Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Gold Short-term Pull Back in Progress - 20th Mar 18
Stocks Appear to be Under Pressure - 20th Mar 18
Time To Eliminate Your Wall Street Tax? - 20th Mar 18
The Beast from the East Snow, UK Roads Driving Car Accidents - 20th Mar 18
Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - 19th Mar 18
2018 Reversal Dates for Gold, Silver and Gold Stocks - 19th Mar 18
This Tech Breakthrough Could Save The Electric Car Market - 19th Mar 18
Stocks Set to Open Lower, Should You Buy? - 19th Mar 18
The Wealth Machine That Rising Interest Rates Create Conflict With The National Debt - 19th Mar 18
Affiliate Marketing Tips and Network Recommendations - 19th Mar 18
Do Stocks Bull Market Tops Need Breadth Divergences? - 19th Mar 18
Doritos Instant £500 Win! Why Super Market Shelves are Empty - 19th Mar 18
Bonds, Inflation & the Market Amigos - 19th Mar 18
US Housing Real Estate Market and Banking Pressures Are Building - 19th Mar 18
Stock Market Bulls Last Stand? - 18th Mar 18
Putin Flip-Flops Like A Drunken Whore On Bitcoin Cryptocurrency Legalization - 18th Mar 18
How to Legally Manipulate Interest Rates - 18th Mar 18
Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - 18th Mar 18
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18
DasCoin: A 5-Minute Guide to How It Works - 15th Mar 18
Stock Market Downward Pressure Mounting - 15th Mar 18
The Stock Market Trend is Your Friend ’til the Very End - 15th Mar 18
6 Easy Ways to Get What Women Want, for Less! - 15th Mar 18
This Isn’t Your Grandfather’s (1960s) Inflation Scare - 15th Mar 18
Eye Opening Stock Market Index, Volatility, Charts and Predictions - 15th Mar 18
Gold Cup At Cheltenham – Gold Is For Winners, Not For Gamblers - 15th Mar 18
Upcoming Turnaround in Gold - 14th Mar 18
Will the Stock Market Make Another Correction this Year? - 14th Mar 18
4 Ways To Writing An Interesting Education Research Paper - 14th Mar 18
China Toward Sustainable Economic Growth - 14th Mar 18
Stock Market Direction Is No Longer Important - 14th Mar 18
Trade Tariffs Defeat Globalists and Return Prosperity - 14th Mar 18
Stock Market Crash is Underway and Cannot be Stopped! - 14th Mar 18
Are Energy Sector Stocks Bottoming? - 14th Mar 18
Nasdaq Stocks Soars to New Record High After Strong Job Reports - 14th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Gold and Silver - Shifting the Narrative

Commodities / Gold and Silver 2017 Aug 29, 2017 - 12:25 PM GMT

By: The_Gold_Report


Precious metals expert Michael Ballanger discusses gold's breakout and its correlation to the U.S. dollar and cryptocurrencies. For most of the past eight weeks, the financial media have been attempting to tilt the scales of conversation away from the weak macro backdrop in favor of the new initiative on Afghanistan and/or the Trump White House and/or domestic and international terror. As stocks rally in the face of flat earnings growth and rising P/Es, I have noticed an unwavering tendency for dips to be bought firstly by the pre-programmed computer programs, then by traders, and finally by the investing public who continue to behave as instructed by the Behavioral Architects that reside within the Working Group on Capital Markets and execute through the N.Y. Federal Reserve. Similarly, gold now above $1,300 and silver above $17.10 have in the past been faded like old swimsuits as all eyes are glued to the rising open interest and bullion bank aggregate short positions that are historical precursors for criminal takedowns.

As we head into the final week of August with the kiddies all headed back to school, I wonder whether or not the world of stock trading has finally assumed the role of an RPG not unlike Final Fantasy or Grand Theft Auto.

The chart below tells me that stocks are certainly not cheap and are indeed fraught with risk. That is based upon years upon years of data that, as you can all see so clearly, suggests that the current market ranks in the top three most overvalued markets in the past 100 years. Only the insanity of the bubble of 1999 that created billionaires out of garage floor entrepreneurs and the drunken orgies of stock-buying binges made famous by the likes of Livermore and Baruch comes close to exceeding the ridiculous valuations seen today. It also explains why the Serial Manipulators at central bank trading desks around the globe are so obsessed with keeping a lid on gold and silver. Like the addict protecting that last hit of junk, the central bank price managers are desperately and defiantly keeping a vice-grip lock on stocks and the precious metals knowing full well the dire ramifications of a meltdown/melt-up outcome for stocks/gold.

Now, given the level and tenacity of these interventions, how can it be even vaguely possible to initiate positions that are counter to the full faith and credit of the sovereign treasuries? How can you possibly get an edge on a bullion bank trader sitting in NY or London or Tokyo with a margin facility of several billion dollars and full authorization to ensure gold does not break out above $1,310 and silver remains capped at $17.10? What I have found over the years is that the level of aggregate shorts held by the bullion banks offers clues to the duration of any up or down move but it in no way predicts the amplitude of the move. For that reason, the past three weeks have seen a sharp increase in Commercial long liquidation coupled with accelerated shorting but the aggregate number of shorts is still well below the level seen at major tops in the summer of 2016 and with gold approaching U.S.$1,400 per ounce. The risk in this assumption that the U.S. Dollar index ($USD) is about to stage a reversal to the upside, forcing the algo's to sell gold. Observe this chart:

The problem with the "rallying U.S. dollar" concept is that as long as the U.S. economy continues to produce sub-par inflation numbers, the Fed will forego the rate hikes because the U.S. banking system needs inflation in order to underpin the collateral held by the member banks against which they have trillions of dollars in loans. As you can see, the USD is nowhere near oversold and in fact looks like it is ready to roll over. So, if we do not get a USD rally, then it will be up to the Interventionalists to find another cover story to explain why gold and silver are pulling back or else the odds favor a continuation move to the upside until the end of November.

Shown below is the breathtaking ascent in the Geek Squad's answer to fiat currencies—Bitcoin. You will recall all of the table-pounders from 2001 calling for $4,000 gold and $400 silver and were able to show us all just how frail were the underlying fundamentals for the big five currencies—dollar, euro, pound, yen, and Swiss franc. Not only were these erudite thinkers correct, they were spot on as gold took off from the 1999 low around $250/ounce reaching over $1,900 by 2011. Since then, the price managers exhibited their OCD with great aplomb as they perpetually carpet-bombed gold and silver while completely missing the creation of the ultimate, untraceable, uncontrollable, manipulation-immune alternative currency called Bitcoin and all of the Bitcoin wannabe's that fall into the category of "cryptocurrencies." Since the central bankers all recall the immortal words of former Fed Chairman Paul Volcker who reflected back to his tenure in the 1980s by admitting error in "not controlling the gold price," the Geeks decided to step around the CBs and run a "covert op" alternative currency—and it has worked beautifully.

Gold's enormous breakout will have all of the technicians salivating but the real question is how long it takes the Commercials to exert their criminal influence over the near-term price action. In my earlier comments, I predicted an epic battle of seasonal demand pitted against interventionalist supply for the upcoming September-November period and today's price action confirms it. Beware of the "technical breakout" at all costs and use tight stops at all times.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger's adherence to the concept of "Hard Assets" allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Charts courtesy of Michael Ballanger.

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules