Gold and Silver, The Big Show

Gold and Silver, The Big Show

It goes almost unnoticed that gold and silver are making new bull market highs on a weekly basis.

Occasionally it will get an honorable mention in the press when they need to fill in some dead space. God forbid that an analyst actually recommends gold because they will suddenly find themselves "out of time". For weeks the commentators on Bloomberg focused on gold's failure to move above 1,440.00 and insinuated that this is what a top looks like. Yesterday they found out just how wrong they are and I feel that merits some comment along with some projections about what is coming down the road. So here it goes.
One of the prime movers in the price of gold is the US dollar and the dollar is headed lower as you can easily see here:

This was great support and now it is a warning

I realize that this is a simple six-month daily chart but in truth it differs little from a ten-year chart in that the trend is down. It's been headed down for a decade and it's headed down today. The greenback is the world's reserve currency and as it loses value, the world moves to the ultimate reserve currency, gold! Right now the dollar is distributing within a range (75.50 to 76.50) in preparation for a move down to the historical low at 70.70.

Gold is also influenced by what the European and Asian central banks do. The United States is finishing up with QE2 and debating whether or not to go ahead with QE3 and Europe is clearly headed toward a QE2 of its own with bailouts of Portugal and Ireland being finalized. Then you have Japan with a QE of its own, pumping out US $500 billion in the weeks following the earthquake. So for those of you who are looking for a fiat port in the storm, there aren't any so gold will be pushed higher that much more. The yellow metal isn't the only thing on the rise either. Silver is marching higher like the little drummer boy and yesterday the HUI broke out to a new closing high as seen here:

That is the equivalent of a "confirmation" is Dow Theory with respect to the Dow and Transports. This is the first time in months that gold, silver and the HUI all made new closing highs on the same day, and it is a major buy signal as well.

With respect to the June gold futures contract yesterday was the first time that it was able to poke its head above critical resistance at 1,449.00 (1,447.50 in the spot price) and it closed well above it at 1,452.50 as you can see here:

This is a significant break out to the upside and it is extremely bullish that the June gold is up another 6.50 today at 1,459.00 and never bothered to look back at what was such strong resistance.

Now I know that you've seen the follow chart of gold twice but maybe the third time is a charm:

Here you can clearly see how each leg up is followed by consolidation at the top of the range. This is as bullish as it gets! Now look at the far right of this chart and you can see that yesterday the spot gold broke out above that last area of consolidation (1,330.00 to 1,440.00) and today it moved even higher as the spot price is now at 1,460.00 as of 3 pm EST. That means yesterday's breakout was confirmed and that is very important. You should copy this chart and put it someplace where you can see it every day, because this is the reality and not the crap that spews out from your TV.

Then we have silver. Silver has been leading gold higher for weeks now and seems to be picking up more strength with each passing week as you can see here:

Counting today gold's poor cousin has made three consecutive bull market closing highs and four out of the last five sessions. That is strength and it is not done by a long shot since there isn't any resistance until it hits 43.71, and is still a ways off in the horizon. Below I have put all the relevant Fibonacci numbers for both spot gold and spot silver so you can follow along:

                        SUPPORT    RESISTANCE
SPOT GOLD   1,447.50           1,522.19
                         1,372.81           1,596.98
                         1,298.12           1,671.77
SPOT SILVER    37.95                43.71
                            31.91                49.45
                            26.48                55.21

and there is no telling where silver will stop even though it is overbought right now.

In conclusion gold will go to a minimum of 1,596.98 and will probably go higher while silver will go to a minimum of 43.71. How much higher each can go is anybody's guess right now. What makes top picking difficult is that a lot of people who want to be in the market were caught on the sidelines and now greed will make them pile in with too much and too late. Yes, I bough both gold and silver yesterday and today but I simply added a little meat to the bone of positions that I began to build two years ago, and I never liquidated along the way. Of course here are people out there calling for US $2,000.00 gold and US $75.00 silver on this leg up, and anything is possible but these are the same people who wouldn't even look at gold when it was at US $1,155.00 back in July of last year. Now they're all heroes!

Rest assured that gold and silver will have a substantial correction this summer but only a fool would give up his position that he struggled so hard to construct and my mother didn't raise any fools. Finally the volatility is only going to increase over the next month or so and that will cause all the traders to sell cheap and buy dear. Fear and greed act on the price of gold and silver like no other market so anyone who try's to trade these two will go broke! My best advise remains to buy a little bit of physical gold and silver (coins whenever possible) every month and watch the food channel when you turn the TV on. Occasionally scan the Sunday paper and look at the price of gold and then go straight to the comics. You'll grow rich and you'll be happy!


http://www.marketoracle.co.uk/Article27411.html


This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.

Wal-Mart Says “Serious” Inflation Is Coming

Thank you Ben Bernanke for all the money printing.  Thanks to a massive injection of cash into the financial system by the Federal Reserve and other central banks, the price of almost every major commodity has skyrocketed over the past six months.  Now those price increases are starting to filter down to the retail level.  During a recent meeting with USA TODAY's editorial board, Wal-Mart CEO Bill Simon said that rising inflation in the United States is "going to be serious" and that Wal-Mart is "seeing cost increases starting to come through at a pretty rapid rate."  For many years Wal-Mart has been famous for their "low prices", so for the head of Wal-Mart to publicly warn that much higher prices are coming is more than a little alarming.  There are millions of American families that are already drowning in debt, that can barely pay their mortgages and that are struggling to put food on the table for their families.  So what is going to happen to the U.S. economy when prices start rising substantially at places such as Wal-Mart?
But Wal-Mart is not the only major corporation that says that inflation is coming.  Hershey has just announced price increases of about 10 percent on their entire line of products.
So if you like chocolate you better start stocking up now.
Cocoa production is being seriously threatened by the political unrest in Africa right now.  The recent chaos in the Ivory Coast is certainly not good news for Hershey, but the truth is that all of the long-term trends indicate that prices for commodities such as cocoa, coffee and sugar are going to move up anyway.
In fact, Aaron Smith, the managing director of Superfund Financial, believes that coffee, sugar and cocoa will all be five to ten times more expensive by 2014 than they are today.
So if you are addicted to coffee or to sugar you might want to start making your plans accordingly.
But the truth is that inflation is not limited to just a few commodities.  Virtually every major agricultural commodity has soared in price over the past 6 months to a year.
So what is causing all of this?
Well, there are several factors which are major contributors.
First of all, overall global demand continues to increase.  The population of the world continues to grow, and as the economies of nations such as China and India develop, millions more people want to enjoy luxury items such as chocolate and coffee just like Americans do.
Secondly, all over the world central banks have been recklessly printing money in an attempt to stimulate their economies, but this is also going to end up causing tremendous inflation.
So how does that work?
Well, it is actually very simple.
For example, in the United States when there are more dollars chasing the same number of goods and services, what is going to happen?
Prices are going to rise of course.
And we are seeing this happen all over the world right now.
Thirdly, as the price of oil continues to rise, it is going to increase the cost of everything else.  The era of massive amounts of cheap food being transported around the world using massive quantities of cheap oil is rapidly coming to an end.
The following chart if from the Federal Reserve.  It shows that the price of oil is rapidly moving back to the level it was at prior to the financial crisis of 2008.  In fact, this chart is slightly out of date.  At last check, the price of oil was over $107 a barrel.  So what is it going to mean for our economy if we soon surpass the record that was set back in 2008?....

Fourthly, global instability is also going to cause prices to continue to rise.  Over the past year we have had really bizarre weather all over the globe, we have seen revolutions erupt all over Africa and the Middle East and the third largest economy in the world (Japan) just experienced the worst disaster that they have been through since World War 2 ended.
When things are unstable, economies don't work as efficiently.  That means that less goods and services are produced.
But when there are less goods and services being chased by an increasing amount of money that tends to push prices up.
The truth is that inflation is here, and if the CEO of Wal-Mart is right, it is not going to go away any time soon.
In fact, many believe that the world is on the verge of another major economic crisis.
If you stop and think about it, every major region of the world is dealing with very serious problems right now.
Right now, the European debt crisis is worse than it ever has been before.  Did you notice that Standard & Poor's just downgraded Portugal's debt for the second time in a week?  Now Portuguese debt is rated BBB-, which is only one level above junk status.
That is a very alarming sign.
Asia is dealing with the Japanese crisis, nearly all of the countries in the Middle East are dealing with protests or full-blown revolutions, Africa is dealing with the war in Libya and quite a few revolutions of their own, and the U.S. is still deeply struggling with a whole host of economic problems.
Most Americans don't realize just how precarious things are at the moment for the global economy.  The financial crash of 2008 did a lot of lasting damage, and the next wave of the financial crisis could potentially be even worse.  Unfortunately, the global financial system is more vulnerable than ever right now.
So what are the Federal Reserve and other central banks going to do the next time a major financial crisis happens?
They are going to print even larger quantities of money and they are going to give even larger bailouts to their friends of course.
The dollars that you have today are never going to be more valuable than they are right now.  Don't wait too long to use them.  If you have a huge pile of dollars sitting in the bank your wealth is slowly but surely rotting away.
Very hard economic times are coming.  The inflation that the CEO of Wal-Mart is warning about is only the beginning.  Eventually we are going to see inflation in this country that is going to be absolutely mind blowing.
But don't wait until the storm hits to start preparing.  We all have time now to prepare, so let us be wise and make the most of it.

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.