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A more aggressive devaluation of paper currencies is on the horizon thus the whole PM Complex is completely underpriced. Averaging in from this point on seems warranted. Below is a full explanation as to why that is the case.
So says Goldrunner
[The following article is presented by Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Goldrunner goes on to say in further edited excerpts:
What has really changed?
The Fed is still printing Dollars via QE with the world still shunning Dollars. Thus, Dollar supply is rising while Dollar demand is falling. This is very Gold friendly, in fact, it is what creates big Bull Gold Markets. There is no real way that this relationship can change with the economy mired in a stagflation depression. Massive debts must come off of the world-wide books before anything changes. The options remain for us to see outright deflation to reduce the debts, or for the Fed and other Central Banks to continue [to] devalue the paper currencies to devalue the debts. [Read: Governments Will Want – Will NEED – Much Higher Gold Prices! Here’s Why and Central Bank Gold Purchases up 17% – Here’s Why You Should Jump in or Top Up Too]
The bottoming action last week looks good with the PM Stocks leading the way, yet we could see a lot of volatility before a large move up; or, we could still see a bit lower lows. Shorts come in to cover in spurts unless they have a major reason to aggressively cover, putting in a “V-shaped bottom.” Thus, the probabilities are that we will have some testing and filling before the PM Complex rips back up, or some kind of failure wave down, first.
What really happened?
It…looks like this whole “paper” charade was sparked by Europe’s failure to move to more aggressive Euro QE printing. The Fed’s Banks have full control over Gold via the paper gold futures market so they shorted and traded Gold sideways as the GS boyz [Goldman Sachs boys]converged on Europe to try to sell the QE way. After reaching the log channel bottom in Gold, they elected to take Gold down via paper gold rather than to risk Gold going into free-rise, prematurely. All of this price movement in Gold allowed the Funds to short the PM Stocks with no risk so they hammered them lower. We know through JS [Jim Sinclair] that the Fed Banks tipped off the Funds that they were going to hammer paper gold several months, ago, but the odds are that they have been “tipping” the large funds most of the way.
With the PM Stocks under pressure to fund new projects before Gold rips higher, many PM companies did big private placements of shares to large funds. In some cases these Funds covered shorts, but I suspect many of these transactions were set-up [to] facilitate further shorting of PM Stocks. A fund comes in to take a large position in a PM company, telling the company that they do NOT want it hedging its exposure to Gold or to Silver- that they want exposure to the upside in Gold. Then the Fund sells leveraged call options against the shares at higher prices, or buys leveraged puts. They benefit from leverage on the downside, and then cover their leveraged bets with huge profits, holding the original stock to benefit on the upside once they cover. This was probably what we saw last week- leveraged downside looking to start to cover. If the covering continues unabated, then we could see a V-shaped bottom in the making- but a few days doesn’t mean much, yet.
We have recently been noting the huge divergence on the charts with the RSI not confirming the moves lower in PM Pricing. This looks like a sign of a major bottom set-up, but the divergences can take some time to play out.
Where do we go from here?
The price movements in the PM Stock Indices look…[to be] forming a huge A, B, C correction that had gone to new highs. This is really strange looking on the charts, but does mimic what we saw in 2001 and in 2004/ 2005, minus the new high. A huge A, B, C on the charts, here, would look to give way to a true Wave III on the upside; rejiggered via this paper gold attack by the Fed and its banks. If so, then we would look for the coming Wave III to trade similarly to the 3rd wave upside we saw in 2002 and 2005/ 2006. Both were parabolic rises after the bottom was in. This is probably a “characteristic of Fed pleasure” that is unique to the current environment of K-Winter price management this time around.
[I am]…familiar with the 3rd wave design from 2002 and 2005/ 2006 for the PM Stocks since I had used 2002 to lay out the price movements for the HUI in 2005/ 2006 before they happened. This week I will go through the charts to see what looks interesting. The bottom line is that the bottom may, or may not, be “in” at this time. If we trade like the similar A, B, C correction bottoms in the PM Stocks that I have mentioned, above, then we would probably trade a bit lower. That is, unless something spooks the shorts to cover faster.In Review
- What looked like a perfectly good 3rd wave move on the charts for the PM Stocks, now looks to have been re-engineered via paper gold and shorting into an A, B, C correction off the 2008 HUI top.
- The “B Wave” moved to new highs which is pretty bizarre considering how long the HUI price stayed up there. [There is] little doubt this was orchestrated via paper gold, and the paper gold false pricing system gives the Fed full control of the Gold market price in that way.
- The PM market action gives me little concern since the Fed needs Gold vastly higher (As do all the Central Banks) if they are going to use Gold…to balance the budgets/ balance sheets. Thus, I still expect Gold to be headed for our $10,000 to $12,000 target range, or higher…and
- PM Stocks Indices will then…run vastly higher as we have been expecting, and the major 3rd and 5th waves should still run similar to the late 70’s surrogate charts.
At this time, it appears that Reward is very high for the PM Complex, with Risk very low.
Happy 4th of July to those of you in the States [happy July 1st to those of you in Canada and best regards to all you reading this article elsewhere from around the world]!
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
Other Goldrunner Articles:
1. Goldrunner: These Fundamental Charts Say “Gold Is Getting Ready to Run!”
The U.S. Dollar is being very aggressively devalued in a parabolic…[manner] as we enter the final stage in the paper currency cycle. The government needs Gold to go vastly higher so the budget can be balanced after all of the paper promise debts are added to the balance sheet. Interestingly, Michael Belkin, arguably one of the best analysts in the world, expects earnings for companies to plunge this year causing the DJIA to crater about 30%. This fits with the kind of correction in the now high flying DJIA that we have discussed per the late 70’s charts where Gold and the Dow would meet between 10,000 and 12.000. Words: 1022 Read More »
When are Gold and Silver going to start a huge parabolic move up? I, personally, think that we are sitting at the cusp [of such happening] as we speak on an intermediate-term basis….Below are… the fundamentals and technical set-up [to that end]. Read More »
3. Goldrunner: What We ‘Know’ & ‘Don’t Know’ About Where Gold, Silver and PM Stocks Are Going
One never knows exactly where Precious Metals are going so I always try to keep in mind a list of items that are probable based on the facts that are evident. I call this “what we know” and “what we don’t know” so let’s take a look what we “know” and “don’t know” at this point in time. Words: 872 Read More »
4. Goldrunner Update: Gold, Silver & PM Stock Sentiment Sucks BUT the Fundamentals Are Off the Wall!
Sentiment in the precious metals sector is in the toilet yet the fundamentals for the sector are off the walls positive. That is not secret, but it is what creates huge market moves in the direction of the fundamentals. In fact, market management will never move price against the underlying fundamentals for too long a period of time.
Our subscription service provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going short term (in the next week or two), intermediate term (within the next 3-6 months) and long term (the ultimate top) in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and our proprietary fractal analysis based on the ’70s. Below are some of our latest comments and rationale for expected price movements in gold without illustrative charts which are only available to subscribers. Words: 1000
Related Articles:
1. Governments Will Want – Will NEED – Much Higher Gold Prices! Here’s Why
That governments will want – and will NEED – much, much higher gold and silver prices in the future is counter intuitive, given that they have done everything within their power to throttle back and to keep a lid on bullion prices. Let me explain why. Words: 1300
2. The Case for a “Fair” Gold Price of $10,783/ozt
What would happen to the market/spot price of gold if central banks around the world diverted their foreign currency reserves – almost $11 trillion’s worth – into gold. Using James Turk’s Gold Money Index the “fair” gold price would be $10,783/ozt. Read More »
3. “$10,000 Gold” Exclusive Excerpts from Nick Barisheff’s New Book
$10,000 Gold offers a candid insight into the current state of the economy, the underlying causes of gold’s rising value and why the price of gold will continue climbing to $10,000/ounce and beyond in the years to come. The book contends that intelligent investors have no choice but to invest in this precious metal to stay safe no matter what lies ahead. Read More »
4. Nick Barisheff: $10,000 Gold is Coming! Here’s Why
This is not a typical bull market. Gold is not rising in value, but instead, currencies are losing purchasing power against gold and, therefore, gold can rise as high as currencies can fall. Since currencies are falling because of increasing debt, gold can rise as high as government debt can grow. Based on official estimates, America’s debt is projected to reach $23 trillion in 2015 and, if its correlation with the price of gold remains the same, the indicated gold price would be $2,600 per ounce. However, if history is any example, it’s a safe bet that government expenditure estimates will be greatly exceeded, and [this] rising debt will cause the price of gold to rise to $10,000…over the next five years. (Let me explain further.] Words: 1767
Bubbles tend to follow the 80/20 ratio indicated in the Pareto Principle where approximately 80% of the price move occurs in the LAST 20% of the time. That being the case it would appear that gold and silver could conceivably top out around $9,000 per troy ounce and $250/ozt respectively .This is not a prediction of future prices of gold and silver; it is an indication of what could happen in a speculative bubble environment based on the history of previous bubbles. Words: 1280; Charts: 1
The precious metals complex is arguably at its most bearish sentiment since the start of the bull market 12 years ago. Either the bull market is over or this will prove to be a tremendous buying opportunity. It’s clear that anyone who doesn’t believe in Gold for the long-term has sold and judging from the sentiment indicators, Gold is now in much stronger hands than when it was trading at these prices at the 2012 and 2011 lows. Despite all of the bearish sentiment, the panic and bad-mouthing, Gold (and Silver) has maintained its consolidation. Thus, if Gold is able to hold this support and turn higher, it should approach $1750 to $1800 faster than one would think. This year will go down in history as one of the best buying opportunities for both the metals and the stocks. Words: 675; Charts: 3 Read More »
7. Huge Rebound in Gold & Silver Stocks Coming Soon – Here’s Why
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8. Gold & Gold Stocks: A Look At the Current Weakness & Future Expectations
Nearly all markets except the dollar reacted rather badly to Ben Bernanke’s news conference – even though it actually contained no news – Treasury yields soared, stocks were whacked, and so was gold. While the charts certainly don’t look good in the short term, though, it should be pointed out though that investors with a longer time horizon probably won’t make a big mistake by buying on weakness. That being said, however, in the short term all the tentative evidence that a bottoming process may be under way has by now been eradicated. Below are a number of charts illustrating the situation. Read More »
9. Physical Gold Cannot Possibly Lose Out Over Fiat & Digital Currencies – Here’s Why
Gold cannot possibly lose its central position as the pre-eminent money used by the world for thousands of years. The aggressive measures of the Anglo-American Axis with regard to gold are absurd and they will lead to total disaster both for the Axis, and for the world which has been forced to follow its lead for over forty years. Read More »
10. The Gold Story Is NOT Over. Far From It. Here’s Why
Is it time to admit defeat, sell our positions, slink into a cave, and lick our wounds? Absolutely not. The only thing that changed over the past 60 days was the price of gold, and perhaps the mainstream’s perception of our industry. The realities of the fiscal and monetary state of the world, however, did not. Amid the ongoing rollercoaster ride of gold prices, clearheaded thinking reveals reasons to be optimistic. Read More »
11. Increasing Evidence Indicates a Reversal in Gold & Silver Trend Is Near
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12. Gold Miners Have Hit Rock Bottom! Now’s the Ultimate Buying Opportunity
Looking at the recent Gold Miners price action and crash-like conditions, I cannot hide my excitement. As we judge the recent cyclical bear market within the longer term secular uptrend, we can see that Gold Miners are becoming very attractive. Whether it is the technically oversold levels that only occur a handful of times over a generation, the rock bottom valuations on nominal or relative basis, or the extreme sentiment that the overall sector is going through, all of these indicators point to one conclusion: we are fast approaching a major buying opportunity. [I support that contention below with the use of 8 charts and a full explanation of each.] Words: 1133; Charts: 8 Read More »
13. With Gold Stocks Suffering So Badly Should You Sell Out or Buy In?
Gold stocks are down between 20% and 30% over the past year yet, in that same timeframe, the price of the gold has risen. As a result, sentiment toward gold stocks is pitiful. Even diehard gold bugs are tired of losing money in gold stocks and have been dumping their shares in disgust. This article discusses 4 main reasons I can think of why gold stocks might be so cheap. Words: 444
14. Finally the Final Bottom in Gold Stocks Is Coming – Finally!
The mining stocks have been a disaster if you’ve invested in the average fund, GDX or GDXJ and if you’ve invested in the wrong stocks, they’ve been a total disaster and you will now hate the sector forever. We’ve certainly been surprised by this protracted struggle. In my articles you’ve heard me talk about accumulating on weakness, buying support, being patient and waiting for better opportunities. Folks, this next week is one of those opportunities. The gold stocks are setting up similarly to the bottom in 2005 [and, as such,] are set to test a major bottom and could be on the cusp of a major reversal. Let me explain. Words: 438; Charts: 3
15. Here’s An Easy Way to Identify Gold & Gold Miner Market Tops and Bottoms
It’s amazing! Every day I learn something new. I have just come across a very powerful tool that identifies market tops and bottoms in both the gold price and the gold mining industry valuation. Let me share it with you. Words: 352; Charts: 4
16. Keep the Faith – This Bull Market in Gold STILL Promises to Be One for the History Books! Here’s Why
Seeing the S&P 500 outperform gold and seeing gold stocks get decimated…has been enough to create suicidal sentiment…in the precious metals (PM) sector…but, as the many calls for an end of the PM bull market…[are expressed,] the risk in the PM sector gets lower and lower. The bigger picture hasn’t changed and isn’t going to for some time [so] keep the faith and hold onto your PM sector items tight. Don’t let the short and intermediate-term noise distract you from what STILL promises to be a secular bull market for the history books. The Dow to Gold ratio will hit 2 and might even go below 1 this cycle. [Let me explain.] Words: 873
17. 4 Specific Reasons Why Owning Gold Still Matters
I’m not going to predict a speedy recovery for gold prices. That said, I continue to believe that gold offers investors safety in an uncertain world and, while I remain optimistic about the recovery of the U.S. economy and stellar financial performance of some companies, there is reason for concern on a global level. That’s why I think every investor…must own gold. Read More »
18. These 10 Charts Confirm That Bull Market in Gold Continues
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19. A Balanced Assessment of the Future of Gold
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20. I’m As Bullish As Ever On Gold Bullion – Here’s Why
The recent panic selling in gold bullion caused those who were speculating to get out as their losses added up…[but] retail investors and central banks seem to be rushing to buy more. [Why is that? Let me explain.] Words: 260; Charts: 1 Read More »
21. Central Bank Gold Purchases up 17% – Here’s Why You Should Jump in or Top Up Too
If central banks are preparing for a major change in the value of the dollar, shouldn’t we? The US dollar cannot and will not survive the ongoing abuse heaped upon it by government planners and federal officials. That not only means the gold price will rise, but that many, if not most currencies, will lose a significant amount of purchasing power. This has direct implications for all of us. Read More »
