Tuesday, January 31, 2012
Source: KMG Gold (1/30/12)
"If silver blasts through $40/oz, it's probably on its way to the all-time high. In that case, the next big move would be to the upside, with potential for $70/oz targets and triple-digit silver prices."
On Jan. 11, we expected the U.S. dollar to top as sentiment was uber-bullish, which would lead to a nice rally for gold, silver and (mining) stocks. That day, the USD index closed at 81.35, silver at $29.89, and gold at $1,641.
Today, the U.S. dollar stands at 78.90, silver at $33.89 and gold at $1,733.50, so we got what we expected.
On Jan. 9, we posted the following chart, which compares the current silver "bubble" to the Nasdaq Bubble a decade ago:
Now let's see where we are today.
Just like the Nasdaq, silver has set a lower/equal low, accompanied by a higher low of the MACD index, and has now rallied quite sharply:
Compare this to the Nasdaq:
An overlay of both charts shows us where we are today:
If we zoom in a bit:
If the pattern holds, we should be about halfway the "Bull trap," as many will view this as the Return to "normal."
If the pattern doesn't hold, and silver blasts through $40/oz, it's probably on it's way to the all-time high. In that case, the next big move would be to the upside, with potential targets of $70/oz and potentially triple digit silver prices.
As long as the pattern holds, I would be careful if silver hits $38/oz.
KMG Gold Recycling
Tuesday, January 31, 2012
One of the hallmarks of the decline in gold prices from an all time high of $1920 in Sept 2011 (as the market collapsed by 26%) was the significant long liquidation of speculative positions by gold futures traders on the CME in New York.
Since then gold has steadily rallied - firstly breaching the important 200 day moving average which was then at $1644 and subsequently technical and psychological resistance around the $1700 level. And it has done this without any significant re-building of net long positions of the CME futures traders (see Reuters chart below).
By last Friday the Commitments of Traders reports suggests that futures traders are now at a net long of 126,937 contracts (a little under 400 tonnes). That is a gain of nearly 9% on the previous weeks position but still less than half the levels seen mid last year.
With the US Federal Reserve committing to keep interest rates at low levels at least until "late 2014" this would suggest the gold market still has legs to run and it is surely only a question of time before the floor traders join the party and rebuild their long positions in earnest.
With gold starting 2012 at a cracking pace, gaining 10% in the first month (equaling the gains of the whole of 2011) - gold may be poised to set fresh highs this year - but much earlier than many - ourselves included - would have expected.
Friday, January 20, 2012
: There was a time when politicians kissed babies to show they had the common touch and a real connection with ordinary folk. With the outcome of the US elections finely poised, gold and a return to a gold standard is seen as a potential vote-winner - today they are embracing gold, not babies.
In South Carolina 33% of voters are gold standard supporters, with 18% warm to the idea while only 11% are against and 6% cool on the proposal. Gold is a clear 3-1 vote winner.
To be fair, Republican presidential candidates Newt Gingrich and Ron Paul have both consistently been strong supporters of 'hard money' but their advocating a "gold commission" to consider a return to a gold standard is interesting at two levels - firstly in what tells us about the mood in the USA - and secondly by its potential impact on the gold market itself.
President Nixon moved the US out of the gold standard in 1971 and brought to an end the Bretton Woods system of monetary management introduced in 1946 where currencies were pegged to each other and the dollar was pegged to gold at a price of $35/ounce. The proposal is to back US dollars with gold (and possibly silver).
The main benefit of the gold standard was that, by linking a countries currency to a fixed asset like gold. it prevented policy makers from over-expanding the economy - it was a forced discipline or straight-jacket which effectively has a self-regulating and stabilizing effect on the economy. As such, the government can only print money depending upon the levels of gold reserves it has. This discourages inflation, budget deficits and debt. Furthermore, the more productive nations benefit - as they should - because the more they export, the more gold they can purchase and therefore money they can print to grow their economy further.
In the current political climate there is a strong desire to achieve economic stability through fiscal discipline, a balancing of the budget and by reducing government interference in the economy. Many would be prepared to forgo potential economic growth that a fixed money supply would engender and even tightness in credit markets that would stifle company growth through lack of funding. Such is the anger of the mis-management of the economy and the short-comings of the fractional reserve banking system.
But can gold fulfill its extended role ? Certainly gold prices have behaved in an exemplary manner during the crisis as a wealth preserver and its role in maintaining purchasing power parity in the long run has been well proven. Prescient gold investors have been well rewarded with over 20% compound growth year-on-year - for over a decade.
But with a large and highly globalised economy, can gold sensibly underpin the world's senior reserve currency in a complex financial world ?
Representing as it does less than 1% of global financial assets, gold is very clearly limited without a massive upward revision in its price from $1650/ounce to about $45,000/ounce. There are also fundamental problems in fixing exchange rates between currencies that we had under Bretton Woods - it is not unlike the artificial and flawed arrangement that underpins the Eurozone. The short answer as to whether or not gold can fulfill this role is in the detail and what sort of system you want.
Economists broadly do not favour a return to a gold standard. The University of Chicago conducted a poll of 40 leading economists none of whom supported the move. But it is also clear that something needs to change. So long as policy makers make over-extended promises on the one hand (to ensure re-election) and the printing presses in the other then we will continue to see inflation and currency declines as those shown below. Since 1971 the US dollar has lost over 85% of its value by official (CPI) measures. Truly the thief in the night and that's just not right. To use the words of President Hoover in 1933 - "We have gold because we cannot trust governments".
Friday, January 06, 2012
Winnipeg, Manitoba– January 4, 2012. - Better Business Bureau investigates thousands of scams
every year, from the latest gimmicks to schemes as old as the hills. Our new Scam Source
(www.bbb.org/scam) is a comprehensive resource on scam investigations from BBBs around the
country, with tips from BBB, law enforcement and others. You can sign up to receive our Scam Alerts
by email, and you can also be a scam detective yourself by reporting scams you’ve discovered.
We’ve divided scams up into nine major categories and picked the top scam in each, plus our Scam of
Top Job Scam
BBB sees lots of secret shopper schemes, work-from-home scams, and other phony job offers, but the
worst job-related scam can dash your hopes and steal your identity. Emails, websites and online
applications all look very professional, and the candidate is even interviewed for the job (usually over
the phone) and then receives an offer. In order to start the job, however, the candidate has to fill out a
“credit report” or provide bank information for direct deposit of their “paychecks.” The online forms are
nothing more than a way to capture sensitive personal data – Social Insurance number, bank accounts,
etc. – that can easily be used for identity theft. And, of course, there is no job, either.
Top Sweepstakes and Lottery Scam
Sweepstakes and lottery scams come in all shapes and sizes, but the bottom line is almost always this:
You’ve won a whole lot of money, and in order to claim it you have to send us a smaller amount of
money. Oh, and keep this confidential until we’re ready to announce your big winnings. This year’s top
sweepstakes scam was undoubtedly the email claiming to be from Facebook founder Mark Zuckerberg
announcing that the recipient was the winner of $1 million from the popular social networking site.
These kinds of scams often use celebrities or other famous names to make their offer seem more
genuine. If you aren’t sure, don’t click on the link but instead go directly to the homepage of the
company mentioned. If they are really giving away $1 million, there will be some kind of announcement
on their website. But don’t waste too much time looking.
Top Social Media/Online Dating Scam
On the Internet, it’s easy to pretend to be someone you are not. Are you really friends with all of your
“Friends” on Facebook? Do you have a lot of personal information on a dating site? With so much
information about us online, a scammer can sound like they know you. There are tons of ways to use
social media for scams, but one this year really stands out because it appeals to our natural
curiosity…and it sounds like it’s coming from a friend. Viral videos claiming to show everything from
grisly footage of Osama bin Laden’s death to the latest celebrity hi-jinks have shown up on social media
sites, often looking as if they have been shared by a friend. When you click on the link, you are
prompted to “upgrade your Flash player,” but the file you end up downloading contains a worm that
logs into your social media account, sends similar messages to your friends, and searches for your
personal data. The next time you see a sensational headline for the latest viral video, resist the urge to
Top Home Improvement Scam
Always near the top of BBB complaint data are home improvement contractors who often leave your
home worse than they found it. They usually knock on your door with a story or a deal – the roofer who
can spot some missing shingles on your roof, the paver with some leftover asphalt who can give you a
great deal on driveway resealing. Itinerant contractors move around, keeping a step ahead of the
law…and angry consumers. The worst are those who move in after a natural disaster, taking advantage
of desperate homeowners who need immediate help and may not be as suspicious as they would be
under normal circumstances. A large percentage of BBB’s Accredited Businesses are home contractors
who want to make sure you know they are legitimate, trustworthy and dependable. Find one at
Top Check Cashing Scam
Two legitimate companies – Craig’s List and Western Union – are used for an inordinate amount of
scamming these days, and especially check cashing scams. Here’s how it works: Someone contacts you
via a Craig’s List posting, maybe for a legitimate reason like buying your old couch or perhaps through
a scam like hiring you as a secret shopper. Either way, they send you a check for more than the
amount they owe you, and they ask you to deposit it into your bank account and then send them the
difference via Western Union. A deposited check takes a couple of days to clear, whereas wired money
is gone instantly. When the original check bounces, you are out whatever money you wired…and you’re
still stuck with the old couch.
Top Phishing Scam
“Phishing” is when you receive a suspicious phone call asking for personal information or an email that
puts a virus on your computer to hunt for your data. It’s almost impossible to avoid them if you have a
telephone or an email account. But the most pernicious phishing scam this year disguised itself as
official communication from NACHA – the National Automated Clearing House Association – which
facilitates the secure transfer of billions of electronic transactions every year. The email claims one of
your transactions did not go through, and it hopes you react quickly and click on the link before
thinking it through. It may take you to a fake banking site “verify” you account information, or it may
download malware to infiltrate your computer.
Top Identity Theft Scam
There are a million ways to steal someone’s identity. This one has gotten so prevalent that many hotels
are posting warnings in their lobby. Here’s how it works: You get a call in your hotel room in the middle
of the night. It’s the front desk clerk, very apologetic, saying their computer has crashed and they need
to get your credit card number again, or they must have gotten the number wrong because the
transaction won’t go through, and could you please read the number back so they can fix the problem?
Scammers are counting on you being too sleepy to catch on that the call isn’t from the hotel at all, but
from someone outside who knows the direct-dial numbers for the guest rooms. By the time morning
rolls around and you are clear-headed, your credit card has been on a major shopping spree.
Top Financial Scam
In challenging economic times, many people are looking for help getting out of debt or hanging on to
their home, and almost as many scammers appear to take advantage of desperate situations. Because
the federal government announced or expanded several mortgage relief programs this year, all kinds of
sound-alike websites have popped up to try to fool consumers into parting with their money. Some
sound like a government agency, or even part of BBB or other nonprofit consumer organization. Most
ask for an upfront fee to help you deal with your mortgage company or the government (services you
could easily do yourself for free), and almost all leave you in more debt than when you started.
Top Sales Scam
Sales scams are as old as humanity, but the Internet has introduced a whole new way to rip people off.
Penny auctions are very popular because it seems like you can get something useful - cameras,
computers, etc. – for way below retail. But you pay a small fee for each bid (usually 50 cents to $1.00)
and if you aren’t the winner, you lose that bid money. Winners often are not even the top bidder, just
the last bidder when time runs out. Although not all penny auction sites are scams, some are being
investigated as online gambling. BBB recommends you treat them the same way you would legal
gambling in a casino – know exactly how the bidding works, set a limit for yourself, and be prepared to
walk away before you go over that limit.
Scam of the Year
Yep, it’s us – the BBB phishing scam. Hundreds of thousands, perhaps millions, of people have gotten
emails that very much look like an official notice from BBB. The subject line says something like
“Complaint Against Your Business,” and the instructions tell the recipient to either click on a link or
open an attachment to get the details. If the recipient does either, a malicious virus is launched on
their computer…a virus that can steal banking information, passwords and other critical pieces of
information needed for cyber-theft. BBB is working with security consultants and federal law
enforcement to track down the source of these emails, and has already shut down dozens of hijacked
websites. Anyone who has opened an attachment or clicked on a link should run a complete system
scan using reputable anti-virus software. If your computer is networked with others, all machines on
the network should be scanned, as well.
For more information on these and other scams, go to BBB Scam Source (www.bbb.org/scam). Sign up
for our Scam Alerts and learn about new scams as soon as we do.
About The Better Business Bureau
The BBB Serving Manitoba & N.W. Ontario, established in June of 1930, is a not-for-profit, public
service organization and part of an international organization with 114 local Bureaus across Canada and
the U.S. and locally in Manitoba & now N.W. Ontario. BBB rates companies in the marketplace
through a rigorous evaluation of businesses against objective standards, unbiased business review
reports, impartial dispute resolution services and educational programs for businesses and consumers
alike. The Better Business Bureau is unique because of its position of neutrality and its outstanding
history of service. Visit the Better Business Bureau at: www.manitoba.bbb.org.