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Gold, Dollar, Stocks & Sentiment at Major Pivot Point

February 28, 2011 by · Leave a Comment 

By Chris Vermeulen, TheGoldAndOilGuy

So far 2011 has been an interesting to say the least. Stocks and commodities have been jumping around with high volatility generating mixed trading signals. This choppy price action typically indicates trends are in their late stages. The late stages of a trend is very difficult to trade because volatility rises meaning larger day to day price swings, and at any time the price could either drop like a rock or go parabolic surging higher in value. Generally the largest moves take place during the final 10% of trend, but with a sharp rise in price keep in mind the day to day gyrations are much larger than normal, hence the false buy and sell signals back to back on some investment vehicles.

Taking a look at the charts it’s clear that we are on the edge of some sizable moves in both stocks and commodities. It’s just a matter of time before a correction is confirmed or this current pullback in stocks is just a dip (buying opportunity). I am in favor of the longer term trend at work here (bull market) but it only takes a 1 or 2 bid down days and that could change.

SPY (SP500 Price Action) – 60 Minute Chart

This chart shows intraday price action with my market internals. It is signaling a short term bottom within the overall uptrend on the equities market. The big question is if this is a just an opportunity to buy into this Fed induced bull market or the start of a larger correction?

Currently I am bullish but the next couple trading sessions could confirm my bullish view or a correction could be unfolding. Until then, we must remain cautious.

Price Of Gold – Weekly Chart

Gold has staged a strong recovery in the past four weeks. But it has yet to break to a new high. I do feel as though it will head higher because of the way silver has been performing (new highs). But it is very possible we get a pause for a week or two before continuing higher.

Because of the international concerns in the Middle East both gold and silver should hold up well even if the US dollar bounces off support. But, if the US dollar breaks down below its key support level we could see stocks and commodities go parabolic and surge higher in the coming months. It’s going to be interesting year to say least…

Dollar Weekly Chart

This long term view of the dollar shows a MAJOR level which if penetrated will cause some very large movements across the board (stocks, commodities and currencies).

In short, a breakdown will most likely cause a spike in stocks and commodities across the board which could last up to 12 months in length. On the flip side a bounce from this support zone will trigger a pullback in both stocks and commodities. This weekly chart is something we must keep our eye on each Friday as the weekly candle closes on the chart.

Weekend Trend Report:

In short, 2011 has been interesting but trading wise it’s has yet to provide any real low risk trade setups which I am willing to put much money on. There are times when trading is great and times when it’s not. It all comes down to managing money/risk by trading small during choppy times (late stages of trends), and times when we add to positions as they mature building a sizable portfolio of investments which I think will start to unfold over the next few months.

I continue to analyze the market probing it for small positions as this market flashes short term buy and sell signals.

Last week we say a lot of emotional trading and that typically indicates large daily price swings should continue for some time still so keep trades small and manage you positions.

You can get my FREE Weekly Analysis here: http://www.thegoldandoilguy.com/trade-money-emotions.php

Chris Vermeulen



Vietnam central bank wants to outlaw gold trading

February 28, 2011 by · Leave a Comment 

By Nguyen Pham Muoi
Dow Jones Newswires
via The Wall Street Journal
Monday, February 28, 2011

http://online.wsj.com/article/BT-CO-20110228-702556.html

HANOI — Vietnam’s central bank is proposing that the government issue regulations to ban the trade of gold bullion from the second quarter of this year, state media reported Monday, citing the State Bank of Vietnam.

“The State Bank of Vietnam in the second quarter will request that the government issue a decree on management of gold trading, aiming to control imports and exports of gold and to ban the trading of gold bullion in the free market,” the state-run Vietnam News Agency said.

“Trading of gold bullion is seen only in Vietnam but not in other countries,” it said. “It is bad for the economy because (the country) has to import gold, which causes trade deficits.”

The elimination of gold bullion trading is “necessary and timely,” as the government is rolling out measures to tame inflation and stabilize macroeconomic conditions, it said.

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February Sees Gold Up 6%, Silver Up 19% on Inflation and Escalating Geopolitical Risk

February 28, 2011 by · Leave a Comment 

Mark O’Byrne submits:

The paper-driven sell off in the gold market seen in January has been trumped by continuing robust physical demand in January and February. This has resulted in gold rising nearly 6% in February and silver’s strong industrial and investment demand leading to a 19% rise to new nominal 30-year highs.




Gold in USD – 6-Month (Daily) and 150-Day Moving Average



click to enlarge

Political, and more importantly socioeconomic, revolutions in the Middle East and North Africa are leading to a degree of geopolitical instability and risk not seen in many years. This is leading to concerns about oil supplies from the region and hence the 14% jump in US crude oil just last week and deepening inflation concerns.

Hopes that the feudal Saudi regime will contain the situation by increasing production and exporting more oil are misplaced as the Saudis are already producing oil at maximum capacity and indeed are

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Agnico-Eagle: Value for the Risk-Averse Investor

February 28, 2011 by · Leave a Comment 

David Urban submits:

Agnico-Eagle (AEM) is a Toronto based Gold producer with operating mines in North America and Finland. Formed in 1972 from the merger of Agnico Mines and Eagle Gold Mines, Agnico-Eagle is focused on a strategy of acquiring and developing quality projects in low risk regions of the world.

4th quarter 2010 sales were $439 million, an increase of 94.5% over the $225.6 million in the 4th quarter of 2009. Net income was $0.53 per share, an increase of 71% over the $0.31 reported in the 4th quarter of 2009. The 53 cents figure includes a loss of $0.04 per share from a combination of stock options, gain on the sale of investments, and foreign currency translation losses.

For the full year 2010 EPS was $2.05 per share compared with $0.55 per share in 2009. Sales were $1.422 billion in 2010 an increase of 131.7% over $613.8 million in sales over

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Barrick Gold: Turnaround in the Home Stretch

February 28, 2011 by · Leave a Comment 

David Urban submits:

Barrick Gold (ABX) is a major global gold producer. During 2010, Barrick made the decision to spin off the high cost African operations into a separately traded vehicle while continuing to retain a significant ownership stake.

Gold production for the 4th quarter came in at 1.7 million ounces and copper production of 82 million pounds. Realized prices were $1,368 per ounce and $3.99 per pound respectively.

Production for 2010 came in at 7.8 million ounces of gold at total cash costs of $457 per ounce. Net income for 2010 was $3.3 billion or $3.32 per share and adjusted operating cash flow was $4.8 billion.

Barrick increased the dividend by 20% as a sign of its strong balance sheet and confidence in the future price of gold.

Proven and probable reserves were replaced for the second year straight at 139.8 million ounces and MII reserves grew to 113.5 million ounces from

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Silver and the New Decade

February 28, 2011 by · Leave a Comment 

The decade from 2000 to 2010 is now forever behind us. So what is in store for the new decade? 2010 to 2020? The last decade was a good time to prepare and recognize that severe chaos was on the way. And that chaos is like a boiler slowly building up pressure.

Read more….

Silver Market Update

February 28, 2011 by · Leave a Comment 

After last week’s update called for a near-term top in silver we got one more up day, thanks to the antics of the Libyan “fruitcake” digging his heels in and resisting being swept away. After that silver did indeed start to correct back although it ended the week with an up day.

Read more….

State as mining ‘player and referee’ raises governance issues – Patrice Motsepe

February 28, 2011 by · Leave a Comment 

The South African government’s position of being both “player and referee” within the mining industry raises corporate governance issues, says African Rainbow Minerals (ARM) executive chairperson Patrice Motsepe.

Motsepe, who was answering questions at ARM’s presentation of its 244 % higher headline earnings to R1 562-million for the six months to December 31, was commenting on the official launching by President Jacob Zuma on Saturday of South Africa’s new State mining company, the African Exploration Mining & Finance Corporation (AEMFC).

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S African capacity to rail 93Mt/y iron-ore envisaged – ARM

February 28, 2011 by · Leave a Comment 

The expansion of South Africa iron-ore export channel to a capacity of more than 93-million tons a year is envisaged, says African Rainbow Minerals (ARM) CEO André Wilkens.

Wilkens says that a study on the economic feasibility of a 93-million tons a year capacity is due in September.

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Northam cautions on outlook after lower interim earnings and output

February 28, 2011 by · Leave a Comment 

JSE-listed Northam Platinum’s six months earnings fell by 65% as production declined by one third after operational difficulties at the Zondereinde mine.

Operational problems associated with mining the Merensky reef at its Zondereinde mine were also unlikely to abate in the short term.

Read more….

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