Continuous Strength in the precious metal’s sector; A harbinger of impending trouble

Gold has rallied to new highs in the Euro, and it continues to defy the dollar; instead of pulling back it continues to put in higher lows, a very long-term bullish pattern. It has also just closed above $1175 on a weekly basis and has thus set the base for a test of its old highs. The entire precious metal’s sector appears to be sensing some sort of future disaster for it simply refuses to correct strongly even in the face of a very strong dollar. Continuous Strength in the precious metal’s sector; a harbinger of bad times…….. Maybe, so if you have no position in the precious metal’s sector, use pull backs to open up a position. If you already have positions, then use strong pull backs to add to them.  A major currency crisis is going to strike, it’s just a matter of time and precious metals thrive in such condition.  On the same token, remember that Wall Street is full of graves of those who were right, but did not have the staying power.  Timing is everything and that is why we always state that one should never overload on any position and this money we are deploying into precious metals is from the profit we locked in when we sold Gold almost at the top in 2011.

The dollar has just rallied to a new 11 month high and will soon put in a new 52 week high; in contrast Gold has refused to trade below its Feb 5 low of 1045. In Feb 2010 the Dollar was trading much lower and so by logic Gold should have easily dipped below its Feb 2010 lows, instead we find that Gold is just a hop and skip away from testing its old highs.  Gold has now put in new highs in all major currencies.   The strongest out of the bunch has been Palladium, which went on to put in a series of new highs in the face of a rising dollar.  These extreme divergences indicate that the precious metal’s market is sensing another crisis in the not too distant future; our guess would be another currency crisis.

Obviously, the best hedge against a currency crisis and an inflationary environment is physical bullion. ETF players can purchase SLV, GLD, CUT, GDX, PALL, etc.

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Other articles of Interest:

The Ulterior Motive behind the Greek bailout (May 3)

Roast the PIIGS, and End the Euro Crisis (April 30)

SWC; a compelling Palladium Investment (April 29)

Gold, Silver, Palladium: True Bull Market (April 28)

Bonds nowhere to go but Down (April 21)

Dollar, Gold and Silver (April 20)

Anatomy of a Housing Crisis (April 16)

The Engineering of A financial Crisis

The Art of becoming a better Investor

The Fannie May and Freddie Mac debacle (March 29)

 

Random musings

Credit-card companies are easing up

Have you noticed how many new offers are coming in the post with extended zero percent balance offers? Some of these offers are good for almost 2 years.  So you can pay a small processing fee and have access to this money interest free for almost 2 years.  This is an indication of how much money the banks have and how they are just dying to lend this money out.  Right now, they are reserving these offers for those with only very good credit scores, but they will soon ease up significantly in the months and years to come.

Next they will start to ease up on mortgages. Remember a good boom cycle, needs easy money; a boom cycle must always be followed by a bust cycle.  This bust/crash cycle has run its course. The banks robbed everyone  blindly, and now they have even more money than before, so the next leg of the game begins. It’s time to create another boom/hot money cycle; the driver for this is the more than 1.8 trillion in excess reserves all these banks are sitting on.

 Religious intolerance and the coming civil war

Religious intolerance continues to rise.  Many European countries are now taking serious actions against the Muslims, banning the building of mosques in certain parts of the country or making the process extremely hard.   We are not concerned whether this is good or bad as we are observers and try to our best not to interact.  What this simply means that we have a new trend in place.  The first move was many of these immigrants, most of which came from poor countries where they had very little, so their mindset was to take as much as they could when they landed in countries that had excellent social programs in place to take care of their own people; it also just so happened that the majority of these new immigrants to Europe also happened to be muslin. Remember this ignorance and stupidity is color and religion blind.

Now the local natives are retaliating, and they are doing so in a very hard manner.  All of this could have been handled smoothly if some very simple and benign rules were added right from the start, but it’s too late to cry over spilt milk now.  The point is that the pendulum has swung; a new trend is place, and this one promises to be even bitterer. The locals (natives) from these European nations are now ready to fight and when a group of individuals who have been quiet for so long suddenly change their position, you can bet that things will and can only get uglier.  Tolerance levels are dropping rapidly in Europe and so the net result going forward is extreme polarization; the net result is that the number of violent encounters between different religious groups is going to spike significantly.

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A harbinger of bad times