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The general US
markets had a tough week as corrections are sitting in hard now, but they may
need to consolidate recent moves lower before they head any lower further.
As
we know, the US dollar is inversely correlated to US equities as well as gold
and silver. Once it begins to fall again, we should see a rally in the
markets but until then we have to expect more weakness.
It’s
times like these that trading can chop you up hard so being very quick and
not greedy is tantamount. Many successful traders also just opt to sit these
periods out and wait for the next great setup which could take anywhere from
6 to 8 weeks or even longer.
Let’s
move into the precious metals charts whom are all
looking to be on the ropes now this week.
Metals review
Gold
slid 1.63% this past week and looks like it is set for a test of lower prices
in the near future now.
As
it broke its uptrend line more volume came in which means sellers emerged.
We’re now teetering on the 21 day moving average and looking to break
below it with more force in the week ahead.
I
know there are rumbling of commercial failures and whatnot but that is always
being talked about it seems and it’s yet to happen. The fact is the
chart is saying lower prices so trading on the long side would be detrimental
to your trading account most likely for the time being.
That
doesn’t at all mean that I’m giving up on gold,
I’ve not sold a single ounce of physical and can’t imagine me
doing so for years to come.
I’ve
said earlier in the year that we may not advance much this year in terms of
the nominal price in gold and that’s fine by me. We’ve risen a lot so far in this secular bull market and
we’ve got a long ways to go.
Just
wait until the blow-off top, and yes, it is coming in time.
We’ve
just got to be patient and wait it out. Gold is our insurance and will take
us handsomely into the new era of currencies, whatever that may be.
Silver
fell 3.12% this past week and broke it’s wedge
pattern. Now it’s on the verge of moving lower harder, most likely to
the $32 support area on the chart which is also the area where the 50 day
moving average resides.
I
tried to trade silver on the long side this week but was stopped out with a
loss. I don’t know why I keep trying to trade the precious metals when
there are much better trading vehicles out there.
As
for stores of wealth though, gold and silver are hard to beat.
Platinum
fell 3.33% this past week and broke it’s
uptrend line. Now it’s breaking down below its 21 day moving average
with volume coming in.
There
is a real possibility we get to near $1,550 and almost a guarantee we hit the
100 day moving average at $1,572.
Palladium
fell 4.38% this past week and is now breaking its head and shoulders pattern.
The measured move puts the low near the $570 area which has also acted as
support from early July to mid-August.
Palladium
has got an uptrend line as well as its 100 day moving average around the $620
level so that could see some support emerge for a short time as well.
All
in all, the four precious metals I cover here are not looking good for the
time being.
I’ve
advocated buying weakness for the past decade when it comes to physical gold
and silver and that opportunity looks to soon present itself to us once again.
Fundamental Review
The
US budget deficit was higher than $1 trillion in 2012
marking this as the 4th year in a row with such an honour!
For
those of you who’ve yet to try and wrap your minds around what a
trillion is exactly, here is a short video that helps.
Maybe
if the US actually HAD a budget, they could keep it in check!
A
very interesting court case has become public, but underreported, whereby US judges are looking to see their payment contracts
upheld.
Basically,
they have a contract of automatic pay increases which in turn keep them from
feeling any effects of an economic downturn or inflationary episode.
Congress
tried to stymie this contract but the judges took them to court and won.
Now
what’s most interesting about this case is that these
“dollars” which they are paid in, or a measure of what a dollar
is truly, was marked as 371 1/4 grains of silver or 1 15th as many
grains of gold.
When
the contract was struck they deemed gold and silver to be the only measure
worthy of holding the contract to.
Basically
US judges just won a court case which says 100% definitively that gold and
silver ARE money, and more than that, they are what all currencies must be
measured against.
Now
this is nothing new to myself or anyone who’s read any of my work but
to the majority who have been brainwashed by the media and school systems
alike this may come as a shock.
Actually,
it most likely won’t as this story will not be widely talked about or
publicized.
Now
if only the general public could enact such a contract for measuring minimum
wage. That would be one hornets nest of a problem!
While
our paper dollars are wasting away, so is the thought that markets are free
and fair. It’s been a long time since markets have been true and fair
but lately it’s becoming more and more talked about in the open.
Computer
trading has taken over and it’s making it harder and harder to trade
profitably and even when you do get good entries, there are always computers
nickel and diming us on every entry and exit of a position.
A
couple weeks ago a single computer program made up 4% of the total market.
While that isn’t such a huge problem, the things is the program used
phantom orders whereby order were entered and then cancelled before they
could be executed which had the double effect of slowing down the system and
probing for bids which would have put a false price on the markets they were
probing.
It’s
all quite confusing and I can’t pretend to understand anything but the
basics of algorithmic trading. What I do know is that more and more investors
are fed up with being gamed and are simply not participating in the markets
anymore.
This
is a big problem that has to be dealt with. I think the best way is to let
these companies fail when the computers they rely so heavily on mess up, and
they inevitably will.
It’s
bad enough having computer programs dictate our markets to a large degree,
but when they do mess up, let’s just let them fail.
I
don’t have much else to get into this week so with that, I wish you a
great trading week ahead. Be careful and weary in this type of market.
If
you need help or would like to see how I’m dealing with it please join our
growing clientele.
Warren
Bevan
www.preciousmetalstockreview.com
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