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The week was a
wild one with lots of choppy action in the indices as was to be expected as
bases build here nicely. We had
options expiration this past Friday as well so that usually tends to throw a wrench
into things.
In
the S&P index it looks like we may have had a breakout Friday and we
could be ready for a sweet run of swing trading profits into the end of the
year. I’ve been patiently
waiting to let great patterns and bases form and they have.
A
few have broken out already and many many more are
on the verge. Let the good times
roll!!
As
for the metals, it’s pretty mixed right now but the good news is that a move lower out of a bear flag for gold failed so far,
which is great.
Let’s
just take a look at the charts so we can see what I’m talking about.
Metals review
Gold
slid 2.24% this past week and is looking a tad nasty at the moment but
Friday’s reversal did alleviate my fears that the bear flag is indeed
playing out.
The
break below the lower end of the channel had me telling subscribers that
we’re heading lower, only to have it reverse Friday. It didn’t affect us since
we’re not trading it, but it did delay some purchasing of mining
companies as we could soon see those get even cheaper if indeed gold does
fall.
Gold
is notorious for false signals and it looks like we got one Thursday but we
shall see as a few more trading days should go by before we can make any
solid claims.
As
for now, it could go either way but it looks ok as the breakdown failed.
The
GLD ETF saw light volume for the week but the heaviest volume on the down
days Thursday and Tuesday. The
interesting thing is that the chart has printed a bottoming bar as the bear
flag was broken Thursday so we could indeed have just seen a fake lower to
suck in a few last bears before we head higher. Let’s hope!
Silver
is still basing out here and dropped 2.52% this past week. I really don’t have anything
else to say about it. We can
certainly go either way from here as we trade within the tightening range
between $33 and $31.
The
SLV ETF saw weak volume all week with a slight uptick on Thursdays move
lower. The basing action in the
chart and low volume is perfect here as we build this base.
Last
week I did expect silver to have moved one way or another by now as the
triangle was close to completing but that hasn't been the case so far. I do expect a resolution one way or
another though over the next two weeks sometime.
Platinum
also fell 2.59% in the past week and is tracing out a big bear flag here
which doesn't bode well. The fact
that the price bounced off the 21 day average does not look good.
To
me the chart is telling me we will soon see platinum lower.
The
PPLT ETF saw pretty good volume over all and most
of it coming on the downside. It
just doesn’t look good for platinum here, but I’ve been wrong
before!
Palladium
slid 1.44% this past week and looks better than platinum but still not great
here. The things that has me
slightly keener on palladium than platinum is the fact that it is really
trying hard here to get above the 21 day average and actually did on an
intraday basis once.
Also
volume is decent here. It just
seems the price action is better as prices rebound nicely after a fall.
We shall see but that's my take. I think we will see palladium move up
to as least test the upper end of this channel before it drops below the
channel.
The
PALL ETF didn’t see any extraordinary volume except for Tuesday’s
slight up day which was testing the 21 day moving average. The price really tried to get above
that level and had the volume to do it but when all conditions are right and
a move still fails that says the price will go the other way and that is what
it did the rest of the week.
Fundamental Review
Spain’s
bond rating took another hit this past week as it was downgraded to A1 from Aa2. Really, is anyone surprised? Looking at bond rates it was known
already as they rose well ahead of this announcement.
24
Italian banks and financial institutions were also downgraded this past week.
There
was a lot of talk about the potential of position limits being imposed
at some date in the future this past week so I won’t go into it to much as I’m sure you’ve likely had your
fill.
Honestly,
I don’t think it would really matter IF, those who got into trouble
were not bailed out, rather they were left to fail and face the consequences
AND the CME did not aid the massive short positions by raising margins.
Now,
raising margins isn’t such a bad thing necessarily but as we’ve
seen recently raising them repeatedly as prices are already in free fall is
totally unacceptable and manipulation pure and simple. The first margin raising
in silver totally knocked the price down as it was meant to do and that’s
ok, but I believe they raised margins five times in seven days which has
never happened in any market before.
That
type of action I do have a problem with.
Even
if these position limits are passed there will always be ways around them by
opening a new account or business.
There are always loopholes.
The new regulations would still only limit traders to 25% of
deliverable supply in nearest delivery month which is a huge amount anyhow.
Enough
on that topic from me. As most of
you know I just want things simpler and failures allowed to
fail while winners are allowed to win.
Last
week I was so quick in completing this report that I only caught three failed
banks while one more squeezed in after I’d sent it out to make it four
bank failures last week. This
week we also add four more failed banks to this years
list of biggest losers.
There
are several companies now paying dividends according to the price of gold. One we own is dong it now
and has released it’s
revised table.
 
I
love companies who are progressive and innovative and this new dividend
structure is just that. It pays
dividends according to the ounces produced as well as taking the price of
gold into consideration.
The
only problem is that they will soon have to expand this table as gold prices
are going to rise substantially.
When gold hits 5k the company should potentially be paying over 1k per
ounce produced as dividends.
This
will incentivise large and retail investor alike to buy great quality company
like this with incredible growth potential.
Ghana
is contemplating raising taxes on gold miners as prices rise. They are adamant that this will
benefit the miners as well and I suppose it could reduce red tape if they are
co-operative but if they are breaking any contracts then I’m not keen
on it.
It’s
so important when choosing mining companies, to consider the country they
operate in as rules can be changed overnight. Even in so-called mining friendly
jurisdictions rules can and have been changed as profits rise.
Mining
is a tough business all around and investing in it is even harder.
One
company operating in Ghana saw corporate tax rates rise
30% quarter over quarter in part due to the increase in gold
prices. In total they paid $71
million to the government in the third quarter alone. They are also paying royalties which
at this point are still voluntary and they are the only company doing this.
They’re
definitely building goodwill.
The
trend of central banks buying domestically produced gold continues to
accelerate. This time Bolivia is now set to buy gold directly from the
thousands of small local miners in a bid to increase their gold
reserves.
Are
you increasing your gold reserves?
Chinese
gold output rose 3.87% this year through
August as they continue to increase their lead as the top gold producing
country in the world. Not much of
this will see the light of day as the central bank snaps it up before it can
get to market.
Here
is a poll taken which indicates that silver is as much a safe haven as is gold,
at least in the mids of precious metals
investors. I couldn’t agree
more and could even make the case that silver is an even better investment.
You
can now watch the great silver debate between Bill Murphy and Jeff
Christian here. Good
times!
This article reporting the finding of a new report
from the Government Accountability Office is pretty hilarious. They’ve discovered that big
banks have a very cozy relationship with
government. I just have to wonder
how much they spent on discovering this pretty basic fact. No wonder government is broke!
I
do have something pretty neat to share with you that could revolutionize many
facets of our lives someday in the future. Quantum levitation. You have to check this short video out!
And
for fun here is the world’s best drummer! He’s amazing and hilarious.
Until
next week take care and thank you for reading. I hope you enjoy this beautiful fall
weekend.
Warren Bevan
www.preciousmetalstockreview.com
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