(Charts courtesy Stockcharts.com unless
indicated).
This chart courtesy Mises.org shows the true
U.S. money supply. The trend is exponential and this trend may well put
pressure on gold and silver to rise in response.
According to Erste
Group Research the combined Base Money Supply of the four most important
Central Banks has been growing at 15.2% per year since 2000!
“This Currency, as we manage it,
is a wonderful machine. It performs its Office when we issue it; it pays and
clothes Troops, and provides Victuals and Ammunition; and when we are obliged
to issue a quantity excessive, it pays itself off by Depreciation.” .....Benjamin FRANKLIN
Featured is the weekly gold chart with a
five year perspective. Price is breaking out in similar fashion to the breakout
in 2009 - after the 2008 pullback. The supporting indicators are bouncing up
from support levels (green lines).
.....On Friday the bullion dealer
Standard Bank noted: “There currently is a large short position in Comex gold. Since 2004 (when physically backed gold ETFs
were introduced to the market), there have been just five times that the size
of the Comex gold non-commercial short positions
stood out.”
Three of these short spikes were
followed by subsequent gains of 25%, 23% and 36%. The exception was the crash
year of 2008. In that case gold did nothing for three months — and then
rose 19%.
Featured is the weekly gold chart with
the Accumulation/Distribution line at the top. Notice how a rise in the A/D
line is almost always matched by a rise in the gold price. The latest jump in
the A/D line is not (yet) matched by gold. The expectation is that unless the
A/D line should suddenly decline, gold is likely to advance.
According to the Financial Times of July
19th, the Shanghai Gold Exchange on August 31st will open to investors from
many parts of the world. At the present time this exchange is open only to a
few selected parties. By opening up the exchange, the gold exchanges of
London and New York will face some serious competition.
“The greatest shock of this decade
is that more people are about to lose more money than at any time before in
our history. And the second biggest shock will be the incredible amount of
money just a relatively small group of people will make at exactly the same
time.” …Larry BATES (Author of ‘The New Economic Disorder’)
This chart courtesy Cotpricecharts.com
shows the number of ‘net short positions’ among commercial gold
traders declined from 159,000 to 136,000 this past week. It also shows the
hedge funds and large speculators (grey bars) are not yet heavily loaded up
with gold contracts. This chart is ‘gold-bullish’.
“Money is too important to be left
to central bankers. You essentially have a group of unelected people who have
enormous power to affect the economy. I propose replacing the Fed with a
laptop computer to calculate the monetary base, and set it to expand it by a
predictable 2% per year through war, peace, feast or famine.” .....Milton FRIEDMAN.
Featured is the daily bar chart for TIP,
the bond fund that is indexed for inflation. The price of gold is at the top.
Usually, whenever TIP produces a rally it coincides with a rising gold price
(five out of five during the past two years). Tip has been rising since April
and gold has not (yet) followed. That may change, especially if TIP should
continue to bounce off the rising 50DMA.
“Gold is an expression of the
world's justifiable distrust of the way our central bankers conduct their
affairs.” …..Jim GRANT.
Featured is the daily silver chart.
Buying interest in physical silver at 26.00 is providing a floor that has held
since October. The CCI at bottom of chart has turned positive (green uptrend
line). The silver price is breaking out at the green arrow. The RSI at top of
chart displays a bullish inverted ‘head and shoulders’ pattern
with the neckline at the blue arrow. This neckline appears ready to give way
to the upside. The fact that silver was able to outperform gold on Monday
July 30th is a bullish omen.
According to the USGS the total amount
of silver mined in history is about 46 billion ounces. This compares to about
5 billion ounces of gold. This ‘mining ratio’ is 9 to 1. The
current ‘trading ratio’ is 57 to 1. The ratio is clearly out of
whack. In view of the fact that most of the silver consumed by industry is
‘used up’, the expectation is that the ratio could narrow
dramatically in the years ahead. Silver usage in the solar industry is
expected to rise to 100 million ounces by 2015, compared to 50 million ounces
in 2010 (source: Silver Institute).
“In a bull market, every time
price comes near or below the 200 day moving average, it represents a buying
opportunity.” ….Joseph GRANVILLE.
Featured is PSLV the Sprott
silver trust. The pattern is a bullish falling wedge. A breakout at the blue
arrow sets up a target at the green arrow. A breakout there turns the trend
bullish. At the top of the chart is the RSI. Just as in the silver chart
above, an inverted ‘head and shoulders’ pattern is visible. This
is a bullish pattern and a rise above the black arrow could turn into a
strong move for PSLV. ‘Up volume’ is building. The premium over
bullion is still low at just 3.03%.
“Money is the most important
subject intellectual people can investigate and reflect upon. It is so
important that our present civilization may collapse, unless it is widely
understood, and its defects remedied very soon. ….. Robert H. HEMPHILL,
(Former credit manager, Federal Reserve Bank of Atlanta, GA).
This chart courtesy
Sprottphysicalbullion.com shows the premium of PSLV over bullion. By
comparing this chart to the PSLV chart above, we find that when the premium
rises to 25% or higher, it is time to take profits. When the premium drops
below 5% (as now), it is usually a good time to buy silver.
According to the U.S. Geological
Society: “Silver will be the first element in the periodic table that
will become extinct”.
Gabirol, Ibn: “There are four kinds of men in this world:
1. The man who
knows, and knows that he knows; he is wise, so consult him.
2. The man who
knows, but does not know that he knows; help him to not forget what he knows.
3. The man who
knows not, and knows that he knows not; teach him.
4. Finally there
is the man who knows not, but pretends that he knows; he is a fool, therefore
avoid him.”
Happy trading!
Peter Degraaf
Pdegaaf.com
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