Wednesday, June 20, 2012

Prepare for the Pivot Point in the Gold Exploration Cycle

Historically, major gold exploration has occurred when the Dow was down and out. In this exclusive interview with The Gold Report, geologist and Exploration Insights writer Quinton Hennigh talks about the coming gold rush and what that could mean for existing companies.

by Streetwise Reports Editors, Gold Seek:

The Gold Report: While the NYSE Arca Gold BUGS Index (HUI) is up a bit from its May low, it is still lagging the price of gold and not living up to expectations based on the role it has traditionally played as a safe haven for investors. Are we close to a turning point in that dynamic?

Quinton Hennigh: Many investors and speculators are deservedly frustrated and dejected by the recent performance of gold and, more specifically, the gold mining sector. For many of us in this business these ups and downs are the norm; however, I see the current down as a critical one. Something is going to happen. It could be a month, six months, a year or two years from now. We can’t know. We may continue to see more pain in junior stocks until then, but a change is coming, and investors should take heed.

TGR: Where are we in the cycle now?

QH: Below is a chart of the Dow:gold ratio over the past 112 years. The peaks generally mark points when the Dow was running hot and gold was in the dumper. Conversely, troughs mark times when gold was riding high and the Dow was down. I have added a few interpretations to the chart. First, I projected this chart forward 25 years with a red line that I believe reflects a pattern that we are likely to experience, given a look back at history. Note that the red line bottoms out as the chart did in 1932 and 1980 and then slowly rises over the subsequent 25 years.

Read More @

David Wind – Is It Safe Yet To Purchase A Home? … It Depends

from FinancialSurvivalNet

One of the most frequent questions you ask the Financial Survival Network is whether or not it’s time to purchase a home. Which, interestingly, is really a very complicated question. It depends upon your personal circumstances, your ability to service the debt and taxes, as well as your state’s tax rate, among other factors. One thing that is not in doubt, if you’re paying over 4 percent on your mortgage, it’s probably a great time to refinance and reinvest the savings and or cash out into precious metals. But these are questions for you, your financial advisor and your accountant. But you should be thinking about it now.

Click Here to Listen to the Audio
(Direct Download HERE)


Throughout the Today's Big Stock newsletters, probably the most common pattern discussed is the Rectangle. Traders like these patterns because trading them is very simple, clear and straightforward. The latest Rectangle pattern in the long list I have highlighted would be that of CSX Corporation

CSX Corporation, together with its subsidiaries, provides rail-based transportation services. It offers traditional rail service and the transport of intermodal containers and trailers. The company transports crushed stone, sand and gravel, metal, phosphate, fertilizer, food, consumer, agricultural, automotive, paper, and chemical products; and utility, industrial, and export coal to electricity-generating power plants, steel manufacturers, industrial plants, and deep-water port facilities. It also provides intermodal transportation services through a network of approximately 50 terminals transporting manufactured consumer goods in containers in the eastern United States, as well as performs drayage services and trucking dispatch operations. In addition, the company operates various distribution centers and storage locations. It operates approximately 21,000-route mile rail network, which serves various population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec, as well as operates approximately 4,000 locomotives.

To review CSX's stock, please take a look at the 1-year chart of CSX (CSX Corporation) below with my added notations:

CSX has been trading within a broad, sideways Rectangle for most of the last year. Rectangle patterns form when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. What's great about a Rectangle pattern is that it not only provides you with trading points of support & resistance, but it also gives clearly defined breakout & breakdown points. For CSX, the Rectangle pattern formed a $23 resistance (navy) and a $60 support (red).

Chart patterns can also provide price targets. Simply take the height of the overall pattern and add or subtract that amount to or from the breakout or breakdown point to get the minimum price objective. For example, since the Rectangle pattern for CSX is $3 high ($23 - $20), CSX should climb to a minimum of $26 ($23 + $3) if it breaks above $23 or fall to $17 ($20 - $3) if the stock breaks below the $20 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

The Tale of the Tape: CSX has formed a very common chart pattern know as a Rectangle. The possible long positions on CSX would be either on a pullback to $20, or on a breakout above $23. The short opportunities would be at either $23 or on a breakdown below $20.


The ever-articulate John Mauldin is reiterating his bearish take on the global economy in a new interview with King World News.

“What we’re seeing is the real end game” and “it is coming to an end,” he said.

According to Mauldin, Europe isn't solving its problems, but rather making things worse. Greece's "fundamental problem is its trade imbalance." And "Spain has lost access to the bond market. They can’t fund themselves."

"What we’re seeing is the real end game," says Mauldin. "We’re coming to the end of government’s ability to borrow money to fund current spending that’s beyond the growth of their economy.

But Mauldin doesn't see this as all bad, because in the end, governments will begin to tighten.

I actually find that massively bullish because that government funding misallocates capital. So governments are going to have to live within their means. Not just in European countries, not just in Britain, not just in Japan which has its own problems that will be coming to us next year, not just in France which will be the headline in 2 years, but also in the US.

It’s going to end in the next 2 or 3 years, Europe first, then Japan, then the US. Hopefully we (the US) don’t end by becoming Spain and hitting the wall and losing access to the market, without the central bank massively funding ourselves and watching interest rates rise.

That’s where Western governments are. They’ve run out of the ability to borrow money to finance their current consumption. This is a good thing that it’s coming to an end. I don’t see this as negative in the longer-term. It’s still going to be a bumpy ride for the markets. It’s certainly going to be (an interesting) ride for the business as usual crowd.”


A Rare Occurrence in the Silver Market

In New York huge lots of commodities get traded every day on the COMEX (Commodity Exchange) between market makers, speculators, producers and consumers.

It can be very confusing – because we can’t know why banker X, trader Y, consumer Z or producer A buys, sells or holds at any given time. There’s lots of noise – and most investors simply will never buy or sell a commodity contract.

It’s somewhat complicated, but one easy way to get a reading on what’s really going on for a specific commodity is to see how many contracts are long, and how many are short.

The chart below shows us that right now, on a net basis, there are more contracts short than at any time during the last two years.

How is this information useful? Well, think of the commodity market (or any market) as a boat. When everyone stands on one side of the boat, it’s generally a good idea to stand on the other side.

Put another way: when would you rather buy – when everyone else is bullish and buying, or when everyone else is bearish and selling? (more)

Jay Taylor: Turning Hard Times Into Good Times

Part 2
6/19/2012: The Perils of Fiat Money & the Inevitable Return to Gold

Is McDonald's Stock Now a Buy?

What a difference five months can make. Back in January, McDonald's (NYSE: MCD [1]) was trading at $102, thanks to 2011's strong 34% rally, and more and more investors were excited to step into what looked like a well-established ride up.

Looks can be deceiving...

Not only did the rally not continue, but as of two weeks ago, shares [2] of the world's biggest restaurant chain have actually lost 11% of their January peak, with no apparent floor in sight.

What happened to McDonald's to merit such a reversal of fortune for shareholders? That's just it -- nothing really happened to the company. The stock simply took on a life of its own.

For investors who understand that a stock's price can sometimes disconnect from the company's actual performance, these wild swings can represent outstanding entry and exit opportunities.

In fact, that window of opportunity is open right now. (more)

Citi’s Fitzpatrick – Despite Rally, Crisis To Get Even Worse

Today top Citibank analyst, Tom Fitzpatrick, warned that, despite the rally, if Europe does not take decisive action we will see this crisis accelerate. Fitzpatrick, a 28 year veteran and top analyst at Citibank, which has $1.3 trillion in assets, also said, “the concern levels are still there, and if anything they are becoming elevated.” Fitzpatrick also provided some excellent charts which illustrate the ongoing train wreck that is Europe. Here is what he had to say about the deteriorating situation in Europe: “Overall we continue to push higher, both in terms of Spanish yields and in terms of the interest differential we are seeing between Spain and Germany, which has to be an increasing concern.”

Fitzpatrick continues @

A Rare Buy Signal on U.S. Stocks

There are lots of reasons to be bearish right now. But one of my favorite trading indicators says it's time to buy.

The New York Stock Exchange Summation Index (NYSI) is an intermediate-term measure of overbought and oversold conditions. Stocks are "officially" overbought when the NYSI rallies above 1,000. And they're oversold when it drops below zero. The indicator triggers a buy signal when the MACD momentum indicator (the bottom box) extended below -200 and then turns higher.

We've only had four buy signals over the past three years. NYSI pegged the exact bottom of the market twice. In the other two cases, stocks drifted slightly lower for a couple more weeks before starting to rally. Six months after each of these buy signals, stocks were between 18% and 50% higher.

As you can see in the chart below, we're on the brink of another buy signal today. There's no telling for sure what we'll get this time around. But based on this NYSI buy signal, it's a good time to buy stocks on weakness.

You can follow this trade with my on my Direct Line blog, where I provide real-time market commentary to subscribers of the S&A Short Report newsletter. To learn more about a subscription to the S&A Short Report and to get access to the Direct Line, click here.