by Jordan Roy-Byrne, CMT
The Daily Gold
gold and silver stocks have rebounded nicely but have consolidated in
recent weeks. Where is this going and how do we know? Well, a few weeks
ago we publicly said that a major bottom is in. Thus, we believe the
trend will go higher. Beyond belief, we need real confirmation that the
sector will continue higher. Enter moving average analysis. By using a
few simple moving averages we can better understand the current context
and get confirmation that the sector will continue to move higher. GDX,
GDXJ and SIL could soon test moving averages which have been resistance
for the past 13 months.
First lets start with GDX. The 150-day moving average provided
resistance at the start of 2013 and then the market declined and
remained below its 50-day moving average for months. The 150-day moving
average provided resistance again after the June bottom. Now that the
market has reclaimed the 50-day moving average which has turned up, it
is in position to break above the 150-day moving average which is flat
and no longer declining. Keep an eye on the RSI which should push above
70 to confirm a breakout. Upon breakout, the medium term target becomes
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Monday, February 10, 2014
The Federal Reserve's dialing back of its massive bond buying program, emerging market weakness and several economic indicators turning downward are some of the culprits of the heavy selling in the first month of the year.
While many supposed stock market experts and perma-bears are claiming that the selling is signaling much more downside to come, I wholeheartedly disagree. This selling is nothing more than simple profit-taking after the incredible bull market of 2013.
One very practical reason is that investors wanted to delay paying taxes on their capital gains. This caused many to wait until 2014 to take profits. (more)
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at 12:04 AM
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Argentina is a country re-entering crisis territory it knows too well. The country has defaulted on its sovereign debt three times in the past 32 years and looks poised to do so again soon.
Its currency, the peso, devalued by more than 20% in January alone. Inflation is currently running at 25%. Argentina's budget deficit is exploding, and, based on credit default swap rates, the market is placing an 85% chance of a sovereign default within the next five years.
Want to know what it's like living through a currency collapse? Argentina is providing us with a real-time window.
So, we've invited Fernando "FerFAL" Aguirre back onto the program to provide commentary on the events on the ground there. What is life like right now for the average Argentinian?
Aguirre began blogging during the hyperinflationary destruction of Argentina’s economy in 2001 and has since dedicated his professional career to educating the public about his experiences and observations of its lingering aftermath. He is the author of Surviving the Economic Collapse and sees many parallels between the path that led to Argentina's decline and the similar one most countries in the West, including the U.S., are currently on. Our 2011 interview with him "A Case Study in How An Economy Collapses" remains one of Peak Prosperity's most well-regarded.
Chris Martenson: Okay. Bring us up to date. What is happening in Argentina right now with respect to its currency, the peso?Please share this article
Fernando Aguirre: Well, actually pretty recently, January 22, the peso lost 15% of its value. It has devalued quite a bit. It ended up losing 20% of its value that week, and it has been pretty crazy since then. Inflation has been rampant in some sectors, going up to 100% in food, grocery stores 20%, 30% in some cases. So it has been pretty complicated. Lots of stores don't want to be selling stuff until they get updated prices. Suppliers holding on, waiting to see how things go, which is something that we are familiar with because that happened back in 2001 when everything went down as we know it did.
Chris Martenson: So 100%, 20% inflation; are those yearly numbers?
Fernando Aguirre: Those are our numbers in a matter of days. In just one day, for example, cement in Balcarce, one of the towns in Southern Argentina, went up 100% overnight, doubling in price. Grocery stores in Córdoba, even in Buenos Aires, people are talking about increase of prices of 20, 30% just these days. I actually have family in Argentina that are telling me that they go to a hardware store and they aren't even able to buy stuff from there because stores want to hold on and see how prices unfold in the following days.
Chris Martenson: Right. So this is one of those great mysteries of inflation. It is obviously 'flying money', so everyone is trying to get rid of their money. You would think that would actually increase commerce. But if you are on the other end of that transaction, if you happen to be the business owner, you have every incentive to withhold items for as long as possible. So one of the great ironies, I guess, is that even though money is flying around like crazy, goods start to disappear from the shelves. Is that what you are seeing?
Fernando Aguirre: Absolutely. Shelves halfway empty. The government is always trying to muscle its way through these kind of problems, just trying to force companies to stock back products and such, but they just keep holding on. For example, gas has gone up 12% these last few days. And there is really nothing they can do about it. If they don't increase prices, companies just are not willing to sell. It is a pretty tricky situation to be in.
Chris Martenson: Are there any sort of price controls going on right now? Has anything been mandated?
Fernando Aguirre: As you know, price controls don't really work. I mean, they tried this before in Argentina. Actually, last year one of the big news stories was that the government was freezing prices on food and certain appliances. It didn't work. Just a few days later those supposedly "frozen" prices were going up. As soon as they officially released them, they would just double in price.
Chris Martenson: Let me ask you this, then: How many people in Argentina actually still have money in Argentine banks in dollars? One of the features in 2001 was that people had money in dollars, in the banks. There was a banking holiday; a couple of weeks later, banks open up; Surprise, you have the same number in your account, only it's pesos, not dollars. It was an effective theft, if I could use that term. Is anybody keeping money in the banks at this point, or how is that working?
Fernando Aguirre: Well, first of all, I would like to clarify for people listening: Those banks that did that are the same banks that are found all over the world. They are not like strange South American, Argentinean banks – they are the same banks. If they are willing to steal from people in one place, don't be surprised if they are willing to do it in other places as well.
We understand that Doomsday predictions are aplenty these days, but given what's going on around the world right now it may be time to revisit the eerily prescient forecast of an elite insider.
Grady Means is a former advisor to Vice President Nelson Rockefeller, a former economist at the U.S. Department of Health, Education and Welfare, and has managed multi-billion dollar firms over his career. Back in October of 2012 Means penned a commentary and analysis for the Washington Times in which he noted that "America's fall will take global economies with it."
But he didn't stop there. Means gave us a target date. There is a very large probability that the real end of the world will occur around March 4, 2014. The doomsday clock will ring then because the U.S. economy may fully crash around that date, which will, in turn, bring down all world economies and all hope of any recovery for the foreseeable future — certainly over the course of most of our lifetimes. Interest rates will skyrocket, businesses will fail, unemployment will go to record levels, material and food shortages will be rampant, and there could be major social unrest. Any wishful thinking that America is in a "recovery" and that "things are getting better" is an illusion. The central issue is confidence in America, and the world is losing confidence quickly. At a certain point, soon, the United States will reach a level of deficit spending and debt at which the countries of the world will lose faith in America and begin to withdraw their investments. Many leading economists and bankers think another trillion dollars or so may do it. A run on the bank will start suddenly, build quickly and snowball. At that point, we will need to finance our own deficit, and we will not be able to do so. We will raise bond rates to re-attract foreign investment, interest rates will go up, and businesses will fail. Unemployment will skyrocket.
The rest of the world will fully crash along with us.
But that's not all. Even the largest retailer in the world is having problems and seeing negative growth. Walmart announced that last November's cuts to food stamp recipients hurt their fourth quarter sales, adding further credence to the notion that without direct government bailouts the stability of America's companies comes into question.
Those investing in financial markets have certainly taken note. On top of the 326 point decline in the Dow Jones today, the market is down a combined 1,000 points from its peak just a month ago. And, with three well known bankers committing suicide in the last week, people are starting to pay attention.
We could well be facing the beginnings of an all-out financial Armageddon that will make 2008 look like a brief warm up.
This collapse, as noted by the US Treasury Department and Grady Means, is going to have generational effects -- a depressive economic environment for our entire lifetimes.
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|MONDAY, FEB. 10|
|TUESDAY, feb. 11|
|7:30 am||NFIB small business index||Jan.||--||93.9|
|10 am||Yellen testimony at House committee|
|10 am||Wholesale inventories||Dec.||--||0.5%|
|10 am||Job openings||Dec.||--||4.0 mln|
|WEDNESDAY, FEB. 12|
|2 pm||Federal budget||Jan.||--||-$3 bln|
|THURSDAY, feb. 13|
|8:30 am||Weekly jobless claims||2/8||330,000||331,000|
|8:30 am||Retail sales||Jan.||-0.1%||0.2%|
|8:30 am||Retail sales ex-autos||Jan.||0.0%||0.7%|
|10 am||Business inventories||Dec.||0.5%||0.4%|
|10:30 am||Yellen testimony at Senate committee|
|FRIDAY, FEB. 14|
|8:30 am||Import price index||Jan.||0.1%||0.0%|
|9:15 am||Industrial production||Jan.||0.1%||0.3%|
|9:15 am||Capacity utilization||Jan.||79.3%||79.2%|
|9:55 am||UMich consumer sentiment index||Feb.||78.5||81.2|
at 12:02 AM