Saturday, August 9, 2014

Silver Mining Documentary

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5 Things To Ponder: Buy The Dip Or Market Correction

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August 8th, 2014 Lance Roberts
Obviously, this weekend's reading list is focused on what to do now. Is this just another "dip" that investors should buy into? OR, is this the beginning of the long overdue intermediate term correction or a "mean reverting" process?

I addressed the issue of potential support levels for the current correction in the post earlier this week. The problem is always identifying the "turn" in the markets from a bullish uptrend in advance.
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The Farm Belt Is In For A World Of Hurt

In his groundbreaking 2006 book, “The Omnivore’s Dilemma,” Michael Pollan devoted several chapters to exploring the vast role that corn has come to play in the agricultural economy and in our diets.
Virtually every processed food contains corn or a corn derivative such as corn syrup. Farmers, taking advantage of $0.50-a-bushel subsidies, have made it America’s largest cash crop. According to the EPA, farmers sold roughly $64 billion worth of corn in 2011 (the most recent data available). That’s roughly twice as much as all of the hay, wheat, cotton, sorghum and rice that is sold -- combined.
So the utter collapse in corn prices, thanks to overplanting and favorable weather, is leading to a sharp drop in farm incomes. (more)

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UltraLong Bond Madness – Issuance of Debt with 30 Year+ Maturity Soars 22% in 2014

by Michael Krieger
Liberty Blitzkrieg

Yesterday, the Wall Street Journal published an article highlighting the surge in what it calls “ultralong” bonds, defined as having a maturity of more than 30 years. The findings are simply stunning. In what may seem counterintuitive, bond yields at hundred year plus lows in many countries has led major investment firms to rush into ever riskier and longer duration fixed income securities just to earn some income. This has opened the floodgates to governments and corporations looking to lock in low yields on debt they won’t have to pay back for a generation.
Just to name a few, this year we have already seen a 100-year bond sale by Mexico, two separate 50-year bond issuances by Canada, and wait for this one, Spain of all countries is set to try to sell a 50-year bond!
We learn from the Wall Street Journal that:
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The Perfect Income Strategy for a Rising Interest Rate Environment

Last week, we saw a massive broader market sell-off that, in part, appeared to be a reaction to stronger economic activity. This included 4% GDP growth in the second quarter and strong labor market data. These reports added to concerns that the Federal Reserve will allow interest rates to rise sooner than expected.
As economic activity picks up, the danger of inflation also rises -- and the Fed's primary weapon against inflation is higher interest rates. After a period of near-zero rates, an uptick in Treasury yields could cause a significant shock to the system and trigger a flight out of equities and into higher-yielding fixed-income products. (more)

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Death Cross?

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August 8th, 2014 Dominic Cimino
A colleague friend of mine recently mentioned a “Death-Cross” that has presented itself on the US 10year yield chart. He showed that when in the past the 50-day moving average for 10yr yields has moved beneath the 200-day moving average, this Death-Cross has preceded a significant move lower in 10yr yields as money has sought safety in Treasury Bonds, while money has simultaneously flowed from stocks leading to precipitous falls in stock market indices.
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Fibonacci Retracements: A Rare Indicator That Forecasts the Timing of Reversals

Retracements are price moves that are opposite to the primary trend. In a bull market, retracements are the short declines that interrupt the long-term trend of rising prices. Bear market retracements are short up moves.
While traders usually think of retracements in terms of price, the concept can also be applied to time. Prices spend most of the time rising in a bull market, and they will retrace advances over shorter periods of time. The reverse is also true, with shorter bounces in a longer bear market decline.
Market moves are usually measured using both price and time. Traders may say that a stock has gone up 15% over the past three weeks. Since prices move both up and down, we would expect the price advance to be partly retraced, and that decline should last for a short period of time in a bull market.
Fibonacci ratios can be applied to either price or time to help define retracements. In either case, the key ratios of 38.2% and 61.8% would be expected to have significance on the chart. Those levels serve as resistance to price advances in a bear market and offer price support on a decline in a bull market.
For example, if prices fell 100 points, traders would look for a retracement to deliver a gain of about 38 points in a subsequent price bounce. From a time perspective, a retracement following a three-week decline should last six to nine days (38.2% of 15 days is 5.73 days and 61.8% is 9.27).
How Traders Use It
When applied to price, Fibonacci retracement levels are expected to forecast support or resistance levels. An example of price retracements is included in the definition of Fibonacci ratios. When applied to the time scale of a chart, Fibonacci retracements are used to forecast the times when a market reversal is likely to occur.
To apply this idea, traders can measure the amount of time a market takes to move from a low to a high. Fibonacci ratios can then be added to the chart from the time when price peaked, and important trend reversals should be expected to occur on days associated with Fibonacci ratios. If a price advance lasted 100 days, price reversals could be expected to last about 38 and 62 days.
The example below shows the bull market move that pushed crude oil to an all-time high in 2008. The price advance lasted 78 weeks. The initial decline unfolded over 30 weeks (38% of 78 weeks). Prices resumed their decline 48 weeks (62% of 78 weeks) after the peak.
Oil Fibonacci Retracement
Momentum indicators, including the 26-week rate of change (ROC) and Moving Average Convergence/Divergence (MACD), confirmed the price reversals in crude oil. Traders incorporating Fibonacci retracements based on time would have been able to catch the major market turns.
Why It Matters To Traders
Traders have few tools that project precise time targets, which make Fibonacci retracements a useful addition to the trader's toolbox. Knowing that a trend change is expected at a certain time, the trader can watch other indicators, such as momentum, to capture as much of the trend as possible.
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