Technical Analysis

Ben Bernanke and his cohort central bankers built a Brave New World (SOMA, SOMA, SOMA!) where central bank money printing would boost stock prices and the wealth created would trickle down to workers and cause a booming economy. If you doubted that, you are now seeing proof that maybe this world was a little bit of Lewis Carroll’s Alice in Wonderland along with the Aldous Huxley.

My advice to my generation if they would like to buy various assets is to just literally say to yourself, "Don't think about the price or what other people are paying. Just ask: 'What would I pay for 1 share of XYZ, knowing it has an artificial edifice around it?'" Then take a swing while flying blind and pray you hit it.

But until that is no longer the case, count me out. Me and my entire generation.

Gold fundamentals are tight, but not so much in silver. According to popular belief, the prices of the metals are supposed to move together. What happens when a trading thesis is believed by just about everyone?

Both the October and December gold contracts are backwardated, and Feb '16 contract is not far. The gold market is tight. Why?

It wasn't really clear to me how popular their site was, though, until the news hit on April 23, 1998 that Silicon Investor had been bought by go2net for $33,000,000 in stock. Now keep in mind this was just a discussion board we're talking about, little more sophisticated than the dial-up BBS's I had enjoyed back in 1981 on my TRS-80.

"When all the experts and forecasts agree – something else is going to happen."

It began in Dec 2008. To understand it, it is necessary to understand two principles. The first is that gold is money and the dollar is credit (which is currently worth 28.4mg gold). For the second, we emphasize it's not just price, but separate bid and ask prices.

You cannot understand gold if you think it goes up and down, that the dollar is the measure of gold. Gold does not necessarily go up with interest, inflation, or commodities. Indeed, it does not go anywhere. It's the dollar going places (mostly down).

For those who are speculating on the dollar—i.e. most people—there was good news. The dollar rose to 28.3mg gold. It’s a big gain, and welcome news for those who keep all of their eggs in the one dollar basket.

The US economy is widely seen as the world’s best performing major economy at the moment. However, so far this year most economic data have actually been somewhere between very soft and lackluster. The steep fall in truck tonnage is definitely an alarm signal. It indicates that inventories are already too high relative to demand, something that seems to be confirmed by recent industrial production and retail sales data. Given that tonnage has continued to decline since the end of Q1, one can no longer blame the port strikes either. To be sure, the US economy is not yet signaling an imminent recession. At best though it is muddling through at a very subdued pace. It probably won’t take much to push it over the edge.

Greece. China. Banking system messes. Central bank printing. And here we are, under $1140. Breakdown?

That cannot be determined from price charts. We want to know the fundamentals of supply and demand. Here's how we measure it.

Due to significant retail participation and the fact that the equity mania in China has served as a distraction for a nation coping with decelerating economic growth and a bursting property bubble, some (and we were among the first) began to suggest that the broader economy and indeed, social stability, may be at risk in China if stocks continued to fall. The extent to which this suggestion represented a real concern (as opposed to the ravings of a tin foil hat fringe blog) was underscored by the extraordinary measures China adopted in a desperate attempt to stop the bleeding and, later by several sellside strategists who began to warn about possible spillovers into the real economy. Now, with Beijing still struggling to restore the stock bubble, the first signs of knock-on effects are beginning to emerge.

The Greek default is a forcible contraction of credit, and bound to be negative for the prices of ordinary assets. But something extraordinary happened to silver this week.

Most leading indicators are warning; more trouble could be ahead...

A look at the psycholgoy of traders as reflected in the price action ahead the new week which promises to be eventful.