Tag Archives: Elliot Wave

Can Gold Make A Run?

There is no stopping the rise in the price of gold. As long as world Central Bankers continue to increase the quantity of fiat currencies, because Gold’s production is limited, a simple supply and demand equation predicts gold must go higher. – Robert McHugh, McHugh’s Market Forecasting & Trading Report

The Fed may have opened Pandora’s Box with regard to its ability to continue holding down the price gold. From Yellen’s press conference:

Let me be clear that negative interest rates was not something that we considered very seriously at all today. It was not one of our main policy options…But if the outlook was to change in a way that most of my colleagues and I do not expect, and we found ourselves with a weak economy that needed additional stimulus, we would look at all of our available tools. And that would be something that we would evaluate in that kind of context…

Hmmm. So negative interest rates and more QE was indeed discussed at the FOMC meeting. Yellen thereby serendipitously confirmed that another big slug of money printing is on the table at the Fed.

As best expressed by Bill King of the The King Report:

The Fed is beyond moving goal posts; they’ve abused that concept to the nth degree. So, Yellen introduced another goal post when she said the labor force participation rate is still far below trend. Another point about the Fed: Its projections and economic forecasts are worthless. They have been consistently wrong for years. Why should anyone heed their sorry economic forecasts?

I’m starting to think we are coming into a period similar to Sept/Oct 2008, only this time the problems are 10x more severe and the the manipulative force put on the metals is 10x more severe. In response, per Newton’s 3rd Law of Motion,  the reaction by the metals to the manipulative action will 10x more powerful than it was in 2008.

With that last idea in mind, I wanted to post the graph that accompanies the quote at the top from Robert McHugh.  While I’m not in any regard an Elliot Waver, over long periods of time there are discernible cycles found in nature.  While trading markets are largely artificial now, to the extent that natural cycles ultimately underlie the markets and the graph below reflects this possible reality as it applies to gold – click to enlarge:

Graph1

 

As you can see from the graph to the left, the Elliot Wave cycle theory is predicting a big move higher for gold (and silver, of course).

On a stand-alone basis, this idea might not have validity.  However, in conjunction with all of the bullish fundamental variables which would support a significantly higher price of gold, the Elliot Wave set-up has a high degree legitimacy.

 

Furthermore, as a reliable contrarian indicator, the market sentiment toward gold is at one of its lowest levels in the last decade:

Graph1

I really think there’s a serious problem in the supply of physical silver. The mint announced another 20% allocation cut-back two days ago. This is NOT a refinery supply issue – this is a raw material supply issue.  And this is another fundamental supply/demand variable that could launch the precious metals into orbit, especially given the potential for igniting a short-squeeze in the paper bullion markets.

SoT #57 – Alasdair Macleod: Economics Of A Systemic Crash

The stock market is extremely overvalued – it could easily crash through the bottom hit after the Lehman crisis [S&P 500 closed at 676.53 on March 9, 2009] – Alasdair Macleod on Shadow of Truth

It’s getting harder for perma-bulls to make the argument that the U.S. economy is in a state of recovery.  It’s getting even harder for them to justify the current stock market valuations.  Not only are all of the reliable economic metrics pointing toward the early stages of what could be a deep economic recession, if the trailing twelve month GAAP earnings of the S&P 500 index companies were adjusted by using the GAAP accounting standards that were in place in 1980 – or even 1990 – the current stock market would be the most overvalued in history.

The U.S. stock market is behaving as if it is getting ready to drop like Niagra Falls:

When you see a genuine top, all the old hands say ‘this is absolutely crazy’ but they throw in the towel and buy at the top along with everyone else – that is a genuine bubble…But recently there’s a fairly strong body of expert opinion that is very cautious about the outlook for the market…that’s consistent with the end of the “B” leg of Elliot technical anlaysis, which proceeds a very nasty “C” leg and which could take us to the lows we saw post-Lehman and likely overshoot that low by a reasonable degree.  – Alasdair Macleod

The technical analysis cited above by Alasdair Macleod is supported and reinforced by the rapid deterioration in corporate revenues, earnings and credit quality.  The banking system in particular has releveraged itself both on and off balance sheet to a level that far exceeds the levels that blew up the financial system in 2008.

The condition of the U.S. economic and financial system is compounded by the fiscal condition of the U.S. Government, which will be forced to raise the debt ceiling limit again before the end of year. Furthermore, the U.S. political landscape can best be described as a three-ring circus – if you are an optimist – and a complete disaster if you are a realist.

All of the guys at the top level of Government/Central Bank authority do recognize they have a problem they just don’t know how to get out of it…there is not exit for this problem. – Alasdair Macleod

For now, the best solution coming from the elitists running the United States is to blame the volatility in the U.S. stock market on China.  While this notion is patently absurd, it’s permeated the propaganda being thrown at the American public by the media.

Rory and I hosted Alasdair Macleod on our Shadow of Truth show this week to discuss the primary economic signals which are warning anyone not in denial about the inevitable catastrophe headed toward the global financial and economic system: