Last Updated : 13 December 2011 at 23:05 IST
Major buying opportunity in gold and silver explorers
The financial press reveals the bipolar state of the global economy. One report questions whether the cash exists to bail out the PIIGS. This morning there is a conflicting story which reports that the major banks of the United States, France, Germany and Japan will provide the liquidity to effect support for the troubled nations.
- NCDEX Guar Seed witness bulk buying at lower levels
- On Wednesday trade, guar seed rose to a high of 7110 Rs/qtl at 12.22 pm IST and is expected to trade positive in the near term. Support is at 6810, 6750 levels and resistance at 7190 & 7210, analyst said.
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The financial press reveals the bipolar state of the global economy. One report questions whether the cash exists to bail out the PIIGS. This morning there is a conflicting story which reports that the major banks of the United States, France, Germany and Japan will provide the liquidity to effect support for the troubled nations. Remember Gold Stock Trades oft quoted trope, that the markets will do whatever it must to confuse, misdirect and obfuscate the lay investor. The daily dose of contradictory reports serve only to tangle the web. Einstein formulated, “The nth degree of complexity is simplicity.” Gold Stock Trades has absolute abhorrence for academic blather.
One day the Professors in the European Central Bank (ECB) tell us that funds are limited for bailouts. On the very same day we read of a meeting of the ECB pundits assuring The World that there is plenty of cash. Its enough to turn a wise man’s beard gray.
Cutting surgically through the divergent boloney, what does all this imply for GST subscribers?
A direct answer might be that Bernanke at the upcoming meeting on Tuesdat will in essence opt for an even more accommodative approach as will the European Central Banks acting in concert with the Princeton Professor.
The accelerated move in gold was due to a panic in the markets in August where we placed a hold after the price exceeded overhead resistance and technical targets. Since that time we have had a 12 week bullish symmetrical triangle consolidation, which we believe will resolve shortly to the upside. This pullback to the long term support trendline should be used as a buying opportunity. Remember the chart of the yellow precious metal is strong, despite short term pullbacks.
For many months GST has been straightforward in reiterating that the monetization of the debt by helicopter is the way out of the economic mess the Western Nations are facing. This is uncharted territory and we would not be surprised to hear about further QE before the end of the year.
Keynesian Theory has never really been proven. It has relied on wars and military adventures to provide a bailout. Now where can we go as we print dollars in the face that we are running out of the money to fund military placebos. We are running out of wars as a solution for pump-priming.
Look at the pictures on the front pages featuring citizens taking to the streets of Italy and Greece to protest implementation of severe financial measures. It can happen here.
The Professors and Bankers are playing for time. Look for quantitative easing with whatever moniker. They can use the Madison Ave. approach to jazz a stagnant if not moribund fiscal picture.
Stimuli can be twisted into whatever shape that will serve as a band-aid for the time being. The Marxists were famous for their five year plans. We may go down in history as being famous for our five-month plans. The bankers are running scared and are willing to settle for a temporary reprieve. Its the old tactic of putting off until later as long as you avoid upheaval today.
Ergo we may witness many stimulative reincarnations in a questionable attempt to prop up the economy of The West. Expect the French, Germans and others to keep the printing presses pumping.
The markets are going through the Euros turn to take center stage as the precious metals and miners wait in the wings ready for their time to shine.
This may represent a major buying opportunity in the long, upward secular arc of gold, silver and precious metal miners. At the very least this is not the time to sell, it is a time to look for adding to existing or discovering new positions. We are purchasing certain promising precious metal equities. Major investors are moving funds raised from the sale of gold bullion over the past few weeks to emerging miners.
We have been calling attention to a growing divergence between mining equities vis a vis bullion.
Since that time miners have been forming a bottoming formation and have successfully tested 2009 lows. Gold and the miners have enjoyed a healthy 12 week consolidation and is more than entitled to this period of rest after such an accelerated move. The world may be turning to emerging miners. It is fast becoming the miners turn, profits should be multi-fold.
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