The 6 PM Recap With Gary Wagner: You Say Stop And I Say Go Go Go

You Say Stop And I Say Go Go Go

Tuesday December 30, 2014 18:03

So, sang the Beatles back in the day. They had a point about contradictory flows of feeling and thought, just as we have now in the precious metals markets.
End-of-year fear came scuttling out of the woodwork today, driving equities down and gold up. Even crude oil found something under its feet other than quicksand today.
Risk aversion is common among year-end investors, especially given the long holiday period when no certain trading patterns can expect to hold steady. Short-players also encouraged gold to rise more than $20 in the morning session. It has now backed off those highs and is trading up about $16

There are a few worries globally. Greece and its newest debt crisis are yet again nagging at EU cohesiveness. In general, any kind of debt crisis throws shivers into traders, but Greece’s problems are very persistent and could lead to further cracks in the union’s façade. And that’s what really worries the financial world.
Other worries include the bubbling Western/Russian conflict and fears about the Middle East and south Asia overall. 
Economically, many analysts are worrying about the ability of the American economy to act solely as the engine to pull the freight train of the rest of the world through a dicey period of poor growth.
Even though the range is fairly wide, gold is trading in one, and it jumps up against 1210 and then hovers just above 1180.
George Gero of RBC made an interesting observation, too, about how funds are "window dressing" their books in the final days of the year, since some are under-invested in gold.
Who knows what investors will be thinking tomorrow? From a strictly fundamental viewpoint, gold is trading approximately the way it should, slightly jumpy and range bound.
Wishing you as always, good trading,
Gary Wagner

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INFOGRAPHIC: Buried Treasure Discovered In 2014

By Neils Christensen
Tuesday December 30, 2014 1:43 PM Looking back, 2014 could be classified as the year of recovered buried treasure as six discoveries made international headlines throughout the year.
One of the biggest buried treasure stories this year was Odyssey Marine, who focus on deep ocean exploration, resuming salvage operations of the SS Central America, which was halted for 23 years as the 1988 discovery was mired in legal disputes. In its first dive the company recovered more than 1,000 ounces of gold. The company said that more than 15,500 gold and silver coins were recovered during this year’s salvage operation.
Another interesting story caught people’s attention because of its intrigue and deception. In early December, four workers in a village in southern India were hired to dig a hole and found a pot of ancient gold. A police investigation started after one of the workers took a coin to a pawn shop to get it appraised. After the investigation, the police turned over more than 600 coins to Archaeology Survey of India.
A third story of buried treasure that captured people’s attention occured early in the year, as a couple from northern California came across about 1,430 mint-condition rare historical gold coins dating from the mid-to-late 1800s. One of the coins in the hoard was an 1866 Double Eagle gold coin, valued at $1 million.
What peaked public interest in the story was that after news broke, speculation started to grow that these coins were from a heist of the San Francisco Mint at the turn of the century. The speculation and rumors were put to rest after the Mint released a statement saying that there was no link between the coins and “any thefts at any U.S Mint facility.”

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Greece Warned Political Turmoil May Hurt Credit Rating

Associated Press
Tuesday December 30, 2014 6:38 AM

ATHENS, Greece (AP) — Credit rating agency Fitch said Tuesday that prolonged political uncertainty in Greece could hurt its sovereign rating, while the country's deputy prime minister claimed a stalemate could leave Greeks with "no economy."
The warnings came a day after a snap general election was called for Jan. 25 — and despite an easing of initial market turmoil.
Fitch said it was unclear whether any single party would be able to form a government alone, a stalemate that would "increase the risks to Greece's creditworthiness." It also cited risks of further delays to bailout negotiations and a potential drop in bank deposits.
"Following the elections ... political and policy uncertainty will probably remain high for some months," Fitch said.
The agency currently lists Greece under a B rating, which is still below investment grade, following a slow climb back from the brink of default.
On Tuesday, conservative Prime Minister Antonis Samaras formally requested that Parliament be dissolved following the failure by lawmakers to elect Greece's new president after three rounds of voting.
"Greece's position in Europe is at stake. This is a struggle of the highest responsibility, for the future of our children," Samaras said after making the request.
An opinion poll published late Monday gave the anti-bailout Syriza party a three-point lead over Samaras' New Democracy party — indicating that neither leading party could govern without forming a coalition.
Samaras' Socialist coalition partner, Deputy Prime Minister Evangelos Venizelos, said a repeat of successive general elections that occurred in 2012 would cause a full return to crisis.
"We don't have the luxury of a second general election," he said. "We must have a government on Jan. 26. Otherwise, there'll be no economy, no country."
Syriza has described the government remarks as alarmist.
"The government fell because of its failed policies and under the weight of a social outcry" against growing poverty and unemployment, a party statement said.
Shares on the Athens Stock Exchange were down less that 0.5 percent lower in late trading, broadly in line with other European markets.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Chinese Consumers Take Advantage Of November's Low Gold Prices As Imports Rise

Gold prices appear to be ending the year in neutral territory, and Asian demand continues to be the bright spot within the marketplace. Monday, Reuters reported that China’s gold imports from Hong Kong in November rose to their highest level since February. Analysts have expected to see strong demand for the yellow metal in Asia, as the Lunar New Year approaches. This year Lunar New Year will be celebrated Feb. 18 and gold is given as a traditional gift during the holiday.
The rise in imports also coincides with gold prices dropping to their lowest point in four-and-a-half years. On Nov. 7 Comex December gold futures dropped to a low of 1,130.40.
In a recent interview with Kitco News, Victor Thianpiriya, commodity strategist at ANZ Bank, one of the first international banks to be allowed to import gold into China, explained that gold imports have been relatively low throughout 2014 because there was already a large stockpile in China from 2013.
However, with most of the stockpiles being depleted, he said that he is expecting to see a pickup in Chinese imports in 2015. He noted that increased imports in 2015 should help to stabilize gold prices.
Thianpiriya also said lower prices could have a limited impact on Asian gold demand in the near-term. Prices would probably have to fall to $1,000 an ounce before consumers started buying gold in large quantities, similar to 2013, he said.
He explained that investors are waiting for the gold market to resume its uptrend before jumping back into the market.
Currently, Comex February gold future prices are hovering around the $1,200 an ounce area. As of 9:17 a.m. EST, February gold was trading at $1,197.20 an ounce. Steve Scacalossi, director, head of sales of global metals at TD Securities said in a research note Tuesday, the news of continued demand out of China is helping to stabilize the gold market as it closes out the year.

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U.S. Consumer Confidence Rises To 92.6 In December

Updated: U.S. Consumer Confidence Rises To 92.6 In December

Tuesday December 30, 2014 10:00 AMThe Christmas holidays created a little cheer for U.S. consumers as optimism rose in December, reversing some of the declines seen in November, according to data from the U.S. Conference Board.  The board said its monthly Consumer Confidence Index rose to 92.6 from November’s revised reading of 91.0. In its initial reading, last month’s index was at 88.7.
Some economists anticipated a boost in optimism; according to consensus forecasts, economists expected the index to rise to about 94.6.
In the report, the board said that the Present Situation Index rose to 98.6, up from the previous reading of 93.7, but at the same time the Expectations Index fell to 88.5, from November’s reading of 89.3.
“Consumer confidence rebounded modestly in December, propelled by a considerably more favorable assessment of current economic and labor market conditions. As a result, the Present Situation Index is now at its highest level since February 2008,” said Lynn Franco, director of economic indicators at The Conference Board.
Although the data shows that optimism was generally positive, the current outlook of the labor market was relatively mixed. According to the board’s survey, participants who said jobs were “plentiful” increased to 17.1% from the previous survey of 16.2%; at the same time, participants who said jobs were “hard to get” fell to 27.7% from the previous level of 28.7%.
Similar to the overall report, the future outlook for the labor market was slightly weaker as participants who said that they anticipated more jobs in the months ahead dropped to 14.7%, compared to the previous survey of 15.5%. Participants who said that they anticipated fewer jobs in the future increased to 16.9% from 16.4%.
Eric Green, head of U.S. rates and economic research at TD Securities described the consumer report as “positive with a few wrinkles.”

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Dec 30 Oil: Lubrication For Gold Stocks Rally Stewart Thomson

Oil: Lubrication For Gold Stocks Rally

Stewart Thomson

Dec 30, 2014

1. Gold is ending the year on a solid note. The bears promised that 2014 would be a horrible year for gold. Many bank economists predicted “double digit declines”.
   
   
2. None of their shrill predictions have come to pass. That’s because the gold bears overestimated supply from the West, and underestimated demand from China and India.
   
   
3. Please click here now. That’s the hourly bars chart for gold. I believe there is now an inverse head and shoulders bottom in play, and the short term price target of that pattern is the $1220 area.
   
   
4. Early yesterday morning, I told my subscribers that I expected gold would decline to the $1180 area to form the right shoulder of the pattern, and rally from there during the night.
   
   
5. That’s what happened. Regardless, gold price enthusiasts should understand that chart and cycle targets are not financial guarantees. They are indications of what is possible and likely.
   
   
6. As the year 2014 ends and 2015 begins, gold is postured quite bullishly, from both a fundamental and technical standpoint.
   
   
7. Please click here now. That’s the daily gold chart. The 14,7,7 Stochastics oscillator is now in an area where rallies of $50 - $150 in the price of gold often occur.
   
   
8. Please click here now. China officially imported almost 100 tons of gold in November, and Hong Kong imported about 50 tons.
   
   
9. As Reuters notes, direct imports into the Chinese mainland from countries other than Hong Kong are not revealed by China. The total tonnage imported into China and Hong Kong during November was likely somewhat higher than 150 tons, but even if they imported no gold directly at all, the demand is excellent.
   
   
10. India also officially imported about 150 tons in November. Clearly, Chindian demand is once again robust, and growing!
    
    
11. As the centres of gold price discovery move from London and New York to Shanghai and Dubai, the price action should mainly revolve around the love trade (gold jewellery).
    
    
12. Until 2014 began, the fear trade (Western debt and the outrageous behaviour of government and banks) was the main mechanism of gold price discovery. In my professional opinion, gold price volatility will diminish significantly as the love trade overshadows the fear trade.
     
13. The “shock and awe” growth of the Indian and Chinese economies is relentless. That means the growing dominance of the love trade on the global gold price discovery stage, is probably best described as a “clock that can’t be turned back”.
    
    
14. As terrible as the gold bears were at predicting the price of gold in 2014, if they keep failing to study the Chindian love trade for gold in meticulous detail, their price projections will go much more awry in 2015, than they did in 2014.
     
15. Gold stocks are prime beneficiaries of the Chindian gold bull era. Please click here now. That’s the GDX daily chart, and it suggests that gold stocks could begin the new year with a solid rally.
    
    
16. A “textbook” double bottom pattern is in play. These patterns tend to be quite reliable.
    
    
17. Please click here now. This GDXJ chart is very similar to the GDX chart. The double bottom pattern suggests that GDXJ could rally to the $40 area in early 2015.
    
    
18. Also, GDXJ has been restructured. It now holds more producing gold companies, and that may reduce some of the volatility it experienced in the past.
    
    
19. Silver looks even more bullish than gold does, and I’ve recently swapped a modest amount of my gold bullion for silver.
    
    
20. Please click here now.  There’s a nice inverse head and shoulders bottom in play on this daily silver chart.
    
    
21. Some individual silver stocks have the same pattern, and they have already staged strong volume-based breakouts to the upside. The stocks tend to lead silver, and they are supporting my thesis that silver itself is poised for a great rally early in 2015. My short term price target is $19.
    
    
22. Please click here now. That’s the hourly bars chart for oil. I have a $49 short term target for oil. The outlook for oil is grim, both in the short term and the long term.
    
    
23. In the short term, supply is overwhelming demand, and oil company earnings are suffering. In the long term, alternative energy is likely to reduce oil’s function to that of a useful lubricant, from the key fuel that it is now. In the coming decades, I expect the price of oil to ultimately return to pre-1973 levels.
    
    
24. Gold mining companies are entering 2015 with robust demand from China and India, and with a very stable outlook for fuel costs. This situation should entice substantial numbers of value-oriented fund managers into the sector, throughout the year!

Dec 30, 2014
Stewart Thomson

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Dec 30 Gold Rallies With USD Above 90 Przemyslaw Radomski

Gold & Silver Trading Alert:
Gold Rallies With USD Above 90

Przemyslaw Radomski
Posted Dec 30, 2014

Gold & Silver Trading Alert originally published on December 29th, 2014 7:17 AM:

Briefly: In our opinion no speculative short positions in gold, silver and mining stocks are currently justified from the risk/reward perspective.
The USD Index moved slightly above the key, long-term resistance level but gold rallied by almost $20 on Friday. We have seen several bearish signs in the precious metals market recently – is the above bullish enough to make the overall outlook for the precious metals market bullish?
Not really. Gold didn’t move above the previous resistance levels, so actually not much changed and most of what we wrote last week remains up-to-date. Let’s start today’s analysis with the USD Index (charts courtesy of http://stockcharts.com).

In the previous alert we wrote the following:
The USD Index moved higher only insignificantly, and we don’t see much change on the short-term chart. One could argue whether there was a short-term breakout or not, but even if we agree that there indeed was one, it’s not confirmed. Consequently, the short-term picture doesn’t provide us with much new information.
The USD Index closed the week above 90 and also above the rising short-term resistance line, so the short-term breakout is confirmed. The implications for the next several days are bullish.
Let’s take a look at the situation in the USD Index from the very long-term perspective.

In the previous alert we wrote the following:
The USD Index has just encountered a major resistance line that it needs to surpass before a rally to 92 becomes very probable – the 38.2% Fibonacci retracement levels based on the entire 2002 – 2008 decline.
The Fibonacci retracements have worked for the USD Index many times in the past, so it could be the case that this level will keep the rally in check for some time. If not, and we see a confirmed breakout, then we’ll likely see another big rally – to the 92 level or perhaps even to the next retracement at 96.11.
However, we would first need to see the breakout and its confirmation. For now, we have just seen a move to this critical level. While the situation in the precious metals market remains bearish, without a breakout in the USD Index, the possibility of another slide in the USD and a rally in gold, silver and mining stocks will be too big for us to think that opening short positions in the precious metals sector is justified from the risk to reward perspective.
The USD Index closed the week above the critical resistance level (the 38.2% Fibonacci retracement level), but it closed only a little above it and for just one day, so the breakout is not confirmed at this time. Consequently, we don’t think that the move to 92 or higher is very probable for the USD Index at present. The implications for the precious metals market remain rather unclear at this time.

The long-term picture for gold remains unchanged. Last week’s events didn’t change much as gold ended the week below $1,200 and well below the declining resistance line. The medium-term trend remains down.

The short-term price action didn’t change much either. The previously-mentioned self-similar pattern could still be in place – the current situation is still somewhat similar to what we saw in January 2014. This means that based on the above chart alone we could see a rally in the coming days.
Please note that gold rallied on very low volume, but that was a low-volume session across the board due to the Holiday season. Consequently, while a low-volume rally would be a bearish sign in a normal case, at this time there are no such implications.
Moreover, there was a buy signal from the Stochastic indicator, which of course is a bullish sign, but on the other hand, there was no breakout above the declining red resistance line.
Overall, the above chart is more bullish than it was last week, but not bullish enough to justify opening long positions based just on it.

When we take a look at the gold market from the gold to USD Index ratio perspective, we’ll see that the recent rally was nothing more than a verification of a breakdown below the 2013 low and 2008 high. With this breakdown being confirmed, we can expect to see a move lower shortly.

The silver market moved higher in the last session and we saw a breakout, but let’s not forget that “breakouts” in silver have very often turned out to be “fakeouts” and followed by sharp declines. The most recent example took place at the beginning of December. Overall, the breakout in silver has no bullish implications in our opinion.

Gold stocks and silver stocks (the XAU Index includes both) didn’t move much lower last week, but they didn’t move much higher either. Overall, the last few weeks of trading seem to be simply a pause within a big decline. If the move that follows the current consolidation is similar to the one that preceded it, we could actually see mining stocks at their 2000 lows.
Could we really see such a significant decline in the mining stocks sector? Why not, it would be less than half of what the miners have already declined since 2010. Besides, the entire commodity sector could move even lower.

The CCI Index (proxy for the commodity sector) has definitely broken and verified the breakdown below important support levels: the rising very long-term support line, the declining long-term one, and the one based on the previous lows. The index has moved well below the 38.2% Fibonacci retracement based on the entire 2001 – 2011 bull market. It’s now likely to decline to the 50% or even the 61.8% retracement. The latter seems even more likely as that’s where the commodities declined in 2008 (back then the retracement was based on the 2008 top) – the CCI Index even moved a bit below this level and then started to rally once again.
Overall, the situation is still unclear as there are several factors that point to a looming decline in the precious metals, but there are also some important signs suggesting higher values of PMs – like the critical resistance in the USD Index.
It seems that another trading opportunity is just around the corner and even though not much seems to be going on, it might be that paying close attention to the precious metals market at this time and in the coming days will be well worth it. It might be the case that the USD Index manages to rally shortly and confirms the breakout above its key resistance. If that takes place, it will likely create a great entry point for short positions in the precious metals market. However, we are not at that point yet and other factors will need to be considered as well. As always, we'll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you'd like to receive them, please subscribe today or sign up for our free mailing list today.
To summarize:
Trading capital (our opinion): No positions
Long-term capital (our opinion): No positions
Insurance capital (our opinion): Full position
You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.
Thank you.

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Dec 30 Five crucial things to know about the snap Greek elections

Five crucial things to know about the snap Greek elections 

LONDON (MarketWatch) — The third time is not a charm when it comes to Greek politics.
Once again, the country finds itself at the epicenter of a political and economic drama after the parliament on Monday — for the third time in two weeks — rejected Prime Minister Antonis Samaras’s preferred presidential candidate.
The failure to line up sufficient backing for former European Commissioner Stavros Dimas in the third and final round of voting has triggered snap elections that could bring the far-left, euroskeptic formation Syriza into power and threaten to derail Greece’s bailout program. In fact, words like “Grexit” and “default” and “accident” are once more being thrown around among nervous market observers.
Expect daily headlines on Greece leading up to the elections and lots of volatility in the financial markets. To stay on top, here are the five key things to know ahead of the parliamentary elections as an investor.

Which parties should I watch for?

Anti-austerity and anti-bailout Syriza, behind charismatic leader Alexis Tsipras, could hold the key to Greece’s future as a member of the eurozone. The party is ahead in opinion polls, and Tsipras appears confident he’ll emerge as prime minister after the elections.
“Be optimistic and cheerful,” he reportedly proclaimed after the presidential vote on Monday. “Austerity will soon be over. The Samaras government, which looted society and decided to take further austerity measures, is finished.”
Syriza has spent years campaigning against the harsh austerity measures imposed on Greece in exchange for the international rescue program and is eager to renegotiate the bailout terms with its international creditors — the so-called troika, composed of the European Central Bank, the European Commission and the International Monetary Fund — sooner rather than later. A major concern is that Syriza and the troika won’t be able to reach new bailout terms, which could force Greece into a disorderly default. The four-year bailout was set to stop at the end of December but was extended by two months to allow Greece more time meet demands from its international lenders.
The other major party in the election is current Prime Minister Antonis Samaras’s center-right New Democracy. The party emerged as the winner in Greece’s last national elections in June 2012 and has as the leader of the coalition government been in charge of the reforms and austerity measures agreed to under the bailout program. However, with unemployment painfully high and economic growth painfully low, Greeks have increasingly turned against the governing coalition with calls for an end to austerity.

What are the risks of a Greek default or a euro exit?

With polls pointing to a Syriza win, the fear of Greece leaving the eurozone is back on the table. Although the party has moderated its anti-euro rhetoric, there remains concern that the drive to end austerity above everything else could cost Greece its membership in the currency union.
Holger Schmieding, chief economist at Berenberg, puts at 55% the probability that Syriza “would push Greece into a serious crisis that — with money running out and neither the troika nor the ECB in any position to help — could potentially catapult Greece into a messy default within the euro or even out of the euro.”

 

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