FYI Martin Luther King Holiday Schedule Ron Nicklas

Martin Luther King Day  Holiday Schedule
 
PennTrade


Dear PennTrader,

All US markets will be closed on Monday, January 19, for Martin Luther King Day.

Canadian markets will not close, so PennTrade will remain open for your Canadian trades.

US markets will reopen on Tuesday and it will again be business as usual.

Thank you for using PennTrade.
Ron Nicklas
President

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BBBBB This past week in gold Jack Chan

This past week in gold

Jack Chan

GLD – on buy signal.

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SLV – on buy signal.
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GDX – on buy signal.
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XGD.TO – on buy signal.
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CEF – on buy signal.

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Gold has poked above the 200ema again, prompting breakout calls from some analysts. In a bear market, time is ripe for short sellers to return at current level. And if gold has bottomed and a new bull market is born, price action and COT data will confirm that over the next few weeks.
Summary
Long term – on major sell signal since Mar 2012 when $HUI was at 550.
Short term – on buy signals.
Gold sector cycle – up as of 11/14.
A bear market rally is in progress.
COT data suggests lower metal prices overall going forward.

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Swiss National Bank Intrigue Mario Innecco

Swiss National Bank Intrigue

Mario Innecco


Despite the SNB's campaigning against the Swiss Gold Initiative late in 2014 and its assertion that a YES vote would interfere with the bank's policy of capping the franc versus the euro the financial world was rocked by the equivalent of a major earthquake on the 15th of January, 2015 as the SNB decided to do a U-turn and abandon the cap on the franc versus the euro.
We all know by now what happened to the Swiss franc on Thursday so I will focus on why I think the SNB shocked the financial world and in the process wiped out many highly leveraged foreign exchange traders and speculators. Why would the SNB change a policy that it had been adamantly protecting just recently?
I personally think that the continued weakness of the euro versus the dollar has put a great deal of pressure on the SNB as it continued to keep the cap on the franc as the dollar kept rising versus the euro. Even though the Swiss Gold Initiative failed to pass last November there has been political pressure on the SNB to stop inflating its balance sheet.
As a result it is my opinion that the SNB, not expecting the euro weakness of these last few months, decided to get out of a losing trade while it could. By lifting the the cap the SNB is basically saying it does not want to buy any more euros but at the same time it has hundreds of billions of euro paper on its balance sheet. With the ECB expected to announce a new QE program on Thursday the 22nd of January, 2015 I expect the SNB to be a keen seller of its euro assets in the months to come. What better way to sell its euro denominated government paper!
My expectation is that just like FDR the SNB will use its proceeds from selling its euro assets to buy gold. Back in the early 1930s the dollar was the Swiss franc of its day as European capital fled a failing financial system to the relative safety of the then gold backed dollar. This exodus from European currencies to the dollar exacerbated the deflationary economic environment in the U.S. FDR called a bank holiday in 1933 as a result and subsequently devalued the dollar by 75% by raising the official gold price from $20.67 to $35 in January of 1934.
By buying gold the SNB will alleviate the deflationary pressure that a strong currency brings. What better way to unload its mountain of euro assets and at the same time assuage its political foes at home.

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The Doughty Swiss NYSun

The Doughty Swiss

Congratulations to the doughty Swiss, we say. The decision of their central bank to remove the cap on its currency, allowing it to soar against the Euro, is causing the foreign exchnge markets to be struck with the dreaded turbulence. It may well make things difficult for Switzerland in the short run. But it was a vote of no confidence in the quantitative easing that the European Central Bank is about to undertake. It may have put some starch into the Germans, to whom the ECB just bowed by saying it will do its quantitative easing without making taxpayers responsible for losses.

All other virtues of this drama aside, what a paroxysm of panic it has produced at the Financial Times, which has declared that “Thursday’s action in the Swiss franc defies the reach of hyperbole.” We haven’t heard such a primal scream from the FT since Prime Minister Thatcher cut taxes (at that juncture the Wall Street Journal consoled its competitor with an editorial called “Cheer Up, Lads”). The FT calls the Swiss National Bank’s move “a poor advertisement for Swiss reliability.” It suggests the Swiss demarche is “all the more remarkable” because the currency is “prized for its stability.”
We’re not sure “stability” is the word we’d have used for either the Swiss franc or the euro, or, for that matter, the dollar. The latter has lost more than 78% of its value since the start of the century (this morning it was worth but a 1,280th of an ounce of gold). A long-term chart of the Swiss franc shows that it (and the Euro) have kept pace with the dollar in this decline. Gold hasn’t changed its policies once during this period. Its quantity hasn’t changed a whole lot; it’s still inert; and hasn’t anybody found any world-shaking new industrial uses for the silent money. Not even the FT can blame the instability on gold.
The bitter truth is that all the sturm and drang over the Swiss franc is a feature of the age of fiat money. The exclamations of horror that have greeted the decision of one tiny country to stop playing the same game as the bigger countries testify to nothing so much as the absurdity of the fiat system. We’ve never understood the virtues of any country running down the value of its money. We’ve long felt that one country or another — Switzerland, Israel, Britain . . . someone — just ought to stop issuing its currency by fiat and return to a classical system. Wouldn’t it be something if it turns out that Switzerland has taken the first step.

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Fallout From the Swiss is a Dress Rehearsal for the Dollar

The move in the Swiss was extraordinary because of the massive short-Swiss through loans and their own buying of Euros. The audacity of the IMF to even state they will look into this as if they have any such authority or credibility is just stunning. They want the inside info so they can line their own pockets along with friends.
The British brokerage house  Alpari (UK) Limited has entered insolvency due to the Swiss move. There is no way a Broker can limit the risk of an account when something moves 30%. There is more fallout to come. Just keep in mind this will happen when the dollar rises for there is even a larger short-dollar position around the globe. What we have seen in the Swiss will be the dress rehearsal for the dollar.

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Analysts Expect Gold To Remain Strong Ahead Of ECB Volatility

By Neils Christensen

Safe-haven demand helped gold prices end the week at its highest level since early September and according to most analysts, ongoing volatility should continue to support gold in the upcoming shortened trading week.
Open floor trading of Comex February gold futures settled Friday at $1,276.90 an ounce, up $53.90 or 4.41% since Monday.
The strong move in gold also helped to drive up silver prices as Comex March silver futures settled the week at $17.750 an ounce, up $1.255 or 7.61% since the start of the week.
Although U.S. markets are closed Monday in celebration of the Martin Luther King Jr. holiday, volatility will likely pick up Tuesday where it left; analysts anticipate that markets will continue to recover from the aftermath of the Swiss National Bank’s sudden decision to discontinue the currency peg against the euro, analysts said.
Traders and investors are also look forvolatility to remain high as speculation surrounding Thursday’s European Central Bank monetary policy meeting continues to grow.
“The rollercoaster ride is far from over… as upcoming ECB QE will refocus the spotlight on the monetary policy divergence themes, likely continuing to place stress on US markets as global investors reposition,” said Gennadiy Goldberg, U.S. strategist at TD Securities.
According to some analysts, markets have priced in a 75% chance that ECB President Mario Draghi will announce an expanded quantitative easing that include the purchase of sovereign bonds.
Bill Baruch, senior commodity broker at iiTrader, said the key will be in the details of the program, which he added will probably disappoint the market’s high expectations.
“I think the risk is that the ECB under-delivers. It is going to add uncertainty to the marketplace, and gold is going to look attractive,” he said.
Although Baruch didn’t give a time-frame, he said that with gold’s current momentum, he expects to see prices test the next key psychological area of $1,300 an ounce.
“The path of least resistance for gold is higher,” he said.


Axel Merk, president and chief investment officer of Merk Investments, said that nobody really knows what Draghi is going to do and that uncertainty is going to help gold in the near-term.
He added gold should still perform well after Thursday’s meeting because markets will then focus on the Federal Reserve’s monetary policy scheduled the following week on Jan. 28.
“The Fed has been fairly quiet with their optimism. Everyone thinks they are going to move forward with a rate hike but I’m not so sure,” he said. “Real interest rates are negative right now and gold will do well in this environment. I am happy with my gold positions.”
Ken Morrison, editor of online newsletter Morrison on the Markets, said that he is not convinced that gold will be able to maintain its momentum.
He added that the gold price has hit and taken out his near-term target of $1,250 an ounce and that he would expect to see some profit taking next week.
“If I were long gold at these levels, I would be looking at taking some of my profits off the table,” he said.
One of the reasons why gold has rallied is because of the anticipation of looser monetary policies in Europe; however, with the decision already priced in, he would expect to see a sell-off on the actual event, Morrison added.
Turning to American markets, U.S. data reports are relatively light until mid-week, with the release of housing data; the week ends with an early view of the manufacturing sector, which thanks to recent regional reports, is fairly mixed.
Looking at housing starts, which will be released Wednesday, economists at Nomura said that they are on pace to beat 2013 numbers but construction is still down by historical comparison.
They add “there is still a long way to go in the housing market recovery.”

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FYI Martin Luther King Holiday Schedule Ron Nicklas

Martin Luther King Day Holiday Schedule

PennTrade
 
Dear PennTrader,

All US markets will be closed on Monday, January 19, for Martin Luther King Day.
Canadian markets will not close, so PennTrade will remain open for your Canadian trades.
US markets will reopen on Tuesday and it will again be business as usual.
Thank you for using PennTrade.

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Understanding the Swiss Central Bank Move and Its Implications for the Rest of 2015: A Guide for Dummies

Understanding the Swiss Central Bank Move and Its Implications for the Rest of 2015: A Guide for Dummies

By Robert Wenzel

As the 2008 financial crises developed, international traders sought the safety of the Swiss franc. This flight to safety intensified as the Greek financial crisis took center stage in 2009.

It resulted in the value of the Swiss franc soaring against the euro  (and to a lesser degree against other currencies).

This franc strength was a great boon to Swiss consumers, as it became cheaper and cheaper to buy  products from other European countries. It, however, had the opposite effect for Swiss manufacturers that exported their products. The products became much more expensive for consumers in other countries that used the euro (and to a lesser degree other non-Swiss currencies).

In 2011, as the franc continued to soar, Swiss exporters continued to put pressure on the Swiss government and the Swiss National Bank. Eventually,  the SNB announced that it would set a minimum value for the euro — 1.2 Swiss francs — and that to enforce this minimum it was “prepared to buy foreign currency in unlimited quantities.” This caused the Swiss franc to fall back from its highs and remain in a trading range.

In order for the SNB to maintain this trading range it had to sop up billions in euros and other currencies  that international investors were willing to exchange for francs. And I do mean billions.

By the end of 2014, the SNB holdings of foreign exchange reserves amounted to more than 500 billion (in terms of Swiss francs) up from under 50 billion in 2009.

In order for the SNB to purchase this huge amount of reserves, it had to print a massive amount of new Swiss francs.

This was not winning fans in Switzerland among the prudent crowd that correctly considered this money printing irresponsible. But here's the kicker. It is widely believed that next week Thursday, after a meeting on the European Central Bank monetary policy committee, the ECB will announce an expanded money printing program. With the SNB propping up activity in place, this would most assuredly have resulted in even more euros flowing into the Swiss franc. In other words, if the SNB continued to prop up the euro after such an ECB announcement. it would have to absorb even more foreign exchange by printing even more francs.

Rather than doing this, the SNB announced yesterday that it would no longer prop up the euro and, instead, would allow it to trade freely. And thus,without the SNB prop, the euro, yesterday. collapsed against the franc. At one point, the euro was down more than 40% against the franc

So why are some financial firms taking huge losses because of this move? Because of something known as the "carry trade." With the SNB printing so many francs, interest rates based in francs were very low. Thus, it made sense, if you thought this policy was to continue, to borrow low interest rate Swiss francs (that is, short francs) and buy (go long)currencies where interest rates were higher. Bloomberg explained in early 2014 the perspective of those that made this trade:

The Swiss franc is offering carry traders some of the best returns in developed markets...Switzerland’s zero-to-0.25 percent target rate makes the franc a natural funder of carry trades. Its credentials may be further burnished by the 1.20-per-euro cap the Swiss National Bank imposed in 2011.
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“If you were to fund a carry trade in the Swiss franc, the funding side would work out pretty well for you because it won’t get stronger,” Steve Barrow, the London-based head of Group-of-10 research at Standard Bank Plc, said by phone on Jan. 15, 2014.

Barrow recommends selling the franc against the dollar, euro and British pound.

This trade worked well until yesterday. Then it went very, very bad. Think about it. In order to make decent money on this trade, you need to be highly leveraged. On top of this, you were short, Swiss francs, which climbed yesterday by as much as 40%. That is, in order to pay off your Swiss franc obligation, yesterday it cost you as much as 40% more than the rate at the time you borrowed the francs. And because traders employing this method are highly leveraged, they were likely getting margin calls, yesterday, to put up more money immediately or face immediate liquidation. The liquidations were likely massive with traders suffering losses so huge that some will be forced to shut down . That's why we are already seeing foreign exchange brokers reporting massive hits.You can be sure that these brokers have underlying clients that also have huge losses.

Here is a statement released by one foreign exchange broker, most are in pretty much the same condition:

The recent move on the Swiss franc caused by the Swiss National Bank's unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity.  This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency.

Bottom line: What is seen regularly in markets is that traders instead of understanding the fundamentals of a situation, trade as though current trends will continue forever. When those trends reverse, the losses are enormous. Because most markets are rigged by central bank manipulations. the potential for all kinds of reversals in trends is possible. Almost no trader believes these trends can be reversed quickly, but when everyone believes they can't and the trend does reverse, and the shift is recognized, it happens very quickly and the losses are massive. Currently very few (I am in a very small minority who does) believe that the fundamentals will ultimately result in very rapid price inflation (5% plus) and much faster hikes in interest rates than almost all expect, sometime by the end of 2015..Because no one is expecting these things to occur, the bloodbaths will be as bad as the Swiss franc carry trade bloodbath we saw yesterday, if not much worse. The year 2015 will be the year of bloodbaths, The Fed and other central banks have simply pushed their manipulations to the edge and they will be forced to reverse direction because of market pressures in the same way that the SNB was forced to give up its propping up of the euro. When this occurs, and traders trading based on current trends have to unwind their positions, financial markets will be rocked to the core.

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From Gold Bear to Gold Bull?

Jordan Roy-Byrne

Bear markets end with extreme bearish sentiment but positive price action is needed before a trend change can be confirmed. That can include (among other things) breaking downtrends, breaking resistance and breaking the pattern of lower lows and lower highs. There have been positive developments for precious metals beneath the surface but Thursday’s breakout in Gold is more significant. If Gold holds this breakout then it will be all but impossible to argue that it remains in a bear market.
Below is a weekly candle chart of Gold and Silver. Thursday’s Swiss-induced strength helped propel the yellow metal above key resistance at $1240-$1250. Over the past four months Gold has had every opportunity to sustain prices below $1200. Within that period Gold made four different lows from $1150 to $1200. The action of the past two weeks and the break above resistance is a strong signal of an important trend change. Silver breaking its resistance would offer further confirmation of a broad trend change in the sector.

Gold & Silver Weekly Candle Chart

We’ve written often about Gold’s relative strength and its importance in signaling a forthcoming trend change. On Thursday Gold closed at a 20-month high in Euro and foreign currency terms and is nearing a two year high against commodities. For months Gold had remained weak against US and global equities. At present Gold is starting to break those downtrends. Below we plot Gold against various equity indices (NYSE, Dow Jones World, MS World, S&P 500).

Gold vs. Equities

Meanwhile, the miners have confirmed the rise in Gold. With the exception of GDXJ, every major index has completed a double bottom and is trading around three month highs. The chart below shows the daily line charts of GDXJ and GDX. We include the 400-day moving average which is often an excellent indicator of the long-term trend. The next important resistance figures to be the 400-day moving average. That could coincide with Gold at $1280.

Gold Miners (GDX) & Junior Gold Miners (GDXJ)

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What’s In Store For Gold in 2015? GoldStockBull

End of CB Power – SNB Folds

 
Thomas Jordan, the head of the SNB has repeated said that the Franc peg would last forever, and that he would be willing to intervene in “Unlimited Amounts” in support of the peg. Jordan has folded on his promise like a cheap suit in the rain. When push came to shove, Jordan failed to deliver.
The Swiss economy will rapidly fall into recession as a result of the SNB move. The Swiss stock market has been blasted, the currency is now nearly 20% higher than it was a day before. Someone will have to fall on the sword, the arrows are pointing at Jordan.
The dust has not settled on this development as of this morning. I will stick my neck out and say that the failure to hold the minimum rate will result in a one time loss for the SNB of close to $100B. That’s a huge amount of money. It comes to 20% of the Swiss GDP! If this type of loss were incurred by the US Fed it would result in a loss in excess of $2 Trillion!
In the coming days and weeks there will be more fallout from the SNB disaster. There will be reports of big losses and gains from today’s events. But that is a side show to the real story. We have just witnesses the collapse of a promise by a major central bank.
The Fed, Bank of Japan, ECB, SNB and other Central Banks have repeatedly made the same promises over the past half decade:

Don’t worry! We are here. We will do anything it takes to achieve the stability we desire. We are stronger than the markets. We can overwhelm all forces. We will never let go – just trust us!

I never believed in these promises, but the vast majority of those who are active in financial markets did. The entire world has signed onto the notion that Central Banks are all powerful. We now have evidence that they are not.
Anyone who continues to believes in the All Powerful CB after today is a fool. Those who believed in Jordan’s promises now have red ink on their hands – lots of it!
The next central bank that will come into the market’s cross hairs is the ECB. Mario Draghi has made promises that he would “Do anything – in any amount”.  Like I said, you would be a fool to continue to believe in that promise as of this morning.
We’ve just taken a huge leap into chaos. The linchpin of the capital markets has been the trust in the CBs. The market’s anchors have now been tossed overboard.

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