With the U.S. Stock Market approaching my upside target of DJIA 10,500 – 11,000, I’ve now begun to look closely for a selling point. Given next week begins a seasonally strong period for the stock market, I may not be saying Ba Hum Bug until after Christmas. Stay tuned.
The U.S. Dollar is showing signs of a doable short- to intermediate-bottom but needs to get above 78 on the U.S. Dollar Index to confirm, IMHO. Such a move could lead to a significant bear market rally so we shall watch closely.
If and when such a dollar rally takes hold, one should not assume it’s curtains for gold (as much as the mortally wounded perma-gold bears are praying for). Gold has so many long-term bullish factors going for it which I hope to discuss as we move closer to year-end. For now, it continues to demonstrate an ability to self-correct intra-day and my target of $1,200 for this year still remains a strong possibility. As I’ve stated often, $1,000 gold has gone from being a ceiling to floor so those looking to buy on weakness should not expect to buy gold again for three digits for quite some time.
This has to be one of the worst-written articles I’ve ever read. I point this out for a couple of reasons:
- Look at the author’s past articles and you will find a big slant against “goldbugs.” This is not uncommon in financial journalism. Simon Constanable comes to mind as someone who can’t help himself but knock gold and those who believe in it. We all know several commentators on CNBC-TV have over the years “panned” gold whenever they can. BNN, a five star network in my book, also has some gold bear anchors. Frances Hurodelsk and Martin Cej can’t help themselves whenever they have a guest on gold. They always take the-cup-is-half-empty line. As I have said numerous times, gold will never be accepted by the masses as it flies in the face of owning financial assets, a factor most in the financial services industry and financial media need to do okay in order to prosper.
- Gold bears always point back to $850 gold, an event that, by the way, was a one day affair (gold fell quickly back to under $700 so very few people bought at $850). What they fail to do is to point back to the tops in the asset they love and live off of – stocks. The author of the article I refer to fails to note how much worse the masses are who bought stocks at their all-time highs. At least gold is back above its high nominally. Good luck to those who wait for the NASDAQ to hit 5,000 to do the same.
Now here’s a journalist who deserves a medal! If it was up to me, he would get the “John Crudele” medal of honor.
PLEASE NOTE – You must assume my opinions remain the same from my last commentary on a market or stock until such time I publish an update.
In the case of Northern Dynasty Minerals, no change in opinion therefore no new update. However, here’s a copy of a comment on it by me for an upcoming article in a mining publication:
Northern Dynasty Minerals (NAK-NYSE/Alnet, NDM-TSX) – Since acquiring the Pebble Project in 2001, Northern Dynasty has delineated and advanced one of the world’s greatest stores of mineral wealth.
Located on American soil in southwest Alaska, the Pebble deposit is remarkable for both its size and composition. Current estimates indicate a total resource of 5.1 billion tonnes measured and indicated and 4.0 billion tonnes inferred, containing 72 billion lb copper, 94 million oz gold and 4.8 billion lb molybdenum. Quantities of silver, palladium and rhenium also occur in the deposit.
In 2007, a wholly-owned affiliate of Northern Dynasty entered a 50:50 partnership with a wholly-owned subsidiary of Anglo American plc to permit, construct and operate a modern, long-life mine at Pebble. Based on Anglo American’s staged investment of $1.425 to $1.5 billion, both companies share equal ownership, board representation and rights in the Alaska-based Pebble Limited Partnership.
Under the leadership of the Pebble Partnership, the Pebble Project is on a path to development. Key project strengths include:
- a known mineral resource with the tonnes, grade, metallurgy and geometry to support a modern, long-life mine;
- favorable terrain — low elevation;
- a stable and predictable regulatory environment;
- ready human and financial resources; and,
- broad public support for responsible resource development in Alaska.
Theirs is a rather loud anti-pebble crowd that has clearly spooked some investors into believing the project will not be able to even make it to the formal permitting application stage and receive due process of law. While one can never say this crowd can’t win, I remain confident because so far government regulators haven’t shown to be anything but fair and I trust they will allow the process itself to determine whether Pebble can go forward into mine development.
End of update
Dear Mr Grandich, I guess you really do not know Cody Willard really well. I present below what this moron wrote about Gold just five months ago. Even Jon Nadler does beter than that!
Sell gold now – it’s headed below $500/ Cody Willard June 16th 2009
The government’s been bailing out entire industries left and right. The Fed’s got their Fed Fund rates at 0%, giving banks the ability to borrow taxpayer money at no cost in this country. The Fed’s guaranteed trillions in worthless debt at the world’s biggest investment banks. You’d think the money supply in this country would be exploding right now. Certainly, that’s what I’d been expecting to see as the overpowering macroeconomic trend in this country for the next two to five years.
Alas the money supply — especially if you reconstruct the M3 money supply, which the government used to publish as the most complete measure of how much liquid money is sloshing around this country — is collapsing. It stood to reason that if the Fed and Treasury are willing to print worthless dollars to send to the corrupt and insolvent banks, that a bunch of those worthless dollars would gush their way into the economy and increase the money supply. That increased money supply would devalue the existing money supply. That devaluation of the dollar would then likely translate into a bull market for gold.
But something happened on the way from the pump. See, all those same insolvent banks don’t just have all those trillions of dollars in worthless debt on which they’ve stupidly risked their depositors’ savings. No, those same banks decided to take their customer’s monies and risk them in secondary, derivative markets that were initially created to “insure” all those trillions in worthless loans the stupid banks made. Like a poker player on a losing streak, they started betting 10 times as much on the derivative markets as they had in the actual lending markets. You know who they thought would pay them and make those insurance payments if those bets were to work out? Mostly American International Group. And other insolvent banks.
They did this 10 times over, dwarfing their initial bets that they’d already made 10 times over on their depositors’ money, eventually gambling on tens of trillions of dollars on insurance on that worthless debt.
And now that the cows have come home and real estate et al is collapsing in this country, these same insolvent banks have to make their balance sheets look better even as they have tens of trillions of dollars of losses that they’re pretending don’t exist. That’s because even after the government has made these corrupt banks whole on about $200 billion of worthless insurance they bought from AIG. That $200 billion is a small fraction of what the banks have actually pretended they’ve got on their balance sheets and that they’ve now got to “mark-to-market” slowly but surely.
And as those trillions of dollars of losses are brought back onto their balance sheets and recognized for the reality they are, the banks find themselves ever more insolvent. So they have to hoard every dollar they can get their hands on to try to build up their reserves. That means despite all that taxpayer money given hand over fist to these insolvent banks, that the money supply keeps shrinking. In the U.S. economy, debt creation equaled money creation, which meant the money supply was increasing. Debt is being destroyed now and that means money is being destroyed. That, in turn, means money supply is decreasing.
This trend isn’t about to reverse itself magically. The money will keep being sopped up by these insolvent banks’ balance sheets until they are forced to recapitalize entirely. That washes the hands of their shareholders who foolishly bet on bad management — and often dishonest, fraudulent management such as at Bank of America and Goldman Sachs, where the executives in charge always deny their need for capital even when they are desperate for capital. That hurts the people who risked their money lending the company money — bondholders, that is — and ensuring that every depositor is made whole.
The preceding sentence outlines what the government is supposed to do now since Timothy Geithner, Mary Shapiro, Sheila Bair and the rest of the bureaucrats at the SEC and the Fed and the FDIC completely failed at their jobs of protecting depositors’ money and policing for ponzi schemes and making sure the banks didn’t lever themselves up recklessly.
Until the FDIC, the Fed and the SEC start doing their job and while they continue to redistribute trillions of working people’s money to the shareholders and counterparties of these corrupt, insolvent banks, we’re going to see wealth in this country destroyed and the money supply decline.
And that’s why gold ain’t going higher any longer. Gold can be a great hedge when the money supply is exploding. I’m still convinced that we’ll see inflation in many commodities that we need, such as food and milk. But betting on gold to go higher in a situation where dollars are actually being eaten out of the system isn’t the bet I want to make. Indeed, because of this new analysis, I expect we’ll see gold below $500 an ounce sometime in the next year or two.
Best bet for the next two to five years – higher interest rates. Regardless of where the Fed keeps the Funds Rate — they can keep it at 0% forever if they want — the cost of capital in this country and around the world is going higher. The money supply is dropping and people are going to want more interest on the money they lend the U.S. government, the private sector and anybody else. I’m open to ideas on what the best strategy for betting on higher market rates over the next two to five years is. Anybody out there think they got the best play on higher rates?
Interesting take on Gold from Bob Hoye
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It seems that everyone has a target for gold. With thousands of analysts, someone is bound to get a bulls-eye. Our work has presented measurements based upon the minor consolidation from February ($1034 & $1100), intermediate calculations based upon the eighteen month consolidation ($1150 and $1300) and longer objectives of $2000+ based on the ‘Battle at 1000’ as it related to the Dow of 1966 to 1982.
However, the most important fact is that the various consolidation patterns in gold (Feb ’09 –Sept ’09, Mar ’08 – Sept ’09 and Jan ’80 – Sept ’07), have been wide enough and deep enough to accumulate a significant amount of stored energy capable of producing a prolonged rally. It is only after the market experiences an exponential move in multiple time frames that we will consider it to be nearing an end. Last Thursday’s daily Upside Exhaustion alert was just the first of what could become numerous daily, weekly and monthly signals over the next few years. Each daily and weekly occurrence can put the market into a position of short term vulnerability, offering attractive buying opportunities on pullbacks within the rising trend.
The best of bull markets will generate overbought readings on expanding volume in the early stages following a breakout of a base or consolidation. This ‘sign of strength’ was seen in copper breaking out at $1.50 in 2005 on the way to $4, crude oil passing through $40 in 2005, the Dow Industrials through 1000 in 1982, gold through $250 in 1979 and silver through $3 in 1974. The recent overbought reading in gold is constructive. It emphasizes the fact that money is truly moving into the market at an accelerated pace. Dips are to be bought.
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Nov 18, 2009
-Bob Hoye
Institutional Advisors
Thanks Army.
I think Peter brought up a big point that even if the Dollar goes up. there are other factors that can keep gold in the green. Sure is interesting to follow gold right now.
Known you through Moneytalks.net.
What is your opinion on Osisko mines. Do you think it is a buy? Thanks.