Thai Guru's Gold und Silber ... (Informationen und Vermutungen)

Chuck checked in last night:

The premium in the Central Fund is not an exact correlation, but it is a good indicator at extremes. The phenomenal drop today must mean something. If you look at the chart of its premium, the last time it was this low was back in June 2003 when gold bottomed at $325. Add in the persistent put buying in the gold options, and it could get explosive here. Chuck

Some help from my friends on this NO conference day:

Bill,
Hope your enjoying NOLA. My two favorite seafood dives (the ones with rodents crawling around but the best crawfish in town) are R & O's by the lake and Franky & Johnny's uptown on the river. You may want to check into these figures but my dad (a lifelong commodity trader) is insistent that Gold open interest reached 1 mm contracts in 1980. He said the IMM and Comex each had 500,000 open interest.

A couple of things you may have missed this morning: Japan 3rd qtr GDP came in at a disappointing +.1%. Euro 3rd qtr GDP +.3% and was aided by Greek Olympics. The important point to me is all the people fleeing the U.S. dollar for these currencies are ending up in no growth economies with low yields. Me I would rather own Gold with falling production and rising costs to produce. Secondly CNBC had a Chicago Merc Currency trader on saying he felt the most important thing he saw all week was South Korea deciding to cut interest rates with inflation picking up in order to protect the little growth they had. His point is there is tremendous international resistance to the falling dollar. The one currency he felt had upside was Gold since there was no government trying to devalue it (obviously that is debatable) but the important point to me is the story is starting to get around. There are very few attractive currencies. Most major currencies are being devalued it is a question which is being devalued the fastest. Gold will soon start outperforming all currencies.

U.S. retail sales were +.2%. While the media is talking up ex-auto retail sales, the growth came from gasoline stations + 4.3%. Auto sales were down 2.2%. In a healthy economy we would rather sell cars than gasoline. So the retail sales report was consistent with a stagflationary environment. Once again someone used the retail sales report to sell off Gold from its 16 year highs. It is clear to me they didn't bother to read the report.

In my opinion until Gold appreciates significantly against all currencies I would prefer to hold physical and physical leveraged Gold (futures) than the gold stocks. While I expect gold stocks to move up with the price of Gold it is clear they need significantly higher prices for their profitability to kick in given rising costs and falling production.
Garic

From Rhody on the WGC ETF

Hi Bill:
This tired brain has difficulty grasping how the new World Gold Council's Streettrack Gold Trust is going to help the cause of gold. If I understand this fund correctly, "units" representing one tenth ounce of gold will be traded on the NY stock exchange. Usually, these sorts of thing trade at a significant premium to the spot price. This thing sounds like the very definition of a derivative, introduced by an organization which has had a poor record in the promotion of gold. If one was unkind, one could say the WGC has had a negative impact on the gold market.. I expect the new Gold Fund to carry on in the negative tradition. You see, every dollar spent on the SGT fund is a dollar not spent on real gold. In this way, all funds like this divert money away from gold purchases into paper. I think this is their ultimate purpose. It is why they are allowed.

A gold fund still must buy some gold however to back its units. In this way, it is still an improvement on buying a gold stock such as NM or ABX.

If one buys a gold stock, one thinks it's a gold buy. It isn't. You have bought a derivative of gold, not metal. It gets worse. if you support a gold mining company with your share purchase, one has not only been diverted away from gold, but has encouraged more gold supply, or even additional hedging, if one buys a company with a history of that behavior. If you believe in gold, buy the metal, not the paper.
Regards, Rhody

Prudential Financial Is Cutting Goldcorp Inc. 2005 Estimate To -0.07 From 0.03 11:37 EST Thursday, Nov 11, 2004

Do you suspect that a phone call was made? Can't have Goldcorp rising and pulling up the HUI and XAU can we now.

If I had money at Prudential I would yank it immediately. Either they are buffoons or they are not telling their clients the truth.
Regards,
Dave.

More commentary help from my friends:

the weakest link?

he weakest link? Good evening Bill
Another week under our belts and gold continues to march onwards and upwards.

Despite all the hoo haa it is clear that Europe and Japan have little or no economic growth. The US has some growth, but at the cost of continuing to try and keep firing an economy that should have suffered a recession long ago, and which has huge triple deficits.

It is becoming obvious that all the major economic powers will try and devalue their currencies; but that is against each other's currencies which offers no consolation to an investor trying to achieve asset growth and real returns.

So what is the weakest link in this equation?

Gold, of course. As countries attempt competitive devaluations against other currencies, akin to a Mexican wave in a football ground, it will become clear that no currency offers safety, security and real value, whereas gold will offer all against all currencies.

Perhaps this will mark the beginning of the second leg of this secular gold bull market, when gold rises against all currencies.
Best wishes
Ian

The gold shares rose without any oomph. Most investors seem to be waiting for the expected gold price correction. The XAU gained 2.59 to 108.59, while the HUI took out 240 resistance and rose 4.41 to 241.65. I would have thought it would have really taken off when 240 was breached. Nope. Just a sign of how blasé the investment world is about gold at the moment.

One reason I can think of for the lack of hoo-rah is few in the US are thinking gold with the stock market doing so well. Most Americans aren’t affected by the falling dollar. At least, they are not paying attention on a day to day basis. With the US stock market moving up every day, the real estate market holding up, and interest income on the rise, they could care less. My how that will change in the months to come.

Because of the disinformation about gold put out there by The Gold Cartel and even the gold establishment world, the understanding by the investing public about what the gold market is all about, remains zilch. Perhaps when it goes $500 bid, a few will wake up.

Gold and silver are going MUCH higher.

So far so good on my continuously bullish call on gold and silver. However, going to keep the rah-rah stuff very low key. No jinx coming from me for us all.

GATA BE IN IT TO WIN IT!

MIDAS

hope a number in the GATA ARMY took a few minutes to contact Anderson Cooper at CNN:

Bill:
The below email was sent to Anderson Cooper at CNN via their website. FYI...

There has been very obvious manipulation of gold (short selling) by several large, prestigous institutions both here in the U.S. and overseas. The disgrace is the suppression of this information by literally ALL the mainstream media. This has been noticed and commented on by what this media has termed as "gold-bugs", "those on the fringe", or "gold nuts". If you're really serious about the "facts" evident in this assertion, by all means contact Mr. Bill Murphy of GATA (the Gold Anti-Trust Action Committee) at

LeMetropoleCafe

Of course, if you're not interested nothing can make you look for the truth.

Best Regards,
Jan L. Abernathy

By: David Morgan, Silver-Investor.com

November 12, 2004

I am extremely pleased to announce that I will be joining several mining industry professionals for an extensive 7 day trip from the 21st through the 28th of November to China's Northern silver mining districts.

Many of my readers have been patiently waiting for me to give some specific direction as to how I think they can profit from the privatization of silver mining assets in China. As I have been doing more and more research it has become obvious to me that China is committed to developing the supply side of their domestic silver markets by encouraging foreign partners to bring much needed capital and western geological methods of exploration and development. China does not wish to be reliant on other countries for silver or other base metals which they desperately need to support their rapid industrial revolution. Having spoken with many high-ranking Chinese officials it is my belief that China's insatiable thirst for silver will spur a Silver Rush similar to what we witnessed in the gold markets throughout North American history as miners realize the vast richness of China's silver landscape.

I believe that Soros, Buffett and Gates, all reputedly large investors in the silver markets, all understand the unfolding phenomenon that China's industrial appetite is going to cause on the world's silver supply. We all know that the US dollar is continuing to breakdown and that without demand for that paper currency it is doomed for failure. China offers hope as they continue to accept dollars in exchange for an accelerated industrial revolution, one that cash-starved country desperately needed once the mainland Chinese population started to get a taste of western material goods via the reversion of Hong Kong to Chinese control in 1997. Ever since, there has been domestic pressure for a better life demanded by the Chinese citizens themselves and the US and European banks have been smiling and supporting this much needed infusion of interest on the demand side of the paper money system in order to continue their money game. We all know that Americans have no credit demand left in their wallets. Without China the entire house of cards will collapse for the United States currency. All you need to do is look where Wall Street has been pouring billions of dollars of investment capital, both directly and indirectly, via the fortune 500 companies who also recognize that in order to meet their future earnings expectations they are going to need a major boost and China's the spring board.

Where the opportunity arises for investors is to look beyond the wall that represents the future fortunes for America and Europe's corporate elitists and take advantage of this once in a lifetime investment for yourself. Don't listen to the critics who play the 'made in America' tune because Wall-Mart has already been singing that one while American consumers have been gobbling up the Chinese imported goods they've been lining their shelves with.

In conclusion, China can't possibly compress 1/5th of the world's population into an industrial revolution that may only spawn a period of 20 years compared to America's 70-100 year industrial revolution without driving up the prices of strategic commodities - and none more than silver. And yes, the paper money machine will continue to finance this compressed revolution, and yes the technology and information sharing capabilities today far exceed those that existed when America was experiencing her enormous growth (with a fraction of the population I might add), but the big question is WHERE ARE THE COMMODITIES GOING TO COME FROM to satisfy this compressed industrial revolution. The answer my friends is blowin' in the wind, and that wind will come from mines which today cannot economically produce silver at these low prices but can when the price increases to a point where it is economic to produce the ore. The second area of supply side growth will come from the inevitability of new exploration successes and the modern development and geological advancement of historic silver deposits and it's precisely here where I believe China offers fantastic potential for investors.

The combination of a rapidly declining US dollar causing millions to turn to silver as a store of wealth, China's accelerated industrial revolution gobbling up the world's silver supply (being driven in large part by the desperate need of US and European banks to create a credit need), and China's untapped domestic potential for new exploration and development successes, make the future price of silver look like a pending nuclear explosion compared to any other mineral or metal I am aware of.

I look forward to this trip beyond the wall and am hopeful to return with valuable information I can share with my subscribers. I will be issuing an expansive report CHINA'S SECRET SILVER SOLUTION early next week before departing to Beijing that will provide much more detail than this brief email alert. Earlier today I issued a new report I encourage everyone to read SILVER VALLEY AND CHINA TREND - KEEP HOPE ALIVE, and it is available in the financial reports section of FreeMarketNews.com.

-- Posted 14 November, 2004 , Quelle: silverseek

Zusammenfassung der "Nuklear Preisexplosion beim Silberkurs":

• China wird zur Sicherung seines rapiden Wachstums seine Suche nach Silber und anderen Metallen durch die Beteiligung von ausländischen Firmen (Geld/Know-How) forcieren. Der unersättliche Durst nach Silber wird zu einem Silberrausch ähnlich dem Goldrausch in den USA führen.
• Soros, Buffet und Gates haben die Auswirkungen verstanden, den die chinesische Industrie auf die Silbervorräte hat. China kann nicht 1/5 der Weltbevölkerung in das Zeitalter der industriellen Revolution überführen ohne dass es Auswirkungen auf den Kurs der strategischen Waren hat - vor allem auf Silber.
• Die große Frage ist, woher die Ware kommt, die die industrielle Revolution befriedigt. Dies kann von Minenstammen, wo es zum heutigen Preis unwirtschaftlich ist zu produzieren, es sich aber bei einer Preissteigerung wirtschaftlich wieder lohnt. Ferner besteht die Notwendigkeit neuer Explorationserfolge.
• Die Kombination von schwächeren Dollar, wo Millionen Silber auch als ein Lager des Reichtums sehen, und Chinas industrielle Revolution führt dazu, dass sich der zukünftige Silberpreis wie eine Nuklearexplosion im Vergleich zu anderen Metallen entwickeln wird.

Silbertaler,

China,China,immer wieder China.Wird das Land und seine Wirtschaft nicht nur benutzt,um einen Nebelschleier über das gesamte Weltwirschaftssystem zu legen?Mit meinen Aktien habe ich dort jedenfalls nichts verdienen können,nein sogar verloren,trotz dessen der HSI um 20% gestiegen ist.

Vor einigen Monaten haben die Chinesen den Silbermarkt mit ihren Silberverkäufen,mächtig unter Druck gesetzt.Damals gab es die Ankündigung der Chinesischen Notenbank,das Silber nicht mehr unter
5,50$ zu verkaufen.

Bedanken möchte ich mich aber zwischendurch mal bei Dir und Schwabenpfeil,für die uns zur Verfügung gestellten Infos,DANKE !

hopth,

Würdest Du Dir wirklich Anteile an einem Goldfonds kaufen,der die pysische Auslieferung ausschliesst?

Ja,wo ist unser Guru,zu seiner Zeit waren wir wenigstens auf dem laufenden

THAI,wenn Du hier mit liest,melde Dich doch mal,was überhaupt los ist?

Grüsse

Kalle

Kalle14,

es gibt zweifelslos eine Auswirkung der chinesischen industriellen Revolution. Für mich ist es nur noch die Frage, ob es sich schon in den nächsten Woche gleich niederschlägt oder in den nächsten Monaten. Auf jeden Fall wird die höhere Nachfrage (mir ist es dabei egal, woher die kommt), das beschränkte Angebot (mangels genügender Produktionsressourcen) und der weitere Dollarverfall zu einer gravierenden Auswirkung führen.

Kalle, ich habe den Eindruck, dass es hier im Forum in letzter Zeit etwas ruhiger geworden ist, wenn man mal die Arbeit von Schwabenpfeil ausnimmt. Der Aderlaß von Leuten, die tiefer in der Materie stecken und auch weitergehende Informationen liefern, ist schon bemerkbar und nicht so schnell zu ersetzen. Auf der anderen Seite lese ich mittlerweile bei silberinfo mit. Von daher entgeht mir nichts.

Gruß

Silbertaler

interessanter Aspekt: die Silber Leihrate steigt deutlich an, auch ein Indikator, dass man von steigenden Kursen ausgeht:

http://www.kitco.com/lease.chart.silv.html

#Hallo kalle,

würde ich nicht machen, im übrigen bin ich kein Freund von Fonds, da bist Du eben nur Bussfahrer und immer auf die jeweiligen Fonds-Manager angewiesen, wechselt er wechselt auch offt die Strategie, nein danke, mach ich besser selbst.

gruß hpoth

Hab mir heute (zum ersten mal...) den Silber-Leaserate Langfristchart angeschaut!Wenn
das stimmt,wie das graphisch dargestellt ist,dann sind die Leaserates wesentlich niedriger,als bei den grösseren Preisanstiegen in der Vergangenheit!
(Seither hab ich nur gelegentlich mal die kurzfristigen charts angeschaut.)

[Blockierte Grafik: http://www.sharelynx.com/charts/SilverLeaselt.gif]

Zitat

Original von Silbertaler

Kalle, ich habe den Eindruck, dass es hier im Forum in letzter Zeit etwas ruhiger geworden ist, wenn man mal die Arbeit von Schwabenpfeil ausnimmt. Der Aderlaß von Leuten, die tiefer in der Materie stecken und auch weitergehende Informationen liefern, ist schon bemerkbar und nicht so schnell zu ersetzen. Auf der anderen Seite lese ich mittlerweile bei silberinfo mit. Von daher entgeht mir nichts.

Hallo Silbertaler,

klar fehlen uns die alten Fahrensmänner und Boardexperten. Irgendwie ist die Situation ja schon komisch: Die Häuptlinge fast isoliert bei Silberinfo; die Indianer bei Goldseiten.

Gruß
Schwabenpfeil

Promises To Pay

When I sit down and think about what a dollar really is; I am amazed at how simple the answer is. In simple terms a dollar is a “Promise To Pay.” When examined from this point of view one begins to understand to true meaning of deficits. Now compound a promise to pay, one trillion times, seven trillion times or fifty trillion times. Gets a little frightening doesn’t it?

When the owners of those “Promises To Pay” finally decide to collect on their debts what will they decide to settle for in payment? What do they want, as final payment, for having been so kind by accumulating our debt for all these years? The important point to remember is the fact that they have not been paid but only accepted a “Promise To Pay” as a pacifier for their goods and services. The story gets a little interesting when we look at it from this perspective. Just what could these owners of our “Promises To Pay” buy with their paper? I think the answer is anything they want! I think it is important to realize that the dollar is not payment but a pacifier until the possessor of that dollar decides what he wants to ultimately take in exchange for his products and service.

Now take a society that has temporarily lost its mind and gone on a buying binge where they are buying foreign goods and services at a deficit rate of $1.5 billion “Promises To Pay” everyday. Just exactly what are these people buying that is so important in their daily lives that they will eventually be selling their most prized and valuable assets, down the road, in exchange, to settle these outstanding “Promises To Pay?"

The most frightening point to this whole topic is the choice that the owners of these “Promises To Pay” will have when the time comes to rid themselves of these promises. These entities will have the option to purchase anything they want Will they be like the consumers in the U.S., a kid in the candy store, or will they be intelligent and purchase the items that they will absolutely need to maintain or achieve the standard of living they now have or want to achieve? My suspicion is that they will understand what they need and make very prudent purchases.

In today’s world, nations are approaching a point in time where the true leaders recognize the shortcomings of their nations and are taking the appropriate steps necessary to guarantee that their people have a sufficient supply of natural resources to meet the growing demands of their people. This new supply shall be purchased with the hoard of dollars that they have now accumulated.

China has made a $5.5 Billion bid to buy Noranda. They are going after the largest mining company in Canada and they are only spending a small fraction of the “Promises To Pay” that they have accumulated. We bought worthless toys and widgets from them and they are now buying hard core, and might I say “dwindling supply” natural resources from the rest of the world. I think that the exchange of widgets for natural resources will be of much greater benefit to China than the U.S.

We have now approached a point in time where these holders of our debt are seeing the writing on the wall and they have decided that now is the time to begin to cash in their paper. The only recourse our officials have to stop this redistribution of assets is to tempt these people with a sweeter pacifier; this pacifier is rising interest rates. The only tool left to postpone this liquidation of dollars and subsequent purchase of natural resources is rising interest rates. How high will the rates ultimately go? I think a whole lot higher than the masses, who are buying these toys and widgets, can even begin to comprehend. I believe that the next five years will bring about dramatic changes in our lives and the purchases that we make. I believe that five years from now, as we compete for a supply of oil and natural resources that are simply not there, we will fully regret the day that we outsourced our manufacturing facilities and our jobs to these foreign countries.

The only way out of this mess, from my perspective, is the create something that the rest of the world must buy from U.S. I see the U.S. developing into a service sector attempting to absorb all the lost manufacturing and financial jobs of the past. The problem with the service sector is the fact that this does not create wealth but redistributes wealth.

I see true wealth as being created, through the making of goods, which is manufacturing; the growing of crops, which is agricultural; the creation of technology and the mining of natural resources. I am sure there are other areas but I hope I have been able to get my point across.

The more outsourcing that goes on in the U.S. the more wealth creation we send overseas. Personally, I hope we come to our senses and change the pattern of the future; if it is not already too late.

Hopefully, I have the problems of my e-mail list fixed. I have sent out two updates, if you have not received them then you need to contact me. Likewise, if you want on the list then, just e-mail me. Sorry for any inconveniences.

Mike,

mhoy@neb.rr.com

Palladium

Palladium was in channel formation from 1991-1997. As we have stated before the longer the channel formation the more explosive the upward movement. When it broke out of the channel the price was 140, about 3 ½ years later it traded as high as 1040 dollars. Since 2002 it has been undergoing a brutal correction. It corrected all the way back to 140 and the support line held. One of the best times to invest in a sector is when it is has been beaten down to death and the reasons just don’t add up. Unless we stop manufacturing cars tomorrow, Palladium is always going to be needed. At current prices and taking inflation into consideration, palladium is trading 20-30% lower than it was trading in 1997.

It did break its main up trend line briefly in 2003, but as we stated before a brief penetration of the up trend line is normal many times. There is also a way to deal with this situation very effectively. When the main trend line is broken in a very long-term chart such as this, you then switch over to a different time frame (that’s where multi time frame analysis comes in) and to determine whether you should stay in or bail out, but that’s another topic.

[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/GPDOL/image001.gif]

Dollar

The dollar was in a channel formation from 1991 to 1997, (It was possible to play the up and down moves in this channel formation using multi time frame analysis as these charts have a lot of data compressed in them). Technically the dollar started rallying from 1995, as the up trend line within the channel formation was never breached, unlike the previous attempts. The main stage however began in the 1997-1998 period and it continued to rally up to 2002. From 2001-2002, the dollar was doing nothing but topping and issuing strong signs that it was ready to start correcting. Now play close attention to this part. In about 2 years the dollar lost all the gains made in 7-8 years; now that is what you call a vicious correction. It only stands to reason that some sort of counter rally is to be expected. Look closely and you will notice that the dollar actually peaked in 2001 and was struggling to take out this high in 2002 without any success. From its peak in 2001 to its low in 2004, the dollar lost approx 31% of its value. Gold from its low in 2001 to its high in 2004 gained approx 72%; so investing in Gold bullion more than made up for your loss in purchasing power.

Notice to that the dollar has not taken out its 1986 high of 128 and is therefore technically still in a downtrend pattern. I did not put the downtrend line here, but it was included in the mid week update.

We have just broken the long term down trend line. Note that Gold initially broke its long term down trend line in 2000; it was unable to stay above it and ended up testing the lows once more before mounting a very nice rally. There is a strong possibility that the dollar could do something similar and just maybe even test the major support Zone at 80 (if it did this, it would most likely do so on some positive divergence, i.e. lower price and higher macds or RSI, or Stochastics or a combo of all three). It is for this reason that we expect this trade to be very volatile in the initial stages.

[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/GPDOL/image002.gif]

Gold

Gold bullion has been in an up trend for 3 ½ years now, without a serious correction. The main up trend line has not been breached and is a zone that currently provides incredibly strong support. If we were to break through this support zone for more than a few weeks, then the top of the channel (not drawn in) around 300-320 provides a fortress of strength.

[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/GPDOL/image003.gif]

Now let’s tie in all these relationships.

Both palladium and the dollar started to rally from around the middle of 1992; Palladium unlike the dollar was able to maintain it’s up trend line. The dollar kept battling within the channel to find a direction. The moves in the channel were by no means small; a range of 80-96 is not a small movement. It appears that Palladium led the dollar in terms of strength; its move was a precursor to what the dollar would do in the future.

Moving on: The real true break out for palladium came in 1997; once again it led the dollar, which only really broke out in 1999 (from 1997-1999 it was forming another channel). However once the dollar really broke out in 1999, palladium went ballistic with the dollar; from 260 it powered of all the way to 1040 and the dollar from 96 went all the way to 122.

This is what we found surprising and only discovered when we were looking at very long term charts.

Palladium seems to work in tandem with the dollar for the most part, which means it works in the opposite direction to what Gold is doing. This can be clearly illustrated not only in the break out phase of palladium but also in the corrective phase. Throughout the palladium bull Gold was essentially correcting and when palladium broke out in 1997, the bottom dropped out for Gold. If history is any indication of what the future might hold, then it appears that once again Palladium has led the break out. Its downtrend was broken in the middle of 2003, while the dollar is still trying to break out of its down trend line.

If the pattern is to be repeated then the dollar will attempt a rally now (since these are long term charts do not expect something overnight), which will initially fail, while palladium keeps slowly moving up. Look at the periods from the middle of 1992 to the 1997; while palladium slowly kept going higher, the dollar was bouncing up and down in a wide range. These up and down movements were pretty huge; the top of the range was 98 and the bottom of the range 80 or so. This is not something small and in terms of futures represents thousands and thousands of dollars in profits or losses depending on which side of the trade you are on. Those performing a simple currency exchange (changing euros, Oz dollars, Swiss francs etc) would also feel some pain initially. We need to watch palladium closely as it seems to be a lead indicator to what the dollar is going to be doing in the future. If palladium is pointing to a stronger dollar, the following conclusions can be drawn

1) That Palladium is seeing a stronger world economy (meaning that even if the US has anemic growth, the world could take up this slack. Since Palladium is mainly used in the auto industry, we are only concerned with this aspect when we talk about the world economies.)

2) That Palladium will lead the way slowly at first, with the dollar rallying and correcting till it finds its way as it did in 1997.

3) There were times when palladium and Gold traded in tandem, while the dollar was correcting. In 1993, both Gold and palladium rallied and finally Gold broke down, while palladium carried rallying on. From 1989 to 1991 both palladium and Gold corrected in sync, then they parted ways as palladium started putting in a base formation, while gold carried on correcting. The same thing is happening now; from 2003 Palladium has been rallying with Gold. If history is to repeat itself then at some point in time they will have to part ways. Since Gold bullion is up approx 71% from its low, it has a better chance of correcting than palladium.

As you can see the data we are looking at is extremely complex and almost provides for contradictory scenarios. Right now we are not assuming much but just reading what the charts are saying, later on we will finish of with our assumptions.

Let’s zoom in a bit and examine the range bound movement in the dollar from 1991 to 1997. First of all we don’t think we will enter such a long phase this time but examining this situation does provide some clues for the future.

The dollar started to mount a rally in 1991 after putting in a low around 80-82 and this rally was rather strong; it took the dollar all the way to 98. After that the dollar started to brutally correct and put in a new low just below 80. Now we could be entering such a phase, the dollar has mounted its first rally and might even rally a bit higher, it could then correct and put in a new low just as it did back in middle of 1992 before taking off again. This means that Gold will initially pull back but then as the dollar corrects hard, mount a pretty sizeable rally. Then the bottom would most likely drop out for Gold Bullion and it would brutally correct. It would not be inconceivable to see a 50% pull back which would mean a correction to the 375 ranges or lower. The dollar then would start a new long term up trend journey just as it did in 1995. Palladium would really start to accelerate its move up, once the dollar was in full swing as was the case in 1999.

We have taken so much time to look at these relationships, because they are extremely complex ones that have occurred over large periods of time. The most complicated part is how deciding how to position ourselves for this situation; knowing that there are going to be periods of extreme volatility in between.

Conclusions

The information above seems to confirm our previous bullish case for Palladium. However it has now provided us with a larger view, which means that technically we could pull back all the way to 160-170 and still be in a major up trend (A situation we would not be looking forward to but must be open to).

It also means that very soon it will pay for overseas subscribers to switch to Dollars or move some of their money into dollar denominated assets. US citizens and residents you already own the dollar so, what palladium and the dollar charts could be indicating is that carrying debt could be more expensive.

Gold, a very tricky situation; palladium can go up with Gold, but to date the Dollar and Gold have not been able to trade in the same direction. So as far as Gold bullion is concerned, it could mount a significant rally if the dollar were to repeat its performance from the middle of 1991 to the middle of 1992. This is where the dollar after mounting a nice rally brutally corrected and took out its previous lows. Gold did not react, as one would expect to such a powerful down move; the dollar corrected from 98 to 79 (19 points) and Gold only jumped up from 350-380 (a mere 30 dollars). Since the situation is a lot graver now than then, Gold should react in a more violent way if the dollar were to correct in such a manner. The 425-430 ranges have been a source of serious resistance for gold since 1990, if we break past that and hold, the next real resistance only appears at 500.

This is one of the most complicated and most difficult situation we have had to ever analyze. The clearest pattern is that of Palladium and the Dollar. As far as Palladium goes it has started a new major trend change and the dollar is in the process of beginning one.

Gold on the other hand is already well into its trend change and such has the potential to correct to its main trend line and even dip briefly below it. So in terms of risk to reward based on current prices, Palladium is a far better play than Gold Bullion. We will update our outlook on this metal in future updates, however there will be some lag time as we have to cater to subscribers first.

[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/GPDOL/image004.gif]

This chart provides additional information as you can see the Macds are at the most oversold point ever in the history of this contract. If you go to the first chart you will notice that the Volume has been very strong in this up move that started in 2003 (from the 140-150 price ranges)

All these charts seem to confirm that palladium appears to be a very good long-term investment. The only problem with palladium is that one has to know when to bail out as the final stages of the move occur very rapidly and end just as fast. We will use our indicators to guide you out when the time is right.

Out of the three charts, Palladium is the most oversold, followed by the Dollar; Gold bullion is the least oversold (we are talking about Gold bullion and not Gold shares many of which are already very oversold)

The average man does not know what to do with this life, yet wants another one which will last forever

Anatole France 1844-1924, French Writer

US Dollar Bear Notoriety

The very foundation of contrarian investing is the premise that the crowd is always wrong near major market turning points. Contrarian investors carefully watch the thundering mainstream herd, noting the dominant popular trading bias, and then consider taking the opposite side of these trades.

The legendary Warren Buffett, the premier contrarian of our time, summed this up beautifully with his famous words, “Be brave when others are afraid, and afraid when others are brave.” I have been thinking about this timeless wisdom a lot lately as I ponder the US dollar’s behavior since the elections.

Since early November, the popular notoriety of the ongoing dollar bear has exploded. The fact that the US dollar is in a secular bear market is certainly nothing new. I first wrote about the coming dollar bear in the summer of 2001 a month after the dollar’s secular top, and have been analyzing this dollar bear periodically ever since.

Back in the early days of this dollar bear, this whole idea was an incredibly heretical thesis. Outside of the small band of hardcore contrarians and battle-hardened gold investors, few believed a dollar bear was even possible since the mighty dollar was the world’s reserve currency. Surely no foreigners would ever be so brazen as to actually sell the dollar, right? Wall Street and the mainstream scoffed at the mere suggestion that the dollar was rolling over into secular bear mode.

How times have changed three years later! Now you can’t even open a financial newspaper or watch a financial news show without hearing about the dollar bear. My desk is literally covered with various dollar-bear articles from Bloomberg, Reuters, and major US newspapers, all published this week alone. Even the US Treasury was trotting out a parade of toadies in recent days to solemnly reassure the world that “the strong dollar policy of the United States remains unchanged”.

The dollar is definitely in a secular bear, but the popular notoriety surrounding this event is certainly in a bull market these days. As a belligerent contrarian, few things make me more nervous than suddenly finding myself in a position where the mainstream starts to agree with my trades. Buffett warned us to be brave (buy) when others are afraid (selling), and popular fear surrounding the dollar bear is surging.

In light of this latest market fashion of jumping on this dollar bear bandwagon, I would like to update my dollar analysis this week. Even with the dollar bear’s immediate notoriety growing, examining the perpetual greed and fear cycles in the dollar is always complex. Long-term and short-term sentiment waves cascade into each other and overlap, sometimes leading to very different outlooks over various future time frames.

We’ve built two new dollar bear charts this week, the first strategic and the second tactical in focus. On both charts the usual US Dollar Index data is superimposed over the Relative Dollar, or the dollar divided by its 200-day moving average. This rDollar indicator has been remarkably accurate in calling major interim bottoms in this dollar bear so far and it offers many insights into the probability of another major bottom brewing today.

By considering the dollar in both strategic and tactical technical terms in light of its recent surge in popular notoriety, contrarians can gain a much better idea of its most probable future course lying ahead over the short, intermediate, and long terms.

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