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This page was last updated on Tuesday, 24 May, 2016.

Bulletin on Metals

SK O'Neal
24 May, 2016

Note today's conversation on gold (Armstrong) [1].   There is useful information.  A close today below 1240 will indicate that it may be wise to sell gold into cash for the next several years, and if it breaks 1200 (below 1206), then  it is a strong sell signal, unless you want to ride the below 1000 to the early twenties and the rise on the other side.  An interesting palladium article in Kitco [3] yesterday pointed out that palladium is the extreme example of industrially driven demand, and gold is the opposite, at about ten percent industrial demand.  With economies in decline on a general scale, the two metals should diverge, with palladium falling much  faster than gold.  The implication  is for silver, a more intermediate ratio of industrial to non-industrial demand, that we can therefore expect to weaken moderately against gold for the same period of economic contraction.

Editor's Note:

At 13:00 EDT (New York), 24 May, 2016, Spot Gold Price (both NYMEX and GLOBEX) is reported at $1228.60/ozt.  Current Price is available here:  http://www.kitco.com/charts/livegold.html

Armstrong also makes a point elsewhere [2], that those who are forecasting catastrophic losses in the stock market are quite wrong, as the massive bubble in the bond market will flow both into the dollar and in part, into stocks.  Armstrong has pointed out last month  the efficacy of blue chip stocks in this light.  This issue with the buoyancy of the stock market  is directly related to the buoyancy of the dollar itself, as the gross failure of emerging nation currencies relative to the dollar creates a condition in which otherwise fundamental weakness in the US economy and the implicitly inflationary effects of QE are overcome by the deluge of refuge-taking (and hoarding).  Of course, this is, in the long term, unstable.  According to Bloomberg, the dollar is in line to be strengthened, as a rise in interest rates is in the works [4], and this will add downward pressure to metals. 

We also have heard that Georgi Schwatrtz (G. Soros) is reported to have accelerated gold purchases recently, which creates a paradoxical trend in thought.  Since Schwartz is not a gold promoter, this information is comparatively valuable.  One approach to reconcile the paradox is to remember that metals are often viewed as a long term investment and diversification.  Another approach is to consider that someone in Schwartz' position may have inside information, or actually be part of a plan to introduce a new effect, for instance war or some other method of destabilization of governments, the net effect being that financial trends will become subject to a transient condition not normally predictable.  We know, for instance, his position behind Obama, and the fraternity of agendas associated with of Z. Brezinski, et al.  These issues have been addressed in previous discussions, but it remains advisable to remember that even wars conform significantly to the momentum of capital flow, and only a design-basis catastrophe will likely alter the dynamics on a permanent basis.  Those who may need access to the buying power of their metals in the next several years may want to liquidate in favor of dollars, and then buy back during that same period on the low, except to the extent that the bet is held on the basis of a catastrophic event (transient),  either to ride out the transient, or to convert directly to life sustaining commodities.  What we do know for sure is that uncertainty is the dominant effect after the grand trends of capital flow, and that there is no truly safe place for money now.

REFERENCES


[1]  https://www.armstrongeconomics.com/markets-by-sector/precious-metals/gold/gold-the-dollar/
[2] https://www.armstrongeconomics.com/armstrongeconomics101/understanding-cycles/confused-when-will-this-end/
[3]  http://www.kitco.com/news/2016-05-23/Gold-Vs-Palladium-Another-Warning.html
[4] http://www.bloomberg.com/news/articles/2016-05-24/gold-holds-four-day-drop-as-fed-procession-signals-rate-rise



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