“Following every great bubble the senior currency eventually became ‘chronically’ strong relative to most asset classes, including commodities, and other currencies for most of the time.” - Bob Hoye, chief strategist of Institutional Advisors *** With the U.S. dollar in the throes of a rally that has been rampaging since June, it’s time to revisit an idea that I first wrote about nearly twenty years ago – that a short-squeeze on the dollar could eventually cause a meltdown of the global financial system. Although doomsdayers have put forth many theories about how economic Armageddon might play out, it was always a given that the dollar would be at the very center of the crisis. The reason for this is that there are vastly more dollars in play globally than the central banks, even acting in concert, could hope to manage when the day of reckoning arrives, as it most surely will. There are perhaps a quadrillion digital dollars swirling in the financial ether right now, most of them created not by the central banks, but by modern-day alchemists who have transformed the very flotsam of the securities world – Bolivian reverse floaters, non-performing receivables of all kinds, rehypothecated brokerage accounts and such -- into seven- and eight-figure bonuses for every partner on Wall Street. Each and every one of those dollars represents both an asset and a liability on the macro ledger, and although they would cancel each other out at some level, it can hardly be assumed that this would occur in an orderly way, if at all, in the event of a financial panic. That the preponderance of those quadrillion dollars are being used to sustain an epic financial Ponzi scheme is inarguable, since the output of real goods and services in this world amounts to no more
Monday, November 10, 2014
Gold, Silver Pause for Breath
– Posted in: Free Rick's PicksBullion futures were idling Sunday night, but Friday's sharp rally should dispel any worries that bulls may already have petered out. December Gold exceeded no fewer than four 'external' peaks on the hourly chart, suggesting that any mild weakness over the next day or two should be regarded as a buying opportunity. For a more detailed look, including precise bullish benchmarks for both gold and silver Comex contracts, check out today's touts and the charts that accompany them.
SIZ14 – December Silver (Last:15.800)
– Posted in: Current Touts Rick's PicksDecember Silver has stalled Sunday night at the precise midpoint of the bullish pattern shown. We shouldn't pretend to know how this will play out, but if the futures can push just a bit higher, exceeding the red line by perhaps 3-4 cents, it would greatly shorten the odds of a follow-through to the 16.265 target. Monitoring the very lesser intraday charts, night owls attempting to climb aboard should wait for the first uptrending ABC pattern following a breakout above 15.870. A bc-type pullback from in-between that high and the one at 15.880 would be the most appealing entry opportunity that I could imagine at the moment.
GCZ14 – December Gold (Last:1172.40)
– Posted in: Current Touts Rick's PicksIgnoring Thursday's fleeting shakedown beneath a major Hidden Pivot support at 1137.50, the futures look to be in good shape Sunday night to continue higher. Price action is subdued at the moment, but it comes on the heels of a rally that exceeded no fewer than four 'external' peaks on the hourly chart without taking a breather. Conditions do not warrant a green light for getting long at the moment, unless via the 'camouflage' technique. We should wait to see what develops in Monday, but be aware that the next bullish benchmark above lies at 1202.80, in the form of a minor external peak recorded October 30 on the way down.
TLT – Lehman Bond ETF (Last:120.00)
– Posted in: Current Touts Rick's PicksTwo weeks of choppy price action has begun to look more like accumulation than distribution, implying this vehicle could take off without first deferring to the 116.69 correction target I flagged here earlier. Friday's move was bullishly impulsive on the hourly chart, projecting most immediately to 120.78. The 119.94 midpoint resistance with which it is associated has been slightly exceeded Sunday night (see inset), but not yet by enough that we should regard 120.78 as a done deal. Whatever the case, I'm not keen on chasing this vehicle higher, especially since its upside potential stretches into outer space. For now, unless you are scalp-trading, remain on the sidelines.
ESZ14 – December E-Mini S&P (Last:2027.75)
– Posted in: Current Touts Rick's PicksFriday's unexceptional payroll news sent the futures into a weak rally that fell four points shy of the 2037.50 target we've been using. It's still valid, but you should short there only with caution, since, if 2037.50 is exceeded, the 2055.00 target of a lesser pattern would be in play. Night owls should look for entry opportunities on the five-minute chart. Shortly before midnight Sunday, the best one I could identify implied bottom-fishing at 2018.50, a Hidden Pivot support that will obtain unless 2030.75 is exceeded to the upside first. This is shown in the accompanying chart.
