dollar

Paying subscribers get to see quite a bit more of Rick’s Picks than lurkers might infer from reading the free commentaries that go out each day to many thousands of readers. A headline that will have caught the eye of the latter was this one, from the May 2 edition: Gold’s Nastiness Hints of a Major Bottom. Comex June Gold subsequently fell $76, and we were therefore unsurprised to receive e-mails from lurkers who evidently had been caught flat-footed by this supposedly unforeseen (by us, anyway) bout of weakness. In fact, the daily “trading touts” that lie behind the Rick’s Picks subscriber wall have been far more cautious than outsiders would likely know. Just yesterday, in fact, we offered a projection for GDXJ, a proxy for junior mining stocks, that may have caused some subscribers’ scalps to crawl. (Click here for a free trial subscription if you want to see just how low we think this favorite of gold bulls could conceivably go.) So which is it:  Are we bullish on gold, as our headlines would seem to imply? Or do we privately shrink from the risk of owning bullion? The answer is that, although we are bullish on gold and silver for the long-term and have been socking away bullion coins for years, we are not so certain that it will achieve the stratospheric heights that some gurus have predicted. However, what we are most confident in saying is that, come hell or high water, gold’s purchasing power will more than hold its own relative to all other classes of investable assets.  We would concede, however, that the fantastic price targets of some bullion superbulls have a few things going for them.  For one, the U.S. dollar is already intrinsically worthless, and that implies that real money – i.e.,

Most of today's touts are actionable, including an options play in the QQQs that is suitable for traders with relatively little experience (i.e., the order can be parked with a broker). Forex traders might want to take note of a potential opportunity in the Dollar Index, which is stealing up on a bullish tripwire that can be leveraged in 'camo' fashion.

With the world in the throes of an unprecedented credit blowout, gold’s failure to crack $2000 barrier can sometimes seem mystifying – the moreso as the correction begun in 2011 stretches on, now into an eighth month. Gold has acted more like wheat or corn than like money. Shouldn’t it reflect the fact that dollars, euros and yen are available to an insatiable group of borrowers, mainly large banks, at no cost and in practically unlimited quantities? Indeed. And yet, lately, gold has been unable to muster the ire, even, of crude oil, which appears to be gathering thrust for its first foray above $120 since 2008.  Meanwhile, Comex Gold has been lazily backing and filling since last September. If gold is not oblivious to the steady and relentless destruction of currencies, it seems unpersuaded that this is what the central banks are accomplishing by design. From a purely technical standpoint, gold’s reluctance to get in gear with crude, and to start acting like it knows what the central banks are up to, is not so mysterious. Let me explain.  I have written here many times that it is not bullish buying that drives stocks relentlessly higher in bull markets, but short-covering by bears. This was a dynamic I got to observe first-hand in the dozen or so years I spent on the trading floor of the Pacific Exchange. While bulls often rationalize their buying strategies by citing “fundamentals,” they probably understand at a gut level that PE ratios are no more useful a predictor of where a stock will be trading in six months than tea leaves. Small wonder, then, that bullish sentiment alone cannot summon the kind of torpedoes-be-damned buying it takes to drive shares through massive levels of supply.  But short-covering can, since the buying is rooted

We bought the E-Mini S&P futures during this session, so it could be an especially illuminating one if you want to see a ‘camouflage’ trading opportunity rationalized in real time. There are also some finely nuanced observations concerning certain uses of the k-A segment. Issues covered include the E-Mini S&P, gold and silver futures and the Dollar Index.

A U.S. banking system that is being held aloft solely by hot air and brazen lies took an ebullient leap toward November 6 yesterday with the release of an Administration-friendly Fed report declaring most banks sufficiently capitalized to weather severe adversity.  How severe? It’s hard to tell, since there were only passing references in the New York Times to a still-deflating housing market that has helped make The Great Recession and a plummeting standard of living an entrenched fact of life for most Americans, if not for their bankers. And nowhere in the front-page article was there even a word about the Fed’s warehousing of trillions of dollars’ worth of mortgage paper once held by the banks – debt paper that might never recover in value.  Under the circumstances, far from being healthy as the Fed and its shadowy masters would have us believe, the banks are afflicted with the financial equivalent of stage four cancer. Not that anyone on the Street would care to notice. In fact, with this week’s big stock market gains, Wall Street seems to be literally banking on the ability of the spinmeisters to hide the financial system’s deathly pallor with the skill of Sonny Corleone’s mortician. In the meantime, many on the Street, and even a contributor or two in the Rick’s Picks forum, were seeing cloudless skies at least till the election. “Money is going to be pouring into the stock market at the expense of other investments,” noted one forum regular, Gary L. “I now see the possibility of a 20 percent rise in the stock market year over year,” he continued. “If external factors don’t derail this trend, we are in a perfect sunny day lasting perhaps another nine months. This will make Obama’s chances of winning re-election an odds on

Index futures have gotten off to a slow start Sunday night, while gold and silver futures are holding their own in the face of a resurgent dollar.  Touts for the new week will be out later tonight, so stay tuned.

Sometimes it's impossible to tell whether the financiers and politicians who carry water for the central banks are bad liars or just clueless dolts. A bureaucrat from the U.K. surfaced in the Wall Street Journal over the weekend, exhaling what seemed to us an ostentatious sigh of relief over the supposed success of the European Central Bank’s latest loan program: “[It provides] a very significant degree of breathing space to banks.” Yeah, sure. A very significant degree --- as though the banking system’s terminally decaying colossus were not in danger of imploding tomorrow -- and for no greater reason, possibly, than that some hapless bank clerk erroneously misplaced a decimal point. The bureaucrat's remark appeared, with unintended irony, in a story about how European banks are in a quandary over how to redeploy a torrent of digital cash that has recently come their way from the ECB’s magical credit-infindibulator. Recall that the banks sucked up €489 billion ($641 billion) in a matter of weeks after the ECB made that sum available to them in December for three years on super-easy terms. But what to do with it all?  None of them are in the mood to lend to – heaven forbid! --  businesses, and that leaves only two bad alternatives: using the digital money to buy government bonds from the sordid likes of Greece, Italy and Spain; or hoarding it at a loss. A loss?  Well, it turns out that although the ECB is charging commercial banks a nominal rate of 1% to borrow as much as their greedy little hearts desire, the central bank is paying them only 0.25% on overnight deposits.  Call us cynical, but we can’t see how the growing asymmetry of this relationship will produce a solution to Europe’s debt problems. In fact, it reminds us

Our good friends at Auerbach & Grayson are out with a storm warning for stocks and other risky assets in the first quarter.  The dollar, on the other hand, is in a strong primary bull trend that should see significantly higher valuations in the months ahead, according to Richard Ross, A&G's global technical strategist.  Click here for the full 27-page report.

Here's a fascinating item just in from Rick's Picks forum regular Roger Erickson: 3:26 PM Gold leasing rates are at record lows, driven down by French and Italian banks lending the metal in exchange for needed greenbacks. Tuesday's rate of -0.57% suggests a bank would actually have to pay for the privilege of lending its gold for dollars. A comment by 'Youngman': "Double HMMMM..this is why the price of gold and silver are down...you will never know how many times they have loaned one bar to how many entities...Probably in the 100´s....as the bank knows no one will take possession...talk about a scam.."