Category Archives: Gold and Silver HUI, XAU, Index and ETF Charts

Ben Bernanke Blinks and the Market Calls!

Gold, the HUI gold stock index, commodities and global markets have exploded to new highs, as Ben Bernanke decided to take the handoff from Alan Greenspan and run with the “asset bubble” ball by unleashing unbridled inflation upon the American people.

Greenspan has to be the luckiest man alive since that last Iraqi to make it over that Kuwaiti bridge in the Gulf War… all thanks to Ben Bernanke.

The market dealt Bernanke his hand and even with 3 inflation cards up, Bernanke blinked and decided to cut rates and bail out Wall Street. 

Bernanke’s decision to cave in to market pressure and to put Wall Street and the DOW above the American people and  fiscal responsibility, is a day that will live in infamy. It was also the day that insured “Greenspan’s Getaway” with his legacy as “Maestro” still intact.

And how about the Alan Greenspan legacy book tour?

Were you as amazed as I was?

From appearances with Matt Lauer on Good Morning America, to 60 Minutes and his book promo appearance charading as an interview with CNBC’s Mario Bartiromo – U.S. Taxpayers were treated to the equivalent of hoisting Barry Bonds up to America’s youth as the flag bearer of  sound mind, sound body and sportsmanship.

I almost gagged on my portabella tortellini when asked if he felt any responsibility for the present credit, subprime and housing crisis, and he replied – “No….none”

No responsibility for cutting interest rates to record lows and leaving them there far too long which created a global debt & credit orgy! “No responsiblity… none.”

 That’s beyond incredulous.

There’s irrational exhuberance and then there’s unbridled hubris.

The biggest bubble Greenspan ever created still remains unpopped.

— his ego.

I was nearly speechless when I saw his denial of “any and all responsibility” for this mess America finds itself within.

Do you want to know what I think about Greenspan’s legacy?

Alan Greenspan should be charged with crimes against humanity for dropping bombs of economic mass destruction upon  America’s economy and it’s people, because our children and perhaps our children’s-children will be paying for his ego and hubris.

  • The U.S. Dollar is collapsing.
  • Inflation is exploding.
  • The U.S. economy is rolling over into recession.
  • The Housing Bubble is going to make the “S&L Bailout” look like a pimple.
  • And millions of Americans stand to loose their homes, their jobs and their futures because of Alan Greenspan – and now Ben Bernanke.

Just look at this message from the markets.

Here’s what the market said about “Bernanke’s Blink.”

And the HUI Gold Stock Index explodes +120 index points in less than a month:

“Bernanke speaks and commodities answer!”

 Alan Greenspan has now exited — stage left. And Ben Bernanke has taken the “asset bubble ball” and decided to run with it.  Gold and commodities are not just reflecting a weaker U.S. Dollar, nor are they just riding a liquidity tide that lifts all boats. They are signaling that Ben Bernanke has  not only “blinked” and lost his “stare-down with inflation,” but that he has also adopted the Greenspan methodology of trading one bubble for another… digging America and Americans an ever deeper economic hole.

The Fed has injected a massive amount of liquidity over the last month with 3 repo injections of $31 Billion, $29 Billion and $38 Billion.

As the U.S. Dollar collapses, investors jumping upon this Fed & PPT orchestrated DOW bandwagon rally resemble those arranging deck chairs on the Titanic. 

In case no one else has noticed, those charts above have signaled that the lifeboats have already been launched.

— Michael Cerulean

The Euro Dollar says – Gold is doing just fine!

Gold bulls have now endured 14 months of consolidation & distrubition and many are now throwing in the towel. But, should they? Is the great gold & silver bull dead? Have we already seen the highs for this cycle? Or, are gold and silver merely in a long, drawn out consolidation phase?

For answers you need only look to the Euro. The Euro is now among the strongest of global currencies. So, let’s set the bar high and take a look at gold vs. the Euro.

Here’s the chart that holds many answers:

Gold vs. Euro Dollar         

 Given the recent dumping of gold onto the market by Central Banks,  gold is showing amazing resiliency. We’re still riding on the 200 dma and as noted in “red” – and every penetration below the 200 dma has led to an immediate influx of strong buying and a “V-Rally.”

 As traders we have two plays here. The first is based on value. Add to positions and buy gold on any dip below the 200 dma – just set stops 5-6% below the 200 dma.

The second trade, a safer play –  is to add to positions on any momentum breakout above the blue-dotted trendline, which I think is imminent.

 All the fundamentals of the gold bull remain intact. We are witnessing  an unprecedented increase in global money supply. Derivatives are growing exponentially and we are seeing the smartest of smart money like Sam Zell and the Blackstone Group – cashing out. The U.S. used a credit and debt bubble to create an asset bubble in housing, and presently in U.S. equities. With cracks developing in subprime and mortgage backed securities, we’ve seen the warning signals in the derivatives market. It will be when, not if – when the meltdown in derivatives becomes a once-in-twenty year rogue wave event. Be prepared, stay the course, buy gold on any and all dips at and below the Gold:Euro 200 dma trendline and get ready for the imminent breakout back about the trendline. The U.S. Dollar is on life-support and Central Banks are doing their very best to keep the “yellow canary” in the coal mine silent.

They don’t call patience a virtue for nothing. Stay the course and be patient. When, not if… gold and silver will re-launch for part II of this generational bull market.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

HUI Gold Stock Index Signals New Highs

After 8 gut-wrenching months, the HUI gold stock index has finally signaled it’s ready to move through last May’s sector highs. Here’s a snapshot of the present cycle for gold, using the HUI gold bugs index.

Each new up-leg of this cycle for gold & gold stocks has required a consolidation phase.  Technical bottoms are formed via selling exhaustion. Ideally, they correspond with a positive change in underlying fundamentals and investor sentiment.

The Fed has utilized every tool in it’s bag of tricks to keep the U.S. consumer and the economy afloat. They removed M-3 from public scrutiny, they’ve manipulated PPI & CPI numbers to where official inflation numbers have become a public joke. They’ve created one asset bubble after another and have flooded the world with U.S. Dollars.

But, sooner, or later – all chickens come home to roost.

 The beauty of Gold is in it’s versatility. Gold can trade as a commodity, it can trade as a currency and it always trades as the ultimate safe-haven during times of geopolitical and economic turmoil.

On the commodity side, we are only in the early stages of a generational bull market. There are three undeniable long term catalysts for this move.

1. The insatiable appetite of China, India and the emerging economies of the world.
2. A generational repudiation of paper currency for hard assets.
3. Massive global inflation and expansion of the money supply that can not and will not stop.

As a currency, Gold offers the lone refuge from the ravages of inflation. We have reached an unprecedented level of global inflation and it is not just the USA that is running the fiat printing presses on overtime. Here are the expansion rates in money supply for the major global economies over the last year.

– Russia has increased money supply by + 43%.
– India has increased money supply by + 20%.
– Brazil has increased money supply by + 17%.
– China has increased money supply by + 15%.
– Great Britain has increased money supply by + 11%.
– France has increased money supply by + 8%.

Golds biggest moves occur when it leads (not follows) the commodity sector. These initial moves often emerge with great stealth and remain under the radar of most traders.  And that is exactly what happened in November. While gold was in the midst of yet another correction – here is what we saw:

Gold confirms the global helicopter drop of fiat currency and errupts against all  currencies.

 

 Gold re-establishes it’s leadership to the CRB commodity index.

Gold breaks out agains the DOW – even as it hits new highs.

In my next post I’ll talk about where I believe gold & gold stocks are going and what the catalysts of this phase of the generational gold bull will be.

 Buckle up, it’s going to be one helluva ride!

Gold and commodity correction over?

This recent collapse of crude oil rocked the world of commodity bulls.

But, Oil is bouncing back, hard and fast.

As is Gold…

                  

Since last May’s blow-off top in commodities; every explosive rally in gold has led to an equally violent correction. But, gold bulls have endured and persevered.

The question remains: Is this just another wild whipsaw ride, or are we  witnessing the formation of the next major breakout in the gold cycle?

In my next post, I’ll share some charts that I believe support the case for this being the next major move for gold and gold stocks.

And this one is going to shock even the most bullish of the gold bulls!