VRA Update: The Next Big Move. Gold and Bitcoin.
/As our bubble bull market continues, we see some incredibly interesting chart developments for gold/miners and the continued rollover in the reflation trade, as this time evidenced by the mini-crash that's occurring in the financials. Also, I highly encourage you to read the article at the end. It's from one of my most trusted and long term experts, Paul Craig Roberts. If you want to understand cryptocurrencies a bit better, along with the tie-in to precious metals and their continued manipulation, I think you'll enjoy this piece. I sure did.
But first, lets take a look at the chart of gold that everyones talking about right now...I must have seen this weekly chart of gold re-tweeted several hundred times in just the last few days (rare for any chart of gold...likely because gold does not have .com at the end of it).
In this weekly chart, from the highs of 2012 ($1900/oz) we see that gold has been in a downtrend. That blue trend line that you see has served as resistance on every rally attempt since. It's almost as if some mystical force has kept this chart in front of them and waved their magic wand, sending gold lower on each occasion it dared to cross this line. Of course the wizard I hint at is the FED and her sister criminal central banks globally.
Here's what we need to see; should gold trade through $1300/oz ($1297 this am) this will be the definitive break higher that will tell the traders of the world that gold is about to have a rocketship-like move higher. The next chart might just give us the ammo to make this prediction...
This is the GDX (miner ETF) chart. Here, we see each instance that the FED has raised rates. The first hike was in December 2015...we were ALL over this in the VRA and made serious money as the gold/silver and the miners ramped 152% higher over the next 9 months (our profits were 3x).
The second hike was December of 2016. Again, we called that move higher, and it produced a GDX gain of 44%. The last hike was in March of this year and we saw a much more compressed move higher (though also very short term) of just 19%.
But looking at this chart tells us two things clearly; 1) GDX sells off into rate hikes and 2) GDX then rallies sharply after a rate hike. Folks, this is what we must be ready for.
The FED decision is just 1 week away....we'll focus on our specific game plan going forward.
Here's the chart of BKX (bank index), showing the big reversal lower, since the March highs. The big banks announced that trading revenues are slowing...of course we know that loan growth is doing the same. This is a big pattern change...we'll soon know if it signals a reversal in the US economy or merely a slowdown. But yes, what you see below is a head and shoulders pattern...if that right shoulder breaks down, look out below.
And this chart (courtesy of Sentiment Trader) might just be the market tell that we needed to see to make sense of the disconnects occurring in the market.
As you'll see, each time (since 2007) that the Nasdaq has hit a new 52 week high, while at the same time less than 55% of small caps were above their 50 dma, a sharp sell-off has occurred.
Heres the article from PCR on gold and bitcoin. PCR is the man...plain and simple. I write about him at least 1-2 times a year. He worked as the #2 man at the Treasury under Reagan and then was top editor at the WSJ. But his honesty banished him to journalist wilderness. PCR is a friend of mine....he's a friend of ours...I highly encourage you to register at his site and support/follow his work. This piece is spot on.
BTW, if bitcoin can soar 600% in less than a year, what do you think gold might be abe to do? My target remains $2000/oz within 9 months.
Until next time, thanks again for reading...
Kip
Is Bitcoin Standing In For Gold?
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Is Bitcoin Standing In For Gold?
Paul Craig Roberts and Dave Kranzler
In a series of articles posted on www.paulcraigroberts.org, we have proven to our satisfaction that the prices of gold and silver are manipulated by the bullion banks acting as agents for the Federal Reserve.
The bullion prices are manipulated down in order to protect the value of the US dollar from the extraordinary increase in supply resulting from the Federal Reserve’s quantitative easing (QE) and low interest rate policies.
The Federal Reserve is able to protect the dollar’s exchange value vis-a-via the other reserve currencies—yen, euro, and UK pound—by having those central banks also create money in profusion with QE policies of their own.
The impact of fiat money creation on bullion, however, must be controlled by price suppression. It is possible to suppress the prices of gold and silver, because bullion prices are established not in physical markets but in futures markets in which short-selling does not have to be covered and in which contracts are settled in cash, not in bullion.
Since gold and silver shorts can be naked, future contracts in gold and silver can be printed in profusion, just as the Federal Reserve prints fiat currency in profusion, and dumped into the futures market. In other words, as the bullion futures market is a paper market, it is possible to create enormous quantities of paper gold that can suddenly be dumped in order to drive down prices. Everytime gold starts to move up, enormous quantities of future contracts are suddenly dumped, and the gold price is driven down. The same for silver.
Rigging the bullion price prevents gold and silver from transmitting to the currency market the devaluation of the dollar that the Federal Reserve’s money creation is causing. It is the ability to rig the bullion price that protects the dollar’s value from being destroyed by the Federal Reserve’s printing press.
Recently, the price of a Bitcoin has skyrocketed, rising in a few weeks from $1,000 to $2,200. Two explanations suggest themselves. One is that the Federal Reserve has decided to rid itself of a competing currency and is driving up the price with purchases while accumulating a large position, which then will be suddenly dumped in order to crash the market and scare away potential users from Bitcoins. Remember, the Fed can create all the money it wishes and, thereby, doesn’t have to worry about losses.
Another explanation is that people concerned about the fiat currencies but frustrated in their attempts to take refuge in bullion have recognized that the supply of Bitcoin is fixed and Bitcoin futures must be covered. It is strictly impossible for any central bank to increase the supply of Bitcoins. Thus Bitcoin is standing in for the suppressed function of gold and silver.
The problem with cryptocurrencies is that whereas Bitcoin cannot increase in supply, other cryptocurrencies can be created. In order to be trusted, each cryptocurrency would have to have a limited supply. However, an endless number of cryptocurrencies could be created that would greatly increase the supply of cryptocurrencies. If entrepreneurs don’t bring about this result, the Federal Reserve itself could organize it.
Therefore, cryptocurrency might be only a temporary refuge from fiat money creation. This would leave gold and silver, whose supply can only gradually be increased via mining, as the only refuge from wealth-destroying fiat money creation.
For as long as the Federal Reserve can protect the dollar by bullion price suppression and money creation by other reserve currency central banks, and as long as the Federal Reserve can keep the influx of new dollars out of the general economy, the Federal Reserve’s policy adds to the wealth of those who are already rich. This is because instead of driving up consumer prices, thus threatening the US dollar’s exchange value with a rising rate of inflation, the Fed’s largess has flowed into the prices of financial assets, such as stocks and bonds. Bond prices are high, because the Fed forced up the price by purchasing bonds. Stock prices are high, because the abundance of money bid prices higher than profits justify. As the US government measures inflation in ways designed to understate it, the consumer price index and producer price index do not send alarm systems into the markets.
Thus, we have a situation in which the Fed’s policy has done nothing for the American population, but has driven up the values of the financial portofilios of the rich. This is the explanation why the rich are becoming more rich while the rest of America becomes poorer.
The Fed has rigged the system for the rich, and the whores in the financial media and among the neoliberal economists have covered it up.
http://www.paulcraigroberts.org/2017/05/31/bitcoin-standing-gold/
