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Thread: A Bubble or a Bull?

  1. #11

    Default

    I agree with you that if the ETF market were to pop mid to long term holders of physical will win big.

    Can these ETFs move the price of spot for physical? I haven't looked into ETFs that much so don't really understand how they are related to the physical market.

  2. #12

    Default definitely a bubble

    The dollar has been a bubble since the 70's and is now collapsing to its intrinsic value.

  3. #13

    Default

    Yes this is very true, you must be referring to the 1971 Nixon Shock. What is very astounding here is that from that very point on the whole world is running on FIAT. Back then, the US was a major exporter, anyone trading with the US was trading in FIAT automatically. As I have mentioned before it is the USD that is in a Bubble status. When it collapses (and collapse it will) all assets denominated in USD will be heavily inflated.

    PMs, as few other commodities, retain value regardless of price since they are finite. Silver is under appreciated as of yet. A rise in demand due to use as money should well elevate its price beyond the inflationary adjustment.

  4. #14

    Default

    Welcome! It is always a pleasure to have another intelligent mind on the forum.

    In my opinion I have no reason to believe metals are in a bubble. Looking at the graph of the US money supply, a huge rally in metals is to be expected. What happens in the short run with FOREX is not really my forte, nor my concern, as you have previously stated - I am an investor. However, you bring up an interesting hypothesis. I am curious to see if Europe will stick with their supposed "austerity" programs or if they will fall victim to "easing". Regardless, in the long run, I feel pretty peachy about PM's.... especially considering the historic ratios and how out of whack they have been. Looking at the graph below and the current rations, PM's certainly have a way to go.

    Last edited by Ryanferr; 10-11-2010 at 12:32 AM.
    The answers are in the data

  5. #15

    Default My definition is pretty simple...

    Bubble
    Anything vacuous and inflated by false premises...such as anything "built up" using a fiat currency system that is printing and "investing" in anything without any limit.

    Bubbles can be easily created in any economic system which is based on fiat currency.

    Other bubbles might be the Tulip Mania, or other crazes. Bubble is anything that has no real value and is being traded or used to trade.


    Bull
    Anything based on supply and demand that increase in value based primarily on the supply and demand intersection.

    Politics can stretch these definitions, but to be a real bull market it is based on a large range of buyers with sufficient numbers that no single trade or small group of traders can significantly influence the market outcome.

    In a real bull market there is no hidden information or agendas that can control the market significantly.


    Rational decision making is also a keynote of market economies, and bull markets.

    Pretty much down the line definition.
    Buy Gold and Silver, then wait.
    Gold, Silver: Beautiful Insurance in Ugly Situations
    Monetary triangle: U-Unit of Account, W-Store of Wealth, M-Medium of Exchange.
    PMs are unencumbered tangible fungible fractionable portable durable liquid insurance...without counter party risk; elementary, "Internet Safe" w/o tech issues.
    Silver cheaper than Gold, both precious !!
    Gold and Silver are elemental with no man-in-the-middle.

  6. #16

    Default

    Dear friend, I thank you for your words, they are as flattering as you are kind.

    As for the prior commentary I would like at this point to share my personal view as to relation between Au, the USD and the EUR.

    $GOLD/$USD:
    Yes what we have seen thus far is a strong upward move with enough momentum to take us easily into the next year illustrated by the moving averages and the MACD way over the 0 base line. This is true on multiple charts but I mainly advise the MONTHLY, WEEKLY and DAILY charts as the rest is more speculative than analytical.

    EUR/USD:
    On the other hand the EUR is gaining ground against the USD and is in positive correlation with $GOLD. The charts are all long term as stated above and the indicators the same.

    If we have enough data thus far to understand the nature of the correlations between the pairs, what remains is of course to understand the correlation between the cross-pair: $GOLD/EUR.

    However we already have such a chart readily available to us. i will try attach it herein for our convenience.



    I am a solid believer that the EU will participate strongly in the currency wars soon and the reason I say this is because Germany has the loudest voice in the EU. In the short run Q/E would ease exports (Germany is one of two largest exporters in the world with approximately over 1.16 Trillion USD in exports). In the long run however it would cause diminishing returns in manufacturing and hurt exports and thus all of the EU economy.

    It will be a choppy road to serfdom since as the USD is diluted further and $ index falls the EUR and XEU will rise nominally. When the reverse occurs it will seem like a dollar rebound but once a currency base is diluted only high rates can reverse this. M1 is very hard to deflate, due to loans made by institutions etc.

    We should track this chart dear friends. Perhaps it illustrates more than the relation between the second largest Fiat currency and the worlds best example of sound money.

    Thank you.

    PS:

    -FMS.-

  7. #17

    Default Market Flatting

    Greetings dear friends,

    this is a follow up on the latest market data influencing PM and the strength of the USD (if there is any distinction between the two effect).

    During the last two days, myself as well as others have been expecting a large shoot up in the price of Ag right after the London close and during the NY session. This did not really happen. Quite contrarily, the price of Ag as we all saw moved sideways with a small price variation. The range was from about 22.9x to 23.4x for a gain of about .50.

    It is interesting to see what may have prevented the anticipated sudden spike. Today we had the release of the Fed meeting minutes and some other less urgent news as well. Bullish for PMs yet on spike. Lets have a look at some charts then to better understand the current trend.

    The dollar index ($USD): 10/12/10

    The USD has been moving sideways from around the 6th of October up to this point. I have been a firm believer that we will see a retrace that it would be caused by negative news from the EU and this would be a chance for the EUR to take a shot in these ambiguous currency wars.
    (I do not hold this view for this week but may well happen within the month but before FOMC. If it does ever occur do not be fooled by $USD upward intraday momentum, for it is probably temporary. Now that would be a very rare buying opportunity for PMs!)

    As always we will use the MN, WK and D1 charts since we are making speculation to invest not to trade. We have upped the indicators in this case, to get a better understanding on both strength and momentum:
    MACD (12,26,0)
    Charts: MN = SELL, WK = SELL, D1 = SELL.
    StochRSI (1) 14
    Charts: MN = SELL, WK - SELL, D1 = BUY.

    I do believe we see some residual strength in the StochRSI daily chart since there has been sideways movement in the USD.

    SILVER, SPOT

    So far as our precious Ag is concerned the reading I am getting from the MN, WK, D1 charts are as follows:

    MACD (12,26,0)
    Charts: MN = BUY, WK = BUY, D1 = BUY.
    StochRSI (1) 14
    Charts: MN = BUY, WK = BUY, D1 = SELL.

    It is interesting to see that we get the reverse readings since the two are negatively correlated, though not perfectly.

    I personally trust the indicators above more so than even the basic technical formation as I have found them to have greater validity (triple top, double bottom, dead cat, H&S, channels etc... are ok but algorithms yield better results)

    but for all you trusting the technicals more:

    $USD:

    Weekly chart: Perfect dead cat bounce with resistance at around 7, which is what we are seeing here, thus the sideways move.
    The fundamentals tell a different tale though: Q/E++, FOMC November 3rd, that says it all. As the USD is monetarily diluted (this is not CPI inflation) Ag will shoot just before and just after. I may correct afterwards but not even close to losing upward momentum.

    SILVER, SPOT:

    Simply follow the most recent channel formation on the Daily (D1) chart. If it breaks out (it prob never will...) we will have the long anticipated on the Kitco forum CORRECTION!, if it doesn't look for a level out and new ladder like channel.

    Remember this is a very strong bull market with bubble like drive, strength and momentum. The price will move up abruptly, correct to a new level (long term equilibrium) and restart higher.

    As always these are simply my views dear friends. What matter the most is your response. I anticipate your input.

    Thank you.

    -FMS.-

  8. #18

    Default

    Hello FMS....

    It would seem that gold and silver are building a base from which to extend gains again. I think many are waiting for a pull back from which to initiate new positions. I am not sure that will be the case. Also, many I speak with think $25 will be the ceiling for this rise.

    I don't really see anything that is going to get in the way of further gains. Perhaps I am missing something. What do you think?

    Secondly, from your perspective, I read a 60% allocation for silver. Sadly, my allocation is more on the order of 25 to 30%. Would you trade Platinum to buy silver now? I am not sure.....much of me thinks that ratio (PT : AG) is waiting for Platinum to rise, not necessarily for silver to fall.

    I most likely will not trade any gold I have simply because of dealer spreads.

    Thanks for any response you can spare,
    Argentine
    Last edited by argentine; 10-12-2010 at 08:56 PM.

  9. #19

    Default Argentine

    Quote Originally Posted by argentine View Post
    Hello FMS....

    It would seem the gold and silver are building a base from which to extend gains again. I think many are waiting for a pull back from which to initiate new positions. I am not sure that will be the case. Also, many I speak with think $25 will be the ceiling for this rise.

    I don't really see anything that is going to get in the way of further gains. Perhaps I am missing something. What so you think?

    Secondly, from your perspective, I read a 60% allocation for silver. Sadly, my allocation is more on the order of 25 to 30%. Would you trade Platinum to buy silver now? I am not sure.....much of me thinks that ratio (PT : AG) is waiting for Platinum to rise, not necessarily for silver to fall.

    I most likely will not trade any gold I have simply because of dealer spreads.

    Thanks for any response you can spare,
    Argentine
    Argenitine dear friend, you visit does us honor.

    I too think what we are seeing the last two days is a brief calm plateau in the case of Ag but not so much Au if you see just the daily Kitco charts, very intraday volatile.
    As per our discussion with Storm and DS I thought negative news from EU would make the Euro index "correct", making the Dollar index ($USD) rise slightly. However, this has not come to pass and I am beggining to think with the FOMC coming up in Nov if it is being "saved for later". I can only guess at this point. I think SD and DS agreed with this view but it has yet to be realized. If it ever will occur however it will make Ag specifically fall slightly maybe $1.5-$2.0 and then rebound with larger gains reaching resistance at $25.
    Sadly, the USD is winning this battle in the "currency wars" but we have yet to see a significant move from Europe, I am very much anticipating this. Europe is the old capital of the world, not the new, it tags along, doesn't lead.

    Silver Gold and Platinum:
    Der friend, I am silver-bug, admittedly. But at least for the time being Au has more momentum than even Ag. I still think despite this fact that the GSR will keep narrowing, somehow.
    I am HOLD on Ag for now and BUY just before November.
    I am BUY on Au for now and BUY just before November.

    Just like you dear friend, the fundamentals tell me, there are only further gains for All PMs. Ag, Au, Pd, Pt, perhaps in that order.

    I love Pt, more than Gold, it is more a noble metal even than Gold. But I see very flat strength in trading in the long term. It will prob always exceed Au of course but what of the ratio with Ag? I think it ll narrow soon, both with Pt and Au. If it corrects, I say this now, I am buying to HOLD.

    Thank you.

    -FMS.-
    Attached Images Attached Images

  10. #20

    Default Intraday Spike

    The long awaited spike has occurred after nearly 3 days of flat trade. We shall talk more about Ag in a minute, lets see what is going on in the more primary markets.

    FOREX:
    EURUSD, the rebound is visible on 1H and 2H charts but momentum seems to have been slightly lost in the Daily charts, though still very much in the positive (way above the MACD zero line). Correction is still not out of the realm of possibilities in the near term. The fundamentals will dominate this one over all technicals. A lot of more new info introduced into the market very soon.

    XAGUSD:
    Silver finally made an intraday spike after 3 days of sideways movement. As of this point there is so much momentum scattered across all charts, literally. The strength of this movement is so great a Buy is recommended at given levels. Forget about short term charts and look at momentum direction in the D1, WK, MN.

    *Storm, though we have not seen significant movement from EU, at these levels I do not see how negative EU news would do anything other than enhance PM prices. The Europeans simply will not go against such a strong trend. They will buy Au when the $XEU falls due to uncertainty. If Au rises more against the $XEU, it will permanently drag Ag up in both London and NY.
    Argentine, this is all You, I hope you are reading this!

    As always dear readers it is your input that matters the most. I can only recycle my own thoughts given the new info. It is your views that give meaning to this thread. I anticipate your insight.

    Thank you.

    -FMS.-
    Attached Images Attached Images

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