Sell the News, Buy the Fact | Weekend Report | 4th-5th March 2017
Merchant’s Weekend Report
Happy weekend everyone. I know some of you have taken big losses while some of you have taken big profits. Whatever state your account is in, reset your mind and realise that tomorrow is a new day. So whatever mistakes or successes you have experienced, the next trade does not relate to the last one. It’s separate, it’s new and doesn’t care how much you previously made or lost.
A new trade doesn’t carry baggage: only you do. So wake up, smell the coffee and get your thinking cap on.
The Bottom Line
I’m cutting directly to the bottom line so that you don’t have to wade through charts and self indulgent paragraphs to figure out what the point of the report is. (P.S you may not like what I’m about to say…but as always, I could simply be wrong. Use it, don’t use it.)
The bottom line is:
- I think that any bounce in gold or miners will be an opportunity to short or exit the miners.
- I believe that gold and miners will experience pressure as we we near the 14th March with a rising dollar.
- I believe the Federal Reserve will raise rates, which will further pressure gold and miners (USA) after the 14th.
- I believe you need to treat your preferred miners on a case by case basis where breaking support will lead to a lower support.
- I think that the PPT (Plunge Protection Team) has sent a clear message about the “strength” of the U.S Stock market: it will not bend for Brexit, it will not collapse under Trump, it will not buckle under interest rate hikes and European instability such as the Dutch Election will only make the dollar and U.S Stock Market stronger- That is the message we’re being sent from the powers that be. How else is the Dow Jones at 21,000 while GDP just reported so poorly?
- Gold and gold miners will be excellent buys at pull back prices. I don’t think there’s any reason to be too hasty.
- REMEMBER: The massive rally we had in January 2016 was due to the stock market having the worst January in stock market history. So we all expected it to repeat this time: it didn’t. The stock market is now at a record high.
- In my opinion, the Fed wants to raise rates because it needs to quell inflation and any bubbles that are about get out of control: in the short run, traders will trade negatively towards gold and gold miners in this regard, however, once they’ve had their fun, they’ll realise that Gold is in an accumulation phase due to the enemy of all currencies and fiat wealth: inflation.
- Currently the economy is reporting high inflation, lower GDP etc… BUT the market shrugs it off because of this Trumpian drug which shouts “Spend, spend, spend!” Spend on infrastructure, spend on military, spend on social security etc… This of course will be powered by deficit spending: spending money that doesn’t exist but rather is created by the Federal Reserve.
- The relationship between currencies and gold will break down in the near future, I expect. What I mean is that currently if the Yen weakens, then Gold weakens. If the Dollar strengthens then commodities and gold/silver/platinum tend to weaken. However, the relationship will soon be replaced by the link between gold and inflation. Each time inflation is reported, gold will be pushed higher and higher. So this is not tomorrow. This is in the medium term.
- Remember, the market thinks that when the Fed raises rates, they will in fact be fighting inflation, making gold less desirable. The only issue here is that with GDP being so low, raising rates is going to slow the economy down to a halt. Therefore the Fed will need to start printing money by allowing the government to spend spend spend. When they launch QE4, we will see the dollar strengthening as well as gold strengthening too. However, it will be inflation that will be the driver of gold’s dollar value.
- Finally, the only wild card here is the Australian Exchange rate AUDUSD: if the US Dollar rallies further (I believe it will rally…much further due to this economic circus) then the Australian Dollar should weaken, which would be positive for our gold, silver, platinum and commodity miners.
I have run out of time to fill in the charts…. but silver and platinum have broken below support. Gold regained some footing but could be a last hoorah.
I will post the metals charts separately. I apologise in advance for the the report being so brief but will expand shortly…
Once again, I won’t be entering metals unless the individual miner is at a bargain price and unlikely to trade lower than its support level.