6 Remarkable Gold Charts This Week | Gold Silver Worlds

6 Remarkable <b>Gold Charts</b> This Week | <b>Gold</b> Silver Worlds

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6 Remarkable <b>Gold Charts</b> This Week | <b>Gold</b> Silver Worlds Posted: 09 Feb 2014 01:36 PM PST In the course of the past week, several exceptionally interesting charts were released on GoldSilverWorlds and other websites. In this article, we collect the most interesting charts expressing gold's fundamental and technical picture. Weekly chart in a downtrend but at major resistance The lack of downside follow-through, after the highest volume bar 7 trading ranges ago, has been an anchor for the current rally, of sorts. The caveat as to which way price will move from here is the trend, which favors lower price behavior until there is an indication of change. Right now, such an indication is absent. Of minor concern is the location of the closes for the 3 bars at the end, tending toward the lower range of each bar. The offset is the fact that despite apparent weakness, price did not move lower. If gold trades higher next week, the daily trend will turn up, and confirmation will come from a lower swing high on the next correction (source). Inverted correlation gold vs equities about to break out? From a broad perspective, it is likely to see an inverse correlation between gold and Equities just like we saw throughout the last bull market in the 1970's (source). The key level to watch on the Dow on a weekly close basis is the 55 week moving average at 15,218. It should also be watched in conjunction with the 55 week moving average on the S&P 500 at 1,672 (see Equities section for more details). The key medium term level on Gold is the double bottom neckline at $1,433. The pattern would target $1,686 (source). Fundamental divergence in the price of gold Until last year destroyed gold's multi-year bull reign, the expansion of the U.S. balance sheet and the price of gold over the past decade moved in near lockstep. From 1999 through 2012, the correlation coefficient of the rising price of gold to the Fed's climbing assets was 0.95. Even with the tapering of the bond purchases that began in late 2013, the Fed's balance sheet remains on an upward trajectory and much higher than the price of gold. This suggests we should see much higher prices (source). JP Morgan turned from seller to buyer The chart below shows the month-by-month number of contracts that were either provided to the exchange or taken from the exchange by JPM. For a single firm, the numbers are large, but the effect across all gold markets is greater because so many gold transactions follow the price set in the paper futures market. What jumps out from the chart is the fact that while JPM had been selling gold into the futures market for most of the year, it made a major shift in December, absorbing 96% of all gold delivered. That is a radical shift and an indicator that JPM's policy has shifted. Bud Conrad notes: "In my opinion, their deliveries of gold were suppressing the price during 2013, but now their policy has shifted in a way that will support gold going forward" (source). Big US banks are now net long gold Another confirmation of the shift by big banks comes from data provided by the US Commodity Futures Trading Commission (CFTC) that shows the net positions of the four biggest US banks in the futures market. There has been a dramatic change from being short the market to now being long (source).

Jim Rickards: Target <b>Gold Price</b> Between $7,000 And $9,000 per Oz <b>...</b> Posted: 09 Feb 2014 01:06 PM PST We had summarized a while ago 10 Currency War Insights From Jim Rickards and we explained how the World Currency System Is Moving Towards Catastrophe. Our latest articles have focused on how The Ongoing Depression Could Force A Return To The Gold Standard  and  how the Most Likely Outcome Is Still A Monetary Collapse. Courtesy of The Epoch Times, Jim Rickards gives a first set of insights from his new book which will be out in April 2013. In "The Death of Money, The Coming Collapse of the International Monetary System" (preorder on Amazon), Rickards confirms the predictions made in Currency Wars and goes deeper in the matter by explaing how the international monetary system might collapse and how the new monetary system could look like. About his new book: The sequel is that in "Currency Wars" I also had a lot of history. There were five chapters of history and I thought that was very important. If you are going to talk about gold with the reader, a lot of times if you jump right into gold, people think you are sort of a nut. I find if you tell the story through history people can see gold in a context, and when you talk about it, it doesn't seem quite so strange. In my new book, "The Death of Money," there is no reason to repeat the history—that's all in "Currency Wars"—so it's more forward leaning, and talks more about the future of the international monetary system, a coming collapse. And not just a collapse, because a lot of people are running around talking doom and gloom, the end of the dollar and all that. I might even agree with that, but I don't think it has a lot of content. What I try to do is provide a more in-depth analysis describing what will come next, what the future international monetary system will look like. I point out that the international monetary system has already collapsed three times within the last 100 years—1914, 1939, and 1971—and that another collapse would not be at all unusual. But it's not the end of the world. It's just that the major powers sit down and reform the system. I talk about what that reformation will look like. So that's the sequel or the continuation of the story looking over the horizon. Some stuff that is before "Currency Wars" and some stuff that is after. And other content on the contemporary situation in Europe and China, so I hope people enjoy it. Rickards on gold's prospects: Gold has a number of vectors. It is technically set up for a massive rally. Let me separate the fundamentals from the technicals. Fundamentally my target price for gold is in the range of $7,000 to $9,000 per ounce. That's not something that will happen straight away, but it's not a 10-year forecast either. It's a three- to five-year forecast, for the price to rise by about five to six times. My analysis is based on a collapse of confidence in the dollar and other forms of paper money. To restore confidence you have two means: You either flood the world with liquidity from the International Monetary Fund in the form of Special Drawing Rights [SDRs, a form of money issued by the IMF], or we return to a gold standard. The flooding of the market with SDRs would be highly inflationary, so that by itself would drive gold to a higher level. If they go back to a gold standard they will have to take a non-deflationary price. People say there is not enough gold in the world. The answer is there is always enough gold in the world. It's just a question of the price. Now, at $1,300 an ounce, there is not enough gold to support world trade and finance. But at $10,000 per ounce, there is enough gold. It's not about gold, it's about the price. If you go back to a gold standard you have to avoid the blunder that England made in 1925, by going back to the gold standard at the wrong price, which proved to be highly deflationary, and contributed to the Great Depression. I've done the math on that and the non-deflationary price for a gold standard today is about $9,000 per ounce. The target price is based on supporting the paper money supply with gold. That would be using M1 [paper notes, coins, and checking accounts] as the monetary base, with a 40 percent backing. If you were to use M2 [M1 plus savings accounts and money market funds] with a 100 percent backing, that would be $40,000 per ounce. What it means for gold investors: It wouldn't mean gold would be worth any more [in real terms]; it would just mean the dollar has collapsed. But yes, you get more dollars for the ounce. Let's call that the three- to five-year forecast. For the year ahead, those fundamentals are unlikely to play out in a year. But the technicals can play out. Technically, gold is set up for a major rally based on the decline in floating supply. Whether gold's outlook is linked to gold's crash of 2013: There was 500 tons removed from the GLD [Spider Gold Trust ETF] warehouse by the bullion banks. That was a massive physical overhang removed from the market. People don't really understand how the GLD ETF works. When people are buying the GLD, they are not buying or selling gold; they are buying and selling shares. The gold sits in a warehouse and is only available to authorized participants. If you look at the list of authorized participants and look at the list of bullion banks, they are pretty much the same people: Goldman Sachs, Citigroup, JPMorgan, Morgan Stanley, Deutsche Bank, HSBC, etc. Those banks have the ability to buy up shares, take the shares, cash them in, and get physical gold. And they were doing that and they were sending that gold to Shanghai to support trading and leasing on the Shanghai gold exchange. So when you take 500 tons and dump it on the market, that's about 20 percent of the annual mining supply. It's a massive physical injection. The other factor is just outright manipulation, which is very visible in Comex future prices. I've seen some statistical analysis that demonstrates market manipulation beyond the shadow of a doubt. So the point is that between central bank manipulation through Comex futures and bullion banks dumping the physical, and by cleaning out the GLD warehouse, and also the Comex warehouse for that matter, there is a massive amount of gold that came on the market over and above normal supply trends, putting massive selling pressure on the Comex. So that was a bad combination, but the problem is that it's not sustainable. Where physical gold is going: You can't loot the warehouse twice. Once you take all the gold out, you can't take it out again. JPMorgan's vault is low, Comex's vault is low, the GLD's vault is low. One of the big movements right now is gold moving from places like UBS, Credit Suisse, and Deutsche Bank to private storage such as G4S, ViaMAT, and Brink's. That doesn't increase the supply of gold at all. But what it does do is it decreases the floating supply available for trading. If I have my gold at UBS, UBS typically has the right of rehypothecation. But if I take my gold and move it over to ViaMAT, it's just sitting there and it's not being traded or rehypothecated. So, if I move gold from UBS to ViaMAT, there's no more or less gold in the world. I'm still the owner, and it's the same amount of gold. But from a market perspective, the floating supply has decreased. The biggest player in that is China. China is buying thousands of tons of gold secretly through deception and using military intelligence assets, covert operations, etcetera. Whether gold will rally: There is a total supply of gold in the world. But to corner a market or squeeze a market, you don't need to buy all the gold, you just need to buy the floating supply. Think of all the gold in the world, it's about 170,000 tons. Think of a little sliver on top of it that is the floating supply available for trading. Gold that's in the Comex or JPMorgan or GLD vaults is available for trading. Gold purchased by the Chinese will not see the light of day again for the next 300 years, and is not available for trading. So with the gold going from West to East, and from GLD to China, the total amount of gold is unchanged, but the floating supply is declining rapidly. This means that the paper gold that sits on top of the floating supply is becoming more and more unstable and vulnerable to a short squeeze, because there is not enough physical gold to support it. So that's likely to collapse at one point and lead to a short squeeze and heavy buying.

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