morris4Submitted by Morris Hubbartt:

US debt negations have been delayed again, by squabbling political parties.  We are told that in May everything will be fixed, but the debt continues to grow, and so does pressure on the US dollar.    
The US dollar is vulnerable to a “loss of confidence” event.  That could create a stunning decline, and a powerful move higher in the price of gold. A key level that I watch on the US dollar chart is the 80.50 area, which never seems to hold for very long.

This chart has numerous head & shoulders top patterns on it, and it closed out the month of January below 80.50, which is a very ominous sign for dollar holders, and great news for gold! 
As this debt crisis continues to unfold, I expect more investors to transfer money from paper gold products to physical gold.  

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US Dollar Technical Breakdown Chart




  • US debt negations have been delayed again, by squabbling political parties.  We are told that in May everything will be fixed, but the debt continues to grow, and so does pressure on the US dollar.


  • The US dollar is vulnerable to a “loss of confidence” event.  That could create a stunning decline, and a powerful move higher in the price of gold. A key level that I watch on the US dollar chart is the 80.50 area, which never seems to hold for very long.


  • This chart has numerous head & shoulders top patterns on it, and it closed out the month of January below 80.50, which is a very ominous sign for dollar holders, and great news for gold!


Euro Power Uptrend Chart




  •  My target for the euro is the 142-145 price area.  I predicted the euro would rise in a “power uptrend”, after it staged a breakout from the large inverse h&s bottom formation.  That power uptrend is now in play.


  •  Note the nice flag pattern within the uptrend channel.  While RSI is now a little overbought, all 2-3 day corrections should be bought by aggressive traders!


US TLT (T-Bond Proxy) Relief Rally Chart



  •  Over the next several years, I see the bond going much lower, if not outright collapsing.


  •  That being said, a strong countertrend rally to the upside is quite likely now.  Positive technical divergences are appearing.  The ultimate oscillator is beginning to trend higher, and RSI refuses to confirm the recent lows in bond prices.  I expect one more punch lower, and then a strong rally should begin.


  •  I will set a firmer upside target, once I see that a short term bottom is in place.  If you shorted the bond, you can cover some positions now, and more on the next leg down.


Gold COT Columns Chart




  • As this debt crisis continues to unfold, I expect more investors to transfer money from paper gold products to physical gold.


  • I have started to color the last column on this chart with more green color, indicating that commercial buyers are slowly reducing their short positions, and increasing their longs. I will update subscribers as soon the next report is released on Friday afternoon, Feb 1, 2013.


  • It’s a tedious process, but one worth waiting for.


SGOL (Gold Proxy ETF) Swing Trade Chart




  • Note the red section on the chart.  Some traders have been trying very hard, to call almost every tiny turn in the market, using excessive leverage. They are becoming frustrated that “the big move” hasn’t happened.


  • I like the simple approach of selling modestly into a big rally, and then buying back, lightly, into the ensuing decline.  I try hard to call the big market turns, but it’s much more important to make money than make spectacular market calls.  If you would like to receive my free “Trading Basics” report, send me an email to, and I’ll send it to you. Thanks.


GDX Aroon Shocker Chart




  • Many analysts believe a huge head & shoulders top is in place on the GDX weekly chart, and much lower prices are coming.  Anything is possible in the market, but bearish sentiment is more extreme now than it was at the 2008 lows, and the action of the Aroon indicator should encourage embattled bulls.


  • The Aroon is an “ahead of the curve” tool.  In Sanskrit, it means “early dawn”.  As gold stocks have fallen by about 25% since the high last fall, the Aroon indicator has continued to climb higher.  It tells me that the bears may be in store for quite a nasty surprise, very soon.


  • Is the Aroon indicating that the spike in the euro will be followed by a gold price rocket, carrying gold stocks as passengers?  I think it is!


GDX Swing Trade Chart




  • Succeeding in the market is as “simple” as buying low and selling high.  It’s not that easy to buy when buying must be done, but now is one of those times to take action with senior gold stocks.


  • My latest buy signal came earlier this week, when GDX moved sharply lower, on very heavy panic volume.  That one- two punch triggered the signal.


GDXJ Swing Trade Chart




  • While GDX got a new buy signal, GDXJ did not, because volume indicated distribution, rather than panic.   Additional price weakness with character-changing volume is required, before a new buy signal can be offered for GDXJ.


  • For junior gold stock accumulators, the time is near, but not quite here!


SIVR (Silver Proxy) Chart




  • Silver has been the best performer in the precious metals market, for several weeks. Continued strength would be encouraging news, for the whole sector.


  • Silver is a market where buying low and selling high, using a rigid system of entry and exit points, is very profitable.
  • My latest signal was a profit taking alert, but I don’t believe any investor should liquidate more than 30% of their silver position, no matter how bearish the market appears to be.  I recommend a large core position of this mighty metal, for even the most active traders!


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  1. Watch the 10 year US treasury rate   It’s climbed to 2.00% from 1.50% in 6 months.
     If the yield continues to climb the bond values will decline, maybe sharply.  Food and fuel inflation are going to hit hard this year. There’s no sign the droughts will abate. When food and fuel jump 20%, the increases in these prices will force the government’s hand on inflation calculation. You can’t use hedonics to conceal inflation forever. People are going to cry  Bulls***. 
    The rates will rise despite the best efforts of Bernanke and the new Secretary of the treasury to try to keep them down.  The bond prices will fall and world wide, those holding bonds will dump them and race to find something else with yield, any yield,  These funds will go to ETFs, mutual funds, equities and maybe, just maybe, as these funds race to higher ground, they’ll buy gold and silver.  One problem however. There ain’t none for sale at these low prices.  Things will get really interesting then.  While the stock market may continue to rise, it will do so on false premises. The earnings aren’t there.  Theprices of precious metals will rise and continue, until they stop and reverse.  When and how much is unknown.  But the perfect storms are in place.

  2. Every statistic is way bullish for Ag, Au, Pt & Rh. The proplem is the generational war on them by criminal goverments and banks. With respect to Ag it has been ongoing since the late 1800s. In 1860 the civil war. Following the civil war, the banks bribed congress to restrict the amount of money in circulation from 46$ per capita to less than 16$ per capita, leading to the post civil war depression. Who bought these commodities that were falling in price? The banks and politicians of course. As the currency dried up and the value of Ag fell the miners were going bankrupt and the banks took them over. The farmers were hedged with Ag. As the price of commodities fell the farmers went bankrupt and their hedges were now inadequate because the banks had the mines and controled the value of Ag. The banks took the farms… They did this across the board. “THE GREAT SILVER CRIME”

  3. Rockets
    Your chart got me to thinking about some things that trouble me a lot. If we use 1913 as a base line, the year the Fed was formed, there’s a lot to be said about commodity prices. Nearly everything we use or consume is up by a factor of 20 to 1 or greater in the last 100 years. We live in that price paradigm. But precious metals don’t follow any of the standard pricing models of the last 100 years Prior to 1913, there was little inflation. Wages did not grow a great deal; neither did prices. One could run their life without worrying too much about inflation. Gold and silver were the coin of the realm. Today, everything is upside down.

    I was reading an essay about the price of oil this AM and it struck me that we live in an era where Price Discovery is nearly impossible. Almost everything we buy is priced at the margins.
    For instance, if you have health insurance and present your card, there is no price discovery since the doctor and the insurance company do the little dance on how much the insurance firm will pay and once the magic number is reached, the Doc accepts payments. I pay cash for almost all medical treatments due to a $5,000 HSA deductible. That makes the price of medical treatment very discoverable. Those treatments are anywhere from 50-80% less costly when paid in cash. My fanaticism on price discovery makes doctors uncomfortable but when I go into the office the first thing I say is “What’s your discount for cash”
    That creates immediate price discovery.

    Without price discovery, it’s pretty clear that medical costs are priced at the margin. Any new treatment that’s available quickly drags up the price of the older treatments to the new level. That’s very profitable for the doctor but very costly to the insurance firm. hence the reason we see double digit increases in our health insurance. Even those who don’t use the health care system extensively suffer double increases.
    50,000,000 people get SNAP and EBT cards. This is basically free money transferred from the government to the people who then use it to buy groceries. The money is free so they have no need to engage in price discovery. That almost means the grocery stores don’t need to be price competitive. Whether its Walmart catering to this group or the local convenience store (an enterprize that knows intimately that there is no price discovery at the register), these companies know full well what we can only suspect; pricing structures are upside down.
    The government pays out $1,000,000,000,000 (trillion) in transfer payments a year. This is big money that has no effort, sweat or value recognition embedded in it. It’s free money. $1 trillion in transfer payments is about 12% of the private sector GDP. That has enormous influence on pricing. The prices at the grocery store reflect the Free Money syndrome. The stores price according to the people who place no value on their Plantation Script (Thank you Pat Fields) Therefore the stores fall into the same trap as doctors, giving much less consideration to the private sector customers as opposed to what comes from the government or insurance firms. There is a 500 year old phrase for that.
    It’s called the Cantillion effect.
    As free or low priced money floods any economic system it skews the value of the FIAT and the goods paid by the first users. At one time it was Spanish silver. Now it’s Digital Dollars. The first users of this free FIAT get the best deals no matter what the price. They could care less about price. Since this first currency tranche is the most readily available and given the least value by this tier of consumers, pricing is not a consideration. The rest of us feel the effects of this wash of FIAT, paying increasingly higher prices as the first consumers move on to another product or service, bidding up those prices with great abandon.
    Obamacare will make the medical care system grossly inefficient and infinitely more expensive due this effect. The first people in line at the clinic will pay anything the doctor charges since they pay nothing for the services. $40,000 for a procedure? No worries; do it.
    My new motto is
    “Free health care? Don’t get sick”
    If Campbell’s prices its latest can of chicken noodle soup at $1.50, adjusted upwards for inflation, wages, machinery etc, that same can coming off an lower priced or more efficient assembly line is still priced at a $1.50. I predict that some day this same can of soup will be prescibed by your doctor as the best remedy for what ails you. The soup will then cost $150, bought only at the local pharmacy.
    Which makes that can of soup, or for that matter any product, including oil, precious metals and health care, fall into pricings at the margin. The price for everything is determined by the latest product to hit the shelves. We can’t know the real lowest or highest price since forces outside our control make that nearly impossible. More taxes and regulations further destroy price discovery. We only get tiny adjustments to the end prices by scouring the marketplace for deals, finding fewer and fewer available and in increasingly limited supply. That’s very true for precious metals too.

    So, where are we today?

    We can’t price oil in various tiers ranging from low to high cost producers, shopping at the gas station who’s oil parent is the most efficient. The prices of consumer goods have nearly no competition since 50,000,000 people don’t know or care how much they pay for soup or slurpees. More importantly, most people don’t care about prices of the vital medical services. We end up chasing the prices paid by the free money crowd. This is destined to produce severe shortages.
    The government is the whale in this pool, bidding up prices as well. Just as they seldom get the best deal, they ‘spread the wealth’ of higher prices with transfer payments and entitlements that do nothing to seeking the best prices. The worst part of it is that government actually benefit from higher prices. Government salaries and benefits have no private sector wage price setting mechanisms. Those salaries are 50-100% higher than private sector jobs with the same skills.
    The governmental cost are loaded from top to bottom in the product food chains and have heavy interest and tax burdens attached all levels, all benefiting the government. The governments have no incentive in the process of price discovery since their money is also essentially free. What they can’t extract from the tax slaves they end up printing.
    This brings me to the prices of precious metals. IMO there is only one group who is forced into price discovery. That’s us, the lowly stackers. We pay the market price since every ounce of silver or gold mined and sold is priced at the margin. The price we pay is what the highest cost miner must charge to pull metals from the ground. The lowest price miner does not offer discounts for their inventory. We use our hard earned FIAT to buy PMs, and that makes us unique in that respect. The one benefit of this is we can buy cheap phyzz for now.
    But price discovery has been blown all to pieces because another free money crowd, the paper traders, are making billions in the paper silver trading pits. They’re making AND forcing these prices. There’s another factor in the maladjustments to precious metal prices. It’s the purchasing power of the central banks and governments. They have nearly infinite access to free money. They either print it or use FIAT reserves to purchase hundreds of billions of dollars worth using OPM of that other country’s printing press. They don’t care about price discovery since the inventory is still cheap. Even if it wasn’t cheap, they wouldn’t care. They are using what essentially amounts to free FIAT to buy real money. Price is not an object.

    I’m not sure where this will lead too, whether it’s a lower or higher PM prices in the short term, but anything we consume or buy is ramping higher. If health care goes up by 25%; food costs go up by 15% and oil jumps by 20%, the Law of Entropy firmly states that gold and silver prices cannot be held down forever. That’s why they call it the Second Law of Thermodynamics. The law breakers will find that entropy always wins. The problem with this type of entropy is that wars, civil unrest and great suffering will take place as the entropic reset takes place. We’re at the front edge of this reset. All signs are there, easy to see. As PM Stackers we may be somewhat protected from the worst of the reset.
    Even a non-scientist like me can see that. Thank you for the chart, Rockets. It helped me to see this problem more clearly.

    • @AGXIIK: You’re welcome. You get it. With the way the system is set up, the consumer is disconnected from the price and price discovery. So everything we need, we need to get ahead of the price if possible and reconnect to price. For instance, we can’t know when or why the price of gas will go up or down, or why it does it (we do know it’s manipulated for someone else’s benefit). Just that it will. So I bought plastic 55 gallon drums. Lots of them, and a pump. When the price is down I fill them. When the price is up I use the gas that’s saved. The same tactics we use with Ag we must now use with everything when possible!

  4. The price of these plastic drums new is around $100 FPS. But, if you have a farm supply (mom & pop type, not corp.) you can buy these drums for under $10 FPS. They are use for soy oil, corn oil… You can store food, gas, decil… in them. They are great for keeping mice away from dry rice and beens, dry salted meats… It’s winter so my gas station is a bit messy! lol. but you can see what I do! The “gas in” sign is for my son or daughter so they know not to take out gas from a drum I’m filling with fresh gas. You have to rotate the fuel to keep it fresh. I also use Stabilz to help keep it fresh!

  5. Rockets  My BOB and I bought 10 55 gallon steel drums for our fuel depot.  We live in the country so storage was no problem. Craiglist provided the steel drums for $20, a decent deal.  They might not be good for food storage since there were chemicals stored in them prior to our use.  The platic drums are great and at $10, price discovery is excellent.  Fresh water can us stored too.  That is limited only by the land space you can devote to that use.  A well is good too.

  6. @AGXIIK: I get mine at a farm supply store in Hillsboro, Ohio on St. Rt 73. Across the Rd. from Lowe’s. For anyone who knows some one from Ohio (Hint Hint DOC: it’s even worth a drive across the state if one buys in quantity!). $9 FPS for any drum. Metal, plastic, 30 or 55 gal. open or close tops! As many as one wants to buy. He says he sells more of these than any thing else!!!

  7. It’s funny about our area.  We live at the edge of Lake Tahoe.  Water probably would not be a problem. Food and fuel are since we live in a ‘food desert’   Everything has to be trucked in.  We stock much food in our home using extra closets etc but some things can’t be stored on site due to health and safety.  My local BOB members are well ahead of the game though and I will send your info to my people.  We did not realize that these plastic barrels can be used for gasoline.

  8. BOB is what I’ve called my Band of Brothers.  Taken from Shakespeare’s Henry V, Act 4, Scene 3,  ‘we happy, we few, we merry  band of brothers.  For he today who sheds his blood with me shall be my brother forever’. 
    My BOB’s members take this vow and oath seriously.  We stick together on  these important issues.  In my Prepper Guide, the sixth element of prepping is the formation of  a BOB.  It helps wrap the first 5 together .  Maybe Uncle Sam can advertise an Army of One.  In the real world, a squad strength BOB is the best group you can have.  The second part of this Guide was written by the senior member of our BOB.
    BOB is also short for Bug Out Bag but that’s used in a more confined context.

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