Gold Could Fly Over A Helicopter Throwing Money

Posted on by Aibek Burabayev

On the 16th of March, when I wondered if “That’s It?” for gold it dropped for more than $100 to the low of $1451. It looked like the first move down in the large second leg of a huge complex correction.

As we know, guessing tops and bottoms is a tricky exercise. So, the next move up was considered to be a correction as to confirm the top we should see the passing move down first (checked), then there should be a corrective move in the opposite (upside) direction and the next should be the continuation to the downside. Let’s see below if you thought gold would reverse down.

The majority of you remained bullish as you clicked on the “retest of $1704” and “$1921”. The first bet already paid well as the market retested the former top last Monday. This price move was quite sharp as previously the same distance unfolded by gold within only 82 daily bars from November 2019 till March 2020 compared to only 20 daily bars this time.

It looks like gold doesn’t want to drop as things changed dramatically. Continue reading "Gold Could Fly Over A Helicopter Throwing Money" →

Is Real Estate The Next Shoe To Drop?

Posted on by Chris Vermeulen

The past few weeks and months have been very interesting to see how the global central banks and governments have attempted to position themselves ahead of this COVID-19 virus event. We continue to suggest that we are just starting the process of navigating through this potentially destructive virus event. We believe the sudden onset of the virus pandemic has sent a shock-wave throughout the globe in terms of expectations and valuations that are, just now, starting to become “real”. Let us try to explain our thinking and how this relates to Real Estate.

The COVID-19 virus event is a global crisis event that is currently in the very early stages of consumer psychological processing. All types of crisis events prompt some forms of typical human reaction. We believe the Real Estate market may be the next big asset revaluation event as consumers continue to process the COVID-19 virus crisis and the consequences of this event.

Real Estate Cycles

Real Estate cycles typically transition through the following phases as supply and demand functions work through the markets. Pay attention to the middle of this cycle chart. In the Expansion and HyperSupply stages, once supply peaks and prices somewhat peak/stabilize, a transition takes place in the market where buyers chase premium properties and push price levels moderately higher. The Recession Cycle is typically a disruptive cycle that is the result of an economic/income disruption. When people can’t earn enough to satisfy their debt obligations and or provide for their families, then the Real Estate cycle begins to contract.

Real Estate

An event like this, the COVID-19 virus event, would typically start out as a regional/local event. This did happen as it roiled certain areas of China in late 2019. Watching how China attempted to manage and hide the extent of the virus explosion within their country was painful to watch. Continue reading "Is Real Estate The Next Shoe To Drop?" →

This Time It's For Real

Posted on by George Yacik

A little over a year ago, I wrote a column about Modern Monetary Theory. Don't look now, but it's no longer a theory, it's reality. Depending on how it eventually turns out, we'll find out if the economic cure to the coronavirus was worse than the disease.

In simple terms, MMT adherents believe that countries that issue and back their currencies, like the U.S., can print as much money as they need and still stay solvent. (Compare the eurozone, where the European Central Bank issues the currency, not the individual member countries). And without creating runaway inflation.

You can try this at home, too, you know, although it doesn't work nearly as well for individuals as it does for governments. Pay off one of your credit card balances with a balance transfer from another bank, then keep repeating the process. This will work for a while until the merry-go-round eventually stops when the banks stop lending you money, and you'll have to either pay everything you owe or wind up in bankruptcy court.

Of course, it's different for the government, which is one of MMT's main arguments, since it can just print more money when it runs out, which means the merry-go-round keeps going, even if investors stop buying Treasury bonds. If that happens, which it never has, the Federal Reserve, a separate but "independent" arm of the government, will pick up the slack.

Neat, huh? Continue reading "This Time It's For Real" →

Optimism Fuels Futures Higher

Posted on by Mike Seery

S&P 500 Futures

The S&P 500 futures in the June contract settled last Friday in Chicago at 2779 while currently trading at 2840 up about 60 points for the trading week as prices are right near a five week high.

Optimism about a possible remedy from the company Gilead for the Coronavirus is pushing prices higher as the Nasdaq 100 is only down about 10% for the year and has experienced a significant rally over the last week as it certainly looks like the panic bottom which developed in March will hold. The S&P 500 is trading above its 20-day but still below its 100-day moving average as the trend is higher to mixed as the United States quarantine could be over in the next couple of weeks as businesses will start up once again as that is terrific news.

The next major level of resistance is all the way up to the 3000 level. I still think there is room to run to the upside, and I see no reason to be short U.S. equities. I do believe this economy will come back quickly, even though we might have a 20% unemployment rate. So, if you are long a futures contract, I would stay long while placing a tight stop as the volatility remains exceptionally high.

TREND: HIGHER - MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH

Silver Futures

Silver futures in the May contract is ending the week on a sour note down $0.32 or 2.03% at 15.31 an ounce after settling last Friday in New York at 16.05 down over $0.70 for the trading week as prices have now hit a one week low.

The U.S. equity markets have rallied substantially this week as money flows have entered back into that sector and out of the precious metals, at least in the Continue reading "Optimism Fuels Futures Higher" →