Gold – Watch the €1000 Level

Gold – Watch the €1000 Level

McClellan Financial Publications, Inc
Posted Sep 15, 2014

Gold is still in a downtrend, if you examine a chart of gold prices measured in dollars. But gold in euros looks much stronger, and that’s actually a bullish condition, eventually.

People often ask at what dollar price is gold likely to find support or resistance. But it can be argued that the dollar price of gold is not very relevant for a lot of the old-school technical tools. The static price levels of prior highs and lows do not generally show much significance as support or resistance agents once they are reached again.

The big reason for this is that gold is traded around the world, and in every currency. So what might look like an important support or resistance level on a dollar-based chart could look totally different in another currency. The whole point about why prior price levels can act as support or resistance is based on the principle that traders remember buying or selling at those prices. So when that price is encountered again, a trader who thought it was a good place to buy is likely to do so again, if he has any money left.

But that factor gets diluted when gold trades all around the world. Seeing the dollar price return to the level of a prior high or low might not spur any reaction at all from a trader who operates in another currency.

The chart above shows gold priced in both dollar terms and in euros. They are obviously similar, which is what we would expect. But when there are differences, then those differences can be instructive. I have found that when the two plots disagree, it is usually the euro price plot that ends up being right about where both are headed.

This can take the form of simple divergences, or the breaking of a trendline earlier or later than the same trendline in the other plot. There are 3 pairs of dashed trend lines drawn in that chart, and for the first two the euro price of gold broke the trendline before the dollar price, giving us an earlier warning about a change in trend. The most recent line has already been broken on the euro price plot, but not yet on the dollar price plot.

Perhaps more important, the euro price of gold seems to be encountering overhead resistance at around the €1000 level. Round number resistance is nothing new; we saw it quite extensively at Dow 10,000 (remember the hats?). But a gold trader who only thinks in dollar terms would miss that insight. Read more ›

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VIDEO: Debt – There’s Just Too Damn Much Of It


The fundamental failing of today’s global economy can be summarized simply: Too Much Debt

We have taken too much of it on, too fast, in too many markets around the world, to have any hope of making good on it. Not only does the math not work out, but also on a moral level, we are placing a tremendous obligation on future generations that will unfairly limit the prosperity they can enjoy tomorrow in order to finance our consumption today.

In the US alone, total credit market debt stands at over $57 trillion and is doing its damnedest to continue expanding exponentially. Since simple math shows us that this debt level cannot be supported, the key questions to ask at this stage are:

Will the unsupportable debt disappear via default, or inflation?

And very important:

When these debts do disappear, who will take the losses?

Click here to watch the 14-minute video

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Banking on bitcoin?

This is Channel 4 News’s recent coverage of bitcoin (11/09/2014). Apparently, the Bank of England are getting behind the crypto-currency now. What is the agenda?

Click here to view the video.

“It’s no longer possible to dismiss bitcoin as a wet dream for techies or anarchists when one of the world’s leading central banks has decided to take it seriously.

Having monitored developments in the world of bitcoin for a year, the Bank of England has now delivered its verdict on a currency that was only created five years ago.

When I spoke exclusively to the Bank’s Chief Cashier, Victoria Cleland, she was keen to say the Bank doesn’t want to dismiss bitcoin. It is watching how it develops and wants to be seen to be taking it seriously.

Perhaps she has a vested interest in keeping an eye on this rival currency. As Chief Cashier, her signature will start appearing on every new bank note from next Spring – a flourish that won’t be required if we all switch to digital.

But I wonder if the Bank is still not taking bitcoin seriously enough.

Rapid growth

It’s keen to emphasise just how small demand for the currency is right now. It calculates there are perhaps just 300 bitcoin transactions in the UK every day and only 20,000 people who have a digital wallet.

Victoria Cleland told me: “At the moment, there isn’t much evidence of the general person in the street really wanting to move to bitcoin”.

Then again, things on the internet have a habit of starting small and getting very big very fast.

Nicolas Cary of the BlockChain website points to the experience of PayPal, saying they “went from doing zero … transactions to doing a couple of million to doing 10 million to doing 100 million. Bitcoin now does 200-300 million dollars-worth of transactions a day, and the speed at which it got to that point is an order of magnitude faster than PayPal.”

He believes bitcoin could match VISA and Mastercard in size – possibly within just a few years.

But even if the Bank is right about bitcoin’s limited appeal in the UK, I suspect there are two other groups that might drive its usage – two groups at the opposite ends of the economic spectrum.

Billionaire banking

One is the super-rich. Many of them are exactly the sort of techie geeks who love the idea of bitcoin – including some who have made millions through investing in bitcoin itself. One such billionaire told me he’d consider holding 10 per cent of his wealth in bitcoin in future.

If that commitment gets repeated by other wealthy entrepreneurs, then bitcoin will become an important part of the financial infrastructure, and fast. It’s not the volume of bitcoin transactions that will matter but their total worth.

Alongside the super-rich will be the super poor.

Financially excluded

Billions of people on the planet have no access to bank accounts and, frankly, the banking system has shown no interest in them.

Already, mobile phone technology has moved in to fill the gap – by creating a whole new payment system that allows people to move money by text. The M-Pesa system in Kenya is the most developed example. In that country, 12 million people use a text message system developed by Vodafone to make transfers – that’s more than a quarter of the population.

Here in the UK, bitcoin allows anyone with a smartphone to effectively operate their own bank account, moving money for almost nothing.

You might not have a bank branch in a hundred miles, you might not trust the banks anyway, and you might not trust your nation’s currency either. Bitcoin will allow you to circumvent them.

As the Bank says, one of the main attractions of the currency is that it “minimises the degree of trust participants need to place in any third party”. It also, cuts down on commission fees charged to people trying to send money home.

So is bitcoin the future?

The internet is littered with next big things that disappeared back into the ether. Think MySpace or Friends Reunited. But the idea doesn’t tend to die, it evolves. With even the Bank calling bitcoin “the internet of finance”, it seems this idea may be here to stay.”

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[KR563] Keiser Report: Global Ponzi Scheme

We discuss the ‘sans dents’ as the new ‘sans culottes’ as the bubbles will continue until morale improves. They also discuss inflation without compensation. In the second half, Max interviews David Smith of the Geneva Business Insider Blog about the Swiss Gold Initiative, the impact of sanctions and the wave of anti-EU sentiment spreading across Europe.

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