China's politically contentious trade surplus widened in October, lending fresh ammunition for foreign critics of its currency policy ahead of a G20 summit.
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In the past I have called gold the Federal Reserve Bank's worst nightmare. Remember ever since 2005 the Federal Reserve no longer provides the public with the M-3 money supply data. Therefore, the public really does not know exactly how much money is really in circulation or is being created by the central bank. The reason that the Federal Reserve gave for not revealing the M-3 money supply to the public was that it no longer fit into it's budget and was unnecessary. This comes from an organization that prints money to the moon anytime it sees fit to do so. Who knew that they even had a budget? In any case do not worry if you cannot see the M-3 money supply because gold tells you that they are simply running the printing presses on overdrive. Gold has soared higher by over 300 percent since 2001 and remains in a nine year bull market. Gold is the one way of telling the public how much the value of the U.S. Dollar Index has declined. Gold is the one true currency unlike the paper we carry in our pockets. It has been this way since biblical times and will remain this way until the end of times.
Today gold, silver and most every commodity soared higher at the opening bell. However, once the U.S. Dollar Index caught a bid higher the precious metals and most other commodities sold off sharply. The SPDR Gold Shares ETF(NYSE:GLD) is now trading lower by $1.03 to 136.74 after making a new high this morning at $139.15. A similar move took place with the iShares Silver Trust(NYSE:SLV) which soared to a new yearly high at $28.72 and has now reversed and is trading lower by 0.12 cents to $26.88. This is a major reversal day for the precious metals on huge volume. Often this type of action can lead to further declines, however, this type of action has occurred before and gold and silver have traded right back up after a small pullback or correction.
As many readers may or may not know the European Union is still having a lot of problems despite the $ 1 trillion bank bailout in May 2010. Ireland and Portugal are experiencing major problems and this is likely going to occur with the other troubled nations. Therefore, this could be the reason why the U.S. Dollar is catching a bid higher today. When the U.S. Dollar Index inflates everything in the commodity sector deflates. Gold has traded higher when the U.S. Dollar Index has rallied before. It happened in May and June of this year. Therefore, do not presume that the gold trade is over just because of a one day sell off. As long as the Federal Reserve continues to print money gold and silver will trade higher again. As for now gold remains the Federal Reserve Bank's worst nightmare.
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BKX is not participating nearly as much as the major indexes have been in this rally, and with-out financials this rally is not sustainable, nor healthy long-term.
Fresh from the desk of EWIThe Next Major Disaster Developing for Bond HoldersElliott wave analysis can warn you of trend changes when the rest of the investment public least expects a market reversal. With that in mind, we have created a new report for our free Club EWI members: "The Next Major Disaster Developing for Bond Holders." Read more.Tuesday, November 9, 2010Tuesday, After the close!!!!BKX is not participating nearly as much as the major indexes have been in this rally, and with-out financials this rally is not sustainable, nor healthy long-term.The SPX had a down day that was printing lower highs and lows for the entire trading session and at one point dropped below the support of the median channel line, then closed right on it. There is a good chance that we had a failed 5th of some sort, but is still too early to know how serious this sell-off could end up being because we could be working on another 4th wave, bullish longer-term, or the small possibility that we are starting into an impulsive wave down, bearish longer-term. The lower channel line is still solid support that has been respected multiple times, but a break below it would open the doors for a much larger sell-off that would start with a challenge of the previous low at 1183.56.
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And this is just a simultaneous overlay of the S&P 500 and the VIX, as seen from StockCharts.com data in a line chart for absolute simplicity.With stocks at new highs, the VIX is ever so slightly above its low from April.Keep watching these levels closely for any signs of breakthrough (beyond 1,230 in the SPX and under 17.50 in the VIX) or reversal.
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EURCAD shows an important combination of fundamentals & technicals . . . both pointing to further further downside. I already raised the euro’s sovereign challenges last week, pointing out the 25-30% increase in Irish/Greek/Spanish 10 year bond spreads over Germany during the same 6 weeks when EURUSD pushed higher. Such a rare occurrence happened mainly on anticipation of Fed QE2. But the euro could no longer sustain those highs solely on the back of the Fed asset purchases, while ignoring the resulting widening in corporate spreads. Ireland’s ambitious new budget is based on €6 bln in fiscal retrenchment for 2011. Whether Ireland will post sufficient GDP growth to reduce the debt ratio remains the key question for Ireland and other austerity-bound Eurozone nations. The Irish Budget has not yet been passed and is likely to face opposition before being formally voted on later in December. ASIDE FROM THESE aforementioned risks for the euro, the Canadian dollar has had another strong week. Canada’s October unemployment rate dropped to 7.9% from 8.0%, matching the June lows, which were the lowest since Jan 2009. Payrolls rose 3K after a decline of 6.6K in September. CAD gains are especially highlighted by the fact that upside surprises occurred in both Canada and the US (its biggest trading partner). Recall that in late October, CAD also outperformed against top10-traded currencies after August GDP rose 0.3% following -0.1% in July. ***************** EURCAD breaks below the 55-week MA for the first time this year (blue dotted line) after having failed to recover above 1.44, which represents the 2- year trendline resistance and the 38% retracement of the decline from the same high (1.75). *********EURCAD is now vulnerable to a retest of 1.38, followed by 1.3570s, which is the trendline support from the June low. A break below this potentially suggests 1.3120. The significance of the 1.44 retracement suggests a placement for short stops.
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