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Gold and Silver • Gold is now moving opposite to the S&P index. Which might p
Gold is now moving opposite to the S&P index. Which might prove handy…
LATELY we’ve been writing about the negative correlation between the equity market and the precious metals market, says Jordan Roy-Byrne at The Daily Gold.
This phenomenon has been in place since summer 2011 and has re emerged in the past few months. Since November 23, the S&P 500 is up 8% while gold mining shares are down 14%. Silver prices have lost 11% and gold is down 7%. For those who have studied history this should not come as a total surprise.
From 1972 to 1977 and November 2000 to July 2002, precious metals and the equity market trended in opposite directions. We’ve postulated that precious metals and the mining shares won’t begin a new bull phase until the cyclical bull market in US equities ends. We don’t expect that to happen immediately but there are some important signals beneath the surface (with the safe-havens) that we should direct our attention to.
First, let’s take a look at the recent activity in a number of markets. From top to bottom we plot Silver, Gold, the GDX gold-mining shares index, US Treasury bonds on the TLT, and the US Dollar. The first three markets have been in a downtrend since the end of September. Meanwhile, TLT and the buck began their downtrends in the middle of November.
It appears that these markets have been tightly connected since the end of November. That is the bigger picture. The short-term term picture shows the US Dollar potentially breaking out and bonds not breaking to a new low.
Meanwhile, we should take note of the action in some other markets since late November. Both emerging markets (EEM) and the US stock market (the S&P 500 index) have advanced, but EEM is slowing down.
Commodities failed to make a new high even as the US$ made a marginal low. As we can see, the inverse of the buck is threatening to breakdown and realign with commodities and CEF, a fund which is half gold and half silver. The rally since November is now seeing a negative divergence as emerging markets have not made a new high and the US Dollar could be breaking out.
The bottom line is the action in precious metals, commodities and the US Dollar is now, we think, signaling a warning for the equity market. The bond market needs to confirm this warning and if it does it could be the catalyst for a sell-off in equities.
Keep in mind, the S&P 500 is approaching strong long-term resistance while in a state of euphoric sentiment. If you don’t believe that, check the recent sentiment surveys and ignore those who don’t provide hard data. By the way, public opinion on bonds (from Sentimentrader) is only 14% bulls! Sounds like we should sell bonds and buy stocks, right?
Meanwhile, the precious metals appear likely to test major support in the coming days and weeks. There will be some more pain but things are setting up perfectly for the next cyclical bull market, we think. Because gold is positioning itself contrary to risk-on assets. It has detached from the stock market and that is a good thing. There will likely be a transition period as precious metals find a bottom and the equity market reaches its peak.
For now, we think investors should look to buy precious metals if they reach an extreme oversold condition next week.
http://goldnews.bullionvault.com/gold-S%2526P-021520124
Statistics: Posted by yoda — Sat Feb 16, 2013 3:44 am
View full post on opinions.caduceusx.com
Gold and Silver • Gold is now moving opposite to the S&P index. Which might p
Gold is now moving opposite to the S&P index. Which might prove handy…
LATELY we’ve been writing about the negative correlation between the equity market and the precious metals market, says Jordan Roy-Byrne at The Daily Gold.
This phenomenon has been in place since summer 2011 and has re emerged in the past few months. Since November 23, the S&P 500 is up 8% while gold mining shares are down 14%. Silver prices have lost 11% and gold is down 7%. For those who have studied history this should not come as a total surprise.
From 1972 to 1977 and November 2000 to July 2002, precious metals and the equity market trended in opposite directions. We’ve postulated that precious metals and the mining shares won’t begin a new bull phase until the cyclical bull market in US equities ends. We don’t expect that to happen immediately but there are some important signals beneath the surface (with the safe-havens) that we should direct our attention to.
First, let’s take a look at the recent activity in a number of markets. From top to bottom we plot Silver, Gold, the GDX gold-mining shares index, US Treasury bonds on the TLT, and the US Dollar. The first three markets have been in a downtrend since the end of September. Meanwhile, TLT and the buck began their downtrends in the middle of November.
It appears that these markets have been tightly connected since the end of November. That is the bigger picture. The short-term term picture shows the US Dollar potentially breaking out and bonds not breaking to a new low.
Meanwhile, we should take note of the action in some other markets since late November. Both emerging markets (EEM) and the US stock market (the S&P 500 index) have advanced, but EEM is slowing down.
Commodities failed to make a new high even as the US$ made a marginal low. As we can see, the inverse of the buck is threatening to breakdown and realign with commodities and CEF, a fund which is half gold and half silver. The rally since November is now seeing a negative divergence as emerging markets have not made a new high and the US Dollar could be breaking out.
The bottom line is the action in precious metals, commodities and the US Dollar is now, we think, signaling a warning for the equity market. The bond market needs to confirm this warning and if it does it could be the catalyst for a sell-off in equities.
Keep in mind, the S&P 500 is approaching strong long-term resistance while in a state of euphoric sentiment. If you don’t believe that, check the recent sentiment surveys and ignore those who don’t provide hard data. By the way, public opinion on bonds (from Sentimentrader) is only 14% bulls! Sounds like we should sell bonds and buy stocks, right?
Meanwhile, the precious metals appear likely to test major support in the coming days and weeks. There will be some more pain but things are setting up perfectly for the next cyclical bull market, we think. Because gold is positioning itself contrary to risk-on assets. It has detached from the stock market and that is a good thing. There will likely be a transition period as precious metals find a bottom and the equity market reaches its peak.
For now, we think investors should look to buy precious metals if they reach an extreme oversold condition next week.
http://goldnews.bullionvault.com/gold-S%2526P-021520124
Statistics: Posted by yoda — Sat Feb 16, 2013 3:44 am
View full post on opinions.caduceusx.com
Are We Moving Toward a More Ideological Trade Policy Debate?
K. William Watson
With John Kerry leaving the Senate to become Secretary of State, the seat that Kerry held on the Senate Finance Committee will be filled by Senator Bob Casey of Pennsylvania. This is an interesting committee assignment given that the Finance committee oversees all international trade issues in the Senate and that Senator Casey is one of the most protectionist members of Congress today. But there is another reason why Casey’s assignment and his voting record are intriguing for the future of trade policy.
The Cato Institute has been keeping track of Congressional votes affecting trade freedom since 1999. Every member of Congress has a trade vote profile that reveals their support for trade barriers and trade subsidies throughout their career. The database reveals some interesting facts about members of the Finance Committee, swing states, and ideology.
Pennsylvania and Ohio are both states where neither Republicans nor Democrats hold a stable majority, and indeed there is one Republican senator and one Democratic senator from each. All four of those senators are now on the Senate Finance Committee. What’s especially interesting is that the two Democrats—Casey from Pennsylvania and Sherrod Brown from Ohio—are solid Interventionists according to Cato’s trade scoring matrix, while the two Republicans—Pat Toomey from Pennsylvania and Rob Portman from Ohio—can both securely claim the (alas, much-rarer) Free Trader designation.
The significant disparity in voting records for Senators with the exact same constituents goes against conventional trade-policy wisdom. Trade barriers often have regional implications so that support for a particular policy will transcend ideology or party affiliation. Polticians from Maine support shoe tariffs; politicians from Arkansas support catfish restrictions; politicians from Florida support sugar subsidies; politicians from South Dakota support beef restrictions; and so on.
I find the possibility of a more ideological trade debate refreshing. Maybe this phenomenon in Ohio and Pennsylvania says more about the electoral peculiarities of swing states than it does about trade policy—all four of these Senators are new comers to their office and were elected in mid-term elections that favored their party. But if it signals a new trend in how the battle lines of trade policy will be drawn in Congress, the future looks bright. I’d rather be governed by two principled ideologues with opposing ideas than by two centrists tied to special interests.
View full post on Cato @ Liberty
Oil And Gas • New twist in stricken rig saga: Shell was moving it to avoi
New twist in stricken rig saga: Shell was moving it to avoid tax
The oil giant will instead suffer a multi-million dollar loss on the exercise after the rig ran aground off the Alaskan coast
TOM BAWDEN FRIDAY 04 JANUARY 2013
Shell’s ill-fated attempt to tow an offshore oil rig from Alaska to Seattle in the final days of December was motivated by a desire to avoid $7m (£4.3m) of Alaskan state taxes, it emerged today.
But the oil giant will instead suffer a multi-million dollar loss on the exercise after the rig ran aground off the Alaskan coast on Monday night.
The rig was beached during a violent storm on its way to a Seattle shipyard for routine maintenance, in a round-trip timed so that, thanks to an accounting loophole, Shell could avoid an Alaskan state tax.
However, because the rig ran aground late on New Year’s Eve and began 2013 within three miles of the Alaskan coast, Shell remains liable for a unique state property tax on equipment dedicated to oil and gas development and exploration.
Shell admitted today that its decision to move the rig, the Kulluk, just weeks after it was brought to the Gulf of Alaska in November, was motivated by financial considerations.
“It’s fair to say that the current tax structure related to vessels of the type influenced the timing of our departure. It would have cost Shell multiple millions to keep the rigs here,” a Shell spokesman said.
Another Shell spokesman, in London, said: “While we are aware of the tax environment wherever we operate, the driver for operational decisions is always governed by safety. In this case, what mattered most to Shell was the two-week window of favourable weather that was forecasted for that journey.”
He denied suggestions that the routine maintenance and inspection could have been carried out in Alaska.
David Gregory, a councillor for the city of Unalaska, said Shell’s equipment tax bill would come to between $6m and $7m, adding: “Maybe they should have just stayed there.”
In addition to the tax, Shell faces millions of dollars of charges including the cost of repairs. It must also reimburse the federal and state governments for an emergency response which involved more than 500 people, including the evacuation of the rig’s crew of 18 by Coast Guard helicopters in weather the Captain later described as “close to a hurricane”.
Salvage experts flown to the rig concluded that none of the 139,000 gallons of diesel and 12,000 gallons of hydraulic fluids on board had been spilled. However, they cautioned that it was unclear how serious the damage was or how long it would take to refloat and move the Kulluk.
For Shell, the incident is the latest in a series of setbacks in its costly pursuit of oil in the environmentally-sensitive Arctic region which is nonetheless regarded as the next great frontier for oil exploration.
The Kulluk began its journey on 21 December and a week later was about 50 miles south of Kodiak Island – out of reach of the Alaskan tax man.
But the tug that was pulling it suffered multiple engine failures just as a subtropical cyclone made its way into the North Pacific. On Monday night, in the dying hours of 2012, the rig ran aground about 1,600 feet from Sitkalidak Island, next door to Kodiak.
Shell has so far spent £3.2bn buying up leases and on exploratory drilling off Alaska’s north and north-west coasts but has yet to discover any commercial quantities of oil. Full-scale production in the region is still thought to be years away.
http://www.independent.co.uk/news/world … 39128.html
Statistics: Posted by yoda — Sat Jan 05, 2013 12:41 am
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If it Moves, Tax it. If it Keeps Moving, Regulate it. And if it Stops Moving, Subsidize it.
By Jim Harper
The Federal Trade Commission is on Step Two.
If it Moves, Tax it. If it Keeps Moving, Regulate it. And if it Stops Moving, Subsidize it. is a post from Cato @ Liberty – Cato Institute Blog
View full post on Cato @ Liberty
Gold and Silver • The world’s gold is moving from West to East
The world’s gold is moving from West to East
Tim Staermose on JULY 30, 2012
Did you know that, according to Capgemini and the Royal Bank of Canada’s latest World Wealth Report, there are now more millionaires in Asia than North America…?
An estimated 3.37 million individuals in the Asia-Pacific region have a liquid net worth of over US$1 million. That compares to 3.35 million in North America.
The same trend is evident in the gold market.
While the current world hubs for gold trading and storage are London, Zurich, and New York, stores of physical metal are also beginning to migrate east. Gold storage facilities are springing up all over Asia like mushrooms after a summer rain.
Back in 2009, the Hong Kong Airport Authority set up the first secure gold storage facility inside the confines of the Hong Kong Airport.
This September, Malca-Amit, the Tel Aviv-based diamonds and precious metals company is opening a second state of the art facility at the airport, which will have capacity for 1,000 metric tons of gold.
That compares to the 4,582 tons that the US government claims is in Fort Knox, and the record 2,414 million tons that the world’s exchange traded gold funds collectively held – mostly in London– as of July 5th.
Malca-Amit also has a facility in Singapore’s Freeport complex, and the company is planning a third Asian precious metals storage facility in Shanghai in the near future.
Speaking of Singapore, Simon has written before that the government there recently announced a series of incentive measures aimed at grabbing as much as 15% of the world’s physical gold trade within 5 to 10 years.
Among the measures, the Singapore government will exempt investment-grade gold, silver and platinum from the local goods and services taxes (similar to VAT or sales tax), beginning October 1, 2012.
ViaMat, one of the world’s most well-known secure logistics companies, is also doing heavy business in Singapore and Hong Kong. ViaMat, in fact, is the security partner for such groups like GoldMoney.com and HardAssetsAlliance.net which offer turnkey gold storage solutions.
Private individuals can contract directly with ViaMat, though their fees can be quite steep… so this may not make sense unless/until your holdings exceed several hundred ounces.
For private investors with smaller holdings, a place like The Storage in Hong Kong is a great option, especially considering how inexpensive it is to buy gold in Hong Kong.
Simon and I have both written before that premiums on gold coins in Hong Kong can run as little as 0.15% above spot—you can see this for yourself at places like Hang Seng Bank and the Bank of China, both located on Des Voeux Road.
One of the great advantages of Hong Kong as a place to buy, sell and store gold is that there are no taxes or duties on imports or exports of precious metals. There is no local sales tax either.
Moreover, the market for precious metals is deep and active, and no one bats an eyelid if you walk into the bank and drop a wad of cash to exchange for gold bullion.
Contrast this with places like the United States where cash transactions are increasingly being viewed with major suspicion, and the government is trying to recruit everyone from bankers to coin dealers into being unpaid spies.
Until next time,
Tim Staermose
http://www.sovereignman.com/corresponde … east-8164/
Statistics: Posted by yoda — Mon Jul 30, 2012 10:59 am
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