Archive for year: 2016

The much awaited Jackson Hole speech by the Fed Chair Janet Yellen – and the subsequent nonfarm payrolls data failed to ignite the prospects of a rate hike this September of 2016. The market now forecasts only a 21% probability of a rate hike in this month, according to the CME FedWatch Tool. The probability of a rate hike in December of 2016 stands at just above 50%.

Time and again, I have explained why the Fed cannot hike rates in 2016. Contrary many market experts, my view has stood the test of time and has come to fruition. According to my research, the chances of a rate hike in December of 2016 are also very bleak. Nonetheless, the Fed speakers will continue to “jawbone” the dollar, the way they have been doing for the whole year.

The coming week has a number of Central Banks competing with each other to unleash their monetary easing plan as if that is the only solution to all the economic problems plaguing the world. Even the failure of the past seven years has not deterred them from printing more money from thin air.

$180 Billion Of Bond Buying – Even Larger Than 2009

The European Central Bank and the Bank of Japan combined are purchasing a whopping $180 billion of bonds monthly, as shown in the chart below. Add to it, the new bond buying program announced by the Bank of England, and the number rises even higher. All three are expected to recommend either adding to their existing bond purchases or extend their duration in their next policy meetings.

This has led the Bond King Bill Gross to warn investors of the dangerous consequences. In a letter to clients, he wrote: “Investors should know that they are treading on thin ice”.

“This watch is ticking because of high global debt and out-of-date monetary/fiscal policies that hurt rather than heal real economies. Sooner rather than later, Yellen’s smooth shot from the fairway will find the deep rough,” reports CNBC.

Silver Is On The Cusp Of A Massive Rally

When investors realize that they are holding worthless currencies, the big money will rush into the precious metals. Consider this: The total world’s investment holdings in silver are a paltry $50.8 billion, compared to $3.04 trillion in gold, as shown in the chart below.

Did you know that the hedge funds alone manage around $2.7 trillion, according to Barclay Hedge data? Even if a small portion of the trillions sloshing around out there decides to enter into silver, the white metal will shoot through the roof.

Traders Are Finally Recognizing The Importance Of Silver

Following the poor jobs report last Friday, traders jumped into silver, thus driving it higher, as shown in the chart below.

As explained in our earlier articles, investors should not only look to buy into the “white metal”, they should also explore options of investing in the silver miners.

What Are The Silver’s Technicals Suggesting?

Silver had a massive run from the lows of $15.83 to $21.22. No markets rise vertically, a 50% Fibonacci correction is a healthy and accepted norm. As seen in the charts below, silver too has corrected 50% of the recent rise.

The weaker hands are out of silver, whereas, the stronger hands have bought the white metal at lower levels. Silver is currently trading above both the 20 – day and the 50-day exponential moving average. This is a sign that it has resumed its uptrend, and is set to rally higher.

Once silver crosses above the highs of $21/oz, it should reach its target of $25/oz.

Conclusion

As Bill Gross says, the world markets are being manipulated by the Central Banks. Consequently, investing is becoming a difficult proposition. You need the help and support of an expert with an edge to invest at the right time and to be positioned propertly for when high volatility strikes.

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Until volatility picks up we can only focus on short-term extreme oversol/overbought markets for opportunities. Keep watching this space and subscribe our services to get the maximum benefit of timely advice to buy and sell silver and various other asset classes.

He’s highly bullish on gold and silver and sees new highs ahead once gold breaks the $1400 mark. And that’s not too far ahead. It’s been building and when it hits, there’s no telling how high it will go.

Last week ended on a very positive note for those who follow and trade filtered price spikes.

What is a filtered price spike? In short, I scan pre-market, and post-market trading hours’ price charts of SPY, QQQ, IWM, GLD, and GDX for a very special odd tick in the market which creates a spike on the chart.

These spikes could be to the upside or downside, does not matter. What they tell me is the direction which the market (market makers) are going to try and move the market in then next 48 hours.

As long as you can trade 1x, 2x or 3x ETFs, futures, Binary options, spread betting, or CFD’s, then you can take full advantage of these quick and powerful moves.

These spikes generally are not huge percent movers, typically range between 0.25% – 1.1%, but they are highly accurate and when leverage is used like trading futures you can pocket $250- $1500 quickly.

I have found price spikes to work exceptionally well in predicting market-moving news before it takes place like Brexit and Friday’s FED decision.

Below you will see a chart of GLD (gold) which flashed us a with a buy signal 36 hours before gold shot up in price post the FED decision.

This week (Monday Aug 29^th) SPY Spike and Target Hit

On Friday after the market closed I saw a spike up on the SPY chart. You can see what happened the next trading session once the market opened – Market rallied and spike was filled for a quick $450 profit.

Concluding Thoughts:

In short, if you are looking for a few extra trades each month that are highly accurate and only put your money at risk for a very short period of time then you should look into getting my ETF trades and Spike Alerts.

Trade With Me At: www.TheGoldAndOilGuy.com

Chris Vermeulen

The SPX has completed its’ “Broadening Topping Pattern”
…the next trend is DOWNWARDS!

The current pattern is suggesting that a significant top is at hand. I fully believe both in patterns and indicators and right now the current pattern is suggesting that a significant top is at hand.

My cycles are suggesting a potential “Black Swan” event, in multiple indexes, which are “imminent”.  The SPX may have made its’ last challenge of the upper trend line of its’ ‘Broadening Top’. On Friday, August 19^th, 2016, it closed beneath its’ ‘Cycle Top’ resistance at 2185.38.  The SPX has fulfilled all of the fractal requirements necessary for a completed “corrective” uptrend. The uptrend from 1810 has been in a “corrective phase”. The next wave down will be an impulsive wave.

The large divergences which I have been viewing, in my proprietary oscillators, are most real and accurate and once the selling begins, the momentum should quickly move to the downside.  The current market is being supported by a lack of sellers, more so than aggressive buying.  With investors still thinking that there is nowhere else to place their money, they appear to be content with leaving their money at “risk on” assets, within a market that is pushing all-time highs.  This type of “mentality” usually leads to large losses, rather than big gains.  There is just no opportunity for growth in the SPX!

Investors have become complacent with the current rally.  They listen to and believe what the FED has been saying regarding interest rates and they have come to believe that everything about this market depends upon the FED. I do not believe that to be the case.  I believe that the FED is or should I say will be irrelevant in due time!

The Bank of America Merrill Lynch reports that its’ clients (institutions, hedge funds and private clients) who have sold stock for all but 2 to 3 weeks, during all of 2016, have once again sold $1.9 billion of US stocks while the SPX was hitting new highs.  Institutional clients led the sales due to poor performance.  It has been the retail investors that have been flooding into the market while anticipating a massive breakout and rally.

The big and smart money continues to build up massive short positions. George Soros has become more bearish on equity markets, nearly doubling his short bet against the SPX, following similar moves by Jeffrey Gundlach, Carl Icahn and David Tepper. According to his 13F filing, Soros now owns roughly 4 million ‘put options’ on shares of the SPY.

We are presently living on borrowed time and vast amounts of borrowed moneys. This is a period of time of “unprecedented economic upheaval” which was caused by ‘financial engineering’ by governments and their Central Banks. It’s a slow-motion catastrophe, where as we are living today at the expense of tomorrow. The FEDs’ balance sheet has more than quadrupled since the Crash of 2008.  This is unprecedented:

Keep in mind, that most of these highly successful investors mentioned above also predicted other major market moves if you look back through the years. Their huge bets and called typically play out, but I do find most of them jump the gun a little early (many months in most cases). Reason being, they understand how and why the markets move, and because they do, they know when various markets are nearing a major turning point.

The catch, with trying to time these major multiyear market reversals is that all investors around the world (all market participants) buying/selling habits need to stall out and reverse direction for the new trend to take hold. This always seems to take longer than we expect, but these highly successful investors along with myself feel this bull market in stocks is about to come to an end.

Conclusion:

The next stage will become a vicious deflationary cycle in which prices and growth “crash and burn”. Prepare for another massive wave poor earnings, job layoffs, and falling stock prices.

Over the past 500 years, or more, whenever deflation emerged, price of gold gained and always gained big, in terms of purchasing power and I don’t feel this time will be any different.

There will be many ways to profit from all of this, precious metals is just one of many awesome opportunities unfolding for myself and subscribers to enjoy.

My ETF Trades: www.TheGoldAndOilGuy.com

Chris Vermeulen

Low and negative yields mean that no one has the confidence to invest in real capital projects. Investors would much rather lose money over a 10-year horizon than invest in building dams, repairing pipes, creating better grids, starting new businesses, etc. A new monetary order must replace the existing one, and as soon as possible. It will likely be one that China is determined to dominate this time around.

The Bank of Ireland is set to become the first domestic financial institution to pass on the ECB’s negative rates to customers for placing their money on deposit with the bank. I have learned that the Bank of Ireland, which is 14% owned by the State, has informed its large corporate and institutional customers that it plans to charge them a negative rate of -0.1% for deposits of €10 million or more starting in October 2016.

Ulster Bank, which is owned by UK lender Royal Bank of Scotland, has already introduced negative interest rates for a small number of large corporate clients. Ulster Bank has products priced off the back of Euribor, a European interbank lending rate, which is at an all-time low and had turned negative last year. These interest fees being charged by the bank do not apply to SMEs or to personal customers.

Additionally, as Bloomberg reports, The Royal Bank of Scotland, which is Great Britain’s largest taxpayer-owned lender, stated that some of its biggest trading clients must pay interest on collateral as a consequence of low central bank interest rates. Some of the bank’s institutional clients will need to pay interest on funds pledged as collateral when trading futures contracts.  The changes for sterling and euro futures and options trading will probably affect about 60 large clients. “Due to the sustained low interest rate environment, RBS will now be passing the cost of holding such deposits onto a limited number of our institutional clients,” the bank said in the statement. RBS said it had previously applied a zero percent floor to the overnight rate charged for collateral required by clearinghouses for future traders.

This is the first indication that the Bank of England’s decision to cut rates to historic lows is forcing lenders to collect negative interest from deposit holders.

Ironically, unlike Europe, the U.K.’s rates are (still) positive, even though the BOE recently cut the interest rate to an all-time low of 0.25% as it unveiled that it would resume monetizing government and corporate bonds. It may soon cut rates to negatives.

While the RBS move affects only a subset of business customers, some lenders in Europe, where both the European Central Bank and the Swiss National Bank have kept interest rates below zero for months, have been charging a wider array of customers in order to hold their deposits.

“What you’re seeing is there have been a few banks in Germany and a couple in Switzerland which have started to charge for deposits; importantly, it’s to corporate customers, or very wealthy people,” said Andrew Lowe, an analyst at Berenberg, as quoted by the FT. “You are likely to see the UK banks follow suit, in particular if rates fall further,” he added. “Everything that applies to Europe applies to UK banks as well.

After a certain period of time passes, it will also apply to less than “very wealthy people.”

The RBS charges would apply to clients who trade futures and options and, therefore, hold cash on deposit as collateral. He said customers were being encouraged to put their cash into bonds, instead, so as to avoid the cost.

Conclusion:

In short, customers who hold money at banks are slowly beginning to get squeezed and charged fees. What does this mean? To me, I feel it’s going to be negative on the banks and their share prices as investor slowly move away from those banks and/or spread their money to other asset classes to avoid paying interest to a bank to hold their money.

Banks have it really bad, if you ask me. They are not making much interest on the capital they hold for clients, and charging customers to hold money is a sure way to lose some of their biggest clients and income.

The financial sector has never recovered from the 2008-09 bear market in stocks, and with, potentially, another bear market just around the corner, bank stocks could be in for a massive bout of selling.

Where could a large chunk of investors’ capital flow? Precious metals is one of the places, though many other greater opportunities are slowly unfolding, and its just a matter of time before we take advantage of them.

Join Me at www.TheGoldAndOilGuy.com and see my exact trades and prosper during these interesting times.

Chris Vermeulen