Gold: Isn’t the Whole Idea to Buy Low and Sell High?

Isn’t the Whole Idea to Buy Low and Sell High?

Authored by Adam Baratta

When it comes to the gold market, perhaps the old saying should be changed to “buy low and sell high-if ever.” That is likely the mentality behind gold investors at this point, as the yellow metal remains stuck in a trading range.

The gold market has some issues working against it currently. Higher stocks, a stronger economy and overall robust appetite for risk are all playing a role in the market’s current lack of upside follow through. In the absence of any fresh, bullish catalyst, gold could remain on the weaker side of the ledger going into the New Year.

Such a view is, however, dangerous as it does not really examine the bigger picture. If there were no significant reasons for gold to eventually start moving higher, the market would likely have sunk far below its recent lows by this point. Despite short sellers and others taking a bearish view of the metal currently, the market has held its ground. This is undeniably a sign of underlying strength.

Investors have an interesting tendency to view gold very differently from other asset classes such as stocks, for example. But in many ways, some of the same investment principles still apply. For example, if you were a long-term investor in Microsoft, would you rather buy shares at $25 per share or $30 per share? Obviously, buying the stock at $25 per share would be preferable, allowing the investor to potentially realize more gains if the price goes up while also possibly making better overall use of investment capital.

The gold market is no different in this regard. While many investors seemingly want to wait and see the market moving higher before taking action, the savvy investors realize that the old notion of buy low and sell high still applies. This is exactly why the market has not been able to really breakdown-the buyers have met and neutralized any significant selling pressure.

For the investor that is interested in value, and is taking more of a long-term view rather than a short-term view, the current range in the gold market could represent an excellent long-term buying opportunity. The market has shown time and time again that it has the ability to move sharply higher in a short period of time, and the next upside breakout could see such price action once again. Would you rather buy gold at $1250 per ounce or $5000 per ounce?

Now is the ideal time to add to a gold portfolio, and if you don’t already have an allocation in this key asset class, now is the ideal time to get started.

Adding physical gold to your holdings has never been easier than it is today, and you can get started by simply picking up the phone. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how to make this asset class a key part of your portfolio using an IRA account.

 Read more from Adam at Advantage Gold

Top Crypto-Mining Executive Explains Why "We"re Hoarding The Coins"

Authored by Mac Slavo via SHTFplan.com,

If the price action in crypto currencies over the last several months has proven anything, it’s that the blockchain has gone fully mainstream with global investors, major financial institutions and governments showing significant interest in the space. While a number of blockchain projects are moving onto the stage, the primary focus for investors has been Bitcoin, which has seen an increase of over 1,600% in 2017. And according to Frank Holmes, there is much more to come.

In an interview with SGT Report, Holmes, the Chairman of Hive Blockchain Technologies, the world’s only publicly traded blockchain mining company explains that, while roughly 78% of the available 21 million Bitcoins, or about 16.4 million, have been mined up to this point, there are probably only about 10 million coins in actual circulation around the world because somewhere on the order of 25% have been lost forever due to misplaced wallet access keys and other issues. Moreover, of those 10 million or so available coins, it has been widely reported that about 1000 “whales,” or high net worth investors, own some 40% of the coins, creating a scarcity in the market that has left millions of global investors chasing a limited supply of BTC.

Holmes suggests that this limited availability works to the advantage of cryptocurrency miners who use expensive computer hardware mining rigs to process transactions on the blockchain, because with so much investment capital moving into the space they can hoard the coins they mine and sell into the market during price spikes while loading up on more coins when markets dip. Hive currently mines Ethereum, Ethereum Classic, Bitcoin and will soon move into Litecoin and other popular cryptocurrencies using the same strategy:

We’re hoarding the coins… we mine virgin coins and in fact we are getting offered premiums for our coins because they’ve never been tainted.

 

We never buy the coins… anytime it has a huge surge we will sell one, two or three percent… and as soon as it corrects we just mine more and replenish ourselves…

 

We want to wait until we get at least 20,000 coins and then we can turn around and use our quant models, so we’re doing things very unique…

Most crypto currencies have a maximum supply of coins that can ever be mined. As Bitcoin demonstrates, a percentage of those already-mined coins will be lost. Another percentage will be locked up by high net worth and long-term investors. These mechanics create a situation where, perhaps only a little over half of the actual listed circulation of coins is actually circulating.

With this being the case it’s not difficult to see why, as tens of billions of dollars, and perhaps even trillions as has been suggested by investment gurus, continue to pile into these assets, prices for top tier crypto currencies could continue to rise exponentially in coming months and years.

Bill Blain: Bitcoin Futures Could Be "A Clusterf*ck Of Monumental Proportions"

Crpto-"currency" or total carnage?

Mike Novogratz doesn’t see "quick adoption" of Bitcoin as a currency, preferring to think of it as "digital gold".

Perhaps this is one reason why.

Amid its meteroic rise, Bitcoin is now 20 times more volatile than the US Dollar...

As MINT Partners" Bill Blain exclaims, next week sees the improbable launch of Bitcoin futures. This looks like having the potential to be a clusterf*ck of monumental proportions when it bursts.

Every bank knows BTC’s extraordinary gains are a crowd delusion fuelled by the extraordinary promise of free wealth!

Yet, many will be willing to trade and settle them for their clients – largely retail.

Bitcoin has become the ultimate Klondyke.

Most folk don’t have a clue what BTC and the associated Blockchain ledger might be, but everyone knows what the price action has been.

Where that price is going is clouded by a lack of clarity on the technological nuances, distorted by Libertarian/Geek monetary gobbledy-gook, confused by a plethora of me-too coin offerings, speculators who see the chance of a quick buck, and investors scared they are missing out.

I’ve spent most of this week learning more and more about the limitations of Blockchain and two things are crystal clear – it doesn’t work, and it’s an evolutionary dead end that nimbler cryptocurrencies will take the niche of. But I still don’t understand why we need them at all?

If its central banks you object to, let’s have a private cryptocurrency based on gold, or oil, or something else tangible… but based on some computer babble? Not for me.

On the other hand, the long-term possibilities that BTC exploits in terms of Blockchain distributed ledgers are very real. Blockchain applications are going to utterly change finance..

Precious Metal Futures" Trendline Frenzy: Are Gold, Silver, Platinum, and Copper About to Die?

Gold Futures (GC)

 

Gold futures found itself in dangerous waters during the 12/05 session as GC price action temporarily broke below 1,267 – a key support level from gold’s last two swing lows on 10/6 and 10/27.  After closing at 1,268.40, GC became the chart of the day, with price sitting just above support trendlines on both the short and long-term.  Having tread water in place by chopping around in a sideways price channel for the past two months, GC futures need to bounce immediately or may begin a lengthy plunge with a clear-cut downside drowning target of 1,215.

 

 

 

 

Silver Futures (SI)

 

Silver futures continued to sell-off for the 6th consecutive losing session; swiftly breaking down below two previous major swing lows at 16.444 (10/09) and 16.282 (08/07).  SI’s short-term technical profile has become very bearish, with silver futures floating around in ‘no man’s land’ without any meaningful support levels in sight.  While a small bounce may cool-off the current sell-off - and attempt to push ‘poor man’s gold’ prices back up into 16.50-17.00 - what’s more likely is that silver futures will gravitate towards their next major support levels.  If so, SI will be magnetically drawn down to 15.55 like Magneto lazily beckoning for a spoon. 

 

 

 

Platinum Futures (PL)

 

Platinum futures dropped for the third straight session, before finding support at the key trendline connecting the last two major swings at 895.40 (07/11) and of 906.50 (10/06).  The next few sessions will likely determine whether platinum bounces back up towards 960 and remains in a sideways price channel, or if it confirms the Super DMI™ bearish crossover and heads even lower to test long-term support at 895-905.  Price action will see a strong bounce at those levels, but a break below 895 means that 830-870 is where PL futures will be heading in early 2018.

 

 

 

 

Copper Futures (HG)

 

Dr. Copper’s technicals are the only thing we would dare think to possibly know better than Gundlach; well, maybe how to handle frustartion with a pathetically hollow fourth estate of mainstream media and maybe haircuts, but we digress and absolutely adore the art-loving Buffalo Bill suffering true Bond King.

Copper futures were simply obliterated, suffering their largest loss in a single session since 12/14/11.  If price continue to head lower over the course of this week, extremely strong support at 2.906 should provide a well-bid bounce back up towards 3.05.  If not, Copper may only delay an inevitable move down towards long-term support at 2.55 now that price has confirmed the Super DMI™ bearish crossover.

 

 

 

Check out Fibozachi.com to learn about modern technical analysis and trading indicators that actually work.

Doc Copper breakdown important global message?

Ole Doc Copper has performed very well over the past 2-years, as it has rallied 50%. Maybe the rally has been sent a positive message about the worlds macro picture? Could have and maybe stocks liked it.

Below look at the price action of Doc Copper over the past 5-years and why price action of late might be something one might not want to hide from–

CLICK ON CHART TO ENLARGE

The 24-month counter-trend rally took Doc Copper to test 5-year falling resistance at (1), where it attempted three times to breakout. While attempting to breakout, Doc Copper created several bearish wicks (bearish reversal patterns) at (1).

The rally pushed momentum to the highest levels since the 2011 peak of late, which looks to be turning lower.

Doc Copper this week, could be breaking 6-month rising support at (2).

Time will tell if ole Doc Copper is sending an important global macro message to stocks and about global inflation or lack of. Stick your head in the sand and ignore the message from Doc Copper? I am not at this time.

 

Chart pattern analysis with brief commentary:   

There is a ton of news and opinions about markets and stocks that make the decision-making process more difficult than it needs to be.    

I believe the Power of the chart Pattern provides all you need to see what is taking place in an asset and determine the action to take.  

This approach has worked well for me and our clients and I encourage you to test it for yourself. 

 

Send an email if you would like to see sample research and take me up on a trial of our Premium or Weekly Research where I provide actionable alerts on breakouts and reversals in broad market indices, sectors, commodities, the miners and select individual stocks 

 

Email services@kimblechartingsolutions.com  

Call us Toll free 877-721-7217 international 714-941-9381 

Website: KIMBLECHARTINGSOLUTIONS.COM 

 

Receive daily research I post on the blog each day

 

Follow on Twitter 

 

See our latest webinar

 

 

 

 

5 Tips For New Bitcoin Investors

Authored by Darryn Pollock via CoinTelegraph.com,

Taking the plunge and entering the crypto space can be daunting. There is no centralized authority to hold your hand, and the rumors and stories circulating around digital currencies can be fear-inducing.

image courtesy of CoinTelegraph

However, with a few straightforward tips, negotiating that first Bitcoin transaction or trade can be a lot less stressful.

1. Do your homework

There is plenty of hype, rumor, success stories and tales of horror when it comes to Bitcoin and other digital currencies. Make sure you understand exactly what you’re getting into, and don’t risk more money than you could afford to lose.

Bitcoin is an exciting world to be in, but it is one that is complex and confusing if you only enter it on hype. Many people buy expensive cars, not knowing how the engine works, and that is fine because if it breaks there are mechanics and garages. In the cryptocurrency world, it is you against the world, it is decentralized and there is no one to hold your hand.

Pawel Kuskowski, CEO & co-founder of Coinfirm, gave this advice:

"The more you understand, the better off will be."

Don’t simply speculate about the big money there is to be made, actually go out there and learn how Bitcoin and Blockchain work. Lucas Geiger, founder and CEO of Wireline, says:

"This may seem obvious, but I think the first thing is take time to understand the Blockchain. I say this strongly because few people will do this. If you don"t have a high-level understanding of how a Blockchain stores secure data (such as coins), then you are investing in the equivalent of tulip bulbs.”

A good place to start is the beginning - with Satoshi Nakamoto"s white paper. Crypto fund manager Jacob Eliosoff wrote:

"If you have any technical bent whatsoever, take 10 minutes to leaf through the original 2008 Satoshi white paper. It"s only eight pages, legible and an inspiring work of genius!"

The great thing about the cryptocurrency ecosystem though is that there is a lot of material and information out there. Loads of websites and resources are aiming at trying to make the technology easier to understand.

Even more than that, the investment world is also trying to simplify things by making Bitcoin more available to traditional investors. The introduction of things like futures will help people understand how Bitcoin works.

2. Be cautious

In any investment there will be risk, but that risk is somewhat magnified by Bitcoin’s newness and extreme volatility. Eliosoff emphasized:

"This is still an extremely high-risk space. Don"t invest money you can"t afford to lose!"

It is tempting to be bold and brazen, throwing money at Bitcoin after hearing the success stories, but especially as a first timer, caution is the better part of valor. There is no reason to look to become a millionaire overnight with Bitcoin, and by sinking huge amounts of capital in it from the start, you will be met with more problems than solutions.

Marshall Swatt, a serial entrepreneur, suggested:

"Start small and invest a small portion of your capital."

Additionally, from Tim Enneking, managing director of Crypto Asset Management, advises:

"Don’t chase Bitcoin prices. Decide on a entry point and stick with it. With Bitcoin, you’re almost always right in terms of foreseeable price action – it’s your timing that might be off. So, be patient, and let the Bitcoin price come to you."

There are a number of investing strategies that work really well with Bitcoin, and those that offer the most success are often the most cautious.

Things like ‘Dollar Cost Averaging’ - putting in the same amount of money into an investment at the same time each week or month - is great for Bitcoin as it helps you ride out the lows, as well as the highs.

3. Diversify effectively

Most new digital currency enthusiasts hear first about Bitcoin, but there are thousands of other cryptocurrencies out there, and some have grown much faster than even Bitcoin. Diversification is wise, particularly since many of these “altcoins” perform well when Bitcoin drops. Tech entrepreneur Oliver Isaacs writes:

"Hedge against volatility and don’t put all of your eggs in one basket. Much like investing in the stock market or FX, you should diversify your funds as a risk management technique." 

Famed stock picker Ronnie Moas is a strong believer in diversification. It is easy to become infatuated with one cryptocurrency, especially Bitcoin, but it is important to hedge your bets.

“Do not put all your Crypto money into Bitcoin,” Moas warns. “You must diversify across at least a dozen of the more than 1,000 names. Focus on names in the top 50.”

4. Keep coins off the exchanges

There is still a lot of hacking and thievery that goes on in the crypto space, and it is important to take precautions. It isn’t too hard to make hackers’ lives difficult. Use the exchanges for just that: exchanging. Once you have bought a currency, move the money off the exchange and into a wallet that only you control, such as a hardware wallet.

A lot of people have been burned on exchange hacks - none more so than the major Mt. Gox one - but even recently, things like BTC-e and the charges against their CEO would have caused many people to lose out on huge amounts of money.

Matthew Unger, founder and CEO of iComply Investor Services Inc. suggested:

"Just like you keep some cash in your wallet, some in your bank account and perhaps the really valuable stuff in a safe, you need to manage digital currencies in the same way."

5. Get ready for a wild ride

Bitcoin is notorious for its volatility, so much so that many traditional investors are terrified of it. A massive drop in Bitcoin’s price does not spell permanent disaster, but it is hard to stay committed when you start heading into the red.

Diversification is a great strategy to help with that, but it takes some thought and effort. Of course, the most famous (and so far, successful) Bitcoin strategy of all is to ‘hodl’ - or hold onto -  your investment no matter the market volatility.

You can also buy and forget, as not keeping an eye on the market can help keep you from worrying about the dips and miss the volatility.

Dow Jones Megaphone pattern, bounce of new support

Below looks at the Dow Jones Industrials Index over the past 100 years on a monthly closing basis-

In the early 1980’s the Dow used old resistance to become new support at (1), where a breakout and strong rallied followed.

CLICK ON CHART TO ENLARGE

The Dow looks to be using old resistance as new support to push higher off of at (2) again.

Positive price action off new support at (2) continues. For bulls to get concerning long-term concerning message from this pattern, support would need to be taken out at (2).

 

Why you see chart pattern analysis with brief commentary:   

There is a ton of news and opinions about markets and stocks that make the decision-making process more difficult than it needs to be.    

I believe the Power of the chart Pattern provides all you need to see what is taking place in an asset and determine the action to take.  

This approach has worked well for me and our clients and I encourage you to test it for yourself. 

 

 Send an email if you would like to see sample research and take me up on a trial of our Premium or Weekly Research where I provide actionable alerts on breakouts and reversals in broad market indices, sectors, commodities, the miners and select individual stocks 

 

Email services@kimblechartingsolutions.com  

Call us Toll free 877-721-7217 international 714-941-9381 

Website: KIMBLECHARTINGSOLUTIONS.COM 

 

Receive daily research I post on the blog each day

 

Follow on Twitter 

 

See our latest webinar

 

 

 

 

"None Of The Problems Are Solved" Despite Global "Plunge Protection" Overnight

When many American traders went to bed last night, China was tumbling, the euro was in trouble, and US equity futures were notching lower. Then, as former fund manager Richard Breslow scoffs, it appears the world "reconsidered" and everything rallied to erase any sign of discontent or uncertainty by the time everyone woke up...

Via Bloomberg,

Apparently, the word of the day is “reconsider.”

Across a whole host of assets, we got somewhat violent moves early in the 24-hour trading cycle that managed to unwind themselves over the course of the day.

I kept being told that the euro, Chinese equities, U.S. equity futures, gold, bond yields, Eurostoxx 50, and so on, all reversed their opening, sometimes gap, moves after the market reconsidered what it all meant.

Of course, that’s being a bit too kind. It would be more accurate to say things turned around when traders actually considered things for the first time. But this all matters more than just a collection of knee-jerk reactions that have come to naught as another trading region came in.

 

North America isn’t being asked to break the tie and decide who was right. They are being told that they can afford to ignore the news that propelled things in the first place. After all, we’re right back where we started. No harm, no foul. That would be a mistake, as once again we keep muddling-up short-term and long-term information as if they should be discounted by the same rate and assuming we should trade without benefit of context.

 

 

Chinese equities opened lower leaving gaps from last Friday’s close.

 

 

Big swings: the Shenzhen dropped a quick 2.1% before staging a relentless rally throughout the day to finish up by 0.9%. No leap on the close, just a steady rally.

 

 

The commentary at the lows was as dire as the dismissive tone was at the close.

 

The PBOC proposed additional regulations to curb the run-away shadow banking industry. What was described in the morning as policies that would cause a flood of outflows from various short-term investments were later described as likely to attract foreign inflows. Wait, we’re not collapsing through the last lines of support any more? What a gift -- buy!

 

The message from this is that, once again, the PBOC is delivering on what they have warned about and promised to address. Perhaps instead of trying to deconstruct the “real” Chinese intentions based on outmoded epigrams, we should start to listen to what they’re actually saying. And accept that regulation isn’t bad by definition. Sometimes a healthier Main Street can actually be good for equities--the old-fashioned way. But it would be folly to decide these new regulations must not be all important because of the day’s price action.

 

European shares and the euro were hit early on the German coalition talks collapse.

 

 

What began as “markets are being roiled” quickly turned to markets “shrugged it off.” Hardly. They recovered on the very fortuitously timed announcement that Volkswagen was going to spend an additional EU25B over the next five years on its core brand. That’s hard and good news. May even help out with Germany’s hopelessly flat Phillips curve.

 

 

But don’t think, Chancellor Merkel on her back foot isn’t something with negative possibilities that make it foolish to dismiss. Just hard to enumerate the immediate implications.

As Breslow concludes, the mirage of markets" ignorance does not mean anything is solved.

Some of the other realities to keep factoring into your analysis and avoid being lulled into ignoring include:

• Brexit wasn’t solved because today’s headline was upbeat, it’s serial noise;


• you’ve no way of handicapping Nafta as each debating point is aired;


• no one has a firm handle on the Middle-East;


• and U.S. tax reform may end up just stoking the debate of whether a bad deal is better than no deal.

Don’t ever let someone tell you the really big news is the ones you can afford to ignore

And it appears we"re gonna need more "help"...

Sweet melt up potential here says Joe Friday

Tis the season for Chocolate (Cocoa) to do well, will it repeat its historical pattern again this year?

Below looks at the seasonal pattern of Cocoa from Sentimentrader

CLICK ON CHART TO ENLARGE

Going into this period of seasonal strength, Cocoa bulls of late are hard to find and dumb money traders have established one of the largest short positions in this commodity in years. The triple combo could make the price action of this commodity very interesting going forward.

This commodity can be played in the futures markets or two different ETF’s (NIB & CHOC). Below looks at NIB

CLICK ON CHART TO ENLARGE

Cocoa ETF NIB could have built a base at, where seven different bullish wicks (reversal wicks) took place just above 10-year support at (1). Of late NIB has been moving higher and this week looks to be breaking above highs hit earlier this week at (2).

A nice combo of pattern, sentiment and traders positions is in play in this asset that is down nearly 50% in the past couple of years.

Some perspective- since the first of this month, NIB has gained over 7%, which is nearly half of what the S&P has done year-to-date.

Full disclosure Premium and Sector members have been long NIB since the end of October. If you would like to become aware of these type of pattern and sentiment setups, we would be honored if you were a member.

 

Why you see chart pattern analysis with brief commentary:   There is a ton of news and opinions about markets and stocks that make the decision-making process more difficult than it needs to be.   

I believe the Power of the chart Pattern provides all you need to see what is taking place in an asset and determine the action to take. 

This approach has worked well for me and our clients and I encourage you to test it for yourself.

Receive my free research posted on the blog daily here 

Or,  send an email if you would like to see sample research and take me up on a trial of my premium or weekly research where I provide actionable alerts on breakouts and reversals in broad market indices, sectors, commodities, the miners and select individual stocks 

 

Email services@kimblechartingsolutions.com  

Call us Toll free 877-721-7217 international 714-941-9381 

Website: KIMBLECHARTINGSOLUTIONS.COM 

 

follow on Twitter 

  

See our latest webinar

 

 

 

 

 

 

 

 

 

Is This The Real Driver Of Gold's Recent Weakness?

If you are a precious metals investor then you may be wondering why the price of gold and silver has been slammed in recent weeks... amid ever-increasing nuclear armageddon rhetoric, storms, quakes, floods, and a central bank (that is notoriously bad at forecasting) about to attempt to do something with its balance sheet thathas never been achieved...

The answer is surprisingly simple... China"s Golden Week Holiday.

As SHTFplan.com"s Mac Slavo wrote a year ago, and appears to be proved correct once again... Ask the expert pundits on financial media and you’ll get a swath of explanations for how the strength of the dollar or the improving health of the global economy are to blame.

One could reasonably argue that dollar strength this week could certainly put downward pressure on the gold price. So, too, could one make the point that mainstream perspective is such that the economy is improving, which means investors aren’t in panic mode and have no reason to hold a safe haven asset. But neither of these arguments could realistically lead to the smack down we witnessed this week.

So what happened?

Well known gold and silver analyst Andy Hoffman suggests the answer could be much simpler than we have been led to believe.

There’s no reason… there’s not even a propaganda meme of why [gold has been smashed]… there isn’t even a such thing as negative news for precious metals anymore…

The fact is, [like the last few years, when prices collapsed], China is closed for the week.

One glance at the last few years gold price action suggests he may well be correct...

After this Friday"s close, China will be on vacation for its Golden Week National Holiday and this weakness appears to be traders front-running the traditional chaos that the rest of the world plays when China leaves the playing field.

China will be back in business on October 9th, and that means the Shanghai Gold Exchange, which opened in 2015 to counter Western manipulation of precious metals, will likely help re-balance prices to where they were before this recent takedown.

We could be wrong, but something tells us gold and silver prices won’t stay this low for much longer and that they could well see a complete turnaround when China reopens on October 9th.

You Can Only Choose One: Cheap Oil Or A Weak Dollar

Authored by Charles Hugh Smith via OfTwoMinds blog,

When the price of oil rises to the point of pain, just remember the handy-dandy discount mechanism: a much stronger US dollar.

Glance at this chart of the trade-weighted U.S. dollar, and note the swing highs and lows in the price of oil per barrel around each peak and trough. You can look up historical inflation-adjusted prices of oil in USD on this handy chart: Crude Oil Prices - 70 Year Historical Chart (macrotrends.net)

The correlation isn"t perfect, of course. Oil was relatively cheap between 1986 and 2003, due to a relative abundance of supply as Saudi Arabia and new fields ramped up production, with two periods of extreme price action: a brief spike higher in 1990 preceding the First Gulf War, and a collapse to $17 in the 1998 Asian Contagion financial crisis.

Geopolitical crises, wars and supply shocks will move oil prices regardless of the value of the USD. That said, it"s clear that absent such shocks, there is a strong correlation between a stronger USD and lower oil prices (in USD of course) and a weaker dollar and higher oil prices.

The reason why is straightforward: if the dollar gains purchasing power against other currencies, it buys more oil for each dollar.

Conversely, when the USD weakens, its purchasing power declines and it takes more USD to buy an imported barrel of oil.

(Note that the price of domestically produced oil is largely set on the global marketplace. West Texas crude oil may be a few dollars less per barrel than Brent crude oil, but if the global price skyrockets, so does the price of US-produced crude.)

Since oil and gas are the essential resources of the industrial economy, the price paid by consumers and commercial users matter.

The one way the US can get an across-the-board global discount on oil is to push the purchasing power of the USD higher. That is an enormous benefit that few commentators ever mention. Instead, pundits talk about the benefits of a weaker dollar, which boil down to lower priced exports.

Which matters most to households and enterprises? A tiny blip higher in exports (a relatively modest slice of the U.S. economy) or lower energy prices at the pump?

If a recession were to pressure household budgets, the one sure way to lower household spending on oil/gasoline would be to strengthen the USD.

There are two basic mechanisms that strengthen the USD: raise interest rates, so global capital flows to USD-denominated debt to earn the higher yield, or a global financial crisis which causes global capital to seek the relative safe haven of the USD.

In a global crisis, liquidity and credit will dry up, and all those non-US debtors holding the $11 trillion in USD-denominated debt I mentioned on Friday will be scrambling for USD to service their debts. This will also increase demand for USD, pushing the USD higher.

The Federal Reserve insists that yields must remain near-zero or the economy will collapse. Americans paying 15% to 23% interest on their credit cards haven"t seen any benefit from near-zero rates, nor have student-loan debtors. The real beneficiaries of low yields are financiers, banks and corporations which borrow immense sums for next to nothing. (Try finding a credit card with a 1% or 2% interest rate.)

At some point, the price of oil might start mattering to households and businesses. Note that the discoveries of oil are now a thin slice of annual consumption. As the cheap oil is depleted, what"s left is the costlier-to-extract stuff.

Even more alarming, the global supply of oil might fall well below global demand, and stay there.

When the price of oil rises to the point of pain, just remember the handy-dandy discount mechanism: a much stronger US dollar.

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

Why the US Dollar is About to Go Up, and the Euro Isn’t.

With $DXY’s 92.63 monthly close, August 2017’s end likely marked an 8-month high-to-low cycle for the US Dollar – which hovers a mere penny above major support at 92.62 (next major support ~ 91.92).

92.63

That’s where the Dollar ($DXY) closed the month of August.

A full 0.01 above major support at 92.62.

The Dollar’s been hammered for 8-months straight.

It’s gone down for all of 2017.

Yeah, it bounced in February - c’mon.

After an 8-month high-to-low time cycle that shaved off 11.75% (peak-to-trough), the US Dollar appears poised to find its footing and bounce markedly from a cluster of strong price support spanning 92.62 - 91.92 (note $DXY price action and weekly candlesticks across the last few weekly bars of 2014 and first few of 2015 ~ extremely strong support range from massive technical breakout).

Technical Outlook for the US Dollar ($DXY)

~ why it wants higher from here

The combination of a strong 8-month selloff – that ends in a picture-perfect doji, 1 penny above the first major support level going back to 2015 – suggests that a strong bounce is more than likely to develop over the next few months, with 95/96 $DXY the likely target (round number 100 is a longer-term possibility and a floor to absolutely trampoline through 103 if  Big Lil’ Kim launches an EMP that ‘fails’ over Hokkaido/ Sakhalin.

The daily chart below shows the US Dollar with the Super RSI, Super MACD, and Super DMI – it’s worth noting that all four of these technical indicators are showing a clear-cut bullish divergence. This is because every indicator is registering a higher value even though the price of $DXY printed a new swing low.

The following chart shows the exact Pip Strength of individual currencies … 

(EUR, GBP, USD, JPY, CHF, CAD, AUD, NZD)

… over the last 8-months ~ the timespan when the USD registered it’s last major swing high.

Over this period of time, the USD has been the weakest currency when we tally the total amount of pips lost since January 1st. 

Working from the assumption (albeit measured) that the USD is about to turn up …

what may prove itself the best currency pair trade, from the perspective of technical risk:reward?

EUR has been the strongest performing major currency (represented via Cyan below) but appears ready to cool-off, lose its lust for the luster of 1.20 and turn south (after explicitly failing to plot a new swing high).

i) Looking at a EURUSD monthly chart shows that the open gap from January 2015 has just been filled (to within roughly 20 pips), and

ii) While the 1.2100 level has provided rock-solid support on numerous occasions, we’re now on the other side of it ..

iii) Meaning that same level will likely serve as resistance now – because price is approaching it from below instead of above.

[1] http://www.zerohedge.com/news/2014-07-29/most-significant-danger-according-elliotts-paul-singer

[2] http://www.zerohedge.com/news/2017-08-04/epic-quarterly-letter-elliotts-paul-singer-rages-against-everything-passive-investin