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From The Desk Of David Schectman

Gold bulls should not despair, according to ThinkMarkets.

“The price is still looking solid,” Aslam wrote on Tuesday. “The price is trading above the 50-day, 100-day and 200-day moving averages. This confirms that the price is trading in an uptrend and as long as the price stays above this, bulls have very little reason to worry about anything.”



The precious metal is still trading near six-year highs on dovish Federal Reserve expectations, which are unlikely to change significantly in the near-term.

“The Fed is under pressure to cut the interest rate this year in order to support inflation and this means weaker dollar,” Aslam said. “Geopolitical tensions are still high. France, Germany and the UK have increased pressure on Iran to act responsively in relation to its commitment (made back in 2015 about the international nuclear agreement).” - ThinkMarkets .

 

China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years! – Donald J. Trump

David's Commentary (In Blue):

Preaching to the choir…

 

Have you ever tried telling your friends or family that they really need to own some gold and silver? Most of you would say, “yes.” Did you convince any of them? Most likely the answer is “no.” I learned the lesson during my four plus years in Miami. I talked about gold and silver to my new (wealthy) friends and acquaintances until I was hoarse and not one of them ever bought a single ounce. I was really surprised. These were smart, well educated people with the means to buy precious metals. Nothing I could say got through to them and trust me, I gave them all the compelling arguments.

 

Lesson learned: you are wasting your time trying to convince anyone who does not already own precious metals, or expresses an interest in owning them or learning about them, or that they need to. The only people who will listen to you are those who already own metals. I call it preaching to the choir. 

 

Chances are, when the stock market is in flames and gold and silver are back in the headlines and making new all-time highs they may pay attention to what you say, but it will be a little late. Now that is not YOUR problem - it is THEIRS. If you are anything like me, you would like to help these people. We see what is coming and want to share it, but trust me, it is a waste of time. At least, wait until they are receptive – and we are way early now. 

 

Another lesson I’ve learned is it is a bad idea to give financial advice to others. If you are correct and they make money off of your advice, they will not give you credit, but if they lose money they will never let you forget it. 

 

Investing, religion, and politics, are topics best avoided with friends and family. I know, it is easier said than done, but it is still good advice.

 

I have told our brokers when they call new people that the first question that they should ask is, “Do you own any gold or silver?” If the answer is “no,” then you most likely will be wasting your time and theirs to try and convince them that they should. If they already own precious metals or express an interest in learning about them, then a conversation is justified.

 

Look, we love referrals from our clients, and I know that those of you who give them to us do so with the hope that they will see the light. Make sure if you do, that the people you want us to talk to at least have an interest in, or some understanding of gold and silver and why it is important to own it. The best of intentions and a great story will not resonate (at this time) with the traditional stock and bond investor.

 

I ask myself why that is? One of the reasons is because most of them will ask their stockbroker or money manager if it is a good idea? And they will not get any positive reinforcement from their advisers. Why not? Because the broker and advisors do not make any money on their clients when they buy physical gold and silver. They are not in business to give advice, even good advice that costs them money. Stock buyers buy stocks, sell them and buy them again. Owners of physical metals buy them and keep them. They don’t trade them for profit but do so to balance their precious metal portfolio.

 

So when will your friends and family buy gold and silver? Most won’t. Those who do will do so because there will be a time when interest rates are once again on the rise – which will be very bad for bonds, stocks,the economy, and for real estate. All of the traditional investments that traditional people park their money in will be heading south - all at once. And what will be going up then? Yes, it will be gold and silver. And that is precisely why they need it. Gold and silver ARE financial insurance, assets that rise when the rest of one’s wealth is falling. And the thing is, it is free insurance. You can always sell it if you don’t need it and get your money back.

 

Most people are basically greedy. Whatever they have, they WANT MORE. They will stay full invested in the stock market so they can make a bit more, even if they think there may be risk and the market has little room to move up. They think that they can time it, and get out at the top. No one can do that. And worse yet, when the market does start to fall, their brokers will tell them, “It is just a correction, don’t sell.” Just like the silver “correction” smashed the price down from $50 to $13. It’s been a decade and it has not yet recovered. The same thing will happen to the stock market. Sell high, buy low. Everyone knows that this is the way to invest but few ever do it. Today stocks are high and silver and gold are low. 



The Silver To Gold Ratio

 

The silver to gold ratio has started moving back down. Silver has risen more than $1.00 in the last two weeks and by $2.00 since last November.



It has now fallen from a nosebleed high of 94:1 to 89.26:1 and is headed back down. In the past, the ratio always reversed back to the mid-level 65/1 ratio. 

SRSrocco wrote,

In stead of watching Kitco for daily price actions, hoping and praying for the silver price to finally start moving significantly higher, if we look at the technical analysis, it gives us some important clues. Again, I still believe the value of gold and silver will be some of the best assets to own when the over-leveraged financial system and economy finally crash , but if we pay attention to the technicals, they do indeed provide some hints, as they did when gold broke out above $1,360 in a big way.”

This graph tells us that silver will break out of its long-term symmetrical triangle formation, but it does not tell us if it will break out to the upside or the downside. This week it broke out to the upside. 

Silver is moving up towards its 50-day moving average, which is at $16.21. Once that is penetrated, silver should move up to its next resistance at $21. We are very close to the breakout.

SRSrocco

 

THE SILVER PRICE: Setting Up For A Breakout?

After gold broke above a critical resistance level, held for the past five years, precious metals’ investors are now wondering, “what’s in store for silver?” While gold surged from $1,340 to $1,440 in just one week last month, silver only went up a mere $0.70. Thus, the Gold-Silver ratio increased from 89/1 to 94/1, in the same five-day period.

So, the BIG QUESTION many precious metals investors are asking, “Is silver going to follow gold’s move higher?”  And, in several price trends in the past, silver does follow gold higher but also outperforms the yellow metal in the later stage.

To understand the dynamics of the silver price, we must realize it is based upon two aspects of the market:

While many in the precious metals community discount or don’t believe in technical analysis (I was guilty of this for years), the majority of traders, investors, hedge funds and institutions most certainly do. So, if we ignore these technical levels or formations, then we are also blind to how price discovery is being made in the market… yes, even with market intervention.

Now, I am not saying that the current price discovery of silver at $15.25, is based on sound fundamentals if we compare its real value as a store of wealth to all the DEBT, DERIVATIVES, and JUNK ASSETS held in the world, but rather, how it is being priced by the leading DRIVERS in the market… which are traders, investors, hedge funds and institutions.

To better understand how silver is being currently traded, you must know what these leading PRICE DRIVERS are looking at. Furthermore, many precious metals investors say that they don’t care about the short-term price movement or technical analysis, but when the silver price happens to fall to a low (or is underperforming gold or the market), then there is no shortage of BELLY-ACHING, and COMPLAINING by the very same people who supposedly ignore this information.

So, instead of watching Kitco for daily price actions, hoping and praying for the silver price to finally start moving significantly higher, if we look at the technical analysis, it gives us some important clues. Again, I still believe the value of gold and silver will be some of the best assets to own when the over-leveraged financial system and economy finally crash, but if we pay attention to the technicals, they do indeed provide some hints, as they did when gold broke out above $1,360 in a big way.

For example, gold’s price BREAKOUT above $1,360 occurred in a technical formation called, an ASCENDING TRIANGLE . Here is my chart showing how gold’s price shot above that $1,360 level:

According to technical analysis, a breakout above the Ascending Triangle Top Line is very bullish. Thus, traders, investors, hedge funds, and institutions use this information as a motivation to take confident positions in gold. Now, what are the silver price technicals saying??

Well, if we look at the 40-year monthly chart for silver, its price has been trading in a SYMMETRICAL TRIANGLE formation :

The blue dashed lines show this Symmetrical Triangle formation. Furthermore, you will notice that when silver finally broke above the KEY $14 Resistance Level in 2007-2008, it shot up to $21 rather quickly.  That $14 Resistance Level remained since 1983, but recently has acted as a MAJOR SUPPORT LEVEL.  Now, if we take a look at a close up of this Symmetrical Triangle formation, you will see how tightly silver is trading in it:

There is no coincidence that silver is trading in-between this symmetrical triangle. However, a symmetrical triangle formation suggests a breakout will occur, but it doesn’t indicate whether that will be UP or DOWN. Thus, market drivers are keeping a CLOSE EYE on the silver price to see which way it will break out of this triangle formation.



I will be explaining this in much more detail in an upcoming video. Yes, I stated in the past that I would have already made a video, but I have been putting together the charts and will likely publish a new YouTube video in 10-14 days. Please stay tuned.

Major participants in the silver market have been following two important trend lines in silver over the past several years. The first one is the 50 Month Moving Average (50 MMA), and the second, is the rising bottom trend line:

Again, there is no coincidence that silver has been trading right up against the 50 Month Moving Average since the middle of 2016. Please take note that the rising bottom trendline is also the bottom part of the Symmetrical Triangle.  Silver has not broken this lower trend line since 2004.   Will it? Well, it could, but I doubt that it would do so for years because silver is now severely undervalued with respect to gold and most other assets.

Moreover, the direction to which silver initially BREAKS OUT of its symmetrical triangle may depend on the price direction of gold. So, if gold trends upward, even with corrections lower, then traders will likely believe silver will break-out ABOVE the symmetrical triangle formation that it has been stuck below since early 2013. 



Of course, this information only provides short-term price movements that traders, investors, hedge funds, and institutions look at in determining the market price of silver.  THIS HAS NOTHING TO DO WITH THE LONG-TERM EXCELLENT FUNDAMENTALS OF OWNING SILVER. But, to get to that point, we are going to see it show up in the technicals.  Again, more of the details in my upcoming video.

Lastly, many believe that the silver price may go lower or underperform gold during the next recession or weakening economy. At first glance, this makes perfect sense because a lot of physical silver demand comes from the Industrial Sector.  However, if we look at another long-term chart, the Gold-Silver ratio fell to its lowest when U.S.

unemployment was close to its highs.   When the Gold-Silver Ratio falls, then the silver price is outperforming gold, and the opposite is true when the Gold-Silver Ratio increases:

The upper part of the chart shows the Gold-Silver Ratio while the bottom of the chart is displaying the U.S. unemployment rate, which is currently at 3.7%. Yes, the U.S. Government is manipulating the unemployment data. We all know that.   But, if we just go by the data as an indicator, in 1983, when the employment data WASN’T MANIPULATED, the Gold-Silver Ratio fell to 30/1 when the unemployment rate reached 10.5%.

Furthermore, it wasn’t until the U.S. economy and markets collapsed after 2009, did the silver price shoot up to $50. So, when the U.S. unemployment rate was 9.2% in 2011, near the highs, the Gold-Silver Ratio fell below 30/1.

Here we can see that the silver price outperformed gold in a big way during two major recessions and elevated unemployment rates.  Thus, the fear by precious metals investors that silver will do worse during the next recession may not be true and hasn’t been the case during the past two major recessions.

Also, you will notice that the Gold-Silver Ratio is hitting the upper level of 95/1. While it could go higher, the ratio always reversed lower back to the mid-level 65/1 Ratio, or even lower.

There’s a lot more to share and explain about silver, so please stay tuned to my YouTube Video update.  Right now, the Fed is fighting a market correction, and recession with continued Dovish statements since the Dow Jones Index suffered its worst Christmas Eve trading day ever. However, they haven’t GONE ALL IN YET with lowering interest rates and starting up QE (money printing). If they finally resort to doing this, we are going to see what happened to gold in June take place in a much BIGGER WAY in the precious metals. And, I would imagine silver will still outperform gold in the end.

Kitco

Trader Who Nailed Gold’s Summer Breakout Now Eyes This Price

 

Todd Gordon Founder, TradingAnalysis.com

 

The Fed’s dovish position is likely to send gold several hundred dollars an ounce higher in six months, this according to Todd Gordon, founder of TradingAnalysis.com. 

“I don’t think this is the birth of a new gold market. I do see upside though, into the $1,500s, $1,600s, potentially $1,700 but unfortunately I think at that point the Fed is going to start to reverse course, forced to get a little more hawkish, and I think that might choke off gold’s rally,” 

The two trends that are the most important to me are interest rates and the US dollar. When interest rates begin to rise and/or the dollar starts to fall, gold and silver will be the best asset to own. We are at the dawn of these two trends moving in that direction.

Foreigners Dump U.S. Treasurys, Liquidate a Record $216 Billion in U.S. Stocks in 13 Consecutive Months

 

The latest TIC data for the month of May, released just after the close, showed that China continued to sell U.S. Treasurys for the third straight month, bringing its total to just $1.11 trillion, down another $3 billion, and the lowest since May 2017...

... Even as Japan bought a whopping $37 billion in US paper in May, its largest monthly purchase since August 2013, and bringing its total to $1.101 trillion, just $9BN shy of China's $1.110 trillion.  

Meanwhile, in a surprising development, the U.K. - which has been aggressively buying U.S. paper either for itself, or in proxy for other purchasers - saw its holdings jump once again, rising to $323.1 billion, an increase of $22.3 billion in the month.

 

Similar to Belgium and Euroclear, it is far more likely that this surge is simply the result of some offshore fund serving a sovereign, but based in the U.K., is doing the buying. Whether it's China or someone else, will be revealed in due course.

 

Yet despite the occasional purchaser, foreign official institutions (central banks, reserve managers, sovereign wealth funds) have seen their holdings of U.S. Treasuries slide by another $22 billion, the 9th consecutive drop in the holdings of foreign official institutions, and yet because the decline this May was smaller than the drop in May of 2018, the LTM [last twelve months] net sales posted a modest drop.

 

Overall, May - and the past 12 months in general - were not good for U.S. Treasurys, as foreigners, both public and private sold a total of $33.8 billion in U.S. Treasurys and $1.4 billion in corporate stocks, offset by purchases of $15.1 billion in Agencies and $14.9 billion in Corporate bonds.

 

This article showed up on the  Zero Hedge  website at 4:28 p.m. EDT on Tuesday afternoon -- and it comes to us courtesy of Brad Robertson. 

And how do countries react to a currency war? They devalue their currencies. In other words, the dollar is about to get involved (with Trump’s approval) in devaluation. That is one of the two trends I mentioned above that you should focus on.

Trading a Currency War: Stay Clear, Buy Gold, Deutsche Bank Says

 

Should U.S. foreign-exchange policy spur a global currency conflict, Deutsche Bank AG sees gold as the ultimate victor.

 

The possibility of U.S. FX intervention has created some buzz among Wall Street analysts after President Donald Trump took aim at China and Europe this month, saying they're playing a "big currency manipulation game." A U.S. attempt to weaken the dollar -- a step it hasn't taken since 2000 -- could prompt other nations to combat the intervention, sparking a "true currency war" probably involving the yuan and euro, according to Deutsche Bank strategist Alan Ruskin.

 

"With a currency war most likely to be fought on USD/CNY and EUR/USD terrain, one approach would be to steer clear of the direct conflict," Ruskin wrote in a note Monday. "By far the most direct and simple way to trade the complexities of a currency war is by going long gold."

 

Gold has climbed 10% this year amid deepening U.S.-China trade tensions and climbing wagers on a Federal Reserve rate cut. The metal touched a six-year high last month, and hedge funds are close to their most bullish levels since 2017.

 

This  Bloomberg  article story showed up on their website at 8:24 a.m. PDT on Tuesday morning -- and it's the second offering of the day from Patrik Ekdahl.  

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About Miles Franklin

Miles Franklin was founded in January, 1990 by David MILES Schectman. David's son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin's primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.

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Create a great offer by adding words like "free" "personalized" "complimentary" or "customized." A sense of urgency often helps readers take an action, so think about inserting phrases like "for a limited time only" or "only 7 remaining!"