The theme for next week will be inflation hedging. It will be about price growth, which will be reflected in the markets; and an easy way to monitor this would be to watch the spreads between the yields of inflation-indexed US treasuries.
Friday will be a day to stay tuned in to as May's labor market numbers are reported. Nonfarm payrolls should rise, unemployment should drop. Even though bonds will probably rise in Europe and recovery in China is still important, it matters most what happens at home next week. Things may change quickly on several other issues but most of the focus is on the USA and recovery.
"You are just as confused as the rest of us but now, instead of pretending to know things which you clearly don't have a clue about, you're blurting out your confusion."
mbbf, mr friggin quotations, My view hasn't changed at all, bigmouth. It is everyone else's doing TA that is out there, and if you'd read any other of my posts you'd know that. I haven't heard an intelligent post from you since day one.
You need more love in your life. Didn't mommy and daddy give you enough kisses?
Get off this board, because you have nothing to offer here.
"Everywhere I turn to for info it seems to be a down prediction near-term for precious metals. Since so many people are jumping aboard this ship, could the exact opposite happen?"
Attaboy! Welcome aboard. You are just as confused as the rest of us but now, instead of pretending to know things which you clearly don't have a clue about, you're blurting out your confusion. Get it all out. Leave it in and you'll grow a tumor.
There are several red flags indicating further correction in pms. Check the GDX:GLD ratio chart. PM stocks have been underperforming gold since September! There was an uptrend channel since February, but recent fell below channel to downside. PM's are still under a negative macd cross from the recent drop, and gold made a lower high at 1220. Gold needs to take out 1220 asap to have any chance at further upside. I believe the HUI is tell you were going down in June as usual.
Here in Canada, the Fed Gov is widely expected to raise interest rates tomorrow. Although canada only compromises a smaller component of the dollar index, an above 0.25 rate rise would correlate inversely with the dollar index, more than likely giving PM's a boost if the rate increase hasn't been factored in. I tend to believe the rate increase and magnitude hasn't been completely factored in because some of the recently released statistics beat estimates and our gov might wish to compensate for the hotter than expected numbers. Further, our housing market never burst like the rest of the world and our politicians are terrified of our overheated housing markets. Average house prices in Toronto are around 500K and in vancouver around 600K.
Silver has the danger of H&S forming in the next couple of days. However gold shows no such sign. The scary thing to me, is the consolidating pattern the dollar index is forming. It looks like its position for a dollar thrust upward in 3 to 5 business days.
WHAT recovery? WHAT price growth? We won't go a single week where those factors are not imploded by Europeans arguing how to employ the trillion they set aside for Greece, and since Spain was downgraded--whether one trillion or five is enough to jumpstart the PIIG economies. The DOW contains so many companies with Europe counterparts as "hedges", all we'll hear is about how the negative part of the hedge lays like an anchor around those companies necks.
Foreclosures in the US are growing while people inexplicably astoundingly look to housing starts as a measure of health. It's a measure of insanity as the gushing arterial wound gets more pressure to sluice the value of homes downward. Think of it as the BP oil spill, only this artery is the wealth of the middle class.
We're waiting for the other shoe to drop in Europe and the fact that the boast of the last five years, the DOW components, have a European part of those businesses, as a "hedge"?--we'll be concentrated on that "new" news to the great unwashed that those currency flip flops to bring our market down on its knees more than once next week.
Three and five year adjustable mortgages are beginning to reset this past May and through the summer in huge quantities--those based on the LIBOR rate are resetting around 3.5%-3.75% for the next six months to one year. Interest rate only loans will see a $5-700 a month DROP in payments, offset by a $250 GAIN in Fed and States taxes, $400-500 a month in your pocket.
Second loans will drop by about $150 a month. A pure LIBOR interest only scenario will net you about fifty bucks a month.
Principal plus interest scenarios will LOSE about $400 a month due to increased payments, and the fact that the payment will contain 40% principal, which isn't deductible.
First loans at 5 years reset at about 3.25-3.75%, but generally are 25 year notes with principal, as opposed to interest only. That means a POP in loan costs of about $150 a month in gross costs, and a LOSS in interest rate deduction of about $800 a month in principal--net cost to all note holder is $450-$500/month in take home income in the BEST of circumstances.
Net net--33% of all note holders with exotic instruments, will face mortgage cost changes. 3/4 of that 33% will LOSE income and cash flow, crimping the recovery, in the BEST of circumstances. 1/4 will gain, but only if they are interest rate only loans.
We'll begin to feel the results of those 2005-8 resets and boom year adjustables this summer. Good luck when that hits the fan, alongside all those "new homes" coming to market.
The days of relying on your house for any kind of equity are over. And, that's the next shoe to drop. Next week? Maybe not. Europe? That and the BP oil spill will give us down days galore.
My subject post was not giving direction for the coming week, but rather to say that the focus should now be to see if there is any stabilization at all. The focus by many in the prior two weeks was more on safety - you and many others were very negative when SLW fell to the low $17 range. Many people were hurt by mainstream posters on this board who were rhetorically defiant by scaring others into selling in the low $17s. I was one of the very few, including CGREENS, who saw a short-term bottom to the fear damage. I was not wrong, and I don't think I have ever been. It is very important that we do not ignore what is happening in the USA and what our markets do. My post was not one of direction, especially longer term. Turning points are important if you want to make money by trading, adding or selling your positions. Talking about the financial concerns and economics of Europe, my experience is well known in certain circles. Europe does have serious problems which I have mentioned in previous posts. They are still the same, but there was hope for some stabilization in Europe last week, and the question is will there be any in the coming week. (I think I know all the answers to that but I will withhold comment.) The reflection of European crisis will also be reflected in the US markets, and that is a very important point. Your calendar of events will be very important as will future guidance, which should be used for longer term analysis. The importance of my previous post is to have clear focus on what happens here. It is not about 2 or 3 weeks from now, but just one week. In a period longer than a week, imports and exports of all nations will be a concern leading to lower GNP and twenty other factors. Since there is heavy buying of metals and bars in Europe, I expect that we will again turn to the fear scenario. I do not see a collapse now or in the future with precious metals as an investment. My low-end trading range and reasons why are still in place from previous posts over the last two weeks. I always take into account those who post who are either short, have protection in place or want to buy lower. I am not one of those who have ever had a big investment/ position in SLW.
The main market should continue to bounce up next week, but the weak rally won't last long. If this don't scare ya, nothing will.