-- Posted Friday, 16 February 2007 | Digg This Article
The Precious Metals are making nice and steady progress. The majority of short-term indicators are green for “GO”. The fundamentals continue to support the up-move: An increasing supply of digital and paper “money,” chasing a decreasing supply of gold and silver. South Africa, for years able to increase its supply, now reports decreasing output.
(The reason I put “money” in quotation marks is because what we call money is actually a paper or digital substitute for money. Money or ‘Argent,’ by definition has to be of equal value to the goods or services that are provided in return for this medium of exchange).
Longer term the indicators are also bullish. For a number of years I’ve conducted research on the subject of exponential trends. An exponential trend, as most of you know, is when a line on a chart starts out nearly horizontal, then moves up progressively higher, until it becomes nearly vertical. According to Dr. Albert Bartlett, retired professor of physics at U of Col. at Boulder, CO., ‘the greatest shortcoming of the human race is our inability to understand the exponential function.
Here is a partial list of some items that are currently moving up exponentially. In my 51 years of studying the markets I have never seen so many exponential trends at once, and co-incidentally the number of items that are going exponential is itself moving exponentially!
The number of blogspots on the internet (40,000 new ones each day!); population growth; (visit www.worldometers.com to see the number increase before your eyes); allergies, asthma, diabetes and cancer; technological advancement; the US C.P.I. –Consumer Price Index, (from 10 in 1913 to 202 today); the number of components per I.C. (integrated circuits) is doubling every 18 – 24 months and is called “Moore’s law.”
The growth in technological ‘intelligence’ (the ability of machines to appear to ‘think.’ Household debt; credit card debt (4.8 trillion in 1975, now over 50 trillion). The earth’s magnetic field is declining, and the rate of decline is increasing rapidly. Cell-phone time worldwide, (despite a number of studies that show this to be harmful behavior). Email traffic. Computer power. Mass use of inventions in the US: telephone, radio, TV, PC’s, internet. The power of energy: human muscles – domesticated animals – plant energy – coal – oil – natgas – nuclear energy.
According to futurist Raymond Kurzweil, in an essay called “The law of accelerating returns”: Whenever technology approaches some kind of a barrier, a new technology will be invented allowing us the cross that barrier.” There is a very interesting paragraph in Genesis, ch. 11 vs 6: And God said: “Indeed the people are one and they all have one language, and this is what they begin to do; now nothing that they propose to do will be withheld from them.”
There are many more exponential trends, but I’ll close with these: The dollar value of derivatives (“Nobody is keeping track, and no one knows what’s going on: …Michael Lewitt, HCM Market Letter). Inventions double every 10 months, according to futurist Dr. Nick Begigh, MD. The US money supply (M3) is growing so fast that the Federal Reserve has stopped publishing the numbers (keeping track was ‘too expensive’ don’t you know). In 1971 the number was 800 billion, currently, as reported by those who are crunching the numbers the total is 11.5 trillion (11,500 billion). The worldwide stock of money is also increasing exponentially, and Jason Hommel often reports this number in his articles (www.silverstockreport.com).
Before we get to the charts, let’s tie it all together.
- To the best of my knowledge, never before have we seen this many exponential trends at once.
- Never before have so many governments inflated their currencies at the same time.
- As long as the bankers of the world work in unison, the supply of money will continue to grow.
- At some point an increasing number of people will become aware of these trends, despite the lament of Professor Bartlett.
- When this happens, Precious Metals will go exponential!
Warning! Exponential trends cannot go on forever. At some point they reach an end. The end is very emotional! Some people will get rich, others will be impoverished.
Now for some charts:
Featured is the SLV (Electronic Silver Trust). Notice the steady climb since June. The green arrow indicates that the 50DMA never fell below the 200D (very bullish). The blue arrow indicates the target once SLV moves above 140 (this translates into silver at 14.00). Don’t be surprised at a few down days along the way, as this will help to keep the RSI (top of chart), from becoming overheated.
Featured is the index that compares the POS (Price of silver), to the POG (Price of Gold). Generally speaking, during a bull market, silver outperforms gold. Thus, when this index is rising, it is bullish for both metals. You will notice the trend has been up since August, and once we surmount 0.0210 (blue arrow), I expect a few days of very rapid rises in both the POS and the POG.
Featured is the daily bar chart for the POG. The red dashed line was resistance for 8 months. It now becomes a line of support. The blue arrow shows us the expected target for this move. Due to the facts that the RSI is nearing 70, and the commercial traders are net short at least 147,000 contracts; we must expect some down days along the way.
Featured is the AMEX index of oil stocks. This index is in full ‘bull mode’, totally ignoring the pundits who are predicting the oil price to drop to $30. The upward channel is well defined, and the blue arrow shows a ‘golden cross-over’ (which is very bullish).
This final chart shows the AMEX natgas index. The blue arrow indicates where the 50D touched the 200D, but never went below it (very bullish). Again a ‘roaring bull’, especially now that winter has arrived. Despite the self-serving politicians (especially the pack of 40 at the United Nations who are blaming global warming – for which there is no scientific evidence – on human behavior), nevertheless natgas is once again being used up faster than it can be pumped up. All of this so we can keep ourselves warm.
There was a report today that it showed in an area of Nepal where people have never seen snow before. Some parts of Alaska are dealing with record snowfall. The Global Warming issue is tailor made for politicians who want to increase their sphere of power. To the extent that some parts of the globe are warming up above average, it is simply a cycle that is swinging like a pendulum. In the 1970’s the buzzword was ‘the coming ice age’. Meanwhile, make sure you have a good oil or natgas stock to balance out the gold and silver in your portfolio!
DISCLAIMER:
Please do your own diligence. I am not responsible for your trading decisions.
Peter Degraaf is an online stock trader. He issues a weekly Email alert to his subscribers. For a 60 day free trial contact him thus: ITISWELL@COGECO.CA
-- Posted Friday, 16 February 2007 | Digg This Article
