-- Posted Thursday, 19 March 2009 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Wednesday, March 19, 2009
“Phenomenally accurate forecasts”
Gold bulls got sweet revenge yesterday when the Fed surprised everyone by announcing a shock-and-awe program to jolt the housing market back to life. Gold shot up $70, or about 8 percent, on the news after starting the day in a near free-fall. As bullish as we've been on gold, we'd anticipated this weakness the night before with the following real-time update sent out to subscribers: "In thin trading Tuesday night, by breaching the 913.90 Hidden Pivot midpoint of the pattern shown in the chart, the April contract has tripped a signal implying a fall to 886.70 is imminent." In the actual event, the futures exceeded the target by a few dollars before staging their amazing comeback. All of this was not lost on Rick's Picks subscribers, including Dominic C., who evidently made hay with the forecast: "Been a subscriber for a week now. I just used your 886 gold target this morning. I live in Maui so when I woke up gold was at $888. Bought at $890. Sold twenty minutes later at $924. I guess I should have held onto it longer. I already made enough money to pay for the seminar. Unfortunately I will be in Oahu on business that weekend but if you have a recorded seminar please let me know." (Note to Dom and others who may be interested in the April 1-2 Hidden Pivot seminar: Join us for a free online demo during market hours this Tuesday. Click here to sign up for it and receive a free pivot calculator as well as a detailed description of the Hidden Pivot Method.)
Another subscriber, Phil D., also wrote to say he caught the move: "Entered April Gold Comex today at 883.90. The drop must have been wicked as that is well below the trigger price of my conditional order set to buy well above your pivot. The stop I set below 880 -- to allow for Fibonacci support -- was not triggered and I now have nearly $6,000 profit showing on this position. I also picked up a mini-contract at 934.50 on the break out form another pivot. I set these before going to work and didn't set them up either/or but didn't expect both to be executed in the same day, and in the right order no less. I had forgotten about the mini order and was surprised to have two confirmations when I got home. Nice work! Now I just have to figure our whether to hang onto both of these. I will look for your next commentary on gold for guidance." Note to Phil and others: Check back later tonight, since I plan to put out further guidance after the action in gold has loosened up during the night session.
Death by Deflation
Readers will already know that we didn't expect the recent weakness in gold to last, and we explained why in yesterday's commentary. Even so, we were somewhat surprised by the ferocity of yesterday's recovery spike. It was triggered by news that the Fed plans to buy up to $300 billion in long-term Treasurys over the next few months and to expand its mortgage relief programs by another $750 billion. The markets, dumb as ever, evidently forgot that the Fed committed months ago to buying as much Treasury paper as it would take to hold interest rates down. We wrote about this not long afterward, since this pledge, if honored, could conceivably push the U.S. into a hyperinflation at some point.
But not now, though. In fact, we see the Fed's tactic of dribbling out a trillion dollars here, a trillion dollars there, as all but guaranteeing the deflationary death of the economy by a thousand cuts. While President Obama and his banking whizzes evidently think an extra trillion dollars is a big number, they seem not have observed that the $11.5 trillion of bailout cash and commitments that have already gone out the door have not raised the price of homes one iota. (And that is not to say that artificially inflating home prices is the best way to deal with a debt deflation in the first place.) If the Government really and truly wants to shock the housing market back to life, it could do so at any time by sending $200,000 checks out to every homeowner. It's hard to believe, but that would have been a less costly way to get the economy moving than what has been attempted so far. If $200,000 per household sounds too pricey, the Government could enact a two-year moratorium on income taxes. Now that would be a stimulus.
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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 19 March 2009 | Digg This Article | Source: GoldSeek.com
