-- Posted Thursday, 7 July 2011 | | Disqus
Gold and silver racked up another day of solid gains yesterday, providing some of the most encouraging technical signs we’ve seen in several months. Most impressive was that numerous bullion-related issues that we track were able to generate fresh, bullish “impulse legs” on their hourly charts, much as we might expect from a rally with more than merely short-term potential. This was true not only for Comex precious-metal contracts, but for such high-octane performers on the equity side as Silver Wheaton, a Rick’s Picks favorite that has been on a rampage, gaining nearly 22% in less than three weeks.
Although we’re always eager to go-with-the-flow, it is our practice to closely monitor rallies like this one lest we be caught unawares by the sort of nasty downdrafts that are common in prolonged corrections. The purpose of such corrections is to shake loose all but the hardiest bulls, and that is why we are always guarding against the unpleasant surprise. Technical analysis aside, we remain open to points of view that differ from our own, currently bullish, outlook for bullion. To help readers keep an open mind, here is a bearish note that turned up yesterday in the Rick’s Picks forum. The author is Cam Fitzgerald, a frequent contributor. He argues that the looming 2012 election will put a lid on commodity prices. Cam begins his post by addressing the sunny outlook of “Charles,” who wrote that predicting a bullion rally “just ahead” is a no-brainer.
‘Sympathetic’ Decline
“I am not with you, Charles. There is something else at play now that relates to elections next year. Commodities will decline and so will the commodity induced inflation threat. This is not bullish for metals. Gold and Silver, which closely parallel those other speculative indices, will decline sympathetically. There is no other way for this to come out. No other logic on the topic even makes sense. Coming elections mean that the Obama administration needs to show proof that the economy is actually performing and that inflation is under control. That is why the commodity trade is under fire and why [precious metals] do not have a lot of life at the moment. How could they? Technical indicators may suggest a PM rally, but I seriously doubt it will happen. If it does, it will not and cannot be sustained. If commodities keep rising we will face some serious ongoing cost-push inflation, which is a big negative for electability as it impacts on consumption, employment, housing and growth.
“I am convinced that equities are set for a sharp increase over the months ahead as input costs decline and profits and revenues improve for our best companies. Defensives will be huge but all others will rise on the coat-tails. This trend will naturally engender confidence in the markets and the economy, improve employment prospects, drive up consumption and even possibly create the conditions necessary for real growth to emerge.
“QE3 will not, therefore, happen. I know that everyone is convinced it will happen…..but they are all wrong. Alternate programs are now coming into place instead to kill commodity speculation, reduce inflation risks and improve the odds that a bright economy will be in place by the time elections arrive.
“Remember you read this. I am right, and I know it.”
***
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. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. 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 © 2011, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 7 July 2011 | Digg This Article
| Source: GoldSeek.com
