A recovery in U.S. equity markets and positive economic data Tuesday morning is taking some momentum away from gold prices; however, some analysts still see potential for the yellow metal as uncertainty remains in the marketplace.

Gold prices have been under consistent pressure since most the Asian trading session. Overnight, in an effort to stabilize its domestic equities market, the People’s Bank of China pumped much needed liquidity into its fragile financial system, cut interest rates and reduced reserves requirements for Chinese banks.

These moves boosted confidence in global markets as North American equity markets opened in positive territory, clawing back from Monday’s losses. The S&P 500 gained 30 points, or 1.61%, at the open, while the Dow Jones Industrial Average jumped higher by 213 points, or 1.4%.

As of 11:12 a.m. EDT, the S&P was up 65 points, or 3.52%, at 1,937; at the same time, the Dow Jones was up 375 points, or 2.36%, to 16,246.

This positive market sentiment has dragged gold lower. Following the U.S. economic data, December gold futures hit a session low of $1,134 an ounce and prices continue to hover only slightly higher, trading at $1,135 an ounce, down 1.61% on the day.

George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures said, in a phone interview with Kitco News that right now gold is off the radar as all the investors are watching equity markets and China.

He added that in the short-term gold prices could continue to weaken as the inflation outlook – resulting from lower oil and copper prices – remains weak. However, he noted that market uncertainty should keep the market from collapsing to new long-term lows.

“The problems in financial markets won’t be repaired in one day,” he said. “Ultimately I continue to see more long-term potential for gold.”

Sean Lusk, director commercial hedging division at Walsh Trading, is also expecting to see lower prices now that equity markets have turned around. He added that although prices hit a new six-month high Monday, many are disappointed that prices didn’t move higher as many were expecting to see prices push towards the 200-day moving average around $1,189 an ounce.

“There were some reasons why gold didn’t perform better; some funds probably had to cover their recent profitable long positions to raise capital for margin calls,” he said.

Lusk added that after a two-week rally, it is not surprising to see prices pull back on some profit taking. Moving forward, the key, will be to see if there is any buying on the dips.

The target Lusk is watching in the near-term is last year’s lows at $1,132.

“It is hard to get excited about gold until we push towards the 200-day moving average,” he said. “There is a downward sloping trend line that comes in at just below $1,200 that you need to take out, but right now we are sitting well below that.”

Although gold prices are under pressure, the market has managed to hold initial support. In their daily research note, market strategists at iiTrader.com said that they see initial support at $1,133.1 and a close below that level will leave the bulls in control of the market.

“The bulls look to maintain a close above 1148.5 in order to keep an upper hand,” they said.

For the past 15 – 40 years, debt and most markets have moved upward in exponential trends. Examine the following log-scale graphs.

Debt: The US official national debt is shown on a log scale. Debt goes up and up with no end in sight!

national_debt_1975_August_2015

national_debt_1975_August_2015

S&P 500 Index: Note the exponential trend line in blue, and the “danger zone” lines in red. Given points 1 and 2, point 3 indicates that now is NOT the time for complacency. Read: 15 Warning Signs of A Market Top.

s&p500_1993_August_2015

sp500_1993_August_2015

Crude Oil: Conventional wisdom suggests that crude oil prices will remain low for a very long time – due to weak demand, strong supply, fracking, economic contraction, wind, solar etc. Perhaps, but I’m not convinced.

crude_oil_price_1993_August_2015

crude_oil_price_1993_August_2015

Gold: Gold made an intermediate bottom in July after the highly implausible Chinese government gold announcement and the HFT stop run. The official Chinese announcement appears as plausible as the US unemployment rate – if we don’t count thousands of tons of gold and millions of unemployed workers, then the numbers will support the current propaganda agenda.

gold_price_1993_August_2015

gold_price_1993_August_2015

CONCLUSIONS:

For the past 20 years, and much longer in most cases, debt and prices have moved upward in exponential trends.

Markets go up and down. Debt however, based on over 100 years of central bank and politician foolishness, only goes up – until a great deflationary crash that may not happen. Expect debt to increase, politicians and central banks to spend and “print” and markets to boom and bust and follow exponential trends higher.

When markets get overextended in either direction, they reverse, or regress to the mean. The 64 Trillion Dollar questions are which markets and when? Look at the graphs again and ask yourself if you truly expect higher S&P prices along with lower gold prices, OR THE REVERSE.

Big Picture Perspective:

Yes or no? Can we borrow our way out of debt and into prosperity? Typical government and central bank actions indicate the usual answer is yes. A more realistic understanding, which is coming, will boost gold prices.

Yes or no? Are more government regulations, restrictions, and controls good for economic growth? Typical government actions indicate the usual answer is yes. But more regulations means less economic activity, less taxes collected, higher debt, more “money printing,” higher gold prices …

Yes or no? Are policies that benefit banks and politicians generally beneficial to the middle class? Typical actions indicate the usual answer is yes. Buy gold, not the S&P.

Yes or no? Is world peace good for the economies of the world? One might think yes, but typical government actions indicate the usual answer is no. More military expenses, more war, more debt, higher taxes, more “money printing,” higher gold prices… and repeat.

Question: What will cause the next “Lehman Moment?”

For those who want a truly pessimistic assessment, read: “The Great Financial Catastrophe”

Not in 2013, not in 2014, and so far, nothing positive for the price of gold and silver has developed in what looks like for the balance of 2015. Most of the highly regarded gold and silver sites and bloggers have been expecting an upside breakout, some even saying an explosive breakout. As we have been saying for the past few years, the “eyes” have it. Just by following developing price activity, in chart form, it is more than obvious that price continues to languish at recent 4 -5 year lows with NO signs of ending.

It does not matter how much gold China has bought, how many gold/silver coins have been sold to the public, even record numbers. It does not matter how low is the existing supply for silver and its excessive and growing demand. So far, it has not mattered how the miners have been suffering and are closing down operations.

What does matter is the proverbial 800 pound gorilla in the room, the globalists, elites, central bankers. They are so controlling that the natural laws of Supply and Demand have been subverted, temporarily corrupted that speaks to the entirely subversive and corrupt nature of the globalists, those who are the controllers behind a New World Order, pretty much in place with little to no opposition.

Those who have been “long and wrong” the physical from much higher prices have not been “wrong.” The reasons for buying and physically holding the physical metal have not altered one iota, and, in fact, what we just said is the good news. Let us remind again how the laws of action and reaction, while temporarily suspended, albeit in a prolonged time frame, the opposite reaction will come into play. The not so bad news is no one knowswhen it will come into play.

The number of mostly negative events dominating the Western world hve been accelerating at an alarming pace, one right after the other, none of which make any economic sense, save for the globalist’s news media ever putting a positive spin on the negative, feeding lie after lie after lie. Sadly, too many have come to always believe in the lies because they come from the “government,” a [mis]trusted source.

As Obama and the equally corrupt supreme court have made clear, political lying is truly a protected form of speech. As a consequence, the only statements made by politicians are lies. Believe them at your own peril, and whenever politicians are in control, you can believe your economic life is in peril.

It becomes clearer that the globalists have just about finished draining all of the wealth from Western governments, the US being the biggest [stolen] jewel in their crown, and are in the end game but not quite finished. All of the hidden, least understood derivatives have to be unwound. Once that is accomplished, and Western people have been stripped of what little wealth and freedom they have left [Greece, coming soon to your neighborhood], the switch to the East will begin in more earnest.

It is worth mentioning that maintaining control over a blatantly broken financial system can explode the the elites lying faces at any time. That is a lower probability, but one that grows with each passing month.

For the past few decades, the globalists have been preparing to take over the Eastern world and plunder Eastern wealth over the next 100 years. China, Putin/Russia, BRICS, AIIB, NDB, et al, are not going to defeat the West. Quite the contrary, the parasitic globalists have already defeated the West, sucked it dry of its wealth and gained total control over every aspect of people’s lives. China, Putin/Russia, BRICS, AIIB, NDB, et al, are next up on their agenda, so do not expect the Eastern “good guys” to put the Western “bad guys” in their place. The globalists are pulling the same strings in both arenas. Do not doubt that for a minute.

It is harder to make the story for an Eastern takeover by the globalists, at this point, but when it was happening to the US, well over 150 years ago, it was hard to make that story then. It was beyond sane comprehension, but all the signs were there. Many still do not believe or accept an elite global takeover of the Western world, so it would be an even harder story to “sell,” at this stage.

The manipulated suppression of gold and silver is the most revealing final stage of how the central bankers have been in total control for the past century, not just the past decade or two or three. There is no other power on earth that can account for the corruption and suspension of supply and demand for PMs, and that should be your clue as to how vast and deeply penetrating the elites are able so exert such influence, unopposed.

Once they are able to more viably make the transition from West to East, then the price of gold and silver will move to the upside. Will it be as explosive as so many, including us a few times, have conjectured? Maybe, maybe not. China is looming largest in this global transition of shifting powers and economic control. That country has a decidedly different approach in both method and timing as to how she wants to see the new Eastern world develop. A rise in the price of gold to $10,000, or some multiple, may not be how China wants the price of gold to be valued. That country takes a more deliberate and controlling stance on everything.

From all indications, China is willing to be a part of the existing globalists’ fiat money power control structure, via the IMF. While the New Development Bank [NDB] is supposed to be a replacement or competitor to the IMF, and the Asian Infrastructure Investment Bank [AIIB], a total turn away from the US fiat petrodollar, all that is going on behind the scenes may not be known for many years to come, so everything is speculative.

What is the least speculative are the charts for gold and silver. All of the fundamentals for PMs simple do not apply, at present, and all of the stories coming out of the gold/silver community are based more on sentiment and belief in the fundamentals while ignoring the reality of price, which is telling a completely different story.

Hold whatever physical gold and silver you have, and make sure you physically have it.
If you do not have it, more than likely, you will never own it. That is how events have been proving out. Do not hesitate to continue to buy and hold more, regardless of price and even if price is to go lower. Access to buying physical PMs may dry up. Governments will surely make it much harder to buy, as controls can easily come into play.

Gold and silver have been one of the most reliable and proven forms of wealth preservation. The globalists want people to become disheartened in owing silver and gold. Yet, gold is the most coveted form of wealth by the globalists since the days when the Rothschilds took control of Western world finances and governments, along with every thing else.

The charts continue to paint a different picture from what most are told in the media and different from what most in the PM community have come to expect and believe, as well.
We start with the fiat Federal Reserve Note, called the “dollar,” because it is the antithsis for gold and silver.

The monthly chart shows a very bullish developing scenario, despite the call for the demise of that worthless fiat. Its “value” derives from the faulty imagination of its users, which is most of the real world. However sadly true that may be, a billion wrongs will still never make a single truth wrong. Again, this shows the power of deception and influence the globalists have maintained for the past few hundred years, for it is not a recent phenomena.

DX-M-1-Aug-15
Gold And Silver Charts.DX-M-1-Aug-15

We often advise to watch how price acts/responds to obvious resistance or support. 98 has been a resistance area, yet there is no apparent selling overtaking buying at resistance. This suggests price will continue to move higher. That conclusion is also in line with knowing the most important market information, the trend. A trend will persist longer than most expect.

DX-W-1-Aug-15

Gold And Silver ChartsDX-W-1-Aug-15

“Trust your eyes.” However much gold China has been buying, however much the demand has been from countries and individuals, however much supply appears to by drying up, the power of control exercised by the elites remains unparalleled in history. Price is a function of elite control and nothing else. Believe otherwise, if you chose, but there is no arguing with what is, regardless of how much you believe it should otherwise be.

There is a small area of bullish spacing that corresponds to the touted 1035-1045 support level that appears valid. While most people look at daily and intra day charts, this time frame is more in line with what smart money watches, while ignoring daily charts.

It takes more time and effort to change a trend on the higher monthly time frame, a simple fact. Given the decline to recent lows, the probability of a slingshot turnaround to the upside is very low. It can happen, but the odds are low, and money is best made being in sync with the higher probability odds, another fact.

GC-M-1-Aug-15

Gold And Silver ChartsGC-M-1-Aug-15

Last week’s attempt to rally looks rather feeble, relative to the prior down week that broke support. If price does not continue lower, next week, even the prospects of a rally have a series of overhanging resistance areas along the way. A lot of damage has been done to this market, and it will take time and effort to repair it.

As things stand, the prospects for a turn in the gold market are small. It can change next week, but next week has not happened, so all we can do is deal with what is known and change only when what is known has changed.

GC-W-1-Aug-15

Gold And Silver ChartsSI-W-1-Aug-15

Market assessments always need to be confirmed by price activity. The higher volume days are occurring on lower closes from the prior day, but price is not making further downside progress. That would argue for a rally. At the same time, with the increased volume, price has not made any inroads to the upside and remains under a 50% retracement, typical in a down market, and that would argue to continuation lower.

Is the glass half-empty or half-full? This is where one needs to let the market develop more and confirm its next direction. An inability to rally away from 1080 support, with sustainability, suggests support will likely give way. The lower probable event is a rally, next week. Let the market confirm its intent and then react accordingly.

GC-D-1-Aug-15

Gold And Silver ChartsGC-W-1-Aug-15

We will always maintain that charts are the very best source for the most accurate price information and intent available. That not a lot of people know how to read charts does not diminish their reliability. Of course, we are not talking about the use of mechanical aides like moving averages, RSI, MACD, Elliott Wave, etc. The combination of price and volume, sometimes with Time added, is most reliable.

The easiest read for silver and gold is to recognize their trends remain down. More money is lost trying to pick bottoms [and tops], so do not fall into that money-losing ego trap.

SI-M-1-Aug-15

Gold And Silver ChartsGC-M-1-Aug-15

While price and volume are the most reliable indicators, it does not mean there is 100% clarity at all times, such as now. Realize that the trend has been down and developing activity has also been in sync with the down trend. There will be periods where it may be hard to read what the market is saying. This is yet another reason to let the market confirm its intent.

If one were trying to make a first time decision as of last week, having not participated in the down trend of the last several years, that would be a difficult call to make, based on the two very small range bars. Trend and probability favor the downside.

SI-W-1-Aug-15

Gold And Silver ChartsSI-W-1-Aug-15

The chart comments are fairly conclusive. The trend is down, price is not exhibiting strength, so trying to buy in the paper market makes little sense. If we were to focus on the last bar on the chart, in context with what precedes that bar, the conclusion would be to expect more downside.

Why?

Volume increased [effort], the highest volume for the week. Price made a slightly higher probe above the last 10 TDs, but note where it closed: mid-range the bar. On increased volume, the mid-range close tells us sellers were aggressive and overcame the effort of buyers sufficient to push price down from the high of the day. In a down trend, the onus is on buyers to effect change. Buyers are not meeting that burden. It is tough to change a trend. Respect it, at all times, until a change has been confirmed.

In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,095.82 down $3.23 per ounce (0.29%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, lost 1.61%. The U.S. Trade-Weighted Dollar Index lost 0.04% for the week.

Gold Market Strengths

In July, the U.S. Mint sold the most physical gold in two years even as the price of the precious metal briefly slid to its lowest level in five years.

Goldcorp cut its dividend as part of a strategy to cope with slumping prices. The decision was made even after the company said it became cash-flow positive in the second quarter, after years of capital expenditures to build two new mines in Argentina and Canada. The company hasn’t been cash-flow positive since the third quarter of 2012.

Gold Market Weaknesses

Gold traders are the most bearish since April as U.S. policymakers move closer to raising interest rates this year. According to the Perth Mint Treasurer, the market expects bullion to decline to $1,000 per ounce before prices begin to recover.

According to Capital Economics, China’s imports of gold are yet to respond to low prices. The company also believes investors are becoming increasingly worried about a more pronounced correction in China’s stock market and will return to gold to diversify their portfolios.

Gold slipped to five-and-a-half year lows on Friday and had its sixth straight weekly fall, its longest retreat since 1999, after upbeat U.S. economic data strengthened expectations for a near-term interest rate hike. The S&P Goldman Sachs Commodity Index has lost more than 12 percent month-to-date, bringing its level to the lowest since February 25, 2002. It has now exceeded the bottom of the 2008 global financial crisis.

Gold Market Opportunities

Russia’s central bank has turned away from buying U.S. treasuries and opted for buying all its domestically-produced gold instead.

Russi-Gold-Reserves-1995-2015

2015-08-03-Russi-Gold-Reserves-1995-2015

According to Gold Mining Union, Russia became the world’s second biggest producer of gold last year, extracting 288 tonnes. In Russia (where the ruble to the dollar has depreciated to more than 57 to $1, from 1.17 in 1993), the ruble price of gold has risen 15,030 percent during that time period. Gold holds great value to citizens of countries where the currency has shown historical bouts of severe volatility.

Russia-Gold-Prices-1995-2015

2015-08-03-Russia-Gold-Prices-1995-2015

The Reserve Bank of India bought significant amounts of gold when oil prices plunged in 1986, the early 1990s and in 2009. Lower oil prices bolster India’s balance of payments, giving the central bank room to make gold purchases. With India being the world’s largest buyer of the metal, perhaps its central bank could be a big buyer now that oil prices have slumped.

India-Gold-Oil-1995-2015

2015-08-03-India-Gold-Oil-1995-2015

Even as the Federal Reserve may be getting closer to raising interest rates for the first time in almost a decade, currency forecasters are ratcheting back expectations for gains in the dollar. Back in April, analysts were calling for the ICE U.S. Dollar Index to reach a 12-year high of 100.7 at year end. Now they see it finishing the year at 98.6. It seems to be an enigma why dollar bulls are losing confidence given the likelihood of rate hikes.

First Majestic agreed to purchase SilverCrest Mines for C$154 million, which represents a 37-percent premium to SilverCrest’s 30-day weighted average price. Separately, OceanaGold announced it will acquire Romarco Minerals in an all-share transaction representing a 73-percent premium based on the July 29 closing prices. The combination is expected to create the lowest cost gold producer in the market that is propelled by a long reserve life, a portfolio of high quality assets that generate significant free cash flow, and a solid pipeline of organic growth opportunities. This represents two acquisitions announced in less than a week. This is a good sign that parties are now more willing to get a deal done, and could bode well for more deals in the near future.

Gold Market Threats

According to Bank of America Merrill Lynch (BofAML), hedge funds have gone net short on gold for the first time since 2006.

While the mantra says sell in May and go away, the current three-month seasonality suggests selling in July/August, as the worst three-month period of the year is August-October.

S&P500-Seasonality-1928

2015-08-03-SP500-Seasonality-1928

The incumbent presidential cycle calls for a mid-year 2015 peak ahead of a weaker period into year-end and 2016. This weaker part of the cycle opens the window for a cyclical bear market within the larger secular bull market trend, according to BofAML. Weakness ahead may also be foreshadowed by the collapse of net free credit to a new record low. Net free credit is free credit balances in cash and margin accounts net of the debit balance in margin accounts. As of April, net free credit stood at a new record low of -$227 billion. If the market drops and triggers margin calls, investors do not have cash in their accounts and would be forced to sell stocks or get cash from other sources to meet the margin calls. This would likely exacerbate an equity market sell-off.

Historical-presidential-cycle-pattern

2015-08-03-Historical-presidential-cycle-pattern

According to the average estimate in a Bloomberg News survey, the price of gold will drop to $984 per ounce before January. That would be the lowest since 2009 and a 10-percent retreat from Tuesday’s closing price. ANZ sees gold averaging $1,020 in December versus a previous forecast of $1,125. Citigroup cut its three-month gold target to $1,000 and has a six to 12 month target of $1,025. HSBC lowered its average gold price forecasts for 2015 and 2016 to $1,160 and $1,205, respectively. According to Morgan Stanley, gold could sink to $800 in its worst-case scenario and has the largest downside risk of all commodities.