GOLD close to confirming a new breakout to all-time highs

By: David Banister- www.markettrendforecast.com Aug 8^th 2012

Back in the fall of 2011 I was warning my subscribers and the public via articles to prepare for a large correction in the price of GOLD. The metal had experienced a primary wave 3 rally from $681 per ounce in the fall of 2008 to the upper $1800's at the time of my warnings in the fall of 2011. A 34 Fibonacci month rally was sure to be followed by an 8-13 month consolidation period, or what I would term a Primary wave 4 correction pattern.

We have seen GOLD drop at low as the $1520's during this expected 8-13 month window, but at this time it looks to me like a break over $1630 on a closing basis will put the nail in the wave 4 coffin. I expect GOLD to rally for about 8-13 months into at least June of 2013 and our longstanding target has been in the $2300 per ounce arena in US Dollar terms. Some pundits have much higher targets in the $3,500 per ounce or higher area but I am using my low end targets for reasonable accuracy.

This 5^th wave up can be difficult to project because 5^th waves in stock or metals markets can be what are called "Extension" waves. This means they can have a potentially much larger percentage movement relative to the prior waves 1 and 3 of the primary bull market since 2001. You can end up with a parabolic move at the end of wave 5, where those $3000 plus targets are possible. I expect the 5^th wave to be about 61% of the amplitude of wave 3, which ran from 681 to 1923, or about $1242 per ounce. If we were to apply that math, we come up with $767 per ounce of rally off the wave 4 lows. $1520 plus $767 puts us at $2287 per ounce, or roughly $2300 an ounce low end target.

In summary, crowd behavior is crucial to the next coming movement in GOLD and it could be a sharp rally that catches many off guard, much like the downdraft last fall did the same to the Bulls. Be prepared to go long GOLD once over $1630 per ounce and buy dips along the way up to $2300 into the summer of 2013.

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Silver Is About to Rocket Higher

白銀升水

通常期貨會貴過現貨，因為期貨要等到期才能提取貨，期間要付倉租，若現貨貴過期貨，買了期貨的人就會要求提貨，到現貨市場出售，賺取差價。

故現貨升水是見底訊號之一，期貨商要盡快提升期貨價格，以免增加提貨壓力

 

http://www.wealthdaily.com/

Silver Is Now in Backwardation

By Brian Hicks
Wednesday, August 8th, 2012
Silver futures are in backwardation.
Backwardation is a pricing anomaly that typically – but rarely – shows up in the commodities market. And if you can catch it, you can make quite a bit of money.

Historically backwardation means one of two things: 

1) there’s a current shortage of silver bullion available on the open market and/or 

 2) silver traders believe the price of silver is about to take off.

Here’s what happens...
Backwardation occurs when the future price of a commodity (gold, silver, oil, corn, etc.) is less than the current spot price.
In other words, the price you pay now is higher than the price you have the option of paying a month later... two months later... or a year later.

Think of it like this: Would you rather lock in the price for a Mercedes today versus three years from now? Most likely the price of a Mercedes three years from now will be more than the price you pay today.


So let’s take the current state of the silver futures market. As of this writing, the cash price for silver is $28.16 per ounce. That’s the cash price. That means today you can buy or sell a one-ounce silver eagle coin for $28.16.
However, the October 2012 futures contract price for silver is $27.88.

If we go out to the beginning of next year, the January 2013 silver contract is $27.97. The July 2013 silver contract is $27.99.
Go out a bit further and you’ll see that the backwardation continues. The December 2014 contract is $27.85… and the December 2015 contract is $27.59.

For the most part, the current spot price of silver is more than in distant contracts. If you go all the way out to July 2017, the price for silver is $27.19.

So what does all this mean?
Basically it means that there are relatively few silver owners that are willing to sell their bullion holdings.
As a result of this tight supply, there’s an increasing amount of demand for bullion that is jacking-up the current spot price of silver.
And that’s the significance of backwardation. The current spot price of silver is an accurate record of the real spot price of physical silver as long as people are willing to exchange currency for silver at that price, which is why backwardation is so important.
If silver goes into backwardation – which is rare, but it happens – then the physical price is diverging from the paper price. No one is willing to arbitrage. And the reason is they are worried about two possible events.
The first possibility is default: i.e., someone won't make good on their paper promise to deliver. 
The other is debasement.
That means the government takes some action to make the dollar less valuable relative to silver. 
So rather than selling their physical silver today and holding currency until someone delivers the silver back to them in the future at a lower price – enabling them make a profit from the arbitrage – the holders of physical metal choose not to sell. 
They are willing to give up a profit to keep their bullion safe, rather than exchange it for dollars and the risks of default or debasement.
In a report titled Speculators Pile Into Gold Futures, the precious metals investment site Kitco.com reported this past Monday:

As gold prices rose during the last week of July, speculators sought out to buy the yellow metal on the Comex division of the New York Mercantile Exchange, according to U.S. government data.

For the week ended July 31, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report saw their net-long positions in gold rise significantly in both the legacy and disaggregated reports. Silver saw a similar strong rise in the net-long positions, while palladium’s net-long position rose modestly. Platinum activity was divided in the two reports, as it was also for copper.

This rise in silver trades that went net long by the funds was the greatest in three months.

As a holder of silver bullion, I am betting this situation will be so lopsided in the coming weeks and months that I will wait for at least several dollars' backwardation before I consider selling my silver or my silver miners.

To your wealth,

Brian Hicks
Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily, Energy & Capital and the H & L Market Report. Known as the "original bull on America," Brian is also the author of the 2008 book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox and countless radio shows. For more on Brian, take a look at his editor's page.