"In what traders called a 'bear raid,' sellers on Monday dumped an estimated 33 tonnes of gold in just two minutes on exchanges in Shanghai and New York, sending prices on a nearly $50 downward spiral from which they never fully recovered." (Reuters, July 21)
If you live in the U.S., maybe you've noticed lately that "We Buy Gold!" signs are disappearing from sidewalks in front of pawn shops. The signs really began popping up in 2010-2011, when gold prices were climbing to their all-time high of $1900 an ounce. And even after gold tumbled from that peak in September 2011, the signs stayed up for months. Only after gold fell below $1200 an ounce in 2013 -- and price stayed flat for almost two years -- did "We Buy Gold!" signs become scarce.
Someone may chuckle at this brief record of poor timing decisions, and maybe even put it down to the general investment ineptitude of laymen. Certainly, big-name gold market players -- like central banks, for example -- with their access to privileged information and armies of PhD's would not make timing mistakes like that. Right? Continue reading "Gold Hits a 5-Year Low: How to Time the Next MAJOR Bottom"→
It is amazing to read assertions from the Fed and others that the stock market is nowhere near being in a bubble. Several aspects of the financial environment are actually so extreme as to be unprecedented. Some indicate a bubble, and others a bubble in trouble.
Below are eight indicators we are watching closely, among others.
1) Record debt in U.S. dollars
Total dollar-denominated debt peaked at $52.7 trillion in early 2009. At the end of Q1 2015, it stands at $59 trillion, an unprecedented amount.
Priced in real value, the Dow has collapsed 84% since 1999
By Elliott Wave International
Stock market investors who glance at their screens see the dollar value of the Dow Industrials.
Another way -- the way Elliott Wave International (EWI) prefers -- is real value, in terms of the things you can actually buy with your Dow shares, such as real money (gold) or a basket of commodities.
Clearly, one could ask: "Why is the Dow priced in real value important? I buy things with dollars."
Let's look briefly at the nominal (dollar valued) Dow vs. the real Dow. Then we can address why the Dow measured in real value matters.
On July 16, the nominal Dow reached an all-time closing high of 17,138.20.
"The value of the real Dow is not even close. Indeed, you may be in for a shock. The Dow priced in real money-gold-topped in 1999 and has collapsed 84% since then ... . Had the U.S. maintained honest money, the Dow would be priced at 266 today ... ."
The following article was adapted from Robert Prechter's June 2014 issue of The Elliott Wave Theorist, one of the longest-running investment letters in the business, continuously published monthly since 1979.
Figure 1 shows the stock market's waves from 1693 to the present. The circled Roman numerals denote waves of Grand Supercycle degree, the largest complete waves for which stock market data exist.
Wave I (circled) ended in 1720 at the peak of the South Sea Bubble in England. Wave II (circled) took the form of a zigzag, labeled (a)-(b)-(c); it ended in 1784. Third waves are usually extended, meaning they are longer than wave one and have clear subdivisions. This is exactly how wave III (circled) developed. It ended in 2000.
Wave III (circled) subdivides into five waves. Wave (I) ended in 1835, wave (II) in 1859, wave (III) in 1929, wave (IV) in 1932 and wave (V) in 2000.