The US Federal Reserve's decision not to taper Qualitative Easing was no surprise to some analysts. As Patrick Montesdeoca has discussed before with Rick Rule, President of Sprott Asset Management USA, and he reiterated in a recent interview, QE is not a program to add liquidity. There is plenty of liquidity in the markets. Rule said, "The federal government is spending $1.2 trillion per year more then it takes in." The government can borrow about half of that amount, but to get the other half, it has to create it. QE is a means to create the money needed to cover the difference between government income and spending. Or, as Mr. Rule said, and I agree, "It is counterfeit, plain and simple."
The mainstream media has spent a great deal of time on the current debt ceiling impasse. Mr. Rule believes that the politicians will find a way to agree to raise the debt ceiling for the simple reason that if they do not, they will have to significantly cut spending. As Mr. Rule said, "They will find a way to continue to perpetrate this fraud, and find a way through it... There are some concrete spending measures they could take, but if they save money in one column, it's already spent in several other columns." (click here for full interview) In my lastpost, I speculated there would possibly be some further weakness in the silver market. I am using this continued weakness to add to my long term holdings given the strong fundamentals supporting the market. Despite the fact I am a silver and gold bug, I am not always bullish on the shorter term time frames and it doesn't mean that I will buy at any price.That is why I am writing these reports to help those of you who are buying gold and silver to be patient and learn to buy when it makes sense. The key point here is that both technical analysis and fundamental analysis have to match up. This is where indicators like The VC Price Momentum Indicator can come in handy.
Chart 1 is the Weekly VC chart. These numbers are generated before the week begins and can improve your entry points into the gold and silver markets with uncanny accuracy. Throughout the week the S1 level (which is the first red line) served as key resistance in the silver market. If you were long with your swing trades on shorter term time frames this would have been an ideal place to take profits. Today support has come in around the B1 line (the first Green line) which would serve as support going into the weekly close. This would be a great time to add to any current positions or take a short term trade. Notice how the RSI was in oversold conditions as soon as we touched the B1 line. Based off these charts, I would be expecting a quick bounce the beginning of next week; however, the shorter term trends still remains sideways as noted on Charts 2 & 3.
Chart 1
Charts 2 and 3 clearly show the long term trend line from $34/oz. silver back in December 2012. We have yet to clear this trend line and it is quickly meeting up with an intermediate term trend line from the recent lows at $18/oz. Fundamentals put aside, these competing trend lines have been leading to our sideways to lower price action since August. It looks as if we should have a resolution by the end of October or early November. From this a major move should occur establishing a strong trend in either direction. I am expecting the next move to be up, but I do not plan on being the silver "bug" that gets squashed. So as a precautionary, I will be hedging my long position using "puts". If I am right and the move is to the upside, we could quickly see a retest of $26/ ounce. I have been writing about this for several months now. (posts)
Chart 2
We are currently up over $100K in 10 months Trading The Code... LIVE!!
When asked about the recent rally in Gold and Silver in a recent interview, Rick Rule stated, "...I think there were a few things happening. Gold was simply oversold. We had a massive move 3 months ago from weak hands to strong. That's a very good thing. Gold moved from weak central banks, sclerotic central banks, to emerging market central banks that were under-indebted. Gold went from overly leveraged futures markets, weak hands, people engaged in hedge funds, people engaged in leveraged carry trades to the physical markets... And, I see that continuing." (Click here to listen to the full interview with Patrick MontesDeOca.)
This week's price action has been indicative of the silver market currently. We are continuing to trade within a trading range between $20-25/ounce. In last week's post, I was hoping for a rally starting the beginning of this week that would take us to the middle of October, but I forewarned everyone that if 21.23 was taken out we could see a retest down to $20/ounce rather quickly instead. That happened this Tuesday when we saw a quick drop to 20.63. With this development, I'm now expecting a retest of the $20/ ounce level in silver sometime between now and mid-October, which should set us up for a rally possibly in November. I will not be selling any of my longer term holdings. I believe the longer term trend is intact. To see other blog posts, click here.
So let's see what the charts have to say:
First, look at the hourly chart below with the VC Momentum Price Indicator as a guide. You can clearly see how important this line is. Throughout the week there were multiple inflections off the VC Indicator, showing the significance of this swing trade line. This serves as an indication that silver price action for the week was neutral, reinforcing the lack of a trend.
The 4 hour chart below shows clearly where support came into the silver market when it broke down this week. I would not be surprised to see a quick retest of this line sometime before the 15th. The RSI remains neutral and out of its oversold condition, confirming possible sideways-to-lower price action in the coming weeks.
We are currently up over $100K in 10 months Trading The Code... LIVE!!
TRADING
DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES
SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
The VC Price Indicator predicted this last pull back that we have had sense the end of August. I stated on the 23rd of August the following: "It wouldn't surprise me to see a short term pull back towards the end of
next week and possibly into the middle of September. We are in the
early stages of the continuation of a screaming bull market in silver
and gold, so I am not selling my current long term holdings. I do plan
on adding to these positions on the next pull back."
Well it appears that the pull back has happened as discussed and I have been buying at these levels. It appears to me, based off recent price action, that Silver is currently once again stuck in a tug of war. In order for silver to maintain its bullish stance it is critical that we do not take out the most recent lows at 21.23 on the 4 hours chart seen below. It is also important that we stay above the rising trend line seen on the daily's. If that trend line were to fail, we could possibly see a quick retest to $20/ounce. Vice Versa, if this trend line holds and the most recent lows are not broken we could quickly see a run back up to the recent highs. I am leaning towards the later of the two. Next week will be key, as I expect volatility to return to the markets. Enough with what I have to say though, lets look at what the charts are telling us.
The above 4 hour chart is showing us a short term consolidation was needed in the silver market. The Bollinger Bands are tightening, which is indicating that we are getting ready to have a decent size move in either direction. It remains critical that 21.23 isn't taken out.
The daily chart above clearly shows the importance of the trend line that has developed from the lows around $18/ounce. The Heiken Ashi bars are indicating to us the major indecision in the market place while the RSI is showing us that we should get a bounce here early next week. This bounce could be the spark needed for silver to retest $25/ounce silver. I believe we could see this as early as the middle of October.
Our subscribers at Equity Management Academy would now be up over $100k for the past 11 months just simply following what we do in the room. They are optimally positioned on short term and long term time frames
and are making some serious cash!
In my last blog post, I predicted a short squeeze in silver was about to begin. Looking at this week's price action and VC technical analysis, I'd say my analysis was correct and this move has just begun. Let's see what the charts have to say. (learn more about what we do)
The chart above is the Monthly VC. This chart illustrates just how powerful this break out is in the silver market. Whenever you take out the S2 with this type of conviction in price action, it is a strong indication that price will continue to show follow through and a major trend change has occurred. This type of price action is very rare even on the Daily VC Momentum Indicator. So, seeing this type of action on The Monthly VC Momentum Indicator gives me confirmation that the long term trend has switched from bearish to bullish. I am expecting new all time highs in the silver market between now and the end of 2014!
The Weekly VC Indicator remained bullish throughout the week and encountered short term resistance at the S1 level. It wouldn't surprise me to see a short term pull back towards the end of next week and possibly into the middle of September. We are in the early stages of the continuation of a screaming bull market in silver and gold, so I am not selling my current long term holdings. I do plan on adding to these positions on the next pull back. I will keep all my readers informed.
Our subscribers at Equity Management Academy would now be up over $100k for the past 10 months just simply following what we do in the room. They are optimally positioned on short term and long term time frames
and are making some serious cash!
TRADING
DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES
SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
I believe the bottom in silver is in for now. A short squeeze is now inevitable. Based off VC technical analysis a squeeze is getting ready to begin. Our subscribers at Equity Management Academy would now be up over $100k for the past 10 months just simply following what we do in the room. They are optimally positioned on short term and long term time frames and should make some serious cash over the months to come. Lets get right to the charts!!
The chart above is the same chart that I posted on June 30th. On the 30th, I highlighted this chart warning people that a short squeeze was coming. I explained that we were in the early stages. During this time the bearish sentiment was at an absolute extreme and these statements were going against what the mainstream would have you believe. A little over one month later now, the VC numbers has held true and it appears to have given us an optimal entry point for what appears to be a major bottom in the silver market. Now lets look at the weekly charts.
This chart shown in Heikin Ashi demonstraes the bottom in silver being formed. The last four weeks have posted green Heikin Ashi bars signaling a change in trend is occurring. This, along with the monthly VC, gives us strong evidence that a serious bottom is forming. The RSI is pointing up and is giving us an indication that the energy beneath this market is building. This indicates a big move is coming. Now lets look at a daily VC chart.
This is the chart that was posted on Thursday, August 9th 2013. If you are a subscriber you would have had access to it (subscribe here). It is not all that often that the S2 or B2 levels are broken on the VC. Usually this is a strong indication that energy beneath the market was able to push the market to the next fractal and essentially break the Code. This is rare and the fact that S2 was broken is another major buy signal.
We are currently up over $100K in 10 months Trading The Code... LIVE!!
TRADING
DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES
SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
As I have been saying on this blog, I believe there is going to be a considerable short squeeze in silver. Since my last post, we have started to see the price action slowly confirming that a possible bottom could be in place in the silver market. Lower prices are always possible, but I believe that the bears are running out of time. Lets have a look at what the charts have to say.
The chart above is The VC Price Momentum Indicator being applied on a monthly time frame. These numbers were given to me July 1st. It is obvious that on a monthly timeframe silver has encountered its first area of resistance @ 20.17. This VC number indicates that price action in silver has currently been neutralized for the month of July, as silver has flirted with the VC number for the majority of the month. If we are going to get anything going in silver for the month of July, silver would need to take out 20.17 on a closing basis on the 6 hour chart. As far as downside risk is concerned, 17.47 and 15.49 are reflective at the B1 and B2. If those numbers were to come in, I would expect a tremendous amount of short covering there. As is stands now, however, it appears silver has not given us confirmation on the VC Monthly Chart. The weekly chart, however is starting to confirm a bottom forming.
When we look at the yearly charts on a weekly time frame, it looks like we are finally showing confirmation that silver on a weekly time frame is forming a bottom. I have highlighted the doji on the Heikin Ashi chart above. This green candle shows indecision in price action with a slightly bullish bias. If my analysis is correct, even if we were to make a brief new low for this month the trend is slowly turning bullish. The price action over the next couple weeks will provide us the clues needed to confirm this analysis.
TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Last week I showed you this chart and explained that the VC was indicating we were between a B1 and B2 indicating energetically that the silver was expending what little energy it had left to the downside. I also indicated that we were close to approaching a short squeeze in the silver market. I now feel that we could be on our way and we are entering the early stages of a short squeeze right now. Once we get confirmation on the weekly chart and with the VC Monthly Indicator, prepare for fireworks!
I said that I would never show these charts again, to protect the
validity of the VC Code. However, after last weeks price action I cant
help but do a little bragging on how amazing this tool is. Now look at the chart below. Look at the B2 number and the low in silver. Do you think these numbers are accurate? At Equity Management Academy, we have figured out how to measure the energy within the market to determine where price can potentially manifest. The results are what you see below. The bottom for silver futures was 18.17 and the Buy 2 number was 18.13. This is absolutely incredible! These results are speaking for themselves. This is what I am referring to when I say that the VC can be applied to any time frame. This should send chills down your spine. The VC Live Trading Room is just one facet of what we have to offer. Swing Trading the VC can be implemented along with day trading the VC to maximize our gains. Remember, the price action you see on your screen was not there at the beginning of the month, but the VC numbers were provided to us one month in advance. The VC gives you a road map of possibilities that can make us rich if traded appropriately.
Analyzing the monthly VC we have come down to the B2 level, which demonstrates that the silver market on a monthly time frame was a level 1 in terms of energy. The divergence shown on the 8 hour chart shows that strong short covering rally that I have been referring to in previous posts is in its early stages and about to unfold.
TRADING
DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES
SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
This is why I trade the VC Live Trading Room. I would be sitting here like a sitting duck without it, just like every other gold and silver bug. The VC has been providing us an edge in this market on both long term and short term time frames. I mean seriously, when is the last time you made $2500 in one day before noon. We just need to stay the course my friends. Even if silver goes lower from here, there is no reason to panic. Use the money you are making by trading in the room and continue to scale in at these levels. The monthly charts are starting to fall in line with the weekly's and a major bottom is almost in. A major wealth transfer is taking place as we speak.
Here is a quick snap shot of our trading room today. Profits are on the right hand side of each trading platform:
TRADING
DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES
SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
A short
squeeze is coming our way in the silver market. The
weekly chart belowshows the tremendous divergence building between the
RSI and Price. It won't take much energy to get the price headed in
the opposite direction. Once we get confirmation, I will let everyone
know. We are still subject to one more possible flush to the downside,
but the the downside from here is very limited with huge upside potential.
Now, let me let you in on my secret weapon... the Monthly VC Chart. This will be the only time that I post this chart. Based off the Monthly VC chart, we are between the buy1 and buy2 level. As a trader this is very exciting to see, especially now when many are pessimistic. July should be a very interesting month for silver based off these two charts. A short squeeze is coming our way sooner than some may think. Before we get ahead of ourselves, after the first initial short squeeze, which I expect in July, I would not be surprised to see lows tested one last time to destroy any bullish confidence left in the market. I am expecting a nice swing trade coming out of this price action soon and then a larger swing trade to set up once the lows get retested. This could mean a lower low later in the year is possible. As a trader I will be open to this, but one thing is sure, I am not selling my physical metal in expectation of this. I will only use further pull backs as invitations to buy more physical and trade the volatility to increase my cash flow as I scale in at these lows.
TRADING
DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES
SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Si todolo que hizo fuetomarlos oficiosde laVCen vivosala de operaciones, que seríamás de $94ken los últimos 9meses.Hoy en día elVChizootros $425.Recuerde que este esel éxito a largoplazoque estamos teniendo.No esuna empresafly-by-night.
En cuanto a losmercadosdel oroy de la plata,que esperoalgún revéspara elsegundosemestre del año.Creo que estamosa pocas semanas detocar fondoaquí.Puede tomar algúntiempo paraque la locomotorava, sin embargo,una vez que comienzaestoy esperandolos fuegos artificialesal alza.Como siempretenemos que gestionarnuestro riesgo demanera adecuada ynonos adelantemos.
Aquí estála acción del precioactualen el mercadode plata:
Enel último par dehoras de operación,nos acercamos a laserieB2.Esto indicaque estamos enun nivel de energíade 0-1.La divergenciaen elgráfico de 30minutos esclara.El númeroB2habríasiempre queun punto de partidaóptimopara una operaciónrápida de un díacuero cabelludo.Con la continuaconstrucción deimpulsoa la bajavaen el comerciodel día siguienteestoy esperandoel20 y 21para proporcionaralgunosbuenospuntos de entradapara agregar a miposición en el comercioswing.Voy a ofreceruna actualización semanaldecierre del viernes.
If all you did was take the trades in the VC Live Trading Room, you would be up over $94k in the last 9 months. Today the VC made another $425. Remember this is long term success we are having. Its not a fly-by-night venture.
As for the Gold & Silver markets, I am expecting some upside for the second half of the year. I believe we are within weeks of bottoming out here. It may take some time to get the locomotive going; however, once it starts I'm expecting fireworks to the upside. As always we need to manage our risk appropriately and not get ahead of ourselves.
Here is today's price action in the Silver Market:
In the last couple of hours of trading we approached the B2 number. This indicates that we are at an energy level 0-1. The divergence on the 30 minute chart is clear. The B2 number would have provided you an optimal entry point for a quick scalp day trade. With continued momentum building to the downside going into the next day's trading I am expecting the 20th & 21st to provide some nice entry points to add to my swing trade position. I will provide a weekly update by close Friday.
TRADING
DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES
SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Eso es más de9kdel mes! Sí, esreal ylos oficiosson en vivo. Se trata deun trenque no vienemuy a menudo.Cuandoeste tipo de tecnologíallegue al mercadohace un sonidogrande yantes de saber quetodo el mundo quiereser partede ella.He estado enotrassalas de operacionesy nuncahevisto nadacomo esto antes. Esta tecnologíaque puede hacer quemás de100 milpor año.Ya estáa90ken sólo 8meses.Lo digo en serio, que deseala libertad financiera,aquí está.Lo asombrosoes que la habitaciónespor lo general sólonegociarun contratoen variosmercadosa la vez.¿Qué pasaría siusted fuera anegociar5contratosa la vez encada mercado? Eso sería5 veceslasganancias. Las posibilidades son infinitas.
Publicado el 10 de junio 2013, Patrick Montesdeoca Eric Sprott 31 de mayo 2013
Patrick Montes de Oca (PM): Este segmento es traído a usted por la Academia de Gestión de Renta Variable. Hola a todos, este es Patrick Montes de Oca. Tenemos
el placer de tener hoy con nosotros el Sr. Eric Sprott, director
general, gerente senior de cartera, Eric Sprott tiene más de 40 años de
experiencia en la industria de inversión. Después
de obtener su designación como contador público, entró en la industria
de las inversiones como analista de Merrill Lynch en 1981. Fundó
Valores Sprott, que ahora se llama Valores Cormark, que hoy en día es
una de las mayores firmas de valores de propiedad independiente de
Canadá. En 2001 Eric Sprott Asset Management estableció.Bienvenido a Hablar de comercio. Eric.
Eric Sprott (ES): Patrick, muy feliz de estar de vuelta de nuevo y espero que nuestra conversación.
PM:
En su testimonio la semana pasada la Reserva Federal, Ben Bernanke, dio
a entender en el programa de flexibilización cuantitativa, que ha
apoyado la economía, los mercados en los últimos tres años podría llegar
a su fin antes de que llegue la Navidad. ¿Cuál es su opinión, ¿qué es lo que hacemos de ella, Eric?
ES:
Me encanta la pregunta, porque ya hemos ... Es muy interesante lo que
está pasando en el mundo ahora mismo, porque aquí tenemos la
flexibilización cuantitativa masiva en una escala mucho mayor en Japón
que aún tenemos en los EE.UU. y los rendimientos de los bonos tienen ratcheted de forma espectacular. Al igual que los rendimientos han subido más de un 200%. Han pasado de 30 puntos básicos, hasta, creo, 95 o 96. La gente está viendo a través de la impresión. Y
lo mismo está ocurriendo ahora en los EE.UU., donde las tasas de los
bonos, las tasas de los bonos a 10 años, han pasado de 160 a tan alto
como hace 223 dos días. Creo que actualmente son alrededor de 215, y esto es, mientras que la Fed está comprando. Y
yo, y estoy seguro de que la Fed, habría un total entendimiento de que
si alguna vez dejan de comprar los bonos de lo que pasaría con las tasas
de interés? Debido
a que una gran parte de este mercado de valores se basa en la parte
posterior de bajos tipos de interés y tipos de interés artificialmente
bajos con la palabra más importante es artificialmente bajo. Sabemos que la política de tipos de interés cero es ridículo. Y otra cosa que debo decir, que dijo que estaba ayudando a la economía o algunas palabras en ese sentido. Y
te puedo decir que la política de tipos de interés cero ha tenido dos
efectos notables y significativas en el mercado de EE.UU.: una es la
vivienda recuperada, un poco, y las ventas de automóviles se han
recuperado. Tanto porque son tasa de interés muy sensible. El costo de cada uno es en gran medida un factor de los tipos de interés. Con
las tasas de volver aquí, la gente va a descubrir que hay un efecto
inmediato, un impacto negativo en el mercado de la vivienda en Estados
Unidos, y también tendrá un efecto significativo en la refinanciación de
automóviles. Debido a que los costos de los intereses han subido teóricamente hasta un 33 por ciento las tasas fueron 160-215. Así
que no creo que hay una esperanza en el infierno de la Fed disminuyendo
sus compras, ya que tendría consecuencias increíbles en los mercados de
bonos, que ya hemos visto que se manifiesta, tanto en Japón como en los
Estados Unidos durante el último mes.
PM:
Eric, sólo para seguir esa línea de pensamiento citar Bill Gross de
PIMCO empresa responsable de inversiones en una entrevista reciente, "Si
los precios de los bonos bajan, precios de las acciones deben ir hacia
abajo también. Eso
es simplemente porque el comercio de apalancamiento mundial depende de
las Yen japonés estabilidad y el rendimiento J / GB estable y un
rendimiento de tesorería estable y una vez que se produzca la
inestabilidad, a continuación, que aprovechan empieza a relajarse. El
mercado inmobiliario comienza a ser afectado, y las acciones bajan.
"Usted ha estado cantando la misma canción de hace un par de años, por
lo menos desde que yo he estado hablando con usted. ¿Todavía se siente tan fuerte ahora? Quiero decir, obviamente, que parecen tener opiniones muy fuertes sobre eso, y ... ¿dónde cree usted que vamos desde aquí?
ES:
Siempre es bueno dar un paso atrás un poco y cada vez que me presento
en una habitación y cuando estoy hablando con usted y sus oyentes,
siempre digo a cada uno de ellos, es lo que, en su corazón, creo que una
política de tipos de interés cero es apropiado? Y tú, en tu corazón, creer que la impresión de dinero es la adecuada? Porque si no lo hace, usted no debería estar jugando el juego que todos estamos jugando. Y el juego que todos estamos jugando trata básicamente de juego de la Reserva Federal. Y así, a todos nos gusta bonos de compra. Como usted sabe que ha habido este enorme interés en los bonos aquí, que creo que está siendo completamente jugó mal. Quiero
decir que yo digo a todos, no debe poseer bonos en ese entorno, y mucha
gente dice, bueno, tengo que esperar a una señal real de que no está
funcionando. Bueno, estamos llegando a nuestro primer signo por el camino. Y
usted no puede esperar, porque si usted es un largo plazo o incluso un
pensador mediano plazo, usted sabe que las tasas de interés no deben
estar donde están. Y si la imagen que las tasas estaban donde normalmente sería, ¿dónde estaría la economía? Sería un caso perdido. Vivienda sumiría de nuevo. Las ventas de automóviles podrían sumir de nuevo. La deuda pública se dispararía. Sólo sería la peor de todas las situaciones posibles. Hemos
ocultado por completo la capacidad de los gobiernos para financiar con
estas, estas tasas anormalmente bajos de interés bajas. Si
es que alguna vez fueron una copia de seguridad, los costos de interés
para los países que se dispararían y de repente está fuera de control,
no es que no estaba fuera de control ya. Por lo tanto, no sería más que un escenario horrible.
PM:
Usted sabe, hace poco, obviamente, el mercado de renta fija ha estado
en una caída de las últimas semanas, hasta cerca de 9 puntos básicos, y,
obviamente, el aumento de las tasas y los precios que refleja lo que
dicen es fuertes datos económicos. ¿Esto es real o ...? ¿Vamos a ver las burbujas que estallan en los mercados mundiales, en acciones, bonos, especialmente en los EE.UU.?
ES: Estamos viendo una explosión de la burbuja. La burbuja está estallando, es lo que está sucediendo en Japón. Anunciaron
un programa QE2 de buen tamaño y las caídas de los mercados de bonos
porque la gente ve a través de él y por lo tanto, una vez que el mercado
de bonos japoneses comienzan a bajar, entonces la gente piensa, oh Dios
mío, el Banco de Japón ha sido la compra de todos estos títulos, sin
embargo, las tasas de interés están subiendo. ¿Cómo funciona eso? Y entonces comienza a recibir preocupa que lo mismo va a pasar aquí en los Estados Unidos. Y a pesar de que Bernanke de comprar todos los bonos, que todavía no puede mantener las tasas hacia abajo. Ellos
han subido 50 puntos básicos, aquí en los últimos 6 o 8 semanas, y eso
es con él que es casi el único comprador de los bonos. ¿Qué pasaría si él no iba a comprar los bonos? Y
el comentario que usted hizo, usted sugirió que Bill Gross hizo, y él
va directamente al problema, hay tanta influencia en el negocio de bonos
que cuando se baja de lado, todo el mundo tiene que empezar a hacer las
cosas y que trae gran volatilidad en el mercado de bonos. Así que vimos la volatilidad en Japón. Ahora
estamos viendo la volatilidad en el mercado de bonos de EE.UU., donde
de repente, la gente va a revolver porque poseen estas cosas sobre una
base de apalancamiento, que por supuesto es ridículo, también, y con el
fin de cubrir off, que 're exceso de apalancamiento, que tienen que vender los bonos. Así
como las tasas están subiendo, se convierten en el vendedor y casi se
convierte en auto-perpetúa, si son demasiado apalancada.
PM: ¿Estamos hablando de un superior en el dólar de EE.UU.?
ES:
Usted sabe, Patrick, ¿qué tan difícil con esa pregunta, me resulta casi
risible que tenemos el Yen, tenemos el euro, tenemos la libra y tenemos
el dólar, y no tengo ni idea, es decir, No me gustaría ser dueño de ninguna de esas monedas. Todos ellos tienen sus problemas individuales. Puedo
decirte que me parece el Yen es el peor de todos, pero yo también
podría decir a usted, yo diría que tú y yo hemos escrito, que en lo que a
mí respecta el gobierno de EE.UU. es quiebra ya, así que ¿cómo iba a hacerlo, posiblemente, en el largo plazo, quieren poseer dólares? Te ves en la carnicería que está sucediendo otra vez en Europa, ¿cómo me puede querer tener el euro? Y la única razón de que estas monedas se ven bien de vez en cuando, es que se ven mejor. Una cosa que usted y yo sabemos y la mayoría de la gente no puede apreciar, es que hay otra moneda, y eso es oro. Y el oro ha subido un 500% frente a todas las divisas en los últimos 11 años. Te
concedo que ha bajado recientemente, pero lo cierto es que ha sido, con
mucho, la mejor dinámica y si tiramos nosotros mismos salir del mal que
estamos en los metales preciosos, que yo creo que estamos en el proceso
de de hacer en este momento, el oro una vez más reafirmarse como el lugar que es mucho mejor que cualquiera de las monedas fiat.
PM: Vamos a hablar un poco más sobre el oro y la plata por un minuto. Eric,
¿puedes verbalizar lo que usted piensa que está sucediendo en el
mercado de oro físico en comparación con el mercado de vapor?
ES: Me encantaría. Tengo
mis propios puntos de vista sobre las cosas y yo soy, como ustedes
saben, en gran medida un alumno del mercado de oro físico y ver lo que
están haciendo en términos de compra y venta, porque escribí un artículo
sobre el oro alrededor de un año y Hace medio, haciendo la pregunta, qué los bancos centrales occidentales tenían ninguna de oro? Como
se puede ver toda esta nueva demanda llegando al mismo tiempo el
suministro de la minería ha sido fija cada año desde hace trece años. De hecho, es incluso el año pasado y sospecho que va a ser por este año, por cierto. Entonces, ¿cómo toda esta nueva compra de entrar? ¿Cómo
de China recibe un extra de 700 toneladas y cómo los bancos centrales,
que solían ser los vendedores de 400 toneladas llegar a comprar 500
toneladas, todo en un mercado de 4.000 toneladas? Puedo
identificar 2.300 toneladas de nueva compra y eso sin contar con los
nuevos datos que ahora estamos viendo que, de repente, la demanda de oro
y plata, productos ha estado subiendo por, en abril y mayo, por cientos
de por ciento más que el anterior años cuando se mira a China, India, los EE.UU., la Casa de la Moneda de Canadá. Yo no creo que tengan el oro que dicen que tienen. Que
estaba percibiendo antes del accidente de abril que había un montón de
historias anecdóticas de los retrasos y la escasez y la incobrabilidad
de las entregas, ya sean de los bancos comerciales, de las bolsas de
productos, etcétera. Y lo fue bastante evidente que había un problema. Así
que viene a lo largo de esta toma abajo de oro, que ha sido descrito
como un evento derivado de octava, y ocho eventos derivados sólo pueden
ocurrir una vez cada millón de años, lo que probablemente significa que
se perpetuó. Quiero decir que no ocurrió, naturalmente, en otras palabras. Creo
que la intención de ese éxito era que la gente, para que la gente, para
convencer a la gente que no deben poseer oro físico. Desafortunadamente, para el cártel de oro, es totalmente contraproducente en ellos. Los
compradores llegaron con fuerza y los volúmenes que estamos viendo
son increíblemente grandes y no van a ser capaces de suministrar la
entrega.
Patrick Montes de Oca (PM): This segment is brought to you by Equity Management Academy.
Hello, everybody, this is Patrick Montes de Oca. We have the pleasure
today of having with us Mr. Eric Sprott, Chief Executive Officer, Senior
Portfolio Manager, Eric Sprott
has more than 40 years of experience in the investment industry. After
earning his designation as a chartered accountant, he entered the
investment industry as a research analyst at Merrill Lynch in 1981. He
founded Sprott Securities, now called Cormark Securities, which today is
one of Canada’s largest independently owned securities firms. In 2001
Eric established Sprott Asset Management.
Welcome to Trading Talk. Eric.
Eric Sprott (ES): Patrick, very happy to be back again and I look forward to our conversation.
PM: In testimony last week Federal Reserve Chairman Ben
Bernanke hinted at the program of Quantitative Easing that has propped
up the economy, the markets over the past three years might come to an
end before Christmas comes around. What is your opinion, what do you
make of it, Eric?
ES: I love the question, because we’ve already…It’s very
interesting what’s going on in the world right now because here we have
massive quantitative easing on a scale much larger in Japan than even we
have in the USA and the bond yields have ratcheted up dramatically.
Like the yields have gone up more than 200%. They’ve gone from 30 basis
points to, I think, 95 or 96. People are seeing through the printing.
And the same thing’s now happening in the US, where the bond rates, the
10-year bond rates, have gone from 160 to as high as 223 two days ago. I
think they’re currently around 215, and this is while the Fed is
buying. And I, and I’m sure the Fed, would have a total understanding
that if they ever stop buying the bonds what would happen to interest
rates? Because a lot of this stock market is built on the back of low
interest rates and artificially low interest rates with the most
important word being artificially low. We know that the zero interest
rate policy is ridiculous. And one other thing I should say, you said it
was helping the economy or some words to that extent. And I can tell
you that the zero interest rate policy has had two noticeable and
meaningful effects in the US market: one is housing recovered, a little,
and auto sales have recovered. Both because they are very interest rate
sensitive. The cost of each is very much a factor of the interest
rates. With rates going back up here, people are going to find out that
there’s an immediate effect, a negative impact, on the housing market in
the States, and it will also have a meaningful effect on the
refinancing of automobiles. Because the interest costs have
theoretically gone up by 33 percent as rates went from 160 to 215. So I
don’t think there’s a hope in hell of the Fed tapering their purchases
because it would have unbelievable consequences in the bond markets
which we’ve already seen manifested, both in Japan and in the States
within the last month.
PM: Eric, just to follow that train of thought to quote
Bill Gross from PIMCO company Chief Investment Officer on a recent
interview, “If bond prices go down, stock prices should go down as well.
That’s simply because the global leveraged trade is dependent on the
stable Japanese Yen and the stable J/GB yield, and a stable treasury
yield and once you produce instability, then that leverage starts to
unwind. The housing market starts to get affected, and stocks come
down.” You’ve been singing the same song for the past couple of years,
at least since I’ve been talking with you. Do you still feel as strong
now? I mean obviously, you seem to have very strong opinions on that,
and…where do you think we’re going from here?
ES: It’s always good to step back a little and whenever I’m
presenting in a room and when I’m talking to you and your listeners, I
always say to each one of them, do you, in your heart, think that a zero
interest rate policy is appropriate? And do you, in your heart, believe
that printing money is appropriate? Because if you don’t, you shouldn’t
be playing the game that we’re all playing. And the game we’re all
playing is basically trying to game the Fed. And so we all love buying
bonds. As you know there’s been this huge interest in bonds here, which I
think is being completely misplayed. I mean I tell everybody, you
should not own bonds in that environment, and a lot of people say, well,
I gotta wait for a real sign that it’s not working. Well, we’re getting
our first sign by the way. And you can’t wait, because if you’re a long
term or even a medium term thinker, you know that interest rates
shouldn’t be where they are. And if you imaging that rates were where
they normally would be, where would the economy be? It would be a basket
case. Housing would plunge again. Car sales would plunge again.
Government debt would skyrocket. It would just be the worst possible of
all situations. We have totally masked the ability of governments to
finance themselves with these low, these abnormally low interest rates.
If they ever went back up, the interest costs to those countries would
skyrocket and suddenly it’s out of control; not that it wasn’t out of
control already. So it would just be a horrible scenario.
PM: You know, just recently, obviously the bond market has
been in a tumble the past few weeks, down about 9 basis points, and
obviously rates rising and the prices reflecting what they say is strong
economic data. Is this real or…? Are we going to see bubbles bursting
in world markets, in stocks, bonds, especially in the US?
ES: We are seeing a bubble burst. The bubble that is
bursting, is what’s happening in Japan. They announced a good-sized QE2
program and the bond market crashes because people see through it and
therefore, once the Japanese bond market start going down, then people
think, oh my goodness, the Bank of Japan has been buying all these
bonds, yet interest rates are going up. How’s that work? And then they
start getting concerned that the same thing is going to happen here in
the United States. And even though Bernanke’s buying all the bonds, he
still can’t keep rates down. They’ve gone up 50 basis points here in the
last 6 or 8 weeks, and that’s with him being almost the sole buyer in
the bonds. What would happen if he wasn’t buying the bonds? And the
comment you made, you suggested, that Bill Gross made, and he goes right
to the problem, there’s so much leverage in the bond business that when
it gets off side, everyone has to start doing things and it brings huge
volatility into the bond market. So we saw the volatility in Japan.
We’re now seeing the volatility in the US bond market, where all of a
sudden people are going to scramble because they own these things on a
leveraged basis, which of course is ridiculous, as well, and in order to
cover off, they’re over-leveraged, they have to sell the bonds. So as
rates are going up, they become the seller and it almost becomes
self-perpetuating, if they’re too leveraged.
PM: Are we looking at a top on the US dollar?
ES: You know, Patrick, what’ so difficult with that
question, I find it almost laughable that we have the Yen, we have the
Euro, we have the pound and we have the dollar, and I have no idea, I
mean, I wouldn’t want to own any of those currencies. They all have
their individual problems. I can say to you that it looks to me like the
Yen is the worst of the bunch, but I could also say to you, I would say
to you and I have written, that as far as I’m concerned the US
government is bankrupt already, so how would I possibly, in the long
run, want to own dollars? You look at the carnage that is going on over
in Europe, how would I possible want to own the Euro? And the only
reason these currencies look good from time to time, is that they look
better. One thing you and I know and most people may not appreciate, is
that there is one other currency, and that’s gold. And gold has gone up
500% against all currencies in the last 11 years. I grant you that it’s
gone down recently, but the fact is that it’s been by far the best
performing currency and if we pull ourselves out of this funk that we’re
in in the precious metals, that I think we’re in the process of doing
right now, gold will yet again reassert itself as the place that’s way
better than any fiat currency.
PM: Let’s talk a little more about gold and silver for a
minute. Eric, can you verbalize what you think is happening in the
physical gold market as opposed to the vapor market?
ES: I’d be happy to. I have my own views on things and I’m,
as you know, very much a student of the physical gold market and
watching what people are doing in terms of buying and selling, because I
wrote an article about gold about a year and a half ago, asking the
question, do Western central banks have any gold left? Because you can
see all this new demand coming in while at the same time the mining
supply has been flat every year for thirteen years. In fact, it’s even
down last year and I suspect it’s going to be down this year, by the
way. So how’s all this new buying coming in? How’s China get an extra
700 tons and how do central banks, which used to be sellers of 400 tons
get to buy 500 tons, all in a 4,000 ton market? I can identify 2,300
tons of new buying and that’s without using the new data we’re now
seeing where all of a sudden demand for gold and silver products has
been going up by, in April and May, by hundreds of percent greater than
the previous year when you look at China, India, the US, the Canadian
Mint. I don’t think they have the gold they say they have. I was sensing
pre the April crash that there were lots of anecdotal stories of delays
and shortages and defaults on deliveries whether they be from
commercial banks, from commodity exchanges, et cetera. And it was
getting quite apparent that there was a problem. So along comes this
take down of gold, which has been described as a eighth derivative
event, and eight derivative events can only happen once every million
years, which probably means it was perpetuated. I mean it didn’t happen
naturally, in other words. I think the intention of that smash was to
have people, to make people, to convince people they should not own
physical gold. Unfortunately, for the gold cartel, it totally backfired
on them. The buyers came out in force and the volumes that we’re seeing
are unbelievably large and they’re not going to be able to supply
delivery.
