Weekly Updates & Forecasts for July 2008

July 28, 2008 Update:

     [7-9-08 Supplement]:

Fairy tale news continue to assuage the concerns of the deliberately uninformed. Today we are treated to the revelation that consumer confidence "rose" in June and July.

If you go to the Conference Board's actual website, quite a different picture emerges.Here are some quotes:

"Consumers' outlook, while slightly improved from last month, continues to be very pessimistic. Consumers anticipating business conditions to worsen over the next six months eased to 32.4 percent from 33.5 percent, while those expecting conditions to improve edged up to 9.3 percent from 8.5 percent in June."

That, and the expected drop in oil is cited as the reason for the Dow/dollar bounce today, which served as a great excuse to push gold down far more than it would ave gone otherwise.

The US reporting on the NAB issue continues to be absolutely dismal. Bloomberg and the WStJ. Nothing else, while British and Australian papers are full of stories about it.

The US press outlets that do report on it say nothing about the fact that NAB's reason for taking a nearly 100 percent loss provision was due to its view of the US housing market collapsing completely.

That's probably one of the easiest figures to fudge because who could possibly check or verify these claims?

Please read this new article first: NABBED - and Taken Straight to Hell if you haven't already.

Strange things are happening. Even though the news of NAB's $830 million, 90% loss write-down of its entire exposure to the US mortgage securities collapse has roiled Asian markets overnight, at least as of 8 am CST on Monday morning, the US press has not even mentioned the bank and the consequences of its action once.

Gold suffered a brief, preemptory hit just before the NY open and is in the process of recovering. It will be interesting to see for how long the US financial press cabal can keep the NAB shocker from spreading around. My guess is that by noon things will trickle down to the masses so they have to report on it or lose market share.

All of the fabricated 'good news' from Friday will soon be either down the drain or struggling to hang on to the drain sieve as a torrent of bad news washes by.

The Dollar:

Late last week, the ECB's Austrian board member, Klaus Liebscher, brought some reality back into speculations as to whether the ECB is done with hiking its repo rate. He reminded the ignorant masses that even bad economic conditions do not force the ECB into the US Fed mold. When will they learn?

Gold & Silver:

This morning, gold was knocked down even though the dollar fell and oil rose - a point that by itself should tell observers that the paper gold price doesn't necessarily follow the drum of the markets alone. Silver was hit more than gold and has shown no signs of recovering by 8:30 am.

Bonds & Rates:

Bond yields are falling across the board, indicating somebody is buying bonds despite a worsening inflation outlook. It's the hallucinogenic economy, my friends.

Platinum:

Platinum keeps on crashing. It is now in the mid-$1,700 range and shows no signs of a turnaround. There must be serious concerns and planned production cutbacks in the car industry.

<3>Gold Stocks:

The XAU has been broken down far beyond what the gold price action would ordinarily support.

and it is now no higher than it was at its May 2006 peak - over two years ago.

Yet, there is still a slight, general uptrend going on. It all depends on hwo you draw the lines, of course. It could also be the beginning of a very long, very wide consolidation pattern, but I don;t think so. Gold will break out big pretty soon, and the stocks will follow. We are now very close to that time of year.

The predicted breakout in June was very real, but it got squashed at the behest of the banker elite. Yet, this recent low can be the catalyst for the next breakout, just like the severe breakdown in August of last year preceded the tremendous rise that followed.

I do believe that gold stocks have essentially gained their strength back, but the way things look now, it will take gold above $1,000 and rising for the stock indexes to make serious new highs in the coming months. Let's see how the NAB story plays out over the rest of this week.

Two more banks have failed over the weekend while the press sat on the news and is only now slowly beginning toreport on this development. The banks were small, but the fact that they sat on the news shows the degree of apprehension among the regulators.

I will keep you updated during the week as the NAB story progresses.

July 23, 2008 Update:

Oil:

Oil is the big story right now, and it may just be the cartel's newest policy tool, as alluded to in the most recent article entitled "Borrowing America."

It has obviously broken down from its recent, seemingly endless uptrend, and that breakdown is being widely used in the press to "explain" the dollar's recent phony recovery and gold's apparent decline.

Problem is that the alleged synergistic relationship between oil and gold isn't all that strong, as can be seen from the fact that persistently record-breaking rising oil obviously did little to prevent gold from "collapsing" back on March 16th.

Compare these two charts:

On March 16th when US taxpayers were 'volunteered' to buy Bear Stearns for JPM, gold stayed put for two days while oil and other commodities dropped. After that, oil dropped just a bit more and double-bottomed by April 1st, while gold kept setting three consecutive lows until May 1st.

Bottom line is that oil is NOT driving gold.

However, oil is driving the dollar - in a reverse sort of way. Oil's recent advances have served to weaken the dollar, or so we are told. Actually, the weakening dollar has forced the oil prducers to raise their prices in dollars so they won't lose out on their deals. Yet, whenever oil goes down, it helps the dollar recover because traders and the press think that lower oil is dollar supportive, so they trade and write stories that way.

In the end, what you have here is a new policy tool. Lower oil supports the dollar and the Dow at the same time while avoiding the necessity of actually having to raise interest rates (bad for the Dow), or lower them (bad for the dollar).

Yet, when you compare by how much oil had to fall in order to get any real movement in the dollar or gold, it doesn't seem to be all that great of a tool.

Here are the charts:

All this is happening while a US or Israeli attack on Iran becomes ever more likely, which is strange, because that is one of the major reasons the press provides for rising oil prices.

Is it true demand destruction, then? One piece of evidence supports that, and that is sinking price of both platinum and palladium.

Platinum:

Platinum has suffered a severe breakdown from which no immediate or even near-term recovery appears to develop.

Here is the longer term view of the blow-off top:

Palladium's short term chart looks similarly dismal, and that means demand for catalytic converters as a whole is falling. There is no demand substitution from expensive platinum to cheaper Palladium, which means that demand for cars worldwide is shrinking, or at least not expected to rise as it was before, and that means China ain't doing so well, either.

Yet, the palladium chart never got as much out of hand as the platinum one did, and palladium is still within its primary uptrend channel, even though it broke down from its triangle formation. This means it probably has a better chance to catch itself than platinum does, and if it does, that would demonstrate support from residual catalytic converter demand, which means the car and oil markets will not be quite as threatened, then.

Before, we were always told that Chinese demand for cars will continue. According to the platinum group price picture, this doesn't appear to be the case.

Now, if that is true, then oil demand will likewise collapse. not that oil consumption will necessarily shrink, but the previously expected increase in demand will not materialize, and that has its own price-depressing effect.

The big question now becomes: how far will oil prices fall as a result, and how much will that help the dollar and the Dow and hurt gold and silver?

Gold & Silver:

So far,

July 14, 2008 Update:

US Government:

The SEC is out chasing rumors while the real culprits, naked short sellers of stocks and other investments, are having a field day right under their nose.

How can they dare to do this? "Regulation SHO" has grandfathered them in. Why? Because their cumulative violations are so big that exposing them will bring down the whole system, and that includes longtime buddies of the head-honcho SEC regulators themselves.

That, of course, is nothing but a license to continue doing exactly the same thing, over and over. These guys, whoever they are, are untouchable - except they are not immune to the roving bands of bears who are finding the proponents of the "Goldilocks economy" from the 1990's sleeping in their beds as they return from their walk in the woods.

Needless to say, the bears have decided to eat Goldilocks, and they are proceeding accordingly.

Gold & Silver:

Gold has overcome a major hurdle when it climbed the $950/oz. ladder last Friday. This week it will launch an initial assault on the minefield between $975 and $990. Once a path through that field is cleared (which will probably take some casualties), the campaign into enemy territory above $1,000 will continue virtually unopposed.

The enemy is busy elsewhere - trying to shore up the crumbling foundation of its own castle. The earth underneath is moving in unpredictable ways.

Silver has broken through its last resistance level before the "big one". Technically, there is a huge gap with nothing to stop it between here and $20/oz. I fully expect it will climb that hurdle between now and Friday, maybe even in the next few days.

The projected path here should be taken with a grain of salt. It is unlikely to be commenced this week. There is just no room on this chart to indicate where it likely will commence - after silver has climbed that last hurdle.

The establishment has finally met its match - its own machinations. Their world is coming tumbling down all around them.

Good riddance!

Paulson wants Congress to give him legislative cover for bailing out the massive foreign shareholders in Freddie Mac and Fannie Mae. His fear is that the Chinese and Japanese may retaliate aainst the US government, should it allow their investments to go sour. "Retaliate" here fo course means they will begin to sell their prodigious holdings of US treasury debt.

Who is the master, here? It sure ain't Americans. They are asleep at the switch. Whatever their government does must ultimately be blamed on them. There's no one else to pass the buck to. In fact, the world is passing it back to us, as it should.

The buck has got to stop here.

Congress wants to stick the US taxpayer with the bill for all of this.

July 9, 2008 Follow-Up:

The Dollar:

As expected, the apparent furor over the "sharply rebounding" dollar was short lived. Much of today's dollar losses were blamed on Iran's missile test and the resulting rebound in oil prices, but in my view the main thing underpinning the euro was a comment from Trichet that inflation, not the slowing EU economy, remains the main focus and concern of the ECB. It's amazing how dense forex traders and the press can be.

Gold & Silver:

Gold and silver are bouncing a bit,

and maintained their closing levels after hours, rising even a bit further. The gold stocks' attempted rise this morning appears to have been capped again, however (see further below).

I do believe that a wholesale exodus from regular stocks and bonds into the PM stocks is now a major concern of the Fed and top US banks, and they are leaning heavily on the PM stock indexes which have sunk all the way back to their respective breakout points from the recent triangle formations.

Platinum/Palladium:

Platinum has decisively broken down from its triangle, and today is merely moving sideways, rather than up, as gold and silver are. That [can be] a sign of demand destruction in my eyes. At the same time, Palladium, which is a much cheaper substitute for Platinum in catalytic converters, is rising sharply this afternoon. It is very possible that Platinum's heydays are over. (Note: In after-hours trading, platinum had a nice bounce, so the jury is still out on this one.)

Rates & Bonds:

Long term interest rates are falling again, which means money isflowing into US treasuries. Whose money that is isn't exactly clear. It also isn't clear why that would be the case, given the strong inflationary expectations among investors. I consider it very possible that (quasi)-official money is being pumped into long treasuries while gold and the PM stocks are being shorted by establishment entities so that other investors will mistake this as a genuine trend and follow suit. Otherwise it makes no sense.

Given Trichet's repeated emphasis on the ECB's inflation fightingmandate, I see the dollar's misguided recent bounce as essentially over, now. We will see.

Now for the Weird Part:

It makes absolutely no sense for the gold stocks to follow the way of the dollar-bird, but that's exactly what they appeared to be doing today. Take a look at these charts:

It makes no sense at all for this to be happening while gold and silver are actually rising.

However, since I always assume the worst of motivations by those in power, it's easy for me to figure this out. To me, it means that last-ditch rescue attempts are being made to prop up the financial system, and they are being made under the table. It's just that I have no "proof" for that - except the absolute 'nonsensicalness' of this kind of market action under these conditions.

Make it appear as if "investors" are fleeing gold stocks alongside regular stocks while rushing to the "safety" of government bonds. Ha! It's easy!

Right!

How stupid do they think people are?

July 6, 2008 Update:

The dollar seems to be on a tear, and gold is falling, so is everything 'okay' in financial land?

No.

This is a continuing effort to mask the structural cracks criss-crossing the dam at lightning speed, in all directions. Making tape does not hold a cracking dam together, though. It only keep those most affected by the eventual collapse (those living in the shadow of the dam) from paying attention.

The flood wave will be tremendous.

This is what early overseas action in the forex and precious metals markets looks like for Monday, July 7th, as of 10:00 pm CST:

This is a continuing consequence of widespread reports that Trichet's comments last week were "dovish." Nothing could be further from the truth, but the markets appear to have bought the line - and swallowed the hook as well.

Meanwhile, even mainstream news outlets recognize that investors are being squeezed out of their retirements. Bad news.

How long this dollar -bounce will last is unclear at this time, given the degree to which currency and PM traders are allowing themselves to be deceived.

I will continue to update you as the week progresses. This bears closer scrutiny.

Nothing new has developed in the stock, bond, and oil markets since the July issue of the Monitor was uploaded, so these will no tbe updated until next Sunday.

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