Gold Daily Report ~ July 23, 2014 Trend Long Term ~ Bearish- Need a monthly close above 1800 to confirm the bull market final phase underway. Medium Term ~ Neutral– The medium term trend was upgraded from bearish to neutral. Intermediate Term ~ Neutral– Stuck in a trading range of 1280-1340 Short Term ~ bearish - need a close above 1316 to go to just neutral again. Initial Resistance 1312-1322 2nd tier 1333-1342 Initial Support 1294-1304 2nd tier 1277-1284 The last update listed resistance at 1316-1326 and the high was 1316. Support was listed at 1302-1309 and the low was 1302 A hot CPI and better-than-expected home sales was all that was needed to send the S&P 500 and Tyrannies to new all-time intraday record highs. Escalating sanctions threats and death tolls were tossed aside. Treasuries were less than exuberant and rallied 4bps off their high yields of the day. The USD rose 0.3% (biggest jump in 3 weeks) testing up towards 5-month highs. Gold and silver were dumped, pumped, and then dumped as CPI and housing data hit to end the day mixed. 9 minutes before CPI data hit, gold futures were slammed lower on notable volume ($390 million). Then as CPI hit and noise was evidently not going away, gold prices surged over $12 to $1316 on very heavy volume... Gold is moving inversely with the USD (which is flying around) as stock rally (?) and longer-term bonds rally/flatten. Consumer Price Inflation was 2.1% in June. Core CPI fell very modestly to 1.9% year-over-year but the jump in gasoline prices accounted for two-thirds of the overall rise in June CPI. Deflationary trends and Liquidity concerns Portugal President Admits Espirito Santo Failure Could Be Systemic As Another HoldCo Goes Bankrupt Submitted by Tyler Durden on 07/22/2014 - 14:20 As RioForte joins its parent ESI in bankruptcy, in a strangely honest turn of events from a European leader, Portugals President Anibal Cavaco Silva warned on Monday that fallout from the financial troubles of the founding family of Banco Espirito Santo (BES) could affect the wider economy. With Portugals hope-strewn GDP growth expectations at only 0.9% for 2014, they do not have much room for disappointment before the nation (whose yields remain near record lows) double- or triple-dips back into recession. Silva concluded, We cannot ignore that there will be some impact on the real economy, which is odd given every talking-head has explained it is contained and priced-in. The Baltic Dry Index Collapses To 18-Month Lows; Worst July Since 1986 Submitted by Tyler Durden on 07/22/2014 - 17:51 The bulls will ignore it, shrugging that its merely over-supply of ships that the resurgent world economy will quickly soak up as it recovers... However, World GDP growth expectations are collapsing, trade volumes are slowing, and the Baltic Dry Index has continued to slump to its lowest since the start of January 2013 (a holiday period). For some context, this is the lowest July level for the Baltic Dry since 1986. First Detroit, Now Flint Warns Bankruptcy Train Is Headed For the Cliff Flint may be Michigan’s second city to plunge into bankruptcy unless retirees accept cuts in health benefits that threaten to unravel a balanced budget. As Crains Detroit reports, Emergency Manager Darnell Earley (Flint’s third emergency leader since it was placed under state control in 2011) warned If we have no ability to mitigate the cost of retiree health care, that’s going to make it very difficult for the city to remain financially stable over the next few years. As Eric Scorsone notes, Flints at the forefront, but a lot of cities are on the same train, and that train is headed for the cliff. Like Detroit, which a year ago this week filed the largest U.S. municipal bankruptcy, Flint has struggled with loss of population, jobs and revenue. The birthplace of General Motors Co. has only half its population of 1960. NY Fed Slams Deutsche Bank (And Its €55 Trillion In Derivatives): Accuses It Of Significant Operational Risk Submitted by Tyler Durden on 07/22/2014 - 15:41 First it was French BNP that was punished with a $9 billion legal fee after France refused to cancel the Mistral warship shipment to Russia (which promptly led to French National Bank head Christian Noyer to warn that the days of the USD as a reserve currency are numbered), and now moments ago, none other than the 150x-levered NY Fed tapped Angela Merkel on the shoulder with a polite reminder to vote Yes on the next, Level-3 round of Russia sanctions when it revealed, via the WSJ, that Deutsche Banks giant U.S. operations suffer from a litany of serious problems, including shoddy financial reporting, inadequate auditing and oversight and weak technology systems. The shortcomings amount to a systemic breakdown and expose the firm to significant operational risk and misstated regulatory reports, said the letter from Daniel Muccia, a New York Fed senior vice president responsible for supervising Deutsche Bank. Market Recap by Martin Armstrong The Markets are being bombarded from every direction fundamentally. The confusion is rising and so will the volatility. The euro is gradually declining, the stock market keeps holding, gold really cannot get out of its own way, and the 10 year rates remain low even in Germany. Capital is confused every which way from Sunday. Within Europe, people are buying the Germany assuming they get Deutsche marks when the Euro goes kaput. Others are still shifting to the state for diversification. Then we have rising bank fears so many in the big money crowd are also shifting to equities, and we have central banks buying equities to diversify from purely US government debt in dollars. Gold Overview It was a nasty day as gold once again was range bound up to 1316 and down at 1302. Both of those targets were on the support and resistance numbers for Tuesday on last night’s update. While the gold keeps moving from the west to the east many are perplexed as to why gold is not rising in price. We continue to maintain that we are witnessing both inflation and deflation at the same time. As long as the global economies continue to get worse and as long as liquidity in the banking systems continue to get tighter and tighter gold will have a hard time mounting any significant rallies. Yes, inflation has gotten worse even in the government rigged CPI statistics, but the counter balance is the deflationary and liquidity concerns also are growing. As long as there is ample evidence that another liquidity squeeze like 2008 can develop, the final phase of the gold market explosion higher will most likely be on hold. There will be rallies, but a sustaining one like we saw from 1999 to 2011 is not yet in the cards. With that said, the medium term trend is getting close to giving a bullish signal just as the best part of the season arrives for gold and silver. With today’s big push after the CPI data it looked like gold was going to make another attempt at 1322-1325 as we discussed last night that 1302-1305 could hold and move towards 1322-1332. Indeed 1302 did hold at the low but it stalled right at the beginning of resistance at 1316. The close ended up below the trend line that has been holding gold and that is a negative going into Wednesday that allows gold to move lower. Although I was faked out today with the hold of 1302, after all was said and done with the day, the best buy point still looks to come between July 24th and July 30th in gold and silver. However as we move to Wednesday, 1302 did hold on Tuesday. Can it do it again? Gold Hourly Chart As mentioned earlier, for a while it looked like 1302 reversed gold higher and it still may be the case. But the close below the blue trend line on the hourly chart does not favor that gold is off to the races. Certainly we see that it’s not out of the question that gold can re-conquer that mini blue trend line. However if gold takes out 1302 now odds will favor that gold will move lower into the Thursday/Friday time period. Resistance is now 1312-1322 and if we lose 1302 support then the 1292-1295 area looks to be the last before 1277-1282.
Posted on: Wed, 23 Jul 2014 03:50:18 +0000