Gold - Long Term Chart Says Buy Now!

Since 2001, Gold has been behaving very nicely and stayed in a narrow range in its logarithmic chart. So If Gold has gone down for an extended period of time and suddenly drop at level not seen for a while, or alternatively if it has gone up for a long time, and makes new highs, I like to have a look at the logarithmic chart since the bull market started in 2001, and see is we've hit the higher or lower bound of the trend

(Source: Boursorama)

Guess what, we've just hit the lower bound last Friday. Assuming long term fundamentals remain the same (debt issue, money printing...), Gold is likely to go up over time, and this could prove to be the right time to buy. The 14-day RSI is at 30 (and hit this level 3 times) which means Gold is oversold short term. So it looks like a long and short term buy at this level.

The only thing that bothers me is that is has mostly corrected through time, and not really through price (it only lost 15%) which means it keep it amazing record of 12 positive years. Which is probably why Georges Soros recently lightened his position, and Jim Rogers said he would not buy at those levels. however, Marc Faber still continues to advice buying every month.

The Gold chart may also indicate it's a good time to buy Silver which has gone down by over 40% since the $50 it hit in 2011, but it's still not technically oversold (yet).

GEAB 62: Euroland 2012-2016 : Perennisation of a New Global Power Contigent On Democratization

Here are the highlights of GEAB 62 (February 2012) entitled "Global Systemic Crisis: Euroland 2012-2016 : Perennisation of a new global power contingent on democratization":

• Global Systemic Crisis: Euroland 2012-2016 : Perennisation of a New Global Power Contingent on Democratization. The Euroland will come out stronger of the crisis as long as people are involved in the Euroland project (and not just technocrats).
• 2013 : End of the US Dollar Supremacy in Global Commercial Transactions. The decreased amount of commercial transactions in US dollars will be the main trigger of the demise of the dollar, not USD currency reserves by foreign powers.
• 2015 – The Great Slump of Western Real Estate. LEAP 2020 forecasts important price correction for real estate in western economies by 2015. (Excerpt from a book to be published in March 2012)
• January 2012 GEAB $ Index: The US dollar accelerates its loss of value against the currency basket €, ¥, Ұ et R$.
  
• Strategic and operational recommendations. Many currencies will fall sharply, mind where you keep your Gold, solutions for Greece, winter stock market returns were a travesty and the coming great collapse of Western residential real estate.
• The GlobalEurometre - Results & Analyses. 69% of respondents (vs. 58% in January 2012) expect an important fall in the value of the US Dollar in the coming months.

The full GEAB 62 (PDF format) is available to LEAP 2020 subscribers for 200 Euros per year (10 + 6 issues).

Marc Faber: Stocks to Correct After April

Marc Faber is interviewed by Bloomberg TV in Hong Kong on the 2nd of February 2012.

He talks about his recent investments (stocks in Hong Kong and Thailand) and his views on the markets in 2012. He expects February to be somewhat weaker than January, followed by another rally in March/April, before a more meaningful correction starting around May.

2012 Recession Likely

A recession in the US is likely according to indicators used by John Hussman of Hussmann Funds and the WLI (Weekly Leading Indicator) growth by the ECRI.

John Hussman created a chart (below) corresponding to the average of standardized values (mean zero, unit variance) of the following variables:

• 6 month change in S&P 500
• 6 month change in nonfarm payrolls
• 12 month change in nonfarm payrolls
• 6 month change in average weekly hours worked
• ISM Purchasing Managers Index
• ISM New Orders Index
• OECD Leading Indicator - total world, 
• OECD Leading Indicator - US, 
• ECRI Weekly Leading Index growth
• Chicago Fed National Activity Index 
• 3 month average, credit spreads (Baa vs 10-year Treasury), 
• Industrial commodity prices - 12 month and 6 month change
• New building permits 6 month change.

Here's the chart between 1952 and 2011.

The level we currently get (-0.5) has always been associated with recessions, except with the false positive in 2003, right after the 2001/2002 recession. It correctly predicted or coincided with 10 recessions, never missed one and gave one incorrect signal as previously mentioned.

The WLIG currently stands at -8.4 (6 Jan 2012), a level usually associated with recession. ECRI insists however they use other leading indicator to make a recession call. That's why they did not make a recession call in 2010, but did make one for 2012.

There is now a fair amount of optimism in AAII survey (~50% bullish), although its' not extreme yet, and lagging indicators give a positive outlook for the US economy, so those recession calls still have many critics, but I believe they will eventually be proven right this year.

GEAB 61: Global Systemic Crisis: 2012 : The Year of the Great Global Geopolitical Swing

Here are the highlights of GEAB 61 (January 2012) entitled "Global Systemic Crisis: 2012 : The Year of the Great Global Geopolitical Swing":

• Global Systemic Crisis: 2012 : The Year of the Great Global Geopolitical Swing. 2012 will be a transition year year between the old world and the new world order.
• USA 2012: Towards QE3 Tragedy. QE3 will play an important role in the transition.
• Anticipations 2012 - 20 up and 15 down. 35 Key Trends for 2012. For example, LEAP anticipates that People will become more and more angry, revolt around the world  and contribute to the transition. They also expect that the power of central banks will decrease and that the Euro crisis will disappear in the headlines as the UK and the US debt crises will come back in front pages.
• Strategic and operational recommendations
• The GlobalEurometre - Results & Analyses 

The next month, LEAP/E2020 will unveil its anticipations for Europe 2012-2016 in GEAB 62.
The full GEAB 61 (PDF format) is available to subscribers for 200 Euros per year (10 + 6 issues).

GEAB 58: H1 2012: Decimation of Western Banks

Here are the highlights of GEAB 58 (October 2011) entitled "Global systemic crisis - First semester 2012: Decimation of Western banks":

• Global systemic crisis – First half of 2012: Decimation of the Western banks

It’s this very unhealthy financial environment that will cause the "decimation of Western banks" in the first half of 2012: with their profitability in freefall, balance sheets in disarray, with the disappearance of trillions of USD assets, with States increasingly pushing for strict regulation of their activities, even placing them under public supervision and increasingly hostile public opinion, now the scaffold has been erected and at least 10% of Western banks will have to pass that way in the coming quarters... Read public announcement

• Global systemic crisis: LEAP/E2020 anticipation of 40 countries’ risks 2012-2016 (USA, Euroland, BRICS, Japan, UK, Australia, Argentina, Sweden, Egypt, Switzerland, Philippines, Mexico, South Korea, Morocco, Libya, Syria, Iran, Israel, Poland, Thailand, Indonesia, Saudi Arabia, Tunisia, Chile, …) - Widespread collapse at the heart of the global geopolitical dislocation phase... with very different prospects for exiting the crisis depending on the country

In this issue, our team sets out the annual update of "countries’ risks" under the crisis from 2012 to 2016. The assessment of country risk for the next 5 years is meant to be a decision-making tool for political and economic players and investors (individuals, companies or institutions). In a world in turmoil, it offers a medium-term perspective based on the methodology of political anticipation which has proved itself over nearly six years in terms of anticipating the global crisis and its consequences. Based on an analysis incorporating twelve criteria this year, this decision-making tool has already demonstrated its relevance for many years, faithfully anticipating developments generated by the crisis....

• GEAB $ Index – October 2011: The US$ fall accelerates against the €, ¥, Ұ and R$ basket

As our team has explained in many GEAB issues, the traditional Dollar Index (used by the financial markets) isn’t a reliable indicator for calculating the Dollar’s progress. In fact, it is based on a basket of currencies which is no longer representative, neither of the major global monetary balances, nor United States’ trade. This currency basket is, in fact, a "tiny Western club" even more illegitimate today than the G8. …

• Strategic and operational recommendations
  
  • Banks: How to avoid being trapped in the decimation of Western banks?
  • Gold – Currencies: A new inflexion point coming up
  • Commercial real estate: The moment of truth comes closer
    

• The GlobalEurometre - Results & Analyses

We note a continuation of the major uncertainty over the exact state of Euroland governance progress. This month opinion is split (48%), still showing the clash between the laborious, but real, putting in place of this governance with the solid message showing the opposite…

The full GEAB 58 (PDF format) is available to subscribers for 200 Euros per year (10 + 6 issues).