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I’d love to tell you that all is well in the world. That Europe has solved its sovereign-debt and currency problems. That the U.S. economy is looking better than most believe. And that Asia is about to soar again.
But the fact of the matter is that none of that is true.
Europe’s in deep doo-doo. Spanish and Italian debt yields are soaring again. Moody’s has now downgraded Italy. Finland is threatening to pull out of the euro. The euro is tanking; it’s at a fresh multi-year low and threatening to plunge even more.
Here in the United States, corporate earnings are starting to disappoint. The U.S. budget deficit hit $904 billion in June and is on track to hit $1.17 trillion by the end of the year.
Our national debt is approaching $16 TRILLION, more than $51,000 for every man, woman and child.
Plus, our country is quickly heading toward a fiscal cliff of gigantic proportions ― uncertainty in just about everything, from tax policy … to fiscal policy … to monetary policy and more.
Also thrown into the mix: Underlying tones of class warfare, rising social unrest, stubbornly high unemployment, and more.
In Asia, China’s economy has slowed more than I expected. Though the region can bounce back quite quickly, there’s no doubt the added worries about Asia are also weighing on the global economy.
Bottom line: The short- and intermediate-term fundamental forces driving the markets are looking ugly.
That’s also precisely why the technical picture for most markets is also looking bad.
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Consider this chart of gold: Many see some sort of bullish formation forming, all because gold has managed to hold the $1,522 to $1,545 level on at least five occasions.
But anyone who has truly studied the market knows that the more times a market tests a particular level, the greater the odds are that it will eventually break that level and plummet right through.
All my system signals remain bearish gold in the short to intermediate term. Once $1,545 is taken out, look for support levels at $1,495.50 … $1,446.80 … $1,400.80, followed by $1,373.10 and $1,346.80.
ONLY a close above $1,723 in gold would reverse the downtrend. Short of that, I strongly believe gold is headed lower.
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Also consider this chart of silver: Similar to gold, silver has repeatedly tested — and worn down — the support level at the $26 area. The next time through it, and silver should plummet.
Look for support at $23.61 followed by $20.27 and $16.89.
Only a weekly close above $31.49 would reverse silver’s short- to intermediate-term downtrend.
Hard to believe silver could fall to $20 or lower. I know. But that’s what my systems are telling me. And the rout could come soon. So stay alert.
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Also consider this chart of crude oil. It’s one of the ugliest charts I’ve seen in a while.
While oil is trying hard to hold the $80 level, it will soon fail to do so. Instead, a shocking decline lies ahead for oil, one that will see it plunge to below $60 a barrel.
Keep your eyes on the $77.33 level. Once that gives way, oil will spin a lot of heads as it tumbles hard. Only a weekly closing above $92.87 would turn the immediate trend around for oil.
As for U.S. stocks, don’t expect much upside there either. While the broader U.S. stock markets are in a new long-term bull market, they remain vulnerable to the downside in the short term.
There’s simply too much global uncertainty right now, and I see the Dow falling to at least 11,500 and possibly 10,500 — before any sustainable rally develops.
My view:
- Continue to keep most of your liquid funds in cash, ready to be deployed on a moment’s notice, but as safe as can be right now. The best way: A short-term Treasury-only fund in the U.S., or equivalent.
- Despite gold’s weakness, hold on to all long-term gold holdings. You do not want to let go of those. Long term, gold is heading to well over $5,000 an ounce. Short term, gold is heading lower. Consider inverse gold ETFs, such as the ProShares UltraShort Gold (GLL), to hedge your long-term holdings.
- Consider prudent speculative positions to grow your wealth. Like those I have recommended in my Real Wealth Report, which are doing great right now as silver falls, as the euro struggles, and more.
Most of all, don’t let the pundits on Wall Street kid you. The Fed will not prop up the markets for the elections … Europe will not be able to solve its sovereign-debt crisis … corporate earnings have seen their best for the current cycle … and there are more dangers to your wealth right now than there have been in the recent past, since at least 2008.
So stay cautious, but ready to pounce on new opportunities as they unfold.
Best wishes,
Larry
{ 24 comments… read them below or add one }
Probably your best article yet.Says everything in a concise manner.Well done.
Doesn’t sound like Mr Edelson views gold is an alternative currency. Telling us to short gold makes it sound like he’s working with the banksters!
Larry,
The levels in the markets mentioned have already been achieved if figured per the dollar. Could the bottom be now? You did mention this way of valuing markets in Real Wealth. Interested in your thoughts.
To Wyatt… how can you ask Larry if the bottom is in now when he writes for gold/silver / oil/ markets ..” one more leg down ” ?????? Can’t people understand what was written ? And don’t forget …. it is an OPNION what you read ( and pay for ) from Larry not a guarranty .
Apparently you didn’t understand my question to Larry. I don’t pay for his opinion either. I pay for his expertise and experience in the markets.
A lot of people are counting on Bernanke to boost the markets with more easy money just like he did with the last QEs and Twists.
Tony Sagami is still sprinkling China fairy dust, and even Larry said recently that China would roar up again, but now he is tweeting a different tune. The Weiss Group currency analyst swears the dollar will rise, and Larry says it will be debased. So we have the usual variations in viewpoint.
Everyone believes that Europe will go down in flames, yet we say it will rise to a new power and glory as a true United States of Europe—-actually a new Roman Empire—and stun the world.
Only time will tell if a wayward Japanese-American with a love affair for China, an American based in Thailand skirting the fleshpot of Bangkok and sworn to the yuan, or a seer with an eye in the Unseen will turn out true.
Remember, we told you two years ago silver and gold would lose their shine, and were attacked from all sides by Teutonic hildas, cowboy pundits, pat androgynes, and gold licking fundamentalists from all sides who believed it never could.
Moral of the story: Never say never.
To FS ..” We told you gold and silver would lose their shine ” ….? Who is WE ? And why has gold lost it’s shine ? 2 years ago – that’s 2010 – gold traded around $ 1050 to $ 1420 . Gold now trades in the $ 1500 range . Explain where the ” shine ” was lost .
The shine was lost when you stopped buying gold bullion because the rate of inflation is exceeding the rise in gold.
And, do you think silver is worth more now than it was last year?
It touched $50 per ounce and is now trading around $26——QUITE A LOSS OF SHINE!!!
But we believe it will rise again. So sell your short positions while you can.
And if you lost money on your shorts, thank Larry for that.
Heidi—-do you believe silver is trading as high as it was last year?
It touched $50 an ounce, and is now floundering around $26. We think that is a BIG LOSS IN SHINE!!!!!
But, we also think it will jack up again big! Expanding, pulsating, throbbing to a stiff new high,
So, clean out your shorts now while there is still time. Dump them. Get ready, because when the manipulators are finally removed from the markets, silver will make your head spin.
That will be an orgasmic explosion, due to fear, not fundamentals.
So go figure.
I don’t understand how you can be so negative on the markets and also be so negative on precious metals. It seems to me that you give great analysis of the fundamentals but then only look at the charts when it comes to trading. The worse things get, the more support gold and silver will have as people lose faith in governments and fiat currencies. I would be very surprised if gold went below $1500. If it does, it won’t be because of a chart pattern but because of an external/ fundamental event like India stopping imports. This is impossible to predict. Good luck to all, we will need it.
We are slowly heading into a debt crisis of super cycle degree. Best bet is to hold downside hedge plus cash and short term treasuries. Anyone in junk debt or long term bonds will get hurt as interest rates will rise higher than anyone can imagine as people will fear default. Mant debtors and creditors will get wiped out. Gold will get wacked hard as people seek liquidity. However this could lead to long term buys
I’ve been wondering if now is a good time to take a position in either TBT or TMV.
I am still holding the SPXU that I bought last fall at $89 (post reverse split price) per your recommendation then that the market would likely tank to the 9000 level. Would you personally average down and buy more at this time sinc the share price is down to $47? Or is the chance the market will tank becoming less and less likely as your thoughts on the market level have changed since the June ’12 newsletter that said to look for the Dow to fall to the 10,000 support level?
Danette,
Thank you for sharing here that last month’s newsletter prognosticated the DOW to fall to 10K. I truly wish you luck with getting your money back but it is not going to happen. World governments will turn on the printing presses before letting markets sink as they did in 2008. It’s not your fault you listened to these perma bears and let them get the best of your emotions (fears). The best advice I can give you is do NOT buy more of SPXU.
Ron Rowland, in his recent article said inverse ETF’s are meant for one or two day trading and after that the double or triple inverse properties work AGAINST you.
Rowland is the ETF expert on the Weiss team.
So the SPXU will continue to bleed and suck out more of your money. There is no way it can be made up—-no matter how far the market drops.
The creators of inverse ETFs made them to rob the buyer of his or her money and enrich themselves. It is just another scheisters’ con game. Banksters have no morals and never did.
There are massive local, state, and federal lawsuits brewing now to bring these racketeers down. It’s only a matter of time now. Meanwhile the markets are totally manipulated—–a total scam, sham, and ponzi scheme just like the whole Federal Reserve system.
Buying up all the gold I can NOW. Why wait for the green light from
who knows who. While they tell you sell they are hoarding what you
sell.
Larry, I do get your Real Wealth Report, but today my question is for
Tony Sagami.
Several years ago I subscribed to his China Report and bought New
Oriental Education (EDU) on his recommendation. Needless to say,
I did well with it.
Tell me they did nothing wrong with their reporting figures……..and your
views on the outcome of this sudden situation.
H
To Helen ..you did well with EDU ? Maybe that was before it was attacked by Muddy Waters who claims it is fraud … and now dropped to $ 9 – $ 11 ….just like what happwned to Sino Forest . Any Chinese Co., trading in N.A. but has it’s business in China gets called FRAUD these days.
What about the Euro? Where is that going? Will it keep going down to parity with us dollar?
we need to see all the charts redrawn and indexed for inflation.
Meanwhile be aware that it is only a matter of time before industrial pollution that has poisoned the Planet makes LIFE EXTINCT,. The only sensible investments on Earth today are to build the High Frontier Space Colonies Gerard O’Niel wrote about. Build and Live there or Humanity perishes.
Remember this date JULY 16 2012 where Larry wrote …” Ugly charts in gold /silver ” …remember it good .
Oct. 10 2011 Larry said ” DOW to 9000 ..if Dow goes to 10,358 it will drop to 9000 …..Dow still in the 12,700 range July 2012 …
Gold was / is expected by Larry to hit $ 1425 – $ 1100 …Silver to $ 25 – $ 23 and most likely $ 19 ” .
Remember his July 16 comments !!!!!
@Heidi von Fraungenschwelder
The shine was lost when silver, which was trading at around $50 per ounce not all that long ago is now trading at only $26 per ounce. Yes, that is a diminishment in shine Frau Fraungenschwelder!
BUT— and this is a big but—we believe silver will begin pulsating, throbbing, twitching, and stiffening to a new high—–erect and proud—as soon as the market manipulator scheisters are removed from the scene, as they soon will be.
Rejoice in that, and drop your shorts as soon as you can.
Then get your hands around a shaft of silver and buy more!!!!
Guys if your worried about a few thousand dollars or even a few million dollars, all that runs pale in comparison to what many countries have done. Just look around at the tons of gold that China, Russia, Venezuela and countless other countries have purchased since 2003. Don’t believe everything that you read or hear. Simply look at what the leading economic super powers have done to shield their economies from the upcoming crisis.