Bond Bubble
Is the bubble in the bond market about to burst? Even a move back to the 38% retracement level over the next several weeks would cause chaos in the global financial markets.
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Is anyone taking notice of the vote over in Italy later today? Could be a Brexit squared perhaps but not much coverage on it in the press.
I will be watching today’s vote over in Italy very closely later today as I think it may hold the key to many cycle turns. Here are my thoughts:
https://surfcity.co/2016/12/04/italian-referendum/
Surf: Most likely the italian referendum is a storm in a teacup, because there are no direct consequences. If Renzi (the president of Italy) step down, he is being replaced by an other politician.
The NO vote has won!
57% of the people went to vote until now so the referendum will be valid.
The NO vote was leading in the oldest polls but,unfortunately,the YES vote seems it is rebounding.
In Austria the green party won and this is a victory for the UE,let’s hope the same will not happen in Italy!!!!!
Gary, why should the bond bubble burst ? Are there any fundamental reasons ?
I think the decline in bond prices is the result of the american Trump-Dream. But this illusion can’t be the reason for a real burst.
rate is 0 now.. only way to go is up
My thoughts are this latest resurgence in yields is more like the “Taper Tantrum” of 2013 when the 10Y Treasury saw its yield more than double to 3% in the span of a few weeks only to have yields fall sharply once again. After all, the US economy (particularly real estate) can not withstand “normalized” rates ever again given the debt overhang. The entire developed world has negative real rates, so if the bond bubble is truly bursting, we will need to see positive real rates globally. Also, given the perverse nature of financial markets and the desire to prop up equity markets, I’m sure that if the bond bubble was truly bursting, all that money would just continue to be thrown at the stock market to inflate that bubble even more, probably little of it finds its way into precious metals, which would be par for the course.
It does not work that way Mark. The bond bubble bursting is not the same as a stock price dropping and sending capital fleeing into other stocks. Not in the big picture anyway. If every single bond was sold today it would still have to be bought by someone else or there would be no market. If there is no market then the original holder cannot sell at all and must wait until maturity. Somebody is always going to be the holder of that paper in other words. What the real worry is about is that market liquidity vanishes and as it goes so does price discovery. Think of it this way; if everyone in a Vancouver neighborhood owns a house that is worth a million bucks on paper but nobody is buying Vancouver houses anymore (and nobody can sell as a result) then what is the real price? And where is the cash that is needed to lubricate all the moving parts in the real estate market? Maybe that is not the best example but you get the drift. If bond prices have peaked it is unlikely everyone would be able to sell all at once, if at all. Who would be the buyer outside of a Central Bank? All that is really going to happen is that a whole lot of pension funds will be holders until maturity. So there won’t be a flood of money into other asset classes. Not in the way you imagine anyway.
ITALY VOTES NO
Euro crashing; gold/silver up
A 1% move down is not a crash Goldi. Not even close.
Renzi out
and another goldman sachs man in….
Will you look at this shit! Italy vote NO gold gap up all the way to 1190 and now back below 1180. Total trash. I think this decline is actually worst than the one in Dec last year. I told you that gold is hated. Cant see what will make gold go up after tonight…Maybe another terrorist attack is the only thing. It looks like more rangebound into next year 1160 – 1180
Look closer at that spike on an hourly Robert. It is not a reversal candle on gold. What we have instead is a channel that has just been created implying gold has returned to a rising track. It is not quite perfect yet however its not a bad hint that golds immediate declines have ended. What you might notice instead is that currency markets shifted out of euro and into Yen, dollars, gold and long bonds. So while the Euro made a new low, the US Dollar did not make a new high.
Pretty crappy I agree. However, most knee-jerk reactions (and there were lots of gaps in commodities) get corrected short term.
I wish I could find out who is behind the gold selloff. They should all be executed
Robert… get out of gold & into biotech
Silver is a buy at $16.66 with a stop at $16.20 IMHO.
Robert, do yourself a favor. Sell, cut your losses on gold. Give up your hope on it. Gold goes to $1000 will hurt you big time. Sell now. Buy back when gold is $1000, you could then make back a lot more money
We got a buy signal from PSAR for silver this evening. I believe the correction is over, and we are headed for $26-$27 sometime next year. After that, another, smaller, correction and then much higher prices to come. The economies of the world are in deep trouble (trillions of dollars in debt), so we can expect more QE or money printing (counterfeiting), which will fuel inflation and eventually hyperinflation. We are in deep trouble folks, so we can expect exploding gold and silver prices in the years ahead. Buy some physical gold and silver and keep it outside the banking system. The paper gold and silver markets will eventually be destroyed because of runaway inflation and no PMs in the vault or elsewhere.
trader, hope springs eternal. Italy vote a big yawn, the no result was a foregone conclusion for some time. Question is, whether this will further strengthen the dollar at expense of gold and other metals
Hey Robert. Shorting bonds is the way to go.
TMV will get your money back. Good luck.
Revenge trades……not a good idea
Revenge trade worked great last Thursday. Long gasl before OPEC.
Recovered all unrealized losses in gold miners in one day.
well good for you
Patience is a key skill in trading.
That gold spiked to 1190 is just one of the ways the market tells I like to get there.
It is telling us the direction; there are reason to be there. Had gold have bad news they should be by now evident.
I was skeptical about gold last week but I am getting that rare feeling that we are going to get a good bounce tomorrow and into mid week. (even though gold has just pulled back).
Dollar topping right now. Nikkei 225 down. sm down.
We’ll see.
Always use stops.
I wonder if the money manipulators are ready to go long in Miner’s? lol
bginvestor,
here is an answer:
http://www.investing.com/analysis/gold-juniors’-q3’16-fundamentals-200167999
Adam Hamilton concludes:
“But unfortunately today most investors and speculators aren’t paying attention to the gold juniors’ strong fundamentals. Instead they are all wrapped up in the fearful prevailing sentiment. That’s a big mistake as always. While the gold juniors’ operating profitability will indeed decrease in Q4 if gold prices stay low, gold’s bull is far from over. When it starts powering higher again on weaker stock markets, juniors will soar.”
“….The euro has fallen to a 20-month low against the dollar and investors fled riskier assets….”
which is why the dollar will continue powering on. No this isn’t just another storm in a teacup. The EU is in crisis and funds are leaving for the dollar(not gold).
I maintain my short term bearish outlook on gold & GDX posted on Friday — I took my short position a bit too early, but the outlook remains bearish…
Not bearish by my read. Gold is posting an outside reversal this early morning. I think its a buy.
Us markets acting as safe haven as funds flee EU.
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Mirror , mirror on the wall are gold the fairest of them all, might just be reflected by end next week latest at FOMC but we have some sparkle to reflect on:
We are at a pivotal point on the monthly, weekly and daily to determine where we really going. We need to stay 1160-1180 and close weekly above 1200 to know we continuing in a bull after a retracement, then only otherwise closing below 1160 we aiming for $1000. The fat lady has not sung while we on the precipice of monthly and weekly direction. I find Sive gives a person good alert warning sign for you approach in short and long term. (Great analysis in links)
My weekly additional perspective and other angles is also Sive Morten technical overview of many instruments and outlooks might also bring value for perspective for a few of you to manage risk as me with up tits to my chin in NUGT http://www.forexpeacearmy.com/community/threads/gold-pro-weekly-december-05-09-2016.48246/ and https://goldpredict.com/?p=6244. Real management required for that this week.
I do enjoy many of the comments, but I do find some commenst to previous posts to be very negativity on Gary that does not contribute to the value that this blog but Gary do offer a peek at a other view point. The idea to share a good counter balance than plain rudeness. Most experience people you need to find by trial & Err with insight that offer you value. The comments like this free view blog and the comments Gary offer is not that freely , but paying Gary is the risk as the investment you make. To attack and being rude just demonstrate the individual’s character for me. I am surprised the extent Gary allows the abuse on him but some characters would just be fuel on fire to respond.
Thanks for all diverse insight!
I would suggest that the bounce in Oct. was not an intermediate cycle low as it didn’t complete a weekly swing.
How unexpected…. As of this moment the EUR/US almost back to even while gold is about -1%.
This does not make sense.
VICTOR, crude oil has just produced the bull trap I was talking to you last week !
It is now that one should start looking for signals to enter short oil. This does not mean one should short right away but that the first prerequisite has occurred – allowing bullish sentiment to get extinguished.
Yea looks like oil has broken above the long term resistance, also breaking out of long term inverse H&S pattern. Target $62.5
Everything pretty much up bar gold and silver after the Italian referendum. You have to chuckle(ironic)….
yes indeed. Italy no vote was cast as negative with dire consequences similar to sentiment on brexit and trump. None of it has transpired. Equities breaching new highs, bonds sink, oil pumping ahead and gold irrelevant as the dollar provides a refuge for nervous money.
When a economic negative is disregard let alone embraced then you have to pay notice. Seems those who actually put down the bets with their money don’t feel all the disruptions politically and economically are all that bad in spite of expert public prognostigators who coach the game of investing but don’t actually play the game
watch the vix, if it sinks over next couple days below former lows it will further confirm the fear of political populism worldwide is not the monster portrayed and it’s onward and upward and more of the same for equities and dollar at the expense of gold and bonds.
Is it time to go long on gold for the day?
Or is this the final bear trap for gold?
unless there is a change with current direction on dollar, equities, and gold by the open, which still remains a possibility although fleeting, and ends the day on the flip side the I suspect the die will be cast in spite of all hopes for the opposite by many on this site.
Alexandru I notice you seem to be wrong about most things. Crude should go higher if you are predicting lower. Where is that market scorch you said was coming? You were wrong on gold, the market etc. Terrific contrarian indicator.
do not forget I shorted gold @ 1307. Were you a gold bear at that time ?!
if you like stocks, then be my guest and buy them deep on leverage! 🙂
Alexandru I do not forget how you called the market scorch a few weeks ago and you have been completely wrong. You also called gold bottom a while back and were wrong too. And you should short oil so you can be 0 for 3 soon.
I have heard of traders taking the other side of some of these traders that have an uncanny ability to get it wrong and make money. Imagine a indicator with 90% accuracy and its here free.
The scorch was the gold bugs getting their wings burned off.
If you short oil right now I am sure they will soon get scorched too.
Any insight why EUR/USD is up?
Recently there is some resemblance between the inverse XLF and gold. It might be that banks are manipulating gold.
This may be another week to sit on the sidelines.
Gold unlikely to form a swing today, so no trade there.
Until the Nasdaq recovers the breakout and makes a new high I would be unwilling to go long stocks. And even if it does recover I would still wait for the next DCL before buying. That would be due sometime around the election.
With the recent history of oil forming ICL’s early in the year I’m not willing to chase oil this late in an intermediate cycle either.
So nothing to do unless one is a day trader.
Just one question with the recent action from OPEC what could derail this new oil bull to have it do its YCL??? I think the cycle low is aldready achieved. When it touched 42 $ 2 weeks ago
Just one thought for all of you here : the market can stay irrational longer then you can all stay solvent . Trade accordingly.
My point exactly. Might be a week to just sit on the sidelines.
yes Gary, best to watch. Went long gold miners earlier last week around 1170, with 1150 stop out. Will give last benefit of doubt today. Gold has to get above at least 1180 this week to look remotely positive, with1220 to provide longer term hope. Dollar remains the key, hike mid month all but certain, perhaps dollar will correct with the rate rise confirmation.
This correction is expected. As ChrisG mentioned on Friday and I agreed. The chart was full on Friday. I am going to get back in. I expect gdx will spike to 22.1 then 23+. Sell all your gold there. I will open a short on spx December 8th.
I read that the Italian referendum had no effect on the market as the EUR/USD is now positive.
This is/was the opportunity for USD to start a new leg up. If EUR/USD stays positive today it could be good news for gold.
Holding below 100.50 potentially generates a false breakout on the dollar.
Looks like we are back to the ‘all news is good news’ for the stock market. These reversals are getting quite predictable.
Silver, and platinum are the best buys right now. This is the time to accumulate, not to be waiting as Gary would have you do.
XOP and XLE are respectively on day 22 and day 20 into DC.
Probably we have already had a peak 2 days ago.
There are the lower gap that must be closed.
Someone agrees?
Jesus Christ.. Euro UP.. Dollar down… Gold down .. Miners down.. indexes up.. u better wake up my friend… !!!!
here’s the scorch bears. If no reversal midday based on early dollar weakness, then the worse is yet to come for the bears.
gold is falling towards 1150,it is worsening day by day,I bet that even Gary is becoming bearish now!
Incredibly the most bullish scenario is a double bottom for gold at the moment,the worst…God only knows……:-(
The Scorch started on NOV15, when Utility stocks bottomed to their YCL.
Stocks advance today is Fools’ advance – buy it if you like it.
I closed my short stocks on Friday and stand ready to reopen soon 😉
Alex,
Hope you are doing well. What do you make of usd/ Jyp strength? When do you see jyp bottoming ?
Basically, we’ve had three events this year that threatened the status quo…the half-life for “price discovery” following these events has gone from 2-3 days in the case of Brexit to a few minutes in this latest episode. SPX looked like it was tracing out that Aug 1-2 analog (first pullback after the Brexit ICL), problem is that it all happens in the middle of the night these days. By the time RTH opens, a gigantic price vacuum emerges, you basically have to be trading in the middle of the night nowadays.
I think even the most bullish commentators have to realize that there is no “baby bull.” Looking at Kitco, the 365-day change in gold is now just + $72.70, a far cry from the + $300 earlier in the year. This was nothing more than a 30% rally in an ongoing bear market. And if truly the bond market bubble is bursting (which I highly doubt), then that will just be more pressure to buy assets with yield (stocks and shorter-term securities) and pull away from gold. I don’t like it, but it is reality unfortunately.
When you think of it, even the 30% gain in gold in the first half of the year really is nothing, and now there is almost no gain left of that move. In contrast, US stocks, which were already well overvalued and overbought at the beginning of the year keep going higher, with no correction whatsoever since 2011. Think about that, US equities are up 250% in seven years without even so much as a correction (10% drop) in five years.
Another great news!according Jordan Ray Byrne we are back into a gold bear market,the only positive is that he hopes it will make a double bottom around 1050.
https://www.youtube.com/watch?v=Ydlemm6URvQ
What is the deal now guys? What will make gold bounce back over 1200? This is pathetic
Load the boat with gold today Robert. My proprietary indicators are flashing – BUY TODAY.
You will get your $1,200 this week.
Haha the boat will sail with many of the gold bugs left behind.
Watch and see.
Platinum is about to wake up and its gains will eclipse gold.
WallST thanks. How far can it run baased on ur indicators?
Yen is gettIng pounded yet again today. A repeat of 2012-13 is what this looks like to me. The similarities are pretty stunning. And not just for yen, but almost every asset class.
I am holding my miners for now, but this does not look good at all. Gold has been as weak as 2012-13.
Realized that TIP is going up, USD is down. The fact that gold is down makes no sense. I am double on my NUGT shares as I see miners going up.
Gold is weak because of rate hike looming. Gold charts look god dam awful, careful throwing money/averaging down with NUGT. A bounce here is possible, but a collapse is another possibility.
Thanks Dday,
To be prudent I just dumped the NUGT shares I got this morning and have some profit to hedge in case NUGT goes down. Good trading to all.
Maybe a new “baby bull” will begin once we fall well below $1000/oz that will take prices up close to where they are today?
Good call on the 2012-13 similarities. The relentless dollar-yen drive is pretty clear as well. I swear the algo’s are simply fed analog’s and much of this stuff is just scripted.
GDX not buying the weakness in gold…….
It’s crazy to say gold is back in a bear market again. Today you can observe why gold is going down: It’s not the USD (USD-Index down, Euro up), but the bond prices (today down) which pull gold down. Gold needs rising bond prices or higher inflation to rally up. No later than the first quarter of 2017 inflation is going to rise significantly – then the gold bull market will continue for sure.
Today you also can observe how crazy the stock markets are: They rally in spite of the “no”-referendum in Italy. Italy is bankrupt, without reforms there is no hope for rescue. The italian banks are also bankrupt. There is no possibility to rescue them. Nevertheless stocks go up and gold (“save haven”) down. Most likely the EU will collapse in 2017 / 2018. Simultaneously US under Trump will sink into debt. Then you doubtless need gold.
maybe,but we are VERY close to the bear market BOTTOM,so it’s not that crazy to say that we are back into the bear market.
This is the best chance to buy gold in almost a year. Seriously 1160’s won’t last long.
61.8% fib retracement of the entire 2003-2012 rally is between $800-$900. So you are right technically right, it would be crazy to assume the bull is over. That doesn’t mean the possibility of further falls are out of the question. How about the EU collapses and funds pile into the dollar and US markets not gold, another possibility?
watching closely miners, still holding above recent lows including the leveraged nugt etc. below 1150 and out as planned, if wrong there will be plenty of time to rebuy. Agree with emptyness post on no sense to equity rally, but it is what it is. Eventually this will go very badly however Trump’s bankster appointees will talk, walk and shake this thing as long as possible. Trump knows any weakness in markets will cause his economic pipedream to collapse. For me the vix will be instrucive as to a real top
I remember in 2012 gold bugs saying gold/silver couldn’t possibly fall below $1580/$26. It doesn’t matter a jot what the price of pm’s are. If people aren’t buying they aren’t buying. The stock market has been the place to be since 2009, and the dollar has outperformed gold since 2012 ,that’s reality. Greece, Brexit, Trump have all led to dollar gains falling gold. It would be crazy to ignore the trend.
I had a feeling on Sunday before Italy results posted that if it was YES gold would go down, and if it was NO gold would go down. Sort of like the only way to win a coin flip was if the coin landed on its edge.
I had a feeling on Sunday before Italy results posted that if it was YES gold would go down, and if it was NO gold would go down. Sort of like the only way to win a coin flip was if the coin landed on its edge.
Transports have reached exhaustion.
Homebuilders’ bear has cooled a bit; ponders renewing its attack.
STOCK BULLS, YOU WILL GET SCORCHED!
Tomorrow I’ll renew my short.
alternatively, Gold+miners should push high into a new YC as stock market dives, but long gold is no longer a trade for me.
alex, where do you see an exhaustion with transports. they appear to be doing more than confirming highs in other indices including dow, spx etc. Even the NYA, is finally hitting new highs. equity certainly may pull back a percent or two,but that’s no scorch
You’re delusional if you think the stock market is going to get “scorched” or tank. This is the one asset that TPTB have worked tirelessly to prop up. I’ve given up trying to rationalize things…if the S&P were truly at fair value, we’d have a reading of 1400 or so based on historical valuations. If you think a 1-2% drop is coming, I can’t argue with that; but at that point, the dip will be immediately bought.
Jon, complacency in stocks is prevalent – STOCK INDEXES GROW EXCLUSIVELY ON RETAILERS’ BUYING.
Indexes will fall dip.
deep 🙂
USDJPY just put a double top – it should fall to DCL next couple of days to help USX get to the prior 99.90 pivot and print its DCL around there.
VICTOR, I will renew my short stocks trade on a swing high in NYSE Composite tomorrow.
If I were a crude oil trader I would place a sell-stop order right under today’s low, i.e. to SHORT OIL@ 51.00
target for covering the SHORT OIL trade @ 39.00 (even though it may get to 37 too).
Alexandru you are really something. You will never see under $40 again and will likely not even see under $47. Your predictions are a joke.
…and USDJPY has started to plummet indeed 🙂 🙂
Alexandru you were saying SM would dive for weeks already. You are clueless.
can disagree without being disagreeable with Alex
yes, Michelle, I am “clueless”, so do the opposite of what I am saying, go and:
– buy stocks,
– buy oil,
– buy USDJPY,
– buy GBPUSD and
– short VIX.
Do all these, Michelle! 🙂
Be my guest 🙂
Is a Michelle the duck in disguise ….? Lol
Good call on shorting oil Alex.
Unbelievable volatility. Most of my silver miners are up now.
GBUSD is turning, heralding that USX correction through the next couple of days is transitory.
Silver hit my first target of 1688.
yes, look at dollar dxy vs gold. an obvious inverse relationship. Have felt for some time, key to gold is dollar. today case in point, and alex there is no way to determine to this not continuing at this point. Eventually Trump’s people will not be pleased with dollar strength if they have any hope of competing.
Potential false breakout on the dollar index.
Why dollar index dropped deeply today, Gold is still on decline?
Vanbc, look at my comment above: It’s not the USD who is driving Gold – look at the us treasury bonds (5 year or 10 year), they are driving gold.
you may something there but I can’t see this, 10 year treasuries basically flat. It’s the dollar which manifests itself inversely to gold.
No jonsyl – look at U.S. 5 Year Bond Yield (5 Minute Chart), it’s inversely to gold. USD doesn’t matter.
It’s about the Yen. Overlay 6J with a chart with GC and you will clearly see. Gold did a .618 retrace from 1156 region to HOD. Looks like we bounced off the 20ema on 1hr chart, but now USDJPY looks like a blank in heat.
If one doesn’t understand how markets for bonds, currencies, commodities are related and why the correlations between them suddenly change then what good is it trying to figure out what is driving the price? Even if you figure out what the driver is now, you will have no ability to anticipate or immediately recognize when the relationship changes.
and Oil dives 🙂
Thank you Alex, it was a long ride today for me, will look to short it for sure, YES to at least 40 …
Unreal. The candle on USD is so bearish, big move down. What happened to gold? Well it made a new low 1158 and a baby bounce to 1177 now weakening. Based on this it looks like gold may top out 1210. Lucky if it even reaches 1200 however miners strong giving new highs. Looks like GDX 23 is possible
Hang in there Robert. This is how the game is played. The move in gold is coming.
For sure wallst. I have a question for u or Gary…this bounce coming in gold, will it be like a dead cat and then we make the final bear market low near 1050? Or will it just rocket from here like natural gas? Its hard to picture a rocket given that it’s below all key moving averages and how ugly the monthly chart looks. Reason I’m asking is because I also have some physical silver thinking of selling. I don’t want to keep it if silver going back to 14 or so. I could sell it in 18-20 range and then buy back cheaper
Regarding oil it is very difficult to read, it is erratic, as it depends on the mood of a few.
Yes, there are times when it is obvious as it is oversold or overbought, but apart from those times, it is very difficult to read. Point in case: the most brilliant minds called for an oil bottom on its way down many many times, and they only succeeded when the safe was all broken into parts. Then there was the opportunity to do some excellent trades, and yet few truly took advantage. Today the risk/reward for getting into oil is no so attractive; why spend time on it? The financial gurus said cheaper and lower for longer and that is likely what we will still have.
Gold should make a local minimum on 12/14/16, + or – one day. After the Fed raises rates on 12/14, we should see a respectable bounce above $1200.
Thank you, Yasen! Though I would wait shorting oil tomorrow after it hits 51.00 sharp, even if it means doingit at a slightly lower price.
Selling on stocks’ strength has just emerged – as retailers are attempting another push, smart money is selling it to them.
$RUT is just crazy. Panic buying.