Wednesday, January 29, 2014

Nat-Gas to Gold -- Let Opportunities Unfold

The market outlook this morning is melting down like an ice cream sandwich on the sun-baked sands of Miami's South Beach. I'm so glad I recommended that Gold & Resource Trader subscribers exit three positions yesterday. One was a small loss, but two were nice wins, and in a short time frame, too.

Today, stocks are down and gold is up. I was hoping for more of a pullback in gold on dollar strength, but fear rules the market. So that raises the question: What will gold do when fear subsides?

When that happens, we'll see some kind of pullback, sure. But there are so many bullish things happening for gold right now -- some of them in China, some in Western ETFs, some elsewhere -- that I still think gold's uptrend is solidifying.

We still need a monthly breakout in gold. The big downtrend is in place until that happens. But there is a shift in the wind, and it looks bullish for gold.

Now some of you may be thinking: "Fear isn't going to subside for a long time. This is the beginning of the end -- the big sell-off that very smart people have been warning us about!"

Well, those people might be right. A stopped clock is right eventually. But then again, they were wrong all last year. I'm not saying I have a crystal ball. And there are risks in the market. I think most of the risks are China related, not the currencies of Turkey or Argentina or whatever f--'d up country is seizing the headlines now.  Those can be important IF a momentum of fear builds up because of all the brush fires going on in the emerging markets.  But for now, what I'm watching is copper, as I laid out in my Monday column.

(Updated chart)

It sure looks like copper is going to test its recent uptrend.  We'll what happens then. Also, iron ore prices are at their lowest level since July.

On the other hand, if you want something that is bullish, look at natural gas.
(Updated chart)

Thanks to cold weather that has depleted nat-gas in storage, prices are breaking out. We may see a re-test of the breakout. I would think that would be a buying opportunity in all sorts of things.  This is not a recommendation. Do your own due diligence before buying anything. And remember, weather pushes around nat-gas like a bully pushing around a skinny kid. Those pushes can come from more than one direction.

Other Things I'm Reading ...

‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil As I said, this is a worry, but I think the mainstream media is exaggerating that worry.

Is China's Economy Growing or Not? Some great analysis from Econbrowser, and there are lots of charts like this one of China's electricity output and industrial value added.

 Read the rest HERE.

The $604 billion that big tech firms have stashed offshore could threaten their credit ratings. Gee, it's hard to feel bad for these companies when they could be using that cash to boost dividends or invest in America. Anyway, here's a chart to go with that ...

Rare Earths Outlook. One analyst thinks China's output will decline, which will open up opportunities for other, non-China miners.  Okay, but we've been hearing that for years now, haven't we? I do think there are select opportunities in rare earths, but don't count on China scaling back production.

Obama says foreign investors prefer the US over China—and here’s his proof Because one study proves the whole shebang, right?

Obama appears to be referring to this study by consulting firm A.T. Kearney, which finds that for the first time since 2001, China isn’t the world’s favorite destination for foreign direct investment—the US is.

Obama's economic remarks from the State of the Union speech last night.  As I said on Twitter last night: 'President: "That can happen." Dude, not if the orange guy behind you has anything to say about it.'

Iraq and Iran plot oil revolution in challenge to Saudi Arabia Iraq is poised to flood the oil market by tripling its capacity to pump crude by 2020 and is collaborating with Iran on strategy in a move that will challenge Saudi Arabia's grip on the Organization of Petroleum Exporting Countries.

Combined, Iran and Iraq hold greater reserves of oil than Saudi Arabia and the potential with the help of international investment to match its capacity to produce oil, which currently stands at around 12.5 million barrels per day of crude.

Rebels in Syria Claim Control of Resources. Al-Qaeda in Syria -- which is financially backed by our best buddy Saudi Arabia -- now controls oil fields. And just to show you how confusing the whole issue is, that branch of Al-Qaeda is rumored to be working with the dictator Assad in Damascus -- you know, the guy they're supposed to be fighting.  Can we stay out of this quagmire, please?

Be careful today. Good luck, and good trades.

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