10-Year Yield Breaks Support. Look Out Below!

I wrote a story for the Non-Dollar Report on how zero and negative-yields are helping boost precious metal prices. You can read that here: http://nondollarreport.com/2016/06/gold-takes-monetary-amphetamine/

And here's an updated version of the chart was in the story. The 10-Year-Yield has broken the first line of support.

(Updated chart)

Will there be follow-through? And what does it mean for the prices of gold and silver? Stay tuned.

Pray for a Pullback. My Targets on Silver: $20 and $25.50

I think precious metals put in a short-term top on Friday. The good news, it was great to grab remaining gains on Barrick calls. The better news; if this IS a short-term top, we'll see a correction. And that will be a buying opportunity.

Why? Because ...

• Precious metals have just come out of a 4 1/2-year long bear market. The bull market could last 3 to 5 to 7 years.
• There is a global supply/demand squeeze, especially for silver. By that I mean mine production has peaked, and demand is rising. For gold, it is primarily investment demand. For silver, it is investment and industrial demand.
• The zero- and negative-interest rate policies of the world's central banks lift a huge weight off gold and silver. There is little to no carrying cost of holding physical metal.

Here's what the technical analysis "voodoo" I use gives as targets on silver now.



(Updated chart)

Your time frame may vary.

We'll see what happens. Good luck to us all.

Oh, and for your viewing pleasure, here is molten silver being poured into dore bars at a mine I just visited in Mexico.

Lurulu: Death, Destiny & the Lifelong Quest

Here's an article I wrote in 2013 ...

Posted on June 3, 2013 by Sean Brodrick

Every week in this space, we look at ways you can make more money to make your financial dreams come true.

But this week, I want to take a little bit of a departure from our usual conversations about gold, silver, oil and natural gas to examine a valuable lesson I learned from one of my other passions … one I think you can appreciate and, I hope, benefit from in your investing and personal pursuits.

On May 26, Jack Vance, a grand master of science fiction, passed away at the age of 96. Our world is poorer for his passing. He leaves a wealth of writing to his legion of fans, and what a fascinating life he led.

When I call him a “grand master of science fiction,” you might peg him as a writer of cheap pulps. Well, maybe he was — but oh, what a glorious treasure every cheap paperback contained. In fact, I would put Mr. Vance on par with the greatest writers of the 20th century, along with Ernest Hemingway, F. Scott Fitzgerald, Stephen King and others.

Today, I’m not going to talk too much about his great stories, like the five-volume revenge-fueled “Demon Princes” or “The Dying Earth,” a series of novels and stories in which the sun has dimmed and magic has been re-established as a dominant force. Sure, those books changed the face of fantasy fiction forever. But you can find those on Amazon.com.

Instead, I’m going to talk about something you CAN’T find, at least not easily. But it’s something we all should be looking for. Vance certainly was.

The concept is a theme in his last two books, the duology “Ports of Call”/“Lurulu.” That concept islurulu itself.

Vance was a writer who liked to invent words, and lurulu was one of them. While it is never strictly defined, characters allude to it as achieving your heart’s desire … sort of. It’s a bit of fate, a bit of destiny; all that AND the fulfillment of a quest.

As investors, we identify with those desires. Whether we want a speedier path to retirement … a second home in a country we’ve always loved or wanted to visit … or the ability to make sure our kids and grandkids can pursue their dreams without fearing how they’ll afford them … each day we work toward achieving our own personal lurulu.

As one character in the book says:

“‘Fate,’ ‘destiny’ and ‘lurulu’ are not synonymous. ‘Fate’ is dark and ponderous; ‘destiny’ is more like a beautiful sunset. In speaking of ‘lurulu,’ however, language of this kind is not useful; lurulu is personal, it is like hope, or a wistful longing more real than a dream.”

“Ports of Call”/”Lurulu” is ostensibly about a picaresque group of crew and passengers aboard a tramp space freighter shuttling from planet to planet. They meet amazing people and have weird adventures.

I liked this book in particular because it is capitalistic; many science fiction writers are more-terrified of economics than they are of any bug-eyed monsters.

Vance published the last of these books when he was 88. It is built around an old man’s truth, one that is no less profound for being simple: that life is a voyage whose significance is not to be found in the arrival but in the journeying.

Of the main characters, one burns for justice, one wants to save his mother from a scoundrel, one shifts his desire (or lurulu) from one thing to another, and one denies the very concept of destiny while revealing his deepest desires in a conversation with the one man who bested him. After one character achieves his goal — he gains wealth beyond most men’s dreams — he finds it not satisfactory in the least.

That’s because lurulu lies not in the amassing of wealth, but what you do with that wealth. It is here and now, in the warmth of friendship, in shared encounters that celebrate life. It is the awareness to grasp fleeting moments and appreciate them to the fullest.

Vance was going blind when he wrote these books. What an ironic fate for a writer and a lover of books. But he’d battled nearsightedness his whole life.

Getting Around the Rules

In his youth, Vance worked in a cannery, on a gold dredge and in many other trades to support himself while periodically attending college before the outbreak of World War II.

Weak eyesight prevented military service. So, in 1943, he memorized an eye chart and became an able seaman in the Merchant Marine.

I like that Vance got around the rules by using his brain. It reminds me of “Cugel the Clever,” Vance’s most famous creation, an absolute scoundrel who defeats much more powerful beings through his wits alone.

The stint in the Merchant Marines inspired a love of boating for the rest of Vance’s life. Boats, ships — and spaceships — were often themes in his work. In real life, he built a houseboat with science fiction authors Frank Herbert and Poul Anderson, and he went on at least one round-the-world voyage.

Vance and his wife settled in Oakland in a house that included a hand-carved wooden ceiling from Kashmir. He loved art but detested modern art; was spiritual but spoofed religion mercilessly; lived by a moral code but painted bureaucrats as incompetent bunglers. You would have liked him.

He wrote for the pulp magazines of the 1940s and ‘50s. He went to Hollywood and was a screenwriter for the “Captain Video” TV series. Vance was a lover of Dixieland and traditional jazz. A lifelong musician, he released a jazz album just two months ago.

Hugos, Nebula, Edgar, Oh My!

And then there were his accomplishments in books. He won two Hugo Awards, a Nebula Award, the Jupiter Award, the World Fantasy Award, and an Edgar. That’s right, Vance wrote mysteries, too.

Vance’s stories featured great plots — but his shining quality was that he was a virtuoso wordsmith. No one was more adept at creating a strange landscape and populating it with bizarre people in only a few paragraphs.

The most amazing thing to me was that Vance’s heroes could be horrible scoundrels, or killers bent on revenge, and yet you’d still find yourself rooting for them. Many writers try to pull off that trick, and they fail miserably. Vance did it without breaking a sweat; he put the “master” in “grandmaster.”

A Life Well-Lived

Vance was so influential that in 2009, 24 of the biggest names of fantasy and science fiction — George R.R. Martin, Neil Gaiman, Robert Silverberg, Tanith Lee, Mike Resnick and many more — put together a collection of stories called “Songs of the Dying Earth.” Set in Vance’s Dying Earth world, these are incredible stories — it’s impossible to find a stinker in the bunch.

And with each story, every single one of these best-selling authors enclosed an essay talking about how Vance’s writing had influenced, entertained and enthralled them as a young reader and writer.

Jack Vance has a treasury of memories to take to his grave, and he managed to give his readers a wealth of reading experiences along the way. I’ve lost count of his books.

“Lurulu” is not Vance’s best book, but the concept of lurulu — the idea of finding your real reason for living —  is something none of us should be without.

Happiness is not in the arriving. Happiness is in the getting there. It is the experiences you share with your friends. It is not the accumulation of gold, but the golden memories you build along the way.

Jack Vance’s productivity, sense of wonder and sheer love of life should be an inspiration to us all. I hope you read his books.

And most of all, I hope you find your lurulu.

All the best,

Sean

The US Dollar Is at a Make-or-Break Point

I'm traveling to Washington, D.C., this week to present my best case for a new publication to cover precious metals miners, developers and explorers. We'll see. In the meantime ...

The U.S. dollar enjoyed a nice rally last week. But unless it can break out this week, the rally is probably done.


(Updated chart)

I would keep the following points in mind ...

• Fed officials have warned that markets are "wrong" to expect just one rate hike for 2016. 
• CPI data comes out on Tuesday, and inflation probably strengthened in the last measured period.
• FOMC minutes from the April meeting come out on Wednesday.This will be scrutinized for hawkish speak that indicates a June or July rate hike is imminent.
• Goldman Sachs says the oil bear market is "over" due to falling U.S. production and chaos in select OPEC members.

However ...

• Economic numbers out of China are downright lousy.
• Earnings for S&P 500 continue to deflate. This is due in part to a too-strong U.S. dollar.
• What's more, headline earnings cover carnage in GAAP earnings. For example, Adjusted net income at S&P 500 companies rose 6.6% to $840 billion last year. Under GAAP, income at those same companies actually declined 11% to $562 billion.

The wild card is we'll see actual economic growth numbers (or lack of growth) for Q2 this week. That might tip the Fed's hand.

If the dollar does continue to rally, we might get the buying opportunity in gold that everyone has been waiting for. On the other hand, gold miners are one of the few things working in the market now, so there might not be as much of a dip as some anticipate.

Good luck to us all, and good trades.

Gold Miners & Silver Miners Leave S&P 500 in the Dust

A performance chart for gold, gold miners, silver miners and the S&P 500.


(Updated chart)

There is always a bull market somewhere, right?

Check out this chart from StockCharts.com for XRA

This chart I did on XRA back in April worked out well. Huzzah for technical analysis.

$GOLD Charts a Course for Higher Prices

It sure looks like we're seeing an inverse head-and-shoulders pattern developing in $GOLD. My target is $1,474.



(Updated chart)

For an inverse head and shoulders pattern to work, heavy volume on the breakout through the neckline is a must. And that’s just what we’re seeing now. Remember, “volume should move with trends, not against them.”

After breaking neckline resistance, the price target is found by measuring the distance from the neckline to the bottom of the head. This distance is then added to the point at which the pattern breaches the neckline to reach a price target. Any price target should serve as a rough guide. Other factors (previous resistance levels, etc) should be considered.

They say “every sunken ship has a chart.” So don’t bet all your pin money on this.

On the bright side, chart analysis CAN be an indicator of potential price action. As a reminder, here’s the chart I sent around in February, when the gold bull market first started.

We'll see if it works out this time. A weaker dollar certainly helps gold go higher, and I made the case for the dollar going much lower in a previous post.

Good luck and good trades.