Money Flow Trading Method along with Risk Management

The Most Profitable Traders
I thought I would post this here due to the value behind it, as I believe there are a lot of traders out there that could benefit from basic info such as this. I've posted it elsewhere in ForexFactory as well.

The below list comprises a number of different observations of myself and others through experience working with traders of all shapes and sizes, and is equally relevant to all. Some of the information is rehashed and/or might sound cliche, but here it is:

They are experienced – Probably the most horrifying and worst myth shot out to anyone considering trading for a living is that you will compound millions in an extremely short amount of time. The only true way to make every day profitable comes through experience, and countless hours learning is crucial to longevity of success.

They know the damage they are capable of – Notice I didn’t say potential or profits here. The best traders I know of understand their limits, and seem to focus more on what can go wrong than what can go right. They are not easily convinced of lucrative outcomes, and have a very high sense of self-awareness.

They trade to make money, not to be right – They understand the strengths and possible pitfalls of what it is they do for a living, and use that knowledge to curb their emotional output.

They have an edge and know how to use it – They understand that without it they wouldn’t last long

They have a gameplan, and follow it explicitly – Each trade is planned and opportunities are scouted for before any trading takes place. They steer away from the killer of all killers: overtrading.

They manage risk – Regardless of how much conviction they have on a trade, they will still do what they can to avoid the potential of any losses and understand rule #1 about trading: anything can happen.

They work obsessively – They follow each turn, each piece of info that comes out in regards to their trade, and follow any underlying information relevant to failure or success.

They only access the best information – Information rules in trading, and having some of the best translates to money. Using the wrong information leads to failure.

They think about the trade, not the money behind it - Focusing on money can destroy your means to objectively assess the trade itself.

They are constantly learning - Just when you think you know it all about trading, a new curveball gets thrown your way, not to mention there are continued means and methods to be learned about making money. Even the most highly successful trader I ever knew, a multi-billion dollar portfolio manager, has a team of fundamentalists and technicians come in to train and retrain himself and his traders.

They are active – Activity sparks creativity, a very crucial part of trading.

They have patience – They understand that the money will come, but everything needs to be in place, first.

NOTE: Not my information however excellent points so I share it here on this quiet Saturday night.

Regards,


Benjaminis

1. BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 3,646 Posts | Online Now

I first want to talk about having an EDGE. Fundamentals by themselves is not an EDGE. However using Money Flow between Asset Classes from here on I will include in my basket of 100% of what a winning Forex Trader needs. I will not refer to it as a fundamental anymore since new people coming to this thread put my method as including Money Flow as a fundamental which it actually is however not in the same way as most people understand Fundamentals.

This week we will get to see Non Farm Payroll (N F P) and as any experienced Fundamental Forex Trader knows it usually is a fantasy number created by the BLS however next to a FED rate announcement it is the one number that can move markets hundreds of PIPS in seconds and minutes.

Whatever the number Trillions of Fiat Currencies and other Asset Classes will start to change values as we "SEE" the Money Flow. That is why I call it my EDGE and once you know it and understand it well then it becomes your EDGE as well.

Here are the 5 important things that any Forex Trader that belongs to the minority of constant profitable Forex Traders , which I have named , The 5% Club needs to have. Of course in my opinion, I would think that very few Professional Forex Traders use the EDGE. Of course when you know about it then anyone can use it.

Each of the following five important things which I have given a weighting of 20% to each makes up what a profitable Forex Trader needs to have in order of IMPORTANCE.

(1) The ability of the Forex Trader to control their FEAR and their GREED and their EGO. Perhaps the last one is the most important of the three since the MARKET is always right. Using Money Flow puts you with the Market instead of against it as your Forex Account keeps losing the value in it.

The reason that I teach Forex Traders whether experienced or new to Forex trading with a $50,000 US Dollars Demo Account is because that is how I learned my trade starting during 2003. By learning to trade with $50,000 US Dollars in Demo Funds, then I had no FEAR or GREED. However after 3 years of Forex Demo Trading I surely had EGO since month in and month out my Return On Investment (ROI) was constantly over 10% a month or 120% a year.

(2) Money Flow. I have now explained why.

(3) Risk Management. That is next to Money Flow the KEY element of my Forex Trading since when you blow your account whether you are trading with too little capital as the majority of Retail Traders are or because of a Black Swan event such as Brexit or Europe banking issue such as we have in Italy at the moment or the Swiss Central Bank as they did a few years ago say one thing and then next moment announce a major change in their policy and 500 PIP movements happen in seconds. The absolute MINIMUM Forex Account that I would and could trade with would be $10,000 US Dollars. I would be glad to answer questions as to why although most will understand. What if you do not have $10,000 US Dollars trade with ? Prove to yourself that you have the skills and the knowledge to trade with profits then you will have no problems finding funds to trade Forex with. After my 3 years of Forex Demo Trading, I went out and found 6 clients that first deposited initially $50,000 US Dollars and within 3 months along with the profits that I was generating in my first three months of Forex trading from March 2006 to June 2006, I was managing well over $100,000 US Dollars.

(4) Technical Indicators which includes all parts of it whether Support and Resistance or Supply and Demand or Pivot Points. I use when I do daily trades the 5 Minute Charts along with the 15 Minute Charts and 30 Minute Charts to go along with the 4 Hour Charts. When you toss a rock in the river the first ripple is the 5 Minute Chart and then on to the 30 Minute and the two others. I use other indicators aside from the standard ones which are SAR and Fractal and Awesome Oscillator. The most important one that I look at when I enter into a Forex Trade is Support and Resistance so if I am going long or short I enter either at the TOP or BOTTOM of the Chart that I am using. Of course my Risk Management protects me from Human Errors or EGO.

(5) Fundamentals. I am fairly sure most of those reading my words today or whenever they read it might be surprised how a Forex Trader such as myself who posts a tremendous amount of research can list fundamentals as number (5) in order of importance. It is the research that allows me to clearly understand the difference between PERCEPTION (Markets) and REALITY (Research) Then I know what will most likely happen in the future and I am better prepared to deal with it.

I hope that this post of my daily Morning Thoughts answers some of your questions both for the 12 Forex Traders using the $50,000 US Funds Demo account with FXCMUK or anyone else. There is no reason that an experienced trader reading this thread or anyone else to not open a $50,000 US Dollars FXCM UK account so they can use the knowledge that we share here to learn new things and try them without having any FEAR of LOSS !!!

As always , I look forward to feedback and thoughts and anything that you care to share with us on our Thread.

Benjaminis

Each Forex trading day I start reviewing around 5:00 AM New York Time if the day will bring RISK ON or RISK OFF.

Tomorrow morning I will post around 5:00 AM to 6:00 AM to see where the Futures are at that moment and review what happened overnight in Asia. We have Europe opening in Frankfurt , Germany at 2:00 AM New York Time and by 3:00 AM the MONEY FLOW starts with the open of the DAX and the CAC and the FTSE.

I look ahead to see what news releases are scheduled for 8:30 AM , New York Time and 10:00 AM.

Once the North American Equity Markets open at 9:30 AM New York Time we have MAXIMUM Money Flow until 11:30 AM New York Time when Europe closes for the day only with regard to the DAX , CAC and FTSE.

There can be trading opportunity here as positions are closed for the day in some instances both in the Equity Markets however MORE IMPORTANT in the Forex Markets as the large Forex Trading houses also go home for the day.

I will post during the morning so that you can see my thinking in LIVE TIME as I look for Trade Opportunities based on our 6 Forex Trading Plans.


Benjaminis

Did more trading today heading for $70,000 US Dollars starting from $50,000 US Dollars on February 27, 2018.

Tomorrow at 8:30 AM is NFP Day. Stay Tuned.


Benjaminis

https://seekingalpha.com/article/416...oadblock=false

https://goldswitzerland.com/gold-hol...l-opportunity/

Strategic investments are made for the long run and with no intent of short term gains or concern of short term fluctuations. This kind of investing is based on buying undervalued and unloved assets and holding them for a very long term. This is what we did with gold in early 2002 for our investors and ourselves.

Having come down from $850 in 1980, not only did gold represent incredible value at $300 in 2002, but it was also the best insurance possible against a financial system which was turning increasingly unsound. Sixteen years later we are still sitting on our gold. We have seen a high of $1,920 in 2011 and a low of $1,050 in 2015. Have we ever been tempted to sell the gold? No, not for one second. We would rather buy more than sell an ounce.

We will patiently hold the gold until one or more of the following events have happened:

1. The financial system has been miraculously restructured and debt has vanished – IMPOSSIBLE
2. Major sovereign nations are running surpluses and have reduced debt substantially – NEVER
3. The financial system is backed by gold, guaranteeing the value of money –UNLIKELY
4. We can swap some of the gold for real assets at values 90-99% below today – LIKELY

We would never sell gold just because it reaches a certain price. Nobody knows today the level gold will reach. Will it be $10,000, $100,000 or $100 trillion.

That depends on the amount of money that will be printed in the next few years. The nominal value of gold at that point is irrelevant. It is only the purchasing power that counts. When the crisis peaks, so will the gold price, although there will be some time lag. At that point it serves no point of course to sell the gold since the financial system will be on its knees. But it could make sense to swap some gold against safe high yielding assets at a bargain price or even against sound businesses that have survived the crisis and can be picked up for a song. There will be plenty of bargains around at that time.

INCREDIBLE INVESTMENT OPPORTUNITIES COMING
https://goldswitzerland.com/wp-conte...ty-279x450.pngIt is these opportunities that investors should now prepare for.

Sell your Tesla shares, Amazons , Facebooks and your government bonds and buy gold and then wait. The next 5-10 years will give us opportunities that only happen once every few hundred years. And due to the massive debt and asset bubbles we are in today, this time the bargains are likely to be greater than any time in history.


Sadly, only a fraction of 1% of the investment population can see this opportunity. But Remember the Golden Rule: “Whoever holds the gold makes the rules.”

THIS TIME IT WILL BE DIFFERENT
Most investors will hold on to their bubble assets until they have declined by 85-100%. They will again believe that central banks will save them. But this time it will really be differentalthough nobody can see that, until it is too late.

The transfer of wealth in coming years will be of a magnitude that few can realise today. Most billionaires will disappear and not understand what has happened. They all thought it it was their own ability that created their wealth. They will soon become aware that their wealth was based on the central bank money printing bonanza that favoured a few and impoverished not just the poor but also the middle classes. But when bubbles burst, debts implode and so do asset values.


FLATION
Many ask how we can have hyperinflation when so many assets will implode which is deflationary. As I have explained before, we will have “FLATION” in coming years. This means both deflation, stagflation, inflation and hyperinflation simultaneously.


All bubble assets will deflate and the economy will have deflation which is inflation with economic stagnation. Consumer products, foods, raw materials and many commodities will hyperinflate. Most people don’t understand that we can have hyperinflation without high demand. Just look at Venezuela to understand how this is possible.


HYPERINFLATION IS A CURRENCY EVENT
Venezuela’s economy is totally collapsing with most people living in absolute poverty and squalor. There is very little demand for products or even food since there is none and people can’t afford it. Still prices are going up exponentially. This has nothing to do with demand but with the currency. Hyperinflation is a currency event and when a country prints unlimited amounts of money the currency collapses. And this is what creates hyperinflation.


FROM IMMORALITY TO MORALITY IS A LONG ROAD
We live in a world where real values and morals have been replaced by instant gratification and worship of the golden calf. Loyalty and friendships are gone, instead it is everyone for himself and win-lose rather than win-win. This is what happens in an unsound and immoral economy manipulated by an elite. The next phase that the world will go through will eradicate this system which is rotten in its core. After a long period of very unpleasant transition, real moral and ethical values will return. But before that, there will unfortunately be a lot of suffering in the world.


GOLD HAS BROKEN OUT IN MANY CURRENCIES
For holders of gold and silver who are impatient, I don’t think we are far from the next major move up. The problem with looking at gold in just US dollars is that it doesn’t give the full picture. Gold must be measured in the home currency of the holder.


Just look at the charts below. Gold in Swiss francs has broken out and is in a clear uptrend to new highs. And gold in Swedish kronor is near the 2012 highs. So is gold in Canadian and Australian dollars. Gold in US dollars and other currencies will follow soon.
https://goldswitzerland.com/wp-conte...5/gold_chf.png


Looking at gold in the weak South American economies, we can see the effect of collapsing currencies and the resulting hyperinflation.
Gold in Argentine Pesos is today ARS 27,000 from ARS 300 in 2000. And gold in Venezuelan Bolivars is now VEF 88 million. It was VEF 75 million last week and VEF 200 in 2000. So that is what real hyperinflation looks like.
https://goldswitzerland.com/wp-conte...gold_pesos.png


The gold charts for Dollars, Euros, Pounds and Yen will look the same as the two charts above, in a few years time. Take my word for it. All these countries will have unlimited money printing and hyperinflation.


Please don’t ignore the risks and don’t ignore history. Physical gold and silver will be your saviour.


Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management AG
GoldSwitzerland.com
Contact Us


Benjaminis

https://www.zerohedge.com/news/2018-...ops+to+zero%29

https://wolfstreet.com/2018/05/03/fe...tes-sharply-2/

These are getting to be serious amounts.
The QE Unwind is ramping up toward cruising speed. The Fed’s balance sheet for the week ending May 2, released this afternoon, shows a total drop of $104 billion since the beginning of the QE Unwind in October – to the lowest level since June 11, 2014.


During the years and iterations of QE, the Fed acquired $3.4 trillion in Treasury securities and mortgage-backed securities.

The mortgages underlying those MBS are guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The “balance sheet normalization,” as the Fed calls it, was nudged into motion last October. But the pace accelerates every quarter until it reaches up to $50 billion a month in Q4 this year.


This would trim the balance sheet by up to $420 billion this year, and by up to $600 billion in 2019 and every year going forward, until the Fed considers the balance sheet to be adequately “normalized” — or until something big breaks, whichever comes first.


In April, the scheduled maximum pace was $30 billion (up from $20 billion in January, February, and March): $20 billion in Treasuries and $10 billion in MBS.


Treasury securities
The balance of Treasury securities fell by $17.6 billion in April. This is up 60% from March, when $11 billion “rolled off.”

Since the beginning of the QE-Unwind, $70 billion in Treasuries “rolled off.” Now at $2,395 billion, the balance of Treasuries has hit the lowest level since June 18, 2014.
https://wolfstreet.com/wp-content/up...Treasuries.png


Just like the Fed “tapered” its monthly QE purchases in 2014 before ending them altogether in October that year, the Fed is ramping up the QE Unwind in a similar manner, but somewhat more slowly:
The stair-step pattern in the chart above is caused by how the Fed unloads securities. It doesn’t sell them outright but allows them to “roll off” when they mature. Treasuries mature mid-month or at the end of the month. Hence the stair-steps. In April, no Treasuries on the Fed’s balance sheet matured mid-month. But at the end of April, $30.4 billion matured, and that’s when the action took place.


The Fed replaced $12.8 billion of the maturing Treasuries with new ones directly via its arrangement with the Treasury Department that cuts out its primary dealers and Wall Street. In other words, those $12.8 billion were “rolled over.” But it did not replace $17.6 billion of maturing Treasuries. They “rolled off.” The blue arrow in the chart above shows the April 30 roll-off.


Mortgage-backed securities
Residential MBS are different from regular bonds. Holders receive principal payments on a regular basis as the underlying mortgages are paid down or are paid off. At maturity, the remaining principal is paid off. Over the years, to keep the MBS balance from declining, the New York Fed’s Open Market Operations (OMO) has been continually buying MBS.


But settlement of those trades occurs two to three months later. The Fed books the trades on an as-settled basis. The time lag between the trade and settlement causes the large weekly fluctuations on the Fed’s balance sheet. And it also delays when MBS that “rolled off” actually disappear from the balance sheet [my detailed explanation of further complexities is here].


These timing mismatches cause the jagged line in the chart below. So we’re looking for lower highs and lower lows.

Today’s balance sheet reflects MBS that matured somewhere around January and February, when $8 billion in MBS were supposed to have rolled off per month.

Today’s balance fell by $9.5 billion, to $1,744.9 billion, from low to low over the past month. This “roll off” pace is up 70% from March, when $5.6 billion rolled off.


In total, the balance of MBS shrank by $25.5 billion from low to low since the beginning of the QE Unwind. So the roll-offs from earlier months are starting to show up on the balance sheet:
https://wolfstreet.com/wp-content/up...-05-03-MBS.png


The Fed’s total assets
The QE-Unwind only relates to Treasuries and MBS. Since the beginning of the QE Unwind, they dropped $70.3 billion and $25.5 billion respectively for a combined decline of $95.8 billion.


The Fed has other roles that can impact assets and liabilities of the balance sheet. For example, it acts as the bank of the US Treasury Department and holds “Foreign Official Deposits” by other central banks and government entities. But these and other activities are unrelated to QE or the QE-Unwind.


Total assets on the Fed’s balance sheet dropped by $30 billion in April, and by $104 billion since the beginning of the QE-Unwind, to $4,356 billion. This is the lowest since June 11, 2014. Note that total assets are now down by $160 billion from the peak in January 2015:
https://wolfstreet.com/wp-content/up...03-overall.png


The pace of the QE Unwind has accelerated sharply in April, as planned. And it’s unlikely that the Fed will try to prop up the stock market by pausing its QE Unwind machine, even during a sell off. The Fed is targeting “elevated” asset prices, and sell-offs are part of the deal, as long as panic doesn’t freeze up the credit markets, as it did during the Financial Crisis. But currently, credit market conditions are ultra-loose as a result of years of QE and zero-interest-rate policy. So the QE Unwind has a big job ahead to reverse part of what QE has done, which is what “balance sheet normalization” ultimately means.


The Fed’s favorite inflation gauge spikes, as employment costs surge the most since 2008, and consumer spending holds up solidly. Read… Rate Hike Ammo


28 comments for “Fed’s QE Unwind Accelerates Sharply”

1. Justme
   May 3, 2018 at 8:03 pm
   I think QE-unwind is definitely is starting to affect the stock market. High-flyers like AMZN, GOOG and MSFT (amiong others) are no longer defying gravity like they have been the last two years. More to come.
2. Reply
3. Gandalf
   May 3, 2018 at 8:10 pm
   It will take 4 years for QE to unwinds at this rate. What are the odds of a major stock market crash or some other economic disaster to occur during the next 4 years that will cause the QE unwind to stop? Not to mention the current political situation in the U.S., which looks, shall we say, Stormy?

COMMENTS FROM BENJAMINIS: Non Farm Payroll at 8:30 AM will move the markets whatever the numbers. Stay Tuned !!!

https://www.zerohedge.com/news/2018-...ops+to+zero%29

http://www.sprott.com/insights/sprot...arly-february/

Enjoy Your Weekend


Benjaminis

Tell the truth.


Do not do things that you hate.


Act so that you can tell the truth about how you act.


Pursue what is meaningful, not what is expedient.


If you have to choose, be the one who does things, instead of the one who is seen to do things.


Pay attention.


Assume that the person you are listening to might know something you need to know. Listen to them hard enough so that they will share it with you.


Plan and work diligently to maintain the romance in your relationships.


Be careful who you share good news with.


Be careful who you share bad news with.

Make at least one thing better every single place you go.


Imagine who you could be, and then aim single-mindedly at that.


Do not allow yourself to become arrogant or resentful.


Try to make one room in your house as beautiful as possible.


Compare yourself to who you were yesterday, not to who someone else is today.


Work as hard as you possibly can on at least one thing and see what happens.


If old memories still make you cry, write them down carefully and completely.


Maintain your connections with people.


Do not carelessly denigrate social institutions or artistic achievement.


Treat yourself as if you were someone that you are responsible for helping.


Ask someone to do you a small favour, so that he or she can ask you to do one in the future.


Make friends with people who want the best for you.


Do not try to rescue someone who does not want to be rescued, and be very careful about rescuing someone who does.


Nothing well done is insignificant.


Set your house in perfect order before you criticize the world.


Dress like the person you want to be.


Be precise in your speech.


Stand up straight with your shoulders back.

Don’t avoid something frightening if it stands in your way — and don’t do unnecessarily dangerous things.

Do not let your children do anything that makes you dislike them.

Do not transform your wife into a maid.

Do not hide unwanted things in the fog.

Notice that opportunity lurks where responsibility has been abdicated.

Read something written by someone great.

Pet a cat when you encounter one on the street.

Do not bother children when they are skateboarding.

Don’t let bullies get away with it.

Write a letter to the government if you see something that needs fixing — and propose a solution.

Remember that what you do not yet know is more important than what you already know.

Be grateful in spite of your suffering.


Follow me on Twitter: @jordanbpeterson


Follow me on YouTube: Jordan B Peterson

A waiting game

Daan Joubert
May 8, 2018

There is a saying that refers to the quiet before the storm. Whether it is true that storms are often or usually preceded by a period of quiet or whether the quietness later seems only relative to the violence of the storm, is irrelevant to this week’s discussion. The only question is whether the same applies to markets as to the weather. If so, the past week or two may well be leading into a period of stormy weather for a number of markets. Over the past two weeks the DJIA has fallen by exactly 200 points, this despite frequent 300-400 point moves during the trading day; the yield on the US 10-year has changed marginally during the same period from 2.96% to 2.951%. Other markets have changed a little more, but there is nothing major to write about. Does it mean a major storm is waiting to break?


The prices of gold and silver declined during the past two weeks; gold from $1337 to $1309 and silver from $17.11 to $16.41, which is of course no surprise at all as we have just had the time of futures expiration and the nonfarm payroll. The dollar did surprise a little, as it broke the 15 month bear trend with a rally, while crude oil managed to resume the bullish trend that had stalled a while ago. The rise in the price of energy is perhaps of most consequence among these recent changes as it has such a wide impact across the economy, but there are no dark clouds massing on the horizon. Yet. However, all is not well with the markets.


Like a river that runs silent when it runs deep, the lack of recent rapid changes in a few markets disguise what is going on below the surface. Consider a monthly chart of the DJIA that begins in 1999. Perhaps it is time to again comment on changes in the trading volume of the 30 Dow stocks over time.
http://www.lemetropolecafe.com/img20...l_m236f60c.png


https://www.investing.com/indices/us-30-chart


Back during the dot.com madhouse in the late 1990s that had stock markets roiling and one would have expected lots of activity across all equity sectors, turnover of the Dow 30 where the marker is situated shows that the volume in June 1999 was 86.02 and a monthly average of 73.30, in millions of shares. By mid 2003 there was a sudden, steep jump to about 4-5 billion shares traded in the month and by mid 2007 the monthly figure had settled between 5 and 6 billion, with an average above 5 billion. Could this have been the effect of automated hi-frequency trading?


After the tall spikes associated with the final phase of the 2008/9 bear market, the turnover tapered gradually lower to be less that 3 billion shares on average. But as soon as Trump was elected, the turnover jumped very steeply to range between 6 and 8 billion shares per month. 2018 started off with a bang on Wall Street as the market topped out and volatility increased; monthly volume jumped to well above 9 billion shares for the first three months of the year and above 8 billion for April.


It was also discussed on Midas that there has been a steep increase in the volume on Comex as activity in the precious metals increased substantially. Yet even days with very high turnover in the futures market often see minimal changes in the metal prices – similar perhaps to 2018 on Wall Street; very high turnover, but mostly range bound churning with only high short term volatility within that range. Consider a catch phrase that is now associated with the silver market, that of a tennis game across the $16.50 net. So even if the precious metals had the usual slump towards month end, the activity in the market is much higher than the visible evidence as seen in small changes in the prices with no real trend.


Something seems to be brewing in at least some markets. How long before it boils over or erupts is not possible to say; but given all the activity below the surface, it seems likely that 2018 should see the start of it. There are any number of potential triggers for a major convulsion in the markets, from various domestic issues to a breakdown of relationships on the international scene. Until that happens and the storm breaks there is not much one really can do except to sit and wait and make whatever preparations are thought to be prudent.


Euro-Dollar
After sitting in a tight range while the dollar sought direction, the horizontal support along line H ($1.2255) was finally broken two weeks ago and the euro at first tried to hold at new support at line D ($1.2093). That support failed last week and since line D has acted as solid resistance until quite recently, the break lower looks quite bearish.


Technically the odds now favour a test of support at the bottom of euro bull channel KL ($1.1767). This can be by continuing the steep decline or if the euro should turn more sideways and then drift into that support. A break below the bull channel will be quite bearish for the European currency.
http://www.lemetropolecafe.com/img20..._m44096272.png

Euro-dollar, last = $1.1961 (www.investing.com)
DJIA
http://www.lemetropolecafe.com/img20..._m205446c1.png

DJIA, last = 24262.51 (money.cnn.com)

The post 2009 bull market held mostly to the steeper channel JKL and at the end broke above the shallower channel AD (24 793), but failed to hold the break higher after making the new all time high. Wit line X having acted as close support during the 2008/9 bear market, it is possible that channel YZ, with line Y (23 344) acting as support, could become a new bear channel.

Since the reversal off the all-time high, the DJIA has had a very volatile period that is mostly confined to the pennant YF (24 581). Pennants are traditionally viewed as continuation patterns, i.e. when the pattern ends, typically with a break at the end of the fifth leg in the pattern, the price resumes the original trend. Here that would imply a resumption of the bull trend on a break above line F and also channel YZ.

The DLIA has already concluded the fifth leg when it recently reversed off line F and is now on leg 6. A touch on line Y will end leg 6, which could warn of a break lower.

On the rather rare occasions when a pennant, or a triangle, breaks in the opposite direction to the original trend, the resulting move more often than not is steep and sustained.

Gold PM fix - Dollars
http://www.lemetropolecafe.com/img20..._m77468f08.png

Gold price – London PM fix, last = $1309,40 (www.kitco.com )

Two weeks ago, when the price of gold dipped below the support of line L ($1335), it was a warning of further weakness which as many expected happened last week. Weakness at the end of the month is routine and if history repeats again, we should see the price improve from now on – hopefully to recover into bull channel KL.
Euro-gold PM fix
http://www.lemetropolecafe.com/img20..._m48879b33.png

Euro gold price – PM fix in Euro, last = €1097.8 (www.kitco.com)
After managing during recent weakness to mostly hold to the support of channel ST (€1081), the euro price of gold is now struggling to hold above to rising support of channel KL (€1099), but not fully making. The stronger dollar last week caused the euro to extend the break out of its tight sideways range of recent weeks and this surely helped the euro price of gold. Unfortunately, last week also saw the dollar price of gold near recent lows and that prevented a recovery back into channel KL.

While the dollar seems to have further bullish potential, it is the dollar price of gold that will have to perform better in order to effect a break back into the bull channel for the euro price of gold. Here, too, we have to sit and wait to find out whether the markets will oblige by returning the euro price of gold to a bullish bias.

Silver Daily London Fix
As discussed last week, the London silver fix has been worming itself into a narrow space between lines C ($16.90) and L ($16.573), only to break lower as month end blues too over. At least the decline did not extend much lower and managed to hold above $16, with a bit of a recovery even before the end of last week.

That recovery now has to speed up for the price to break back above lines L and C in order to make it above the $17 level again. The SGE silver premium has recently broken above $1.40, but is now back at $1.22 with silver near $16.50 again.

http://www.lemetropolecafe.com/img20...l_546573ae.png

Silver daily London fix, last = $16.42 (www.kitco.com)

U.S. 10-year Treasury Note
http://www.lemetropolecafe.com/img20..._m2b6474f9.pngU.S. 10-year Treasury note, last = 2.951% (www.investing.com )
After the second break higher above line C (2.962%), the yield on the 10-year has managed to firm a little and by late last week broke marginally below line C and also sideways bear channel KL (2.952). The yield nevertheless is finding it difficult to get away from 3% and one gets the impression that much efforts is being spent to retain the yield below that psychological number.

With expectations of further increases in official rates, this would appear to be a battle that is destined to be lost at some point in time. Perhaps the battle to keep the yield below 3% is the equivalent of the military rear guard defensive action to enable the bulk of the main army to escape capture or worse. It would not surprise to find that the open interest in the global market for financial derivatives recently has been increasing at a substantial rate.
West Texas Intermediate crude. Daily close
http://www.lemetropolecafe.com/img20...l_m5d45d4c.png

WTI crude – Daily close, last = $69.72 (www.investing.com )

After creeping higher steadily for quite a while, the price of crude finally reached the resistance of line W ($69.04) two weeks ago and, after first settling quite close to the resistance, managed last week to close the week above line W. A definite break clear above line W will be a bullish signal, but in due course a break higher has to be confirmed with subsequent breaks at lines Q ($72.81) and B ($73.23), with more potential to move even higher.

Should that happen, a higher cost of energy would stifle the economy to at least a degree, which will not please the Trump administration. In that case, either OPEC or the fracking entrepreneurs can expect some nasty tweets. Or both.

2018 daan joubert, Rights Reserved chartsym (at) gmail(dot)com

https://www.zerohedge.com/news/2018-...ops+to+zero%29

Authored by Jonathan Cook,
This is the moment when a newspaper claiming to uphold that most essential function in a liberal democracy – acting as a watchdog on power – formally abandons the task. This is the moment when it positively embraces the role of serving as a mouthpiece for the government. The tell is in one small word in a headline on today’s Guardian’s front page: “Revealed”.


When I trained as a journalist, we reserved a “Revealed” or an “Exposed” for those special occasions when we were able to bring to the reader information those in power did not want known. These were the rare moments when as journalists we could hold our heads high and claim to be monitoring the centres of power, to be fulfilling our sacred duty as the fourth estate.


But today’s Guardian’s “exclusive” story “Revealed: UK’s push to strengthen anti-Russia alliance” is doing none of this. Nothing the powerful would want hidden from us is being “revealed”. No one had to seek out classified documents or speak to a whistleblower to bring us this “revelation”. Everyone in this story – the journalist Patrick Wintour, an anonymous “Whitehall official”, and the named politicians and think-tank wonks – is safely in the same self-congratulatory club, promoting a barely veiled government policy: to renew the Cold War against Russia.
https://www.zerohedge.com/sites/defa...ges/russia.png


It is no accident that the government chose the Guardian as the place to publish this “exclusive” press release. That single word “Revealed” in the headline serves two functions that reverse the very rationale for liberal, watchdog-style journalism.

First, it is designed to disorientate the reader in Orwellian – or maybe Lewis Caroll – fashion, inverting the world of reality. The reader is primed for a disclosure, a secret, and then is spoon-fed familiar government propaganda: that the tentacles of a Russian octopus are everywhere, that the Reds are again under our beds – or at least, poisoning our door handles.

British diplomats plan to use four major summits this year – the G7, the G20, Nato and the European Union – to try to deepen the alliance against Russia hastily built by the Foreign Office after the poisoning of the former Russian double agent Sergei Skripal in Salisbury in March.

This – and thousands of similar examples we are exposed to every day in the discourse of our politicians and media – is the way our defences are gradually lowered, our critical thinking weakened, in ways that assist those in power to launch their assault on democratic norms. Through such journalistic fraud, liberal media like the Guardian and BBC – because they claim to be watchdogs on power, to defend the interests of the ruled, not the rulers – serve a vital role in preparing the ground for the coming changes that will restrict dissent, tighten controls on social media, impose harsher laws.

The threat is set out repeatedly in the Guardian’s framing of the story: there is a self-evident need for “a more comprehensive approach to Russian disinformation”; Moscow is determined “systematically to divide western electorates and sow doubt”; “the west finds itself arguing with Russia not just about ideology, or interests, but Moscow’s simple denial, or questioning, of what the western governments perceive as unchallengeable facts.”

Tom Tugendhat, son a High Court judge, a former army officer who was honoured with an MBE by the Queen in his thirties, and was appointed chair of the Commons’ important foreign affairs select committee after two years in parliament, sets out the thinking of the British establishment – and hints at the likely solutions. He tells the Guardian:

Putin is waging an information war designed to turn our strongest asset – freedom of speech – against us. Russia is trying to fix us through deception.
Second, there is a remedy for the disorientation created by that small word “Revealed”. It subtly forces the reader to submit to the inversion.

For the reasons set out above, a rational response to this front-page story is to doubt that Wintour, his editors, and the Guardian newspaper itself are quite as liberal as they claim to be, that they take seriously the task of holding power to account. It is to abandon the consoling assumption that we, the 99 per cent, have our own army – those journalists in the bastions of liberal media like the Guardian and the BBC – there to protect us. It is to realise that we are utterly alone against the might of the corporate world. That is a truly disturbing, terrifying even, conclusion.


But that sense of abandonment and dread can be overcome. The world can be set to rights again – and it requires only one small leap of faith. If Russian president Vladimir Putin truly is an evil mastermind, if Russia is an octopus with tentacles reaching out to every corner of the globe, if there are Russian agents hiding in the ethers ready to deceive you every time you open your laptop, and Russian cells preparing to fix your elections so that the Muscovian candidate (Donald Trump, Jeremy Corbyn?) wins, then the use of that “Revealed” is not only justified but obligatory. The Guardian isn’t spouting British and US government propaganda, it is holding to account the supremely powerful and malevolent Russian state.


Once you have stepped through this looking glass, once you have accepted that you are living in Oceania and in desperate need of protection from Eurasia, or is it Eastasia?, then the Guardian is acting as a vital watchdog – because the enemy is within. Our foe is not those who rule us, those who have all the wealth, those who store their assets offshore so they don’t have to pay taxes, those who ignore devastating climate breakdown because reforms would be bad for business. No, the real enemy are the sceptics, the social media “warriors”, the political activists, even the leader of the British Labour party. They may sound and look harmless, but they are not who or what they seem. There are evil forces standing behind them.


In this inverse world, the coming draconian changes are not a loss but a gain. You are not losing the rights you enjoy now, or rights you might need in the future when things get even more repressive. The restrictions are pre-emptive, there to protect you before Putin and his bots have not only taken over cyberspace but have entered your living space. Like the aggressive wars of “humanitarian intervention” the west is waging across the oil-rich areas of the Middle East, the cruelty is actually kindness. Those who object, those who demur, do so only because they are in the financial or ideological grip of the mastermind Putin.

This is the moment when war becomes peace, freedom becomes slavery, ignorance becomes strength.


Benjaminis AWARE

IMPORTANT REPORT - PLEASE READ - OUTSIDE THE BOX REPORT

https://www.zerohedge.com/news/2018-...ops+to+zero%29


Benjaminis

Good Evening Forex Traders

I am approaching $70,000 US Dollars after trading this Demo Account since February 27, 2018 , 69 days ago. So 10 weeks tomorrow. Is it possible that no person can post to my thread or why does no person post.

My next Goal is $75,000 US Dollars which will increase my FXCM UK $50,000 US Funds Demo Trading Account by 50% !!!

I should reach that after 75 days or 1% a day Return on Investment. STAY TUNED !!!


Benjaminis

Email of April 1, 2003:

Yesterday to my great sadness and I am sure to the
American soldiers who accidentally killed those women and children by
shooting at them when they didn't stop. The American soldiers thought they
were another wave of suicide Iraq combatants.

Sadly their deaths and all those who have needlessly
died for no good reason other than the immoral and bankrupt policies of
the US Government. Tony Blair and George Walker Bush bear the
responsibilities of their actions. G-D will judge them as the Pope
stated before this tragic and unnecessary war started.

All of us reading this email in our respective lots in
life, have a responsibility to act as best we can to stop the
killing of innocent women, men and children. Let us not forget that the
brave and loyal soldiers of the United States Of America and Great
Britain are also victims of this historic tragedy. They just are doing
their duty.

America for the first time in their glorious 227 years
as a great empire since they were created by the founding fathers in
1776, has now attacked another nation without justification and
pre-emptively. The first time in their long history that they have done
so.

For Canadians reading this we can discuss some issues
in public through the Canadian House Of Commons. For me I would like to
see the NDP Party of Canada ask the Canadian Government as represented
by the Liberal Party Of Canada and Prime Minister Jean Chretien,
answer a question about the chemical agent, VX, one of Iraq's weapons of
mass destruction.

From the research that I have read in the attached
files, as Dr Glen Rangwala has so clearly pointed out.You can refer to
VX for yourself by clicking on it in the Index of Dr Glen Rangwala's
research file attached in the forwarded email with hot links to the material,
I conclude that whatever VX that the Iraq Government had was produced
prior to 1991,with the assistance of the US and UK Government. The
VX produced was estimated to be about 4 tons maximum but it could have
been much less than that. Iraq never publicly disclosed how much of
the VX was used against Iran during their conflict for political
reasons. The accepted quantity of VX that may be left at present time is 1.5
tons as is often mentioned by the US and UK Governments.
In the research of Dr Glen Rangwala, he states based
on the information contained in the public records of UNSCOM, IAEA and
IISS that VX degrades. So in all likelihood even if Iraq still holds some VX, since
the best scientific minds say that after 12 years at the most, any VX
left would have lost it's potency. It is quite clear to me that since
Iraq produced it's VX prior to the first Gulf war in 1991, that 12
years and more have passed since the Iran-Iraq war, that
when the American and British Government talk to the world about the great
danger Iraq poses to the world with it's 1.5 tons of unaccounted for, VX
that they are not being truthful. Surely the CIA most also know this.

For Americans reading this, I would like to see someone ask US Senator
Jay Rockerfellow of West Virginia,to ask the FBI to also ask President
Bush and his administration, are they aware of the VX potency after 12
years issue. Since Senator Rockerfellow has already asked the FBI to
investigate why President George Walker Bush used information concerning
Iraq's nuclear capability that was obtained from Nigeria. Fortunately
the world learned through the UN inspectors report of March 7, 2003
that the information used by President Bush in his State Of The Union speech
of January 2003 was not valid in that the documents
used as background was forged. George Tenet of the CIA decided that these
documents were questionable, however President Bush still choose to
use this misinformation in his State Of The Union Address.

Maybe Helen Thomas, a great and courageous US citizen and White House
reporter might like to ask Ari Fleisher during the daily press briefing
at the White House how long does VX gas retain it's potency ?

I won't feel responsible for the next child murdered in Iraq because I
know that since March 7, 2003 at 11:52 PM when I started this research
and information project with my two good American
writer friends, that I have given my all to try to prevent the war.

Unfortunately I have failed in that task. However I am not willing to stand idly
by and watch more Iraq children and their mothers and fathers including American and
British soldiers lose their life for reasons that are only truly known
to the American and British Government of President George Walker Bush
and Prime Minister Tony Blair.

May G-D bless us all and give us added strength and
wisdom to find a way to stop this unjust and unauthorized war.

The UN failed to stop the war.

Will we also fail ? I hope not because if we do, their
will be another victim. The great nation of The United States Of
America, a friend to Canada and Canadians as Canada has been and still is
to America.

America is now in grave danger of losing their position in the
world, as holder of the world's only reserve currency, the US dollar.

The Euro is starting to take over that position as nations such as
Iraq and North Korea already use the Euro as their reserve currency.
Iran is thinking about converting to the Euro from the US dollar.

Russia in the last six months has reduced their holding of American dollars
from 70% to 50% , replacing the 20% with the Euro and putting 10% of
their reserves in gold. It should be noted that since 1971 when President Nixon untied
the US dollar to gold, for the first time in American history.

The Clinton administration had a strong US dollar policy that was directly responsible for the stock market bubble
through the assistance of the Federal Reserve led by Alan Greenspan. When President Bush took
power in January 2001, American interest rates were 6%.

They now are 1.25%. The Fed is in a jam now. If they raise interest rates now, the massive American housing debt bubble
crashes. If he lowers the rates it will exacerbate the decline of the US dollar. If the US dollar falls to 85 cents to the Euro as many
world economists have predicted, inflation will reign again as never seen before. Since gold is the only thermometer of inflation, since 1971
America has had no instrument to alert American's to the reality of inflation. If the great debt bubble of the American Government and it's
citizens collapses then there is deflation. So the US Government as stated by Fed Governor
Bernake during a November 2002 speech, "The US Government has a secret weapon, it is called a printing press" That is the
real reason that the US dollar has declined from $1.08 to the Euro in December 2000 to the point where today positions are reversed and it is now
$1.08 to the US dollar in favor of the Euro. The US dollar is in great danger of going the way of the German mark during their war when they
hyper inflated away their mark currency. The US Government needs the help of the world each
day to the tune of 1.5 Billion dollars each day to support their dollar.

If the world decides to start switching over to the Euro as it seems to be doing now, the US dollar will collapse and the
unfortunate end of the United States as a world power will begin to happen.
You may ask yourself why am I telling you all this ?

I will now answer you. The real reason for this Iraq war in my honest
opinion is not Iraq oil per say. However by getting control of Iraq's oil wells, the 2nd
largest oil reserves in the world, the US Government will be able to
lower the price of oil, reduce Opec's influence on higher oil prices. Allow the US and Japan to have cheaper oil for their
economies, Russia as a oil exporter, has a cost of oil to produce of about $18.00 dollars
a barrel. Cheap oil is bad for their economy. Also by lowering the price of oil to levels of $12.00 or so, the Opec nations
receive less revenue due to the effecttive breaking of the Opec Cartel. In conclusion this war is not about oil. It is about the dismantling of
Opec and thus lower oil costs for the American economy. It is about who controls the
world's reserve currency, The US or Europe.

It is about PNAC as stated by members of the US Government. This is public information. People such as Vice President Dick Cheney and Secretary Of State,

Donald Rumsfeld and Mr Pearle have convinced President Bush of the correctness of the PNAC
"Pact For A New American Century"


History and G-D will be the judge of our actions.
Sincerely yours

For the central bank, the gold stock is the international payment reserve for the whole country -- for the state authorities, private companies and corporations, as well as individual citizens. Like any reserve, it needs to be conserved, in terms of both actual physical form and its value. To a lesser extent, we need to be concerned about its liquidity, or more precisely, market price developments.

The central bank’s duties in managing gold reserves may therefore not seem particularly onerous to a commercial trader, who has to close dozens of transactions daily to achieve results by the end of the day.

In this there is a grain of truth. The central bank’s specialists do not have to follow real-time price movements every day and every minute, or react instantaneously to every little twist and turn in the market. We are concerned with other, less immediate problems regarding gold. In a figurative sense the central bank’s attitude can be compared with that to a giraffe. I have in mind an image of an animal that suggests certain ambiguity, at least in the Russian language.

On the one hand, when Russians say that someone is reacting like a giraffe, they are highlighting that person’s slow reaction. It even suggests a degree of slow-wittedness. On the other hand, the evident magnificence of the animal commands respect. "The giraffe is tall, and he sees all" -- the words of the Russian bard Vladimir Vysotskii are well known throughout Russia.

With this allegory in mind, I would like to mention the issues concerning gold which fall within the "giraffe category" -- or more formally, present concerns of a central bank.

These are several: the volume of actual precious metal stock, both in absolute and relative terms (essentially, the optimum component of the metal in total monetary reserves); methods of controlling the stock; ensuring both security and availability for liquidity purposes and at the same time optimizing income-earning potential. All these issues reflect very practical concerns.

It may seem strange but all bear direct relation to a problem that is often considered purely theoretical: What is gold currently, and what will it be tomorrow? Real money with intrinsic value? A raw material? A cash commodity that has lost some of its monetary functions? If so, what are the prospects -- complete loss of gold’s role or a restoration of lost functions, in one form or another?

There is a wide circle of leading financiers who believe that pondering on these themes is a fruitless academic exercise. They are convinced that the heads of the world’s richest countries, who once agreed to abolish exchange of national currencies for gold at a fixed rate, have in fact demonetized gold altogether. In their eyes, the existence of official gold reserves is simply a remnant of the past, a financial monument to the gold and gold-currency standards, which will ultimately be absorbed by the global gold market. This market has properly organized infrastructure, products, rules, and procedures, and central banks are merely one of its clientele. For them, this is the only reality to be reckoned with.

Is this a true picture for gold in the modern world?

Many people do not think like this; the reality is more complicated. The contemporary gold market has emerged as a byproduct of a series of agreements between governments, initiated by the United States and supported by the other major powers, in whose possession the bulk of all gold ever extracted lies.

These agreements (the most important of which were the Jamaica Agreements of 1976) created ideal conditions for stimulating international trade by means of expanding credit facilities in national currencies. The obligations on debtor countries to pay off the trade deficits with gold (upon demand of the creditor countries) severely limited the exporter countries’ opportunities for trade expansion. The importer countries were made to live within their means, predicated by their gold reserves. Gold was therefore considered by a number of economists and policy makers as an instrument guaranteeing order and justice in international economic relations, while others remained convinced that it hindered international economic progress and development.

The latter, as you know, secured the upper hand.

That brief look back into the past was necessary to make the following conclusion: The present state of the gold market and its future cannot be analyzed in isolation from the problems of the international monetary system.

Some people may question this conclusion because of the incompatibility of the present volumes in the respective gold and foreign currency markets. I would suggest that the volumes do not matter for this particular purpose. The modern monetary system, although undoubtedly robust and long-standing, in fact has a number of flaws and weaknesses. These, like the birth of the new, can cause health problems to the participants of the system.

This disconcerting phenomenon occurs because, by taking gold out of international payments turnover, people are undermining payment discipline. The discipline I have in mind is at a macro-level; that is, the discipline of rich industrial countries whose convertible currencies have taken the role of an international trade medium by virtue of their economic strength and have been accepted by the world community as reserve units of payment.

Although there are several reserve currencies, the blatant lack of discipline is demonstrated by the U.S. dollar. I am leaving aside the main aspects of this problem, such as the social and economic injustice of a world order that allows the richest country in the world to live in debt, undermining the vital interests of other countries and peoples. What is important for us today is another aspect, which is connected with the responsibility of the state issuing the reserve currency and for the international community preserving that currency’s buying power.

Given the actual behavior of the dollar on the foreign exchange markets, the problem could be more accurately termed the irresponsibility of the U.S. government in relation to the market valuation of its currency in international circulation.

Today the net debt owed by the United States to the outside world (the so-called "international investment position") is in the region of $3 trillion. To understand the scale of this figure, let me remind you that it exceeds the total official currency reserves in all the world’s countries (including the United States itself). According to the International Monetary Fund statistics at last year-end, the world pool of foreign currency reserves totaled Special Drawing Rights 2,013 billion, or about $2,800 billion. The volume of cash only ("greenback" banknotes) available outside the United States totals about $400 billion.

The world has come to a paradoxical situation in which the creditor countries are more concerned with the fate of the dollar than the U.S. authorities themselves are.
Thus, the evolution of the U.S. dollar's reserve role in recent years has given ground to some quite pessimistic forecasts, based on rational economic theory. No wonder that the number of people who have held assets in dollars and now wish to diversify them partly into gold -- the traditional shelter from inflation and political adversity -- is steadily growing.

The statistical correlation between the market prices of dollar and gold is obvious. For the problem we discuss today it means specifically that gold, in addition to its unique physical and chemical properties used in industry, has retained its particular monetary attractiveness for cautious financial investors, and its market price is still heavily influenced by the state of the international monetary system.

This dualism in gold price formation distinguishes it from other commodities and makes the movements in the price sometimes so enigmatic that market analysts need to invent fantastic intrigues to explain price dynamics. Many have heard of the group of economists who came together in the society known as the Gold Anti-Trust Action Committee and started a number of lawsuits against the U.S. government, accusing it of organizing an anti-gold conspiracy. They believe that with the assistance of a number of major financial institutions (they mention in particular the Bank for International Settlements, J.P. Morgan Chase, Citigroup, Deutsche Bank, and others), some senior officials have been manipulating the market since 1994. As a result, the price dropped below $300 an ounce at a time when it should, if it had kept pace with inflation, have reached $740-760.

I prefer not to comment on this information but dare assume that the specific facts included in the lawsuits might have given ground to suspicion that the real forces acting on the gold market are far from those of classic textbooks that explain to students how prices are born in a free market.
So even those who stick to traditional economic theory in analyzing and projecting gold market developments should admit that various factors that influence gold price interact between themselves in a constantly changing manner, sometimes in a very odd way. Here, as in nuclear physics, some factors briefly disappear or cease to act, and in their place comes a new dominant market factor. This causes confusion for the forecasters in their efforts to build a logically balanced model for the metal price movements.

So I do not even dare shed light on the methodology of gold price forecasting, but would like to risk outlining basic factors, which are permanently (and I stress permanently) acting on the market. There are four of them -- two relating to the raw material properties of gold and two to its monetary qualities.

As an economist educated in the Marxist school, I believe that the base for gold prices is rooted in the sphere of the real economy. Like any mineral raw material, mined gold has its intrinsic value. This value fluctuates quite significantly depending on the location, time, and technology of extraction. The market averages out the individual expenses, optimizing them at a level that is acceptable to the industry that uses the metal in its production. The absolute values in monetary terms for this factor fluctuate, although they are the least mobile element of the price.

The production cost category has its own "floor and ceiling." The technological particularities of gold extraction determine the minimum price level at which production is economically feasible in the industry as a whole. We think that the worldwide level is currently about $200 per ounce. This is the minimum price limit. With lower prices the industry will plunge into a zone of catastrophe. So the average costs of gold production in volumes sufficient to satisfy expected market demand (over the past 15 years this has averaged 2,500 tonnes with the upward trend) are the first factor.

The second factor is the real volumes of demand generated by the consuming industries for physical gold. The behavior of industrialists (jewellery is playing the most important role) is mainly caused by factors connected with an economic activity cycle. During the 1990s there was a significant but uneven rise of demand for jewellery: from 2,200 tonnes in 1990 to 3,200 tonnes by the end of the decade, with a peak of 3,350 tonnes in 1997. The first three years of the new millennium saw a decline of demand from jewelers; the volume of metal purchased by the industry dropped down to 2,550 tonnes in 2003. The fundamental correlation between gold prices and the volume of demand from industry is normally linear in character. This correlation cannot be the sole cause behind the dramatic falls in prices, but can show a vector for price movement, which can be enhanced or indeed maximized through the efforts of speculators.

However, even when speculative activity is relatively quiet, this vector is not always clear. There are "anti-phases" in economic activity in various parts of the world, and on top of these, various national traditions in demand for the metal.

A recent example of this occurred at the turn of the century. After prices reached a 20-year low of $252 in May 1999, demand for physical metal increased and pushed the price temporarily to a new "equilibrium level" of $300 by the end of the year. The concept of "equilibrium" reflects the situation on the market when its participants believe that they are aware of a balance between supply and demand. It brings a measure of price stability to the market.

Such a situation appeared to take place following the central banks' Washington Agreement on Gold.

However, as soon as demand started to shrink again and a danger of excess supply arose, prices went down. This was the beginning of a two-year market stagnation, with the price waving within a range of $270-290. It was not sufficient for the metal producers, but they were unable to control the situation. It was investors who made the weather on the market.

Now the time has come to admit that investment demand was, and still is, the main driving force behind price fluctuations on the gold market. The changing character of demand heavily depends on what is going on in the international foreign currency and financial markets.

The investors pay continuous attention first to the dollar rate of exchange and second to the level of interest rates for financial assets. The volatility of these indicators directly influences the investors' interest in gold. Since this interest is realized not through operations with physical metal but through deals with gold derivatives on stock-exchange and non-stock-exchange markets (where gold is mentioned only as a base asset), the volume of these deals can exceed the volume of trade in physical metal dozens of times. Last year turnover with gold derivatives was about 4,000 million ounces (or 129,000 tonnes), but physical metal actually sold totaled 120 million ounces or some 3,860 tonnes. As it is said: Feel the difference!

It is true that the markets for derivatives linked to other raw materials also usually exceed the operations with base assets. The difference in volumes are incomparably less (five to 10 times). At the same time the markets for derivatives with foreign currencies and prime securities as base assets are developing every bit as rapidly as the gold derivatives.

What can we infer from that?

One conclusion, at least, is clear: Gold is predominantly a financial asset, not merely a precious metal.

In this capacity gold is competing with other financial assets on a variety of parameters. Being inferior in terms of returns, it is far more reliable than anything else for protection against war-related, political, financial, economic, and credit risks, and provides a high level of liquidity and lower management costs. However, since the rate of return is the main measure of success for financial institutions under normal conditions, investment-related decisions depend directly on the stability of the international monetary system, strength (or weakness) of the dollar, and the level of interest rates on financial markets.

This dependence is not linear in nature. Correlation factors change from time to time because decisions are taken by investors individually on the basis of their market expectations. As a result, investors' reaction may race ahead or lag behind developments on the forex and financial markets. If we examine gold price movements over the last 10-12 years, it becomes clear that during the first half of the 1990s the dominant factor was the weak dollar and the market was still living in hope of a recurrence of the 1980s "gold fever." From 1997 onward, as the dollar strengthened, these hopes were dispelled, investors turned around, and price fell to the level of support on the physical market. It seems to us that the depth and duration of this depressed phase of gold prices were to a considerable extent caused by the wide use of gold derivatives by investors. Insofar as these instruments are intended for protecting banks and their customers against unwanted and unexpected changes in price dynamics, they can provoke massive closing of the existing position at a specific moment. This process may take the form of a chain reaction. As a result, the price falls below the level dictated by the sensible interests of investors.

I would also like to note that recently the central banks have been playing a significant role in the gold market. Low interest rates in the money markets and revaluation of gold reserves in line with lower market prices have exacerbated the problem of the financial efficiency of gold stock management. To earn some income on the stock and compensate for "book losses" caused by its revaluation, a number of central banks have started to place a part of their reserves into deposits with commercial institutions -- leasing operations.

Data available to me suggest that these banks deposited about 1,000 tonnes in 1991, and 10 years later the volume of the deposits reached 4,800 tonnes. Naturally, the central banks' activity increased market liquidity and thus also put downward pressure on the gold price. The influence of these operations, however, must not be exaggerated. It is even incomparable with the pressure that was exerted on the market of gold derivatives.

The same conclusion can be made about the central banks' sale of some of their gold reserves. All market participants have been paying particular attention to these operations since September 1999, when 15 European central banks agreed in Washington on the orderly sale of 2,000 tonnes of gold from their official reserves over the next five years.

One month ago the agreement was extended for a further five years (to September 2009), setting the total sale limit at 2,500 tonnes or 500 tonnes per year. One may wonder if these agreements and sales indirectly indicate that these countries have embarked on a long-term gold demonetization program and if their statement that "gold will remain an important element of global monetary reserves" is nothing but a sort of soothing therapy for the market. Such opinions exist, although they do not prevail.

I think that the agreements do not give ground for this view.

First, the participating countries own between them 12,300 tonnes of gold. The share of the metal in their official monetary reserves has reached 36 percent. This is significantly higher than the average for all the world's countries (10-12 percent). So the sales can be seen as optimization of the reserves structure.

Secondly, the countries making the sales (France, Germany, and some others) are enduring budget deficits exceeding the limits laid down by the Maastricht Treaty. Hence, this may explain the temptation to solve their budgetary problems without reducing expenditure or raising taxes.

The current decisions by the monetary authorities in European countries could therefore be considered sensible, like the actions of certain Asiatic states that in recent years increased the gold portion within their monetary reserves. The internal imperfections of the international monetary system (which I spoke about earlier) have already led to a number of regional financial crises and still carry the danger of larger upheavals. Under these conditions, the growing interest of investors in real assets, gold in particular, is more than justified.

And on that optimistic note, I would like to end my presentation.
-END-

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1. BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 3,957 Posts | Online Now

https://www.finviz.com/futures.ashx

Comments from Benjaminis: We can see by the above Finviz resource that we have RISK OFF at this moment. Look at the Futures on the Dow 30.

Gold is UP and the US Dollar index is down.

Here is the resource on Forex only.

https://www.finviz.com/forex.ashx

And MOST IMPORTANT as regards to the MONEY FLOW is the Bond Yields.
Have a look and please post your questions. Thank You.


Benjaminis

https://www.finviz.com/futures_charts.ashx?t=BONDS&p=d1

Here is the 5 Minute Chart on the 10 Year US Treasury Bond.

https://www.finviz.com/futures_charts.ashx?t=ZN&p=m5

You can see as the Bond moves up in value which MEANS that MONEY IS FLOWING into the BOND and "OUT OF THE STOCK MARKET" as the 10 Year Yield goes down inverse to the price of the bond.

https://www.birchgold.com/news/stock...30bf0-75642497