Ian McAvity slides

Zermatt, Jan-07

The Matterhorn from Chez Vrony balcony, Table 83 – Zermatt – 31 Years…

Ian McAvity’s

DELIBERATIONS On World Markets Technical analysis & other perspectives on the major world markets for stocks /bonds /currencies /precious metals

Ian McAvity Toronto, Canada

imcavity@yahoo.com SAMT Geneve / Zurich February 3 & 4, 2014

Confused?

Confused as a herd of goats on Astroturf ?

----US Economy, Debt & Stock Market Dollar & Fiat Currencies Gold, Miners & Silver

Kicking the can down the road

"What happens when can-kickers run out of road?"

Will 2014 be “the” year ?

A Chartist's View of Secular Trends & Cycles Big picture perspective

Raise the ceiling – house of cards?

Iranian Deal? More “Arab Spring” Fiascos?

Sunni / Shia challenges

Syria: Iran & Russia vs. Saudi & ??

Under the bus of “Appeasement”?

Israel, Saudi, Kuwait, Qatar, UAE

New risks for Turkey?

(US Track Record in Iraq, Egypt, Libya, Afghanistan, Pakistan ?)

The Presidential Vision thing…

Syria September

“The Red Line in the sand…”

The Washington Times on Sep 15th:

“Ex-KGB Officer talks Nobel Peace Prize Winner out of launching war.”

Washington hypocrisy in Domestic & Foreign Policy

Pearl Harbor

The Zimbabwe Tragedy: No Oil & No threat to Israel

TIME covers – Sept 16, 2013

Nobel Peace Prize in the offing ?

Putin or Snowden ?

Gold vs. S&P from 2003

S&P 500 (red) & Comex Gold (blue) 3.700

Weekly Averages rebased to Dec 31, 2002

GOLD

Logs of price for visual comparability 3.600

3.500 Gold bottoming

3.400

S&P Topping May / Jan

3.300 $1040 Barron's 3.200

3.100

3.000

2.900

Barron's Insight - 4-Oct-09

14 Dec-

13 Dec-

12 Dec-

11 Dec-

10 Dec-

09 Dec-

08 Dec-

07 Dec-

06 Dec-

05 Dec-

04 Dec-

03 Dec-

02

31-Jan-14

Did "STILL" exclude the prior 7

2.800

Dec-

S&P 500

"Gold Is Still a Lousy Investment!"

My Biases?

4 Public Companies

CEF – Central Fund of Canada 1,694,644 Oz Au 76,964,103 Oz Ag ($3.7 bil Mkt Cap - 5% NAV Discount!)

-------------

GTU - Central Gold-Trust 2.4 mil oz Au 80 mil oz Ag ~$5 bil Mkt Cap in Au/Ag Related

704,652 Oz Au ($881 mil Mkt Cap - 6% NAV Discount) -------------

SBT-T Units - Silver Bullion Trust 3,143,830 Oz Ag ($65 mil Mkt Cap - 3% NAV Discount) -----------------------------

DCNPF - Duncan Park (Exploration) ($1 mil Mkt Cap)

3.5000

S&P Composite Secular Trends 1900 - 2013

SPX Secular Uptrends NOT “Normal” 3.0000

2.5000

Blue Dots are only 38% of 112 Years shown

1982 / 2000

Secular Uptrends Average BEAR Cycle

-20% over 7 Months (1949-1966 & 1982-2000) 1949 / 1966

2.0000

1921 / 1929 1.5000

"Other" Secular periods Average BEAR Cycle -32% over 18 Months (1900/21, 1966/82 & 2000/16?)

(Excluding 1929/42)

1.0000 Logs of price 0.5000

20 Jan-

10 Jan-

00 Jan-

90 Jan-

80 Jan-

70 Jan-

60 Jan-

50 Jan-

40 Jan-

30 Jan-

20 Jan-

10 Jan-

Jan-

00

27-Jan-14

2.500

7 -0

3.000

S&P Composite "Other" Secular Phases

ct O

S&P Secular Phases Average BEAR Cycle

3.500

-20% over 7 Months (1949-1966 & 1982-2000)

62% of the time 1900 / 2013

2.000

1.500

Average BEAR Cycle

-32% over 18 Months

1.000

(Excluding 1929/32) 0.500 Logs of price

27-Jan-14

20 Jan-

10 Jan-

00 Jan-

90 Jan-

80 Jan-

70 Jan-

60 Jan-

50 Jan-

40 Jan-

30 Jan-

20 Jan-

10 Jan-

Jan-

00

0.000

Gold vs. Dow from 1885 Jan'80 1.0x

Aug'96 1.0x

1 1.5x Oz

Jul'32 2.0x Apr'42 2.8x

Dec-74 3.2x 3x Oz

9-Sep-11 5.9x 7.1x Mar-09

Median Ratio 1968-2012 = 9.5x 1885-2012 = 5.0x

10

18.3x Sep'29

Gold Vs. DJIA from 1885

27.7x Feb'66 43.7x Sep'99

31-Jan-14 12.6 Oz DJ 15,700 Gold $1,251

Jun21

Jun13

Jun05

Jun97

Jun89

Jun81

Jun73

May -65

May -57

May -49

May -41

May -33

May -25

May -17

09 Apr-

Apr-

01

100 From Jan 1885 Weekly

Gold vs DowRatio recent Dow/Gold

100

(Monthly Average Values with 24mo MA)

G B

Aug -7

1

d ol

Jan-66 28x

Aug-99 42.4x

ld Go

10

B D ow

Aug-76 8.9x

ea t

s

Dow Gold Ratio Scale

G ol

ow D

d

ts ea Dec-13 13.4x

ats Be

Sep-11 6.2x

w

Do Dec-74 3.3x

??

Jan20

Jan15

Jan10

Jan05

Jan00

Jan95

Jan90

Jan80

Jan75

Jan70

Jan65

Jan60

Jan55

Jan50

Jan85

Jan-80 1.28x

1

DJI Gold Ratio daily from 1997

100

44.64 Oz 25 Aug 99 40 Oz 30 Oz 21.0 Oz 17-Jul-07 20 Oz 21.1 Oz 4-Feb-03 16.0 Oz 12-May-06

10

7.03 Oz 6-Mar-09

6 Oz

5.75 Oz 22-Aug-11

The Equity Bubble Market

Daily DJI / Gold Ratio with 200 day MA 1997 - 2013

The Market s Crash Oct'07 to

31-Jan-14 12.7 oz

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

Nov-

1

Committee to Save the World

Creators of the TBTF Mantra LTCM Bailout 1998

Glass-Steagle Act Repealed Nov 1999 Commodity Reform Act 2003

NYSE Margin Debt

S&P 500 & Margin Debt (right scale)

3.700

$1,000,00 Jul-07 $381 bil

Dec-13 $444 bil

Mar-00

Margin Debt 3.400

2.800

g-9

8

Feb-09

Oct-02

Logs of S&P Price

3.100

Au

$100,000

Sep-87

Oct-98 LTCM Bailout

Jul-81

2.500 Jan-73

$10,000

Dec-13 Debt $444 bil

S&P 500

Jul-68 2.200

UP $104 Bil Sep/Dec 30% YoY

Aug-82

1.900

(31-Jan-14)

Oct-74

8

2

6

0

4

8

2

6

0

4

8

2

6

0

4

8

Dec6

Dec6

Dec7

Dec7

Dec7

Dec8

Dec8

Dec9

Dec9

Dec9

Dec0

Dec0

Dec1

Dec1

Dec1

$1,000

Dec5

1.600

Margin Debt - Coppock Peaks

3.500

SPX & Coppock Curves SPX & Margin Debt

Logs of S&P 500

3.000

300%

S&P 500 250%

2.500

200%

Margin Debt Coppock (red) 2.000

150%

1.500

100%

SPX Coppock (blue) 28-Jan-14

16 Dec-

12 Dec-

08 Dec-

04 Dec-

00 Dec-

96 Dec-

92 Dec-

88 Dec-

84 Dec-

80 Dec-

76 Dec-

72 Dec-

68 Dec-

64

50%

Dec-

Dec-

60

1.000

S&P - Trillion $ Bubble?

2000

Fed Balance Sheet ($ Trillion - right) & S&P 500 - (Weekly, 30wk MA)

$4.6 1851

$4.4

1800

$4.2 $4.10 tr 31-Jan-14$4.0

1600

Global Markets Peak Q2'11

$3.8 $3.6

S&P 1370

1400

$3.4 1343

$3.2

FED ASSETS QE3 +$1.25 tril

1200

$3.0

S&P +508 pts (+38%) $2.8

$2.85 tr 30-Nov-12

1000

Trillion $ Bubble?

800

$2.2 $2.0

14 Jun-

13 Dec-

13 Jun-

12 Dec-

12 Jun-

11 Dec-

11 Jun-

10 Dec-

10

$1.8

Jun-

09 Dec-

09 Jun-

08 Dec-

$2.4

(+$79 bil Jan’14)

$1.99 tr 7-Aug-09

600

$2.6

S&PFED and Fed Balance Sheet Sheet S&P and Balance

$1.3 Trillion QE3 Bubble?

3.500

Logs of both series for visual comparability

3.400

3.200

3.100

6.600

6.500

22-Jul-11

Bank Bailouts

Logs of S&P price

3.300

6.700

6.400

19-Dec-08 16-Nov-12

3.000

6.300

6.200

SPX Close Log Fed assets

2.900

Fed Assets Jan 1, 2003 = $0.72 tril Sep 5, 2008 = $0.91 tril Dec 19, 2008 = $2.21 tril Aug 31, 2009 = $1.99 tril Dec 31, 2012 = $2.99 tril Jan 31, 2014 = $4.10 tril

2.800

2.700

6.100

6.000

5.900

5-Sep-08 31-Jan-14

02

03

04

05

06

07

08

09

10

11

12

13

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

2.600

5.800

InvInt quote

I see the rush of the last year as a Fed fueled blow off to put in a 3rd major top of the debt madness secular phase dating from the 1998 LTCM bailout & Glass-Steagall repeal that enabled conversion of the mega banks of Wall Street into casino operators that are too big to bail, fail or jail. (22-Jan-14)

S&P and QE

Most feared animal on Wall Street

2,000

18,000

SPX – Net New Highs & NY Volume SPX & 3 Day MA

Volume & Net New Hi/Low Pressures

16,000

1,500 14,000 Net new 52wk Highs peaked in May

1,000

12,000

9-May-13 22-Oct-13

500

10,000

26-Dec-13

8,000

0 6,000

QE3 may fuel prices but not volume

-500 4,000

2,000

Jun14

Dec13

Jun13

Dec12

Jun12

Dec11

Jun11

Dec10

Jun10

Dec09

Jun09

31-Jan-14

Dec08

Jun08

-1,000

1800

InvInt Bears low since Dec 2005

+120

S&P 500 Weekly (40wk MAs) & II Bulls-Bears Net Sentiment

+100 1600

-50%

-20%

1400

+80

1200

+60

1000

+40 800

+20 600

61.6% Jan 1 Bulls Highest since Oct 2007 Top 14.1% Jan 8 Bears Lowest since Apr 1987?

400

200

?

-20

Dec14

Dec13

Dec12

Dec11

Dec10

Dec09

Dec08

Dec07

31-Jan-14

Dec06

Dec05

0

+0

-40

The FED weather update

Low Bridge surprise‌ How’s your day going so far?

Just when you think the worst of it is over, and you see a little light at the end of that tunnel......

TOTAL POPULATION

Pop Jobs & NILF Down 1.2 mil from Jan'08

Population & "Jobs"

200

Private Payrolls

Rebased: Jan 1975 = 100

190

PRIVATE PAYROLLS Not in Labor Force

Sep-07

Jan-2000 169.2

Rapid Job Growth 1982 - 2000

From Jan 2000

170

LS L O

TE A V

P

160

R AY

156.6 150

I PR

Total Population +0.87% p.a.

Up 36.1 mil from Jan'00 Up 13.6 mil from Jan'08

Pop + 36.5mil Jobs + 6.0 mil NILF +22.7 mil

177.1 180

Se p

-0 7

140

130.7 L

A TOT

N ATIO L U POP

130

NOT IN LABOR FORCE

120

117.1 Up 13.3 mil from Jan'08 110

100

Jan15

Jan10

Jan05

Jan00

Jan95

Jan90

Jan85

Jan80

Jan75

Dec-2013 Data

SPX & Jobs & NILF

Secular Trend 2000 / 2017?

3.100

315

th w ro G op P x

Non-Farm Employment

2

215

h wt o r G op P x

1.900

2.1

1.600

A

C

B

115

Dec04

Dec00

Dec96

Dec92

Dec88

Dec84

Dec80

Dec76

Dec72

27-Jan-14

Dec68

Dec64

1.300

165

NOT in Labor Force "NILF"

Dec16

2.200

rebased to Jan'75 = 150

Dec12

2.500

265

S&P, Jobs & NILF

Dec08

2.800

Logs of Stock Prices

S&P 500

& U.Mich Consumer Sentiment SPX &SPXConsumer Sentiment

3.400

150.0

3.200

3.000

Logs of S&P Price

140.0

130.0

120.0 Jan-00

110.0 Jan-04

2.800

Jan-07

100.0

Jul-13

90.0

2.600 80.0

70.0

Univ Michigan Consumer Sentiment with 6 Mo MA

2.400

17-Jan-14 prelim 80.4

14 Dec-

12

50.0

Dec-

Dec-

08 Dec-

06 Dec-

04 Dec-

02 Dec-

00 Dec-

98 Dec-

96 Dec-

94 Dec-

92 Dec-

90 Dec-

10

Aug-11

2.200

60.0

1000

SPX & Personal Savings Rate

16.0

US Personal Savings Rate (scale right) S&P 500 (restated 1949 =10, log scale left)

14.0

12.4% Dec-81

2000 to 2009

12.0

DEBT/GDP Ratio went crazy

10.0

1966 to1982 8.0

100

6.0

1950 to1965

4.0

1982 to 2000 Stocks & Debt/GDP 3.7% Sep-99 soared Savings collapsed

2.0 2.3 Sep-05

0.0

Dec14

Dec10

Dec06

Dec02

Dec98

Dec94

Dec90

Dec86

Dec82

Dec78

Dec74

Dec70

Dec66

Dec62

Dec58

Dec54

Dec50

10

Savings Rate Trying to turn up

S&P and DEBT/GDP

1000

Total Credit Market Debt/GDP Ratio (scale right) S&P 500 (1949 =10, log scale left)

4.0

S&P 500 3.5 3.75 Mar-09 3.0 2.58 Mar-00

1966 to1982 100

2.5

1950 to1965

1982 to 2000 1.63 Mar-82

2000 to 2009 DEBT/GDP Ratio went crazy

2.0

Stocks & Debt/GDP soared Savings collapsed

1.5

0

4

8

2

6

0

4

8

2

6

0

4

8

2

6

0

4

8

Dec5

Dec5

Dec6

Dec6

Dec7

Dec7

Dec7

Dec8

Dec8

Dec9

Dec9

Dec9

Dec0

Dec0

Dec1

Dec1

Dec1

1.0

Dec5

10

Debt GDP: Consumers & Fed Govt

Household & Government Debt/GDP Ratios

Gross Fed Debt/GDP

1982 / 2008 Consumer Borrowing Binge 45% to 95%

Ho us eh ol ds

Household Debt/GDP

Gross Federal Debt

110%

100%

90%

80%

Mar-03

(new GDP series)

70%

Jun-00

Sep-08

60%

Gross Federal Debt from 61% to 102% in 5 Years

50%

40%

30%

Dec-13 Data Q3-13

Sep-82

6

0

4

8

2

6

0

4

8

2

6

0

4

8

Dec-6

Dec-7

Dec-7

Dec-7

Dec-8

Dec-8

Dec-9

Dec-9

Dec-9

Dec-0

Dec-0

Dec-1

Dec-1

Dec-1

20%

ShadowStats Cons Debt ex-Student Loans

Student loans don’t fuel much Consumer economic demand

Student Loans > Credit Card Debt Estimates now show more than $1.2 trillion in student loan debt across the nation,

more than the nation owes on credit cards.

News 25-Nov-13

Jane & Joe Six-Pack Are NOT borrowing to spend‌

Logs of Price

2.3

The Exciting “Recovery” in Housing

US Housing Starts “Recovery”

4.6 4.2

HGX Phlx Housing Sector Index (Logs of Price)

3.8 Nov-13 3.49

Mar'13 3.18

2.1

3.4 3.0 2.6

1.9

2.2

4 Jun-1

3 Dec-1

3 Jun-1

2 Dec-1

2 Jun-1

1 Dec-1

1

1.4

Jun-1

Dec-1

0 Jun-1

9 Dec-0

9 Jun-0

8 Dec-0

8 Jun-0

0

1.66 Feb'11

1.56 Apr'09

1.7

1.8

US Housing Starts per Capita Starts per 1000 US Population

Logs of Price

2.5

2.3

HGX & Per Capita Starts from 2002

10.0

HGX Phlx Housing Sector Index (Logs of Price)

9.0 8.0

7.0

7.0

2.1

6.0 5.0 1.9

Nov-13 Mar-13 3.44

US Housing Starts per Capita Starts per 1000 US Population

4.0

3.18 3.0

1.7

“Recovery” vs.“The Bust” What are the stocks smoking?

2.0

1.66

1

2

3

4

5

6

7

8

9

0

1

2

3

4

Dec-0

Dec-0

Dec-0

Dec-0

Dec-0

Dec-0

Dec-0

Dec-0

Dec-1

Dec-1

Dec-1

Dec-1

Dec-1

1.0

Dec-0

1.5

100

10000

Housing Housing Starts per capita from 1959 Starts Raw Data (Seas Adj) & per capita (per 1000 Population) Jan-06 2273 Nov-13 1107

10

1000 7.64

478

4.27 Oct-66

3.49 Nov-13

PER CAPITA 1960 / 2012 Population rose by 75% (180 mil to 315.6 mil)

1.56 Apr-09

58

62

66

70

74

78

82

86

90

94

98

02

06

10

14

18

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

De c -

100

De c -

1

“Recovery” ?

3.250

1000

S&P 500 S&P & Mtg Debt & CS Home prices (logs left)

&

Mortgage Debt O/S

CS Homes Index (rebased, logs left)

&

Mortage Debt

B

(rebased/scale right)

S&P/C-S Home Price Index

2.750

A ABS Issuance Bonanza 2.500

Rebased to 150 Dec-89

Sep-13 Debt = 623 4.2x 1989

Stock prices & Home Prices Fell

Oct-13 Home Price = 327 2.2x 1989

90

94

98

02

06

10

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

29-Jan-14

14

86

100

Dec-

2.250

Stock Prices fell Home prices rose

The $2 tril Gap

C

Dec-

3.000

2.500

HGX & CS Home Price & Debt Banks Topped Jan'07

HGX - 294 Jul-05

Mortgage Debt Outstanding (Rebased)

257 Feb-07

HGX Index Home Builders Stocks

1800

1600

Logs of price

S&P 500 Topped

2.300

210

1400

133 Apr-10

121 Feb-11

Home Prices & Mortgage Debt Soared

2.100

Oct-03 1.900

1200

1000

SP/CS Home Price Index 20 Cities

Oct-11 74

Mar-09 54

800

02

03

04

05

06

07

08

09

10

11

12

13

14

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

28-Jan-13

Dec-

1.700

Mtg Debt & Home Prices

1800

Mortgage Debt & Home Prices (CS-20 National) rebased

Mor tgag

1700

e De

bt O S

Apr'09 $3.2 Trillion More Mortgage Debt than June 2004

1600

1500

1400 $2.0 Trillion More Mortgage Debt than June 2004

1300

Dec-13

Ju 4 n-0

1100

1000

SP/CS Home Price Index 20-National

09

10

11

12

13

14

Dec-

Dec-

Dec-

Dec-

Dec-

900

Dec-

Dec08

7

06 Dec-

Dec0

05 Dec-

4 Dec0

03

Who’s the FED buying the MBS from?

Dec-

1200

According to the Mortgage Bankers Association Applications have declined in 16 of the last 21 weeks to Sep 27th & continue to fall

TNX – 10 Year Yield

Taper Talk ?

New Debt Bubble?

60% of New Corp Loans are “Cov Lite” ($250 bil) vs $95 bil in 2007)

Who’s going to bail out Hu ?

Uncle Sam?

Logs of prices

3.700

S&P 500 S&P & World Ex-USA 3 Peaks from ‘95 with 40wk MA

LTCM Bailout Sep'98

B

A

3.500

3.20

14-Sep-12 QE3 & QE4

3.00

C ?

2-Nov-07

MSCI World Ex-USA (US$) 3.300

6-May-11

17-Jan-14 2.80

7-Apr-00

3.100

2.60

6-Mar-09

2.900

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

2.40

& Euro Stoxx 50 from 1998 SPXS&P&500Eurostoxx with 40wk Mas - (Logs of price)

4.000

3.20

3.900

3.10

S&P 500

3.800

QE2

Logs of Prices

3.700

3.600

3.300

3.00

2.90

2.80

LTRO

3.500

3.400

QE3 & QE4

2.70

2.60

SECULAR TREND PEAK LTCM

Euro Stoxx 50

2.50

Bailout 31-Jan-14

7

8

9

0

1

2

3

4

5

6

7

8

9

0

1

2

3

4

ec-9

ec-9

ec-0

ec-0

ec-0

ec-0

ec-0

ec-0

ec-0

ec-0

ec-0

ec-0

ec-1

ec-1

ec-1

ec-1

ec-1

2.40

ec-9

3.200

C$ & A$ Long term

A$ broke 95 cents‌ Canada ?

Nov-07 Japan – Nikkei // Weekly with 40wk MA Messing up RegionalApr-11 Growth?May-13

4.600

2.600

4.400

2.400

4.200

2.200

4.000

Logs of price

2.800 Asia-Pacific Ex-Japan MSCI

Japan - Nikkei 255 Weekly Average Logs of price

31-Jan-14

Dec14

Dec13

Dec12

Dec11

Dec10

Dec09

Dec08

Dec07

Dec06

3.800

Dec05

Dec04

2.000

Japan’s devaluation – disruptive to Regional trade?

JAPAN 1981 - Nikkei 225 Weekly Japan – Nikkei from 38,958 Jan'90

4.6000

1982 - 2013

(Logs of price) 104wk MA

Japan’s devaluation – Nikkei at big resistance 4.4000

Logs of price

4.2000

18,300 Feb-07 & July-07 Jan-14 16,320

4.0000

Nov-11 8,136

Apr-03 7,700

Oct-08 6,995

1

5

9

3

7

1

5

9

3

ec-8

ec-8

ec-8

ec-9

ec-9

ec-0

ec-0

ec-0

ec-1

3.8000

SPX-CopperS&P 500

1.300

3.2

Comex Copper & S&P 500 Wk Avg with 40wk MAs

Wkly Avg

3.1

1.050

3.0

0.550

Logs of Price

0.800

Feb-11

2.9

2.8

Comex COPPER

0.300

Weekly with 40wk MA

2.7

31-Jan-14

Dec14

Dec13

Dec12

Dec11

Dec10

Dec09

Dec08

Dec07

Dec06

2.6

Dec05

Dec04

0.050

1.250

Pac-Ex-Japan & Copper

MSCI PACIFIC EX-JAPAN

2.80

Nov-07

Apr-11

May-13 Oct-13

2.70

1.050

2.60

2.50

0.850

2.40

0.650

0.450

Logs of Price

Feb-11

2.30

2.20

Comex Copper

2.10

Pacific Ex-Japan Stock Markets & Comex Copper Weekly

0.250

2.00

with 40wk MAs (Logs of Price) 31-Jan-14

Dec14

Dec13

Dec12

Dec11

Dec10

Dec09

Dec08

Dec07

Dec06

1.90

Dec05

Dec04

0.050

Pac-Ex-Japan & Copper

SPX-Copper-SPGSCI (Logs of Wk Avg Price) 3.300

3.100

S&P 500

1.40

1.20

1985 / 1999

FTXL

1.00

2.700

0.80 SP-GSCI Commodity Index

LOGS of price

2.900

2.500

0.60

2.300

0.40

Comex COPPER

6

0

4

8

2

6

ec-0

ec-0

ec-0

ec-1

ec-1

-0.40

ec-9

1.500

2

-0.20

ec-9

1.700

8

0.00

ec-8

1.900

4

0.20

ec-8

2.100

Copper, Silver & Gold from 1995 100

10.00

Copper & Silver & Gold Wkly from 1995 First Cycle of New Secular Uptrend (rebased) confirmed by 2003 & 2005 breakouts?

Copper NY (rebased x1.5)

?

10

1.00

Silver NY

Gold NY (rebased) 31-Jan-14

1

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

0.10

Comex Gold – must clear $1362 & $1433 2000

QE3 & 4-ever?

Comex Gold Near Active with 50 & 200 Day MAs

1900 1800 1700 1600 1500

1432.5 28-Aug-13

1431

1362 1400 28-Oct-13

1265

1300

1226 1200

20-Sep-13 $2642

1100

15-Nov-13 50-Day MA $1309 - falling 200-Day MA $1396 - falling

1000 900

22-Nov-13

13 Dec-

13 Sep-

13 Jun-

13 Mar-

12 Dec-

12 Sep-

12 Jun-

12 Mar-

11 Dec-

11 Sep-

11 Jun-

11 Mar-

10 Dec-

10 Sep-

10 Jun-

10 Mar-

09 Dec-

09 Sep-

09 Jun-

Mar-

09

800

Breakout runs

The Gold Bull -

E?

London Fix - Logs of Price Weekly

Sep'11 $1910

The Key Breakout Runs 3.300

73% in 70wks?

D +111% May'08 $1020/$1030

3.100

C

$1650/$1520 Well tested

+61%

May'06 $726/$732

"What if‌"

2.900

Logs of Price

B

(Breakout above $1800) ---

+75%

2.700

20-Sep-13 $2642 ?

$428/$454

A $300/$328

A/D Average Gain 73% & Duration 70wks from May'12 low

+45%

2.500

D ec

13

8-Nov-13

D ec -

12 D ec -

11 D ec -

10 D ec -

09 D ec -

08 D ec -

07 D ec -

06 D ec -

05 D ec -

04 D ec -

03 D ec -

02 D ec -

01 D ec -

00 D ec -

99 D ec -

D ec -

98

2.300

IAU+GLD MT / IAU price Jun'07 to Mar'09 Bear Stearns Fund Crisis Bailouts/Tarp +685 mt No Price Breakout?

GLD + IAU Tonnes (Red) (scaled adjusted) IAU Share Price (Gold proxy) (Blue)

100

31-Dec-12 1569 mt

16-Jan-14 951 mt

618 mt Out of GLD & IAU in 2013

14 Jun-

Dec13

13 Jun-

Dec12

12 Jun-

Dec11

11 Jun-

Dec10

10 Jun-

Dec09

09 Jun-

Dec08

08 Jun-

Dec07

07 Jun-

Dec06

06 Jun-

Dec05

05 Jun-

Dec04

Germany only got 5 mt from NY Fed ?

100

IAU: 20% of Tonnes & 4% of $Val Trading ?

IAU vs. GLD Tonnes & $Value of Trading Volume 20.0% IAU Tonnage % Series1 IAU Cut Fee from 40 Series2 bps to 25 bps Series3 & 10:1 Split 15.0% 24-Jun-10 Linear (Series2)

$2

16-J ul-12

GLD (Market Share)

$2

20% of Gold 4% of trading?

$1

$1

$1 10.0%

IAU

m g Do n i d Tra

i...

$1

$1

5.0%

inant

-14 -Jun

-14

$6

-Mar

-13

3.5% 31-Oct-13

-Dec

-13 -Jun

-13 -Mar

-12 -Dec

-12 -Sep

-12 -Jun

-12 -Mar

-11 -Dec

-11 -Sep

-Jun

-11 -Mar

-10 -Dec

-10 -Sep

-10 -Jun

-11

GLD?

0.0%

$8

-13

Robo trading dominates

3.8% 29-Apr-13

-Sep

Dom ding a r T GLD

10000

Gold 50MA vs 200 DMA from 1980 The nature of secular trend – persistence . Jun'01 to Feb'13

10000

50 MA crossed ABOVE 200 MA - 20-Sept12

532 Wks Blue & 79 Wks Red (13% of time)

Reversed it 22-Feb-13 Comex GOLD (near active) with 200 DMA

4 Previous Long Consolidations Resolved on the upside

Periods of 50 DMA Below 200 DMA in Red

1000

1000

22-Nov-13 50 Day MA 1309 falling 200 Day MA 1396 falling

80

82

84

86

88

90

92

94

96

98

00

02

04

06

08

10

12

14

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

Jun-

100

Jun-

100

Gold & Silver VERY related

2.000

4.000

1.500

Logs of price

1.000

3.500

SILVER (London Monthly Logs of price)

3.000

0.500

2.500

London GOLD Monthly Average

0.000

2.000

Dec14

Dec09

Dec04

Dec99

Dec94

Dec89

Dec84

Dec79

Dec74

Dec69

Dec64

Dec59

1.500 Dec54

Dec49

-0.500

Silver & Ag/Au Ratio

2.000

1.0

London SILVER &

Silver/Gold Ratio Inverted Mo Average, with 12 Mo Avgs (logs of price)

1.000

0.500

Logs of Price

1.500

10.0 15.6 18.5

17.2

18: 1 to 45: 1 Ratio prevailed 1950/1982

Apr-11 31.8 to 1

45:1 to 80:1 Ratio prevailed 1984/2011

0.000

New Range?

30:1 / 65:1

Jun-73 46.5

Silver/Gold Ratio Monthly Averge of Daily Inverted

100.0

an-15

an-05

an-00

an-95

an-90

an-85

an-80

an-75

an-70

an-65

an-60

an-55

an-50

an-10

Dec-08 79.3 to 1

-0.500

SILVER

3.800

400.0%

3.400

11 29 -D

ec -

7-Mar-08 11-May-06

2

350.0%

300.0% 1 nJu 26

14 -S ep -10

3.200

1O ct -1

3.600

29 -F eb -1 2

& 200 Day VsMA Ratio

28 -J un -1 2

23 -A

ug -1 1

Comex Silver Price Log 25-Apr-11

3

250.0%

Lower Peaks

28-Aug-13 - 25.12 Oct 1-12 - 35.45

3.000 12-Apr-04 27-Oct-08 19-Apr-06 169%

2.800

Feb 29 - 37.48 Aug 23 - 44.28 Apr 25 - 49.82

29-Apr-11 174.6%

200.0%

150.0% 2.600

100.0%

2.400

4

Dec-1

3

50.0% 31-Jan-14

Dec-1

2 Dec-1

1 Dec-1

0 Dec-1

9 Dec-0

8 Dec-0

7 Dec-0

6 Dec-0

5 Dec-0

4 Dec-0

3 Dec-0

Dec-0

2

2.200

TSX VsMa Venture Index from 2003 Ratio 13wk/40wk

3.800

a -J

l Ju 1-

24

1.2

14 n-

1 -1

3.600

Logs of price level

3.400

1

0.8

136 wks 13wk MA BELOW 40wk MA Jul'11 to Jan 31, 2014

92 wks

0.6

13wk MA BELOW 40wk MA Aug'07 to Jun'09

3.200

0.4

0.2

0 3.000

TSX Venture Composite Index (JX-I) - Weekly with 13 & 40wk MA Ratio

Jul'04-May'07 +133% - 34 mos May'07-Dec'08 -80% - 20 mos Dec'08-Mar'11 +163% 27 mos Mar'11-Jul-13 -65% - 28 mos

-0.2

2.800

03

04

05

06

07

08

09

10

11

12

13

14

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

-0.4

ZJG-T

Junior Gold Index Crash

BMO Junior Gold ETF

30.00

Gold miners drop over 50% with no bottom in sight.

(34 Stocks) NAV Daily 6-Dec-10 with 20, 50 & 200 MAs 24.85

Tax-loss selling of mining stocks add insult to injury; patient investors have a chance.

8-Sep-11 24.26

25.00

Marketwatch ‌ 6-Dec-13 (8.05AM EST) 21-Sep-12 16.88 5-Jun-12 15.49

20.00 50/200 Cross

15.00

23-Jul-12 12.60

16-May-12 12.36

10.00

13

23-Dec-13 5.00 $5.74

Dec-

13 Jun-

12

17-Apr-13 $7.44 26-Jun-13 $6.40

Dec-

12 Jun-

11 Dec-

11 Jun-

10

Now 26 stocks Down from 34 yr ago

Dec-

10 Jun-

Dec-

09

C$86 mil Assets 1-Feb-13 C$40.5 mil assets 21-Jun-13 C$46 mil assets 2-Oct-13 26 Stks C$39.8 5-Dec-13

Gold vs. S&P from 2003

S&P 500 (red) & Comex Gold (blue) 3.700

Weekly Averages rebased to Dec 31, 2002

GOLD

Logs of price for visual comparability 3.600

3.500 Gold bottoming

3.400

S&P Topping May / Jan

3.300 $1040 Barron's 3.200

3.100

3.000

2.900

Barron's Insight - 4-Oct-09

14 Dec-

13 Dec-

12 Dec-

11 Dec-

10 Dec-

09 Dec-

08 Dec-

07 Dec-

06 Dec-

05 Dec-

04 Dec-

03 Dec-

02

31-Jan-14

Did "STILL" exclude the prior 7

2.800

Dec-

S&P 500

"Gold Is Still a Lousy Investment!"

Gold, SPX & Gold Miners from 2003 GOLD 9-Sep-11

S&P 500 (red) & Comex Gold (blue)

3.700

Weekly Averages

rebased to Dec 31, 2002

Logs of price for visual comparability 3.600 4-Dec-09 10-Dec-10

3.500

14-Mar-08

3.400

12-May-06

GDM Gold Miners

3.300

3.200

5-Dec-03

23-Apr-10 3.100

S&P 500

3.000

2.900 31-Jan-14

Dec13

Dec12

Dec11

Dec10

Dec09

Dec08

Dec07

Dec06

Dec05

Dec04

Dec03

Dec02

2.800

GDM vs. Gold from 2003GOLD

Comex Gold & Gold Miners Index Weekly Averages rebased to Dec 31, 2002 Logs of price for visual comparability

3.700

E

3.600

C

9-Sep-11

4-Dec-09

10-Dec10

3.500

B

21-Mar-08

21-Sep-12

3.400

12-May-06 3.300

A

3.200

5-Dec-03

5-Feb-10

GDM Gold Miners

3.100

23-Aug-13

F

3.000

31-Oct-08

Miners vulnerable to "S&P Risk" 2.900

28-Mar-03

Implicit Profit Leverage of Producers is a myth.

(Capital intensive, Energy costs, Dilutive M&A Premiums & Geo-political risks)

20-Dec-13

false breakout?

D

31-Jan-14

14 Jun-

3 Dec1

13 Jun-

2 Dec1

12 Jun-

1 Dec1

11 Jun-

0 Dec1

10 Jun-

9 Dec0

09 Jun-

8 Dec0

08 Jun-

7 Dec0

07 Jun-

6 Dec0

06 Jun-

5 Dec0

05 Jun-

4 Dec0

04 Jun-

3 Dec0

03 Jun-

Dec0

2

2.800

Gold

"Old Boys Club" Tonnes 1 2

United States Germany IMF

3 4 5 6 7 8

Italy France Switzerland Japan Netherlands

9

ECB

10

16

Portugal United Kingdom Spain Austria Belgium Sweden BIS

17

Greece

18

Australia Denmark Finland

11 12 13 14 15

19 20

Top 20

% of reserves

FX Reserves

$3,681 $516 $291 $149 $413 $21 $723 $84 ? $168 $26 $272 $49 $176 ?

1,054 1,015 558 442 424 503 323 193 174 152 140 127 125 123 117

$345 $49 $107 ? $97

104 104 103 79 78

1.2% 8.3% 8.4% 16.0% 4.0% 65.6% 1.8% 9.8% 3.7% 3.8% 25.1% 2.0% 10.6% 3.0% 3.9% 1.3% 8.6% 4.1% 9.6% 3.5%

Gold % of reserves Tonnes

115 112 80 67 49

76% 6% 3% 19%

China* Russia India Turkey Taiwan Venezuela Saudi Arabia Phillipines Algeria Thailand Kazakhstan Singapore* South Africa Mexico Libya South Korea Romania Poland Kuwait Indonesia

24,176

30%

Egypt

$18

76

17.1%

Brazil

$362

67

0.8%

$7

64

8,134 3,391 2,814 2,452 2,435 1,040 765 613 502 383 310 282 280 228 126

World "Official" Gold 31,914 20 'Old Boys' own 25 Major Emerging

70% 66%

Emerging Countries

65% 65% 8% 2% 52% 27% 84% 12% 23% 48% 33% 7%

tonnes

76% 20%

Pakistan Argentina

32.8% 62 7.6%

$31

Malaysia

$136

36

$7,720

6,242

1.1%

WGC Dec'13 data (6-Jan-14) FX Reserves - Economist2-Jan-14 & IMF Stats

(median %)

4%

Who owns the “official” gold ------Who owns $7.7 tril of who’s paper?

Global Currency Transition Bretton Woods 1949/1971 Then G3 or G7 to 2009

£sd to

¥ € $ Yes we can ?

US$

€ (DM)

¥

Gold BRIC’s say NO You can’t…

Zim Inflation $100 Trillion (2008)

Gono might have been available, but he picked Yellen‌

Russian Gold Reserves

notes

0.500

Fiats vs. Gold from 1946

2.5

BP, US$, Euro/DM & Yen vs. GOLD (Logs of Monthly Average)

Fiat Currencies vs. Gold Lose value over time

BP/oz

1.000

1971 / 1980

3.0

(Bretton Woods Discipline 1950/71)

US$/oz

1.500

3.5

DM-Euro/oz 2001 / 2015?

2.000

4.0

Yen/oz 2.500

4.5

3.000

5.0

31-Jsn-14

Jan16

Jan11

Jan06

Jan01

Jan96

Jan91

Jan86

Jan81

Jan76

Jan71

Jan66

Jan61

Jan56

5.5 Jan51

Jan46

3.500

10

Major Forex vs. Gold from 1998 Last New FX Paper Lows US$ - Sep 2011 Euro - Oct 2012 Yen - Feb 2013

Euro/oz

Major Forex Vs. Gold Weekly - from 1999 Lows Rebased

Yen/oz

US$/oz Dec14

Dec13

Dec12

Dec11

Dec10

Dec09

Dec08

Dec07

Dec06

Dec05

Dec04

Dec03

Dec02

Dec01

Dec00

Dec99

Dec98

31-Jan-14

10

Gold & DXY

2.1000

2.4000

Logs of Gold & DX Index (Weekly Average Values)

DXY Index Blue Gold INVERTED Red

2.0500

2.5000

2.6000 2.0000

US$ Vs. Gold Rising vs. Paper but not vs. Gold

US$ & Gold NOT Agreeing

2.7000

1.9500

2.8000

2.9000

1.9000

US$ & Gold NOT Agreeing

3.0000

1.8500

3.1000

3.2000

3.3000

ec-1 4

ec-1 3

ec-1 1

ec-1 0

ec-0 9

ec-0 8

ec-0 7

ec-0 6

ec-0 5

ec-0 4

ec-0 3

ec-0 2

ec-0 1

31-Jan-14

ec-0 0

ec-9 9

1.7500

ec-1 2

1.8000

US$ trying to be BLHiGF ?

C$ & A$ Breakdowns C$ 6-Nov-07

C$ and A$ vs. US$ Daily

WSJ Spot Daily with 200 Day MAs

1.15

29-Jul-11 1.10

A$ Jul-08

1.05 1.00

C$ in US$ 0.95 0.90 0.85 0.80 0.75

A$ in US$

0.70 0.65 0.60 0.55 0.50 31-Jan-14

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

0.45

Gold vs Gold Stocks From 1934

Gold (blue) & Gold Miners (US$) (red)

4.500

from 1934 (logs of price)

3.0000

4.000 1968 to 1980 Run

3.500

2.5000

GDM (pre'93 TSEG-US$)

3.000

Gold Price PM Fix

Logs of price

Shs Metal Ratio US$ Poly. (Shs Metal Ratio US$)

2.500

2.0000

2.000

1986 to 2011 Range

1.5000

1.500

1.000

1.0000 0.500

Gold Miners /Metal Ratio

Shares Lagged Metal 1968 / 80

0.5000

(scale right - not log scale)

33

38

43

48

53

58

63

68

73

78

83

88

93

98

03

08

13

18

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

Dec-

0.000 31-Jan-14

GLD vs GDX (Metal vs Shares) 5 Yrs

GDX & GDXJ vs GLD (Metal vs Shares) 2 Yrs

Gold &GoldMkt & MarketVane Vane Bulls Bulls

3.100

Logs of price

3.350

22

with 40wk MAs

20

18 In Secular Bear Markets, assume a range of 20% to 50% Bulls.

2.850

16

14

In Secular Bull Markets, assume a range of 50% to 80% Bulls (I.M. 2001)

12 26-Aug-11 89%

Secular Bear 2.600

10

5-Oct-12 76%

80

60 2.350

16-Jun-06

11-Apr-03

1-Jun-12

21-Nov-08

40

19-Apr-13 wk - 41% 25-Jun-13 wk - 37% 15-Nov-13 wk - 35% 6-Dec-13 wk - 33% 31-Jan-14 wk - 41%

4

6

8

0

2

4

6

8

0

2

4

Dec9

Dec9

Dec0

Dec0

Dec0

Dec0

Dec0

Dec1

Dec1

Dec1

0

Dec9

2.100

20

This wk 33% (4-Dec-13)

- 11th wk under 40% since 2001 – (16wks-Jan 7th)

London Gold Fix Questions

German Regulator BAFIN declares possible price manipulation in precious metals is worse than the Libor rigging scandal.

(Jan 16, 2014)

Jan 17th Deutsche Bank announces withdrawal from the London Fix… “There is a lot of contractual business done on the basis of the London Fix. If there’s no basis for the fix, somebody is going to get hurt…”

550

1998-2004 & UK Gold Sales NMR & AIG Leave LBMA AngloGold Swallows Ashanti in 2004

Brown Bottom in Gold 2001 Commodity Reform Act 2003

Glass-Steagall Repealed Nov'99

blo ws dg ing

400

mb

ior

he

Ashanti Hedges Blow up on Central Bank Agreement to limit selling Sep'99

450

Germany Repatriates 500mt from London in 2001

up

Greenspan: "CBs ready to lease gold in increasing quantitites should the price rise" 24-Jul-98

500

12-Apr-04 NM Rothschild quits LBMA 421.90

Ca

The Breakout Dec 2002 333.00 US invades Iraq 20-Mar-03

LTCM Bailout

350

395.50 AIG quits LBMA 1-Jun-04

300

Oct’09 India bought 200 tonnes from the IMF at $1045

The "Brown Bottom in Gold" 56% of UK Gold Reserves -Sold Average of

$275.60 (395 tonnes bewteen July 1999 - March 2002)

250

05 Dec-

05 Jun-

04 Dec-

04 Jun-

03 Dec-

03 Jun-

02 Dec-

02 Jun-

01 Dec-

01 Jun-

00 Dec-

00 Jun-

99 Dec-

99 Jun-

98 Dec-

98 Jun-

Dec-

97

200

Humility

Dealing with Mr Market ----

Learn Humility

Patience My Ass, I’m Going to Kill Something !

‘Opportunity’

rarely happens at your convenience

Bad buying causes losses

Dogs slide Feb 2010

Zermatt – February 2010