Staying Engulfed in Bearish Bias Amid U.S Presidential Debate

The USD Index declined yesterday, while the precious metals market moved higher, possibly due to the relatively “turbulent” pre-election debate in the U.S. But still, did anything actually change regarding the outlook?

Not really.

As we have stated in our previous analyses, while gold and the rest of the precious metals market will probably decline significantly in the following weeks, and that a short-term correction would not be surprising at all. The same holds true for the USD Index, except that the direction of any possible moves could be considered the opposite.

Regarding the USD Index’s short-term chart, we’ve indicated the following:

Last week, the USD Index was just starting to break above the declining resistance line. We wrote that the situation doesn’t become crystal-bullish, unless we see a confirmation of the breakout in the form of either a significant move above the resistance (it’s not significant so far), or three consecutive daily closes above it.

That’s exactly what we saw. The breakout is more than confirmed. We didn’t saw a corrective decline, but rather, we’ve witnessed a pause. So, will we see a pullback soon? That’s quite possible, but definitely not inevitable. Such a decline could trigger a rally in gold, but we don’t think that any of these moves would be significant.

As it turns out, that’s precisely what we’ve witnessed this week.

The USDX moved a bit lower, while gold, silver, and mining stocks moved slightly higher. However, the sizes of these moves were not particularly significant.

In the chart above, we see that the USDX has barely moved to the August highs, and then moved back up again (in today’s pre-market trading) – above these highs. What does that mean? It means that the pullback might already be over.

At the moment of writing, we can see that gold erased most of yesterday’s upswing (during the pre-market trading), which would support the theory above about the corrective move being over.

If we take the intraday prices into account, gold moved slightly above its August low, but that would not be the case if we consider the daily closing prices. In the latter case, we could even speak of a breakdown’s verification below the August low.

Silver corrected based on a relatively weak support level created by the local August lows. We’ve predicted that this move is not likely to be anything significant, and indeed, it wasn’t. Silver corrected a smaller part of the downswing, and it didn’t even manage to move back to the rising support line that it had broken earlier this month. Therefore, the outlook remains bearish.

But, did it become bullish in the case of the mining stocks? After all, they just closed above their August low…

In short, we’re not buying the bullish narrative because of the following three reasons:

  1. It doesn’t fit the indications from the USD Index, gold, or silver.
  2. GDX corrected to the rising resistance line, based on the previous lows (red, dashed line) without breaking it.
  3. Gold is already back to where it was 24 hours earlier, and since miners closed above their August low for just one day, it seems that this was somewhat accidental and that they will follow gold’s bearish lead that we’ve already detected in the pre-market trading.

In other words, practically everything that I wrote yesterday and in Monday’s extensive analysis still applies – the outlook for the precious metals market remains bearish for the next several weeks.

As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
Sunshine Profits: Analysis. Care. Profits.

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

How Can cTrader Benefit Your Brokerage?

Many of you are already aware that Spotware is celebrating its 10th birthday – an entire decade in the industry filled with excellence, amelioration and new partnerships, all based on our core Traders First™ motto. But how exactly does the cTrader Suite help both start-up and existing brokerages, and which features make it stand out in a competitive market? Let’s take a look.

The idea behind cTrader

cTrader was established as a premium STP/ECN platform for both brokers and traders worldwide. What began as just a trading platform grew into an entire selection of products – the cTrader Suite, packed with cTrader Copy, cTrader Automate and cTrader Analyze, all available on PC, Web, IOS & Android.

With 60+ world-renowned brokers, millions of traders and over 40 integrations with leading liquidity providers, CRMs and data-vendors, cTrader Suite is the product of choice for a range of reputable brokers. The customer-centric idea of the platform works to grant traders the ultimately transparent all-in-one experience they seek, and to benefit brokers by helping them stand out from the crowd and grow their customer base.

How cTrader stands out from competition

When it comes to cTrader, the complete experience isn’t just for traders, but for brokers too, which is why cBroker as a tool first came to exist.

cBroker is an all-inclusive, broker-oriented platform, used for superior business reporting. With a complete and fluid structure, cBroker collects all necessary information about traders’ and managers’ activity, from transactions to execution and deal reporting for transparent access to all events and daily operations in your trading environment.

With the top number of reporting features in the industry, a powerful back-end and a convenient layout, cBroker can best be described as limitless. It comes equipped with:

  • Unlimited scalability
  • Unlimited number of accounts, groups and symbols
  • Netting, hedging, Shariah-compliant and AMF accounts availability
  • Multiple types of execution: Full Volume at Spot, Full Volume at VWAP, Partial Volume at VWAP
  • Dynamic leverage, dynamic commissions, an integrated IB program, white label licensing, an open API and much more.

All these features translate into maximum customizability that brokers usually miss out on when dealing with traditional trading platforms, which tend to be strict and inflexible.

Additionally, cTrader does not have any hidden payments. The core package includes:

  • Desktop Platform
  • Web Platform
  • Mobile Platform
  • Branded applications
  • Unlimited number of Accounts / Groups / Symbols
  • Group Settings Profiles

And much more.

How cTrader works for start-ups and established brokerages

Following the Swiss Franc shock of 2015, the FX industry had fallen under strict regulator control. Transparency and fairness have become more valuable than ever before, and cTrader has become the top destination for many traders fearing for the safety of their funds. As a result, established brokerages flocked to cTrader in order to respond to new-found trader needs, while discovering the utter convenience of a trading platform truly catered for their personal needs.

Whether you are a startup or an established broker, cTrader can help you grow your customer base and therefore – increase your market share. You will gain the necessary competitive edge, and offer your traders a complete trading experience with a premium ECN/STP platform.

As a start-up broker, in turn, you need a platform you can fully rely on. cTrader offers just that with a pricing model tailored specifically for start-up brokers. As a result – you can easily enter one of the most attractive markets with a leading multi-asset Forex and CFD trading platform.

It is often not understood what we mean by Traders First™, but the truth is – both – a platform provider and a brokerage business could not work without traders. By staying one step ahead of the retail market and putting their trading needs first – we develop a larger market share and a loyal community, which is of essence in today’s competitive Forex business.

If you wish to find out more about cTrader and to join our ever-growing community, do not hesitate to contact us today: https://spotware.com/contact-us/

Stock Pick Update: September 30 – October 6, 2020

In the last five trading days (September 23 – September 29) the broad stock market has been retracing some of its recent decline. The S&P 500 index set new record high of 3,588.11 on September 2. But then the market fell below February 19 high of 3,393.52. On Thursday it set a local low of 3,209.45 before bouncing back above 3,300 mark for the second time. So far, the recent decline looks like a downward correction of a 63.7% rally from March 23 corona virus low at 2,191.86.

The S&P 500 index has gained 0.46% between September 23 and September 29. In the same period of time our five long and five short stock picks have lost 0.15%. So stock picks were relatively slightly weaker than the broad stock market. Our long stock picks have lost 1.43%, but short stock picks have resulted in a gain of 1.12%.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

This means that our overall stock-picking performance can be summarized on the chart below. The assumptions are: starting with $100k, no leverage used. The data before Dec 24, 2019 comes from our internal tests and data after that can be verified by individual Stock Pick Updates posted on our website.

Below we include statistics and the details of our three recent updates:

  • September 29, 2020
    Long Picks (September 23 open – September 29 close % change): MLM (+4.25%), MAS (-0.88%), ROST (+0.03%), OXY (-10.24%), JNJ (-0.28%)
    Short Picks (September 23 open – September 29 close % change): KMI (-3.26%), MCK (-1.92%), VZ (-0.99%), AMCR (-1.27%), IR (+1.82%)Average long result: -1.43%, average short result: +1.12%
    Total profit (average): -0.15%
  • September 22, 2020
    Long Picks (September 16 open – September 22 close % change): CF (-5.53%), ROST (-4.54%), SPG (-8.33%), XOM (-2.55%), CME (-1.50%)
    Short Picks (September 16 open – September 22 close % change): MPC (-0.86%), JPM (-5.19%), ETR (+1.03%), SHW (-3.12%), MCD (-2.59%)Average long result: -4.49%, average short result: +2.15%
    Total profit (average): -1.17%
  • September 15, 2020
    Long Picks (September 9 open – September 15 close % change): UAA (+7.37%), EFX (-3.77%), CF (+2.30%), SLB (-1.52%), INTC (+0.95%)
    Short Picks (September 9 open – September 15 close % change): PSX (+0.02%), GLW (+0.98%), EIX (-0.37%), MCD (+3.43%), RTX (+2.79%)Average long result: +1.07%, average short result: -1.37%
    Total profit (average): -0.15%

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, September 30 – Tuesday, October 6 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (September 30) and sold or bought back on the closing of the next Tuesday’s trading session (October 6).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s.

Based on the above, we decided to choose our stock picks for the next week. We will choose our top 3 long and top 3 short candidates using trend-following approach, and top 2 long and top 2 short candidates using contrarian approach:

Trend-following approach:

  • buys: 1 x Utilities, 1 x Materials, 1 x Industrials
  • sells: 1 x Energy, 1 x Communication Services, 1 x Financials

Contrarian approach (betting against the recent trend):

  • buys: 1 x Energy, 1 x Communication Services
  • sells: 1 x Utilities, 1 x Materials

Trend-following approach

Top 3 Buy Candidates

SO Southern Co. – Utilities

  • Stock trades within a short-term consolidation after breaking above local highs – possible uptrend continuation play
  • The resistance level is at $55
  • The support level is at $50-52

SEE Sealed Air Corp New – Materials

  • Possible bull flag pattern and uptrend continuation
  • The resistance level of $42
  • The support level is at $35-36

MAS Masco Corp. – Industrials

  • Possible bull flag pattern and uptrend continuation play
  • The resistance level of $60
  • The support level is at $54

Summing up, the above trend-following long stock picks are just a part of our whole Stock Pick Update. The Utilities, Materials and Industrials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today.

For a look at all of today’s economic events, check out our economic calendar.

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Fondex Adds Paytrust88 to its Funding Methods to Facilitate Asian Market Deposits

Paytrust88 is a reputable payment provider, specialized on the support of Asian market payments. Fondex clients from Malaysia, Vietnam, Indonesia and Thailand, can now choose the Paytrust88 deposit method for even more convenient and smooth fund processing.

“True to the idea of raising the standards of the Forex industry and providing the uttermost comfort, security and support to our clients across the globe, we at Fondex are happy to add Paytrust88 to our numerous deposit methods. A highly-international entity, we strive to accommodate traders from all parts of the world, and believe that the integration with Paytrust88 will make our Asian clients’ journey an even more effort-free and easy-flowing one” says Mr Alex Sologubov, COO of Fondex

About Fondex

Fondex is an award-winning multi-asset brokerage, offering CFD trading on 1000+ instruments across Forex, Shares, Indices, Precious Metals, Energies, ETFs, and Cryptocurrencies. Fondex cTrader offers the opportunity to trade in four different ways – manually, copying other traders’ strategies, using cBots and following signals from Trading Central and Autochartist – making it the ideal platform for both experienced traders and beginners. Spreads start from 0.0 pips and Fondex charges the lowest cTrader commissions globally on Forex, Energies and Precious Metals. Additionally, Fondex secures its clients’ funds by keeping them in Tier-1 segregated accounts, while also offering them Negative Balance Protection.

Fondex is headquartered in Cyprus and has a dual regulatory listing, both through the Cyprus Securities and Exchange Commission (CySEC), as well as through the Financial Services Authority (FSA) of Seychelles.

Fondex Limited with registration number 8424819-1 is a company registered under the Laws of Seychelles and is licensed by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No: SD037.

Fondex™ is a tradename of TopFX Ltd with registration number HE 274180, which is registered as a Cyprus Investment Firm (CIF) and licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 138/11.

For more information, please visit https://fondex.com/.


Risk warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved.

NASDAQ Potential Bullish Bounce off the 3 POC Zones

NASDAQ (National Association of Securities Dealers Automated Quotations Exchange) has shown more bullish actions than other US Equities.

Compared to SNP500 and DOW30 we can see that NASDAQ is more bullish. I expect bullish continuation off any of the 3 POC zones. See the chart for exact zones. Bulls should be ready as the bullish momentum prevails. Zones are clustered around 50.0, 61.8 and 88.6 Fib retracements. We should see a move up once the price gets to a zone. The final target should be 11489 and above we will should see a retest of 11559.

 

DAX Heavy Resistance Zone Could Create ABCDE Triangle

SM:

  • German stock market (DAX 30) bullish price action is running into a heavy resistance zone. A bearish reversal could take place and create an ABCDE triangle
  • A bearish breakout below the support zone (green box) could send the DAX lower towards the Fibonacci targets.
  • The DAX chart needs to break below the support trend line (purple) to increase the probability of a triangle chart pattern developing.

The German stock market (DAX 30 index) bullish price action is running into a heavy resistance zone (red lines). A bearish reversal could take place and create an ABCDE (purple) triangle chart pattern. When would this triangle become confirmed?

Price Charts and Technical Analysis

DAX weekly chart

The DAX chart needs to break below the support trend line (purple) to increase the probability of a triangle chart pattern developing. A bearish breakout could confirm (green check) the push lower to test support (green box). If price action keeps respecting the tops and bottoms, then an ABCDE triangle chart pattern is likely to emerge. A break of the top or bottom would invalidate (red x) that outlook within a potential wave 4 (green).

The SWAT candles are showing red color for the second time. Price action also broke below the support trend line (dotted purple) and the 21 ema zone. The trend lines also indicate a broken rising wedge reversal chart pattern. Price seems to have completed a bullish ABC (orange) within wave B (purple). A bearish breakout below the support zone (green box) could send the DAX lower towards the Fibonacci targets.

DAX daily chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

Monthly Outlook for October – Webinar Oct 05

Join our accomplished Senior Research Analyst, Lukman Otunuga, and Market Analyst, Han Tan, to find out. This interactive presentation reveals potential trading opportunities in the month ahead, and reveals what could be in store for Gold, US stocks, the Pound and much more. A live Q&A session will follow, providing you with the perfect opportunity to get your most pressing questions answered by our experts! Don’t miss out on the chance to learn more about what’s moving the markets this October! All the material presented has been approved by the Company’s Key Individual, in accordance to FSCA guidelines.

REGISTER FOR FREE

  • Log in or register
  • Click ‘Join Now’ on your chosen Webinar
  • Check your inbox for the webinar link

Lukman Otunuga is a research analyst at FXTM. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in the various factors affecting the currency markets. Read his full profile here.

Tan Chung Han (Han Tan) joined FXTM in January 2019 as a Market Analyst. A highly experienced financial journalist and news presenter with an in-depth understanding of the Southeast Asia and Asia-Pacific regions, Han will be providing valuable insights into local and international market news, as well as macroeconomic trends. Han will also act as the face of the company for these regions by providing market commentary, thereby solidifying FXTM’s reputation as a leading authority on world currency trends. Read his full profile here.

Gold Miners Update – Another Decline Coming in GDX

Miners are back-testing the breakdown trendline and the 10-day EMA ($39.66). The technical pattern resembles an ABC measured move to a target encompassing $33.50. Prices could turn back lower between now and Friday. It would take progressive closes above $40.00 to promote an alternate scenario.

Chart Description automatically generated

The correction into an intermediate low is filled with twists and turns, some convincing – do not be fooled.

The current rebound in gold should be limited to $1900 to $1920 before prices turn lower. We maintain an optimal cycle target of $1740 – $1780 in the opening weeks of October.

How markets react to tonight’s presidential debate will be interesting. Prepare for increased volatility.

AG Thorson is a registered CMT and expert in technical analysis. Premium members receive daily market updates. For more information, visit here.

For a look at all of today’s economic events, check out our economic calendar.

 

Fed Isn’t Thinking about Rate Hikes. So Does It Maybe Think about Gold?

The Fed Vice Chair says that the Fed will not even think about hiking interest rates until the inflation reaches 2 percent. Meanwhile, the price of gold decreases further. What is exactly happening in the gold market?

Over the last week, several Fed officials spoke publicly with the purpose of convincing investors that their new policy strategy would be positive for the economy. Powell himself testified three times before Congress. However, the most interesting remarks were delivered by Richard Clarida, Fed Vice-Chair.

On Wednesday, he told Bloomberg Television that the FOMC would not even think about hiking the federal funds rate until the inflation reaches 2 percent:

Rates will be at the current level, which is basically zero, until actual observed PCE inflation has reached 2%. That’s ‘at least.’ We could actually keep rates at this level beyond that. But we are not even going to begin thinking about lifting off, we expect, until we actually get observed inflation … equal to 2%.

That’s excellent news for the gold market! Clarida’s words imply lower interest rates for a more extended period. The Fed will not raise the rates until the labor market recovers completely, and the inflation at least hits the Fed’s target, or until it somehow surpasses it for some time. According to the US central bankers, these conditions will not be met until the end of 2023, if not later. The dovish monetary policy of lower for longer means that the real interest rates will likely stay in negative territory, supporting gold, but does not bear any yield. And if the inflation rises, the real interest rates will decline even further.

But still, if this is so positive for the gold market, why the yellow metal price has declined further below $1,900, as the chart below shows?

Well, the interest rate policy is only one aspect of the Fed’s standpoint. Another is the asset-buying program – and this is the one area where the US central bank disappointed investors. You see, market participants were upset because the Fed did not announce the bond purchases expansion.

It is an event that saddened precious metals investors. After all, gold benefited substantially from the mammoth growth of the Fed’s balance sheet. But, as indicated in the chart below, already in May, this growth lost its momentum and stagnated further later on. Additionally, since summer, the central bank’s assets have been stabilized at around $7 trillion.

Implications for Gold

So, to conclude, what does the above mean for the gold market? Well, amid the recession, negative interest rates, rising public debt (last week, the Congressional Budget Office projected that the U.S. federal debt held by the public would balloon to about 195 percent of the US GDP in 2050), easy monetary and fiscal policies and the risk of inflation acceleration, the fundamental outlook for gold remains positive in the long-run.

However, despite that, this fall, we can see more weakness in the gold price. The downside risks include the renewed recession with a rush toward cash, a smooth presidential election, the introduction of a COVID-19 vaccine and related market euphoria, and the lack of additional fiscal and monetary stimuli. Indeed, the current stalemate in Congress over additional aid programs, although negative for the GDP outlook, does not help gold. The lack of freshly issued Treasury bonds also lowers the Fed’s potential to monetize the public debt.

In other words, it seems that the second leg of the bull market in gold will not come into effect unless the Fed expands its assets again or the inflation accelerates, which at the end of the day, it is quite possible, given the broad money supply expansion, the rising federal debt, and the Fed’s new monetary framework.

If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports, and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. To enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet, but you are not on our free gold mailing list yet, we urge you to subscribe for it as well for daily yellow metal updates. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Profits.

 

Will the Bomb Explode, Igniting Gold?

The bomb can explode one day. And I do not mean here missiles from North Korea, Iran or China. Neither I think about the viral threat – the coronavirus bomb has already blown up in spring, dragging the world into deep economic crisis. I have in mind the U.S. debt bomb. Just take a look at the chart below. As one can see, the public debt has reached 107 percent of the GDP even before the pandemic.

And it further increased in the second quarter of 2020, possibly even to around 137 percent, according to the U.S. National Debt Clock. Although the surge in the ratio of debt-to-GDP partially resulted from the unprecedented collapse in the economic activity triggered by the epidemic and the Great Lockdown, it was also driven by the vast additional government expenditures. As revenues declined, the fiscal deficit is expected to balloon from $984 billion, or 4.6 percent of GDP, in fiscal year of 2019, to $3.7 trillion, or 17.9 percent of GDP in 2020, according to the CBO. In consequence, the already high public debt is forecasted to increase even more. And Fitch has already downgraded its outlook on the U.S. debt from stable to negative.

Some economists claim that government stimulus financed by debt was necessary given the disastrous economic effects of the coronavirus crisis. Maybe it was, maybe not (we believe that increased spending on health should be accompanied by spending cuts in other areas) – but one thing is certain. When the battle with Covid-19 will be won (and it will be!), the policymakers will need to detonate the debt bomb.

There are a few ways to do it. The first is obvious and the less harmful one in the long-run. The government could reduce its excessive spending and, thus, fiscal deficits, stabilizing the ratio of debt to the GDP. Unfortunately, it is the most difficult option from the political point of view, especially when both Trump and Democrats talk about the need of more economic stimulus and higher spending on infrastructure.

Second, the government could hike taxes to raise more revenues, filling the budget hole. Trump is unlikely to raise taxes, but if Biden wins, higher taxes for the richest are possible. Although they would reduce the fiscal deficits, hiking taxes, especially in the aftermath of the recession, would be harmful for the economic growth.

All this means that policymakers will be tempted to reduce the public debt through either higher inflation or financial repression. Both ways are supportive for the gold prices.

Let’s start with inflation. Gold is believed to be an inflation hedge, so the increase in inflation – or mere inflation expectations – would increase the demand for gold and its price. Moreover, higher inflation means lower real interest rates – which would also make the yellow metal shine. So, attempts to inflate away the debt would weaken the greenback, lower the already ultra-low real bond yields, and support the gold prices.

Financial repression is maybe less spectacular but also positive for the yellow metal. It works as follows: the government caps the interest rates that financial institutions are allowed to pay. The idea is simple: thanks to the financial repression, government can borrow cheaper than it could otherwise because people simply are not allowed to get better returns elsewhere. This method wouldn’t be unprecedented, as it was used to reduce the high public debt after World War II.

Oh, by the way, the interest-rate ceilings were lower than the rate of inflation, so creditors received negative returns in real terms. It goes without saying that gold should shine during financial repression. After all, the argument that gold doesn’t pay interest would be less convincing in the world where other assets offer scant yields or even negative returns in real terms.

Yield curve control contemplated by the Fed would be that kind of financial repression, as it would also aim to keep the Treasury yields at sufficiently low level to reduce the debt-to-GDP ratio over time. If implemented – so far the U.S. central bank has not endorsed the idea – it would maintain ultra-low interest rates with all their negative consequences, such as: the prevalence of zombie companies and misallocation of capital, the search for yield and excessive risk-taking, the rise in private indebtedness, etc.

Moreover, the ultra-low interest rates could lead to capital outflows, which would weaken the U.S. dollar, while strengthening gold. Last but not least, the pledge to keep interest rates at very low level could require the Fed to let inflation turn hot, which would also support the gold prices.

To sum up, high public debt will be one of the most significant legacies of the coronavirus crisis. The efforts to reduce it will become an important element of the political debate in the upcoming years, as policymakers will realize – sooner or later – that they are sitting on a ticking time bomb. It seems that financial repression will be the preferred method of reducing the high debt-to-GDP ratio, dominating the investment outlook in coming years. Precious metals investors holding gold should benefit from negative real interest rates.

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar. 

Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Profits.

Gold Bull Markets: History and Prospects Ahead

 

Dollar and Stock Markets Mature for a Correction

DAX makes contact with the first important resistance

SP500 corrects massive upswing from Monday

CAC stays above the major support after the false bearish breakout

Dollar Index goes lower after the head and shoulders pattern

EURUSD tests the first crucial horizontal resistance

USDCHF on the other hand, tests important support

EURJPY reverses higher after the false bearish breakout from the rectangle

Gold on the way to test the 1906 USD/oz

For a look at all of today’s economic events, check out our economic calendar.

HotForex Celebrates Double Award Triumph in Africa

HotForex, the internationally acclaimed multi-asset broker on CFDs, has raised the bar in the FX industry since the company has received two prestigious titles from International Business Magazine, the “Best Trading Experience Africa 2020” and the “Best Client Fund Security Africa 2020”, in recognition of the quality of the trading experience and the high levels of fund security provided to its traders and investors across Africa.

Since the company’s inception, its mission and business strategy have remained 100% client-focused. The range of products and services is very wide providing a rewarding trading experience and a more professional trading environment for traders. The company also complies with a strict regulatory framework and is constantly refining practices to ensure the highest possible levels of reassurance for clients and their funds. Negative balance protection, a market leading civil liability insurance program and segregation of funds are some of the measures HotForex has taken in order to provide a comforting and secure environment for clients.

HotForex CEO George Koumantaris commented: “We are all very pleased and honored for this great achievement. It is an affirmation that we always put our clients at the core of our business. We welcome this award and continue to work hard towards meeting the demands of our clients.”

About HotForex

With its origins dating back to 2010, HotForex is the brand name of HF Markets Group which encompasses global and regulated entities which are operating as multi-asset brokers offering both retail and institutional trading services to clients from around the world. HotForex is continuously establishing its position as a market leader, a fact affirmed by:

  • Over 2,000,000 Live Accounts Opened
  • More than 40 International Awards
  • Client Support in 27+ Languages
  • Top Fund Security Measures

To learn more about HotForex, please visit our website by clicking here.

Risk warnings:

Trading Leveraged Products such as Forex and Derivatives may not be suitable for all investors as they carry a high degree of risk to your capital.

Media Contact:
HF Markets Ltd

HotForex Honored With the Coveted “Best Forex Trading Conditions Global 2020” Award

HotForex, the internationally acclaimed multi-asset broker on CFDs, has been awarded the coveted title of “Best Forex Trading Conditions Global 2020” by International Business Magazine, confirming it is a preferred and trusted broker globally.

Over the years, HotForex has invested greatly in improving the trading conditions provided to its international client base by combining competitive pricing, execution speed, innovative platforms, world-class service and full transparency with regards to its services. Its decade-long commitment to offering traders these outstanding trading conditions is what has differentiated the company among the industry.

HotForex CEO George Koumantaris commented: “We are delighted our company has been recognized with this major accolade. The award reflects our constant efforts to provide clients from many different parts of the globe with the same business integrity and ensure the best trading experience possible for all. We will continue to work hard on enriching, optimizing and perfecting the trading experience for our clients through competitive conditions, full transparency and the highest regulatory standards.”

About HotForex

With its origins dating back to 2010, HotForex is the brand name of HF Markets Group which encompasses global and regulated entities which are operating as multi-asset brokers offering both retail and institutional trading services to clients from around the world. HotForex is continuously establishing its position as a market leader, a fact affirmed by:

  • Over 2,000,000 Live Accounts Opened
  • More than 40 International Awards
  • Client Support in 27+ Languages
  • Top Fund Security Measures

To learn more about HotForex, please visit our website by clicking here.

Risk warnings:

Trading Leveraged Products such as Forex and Derivatives may not be suitable for all investors as they carry a high degree of risk to your capital.

Tesla: Lithium Phase

Tesla signed a 5-year deal to take lithium from Piedmont – in addition to its other plan to extract the metal in Nevada. Piedmont’s stock surged by almost 300%. Tesla’s stock is still in a downturn though.

The daily chart below shows that Tesla is consolidating around the current level of $420. The heights of $500 were left in the dust a month ago but may turn into a bullish target soon – once we see the downtrend capping the upside broken. In the long-term, it’s unlikely that Tesla will go down because fundamentally, it keeps expanding its horizons. Even though its P/E ratio is way beyond 20 as Warren Buffett liked to warn, the business outlook for Elon Musk’s business looks positive and full of opportunities. And sales – including in China. So let’s wait where the bottleneck of the current fluctuation to exhaust and see where the stock goes.

This post is written and submitted by FBS Markets for informational purposes only. In no way shall it be interpreted or construed to create any warranties of any kind, including an offer to buy or sell any currencies or other instruments. 

The views and ideas shared in this article are deemed reliable and based on the most up-to-date and trustworthy sources. However, the company does not take any responsibility for accuracy and completeness of the information, and the views expressed in the article may be subject to change without prior notice. 

RoboMarkets Named the “Most Trusted European Broker”

“Global Forex Awards 2020 – Retail” commends achievements of the world’s leading brokers on global and regional scales. Among winners are the companies that achieved outstanding results in implementing their projects in such areas as the introduction of advanced technologies, comprehensive market research, carrying out of effective educational programs, provision of quality financial services on financial markets.

Konstantin Rashap, Chief Business Officer at RoboMarkets: “Recognition of us as the most trusted European broker is priceless. People require business openness and availability of quality services on a regular basis, and that’s exactly what RoboMarkets offers. In the future, we’re going to stick to the chosen development path and continue providing our clients with the first-class brokerage service”.


About RoboMarkets

RoboMarkets is an investment company with the CySEC license No. 191/13. RoboMarkets offers investment services in many European countries by providing traders, who work on financial market, with access to its proprietary trading platforms. More detailed information about the Company’s products and activities can be found on the official website at www.robomarkets.com.

RoboForex Receives the “Most Transparent Asian Forex Broker” Award

Global Forex Awards organizers bestow honorary titles to the companies that demonstrate outstanding results in the area of providing services on the Forex market. By means of open voting, they choose more than 20 laureates on global and regional levels, each of which is nominated according to a territorial basis: Asia, Africa, the Middle East, or Europe.

“Global Forex Awards – Retail” are presented to the most successful forex companies and brands on a global and regional scale – the ones that implement cutting-edge technologies, provide the best trading conditions, use complex market research tools, offer “advanced” educational programs, and deliver services of worldwide standards.

Denis Golomedov, Chief Marketing Officer at RoboForex: “We’re very pleased to get an award in the “Most Transparent Asian Forex Broker” category. Being an international company, RoboForex particularly appreciates regional acknowledgment – it means that our clients recognized our efforts and the strategy we’ve chosen is right. This award is another motivation to become the best broker in each category”.


About RoboForex

RoboForex is a company, which delivers brokerage services. The company provides traders, who work on financial markets, with access to its proprietary trading platforms. RoboForex Ltd has the brokerage license IFSC 000138/107. More detailed information about the Company’s products and activities can be found on the official website at www.roboforex.com.

FBS Announces New Trading Instruments in FBS Trader App

From now on, European traders can enjoy updated lists of indices and energies, in case they have Real or Demo accounts. The following instruments are now available in FBS Trader – Reliable Forex Trading Platform app:

  • Indices: DAX30, NASDAQ, S&P500, YM,
  • Energies: WTI, BRN

These instruments are popular among traders because of their high volatility. Oil especially shows an impressive presence in the market. This sector demonstrated the highest standard deviation. As for DAX30, NASDAQ, S&P500, YM, this group includes all major stock indices from leading global economies. It tends to be a good indicator of the overall market performance.

European clients may evaluate new opportunities for trading with the powerful and easy-to-use trading platform – FBS Trader. This brokerage app allows trading on the go from mobile devices using handy Forex tools from anywhere, any time. Moreover, it helps traders to track real-time statistics using price charts and never miss the right moment to open or close a trade. Now with the updated list of trading instruments, FBS Trader becomes even better.

FBS is an acknowledged, CySEC licensed international online Forex broker and the official trading partner of FC Barcelona. FBS is a broker with an international outlook that serves clients in Asia, Latin America, Europe, and the MENA. Its primary focus lies in offering financial products for currency, metals, and indexes trading for clients with different goals and backgrounds. The company features a low barrier to entry and top-ranking apps. Over 11 years in the field, the broker won 50 international awards, including Best International Forex Broker, Best Forex Brand, and Most Progressive Forex Broker Europe.

Gold Sellers are Waiting in the Ambush

The EUR/USD has formed a rounded bottom pattern on H1 timeframe and it has come exactly to the resistance zone.

We should see either a break to the upside or a move down. A breakout to the upside will target 1.1700, 1.1730 and 1.1771. This will be a sign of a deeper retracement up where we might see another wave of selling maybe this week depending on the US data later in the week. A drop below 1.1665 would instill another bearish momentum towards 1.1600. For the EUR/USD it’s – make it or break it.

 

FBS Won 3 Awards From The European Magazine

Over the past decade, FBS earned the trust of more than 15 million traders worldwide, many of whom are from Latin America, Asia and MENA regions. These regions have vast potential in terms of traders’ engagement and their desire to grow into professionals. FBS reaches everybody to help them learn Forex and become professional traders with their help, – support team of FBS works 24/7 in 20 languages.

FBS is winning the awards from European magazine every year. Winning The Most Reliable Forex Broker award from 3 various regions at once is inspiring for the broker. These awards once more prove that we provide outstanding investments services for all our clients from all over the world. It also shows that FBS is on the right track and gives the broker even more energy to deliver more fantastic trading features and bonuses to clients.

Nowadays, FBS offers demo accounts to investors to test their trading strategies in a safe environment. The broker also provides various types of accounts, both for beginners and professional traders. On top of that, FBS provides instant deposits and withdrawals via the most popular payment systems with zero commission and various promotions for the clients.

____

FBS is an international broker with over 190 countries of presence and more than 15 000 000 clients. It is famous for regular, diverse, and advantageous contests and promotions that are highly appreciated by the global trading community. Besides, the broker offers various specialized services to make trading more pleasant and beneficial, such as swap-free and VPS services, cashback up to $15 per lot, and more. An official trading partner of FC Barcelona from January 2020.

The European is a quarterly business publication that covers a broad spectrum of business affairs globally, including Energy, Banking and Finance, Foreign Direct Investment (FDI), Shipping, Technology, and more.

Gold And Silver Follow Up & Future Predictions For 2020 & 2021

RESEARCH HIGHLIGHTS:

  • Uncertainty and cycle events will likely lead to continued Gold and Silver price appreciation until the cycle events end (likely in 2024 or 2025).
  • The gold/silver ratio chart shows very clear levels of support and resistance. With the next targets $2,000-$2,250, $3,200 then $5,500+.
  • Extended basing may continue for the next 2 to 4+ months.

I have received many comments and questions related to our Gold and Precious Metals predictions originating from research posts we have made recently.  Today’s research article is Part 1 of a two-part series, which will revisit some of our past forecasts and showcase what my research team and I believe will be the most likely outcome for Gold as we push through the end of 2020 and into early 2021.

A CONFLUENCE OF TECHNICAL AND CYCLE PATTERNS CONVERGE

I will be referencing two of my team’s earlier research articles in this follow-up article. Our June 2020 article entitled All That Glitters When the World Jitters is Probably Gold put forth a bold prediction that the spike in the Gold to Silver ration during COVID-19 would collapse into a Flag formation, then collapse lower, resulting in a strong upside move for both Gold and Silver.  In August 2020, our next piece of related research, Detailed 2020/2021 Price Forecasts for Gold & Silver, suggested detailed “100% Measured Moves” would continue to drive Gold and Silver prices higher in block-like advances until a true parabolic upside rally broke away from these 100% Measured Move price events.

The chart below from the August research article highlights how our predictions translated into reality as the spike in the Gold to Silver ratio broke lower after the March 20, 2020 bottom, then executed a series of 100% Measured Moves resulting in a deeper price breakdown in the Gold to Silver ratio chart. It also highlights the future expectations as of August 2020 – where we suggested a more moderate sideways decline in the ratio would likely take place resulting in more moderate measured moves lower.

There are a number of factors related to precious metals and the fragility of the global markets in the current market environment.  To this end, we have also recently posted a research article suggesting the major Super Cycles are aligning in a way that suggests we may experience 3 to 5+ years of very odd price cycles. This is something that we have not seen in well over 75 years.  We are also in an election year cycle. Please review the following articles for more information on the cycle events that are currently playing out.

April 2, 2020: STOCKS HAVE ENTERED A 25-35 YEAR CRISIS CYCLE RE-EVALUATION EVENT

June 1, 2020: ELECTION YEAR CYCLES – WHAT TO EXPECT?

What does all of this mean for Precious Metals?  It means the uncertainty and cycle events will likely lead to continued Gold and Silver price appreciation until the cycle events end (likely in 2024 or 2025). Below, we will share our thinking related to the future price actions in Gold, and how the Gold to Silver ratio will react over the next 6 to 12+ months, to help you better understand the opportunity we believe will continue to persist in Precious Metals for some time to come.

The recent downside price move in Gold and Silver is suggestive of the COVID-19 price collapse in Precious Metals.  As the markets have fallen over the past 2 to 3+ weeks, Gold and Silver fell from support levels and set up a moderately deep price low , similar to what happened when COVID-19 took hold.  My research team believes this downside “washout” is the same type of reactive price move as we saw in February/March 2020 when the broad US and global markets collapsed. We see a deep washout low price rotation well below reasonable support levels.

Although it may be difficult to see on the Monthly Gold to Silver ratio chart below, the right side of the chart shows the recent upward spike in the ratio (follow the END of the BLUE LINE).  Because of the current rally in both Gold and Silver followed by the recent moderate downside price move in metals, the Gold to Silver ratio has yet to spike above the SUPPORT level on this chart.  What happened back in March 2020, after the COVID-19 collapse was that Gold rallied back to near recent high levels while Silver languished near low price levels – that is what caused the spike in the Gold to Silver ratio.

Currently, both Gold and Silver have collapsed nearly equally, resulting in a more moderate spike in the Gold to Silver ratio. We believe the SUPPORT level on this chart will act as a ceiling for the ratio going forward.  We believe the two downside RESISTANCE levels will become the next targets for Gold.  The $2000 to $2250 level is very clearly the next upside price target.  Once this level is reached, then we believe Gold will attempt to move to $3200 or higher. Ultimately, the $5500 level is on our radar as an eventual parabolic price trend takes place (this may be well into 2022 or later).

Our research suggests a new BASE is setting up in the US stock market and in Gold and Silver.  This new base may become the future launch pad for a very big price move higher.  Our researchers believe this new basing pattern will start to complete near the middle/end of 2021 (possibly extending into early 2022).  We are watching the current price action in the US stock market and precious metals to better determine where and when this incredible setup initiates the next big upside price move.

We believe extended basing may continue for the next 2 to 4+ months in the US stock market and precious metals.  This does not mean that precious metals will trade sideways – it is very likely that metals may continue to push higher from the current base levels.  We believe this new basing pattern will prompt a big upside move eventually, but right now we believe the moves to be more moderate and prompt more of an upside “drift” in metals.

In Part II of this research post, we’ll highlight more of our expectations and attempt to highlight the new FUTURE BASE that is setting up in the US stock market and precious metals.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. Subscribers of my Active ETF Swing Trading Newsletter can ride my coattails as I navigate these financial markets and build wealth. My research and trading team are here to help you find better trades and navigate these incredibly crazy market trends.

While most of us have active trading accounts, our long-term investment and retirement accounts are equally at risk. We can also help you preserve and even grow your long term capital when things get ugly (likely now) with our Passive Long-Term ETF Investing Signals.  Don’t wait until it is too late – subscribe today!

For a look at all of today’s economic events, check out our economic calendar.

Have a good week!

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

NOTICE AND DISCLAIMER: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.  It is provided for educational purposes only.