Homepage / Archived News or Quarterly News / 4th Quarter 2015
Date Posted: 3/08/2016 @ 2:14am
When investing in any market, a good way to judge price movement in the future is to learn from the past.
In
this introduction section of these quarterly chart pages, I have used
quotes from Peter Lynch, Benjamin Franklin, and Frederick Douglas to try
to get my point across about why I began to put these pages together.
On this quarterly page, I am going to use a quote from an awesome realist and comedian who passed away (to early) from pancreatic cancer. Here's his quote:
"The world is like a ride in an amusement park. And when you choose to go on it you
think it's real because that's how powerful our minds are. And the ride
goes up and down and round and round. It has thrills and chills and
it's very brightly colored and it's very loud and it's fun, for a while.
Some people have been on the ride for a long time and they begin to
question: "Is this real, or is this just a ride?" And other people have
remembered, and they come back to us, they say, "Hey, don't worry, don't
be afraid, ever, because this is just a ride.
- Bill Hicks (1961 - 1994)
Each one of these quarterly pages is put together to help you understand the crazy financial world we find ourselves in and why owning some precious metals will help you make your ride through this insane market, a little more tolerable.
The charts and bullion news links on this page are largely devoted to the precious metals markets during the 4th Quarter of 2015.
There are also articles about the general direction of the financial markets and current events that affected the market during the quarter.
Immediately
below this summary, there are charts for the US Dollar, Gold, Silver,
Platinum, and Palladium, with simple Technical Analysis.
The financial news, audio, and videos links posted below the Palladium Spot Price Charts, were originally posted on the homepage during the 4th quarter of 2015.
Bullion News
The charts below are provided by the courtesy of
In the 4th quarter of 2015, the Federal Reserve (the Fed) and European Central Bank (ECB) dictated the US Dollar's movement.
Just like last quarter, I used dotted lines, in the chart below, to indicate when the Fed and ECB made their announcements to show you how it moved the US Dollar.
When
you look at the US Dollar chart, you're not only looking at a currency
chart, but you are also looking at tug-of-war game played by the World's
Central Banks to weaken their currencies against the US Dollar.
This is also known as 'Currency Wars,' a currency war is also referred to 'the race to the bottom'
for currencies and that is the current climate we find ourselves in.
Currency
Wars happen when a country's central bank devalues their currency
against other currencies of the world, making their exports more
competitive by making them cheaper to foreigners. But when one country
sees its exports diminished due to a higher currency rate, they also
devalue their currency. This action of reducing one country's currency against another will continue until the whole system implodes.
Currently,
it is "King Dollar" that other countries are devaluing their currencies
against, but sooner or later the U.S.'s debt and deficits will get the better
of "King Dollar," and that's when the system will implode.
(continued...)
US Dollar Price Chart - 3rd Quarter - (Oct 1st, 2015 - Dec. 31st, 2015)
The quarterly chart (above) gives
the impression that the US Dollar was falling in the beginning of the
quarter, but actually the US Dollar had been moving in a choppy sideways trade since May of 2015.
The
1st dotted line on this quarterly chart indicates when the Federal
Reserve failed to raise rates at its October meeting, they stated that
they did not want to raise rates because of volatility in the Global
Markets.
After the Fed didn't raise rates in October, the heat was on them from Wall Street to raise rates in December.
Bullion News
US Dollar Price Chart - (Oct. 1st, 2014 - Dec. 31st, 2015)
The pressure on the Fed from Wall Street caused the US Dollar to rise after the Fed's October meeting until the ECB announced that they were not going to extend their own version of QE (Quantitative Easing) as long as economists and investors had predicted.
See Article: ECB Day: Markets tumble as Draghi disappoints investors - as it happened
Before
the ECB's announcement, the Dollar broke above its $99.00 resistance
level, but after the ECB's decision, the US Dollar lost a lot of
strength, falling back below $99.00.
US Dollar Price Chart - (Oct 1st, 2012 - Dec. 31st, 2015)
After the Fed failed to raise rates in October, the Market expected two things to happen in December.
After
the US Dollar fell in response to the ECB's announcement, it stayed
above the $97.00 support level for the rest of the year.
The
Fed did raise rates, at its December meeting, by 25 basis points
(.25%), this pushed the US Dollar briefly above $99.00, but it fell back
below it and stayed below it for the last two weeks of the year.
US Dollar Price Chart - (Jan 1st, 2006 - Dec. 31st, 2015)
The US Dollar's long-term resistance level currently sits at $101.00 and its support levels currently sit at $93.00 and $90.00.
Since October of 2014, after the Fed ended QE (quantitative easing), the U.S. Dollar has moved up creating what I call a 'Confidence Zone' in the U.S. Dollar price and chart.
When the U.S. Dollar breaks above or below one of these price levels, it will be a sign of more or less Confidence in the Federal Reserve.
In addition, if the U.S. dollar goes up it will hurt precious metals and foreign currencies and when the U.S. dollar falls, precious metals and foreign currencies will move in a positive direction
I think I was a little too liberal on last quarter's 'Confidence Zone' section.
From what I've seen in the US Dollar's movement, it looks like the 'Confidence Zone' starts to affect precious metals and the foreign currency markets after the U.S. dollar falls under $93.00.
If the
U.S. dollar index falls to $93.00, I think we should see gold about to
break above the $1350 level. If and when this happens, gold's new bull
market will be confirmed.
After the Fed raised interest rates in December of 2015 by 0.25%, I watched Janet Yellen's press conference, and what struck me the most is how oblivious the FOMC is about how their actions affect the U.S. Dollar.
While the rest of the world is involved in Currency Wars, the Fed is only paying attention to their own set of indicators, and these indicators are reactive indicators and not proactive, which is a good explanation as to why they are often behind the curve.
I have indicated, in the chart below, a NEW "Low Confidence" Zone in the Dollar Chart.
I
think the support level for the Confidence Zone at $90.00 was
too low, $93.00 has been tested and has held since the U.S. dollar broke
above this price level in January of 2015.
However, after the Dollar falls below $93.00, it will only be the first step down in the Fed's Confidence Zone, after the $93.00 support level is broken a New 'Confidence Zone' for the Fed and the USDX will be drawn.
On the last three quarterly pages, I have posted the chart below, a pattern is forming in the U.S. Dollar chart.
The pattern is a technical pattern made popular by Chris Kimble of Kimble Charting, called the Eiffel Tower pattern.
I haven't changed anything in the charts about the USDX's Eiffel Tower pattern because it is still playing itself out.
However, below, I've indicated how long the other major peaks in the U.S. Dollar's index have taken.
Time will be the final judge as to how this pattern plays out.
44 year US Dollar Chart courtesy of: Trading Economics
Back to Order of Analysis and CommentaryBullion News
Below is a comparison chart I put together last quarter.
When observing the movement between the Federal Funds and Gold, you can see that the only time when the Federal Funds rate really affects gold's price was in the early 80's, when the Fed rate was raised above the level of inflation.
Furthermore, the Federal Funds rate has had only a minimal impact on the gold market.
For instance, the reasons why gold hit lows in the mid-80's and late 90's, was caused by low inflation, economic growth and debt reduction, not higher interest rates.
shaded areas on chart above indicate periods of recession
The most glaring observation is the lack of influence that the Federal Funds rate has made on Gold, which ultimately may make one wonder, given the natural business cycle, how much strength is left in the current bear market in gold?
Below, is the Gold Chart used to make the comparison chart, above.
Bullion News
Gold hit new lows in the 4th quarter of 2015, but, before we get to the charts, I wanted to show you that gold's movement in 2015 was no different from what it has done for the last two years.
(see the 2013 & 2014 gold charts below)
Bullion News
For the last two years, gold's price has been dictated by the Fed's
decision or lack thereof, to raise interest rates.
Since the Federal Reserve ended QE in October of 2014, Wall Street
has been expecting an Interest rate hike, but the Fed has failed to act.
The dovish talk from the Federal Reserve caused gold to rise in the
first few weeks of the quarter.
The price of gold rose so much that it briefly broke above the $1180 price resistance level.
But, shortly after the Fed failed to raise rates in October, the Fed
changed its tune and started to speak hawkishly for a rate hike in December.
In addition, the markets expected the ECB to increase its own form of QE at its December 3rd meeting.
Gold Price Chart - (Oct 1st, 2015 - Dec. 31st, 2015)
After the ECB's announcement disappointed the markets, it caused a small spike in the price of gold, then after the Fed announced that they were raising rates by 25 basis points (0.25%) gold traded sideways for the rest of the year.
On last quarter's page, I indicated 4 different support levels, on Gold's 10year chart.
Those price support levels were $1080, $1060, $1025 and $1000, the first two didn't stop gold from falling through them, but gold didn't fall as low as the other two.
Instead, gold's price stopped falling a little above the $1045 price level.
Gold Price Chart - (Oct 1st, 2014 - Dec. 31st, 2015)
Gold's price support levels currently sit at $1045 and $1000 and its price resistance levels sit at $1180 and $1350.
Gold Price Chart - 10year - (Jan 1st, 2006 - Dec. 31st, 2015)
Bullion News
The Federal Reserve raised rates at its meeting on December 16th-17th, 2016.
I did state more than once that I did not think it would be a wise choice for the Federal Reserve (the Fed) to raise interest rates, even though it was for a minuscule .25%.
In a normal market, the only reason to raise the Federal Funds rate is to pull liquidity out of the market.
The problem for the Federal Reserve is that liquidity is almost non-existent in this not-so-normal market and raising rates now doesn't make sense.
I honestly did not think they would do it and I know I said more than once that they wouldn't raise rates, I was wrong about that, but I also stated, on the quarterly pages since the 4th quarter of 2014, as to what would happen if they did raise rates and we're currently in the middle of that mess.
How it all unravels is still unknown, but Confidence in the Fed is waning, and Gold will be the ultimate winner.
Below I have included my own commentary as to why I think the Fed raised rates in December and what to expect in the future...
In this commentary, I wanted to share my comments in a response to an article that Jim Rickards wrote and released on the Darien Times.
Jim Rickards is a well-known author and economist who has recently written many articles on why he believes 'the Fed' (Federal Reserve) raised rates in December and he offers his views on what the Fed will do in the future.
Before I continue, I want to say that I respect Mr. Rickards and his views, I just disagree him on these issues;
The following is from a comment I posted under a Darien Times article that Jim Rickards wrote, titled "Rickards: Fed Mirage" <- click the link to see the article.
Mr. Rickards,
I respect your point of view, however, I have to disagree with almost all of your points in the article above, Titled: "Rickards: Fed’s Mirage"
A week or two ago you wrote an article on The Daily Reckoning titled: "Three and Done" in it - you made the point that the Fed would raise rates three times then reverse direction and ease.
In this article, you state that the Fed is going to raise the Fed Funds Rate "two times" then back off.
What happened to "Three & Done?"
The points you make in both articles are reasonable, but the Fed did not raise rates for the reasons you state.
They raised rates because of peer pressure from their peers in the Banking System and WallStreet.
For all of 2015, Wall Street kept predicting the Fed was going to raise rates and when the Fed kept balking after each meeting, to raise interest rates, their peers in the markets and academia were tapping them on the shoulder and telling them to stop stalling and raise rates, or they will lose confidence in them.
This has nothing to do with Data, it is all a Confidence Game
In October of 2015, the Fed balked again, claiming Global Markets for the reason.
Before October, Wall Street had been telling their clients, 'rates are going up, rates are going up, and after the Fed failed to raise rates, again and again, Wall Street's clients were losing faith in them.
So when the Fed didn't raise rates in October, Wall Street was pissed because now they were looking like fools.
So they started to shout at the Fed to raise rates or they would lose Confidence in them.
But the writing was on the wall for the Fed, Low Inflation and Turbulent Global Markets. Unemployment may be reduced, but Part-Time employment is growing at an alarming rate and so is the age of those employed.
The only reason the Fed raised rates was to keep confidence in them high on Wall Street and in the Global Markets.
And now that they raised rates, everyone is saying they should not have done it.
Nothing in the data says they should have raised rates. The only thing that has kept this economy afloat is the Fed and now that they raised rates - nothing is holding it up.
They can't raise rates more because it will influence the Dollar and hurt Global currencies. In addition, multinational companies will continue to get hurt by the rise in the dollar, dropping earnings.
Plus, Oil will get pummeled if they raise rates again, I don't know if you've been watching the markets (Mr. Rickards) but the last thing the Fed or Wall Street needs is for Oil to fall further in price.
The Fed has no reason to raise rates, I just hope they will figure that out as well as you .(Mr. Rickards)
I do not think that the Fed will raise interest rates again, as I noted on this page's 'The Fed's New Confidence Chart' section, the Fed's data is reactive, not proactive.
Meaning, the Federal Reserve doesn't see things until they have already happened, ex: the Tech Bubble & Crash of 2000, the Housing Bubble & Crash of 2008 and now the Credit Bubble & Crash we are in the beginning of today.
In my point of view, the data isn't what rules the Fed's future actions, what the Federal Reserves actions are based on has everything to do with what happens in the Stock Market.
If liquidity is as tight as I think it is, we'll probably see a rate cut before the end of the year, which will be the Fed's reactions to this Credit Bubble and Crash.
Overtime, their reactions will lead to a total 'Loss of Confidence' in the Fed.
Here is Mr. Rickard's article originally titled "Three and Done"
01/08/16: The Daily Reckoning - Three Rate Hikes and Done in 2016
Back to Order of Analysis and Commentary
Bullion News
Silver's price chart for the 4th quarter of 2015 looks almost identical
to gold's price chart and the rest of the precious metals sector.
Like gold, silver's movement was mostly dictated by the actions of central banks.
Silver Price Chart - 3rd Quarter - (Oct 1st, 2015 - Dec. 31st, 2015)
In the quarterly chart above, you can see that in mid-November, the price of silver fell to its support level of $14.00 a troy ounce.
The $14.00 price support level for silver was identified in last quarter's silver charts here: Silver Charts - 3rd Qtr 2015
Then on Dec. 14th, a few days before the Federal Reserve's decided to
raise rates a quarter of a percent, silver fell through the $14.00
support level and hit a low of $13.65.
Highlighted in the 1year chart below are the old and new support and resistance levels for silver.
Bullion News
Silver Price Chart - (Oct 1st, 2015 - Dec 31st, 2015)
Bullion News
In addition, in the chart above, the RSI and MACD are giving an indication of price direction for the next quarter.
In addition, I have highlighted in the 10year chart below, Silver's long and short-term support and resistance levels.
Silver Price Chart - (Jan 1st, 2006 - Dec. 31st, 2015)
Silver trades in the general same movement as gold, however, silver also trades as an industrial metal, due to the fact that over 50% of silver supply is used for industrial means.
Expect Silver to continue its volatile movement, but in the silver market, volatility is the norm.
At this time, it's better to be a silver observer than forecaster, after the 1st quarter of 2015 is over, it should be a little easier to contemplate on Silver's Future.
Bullion News
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Although Platinum and Palladium are affected more by industrial market forces than gold and silver, all of the quarterly charts for the precious metals look very similar.
The reason for this has everything to do with the Federal Reserve and ECB (European Central Bank).
Supply and demand factors usually affect the movement in the Platinum market, monetary factors don't usually move platinum as much as they have this quarter.
Platinum Price Chart - 4t Quarter - (Oct. 1st, 2015 - Dec. 31st, 2015)
Bullion News
Although the price of Platinum moved to a high of $1020 and fell briefly below $840, it started and ended the 4th quarter of 2015 in the low $890's.
Platinum's resistance level sits at $1040 a troy ounce.
But in the 1year chart (below), we see that the price of Platinum continues to make lower lows and has not found a bottom yet.
So, we need to look at a longer term chart to find a solid support price for the price of platinum.
Platinum Price Chart - (Oct 1st, 2014 - Dec. 31st, 2015)
Bullion News
Platinum's support level sits at its 2008 low of $750 a troy ounce
Platinum Price Chart - (January 1st, 2006 - December 31st, 2015)
Bullion News
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The Federal Reserve and the ECB's actions have dictated this quarters palladium price chart which was also pointed out on all the previous precious metals quarterly charts.
Like Platinum, this movement in Palladium is rare, because supply and demand factors usually affect these metals more-so than monetary factors.
Palladium Price Chart - 4th Quarter - (Oct. 1st, 2015 - Dec. 31st, 2015)
Last quarter, I pointed out palladium's support and resistance levels, this quarter those price levels were confirmed because the price of palladium did not close above or below those levels, in a trading day.
Palladium Price Chart - (October 1st, 2012 - December 31st, 2015)
These levels will stand until Palladium either breaks above or falls below its support and resistance levels.
The charts above are provided by the courtesy of StockCharts.com.
Bullion News
The Quarterly News starts with the end of the quarter articles, first.
The Headlines without links, had the link removed from its original source; the Headlines was kept on the page due to relevancy.
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