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Chris Vermeulen
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Chris Vermeulen the founder of AlgoTrades.net Algorithmic Trading Systems. This automated investing system is designed for individual investors and traders. He is also the editor of the TheGoldAndOilGuy newsletter which is designed for gold market traders providing quality ETF Trade Alerts,... More
My company:
AlgoTrades Algorithmic Trading Systems
My blog:
TheGoldAndOilGuy - Gold Market Traders
My book:
Technical Trading Mastery - 7 Steps To Win With Logic
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  • Bill Gross Says Gold Will Thrive In ‘Ring Of Fire'

    Bill Gross is one of the most recognizable names in the investment world. He is the founder and co-chief investment officer at bond fund giant PIMCO. His long-term track record regarding bonds is among the best and he still runs the world's biggest bond fund, the PIMCO Total Return Fund.

    Gross is also known for speaking quite bluntly about the United States' growing debt problem. His latest monthly market commentary came with a warning for the U.S. and investors alike. Gross stated that a number of recent studies have concluded that "The U.S. balance sheet, its deficit and its 'fiscal gap' is in flames and that its fire department is apparently asleep at the station house."

    The recent studies Gross pointed to came from the Congressional Budget Office, the International Monetary Fund and the Bank of International Settlements. The studies calculated that the United States needs to cut spending or raise taxes by 11% of GDP over the next 5-10 years. This translates to $1.6 trillion per year. That compares to the country's 8% of GDP deficit in 2011. Those numbers put the U.S. in the 'ring of fire' with other countries with similar fiscal gap sizes. These countries include Greece, Spain, Japan, France and the U.K.

    Gross warned that the U.S. debt problems have put the country in this "ring of fire" that will burn most investors. The only investors who will not get "burned"? He says the lucky few will be those that are protected by gold and other real assets, protected from a severe U.S. dollar depreciation caused by the Federal Reserve's money printing.

    In a white paper titled "GOLD - The Simple Facts" posted on PIMCO's website, PIMCO analysts Nicholas J. Johnson and Mihir P. Worah also said some interesting things. Here is an excerpt, "Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies." They pointed out the positive supply/demand characteristics of gold as a big plus in their scenario. The PIMCO analysts went on to say, "We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio."

    That is quite a statement coming from a "mainstream" investment firm. Wall Street's usual reaction to gold is that it is a barbarous relic whose only use is in jewelry and that no sane investor should put any money into it, even paper gold instruments such as gold ETFs like the SPDR Gold Shares (NYSE: GLD) and others.

    After Bill Gross' bullish words, gold prices were trading a 7-month high on Thursday before falling Friday to finish the week at about $1776.00 an ounce.

    (click to enlarge)

    Gold Investing Newsletter

    From a technical analysis point of view gold, silver and gold miners have been holding value at key resistance levels. While we could see a 3-5% pullback before they breakout and start the next rally overall the outlook for precious metals remains very strong and I put a $2400 per ounce on gold for 2013. My daily analysis and trade ideas are available at www.TheGoldAndOilGuy.com

    Chris Vermeulen

    Disclosure: I am long DGP.

    Oct 10 9:41 AM | Link | Comment!
  • 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

    Over the past year we have had some really interesting things unfold in the market. Investing or even swing trading has been much more difficult because of all the wild economic data and daily headline news from all over the globe causing strong surges or sell offs almost every week.

    For a while there you could not hold a position for more than a week without some type of news event moving the market enough to either push you deep in the money or get stopped out for a loss. This has unfortunately caused a lot of individuals to give up on trading which is not a good sign for the financial market as a whole.

    The key to navigating stocks which everyone thinks are overbought is to trade small position sizes and focus on the shorter time frames like the 4 hour charts. This chart is my secret weapon and giving you both large price swings which daily chart traders focus on while also showing clear intraday patterns to spot reversals or continuation patterns with precise entry/exit points.

    While I could ramble on about why the stock market is primed for major long term growth from this point forward I will keep things short and simple with some 4 hour and daily charts for you to see what I see and what I am thinking should unfold moving forward.

    Keep in mind, the most accurate trading opportunities that happen week after week are the quick shifts in sentiment which only last 2-5 days at most which is what most of my charts below are focusing on…

    Dollar Index - 4 Hour Chart

    This chart shows a mini Head & Shoulders reversal pattern and likely target over the next five sessions. The dollar index has been driving the market for the past couple years so a lower dollar means higher stock and commodity prices.

    (click to enlarge)

    Bond Futures - 4 Hour Chart

    Money has been flowing into bonds for the past couple weeks with most traders and investors expecting a strong correction in stocks. As you can see the price of bonds hit resistance this week and as of Thursday has now started selling off. Money flowing out of this "Risk Off" asset means money will move to the "Risk On" investments like stocks and commodities.

    (click to enlarge)

    Gold Futures - Daily Chart

    Gold is stuck in both categories in my opinion. It is a "Risk Off" safe haven when people are scared of falling stock prices, and it is also a "Risk On" speculative investment when people are feeling good about the market. Gold has been trading at key resistance for a couple weeks and looks as though it's starting its next rally. I like the GLDand DGP gold bullion Funds.

    (click to enlarge)

    Silver Futures - Daily Chart

    Silver is in the same boat as gold though it carries much more volatility than gold. Expect 2-4% swings regularly and sloppy chart patterns in this metal.

    (click to enlarge)

    SP500 Futures - Daily Chart

    As much as everyone hates to buy stocks up at these lofty prices I hate to say it but I think they are going to keep going up and they could do this for a long time yet. If the dollar index continues to break down then I expect the SP500 to rally another 3% from here (1500) in the next 1-2 weeks.

    (click to enlarge)

    Crude Oil Futures - 4 Hour Chart

    Crude oil has not had much attention from me in the past few months. While it has had big price action many of those big days took place on news causing an instant price movement making this extra dangerous to trade. I continue to watch rather than get attached to it.

    (click to enlarge)

    Natural Gas Futures - Daily Chart

    Natural gas has been a great performer for us in the past 6 months as all the short positions slowly get covered. I just closed out my natural gas ETF trade this week with a 31.9% gain and plan on getting back in once the chart provides another low risk setup.

    (click to enlarge)

    Trading Conclusion:

    In short, I feel the dollar index along with bonds will correct over the next few weeks. That will trigger buying in stocks and commodities. Keep in mind natural gas dances to its own drum beat. The dollar does not have much affect on its price and most times natural gas is doing the opposite of the broad market. Get My Pre-Market Trading Analysis Video and Intraday Chart Analysis EVERY DAY - www.TheGoldAndOilGuy.com

    Chris Vermeulen

    Disclosure: I am long DGP.

    Oct 04 10:45 PM | Link | Comment!
  • Gold Hits Record High In Euros And It's Setting Up For Another Rally

    The price of gold hit a record high this past week . . . in euro terms (at about 1380 euros). The record came after a number of actions by central banks around the world, trying to stimulate their respective economies. The actions, usually centered around money printing, once again had investors looking for refuge in gold.

    Since the beginning of September, investors have bought about 75 tons of gold through exchange traded funds. Reuters says that gold ETFs, such as the largest gold ETF - the SPDR Gold Shares (NYSE: GLD), are on track for their biggest quarterly inflows in over a year, of 3.285 million ounces. Finally, according to UBS, investors have also raised their bullish bets on gold futures to the highest level in more than a year.

    All the world's major central banks took action recently including the Bank of Japan which launched a fresh round of monetary stimulus. The main action though was centered in Europe and the United States. The European Central Bank has promised to buy an unlimited quantity of eurobonds going forward. And the Federal Reserve announced its third round of monetary stimulus, QE3, that promises to buy $40 billion of mortgage-backed securities monthly on top of its ongoing Operation Twist program of buying long-dated Treasuries.

    Speaking about the monetary easing, Barclays precious metals analyst Suki Cooper put it this way to the Financial Times, "Gold finally found the catalyst it had been waiting for all year after the Fed announced open-ended quantitative easing."

    Another reason for gold's rise in euro terms, it must be noted, is the continuing fiscal turmoil in Europe itself, particularly in Spain. Spain's largest autonomous region, Catalonia, manages an economy as big as Portugal's. The problem is that it has debts of 42 billion euros which it is struggling to service. Catalonia has requested a 5 billion euro temporary bailout from Spain's central government, adding to its debt burden. In a real show of defiance, Catalonia is also refusing to implement austerity measures. Add to that, bank stress tests in Spain showed that the country's 14 largest lenders will need 60 billion euros in new capital.

    No surprise then that physical demand for gold bars and coins in Europe rose 15 percent in the second quarter, according to the World Gold Council!

    Another positive fundamental reason in the corner of gold bulls is the recent currency appreciation in the Indian rupee. India is traditionally the world's largest consumer of gold. Sales have been slow there this year due to the government trying to slow down gold sales there through rises in a gold import tax. However, the recent rise in the rupee has made gold purchases more palatable and gold sales to India have hit their highest level in two months.

    So for now, many of the fundamentals look to favor a move higher for gold, although there is technical resistance at its 2012 high of $1791.

    Know when to buy gold, silver, oil and stocks - www.TheGoldAndOilGuy.com

    Chris Verneulen

    Disclosure: I am long DGP.

    Tags: GLD
    Oct 02 10:42 AM | Link | Comment!
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