Walter Burien – CAFR1: The word that hovers over the market place with a foreboding tone

CAFR1 NATIONAL POST

CAFR1 MARKET RANTS 11/05/14

That foreboding word is deflation.

Copied below is the CAFR1 Market Rants of 10/03/14 which notes the deflation aspect of what appears to be the force overhanging the markets.

The dollar index projections noted are generally in line and stand. The silver notes were off per the extent of the push to the downside.

On silver it appears the DEC SILVER contract may breach tonight the lows set previously last night and I am looking at two prices to be a buyer. The first buy price is more of a day-trade at $14.960 looking to cover at $15.22 and stand back to see the forces at play. So far the forces at play have been persistent exerting downward pressure basically in line with inverse moves to the dollar index. If that holds true, I am looking at bottom picking tonight or early in the morning. I would imagine there are many players that bought much higher who are under pressure to liquidate their futures positions in silver and gold.

With that in mind, and the nature of the commercials / fund managers to squeeze blood from a rock, what is called a blow-off may be in line for the setting of the lows and possibly the bottom price for the year.

That second trade I am looking to do, and will be standing back to see if it happens is a slide down to between $14.73 to $14.615 and if that happens I will be taking a long term position with an initial upside target of $20.000 come December and then $24.500 come February 2015. After, and if that happens I will re-evaluate at that time.

Walter Burien – CAFR1.com – Prior CTA 1978 to 1992

COPY OF 10/03/14 CAFR1 MARKET RANTS POST IS AS FOLLOWS:

MARKET RANTS – CAFR1
10/03/14

I have not put out a Market Rants Post for over a year.

Today though I see a reason to do so.

US Dollar Index WEEKLY CHART 5-YEARS  and  MONTHLY CHART 25-YEARS

SILVER –  WEEKLY CHART 5-YEARS  and MONTHLY CHART 25-YEARS
As of this writing the US Dollar index is at 86.825 and Silver at 16.815

First and foremost, the Dollar index over the last several years appeared to be held by the Feds at the 82.50 mark. If it went below, intervention brought it back. If it went above, Fed intervention backed off and it returned to that level.

Well, in the last few weeks the Dollar index has been picking up steam as can be seen by the current price. Precious metals in the US are priced in Dollars so as the dollar goes up, the price of metals is pressured to go down. You could have metals in another country stay the same but in the US go down being priced in Dollars which are going up.

So, the big question is “What is going to happen and what is going on?”

When the Dollar is low, business activity is strong regarding international trade. US goods are cheaper to foreigners with a cheaper Dollar. The opposite is true with a stronger higher priced Dollar. So what are the Feds doing here? Allowing the Dollar to push higher and higher creates a word to many businesses that causes a cringe, that word is Deflation. So why are the Feds pushing at this time for Deflation? Business cycles are looked at in long term parameters. It is a chess game of motive and motivation. If the International community looks at the Dollar as heading to new high territory, and the trend is for it to continue to do so, they will not back off from buying US goods that they need. In fact they will increase their orders and then back off. This has a positive effect on the economy (if foriegn purchases back off, here the opposite is true). Additionally, the higher Dollar has the effect of bringing down prices in the US, Crude Oil, agricultural, precious metals, price of foriegn imports, etc.. or in other words: Deflation.

Government’s intent here? Well, they want to maintain the value of their multitrillion Dollar holdings and see a good rate of return on their investments.

Looked at on a global perspective per investments in the US, real estate values increase (even though they may go down slightly); stock market is attractive motivated to maintain its value priced in Dollars, inflation is stymied with a higher Dollar. Overall another word comes into play, “stability”. Here is what I think the Feds are going for. If deflation accomplishes that purpose, then motive and intent is answered.

The 10-year high level in the Dollar index was at the 91.0 to 92.5 range. I don’t think it will pass that mark in the next four years. Reaching 88.0 to 90.0 in the short run, that appears to be a strong probability. Again, this is a chess game. Next 30-day top? I would put it at 88.50 to 88.80 and the backing off to 86.00 to 85.00

What effect will this have on Silver? Well, when Silver was in the $30 range and I was asked higher or lower, I would say higher BUT, if the commercial boys wanted to push it lower the target mark I would look for to be an aggressive buyer was $16.85 per oz. (most that I told that to at the time probably thought to themselves what is he smoking, it will never get down there). I have learned to pick points after asking myself: Where would they push it to if the commercials and money manager boys wanted to screw everybody? The $16.85 mark was hit a few days ago and breached today with a $16.64 low set early in the morning. In the time it took to write this article, as of 8:45 AM AZ TIME it is at $16.90

Per Silver, I stand with the $16.85 mark being a good price for buyers who have bought looking to hold and “if” $15.55 was hit with the commercials and fund mangers putting the squeeze on, that price I refer to as the “Mortgage the farm price” as a buy.

Sent FYI from,

Walter Burien – CAFR1 – Prior CTA 1978 to 1992
P. O. Box 2112
Saint Johns, AZ 85937

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Published in: on November 5, 2014 at 8:17 pm  Leave a Comment  

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