by Bill Downey     Price Analysis of Gold and Silver
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Technical Analysis Trading Gold, Trading Silver/ analysis By Bill Downey providing key turning points & charts for investors and speculators in Precious Metals Trading, and Precious Metals Markets

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Bill Downey, of Gold Trends.net, LLC, is an Independent Investment Analyst with over twenty years of study. YOU SHOULD NOT TAKE ANY MATERIAL posted on this WEBSITE AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED. Do your own due diligence. No one knows tomorrow's price or circumstance. The author intends to portray his thoughts and ideas on the subject which may s be used as a tool for the reader. GoldTrends does not accept responsibility for being incorrect in its speculations on market trend or key turning points that it may discuss since they are at best a calculated analysis based on historical price observations.

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The most important chart on Earth and the Fed knows it

25 Mar 2015 1:09 PM | Bill Downey (Administrator)
GoldTrends has been for some time discussing the coming liquidity squeeze. That is what is forcing the US dollar higher and the risk of a liquidity squeeze that we have been warning since 2011 is nearing the 2015 target for a crisis.

As you can see below, its starting to make the news headlines. Recall how long we favored deflation before it became main stream news? Now it’s beginning with liquidity.

Profound Shift In Liquidity Risk" May Imperil Market Function, New Report Say

Submitted by Tyler Durden on 03/24/2015

Over the past several weeks we’ve said quite a bit about the lack of liquidity in both corporate and government bond markets. In a nutshell, QE is taking its toll on Treasury and JGB markets, with both traders and officials in Japan voicing concerns about liquidity while new regulations have made it more onerous for banks to hold inventories of corporate bonds, imperiling the secondary market at a time when new issuance is high thanks to record low borrowing costs. Here’s more:

•Illiquid Corporate Bond Market Will End In “Very Unpleasant Fashion”
•Drowning In Liquidity But None In The Bond Market
•More Flash Crashes To Come As Shadow Banking Liquidity Collapses
•BoJ Conducts Survey, Promptly Ignores Results

Now, Oliver Wyman and Morgan Stanley are out with a new report that takes an in depth look at the issue.

From the note, on market conditions in general...

There's a liquidity conundrum in fixed income markets facing policy makers and investors: how it’s resolved will have long term investment implications across banks, asset managers and infrastructure players.

At its heart is the huge shift in liquidity risks to the buyside and asset owners as the twin forces of financial regulation and QE have played out. New rules have driven a severe reduction in sell-side balance sheet and banks’ liquidity provision. Wholesale banking balance sheets supporting traded markets have decreased by 40% in risk weighted assets terms and 20% in total balance sheet since 2010. At the same time, credit markets have boomed as companies turn more to bond finance and investors are hungry for income. Credit market issuance is 2.4 times larger today than 2005. Within this, AuM in daily redeemable funds have grown 10% per annum and are now 76% above 2008 levels…

This comes at a time when we think the liquidity of secondary fixed income markets is likely to get materially worse. As regulatory costs continue to drag on returns, we expect another 10-15% shrinkage of fixed income balance sheet from the largest wholesale banks in the next 2 years. As much as 15-25% could be taken out of flow rates, we think, given the huge returns pressure on that business.

There is a growing urgency to tackle this debate by policy makers. The impact of less liquidity has been masked by a benign, ultra low interest-rate environment, but this is set to reverse in the US in the next 12 months, and could also reveal the side effects of QE pushing investors to less liquid securities.

(End of Article and our thanks to www.zerohedge.com for it)


Here is the most important chart on earth
and the real reason why the Fed is afraid to raise rates. We get above the little back trend line above that major red one and the TREND OF THE USD on a long term basis flips from DOWN to UP. As you know we turned bullish on the USD in May of 2014 just under 79. While we are not ready to say it’s over, this is the first long term area where the dollar rally could end. Odds favor the Feds and central banks take a stand against the dollar here. Their quandary is they would like to see a pullback in the stock market too as they are worried It’s nearing bubble land. What they really should be wary of is the real bubble………..THE BOND MARKET. In sum, it is likely the US dollar climb takes a breather, but beware. If we get above these lines in the USD, it’s a whole new game. If we get the correction, it could be the catalyst that takes gold higher for the seasonal uptrend from the 21st of March to the 21st of May. Besides September, its most often the place where strength develops.

US dollar long term price chart with most important trend line


Gold Chart

Gold has exceeded the 2015 downtrend line and now resistance is 1205-1211. With options expiration today/tomorrow, the control boys moved it right to 1200 this morning as these options get ready to expire. A pullback to the channel line or the Fib 23% at 1180 or the weekly price reversal number at 1172 has us putting 1st support at 1172-1182 for today and Thursday. Resistance is 1205-1211 and then 1222-1225. It’s tough to gage whether gold pulls back from this area before heading to 1205-1211 or if it just moves there first. We are always dealing with odds and so there is nothing to say that the move completion at 1199.75 perhaps has completed the Options expiration portion of this move. Odds are still 1205-1211 and potentially 1222-1225 for this short term move. IF gold is really strong, then its just waiting for options expiration to expire, and then gold will move to 1222-1225 instead of 1205-1211. One of those two areas should be the high this week.

Gold Cycles



Cycles

The next cycle is due April 3rd (plus or minus 72 hours). There’s another mini cycle due March 26th, and we might get a pullback that begins from then. We’re not sure and just mentioning it. Overall, we still should expect this rally to push to the red channel line or the 50 day average at 1222.

Gold cycles


Silver

Resistance is 1705-1710 but more liikely 1725-1750. Support is 1625-1650 and minor at 1666-1674 and 1625-1650. Any close below 1604 would be bearish short term. Silver has been trying to break the upper downtrend line now for 48 hours. Should it do so, look for 1725-1750 next. In summary, silver needs to get above this red downtrend line. If it does, we should get 1725-1750. Thus 1705-1710 or 1725-1750 are odds favorite areas for this weeks high.

Silver price chart since the 2015 highs

 


Technical Analysis :: Gold & Silver

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