Gold Presents Major Buying Opportunity

Gold prices fall sharply on profit-taking and a stronger U.S. dollar. U.S. stocks end higher on upbeat earnings reports. Gold last traded at $1,300 an ounce. Silver at $19.49 an ounce.

As millions of Americans rush to meet tonight’s deadline for filing their federal income taxes; gold has entered a correction, tensions continue to escalate in Ukraine and economic reports raise concerns about the health of the US economy.

The price of gold is off about 2% on technical-driven profit taking today after five days of consecutive gains. Despite the sell-off, there is evidence higher prices are in store.

Richard Ross, global technical strategist at Auerbach Grayson, says today’s correction is providing a good buying opportunity, as the charts are doing something they haven’t done in a while: flash a buy sign.

“There are some signs that make gold very attractive at these levels,” said Ross. “I’m not a gold bug per se but I do like a nice chart and I think that’s what we can see here with gold. It has a lot of things in its favor.”

Pulling out his fundamentals hat, Ross also sees a weaker dollar, lower interest rates and volatility in the equity markets as tailwinds for bullion.

One of the recent bullish indicators for gold has been rising Chinese demand, making China the world’s number one consumer of gold. According to the World Gold Council, that trend will continue over the next few years, with Chinese gold demand rising by another 20% by 2017.

Another factor that could potentially drive global investors to gold as a safe haven is the continuing tension in Ukraine. This tension ramped up yet again today as Russian Prime Minister Dmitry Medvedev said Ukraine was on the verge of civil war as the country launched a military operation against pro-Russian militants in the separatist East.

The government in Kiev is taking the battle to the restive East of the country after armed pro-Russian activists occupied administrative buildings in cities including Donetsk, a regional center of more than 900,000 about 62 miles from the Russian border. An attempt to head off the mounting insurgency may escalate tensions with Russia, which has 40,000 troops massed on Ukraine’s border after its annexation of Crimea last month.

In addition, a Russian fighter jet buzzed a US Navy destroyer in the Black Sea yesterday, making as many as 12 low-level passes over the ship in a clear effort at intimidation.

In more mundane economic news, new economic reports were released today which all show reasons to be concerned about the US economy:

• The Consumer Price Index (CPI) rose 0.2% in March, slightly higher than 0.1% economists had forecast. The Bureau of Labor Statistics said increases in the shelter and food costs accounted for most of the rise. Consumers are especially feeling the hike at the grocer where beef is at a record high and milk, and some vegetables, are also climbing in price.

In fact, beef prices are at their highest levels in 27 years and the drought in California is expected to drive fruit and vegetable prices up across the board anywhere from 14% for corn to 34% for lettuce in coming months.

• Confidence among home builders in the market for new, single-family homes remained in a holding pattern in April, ticking up just one point.

The National Association of Home Builders/Wells Fargo Housing Market Index rose to 47 from a downwardly revised reading of 46 the month before. The reading disappointed analysts who had expected it to rise to 49. A reading of more than 50 indicates more builders view market conditions as favorable than poor. In other words, more builders view market conditions as unfavorable or poor today than favorable.

• U.S. business inventories rose a bit less than expected as sales rebounded, suggesting a slow pace of restocking could weigh on economic growth. The Commerce Department reported that inventories increased 0.4 percent in February after rising by the same margin in January. Economists had forecast inventories increasing 0.5 percent in February.

Businesses accumulated too much stock in the second half of last year and are placing fewer orders with manufacturers while they work through the pile of unsold goods.

Add to these concerns; severe weather, the expiration of long-term unemployment benefits and food stamps cuts … all of which add up to a gloomy forecast for growth.

SATC Chairman Craig R. Smith on The Harvest Show – March 21, 2014

He oversees one of the most respected ministries in the country … CEO Cary Vaughn talks about his God-given vision for Love Worth Finding Ministries. And the chairman of Swiss America Craig R. Smith joins me with today’s economic news.

The Global Economy Is Struggling

Gold prices end slightly lower on weak data from China and Europe. U.S. dollar higher on emerging market concerns. Gold last traded at $1,316 an ounce. Silver at $21.68 an ounce.

Despite what you might be hearing from the so-called, mainstream financial press, there is mounting evidence the global economy is on shaky ground.

The first indication comes from yet another disappointing employment report in the US. Applications for unemployment benefits fell slightly in the second week of February but the level of claims appeared to signal little improvement in the U.S. labor market. Initial jobless claims dropped by 3,000 to a seasonally adjusted 336,000 in the seven days ended Feb. 15, the Labor Department reported this morning. The average of new claims over the past month, usually a more reliable gauge than the erratic weekly number, rose by 1,750 to 338,500.

Meanwhile, the government said continuing jobless claims increased by 37,000 to a seasonally adjusted 2.98 million in the week ended Feb. 8. Continuing claims are reported with a one-week delay and reflect the number of people already receiving benefits.

The second indication involves the Philadelphia Manufacturing Index, a widely watched gauge of industry activity in the US put out by the Philadelphia Federal Reserve Bank. This index has taken a big dive thus far in February, sinking to negative 6.3 from 9.4 in January. This is the weakest reading since February 2013 and the first negative reading since last May. Economists had expected a 7.3 reading. Any number below zero indicates contraction.

But indications of economic trouble are not limited to the US.

China’s vast factory sector contracted over the past month and a widely anticipated acceleration in euro zone business activity failed to materialize, highlighting the fragile state of the global economy. A similar survey out of China reinforced concerns of a minor slowdown in the world’s second biggest economy.

The flash Chinese Markit/HSBC PMI (a manufacturing activity index) fell to a seven-month low of 48.3 in February, although some analysts cautioned against reading too much into the report, noting it was a shorter-than-usual snapshot. Anything below 50 in this index indicates a contraction.

Markit’s Eurozone Composite PMI, another manufacturing index, dipped to 52.7 indicating an increasingly fragile recovery. The overall index masked news France is lagging far behind its European peers, pouring cold water on hopes for a recovery gaining momentum in that country.

Is it any wonder investors around the world are increasingly turning to gold?

Stocks can’t hold up indefinitely under the weight of poor underlying economic fundamentals. Gold, on the other hand, is an asset in its own right. It has historically moved independently of stocks and has proven a hedge against economic crisis and uncertainty, which erode the value of paper assets and currencies.

2.13.14 – Craig Smith Urges Personal Responsibility: ‘Let’s Get Back to Work’

In an appearance on the Fox Business Network’s “Cavuto” on Wednesday, Swiss America Trading chairman Craig Smith spoke on how to correct the course of the country, particularly the U.S. economy, which involves repairing some of the underlying structural problems of American culture. According to Smith, our young people have not had good leadership role models who are making good choices. Instead they are witnessing leaders who are afraid of the truth and of taking personal responsibility for failures. Americans think it’s time to stop the political blame-game and get back to work!

U.S. Stock Market Takes Breather From Yesterday’s Carnage

Gold prices end slightly lower on stronger U.S. dollar, equities rebound. U.S. stocks rebound after heavy sell-off. Gold last traded at $1,251 an ounce. Silver at $19.42 an ounce.

The turmoil in global stock markets persisted overnight, with bourses in China, Japan, Germany and the United Kingdom all sharply lower. For now, it appears the US market is taking a breather from the carnage, but there is still a wall of worry in the financial world.

Yesterday’s hugely disappointing US manufacturing report has served as somewhat of a wake up call, prompting renewed worries about the US economy. This is on top of the global worries about a slowdown in China and emerging market nations.

Mitul Kotecha, an analyst at Crédit Agricole articulated the concerns that trouble investors right now:

“A combination of tapering, a confluence of country-specific emerging-market country concerns and weaker growth in China provide the backdrop for a volatile few weeks if not longer, ahead.”

The Nikkei, Japanese stock market, is now down 14% for the year. The S&P 500 is down around 7%.

Despite the renewed concerns about the US economy, Richmond Federal Reserve President Jeffrey Lacker said that it was unlikely the Federal Reserve would stop “tapering” (cutting back on bond purchases). We shall have to see if Lacker’s attitude is shared by others at the Fed if the economy continues to disappoint. New Fed Chair Janet Yellen is known as an inflationist who believes in the myth of easy monetary policy as an economic stimulant.

One factor that could definitely figure into Yellen’s decision-making is a new report from the Congressional Budget Office (CBO) that Obamacare will push the equivalent of about 2 million workers out of the labor market by 2017.

That’s a major jump in the nonpartisan budget agency’s projections and it suggests the health care law’s incentives are driving businesses and people to choose government-sponsored benefits rather than work. That would amount to a double whammy for the financial world as it contributes to higher deficit spending and higher unemployment at the same time.

It’s no wonder experts are urging investors to accumulate gold at current levels in anticipation of higher prices down the road.