Gold Imports by China Soar Almost Fivefold as Inflation Spurs Investment

Stages of Denial
(1) Laugh
(2) Discredit
(3) Fight
(4) Accept

Are we still laughing at $5,000 gold?

Gold, London P.M. Fixed:

China’s gold imports jumped almost fivefold in the first 10 months from the entire amount shipped in last year as concern about rising inflation increased its appeal as a store of value, said the Shanghai Gold Exchange.

Imports gained to 209 metric tons compared with 45 tons for all of 2009, Shen Xiangrong, chairman of the bourse, told a conference in Shanghai today. China, the world’s largest producer and second-biggest user, doesn’t regularly publish gold-trade figures and rarely comments on its reserves.

Source: bloomberg.com

China readies price controls to tackle food inflation

Price controls, either direct or indirect, inevitably lead to shortages. A close inspection of the gold and silver markets illustrates this point.

China will unveil food price controls and crack down on speculation in agricultural commodities to contain inflationary pressure that its central bank governor highlighted as a risk on Tuesday.

With consumer prices rising at their fastest pace in more than two years, the National Development and Reform Commission, the country's top planning agency, is preparing a "one-two punch" of actions to rein in food costs, official media reported.

Source: reuters.com

'Careful People', says The Trend in Home Prices

The trend in home prices, already bolstered by currency devaluation across the globe, is saying - "careful people." Any material deficit reduction program, such as elimination of the mortgage tax deduction, whether spun as ethically right or wrong, will bring down the pain not felt since the Great Depression. The cycle bottom for real estate is not due until 2032.

As Armstrong suggested, the 30-year mortgage was created to restore the real estate market in the Great Depression. The price of this innovation, which homeowners view as the norm today, was leverage. It took roughly 80 years for homeowners (Americans) to realize the inherent risks (price) of increased leverage.

U.S. Median Home Price (MHP):


Headline: Mortgage tax break in the crosshairs

Don't even think of touching the mortgage interest tax deduction in the midst of a fragile housing market.

That was the immediate response of the housing industry, which has come out with guns blazing against the presidential deficit commission's proposal to overhaul the coveted tax provision.

Source: money.cnn.com
Source: martinarmstrong.org

"The More or Less Than Expect" Do Not Alter the Cycles

Let the media play the "more or less than expected" game with daily fluctuations in the stock market. Today's average weekly jobless and continuing claims fall within the cycle trends.

Average Weekly Initial Claims State Unemployment (AWIC) And YOY Change:


Average Continuing Claims State Unemployment (ACC) And YOY Change:


The trend line breaks in announced layoffs suggest that the pressure is building for a 2011-2012 turn.

Challenger, Grey, and Christmas Announced Layoffs (ALO) And YOY Change:


Headline: Jobless claims increase more than expected

More Americans signed up for unemployment benefits last week, but the broader trend in layoffs points to a slowly healing jobs market.

The Labor Department says new claims for unemployment aid rose last week by a seasonally adjusted 26,000 to 436,000. The previous week's claims were revised up slightly to show applications had tumbled by 31,000 to 410,000. The figures are often volatile during the weeks around the Veteran's Day and Thanksgiving holidays.

Source: finance.yahoo.com

Positive Divergences in Natural Gas

There's so many people bearish on natural gas, it's likely only Grizzly Adams would be comfortable in this space.

Nevertheless, the message from the markets, similar to that in the Uranium market several months ago, implies growing bullishness.

This market should be closely watched for a technical breakout.

Natural Gas ETF (UNG):


Commercial traders have been big buyers for months.

Natural Gas ETF and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

Wall St jumps on U.S. commitment to Europe

The "reason" provided by the media. The only thing not predictable is the exact wording of the headline. Yesterday's "Set them Up Fellas" - COT Equity Money Flows analysis revealed that connected interests have been buying weakness long before this news flash. But then, why spoil the "big story" of the day?

The big headline flash simply makes the markets easier to understand for the public. Efficient market hypothesis suggests that every known piece of information is discounted in price. This interpretation leaves little room for the management and control of markets. Hah!

Stock indexes hit session highs in late morning trading on Wednesday as the euro jumped against the U.S. dollar after a government official said the United States would be ready to back a larger European financial stability fund via increased commitments to the International Monetary Fund

Source: reuters.com

Fear Cannot Drive Investment Decisions

Fear part of our evolutionary fight or flight survival mechanism. It works to override high-order consciousness in favor of reactionary limbic responses. While conditional responses are a wonderful survival technique, they are death in the trading/investing world. They are so counterproductive that organized ‘Trading Operations’ use them as their primary controlling tool.

Headings such as “Death of Commodities” and the “Mother of all bubbles” create fear. That fear tends to evoke reactionary selling. An initial flurry of reactionary selling triggers the non-thinking black boxes to instantaneously react. Towards the end of the operation many readers are too disillusioned to buy the dips.

The latest trading operation in gold is no exception. The small correction has created so much doubt and fear it’s likely that many will not return to gold or the gold shares. The transfer of ownership from the weak to strong hands, unfortunately, is simply the natural progression of the secular trend.

The sell off, though accompanied by a lot of arm waving and hype, has been minor. The trend energy of the gold shares can only be described as exceptional. Not only has trend energy, REV(E), surged to new highs, it’s appreciation has begun to accelerate.

Gold Miner's ETF (GDX):


Increasing relative strength of the junior gold shares against the majors also supports the growing interest (acceleration) within the gold shares.

Junior Gold Miners to Major Gold Miners Ratio:


Those using fear (conditional responses) to direct their investment decision will be shaken out of this secular bull market.