Deutsche Bank And Precious Metals’ Review

October 3, 2016
Technical Analyst & Author

A major “Sword of Damocles” overhanging global stock markets has been the situation with Deutsche Bank, which has a monumental derivative book and whose stock has been plunging to new lows. We have largely ignored this situation up until now, on the assumption that everyone else will until the SHTF, a strategy that has until now paid off. However, we should keep in mind that this is potentially a very dangerous situation that could dwarf the Lehman debacle and send world markets into a tailspin. That said, however, we have just seen a turnaround on stupendous record volume in DB stock on Friday, which suggests that the crisis is set to ease at least over the short to medium-term, and if so world markets could rally. Mrs Merkel and the German government have been caught in a dilemma over DB – after lecturing Greece and other southern European governments about the virtues of propriety for ages they can’t very well wade in and rescue Deutsche Bank, so it looks like the bailout will have to come from an international consortium of banks, via the simple expedient of printing up another few trillion, which gets more habitual the more times you do it, and there’s always the fallback position of a coordinated international bail-in, although for obvious reasons they are unlikely to resort to this until they have implemented the cashless society. Cyprus was a trial balloon for this. In the meantime various creditors might take pity and engage in debt forgiveness. The movie Wall St 2 with Michael Douglas is recommended viewing for senior management at Deutsche Bank.

Thus it is ironic that at a time when there are a plethora of “end of the world” articles inspired by Deutsche Bank’s troubles, Deutsche Banks’s latest chart shows what looks like a convincing reversal, with a prominent bull hammer appearing last Monday, the 1st sign of a reversal, then a Double Bottom with Monday’s low on Thursday, followed by a big white candle on titanic record volume on Friday. This could be a major bottom here and the bill for bailing out Deutsche Bank can surely be pushed onto either German taxpayers or international taxpayers, or both, in time-honored fashion, perhaps with a special exemption on this occasion for the Greeks, as an exercise in diplomacy.

Gold and silver stocks have continued to consolidate in recent weeks. Gold has been consolidating since early July after a sharp rise during June and looks like it is waiting for its 200-day moving average to catch up more with the price. There is important support in the $1300 - $1310 area, and since the price has dropped down close to that it is considered a buy here.

The pattern in silver is similar and looks to be morphing into a Symmetrical Triangle. The bullish inverted hammer of Friday means that there is a good chance that it will rally during this coming week.

Gold stocks, as represented by GDX, appear to be completing an intermediate base pattern above its rising 200-day moving average, and this looks like a good point to pick up the better ones, especially now that Deutsche Bank looks like it is pulling back from the brink, thus averting for now the risk of an all-out market implosion, although here it should be pointed out that DB is certainly not the only bank in trouble. Only in the event of the entire market caving in would the sector would be likely to break down into a C-wave decline.

 

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Courtesy of Courtesy of  http://www.clivemaund.com

Clive Maund

Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.

Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.

The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.

Visit Clive at his website: CliveMaund.com

Gold is one of the most recycled substances in the world.

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