New Era Of “Debt Addiction”

Globally, the world is fast turning into an unfriendly and economically debt ridden haven filled with time-bombs that could go off anytime. If it is so bad why do politicians and the financial media promote a recovering economy filled with positive mentality? Just because it is their job does not necessarily means that constant raving about it will help.

An all-time record of high debt level is the one and main remedy to the current economic problem. It is by far an ingrained social acceptance that further debt escalation will be a common solution.

The IMF report on world debt summarised that “the world will need a wave of defaults, saving taxes and higher inflation to finally clear the way for recovery”. Are we on the verge of a liquidity crisis which could once again cripple the global economy once and for all? The stakes are too high and the “too big to fail” mantra send a strong echo to all politicians and economists.

Despite knowing the existence of toxic debts, the only solution is to deal with it later. For now, that is the most viable and easiest action to do rather than finding any real solutions via any form of discussion. Ironically, this is what the Chinese government has done over their mountain of debts.

Gold Technical Outlook

Gold registered a low at $ 1147.70 and bears continue to hold the upper hand. Only a break and close above $ 1195 will neutralise our view but anything below this are selling opportunities. We cannot discount the fact that the bears could try to attack previous support $ 1140 as well as previous low at $ 1130. Expect a small rebound but sellers will continue to dominate.

Silver Technical Outlook

As per last week commentary “Other indicator such as MACD and Stochastic are heading lower with more selling to come. Weekly Bollinger Band at $ 15.15 area could provide significant support as it reaches the previous downtrend line created since 2010.”

We expect a small rebound as Silver prices consolidate but any rallies are selling opportunities. Previous low at $ 15.28 will be the next target followed by $ 14.60. Break below that we envisage a dump and pump day, setting new low possibly to $ 13.50 area followed by a potential reversal.

Platinum Technical Outlook

Major support at $ 1150 failed to stop any fresh selling of Platinum. Weekly low registered at $ 1115.50 and with the market trending lower, we cannot rule out lower prices in the near future. Daily Chart shows a compelling trend lines and on this basis, only short covering action will allow the market to test the upper trend line between $ 1143 to $ 1148 areas.

In addition, the daily 20 MA will act as 1st resistance where sellers will prevail. Bears are still in full control and we felt that Platinum will further consolidate but any rallies are selling opportunities with a potential target of $ 1050 for long term support.

Palladium Technical Outlook

This nicely uptrending market pulled back in Palladium healthily and we cannot rule out that the metal could try lower next week. Pullback to the lower range of the trend line at $ 755 area may give investors an opportunity to buy in. Palladium prices reacted according to our weekly technical outlook. We shorted Palladium as the market open at $ 819.50 and hit our target of $ 795. “Look for a pullback as the weekly candlestick is a gravestone doji which could indicate that the bull tried to take the price further but failed.”

Longer term bearish scenario happens only if prices continue in this selling phase. A break and close at $ 773 will give the bear further impetus to take prices to test the lower Bollinger Bands at $ 754.39 (as of the time of writing). This bearish scenario will be invalid if price break and close above $ 850 area.

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