Working against gold were several items today. The first is the strength in the US Dollar, especially against the Yen which is down over 1.5% against the greenback as I write this. Also lower are the Euro, Pound and Franc with the commodity currencies also lower. King Dollar is back, at least for today.
The second is the sharp selloff in the US Treasury market which is pushing yields up once again. Today the yield on the Ten Year which is at 2.715% and is knocking on the door of that recent spike to a TWO YEAR HIGH. Recently, a rising interest rate environment in the US has tended to quell gold buying.
Thirdly is the mining shares failing to extend past the top of the recent trading range and drifting lower.
Fourth was news out of India that they are back to slapping additional import taxes on gold and silver in an effort to get their widening current account deficit under control. Gold traders in particular viewed that with alarm fearing a drop in gold demand. However, and I think this is important, China is on its way to replacing India as the largest demand source for physical gold. Just yesterday we got the news from the China Gold Association that Q2 demand hit a record of 385.5 metric tons. That is double from the previous year! It also continues to explain where a great deal of the gold being dishoarded over in the West is ending up.
In a sense, it was a trifecta plus ONE against gold in today's session but all in all the metal is holding fairly well. I personally think that the Chinese news is really positive for the metal especially when you hear reports of gold mines being shuttered and low grade ore deposits being drained. At some point the supply/demand equilibrium becomes unbalanced and price needs to rise to adjust it.
Please realize that this is longer term oriented but it is something that those who have an investment horizon of that nature should keep in mind.
For the shorter=term oriented traders - gold is knocking on the door at the very top of the range but still has not forced it open. IF (note the emphasis) the market can stick around here closer to the top of the range and stay above $1300, the onus is going to be on the bears to cap it off because the seasonal tendency for the metal to rise heading into the 4th quarter is going to make life tougher for them.
One has to wonder if the fact that the yield on that 10 year is going to get the Fed governors back out to the microphones for a little "verbal intervention" soon. The last time we had mortgage rates kicking up recently, some realtors were already making noise about the rise hurting the sales of higher-end homes due to the inability of buyers to qualify for loans now that interest rates had gone up. not only that, but it is the BORROWING COSTS of the Federal Government that keeps the Fed awake at night.
Over in the grains corn was whalloped lower today after staging a big short covering rally yesterday on immense volume. USDA came up with some goofy number that I certainly do not believe for the final yield but it was enough to send a large contingent of shorts heading to the hills. Today, after some time to digest the number I think the market began pooh-poohing it and back in came the selling. Hey, gasoline is expensive at the pump but maybe I can afford to buy a box of Corn Flakes at the grocery store soon without having to leave a pint of my blood as a surety.
Silver remains impressive as does copper, both of which got a lift today on the news that Germany's economy is doing better than was expected. News that the Eurozone's largest economy has perked up is good for copper usage and silver usage as well. Remember, silver has been moving quite a bit in sync with the base metals recently having launched higher last week on the Chinese trade data. As long as the base metals are firm, silver bears are going to have to look for something else as an excuse to aggressively sell it.
I still need to see silver trading through $22.00, preferably through $22.50 or so to feel like it has a solid shot at beginning a more exciting trending move.
Oops, gold bombed back to $1,315 in Asian trading, must be Bernanke sending more signals that tapering will be seemless and we have no inflation, however he will be ready to act when and if data dictates.
ReplyDeleteBombing of grains worked today, since he can't seem to get oil down.
Never before in modern history has Central Banking been so easy.
The "Bernanke Fed" model will be followed for the next 50 years as the "Holy Grail" to solve any and all financial problems.
My guess is that gold will get a boost soon as Bernanke utters something about "price stability" in the Treasury markets and say that the Fed is "ready to act" in order to enforce its mandate, meaning it will increase bond buying by $50 billion per month in order to get the homebuilding stocks moving.
Mark,
DeleteHow do we get the homebuilding stocks moving when the banks have been saved to the detriment of the entire economy? The assets on their balance sheets does not translate to the value of the home prices. There is a complete disconnect. Yes, they got this "DEAD CAT BOUNCE" by printing, lying, and getting the Hedge funds to prop up the housing market in specific geographical locales, but it cannot last. The entire scam is doomed! Any increase in more Bond Buying is not translating to increases in income for 90% of Americans. Does not matter anymore. It is like Captain Kirk (Ben) screaming giver her more juice scotty trying to get the Starship to respond, while Scotty is screaming back, 'I am giving her all she gots Captain'!!! She cannot escape Gravity. She is falling down towards Earth.
Deceit and Reality are destined to meet. God Help us.
DeleteI wish we could write a better ending to all this but we are not on the Starship Enterprise we are on Earth.
This comment has been removed by the author.
DeleteWhite Wolf,
DeleteOne has to wonder why the governments are still lying to their citizens. I guess they think that panic will follow such an announcement - The system is broken and the banks are bankrupts- but after what happened in Cyprus, and what followed -deposits UNDER Euro 100K are not safe and could be taken by governments if needed to "SAVE THE SYSTEM"- citizens in Europe are well aware of what is going on. The only problem so far is that they do not know what to do to protect themselves. I have numerous contacts with friends in Europe and they are paralysed; What do we do?
The answer COULD come from what we are seeing more frequently -as is the case today- The stock market is down but gold equities are up. This doesn't happen too often yet but IF/WHEN a big media decides to open the story and mention what is happening you could see a rush to gold and gold/equities.
In the meantime, you are right: God help us!!
Gold, I'm following :
ReplyDelete- the upwards pitchfork
- the downard resistance
As a bull, the mlh inf must not break.
http://s23.postimg.org/f54ubygd7/prt.jpg
Have a nice day,
Just a comment about the dollar and gold relationship. I have been doing this a long time and I will say that some of the biggest down days in gold have come when the dollar is weak and some of the strongest up days in gold have come when the dollar is strong. What happens is that most traders expect gold to rally when the dollar is weak, so on those days when the dollar is weak, and gold doesnt rally, the idea is that it is very weak and then has a very strong down day. The opposite also happens.The dollar is strong and the expectation is that gold will be weak, and when it is not, then it gets very strong. Its those kind of days that gives one the impression that there is no correlation of gold to the dollar. But in general, there is, but its not perfect and its not all the time.
ReplyDeleteWell, the worlds CB's and Economic data gatherers and media printers are hard at work conspiring from two different vantage points to keep the citizens in their place. The print from Eurozone this morning took another shot at the "TRUTH". If our leaders ever told the truth, maybe, just maybe, the people would have a chance, but instead they double down on misinformation. They continue to tell us that the world economy will improve and everyone is doing fine. When such a policy geared towards "deceit" collides with the truth, hell will be unleashed. God help us!!!
ReplyDeletehttp://www.zerohedge.com/news/2013-08-14/europe-returns-growth-after-record-6-quarter-long-double-dip-recession-depression-co
For information :
ReplyDeletehttp://jimroger.blogspot.ca/2013/08/gold-will-fall-further.html
hmm...Jim Sinclair, Jim Rogers, Jim Silver, Jim Rickards, Jim Willie, and of course Jim T.Kirk. Before I become successful and famous, I must change my name first :)
Is it Jimmy Du Haut?
DeleteYou forgot Jimmy the Greek, before he became a "bum" in Vegas as reported by another of Dan's followers.
Are you flying around in the Enterprise viewing the earth from above? If you are Mr. Du Haut, please tell us is Jim Rogers going to be correct? I cant see this one, $900?
From the way I intepreted, I dont think the 900 was a prediction. Jim Rogers gave the example of gold correcting 50% in the past before so IF gold was to follow the same pattern and correct 50% from its high of 1900, thats where he got the 900+ number from. He even mentioned he bought some gold at 1200 "just in case".
Deletewas just FYI.
DeleteDoesn't mean I'm convinced we are headed towards 900 $.
Silver going up after a squeeze of the daily bollinger bands is rather positive as well.
But I'd really rather wait that gold confirms all this by getting through 1350...
Hubert Du Huat,
DeleteSo base on your study, if gold fell below 1280 is a sell and only buy if the price above 1350.
Am i correct?
Cheer
Hi Preditor,
DeleteI'm answering on next file.
Patience is tough
ReplyDeleteWhite wolf,
DeleteYes patience is tough especially, when the stop is getting tight. But patience always rewarding and the best part usually at the end of the show.
Cheer
Hey White Wolf, all you gotta do is stick around for 58 years and then you can make $150 silver calls; steve in sparks
ReplyDeleteHey steve,
DeleteHe need not need to wait until 150. From this point. Us$28.00 can make lot of money..
Steve,
DeleteThe market is what the market is nowadays. Politics, rhetoric, media input with a very high dose of manipulation is getting a heavier hand. I do believe that supply and demand long term will take prices to places that today will seem shocking. 158 years for $150 silver is a stretch. I give it about 5 at the max. Just an opinion and we all have them.
preditor1976, what mkt r u looking at for $28 prints in silver? the pt I tirelessly try making is that for anyone out there to constantly beat the drums for whatever prices, only discredits whatever professionalism they may have once had; to wit, they are clowns and should be ashamed of themselves; if you r bullish, fine, or bearish, fine, but please leave your cockamamie calls in your mother's basement, which, I am afraid, is where u reside, steve in sparks
ReplyDeleteHey steve,
DeleteI am say from here $21.8 to $28 he will make lot of money.
I did not make call. Sorry steve in spark... and i forgive for your insult cause i do not see how i am going profit from calling you 'cockamamie'.. and i am living in villa, basement is where i live 12 years ago..
cheer steve
Fellow followers,
DeleteI have been reading this blog for a long time now, and it is one of my favorite destinations on the web. Dan, you often receive thank you's here, and I also would like to extend my profound appreciation for your work in helping guide those of us with lesser knowledge and/or experience. Something that I think has gone unsaid for too long now, is an acknowledgment for the the eloquence with which you write. Your talent for writing (and speaking, based on the many interviews I've enjoyed listening to in my garage on Saturdays) is a gift to all of us. I find the content you share not only extremely informative, but I also enjoy it as literary art. Thank you for providing such a tasteful forum.
Joe - thank you for those very kind words. And ... welcome!
DeleteDan
Well guys.
ReplyDeleteIf you follow Martin Armstrong I wouldn't get too excited about much in the way of upside for gold right now.
The DOW is still king, the US dollar is still the reserve currency, the US military is still by far the biggest in the world, Wall Street still dictates the economy of the planet.
As Armstrong has stated many times, gold's time will come, but for now, the DOW is the only game in town. The DOW will outperform gold even going into the future by several years.
Gold is insurance, treat it as such
. I wish I had taken that sage advice many years ago.
As much as we all loved to hate Jon Nadler, the man was more accurate in his analysis and predictions than we want to admit.
No more than 10% of your portfolio should be in PM's.
Hi bean,
DeleteYou will not want to follow jon nadler 4 years ago
Nor martin armstrong....
If you follow jame turk 8 years ago you will make hell of the money. The problem is that is that it take time for people to believe. And people usually believe when market have gone far..
Which you to be balance of thought in both bull and bear.. sometime bull and sometime bear. Timing is most important. There is reason for every bull or bear, and everything have it cycle.
It situation seem to be similar but have unqiue different at the point of time.
And back in 2009 how many of you believe in stock, now how many people believe in stock
Cheer
Hi everyone,
ReplyDeleteJust in case any of you have read the interview of Grant Williams on KWN. In relation to the physical demand here in Asia, he states..."There were lines here in Singapore...".
The reason why I'm writing this post is not to put anyone (Grant William, KWN) down but rather to clear this point up just in case people get false ideas and jump into buying physical from the frenzy that he alludes to. I currently live in Singapore and buy physical silver for long term holding and have never experienced or seen any lines/ques for purchase of gold and silver in any of the local dealers.
If anyone has doubts about news regarding physical shortages and how true this is, perhaps you may read the following;
http://silverreport.blogspot.sg/2013/05/is-world-about-to-run-out-of-silver.html
Fellow Followers,
ReplyDeleteI have been enjoying all of your contributions for a long time now, and thought it would be appropriate to introduce myself to those of you who so kindly share your knowledge with those of us who enjoy this blog on a daily basis, as I do. Thank you Dan, white wolf, Hubert Du Haut, Jim Silver and even Mark and Steve in Sparks for your regular contributions. I am a relatively young and restless husband and father of two who decided to lay a make or break bet on what I thought would be a destructive act on the part of the fed starting with QE1. I invested my retirement fund heavily (fully, I must confess.... a true mortal sin) into a gold and precious metals fund within my 401k. I obviously was blown out of the water, and through the pain still I linger in this reservoir, refusing to sink or to exit this pool of torture. Fundamentally speaking, I expected the unprecedented war of global and intentional currency debasement, along with the outrageous level of money printing via QE to cause explosive inflation. I was wrong, and have paid a heavy price for it. Although, fundamentally and intellectually, I still can not accept that these acts of currency destruction can go unpunished (more on that later). I have since learned that printing money alone is not the cause of inflation, and that it is the availability of currency ALONG WITH the velocity of that currency which causes prices to rise. We have completely lacked that velocity, due to our pathetically slow growing economy.
Since this spring I have been reading and following this taper talk, just as the rest of you have. In the beginning, I noticed something strange. Nobody was out there giving reasons, or asking for reasons, on why the fed was planning to taper. The fed started discussing the tapering, and the investing community seemed to accept its premise without exploring why the fed was so inclined to make this move. I feel like people just figured "well, they have to stop it eventually", which although true, just isnt a good enough reason to end this amazing party that Bernanke started for us. When you really look at it, through the eyes of the fed, I can see how the desire to kick the can down the road, and continuing the asset purchases, would be quite tempting. This environment which they have created has been nothing but positive since QE1. Low rates, cheap borrowing costs for private individuals, businesses, and government spending, an ever higher stock market, creating wealth for all, a historically low currency, allowing for excellent corporate earnings. Low inflation, tame as a kitty cat (at least after QE1) Trading on margin has been an easy endeavor. stock buybacks? why not?? money is cheap! Lesser shares outstanding = increasing earnings per share. a win win. It has been an all inclusive vacation for anyone willing to participate. why end it????
ReplyDeleteToday we had a few words from the feds Bullard - "inflation low for now, but could be excessive in the future". Other fed chiefs have been phrasing the current low inflation environment as "transitory". I think this is the reason that they finally want to end the party, they are FINALLY fearing a spike in inflation. Although it appears they expected to be able to stop the music with ease. The marketplace has shown them otherwise, which puts them into a real mess. Rates soared quickly when the september taper talk began, and this caused everybody pain (including the federal governments new debt issues, and the Feds current holdings of US debt). They have tried to reverse those talking points, while still keeping an open mind for tapering, and it has not worked. I am picturing Bernanke holding the tail of a tiger named QE, and its going to be a bloody mess regardless of the strength of his pinching fingers. If I were Bernanke, I too would be ready to retire my position. I think the fed smells inflation on the horizon, but they have created a dysfunctional relationship with the investing community. It is codependancy defined, and as we all know, that never ends well.
Armstrong has his own ax to grind against gold bulls. Jon Nadler was bearish on gold when it hit five hundred dollars. All that said your allotment for gold in retropect looks like it is wise.
ReplyDeletePreditor 1976; u sound like a nice kid; when I use the word cockamamie it was as an adjective, not a slam on u; if u really want to read a book that tells it like it is, get Stockman's, The Great Deformation and u will really wake up to how dirty and screwed up things really are; the charts are worthless if you look at them daily; why do you think barchart.com has 44 different ways to look at a chart? come on? steve in sparks
ReplyDeleteYes steve,
ReplyDeleteYes chart is one of tool in investment. It is just fraction of overall investment views.
Like i say it work from time to time but it not the only tool you relied on,you should be focus on cycle, fundamental and sometime chart.
now i bet there will more way to see chart as we go along.. because market evolve all the time
cheer.
Hello Jim Silver; Glad to meet you and happy to know that everyone in Asia is not standing in line to buy pm; what a tired story, just like backwardation, which Sinclair started back in '79 , along with geopolitical strife and shortages; some things never change; thanks, steve
ReplyDelete