“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput






Wednesday, October 2, 2013

Bonds and Gold back to Safe Havens Again?

I noted in yesterday's comments that neither US bonds or the gold market were acting like the typical safe haven trade that one would have normally expected to see during a time of crisis ( debt ceiling, government shutdown, etc.).

Gold was sold off on fears of a slowing economy as were the majority of commodities in yesterday's trading. Bonds were also dumped.

Today, we seem to have the exact opposite price action occurring - gold is up, the majority of commodity markets are in the green and the bond market was soaring earlier in the session. It is almost as if the big macro trade was back on today with the lower US Dollar spurring buying of commodities rather indiscriminately as was prone to happen during past episodes of that particular trade.

What I find almost bizarre is seeing report after report about analysts/investors worried about the current government shutdown being prolonged and a risk of a failure to get any sort of agreement to raise the debt ceiling which would result in either a credit downgrade of the US rating or default. such fears are preposterous in my view as the US takes in plenty of money to service its interest payments. However, think about this - the supposed fear is one of default or a credit downgrade and yet the lemmings cannot seem to stuff enough of these US government IOU's (bonds, notes, etc.) into their portfolio merely because the US stock market has been experiencing some weakness in today's session.

The analogy is obvious - let's say my next door neighbor is head over heels in debt and has been paying his bills by borrowing money from the folks in the neighborhood. He has enough of an income coming in that he can pay the interest that he has promised to pay to anyone willing to lend him money but one thing is for sure, he cannot pay back the principal. Now, he finds that his expenses continue to rise because he refuses to make any changes in his extravagant lifestyle so he announces with great fanfare that he is going to borrow more money from another set of neighbors promising to pay them back both principal and interest. Would any of you feel comfortable lending to this leech? Yet, that is exactly what is transpiring in the bond market today. The very items that investors are supposedly worried about being downgraded ( U S debt obligations) are being scooped up in droves by eager buyers.

I don't know whether to laugh at such lunacy or weep that so many can be so ignorant and oblivious to the staggering amounts of debt that the US government and its spendthrift politicians continue saddle the nation with.

Crowds go mad en masse and only come to their senses one by one, and slowly at that.

Gold seemed to get a bid today on the heels of the ADP jobs number. The private firm released a number that was LOWER than analysts had been expecting and this fed into the idea that the Fed would be forced to maintain the QE at full capacity.

Seriously, this sort of nonsense gets really old. The Fed will be doing QE until the cows come home without any structural changes to the US economy (getting rid of obamacare) and reform of regulations that are impeding companies from expanding and thus hiring. As stated here previously, if 4 rounds of QE has yet to produce any sort of runaway inflation why does anyone believe that a prolonging of the current program (QE4) is going to somehow be a catalyst for future inflation.

The truth is that gold is stuck in a broad sideways pattern in which dips get bought and rallies get sold. Until it shows me something on the price charts which indicates anything to the contrary, I expect this pattern to continue. For traders, that will mean rallies are selling opportunities while dips can be used to cover.

Crude oil has a big rally today for some reason - that which was cited was an EIA report showing a drawdown in stockpiles at Cushing as well as news from TransCanada which released news that the southern leg of the Keystone pipeline which it is constructing is 95% and should be open to move crude sometime after October. That was seized upon as a reason to buy crude oil futures, especially after the sharp fall in price the last few days as the thinking was this would help to further drawdown crude stockpiles at that all important hub.

It's funny how thinking shifts from day to day isn't it? Yesterday, government shutdown fears entailing furloughed workers and no salaries for many was viewed as a drag or negative factor for growth in the US economy. Today, it is no where to be seen! 

Personally, my view is that this is further evidence that the hedge fund computers have destroyed any integrity that might have been left in our financial markets. To see silver implode lower one day only to watch it shoot back up the next is beyond silly - it is a sign of a dysfunctional market system.

I have noted some levels on the gold chart below which are worth monitoring. Other than that, there really is not much worth saying about gold today. Until it gets a clear break out of this range trade, the market is going to bee-bop back and forth as it responds to the vagaries of shifting sentiment and economic news.

Lastly, surprise, surprise, the gold stocks, as evidenced by the HUI are higher today. Take a picture of that screen because no one is liable to believe you if you don't document this rare occurrence.


 

77 comments:

  1. Alas the gold stocks have come back since you wrote this Dan. Not surprising at all though.

    ReplyDelete
  2. _my next door neighbor_

    there is a flaw with this analogy:
    1) your neighbor does not have a printing press - which Fed/Treasury has ;-)
    2) your neighbor's money have no "reserve currency" status - i.e. he does not control the "other people's money"

    ReplyDelete
    Replies
    1. 3). ;) The "neighbour" is actually a master: he is being lent money because he has coercive discretion over the 'neighbourhood'. It is this extractive power which makes him credit-able, not his 'lifestyle'...
      The lenders are accomplices of the extractor: and, insofar as they live in the 'neighbourhood', they are the agents of their own servitude. There are no ethical prizes to be distributed here...

      Delete
  3. Mining stocks still trading like death, not confirming the mini-squeeze in gold.

    Bottom line is that when investors are in doubt, they immediately adopt the "Barbell Strategy" whereby half the money is put into high flying momentum stocks on the Investor's Business Daily screens and the other half safely encapsuled behind Uncle Sam's apron in the form of rock solid Treasury Bonds.

    And don't even get me started on the relative performance of XRT vs. XAU, hands down the widest divergence ever recorded. Joe Sixpack seems to be "winning" while most mining companies are on the verge of insolvency and bankruptcy.

    Another miracle by Ben Bernanke, who has managed to stoke the confidence of the U.S. Consumer and has removed virtually any and all threats to inflation whatsoever.

    ReplyDelete
    Replies
    1. small edit--people who own 'joe sixpack' equities are #winning. Joe sixpack is screwed unless he has a police pension and is out in his fishing boat off Sheepshead Bay.

      Delete
    2. " Rock solid treasury bonds " thanks for the laugh. In other parts of the world my rolls of toilet paper have more value than dollars... Wait dollars, toilet paper, is there a correlation here?.. hmm

      Delete
  4. People just playing the dead cat bounce in gold, give it a few more day of sideways then it's back down business as usual.

    ReplyDelete
  5. damn would be real nice to see the mining shares react positively for once. talk about a bear market!

    ReplyDelete
  6. GDX closed at the dead lows of the day, many stocks are now down 10 consecutive days with vicious chain selling.

    GDX/GLD ratio is within a hairsbreadth of taking out the June world record lows.

    GDX is the only ETF in history with a sustained bear market with no sustained countertrend bear market rallies at all, just a horrific, non-stop grind down.

    But of course, "Any Minute Now!", we'll see an explosion in the PM prices towards $10,000/oz and $150/oz. respectively, LOL!!!!

    ReplyDelete
    Replies
    1. Mark

      Less than 12% of the American Public is in the stock market...your Joe Sixpack is not part of this "winning" group.

      Delete
    2. Good point Mark, that "any minute" could finally be tomorrow at the open. Or Asian overnight market, keep stacking keep stacking at every pull back - you know the lingo. There is a shortage of physical metal around the world from all the coin demand.
      Sorry guys just having some fun here for comic releif.
      Our time will come - any minute now :)

      Delete
    3. Tip buy low 'GDX' sell high 'DOW'

      Delete
    4. Actually insert 'Allocated Gold' for 'GDX'

      Delete
  7. Dan, the rush into bonds, gold and silver was stimulated by the investors who were fleeced by TESLA. You know the company Cramer , and Mark here have been pumping as the stock of all stocks, impermeable to dilution, as the growth will GO ON FOREVER/. Never mind "reality" that they do not make an automobile under $60,000 and the ever decreasing wages for 99% of the people are dropping under this facist Government fueled by the Banker statist regime, such as STEAL EVERYTHING THAT YOU CAN JAMIE, and We are doing gods work LLOYD. Hey Mark, I could not help taking a jab at your bullet proof stock ready to tank on the news. Read em an weep. http://www.zerohedge.com/news/2013-10-02/tesla-plunges-potential-dilution-speculation-car-fire. I guess there will be some scalps to pick up along the way.

    ReplyDelete
  8. Jesse concurs with Dan, discerning dysfunctional and directionless dope addicted markets:
    http://jessescrossroadscafe.blogspot.com/2013/10/gold-daily-and-silver-weekly-charts-sit.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

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  9. I have one stock chart guaranteed to make the following men cry:

    David Stockman
    Richard Russell
    Egon Von Greyerz
    Gerald Celente
    Marc Faber

    among others......

    The "Paragon" of consumer spending: Domino's Pizza (DPZ)

    Go look at a 5 year chart and you will see an huge move up from $5 to $90.

    Then compare that with any intermediate gold producer.

    The amount of opportunity lost is simply mind-numbing, if you were invested in the wrong sector.

    Eventually the apologies will start rolling out, in order to shield oneself from outright humiliation and embarrassment.

    ReplyDelete
  10. Mark

    Perhaps you could explain why DPZ has gone up 1800% in the last 5 years yet traded in a range of $10 to $20 in the previous 5 years before the crash?
    Are Americans eating 1800% more pizza?

    ReplyDelete
    Replies
    1. Perhaps most Americans could afford only cheap pizzas in the last five years.

      Delete
  11. I think its 100 out of 100 days that no matter what the price of gold is at the close, in the opening it always go down at least 5 to 30 dollars. I dont know whether I am jealous because I cant make that money or just angry that it can even happen like that all the time. Because when everyone knows it is happening then it cant happen anymore, but it does so it has to be some kind of concerted effort.
    Maybe some can answer this. When Roberts voted with the other 4 liberal judges to say that nonsense obamacare was constitutional, those 4 wrote a scathing opinion blasting Roberts for his opinion that gave them the win, in a separate opinion piece. The winning side writes an opinion, and the losing side can to, but the winning side doesnt ever write and opinion blasting someone who voted with the winning side. How someone calls something a tax, even when it is, when its not written into the law is insane. Has this kind of thing ever happened before?

    ReplyDelete
  12. Arnie; The Supreme Court, along with the FED, SEC, CFTC, and I can go on and on and on, should be destroyed, once and for all; swb

    ReplyDelete
  13. Looking at miners charts tonight it's hard to image how much uglier it will look if gold hits $1000. The panic selling would be crazy seeing how 90% of miners wouldn't be profitable and the other 10% barely hanging on.

    ReplyDelete
  14. Dan, I don't like the lend-to-your-neighbor analogy for a number of reasons.
    1) almost any single neighbor can be paid off anytime they want.
    2) the alternate to lending to your neighbor is hiding your money under your bed (ie, no interest will be received and inflation will reduce your purchasing power).
    3) your neighbor is an old man who has always honored his debts.
    4) your neighbor has massive debts but also a massive income. He has the most liquid accounts in the world. Try moving $20bn into the gold market, see where the price goes.
    5) if you take the money back, your currency will strengthen, making it harder to sell your wares to the neighbor.

    I'm sure I'll get shot down for this. Fine, but as long as interest rates are low, the government can service its debt. But pension funds are getting hurt badly by this deal. When interest rates start to rise, they could cause an avalanche of selling as investors look to take profit on bonds. Ultimately the rising rate trend will feed itself until, I believe, a new currency is born.

    ReplyDelete
    Replies
    1. John - thanks for the sound comments... I agree with you - rising interest rates threaten the entire structure of the federal government's house of cards fiscal condition. That is why the Fed is engaged in so much verbal intervention to prevent it.

      The Fed is always about punishing savers, senior citizens and those on fixed incomes and rewarding spenders, big banks and Wall STreet.

      Delete
  15. http://www.shiftfrequency.com/eric-blair-10-signs-the-global-elite-are-losing-control/
    By Activist Post

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  16. Hello,

    A small chart to complement Dan's analysis.
    I chose the 2 day time unit, because its Bollinger Bands are horizontal and parallel, i.e in a range, which gives us the most probable scenario of volatility (prices being most of the time within Bollinger), with a support around 1280 $ area and resistance above 1400 $.

    Simultaneousy, if the price action is "manipulated" by the bears as I read recently from that other trader, then the bears will try to maintain prices within the downwards channel I traced.

    If we get close to any of the Bollinger Bands again, it will be important to follow the price action on smaller time units, to see if we get out of the range with an acceleration of volatility, or if we bounce back into it.

    As I'm not an intraday maniac :) :), I'm not doing much between these bands, only acting if we get in contact with one of them.

    http://i39.tinypic.com/14kuqlg.jpg

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  17. http://i39.tinypic.com/14kuqlg.jpg

    ReplyDelete
  18. gold again out-performing platinum and now only $70 discount, portending more bearish in general political or economic news not already discounted; and btw, anybody who thinks that Chinese gold traders are not at their desks because it is Golden Week, is smoking too many fatties; swb

    ReplyDelete
  19. The DOW is behaving in reverse of gold. Starts the morning down but almost always rallies by days end.
    I also notice that more often than not you will see a rally into a Friday close.
    Do hedge funds and smart traders really behave that way?

    ReplyDelete
    Replies
    1. Dean and Arnie;

      The Dow is in a strong uptrend while gold is mired in a broad trading range. That means dips in equities will be bought while rallies in gold will be sold.

      Delete
    2. Hi Dan, with the DOW starting to break down and gold at these low levels...do you think is it time for a gold rally? The two often move in opposite directions, but gold has failed to move anywhere for the last few weeks. We need 'like' buttons for comments! Cheers.

      Delete
  20. If hedge funds do move markets, I dont get the logic of selling the dollar and also selling gold at the same time.

    ReplyDelete
  21. Mark

    I know exactly how you feel, like you and many others who post here we have been beaten up on our gold investments and have missed once in a lifetime opportunities in general equities. It hurts...real bad..and many of us feel the same shame and anger. I often think "how could I have been so gullible and wrong". You are not alone. I also believe the US stock market may have some legs left but you also have to be very very careful .
    Trade Dan has said the same as what I have posted below. This statement is from Jim Rogers...the man is no quack or charlatan

    Be Careful, You Are In A Fool's Paradise
    "Be careful. The U.S. is the largest debtor nation in the history of the world. We may well have a big, big rally in the U.S. stock market, but it's not based on reality. I would encourage investors to know you're in a fool's paradise, be careful, and when people start singing praises, say, 'I've been to this party before, and I know know it's time to leave.'" - in CNBC.com
    Jim Rogers

    ReplyDelete
    Replies
    1. By the way, that quote is from an interview he did today.

      Delete
    2. Armstrongs view is the DOW is going to 30,000 by 2016 cause foreign money avoiding Europe and other hurting parts of the world is coming to the US. Same thing happend during the Great Depression where from 1932 to 1937 the DOW doubled if not tripled in value. Was this because the economy was so good during the GD? Heck no. But it was better than other parts of the world, it's all about capital flows, and right now the US is the best looking of the ugly sisters. Thoughts?

      Delete
    3. Hi Prophet

      It is true that the US is the only pig at the party wearing lipstick.
      The DOW could very well go to that lofty number because of the ridiculous amounts of funny money sloshing around the planet looking for a home with some kind of return.
      I am more cautious now about listening to oracle type predictions but what Armstrong says makes sense..but so does everyone one else...aaarghhh! As accurate as he is I do not think he is infallible.
      The trick here will be knowing when to get out, by the time the DOW hits 30k the euphoria will be incredible. Absolutely no one will believe that a correction is even a possibility, many are already thinking that way.
      Will someone ring a bell letting everyone know that it is time to leave and please depart in a orderly fashion..not likely ! All the profits made in the great rally from 09 could be wiped out in days with no escape.
      I intend to keep a wary eye and stop losses tight.
      But hey!..if I really knew anything I would have my own newsletter!!

      Delete
    4. Dean,

      Do you know Walt Disney's Pinocchio?
      Careless "investors" herded into buying stocks because they are the best performing investment are like the kids going to the kid's island for one night of pleasure. Most of them may turn into a pig in total panic and disbelief just like in Pinocchio.
      - Volumes in those markets are constantly lower throughout the year because usual people are sick and tired of HFT and volatility.
      - So when most investors are long, and there are only people to sell, the escape door is going to be quite narrow.

      Like Pinocchio (or Cinderella), you may choose to go to the island for a while, but you'd better watch the clock and go back home before midnight.
      The clock can warn you about extreme concentration (followed by Eric de Groot) but still won't give you the time (sorry, I just don't believe in cycles to predict tops and bottoms with timing. I haven't seen such forecast based systems predictable on a sustained period of time).
      If I considered myself a usual joe, without any knowledge of trading, and rather long term investor, I don't think I'd risk much money into those markets, and if I did, I would not forget to put a stop loss somewhere to protect my capital.

      Delete
    5. This comment has been removed by the author.

      Delete
    6. Long thread!
      Arnie – hard call but gold and the dollar do not move in perfect correlation, so they can both strengthen/weaken together and move contrary to one another. The trend is your friend, and both are currently trending downwards.
      Dean – I disagree with Jim Rogers that the US stock market rally is not based on reality. Private assets (ie, listed firms) will hold their value/increase in price as the public—Joe Blow—sees that public assets (ie, government bonds) are not worth the paper they are written on. Money has to move somewhere, and it is this movement that could cause capital to concentrate on US equities. As you stated, if capital from Europe and Japan were to move on mass to the US, shares would soar.
      Prophet – Armstrong gives price and time guides, but his time forecasts tend to be more accurate than his price projections. I follow these the closest. For example, he forecasts a change in direction for gold next week, with that trend continuing through January. January is set to be a big turning month, so look for possible highs or lows (the cycle sometimes inverts, so you have to pay attention to what is happening and when!). Through the time forecasts, I believe that you can stay ahead of the crowd, but like Dean says, don’t trust anyone 100% and keep your eyes and ears open.
      Hubert – This is a piece where Armstrong explains his cycle theory (http://armstrongeconomics.com/models/7219-2/). I believe that he will be looked back on as one of the great economists of the 21st century. I am blessed that l was too poor to participate in the housing frenzy that ended with the bubble bursting in 2007, but bubbles will always emerge because that is what makes us human!

      Delete
  22. The problem with the miners is that they mismanaged production, prospecting, and hedging. They have mismanged their capital and mangled their balance sheets, creating long term damage to their firms and shareholders. This will continue to cause a drag on their share prices for years to come, even if PM prices recover. Many firms won't be able to take advantage of higher prices. they shot their load, and will not be able to raise needed capital if prices move higher.

    They cannot control the price of gold, but they could more easily have managed their profit per oz. The reason the cost per oz rose so high is that the firms became very inefficient and sloppy, and read all those gold bugs blogs.

    Gold mining is probably the worst business to be involved in. The best way to invest in gold is to own the metal outright. It's untraceable.

    ReplyDelete
    Replies
    1. But the right miners with small to no debt, good projects and cash, and oz's in the ground will be grand slams. These would be mostly the upcoming junior miners.

      Delete
    2. The whole industry is tainted. Top to bottom. I am sure there will be a few who do well, but that will be from luck, not from building out mines and raising capital. But one has better luck picking a winner from oil plays or the overall stock market.

      Delete
  23. JPM sold those futures to drive the price below 1300. It bought them back below 1300 and stood as the official wall of selling at 1320. Notice the spikes above 1320. They were shot down several bucks with a vengence, within minutes. It was a message. Unless JPM decides to let gold rise above 1320, it won't.

    GDX tanks into close. same old, same old. Pl and Pa look bad today. Sell into strength, that's what JPM is doing.

    ReplyDelete
  24. Get ready for the great fade. the longer gold stays here and doesn't move up, with the govt crap dragging on, the more likely people will cash in their chips, and throw in the towel.

    All by design. There were many traders banding together this afternoon to drive the price above that very important 1320. It even got me wondering whether I should have put a 1321 stop in place. But they were fighting with bows, arrows, slingshots, and bearskins, compared to the shotguns and rifles of the globalists. Those naive, but valiant traders used up a lot of arrows and stones today.

    ReplyDelete
    Replies
    1. Yep. And the miners finished in the red even though gold held and even tried to push up. Usually that means gold will follow down in the next day or two as miners have been leading gold on turns. I've always wondered how such a phenomenon happens that miners just "know" when gold will start going down, but then it hit me - by golly it's all computer controlled.

      Delete
    2. I think the miners simply got pulled down with the rest of the market.

      Even XLY and XRT were down....gasp !!!

      Delete
    3. How about if the miners actually start making some money. Maybe that will turn the tide.

      Im so tired about miners wanting Ben to make them make profits. Soo tired. Just Do It and stop whining about monetary affairs.

      Find ounces if thats your business. Produce profits from producing if thats your business.

      Please. Stop taking out money.

      Delete
    4. I'm with you on that Jasper
      I more or less consider my gold mining shares as being worthless, and I own some good ones.
      I doubt they will ever smarten up, we all deserved what we got.

      Delete
  25. Another low in the GDX/GLD ratio.

    But wait!!! Some say we are headed for a "Monster Collapse!"

    Wow, that means the miners will surely be pushed to new record lows soon.

    ReplyDelete
  26. The last AMERICAN GOLD BULL. http://m.youtube.com/watch?v=qq8zFLIftGk&feature=player_embedded&desktop_uri=%2Fwatch%3Fv%3Dqq8zFLIftGk%26feature%3Dplayer_embedded
    TANK MAN 1989 china

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  27. Good one White Wolf..!!
    Ha ha..really enjoyed that!

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  28. At one point in time, not that long ago, the price of gold went from 250 to 1920. That was before most of the QE money went into the system. That was before the drought of 2012. That was before the euro went to 136. That was before oil went to 112. Now gold is 1316. And one has to wonder, where are the forces that created that original move? Does gold need massive inflation to go up? It didnt when it did its move? So why is it necessary now? There are so many reasons for a bullish case in gold and there is only 1 reason for a bearish case. That is, if it is such a bullish case for gold, why isnt gold at new all time highs? And since it is not, that is the bearish case. So looking at all of history, where in the world are we in gold at 1316? At one time I thought I knew, but I dont anymore. Maybe someone does.

    ReplyDelete
    Replies
    1. Arnie you express my frustrations well. The problem is nobody here can answer it accurately. Gold must have gone up too far too fast. Manipulation played a role and then all the momentum people in gold got out at 1530. I sold some but not nearly enough. The fundamentals are there stronger than ever but God knows when it will manifest in higher prices. I have given up trying to predict it, we will know it when and if it comes.

      Delete
    2. After 9/11 and the tech bubble interest rates were lowered to all time lows and i think that's what kick started gold. Then came 2008 and QE which gave gold another boost, all this with the expectation of inflation. Now apparantly we are not seeing it, although it's debatable. What will get gold going again will be rising interest rates as velocity of money picks up, and then we'll see inflation and gold prices to the money. In addition rising rates will put stress on the derivatives structure which is what some call a nuclear weapon. JMHO

      Delete
  29. We may have to face the fact that the secular bull market in PM's is over and has been for sometime now, 1300 may only be a dead cat bounce before the final collapse. This is what some of the best and brightest are saying.
    I almost hate saying that statement but it must be considered at this point.
    I also with you guys on the frustration level.

    And yes Mark..before you jump in to call us fools...we are already very aware of that fact.

    ReplyDelete
  30. It is not that the gold bull is over Dean. It is when it will resume. It could be as Armstrong says a couple of years away. That is the fly in the ointment. Sinclair has been silent lately with his predictions I think because of this fact. He and everybody else does not know when a black swan like event will drive gold to higher highs. Nobody knows all we know is it isn't here and we are bearish not bullish in gold.

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  31. Hey Concord
    Armstrong claims the turn for gold will be in Jan/14 (I think)
    they say a bull market climbs a wall of worry...this is terror.

    ReplyDelete
  32. Stand back relax if Gold is forcasting deflation it more than most assets has that already factored in, if true other assets DOW etc. will get a flogging as per 2008. If deflation doesn't occur then get ready for the Gold rally. GS JPM and TBTF are all accumulating positioning for the big move in Gold.

    ReplyDelete
  33. Jesse doggedly pursues puzzling inventory discrepencies and drawdowns (documented here and in his previous post): http://jessescrossroadscafe.blogspot.com/2013/10/gold-and-silver-bullion-major-inventory.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

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  34. Is this what the guys at the Alamo felt like. Always waiting for help that never came?

    ReplyDelete
  35. Wow, GDX getting pasted again.

    Some juniors down 12 consecutive days in a row.

    Many guys that run or invest in these outfits have lost 1/3 of their net worths in the last 6 months.

    Never seen a bear market as bad as this one.

    ReplyDelete
  36. We are all living through an experiment. Suspended animation. I believe a long slow miserable period of deflation where govt will control, lie, manipulate, until the wheels start falling off. Desperate people will erupt because there are no easy fixes. Much pain to do the right thing. Politicians would rather keep control and brutalized those who want to take the pain and fix it. LONG LIVE TANK MAN. There will come a time when we all will have a choice like him. When the despotic leaders come rumbling down the road to strip any last resemblances of freedom, what will you do? I say FIRE ON THEM. GOT GOLD, FOOD, AMMO?

    ReplyDelete
  37. As predicted, the band of valiant traders tried to bring this over 1320, but it couldn't and they are throwing in the towel, en masse.... Keep those shorts and keep your physical hedged. There are no more arrows left, and the bullion banks picked off most with their rifles.

    ReplyDelete
  38. Wait till the gov shut down ends and the debt ceiling is raised. In 2011 this made gold go ballistic, this time because we live on the flip side raising of the debt ceiling will sell gold off - I guess cause we didn't default?!

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  39. Imagine interest rate higher or credit severely restricted. Asset prices will be lower, especially Real estate. That is very deflationary. Notice the problem with 2011 is that this marked the high in gold. No more will traders bid up - unless the bullion banks and, especially JPM wants it higher. It would be nice to see gold higher, but the globalists control all the markets and the gold market is one of the easiest to rig, even over several years. My thesis is that gold was allowed to rise, so that when things got crazy, it could be managed down. This thesis was rewarded me very well. Haven't worked in 13 years. If gold drops more, you will see central banks around the world start to sell again. People in the west will hate gold. The east will not, of course. Perhaps Cyprus will sell, etc. maybe they already are.

    If the globalists want gold at 1,000, they will get it. Gold is great at any price. In fact, as someone who has about 30% of his net in physical, I hope to watch it cave, so I can add to my weight. High prices are not exactly what I care for, as long as I am hedged and know the direction. Which looks to be down - in a managed fashion. Remember, gold is broken. the miners are broken. The globalists will pick up the mining pieces for peanuts. All done by design, as the shareholders are left with booked losses.

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    1. Eph,
      Your comments above are really compelling and make sense. I would love to see Jim Sinclair reply to what you think is going to happen. I believe despite my positioning in gold you are sadly right. Gary Savage and Armstrong seem to feel similarly. Hedging seems like a good idea would any specifically jump out at you as the best vehicles. thanks

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  40. Eph
    I have no worries about my physical position.
    It's the useless miners that have hurt us all bad.
    No graceful way out of this one.

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    1. Dean what did you buy your physical position for?

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    2. My physical is my insurance position, shares were my action.

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  41. I do not like what I am saying. Why? Because I have to come to terms with the prospect that all markets are firmly under the control of the globalists. It's sobering, but the observations speak for themselves. The Latin phrase "Res Ipsa Loquitur" comes to mind.

    As a person who enjoys owning gold, I sleep at night, because I have a full-time hedge of 3 COMEX contracts that I lighten up on from time to time as prices rise (like after the no taper I put in a buy stop) and add to as prices fall. I put back on after gold fell back through 1350. Trading gold for ten years allows me to see important levels and inflection points. I don't use the charts, other than to see price points. i rely more on price and order action and feel. i often trade on my mobile phone during the day, for instance.

    People reading the COT reports say that the large gross short position by the small specs is a contrarian indicator. I say I am hedging my 300 oz and locking in my sizeable profit. Three of my short contracts have been reported every week since the 1632 failure. It is not contrarian. Many small specs understand the markets better than the hedge funds. People, like myself, understand the conspiracy, and take precautions.

    I like COMEX contracts that are fully hedged. I never liked mining shares, but owned a large percentage of my IRA plan (that I liquidated over several years) in the Vanguard Precious metals fund. I liquidated half in 2006, and the other half in the summer of 2008, after Lindsey Williams came out and said oil was going to 50/bbl. I think many remember his only correct call. I never returned to miners. Their shareholders are an illogical bunch and management is often forced into actions they normally would not do on their own.

    If you own 50 oz of gold I would hedge a couple of e-minis. GLD is expensive and the margin is greater. I love futures, as it costs almost nothing to hedge, and they trade 24 hours a day. often the best setups happen overnight. this is why I also like e-minis for the smaller bullion holder. I think they trade equal to 33 oz. A full contract is for 100oz.

    If you own mining shares, I would use GDX. It's the most liquid.

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  42. Eph,
    Thanks for you thoughts. I am more limited to etf's as a way to hedge. I have watched gold for eight years and have the same feel for when price breaks up and down happen. Unfortunately I rarely act on them as gold has been very forgiving over the last ten years. Rarely have corrections not resulted in bailing people holding gold out. Even last September you could have been bailed out if you had sold. No longer, things have changed in a big way and I have listened to those who continue believe gold is going to explode higher. This debt ceiling will be tricky. If it is settled gold will get hammered, if not we could get hammered as it is with a strengthening dollar as it is today. Gold is being driven down and those in control have told us in advance.

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  43. The GATA boys and the CIGA's must be close to the breaking point, 40% collapse in 12 trading days in some names.

    Hurry up and puke up those positions so we can mark a bottom.

    Then the hedge funds will sell the social media winners which are up 300% and start buying some value in the gold sector, and make another 300%.

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  44. @concord,
    to me your wisest sentence today was :
    "I have given up trying to predict it, we will know it when and if it comes."
    Relax and just watch price action. Everything else is agitation and speculation.
    Have a nice weekend :)

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    1. Hubert,
      Thank you. It is hard to be holding gold and shares when they disconnect from fundamentals and only seem driven by technicals. I read you carefully and with appreciation for what you have to say.

      Delete
    2. Thanks Concord.
      I think we should all consider ourselves as students on this forum, more or less unexperienced and benefiting from Dan's expertise and advice.
      I've only be lucky to meet with a few successful (and discreet :)) traders in my life, as I like T.A and always wanted to learn from them bit by bit. What I can remember as a common quality is they don't try to predict price evolution too much. Especially they don't stay fixed on a determined target because "it must go there". They permanently adapt to the message of the market, and they admit it is often unpredictable.
      I was watching Eric's blog today.
      Funny he just wrote this about the Yen :
      "As the headlines struggle for explanations, we ignore them and watch the message of the market."
      The message of the traders I know is the same with different words.
      As a long term investor, your long-term physical position in gold is locked, and price variation should leave you more or less indifferent. Especially, if it's long-term, once you know why you bought, there is no need to read a blog every day to see if something has changed.
      Only on shorter time scale, as a trader this time, if you want to "play" dynamically through CFDs some gold contracts (futures is too big unless you are hmm...wealthy and experienced), do you monitor prices regularly and try to make profits, but imho without touching your physical position.
      If you don't trade, enjoy life and don't monitor gold price every day :) it will only make you nervous.
      Take care,

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  45. Hubert
    Wise words, watching it everyday is bad for your health.
    But like I tell people, it's like a bad car accident..you just have to look!

    I do not trade but occasionally I will buy DUST or GLL to catch some downside..which is just about every week.
    I also use GDX or GDXJ for my share exposure. I do also have some individual miners but not many.
    I followed Jim Rogers advice "if you have trouble picking a individual company then just buy the index, you will still make money"
    I have bought a small amount at these low levels but it is very very hard to do.

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  46. The story needs deep thinking and understanding. It gives me idea about bond and gold market. I am more focusing on my business of On Hold Marketing and see how my investment works to boost my business.

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  47. the globalist want you in paper and they don't want you only physical gold the bottom line is that they are going to make it so unbearable for those who are in precious metals that they wish they never got involved in the first place if you go with this premise then you can understand why gold one up and now it is on the process of coming back down you're buying strategy will continue to wipe many out.unfortunately if you are invested in the sector you need to look at the prices every day or else you'll be long during the next "surprise" take down. the bulliom banks pulled the plug at the right moments. one can learn to see the setups. it's important to notice that they would not let gold rise above 1320. they are preparing for another set up, be careful....

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