"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


Tuesday, November 19, 2013

Gold Waiting on Bernanke Speech and FOMC minutes

Dull trading in gold today as most players remain hesitant to place any large bets ahead of this evening's speech by outgoing Fed Chairman Ben Bernanke. Additionally, the bulk of market participants are waiting for the release of the actual FOMC minutes from their most recent meeting. The idea is that it will give them a better or deeper look into the thinking occurring among the majority of Federal Reserve voting and non-voting members and thus some clues into their next move in regards to the timing of any Tapering.

I think some shorts rang the cash register and took partial profits ahead of the speech/minutes just in case there might be some surprises although I personally am not expecting anything other than what we have already been conditioned to think based on the recent comments by some Fed governors.

Volume was mediocre at best; lackluster is another word I would use to describe it.

Wonder of wonders, we actually got a wee bit of downside follow through in the S&P 500 pit today. Maybe it was selling related to Maria Bartilomo's reported move over to the Fox Business Channel. Now, if Rick Santelli would make a move over there, we would have no reason whatsoever to watch CNBC.

Even with the follow through to the downside, there is no significant chart damage other than the most short term of signals, which is more for scalpers and other short-term oriented traders.

By the way, did any of you readers see the report talking about how the payroll numbers were deliberately distorted (upwardly of course) just prior to the presidential election back in November 2012? Some of us were marveling how it was nearly inconceivable at the time that the unemployment number would miraculously get down below the all-important threshold  of 8% that Obama had set for judging the success of his measures to supposedly improve the economy. It undercut Romney's argument that the economy was flat and that job growth was anemic just in time for voters to make a decision before heading out to the polls. Pathetic isn't it....

Many talk about gold, silver, platinum being "PRECIOUS" metals meaning that they are relatively rare in comparison to more commonly found metals. Methinks the MOST PRECIOUS COMMODITY out there right now is the TRUTH. There certainly isn't any coming from the current administration about much of anything.

I am not going to post any chart of gold up today as it is basically meaningless until we get through the release of the FOMC minutes tomorrow. Barring any unforeseen developments elsewhere, I expect gold to tread water until then.

The Goldman Sachs Commodity Index (GSCI) continued to head lower today even with a bit of mild weakness in the US Dollar. The same theme of general selling across the complex continues.

The biggest move in the markets that I trade regularly that I noticed today was in the cattle which were slammed lower, especially feeders as high priced beef seems to be choking off domestic demand right now. Corn popped higher again, along with wheat as the usual chatter about low prices stimulating demand showed up once more. Beans continued to see selling as S. American planting weather seems fairly benign at this point. Traders are looking for large acreage numbers again down there. Demand for the grains/beans is going to be the big wild card and the big unknown. Compared to the prices of last year, both beans and corn are bargains right now. It is not a question of whether demand will pick up at these lower prices - It most certainly will. The question is whether this demand will be strong enough to absorb the big supplies of both and whether or not farmers are going to let go of stocks or hang on until after the first of the year.


  1. Dan

    I clearly remember former GE CEO Jack Welch calling foul on the job numbers in 2012
    “Unbelievable job numbers..these Chicago guys will do anything..can’t debate so change numbers.”

    MSM proceeded to crucify him for the remark. Outrageous they cried !
    There is no way the BLS would do such a thing !
    Their Socialist hero was untouchable.

    But hey, there is no manipulation in any of the financial or commodity markets either....ahem.......

    1. Hey Dean - Not really sure you can call Obama a socialist. I think that's a bit sloppy thinking on the part of the right. He has overseen one of the biggest wealth transfers from the middle class to the rich with the help of corporate America. The ruin of the meritocratic system is depressing beyond belief. Job numbers fudge is criminal. But so was fudging the data on Iraq by Bush dos--"We don't want the smoking gun to be a mushroom cloud." lie. That's what the liberals remember.

      What will be likely by glossed over by liberals about Obama, the Nobel Peace Price winner is how 1. He turned prisoners of war over to enemy forces in Iraq against the Geneva convention in the rush to get out of the country. 2. How he escalated drone warfare 3. How he subverted the War Powers Act by making JSOC into a secret army fighting at the President's pleasure.

    2. MDL

      He seems like a Socialist..or at least act like one, big increase in size of government etc.
      When he was awarded the Peace Prize the rest of the planet literally gagged, it was a total insult to what it is supposed to be.
      He wasn't smart enough to refuse it, which is very worrisome.

    3. The "Lets use health care to help expand the dependency class at the expense of the productive class so no one will notice." strategy isn't working out too well so far...

  2. great thoughts and observations as usual; sparks

  3. Never before in history have the markets been so polarised by the actions and thoughts of one single entity.
    That is why they no longer function as free markets and are completely "broken" and thus why the time comes ever closer when the Chinese move to shut down US dominance.

  4. Bitcoin or how to lose 40% of your purchasing power in one day, being unleveraged.
    Yesterday 650 euros, today 370 euros.
    For gold to achieve that, we would need something like prices at 900 $...tomorrow.
    I feel safe with bitcoins :)
    Maybe Mark will be speechless a few hours after that drop :)

  5. Here's my prediction for PM's after tomorrows FOMC Meeting results. If they raise the amount of QE, PM's will get hammered, if they keep QE were it is, PM's get hammered, if they pull back and taper QE, PM's will get hammered. Sarcasm aside...what people forget is that the gold/silver price is PAPER price, there time being coupled with physical PM's is RAPIDLY running out. Only a complete MORON would be selling any amount of physical PM's at this point. If you happen to be this stupid, then you will get what you deserve.

    1. @eph,

      You wrote that there seems to be a big buyer at 1270 level, but I see only a decrease on the OBVD every time we hit 1270 in the daily unit, which rather seems to indicate that there is no accumulation at this level for the time beeing, but on the contrary, more volumes selling every time we are back there...I'm not going long on that support as it doesn't seem to receive the buying flows necessary to hold.
      Juniors to Majors gold miners ratio is also down to lowest.

      - I have a little biais to see gold prices drop under 1270.
      It's nothing to do with predictions after FOMC meetings which I leave to fans of silver :) but monitoring a few of my indicators.

      - I see now an intermediate support at the recent lows 1250 which may suffice to support prices if 1270 give way. Indeed now 1250 is the area of the Bol Inf weekly, and also of the Bol Inf daily giving way down. Reinforced by the recent low on prices.

      So...drop under 1270, only to wait and stop once more at 1250 is also possible. I see no convincing signal above or at the daily time unit to entice me toget into the market.
      Maybe on faster time units...

    2. @Silver Fan,
      what sign did you see that suggests paper price being coupled with physical PMs is "Rapidly" running out?

  6. Interesting comment today by OECD (think tank) http://www.cbc.ca/news/business/oecd-says-bank-of-canada-may-have-to-hike-rates-in-2014-1.2432183
    Essentially the report thinks economic growth in Canada will be around 2.5% for both 2014 AND 2015 thus causing inflation with interest rates to rise to combat inflation, eventually doubling current interest rate. So, imagine what this will do to mortgages and also since interest rate hike in Canada means interest rate hike probably similar in US, what this will do to the US debt and can US survive such an increase......think interest on debt will be crushing just like the sudden default in Detroit? Don't know.
    Recently read that QE money is only flowing to the big banks who are sustaining the Dow feeding frenzy. Forget musical chairs, think ponzi scheme. Wonder what will prick the bubble.

  7. We keep hearing endless banter about the lack of physical demand for gold and then an article like this pops up.

    Somebody has the "bull by its horns".............Reality is near me thinks and I can't wait ;)


    1. Physical gold is just a small part of the gold market. Watching GLD inflows/outflows in tons is a better gauge of retail investor sentiment.

    2. hilarious action in bitcoin and litecoin, both of which have as much chance of being around in a year as a fart in a windstorm; sparks

    3. "Physical gold is just a small part of the gold market"

      Exactly my point

  8. If there is so much buying in gold. Why can't the buyers of the metal, make their presence felt on the paper market? The price keeps dropping, at some point investors don't want to see their asset losing its value. I know its a game but the gold bulls have to make their presence known.

    1. One can only think that the supply of gold is overwhelming. It did trade 1900. maybe there was no supply then but at 1250 the supply is unlimited.

    2. Concord - it is Western Investment demand that continues to drop; Asian buying is strong but in and of itself it cannot support the market if western based investors continue to sell the metal and move into equities. That is where the gains are to be made for now and thus that is where the money flows are going. If you own gold in paper form as a Western investor, it is doing nothing for you right now. Thus the reason for selling it and taking the proceeds and chasing stocks higher.

  9. Wonder what excuse the "acclaimed experts" will use for the massive gold selloff today.

    Probably blame it on the same guys: "Central Planners", "Riggers", etc.

    Gotta hand it to those guys, they never give up the fight, no matter how much money they lose in their trading accounts.

  10. Mark

    The "acclaimed experts" probably hold massive short positions.
    They're not stupid….we are.

  11. Trader Dan had already reported higher than normal short buying with the big guys last week or so. Markets are still 90% traded by computer algorithms putting the little guy on the sidelines leaving fund managers (they think they have to trade no matter what) the main victims of downdrafts. Market algorithm computers had the FOMC report in digitized form inputted last week.


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