“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


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Tuesday, December 31, 2013

Gold loses 28% to end the Year

Extreme volatility/wild swings in price was the highlight of gold trading in today's end-of-the-year session. Some fund managers on the long side of gold were heavily dumping positions early in the session to clear their books of one of the worst performing assets of the year. On the other side of that activity were some large specs who have been short the market for most of the year and were busy lifting some of those positions to capture those paper gains.

Around mid-morning, a rash of  "sudden orders" to buy ( Dow Jones wire services quoted traders using those exact words) flipped the market higher after it had run down near $1180. It moved as low as $1181.4 before shorts began ringing the cash register to close out the year.

The lack of selling enabled the buying to take price high enough to catch some overhead buy stops and up she went. Here we have another one of those events that I have sarcastically dubbed, "A REVERSE FLASH CRASH" in honor of those who love to regale us with stories of Flash crashes when gold drops sharply as evidence that the gold price is being manipulated lower by sinister forces intent on delegitimizing it as a viable investment.

I trust we will not hear a peep out of that crowd about today's bizarre price swing higher. After all, according to them, this is what gold should be doing all the time and thus this is legitimate price action whereas gold dropping sharply in price is somehow illegitimate.

Honestly, one grows weary of attempting to dispel the market ignorance on display from this group but this is what happens when anyone with a computer and a keyboard is now an authoritative source on market price action. Then again gold seems to spawn more of this sort of thing than many of the other commodity markets. I guess it just comes with the territory. Gold bugs tend to be very passionate about their views - nothing wrong with that -  but that very same fervor is what so often makes it difficult for them to see market price action with any sort of objectivity. They have to keep coming up with reasons to explain why their asset of choice is losing them money instead of just admitting that they were wrong and moving on.

What happened is not hard to understand however - gold dropped into a major, major support zone ( I have stated that $1180 is as critical to the future fortunes of gold as was the $1530 price level some time back) where strong buying surfaced once again. The short term players saw that it was holding and began to cover their shorts realizing that the support zone was going to hold for now. As price rose, with a large number of traders out of the market already in anticipation of the holiday tomorrow and low liquidity, there was no one left to sell. Thus there was a air pocket above the market and little to no resistance to the metal's rise.


There is nothing quite as dramatic as one of these typical short squeezes. The volume leaps dramatically as fear and panic hit those who sold into the bottom of the move and are now forced to scramble in order to avoid deep losses. While it looks impressive on the surface, the key is not what happens on any given day but the SUBSEQUENT market reaction over the next couple of days. If the market builds on its gains and continues to extend, then you have the makings of a legitimate short-term bottom. If however the market simply hangs around near the highs of the short covering day and is unable to extend much higher, the odds then favor a continuation of the downtrend with stronger hands coming in to sell at the new and higher level. We simply have no way of knowing which scenario we are going to get until it occurs. SUBSEQUENT PRICE ACTION is therefore the only safe guide to rely upon; not hunches, guesses, and dogmatic assertions from newsletter writers and other various pundits who know no more than the rest of us what will happen tomorrow.

I can tell you this from experience, making any predictions as to future price movements based on the price action from the last day of trading for the year is not wise. The other thing to keep in mind - one day does not a trend make. Gold is in a BEAR MARKET until proven otherwise. It really is that simple. Any market that loses more than 20% for a year is officially in a bear market and at one point in today's session, gold was down over 29%. Do the math.

 I will also add this one last thing - that the market faded from off its best levels tends to confirm the idea that we are not going to see much in the way of additional upside as we begin the New Year. The bulls are living on borrowed time and unless something occurs to change sentiment here in the West in regards to gold quite soon, it looks to me like one will be able to buy gold at a cheaper level than they were even at today's lows early next year.

As always, time will tell...

One last thing, some money managers like to come in and buy distressed stocks from poorly performing sectors towards the end of the year. The idea is that many participants are selling losers to square their books and to realize tax losses. Those who come in and buy these stocks which are being thrown out will then look to make a quick 8% - 10% profit as the selling pressure lets up when the New Year begins. It is a short term trade by nature with the theory that the heavy selling is now finished so one can safely buy. This sort of thing can tend to put temporary bottoms in those stocks. As mentioned above, the key to seeing whether or not a trend reversal/longer-term bottom is in the sector is to watch how subsequent price action unfolds and especially volume.

Moving forward this next year, gold's fortunes will be determined by whether or not Asian demand, especially out of China is sufficient to absorb Western-based selling of the metal. As stated yesterday and reiterated today, I am concerned because in spite of such heavy losses in gold, the large specs remain stubbornly bullish; this is not a recipe for a reversal. If anything it is a recipe for more losses ahead for the metal until the bullishness is killed.

When you take a look at this chart of the reported holdings of GLD and see that the holdings are back at levels last seen in January 2009 ( an incredible 5 years ago), it is not hard to understand the drop in the price of gold. What is difficult for me to grasp is why these big specs remain as net longs over at the Comex. The big money in gold has been made on the SHORT side over the last year; trend followers have done fine. It is those bucking the trend that have gotten badly burnt. One wonders just how much more pain that want to bear.




What I am going to be looking for in 2014 is if/when market sentiment begins to turn strongly in favor of "growth/inflation" and away from "growth/no inflation". If/when it does, commodities should see some risk money moving back into the sector in general with the expectation of higher prices as a result of ramped up demand. I am not saying that this is going to happen as I am not in the business of making predictions ( I will leave that to those who have no money at risk in the markets). What I am saying is that this is something to watch for to see if this were to develop.

Such an occurrence would tend to bottom gold but especially silver. Copper prices have already turned higher over the last several weeks and are now up in levels near the top of a trading range that has been in place since April of this year (2013). If copper begins to push higher, especially if it can clear $3.50 convincingly, silver should get some help on the buy side.

I would also like to take a bit of time here to thank all those who have visited the site this past year. I would especially extend my gratitude towards those who post here for your many encouraging words, your insightful posts, as well as your helping to keep this site clear of profanity, ugly personal attacks on individuals and the other assorted crap that is all-too-frequent nowadays in this unethical age. As I have written many times here, opinions on the markets are fair game; those who offer them should expect that others will often take the other side because there is always a bull side and there is always a bear side. If not, we would not have anyone to buy from if there were no bears nor would we have anyone to sell to if there were no bulls. Personal attacks that impugn the motives/character of others is a different story however and that is something that I will not tolerate here, nor should those of you who read and post here allow either. It demeans the site and interferes with what we are trying to accomplish here which is to provide a forum where folks can learn to read the voice of the market and hopefully become better informed in their trading/investment decisions by applying that which they have learned.

A Happy, Safe, and Prosperous New Year to you all. Personally I like to take this time of the year to look back at the many blessings of God and realize just how gracious He is to we who do not deserve such goodness at times. At times we are prone to measuring our "wealth" by the size of our bank accounts but what price can one put on family, health, friends, and our reputations? Such things are irreplaceable.

Once prior to a famous sermon that he preached during what historians have termed, "The Great Awakening", Jonathan Edwards prayed to the Lord asking Him to "stamp eternity on the eyeballs of those who heard him preach". We might do well to consider that more frequently during the course of the next year. It is remarkable how it tends to help us keep things in their proper perspective!










36 comments:

  1. Thanks Dan for taking the time to post as you have done throughout the year - I always enjoy your perspective - Hope you have a good new year

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  2. Thanks for your time and effort, Dan. Happy new year and a wonderfull 2014 to everyone.

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  3. Thanks Brother Dan, You and your family have a safe Happy New year and next year we get to fight another battle. The many battles might be lost this year but we will win the war down the road.

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  4. Happy New Year Dan and Your Family! Once again, a fine letter to conclude 2013. I have nothing to add to the prevailing heavy and bearish sentiment that pervades everything but the stock market especially, and to a lesser degree, the debt markets, which stubbornly refuse to come apart from the seams. As for the $, it is more bullish than bearish, depending on which fiat you want to compare it to. I still lean heavily on bearish Yen ideas.

    Now, onto a less serious subject, I know a lot of your readers get a kick out of giving me the horse laugh on football calls, so here goes for tomorrow. Wisconsin -1, LSU -7 1/2, Stanford -6 1/2.

    Take care all, and Happy and Safe New Year. I am off to find a crap table; sparks

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  5. Dan: Do Gold/Silver ( the commodity and related stocks) experience the Jan effect?

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    Replies
    1. WolfWisdom;

      It depends on what the consensus of the market is in regards to the deflation/inflation sentiment as to whether or not an influx of speculative money finds its way into the commodity sector at the start of the new year. This coming year, as of now, does not seem to have the "inflation if definitely coming" sentiment attached to it at this point and thus I cannot see any particular reason for fund managers to put a large dose of cash to work in this sector which did not perform well last year.

      There will however be some commodity index fund rebalancing associated with the yearly reweighting of the various indices and that will bring some buying into some commodities and some corresponding selling into others as those funds which benchmark against these respective indices are forced to rebalance their portfolios so as to bring them into line with the new weightings.

      Happy New Year

      Delete
  6. Thanks very much to you for keeping this blog alive and active, given all the hard work it represents, regardless your mood or how busy you are at some time.
    It's a nice lighthouse in a dark ocean of forecast newsletters and prophets, and it sure brings interesting people to discuss on its forum, each with their own different points of views.

    Health is more important than anything and that's what I wish to everyone for 2014, with lots of love to share. I went to a funeral right today. Learnt about the news yesterday. A friend of mine when I was student. 39 year old only. Mother of a 4 year old kid. Dead. From a 3rd tumor in her brains. She fought and survived the two first ones through operations and all. I didn't know this shit came back a third time. I just heard about her death and went there. She's gone now forever. Enjoy the time you have with each other and don't let gold, profits, daily candles, take more room in your lives than they should. Some things matter more. Life is too short.

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    Replies
    1. Hubert;

      Very sad story but one that perfectly brings home the point I was attempting to make. None of us are promised tomorrow.

      Happy New Year to you my friend.
      Dan

      Delete
  7. The problem the majority of gold bugs have now is that in order for their favorite asset's price to rise in any meaningful way, they are going to have to root for something most of them seem utterly loathe to root for these days: Super-strong economic growth. What's more, not only do they seem to have an almost ingrained predisposition to root against it, whenever a data point is released indicating some strongly positive economic indicator, they go to great (and often absurd and dishonest) lengths to explain it away or otherwise deny it. For their sake, this is too bad, because this puts them into the position of denying the one thing that will help their favorite asset.

    I don't know if I've posted this before, but I like to use the year 1978 as a poster child for what the gold bug crowd should be rooting for. In 1978, gold started the year at $169 and rose to as much as $243 in late October, finishing the year at $226, a 34% gain. Not bad. Was 1978 a year of gloom and doom, as gold bugs typically like to harp upon? Hardly.

    Here is monthly job creation in 1978:
    Jan: +187K
    Feb: +353K
    Mar: +513K (!!!)
    Apr: +702K (!!!)
    May: +346K
    Jun: +442K (!!!)
    Jul: +254K
    Aug: +276K
    Sep: +137k
    Oct: +336k
    Nov: +437K (!!!)
    Dec: +283k

    Out of 12 months, only 1 had job growth below 150K. And four had growth above 400K. Those are some damn good numbers!

    GDP growth, with the exception of the first quarter, was pretty darn good too:

    Q1: +1.4%
    Q2: +16.5% (!!!)
    Q3: +4.0%
    Q4: +5.5%

    Numbers like this will help stroke inflation and help the price of gold (especially if Yellen is as dovish as advertised) - but if the BLS and BEA churned out numbers like this next year, would your average gold bug believe a word of it? No, of course not! - especially not with Obama in office! God forbid actual, real and genuine strong economic growth occur with a liberal democrat in the White House ... never mind that Jimmy Carter was in the White House in 1978.

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    Replies
    1. Unknown;

      that is very interesting information on the jobs front. Thanks for providing that data for us!

      Happy New Year!

      Delete
  8. Hi Dan,
    Thanks for the great analysis - you're right, I suppose the manipulation crowd is comfortable in the 'downwards only' manipulation thesis, without a word to explain situations such as today when gold spiked up as it did earlier this morning nearly $30 an ounce within a matter of minutes.
    It seems that involving oneself in a trade at these types of critical support levels involves a lot of shakeout and second guessing one's opinion. I saw the fall this morning and thought we'd slice through 1180 only to later see that we were back up over 1200, so I covered my short at a slight loss. Emotions man - it's hard to control when price moves like that, especially with leveraged positions such as options! Oh well - live to trade another day.
    Quick question for you - if 1180 is as critical of a support level as you suggest, akin to the 1530 level broken back in April, how swift of a fall do you see us potentially going through down below it? I ask because when we broke 1530 we never saw the 1500s again - there was a bounce from the 1300s to the 1400s but that was the end of that.
    Is there a potential here for us to slice through that 50% Fibonacci level at 1089 - and go right for the whole # 1000? I suppose anything can happen at this point.
    Best to you in the new year to come!

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  9. Syncubate;

    If that $1180 level were broken, I think we would finally see the large specs in the Comex who are still longs finally throw in the towel. The combination of long liquidation on their part along with fresh short selling would probably drop the market down to $1100 in short order. You might even see gold overshoot that level just based on the downside momentum that would be generated.

    The deal is, what makes this a bit different than the impact from the $1530 breach, is that gold would then be moving down into the cost of production levels. If we were lucky, we would see some mine closures which would eventually pave the way for a good bottom. In other words, your downside from a $1180 breach would be much more limited from the downside that occurred on the $1530 breach.,

    It would however turn the complexion of the gold market strongly bearish and would thus bring a lot more negative sentiment towards the market. In truth however, that is necessary in my view to forge a LASTING bottom in this market. There are still too many bullish people out there who need to get weeded out before we can put in a proper base in my view. The only thing that would dissuade me from this view is something along the line of massive buying of gold by the Chinese of the same magnitude that we saw this past year in the summer when gold spiked down to that $1180 level and then careened higher as physical demand soared from all corners of Asia.

    Yes, emotions can be tough because the leverage involved in trading futures is so large. Just trade smaller... a little goes a long way with this kind of volatility and you cannot get hurt quite as badly if you keep a small position size to work with instead of trying to bet the farm on any one trade.

    Happy New Year

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  10. Dan,

    Thanks for all the great market insight and sharing your time and expertise with all of us. Best to you and your family for the New Year and beyond!

    -Rick

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  11. 2013 will go down as a truly horrific year, one of epic proportions, for those in the gold bug community.

    Many fine men had their reputations ruined and destroyed by constantly harping "buy, buy, buy" throughout this huge collapse.

    Even guys Cramer had the sense to stop calling bottoms during the prior two bear markets in stocks.

    More data will follow later this weekend about the staggering gains in many stocks and sectors and the eye-popping losses suffered in the mining sector.

    Truly historic times.

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  12. But cramer doesnt "know the future before it happens", his father wasnt partner with anyone and he isnt considered "mr stocks".

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  13. Dan
    Thank you again for your reasoned aproach and civil forum. A bit of class in a WWW that is often full of ne calling and vituperation.
    Happy new year all.

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  14. Good morning and greetings from another continent. Wishing all a happy and healthy 2014. I have never posted before but I am a compulsive reader and I have learnt really tremendously from Dan. How easy is it to recognise intelligence as opposed to outright stupidity in what one reads on blogs when you have a leader such as Dan to follow compared to so much other rubbish that is bandied about out there! Thank you for all your words of wisdom and please keep up this very worthwhile blog of yours.

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  15. This comment has been removed by the author.

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  16. Hey Dan, Happy new year from Australia.
    Great article. I always read your "The commentary" via Silverseek and try to understand the technicalities that you write about.
    I came across this article
    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/1_The_Most_Remarkable_News_In_The_Gold_%26_Silver_Markets.html

    and I was wondering if you could comment on the charts, as I am not technical but they seem to be pointing to a change.
    Regards, John Mitchell

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    Replies
    1. John Oz;

      Happy Hew Year to you folks from down under!

      In regards to that article referenced... this is one of the things that is so difficult to contend against when trying to teach folks how to read markets. Implied in this article is the idea that gold and silver are both so oversold that THEY JUST HAVE TO HAVE A BIG RALLY AT SOME POINT.

      Okay - but so what does that mean to the average trader/investor especially to those who have sat on their mining shares and watched their value evaporate into the ether. That is small consolation for not knowing how to detect a TREND CHANGE and either getting out of the sector, buying puts to protect the downside or at least cutting some exposure and reducing ones holdings. While gold lost nearly 29% this past year, the losses in the mining shares/sector have been even larger.

      Sure, at some point a market will stop going down and then all those who regularly call for bottoms will be correct but as the old saying goes, even a stopped watch is correct twice a day or perhaps more appropriately, even a blind sow can occasionally find an acorn by grubbing around in the dirt.

      This is not technical analysis, it is HOPE that is on display in that article. Hope that the market will turn around and see some sort of strong sustained uptrend during the year. Again., WHEN is the question but more importantly to the point, markets are oversold because no one wants to own them. When the conditions change then people will want to own them again. Who is to say when that will occur? My contention remains the same - when the sentiment in regards to GROWTH/INFLATION emerges to replace that of the current SLOWGROWTH/ NO INFLATION, then the metals will begin moving higher. That could occur next week, next month or even next year. We have no way of knowing until it does and the way we can detect that is by studying the movements in the price of the metal and its technical action.

      One last thing - I have learned over the year, because I have been guilty of it myself at times in the past, that those who call for market reversals based on the nebulous term "OVERSOLD" are always on the long side of the market. Those who call for market reversals based on the equally nebulous term "OVERBOUGHT" are always on the short side of the market.

      here is a trading fact - markets can and will remain in overbought or oversold conditions much longer than those who predict that they are going to turn can imagine. HOPE is not a trading strategy - Sound money management and trading discipline is.

      The trend is your friend until it is proven to have turned. NO one needs to pick an exact top or an exact bottom in a market to consistently make money trading/investing. There is plenty of money to be made by catching the early/middle part of a trend and riding it up or down.

      Only egotistic fools constantly call for tops or bottoms because the simple truth is NO ONE, including themselves, has the faintest idea of market top or bottom until after the fact.

      Delete
    2. Hi Dan,
      Thank you very much for your reply. Everything you said makes a lot of sense. So when I see these types of articles in future I will take them with a grain of salt.

      Delete
  17. Congratulations Dan, on being one of an extremely short list of metals people who have kept a level head during the metals debacle of 2013. As Buffett says, "It's only when the tide goes out that you discover who's been swimming naked."

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  18. Action in XAUUSD (gold vs USD) fx options entire year could tell us similar story that fx options traders are bearish on spot gold price as well.

    Looking gold options with expiry from 1 week up to 1 year we could see that price of gold puts was greater than price of gold calls - meaning majority of biggest players buying gold options (such as big banks investing $billions), were positioned for a bearish gold price.

    You're all welcomed to browse through archive of my daily fx options analysis & weekly fx options commentary on my blog found at FXoptionsANALYSIS.com

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  19. Here's Doug Noland's scorecard, as of last week.

    Doesn't even include the recent gains from the last few days.

    From November trading lows to mid-May highs, the S&P 500 surged 25% and small caps gained 32%.

    For the year:

    The S&P 500 returned (including dividends) 32.4%
    S&P400 Midcaps returned 33.5%
    Russell 2000 small caps returned 38.8%
    Value Line Arithmetic up 38.4% (compared to 1999’s 10.6%)
    NYSE Arca Securities Broker/Dealer index gained 70.2%
    NYSE Arca Biotechnology index rose 50.6%
    Dow Jones Transports surged 39.5%
    Morgan Stanley Cyclical Index gained 41.4%
    Philadelphia Semiconductor Index jumped 39.3%
    KBW Bank Index rose 35.1%.
    The Nasdaq Composite surged 38.3%
    Nasdaq Industrial Index up 43.1%
    Nasdaq Bank Index gaining 38.9%

    The Goldman Sachs Most Short index surged 46.7%.
    Herbalife gained 139%.

    Sunpower gained 430%
    Solarcity jumped 376%
    SunEdison up 307%
    3D Systems jumped 161%
    Stratasys rose 68%
    Netflix jumped 297%
    Zillow rose 195%
    TripAdvisor 98%
    Micron Technologies jumped 243%
    Best Buy 237%
    Facebook advanced 105%
    Yahoo! 103%
    Tesla surged 344%

    AND THE XAU COLLAPSED BY 53%!!

    With notable names like Tan Range decimated to "penny stock status" from over $4 to $1.75

    McEwen Mining outright collapsed to $1.80

    Here's how the Consumer Discretionary ETF performed in most major currencies lately:

    http://stockcharts.com/freecharts/candleglance.html?xly:FXE,xly:FXY,xly:FXC,xly:FXS,xly:FXA,xly:FXB,xly:FXF|D

    And now here is a look at GLD, completely brutalized in every currency this year:

    http://stockcharts.com/freecharts/candleglance.html?GLD:FXE,GLD:FXY,GLD:FXC,GLD:FXS,GLD:FXA,GLD:FXB,GLD:FXF|D

    Just amazing how many "acclaimed experts" and "billionaire investors", and "international money managers" got it completely wrong.

    To quote Bob Brinker again:

    NEVER BEFORE HAVE SO MANY BEEN SO WRONG FOR SO LONG

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  20. And more on the commodity front.

    Proving once again that the "Endgamers" and "Hyperinflationists" were caught flatfooted.

    2013 was bulletproof evidence that the faster one prints, the higher likelihood of increasing prosperity in the form of collapsing commodity prices and input costs.

    For the year, the Fed’s balance sheet ballooned 37% to surpass $4.0 trillion.

    Bank of Japan assets surged 42% to exceed $2.0 trillion.

    Yet "currency induced cost push inflation" is nowhere to be found, as it is certainly a fairlytale manufactured by the the doomer crowed.

    Silver down 35.8%
    Canola down 26.8%
    Wheat down 22.1%
    Soybean oil down 21%
    Coffee down23.0%
    Nickel down17.2%
    Aluminum down 12.8%

    But the biggest story is corn.

    From Bloomberg:

    Dec. 31 (Bloomberg) — Corn headed for the biggest annual drop since at least 1960 and wheat tumbled the most in five years as grain production climbs to records worldwide and outpaces demand for food, livestock feed and use in biofuels.

    Corn plunged 39 percent in 2013, the worst performance among 24 commodities on the Standard & Poor’s GSCI gauge, as the U.S. harvest rose to a record.

    Farmers worldwide are producing record amounts of everything from soybeans to wheat, leaving food prices tracked by the United Nations 13 percent below an all-time high in 2011 and spurring banks including Goldman Sachs Group Inc. to predict further declines in crop prices in 2014.

    “We’ve moved from a deficit environment to a surplus environment with big crops in the U.S.,” Chris Gadd, an analyst at Macquarie Group Ltd. in London, said by telephone today. “Rather than trying to ration demand, the function of price now is to try and find demand.”

    More proof that the Bernanke Fed will go down in history as the most fantastic ever.

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    Replies
    1. Mark;

      Thanks for providing those yearly returns/losses numbers for us. That is a lot of work. Most appreciated... very informative as well.

      Happy New Year

      Delete
    2. Hey Mark,
      Most appreciated - seems you've done quite a bit of research there and it provides a clear perspective on trends set in 2013 and the corresponding top performers.
      Now that 2014 is upon us though, I'd consider the possibility that the trends could change at some point later in the year. Stocks may continue to rise in the near/intermediate term, but a pullback will have to come into play. Will that happen at SPX 1900, 2000, or above...who knows.
      Gold got hammered down from the all time highs as hard as it did in many ways due to what Dan talks about - the inability of those long physical to realize a major trend change came upon us back in April. At this time I still get the sense that many feel 1180 can't be broken and we've hit a bottom. I'm not so sure about that though - as Dan has mentioned, the large specs are still long and a pushdown may be in order for a final capitulation. We'll see. Judging from the trading action over the past week, the bulls and bears are fighting hard between the 1180 and 1210 levels --- it reminds me of the fight and swing back and forth that was happening between the high 1300s and 1420 back in the summer, before we saw that June drop.
      Anyways, I'd contend a similar scenario may be in play for stocks, and I know Dan's focus is on technical analysis for commodities, but I'd love to get his perspective on the DOW & SPX based on the last year and what he sees going forward. No need to call the top - it's a dangerous game to play, especially when trading on leverage. But everyone is a bull in stocks right now - it eerily reminds me of all the gold pawn shops I saw springing up when gold was shooting up towards 1900 and everyone was saying we were surely going to 5000 an ounce soon. Now you've got everyone under the assumption that stocks can only go up and can't come down - that's simply not an objective perspective to hold onto indefinitely .
      Dan, if you do get a chance to comment on the DOW and SPX as we start 2014, that would be most appreciated sir!
      All the best.

      Delete
  21. Thanks again, Dan.

    Say everybody, isn't it odd that PRPFX [which holds an annually rebalanced portfolio of bullion, US stock warrants (a way of leverage), Zero-coupon Treasuries (a way of leverage), a bit of REITS, a bit of energy resource stock, a bit of Swiss bonds] has remained has remained in a range between 45 and 50 for five whole years. Seems to mean that financial instruments (if you include gold and silver as financial instruments) are in a stable state. Like, if stocks went down and gold went up in a direct inverse of last year, the PRPFX would remain the same. How bizarre. Anyway, it demonstrates the need for stocks as a hedge against whatever.

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  22. Yes Peter.

    Proof that "paper rules" in today's age of "infinite fiat" whereby prosperity and deflation in key commodities can be achieved by printing even greater amounts of money.

    The "derivatives colossus" names like JPM have engineered things such that inflation and recessions can be defeated easily.

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    Replies
    1. Mark

      Seriously? …no more recessions?
      Care to wager on that one ?

      Delete
  23. Dan,

    I'm just wondering what are your thoughts on the energy complex, especially crude oil and natural gas? Do you think both of them, especially the latter will continue its bull run?

    Thanks!

    ReplyDelete
  24. Hi Dan, thanks so much again for a wonderful commentary!
    I have to admit though that I really don't like those diagonal downward sloping pitchfork lines you put on your chart LOL!
    As I reflect back on 2013 and the miserable year for the metals I can't help but try and remember it as an "opportunity" to accumulate, and not a losing year as I haven't sold much knowing that what goes down must go up again! I think the prices for the precious metals may be looking at gov't actions for direction more than central banker baboonery! we will see.
    thanks again for all your work here offered to us who can't afford the high priced analysis that some may enjoy! I like referring and comparing your charting work to the other info I find on the net for a more balanced approach.
    One thing I try and remember, we never brought anything into this world and we surely won't bring anything with us when we leave this world! I've read though that there will be streets of gold in Glory ! Hope there will be some of silver for us silver bugs too!
    All men are equal at birth and at the cross! I hope we can remember that we should measure success by our relationships and not how much we have!
    God bless you and yours Dan!

    In Him,
    Derry

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  25. Mark

    We all are not sure if 2013 was a bad year for commodities.
    Could you please repeat those numbers for us…none of us really "get it" quite yet.

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  26. Mark ,

    Could please let me know where you found those figures , I am looking everywhere and can't seem to find them . Thank you for you added value. I have only one word , Priceless !

    Happy new year

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  27. Dan,

    Thanks for your excellent work and, most of all, objectivity! December's monthly close was shaping up to be an important one relative to the 2009 high and 2010 low. Is that where the major support comes from or is it just the round 1200 number?

    Jonathan

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  28. Happy New Year to Dan and Blog Members. ( Dan: Thanks for responding to my Q re: Jan effect. Rebalancing could definitely be a factor in Gold's bounce back. )

    Needles to say the Bulls do not seem to want to surrender the July Low 1180 level without a major fight.

    Another person's opinion ( from down under)
    http://sentiment-trader.blogspot.com.au/

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