“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






Tuesday, March 4, 2014

Putin Pulls Troops - Bulls Pull Longs

Apologies for the lack of commentary yesterday - a bit busy and worn out from trying to navigate the Ukranian-based volatility.

Watching the price action in gold last evening was an exercise in the difficulties in trading gold, or for that matter, any commodity futures markets, based on geopolitical events. They can be so volatile, so unpredictable, so fluid that those who overload their account with related positions run the very real, and unfortunately, all too frequent risk of having those positions turn against them without the least bit of warning.

The yellow metal dropped rather rudely last evening here in the US ( daytime in Ukraine). Moments later the news showed up on the wire services that Putin had seemed to dismiss the use of military force ( for the moment) in dealing with the situation on the ground in the Crimea region. That sent gold bulls packing faster than one can say: "Oligopoly". Dip buyers did show up later in the session however as the situation is quite fluid.

AS a side note - buying PHYSICAL gold because one has been told that  a nuclear WWIII is just around the corner as some are now claiming (  personally I dismiss this altogether) might make sense to some but for goodness sake, do not go piling into the highly leveraged Gold futures market at the Comex based on those sorts of wild claims. You will inevitably ending up buying at the highs while the market then drops off leaving you stranded and with deep losses.

I have already gone on record in the comments section here but might as well go on record on the "front page" as stating that my suggestion is that the West should stop meddling in Russia's back yard and get behind a national referendum there in Ukraine to split the region into two parts with the Eastern half being given the option to remain under Russia's umbrella while the Western half can drift into the sphere of European influence. My guess is that such a vote would pass. Russia would retain its warm water port on the Black Sea and the Western half could then get bailed out by Germany, who would more than likely be sorry that they adopted it as Ukraine is an economic basket-case. The US itself has NO strategic interest, especially in the Crimea region.

While chart technical levels are important to watch in trading, geopolitical events tend to make buying solely on chart patterns very tricky for the reasons stated above. Let me leave it at that for now. Traders, if you are going to stick your neck out and trade this yellow metal right now, do yourself a favor and stick your mouse hand in a bowl of icy water until it goes numb and you cannot move it. There are better opportunities without the risk of staying awake for endless hours out there.

This is one time when the physical gold buyers can sleep much better. If things happen to escalate and tensions get higher, they have their metal in hand. If things calm down, they still have their metal in hand. Traders on the other hand, can easily end up battered and bruised as no one knows how these events will unfold, contrary to the many confident and reckless predictions that now abound.



55 comments:

  1. I am actually surprised that Au is not trading much higher, based on all of the craziness going on in Eurasia. Russia is threatening with dumping the US treasuries if they don't smarten up, and if they did that could be a catalyst for gold, but it looks like posturing and lots of push-pull action. As for the WWIII, who buys investments and assets in the face of something like that? If I thought this is what is coming, I'd trade my gold, shares and/or $ and buy me some good Scotch and book me the first flight to Caribbean. Who hopes to profit from the Apocalypse? People are funny animals!

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    1. Good thinking Dan and Abraxas; the loose talk about nuclear wars and so forth is shameful, unsophisticated, and downright pathetic, and only serves to discredit so-called educated and connected types. sparks

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    2. "A fire broke out backstage in a theatre. The clown came out to warn the public; they thought it was a joke and applauded. He repeated it; the acclaim was even greater. I think that’s just how the world will come to an end: to general applause from wits who believe it’s a joke."
      – Søren Kierkegaard
      :)

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    3. "I want to say, and this is very important: at the end we lucked out. It was luck that prevented nuclear war. We came that close to nuclear war at the end. Rational individuals: Kennedy was rational; Khrushchev was rational; Castro was rational. Rational individuals came that close to total destruction of their societies. And that danger exists today."
      _ Robert McNamara, the Fog of War.

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    4. http://prophecies-2012.blogspot.com/2011/02/baba-vanga-prophesied-44th-us-president.html

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    5. Hubert; Why quote a scoundrel like McNamara, who took 40 some odd years to admit his mistaken role in Viet Nam? sparks

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    6. Because he was there, or he knows from first hand that Castro was pushing Khrushchev to strike the US...so I believe him when he says we were near total catastrophy.
      The mere fact that people like Craig Roberts, or here Eph, believe that some "globalists" or "neoconservatives" are delusional enough to believe they could benefit from a first strike and start a "limited" nuclear war brings me goose bumps.
      You don't know how much I hope I am a stupid fool and you are 100% right.

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  2. Have a small position gonna hold it regardless of "fog of war" media. Charts holding and Mr. Putin is not beyond a showdown. Split would certainly be best solution, but ...do not believe he is done extracting more fear to prove his ego.

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  3. "The US itself has NO strategic interest, especially in the Crimea region."

    Except maybe the strategic interest to divide and conquer and seed the roots of chaos everywhere else in the world. Reign on everyone by creating division, conflict, tensions between all other nations and weaken them one by one until they submit. Russia hasn't submitted yet for sure, it must be broken.

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  4. Looks like the greatest economic boom ever recorded is still in front of us, that's why stocks are once again making new highs.

    Bears are getting creamed once again.

    Stay in the System.

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    1. I'll try another short at 1900 SP :)

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    2. I m with u Hubert. Short SP and the leveraged zsl and gll funds. Since they are shorts on GOLD and silver it will be a short on a short fund. Lol

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  5. It is funny how all of these experts predicting WWIII and global financial meltdown because of Ukraine, were apparently unable to predict Ukraine only a month ago. They are great in predicting in retrospect, it seems.

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    1. As well, Russia selling off US treasuries and putting sanctions on US is a bit overblown. Nuclear power, yes, economic power less so. Russia's GDP is about the size of Italy or Brazil. As a holder of US gov. debt it ranks just above Luxembourg. Gazprom's NG monopoly isn't what it once was (WaPo article on this yesterday--Europe learned its lesson after last threat to cut off supplies)

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    2. Yeah, I guess low commodity prices are not helping Russian economy either.

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  6. Abraxas.

    Exactly.

    Same guys also failed to predict the biggest bull market in stock market history and the biggest XAU crash since 2001.

    Just goes to show how many gloom and doom "experts" have such an aura surrounding them, they can be wrong over and over again yet people still fawn over them and travel great distances to go to Q & A seminars come hell or high water.

    By the way, check out the monstrous moves in platinum and palladium, as if the entire globe is about to go on a auto buying frenzy creating huge demand for catalytic converters.

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  7. Wow, it seems like Silver is tracking the USD index today.

    It seems like most of the time, they move inversely, not conversely.

    A sign of money moving into the US $ AND into silver - or just some wierd side effect of the way market correlations & trading dynamics work ?

    Perhaps related to "Flight from the Ruble"-itis ?

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  8. GDX/GLD ratio still rolling over. Amazingly, still lower than the 2008 lows, so pretty much at multi-decade lows.

    Hands down the worst sector of all time.

    While the rest of the market is in a moonshot, led by consumer stocks like Chipotle and Priceline.

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    Replies
    1. If you were short the metals since last year and went long the double bottom you made a fortune. Far out pacing the SM.

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    2. Mark

      If I was retired with $1 million in the bank and searching for yield. I could buy any security or asset class and hold it for the next 3-5 years. Would you recommend that I buy U.S. equities today?

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  9. Sevastopol is to Russia what Cuba was to the US.
    If the US fail to understand it, and try to play chicken with Putin, you have a possibility of a very serious situation.
    I would simply not dismiss the risk of escalation completely.
    Bring a match above a powder keg and there is always a risk of sudden ignition.

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  10. IWM had one of the biggest volume days of the year on a world record price breakout. That tells me we are on the cusp of a huge economic boom and recovery.

    And on top of that, when all the dust settles in Ukraine, Chipolte will march in and open at least 500 new restaurants there, ergo explaining the huge 5.5% ramp in that stock today.

    And all the while interest rates are dirt cheap, Bill Gross at PIMCO is buying up more toxic debt in Europe hand over fist, and millions of money managers sitting on the sidelines worried about a financial meltdown will have no choice but to jump in and buy stocks if they want to keep their jobs.

    The Bernanke Legacy continues, the greatest central banker ever, and the markets continue to shrug off bad news and march to new all time highs month in, month out.

    I expect that gold will soon start crawling up out of the grave, eventually it will have to slowly eat through that huge supply line and make its way back up to rescue those poor "Angels" trapped in the battered women's shelter sitting around $1,650.

    Stay in the system.

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  11. What we saw today , is that Putin has the markets by the balls …. he twisted them a little , and all major indices where down anywhere from 1.5 to 2.5% … the USD barely moved higher … Maybe he has learned from the FED and got himself a nice little trading desk at number 1 red square … LOL

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  12. … in the mean time … comex gold its starting to look like a freight train to the stratosphere ever since it stopped at the double bottom station … I am out of my two positions MUX and LSG … but I am getting an itchy trigger finger … for the time being I am listening to Dan and putting it inside the little frizzer next to my desk every 10 minutes … will keep you posted . I am convinced that this Ukraine shennanigans , don't know if I spell that one right , is p u t i n a bid in the gold market that we didn't have before … that plus 4 trillion reasons …

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    1. And Ben during his $250K cameo appearance today said..aww, I wish I could have done something for the common man. I think he did, he drove a stake through our hearts. Forgiveness, ok, but forget and not punish that sob, never. One thing, if I ever meet a Fed employee, their teethe will be in the back of their throats. How about that for forgivenss.

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  13. Komiskey is saying Russia about to default which in turn could lead to a major take down in gold as they dump it to pay off their debt! Sit tight belts on!

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    1. Anon; you need to get better sources; the Russians are minor leaguers in the big picture when it comes to gold and U.S. Treasuries; let them puke it all out and then what are they going to buy to replace it? I am not taking one side or the other on Ukraine or Crimea, but In the financial world, they are not quite what a lot of people seem to think; sparks

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    2. Good old trader from Chicago fun to watch jimkomiskey.com

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  14. Who is Komiskey?
    Let me guess..Russia defaults…the mighty Dow surges.
    Obama warns the entire world…I mean everybody...that they better watch out or face the consequences….Dow rallies.
    All bullies are destined to suffer the same fate…it's not if…it's when.

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  15. West created pressure in the Russian backyard because Russians outdid them in Syria. This is not simple revenge. It is to show Russians what kind of problems they can expect. Eventually, Russia will let US deal with Syria, and US will leave Ukraine alone. Similar things happened several times in the past but most of the people are too lazy to connect the dots, but are looking for some gurus, experts, movie stars and journalists to tell them what to do.
    This crisis will eventually be continued in the Middle East.

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  16. http://www.marketwatch.com/story/smith-wesson-fuel-cell-makers-jump-2014-03-05?link=MW_home_latest_news
    Guns will be the common man solution. One bullet one vote.

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  17. the platinum and palladium continue to rally sharply, indicating worry over Russian/Ukrainian events? sparks

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    Replies
    1. supply issues more likely

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    2. @Anon, Russia is the supply issue - 2nd largest producer of PGMs:
      "Currently, Russia is the second largest global pgm supplier. In 2011 shipments amounted to 835,000 oz of platinum and 3.48 million oz of palladium, or 12.9% and 47.3% of the world's total supplies, respectively." cited from Platinum Metals Review
      (http://www.platinummetalsreview.com/article/56/3/202-202/)

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    3. SA also in counts check the tape

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  18. kwn is outdoing itself once again with all their ideas about what is wrong with America, and yet they fail miserably in touting the Russians and Chinese neophytes and how they would somehow come to the rescue; lmao and btw, who exactly is the author of this piece? sparks

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    1. Perhaps it's Jim Willie's Voice.

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    2. @Steve in Sparks. Ugh just crazy. First, how is it that the US is rotten and somehow Russia is a paragon of virtue. Is there an equivalent of Brighton Beach Brooklyn, in Russia, (full of American emigres)?

      Living in Mexico, a corrupt, dangerous country with no protection of law for victims of crime or anyone but the powerful, you appreciate the rule of law and relative opportunity of the US (albeit both eroding). Dismissing Obama as a puppet is as wrong headed. One might not like him, but he's freely elected, rational, and nothing if not calculating.

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    3. MDLGTO; there is truth in what you say; however regarding Obama I disagree, as he is truly nothing more than a puppet, and if you remember, the 2000 election was stolen by the dangerous Bush monsters, as was the 1960 election, when Uncle Joe bought Illinois in order to slip past Tricky Dick. Until the rule of law is restored along with accountability and the banksters start going to jail or get assassinated, the bubbles will blow even bigger than we all see currently, and please, Mark, do not for a minute try to equate stk prices with the real world. sparks, of course

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  19. steve in sparks:

    Stock prices ARE the real world. If you trade for a living....

    But if you do not trade, but merely pump out newsletters, scare blogs, and hold Q & A seminars based on the sky is falling thesis, well, that's not trading. That's touting and carnival barking, a whole 'nuther thing..

    In that case, you can say that stocks have nothing to do with the real world.

    LOL.....

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    1. Mark; Semantics is what we are talking about here and nothing more. We both know that the engineered and orchestrated 5 yr bull mkt in stks long ago detached itself from the economy at large; I am long and drag my stops up every day because when this thing ends, it will not be in a wimper, but very ugly I am sure of; sparks; btw, do you remember Oct '87, when they didn't answer the phones? This time will be the same thing, as they gap the mkt down 20% overnite and Hoosier Johnnie Come Latelies like you, scratch their heads in complete bafflement, saying btd baby; hahaha

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  20. Mark
    Are you saying JS is not a trader?
    We may not agree with what he says but I can guarantee you the man knows how to trade, and no doubt does it very very well.
    I am sure Dan could clarify that one.

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    Replies
    1. Dean allow me to clarify as you seem to have a short memory.

      You are right trader for himself as I guarantee you he sold some holdings after gold formed a perfect tripe top Oct 2012. All the while telling the CIGA's to hold and "gentlemen prepare to defend your selves" with that silly war video he would re-post as gold was dragged from 1792 to 1530.

      Then it was suppose to be all over come his birthday...well he was right as gold collapsed from 1530 to 1300.

      His Wallstreet trader dad and Jesse Liveremore probably turned in their graves.

      Mark is right time and time again, he would have been a rockstar if he told the CIGA's to sell and come back in a few years, instead of ridiculing guys like Armstrong that were dead right.

      One thing to add, do you notice how he is now charging $100 for Q and A's as opposed to the $50. It's likely cause attendance is getting so bad at these that fees are higher to cover costs, LOL!

      And no offense to Jim, I do respect the guy - but this will be a whopper I'll be telling my grand kids some day and warning them about so called guru's and permabulls.

      Good night!

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    2. same conversation again...

      - "I guarantee you he sold some holdings after gold formed a perfect tripe top Oct 2012."
      All right, do you have any evidence about that, or is it just free accusation?

      - being a good trader has nothing to do with guessing right all the time about the price direction. It is about money management, stop losses, being able to go long or short. I was LONG gold as long as gold didn't break the 1540 area. I posted on this very blog to explain why I sold my positions at 1539 at that time (breaking down mlh inf of important pitchforks). Jsmineset is not Dan Norcini's blog. It is not a real time forum for day traders. Indeed you don't know if Jim covered his paper positions when the collapse started, which may have made him a good trader despite he was wrong about anticipating the price direction that time. Good traders make money on the long run. They never pretend to be right all the time, even not 75% of the time.

      - JS message was about to cover your ass by owning some PHYSICAL gold before it disappears or a systemic event occurs. As an insurance rather than a short term speculation or a middle term investment.
      - JS message was therefore to never use any leverage (a financial death wish).
      - JS message was to push the populace to own some gold and become aware of the danger of hyperinflation / dollar self devaluation over weekend, etc... so that they don't risk losing everything.
      - JS message is beyond gold, it is about getting out of a system and warning about retirement system and pensions, cash accounts at a bank, etc... so that once again people act at least partially to get out a bit of a system which might crush them all, just as it did happen during the collapse of the Soviet Union an the russian rubble.

      I don't think JS deserves such bashing. You judge him on his site as if it was positioned as a trader's daily newsletter about gold price movements, which it is not.

      I don't excuse his mismanagement of communication or his pushing too hard on the fact that gold should go up. That, I think, was a clear mistake in the speech, as he gathered a lot of people who were there simply to make money immediately, regularly, and were not seing gold for what it is now : an insurance against a crisis of confidence in fiat, an insurance against governments crazyness or geopolitical real chaos.
      Like it or not, Ukraine is one more step in the escalation of tensions between East and West.
      Maybe it won't be the last.

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    3. - "I guarantee you he sold some holdings after gold formed a perfect tripe top Oct 2012."All right, do you have any evidence about that, or is it just free accusation?

      Jim sold million and millions of trx shares untill 2012. Sedar proves that. Even today jim will claim he invested 30 million dollar in trx. Jim owns a little over 1.5 million shares many million shares less then in 2008.

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    4. Jim was very adamand in 2008 that " this leg us not over" right on the day gold hit 1033 beforebit started crashing. He did it again in 2013.

      Its been quite the religeous experience listening to jim.

      He raised the corporate salaries by 200% to 500% (from under 100k to over 550k for the cfo) right after raising 30 million dollar based on as of yet unfulfilled promises.

      Jim is no saint nir a visionary. He is a carnival barker as mark knows.

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  21. I would still rather hear it from a pro trader like Dan.
    Is he or is he not?

    Good night? WTF?

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  22. Well looks like crashing energy prices are pushing up financials to new highs. Amazing how easy it is to crush commodity prices once they rise too far, too fast, thus creating an instant "tax cut" for the consumer.

    I'm watching Yum Brands, Kroger, Tiffany, and a plethora of other consumer stocks charging towards new highs today.

    And don't even get me started on the financials, check out XLF, led by names like GS and MS which were supposed to "implode" according to sources out of Costa Rica, LOL.....

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    Replies
    1. Mark, you need an eye check-up because over the last 60 days, ALL commodity sectors have turned up! And, if the Euro closes Friday >1.38, that is going to be construed by players as bullish everything. sparks, of course

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  23. There is no shortage of pigeons out there who'll get sucked into the master shills alarmist (and quite convincing) predictions which by all appearances is nothing more then a constant wail of doom, fear and...."please subscribe" underneath it all. 
    Some of the more clownish shills out there have irrepairably damaged the precious metals blogosphere that they initially sought to "enlighten". It's more like "lighten" the pigeons pockets before they realize what they're caught up in. 

    Buyer beware...there's a sucker born every minute. The shills are counting on you to be one of them. 
    Are you? 

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    Replies
    1. good thoughts, Dan the Man; does a flush still beat a straight? sparks

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  24. U.S. retail stocks now going completely vertical in virtually every currency.

    The consumer has never been stronger.

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

    Stay in the system. You can't lose.

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