“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, April 16, 2014

As Ukraine Heats up so does Gold

Gold is being batted back and forth between two opposing forces at the moment. The negative force continues to be the slowing Chinese economy with traders fearing a slackening of demand from that key consumer. The positive is escalating tensions in the eastern part of Ukraine.

Separatists, or pro-Russian citizens, are continuing to clash with pro-Western citizens with the Ukranian military getting more involved, although there have been reports of defections over to the Russian side from some Ukranian military units.

This is supporting gold, as is the weakness in the US Dollar.

Much is being made in certain gold perma-bull websites about rising meat prices as evidence that inflation is here to stay. Such stories are meant to justify claims that gold should be moving significantly higher in anticipation of even further upward price pressures but such stories are inflammatory and not forward looking.

Wholesale meat prices have already peaked out. My view is that we have seen the highs for this season for both beef and pork prices. As we move further into the year, particularly towards the end of the 3rd quarter and on into the 4th, look for prices to fall significantly from current levels. What is currently being witnessed is the catch up in the retail price of red meat as it takes a while for the more recently killed, higher priced product to make its way into the food distribution channel. By the end of this year, and certainly by the beginning of next year, beef and pork prices will have come down considerably from current sticker-shock price levels.

The same goes for soybean prices ( barring any serious weather event this growing season ). New crop beans are priced a whopping $2.70 below old crop beans as the market is moving on historically tight ending supplies of beans. With record acreage going to beans this growing season, we should also see some relief from these high-priced beans as well, although it will take some time before the market feels comfortable enough to push bean prices lower.

Corn prices are pivoting around the $5.00 level. While they have come off the lows near the $4.00 level, they remain far below the historic peak near $7.75 - $8.00. Wheat is reacting to continued dryness in key growing regions of the Plains but some of its premium is also due to the Ukranian situation. Traders fear supply disruptions from this key wheat-growing region and have bid prices higher in anticipation of possible shipment disruptions associated with the unrest over there.

The GSCI or Goldman Sachs Commodity Index is trading up near the top of its range as several commodity sectors have been moving higher. If it could clear 680, we might have something in the overall sector indicating some strong upward pressure and a breakout but so far the current board structure in many commodity futures markets is not suggesting SUSTAINED higher prices.

If China continues to slacken further, traders are not going to feel comfortable committing large sums of money into the sector in general.

The Dollar is basically going nowhere as it remains trendless. When it weakens, commodities, especially gold, tend to get a bid. When it strengthens, the opposite is generally true.

Nothing has changed in that regard.

We are back to watching geopolitical events and trading around those for the time being.

By the way, China's GDP number was a tad bit better than the market was looking for but even one of their officials said that the double digit growth that had marked it for some time was over. Gold popped a bit higher when the number came out last evening expressing a sigh of relief.



41 comments:

  1. I would have thought that the possibility of a conflict is normally bullish for the dollar

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  2. anon;

    Janet Yellen's remarks were not considered Dollar bullish as she indicated no movement on the interest rate front for now. We are back to watching economic data releases, especially those related to payrolls, to get a clue as to when the Fed will act to raise short term rates.

    ReplyDelete
    Replies
    1. I get that, and I agree with you . Yellen is little by little showing her true colours , the fed though as a team , keep things as confused as ever in my opinion , hawkish comments here , dovish comments there , then hawkish again etc … The point I am trying to make is that I find odd that in front of a situation as the ukraine which is supposed to be temporary , how come investors are not bidding the USD higher ?

      Delete
  3. We are almost there
    ..not. David is astute. http://www.zerohedge.com/news/2014-04-16/about-strong-march-retail-sales-bounce-good-thing-summers-coming

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  4. Thanks Dan.

    It's pretty amazing to surf around today and read how yesterdays huge gold sell-off was a manipulated event by "the evil one's" because they're on the verge of losing all control and yesterdays sell off is proof that they're desperate blah, blah, blah.

    They're grasping straws out there at this point again trying to rally and cheerlead their troops into forgetting how off the mark they've been trying to bottom call or a veryyy long time.
    In one breath these pundits will accuse or bemoan the entire MSM and insist it's all misleading propaganda or half truths. And then in another breath out of the other side of their mouth they'll cherry pick (from the MSM or extreme alternative media) one or two quotes that would seem to bolster their attempt at explaining what's really happening behind the scene that few or no one else realizes except them. Do they really believe that???

    KWN and others are simply making it up as they go while stringing willing and gullible people along who are fascinated by the spy novel-like script the veteran shills keep repeating over and over that captures the imagination and ire of newbs and the gold/silverbugs who haven't realized yet (or ever) that they've allowed themselves to get wrapped up in someone else's eccentric crusade against some evil financial adversary or whatever it is that drives them, besides subscriptions or advertising traffic etc.

    It's pretty twisted out there when you step back and look at the entire elaborate construct that some fringe elements have their belief (or marketing) systems rooted in. Just consider all the angle's or theories that have been laid out that somehow magically always have something to do with gold or silver. Always!

    I suspect that there's lots of folks out there who are starting to realize this the longer they keep reading or hearing the same tired accusations or predictions that haven't panned out lately at all. Must be JPM's fault for improperly manipulating the market in the direction the JPM long gold position was supposed to go in OR it's because they're desperate and losing control.
    An objective mind would wonder....who is it exactly that's desperate and losing control?
    Is it JPM and the evil banking cabals or is it the KWN's of the blogosphere who are flailing away trying to stay relevant or laughably amusing? As long as there are newbs and fresh meat out there those hysteria/fear based blogs will continue to grind forward in the rut they've paved.

    The folks who choose to turn a blind eye to the marketing charade (and prediction/hysteria inaccuracy) aspect of KWN and others are like moths attracted to the black light or darker side of life.

    Some sites and their messaging and marketing efforts are dependant upon that very crowd while never grasping the fact they've for all intents and purposes they've dimmed the energy within their own community...or the one that used to exist long, long ago.

    Thank goodness for paywalls and the trend towards the warden(s) out there closing their collective drawbridges up.







    ReplyDelete
    Replies
    1. DarkPurpleHaze; Money talks and bullshit walks. (kwn) In a couple weeks silver celebrates its 3 year bear mkt anniversary; sparks

      Delete
    2. Got It Wrong:

      Wrong again.
      Greg Manure-ino is walking.
      SGTBullsh*t is walking.
      BrotherJohnFU is walking.
      KWN is walking.

      YOU are walking.

      Got It Wrong - another disgruntled precious metals cult member in denial that gold/silver are in a bear market. A dime a dozen.

      Delete
  5. Wow Yamana Gold completely decimated, new 6-year lows today, what a disaster these mining stocks are.

    More net worths wiped out on that play.

    U.S. Treasuries and big cap tech stocks offer a much better balanced portfolio for wealth preservation.

    ReplyDelete
    Replies
    1. Mark;

      The market is casting its votes about the gold mining sector when it comes to discipline among management. To get a company involved in a bidding war for another when the price of gold is stagnating and in some cases, for some firms, below the cost of production, is a perfect example of what is wrong with this sector. Hard nosed investors are shaking their heads in astonishment at the doings taking place among some firms in this sector.

      The only thing that managed to bail out some of the pathetic management decisions that have taken place in this sector some years back was a gold price that was soaring. That covered a multitude of sins. Not any more - now many of them are naked and exposed for just how inept some of them are.

      Delete
    2. Mark..you're right...load up on treasuries and tech stocks. See you in 6 months.

      Delete
    3. Dan , I really don't want to waste too much of your or my energy here , you do a great service for free , and I really appreciate that . Now , to put into question the integrity or the know how of a guy like Sean Boyd , is unnecessary and I in my opinion totally misleading . Agnico Eagle has managed to pay dividends non stop for many many years , they study their acquisitions very carefully , trust me . You talk about hard nosed investors , you mean hard nosed investors like Mark ? There are no hard nosed investors in the market anymore my friend , its all sheep following a trend , thats all , working out very well for them , if they get the timing right , or if they first bought 18 months ago . Agnico Eagle has been around since the 50s , probably before you were born . I think the least they deserve is the benefit of the doubt . Please Dan don't just fire crap around like many people do , I respect you a lot , as you know I have been following this blog for quite a long time now . Wether gold goes to 500 or 5000 its irrelevant to this argument , hope you don't take this wrong . Best

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    4. Anon;

      My point is not to question the INTEGRITY of some gold mining management such as that of AEM or GG but rather their judgment. I can tell you that the MARKET, the one which has the deciding and important vote in financial matters, does not approve of what they are doing with this buy out madness. Just pull up a stock chart of AEM and look at what has happened to it.

      It plunged $2.00 share yesterday on huge volume. That is not a vote of confidence in management's judgment my friend.

      I do not think I " am firing crap around". I am making a statement about how the market is interpreting this stuff. If you lool at GG by comparison - note how it actually moved a tad higher yesterday as AEM plunged. The market was relieved that GG was not going to spend the kind of money that it had been believed it would to acquire Osiko ( at least for now!)

      No, I am not taking your response as something personal. Just pointing out that the markets reward what they think is good decisions and punish poor ones. This is a poor decision on the part of AEM.

      Delete
  6. Shit interest in these kind of stocks came down from 15% a few years ago to some 5% now. Im waiting for 1% -2% short interest in the miners before im ready to consider a bottom is in. That does not necessaryly mean rising stock prices but they will be good dividend paying stocks that have stopped crashing by then with upside potential if the gold bull isnt dead and will resume at some point.

    ReplyDelete
  7. Short interest i meant...

    Lol.

    ReplyDelete
  8. I think you were right first time bud :-))

    ReplyDelete
  9. Jasper...your comments on the last thread about Sinclair and TRX are pretty incredible.

    Somehow I'm not surprised but it's pretty eye-opening to think what your scenario (backed by SEDAR documents) implies about him or others of his "veteran" stature in the goldbug blogosphere circus.

    I recommend to anyone who hasn't read Jaspers posts to do so. If true, this changes the dynamic greatly imho
    Not that I ever hung on JS's Nostradamus-like Huh?-trains for investing advice. His musings seemed purposely vague at times if not amusing.






    ReplyDelete
  10. john taylor; a lot of what Armstrong says makes sense , like Cashine, Celente and a host of others, but in what of his last posts, he clearly shows that he does not understand mathematics or the gambling industry; to wit, there are no patterns, only losers; old man percentage took care of that a long, long time ago ; sparks

    ReplyDelete
    Replies
    1. Steve brassey, speaking of gamblers I lived beside the Aria at Panorama Towers for three years in Vegas. Nothing like taking an hour long walk just after waking up and collecting the occasional found money from the tourists at the hold'em tables. You mentioned going to Vegas this weekend so I just thought I would mention my ID says Dean Martin Drive!! lol You have been brutal on my man Martin Armstrong lately and that's the only reason I said anything to you.

      Delete
    2. John, when a guy says he has price and pattern history going back to 800 B.C., I just do not know whether to laugh or cry; he sure is one helluva self promoter though, and that is for sure; sparks

      Delete
  11. Yesterday you said the price of gold is based on inflation period. Today you sight no less than 5 other reasons. I guess you got it covered eh Dan?

    ReplyDelete
    Replies
    1. Got it Wrong;

      Small-minded twits such as you make me question why I do not turn this into a fee-paid site so as to avoid having to put up with johnnie-one-notes ( gold must always go up in price or something is wrong ) who have nothing better to do with their miserable life than reading web sites that they hate. I have heard of various forms of masochism but yours is completely voluntary which strikes me as being a form of mental instability.

      Delete
    2. Please ignore the fools Dan. That's exactly what he wants for you not to help people in a public forum such as this one. He would love it if everyone were as blinded by permabull dogma as he is and were without an outlet to break free their minds from the chains of ignorance grounded in constant idiocy from the hucksters. I'm sure plenty of small guys would be hurt if you did go completely pay service. This blog is one of my favorite on the web and I'm sure may others would agree with me on that. Keep up the good work brother. Got it wrong piss off.

      Delete
    3. Spoken like a perfect Christian. Sorry I will never be one of your bootlickers. You insult people everyday but can't take it. "let him without sin cast the first stone"

      Delete
    4. Dan, don't worry, remember the Dalaï Lama's words :)

      "We cannot learn real patience and tolerance from a guru or a friend. They can be practiced only when we come in contact with someone who creates unpleasant experiences. According to Shantideva, enemies are really good for us as we can learn a lot from them and build our inner strength."

      Delete
  12. http://taxicabdepressions.com/?p=1193
    It will happen ...just not yet. When benefits start being cut on people like me who are being raped by our taxes, loss of health care (quality) and quantity, when big gov decides to move progressively more towards entrapment, when the lies are finally exposed. Great read. Got the best commodity called lead.

    ReplyDelete
  13. http://www.zerohedge.com/news/2014-04-16/fbi-plans-have-52-million-photos-facial-recognition-database-2015
    Just in case some folks were wondering if their mug shot looked good.

    ReplyDelete
  14. http://i59.tinypic.com/2z5knj8.jpg

    Gold prices are evolving between red mlh sup and purple mlh inf within a trinagle.
    Not much to do on the weekly time unit as long as we are between those two imho.

    Ukraine...in the 2 most eastern provinces where :
    - more than 90% of the population is pro-russian and voted for the ex-president who was overthrown by the "revolution" in Kiev.
    - civilians just managed to stop a column of 14 tanks and make friends with the soldiers to avoid a bloodshed of the population.
    Those guys are described as terrorist by the westen media.
    Here is a recent message from those dangerous terrorists directly to Mr John Fck Kerry, which I share entirely.

    http://i62.tinypic.com/swr2q1.jpg

    ReplyDelete
    Replies
    1. very good Hubert; not only can you trade, but now I know you also have a good sense of humor; Happy Easter from Sparks!

      Delete
  15. http://www.foxnews.com/politics/2014/04/17/unions-want-100m-in-federal-funds-to-aid-detroit-pension-deal/
    When bailouts start "expectations" get out of hand. Not sure where the match here in the US will be lit. Plenty of propellant and fuel around. Cities are dangerous.

    ReplyDelete
  16. Like Babel, Sodom, Babylon, Jerusalem, the destruction will begin again. It has to. When you elect a godless man, who states "he wants to fundamentally change America" rather than improve it, and he surrounds himself wit Socialists, rather than Capitalist, When he lies and creates deception rather than truth, the table is set. God bless all who can hear and pray. Wall Street has been complicit. Let every man suffer for his own sins. REPENT NOW AS THE TIME NEARS.

    ReplyDelete
  17. White Wolf,

    Looks like another "beat by a penny" saga ongoing in U.S. stocks as many are soaring by beating lowered expectations and the entire decline in the S & P 500 futures has almost been entirely erased.

    Meanwhile, gold mining and coal mining companies continue to be mired in a massive ongoing depression with no end in sight.

    Sure pays to say in Fed-sponsored investment vehicles such as blue chip Dow stocks, rather than run for the hills clutching gold coins and mining shares which continue to get clipped and lose value every year.

    Stay in the System.

    And I also like Palladium, it is still pinned at the highs due to the imminent economic boom going forward.

    ReplyDelete
  18. Mark, when the bank's release the capital I will know that recovery has a chance. When small businesses can borrow, and the current administration is buried, then there will be recovery, until then it is a shell game. No other way.

    ReplyDelete
  19. Deception, lies and gov't brutality don't make for a lasting recovery nor a harmonious nation. Tell the handlers a large percentage of us would rather fight than become tyrannical.

    ReplyDelete
  20. White Wolf,

    The U.S. economy is now on course for the longest, most sustained expansion and recovery every recorded. Two bear markets in stocks, combined with ultra loose monetary policy, and zero inflation has instilled much fear and pent up demand. When that demand is released, there is going to be a huge boom in spending and capital investment worldwide, the size and scope which we will probably never see in our lifetimes ever again.

    Be ready and be prepared for the good times ahead.

    Write it down as I said it here.

    ReplyDelete
  21. http://www.zerohedge.com/news/2014-04-17/wtf-moment-week-no-one-bought-japanese-bonds-36-hours-week
    So I guess we don't need risk managers, asset managers, even traders any more. JUST BUYERS AND GOVTS. I MEAN THIS WHERE IT ALL GOES WHEN GOVTS ARE THE LAST RESORT BUYERS. ANYONE WHO DON'T WORK AS A G MAN OR BUYER. "Bring out your dead" rings in my ears. Help me someone etc is this end game.

    ReplyDelete
  22. Wow mining stocks are just getting completely demolished.

    Hands down the worst asset class ever.

    ReplyDelete
    Replies
    1. Mark, hard to disagree. Please help me folks: Gold only broke above $1400 for the first time in 2nd half of 2010. It stayed up there for only 2 1/2 years. And yet miners only showed Free Cash Flow during that period. The whole business model seems to have been predicated on historically unrealistic prices. So now that the base commodity is still 30% higher than it was 5 years ago, labor around the world is less expensive, fuel costs static, capital goods cheap, interest rates at historic lows, 3rd world currencies where the mines produced tanking-further lowering productions costs, the producers still can't make a profit?

      So every 'analyst' and pundit who was touting a version of one's very own jet pack, etc. was a) a complete idiot w/ no understanding of the basic geology/resource economics of mines or b) con artist c) both?

      Delete
    2. Mark,

      I think you might be looking at those charts upside down.

      DGC UP ~300% YTD.
      LSG UP ~100% YTD
      PAA UP ~30% YTD
      TMM UP ~40% YTD
      WDO UP ~100% YTD
      AUQ UP ~25% YTD
      OSK UP ~60% YTD
      PVG UP ~100%
      PPP UP ~50%
      FNV UP ~30%

      I'm making so much money I might have to buy a bigger mattress to hold it all!

      Meanwhile 50% of the S&P companies have MISSED Q1 earnings even though earnings expectations had been lowered.

      Get Out Of The System . . .Buy gold, tractors and grass fed beef!

      Delete
  23. Here's a lesson in technical analysis in gold:


    "First-Quarter 2014 Housing Starts Contracted at Annualized Pace of 30%, Down by 4% Year-to-Year"

    "February-March Production Jump Ran Counter to Weak Durable Goods Orders"

    "Fair Shot at First-Quarter 2014 GDP Contraction"

    Doesn't matter. Gold is in a bear market.


    "Putin asserts right to use force in east Ukraine President says he hopes he does not have to exercise military force as he points out eastern Ukraine was once part of Russia"

    Doesn't matter. Gold is in a bear market.



    "Home price slowdown leaves millions underwater"

    Doesn't matter. Gold is in a bear market.



    "China physical gold demand to rise 25% by 2017: World Gold Council"

    Doesn't matter. Gold is in a bear market.



    "Empire State Manufacturing Index Falls To 1.3 In April"

    Doesn't matter. Gold is in a bear market.



    "EU threatens Russia with more sanctions over Ukraine"

    Doesn't matter. Gold is in a bear market.


    Any questions? LOL...

    ReplyDelete
  24. One gov't SPOOK shoots one man in Nevada, liberty movement mobilizes, civil war breaks out GOLD to the MOON. Go liberty movement.

    ReplyDelete