“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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Monday, April 28, 2014

Speak Loudly and Carry a Wet Noodle

That pretty much sums up the market's reaction to the announcement of a new set of "sanctions" unveiled by the current administration against Russian President Vladimir Putin and Russia over events in Ukraine.

Sellers in gold wasted no time in declaring their view of the "strong message" ( note sarcasm here ) being sent to Russia proceeding to knock it back down below the $1300 level.

Further aiding the move lower was the heavy selling in Newmont and more weakness in Barrick over the announcement that any merger between the two was off the table for now.

The Yen also moved lower signaling the absence of any safe haven play as bonds also moved lower. Equities are moving in and out of positive territory as I type these comments. Safe havens are on hold, at least for today. There remains a great deal of volatility with short term technical factors dominating trading today.

I mentioned last Friday that I do not believe gold has much upside here because at this time I do not see events in Ukraine spreading outside of that region. If the market felt like those events could be a harbinger of more to come, gold would be much stronger. That it is not, is evidence enough that while the situation remains tense, most do not see it spreading beyond that region. Rallies in gold are therefore attracting selling even as dips lower are attracting buying from some due to the ongoing geopolitical developments. As stated so many, many times here now, buying gold due to geopolitical events is extremely risky. You have no idea what might or might not happen and thus it is entirely a crapshoot. That is not trading; it is not investing either for that matter; it is gambling. If you want to gamble, head to Las Vegas or Reno - at least they have some great looking showgirls while you are losing your money.

Corn continues to attract buying as traders are concerned over the slow start to planting this year. Also, the cool, wet conditions have raised concerns about poor germination of those crops which have been seeded. Soil temps are not warm enough and the market wants to see more sunshine.

This past Friday's Cattle on Feed report was considered friendly to the market as it caught some by surprise who were expecting to see larger numbers moving ahead. Feeder cattle continue to make all time highs as most small specs are caught on the short side and are getting squeezed out in a brutal fashion. How some of these guys paying the kinds of prices that they are for feeders are going to be able to make any money on them is a big mystery to me but that does not seem to be impacting things at the moment. Hogs are bleeding out of some the premium in there as traders take a "show me" attitude towards the slaughter numbers and the impact from the PED virus.

Crude oil continues weak in today's session further retreating from the double top near the $105 level.

Silver has once again attracted selling as it neared $20. It remains stuck in a narrow range between that level and $19 on the bottom.




42 comments:

  1. Thanks Dan....gold and silver look poised to stumble further unless some hiccup of news cause them to float up minimally as has been the case lately.

    The interest in both of them is tepid at best.



    Looks like the pretext for further repressive action by both sides is underway...

    Donetsk Riots Break Out In "Scenes Of Absolute Brutality"

    Submitted by Tyler Durden on 04/28/2014 - 12:10


    It seems the US and EU sanctions escalation has done nothing to calm the tensions between Ukrainians and pro-Russian forces in Donetsk, where according to report ultranationalists from Kiev are involved in a skirmish with local riot police. As the following clip suggests... "rocks and missiles are being thrown from both sides - there are injuries and scenes of absolute brutality as both sides clash."

    Zerohedge.com

    ReplyDelete
  2. Agreed. We got Vegas markets right now. No clear trends established, bad for traders and great for gamblers. I still think Deflation will ultimately win the day. I side with the likes of Harry Dent and Bob Prechter. We got a global almighty tug of war featuring Deflation vs. Inflation and both are offsetting each other well right now for the most part barring some exceptions in certain markets. But the greater market Will win the day. Not even a global alliance of inflationary central banks will be able to better natural market forces.

    ReplyDelete
  3. Viagara for the wet noodles in small doses is keeping the gold around &$1300' meanwhile RUT crushed.

    ReplyDelete
  4. Bottom line is that once the Ukraine crisis blows over, oil and gold prices may end up crashing, and stocks will soar once again, led by the Russell 2000 momentum names and the consumer discretionary stocks which everyone is shorting en masse right now.

    Just another "Wash, Rinse, Repeat" baiting of the bears.

    Like watching the NBA playoffs and seeing the winning team run the same play over and over again, and each time they run it its successful.

    Because the gloom and doomer crowd falls for it every time, without fail.

    ReplyDelete
    Replies
    1. Mark, I don't see this situation with Ukraine/Russia blowing over anytime soon and if anything It's gonna get much worse. It's going to be very interesting to see how this plays out and effects the markets etc. I for one hope these megalomaniacs take a chill pill but it's easier for the powers that be to start WW3 than to ever give up any power or admit they are responsible for whats going on. Point fingers, start wars, keep their jobs, mission accomplished, until they destroy the world. Let's hope that doesn't happen but with these fools anything is possible.

      Delete
  5. EVERTHING IS UNDER CONTROL..BANKS ARE SOLVENT. LOL

    ReplyDelete
  6. I lean towards the deflation side also. except food, bummer. the Fed seems like it's going to continue the tapering for another round. they don't have to prop up the banks anymore. the new/next bust they will just take the people's money. I used to clink my silver bars together. now they're stashed away and I ruffle thru my growing stack of $20s, 50s and 100s. I'll be ready for the bargains as they show up.

    ReplyDelete
  7. Armstrong has changed his tune a bit. He is now saying that the dollar won't rally until after Q3 of 2015. He is backing off some of his earlier statements. I haven't yet seen how he thinks this will impact gold. Certainly a weaker dollar is good for gold . . . . But he hasn't yet called for gold to rally before 2015.

    ReplyDelete
    Replies
    1. Concord, nothing is written in stone. Armstrong doesn't state his opinion, he only tells his readers possible outcomes according to how outside stimuli effect/work on cycles. He has been saying the dollar would strengthen substantially for months now after the third Q2015. He hasn't said much about the dollar weakening that I've read. He has released several new videos on youtube talking about this subject in depth you should check them out.

      Delete
  8. White Wolf,

    I see that GDX and GDX/GLD was smoked again today, man, I've never seen one sector under such intense selling pressure, going on for 3rd year now.

    At least during the 2000 - 2003 tech bust that occurred after Labor Day 2000, the markets were able to bottom in July 2002 and secondary low in March 2003 and any investor who was patient was able to ride out the storm.

    Gold Bugs I'm afraid may have to endure a tremendous, long bear market.

    With Yellen on deck this week, PM investors are going to shoot first, ask questions later, hence more selling, LOL...

    ReplyDelete
    Replies
    1. I am awaiting on the last washout so I can go all in and watch the M&A drive up some stock profits.. it will be grand Mark.
      You better get out of the stock market soon, it will become short bread TOAST..LOL

      Delete
    2. Mark - I appreciate the agitprop, but the Gold bear is just another bear market, plain and simple. The NASDAQ composite hit a monthly high Jan 2000 @4572 and bottomed Jul or so 2002 @1172 so 2 1/2 years and just under 75% decline. CSCO topped Mar 2000 (generally accepted bubble top) @77 and bottomed Sept 2002 @10 for an 87% or so decline in about 2 1/2 years.

      The GDX hit 65.8 Sept 2011 and 20.5 Dec 2013. If the lows are indeed in, that's 68% loss. GDXJ suffered an 83% decline. So not so different.

      Delete
  9. Mark,
    Your buddy Armstrong is already backtracking with his dollar call this year saying it will be Sept 2015.. Nothing is certain. I bought general stocks over this year and I am scared to death. Especially those momo stocks you love so much are this year's gold stocks.

    ReplyDelete
    Replies
    1. I think the dynamic between gold and the dollar will change, meaning they will both be going up at some point - likely 2015.75.

      I doubt he'll change his forecast on gold being bullish before then. On the other hand what is bullish for him, when it breaks 1825? Who wants to wait that long to get in.

      Delete
  10. http://www.zerohedge.com/news/2014-04-28/epidemic-hunger-new-report-says-49-million-americans-are-dealing-food-insecurity

    And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

    ReplyDelete
    Replies
    1. For those without a classical education. Can you explain?

      Delete
  11. I haven't seen anybody link to this week's letter by John Mauldin, so I'll do it.

    Mark, you especially, need to take note of this.

    http://news.goldseek.com/GoldSeek/1398618120.php

    The take away for me was the Bank of England chart showing the anticipated effects of QE. In their model, QE would initially boost asset prices. Once stimulus was removed, there would be a decline in asset prices and a correspondent increase in CPI. We are at that point now.

    This is the playbook of the western central banks . . . ignore it at your peril.

    ReplyDelete
  12. Maybe someone has the answer. Which can make someone more nauseous? Being seasick or watching the metals trade right now?

    ReplyDelete
  13. GDX/GLD ratio plummeting again this morning, still plummeting towards .19

    The worst it got in 2009 was .22, we have been under that number for an astonishing 12 months now.

    Worst bear market in any sector in recorded history.

    And none of the "acclaimed experts" saw it coming.

    They "Cramerized" the gold bugs by saying "Buy, Buy, Buy" all the way down, vaporizing many accounts.

    What a shame.

    ReplyDelete
    Replies
    1. Sad thing is after all that they still do it day in day out.

      BTW does anyone know how long KWN has been around cheer leading the same stuff over and over?

      Delete
    2. JS's prediction of "gold going to and through 3500" didn't work out even though he tried the Jospeh Goebbles approach in constantly repeating the phrase over and over.

      Then heck if 3500 didn't work then lets jack it up to 50,000K !

      Delete
    3. is it a surprise that you can not e mail kwn? sparks

      Delete
    4. Prophet and Brassey,

      It has gone on a very very long time. We all know that the US is only printing our way to prosperity, like Japan, and China. Europe actually is in the midst of a most massive depression ever seen, except, war time. South America is in the crapper. Now tell me guys how this goes on forever. Japan is going to collapse. (queue Kyle Bass). If the Fed continues the Taper, Mark believes that the Fed will unleash the pent up $4.2 Trillion through the banking system multiplier effect. If the Ukraine situation does not blow this whole thing sky high, how in the heck (really) does the media continue this charade. I say this is the year. I will be a crisp $100 Bennie that it blows before summers end. Any takers? When I say blows, Nikkei goes below 12K, at least touches it, and the US has a minimum of a 20% correction, lets call it 12,000? Come on guys I will put up a crisp $100 bennie on it. I get to paint the $100 bill with a Ben Bernanke Moustache and beard before I send it if I lose?

      Delete
    5. Bass is one smart guy; he has the yen going to 115 this year and ultimately north of 250, so we shall see; sparks

      Delete
  14. Just a simple question for the silver bulls; Are we in a secular bear market from 1980, or just a simple cyclical 4 year bear market from 2011? sparks, of course

    ReplyDelete
  15. I suspect the latter as i dont see silver (or gold) trading low for an extended period due to production cost inflation. I think the production cost / profit margins were much much higher in 1980 even after the collapse then today. Its gotta be years, not decades of bear market. Jmo i dont know the future before it happens for that you gotta pay one hundred bucks and attend a q and a.

    ReplyDelete
  16. Silver must be ready for another plunge. I have read several opinions pieces today from the newsletter crew opining what a great buy the metal is at these price levels. Watch it drop like a led balloon now!

    ReplyDelete
  17. Don't you mean a Led Zeppelin?

    ReplyDelete
    Replies
    1. Nate, I love Zeppelin man. I play guitar and Jimmy Page is a rock god! Pink Floyd is still my favorite of all time. I get goose bumps thinking of how cheap silver may go with these nummies saying it's a steal right now! Haha

      Delete
  18. Yeah, poor Richard Russell now lamenting that after 90 years he's been a chronic worry wart.

    Poor guy who is described as a "60-year veteran" went long at the 2009 lows but then got out in 2011 and he's been fighting the bull market "tooth and nail" ever since. Now that guy must be dumbfounded, missing out on more than half of the biggest bull market in recorded history, keeping his investors on the sidelines in cash, and even making the horrific call of recommending outsized positions in GDX and GDXJ back in 2012 and then watching those to collapse like a folded shirt shortly thereafter.

    Man, its is really sad to see a legend like that make such blown calls and ruin a 50+ year reputation.

    ReplyDelete
    Replies
    1. Its all true. And the devastation from 1900 to 1200 is a lot worse then the ride from 500 to 1900. Still, I do enjoy reading his stories that dont involve predictions of any kind. It would be nice if this last call of his about silver, could be a correct one, and then in a moment of supreme humility, just go on with his stories without any reference to markets at all, knowing that his last call was correct without saying a word about it, and then just go on with his stories. Thats is the way it should end.

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

    ReplyDelete
  20. Well, check out that stellar ADP jobs number. Gold and silver imploding right now, brace yourself for another epic collapse and huge rally in the Nasdaq as the hope of a "v-shaped 2nd half recovery" gets touted on CNBC and become a self fufilling prophecy.

    Poor General Jim is going to get heckled big time at the Marriott Marquis having to explain the unprecedented collapse and the 50% - 70% investor "bail - in" on many junior mining stocks.

    And of course, the "economic collapse" that never happened, virtually no impact whatsoever from Greece, Cyprus, Fukishima, Egypt, Ukraine.

    Onward and upward for stocks.

    ReplyDelete
    Replies
    1. Lol. Mark I want whatever drugs you are ingesting as if we take enough of them we can ignore reality.

      Delete
  21. Wow, short lived pop on that GDP report. Fully reversed and silver (of course) checking out new lows for the morning.

    I'm trying to be as objective as I can, and speaking as someone who holds physical gold that I'd like to go UP, but the metals look terrible here. Just terrible.

    And stocks bouncing back. Welcome to Groundhog Day.

    Don't Fight The Tape

    ReplyDelete
    Replies
    1. To tell the truth, they havent really looked good since that break at 1540 gold.

      Delete
  22. http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/04/Fixed%20Investment%20Spending.jpg
    You cannot, I repeat, CANNOT, print your way to prosperity. No investment in small business, poverty for all but the few.

    ReplyDelete
    Replies
    1. Wolf, If you print the money than you CAN print prosperity for yourself. Who says that they want prosperity for you or me?

      Delete
    2. They will eventually reap what they sow, and if not, I hoe Peter closes the gate on them.

      Delete
  23. fed follies are a goddamn shame; sparks; janet continuing the line of 3 stooges with easy al, bearded ben and god knows who comes after this academic clown; where are Volcker and McChesney Martin when we really, really need them? sparks

    ReplyDelete
    Replies
    1. Steve, I don't think even Volcker would be able to do anything at this time. The 80-ies were drastically different from today. The tipping point has been reached, it's just not visible as yet.

      Delete

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