“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, May 13, 2014

Copper Succumbs to Disappointing China news

Data out of China today noting that industrial output rose "only" 8.7% against expectations of a 8.9% increase, brought some selling into the red metal. Traders viewed the news as confirmation, in their minds, that China is slowing down.

Copper had put in a nice move higher yesterday finally clearing stubborn chart resistance near 3.13. Today's setback is disappointing to bulls but the dip remains relatively shallow. I am keeping a close eye on the chart of this key metal to gauge how investors/traders are sizing up the overall global economy.

The silver bulls should be hoping that copper remains firm. I will never understand that crowd as they speak out of one side of their mouth trashing any positive economic news and yet, out of the other side, regale us will tales of soaring silver prices. They fail to grasp the utter illogic of their own discombobulated theories. If they want silver higher, then they need to cheer for improving economic news, especially any sort of news that would indicate the Velocity of Money might be starting to pick up. In other words, they should be cheering for growth and inflation that tends to accompany it.

Silver needs inflation and solid economic growth to move higher - Period! It will not thrive if the equity markets crater and traders begin to fear deflation and or slowing growth.

The S&P 500 made another try at the 1900 level but could not manage to clear it ( yet). It did manage to make a new all-time high ( basis the emini futures) but so far cannot extend and change handles. I am observing with some strong interest the fact that long term interest rates are moving lower today. That is odd to say the least.

The biggest news of the day in my view concerns the German Bundesbank. Anyone who has traded currencies for any length of time, but particularly the old-timers who used to trade the Deutschmark, should be more than familiar with the conservative views of this Central Bank. It has a long history of dreading inflation and anything that might contribute to it (call it a lesson going back to the Weimer Republic days). There seems to be a slight shifting of the views of the Bank; at least in the sense that it is no longer as vigorously opposed to some of the "unconventional" approaches to monetary policy. We are of course talking mainly about Quantitative Easing or Bond buying programs. It appears that deflationary concerns have even this Central Bank a bit uneasy.

Dow Jones, referencing a report in the Wall Street Journal noted that the Bundesbank is "open to significant monetary stimulus at the ECB's next interest rate meeting if conditions warrant it".

That sent the Euro cascading lower as traders tied the news article to comments from ECB President Draghi made last week with the idea that Draghi would not have made the comments without at least ascertaining the mind of the Bundesbank on the matter.

The take away from this is that forex traders are baking into the cake some sort of stimulus measure coming out of next month's ECB meeting. If they do not deliver however, and the case is far from certain, watch for the Euro to pop higher. Between now and then, European economic data is going to be closely monitored for clues as to whether or not the ECB will indeed take some sort of action.


With the Euro moving sharply lower, the US Dollar is higher and is back above the 80 level basis the USDX. That seems to be pressuring gold somewhat although it continues to garner buying support from Ukrainian related issues. The yellow metal remains rangebound. Very noteworthy is the fact that once again, GLD, reported yet another drop in holdings. This time it was 2.4 tons. Rallies in gold are being used by investors to exit their GLD holdings with it looking more and more like they are willing to put the money to work in the equity markets where the big gains are to be made. Western-based investors are losing interest in gold unless it is to sell it on rallies.

Soybean traders are back to buying old crop beans again as they continue to bank on strong demand to deplete supplies before this year's crop is harvested. They have managed to push May beans ( which is in its delivery period) back over the $15 mark. In the recent past that level has tended to shut off some demand or at least start getting end users to source from outside of the country. We'll see if that is the case.

Wheat continues lower as traders are focused on the recent rains in the Plains.

That is all for now... will see what happens later on and comment on it if need be and if time permits.




35 comments:

  1. Curious as to where you think the 600 + tonnes of gold that has been liquidated from the GLD over the last 1 1/2 years has gone.

    ReplyDelete
  2. Horrific selling at the close once again on GDX and anything gold related.

    Selling pressure is simply enormous.

    ReplyDelete
  3. KWN cheerleading chant:
    "Leeb, Turk, Leeb,
    Russel, Cashin, Leeb
    Pento, Embry, Sprot,
    Leeb, Leeb, Leeb!"

    ReplyDelete
    Replies
    1. but Abraxas, "what about backwardation?" swb

      Delete
    2. Steve,

      Devastating!, Earth Shattering!, Stunning Events that will shock the World!..... I'm usually very polite, but I couldn't resist, sorry.

      Delete
  4. Mark cheerleading holds destruction is an ominous sign for the future of RUT, Dow and S@P. Deflation rules for sure, and if it continues no amount of Fed, orb or any other is going to save anything. I wish you understood rather keep this cheering on stocks. They too are vulnerable to coincidence. But suit yourself have at it my friend. Go all in show us your balls.

    ReplyDelete
    Replies
    1. Wolf, "Don't get mad, get even", is what old Joe Kennedy used to say. And another guy always said that in order to get right, one first has to stop being wrong. Take care of yourself because sometimes I think you are ready to pull the main breaker; sparks

      Delete
  5. The facts are, all time highs for stocks, while holders of the various "doomsday" vehicles (metals, miners, short bonds), remain holding the bag with horrendous losses, whether they choose to "realize" them or not.

    btw, just as an aside, that's one of the stupidest things I ever see on blogs anywhere. "I haven't sold, so I haven't lost!" Yee, Hawwww, morons.

    When the facts change, when the charts change, I'm ready and willing to change. No sign of it yet. Not even a hint.

    ReplyDelete
  6. . . . and the Empty Hat publishes this 'in depth report'. He doesn't even bother to reference the work of other GIMATT perma pumpers, he just references himself as 'proof'.

    I link to it at Goldseek so that you can read it if you want, without giving him the traffic.
    http://news.goldseek.com/GoldSeek/1400006731.php

    Eric, don't be too hard on folks who find themselves stuck in doomer asset classes. Fine to lambaste the perma pumpers, but lots of folks got taken in by those charlatans .. . . . they're (we're) not all as savvy as you.

    ReplyDelete
  7. It's never too late to just clear out the portfolio and reallocate. It's never too late to come to your senses.

    ReplyDelete
    Replies
    1. I understand that.

      There's a bunch of people who were in S&P or NASDAQ in 2008, who followed that exact advice and sold at the bottom after the wipe out at the onset of the GR.

      Average people have been fed the mantra of 'buy and hold a diversified portfolio' as the "proper " way to invest their savings.

      IMO - the wipeout in 2008 spooked alot of the retail crowd. Some completely out of the market, never to return. Some taken in by the doomer cult and overweighted into PM sector. . . . .after selling out at the bottom in 2008, reallocating in PMs in 2009, making beaucoup bucks for two years on the doomer trade, while also watching the
      S&P recover, I think many people were scared to repeat the sell low part and stayed in their positions waiting (now hoping) for a recovery.

      They were given plenty of encouragement to 'have faith' and stay the course by the perma pumpers. That is the part I have issue with and why I say take it easy on people.

      Delete
  8. I'm one of those who lost most of their retirement in gold and silver, miners and physical. I am not stupid either. I unwittingly timed the market as wrong as can be, and I took plenty of advice from other intelligent people, including so many super smart people that once hung out at TFMR. I still believe that the precious metals are controlled by the bankers, and one of these days, weeks, years, the metals are going to get priced fairly. So don't get too cocky EO and Mark, because what you are recommending right now is also a form of market timing, and after the metals have already been slaughtered. If you are seeking revenge, or just trying to distance yourselves from the Turd Cult, reserve your criticism for the idiots that still remain at that blog. Thank you.

    ReplyDelete
  9. I don't buy the Euro zone deflation argument anymore than does the ECB themselves who continue to reduce their balance sheet " ECB balance sheet shrinks by 49.4 bln euros to 2.168 trillion euros in week to May 9". I have never seen trader types so dragged around by the nose by someone like Mario Draghi and continue to act on WSJ rumours that are almost always wrong. There is no way the US dollar rises much against the euro when the ECB has a balance sheet half of what the FED has & especially given the ECB is a bigger market. Draghi likes to talk the talk but never walks the walk & the market continues to give him a free pass, he may be the greatest central banker of all-time who never actually had to do anything.

    ReplyDelete
  10. Steve, hows this:
    Back-wardation
    Mani-pulation
    Con-fiscation
    World is going down.
    Doom! Gloom! Booom!

    ReplyDelete
  11. Getting bashed for something I didn't intend. Trying to decide if I'm supposed to apologize, or try to explain.

    Ah, screw it.

    ReplyDelete
    Replies
    1. My intent wasn't to bash you or set you up for a bashing Eric.

      You (and Mark) are right in your S&P positions in the current time frame. However, don't forget that were also right about the doomer trade that you were in during 2010 and part of 2011. How much longer will you remain right about your current positions.

      I responded to one of Mark's posts a couple of weeks ago that IF you had put money into the right miners late last year you would have made gains way above anything the S&P served up over that same time period. So, at what time interval do you look over your portfolio and ditch the losers or non performers. Daily? Weekly? Monthly? Or only after a major market meltdown?

      Incidentally, two of the miners I highlighted in that post that had made huge gains in the time frame I selected, are names you would recognize as touts of yours from 2011. Detour Gold and Lakeshore Gold.

      Delete
    2. EO - whether you realize or not, what you said above is cruel. no not cruel to the shills, the agenda mongers, or the cultists, but to so many good people that have lost money. look at who is left at TFMR. do you think they are affected in any way by what you say here? what about all those who now are missing from that blog? do you think that many people left quietly after losing their hard earned, hard saved money? the sad thing is that these people suffer silently - no one ever wants to admit they were conned. i speak for those folks, because i'm one of them.

      Delete
    3. PW,

      In the blogspot days of the Empty Hat's arc of notoriety, there was a person who posted that they had lost his family's entire life savings - some $250,000 if I remember right . . . after following the Empty Hat's lead into the COMEX pits for a "can't fail" trade.

      The guy was angry, the Empty Hat spouted some BS about accepting personal responsibility for one's actions in his first reply, the second reply from Empty Headed one was a C&P of his disclaimer notice after that he wouldn't even come out in public to address the issue. Don't know what happened to the individual who lost his $ . . . .he sounded suicidal at the time.

      I've never had any respect for the Empty Hat ahole since that day.

      Delete
    4. all Turd cares about is making money from his blog. it is plain as day. the sickest thing of all is the caring and kind benefactor act. he is a classic narcissist, if not an actual sociopath. the difference between the two is very difficult to determine. the best way to describe to the laymen is that a narcissist has little conscience, while the sociopath has none at all.

      as for the rest of the site - it has been overrun by shills with agendas. predominately political and religious far right stuff.

      i actually despise the site just as much site more for it's hate and fear mongering, than for Turd's conjob.

      Delete
    5. sorry for the typos. have much to do. have a nice day all. do something nice for someone just for the hell of it. :-)

      Delete
  12. Look, Mark Was right given the timing. I admit it. I made some from 2009 in miners. Held too long and lost all of it. Made some back. Timing an entrance into stocks now is Suicidal. I see cash is good. I hold less than 5%. Thinking energy utilities should be a safe bet. Watching oil and natural gas. Brassey. I dislike big bankers. Worked for them for years. Arrogance is a mild statement. Would love a schematic with any and all of them. Thanks for the heads up.

    ReplyDelete
  13. CAGE DEATH MATCH. NOT SCHEMATIC.

    ReplyDelete
  14. Uh oh...maybe I spoke too soon.....http://www.zerohedge.com/news/2014-05-13/russia-holds-de-dollarization-meeting-china-iran-willing-drop-usd-bilateral-trade

    ReplyDelete
  15. This is where our fearless bankers and military industrial complex combined with our narsacisst president will regret they ever decided to go all in for a make believe recovery. Hope and change meets debt and destruction, hyperinflation and energy shooting star costs. Hope our ability to produce oil and gas is what is hyped by Mark.

    ReplyDelete
  16. Nice 20+ percent pop in UEC today; has Uranium bottomed ?

    ReplyDelete
  17. One more day for nothing on gold & silver.
    See what happens?
    I get so bored that I want to try a small trade anyway, just to pass the time.
    Compared to 10 years earlier, I'm restraining myself a lot, and when I short silver like yesterday, I know which part of my brains is talking (the casino guy), and I keep the line very small.
    Anyway, that's how people get whipsawed.
    Directionless markets.
    Trying to trade every day and bleed out with a thousand small losses.
    I'll keep it to that until gold or silver are gracious enough to indicate me what they want to do (except from do nothing just as they are now).
    Have a nice day,

    ReplyDelete
  18. Hi Hubert, hope my chart helped you keep the right side of the pgms...we are now experiencing the pop I have been expecting...let's see how far short covering takes us....

    ReplyDelete
  19. I am still expecting resistance around $19.90 - $20 in spot silver, but if we get to $20.20 or so and can hold above $20. then all bets are off and will be looking for an exciting weekly close. In gold still expect to see resistance around $1320/30 IF we can get some headroom above $1300.

    Good luck all...could be a momentous day!

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  20. Look from my limited point of view, I believe the oil situation is perilous in these times. If you look at the oil GSCI chart you will see that since 2009; after the ETN has been range bound. It has been locked into a 20-30 range for over 5 yes that is FIVE years. I believe the same attempts to lock in Gold has occurred. I am not an expert, but, in the banking world the banks have limited their exposure to our new fracking technologies. Risk on equipment capital has been limited due to political obsolescence. They refuse to take much risk in these assets. IF and a big IF, the Obamas and Bankers of this world including environmentalist continue to win their battle with expansion, and the world heats up with war, their is going to be a price to pay. Sure demand has been quashed with our recession, but, the limited demand will not stop the world price from exploding if major wars break out. I am not stating they will, just the reward from investing in the oil will pay off monstrously if the civil strive continues. I also believe these same forces were caught off guard in 2009-2011; and were not up to the task to keep a lid on the price of gold as an alternative currency. IF and a big IF, the Chinese, Russians, Indians are successful in winning a commodity backed world vs. a dollar backed world, then all bets are off and they will not be able to stop gold from exploding. I guess time will tell. Increasing from 5% to 20% today. Things in the press are not what is under the hood. It is a very dangerous time. Our fearless leader is not a leader nor fearless. The US hegemony is being challenged. Our currency is under attack. Lets see how it plays out. Expect announcements coming soon..Strategic Oil Reserve releases, natural resource taxation, etc..etc.

    ReplyDelete
  21. Wolf, you make salient points EXCEPT when you reference our fearless leader! We should all know by now that he has basically NOTHING to do with policy at all. Not even a puppet is he; swb

    ReplyDelete
  22. The financial markets are all BS, political and have been. When the markets return, after the destruction of the dollar, then things get real interesting again. I get that Steve, a puppet he is, but he is the salesman for the puppets. He is the main stream media leader, like they are now pushing both Jeb and Christie on us. I think it is a time for change. PAUL, CRUZE!! WE NEED LIBERTARIAN LEADERSHIP NOW!!!! They again are trying to set us up for a non choice. It stinks from high heaven.

    ReplyDelete
    Replies
    1. Wolf, maybe Vegas and Albuquerque are windows into the future? swb

      Delete
  23. Steve, Exact.y, and the powers that be don't believe there are many here among them that ARE willing able and ready. I say, LET THEIR BE LIBERTY! Will have a difficult time fighting on all fronts..If it takes the US destruction of the political and banking front so be it. Time to rebuild. Jefferson said it best when he did say "The tree of Liberty has to be watered"

    ReplyDelete
  24. I worked for Capital (GE) during the decade of the 90's, it was apparent that they were all in for Globalism, which at that time I was too. Imagine the profits of the Internationals when that backfires. When 30-40% of their sales come from overseas disappear overnight. Imagine that Steve. Today, I sit on a different front. I sit for America, not the mighty global America but the small man America. Lets see what happens. I would be getting prepared to Short the GE's of the world. And that means Immelt !! Short that big pig

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  25. Watch tomorrow when all is well with the US when the BLS BS comes out and shows payrolls exploding, yet, labor costs still decreasing. It will go on for a bit longer. Seems they will get their taper to continue with PPI increasing and payrolls increasing. All is well..LOL.
    Don't bet on it, or at least, bet it short term, long term the dollar is in trouble. Oil accounts for a lot of production worldwide, and that is the key here. Anything produced contains much petroleum, plastic, machinery and equipment, steel, it aint easy to keep up these lies. It will end badly.

    ReplyDelete

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