“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, August 12, 2014

Bloodbath Continuing in the Livestock Complex

Red meat lovers, take a look at the following charts and rejoice... relief from record high meat prices is on the way.




The Russian food ban from the US and Canada ( among other nations) seems to have gotten the ball rolling in earnest but now technical aspects have taken over with margin calls and forced liquidation dominating trade. Producers who were prudent enough to hedge and secure some downside price protection are sitting pretty right now. Those who did not, have let some enormous profits get away from them.

As mentioned previously, those of us who enjoy good Bar-B-Q have suffered through sky-high meat prices so far this year, but relief is on the way!

Combine falling livestock prices with a large crop coming this fall, and energy prices which have taken a dive recently, and one can see the impact on the overall commodity sector as evidenced by the Goldman Sachs Commodity Index.

It was this weakness across the commodity sector today which weighed on copper prices and helped pull silver lower even though gold was able to buck the trend and move slightly higher.

The extent of the collapse in commodity prices over the last six weeks has been stunning. Here is the chart.





It looks like gold is caught in a sort of tug of war between forces springing from the overall sector and upward pressures coming from the mining section.

The HUI is currently quite strong on the charts. As you can see from the chart below, it is flirting with strong overhead resistance near the 250 level. A closing push past this should allow the index to target further resistance near 260. Above 260, there is not much until one gets to 280 or so.


Here is another negative factor:

According to the most recent updated information, GLD holdings have now fallen below the starting level of this year. They were at 798.22 tons at the end of the year and as of yesterday stood at 795.86.

So what to make of this? I think one can make the argument that the gold shares have been the leaders of the gold price both on the way down and on the way up. So far, if I had to pick between following falling commodity prices and falling reported GLD tonnage and the mining shares, I would have to side with the miners. Their track record is very good at predicting future price action in the underlying metal.

That being said, with the negative factors of falling commodity prices, falling GLD tonnage and a stable to rising Dollar, the HUI needs to break out to the upside sooner rather than later to convince enough traders that the move higher in gold is more than a momentary flash. Many of the larger players are obviously moving into the mining shares based on the price action because they apparently feel that the downside is rather limited from this point. However it is difficult to see why some big specs would want to chase gold significantly higher given the above-cited negatives. If the Dollar does finally manage to breakout above that stubborn level of resistance near 81.60 basis the USDX, gold will have to overcome even more headwinds.

The jury is still out therefore. As you can see from the price chart, the level near $1320 is proving to be formidable overhead resistance. Also, the ADX continues to move lower indicating that a trending move is not yet underway but rather that the market continues to move in a range trade. $1280 is the bottom and $1320 is the top within a broader range of $1240 - $1340. Let's see what the next few days bring us.



56 comments:

  1. looked like a bit of 'buy the news' off the USDA report, as the ags came in low and the shorts could not break out the bottoms. the august usda report does not normally go ballistic on yields for corn-beans, but did show 'record crops' are well on the way. would be surprising if corn could take out the 20-day MA and force more short covering as the forecast is for more rain, then warming temps next week(no early frost worries).

    looked like silver followed crude oil today, and poor dr copper wowo. CCI has some support from last nov-dec it's working into now. better hold or it's another leg down.

    RGLD is the gold stock said to be leading the HUI XAU move up, quite interesting along with the ballistic gold/silver ratio.

    as always august is a super thin month and old timers say 'take august off'... thursday aug beans go off the board, so continuous chart will take a hit, and it's stock mkt op-ex week.

    cheers!

    ReplyDelete
  2. We are now living in the most glorious financial period ever.

    We've printed trillions upon trillions, and at the first sign of cutting back, commodities of every race, stripe and color implode.

    The consumer is now grinning ear to ear, as the runaway meat prices was really "transitory" exactly as the "Central Planners" described it.

    And over at KWN, superbull Jeff Saut is even bearish cautioning those not to buy the dip any longer.

    I think he's wrong as the outright terrifying collapse in these food and energy prices has created an instant tax cut for the consumer. And this cut is so significant, it will spur one of the greatest spending orgies of all time.

    ReplyDelete
  3. In the last week, since August 6, jsmineset has posted 32 articles about the woes in Ukraine or Iraq, with themes such as the "death of the dollar", etc.

    In the last 6 trading days, the USDX has rallied non-stop and oil prices have outright collapsed.

    Way to go Jim!

    Back to hugging the dogs for comfort, as TRX is still languishing under $2.50/share

    ReplyDelete
    Replies
    1. So in spite of your criticism of J. S., it would seem you follow Mineset rather closely. I think J.S. has learned his lesson and does not make price or timewise predictions anymore. Back in the late seventies, when he had so much success in the gold market, his technical skills were probably much more reliable ie. not the kind of mindless computer driven markets we have today. In any event, you should cool the critcism until you can show that you've had the success that he has had.

      Delete
    2. Jim was a succesfull wallstreet type salesman in the seventies. He is lying about having sold the top and i have newspaper aeticles to prove it.

      Just a few weeks ago jim was posring dollar charts. I commented here that it means inevitably the dollar will go up. Jim is always wrong.

      Delete
  4. Dan,
    Very nice post about R.W, thank you for writing about him and the meaning of this short life we have. I'll copy paste your thoughts on my FB page if you don't mind, as I wouldn't have written it better myself.

    Many talented comedy artists are and have been depressed, or taciturn.
    Our French Louis de Funes was not a funny nor very positive guy in private.
    Why should he? His clown, his role on stage was an image, not reality. Still, people were surprised of that difference. Many artists are very sensitive. Emotions is where they thrive and find their talent. That's why they are artists most of the time, and so I think it would be true to say that emotions can also overwhelm them more easily than the average guy.

    What is more shocking about his death to me here is that the message of this guy through so many movies was so positive and full of hope. He was representing hope and wisdom and a great sense of humor to me, that's why the news of his suicide really came as a shock to me.
    I guess it only confirms what psychiatrists say : depression is a real disease, chemically driven, that one can't cure on one's own. When depression is installed, the black hole swallows everything, mainly because the chemical imbalance inside your brains is there, and it is extremely difficult to fight it with "good thoughts". Depression can only be cured by a chemical treatment in some cases. Just as many, many other diseases and infections.

    About cancer : I heard myself that Sugar is the element feeding cancer cells. Stop sugar when you have cancer. Also, I read about Marijuana which would have a real deadly effect on cancer cells. OK, long-term effect of Marijuana on the brains is not good, but if we are talking short-term and expanding life expectancy, it is supposed to fight cancerous cells quite effectively.
    The father of a friend of mine died 2 days ago of a long cancer after a whole year fighting it. My friend and his mother are totally exhausted and depressed for now, after being near him all the day down, and yet being christians with a strong faith.
    Dan, I sincerely wish you and your friend a lot of strength and courage, and please remember that though it is nice and essential to help, you must also protect yourself from the colateral depression this can bring on you. Watching closed ones slowly die from this devouring disease is probably one of the most stressful depressing experiences we can be confronted with. Good luck.

    ReplyDelete
    Replies
    1. Hubert;

      Always kind words from you my friend. I am so glad that you have joined in at our little blog here!

      Thanks so much!

      Dan

      Delete
    2. Hubert

      Watching a good friend get basically "eaten alive" by cancer changes you.
      I have had to go through this and I can tell you that my priorities in life have changed forever.

      Delete
    3. Thanks for the kind words, Dan. I'm sure glad as well that the web allowed me to get in contact with you and other nice people here, despite virtually only. Hope to correct this someday. Have a nice day.

      Delete
    4. Hubert,

      Your writing is very good. I enjoy reading your comments as much I enjoy reading Dan's analysis and thoughts. This applies to many others that follow along and comment here as well. Good to know there are well spoken traders in the game.

      In light of Dan's post, I would be interested in seeing your thoughts on natural gas. I just wrote about it earlier in the week - its taken a steep fall since the end of June, and I'm wondering if maybe a bounce is in order at this point. Technicals and price action seemed to indicate such earlier in the week, but today's sell off has me reassessing the situation.

      Dan -

      Sorry to hear about your friend's cancer diagnosis. It seems like cancer in many forms is becoming more prevalent as the years pass. Despite our best efforts to preserve ourselves against this, we still learn of friends and loved ones afflicted with it.

      As you mentioned, trading and investing is all well and good, but ultimately, your health is your wealth. We should remind each other of that every day. If we can sit and watch the markets for hours, we can surely dedicate a few sessions a week to working out our hearts and breaking a sweat.

      This may not ward off the inevitable, but while we have this time on this earth, we should be grateful for it, regardless of our individual spiritual convictions. This is a common bond that all men can hold to, and it is my hope that the great minds of medicine and science will come together from across the globe one day to conquer cancer and all of the chronic ailments that afflict humanity on a global scale.




      Delete
  5. O Captain! My Captain! our fearful trip is done;
    The ship has weather'd every rack, the prize we sought is won;
    The port is near, the bells I hear, the people all exulting,
    While follow eyes the steady keel, the vessel grim and daring:


    But O heart! heart! heart!
    O the bleeding drops of red,
    Where on the deck my Captain lies,
    Fallen cold and dead.

    O Captain! My Captain! rise up and hear the bells;
    Rise up—for you the flag is flung—for you the bugle trills;
    For you bouquets and ribbon'd wreaths—for you the shores a-crowding;
    For you they call, the swaying mass, their eager faces turning;

    Here captain! dear father!
    This arm beneath your head;
    It is some dream that on the deck,
    You've fallen cold and dead.

    My Captain does not answer, his lips are pale and still;
    My father does not feel my arm, he has no pulse nor will;
    The ship is anchor'd safe and sound, its voyage closed and done;
    From fearful trip, the victor ship, comes in with object won;

    Exult, O shores, and ring, O bells!
    But I, with mournful tread,
    Walk the deck my captain lies,
    Fallen cold and dead.

    ReplyDelete
    Replies
    1. Thank you Hubert
      Very appropriate. RWs death has shaken us all.

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

    ReplyDelete
  7. Dan, your comments of late , messages and your expression with your words about Robin Williams have touched me. Many thanks for your great writing.

    ReplyDelete
  8. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. Shikah Vermine is really showing no respect.
      What to expect from a spamming bot?

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

    ReplyDelete
    Replies
    1. Great post Dan, thanks. Looking forward to some lower meat prices for sure.5

      Regarding Robin Williams...what internet metals "asshat" posted the following maladjusted, self centered mean spirited comment about R.W. 's death shortly after the story broke?

      "..Very sad. I know that mental illness is a horrible affliction but I still have very little sympathy for the narcissists that go through with it."

      The comment above totally derailed the authors thread and judging by the tone of the comments afterwards ( not to mention the silence or dearth of comments) it wasn't appreciated by other posters who were compassionate enough to express genuine human shock and sadness.
      Who in their "right mind" unnecessarily bashes a beloved funny person who just died?
      An egocentric twisted thinker that commands attention, that's who.

      Between the malcontent feminazi contributer over there(who also spies on the private message system there) and the maladjusted unapologetic know it all shill who runs the place (who allowed the spying) it's kind of surprising anyone still finds that site palatable to any degree.

      I'm pretty sure the RW comment, along with the other nonsense going on there, has opened some eye's about whom and what they're actually supporting or contributing to.

      TEOTGTE is upon them and the guy in charge (or is he?) and his feminazi minion are slowly scuttling their ship and apparently are clueless about why it's happening.

      There's a reason I stopped supporting or contributing that line of thought once it became apparent the meme over there was beyond twisted and hypocritical and it went off the rails of believeability and became a rabbit hole of suspicions and wildly alternative explanations mostly unfounded by any facts, just suspicion.2

      Delete
  10. Energy complex bloodbath continues.

    And investors are happily snapping up tech stocks like Amazon, semiconductors, and biotechs.

    Never before has the world been so awash in ample supplies of cheap energy.

    ReplyDelete
    Replies
    1. Mark, I have a project for you. You should write an article and get it published on the front page of the WSJ, entitled, why trillion dollar deficits dont matter anymore. You will become famous, even more famous then you are on Dan's blog.

      Delete
    2. Mark, your screen is broken; Energies action quite positive today with the exception of nat gas. They are trying to turn up.

      Delete
  11. Dan:
    As you stated Gold may be getting a bid from Geopolitical unrest in Ukraine and elsewhere. Do you think Crude, Platinum, Palladium are also being supported by the same factors while most other commodities sell off? Even Copper is getting hit while the equity markets rally... One has to wonder how much lower oil would be without Ukraine unrest. Especially after today's bearish supply report.

    On the other hand maybe the Gold market is sensing a hike in interest rates in 2015 may not be as imminent as perceived. With the swoon in most commodities why raise rates?

    ReplyDelete
    Replies
    1. Trinity, it is accepted by just about everyone that geopolitical unrest translates into higher gold. Call me a fool, but every morning when I shave and wonder if all hell broke loose again would I buy more gold? I always answer no. maybe I am a donkey?

      Delete
  12. Another day to fade KWN and buy the dip.

    "But any minute now I swear!"

    ReplyDelete
  13. Jim Puplava explains how one new client of his lost $120,000 by paying capital gains taxes in 2012 and missing out on the last big leg up in the S & P 500 by following the advice of one "doomer and prepper" website which we are all so familiar with.

    Poor guy sold out in fear and lost his position in all of his stocks, had to pay taxes, and then missed out on one of the most fantastic rallies ever, when SPY rallied from 140 to 200.

    About 39 minutes into the podcast:

    http://www.financialsensenewshour.com/broadcast/fsn2014-0809-2.mp3

    ReplyDelete
    Replies
    1. Did he also take certificates in the explorer that doesnt explore, mine or receive royalties and tripled quadrupled and quintupled the salaries of the board after raising 30 million dollar on the back of promises of production in 30 months in 2011?

      Only an egomaniac sociopath could give such advice.

      Delete
  14. These retirement statistics show how well our debt fueled consumption economy works in the long run. Not much in the way of savings. Hopefully the bubbly market is up when they retire.

    http://www.statisticbrain.com/retirement-statistics/

    ReplyDelete
  15. I found this video about the gold manipulation conspiracy tards interesting.

    https://www.youtube.com/watch?v=doo5nT5l7N8&list=UU6WVWDoJOKsHR_fKM30a8lA

    ReplyDelete
  16. It is my very great privilege - nay, an honour - to be able to confide in you the news that the global ponzi scheme is now "on its Death Bed" (again)

    For it has ponzi been reveal-ed unto me (and to many) by The Top Trends Forecaster In The World that :

    "when the Ponzi scheme is finished, that’s when you are going to see gold prices go up again because interest rates are going to go up."

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/8/13_Gerald_Celente_-_The_Global_Ponzi_Scheme_Is_On_Its_Death_Bed.html

    and there. Dearly Beloved, you have ponzi it - Rates up Gold up - simples!

    Quite how such obvious logic can ponzi have escaped us Lesser Mortals is both baffling and indicative of the huge gulf between their enlightened intellects and our ponzi single-cellular capacity for reasoning, which would surely shame even the lowest forms of pond life

    Or not, as the case may be ponzi ponzi
    .
    .
    .
    (did I say "ponzi" yet?)

    ReplyDelete
  17. Zhang:

    But wait!!!

    I thought we were on the verge of a "Total Global Collapse"!!!

    Of course, if that were to happen, gold and gold stocks would go down 2x faster than everything else, just like they did in 2008 - 2009.

    ReplyDelete
  18. I am listening to Gene's video - quite refreshing and balanced

    There is no need to take the KWN article I quoted seriously - it only has the "Joker" photo attached to it, and the Real Deal KWN articles all bear the hallmark "Hooker's Mouth" graphics (Pill: Impending COMEX default Apple: London Vaults are Empty Bubble: Andrew Maguire needs some new mug subscribers Triptych: Eric is bored and fiddling with Photoshop)

    ponzi

    ReplyDelete
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  20. SP500 already back at 1950... :) that will be all for me, I'm out the remaining 50% of my long position from 1900.
    Last position remaining is my short Eur Usd (50% left).

    ReplyDelete
  21. EUR USD.
    There is a descending wedge forming now, as Eur Usd is about to choose between the blue and the red downwards channels.
    I'll reinforce my short position at around 1.3440 in the next few days if we bounce there. If we bounce later, I'll put my short rather at the blue resistance level near 1.3540.

    http://fr.tinypic.com/view.php?pic=35lyjr6&s=8

    ReplyDelete
  22. Oil...
    I think that support is there at 96 $.
    I'll probably buy if we make it there. Stop loss can be put just under near 94.
    We'll see. I'll post a chart if I do sthg.

    ReplyDelete
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    ReplyDelete
  24. Poker...
    I'm at the button with pocket aces. One guy raises 2.5 the blinds with Ace-shit.
    I just call, to bring the BB with us, who indeed calls as well.
    Nice harmless flop, the early preflop raiser bets 2/3 of the pot and I simply call, the BB folds.
    Turn comes with a second low spade on the deck and my opponent checks. The pot is 1400, his stack as well and I don't want to give him the right odds to make his potential flush on the river (20%), so I bet a solid 1000 and the donk reraises me all-in which I obviously call. He shows Ace spade - shit spade for a flush draw. So I'm an 80% favorite to win the hand at that moment for all his stack, but of course the river is a spade and I lose 2/3 of my stack.
    This is why I hate poker and love trading :)

    ReplyDelete
  25. Look at this graph: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140814_open1_0.jpg

    1. Gold was "smacked lower twice overnight" (from 1316 to 1311 )

    2. Gold "poked its head above $1320" (from 1311 - 1322 with no stops in between)

    from the chart, can you see what is skewed and ever-so-slightly-selective about those two comments?

    http://www.zerohedge.com/news/2014-08-14/gold-jumps-above-1320-bunds-treasuries-hit-new-cycle-low-yields

    ReplyDelete
    Replies
    1. Massive takedown in gold. Bullion bank manipulation in the thin overnight market.
      Sure I forgot several things.

      After Putins comments gold is remarkable strong.

      Delete
    2. Gold hit overhead resistance around 1320. As a trader you expect selling there. Why is that manipulation. I was there shorting . Was I trading or manipulating. As Dan says. There are two sides to a trade. The right side and the wrong side.

      Delete
    3. Janet
      I was reflecting (poorly) the gold permabull comments some web sites feature. Sorry my sarcasm did not come over to you.

      Delete
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    ReplyDelete
  27. Well, the "Terrifying Collapse" is here.

    Look no further than WTIC and Brent Crude.

    Any wonder why XLY is less than $2 from world record highs?

    The consumer has never been stronger. Or maybe just flat out lucky.

    ReplyDelete
  28. Maybe I am the biggest Hoosier out there, but I am thinking that if the energies can not hold here, that the message is that the German/Chinese shit sandwich economies outweigh anything geopolitical out there. Call me crazy but it seems stks, bondolas, and the $ are about the only things worth holding. And please, don't bring up the fantastic real estate and art prices that are being paid, as they have as much bearing on the big picture as the latest bid for a Honus Wagner card. Thanks for listening and we'll keep the light on.

    ReplyDelete
  29. Mark, you made a helluva call a few wks ago on gold vs. energy, and I tip my hat to you

    ReplyDelete
  30. the last bull commod standing is palladium and be warned if you are trying to top pick this very thin mkt; check out sugar 40 years ago, Minneapolis wheat 6 years ago and most recently the oats this year. There are no fundamentals anymore, just busted up dirty mkts brought to all of us by duffy and his thieving friends at the filthy cme, which will not be there at the end of the debacle soon to unfold. this is why I pay zero attention to cot numbers anymore, as imho, the real players have gone otc. and also, I pay a lot of attention to Baltic charts, as they are no good for timing purposes, but do give a good picture of the real world, as opposed to paper spec prices that we have to trade.

    ReplyDelete
  31. HATS OFF TO OUR OWN ESTEEMED DAN NORCINI for nailing the exact top in USO, XLE, XOP, OIH, UGA, etc.

    ReplyDelete
  32. what a mess in energies!!!!!!!!!!!!!!!

    ReplyDelete
  33. I mean really.

    Over 350 posts the last few weeks from "General Jim" on jsmineset

    "Putin this"

    "Iraq that"

    Ukraine risks"

    LOL...

    Complete and total waste of time.

    ReplyDelete
    Replies
    1. Jims closing in on 10 years of waisted time and other peoples money.

      Whats new.

      3 months and trx runs out of money. Nothing but destroyed widows and orphans.

      So much for setting a mine.

      Delete
  34. xau, hui looking like exhaustion gaps a week ago; look out below ladies

    ReplyDelete
    Replies
    1. Gold below 1k and ill consider xau and hui again.

      Trx below 25 cents and there *may* be some value to that stock fundamentally.

      I probably wouldnt touch it.

      Delete
  35. A massive trend change in place.

    Sell commodity stocks and buy tech and retail.

    Sell physical commodities and buy paper.

    Just look at the amazing 9 day run in JNK and HYG.

    Never before in history has there been such an infatuation with high yield debt.

    ReplyDelete

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