"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


Friday, August 15, 2014

Ukrainian Events not Only impacting Gold but Wheat as well

Geopolitical events have a way of roiling markets and giving credence to the reason why so many traders/investors will not touch commodities. We were reminded of this by the wild price action occurring in the gold market, and, to the surprise of some ( but not grain traders ) the wheat markets.

Gold had been pressured earlier in the session on De-escalation of tensions over in Ukraine. Yesterday it was fears that a Russian humanitarian relief column was a Trojan horse which would foment war. Earlier today when it became clear that there were no weapons, troops, etc., in the convey, gold promptly sold off. Then around mid-morning, up went the yellow metal, recapturing the $1300 level as reports filtered into the market that Russian forces had crossed the Ukrainian border and been engaged by their troops.

Wheat, which had also been under pressure earlier in the session, immediately shot higher as panicked bears began running for cover. Ukraine is a major wheat producer and traders are nervous over any impact that military tensions might produce as far as wheat exports from that country go. Last I saw, Ukrainian wheat ( which is shipped from Black Sea ports ) is priced below US wheat.

Now the market has to sort through the news and see what has actually taken place.  Suffice it to say for now, safe havens which were ignominiously thrown out and discarded early in the session, are suddenly now all the rage once again. Who knows by the end of the session they could all be jettisoned...

Never a dull moment....


  1. I am a seller of wheat, the weed and will admit I am wrong if they can take it over $6. Ukraine has corn and wheat and valuable real estate for pipeline purposes sure, but worldwide, there is NOTHING bullish for wheat.

  2. putin problems heading into the wacky world weekend! saved gold from losing the 1300 rounder for sure.

    interesting blurbs out there on foreign holdings of US treasuries rising to over $6 trillion..world flight to safety shows why USD and gold can both be up since may.
    also data on central banks buying of gold being firm all year and ahead of last year pace, with emerging mkt countries buying gold to offset debasing of their currencies.

    fsa-usda data out today bearish for beans and corn.. commentators talking below 10.00 for nov beans and corn hope for 3.90-4.00 to sell more. let's see what happens on the sunday nite open, can the ags gap up on poorer weather printing than forecast as of now, and putin.

    we don't fade what's moving on putin now ahead of the weekend, will have to see around the japan opening on sunday nite how things are.


  3. Dan,

    Corn looks to be confirming a bottom. It's about 50% from all time high and is due for bounce imo. Jw what you think.

  4. Today is "Exhibit A" of how the "Goldilocks Financial Markets" keep getting better and better.

    Check out the action in TLT today, as there appears to be a mad panic to buy U.S. Treasuries, TIPS, Muni-Bonds, etc. as the world's fascination with paper assets explodes.

    Meanwhile commodities are sitting at multi-month lows.

    Five years ago, could anyone imagine ES over 1900, the 10-yr. yield at 2.3%, and commodity prices freefalling?

    This has to be the most glorious financial era ever recorded.

    Now, watch all the panicked fund investors who missed last week's lows "Buy The Dip", LOL.....

    1. When debt and deficits dont matter, you bet its a glorious ear. Someone just whispered in my ear that they do matter. I answered, dont tell that to the bond market.

  5. By the way, where is Kyle Bass?

    10-yr. JGB yields just crashed under 0.50%.

    Debt to GDP over 200%??

    Heh, no worries, that means bond prices will scream higher and higher as more money is printed in Uncle Abe's goosing scheme.

  6. Ukraine is getting hotter every week.
    At this pace, we'll soon have open war between Ukraine and Russia, and that shouldn't be taken lightly.
    I hope I'm wrong.

    1. http://www.bbc.com/news/world-europe-28810622

      Well, that should be fairly black & white - if the USA can produce satellite footage allegedly showing Russian artillery firing on positions in Ukraine, it should surely be a piece of cake to show a destroyed Russian armoured column on Ukrainian territory; no doubt there will be Russian military markings, insignia or documentation clearly identifying the unit which has been wiped out, and GPS-annotated photographs of the burnt-out vehicles

      or maybe not


    2. Addendum http://www.zerohedge.com/news/2014-08-15/did-ukraine-attack-its-own-tanks-white-house-cant-confirm-russian-convoy-was-destroy

    3. Thanks Zhang.
      Real question is will public opinion care about the facts, the truth, or only believe the earliest news about any event.
      Journalism is not about telling the truth anymore.
      Journalism became about being the first to tell about anything, be it true or not.
      What a disgrace.

  7. Hubert, long s and p exactly for the rally, long oil exactly for the rally, short gold exactly for the break. Dont you think you can manage money better then these hedge fund clowns? These trades are not luck.This is a real plan that can lead to some spectacular results.

    1. Arnie,
      Depends how much money you can handle without having your hands shaking and starting to impact your decision making as well as your nerves...how much hard earned money you are ready to put at risk in case you get wrong several times in a raw...
      I just don't feel comfortable and self confident enough to live through trading.
      "Fortunately", at the moment, I never had to do so.

  8. Wow, what's wrong with silver?

    John Embry, Richard Russell, Stephen Leeb must be puking up blood, while looking at their screens at the epic destruction taking place.

    Paper market "manipulation"? Nah, I don't see it. PSLV is trading TICK FOR TICK with Comex futures quotes.

    1. Silver lost support at 19.80 level this morning on the Ukraine news. next decent support looks to be around 19.26 which is the 78% fib retracement (for those who watch that type of thing). As Dan mentioned, never a dull moment. How would you like to have Putin living next door? Not exactly the most "neighborly neighbor in the neighborhood".

    2. Sinclair seems to really like the guy.

    3. There is NO SUCH THING as a 78% Fibonacci retracement, and how would you like having an overweight, heavily indebted bully lining up siege catapults along your boundary line whilst ordering the local supermarkets not to serve you?

      Silver? No idea, except

      a. Down

      b. A long way yet

    4. Zhang:
      There is no 78% fib ratio. But it is used as a retracement level in fib analysis:


      I use the 50% and 78% retracement levels in most plots, others may not. You may be in that school...Good day sir.

    5. I also use 78% Fibo.
      Silver long-term charted uptrend retraced and bumped twice on the 78% Fibo retracement.
      9 $.
      Then now 19 $.

      As regards to geopolitics, I'm in agreement with Zhang. Who is the bully here?
      Let me ask you a simple question : when did Putin ever take the initiative to act as an invader?

    6. Listen, Gentlemen, it really doesnt' matter what metrics or indicators you use - do whatever works for you, with my full and unequivocal blessing - but if you are willing to pay attention for a second, you might learn something about yourselves:

      bring up the Wikipedia article you cited and scroll down to "Other ratios - http://en.wikipedia.org/wiki/Fibonacci_retracement#Other_ratios

      here you will find 0.764 and 0.786 - which round to 76% and 79% respectively. There is no 78% Fibonacci retracement (contrived or otherwise)

      each to their own, but a little less militant arrogance might take you a long way

    7. It is a matter of symantecs here boys. The 78% fib retracement is used in the software I use along with the "other" ratios. It has less to do with "militant arrogance" than it does symantecs and trying to profit using any analysis to help accomplish that...

      Putin (the communist KGB colonel) invaded Crimea... Most people would consider "this" breaking international law and violating Ukrainian sovereignty. If the world did not push back, Russia would likely eventually occupy the rest of Ukraine and many other countries that made up the old Soviet block. He understands strength and weakness. If others do not push back with strong force Putin would not respond.

  9. As previously mentioned a few days ago...


  10. For those of you going "Cold Turkey" with withdrawal symptoms due to a lack of high-quality analytical research and analysis, here is your Weekend Reading (which is all about Germany and China, by the way) ~

    "The West is losing influence in the South China Sea. ...... " - I suppose after the North Atlantic Treaty Organisation spends 10 years in land-locked Afghanistan, nobody need question what "the West" thinks it is doing in the Far East?

    "The trade that is now being done between the Baltic States and Russia is now being done in rubles........ it's peanuts, trade with Russia has dried up due to sanctions, and it was previously conducted in €uro

    "All of this is escalating the move together between the yuan, the ruble, and the mark, along with gold. " The Deutschmark hasn't existed for 15 years (and this guy is supposedly "an acclaimed money manager"

    "In the meantime, I would still focus on silver. Despite economic weakness in the world, I still think it will be a stronger performer than gold. Silver is much cheaper for the masses to buy." Sell Silver, Run Away

    "As the dollar falls from grace, this will turbocharge gold and silver and also completely change the way the world is being run". USDX looking pretty firm of late

    "massive inflation" ok, you get the picture - have a good weekend (and try not invade anyone, ok)


  11. LOL Zhang, that's hilarious.

    These foreign direct currency exchange deals are a small pimple on the fx markets, look at the voracious demand for U.S. Paper, demand for U.S. Dollars is simply enormous right now.

    And why the heck buy silver when its in a bear market?

    Better off with copper or aluminum, which will participate greatly in the coming economic boom. The steel stocks like X and NUE are speaking loudly right now.

    Just look how well Dan did for us.

    He single-handedly called the top on many commodities, especially oil, and he doesn't have near the so-called credentials or "veteran experience" that those so-called "acclaimed experts" have.

    Dan just uses common sense and listens to what the market is telling him, not forecasting fantastic price moves like some Vaudeville Soothsayer.

  12. Isn't it fun being wrong all the time! I mean, they say that "ignorance is bliss", and I am indeed insanely blissful that I didn't follow all the erudite and sage wisdom like this


    and this


    and this http://www.ingoldwetrust.ch/interview-fabrice-drouin-ristori-goldbroker-com

    and this http://hiddensecretsofmoney.com/blog/silver-the-opportunity-is-now

    and this https://www.goldbroker.com/en/news/paper-silver-market-250-times-size-physical-silver-market-526

    Hey look, we are all entitled to our opinions - informed or otherwise - and we are all sometimes liable to try to express them to others - that's human nature - but the single fact which unites all of these Snake-Oil Salesmen is that they are trying to make a buck out of you by selling you overpriced Silver junk on a disproportionately massive bid-offer spread

    as I pointed out on Mike Maloney's site last week, using his own price quotes:

    Consider if you will, an Investor wishing to invest $100,000 in Precious Metals:

    1. Generic Gold Bars: http://goldsilver.com/buy-online/1-oz-gold-bar/

    the price per oz is currently $1,347.95 and Mike will buy the bars back from you for $1, 296.93 - a Bid/Offer spread of around 3.8%; to break even, Gold would need to rise in price to almost exactly $1400

    2. Generic Silver Bars http://goldsilver.com/buy-online/1-oz-Silver-Bar-Sunshine-Mint/

    Mike will sell you these at the bulk-discount price of $21.39, and will buy them back from you for $19.86 - a Bid/Offer spread of 7.15% and Silver would need to rise to almost $23 in order for you to break even. (Of course, order sizes of less than 1,000 bars would not attract such a generous discount)

    This pricing discrepancy is typical across the Precious Metals industry, and I do not find Goldsilver.com in any way unfair - in fact, it is conspicuously transparent, but, If you were Mike, which precious metal would you prefer retail investors to buy? And, as an investor, do you really believe that Silver will hit $23 before Gold will hit $1400 (implying a Gold:Silver ratio back around 61?)

    IT REALLY SICKENS ME to see these poor mugs being taken to the Cleaners by being told that "Silver is Cheap", when $100 invested is $100 invested, and the unit price itself is not a determinant to the price performance of the asset. Penny Shares cost only pennies for a reason

    1. Its funny how "honest money" seems to attract the scum of the earth.

      But they are probably all real nice for their dogs.

  13. Zhang.
    I applaud you for pointing this out. The bid ask spread is a real detriment to trading or even buying the physical asset. It does make the retail bullion trade quite profitable though.

    The low bid ask spread in the equities market is one of the things that has driven volume up in those markets though.


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