"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


Thursday, September 25, 2014

Copper hit by China News

Do any of the readers remember not that long ago when the talk in the copper market ( and the metals market) was about those fraudulent financing deals that were being investigated in China. To refresh your memory, it appeared that the same stash of metal was being used to secure financing multiple times.

That made a big splash at the time but then seems to have been largely forgotten until overnight news surfaced that the amount involved in those less-than-upright deals was in the vicinity of $10 billon!

The metals were stored in two port cities, Qingdao and Penglai. Reports noted that potential losses for foreign banks and commodities firms could be close to $1billion. Worse however was estimates that exposure for Chinese banks could potentially be in the billions ( yes, with an "S") of dollars.

That send copper lower - as if it did not already need any help moving in that direction.

The red metal has pushed down into an important chart support zone. Failure to hold here and copper is going to change handles to a "2". It will, as it always has, take its cues from economic data.

As a way of reminder - that certain website out there, which goes by the name, "We never saw a news article that we could not interpret and spin to be bullish for gold", was pushing that story as one more perma bullish gold theory not that long ago when this thing was in the news. Talk about another one biting the dust!

Their bizarre claim was that somehow double-counted metal was bullish for gold because all of that gold that was hedged was going to have to be covered resulting in a huge rally in the yellow metal. Whoops!

By the way, gold is still holding onto its gains as the equity markets are not as of yet showing any signs of serious buying. The yen remains higher as does the bond market which is up over a full point now. Safe haven buying is definitely keeping gold aloft at the moment.

On the moo-moo front, they simply will not break down even as the beef weakens. Packer margins are already deep in the red but that is not fazing the cattle bulls. I thought that perhaps, just maybe, we might see the cattle sell off with the lower equity markets today, but no dice.

Those who think gold is volatile should try their hands at the hogs. The blasted things fell to practically limit down earlier today and then cut those losses in half as there was what might best be described as a "panic buying" short covering binge that hit the pit 15 minutes before the close of the pit. With the big Quarterly Hogs and Pigs report due out tomorrow, no one knows what to expect.

My view at this point is that regardless of what the report might or might not say, the industry is going to ramp up in a big way. It might not be reflected in that report since many hog producers have gotten wise to telling USDA their breeding plans in advance, but nonetheless, with two vaccines now approved and with dirt cheap corn prices, I expect to see significant efforts to enlarge herds. We shall see. I have been wrong on these wildly unpredictable reports before so it will not be the first time if I am.

What matters more than the report however is the reaction to it and that we will not get until next Monday morning.

One last thing- those corn/wheat spreads are coming right back on again. Amazing.


  1. Thanks Dan, yeah I remember the story.

    The shills out there are just making it up as they go along at this point.
    They're counting on short memories, patience and loyalty at this point.

    No one dares challenge their version of events whether real or imagined.

  2. Dan, did you just get a hold of your old friend Bill Haynes and place a Huge buy order for gold recently? ;)

    1. Bob;

      That was one of the things that I did not like about doing that Metals Wrap over there. I always had to follow someone who was perennially bullish because that was his main business.

      You know what's sad Bob? so many of these people simply cannot acknowledge a simple fact that sometimes gold is in favor with investors and sometimes it is not.

      That is not a difficult concept to understand but fortunes are made and lost because the vast majority cannot let go of their biases.

  3. last trading day in sept feeder cattle options said to be a cause for some yankage!

    fresh usda:
    Red Meat Production Down 10 Percent From Last Year. Commercial red meat production for the United States totaled 3.80 billion pounds in August, down 10
    percent from the 4.20 billion pounds produced in August 2013.

    Ags the end of quarter plays into the 'sell rosh buy yom' theme. harvest is ongoing and usually longs aren't initiated until the next quarter begins.

    The gold-silver ratio has surged to a new multi-year high, with bullish momentum indicators and an RSI that continues to climb to rarely-observed overbought levels.

    new lows for the move for GC SI today on a thursday, the pattern has been a poor friday in that case. perhaps op-ex can change that as in the money puts now become short futures contracts!


  4. Yup, fraud in copper was going to reveal fraud in gold and send the precious "to da moooooooon!"

    Do their knuckles ever get sore from dragging on the ground so much?

    1. And the whole episode hasn't done diddly squat for the price of copper either. Of course, I'm talking the US Ponzi Fiat price of copper, so of course I'm a muppet anyhow...

  5. Another overblown hopium campaign is underway that revolves around Andrew Maguire and the incessant manipulation meme.

    The nonsense I eluded to earlier is linked in this article...


    Has it ever ocurred to the manipulation crowd that silver was manipulated to the upside and what their seeing is it fall back to a more accurate or average trading range?
    I realize prices are based on buying/selling due to sentiment and technical indicators and modern hft algo trading programs etc no matter where that buying or selling originates from.

    But has the GIAMATT crowd ever considered the steep run up in silver/gold was the actual manipulated momentum trade that was going on to the upside and they mistakenly looked at that long run up as..."the bankers are losing control and there's a silver shortage on top of it!"
    And what they've actually witnessed is that the long side trade (and sentiment) in the metals through GLD and/or SLV went the other way quickly and hard to the shortside while the GIAMATT saw it as evil banker cartel monkey manipulation all the way down and they had it all backwards?

    I think it possible but I realize the GIAMATT doesn't dare consider they're mistaken in the least. One thing that rings true with the GIAMATT crowd is a condescnding arrogance that they're always right and everyone else is an imbecile for not simply accepting their stubborn and obtuse "proof" of manipulation they offer up.

    I guess it's easier for some to make up a never ending series of villians or plots to blame on some type of result (higher PM prices) that didn't work out as "envisioned" and that they simply got it wrong and threw caution to the wind at $1900 and $48

    Andrew Maguire is a joke and it's pretty telling he or others didn't practice what they've been preaching the entire time regarding some supposed whistleblower BS.
    They won't or can't prove anything but they'll certainly talk about it a lot and exhort others to take up their cause because all they've got left is to try to appeal to the doomers chronic sense of outrage.

    But where's the proof and why won't the most vocal and outraged among them do something themselves about it except for talking about it?
    It's because they can't or won't.

    Maguire and Co. and all the dramatic BS they've alleged and moaned about was all a promoting marketing ploy that continues to this day in an effort to keep the hyper-gullible onboard as the metals have done nothing but tank.

    1. DP, For sure it appeared that silver was manipulated to the upside. It did not seem right the way it just took off and then it didn't even break the old 1980 high! I was selling into it as it progressed thinking that $30 was such a gift after enduring the 80's and 90's doldrums! I sold more in the mid 30's then again at 40 and again at 42. I remember thinking that it will test the old high so I set my my next big sell at 60. The way it reversed didn't seem like a top created by the public jumping in or being totally in like in 1980 with people lined up outside coin dealers. I think there will be another run in silver in the future some day which will exhibit the classical mania phase symptoms.

    2. the tragic thing is that the silverbug minions are being fed this hopium - if only this magic article gets published, then silver price suppression will cease and silver will go to the moooooon! so sad.

      I wonder why no one is asking the most important question: why does Whistleblower Andrew Maguire need a PR agent!?!?!? answer: because he's a businessman selling crap... in his case: his trading service (and confirmation bias)...

      I am probably the only one in the metals blogosphere (umm - i mean, I have written about metals in the past: i'd hate to associate myself with these fraudsters and charlatans) who has seen a draft of the William Cohan piece... guess what - it's an amalgamation of all the crap AM has ever spouted. there is nothing new in there. There is nothing that will bring down some imaginary Cartel and result in a mooshot for free silver.

    3. It's a virtual fantasy land of clandestine thoughts and scenarios that get played out over there where there's always some type of villian involved no matter what the topic is.

      The whole pretense of framing everything as a battle or war is telling.
      It must be tough to go through life everyday and feel like everyone is screwing you over or holding you back from the envisioned scenario you think should be playing out.
      It's magical or fantasy thinking on some level with a dose of role playing mixed in.

      Alex Jones is close to the mark with his slogan..."There's a war going on for your mind".

      What he can't see is that there's a war or battle going on within some folks minds all the time where reality has become the enemy.

  6. Hello,

    I'm correcting what I wrote on last post : the bollinger band as a support is on the monthly time unit, not weekly. Here is the chart. You can see it, still horizontal, in the 1.27 area.
    So I see two options :
    - we bounce, at least temporarily, quickly, on the 1.2730 area.
    - we keep heading down, the inf bol band gives way, and in that case we may be heading towards 1.22 or lower before year end.


  7. Keep up the good work busting the Gold bugs narrative Dan!

    I'm throwing this out here, its from a mainstream media organisation, though of course one must treat it with healthy skepticism much like a tiny newsletter written in the basement of some Gold blogger in rural idaho.

    The author is cautioning Copper bears as he claims a single mysterious entity has a stranglehold on most of the physical supply.


    Don't forget its probably wise to question mainstream media as they were recently airing the story of the woman with three breasts without bothering to look into her background and see through her hoax.....

  8. Hello,

    A quick look at the SP500 confirms what I was monitoring since july.
    We have a real serious possibility to see 2000+ being the real top of the whole uptrend move from sub 1000.
    IF SP500 "soon" choses to break first 1950 area, i.e support of the steepest upwards channel, here is what I anticipate (not a forecast, just an ideal scenario, but I'll come back on it if it happens) :
    - acceleration down to 1900 then bounce.
    - upwards correction towards 1980ish. THERE will be the major opportunity to short the SP500 I'm waiting for.
    - pullback towards 1900, confirming a Head and Shoulders, then break of 1900 and quickly headed towards 1700.

    First things first : let's see how SP500 behaves if it meets the 1950 area. I would buy back the 1990 smallish short I've made on that market if we reach them.

    1. Plausible senario Hubert. Are you going to short with a 3x bear etf or what?

    2. bah, as long as we remain in the main upwards channel, my short positions are extremely small and speculative. I shorted 1 cfd at 1990, one at 2001 which I bought back at 2002, and now my stop loss for the remaining one is already back at 1990. If we reach 1950, so be it, but you see I'm playing for 6 cans of fresh bear on that one :)
      Once we break the upwards channel, I'll short more heavily on the next upwards correction, because it is supposed to be the last before a bigger move down. We'll see. It will happen slowly, given the main time unit of the trade : 2 weeks time.

  9. Gold : absolutely hopeless. I was hoping we's reach a mere 1936 today so that I can add up to my short position. Nope. Not. Nada, nothing, bulls are in a panic. There is nothing bullish on gold here. This is utter weakness.
    I really thought we'd at least test the ema15...too ambitious.
    Nothing's changed in my expectations : we are headed towards sub 1200.
    Sorry for all gold bugs : it's probably going to get worse before it gets better.
    If you are overloaded in gold, if you accumulated on "weakness", just consider selling a bit NOW, not when 1180 breaks down and you'll have to sell at 1100 or lower to recover sleep at night. If you can stand the heat and consider 1000 $ gold without selling and without caring about it, then hold and forget about the price action for a few months.

    1. Hi Hubert,

      I regularly read your posts and they are very helpful. If the Euro bounces for a few days, don't you think gold will bounce with it? It might reach 1236, or even ema15, as you have been hoping.


    2. Satan's whiskers, well...this is the end of the week, nearly the end of the month, and I don't see eur usd bouncing. I see it under 1.27 right now, and I think I'm going to sell once more the 1/3 of short position I bought 2 days ago at 1.2790. I don't know if it will bounce anymore, eur usd really looks weak and ready to fall like a knife towards 1.22.
      The question for me now is whether to be short or neutral on eur usd and gold and siver. Certainly not to try to be long on a counter trend move : the bearish trend is simply too strong and I don't see strength when prices meet support areas.
      Your only hope if you are long is that I'm not a professional trader, not the best of them by far, I insist on that.

    3. Hubert, if gold falls below 1200 do you think bulls will put up a huge fight at 1180 or will they give into margin calls rather quickly?

    4. Hi dfly,
      I'm writing under Dan's control, because his exerience about trading is not comparable to mine. I'm posting a lot when I have time, but please take it as it is : for my one and only opininion which should be confirmed by a more expert person about the markets and trading.
      From my point of view, there is no way to know in advance what will happen, the only way us really to monitor the markets on faster time units (4 hours, 1 hour...) when / if we get there.
      Nevertheless, the more a support is being hit, the more it is supposed to become fragile.
      This time being the 3rd time we hit 1180 (if we get there), it will imho be more fragile than during the previous hit.
      To add up to this simple theory, I see that every single bounce from 1180 has been lower than the previous one : not a good sign for bulls.
      I sometimes watch the obvd, to see if there is a bullish divergence in terms of volume when I'm unsure about the way out from a range's support. I'd do the same this time to get more information.
      Volumes are interesting to monitor when you hit a horizontal support : if you break it with increasing volumes, it's usually a sign of strength for bears. If volumes are very low, it can be a head fake.
      Lastly, last time we bounced on 1180, gold was also bouncing on its long term upwards support. It's not the case this time. We already broke through, as it was around the 1240 level.
      As you see, many things to take into account, but I'm more pessimistic for bulls this time than I was the two last times.
      That being said, 1200 is the worst time to add up to a short position. You usually sell when you break a support or above, under a resistance. In our case, I sold gold when we broke through 1240, then I was waiting with a sell order at the ema15 level (1236 today, didn't hit).

  10. So, what particular expertise does Eric Sprott have in the field of infectious disease? None whatsoever, obviously. He and his people do have a great deal of expertise in rank fearmongering though. That's their bread and butter.


    1. Eric Original;

      Sprott is the same self anointed guru whose predictions of $2000 gold by the end of the year and $50 silver by the same time period are quoted by some of the gold and silver dealer radio commercials to entice people into buying a "sure thing". After all, China and India are cornering the market so you had better get in soon.

      He and those like him peddling this crap are the 21th century version of snake oil salesmen.

      One can only imagine the redemptions that must be hitting his funds.

    2. I'd find it hard to believe that Sprott or any other big name out there wasn't shorting the miners or metals while pumping it up the whole time.

      I wonder if the perma-bulls have ever considered that.

  11. @DPH,
    I like your phrase "chronic sense of outrage"--that encapsulates the whole meme. There is clearly a large cohort of people whose lives are defined by their envy and resentment of others' success.

    I completely agree that the world is an "unfair" place, by certain arbitrary yardsticks. It's also the way the world is. Deep down, these people know they are the "losers", and more importantly, they know it's because of their own flaws. It's easy to see how congregating together online (one of the most idiotically easy activities on earth--like watching TV) holds such an appeal for them. It's equally easy to see why they are such easy prey for the con artists that get mentioned here. Oh, well--ultimately, it's tough shit for them.

    1. Rico...on the flip side of that is the selective outrage or blind eye as I called it.

      Seriously, if the appearance of blatant plagarism or "borrowing" of argentus maximus' work doesn't raise some eyebrows over there then nothing will.

      No one dares look up "Craig Hemke" at Investing.com to see how he's used AM's written work with no acknowledgement the piece wasn't of his creation at all.
      Integrity anyone?

    2. I noticed that too. No integrity whatsoever. His position all along was that once you post it on his site, he owns it. Period.

    3. Argentus is not clean in this either. Why on earth does he stay there? It's his choice, and a permanent stain on his record.

    4. It's all about having an audience and advertising his own site and services from turdland.

      Apparently he's not worried about nor recognizes the perma-bullish anger or looniness that the site is known for.

      I would think being affiliated with a site that can't be taken seriously would be bad for business and one's own reputation for hanging out there.
      Maybe he's simply unaware what's taken place or they have some type of arrangement....or The Turd simply swiped it because he feels "entitled" to it.

  12. Either Hathaway can not do simple math or Eric King needs an editor regarding gold sentiment numbers. Once again, a truly pathetic example of the ongoing thinking in the shrinking bull camp of pm's.

  13. For anyone whose willing to take their blinders off...


  14. Dan, I show $2.90, then 2.75, then 2.50 as smidgeons (sp?) of support for the red metal, but from a BIG picture standpoint, the real support comes in at $1.50. Sounds like a reach, but if you look at China and the Aussies, they both have their hands full right now. I think Chanos is spot on and we continue heading south. It is early, so we shall see how we close the week out. Everyone, have a good weekend !

  15. http://www.mrci.com/pdf/hg.pdf copper picture

  16. Tough market environment claims another long timer...

    Bill Gross Quits PIMCO, Which He Co-Founded, Joining Janus

    Tyler Durden on 09/26/2014 - 08:36

    After co-founding PIMCO in 1971, Bill Gross has called it quits...


    “I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization,” said Mr. Gross. Janus +40%, Allianz -4%.


    1. Sounds like Gross is easing into retirement. Janus probably came to him with an offer he couldn't refuse. Great money and doing only what you love, with complete freedom. I'd take it too.

    2. Sounds about right. I'd take it too.
      He's probably got a boatload of money already and its time to step back from it all.

      El Erian must be smirking at this point. :-)

  17. Dollar spiking again...through $85.65 which is a key number on my charts...

  18. Must be getting kinda tough on anyone trying to export unless they use a lot of imported stuff in their finished product.

  19. The cancer that began at the periphery of Greece and Portugal is now boring in on Italy, France, and Germany. No real leadership and spiraling down the primrose path into obscurity no less.

  20. george did gold today:
    "Commitments of Traders classic battle between the GOLD HEDGERS and GOLD TREND FOLLOWERS returns!"

    SPX high o day the 50-day MA touch..INDU TLT staying above their 50-day.

    Bonds: really the usa could use a bond rally here, as the higher interest rates had really been hurting a rather tepid or even weak housing market. mortgage related data has been stinking up the field since 10 yr yield went over 2.50%.



  21. The only grain I see which may have bottomed is rough rice. If it continues up, I expect that would be inflationary for eastern em's. With their higher incomes and love of beef, pork etc, the old grocery bill must be getting bigger.

  22. Absolute Stunning Moves....

    In the U.S. Dollar Index.

    Fastest, steepest rally of any currency in recent history.

    Yet none of the following "acclaimed experts" predicted it:

    Eric "Crybaby" King

    James "Belvedere" Dines

    "General" Jim Sinclair

    James "Bond" Rickards

    Bill "Wild Turkey" Murphy

    Rick "I'd Love To!" Rule

    Paul Craig "Moonshiner" Roberts

    Richard "Godfather" Russell

    Eric "The Billionaire" Sprott

    Stephen "Squeaky" Leeb

    David "Blue Hair" Stockman

    Egon "Egghead" Von Greyerz

    James "Month In, Month Out" Turk

    Michael "Screaming" Pento

    Peter "Smug Face" Schiff

    John "Squealer" Embry

    John "The Monk" Hathaway

    Ben "Prep School" Davies

    1. Mark, you have to get Turd "All Hat, No Cattle" Ferguson on that list.

    2. And Doug "Don't Cry For Me Argentina" Casey

    3. Andrew "I've Got A Secret" McGuire.

    4. I noticed Martin "dyslexia/spell-check" Armstrong wasn't on your list Mark. The man everyone hates called this dollar rally.

  23. Even " Stay in the System " Mark never predicted it.

  24. kjm...

    When the dollar sprung to a new low this spring and instantly recovered, at the same time General Jim's jowls were flapping as he said "The Story Will Be Told Here" as he posted his USDX chart...

    I told everyone to "watch out" and that could be a major low.

    By the way, gold is not going down as fast as other currencies.

    So for the first time in a long time, gold is actually RISING in most currencies except the U.S. Dollar.

    FWIW, I said it here first.

  25. Okay...I take it back.....I forgot you said that. It is interesting that the gdxj is not crumbling like the pm's.

  26. When Alexander the Great asked the Delphic Oracle whether he would be successful in his conquest of Persia, the Pythian Goddess enigmatically answered: "Know thyself."

    There could be no better advice to the would-be entrepreneur or investor as well.

  27. Gold has held up reasonably well, under the circumstances, with the ballooning dollar, stronger stock market today, and GDP figure. We have increased Indian and Chinese buying as well.

    Anticipating a short-term correction in the dollar, and continued weakness in the general markets, plus seasonal factors, may produce a golden bounce going into the close, and also next week. Long overdue by any stretch, but surely temporary.

  28. General Jim is approaching series of articles on:

    - Ukraine
    - Iraq
    - Syria
    - Putin
    - Weak housing
    - Manipulation
    - Hyperinflation

    But none of it matters.

    The market loves the strong dollar, cheap interest rates, and the ongoing crash in the CRB Index. Best of all worlds.

    Bottom line is that stocks are up and gold is down, the market is basically laughing at him.

    And the Blue Hairs refuse to sell their gold or gold shares, come hell or high water.



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