"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, September 19, 2014

Grain Markets coming to Grips with Reality

There are two factors that are now finally becoming begin to seriously take hold among those who kept insisting that grains would experience a bounce higher. The first of these is the sheer size of the upcoming harvest. The latter is the strength in the US Dollar.

Early harvest results are rolling in and they are impressive! With forecasts calling for warm and mostly dry weather, harvest progress will continue as the combines move north. As the actual results are known, traders are realizing the old adage that, " a big crop gets bigger".

All three grains/beans are lower this morning with beans looking like they are accelerating down. I am most interested in seeing this afternoon's COT reports on the corn because I want to see if any of the large specs ( hedge funds and other large reportables) are still net long corn or if they have whittled down those positions any.

My concern for corn is very simple - IF, and this is a big "IF", that just-mentioned group remains as sizeable net longs, corn is in danger of having more downside than many are currently thinking. The reason? Those guys are going to have to get out of those losing longs.

Now, even if they are spread against wheat, and so far that spread has been performing admirably with wheat fundamentals even more poor than those of corn, lifting those spreads entails a lot of corn selling that will be hitting this market at some point.

Here is a picture of the spread:

As you can see, it has been a most profitable strategy. If the spread moves too much in favor of corn however, livestock feeders will switch over to wheat. The spread has not moved much over -$1.20 with some resistance near -$1.40 so one wonders how much more upside this spread has.

Here is the wheat chart: Talk about ugly! It hit a 51 month low this week. Even at that, the thinking is that US wheat prices are still not low enough to attract solid export business due to the global glut and the stronger Dollar.

And now for corn - again, one ugly chart; however, beauty is in the eye of the beholder and for livestock and poultry producers, this chart is a thing of wondrous beauty!

That brings me back to the commodity complex as a whole. This week's FOMC statement and its hawkishly construed message, has sent the Dollar higher and the commodity complex as a whole, lower.

With the index moving lower one can expect to see both copper and silver heading down and that is exactly what both are doing. Copper is clinging to support near and just above the $3.06 level while silver crashed and burned through the $18 level. If silver cannot recapture that level quickly, a test of $17.50 - $17.35 is its next stop. Below that and things get very ugly as it could easily fall below $16.00.

As for gold, as you can see on the chart, it is clinging for dear life to the bottom of the support band noted. Based on what I can see from this chart, there is little in the way of further support until one gets back down to the former double bottom low near $1180. There is only what I view as "psychological" support near round number $1200 but I suspect that will not hold if the Dollar index runs past 85.50. If gold does manage to get down to near $1200, Asian buying will no doubt be active but it will be insufficient to sustain the metal if Western interests become aggressive sellers. Along that line I am closing watching reported GLD holdings and to some extent, the action in the gold mining shares, which incidentally, look very heavy at the moment.

We have a cattle on feed report due out this afternoon which will give us some further insight into the state of the US cattle herd. One wonders how long cattle are going to be able to buck the general selling trend being seen across the rest of the commodity complex, especially with high-priced US beef rapidly pricing itself out of the export markets. Feeder cattle also continue to defy gravity as cheap corn and abundant pasture spurs buyers to pay these outrageously expensive price for available animals. That being said, these kinds of prices, given what the board is showing for spring and summer cattle prices, are essentially guaranteeing losses to feeder buyers. One wonders how long that can continue. For now cattle bulls, especially in the feeders, are vigorously defending their positions. They seem intent on not surrendering and have the money to back up their stance it appears.

A week from today we get the quarterly Snout count or the Hogs and Pigs Report. That is always a lot of fun.

By the way, with the Scottish vote coming in a resounding "NO" in favor of independence, it was interesting watching the action in the British Pound last evening. As the first results started rolling in favoring remaining in the Union, the Pound began to rally. However, after the final vote was tallied the currency began to slowly relinquish its gains and is now firmly lower. This is a matter of "buy the rumor, sell the fact". The forex markets have an uncanny ability to predict election results as the Pound began rallying earlier this week AHEAD of the vote. Currency traders were clearly voting with their pocketbooks that the vote was going to be one of staying in the Union. Once the vote was cast and the results tabulated, there was no other reason to buy the Pound so down it went against King Dollar.  We are firmly back to trading interest rate differentials it would seem.


  1. This comment has been removed by the author.

  2. this needs to be posted up top. i will just post w/o comment because i am having great difficulty not swearing. good grief... a "public service"... well, maybe allow me just one little bit of profanity. go to hell Turd.

    Reply to: Storm Clouds Gathering
    As a public service by Turd Ferguson
    1 hour 45 min ago

    A snippet from today's Vault post:

    So here's what you need to decide right now. You have three choices:

    Do nothing. Shake your head at the schemed paper shenanigans and prepare to add to your stack by buying the dip at prices thought unimaginable three years ago. You're preparing for The End of The Great Keynesian Experiment and the paper price of metal in September of 2014 is meaningless. (FWIW, this is what I'm doing.)
    Hedge/trade/profit from this decline by buying some put options. You can do this through your online trading account. Puts on ETFs like the JNUG, the AGQ or the UGL might appreciate handsomely in the days ahead. Theoretically, you could then take these paper profits and buy yourself some deeply-discounted physical to add to your stack.
    Fully hedge your physical position if you're really bothered by the volatility. Call JimC or some other commodity broker and hedge your physical. Each gold futures put hedges 100 ounces of physical. Every silver futures put hedges 5,000 ounces of silver. It won't take much "premium" to buy the "insurance" you need for peace of mind.

    I'm not trying to freak you out nor am I trying to frighten you.This just is what it is and, as long as precious metal continues to be priced based off of the whims of a handful of HFT algos and Cartel monkeys, this is what we have to deal with.

    1. We are in Falling Knife territory on Gold & Silver. I have a feeling Monday will be Bloody...

    2. Turd is right on the third aspect. I am not bothered with the volatility. I am concerned with the trend. With silver routed, I see gold slicing right.through 1180. The dollar is the Phoenix rising from the NWO ashes.

    3. peckerwood;

      sure, now he gets bearish and starts advising short positions and put options when the chart has been bearish for some time now. clowns like him are beyond pathetic. They sell bottoms and buy tops and somehow people listen to them.

      I have no idea what he is even referring to when speaking of "volatility". What volatility? the Gold volatility index has been trending LOWER since April of this year. He calls a commodity moving lower in a bear trending move "volatility". And to think some folks pay for that sort of nonsense.

      The problem with him and so many other perma gold bulls is that they do not want to look at what is right in front of their eyes without denying it. To do so would mean that they have to admit they have been wrong for more than 3 years now. That is the problem It is one of ego.
      Pity the poor folks who actually were duped by these hucksters and lost real money following their "expert" opinions.

      Remember - opinions are like armpits. Everyone has them and they all stink.

      the only opinion that matters is the market's.

    4. Dan, wouldn't it be something if this note of caution from the great Turd turned out to mark the final bottom? too bad we can't call it Turd's bottom, the phrase being pretty stale, and also the object of so much ridicule. but would you consider having a contest for the most descriptive name, should in retrospect, this public service announcement mark the turn?

    5. peckerwood;

      The problem with still far too many in the gold cult is that they somehow have convinced themselves that once gold does find a bottom, it will then immediately embark on a huge bull market run leaving anyone not on board in the dust without the least chance of getting on. I have no idea where that sort of foolishness originated but suffice it to say that is just nonsense. The market might find a bottom near $1180 again. It might not and thus move even lower. But even if it does, why would it then suddenly turn around the embark on an enormous one way upside surge? The odds favor more of a sideways trade above a major support area once that area is tested and identified. Think about how long gold endured a bear market after its peak back in 1979-1980 and how many kept predicting another huge bull market. They were all wrong until the time was finally right in 2001. Even at that, it took some time to finally become evident on the technical charts that something was brewing.

      What I am saying is that anyone who pounces on what they perceive to be some sort of bottom with the express intent of watching their gold suddenly soar to the heavens, is more than likely to be sorely disappointed instead.

      When gold's time finally comes, I think we will all be able to recognize it. Sadly, it will also make some very bad and trying times for all of us. I for one, do not want to see that and frankly anyone who is wishing for sharply higher gold prices in order to fatten their wallet is disgusting in my view because of all the pain and suffering that would entail for everyone else.

      You buy the metal and HOPE you never have to witness it soar to the kinds of levels that some keep loosely throwing around.

    6. 3.5% drop in silver in 1 day is not considered volatile?

    7. It has been declining since April 2013...a spike is due...like Now.


    8. Matt:

      Why do you keep listening to those who have been so wrong, for so long now, that it is gotten beyond ridiculous that they have the least bit of credibility left? It is idiocy and financial suicide to put your financial well being in the hands of rank novices like some of these are.

      The time to buy puts is not when a market is plunging - that is when the premiums soar in price. The time to buy them is when YOU DON'T NEED THEM. You buy them when you can, not when you have to.

      Buying puts now will certainly give you some downside protection but that depends on how much you pay for the premiums at this point. Also, now all those puts do is to guarantee that you have LOCKED IN LOSSES on all the metals you own that you never bothered to hedge when prices were up. Did the investing/trading hat clown over there inform any of his readers of that?

      Also, why do you think I keep mentioning support and resistance levels so often? When a resistance levels fails on the upside, then is the time to purchase some puts or lighten up on any long holdings.

      Nope, that is when these frauds all start screaming about "Evil cartel price capping",."stay the course", "any day now" etc, ad infinitum, ad nauseam. that works to prevent rookies from buying downside protection. Instead they dig in determined not the let the "cartel take them out".

      Gold and silver are not isolated markets. They are part of the commodity complex. Gold also is a currency depending on monetary conditions and sentiment.

      As such, one must be aware of what happens on the currency front. One must also be aware of what takes place across the entire commodity complex.

      Commodities have been falling out of favor for some time now ( see the GSCI chart that I post very regularly). It is one thing for long positions to finally give up and throw in the towel. It is another if the specs decide to aggressively sell a market. This afternoon we will get a bit of a glimpse into that.

      If hedge funds decide to attack silver from the short side, as they are currently doing with many other various commodity markets, it is going to go lower yet.

      All we can do is watch the price action and attempt to decipher the market's voice. Might I suggest you stop wasting your time ( and by consequence your money) reading stuff that is so obviously biased in favor of one view - the bullish view and currently the wrong view.

    9. Dan, thanks for the reply. I think you'd be surprised where I get my financial/economic news. For the record, they see the price moving down over the next couple of years, not up. I am doing my best to continue to learn economics etc. As you know we are all learning as we go, on macro level, where central banks are concerned.

      The silver price is down 3.5% today. Are we going to pretend that that is physical supply coming into the market,or physical demand for the metal way down for the day? That is my point.

    10. No, that one doesn't count - I don't sense any hint of contrition or humility in TF's comment, so I am afraid he doesn't make it onto the Leader Board***

      Matt - 3.5% down does not count as Volatility, because the move has been both linear and part of a sustained trend; I am not going to lecture you on financial mathematics, but Vol is measured as the standard deviation of returns - "uncertainty" if you will - and if the price changes are consistent (e.g. -1, -1, -1, -1) then it will not register a spike in Vol

      "physical supply coming onto the market"; I have no idea, and neither have I yet checked on Silver OI (COMEX) and Volume (COMEX and LBMA); however

      - It's not just Silver which has been whacked

      - There is certainly more than enough physical Silver stuffed into warehouses to explain why someone just decided to have a "clear out" fire sale - please refer to Keith's analysis at monetary-metals.com, where for several months now he has been referring to the Warehouses as "The Buyers of Last Resort". COMEX inventories have soared in the recent past, and this appears to have been largely due to a very viable "Cash & Carry" arb opportunity which is now unwinding

      - Some of us have been calling Silver out as a potential Lemming for quite a while now - again, I am not in any way associated with Keith, but check out his "Dripping Icicles" article http://monetary-metals.com/like-dripping-silver-icicles/

      - It's surely time to stop flapping about the Why's and Wherefores and get to grips with the reality of the situation: Silver just went through the floor and shows no sign of stopping any time soon. If you see a freight train hurtling down the tracks at you, calling it names, saying it's not supposed to be doing that, and pretending its not really there, is unlikely to be a profitable strategy

      Ultimately, who cares if there is "volatility" or "physical supply" - the simple fact is that the price has collapsed, and if you are a holder of Silver, you have just taken a bath, just as surely as if someone had stolen some of your stash, slapped a windfall tax on your savings, hacked your credit card or decided your house was worth less than you paid for it.

    11. *** Leader Board

      we have the Formula 1 Grand Prix in town this weekend, so Singapore is in full Race mode

    12. Hi Zhang. I was in Singapore a few years ago around the time of that Ferrari crash. Has anyone fallen off of the Marina Bay Sands tower recently? Someone had taken a fall when I was in town.


    13. I'm surprised anyone there still trusts or finds the opinions there relevant especially after SpyGate 2.0 came to light again.

      The public service announcement is laughable and too little far too late. It's like Aurther Fonzarelli being unable to say "I was w-w-wr-r-r-o-n-g-g!"

      For cryin' out loud, Forest Gump could've seen this trend in the metals happening and reacted faster while doing so humbly.

  3. How far can it get?
    Actually I'm a bit optimistic, I don't think it can go much further down.
    More precisely, 1080 seems to be a good bounce zone for gold (of course IF gold breaks through 1180, and I don't know that yet).


    The inf bollinger band is coming as a white knight for bulls, on the quarterly time unit for the last 3 months of 2014. 1080 is also an ex-resistance which became a horizontal support. So why not? It is definitely (to my only point of view) a support area.

    But 1080 on the monthly time zone also correspond to a support on the monthly timescale, the mlh inf of a pitchfork I traced on the chart.

    1080 for gold / 16 for silver would give us the same kind of gold to silver ratio around 70.

    All I can tell people who are long gold or bought gold as an insurance against the worse : KEEP the physical gold you won't mind seeing at 1000 $. If you think you bought too much and emotions could overwhelm you and make you sell at 1000 $ all your gold, then sell a bit now, only keep the gold you don't mind about what is the price. Forget about it. Don't see it as an investment, as a speculation. See it a diversification of your portfolio and an insurance against the worst. It is wise to have some physical gold. It is unwise to have only physical gold, or to average down your long ppositions right now buy "buying the dips" because you don't know how deep it will go. There is no point to do it. Just hold steady with the gold you can allow yourself to see at 1000 or 900 $ for a few years, forget about it, and follow your other investments as usual.

    1. "Sell down to the sleeping point" is always sound advice.

    2. Hubert;

      That is sound advice when it comes to owning some physical gold. Buy it and forget about it. Those who throw around the worn out mantra of "keep stacking" are not SERIOUS about gold as insurance but they are speculators hoping for massive gains in the metal. Once they can admit that about themselves, then maybe there is hope for them.

      One invests wisely by diversifying. Too many have followed the "world is going to end tomorrow" mentality that infects the gold cult and have nearly all of their wealth tied up in gold ( or perhaps silver). That is why they are so ferocious to attack those who dare to accurately and objectively report on the charts of either or both. They are watching their entire net worth, the fruit of their life's labor evaporate. No wonder they are upset!

      If they would stop listening to the siren voices of the hucksters, charlatans, frauds and other assorted NON-OBJECTIVE gold perma bulls, they would be able to do exactly what you have suggested; namely, buy the metal, put it aside and forget about it. If they wanted to buy a bit more as price moves down, that is also fine. But they should also understand that anytime one gets too lopsided in one asset class or one sector when it comes to investments, they are going to become too emotionally attached to remain objective and hard-nosed realists.

      Instead they will look for reasons, from someone, from anyone, to reassure them that they are not going to end up losing all their money. That is where the gold hucksters come in. They are always there to reassure against losses all the while the losses mount.

      "Any day now" is the motto at that point. Hope replaces strategy. It is all so completely avoidable.

      My intent with this blog has been to provide readers with some sort of education as to how to read markets which will enable them to make their own decisions and tune out these charlatans and other self-centered, self-seeking shills that infect the internet.

    3. Hats off to that.

      on jsmineset today :
      "This is a time not to listen to your emotions. "
      I agree 100%.

      "I am fully committed to gold, and remain so."
      I disagree 100%.

    4. Firstly, we are for the time being still some way off $1000 in Gold, so although the current market does not look in any way favourable, it is to my mind not yet time to be rushing for the exits.

      Secondly, Gold is indeed a very sensible form of insurance - not just against Armageddon, but also against the vagaries of Life in general. However, as Dan notes, it is not a Get Rich scheme, and the moment you hear one of these Snake Oil Salesmen ringing Pavlovs bell by picking an arbitrarily large number as a price target, you can almost hear the muppets who follow them salivating at the prospect of "getting rich quick". As I commented yesterday, that kind of mindset can get you poor pretty quick too - and will help you stay poor

      As I also commented yesterday, I am firmly in agreement with Dan that asset diversification is not only essential, but really does confer "free" benefits in terms of risk reduction and portfolio enhancement. It's the only way to go, else you might as well go to Vegas and go all-in on Black

      The saddest thing is that people's dreams endure far longer than their memories, and as soon as this rout wears off, the charlatans will be back again touting their same old tired stories, and this time they will be "right" all along, because for a while the price may either rally or, as Dan points out, put in a sustained "bottom". When this occurs it will not even be a case of the goldbugs finally getting lucky - it will just be an entirely natural and understandable period of stability and perhaps resurgence - but the goldbugs will of course claim it as their moment of Justice, and remind you how they said this would happen all along

      Selectively forgetting your past mistakes must be a wonderfully comforting way of living your Life - its just a shame when people leave others financial lives in ruins all around them

  4. $1000 seems to hold some sort of totemic magic for the 'bugs, as if it is inconceivable that GC could penetrate that to the downside. The problem is that it only penetrated to the upside relatively recently, and could go right back if PMs become a truly dead asset class (from an institutional money perspective).

    There is no top, and no bottom--there is only the current price. Same with everything.

    1. For years and years and years, the REAL number on everyone's mind was $800 gold. That's the magic number.

    2. Not saying it goes there, but if you want to talk psychological numbers, 800 is it for the long term bugs.

    3. Once we hit $1600+ and more then doubled the previous high from over 30 years ago I felt like gold was on borrowed time and overbought.
      Looking back, It was clearly in a mania phase around $1900 and has since shrunk back $700 while sentiment steadily shriveled up as the equity and bond market were blistering hot.

      I'm sticking with my $1075 guess but sub $1000 can't be discounted as impossible. One look at a long term gold chart tells you why it's possible.
      If you can't see it or you're scoffing at that notion you're clearly in denial and caught up in someone else's tangled web of ego and oppositional defiance to the market reality that currently exists.

  5. The reason why the PM market will not stop selling off is because people are still "stacking".

    Eventually prices will get so low that these cultists will start "unstacking", and start buying paper assets like U.S. common stocks LOL....

    1. Alibaba comes to mind:

      My Dear Extended Family,      


      Today is a day that should be memorized. Alibaba is the star with a huge market debut making this company worth more than some of the banks that brought it to market.


      Long term equity cycles have turned down as the equity market races to new highs almost daily. The US dollar is trading into decades old overhead resistance with long term dollar cycles due to turn down in the fourth quarter of this year.


      Gold, whose long term cycles have turned up, is plumbing previous lows and trading into major support. This is a classic example of "Popular Delusions, and the Madness of the Crowd."


      This is a period of time when major market changes have a high probability of happening. This is a time to control yourself, returning to fundamentals and gaining what guidance can be given by history. This is a time not to listen to your emotions. This is a time when geopolitical developments have the ability to impact markets significantly, certainly in the dollar/euro cross rate.


      Cycles are probabilities, but not absolutes. Only when price direction confirms the direction of cycles can long term trends be considered to have turned.


      That point in time is the next major event more important than Alibaba. There is another $10 billion dollars in new deals coming next week. That is a bubble if there ever was one.


      I am fully committed to gold, and remain so.





    3. There is no limit the egomaniac sociopath is willing to do to others.

      For the record Sinclair sold 3.5 million shares in his fraudulent company before 2011.

    4. In this memoir Jim sounds like Hitler in his bunker in the last days of the war when the Russians were moving in and it was realized the war was lost.

  6. Hey Dan,
    Thanks for your commentary. I love your comment: "starts advising short positions and put options when the chart has been bearish for some time now. clowns like him are beyond pathetic." That sums it up. Enjoy your weekend within the brief spark that is our life on earth.

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  8. Wow, Sinclair really has no shame whatsoever.

    All I can say is that the PM market is now in the throes of one of the most devastating collapses ever recorded, in terms if time, length, and duration. Very soon, the percentage drop will also eclipse the drop from the 1980 highs.

    And yet none of the "Acclaimed Experts" saw it coming, or warned people to step out of the way.

    1. And Mark lets not forget that the stock market might also start having a devastating collapsing right along with gold as QE ends.

    2. No shame no conscience. Just EGO. And money offcourse, Jims got money too.

    3. Ya it doesn't matter for Jim he's sitting pretty in retirement, same can't be said for those who bought into the golden dream waiting for 12k gold.

  9. It is not good. I just have checked the history of gold in down trends. Usually it bounces off after 11-12 consecutive closes under 5sma daily. However there were exceptionally 2 occasions on Friday August 8, 2008 (triple 8s) and Friday Nov 29, 1996 which not only are 13rd day closes under 5sma but also made new lows for the respective weeks THEN continue to went down big next Monday. This Friday Sep 14, 2014 marks as a 14th day close under 5sma and a down close as well. Let see !

  10. Time to stop taking the Red pill guys and opt for the Blue pill.

    You can eat corn and oil provides heat, but an ipad or Alibaba?

    Wake up and smell the coffee or see your money disappear. Not a gold bug just a realist that has been around for a while and what goes up must come down. We are all, of course, clever enough to get out in time! Until, that is, the market shuts for a week while the powers that be get their money out.

    Made 30% on Yahoo over the last month, so as I say not a Gold or Silver bug, but a realist and I really hope we see a set back soon to take the heat out of the stock markets, or we will see a big meltdown.

    1. David B;

      "Wake up and smell the coffee or see your money disappear". You are of course, I assume, speaking to the perma gold and silver bulls are you not? that is the group that has seen their money disappear.

      Let's just say that you will have a large number of regular posters here, including myself, who will disagree with you. The only pill that we take here is the pill that enables us to see the charts that are set in front of us. Perhaps you want to borrow a few?
      We are all realists here - we know exactly what is going on in this economy and why the equity markets are doing what they are doing and why the commodity markets are doing what they are doing. Until that changes, that is the only reality that we are interested in.

      So you made 30% on Yahoo last month. Good for you. I assume you must think none of us over here can read a price chart and know when to move in and when to move out. Maybe you can teach us all some of that great wisdom of yours as we are obviously a bunch of clods compared to your market trading skills.

      All I can say is no humility - just more grandiosity and pomposity. So typical of this generation.

    2. This comment has been removed by the author.

    3. Not sure that was necessary Dan I was not boasting about Yahoo just making the point that I do not ignore the market and take advantage when it is there, but this cannot continue. We cannot continue to see basic items downgraded and fluff upgraded.

      You say that you get attacked by the perma bulls well please do not make the same mistake and attack someone posting on here who reads this blog as it contains good information, but may not agree with all of the posters that comment that there is no end to the rising dollar and stocks. I know you do not post that and my comments were not aimed at you.

  11. It is so depressing

    really, at a moment when their readership surely needs some sober analysis and reassurance, all the muppets over at KWN can do is recite the same vapid babble of nonsense. I can't be bothered to even counter it right now, its such utter bullshit, but consider this -

    The market collapses, so the greates erudite wisdom we have concentrates all those decades of experience on telling us "Founded in 1792, the Exchange had survived early volatility (1794), a challenge from competitors (1802), a merger and a new name (1825), a punishing diet (records indicate that, circa 1810, lunch was a double jigger of dark rum and a wedge of dried codfish.....please note....we no longer serve codfish). But on Saturday, September 20, 1873, for the first time in its history, the NYSE closed in response to a panic.... A week or more before, one of the most renowned firms in American finance and especially U.S. Treasury auctions came under a cloud of suspicion. The firm was Jay Cooke and Company"


    so effing WHAT? - please tell us why we just lost half our money following your lameass "expert advice" for the past 3 years, not give us another friggin' history lesson. Tutankhamun is dead - get over it already!

    And on the the China meme? - just take it as read that I consider ALL of the following to be totally, utterly and demonstrably misguided:

    "“We’ve already seen gold fall 6.5 percent recently, so I feel that the worst is over. ...... The fact is that the Chinese remain bullish on gold..... they are going to initially introduce something like 11 renminbi contracts. So gold will be transacted and settled in renminbi instead of the U.S. dollar. (see my comments yesterday about the RMB-denominated Kilobar contract which has been trading in Hong Kong for the past 3 years without consequence) .... ecently we’ve seen even more evidence of the huge appetite on a physical basis that the Chinese have (i.e. DOWN 17% YOY) .... What we are seeing is the last gasp in terms of U.S. dollar strength........ every country is trying to weaken their currencies, including the Japanese and the Chinese ( I told you it wouldn't be long before the cries of Currency Manipulation by the Asians were raised once again) .... These currency wars are a very favorable backdrop for higher gold prices. So on a risk/reward basis, the downside is somewhat limited in gold and the sky is the limit on the upside.”


    Pity human frailty that there should still be morons aplenty who are dumb enough to fall for this kind of bullshit

    Sorry, peoples, I am off for a ride around on the Dragstar to try and blow some of the cobwebs out of my befuddled brain. Have a great weekend

  12. When Martin "The Grinch" Amstrong got out of prison and saw what his arch nemesis Jim had going on he must had blinking gold dollar signs in his eyes with his grinchy smile and a joyful christmas backround music. Din Dong Din Dong!!

  13. There are some interest figures noted in a Zerohedge article attributed to Mark O’Byrne at Goldcore: "Globally, 26,000 tonnes of silver are mined each year and about 7,000 tonnes of silver is recovered through recycling and scrap. Industrial demand accounts for 14,500 tonnes, jewellery demand for 8,000 tonnes, coin demand for 2,500 tonnes and photography for 1,700 tonnes".

    So that leaves 6000 tons of annual surplus production - little wonder, therefore, that warehouse inventory is spiraling upwards: http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart3_18-09-14.png

    After the obligatory rant about manipulation of the London fix, he reaches the baffling conclusion that "both gold and silver remain undervalued and are in the process of bottoming. We remain confident gold and silver will see new record highs in the coming years. Both will continue to act as hedges and safe havens against the considerable risk in the world today".

    What, so the warehouse inventory and the 7000 tons of surplus production are just going to vansh into thin air? It's lame - nothing has changed, and the same old mantras keep getting trotted out : "ilver remains undervalued vis a vis gold with gold silver ratio at over 66. At $18.59, it is some 63% below the record nominal price of $50/oz in 1980 and again in April 2011".

    To my mind, the truly interesting aspect of this article is the inclusion of a stylised Cycleof Market Emotions chart: http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_18-09-14.png It would apear that Investors generally are now in the Fear/Desperation phase of the cycle, whereas Byrne himself appears to remain firmly in the "Denial" phase. Either way, that curve only goes one way from here

    1. But...but...I thought the vaults were nearly empty. ;-)

    2. Hi Zhang Lan, I was wondering is it true that a silver locket hung around a child’s neck would ward off evil spirits?

  14. Dan

    It makes me so damn angry that everytime pm holders are warned of further downside then comes KWN with their timely diabolical fearmongering headlines to try to convice them not to sell because a new breakthrough just happened.

    Eric I hope you enjoy your 30 pieces of silver you piece of sh*t

    1. Loren;

      They are going to continue that foolishness until the moon falls from the sky. Then, one day, gold and silver, will finally go back up. As soon as it does, the headlines will change to "from the man who predicted this bottom in the metals...."..

      I am trying my best to educate folks out there about the flimflam artists that infect the world of precious metals. Sadly, they will always be with us.

      Hopefully, some will come to their senses but not until they have lost a lot more money. It will take some a lifetime, IF EVER, to recoup their losses from following the " counsel" of these charlatans and hucksters with their one way calls on gold and silver.

      In the meantime, do me a favor please - I understand your indignation at Eric King for continuing this crap. I used to call him a friend at one time until he continued doing the same thing over and over again. He is of course entitled to his views. Just understand that serious traders/investors ignore him and his site. I never even bother to look at it so as not to provide the satisfaction of registering pageviews for them over there. Why should anyone who is a serious student of the markets visit it? after all, one already knows the kind of foolishness that they are going to find there. That being said, try to minimize the use of that sort of vulgarity here please.

      Thanks for cooperating.

    2. This comment has been removed by the author.

    3. Sorry Dan. I will cooperate. :-)

    4. Dan, I believe that there is some merit in continuing to read e.g. KWN, if only to avoid falling into the same trap by developing a "I hear only what I want to hear" mindset

      I do not believe that the writers who contribute to KWN are necessarily idiots; however, they are frequently less-than-well-informed, often misguided and illogical in the conclusions they draw, and sometimes downright devious in their methods and motivations. (I put Mike Maloney, Celente and von Greyerz firmly in the latter category)

      I do not feel the need to be "right" or vindicated in my views and expectations: I DO, however, feel the need to be confident that I have conducted all the diligent research and analysis available to me at any point in time, and if that requires me to fight the gag reflex whilst visiting "the Dark Side", then that is a price I am willing to pay (unlike e.g. $17.85 for Silver)

      That having been said, I have long since given up reading Harvey Organ, Turd Ferguson, Koos Jansen or any of the Silverdoctors nonsense, as I do not believe that these authors have any substantial experience or professional credentials in wholesale financial markets, and are just narcissistic chancers getting high on the attention they are able to briefly attract

    5. All the contributors there have something to sell. Its a platform to advertise their business. Period.

      Dan , you just convinced me to never ever go to that site again. Not only did you teach me about markets, you have liberated me from the worst gulty pleasure I have encountered.

      God bless!

  15. Has anyone seen this? http://journal-neo.org/2014/09/18/us-officials-demanded-a-30-billion-dollars-bribe/

  16. This Ing says we have a triple bottom and then goes on to say

    " i THINK its the worst case. " Really ? You THINK ?

    Who cares what you think

  17. This is exactly why we do indeed have a risk of further collapse / capitulation.
    Masses have been taught once again that 1180 was an unbreakable support.
    If it breaks, panic will ensue, and stop losses will be hit.
    As a short (or a "shark" for the sheep bulls), I can smell blood here. Better short near the ma20 going downwards than when prices will hit 1180, because we'll be quite far from it. ma20 is a nice resistance protecting the shorts in terms of risk / stop losses.
    Because it is still quite far from 1180, I'd be quite surprised if we broke through 1180 immediately, should we hit them.
    But let gold remain in the near 1200 long enough, with an ma20 coming closer and closer to 1180 and you'll have a real chance to break through this major support.

  18. Since the timing wasn’t quite right on $1180…not the right year I suppose, I thought Martin made himself quite ( or perhaps somewhat) clear that the yellow metal would bottom somewhere around $950 or possible as low as $870 or so in 2015 . His site even stated that the earliest time frame for a bottom would be in Jan/ Feb 2015.

    AND SO…What does Mr. Spellcheck mean when he says, “The gold report has the forecast for the turn. I will NOT state it on this blog as a matter of principle.” ???

    I guess I got “sucked” into his blog after the Birthday General mentioned Martin was his nemesis.

    Martin’s 2032 / 2033 date forecast has my attention because of it being 2 days after Christ’s death…… if it is really now 2014…I wonder because of the Gregorian calendar we are using.

    I apologize for throwing this date issue in here, but along with Martin’s attempt to understand the past, it is a reason that draws me into his blog

    Shem Blue

  19. Dan, is it not appropriate to consider the extraction price for gold as a factor for determining a sustainable bottom, after this rout it has experienced? This price has been put at roughly $1100 to $1200 per ounce. Presumably, if it went much below this mines would have to close or be suspended, reducing supply, and thereby underpinning the price - which does not necessarily mean, of course, the market cannot overshoot for a while.

    Such being the case, we should not be too far from this proverbial bottom, though as you say it does not mean gold will suddenly rise dramatically. That may be brought about by a rise in price inflation leading to real interest rates becoming negative, or more negative than they are already, allowing for the fact that inflation is probably misreported.

    One thing I do not understand is if the economy is indeed recovering the Fed is so coy about even mentioning an interest rate rise. They seem to be really afraid of something that they understand a good deal better than we do. Clearly, such a mention might hit the stock market ( and the gold market), but why should they obsess about that when it is already so high, and when actually the corrective effect might be very salutary. Surely, there other even more important factors indicative of recovery which are more sustainable than just the level of the market? Or is the belief factor by the public - easily measured by the S&P - an essential psychological influence for this recovery to actually take place, and if this belief was damaged the process of a successful outcome might unravel?

    1. Peter Dykes;

      I have read various estimates of the cost of production for gold. I am sure it varies widely from miner to miner. Some mines are richer with the metal easier to extract and cheaper to extract than others.

      I am mainly a commodity futures guy so I do not pay all that much attention to miners for that matter as I do not have the time to research those items but I am sure it would be a worthwhile study for someone with the time and inclination to do so.

      I am sure it would help one TRY to ascertain where a bottom in the price might eventually form but doing so is risky because while supply might fall, what happens if DEMAND also falls? What happens if DEMAND falls faster than the supply falls? Answer, the price goes even lower.

      In other words, I am going to stick to the charts and see if I can read where such an event might be. As you noted, even if a bottom was formed, it does not mean the metal could rise in some sort of sudden bull market. It could remain mired in a sideways trade going nowhere for many years. I honestly don't know.

      Anyway, we are all going to learn the outcome of this grand experiment by the Fed and the other assorted Central banks, not to mention the Chinese government's stimulus programs.

      My main contention in all of this mine field of dogmatic assertions, reckless predictions, bold ( and shockingly wrong ) claims, has been NO ONE KNOWS how this is going to all play out because NO ONE has even seen a situation quite like this in our lifetime.

      That is why, quite frankly, I am sick and disgusted with these self-appointed "experts" who rashly assure their sycophantic followers that they know the answer to everything.

    2. Good question and honest answer. It would be a good post.


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