"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


Wednesday, September 3, 2014

Trader Dan's Grain Index at 50 Month Low

Not much to add to the chart, which is essentially a composite of some of the grain markets. This is going to help with any inflation pressures on the food front. We still have some high-priced beef and pork ( at the retail level) to deal with but those prices will be coming down in the next few weeks.

Along this line, check out the latest on the TIPS Spread and the Gold Price. It hit a 5 month low today!

As mentioned many times here recently, the market is taking the view that inflationary pressures in the broader economy are not a serious concern. More headwinds for gold which is higher today due to disappointment in an earlier-announced cease fire in the Ukraine which turned out to be merely an outline for a cease-fire and not the real deal.

One last quick comment: Any faltering of demand out of Asia ( India/China) will most assuredly allow gold to test support near $1240. India tends to buy ahead of its major festival but one wonders if that will be enough to offset declining interest in the metal elsewhere.

Western-oriented investment demand continues to be limp judging by the ETF, GLD. I narrowed the usual chart I have been posting to the start of 2013 so that you can see for yourself the lackluster demand for the metal. While some want to assert a bullish case for gold based on the lack of heavy liquidation in this fund that we have seen in the past, the problem is that there is nothing on the immediate horizon to replace that lost interest on the buy side.


  1. the AUD/USD kinda like crude oil ..Governor Stevens reluctance to add any more to his view that the AUD is too high, ironically sent the AUD higher (or so goes the story). He should have said something… the aussie back looking at the 50-day MA again.

    crude oil the volume was lower on the way back up today, but it does affirm the view that we should wait to see at least the close of this week or even next monday close(as new trends can emerge the monday after non-farm friday) to see what the biggest money is going to do coming back to work after summer vacations.

    another 'anniversary date' in stock mkt today as 9/3/1929 was the high before the '29 crash. SPX did make an all time high today and the reversal was led by AAPL (thus NDX).

    yeah seen quite a few happy campers in the meats lately:
    "Does this get old? I'm sure it doesn't for #Cattle producers! Jan #Feeders LIMIT UP!!"

    ecb decision on deck should be interesting!


  2. Good points as always Dan. As I see it, the only commods with a chance of going higher are the fats, feeders, cocoa, coffee and maybe the palladium.

    I am not smart enough to call the China/Commod cycle secular or cyclical, but that does not matter, because I do not trade monthly or yearly cycles. I do not think many people out there do either.

    The big play is bonds and I have to believe the '12 top is in. I could be wrong, but I trade against rallies and we will see what happens. I can not be excited about stks but they still look higher, so I wait for reversals and Hubert to open up the selling campaign. take care all, and use your stops

  3. There have been complaints

    apparently some avid - maybe even impatient - readers of this Blog have noticed a recent lapse in commentary on the erudite wisdom pronounced by KWN. Merely an oversight, I assure you, and normal service will be resumed as soon as my daytime job allows time for further nonsense. In the meantime, please console yourselves with the following historical anecdote (or in the alternative switch over to Jesse, where you will find references to Braveheart - considered by some to be motivational if you wish to be hung, drawn & quartered in the vain pursuit of a lost cause such as Goldbuggery)

    "It began in a bakery on Pudding Lane, which was on the East End (between London Bridge and the Tower). The fire raged into the shop (or shoppe) next door which sold ship's goods, especially tar and turpentine. That building not only caught fire, it exploded raining flaming tar down on the wooden buildings in the neighborhood.

    At first the authorities dismissed it as a local blaze. The wind had other ideas, however. It whipped up in strong gusts and soon the flames were spreading across the city. By mid-morning the next day much of the city was on fire and much of the populace had taken to boats and barges on the Thames.

    The king called for a team of Navy gun experts to blow up blocks of buildings to form a firebreak. Luckily, the strategy worked and after raging three days, the fire burned itself out. The devastation, however, was huge. Nearly 500 acres of the city was nothing more than ashes. An estimated 15,000 homes and nearly 100 churches were fully destroyed leaving 100,000 homeless. Amazingly, the human death toll was set at 10.

    Under the rubric of “It's an ill wind that blows no good” the disaster was, in fact, a blessing in disguise. The year before, nearly 100,000 Londoners had died of the Plague. A new outbreak had been feared but the fire destroyed the rat hovels where the plague-bearing fleas had prospered. After the Great Fire, the Plague virtually disappeared. No one realized it at the time but the fire saved the city.

    And the moral of the story is: : Keep Stackin'


  4. Technically, I see Gold slightly oversold here (within a down channel from around 10th July): there is scope for a recovery to just below 1290, with the immediate downside apparently constrained to 1250 and below that the previous lows around 1244 in early June)

    If May-Jun weakness and Jun - Jul strength are interpreted as aberrations, then the regressed trendline from the March high is only slightly negative and again suggests an equilibrium price of around 1290

    What I am trying to say is that this might represent a buying opportunity for the brave, but their is probably less than $30 to be had

    1. I believe both gold and silver are trading below the production cost of most miners. It doesn't really matter what charts say. What matters is that if you can buy the metals at or below production cost, you will make a nice return at some point in the not too distant future. It isn't more complicated than that.

    2. Megaprophet;

      If you don't care what the charts say, you are at the wrong web site.
      This is a trading oriented web site; not a place to sing to the gold bug choir.

    3. I didn't realize that production costs was a constant number.

    4. Plus what do you make of stocks above ground? They are the large quantity determining price. I don't think production costs have more than a marginal effect on gold prices, especially "short term"

  5. Upcoming tradeable events for Gold:

    9/05/2014: Non-farm payrolls
    9/16/2014 FOMC meeting
    9/17/2014: FOMC meeting

  6. Megaprophet

    Gold - and especially Silver - production is of marginal consequence to the price-dynamics, as above-ground stocks totally dwarf annual new supply. Added to this most Silver is extracted as a waste product from other mineral refining processes, and the conclusion is that the marginal production cost is irrelevant over any relevant trading or investment horizon

    1. You mean to say if most of the big gold mines went on care and maint., that it would be business as usual?

    2. is there any indication that they are likely to do so? They didn't shut up shop the last time Gold traded at 1269, nor at 1190, nor indeed before the 2009 - 11 bubble period

      we can all postulate imaginary extreme scenarios, but we can't live our lives day to day as if The End Is Nigh! - in truth, many of the Gold producers will either have hedged production forward several years, or will be operating on a "sunk cost" basis - at worst sub-decade swings in the Gold price will impact future exploration and development decisions, rather than ongoing operations

  7. NB article on Zerohedge about the Basel III Liquidity Coverage Ratio (LCR) which implies that US banks will require $100 billion in additional High Quality Liquid Assets (HQLA) - i.e. T Bonds, Notes and Bills

  8. Dan- thanks for the charts today- quite eye opening to say the least. Would you mind elaborating on the reason why beef and hogs are expected to come down in price in the next few weeks? Live cattle and lean hogs have been on a rip higher the last couple weeks after the major sell off the 3 weeks before (for cattle). The price charts aren't showing much in the way of lower prices at least in the front month and price structure for cattle is pretty flat through next spring. The front month in hogs is higher though. Thanks

  9. Grr...I'm probably playing too tight.
    Well, I'm not monitoring screens, so I can't adjust real time.
    - Short DAX 9690 missed by 7 points :( , put there estimating once more the upper bollinger band on the daily time unit, just that simple, I'd be out now already at 9600. This is of course not a right / professional way to proceed. The professional way is to monitor prices, and when they get close to the area you are monitoring, you watch the smaller time units and wait for a confirmation, then act quickly as a contrarian, playing the resistance of the bollinger band. I don't have that luxury, so it's more a feeling, and in the present case, doesn't get executed, sometimes get executed and triggers a .stop loss. But well, it's not my full time job.
    - Short SP500 at 2015, missed by 2 points :(

    Eur Usd : I have only 1/3 of my position left. The MACD 9 20 7 daily is bouncing on its propagation axis if you watch a chart with 1000 candles history. Cdur is going up. So this should be the time for Eur Usd to make a bit of a rallye upwards. I'll wait for Eur Usd near 1.3330 in order to sell back my positions to full short position. Sorry for my english, I'm very tired today.

  10. Copper.

    There is a horizontal support area at 305, and it will meet both a median of downwards pitchfork and the inf bollinger band of the weekly time unit.
    There is no particular reason that we will, but if copper collapses within 2 or 3 days towards 305, I'll wait for it with a buy order. Once more because there is a stop loss nearby under the weekly bollinger band and because it is likely a support area. Best would be to monitor it live on the faster time units if I have the opportunity.


    Everything under 1278 (pullback towards ex support of the lows, daily time unit, which now became a resistance) is bearish, especially under 1275 top (ligne de poussée, japanese candlecharts, prices can't go above the middle of the previous red marubozu, sign of weakness), and should allow a test of the Inf Bollinger Band on the weekly time unit near 1250, which I expect to hold, as it horizontal. Therefore I'm getting rid of another 1/3 of my short if we reach 1252.

  11. The Remarkable Chart The Zhang-family Money Is Watching Right Now


    1. Is it just bumping along the bottom or will it break through to new lows given the trends. I fear a breakdown.
      Even more so after Draghi's announcement of QE in Europe by buying bonds and more negative negative rates.

  12. Dollar bears like GATA's Bill Murphy are getting carried out on stretchers this morning.

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