"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

Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET



Friday, October 31, 2014

HUI / Gold Ratio hits lowest level ever recorded (UPDATED with Gold Chart)

I have been detailing this ratio chart quick often of late as I am of the opinion that the gold shares still lead the price of the metal. My concern for the outright price of gold has been noted as this plunging ratio has been a very good indicator for the future direction of the gold price thus far.

Much is made by the same culprits as usual about big sell orders on the Comex, takedown of this, takedown of that, the usual, blah, blah and more blah, as an attempt to buttress the notion that this fall in the price of gold has been orchestrated by the powers that be to discredit the metal.

The problem with this theory in this environment is that the MINING SHARES have been LEADING the metal lower. Gold is merely following what the miners have been very effectively signaling now for some time since this ratio began declining.

I cannot tell you how disconcerting it is to read the same discredited individuals ( who will not do us all a favor and simply go away) pedaling yet another "special insider claim" that they are privy to the origin of the sellers that "have hit gold with big sell orders eating through all the bids". What else is to be expected when large speculators are entering a market on the sell side or bailing out from off the long side, as their positions grow increasingly underwater? Tiny offers? Small lot sell orders? That is not the nature of today's computer-driven markets and anyone who trades for a living knows this quite well.

Those who continually attempt to make some sort of big deal about big sell orders as  IF they are coming from the powers that be are nothing but pompous windbags spouting hot air that deludes only the unsuspecting and na├»ve.

Also, are we to assume that some nefarious evil agent has been working over the share of each and every mining company PRIOR to then going in and "taking down the gold price"? If the mining shares lead the way down in gold, then to be consistent with the latest gold perma-bull spin, someone would, by necessity, have had to first orchestrate a takedown of the mining companies that comprise all of the gold stock indices, not to mention have been selling all of that gold that has been withdrawn from GLD.

Here is the simple truth - the Dollar has been surging against its competitors; Central Banks have signaled their intention to either keep interest rates low or to provide stimulus or both; and commodity prices in general are falling. In that environment, one in which inflation is not a concern, stocks remain the GO TO asset class. Until that changes, gold is not going to attract sufficient capital flows from serious money managers and hedge funds to keep it levitated. Since the path of least resistance in the metal is therefore lower, that is exactly where it is going. There is no mystery whatsoever to any of this nor is there any conspiracy to force the price lower. Specs simply are not interested in an asset that pays no yield and which requires an overall economic environment in which its price is more likely to head higher.

Along this line, take a look at the HUI/Gold ratio chart once again. the only reason I note it once more is because something historic occurred with it today; it hit the lowest recorded level in the history of the HUI.




Again, this is HISTORIC. As such it signals either more losses lie ahead for gold or an abrupt turnaround for the mining shares. Since both the HUI and especially the GDXJ closed near their weekly lows, that does not look too likely at the moment.

In closing, let me say this... gold's downside breach of $1180 has as much technical significance as its breach of major chart support near the $1530-$1525 level in April of 2013. That too was a TRIPLE BOTTOM that failed.


Note that gold spent 18-19 months moving sideways in a broad range between roughly $1800 on the top and $1530-$1525 on the bottom. When it broke down below that range at the TRIPLE BOTTOM it proceeded to fall another $345 before bottoming out and forming the base of a new 16-17 month long sideways trade above what proved to be another TRIPLE BOTTOM at $1180 that failed today.

The question now becomes will gold do what the pattern calls for, namely eventually leg down somewhere between $300 and $345 before bottoming and carving out yet another base? That could put the metal down as far as $835 - $880 before reaching a new bottom once more.

Of course that seems inconceivable to many but back when gold was trading in the range between $1800 and $1525, it seemed inconceivable at that time that it could ever fall as low as below the $1200 level!

Please note that this is not a prediction; it is merely an observation based upon an analysis of former price action which extrapolates POTENTIAL. Much of course depends on the overall direction of the US economy and whether or not Central Bank activity proves to be insufficient to deal with the deflationary headwinds buffeting it.

One thing that inclines me to not rule out a move this low is that HUI to Gold ratio charted and commented upon above. That is so far off the mean that some sort of reversion seems as if it is necessary to correct it and bring it back more within the norm. As stated before, it can do so either by the mining shares gaining on the price of gold or the price of gold falling faster than the overall price of the shares.

One last look at the LONG TERM CHART shows some Fibonacci retracement levels sketched in to provide some shorter term targets if the selling intensifies.




The downside is now open first to near the $1150 level. Failure there targets that $1100-$1090 level.....

195 comments:

  1. I just got into an debate with a goldbug today who kept saying gold was still in a very impressive bull market. He says, "well, it is up ~400% since 1999 and up 800% since 1971". Then he says "the last 3 years were just a pullback" ....LOL. I gave up and told him to enjoy trying to catch all of those falling knives and I hope he can keep his fingers ...LOL. This is no doubt a religion to these people.

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    1. When you look at the monthly chart Dan posted, what do you see ...2 years out ...7 years out?

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    2. it's actually irrelevant, because what happens NEXT is far more important than what has gone before; of course, nobody knows, but we are not entirely at the mercy of the Gods in all of this - as Dan points out, ratio analysis of the relationships bertween different market sectors/indices, momentum and MA indicators, and Mk 1 Eyeballs applied to the charts all give a better-than-evens indication that the next movement is unlikely to be rabidly upwards

      Risk Management is largely about applying ex-ante observations to forecast ex-post outcomes, and it is typical to assign an a priori (supposed) probability to each outcome. Of course, not only is this based at best on informed subjectity, but also typically results in each potential future path having less than 50% probability

      As an example, IMHO we currently have around a 20% chance of a total catastrophic collapse, 40% chance of further weakness, 30% chance of entering another horizontal band and only a 10% chance of the market rising to any appreciable degree. On balance, therefore, I dont think ANY of those things is going to happen.....

      It is of course FAR more difficult to predict How Far or When: Fibonnaci levels and (if you use them) pitchforks and Bollingers may give some tolerances / targets, but unless you are an obsessive Fibonnacist or a compulsive Gann fundametalist (emphasis on "mental") then the best you can reasonably do in terms of timing is to look for e.g. Quarter Days, Witching Hours, Expiry Dates, FOMC meetings and other scheduled events, because other than that even supposed cycles carry a significant degree of noise in the time component.

      Frankly, I am not yet convinced that the Close we saw yesterday actually ruptured the previous bottom; there is no reason for encouragement, but I am not at the wrist-slitting stage quite yet. If we fall to 1150 then all bets are off and I thing 1000 is a real prossibility before year end. On the up side, before we can get to Da Moon we will need to recover 1200 first, and then 1300 (at which point I may wake up) but it will take 1500 before anyone can realistically start braying about a Bull Market

      Silver? walk away, and if you can't walk, run. I see single figures before year end, and will need to see at least $22 before I am willing to believe that this market has pulled out of its nosedive

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    3. Here is an interesting exercise. Plot gold versus CPI and look at a 100 year chart. What you will see is that the gold/CPI has gone literally straight up like a space needle fro 1999 to 2011. The historical average over hundreds of years is a Gold/CPI factor of 2 (units of 100). From 1999 to 2011, this factor rose from around 2.0 to near 9.0. Now, as Ophelia says, can anyone deduce what's likely to occur next? Is this factor likely to keep rising all the way to 20.0? Really, is it any surprise that gold has been falling over the last few years?

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    4. Ophelia...great post. Can't disagree with your reasoning
      My guess would be that we straddle $1000 horizontally for awhile.
      I'm guessing that big round number will last long enough to keep some people onboard or to sell off at.

      Unless some dire economic situation (Japan implosion) or political situation (war/oil supply disruption) occurs I think we're well on are way to experiencing possibly a decade of bearishness after these last 3 1/2 years and the deflationary or stagflationary outlook I see in front of us.

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    5. @ DarkPH -- I completely agree with your assessment. There is actually a commodity cycle going back 200 years -- with rising and falling prices that fit the pattern you just described. Commodity peaks and troughs tend to occur every 20 to 30 years. So, a new bull run starting in 10 to 15 years would again fit this picture exactly.

      Delete
    6. "... we're well on OUR way..."

      Couldn't let a flagrant typo like that go by {:-p

      Delete
  2. Hands down the most vicious bear market ever. Both in terms of percentage drop and duration.

    Not even close to the Nasdaq bear market in 2000 - 2003.

    Not even close to the NYSE bear market in 2008 - 2009.

    Yet the Charlatans at KWN kept saying "buy, buy, buy" all the way down, for nearly 3 years.

    Even Cramer was quick to point out that he was wrong when his "must own" tech darlings crashed out. Didn't take him long to admit he had made a severe error.

    Yet just to show how vicious this bear market can get, it still isn't a steep enough drop to get the Blue Hair CIGA's to throw in the towel or the 200+ "Stackers" at Zero Hedge to give it up.

    Now that gold has broken below $1,200, virtually every Chinese, Russian, and hedge fund that was "buying the dips" for the last 2 1/2 years is now in a losing position.

    The entire market cap of the XAU can probably be acquired with Apple or Exxon's cash reserves, but nobody is interested because there is no investment opportunity, unless a Central Bank suddenly announces their intention to back their currency with gold.

    Barring that, the new Asian bullion exchanges, the 2,276 scare-mongering articles posted at jsmineset.com, the Swiss initiative, record coin sales, etc. have made no difference whatsoever.

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    1. This comment has been removed by the author.

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    2. Mark- It's sad because a "perfect storm" set the blue hair crowd (regardless of age) up for this mess: 1) Extreme mistrust of the mainstream press during the 2008-2009 financial crisis, which affected not only equities, but the bulwark of the middle class's net worth--primary home values. 2) Stellar performance of gold & miners before & immediately after the crisis, making their performance & "anti-asset" status extremely alluring. 3) The thorough mainstreaming of internet and alternative media, bringing the touts and prophets on to the computers of those needing financial salvation.

      Delete
    3. @ Mark

      In an index like the Nasdaq, bankrupt stocks leave the index and are replaced by new ones. So there is no comparison to gold here. Gold is always the same thing

      Delete
  3. I have to replied what is your problem with physical holder of metal. I own silver bar bought with Sprott and stored outside of bank. I am currently under price wise and I do not care. My silver is real and can not go to zero. On the other hand people as yourself and other which gamble with contract are hubris. You think you are a hot shot holding the truth the real truth. God I despise gambler amazing that you never speak of thousand of naked contract sold at wears hours when no liquidity is around in order to trip stop and have commodity go down. So funny to hear that aie American trader are not interested in buying. It is the Bankster behing the naked short which is illegal in equities. Amazing silence on this. The silver and gold guru preach to buy physical dummy. And holding physical one will be rewarded eventually. In my country our money is lower at this time even do where a rich country with lots of commodity. Real job are being lost as mine are being mothballed because gambler on Wall Street are abusing contract future by selling thousand of naked shorts.meanwhile real jobs are being lost. A day of re conning is coming where trader like yourself will have a Religious moment when all of your margin will be called.

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    1. Whisper;

      feel better now that you have had your rant? I hope so because kicking the dog is unacceptable.

      As to your comments, I have written innumerable articles describing the nature of selling in the gold market, especially detailing the false claim that large selling during Asian trade is evidence that the powers that be (banksters in your words) are behind the sell off. Such statements reflect an ignorance of the nature of modern markets and of the manner in which hedge funds run prices up and down.

      As far as "dummy" is concerned, "dummy" owns physical metal for insurance but "dummy" also is smart enough to read a price chart and avoid suffering catastrophic losses like other "dummies" who listen to gold and silver guru.

      Have a nice life. The religious moment will happen when the gold cult members realize how much they have suffered financially for putting all of their eggs in one basket and heeding those who are hucksters and peddlers of deception.

      Delete
    2. The term Religious momdnt offcourse comes from Jim Sinclair the sqme person that regularly expresses his contempt with the public at large, has the nerve to post pictures of sheered sheep the "deeply enjoy their sheering" at gold bottoms, sold millions of shares before 2011 has an inherent conflict of interest as a "gold mining" ceo and has told so many lies about his company that i stopped counting.

      I think there will be an existential crisis rather then a religious experience for anyone following him.

      Delete
    3. LOL....another awesome come back by Dan!

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

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    5. Whisper. 1. How many mining jobs have been lost in the US due to the bust in mining? 2. How many jobs have been created in the tight oil boom since 2008? 3. Mass firings are the norm during busts--It will happen in Silicon Valley, too (again). Luckily, most states have decent short term unemployment support to help people while they make the transition to another job.

      Delete
    6. Has anyone ever noticed how the word or term "battle" and "the truth" seem to crop up quite a bit when defensive 'bugs start to defend their bunker mentality and outlook?

      What exactly is "the truth"?
      Is it some contrived alternative form of reality the holder of "the truth" is more comfortable with then the reality they presently face?

      It boils down to these traits....fear,vulnerability,skeptism,alarmism, opposition, defiance and a sense of persecution. There's always some type of invisible hand that is oppressing, harrassing, manipulating, lying, decieving etc. these folks to the point that these days I'm reading more people utter..."I'm not even sure what's real or reality is anymore."

      That's a clue they're so far down a rabbit hole of their own making (with lots of help from their confirmation bias buddies) that on some level they've lost touch with the thinking they probably used to engage in at some time before some siren song of gold or silver fever (and fabulous wealth) was steadily pitched to them from seemingly genuine, trustworthy sources that captured their ability to recognize they're a niche clientel/herd in someone's marketing plan.

      "The truth" is only known to themselves because many of these folks consider themselves to be far smarter then almost anyone else in society because they might have a super-inflated view of themselves and the power of "their" mind vs. others.
      Doctors, scientists, acedemics, business people.....they're all suspect of being part of some diabolical group known as "them" or TPTB etc. who are out to get "the truthers" among them.

      Everyone is wired differently due to life experiences or genetics but some folks allowed themselves to be hot-wired by some buzz-word shills who knew their market niche and said everything their herd wanted or needed to hear....repeatedly and no matter what, reality be damned.
      The feeling of exclusiveness (segregation) appeals to them. In fact, their Dear Leaders have a dismal, petty reaction to alternative viewpoints that challenge their own within their small closed society.

      Heck, they'll just make up a new one that appeals to them that feels better. Problem solved.

      Delete
    7. @DPH Trader Dan has alluded to the cult mentality of the goldbugs-to add to this, "most" cult leaders have Narcissistic Personality Disorder (DSM5) -- characterized by:
      -Has a grandiose sense of self-importance (special access to power brokers of the world, called upon by Paul Volker..)
      -Is preoccupied with fantasies of unlimited success ($50,000 gold)
      -Believes that he or she is “special” (I know what gold will do…)
      -Requires excessive admiration (hence blog)
      -Is exploitative of others, e.g., takes advantage of others to achieve his or her own ends (invest in my company, fund, etc)
      -Lacks empathy (unwillingness to admit failure--"Gold is in a bull market!)
      -Does not take responsibility for actions (Cartel whacked gold this AM!)

      Delete
    8. Whisper, have you considered applying for the open editorial position at Mr. Spellcheck's site?

      Delete
  4. Quick note on the latest triple bottom: The little mini-bottom in June appears to be the 3rd bottom, not the right-most arrow on Dan's chart. In fact, if we use the June dip the entire triple bottom appears to be a failed inverse head-and-shoulders pattern (with January as the "head"). Also, since July of last year there appears to be a quadruple top which looks like a smaller version of the 2011-13 quadruple top. So yeah, it looks like it's on the precipice of a few hundred $$ or so of downside.

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  5. To try to complement what Dan has been writing.

    1) Gold bugs are NOT traders. They are maybe not members of a cult, just normal people. And normal people don't know how to manage their assets. They are intuitively making the worst decisions, especially two of them, which I'm sure everyone knows here :

    a) Averaging down. "It's lower prices, let's buy more, it's an even better price than before...". Total blunder. Totally widespread among normal people.

    b) Sticking on their losses. "As long as I don't sell, I didn't really lose money"!! Come on, you all know about that one, too. So they stick on their gold, and they will stick on it all the way down.

    So, to all those people, I have only one chart to show.

    http://i57.tinypic.com/vxlvlw.jpg

    If I want to be "pessimistic" about gold, I'm telling you that the potential is 750 $.
    It is the retracement 100% of last upwards move.
    It is indeed an important horizontal support.
    More importantly, look what happened when we bounced against the red resistance at 1800 $. We lost 620 $ down to 1180 $ .
    Well, you can report that move from the last time we hit the red resistance.
    That time gold was at 1350 $. So the target is 730 $.
    Yeah, exactly the same area.

    Suit yourselves, and watch the boat sink.
    At least, if you can't help keeping all your gold because of reason 2), don't add up to the mess by buying more and accumulating. This would be pure madness.
    There is no need to buy gold as long as we remain in the red downwards channel.

    http://i57.tinypic.com/vxlvlw.jpg

    ReplyDelete
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    1. of course there are supports on the way down, as the inf bollinger band on the quarterly time unit, which meets also another fibonacci ratio level a little above 1000 $.
      But hey...that's still 20% down from here.
      What's the hurry to buy now?

      Delete
    2. @HDH - it's a tough lesson because the investing public is trained to think that the market has value like any other good and so 'going on sale' is a good thing (Not sure if it was Peter Lynch or another pop investment figure where I first heard this) and that 'you can't time the market' (random walk down wall street, etc).

      Delete
    3. Nice charts Hubert; much appreciated. I will add my 2 cents here as I am not exactly politically correct and am proud to state such. Most gold bugs are looking to lose. They just do not realize it.

      Delete
  6. lol Marting Armstrong is only telling us now that the market sent a bullish signal.
    It gave the signal 2 weeks ago with the hammer on the SP500 and Dow.
    Especially, on SP, the rules are that artificially the opening price is fixed at the closing price of the previous day. But actually the market opened with a gap much lower, creating indeed a quite bullish hammer at the end of the week.

    I'm excluding any fundamental from my statement here, but fundamentals may take a role, given the long term time unit involved, but the breaking of the "tendance en ligne" upwards support did lead to a correction further to new historical highs, as in the theory. Now, the theory says this is the ultimate upwards move before a real big correction.
    So I'll follow the theory, and ignore the fundamentals, QE, Fed and noise.
    I might be wrong, because money keeps flooding towards US stocks from the rest of the world. Look at DAX and CAC performances. Did they make it towards their previous highs? Nope. Dax was at 10.000. Now a mere 9300.
    In fact I'm going to short Dax in the 9400 area if we have an opening gap on monday. I think it won't sustain this level before a correction.

    The upwards resistance of SP500 of the long term time unit is at 2050. I will monitor 2040-2050 if we reach it. SP500 may even correct from this level 2020. The macd reached its propagation axis, so it could be a level to correct, and form a double top. But given the shape of the weekly candle, it may quite well push another 30 points.
    So let"s see together if the tendance en ligne theory is correct until the end, which would involve an imminent strong correction, with lower prices than 1820 on SP500, or if this time is different and the world keeps hiding in the US stock markets for another 1000 points as Armstrong seems to suggest.

    ReplyDelete
  7. Gentlemen, I always enjoyed Dan articles as they are very balanced and informative. Thank you Dan for all your effort and contributions. I benefited a lot from your articles. I also would like to share with all of your readers and yourself a huge web app I designed which is free on the net at www.yamasuta.com. Yamasuta is a robot as you said we are in the computer age of trading. It is a robot that analyses all public companies and currencies in 33 countries with 57 exchanges. It does so everyday after market close. I would all of you to try it and give it a run for the next 6 months to see how it works and compare it with your strategy.
    Kind Regards and good luck to all.

    ReplyDelete
  8. Hi Dr. Basel,

    Could I use yamasuta.com to analyze gold and silver as well?
    Thanks.
    RB

    ReplyDelete
    Replies
    1. Hi Basel,

      Are you by any chance related to Basil Fawlty?

      Delete
  9. Thanks Dan! Considering TFmetals, Kingworldnews, et al., seem to be clueless in terms of lower range 'potential' targets, your commentary is a breath of fresh air.

    ReplyDelete
  10. Seems like a good time to reiterate my view of the HUI/Gold Ratio.

    http://traderdannorcini.blogspot.com/2014/10/safe-haven-day-again.html?showComment=1412734691190#c6597331286819474355

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    1. @Eric - Good to be reminded. Perhaps the only thing to add to your view of the miners is that the introduction of DUST & NUGT in 2010/2011 has changed the game somewhat in that late day rebalancing of leveraged ETFs moves price & increases volatility of underlying stocks. Citation below:

      http://cbt2.nsuok.edu/kwok/conference/submissions/swfa2013_submission_134.pdf

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

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  12. “My Dear Extended Family,”

    “Gold is down because the dollar is up and because an important Swiss vote is pending that could go quite pro gold.”

    And…”Nothing has changed”

    Yep…

    And we have another Non Farm Payroll jobs report coming this Friday November 7th too.

    Since “nothing has changed” will its release be lukewarm or the other towards the metals?

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  13. One can distil the question of gold's further decline or rise to one factor: the dollar. As Greenspan recently said, gold is not so much a commodity as a currency, and will take its cues from the dollar's actions. Greenspan also said that the US economy faces a state of 'turmoil', and that he preferred to use that word rather than 'crisis', but this is a question of semantics, and the very fact he mentioned crisis is rather ominous. He is certainly not a member of the happy clapper brigade. He further stated that gold will rise in price, but when asked by how much, he answered in a Greenspanian way by saying only 'measurably'.

    So then, what is the dollar going to do? Rather a complex question. Will the Fed permit it to go on rising against other currencies with all the attendant disadvantages that might imply, or will it allow other currencies to decline in order to boost their economies, or perhaps it is powerless and can do nothing? This last is unlikely one might think, so that leaves the first two alternatives, and to crysallalize the matter further, the leading question might well be ' what is their toleration level for the dollar's rise?'

    To my mind it is entirely reasonable to suggest that the dollar will go on appreciating for some time, thereby dragging down gold in US dollar terms, but I definitely think there is a limit of toleration, and a cut off point, and that will determine the price of gold.

    Oddly enough, if you believe that the Fed can control the U.S. dollar with the various tools it has at its disposal, then you probably also agree that they can control the price of gold, or to put it another way, that they can and do, manipulate the gold price vicariously.



    ReplyDelete
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    1. Peter, the Panderer to Power, Easy Al Greenspan, has been irrelevant for quite some time and him being quoted by the worthless msm only reinforces my claim. Send him a new case of waterproof bibs that he can share with cheerleader eric king and the cast of slime, polluting the blogosphere.

      Delete
    2. The USD is doing what gold did in sept 2011. Look out below

      Delete
  14. Can we see your 3 year monthly Physical market chart?
    can you please include it with your arguement.
    The gold market doesn't only Involve computers and algorithms.

    ReplyDelete
    Replies
    1. PLEASE stop with the nonsense ignorant memes... that is exactly what the people on this blog are critical of. The price of physical gold and paper gold are the same. still...

      http://kiddynamitesworld.com/paper-and-physical-gold-prices-are-not-decoupling-yet/

      and remember - every charlatan shill shouting RECORD PHYSICAL DEMAND should also be citing RECORD PHYSICAL SUPPLY... but that doesn't fit the story they're selling. oops - time to re-up that subscription!

      Delete
    2. When Dan uses GLD as a physical market chart
      You all thank him and say thanks for the great info.

      Again using GLD as a physical market chart is wrong.

      Delete
    3. PP....do you believe there is physical gold in GLD or are the vaults empty?

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    4. Yes I do.
      Go to any bullion dealer and ask them instead of staring at a computer screen.
      The price goes down while premiums are going up.
      Can you please explain this ??

      Delete
    5. Here's a good one....

      "I've mentioned repeatedly just this week, the fiat-conversion price of precious metal may be going down but your personal stack of physical metal has never been more valuable."

      tfmetasreport.com

      Sooo...if the price of metals (paper priced btw) were to skyrocket then fiat-conversion price STILL wouldn't matter?

      The comforting, handholding nature of some authors online comments are an attempt at PM grief counseling at this point.s

      What will they say at $1100-$1000 Au or $14-$12 Ag?

      Delete
    6. PP...I asked, do you believe their is real gold that GLD holds in their vaults?

      Myself going to a bullion dealer has nothing to do with GLD. There is no shortage of phyz metals at the retail level.
      How would a random bullion dealer be able to ascertain and prove the existence (or not) of phyz gold in GLD?
      I can't explain your premium reference because I'm not sure what you're implying by bringing it up.

      Are you saying it implies low to no gold in GLD? It appears you stated you believe there is phyz gold in GLD but your question seems to imply their isn't or there's a shortage.

      Delete
    7. LOL..... @DPH -- LOL.... good slam of Muppet the Puppet.

      Delete
    8. retail coin dealers charge higher markups BECAUSE THEY CAN... that's actually, the ENTIRE point. - just look at the argument you are making. YOU are the victim.

      hint: any item where the pricing gets *cheaper* the more you buy (like gold and silver!) is not experiencing a shortage.

      you can get all the gold and silver you want in bulk at the published "paper" price... don't confused retail vs wholesale with paper vs physical.

      Delete
  15. Wait Wait Wait...

    While Eric Sprott was being interviewed by Mr King giving his quarterly sermon, he was doing this with his other hand ?!

    https://www.canadianinsider.com/node/7?ticker=PHY

    Despicable

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    1. Loren;

      I want to commend you for bringing this to our attention. If this is indeed accurate, and it sure seems to be ( anyway we could verify this), it underscores the wickedness, and I use that word carefully, of so many of these deceivers and hucksters in the precious metals world.

      Make no mistake about it - doing something of this nature - when singing the praises of the metals with your mouth and offering up predictions of soaring prices, while secretly selling out at the same time, speaks of a DEPRAVITY that is shockingly brazen. It speaks of a conscience that no longer functions. To ruin people saying something that one's actions testify that one does not believe, is WICKED.

      Some make fun of my views as a Christian ( and I never care about that) but I will tell you one thing - the Scriptures speak very plainly about deceiving others and they especially speak to those who are wealthy and defraud those who are less well off and the special judgment reserved to them from the Most High. I firmly believe that.

      This is also one of the reasons that I write what I do. People that do such things disgust me. It is one thing to sell something when one no longer wants to suffer losses. No one is begrudging that to anyone. It is altogether another thing to lie in order to trick some other sincere, but gullible, individual into buying what you want to get rid of.

      The gold cult is always up in arms about banks like Goldman Sachs profiting while doing things like selling MBS out of the their front door while shorting the actual indices that are there for them to profit on when they know the price is going to fall. Here we have the exact same thing taking place by one of the chief priests in the gold cult.

      Delete
    2. Like I said last weekend...Sprott, Sinclair and others would be foolish if they weren't shorting/selling the metals on the way down while they were talking them up the entire time.
      I stated I didn't think they were foolish but instead they were being intentionally misleading and shrewd/manipulative to their audience of groupies.

      I suppose some will say..."Hey, we're only talking $250,000+ and he's a billionaire and knows what he's doing."

      That's exactly my point. Anyone who knows me previously from The Land That Time Forgot knows I've been saying this about the big money interests out there for a long time.

      We zig, they zag.
      Simply put, the smart big money interests always front runs the smaller retail investors sentiment.

      The hucksters out there have your number...while padding theirs.

      Delete
    3. Lets give credit to

      http://incakolanews.blogspot.com/2014/11/sprott-physical-gold-trust-phys-phyu.html?m=1

      Delete
    4. DPH:

      Its not $250,000

      Its 250,000 +SHARES !!!!

      Delete
    5. Despicable indeed. Canadian Insider is pretty reliable. I understand that Dan might need to use the conditional "If" for liability sake. One thing is for sure--Sprott can read a chart.

      Delete
    6. O-M-G!
      And he's been talking it up the entire time...wow! :-0

      Loren...no one on any doomer 'bug site will ever mention what you just posted.
      This sounds like tip of the iceberg stuff because I have a hard time believing it's just a Sprott issue.

      Just imagine if you could go back and check the insider transactions of the "experts" in the PM field just before or after the May '11 silver crash or the Sept. '11 gold downturn.

      Delete
    7. I found it first at:

      http://incakolanews.blogspot.com/2014/11/sprott-physical-gold-trust-phys-phyu.html?m=1

      What this site did not mentioned is Mr Sprott's interview at KWN

      As Dan says, you have all right to sell, but definitely not while giving bullish interviews.

      Delete
    8. Seeing this, I would not be surprise if Eric King sold his 3 tons of silver, and anything gold a while back ago.

      Delete
    9. That is one of the most brazenly disgusting things I've seen in this whole sorry saga.

      Delete
    10. Just to save for posterity right here on this same thread, here is Eric Sprott at KWN, dated the very same day he dumped $2M worth of his PHY holdings.

      Note the very last comment on the post:

      "Again, I just think that owning paper assets is the worst thing that anyone can do, and they should continue to buy and own physical metals.”

      Same day, that douchebag was doing the exact opposite! I wonder if the SEC would be interested in this?

      http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/31_Billionaire_Eric_Sprott_Says_Stock_Market_Will_Crash,_Not_Gold.html

      Delete
    11. If this doesn't open up some eye's nothing will.
      There are large contingents of 'bugs online who have been brainwashed into believing that if the price of metals goes to zero that the big payday isn't too far behind.
      All they have to do is exhibit stronghands/weakminds while their PM asset goes to zero or close to it and then they'll be rewarded (with fiat btw) after the collapse is over.
      Lol...that's crazy talk!

      What other industry preaches that same line of thinking?
      The magicians guild maybe.

      Delete
    12. "There are large contingents of 'bugs online who have been brainwashed into believing that if the price of metals goes to zero that the big payday isn't too far behind."

      It has sort of an "arbeit macht frei" ring to it, doesn't it?

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

      Delete
    14. Also per SEDI:
      Sprott also sold 28,000,000 shares of Sprott Inc July 15 and August 12 2014 (Rick Rule only sold 15K shares Oct 22nd 2014).
      It's a Two buck fifty (Canadian) stock, but still...

      Delete
    15. Wouldn't it make sense to find out how many shares Sprott owns in the fund before getting all nauseous over 250k. Maybe its small potatoes, maybe it cleans him out , we don't know. Anyone can be high on a stock but still have to sell some for whatever reason.

      Delete
    16. Thank you Loren for the link. It just goes to show you that nothing really changes, just the characters. Sprott studied at Enron University, so are we surprised? Also, point in fact is that more an more rumors are circulating that indeed, not only is he not a billionaire, but could be hurtling rapidly towards a complete melt-down. Remember what Mark Twain used to say about bankruptcy, right? It starts gradually and then.....suddenly.................. Get my point? Have a good wknd.

      Delete
    17. Steve brassey;

      We old timers have been around enough to know how crooked and how corrupt some players in our financial realm can be. Ethics is perhaps the most rare of commodities when it comes to the world of finance. Some people, who have made a god of mammon and attempt to secure it at any cost, believe that success is measured by the size of their trading account or of their bank account or their net worth. In their mind, the pursuit of that end means no matter how they achieve that goal, whether by hook or by crook, the end justifies the means.

      I begrudge no one success in life from a financial perspective. However, there is a day of judgment in which all men are going to have to give an account of their life before a Judge who cannot be bought, cannot be deceived, cannot be influenced by "circumstances" etc. On that day, those who have achieved prosperity by methods which bring about hurt to others, will have much to answer for.

      There is an old saying in the Christian world in which I live that:
      "the wheels of God's mill ( His Justice) grind exceedingly slow, but they grind exceedingly fine".

      The translation means that while those who are corrupt and deceive others in order to achieve wealth for themselves may seem to escape the notice of heaven for a while, Justice will eventually come to them.

      "It is a fearful thing to fall into the hands of the living God".
      Hebrews 10:31

      The deceivers in the world of gold and silver would do well to remember this.

      Delete
  16. This is for Goldbugs Gene and Barney who are convinced that Hyper-inflation is coming soon. Specific details about QE come from Cullen Roche at Pragmatic Capitalism.

    1. If QE was indeed “money printing” or an operation to directly insert money into the private sector – then a gallon of Milk would already cost you over $500. Is this what you observe when you go to the store? Open thy eyes and observe the REAL world in which you live!
    2. The government doesn’t “print money” in the way your ZH goldtards have taught you. Most of the money in our monetary system exists because banks created it through the loan creation process. The only money the government really creates is due to the process of notes and coin creation. These forms of money, however, exist to facilitate the use of bank accounts. That is, they’re not issued directly to consumers, but rather are distributed through the banking system as bank customers need these forms of money. The government “prints” Treasury Bonds, which are securities, not money.
    3. Banks do NOT lend reserves, despite what your ZH lunatics tell you! This myth derives from the concept of the money multiplier, which we all learn in any basic econ course. It implies that banks who have $100 in reserves will then “multiply” this money 10X or whatever. This was a big cause of the many hyperinflation predictions back in 2009 after QE started and reserve balances at banks exploded due to the Fed’s balance sheet expansion. But banks don’t make lending decisions based on the quantity of reserves they hold. Banks lend to creditworthy customers who have demand for loans. If there’s no demand for loans it really doesn’t matter whether the bank wants to make loans. This is why, ultimately, multiple rounds of QE become DEFLATIONARY – because the lending industry becomes too staturated.
    4. QE is NOT money printing, NOR is it inflationary! This is the biggest myth purported by the Goldtard community – and is the NUMBER ONE playbook used by the gold marketers to get gullible folks like you to go buy gold. QE is a form of monetary policy that involves the Fed expanding its balance sheet in order to alter the composition of the private sector’s balance sheet. This means the Fed is ‘creating’ new money and buying private sector assets like MBS or T-bonds. When the Fed buys these assets it is technically “printing” new money, but it is also effectively “unprinting” the T-bond or MBS from the private sector. When people call QE “money printing” they imply that there is magically more money in the private sector which will chase more goods which will lead to higher inflation. But since QE doesn’t change the private sector’s net worth (because it’s a simple swap) the operation is actually a lot more like changing a savings account into a checking account.
    5. QE is not monetizing debt – despite what you read on the whacko ZH site. Because the USA is sovereign in the US Dollar, the government is always able to procure funds by harnessing the Primary Dealers to bid for bonds (who then on-sell the bonds mostly). Therefore, the idea that QE is monetization is a myth. Rather, QE serves as an interest rate operation that serves to lower long-term rates in a manner very similar to the way monetary policy works at the short-end of the curve.
    6. QE is NOT money printing and will not cause hyper-inflation. Many have tended to compare the USA to countries like Weimar or Zimbabwe to express their concerns. But if one actually studies historical hyperinflations you find that the causes of hyperinflations tend to be very specific events. Generally:

    A. Collapse in production.
    B. Rampant government corruption.
    C. Loss of a war.
    D. Regime change or regime collapse.
    E. Ceding of monetary sovereignty generally via a pegged currency or foreign denominated debt.

    The hyperinflation in the USA never came because none of these things actually happened. Comparing the USA to Zimbabwe or Weimar was and still is extremely ABSURD!

    ReplyDelete
    Replies
    1. With reference to point 5, when the FED conducts POMO where do the funds come from?

      Delete
    2. Eric, I was listening to Alan Greenspan interview @ the CFR, https://www.youtube.com/watch?v=XqHNF6NOpoE
      Go to the 10 minute mark where Alan states that the Fed is not printing money, it is expanding the balance sheet. He then goes on to say that this will eventually turn into printed money.
      On your general A to E causes for hyperinflation what would you say a 50% decline in use of $US for world trade do when the foreign holders of US debt want something of value for example US real
      estate?
      When the Fed buys US debt does the Treasury get input into their spending accounts to pay the bills? and where did the Fed get the money from?

      Delete
    3. @ Silverwood -- Also KEEP in mind Alan Greenspan has been telling folks for the past 6 years to buy gold. As early as last week he was telling folks to buy gold. If you are listening to him, then you are a gullible fool. He says what he's saying because he hopes the price of gold will rise.

      Delete
    4. Grumps, question is answered below

      Delete
    5. Eric, if I had to chose between Greenspan or yourself as to who is right on this matter, after 19 years as Fed chairman, I think I will have to go with Sir Alan (check).

      Delete
    6. OK Peter ... tell me EXACTLY when it is we'll get our hyper-inflation. And go right ahead and buy gold just as the old lunatic man suggests ....LOL

      Delete
  17. Hi Eric, despite your confrontational post I will try to respond to your absurd explanation of QE.

    First I gather that in your opinion QE is money printing (technically) but then it is "unprinted"..... ok

    You, Cullen, and the rest of the MMT (or is it MMR?) bunch have some important mistakes in your explanation of QE. When the USG creates (prints) a security it is spending. When the fed "unprints" a security it creates a credit (a base money unit) in a commercial bank account that becomes part of the banks reserves.

    In the current deflationary environment all this created (printed) base money is still mostly just sitting there. All one has to do is look here to see that all this freshly created (printed) money does actually exist. I have no idea if the USD will collapse in hyperinflation but I think the pumps are primed and lack your faith in the Fed to prevent it.

    ReplyDelete
    Replies
    1. Well, perhaps there is no hope for you after all. You are DEAD wrong. Feel free not to admit it, but I'd say so FAR, all of the empirical data supports the assertions outlined above. You may pray each and every single day to your God (or your devil) -- but you will not get your long desired doomsday. There is no sign of it occurring any time in the near future. People like you have been on this rant for FIVE, I repeat FIVE FREAKING YEARS!!!!!! When will you give it up!? Are you going to be a stubborn old man with the same absurd argument all the way until you draw your last breath? At some point it ought to be time for you to grow up and step free from the land of Mickey Mouse and Donald Duck.

      Delete
  18. "You are DEAD wrong. Feel free not to admit it, but I'd say so FAR, all of the empirical data supports the assertions outlined above."

    Please explain..... (and calm down)

    ReplyDelete
    Replies
    1. 1. Where is your disaster? Been calling for it 5 years – nowhere to be seen
      2. Where is your hyper-inflation? Been calling for it for 5 years, nowhere to be seen.
      3. Where is the economic collapse? Been calling for it for 5 years, nowhere to be seen
      4. Where is the stock market collapse? Been calling for it for 5 years, but nowhere to be seen.
      5. Where is the collapse of the dollar? Been calling for it for 5 years (some for 20 years), but nowhere to be seen.
      6. Japan has been doing this stuff since the late 1980s, how come they have not collapsed?
      7. How come Japan has never seen hyper-inflation?
      8. How come the Yen has not completely collapsed?
      9. Why Has Japan been more or less fighting disinflation for the past 20 years?
      10. Why is most of the world currently fighting disinflation right now – INSTEAD of hyper-inflation.

      Clearly your thesis has yet to be correct. And there is no sign of it being correct anytime SOON!

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

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    3. Other points;

      1. Cash is simply a very liquid liability of the U.S. government.
      2. Major distinction between “cash” and bills is Just the duration and amount of interest the two pay.
      3. What’s a treasury note account? It is a savings account with the government?
      4. What is the difference between your savings acct cash earning 0.1% and that t-note earning 0.2%? NOTHING except the interest rate and the duration.
      5. You can’t use your 13 week bill to pay your taxes tomorrow, but that doesn’t mean it isn’t a slightly less liquid form of the exact same thing that we all refer to as “cash”. They are both govt liabilities and assets of yours.
      6. When you own a t-note you really just traded your “cash” for a slightly less liquid form of the same exact thing.
      7. If the Fed buys those t-notes from you, they give you back your cash minus the interest rate. That’s all there is to it. No change in the money supply.
      8. No change in anything except the rate of interest you were earning.
      9. The inflationary bet on QE is associated with the idea that it is increasing new financial assets to the private sector. BUT, this is completely FALSE.
      10. The assets already existed! They are merely swapping reserves for bonds. They are giving the banks a “checking account” instead of a “savings account”
      11. What changed? Nothing. Just the duration and rate of the paper. The number of assets in the system is the exact same.
      12. The logical question that most people ask is: “where did the Fed get the money to buy the bonds?
      ******They didn’t get it from anywhere.
      ******But it is not new money being injected into the private sector. It is merely being swapped with something that was already spent into existence.
      ******Therefore, you’ll often hear that banks have new money to put to work. That’s not true. They had a 0.2% piece of paper that was already put to work and can be exchanged in markets for whatever they please.
      ******There is not “more firepower” in the market following QE. All that the Fed altered was the duration of the U.S. government’s liabilities.

      13. The point here is that from an operational perspective the Fed is not really altering the money supply.
      14. What’s the purpose of QE?
      ******QE supposedly changes the term structure of the bond market.
      ******should lower interest rates and entice borrowing, generate lending, make other assets more attractive, etc.
      ******If you sell your bonds to the Fed and receive low interest bearing cash you might want to rebalance your portfolio.

      15. However, QE doesn’t increase lending long-term.
      ******Banks are never reserve constrained. They are always capital constrained. Reserves are used for only two purposes – to settle payments in the overnight market and to meet the Fed’s reserve ratios.
      ******QE serves as an interest rate operation that serves to lower long-term rates in a manner very similar to the way monetary policy works at the short-end of the curve.
      ******But, Lending depends on individuals and corporations –who CANNOT be forced into Barrowing – and will not be lent to without illustrating credit worthiness (whose standards may change up/down over time) .

      16. If you run out and bid up risk assets (like Gold) just because you think the Fed is “printing money” then you’re making a mistake. This is exactly what folks did between 2008 & 2011 and now they’ve been proven EXACTLY DEAD WRONG!

      Comment from Ben Bernanke:

      “Now, what these reserves are essentially deposits that commercial banks hold with the Fed, so sometimes you hear the Fed is printing money, that’s not really happening, the amount of cash in circulation is not changing. What’s happening is that banks are holding more and more reserves with the Fed.”

      Delete
    4. They've been calling for all that stuff for 40 years, at least.

      They haven't gotten anything right yet.

      Delete
    5. @Eric .. EXACTLY my Freaking point! LOL.... I get a little excited ... but my point is "at what point do we stop listening to them?" At what point do these people turn away from their original thesis? I actually used to believe it all .... then in October 2012, I started asking myself: "Where is All of the Hyperinflation?" In investigating the answer, it was in there that I realized the WHOLE thing is nothing more than an elaborate hoax perpetrated by folks trying to drive a particular product. Being that I was a Libertarian minded person who believed in free market capitalism (I still do) I easily fell victim. But, my individualist (and Anti-herd following) mindset allowed me to break free and try and search for the truth. Ironically, there are so many of those out there make fun of "herd-followers", yet they are the ones being herded into buying assets like gold.

      Delete
    6. Hi Eric, First off I haven't been calling for anything the past 5 (or 40) years so i don't know wtf you are ranting about. I actually like Cullen Roche and consider him a calm, rational voice in a bizarre economic paradigm. What I took issue with is the idea that there is no new money creation (printing) taking place.

      If your point is that QE has not been inflationary, bravo. Much to the Fed's disappointment they cannot create inflation to save their ass. You are using a semantical argument when you say things like "The point here is that from an operational perspective the Fed is not really altering the money supply." Explain this chart.

      "Reserves held at the fed" are simply electronic representations of cash held at commercial banks. No different. Obviously if I withdraw cash from a bank it does not alter the money supply. No argument there.

      IMO we are just talking past each other and there is no need to booger up this good man's blog any longer. Take it easy, Gene

      Delete
    7. If I have learned one thing since the 2008 crash it is that I cannot predict the future. You will never hear me "calling for' anything or trying to put a timeframe on anything. Just trying to figure it out like everyone else.

      Delete
    8. Well, either everything the Fed does leads to inflation, or they can't create inflation to save their ass. I guess that clears that up. ;)

      Delete
    9. You continue to the miss the point. Not inflationary AND not money creation or printing! You obviously did not even read what I posted. My rant is really for the Goldbug charlatan group - which many listen to.

      Delete
    10. BTW - that link you provide is a completely meaningless chart. Used to scare folks like you into buying gold. All it is doing is showing the Open Market Operations or Large Scale Asset Purchases. Meaningless.

      Delete
    11. Gene - Over the years many like you have been quick to cite the monetary base as the direct transmission mechanism that would lead to the great hyperinflation. OK - so we all know the goldbug story – the Fed’s balance sheet explodes, the monetary base shoots higher and money starts flowing out of bank vaults like a volcanic overflow. But the monetary base has no correlation with the broader money supply. The reasoning is simple – the money multiplier is a myth. So, it doesn’t matter how many apples (reserves) the Fed puts on the shelves. It doesn’t result in more apple sales (loans). Banks are never reserve constrained. The explosion in reserves and continuing decline in loans makes this crystal clear. The Fed can continue to stuff banks with reserves and unless we see a substantive increase in lending the expansion of the monetary base will continue to be insignificant. And, in fact, as QE has gone on, lending has actually done nothing but decline as the US economy continues to de-leverage from a financial crisis brought on by too much leverage! Again, that plot is being used as nothing more than a tool for alarmism. The story here couldn’t be more self explanatory. The US M2 money supply is simply not expanding anywhere close to its historical rate. The only country where the M2 money supply is seeing any sort of substantive growth is in China – in the US it has been flat to slightly down in recent years.

      Delete
  19. Although Dan said he a technician but I see he got well mixed of FA and TA. It is a free blog so there could be 2 things Dan reluctant to discuss. Sentiment and Seasonal. Sentiment you can subscribe to sentimentrader.com to know gold now bullish or bearish in polling. Seasonal supposed bullish for gold but this time gold weaker than usual seasonal so it could go down more. I think 900$ could be a new base. I see gold never revisit the levels between $950 and 1046$.Maybe some residual shorting gold still there to be filled. My 2 cents

    ReplyDelete
  20. Dan Norcini:

    You are the very best person I have ever seen who can understand what is and has been happening in the precious metals market. You are 100% spot on. Almost everyone else writing on web sites is hot air pushing their hoped for outcome or agenda. I only wish I had known of your blog much earlier, like 3 years ago. Thank you for your unselfish and accurate work. God bless you!

    ReplyDelete
    Replies
    1. Three years ago Dan was trying to inject some sense into KWN with the lone voice of reason. By the way I notice Louise Yamada has articles there. Considering she is suggesting the possibility of $700 gold, allowing her on is a bit of an anomaly, and somewhat out of character.

      Delete
    2. Rich;

      Thank you for such incredibly kind words. I am honored by your complements.
      Since I started this website some years ago, I have tried to do one thing with it - teach people how to read the markets and to tune out the voice of everything else, especially the quacks, frauds, deceivers and flim flam hucksters that infest the world of gold and precious metals.

      If I have accomplished that, then I feel it was time well spent. Those who have ears to ear, will hear. Those who have eyes to see, will see. The rest will go on in their delusions. Sadly there is always a new batch of them to keep the hucksters going.

      Sincere best to you.... try to stay open-minded about the markets and you will be fine.

      Delete
  21. Japan's central bank starts a new money printing program just as the US ends their money printing program and gold sells off huge on the news. Makes sense as money printing is bad for gold in this new investing era apparently.

    Japan's central bank also announces they are going to buy stocks in the foreign stock markets ( and at record highs I might add ) Buy high and hope to sell higher, another sound investing approach.

    Investors seem way too clueless still to connect the dots and figure out that money printing by countries around the world can not be ended without the asset bubbles deflating. Consumers are not going to hold them up.

    Gold will do nothing until investors figure out money money printing is the end game for a currency and does not create an economic recovery.

    The illusion continues.

    ReplyDelete
    Replies
    1. Your comment makes perfect sense if you were a disillusioned ZH reader

      Delete
    2. Oh I forgot Eric, that they have created a new way of printing money now that has no consequences to currencies any more.

      Thanks for the reminder, I had better go and buy a bunch of Yen as they can print as much as they want now, no problem.

      Delete
    3. Barney, be a good boy and read my post above. Do so with an open mind.

      Delete
    4. Your post above Eric proves my theory that not much common sense exits out there any more.

      Kinda like when PE ratios did not matter any more, recall that famous talk about the Nasdaq in 2000

      Now money printing does not matter any more.

      Now you go right out and go long the Yen Eric or what ever the latest currency is they are printing trillions worth of.

      Delete
    5. OK Eric, maybe I'm dense here but the USG has an insatiable demand for cash which comes from taxes and treasuries right? So if there are not enough Joe Public and foreign appetite for the treasuries, then the Fed steps up and purchases the bonds. And where does the money come from to do that again?

      Delete
    6. Barney - enlighten everyone here and explain exactly HOW it is money printing. You obviously did not read my post.

      Delete
    7. Just use common sense Eric, you are going way too deep.

      The Fed has no money to buy assets, they have to "create" the money to buy those near 5 trillion of assets that are on their balance sheet.

      Also I never said anything about hyperinflation?

      But hyperinflation could happen if confidence is lost in a currency and investors start dumping it right?

      How is confidence lost in a currency?

      Never ending money printing and never ending rising debt.

      Not saying it is going to happen as just look at Japan, they keep holding the Yen for decades even though the debt is unpayable.

      Delete
  22. Dan, I am a bit confused. You say that the HUI/GOLD index is completely out of kilter, which it surely is, and to rectify this gold shares must go up or gold go down. Are you saying that gold could go down but not the shares? Or that gold can remain the same and gold shares go up? Or that gold can go down but shares more slowly? I doubt you are suggesting that gold can go up and the shares much faster.

    ReplyDelete
    Replies
    1. no mention of record physical buying either.
      But that doesn't pertain to traders as computers are their only information and that's all that matters.

      Delete
    2. Peter Dykes;

      Any of what you mentioned would correct the ratio and bring it back more into line with historical norms...

      Delete
    3. Mr. Paper Puppet;

      "record physical buying" - says who? and more to the point, Who cares?

      If it mattered, the price would be going up, not down. You are liked a stopped clock. You end up saying the same thing over and over and over and over again.

      We buy some physical gold over here from time to time but understand that the metal is in a bear market. Until that changes, nothing matters.

      Delete
    4. Maybe the US mint? That's who.
      Exactly the price should be going up and it's not.
      Intervention???

      Delete
  23. Eric, thanks for all you input above. So when the US needs to pay the costs of government, for example your social security check and they don't have enough money from taxes and fees or other income sources, they go to market and borrow it, correct? So when the Fed purchases this debt, as opposed to other entities who use their $'s, where did the Fed get the money from? Did you even read the book The Creature From Jekyll Island? The author calls the Fed's money creation the "mandrake mechanism".

    ReplyDelete
  24. Pulled this out of an old bookmark list. Some here might enjoy. "Take The Zero Hedge Test".

    http://nihoncassandra.blogspot.com/2013/03/take-zero-hedge-test.html

    ReplyDelete
  25. The funny thing is it is Eric 1&2 that keep mentioning Zerohedge, hyperinflation,.. mickey mouse, donald duck??

    ReplyDelete
    Replies
    1. Regarding your constant mentioning of the 'monetary base' ***** . OK - so we all know the goldtard story – the Fed’s balance sheet explodes, the monetary base shoots higher and money starts flowing out of bank vaults like a volcanic overflow - which is what you'd have us believe - right? But the monetary base has no correlation with the broader money supply. The reasoning is simple – the money multiplier is a myth. So, it doesn’t matter how many apples (reserves) the Fed puts on the shelves. It doesn’t result in more apple sales (loans). Banks are never reserve constrained. The explosion in reserves and continuing decline in loans makes this crystal clear. The Fed can continue to stuff banks with reserves and unless we see a substantive increase in lending the expansion of the monetary base will continue to be insignificant. And, in fact, as QE has gone on, lending has actually done nothing but decline as the US economy continues to de-leverage from a financial crisis brought on by too much leverage! Again, that plot is being used as nothing more than a tool for alarmism. The story here couldn’t be more self explanatory. The US M2 money supply is simply not expanding anywhere close to its historical rate. The only country where the M2 money supply is seeing any sort of substantive growth is in China – in the US it has been flat to slightly down in recent years.

      Delete
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      Delete
  26. Actually Eric O, that link is pretty damn funny!

    ReplyDelete
  27. QE has actually delayed kept HI at bay. Exponential increases of the money supply are not the cause of HI, but a symptom. It's when debt fails to perform and monetary aggs collapse to MZM that you get HI.

    When you look at it from this perspective you can see HI is really a deflationary event, a deflation of time deposits and bonds.

    These last 5 years QE has kept the bond market inflated. The QE inflation went into financial assets that have a yield such as bonds and stocks. The artificially high prices of bonds and stocks have left real yields negative which should be a fertile environment for gold, but there is an unstated objective to macroprudential policy, aka financial repression. Besides keeping real yields on debt negative, gold must be capped so as to provide no alternative to bonds. If gold is trading above 2000, then the 10Y @ 2% is a joke. Can't have that. And as Gordon Long points out highly priced stocks with low yields aren't much competition against equally low bond yields.

    As for why the miners have been falling, I think this is another phase to China's long term strategy. By 2013, it probably had it's core position in bullion established. Not done accumulating but it had its eye on future production. Hence the massive takedowns despite the Chinese put. I betcha the SWF's are gobbling up gold shares across the globe at major discounts. And what about the recent announcement by the Japanese GPIF. 25% for Jap stocks, 25% foreign stocks, 35% JGB's. What about the other 15%. I'm sure a portion will go to gold. And a portion of the 25% foreign stocks will go to gold shares.

    The engineered knockdown since 2013 was in preparation for a huge debt for equity swap and subsequent recapitalization and that's when gold's true function will be revealed.

    ReplyDelete
    Replies
    1. WOW, you have got to be kidding me. Did Aliens abduct you and provide this explanation. YIKES

      Delete
    2. Have you ever read Ben's 2002 speech "Deflation: Making Sure It Doesn't Happen." FF to the paragraphs under Fiscal Policy. This is what the BOJ is doing. Also watch this 2008 video interview of Fed Governor, Lyle Gramley, in which he refers to the nuclear option the CB's always have.

      http://bphouse.com/honest_money/2008/12/12/fed-could-mtm-its-gold-certificates/

      Delete
  28. Wow! Eric Webber has 22 posts (so far)...

    ReplyDelete
  29. GG opened down 9% on Friday, from an 18.61 close on Thursday, but managed to end the day at 18.80. That's right, GG actually ROSE 0.91% on Friday (an island reversal?). Everybody and their grandma (me included) is short here, so watch out...

    ReplyDelete
    Replies
    1. Isn't being short at this point picking up nickels? What's the risk v. reward ratio? These pups are trading below book values. You should be accumulating, not shorting. Don't you remember how this sector reverses? It'll go up 10-30% in a day. I guess that's b/c of all the nickel picker-uppers who don't know when to leave the last 20% of the trade to the next guy. Everybody thinks they'll get out at the top or cover at the bottom.

      Delete
    2. Yes, be careful here if you're shorting miners - that was kind of my point. I'm short gold - I own GLD puts. The miners typically lead, as we all know. They were signaling the break of the triple (quadruple?) bottom last week. But did the miners (especially GG) just tell us that the break of 1180 was an anomaly, triggered by the wackiness from Japan? You know, the way we frequently see equities spike above or below big trend lines for a day or two to fake everybody out. Or do we have a $100 downdraft tonight? We'll see.

      Delete
  30. Dan and Mark and Hubert; This is very important for you to know that my pool boy John Ing is finally retiring. He has a very sizable retirement plan thanks to the girls at kwn , since his scale down program from 4 years ago makes him quite comfortable. When he gets nervous he just calls on Maguire and Egon and Sprott and then just goes on his merry may, but wait, wait, let us call the donkeys at zerohedge, or max clownser, or the jesseclowncafe or whatever, and I am going to bed, a couple too many
    e

    ReplyDelete
  31. A sub 1,000 COMEX print is begging to happen. I wrote about this in my articles when gold was falling back below the 1632 bearish wedge down to the 1525 breach. That smash down was enhanced by the "conspiracy." The PTB just made sure it never went back above 1500. The traders do the rest. The damage was done for years. No need to "manipulate." In a way it was good, for the trend was accelerated.

    Looking at the monthly chart with all that 1,000 congestion from 2008 to 2010, it will have to test that cloud to see if gold can hold for the next leg up.

    The price of gold will always continue to hang on longer than the other "investments" like mining shares and silver. That is because stuff out there really is in peril, and wealthy people still look to gold as a haven. It is in the human DNA.

    As for the shares, many miners will no longer be around to see the next leg up in a couple years. Why anyone will ever buy mining shares is beyond me. Just buy the gold in physical form and hedge it somehow, depending on how much you own. When a macro trend reestablishes itself lift those hedges.

    The stories of ABX and their partnership with the UST were legion back about 10-12 years ago. From what I could tell much of it was true. The UST had transcripts of meetings posted on their website from the late 90s to 2002 discussing how to maintain treasury demand. One aspect that cropped up was how to control the gold price. Via the establishment of ETFs like GLD and SLV, they did a great job cultivating demand to drive the price up to insane heights, only to bang it down when things got dicey. All counterintuitive to those who were late to the gold party (the dumbed down patriots - listeners to the doomers like ZeroHedge and Lindsey Williams). Lindsey is a Mason and does his father's bidding.

    Does anyone on this board know who writes for ZeroHedge? I would not be surprised that it comes out from DARPA or NSA. People don't trust family, but read that trash.

    The large miner B of Ds are controlled by the globalists. The miners will go out of biz first rather than care about their shareholders.

    ReplyDelete
  32. Eph; Good thoughts; I think he is some kind of Bulgarian type whacko

    ReplyDelete
  33. They won't go out of business. Exploration budgets will be cut. Ore stockpiled. Minimal metal sold to meet expenses.Hibernation at worst for a little while. Eastern players will come out of the woodwork with financing for special placement in the capital structure be it preferred shares, seats on the board, gold-linked notes, and royalty streams. Besides the Shanghai Gold Exchage International Board contracts have to be settled daily with real physical metal. The days of Comex ass pounding will soon be over. The miners will always have a real bid over at the SGE. The day is coming when the PBoC will reveal its gold reserves and that's not counting what the population or the SWF's are holding. The price of gold will be determined over there. The Comex will devolve into an options market.

    ReplyDelete
    Replies
    1. Most miners are still severely overleveraged. The large ones will keep the lights on. As prices continue to ebb that leverage will weigh on many of them. It is a race to deleverage faster than the collapse in prices. Many will lose. The remaining ones will learn to lower their costs of production to 750-800.

      ZH talks about cost of production is 1100 or 1200. But most have not been around long enough to recall that the cost of production was about 300-400 as recent as 2004-2005. Like all wild manias, this, too, will revert back to long term averages.

      Any miner who cannot manage to revert back will no longer be around. Just go down your list and check off the possible candidates.

      It is very sad to see so many still holding to the notion of this nascent rebound. I submit that China sovereign govt may have indeed been on the bid at 1180. But they, too, relent and follow it down. All the stuff you write about is already in the price. India's demand was very fierce at 250-300 gold, yet the price was low.

      Eastern demand has come out of the woodwork. ZeroHedge suckers people with those articles everyday. Yet that is already priced in.

      Studying human behavior many players on the "Eastern" side will relent when their losses stack up and go into stocks and real estate, or anything else that has a hope of doing well.

      I have a screen of miners I typed up on my trading platform back in 2010. I refer to it every several weeks for laughs. I have not changed the makeup of it since I formulated it. Of the 50 or so miners, fully 30% no longer trade. Most were declared insolvent or bought under for pennies.

      Delete
    2. Rick Rule would be delighted

      Delete
  34. Those are exploration companies. Of course those are lottery tickets. I'm referring to established producers. AISC costs are 1000 or below. Cash costs 800 and below. The majors aren't overlevered. Past acquisitions were largely stock deals.

    What's different about the gold thesis apart from other sectors is that gold will be entering the monetary system likely by 2018 as a reserve asset. Remember it's not Mrs. Watanabe or Mr. Chang with their retail accounts that will drive gold to where it's going. It will be Central Banks during the Reset. All this toxic debt will ultimately find its way onto CB balance sheets. Once there, to make themselves solvent again the only way out is gold operations. We wake up one morning and some CB will bid 3000 offer 3100.

    It's not going be a bunch of Etrade babies or Indian dowries that drive gold, it's going to a Central Bank Rerack of the System.

    ReplyDelete
    Replies
    1. You could be right Grumps; for sure, and I have talked about this with Dan, and that is that Duffy and his miserable CME have sold out the public and indeed Asia will become more important for the gold trade. BUT, your belief in the CB's and their importance is questionable, in that at $250, the Brown Bottom was made by them, and NOT by the public. Same thing in "80, the public lined up to give the dealers all the silver sets they had. The public is very under-estimated. On a lighter note, Cincy -11 is free money this morning, from Sparks of course.

      Delete
    2. I wouldn't invest on speculation or anticipation. I would let the patern unfold. I can say that most of the etraders I know have.stayed away from gold and silver on the long side for a while now.

      Delete
    3. @Grumps:
      -Leverage is increasing because assets continue to be written down. -ABX's debt/equity ratio has gone up from .4 in 2009 to close to 1 now.
      -Big miners are using future growth to lower AISC--how do you think they got costs down from $1,400 to $1,000? By mining high grade ore. If prices go up, gold miner margins are going to disappoint because they'll start going for the lower grade stuff.
      -Explorers have a different problem. Most don't have debt (who would loan to a company w/o cash flow?). They are funded by risk capital, so don't have debt. Still they have expenses & have to pay license/permit fees on the land they are exploring + exploration is not cheap. Many small fry explorers are out of cash. They are also sitting on deposits that don't even break even under $1,500 gold (Tower Hill Mines)--undiscounted! Others, like TRX just threw PEI out the window and pretended like physics & economics didn't matter and let their shareholders resort to magical thinking. The question is, who would fund them in a bear market? The only assets that will get snapped up are the highest quality ones, at a severe discount.
      -Central banks were selling gold during most of Gold's bull market.

      Delete
    4. I meant PEA not PEI (Malpeque oysters on my mind)

      Delete
    5. Writedowns, not writeoffs. When price of gold goes back up then we'll have writeups.

      The high grade mining is really a myth. Usually a miner has little choice. The high grade ore might be buried deep in the resource body. Sometimes there is no option but to mine what's accessible.

      Another way of looking at rising AISC is that the leverage to the gold price has actually increased. Look at GG. It makes about $100/oz at 1170. For every $100 gold rises from here, say 75 net of taxes goes to net profit. If gold goes back to just to 1470, Goldcorp's net profit quadruples. So a mere 25% rise in bullion could mean GG trading at about 50 or 60ish. That would be over a 200% move for gold share. Do you see the danger in shorting here?

      As for CB's selling gold, the 4th CBGA went into effect Sept 27th.

      Delete
  35. The Brown episode was likely a bailout for banks caught short.

    http://blogs.telegraph.co.uk/finance/thomaspascoe/100018367/revealed-why-gordon-brown-sold-britains-gold-at-a-knock-down-price/

    *******************************************************************************

    19 May 2014 - ECB and other central banks announce the fourth Central Bank Gold Agreement

    In the interest of clarifying their intentions with respect to their gold holdings, the signatories of the fourth CBGA issue the following statement:

    Gold remains an important element of global monetary reserves;

    The signatories will continue to coordinate their gold transactions so as to avoid market disturbances;

    The signatories note that, currently, they do not have any plans to sell significant amounts of gold;

    This agreement, which applies as of 27 September 2014, following the expiry of the current agreement, will be reviewed after five years.

    ********************************************************************************


    An important point I disagree with the goldbugs is that gold is wealth or money. It's not. It's modern function is to serve as the ultimate collateral underpinning the monetary system. It's like a nonexpiring option the CB's always have to reboot the system when fiat/debt chromosome is down to its last telomere like it is now with debt saturation. Anybody notice that rates have been zero for 5+ years? Gold lays dormant for much of a monetary lifecycle, not even keeping up with CPI. Which is normal and why gold is not an inflation hedge. It's at the end during a Kondratieff Winter that debt must be written down--the Shemitah. To recap the system gold is called upon to balance the books.

    http://www.jsmineset.com/2011/05/26/the-mathematics-of-gold/

    If you crank the formula above it probably gives you about 17 grand per ounce. After the revaluation is where I part company with the goldtards. They think gold will be a stable store of value. Some blogger thinks it will actually increase in purchasing power over time as the world's savers eschew bank deposits and save in gold only. I don't think so. Once a positive real rate can exist w/o imploding the system, then the real price of gold will go down. I said the real price. The nominal price may continue to go up to match global liquidity, but it will not match CPI during inflation when real rates are above 2%. It will be FIAT/DEBT that serves as a store of value during this phase, not gold.

    ReplyDelete
  36. The single most important thing that I learned from this PM market is that how many rotten minded, corrupt people are out there. While Gold was above 1500 I truly believed that these "gold is about to shot to the moon" pinheads are telling these things because they genuinely want to help others. When gold fell below 1500 and these idiots were still telling the same thing than I realized that quite the opposite is true. They want to get rich by ripping of others. They are extreme bullish in words meanwhile they are shorting gold in the background like Eric Sprott. Sprott was especially a surprise to me because he looks like a gentleman unlike the other pinheads like Doug Casey or Mike Maloney. Anyway my naivety has gone forever and now I am treating everybody with lots of suspicion even when there is no reason to do so. My partner said I am very negative person. Well I learned my lesson (by loosing a lot of money). Now I am suspicious even about the Santa. :)

    ReplyDelete
    Replies
    1. kris kov;

      most of us learn through painful experience rather than heeding the advice of those who have more experience. the financial realm is infested with sharks who prey on minnows. these sharks are especially prevalent in the precious metals arena.

      the point in all this is very simple - when it comes to money, especially their own, many of the priests and prophets of the gold cult, have no conscience.

      Caveat Emptor has never been more suited than when it comes to all things gold and silver.

      One bit of advice - learn to listen to the charts... tune out everything and EVERYBODY else. They no more know the next move in gold that the man in the moon. That they continue to present themselves as people who do speaks to a hubris that borders on mental illness.

      At least a cow that gets popped with a cattle prod a few times, finally learns to avoid the prod. The hucksters that infest the gold world have been burned by the prod so many times that the skin has become cauterized and no longer feels anything. that is the reason they continue with their arrogant prognostications.

      The mark of a great man is being able to admit error. That you do not see this, is all you need to know about these people. They are very small people.

      Delete
  37. "The ‘treat’ for gold investors is that physical buying remains very strong. Evidence coming out of China suggests that they have already bought somewhere around 1,500 tons"

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/11/2_Stunning_Facts_About_China,_Russia_%26_End_Of_Gold_Bear_Market.html

    and it has made bugger all difference to the price, so whay even comment on it? Well, because the esteemed author - "a legend who was recently asked by the Chinese government to give a speech to government officials in China" - goes on to opine that "we are within days of this turnaround in gold.... This situation should reverse itself shortly and gold should begin a rather lengthy and large move to the upside. This also means the gold bear market is finally coming to an end"

    Uncle Wiggly Woggly says we will have to wait before forming a definitive opinion on that one, but while the Jury is out, it's not looking good

    ReplyDelete
    Replies
    1. Ophelia;

      Opinions, especially those from gold perma bulls, are like armpits - everyone has them and they stink.

      These frauds have saying EXACTLY the same thing since gold broke down below $1500 some years ago and have been touting Chinese and Indian buying the entire time as evidence that "the bottom is in". "Anyday now, I swear it - just wait and see;; trust me because I am well connected", blah, blah, blah and more blah.

      Delete
  38. Here is another one, courtesy of the "No-Sensationalism Here, Honestly!" sages over at Zerohedge:

    "sales of American Eagle silver coins by the U.S. Mint jumped 40 percent in October ..... to 5.79 million ounces"

    WOW! 5,79 million ounces! In a MONTH! That sounds like a really MASSIVE figure

    How big is the overall Silver market, by the way?

    Try 1,645 miillion oz A DAY http://goldresearcher.com/silver-investment/size-of-silver-market/

    It kind of puts things in perspective, really. Zerohedge, of course, interprets this as "confirming yet again that any connection between paper prices and physical demand no longer exists"

    Of course the relationship still exists: volume may have increased, but that may perhaps have been because the price was lower, and an equal investment may have purchased a large amount; how about noting that 5.70 million oz is still way below the 7.5 million oz sold in January 2013, (which in my rough & ready estimation now carries a loss of $112.5 mio just for that month alone?)

    http://www.zerohedge.com/news/2014-11-02/october-silver-coin-sales-us-mint-soar-highest-two-years

    DOWN IS THE NEW UP apparently

    ReplyDelete
    Replies
    1. Ophelia;

      Zero hedge is called "ZERO" hedge because the dolt that runs that propaganda site has posted up one bullish story for gold after another and prevented anyone who actually believes the crap posted there from hedging any physical gold they might have had in their portfolio. If they had done that and listened to the charts instead of the Joseph Goebbels of the gold market, they would not have suffered the massive losses that they have. Meanwhile he gets rich with his click bait.

      Delete
    2. I Say! I Say! I Say!

      What did the first Snake Oil Salesman say to the Second Snake Oil Salesman?

      "Bitcoin!"

      Oh, how we laughed and laughed.....

      Delete
    3. This is exactly why physical buying/selling have little effect on the market.

      Delete
  39. "Since I started this website some years ago, I have tried to do one thing with it - teach people how to read the markets and to tune out the voice of everything else, especially the quacks, frauds, deceivers and flim flam hucksters that infest the world of gold and precious metals.
    If I have accomplished that, then I feel it was time well spent. Those who have ears to ear, will hear. Those who have eyes to see, will see."

    It's the case for me 100%.
    Your detailed explanations about every new BS from all those gold bugs blogs was extremely welcome for a novice on PM fundamentals like me : backwardation BS, manipulation all the time and only down and on gold & silver BS, etc... I was believing most of this BS.
    But you brought sound argumentation, and most importantly you were the only one I know who brought it.
    1000 thanks for that.
    I'd add one thing to your post : those who have brains to think, will think".
    You brought all necessary inputs and arguments to let people with an ounce of intelligence analyse by themselves both sides, and use their self criticism to make their own conclusions.

    There is nothing more to ask for.
    You stood straight in your boots and kept your positions when it meant being "fired" from KWN, and in conflict with your "friends", regardless the loss of "fame" or "visibility", proving you don't care about it while most newsletter writers are addicted to it.
    And you did and do this absolutely for free.
    Hats off. For once it's 100% deserved.

    ReplyDelete
    Replies
    1. Dan trades in a rare commodity: integrity

      Actually, I sometimes disagree with his perspectives, and frequently throw up my hands at his manner, but not only is it his website, it is entirely in keeping with the notions he espeouses that he should tell it precisely as he sees it, and that he does. In spades

      Dan, I take my hat off to you. End of.

      Delete
    2. I agree with the above sentiments.

      Not much I can add to the above except that I'm glad this blog isn't super pessimistic with a doomer outlook and that the daily disussion doesn't consist of...
      Ebola fears and conspiracies
      Ancient Aliens
      Chemtrails
      Shape-shifter lizard people
      Fairies, nymphes, orbs
      Third eye's/psychic remote healing
      Govt. planned massive depopulation
      ...and the list could go on and on.

      Great thread this weekend.

      Delete
  40. all right got an extra hour let's get systems up and see: 'what's the buzz, tell me what's a happening.' one thing with time change is NIKK at nite will be yanking things an hour earlier, then hong kong and china also move up one.

    cnbc world is nice for that time frame, it's live asia action for all the indexes.

    for research in the ole days we would open many accts just to get each firm's research. right now everybody ought to drop $1K US into a tdameritrade ira and then download thinkorswim platform. schwab has streetsmart platform very good for real time news and also optionsexpress all very good.

    barrons panned soybeans in the commodity corner article.

    ReplyDelete
  41. seasonals: SPX go long 10/27 into bullish November-December and then Year 3 best year of Presidential Cycle.

    mrci: Seasonally, corn and soybeans are typically steady/ firm LH Oct before rolling over early Nov while wheat usually erodes late Oct into mid-November. In fact, WZ has declined from 10/27-11/19 in 14
    of last 15 years while CN has declined from 10/31-12/7 in 13 of last 15 years.

    thanksgiving holiday will diminish beef sales.

    ReplyDelete
  42. every quote provider is slightly different and perhaps some commentaries are talking spot:

    gold the focus now is 1086 the midpoint of the range from the 1999 low (251.95) to the 2011 high (1921.17)


    short covering would happen if they 'regain the range' which is GC 1180 and SI 16.64.

    blurbs out there talking how the general public was 'so wrong' buying gold/silver coins in the latest stats showing high sales.

    Many investors are understandably concerned that mining companies in West Africa will suffer because of Ebola. Several companies operating in the three hardest-hit countries have indeed been hurt by the virus, some of them being forced to halt production.

    COT really doesn't matter as it was thru last tuesday, but commercials covered a bit of their short.

    cheers!

    ReplyDelete
  43. Funny as you being a trader fail to realize and show RSI levels in both gold and the USD index at this present date.

    ReplyDelete
    Replies
    1. Mr. Puppet head;

      Big deal.... so gold might bounce... it might not bounce either. so, it is now going to reverse and head straight into a bull market?
      You gold cult members are sickening to me. "til death do us part' is your mantra.

      Have a happy marriage to your investment class.

      Delete
  44. I still think it more likely than not that metals and miners spend a period of years ( at least a few, maybe 5-10-20) backing and filling going nowhere in particular. That might be more damaging to the psyche of the 'bugs than the straight down stuff. Pure attrition. I remember the 90's. Been there, done that. First you get killed by price, then you get killed by time (opportunity cost), until you finally throw in the towel and move on.

    This delves into the psychological, but a huge contingent has been burned badly, and is never coming back. That, plus the blue hairs who've been around since 1980 are dying off at a frightening clip. It's actuarial science 101. The 2011 bubble ( and yes, it was a bubble) was 25 years in the making. The Fear Industry is going to have to repropagandize a whole new generation before any sort of mania can rebuild. The current band of stragglers just don't have the capital to push it up again anytime soon.

    The constrant mantra that whenever it finally comes, it will be a hard bounce off the bottom and an immediate moonshot is complete bullshit.

    ReplyDelete
    Replies
    1. Maybe gold bugs hope for a V bottom the shape of SP bouncing on 1820 level up to new historical highs. Good luck with that.

      Delete
    2. I could care less about new highs.
      I'm buying value
      What do you guys buy??

      Delete
    3. You are buying value?
      Is it edible?
      Can you exchange it with dollars?
      Can you buy something with your value?
      What do you with value? What is the point of value?

      I bought gold for insurance against worst case scenario of a sudden hyperinflation. I separate that quantity of gold I have from anything linked to my trading now. It is here. It's a quantity. It will be worth something if suddenly currencies collapse like in Zimbabwe, Iran, etc...

      For the rest, i.e day by day, I consider "buy" as a position, long, which is betting on an upwards movement. "Sell" as a position, short, which is betting on a downwards movement. "out", as a position, as being undecided about the movement and not taking risk on my capital.
      The name of the game is to have the right position according to the trend.
      If I'm right, I make money. That money, I can use, by withdrawing it periodically from my trading account to buy real things in real life. Just like Dan making a living with it. I can also add up to my trading account, and then play bigger sums / number of contracts.

      It doesn't matter whether gold goes down or up to me, because I can be short or long. What matters is to be right about the direction. Else I lose money.
      What is value?
      What is the point of your sacred value?
      Does it make you breathe? Does it make you earn money?
      How do you define value? What's the value of gold?
      Will it be the same tomorrow?
      How do you know?
      I'm 42 year old, and the only people I saw lose all their money were chasing the same dream. They thought they were buying for "good value". My grandmother bought for excellent value some eurotunnel shares at 18 euros because they went down from 100 euro a share, but the stock eventually fell to sub 1 euro.
      On the other hand, the only people I saw managing to make a living regularly, constantly, are the ones who manage risk, and trade on the direction of a market, not its price.
      Maybe "value" plays on the very long term.
      The more I live, the more I'm sceptical about the added value of using any "fundamentals" in my trading decisions. Because markets are not rational. Markets can exagerate until you are broke, very far from your "good value" estimation.
      Buy more now for your value if you like.
      I am on the short side, and even more now that 1180 is broken.
      Let's see who wins the race.

      Delete
    4. Historic lowest price ever in history maybe?
      Not rocket science bud.
      Stop with your pages and pages of nonsense.

      Delete
    5. Mr. Puppet;

      I have put up with your idiocy and snide remarks long enough. This is your notice. You are done posting here. All of your subsequent posts will be deleted.

      People of your ilk and mental denseness are not welcome here. I am sick and tired of providing a forum for gold cult members to spew their nonsense.

      Get lost. You are done here.

      Delete
    6. [applause]

      as a general rule I don;t agree with censorship and heavy handed moderation, but sometimes it is both appropriate and necessary

      Delete
  45. One comment I have on Sprott being vilified early on in this thread, maybe it was corrected, but I assume it is the same thing as any major shareholder of a company, isn't it? Bill Gates routinely has automatic sells of Microsoft regardless of price or the current condition of the company. Is it not the same?

    ReplyDelete
  46. 2011 was by no means a mania or a bubble. It was a 10 week short squeeze and gold traded comfortably above 1600 for some 18 months afterwards until the tax day massacre when it pushed. It's silly to think the Treasury is not in the markets. This is just another part of QE. In order to make the gains in the S&P and bonds look good, the metals have to be managed.

    For the bear case to be valid then that means there is no problem with current debt levels. That this debt can be serviced. Well, why have interest rates been zero for 5 years? Why can't we get a yield at the bank?

    If rates rise then how are trillions in IRSwaps going to pay out?

    If rates rise then then what happen to the collateral ( sovereign bonds) banks hold as reserves?

    If rates rise how will the Central Banks keep themselves solvent?

    For chrissakes guys, they just announced QE4 a few days ago in Japan! Whenever liquidity threatens to dry up they capitulate. There is simply no real bid for assets at these artificial levels. What happened Oct 15th? Looks like the ESF went to sleep and behold the true markets. Stocks down, USTs down to 1.6%. gold moving up to 1250. Deflation in all its horror.

    ReplyDelete
    Replies
    1. All you have if you don't understand a market's behavior is plenty of questions without answers.
      Eventually, forget the questions.
      There is no spoon.
      There is only a price.
      Follow the price action.
      Everything is priced in a market.
      Don't fight the market.
      Don't try to explain it with thousands of questions and answers and fight the tide. Follow the tide. It's that simple.
      Don't be too clever.

      Delete
    2. let the clever guys care about "value" and get broke.
      Just follow the trend.
      If you can't follow it, at least don't fight it.
      Staying out of a market is also a trading position.
      Not losing your money is the very first step allowing you to eventually win some later.
      Just as in poker : best players minimize their losses on marginal hands.
      Pick up your hands carefully. Put a stop loss close enough.
      Don't average down.
      Don't add up to a losing position.
      Cut your losing positions quickly.
      Take the habit to keep a bit of your winning position for further gains, even if you reached your intended target.
      Nurture your winning positions. Kill the losing ones.
      Not the other way round because of pride, stubborness, intellectual reasoning about an ever changing "value" you think you know all about.

      Delete
    3. But that's the problem Hubert. the price signals we are getting are false due to Central Planner intervention. Hell, how many hedge funds have closed up b/c they can't generate alpha b/c they can't make money shorting.

      Look who Raoul Pal's been reading. Gordon Long. Take a gander at this graph.

      http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/11/globalization%20trap.jpg

      See how HI is a sequelae of deflation.

      Delete
    4. Hubert,Is it too late to short gold/silver? At what price level should I look to add short position?

      Delete
    5. DFLY- Look at Dan's actual post w/ price levels!

      Delete
    6. ok, i'll hope for a bounce towards 1180 and then short.

      Delete
    7. "Hubert,Is it too late to short gold/silver?"
      It depends if you have a position already or not.
      If you are hedging your physical long position or not.
      It also depends on your target downwards, and the position of your stop loss above.
      The amount you want to short depends on the amount you accept to lose if you are wrong with your stop loss.
      Personally I added to my short position at 1180 because I was already short from 1239, so I'm "risking" my previous gains but overall, I see it as a protection against a quick collapse.

      Difficult to answer more precisely because I'm not behind my trading platform now, I'm at work... :) but I guess gold could also rise up towards 1205 without putting into question that it is very weak and bearish short term.
      My only advice : don't try to get rich with one trade on those markets. Play small. Whatever you do, play small and play several different trades. If your long position on gold is too large, cut it a bit now, because maybe gold is headed towards 1000 $.
      Have a nice day,

      Delete
  47. big moves reopened the currencies-The soft China PMI is weighing on the Australian dollar while the yen continues to weaken with USD/JPY pushing up against 113.00.

    natural gas +4.21% right out of the gates.

    wheat supposedly had a tender from egypt friday nite, nobody showing any results yet.

    soymeal problem not over yet it's said...

    we have one week til the impt monday 11/10 usda report, where it's expected big bean-corn crops will get bigger, and wheat forecast to be lower on all the crop problems worldwide.

    it's king dollar cheerio!

    ReplyDelete
  48. "...the price signals we are getting are false due to Central Planner intervention." --Grumps LaBarstard 2014

    Omigod what a sickness! The price is the price! The only guys going around complaining of "false" prices are the guys who are getting creamed! FantasyLand! Denial! I bet you use "Mark to Fantasy" accounting in your own portfolio in order to avoid having to come clean with da wife!

    Don't Fight The Tape.

    ReplyDelete
    Replies
    1. Crap, Grumps,didn't mean to misspell your name. That's a cheap trick of internet debate and it was not intentional. Sorry.

      Delete
    2. What happened in April 2009? Mark to market was suspended for mark to model. Yes, I grant you the charts are ugly, but being a slave to a trend could prove fatal in a period of discontinuities. What's the end game? What season of the Kondratieff Cycle are you in? Has there been any deleveraging? Is the economy really growing? Is national income rising faster than the debt?

      What are going to do some Sunday night when a group of central banks finally decide enough is enough and decide to break the case marked :"IN CASE OF DEFLATION BREAK GLASS" And in that case are gold certificates which by the way the US Treasury marks at a measly $42 and ounce for a paltry 11 billion dollars. What are you going to do when all this QE fails, demand never materializes, and the banks have to save themselves by revaluing gold? What are you going to do if you not just have gold, but are short the metal? I wouldn't want to be you.

      Being short gold is like being a Japanese bank long JGBs and short the credit default swaps on these same JGBs. The trade is going to work for awhile as long the central bank has your back.

      Delete
    3. Quite right, Eric. This bug/doomer mantra that price signals are "artificial" just betrays complete ignorance as to the nature of said signals. As you said, the price is the price--no more, no less.

      I think they somehow just completely confuse TA and fundamentals. They cannot let go of the comfort of fundamentals (which give you a false sense of being smarter than the market), and just trade.

      As Livermore said "no man can beat the market", by which he meant no one is SMARTER than the market.

      Delete
    4. "Sit tight and be right" for the secular trend. Even during a cyclical bear you can accumulate dividends. Darting in and out with stops, transaction fees, and cap gains tax will seriously erode the final result. Plus there is the anxiety of always trying to re-establish a core position. If you wait for confirmation of a bottom in this sector you've already left a 100+% move on the table.

      Pull up a long term chart of a gold mining index and you can see the tectonic moves it makes during a K-wave Summer and Winter. Just magnitude moves. We'll look back on all this price action on the HUI from 150-635 as relatively flat line on a chart post 2020. A flat line lifting up to new plateau much higher on a log chart. Nobody is going care if you bought in at 150, 250, or 450, as long as hung on thru the bear phase.

      Wait till the volatility kicks in. You traders won't make any money b/c you'll get stopped out and too timid in getting back in. There are going to be times when your little Etrade account won't open due to market conditions. What are going to do then? The price of gold could go dark, the stock markets closed for a few days, maybe weeks. You'll be sweating out whether your limits got tripped and what price and if they did would the trades be broken.

      I'm telling ya guys being short the stuff at the bottom of Exter's Inverse Liquidity Pyramid during the Mother of All Debt Saturations is not too smart.

      Delete
  49. No surprise...gold/silver open and head downwards.
    Silver about to nudge under $16 again. 2nd attempt since early Friday.

    ReplyDelete
  50. Why was Palladium up $15 on Friday while all other pms were in the shitter?

    ReplyDelete
    Replies
    1. Makes sense if you think of it as an industrial metal + plus chart had a clear bottom.

      Delete
  51. Dan is getting a little press over in the Main Street thread today over at TFMR. There is some resentment for sure, which I can understand. However, it is sad that many of them have taken on a 'plug your ears and don't listen' approach. I hope that these folks don't have families to feed.

    ReplyDelete
    Replies
    1. I notice that Koos Jansen has sunk into the gutter in an attempt to regain some of his previous readers; this guy is a one-note tin whistle. and whether or not he is right about Chinese retail demand for Gold, it hasn't made a blind bit of difference to the price, and since he sold out to Bullionstar.com he has lost all credibility

      Delete
  52. It's a given now, that anyone who shows up at TFMR is just hanging on like grim death, trying to stay in business. Hey, still got boat payments to make, get me Hemke on the line!

    ReplyDelete
  53. Silver is the buy of the Century. Maybe of all time

    http://www.tfmetalsreport.com/comment/445067#comment-445067

    Down 40¢ as I write, at $15.89. These people are delusional

    ReplyDelete
  54. stewie - Pls don't post Dan Norcini on TF Metals by mike97

    Norcini is a disinformation agent for the Fed/Cartels. We don't read him and we don't want him posted here.


    http://www.tfmetalsreport.com/comment/445062#comment-445062

    and there you have it, in a nutshell

    ReplyDelete
    Replies
    1. Wow-Miners are bad because they are 'paper gold' and somehow fudging their bad numbers. And Trader Dan an agent of the cartels. Dan, What kind of tea does Chairwoman Yellen drink? One lump or two?
      CUCKOO.

      Delete
    2. MDLGTO;

      Remember I am actually a Sith Lord; a Senator Palpatine of the gold community who is actually Darth Sidious. I prefer that title rather than a cartel disinformation stooge. With the former I can shoot lightning bolts out of my fingertips and fry my enemies.

      I will let you in on a secret. I once had a gold cult member on my torture rack and was electrifying him and he ended up confessing that Maquire, Turk, Sprott, Hemke, etc., all worked for the Illuminati! Don't let that get out however as it might ruin their reputation in the gold community.

      Delete
    3. There's no shortage of paranoid or delusional outlooks at times over there.
      It's easier to focus on Dan or anyone else instead of the misleading or wrongheaded advice they got from their guy and the uncomfortable situation some might find themselves in.

      You'll also never see anyone there bring up the Sprott comments earlier in this thread and discuss if Sprott or any other chronic BTFD'r ever went short (with paper!) while pumping the metal long to them.
      Seems like an important element they might want to consider, if that's possible.
      I suppose the intense focus on ebola victims (and who's responsible or if they're shape shifters ;-) and other end of the world conversations are enough of a distraction that the hard questions won't get asked.

      It's become doomer central and with a narrow dark focus.

      Delete
    4. You'd think the whole Ebola conversation over there would reveal to one and all what a ridiculous retarded snake pit the whole site is. But, I thought that about a hundred conversations ago.

      Rank stupidity, top to bottom.

      Go suck on a silver lozenge, idiots.

      Delete
    5. "Remember I am actually a Sith Lord; a Senator Palpatine of the gold community who is actually Darth Sidious."

      Ha!
      Dan da man uncovered himself!
      Martin Armstrong nailed it!
      If you want to hide a conspiracy or a fact, just exagerate it to the extreme!
      That's what Dan is doing now by pretending he is the Sith Lord, to exagerate the accusation of being a Fed stooge.
      So this is proof enough.
      Dan is able to manipulate your thoughts, as Armstrong noticed and wisely remarked.
      There is no doubt that Dan is not the Sith Lord. But he is the apprentice for sure, you are Dan Vador and the dark side is strong with you. You don't use lightning bolts but I'm sure you can keep your opponents from breathing at will and make them suffocate like in the death star!
      omg, what are we going to do?
      lol :)

      Delete
  55. Just eyeballin' the charts here, but it looks like new lows tonight.

    Moderate though. I thought there was a chance for a real dump. Nope. Not yet. Let's see what dawn brings.

    ReplyDelete
    Replies
    1. The big dumps take time to digest. Probably drift for a few days, but I expect any rallies to be sold ruthlessly--just as I expect any SPX dips to be bought with the same fervor.

      Delete
  56. a million years ago we had a saying, "if you buy Smith's tips, you must sell Smith's tips". 4 years into the pm bear mkt it would seem that the Hoosiers are still stacking. God love them as we all need someone to sell to, as the grind goes on, and we very well may be only beginning, as long time observers can attest to. who else? sparks of course

    ReplyDelete
  57. Great quote to start the week (from SA):

    "my investment decisions are based on a deep understanding of my own limitations in predicting the future." However much you think you know, it's usually a good bet that a) someone else knows more, and b) there is at least one important thing you don't know. This view is shared by many famous investors (Marks, Buffett, etc.) and is an important reason for conservatism in analysis both inside and outside the investment world.

    ReplyDelete
    Replies
    1. to quote Einstein: the only difference between genius and stupidity is that genius has its limits

      Delete
    2. I think that is apocryphal. He is supposed to have made several other so-called witty comments about the same subject.

      Delete
  58. Egypt, the world’s biggest wheat importer, bought 60,000 tons of French supplies in a tender Nov. 1. The country’s state-run grain buyer has purchased French wheat in its last four tenders and hasn’t bought U.S. supplies since late September, Bloomberg records show.

    barge prices also up, longshoreman's strike:
    http://online.wsj.com/articles/pain-in-trains-falls-mainly-on-grain-1414972402

    Bottom line: A little back and fill today as we reassess haves progress this afternoon, as well as the ongoing logistical complications with moving supply from origin to destination. Private yield estimates will be out this week in the ramp up to the November WASDE.

    cheers!

    ReplyDelete
  59. I'm not saying the gold bug community is totally delusional or there is no manipulation.
    One can be troubled by the fact that Fed stops QE just to see BoJ starting its own. CBs are printing endlessly until the endgame.
    Is some of this money used to suppress prices? Maybe. I honestly don't know.
    That's why I always put a stop loss and play small.
    Markets can reverse.
    Is this a bear trap?
    Maybe. I'm not going to go all ill just because we closed under 1180.
    Play small. Protect my capital. These are my first priorities.

    ReplyDelete
    Replies
    1. Hubert,

      Yea,

      The Fed ends QE and then a few days later the BOJ announce it own QE.

      I suppose one can make an Armstrong argument that both of these central banks are riding the waves just like us common folks are doing.

      Of course we are not suppose to speculate, but what if they are trying to control things. Another thing that “bugs” me is their pattern of press releases on dates that seem to be illuminati-like dates. The Fed meeting ended on the 29th and BOJ released their info on QE on the 31st.

      Of course, this pattern-like numbering action by central banks is not accurate enough to trade with. If it were, then where would be the control mechanism?

      The CB press releases on these suppose to be illuminati dates are in my opinion wickedness.

      Dan, I love your site and do not want to distract new readers away from your mission here on your blog. I enjoy much reading from you and all the talented individuals exposing all the deceitful gold bugs that knowingly harms others who are trying to protect what they have. People like “captain” Jimmy Turk, Eric “original Sprott, the King guy, ect. need to be exposed.

      However, I believe that people like you and your talented posters on this site have the potential to become the best that a Christian can be in the conflict between good and evil on this planet right now. And from my eyes, you guys have the potential to “move mountains.” And so, I remain here praying for the light of Christ to pour his spirit out on you guys.

      Delete
  60. Very wise Hubert. Shorting the gold shares now could be very dangerous, and you could have your head handed to you on a plate. I do think the path for gold is still down, especially for the next few weeks, with a probably rising dollar and stock market, but if gold consolidates, or falls only a limited amount, the gold shares could rise substantially, as they seem way oversold.

    ReplyDelete
  61. For instance the action today for gold shares is suspicious. Gold down but HUI holding its own. Substantial rise in NUGT. If gold just popped its head above
    $1170 by a few dollars shares could rally hard. But definitely a short-term trade, and one could sell into that.

    ReplyDelete
    Replies
    1. This comment has been removed by a blog administrator.

      Delete
  62. I appreciate most your post, Dan. I like seeing other people's thoughts on the metals.

    I think what would add some depth and context to this conversation is mentioning gold volatility, as I know you do from time to time.

    As an option trader, it is important for me to pay attention to. I am noting that GVZ is hitting some highs. As an option premium seller, this is good. But for basic traders, it could mean some bigger moves. The only thing that is keeping me from selling premium here, is a longer-term look at implied volatility shows more room for potential upside, as implied volatility is still coming off major long-term lows in August.

    Your thoughts?

    ReplyDelete
  63. Thank you, Dan, for your great work. Here's a graph called the Vomiting Camel from the gold chart: http://www.cnbc.com/id/102147311

    ReplyDelete

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