"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Wednesday, October 1, 2014

Saudi Oil Price Cut Surprises Market

Talk about a fast turnaround out of nowhere! Crude oil was moving higher today after its big sell off yesterday. This morning's catalyst for the upward move was news that oil stocks had unexpectedly shrunk. It had recaptured half of its losses from yesterday when it began to slowly fade and then fell sharply. The cause was news out of Saudi Arabia.

The Kingdom announced that it was lowering its official selling price for its crude oil. The cut was $1.00/barrel.

Brent crude was hit harder than WTI as the former made a 2 year low in price.

I think it is safe to say that S. Arabia is not exactly thrilled to see US production rising. I for one am particularly happy to see Uncle Sam dethrone it in this area. Think about what might be if we had an energy friendly Administration here in the US!

Bonds continue on a tear higher. The yield on the Ten Year Treasury Note has fallen to near 2.4% today.

I am wondering if some of the weakness being seen in stocks today - and the resultant rush into Treasuries - might be tied partially to investor concerns over the Ebola virus. That slowing PMI number this morning seemed to get the ball really rolling to the downside but we then got news that a second patient is now being tested for possible contamination with Ebola. Some might ( and I am stressing that this is only a guess ) be thinking worst case scenario with an epidemic that would stunt consumer growth. Who knows? But for whatever reason, stocks at this point in the session are not yet seeing any concerted buying. Markets are funny things - they react to news in sometimes unpredictable manners choosing at times to ignore what many deem important and at other times possibly overreacting.

As a personal side note, I do not understand why we do not have a quarantine in place for incoming flights from those regions of West Africa where that virus is raging. Is it more political correctness at the expense of public safety of US citizens?

We can all argue about the proper role of government but one thing that we can probably all agree on is that one of the chief roles, if not THE CHIEF ROLE, of the federal government is protecting the well-being/safety of its citizens. To me, it is inexcusable that we are allowing anyone coming from that area of the world into this country. How many more deadly or crippling diseases are the authorities going to allow into this nation before we get serious about our borders?

There are too many instances of diseases coming into this nation, that we cannot even identify in some cases or that we once had eliminated here to believe that our open borders and lax immigration policies are not the main contributors. 


  1. Good question on Ebola. Why do we have open boarders (which violates the US constitution)? There is a nasty respiratory virus going around (that my son might have gotten) that has been traced to El Salvador. So why did that get here? Illegal immigration is the reason.

    1. Not just illegal immigration but a desire by the administration for open borders like the paragon of virtue "Europe".

      Personally we need to reopen Ellis Island and establish a 30 day quarentine.

      Not going to happen though as the powers would have to admit that there is risk of contagion. And that is 180 degrees off what they are selling.

      Not a conspiracy big at all but do know that we are being fed lies. Start with any no risk 100% sure assurance.

      The Ebola patients are in isolation for a reason folks.

    2. I think it would require a more concerted effort among nations to quarantine a country(ies) in West Africa--There are way too many ways can get to the US legally through stopovers etc.

      Also-I'm not sure how this turns into an illegal immigration debate as it is more than likely that a person coming via air from Africa via Brussels will have legitimate (looking) papers.

      Stop illegal immigration by eliminating minimum wage and cutting out benefits for able bodied non-seniors that aren't working. The reason illegal immigration 'works' is that there is a demand for the workers (obviously there are people coming -- many through a loophole of a Bush administration law i might add-- to suck off of US benefits).

      Don't underestimate the will of the immigrant--to use the Under Armor catchphrase- they will what they want. My workers in Mexico have all worked in the US, WALKED 800 miles to the border, crossed the desert, to work roofing jobs in the summer sun in Houston paying minimum or less.

    3. I see their energy every day here in Southern California. But illegal is still illegal. Every step to normalize them is wrong and immoral, drivers licenses for instance.

      As long as we allow illegal mime graton we are at increased risk.

      Yes it would be difficult to screen out those exposed but remember the Seabees motto. " the difficult we do immediately, the impossible takes a little longer".

      Quarentine is a well known and effective means of controlling spread is disease, let's use it. Even a poor one would be more effective that the don't worry be happy pap comming out of Washington DC.

  2. wowo gasoline took out all the lows back to 2011!. if unleaded can stay down it's a huge 'tax break' for american citizens!

    the ags came up with some bullish items into the close, let's see if they bulls can do anything tonite.
    --Mato Grosso october rainfall looking to be poor.
    --frost hitting northern reaches ND MN this weekend.
    --soybean stocks number showed ever increasing demand.

    yes many blurbs have 'ebola' as the cause of the stock market demise today. ecb decision tomorrow morning with draghi press conference.

    moo moo!

  3. heating oil as well, staying down for the winter season would be a tremendous benefit to usa households!

    the Ags also got support from the rain stopping 'harvest hedges' and export sales due in the morning.

    after the close private forecaster out with ~~ record crops: FC Stone survey produces U.S. corn yield of 178.4 bushels per acre and soybeans of 48.4 bpa.

    all right fed heads getting with the program: DJ 4:29 FED'S EVANS: REITERATES WOULD PREFER TO WAIT UNTIL 2016 TO RAISE RATES

    "Wall Street tumbles on Ebola fears"- reuters headline

    coffee and sugar quite strong today, maybe they knew that brazil weather.


  4. Thanks Dan.
    I've been of the belief recently the Saudi's have gladly accepted lower oil prices as long as they get to use their military and they get to inflict pain on Syria/Assad and Iran eventually.

    Awhile back I mentioned how the US Green Zone would eventually come under attack from within Baghdad and at some point they'd have to evacuate it or defend it fiercley.
    They'll defend it fiercely and it'll provide the reason and excuse for more troops on the ground.

    A report I just saw on TV says that reports from around the GZ say it underwent a mortar attack today.
    The GZ is basically a sitting duck and at some point things get crazy around there.

  5. Here's the latest claim I'm hearing from the gold charlatan crowd. This one is very funny;

    "China will use gold and gold pricing to force global currency reset. China will demand physical delivery on their massive number of gold contracts they currently hold in the U.S. futures market (Comex). And based upon supply details for the Comex over the past two years, America's primary gold exchange no longer settles their contracts through the delivery of physical gold, but instead settles in cash payments or through the hedging of gold using derivatives. Subsequently, once this failure to deliver takes place, then China, through the Shanghai gold exchange, will become the default market for price discovery, and at that point will re-adjust gold to its true value, instantly causing massive chaos in the fiat currency markets and leaving the world little alternative but to implement a complete currency reset."

    1. Another respin of the COMEX default, vaults are empty meme.

      Wonder how they know how many contracts China owns.

    2. Doubt China would do this.

      Still do any of you believe the Comex actually has the physical gold to deliver for all the paper contracts they sell?

      Or does the Comex have to prove they have the physical gold before they can sell it as a paper contract?

    3. Not sure how this all works out but my understanding is that most contracts are rolled over. Dan has periodically published results of the expiration and delivery process. Suggest you go back and read some of them.

    4. This statement is rather hilarious;

      "and at that point will re-adjust gold to its true value, instantly causing massive chaos in the fiat currency markets "

      What's the true "value"? What does that even mean? Typical Goldbug speak. LOL

    5. 50.000

      You heard it first on KWN. From Jim Sinclair.

  6. Whoa did KWN just posted a BEARISH article ? Dated 1 month ago?

    1. Loren, Yamada is very good. I am almost surprised that King features her work about once a month.

    2. She also said DOW would go to 3000 in 2009.

    3. Maybe gold would have "Yamada" bottom , just maybe

    4. liang, that call was wrong and she did not stay married to it, UNLIKE the amateur charlatans @ kwn; she is a pro.

  7. Dan - agree that the role of government should be to protect the safety and well being of its citizens. The problem is the WAY you suggest doing it just makes too much sense and therefore would likely never be implemented by the CDC or any other government agency. These bureaucrats are much better at creating more bureaucracy. Its a tough job but someone has to do it....

  8. It starts to look like "12 monkeys".

    Besides, suppoze I'm a crazy terrorist organization, I send one of my guys to get infected, bring him back to my small lab facility to grow the virus myself with a few protective suits for the staff. I grow Ebola in a few dozens glass tubes and I send my agents all over the world in the main western cities.

    How unrealistic is this, at a time when Isis controls a good size of 3 countries and their installations? Are your airports equipped to detect Ebola virus in a few glass vials? I don't think so. Freaky :(

  9. http://www.jsmineset.com/wp-content/uploads/2014/10/clip_image001.jpg

    Can anyone explain to me what Ebola has to do with "setting a gold mine"?

    Other then scaremongering people into buying a losing proposition?

    Jim service to the community.


  10. Get ready.....

    "Draghi’s Buying Spree for the ECB Might Start Modestly"

    By Jana Randow
    October 02, 2014 6:09 AM EDT

    When Mario Draghi writes his first check to pay for asset purchases, he might not use much ink.

    While the European Central Bank president pledged to start a program this month to buy asset-backed securities and covered bonds, initial buying in those markets will probably be modest, according to two euro-zone central bank officials who asked not to be identified because the matter is private.
    That will keep investors guessing on the scope of his intentions today as they bet the ECB will expand the range of securities it can buy.

    Policy makers gathering in Italy for their monthly decision are under pressure to act after Draghi’s pledge to add as much as 1 trillion euros ($1.3 trillion) to the ECB’s balance sheet failed to rein in bets on a worsening price outlook in the euro area. Speculation on how far he’ll go sent Greek debt higher after the Financial Times said he wants looser requirements on the quality of assets the central bank can accept.

    “For an immediate effect on inflation expectations, a fast implementation seems important,”.....(cont.)


  11. we are looking at a 16 month possible triple top on the weekly charts for the Nikkei. it is not as clean as the 11 month in time weekly for the gold @1800, so we shall see. triple tops are rare, but we have all been breathing rarified air for the longest time, no??

    1. I dont believe in triple tops...

    2. like I said Jasper, they are rare, but 1800 gold was a beauty

    3. double tops are nice too--AA formed a perfect one and collapsed accordingly, despite Goldman's strong buy recommendation into earnings.

  12. moo-moo! --traders talk about 'icebergs' they mean huge bids in the livestock markets:

    saw more blurbs about hong kong-china making for selling in the equities. china is a loose cannon no doubt.

    Mktg yr wheat export sales to date exceed seasonal pace to hit USDA target by 32 million bushels, versus 25 million previous week..

    Drop in oil and food prices has been significant on inflation says Draghi.

    banks in spain and italy didn't like ecb- down -4-5% some halted,


  13. nice call by Dan: HG the 3.00 rounder support, and SI follows HG.

    hard for silver to do anything if crude oil is breaking bad, either.

    Gold derivative holdings declined again by 94,371 ounces overnight with silver derivative holdings also declining
    by 3,220 ounces.

    Ags Bottom Line: Wheat is rallying on the better than expected sales activity, although row crops seem to lack any true conviction today. Harvest will slow the next 5-days, and it has yet to really get going in the West.

  14. Draghi's comments and the lack of any huge specific numbers out of the news conference seems like a dud at this point.

    I'm waiting to see or hear what type of comments from him or any other relevant ECB official has to say in the coming days that might effect the euro trade going forward.

    I could be entirely wrong but it seems a strengthening euro isn't going to last long when more bearish economic EU news or comments resume after this Naples conference concludes.

  15. Things must be getting bad…Warren Buffet is being trotted out again to say he's buying stocks. Deja vu all over again.


    1. Of course, being that the stock market is the economic recovery, they desperately get guys that people trust like Buffet to come out and tell people not to sell stocks but to keep buying always.

      Sounds familiar, like some of the KWN guys saying buy gold always.

      They ignore the deflation and try to keep people buying to prop up the markets.

  16. Eur Usd is recovering slowly. The key for me is 1.2730 : above or under by the end of the week. Above will invalidate the break through that fibonacci ratio level on my 2 week time scale, i.e 1.2730 would still act as a support and 1.3150 as a target.

    Dax : who knows...9200+ and remember we have a fantastic niagara falls neckline at the 9000 level on this one. I will be in the short canoë if we stumble :)

    1. SP500 : now with a low at 1926, I think this puts a dent in the upwards green channel I've been monitoring on the weekly and 2week candle charts.
      This support has been broken, even if we end the week above 1945, while the resistance of the slower support is intact.
      Conclusion : for the moment the SP500 doesn't seem to be able to sustain such a strong slope any longer, and it is more and more likely that we eventually break definitely this upwards support, which would make it possible to target the support of the slower upwards channel, now near 1700.

  17. Agreed, the idiots in charge choose not to put controls in place to restrict movement to/from West Africa during the worst Ebola outbreak in modern times, but we have to pat Grammy's bra down and make her take her shoes off in case she's carrying explosives.

    Their complete willingness to take away our personal liberties when it benefits them is overshadowed by their unwillingness to do something when we actually need them to.

    All we need to do is slip a 'tip' to the gov't that Snowden is hiding somewhere in Africa, and rest assured, they'll pay more attention.

    What worries me is that they're waiting until the moment of maximum possible pain. At that point, people will be begging to have their freedom restricted for the good of the nation's health. And it's at that point, once things are already too late to fix, that they will come through and in some grand sweeping action, take away much more of our freedom than necessary. The conspiracy theorist in me worries this is completely part of the plan. I hope I'm wrong

  18. I keep following the development of scenario about SP500.
    So we had today the acceleration down anticipated yesterday. But a quick bounce towards the ex-support which became now a resistance in the 1950 area.
    It's interesting, because yesterday we nearly had a marubozu down on SP500, which can allow to short the SP or reinforce a short position on SP very close to the ex support of the channel (1950 area) with a stop loss nearby, i.e close to 1960, if we bet on a "ligne de poussée" i.e weakness of the SP500 = can't go above the middle of yesterday's red marubozu.

    I'm not saying exactly what I'm doing becase I don't want to be followed and be told that this led to a loss. It is highly speculative, but well, I'm still targetting 1905 area at the moment, as long as SP 500 doesn't go above 1960. So, you can estimate the risk reward ratio and where I'd reinforce my short position. My philosophy is globally : take risks if the risk reward ratio is good, i.e for example 5 to 1, and some signals show this level as a likely reversal level.

    1. P.S : watch the DAX really in weekly time units. It is about to complete a nasty Head and Shoulders, neckline the 9000 area.
      It's perfectly placed after a long upwards trend.
      I dream about a figure like that on the SP500 later on.

  19. If I had a hammer, I'd hammer in the morning: it was from about 11am ET, and ES NQ CL all made the hammer look. needs follow thru to confirm a bottom, so here comes non-farm friday.

    boom boom bernanke mortgage application declined, well he is unemployed.. definitely the usa needs higher bond prices (thus lower interest rates) to save the housing market and lower the us dollar index.

    the 'c-team' coffee and cattle!


  20. kwn is really grasping at straws in referencing Easy Al Greenspan in an interview with this guy Kaye, who is just basically another guy, nothing more and nothing less. Is it mean to say that 88 year old Al has seen his best days? Well, if not, let us hear from a couple 90 year olds like Jimmy Carter and Henry Kissinger, ok? Just more examples of how the mentally and morally defective 4th estate has long ago ceased its relevance, and sadly kwn is following down the same yellow brick road.

  21. sorry to rain on your parade Eric King of kwn, but Huszar interview is a rehash of year ago interview, which was rehash of 2 year old interview; As always, the Shadow knows, and the Elephant does not forget ! Sorry and sad.

  22. And 24 hours later...there goes the euro.
    We'll see how long the jobs report number effects the USD/EUR today.

    Sub-$1200 shouldn't be too far off at this point.

    1. ...and gold just dipped to $1198!

    2. $15 silver looks inevitable as does sub-$1180....just not today.

    3. I'm still hoping for $33 gold like last century (early 1900s).

    4. Lol!
      Wow..could you imagine having that buying opportunity?

    5. I wonder if we are going to get a strong bounce sometime soon like later today or perhaps no later than this coming Monday. Maybe, some "pro metal" news is on its way...?

      If not, I wonder if a meltdown is about to happen?

      Dan, I hope you can give us an update before the markets close today.

    6. At this point I'm seriously considering shorting the S&P or other indexes.
      With the USD up and the end of QE and POMO coming soon and the 200/50 DMA's recently being breached it looks like an opportunity coming up to capitalize on a correction taking place by years end if not sooner....like right after elections in November.

  23. I hope all the gold/silver perma-bulls and the USD haters out there will finally accept the reality of what's taken place at this point.

    The various cheerleaders out there were simply ostriches the last 2-3 years until some just recently jumped on the deflationary bandwagon to the dismay of all those who've heard nothing but gold/silver to the moon and hyper or high inflationary scenarios.

    Folks need to question why they listen to or put up with blatant self-serving cheerleading by some out there.
    If the goals of some communities is to help their members for "the end of whatever" then identifying uncomfortable counterintuitive trends should've been part of that even uf it runs counter to their pet biases or "theories".

    When will people recognize that their self-interests are not the same self-interests as those who have a service or merchandise to sell that they earn a commission on???

  24. keep your full passive hedges in place. hedges up enough today for another several more oz. Same total market value, more ounces of gold. keep stacking. :)

    what a bleed.... new lows coming in gold. getting close down here.

    The bald headed shills on CNBC were cheering the falling gold price post employment numbers


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