Gold World News Flash |
- Why you can’t day trade Gold
- Appetite for Commodities
- The Assault on Enterprise
- Jim?s Mailbox
- In The News Today
- Our Douchebag Government - Midyear Debt Update
- Debt & Demobilization
- Bob Moriarty: Due for End-of-Empire Do-Over?
- Early-Stage Gold Juniors
- How Blatantly Obvious Can You Get?
- LGMR: Gold Bounces from "Surprise" Euro-Gold Liquidation, Physical Buying Strong
- Continental Gold: Back in Business in Colombia
- Gold 07-02
- Crude Oil Plummets on Double Dip Fears, Gold Falls the Most Since February
- Spain may need financial rescue, says Merrill
- Markets Create Spun Reasons For Financial Reporting
- Punctuating the Severity of Excess Money Creation
- A Downshift in US and Chinese Growth Coupled with Risk Aversion Marks a Critical Brea
- Paper Short Gold Positions Hit Fresh Record, As EUR Reshorting Persists In Early Part Of Week
- Gold: Maintaining Some Perspective
- Metanor Resources Update
- Unavailability of Spending Crisis
- Visualizing Why The Future Of Europe's Financial System Hangs By A Thread
- US Jobs Slipping Away?
- Lower Silver and Gold Prices Offer you Another Opportunity to Buy Metals on Sales - Don't Pass it Up.
- Coco vs the Trifecta of Trouble
- Hourly Action In Gold From Trader Dan
- Gold Daily Chart
- COT Gold, Silver and US Dollar Index Report - July 2, 2010
- Time is Running Out for Making US Jobs
- Gold rides high in Dubai despite slowdown
- Jim O'Neill's Latest Spin: "The Quicker China Slows, The Better"
- Weekly Credit Summary: July 2 - Something For The Weekend
- China concentrating on gold
- FRIDAY Market Excerpts
- Who Pays Bad Debts?
- Dow Seven-Day Losing Streaks
- The best junior gold stocks to buy today
- America the Beautiful ... Investment Destination
- Rampjob - Fail
- Stock pullback is looking less healthy as bear market looms
- Bears beware: The market could see a sharp rally soon
- Russia’s Peeping at an Aging Empire
- The Scam Artist Formerly Known As The Market Proceeds To Refute EMT In Under 10 Minutes
- The Fourth of July, And Investing in America
- Should We Nuke the Oil Well?
- Risk and Reward Ratio on The Precious Metals Market
- Legendary trader Gartman: Gold is about to go "parabolic"
- Goldman Responds To Zero Hedge Musings On The Segregation Of Cash And Derivative P&L
- What The Heck Happened Yesterday?
| Posted: 02 Jul 2010 05:30 PM PDT
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| Posted: 02 Jul 2010 05:00 PM PDT I am always worried that I am not ready for something, like "Do I have enough ammo to hold off a horde of desperate people storming the Excellent Mogambo Bunker (EMB)?" which I soon realized was a stupid question since there is no "correct" answer; it all depends on when the crowd of angry, starving people, destroyed by the Federal Reserve creating so much money and the government borrowing it and spending it, decides, "We better not rush the bunker and try to get all his gold and silver because The Fabulous Mogambo (TFM) will shoot us and kill us, and then shoot at the people who come to take our bullet-riddled bodies away, and then kill them, too!" I assume that kind of anticipatory thinking by mobs and crowds is caliber-related and/or firepower related, and I knew that I was, after quick reflection, "good to go." But one of the things for which I was not ready was to read that Julian D. W. Phillips, of the Gold/Silver Forecaster, saying that "The debate is on-going as to whether w...
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| Posted: 02 Jul 2010 04:59 PM PDT The 5 min. Forecast July 02, 2010 11:03 AM by Addison Wiggin & Ian Mathias [LIST] [*] Rising taxes, Wall Street crooks, government boondoggles… Abundant evidence underpinning our theme for Vancouver [*] Gold Slaughter 2010… and an urgent question from Byron King [*] June jobs report… when even good news is bad [*] The biggest news for dividend investors in more than a year [*] Readers sound off on central banking… South Africa, the World Cup, Al’s big mansion… and more! [/LIST] We’re less than three weeks away from the start of the Agora Financial Investment Symposium in Vancouver. And it appears our choice of a theme for this year -- Assault on Enterprise: How to Invest in an Age of Rising Taxes, Wall Street Crooks and Government Boondoggles -- is more apt than ever. It’s not easy picking a theme for the speakers and attendees from 29 countries to rally around. Most of the marketing materials need to be prepared mo...
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| Posted: 02 Jul 2010 04:59 PM PDT View the original post at jsmineset.com... July 02, 2010 06:49 AM Gold’s Cup and Handle Formation CIGA Eric Thin trading, headlines promoting fear & doubt, and the increasing casino market mentality has augmented volatility in gold. Gold is a market driven largely by fear and greed towards the end. The trend managers know the end result of a flagging economy will be more devaluation. As a result, short positions used to control must be reduced, preferably into weakness before the next round of stimulus and quantitative easing. The stock market is giving a very strong signal that cannot be ignored for long. Devaluation, which is equivalent to the revaluation of gold, is used to mitigate the excessive debt burden from the prior expansion is not deflationary. Hyperinflation, and the build up to it, is a product of dire economic conditions and the official currency response to it. Paper Gold ETF (GLD): More… Hi Jim, "Hyperinflation is a currency event, not an...
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| Posted: 02 Jul 2010 04:59 PM PDT View the original post at jsmineset.com... July 02, 2010 10:12 AM Thoughts For This Morning Yesterday’s action in gold was started by a hedge fund that was experiencing a withdrawal of funds, as did most in the last quarter. They attempted to take a profit and get money out of the market for redemptions by entering a sell for their gold in the cash and paper markets. This morning is margin call city in gold. The .6 drop in those that have part time jobs in the Jobs Report means an additional 100,000 are out of work. That number was not added into the total. Jim Sinclair’s Commentary This is a pure exercise in MOPE because "For now, I have no detail on the nature of the "sovereign shock" that will be tested." Stress Tests: 80 More Banks JULY 2, 2010, 12:06 PM ET By Stephen Fidler European officials appear to have decided on public stress-testing of about 80 extra European Union banks–over and above the 25 banks of significance to the global ban...
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| Our Douchebag Government - Midyear Debt Update Posted: 02 Jul 2010 04:59 PM PDT Market Ticker - Karl Denninger View original article July 02, 2010 08:43 AM Keep up the lying, legislators, about how it's all "those other guys" fault..... Yesterday gave me the opportunity to update this chart with an extrapolated forward number for this year through the first six months. Yeah, tell me it's all the Republicans' fault. Or all the Democrats'. Nonsense. Our government refuses to deal with the facts - there is no recovery in the private economy, there has been no recovery, private final demand collapsed in 2008 and has not come back one iota and the Feral Government is LYING - on both sides of the aisle. You want a stock market crash and economic collapse Mr. Grayson? Mr. Reid? Ms. Pelosi? Mr. McCain? Mr. Hoyer? Mr. Issa? Mr/Ms (Pick a name)? You're going to get one and the longer you keep this crap up the worse it's going to be. Want to argue with me? Go ahead and try - argue with the math. I double-dog...
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| Posted: 02 Jul 2010 04:59 PM PDT by Adrian Ash BullionVault Friday, 2 July 2010 Four short notes on the link between private wages and public debt... BETWEEN V.E. Day in 1945 and June 1947, the United States shrank its armed forces from twelve million people to around 1.5 million. The impact on the economy – and on the US Treasury's then record debts – is hard to overstate... Indeed, at either end of our chart, national debt – as a proportion of gross domestic product – shows a mechanical relationship with private-sector income. Because it falls as wages rise, and vice versa. That's unsurprising, given that privately-generated income is always the prime source of net tax receipts. But the chart shows three further things, however, which Washington's planners (if not private and foreign Treasury-bond holders) might also consider: #1. The share of GDP going to private-sector US wages has steadily declined since the post-war demobilization. Yes, there's be...
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| Bob Moriarty: Due for End-of-Empire Do-Over? Posted: 02 Jul 2010 04:59 PM PDT Source: Karen Roche of The Gold Report 07/02/2010 Economic rebound? Not with 22% unemployment. Banking reform legislation? Loaded with pork. Bankrupt nations? Rock-solid, lead-pipe cinch. "We need to start all over," says the inimitable Bob Moriarty in this exclusive Gold Report interview. "And in the end, we will." Meanwhile, he's keeping an eye out for the few-and-far-between juniors that manage to get things exactly right. The Gold Report: Just in time for President Obama to meet with the leaders of the G20 nations in Vancouver over the last weekend in June, Congress finalized a sweeping bill to overhaul the banking system. These reforms are touted as the most ambitious rewrite of financials since the Great Depression. What impact will this legislation have on protecting us against another financial meltdown similar to 2008? Bob Moriarty: Not a person I know, including myself, can actually say one thing of significance about this bill because no one actually und...
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| Posted: 02 Jul 2010 04:59 PM PDT Scott Wright July 2, 2010 2756 Words Ahhhh summer heat, stock-market corrections, and juniors. What more can one ask for to soothe the soul? OK, so perhaps writhing would be more appropriate than soothing. But you know, heat happens every summer, the stock markets were due for a correction (especially after an 80% move higher since March 2009), and junior gold stocks will eventually return to favor. It has no doubt been frustrating owning gold stocks of recent, especially the juniors. With gold achieving record highs it is natural to believe the gold stocks would mount material rallies and achieve records of their own. And based on their inherent risk, the juniors should have been exhibiting huge upside leverage. But with gold stocks continuing to lag gold (the HUI/Gold ratio remains at 2003 levels), the few remaining investors not selling into these crazy volatile markets have ex...
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| How Blatantly Obvious Can You Get? Posted: 02 Jul 2010 04:59 PM PDT Well, at least I don't have to spend too much time on what happened in Far East and early London trading on Thursday... as everything of consequence happened in New York. The top for gold [around $1,243 spot] was pretty much high noon in London... and the price was already starting to slide a little as the Comex opened for trading. The price continued to slide into the London p.m. gold fix which was moments after 10:00 a.m. Eastern time... and then things really got serious to the downside. JPMorgan et al pulled their bids, and the tech funds found themselves selling into a vacuum... and down went the price. The selling continued right through the end of Comex trading and into the electronic market... with the low of the day [$1,195.40 spot] coming a few minutes after 4:00 p.m. Eastern time... and gold closed below the $1,200 mark at $1,199.40 spot. From its high to its low... gold was smacked for almost 50 bucks! Silver followed virtually the sa...
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| LGMR: Gold Bounces from "Surprise" Euro-Gold Liquidation, Physical Buying Strong Posted: 02 Jul 2010 04:59 PM PDT London Gold Market Report from Adrian Ash BullionVault 07:15 ET, Fri 2 July Gold Bounces from "Surprise" Euro-Gold Liquidation, Physical Buying "Strong" Near $1200 WHOLESALE GOLD rallied in early London dealing on Friday, rising 1.2% from yesterday's sharp drop to 6-week lows and holding steady as new US data showed 125,000 jobs being lost in May, with unemployment standing just shy of 1-in-10. The Euro extended its gains on the currency market, while European stock markets bounced from this week's 5% drop towards 9-month lows and major-economy government bonds eased back. US crude oil contracts slipped further, but both base and precious metals dealers reported "bargain hunting", with one calling physical gold demand "strong" around $1200 an ounce. Silver prices briefly crept above $18.00 after losing more than a dollar-per-ounce to a 3-week low of $17.73 late Thursday. "All metals rebounded in Asia because of Chinese buying," says a note from M...
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| Continental Gold: Back in Business in Colombia Posted: 02 Jul 2010 04:59 PM PDT By Claire O'Connor and James West MidasLetter.com Friday, July 2, 2010 Continental Gold Ltd.(TSX: CNL) began trading on the TSX on April 19th 2010 following an amalgamtion with Cronus Resources Ltd. Continental's flagship project is Buriticá, a high-grade gold vein system, with historic gold production and areas that would allow for expansion. The company also has an extensive portfolio of projects in areas of known gold mineralization in Colombia, and is currently focusing on a program at its two key properties that will provide 30,000 – 60,000 metres of infill, step-out and exploration drilling. [INDENT]"The diligence and dedication of Continental's professional team has moved this company forward tremendously since the amalgamation and TSX listing just a short two months ago, and I would personally like to thank them for their efforts." ...
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| Posted: 02 Jul 2010 04:59 PM PDT courtesy of DailyFX.com July 02, 2010 08:20 AM Gold has topped. Please see the latest special report for details. Near term, gold is making its way lower and most likely in an impulsive fashion. From a trading standpoint, the next opportunity will come from the short side on completion of wave iv of 3....
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| Crude Oil Plummets on Double Dip Fears, Gold Falls the Most Since February Posted: 02 Jul 2010 04:59 PM PDT courtesy of DailyFX.com July 01, 2010 07:03 PM Commodities got slammed across the board on Thursday, as double dip fears mounted. There is evidence to suggest that there may be more downside to come. Commodities - Energy Crude Oil Plummets on Double Dip Fears Crude Oil (WTI) $73.18 +$0.23 +0.32% A batch of weak U.S. economic reports sent crude oil screeching lower on Thursday. Prices slid through $75.50 support and never looked back. A measure of expected oil volatility increased to 41.22%, as traders anticipate large swings going forward, though that is below the 47% registered in May and early June. The double dip thesis is gaining traction, and that naturally bodes poorly for economic-sensitive commodities such as crude oil. It mattered little that the dollar was slammed on the day, as that was merely a consequence of Thursday’s disappointing economic data. All eyes are now on the June U.S. nonfarm payrolls figures set to be released early ...
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| Spain may need financial rescue, says Merrill Posted: 02 Jul 2010 04:59 PM PDT July 01, 2010 01:54 PM - Spain's debt crisis may force the country to tap the EU-IMF rescue fund over the next two to three months and set off a political storm, according a confidential report by the Bank of America Merrill Lynch. Read the full article at the Telegraph......
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| Markets Create Spun Reasons For Financial Reporting Posted: 02 Jul 2010 04:59 PM PDT View the original post at jsmineset.com... July 01, 2010 05:30 PM My Dear Friends, Markets create spun reasons for financial reporting. Reasons given by financial reporting do not make markets. Financial reporting is the basis for frantic interlopers to talk their position As the day wore on, Financial TV today decided gold was down because there was no longer any chance of serious debt problems for Greece, Spain, Italy, Portugal or Italy. Their reason was that the Spanish debt offerings went so well even in the face of potential rating agency downgrades announced yesterday. The euro took out the $1.24 to $1.25 resistance in a short covering panic thereby busting the dollar in its mirror image. The gold banks piled on the Comex paper exchange, therein scaring the hell out of the super leverage guys, taking gold down hard. This gives us certain points to consider: 1. You can clearly see that in this mirror image Forex market the US dollar can trade as easily at $1.72 as the euro...
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| Punctuating the Severity of Excess Money Creation Posted: 02 Jul 2010 04:59 PM PDT I know, alas, that there is nothing that can be done to prevent unimaginable suffering and the collapse of the economy, now that the Federal Reserve has created so much excess money and credit, and, to make matters infinitely worse, are still doing it, more than ever! The exclamation point at the end of the sentence indicates that I still register surprise at the sheer stupidity and insanity of it all; the Federal Reserve has to create more money to be used to buy up the trillions and trillions and trillions of dollars in a for-the-rest-of-your-life tsunami of new federal government borrowing and spending. Sharp Junior Mogambo Rangers (JMRs) noticed the use of the prosaic period as punctuation at the end of the last sentence, even though the content of said sentence is of such horrifying magnitude that it would seem to merit at least one exclamation point. But no! So what gives? What am I up to? What am I trying to say with my choice of punctuation, as if it is was some kind of code...
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| A Downshift in US and Chinese Growth Coupled with Risk Aversion Marks a Critical Brea Posted: 02 Jul 2010 04:59 PM PDT courtesy of DailyFX.com July 01, 2010 03:06 PM Is the global economy facing a double dip recession and a new financial crisis? That is the concern that made the capital markets swoon Thursday. A disappointing round of data for both the US and China coupled with a questionable shift in the European banking sector would have a particularly dramatic impact on crude prices for the session. North American Commodity Update Commodities - Energy A Downshift in US and Chinese Growth Coupled with Risk Aversion Marks a Critical Break for Crude Crude Oil (LS NYMEX) - $72.75 // -$2.88 // -3.81% Is the global economy facing a double dip recession and a new financial crisis? That is the concern that made the capital markets swoon Thursday. A disappointing round of data for both the US and China coupled with a questionable shift in the European banking sector would have a particularly dramatic impact on crude prices for the session. Heading into the session, the benchmark NYMEX future...
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| Paper Short Gold Positions Hit Fresh Record, As EUR Reshorting Persists In Early Part Of Week Posted: 02 Jul 2010 04:17 PM PDT
This week's CFTC report indicates that commercial shorts on the CFTC, both gross and net (excluding commercial longs) have hit another fresh all time record, at -290k and -482k. Should the ongoing asset liquidation squeeze forcing gold prices to decline, fizzle out, and should gold prices resume their trajectory higher, the only question will be at what point will this barrage of paper shorts get the marching (and margin) orders to cover.
And in related liquidation news, the CFTC COT indicated that the short covering rampage in the EUR seen three weeks ago has not returned. Net shorts once again increased in the week ended June 29 by 2696 to -73,670. This was to be expected after the biggest short covering episode in the history of the the EUR shook out all weak hands. Yet the real action in the last week started on June 30, which data was not captured in today's release. Assuming there was a fund liquidation as we suspect (and which is also impairing the price of gold and other commodities), we expect the net short number out of next week's CFTC to once contract.
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| Gold: Maintaining Some Perspective Posted: 02 Jul 2010 03:14 PM PDT Yesterday was one of those days in the gold space that is a nightmare to many gold investors, but an absolute dream to investors like me. These are the days when the price action in gold resembles a cliff dive. Stop after stop gets hit as shorts press the issue and force overleveraged investors out of the market. Strong hands step in to support the market on its way to new highs. The last time we saw a drop comparable to yesterday's $40+ dollar move was in February. This was about the time gold bears reappeared out of hibernation to augur the end of the bull market. What happened next? A 3-month, $200 dollar rally. You can see why I love it whenever we get panic sell-offs that have bears celebrating.   For some perspective, I've pulled a 3 year chart of gold. Now unless I pull out a microscope, I don't even notice yesterday's sell-off that had investors running for the exits. This is the type of perspective investors in the gold space need to have. This is a very clean bull market  . Now I'm not saying we've hit a bottom and that we can't break $1200 from here. But I can tell you that I will be buying every single time there is a panic sell-off; I am more than happy to take speculative longs out of their positions. You are seeing right now that the markets  never make it easy to profit. Those who are best able to keep their emotions in check will be the ones with the biggest profits.
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| Posted: 02 Jul 2010 03:08 PM PDT MiningMarketWatch.net recently sent an update on Metanor Resources, which is one of my top penny mining stock picks. Metanor has exceptional management, great upside potential, and is a gold producer. Cash cost per ounce should be around $US 500 per ounce. I don't of too many new gold producers you can buy today with a 1Moz+ gold resource, targeted to produce 60K-70K ounces of gold per year, with a cash cost of just $500 dollars, run by a great management team , and you can buy for about 50 cents/share. If you do, then please let me know. For more information, see Metanor Resources Trading Card for my complete review.
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| Unavailability of Spending Crisis Posted: 02 Jul 2010 02:18 PM PDT My thesis holds that the market's structural debt fears are shifting from the Eurozone to here in the U.S. The Euro gained 1.5% this week against the dollar. The Swiss franc jumped 2.7%. European debt markets showed hopeful indications of ... Read More...
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| Visualizing Why The Future Of Europe's Financial System Hangs By A Thread Posted: 02 Jul 2010 01:45 PM PDT
This highly informative (and very disturbing) graphic prepared originally in 2009 by the Guardian, makes it all too clear just why Europe is so concerned about its banking sector, and if it isn't, why it most certainly should be. While the top 5 banks in the US have roughly $7 trillion in assets (all of which are largely undercapitalized, as the little black circles show a bank's market cap, thus demonstrating the gaping hole between assets and equity), just the top five banks in France alone have nearly $1 trillion more in assets than all of the US banks (and are even more undercapitalized). Add to this the UK, Germany, Spain, Italy, Belgium, and the Netherlands, all of which are intricately interconnected with one bank's assets representing another bank's liabilities, in the world's biggest circle jerk, and you can see why quite literally the fate of the world depends on Europe containing the fallout from the ongoing financial crisis. Imagine for a second that these tens, if not hundreds, of trillions in assets in European banking assets are marked to market, even as the liabilities are completely fixed, thus crushing trillions in equity value, and you can see just how precarious the financial stability of the entire world is. One little falling domino forcing a MTM scramble across the banking sector will end Europe's financial system. The only amusing consequence of this doomsday hypothesis is visualizing the powerless and decentralized consortium of the ECB, BOE and SNB attempting to stop an avalanche of a hundred trillion in busted bank assets. One can see why Jean Claude Trichet is the world's most nervous human being. PS - for clarification, the underlying market cap data is dated, but the underlying assets have not changed much since the preparation.
above chart in pdf format
This posting includes an audio/video/photo media file: Download Now | ||||
| Posted: 02 Jul 2010 12:33 PM PDT
Lucia Mutikani of Reuters reports, Weak private hiring in June shows tepid U.S. recovery: U.S. private payrolls rose only modestly in June and overall employment fell for the first time this year as thousands of temporary census jobs ended, indicating the economic recovery is failing to pick up steam. The employment figures from the U.S. Labor Department on Friday followed a raft of weak reports this week on consumer spending, housing and factory activity that have heightened fears the economy could slip back into a recession. But even though private-sector hiring in June was well below levels needed to bring down unemployment on a sustained basis, analysts said the figures were not consistent with an economy on the brink of another recession. "We are still on track for a fairly moderate recovery," said Julia Coronado, an economist at BNP Paribas in New York. "There have been some concerns that maybe we are heading for a double-dip. The report eases those concerns in the sense that we are still creating private sector jobs." Private hiring rose by 83,000 after adding only 33,000 jobs in May. Total nonfarm employment actually dropped 125,000 -- the largest decline since October -- as the government laid off 225,000 temporary census workers. The unemployment rate fell to 9.5 percent, the lowest level since July 2009, from 9.7 percent in May, but only because a flood of jobless workers gave up their employment search. President Barack Obama, whose approval ratings have been battered by the weak economy, expressed disappointment in the numbers even though he said they showed the recovery moving forward. "We're not headed there fast enough for a lot of Americans," he said at Andrews Air Force Base in Maryland. "We're not headed there fast enough for me, either." Economists polled by Reuters had expected private employment to grow by 112,000 jobs, although some had scaled back their projections in recent days. The jobless rate was expected to edge up to 9.8 percent. U.S. stock indexes closed down for a fifth straight day. Prices for government debt slipped as bond investors, who had driven a rally in recent days, focused on the report not being as bad as had been feared. The U.S. dollar fell against the euro. EUROPEAN DEBT CRISIS BLAMED Also on Friday, the Commerce Department said that factory orders in May suffered their biggest tumble since March of last year. Analysts blamed the moderation in the recovery from the longest and deepest recession since the 1930s on the sovereign debt crisis in Europe, which is expected to stunt growth in the region as governments tighten belts to cut budget deficits. "The European debt crisis is having a negative impact on consumer and business confidence," said Chris Rupkey, chief economist at Bank of Tokyo-Mitsubishi UFJ in New York. "I don't think the outlook for the second half is that negative, but the jury is out on this until we see next month's jobs report." A poor labor market in an election year is the worst nightmare for Obama and could cost the Democratic Party dearly in November mid-term elections. Obama, who has called job creation his No. 1 priority, has tried to put the blame on the policies of the previous administration. But Republicans say a roughly $800 billion package of tax cuts and spending pushed by Obama has not worked. "The writing is on the wall for President Obama's stimulus policies and everyone -- taxpayers, economists, and the rest of the world -- sees it but him," said House Republican Leader John Boehner. With the economy still in a fragile state, the Federal Reserve is also in a bind. It has held benchmark overnight interest rates close to zero since December 2008 and has pumped more than $1 trillion into the economy. Fed officials believe a sustainable recovery has taken hold, but are watching cautiously and financial markets do not expect the central bank to raise rates until the middle of next year. Last month, payrolls in the dominant services sector rose 91,000 after increasing 20,000 in May. Temporary help employment rose 20,500, while retail hiring fell 6,600. In the goods-producing sector, employment fell by 8,000 after increasing by 13,000, pulled down by declines in construction. Home building activity has dropped sharply since late April when a tax credit for homebuyers expired. Employment in the factory sector, which has led the recovery, rose by just 9,000 after a gain of 32,000 in May. Cash-strapped state and local governments were also a drag on employment last month. Analysts were disheartened by the shortening of the workweek to 34.1 hours from 34.2 hours in May and a slip in average hourly earnings. The decline in earnings is worrisome on two fronts: it could crimp consumer spending, and it may add to downward pressure on already weak inflation. "This leaves the Fed on extended hold. Recent data also heightens concern that the disinflation process has not yet found a trough," said Michael Feroli, an economist at JPMorgan in New York. In June, just over 45 percent of the total 14.6 million people unemployed had been out of work for more than 27 weeks, little changed from May.
The statistics are grim, and it's obvious that growth is moderating, but it's too early to conclude that hiring will not pick up in the months ahead.
Finally, I had a chat with Stefane Marion, Chief Economist at the National Bank of Canada, who told me "leading indicators are up, but I need confirmation in the form of job growth".
The bottom line is that even though this report was anemic, it's too early to throw in the towel on US jobs. The recovery will be tepid, especially if private sector employment doesn't pick up, but there is always a lag between employment and leading indicators. Below, I leave you with Nigel Gault's take on Friday's weak jobs report.
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| Posted: 02 Jul 2010 12:24 PM PDT Gold Price CloseToday : 1,207.40Gold Price Close : 25-Jun 1,255.80Change:-48.40 or -3.9%Silver Price Close Today : 1769.8Silver Price Close : 25-Jun 1911Change -141.20 or -7.4%Platinum Price Close... This is a summary only. Visit GOLDPRICE.ORG for the full article, gold price charts in ounces grams and kilos in 23 national currencies, and more!
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| Coco vs the Trifecta of Trouble Posted: 02 Jul 2010 11:00 AM PDT Obama: US economy 'strengthening' despite weak data - Yahoo news
[Re: financial reform bill] It's a great moment. I'm proud to have been here ... No one will know until this is actually in place how it works. - Senator Chris Dodd, chairman of the Senate Banking Committee
We need to pass the bill so that you can find out what's in it... - Nancy Pelosi on ObamaCare (March)
We believe there may be added risk to U.S.-based credit rating agency Moody's business profile following recent U.S. legislation that may lower margins and increase litigation related costs for credit rating agencies. We are placing our 'A-1' short-term rating for Moody's on CreditWatch with negative implications. - Standard & Poor's Ratings Services (Moody's competitor)
Trifecta of Trouble The Wall Street Journal has coined the world's economic worries as the "Trifecta of Trouble". European debt, a Chinese slowdown and a US slowdown are conspiring against the all important stock market and GDP figures. That's rather odd. These three threats would sound rather familiar to long term Daily Reckoning Readers. You know our views on the so called "GDP", but what about financial markets? Checking the ASX 200 every thirty seconds isn't your editor's thing. But lately, it's all become a whole lot more interesting. That's partly because Murray Dawes, the editor of our trading newsletter Slipstream Trader, has had a remarkable run at picking the movements of the market. But it's the way he plays his predictions that is really fascinating. For example, at one point he had a pair of trades, one long, one short, with both in the money about 10% ( in less than 2 months). These were similar blue chips (but not his best performers). The idea behind the pair trade is that regardless of the market's move, subscribers are guaranteed profits. His plan is to close out the position that will become less profitable as the market moves up or down, while letting his winning bet run. That means Slipstream subscribers will be profiting from this pair trade no matter which way the market goes. But back to the market's daily movements, because they have been intriguing. To be more specific, various indices have been playing silly buggers, in your editor's opinion. First we had the US flash crash of May 6, which gave investors quite a fright and left everyone feeling suspicious. Then, on Monday of this week, the ASX did the same thing down under style. That's a 13% move in a few minutes. A bigger move than the Flash Crash. Slipstream Trader editor Murray had a grip on things. His reaction was to be irritated about the effect of a data mix up on his charts. So, the excitement was probably much ado about nothing. Only it's not just indices that are misbehaving. Trades which drove Boeing shares down 44% have been cancelled. "A 17 percent plunge in Citigroup Inc. today triggered a five-minute trading pause, ... The order that caused the slump, was cancelled, ..." What's real anymore? Trades are just cancelled when they are out of favour. If this happened on genuine upticks, Port Phillip Publishing would be out of business. Our subscribers couldn't realise their gains. The market manipulators (central banks and government regulators) have funded booms indirectly with low rates, then directly with quantitative easing, and now they are literally zombifying investors to do their bidding. Regardless, assuming there is any integrity to market action, you can only reach one conclusion about the next few months of index action. That's because the golden cross has gone dark. Basically, the chart tells you that a major bear market is in the making, because certain moving averages have crossed. Check out the article for a better explanation. Your editor watched a documentary on Paris Tuesday night. Apparently there is a clandestine group which runs around the city at night fixing things for the sake of it. Like old clock towers. The police arrested them a while back, but the Judge let them off. The TV show host (legendary Rhys Griff Jones) commented on the fact that Paris spends more money on appearances than any other city. Perhaps this is where the money goes. Paying police to catch the clandestine cleaners and judges to let them off... Regardless, things are about to change in the French national psyche. Austérité is the buzz word there too now. Politicians are having to give up Cuban cigars while So-kozy continues to enjoy his weekend retreat at Versailles. Ahh, the French. Speaking of which, Coco Chanel has proved the difference in an ongoing debate about intellectual property between economists. Many from the Austrian School of Economics oppose IP laws. That used to be quite popular. Medical researchers once considered it immoral to file patents. It just so happens that the fashion industry is an example of how industries flourish in the absence of (significant) IP rights. And ladies, Coco Channel features prominently in the discussion on the side of the Austrians. But back to austérité. How much can you buy it for? Austerity goes for about $US 1 billion these days. The Canadians found this out the hard way by hosting the G20, which resulted in austérité going global. And 1 billion is just the security cost for hosting the G20 summit. Damage done by demonstrators pushes up the figure significantly. Dan discussed the G20 on Monday:
So stimulus steals from the long run. But does austerity pay? The German politicians think so. Their argument is that the private sector gets insecure about uncertainty and an unsustainable government debt makes the consumer uncertain. Especially any German consumer with a long memory and an eye on the ECB. Are they right? Does austerity pay off? Die Bild Zeitung reports that the "Job Miracle Continues" with falling unemployment in Germany. That doesn't sound like the anti-austerity predictions of Obama, Biden and Geithner (the real trifecta of trouble). Of course, with a falling Euro, Germany's export driven economy is having a good old time. But still, the Germans are setting out to prove Keynes wrong. A falling currency is the market at work, stimulating the strugglers, while slowing down the boomers. That's why China's currency is expected to appreciate once it's allowed to. But not everyone is convinced on that matter. And not everyone is convinced Greece should stay in the Euro. After a comment from a German politician, which was originally ridiculed, the Germans are supposedly seriously considering giving the Greeks the boot. They have worked out how much it will cost them to do so and it looks mighty less than a Greek bailout. It's Budget Love! The following news must just be another data glitch like the ones discussed above: US "Treasury two-year yields fell to a record" low. Why must it be a glitch? Because even the military has figured out how bad the US debt position is:
But still, investors apparently react by driving yields lower. Hang on. Interest expenses at about the size of the US military budget! And that's at record low rates. Surely this is in the Recipes for Disaster book. To donate to the US Fiscal fiasco, click here. If you don't, Pennsylvania may have to go ahead and privatise its 621 government owned liquor stores. You think we're gloomy? Royal Bank of Scotland, one of the UK's eight note-issuing banks, has been causing a stir. Keep in mind that RBS needed more than one bailout to survive the crisis. And now they come up with this:
It's rather strange agreeing with a bank analyst. But don't think this gets them off the hook. One of our readers sent this in:
At least we still have the central bankers to disagree with. But wait. "Central banks warn of new crisis if exit left too late". They are referring to exits from fiscal deficits. The comment applies equally to exiting their own extremely low rate policies too. It's the old inflation/deflation argument. And last, but not least in the doom file, Paul Krugman calls this Third Depression a "Long" one.
Why so pessimistic?
Paul should ask the Greeks about this inadequate spending thing. Currency Kerfuffle Why not keep this section short? That's how the Euro was being kept, until recently. The UN is more concerned with abandoning the US Dollar as the world's reserve currency. Of all the places for this idea to come from! Well, the ECB was busy rolling over US $530 billion in loans to banks. And the Americans were busy catching Russian Spies. But what were those spies doing? Reuters reports:
Who could make this up? PS: any American readers, click here to claim your "Obama Tax Hike Exemption Card", if you earn less than $250,000. ALP turn RSPT into MMRT as RIO, BHP, XTA go MIA in ACT We will let Dan cover this in Friday's DR. It's too depressing. Nickolai Hubble
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| Hourly Action In Gold From Trader Dan Posted: 02 Jul 2010 10:25 AM PDT Dear CIGAs, Gold held fairly well today considering the fact that there was further unwinding of those Gold/Euro and Gold/Sterling spread trades. That trade continues to be tied to the shift away from the problems of sovereign debt in Euroland and an increasing focus on the abysmal state of the US economy which we were reminded of with today's payroll numbers. You can see the unwind by looking at the performance of Dollar-priced gold versus Euro-priced gold at the London PM Fix over the past week. Euro gold lost 6.4% of its value against a fall of only 4.2% in Dollar gold. If you recall, gold priced in Euro terms had been outperforming gold priced in Dollar terms during the height of the European sovereign debt crisis. Now that those fears are fading somewhat, Euro gold is dropping at a faster clip. We will be able to see where the investment community focus is shifting from day to day or week to week by monitoring the performance of these two "currency" pairs in the days and weeks ahead. I should note here that merely because the attention of the market "shifts" from one day to the next does not mean that the situation is going to improve or that the causes underlying the original crisis have been corrected and that now the problem is solved. It simply means that investors are looking at something else for the time being. Today's trading crowd has a terminal case of ADD (Attention Deficit Disorder) and seems incapable of looking at two things without forgetting about one of them but it is what it is and that shows up in the daily price movements in these markets. Trying to read too much into any market in front of a holiday weekend is not a wise thing to do as a great deal of the activity is more often than not book-squaring and profit taking but if I had to pick my "druthers" (That is Texan for "I'd rather") I would choose to see gold move higher or at least stop going down after a day like yesterday. It did put in an "inside day" – an inside day is one in which the market high and low of the current session does not exceed the previous day's high or low – so that is encouraging to the friends of gold that sellers could not manage any further additional downside traction. Still, yesterday's technical damage was pretty significant so gold is not out of the woods yet. Bulls will need to get the closing price back above $1,227 to at least spook some of the weaker-handed shorts. Additionally, that sagging momentum indicator shown on the chart will need to break its downtrend. The longer-term weekly gold chart looks okay as it shows the uptrend intact but next week's price action will need to see gold stay above $1,175 on a closing basis to keep the bears from further entrenching themselves. That chart shows some indicators turning lower so bulls will need to take charge next week to prevent any further deterioration getting displayed. A weekly close below $1,165 would not be at all helpful. Mining stocks are higher today which is a welcome sign. The HUI needs to at least climb back above the 50 day moving average near 464 to get anything going to the upside. Bonds moved lower today for some reason even with the lousy numbers out of the jobs report. Could be pre-holiday profit taking by longs who definitely had a good week in there. Happy Birthday America! Remember those things that have made you great and work to see that they are not lost or taken from you right under your nose. Click chart to enlarge in PDF format with commentary from Trader Dan Norcini
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| Posted: 02 Jul 2010 10:23 AM PDT | ||||
| COT Gold, Silver and US Dollar Index Report - July 2, 2010 Posted: 02 Jul 2010 10:19 AM PDT COT Gold, Silver and US Dollar Index Report - July 2, 2010.
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| Time is Running Out for Making US Jobs Posted: 02 Jul 2010 10:00 AM PDT Andy Grove, one of Intel's earliest employees and its former Chairman and CEO, offers his take on how the US must create jobs at home instead of in China. As he sees it, the cost of rising wages and benefits in the US has eroded the nation's ability to compete versus China's low-cost labor machine. US companies have understandably chosen to ship work overseas in order to boost profits and please shareholders in the short term. However, the number of offshored positions has become staggering. These decisions have contributed to the frailty of the US manufacturing sector, and Grove probes what could be done differently. From his opinion piece in Bloomberg: "Today, manufacturing employment in the U.S. computer industry is about 166,000 — lower than it was before the first personal computer, the MITS Altair 2800, was assembled in 1975. Meanwhile, a very effective computer-manufacturing industry has emerged in Asia, employing about 1.5 million workers — factory employees, engineers and managers. "The largest of these companies is Hon Hai Precision Industry Co., also known as Foxconn. The company has grown at an astounding rate, first in Taiwan and later in China. Its revenue last year was $62 billion, larger than Apple Inc., Microsoft Corp., Dell Inc. or Intel. Foxconn employs more than 800,000 people, more than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard Co., Intel and Sony Corp… "…You could say, as many do, that shipping jobs overseas is no big deal because the high-value work — and much of the profits — remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed? Since the early days of Silicon Valley, the money invested in companies has increased dramatically, only to produce fewer jobs. Simply put, the U.S. has become wildly inefficient at creating American tech jobs." Foxconn's employment of 800,000 — more than Apple, Dell, MSFT, HP, Intel, and Sony combined — is simply astounding. It's a stunning example of how quickly offshoring has transferred employment from the US to China. And, it's not a mechanism that works so easily in reverse. Grove implores today's US executives to develop US employment strategies of the same caliber as their China offshoring practices. If the US is going to avoid overwhelming unemployment, and retain some potential for manufacturing leadership, he recommends that action be taken immediately, before it's too late. To read Grove's full opinion, and some of his ideas for creating US jobs, visit his Bloomberg piece on how to make an American job. Best, Rocky Vega, Time is Running Out for Making US Jobs originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Gold rides high in Dubai despite slowdown Posted: 02 Jul 2010 09:59 AM PDT By Cleofe Maceda According to the World Gold Council, the sentimental value of gold "sets it apart from the competing purchase choices, making it more desirable and long lasting" for many women. Experts also consider gold an integral part of women's appearance and of their ability to look and feel good. But more than anything, it is the investment value of gold that makes it worth every dirham spent. "It comes to mind what I said a few years ago: When my wife buys clothes, she spends money, but when she buys jewellery she saves money," recalls Rolf Schneebeli, chief executive officer of Joyalukkas. Schneebeli says gold has various aspects that are appealing to women. First, gold is traditionally viewed as a store of value, a saving tool that will prove useful during a rainy day. This is the reason people gift gold on weddings, in the hope of providing safety to the couple for a long time to come. "[Gold belongs] in the savings category and as such competes with bank deposits and stock portfolios. Here we would talk about bangles and similar pieces with limited value addition which are essentially the bank account on the wrist," he adds. [source]
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| Jim O'Neill's Latest Spin: "The Quicker China Slows, The Better" Posted: 02 Jul 2010 09:54 AM PDT
It was only a month ago that Jim O'Neill was openly taunting those who refused to suckle on Goldman's Kool Aid teat: "dear grizzlies…….bet your worried about today’s rally? See u later." (sorry, we won't let this go for a long time). Then again, those who did believe Goldman's and David Kostin's advice that the market would be 30% higher now, are down to 70% of AUM (the very same David Kostin who on September 12, 2008, the weekend before Lehman blew up, predicted a 12% rally by the end of 2008 on the road to "S&P 1,400"). So, yes Jim, the grizzlies are far less worried at this point. Wish we could say the same for the bulls. Which incidentally may explain why Jim O'Neill has been completely gone from the scene for the past month. Luckily, he has now reappeared, and is once again dispensing bullishness to all who care to listen. The quote du jour this time: "While I can understand why some of the China bears will be full of the joys of Spring right now, this is a “desired slowing” and unlike some of the many issues in the West, the quicker they slow, the better." And we thought Bob Pisani had trademark to the "a nuclear holocaust is a victory for the bulls" phrase. Needless to say, we disagree with everything Jim has to say, except for his world cup pick. That said, we certainly enjoy his spin for the comedic content.
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| Weekly Credit Summary: July 2 - Something For The Weekend Posted: 02 Jul 2010 09:28 AM PDT
Commentary conributed by www.creditresearch.com Spreads were significantly wider this week with HY the notable underperformer relative to IG. Indices underperformed intrinsics in general as US credit worsened relative to European credit quite drastically. US corporate bonds (cash) saw a definite up-in-quality shift as TSYs rallied large and flattened 10bps or so. FINLs (most critically the majors) outperformed non-FINLs on the week as real economy risks start to be the focus once again with 10-12bps compression in the spread between them in the EUR and 5-6bps in the US.
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| Posted: 02 Jul 2010 09:18 AM PDT by Frank Holmes
China already has the sixth-largest reserves of gold in the world … but this deal could help them grow faster. China is one of the few countries in the world that could swing this deal because it has the available smelter capacity to handle this type of [unrefined] gold… The deal also reflects that the Chinese government wants more gold and it'll do what it takes to get it. China agreed to pay for the gold within days of delivery, much shorter than the industry standard of three-months. Gold demand in China has seen a significant shift in direction in recent years. The government, which used to restrict how much citizens could own, is now running ads on state television encouraging the middle class to own gold. As a result, gold demand has increased 13 percent annually for the past five years… This is why agreements like the one with the Kensington Mine are important. It provides an innovative source for China to increase its gold holdings without going out to the open market to acquire refined gold. [source]
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| Posted: 02 Jul 2010 09:06 AM PDT Gold trades sideways before holiday weekend The COMEX August gold futures contract closed up $1.00 Friday at $1207.70, trading between $1198.80 and $1214.00 July 2, p.m. excerpts: see full news, 24-hr newswire…
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| Posted: 02 Jul 2010 09:00 AM PDT A front-page photo in Tuesday's Financial Times shows lightning striking near the Parthenon. Zeus must be reading the paper. Greece is supposed to cut its public spending by an amount equal to 10% of its GDP. Even so, its public debt is expected to rise to nearly 150% of GDP by 2016 – or three times the level of Argentina when it defaulted in 2001. It should be obvious that the Greeks owe too much. But so does almost everyone. Every kind of debt is so heroic it poses an affront to nature and a challenge to the gods. Much of it is unpayable. Private debt. Public debt. Short term. Long term. US. England. Europe. All kinds of debt in all kinds of places. In America's private sector, for example, debt exploded 6 times faster than GDP since 1950. And today, the whole world staggers under debt, with more than $3.50 of debt for every dollar of GDP. Today's global economic problem is breathtakingly obvious: too much debt. The solution is obvious too; debt that cannot be repaid must be destroyed – by defaults, foreclosures, bankruptcies, write-downs, and restructurings. Nouriel Roubini, writing in The Financial Times this week, is on the right track. Greece cannot bear the weight of all its debt, he says. Since it will default sooner or later, better to restructure the debt now…reducing it to a level the Greeks can actually pay. Fair enough. Creditors would take their losses in an orderly way. When the debtor cannot pay, the creditor should take the loss. But practically the entire burden of modern economics over the last 3 years has been a scammy effort to shift the losses to someone else. To bring the readers fully into the picture, the great debt build-up began with Reagan in the White House and Thatcher at #10. Reagan added to deficits. Thatcher cut them. On the west side of the Atlantic, economists called on Reagan to stop spending. On the east side, 346 economists implored Maggie Thatcher to spend more. Reagan's young budget director, David Stockman, resigned in protest when the Republicans wouldn't bring deficits under control. Meanwhile, Maggie Thatcher was told that her austerity policies would "deepen the depression, erode the industrial base and threaten social stability." She should do a U-turn immediately, said the august economists. "This lady's not for turning," she replied. It didn't seem to matter what anyone thought or did. Markets do what they want. Back then, interest rates were coming down. The US 10-year Treasury yield fell from 15% in 1980 down to under 3% today. In that tender, delightful world, debt was no problem for anyone. Even if you wanted to default, the banks wouldn't let you. They offered to refinance your debt at a lower rate. Both Britain and America grew; their debts grew too. Private sector debt peaked out in 2007. Households and corporations have been de-leveraging ever since. But as the private sector taketh away, the public sector giveth more debt. And again, markets are doing what they want. Interest rates are already at the lowest levels in a generation. This time, economies cannot cut rates and grow their way out of debt. Instead, someone will have to pay. Who? The world's economists have no better idea what is happening in the 21st century than they had in the 20th. They neither saw the crisis coming, nor knew what to do when it arrived. Their panicky 'rescue' attempts wasted $10 trillion. They claimed they had put the world on the road to 'recovery' and claimed victory over the credit cycle. They might just as well have claimed to have conquered sin or exterminated cockroaches. Neither governments nor their economic advisors can make bad debt disappear. They know that as well as we do. All their sweating and grunting has another purpose – to decide who gets stuck holding the bag. Taxpayers, for example. That is the general drift of the Germano-Anglo-Canadian proposal. 'Austerity,' as they call it, means higher taxes, fewer services, and bailouts of the financial sector. The big banks won't pay for their mistakes. The public will. Martin Wolf and Paul Krugman are wrong about many things, but they're probably right about the side effects of this bitter medicine; it will probably deepen and prolong the slump. It will cause a 'third depression,' says Krugman. On the other hand, Krugman, Wolf and the other neo-Keynesians have a bad proposal of their own. "…governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending," writes Krugman. If too little spending were the real problem, it would invite the most agreeable fix since sex therapy. Every government would lend a hand. Alas, the real problem is the opposite. It is the consequence of too much spending – debt. More government spending means more debt. Who will pay it? Taxpayers? Consumers? Savers? Investors? Lenders? The young? The old? Nobody knows for sure. But everybody is surely going to find out. Bill Bonner Who Pays Bad Debts? originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Posted: 02 Jul 2010 08:52 AM PDT  Hickey and Walters (Bespoke) submit: Yesterday we noted that the percentage of stocks in the S&P 500 trading above their 50-day moving averages was down to levels not seen since the late 2008 collapse. Now the Dow is on a 7-day losing streak, which also hasn't happened since late 2008 (10/9/08). There have been 32 prior 7-day losing streaks for the Dow over the last 50 years. Complete Story »
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| The best junior gold stocks to buy today Posted: 02 Jul 2010 08:25 AM PDT From Resource Investor: In a jittery stock market, the only gold stocks that investors should own are for companies that really do have the goods. This is the consensus view among various gold investment industry commentators and analysts. In particular, “advanced stage” gold development stocks offer the best bets for speculative investors, argues Al Korelin. He is the publisher of the Korelin Economics Report, a longstanding radio show that covers politics and business news, with a particular focus on the mining investment sector. By definition, advanced stage gold companies have... Read full article... More on gold stocks: The best gold stocks to buy today Keep your eye on gold mining stocks How a deflationary shock could send gold stocks soaring
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| America the Beautiful ... Investment Destination Posted: 02 Jul 2010 08:23 AM PDT  Carl T. Delfeld submits: Since I do quite a bit of writing and speaking on investment opportunities in international markets, some may get the impression that I am not very keen on prospects for investing in American stocks. But it appears that as we head into the 4th of July weekend, I have more confidence in America’s future than most. A recent poll by the Chicago Council on Global Affairs indicated that 55% of those polled believe that the U.S. will be equaled or surpassed as a global power over the next 50 years. A group of Chinese polled believes their country will catch up to America in terms of global influence within 10 years. My view is that while the world is clearly filling in, and emerging competitors like India and China are catching up with us quickly due to rapid advancements in technology and communications, the American economy is more than holding its own. And since the valuation gap between the U.S. and foreign markets has narrowed considerably, I believe that the overall performance of the U.S. stock market, and in particular certain sectors such as financial, technology and health care, may very well outpace global markets. Complete Story »
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| Posted: 02 Jul 2010 08:08 AM PDT
Bad algo. Go in that XOR gate (in retrospect, with this market, this should actually be a NOT gate) and stay there for 1 trillion co-located CPU cycles. In other news, the volume in the last minute was 50% above normal, hitting 44k contracts in 60 seconds. Good thing the circus rang the closing bell for the Nasdaq or else people might take this market seriously.
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| Stock pullback is looking less healthy as bear market looms Posted: 02 Jul 2010 08:06 AM PDT Friday July 2, 2010 (CNBC) — When the stock market pulled back 5 percent in early May, it was no big deal. When the drop hit 7 percent, then 10 percent, it was just a normal correction in a bull market run. But now that the drop from the most recent high has hit more than 16 percent and is nearing 20-percent-drop bear status…well, it's getting harder and harder to put a happy face on a market that appears to be in full retreat… Indeed, worries are growing that the market is doing more than simply selling off from a historic rally and is in fact sending a very strong message about the difficult terrain ahead. "This is back to the drawing board," says Quincy Krosby, general strategist for Prudential Financial. "The market is pricing in a much more significant slowdown than the soft patch that we are in right now, and it may continue to price in something deeper and deeper than that." Worries abound for investors these days, with the most prominent morphing from concerns about the European economy and its sovereign debt situation to new concerns that the US economy may be heading for a double-dip. [source]
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| Bears beware: The market could see a sharp rally soon Posted: 02 Jul 2010 08:04 AM PDT From Gold Scents: I'm going to go through some signs that rabid bears might do well to pay attention to because I think the market is very close to a major bottom. ... We can probably expect an explosive rally soon, even if it ultimately turns out to be a counter trend rally in an ongoing bear market. First, way too many people are counting on the head and shoulders pattern taking the market directly down to 850. Folks, historically these head and shoulder patterns have a success rate of about... Read full article... More on stocks: Jeff Clark: Stocks could make a big move soon This could be the most important stock for investors to watch This unusual stock is dirt-cheap and highly leveraged to gold
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| Russia’s Peeping at an Aging Empire Posted: 02 Jul 2010 08:00 AM PDT In its prime the US was made up almost entirely of assets worthy of a closer inspection. But, the years rolling by have not treated the aging superpower well. Her economy is sagging, she can barely afford to pay her bills that keep piling up, and, although she was once easily able hold her own against adversaries, she now has much less spring in her step. Yep, the US may have provided some mighty fine eye candy back in the day… but, those days seem long gone. It's probably in everyone's best interest to respectfully avert their eyes in the event of her overexposure. We spotted this cartoon over at The Mess That Greenspan Made, which simply questioned, why spy?
Russia's Peeping at an Aging Empire originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| The Scam Artist Formerly Known As The Market Proceeds To Refute EMT In Under 10 Minutes Posted: 02 Jul 2010 07:55 AM PDT
Just because idle frontrunning Cisco routers are sad routers. Also, the Fed has a trillions pieces of paper just collecting dust: explains why Goldman and JPM allegedly received RFPs for the most creative way to squeeze the last nickel out of their momentum trading clients recently. Lastly, let's not forget today's John Holmes NFP report that confirmed beyond a reasonable doubt that the Depression is over. The only silver lining is that had this occurred in early 2009, the market would have been up about 1,000 points in 2 minutes on 10 SPY shares. It appears even the Liberty 33 team is now composed exclusively of census workers (hired and fired about 20 times in the current week).
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| The Fourth of July, And Investing in America Posted: 02 Jul 2010 07:55 AM PDT Luckless Hero submits: Happy Fourth of July weekend! The Fourth of July is a time where we reflect on one of the most important moments in history, a moment and a revolution that created the longest running democracy in the history of the world. Now, let’s put all negative feelings aside, all politics should be put to rest for a day, all spears and spite lowered because this weekend is a weekend of history, family, fireworks and BBQ. I figured that I would put together an A-Z list of companies to invest in that will invest in America.
Now set off the fireworks! Again Happy Fourth! If I goofed up on a company actually being an American Company mea culpa. My disclaimer is that I was going quick before the holiday weekend as I too can’t wait for some good ole fashioned Americana. Complete Story »
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| Posted: 02 Jul 2010 07:54 AM PDT
CBS News, the Christian Science Monitor, CNN, Reuters and Fox (and see this) have all asked whether BP should nuke its leaking oil well. Indeed, some high-level Russian nuclear scientists and oil industry experts have suggested such that approach to stop the Gulf oil gusher. Here is archival footage of the Russians killing a gas leak with a nuclear device. And Obama's energy secretary and Nobel prize winning physicist Steven Chu included the man who helped develop the first hydrogen bomb in the 1950s on the 5-man brain trust tasked with stopping the oil. And oil industry expert Matt Simmons proposes the use of a tactical nuclear device every time he is interviewed on national television. However, even the history of Russia's successful use of nuclear devices to stop gushers has some important caveats. As Reuters notes (unless new links are provided, links for all cited articles are provided at the beginning of this essay):
As the Christian Science Monitor points out:
As CBS News reports, not all of the Russians nukes worked:
Indeed, several experts have said that nuking the well might make the situation worse. For example, Reuters notes:
CNN points out that nuking the leaking well could conceivably destabilize other oil wells miles away. The New York Times writes:
And one of the world's top physicists - string theorist Michio Kaku - writes:
Moreover, former President Bill Clinton told CNN on Sunday (starting 3:13 into video) that he has looked into the issue, and that a nuke is not needed. He said the Navy can use conventional explosives to seal the well. As the former commander-in-chief, Clinton is probably getting such information from someone high up in the Navy. For more on the nuclear option, see this.
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| Risk and Reward Ratio on The Precious Metals Market Posted: 02 Jul 2010 07:52 AM PDT
This essay is based on the Premium Update posted on July 1st, 2010 At times daily volatility can cause one to lose the big picture from sight – focusing on trees is ok as far as one doesn't forget about the whole forest. This universal approach can be applied today since we have just seen a massive decline in the prices of gold, silver, and mining stocks. In this case, we would like to provide you with our thoughts on something that might influence the precious metals sector (not every part thereof to the same extent) – the head-and-shoulders formation on the general stock market (charts courtesy of http://stockcharts.com.) Let's begin with the long-term SPY ETF chart. This week's SPY chart clearly shows a continuation of the bearish trends, which were prevalent to last week. There has been continued development of the head-and-shoulders pattern and this has been confirmed by an increase in volume. The long-term chart above suggests that the pattern has yet to complete. Note the low point is below two previous bottoms. Also, note the pattern in the chart of weekly volume levels. This bearish head-and-shoulders formation has and will probably continue to spell trouble for the general stock market. More details will be seen on the short-term charts. The final confirmation of pattern completion will likely come from price movement in the SPY ETF or directly from the main stock indices such as the Dow Jones Industrial Average. Visible declining below the neck level (SPY: $103) and then increasing only slightly, accompanied by low volume increase would be a final confirmation of the bearish trend. Subscribers who seek to short the general stock market may wish to watch these signals closely as there may well be some good profit opportunities in this speculative activity. This week's short-term chart reveals that the June top is slightly below the one seen during in January. Since the right shoulder in the pattern is lower than the left, the neck is likely skewed as well. The price would need to move below the solid blue line in the chart for completion of the formation. Without this type of movement, the breakdown is not complete although it may appear to be. The RSI is presently in the 30 range, which corresponded to local bottoms in early May and February. However the late January RSI in this range did not result in a local bottom until a week later. In late May the 30 level in RSI did not mark the final bottom either. Consequently, the RSI alone does not imply that the bottom is imminent. If price were to move sideways and then lower or simply move lower immediately the implications would likely result in the SPY ETF below a level of $103 and then moving up on low volume would be a bearish signal. The DIA ETF, a proxy for the Dow Jones Industrial Average confirms the above comments about the non-existence of the breakdown at this point. The left and right shoulders are relatively equal – no breakdown has yet been seen here. The Broker-Dealer Index this week indicates the likelihood of a breakdown. The financials have been very weak for several months and especially in recent days. This is normally a clear indication that declines will follow in the main stock indices. Consequently, the odds favor a breakdown from the recent head and shoulders pattern in a continued move downward. Although this is not a certainty, it is probable. If the general stock market moves below the neck in this pattern and then rises slightly on low volume, shorting SPY ETF could be profitable. Part of the precious metals sector, namely silver and mining stocks are at particular risk when the general stock market is trending in ways seen today. We have frequently commented on comparisons between gold and silver investments. While writing about gold being preferred over silver we have meant much more than just the profit potential of both markets. It simply indicated that silver and mining stocks are more vulnerable to general stock market's weakness and therefore carry a higher probability of not moving higher. This can also be stated as a higher risk to reward ratio. Caution: the following is an example to be used only for illustrative purposes. The quantities, percentages and dollar amounts quoted are not in any way implied to be meaningful except in explaining the risk to reward ratio. Let us say, for example, that gold has a 90% likelihood of increasing in price, silver has a 70% chance and mining stocks have a 60% chance and all of these markets would move up or down by the same amount during the move. All would be likely to move higher since, in this example, all percentages are greater than 50. Since gold is the most probable to go higher, it would be less risky. Therefore, gold would be preferable over silver and mining stocks even if all of them are likely to rise. To address the subject of risk to reward ratio, let us go a step further with our previous illustration. Suppose that we invested $1,000 in each of the situations above. Let us further hypothesize that the upside potential or likely profits were $400 for each if our investments all reached their full potential. The likely gain, or reward, would be $360 for gold since there is a 90% chance of the $400 profit, $280 for silver which has a 70% chance of the $400 profit, and $240 for mining stocks. Since the risk for each was the investment of $1,000, the risk reward ratios would be 2.50, $1,000 divided by $360, 3.57, $1,000 divided by $280 and 4.20, $1,000 divided by $240 respectively. The statement gold has a lower risk-to-reward ratio that the other precious metals is thus supported by this example. Another example: gold has a 90% likelihood of rising 10% higher (and if it moves lower, it would move 10% lower), silver has 90% likelihood of rising 11% higher (and if it moves lower it would move 50% lower). Which of them has the better risk/reward ratio? Gold – because even with higher profit potential for silver (11% vs. 10%) the real difference is what happens if the move up does not materialize at all (only 10% probability). In this case gold investor loses 10%, while silver investor loses 50%. We get the feeling that at this point you would have preferred to own gold instead of silver even though it had smaller profit potential. Of course, you cannot go back in time, so you need to take the negative outcome into consideration before you put your money on the table. In this case it would mean buying gold instead of silver even though it was likely to gain less during an upswing. Moreover, those who invested in silver could brag about their higher profits not mentioning the fact that they were risking 50% of their money, while gold investors only risked 10%. Let's run a simple simulation for the above example. Speculation is not a one-time bet – it's a set of many bets, and what matters is if you lose or gain money in the long run. So, let's see what would happen if there were many similar situations to the one described above. With 10% of losing and 20 trades the average value of losing trades would equal 2, so we would have on average 18 winning trades and 2 losing ones. For 20 trades with the abovementioned odds and gains/losses the gold investor would gain 1.10*1.10*1.10*…*1.10*0.9*0.9 (18 times winning 10% and 2 times losing 10%). So, in the end the effect would be 1.10^18 * 0.9^2 – 1 = 3.50 meaning that the investor would gain 350% of their initial capital. At the same time with the abovementioned odds and gains/losses, the silver investors would gain 1.11*1.11*1.11*…*1.11*0.5*0.5 (18 times winning 11% and 2 times losing 50%). So, in the end the effect would be 1.11^18 * 0.5^2 – 1 = 0.64 meaning that the investor would gain 64% of their initial capital. Shocking isn't it? One could achieve over 5 times bigger profits just by paying attention to the "what if we're wrong" question. Moreover, if the gains and losses were spread evenly, the first loss would occur after 9 winning trades. Please recall that the profit potential alone was bigger for silver, meaning that if we had only winning trades one would have biggest gains by investing in this particular market. The point here is that up to this tenth trade gold investor would have smaller gains than his silver colleague, and the latter might argue that paying attention to losses makes no sense if markets are moving only up, and that the gold investor is wrong for preferring the yellow metal over the white one. The silver investor would have no idea that after his next trade he will wish that he had joined his golden colleague in the first place. Please note that the above situation is just an example, in the future it could be the case that the risk/reward for silver is more profitable that the one present on the gold market. Consequently, we strongly believe that the risk/reward ratio with focus on the long-term growth of one's portfolio is the most profitable way to approach any market, and that paying attention many factors instead of looking at the day-to-day gains will eventually prove very useful. Please keep the above examples in mind while examining the correlations matrix below. The correlation matrix has some changes this week. The positive relationship for silver and mining stocks with the general stock market has declined somewhat. The corresponding coefficient for gold with the general stock market still remains lower than the other metals. What this means is that gold will generally be more resilient during a downswing in the main stock indices; it will most likely hold its value more so than silver and precious metals' stocks. Summing up, gold itself continues to be the preferred part of the precious metals sector at this point due to the tense situation on the general stock market. Meanwhile, we have just sent out a Market Alert to our Subscribers describing short- and long-term implications of yesterday's downswing for Precious Metals Investors and Traders. To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, I urge you to sign up for my free e-mail list. Sign up today and you'll also get free, 7-day access to the Premium Sections on my website, including valuable tools and charts dedicated to serious PM Investors and Speculators. It's free and you may unsubscribe at any time. Thank you for reading. Have a great and profitable week! P. Radomski * * * * * Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio? Sunshine Profits provides professional support for precious metals Investors and Traders. Apart from weekly Premium Updates and quick Market Alerts, members of the Sunshine Profits' Premium Service gain access to Charts, Tools and Key Principles sections. Click the following link to find out how many benefits this means to you. Naturally, you may browse the sample version and easily sing-up for a free weekly trial to see if the Premium Service meets your expectations. All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. 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| Legendary trader Gartman: Gold is about to go "parabolic" Posted: 02 Jul 2010 07:42 AM PDT From Expected Returns: ... Gartman: I don't get the sense that the public is terribly involved. CNBC anchor: Wait you don't think the public is involved in the gold trade Dennis? Gartman: No, not much at all actually. CNBC anchor: But the holdings for GLD are at record highs. Gartman: I understand but you look at... Read full article (with video)... More from Dennis Gartman: Must read: Dennis Gartman's rules of trading Legendary trader Gartman: The euro is "doomed" Legendary trader Gartman: This is more than just a correction
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| Goldman Responds To Zero Hedge Musings On The Segregation Of Cash And Derivative P&L Posted: 02 Jul 2010 07:18 AM PDT
Yesterday, Zero Hedge summarized our thoughts on David Viniar's claim that it is impossible for Goldman to present derivative revenues on a standalone basis. Today, we provide Goldman the chance to "set the record straight" on the issue. Here is Goldman's side, courtesy of Lucas van Praag. We are surprised that Mr. van Praag focused on the more shallow issue of the daily P&L production which the firm provides for broad firm consumption: various Goldman groups under the FICC umbrella (and under the narrower "prop-trading" definition) have their own formats, and we are happy to present to our readers the non-mortgage daily P&Ls, if Goldman would be so kind as to provide it to us. Perhaps the delineation of derivative P&L is far more specific the CDS trading group (alas, we currently do not have access to that specific form P&L). Mr. van Praag, however, did not answer our inquiry as to whether the firm keeps track of cash and derivative P&Ls by strategy, which is a far more relevant issue. For the record, we are still 100% confident that a P&L track by strategy, and subsequent stripping of cash legs is a simple enough exercise, and one firm's self-respecting back office can complete such a task in minutes.
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| What The Heck Happened Yesterday? Posted: 02 Jul 2010 07:13 AM PDT Knowledge without experience is not really knowledge...It finally dawned on me this morning how yesterday's manipulated Comex plunge was orchestrated, in reviewing the idea of the dollar losing 1.20 yesterday and gold losing $40. Doesn't make sense, right? Here is my view on what happened. I base this on 9 years of trading, investing, researching and observing the precious metals market. This is an educated hunch based on experience. Recall that over the past 2-3 months, the large hedge funds have built a record short position in the euro and an offsetting long position in the dollar. For the past two months gold has been trading inversely with the euro and in near-perfect correlation with the dollar. The big banks, who are absurdly short paper gold, have built up near-record long positions in the euro and a short position in the dollar. You can find all the data which shows using the COT (Commitment of Traders) report. We know that big banks who are short an absurd amount of gold futures on the Comex like to ambush the market on low volumn, holiday affected trading days and do so by unloading an enormous amount of paper contracts as soon as the Comex opens. See my chart in yesterday's post. (Not) coincidentally, Canada was closed yesterday for a national holiday observance. Yesterday the dollar started dropping off of a cliff at 3 a.m. NY time, but gold drifted higher until just after the London a.m. price fixing. From there it flat-lined until exactly the 8:20 NY time Comex open. Comex volumn was enormous from second it opened up until 11 a.m., which is when the largest part of the $40 drop occurred. I believe that the manipulating banks used massive sell orders to trigger stop losses (as per usual), as the hedge funds were scrambling to cover record short positiond in the euro and long position in the dollar. Why else did it take until the Comex open for gold to plunge, over 5 hours after the dollar had started plunging? Sorry Zerohedge, but that not "asset liquidation." That's what I believe occcurred yesterday, for the most part, and the bullion banks were helped by the fact that it was a pre-holiday, low volumn week and that Canada was closed. Having said all that, I've been wondering what it would take to break the euro/gold inverse relationship - and the correspoding dollar/gold correlation - once the dollar rolled over and started eventually to seek new lows. Yesterday may have taken care of most of that process. I actually expected to see more downside today in gold/silver, but gold has been relatively strong relative to the rest of the market. At least for today, it has moved inversely with the dollar. BP/Gulf Disaster Update As for the Gulf oil situation. I was chatting with a friend who is originally from New Orleans today and she said that her people down there are saying that everything being reported about the BP effort is complete b.s. She said that no claims are being paid and BP seems to be going to minimal effort and expense to work on cleaning the mess. She said they told her not to believe anything being reported in the media about BP's efforts - that it is a total media whitewash. She was recently in Pensacola, Florida and said the beaches are getting decimated with oil and that the oil is now hitting the beaches further east of Pensacola. Anyone wonder why the worst ecological disaster in the history of the planet all of a sudden has been minimized in terms of reporting lately? Ask the guy in charge who most of us wouldn't put in charge of a hot dog stand... 
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Gold futures rose fractionally as some thought the previous session's huge slide created bargain opportunities, but most didn't want to place fresh bets ahead of the long weekend. Trading was thin and choppy ahead of the U.S. Independence Day holiday, with markets closed Monday. Bob Haberkorn, senior market strategist with Lind-Waldock, said yesterday's drop left gold at attractive prices for a few. The metal was "definitely oversold," he said…
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