saveyourassetsfirst3 |
- Am I Still Bearish? Sort Of Not
- The Risks Involved In Investing Today
- WATCH: The Great Silver Debate
- Murphy vs. Christian: The Great Silver Manipulation Debate at the Silver Summit
- Aussie Dollar in a Copper Cauldron!
- It Would Be Foolish to Deride or Ignore GATA: Financial Times, London
- Gillian Tett in the Financial Times: It would be foolish to deride or ignore GATA
- Why such a manipulated and covert gold market?, Rickards asks
- Russian central bank acquiring 'huge volumes' of gold
- Long wait for silver delivery in manipulated market, trader tells King World News
- Another day, another currency market rigging
- The single currency is close to collapse
- Gold and silver rebound/Fed Vice Chairman:QEIII needed/
- LISTEN: David Morgan from the SIlver Summit
- BrotherJohnF: Silver Update – “Kick The Can”
- LISTEN: “Gold Is Being Permitted To Rise Slowly”
- LISTEN: Jack Crooks discusses Gold
- In 2000, The Nasdaq Fell Off A Cliff
- Understanding Silver Price Manipulation - Part I
- Dominic Frisby interviews Nick Laird
- WATCH: Metals Recovering?
- Eurozone Rescue Going Off the Rails
- Tocquevilles Hathaway muses about intervention against gold
- Worried About Silver? Listen to Eric Sprotts Stump Speech
- The Mechanism Of Capital Destruction
- Silver Summit Report: Three Investment Approaches to the Volatile Metal
- By the Numbers for the Week Ending October 21
- The Bear is About to Sink His Teeth into Last Holdout Sector
- Have the Sour Krauts Got You Worried?
- Friday ETF Roundup: EFA Surges On Europe Hopes, VXX Tanks On Strong Markets
| Am I Still Bearish? Sort Of Not Posted: 22 Oct 2011 03:46 AM PDT By Stephen L. Weiss: I have had very light equity exposure for an extended period of time with periods of being net short to being fairly long. Fortunately, with the indices having been range bound, the opportunity cost has been insignificant. As I mentioned in a prior note being bearish is exhausting, lonely and counter to my natural optimism (although I do admit to always maintaining a healthy dose of cynicism). Imagine taking your child to see 101 Dalmatians and loudly rooting for Cruella deVille to come out on top. Your kid shrinks away to another seat on the other side of the theater while others shun you. That's how bears are treated. I continually second guess my investment thesis, trying to see what the other side sees. I weigh the inputs underlying my stance, marking them to market. I try to remove the bias of my position as I seek additional data that Complete Story » |
| The Risks Involved In Investing Today Posted: 22 Oct 2011 03:22 AM PDT By Doug Carey: The S&P 500 equity index is down nearly 11% from its peak as I write this article. The incredible volatility we've seen lately can be nauseating for even the most even-tempered investor. It's enough to drive many people to pull most, if not all, of their money out of stocks and put it into less risky investments. While it's completely understandable that many are fed up with the stock market swinging wildly based on Federal Reserve and government intervention as well as market rumors, it is important to understand that a lot has changed since 2008 in terms of the risk profile of other investments. Money market funds, although yielding less than 0.5% on average, are actually much riskier than most might think today. In 2008 the federal government decided to guarantee all money market funds after one of the largest of them, the Reserve Primary Fund, was in danger Complete Story » |
| WATCH: The Great Silver Debate Posted: 22 Oct 2011 03:21 AM PDT Watch the Great Debate featuring CPM's Jeffrey Christian and GATA's Bill Murphy as they battle it out on the topic of silver and gold manipulation. Fact or Fiction? You be the judge.
~TVR |
| Murphy vs. Christian: The Great Silver Manipulation Debate at the Silver Summit Posted: 22 Oct 2011 02:27 AM PDT |
| Aussie Dollar in a Copper Cauldron! Posted: 22 Oct 2011 01:12 AM PDT Money And Markets |
| It Would Be Foolish to Deride or Ignore GATA: Financial Times, London Posted: 22 Oct 2011 12:28 AM PDT ¤ Yesterday in Gold and SilverThe gold price spent most of the Far East trading day within a ten dollar price range...but around noon London time...a rally worthy of the name appeared. This lasted until 9:40 a.m. in New York...which may have been an early London p.m. fix. That was gold's high of the day...and from there it got sold off about fourteen bucks to its New York low around 1:10 p.m. Eastern time. From there it rallied gradually right into the close of electronic trading. The gold price closed at $1,642 spot...up $21.80 on the day...gaining back virtually everything it 'lost' on Thursday. Net volume was sort of average...around 122,000 contracts.
As always, the silver price was more 'volatile'. It chopped around in a 50 cent price range until a rally began around 12 o'clock noon in London. It's possible that this rally [along with the beginning of the rally in gold] began once the silver fix was in, which occurs around noon local time every day. Once the 'fix was in'...the silver chart looked very much like the gold chart, except for the fact that the silver rally got chopped off at the knees at 8:40 a.m. Eastern time vs. 9:40 a.m. for gold. The price traded in a one percent price range from there, closing reasonably close to its high of the day...which was $31.40 spot...up 82 cents on the day, gaining a bit more than it lost on Thursday. Net volume [30,000 contracts] was pretty average considering the price action.
Here's the New York Spot Silver [Bid] chart. The daily chart above doesn't show the big spike in the silver price the moment that Comex trading began...and was probably the reason they smacked it an hour sooner than gold. One can only imagine how high the silver price would have gone if the not-for-profit seller hadn't shown up when they did.
The dollar took a bit of a header yesterday beginning at 9:00 a.m. in London...4:00 a.m. Eastern time. The vast majority of the drop was in by 10:00 a.m. in New York...but the actual low for that move came an hour later at 11:00 a.m. The gold rally fits the dollar rally pretty well, but was a rather anemic gain considering the size of the drop in the dollar.
The gold stocks pretty much followed the gold price yesterday...and the HUI finished up 1.73%...gaining more than double Thursday's loss. I'm sure that was helped along by the fact that the Dow was in rally mode.
The silver stocks did just all right...and Nick Laird's Silver Sentiment Index closed up 1.95%
(Click on image to enlarge) The CME's Daily Delivery Report didn't show much. They reported that 27 gold and one lonely silver contract were posted for delivery on Tuesday. There were no changes in the GLD ETF yesterday...but over at SLV they reported another withdrawal. This time it was 1,070,546 troy ounces. During this past week, 3.65 million ounces were reported withdrawn from SLV. There was no sales report from the U.S. Mint. The Comex-approved depositories reported receiving 595,958 ounces of silver on Thursday...and shipped 262,251 ounces of the stuff out the door. Well, I must admit that the Commitment of Traders Report [for positions held at the close of trading on Tuesday, October 18th] was a very pleasant surprise. In silver, the Commercial net short position declined by a further 2,054 contracts...and is now down to 18,774 contracts...which is a shockingly low 93.9 million ounces. Most of the improvement was Ted Butler's smaller traders [the raptors] adding to their long positions on the price declines of the past reporting week. The '4 or less' Commercial traders are short 143.7 million ounces...and the '5 through 8' Commercial traders are short 46.5 million ounces. If you add them up, these eight largest Commercial traders in silver are short 190.2 million ounces...which is a bit more than double the Commercial net short position...and they are short 64.6% of the total gross short position in the Commercial category as well. And if you remove all the spread trades, then the concentrated short position held by the Commercial traders skyrockets even further. They are the market! The other 33 traders holding short positions in the Commercial category don't matter at all...and the shorts they hold are probably the short side of a long/short spread trade anyway. I'd bet money that that's the case. The other surprise in silver was the fact that the technical funds, along with the small traders in the Nonreportable category, added to their short positions. It's been a while since I've seen that, especially considering how far below silver's 200-day moving average we are. In gold, the Commercial net short position declined by a rather substantial 9,325 contracts, or 932,500 ounce of gold...and is now down to 15.9 million ounces. And, just like in silver, the technical funds and the small traders not only sold long positions, they also added to their short positions as well. The '4 or less' Commercial traders are short 14.1 million ounces...and the '5 through 8' are short 4.3 million ounces. Between the eight largest Commercial traders they are short 18.4 million ounces...which is 115% of the Commercial net short position...and 54% of the gross short position in gold. Just like in silver, these 'big 8' are the market...as the other 41 traders that hold the balance of the short positions in the Commercial category [15.7 million ounces] just don't matter. Ted Butler and I both agree that, since the Tuesday cut-off, there has probably been even more improvement in the short positions of the big commercial traders...but the extent of that won't be known until next Friday. But, regardless of that, from a COT point of view, this is probably the most wildly bullish report that I've seen in many, many years. It's hard to imagine a more bullish report than this. Here's Ted Butler's 'Days of Production to Cover Short Positions for the 4 largest traders...and the 8 largest traders...in all Comex traded commodities as of yesterday's COT report...from which this chart is derived. Note the number of days of total world production it would take to cover their respective short positions...particularly silver and gold. The 8 largest traders in silver are short 100 days of total world silver production...and the 8 largest traders are short 86 days of total world production.
(Click on image to enlarge) Now here's the same chart from way back on September 28, 2010...a year ago next week. Look at the number of days production that the 'big 4' and 'big 8' were short back then. In silver, the 8 largest traders were short about 178 days of world silver production...and about 131 days in gold Notice how much it has declined in a year. That's JPMorgan et al gettin' out of Dodge.
(Click on image to enlarge) But, as I said, we are virtually totally cleaned out to the downside...and the only way that JPMorgan et al are going to be able to get out of their remaining short position [100 days of world silver production as of the cut-off for the COT report on Tuesday] is by breaking every rule in the book...because whatever they don't cover, they have to buy back and drive the price sky high...or declare force majeure...or maybe the crooks running the CME will change the rules on their behalf. Since we're talking about silver...here's a pretty picture of pallets of Comex good delivery bars. I wish I could say that it was my personal stash, but it isn't.
(Click on image to enlarge) Since it's my Saturday column, it's time to empty the in-box...and I have lots of good stories and interviews for you today. Make no mistake about it...we are at, or near, historic low levels in all three categories contained within the Commitment of Traders Report. Russian central bank acquiring 'huge volumes' of gold. Why such a manipulated and covert gold market?, Jim Rickards asks. Chris Powell: Where in the world is the gold? ¤ Critical ReadsSubscribeU.S. "misery index" rises to highest since 1983An unofficial gauge of human misery in the United States rose last month to a 28-year high as Americans struggled with rising inflation and high unemployment. The misery index -- which is simply the sum of the country's inflation and unemployment rates -- rose to 13.0, pushed up by higher price data the government reported on Wednesday. The data underscores the extent that Americans continue to suffer even two years after a deep recession ended, with a weak economic recovery imperiling President Barack Obama's hopes of winning reelection next year. What recovery? Doug Casey's "Greater Depression" is upon us. This Reuters story from Thursday, posted over at finance.yahoo.com, is courtesy of reader Scott Pluschau...and the link is here.  The Coming Derivatives Crisis That Could Destroy The Entire Global Financial SystemMost people have no idea that Wall Street has become a gigantic financial casino. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end. The word "derivatives" sounds complicated and technical, but understanding them is really not that hard. A derivative is essentially a fancy way of saying that a bet has been made. Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.5 quadrillion. This very long read is well worth your time, if you have it. The essay is posted over at theeconomiccollpase.com website...and I thank Roy Stephens for the first of many stories he has for us today. The link is here.  Sean Corrigan: Value can't be calculated after governments wreck marketsThis is a GATA release from late last night...and it begins as follows... Interviewing Sean Corrigan of Diapason Commodities Management in Lausanne, Switzerland, GoldMoney gets a wonderful comment along the lines of GATA's old complaint: "There are no markets anymore, only interventions." Asked how to determine whether gold [and everything else] is over...or undervalued, Corrigan remarks: "What is 'value' in a world where the single goal of the powers that be is to deny the market the ability to have its constituents' underlying ordering of wants accurately reflected in the price structure? We have no proper market in capital; severely impaired markets in any number of basic goods; false markets in real estate; distorted markets in labor (hence why so many poor souls are still without jobs); and no certainty about anything except the awful certainty that nothing is off-limits to those who are desperately trying to put Humpty Dumpty together again." This GATA release of a 2-part goldmoney.com interview with Sean is a must read...and the link is here.  Occupy Wall Street: Washington Still Doesn't Get It: Matt TaibbiI'll have more coming out about this in a few days, but there have been two disgusting developments in the realm of plutocratic intervention on behalf of Wall Street that everyone protesting should take note of. The fact that both of the following things took place in the middle of the full fever of OWS, when everyone is supposedly trying to placate anti-banker sentiment and Obama and the DCCC are supposedly pledging support of the protesters, shows how completely bankrupt this system is and how necessary street-level protests have become. This short Matt Taibbi blog posted over at Rolling Stone magazine...and courtesy of Roy Stephens...is worth the read. The link is here.  |
| Gillian Tett in the Financial Times: It would be foolish to deride or ignore GATA Posted: 22 Oct 2011 12:28 AM PDT  Out there in the world today, a cabal of Western central bankers is secretly determined to manipulate the world's markets. They are doing this not via interest rates but by rigging gold prices. More specifically, they have kept bullion prices artificially low in recent decades to ensure that our so-called fiat currency system -- that is, money created by central banks -- continues to work. For if the public ever knew the "real" price of gold, we would finally understand that our currencies, such as the dollar, are a sham. ... Hence the need for that central bank plot. Does this sound like the ranting of a Tea Party activist? A Hollywood screenplay? Or could there be a grain of truth in it? |
| Why such a manipulated and covert gold market?, Rickards asks Posted: 22 Oct 2011 12:28 AM PDT  Interviewed yesterday by King World News, geopolitical analyst James G. Rickards laments the surreptitiousness and manipulativeness of the gold market. "Why do we have such a non-transparent, manipulated, covert system?," Rickards asks. "Why don't we have something that's more normal." Unfortunately the system Rickards laments has been the "normal" system for most of the 40 years since the United States repudiated the direct convertibility of the dollar into gold. |
| Russian central bank acquiring 'huge volumes' of gold Posted: 22 Oct 2011 12:28 AM PDT  The Russian central bank will continue raising the share of gold in its gold and foreign exchange reserves, the central bank First Deputy Chairman Alexei Ulyukayev said on Thursday. "We are not planning to step away from this path. We are acquiring huge volumes" of gold, Ulyukayev told the parliament. Earlier on Thursday, the central bank data showed that Russia's gold and forex reserves, the world's third largest, rose to $517.7 billion in the week to Oct. 14th. This Reuters story was filed from Moscow on Thursday...and I borrowed it from a GATA release as well...and the link is here. |
| Long wait for silver delivery in manipulated market, trader tells King World News Posted: 22 Oct 2011 12:28 AM PDT  Silver supplies are tight, there are long waits for delivery, and market participants increasingly realize that the silver futures market is manipulated and has little bearing on the price of real metal, the KWN London trader source reported yesterday. The link to the blog is here. |
| Another day, another currency market rigging Posted: 22 Oct 2011 12:28 AM PDT  Japan's finance minister said on Saturday he would take decisive action against excessive and speculative yen moves, Kyodo news agency reported, threatening to conduct currency intervention after the yen rose to a record high against the dollar. Jun Azumi was also quoted by Kyodo as saying that the yen's appreciation was not so much a reflection of Japan's economic fundamentals, but reflected the relative economic conditions in Japan, Europe and the United States. "I would like to take decisive action on excessive and speculative movements," Azumi was quoted by Kyodo as telling reporters. "We're in a situation where the foreign exchange rates would wipe out earnings by hard working companies." |
| The single currency is close to collapse Posted: 22 Oct 2011 12:28 AM PDT  Yet again, Europe stands on the brink of abject disaster, apparently unable to resolve its differences. A monetary union that was meant to bring former enemies together, binding them to each other via irreversible economic integration, is succeeding only in tearing them apart. It is a crisis that this newspaper has consistently warned of since the single currency's creation; it gives no pleasure to see our predictions come true. |
| Gold and silver rebound/Fed Vice Chairman:QEIII needed/ Posted: 21 Oct 2011 11:49 PM PDT |
| LISTEN: David Morgan from the SIlver Summit Posted: 21 Oct 2011 10:47 PM PDT
David Morgan speaks with Al Korelin from the Silver Summit. More @ KEReport
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| BrotherJohnF: Silver Update – “Kick The Can” Posted: 21 Oct 2011 10:46 PM PDT Brother John discusses kicking the can, silver price and the following:
~TVR |
| LISTEN: “Gold Is Being Permitted To Rise Slowly” Posted: 21 Oct 2011 10:45 PM PDT
From the Silver Summit, Bill Murphy discusses issues affecting the price of gold. More @ KEReport
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| LISTEN: Jack Crooks discusses Gold Posted: 21 Oct 2011 10:41 PM PDT
Currency expert Jack Crooks of Weiss Research discusses safety strategies and gold. More @ KEReport
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| In 2000, The Nasdaq Fell Off A Cliff Posted: 21 Oct 2011 10:17 PM PDT This Was In Fact, The Start Of Greater Depression II. But, Greenspan Extended Markets By Dropping Interest Rates To The Basement. This then, Set-Up The Housing And Credit Crisis Along With Wild Derivative Trading. In Our View, The Next Years of 2012-2015 Could Be Broader Market Hell. Why are we showing the long view Nasdaq chart in the precious metals section? Because; this index is a leading indicator for ALL STOCKS AND STOCK INDEXES.
The Nasdaq peaked in 2000 and crashed. Further trading has produced a BIG BEAR DOUBLE TOP. Bernanke and Tiny Tim will not escape the next crash we see near fall of 2012. Sometime right after that, sadly we get World War III, manufactured to get us out of the depression. That war will be fought over energy oil and gas and its global control. Simultaneously with crashing stocks, traders and investors are running to gold, silver and farm land in a frantic hunt for hard assets. We envision a gold top in 2017 or 2024. The next decade will not be as much fun as the last one, which was no tea party. Our forecast for May-June, 2012, is a 10-12% stock markets haircut. In the fall of 2012, we envision the Dow under 7,000 with perhaps a run at 5,600. If it gets totally out of control the Dow could be 3,000, 1,800 or even 1,500. Hyperinflation could pump the Dow and Gold to unreasonable heights. Jesse Livermore earned $100,000,000 shorting the markets in 1929. This time trade management could make this almost impossible except for a handful of very rich traders.         This posting includes an audio/video/photo media file: Download Now |
| Understanding Silver Price Manipulation - Part I Posted: 21 Oct 2011 09:31 PM PDT |
| Dominic Frisby interviews Nick Laird Posted: 21 Oct 2011 09:30 PM PDT Dominic Frisby interviews Nick Laird, of www.sharelynx.com, for the GoldMoney Foundation. They talk about the gold price and gold charts in detail and Nick mentions his time frame and price ... |
| Posted: 21 Oct 2011 09:29 PM PDT BigDad06 speaks with Jeff Nielson about his latest article, US money supply and more. ~TVr |
| Eurozone Rescue Going Off the Rails Posted: 21 Oct 2011 08:21 PM PDT In the runup to the crisis, it was striking to read the undertone of worry in quite a few of the articles in the Financial Times, and I don't mean only Gillian Tett's fixation on collateralized debt obligations. It was palatable that a lot of writers were uncomfortable with how frothy the markets were, yet couldn't say anything too much at odds with what their largely cheerleading sources were telling them. Even though the overall mood at this juncture is far more downbeat, there is again a reporting gap between the pink paper and the two major US print business outlets, the Wall Street Journal and the New York Times on the expected crisis nexus, the Eurozone. Both US media outlets have a prominent article on the latest Euro exercise in rescue brinksmanship. And they are almost the same story; indeed, at this hour, they perversely use identical photos of Merkel and Sarkozy conferring. They present the formerly aligned core nation leaders as being at odds, then widen the frame to explain the divisive issues. First,, the Germans want a deeper but voluntary haircut of at most 50% of Greek debt; the French do not want to go beyond the 21% reduction structured last July. The steeper writeoff would, of course, lead to a bigger hit to French banks. Second France (effectively) wants the ECB to provide further leverage to the EFSF directly, while Germany and the ECB itself are decidedly opposed (Germany wants individual states to be responsible for their banks, with the ECB acting as a guarantor). The Journal was thinner on details and focused on the hardening political stances, not just between France and Germany, but other states as well. Per the Journal:
If you rated these articles as sobering, the far more detailed coverage at the Financial Times has an undertone of despair. And one story emphasizes an issue absent from the times and mentioned only in passing in the Journal: the experiment in Greece in radical austerity is killing the patient. From the Financial Times:
Now before you attribute this shortfall to civil disobedience, which has been a contributor, an even bigger factor seems to be a major breakdown of a wide range of critical operations, such as power and garbage collection. And the bailout plan had some absurd assumptions, such as forecasting proceeds from infrastructure sales that were three times the level private sources expected them to fetch. A must-read set of on-the-ground accounts in the Guardian (hat tip reader FlyingKiwi) gives a sense of how bad things are:
Now remember the earlier prevailing assumptions. Even though Greece was widely understood last year to be deeply underwater and independent observers all said a bond writedowns of at least 50% were in order, it was also assumed that Greece alone was a manageable problem. The danger was seen as contagion to bigger economies, particularly Spain and Italy. But Greece alone is morphing into a potentially unsolvable problem. The EFSF, with its CDO-like structure and its not-very-convincing of states guaranteeing the very same fund they are borrowing from, was always better on paper than it would work in reality. Given the difficulties of getting approvals even for existing plans that are in desperate need of reworking, the only way out of the box would seem to be to resort to the ECB (as in "print"). But Germany remains firmly opposed, and the ECB is not too keen. The FT highlights a second issue: given the difficult of getting any fix approved, and that Italian bond spreads are elevated, it seems crucial to get a big enough fix approved. But given the impasse over Greek haircuts, the belated willingness to consider a much larger bailout fund is exposing its widely discussed design flaws (this blog was far from alone in pointing them out). Again, the FT:
There are other possible ways out of this seeming impasse, such as having the IMF assist in rescues in Spain and Italy. The Eurocrats have managed in the past to cobble deals together at the 11th hour, even if they satisfy the markets for only a few days. But every time, the issues that need to be solved are more daunting, and the various government leaders believe or pretend they have less bargaining room than they did in the past. While it would be better if I were proven wrong, there is not much cause for optimism here.
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| Tocquevilles Hathaway muses about intervention against gold Posted: 21 Oct 2011 06:30 PM PDT |
| Worried About Silver? Listen to Eric Sprotts Stump Speech Posted: 21 Oct 2011 05:03 PM PDT |
| The Mechanism Of Capital Destruction Posted: 21 Oct 2011 04:00 PM PDT Gold University |
| Silver Summit Report: Three Investment Approaches to the Volatile Metal Posted: 21 Oct 2011 03:42 PM PDT For this special report from the Cambridge House Silver Summit in Spokane, Washington, The Gold Report caught up with three silver investing experts: James Turk, chairman of GoldMoney; Andrew Kaip, vice president of Precious Metals & Mining at BMO Capital Markets; and Ian McAvity, a writer at Deliberations on World Markets. While the three didn't all agree on why silver acts the way it does, they all said that it belongs in some form in a diversified portfolio—but only for those who can handle volatility. |
| By the Numbers for the Week Ending October 21 Posted: 21 Oct 2011 01:39 PM PDT Just below is this week's closing table, followed by the CFTC disaggregated commitments of traders (DCOT) recap table for the week ending October 21, 2011.
Vultures, (Got Gold Report Subscribers) please note that updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be done by the usual time, (18:00 ET) on Sunday. Gold and Silver Disaggregated COT Report (DCOT) In the DCOT table below a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter. All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report.
Please note that the traders the CFTC classes as Swap Dealers currently hold the largest net LONG position for silver futures in the entire DCOT dataset going back to 2006. Note also that the closing price for silver is not a typo, it was unchanged for the COT reporting week.
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| The Bear is About to Sink His Teeth into Last Holdout Sector Posted: 21 Oct 2011 11:51 AM PDT
At this point I think it's pretty clear the general stock market is now in the initial phase of a new bear market. It's trying to generate a bear market rally over the last three weeks, but so far it's been pretty weak. That doesn't bode well once the cyclical and secular bear trend resumes. The HUI mining index is now on the verge of breaking down out of the multi-month megaphone topping pattern. Once it does that will confirm that the bear now has his teeth in the last holdout sector. The sector that led the bull market over the last 2 1/2 years and now the last sector to succumb to the deflationary forces.  As I have noted in the chart I do expect the miners will find at least temporary support at the 200 week moving average. That should correspond with gold putting in an intermediate degree bottom sometime in the next two or maybe three weeks. Presumably it will come with gold below $1535. My best guess is that gold will make an attempt to test the 75 week moving average at that intermediate bottom.  At that point gold should be severely oversold enough to generate a very powerful, snap back, A-wave rally. That should be followed by a multi-month consolidation as gold works off the huge gains of the last 2 1/2 years. This while the stock market continues down into its final four year cycle low. I expect the miners will produce a substantial rally off the 200 week moving average also but I'm afraid they will continue to get dragged down by the general bear market in stocks even if gold does form a high-level consolidation over the next year.  So while I expect to see a great buying opportunity on miners in the next few weeks I doubt it will be a long-term type trade. That probably won't occur until the stock market puts in its final four year cycle low sometime in the fall of next year.
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| Have the Sour Krauts Got You Worried? Posted: 21 Oct 2011 10:15 AM PDT This Weekend Daily Reckoning begins with nincompoopery on a spectacular scale. Not content with its exposure to the Australian housing bubble from tax revenue, our government has decided to increase its investment in mortgage-backed securities another $6.6 billion in one year. We can't cover the story further because it's too infuriating. *Deep breath* Your editor is German. At least partially. That means we can get away with calling Germans funny names like Sour Krauts. But it also means we get grumpy when foreigners give Germans an undeserved hard time. Yes, undeserved. Like on Tuesday. Media from around the world blamed the stock market selloff on the Germans. The Wall Street Journal was most blunt: 'Merkel warning shakes markets.' But if you take a moment to look at what the German Chancellor's spokesman actually said, the Germans seem sincere, not sour. 'Spokesman Steffen Seibert said a "package" of measures would be agreed upon at the European Union summit in Brussels this coming Sunday, but "the chancellor reminds (everyone) that the dreams that are emerging again, that on Monday everything will be resolved and everything will be over, will again not be fulfilled.' Yes, someone stating the obvious truth in a measured, reasonable way is a big problem for stock markets these days. The Dow fell 200 points. Of course it has been going up and down like a yoyo. And the Aussie market is like a yoyo on the end of a yoyo. Luckily for your editor, we don't have a newsletter portfolio to look after. The other editors around the office (and their subscribers at home) can't be enjoying the volatility much. Except Slipstream Trader Murray Dawes and his subscribers. Our colleague over at the newsletter Money Morning pointed out that it is always easy to write about Murray's work 'because he keeps getting it right' on the stock market. Murray's subscribers have been benefitting from just about every sizeable move in the markets since April when Murray picked the top. No wonder he has built up quite a following on YouTube with his free weekly videos. But back to the Sour Krauts. The Germans, who are being blamed for Europe's slow reaction to the crisis, have plenty to whinge about themselves. Like discovering the ridiculous glass palace being built for the Eurocrats in Brussels who increasingly rule Europe. The newspaper Bild is also reporting on how the French are collecting reparations this time around: 'Berlin is unhappy about a weapons deal in which France plans to supply warships to highly indebted Greece free of charge for the first five years, and at a big discount when payment comes due. Firms and politicians in Germany say taxpayers may end up paying for part of the deal, and they want Chancellor Angela Merkel to intervene.' History buffs will have noted the mention of 'reparations' before the quote. Is it inappropriate to bring out World War 2 vocabulary? Maybe. But Daily Reckoning readers are not the only ones who are catching on. The Finance Minster of Poland and his banker friend discussed how the Eurozone debacle may play out in a really bad case scenario: 'We were talking about the crisis in Eurozone. He told me "You know, after all these political shocks, economic shocks, it is very rare indeed that in the next 10 years we could avoid a war". A war ladies and gentlemen.' When the Poles start speaking of war, you should sit up and listen. If you think this is all claptrap and poppycock, consider what those 'in the know' are up to. The Stansberry & Associates Digest gave some idea on Monday:
'Kyle Bass, a hedge-fund manager from Dallas, was one of the few financial professionals to foresee the mortgage collapse. And like John Paulson, he made a fortune on credit default swaps (CDSs) when subprime paper imploded. Bass was prominently featured in The Big Short, written by our favourite financial journalist Michael Lewis. Lewis again features Bass in his latest book, Boomerang. And according to those pages, Bass is still bearish. In fact, he's preparing for the worst... Need we add he owns plenty of gold too. 'But not gold futures. You need physical gold.' Your editor has never been this worried. Hopefully nothing as bad as Kyle Bass's worst-case scenario will happen. But the fact that you have to hope tells you a lot. How have things managed to get so bad? We have a new theory.... Occupying Gambler's Gulch So far, we have been following the plot of Atlas Shrugged quite well. The famous fiction novel is about what happens when the entrepreneurs of society go on strike. One by one, the famous industrialists drop their tools and disappear. And society begins to fall apart. The Occupy Wall Street movement has spread to main street in the last few days. Much of their rhetoric is straight out of Atlas Shrugged. Any day now, the taxpayers, inventors, entrepreneurs and industrialists will throw in the towel and disappear. Unless they already have. In the book, the world's business geniuses go to a place called Galt's Gulch, named after John Galt, the first to have spat the dummy and left productive society. But our question is, have the so-called 1% shrugged already? Were they hiding in plain sight? Here's the theory: The job creators, inventors and wealthy have increasingly left the real economy to the feminists, unionists, interventionists, Qantas engineers and Chinese. They have left the world of creating and entered the world of gambling. The one place where greed is still good, regulations don't matter and politicians are beholden. It's called Wall Street, but you can call it Gambler's Gulch if you like. The collectivists and bureaucrats were left to take over the industrial sector and governments. Law and order became subjective terms, making employment and production far too dangerous, expensive and strenuous. Unless you were offering bonuses so big everyone agreed not to complain. Until now, those at Gambler's Gulch have enjoyed themselves, forgetting about the outside world. One of Wall Street's leaders had a private lift installed in his building so that his exposure to the common man would amount to just seconds each day. Just as in Atlas Shrugged, the outside world began crumbling without the support and regeneration of the entrepreneurs, inventors and innovators having a good time on Wall Street. But things have gotten too bad out there. And the government has turned out to be worse than the industrialists used to be. Let us know what you think of this Gambler's Gulch theory. Does it deserve a Nobel Prize in economics? The awards ceremony would certainly be more lively than the recent one. Occupy everything (except Sweden) Apart from the odd sign mentioning evil central banks and why we should return to the gold standard, we're a little confused about these global 'Occupy everything' protests. They seem concerned about inequality. But what inequality? Inequality of income? Of wealth? Of living standards? Each of these lead to the opposite conclusion for the state of inequality and its change over time. For example, Sweden and Denmark are bastions of income equality. But for wealth inequality they are shocking. Denmark is third most unequal, beaten only by Zimbabwe and Namibia. Sweden comes inside the top 30% for wealth inequality. Australia is fairly equal on both counts. We're also the richest nation according to Credit Suisse. So much for tall poppy syndrome. And we're well ahead on living standards. That's why our office is full of (legal) Australian residents by choice. So surely it's living standards that matter in the end. Maybe not to those protesting, who are making do with tents and tarpaulins in CBDs around the world. But to the rest of us, how do the statistics of income and wealth matter relative to living standards? Going by the amount of debt Aussies and their foreign cousins have racked up, living standards were considered far more important than income and wealth in the boom years. People were willing to have a punt with their wealth. They even accepted loss-making investments, just to boast their social standing as a property investor. But now the age of deleveraging has begun. No longer can the poor finance a rich lifestyle with debt. Even those who borrowed via the government's balance sheet to fund their consumption are losing out. The sovereign debt crisis in Europe has seen an end to cheap education in the UK, an end to ridiculous pensions in Greece and an end to early retirement for the French. At least, that's where they are headed. This is the end of the age of debt to fund living standards. It's the beginning of the age of income to create wealth. Or pay off old debt. And that's why the people are out on the street. They didn't expect the change. They thought deficits and borrowing were normal. They thought it was perpetual. They believe in a free lunch - often literally. The system has failed them. They have realised that it kept the rich rich and the poor poor. On that note, increasing the income tax does not reduce inequality. It reduces wealth mobility. In other words, the rich will stay rich and the poor will find it difficult to become rich because their income is taxed more if they earn more. So that won't work to reduce true inequality. Neither will protesting generally. The remarkable contribution to inequality by protesters remaining out of work and taking time to protest instead should be recognised. But what should the occupiers be in favour of if they seek to implement equality? Higher taxes? Less greed? We went to Wikipedia to find out. There you can find a table on the 'Wealth Gini'. It's a measure of inequality. Sadly the data is from the year 2000, but we couldn't find any better. Occupy Australia protesters will be pleased to know Australia scrapes into the top 10 when it comes to equality. It's joined by a very odd combination of countries. Japan, China, Spain, Korea, Macao, Ireland, Italy, Yemen and Finland. What do they have in common? We can't spot any similarities. The least equal are just as diverse. Namibia, Zimbabwe, Denmark, Switzerland, USA, Brazil, Gabon, Central African Republic , Swaziland and Guatemala. If you exclude Denmark and Yemen from their top and bottom 10 status, perhaps corruption emerges as a key cause of wealth inequality. Using our trusty and rusty excel skills, we plotted all the countries in the Wikipedia table by GDP per person on the Y axis and Wealth Gini on the X. Adding a trend line to the data gives the following insight: Higher GDP per capita countries have lower wealth inequality. Maybe that's what Communist China leader Deng Xiaoping meant when he said 'To be rich is glorious.' Similar Posts:
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| Friday ETF Roundup: EFA Surges On Europe Hopes, VXX Tanks On Strong Markets Posted: 21 Oct 2011 09:56 AM PDT By Jarred Cummans: Friday was another solid day for markets as investors cheered the results of a number of earnings reports and continued hopes over the European debt crisis. Every major asset class topped off the week in the black, as the Dow posted the most impressive gains at just over 2.3%. The S&P 500 raked in 22.8 points and the Nasdaq was also up about 1.5%. Likewise, oil and gold finished out the day up about 1.7% a piece, marking for a rare day with both of the aforementioned commodities and equity indexes both posting winning sessions. The strong trading session came just one day after the death of Libyan dictator Moammar Gaddafi, who was killed by rebel forces, ending a long and tumultuous journey to bring his reign to an end. Aside from the major earnings and welcomed news from the eurozone, president Barack Obama announced a major move to pull Complete Story » |
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