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Tuesday, June 26, 2012

Gold World News Flash

Gold World News Flash

So the third step of the process might be closer than we think. That's when, in the 1930′s, people moved out of cash, and into gold.

Posted: 25 Jun 2012 06:36 PM PDT

Turk – Capital Controls, Panic, The Great Depression & Gold


Economic Crisis: A Global Slide into Depression

Posted: 25 Jun 2012 06:30 PM PDT

by Andre Damon, Global Research:

It is now coming on close to four years since the collapse of Lehman Brothers in the autumn of 2008. The events of the past several months underscore two fundamental features of the crisis that emerged out of the subsequent financial collapse: 1) that it is systemic, not temporary; and 2) that it is global, affecting every country in the world. Globally integrated capitalism has created a globally integrated catastrophe.

This week, a series of economic figures were released confirming this analysis. Hopes from bourgeois commentators that the debt crisis in Europe could be offset by economic growth in Germany, or that weakness in the West as a whole could be counterbalanced by strong production in Asia, are being dashed with each passing day.

In fact, production in both Germany and China is contracting, in large part due to falling exports. According to Thursday's figures, Germany's composite purchasing managers index hit a three-year low, falling to 48.5 in June from 49.3 a month before. The HSBC China Manufacturing Purchasing Managers' Index likewise fell to 48.1 in June, down from 48.4 in May. It was the eighth consecutive month of readings below 50, indicating contraction.

Read More @ GlobalResearch.ca

Two Pronged Manipulation Technique: Gold Priced Out of Reach For Indians Via Weak Rupee, Kept Out of Headlines in USA Via Strong Dollar

Posted: 25 Jun 2012 05:45 PM PDT

from Silver Vigilante:

As gold has broken through new highs in the Indian Rupee, demand there to buy gold, sensitive as the people are to market conditions, has slowed. There has been increased selling of scrap gold, on the other hand, as sellers try to take advantage of a gold price in the Rupee that has climbed stalwartly, recently reaching a record of Rs 30,400 per 10 grams. This marks an 8.5% increase when compared to last year's price. The Rupee has been low as of late, which has helped to precipitate the high gold prices. I believe this to be a pre-programmed rise in the gold price in Rupee denominated terms so as to thwart demand and encourage that people cash out.

Furthermore, usually a weak Rupee means a strong dollar. Thus, gold demand can be priced out of reach of Indians and taken out of the headlines in the United States simultaneously. And so, the result is that demand is quelled in both nations.

Read More @ Silver Vigilante

Essential Things you Need to Know about Silver and Gold

Posted: 25 Jun 2012 05:26 PM PDT

Silverstockreport


Alert From a Reader: Total Collapse, ‘Blocked Zones' & the End of America?

Posted: 25 Jun 2012 05:17 PM PDT

[Note: I struggled with whether or not to post this "letter" given that I cannot personally verify the claims made here, despite having asked to be put in touch with the 'General'. Also, I don't think the U.S. military has the man power available to pull off what is being described here. But given the gravity of worldwide economic events, and the fact that the 'bad guys' are clearly still in charge, this article is posted in the hope that you might take heed and prepare for a worst-case scenario. I added the images to this piece, not the author. God Bless. Good luck. ~SGT]

from SGTreport reader Mike W.
June 26, 2012:

Dear SGT, I just talked to a fellow that astonished me. I don't know what to think of what he told me. But here are my quick notes.

Today I had a conversation with a multi star General in the United States Marine Corps quite by accident. He has been in the Marines Combat Divisions 40 years and is still on active duty. It occurred in a noisy restaurant and I often had to repeat the questions to him. I had talked with him for quite awhile before I found out he was a General from the friends he was with. Absolutely no question he was the real deal. He was well built and very physical for his age. He said at one point in his career he had been commander over the Navy Seals. I have his phone number.

I told him my father was a sergeant in WWII. He said he led combat divisions in Viet Nam and captured Iraqi forces on the ground in that war. The conversation really started when I asked him about New World Order. His eyes literally opened wide and he stared at me. Remember, this conversation is taking place in Southern California, where he lives.

He said he works under the President and the Marines take orders from the President. For the last ten years he had known about the plans for the closure of much of California. He mentioned blocked 'zones'… The General said it will be blocked off from San Francisco to the Mexican border and around the mountains to the north [Ed. Note: FEMA Region IX]. He mentioned the Grapevine and pass going up to Victorville as important. I told him Jesse Ventura had moved to Mexico on the Baja. He laughed and said Jesse was not safe there, that it also extended from the Mexico border down the Baja, but did not say what army would hold that.

He says he has had hard copy instructions for last 10 years. Under direct instructions of the Presidential command. He had taken part in drills for closure and had the field manuals for carrying it out. He said he has authority over the police. Each man for himself in blocked off zones. Military may take your food and everything else you don't hide. The military may even come into your home. He said you need guns and claimed the only safe place is in high mountain ranges. People will need to survive off the land.

I asked him about food and water. He said, "Nothing goes in or out." I asked him the same question twice more and got exact same answer. He said it is every man for themselves. I told him the Marines wouldn't do that, they have family here. He said they would indeed do it. He said most military have no idea about this and seemed to infer they were not that smart. They will follow orders he said (and I assume he will too.) It sounded like these people were trained to kill, not to think. He mentioned it might take up to ten years for this to happen, but when I pinned him down he said within 5 years. Since he might retire soon he said he definitely did not want to be here when this happens. He said they can come in your house and take everything. The General said the only safe place was the Rockies and up where it was cold.

So I pressed him on the "zones" again. He said nothing will be allowed in or out of zones. Nothing. Buy gold and silver, it will be the only money there is. Seemed to hint that they might confiscate and give you 15 cents on dollar for it!!! He says Isreal has bunker busters now. Key point. He told me that when Israel signs a peace treaty with Arab nations that will be the beginning of all hell breaking loose. That's when everything hits fan. He inferred that if you waited to prepare, by then it might be too late. He said after Israel signs the peace treaty, tribulation will last for 3 1/2 years after which, another 3 years gets worse. I questioned if his info was from a church. He said no, directly from government. But, added that he did believe in Jesus.

He said he was retiring soon and didn't intend to be around when all this goes down. I asked him over and over who was doing this. Satanists (Freemasons), Rothchilds, etc. He would not answer this question, but he knew.

I am writing this down quick so I remember correctly. Major problem is that I inferred from him that you might live the first 3 1/2 years, but after that there seemed to be little hope. Had I not talked directly with this fellow in person, I would never have believed it. I kept asking him, Are you sure? He answered 'positive' every time. He said for 3 1/2 years this tribulation could go on. He was an extremely religious Christian (and 3 1/2 years is mentioned in the Bible.) So, I assume he doesn't really know? For 3 more years after it would get worse. (Bible again ?) Many times I asked him how to survive this period and many times he said, "accept Jesus as your saviour". He kept saying to me each time, "you don't understand". Until, I realized he was saying this was the end.

There was no escape in the end. Get ready to meet your maker.

Again, he said most military people are uniformed AND WOULD FOLLOW ORDERS TO SAVE THEMSELVES. He mentioned he thought this would all go down some time within the next 5 years. He said you must buy gold and silver (as he is doing) and HOLD IT no matter what the price it is. DO NOT SELL IT.

He said, "You can wipe your ass with paper money, only gold and silver will be money." And, said he had been collecting silver for 30 years. He said buy American gold Buffalos because they were 24-carat gold. For some reason pure gold seemed important to him. I asked if they could confiscate gold and silver. He said, "If they did it before, they will do it again and give you 15 cents on the dollar."

He said only 1/10 of the gold is left in Fort Knox, but also said the government has the gold somewhere else. World governments will use the gold when the fiat currencies collaspe, which he knew would happen. He told me the pallet count in Fort Knox, but I couldn't quite hear him. But, for sure he said only 1/10th in there now.

I asked him if he got this stuff from church. He said he had never heard anything about this in church. He said it was all from 40 years in the government. The General was an extremely nice fellow (for being a stone cold killer). I am not so sure I want to see him again. But, I am sure my curiosity will get the best of me. Remember, he is one of "Them". That's something I have to remember.

I am literally shocked and stunned. I have absoltely no idea if he is correct or not about any of this. But, I verified that he was a high ranking General, there's on question about it. I hope to God he is not right. This all seems so impossible to believe. I keep saying to myself, this is impossible. Why would anyone want to do this? There has to be a motive. Maybe I will wake up from this bad dream.

My mind absolutely refuses to believe this could be possible. But, then I remember Congress passed NDAA and overturned Posse comitatus.


Global ECONOMIC collapse, war, & more

Posted: 25 Jun 2012 04:45 PM PDT

Alchemy By Other Means

Posted: 25 Jun 2012 04:15 PM PDT

by Gregory Cummings, Mises.ca:

Reprinted from Lapham's Quarterly, originally written in 1786 and appeared in The Complete Writings of Thomas Paine

I remember a German farmer expressing as much in a few words as the whole subject of paper money requires: "Money is money, and paper is paper." All the invention of man cannot make them otherwise. The alchemist may cease his labors, and the hunter after the philosopher's stone go to rest, if paper can be metamorphosed into gold and silver, or made to answer the same purpose in all cases.

Gold and silver are the emissions of nature: paper is the emission of art. The value of gold and silver is ascertained by the quantity which nature has made in the earth. We cannot make that quantity more or less than it is, and therefore the value being dependent upon the quantity, depends not on man. Man has no share in making gold or silver; all that his labors and ingenuity can accomplish is to collect it from the mine, refine it for use, and give it an impression, or stamp it into coin.

Read More @ Mises.ca

My Last Forecast on Silver and Gold Prices

Posted: 25 Jun 2012 04:01 PM PDT

By Jeff Nielson | SilverGold Bull - It seems at the very least ironic that as I begin a new chapter in my own career as precious metals analyst for Silver Gold Bull, that simultaneously I'm writing my last chapter on one facet of that analysis. This will be my last effort at playing the increasingly [...]


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Of VIX, Correlation, And Building A Better Mousetrap

Posted: 25 Jun 2012 04:00 PM PDT

We have discussed the use of correlation (cross-asset-class and intra-asset-class) a number of times in the last few years, most recently here, as a better way to track 'fear' or greed than the traditional (and much misunderstood) VIX. As Nic Colas writes this evening, a review of asset price correlations shows that the convergence typical of 'risk-off' periods in the market is solidly underway. While we prefer to monitor the 'finer' average pairwise realized correlations for the S&P 100 - which have been rising significantly recently, Nic points out that the more coarse S&P 500 industry correlations relative to the index as a whole are up to 88% from a low of 75% back in February. In terms of assessing market health, a decline in correlation is a positive for markets since it shows investors are focused on individual sector and stock fundamentals instead of a macro "Do or die" concerns.  By that measure, we're moving in the wrong direction, and not just because of recent decline in risk assets.  Moreover, other asset classes such as U.S. High Yield corporate bonds, foreign stocks (both emerging market and develop economies), and even some currencies are increasingly moving in lock step.  Lastly, we would highlight that average sector correlations have done a better job in 2012 of warning investors about upcoming turbulence than the closely-watched CBOE VIX Index.  Those investors looking for reliable "Buy at a bottom" indicators should add this metric to their investment toolbox as a better 'mousetrap' than the now ubiquitous VIX.

Nic Colas, ConvergEx: Building A Better (Volatility) Mousetrap

The most patented machine in American history has nothing to do with the Internet, or automobiles, or space exploration; rather, it is the humble mousetrap.  According to noted historian on the topic (yes, there is a mousetrap historian… See link after the note) Jack Hope, since the U.S. Patent Office opened its doors in 1838 it has awarded over 4,400 patents for distinct approaches to catching mice.  The process for obtaining a "Terminate mouse with extreme prejudice" patent includes categorizing your invention into a distinct subclass – "Impaling," "Choking or squeezing," or "Electrocution and explosive," for example – and then proving that you have a unique approach to the process.   And in case that's not enough mousetrap trivia for you, consider that the still-popular "Snap trap" was first patented in 1903 and is among the handful of inventions in this realm to ever turn a profit.  According to Hope, 95% of all mousetrap patents have gone to first-time applicants and fewer than two dozen have ever made any money for their inventors.

The desire to build a better method of catching mice is positively ingrained in American lore, exemplified by the old Ralph Waldo Emerson quote, "If a man can write a better book, preach a better sermon, or make a better mousetrap, than his neighbor, though he builds his house in the woods, the world will make a beaten path to his door."   Innovation is a hallmark of American entrepreneurial spirit, whether it is pointed at a field mouse breakfasting in your pantry or fixated on developing the next tablet computer.  The mousetrap is, for better or worse, the symbol of that drive to create both.  Emerson's observation may have seemed random at the time, but hoards of patent-seekers have proven him right since then.

In the same spirit of invention, I would like to offer up a "Better mousetrap" for measuring market sentiment.  The existing product – the CBOE VIX Index – has been around for +20 years in its current form and has done yeoman's work at defining the conversation around how to measure "Fear" in equity markets.  Technically, the VIX is simply the price of short term portfolio insurance on a basket of large-cap U.S. stocks.  That insurance comes through the options market, where every contract is priced against the Black-Scholes five-input model and "Implied Volatility" (IV) is the unknown variable.  The higher the IV, the more investors are willing to pay for options that protect their portfolios against near term price declines.

My mousetrap is the actual price correlations between the S&P 500 sectors and the index as whole, measured on a trailing monthly basis.  Right after the text of this note is a summary table that shows the current levels for each of the 10 major industry sectors as well as some other asset classes such as commodities, international equities, currencies and fixed income investments.  We'll get to the latter categories in a minute, but let's focus on sector correlations for a moment.  A few points here:

  • Different industries typically do better at different parts of the economic cycle.  As the U.S. moves from recession and into the early stages of recovery, financials tend to outperform.  Towards the end of an economic upturn, commodity producers take the lead since their products have hit scarcity thresholds that offer them pricing power and cash flow.
  • Historically, active money managers have focused intensely on getting their sector over/underweights correct, and the common wisdom was that these decisions were 50% of outperforming the S&P 500 index benchmark.  The other half was picking the right stocks, but every manager knows the pain of picking the right stock in the wrong sector.   You are often better off picking the worst stock in the right sector.
  • Over the last few years, U.S. industry sector price correlations have yo-yoed between their long term historical averages (50-70%, depending on the group) all the way to +90% in any given month.  For example, the average industry price correlation for the 10 major sectors in the S&P 500 is 88%, measured against the index itself.  This is essentially the average of the past two years (87%), but still higher than "Normal" markets.  Average sector correlations have been as high as +95% and as low as 75% (historical charts attached).
  • While the average sector correlations we've outlined here tend to track the VIX pretty well (69% correlation, as shown in the accompanying graph), there has been a strange divergence in the past five months.  Simply put, the VIX is down 21% over the course of 2012, but the average sector correlation is +1.5 points over the same period.
  • Does the current investment environment look and feel like it is 21% less risky than the end of 2011?  Only if you are in cash, gold, shotguns and a cabin in rural Maine, I think.  The VIX has been unexpectedly quiescent in recent weeks, touching 17.5 on June 20th.  Even with Monday's sell-off it barely held 20, its long run average.
  • Conversely, the correlation data is sending up a very visible warning flare about future market direction.  Back in February/March 2012, this indicator hit its low (good for stocks, since they are moving distinctly and separately) and began to trend higher (bad for stocks). Now, sector price correlations have essentially gotten back to their 2 years averages – 87/88%.  This would be like the CBOE VIX Index reading 28, which is its post-Financial Crisis average.  And frankly, a VIX at 28 would feel about right.
  • The real "Buy signal" from sector correlations is when then hit 95%, some ways from here.  As the accompanying charts show, this occurred in mid 2010 and Fall 2011 – both good times to buy U.S. stocks.

Just to round out the discussion, I would point out that there are asset classes that aren't clustering around stocks like scared sheep in a thunderstorm.  Precious metals, for all their whippy action this past month, are fulfilling their promise to act independently of financial assets.  Gold's correlation to the S&P 500 index was (18%) last month, and Silver was just +11%.  I have read some notes recently that were critical of gold's ability to provide diversification in choppy markets.  This month, however, gold and silver are acting exactly as they should – with no eye to other asset class price movements.  U.S. high yield bonds are at the other end of the spectrum, and now trade more like domestic stocks (87% correlation) than sectors such Utilities (59% correlation to the S&P 500) and Consumer Staples (81%).    International equities – developed and emerging economies alike – trade more like US stocks than most U.S. stocks.  Their correlations are 91% (EAFE stocks) and 89% (Emerging markets), versus that 88% sector average.

My conclusion is that sector correlations are a useful adjunct to the widely-followed CBOE VIX Index when it comes to assessing how much risk is really priced into U.S. stocks.  It isn't actually a "Better mousetrap," in that the VIX is widely traded and tracked.  But it is a useful add-on tool, and one that is more accurately reflecting the risks imbedded in U.S. stocks at the moment. 

 

[ZH: as an addenda, we track implied correlation and cross-asset-class realized correlation almost every day in our various market posts, and furthermore, while Nic's approach at analyzing the sector correlations is extremely valuable in our eyes, we find the greater sensitivity of the average correlation of the entire 100 names of the S&P 100 (and the high-yield and investment grade credit indices) is a more accurate and better indicator for turning points in macro 'fear' and 'insensitivity']

The chart below is the intraday cross-asset-class correlation for today - this measures the minute-by-minute changes in commodities, rates, credit, and FX relative to stocks for a sense of whether stocks are moving systemically or idiosyncratically...

Clearly, stocks began to move on their own after mid-morning as correlations fell and then after-hours this evening, correlations have picked back up as stocks have resynced with systemic risk movements.

Below is the chart of 1-month and 2-month rolling average of all pairwise realized correlations in the S&P 100.  Compare this to the chart in the upper left of the charts above (above measures the high beta correlation between the 10 sectors and the S&P; below measures the much broader and more sensitive correlation across all 100 names in the S&P 100)

Three things should stand out:

1) We are following a very similar cyclical pattern of idiosyncratic to systemic fear rotation once again - i.e. as Fed measures lift and we are left to fend for ourselves so risk rises and systemic fears creep back into the market, slowly at first and then rapidly;

2) We are quite a way from any capitulative 'fear' level across the 100 names of the S&P 100 - i.e. there is considerably more pain to come as correlation is expected to rise; and

3) This realized pairwise correlation is much closer to the implied correlation levels we see by tracking the variation between index volatility and the average of all individual volatilies - i.e. this is a better day-to-day tracker for the premium in implied correlation (the real 'FEAR' index) over a realized correlation.

 

Finally, the chart above shows the average pairwise correlation for a rolling two-month period across all 125 names in the IG18 credit index. Three things should be apparent:

1) IG credit is considerably more sensitive to swings in systemic risk than stocks - i.e. the variation high-to-low is greater and more rapid;

2) We are at a more extreme level of realized correlation in IG credit currently, perhaps indicative of an increase in dispersion aboout to occur - or post-hoc a major market dislocation; and

3) the rapid rise in pairwise correlation post the JPM-CIO-Whale Debacle as investment grade credit spreads in IG become much more index-driven than idiosyncratic risk driven thanks to the need to unwind their position - i.e. a pronounced turn-down would be indicative of a slowing in the unwind. 

 

Bottom-Line - Don't worry about VIX, it's simply too contemporaneous with risk to be useful; understand and identify useful relationships in correlation to comprehend real 'fear' in the market. Right now, correlation is indicating a systemic AND risk-off mode in markets.

Heading for Economic Collapse

Posted: 25 Jun 2012 03:56 PM PDT

The late Bob Chapman predicted it years ago. So does Paul Craig Roberts. It could "destroy Western civilization," he believes.

Untenable political and financial decisions put US and European economies on a collision course with disaster. Bailouts and market manipulation delay the inevitable.

A tipping point approaches. Only its timeframe is unknown.

Money power runs world economies. Wall Street and giant European banks run Western societies.

"Financial deregulation converted the financial system (into) a gambling casino….," says Roberts. Zero interest rates destroy household savings. Media scoundrels suppress ugly truths.

Western governments letting banking crooks scam the system for profits "is a system that is headed for catastrophic failure."

Bad news keeps getting worse. Public acknowledgement arrives late. Moody's June 21 downgrade of 15 major banks conceded what's been known for years.

Giant Western banks are zombies. They're insolvent. Taxpayer funded bailouts alone keep them operating. Moody's warned last winter than downgrades were coming. So-called stress tests suppress more than they revealed. Read more.....


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Robert Lambourne: Gold is a huge part of Bank for International Settlements' profit

Posted: 25 Jun 2012 03:45 PM PDT

By Robert Lambourne, GATA:

The Bank for International Settlements yesterday published its 2011-12 annual report:

http://www.bis.org/publ/arpdf/ar2012e.htm

The bank reported a profit of Special Drawing Rights 758.9 million. A gain of SDR 78.7 million arose on the sale of 3 tonnes of gold (3 tonnes from 119 tonnes, including gold loans) and there was a gain of SDR 34.7 million from the release of a provision set up in prior years on a gold loan that was repaid.

Hence the profit arising from the sale of physical gold and the repayment of gold loans was SDR 113.5 million. Fifteen percent of the bank's reported profit came from this source.

In addition there was a net revaluation gain on the remaining gold investment assets of SDR 551.8 million. This together with the SDR 113.5 million gold-related profit noted above represented 41 percent of the reported comprehensive income of SDR 1,607.2 million for the year. (Comprehensive income essentially means profit plus unrealised net valuation gains.)

Read More @ gata.org

Silver Update 6/25/12 Losing Position

Posted: 25 Jun 2012 03:15 PM PDT

Goldfinger bows out of precious metals

Posted: 25 Jun 2012 03:07 PM PDT

[Ed. Note: This just in from Bix Weir who sent us this link and writes, "600+ resignations of senior bankers was NOTHING in comparison to the latest resignation announcement from the Bad Guys..."]

by Jack Farchy, FT:

The gold market has just lost one of its most senior figures.

Jeremy Charles, the veteran head of precious metals at HSBC, retires on Friday after a career of nearly four decades at the heart of the bullion industry. In that time, he helped to revolutionize the market.

Under Mr Charles, HSBC's precious metals division has become one of the largest and most profitable franchises in the industry. With just 27 front office staff, competitors estimate that the bank's precious metals division makes annual revenues of $200m-$300m a year, rivalled only by ScotiaMocatta, UBS, and JPMorgan. Along with JPMorgan, HSBC trades more gold in the London market than any other bank, traders say.

Mr Charles, who started his career in 1975 as a 19-year-old "tea boy" at NM Rothschild and went on to become chairman of the London Bullion Market Association, has witnessed the transformation of the gold market from a backwater into one of the most profitable areas of many banks.

The industry in no small part has Mr Charles to thank for that.

Read More @ FT.com

Cloaked Wording – Tax = Theft

Posted: 25 Jun 2012 02:15 PM PDT

By Alan Lynch, Dollar Vigilante:

I am a strong advocate of keeping language simple. I think it's really important to tailor your use of language to your audience. It would be pointless using complex language to a group of children. I think it is wise to adjust your articulation and language skills to the audience you are directing it to. Otherwise, you will all have wasted your time. Imagine trying to explain the phrase 'Quantitative Easing' to a group of five-years-olds. For that matter, imagine trying to explain the phrase to over 90% of the population. They have no idea what it means. I mean, neither do lots of academic economists. Try saying: "Yeah, Quantitative Easing just means printing more money or creating more credit for people". In the technological age we are in, they can just type the numbers into a computer. In fact, they are already trying to stop you using cash, in favour of your plastic card – much easier to track transactions. Here is an interesting post about people from Louisiana being unable to use cash for second hand sales goods.

Read More @ DollarVigilante.com

Spain officially requests bailout money/Also Cypress/Moody's set to downgrade Spanish banks/Greece finance minister resigns

Posted: 25 Jun 2012 02:13 PM PDT

by Harvey Organ, HarveyOrgan.Blogspot.ca:

Good evening Ladies and Gentlemen:

Gold closed up by $12.30 to $1587.30. Silver also followed suit rising by 87 cents to $27.52.

Today's big news comes from the official asking for funds from Spain. I can remember that Rajoy stated that the bailout will be unconditional. Guess again, there will be strings attached. We are waiting momentarily for Moody's to place the entire Spanish banking sector in junk status. Credit default swaps rise big time today along side the huge bloodbath in bourses from Europe and the USA. The unemployment in Spain surpasses 25% and is close to that in Greece. Today the Troika was scheduled to visit Athens but that that trip was cancelled due to:

a) the sudden surgery of the new Prime Minister for a retina detachment
b) the fainting of the new Finance Minister upon seeing the real Greek figures.
He subsequently resigned a few hours later.

Read More @ HarveyOrgan.Blogspot.ca

Rare Earth Silver

Posted: 25 Jun 2012 01:55 PM PDT

The last years of mining silver could well be compared to studies that indicate the world is approaching the last years of pumping oil. While the earth's stores of silver may not actually run out anytime soon, increasing demand and increasingly difficult mining opportunities for silver tends to put upward pressure on the cost of extracting what silver is left from the planet. Those mining costs are also getting more and more complex as new processes and resource scouting techniques are required. Energy prices ultimately will go up. If not because of dwindling supply, then they will very likely rise due to inflation. The same is true of precious metal prices. The Silver Mining Industry The silver mining industry, much like the agricultural industry, is aging. It will take a substantial capital investment to train new people and bring in new innovation to meet growing industrial and investor demand for silver. Furthermore, silver mining is machine and labor intens...


Down Days

Posted: 25 Jun 2012 01:43 PM PDT

www.preciousmetalstockreview.com June 23, 2012 It was a wild week with markets hitting major resistance levels and then failing on heavy volume. Gold and silver were rocked hard Thursday and was easy to see coming Wednesday. I didn’t short them unfortunately as it would have been a huge win for the day but there are some other areas that are working on the downside which are more predictable. The next week or two should be quite weak and we’re ready to take advantage of it. Markets move both up and down and when the trend is either up, or down I think the trend should be traded. Why sit by and watch the markets fall when you can make money at it? Learning to short markets using inverse ETF’s, options or even straight up stock is a key tool in a rounded investing quiver. It’s really not that different than trading on the long side, although a stock can only drop 100% while it can rise without limits in t...


The Day Of The Deflationists

Posted: 25 Jun 2012 01:24 PM PDT

My Dear Extended Family, Never before in the entire period of 1968 to 1980, or 2001 to present, have I received so many copies of classical deflationist scenarios in one day. It would seem as if the God of Deflation overflew the gold guys and dropped their leaflets. Classical deflation does not have a snowball's chance in hell of occurring now for any length of time. To assume that you have to hold the belief that Bernanke is a mole in the present administration, placed their covertly to bury the present administration so deep that there will never be a democrat in office after 2013 anywhere. If you believe there is a political appetite for the collapse of the Western financial system, they had a perfect chance in 2008 and did not accept that great opportunity to purge the system of Banksters for political reasons. The problems of 2008 are here now and greater. Derivatives still challenge the entire system at a greater level. A major under the covers audit...


Frank Holmes: An Ending Made For Gold

Posted: 25 Jun 2012 01:13 PM PDT

"I'd guess that we saw the lows for this move down at the London close on Friday...and if not, we're very close to it." [COLOR=#7f4028] Yesterday in Gold and Silver The gold price traded in a ten dollar price range everywhere on Planet Earth yesterday...with the low price tick of the day [$1,557.10 spot] coming a couple of minutes before the London close at 4:00 p.m. BST...or 11:00 a.m. Eastern Daylight time. After that, it rallied slowly but steadily through what was left of the Comex trading day...and then into the electronic trading session that followed. Gold closed up $7.10 at $1,572.30 spot. Net volume was a much more subdued 112,000 contracts. The silver price made many attempts to break back above the $27 spot price mark, but got sold off every time. Silver also traded within a pretty tight range yesterday as well...about 50 cents or so, with its low tick [$26.48 spot] coming at the same time as gold's...a few minutes before the London c...


Top Seven Reasons Gold Producers Will Soar

Posted: 25 Jun 2012 11:34 AM PDT

Synopsis: Is today's gold market the contrarian opportunity of a lifetime? Dear Readers, I'm off for a multi-company due-diligence trip to China next month. I'll also stop in Shanghai, the nation's financial capital, for an up-close update on the single economy that so many people are counting on to save the rest of the global economy. I'll report back on any significant observations I make. While there, I'll be participating in this year's International Society for Individual Liberty conference in Shanghai. There will be an economics seminar for students, similar to the Casey Youth Conference on Liberty and Entrepreneurship I lead every summer in Lithuania. If you're curious about China, want to meet some great people, and pitch in for a good cause, I'd love to see you there. Meanwhile, Jeff Clark has an up-close update on the reasons for owning gold – and gold stocks. Remember, it's easy to say, but harder to do: buy lo...


Gold Locked in Range

Posted: 25 Jun 2012 11:34 AM PDT

courtesy of DailyFX.com June 25, 2012 12:25 PM Weekly Bars Prepared by Jamie Saettele, CMT No change…I’m looking lower. “The latest move off of the high is impulsive (5 waves) which favors lower prices from the current level to at least Friday’s low at 1553. The bearish RSI reversal signal that was in place for gold last week is now in place for USD crosses.” The mentioned 5 wave decline was succeeded by a 3 wave advance into former congestion (resistance). Look lower as long as price is below 1641. A break of the December low could result in an historic collapse. LEVELS: 1500 1522 1553 1589 1615 1641...


The Gold Price Needs to Climb Above $1,630 and then Above $1,656.50

Posted: 25 Jun 2012 11:18 AM PDT

Gold Price Close Today : 1587.50
Change : 21.50 or 1.37%

Silver Price Close Today : 2752.0
Change : 85.9 or 3.22%

Gold Silver Ratio Today : 57.685
Change : -1.052 or -1.79%

Silver Gold Ratio Today : 0.01734
Change : 0.000311 or 1.82%

Platinum Price Close Today : 1439.40
Change : -28.20 or -1.92%

Palladium Price Close Today : 606.20
Change : -10.95 or -1.77%

S&P 500 : 1,313.72
Change : -21.30 or -1.60%

Dow In GOLD$ : $162.80
Change : $ (4.04) or -2.42%

Dow in GOLD oz : 7.876
Change : -0.196 or -2.42%

Dow in SILVER oz : 454.31
Change : -19.82 or -4.18%

Dow Industrial : 12,502.66
Change : -138.12 or -1.09%

US Dollar Index : 82.49
Change : 0.234 or 0.28%

Today's silver and GOLD PRICE market can be likened to September, October, November, and December 2008. Silver and gold plunged and plunged every day. In late October silver hit 880 cents, then rallied, then fell back to 879 cents on 13 November. Gold bottomed the same day, having lost 30% of its peak value. Silver lost 105% of the preceding gain. Looked like the end --- to those who grasped not that it was a BULL market. Silver and gold crept up into December, enough to begin confirming they were past danger.

The SILVER PRICE and GOLD PRICE have both tested the base of that declining triangle, gold 5 times, silver 4 times. More times support is tested, greater waxeth the likelihood it will break. If that support is pierced, silver plunges toward 2250c and gold toward $1,475, maybe $1,435. That's the REALITY.

Feels like December, 2008 to me, but then, it might be late October 2008, too. I have no crystal ball, but I believe the fight at support will be won or lost this week. Personally, I loaded up on Friday, but then, I'm a "plunger." My wife says you have to bet big to win big. Of course, some times you lose big, too.

Where are other witnesses or confirmations to watch for? The SILVER PRICE RSI did not make a new low when the price did -- bullish non-confirmation. Silver today gained 85.9 cents (3.22%)to close Comex at 2752c while gold gained $21.50 (1.37%) to end at $1,587.50, just below $1,590 resistance. Silver is knocking on 2750c resistance, just barely into it. GOLD/SILVER RATIO fell nearly fell nearly a full point, from 58.583 to 57.685. All those whisper -- whisper, they don't shout -- metals turned today.

Confirming a bottom silver needs to close above 2800c, then move rapidly above 2850c. Within a week or so after that, it ought to move through 2900c. Whether this marches rapidly or slowly grinds makes no difference, only that it steadily advances.

For the GOLD PRICE to confirm a bottom it needs to climb up and out of its present even-sided triangle (from a line connecting the lows from May through last week, and the highs from 1 May through 18 June). That requires a close above $1,630, with no telling fall-back. Fairly rapidly, afterwards, gold needs to climb above its 150 DMA (now 1,656.50).

It's a bull market. Most of the time, bull markets resolve to the upside. That's what makes them bull markets.

What will gainsay my upward outlook? Any gold close below $1,558 casts everything in doubt, a close below $1,532 shatters it. Silver must not close below 2641c, period.

There y'all go. Don't bother writing me asking for your money back. I never claimed to have a crystal ball, and I sure can't read the future. I'm just a "chart-whisperer."

Well, blast it all! I've gone MAINSTREAM! I'm so ashamed, and not a little suspicious.

My friend Catherine Fitts sent me this link to a CNBC Kudlow Report broadcast, http://www.youtube.com/watch?v=q1KnJbBJTE0 Here are not one but FOUR talking heads saying that we are all "slaves" to the central banks and that the stock market isn't driven by the economy but by central bank manipulation.

What are they up to, talking sense? Don't make no sense, coming from them.

They've shamelessly STOLEN the arguments I've been making for over 30 years. They must be desperate for ratings, stealing from a natural born fool from Tennessee.

Well, even a blind hog finds an acorn now and then. I wish 'em well, but even though they said nice things about gold -- think about THAT! -- they're only about 1/100th of the way there. Still think you can make money in stocks by outguessing the Fed. Haven't a clue silver exists in the same cosmos with themselves. Prob'ly wear them shiny, pointy Eyetalian shoes.

I wish 'em well, but they have no solution. Only workable solution is to build a real economy using real money right alongside the rotten one, so that when the rotten one falls, we'll still be chugging away, helping our neighbors and ourselves re-build.

Meanwhile in Argentina nervous savers withdrew US$522 million (in US paper dollars) last week. Seems they recall the last time government cheated them out of their savings in 2002 (never mind all the other times). To show you how desperately rotten the Argentine paper money is, next to it US dollars actually look good. Wonder why they don't just buy gold coins? Makes no sense, but maybe habit is hard to break.

All those talking heads have their work cut out for 'em this evenin', since both the US dollar AND gold rose, while stocks fell, all of which, according to the conventional guru-wisdom, ain't possible.

US dollar index rose 23.4 basis points (0.3%) to 82.49. Dollar was stymied by 82.60, but closed above its 20 day moving average (82.31), first sign of an upward turn. Looks now as if the whole move from 1 June's 83.54 high to 18 June's 81.16 amounted to nothing more than a 50% correction of the foregoing 1 May to 1 June rally.

In other words, the US dollar points higher. Considering the plights of the other bankrupt currencies and their bankrupt economies, that's no surprise. Dollar's ugly, sure, but has slightly fewer warts than the yen and euro.

After gapping down below its 50 DMA on Wednesday last, today the yen gapped up above its 50 DMA. You don't buy things like that. Market proverb says, "Gaps are always filled." That's all this amounts to, not a change of direction. Closed 125.53c/Y100 (Y79.66/US$1). Will drop further.

More I think about that sorry euro, that gapped down today, more I wonder if it won't drag the rest of the world down with it. Closed today at 1.2504, down 0.54%. 'Fore long, it'll hit 1.2000 unless the alchemists at the ECB learn how to transmute metals first.

Come now, ye prattlers! Where now is your "risk-on/risk-off" trading? Pray declare how the risk-off dollar rose while risk-on stocks fell and risk-on silver and gold rose?

Oh, y'all are so glad that you didn't own stocks today! Dow fell 138.12 points (1.09%) to 12,502.66. S&P500 hurt worse, losing 1.6% (21.3) to 1,313.72. Dow in gold dollars fell 1.94% to G$163.10 (7.89 oz), having left behind a blunt and unequivocal double top, child of confusion that has now found its way: down.

Looking back on the S&P's trajectory since it fell through the Head and Shoulders' neckline in early may, we mark that all the action in June was no more than a counter trend rally stopped cold at the 50 DMA -- didn't even reach back up to the neckline. Descent speeds up once it falls through 1,270 again.

Been thinking all weekend about those silver and gold charts: declining triangle adorns both. A declining triangle (falling to the right) generally breaks out to the downside, and potential for that is plentiful. However, against what backdrop playeth out this triangle? LO, against a BULL market.

Remember stocks from 1996 - 2000? Repeatedly formed BEARISH rising wedges, and against usual expectation broke out Upside time and again. Why? It was a BULL market, silly.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com
1-888-218-9226
10:00am-5:00pm CST, Monday-Friday

© 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose. No, I don't.

Guest Post: Oil Price Differentials: Caught Between The Sands And The Pipelines

Posted: 25 Jun 2012 11:14 AM PDT

Submitted by Marin Katusa of Casey Research

Oil Price Differentials: Caught Between The Sands And The Pipelines

One of oil's most important characteristics is its fungibility, which means that a barrel of refined oil from Texas is equivalent to one from Saudi Arabia or Nigeria or anywhere else in the world. The global oil machine is built upon this premise – tankers take oil wherever it is needed, and one country pays almost the same as the next for this valuable commodity.

Well, that's true aside from two factors that can render this equivalency void. In fact, crude oil prices range a fair bit according to the quality of the crude and the challenge of moving it from wellhead to refinery. Those factors are currently wreaking havoc on oil prices in North America: a range of oil qualities and a raft of infrastructure issues are creating record price differentials. And with no solution in sight, we think those differentials are here to stay.

The Parameters of Pricing

The first factor in oil pricing is quality. The best kind of crude is light and sweet: "light" means its hydrocarbon molecules average on the small side within the oil range; and "sweet" means it does not contain much sulfur. Light, sweet crudes are the easiest to refine into petroleum products, which makes them more desirable than heavy, sour crudes.

No two reservoirs produce identical oil, though reservoirs in the same region often produce similar crudes. For example, conventional oils from Texas are generally lighter and sweeter than the crudes that make up the European benchmark Brent blend; this is why West Texas Intermediate crude oil carried a premium over Brent crude for years. Similarly, Bonny Light oil from Nigeria is a bit heavier and sourer than Algeria's Saharan Blend and therefore receives a slight price discount.

But wait, you say – isn't Brent more expensive than WTI? Yes, today it is. This graph shows the two prices' movements over the last 25 years.

(Click on image to enlarge)

For most of the graph the prices track very closely, with the green WTI line sitting just above the black Brent line. Then, in the second half of 2010, the relationship starts to shift: WTI prices started to lose ground against Brent. The differential was only a dollar in November 2010, but by September 2011 Brent crude was worth US$27.31 or 32% more than WTI. The differential narrowed in December but has recently opened up again, with the spot price of Brent closing US$13.88 above that of WTI yesterday.

The characteristics of WTI and Brent crude oils did not change during 2010, so the pricing reversal must have stemmed from the other factor that impacts crude-oil prices: infrastructure. More specifically, WTI prices started to slide because of a lack of infrastructure.

North America's Fantastically Flawed System

North America has a long history of oil production and processing. Decades of producing oil and consuming lots of petroleum products have left the continent with a pretty good system of pipelines and refineries… but pipelines are annoyingly stagnant things that tend to stay where you build them. And it turns out that the pipelines of yesterday are in the wrong places to serve the oil fields and refineries of today.

America's oil infrastructure was built around two inputs – some domestic production and large volumes of imports. You see, while the Middle East may be the biggest producer of crude oil in the world, most of the refining occurs in the United States, Europe, and Asia. There are two reasons for this. The first is that it's easier to ship massive volumes of one product (crude oil) than smaller volumes of multiple products (gasoline, diesel, jet fuel, and so on). The second reason is that refineries are generally built within the regions they serve, so that each facility can be tailored to produce the right kinds and amounts of petroleum products for its customers.

During World War II, the US War Department (now the Department of Defense) divided the United States into five regions to facilitate oil allocation. The regions were called "Petroleum Administration for Defense Districts," or PADDs.

The United States is split into five oil districts to help with regional administration of a crucial asset.
Thanks to the US EIA for the map.

Today, refineries in PADD I on the East Coast process oil shipped to the district's Atlantic ports from all over the world. Its refineries produce enough petroleum products to meet about one-third of regional demand; the rest comes from imports of refined products, primarily from the Gulf Coast but also from Europe. PADD V, on the West Coast, processes domestic oil from California and Alaska, as well as imported oil.

While the East- and West-Coast PADDs are not connected to the rest of the crude oil system, PADDs II, III, and IV have become very interdependent. PADD III, on the Gulf Coast, has more refining capacity than anywhere in the world and accounts for 45% of total US capacity, with 45 refineries processing more than 8 million barrels of oil per day from countries like Mexico and Venezuela as well as domestic sources. Refineries in the Midwest and California push the US's total refining capacity to 18 million barrels of oil a day.

While domestic production has always helped meet the US's oil needs, imported oil has long ruled the day. The US has relied on imported oil so heavily for so long that the country's oil infrastructure is built primarily around refining imported oil and then moving refined products – gasoline and diesel and the like – north, from the Gulf Coast to the Midwest, or inland, from refineries on the coasts to customers in the interior.

It was not, it is important to note, designed to move oil from the interior of the country to refineries. But that is what is needed today.

Oil's a-Flowing, But with Nowhere to Go

North American oil production is on the rise in a serious way, and there are two prime culprits: the Bakken shale and the oil sands.

The Bakken shale formation underlying North Dakota gets most of the credit for the resurgence in US domestic output, though some of the shales in Texas are also contributing notably. Production in the Bakken is so booming that North Dakota's crude output topped half a million barrels a day for the first time in November, up from just 300,000 bpd in 2010. The state is on track to surpass both California (539,000 bpd) and Alaska (555,000 bpd) this year to become the number-two oil-producing state in the United States.

Oil from the Bakken is generally mid-weight and fairly sweet. Ideally it should stay in the Midwest, because the refineries around Cushing are still designed to process light sweet oil. However, the other area where North American oil production is booming produces just the opposite. In fact, oil from the Canadian oil sands is so heavy that it has earned a distinct moniker: "bitumen." And there is a tsunami of bitumen on the way. The two million bpd being produced in the oil sands today is set to increase 50% in just the next three years.

However, Canada's oil sands are not the only place in the world producing heavy oil. In general, global production is gradually moving towards heavier, sourer crudes because the easy deposits of light, sweet crude are being tapped out. And that has forced refineries to evolve.

A refinery designed to handle light, sweet WTI crude cannot switch to heavy, sour oil sand bitumen without some serious upgrades. To that end, US refineries have invested billions in upgrades over the last decade to enable them to process heavy oil. The catch is, now the refinery army along the Gulf Coast needs heavy oil – just as they couldn't easily switch from light to heavy, they can't switch from heavy back to light.

The obvious source is the oil sands. It's a win-win: Oil-sands producers want to get their oil to suitable refineries, and the heavy oil refiners on the Gulf Coast want Canadian crude, because without access to bitumen they are being forced to pay a premium for to secure heavy oil supplies from Venezuela.

But that potential win-win is instead a losing predicament for all, because the pipelines to move that oil simply don't exist.

Remember how the US's oil pipelines were designed primarily to move refined products from the Gulf region and the coastal refineries to inland customers? Well, those pipelines of yesterday now run the wrong way. Today what North America's oil machine needs are pipelines running from the oil sands to the Gulf Coast. At the moment there is just enough capacity to get bitumen partway there – it gets to Cushing, the oil hub. And then it gets stuck.

This chart tells the story perfectly. The vast majority of Canada's bitumen is ending up in PADD II – in Cushing – where it simply sits in tanks because there is no heavy oil refining capacity in the Midwest, and there is very limited pipeline capacity to move oil south.

Cushing is overwhelmed. The storage tanks at Cushing are at record levels, housing no less than 46.7 million barrels of oil. The recent reversal of the Seaway pipeline is helping – Seaway used to move refined products north from the Gulf Coast but has now been flipped to carry oil south. It is currently moving some 150,000 barrels of oil a day; volumes are expected to rise through the year to reach 400,000 bpd by early 2013. The pipeline's owners would ideally like to twin the pipe, but regulatory proceedings for that project are not yet under way.

The much-debated Keystone XL pipeline will also help. While routing and approval for the northern section of the pipeline are still under debate, construction of the southern leg of the project, running from Cushing to the Gulf Coast, is set to begin this summer. It could be operational before the end of next year.

But even with Seaway reversed and Keystone XL's southern leg in place, the glut of oil at Cushing will continue to grow. Production from the oil sands and the Bakken is simply growing too quickly for infrastructure to keep up. And when oil becomes landlocked, it loses that key characteristic – fungibility – that helps make it so valuable.

North American Oil Differentials: Here to Stay

With so much supply landlocked, Canadian oil prices are taking a serious hit. The benchmark price for Canadian heavy oil is Western Canada Select (WCS), which is currently trading at just US$59.33 per barrel. By contrast, WTI is priced at US$82.70, which means the differential is a whopping US$23.37 per barrel, or 28% higher.

(Click on image to enlarge)

Even Canadian synthetic – a partially upgraded bitumen product that has historically carried a premium to WTI – is trading at a discount to its American peer: Canadian synthetic is at US$79.13 per barrel.

It's a double-whammy differential: Canadian oil is heavy, which discounts its price; and the system to move it to suitable refineries is clogged up, creating another discount. Neither of those situations is going to change any time soon, and that means oil-sands projects may soon be on the chopping block.

The oil sands is one of the costliest oil regions in the world to develop; and with WCS prices so low, the economics behind many new oil-sands projects have become pretty weak. New oil-sands mines require a price of around US$80 per barrel to break even. If an upgrader is part of the plans, that break-even price rises to almost US$100. In-situ projects, which use wells and underground steam injection to extract oil from the sands in place, usually carry a break-even price near US$60 per barrel.

But even with some projects postponed and others slowed, bitumen production is still expected to climb rapidly. Estimates range, but most observers agree that it is likely the oil sands will be producing close to 2.7 million barrels a day by 2016, up from 1.6 million bpd last year.

That kind of investment means that every time new pipeline and refining capacity is built, supply will catch up and the system will remain chockablock. And that means the differential between Canadian and US oil prices is settling in for a long stay. There are ways to benefit from this differential, but given the complexity of the situation, only informed investors will be able to take advantage.

Waiting for the Collapse

Posted: 25 Jun 2012 09:31 AM PDT

The 5 min. Forecast June 25, 2012 12:01 PM Dave Gonigam – June 25, 2012 [LIST] [*]Iceland de-zombifies, while Americans fork over $14 billion a year for JPMorgan salaries and bonuses [*]What regulations can’t fix: Niall Ferguson on the moral rot in the banking system [*]Waiting for The End: Chris Mayer, Tucker, Cox, Casey on the prospect of systemic collapse… and the innovators who will overcome it [*]Markets tank as recession indicator flashes yellow… but one housing indicator looks spiffy [*]Four days to profit on the Aussie dollar… Reader takes issue with “war on the U.S. dollar” theme… Laurel and Hardy face off across the Atlantic with the Three Stooges… and more! [/LIST] Hooray for Iceland. The nation has effectively purged an entire class of zombies. Late on Friday, the Icelandic government repaid $483.7 million in loans to the International Monetary Fund. Ahead of schedule. On top of another early payment totaling $900 m...


Platinum Outlook Remains Volatile

Posted: 25 Jun 2012 08:44 AM PDT

A third round of quantitative easing won't help support platinum and palladium prices, according to Erica Rannestad, platinum group metals specialist with CPM Group in New York. So, what will drive the platinum group metals, which have been suffering from lags in demand and increasing interest from short sellers? Rannestad discusses the outlook for these specialized metals in this exclusive Gold Report interview, including what they have in common with gold.


Turk - Capital Controls, Panic, The Great Depression & Gold

Posted: 25 Jun 2012 08:32 AM PDT

With tremendous volatility in global markets, today King World News interviewed James Turk out of Europe. Turk told KWN that we are headed into an extraordinarily dangerous time for both the markets and the financial system, that will end in a massive panic. Here is what Turk had to say about what is taking place:  "Today was a very important day, Eric, because gold was strong while the stock markets were weak. This is a trend I expect to continue, and one that will baffle many financial analysts, going forward, that don't understand this type of cycle."


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Stocks Slump But Commodities Jump Despite USD Pump

Posted: 25 Jun 2012 08:29 AM PDT

US equities dumped out of the gate from the day-session open - after drifting lower with Europe all night/morning. Regimes shifted as Europe closed with Gold and Silver spurting higher (with the latter outperforming to play catch-up from last week) which led to the start of a correlated risk-on move in stocks (egged on in a 'ignorant' way but Oil strength from its increasing war-premium given the middle-east turbulence.) The levitation on low average trade size and low volume was mind-blowingly algorithmic as ES came to rest for the last hour almost perfectly at VWAP (and EURUSD seemed pegged at 1.25). Just like on Friday though, with a few minutes to go, ES dropped rapidly on heavy volume and average trade size as it would appear institutional sell orders plagued the market. The close took us back into the down-trend channel and back to 10-day lows for stocks. Modest USD strength (and JPY strength on carry-unwinds) left Oil lower from Friday but well off its lows as the rest of the commodity complex surged. Treasuries gained back all of Friday's losses ending at Thursday's low yields with 30Y outperforming. Financials and Energy sectors were worst with the major financials ending down 5-7% from the pre-downgrade close now. HYG (and HY) outperformed in the short-term but as we noted earlier remains a convergence trade than an indication of rotation or strength. The late-day dump in stocks lifted VIX back over 20% ending up 2.3 vols as implied correlation lifted back above the 70 'crisis' levels once again.

S&P 500 e-mini futures (ES) drifted lower early, snapped lower on the day-session open, recovered from Europe's close - magically levitating perfectly to VWAP (red arrow - blue line) and then dumped on heavy activity into the close...

 

and while credit did widen (weaken) today, stocks contonue to underperform in the short-term (though as we noted here earlier, there is good reason for this and we should see the divergence stall now)...

Commodities all performed well off the lows (even as Oil closed down on the day more in line with USD strength) as it seemed the rally in Treasuries stalled at Europe's close and safe-haven flows pushed into Gold and Silver...

and the divergence between stocks/bonds and gold/USD is clear (around the European close here)...

risk assets in general were very quiet this afternoon as CONTEXT trod water and stocks limped UP to meet its value (and VWAP). We will need to see some follow-through on EURJPY or Treasuries (or a reversion in WTI) for equities to leak more here...

Charts: Bloomberg and Capital Context

Gold Daily and Silver Weekly Charts - Big Bounce on 'Flight to Safety'

Posted: 25 Jun 2012 08:12 AM PDT


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LGMR: Gold "In Sideways Range" Ahead of European Summit, German Government Announces Joint Debt Sharing, But Only Within Germany

Posted: 25 Jun 2012 08:08 AM PDT

London Gold Market Report from Ben Traynor BullionVault Monday 25 June 2012, 08:30 EDT WHOLESALE MARKET gold bullion prices dropped below $1570 an ounce during Monday morning's London session, though they remain broadly in line with where they ended last week, with markets focused on this week's European leaders' summit. Gold bullion is now at levels similar to those seen in the second week in May, when gold fell through $1600 for the first time in 2012. "Gold has essentially been in a sideways range for the past seven weeks," says the latest technical analysis note from bullion bank Scotia Mocatta. "We will need to see a break through the low at $1526 to get a bigger directional move." Silver bullion hovered around $26.80 an ounce – a slight dip on last week's close – while other commodities were also broadly flat, with the exception of oil which ticked lower. US Treasury bond prices gained meantime, along with other major governments bonds, while the Dollar also stren...


Platinum Outlook Remains Volatile: Erica Rannestad

Posted: 25 Jun 2012 07:31 AM PDT

The Gold Report: Erica, the June 6 issue of CPM Precious Metals Advisory reported that, "Some investors view the present easy monetary policy of the U.S. Federal Reserve as a great reason to purchase gold, seeing the current monetary policy as likely to result in higher inflation and the dollar losing value. When viewed over the longer term, much to the contrary has happened since the Fed began to ease monetary policy." It seems like the returns for quantitative easing (QE) are indeed diminishing. Tell our readers what you mean. Erica Rannestad: We ran an analysis on the impact of QE in the U.S. on gold prices in our recent report. We found that the percentage return during the periods of QE1 and QE2 were positive, but that QE2 is lower in percentage and dollar terms than the increase during QE1. The reason for that is investors were buying gold as a safe-haven asset during those periods. These quantitative easing measures have not translated to higher inflation that has trickled down...


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