Tuesday, August 31, 2010
Uranium - U.to chart updated
Well, it turned down from the anticipated resistance alright. And it still flops around down below.
GDX - Momos in waiting?
Can you imagine the sky captains and momo jocks that are going to take note if this thing breaks the upper line? While I never, but never make predictions, an impartial view of the technicals suggests that people bearish on the gold stocks right now have been going by what they think they know fundamentally, not by this chart.
Dear Subscribers... HUI
As we approach the short term target zone, please keep in mind your goals. Keep in mind your orientation, whether investor or trader. Keep in mind the upside and downside potentials and targets and the probabilities therein.
What appears to be happening is that the gold miners are leading a market dependent on what would ultimately be inflationary policy. The market is thrusting this special sector up upon its shoulders [head & shoulders :-)] and as I called them in an article about half a decade ago, the "inflation hounds" are sniffing.
There is a scenario in play where the misery of the majority can manifest in the pleasure of the few (gold stock holders) who have gotten contrary the deflation scare. But please expect there to be chop and grind (at a minimum) or serious volatility at the target zone. This is a big battle in the war.
Signed, Jim Sin... I mean, Gary
What appears to be happening is that the gold miners are leading a market dependent on what would ultimately be inflationary policy. The market is thrusting this special sector up upon its shoulders [head & shoulders :-)] and as I called them in an article about half a decade ago, the "inflation hounds" are sniffing.
There is a scenario in play where the misery of the majority can manifest in the pleasure of the few (gold stock holders) who have gotten contrary the deflation scare. But please expect there to be chop and grind (at a minimum) or serious volatility at the target zone. This is a big battle in the war.
Signed, Jim Sin... I mean, Gary
SPY - do or die
To paraphrase Sgt. Barnes (Platoon)... "if the flag breaks down, WE break down!"
If the first dotted line is broken, we are most likely going to fast track it to the lower, major neckline on SPX, Dow and many others. A failure to hold there and some nasty downside targets are activated.
Gold... this is not bullish
Between those horrific commercials on Fox (boy do they feel like they are right out of the 70s') and things like this in the MSM, there is a lot of NOT BULLISH noise out there in gold.
Still, the rational side of me sees deflation and sees the Keynesian battle against it and thinks "while we can always get a hard correction to clear some dead wood, the targets in this pump piece actually look pretty good." Not $1500 in 2010, I don't think. But $1500 and beyond in due time.
Still, the rational side of me sees deflation and sees the Keynesian battle against it and thinks "while we can always get a hard correction to clear some dead wood, the targets in this pump piece actually look pretty good." Not $1500 in 2010, I don't think. But $1500 and beyond in due time.
Monday, August 30, 2010
Rio Alto Mining (RIO.v, RIOAF)
Say Otto, do you want to know what the measured upside target is for this stock I have only you to thank for owning? Well, the target is noted on the chart. --Signed, a happy and very satisfied reader of IKN Weekly.
T-bill & 10 year yields updated
What a difference a summer makes; Tim and Ben worked some magic in helping guide long rates down from where they may have belonged to a more comfortable (for them) area in alignment with the t-bill. All good, what's a little deflation scare when the important thing is Ben's ability to I.N.F.L.A.T.E. being intact? And it is.
Buying myself out... FRG to buy XAU.to
I have made mistakes in trading a couple other quality core members, but the FRG/XAU/Long Canyon story was just too good to be left on the outside looking in. There are plenty of other non-trustworthy entities out there to trade.
A good start to the week.
Vancouver, B.C., August 30, 2010 - Fronteer Gold Inc. ("Fronteer Gold") (TSX/NYSE Amex:FRG) and AuEx Ventures, Inc. ("AuEx") (TSX:XAU) announced today they have entered into an arrangement agreement under which Fronteer Gold will acquire 100% of the outstanding common shares of AuEx by way of a plan of arrangement.
Under the plan of arrangement, AuEx shareholders will receive 0.645 of a Fronteer Gold share, $0.66 in cash and 0.5 of a share in a new exploration company ("SpinCo") for each AuEx share. Excluding the SpinCo shares, the offer represents a premium of approximately 50.9% based on the volume-weighted average prices of AuEx and Fronteer Gold shares on the Toronto Stock Exchange ("TSX") for the 20 trading days ended on August 26, 2010, resulting in a fully diluted equity value for the transaction of $280.8 million. [PR continues per link above]
Edit (9:59) Here's the XAU.to chart err... updated:
Gold This Morning - Back From Central Asia --J
Overnight volume is the lowest I have seen in several months and we have traded in ~$5 range. Open interest as of Thursday was marginally higher at ~565,000 contracts but hardly representative of any trend or new buying. COT (Commitment of Traders) had no surprises and while commercials increased shorts by 15,000 contracts, the large specs offset that by a similar increase in their long positions. So, let's go to the GSR currently at ~64.60 and easier by 2 points since a week ago. This number is still 'in the range', but the relative silver strength in the face of hysterical bond buying and Japanese attempts to jawbone their currency lower without success should be noted carefully. We must keep in mind that September is seasonally the beginning of Gold's most robust trading period as the dogmatic pundits will remind you of upcoming holidays, Indian buying, and Chinese hoarding. Nevertheless relative strength is presently close to being as elevated as it was at our all-time highs in June and it is also clear over the past week that ~$1145 has been a resistant level with either sellers or manipulators at that barricade. So, let's see if we can muscle through that area, but if not we suspect the downside should be muted in a pre holiday week.
Sunday, August 29, 2010
NFTRH99 Out Now
A quick read of the 1st page screenshot below will tell the story of the majority of 99's fifteen page content. After last week's heavy theorizing, the letter is glad to be back in the hands of a technical analyst because after all, theorists can mentally pleasure themselves all they want, but traders and investors are here to be on the right side of macro events, putting their money where their theories are.
Friday, August 27, 2010
Gold-Silver Ratio Updated (GLD-SLV proxy)
Many weeks ago it was stated here that the markets were getting interesting. Well, revise that now to these markets are absolutely back in gear, making sense and flashing prime opportunities, not necessarily to buy stocks or assets, but to be right, preserve capital and yes, maximize capital as the situation dictates.
Okay, that's enough for me today. Got a newsletter to write. Hey, have a great weekend.
Bernanke Says...
Bernanke Says Fed Will Do All It Can To Ensure US Recovery
There's the headline, here's the pump:
Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery, and outlined steps it might take if the growth slows.
“The Committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly,” the Fed chairman said today in opening remarks to central bankers from around the world at the Kansas City Fed’s annual monetary symposium held in Jackson Hole, Wyoming.
Steroids, I'll put this Ponzi racket on steroids if I have to to prove my theories. I am an academic and you are a dumb ass. Your quaint old fashioned theories of sound money and monetary systems are so outdated. You and your stupid concerns about young people, about your children... I am Bernanke and I have a plan.
The Fed chairman gave a detailed analysis of the economy and said growth during the past year has been “too slow” and unemployment “too high.” Still, he said a handoff from fiscal stimulus and inventory re-stocking to consumer spending and business investment “appears to be under way.” He also said that the “preconditions” for growth in 2011 are “in place.”
The only "handoff" that's on the way is the toxic debt no longer carried by global partners to the people of the United States.
Bernanke said the risk of an “undesirable rise in inflation or of significant further disinflation seems low.” He said the Fed has several tools if prices decelerate, or job growth stagnates, including shifting the composition of its bond reinvestment strategy.
Stocks fluctuated after Bernanke’s comments and as Intel Corp. said third-quarter revenue will be below its previous forecast. The Standard & Poor’s 500 Index was little changed at 1,047.04 at 10:16 a.m. in New York.
Exit on Hold
Federal Reserve officials put their exit strategy on hold this month and decided to purchase Treasury securities to keep their portfolio from shrinking as their mortgage bonds mature. Economists at Goldman Sachs Group Inc. and JPMorgan Chase & Co. say the Fed could boost monetary stimulus if the economy continues to deteriorate.
There is no exit, this far off the macro balance sheet. We have entered, and there is no exit... short of termination of the system as we know it.
“The FOMC’s recent decision to stabilize the Federal Reserve’s securities holdings should promote financial conditions supportive of recovery,” Bernanke said in the 19- page text of his prepared remarks. “Additional purchases of longer-term securities, should the FOMC choose to undertake them, would be effective in further easing financial conditions.”
What other options do you have Ben? Congress has not yet mustered the nerve to pull American retirement savers into the all-in game. Are we at the 'all or nothing' point yet, where national security is at issue? I can see it now... "Patriots should buy these Treasury securities for the cause of NATIONAL security. Buy bonds! -- or else get off the tax advantaged deal you have going with us.
Jackson Hole
The Kansas City Fed is hosting central bankers from more than 40 countries including Brazil, Malawi and New Zealand this year as well as economists from firms such as Bank of America Corp., Morgan Stanley and International Strategy & Investment Group Inc. U.S. central bankers next meet Sept. 21 for a one-day meeting.
Zzzzzzzz
The Commerce Department today cut its estimate for U.S. economic growth in the second quarter to an annual pace of 1.6 percent from an initially reported 2.4 percent pace. Reports on employment, manufacturing and housing in the past month have indicated the recovery is faltering.
“Incoming data suggest that the recovery of output and employment in the United States has slowed in recent months, to a pace somewhat lower than most FOMC participants projected earlier this year,” Bernanke said. “Consumer spending may continue to grow relatively slowly in the near term.”
Goodie, now I get to ride on the QE2!
The economy is expanding at about a 1.7 percent annual rate in the current quarter, according to estimates by Macroeconomic Advisers in St. Louis. Capital spending declined in July, and sales of existing homes fell a record 27 percent. Manufacturing in the Philadelphia region weakened in August, according to an index compiled by the Philadelphia Fed.
Sales Miss Estimates
Cisco Systems Inc., the world’s largest maker of networking equipment, this month forecast first-quarter sales that missed analysts’ estimates. Chief Executive Officer John Chambers said the San Jose, California-based company was seeing “unusual uncertainty” and getting “mixed signals” about the health of the economy.
“Investment in equipment and software will almost certainly increase more slowly over the remainder of this year, though it should continue to advance at a solid pace, ” Bernanke said.
If you did not see this, you do not belong in the financial markets. Gov't stimulus did not work in the Great Depression and it will not work in the Great Recession, as my favorite media robot calls it.
Back-to-back quarters of growth below 2 percent are likely to push unemployment higher and put more downward pressure on inflation, which is already lower than the Fed’s longer-term desired range, economists say.
Just what the wizard needs to keep this game going.
“The Fed would definitely like to see faster growth than what we are looking at in the middle two quarters of this year,” Ben Herzon, senior economist at Macroeconomic Advisers, said before the speech. “It is going to put downward pressure on inflation.”
Speaking of media robots...
Jobless Rate
Economists estimate that the unemployment rate will rise to 9.6 percent in August from 9.5 percent in June and July, according to the median forecast in a Bloomberg News survey. The Fed’s preferred inflation indicator, the personal consumption expenditures price index, minus food and energy, rose at a 1.1 percent annual rate in the second quarter.
Who cares what these dunderheads estimate?
Fed officials said in June their longer-run preference range for inflation is 1.7 percent to 2 percent. Market measures of inflation expectations have also declined, said Michael Pond, co-head of interest rate strategy at Barclays Capital Inc., New York.
Barclays’ measure of average annual inflation rates for five years, starting five years from now, show a decline to 1.96 percent from 2.31 percent when Fed the Federal Open Market Committee met on Aug. 10.
What, did somebody say something? I must've nodded off.
Pond said the Fed’s reduced outlook for the economy has pushed inflation expectations lower. That threatens to undermine the Fed’s goal of keeping prices stable at around 2 percent.
‘Sharp Downturn’
“They led the markets to believe that the economic outlook had downshifted,” Pond said before the speech. “Since then, we’ve seen a sharp downturn in inflation expectations.”
Household confidence has also been undermined by falling stock prices. The Standard and Poor’s 500 stock index is down 5.7 percent this year. The Conference Board’s Consumer Confidence Index fell to 50.4 in July, the lowest in five months.
Central bankers this month decided to reinvest about $18 billion a month of maturing agency and mortgage-backed securities back into U.S. Treasuries. They also adopted a $2.05 trillion floor for their securities portfolio.
The strategy left investors confused about the Fed’s goals, said Laurence Meyer, a former Fed governor.
“The Fed’s communications efforts have faltered of late,” Meyer, vice chairman of Macroeconomic Advisers, said before the speech. “The markets did not fully understand how to interpret the meaning of what the FOMC did and said in August.”
The Fed can communicate all it wants, it is not going to help. These powerful people ultimately will go down in history as the biggest and most dangerous baffoons of modern financial history.
The Dow Jones Industrial Average has fallen 6.2 percent since Aug. 10, and the yield on the 10-year Treasury note has slid to 2.48 percent from 2.83 percent.
‘Credit Easing’
The Fed’s previous purchases of about $1.25 trillion in mortgage-backed securities were focused on what Bernanke called “credit easing,” or pushing down rates on mortgages to support housing.
The Fed may be trying to reduce U.S. Treasury interest rates, and force down interest rates on corporate bonds, mortgages and other fixed income securities in tandem.
Credit is not 'easing', credit is contracting. I think that's a less glossy word for it.
Dear herd: when you are momo'ing the new inflation cycle one day, trying to play catch-up, remember who put you in this position; remember who wrecked your future. Well, it was you first and foremost, because you are comforted by convention, you are compliant and for you it is all about feeling relatively okay, isn't it? So, with that qualification out of the way, just remember the academic genius who guided you toward your fate.
Michael Feroli, chief U.S. economist at JPMorgan, said the Fed could buy up to $1 trillion more in U.S. Treasuries securities as needed if the economy continues to move away from the central bank’s dual mandate of stable prices and full employment.
“Sub-trend growth is inconsistent with the dual mandate” from Congress to promote full employment and price stability, Feroli said before the speech.
This is robot code for "just shut up and take it" and let the powers that be continue to try to manipulate us out of this mess." It won't work.
There's the headline, here's the pump:
Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery, and outlined steps it might take if the growth slows.
“The Committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly,” the Fed chairman said today in opening remarks to central bankers from around the world at the Kansas City Fed’s annual monetary symposium held in Jackson Hole, Wyoming.
Steroids, I'll put this Ponzi racket on steroids if I have to to prove my theories. I am an academic and you are a dumb ass. Your quaint old fashioned theories of sound money and monetary systems are so outdated. You and your stupid concerns about young people, about your children... I am Bernanke and I have a plan.
The Fed chairman gave a detailed analysis of the economy and said growth during the past year has been “too slow” and unemployment “too high.” Still, he said a handoff from fiscal stimulus and inventory re-stocking to consumer spending and business investment “appears to be under way.” He also said that the “preconditions” for growth in 2011 are “in place.”
The only "handoff" that's on the way is the toxic debt no longer carried by global partners to the people of the United States.
Bernanke said the risk of an “undesirable rise in inflation or of significant further disinflation seems low.” He said the Fed has several tools if prices decelerate, or job growth stagnates, including shifting the composition of its bond reinvestment strategy.
Yey, Goldilocks! Yes, that old nugget.
Stocks fluctuated after Bernanke’s comments and as Intel Corp. said third-quarter revenue will be below its previous forecast. The Standard & Poor’s 500 Index was little changed at 1,047.04 at 10:16 a.m. in New York.
Exit on Hold
Federal Reserve officials put their exit strategy on hold this month and decided to purchase Treasury securities to keep their portfolio from shrinking as their mortgage bonds mature. Economists at Goldman Sachs Group Inc. and JPMorgan Chase & Co. say the Fed could boost monetary stimulus if the economy continues to deteriorate.
There is no exit, this far off the macro balance sheet. We have entered, and there is no exit... short of termination of the system as we know it.
“The FOMC’s recent decision to stabilize the Federal Reserve’s securities holdings should promote financial conditions supportive of recovery,” Bernanke said in the 19- page text of his prepared remarks. “Additional purchases of longer-term securities, should the FOMC choose to undertake them, would be effective in further easing financial conditions.”
What other options do you have Ben? Congress has not yet mustered the nerve to pull American retirement savers into the all-in game. Are we at the 'all or nothing' point yet, where national security is at issue? I can see it now... "Patriots should buy these Treasury securities for the cause of NATIONAL security. Buy bonds! -- or else get off the tax advantaged deal you have going with us.
Jackson Hole
The Kansas City Fed is hosting central bankers from more than 40 countries including Brazil, Malawi and New Zealand this year as well as economists from firms such as Bank of America Corp., Morgan Stanley and International Strategy & Investment Group Inc. U.S. central bankers next meet Sept. 21 for a one-day meeting.
Zzzzzzzz
The Commerce Department today cut its estimate for U.S. economic growth in the second quarter to an annual pace of 1.6 percent from an initially reported 2.4 percent pace. Reports on employment, manufacturing and housing in the past month have indicated the recovery is faltering.
“Incoming data suggest that the recovery of output and employment in the United States has slowed in recent months, to a pace somewhat lower than most FOMC participants projected earlier this year,” Bernanke said. “Consumer spending may continue to grow relatively slowly in the near term.”
Goodie, now I get to ride on the QE2!
The economy is expanding at about a 1.7 percent annual rate in the current quarter, according to estimates by Macroeconomic Advisers in St. Louis. Capital spending declined in July, and sales of existing homes fell a record 27 percent. Manufacturing in the Philadelphia region weakened in August, according to an index compiled by the Philadelphia Fed.
Sales Miss Estimates
Cisco Systems Inc., the world’s largest maker of networking equipment, this month forecast first-quarter sales that missed analysts’ estimates. Chief Executive Officer John Chambers said the San Jose, California-based company was seeing “unusual uncertainty” and getting “mixed signals” about the health of the economy.
“Investment in equipment and software will almost certainly increase more slowly over the remainder of this year, though it should continue to advance at a solid pace, ” Bernanke said.
If you did not see this, you do not belong in the financial markets. Gov't stimulus did not work in the Great Depression and it will not work in the Great Recession, as my favorite media robot calls it.
Back-to-back quarters of growth below 2 percent are likely to push unemployment higher and put more downward pressure on inflation, which is already lower than the Fed’s longer-term desired range, economists say.
Just what the wizard needs to keep this game going.
“The Fed would definitely like to see faster growth than what we are looking at in the middle two quarters of this year,” Ben Herzon, senior economist at Macroeconomic Advisers, said before the speech. “It is going to put downward pressure on inflation.”
Speaking of media robots...
Jobless Rate
Economists estimate that the unemployment rate will rise to 9.6 percent in August from 9.5 percent in June and July, according to the median forecast in a Bloomberg News survey. The Fed’s preferred inflation indicator, the personal consumption expenditures price index, minus food and energy, rose at a 1.1 percent annual rate in the second quarter.
Who cares what these dunderheads estimate?
Fed officials said in June their longer-run preference range for inflation is 1.7 percent to 2 percent. Market measures of inflation expectations have also declined, said Michael Pond, co-head of interest rate strategy at Barclays Capital Inc., New York.
Barclays’ measure of average annual inflation rates for five years, starting five years from now, show a decline to 1.96 percent from 2.31 percent when Fed the Federal Open Market Committee met on Aug. 10.
What, did somebody say something? I must've nodded off.
Pond said the Fed’s reduced outlook for the economy has pushed inflation expectations lower. That threatens to undermine the Fed’s goal of keeping prices stable at around 2 percent.
‘Sharp Downturn’
“They led the markets to believe that the economic outlook had downshifted,” Pond said before the speech. “Since then, we’ve seen a sharp downturn in inflation expectations.”
Household confidence has also been undermined by falling stock prices. The Standard and Poor’s 500 stock index is down 5.7 percent this year. The Conference Board’s Consumer Confidence Index fell to 50.4 in July, the lowest in five months.
Central bankers this month decided to reinvest about $18 billion a month of maturing agency and mortgage-backed securities back into U.S. Treasuries. They also adopted a $2.05 trillion floor for their securities portfolio.
The strategy left investors confused about the Fed’s goals, said Laurence Meyer, a former Fed governor.
“The Fed’s communications efforts have faltered of late,” Meyer, vice chairman of Macroeconomic Advisers, said before the speech. “The markets did not fully understand how to interpret the meaning of what the FOMC did and said in August.”
The Fed can communicate all it wants, it is not going to help. These powerful people ultimately will go down in history as the biggest and most dangerous baffoons of modern financial history.
The Dow Jones Industrial Average has fallen 6.2 percent since Aug. 10, and the yield on the 10-year Treasury note has slid to 2.48 percent from 2.83 percent.
‘Credit Easing’
The Fed’s previous purchases of about $1.25 trillion in mortgage-backed securities were focused on what Bernanke called “credit easing,” or pushing down rates on mortgages to support housing.
The Fed may be trying to reduce U.S. Treasury interest rates, and force down interest rates on corporate bonds, mortgages and other fixed income securities in tandem.
Credit is not 'easing', credit is contracting. I think that's a less glossy word for it.
Dear herd: when you are momo'ing the new inflation cycle one day, trying to play catch-up, remember who put you in this position; remember who wrecked your future. Well, it was you first and foremost, because you are comforted by convention, you are compliant and for you it is all about feeling relatively okay, isn't it? So, with that qualification out of the way, just remember the academic genius who guided you toward your fate.
Michael Feroli, chief U.S. economist at JPMorgan, said the Fed could buy up to $1 trillion more in U.S. Treasuries securities as needed if the economy continues to move away from the central bank’s dual mandate of stable prices and full employment.
“Sub-trend growth is inconsistent with the dual mandate” from Congress to promote full employment and price stability, Feroli said before the speech.
This is robot code for "just shut up and take it" and let the powers that be continue to try to manipulate us out of this mess." It won't work.
Fronteer Gold (FRG)
Now, the technicals... FRG looks like it should be halted here with the resistance of the 2007 topping cluster providing what looks like strong congestion. We can even read a rising wedge into the weekly chart, although a bearish rising wedge usually comes after a decline of some sort, not a consolidation like that of 2009.
On the plus side, all panel indicators remain below hysterical over bought, especially the weekly MACD. In fact, STO is a bit of a bearish indicator until it gets over 80. If it does that, the stock is likely to blow off into double digits. Also, the stock is trying to turn some of that resistance into support.
No real purpose for the post as I am going to hold an out-sized chunk of this company no matter what. I just found the chart interesting as I sit here not trading anything.
S&P Weekly TA - Video
Can't say I disagree with anything shown here. The market stinks, regardless of short term noise. Simple and to the point. This is not a complicated situation and the markets are making sense.
Thursday, August 26, 2010
US Credit Rating in Danger
Our AAA (he he ha ha) rating is in danger of downgrade according to some talk on Cavuto on FOX. Do you know what happens if a downgrade comes about? What happens is that either interest rates rise to attract actual buyers, Bernanke puts his purchase plan on steroids, people get compelled to own this garbage in their government sponsored retirement accounts, or some combination of the above.
Regardless, there is nothing of value here because this is the debt of a hopeless inflator going in the wrong direction and the world appears to be de-levering from the process as best it can.
Attn: Herd... you are in treasury bonds because you have been tended there, put there. Whether by compulsion or by ignorance, you sit in long term treasury bonds to ride out the storm. You feel safe and comfy for the moment. But you are the herd, remember? You are never right.
Attn: d Boys, you are being played if you think hiding in USD and in T Bonds is THE play.
Wash, rinse, repeat for the weak kneed. Opportunity for those who can get out of this lousy box and think about the meanings in the vast area between the INFLATION & DEFLATION headlines.
Regardless, there is nothing of value here because this is the debt of a hopeless inflator going in the wrong direction and the world appears to be de-levering from the process as best it can.
Attn: Herd... you are in treasury bonds because you have been tended there, put there. Whether by compulsion or by ignorance, you sit in long term treasury bonds to ride out the storm. You feel safe and comfy for the moment. But you are the herd, remember? You are never right.
Attn: d Boys, you are being played if you think hiding in USD and in T Bonds is THE play.
Wash, rinse, repeat for the weak kneed. Opportunity for those who can get out of this lousy box and think about the meanings in the vast area between the INFLATION & DEFLATION headlines.
Gold (GLD)
This chart was sent to subscribers by way of email update on Aug. 12 as I noticed the SMA 50 under upside threat. Obviously GLD successfully surmounted the SMA 50 to load the short term target of 124. With today's ping of 122.95, I am going to call the target hit for anyone who cares. And traders should care because they should not try to bleed every penny out of a target (I often sell trading vehicles just below them, as you may have noticed). But traders should also be mentally prepared for it to just keep on going, as this is just a short term technical target.
Investors? Well... zzzzzzz. Gold will get where it is going when it gets there. I am an investor.
I am also an investor considering once again a hedge with silver. Yes, I actually wrote that. Don't out think yourself, Gary!
Edit (3:27) Okay, here is my issue. By weekly chart SLV does not look so much like an ascending triangle or if it is, it definitely has the potential for a second hit at the lower line. Decisions... sometimes it's best to leave well enough alone and in this market, it is looking more and more like simply having lots of cash is the way to go.
Investors? Well... zzzzzzz. Gold will get where it is going when it gets there. I am an investor.
I am also an investor considering once again a hedge with silver. Yes, I actually wrote that. Don't out think yourself, Gary!
Edit (3:27) Okay, here is my issue. By weekly chart SLV does not look so much like an ascending triangle or if it is, it definitely has the potential for a second hit at the lower line. Decisions... sometimes it's best to leave well enough alone and in this market, it is looking more and more like simply having lots of cash is the way to go.
Gold-Silver Ratio (GLD-SLV proxy) updated staus
If you are a deflationist, you most definitely do not want to see the GSR break down. This is close to negating the bottoming pattern I have been watching for too long now. If GSR confirms a breakdown, the herds hiding in T bonds are going to get sheared but good. If it holds and rises, on with the current plan.
Picture Time
NFTRH99 is going to go full on about the gold stocks and their relationship with the gold-silver ratio (GSR), to make sure that there is no doubt about the fundamental and technical picture. NFTRH has stated for many months now that while a deflation impulse is expected, I do NOT expect this to be a replay of 2008. i.e., even if the goldies decline in any coming deflationary 'events', they will not be downside leaders like in 2008.
The fact that this scare into bonds has been at least partially manufactured, does not strengthen the case of the hard core d Boys. In fact, it gives at least a partial lie to said case. Oops, I almost started with the MM again. Let's look at a pretty picture instead, and ponder what kind of analytical nuggets may come from it. I think #99 is going to be a fun one to write.
Wednesday, August 25, 2010
Value
Gloomy old 'd Boy' Rick Ackerman is one of the people I pay attention to. His experience and his sense of balance are impressive. Here are some of Rick's [see edit below] words from this morning's article Few May Imagine What is Coming:
"I think Mr. Market is going to suck the blood out of nearly everyone — but especially from Bears who think Mr. Market is their friend in crushing the Bulls. Imagine “Value” and imagine what value really is in its most basic sense. I’d tell you what value is, but you either know, or will not listen to this ol’ radical gloom-and-doomer."
[Most] Deflationist bears generally have no concept of value in my opinion. Hell, fire and brimstone... and not a clue.
Back down memory lane, here is what this doomy blogger thought about value back in '07: A Value Proposition
Edit (2:50) I just realized the quote and the article are from a forum contributor named Steven George Fair. I should really slow down just a bit... anyway, the message remains every bit as valid.
I should also note that I dumped my final bear position today (and yes, ZSL was indeed terminated for a quick loss), releasing S&P ultra-short SDS for a nice profit. Let's see what, if anything the counter-trend can do here for a bit.
"I think Mr. Market is going to suck the blood out of nearly everyone — but especially from Bears who think Mr. Market is their friend in crushing the Bulls. Imagine “Value” and imagine what value really is in its most basic sense. I’d tell you what value is, but you either know, or will not listen to this ol’ radical gloom-and-doomer."
[Most] Deflationist bears generally have no concept of value in my opinion. Hell, fire and brimstone... and not a clue.
Back down memory lane, here is what this doomy blogger thought about value back in '07: A Value Proposition
Edit (2:50) I just realized the quote and the article are from a forum contributor named Steven George Fair. I should really slow down just a bit... anyway, the message remains every bit as valid.
I should also note that I dumped my final bear position today (and yes, ZSL was indeed terminated for a quick loss), releasing S&P ultra-short SDS for a nice profit. Let's see what, if anything the counter-trend can do here for a bit.
The Next Bubble?
Well, charts like XAU.to, FRG, SBB.to, AAU, etc. make me think that something might be getting going here. Is it a bubble? No, not yet; not nearly by a long shot, because lots of crappy miners are getting killed while the cream seeks out its value and rises to the surface. But at the least, attention is coming to the sector. There are times that an explosive exploration sector can signal the ending phases of gold stock rallies, and yes, in the newsletter we have been watching certain levels on the HUI as critical to further upside (today is err, good).
Now considering the upside potential in silver (if that's an ascending triangle and it breaks, it's going much higher) and considering that even if the gold-silver ratio rises (still favored by me at least), there are times (less frequent though they are) that the gold stocks rise WITH the GSR, and considering that broad markets continue to look like crap while the goldies gain a bid... maybe it is time to consider the makings of the "next bubble", one that would be propelled by fear as opposed to the usual greed.
Given the time stamp, the following may as well have been written by a crazy person. I am not predicting anything here, not by a long shot. But would not a launch by the only sector getting Nitro poured right onto its fundamentals be just perfect in the face of the T-Bond herds and deflationary professors?
I understand that deflationist contrarians might see the above as the hysterical ravings of a human topping indicator. That is why the fundamentals are so important and d Boys and girls, you must understand that the very macro fundamentals you promote are the very makings of the true fundamental underpinnings of the gold sector. Also, bear in mind that the below was written as things were falling apart. What kind of crazy person thinks about bubbles at a time like that?!
Excerpted from a segment called 'The Next Bubble?' in NFTRH3, dated 10/11/08:
The title of the piece is ‘The Next Bubble?’ and as I see it, there are two primary candidates; a bubble in financial Armageddon as policy makers’ efforts are rendered null and void by the ‘black hole’ and all hope is lost as even the word ‘depression’ will be an understatement. Or a new bubble, in some asset class, as global money supplies shot out of fiscal Howizters reach their intended target, the investment community.
I will go with number two, because inflation is the increasing supply of money and with the deflationary backdrop and inflation fears nowhere on radar, policy makers have a free pass, a directive, to print as much ‘money’ as they can as fast as they can. This makes Greenspan look like child’s play.
The markets, gripped in fear and panic will take whatever time they need to come around to the new inflation cycle. In fact, they will likely not respond in force until rising prices are evident. But what I am interested in is the first movers in a new inflation cycle – aside from physical gold, a sound holding about which value, not price is key – and those first movers are likely to be the companies that dig gold out of the ground. Given their outrageous undervaluation vs. the metal itself, when they do emerge from the global stock panic, leverage to the price of gold, the asset outperforming nearly everything except the USD of late (just as it should be) is likely to come into play in a forceful manner. Picture an elastic band being stretched to near the breaking point. If it breaks, it is all done. Nice to know ya and thank you for having been a subscriber to NFTRH for a little while but I’ve gotta go now and hunt me some squirrels to serve the family for dinner tonight. But if the policy takes… if the money supplies continue upward, this ‘money’ will have to go somewhere and it will not go back to where it was so unscrupulously abused in the last cycle, like the credit markets or an unregulated Wall Street.
No, I have to believe that the current crisis may actually inspire a bubble in sound thinking, at least in the early part of the cycle. The fact is the gold miners are at historic undervaluation vs. the metal and the metal, their product which is first and foremost a monetary and investment safe haven, is outperforming nearly all global assets during the deflationary impulse, including miner cost inputs like energy and industrial commodities along with human hopes for prosperity. Not to sound callous, but a worker who is thankful to have his or her job is more productive and cost effective than one looking over his or her shoulder at the next guy in a ‘I wanna git mine’ inflationary boom.
We will look more closely at the sector, along with my technical take and Otto’s full professional fundamental write up of a junior miner later in today’s report. The markets will do what they will, and the results have been painful. But the big picture has not only not changed, it has improved significantly given the combination of rising money supplies and deflationary depression panic.
Now considering the upside potential in silver (if that's an ascending triangle and it breaks, it's going much higher) and considering that even if the gold-silver ratio rises (still favored by me at least), there are times (less frequent though they are) that the gold stocks rise WITH the GSR, and considering that broad markets continue to look like crap while the goldies gain a bid... maybe it is time to consider the makings of the "next bubble", one that would be propelled by fear as opposed to the usual greed.
Given the time stamp, the following may as well have been written by a crazy person. I am not predicting anything here, not by a long shot. But would not a launch by the only sector getting Nitro poured right onto its fundamentals be just perfect in the face of the T-Bond herds and deflationary professors?
I understand that deflationist contrarians might see the above as the hysterical ravings of a human topping indicator. That is why the fundamentals are so important and d Boys and girls, you must understand that the very macro fundamentals you promote are the very makings of the true fundamental underpinnings of the gold sector. Also, bear in mind that the below was written as things were falling apart. What kind of crazy person thinks about bubbles at a time like that?!
Excerpted from a segment called 'The Next Bubble?' in NFTRH3, dated 10/11/08:
The title of the piece is ‘The Next Bubble?’ and as I see it, there are two primary candidates; a bubble in financial Armageddon as policy makers’ efforts are rendered null and void by the ‘black hole’ and all hope is lost as even the word ‘depression’ will be an understatement. Or a new bubble, in some asset class, as global money supplies shot out of fiscal Howizters reach their intended target, the investment community.
I will go with number two, because inflation is the increasing supply of money and with the deflationary backdrop and inflation fears nowhere on radar, policy makers have a free pass, a directive, to print as much ‘money’ as they can as fast as they can. This makes Greenspan look like child’s play.
The markets, gripped in fear and panic will take whatever time they need to come around to the new inflation cycle. In fact, they will likely not respond in force until rising prices are evident. But what I am interested in is the first movers in a new inflation cycle – aside from physical gold, a sound holding about which value, not price is key – and those first movers are likely to be the companies that dig gold out of the ground. Given their outrageous undervaluation vs. the metal itself, when they do emerge from the global stock panic, leverage to the price of gold, the asset outperforming nearly everything except the USD of late (just as it should be) is likely to come into play in a forceful manner. Picture an elastic band being stretched to near the breaking point. If it breaks, it is all done. Nice to know ya and thank you for having been a subscriber to NFTRH for a little while but I’ve gotta go now and hunt me some squirrels to serve the family for dinner tonight. But if the policy takes… if the money supplies continue upward, this ‘money’ will have to go somewhere and it will not go back to where it was so unscrupulously abused in the last cycle, like the credit markets or an unregulated Wall Street.
No, I have to believe that the current crisis may actually inspire a bubble in sound thinking, at least in the early part of the cycle. The fact is the gold miners are at historic undervaluation vs. the metal and the metal, their product which is first and foremost a monetary and investment safe haven, is outperforming nearly all global assets during the deflationary impulse, including miner cost inputs like energy and industrial commodities along with human hopes for prosperity. Not to sound callous, but a worker who is thankful to have his or her job is more productive and cost effective than one looking over his or her shoulder at the next guy in a ‘I wanna git mine’ inflationary boom.
We will look more closely at the sector, along with my technical take and Otto’s full professional fundamental write up of a junior miner later in today’s report. The markets will do what they will, and the results have been painful. But the big picture has not only not changed, it has improved significantly given the combination of rising money supplies and deflationary depression panic.
Self-help guru re-tools self for the times...
Depressed sheep in an economic depression need to be tended after all. This guy has baffled 'em with bullshit for decades. He's a genius, really. Coach Tony should have been telling people this in 2004, 2005, 2006... where were you when the herd needed you coach Tony?
Ag (gravated)?
No, not really. I will yawn and take the loss if SLV rises any further. That is because while Silver has resistance at the top red line, if it gets there it will have brought a BULLISH ascending triangle to the forefront, and I have no interest in being positioned against something in a bullish ascending triangle that I am ultimately bullish on fundamentally as well. So today likely decides the fate of yet another trade that will not have worked out, hedge or no hedge. No further comment on the silver bear position. Any higher and you know I'll have booked the loss.
Cu later?
The doctor is not looking like he is on a "major breakout" anymore, is he? People should stick to what they know. A top flight geologist should not be making hysterical public remarks about technical analysis and I should not try to pretend that I know how to value inferred ounces in the ground. Simple.
Meanwhile, the CU-AU ratio is hinting to turn down again and this would not be good for the broad market one teeny little bit.
Meanwhile, the CU-AU ratio is hinting to turn down again and this would not be good for the broad market one teeny little bit.
Alcoa... Whoa!!
AA aborts any hoped-for relief to test the neck line. AA instead breaks down toward our downside target. MACD now triggered below zero and RSI boring its way down to RSI sub-30 ultimately. I got some derisive feedback on the 8 buck target from some well buttoned down, well researched conventional stock bulls at SeekingAlpha on this one.
Tuesday, August 24, 2010
GSR lagging 30 yr - 5 yr yield curve
Say, anyone else see a catch up move in the Gold-Silver Ratio just around the bend? The chart suggests silver might turn out to be an effective hedge against gold. I am now on a 4 for 4 streak short silver. Going for 5 now with the caveat that I am never overly brave in the face of the rampaging and half lunatic silver bull.
Edit (2:02) 99% of the regular financial world ignores the message of charts like this, but the more the geek looks at it, the more the geek feels his blood run cold. I know some of you are geeks too and the potential message of this chart is at once frightening and exhilarating. Admit it geek!
Edit (2:27) And in the event the GSR should not follow through? That would indicate that there is a lot of b/s going on in the treasury market and that the deflation argument is exposed as a straw man MUCH sooner than currently expected. Got to consider all possibilities. For now, I lean strongly toward a catch up move in the GSR and the big D.
Edit (2:02) 99% of the regular financial world ignores the message of charts like this, but the more the geek looks at it, the more the geek feels his blood run cold. I know some of you are geeks too and the potential message of this chart is at once frightening and exhilarating. Admit it geek!
Edit (2:27) And in the event the GSR should not follow through? That would indicate that there is a lot of b/s going on in the treasury market and that the deflation argument is exposed as a straw man MUCH sooner than currently expected. Got to consider all possibilities. For now, I lean strongly toward a catch up move in the GSR and the big D.
Gold-Canada Dollar Breaks another handle...
But not yet at new highs. That should be watched as a clue for gold's 'real' price as measured in commodities.
Meanwhile, for copper bulls (and by extension commodity and broad market bulls), this is not a good sign.
Meanwhile, for copper bulls (and by extension commodity and broad market bulls), this is not a good sign.
Equity Put/Call
I did this chart a while back as some bull wiseguys were trying to paint a spike in $CPCE as something bullish. It was noted that it is the near term moving averages that are important, not any given day's noise. This was not and is not bullish because it shows relative complacency and even worse, relative complacency as anxiety trends slowly creeping up through the fan lines.
On an only marginally related matter, since I opened the TBT trade on the blog, I'll close it here... with a loss. Ho hum. Onward d Boys, destiny awaits!
On an only marginally related matter, since I opened the TBT trade on the blog, I'll close it here... with a loss. Ho hum. Onward d Boys, destiny awaits!
Prechter Masks For Halloween? NFTRH Short Term View
Here is an excerpt from the August 22 newsletter, NFTRH98. The main point I am trying to make as the deflation argument once again comes to the fore, is that with this short term view finally kicking in (this blog and the newsletter have been awaiting renewed deflationary destruction for many months now), we are at the point where it makes sense not only to manage these near term events, but to begin cobbling together medium and long term plans to go along with an already established short term deflationary one.
NFTRH98 went on to do just that, as I believe it is important to carry forward revisable longer term plans as global market participants, because the world is not going to end my friends; it is just going to feel that way for some played out entities. This process will be measured over years and decades and is likely to see a global shift of capital toward productivity and resource.
Meanwhile, "inflation" and "deflation" are two ideological cartoons bandied about by financial types with a majority of the herd obsessing on their respective effects; namely, prices. If you are chasing prices around, whether up or down, you are going to get smoked at important turning points. Anyway, on to the excerpt:
The time has come to make sure we are tuned and paying attention. The markets are not a game. We should not take them lightly; brag when we win or cry when we lose. The markets are the markets and just as a well-coached football team knows that it must leave every game in the past and immediately begin game-planning for next week, we as speculators in the markets should continually update our plans, only over various timeframes; next week, next month, next year and even next decade.
Short Term - Prechter Masks for Halloween?
You may already understand that I have an attitude problem with regard to the major financial media and many of the smart alecks that come out of the woodwork to cheer already mature trends. As the media and gurus happily touted a new inflation cycle this spring, my newsletter and blog sought to calm the noise by showing the “line in the sand” between inflation fears getting out of hand and yet another deflationary ‘event’ – as per the ongoing cycle that has lasted decades.
This “line in the sand” or 100 month exponential moving average on the 30 year US Treasury Bond was very important, because if it had broken to the downside (as yields break to the upside), this would have represented a secular change to something that had been in force since most of us have been actively participating in the financial markets. It would have been a BIG deal and it would have signaled that our inflationary future – which may be part of the intermediate term plan and is most definitely part of the long term plan – would have come sooner than expected, and that Uncle Sam would now have a hellish time attempting to finance operations through confidence in his bonds. That is because rising yields would come hand in hand with declining confidence [regardless of whether said confidence is real or ginned up] in Uncle Sam’s debt notes.
So what has our illustrious Fed chief now done? Why, he has decided to be a buyer of last resort in Treasury Bonds, using the principle payments on worthless garbage no less:
“To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.” –FOMC Statement excerpt, August 10, 2010
In the springtime we repeatedly noted the dangerous proximity of yields to the EMA 100 but could not commit to the “inflation trade” until confirmation of a sustained break through the EMA 100. Then, we – you, me and even the blog – were among the few to view the hints of an improbable rise in Treasuries. It was as if the charts knew of the Fed’s plans before they were announced. Go figure.
Reference:
Suddenly Treasury Bonds Are Not So Bearish, Are They? (April 27, 2010)
Various Treasuries Updated (May 5, 2010)
At the time, it was stated here that the Fed, Treasury and US government needed a deflation scare of some intensity to put the herd back into bonds, thus reloading the “inflation gun” AKA policy makers’ ability to continue to do the one thing the Ponzi economy needs to keep running – inflate the money supply.
Robert Prechter once again kicked open the door to the media and the junior deflationists followed right along in his wake. All good for our plan, as we have been awaiting the deflation ‘event’, ‘impulse’ or ‘scare’ all along. This would be the event that triggers new inflationary policy, the likes of which the mainstream media propaganda robots are now increasingly demanding. The Fed just happens to have the ammo now – unlike in the spring when yields were threatening to break out – to continue the great inflation.
But there is an issue that potentially muddies the analysis. The question ‘to what extent is Bernanke supporting the bond?’ is an important one. Because if he is THE buyer of last resort, this is nothing more than an incestuously manufactured deflation mirage with the implication that our big picture view (long term) of breakout inflation expectations could arrive sooner rather than later; perhaps even in the intermediate as opposed to long term.
Think about the implications of the United States buying its own debt obligations. Think about Enron and the many billionaires who parachuted out of the cockpits of the varied financial Ponzi schemes in the run up to 2008’s crash. Think about conventional financial services providers putting people in Treasury Bonds right now. These debt obligations are intrinsically worthless because they can never be repaid; at least not without setting fire to the currency, in which case T Bond ‘investors’ will be eaten alive by rising yields.
Now think about the ‘transitional’ asset class, the precious metals and in particular, gold. As far as stocks go, think about the one sector that stands to gain from an environment of a decelerating economy that is in need of more inflationary policy. As the paper wizard attempts to blow smoke and use mirrors to keep traditional asset markets afloat, the gold miners gain leverage and revaluation as gold’s ‘real’ price – as measured in many commodities and asset markets – increases in the contraction and/or deflationary environment.
The gold stocks should outperform as we transition from the short and/or intermediate term pretense of deflation to our inflationary future in the longer term. At some point, I expect the digital and paper money created basically out of nowhere during the 2008 panic and its ongoing aftermath to result in a new world order, which sees inflated currencies that denominate a relative lack of productivity in areas that are on the decline, and sees areas of resource and productivity attracting capital.
In other words, the world may feel like it is ending for some, but it will feel like birth for others. As still-free investors and speculators, we may cast our view and our accounts out into the great wide world of opportunity beyond the complications of the short term. Meanwhile, we manage the short term still, with the indicators like the Gold-Silver Ratio (GSR) still heavily in play.
With the GSR still indicating a nice looking weekly Inverted Head & Shoulders pattern, the implication is for draining liquidity into the climax of the short term plan as speculators continue to pull in the reins in anticipation of a deflationary ‘event’. This would signal the transition to the intermediate view.
Let’s take a look…
Intermediate and longer term views followed in NFTRH98
NFTRH98 went on to do just that, as I believe it is important to carry forward revisable longer term plans as global market participants, because the world is not going to end my friends; it is just going to feel that way for some played out entities. This process will be measured over years and decades and is likely to see a global shift of capital toward productivity and resource.
Meanwhile, "inflation" and "deflation" are two ideological cartoons bandied about by financial types with a majority of the herd obsessing on their respective effects; namely, prices. If you are chasing prices around, whether up or down, you are going to get smoked at important turning points. Anyway, on to the excerpt:
The time has come to make sure we are tuned and paying attention. The markets are not a game. We should not take them lightly; brag when we win or cry when we lose. The markets are the markets and just as a well-coached football team knows that it must leave every game in the past and immediately begin game-planning for next week, we as speculators in the markets should continually update our plans, only over various timeframes; next week, next month, next year and even next decade.
Short Term - Prechter Masks for Halloween?
You may already understand that I have an attitude problem with regard to the major financial media and many of the smart alecks that come out of the woodwork to cheer already mature trends. As the media and gurus happily touted a new inflation cycle this spring, my newsletter and blog sought to calm the noise by showing the “line in the sand” between inflation fears getting out of hand and yet another deflationary ‘event’ – as per the ongoing cycle that has lasted decades.
This “line in the sand” or 100 month exponential moving average on the 30 year US Treasury Bond was very important, because if it had broken to the downside (as yields break to the upside), this would have represented a secular change to something that had been in force since most of us have been actively participating in the financial markets. It would have been a BIG deal and it would have signaled that our inflationary future – which may be part of the intermediate term plan and is most definitely part of the long term plan – would have come sooner than expected, and that Uncle Sam would now have a hellish time attempting to finance operations through confidence in his bonds. That is because rising yields would come hand in hand with declining confidence [regardless of whether said confidence is real or ginned up] in Uncle Sam’s debt notes.
So what has our illustrious Fed chief now done? Why, he has decided to be a buyer of last resort in Treasury Bonds, using the principle payments on worthless garbage no less:
“To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.” –FOMC Statement excerpt, August 10, 2010
In the springtime we repeatedly noted the dangerous proximity of yields to the EMA 100 but could not commit to the “inflation trade” until confirmation of a sustained break through the EMA 100. Then, we – you, me and even the blog – were among the few to view the hints of an improbable rise in Treasuries. It was as if the charts knew of the Fed’s plans before they were announced. Go figure.
Reference:
Suddenly Treasury Bonds Are Not So Bearish, Are They? (April 27, 2010)
Various Treasuries Updated (May 5, 2010)
At the time, it was stated here that the Fed, Treasury and US government needed a deflation scare of some intensity to put the herd back into bonds, thus reloading the “inflation gun” AKA policy makers’ ability to continue to do the one thing the Ponzi economy needs to keep running – inflate the money supply.
Robert Prechter once again kicked open the door to the media and the junior deflationists followed right along in his wake. All good for our plan, as we have been awaiting the deflation ‘event’, ‘impulse’ or ‘scare’ all along. This would be the event that triggers new inflationary policy, the likes of which the mainstream media propaganda robots are now increasingly demanding. The Fed just happens to have the ammo now – unlike in the spring when yields were threatening to break out – to continue the great inflation.
But there is an issue that potentially muddies the analysis. The question ‘to what extent is Bernanke supporting the bond?’ is an important one. Because if he is THE buyer of last resort, this is nothing more than an incestuously manufactured deflation mirage with the implication that our big picture view (long term) of breakout inflation expectations could arrive sooner rather than later; perhaps even in the intermediate as opposed to long term.
Think about the implications of the United States buying its own debt obligations. Think about Enron and the many billionaires who parachuted out of the cockpits of the varied financial Ponzi schemes in the run up to 2008’s crash. Think about conventional financial services providers putting people in Treasury Bonds right now. These debt obligations are intrinsically worthless because they can never be repaid; at least not without setting fire to the currency, in which case T Bond ‘investors’ will be eaten alive by rising yields.
Now think about the ‘transitional’ asset class, the precious metals and in particular, gold. As far as stocks go, think about the one sector that stands to gain from an environment of a decelerating economy that is in need of more inflationary policy. As the paper wizard attempts to blow smoke and use mirrors to keep traditional asset markets afloat, the gold miners gain leverage and revaluation as gold’s ‘real’ price – as measured in many commodities and asset markets – increases in the contraction and/or deflationary environment.
The gold stocks should outperform as we transition from the short and/or intermediate term pretense of deflation to our inflationary future in the longer term. At some point, I expect the digital and paper money created basically out of nowhere during the 2008 panic and its ongoing aftermath to result in a new world order, which sees inflated currencies that denominate a relative lack of productivity in areas that are on the decline, and sees areas of resource and productivity attracting capital.
In other words, the world may feel like it is ending for some, but it will feel like birth for others. As still-free investors and speculators, we may cast our view and our accounts out into the great wide world of opportunity beyond the complications of the short term. Meanwhile, we manage the short term still, with the indicators like the Gold-Silver Ratio (GSR) still heavily in play.
With the GSR still indicating a nice looking weekly Inverted Head & Shoulders pattern, the implication is for draining liquidity into the climax of the short term plan as speculators continue to pull in the reins in anticipation of a deflationary ‘event’. This would signal the transition to the intermediate view.
Let’s take a look…
Intermediate and longer term views followed in NFTRH98
Monday, August 23, 2010
Pendulum Swings to 'D'
Anxiety is rising... I know this from the emails I am getting. If I have to hear the words "treasury bonds" one more time, why... :-) But of course we are going to hear about T Bonds... just look at the yield. It is now the 'in' thing and it feels okay. Time for the big D to hit the airwaves. Step right up and dance everybody, just like you used to do in the discos when that awful music compelled you to get in line and shake yer thang.
Back in the spring I was taunting the inflationists with the chart that showed bullish ascending triangles and symmetrical triangles in various treasury bond funds of varying durations (TLT, IEF & IEI) after the long bond failed to break the "line in the sand" at the monthly EMA 100. The i Boys (and girls) largely took this in stride or ignored it in favor of chasing down the dreams of rising asset values into perpetuity.
Now, the input is about deflation, 24/7 and it generally comes from some very smart people (I have always contended that the average d Boy is more financially astute than the average i Boy - and I'm an i Boy!) and cites some very smart sources. But sorry d Boys, you will not sway me until my own analysis sways me. How can you sway someone who has been awaiting your event for so long?
It still says here that your 'event' - regardless of how destructive it may be for the US and other entities that are levered off the balance sheet without the reserves to help compensate -is a lever in its own right. Your treasured T Bond is what Bernanke needs. I did not and do not know how he got his gun reloaded and got intellectuals and the herd alike into the Bond, nor do I care.
Anyone who could read a chart and maintain an independent viewpoint (from the respective I & D dogma) could see the bond was going to rise. Now, on cue we have the mini hysteria. It's Prechter time! Personally, I have short, middle and long term plans on how to use Prechter time, beginning with being aware of what this smart man recommends and as I have done over the years, actually implementing some of it. But it does not end with that. No, not by a long shot.
The last time I was scolded by a d Boy was over at SeekingAlpha in early 2009, as I forecast bullish on copper and oil. They are scolding again and while things could be very tricky and difficult in the coming months, they are just getting cooking my friends.
Also for reference:
Suddenly Treasury Bonds Are Not So Bearish, Are They? April 27, 2010
D Boys Coming Out to Play May 20, 2010
And there were plenty more. All I ask is that readers resist the compelling urge to herd. Whether one case or the other (i or d) is right or wrong ultimately is not the issue so much as the proven destructiveness of allowing one's market stance to be whipsawed around by very smart people with very persuasive arguments. These are the markets, and they go to their own beat.
Edit (1:30) You are a stout and savvy reader of this blog and have not yet turned me off with a contemptuous "screw you". Therefore, I need not put any of my own words to the inherent meaning of the MSM blurb below:
Back in the spring I was taunting the inflationists with the chart that showed bullish ascending triangles and symmetrical triangles in various treasury bond funds of varying durations (TLT, IEF & IEI) after the long bond failed to break the "line in the sand" at the monthly EMA 100. The i Boys (and girls) largely took this in stride or ignored it in favor of chasing down the dreams of rising asset values into perpetuity.
Now, the input is about deflation, 24/7 and it generally comes from some very smart people (I have always contended that the average d Boy is more financially astute than the average i Boy - and I'm an i Boy!) and cites some very smart sources. But sorry d Boys, you will not sway me until my own analysis sways me. How can you sway someone who has been awaiting your event for so long?
It still says here that your 'event' - regardless of how destructive it may be for the US and other entities that are levered off the balance sheet without the reserves to help compensate -is a lever in its own right. Your treasured T Bond is what Bernanke needs. I did not and do not know how he got his gun reloaded and got intellectuals and the herd alike into the Bond, nor do I care.
Anyone who could read a chart and maintain an independent viewpoint (from the respective I & D dogma) could see the bond was going to rise. Now, on cue we have the mini hysteria. It's Prechter time! Personally, I have short, middle and long term plans on how to use Prechter time, beginning with being aware of what this smart man recommends and as I have done over the years, actually implementing some of it. But it does not end with that. No, not by a long shot.
The last time I was scolded by a d Boy was over at SeekingAlpha in early 2009, as I forecast bullish on copper and oil. They are scolding again and while things could be very tricky and difficult in the coming months, they are just getting cooking my friends.
Also for reference:
Suddenly Treasury Bonds Are Not So Bearish, Are They? April 27, 2010
D Boys Coming Out to Play May 20, 2010
And there were plenty more. All I ask is that readers resist the compelling urge to herd. Whether one case or the other (i or d) is right or wrong ultimately is not the issue so much as the proven destructiveness of allowing one's market stance to be whipsawed around by very smart people with very persuasive arguments. These are the markets, and they go to their own beat.
Edit (1:30) You are a stout and savvy reader of this blog and have not yet turned me off with a contemptuous "screw you". Therefore, I need not put any of my own words to the inherent meaning of the MSM blurb below:
A big beneficiary has been bond funds, which offer regular fixed interest payments.
As investors pulled billions out of stocks, they plowed $185.31 billion into bond mutual funds in the first seven months of this year, and total bond fund investments for the year are on track to approach the record set in 2009.
Charles Biderman, chief executive of TrimTabs, a funds researcher, said it was no wonder people were putting their money in bonds given the dismal performance of equities over the past decade. The Dow Jones industrial average started the decade around 11,500 but closed on Friday at 10,213. “People have lost a lot of money over the last 10 years in the stock market, while there has been a bull market in bonds,” he said. “In the financial markets, there is one truism: flow follows performance.”
Sunday, August 22, 2010
NFTRH98 Out Now - Short, Intermediate & Long Term Plans Detailed
"The gold stocks should outperform as we transition from the short and/or intermediate term pretense of deflation to our inflationary future in the longer term. At some point, I expect the digital and paper money created basically out of nowhere during the 2008 panic and its ongoing aftermath to result in a new world order, which sees inflated currencies that denominate a relative lack of productivity in areas that are on the decline, and sees areas of resource and productivity attracting capital.
In other words, the world may feel like it is ending for some, but it will feel like birth for others. As still-free investors and speculators, we may cast our view and our accounts out into the great wide world of opportunity beyond the complications of the short term. Meanwhile, we manage the short term still, with the indicators like the Gold-Silver Ratio (GSR) still heavily in play."
Edit (9:42) For commenter 'Gary', and any other d Boys reading, please go here and read the top item from John Hussman. I am just a simple chart twittler with an honest 'gut', but the good Doctor lays out a good lesson this morning as to why QE2 is going to blow a gasket. Deflationists are being played (again) - and that is the play IMO. I have been more bullish the USD for longer than many people I have seen in the media and now the deflation story is gaining a bid and it is easier to be bullish. I'd say USD 86, per a previous post, might about do it for this debt note's upside.
"In contrast, quantitative easing can be expected to create a remarkably different situation. The Fed's purchase of Treasury securities and creation of base money is occurring in an environment where fiscal deficits are already out of control, while two-thirds of the Fed's balance sheet already represents Fannie and Freddie Mac securities that need to be bailed out by the Treasury. This makes it enormously difficult to reverse the Fed's transactions - because the Fed is not simply determining whether a given stock of government liabilities will take the form of Treasury bonds or currency. It is instead effectively printing new money to finance ongoing spending for fiscal deficits and the bailout of the GSEs. At the same time, the fact that it is operating in a weak economy and a near-term deflationary environment means that nominal interest rates are being pressed down at the same time that long-term inflationary prospects are escalating"
More...
"My impression is that Ben Bernanke has little sense of the damage he is about to provoke. A central banker who talks about throwing money from helicopters is not only arrogant but foolish. Nearly a century ago, the great economist Ludwig von Mises observed that massive central bank easing is invariably a form of cowardice that attempts to avoid the need to restructure debt or correct fiscal deficits, avoiding wiser but more difficult choices by instead destroying the value of the currency.
Von Mises wrote, "A government always finds itself obliged to resort to inflationary measures when it cannot negotiate loans and dare not levy taxes, because it has reason to fear that it will forfeit approval of the policy it is following if it reveals too soon the financial and general economic consequences of that policy. Thus inflation becomes the most important psychological resource of any economic policy whose consequences have to be concealed; and so in this sense it can be called an instrument of unpopular, that is, of antidemocratic policy, since by misleading public opinion it makes possible the continued existence of a system of government that would have no hope of the consent of the people if the circumstances were clearly laid before them. That is the political function of inflation. When governments do not think it necessary to accommodate their expenditure and arrogate to themselves the right of making up the deficit by issuing notes, their ideology is merely a disguised absolutism."
As a side note, von Mises also cautioned against the misconception that destroying the value of a currency would have a sustainable benefit for the economy, writing "If the depreciation is desired in order to 'stimulate production' and to make exportation easier and importation more difficult in relation to other countries, then it must be borne in mind that the 'beneficial effects' on trade of the depreciation of money only last so long as the depreciation has not affected all commodities and services. Once the adjustment is completed, then these 'beneficial effects' disappear. If it is desired to retain them permanently, continual resort must be had to fresh diminutions of the purchasing power of money."
Edit (10:41) As for the long bond, here is Rick Ackerman with some interesting words. He is a d Boy, but a different sort of d Boy. Read his blurb and then ponder the meaning of predominantly US sources taking up the slack in T Bonds. Look, I don't know how or why it is happening (I just knew what the charts were saying months ago), but the entire construct... official sources, media propagandists and docile followers of convention all appear to be enabling this vital shift in buyers of last resort for the great inflator's bonds (debt notes).
Edit (10:41) As for the long bond, here is Rick Ackerman with some interesting words. He is a d Boy, but a different sort of d Boy. Read his blurb and then ponder the meaning of predominantly US sources taking up the slack in T Bonds. Look, I don't know how or why it is happening (I just knew what the charts were saying months ago), but the entire construct... official sources, media propagandists and docile followers of convention all appear to be enabling this vital shift in buyers of last resort for the great inflator's bonds (debt notes).
Friday, August 20, 2010
Gold juniors - shake & bake
Anyone else getting a hint that today is a shake out of the weaklings day in the quality gold explorers and juniors? Look at the shakeout in FRG this morning. A great example. Down hard, and now green.
In fact, I was shaken into profit taking in a non-core item. But what did I do? Turned around and added to another non-core item that is on the verge of becoming a core hold. It was sold down recently, recovered strongly and today re-tests what should be support. Thank you sellers. Maybe we will talk about this and a couple other individual stocks this weekend in NFTRH.
Incidentally, subscribers please keep in mind the more important of the two parameters noted on the HUI per yesterday's email update. Today is a perfect test and is thus far successful. But these tolerances are still in play.
In fact, I was shaken into profit taking in a non-core item. But what did I do? Turned around and added to another non-core item that is on the verge of becoming a core hold. It was sold down recently, recovered strongly and today re-tests what should be support. Thank you sellers. Maybe we will talk about this and a couple other individual stocks this weekend in NFTRH.
Incidentally, subscribers please keep in mind the more important of the two parameters noted on the HUI per yesterday's email update. Today is a perfect test and is thus far successful. But these tolerances are still in play.
Paul & Paul
Dear Supporter,
I feel a little sheepish asking this, but I really need your help right now.
Today is my birthday, and traditionally, I hold a barbecue in Texas with friends, family and supporters. This year, with my son Rand running for Senate and everyone tightening their belts, I decided to skip the event.
Instead, I am asking my supporters to contribute to Rand's Money Bomb today. Can you help?
Rand is leading in the polls and is fighting hard. But, the national drive by media has made him target #1 and he has a fight on his hands.
My son is under fire for the principles we hold dear. He is labeled "extreme" because he wants to abolish the department of education and return to sound money. He is called "radical" because he wants to balance the budget. And, when the attack dogs can't think of anything else to smear him with, they dig up teenage pranks, twist facts beyond recognition and try to assassinate his character.
You and I understand what is really extreme: trillion dollar deficits, a Federal Reserve that creates money out of thin air and a foreign policy that weakens our defense at home while funding 700 bases around the globe. We know that sound money, balanced budgets and a common sense, Pro-American foreign policy are the solution to our problems.
Rand shares our principles and hopes to fight for them with unwavering commitment in the United States Senate. Will you help him today and make this a birthday I will always remember?
Please visit www.RandPaul2010.com and help as much as you. If we come together, we can give Rand the boost he needs to fight off the attacks and win this race.
In Liberty,
Ron Paul
I feel a little sheepish asking this, but I really need your help right now.
Today is my birthday, and traditionally, I hold a barbecue in Texas with friends, family and supporters. This year, with my son Rand running for Senate and everyone tightening their belts, I decided to skip the event.
Instead, I am asking my supporters to contribute to Rand's Money Bomb today. Can you help?
Rand is leading in the polls and is fighting hard. But, the national drive by media has made him target #1 and he has a fight on his hands.
My son is under fire for the principles we hold dear. He is labeled "extreme" because he wants to abolish the department of education and return to sound money. He is called "radical" because he wants to balance the budget. And, when the attack dogs can't think of anything else to smear him with, they dig up teenage pranks, twist facts beyond recognition and try to assassinate his character.
You and I understand what is really extreme: trillion dollar deficits, a Federal Reserve that creates money out of thin air and a foreign policy that weakens our defense at home while funding 700 bases around the globe. We know that sound money, balanced budgets and a common sense, Pro-American foreign policy are the solution to our problems.
Rand shares our principles and hopes to fight for them with unwavering commitment in the United States Senate. Will you help him today and make this a birthday I will always remember?
Please visit www.RandPaul2010.com and help as much as you. If we come together, we can give Rand the boost he needs to fight off the attacks and win this race.
In Liberty,
Ron Paul
Uncle Buck puts on the Prechter mask - scares little children
Little inverted H&S is breaking the neck line today (not shown on this delayed chart). The USD and GSR are buddies, neither of whom ever gets invited to the speculative parties. Silly casino patrons... the party is in danger of turning into one of those horror movies where the outcasts turn things mighty bloody for the popular crowd at the climax.
But they are just movies, so we look to the conclusion and then go on with our inflationary lives after it's over.
Off the imagery and back to the technicals, Unc will have to confirm the break (and associated target) by getting above the SMA 50.
Dow - Rut roh... test of neck line coming?
Hey, it's an Op/Ex extravaganza, so who knows for sure what is in play today? But it sure looks like the Dow is going to test one of the two theoretical neck lines if the short term breakdown off of the baby topping pattern holds. Dow below both SMA's 50 and 200 does not help its case one teeny little bit. This is a market for traders and speculators only in my opinion and has not been easy for bulls or bears. With the Bernanke wild card thrown in there, things are made all the more confusing.
But it sure looks like that neck line is going to be tested at some point soon. Plot out the distance from the top of the Head directly down to the neck line. Then subtract that amount from whatever level the down-sloped neck line is at if/when it breaks and you will have a good idea of Dow's downside potential in the coming weeks or few months. Again, if the neck line breaks.
M2 - Zero Hedge
Even then, it may not come domestically here in the good ole' US of A or more accurately its (monetary) velocity will lead right out of the country, into global resource and economic investments not anchored below the surface by a sublime and unpayable debt burden.
But money supply is there and it is being ramped exponentially and systematically through various methods by very smart theoretical and mad scientists; paper alchemists. You cannot create limitless amounts of something, unbacked by productivity of any kind, and expect that its value in relation to real things and real productive centers will not erode exponentially over time.
So M2 is there. The herd will ignore this just as it did in 2008 and the transitional asset of monetary value will benefit first, its miners will gain the famed leverage that gold bugs have lost hope on, followed by resources (commodities) that the productive world needs to function. Finally, those productive economies that are aligned with the inflationary future will catch the bid as a new global system gets sorted out.
This will probably be a grind - over years - which is why those with short attention spans, a lack of stamina and/or no plan or road map are going to get blown up. But yeh, M2 "is there" and velocity will probably be more tricky.
Thursday, August 19, 2010
Cu company did not get the memo on deflation (ANM.v)
Thanks to Otto, this copper guy came my way. I sold it below the original target and bought some back on a pullback at the low 2's. Now, potentially holding for an inflationary future. Caveat, I am not a new highs style breakout buyer. So I for one, would not be buying here.
If you know something is a lie, why not short it?
Because it is being bought by the most powerful man in the financial world, that's why. Still, the dumb technical analyst sees measured target and shorts the long bond, via TBT. Not recommended for the squeamish. Edit (11:36) And I should mention this is done today without the commitment of a zealot, because some of the biggest bubbles in history continue right along shaking off all kinds of nay sayers. Potential short term loss will be managed and minimized. And oh yes, another thought as Ben moves to make this look like an ill-conceived trade; I am short several other things that should decline if the bond continues higher. So, this is not a stand alone trade here.
Gold This Morning - Just the Facts --'J'
Scrappy overnight volume with less than a $4 range. Open interest down slightly at ~544,000 and the GSR unchanged at ~66.40. Yesterday's action is notable; early price weakness on little volume gave way to a probe of ~$1123, a number many on the floor were using for support. The sell stops were lined up below the figure and prices quickly cascaded down to ~$1218, from a traders's perspective this immediately turned $1223 into new resistance and sellers (long and short) queued up for the bounce. Prices did the perfunctory knee-jerk rebound, stalled at $1223, then broke through, picked up trading momentum, short covering, and brought us to the late close in the low $1230s on the best volume in several days...a textbook outside up day. So today with RSI creeping slowly toward overbought let's not get carried away with dreams of the possibility of meaningful strength on sunny days in late August but continue to carefully probe the upside since our sellers were surely bruised yesterday. Option vols remain compelling low at ~15.5.
On message...
Now that the Fed has shown its hand (as if there was ever any doubt that they are all about asset appreciation, inflation be damned) smart investors and speculators have just found the big section of the road map that had been torn off and lost under the car seat.
You must be awake right now and anecdotally to me at least, it seems like many people are falling asleep at the wheel... right now. Maybe that is the whole idea of running macro operations under cover of a dispiriting summer - or as the Center For American Progress' Ministeress of Propaganda put it, "our summer of our discontent."
You are reading this blog, you are unsubscribing from it, you are at the beach... I don't really care what you are doing because in most cases, I don't know you. You come here or you used to come here or you never did come here. The message presented can be confusing and downright 'out there' for some, I know. I am told "you need to write so your grandmother can understand you" and "if you write at a 10th grade level your newsletter will attract the masses".
I was schooled by a guy who spoke exclusively in riddles, but this forced me to do my own thinking. Don't get me wrong, I learned from many people and indeed showed up to the casino as an already smart and savvy business person. But this guy... he slapped me right down that rabbit hole and changed my life. This riddler had the ear of Rick Ackerman - a guy who is the real deal as a speculator and market watcher - and many other long time market professionals.
The things in play now demand a certain level of familiarity with what goes on in the macro financial world and even more familiarity with the dynamics involved in comparing these events, making formulas and deriving logical game plans from them. I - as a lowly but smart market participant - can only be what I am because while I show a couple portfolios in the newsletter, these are my actual portfolios, as in my family's future. What you read here and to a greater degree what you may read in NFTRH is what I feel must be done to maximize this lowly participant's situation.
So, enough talk of dumbing it down. You are reading this because I have not yet alienated you. I am here to preserve my family's capital and to make speculative gains upon this mess. It seems we are entering the absolute most dead wrong time to be changing anything, because macro events - even as they grind up the majority - are setting up for what could be the biggest macro play(s) in many of our lifetimes.
So, nothing is going to change here in Biiwii land; not with the message nor the style of writing it. Too much thinking about how to change can take one right out of one's Zen-like zone. :-)
You must be awake right now and anecdotally to me at least, it seems like many people are falling asleep at the wheel... right now. Maybe that is the whole idea of running macro operations under cover of a dispiriting summer - or as the Center For American Progress' Ministeress of Propaganda put it, "our summer of our discontent."
You are reading this blog, you are unsubscribing from it, you are at the beach... I don't really care what you are doing because in most cases, I don't know you. You come here or you used to come here or you never did come here. The message presented can be confusing and downright 'out there' for some, I know. I am told "you need to write so your grandmother can understand you" and "if you write at a 10th grade level your newsletter will attract the masses".
I was schooled by a guy who spoke exclusively in riddles, but this forced me to do my own thinking. Don't get me wrong, I learned from many people and indeed showed up to the casino as an already smart and savvy business person. But this guy... he slapped me right down that rabbit hole and changed my life. This riddler had the ear of Rick Ackerman - a guy who is the real deal as a speculator and market watcher - and many other long time market professionals.
The things in play now demand a certain level of familiarity with what goes on in the macro financial world and even more familiarity with the dynamics involved in comparing these events, making formulas and deriving logical game plans from them. I - as a lowly but smart market participant - can only be what I am because while I show a couple portfolios in the newsletter, these are my actual portfolios, as in my family's future. What you read here and to a greater degree what you may read in NFTRH is what I feel must be done to maximize this lowly participant's situation.
So, enough talk of dumbing it down. You are reading this because I have not yet alienated you. I am here to preserve my family's capital and to make speculative gains upon this mess. It seems we are entering the absolute most dead wrong time to be changing anything, because macro events - even as they grind up the majority - are setting up for what could be the biggest macro play(s) in many of our lifetimes.
So, nothing is going to change here in Biiwii land; not with the message nor the style of writing it. Too much thinking about how to change can take one right out of one's Zen-like zone. :-)
What to make of the Bond CoTs?
Beats me, but...
It looks like the commercials had their heads up on the 10 year into Bernanke's latest and most desperate inflationary attempt. Open interest is surging, commercials are now selling and the dummies AKA large and small speculators are less bearish.
Edit (8:39) And right on cue, this classic bit of writing from Rick Ackerman:
It looks like the commercials had their heads up on the 10 year into Bernanke's latest and most desperate inflationary attempt. Open interest is surging, commercials are now selling and the dummies AKA large and small speculators are less bearish.
Edit (8:39) And right on cue, this classic bit of writing from Rick Ackerman:
A Lush Mirage
Additional “support” for Treasurys is coming from the government itself, since the U.S. is now parking the proceeds from maturing mortgage paper in longer-dated T-Bonds. We put quotes around the word “support” because it is beyond stupid to think that a bankrupt government’s purchases of its own debt supports much of anything except a mirage. Even so, we accept that the institutional lemmings will continue for yet a while longer to gorge themselves on the coconuts, cool water, dates, figs and olives produced by their lush mirage. As to why bond yields would be headed higher, we can only speculate that perhaps the debt paper issued by newly-austere Europe will gain favor for a while.Wednesday, August 18, 2010
Fronteer Gold (FRG)
As for FRG, forget Sandman, forget North Umberland, forget Aurora (uranium), forget Newmont, forget the politically stable locale, forget the cash hoard for now... this is about Long Canyon.
Of course, I would not personally be buying this stock at 7 bucks which is a primary advantage of committing to owning something you perceive as a bit special, regardless of price; I don't have to worry about it.
A chart is included here for fun but really, they will not pry this gem out of my greedy hands. There were reasons (noted in the newsletter at the time) I bought it at 2 bucks when so many were puking it up. The stock was immediately written up as "NFTRH's top gold stock" and "investment grade". The reasons are becoming confirmed with results. I will let the fundamental guys value it for me going forward, but given that we are nowhere near where we are going in gold, I am nowhere in the same time zone as the thought of selling it, even though it is somewhat overweight in the portfolios.
I guess I took quite seriously my perceived mistake last week (we're all learning all the time, yeh?) and it is good to see a stable full of quality explorers and juniors sitting there appreciating as Ben attempts to burn his way out of his mess.
Given that I seem not to be able to get off the Fed's treasury bond operations, I guess I must perceive this as very important. So much so that I think NFTHR98 is going to try to look at the US situation in comparison to the emerging and productive world.
It is not for nuthin' that another global emerging market fund was initiated today in NFTRH's slow but ongoing process of getting ready for what comes next by being in gold positions first and foremost, but also casting its view into the whole, wide world. The changes may not take as long as some of us - myself included - may favor.
Okay, the 'yey, look at FRG!' post rambled down another road. But really, these roads are all related in the face of the desperate events going on with our genius academic policy makers and their paper bonfire.
Upside target for gold
Last Thursday, in real time, NFTRH subscribers were informed of some interesting activity I noted in gold:
"A quick note as I just noticed gold proxy GLD doing something interesting.
If GLD breaks the black dotted line (chart attached) and breaks above the SMA 50 (and holds it), the upside target is 124 in the short term. That would imply a marginal new high in nominal gold. Of course, it is the GSR (gold-silver ratio) I am much more interested in, and that looks like it is getting a bit frisky as well."
Now here comes Ino.com with their impartial trading system's arrows gone green up to the same target. And given that Benny is taking us into uncharted theoretical waters with his bond manipulations, one might consider that one of these days, gold is not going to conveniently stop at resistance.
"A quick note as I just noticed gold proxy GLD doing something interesting.
If GLD breaks the black dotted line (chart attached) and breaks above the SMA 50 (and holds it), the upside target is 124 in the short term. That would imply a marginal new high in nominal gold. Of course, it is the GSR (gold-silver ratio) I am much more interested in, and that looks like it is getting a bit frisky as well."
Now here comes Ino.com with their impartial trading system's arrows gone green up to the same target. And given that Benny is taking us into uncharted theoretical waters with his bond manipulations, one might consider that one of these days, gold is not going to conveniently stop at resistance.
When will gold launch through 1300 and beyond?
Answer the question "when will Bernanke's ability to manipulate long term treasuries be terminated?" and you just might have the answer.
Rational people are making sense of this and implementing strategies on how to play it. Irrational people are ignoring the idea that now is the time to be aware and thinking 2 steps ahead. Really irrational people are buying into it and adding the long bond as an investment and gulping down the deFLAYshun story hook, line and sinker.
Am I speaking in code or making myself clear? People over at SeekingAlpha often don't know what the fuck I am talking about. But I only know one way to write (on a blog at least).
Stay awake, this is for all the marbles. There appears to be a chance that the deflationary bread crumbs - so carefully laid out there by policy makers and the media for the herd to follow - are not getting eaten fast enough.
Rational people are making sense of this and implementing strategies on how to play it. Irrational people are ignoring the idea that now is the time to be aware and thinking 2 steps ahead. Really irrational people are buying into it and adding the long bond as an investment and gulping down the deFLAYshun story hook, line and sinker.
Am I speaking in code or making myself clear? People over at SeekingAlpha often don't know what the fuck I am talking about. But I only know one way to write (on a blog at least).
Stay awake, this is for all the marbles. There appears to be a chance that the deflationary bread crumbs - so carefully laid out there by policy makers and the media for the herd to follow - are not getting eaten fast enough.
Gold This Morning - No Volume --'J'
Unsteady volume all night with a brief run of stops has gold a couple of bucks easier this morning. GSR elevated slightly to 66.40 and open interest increased just over 5,000 contracts. Yesterdays volume was the lowest for DEC since it became the front month; behind the scenes there were a number of large option spreads from recognizable players setting up DEC call spreads and most likely taking advantage of option vols that are back at 15ish. I just checked open interest on at the money DEC options and was surprised to see the 1200 put/call ratio at 1/3 and the 1250s at 1/4...where are the bears? Today? Tomorrow? We are now clearly stalled with a lack of volume mitigating our course so focus on the bond bubble and junk spreads for amusement unless we leave this trading range below $1220 or above $1230. I'll be on the road in Central Asia until August 29th so communications will be sporadic for a while.
BDI-SPX Correlation Updated
$BDI had what looked to be a fatal breakdown, which it is now testing. Meanwhile the S&P 500 tries to decide whether it wants to express a large Head and Shoulders top or smaller H&S bottom. The BDI might have something to say about which one manifests, depending on its test of the breakdown.
Tuesday, August 17, 2010
Attn: Subscriber Monica D
An important gold stock update (incl. a look at gold & silver) went out this morning, but was kicked back from your mail account.
I sent it again this evening. If you do not receive, please contact me at gt AT biiwii.com
Thank you!
I sent it again this evening. If you do not receive, please contact me at gt AT biiwii.com
Thank you!
Gold This Morning - Analyze This --'J'
Overnight volume based on my diminishing memory was the lowest I recall this summer with a trading range of $5. Friday's open interest was up exactly 4 contracts and the GSR was down an even handle at 66.0. The easy comment is it's summer and all the heavy traders are in the Hamptons or St-Trop buying bonds over brunch. However yesterday morning speaking with one of the best independent gold pit brokers I heard the lament that trading was too quiet even for August. Ok, it's August and traders always whine about low volume as gratuitously as Lady Gaga sheds her clothes but let me make a quick segue and point out that this low volume and lack of cover in no way diminishes the gearing in the paper market. As usual I shall not be held to my numbers, but trust me they are in the ball park. Let's assume annual mine output is ~2,500 tons. Let's assume on a decent day COMEX gold volume is 100,000 contracts which is ~300 tons. Now do the math and conclude that every 8 days COMEX turns over the worlds annual gold mine output (this does not even include additional volume from the London Bullion Market Association, LBMA, and other smaller markets). Bottom line: There is significant physical gold accumulation (witness the recent opaque BIS swap and sovereign purchases) outside a paper market that is heavily geared, easily moved, and regulated only by those who control that gearing and moving so let's not forget trader rule number 5 again, and never short a dull market particularly when volume is diminished.
'Going Down'
It is what the Blackhawk pilots radioed over Mogadishu, Somalia, it is what the once again popular deflation proponents forecast for asset prices and it is what Ben Bernanke has now radioed to the financial world with regard to the direction of interest rates on the long term treasury bond.
This latest move in the inflation/deflation drama coming after several years of inflationary 'recovery' during which China and other macro vendor financiers did the heavy lifting (in buying treasuries with huge USD reserves) to keep the appearance of stability on the long bond. The bond is seen by legions of herding and conventional investors as a benchmark for confidence in Uncle Sam.
Now, Uncle Sam himself is stepping up to the plate in order to maintain the illusory confidence so important to the tepid recovery domestically.
Let's get an updated big picture view of the monthly 30 year treasury yield along with the 100 month exponential moving average, which is of course our "line in the sand" or would-be gateway to overheating inflation expectations and a new era of hyper-inflationary fears.
Was it only this spring that the most recent assault on the EMA 100 by the long bond's yield was repelled? I seem to recall that cries about inflation getting out of hand were pretty loud way back then. As speculated here, what was needed was a deceleration of the inflation-fueled recovery indicators and associated asset markets. Check.
With inflation under control - by the above picture if not in reality - Bernanke has apparently bullied the bond into a structure that allows him to re-load his inflation gun (by monetizing the US' own debt). Remember, the Fed and the treasury need the implied confidence of a weak economy and asset markets to lure the herd back into the 'safety' of the bond (two appropriate definitions: 1) a certificate issued by a government or public company promising to repay borrowed money at a fixed rate of interest at a specified time. 2) Physical restraints used to hold someone or something prisoner, esp. ropes or chains.)
I'll take #2 Alex. Prisoners of convention will do as they always do, buy treasuries in Mr. Bernanke's wake and sit out any coming turbulence of a deflation scare. If you think a real and enduring deflation is on tap - with the mainstream media on that tout once again, no less - you will dutifully put the lock on your own chains.
Meanwhile, I expect the process to play out in wash, rinse, repeat fashion. As the inflationists get too loud in an assault on the EMA 100, you realize that the deflationists are likely to get the macro tout. This blog and its associated newsletter were on that - in real time.
But Gary, what have you done for me lately? What I am doing for you lately is showing you a simple chart and asking you to keep your head screwed on straight as the deflation story gets airplay, right on schedule. I am asking you to protect yourself and manage risk as you see fit. But I am also asking you to realize that the world is not ending, it is slowly shifting. I am asking you to consider a global, as opposed to US or Europe-centric, view.
Aside from the current noise, there is a slow, lumbering change taking place and as the US and other maxed out entities struggle with indigestion of decades of excess (and associated debt). The latest maneuver by the Chief academic at the Fed is, when you look into the details, merely a pathetic attempt to once again replace real productivity with the manipulation of paper. There are many productive zones now in ascendancy and when you dial your thinking out to decades and even centuries, it is not so hard to see that the game is changing.
The field is not only evening out, I expect it to eventually begin to tilt the other way, as some macro entities come up, and others go down. In the words of NFTRH's 'charter subscriber' (his gold thoughts for today are in the next post), a "global leveling of the playing field" is the long term play.
This long term process is part of the NFTRH 'big picture' stance. In the near and intermediate term, the main focus is on gold and the gold stocks as a pivotal - and potentially dynamic - play during the transition to what comes next. In the immediate term, we have of course been watching for Mr. Prechter and the deflationary argument to once again grab center stage. I do not believe their short term play is yet done.
This is all about perspective, education and a sound contrary orientation backed by real indicators, or clues, which are there all the time, if one will just seek them out.
This latest move in the inflation/deflation drama coming after several years of inflationary 'recovery' during which China and other macro vendor financiers did the heavy lifting (in buying treasuries with huge USD reserves) to keep the appearance of stability on the long bond. The bond is seen by legions of herding and conventional investors as a benchmark for confidence in Uncle Sam.
Now, Uncle Sam himself is stepping up to the plate in order to maintain the illusory confidence so important to the tepid recovery domestically.
Let's get an updated big picture view of the monthly 30 year treasury yield along with the 100 month exponential moving average, which is of course our "line in the sand" or would-be gateway to overheating inflation expectations and a new era of hyper-inflationary fears.
Was it only this spring that the most recent assault on the EMA 100 by the long bond's yield was repelled? I seem to recall that cries about inflation getting out of hand were pretty loud way back then. As speculated here, what was needed was a deceleration of the inflation-fueled recovery indicators and associated asset markets. Check.
With inflation under control - by the above picture if not in reality - Bernanke has apparently bullied the bond into a structure that allows him to re-load his inflation gun (by monetizing the US' own debt). Remember, the Fed and the treasury need the implied confidence of a weak economy and asset markets to lure the herd back into the 'safety' of the bond (two appropriate definitions: 1) a certificate issued by a government or public company promising to repay borrowed money at a fixed rate of interest at a specified time. 2) Physical restraints used to hold someone or something prisoner, esp. ropes or chains.)
I'll take #2 Alex. Prisoners of convention will do as they always do, buy treasuries in Mr. Bernanke's wake and sit out any coming turbulence of a deflation scare. If you think a real and enduring deflation is on tap - with the mainstream media on that tout once again, no less - you will dutifully put the lock on your own chains.
Meanwhile, I expect the process to play out in wash, rinse, repeat fashion. As the inflationists get too loud in an assault on the EMA 100, you realize that the deflationists are likely to get the macro tout. This blog and its associated newsletter were on that - in real time.
But Gary, what have you done for me lately? What I am doing for you lately is showing you a simple chart and asking you to keep your head screwed on straight as the deflation story gets airplay, right on schedule. I am asking you to protect yourself and manage risk as you see fit. But I am also asking you to realize that the world is not ending, it is slowly shifting. I am asking you to consider a global, as opposed to US or Europe-centric, view.
Aside from the current noise, there is a slow, lumbering change taking place and as the US and other maxed out entities struggle with indigestion of decades of excess (and associated debt). The latest maneuver by the Chief academic at the Fed is, when you look into the details, merely a pathetic attempt to once again replace real productivity with the manipulation of paper. There are many productive zones now in ascendancy and when you dial your thinking out to decades and even centuries, it is not so hard to see that the game is changing.
The field is not only evening out, I expect it to eventually begin to tilt the other way, as some macro entities come up, and others go down. In the words of NFTRH's 'charter subscriber' (his gold thoughts for today are in the next post), a "global leveling of the playing field" is the long term play.
This long term process is part of the NFTRH 'big picture' stance. In the near and intermediate term, the main focus is on gold and the gold stocks as a pivotal - and potentially dynamic - play during the transition to what comes next. In the immediate term, we have of course been watching for Mr. Prechter and the deflationary argument to once again grab center stage. I do not believe their short term play is yet done.
This is all about perspective, education and a sound contrary orientation backed by real indicators, or clues, which are there all the time, if one will just seek them out.
Monday, August 16, 2010
B2... CU
Unlike the public self-flagellation over the AAU sale last week, the new, mentally refreshed Biiwii today says thank you so much former Bema guys and takes a 25% trade from B2 Gold. Somebody likes it today and I will continue to look for things on sale and sell non-core things that move hard. This routine may go on as long as I feel the macro picture - as it pertains to the goldies - is unresolved in the shorter term time frames. As for B2, if it should happen to come back down to the lower end of the recent range I will be happy to own it again.
David Rosenberg - Now Highlighting Quality
Last week, Biiwii Blog went negative and to a degree saw the mainstream financial world as naive at best, and propagandist at worst. This week, thanks to a subscriber's email, we present Gluskin Sheff's Chief Economist David Rosenberg - an absolute pleasure to listen to. Do yourself a favor, and listen.
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