All About The Pig

Doesn't it seem as if everything is at a bit of a standstill? Sure, the WOPRs are slowly churning away but there doesn't seem to be any real conviction anywhere to drive markets higher or lower. Yes, there's a lot of uncertainty about Europe but, for me, it all comes back to The Pig.

For neo-Turdites and as a refresher for everyone else, when we discuss The Pig, we do not mean...

Babe

babe.jpeg

or Miss Piggy.

piggy.jpeg

We mean no disrespect to Porky

porky.jpeg

or Arnold.

arnold.jpeg

And by no means would we ever disparage Piglet. (LT#2 would be quite irritated if we did.)

piglet.jpeg

No. When we discuss The Pig around here we are always making reference to The World's Reserve Currency, the U.S. dollar. One day soon, the world financial system will restructure and The Pig will be cast aside like The Pound Sterling and the Denarius of ancient Rome. Until then, the relative value of The Pig will remain the primary determining factor of the price direction of many "risk" assets.

(There's a good one for you. The Pig is, most assuredly, doomed. Yet, hard assets such as precious metals are deemed as "risk" assets. Go figure. I guess in the Management of Perceptions, one of the critical elements is management of the language and the terms used to describe things.)

With that in mind, you need to know that we have come to a rather critical juncture for The Pig. Take a look at these two charts. Note the significance of the 82 level on the POSX weekly chart. Also note the seeming reluctance of The Pig to cross 82 on the hourly chart. Look long and hard at these two.

paper_1-18ampigw.jpgpaper_1-18ampigh.jpg

Now look at the daily chart. It would seem to indicate that we are at a rather important crossroads.

paper_1-18ampigd.jpg

So, the question is: What will happen next? Will 82 fall or will the trendline from Halloween break? Hmmm. That's a good question. As you might imagine, I'm ready to hazard a guess. First, though, we must consider a couple of fundamental items.

Though the POSX is a comparison of The Pig to a basket of other currencies, the primary determinant of the index is the Euro, which has a weighting of nearly 58%.

large_usdx-components.jpg

And there is already a record short position in the Euro.

http://www.zerohedge.com/news/net-eur-short-position-soars-all-time-record-implies-value-eurusd-below-120

http://www.zerohedge.com/news/everyone-hates-euro-eur-shorts-hit-new-record-high

So here's my guess. The Pig will break through 82 and move UP toward 84 based upon a further drop in the Euro which will suck in a few extra, new shorts. At that point, a massive short squeeze in the Euro will develop, which will cause the Euro to rally and The POSX to roll over. The implications for gold and silver of a POSX move to 84 will likely be negative. They will remain under some pressure but hopefully stay in or near the ranges depicted on the charts below. Of course, I could be wrong. Maybe the Euro short squeeze begins later today or tomorrow. If that's the case, 82 will act as a hard ceiling for The POSX and the index will begin to fall toward 80. maybe even 79. Go back up and look at the daily POSX chart again and you will see that we will soon have our answer.

paper_1-18amgold4.jpgpaper_1-18amsilv4.jpg

paper_1-18amcrude8.jpg

Lastly, I've noticed a lot of talk recently about the timing of the resumption on overt quantitative easing by The Fed. I don't think that it's imminent. One of the things we'll be watching here in 2012 will be the interest rate charts, specifically the 10-year note and the 30-year (Long) bond. Take a look at this weekly chart of the 10-year note. Take note of where the price was at the initiation of previous QE programsand then notice where price is now.

paper_1-18am10yrw.jpg

I think it's quite clear that a resumption of overt QE will be foretold by a topping pattern on the 10-year chart. The question is: Are we topping now? Maybe. Take a look at this daily chart. If the 10-yr begins to surge through 132, I think we'll know that QE is still on the backburner. However, if the 10-year rolls over and breaks down and out of this range, dropping through 127, I think we'll begin to sense that an announcement of QEIII is imminent.

paper_1-18am10yrd.jpg

We'll be watching the Long Bond (30-year), too. Amazingly, the price of the Long Bond is now at record levels, exceeding even those seen at the height of "The Great Financial Crisis" of 2008. What does this mean? Well, I'll let you figure that one out for yourself.

paper_1-18am30yr.jpg

OK, that's all for now. Hang in there and have a great day. Smile, laugh and be happy.

Oink, oink,

TF

183 Comments

TruthPreeminent's picture

Waiting For Someone

Waiting for someone to post first.

Edit: Guess I didn't wait long enough.  Over the summer I suggested that if there was something outrageous like 10 trillion printed as a coordinated effort by all countries involved, then maybe the metals would move. This is back when they were talking about a trillion or so at the most. Well ZH said last night that 10 trillion may be the whisper number next month.  If this is true, then yes, I would be as bullish as everyone else is right now.  Take care everyone.  Have a nice day!            TP

Ubergrinch's picture

Homer Zuckerman

In high school I played the proud owner of the pig in Charlotte's Web.

As for silver, I found an old 10 oz Silvertowne loaf & some Sunshine Mint 1 oz bars at the local shop yesterday. Nice stuff, but they were sold out of generic rounds, etc. Only had a few lame Christmas-themed rounds left. I got the idea the store had been pillaged yesterday.

Be Prepared's picture

Pigness

Like Pig....especially if its bacom.

vivekmert5's picture

for tis week

S&P and all other major indexes are holding well as expected and this confirms that the global equities are ready to move up continually during this year. Finally the nine euro zone countries’ ratings were cut by S&P however they did not touch Germany. I don’t this this will have any impact on the market sentiments as this was bound to happen.
Let’s talk about this week. The Astro cycle of the week is indicating that some volatility will come back in all major stock markets from Wednesday. Metals, energies and indexes will have a tough time. I highly recommend investors and traders to reduce their exposure from late Tuesday or early Wednesday.
Euros fundamental weakness has been exposed to many countries around the world and are still holding euro in pity, but they are confused whether to hold Euro or diversify and get into Dollar or add more gold at this level. We all are aware that China is losing its charm, the housing market is in bad shape and India is also facing many economic challenges. In this kind of a scenario where should one go? Where one should put their money?
If, I say invest in gold then many will say that China already stopped buying gold. India is doing the same, as a matter of fact; recent reports suggest that India may sell some of its position. European countries are not in a position to buy gold; in fact these countries like to sell their gold holdings to reduce their debts. Gold miners are also thinking in the same direction to cash in of their holdings or to give commitment to their buyers at current prices because their cost is far lower than current prices. So fundamentally it looks very clear that not many takes in gold at higher prices or even the current level but our theory suggests something different. USA will acquire gold. Believe me when I see that USA will double its holding in gold and a huge shift in gold holdings will take place.
Here is a chart where we can see that USA is at the top of gold holdings. Why do investors never talk about this? Why do they always talk about India and China buying gold. Experts
Edition 663.0
January 15, 2012
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always talk about the USA debt problem and printing money, but the truth is that the Fed is doing a great job by managing their books. Why is Germany still surviving? The answer is simple; they are the second biggest holders of gold in the world.
World top countires gold holding by December 2010
1 United States of America 8,133.5 76.6%
2 Federal Republic of Germany 3,396.3 73.7%
3 International Monetary Fund 2,814.0 N.A.
4 Italian Republic 2,451.8 73.4%
5 French Republic 2,435.4 71.8%
6 People's Republic of China 1,054.1 01.8%
7 Switzerland 1,040.1 15.3%
8 Russian Federation 871.0 09.2%
9 State of Japan 765.2 03.5%
10 Kingdom of the Netherlands 612.5 61.9%
11 Republic of India 557.7 09.6%
12 European Central Bank 502.1 35.0%
13 Republic of China 422.4 05.9%
14 Portugal 382.5 89.2%
15 Venezuela 372.9 67.7%
16 Kingdom of Saudi Arabia 322.9 03.3%
17 Islamic Republic of Iran 320[11] 00.0%
18 U K and Northern Ireland 310.3 17.6%
19 Lebanon 286.8 32.2%
20 Kingdom of Spain 281.6 39.2%
21 Austria 280.0 57.0%
22 Belgium 227.5 41.2%
23 Algeria 173.6 79.5%
24 Thailand 152.4 04.6%
25 Libyan Republic 143.8 05.6%
26 Philippines 142.7 10.4%
27 Singapore 127.4 03.0%
28 Sweden 125.7 13.6%
29 Republic of South Africa 125.0 13.8%
30 Bank for International Settlements 119.0 N.A
Foreign exchange reserve minus debt Gold Reserve
3
Rubble collapsed in 1991 due to not having enough gold and any country needs a back bone of gold to support their currency or debt. I believe that gold will be the most important financial instrument in the coming time and I mentioned these 10 years ago and I will say it once again.
Silver also has a great time ahead so wait for our buying strategy as we would like to focus on silver and gold. Gold should be added on any weakness because in the coming time gold won’t make you poorer, rather, it will make you richer and silver will add flavor to your life as it will move up multifold.
If you are holding assets in dollar terms then you are fin otherwise the time has come for you to seriously think about dollar, gold, silver and S&P because these investments will keep moving higher. If you are rich and have enough balance in your account but if your investments are not holding all these instruments then I don’t know what the real value of your money will be in the coming 5 years.
Strategy for this Week:
From late Wednesday to Friday we will see both side’s movements coming in the markets and any sharp fall should be taken as a buying opportunity in intra-day trading and any sharp rise should be taken as a selling opportunity for intraday.
During the Middle of Friday trading session one can start accumulating grains and soft commodity position.
On Monday USA markets closed due to a holiday but the rest of the world markets will be trading. In future markets there will not be much volatility or volume due to USA close.
On Monday and Tuesday metals will remain positive in the tight range however metals investors will experience huge volatility from Wednesday, but don’t short metals on Monday and Tuesday. The volatility will continue from Wednesday until the middle of Friday.
Our longer term outlook on metals looks very bullish but the shorter term for the next ten days metals may find the bottom.
Silver will outperform gold in the medium and longer term so yes, if gold moves up 50% from here, silver will move up 150% from here. If you give me 100 dollars to invest in metals then I will surely place huge bets on silver by buying December calls with strike price of $39 in three stages from here (The first stage will be on this Friday, the next one on the 25th of January and the last one on the 16th of February).
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We believe that $1550 should be the bottom for gold and $26.80 for silver in 2012. We have mentioned the same in our book “2012 Financial Predictions”. Ignore all experts those who are advising not to buy metals and stocks, buy at lower predicted range.

Last week natural gas made another low, one thing is clear that we are coming wrong on gas so don’t follow our predictions on gas until our accuracy comes back on track. Just follow our trading range in gas as that has been coming accurate. BUT, build up call options in Natural gas and I am sure you will make fortune in the next five months.
Twenty five year chart is here below; it is always very difficult for buy something at bottom or selling at top. In the last ten years we have discovered that buying call at bottom when astro indicators are showing great price movement for the medium term, buy puts at top when something at top and astro indicators
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show huge negativity in medium term. Last year our recommendations in Swiss Franc trade made many new millionaires in Swiss trade.
Oil prices are trading in a tight trading range. This week there will be a huge amount of volatility in oil so trade carefully. This week going to be a very confusing week for traders and the market will behave a bit negatively from Wednesday onwards so any rise in oil should be taken as a selling opportunity.
In electronic market Monday energy will be trading but the volume will be very light. Oil maytrade positively Monday and Tuesday but from Wednesday oil can fall with metals.

US dollar is outperforming as predicted and this is not new news to us as emerging market economy and Europe is facing touch changes. Higher interest rates in many African nations is concerning or threatening to their local growth. China’s housing market is struggling and many developers are having a tough time to find buyers. India is currently facing its own problems. Interest cost is going higher also creating threats to the growth rate.
As I said in the start of the newsletter, Euro’s fundamental weaknesses have been exposed. Germany has to take over Euro otherwise euro will remain in a problem. The future for Dollar looks great, so don’t go up against USD. Keep adding dollar or any assets class which is in dollar.
This week dollar will perform well and I would like to see dollars trading pattern on Wednesday, Thursday and Friday.

Turd Ferguson's picture

from back in the day

MODERATOR

where has the time gone?

large_1-18ampiglet.jpg

cpnscarlet's picture

What about PSLV?

The drop in PSLV on a day when Ag is up is just epic. Is it all just the new issue?

Dr G's picture

I'm glad Turd started a new

I'm glad Turd started a new thread because hopefully nobody read my absolutely horrid short-term predictions at the end of the last one.

When Turd printed those charts, the Pig was 81.05. I have it now at 80.75 (although it looks like it is trying to make up some losses).

Maybe the POSX rises higher on Euro disaster AND the metals trade higher as well simply due to Eurozone members pouring money into metals and not the POSX? Possible?

boatman's picture

DOLLAR FLAT

so is DOW ..............and gold back up in last hour.

there's our safe haven for some minutes ANYWAY.

(for years someday soon)

Marblesonac's picture

CPN

New offering of PSLV is at 13.20 per share.  Yes, it is all about the new issue

ReachWest's picture

Bliss

Great overview of where we sit with the "Pig". Thank-you.

Everything does seem to be stuck in limbo-land.

It's times like this that I almost wish I was ignorant of what is really happening in the world economy. The bliss of ignorance (like so many of my friends) would be nice for the short term. (not really).

ferretflat's picture

If the PIG gets

If the PIG gets high enough it will be flying!!

Groaner's picture

I hope more people follow this advice

just posted from Trader Dan. However he needs to slam the cartel more..

http://www.traderdannorcini.blogspot.com/

BagOfGold's picture

Be Prepared...

Ahem!...You need one of these...

to go with your new hairdo!!!...

Bag Of Gold

kwr446's picture

who knows? - sleep easier with the permanent portfolio

looking at all the uncertainty in direction - i.e dollar, LT bond etc ... gives further reason to diversify by choosing all (25% gold, 25% cash, 25% LT bond and 25% total stock market). A DYI way to investing called the Permanent Portfolio.

www.takingmoneyseriously.blogspot.com

survivalwstyle's picture

stack and hold

since you dont nEEd it you dont care when over the boat into the ocean it goes. pigs gets slaughtered. 

fats's picture

one more wring of the sponge?

Could a move in the pig to 84 be what the EE needs to liquidate the last of it's short positions at a lower spot?

BlackHawk's picture

The Gap will eat the Pig

This sobering commentary from Kotlikoff (Boston College, former Presidential Advisor, Harvard PhD) when asked " What are we getting wrong in the debt debate?", answers:

1. There is a $211 trillion fiscal gap.

2. It would embarrass Madoff (in other words, it's a biggggg Ponzi).

3. The U.S is insolvent.

It was not posted on ZH or other alternative news sources, but right there for all to see on Bloomberg.

http://bloom.bg/u541rp#ooid=VjNnQwMzrOWIq0YToftGZ8dp1bsOAWGi

LaMachinna's picture

awwww....

how stinkin' cute!!!!!  Now she just needs a turdlet costume~ hee

Be Prepared's picture

@BOG - That's the Ticket

The music reminds me of my days of going to raves in the Land of "LA"...... 

Groaner's picture

this little piggy is going to the market or slaughter house!

Yup the usd is starting to go down very nicely.. See if the crooks can keep gold and silver down now.. for the moment that is.

silverwood's picture

Premature obituaries on the dollar

"The majority of hard-money analysts call for a hyperinflationary collapse of the dollar. Their analysis is faulty. Like a cornered rat, the dollar is capable of putting up a vicious fight for survival. In the words of Mark Twain, all the obituaries on the dollar are premature. The dollar is not a push-over. A yen-yuan coalition (or any other combination of existing or yet to-be-invented fiat currencies) cannot send it into oblivion." Antal Fekete

read the rest here;  http://news.goldseek.com/GoldSeek/1326835574.php

boatman's picture

we are still in the JAN '12 gold channel

and this warm winter is killing 'natty, SHILL

Groaner's picture

Now silver needs to break

Now silver needs to break $30.60...

Eric Original's picture

My home made "enthusiasm" indicator

Is definitely showing some signs of life.  It's small miners vs large miners.  When folks are getting exited, small miners outperform and the ratio rises.  Epic dive in the indicator since last spring, but things are looking up!

Here's the daily:

6721079595_710115d207_z.jpg

Here's the weekly:

6721079711_598fcfa18d_z.jpg

ReachWest's picture

Silly Cartoon Ad for Real Gold

I posted the Cartoon news video for Tuesday on yesterdays thread, but thought I would post the "Get Real Gold" ad that was contained in the longer video, separately. If you saw the news report yesterday, you already saw the ad - if not, here is the silly ad on it's own (it's done in the genre of the "Get a Mac" ads):

FriedEggs's picture

The always interesting

and unique: Stewart Thomson

.

Gold Correction Is Over, Professionalism Is Not

  1. Probably the most critical part of investing is forcing yourself to remain professional in your actions on the price grids.  The nature of human emotion has not changed for thousands of years. 
  2. It is highly unlikely that today marks the beginning of any change in the emotional status quo of the human race.
  3. Unfortunately, I believe that January 17, 2012 could be seen as a day that marked the beginning of a new “price chase” in the gold market.
  4. Since December 29, the dollar price of an ounce of your gold has risen strongly.  The price has jumped almost $150, from about $1525 to $1667, basis February futures.  Investors are starting to feel the flow of “emotional juices”.  In the simplest terms, Sir Greed is coming back to gold town.   
  5. As gold prices soar, investors are measured by their ability to remain professional in market action, not by the ability to hold a dance party and wave mine reports in the air.   Those who sold out into the $1500-$1600 price zone lows will today begin to feel an emotional pull to re-buy their positions, before price “gets away”. 

.

http://www.kitco.com/ind/Thomson/jan182012.html

.

Fried(e)

Irene's picture

@Eric

Take a bow, Eric.  Great charts.  Thanks.

balz's picture

We are very close to a

We are very close to a breakout now.

http://finviz.com/futures_charts.ashx?t=SI&p=m5

Eric Original's picture

Thanks, Irene!

Thanks, Irene!

Dr G's picture

@Fried, thanks for the link.

@Fried, thanks for the link. I don't read anything from Kitco due to that wiener they have employed over there, but I very much so enjoyed that link.

Here is the link that balz posted from Finviz:

fut_chart.ashx?t=SI&cot=084691&p=m5

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