So much to do and so little time. Let's get started.
Thank you for the day off yesterday. It was very productive and helpful. However, the world doesn't seem to stop just because I want it to...so...there are a number of things that have piled up while I was away.
First of all, the USDA crop estimate that I was anxiously awaiting finally came out this morning. It was pretty much what most expected. Bad...but not horrific. Yet. By late yesterday, I had come to expect a quick pop at the news and then some profit-taking. That's pretty much what has happened. From late Wednesday through the close yesterday, corn had already risen by 40c and soybeans bounced 80c. This indicated that we were onto a "buy the rumor, sell the news" type of event and that's exactly what has happened. From here, let's see if we can get a little pullback and subsequent erosion of option premium. Nothing can save the corn crop at this point so yields will likely continue to be marked down. Nine dollar plus corn is still likely as we head toward harvest.
Crude ran out of gas today and you can see it on the chart. I'm not too worried, though. The 16-day global festival of peace, love and utopia is about to end in London so next week should bring a renewed focus on all the strife and chaos in the Middle East. The next move, through this week's highs of $94+, should carry crude toward $98.
Lots of talk about Uncle Ted's latest piece. Since it has now been widely distributed, I thought I'd c&p the two paragraphs that I personally found the most interesting:
"More importantly, were the agency to charge JPMorgan with manipulation of the silver price (as it should) that could set off a series of events that could easily grow out of control. One thing that makes the silver manipulation so potentially profound is that the core allegation is of a crime in progress. The CFTC has never busted up a manipulation that was in force; like most government agencies, it only reacts after the fact. Don’t take that solely as a complaint, but more as an observation that governments are more reactive than proactive. Because the silver manipulation is very much in force, were it to be terminated by CFTC actions against JPMorgan and/or others, it would be a “live” event for the first time. History shows that all manipulations end violently. In the case of silver, since it has been depressed in price by a downward manipulation, its termination would necessarily cause prices to explode higher. Any charge brought by the CFTC would send a clear signal to the world that silver had been depressed in price and was undervalued and, therefore, should be purchased. This would cause a flood of buying and discourage new selling, causing the price to truly explode, most likely in disorderly market conditions. Do you find it likely that the CFTC would wish to cause that disorderly pricing that could lead to further unsettled conditions in other markets?
If JPMorgan (and perhaps the CME Group) were found to be the main culprits in the silver manipulation and the CFTC brought charges against them, the repercussions to JPM and the CME could be a threat to them as going concerns. It was never a case that JPMorgan couldn’t financially afford to buy back its concentrated silver short position; it was always a case that should JPM ever move to buy back aggressively to the upside that would prove conclusively that it had been manipulating the price of silver all along. That would set JPMorgan (and the CME) up for a legal holocaust, both civil and criminal. There has been talk of a civil litigation nightmare for those banks deemed guilty in the developing Libor manipulation; but determining damages will be difficult because the Libor rates were allegedly manipulated both up and down, making the damages unclear and hard to prove. Were there to be findings of a downward manipulation in silver, those damaged, from investors to producing companies and countries could easily demonstrate the damage. Back in the Hunt Bros silver manipulation of 1980, one of the successful litigants was Minpeco, the government producer organization from Peru, who I remember collected more than $100 million. That would be chicken feed compared to the consequences of the much longer downward silver manipulation of today by JPMorgan. And this says nothing of potential criminal liability."
High hopes, indeed.
And here are a couple of updated charts for you. I posted similar charts into yesterday's comments section when I saw the clear and determined effort to keep gold under $1620. I suspect that there are an enormous amount of buy-stops above 1620 and 1625 that must be protected. A move that trips those stops would cause a surge in price that would likely break gold through 1635-1640 and present a clear technical buy signal to the momentum-chasing algos. To keep this from happening, 1620 is being defended. That said, The Cartels are fighting a losing battle here. Demand for physical metal continues to be extraordinarily strong in London, particularly in euro. Trader Dan wrote an excellent piece about this yesterday ( http://www.traderdannorcini.blogspot.com/2012/08/euro-gold-hinting-at-upside-breakout.html). Soon, gold will break through 1620 and silver will break through 28.20. It is simply a question of when. Today? Monday? Soon. Very soon.
I've got two other posts that I have to create this morning and a podcast for TTM, too. Again, lots to do and little time to do it in so I'd better wrap this up. Please keep checking back as I will be adding content through the day.
Have a great day and a great weekend!