Porky Charges Back

Lots of talk today about the surging Pig and it's all piling up on the metals as brainless algos see Pig strength and mindlessly dump gold and silver. But is the rally in The Pig just beginning or almost over?

Of course, any discussion of The Pig and, by extension the POSX, must begin with a review of the components of the Dollar Index (POSX). Always remember that the POSX is simply a relative comparison of The Pig versus other fiat currency. So, when you see The Pig rallying, it is primarily a reflection of weakness in other fiat, particularly the euro. Take a look at this chart:

Notice, too, that the Japanese Yen also accounts for about 14% of the index. Recall that Abenomics has clipped over 30% of the yen's value versus The Pig in just the past seven months.

So when you hear or read all of this talk about "the strength of the dollar", you must take it all with more than one grain of salt.

Now, you know that I hold Tom Fitzpatrick of Citi in very high regard as a Technical Analyst. I want you to read this but, in this matter, I hold a differing opinion. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/17_Five_Incredibly_Important_Gold_%26_US_Dollar_Charts.html

Where Tom sees a potential breakout, I see stickiness. In fact, though the POSX does look poised to rally to and through 86, I think it's going to have a very difficult time breaking through the area around 88.

Regardless of the long-term trend, a move toward 88 on the POSX is going to keep paper metal under some serious pressure. Brainless computers and money managers will only see the "rallying dollar" and use it as rationale to sell metal. What does this mean? In all likelihood, there's a pretty good chance I'm going to have to eat that hat after all. Ugh. Gold looks almost certain to retest the lows of April 15-16 near $1320. A double bottom would be nice but it wouldn't surprise me if we overshot a bit as again there has to be a veritable cornucopia of sell stops below that level. A sell-stop-triggering spike down could reach below $1300 and why would that be significant? Because depending upon where you measure it, gold would then be very close to a perfect, 38.2% retracement of its bull market.

If we measure the bull market in gold as beginning on 1/1/01 at $272 and then peaking (for now) at $1920 in early September of 2011, then a 38.2%, Fibonacci retracement ( http://en.wikipedia.org/wiki/Fibonacci_retracement) of that move would be about $630 or a drop to near $1290.

And if gold still has a little further to drop, we should expect silver to fall a bit farther, too. To where? Who knows but it seems certain at this point that I'm going to get a chance to nibble on some yellow foam. Double ugh.

Just two other items for you to review today. First, Gene Arensberg has written a fantastic piece on the historic takedown of last month. Please take time to read and consider this forensic analysis: http://www.gotgoldreport.com/2013/05/so-much-for-position-limits-on-comex-gold.html

And Jeff Nielson has written another terrific piece that deserves your attention. This one deals with the inappropriately-named but oft-quoted "World Gold Council". Good stuff. http://www.bullionbullscanada.com/gold-commentary/26193-the-world-paper-council

This week's CoT will once again be interesting and I'll have some comments later today. For the week, gold was down $22 while its OI rose again, this time by 5,900 contracts. The silver CoT will likely continue the relatively quiet trend of last week. For the reporting week, silver was up 43¢ but its OI was up about 500. We'll know soon enough.

Have a great weekend!

TF

 

645 Comments

Mr. Fix's picture

1st

smiley

the_circle's picture

1st

ooh yeah

maybe not....

silver66's picture

Thurd

Silver66

edit: going to LCS on way to golf course. Maybe pick up a new" ball marker"  or two

foscotanner's picture

top 5

:-)

Wow - you need to be quick to get a first!

todays action sucks.

this weeks action sucks.

this months action sucks.

this years action sucks.

last years action sucks.

Why on earth do we bother. Even when we were rising to new highs, it felt as if we were going down every week. It would be down, down, down, spike up, down, down, down, spike up, down. It always felt as if we were down until I saw the price and saw it was up.

So why bother. But i guess thats the point. we bother because we realise the feelings above are not an accident. They are planned to be like that. If they were not planned to be like that, we would all be a lot happier. Imagine where sentiment could be without the sentiment management that happens.

Maybe I just need a new PC. Maybe if i get a brightly coloured PC then the action will not suck as much. Maybe it will seem more vibrant.

Actually what i really want is a cool screen saver. Every time gold falls by $10 it can pop up on screen with a video clip containing Jamie Dimon and Ben Bernanke throwing gold bricks at two chinese men. And then the two chinese men can throw a wad of paper back at Jamie and Ben. And the wad of paper can smack Jamie and Ben on the head and knock them over and they can land in the largest p1le of horse manure ever. That would make the action suck a bit less. And then when gold rises $10, we can just have Jamie and Ben diving into a swimming pool full of horse manure with the two chinese chaps watching with big grins whilst clapping.

Save_America1st's picture

Fifth?

Stack, Stack, Stack...keep stackin'...that's all I can say.  And have a kick ass Friday and weekend everybody!

And for those who can, maybe grab a few Power Ball tickets tonight.  That's a lotta fiat to use for STACKIN' real money!!! cool

eagles-01.jpg?w=300&h=198

Take care...

agNau's picture

Starting to feel just like this aye!

Over55's picture

Economy still

Economy still down. Can't believe the hit on metals in the few week

Layoff / Closing list

http://www.dailyjobcuts.com

Mudsharkbytes's picture

Woulda been higher in this list

But read the post first.

Flying Wombat's picture

Soros & Bloomberg Lies

Bloomberg is reporting on, among other things, the old news about Soros selling GLD last quarter without noting that he's buying gold stocks right now.  See this:

http://www.bloomberg.com/news/2013-05-16/gold-bears-revived-as-rout-resumes-after-coin-rush-commodities.html

That's about as classic as their Dec. 2010 BS article about Soros declaring gold was in the ultimate bubble (when he in fact said "Gold could become the ultimate bubble").  That story took to the newswires and the rest of the world in a way that would have made George Orwell blush.

Urban Roman's picture

Mudshark,

I know what you mean. 

Not foam, Turd. Sponge cake and fondant and butter icing. There are no rules as to what the hat is made of. If you want it to be more like the cheap Chinese foam hat, you can spike the icing with a little melamine ... but wouldn't recommend it. 

Turd Ferguson's picture

Btw

MODERATOR

Every time I post a new thread, a link goes out via Twitter. If you'd like to be immediately notified, follow me @TFMetals.

Just A Regular Guy's picture

Great Post Turd

Kodus sir! Yum yum hat time?? :)

NonoverlappingMagicCereal's picture

How about this compromise?

The hat can be made into any manner of decadent cake or pastry, as long as he wears it as a proper hat momentarily.  That would fulfill the letter of the promise sans the ER visit.  Win-win.

foscotanner's picture

@ turd

Turd,

Notification via twitter for new posts?

Are you trying to get more people posting 'first' each day.

I think the record that I have seen is three. two seems very common.

Soon, maybe soon, we will see four or five

:-)

Just A Regular Guy's picture

I'll post this link again...

I dunno if people read it. It's an interview with Prof.Fekete with The Daily Bell.
Specifically he's talking about backwardation of gold and the consequences for fiat currencies (hyper-deflation).
Fekete seems to be on a similar vein as to Jim Willie regarding the "towers of babel" (or vice-versa).

Any thoughts Turd?

http://www.professorfekete.com/articles/AEFTheDailyBellinterview2013.pdf

Peace

foscotanner's picture

fubm day

Maybe i am going insane, but i can really sense a desire in Ag to come back today.

Been over watching it and I really do not see that much weakness today.

Despite it being clobbered!

Something isnt fitting well today.

Swineflogger's picture

@AlexCojones re: Einstein as an Economist (prior thread)

Turd Ferguson's picture

I've got a better idea...

MODERATOR

Just for fun, why don't you ask Trader Dan what he thinks? wink

AlexCojones's picture

Pig Opens Door to Bacon & Pork Belly Jokes

Love the smell of bacon in the morning.

Thought Mark Twain's comment appropriate. Sam Clemens, before he became Mark Twain, spent a great deal of time in Nevada, Comstock Lode country, the source of most our silver dollars.

He was actually a pick & shovel man before he discovered a treasure trove of words

mark-twain-oppressors-quote.jpg

Just A Regular Guy's picture

My Guess

Ummmm, no backwardation bro! ;)

lostinspace's picture

Comedy Relief

EE seems determined to make Turd eat that hat.

Clubfoolish's picture

LCS update since 2 days ago

Ok, 2 days ago, my local shop had zero silver, at any price.  He was then not willing to sell me any of his 'coming supply' of silver eagles (6-8 weeks out from now), because he didn't have them in hand.
 
I called to check in again today - he now has a small supply of junk coins (dozens of face value dollars worth, no more).
 
The Comex spot price cost for junk silver is ~$16.25 per $1 face value of coins....
but he will sell me what he has for $24 per $1 face value.
 
NO one is selling him any silver of any significance, and the ASEs he has to buy fromhis wholesaler costs him $5 OVER spot plus shipping...so our cost is even higher -->
 
Today, he told me he'd be willing to advance sell me up to a few hundred ozs of silver eagles at $35/oz...but I'll have to pay him now and wait at least 6-8 weeks to *maybe* get the ASEs (IF they actually come in).
 
=========
of course, I could go online and find some 1 oz generics at around $24/oz plus shipping,
or go to AG store and pay $27/oz plus shipping.
 
I wanted my usual local anonymous fiat for physical deal....but no go for now.
 
Texas Sandman's picture

fubm?

It's friday.  Unlikely to make a big comeback on a friday afternoon.

Next week is another week and another story.

JMHO.

dropout's picture

Look Behind the Curtain

Lots of lipstick and makeup can have the effect of deception, especially when surrounded by fake treasures.

That phrase pretty well sums up what the entire western financial sector has stooped to. Mix in a goodly measure of criminality in the form of falsehoods, thieving, you-name-it, they've done it, and you have Wall street.

Have a gander at the following link and the ten charts that accompany the article. Also posted on ZH.

http://www.theeconomiccollapseblog.com

Don't get your knickers all in a twist over this short term crap, that is being thrown at the price of gold & silver.

Its all SHOW & NO GO! A make believe play put on by the masters of deception, for the benefit of those easily fooled.

Nothings changed. All remains. The economic picture slowly worsens. Actually, their actions are funny to watch!

ancientmoney's picture

@agnau re: Interesting?? . . .

The very first comment after the article sort of explains why it's a non-starter.  Good marketing ploy, though.

tmosley's picture

Is it just me, or has the

Is it just me, or has the volatility of silver fallen below that of gold?

I don't even know what to think about that.

Juggernaut Nihilism's picture

Eating of hats

I always assumed Turd eating his hat was just a euphemism for admitting that he has no better idea what he's talking about than anybody else, and that while his understanding of long-term macro trends in socio-economics is more or less sound, his understanding of short- and medium-term price action in the markets is no better than random (an admission which is implicit in the fact that this website asks for donations and sells coffee mugs, rather than just living off the ample proceeds of his trading profits).

And I am not getting on his case.  I think sometimes he gets sucked into giving opinions on where he thinks the metals are going (or not going) in a given period of time, something that I think is utterly pointless.  Mostly he gets sucked into it by the readers, who cheer and give you a million hat tips for saying that a moonshot is imminent, and mope like jilted teenagers if you say anything else.  Whatever the reason, he shouldn't do it.  I am contemptuous of any and all predictions of how a complex system will behave in the short- and medium-term.  I am also contemptuous of any talk about what the price of gold "should" be.  Such talk prevents people from making rational decisions.  I see a lot of comments from readers on this site who are obviously putting all of their family's savings into metals because they think they're going to get rich, or they have been frightened into thinking Mad Max is just around the corner, and it's horrifying.  They are being tricked by all the predictions of the imminent demise of the financial system, and all the assertions that "this can't go on much longer..."  Their family's future and security are being put at risk because people are making predictions about a system they barely understand.

The only reasonable way to look at the metals is as a hedge against systemic collapse, and as a store of value during the transition to a new monetary system.  That may happen tomorrow, it could take decades.  It is not an investment, because it does not generate returns.  It is an insurance policy.  An insurance policy whose nominal value could collapse as long as society doesn't appear to be on the verge of being destroyed.

Texas Sandman's picture

@juggernaut

At the risk of feeding a troll...I always assumed turd eating his hat meant turd eating his hat.

devil

And gold has been money for 5,000 years.  It is money today.  It will be money long after all existing paper currencies are confetti.  Ben Bernanke is as wrong about this as he is about everything else.  Attempts with the paper market to crash the price won't change that fact.

Silver has been money almost as long as my nice shiny tetradrachm from 300 BC proves.

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