Waiting on The Bernank

Wednesday, April 25, 2012 at 10:22 am

On a day where not much is happening ahead of the FOMC and The Bernank, what in the world does a Turd write about? Fortunately, Turd has friends who can help him out of this predicament.

First up, I spent a considerable amount of time this morning getting caught up with my new pal, Winston. It's such a dull day globally that he was able to spare some time. Apparently, even London physical trading is very quiet today and Winston estimated that less than 10% of all trades were "real", the rest being simple HFT paper trades attempting to game stop orders and the like. Even physical buyers in London, who have been accumulating on nearly every fix recently, were on standby today but he suspects that won't last for long. One last nugget he shared with me...In Shanghai overnight, the backwardation in silver of spot versus the front-month on the Comex reached over $1. In other words, though paper silver may be trading at $30.80 in NY, someone was willing to pay nearly $32 for physical silver in Shanghai earlier today. Hmmmm. I'll let you draw your own conclusions regarding that.

Next, I'd like to highlight two, terrific bits of information from your fellow Turdites that were written into the comments of the previous post. The first is from SRSRocco. Steve does a fantastic job of digging into the fundamentals and uncovering the truth, be it about gold, silver, crude, whatever. It's the kind of work I'd like to do but my ADHD prevents me from even attempting it.

THE NEGATIVE NEWS FLOODGATES ON SILVER ARE NOW WIDE OPEN

As I sit here and read comments on this blog as well as articles on silver, I see a trend taking place. Silver investor sentiment is hitting rock bottom (maybe will fall even more) and the psychology is now in the HANDS OF THE FED & MEMBER BANKS. They have done a very neat trick this past year using all methods of manipulation and negative hit pieces on silver in the MSM. You don't need alot because you get BRAIN DEAD ANALYSTS who come in behind to fill in the rest.

I am simply amazed at what I see. I have been in silver since 2002, and have never looked back. In the past 10 years I have seen silver bug extremes. As I see the reports coming out about higher comex inventories, low premiums, low silver eagle sales, and etc, the sentiment falls even further. It is a NEGATIVE FEEDBACK LOOP and it is working HOOK LINE and SINKER.... just as the FED designed.

Here is a typical part of an article about silver:

Demand for silver fell in 2011 for the first year in four as Europe’s debt crisis sapped industrial use of the metal found in solar panels and photography, Thomson Reuters GFMS said in a report on April 19. The decline in ETP assets yesterday drove holdings to the lowest level since August.

“The price drop drives fund selling and that in turn drives prices even lower,” said Sun Yonggang, an analyst at Everbright Futures Co., a unit of China’s largest state-owned investment group. “Silver isn’t holding up as well as gold because it is still primarily an industrial metal.”

---------------------------------------------

Demand for silver fell in 2011.... that's the big line there. Let's take a look at GFMS newest 2011 chart on silver demand:

World Silver Supply and Demand (million ounces)
(totals may not add due to rounding)

Supply

	2010	2011
Mine Production	751.4	761.6
Net Government Sales	44.2	11.5
Old Silver Scrap	228.7	256.7
Producer Hedging	50.4	10.7
Implied Net Disinvestment	-	-
Total Supply	1074.7	1040.6

Demand

	2010	2011
Fabrication
Industrial Applications	500.0	486.5
Photography	72.1	66.1
Jewelry	167.4	159.8
Silverware	51.2	46.0
Coins & Medals	99.4	118.2
Total Fabrication	890.1	876.6
Producer De-hedging	-	-
Implied Net Investment	184.6	164.0
Total Demand	1074.7	1040.6

In 2010 silver demand as 890 million ounces. What's funny is if you go to their website, you will notice that their total 2010 demand figures were 878 million oz. Somehow they adjusted their 2010 figures higher by 12 million ounces. If they revise figures each year, will 2011 turn out higher?? Who knows. Furthermore, the Fabrication demand in their old 2010 figures was 487 million. They revised it up to a cool round figure of 500 million.

The interesting thing to note is the IMPLIED NET INVESTMENT (this just means total investment). They state that there was actually less investment buying of silver in 2011 than 2010. How can that be if Coin & Medals (most official coins such as Eagles & Maples) were up from 99.4 million to 118.2 million?

The answer to that question is this.... GFMS has to make sure that the TOP SUPPLY FIGURES match up with the BOTTOM DEMAND figures. They don't want any surpluses or deficits in this accounting category. However, they will show a so-called surplus of 260 million oz this year due to their CREATIVE ACCOUNTING. That is for another post coming later.

Lastly, the real news is in the SUPPLY CATEGORY at the top. Here we can see that Government sales from China and Russia fell off a cliff from 2010... 44 million down to 11 million in 2011. Also, Producer Hedging declined a substantial amount of nearly 40 million oz. Together that accounted for nearly 70 million oz less than 2010.

The total supply was down 34 million oz from last year so the folks at GFMS had to do some creative accounting to make it look like INVESTMENT DEMAND was lower along with Fabrication demand.

FOLKS.... THE JOKE IS ON US.

_______________________________________________________________________________

Then there was this terrific analysis of AAPL from "Number 47". It would take a great amount of fortitude to step in and short AAPL here. Even put buying seems like a waste of money. However, the chart pattern is what it is. If APPL doesn't follow the historical pattern going forward, it will truly be one-of-a-kind.

"It's summer here in Ireland, rain and wind galore. No hibernating at this time of year.

You can't eat an Ipad, food, gas, tax and service price inflation V wage stagnation and underemployment does not bode well for aapl. On Bloomberg yesterday the talking heads were speculating this is a $1000 stock and to count increments in price in only $100 moves.

New paradigm? Can't lose? Investment of the century etc, etc?

Ripe for the bears, fatten us up before the long sleep. "

_______________________________________________________________________________

OK, that's all for now as we wait for The Bernank. I would caution everyone from gambling ahead of this afternoon's fireworks show. Though underlying physical demand will continue to provide a stable floor here, the best advice would be to sit back and enjoy the theatrical nonsense and wait for tomorrow before acting.

Comments

@ClinkJr

Submitted by bam on April 25, 2012 - 3:02pm.

But the thing is, there's a good chance these markets don't have that long. AAPL would likely be taken down with the rest of the markets.

I know inflation will lead to higher markets at some point, but I also know that a 'stoppage' of sorts is on the horizon. I don't currently have a time frame for it.

'Rhino horns' are never sustainable. Doesn't matter the company, doesn't matter the sector. It's just not how markets work.

I'm not saying a crash is imminent in AAPL, but the risk-reward is not very good right now. Your potential percentage upside gain is not worth the potential percentage downside loss at this stage. And your potential percentage upside gain is wholly contingent on you selling at the appropriate time (when everyone is greedy); this is a hard thing to master for even the most accomplished traders.

I don't think you'll find many great investors pouring money into AAPL at this stage in the game.

JMO of course.

@SRSrocco

Submitted by bam on April 25, 2012 - 3:08pm.

Don't laugh, but you can also sometimes pick up super cheap electric golf carts from failing golf courses. Can be a convenient and inexpensive option. Only depends on your means of generating electricity (ideal if you are a solar, wind, geotherm household).

I also imagine it isn't a difficult process to convert old gasoline ones to natural gas. Another option.

And Turd's gal

Submitted by onewileyz on April 25, 2012 - 3:26pm.

Meridith Whitney is on the tube now!

Leverage

Submitted by Carmen on April 25, 2012 - 3:26pm.

This is all because Ron Paul held up that silver coin. So send him a contribution today! No one else would do that. He deserves at least a contribution of one ounce silver from each one of us if not more... Or maybe we should make it so that for every dollar they beat down the price we send RP 10% more than $30. Or we send one ounce value for each dollar they beat it down. Let's link them. http://www.ronpaul2012.com/

1099 b applications

Submitted by diegeiro on April 25, 2012 - 3:28pm.

1099 b
Applies to sales of 25 oz or more at one time.

Better information:
http://www.coinweek.com/commentary/opinion/rules-for-reportable-bullion-...

Knew this, but forgot and stressed a bit when I saw that link at Liberty PM

This My First Post

Submitted by TeaDrinker on April 25, 2012 - 3:37pm.

Oooooooooooh, deflowered,

My brother posted me a a 1oz Fiji Taku round from New Zealand. Now there is one pretty coin.

ANZAC day today. Please say a prayer for those who paid the ultimate price.

Again,

Submitted by Turd Ferguson on April 25, 2012 - 3:37pm.

MODERATOR

cute in a hard-partying, slightly-pudgy, sorority girl kind of way.

Response to: And Turd's gal

REPLY.....SRSrocco

Submitted by SRSrocco on April 25, 2012 - 3:39pm.

Bam....I got a great idea. You figure out how to convert those golf carts to NATGAS and I will call up the folks at SONS of GUNS and see if they can mount a 50 CAL MACHINE GUN on the back for trips to the town to pick up odds and ends after the system collapses.

I would imagine we could make a few bucks supplying a NEEDED PRODUCT.

^^^ I'd do her lmao

Submitted by Driven81 on April 25, 2012 - 3:40pm.

About zimmerman...look how the public reacts to the media. The american people are like a rack of pool balls waiting to be broke by the cue ball, drawing immediate conclusions, scattering everywhere upon the biased news of something.

Re: LETS SORT THROUGH THE INSANITY.....

Submitted by Stratajema on April 25, 2012 - 3:49pm.

You said: "The M2 Money Supply has risen a nice $215 billion in the past 3+ months... or $70 billion a month. WHERE ON EARTH DID THIS COME FROM? I imagine out of the THIN FRICKEN AIR."

The evil empire's past lie has been that M2 increased not as a result of covert money printing (which there is!) but rather from U.S. money market fund withdrawals from European banks being repatriated to the U.S. That lie can only be told for so long since Greece "has been fixed" and there is no need for money market funds to fear a European bank collapse. LOL

I'm deeply disappointed that gold and silver did not have a sustainable smash. Best hope now is for a smash down during the summer doldrums or during a sell-off in equities after the election.

I stole this from ZH, in

Submitted by Dr G on April 25, 2012 - 3:50pm.

I stole this from ZH, in reference to the "tools" the Fed may use in the future:

The only tools we will be needing in the future will be a loaded shotgun and a safe to store the precious yellow metal in.

Just purchased an electric

Submitted by Dr G on April 25, 2012 - 3:53pm.

Just purchased an electric golf cart a couple of months ago at an auction. They were auctioning over 75 of them. Got it for $900. Batteries needed to be replaced (cost $200). Now works well. Has a 2 inch tear in the seat, but my wife and kids think it is a hoot to roll around it. Lots of fun.

From Mad Magazine, 1975

Submitted by Xty on April 25, 2012 - 3:57pm.

http://elainemeinelsupkis.typepad.com/money_matters/2008/05/otc-hockey-s...

Let's ask Meridith

Submitted by Stratajema on April 25, 2012 - 3:59pm.

... why municipal securities have not yet collapsed. I've got a lot of egg on my face for parroting her views about that early last year. She pulled a "Sinclair", I parroted it, and I lost some standing as a (private) analyst. oh well...

Interesting...

Submitted by Eric Original on April 25, 2012 - 3:59pm.

All the headlines are about how the Fed is on hold, and about how gold is down, and yet....I look at my miners and all I see is green. A change in the wind?

Kirkland Lake Gold, anyone?

Cheddar Cheese

Submitted by TeaDrinker on April 25, 2012 - 4:00pm.

Off subject, sincere apologies but I must point out that 'Cheddar' originates from the Cheddar Gorge in south west England. Cheese from anywhere else masquerading under that name is false.

On subject, one of the reasons given by the UK for an unexpected surge in imports last January was excessive silver imports. That was a strange admission.

the companion cartoon

Submitted by Xty on April 25, 2012 - 4:01pm.

EricO - living in hope!

Submitted by Xty on April 25, 2012 - 4:04pm.

I have no words.......

Submitted by Magpie on April 25, 2012 - 4:06pm.

U.S.-backed battery company's sale to Russian tycoon sparks anxiety

U.S. sunk millions into battery technology with military applications, but now it's in foreign hands

http://articles.chicagotribune.com/2012-04-08/business/ct-biz-0408-batte...

SRS..Electric to gas golf carts

Submitted by recaptureamerica on April 25, 2012 - 4:09pm.

SRS. Here you go...
http://www.google.com/search?q=golf+cart+electric+to+gas+conversion&ie=U...

The Bernanke, Apple, Commodities - Some Anecdotes

Submitted by California Lawyer on April 25, 2012 - 4:09pm.

Unfortunately, I just have been too busy to maintain my vigil as to watching the Bernanke's comments.

Bernanke:

I will chime in though, with a reminder of the past and how the Bernanke's comments were really much ado about nothing. We know, for certain, that interest rates CANNOT rise in the near term, or else the payments on the USA debt will consume too much of the budget, leading to political problems. So, for the time being, more of the status quo. Nothing to see, nothing magic to anticipate. More Fed swaps for Euros to bail out their failing banks, etc. When will this all change? A good guess is end of summer when Obamacare gets thrown out, Van Jones, Sharpton, et al., call for riots, Europe teeters, perhaps a military conflict erupts in the middle east, who knows? I can tell for sure that the debt ceiling issue and the follow-on political posturing will be fantastic viewing; I cannot wait!

So, the only thing that happens while watching the Bernanke speak is that a bunch of us tin-foil-wearing-end-of-times-sensationalists get all frenzied-up over prognostications . . . and then . . . nothing; same old same old.

So, for me, nothing new is afoot, but my radar is definitely dialed in for other developments.

Apple:

Boy I wish I was smart enough to have bought some of their stock years ago. But, I did not. Still have none. And, I did buy an original iPad. I do not like it. It does not play Flash. I cannot view many web sites, like the website for Rancho Las Palmas in Palm Springs. How is the iPad somehow superior, when it cannot do what my simple Android phone can do? It is a cultish, fetishistic love affair, based on emotion and the cool, geeky factor. As soon as the "tablet" becomes ubiquitous, like the personal computer, the cell phone, the book reader, the smart phone, and every single other electronic "must-have" gizmo, then what makes an Apple product so much more damn valuable than a competing product? NOTHING is that superior that good old fashioned competition cannot take down.

Who wants to buy a standalone GPS device now for $1,000 when google maps on a smart phone is FREE?

Apple revolutionized music delivery. They deserve a huge award in my mind, for wresting control of music away from the established monopoly. Good for them. Likewise, Apple fixed what I always hated about computers, that is, I just want to turn the thing on and have it work. I do not want to know the inner details of how it works. Secondly, I want the manufacturer to update the software, not me. Why do I have to know anything about how the damn thing works? I hate you Bill Gates, I really do. BUT, now that Apple has changed the market for both computers and phones, what is next after the tablet?

If Apple announced that it was going to become a bank, and offer personalized banking, right from the iPhone, or iPad, then, I would consider buying some of their stock. But until they get into the fractional reserve game, they are just posing, and their hyperbolic stock price curve will lead to a stunning crash. I hope I am wrong, but I just don't see how.

Anecdotes:

The friends of friends I know, have still not made a mortgage payment. It has been years. Meanwhile, the wife ended up having an affair with her soon-to-be-ex-husband's younger brother . . . Husband caught her cheating when he found a used condom in the bathroom [this is a problem because husband had a vascectomy . . .].

How does this relate? Wife bought iPad, iPhone, and iTouch's for their three kids. No problem, when monthly mortgage payment of several thousand dollars was not being paid.

Now, though, easy money has dried up. Wife is living on scraps. Husband is out of work. They no longer are spending money like drunken sailors.

I could go on and on about my personal observations. The reality is that folks who wanted Apple products, have already obtained them. No one I know is rushing out to buy the latest new Apple gizmo. Plenty of folks here in So. Cal. are tightening up, foregoing the latest gizmo, and instead are saving or paying down their big credit card debts.

As for me, comparing Apple to Google is a perfectly fine exercise. I use google everyday, constantly. I search on google, and it has become the go to for everything. I am not alone. Legal research is now doable on google. Web advertising is google-based, and most of my client's come to me from the internet. Google is a solid company, with a solid business model. No, I would not invest in them either, because I am a stacker. But, there is a commodity-type utility to google, and google's model prices this in, unlike Apple. Just saying.

Think about the first company to produce small arms ammunition. Huge opportunity for profit. Now, though, ammunition is a commodity. It is foolish and asinine to buy brand name for target shooting. If it is personal defense, hollow point ammo, then brand name matters. But what kind of ammo do I put down range every month to keep my skills intact: the expensive hollow point or the ubiquitous ball ammo on sale at the ammo shop?

So, in short, is an Apple iGizmo so much better that it can continue to command a premium in the multiples above its competitors, or not?

I am typing this on a Dell keyboard using a Dell computer/server/monitor [they were cheaper and better at the time], while I wait for calls on my android smart phone, with my samsung tablet in the briefcase. The wife's iPad is downstairs next to the kid's homework. I think Angry birds was being played this morning . . . just saying.

Eric, I'm scratching my head

Submitted by SSK on April 25, 2012 - 4:23pm.

Eric,

I'm scratching my head too, man. Miners roared for the first time in fucking who knows. 5% on average. Even JAG, that stinking dunghole of a worthless miner bounced. (Confession: I sold some JAG at 2.74 right before the 12:30 announcement. Sweet trade, eh?).

Anyway, the hedgies have tonight to re-load and blast the GDX back to hell tomorrow. Or maybe these--the greediest fuckers ever to walk planet earth--guys decided to cash in for now. My god, they've made a killing.

I hope the miners have re-set. I fear they haven't. KGI chart is awesome. Hope you caught that candle.

Meanwhile at Goldman Sachs

Submitted by Driven81 on April 25, 2012 - 4:30pm.

patience, grasshoppah

Submitted by Turd Ferguson on April 25, 2012 - 4:48pm.

MODERATOR

Rome wasn't destroyed in a day.

Response to: Let's ask Meridith

@recaptureamerica

Submitted by bam on April 25, 2012 - 4:48pm.

Dammit man, SRS and I had a potential business deal going on, and you had to walk in all high and mighty with your fancy pants links.

Have you learned nothing from our ministers of disinformation?? Full disclosure is NOT the way to make a buck.

/sarcasm (as i'm new here)

SSK

Submitted by Eric Original on April 25, 2012 - 4:49pm.

Been holding Kirkland Lake all along. So, yeah, today was great, but still a long way to go to get back to the Land Of The Living.

I knew some girls from Kirkland Lake

Submitted by Xty on April 25, 2012 - 5:06pm.

Brought to you by the Town of Kirkland Lake:

and also cool:

(well, if your me)

New Thread

Submitted by Ferd Torgerson on April 25, 2012 - 5:12pm.

Last - unless Xty wants to elbow in.

Ferd

@California Lawyer

Submitted by Gold Five on April 25, 2012 - 5:13pm.

BUT, now that Apple has changed the market for both computers and phones, what is next after the tablet?

Televisions. That said, as solid a company as Apple is, any chart that looks parabolic like AAPL should raise a red flag, regardless of the fundamentals. Refer to Santa's quote about fishing lines and rhino horns from a few days ago.

Full disclosure: I'm typing this on a MacBook, btw... :-)

Meredith

Submitted by DrkPurpleHaze on April 25, 2012 - 6:31pm.

Agreeing with TF on this one. She was merely ahead in her call and possibly underestimated the extent to which the Fed. Govt. could help keep the states afloat longer than first thought.

Unfortunately, she'll be right in the long run and the states will bleed red ink. It's eventual.