The Greased Pig

Isn't it funny how the brain works? I start out this morning by looking at a few charts of the POSX. Next, I'm looking at a chart of crude. I begin thinking about writing a post regarding a "greasy pig" and, before I know it, I'm watching this video. Out here in the sticks, nestled between Nowhere and Bumfuk, the locals find amusement at such simple things. Maybe you will, too.

So, anyway, back to the charts that started all of this earlier. As I said, I'm apparently one of the few "analysts" who is still watching the POSX. Seems there's hardly much discussion about it these days. A false sense of complacency perhaps? Perhaps, and with so many folks concerned now with Spain, France and the EU in general, maybe The Pig is set for another leg higher. However, with the metals making what appear to be such obvious bottoms, perhaps ole Pigatha can provide some impetus for a price recovery.

Take a look at these charts. Note first that on the hourly chart, The Pig is firmly entrenched in a down channel and has been for the last two weeks. This is such a prominent and obvious trend that it may take something dramatic for it to break out in the short term. Why is a short term breakout important/vital? Well, take a look at the daily chart beside it. The index now sits right atop the trendline from the lows last August that were made prior to the announcement of Operation Twist. A breakdown through the trendline would indicate a minimum drop to 78 and, if 78 fails, a drop back toward 75 or even the all-important 73. Also note that a case could be made that The Pig has already broken down through the line. (This is the lighter pink line on the chart.)

paper_4-26ampigh.jpgpaper_4-26ampigd_0001.jpg

Another major indicator that has reached a critical point is crude. Take a close look at the daily chart below. IF crude can break higher here and move back through $105, it will signal the beginning of a new UPtrend and set a target of at least $110, if not $115. However, if it fails at this level, it will drop back to at least $101 and, failing there, will have a go at $98. Watch this closely the next few days.

paper_4-26amcrude.jpg

As you might imagine, I am very relieved by the action the metals since late yesterday. It was so clearly obvious that they had to be bought at $30 and $1630 but, with things the way they are post-MFG, it's increasingly nerve-wracking to stick my neck out and urge a trade. At $1655 and $31, I'm very excited about our prospects from here but I would strongly urge anyone who bought yesterday to apply some stops at yesterday's lows. Today, we saw selling into the London PM fix at 10:00 am EDT but have since seen a further rally. The next critical level in gold is 1660 and for silver it is the old support level of 31.00-31.35. Moving back through and closing above those levels would be very encouraging and would likely cause an extension of the rally as more nervous, weak-handed shorts continue to cover.

If you have some time today, you should read the items linked below. First, our pal Jim Quinn has released part 2 of his current series. http://www.theburningplatform.com/?p=33585 And your other assignment is to read the text of this speech to the NY Fed by Robert Wenzel. http://www.zerohedge.com/news/robert-wenzel-addresses-new-york-fed-lots-head-scratching-ensues. Like Jim Grant last month, http://www.zerohedge.com/news/must-read-jim-grant-crucifies-fed-explains-why-gold-standard-best-option, Wenzel blasts away at our fuzzy-headed monetary masters. Why the Fed pretends to be interested in all of this is beyond me. I imagine they are just attempting to patronize their critics and, once they leave the building, they simply laugh off the criticism, if they even listened at all.
 

Finally, I'll be recording this week's podcast later today. Given the increasingly blatant manipulation of the PMs, I thought I'd ring up Ranting Andy again in order to have him explain, in greater detail, how The Cartels coordinate and implement their attacks. If any of you have specific questions you'd like me to pose to Andy, please include them in the comments section of this post. I likely won't be able to ask all of them but I'll certainly pick a few. Thanks in advance for your input.

I hope everyone has a fun day. Keep your fingers crossed for a move back above 1660 and 31.   TF

237 Comments

texpat's picture

@Cleburne61 re: Miners Are Down...

I understand your frustration because I've been through it many times.  I first started buying bullion and miners in the mid to late 90s.  Picking up CEF at a 16% discount to NAV, and SLW for under $1.50, are still fond memories.  But that's in hindsight.  For the first several years, as the insane tech bubble continued to swell, I was down about 30%.  But I stuck with it, knowing that the inevitable would eventually occur.  In 2004, I retired in my mid 40s, in part thanks to Doug Casey's International Speculator.

I've been through this bullshit so many times that I've learned to smell it.  Manipulations.  Gross undervaluations.  The miners are an epic buy here.  Gold would have to drop to $750/oz, and the miners hold their current prices, for them to return to their average valuations.  If that happened, you can imagine where the S&P 500 would be.

Stop gnashing your teeth.  Start selling a little into strength and buying it back on weakness.  There are cheerleaders in this sector to be sure.  James Turk has done us a great service by launching GoldMoney, but a great disservice by constantly yapping about how gold and silver are about to go to the moon.  Be thankful for the former and ignore the latter.  Nobody knows what's going to happen next week or next month, so don't listen to people who say that they do.  Or if you feel compelled to listen, do so with amusement.

My guess is that if you come back and read your words a year from now, you'll laugh.

Salisbury House's picture

Miners

Anyone old enough to remember the tech stocks pulling back over thirty some percent then blasting off to Naz 5000?    I remember thinking why?   It didn't make any sense to me at the time.  I was sick to my stomach as I watched my boatload of tech stocks plummet.  Then just when I was ready to jump, the turn came.  I believe that is just what we are seeing with the miners.  The dump is complete and it's time to accumulate.  The bull is just doing what it does best.  My advice is if you got em and they have the ounces in the ground and are cashed up, producing now or soon, they will rocket higher.  Selling now is a mistake.  Fear will turn to greed as the price of gold climbs toward 1700.  

beardeus's picture

Regarding Ivars

In Ivars' defense, there was a time when people on this board constantly criticized him for his predictions and told him he was crazy to say that silver/gold would drag for some time after the April dip.

It so happens that Ivars was more accurate than most on the thread.

Number 47's picture

China awash in Copper.

You have to read this, seems stockpiles of copper in China are getting out of hand. No joke, they are stacking it in the car parks of the bonded warehouses (Pictures). Bearish for the red metal? How much more can they manage?

http://ftalphaville.ft.com/blog/2012/04/26/975511/china-is-being-buried-alive-in-copper/

According to Wikipedia, compulsive hoarding is a disorder characterized by the excessive acquisition and inability or unwillingness to discard large quantities of objects that would seemingly qualify as useless or without value.

We’d like to make the case that China is suffering from this disorder and that we’re at the stage where a psychopharmacological intervention needs to be organised by China’s friends and family. If not China’s hoarding tendencies could destroy the world as we know it.

Case in point, the following picture from a Standard Chartered’s trip to examine copper inventories in bonded areas in eastern Shanghai last week.

Excalibur's picture

Butler sees a gold standard as inevitable

Couldn't get the previous Butler link to work, so here is a written interview. Perhaps he needs to visit this site and get some opinions on GLD, in which he has a position.

http://www.valuewalk.com/2012/04/interview-with-john-butler-author-of-the-golden-revolution/

recaptureamerica's picture

Uncollege. Great site..

Tabberto's picture

Excalibur

if link doesnt work you can watch it through reuters site where it is linked through.  FWIW he does know that GLD isnt ideal, his fund is made up of a garden variety of paper commodity positions - he is an intellectual goldbug rather than a stacker...

Driven81's picture

Wesley

"In conclusion, it is my belief that from start to finish the Fed is a failure. I believe faulty methodology is used, I believe that the justification for the Fed, to bring price and economic stability, has never been a success. I repeat, prices since the start of the Fed have climbed by 2,241% and there have been over the same period 18 recessions. No one seems to care at the Fed about the gold supposedly backing up the gold certificates on the Fed balance sheet. The emperor has no clothes"

BUSTED

What a powerful, heartfelt discourse...

California Lawyer's picture

@Number 47

I read the China excess copper story a little differently.

I see the accumulation of massive commodities, such as copper, as being another rejection of western paper.

Here is the portion of your article that caught my attention:

"Which is why we would be inclined to agree with those who say that cancelled warrants just don’t mean anything anymore.

Indeed, rather than implying imminent delivery, the the cancellation could just be leading to inventory being shifted into the private non-LME section of the warehouse. The logic as to why this happens is pretty simple.

In the past, holding inventory “on warrant” at the LME was considered as good as holding cash. From a balance sheet point of view it ensured liquidity, irrespective of whether the copper backing the warrant had been sold or not.

This was great for freeing up working capital. But it was hardly a long-standing solution for longer term funding needs. More to the point, you still needed funding to buy the copper in the first place.

But nowadays banks don’t like to lend unsecured. And commodity houses and traders don’t conventionally have access to large amounts of acceptable “safe collateral” such as AAA government bonds.

They do, however, have access to commodity inventory. This is especially the case if they represent producers and/or have contracts marketing producer inventory.

So, shift part of that inventory off warrant into the dark inventory universe — unaccounted for by LME stock statistics — and you’ve get yourself a workable long-term funding solution in the form of a commodity securitisation. In some cases deals may even be structured as repos, being brought on and off warrant as and when it suits the banks (usually related to when it suits them to have exposure to the underlying inventory or how easy it is for them to pass on the long position to investors).

A nice neat sum going off warrant in one large convenient move thus hints strongly of a securitisation deal, rather than any pick-up in underlying demand.

So, I see this [stockpiling of commodities, such as copper] as a way to procure financing, without reliance upon traditional western paper, such as AAA govt bonds, USA treasuries, FRN's etc.  Can you blame them?

Does this not also pique your interest in the new silver spot market in China?

Maybe I am just foolish for thinking like this?

Who knows . . .

johnnydow's picture

@Cleburne61

Good post.  Miners are and have been collapsing.  Good ways still from the bottom.
 
Smart money dumped them to the cowboys,gamblers,robots,perma bulls, bagholders and pumpers at the end of 2010 and the first few months of 2011.

Dr G's picture

Ivars doesn't need a

Ivars doesn't need a defender. He asked if people thought this was the final dip. He sought comments. Of course it isn't the final dip. Europe is on fire but not falling apart yet. The USD certainly isn't falling apart. Many more dips to come.

Interestingly, I think I'm the only one that responded to his question. He gets many hat tips each time he posts his charts. I guess people are just too lazy to answer his question and just feel like tipping his purty charts.

Excalibur's picture

Chinese Copper

If that's really copper, I'll send a few of our lads out there. It looks much easier to get at than stripping all the cables from sub stations.

Copper-stockpile-2.jpg

My partner thinks I'm  suffering from compulsive hoarding. She is threatening to make a psychopharmacological intervention with me.

images?q=tbn:ANd9GcSh-kDSWNAINAtBnRrl8ux

Turd Ferguson's picture

Cappers at work

MODERATOR

Now that The Comex is closed, The Evil Ones appear to be using the thinly-traded Globex to push price back down. Look for this to continue.

We'll need some kind of shove tomorrow to press up and through 1660. Will we get it?

Cleburne61's picture

Texpat

I appreciate it sir, but I'm no newbie to miners either.  Held some through a 90% drop in 08'(a particular stock was Oz Minerals, which nearly went belly up, despite having a 1 billion Aus dollar cash position)...80% of their resources were bought by China, and we were "bailed out", becoming Oz Minerals.

Instead of panicking when Oz dropped 90%, I bought about 12,000 more shares and tripled my returns in 18 months.  So, yes, I agree that years down the road....a patient person can make alot of money.

But, there are millions of people who've died waiting for returns from silver and gold in the 80's and 90's, who never saw payday due to a crime in progress for a quarter century.

I know that sooner or later these things' valuations will eventually reach PE's so ludicrous, that they'll explode.  That's not the point though: many have passed on from this life without ever reaping such benefits.  Even our young friend BrotherJohn, who now has serious health problems, what if(God forbid) he doesn't live to see his patience pay off either?  And so many pro PM gurus refuse to stand up and fight for their own wealth....all this to say, an injustice that goes on for years just tears my soul apart.  It's not even about the money, I'm young, I can afford to wait(God willing), but as a man who loves justice and righteousness...such a state of the world reflected in my miners drains my very life's zeal. 

How long must we wait for that which is whispered in the darkest boardrooms to be shouted on Bloomberg?  How long?  At this question, I will never feel silly.

Thanks for your thoughts

Lightning's picture

Rangebound

I don't want to rain on anyones parade but I believe we will be stuck in this 31-33 range until something is done about manipulation.  EE has made it clear that if things get out of hand they have the power to smash it.  Lets not forget May 1, 2011, Sept 22, 2011, and Feb 29, 2012.  Probably a few more key dates in there where metals were crushed for no good reason.  Use these artificially depressed prices to accumulate metal not to trade. 

Silver is money's picture

Greased pig

Imagine if people across the United States actually had to catch their food like that....you lot wouldn't be so darn fat. 

Turd Ferguson's picture

A little "locker room" humor

MODERATOR
Punk-Assets's picture

Ivars - amazing chart. I have

Ivars - amazing chart. I have no idea if this is the last dip. But I bought on this one a few times, just as I always do. 

Jdawg's picture

Looking Good Billy Ray

JY896's picture

Small note on education

While fancy 'diplomas' and the currency of rubbing elbows with those who inherited wealth and influence are today a very important factor, I strongly believe in an eventual reversion to the mean, whereby talent, knowledge and ability will have greater value. In any case, if amassing tens or hundreds of thousands of $ in student loan debt is not a palatable option, then we should be (and of course already are) absorbing KNOWLEDGE wherever it may be found:

http://www.khanacademy.org/

More sources here.

Harald's picture

Ivars

Jeez.  From looking at the chart, Ivars called the MayDay Massacre and the September whatever it's called on the nose.  Did ok with the December beatdown.  He's been right more than most people.  Going forward, I like the red line better but I expect silver to go to $45.00 sometime in September.

From the last thread, gold in Fort Knox?  I don't think so.  I'm sure there isn't any in GLD.

Xty's picture

71185208 - silver as currency

People slowly removed all the coins containing silver because they knew the face value was a joke.  Mints replaced it with cheaper metals, as silver became too expensive to use.  It is true that anything can be used as currency, including shells, as long as there is faith.  But you see, I am an Austrian, if believing that money is a commodity must out me as same.  Print too many pieces of paper, and they go down in value, and people resort to historic types of currencies.

When the Romans started minting coins they choose a silver to gold ratio that was set to the then current market rate.  They had to, or people wouldn't have accepted it:

"Until the Roman mints set a standard of 1,000 silver coins to a pound of gold, the prices of the two metals freely fluctuated – there was a silver price for gold and a gold price for silver. Once the government standardized the system, every coin [in every metal – gold, silver, and bronze] was exchangeable at fixed rates into every other coin. The silver denarius acted as a "link coin against which all other coins, including provincial and civic ones, could be reckoned and exchanged".

This state sponsored system had a gold-to-silver ratio of approximately 12. That ratio was quite consistent with the freely fluctuating ratios that had existed in the Mediterranean economy before the fall of the Roman Republic."*

Fast forward to 1792, and the US does the same thing, with the same metals, at about the same ratio.   (15:1).

The face value of coins was originally related to the weight of the coin.  If silver were plentiful and cheap as you claim, why would it 'ascribe a sense of value' to a coin?  You tangle yourself in knots trying to disprove the 'currency value' of silver.

*http://seekingalpha.com/article/22732-why-gold-using-roman-monetary-history-to-better-understand-inflation

abreik's picture

Austrian vs Liberty

I too agree with the Austrian school, however I don't believe a fixed GSR mandated by government minting of coins is natural or good.  Government doesn't need to be in the production of money at all, least of all in determining that a weight of gold is equivalent to a weight of silver or any other commodity.  That is price fixing.  Gold and silver are two different substances and I don't see any reason why they should have a fixed exchange rate.

bullionboy's picture

Funny

Humorous, made me laugh.

StevenBHorse's picture

Attention Stratajema You have been formally called out Sir

From Jim Willie

"Unique retaliatory treatment is reserved for Citigroup, as a result of special thefts committed against a certain family behind the coalition. This story will develop over time. Information sources are less generous on details, an indication of the gravity of the situation and imminent important events to come. The gold wars are central to the global financial war in progress, with a great many sides and numerous arenas. Stratajema, you can crawl back into your hole, or else share your rich sources."

Thought I would share this with the group as we LoL in your general direction.  

http://news.goldseek.com/GoldenJackass/1335384000.php

silverstax's picture

WOW!

I've never seen anyone called out like that! What did Stratajema say exactly?

beardeus's picture

@ Cleburne61

Oz popped $1.50 to $12 overnight?! How come?!

HeNateMe's picture

@ Ivars

I saved the following chart that you posted on this site last year.  In the above comments you say the red line was made on March 13, 2011 but the date I have of your original posting of this chart on this site is September 29, 2011.  To me, only the portion of your line from September 29, 2011 - today is legitimate. 

Xty's picture

abreik

Abreik - I have no problem with a government that worries about weights and measures.  But they must not be in the business of fiat currency.

¤'s picture

charts

I'm definitely no chart guy unfortunately and I give Ivars credit for the charts and theories.

I'm having a hard time seeing the dateline on the bottom of his chart but it looks like he has silver literally screaming off the chart in a very short period of time. Days.  Is that possible? Sure.   Is it likely? I have no idea.

I did mention to someone earlier today I think the beginning of May could see a turnaround for no apparent reason other then what happened last year unexpectedly around this time. I'm not so sure that there is an impending off the charts moment like I see above but I hope so for us stackers. That would feel pretty good at this point.

I think the next 60-75 days are going to go something like this simple kitco chart except it will be the exact opposite/mirror of that ugly trend and start trending upward in about the same pattern, more or less. Nothing drastic.

So if you flip that chart around and project it out into early July I think that's what we'll roughly see. With a bit of a spike at the tail end due to a potential US downgrade (maybe even some QE by that time), Monti over in the EU wanting to engage in growth related policies and compacts, newly elected French President Hollande trying to undo previous austerity pacts, and the ESM finally kicking in around late June/ July.

That's what I'm thinking and why. I think it'll be more gradual in it's scope and not a screaming 75 degree line straight up. Hopefully I'm wrong and it spikes big time.

I couldn't find a  60 day chart like that gold one above but I think the same applies there also except that we'll surpass $40 in that time frame at least once. 

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