The View From 37,000 Feet

Monday, February 4, 2013 at 1:56 pm

In-plane wifi allows The Turd to end his vacation and get back to work.

Well, that was a whirlwind. It was good to get away for a few days but, sheesh, I almost feel like I have a better chance in the Comex casino than I did at the MGM Grand. If it wasn't for Sweetness being such a lousy golfer, I wouldn't have won anything over the weekend! Oh well, back to work and there's certainly no shortage of things to discuss.

I've got to start with The Pig this morning as the level of sustained BS in the markets these days is simply amazing. Back on Friday, little Ole Turd was able to predict that the POSX, rest precariously upon some critical support near 79, would soon need to be rescued via some Fed Goon-speak or negative Euro headlines. Whaddayaknow, we got both. There's a big surprise! Oh well, as you can see on this daily chart, the drama is slowly building to a climax. Look for the decisive breakdown by the end of this month and, once through 79 and 78, the next target is 73.

<Unfortunately, the airplane wifi is so slow that I'm unable to add charts>

Speaking of lousy fiat, it looks like Abe is going to get his wish. The Yen is continuing its historic puke-job this morning and is now just above 108. Next support on the weekly chart doesn't look to come in until 105 or so but Abe's goal of 100 certainly looks within reach. Please don't underestimate the long-reaching geo-political effects of this.

Crude is selling off after failing three times to get through the $98 level, which we had been watching here for the past several weeks. I'm hoping to watch it fall even farther so that I can re-establish a position somewhere near $93.

And Sylvia finally broke through $1700 overnight. Once it did, it tripped some buy-stops and sprurted all the way to 1710 before pulling back and establishing 1700 as support. Let's hope it can draw clear now as a continued move higher will, undoubtedly, add some spillover strength for gold and silver.

Speaking of which, both are rallying smartly as I type on the backs of reported very strong physical demand in London today on the earlier price drops. Let's see if we can keep this up as we go trhough the day and the week. Gold needs to exceed last weeks highs of 1685 or so before it can begin a run on 1695 and then the all-important 1700-1705. Silver will see continued resistance at 32.20-32.50 and we're going to need to plow through there before we can get excited.

Finally, just a few words no last week's CoT. It was simply remarkable, not only for the size of the moves but the divergence in structure between the metals.

In gold, The Cartels covered a net short of 28,900 contracts, a truly remarkable amount. This brings their net short ratio all the way down to 2.04:1. This has likely fallen even farther in the three days since the survey as total OI contracted Wed-Fri by another 6,600 contracts and stoof Friday evening at just 424,150. This is the lowest OI number since the price lows of 12/27/12 and, before that, late August of last year. Additionally, the large specs reduced their net long by 25,000. Between the OI numbers, the CoT structure, the charts and the physical demand, there is simply very little chance that gold is going to decline much father from here.

In silver, The Civil War continues and The Monkeys on the JPM silver desk have apparently decided to adopt the ultra-successful, Bruno Iksil-model of doubling down while praying for salvation. Like Iksil, they will ultimately fail in spectacular fashion.

For the CoT week, while price was falling by over a dollar, JPM was forced to add shorts. This never happens. As you know, JPM always rigs declines on order to ring the register on the LargeSpecSheep. However last week while price was falling, the LSS were covering shorts and adding longs, to the tune of net +3,700 contracts and the other commercials added 600+, too. This forced The Forces of Darkness to create 3,483 fresh, paper shorts when the would otherwise have been able to cover, instead. In fact, Uncle Ted estimates that JPM alone added another 2,500 nakes shorts last week, bringing their total Comex short position to over 33,000 contracts. When you take out the 47,000 spread contracts, JPM is short over 33% of the entire open interest!! This is brazenly unfair and manipulative yet Thunderlips and Cueball continue to look the other way and allow this criminal concentration to continue. Simply disgusting.

On the bright side, JPM has built themselves a funeral pyre of epic proportions. It's made of kindling, fireworks, TNT, gasoline and gunpowder and it could literally explode at any moment. When it does, the spectacle will be truly breathtaking.

OK, that's all for now. This old MacBook can barely carry a charge anymore so I'd better sign off before it cuts out. Back to work with a full post and lots of pretty charts tomorrow. Have a great day!

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Comments

Sorry is this is overkill...

Submitted by Puck T. Smith on February 5, 2013 - 12:45am.

But here is a seven part interview with Andy Hoffman, Bill Murphy and Bix Weir. They cover a lot of interesting topics.

I wish Elijah Johnson would just post one video instead of breaking them up into these 5 to 8 minute segments over several days. Also he doesn't always get his links right and it makes it hard to watch the whole thing. Anyway, enjoy.

Oh Dear

Submitted by UraniumSprings on February 5, 2013 - 1:10am.

Not that this is likely to be a surprise to this community, but the top story on Drudge right now is rather sobering.

The fact that NBC is reporting it is interesting.

Reading Holder's opinion: "the Constitution does not require the president to delay action" actually made my brain hurt. Doesn't the Constitution require the exact opposite? (Due process, presumed innocence, etc.) Again, not a surprise... but anyone have any theories about why the MSM is picking it up now?

The Threat of Silence - New Tech Revolutionizes Privacy!

Submitted by Pegasus on February 5, 2013 - 1:49am.

Meet the groundbreaking new encryption app set to revolutionize privacy and freak out the feds.

By Ryan Gallagher|Posted Monday, Feb. 4, 2013, at 12:21 PM

For the past few months, some of the world’s leading cryptographers have been keeping a closely guarded secret about a pioneering new invention. Today, they’ve decided it’s time to tell all.

Back in October, the startup tech firm Silent Circle ruffled governments’ feathers with a “surveillance-proof” smartphone app to allow people to make secure phone calls and send texts easily. Now, the company is pushing things even further—with a groundbreaking encrypted data transfer app that will enable people to send files securely from a smartphone or tablet at the touch of a button. (For now, it’s just being released for iPhones and iPads, though Android versions should come soon.) That means photographs, videos, spreadsheets, you name it—sent scrambled from one person to another in a matter of seconds.

“This has never been done before,” boasts Mike Janke, Silent Circle’s CEO. “It’s going to revolutionize the ease of privacy and security.”

Read the entire article here: http://www.slate.com/articles/technology/future_tense/2013/02/silent_cir...

If true, and easily implemented, this is a real victory for Freedom!

These are my home

Submitted by steveo on February 5, 2013 - 2:08am.

These are my home brew

Fear Factor
Volatility on Steroids
Asset Class Total

Do you think that using the complex ratios and arithmetic makes it harder to the "invisible hand" to hide it's intentions?

http://oahutrading.blogspot.com/2013/02/ff-vos-act.html

Weirdness from Facebook

Submitted by Pegasus on February 5, 2013 - 2:23am.

Ok, I posted the 'The Threat of Silence' article from Slate magazine using the FB 'share' app. Here's what happened. First a screen shot of how FB handled the share:

and now, a screen shot from the actual article on Slate:

As you can see, Facebook when posting the 'share' link, changed to title to: "...and Terrify Governments, when the actual Slate title was: "...freak out the Feds." I don't know, maybe I am reading way too much into this, or the antenna on my foil hat is mis-aligned, but it's quite a different meaning when one says 'terrorize governments' and the other (true one) says 'freak out the Fed' -- it all seems extremely insidious to me.

I am not trying to hijack this thread, so my apologies for possibly wasting anyone's time with this.

The Oil to Beef Conversion....

Submitted by Be Prepared on February 5, 2013 - 2:27am.

Assuming an average cow continues to eat 25 pounds of corn a day and reaches a weight of 1,250 pounds, he will have consumed in his lifetime roughly 284 gallons of oil. We have succeeded in industrializing the beef calf, transforming what was once a solar-powered ruminant into the very last thing we need: another fossil-fuel machine.

Based upon 2007 numbers, the average American eats 63.5 pounds of beef annually.....

I am always thinking about the EROEI of everything. SRSrocco has continually spurned my interest, so whenever I run across something that puts it in terms of oil....I have to try to translate it. Through the magic of conversion, 1 barrel of oil makes about 184 pounds of beef. The next time I eat a hamburger or a steak.... I will remember that this year I am actually eating 1/3 of a barrel of oil. Boy, that sounds yummy.

Be Prepared

Submitted by Karankawa on February 5, 2013 - 2:49am.

Grass fed beef isn't expensive in Pre 1965 silver coins. Just like gasoline, they are cheaper today than they were before the money was debased.

@Puck - Further Hershey Chocolate Analysis

Submitted by Be Prepared on February 5, 2013 - 2:49am.

Another tidbit... which I left out of my previous spreadsheet.... but should be part of full disclosure.

A chocolate bar is measured to a large degree by its percentage of cacao it contains within the ingredients. Milk chocolate contains so much milk and sugar that its percentage of true cacao may be as low as 10 percent, the minimum required by the FDA for calling it "chocolate" on the label. Hershey's milk chocolate contains about 11 percent cacao. In contrast, a serious dark chocolate bar will contain anywhere from 65 percent to 85 percent cacao. The higher the percentage... the more expensive the bar... because cacao beans ain't cheep. :-)

So I wonder what the composition of a Hershey's bar was back in 1908 and how much, over time, they have reduced the quality and quantity of their ingredients to pad their profits. They say it's the same recipe that ole Milton used, but I seriously doubt it. :-)

@ Be Prepared

Submitted by Karankawa on February 5, 2013 - 2:56am.

@Puck - Further Hershey Chocolate Analysis

Exactly, our society has allowed itself to be 'led' or forced to accept a lower quality of 'living' for more toys and trinkets produced by others that have been 'led' to do the same.

People are just now waking up to that. I hope.

Do Silver and Platinum Have Higher Growth Potential Than Gold?

Submitted by mahen on February 5, 2013 - 4:02am.

We at Sunshine Profits suggest holding three precious metals (in a physical form) as long-term investments in a "default" precious metals portfolio - gold, silver and platinum. There are, of course, other viable options, such as palladium, depending on one's preferences and needs, but these three mentioned above will suit virtually any precious metals investor.

Gold is and has always been the most popular and usually attracts the most attention both from investors and the general public and could be viewed as the safest bet. What is more, recent bottoms visible in the long-term charts suggest that a huge rally in the gold market is likelysome time this year. However, the other two are tempting as well, as many factors suggest that they may outperform the yellow metal in the coming months and years.

As far as silver is concerned, we would like to mention two important arguments. Firstly, when silver reached its all-time high in April, 2011, it merely reached the level of 1980 high (only in nominal terms, as in real terms this high was much, much lower) whereas gold's all-time high from 2011 was more than double the one form 1980 (again, in nominal terms) - this itself shows a great potential relative to gold. The second argument is more technical in nature, but very much in tune with the above one and consists of various price projections for the white metal that we featured two weeks ago.

A detailed explanation why platinum is likely to outperform gold can be found in one of our recent essays, but the most important factors here seem to be the fact that platinum has historically been the more expensive metal, with last year being an exception and that just recently platinum's price has exceeded gold's. And when we add to that the supply problems, which are the result of strikes in South Africa (which produces 75% of world platinum supply) the outlook for platinum does indeed seem encouraging.

To see how the above arguments fit into technical picture, let us jump straight into the world of charts. We will begin with silver's long-term one (charts courtesy by http://stockcharts.com.)

Larger Image

Today we begin with the long-term chart in order to emphasize the importance of looking at the big picture which should always take precedence over short-term charts. In silver's long-term chart, we see that prices tried to break down below the long-term support line but failed. They are now back above this line, and, after rallying, touched the resistance-support line once again. We clearly have a bullish situation with bullish implications for the long term.

Now, let us move on to the platinum market. Here, we will use platinum to gold ratio, as this chart seems to exert the most influence on the price of platinum currently.

Larger Image

In this chart, we see the ratio is now above 1.0, and the breakout is being verified (successfully so far). Platinum is now more expensive than gold. The ratio broke above 1.0, moved back to it and has moved slightly higher again. We could see more consolidation here, but the long-term implications remain unchanged. Platinum is expected to outperform gold in the months ahead, and the ratio is therefore expected to move higher as well.

A major bottom was seen at the end of 2011 (close to the powerful long-term turning point) and in early 2012. A breakout has now been seen above the long-term declining resistance line in this ratio, and it seems that a big comeback for platinum to much higher prices is likely. This will pay off big time for those invested in platinum for the long run.

Summing up, the technical implications are bullish for both white metals and so do the fundamental ones. Both of them are positively correlated with the general stock market in the long run because of their industrial uses and with stocks moving higher, it is this part of the precious metals sector that may move the most in the coming months. While we continue to believe that diversification is the way to go, it seems that platinum and silver will outperform gold in the medium term.

Use the following link to sign up for a free, no-obligation trial of our Premium Service and read the complete version of this study that is over 10 times bigger. You'll also receive Market Alerts when things "get hot" on the precious metals market and when the trial expires, you'll start receiving our free newsletter. Additionally, you will also receive 12 gold best practice emails.

Thank you for reading. Have a great and profitable week!

Sorry is this is overkill...

Submitted by Karankawa on February 5, 2013 - 4:10am.

Nope, good stuff in my opinion Puck.

I'm on the last one and what I mention here is obviously trumped in spades by Katie. Katie is where many want to be but need to start locally.

Learn to TRADE LOCALLY in your silver. I'm certainly not suggesting anyone avoid taxes. But learn to trade locally and support people that have survived the big box stores by providing a better product/service.

There are more out there than you think.

And real food is always on the list.

Karankawa

Would you cough up 2 real dimes for a pound of fresh picked spinach? Check the fiat prices next time you go to the store and decide what's a bargan.

Re: Silent Circle

Submitted by Boswell on February 5, 2013 - 5:04am.

Checked Slashdot...

They had an article in Oct 2012 on it (pre announcement?) with some interesting comments about it and possible alternatives. YMMV

http://it.slashdot.org/story/12/10/20/1935258/zimmermanns-silent-circle-...

Pay Attention, You to Turd

Submitted by OutLookingIn on February 5, 2013 - 5:21am.

I like fundamentals. So here they are quick and dirty;

1/ Countries now in or close to depression: Greece, Portugal, Ireland, Italy, Argentina (also suffering hyperinflation), Japan, Belorussia, UK, Eastern Europe - Bulgaria, Romania, etc. You get the picture. There are too many to count!

2/ Fully fledged currency war now in full swing, worldwide.

3/ Too many "shooting" wars to count - Iraq, Afghanistan, Yemen, Syria, Libya, Mali, etc. Too many "sore" spots to count - China/Japan, Iran/The West, Turkey/Syria, Most of African with themselves, etc.

4/ The global economy is running on nothing but central bank digit currency. Worth exactly zero.

5/ Solid indicators that cannot be fudged (BDI, Rail car loadings, shippers tonnage, number of TEU's full shipped, amount of basic goods shipped (coal, iron ore, etc.) show an imminent global economic downturn/collapse is fast approaching.

5/ Gold and silver will initially be caught in the same commodity sell off, but will quickly recover as the ultimate safe haven seeking wealth, will flood into anything tangible.

6/ Food prices will skyrocket worldwide. Geopolitical tensions will boil over. There will be a major war. Soon.

@Pegasus

Submitted by JY896 on February 5, 2013 - 5:38am.

The Newspeak app has apparently already been activated, silly. It conveniently translates essence of what is posted (or what the app's authors want displayed on your FB page) into the form it decides is best . Kinda like spellcheck, only with moar electrolytes...

The less sinister explanation is that the cached version linked to by the FB app is a different (earlier?) draft of the article, with a different sub-heading from the final, published article. Email the author/editors at Slate (who also though 'terrifying the .gov' was a poor choice of headline, but forgot to remove or edit the version being sent to FB) , if you really want to find out -

To be honest, I am not sure either explanation is more outlandish than the other.

_________________________

Good to see you around, Be Prepared!

Bollox.......Hmmm, am I onto something?

Submitted by nixy on February 5, 2013 - 5:41am.

'fraid not, it seems.

but it shows why commodity 'prices' have to be manipulated.

http://www.whatdotheyknow.com/cy/request/copper_content

(No subject)

Submitted by Hammer on February 5, 2013 - 6:22am.

“We cannot let the euro fluctuate as the markets feel like,” says Hollande (French) just now.

Soooooo, manipulation it is then............This could get ugly...............

Given that there is now proof

Submitted by nixy on February 5, 2013 - 7:03am.

Given that there is now proof that manipulation exists (LIBOR MBS etc.), perhaps it's time for the suspects to give proof manipulation does not exist.

Quisp - GSR swap

Submitted by Admiral Ag Bar on February 5, 2013 - 7:04am.

You can still do a GSR swap with a online dealer. Call to sell x and buy y with the proceeds.

pre 1992 copper pennies in UK

Submitted by Wales on February 5, 2013 - 7:22am.

Pre 1992 copper pennies in UK are nearly pure copper so worth more then face value.

I collect them for a while now using a magnet to speed up the process :)

http://www.dailymail.co.uk/news/article-385980/Hunt-2p-coins-copper-pric...

Fed refused Germany gold audit before the repatriation request?

Submitted by hz on February 5, 2013 - 7:24am.

From Schiff's recent newsletter - http://www.europacmetals.com/Portals/0/newsletters/february2013.html:

The financial world was shocked this month by a demand from Germany's Bundesbank to repatriate a large portion of its gold reserves held abroad. By 2020, Germany wants 50% of its total gold reserves back in Frankfurt - including 300 tons from the Federal Reserve. The Bundesbank's announcement comes just three months after the Fed refused to submit to an audit of its holdings on Germany's behalf. One cannot help but wonder if the refusal triggered the demand.

Apologies if most were aware but I found that last point interesting. I didn't know the Germans had requested an audit three months prior! I thought the seven year request made it more orchestrated than it appeared, but the refused audit raises even more doubts about central bank trust.

Why Buy Silver? (From The dailysheeple.com)

Submitted by ClinkinKY on February 5, 2013 - 7:30am.

Silver has no counter-party risk. It is not someone else’s liability. Silver Eagles or Canadian Silver Maple Leaf coins are recognized around the world and have intrinsic value everywhere. The same is NOT true for hundreds of paper currencies that have become worthless, usually because the government or central bank printed them to excess to pay the debts of governments that did not control spending.

The price of silver in US dollars since the year 2001 has been strongly correlated with the ever-increasing official national debt of the United States. Read $100 Silver! Yes, But When? I doubt that anyone believes the national debt will decrease or even remain constant over the next four years. We have every reason to believe that it will increase by well over $1,000,000,000,000 per year for many years. If the national debt is rapidly increasing and it correlates, on average, with the price of silver, then we can be reasonably certain that the HIGHLY VOLATILE price of silver will increase substantially over the next few years.

Click on image to enlarge.

Why changes in gold production don't matter

Submitted by Mantis on February 5, 2013 - 7:31am.

Thought provoking (at least for me), in essence the supply from mining is virtually insignificant in affecting gold price.

Most analyses of the gold market consider the annual change in the amount of gold produced by the mining industry to be an important determinant of the gold price, with bulls regularly supporting their case by citing the mining industry's inability to ramp up production and bears sometimes claiming that increasing mine production will eventually weigh the gold price down. Our contention, however, is that the annual supply of newly-mined gold is so small relative to the existing aboveground supply that changes in mine production should be ignored when assessing gold's prospects.

http://www.321gold.com/editorials/saville/saville111009.html

looks to me like silver

Submitted by MrC on February 5, 2013 - 7:41am.

looks to me like silver want's to break up out of it's wedge formation a push and stay above 32.0 would mark the breakout.

Should be a fun day

Submitted by Beastly Stack on February 5, 2013 - 7:59am.

If you are trading please visit-

http://tradermartinstake.com/

small babysteps at this

Submitted by MrC on February 5, 2013 - 8:08am.

small babysteps at this moment for silver, but looking good so far.

Weekly stochastics looking strong

Submitted by Silverman on February 5, 2013 - 8:29am.

The 32 battle is getting old

Submitted by ag1969 on February 5, 2013 - 8:43am.

Yen

Submitted by DrkPurpleHaze on February 5, 2013 - 8:46am.

Looks like the yen went beserk last night. Today should be interesting, very shortly.

Yen

Reply to uranium springs at the top of the page.

Submitted by Mr. Fix on February 5, 2013 - 8:47am.

I believe that a lot of this news is “leaking out” because the powers that be have decided that they have got all of their ducks in a row, and are ready to start the imposition of martial law, but they would prefer that the very first strike be against them, so they are actively trying to incite it.

This became apparent with a lot of the YouTube videos on the Sandy Hook massacre, whereby anybody paying attention could draw the conclusion that the government staged the operation in order to impose gun control, but that might not be the goal, so much as to wake up those that might fight back.

Here's what I think the strategy is:

They are hoping that all of those that would fight back, get organized in some meaningful way, so that they can be obliterated in the first round. This would serve their purposes in three ways,

*it would give them some sort of “moral authority” to defend the laws they have just written,

* it would also strike the fear of government into the masses, and make a second strike highly unlikely,

* it would destroy the most capable of survival and defense.

Martial law could then be maintained with little if any opposition.

Even if they have to completely stage the first attempt of freedom fighters to retake the country, they will do so in an extraordinarily public and messy manner, in order to assure that is never attempted again.