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Tapering Turds

Maybe "Hampton Pearson at The Labor Department" will shoot me down and make me look foolish (again) but all signs point to a weak NFP tomorrow.

I just thought I would post this before heading out. There continues to be all this market talk about "Fed tapering". We've covered this fallacy ad nauseam so there's no need to do it again, especially when The Pig is telling you all you need to know.

First, here's a daily chart of the POSX. If The Bernank was really going to constrict the future supply of dollars by tapering QE, the POSX should be rallying simply because nearly every other fiat currency is being rapidly devalued. Ahem...note the action in the POSX since The Bernank spoke to Congress two weeks ago.

But though today's drop was staggering, it doesn't mean much in the grand scheme of things. Note that on these two longer-term charts, the key level to watch is 80. Admittedly, an horrific NFP tomorrow and we might be there by Monday. But, for now, today was just noise. One bright spot: It doesn't look like we'll be seeing a return to 88 anytime soon.

And why does this matter?

Again, it's all about the flow of funds. A weak Pig will help to drive the entire "commodity" sector higher. (http://www.tfmetalsreport.com/blog/4733/ebb-and-flow-funds) Soon, a fire will be re-lit under the metals and the historically large Spec short position will be forced to cover. A falling dollar along with the attendant higher commodity prices will only exacerbate the pain for the shorts.

So, hang in there. Regardless of whether old Hampton breathlessly exclaims "UP 88,000" or "UP 288,000" tomorrow morning, QE∞ is going to continue unabated. No amount of SPIN or Fed Goon posturing is going to change that. This fact WILL, eventually, be realized by the paper metals markets. It's simply a matter WHEN.

More in the morning.

TF

160 Comments

Save_America1st's picture

Shadow Stats

So what would happen if the .gov and Fed used the REAL unemployment stats...not to mention the REAL inflation stats on top of that??!!  It's all such a huge joke...

http://www.shadowstats.com/alternate_data/unemployment-charts

http://www.shadowstats.com/alternate_data/inflation-charts

oh well...at least Silver is on sale once again today!  I'll take it, because it is also payday (when digital fiat goes into my bank account only to be immediately withdrawn by me in the form of toilet paper $20's which I then convert into more Silver for my stack!). 

Have a great weekend everyone and take care.  Keep stackin' regularly no matter whenever you can! cool

ClinkinKY's picture

Nobel Prize Winner

Paul Krugman explains that the more feathers they pluck, for their head wear, the better off the indigenous species of birds will be.

reefman's picture

Sold some GDX puts and bought JPM (JP Morgan) puts.

Sold some GDX puts and bought JPM (JP Morgan) puts. 

I still think GDX should test the $28.50 area to gap fill. 

¤'s picture

40 year perspective on the USD

Chart of the day shows US nominal and real effective exchange rate for long term cycles lasting 6-10 years, march 2013

NonoverlappingMagicCereal's picture

@Save_America1st

So what would happen if the .gov and Fed used the REAL unemployment stats...not to mention the REAL inflation stats on top of that??!!  It's all such a huge joke...

In one way, it would be fantastic if shadowstats inflation records were legitimate.  According to your chart, they assert over 500% inflation since 1991.  Checking case-shiller since 1991, that means my currently-$130k house should actually be worth over half a million dollars if it just kept track with inflation.

Can't wait for house prices to catch up with shadow stats!

zman's picture

mediocrity

That's the point, mediocrity is good enough for the economic statistics,  low growth and stagflation are acceptable. Policy makers are fine with this scenario, and if they can drag it out for another 4 years,  they would sign up for it.

Gold and silver will not move much higher in this mediocrity,  at this point, we need deep economic recession, we need a banking crisis,  ect.

QE and stagflation will drag this on for years to come, gold and silver will be useful when it comes to a end, when that will be is impossible to predict, but I assume it's much longer than we would expect.

Peoples Front of Judea's picture

Silver BS

SILVER NOW SUB 22 THIS IS TOTAL .....BS... BTFD

¤'s picture

Like I mentioned....Tapering Exuberance

Time To Get Out? What The Cult Of Bernanke Is Telling Us

It’s always a bit amusing to meet an investor making money in the markets right now who actually thinks it’s because he’s smarter than everyone else. Everyone knows the Fed’s quantitative easing program calls for them to buy $85 billion worth of bonds and mortgage backed securities each and every month. And the connection to market performance is clear. But, as is clear with USDJPY, Nikkei, and European sovereigns, the end of this exuberance is beginning to happen. All of this indicates that the leveraged investing herd seems to be squaring positions, going to cash, and paying back some of the USD-denominated debt they’ve borrowed. So far it’s all been an orderly move lower. And herein lies the trouble. Few investors are spooked right now because there is so much calm in the markets. But that calm can quickly turn into anxiety, which can quickly turn into all-out panic. It’s taken years (since 2008) to print so much money. This means that a market panic will unwind years’ worth of liquidity in a matter of weeks. It’s a financial tsunami that no investor should underestimate.

http://www.zerohedge.com/news/2013-06-07/time-get-out-what-cult-bernanke-telling-us

The Green Manalishi's picture

What we need is a FUBM

It's hard to save up for later in life when you are are being killed right now.

Mantis's picture

Slam

Gold, Silver and bitcoins all manipulated down at the same time ?

http://afbitcoins.wordpress.com/2013/06/07/slam/

Howard Roark's picture

Sirens

Can we all ear the sirens?

The bomb carpet is here... Somebody is saying: "I love the smell of napalm..."

Hang on.

HR

Michael222's picture

RE:Slam

Everything priced in $$$ is going down because the dollar goes up (atm).

Willy's picture

F__k!!!!!!!!!!!!!!!!!!!!

On days like today driving to work looking at the the markets all I can blurt out is F__K!  Talk about testing your mental toughness, holy shit.  Make this groundhog day end.  Talk about a mental test, staying in the miners is torture, but the fundamentals and ratios sill say sit tight and be tight.

Turd your point about watching CNBC i hear ya.  It is pathetic.  Any wonder why their ratings have continued to fall year over year, despite the markets ramping up.  Santelli is the only guy worth watching.

Michael222's picture

Comex

http://www.maxkeiser.com/2013/06/skoyles-comex-pt-ii/

COMEX Pt II revealed: Investigating the paper gold market

To help investors understand more comprehensively how gold prices are established, Jan Skoyles and Will Bancroft have just released their new report: ‘COMEX revealed: Investigating the paper gold market’.

comex-revealed

Key points include:

-          Trading at COMEX relatively low compared to last 5 years

-          Percentage of gold backing COMEX in 2013 ranges from 4.8 to 7.1%

-          1.3 to 3% of traders taking delivery in 2013, even with JPMorgan’s massive gold hand-over

-          Gold bullion stocks exceeding delivery amounts  means COMEX not under pressure

-          Number of traders opting for delivery needs to rise 250% to affect stability of COMEX

Get the full report here and see what the findings mean for gold prices and gold bullion investors.

Read more at http://www.maxkeiser.com/2013/06/skoyles-comex-pt-ii/#uvK8hywzBJ4KU80j.99

Willy's picture

OIL

Major FUBM on crude!  Maybe the PM's will follow :)

Mad5Hatter's picture

Moon

Shot! Back to 22$!! That does it!! RIGHT NOW. We need a freakin moon shot!!! The she heads head, madusas needs to fly. That beeeatch. RIGHT NOW. Freaking A baby WE NEED A MOON SHOT!!! Put her in purgatory! With The Master and Margarita,  Pontius Pilate and the Devil, and also the diamond backed snake, while we are at it. Where's ralph?

Russakyas at the ranch, are freaking out, rumor has it, czar bo tox rasputin, ditched the spouse, must have been the eyeing of that painted nude standing before shy-faced frau Merkle.

Dr Jerome's picture

Reefman, I saw your GDX

Reefman,

I saw your GDX warning post too late to protect my mining shares! Alas... That'll teach me to spend time doing productive things around the house and not keep up on the blog here minute to minute.

Murphy,

Fascinating indeed that Greenspan and Rubin are both mentioned. Perhaps the dregs of this evil potion are getting stirred up to the surface. I hope that means it is nearly over and something new, something better some kind of system that is able to re-earn our trust will be emerging soon.

¤'s picture

Things that make you go ..."H'mmm..."

China to Build Larger, Alternative Panama Canal

June 7, 2013

China

EBG6NYSM4VCJ

Some Friday China links:

Nicaragua has granted a Chinese company a 100-year concession to build an alternative to the Panama Canal. At a cost of US$40 billion, the new canal will have a higher capacity than the Panama Canal, allowing ships to transverse it that are twice as large as the biggest ones the Panama Canal will be able to handle after a current expansion is finished.

When the ranking of the world’s top super computers is released later this month, China is likely to top the list owing to a new machine unveiled last week at China's National University of Defense Technology, the Wall Street Journal reports. China briefly held that distinction in 2010, but the new machine, the Tianhe-2, or Milkyway-2, is likely to hold the top ranking until at least 2015 the report says.

On Friday millions of high school seniors in China will sit for the dreaded gaokao, the nationwide college entrance exam. Unlike the SATs in America, entrance to college in China is based almost entirely on gaokao scores, Bloomberg Businessweek reports in an interesting piece on the tests. Interestingly, the tests are seen as one the factors causing the spike in Chinese students going abroad for college. As China Daily reports, “In Beijing, 72,736 students signed up for the gaokao in 2013. However, the figure was 126,000 in 2006.” The same source outlines the grim jobs market recent college graduates face.

Fareed Zakari opines at the Washington Post that China is the not the world’s other superpower. Zakari writes, “China is the world’s second-largest economy and, because of its size, will one day become the largest…. But power is defined along many dimensions, and by most political, military, strategic and cultural measures, China is a great but not global power.” For a similar argument, which Zakari cites himself in the article, see George Washington University Professor David Shambaugh’s most recent book.

At the same time, as fears of an EU-China trade war grow, the People’s Daily insists that the EU must accept it is a declining power. “The change of the times and the shifts of power have failed to change the condescending attitude of some Europeans,” the paper said the Financial Times reported. Interestingly, the editorial doesn’t appear to be in the English-language edition of the newspaper.

In “The Wonk With the Ear of Chinese President Xi Jinping,” the Wall Street Journal’s Jeremy Page provides a probing profile of Wang Huning, head of the Communist Party's secretive Central Policy Research Office. Wang, a Politburo member and top adviser and speechwriter to Jiang Zemin, Hu Jintao, and now Xi Jinping, is described by one of Page’s sources as "Karl Rove and Henry Kissinger rolled into one,” owing to his strong influence on both China’s domestic and foreign policy.

Reuters reports that Chinese new leaders are content to allow growth to slip below 7 percent before instituting a stimulus package, which Premier Li Keqiang has been a particularly strong opponent of.

http://thediplomat.com/china-power/china-to-build-larger-alternative-panama-canal-2/

Dr. Fix's picture

We're not done yet, remember- "It's only paper!"

silver.gif

¤'s picture

"H'mmm..." part 2 ~ Putin Doubles Down

Russia’s Only Aircraft Carrier Syria Bound?

By Zachary Keck

June 7, 2013

China

EBG6NYSM4VCJ

Russia will deploy its only heavy aircraft carrier, the Admiral Kuznetsov, to the Mediterranean Sea by the end of 2013, a Russian military official announced earlier this week.

Discussing the planned deployment, Navy Commander Adm. Viktor Chirkov told Interfax,

“The cruiser will complete its planned maintenance at the end of the year. It is expected to put out and perform a number of missions in an offshore oceanic zone as part of a group. Northern Fleet naval pilots will perform a number of missions on board this cruiser in the long-range mission.”

The report goes on to say that the vessel carries Su-33 sea-based multirole fighters and Ka-27, Ka-28, Ka-29, Ka-32 helicopters. It is also equipped with Granit anti-ship missile systems, Kortik and Klinok anti-aircraft systems, and Udav anti-submarine systems.

The carrier will join the group of warships deployed to the Mediterranean earlier this year as part of a new permanent task force Russia established in the region largely in response to the ongoing hostilities in Syria, where Russia maintains a naval base.

Last month, when the warships arrived in the Mediterranean, Russian state media reported that the task force consisted of the “destroyer Admiral Panteleyev, two amphibious warfare ships Peresvet and Admiral Nevelskoi, as well as a tanker and a tugboat.” Admiral Chirkov was quoted at the time as saying that five to six warships would be sent to the region by the end of the year, and that nuclear-powered and diesel submarines might be deployed as part of the task force in the future. Moscow also intends to establish a headquarters for the fleet sometime this summer, with initial reports suggesting it will be based out of Novorossiysk, Russia or Sevastopol, Ukraine.

Comments by other Russian naval officials indicated that last month was first time since the Soviet Navy’s 5th Mediterranean Squadron was disbanded in 1992 that Russian warships were patrolling waters in the region.... (cont.)

http://thediplomat.com/flashpoints-blog/2013/06/07/russias-only-aircraft-carrier-syria-bound/

reefman's picture

The problem with "tfmetalsreport" is the permabulls.

The problem with "tfmetalsreport" is the permabulls. 

Yesterday I posted warnings about the mining shares. While there were a couple of people who agreed with me, this was the immediate response I got, and these people seem to spit vitriol over anyone who "dares" to suggest the price will DROP. This is why I don't visit this site very often any more, it gives poor advice, has some very caustic individuals and causes a lot of people to lose a lot of money. 

Please look at your charts, and ignore the "permabulls" unless you really don't care about taking advantage of price movements.

Here is what I wrote:

* CAUTION * MINING SHARES OVERBOUGHT

 
Hat Tip!
2

Just a word about the mining shares. They are overbought, and hitting the 50 DMA. Be VERY CAREFUL if you own the mining shares.

http://scharts.co/ZSRTIH

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

...and this was the response by some "permabulls" who just can not accept reality.

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

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

@reefman

 
3

Errr....uhhhhh....duuuuhhhhhh.

Kcap

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

Ok reefman I'll play along

 
8

Tell me.  Which chart looks scarier?

http://graceland-updates.com/images/stories/13june/2013jun4dust1.png

Or this?

http://graceland-updates.com/images/stories/13june/2013jun4gdx1.png

These aren't my charts.  But at least he has interesting hokum like TRIX, ROC, CCI.  You just posted a generic chart.

Confirmation bias is a motherfucker.

Are you the weather channel?  Is this like a tornado warning?  Or are we talking about a scattered thunderstorm?  I would like to know which, I have special sections of my stable depending on the warning from TWC.  Thanks in advance.

Neigh.

I aplogize in advance for my tone...I have found myself in horse rage since this morning.  MOAR OATS!!!!!!!!

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

@stevenbhorse

 
6

Classicly wonderful rebuttal to a moron who shows up like SSJ when the "time is ripe" for the picking.

Reef..you have many veteran traders here.  Please....you're barking up the wrong tree.  Go play with Non-overlapping Fruit Loops and the backwards Jedi.

Kcap

ps. horse....try theweatherspace.com for the real deal.

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

This #scares# me.....

 
0

http://scharts.co/ZT2Z05

a lot more than this....

http://scharts.co/11HMWMR

* NO FEAR

Time for more of that change we been promised.

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

Zoltan's picture

Today's Lease Rates

Although not available yet be assured that they have spiked negative from here:

Silver Lease Rates
Jun 6 2013 Change
1M 0.1875% -0.0004
2M 0.2244% -0.0002
3M 0.2688% +0.4543
6M -0.0897% -0.4969
1Y 0.1552% -0.5251

At 4:16 today when they finally get posted I will put them here so everyone can see where the ammunition for today's raid came from.

Z

Patrancus's picture

a man that cannot be trusted

0345_60putin.jpg

tyberious's picture

Bill Holter Bullion Demand

bill holter
Bill Holter

Bullion Demand Still Unprecedented

Posted on June 6, 2013

 

"Bullion demand still at unprecedented levels."  Yes, demand from the U.S. Mint (and every other mint and refiner) was very strong going into April.  We all know what happened then and have watched as global demand has soared because the "price was too low."  Of course, if you listen to Bloomberg or CNBC they will tell you that gold has been sold off because it's "just not safe anymore." It's in a bear market, only barbarians would invest in it and the smart money has already panicked out...as should you too.

But here is a quote from acting director of the U.S. Mint, Richard Peterson:

Demand right now is unprecedented. We are buying all the coin (blanks) they can make.

-Reuters.com, June 5, 2013

Hold on now...let's take a look at this quote a little closer.  "We are buying all the coin blanks they can make?"  Really?  So if they are buying every blank that can get their hands on...then why have there been shortages this year?  Why has the mint had to suspend sales several times?  "Buying every blank that they could get their hands on"...Was apparently not enough?

Actually, a better question would be, "If demand is so great and the U.S. Mint is buying every single blank that they can, then how is it possible that the price went down?  Not just down mind you, down as in a 'panic "down?"  I'd like to remind you (and preface what I am about to say) that the "law" here in the U.S. is that the mint MUST buy as much silver and as much gold as necessary to meet demand and this supply must come from U.S. mines.  Now, I seem to remember that for the first quarter alone, the mint sold as many (I think actually 1,000 ounces more) Silver Eagles as all tallied silver production that came out of the ground from U.S. mines.  So in plain English, the mint sold more Eagles than the mines produced metal in the 1st quarter.

Now, not to disparage Americans but the Chinese and Indian population make us look like absolute "pikers" when it comes to buying gold and silver.  In fact, it looks like China and India are so far this year (and we don't even have numbers yet for April or May when the demand really exploded) likely to consume MORE THAN 80% of the entire world's production, where is the metal coming from?  COMEX?  LBMA?  Ah yes, GLD!  I would say as an off the cuff comment, once the "bleeding" stops and GLD doesn't report much more in the way of "deliveries" the barrel will be dry.  I say this because once the deliveries stop, my guess is that what they have left in "inventory" will be of the "flammable" type.  "Gold" as in receipts and paper promises.

As I wrote yesterday, "If you are truly listening" you can hear what they are telling you.  Here is the director of the U.S. Mint telling you that they cannot buy enough blanks to keep up with demand.  This tells you a couple of things.

1. Supply and demand are out of balance.

2. It also should tell you that IF you can get your hands on what is of short supply...you are getting it at a price that the market deems to be too low.

LISTEN and analyze what is coming out of the "official mouths" all over the world, if you listen carefully, they are telling you the truth to cover their sorry butts when this thing blows up.  Like I said yesterday, they will throw their arms up in the air and say, "We tried to tell you."

Regards,

Bill Holter
Associate Writer for Miles Franklin

Read more Bill Holter Articles on the Miles Franklin Blog

Just A Regular Guy's picture

Do I win?

Said there'd be a smash down. I expect weakness next few more days. Gold between 1200-1300 = bottom and BTFD imo.... After we bottom here it's off to the races (assuming the shorts get taken off and cover).

I wonder (if we get a replay of Lehman) who is going to go bye bye? Any guesses? Further, with what Marc Faber said a while back, higher USD = tightening of credit conditions. I am expecting (with another big international firm dying, or something similar) some kind of credit squeeze/seize up of the banking system. The SEC stuff the other day furthered my suspicion. Take care guys.....

P.S. I will be loading up the boat next week if gold < $1340-$1330 USD - expecting a waterfall...

Peace

Dr. Fix's picture

Ouch!

Mickey's picture

reefman

so one hedges--and now gets back long

al depends on perspective--are yo a trader or are you a longer term investor--people have to think that out themselves.

i write covered calls on many things--softens the downside.

but this is more like a casino when you have a jobs report out that adds 205k birth death jobs which we kow get quietly adjusted out.

This economy is contractign and the Fed talks taper and they may do it but I suspect the economy and market have problems

unless they are giving up on the whole thing--which  they should have done 10 years ago. Let a free economy be a free economy. for better or worse.

achmachat's picture

congratulations O thou evil ones...

the daily charts for the metals now officially look like crap!

happy now?

ag1969's picture

Just Bought 25 oz

From the bearing company via Turdmart.  Two of those OPM 10 oz bars that are only 89 cents over spot and a 5 oz Fii Taku just because.

Come to Papa.

hai's picture

World Gold Council's Artigas: Expanding Gold Holdings Could Add

World Gold Council's Artigas: Expanding Gold Holdings Could Add Huge Demand, Mine Production Stagnant

This  discussion with Juan Carlos Artigas was very informative. He talks about how much gold demand could increase if gold holdings as a percent of total financial assets were to increase from a mere 1 percent to 2 percent. It's a big number...

http://www.hardassetsinvestor.com/interviews/4873-world-gold-councils-artigas-expanding-gold-holdings-could-add-huge-demand-mine-production-stagnant.html

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