Getting Real, Real Fast

258
Fri, Jun 1, 2012 - 10:29am

Your blissfully unaware family and friends notwithstanding, the global financial "situation" appears to be deteriorating rapidly. I hope you have prepared accordingly.

First this morning, I suppose we should address this month's BLSBS. As you know, the period between 8:25 EDT and 8:35 EDT on the first Friday of the month is the only time all month when I actually watch CNBS. Today, the usual crowd of misfits populated my screen. There was The Shill happily expecting glorious growth. The Coug was prowling and LIESman was stuttering, as usual. Then, the party ended when we went "Live to Hampton Pearson at the Labor Department". No real reason for me to rehash the dismal numbers with you as I'm sure you've had enough of that already. I don't wish to add some color, however.

  • The media will tell you today that gold is rallying on fresh "hopes" on more QE. Bunk. This is not true. Gold is rallying on fear. If gold was rallying on QE, why are stocks down? Why is crude down? Additionally, gold is rallying and extending gains because of a squeeze in the massive spec short position that has been built up over the past month or so.
  • The last commercial I saw before the numbers were released was a promo for a CNBS program that promises to "show you how you can profit from the declining euro". Looks like the bottom is close there.
  • The printed NFP was +69,000 but the "birth/death adjustment" was +204,000. This means that, without the BLS statistical make-believe, the actual number might be -135,000. I wonder how shiny LIESman's head will get as he attempts to spin that? Chances are he won't even try.
  • The 10-year note is now at 1.47%. This is incredible! Even using the nonsensical and worthless CPI, the 10-yr now has a -1.0% real (inflation-adjusted) annual return.
  • The 30-year Long Bond is at 2.55%. Never in my life did I think I would see the day when the Long Bond yield fell below the stated rate of inflation. Well, OK, maybe I thought it was possible that the Long Bond might yield 10% when the CPI was 12% but parity? At 2.5% Amazing!
  • And crude is now down over 20% in the past month alone. This in spite of the ongoing, geo-political risk in The Middle East.

Speaking of crude, anyone thinking of buying some had better take a long, hard look at the chart below.

(I just snuck a peek at gold here at 10:10 EDT. UP to $1610. Wow! Continuing to rally post the PM fix. Very surprising.)

As stated above, the metals soared on the BLSBS and are continuing to rally. Fear, short-squeezing and QE anticipation are driving things higher. For gold, a move through and close above $1610 would be very exciting. Your short-term target to watch in silver is $29.

I mentioned negative, real interest rates above. Remember, negative real rates are a hugely positive indicator for the precious metals. If you need a refresher on this, go here: https://www.tfmetalsreport.com/blog/3325/case-you-missed-it

Today's CoT is going to be very, very interesting when it is released at 3:30 EDT. I'll be sure to post some comments and analysis once I see the numbers.

Lastly, please take a few minutes to page through this scribd doc. It was written by Raoul Pal, one of the most successful hedge funds managers of all time. Doom? Gloom? Yes. Heed his warnings.

The End Game

https://www.zerohedge.com/news/big-reset-2012-and-2013-will-usher-end-scariest-presentation-ever

I cannot imagine that I won't have more for you later on this crazy, crazy day so please keep checking back. Gold is now 1617! WOW!

TF

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  258 Comments

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Anonymous
Jun 1, 2012 - 2:22pm

Removed comment

Removed comment.

Marblesonac
Jun 1, 2012 - 2:20pm

I don't want to gloat...

It's way to soon for that. I wouldn't want to be a trader in precious metals and feel for those that sold their stack recently to try to make fiat in the pits.

GoldMania3000
Jun 1, 2012 - 2:20pm

Jim Rickards ‏@JamesGRickards

Jim Rickards@JamesGRickards

first w/ rate cuts then w/ but not yet. This plays out in Jul-Sept. Fed cares about market on Nov 4 not Jul 4

View conversation Hide conversation 9:15 AM - 1 Jun 12 via web · Details
Dr G
Jun 1, 2012 - 2:15pm

@SRS, please provide some

@SRS, please provide some data for your comment. The charts that I'm looking at show silver always outperforming gold, no matter the placement in the move. Silver is often up 1.5-2x as much as gold.

Dr G
Jun 1, 2012 - 2:14pm

You know, after pondering

You know, after pondering upon these jobs numbers this morning, I'm convinced that new QE will be announced by the Bernank at the meeting later this month. I'm giving it 3 weeks from today.

Stack it up now.

exiledbearbam
Jun 1, 2012 - 2:14pm

And that's why you stack

First time PM investors have a steep learning curve in terms of stomach strength.

A good chunk of the volatility in the PM space is artificially generated, mainly to scare people away from having a position in them one way or the other. But all bull markets are like this - they'll correct and beat on your hands to get you to let go. And then once enough people have been beaten away from whatever, it'll then make another leg and go up again. They're all like this, it's just the the PM markets happen to be the most vicious at it, mainly for political reasons.

Just stay unleveraged and only own as much as you can sleep on at night and go do other things. Doesn't matter what, mow the lawn, smoke some weed, play a game, just go out there and do something else.

Although at this point, I'm not quite sure why I'm giving advice for how to go long on PMs. It's almost too late now to own them.

Mark my words. Mark them well. When gold is at $3000, you will have a hard time getting physical. It'll just disappear into the woodwork. They'll be happy to steer you to the COMEX table though, where they'll bend you over, pull your pants down and make sweet love to you.

gatortrader
Jun 1, 2012 - 2:13pm

1630

is here :) I must admit, I bought some paper - options yesterday. Making a killing!! good day

HeNateMe
Jun 1, 2012 - 2:10pm

The Dearly Departed

I really do miss the old farts.

Bay of Pigs, where are you?

HeNateMe

ivars
Jun 1, 2012 - 2:09pm

@sengfarmer-amaritas

You must be joking...These ones we have are poisonous, strongly so. I saw the link, they say they are edible, taste fine, some people smoke for no reason if they could just digest. I am now worried if some Latvian reads this and goes straight to the woods to search for his tomb place.

Punk-Assets
Jun 1, 2012 - 2:07pm

Holy moly look at gold. Nice

Holy moly look at gold. Nice to see it spike up for a change. But punk never waited to buy lower even though he thought we would have seen $1480 by now.

Headed for an hour walk/ jog.

See you soon.

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Key Economic Events Week of 9/21

9/21 8:00 ET Goon Kaplan
9/21 10:00 ET Goon Evans
9/21 Noon ET Goon Brainard
9/21 6:00 pm ET Goon Williams & Goon Bostic
9/22 10:30 ET Chief Goon Powell on Capitol Hill
9/22 Noon ET Goon Barkin
9/22 3:00 pm ET Goon Bostic again
9/23 9:00 ET Goon Mester
9/23 9:45 ET Markit flash PMIs for September
9/23 10:00 ET Chief Goon Powell on Capitol Hill
9/23 11:00 ET Goon Evans again
9/23 Noon ET Goon Rosengren
9/24 1:00 pm ET Goon Bostic #3
9/24 2:00 pm ET Goon Quarles
9/24 10:00 ET Chief Goon Powell on Capitol Hill
9/24 Noon ET Goon Bullard
9/24 1:00 pm ET Goon Barkin again & Goon Evans #3
9/24 2:00 pm ET Goon Bostic #4
9/25 8:30 ET Durable Goods
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9/25 3:00 pm ET Goon Williams again

Key Economic Events Week of 9/14

9/15 8:30 ET Empire State and Import Price Idx
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9/9 10:00 ET JOLTS job openings
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9/10 8:30 ET PPI
9/10 10:00 ET Wholesale Inventories
9/11 8:30 ET CPI
9/11 9:45 ET Core CPI

Key Economic Events Week of 8/31

9/1 9:45 ET Markit Manu Index
9/1 10:00 ET ISM Manu Index
9/1 10:00 ET Construction Spending
9/2 8:15 ET ADP employment
9/2 10:00 ET Goon Williams
9/2 10:00 ET Factory Orders
9/3 8:30 ET Initial jobless claims
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Key Economic Events Week of 8/24

8/24 8:30 ET Chicago Fed Idx
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