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

About the Author

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  258 Comments

ivars
Jun 1, 2012 - 12:03pm

Had to remind about this:

Had to remind about this: DJIA 11500 looks like a close reality:

Improved version by goldpricemodel here-he made it on March 3 on top of my latest DJIA version- notice that the first SHARP drop in his model starts in the beginning of May.

Points to QE in July 2012- a good guess as well.

https://www.flickr.com/photos/61834461@N02/6803255004/sizes/l/in/photostream/

Stock_Canines
Jun 1, 2012 - 12:03pm

Strong Stomach

bam - he's got a strong stomach alright. He's been through a lot in this life time. He understands the volatility, but also recognizes where things are heading and believes silver will outperform gold during the next several years as things unwind all around us. He may buy gold (he owns none), but right now his focus is on silver. He has 50% of his allocated capital waiting for lower prices.

xty - I do stack; I have far more silver than I do gold. I have been buying through Provident for the past 1.5 years. I have followed and been interested in gold/silver since 2007. Unfortunately, I initiated my investment thesis through the miners and not bullion. Fortunately, I wised up. I still hold miners, but most of my investment dollars are now in bullion.

Dr G
Jun 1, 2012 - 12:04pm

Anybody have thoughts as to

Anybody have thoughts as to why the silver response is so weak in comparison to gold? Both up around 3.5%. Silver should be in the 5% range based simply on how they usually trade.

Thoughts?

R man J
Jun 1, 2012 - 12:05pm

Just pulled this from my Twitter feed

Freaked me for a brief moment.

bam TF
Jun 1, 2012 - 12:06pm

@ LHSI

I still cannot get over that last name: LIESman

It's so f**ing perfect.

Jun 1, 2012 - 12:06pm
Dr G
Jun 1, 2012 - 12:07pm

@ivars: I think July 31/Aug 1

@ivars: I think July 31/Aug 1 QE as well. That gives them 1 more month of crappy job numbers before unleashing the beast.

Jun 1, 2012 - 12:07pm

Looking good

Gold holding and even managing to creep higher. Very nice. $1615 last.

What should be a positive CoT will help on the Globex, too.

Eric Original
Jun 1, 2012 - 12:07pm

I'm thinking pretty soon I

I'm thinking pretty soon I can take FB off my "deathwatch" ticker, and put JPM on in it's place. Just checked a quote. Did someone say "Bacon??" This day just keeps getting better.

https://www.bloomberg.com/news/2012-06-01/jpmorgan-names-bacon-deputy-ri...

Katie Rose
Jun 1, 2012 - 12:09pm

Coin Store Owner's imput

I just spoke with my favorite dealer about purchasing some SAE's. I don't have much money as the Vet got my SAE savings account when she valiantly tried to save one of my goats. I am convinced her death is due to GMO feed.

His input startled me. He said there were many more folks coming in to sell their silver than to purchase more at these low prices.

As we chatted, he also stated that he thought that part of the purpose of the shake down in the metal's market was to destroy the local dealers like himself. He was very pensive as we spoke.....

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8/21 10:00 ET Existing home sales
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Key Economic Events Week of 8/5

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7/30 8:30 ET Personal Inc/Spending & Core Inflation
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Key Economic Events Week of 7/15

7/15 8:30 ET Empire State Fed Index
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7/16 9:15 ET Cap Ute and Ind Prod
7/16 10:00 ET Business Inventories
7/17 8:30 ET Housing Starts and Building Permits
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Key Economic Events Week of 7/8

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