Tame, Tedious and Tiresome Tuesday

142
Tue, Aug 7, 2012 - 12:10pm

At least it's not "Terrible"...at least not yet. The only thing of interest, so far, was when gold had the audacity to approach 1620. The banks quickly beat it back and have seemingly decided to take the rest of the day off. Let's see if we can find something else to talk about.

First of all, the metals. We've had a couple of good days in a row and a nice little pop this morning. Apparently, that was all that would be allowed for now as gold was suddenly pressing up against 1620. There would appear to be quite a few stops between 1620 and the top of the range so The Cartel appears intent upon keeping a lid on things here. Silver is facing a similar issue. Having rallied over $1 from the Friday lows, it is now back into the very center of its 3-month range. It needs a propellant to shove it through 28.40 and on towards 29 and 30. Let's hope we see some propellant soon.

By far, the most interesting market right now is crude. The chart is compelling and the fundamentals are certainly heating up. For now, The Olympics have distracted the global press so everyone seems to be ignoring the major battles in Syria. For example, bubbling just below the surface is this: https://www.sltrib.com/sltrib/world/54635926-68/syrian-rebels-government-syria.html.csp. Of course, the Iranians aren't too excited about this development and have supposedly issued a warning to the U.S.: https://www.debka.com/article/22250/Iran-threatens-US-Turkey-after-Israel-with-spreading-Syrian-conflict.

You may be wondering why this is so important. Mainly, it's the geo-politics. We have the U.S., NATO, many Arab states and Israel on one side. The Assad Regime, Russia, Iran and even China on the other. First of all, the chances of a miscalculation or accidental escalation are high. All of those ships and aircraft in the same area can be very dangerous.

We'll Be Lucky to Live Through It
Russians don't take a dump, son...

Why is Russia so actively engaged in opposing NATO and supporting not only Syria but Iran? Can they be "talked into" standing down? Not likely. Why? Do you realize that crude oil and natural gas now account for 75% of the value of all Russian exports? Because of this, Russian industry and government (and political stability) is supported almost entirely by the revenue generated by energy exports. To mollify the masses, Putin has recently promised a new Keynesian-style stimulus program that increases government pensions and puts a freeze on domestic gas prices. The estimated "cost" of this is about $200B over the next 5 years. From where will this money come? Oil and gas exports! And it's estimated that the Russians need a crude oil price of at least $150/bbl to be able to meet these obligations. Clearly, the Russians have an interest in not only maintaining the current level of prices for oil and gas, they need to see higher prices, as well. Uh-oh.

So, here's your current daily chart. What was once resistance at $88 has now become stout support. A move through and close above $93.25 will set the stage for a run toward $98 and $100.

And here's a grain update for you. Things are sideways so far this week as the markets anticipate a major crop report on Friday. Soybeans, which still have time to be partially-rescued if decent rains can develop in the next 10 days, have been under significant pressure now for over two weeks and are close to completing a 50% retracement of the move from June 1 to July 20. This retracement will be complete near $15.50/bushel and that level would close the final gap on the chart, too. Let's see if we can get there. Corn, where most of the drought damage has already been done, is consolidating in a pennant ahead of the Friday report. It's poised to go either direction. Which direction will it be?

Finally, just a few random items. First, our pal Jim Quinn has typed out another, excellent two-parter. Both segments are well worth your time:

https://www.theburningplatform.com/?p=37087

https://www.theburningplatform.com/?p=38476

And because you likely have this stuck in your head now, I present this as a public service:

Billy Joel - A Matter of Trust (Official Video)

(Boyohboy, that takes me back. Maybe 1986 or 1987. A young Turd wooing a future girlfriend. Wow, where does the time go? Anyway, the Great Liberty Devito was on drums for Billy back then. He sure is fun to watch. Timeless music and timeless memories.)

OK, back to work. This story from ZH is well-written and, though it's a rehash of much of the same stuff we talk about daily here in Turdistan, I present it to you nonetheless:

https://www.zerohedge.com/news/guest-post-has-perfect-moment-kill-dollar-arrived

And lastly, my pal Big Red in Richmond sent along this chart yesterday. For me, it's a visual illustration of The End of The Great Keynesian Experiment. The accumulated debt is now so great that additional dollars of deficit spending are having a decreasing level of "effectiveness". If I were Romney (and I thank The Good Lord that I'm not), I'd publish this chart every day. I'd hand out pocket-sized versions at all my rallies and I'd make it the "poster child" for all of O'bottom's keynesian failures.

Alright, that's it. As I go to publish, I see that the metals are stable at 1612 and 28.15. That's OK. We'll live to play another day. Crude, though, is rolling and breaking out at $93.60. Again, IF it can close above $93.25 and not fall back below tomorrow, I would expect the next move to take it toward $98 and maybe even $100. Watch closely. Have a great day!

TF

p.s. Here's a little more Billy Joel for you. As a bonus, this video comes from the 100%-outstanding, 1980s television series "Moonlighting". Any Turdites too young to recall Moonlighting should check it out on Youtube or Hulu today!

Moonlighting - Billy Joel - Big man on Mulberry Street

About the Author

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turd [at] tfmetalsreport [dot] com ()

  142 Comments

dropout
Aug 7, 2012 - 12:37pm

TE of TGKE

The End of The Great Keynesian Experiment

"additional dollars of deficit spending are having a decreasing level of 'effectiveness'."

Put into economic jargon;

The diminishing marginal productivity of debt. = The more you print, the more you must print, or die.

It is now estimated that to gain a $1.00 rise in GDP the debt must grow by $2.63

The "Wall" is fast approaching!

tread_w_care
Aug 7, 2012 - 12:38pm

You know what is Tedious and Tiresome?

this crap:

https://www.ft.com/intl/cms/s/0/312bf416-d1a7-11e1-bb82-00144feabdc0.htm...

Google "Cash out of gold and send kids to college" to bypass the registration wall.

Another attempt to shear the sheep. I still have a shred of normalcy bias left, and, due to rules of current employer 401K plan, cannot cash out even at penalty. So I do the next best thing I can and heavily weight the portfolio toward physical bullion funds, Sprott's two, PSLV, PHYS, CEF, and GTU. The article above causes that last little shred of normalcy bias/doubt to flare up.

"What if we're wrong? What if they really can find a way out of this and keep the music playing 10, 20, 50 more years? What then? What will my family and friends think of me? How badly damaged will my long term financial plans/capabilities be?"

Be right and sit tight is easy to say . . . hard to do.

GoldMania3000
Aug 7, 2012 - 12:42pm
Beastly Stack
Aug 7, 2012 - 12:45pm

Painful Tuesday

I have to stop trading Gold,I have a great position but added to it today @1620.I want to puke watching evrything else go up especially Oil on the verge of blowing through 94-.

It is difficult fighting the Cartel but I think they are about to pay me in a big way!

I like to post here to vent at times,I apologize for sounding like a whiner!

Good Day.

ClinkinKY
Aug 7, 2012 - 12:45pm

(60th Senate Dem in 2008) Al Franken Elected By...

...felon vote. Yes, he's a comedian but this is NOT funny.Just a taste of what's to come this year.

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

Campaign 2012

York: When 1,099 felons vote in race won by 312 ballots

In the eyes of the Obama administration, most Democratic lawmakers, and left-leaning editorial pages across the country, voter fraud is a problem that doesn't exist. Allegations of fraud, they say, are little more than pretexts conjured up by Republicans to justify voter ID laws designed to suppress Democratic turnout.

That argument becomes much harder to make after reading a discussion of the 2008 Minnesota Senate race in "Who's Counting?", a new book by conservative journalist John Fund and former Bush Justice Department official Hans von Spakovsky. Although the authors cover the whole range of voter fraud issues, their chapter on Minnesota is enough to convince any skeptic that there are times when voter fraud not only exists but can be critical to the outcome of a critical race.

Read more:https://washingtonexaminer.com/york-when-1099-felons-vote-in-race-won-by-312-ballots/article/2504163

Aug 7, 2012 - 12:46pm

kids games

I recall a game I played with my best friend and our younger siblings--"Economy." We started out making counterfeit money--drawing as well as we could (both our dads were artists) and then started buying and selling our toys back and forth. It was a blast--for about an hour until our younger brothers figured out they could draw a 0 bill as easily as a . Not to be out done my friend and I started drawing 00 bills. But that was ineffectual against our keynesian little brothers who began mass producing 00 bills (I guess we didn't think there was anything bigger in 1969). The game just wasn't fun anymore and it collapsed as we threw everything in the trash and went outdoors to play in the pine forest of northern New Mexico. Those were the days! But who would have imagined that we learned all we needed to know about modern economics, collapses, and living off the land in an hour.

ClinkinKY
Aug 7, 2012 - 12:47pm

@ TF-Moonlighting

Ah, that "up and coming" actor Bruce Willis. Good series, unlike 95% of the crap today. Wonder if he ever made it big in movies? /s

ClinkinKYDoctor J
Aug 7, 2012 - 12:50pm

@ Dr Jerome---Kids Games

You're eminently more qualified than Ben Bernanke, based on this anecdote.

Physical_only
Aug 7, 2012 - 12:54pm

FYI.....interesting

https://www.caseyresearch.com/gsd/home

The U.S. Mint had a sales report. They sold another 1,000 ounces of gold eagles...and 585,000 silver eagles. Four business days do not a month make, but as of yesterday, the silver/gold sales ratio for August at the U.S. Mint was a bit over 117:1. I sure do hope you are getting your share, dear reader.

Aug 7, 2012 - 12:57pm

Updated gold chart

Looks helpful.

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