Top o'the mornin' to everyone in Turdland. As we get the week started, I thought it best to refresh the charts.
Let's start with the metals. As discussed last week, gold was being actively penned below 1620. We finally moved through that level on Friday but, after tripping only a few stops up toward 1630, have since fallen back. The question now is: Can 1620 act as support and a springboard for our next move? The goal now is to finally break out of this 3.5-month range by getting above 1635-1640. From there, we'll head off to fight the major battle at/near 1670.
Though gold has been able to get above 1620, silver has not been able to break its cap at 28.20. This is curious to me and suggestive of additional new shorting in order to contain price. I've often mentioned how odd it was that total Comex silver OI had ranged between 121,000 and 124,000 for nearly six weeks, from 6/28/12 to 8/3/12. The open interest finally broke out of this range on 8/3, just as silver rallied from near $27 to $27.80 and began pressing up against 28.20. Total OI as of last Thursday is now 125,491. To me this is simply adding fuel for the inevitable short squeeze.
Crude is bubbling up again this morning and I expect that to continue now that the quadrennial utopian love fest has concluded in London. Just a reminder that all is not well: https://www.debka.com/article/22271/Iran-can-build-an-N-bomb-by-Oct-1-Cairo-coup-hampers-Israeli-action
And just a few words about the grains. The much-anticipated USDA report from Friday has become a "buy the rumor, sell the news" event. This is not surprising as corn had rallied 40c in the 24 hours leading up to the report and beans had gained 80c. They are now down sharply in the hours since. This is fine with me. I spent the weekend driving all over the American Midwest and let me tell you...the drought is horrific. Only well-irrigated crops look anything close to "normal". Non-irrigated or "dry-land" corn is mostly dead. (And not in the Miracle Max sense. I mean simply that most of it is 100% dead.) Much of it is already being chopped down in order to use it as silage for livestock...the only use left for it. IF we can continue to chase some of the hot money back out of corn and beans and IF they can fall a bit further, I will definitely be looking to buy. The damage is done and crops estimates will only go lower as we head to harvest. Again, if you're looking for a simple way to participate in the carnage and hedge your personal food costs, take a look at the "DAG" or any similar, agricultural ETF.
Just two other items from the weekend. First, Sprott Asset Management is out with their July newsletter:
And Alasdair Macleod of GoldMoney has a short piece you should read, too:
That's all for now. I hope to have more later.