ChartDaddy Returns

203
Tue, Jan 8, 2013 - 1:36pm

This is way more charts than I've ever given you in one post. I hope you're ready.

For now, the metals are both being contained below their 200-day moving averages of gold at $1667 and silver at $30.82. So, while the metals continue in a holding pattern, I thought that today would be an excellent day to give you this massive update and, perhaps, make some general assumptions about 2013.

The problem with doing this is knowing where to start and how to put these into an order that makes some sort of logical sense. Since "logical sense" eludes me at this moment, I'm just going to dump them on you, instead.

First up, here are daily charts of the euro and copper. Note how closely they tracked each other through 2012. Actually, it would probably be more accurate to say "look how closely copper tracked the euro". Also notice how both declined in mid-December but recovered in late December.

Now look how closely silver has also tracked the euro in 2012. Note that silver fell in mid-December, too, but did not see the rebound that copper did. Hmmm. Is paper silver undervalued by 10%?

Next, let's look at the bond market. I've suggested to you that QE of $85B/month is not enough to fund the 2013 deficit, which looks to be in the $1.6-1.7T range. Falling prices/rising rates would also suggest that more Fed "support" is needed in the bond market. My guess is we'll see it soon...probably when the 10-year approaches the 127-128 level and the Long Bond is threatening to break down through 140.

Let's begin the currency discussion with the POSX. Remember and never forget that the POSX is simply a reflection of The Pig versus other rapidly-devaluing fiat currencies. The fact that the POSX is flat over the past five years only means that other global fiat have declined in value by an equivalent amount.

So, in that context, look at The Pig vs the yen. Yikes! Were you aware of this? We'll definitely need to watch this relationship over the next few weeks and months.

Another very interesting currency chart is the Swissie. From mid-2010 through mid-2011, the Swiss franc rallied almost 40% as it was perceived to be the final and only "safe haven" fiat currency. Well, the Swiss didn't like that too much as they keynesian-foolishly feared that a strong franc would wreck their economy. So, they did what all centrally-planning keynesians do, they devalued by pegging the swissie to the euro in early September of 2011. (Recall, too, that this left gold as the only remaining "safe haven" currency and it was carpet-bombed a full five minutes before the announcement was made and has been firmly held in check ever since.) Well, now, the swissie (and, by extension, the euro) has begun to form a massive, bowl-shaped bottom on this weekly chart. Hmmmm....could this foretell a POSX breakdown in 2013?

Let's now switch to crude, where a trading opportunity may be developing. (Full disclosure: Like most everything else, I missed the boat quite often in crude in 2012.) Look at these charts. A pullback to 91-92 would sure seem to present a buying opportunity for a move to 98-100. From there, a consolidation would paint the chart with a massive, cup-and-handle formation and would make the chart look like 115+ by mid year.

The old adage among grain traders is "buy on Valentine's Day and sell on Mother's Day". That strategy certainly looks like a good idea in 2013, too. The drought in the U.S. Midwest has not lessened at all this winter ( https://droughtmonitor.unl.edu/12_week.gif) so you can rightly expect some rapid gains this spring if the next growing season begins dry, too. I'll definitely be looking to dabble in beans next month, especially if price can fall a bit further, toward $13.

And this is interesting. Have you been to the market lately and thought, "Damn, that shit's expensive" when looking at steaks and burgers? If so, this next chart will show you why. It's a weekly chart of Live Cattle and note that since the advent of Quantitative Easing in 2009, beef prices have risen over 60%. Is your salary up by 60%, too? No? Hmmm...the major problem here is that soaring "protein" prices will ultimately lead to civil unrest, first in the 3rd world but, eventually, here in The West, as well. Watch this closely in 2013 as it has the potential to develop into a real problem.

And get a load of this next chart...Lumber. Apparently lumber didn't get the memo post-QE∞. Since mid-September, it's up over 40%. Permanently low rates means a housing recovery? I don't think so but clearly the lumber market does! Either this sucker rolls over soon or, eventually, a lot of other commodities are going to have to play catch up. Another chart to watch closely in the weeks and months ahead.

And, finally, here's the S&P. I guess we're all just dumb-as-a-box-0f-rocks for buying metal over the past four years when we could have been buying and holding stocks, instead. UP over 100% since the initiation of Quantitative Easing in March of 2009, more than just about any other paper "asset" and you get a dividend! Isn't it interesting that all of this money printing leads stocks higher than everything else? Gee, I wonder why that could be?

Perhaps THIS has a little something to do with it. Please take the time to read this very important and informative article from ZH. It's one of the most important things they've written in quite a while. https://www.zerohedge.com/news/2013-01-07/dear-steve-liesman-here-how-us-financial-system-really-works

And buried within that article is the paragraph near-and-dear to my heart and the hearts of all of Turdville. This is the mechanism through which JPM conceals their manipulative actions from the CFTC and everyone else:

"Now the JPM spin is well-known: the CIO was merely there to "hedge" exposure, as a direct prop bet would be illegal as per the Volcker Rule, not to mention the avalanche of lawsuits and the regulatory nightmare that would ensue if it became clear that the firm was risking what amounts to deposit capital to fund massive, highly risky prop trading bets. Which, when one cuts out the noise, is precisely what JPM did of course, especially since the "hedge" trade blew up just as the market tumbled in the spring of 2012, a time when it should have otherwise hedged the balance of the firm's otherwise bullish posture. That it did not do this refutes the logic that this was a hedge, and confirms that what JPM was doing was nothing short of using an internal, heavily shielded hedge fund, which had $323 billion in collateral as investable equity, to trade away, knowing very well no regulator would dare touch JPM."

OK, that's all for today. I look forward to reading your comments.

TF

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  203 Comments

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Mr. Fix
Jan 9, 2013 - 8:30am

@ Wizard

So, I'm just wondering, if they successfully repeal the 22nd amendment, does that mean that we could have back "Slick Willie" or "W"?

I know that is just a rhetorical question.

Obama's not going anywhere.

ClinkinKYWizard
Jan 9, 2013 - 8:22am

@ Wizard

Saw this earlier. It'll never work. "King Obama" just doesn't have the same "ring" as "King George". Now, "Ayatollah Obama"...hmmm

Green Lantern
Jan 9, 2013 - 8:21am

    BIG GOLD: Gold ended

BIG GOLD: Gold ended 2012 with a modest gain, in spite of plenty of positive catalysts. What will break the metal out of its trading range? What’s your expectation for when that will happen? What trading range do you see for gold in 2013? James Rickards: Gold will trend higher in 2013, but at a modest pace and with the usual volatility. The catalyst for a spike into the $2,500 to $3,000 price range will be an announcement by China, probably in late 2013 or 2014, that they have acquired 4,000 tonnes or more in their official reserve position. This will put China on an equal footing with the US in terms of a gold-to-GDP ratio and validate gold as the real foundation of the international monetary system. Once that position is validated, gold will move to the $7,000 range in 2015 and beyond. Any lower price level is deflationary and must be avoided at all costs by central banks. The key is that the US and IMF do not want gold to achieve its full potential price until China has acquired its appropriate “share” of official gold reserves. Any other outcome is unacceptable to China.
Wizard
Jan 9, 2013 - 8:18am

Well Boys and Girls

It's going to be a bumpy ride from here on out

They introduced legislation last Friday. Talk about looking desperate to hold on to the reigns of power

H.J.Res. 15: Proposing an amendment to the Constitution of the United States to repeal the twenty-second article of amendment, ...

...of amendment, thereby removing the limitation on the number of terms an individual may serve as President.

Introduced:
Jan 04, 2013 (113th Congress, 2013–2015)
Sponsor:
Rep. José Serrano [D-NY15]
Status:
Referred to Committee

The resolution’s title was written by the resolution’s sponsor. H.J.Res. stands for House joint resolution.

https://www.govtrack.us/congress/bills/113/hjres15#overview

Groaner
Jan 9, 2013 - 8:12am

Hey Kids

Have we turned the corner yet?

Looks like it.. but then again what do I know.

ivars
Jan 9, 2013 - 8:10am

What is happening? Trap for

What is happening? Trap for bulls? I heard of no news, except opening of Comex.

ClinkinKYMariposa de Oro
Jan 9, 2013 - 8:09am

Thanks Mariposa for introducing me to ...

...another "must read" author, Matt Bracken.

Brad Thor is not bad either

boatman
Jan 9, 2013 - 8:06am

the social security subject that has been brought up by someone

social security is 1/7th the coming problem of medicare.

social security is easily made solvent[or would be .......if TSHTF wasn't coming]

i am getting my social security.....and it, plus a little work i can scare up in this depression[boat business is DEAD-----momma will buy pools and motorhomes, hell small AIRPLANES before she'll OK a boat deal] is enough to live on---in my austere[compared to most] but happy life.....

it is my money they forcibly took from me..........and some of it the matching FICA funds from my employer..................when i had one 35 years ago, being self employed since.

i am taking it until the inflation adjusted principal will be GONE...........which will be until i die or LATER,actually.

it does not mean i'm a loafer or lazy...

they can KEEP their lousy stupid medicare....[and i understand the 10%/year penalty for not signing up for it at 65 if u sign up for it LATER].... i don't expect something [and it is NOT nuch....expect for car wrecks--- western medicine is 90% bullshit anyway] for nothing................that's 90% of the REAL entitlement problem.

17% of every dollar is now spent on health care[ridiculous in itself and mostly WASTED].............projected to be 33% in 15 years.........UNSUSTAINABLE.

social security is my confiscated money.

ivars
Jan 9, 2013 - 8:04am

@SRoche-Chart service

It is from within my trading platform,which is based on Saxo Bank Broker.

Mr. Fix
Jan 9, 2013 - 7:52am

Reply, Dear Mr. Security Agent by Mariposa de Oro

Thank you for posting that,

it took a while to read, but well worth the effort.

It would appear to be a well constructed essay on what to expect in the foreseeable future here in the homeland.

I agree, it is a very sobering read.

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