A Broader Perspective

525
Tue, May 14, 2013 - 11:37am

Time is short but I do have something interesting for you to consider today.

Look, there's a lot going on that will make tomorrow's gold (and silver) "market" different from yesterday's. Regardless, I still believe it's useful to look at yesterday's market in order to forecast where we might be going based upon where we have been.

Today, we're going to look at the Continuous Commodity Index. https://en.wikipedia.org/wiki/Continuous_Commodity_Index. Here's a little background info from the Wiki page:

"The 17 components of the CCI are continuously rebalanced to maintain the equal weight of 5.88%. Since CCI components are equally weighted, they therefore distribute evenly into the major sectors: Energy 17.65%, Metals 23.53%, Softs 29.41% and Agriculture 29.41%. While other commodity indices may overweight in certain sectors (e.g. Energy), the CCI provides exposure to all four commodity subgroups."

So, first, let's look at a 25-year chart. Some of you may not even have been alive at the start of this chart. Personally, I was just graduating from college and chasing my then-sweetheart to San Francisco. (That's an interesting story but we'll save it for another day.) The point is: This chart covers a lot of ground and time. Therefore, it is to be respected.

Notice that for the first half of the chart, the action is sideways. From 1988 to 2002, the index fluctuated in roughly a 50-point range. Though there was some action in individual commodities from time to time, overall the sector was a real yawner. The sideways action actually goes back even further, to the early 1980s, when interest rates were raised to choke the money supply and curb inflation. So, for roughly 20 years, commodities in general sucked.

Then what happened? The debt-induced easy growth of the 90's finally popped in 2001 and it has been off to the races for commodities ever since. Sure there have been pauses and corrections along the way but there also been periods of blowoff, parabolic rallies, too. In the end, though, the trend has remained. Here, see for yourself:

So now let's look a little closer. On the five-year, weekly chart below, you can see where we currently stand. Of course, I've tried to draw the trendline as accurately as possible but it's impossible to show exactly where it currently lays. Needless to say though, we're pretty much right on top of it. So there are three things to consider:

  1. First and foremost, is this 11 year bull market in commodities over? Did commodities go sideways for 20 years only to have a bull market end after just 10 years? Look at it another way...Have the fundamental conditions which prompted this bull market changed? Are the Fed and other central banks about to embark on a Volcker-esque tightening spree?
  2. Could commodities in general (and, by extension, gold and silver) bounce and rally right here and right now, just like they did the on the last two occasions they encountered the main trendline in late 2008 and mid 2012?
  3. Are commodities about to over-shoot again, similar to the circled area on the monthly chart above? If so, could a final drop toward 500 or even 475 be in the cards? IF that were to happen, what would be the short-term impact on the price of gold? Of silver? Would you finally capitulate/panic and sell or will you rely on your answers to the questions posed in point #1 above?

OK, gotta stop there but that should give you plenty to think about and discuss for a while. Have a great day and let's hope that CIGA BoPolny/BoPelini/BoDiddley/BoJackson is proven correct.

TF

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Southern Cross
May 14, 2013 - 5:01pm

Proud To Be Called A Terrorist -

Founding Fathers

The Founding Fathers were a group of well-educated men who led America in the early stages of her history. These men risked their lives for the freedom of Americans. This began with achieving independence of the thirteen colonies from England, and continued on with the formation of a government for the new nation once the Revolutionary War had been won.

As for specific people, the Founding generation included: Benjamin Franklin, George Washington, Thomas Jefferson, James Madison, John Adams, Alexander Hamilton, Samuel Adams, Patrick Henry, John Hancock, Thomas Paine, Roger Sherman, John Jay, James Wilson, and Gouvernor Morris. It would be impossible to construct a list which would be accepted by all historians.

If one considers any of the people who participated in the forming of this Republic or of evicting the King to be "Founding Fathers," then naturally the Framers of the Constitution are a subset of the Founders, since they gave us the format and structure for the Republic. Of course, the number who might be deemed Founding Fathers would be larger than the list of Framers, a case in point being Thomas Jefferson and John Adams, who were not present at the writing of the Constitution, but were surely Founding Fathers.

The first US war on Terror. The American Revolution.

The Watchman
May 14, 2013 - 4:51pm

US Mint UPDATE-658,500 More ASE's Sold

2013 Gold Sales Totals
(in ounces / number of coins)
Month One
( oz. / #coins )
Half
( oz. / #coins )
Quarter
( oz. / #coins )
Tenth
( oz. / #coins )
Total
( oz. / #coins )
January 124,500
124,500
8,500
17,000
6,000
24,000
11,000
110,000
150,000
275,500
February 68,000
68,000
2,500
5,000
3,000
12,000
7,000
70,000
80,500
155,000
March 54,000
54,000
2,000
4,000
2,500
10,000
3,500
35,000
62,000
103,000
April 187,500
187,500
7,000
14,000
6,500
26,000
8,500
85,000
209,500
312,500
May 25,000
25,000
500
1,000
0
0
0
0
25,500
26,000
Total 459,000
459,000
20,500
41,000
18,000
72,000
30,000
300,000
527,500
872,000

[Top]
[American Eagles Bullion]

2013 Silver Sales Totals
(in ounces / number of coins)
Month One
( oz. / #coins )
January 7,498,000
7,498,000
February 3,368,500
3,368,500
March 3,356,500
3,356,500
April 4,087,000
4,087,000
May 1,558,500
1,558,500
Total 19,868,500
19,868,500
AlienEyes
May 14, 2013 - 4:43pm

Jon Stewartstein

Until I watched your Jon Stewart clip, I wanted to see him "dipped in shit and set on fire."

Since seeing the aforementioned clip, I might have been a bit harsh with regard to mister Stewart.

I now feel that perhaps the "dipping in shit" is not necessary and that perhaps a "dipping in napalm" might be ok with the new, more liberal, me.

robov
May 14, 2013 - 4:40pm

Apparently...

Bo don't know either. Didn't he say May 10 - 13 would mark the low? So what happened today? The relentless naked paper selling as REAL PHYSICAL SUPPLY continues to dwindle daily sure does wear on a man.

wouldyoubelieve...
May 14, 2013 - 4:39pm

ballyale

https://www.skynews.com.au/offbeat/article.aspx?id=872062

don't laugh, they're saying we should eat bugs to help ease food shortages

csquared13TF
May 14, 2013 - 4:30pm

Reponse to Watchman and Turd

Could it be related to that statement that was made from their trading floor last month? When they stated they were bringing in gold from London and Switzerland?

I'm sure some Turdite has that link handy...maybe it was a floor trader or director at the shanghai exchange that was interviewed? May have been on bloomberg, but sure that it was on ZH too.

wouldyoubelieve...
May 14, 2013 - 4:29pm

this administration is on a kamakazi mission

you got Jay "Baghdad Bob" Carney

Janet "hollow(point) head" Napolitano

Eric "I never met a Constitution I couldn't shred" Holder

Hillary "what does it matter?" Clinton

and Barry Obama as the Beaver

The Green Manalishi
May 14, 2013 - 4:28pm

Bloke I know....

...works for JP Morgan in Bournemouth, came to my wedding - quite high up in his field by all accounts, announced that he had just cashed in all his shares. Wouldn't say why.

No more than that, just reporting.

Edit: Mind you he is as camp as a row of pink tents, so he might be just funding a set of Judy Garland DVDs.

achmachat
May 14, 2013 - 4:24pm

Gold Dog

you might want to add the crown jewel of the STASI way:

SEE SOMETHING, SAY SOMETHING

Gold Dog
May 14, 2013 - 4:20pm

Random thoughts from the den

- I am becoming more uneasy, (If such a thing is possible), over the behavior of the U.S. Government. This IRS business targeting Conservatives and the snooping at the phone records of the A.P. reporters reminds me of KGB or Stasi tactics. It only increases my respect for my friends who are going to D.C. for Independance Day and makes my think a little more about joining them.

- This abortion guy should have his eyes poked out! Killing babies! wtf??

-My Daughter graduated on Friday and we had a great dinner party in the city. If you fall into the clutches of young people, be careful. We were out carousing until 5:30 in the morning. I am just now getting back to normal.

-Those of us in Turd's Army, (TWATS), know that Paul predicted the S+P 500 of 1560, right where it topped out today.

-I haven't counted ticket stubs but believe that I will be attending my 40th Indy 500 this year.

- The G7 meeting this weekend is more ominous that we are crediting it with.

Hugs not drugs....unless your knee really hurts, then both.

Peace out,

Dog

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