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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tyberious
May 14, 2013 - 12:04pm

Russia's Plan For The BRICS

Russia's Plan For The BRICS To Dismantle The Dollar System

https://www.testosteronepit.com/home/2013/5/12/russias-plan-for-the-bric...

n Russia, politics are Byzantine; the fact that the Kremlin decided not to hide the document or leak it to a chosen few journalists, but publish it outright is a very strong signal, a very vocal angry signal directed at the US. A signal that the Western media chose to ignore.

In the recitals section of the document, the authors point out that “there is a common desire of the BRICS partners to reform the outdated global financial and economic framework that doesn’t take into account the growing economic weight of the emerging markets.” Moreover, the Russian strategists view the BRICS as a tool to reform the way the world is being governed. Then the document hammers home its message:

Russia assumes that, given enough political will of the leadership of the BRICS countries to advance their cooperation, this alliance can become one of the key elements of a new system for global governance, primarily in the economic and financial domains.

Move aside New World Order! The BRICS are coming to change the world.

The goals are clear. In the section titled “Strategic goals,” the first point on the BRICS’ agenda is the reform of the world financial system in order to make it “fairer, more stable, and more efficient.” In the later chapters, it is spelled clearly that this “reform” is actually a dismantling of the dollar system.

It is worth noting that the place of this issue in the list of the BRICS’ priorities speaks volumes about its importance. Judging by the order of priorities, depriving the dollar of its status as the world reserve currency is more important than “preventing breaches of sovereignty” (a.k.a. the “Syrian problem”) or “expanding economic cooperation.”

The language used in this document indicates that it has been written or strongly influenced by Sergei Glaziev, the president’s economy advisor, who is known for masterminding the economic aspects of the Eurasian Union between Russia, Belarus, and Kazakhstan. Glaziev has repeatedly accused Fed Chairman Ben Bernanke of starting “a currency war” against the emerging markets. He also believes that Bernanke’s policy will ultimately lead to a military confrontation: “the conservation logic of the current financial and political system leads to a further escalation of military and political tensions, including the start of a major war” (read more).

A whole chapter of the strategy document is dedicated to step-by-step instructions on dismantling the existing global financial system. The list of measures includes:

  • Reformation of the world currency system in order to create a representative, stable and predictable system of world reserve currencies;
  • Reduction of the risks of destabilization of currency and equity markets linked to massive cross-border flows of capital;
  • Increasing the use of national currencies in the trade between BRICS countries;
  • Increasing the level of cooperation between BRICS countries in order to promote their interest in the domain of world trade;
  • Strengthening the BRICS Exchange Alliance;
  • Creating independent rating agencies.

Since the Durban Summit, at least one of those measures has been implemented: RT reported that “China’s Dagong Global Credit Rating agency is to set up the joint venture with US-based Egan-Jones Ratings Co (EJR) and Russia's RusRating JSC to challenge the three major US ratings agencies.” As BRICS countries try to achieve the rest of their stated goals, it remains to be seen if the dollar system survives the joint onslaught of the biggest emerging economies. By Valentin Mândrăşescu, author of the pungent article on the inner machinations of Russia.... Cyprus: A Triumph For Russian Isolationists

Keep Stacking!!!

treefrog
May 14, 2013 - 12:03pm

thanx turd

nunth!

thanks for the macro view. i got into silver just after y2k. i have plenty of time to wait. weekly charts? monthly charts? bring them on. they look pretty good from here. imo, this pm bull has AT LEAST another ten years to run. if you price it in dollars? that night get problematic. not for the pm's, for the dollar. might need to adjust/recalibrate the metrics of the charts if uncle buck crashes and burns.

Mickey
May 14, 2013 - 12:03pm

"You can't build catalytic converters with paper palladium"

Nick Barisheff in an interview with Gregg Hunter USA watchdog.

cpnscarlet
May 14, 2013 - 11:54am

Top ten

Because time is shorter.

Ccanuck
May 14, 2013 - 11:53am

A Thurd at Turd's

I am mostly a lurker, however I must state that the information here is incredibly diverse.

There have been statements made about echo-chambers, and like-minded people just re-enforcing the same position.

Mr.Fix makes excellent points about trolls not standing a chance, and the diversity that is offered from many different people in relation to any number of issues dealing with the end of this experiment.

I come here for that diversity, for the difference of opinion, and for Turd's insights, information, and interviews.

Most of all I like that the Trolls do not stand a chance here, they are identified quickly,

Anyway, Keep up the great work Turd and all contributors, you provide a Fantastic Site!

Thank you to everyone in this online community.

Ccanuck

SilverSurfers
May 14, 2013 - 11:49am

come

back kid, never count the ho out, HI HO SILVER!!!!

with a top ten turder, yeah baby!!!

Grublux
May 14, 2013 - 11:48am

Top Ten

A rarity nowadays!

Wallace Hartley
May 14, 2013 - 11:43am

"I plee da fif!"

Personal best...FIF!

The Doc
May 14, 2013 - 11:41am

First 1st?

First 1st?
Guess not..close though!
Silver looking good today off this morning's bottom. Classic FUBM...back squarely in the last 2 week's trading range.

-Doc

Arjen
May 14, 2013 - 11:40am

4th

4th

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