Not So Happy Tuesday

171
Tue, Jun 4, 2013 - 1:57pm

Lots going on today and I'm off to a late start so let's dive right in.

First, let's talk about the price action today. After the surprising rally yesterday, I asked you to watch the Asia and London trade for clues to the Comex action today. What did we see? After a flat Asian session, the London Monkeys did their usual thing from about 2:00 am EDT on. The London Monkeys have now acted on 14 of the past 17 days. Check this chart from Ranting Andy:

The result was a giveback of more than half of yesterday's gains.

Why did we see this? Hard to say for sure but, with volume light ahead of the BLSBS later this week, I suspect that a lot of this was some Bullion Bank selling that was aimed at lessening some longs ahead of the CoT survey. No doubt the action since last Tuesday is a continuation of the trend of last week's report. Therefore, the banks tried today to lighten a few of the longs they had built up over the course of the week. This also serves the dual purpose of defending the 20-day MA and restoring some confidence to some of the shaky spec shorts. At any rate...we're down a modest $13 as I type. Let's see what tomorrow brings.

Speaking of the CoT, there has been some excellent analysis written in the past few days so I thought I would highlight some here. Again, the positioning of the Commericals vs The Specs has gotten so extreme that it has reached historic levels. Ultimately, how you interpret this depends upon just whom you think is really in charge. Is it The Specs or do The Cartel Banks lead The Specs by the nose into whichever position they would like? Let's start with longtime CoT-watcher Gene Arensberg: https://www.gotgoldreport.com/2013/05/gold-and-silver-disaggregated-cot-report-dcot-for-may-31.html

Next, read this link over at KWN: https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/4_This_Amazing_Chart_Shows_Gold_Set_For_Massive_$1,000_Spike.html. While we might disagree that this chart alone shows that "gold is set for a massive $1000 spike", the interview is helpful and in contains this excellent chart. (Click on it to enlarge.)

Reading that article inspired the Turdite "WildStyleChef" to create the chart below. This shows graphically how Commercial positioning is inversely correlated to price. (Again, click to enlarge.)

OK, moving on. I found this to be interesting. Recall that when the Dutch bullion bank, ABN AMRO, announced their plan to settle in cash a few months back, many of us called it a default. https://www.tfmetalsreport.com/blog/4667/gold-delivery-or-default This article published Friday follows along with that theme. I don't know anything about the author but that's OK. He probably doesn't know anything about me, either. https://www.jcaschipper.nl/2013/05/nationalized-abn-amro-offers-fools-gold/

Still lots of talk out there about Fed QE "tapering". Again, I think is all silly and it may be a non-topic as soon as Friday at 8:31 am. Regardless, as mentioned last week, even if The Bernank was to announce some type of "taper", it would likely come from the $40B/month MBS-purchase side of the QE∞ equation. The Fed could still monetize $45B/month in treasuries directly while cutting the Primary Dealer kickback life support handout welfare bullshit MBS purchases to $20B/month. This would still be $65B/month in QE and silence all the hawks. Not saying that it will happen, just saying that even if it did, it's no big deal! $65B/month is still nearly $800B/year in fresh greenback, created from whole cloth for the purpose of sustaining The Great Ponzi. Read more at ZH: https://www.zerohedge.com/news/2013-06-04/chart-day-feds-taper-perspective And here's how it looks graphically:

Finally, I don't know if you've noticed but lately there sure have been a lot of big mines that have been taken off-line.

So, now, what to make of all this? Well, if you believe that everything is hunky-dory and that there are no supply issues in gold, then this is no big deal. After all, even though The Grasberg mine is the largest in the world, it still only produces about 30 metric tonnes per year or a little over 1% of all global mine production.

If, on the other hand, you think that the Bullion Banks are living hand-to-mouth and frantically trying to keep their Fractional Reserve Bullion Banking system alive, then it is a big deal. A very big deal.

That's a lot of gold...a lot of currently anticipated and expected supply that isn't coming. How much of this production was already sold forward into the market? And if it was already sold forward, what happens when it fails to materialize on schedule? Hmmmm. Could that lead to those contracts being covered? Could it lead to some new long purchasing as a hedge against supply delays, not only from the suppliers but from the end-users, as well? And with the current CoT structure in gold being akin to an overgrown and dried out California ravine just waiting for a spark...

Let's just leave it there for today. I hope that the rest of your Tuesday goes well and I look forward to seeing what tomorrow brings. Again, if I'm right about the cause of today's drop being Cartel CoT-positioning, then we should see a bit of a bounceback on the Globex and overnight.

TF

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  171 Comments

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Charles S. Hamlin
Jun 4, 2013 - 9:52pm

A picture is worth a thousand words...

This will soon be represented in US Dollars...

Ojibwemowin
Jun 4, 2013 - 9:50pm

Two perspectives

The first perspective is from my parent's financial guy and his regular missive to investors:

Three Year Twelve

May Months To Date Months

Dow 30 + 2.37 + 8.35 +16.81 +25.20

S&P 500 + 2.36 + 8.29 +15.28 +27.09

NASDAQ + 3.82 + 9.36 +14.45 +22.23

Russell 2000 (Small Companies) + 3.93 + 8.09 +15.99 +30.77

Vanguard Europe ETF + 0.02 + 4.41 + 5.18 +33.92

IShares Emerging Markets ETF - 4.83 - 4.65 - 7.10 +11.29

iShares Japan ETF - 7.35 + 6.17 +11.18 +24.25

Vanguard Total Bond Market ETF - 1.93 - 0.85 - 1.01 - 0.30

SPDR Gold ETF - 6.20 - 12.47 - 17.34 -11.67

SUMMARY:

Possibility of a summer of flat to lower stock prices. Prices likely will be higher before yearend.

Despite limited short-term vulnerability in the stock market and because the potential for multi-year growth is significant, staying fully invested at this time is advisable.

Portfolio model is now more weighted toward Cyclical versus defensive stocks.

He goes into a lot more detail, but I don't want to get into his proprietary elements.

The second perspective is that of my wife's father. We have been gradually helping he and my mother in law move over the past few weekends. They are in their 80s and moving from their lake home here in MN to a smaller one level living arrangement.

It came time to tackle his safe on Saturday when we discovered that it could not be easily moved on the hand truck unless emptied. We carefully helped him put his stack into separate boxes for the move. The sheer weight was impressive, not to mention the gleam in his eyes as we beheld his diligent efforts over at last four decades to protect his family from dollar devaluation. He holds his stack forever and is quite happy to pass it on to his children. This is the person who was talking in "turd parlance" before most of us here had any idea of what was going on or would have been able to fully comprehend what he was talking about. He advised me a few times to buy gold when it was under $300 an ounce. He is a die hard constitutional conservative and highly decorated US Air Force pilot, with a purple heart earned while flying helicopters in Viet Nam. Lets just say he is the ultimate salt of the earth Christian man and I admire him greatly.

The tale of the two views reveals stark differences, and I fell blessed to have regular influence from both sides. Both have been right at times during my lifetime, but the later view will ultimately be validated as a result of natural physical law, as well as from the assured outcome of the earthly battle we all are in contact with, yet may not be resolved to satisfaction within our lifetimes. So I think it wise to hedge both sides if you can swing it. If I had to choose one, I would pick the later perspective on principle alone. Personally I bend toward the latter, but due to realities of my father's estate, my own 401K and pension, I am in fact, somewhat ambivalently "dancing with the devil. "

The Watchman
Jun 4, 2013 - 9:34pm
¤
Jun 4, 2013 - 9:29pm

More Stratego....Jordan

France says tests prove Syria used nerve gas; U.S. sends Patriots to Jordan

By Suleiman Al-Khalidi

AMMAN - France said it had performed tests that proved President Bashar al-Assad's forces had used nerve gas in Syria's civil war, a "red line" that the United States and other countries have repeatedly said would demand a response. Full Article

The Watchman
Jun 4, 2013 - 9:29pm
The Watchman
Jun 4, 2013 - 8:52pm
Just A Regular Guy
Jun 4, 2013 - 8:51pm

I assume this has been posted - McAlvany

It's a great interview with Dave and his dad Don!

Don McAlvany: The Great Gold Robbery | McAlvany Commentary

¤
Jun 4, 2013 - 8:45pm

Informational purposes only?

Is that like a medium and for entertainment purposes only?

Sooo....it's based on nothing or something?

Powerman 5000 - Nobody's Real

Nothing is as it seems....I think we've realized that for awhile now. Consider the source of the numbers and why they might be misleading and why some things don't make sense at times when it appears they should.

Is it possible the numbers are intentionally misleading with many interpretations or variables purposely available and that they're based in a somewhat believable pattern? You bet.

Investor psychology comes into play here, no question. The urge in humans to want to recognize, believe or discern patterns can't be understated. TPTB know this.

Video unavailable
Occasnltrvlrالقراع عصفور
Jun 4, 2013 - 8:39pm

@Dryocopusus pileatus, re: From Fidelity

Thank you for this.

I have a guess about why they'd be sending this out. The Oversight Committee legislated by Dodd-Frank recently notified the non-bank institutions which they've chosen to call out as "Systemically Important Financial Institutions".

I'm guessing (only guessing, mind you) that Fidelity was fingered, and they're front-running the public relations materials to minimize any potential backlash.

Utilitarian
Jun 4, 2013 - 8:38pm

@ RaRaRasputin - The link for channel 4 gives error msg

Thanks for attempting to post a link so we could watch the show, but I received a msg that it was not available in my area. If you know of another way to post a link it would be appreciated. Sounded like an interesting show.

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