Back At It
Ole Turd is back in the saddle with several burrs poking his rear end. More on that as we go through the week. For now, let's just try to get our heads screwed on straight.
There is so much shit going on, it's hard to know where to start. The MOPE and SPIN following the ridiculous BLSBS data from Friday continues and the stock market levitates. The Nikkei continues the "Calvin" bounce I projected three weeks ago but that will likely run its course in another 500-1000 points. The U.S. bond market is in complete disarray and Friday saw the largest jump in mortgage rates in years. And the MENA is on the verge of total chaos. Wow! Again, where to start?
Let's start in the Middle East where, to no surprise, the Brothers ain't taking last week's events too well. Watch this situation very closely as it could very easily spill over into other countries. The Muslim Brotherhood has been around for a long time, they are very well organized and well funded and will not take this major setback quietly. Keep an eye on crude as it will continue to be your tell.
And if the global economy is as strong as CNBS and Bloomberg would have you believe, why is copper looking so terrible? Take a look at the chart below. Does it not resemble the gold chart from earlier this year? So what do you suppose will happen if suddenly copper is trading with a number that starts with "2"? Could we see a 2008-like waterfall? And if so, what else do you recall happening in 2008?
And the bond market is an absolute disaster. However, look what I found when reviewing the weekly charts. Note that, in the months that followed both QE1 and QE2, the Long Bond sold off between 15 and 20 points before turning and resuming the now 30-year rally. Are we at this point again? Probably. As stated here ad nauseam, The Fed cannot allow higher rates and mortgage rates have risen by over 30% in just the past month. http://www.nypost.com/p/news/business/hold_on_mortgage_rates_to_rise_again_7bPZTKa4lsfMY8YuJvU6dK
So, anyway, where does this leave the metals? WTFK? The Cartels are still granting the paper momo-chasing specs complete control and no bottom appears to be in sight. One could appear any day but it will only be visible in hindsight. For now, the proper strategy is continued, regular accumulation of physical. Though the last 9 months have been painful to say the least, none of the underlying fundamentals have changed. The world is still awash in debts that it cannot repay without continued currency devaluation.
Speaking of silver, I was thinking over my vacation about this long-forgotten post from a guy that I used to consider a friend. The topic that day was "commercial signal failure" and that was a term being bandied about quite a bit in the heady days of early 2011. Go back and review this again and then ponder the current chart of silver. Did we, in fact, see a commercial signal failure in March and April of 2011? http://traderdannorcini.blogspot.com/search?q=commercial+signal+failure
Finally, we have to spend a few more minutes discussing the GLD today, which is now down 387.93 metric tonnes year-to-date, from 1,349.92 to Friday's 961.99. That's a staggering 28.74% of "inventory" which has been removed...in just 6 months! We're told that this is due to "investor redemptions as money is allocated away from the precious metals sector". OK. Fine. But if that's true, how do you explain away the fact that the SLV is only down 33.50 metric tonnes year-to-date? The SLV "inventory" was 10,084.96 metric tonnes on 1/2/13 and, as of Friday, it rests at 10,051.46. Hmmmm. Curiouser and curiouser.
To put this into proper perspective, now consider this: 33.50 metric tonnes of silver is 1,077,050 troy ounces which, if cast into the standard 1000-ounce Comex bar, would yield 1,077 bars. If we stacked those bars onto pallets of 192 each, like we do with our gold bars, we'd have about five and a half pallets. If you imagine these pallets as silver instead of gold, it would look like this:
However, the GLD has shed 387.93 metric tonnes. This is 12,472,239 troy ounces. Casting that much gold into the standard 400-ounce, LBMA bar would yield 31,181 gold bars which, if stacked 192 to a pallet, would give us over 162 pallets.
Now, there are some lunatic fringe websites out there, run by egomaniacal anonymous bloggers with over-developed messianic complexes, which frequently state that this gold is being used to settle an insatiable demand from China, which plans to one day soon back its currency with gold and offer it to the world as an alternative reserve currency. Again, though, this is just crazy talk. The fact that now even The Bundesbank (The Central Bank of Germany) is mentioning the inevitability of renminbi/yuan superiority is, of course, hardly noteworthy. Just more lunacy from the tinfoil hat crowd. http://www.bundesbank.de/Redaktion/EN/Kurzmeldungen/Current_issues/2013_07_03_nagel
Anyway, as I close, I see that the metals are actually UP today. Wow! Let's see what tomorrow brings. In the meantime, please be sure to check back later as I will have some thoughts and analysis of last week's CoT, once it's finally released this afternoon. Until then, have a great day!