Birth-Death-ing Your Way To Prosperity

Fri, Jun 5, 2015 - 10:54am

As expected, the statistical guesswork of the BLS magically added 200M+ "jobs" in May. This has spiked interest rates and crushed the yen, which is now trading at levels not seen since 2002. What does this mean for the short-term future of the metals?

First of all, that nonsensical "birth-death" thingy. Again, based upon the statistical guesswork of past Mays, the BLS presumes that "X" number of businesses were started in May (birthed) and "Y" number of businesses were closed in May (death). They also presume the number of "jobs" gained or lost by these opening and closing business. The net number...the amount of guesstimated new jobs minus the amount of guesstimated job losses equals the "Birth-Death Adjustment".

For the month of May 2015, the BLS decided that the Birth-Death Adjustment was a whopping 213,000 "jobs". When combined with other new "jobs" discovered through their extensive <sarc> phone survey work, Hampton Pearson was allowed to breathlessly report "UP 280,000 jobs for May". And there you have it.

Because all of this "robust job growth" clearly signals a roaring US economy, everyone now is 100% confident that Mother Fellen is going to jack the Fed Funds rate 25 bps, perhaps as soon as this month.Up go US interest rates and The Pig. Down go all other currencies, particularly the yen.

And the yen, as noted above, is now trading at 13 year lows! WOW! Take a look at these two charts. The one on the left is just the last six months. The one on the right is the last 25 years.

In case you're wondering whether the all-dominating HFT algos still have gold and the yen tethered in a swirling ball of death, please observe the chart below:

However, in yesterday's podcast, we pointed out a couple of things:

  • the metals were getting quite oversold
  • the metals were approaching solid support areas just below $16 in silver and near $1170 in gold
  • the Specs rapid rotation back out of longs and into shorts, thereby "cleaning up" the CoT structure

Because of all this and the expected flush after the B/D-adjusted BLSBS, we thought there might be a tradable bottom made this far, so good.

After reaching all the way down to $1162, the August gold now has a last of $1169. Not a full FUBM but impressive nonetheless. Again, I'd just like to see us hold here and eek out a close back above $1170. July silver saw a low of $15.94 and it's back to $16.10. I'll take it! Why? Check these updated daily charts. If gold can hold here and close back above $1170, it stands an excellent chance of a "false breakdown" and reversal with a move next week right back into the $1180-1220 range that has contained it for nearly 90 days. Silver bounced from very near the trendline from the March lows and, if t can just come back a little farther and close today back near the $16.20 area, I think we can feel pretty good...all things considered.

Lastly, just a few words about the HUI. Every since the index hot that overbought peak a few weeks ago and proceeded to break down through its 100-day MA, we've been waiting for an oversold dip toward the 155 area that has been solid support. Well, with today's low of 158, I think we're pretty close. And look at how deeply oversold the RSI and MACD have become. The miners may not immediately spring higher from here but I don't think we have to worry about them falling dramatically lower, either. Nibble away, if so inclined.

Just two items to read this morning. First, Koos does his usual excellent job of clearing up the confusion raised yesterday by this article from Sputnik: The translation from Cyrillic to English must have added a few too many zeroes. Koos points out that, in the end, Russia is announcing that they plan to add about 400 mts of gold to their reserves. That's still A LOT and it certainly adds further pressure to the global physical market.

And last week's A2A guest, Alasdair Macleod, is out today with an update on his thinking regarding China and gold. You might find this interesting, too.

As I close, I have $1169 and $16.09. Watch those levels listed above and let's see how the week finishes out.


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lakemike49Doctor J
Jun 6, 2015 - 12:54am

dr. j

what can one say , except, this is why i come here. metals and people.

money is money and life is life. the bitch is you need some money to have some sort of life.

out of everyone you teach at least one has to hear you. if not why would we speak meatels.

keep posting. your friend.


Jun 5, 2015 - 5:11pm


intense, acute, keen, heartfelt, overwhelmingly brilliant. Thanks. Did I leave out refreshing?

Jun 5, 2015 - 5:10pm

A fine day for Pining ...

Not sure I'd cross that one off my bucket list. More old warbirds to ride.

My dad was crew chief on a B-24. As he put it, he fought the battle of Albuquerque, NM. Stationed out in the desert in the early 40's, training other crew chiefs on 24s. When he got out, there wasn't much he couldn't build if you gave him a torch, a welder and a pile of metal.

Some Texan A-6s are hangered at a nearby small airport. It's common to see anywhere from 2 to 5 of them on a weekend morning out for a "jog", flying in formation. Loud as hell. When I hear them coming, if I'm not outside already, I head out the door to watch. Just never get tired of it.

wax off

Jun 5, 2015 - 4:45pm

fix the money

  Image cannot be displayed

Jun 5, 2015 - 4:13pm


I have an 8 Day Elgin clock, which I am told is from the cockpit of a B17. It came out of England after WW II, and ended up owned by a friend, who gave it to me last year. His mother was in the RAF during the war, but don't know if she, or another obtained it. It was probably rejected from service because one of the mounting bolt flange holes is slightly broken. Upon closer examination, I notice the other 3 holes are worn, and elongated quite a bit. My 8 years in aero engine inspection lead me to deduce that this clock had been installed for quite a few hours of aircraft operation, and had vibrated loose, eventually breaking one of the mounting lugs.

I have no idea what to do with it, other than watch it gather dust. Also, in the 70 odd years since it was made, it appears to have been overwound....yes, not electric. No internal light either.

Jun 5, 2015 - 4:12pm

@Doctor J

Said with all due respect and admiration: kick a banker instead . . .

Have a great weekend.

Jun 5, 2015 - 4:02pm


are totally destroyed. No volume, no retail order flow, and no connection to reality. Fuck you Fed, fuck you government, and fuck you banksters. You have totally ruined the American dream and American family. There is a cold place in hell for you people. Rule of law and righteousness is gone. We are Israel just before they got exiled to Babylon. Sorry for the grimness but watching this shit is depressing.

Jun 5, 2015 - 3:57pm

Last COT report

Still a lot of shorts. Report 3 days old as usual. They have probably covered some shorts. But they really need to engage more momos, so they will probably try to make a rejection next week at the old support level. I think we are not done in this scam. These fuckers think they have plenty of time to cover. The Fed has just sent a big fuck you to congress in their subpoena attempt today.

They are the market, they make the rules. For now.

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Jun 5, 2015 - 3:38pm

Familiar vs Unfamiliar Right vs Wrong

The system is starting to come unglued.

Folks in Silver and Gold should be of good cheer!! "yay"

but some are not... "boo"

why "boo"? Because they find security in the familiarity of the system.

The more the system shakes, the more intently they focus on it. Still looking for security in the familiarity of the system while the whole thing dissolves around them.

The system is dying, the security of all the old "market" culture stuff is dying. And "boo" is being heard from those who are now being forced to deal with the reality of the system in it's death.

DENIAL- This can go on for ever, nothing is going to happen.

ANGER- I hate these sons-a-bitches who are "manipulating" these "markets"

BARGAINING- Let's go back and do some paper trading... yeah, we'll go back, that old familiar place in the system.


ACCEPTANCE- Only Silver and Gold are Money


The system is stampeding the herd and is going to offer them a grand solution. Whether it's a Yuan centered system or BitGold/BitCoin or whatever it might be. They are going to play on the fears of all those who are feeling lost and running scared in unfamiliar territory.

I encourage folks to let the system die alone, and to get firmly positioned in Silver (and Gold). Even if it might seem unfamiliar, it's the right position. Besides, the old wrong road of false security is ending anyway.


Jun 5, 2015 - 3:37pm

Being on KWN...

doesn't help Andy's credibility.

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