Gold And Silver Price Drop To Critical Fibonacci Levels

The Fed decided to keep the ‘considerable time’ pledge until the first rate hike in its statement on Wednesday. This boosted stocks, sending the Dow and S&P to fresh record highs. The dollar bulls were also satisfied with the so-called ‘dot plot’ of Fed members’ forecasts for interest rates edging higher. As the dollar and stocks continued to strengthen, so too did the pressure on commodities priced in the US currency. And so as another week draws to a close, both gold and silver are once again falling.
The sell-off has forced the metals to break below some key technical support levels. As a result, fresh sell orders have been triggered which have thus exacerbated the sell-off. In fact, silver has just broken below the 2013 low of $18.20 and at the time of this writing, it looks like more losses are on the way for the grey metal.
For silver, the next potential support is around $17.75/80, a level which corresponds with the 127.2% Fibonacci extension of the last major upswing. The 161.8% extension of that move comes in way down at $16.75. Worryingly for the bulls, the metal has also created a ‘death crossover’ which is another bearish development. This crossover occurs when the 50-day moving average drops below the 200-day SMA.
The bulls will be hoping that the metal may bounce back off its lows and close the day above where it had opened or ideally at an even better level. If that were to happen, it would indicate that there was lack of supply below $18.20 and we would potentially have a false breakdown reversal pattern on the cards. As we go to press, the chances look slim for this scenario, but it is nonetheless a possibility.

This post was published at GoldSilverWorlds on September 19, 2014.

The Silver Paradox In One Chart

As gold and silver prices tumble to multi-year lows, an odd thing is happening in the ‘paper’ precious metals ETF markets. Demand remains high for silver ETF exposure as ‘someone’ is aggressively unwinding gold ETF positions.. and yet the prices for both are falling rapidly. It appears the retail investor is taking advantage of the lower prices in silver to accumulate additional exposure as Credit Suisse notes, “the perception is that silver will do well, and should outperform gold as the economic recovery strengthens,” adding that “belief in silver’s dual properties, as a financial asset and also as an industrial metal, appears to remain strong.”
*SPDR GOLD HOLDINGS TUMBLE 1% TO 776.44 TONS, LOWEST SINCE 2008

This post was published at Zero Hedge on 09/19/2014.

Monetary Policy Killing the System

The byline should read MONEY VELOCITY HITS RECORD LOW, WHILE MONEY SUPPLY CONTINUES TO GO INTO ORBIT… SYSTEMIC FAILURE IS EVIDENT AS POLICY IS NOT STIMULUS AT ALL… THE PRINCIPAL CAUSE FOR THE BREAKDOWN IS MONETARY POLICY, WHICH IS STUCK IN PLACE.
The USFed monetary policy is killing the system, simply and boldly put. They call it stimulus, when the extreme accommodation is actually just a backdoor Wall Street bailout combined with a pass on the USGovt debt discipline. No debt limit is enforced anymore, a travesty. The United States is looking more like a Third World nation with each passing month, with colossal fraud, economic decay, war and sanctions, and no leadership. The US Federal Reserve has ventured into very dangerous ground, putting hyper monetary inflation as the installed policy, while making money free for the Interest Rate Swap machinery that operates the derivative for maintaining the easy policy. So foreign creditors have largely exited the room, with no great entities to finance the yawning annual $trillion debt. So derivative machinery is relied upon to maintain the absurd 10-year USTreasury (TNX) yield at 2.60% without buyers. So asset markets like the US Stock Market go to monthly new high levels, despite the USEconomy mired in the worst recession since the Great Depression. The visible piece is shopping malls with one third of stores shuttered, and the jobless rate over 22% in the real world without rose colored glasses. These conditions cannot be sustained, especially since the credit machinery is all jammed. The big US banks are insolvent structures dedicated to the bond carry trade, where that same cheap money is used to invest, often with leverage, in the long-dated maturity USTreasury Bonds. The banks serve the casino, not the business sector.
STUCK MONETARY POLICY
In no way can the current easy money policy be reversed, and put into a normal mode. In no way can the accommodation be tapered. The entire Taper Talk is a lie, and always has been a lie. The Jackass called out the USFed last June and July, and was proved correct by September. Since that time, the USFed has been lying vigorously and creatively. The Belgium Bulge showed itself as a $400 billion abscess visible to the world, hardly a real savings account by the small nation. It was either a Hidey Hole for USTBonds or else a loading depot for BRICS sourcing of Gold bullion for their upcoming central bank. In no way can the enormous bond carry trades be stopped. They are the only source of actual income for the big US banks. Their other source of narco funds money laundering. Doing so would put the carry trade engines into reverse, forcing an unwanted Bond Convexity episode of leveraged selling of USTreasury Bonds by the same large corrupted banks which are so clearly involved in the derivatives game. In no way can the USFed hike rates, since their own outsized bond portfolio would register huge losses, only to gain ugly publicity. They after all bought the top in bonds, and continue to buy the top in bonds every month that QE continues. They are the fools buying the asset bubble at the top. See a parallel in Japan…

This post was published at GoldSeek By Jim Willie CB, GoldenJackass.com /19 September 2014.

SP 500 and NDX Futures Daily Charts – The Error of Their Ways

‘To keep any great nation up to a high standard of civilization there must be enough superior characters to hold the balance of power, but the very moment the balance of power gets into the hands of second-rate men and women, a decline of that nation is inevitable.’
Christian D. Larson
Today was the day of Alibaba, the biggest IPO ever. Huzzah!The great BABA ran up to $99.70 in the first hour after its open, and then settled back down into the low 90′s. This is quite jump over the IPO which priced out last night at $68. Is there a fat lady singing in there anywhere? I am not sure, but I think I hear a familiar melody. The equity market is an asset bubble. And when it breaks, there will be another attempt to transfer the debts to the broader public, with no penalties to the perpetrators. And then we shall see how the cards may fall. And who knows? They may do it all over again after that? What is to stop it?

This post was published at Jesses Crossroads Cafe on 19 SEPTEMBER 2014.

Cheap Gold Stocks’ Upleg Intact

Gold stocks have plunged in September, crushed by the withering selling pressure from heavy futures shorting hammering gold. As usual, these falling prices have kindled extreme bearishness on this left-for-dead sector. But despite this rotten sentiment, gold stocks’ young upleg remains very much intact technically. This impressive resiliency is fueled by these miners’ incredibly-cheap fundamental valuations.
Gold stocks are without a doubt the most despised sector in all the stock markets. Thanks to the Fed’s brazen debt monetizations and manipulations of interest rates, the global markets are distorted beyond belief. Stock markets have soared to extreme valuations on the Fed’s implied backstopping, leading to epic complacency, greed, and hubris. That artificial levitation sucked vast capital out of alternative investments.
When stock markets do nothing but rally thanks to the Fed, the perceived need for prudent portfolio diversification with alternative investments like gold has vanished. And with investor interest in gold virtually dead, the gold stocks have suffered mightily. Nearly everyone believes they are doomed to spiral lower forever. To be bullish on this loathed sector guarantees ridicule and mocking these days.
Nevertheless, a hardcore remnant of contrarian investors remains very bullish on this sector. They have studied market history, and remember core truths that the Fed has blasted from most minds. Markets are forever cyclical, they rise and fall. Any extreme in sentiment and prices is soon followed by a major reversal. Exceptionally-high greed-fueled prices soon fall, and exceptionally-low fear-drenched prices soon rise.
Contrarians know that successful investing demands buying low then selling high. And the cheapest stocks are always the most hated, the sectors with the most universal and overwhelming bearishness. They have the most potential to explode higher and multiply wealth when sentiment inevitably shifts the other way. That’s why smart investors including elite billionaire hedge-fund managers are long gold stocks today.
Gold-stock fundamentals are exceedingly easy to understand. Gold miners obviously mine gold. And their production costs are largely fixed when mines are built. So their profitability is determined by the gold price. When gold climbs, their profit margins and absolute earnings soar as their costs stay pretty stable. So these companies are ultimately a leveraged play on the gold prices which drive their profits.
Across all the markets, any stock’s underlying profitability determines what its fundamentally-sound price levels should be. Gold stocks are no exception, as they will eventually climb dramatically to trade at reasonable valuations relative to their profits. And not only will their earnings surge as the gold price itself recovers from today’s sentiment extremes, gold stocks are dirt-cheap relative to current low gold levels!

This post was published at ZEAL LLC on September 19, 2014.

Was Scottish Vote Rigging Caught On Tape?

Given the pre-vote polls and 300 years of historical resentment, many were somewhat surprised at the overwhelming “No” vote in last night’s Scottish Independence referendum. While we now know that the vote broke very cleanly between old (“no”) and young (“yes”) Scots, the following clip suggests the possibility that more was afoot than that. As the commentator blasts, “Busted! Absolutely busted!” You decide…

This post was published at Zero Hedge on 09/19/2014.

Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Over 1% and 4% on the Week

The Metals:
Gold dropped $11 to $1213.90 by a little before 2PM EST before it bounced back higher in the last couple of hours of trade, but it still ended with a loss of 0.6%. Silver slipped to as low as $17.795 and ended with a loss of 3.3%.
Euro gold remained at about 948, platinum lost $10 to $1334, and copper remained at about $3.09.
Gold and silver equities fell about 2% by late morning and remained near that level for the rest of the day.

This post was published at GoldSeek on 19 September 2014.

Gold Daily and Silver Weekly Charts – Option Expiration

“The mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges which they have succeeded in obtaining in the different States, and which are employed altogether for their benefit; and unless you become more watchful in your States and check this spirit of monopoly and thirst for exclusive privileges you will in the end find that the most important powers of Government have been given or bartered away, and the control over your dearest interests has passed into the hands of these corporations.”
Andrew Jackson, Farewell Address, March 4, 1837
What a parcel of rogues in a nation. Although it was not much discussed on bubblevision, today was the fairly important stock option expiration for US equities. It was utterly overshadowed by the big BABA IPO. Next week will be an option expiration for the precious metals on the Comex. I cannot remember when sentiment was this low amongst the metals crowd since around 1999-2001 timeframe. I do suspect we are making a bottom, and somewhat artificially low at that. This ought to do enough damage to supply to provide for a high upside IF and WHEN markets become transparent and honest again. But I will not say we actually have a bottom until we break this trend of lower highs and lower lows. That is a mugs’ game. And there are plenty of mugs out there, who have called about forty of the last three or four bottoms in the precious metals markets. Fear not, when the time comes, they will be ‘right.’ We need to maintain some discipline in our thinking and a focus on the fundamentals. Talk is cheap. So what does this mean? Holding positions with NO leverage, and of a comfortable size with a longer term price horizon that do not interfere with short term cash flow needs. To do otherwise places one at the mercy of the short term market speculators and manipulators. If the precious metals are insurance, do you place all of your assets in insurance? Hardly.

This post was published at Jesses Crossroads Cafe on 19 SEPTEMBER 2014.

Algos Gone Wild: BABA “Glitch” Halted 7 Seconds, “100s Of Flash Crashes” Into Close

During the first 20 minutes, $BABA often exceeded 25% of all trading volume in NMS stocks pic.twitter.com/gnKVhI9psZ
— Eric Scott Hunsader (@nanexllc) September 19, 2014

As business media pats itself on the back for the BABA IPO, proclaiming how it’s the most important, and biggest IPO of all-time and on “the most efficient and transparent” exchange, perhaps it was just oversight that they forgot to mention BABA’s 7-second halt “glitch” this afternoon as BABA trading exceeded 25% of all volume at some points. But that was minor compared to the utter clusterfuck that occurred as AAPL shares started to tumble and, as Nanex points out, 100s of individual stocks instantly flash-crashed and dashed by over 1% at 1550ET as the Russell rebalanced. These are your unrigged, transparent, efficient markets…

This post was published at Zero Hedge on 09/19/2014.

Stocks Slide As Gartman Goes “Long Of One Unit Of The US Equity Market:”

It just never, ever fails. From this morning’s Gartman letter:
SHARE PRICES AROUND THE WORLD ARE STRONGER and the news from Scotland should serve to keep the global bull market intact for markets do indeed disdain confusion and the confusion over the UK’s future has been relieved. All things being otherwise equal, this is supportive of shares generally.
Stare then… do not merely look; stare!… at the chart of the S&P at the bottom left of p.1 and try if you will to see anything bearish in that chart.

This post was published at Zero Hedge on 09/19/2014.

Staying Invested in Cash Is Not Such a Sure Thing After All

According to a study by Deloitte, cash reserves of corporations located in Europe, Africa and the Middle East (EMEA zone) are reaching record highs, totalling 936 billion euros. This is 40% more than in 2007, just before the crisis, and this is where the problem lies: businesses are making money, but they don’t know what to do with it.
In normal times, profits go toward investments. As Helmut Schmidt, former Chancellor of Germany from 1974 to 1982, famously said, ‘Today’s profits are tomorrow’s investments and day-after-tomorrow’s jobs’. But this is not how the economy is working nowadays, especially since 2008. Businesses are not investing (as much as they could) because there is hardly any growth or demand. Instead of investing, these companies choose to pay more dividends to their shareholders or go on merger/acquisitions sprees (Astra Zeneca-Pfizer, TWC-Comcast, General Electric-Alstom, Lafarge-Holcim are some of the important ones of the last months). Paying dividends does not create value per se, it’s just a simple transfer, and merger/acquisitions, as can be observed these last decades, rarely create any value as well. The objective is, mainly, for the predator business to strengthen its position in the market.
But large corporations are not the only ones hoarding tons of cash… so are central banks of countries with commercial surpluses (China, oil-producing countries) or sovereign funds (these same oil-producing countries). And, furthermore, the central banks of the United States, Europe and Japan are creating money with their QE plans in the hope of boosting economic activity… which all leads to an excess of liquidity across the globe…

This post was published at Gold Broker on Sep 18, 2014.

Miraculous Impact of Abenomics on Trade, in One Chart

One of the most important goals of Japan’s newfangled, democratically elected economic religion is to stimulate the economy for Japan Inc., if for no one else, by boosting exports (by making them cheaper overseas) and curtailing imports (by making them too expensive in Japan). To get there, Prime Minister Shinzo Abe and the Bank of Japan have agreed to water down the yen, and thus the wealth and earnings power of the Japanese.
To execute that noble strategy, the BOJ went on a money printing binge. It worked: the yen has dropped over 30% to the dollar since the election campaign in late 2012. It accomplished all sorts of goals: the yen-denominated wealth of the Japanese was cut by over 30%, real wages were cut as well, the economy is in shambles….
The one thing it hasn’t accomplished is the original goal of increasing exports and lowering imports, thus creating that all-important trade surplus that would goose GDP and make Abe and the Bank of Japan smell like a rose. The Ministry of Finance sprinkled salt on the wound today with the trade statistics for August.
Exports, instead of soaring due to the watered-down yen, dropped 1.3% from a year ago to 5.7 trillion. Imports edged down 1.5% to 6.7 trillion, mostly due to petroleum imports, the largest category, which fell by 5.2% based on the lower price of oil on the world markets. This alone contributed 0.9 percentage points to the 1.5% drop in imports. The other factor: consumers, squeezed by higher prices and declining real incomes, have been curtailing consumption. As a result, the goods trade deficit inched down 2.4% to 948 billion…

This post was published at Wolf Street on September 18, 2014.

Idiotic Proposals for Fed to Give Away Money

A Fiscal Times, Yahoo Finance article by by John Grgurich claims that Instead of QE, Fed Could Have Given $56,000 to Every Household in America .
Grgurich formulated his article after reading “an intriguing piece just published in Foreign Affairs, Brown University political economist Mark Blyth and London-based hedge fund manager Eric Lonergan argue the Fed could have done better by pursuing a far different type of grand policy experiment.”
The “intriguing piece” is Print Less but Transfer More, Why Central Banks Should Give Money Directly to the People.
Sheer Idiocy
First, the Fed cannot give away money, it can only make money available for lending. Second, the idea that the Fed should give away money is ludicrous, even it the Fed could…

This post was published at Global Economic Analysis on September 19, 2014.

This Pension Fund Is Daytrading Your Retirement Funds, With Up To 500% Leverage

While we have already noted the backlash against hedge funds as a result of their chronic underperformance of the market over the past 5 years, resulting in first Calpers and now Texas Pensions to pull money out of the asset class, the reality is that in a micro-managed world in which the Fed itself is the Chief Risk Officer of the S&P 500, there is no need to actively manage assets – after all the money printer itself is doing so on behalf of everyone. However, it is not just highly paid hedge funds – paid highly to hedge risk which simply does not exist until such time as central banks lose control – but pension, mutual and virtually every other class of actively managed money will underperform the S&P as long as the central banks are actively pushing asset values higher (and when they stop watch out below because no amount of shorts or puts will offset the carnage that will result).
And yet some, such as Pension funds, have a specific bogey they have to hit every single year, in order to maintain a mandated increase in their assets or else suffer the wrath of disgruntled pensioners and overseers.
Which probably explains why as Pension360 reports, the Chief Investment Officer of one such pension fund decided to do the unthinkable: daytrade, i.e. gamble, its assets, which happen to be the lifetime savings of hard workers who just happen to be naive enough to believe their retirement money is entrusted into safe hands. Little did they know that instead they have handed the fruit of their lives’ labor over to the E-trade baby.

This post was published at Zero Hedge on 09/19/2014.

Silver & Small Caps Slump As Bonds & Dollar Jump

What a difference two days make. After the exuberance of The Fed-day’s “dovishness” which was “hawkishness”, Small Cap stocks and Transports have given back all their FOMC gains and Treasuries have regained all their losses. Russell 2000 closes near 6-week lows, down 1.0% year-to-date (as Trannies end the week 17.4% YTD) with the S&P and Dow making new record highs. Despite a 1-2% gain for big caps, Treasury yields ended the week lower (30Y -6bps, 10Y -4bps) tumbling 7-10bps from high-to-low today. The USD ended the week 0.75% (10th week in a row) at new multi-year highs led by JPY, AUD, and EUR weakness. Oil was the only commodity holding gains by the close of the week as copper and gold were clubbed in line with the USD gain as Silver was monkey-hammered -4% on the week. BABA closed just above its opening level around $93.

This post was published at Zero Hedge on 09/19/2014.

Grain Markets coming to Grips with Reality

There are two factors that are now finally becoming begin to seriously take hold among those who kept insisting that grains would experience a bounce higher. The first of these is the sheer size of the upcoming harvest. The latter is the strength in the US Dollar.
Early harvest results are rolling in and they are impressive! With forecasts calling for warm and mostly dry weather, harvest progress will continue as the combines move north. As the actual results are known, traders are realizing the old adage that, ” a big crop gets bigger”.
All three grains/beans are lower this morning with beans looking like they are accelerating down. I am most interested in seeing this afternoon’s COT reports on the corn because I want to see if any of the large specs ( hedge funds and other large reportables) are still net long corn or if they have whittled down those positions any.
My concern for corn is very simple – IF, and this is a big “IF”, that just-mentioned group remains as sizeable net longs, corn is in danger of having more downside than many are currently thinking. The reason? Those guys are going to have to get out of those losing longs.

This post was published at Trader Dan Norcini on September 19, 2014.

Russell & Trannies Give Up FOMC Gains, Bond Yields Tumbling

This is not what Yellen promised! The Russell 2000 (inching ever closer to its death cross) has plunged today and is now -0.8% from pre-FOMC and negative year-to-date. Dow Transports have also given up all their post-FOMC gains and Homebuilders have plunged. US Treasury yields have tumbled with 30Y now -3bps on the week (and below pre-FOMC levels). The USD is rising as GBP weakness re-emerges.
Russell is weak and Trannies have rolled over…

This post was published at Zero Hedge on 09/19/2014.