Gold & Silver Trading Alert: Huge Reversal In USD And Gold…Finally!

Briefly: In our opinion speculative long positions (full) in gold, silver and mining stocks are justified from the risk/reward perspective.
The precious metals market finally rallied yesterday. Gold moved lower in the first hours of the session, getting very close to the Dec. 2013 low, but it rallied before the session was over, finally closing over $16 higher. Is the final bottom in?
The final bottom – not likely. The local bottom – very likely. Let’s examine the charts and see what actually changed (charts courtesy of
Yesterday, we wrote the following:
The Friday’s rally was huge and it’s no wonder that metals and miners declined. The move took place right after the cyclical turning point, so the odds are that we will not have to wait long for a reversal.
All in all, the outlook for the USD Index is still bearish based on the extremely overbought status, the turning point, and the fact that previous similar breakouts (as seen on the weekly chart) were invalidated.

This post was published at Gold-Eagle on October 7, 2014.

Inside September’s ‘Born Again’ Jobs Report

The September jobs report was greeted by a flurry of robo-trader exuberance because another print well above 200k purportedly signals that growth is underway and profits will remain in high cotton as far as the eye can see. But how many years can this Charlie Brown and Lucy charade be taken seriously – -even by the headline stalking talking heads who inhabit bubblevision?
For the entirety of this century they have actually been gumming about little more than ‘born again’ jobs, not real expansion of labor inputs to the faltering US economy. In effect, some macroeconomic Lucy periodically removes the jobs football, but after ritual hand-wringing during the recession the charade starts all over again. That is, Wall Street and the financial media resume what amounts to a monthly jobs telethon around the BLS’s messaged, imputed, seasonally maladjusted and incessantly revised establishment payroll guesstimates.
But try the trend of aggregate labor hours. instead. That’s also contained in the BLS report, but it is never cited in context – -only as a meaningless point comparison with the prior month. The better angle, of course, is spans of years and decades because that captures trends and the real course of economic history, not monthly noise and revisions.
Here’s what the trend of labor hours used to look like. Notwithstanding five recessions between 1964 and mid-2000, labor hours grew at 2.1% annually between 1964 and 1980, and 1.8% per year between 1980 and 2000. Throw in a point or two for productivity, and you had 3-4 percent real GDP growth.

This post was published at David Stockmans Contra Corner on October 7, 2014.

Deutsche Bank’s Shocking Admission: “QE In Europe Will Be Ineffective”

Via Deutsche Bank’s George Saravelos,
Euroglut: a new phase of global imbalances
This report argues that both ‘secular stagnation’ and ‘normalization’ are incomplete frameworks for understanding the post-crisis world. Instead, ‘Euroglut’ – the global imbalance created by Europe’s massive current account surplus will be the defining variable for the rest of this decade. Euroglut implies three things: a significantly weaker euro (we forecast 0.95 in EUR/USD by end-2017), low long-end yields and exceptionally flat global yield curves, and ongoing inflows into ‘good’ EM assets. In other words, we expect Europe’s huge excess savings combined with aggressive ECB easing to lead to some of the largest capital outflows in the history of financial markets.
Introducing Euroglut
The dust is settling on the Global Financial Crisis, and markets are now focusing on the future. One prominent line of thinking is that the new normal is “secular stagnation” – weak trend growth and very low neutral rates. Another view is that “normalization” is around the corner – growth will soon return, and policy will inevitably normalize faster, particularly in the US. In this piece, we argue that both the “normalization” and “secular stagnation” frameworks are incomplete. Instead, it is Europe’s huge savings glut – what we call euroglut – that will drive global trends for the foreseeable future. While euroglut seems similar to “secular stagnation”, the asset price conclusions are very different and far more powerful.
What is Euroglut?
Euroglut is a global imbalances problem. It refers to the lack of European domestic demand caused by the Eurozone crisis

This post was published at Zero Hedge on 10/07/2014.

Student And Car Debt Exponential; Credit Card Debt Declines

The summer rebound is well and truly over, and the latest nail in the short-lived rebound came moments ago when the Fed reported that in August, consumer credit rose by only $13.5 billion: only because it was far below the $20 billion expected and a plunge from the $26 billion surge in July, since revised far lower to $21.6 billion. Worse, revolving credit actually declined in the month by just over $200 million, its first decline since February. But don’t worry: while US consumers put their credit cards on ice, they had no problems continuing to borrow like drunken sailor when it comes to car and student loans, which rose to a new record high of $2.366 trillion, an increase of $13.7 billion, which still was the lowest monthly increase since January.
Total credit monthly change:

Revolving credit alone:

This post was published at Zero Hedge on 10/07/2014.

China/India Gold Demand: 2013 Dj Vu

In 2013; a chain of events led to what was (at the time) the greatest stampede into gold in human history. It began with the Cyprus Steal, the West’s first ‘bail-in’. This led to the realization (by the Smart Money) that no paper assets were safe any longer, within any Western financial institution or market.
In turn, this led to an unprecedented stampede out of the banksters’ paper-called-gold ‘products’, primarily their ultra-fraudulent bullion-ETF’s. With the paper-called-gold market being 100 times largerthan the real (physical) gold market; this naturally caused a plunge in the official price of gold.
It was at this point that the stampede into (physical) gold began. Some of this demand was from the West: sellers of these vast quantities of paper-called-gold suddenly saw the wisdom in holding real bullion: having physical custody of their asset, and thus zero counterparty risk.
Most of the demand, however, came from the East. With the price of gold falling roughly 30%, from already depressed levels; this was nothing less than a ‘dinner chime’ for Pavlov’s dogs. Unlike the serf-populations of Western nations; appreciation (and understanding) of precious metals has not been blunted by roughly 30 years of relentless anti-gold (and anti-silver) propaganda.
With this Eastern understanding; the world had already been witnessing a relentless transfer of the world’s bullion holdings from West to East. Thus like women flocking to a shoe-store sale; this ‘30% off’ on the price of gold in 2013 led to a spike in Asian demand beyond anything previously seen.
As indicated in a previous commentary in June of last year; at that time both China and India were on a pace to import roughly 2,000 tonnes of gold – surpassing any previous total for either nation. China, indeed, ended 2013 with net imports exceeding 2,000 tonnes, according to gold analyst (and China specialist) Koos Jansen.
Gold demand in India was temporarily derailed, however; as India imposed (what was at one point) anear-total embargo on (legal) gold imports into that nation. This draconian measure was a capitulation to blackmail from the One Bank, which had caused a ‘currency crisis’ in India by attacking the value of the rupee in (rigged) global FX markets. The bankers made it explicitly clear that nothing less than a dramatic drop in gold imports would/could rescue the rupee from these currency market attacks.

This post was published at BullionBullsCanada on 06 October 2014.

Bundesbank Blasts Draghi’s QE, Fears “Monetary Policy Is Hostage To Politics”

“The concept of an independent central bank clearly focused on price stability is neither old-fashioned nor outdated,” exclaimed Bundesbank head Jens Weidmann. As The WSJ reports, he criticized the European Central Bank’s decision to buy private-sector bonds and signaled his fierce opposition to purchasing government bonds, underscoring his reluctance to back additional stimulus measures to combat weakness in the eurozone economy. “There is a risk of monetary policy, especially in the euro area, being held hostage by politics,” Mr. Weidmann said

This post was published at Zero Hedge on 10/07/2014.

Add This ‘Messed Up’ Emerging Market to Your Watch List

An Update From the Pampas Today, an update from the pampas – our favorite economic laboratory. The gauchos try one monetary experiment. It blows up in their faces. So what do they do? They back test! More on that in a minute…
Friday saw a big jump in the Dow – up 208 points. Gold fell hard – down $23 an ounce. What to make of that?
Nothing much. According to our Simplified Trading System (STS), readers should be out of US stocks and accumulating gold. Sell stocks on the rallies. Buy gold on the dips. Keep at it until further notice.
Maximum Pessimism It may be difficult to live in Argentina… but it’s fun to visit. If you’re traveling to Buenos Aires, you’ll find the living is still relatively cheap. But only if you exchange your money at 15 pesos to the dollar.
That’s called the ‘blue rate.’ As opposed to the white rate. And you get it on the black market. Got that straight?
We recommend Parrilla Don Julio on Calle Guatemala in the Palermo Soho neighborhood. Or Lo de Jesus on Calle Gurruchaga. Or La Cabrera on Calle Cabrera.
Have a thick steak. (The portions are so large you’ll find you have to share your meat with at least one other person… maybe two.) Have a nice bottle of malbec. Have dessert and coffee. The whole thing will set you back no more than $30.

This post was published at Acting-Man on October 7, 2014.

Gold & Silver Trading Alert: Huge Reversal in USD and Gold – Finally!

Briefly: In our opinion speculative long positions (full) in gold, silver and mining stocks are justified from the risk/reward perspective.
The precious metals market finally rallied yesterday. Gold moved lower in the first hours of the session, getting very close to the Dec. 2013 low, but it rallied before the session was over, finally closing over $16 higher. Is the final bottom in?
The final bottom – not likely. The local bottom – very likely. Let’s examine the charts and see what actually changed (charts courtesy of Yesterday, we wrote the following:
The Friday’s rally was huge and it’s no wonder that metals and miners declined. The move took place right after the cyclical turning point, so the odds are that we will not have to wait long for a reversal.
All in all, the outlook for the USD Index is still bearish based on the extremely overbought status, the turning point, and the fact that previous similar breakouts (as seen on the weekly chart) were invalidated.
We already saw a significant daily decline yesterday, so it could be the case that the corrective downswing in the USD Index is already underway. The odds will further increase once we see a move below the rising short-term support line (which is likely to be seen shortly).

This post was published at GoldSeek on 7 October 2014.

A Lapse in State Security

The recent break-in at the White House by a crazed man has predictably sparked a debate over national security. The intruder, 42-year-old Army veteran Omar Gonzalez, hopped the surrounding fence and breached what is supposed to be the most guarded house in the country. Gonzalez overpowered a guard at the front door, and traversed much of the main floor before being subdued.
Clearly, this was a security lapse. The intruder alarm near the door, which should have signaled the trespassing, was muted by request of an usher’s office. Had the president been present, his life could have very well been in danger. The White House is supposed to epitomize security. The commander-in-chief is ostensibly the leader of the nation. In a democracy, more value is placed on the life of an elected head of state. Therefore, he should receive the best protection that money – even stolen funds – can buy.

This post was published at Mises Canada on October 7th, 2014.

Japan Admits It Has Entered A Triple-Dip Recession

On Sunday we warned it would happen. Well, it happened.
From Goldman Sachs:
The Indexes of Business Conditions comprises leading, coincident, and lagging composite indices compiled from various economic statistics and market indicators. Since the components are already announced in advance, the composite indices come as no surprise as they can be estimated in advance. That said, the data release is closely watched as an indicator of potential turning points in the economy, as the Cabinet Office makes an assessment of the state of the economy based on the trend in the coincident CI, using a set of objective criteria that eliminates arbitrariness. Of the 11 indicators that make up the coincident CI, 8 made a negative contribution mom in August, as expected. The coincident CI fell 1.4 points in August to 108.5 from 109.9 in July. The three month average of the coincident CI declined 0.84 points, declining for 5 months in a row, and the 7-month average declined 0.87 points, a third month of decline in a row.

This post was published at Zero Hedge on 10/07/2014.

From Hero to Zero in One Trading Day

Incredible Wall Street Stories Sometimes the market provides us with stories that one wouldn’t believe if one weren’t able to observe them with one’s own eyes. Occasionally they involve outright fraud, such as the artificial short-squeeze organized in CYNK earlier this year – a ‘social media’ company based in Belize with a single employee, that never had a single dime in earnings or revenues for that matter, and does not even have a web site (i.e., a shell company).
The company’s market cap rose from an already far too high $17 million to an incredible $6.4 billion in the space of three weeks until trading was suspended by the SEC. By this time, most of the short sellers had already been bankrupted – not only by the huge price rise in the stock, but by the enormous cost involved in borrowing the shares (these borrowing costs seem to actually have been a major feature of the scam). In fact, the most recent information suggests that CYNK was also tied to a complex money laundering scheme. Amazingly, the stock still trades at 11 cents, presumably because its price has been supported by frantic short covering on the way down. ‘Pump and dump’ schemes are a dime a dozen, but this one was noteworthy because it involved a different and quite innovative method of defrauding investors. Instead of mainly aiming to defraud the buyers of the stock, it was designed from the outset as a way of bilking short sellers. What the perpetrators probably didn’t consider was that the squeeze would drive the price to a level that would alert the authorities.
Still, while the CYNK case is unique among pump-and-dump schemes in some respects, it is still clearly identifiable some kind of fraud.
GTAT’s Shareholders See $1.45 billion Disappear in a Flash GTAT’s investors by contrast are probably scratching their heads right now, wondering why they have just been hit by a ton of bricks in what appeared to be a perfectly legitimate investment. As things stand, we don’t yet know every detail of this case, but here is a brief summary: GTAT (‘GT Advanced Technologies’) is a putative maker of sapphire glass. This glass was going to be used in Apple’s new line of i-Phones, and Apple in fact advanced some $580 million to the company so it could invest in furnaces and other equipment needed to produce sapphire glass. Something seems not to have worked out as planned though, as the i-Phone 6 series was released sans sapphire glass.
Upon the release of the new i-Phones, a few analysts lowered their rating of GTAT and withdrew their ‘strong buy’ recommendations – but not all of them did. In fact, as of Friday last week, with its market cap at $1.55 billion, the stock still had three ‘buy’ ratings assigned to it by Wall Street’s bien pensants, complete with rather fanciful price targets. If you still needed proof that a great many WS analysts are of no use to investors – in a bull market you don’t need them and in a bear market you don’t want them (we concede of course that there exist numerous exceptions to this rule) – here you have it.

This post was published at Acting-Man on October 7, 2014.

To buy or not to buy

If I sit back, and close my eyes and recall the exciting days of 2010 and 2011, the recurring thought that comes to me is my desire to have bought more metal when the price was low. I recall walking through an antique store in Centerville Indiana in 2001 and noticing that one dealer had hundreds of silver coins in cardboard holders on the table top for folks to look through, picking out coins for their collections – silver coins, unwatched by security or anyone except the cashier about 30 feet away who was often distracted ringing people up. The shoplifters were after better stuff. The coins were deemed not worthy of even putting in a glass case. Silver was about 4.75 per ounce then.
Oh! How I wish I had loaded the boat like some of you did!
But I didn’t, and it was another nine years before I noticed some silver coins in the display at another antique shop. This time they were with the jewelry and other ‘good stuff,’ and this time the walking liberties were priced at $8 each. I suspected something was up and finally, finally started to investigate. I started making some judicious purchases, a few ounces at a atime.
After silver topped $30, I realized I needed more, that my purchases at $24 were rather insignificant. I often sang that refrain: ‘How I wish I had bought it cheaper.’ How many of you have sang that?
The rest is history – especially the part where I loaded the boat with a credit card at over $40 per ounce.
So here we are with $17 handle silver (16-something over the weekend), with warnings from Turd and others that we may see lower prices. Meh! We have already been tortured and seeing metals priced in for less fiat just doesn’t hurt any longer. My perspectives are changing. What is valuable to me now are the things I will need when the paper system moves to its intrinsic value.

This post was published at TF Metals Report on October 7, 2014.

Silver ‘Particularly Cheap’ as ‘Blood On The Commodity Streets’

At present, those commodities appearing particularly cheap on key ratios would include silver, wheat and soybeans. Crude oil and copper prices have also fallen sharply but not to the same degree against their key ratios. Thinking fundamentally, it is also unlikely that industrial commodity prices will rise in the event that equity markets meaningfully correct to the downside in the coming months.

Source: Bloomberg, CME (Sept 12 = 100)
On the other side, there are a handful of commodities that have bucked the downtrend, but all of these can be explained with reference to extreme weather patterns or other unusual factors.
Coffee, the year’s top performer, remains elevated in price due to poor rainfall in the Brazilian Highlands, the world’s top-producing region.
Cocoa prices are elevated in part due to concerns that the tragic West African Ebola outbreak will complicate this year’s harvest (which appears quite large).
Cattle prices have soared in recent months as seasonal rains have failed to arrive in key ranching areas of the Western US. (That said, the sharp decline in hog prices in recent months could contribute to lower cattle prices if and when consumer substitution effects begin to kick in.)
Strength in these commodity prices in no way contradicts the general weakness or the view that global industrial production has slowed sharply.

This post was published at Gold Core on 7 October 2014.

US Hiring Plummets Most Since June 2010, Fewest Hires Since Polar Vortex Ground Economy To A Halt

On the surface, today’s JOLTS report (which after we caught the BLS fabricating the data aggressively a year ago is triple-scrubbed by government bureaucrats) was great: with total job openings of 4,835K, this was supposedly the highest number of job openings since January 2001, and just shy of the record high 5,273 seen in January of the same year, just before the recession hit to be precise.
There was, however, a big problem. Because while according to the BLS survey employers have almost never had more open positions, they have also decided to put an abrupt stop to hiring, something which certainly points to a major disconnect in the US labor market. In fact, according to the JOLTS report, its far less tracked “Hirings” number plunged from 4,934K to just 4,640K. This was the lowest number of monthly hiring since January’s “Polar Vortex” ground the economy to a halt. What’s worse, the 294K plunge in monthly hiring was the biggest monthly drop since June 2010, and was the third biggest monthly plunge in hiring since Lehman!

This post was published at Zero Hedge on 10/07/2014.

Gold and the S&P 500 Index: Sum and Ratio

The US national debt in 1989 was about $2.8 Trillion. Twenty Five years later, in 2014, that debt had increased by a factor of about 6.3 to $17.8 Trillion.
For many decades the US piled on more debt, increased the currency in circulation much more rapidly than the economy grew, and of course, caused consumer prices to increase substantially. Naturally the S&P 500 Index increased, as did the price of gold, since each dollar was worth less.
Consider the graph of the SUM of the S&P 500 Index and the price of gold.
Debt increased, prices increased, and the dollar purchased less. Now consider the RATIO, as shown in this graph of gold divided by the S&P 500.

This post was published at Deviant Investor on October 7, 2014.

US Dollar is Extreme

Using Tom McCellan’s article discussing a ‘blow off’ move in the US dollar and its very bearish net short position by commercial traders as a starting point, I would like to talk about the USD and gold and how they each fit in to the global macro backdrop. We could add silver into the mix as well because its failure in relation to gold (ref. the gold-silver ratio’s breakout last week) is the other horseman (joining Uncle Buck) that would indicate a changing macro. Here’s the McClellan piece:
Commercials Betting on Big Dollar Downturn
First I would question the term ‘blow off’ when talking about the USD. Markets that have come off of long term basing patterns and broken above resistance with plenty of overhead resistance still to come have not blown off. A blow off is Nasdaq 2000, Uranium 2007, Crude Oil 2008, Silver 2011, etc.
Reviewing the monthly chart below, we see nothing of the sort currently when considering a ‘blow off’ move in USD. What we see is a currency that made its real blow off move in 1985 to climax the Volcker interest rate hiking regime.
There is no blow off in USD. What there is is a savage upward move that we charted all along from its birth to its now mature and hysterical potential pivot point.

This post was published at GoldSeek on 6 October 2014.

Walmart Ends Healthcare Benefits For Workers Under 30 Hours

Under the title (only-a-PR-person-could-make-up) “Providing Quality Benefits for Our Associates,” Walmart – who employs 1.3 million people in America, has changed its eligibility standards for healthcare benefits. “Like every company,” they explain “Walmart faces rising healthcare costs,” and so are ending benefits for associates who work less than 30 hours a week.
Full Walmart statement
In the U. S., the 1.3 million people who work at our stores, clubs and distribution centers are vital to a great experience for the 140 million customers shopping with us each week. We’re in business because our associates bring us their unique skills and talents – and so we do our absolute best to offer all the benefits that come with a great job, particularly affordable health insurance.
Anyone who has been following the news for the last several years knows that health care is a major topic of debate. From doctors’ visits and prescriptions to insurance premiums, health care costs have increased for all of us – individuals and the companies that insure them – each year. Knowing this, Walmart continues to work with health care providers and professionals, using our size and influence to negotiate the best rates and options for our associates.

This post was published at Zero Hedge on 10/07/2014.

Why the US$ is rallying

Below is an excerpt from a commentary originally posted on 5th October 2014.
As long as a market is in a strong rising trend almost any bullish argument could appear to have a ring of truth about it, even a completely baseless one. A case in point is the deluge of baseless, bullish-slanted US$ analyses prompted by the strong rise of the past few months in the Dollar Index.
Many of the fundamental reasons put forward for the US dollar’s strength could seem valid at first glance simply because they match the price action, but many of these reasons are irrelevant or wrong. For example, considering its financial effect relative to the volumes of foreign exchange trading and international investment flows, there is no way that the US “shale revolution” and the associated move towards energy independence* could be a primary reason for a US$ bull market. For another example, the belief in some quarters that the US$ has been manipulated higher by the Fed is ridiculous, because the Fed wants a stable or a moderately weak dollar; it absolutely does not want a strong dollar. The reality is that speculators have ramped the US dollar’s exchange rate upward contrary to the wishes and best efforts of the Fed. For a third example, the popular notion that the euro is being pushed downward against the US$ due to the potential for much greater monetary stimulus in the euro-zone is not just off the mark, it is diametrically opposite to what’s actually going on. We’ll now explain why.

This post was published at GoldSeek on 7 October 2014.

The Puzzlement of the Gold Tumble

Gold tumbles as US economy shows more signs of strength … The strengthening US economy has helped send gold prices below $US1200 per ounce … Strong US jobs data on Friday fuelled expectations that the US Federal Reserve will start hiking interest rates soon, sparking a 2 per cent slump in the gold price that took it to a four-year low. The precious metal on Monday extended the fall, slipping another 0.25 per cent to $US1188 an ounce in late afternoon Asian trade, extending its losses since its year peak in March to 13.9 per cent. – Sydney Morning Herald
Dominant Social Theme: Gold hoarders don’t hold – it’s time to fold.
Free-Market Analysis: Gold has continued its downward trend, and confusingly so. As we can see from the above, expectations that the US Federal Reserve would start hiking rates sent the yellow metal tumbling. But is that how it’s supposed to work?
As we recall, rising rates have the dangerous possibility of destabilizing the bond market and slowing the beginnings of the so-called US recovery. That in turn would be bad for stocks.
But yesterday stocks were not nearly so affected as gold. Here’s more from SMH:
The stocks of Australian gold miners were punished hard in local trade on Monday. Australia’s biggest gold miner, Newcrest, slid 3.4 per cent after falling as far as $9.88, its lowest since June. Smaller gold miners have been hit even harder, with Resolute Mining slumping 11.2 per cent, Northern Star Resources down 11.4 per cent.

This post was published at The Daily Bell on October 07, 2014.