skip to main |
skip to sidebar
"Money is gold, and nothing else." J. Pierpont Morgan
Since option expiry is on Monday the 28th, I would expect Blythe to throw some cards on the table and at least take a run at this rally. If it comes it will be in thin trading and likely into the weekend.
The gold/silver ratio is cracking 40 again. It could eventually go back to 16:1 which has historical precedent.
Keeping the Shell Game Going Department
JPM Becomes a Self-Licensed Vault/WeighMaster/Assayer For the NYMEX/COMEX
Makes it easier to move the bullion between the COMEX and SLV? lol
Good one, Baba Yaga.
Adobe came out after the close and cut forecasts in light of slumping sales, which they attribute to Japan.
"In a way, the worldview of the Party imposed itself most successfully on people incapable of understanding it. They could be made to accept the most flagrant violations of reality, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening.
By lack of understanding they remained sane. They simply swallowed everything, and what they swallowed did them no harm, because it left no residue behind, just as a grain of corn will pass undigested through the body of a bird."
George Orwell (1984)
The US dollar is approaching some key support levels, and gold is pushing up towards a potential neckline on a big inverse H&S formation.
Silver is a juggernaut while the markets are climbing on Fed provided liquidity and the global carry trades.
So, we either correct soon, or Benny takes us to the next level of debasement.
It would be nice to see gold finally hit that 1455 level I called out so long ago before it had broken out.
Option expiration at the Comex on Monday the 28th as shown on the calendar below, although any serious bear raids are likely to be at the end of this trading week. They have not even sorted out the March deliveries yet in silver. It is hard to imagine them losing control of price, although some day they most likely will. Let's see how the metals fare, under the attack of Blythe Baba Yaga, the Silver Witch.
Big gains on thin volumes. Stocks are held by weak hands.
It could go higher, but I do not believe this is an investable market.
Musical chairs for the nimbly positioned is more like it perhaps.
Hard to tell where things will go when the Banks are pumping up.
The markets were firmly in the United States of Amnesia today, sloughing off all the bad news in Japan, the Middle East, and with sovereign defaults. But there was an 'edge' to the trade, with the wise guys keeping one hand on their wallet and a clear path to the door.
A weak chart yes, but a burial would likely be premature.
Currencies notoriously overshoot. A clean break of 71 and we'd be out of Kansas, Toto, and into some brave new world.
Still, if the buck wishes to gather itself together, it might well do so soon. Or better yet, the yen and euro must weaken, because the DX index is a primarily a mirror of their own relative positions.
Updates to this report are available here.
"Updated on March 21, 2011 21:20 (JST)(Japan Standard Time) nGy/h (nano- Grays per hour)Realtime radiation data collected via the System for Prediction of Environment Emergency Dose Information(SPEEDI) These Results are the maximum values of the space those rate distributions shown from local governments in the latest updated date and time.
Not surprisingly, Miyagi , Fukushima and Ishikawa are completely N/A, as every single reading is Under Survey, may be unavailable sensors because of Tsunami (or maybe censored?)."
Background radiation comes from many sources, including medical x-rays, radon and cosmic rays as the usual suspects. Radon is a decay product of the uranium series, and decays by emitting an alpha particle. The direct parent of Radon is Radium, which emits gamma and alpha particles. Radon gas has different levels of concentration in buildings and can vary considerably.
In the cases from around the world, in normal areas, the dose rates were less than 100 nano Grays per hour (0.01 milli rem).
Those in Japan who can take reliable radiation readings and report them to a central independent source can do so here.
They are struggling to take the equity markets higher, but the short term downtrend is still intact.
There was an air of disassociation with reality in the markets today in honor of options expiration.
The Fed announced the results of their stress tests, and began to allow the banks to increase their dividends and buy back their stocks. This is a windfall for wealthy shareholders and corporate insiders, supplied by the Fed using what are essentially public funds, as subsidies to the monied interests.
But it does not help to revitalize the real economy, even while it continue to debase the currency. This is the root cause of a future inflationary episode that will rock the status quo to its foundations.
Gold and silver rallied back with the G7 intervention in the currency markets on behalf of the Japanese yen.
I think the rationale that this was in support of Japanese exporters is more rationale than fact. The exporters' biggest problem is that their supply chains and manufacturing are disrupted.
Rather, the intervention at this time was most likely in response to what the central bankers euphemistically call 'disorderly markets.' The intervention and its timing had everything to do with the yen carry trade, and the pressures that the extraordinarily strong yen was placing on global financial institutions, especially in their hedges and spreads. There was also some concern that the dollar was falling too far, too fast.
I am rethinking my estimates of a hyperinflation. There is also and increase in the forecast of inflation that will accompany the stagflation to which I am more positively inclined in the intermediate to long term forecast.
I consider a real deflation very unlikely, only as a policy decision. The risk as I see it is an inept slide into a deeper inflation than the central bankers intend.
As such I am now even more inclined to protect my own assets in hard currency and precious metals.
Now that we have a few more data points I adjusted the green 'parabola' which marks what is essentially an inverse head and shoulders formation developing in the gold market. We will look to see if the formation holds and is confirmed by gold breaking out above the neckline which is around the 1450ish area.
Silver is resilient, but as those of you who hold positions, particularly in the miners, the intra-day volatility can be fairly breath-taking.
The G7 will be meeting this evening on a teleconference to discuss the markets and the impact of the Japanese and Middle East situations on them. I expect interventions to be readied, but not necessarily unleashed tomorrow unless things are much worse than we realize.
Options expiration will become more of an issue later this month. For now the focus is on the delivery of March silver at the Comex, and the anticipation building in the April contract.
The G7 is meeting tonight to discuss potential market operations in the event that the situation in Japan and the Middle East worsen and the financial system begins to falter.
The strong yen does not create all that much of a problem yet for Japan, and it does have the benefit of easing their needs to purchase imported energy and supplies. The bigger problem might be for global financial institutions who are not properly hedged to the yen at these previously unthinkable highs.
I do think that more intervention in the markets in terms of buying support is likely, and the central bankers will play their usual games along with the primary banks' trading desks.
The situation in Japan with regard to the reactors is not yet resolved, and there are still follow on earthquakes which complicates the situation. There remains the possible for wider spread damage and loss of life.
Once that situation is resolved, the disruption to their infrastructure and supply chains will be their biggest challenges. Do not underestimate the severe damage that has been done to their electrical infrastructure generating capacity.
So, let's see what happens. The US indices stopped almost dead on their key support levels and tomorrow is options expiration. The capping in gold and silver has been almost continuous. It is interesting to see the pair trade of long bullion and short stocks working again. This tells us something of the nature of the market.
Stock futures are moving sharply lower after hours based on reports such as this: US Calls Radiation 'Extremely High' and Urges Deeper Caution.
The emphasis was clearly on the risk in Japan today. The Middle East situation continues to deteriorate.
The PPI and import prices are rising at a rate that suggests inflation, and continuing sluggish growth in GDP suggest stagflation is developing.
Stagflation, when not caused by an exogenous event such as occurred in the 1970s with the oil embargo, is the result of an obvious policy error in fiscal, public, and monetary decisions.
It takes an unusual set of circumstances to create stagflation. Before the 1970's economists used to say it was not possible.
Therefore it is a tribute to Obama's Wilsonian dithering, Bernanke's general spinelessness, and the Congress' rapacious venality that they will preside over stagflation's resurgence, without the scapegoat of an oil embargo to blame. They are presiding over the wholesale looting of a generation, and abetting the tranfer of that money and the future prosperity of the public to a wealthy few, their real constituency, in the manner of an oligarchy or crony capitalism.
"It was curious to think that the sky was the same for everybody, in Eurasia or Eastasia as well as here. And the people under the sky were also very much the same--everywhere, all over the world, hundreds or thousands of millions of people just like this, people ignorant of one another's existence, held apart by walls of hatred and lies, and yet almost exactly the same--people who had never learned to think but were storing up in their hearts and bellies and muscles the power that would one day overturn the world."
George Orwell
The EU Energy Chief made some comments about the likelihood of a major radiation disaster in Japan, which may be underway. This caused US equity markets to plunge dramatically.
Energy Commissioner Günther Oettinger said the situation is 'effectively out of control' ...
The markets are getting very mixed news on this, depending on the source. There are weighty papers from MIT saying the risks are minimal, and the US Ambassador in Tokyo issued reassuring words this morning.
Therefore traders are jittery because of the uncertainty regarding the quality of information being released from a variety of sources, and some thinking that there is understatement of the risk by the Japanese government and Tokyo Electric in order to avoid a panic. So the bias is to act first and fact check later.
This is what is called a "trader's market." Triple black diamond slopes IF you can handle them. Danger, une chute dans cette piste peut entrainer de graves lesions et meme la mort. Most people should stay off the slopes and enjoy their coffee in the lodge.
EU Official Warns of Possible Catastrophe In Japan
This is known as the 'Humps and Chumps' Paper Metals Conference.
If you short enough bullion, you get a free ticket, but Bullion Banks are permitted to bring in 100 attendees on 1 ticket.
Business attire required, but hedge fund managers may prefer to wear a wire and have a prior grant of immunity.
Do you think Andrew Maguire will be giving the Keynote Address?
Wow, 'networking' with the boyz. Sounds great.
Oh you're a silver bull. Gold too, huh?
So, you like Huey Lewis and the News?
Their early work was a little new wave for my tastes...
Try getting a reservation at Dorsia now...
Certainly hedge fund liquidation was seen today. As Dennis Gartman advised, "Better to panic and remain liquid." And Dennis should know because he is being whipsawed recently in his metals trades, judging by his acknowledged trades and advice at any rate. I am sure his investors feel safer in cash as well.
Could it be more than that? There has certainly been a keen desire in some quarters to keep silver below $36 and gold below $1430 the past few weeks.
"You never want a serious crisis to go to waste," Rahm Emanuel, Mr. Obama's new chief of staff. "Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before." WSJ, 21 Nov 2008
Does Crisis = Opportunity? Only for the nimble and those highly experienced in risk management. The average person would probably be better off waiting for the current situation to clarify.
Today's market commentary was intraday here.
I did come in and buy some of the throwaways in the first hour of trade, but I do not think we are out of difficulty yet. There will have to be a clearer signal from the Japanese government and Tokyo Electric that they have a credible and systematic solution for their nuclear power plant situation.
And then with all the liquidity being added by the central banks, I think there will be a rather sharp short covering rally. And we might even see a return to a bull market trend until the market reaches a more natural point of correction and the dollar crisis or some other more bubble specific problem occurs.
But if this situation in Japan worsens then all bets are off. And the trading is made a little more problematic because it is difficult to trust what people are saying on both sides.
Detective Gregory: "Is there any other point to which you would wish to draw my attention?"
Sherlock Holmes: "To the curious incident of the dog in the night-time."
Detective Gregory: "The dog did nothing in the night-time."
Holmes: "That was the curious incident."
A. Conan Doyle, Silver Blaze
The US dollar is rolling over and going lower today, no doubt easily explained away by the meme of Japanese selling their dollar Treasuries to raise cash to pay for their much needed repairs.
Except, that it does not bark sufficiently for me, but in context, the dollar just continues to roll over during what would ordinarily be a classic flight to safety rally scenario, even two years ago.
It is some consolation that the dollar is rolling over, perhaps, because it at least spares us another claim of inevitable victory over all things real from the Deflation's Witnesses. The decline in silver and to a lesser extent gold would have been more impressive except that they have been subject to vicious bear raids almost every day since they went into their delivery period on the Comex.
I can explain the selling and the general declines in almost everything easily enough through hedge fund liquidation. No one wants to meet margin calls under duress should the worst happen. As hedge fund advisor Dennis Gartman said, "Better to panic and remain liquid." I suspect this morning I might have been buying on the cheap from among of the things that Dennis' acolytes were throwing away. I think the metals are going higher if this support level holds. But as always, I make haste slowly.
There is a bit of a flow into Treasuries right after the aptly named Mr. Gross allegedly dumped them, but no net gains for the dollar. Where is all this cash going, and more interestingly perhaps, where is it going next?
And of course it is an options expiration week, and the markets are amazingly subdued given their declines and the dire news this morning on the airwaves. What is skulking in the corners and shadows of the financial sector, waiting for yet another attempt to baffle the world, if but for its sheer banality and obtuseness?
The Fed just had their FOMC announcement, with no change in policy, and absolutely no mention of Japan and any potential actions, reassurances, or impacts. They do see a continuing gradual improvement in the US economy, and a 'firmer footing.'
Of course these are the same Fed folks, the banking regulator as Consumer Advisory Council, that just examined the US mortgage market and said they found NOT ONE instance of a wrongful foreclosure. No surprise there really, since these jokers apparently could not find their own bubble-emitting posteriors with both hands, at least publicly and despite their newly released private meeting conversations. Robert Shiller said today that the housing bubble was the largest asset bubble in US economic history, since at least 1895 which is as far back as his records could go.
"We have now sunk to a depth at which re-statement of the obvious is the first duty of intelligent men." George Orwell
Do these people expect anyone to take them seriously? Little wonder that the Fed and their viceroys are caught in a credibility trap, which seems to be de rigueur in the commonwealth of global oligarchs and autocrats these days.
Many dictators are foul, corrupt sociopaths, violent people who use violence and murder as a matter of course in the self-serving and often obsessive acquistion of wealth and power.
But in the so called civilized western world we have something almost worse: well educated men, leading comfortable, professional lives, committing gut wrenching economic atrocities for the mere sake of appearances, and a clubby kind of quid pro quo.
"Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm -- but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves." T.S. Eliot, 1950
Curiouser and curiouser.
The Central Banks and the US Exchange Stabilization Fund will have their work cut out for them judging by the overnight futures action.
If the market does find a footing after the first hour of trade, watch for a snap back relief rally. I look for this to happen around the key support level at 1251. Watch the action to see if it can regain the pivot around 1278.
This is barring any further deterioration in the situation in Japan with their reactors.
I understand the crisis and catastrophe are very real. Having said that, the media is a prism of a world dominated by the monied interests, and persuasion and deception are key elements in their game of domination. And their hypocrisy knows no bounds.
"Japanese stock futures prices plunged 16 percent on Tuesday as the country's prime minister said radiation levels at a stricken nuclear plant had become high, deepening concerns about the disaster and its likely economic toll." Reuters
"Japan faced the likelihood of a catastrophic nuclear accident Tuesday morning, as an explosion at the most crippled of three reactors at the Fukushima Daiichi Nuclear Power Station damaged its crucial steel containment structure, emergency workers were withdrawn from the plant, and a fire at a fourth reactor spewed large amounts of radioactive material into the air, according to official statements and industry executives informed about the developments." NYT
"Reuters quotes French Embassy saying 'Low level nuclear wind could reach Tokyo in 10 hours.'" - BBC
"In a nationally televised statement, Prime Minister Naoto Kan said radiation has spread from four reactors of the Fukushima Dai-ichi nuclear plant in Fukushima province, one of the hardest-hit in Friday's 9.0-magnitude earthquake and the ensuing tsunami that has killed more than 10,000 people.
'The level seems very high, and there is still a very high risk of more radiation coming out,' Kan said. 'We are making utmost efforts to prevent further explosions and radiation leaks.'" AP
This is an options expiration week for US equities including miners.
The option expiration for Comex gold and silver will be near the end of the month on March 28.
There did seem to be a fairly obvious effort from the US to keep gold and silver prices from breaking out with the natural disaster in Japan. They can try to keep doing this, but as we have seen, eventually the upward buying pressure becomes too great and they must retreat to defend some higher price level. And so we get this stairstep trending move higher.
