Expect the moratorium on interest payments to be extended beyond December. The budgetary strains of the States have been and continue to be transferred to the Federal level. This transfer is... [[ This is...
No Gold Or Silver Bubble Says Sprott's John Embry
A Step by Step Guide to Exactly How Much Derivatives Risk Each of the 5 Big Banks Actually Have, and How It Could All Go Boom!
Posted: Oct 25 2010 By: Dan Norcini Post Edited: October 25, 2010 at 1:54 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
News emerging out of the weekend’s G20 meeting resulted in additional Dollar selling and wholesale buying of the Japanese Yen further evidencing the fact that the Bank of Japan is finished as a market moving force in the foreign exchange markets as it has given up on attempting to derail the Yen. The unvarnished truth is that the BOJ has met its match in the Bernanke-led Fed which can “Out QE” it with one hand tied behind its back. “Resistance is Futile” said the Borg to humanity but it might as well be said by the Borg leader Bernanke to the rest of the Central Banks of the world.
Strength in the Yen and the Aussie is working to keep pressure on the US Dollar, even as the Euro surrendered a rather large portion of its overnight gains as the New York session wore on. It fell below the critical level of 77 but managed to recover and get back over it thanks to the slide in the Euro.
The result was that gold, which had been sharply higher last evening barely missing $1,350 faded off of those levels following the Euro although it did managed to put on some decent gains moving further away from the now established support zone near $1,320.
As mentioned last week and in the recent radio interview, the market looks like it wants to range trade prior to the upcoming November FOMC meeting. Suspicions abound regarding the size, scope and extent of the expected Quantitative Easing related purchases which will be announced. Those suspicions are keeping sellers from becoming too aggressive in gold and bringing in buyers as well on bouts of weakness. However, some are still concerned that the Fed may not be as giddy on their intentions wand that is preventing longs from becoming too aggressive either. The result is a range trade or consolidation pattern setting up bounded by $1,350 on the top side and $1,320 on the bottom side. A breach of either level on good volume followed by a consecutive close in the same direction will give us the next trending move. I am of course looking for that to be to the upside as recent economic data reminds us that the US economy is stuck in a rut and mired in joblessness. QE will do absolutely nothing to get the economy moving again but it is all that these guys know to do. Seeing that they have led the entire world into anticipating the same, failure to deliver would cause the US equity markets to implode to the downside.
The problem in the US is not that interest rates are not low enough. They are! The probably is no one wants to borrow money. Maybe if they just gave it to us we might go out and spend it. Why not – they gave nearly a $trillion to the banks and look at what they did with it! Nothing.
It is encouraging to see the HUI get back over 500 but I will not be impressed by that index until it gets above 520 and STAYS THERE. It too will more than likely range trade as will silver which looks to be hemmed in near 24 and support near 23 – 22.90 for the time being.
Copper is picking up on the QE play and once again set another yearly high as it works ever closer to the magical $4.00 level. A closing push past $3.90 and it should hit $4.00. Having copper moving higher never hurts silver or the platinum group metals for that matter. Palladium easily cleared $600 blowing past its 2008 peak in impressive fashion. That will turn out to be the sleeper metal of the year as about the only people trading it in the past have been the 4 locals in the pit there in New York. Suddenly, everyone wants to know what it is and where it trades. Trading palladium is a lot like trading pork bellies – the motto is: “ good luck getting out if you need to”.
The grains were higher early in the session but they began to fade off of their best levels after the Chicago lunch hour. Leadership in that complex has moved to the beans with corn now in a secondary position to that market. Fundamentals for corn are strong but some are hesitant to push it much higher until they see how demand shapes up at these rather lofty levels.
Cotton is once again locked limit up. I am taking contributions to a pool of funds that we can use to buy up irrigated cotton production land in North Texas and get into the cotton business. Each night before I turn in, I am playing the theme song, “The touch, the feel of cotton” to motivate me. I figure that if the bottom ever falls out of that market, I can use the land for windmills Failing that, there are always rattlesnakes to hunt which make some nice boots. Norcini Cotton, Windmill and Boot Company has a nice ring to it. Seriously, I am stunned to see the fiber at these prices. How long it can maintain this altitude is anyone’s guess but when they finish running out all of the trapped commercials, look out. I wonder when people are going to go back to wearing fig leaves and forget the skivvies. They cost too damn much!
Crude oil is continuing to hang above the $80 level but running into selling near the $83 region once again. It too is range bound.
Bonds are also stuck in a rut.
It seems as if a large portion of the markets are just sitting around biding time until early November. My guess is that they are going to announce a rather large amount of QE (above $1.5 trillion) but will phase it in through a series of purchases spread out over a length of time. They hope to be able to have their cake and eat it too but going this route. They can say that they are not trying to undermine the Dollar by being reckless but neither are they ignoring the comatose economy either as they attempt to induce inflation and stave off the deflationary pressures. “Conditions call for action and we are doing that but we are also cognizant of the dangers involved”. And thus will the Fed portray itself as responsible stewards of the Dollar and the economy. And we all know just how well they have succeeded at preserving the value of our currency now don’t we?
Incidentally, the CCI ( Continuous Commodity Index) set a 26 month high in price today. If there was ever a testimony to the failure of the current monetary policy of the country, it is in that price chart.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
News emerging out of the weekend’s G20 meeting resulted in additional Dollar selling and wholesale buying of the Japanese Yen further evidencing the fact that the Bank of Japan is finished as a market moving force in the foreign exchange markets as it has given up on attempting to derail the Yen. The unvarnished truth is that the BOJ has met its match in the Bernanke-led Fed which can “Out QE” it with one hand tied behind its back. “Resistance is Futile” said the Borg to humanity but it might as well be said by the Borg leader Bernanke to the rest of the Central Banks of the world.
Strength in the Yen and the Aussie is working to keep pressure on the US Dollar, even as the Euro surrendered a rather large portion of its overnight gains as the New York session wore on. It fell below the critical level of 77 but managed to recover and get back over it thanks to the slide in the Euro.
The result was that gold, which had been sharply higher last evening barely missing $1,350 faded off of those levels following the Euro although it did managed to put on some decent gains moving further away from the now established support zone near $1,320.
As mentioned last week and in the recent radio interview, the market looks like it wants to range trade prior to the upcoming November FOMC meeting. Suspicions abound regarding the size, scope and extent of the expected Quantitative Easing related purchases which will be announced. Those suspicions are keeping sellers from becoming too aggressive in gold and bringing in buyers as well on bouts of weakness. However, some are still concerned that the Fed may not be as giddy on their intentions wand that is preventing longs from becoming too aggressive either. The result is a range trade or consolidation pattern setting up bounded by $1,350 on the top side and $1,320 on the bottom side. A breach of either level on good volume followed by a consecutive close in the same direction will give us the next trending move. I am of course looking for that to be to the upside as recent economic data reminds us that the US economy is stuck in a rut and mired in joblessness. QE will do absolutely nothing to get the economy moving again but it is all that these guys know to do. Seeing that they have led the entire world into anticipating the same, failure to deliver would cause the US equity markets to implode to the downside.
The problem in the US is not that interest rates are not low enough. They are! The probably is no one wants to borrow money. Maybe if they just gave it to us we might go out and spend it. Why not – they gave nearly a $trillion to the banks and look at what they did with it! Nothing.
It is encouraging to see the HUI get back over 500 but I will not be impressed by that index until it gets above 520 and STAYS THERE. It too will more than likely range trade as will silver which looks to be hemmed in near 24 and support near 23 – 22.90 for the time being.
Copper is picking up on the QE play and once again set another yearly high as it works ever closer to the magical $4.00 level. A closing push past $3.90 and it should hit $4.00. Having copper moving higher never hurts silver or the platinum group metals for that matter. Palladium easily cleared $600 blowing past its 2008 peak in impressive fashion. That will turn out to be the sleeper metal of the year as about the only people trading it in the past have been the 4 locals in the pit there in New York. Suddenly, everyone wants to know what it is and where it trades. Trading palladium is a lot like trading pork bellies – the motto is: “ good luck getting out if you need to”.
The grains were higher early in the session but they began to fade off of their best levels after the Chicago lunch hour. Leadership in that complex has moved to the beans with corn now in a secondary position to that market. Fundamentals for corn are strong but some are hesitant to push it much higher until they see how demand shapes up at these rather lofty levels.
Cotton is once again locked limit up. I am taking contributions to a pool of funds that we can use to buy up irrigated cotton production land in North Texas and get into the cotton business. Each night before I turn in, I am playing the theme song, “The touch, the feel of cotton” to motivate me. I figure that if the bottom ever falls out of that market, I can use the land for windmills Failing that, there are always rattlesnakes to hunt which make some nice boots. Norcini Cotton, Windmill and Boot Company has a nice ring to it. Seriously, I am stunned to see the fiber at these prices. How long it can maintain this altitude is anyone’s guess but when they finish running out all of the trapped commercials, look out. I wonder when people are going to go back to wearing fig leaves and forget the skivvies. They cost too damn much!
Crude oil is continuing to hang above the $80 level but running into selling near the $83 region once again. It too is range bound.
Bonds are also stuck in a rut.
It seems as if a large portion of the markets are just sitting around biding time until early November. My guess is that they are going to announce a rather large amount of QE (above $1.5 trillion) but will phase it in through a series of purchases spread out over a length of time. They hope to be able to have their cake and eat it too but going this route. They can say that they are not trying to undermine the Dollar by being reckless but neither are they ignoring the comatose economy either as they attempt to induce inflation and stave off the deflationary pressures. “Conditions call for action and we are doing that but we are also cognizant of the dangers involved”. And thus will the Fed portray itself as responsible stewards of the Dollar and the economy. And we all know just how well they have succeeded at preserving the value of our currency now don’t we?
Incidentally, the CCI ( Continuous Commodity Index) set a 26 month high in price today. If there was ever a testimony to the failure of the current monetary policy of the country, it is in that price chart.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
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