My Dear Friends,
Today was the first day that we got some good action in the gold price. It will be very interesting to see if sellers appear as they have been during Asian hours. Just because the manipulators use the illiquid Asian hours to paint gold do not assume it reveals the nationality of the selling. The gold market as we all know on a day to day basis is totally rigged. In fact, find a market anywhere that is not bullied by some young buck who considers himself the Master of the Universe.
Gold is coming up on a tight group of four very major support areas that will hold the price from which the next advance is to take place. We have reached a point in terms of the depth of despair in the gold community that was never reached in the 1968 to 1980 reactions.
That is all this is. Just another reaction in a Gold price headed for Alf’s $4500.
I imagine when gold reacts off $2100 the stampede to the bath tub with their razor blades will be on again. Gold has in no way topped. The gold reaction per day in terms of percentage was nothing whatsoever. We have in no way reached the level called “thrilling with bullish bliss” common of a top. Every dollar we have won has been paid for in blood. All the short of gold wunderkin Masters of the Universe will have to be destroyed before gold is fully priced. The community, if you can still call it that, is in a psychotic episode that is soon to end.
Regards,
Jim
Jim Sinclair’s Commentary
John Williams’ www.ShadowStats.com points out that nothing whatsoever has changed.
Commentary No. 410: Special Commentary, GAAP-Based 2011 U.S. Financial Data
- Actual 2011 Federal Deficit Topped $5.0 Trillion
- U.S. Government Debt and Obligations Top $80 Trillion
- Long-Term U.S. Insolvency/Hyperinflation Remain Virtual Certainty
www.ShadowStats.com
Summarizing 2011 In Nine Easy Charts
If one had to summarize 2011 in one sentence, it probably would be: "a
year in which the market ended unchanged, in which the world got
within seconds of global coordinated bankruptcy, and in which central
planning finally took over everything." Simple. On the other hand,
conveying a comparably concise message full of hope and despair at the
same time, using charts would actually be slightly more problematic.
But not for the Economist, which has managed to do just that, however
not in one but nine discrete charts. Here is what they did.Fed Swap Lines Jump 59% In A Week As Japan Shows Its Hand
It seems that it is not just the Europeans that are USD cash starved heading into year-end as the Swiss and Japanese gorged themselves on two-week maturity FX swap lines during the last week. The total outstanding under the Federal Reserve's USDollar Liquidity Swap Operations jumped from $62.599bn to $99.823bn - or more than 59%
during the week ending 12/28. Admittedly, the size of the additional
Swiss draw-down, $320mm more compared to $75mm the previous week, is a
drop in the bucket compared to the ECB's additional $33bn this week.
However, the more-than-$9bn additional draw-down by the Bank of Japan
perhaps helps explain why USD-JPY cross-currency basis swaps eased so
much this week (as the desperate need for USD through this
counterparty-risk-exposed form of funding reduced by around 12bps or
more than 25%). Perhaps it is time to take a closer look at some of the Japanese banks
as while the stigma of borrowing from these lines is talked down,
clearly there are funding/liquidity needs that are rising dramatically.Gold Daily Chart
Gold, as with Silver, managed to bounce right where it needed to in order
to prevent a deeper drop. It uncovered buying down near the $1,535 - $1,530
level, an area where we learned after the fact, that Central Banks had been
buying back in September.
Bulls are digging in here so one can only hope that their conviction
remains firm enough to take the price out of the danger zone and back above
the $1,600 level. Such an event would trigger some sizeable shortcovering
among the weaker-handed bears.
Failure to hold today's low sends the market almost immediately down
towards $1505 - $... more »
Raid on silver and gold fails/Poor Italian 10 yr auction/rumours of global QE to infinity.
Good
evening Ladies and Gentlemen:
I hope that all of you were not blinded by the antics of the banks as
they threw a tantrum this week as they are trying desperately for you to
sell to them all of physical metals that you wish to depart with. The
paper shorting accomplished nothing as you will see below. The bankers
have nobody to play with so they are playing with themselves selling all
the
Silver holding at critical $26 level
Silver has been the on the receiving end of the risk aversion trades and as
noted in a previous post has been badly lagging gold in terms of
performance.
It ended last year (2010) at $28.01. As of this writing, it is currently
trading near $27.74, down, but just barely on the year. Compare that to
Gold which is currently trading near $1547, and remains up for the year at
about 8% or so.
This being said, Silver had held on the charts exactly at the former spike
low near the $26 level which it made after plunging from near $45 in late
September of this year. This is a key level whi... more »
Yale Research: Commodities Better Than Commodity Stocks For Investing
Yale did a study recently showing that investors made 300% more by putting
money in commodities themselves rather than commodity stocks – that is
unless you’re a great stock picker. - *in CNBC*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
The Bottom Is Either Here Or Near
*Dave, thanks as ever for your posts and the great blog. We're dying out
here and need the encouragement of someone who's lived through it before *-
Comment yesterday
I don't have much more to say about the current price correction in the
metals/miners. Please keep in mind that most of the damage has been
inflicted since Christmas Eve, when most traders and money managers are on
vacation and the volume is extremely light. This is the ideal type of
market for someone to manipulate. But having said that, and we'll know
more tomorrow, I'm pretty confident that most of the selling ... more »
Silver From Investment Darling to Pariah
The downside blowout of lease spreads reflects the invisible hand borrowing
silver to ignite the cycle of panic in silver. Notice how the negative
lease spreads compress as price declines (falls down the elevator shaft).
Real Silver Lease Rates (1-Month LIBOR less 1-Month SOFO) and London PM
Fixed Silver Price The price of silver bottoms when ex ante shorts
(accumulated before the price...
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The End of Year Precious Metal Bullion Bear Raid - Another Form of Window Dressing?
Central Planning Update (In Theory And Practice) - You Are Here
The volatility of today is nothing more than a fight between the active perceptions of participants trying to maximize self-interest within the classical, traditional concept of a free economy, and the opposing forces of overlordship of the landed economic elite, trying to get the uninitiated to simply follow orders. The elite really believes that if everyone would gladly pile on even more debt and spend with reckless abandon, the Great Moderation would once again be within reach. Consumers should only stop thinking for and of themselves since common sense is dangerous to the controlled economic system. To get more debt “flowing” requires active price manipulation to make the world seem like it will be better in the near future so that people will start acting like it... That is both the opportunity and danger of a system reaching its logical end. Put another way, there is a growing realization that while free markets are messy and somewhat unstable, central planning is not really a cure for those symptoms. In fact, it has created more harm ($13 trillion in debt is only US households) than good, more illusion than solid results. Volatility means that the free market is at least attempting to impose itself at the expense of central planning’s soft financial repression and control. By no means is such a beneficial outcome assured; rather the other half of all this volatility (the risk-on days) is the status quo desperately trying to hang on through any and all means (even those less than legal, like bailing out Europe through cheapened dollar swaps).ES Bounces Off 200DMA And Total Chaotic Disconnect Ensues
As headline-makers from every mainstream media outlet attempt to fit today's spectacle to their cognitive biases, we note the massive surge in volume at the close in ES
(the e-mini S&P futures contract). Financials closed at the highs
of the day and stocks managed to retrace almost all of yesterday's drop
(with seemingly everyone waiting for the ETF-moment at the end to
transact?). We noted the disconnect earlier (and
potential QE chatter) and while the break between TSYs and the synced
USD-down-ES-up was incredible, the 5.5% rally in Silver off its earlier
lows was none too shabby as Gold also managed to get back to $1550 (as the Gold/Silver ratio reverted to its 55x 'stable' ratio of the last two weeks). Investment Grade credit outperformed
high yield and stocks today (not exactly a bullish risk-hungry
indication) managing to close tighter than Tuesday's close even as HYG
(our trusty high yield bond ETF) shrugged off a little more of its NAV
premium and underperformed all afternoon as the equity ebullience
struck.$135 Billion Redeemed From US Equity Mutual Funds In 2011, 34 Of 35 Consecutive Weekly Outflows
At this point the weekly ICI fund flow update, showing the barrage of redemption requests no matter what the market does, is a moot point, but we will do it anyway: in the week ended December 21, when the market was doing its usual Santa rally antigravitational acrobatics and rising on the now denied hope that the European LTRO would be the Hail Mary pass of 2011, investors in domestic equity mutual funds pulled another $2.7 billion, leaving funds with even less dry powder, with even less ability to lever up, and with an even lower margin of error to any sharp pull backs in stocks. To date, and with just one week left in, investors have withdrawn a whopping $135 billion from equity mutual funds, which we are 100% certain is an all time record for any year in which the S&P closed even nominally positive for the year, proving that nobody believes this farce known as a market any longer. But we all know that... In further detail, investors withdrew funds for 34 of 35 consecutive weeks, have withdrawn $19 billion in the past month alone, and their flows show no indication of any sort of market correlation any longer, indicating that no matter how high the "powers that be" push stocks, retail no longer cares, and will not chase "performance" especially when said performance is 100% fraud and manipulation.
Is Today's Market Pricing A Forthcoming Reactionary-QE By The Fed?
Our earlier discussion
of the relationship between ECB and Fed balance sheets as the driver of
risk correlations this year seems particularly timely as we are seeing
quite notable divergences among US asset classes and FX flows today.
EUR is now up relative to the USD on the day (DXY is down and tracking
stocks higher), Treasury yields are falling fast and the curve
flattening (2s10s30s dropping rapidly) and Silver is rallying hard off
its lows (Gold perhaps being held back for now by
collateral/cash/redemption calls for now). Oil is back green for the
week also. Is the market starting to comprehend that the non-QE
of the ECB's LTRO and SMP is in fact QE and implies the currency wars
just went to 11 - forcing the Fed's hand?New Fiscal Compact, Or More Of The Same For Europe?
While the language,
so far, of the new fiscal compact for the European Union remains
wishy-washy at best and outright useless from an enforceability
perspective at worst, we thought it instructive to take a look at just
where we stand within the existing 'old' fiscal compact. The Wall Street
Journal's interactive charts has an excellent example of the
disappointing state of the union and the likelihood that anything new
will change anything at all. Presented with little comment -12
of the 17 member nations currently have annual budget deficits that
exceed the existing (and new) fiscal compact's 3% of GDP rule (including
FrAAAnce) and the data is not all in yet obnviously!European Credit Weakens As Stocks Rally
European
markets are thin this week, thinner even that in the US from what we
see in credit runs and equity volumes, but today saw a notable
divergence between credit (sovereign, financial, and corporate) and
equity markets continue. The broad BE500 equity index (of European
stocks) rose majestically in the European afternoon (after US day
session began), ending the day nicely positive, while spreads were wider
in every category. Financials were the worst performers in European credit as they didn't see any bid into the close even as investment grade and crossover credit rallied modestly. There are a lot of divergences (and breakdowns in correlation) occurring in and across asset-classes as we see EURUSD weaken - unch now on the day
(weak auctions, macro data, or market recognition of ECB QE that is
not QE occurring), Gold down (because the dollar is up?
liquidation/collateral/cash needs?), Stocks up (QE that is not QE
again?), Corp and financial credit wider (nothing is solved and QE does
not help a spread-based not currency-based numeraire), Sovereigns
wider (nothing is solved and even ECB buying is not working now). Its
always tricky to read too much into Christmas week trading - low
volumes, high marginal impact, and year-end rotations and
window-dressing (cash management), but the trend in risk assets overall seems to be lower not higher, no matter how you squint at it (even though last year's opening-day rampfest is fresh in most people's memories).
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