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  • Weekly COMEX Gold Update: Despite The Rise In Gold Price Inventories Continue To Decline  [View article]
    So, the Comex now has 800,000 ounces of gold. Sometimes, especially when they need to manipulated gold prices in a big way, they trade 80,000,0000 ounces in one day. This is 1000:1 and that is in one day only. This is total madness.
    Does anybody know how trading volume has changed over the last 10 years or whatever period is available? I wonder if trading volume has increased dramatically, not sure but that would be my guess. If that is correct, then leverage has gone up like crazy. Are trading volumes available anywhere? I see them now but not sure about historical data.
    Aug 18, 2013. 09:29 AM | 4 Likes Like |Link to Comment
  • 10-year Treasury yield wants 3%  [View news story]
    Looks like the bond bubble has deflated a bit ... not much really. The FED is starting to talk about untapering the taper.

    ''Federal Reserve Chairman Ben Bernanke may delay his plan to taper bond purchases past September, as investors expect, because of this week's surge in interest rates, according to UBS.''

    The thing is that the biggest problem for the FED would be if they lose control over the bond market. This is what is happening now. Can they get it back? Maybe but eventually they will totally lose control over bond prices. Bond prices are dropping even with the FED buying $85 billion per month ... wow.
    Aug 17, 2013. 02:53 AM | 1 Like Like |Link to Comment
  • GLD: More Volatility Yet To Come  [View article]
    It is kind of funny. Even Keynesians teach that if supply of something goes up, prices go down. If demand goes up, prices go up. These two forces create an equilibrium in a free market.
    NOT so with cash. The FED has increased money supply from $800 billion in 2008 (all cash created in the long history of the US up to 2008) to $3.4 trillion now and growing at $1 trillion per year. Supposedly this will NOT affect the value of money.
    With gold, annual supply is fairly constant (actually will be down this year YOY). Demand is through the roof with Chinese and Indian demand up more than 50% and shortages everywhere. This shouldn't affect the price says the author. He teaches investing and trading, including technical indicators!!! I bet he has never traded anything in his life.
    Aug 17, 2013. 02:44 AM | 2 Likes Like |Link to Comment
  • Ron Paul Has It Totally Backwards, Gold Isn't Going To Explode Higher  [View article]
    The FED is in a tight spot. They've manipulated gold prices lower by direct intervention on the COMEX but instead of killing sentiment they got super strong demand from Asia. The most intelligent thing the FED can do is to let gold go up by about $300 - $400 dollars and proclaim that it is a bubble again. This year China and India alone will buy all gold mined in the world for the year. With scrap supply collapsing (down 20% YOY in Q2), where is the gold going to come from to satisfy the gold hunger of Russia, Turkey, Iraq, the Middle East, European investors, US coin and bar buyers and the rest? Sure enough, the FED can continue to manipulate at current depressed levels for some time but they are running the risk of a run on the Comex and bullion banks and a possible systemic crisis of confidence. The current manipulation scheme is just stupid. Has anyone seen the bond bubble bursting?
    Ron Paul knows what he is talking about. The biggest problem for the FED now is the huge sell off in the bond market. This year the 30 yr bonds are down ~ 25%. The economy cannot take the higher rates and the FED may actually have to step up its bond buying, forget the taper propaganda. They will think very hard what is the best propaganda, maybe lower by say $10 billion first and then hike by $40 billion.
    Aug 16, 2013. 05:07 PM | 8 Likes Like |Link to Comment
  • GLD: More Volatility Yet To Come  [View article]
    Of course the market will be volatile, the FED and their minions at J.P. Morgan and GS will make sure of that.
    Did you see the effect on prices of the spectacular demand from India? The author was saying that Indian demand would be irrelevant ... who knows why ... just the usual Keynesian nonsense I guess.
    Aug 16, 2013. 02:53 PM | 4 Likes Like |Link to Comment
  • Aug Reuters/UofM Consumer Sentiment 80.0  [View news story]
    Don't be shocked if they do the opposite of taper and that is not not taper but actually increase QE. They are going to increase QE eventually but not yet. And interest rates will stay at 0 not till 2016 but till the end of time or the end of the dollar, whatever comes first.
    Aug 16, 2013. 10:52 AM | 5 Likes Like |Link to Comment
  • Time To Buy U.S. Treasuries  [View article]
    I agree that the FED wants to see much lower long term rates. So, if you buy, you are with the FED on that one. This is for sure. You may make some money. But if they lose control of the bond market, and at some point they will, you are going to really get it. Not a good trade to be long me thinks.
    Aug 16, 2013. 10:43 AM | Likes Like |Link to Comment
  • Time To Buy U.S. Treasuries  [View article]
    Bonds are a bubble and will eventually totally blow up but not yet. Still, it is hard to be bullish on something if you think that it is a bubble as I think bonds are. There are some signs that are very troublesome for gov. bonds:
    1. In June foreigners sold $40 billion of gov. bonds, mostly Japan and China sold. They also sold another $20 billion of other assets.
    2. Bonds have been weak even with equity weakness ... not a safe haven anymore?
    3. The FED buys a total of $85 billion per month (some govies and some agency bonds but all similar). Still the market has totally tanked! What if they taper and the government needs new buyers to fund the deficit?
    I don't think that the FED will taper in any significant way and eventually they will actually increase QE to more than 100 billion per month but still. Who is going to buy if the FED steps away ... the answer is nobody.
    It is hard to tell how bonds will perform short term but this is the most overcrowded bubble the world has ever seen - stay away IMHO.
    Aug 16, 2013. 10:35 AM | 2 Likes Like |Link to Comment
  • RBI attempts to boost rupee backfiring  [View news story]
    Indian is a money printer gone mad. Or rather their government is. M1 money supply was 8 trillion in 2006 and is now 20 trillion and the growth is accelerating. Their toilet paper, sorry currency, is nobody's reserve currency and it has collapsed and you can bet that their inflation is going to be high, much higher than the so called economists project. The government just introduced capital controls and they may have to introduce inflation calculation controls as well. They are going to need them.
    Aug 16, 2013. 10:26 AM | 1 Like Like |Link to Comment
  • Comex Registered Gold Cover Ratios Hit Unprecedented Levels: Over 50 Claims Per Oz.  [View article]
    It will come but not yet ... in my view. Can;t predict the timing but within 5 years most likely, probably not less than two. Of course, I am talking about the stampede which maybe joined by the locals as well. The trickle effect of slowly getting out has already started.
    Aug 15, 2013. 03:58 PM | 1 Like Like |Link to Comment
  • Comex Registered Gold Cover Ratios Hit Unprecedented Levels: Over 50 Claims Per Oz.  [View article]
    This is a good question. In June there was a large outflow of foreign money from all markest: $40 billion from treasuries and something like $20 billion from corporate bonds, equities, munis, etc. If this is a trend, it is not a good one but it explains why we have both govies and equities weaker lately. I personally think that this is not the big rush out of the dollar yet. Still, you never know because there is something like $8 trillion in foreign hands invested in various paper assets and if these people get nervous (or a portion of them), the whole thing could become very ugly. The FED is in a really tight spot. Taper QE and the economy tanks and more importantly for them equities. Don't taper and foreigners lose faith in the dollar seeing that money printing forever is the future. So, what is the FED going to do? First, there will be tons of propaganda. This is easy to predict. Then what? This is a tougher one but maybe the best course is in between with some taper but a very tiny one by say $10 to $15 billion per month. I have little doubt that the FED will eventually have to increase QE to more than $100 billion per month but maybe they need to change the CPI calculation first and then claim that inflation is too low again.
    Aug 15, 2013. 02:28 PM | 5 Likes Like |Link to Comment
  • Comex Registered Gold Cover Ratios Hit Unprecedented Levels: Over 50 Claims Per Oz.  [View article]
    This my view on what are the likely options for the market in the next couple of months and why. Given the strong physical demand, especially in Asia, the physical markets for gold are tight. In Q2 physical demand from China and India is up more than 50% YOY, according to the WGC. They also wrote that supply was down 6% and also expect that China and Indian will buy ~ 1000 tons of gold each this year and that with a total amount of gold mined in the world ~2700 for the year. I think that China and India will buy more than that but even that is big. Russia, Iraq, Turkey, European investors, Vietnam and many others are buying like there is no tomorrow. So, how is that all going to affect the prices? Well, the FED enters the picture. They've been manipulating the market heavily (they do that always but really stepped up their interventions in Q2). The FED drove prices lower in at attempt to crush sentiment. While prices are lower, the sentiment in Asia was one of a kid seeing its favorite chocolate on sale and the Asians bought and are still buying big time. So, the sentiment part of the manipulation didn't work well and that was the more important part. The FED has two options:
    - Let prices go up by at least $300 to $400 over the next three months and call this a new gold bubble.
    - Keep fighting it. They can keep prices low for longer than 3 months for sure but they risk a run on the bullion banks and Comex and/or bullion bank default and a possible systemic crisis of confidence.
    I think that the clever thing for the FED to do (the clever think would actually be to stop intervening but that is unlikely) would be to let prices go up and make gold super volatile to discourage as many people as possible from investing in gold. I think that the ''Keep fighting it option'' is too risky as they can cause a crisis but also continue to cause the supply of gold to shrink with prices going even higher eventually due to the lower supply. I don't know which option they will chose as they are very short term thinking so they may choose the second one actually but still the first is much more likely.
    Aug 15, 2013. 02:15 PM | 2 Likes Like |Link to Comment
  • Gold: Where It's Going Next  [View article]
    The WGC just came out with a report for gold supply/demand. These are some of the highlights:
    1. China and Indian demand up more than 50% YOY (Q2)
    2. Supply down 6% due to collapse in recyling.
    3. Prices down 35%.
    Wow, this is some new ECO 101: supply down, demand up, prices ... DOWN. Thank you B.B. for your interventions in the gold market to help China and India buy discount gold from the West.
    About Indian consumption, the WGC projects ~ 1000 tons this year. This is the legal gold of course. I have no idea about the real amounts but I think that India will actually buy more than that. They bought something like 150 tons in one month alone when the price collapsed ... FED intervening of course.
    Nobody is going to know the amount of gold smuggled in India. The amounts are going to be huge because India is very corrupt and the way gold is going to be imported is just like before with politicians, border guards, the police getting paid their protection money instead of the government collecting taxes. Indian demand will definitely go up.
    Aug 15, 2013. 01:52 PM | Likes Like |Link to Comment
  • Bullard: Taper decision should wait  [View news story]
    2 to 3 years from now we are still going to hear the same thing ... FED is thinking of tapering but some members less so than others ... the FED has become like a large bird nest with many vocal little birds trying to get the biggest insect from their parents (the politicians). The insect in this case is some big government job.
    Aug 14, 2013. 03:54 PM | 3 Likes Like |Link to Comment
  • Why Tapering And Rising Rates Will Fuel A U.S. Recovery And Dollar Strength  [View article]
    This is crazy. Rates have gone up and mortgage applications have collapsed. This will kill the housing recovery. Here goes the whole recovery as hardly anything else has recovered at all. Even Bernanke said in his testimony that if the FED end QE, the economy would tank (his words).
    The only recovery is in the market due to $85 billion freshly printed cash per month.
    Aug 14, 2013. 03:49 PM | Likes Like |Link to Comment