Briefly: In our opinion no speculative positions are justified from the risk/reward perspective.
Yesterday’s price action in the precious metals market might seem perplexing to some investors and there’s good reason for it. Gold declined, but silver didn’t, and mining stocks actually managed to rally more than 1%. Let’s take a closer look (charts courtesy of http://stockcharts.com).
[...] What we wrote yesterday about gold remains largely up-to-date:
Gold moved to its recent lows, but didn’t move below them. Technically, the situation hasn’t changed because of that, and thus, the outlook remains bearish, but it’s still possible that we will see some sideways movement or a small move higher before the decline really continues.
Central Bankers will never openly admit that they or their policies have failed. Moreover, they do not rush into sudden tightening (more on this in a moment). But one can begin to notice subtle changes in their language and actions that indicate they have noticed what’s happening in Japan (the failure of the BoJ’s “shock and awe” QE program to generate growth).
Nowhere is this more clear than at the US’s Federal Reserve or Fed. Indeed, starting in August 2013, various Fed officials began questioning the efficacy of QE.
First came the San Francisco Fed with a study revealing that QE generally doesn’t appear to generate economic growth:
LONDON, April 23 (Reuters) – The increasing use of technology on financial trading floors is driving a trend for banks to roll precious metals operations into their forex businesses as a separate unit from other commodities activities.
Barclays on Tuesday followed similar moves by rivals Deutsche Bank, UBS, JPMorgan Chase & Co and Morgan Stanley by announcing that it would keep its gold trading business while hiving off most of its global commodities operations.
The consolidation of interbank gold dealing and foreign exchange trading on electronic platforms is making it increasingly easy for forex traders to execute precious metals deals, allowing banks to ease cost pressures by moving the asset classes into a single business unit.
Federal Reserve officials are on track to reduce their monthly bond buying to $45 billion at their policy meeting next week. This leaves the question if the Federal Reserve will start to raise their short-term interest rates.
With the approach the Federal Reserve has taken on interest rates it is highly unlikely that those rates will move. The fact that an increase in interest rates at this time will cause market turmoil makes it even more unlikely that they will be moved. With a cutback in bond buying next week, bond buying will move to $45 billion a month.
This would nearly be reaching the half waypoint from where bond buying stood before. The Feds have made steady progress in an attempt to cutback on bond buying thus far and it has been successful.
Well, we know that this conglomerate which we call the main stream media is now totally controlled and is a virtual lapdog for the political process of the Democratic party. But, until the mid to late 90’s we didn’t have any efficient way around it. We were stuck with very few alternatives and they weren’t that easy to find.
Many years ago, 80% of the population got its news from the local newspaper and TV. Another 10% got their information from periodicals and magazines, and for the most part, what people “got” they believed. They didn’t have too many reasons to doubt what was being presented because reporters were indeed doing their jobs, doing deep involved investigations and reporting what they determined to be the truth. Investigative journalism was a respected profession.
Even as far back as 1928, there was however a movie titled “The Power of the Press” because powerful people understood that if you controlled what people “got” as news, you could help form opinions about things. The Press could help a particular candidate running for office, simply by expounding on his good qualities while only showcasing the negative aspects of his opponent. The press could help sway your opinion about whether a war was justified, they could push for certain regulations they wanted enacted, they could even push commercial products that they might have a money interest in.
My wife told me about this yesterday and I was laughing out loud before she could tell me that it immediately failed to have the desired response.
How ridiculous are they: they abuse, stomp mudholes, violate the 2nd and 4th amendment on a regular basis, act like sociopaths while rarely being held accountable and now they requested the general public to post friendly “selfies?” What a bunch of stoopid shitheads these copfuks are…
“There is a clear consensus that we are witnessing our second tech bubble in 15 years,” Greenlight Capital’s David Einhorn said yesterday. “What is uncertain is how much further the bubble can expand, and what might pop it.”
Einhorn is the latest high-profile name to hop on the bubble bandwagon. That’s just fine with me. Heck, he might be right.
But I’m not sure what you are supposed to do with this information. After all, we don’t know if the market will continue to grind higher for one, two or five more years. Einhorn even says so himself.
That’s the big problem with declaring bubbles. It really does you no good. Unless you’re attempting to measure and time market moves, you’re also blowing hot air.
We’ve enjoyed a pleasant break – prepare for more economic storms ahead … The challenge of managing the exit from QE and returning interest rates to a more normal 5pc or so level will remain … ‘It now appears that (a slight blip at the end of 2012 aside), there has been fairly strong growth in the UK since the summer of 2012.’ … How is the UK economy doing, where is it going, and who should get the credit or blame? The past year has seen a huge turnaround both for the UK economy and for the politics associated with it. In early 2013, the UK economy lost its AAA rating and there was fear of a triple-dip recession. Opposition politicians said if the Government did not change course there might be no growth for a decade, and the International Monetary Fund said the Coalition was playing with fire. – UK Telegraph
Dominant Social Theme: Central banking policy must always be adjusted to ensure its best applications.
Free-Market Analysis: This article tells us about the challenges that central bankers are facing in managing the economy going forward.
Those in the alternative media discount the ability of central bankers to successfully manage trillion-dollar economies. This article makes the argument that they can, and that they have done much better than they have been given credit for.
[Note: After three years without a break, I'll be taking some time off. There will be no Gold and Silver Daily next week. Ed]
The gold price got sold down a few dollars in the first three or four hours of Far East trading on their Tuesday. The tiny rally that was born out of that around 1 p.m. Hong Kong time got met by the usual not-for-profit sellers 10 minutes after the Comex open—and by the time “da boyz” were done at 11:35 a.m. EDT in New York, they had sold gold down about 14 bucks from its 8:30 a.m. high. The subsequent rally from that point, such as it was, met with a willing seller the moment that it really started to gather strength shortly before 4 p.m. in electronic trading—and that was that.
The CME Group recorded the high and low prices as $1,293.10 and $1,275.80 in the June contract.
Chinese manufacturing remains in contraction for 2014. Output and new orders were down for the 4th consecutive month, but at a slightly reduced pace according to the HSBC Flash China Manufacturing PMI.
[...] Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co – Head of Asian Economic Research at HSBC said:
“The HSBC Flash China Manufacturing PMI stabilised at 48.3 in April, up from 48.0 in March. Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident as both new export orders and employment contracted. The State Council released new measures to support growth and employment after the release of Q1 GDP. Whilst initial impact will likely be limited, they signalled readiness to do more if necessary. We think more measures may be unveiled in the coming months and the PBoC will keep sufficient liquidity.”
While Daniel Swalm researched his family’s genealogy, he learned about a particular episode in which his grandmother, born and raised in Minnesota, was stripped of her US citizenship after marrying an immigrant from Sweden.
Under the obscure 1907 law called the Expatriation Act, a US born woman who married a foreigner was required to “take the nationality of her husband.”
His grandmother was forced to fill out an alien registration form.
“I could not figure out why Grandma Elsie had to fill one out, because she was born in the United States,” Daniel said.
It took Joe Biden just a day after his arrival in Kiev to kill and bury the last remaining hope that last week’s latest attempt at diplomatic de-escalation in Geneva would actually be anything more than a joke. A few hours ago, in a statement posted on the parliament website, Ukraine acting President Oleksandr Turchynov said that pro-Russian separatists have “crossed line” adding that East Ukraine is currently controlled by “terrorists” supported by Russia.
The point of government among free men and women is to protect individual rights. The law rests on rights. Before there is law, codified or part of local practice, there are people, individuals with their rights who may need and want competent and professional protection of such rights.
Accordingly, when one is born into a free country, one is immediately recognized as a rights-holding individual. If all the officers of the law were to vanish – in an earthquake or tsunami – those who live in the area would have and keep having their rights just as they would have and keep having their birthday. Law and documentation follow.
One born to parents who own property – such as land, goods, etc. – and bequeath it to their offspring can thus own property as well.
Today one of the most highly respected fund managers in Singapore told King World News that the collapse of the Western Ponzi scheme will send the price of gold skyrocketing. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also discussed the coming implosion of the Western scheme as well as how the Russians and the Chinese positioning themselves ahead of this collapse.
Eric King: “Grant, as you know James Turk told KWN that gold is in the deepest backwardation we’ve seen in 8 months. What’s happening in the gold market?”
Williams: “Eric, this gets back to the difference between physical metal and paper. We’ve seen this increasing demand for physical gold out of Eastern countries in the last 18 months, particularly China, and that demand for physical is showing itself on a short-term basis in the negative (GOFO) rates we are seeing….
Two of the largest mining operations in the world happen to lie right next to each other, just south of Salt Lake City, Utah. The resources mined in each location are so deep and scattered on so vast a scale that their extraction requires the use of extremely large and powerful machinery.
The Bingham Canyon mine pictured above is so large it can be seen from space with the naked eye. Some judge it to be the largest human excavation on the planet. It is so massively large that it was declared a U.S. landmark and attracts visitors from around the globe. Yet, even though it is deeper than many mountains are tall and the machines working it are larger than buildings, in terms of scale it pales in comparison to the other mining operation just a short distance away—the NSA’s Utah Data Center.
Pressure is mounting on the European Central Bank to take action against the threat of deflation after a closely-watched survey showed prices continued to fall in April.
Markit’s survey of companies across the eurozone showed that output prices fell for the 25th consecutive month, despite accelerating business growth.
Its ‘flash’ output index, which is based on around 90pc of responses, climbed to 54 in March, its highest in nearly three years and well above the 50 level that separates growth from contraction. However the survey also showed companies are not yet confident enough to raise their prices.
If you favor sound money, you’re a sadomonetarist, according to New York Times columnist Paul Krugman. The Nobel Prize winner says he doesn’t use the term “just to be colorful.” No, he uses the term “advisedly,” and defines it as “an attitude, common among monetary officials and commentators, that involves a visceral dislike for low interest rates and easy money, even when unemployment is high and inflation is low.”
Krugman writes as if one favors low interest rates versus high ones in the same way a person supports high taxes versus low, or more government versus less. Interest rates are now government policy to be argued about and decided by government bureaucrats serving at the pleasure of politicians, instead of a reflection of the demand for funds versus the supply.
At what interest rate does a person’s support render him or her the Marquis de Sade?
Michael Tellinger: Ubuntu Party Elections 2014 Philosophy and Plan of Action … A Blueprint For Human Prosperity, abolish the privately owned RESERVE BANK … Create a PEOPLE’s BANK that creates money for the people by the people, tax-free and interest-free, debt slavery, Decentralize the government, escape the grips of Monsanto, Gift Economy, grow organic food … Michael Tellinger shares the philosophy of Ubuntu in this video, published on April 7, 2014, which any freedomloving people can certainly abide. – Forbidden Knowledge TV
Dominant Social Theme: We need a people’s central bank. And make it an anti-usury one …
Free-Market Analysis: The analysis of elite dominant social themes is always difficult. It is like putting together pieces of a jigsaw puzzle. Only in retrospect does one often begin to see larger promotions at work.
Michael Tellinger and his new Ubuntu Party initiative may provide us an important bridge between one power elite promotion – the anti-usury “people’s” central bank – and another one, the “ancient astronaut” theory of human origins.
This is how empires collapse: one complicit participant at a time.
Before an empire collapses, it first erodes from within. The collapse may appear sudden, but the processes of internal rot hollowed out the resilience, resolve, purpose and vitality of the empire long before its final implosion.
What are these processes of internal rot? Here are a few of the most pervasive and destructive forces of internal corrosion:
1. Each institution within the system loses sight of its original purpose of serving the populace and becomes self-serving. This erosion of common purpose serving the common good is so gradual that participants forget there was a time when the focus wasn’t on gaming the system to avoid work and accountability but serving the common good.
Journalist Ellen Brown thinks one of the biggest banker frauds on the planet is the rate rigging of the London Interbank Offered Rate, or LIBOR. Hundreds of trillions of dollars’ worth of interest rates are set off of LIBOR globally. Many claim in court they were cheated, and that includes the FDIC. Brown says, “The FDIC suit is different from the others. Most of the previous suits were about anti-trust and RICO, which is racketeering and are federal claims. . . . It involves 16 of the world’s largest banks that Professor Bill Black called the largest cartel, and illegal cartel, in history . . . clearly a criminal conspiracy.” Brown, who is also an attorney, goes on to say, “The interesting thing about the FDIC case is this: They’re bringing ordinary common law claims for fraud, breach of contract and conspiracy to commit fraud. The University of California should bring that type of charge. They were one of many victims just like Harvard. That’s why all these tuitions have gone up, or a major reason why. They have to have+ these huge costs from their interest rate swaps that went against them. I would argue that they went against them not only because of manipulation of LIBOR but also because the Federal Reserve is the head of the private banking system and pushed rates very low.”
The pictures below do not represent the free market at work. Instead, they track the endless cycle of economic distortion and dis-location unleashed by the Fed’s regime of bubble finance. The foreclosure tsunami hit the bottom tiers of the housing market the hardest because that’s where the sub-prime, Alt-A and other varieties of predatory finance were concentrated.
Then, when Bernanke unleashed his money printing spree, Wall Street hedge funds and LBO shops rolled into Scottsdale AZ and dozens of other busted sub-prime markets and scooped up foreclosures by the thousands. Their concentrated and manic buying soon dried up most of the available defaulted and distressed inventory, sending home prices soaring in the lower tiers of the market.
HONG KONG (MarketWatch) — Investors have done well in the past with a simple strategy of buying what China was buying. So earlier this year, things were looking up for gold when it was revealed that China had swept past India to become the world’s biggest buyer in 2013.
For the first time, Chinese demand topped 1,000 tonnes, reaching 1,176 tonnes after a 41% year-on-year gain, not including central-bank buying.
Apparently Chinese consumers had rediscovered their affection for the yellow metal and gone bargain hunting after prices shed 28% last year. The China buying dynamic was credited with restoring gold prices to their upward trajectory.
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