The Golden Truth: A Couple of Friday Morning Observations...

Friday, May 14, 2010

A Couple of Friday Morning Observations...

"Advance" retails sales estimates for April were released by the Commerce Department today. The "adjusted" headline number showed a .4% "seasonally adjusted" increase in total retail sales over March and an 8.8% "adjusted" increase over April 2009. Looking at the unadjusted numbers, however, April sales took a drop from March (maybe because April has one less day), and if you strip out the gain in building materials/hardware, April sales plunged vs. March. I suspect a large part of the building materials gains were price increases.

How realistic are the "adjustments" and are they to be trusted? Doubtful. Here's what the Census Bureau says about the adjustments:

Adjustment of estimates is an approximation based on current and past experiences. Therefore the adjustments could become less precise if current competitive pressures, changes in consumer buying patterns during holiday periods, and other elements introduce significant changes in seasonal, trading-day and holiday patterns.

They give us a table of the adjustment factors but do not go into detail about how the factors are derived. You can explore the issue with this link: Orwell Smiles. Here's the full blown Census Bureau retail sales reports: Orwell Giggles. You decide.

As for the price action in gold and silver, today is the second trading day in the last 6 that we've had a disconnect between the action in the stock futures and gold/silver. This is extraordinarily significant. Historically during this bull market in metals, when I would wake up to see the SPX, Dow and oil futures all getting hammered, I would have expected to see gold down $20 and silver down 50 cents. But not today and not last Thursday. The world is finally starting to understand the true nature of real currency vs. fiat paper and this view is being expressed in today's price action (and last Thursday's). As this disconnect becomes more frequent, look out above for the metals. And on a gold/XAU or HUI ratio basis, the mining stocks have room to at least double vs. gold here.

If the dollar starts to rollover, we are going to see a very violent and extended move higher in gold, silver and the mining stocks that will make believers out of all but the very worst charlatans on CNBC and Bloomberg. And the junior mining stocks will rip off 300-1000% gains. Got gold? Orwell is laughing uncontrollably now.

7 comments:

anliuFriday, 14 May, 2010
Dave, with the shortage of physical gold and silver sweeping across Europe, looks like people are jumping into the only other alternative the usd.

But somewhere down the line I can guarantee the usd will also be sold off, but we won't see a corresponding rise in the euro. That is when gold and silver will truly shine.
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AnonymousFriday, 14 May, 2010
Looks like the gartman still has the kiss of death... think he went long yesterday.
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Dave in DenverFriday, 14 May, 2010
ROFLMAO. Good point on Gartman!
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JoeFriday, 14 May, 2010
I am sure Murphy will note the Gartman curse in Midas today.

Speaking of Bill Murphy, I find it appropriate that his initials are BM because everytime he uncovers something TPTB get a case of the running shits.

Joe M.
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Dave in DenverFriday, 14 May, 2010
LOL. Wait til next week.
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rothbardFriday, 14 May, 2010
Gartman is either a shill, I'm not entirely sure, or he has still not learned that simple TA in thwe GOLD/SILVER complex is NOT TO BE TRUSTED and USELESS.....but maybe that is changing.

How many breakouts has TGL bought and sold right away? The tape is (was?) so painted its not even funny. TA is being used AGAINST investors in all markets as algo's take the other side.
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Dave in DenverFriday, 14 May, 2010
Gartman is a moronic windbag. He doesn't even run capital - he's a newsletter writer. That means he can claim buy/sell entries ex post facto. He wouldn't know what risk felt like if if it crawled up his well-lubed anus. And he has NO idea what he's talking about w/regard to gold.
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.