Hear that sucking sound? That's the sound of Asia, specifically the Chinese, sucking all of the gold and silver that the reality tv watching American zombies are selling into cash for gold companies and now an operation being set up in Sears/Kmart by an affiliated Chinese company. And by many accounts, including this one from Clusterstock.com: LINK, the Chinese people can't exchange their fiat currency for gold and silver fast enough. I find it fascinating that both Europe and Asia, two civilizations with several centuries more history and experience with the precious metals than America, are buying the stuff hand over fist, while the consumption-happy Americans are all too willing to unload their last vestiges of real money in exchange for fraudulent pieces of paper that allow them to go buy faux-luxury goods and appliances at Sears and Kmart.
The dollar. I know I've been early on this call, but I now believe the dollar has finally rolled over:
(click on the chart to enlarge)
A recent poll reported on Bloomberg showed 97% of all money managers were STILL bearish on the euro and bullish on the dollar. How come no one is talking about the short euro/long dollar trade being too crowded? Given that the big banks have been buying all the euros being sold by funds, and selling dollars to all the buyers, the higher probability bet here is to get long the euro and short the dollar. I can't recall since the internet stock bubble when fund manager/public sentiment was this massively skewed in one direction.
And finally, we all know that Goldman Sachs has taken it upon itself to fund the bailout of Obama's favorite ghetto-home-mortgaging bank, ShoreBank, in Chicago. But is this really a bailout with good intent by Goldman or does the firm look at it as an investment with a huge payoff? Obama apparently has close ties with this bank. Let's say that the Government originally were to settle its SEC lawsuit against GS for $1.5 billion. But now Obama steps in and works out a $1 billion settlement. Goldman effectively "earns" $500 million in exchange for the roughly $50 million that it is thought to be ponying up to save the failed bank. A 10x payout. Helluva deal there. My only question, and it's strictly rhetorical, would Goldman have saved this bank if McCain were in the White House instead of Obama?
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Good infor Dave. The divergence in PHYS today was pretty wild, something seems off to me. I get the physical aspect, but maybe large short positions have not been carved out by the big banks on that one yet? Any ideas?
ReplyDeleteHow can I get a new Caddy out of this deal? Want a 1976 Eldorado Convertible...
ReplyDeleteJMac: ROFLMAO
ReplyDeletegyc: ya i had noticed that the premium on PHYS was almost 20% intra-day. they haven't updated the final as of yet. PHYS has about 10 tonnes in it, so it tells the premium the market is willing to pay for 10 tonnes of bona fide custody metal vs. GLD, which trades at a discount (to some extent cuz of the way the expenses are accounted for, but should still be trading at a premium if the market thought it was bona fide).
Dave, the gold price action is not looking good... Looks like the f'in bastards are going to pound paper again... I hate to say this and I hope I'm f'in wrong but it looks like we might visit sub 1000 again!!!!! Sign when will this paper game end!!!
ReplyDeleteI am absolutely f'in sick of this paper shit... I have lost complete hope in this rigged game ever ending till tanks roll down our streets.
ReplyDeleteWe need to get above f'in 1200 again ASAP or this will be a f'in bull trap... This is getting disgusting now... I repeatedly mentioned it doesn't matter even if GS came out and openly said we manipulate gold, nothing will change. We need countries to start declaring their currencies gold convertible for a perception shift to take place! FUCK this shit!
ReplyDeleteLOL. Anliu you can use the "f"-word on this site. There's no way we go below 1000. Well, it could happen but it's very low probability at ths point. The physical market is starting to control the paper market. 2 years ago, if you told me the Dow was going to lose 10% in less than a month, I would have actually shorted gold, because up until now, a big market shit like this would be utilized to get gold down 20-30%. The metals are hanging in remarkably well so far. It's cuz of the physical demand.
ReplyDeleteIn fact, if you have cash reseves, start legging in to more of the positions you have. We had gone to 40% cash last week and started redeploying some of that yesterday, took a break today, and will deploy more tomorrow. This pullback is a fucking gift and it's going to rip in reverse back up in a way that will make Dennis Gartman shit his pants.
One more point, use this period to add to your favorite positions, research new ones and take a break from the daily grind. There will be public civil unrest coming - probably as soon as this summer - so enjoy what we got now while you can. Gold is a two-headed monster. 1) as long as you own a lot, you will financially survive what's coming and make a lot of money BUT 2) the living environment that will accompany $5000 gold will be unpleasant.
ReplyDeleteMan my junior miners are killing me!!!!!! I do have cash reserves but I'll probably wait for prices to go back above 1200 before adding to my longs... Give a shout out if u hear from the grapevine the shit is about to go orbital!
ReplyDeleteFully agreed about the unpleasantness!!! Dave if u ever get the time listen to this interview!!!
ReplyDeletehttp://www.youtube.com/watch?v=CLsi0Ialvxk
The commies have taken over, its game over for the free and the proud!
This shit could go orbital at any time. The best strategy in this sector is to buy into the sell-offs, legging in in case it goes lower again the next day and then taking profits on the big moves higher.
ReplyDeleteDon't worry the peace maker is moving five aircraft carriers of Iran by end July early August. Obviously a goodwill mission and the peacemaker wants to engage Iran with a lot of goodwill. So the crews of 6,000 Marines and sailors aboard the Truman Strike Group come from four months of extensive and thorough training to prepare them for anticipated missions in the Persian Gulf and the Mediterranean. Obviously goodwill fly bys are planned for the joint peace talks/celebrations.
ReplyDeletehttp://www.debka.com/article/8794/
stay away from making usd calls. You suck at it.
ReplyDeleteLOL. Hey at least I admitted I was early. Win/win for me since gold went up with the dollar, like it did in 2005, and when the dollar rolls over and shits the bed again, gold will launch, like it did in 2006.
ReplyDeleteDon't worry the peace maker is moving five aircraft carriers off Iran by end July early August. Obviously a goodwill mission and the peacemaker wants to engage Iran with a lot of goodwill. So the crews of 6,000 Marines and sailors aboard the Truman Strike Group come from four months of extensive and thorough training to prepare them for anticipated missions in the Persian Gulf and the Mediterranean. Obviously goodwill fly by's are planned for the joint peace talks/celebrations.
ReplyDeleteFunny no mention of this on the Tee Vee.....more important issue I guess., like who won on Dancing with the Stars?
http://www.debka.com/article/8794/
Should I take all the gold(pricing dropping)anger on this blog as a buy sign?
ReplyDeleteDumped all my junior mining plays 2 weeks ago.
They are going to tank a lot more along with the CAD and AUS. So, you´ll lose on the currency as well if you hold on.
Dump all your jnr´s now so, you can grab more later at cheaper prices with more cashola on hand.
And no the USD is not going to roll over any day now. All this loosey, goosey, premature USD tanking talk is pure crapola. Don´t fuck with the mighty USD in times of crisis or you´ll get your head handed to you.
Look at this if you ? the current market
perception....
http://quotes.ino.com/chart/index.html?s=FOREX_AUDUSD&t=&a=&w=&v=d12
http://quotes.ino.com/chart/index.html?s=FOREX_USDCAD&t=&a=&w=&v=d12
and...it´s only just begun...
follow the money dude, the big cartel banks are record long the euro and record short the dollar. I'm placing my bet on their side of the trade. Aussie approaching buy area, especially yielding over 3% now.
ReplyDeleteAussieland is about to go bustola and so is Canacacca. Think RE bubbles! Think China! Now, read some Steve Keen(great name) and some Mish Shylock to update your current thinking.
ReplyDeleteI see your USD bias--but, it´s clouding your judgement.
And...remember big banks can keep putting on more and more shorts a lot longer than people think before we get a big bounce or turn.
re: my dollar/gold view:
ReplyDeletehttp://www.youtube.com/watch?v=XtKydtoLucc
Sorry bro, but Mish is a complete baffoon. He doesn't run capital and he doesn't trade and his understanding of finance and markets is extraordinarily superficial. I don't care if he gets airtime on Bubblevision or whatever - that alone validates my view.
ReplyDeleteI've forgotten more about finance and markets than he'll ever know.
Where was he in 2001 when I was calling housing the next biggest of big bubbles? I sold my McMansion in 2004, can buy it back now down 40% and have been happily renting ever since. I put my money where my mouth is.
I'm usually early on my calls and that's fine. I'm happy getting 60-70% of a move and leaving the other 30% to the perfectionists who end up stepping on their own dicks anyway.
97% of all money managers are bearish on the euro and bullish on the dollar. how come that side of the boat isn't too crowded? when the bullish sentiment on gold gets over 50% everyone screams "bubble! trade's too crowded! sell now."
ReplyDeleteHow come its so different with the euro/dollar? ROFLMAO. I stand by my view and my money is where my mouth is: 100% of my investible funds is in gold/silver/mining stocks.
re: the Aussie. I had a client call me up last October and ask about getting long the Aussie. I said, "too late, eventually it will hit parity w/the dollar but it's overbot, let it sell-off and we'll buy it when it has a juicy yield on it."
ReplyDeleteMy view is that it's time to start legging in on it when the masses and the Mish-worshippers are extrememly bearish on it. 1/3 now, 1/3 more if it goes lower, and another 1/3 if it hits the level where it was in Oct 2008. I won't care 2 years from now when it hits parity that 82 was too early LOL.
In defense of Mish, I sold all my RE in 2005, and I credit reading him for the inspiration.
ReplyDeleteQuestion, Dave if you don't mind. Since the FX markets are the largest and most liquid in the world, I'm not clear on why a crowded trade would matter. It would seem that economic/financial forces, as well as CBs, have much greater impact on markets than traders. IOW, the futures markets are a relatively small part of global currency exchange. Or am I wrong?
ReplyDeleteWhy waste soldiers/bullets buying now with better prices on the horizon.
ReplyDeleteYou realize you have a skill of getting in early Dave. Now, curb that earliness with some added discipline and wait for a sweeter deal.LOLX2.
Easier said than done. That's why windbags like Mish and Gartman sell newsletters and don't trade - it's the same principle as "those who can do, and those who can't try to teach." there's no better teacher than having your own ballsack in the fire and you have to make buy/sell decisions and put your conviction on the line. It don't matter when all you do is pontificate and defecate, like those two. I've made a good living trading since 1991.
ReplyDeleteU6, you are right about the size of forex vs. futures. However, the COT report reflects sentiment build-up among large spec funds and small pikers. The massive forex market is largely central banks, banks and really large corporations for hedging and intervention. Speculators use futures. The idea is that the speculative money is a good contrarian indicator. The moves we've had in the euro and the dollar are massive by currency standards. Sheer probability suggests the direction of the move is likely to reverse. I remember when the Canadian dollar hit parity and the euro was hitting 1.50, everyone was shouting, "euro to 1.70, euro to 2."
ReplyDeleteSame thing here.
Hey Dave,
ReplyDeleteA little fiesty this Friday!
I like Mish's macro stuff, market timing ideas are not really his thing on the site. I have no idea how Sitka Pacific does but probably pretty well and I guess clients get more of that kind of thing.
Contrarianism has become too twisted. Its like that scene in "The Princess Bride" film where the Sicilian guy keeps talking himself out of which drink to try. I say today is Friday and tomorrow is Saturday. 99.99% of all would agree, that does mean you should think tomorrow is Monday? Sometimes something just is.
I never get the rabid anti-gold crowd. If you dont like it, say so and move on. I dont waste pixels telling folks how stupid a buy BAC (specifily, I do bash banks though!) is, what do I care, makes no difference to me.
I am going to need a few drinks and a good friday night post this week!
LOL. I get irritated by the slavish Mish worshippers. The only worse ones are the Denninger cult followers. If you want to believe the numbers that the Govt reports are honest and correct, then be happy being a delusional deflationist. The real money printing hasn't even begun and we're already seeing a lot of prices go haywire. And there is no debt destruction going on, just rearranging the deck chairs to the Titanic AND putting more chairs on board. People need to look beyond the reported numbers. The Govt has at least $10 trillion of off-balance-sheet debt that is not included in the $13 trillion - $6 trillion alone is the FNM/FRE debt. Where's the debt destruction there? ROFLMAO.
ReplyDeleteAs I stated earlier, Mish's analysis is basic and he regurgitates the obvious. Same with Nouriel Rouwienie. Back in 2005 when Rouwienie was saying housing would go down 10-20% in value, I said 75-85%. Who is looking more correct? I'm sticking to my same call. Hell, Sir John Templeton said in '02 he wouldn't touch U.S. real estate until it went down 90%. I'm with him.
Hey gyc, what you gonna BBQ this weekend? Looks like we finally are going to have some decent "outside" weather in Denver this weekend.