Thursday, December 19, 2013

One newsbit, followed by a rant

BI - gold just got ANNIHILATED!!!1!ELEVEN!!

Here's Joey the Weasel:
It's not totally clear why gold just fell out of bed this morning.
Um... more sellers than buyers?
But overall this is a terrible environment for gold, as all the old stories about endless Fed printing and hyperinflation and political instability are coming to an end.
Yes, and how much gold demand is generated by people buying due to fears of hyperinflation and political instability, Joey?
Instead the Fed is pulling back on QE, the US government just passed a budget, and inflation remains low?

Silver is also similarly tanking.
And that's the funny bit, the thing about silver. Cos if the US economy is accelerating, then shouldn't an industrial metal used widely for electronics and photovoltaics see its demand increase?

Instead, Wall Street Whitey tanks silver because he thinks it's just another form of gold.

So that's your answer to the first bit, above. Wall Street Whitey sells the PMs and they go down.


  1. You would think that demand for silver would increase due to industrial demand but more and more silver is hitting the market. The silver companies are upping production for cash flow.

  2. Shaoul from this morning, on gold:

    As we mentioned earlier today gold has been one of the clear losers from the decision of the FOMC to taper although we suspect that tax selling towards the end of December has also had a substantial negative impact on price. Last night saw the metal close at its lowest level in three years although on an intraday basis the metal traded as low as $1180.50 on June 28th, exactly $15 below its current price.

    In other words gold is currently testing last ditch support below which there would be little to stop the metal experiencing a further plunge lower. It should be noted that the June low followed two weeks of violent liquidation which started with the metal just below $1400 while the current decline has up until this point been relatively orderly, again suggesting that if support fails to hold gold may suffer an accelerated decline.

    Should this scenario play out it would be in line with our benchmark for gold's current bear market, which is the roughly 50% decline of the SPX from 2000-2002. As can be seen gold's movements have increasingly closely followed those of the SPX, which is perhaps not surprising since from a technical perspective the SPX's decline was a textbook bear market in terms of its structure.

    Interestingly gold's current losses in 2013 total -28.65%, bettering the 23.37% loss by the SPX in 2002 (although the index had already lost a similar amount between 2000 and 2001). For it to beat the SPX's 2008 loss of -38.5% the metal would have to close below $1,030. Our assumption is the total will fall between these levels, although if current support were to abruptly fail the possibility of a further deep liquidation would bring the 2008 loss level into focus.

    1. The 2000-2002 analogue is interesting, no? Especially cos I already said that a couple weeks ago.

  3. Also of interest on gold:

    1. He's wrong. Gold *is* consumed. It's consumed in the exact same way copper is consumed. And is anyone worried about copper ever dropping below $2.00 again?

      Most of the rest of his stuff is just cribbed from what Brent Cook's been saying. It's an okay summary, but I'd prefer it from someone who writes under his own name, and not at Seeking Alpha.