Saturday, June 21, 2014

Two weekend reads

Here's two things to ponder this weekend:

New Deal Demoncrat - weekly indicators. Real M1 and real M2 are both strong, and rail is exceptionally strong. You'd want to invest in the US stock market right now if it were not for:

PS Dave - 'tis the season to make money on gold miners. Wherein we are shown this chart:

Even in a down year (like the last three) you can turn a 40%-60% profit in the junior golds in three months. Hey, looks like you even get a down period in August to reload before the final leg up!

So screw the US market: go all-in on the junior golds for a couple months, keep an eye on the short-term EMA and sell on the violation if you want to get cute, load back up in August, sell at the September peak, and viola!

Hey by the way... I wonder if this "seasonality" business has anything to do with India?

Friday, June 20, 2014

Hey, whatever happened to Debbie Gibson and Tiffany?

Whatever happened to 80s pop starlets Debbie Gibson and Tiffany?

This happened:

Tiffany also starred in Mega Piranha, while Debbie Gibson has appeared in all the Mega Shark movies.

None of which you ever have to watch.

Some reading and snark

Here's a few newsbits:

Guggenheim Investments - China the US and the EZ are all improving. They forgot Japan. Japan is also improving.

BI - If China were going to have a hard landing we'd have heard about it by now. It's sarcasm, so it must be true. I've personally been hearing about China DOOOOOM since 2012, and I'm getting tired to waiting for it to happen.

FT Alphaville - India's power deficit. Yet another mountain that Modi's going to have to move. Also, read the comments for some boots-on-the-ground insight into other problems in India. Jim O'Neill's a smart guy, but I'd like to know how plausible he thinks this whole India optimism thing is.

IKN - I told you to buy, didn't I? Whereupon I hoist him upon his own petard:

Consider your petard well hoisted!

A thought about Thursday's gold move

Here's the daily candles for GLD:

That's one heck of a big volume printed yesterday, huh? 24.3M shares. That's about 2.4M ozt, or the equivalent of about 100 tons. What a way to break above the SMA(200), eh?

The rule is that a gap up (ignoring the whole overnight trade thing) followed with a large white candle with big volume is about the most obvious signal of a new bull market that you can ever expect to see on a chart. Whether or not it turns out to be true. Add to that the "false moves beget fast moves" interpretation to the bullshit May opex smackdown, and there's only two safe positions Wall Street Whitey will want to take re gold right now: long, or the sidelines.

And with 100 tons equivalent trade in one day, the net difference in GLD holdings would have to be some significant percentage of that. So a bear would need to see all that gold dumped back out of the vault into the market before the supply damage is undone.

Here's the equivalent chart for $GOLD:

Now look at the spot volume for yesterday. Still large, but not as big as the ETF.

Thus, yesterday's price spike was really the result of a few dozen tons worth of ETF buying from idiot amateur hedge funds and other assorted white trash. Not China or India. An ETF bought a big chunk of worldwide production in one day.

And the same ETF has spent the past few years dumping thousands of tons into China's lap, remember. So Whitey doesn't have a lot of gold available to buy back.

I had my eyes open hoping for this, but I didn't think it would happen. Wall Street Whitey buying gold for some misguided investment reason is a great way to build a price uptrend, because the physical market is so tiny compared to the paper derivative market. And with a strong upmove like this, there's only two positions that are safe to take: long or the sidelines.

If Whiteys decide to pile on to this trade, it can turn into a faceripper.

Whitey has nothing else exciting going on right now - the US market is in the doldrums, and only Japan looks capable of a breakout right now - so, if this move continues, it makes sense to expect a load of volume to pile into the miners as well. Where else can you get a 50% return in weeks?

This despite a bunch of bullshit stocks already being grossly overvalued (come on: DPM at $5? FVI at $6? SAND at $7?).

I don't know how such a strong gold pop can reverse, but it might.

But for the time being I'm going back to playing with juniors.

Friday videos: Portishead's "Roads" live at Glastonbury

Here's Portishead, who still know how to get a big rise out of the crowd, doing a song about how lonely it's been to be a goldbug these past couple years:

Come on, seriously. When she sings "got nobody on my side and surely that ain't right", did you really think it was about being a lesbian? Beth's been on the Agoracom board forever.

Thursday, June 19, 2014

Gold and silver this week

So far this week, gold's up about 3%, and silver's up about 5.5%.

I wonder if we're going back to the era of increased volatility in the PMs? It'd be a nice change, especially if they're volatile to the upside.

It's amazing how quickly people can be forgiven

Here's the Sandstorm Gold chart:

It's amazing how quickly The Sandstorm Kid can be forgiven. I mean, it was only months ago that CSI went under from sinking all their (and Sandstorm's) money into a floodprone mine that it turns out they didn't actually own.

According to the chart above, Nolan's gone from being "that arrogant twentysomething brat who lost all our money on CSI" to "that guy we're willing to trust with our money again".

Dear Jeff Currie from Goldman Sachs: I have a chart for you


How's that $1050 call lookin' there, Jeffy?

Why $21 silver would be nice

Here's a silver price chart:

It's been quite a long time since silver had a weekly close above its weekly SMA(50). So if it were to somehow pop above $20.60 or so, it might possibly portend some extended excitement for goldbugs.

We could all go back to criticizing fiat currency, and calling for the imminent collapse of sociamalism, and stacking phyzz, and worshiping Eric Sprott, and quoting the collected works of Turd Ferguson and Peter Grandich. And buying shitty juniors with 3m 0.6g/t intercepts.

Ah, it does bring back the memories....

Til then, though, remember that we're still perilously close to $18.50, with nothing but a string of lower highs on this chart going back years.

Japan threatens a breakout

Here's EWJ:

So the big runup in 2013 was all due to Abe excitement. Obviously that ran into a wall when people realized it would take time to boost Japan's economy (Modi lovers take heed).

But Michael Shaoul's been pointing out that the numbers coming out of Japan show continued improvement, the sales tax hike wasn't a big deal, and so now EWJ looks to be threatening a break above $12.

So if you have a DM long slant but you're scared of the US runup, or you're expecting poor performance because it's a midterm year, and you think Europe is about played out, then maybe you start looking at Japan as a place to put your money?

Also, please note that Japan is one of the largest economies in the world, and the rest of the world has had zero boost from Japan for the past 20 years. The return of growth to Japan would be a massive game-changer for the world economy. Not that I'm convinced Japan's going to accomplish much, but if it can then there's massive upside risk to the world economy.

Boom, gold goes up

Boom, gold's at $1295 as of now.

I'm still worried about opex next week, but for the time being there's money to be made. Gold's finally going in the direction it's expected to go, and the market's cluing in.

Wednesday, June 18, 2014

Five mid-day reads

Here's some reading:

Calculated Risk - LA port traffic increasing. Imports are still going up, so the US economy is growing.

Calculated Risk - architectural billings increased in May. So, again, the US economy is growing.

Ritholtz - on sentiment being bullshit. It's fine to track sentiment, he says, as long as you realize it only works at extremes, and not every single frickin' day.

Bloomberg - Citic lost some of its alumina in Qingdao. Why exactly is this bearish base metals, btw?

The Economist - clarifying China's corporate debt. That $14T figure you're reading about today is bullshit. So that gives you an idea of which otherwebsites and RSSes you can unsubscribe from, to avoid being suckered by lies in the future.

Sometimes TA works in a weird way

Here's $HUI:

Interesting, isn't it, that $HUI decided to pause exactly at the SMA(50) and SMA(200)?

I'd expect it to continue going up, given this is what GDXJ looks like:

Cos GDXJ has already broken through its own SMAs.

Assuming, of course, that Yellen doesn't tank gold this afternoon (she doesn't have a beard, so that's something) and that there's no opex smackdown in gold next week.

In case you're bullish gold, here's a warning

Just as a warning, GCM14 settlement is 26 June.

In case you don't care, remember that gold got smacked down hard on the last gold option expiry in May. Maybe it doesn't happen again; but maybe it does.

And also remember that the so-called "gold experts" didn't predict the opex smackdown last month either.

Don't listen to them. Watch the price.

If gold is a barbarous relic, what about this?

BI - Rare postage stamp sells at auction for $9.5 million dollars. Get this:
Made in 1856 in Guyana and measuring just one by 1.25 inches (2.54 by 3.18 centimeters), the one-cent magenta is octagonal, printed in black ink and bears the initials of the postmaster.
So for a 150-year-old piece of single-use toilet paper, the buyer paid the equivalent of twice his own weight in gold.

And yet they say gold is a barbarous relic with no real-world value.

Reminder about Jeffrey Currie from Goldman Sachs

Just in case y'all forgot: in September 2013, Jeffrey Currie from Goldman Sachs called for $1000 gold in the near term. Back at the end of last year, he refined his target to $1050, by end 2014.

He reiterated his call in Jan 2014. He stood by that call in April.

We'll revisit this with a post at the end of 2014 to see how well this guy's call works out for him.

Tuesday, June 17, 2014

Three extra reads on emerging markets

Found some more stuff:

Ritholtz - US or EM? Wherein he posts this chart:

And then he says "aw hell, EMs gotta mean revert someday, no?" Which is a nice theory, as long as you completely ignore the problems of money flows, inflation and debt.

By the way, Barry... that chart? Above? If you want to talk about mean reversion of trends, that chart seems to have a dataset of three trends over 25 years. A dataset of three isn't much to go on.

FT beyond brics - Modi's challenge: manufacturing jobs. If only India was able to manufacture anything that the rest of the world would want to buy.

New Yorker - Vancouver's international housing market. I like the euphemisms:
And Vancouver, which has a large Chinese population, easy access to the Pacific Rim, and nice weather, has become a magnet for Chinese investors looking for insurance against uncertainty.
Well, yes, "uncertainty". As in, some minor government official feels uncertain that he'll be able to avoid getting executed once the Party figures out that he's embezzled $100 million.


Hooray! Managed to post this before the power goes out from the thunderstorm!

Pragmatic Capitalism - the most hated economic recovery ever. He has a large amount of charts and data that show how much the whiners are off-base. Especially interesting is how industrial production is "almost 1% above the 40-year average of 2.4%". Sorta shows how much the paleoconservatives are lying about "industrial stagnation", eh? But you should expect this sort of complaining; after all, Obama is black, he can't be successfully leading America!

Bespoke - 10Y yield testing resistance. We'll see what happens to equities then.

Reformed Borker (Bork Bork Bork!) - solar stocks break out. Too bad there's no Canada-listed solar ETF, as far as I know.

Mineweb - amid high inflation, gold gains in India. Wait, what's this I see here?:
"In India, headline inflation shot up in May to 6.01% to a five month high and as macro pressures appeared to accentuate, the rupee has breached the 60 to the dollar mark, at a one and a half month low. The worrying part is that the high inflation number has come now even before the projected weak monsoon has played out,'' said Satheesh Mathur, analyst with a brokerage house.

He added that since gold is a safe haven investment, it saw a firming trend and reclaimed the $466 (Rs 28,000) mark on the domestic front.
Wait a sec... there's high inflation in India? And Indians buy gold to protect against inflation? Um... has anyone told Wall Street Whitey?

IKN - Peru GDP: luck runs out. Wait, what's this he says?:
Peru got lucky and has rode the high margins from commodities for a while, but now the luck has ran out they have no special formula, no secret sauce, nothing but a few prayers to offer to the copper price Gods. Far from creating some new and fanciful growth miracle, Peru is falling into the same classic traps of shoring up a reduced margin primary growth export model with expanded credit.
No shit, eh? Sounds like the classic definition of a secular EM bear cycle, eh? - iron ore crashes through $90. Which I guess is good for China's economy, since they use so much of it. This is the disconcerting bit:
Estimates vary wildly but the portion of iron ore and copper stockpiles at the country's ports tied up in these deals could be as high as 60%.

Last week's revelation that authorities are probing whether traders at the port of Qingdao pledged the same copper, iron ore and aluminum inventories as collateral for loans multiple times to different banks could mean and end to practice altogether.
Disconcerting for copper (let's be honest, we don't give a damn about iron ore miners, do we?), but also disconcerting if you suspect 2000t of gold has been tied up as financing collateral, not bought by the Chinese central bank because fiat Weimar Zimbabwe.

Monday, June 16, 2014

Three evening reads

Three evening reads for you:

Investing Caffeine - the Shiller PE is bullshit. Yet another article explaining to you why you should ignore anyone who blathers about the Shiller PE. Hopefully you started ignoring it yourself months ago.

FT beyond brics - the great EM divide. The author asserts that China is not an EM and you shouldn't expect it to act like one. Again, relevant argument against blindly applying the EM/DM thesis.

FT beyond brics - Indian inflation feels the heat. India is screwed, and it's because they don't damn well export a damn thing and subsidize fuel consumption.

FireSteveLetwinGold stock pops on a Larry Edelson pump

Here's IAmGold's chart:

It popped before all the other goldies. That's funny. Why?

Well apparently, on June 3 at 2PM it got a reccie from Larry Edelson. The pop has nothing to do with any rumoured Niobec sale or any rumoured buyout by Goldcorp.

Who's Larry Edelson?

Larry Edelson - Hi, I'm Larry Edelson.

He asserts that he is always able to pick tops and bottoms. In fact, he can even predict wars well into the future, like some sort of Nostradamus. He sticks to folksy language and very simple sentences. He reliably dings the Republican "money-printing" and "socialism" bugaboos that Americans always fall for. He says your money won't be safe in the banking system. He suggests with a straight face that "a crisis of confidence in government" will mean money flowing into the private sector (not, y'know, cash).

And he's calling for $5000 gold and $125 silver.

I strongly suggest you read the linked article, so you can learn exactly what a pump letter aimed at ignorant Republican hayseeds looks like.

It's amazing that I!Am!Gold! has had legs since; but I would sell it this instant.

$VIX seems to be going up

Here's your VIX:

VIX normally goes down slowly and up quickly. Usually it can even spike +3SD a few times. That's usually the only time you want to short VIX. Blowing up thru the SMA(50) would mean more excitement to come!

Here's its futures curve:

You also generally only want to short VIX when the curve is inverted. Because if you buy it here, and then it inverts while you're holding, you get your ass handed to you.

The way this is behaving right now makes me think that, despite the imminent danger of very good Q2 economic numbers from the US, the market is going to take a pause and churn for a while. People probably need to get more scared than this.

BTW, I wouldn't ever go long VIX, even if you offered to set me up on a date with Lana del Rey. Going long VIX means going long a fast-decay option and going long irrational emotion.

DON'T DO IT, LANA! WE LOVE YOU!: here's what you need to know

Here's the Monday morning news:

Calculated Risk - here's what the Fed will do. OK? So no surprises. So no goddamn hammerblow torque to the markets is necessary.

BI - emerging market debt seems risky. Again, the very basic fact is that a DM bull causes an EM bear, and this article explains exactly why.

Reformed Borker (Bork Bork Bork!) - here's where the inflation is. He links to the above BI article. Josh must read my blog, because I've been explaining that inflation is high in EMs for half a year now. So here's the trick question, Josh: who buys gold? Is it sinking in yet?

Reuters - rupee hits one-month low as oil, inflation hurt. The long-Modi crowd is beginning to realize why you sell the election news and go back to the sidelines: whatever Modi's going to accomplish, he's not going to accomplish it in a week. Meanwhile, India's economy is still India's economy. Their trade balance still gets destroyed by oil shocks, and their growth is still below inflation.

The Guardian - Lana del Rey says "I wish I was dead already". Don't do it, Lana! You know we'll all still love you when you're no longer young and beautiful! We'll all still love you when you've got nothing but your aching soul! You know we will! You know we will! You know we wi-i-i-i-i-ill! Also, marry me.

Sunday, June 15, 2014

New Deal Demoncrat's weekly indicators

Here's one of the few commentaries you need to read every week if you want to be sure you're getting the right info on the US economy:

New Deal Demoncrat - weekly indicators. Rail transport is really looking strong, thus the US economy is growing. Oil prices are an area of concern, as any spike in gas prices can hurt the economy.