Saturday, March 14, 2015
Here's gold's chart:
OMG iz horbl!
Well, not really. While gold did break down in USD terms, it was only because the USD did this:
which is an even more aggressive advance than what we saw in December and January. Seriously, that's 3% in 2 weeks: that's faster than the average stock index move.
In fact, when you look at both charts, the week before March 9th could have seen gold hammered as a bunch of dumb yanks set up long-USD-short-gold positions.
It's happened before. Here's a gold chart with the correlations that Mickey Fulp pointed out to us in November:
And you'll see gold was <-.9 correlated with USD in early November, then it broke upward: first slowly, through December, and then aggressively in January as Whitey's position fell apart and you and I made some good profits.
Look at both the USD:gold correlation and the EURUSD:gold correlation. Pretty damn near mirror images. That means every white-ass honky cracker in the world is playing that trade right now. Which means the boat is full.
So I guess, yet again, we'll continue to see gold get sold down in the long-USD-short-gold trade, until it suddenly breaks upward again.
As for Wall Street Whitey, his reasoning for this trade is wrong, and here's why:
1. Gold moves for other reasons than just USD moves; a >|.9| correlation is always bullshit. The moves caused by going short contracts get cancelled out when the contracts are cancelled, while the moves caused by physical demand don't get cancelled out (barring a magical increase in physical gold supply, which won't come from the miners but might temporarily come from more ETF selling, though how many weak hands are left in GLD after the past few years is a good question).
2. Meanwhile, this is the gold chart that the rest of the world sees:
And it shows that gold has spent the past month doing a good job of acting as a hedge against currency devaluation. In fact, even though gold in US dollars broke below the SMA(50) on Feb 17th, gold ex-US only dropped to its own SMA(50), which it has hugged very safely ever since.
3. And the whole Yen/Euro currency devaluation idea is bullshit anyway because the Yen and Euro shouldn't be collapsing just because of QE, because they're fighting liquidity traps and the same "money-printing" actions in the US didn't cause the USD to collapse versus the Euro when the Euro was in tightening and the US was in QE. But there's a lot of people in the US market who learned all they know about economics from clown blogs like "The Mises Institute", so "money printing" will always be a live idea for short-term trades.
4. And anyways, none of those white-ass honkies matter, because the fundamentals for gold depend on Indian and Chinese demand; early predictions for the Indian monsoon are positive, the rupee has been holding up well because people still think Modi will repair their medieval economy, and if he does that's good for gold because Indians buy gold, but if the rupee tanks that's also good for gold because it means gold is appreciating in rupees, and rumblings are now afoot that China might want to loosen the yuan peg because the yuan appreciation is killing their trade data.
I still don't want to trade the GLD:USD chart right now, because it's simply hugging the SMA(50), which might mean it wants to go down in ex-USD terms and is just waiting for a suitably shocking moment to die. If gold ex-USD breaks below the SMA(50) and/or below 5.10, then yes it could collapse to $1000 US. And that'll be when the patient poops a lung.
But it's not doing that yet, and given that heavy selling made it no more than hug the SMA(50), it makes me think that gold ex-USD will pop upward again. Um, someday.
And that would mean gold will be appreciating against ex-US currencies, which will mean foreigners will buy it again, and the white-ass honky crackers will have to cancel out their shorts against foreign physical buying.
So certainly gold has to turn around by June or July when Indian jewellers start buying. I mean shit, Whitey doesn't want to given Indians a discount on gold buying, does he?
It could turn around viciously before that, if China moves to loosen the yuan peg, because then gold suddenly will be a hedge against yuan depreciation. I don't know if that's a live option for them at the moment, but if it happens a lot of pasty white asses gonna get owned yo.
In either case, the white-ass honky short position on gold that got built over the last 2 weeks will reverse at some point. And then we make money.
Hey shit, maybe it all turns March 19th when the Fed tells everyone they're still being "patient".
So there's your gold talk for this weekend.
There is no interesting trade here at the moment, unless you would be happy to sit for months on end in a pool of other people's vomit.
But when the GLD:UDN chart pops and the correlations snap loose, shit will get real bitches.
Friday, March 13, 2015
Dammit, I bought back some SPY yesterday (HSU.to actually) thinking the bottom was in, then I started cursing myself for getting in before the all-important Fed meeting next week even though I know they're not raising rates in June.
I.e., I deviated from what I felt was the proper script for the market.
But the problem is:
Maybe the past week's selling was just the last gasp? There was a lot more selling in Jan and Feb in preparation for the not-coming rate rise, so how many weak hands are left in the market today?
It might take another Ebola to get a 5% correction in the S&P this month.
As for USD, I really thought that recent move this past 2 weeks was fucking insane. Currencies aren't supposed to move that fast.So maybe at the very least we get another few weeks of plateauing.
at 6:50 AM
Now that I've thrown off the shackles of fucking Google ads, and I've just come down with a cold for the first time this season, I'd like to put in a plug:
Tag No. 5 is a simply beautiful Ontario vodka (none of that mafia Russian chickenshit, as if the fuckers even invented vodka). It's gentle and pure on the first sip but still burns your throat and gets you pissed on repeated usage. Recommended for when you've got a cold, because viruses flee when presented with a good vodka.
Apparently easy to find at every LCBO, my nearest is crap but even they have it.
I wasn't paid for this plug, but if the distillery wants to deliver me a case in thanks for the plug it'd be quite appreciated so please leave your contact info in the comments box below.
at 6:38 AM
From the country that basically pioneered basement electropop twenty years ago, here's Icona Pop singing about the irrational love of investing in junior mining stocks:
No, this has got absolutely nothing to do with some shitty Tupac song. This has an eloquence to it.
Seriously, when they sing
Talking bout the lights, the dirt, the shit that hurts
We're not gonna turn around
We're doing this for good, for worse, the gift, the curse
We're not gonna back down
They're talking about the last three year bear market in junior miners and how their port has gone down something horrible like 90% in that time.
And when they sing
I wanna feel the sun, the waves, the wind in my face
The speed, the chase, na na na na
I wanna feel the sun, the waves, just run across states
Make it up as we go
That's how it's gon' be, young wild and free
Not gonna slow down
Up to the max, until we crash, we're not gonna stop now
They're singing about the hope that one day they can unload this shit at a profit.
Kinda brings a tear to your eye.
Thursday, March 12, 2015
USD seems to have stopped its impetuous advance, which should mean the US equities starting to move back up, and HYG is looking safe, but the gold miners are still puking after yesterday's short covering.
So with no news of importance, let's watch some classic commercials.
First, here's Joe Leduc and the Kelly Twins with a classic:
And here's the Spumante Bambino commercial for which many thousands of kittens died in my teenage years:
Sherry Miller is a Canadian, btw.
As is, strangely, another commercial hottie from the 80s, Roberta Weiss:
For the autistic readers, here's a whole 20 minute video of 1980s commercials, with guest spots by John Denver, the Skipper, and I think the chick below in the preview is Brooke Shields?:
It's amazing how much kissing there was in commercials in the 80s.
Nobody kisses each other now. I blame the Republicans. Who wants to kiss anyone in this new era of race-hatred and fundamentalist totalitarianism?
There is even a 4 hour video at Youtube, full of absolutely nothing but commercials. Because the internet has absolutely everything.
at 10:27 AM
Wednesday, March 11, 2015
Tuesday, March 10, 2015
Well Ricky, this is certainly a puke right here:
GDXJ is now on its way to a new all-time low.
It's silly when you remember that the price of gold is only doing this:
It looks scary in USD terms only because the USD is doing this:
Which can't go on forever, of course, but whatever.
What's the story this time? Buy USD because June rate hike? Cos that's not happening.
Anyway, since the price of gold is not going anywhere except in the currency of a country that eschews buying gold in favour of buying paper-only positions that have to get cancelled back out over time anyway, the gold miners are setting up for yet another fantastic pop.
Just gotta wait til the carnage is done. Maybe by June.
Nothing to do but watch the market carnage, so let's listen to the Swirlies:
I'm trying to track down the song they had where they use full-octave whammy pedals as if they were wah pedals. It was either on this album or the previous one.
And here's various other readings:
Brett Steenbarger - new views for the market this week. He says the big -2SD spike down in stocks that we saw on Friday usually continues with more downside to come. Tangentially, I'm getting sick of reading his blog.
Reuters - China takes lessons from Japan on economics. This is why you should all quit worrying about China:
Chinese regulators are turning to Japan for lessons on economic history, determined to keep the world’s second biggest economy from taking the same path of recession and deflation that has blighted its neighbor for the past 20 years.This is why you should all stop assuming that China's leaders are as fucking retarded as the Republican Party in the US.
Beijing views Tokyo's handling of the liberalization of capital flows and the yen over 30 years ago as key factors that led to the creation and subsequent bust of the asset bubble in Japan in the early 1990s, according to Japanese government and other sources who are in direct contact with Chinese regulators.
“They aren’t a single bit interested in Japan’s successes. Their biggest interest is in Japan’s mistakes,” one China-based source who is directly in touch with Chinese regulators told Reuters on condition of anonymity.
"Japanese and Chinese economies do share many similarities, so I assume there is quite a lot to learn from our experiences."
Chinese policymakers and analysts at government think-tanks are already well versed in the experiences of Japan and other countries, and the sources say two-way communication at both government and private-sector level continued even through a chill in diplomatic ties after a territorial spat in 2012.
the Province - Chinese police run secret operations in BC to hunt down corrupt officials. Apparently, all of BC's wealth is built on corruption and money-laundering. Which explains why they vote Conservative over there nowadays.
Mining.com - Chile launches national program to boost mining productivity. Well, they should be successful at it, since mining is about the only fucking thing they do in Chile: all they have down there is copper and 9.0 earthquakes.
Mining.com - hedge funds cut bullish bets on commodities to lowest since March 2009. And what happened to commodities after March 2009? And how smart are hedge funds when they all have been underperforming the S&P 500 regularly for years?
Daily Telegraph - Greece's foreign minister threatens to send migrants and jihadis to Europe. I'm okay with this: the guy is simply reminding Europe that they need Greece more than Greece needs them. And frankly, he could have stopped at "migrants": if there's one thing the fucking Dutch and Germans and Austrians and British all hate, it's immigrants seeking a better life who are brown.
der Spargel - here's what the glorious People's Republic of Donetsk is like. That's some fine nation-building there, Pooty-Poot. It's as if you don't really give a shit.
The Society Pages - a sociological study on farting. I wonder what Georg Simmel would have had to say about this.
New Deal Demoncrat - now is not the time to raise interest rates! Quote:
I am at a complete loss as to why the Federal Reserve might think that now is the moment to begin raising interest rates. I cannot see a scintilla of hard evidence in support, and potent evidence against.And then he goes on to provide a large number of charts that show there are no inflation pressures, there is no wage growth, and that NAIRU=5.5% is bullshit.*
Now, he makes quite a convincing argument with paragraphs like this:
Wages now are putting less pressure on prices than at any time in the last 50 years with the exception of 8 months in 2012. This is wage pressure??? Again, of the last 600 measurement periods, only 9 of them have shown less pressure than at present. That puts us in the bottom 1.5% of all time periods in the last 50 years for wage pressure.and
So, to summarize, inflation is in the lowest 1% of all times in the last half century, wage growth is in the lowest 1.5% of the last half century, we still have extraordinarily high long-term unemployment, and a unusually high percentage of part-time employees and discouraged workers even taking into account the current unemployment rate.But what's ironic is that all the charts he's using have the word "FRED" written on them in big black letters.
Fred stands for "Federal Reserve Economic Data".
I strongly suspect, good chap, that the Federal Reserve has also looked at these charts.
Now Krugman's already been beating this horse for months, but NDD is one of the more sensible people in the econoblogosphere below Kruggers; so if even he is now starting to scream and foam at the mouth about a June rate hike, then it's only a matter of days before the fear filters down into the mass stupidity of the honky hedge fund crackers and the CNBC talking heads.
So I guess we'll get a good strong market correction for the next 2 weeks. Question is whether we'll be able to buy March 19th for a quick turnaround, or whether we'll have to wait til April.
* - personally I think the high supposed NAIRU of the US, when compared to other countries, is actually a right-wing dog-whistle about how blacks and hispanics don't want to work for a living.
Monday, March 9, 2015
As noted previously, gold did not get hammered ex-US, only in US dollars. So let's see how it does today - so far overnight it looks like China is done hammering and is back to quietly buying.
Though of course the gold market will remain disconnected from fundamentals and at the whim of Wall Street Whitey at least til Indian buying season this summer. So it's not going to be a slam-dunk place to invest for a while.
Anyway, here's the news:
New Deal Demoncrat - weekly indicators: negativity spreads to short leading. Problem is, the negative readings can all be explained by other things (Gallup? weather; rails? port strike and weather) while the big money indicators (jobs, tax withholding) are all still positive. But maybe there are enough honky crackers out there paying incomplete attention that we can get a correction: in any case, the market should react negatively to the March Fed statement (meeting is March 18-19, minutes are 3 weeks later) and crappy Q1 GDP (advance estimate April 29). We'll see.
Calculated Risk - yeah, the prime working-age population is still growing. It would be nice if the young fuckers would agitate for better wages instead of being pussies, but at least the US economy still has demographics working in its favour.
Bloomberg - Greek tensions revive as blah blah blah. Oh good, this again.