Gold, Jerry, gold!

Is it just Macro Man, or do some of the smug musings of "just buy the dip, equities are going up forever" adherents sound a bit like gold bugs in 2011?

 
Not that Macro Man expects a similarly precipitous decline in stocks any time soon; nevertheless, the gold chart does illustrate how quickly and how wrong things can go with relatively little obvious warning.  Such, alas, is the peril of faith-based investing, where mantras are repeated in a style more reminiscent of a Buddhist monk.

Regardless, someone had some gold to shift this morning (or some stops to run, in which case expect a visit from a clown car full of regulators), sending the tarnished yellow metal to its lowest price (against the $, at least) in more than five years.  Technically, it looks pretty awful; fortunately, our central bankers won't be able to use it as an example of deflation, as they were notably silent on the "inflationary signals" from gold in the early part of the decade.  To mention it now while remaining silent then would be intellectually dishonest, and they would never do that, right?  Right?


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washedup
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July 20, 2015 at 3:24 PM ×

This market clearly misses the late 90's too badly to not complete the comparison by displaying fear and loathing of all things shiny, unless its Lloyd Blankfein's head. That said, I do wonder how much of gold's lost allure is because of the rise of alternative alternatives such as bitcoin - after all, gold hardly budged during the recent euro crisis while bitcoin was up 10%.
Poor, poor zero hedge. I would like to see a plot of their subscriber base vs the gold to equity ratio.

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Anonymous
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July 20, 2015 at 3:44 PM ×

http://www.standard.co.uk/business/business-news/gold-flash-crash-as-mystery-seller-dumps-tonnes-on-market-10401551.html

A mystery investor dropped five tonnes of gold — worth around $2.7 billion (£1.7 billion) — on to Shanghai’s exchange overnight, when dealing in the metal is at its quietest.

Ross Norman, chief executive of gold broker Sharps Pixley said: “If you wanted to get out you would do it when your buyers are there and not when there is extremely low liquidity.”

Norman said a large fund or investor looking to bet against the gold price — selling off the metal to drive the price down and then buying it back as a profit — was more likely to be behind the fall, such as one hit by losses on China’s recent stock market collapse.

“Clearly it was somebody who was extremely keen to trade the market short.”

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FunnyMoney
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July 20, 2015 at 4:08 PM ×

When you say "smug musings", I take it you mean "calling the market correctly"?
Not to be facetious, only BTFD has worked continually for the past 6 years. I know plenty here are calling for a big fall in equities, but they are also continually wrong.

Anyway,I say, "just buy the dip, equities are going up forever" - oh look, it just worked on US equities following the open (again!).

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Polemic
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July 20, 2015 at 5:33 PM ×

Equities have basically gone nowhere this year so it would be interesting to run a JBTD against a JSTR program. the most profitable being a hybrid JBTDAJSRT model. Commonly known as mean reversion.

Gold though? Couldn't happen to a nicer bunch of hillbillies.

In general gold and tech work opposed to each other and tough I doubt we'll see $290 again, if for no other reason than inflation on the long trend, you could say that a gold dump is a good verification of a tech boom(bubble). Put gold and oil in your late 90s scenario mantras.

Gosh at this rate we'll all be buying commodities again in 5 years.

I'm a bit deflated afetr all the Greek fun. Cary creep back as the game, but expect some bored panikista to raise US debt ceiling again soon, but hey, why bother we have the new debt ceiling substitute -- Fed hikes. When bored talk about the Fed.
Fed hikes is the ersatz crisis, the ground up acorns instead of roasted arabica.

A bored Pol.


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FunnyMoney
admin
July 20, 2015 at 6:02 PM ×

@Pol: You are referring to the SP500 I assume? Only YTD the Dax is up circa +2500 pts, Nikkei up circa +4000 pts, NQ up +2500 ticks etc. Slightly longer-term equity charts (weekly/monthly) show more trend activity than mean reversion tbh.

Personally I think ZH is much maligned. Everybody laughed at them when they pointed out how markets were rigged, scoffed at how it couldn't be true etc. Then along came the FX, LIBOR, ISDAfix scandals etc. ZH also pointed out that CBs would bid equity markets, and front-run data releases - again people laughed until the BOJ's own data showed it was involved in buying equities, and the Fed admitted to data leaks. ZH also highlighted predatory HFT before most others, then Michael Lewis took it mainstream. You get the point. I don't agree with everything ZH publishes, but most institutional analysis/commentary is utter sh*t too. At least ZH is entertaining.

I also think people are wrong in how they view gold. Imo gold is an insurance contract not an investment (Dalio wrote about this in more detail than I can be bothered to). Think back to Lehman, go watch some recordings of the US treasury secretary & CEOs of IBs telling us we were 4 hours away from complete collapse of the financial system, analyze Europe's banking system and then go buy 0.5% of physical bullion and hope you never see it massively increase in price.

Agree with you on the boredom though.

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abee crombie
admin
July 20, 2015 at 6:03 PM ×

I think we are going under $1000 in gold. From the mantra that everyone can use a little gold as an inflation hedge, now the pendalum has swung to the other side. Gold is useless. We'll duh, so is 1.2trillion worth of tresuries to the Chinese. But I digress. I would start accumulating here but i think there is going to be lots more pain before its over. I also expect it to be a good time to buy a few bitcoin. Blockchain stuff has got a lot of VC ppl very interested. Its not just for criminals. Do take a look

Buy my baby in the bathwater here are MLPs. Yes lower oil is for sure a headwind, but I just dont see US guys stopping to pump. and now yields are creeping up to almost 6%. The big risk with them is the capital markets but with Blackstone et all overflowing its hard to see what has changed.

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Polemic
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July 20, 2015 at 6:21 PM ×

HI FM
Being UK based the FTSE I suppose is in my face most and that, thanks to commodities is flatlining too. But yes SPX too.

I’m sorry but I really can’t buy the ZH are gods re market manipulation on the Libor and FX instances. Their manipulation arguments were based on whole Gold asset classes Gold.. gold gold . being held down from being a trillion percent higher. FX and libor manipulation though obviously in existence was moving things by a mater of pips intraday in either direction rather than doing a De Beers ( and on that subject I ve never understood why the diamond market isn’t at the front of the queue when it comes to mkt manipulation rather than guessing on gold).

ZH may have been first with some of shit spotting but then as they have an open cast mine digging for shit so a few nuggets are going to be found.

Gold is a crap insurance policy, even if you do buy the real stuff and not some warehouse holding in a distant land, when payout time comes you find that eggs, transport, roofs over heads or whatever you are trying to buy with it have outperformed. Your only hope is that it goes up as others have buy it for the wrong reasons too.

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FunnyMoney
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July 20, 2015 at 6:47 PM ×

@Pol
With due respect, to summarise the FX & Libor fix issues as "moving things by a matter of pips intraday" doesn't really do justice to the situation. The multi-billion fines, firing of dozens of senior FX desk personnel, reputational damage etc kinda suggest otherwise.

Wrt to gold manipulation my case is simple: it's a thin market, and could theoretically be manipulated. Since multiple other markets now have proven manipulation, what's so strange about believing the PM complex is manipulated?

You say "gold is a crap insurance policy", although don't really explain why. Ray Dalio said, "If You Don't Own Gold, You Know Neither History Nor Economics". One of you is right.

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Polemic
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July 20, 2015 at 7:03 PM ×

With respect or not I beg to differ over the reverse logic of the severity on how far prices were moved from where they 'should' have been by manipulation as inferred by the severity of the fines. Prices were moved a matter of 0.1%s intraday. The impact in price deviation from was tiny against the mean to the point that no one even noticed it was even going on for 20 years. Which is quite the opposite of price manipulation in Gold where humungous moves are blamed on manipulation where none is proven. FX became a scapegoat and if the intensity of scrutiny put on FX was applied to any other market or business in the world thousands of them would be closed.

Agree Gold is thin and total manipulatable but surmising that as that is the case and as manipulation has occurred in other markets it must therefore exist in the gold market is once again a reverse argument (I am not arguing you are wrong, but maybe just getting there the wrong way). But the bigger question is what s manipulation and what is just doing large trades in the hope that the price moves your way. Or is there even anything wrong with making prices move?

It's a combination of expecting liquidity - which one shouldn't http://polemics-pains.blogspot.co.uk/2015/06/liquidity-market-is-not-third-party.html
And all the overhype of FX corruption/manipulation as I once wrote about here ( re FX) http://polemics-pains.blogspot.co.uk/2014/06/regulation-killed-forex-star.html

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hipper
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July 20, 2015 at 8:10 PM ×

Agree with Pol: know that all is well if the rate rise is public enemy number 1. Wonder if this is turning out to be a buy the rumor and sell the news for USD (which the current rally is part of) and vice versa for bonds. Probably going to go something like: one hike in September, then one next spring if the market doesn't roll over and die and quiet for the rest of the election year. It's public knowledge and like 80% of the economists are already expecting it.

Silver, platinum, palladium are all riding to the sunlight in sympathy with gold although they do actually have more industrial applications I think. The base metals, except for nickel aren't showing signs of halting either.

Started buying a bit NLY but expect that the taper tantrum still has legs and a spear to hurt commodities and REITs and propel the short rates a bit. WPC another REIT I have. And what's the expected schedule on the debt ceiling theater?

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Polemic
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July 20, 2015 at 9:49 PM ×

And Ray Dalio will never be proven wrong as he has sold himself a free option as it has no expiry. When did Gold last pay off as an insurance policy? I mean to the point the holder sold it to save ( or rather buy) their bacon because every other asset was worthless? - you can leave out central banks in that equation. The only people I can see currently having to sell gold to save their bacon is everyone that bought it mercilessly on every dip for the past x years and has no real money left.

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River
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July 20, 2015 at 10:04 PM ×

Agree with Pol on $gold:

$1094..

http://stockcharts.com/h-sc/ui?s=$gold&p=D&yr=7&mn=5&dy=0&id=p67917380001

http://peterlbrandt.com/even-if-gold-and-silver-are-driving-to-the-final-low-so-what-it-still-is-no-reason-to-be-long/

http://www.dailyfx.com/forex/technical/elliott_wave/gold/2015/07/16/eliottWaves_gold.html

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river
admin
July 20, 2015 at 11:06 PM ×

"Long gold and property" is the mantra engrained in us Asians(at least in North India where I was born)...It will be an uphill battle for Indian govt. to wean masses off of those and make them buy stocks!!!!

Even in Canada,most of my family and friends aren't interested in buying/following stocks..from bonds they went into r/e!
We shall see how long that lasts.

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FunnyMoney
admin
July 21, 2015 at 12:31 AM ×

@Pol - Your argument is v weak. In essence you're saying, "My house didn't burn down, nor did any in my town, ergo house insurance is pointless". The whole point about insurance is that there should not be multiple instances where it pays off (i.e. those instances will be rare, yet debilitating events). However, if you wish me to name some: hard assets paid off to those in Russia, Argentina, Venezuela etc when their financial systems collapsed. As I previously mentioned, the Western financial system was 4hrs away from total collapse post-Lehman (according to the UK govt) - so I imagine a sensibly sized allocation of hard assets would not be a poor choice in those situations.

Asia is a large buyer of gold and other hard assets (property etc) because they either have poor financial systems, or do not trust them. Looking at the mess Western finance has become, I don't see it as being far-fetched to see more people losing trust in our financial system in the future.

Ofc you will find opposing sides to this argument (I guess that's what makes a market). And with gold & most commodities currently in a downtrend, you will find many that agree with you. Maybe everyone should "just buy the dip, equities are going up forever" would that be more rational?

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theta
admin
July 21, 2015 at 8:55 AM ×

on gold manipulation:
http://kiddynamitesworld.com/conspiracy-fact-gold-manipulation-goes-front-page/

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Polemic
admin
July 21, 2015 at 9:13 AM ×

I'm not FM. If you want to use a house analogy Im saying that yes your house could burn down but if it does you are best off already owning another house, not gold. And if the whole town burns down then no amount of gold will buy you another house as there aren't any to be had.

Gold is just as much a store of value built on faith as any other fiat currency as it has no other life supporting function. In fact it is the faith of central banks, in whom your lack of faith is prompting you to buy gold, that is supporting the idea that gold is a store of value in the first place. Lose faith in central banks and their faith in gold and gold prices will plummet as they own most of it.


In the collapsed countries you mention the populace would have been better off owning USDs than gold. Easier to move around the world and more fungible.

I agree that the world was close to financial collapse except for one key point. It didnt. As we are learning from Europe when something is so important it will not be allowed to fail. And if it all revolves around faith, then gold is as susceptable as anything else.

And one final point. The financial crash showed the power of the majority. In a crisis the majority get looked after at the expense of the few. IF the big financial apocalypse comes and IF gold was percieved as the great store of value then the State would requisition the lot. For the good of the people!

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FunnyMoney
admin
July 21, 2015 at 9:28 AM ×

lol @ theta

Here's my last word on this topic: it seems to me that those who are anti-gold are as ignorant and blinkered in their arguments as the goldbugs themselves. To quote Meb Faber, "If you're a goldbug or a stock/bond guy you're doing it wrong. Each has its own day in the sun/shade. Learn to become asset class agnostic."

Example: Investors who bought GLD, in late November of 2004 when the fund launched ...and held for 10 years... have done better than those who purchased stocks (source: WSJ, Nov 2014).

Saying that, I hope people continue to engage in groupthink and remain biased, it provides nice opportunities for the rest of us. In fact it's why I've so fervently sought to BTFD in equities - the current groupthink behind equities is about as rational as a goldbug argument, but a great opportunity.

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FunnyMoney
admin
July 21, 2015 at 9:43 AM ×

@Pol - Sorry missed your last post when I posted previously. Ok, I better understand your argument now, but don't entirely agree. Here's why:
- Yes, CBs currently own vast gold reserves. But if it's a barbarous relic, why?
- Ultimately everything financially comes down to an act of faith, but real assets differ from fiat in one way: all fiat currencies are eventually inflated away or abandoned. Real assets (inc gold) are not. If you dug up a roman gold sestertii, the roman financial system is defunct, the gold value is intact. The same is not true of USD, or any other fiat currency.
- Interesting fact: when UK special forces are put into severe conflict zones, they are given not USD, but gold sovereigns to barter with.
- When the US govt made private gold ownership illegal in 1933/34, large amounts of gold stayed in private hands. Only a handful of people were arrested. When financial collapse happens, equities & bond values are also destroyed, all bank deposits seized, pensions wiped out or confiscated, property sometimes confiscated, so by that argument we should never buy any financial asset.

Think we're gonna have to agree to disagree.

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Leftback
admin
July 21, 2015 at 1:51 PM ×

Not interested in any pissing contests with FM. It's been the year of the Swing Trader and he's executed JBTFD nicely.

There is a general mood of commodity aversion out there at the moment that has developed along with another little deflationary downburst. Most of us here felt that a combination of the late summer seasonal trades, massive oversupply, firm dollar and a slower China would drag oil prices lower, and this has proved to be the case. Bucky and crude together are the strongest determinants of inflation these days. Gold, silver, TIPs, and the rest are all secondary victims of this, imo.

A lot of patience is being required this summer by the opportunists looking at REITs, muni bonds, emerging markets etc. but it seems reasonable to assign a high probability to a Sell The News reaction in USD with the proposed Fed rate hike in September as a base case scenario. If this is correct, then we have a long wait for commodities and EMs. It's hard to imagine that the bond market barrels into September w/o some adjustments, so the opportunities in fixed income and REITs should come sooner. An echo of the August 2013 REIT crash might not be unlikely, so we have some Kevlar close at hand.

Just realized LB is going to be out of town when that FOMC meeting happens, perhaps it's just as well...

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Anonymous
admin
July 21, 2015 at 2:34 PM ×

ESM sold €1.9bn 6mths bills at -0.169%,

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Anonymous
admin
July 21, 2015 at 2:57 PM ×

Mountains of debt as far as the eye can see...

With twice the debt of California, Ontario is now the world’s most indebted sub-sovereign borrower...

http://business.financialpost.com/news/economy/with-twice-the-debt-of-california-ontario-is-now-the-worlds-most-indebted-sub-sovereign-borrower

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Anonymous
admin
July 21, 2015 at 3:11 PM ×

Wow, then can really do that????

"The European Central Bank’s quantitative easing programme risks fuelling house price bubbles in several countries, according to new research, as investors pour cash into real estate.
Germany, Norway and the UK are judged most at risk because ultra-low interest rates and bond yields have fuelled rapid house price growth, said the report by Moody’s Analytics."

So you are telling me that some guy in this building ( described as follows: 185 m high office tower +++ 250 m long Grossmarkthalle +++ 120,000 m² total site area +++ 700 trees planted on site +++ 6,000 panels in the office tower facade +++ 14 steel trusses in the atrium +++ 73 km of repointed facade joints" can make the price of my home in Ewehurst Gardens, Dipton, Stanley DH9 go up in price?

Is this true? This guy can really do that?? Is he that powerful? Is he GOD?


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Anonymous
admin
July 21, 2015 at 3:27 PM ×

I am so shocked and I really loved that guy VAROUFAKIS> I mean even some guys on MM's blog praised him...

Via CNN:
Paul Krugman said that it didn’t even occur to him that Greece would make a stand against its European lenders without having made a plan for an exit from the euro if things went wrong.

"Amazingly, they thought they could simply demand better terms without having any backup plan. So certainly this is a shock"

"I mean, the new terms are even worse, but the terms they were being offered before were still not going to work. So I, you know, I may have overestimated the competence of the Greek government"

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Anonymous
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July 21, 2015 at 3:34 PM ×

When will people start to focus on the fact that the ECB has only national banks buying their own debt?

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Mr. T
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July 21, 2015 at 4:47 PM ×

a general mood of commodity aversion out there at the moment

This is an understatement. Its a bloodbath. Industrial metals is a disaster - aluminum, iron etc. Energy is equally bad. US energy sector is a mess. Mining coal (~35% of electric gen) is no longer a viable business model. Natty (~38% electric gen) appears equally uneconomic at these prices. NA oil and a slew of the e&p sector look awful now and are going to look a lot worse when the trailing hedges wear off. So extracting ~80%+ of the raw inputs for electricity used in the country is basically uneconomic. The idea that the BK's are going to pave the way for a new cycle seems unrealistic - even the crappiest CAPP coal stocks are not headed for liquidation. While there are lots of sector level details the overriding theme seems to be too much capacity, financed with too much debt, chasing too little demand. So now, despite rates at zero, all future capex still remains essentially uneconomic. This is what I call a mess.

There are other capital intensive industries out there that have also likely overbuilt and misjudged demand. The automakers are a prime suspect. Airlines, real estate, transports etc. Suppliers to these industries etc.


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washedup
admin
July 21, 2015 at 5:05 PM ×

T - considering China brought forward about 15 years worth of demand into the last 6 after their dear leaders pissed their pants post the 'great recession', that overcapacity is here to stay for a while - that much is fairly obvious - what I find intriguing is the continued belief that this continued slump would somehow be great for the global economy and asset prices - sure in as much as it allows CB doves to fly it very well could, but my tiny brain is a bit skeptical that the great EM/resources bubble worked wonders for everyone as it inflated, and it will be even better when it deflates - really?
Today's growth is tomorrow's value!

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FunnyMoney
admin
July 21, 2015 at 7:20 PM ×

Huge sell programs in US equities today (esp. YM, ES etc). Looks like programs just got switched off. Long here for a short ride.

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FunnyMoney
admin
July 21, 2015 at 7:29 PM ×

BOOM! Ok the last 3hrs of falls in ES just got reversed lol...

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FunnyMoney
admin
July 21, 2015 at 7:49 PM ×

Sry, typo above, 1.5hrs not 3hrs (wrong time setting when I first glanced at chart). That initial move up about +30/+40 ticks in YM/NQ. Ok, will stop cluttering this thread now.

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hipper
admin
July 21, 2015 at 8:27 PM ×

Really interesting observations on commodities. Despite USD being crushed the response from commodities is relatively weak today, so maybe this correlation is beginning to loose its grip. If some producers really are so resilient to bankruptcy then that will be a huge problem for everyone in the industry and the glut will be extremely resilient to remove itself.

Bond action has been very puzzling here, is it just a rotational play from the toppy spoos to "relatively cheap safe heavens" or are they actually reacting to commodities? Whatever it is the market clearly got frustrated for waiting yields to get Bucky's back and now he's paying the price getting smashed onto hard concrete. But he's been through worse things before, right, and just look at his counterpart over there who is suspected to have a tumor. Nobody really has a clue on his life expectancy but certainly treating it with band-aids aint going to cut it. The medicine science still being in medieval times it can't be very good though.

Well joking aside, really not that pessimistic for Europe. Some claim that it might even be the only place of earnings growth for some time and happy to jbtfd on any hangover effects from the Grepisode graduation party. Please accept forgiveness for all my wrongdoings and sins in life and accept me as your humble follower FM!

http://bit.ly/1JvoIvH

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Anonymous
admin
July 21, 2015 at 8:34 PM ×

Mr.T there's only so far a part timers paycheck can go. The full employment myth.

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Anonymous
admin
July 21, 2015 at 9:44 PM ×

It seems to me there are two mindsets with gold traders...the bunker mentality and the trader mentality...

One seems to believe there will come a time when printed money is worthless, therefore barter of some sort (gold being the best of the lot) will be how things progress...I'd call this the bunker mentality..

The other is the trader, who is always looking to improve on the number of printed monies he will get at the far end of his gold trade...this I suspect is how the vast majority of peeps look at gold...it is the only way I have traded it, and why I haven't owned any in years...

The Bunkers, perhaps Archie himself will always be around.

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FunnyMoney
admin
July 21, 2015 at 10:24 PM ×

I have found a solution to the disagreements in this thread:
http://www.arabianbusiness.com/incoming/article479504.ece/BINARY/gold+and+co+ipad+mini+2.jpg

Voila! A gold-plated iPad: with this we can be both gold-bugs and participate in boosting AAPL earnings - looks like they need it :)

PS FWIW made +50pts in YM before the close. Have a good evening.

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FunnyMoney
admin
July 22, 2015 at 3:03 PM ×

I hope you all JBTFD in US equity indexes. Our friends from the BOJ had our backs with their buy programs kicking in just before the open (very decent of them). As usual I missed half the move by selling too early. Anyway, am taking the rest of the day off. Have a good day.

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Dan
admin
July 22, 2015 at 3:45 PM ×

September is the month to shop for precious metals with slow money.

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Dan
admin
July 22, 2015 at 3:52 PM ×

Premiums on silver eagles have already started blowing out and, depending upon your favorite physical vehicle, the lows could be in on a cost of ownership basis.

India's $6.7b IMF purchase was at $1,045/.ozt in November 2009. Not too far away at this point.

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abee crombie
admin
July 22, 2015 at 8:44 PM ×

Mr T. yes coal is in trouble, I dont know enough about it but I would think now it might be interesting to go counter, BTU for $1, why not. I am getting ready to go MLP shopping soon. Some real carnage.

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CV
admin
July 22, 2015 at 10:36 PM ×

I think the fear of deflation is massively overblown, and that higher inflation is right around the corner. This could lead to a little taper tantrum soon, mainly driven by the inevitable break-out of U.S. short rates. Talking my book here of course, as I recently sold some EDs. The thing about the current situation is that if I am wrong, it will just be QE/ZIRP forever driven by permanent deflation fears. I find that difficult to believe. So while the trend of "secular stagnation" may be well established, I think the cyclical story could be quite different in the coming quarters.

Now, on gold. For the record, I hold a small allocation to gold. I hardly ever look at it, but it has of course been a bit of a drag this year ;). One thing I will say about it, though, (and this is especially true for gold miners) is their value in terms of "diversification". Now please don't laugh (too late?), but in a world where stocks and bonds move together, it is nice to see a part of your portfolio trading on its own catalysts, even if they might be negative ones!

My base case is that Q3 will be like walking in the desert with no water bottle (i.e. not much to do), but that Q4 should give us some opportunities. I agree with the sentiment expressed by LB and others that these opportunities will eventually emerge this year.

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Anonymous
admin
July 23, 2015 at 1:17 AM ×

Should I be worried about this chart?

https://research.stlouisfed.org/fred2/graph/?graph_id=247427

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Leftback
admin
July 23, 2015 at 2:20 PM ×

Coal is the new whale oil in the West, but China isn't ready to stop belching smoke from its power plants. There may still be some value in those coal miners that feed the China market. It gets really cold there some winters.

Kudos to those sharp punters here who warned about the depth of the current commodity bust on a slower China. It's been far worse than I anticipated. Still, the point should be taken that a "slower China" is still a massive guzzler of energy and raw materials. Life goes on and at some point the commodity complex will find a floor. Like CV, I harbor the long-held view that it's never a bad idea to own "stuff" that people use for basic necessities, especially if you can scoop the stuff and its producers at decade low prices.

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washedup
admin
July 23, 2015 at 2:52 PM ×

left - beginning to spot good risk/reward in energy credit up the capital structure here and there - equities not so much.
The China stuff is now front page news - doesn't mean its 'priced in', but I feel there will be short squeezes galore to sell into - no hurry.
I can't figure out US rates - nothing can really happen till they find some direction - have a sense bonds were supposed to get clubbed like a baby seal till crude upended everyone's plans by getting on the trampoline and screaming 'deflation' - right now I suspect it is an interruption and not a trend change - we will see.

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FunnyMoney
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July 23, 2015 at 5:16 PM ×

Sell programs in equity indexes in full operation (again). So funny to watch. 11:10 NY time, switch pressed, and your screens turn red. lol.

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Mr. T
admin
July 23, 2015 at 5:26 PM ×

If coal is the whale oil of our time it seems better odds to find investments in whats replacing it than to look for crumbs left in KingCoal. Natty looking at a multi-decade infrastructure buildout ought to create some investable themes.

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hipper
admin
July 23, 2015 at 6:37 PM ×

This is old, but one has to wonder what if, just maybe....

http://www.bloomberg.com/news/articles/2015-03-15/beware-the-300-billion-shift-into-treasuries-coming-from-japan

It's kind of the same as behemoth pension funds with limitless pockets funded by the working people buying real estate in artificially supply restrained environments because they don't get yield from fixed income or anywhere else for that matter, then these same working people who are supposed to work in these areas with limited pockets (because you know, their money went to the pension fund monopoly) can't move there because the pension fund got to the punch bowl first. If the purpose of ZIRP is to paralyze societies as no-one is going were they're supposed to go and skyrocket living costs it's certainly working.

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washedup
admin
July 23, 2015 at 6:39 PM ×

Left/T just would like to point out that whale oil was replaced by kerosene when kerosene became decidedly less expensive - the process of replacing all of the worlds coal (around 6 Billion Tons) with natural gas as a fuel source would require roughly a doubling of current global natural gas supply (or around 350 BcF/d) - the latter equates to around 60 MM Bbl/d of oil equivalent, kind of a tall order.
I am not questioning the inevitability of more gas and less coal, my point is merely that this is likely to be a 50 and not a 10 year process. I do like prospects for Ng prices being higher long term - for the reason cited above, however, I just don't think coal prices can stay down that much in a world where natural gas prices are rising, even adjusting for a reasonable carbon price.

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Anonymous
admin
July 23, 2015 at 7:22 PM ×

So here's the explanation behind the recent big gold crash - it WAS manipulated by Central Banks:

http://www.zerohedge.com/news/2015-07-23/hunt-mystery-gold-bear-raid-leader-begins

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FunnyMoney
admin
July 23, 2015 at 8:19 PM ×

I am initiating a FunnyMoney buy program in the Dow Jones. Someone needs to step up to these rabid market-makers.

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FunnyMoney
admin
July 23, 2015 at 9:07 PM ×

As we close, +50 on YM trade, entry within 5 ticks of the daily low.
FM 1 : Algos 0
Have a nice evening.

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Anonymous
admin
July 24, 2015 at 2:43 AM ×

Here's some historical perspective supporting the FM model for a long-term investor.
http://ciovaccocapital.com/wordpress/index.php/stock-market-us/rare-and-extreme-investor-skepticism-leans-bullish-for-stocks/

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river
admin
July 24, 2015 at 11:16 AM ×

Gold at a long term trendline:

http://www.dailyfx.com/forex/technical/elliott_wave/gold/2015/07/23/eliottWaves_gold.html

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July 24, 2015 at 2:50 PM ×

I was intrigued by the coal investment theory (and my own predilections towards contrarian investing) so put a starting 25% position on in CLD, the best of the worst IMO.
Another little "early" investment is BWXT because if coal is hated nuclear is in intensive care. However it's the only real viable alternative if environmental impact is to be considered important.

Along those lines(!) electrical grid pure plays are also probably another good buy and hold but I have not found a good name to invest in there yet. I'd welcome ideas.

Thanks for all the good content and comments here. I read every day.

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FunnyMoney
admin
July 24, 2015 at 3:27 PM ×

Sell programs running stops in US equities... this is like groundhog day.

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Nico G
admin
July 24, 2015 at 3:38 PM ×

i know nothing about gold so can't contribute but Jared Dillian has a really good piece on gold today (the 10th man)

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mcr
admin
July 24, 2015 at 4:15 PM ×

What about correlation, do we have anyone with a close eye on moves in correlation? I am trying to find confirmation of the thesis that we really have these asymmetric business model companies outperforming most other sectors (excl CB supported financials). Is this the golden (no pun intended) time for a long short of mega cap techs vs the rest? And the rest could especially entail some equity pigs (not debt), EM heavy companies, commodity producers etc ? Thoughts?

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washedup
admin
July 24, 2015 at 5:33 PM ×

mcr - the mega techs vs the rest (call it the winner takes all magic portfolio) is the obvious trade and has been for a while, the only issue is that if one were to hop on now, it would be on a train already crowded and bursting at the seams, while not exactly trundling along at a gentle pace. I'd hazard a guess there are no shorts left in names like apple, goog, and amzn (or ones that are not in ICU anyway) - it behooves one to construct an index of say these 3 9plus FB) vs IBB and buy it when its down to more reasonable levels, as opposed to right here right now.
I know, I know, Nico, why bother hedging the shorts - honestly don't have an excuse other than most people's timing is not as good as yours!

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hipper
admin
July 25, 2015 at 10:36 AM ×

Good post:
http://www.financialsense.com/contributors/patrick-o-hare/yield-curve-flashing-yellow

"In effect, then, the market is caught in a traffic circle and it's not quite sure which turn to take. Consequently, we keep going around and around with three competing ideas that weak commodity prices are owed either to: (1) the dollar's strength (2) overproduction by producers that has led to a supply glut or (3) an actual slowdown in end demand that is being exacerbated by the dollar's strength."

"What can be gleaned from the back end of the yield curve, which is more inflation sensitive, is that it isn't all that concerned about rising inflation pressures."

Exactly, and my idea is that if the back end continues pricing further dis-inflation, will probably continue to draw more support away from USD despite an eventual little nudge-up on the front end, as weakening USD hasn't so far had any reviving effects on commodities. Now, EZ PMI's took a dent and the French even back to below 50 even with favorable FX with July compared to June. If EURUSD already saw its trough for the next month or two, these might get worse, and just not to downplay, might exacerbate the effects from the slowing Chinese auto market on the German manufacturers and suppliers.

Though supporting factors coming from leading M1 growth in the EZ should also be noted, which is probably enough to offset decelerating effects from the strengthening EUR in the coming months. Meanwhile equities would probably continue to trade accordingly to (strengthening) EUR, until we actually get to see the better data materialize:
http://bit.ly/1CWtENv

In the big picture though if the submerging markets in Lat-Am, Middle-East and Africa continue their spiral on the back of the resilient commodity glut and China is on the best case scenario "stationary", then should we really rely on a lasting domestic based M1 growth scenario or rather just call it a short term blip while (it could be plausibly expected that) the extra-EU exports take it up the chin?

Just can't get that picture of a sprinting major global recessionary environment out of my head, and when it arrives it would setup a very interesting obstacle course for the much advertised consolidating, "what doesn't kill you makes you stronger" EZ pact.

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washedup
admin
July 25, 2015 at 2:32 PM ×

hipper - thanks for that link - obviously thats not a contrarian opinion at this point - I, for one, however, am struck by the fact that even though crude is close to the lows from last year, energy equities and credit are making new lows, and the dollar is not far from the early year highs, the 30 yr, which as the author correctly points out should be free from Yellen's whims and fancies, is about 60 bps higher depending on which past episode (i.e. oct 14 or jan 15) you pick to compare. It's an easy and tempting statement that its a matter of time before long yields go smashing down to reflect the reality in these other markets, but my hunch is that its because positioning is a lot different. Bond bulls seem just as likely to be frustrated most of this year as Bond bears were last year.

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Anonymous
admin
July 26, 2015 at 1:51 PM ×

My favorite insane person...
"Former Finance Minister Yanis Varoufakis has claimed that he was authorized by Alexis Tsipras last December to look into a parallel payment system that would operate using wiretapped tax registration numbers (AFMs) and could eventually work as a parallel banking system, Kathimerini has learned.

In a teleconference call with members of international hedge funds that was allegedly coordinated by former British Chancellor of the Exchequer Norman Lamont, Varoufakis claimed to have been given the okay by Tsipras last December – a month before general elections that brought SYRIZA to power – to plan a payment system that could operate in euros but which could be changed into drachmas “overnight” if necessary, Kathimerini understands."

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Anonymous
admin
July 26, 2015 at 2:06 PM ×

When monetary policy is the only game in town, everyone should own gold. Kyle Bass explains:

http://www.bloomberg.com/news/videos/2015-07-24/the-100-most-beautiful-airplanes-at-oshkosh-fly-in

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hipper
admin
July 26, 2015 at 4:58 PM ×

Good point washed, thx. A considerable gap between low-current yield still in place, especially considering the circumstances now. Better to once a while check the position on the actual map instead heading and speed for the last couple of days, forest from the woods etc. Wonder how many bond bears there were in the beginning of 2014 vs bulls there are today in the mega-deflationary blowup narrative which will soon ensue.

No scientific evidence but it seems the skepticism for growth seems to have been rising a lot recently. In the beginning of 2014 and mid-2013 headlines the widespread narrative accordingly seems to have been the accelerating escape velocity.

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Anonymous
admin
July 26, 2015 at 5:17 PM ×

US employment rising but GDP falling... to paraphrase... fire 5000 full-time electronics engineers and create 10,000 part-time jobs for parking lot attendants. Hey presto: +5000 jobs created !!!
But this is bad for companies you say? No need to panic, management will use the cost savings (from firing US workers) to buy-back stocks (thus CEO bonus is intact). In addition the BOJ will buy our stocks and the Fed will support our housing market. Et Voila, asset prices soar !!!
Ofc endless central bank manipulation and govt spending will increase our debt, and cause some alarm, but at $18.6 trillion what's another $5-10 trillion here or there? And let's face it if this all unravels, and the markets perceive that central banks lose control, we can just put up interest rates to 15% to fix everything (HAHAHAHA - can u imagine????)

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Anonymous
admin
July 26, 2015 at 5:26 PM ×

http://northmantrader.com/2015/07/26/the-big-bad-bear-case/

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Anonymous
admin
July 27, 2015 at 3:21 AM ×

From today's Telegraph:

Varoufakis: "Schauble believes that the eurozone is not sustainable as it is. He believes there has to be some fiscal transfers, some degree of political union. He believes that for that political union to work without federation, without the legitimacy that a properly elected federal parliament can render, can bestow upon an executive, it will have to be done in a very disciplinary way. And he said explicitly to me that a Grexit is going to equip him with sufficient terrorising power in order to impose upon the French, that which Paris has been resisting: a degree of transfer of budget-making powers from Paris to Brussels."

Mr Varoufakis told that Mr Schauble has made up his mind that Greece must be ejected from the euro, and is merely biding his time, knowing that the latest bail-out plan is doomed to failure.

"Everybody knows the International Monetary Fund does not want to take part in a new programme but Schauble is insisting that it does as a condition for new loans. I have a strong suspicion that there will be no deal on August 20," he said.

He said the EU authorities may have to dip further into the European Commission's stabilisation fund (EFSM), drawing Britain deeper into the controversy since it is a contributor. By the end of the year it will be clear that tax revenues are falling badly short of targets - he said - and the Greek public ratio will be shooting up towards 210pc of GDP.

"Schauble will then say it is yet another failure. He is just stringing us along. He has not given up his plan to push Greece out of the euro," he said.

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