Buying gold??? I suppose you want to use untraceable cash … Buy real coins.
It seems the crossing of the Maginot 100-day moving average combined with Jackson Hole chatter and the dismal new home sales data has set the precious metals ablaze once again. For the first time since early June, gold has crossed the psychological $1,400 level (up 18.5% from its 6/18 lows). We suspect the still-unprecedented short-interest in COMEX gold futures may well be feeling more heat here (having fallen 40% in the last 5 weeks)…
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Home valuation, formerly the store of Americans family welath ::: Plunging Home Sales Send Stocks Higher, But Dow Drops For Third Week
Despite the best efforts of the efficient and idiotic things we call the US equity markets – which exhibited the kind of epic VIX smashfest into the close – the Dow was unable to be rescued from its 3rd red week in a row (the first in 9 months). The S&P closed above its 50DMA (at the highs of the week) with a late-day scramble (but Nasdaq ends the week +1.7%). So a very mixed bag for stocks and the USD (thanks to today’s post-home-sales dumpfest) ends the week unchanged. The real story of the day (and week) though is precious metals and bonds. The 30Y bond’s best week in a month and best day in 5 months wa snotable but perhaps more so, while the entire complex ripped lower in yield as the un-taper un-housing-recovery data hit, the flattening of the 5s30s spread is extreme. Gold and Silver spiked on the home-sales data ending the week up notably. The VIX-compression into the close ended at 14.00% for the biggest 2-day drop in 2 months.
With the ongoing musical chairs at the COMEX (focused on JPMorgan’s volatile holdings), the bank’s precious metals team now sees a number of reasons to be long gold. Noting the market’s shrugging off of Paulson’s unwind (“delivering an exclamation mark to define the end of the fall in gold stocks”), JPMorgan (ironically) suggests the questionable price action in the paper markets in light of unprecedented physical demand combined with the seasonal positives (and physical supply restrictions) all points to “getting long the gold space,” with gold and silver miners offering value. The question remains, given that none of these are ‘new’ facts, why the change of heart now (especially as JPM is also buying)?
Comments Off on JPMorgan Advises To… Buy Gold? | News and politics | Tagged: COMEX, Exclamation mark, gold, Gold as an investment, JPMorgan Chase, Musical chairs, New York Mercantile Exchange, Precious metal | Permalink
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He was testifying today to the House testerday … Bernanke Ruminates On “Incomprehensible” Gold Prices
One of the better exchanges today, discussing a topic near and dear to Bernanke’s heart – gold:
- BERNANKE SAYS GOLD `IS AN UNUSUAL ASSET’
- BERNANKE SAYS SOME SEE GOLD AS DISASTER INSURANCE
- BERNANKE SAYS `NOBODY REALLY UNDERSTANDS GOLD PRICES’
- BERNANKE: GOLD MAY BE LOWER ON LESS CONCERN OF EXTREME OUTCOMES
- Bernanke says if he stops printing moeny, the economy will tank
Whoever heard of an economy dependent on printing money???
Maybe he should note people aren’t stupid, you can’t print GOLD…
Or, even simpler, gold may be lower on more paper gold sellers than paper buyers. In the meantime, gold continues to be in backwardation, but that too “nobody really understands” Bernanke would likely attest. Buy real only …
Our chewing gum and suspenders economy, held up by nothing at all … What is business going to do with all the temp workers.
HERE COMES INFLATION …
If Bernanke is looking for inflation under every rock and cranny, he may have just found it in today’s PPI, if only in its energy components.
While the headline June number was expected to jump sequentially by 0.5%, the same as May, the final number came at 0.8%, or 2.5% on a Y/Y basis – the highest since March 2012 – driven entirely by Energy good prices, which soared by 2.9% sequentially, the most since February’s 3.2%.
Foods PPI jumped by a more manageable 0.2%, although no matter how, it is inevitable that producers will now pass both of these to consumers whose purchasing power, especially at the gas pump, is about to be severely tested especially with fuel prices now once again rising at the fastest pace in months.
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And Southwest Securities’ Mark Grant sums it up best:
On February 12, 2013 I said in Out of the Box:
“The engagement is just beginning. It will be one of the most significant events of this year and the various skirmishes may lead us into some sort of planetary Battle Royale. It is not Star Wars but “Currency Wars” and you too can engage in the action.”
On the same day the yen was 93.47 to the Dollar. This morning it is 101.40 to the Dollar. That is an 8% shift in three months which is a significant move in that period of time. Japan, with a nod from both the Fed and the EU, has actively begun to devalue their currency and to increase inflation before they enter some viral space that they cannot leave without more severe measures. What is happening, however, will cause further dislocations in my opinion and may well cause Europe to react and send the Euro towards 120 to the Dollar. As a matter of fact I think the major central banks are all engaged in a world-wide devaluation of currencies where they all will be worth less and then the relative valuations will all be lower as a result. The small blue and green pieces of paper will be smaller still and goods and services will be more costly.
As the “Currency Wars” go from skirmish to battle we are also faced with a great paradox in the gold markets.The price of paper gold is down, this is gold in any other form than physical delivery, while the demand for physical delivery skyrockets. There is a portent here I am afraid and an unsettling one.
Recently JP Morgan’s inventory of gold at the COMEX fell from 2.4 million ounces to 160,000 ounces and we should all note what is happening. Also, recently, ABN Amro said it could not settle its gold contracts with gold and that settlements would have to be made in cash. It has also been reported that the LBMA is having trouble settling their contracts in actual bullion so that it is becoming apparent that something is amiss in the gold markets. China reported in March that their imports hit an all-time high of 223.5 tons. I would guess that April will overshadow March. While there is no apparent economic crisis the demand for physical gold and the vibrations in this market gives me pause that some game might be afoot.
If you consider what is happening in the currency markets and then factor in the demand for the physical delivery of gold there should be some additional note of caution in your evaluation of the markets. Smart money always moves first while dumb money lingers and is baited by those that take advantage of it. A sniff of Fear has returned to the marketplace and Greed may be in the process of giving way. Watch your backs!
Comments Off on “Sniff Of Fear” Returns – Commodities Crack Under USD Strength | News and politics | Tagged: ABN Amro, Battle Royale, Currency war, Emirates NBD, Japan, London bullion market, Mark Grant, Precious metal | Permalink
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