The 6 P.M. Recap With Gary Wagner: Oil, Unhinged

Oil, Unhinged

Oil continued to careen lower today, both WTI crude and Brent free falling around 4.25%. (Natural gas tumbled even more – 4.65%.) Oil-dependent nations that have been planning poorly are reeling, Venezuela and Russia among them.

Normally, the fall in oil prices would drag gold down with it. They do consistently but not always trade in tandem. That was not the case. The nosedive in oil is so sharp and so noisy that it finally is rattling the equities markets. As a guide to the impact going-going-gone oil prices are having, remember that the energy sector accounts for about 13% of the S&P 500.

The equities were having other problems, though, too. McDonald’s, on devastating same-store sales, fell almost 4%. The burger-meisters can’t seem to find a formula for the new millennium.

Onto this fire was thrown the wreckage of the Japanese economy in the third quarter, which contracted almost 2% (in annual terms).

Many analysts are betting that Japan is already recovering in the fourth quarter. The Nikkei was up ever so slightly, but you can bet gold buying has become appealing to some Japanese investors, if only until the typhoon blows over. The yield on the Japanese 10-year bond is 0.44%.

The dollar, which had been sailing high and mighty, also took a break today, like American stocks.

On a more market-specific basis, gold found some support through short covering moves and some simmering technical momentum that bulls are able to stoke on the back burner.

But, we have been seeing gold swing in a range for a while. Without seriously new fundamental info, we don’t see that changing a whole lot.

Wishing you as always, good trading.

Gary Wagner

Read More

Short Covering Lifts Speculators’ Gold Holdings In Latest CFTC Data

By Debbie Carlson 

Short covering lifted large speculators’ Comex gold futures and options holdings in the latest Commodity Futures Trading Commission weekly data, after a modest increase in gold prices in the timeframe covered by the report, which is for the week ending Dec. 2.

Since funds arrested the slide in their net-long holdings in the past few reports, the rise in net-long holdings have come mostly on the back of short covering, rather than a big build of new bullish positions. Short covering is when market participants buy back previously sold positions and exit the trade.

Fund managers added to their bullish positions in silver, but had mixed action in the platinum group metals. These traders added to their bearishness in copper as they increased net-short holdings. The data includes information from both the CFTC’s disaggregated report and legacy reports.

Metals prices were mostly weaker during the time period covered by the latest CFTC report. Comex February gold managed to buck the weaker price trend, rising $1.60 an ounce to $1,199.40. March silverfell 15.50 cents to $16.456. January  platinum fell $7 to $1,217.50 an ounce. March palladium was the only other gainer in the metals complex, rising $6.90 to $803.75. Comex March copper fell, dropping 8.6 cents to $2.8915 a pound.

Managed-money traders’ net-long holdings rose to 79,497 contracts, the highest since Aug. 26, as they added 3,692 gross longs and cut 9,577 gross shorts, meaning they cut bearish trades and added bullish ones. Producers and swap dealers both bolstered their net-short positions by cutting gross longs and added gross shorts.

As in the disaggregated report, the non-commercial traders in the gold legacy report also added gross longs and cut shorts. They added 4,428 gross long contracts and cut 8,844 gross shorts. They are now net-long 104,751 contracts, the highest since Sept. 2. Commercials are net-short and raised that position by cutting gross longs and adding gross shorts.

Analysts at Commerzbank said based on the CFTC data, fund activity is behind the recent rise in gold prices.

Joni Teves, analyst at UBS, concurred. She said gold's ability to hold near the $1,200 area “over the last three weeks has mostly been driven by short covering, amplified by thin liquidity conditions. After reaching the year's high of 16.30moz (million ounces) in early November, gold gross shorts have consistently declined by 1.50moz per week. Latest CFTC data shows that gold shorts have declined by a total of 4.50moz or 28% to 11.80moz as of Dec. 2, which is the lowest level since the beginning of September. During this period, gold gross longs have increased by 1.00moz or 5%.”

Managed-money traders increased their net-long silver position for the third week, raising it to 14,428 contracts; however, they did it by short covering. They cut 1,573 gross longs and cut 7,176 gross shorts. Producers increased their net-short position by adding more gross shorts than gross longs.  Swap dealers moved to a net-short position by cutting gross longs and adding gross shorts.

For the fifth week, funds increased their net-long silver position in the legacy report, raising it to 20,751 contracts. As in the disaggregated report, non-commercials cut 2,289 gross longs and cut 8,466 gross shorts. Commercials are net-short and increased that position by cutting gross longs and adding gross shorts.

Jonathan Butler, precious-metals strategist at Mitsubishi, said given the sizable short covering seen in silver, the gross short position held by funds is now the smallest since mid-August, “indicating that investors have greater conviction now that silver will not see substantially lower prices in the short term.”

Commerzbank analysts said silver net-long positions rose even higher than the gain seen in gold in, up by a full 58%. “All the same, the silver price actually fell marginally in the period under review, which suggests weak physical demand. That said, the silver ETFs (exchanged-traded funds) tracked by Bloomberg saw inflows of 28 tons during this period, which in turn points to only subdued silver demand from industry. The silver price is unlikely to make any significant gains until this picks up,” they said.

Managed-money accounts in platinum increased their net-long position to 18,439 contracts. They added 382 gross longs and cut 3,134 gross shorts. Non-commercials in platinum also boosted their net-long position, lifting it to 26,796 contracts in the legacy report. They added four gross longs and cut 3,491 gross shorts.

Large speculators’ net-long palladium holdings slightly rose in the disaggregated report to 18,439 contracts. They added 189 gross longs and added 24 gross shorts. However, the palladium legacy report saw non-commercials cut 352 gross longs and add 119 gross shorts, which lowered their net-long to 21,130 contracts.

“The Nymex palladium book bucked the trend and was the only precious metal posting a decline in positioning,” Teves said. “Palladium net longs (fell) …  due to long liquidation and some additional short positioning. Some longs that were established three weeks ago likely took the opportunity to book profits – palladium prices were up as much as $50 between Nov. 20 and 28. As we've mentioned previously, year-end trading is likely to be limited both in size and time-frame, with investors more inclined to book profits quickly.”

Managed-money accounts increased their copper net-short position for the second week. Their net-short position rose to 5,919 contracts, as they cut 3,442 gross longs and added 606 gross shorts. Large speculators in copper’s legacy report added to their net-short position, lifting to 34,190 contracts. These traders cut 4,697 gross longs and added 1,168 gross shorts.

Aakash Doshi, analyst at Citi Research, said concerns about China reflect the build in funds’ net-short copper positions, particularly as copper prices on the Shanghai Futures Exchange fell sharply during the time period covered by the CFTC report. After the reporting window closed, Comex copper prices rose following news of strong November copper import numbers, so “we would expect some short positioning to have been covered, suggesting a pullback in net shorts for the next CFTC report,” he said.

For further information, see the CFTC’s website.

By Debbie Carlson

Read More

Gold Bulls Hang Tough, Despite Dollar

Technical Trading: Gold Bulls Hang Tough, Despite Dollar

By Kira Brecht 

February Comex gold futures are moderately firmer in early New York trading action, despite overnight strength in the U.S. dollar. For now, gold bulls are hanging tough and limited chart damage was seen after Friday's surprisingly strong U.S. non-farm payrolls report

On the weekly chart for February Comex gold futures (not shown here), the market formed a "bullish outside" week and closed higher. That simply means that last week's range exceeded the previous week's high and low and gold closed higher on the week. It is a positive signal on the weekly chart.

On the daily chart, for now, the 20-day moving average at $1,189.40 is holding as strong nearby support for the gold contract. The market fell to touch that level on Friday, but is now rebounding above that area. See Figure 1.

Drilling down to the 60-minute chart, Friday's low at $1,186.40 is important near term support. That floor needs to hold to keep the very short-term outlook sideways, with the possibility for improvement.  See Figure 2 below.

Shifting back to the daily chart, the market has staked out two strong support areas in recent weeks at the November 7 $1,132 low and the December 1 $1,141.70 low. Those can be seen on Figure 1, marked "A" and "B." Both of those sessions saw "wide-bar" days emerge with bullish outside days forming at the final bell.

Buyers are defending gold on dips, and those two lows represent perhaps the bottom of a new short-term range that may be developing on the daily chart.

Daily momentum studies are lackluster. The 14-day relative strength index is mid-range and not showing strong momentum currently. Heading into the holidays and year-end, quiet trading conditions could begin to grip the market.

In the very short-term, as long as the 20-day moving average and Friday's low at $1,186.40 hold firm, sideways to higher trade can be expected. Strong resistance lies at $1,221, marked at point "C." It would take gains through that ceiling to open the door to a fresh buying wave.  

By Kira Brecht

Read More

Fuel Cell Electric Cars: Throwing Down The Glove, Potential Impact on Platinum

As predicted, fuel cell electric vehicles made a broad entrance at this year’s Los Angeles Auto Show and consumers could be seeing these models in showrooms as early as next year.

The advancement of FCEV vehicles could have an impact on precious metals and platinum group metals demand in the long term.

Toyota presented its final version of the long anticipated FCEV -- now called Mirai. Honda, the first to have a series of hydrogen cars (the FCX Clarity) on Californian streets many years ago, showed off its next generation vehicle and Clarity’s successor. To the surprise of some, Volkswagen Group entered the arena with both a lower-end model based on the VW Jetta Wagon and a high end A7 “h-tron Quattro”, the latter clearly positioned as a Tesla alternative. BMW came forward with the proposition that its second generation “I” cars might be powered by hydrogen as well.

The L.A. Auto Show may therefore be remembered one day as a direction-altering event in the history of the automobile, with serious implications to precious metals:

• A boost to electric vehicle (EV) sales – be it battery electric like the Tesla S or fuel cell electric – will reduce the number of new cars needing an automotive catalyst; autocats still amount to about 50% of the world’s consumption of platinum group metals.
• At the same time, as we reported earlier, the market indecision between battery electric and fuel cell electric will decide on whether and how much platinum will be used in new automotive applications. Only fuel cells need platinum, while batteries usually contain a lithium-based chemical cocktail.

Both technologies have positives and negatives alike at this point. Ultimately, convenience in the eye of the mass market will perhaps be more important than the ecological impact of each option. John Voelcker of Green Car Reports, a Tech Metals Insider guest in the early stages of the series, just released an excellent three-part series on some of the more relevant concerns consumers have.

Toyota, Honda and Hyundai all provided answers to ten questions offering insights into the approaches of each company. The series of articles spawned a record breaking series of comments and arguments underlining how emotionally charged the discussion is led by enthusiasts in both camps.

Tech Metals Insider will embark on a journey to answer the more general questions regarding total energy balance, total cost and efficiency in future issues. However, as history indicates it isn’t always the best technology that wins – remember Betamax? Consumers around the world will make a choice, and industry lobbies will try to influence these choices. With FCEVs finally on the market, the game may begin.

Bodo Albrecht

Read More

Mitsubishi: Palladium Fundamental Backdrop ‘Exceedingly Strong’

The fundamental backdrop for palladium remains “exceedingly strong,” says Mitsubishi, and platinum is also showing signs of bouncing. Palladium should benefit from strong auto sales in the U.S., with the most recent report showing that November sales of passenger vehicles rose to a 10-year high of 17.1 million units on an annualized basis, up from 16.3 million a year ago. Demand for light-duty trucks and sport utility vehicles rose 9.6%, compared with a more modest 1.3% increase in car sales. “This is positive for palladium demand, since trucks and SUVs tend to have larger engines than cars and therefore require higher catalyst loadings to deal with emissions,” Mitsubishi says. Meanwhile, platinum consolidated above the $1,200 level in the last week, apparently confirming the reversal of a downtrend that since the highs of the year in mid-July, Mitsubishi says. Also, platinum outperformed palladium last week, with the platinum/palladium ratio pulling back from its 12 year low of 1.48 – another indication of platinum’s short-term relative strength, the firm says. “Last week’s new quarterly report from the World Platinum Investment Council and SFA Oxford brought into focus the tight fundamental picture, although as noted in the report, the platinum market moved into a quarterly surplus in Q3 as South African mined output recovered and metal was released by exchanges amid investor liquidations and falling prices.”

By Allen Sykora 

Citi Research: Seasonal Factors Boost Chinese Copper Imports In November

Chinese copper imports continued to rise last month, although Citi Research chalks up this to seasonal factors. Total imports rose to 420,000 metric tons from 400,000 in October.  Citi says “this is a typical seasonal pattern, and December imports may well rise further for the same reason. However, term contracts for 2015 are likely to be far lower than for 2014 given premiums were offered far above spot levels, currently in the $60s, while 2014 saw record term contract bookings as term premiums were well below spot levels of late 2013, around $190.”

By Allen Sykora 

Barclays: India’s Scale-back Of Restrictions Supportive For Gold, But Not Immediately

Monday December 8, 2014 8:14 AM

Barclays says India’s recent decision to lift the so-called 80-20 rule should support gold, although maybe not immediately. The now-scrapped rule called for 20% of all imports to be re-exported as a finished good. “But given that a number of dealers stockpiled in anticipation of tighter trade restrictions and that the announcement comes toward the end of the seasonally strong period for consumption, we do not believe the news will offer support immediately,” Barclays says. Analysts note that India’s Gem and Jewelry Federation has urged that the import duty be reduced to 10% to 5% initially, and then scaled back to 2%, to curb smuggling.  

By Allen Sykora 

Morgan Stanley: Aluminum Price, Premiums Reflect Robust Fundamentals; Supply To Pick Up

Higher aluminum prices and premiums than earlier this year reflect robust fundamentals, although this is likely to lead to increased supply that curtails premiums, says Morgan Stanley. “Throughout this year, the global primary aluminum market balance has increasingly tightened as a consequence of strong demand growth, subdued production growth ex-China and a steady fall in global inventory to a five-year low,” Morgan Stanley says. Nevertheless, the firm says premiums are likely peaking as supply growth resumes, suggesting they are likely to retrace toward long-term levels of $100 to $150 per metric ton next year. In the third quarter, the U.S. Midwest premium was at $447. “Renewed growth in global supply will be the primary driver of the declines in global premia, rather than any deterioration in demand growth, which we forecast at 6.0% YOY (year-on-year) for 2015,” Morgan Stanley says. The higher London Metal Exchange price and premium will probably encourage producers worldwide to expand capacity, the firm says. “China already has returned to full production, after 1H14 curtailments.”

Read More

Dec 08 Momentary Sanity in the Legal System Bob Moriarty

Momentary Sanity in the Legal System

Bob Moriarty

It was like a ray of sunshine to see a Federal Judge take an action that actually made some sense. Net dresses made of hen’s teeth are far more common.
In business since 1998, Bernard von NotHaus, (Affectionately nicknamed Nuthouse by Barb) attempted to create a gold-, silver- and copper-based currency to demonstrate the destruction of the American dollar since the Federal Reserve sprung to life in 1913. With the exception of wartime, we had little inflation from the foundation of the United States in 1793 until passage of the Federal Reserve act. Since 1913, the dollar has lost 98% of its value. So he gets charged with counterfeiting.
In 2007 the government raided von NotHaus and seized millions of dollars in gold and silver. It didn’t belong to von NotHaus, it belonged to the people he convinced to store it with him. In 2011 the case went to trial. Von NotHaus lost the case and was convicted of counterfeiting.
That by itself is an interesting finding. By making fake currency out of silver, gold and copper, according to the government he was defrauding Americans by giving them the choice between money with value and slugs. His money contained real value and US currency is basically a system based on worthless slugs.
The prosecutor went so far as to distort English to the point of absurdity by describing the crime as one of “a unique form of domestic terrorism,” continuing to say, “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country"
In the United States we accept an institution that removed 98% of the value of savings over a 100-year period in order to enrich a tiny 1% of the population. We have a country busy destroying the middle-class, the very foundation of a prosperous and healthy country. Yet someone coming up with a currency based on honest money is called a criminal. Is this the last act of a farce, the crumbling of a fake empire?
It wasn’t very long ago that the sexual preferences of U.S. Attorney Anne Tompkins were still a criminal act. I don’t care what she does behind her bedroom door or with whom she does it. But the government felt it appropriate to criminalize personal preferences. Now she wants to distort not only English by her choice of words but also to make sure Americans do not have a legal right to a currency of their own choice. Slugs are real, gold and silver aren’t. Go figure.
Not all victories are real victories. In 279 BC, King Pyrrhus defeated the Roman army at the Battle of Asculum. He replied, “One more such victory would utterly undo him.” His actions defined a Pyrrhic victory.
U.S Attorney Tompkins should have gotten a sense of what she had really accomplished when Federal Judge Richard Voorhees allowed von NotHaus free on a tiny bail. It was within the right of the judge to stick NotHaus in jail while he appealed his conviction but NotHaus was free to travel and live without shackles.
Von NotHaus appealed his conviction and lost. That was sort of a waste of even fake money; no one defeats the power of the federal government in an appeal of a criminal conviction. If the government can’t figure out that a chokehold is murder, how could they figure out that gold and silver can’t be a counterfeit of slugs? That’s like saying fresh organic vegetables aren’t food but feces is.
Judge Voorhees had the final say when he sentenced NotHaus this week. Our legal system has been so totally warped out of shape since the passage of the Harrison Tax Act 100 years ago, the first drug prohibition law, that police have become judge, jury and executioners. The prosecutor now determines the sentence and judges collect a lifetime paycheck for staying awake during a trial.
U.S Attorney Tompkins wanted to send a clear and convincing signal to all Americans who believe gold and silver are money. She demanded NotHaus be sentenced to a 14 to 17 year period. For a 70 year-old, that’s pretty much a death sentence. How dare he create real money or give Americans a choice between silver and slugs? As it turns out, Judge Voorhees also wanted to send a clear and convincing signal to Ms Tompkins.
Judge Voorhees slapped NotHaus with a six-month sentence of home detention followed by three years of probation. That’s about as serious a sentence as police getting paid vacation for 6 months after they murder someone. It was literally a ray of sunshine into the darkness of the cesspool America has become.
Lost in the clutter of disinformation put out by the prosecutor was the fact that the $7 million dollars in silver, copper, gold and platinum the government seized and intends to keep, didn’t belong to NotHaus. It belonged to Americans who believed fiat currency has no real value and gold does. For that, they have to suffer.
It’s end of empire. Rome had their Nero and Caligula. The US has Bush, Cheney, Palin, McCain, Boehner, Pelosi and Obama. The government thinks slugs are real, gold is counterfeit and NotHaus is a criminal.
We have life in a blender. It’s pretty obvious who the real criminals are. We know what is real, and what is counterfeit. So does Judge Voorhees.

Read More

Dec 08 New Signs Gold and Silver Are Returning as Monetary Assets Stefan Gleason

New Signs Gold and Silver Are Returning as Monetary Assets

Stefan Gleason

Much to the chagrin of the financial elite, gold and silver are reentering the American consciousness and starting to shake the wing nutty image of their recent past. But it’s taken a global financial crisis to get the public’s attention – one that could wipe out our nation at almost any moment.

The U.S. government’s role in the economy is on a seemingly interminable upward trajectory. The government’s official debt balance that just crossed the $18 trillion mark (with additional unfunded liabilities estimated at more than $100 trillion). Half the population now lives in households that receive government payments.

Even as private sector jobs disappear and workforce participation rates languish near generational lows, the corporate sector is seemingly thriving. Corporate profits as a percentage of the economy are at record highs. Fortune 500 corporations are using cash hoards and cheap financing – not so much to invest in capital assets or business expansion, but to buy back their own shares and send their stock prices higher.

All these dangerous excesses and distortions are made possible by our free-wheeling fiat monetary system.

What’s occurring now – endless proliferations of paper flowing into the Treasury and banking sector from the central bank – is precisely the sort of thing our Founding Fathers sought to prevent.

The Coinage Act of 1792 authorized the minting of the nation’s money. It defined a “dollar” in terms of a specific quantity of grains of silver (equivalent to about three-fourths of an ounce). Few people today even realize that the dollar bills in their pocket were originally intended to be silver.

The de-monetization of silver was effectively complete in 1965, when the U.S. Mint ceased producing dollars, half dollars, quarters, and dimes containing 90% silver (from 1965 to 1970, half dollars still contained 40% silver).

Of course, you can still buy U.S. 90% silver coins minted in 1964 and earlier. They are priced based on the current value of their silver content, plus a small premium. You can even use them as money in legal barter transactions.

The last real link the U.S. still had to sound, Constitutional money was finally broken in 1971, when President Richard Nixon suspended gold convertibility. Henceforth, no foreign government could redeem their dollar reserves for gold.

After the dollar became a purely fiat currency 43 years ago, it began a course of massive depreciation. Since 1971, gold prices have moved from $41 per ounce to as high as $1,900. Silver went from $1.40 an ounce to $49.50 at its peak in 1980 – a high mark hit again in 2011. Gold and silver prices have pulled back from their 2011 highs, but are likely to rise higher still.

Meanwhile, government debt and profligacy have reached epic proportions. In 1971, the national debt stood at $398 billion, 34% of GDP. Today’s $18 trillion debt load represents 99% of GDP.

Total credit market debt comes in at an astonishing 330% of GDP – and that’s off from its peak in late 2008. Since the 2008 financial crisis, the Federal Reserve has been waging a battle against credit market deflation, which is the market’s way of unwinding a credit market bubble. The Fed has bought more than $4.3 trillion worth of bonds and tried to reignite a financial bubble in the stock market by holding rates at ultra-low levels.

(Click on image to enlarge)

Ironically, the promulgators of this financial madness will often try to portray advocates of hard money as loony! Yet under a gold standard, we had stable price levels, a more restrained government, and less severe booms and busts in financial markets.

The movement to return fiat currencies to sound money has gained momentum in recent years. On November 30th, Swiss voters went to the polls to decide on a referendum to force Switzerland’s central bank todramatically boost its gold reserves. (The Swiss franc had been the last remaining major country to operate on gold standard until 1999, when the franc went fiat.)

The “Save Our Swiss Gold” referendum failed. Even so, other countries in Europe are eyeing gold as a monetary asset.

The Dutch central bank in November moved a fifth of its 612.5 metric tons in gold reserves from the Federal Reserve Bank of New York back home to Amsterdam. “The Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country,” the central bank said in a statement.

France may soon make a similar move to repatriate its gold reserves. The leader of France’s largest opposition party, the National Front, called on the French central bank to take full possession of its gold held abroad and called for an independent audit of the country’s gold reserves.

A member of the European Central Bank Executive Board, Yves Mersch, recently gave a speech discussing the potential benefits of the ECB buying real assets, including gold.

Russia this year became the world’s largest regular buyer of gold. In October, the Russian Central Bank bought nearly 20 tons of gold, or around 8% of total world monthly gold mining production.

Sound money efforts are spreading in the U.S. at the state level. Earlier this year, Oklahoma joined Utah, Texas, and Louisiana in passing a legal tender law that removes state taxes on transactions made with gold and silver coins. These states have asserted their power under Article I, Section 10 of the Constitution to recognize gold and silver as legitimate currency alongside the dollar. Similar legislation is now under consideration in several other states.

Granted, it seems unlikely that the U.S. or any major country will return their currency to a classical gold standard anytime soon. But signs abound that precious metals are re-entering the public consciousness – and will be playing a more prominent role in monetary systems as geopolitical tensions rise, debt levels become more unmanageable, and public confidence in political institutions wanes.

Read More

Dec 08 Capitulation Not Over in Crude Oil Tom McClellan McOscillator

Capitulation Not Over in Crude Oil

 

 

December 05, 2014 

Tom McClellanCrude oil prices had a seemingly exhaustive washout selloff following the Nov. 27 OPEC meeting.  Oil bulls had been hoping for a production cutback at that meeting, but Saudi Arabia successfully led an effort to oppose such cuts. 

But the message from the Commitment of Traders (COT) Report data is that the washout is not yet complete.  An exhaustive move like what we have seen should produce capitulation among the small speculators, but instead the readings from recent weeks showed them them rushing in to buy.

Traders’ positions are reported each Friday in the COT Report, and they are broken down into 3 categories:

Commercial traders are the big money, and presumed to be the smart money.  They are “engaged in business activities hedged by the use of the futures or option markets.” 

Non-Commercial traders are ones who are not engaged in such practices, but who have large enough positions to merit individual reporting of those positions.  Think hedge funds.

Non-Reportable traders are those whose position sizes are small enough that the CFTC deems them not worth reporting individually.  They are the small speculators, and reliably considered to be the “hot money”. 

This week’s chart looks at the Non-Reportable traders’ net position in crude oil futures.  These traders tend to get more net long as prices move higher, and they get scared out or go short as prices go lower.  Generally speaking they have a bias toward the net long side, and so any time they actually go net short, it is usually a sign of a bottom for crude oil prices. 

Given the amount of the drop in crude oil prices, it would be reasonable to expect these traders to get shaken out of their long positions.  But that is not what they have been doing.  The “buy the dips” mentality was still active.  With the COT Report released on Friday, Dec. 5, they are finally starting to make more of a move to unload their long positions, but they are still not yet back to neutral or even net short, which is what it should take to mark the bottom of this decline.  

The COT Report is issued every Friday, and we feature a discussion of the relevant insights from that data every Friday in our Daily Edition. 

This oil price decline actually ties into the recent Hindenburg Omen (HO) signals which were triggered this week.  I was just on CNBC on Dec. 4 talking about the Hindenburg Omen, and you can see that interview here.  One point to understand about that video is that headline writers like to spice things up, and in ways not necessarily consistent with the actual story, or with the views of those who are interviewed. 

The reason why the oil price decline is related to the Hindenburg Omen is that HO requires seeing both New Highs (NH) and New Lows (NL) exceeding a certain number of issues on the same day.  There are also some other requirements.

A cursory review of the list of stocks making new 52-week lows shows a lot of stocks with the words “drill”, “energy”, or “resources” in their company names.  Were it not for the concentrated damage to energy stocks resulting from the oil price slide, we would likely not be seeing an HO signal now.  Not all HOs end up seeing a big market collapse, but they do tend to show up ahead of every big market decline so they are worthy of some attention.  To get a big slide now, the stock market is somehow going to have to fight off the bullish forces of positive seasonality, plentiful liquidity according to the breadth numbers, and more QE coming from other countries’ central banks.  Plus we are now in the year following the mid-term elections, which is nearly always an up year. 

That is a tough package of forces for the stock market bears to fight against.   

Read More

Dec 08 BBBBB This past week in gold Jack Chan

This past week in gold

Jack Chan

GLD – on buy signal.
***

SLV – on buy signal.
***

GDX – on buy signal.
***

XGD.TO – on buy signal.
***

CEF – on buy signal.

***

This long term chart helps me to stay focused on the big trends and ignore the noise.

Read More

Dec 08 Gold Rushes Higher, Fresh Uptrends Transpire Demeadville

The Gold Update by Mark Mead Baillie --- 264th Edition --- San Francisco --- 06 December 2014 (published each Saturday)

“Gold Rushes Higher, Fresh Uptrends Transpire”

With a week under its belt since the "Swiss Miss", we've presently two initial impressions as regards Gold's current price of 1193. The first, quite obviously, is its ever-evident estrangement on the above scoreboard in the face of debasement. The second is its not succumbing to the warped will of Switzerland's bürgerschaft, (which, for you WestPalmBeachers down there, is not a fast food drive-thru lane), the country's once sensibly-shrewd citizenry that threw Gold down the toboggan chute.

Indeed: after the Swiss "NEIN" vote for their central bank to maintain a 20% Gold-asset base, etc., was known last Sunday, but prior to the market's opening that afternoon (15:00 Pacific Time), a close Swiss-related "family" member rang up as to Gold's perhaps getting walloped in the offing. I calmly suggested that the knee-jerkers would almost certainly send it bollocking down at the open, but come session's end on Monday, 'twould likely be higher than Friday's pre-vote close. When asked why that would happen, I simply said that, by the polls, the vote's result was already priced into Gold and moreover, that when 'tisso obvious which way a market is going to go, 'twill "unexpectedly" do the opposite.

And so off Gold went, gapping down from the prior Friday's 1167 settle to open Sunday at 1159 and then swiftly head further South to as low as 1142; but by the time the dust had settled last Monday at 1212, Gold had reached as high as 1221, a 79-point upswing. 'Twas not only the largest such intra-day points up-move since 16 April 2013, but the fourth largest since Gold's All-Time High, (1923 on 06 September 2011). And if your name is Claire Voyant, buying just one li'l ole Gold contract at the day's low and selling at the high earned you $7,900. (Too bad you didn't buy 1,000 contracts). Oh, but wait: you say you bought Silver instead? The single contract swing profit there was $13,275 (from 14.155 to 16.810). Dinner's on you baby.

"Well, mmb, you did write last week that given these are precious metals markets, they can rise just as swiftly, if not more so, than they've fallen..."

Nice of you to point that out Squire, but the bottom line is, here at 1193, we've a very long row to hoe toward reaching pricing sanity at 2000+. Remember our axiom: change is an illusion whereas price is thetruth. Still, that strong intra-day upswing does beg the question, albeit for the ad nauseath time: is Goldfinally "sold-out" here?

Switzerland's rejecting a return to some fractional form of Gold standard certainly gave the Trading/Investing/Manipulating bearish powers-that-be the quintessential opportunity to crush price once and for all: why, the Swiss have comprehensively turned their back on Gold! 'Twas the chance to drive it into oblique obscurity, render it worthless, or at best make a weak cousin to Molybdenum (59¢/oz.), perhaps even drive the price sub-zero! But no: the nattering nabobs of Gold negativism couldn't even push it down to test the year's low at 1131. Have they who drive price begun to think twice?

One thing's for certain as we go to the weekly bars, Gold's power pop was more than satisfactory to flip the parabolic trend back to Long, the rightmost bar in the chart representative of price this past week having eclipsed the level of the red dots to record a new blue dot. So from here, the first higher goal is to trade up into the mid-1200s, and then to focus on moving above that 1240-1280 resistance band as bordered by the purple lines. 'Course, as you can see center-right of the chart, the last flip to blue was a flop -- fortunately an exception to our technical expectation that shan't this time 'round be repeated:

Also flipping to Long, which it'd almost done a week ago, is Gold's daily Price Oscillator study, the bars in the below graphic having turned to green. To be sure, the prior three occurrences of going green have sported mediocre follow-though rather than material up movement. Something more on the order of the green course charted last spring would place Gold into the 1300s and really start reeling in those who'd abandoned ship en route. When then gathering for high tea, one would appear terribly common to have missed the re-ascension of Gold: "Charles never actually sold his, you know...":

Quite. We might also point out that Sister Silver's daily Price Oscillator stance went positive as well this past week, such that the associated Market Rhythm target points to a price of at least 17.155. The white metal's settle yesterday (Friday) was 16.285.

Let's next pair up our precious metals below in this two-panel graphic. Both panels show the daily bars spanning the past three months along with their "Baby Blues" that depict the consistency of the ever-evolving 21-day linear regression trend. Clearly, the same case can be made for both metals, especially per their respective bars of last Monday (fifth in from the right). On the left for Gold, 'tis now twice, indeed thrice, been shown that trading sub-1150 is just too doggone low, per the red pointy fingers. On the right for Silver, 'tis the same analysis that trading sub-16, let alone sub-15, is just too doggone low, in her case dastardly so! Note the resolute, shorts-busting upside resilience in both cases: BANG!

Given the above graphic, methinks 'twill take one heckova concocted, dare I say conspiratorially, trumped-up myth to rationalize lower lows, (although we've a real doozie as you'll see at the foot of this missive). Nevertheless, let us reiterate one of our favourite time-honoured quotes, especially as we're in the thick of the StateSide football season: were the late great Green Bay Packers head coach Vince Lombardi to look up at our scoreboard, he'd yell "What da hell's goin' on out dere?!?!?" Well, take heart, Coach: by our graphics, the Gold Game looks to be turning around.

Indeed what's going on here is Gold's having out-performed the other primary BEGOS components month-over-month, the percentage performance of those five markets which comprise that acronym as next shown. And how arduously challenging it must be for some to grasp that Gold could be the period's the top performer given both the €uro -- and certainly so the ¥en -- succumbing to so-called "Dollar strength". Why even the S&P is higher too ... but then again, it never goes down. (And blame the chart's "compressed" appearance on Oil's recoil):

Yes, 'tis once again evidence that Gold plays no currencies favourites, (as 'twas detailed back in our 25 October piece entitled "Gold & Debunking Dollar Strength"). Today we've the EuroZone's economy sliding back toward recession, their most recent Purchasing Managers’ Survey achieving its lowest level in 16 months, with a further bond buying binge expected to be announced in January as part of the European Community Bank's €1 trillion Quantitative Easing strategy. Meanwhile Moody's has further reduced any yen for the ¥en in having just downgraded Japan's credit rating. And yet through it all, even including the Swiss Miss, Gold's defying to take further downside bait.

Still in the broader picture as noted earlier, the yellow metal's resilient post-Swiss Miss power pop pales in comparison to the reality of price's lowly position as we turn to our layered Structure chart, wherein we see Gold, per that great 1978 Van Halen hit, all but "Runnin' with the devil...":

Toward closing, let's pair up the 10-day Market Profiles for both Gold (left) and Sister Silver (right), followed by three quick quips on the way out, (including the doozie as promised). Again, the horizontal profile bars represent contact volume per price point for the last 10 trading days and the white bar in both panels yesterday's settle; from the trader's perspective, the longer the bars, the more expected their supportive or resistive qualities:

And we thus end it with these:

1) Here's the Kerfuffle of the Week: Jens Weidmann, who heads Germany's Bundesbank, seems dead-set against the ECB's imitating US-style money printing, such position of the Präsident said to be holding up the EuroZone's central bank from taking more aggressive QE action. The ECB indeed put forth that it“remains unanimous in its commitment to using additional unconventional instruments". At least the Germans are hedging by repatriating their Gold, (assuming 'tis still out there somewhere).

2) Here's the Headline of Week: "French economy resilient but stagnant". Ok...

3) Here's the Doozie of the Week: On the off chance that you missed this one, it really does take the cake. There's a Dutch-born chap in New York who works for Citigroup as their Global Chief Economist by the name of Willem Buiter. He's quite bright, and assumedly so given his high-level stance at Citi, albeit he's on record now as likening Gold to Bitcoin. (I'm hearing your collective "Oh, C'mon Man!" as you read this). Still, Mr. Buiter is not denying that Gold can't climb to $5,000/oz., as it could be in a bubble for another 6,000 years. For after all, as he was so quoted in a FinMedia piece: Gold is a "fiat commodity currency, just as the U.S. dollar, the euro, the pound sterling … are fiat paper currencies and as Bitcoin is a flat virtual currency". I'll tell ya Folks, never has it dawned on me throughout all my years of analysis that the supply of Gold is unlimited. Who knew?

Read More