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Saturday, September 21, 2013

Is JP Morgan really this retarded?


Zerohedge (yeah yeah I know but stick with me here) has an article on JPMorgan supposedly going long gold.

It includes these three charts:



JP Morgan, where this chart supposedly originates, apparently entirely seriously think that gold has something to do with the Fed balance sheet.

Hey, JP?

When something swings from a +1 correlation with something else to a -1 correlation, that proves it has utterly nothing to do with the other thing.



Oh my god it's this old sack of lies too - this time from the homoerotic masturbatory idiots at Zerohedge.

Guess what, Zerohedge?

The total gold reserves of the United States are approximately one third of the total amount of gold held in Indian temples. So what the hell is the American debt limit supposed to do with gold again?

Oh and also, why don't you show us all the part of the chart from 1980 to 2000?



At least in this case you're accepting the fact that other nations exist. Unlike, say, every other idiot analyst in the United States, who still think gold is all about Lord Amurrica Jesus.

Even still, I have a graphic for this:


Someday ZH is going to realize this horse has been flogged to the point of disintegration into a gossamer foam.

Then again, maybe they mean to be this stupid.

But I don't see what JP Morgan's excuse is. Poor ol' Pierpont must be spinning in his grave right now.

Here, let me bum you out


One article for you to read on the weekend:

der Spargel - India's child slavery scourge.

Just in case you needed a reminder that the vast majority of India is still living in the middle ages.

Because some peeople seem to think that Indians would do modern things like put money into banks or buy shares in Apple.

People who put money into banks or buy shares in Apple don't sell daughters into slavery for $1.50. Or torture their servants by pulling their fingernails out and pouring boiling oil down their backs.

Friday, September 20, 2013

A funny joke


Ha ha.

Three slightly more current newsbits


Three more things I just stumbled across this morning:

Calculated Risk - Will the BLS release a September employment report? If the Republican jihad shuts down government on October 1st, you'll get no employment report. But as Bill McBride keeps saying:

If the government stopped paying the bills in mid-October (doesn't raise the "debt ceiling"), the consequences would be serious - but I doubt anyone is that crazy. The good news is these threats and stunts only happen in off years to give voters time to forget before the next election!
FT beyond brics - Rajan smells the onions. India raised its repo rate this morning.

FT Alphaville - RBI springs its own surprise. However, RBI also rolled back liquidity tightening, which as far as I can tell is supposed to offset the repo rise.

I dunno why this is supposed to be driven by the price of onions, btw, since India's about to bring in a bumper crop this year. Or rather, India's going to let a bumper crop rot this year because of the nation's stone-age logistics.


Friday morning news



Calculated Risk - AAR rail traffic increased in August. Therefore the US economy is growing.

Bonddad - why do doomers hate supertrains? Quote:
The Doomer obsession with "green shoots!", "printing fiat money!", airquote "recovery!", and the like means they fail to see - in fact, don't want to see - how important the price of gas has been in holding back ordinary consumers, and how important it is for this country to break free of the Oil choke collar.

So Doomers hate Supertrains. I know math is hard, but maybe if they really learned how to do it, they could see how much it would help the people they claim to champion if they focused on the reasons why some measures of average Americans' well-being haven't improved.

Bloomberg - jobs cuts in Chinese steel town. It's nuts when you hear that one single city in China has 5 times as many blast furnaces as all of North America. Then again, personally, I'm from a city with (used to be, at least) three blast furnaces; if Tangshan has 156, they're probably tiny childish facilities at the level of 18th-century technology. Small production, highly polluting, and grossly inefficient. Comparing total tonnage production (or even better, total sale value of production) might be a better idea. Well, at least it means China can easily produce tremendous growth simply by killing off inefficient businesses.

Bloomberg - hedge fund bears and emerging markets. All of a sudden I want to moderate my bearish position on the EMs. Why? Because the hedge fund cokeheads are all bearish EMs. They're always wrong.

Bloomberg - smallest ships profitable again. Looks like the investing world has drilled down to another "trustworthy" indicator of Chinese growth: domestic shipping costs. This is the second article on the topic that I've come across.

Rick Ferri - investment noise and how to deal with it. Let me quote nearly the whole damn thing for you:
Investors would do well for themselves if they were able to reduce the noise. Before reducing noise, it must first be defined. Achor does this by classifying noise into four categories: unusable, untimely, hypothetical and distracting. If information coming into your brain fits any of these four criteria, it’s almost certainly investment noise:

1. Unusable: If your actions or behavior will not be altered by the information coming in, then the information is likely noise. An excellent example is our tendency to obsess about current events and how they might affect our portfolios in the short-term. Will a gas attack in Syria cut oil flow through the Suez Canal and cause a global panic? It’s possible, but not probable. If an event has no effect on your long-term strategy, then ignore the noise.

2. Untimely: If you’re not going to use the information you hear in the near future, and if the story could change by the time you’re ready to use it, the information is noise. Frequently checking the level of the stock market when you’re a long-term index fund investor is a noisy habit. The action might end up doing you harm if it changes your behavior – so stop looking.

3. Hypothetical: This is probably the most common type of noise because it’s based on what someone thinks will happen. Listening to expert predictions about the economy and the stock market is almost always noise. Even if a person is right, the information is practically useless. A broken clock is right twice per day.

4. Distracting: Noise is anything that distracts you from your long-term goal. Believing that new ETFs that follow so-called “intelligent indexes” or have “smart beta” have a high chance of earning a high return is noise. Jim Cramer screaming at us so loudly that we don’t dare disagree with him doesn’t make his advice any better than average. Loud noise isn’t better noise.

The information we listen to or look at affects our outlook and ultimately our actions, even if we don’t believe it does. This is dangerous because our brains are wired for negativity. According to Achor, we listen for bad news three times harder than we listen for good news. This makes it appear that bad news overwhelms good news, which isn’t true in reality.

Achor believes that if we can stop 5% of the negative noise, then our lives will be much better. He has some helpful tips how to do this. Here is a short list based on those ideas:

1. Leave the radio off for the first five minutes after getting into a car.
2. Turn the radio off when talking with someone in a car.
3. Lower car radio volume or mute during commercials.
4. Mute the TV and internet during commercials.
5. Remove news media links from your bookmark tool bar (less news is good news).
6. Limit watching financial entertainment shows that make predictions (Bloomberg, CNBC).
7. Don’t read about tragedies in the news, because they can affect your outlook.

We’re inundated with negative information in our wired world. The 6-o’clock and 11-o’clock news almost always begins with negative stories of murder, war or natural disaster. On the business front, when the stock market declines by 1% the result is many more negative economic stories than positive ones. On a good day in the market, the positive events leading up to the good day are rarely elaborated upon.

Successful investors begin with a realistic plan for achieving a truthful goal. Then the plan must be implemented and maintained in a cost-effective way. The final step is to stay the course, in part by ignoring the noise. Learn to recognize noise, and then learn to tune it out. This leads to better investment results.

I especially agree that "listening to 'expert' predictions is almost always noise". This includes the clowns at Goldman Sachs, as you can see by following their one-year target prices for gold - or anything, really. Ignore the 'experts' with their 'expert' predictions - they're really just as lost as you. That's why they have to resort to industrial espionage, market manipulation, and inside information to get an edge.

Friday videos - The Postal Service


Hey, I didn't know this became a hit single that everybody sings along to, and that this band went on to do anything!

Here's The Postal Service this summer at Coachella, doing "Nothing Better":

Thursday, September 19, 2013

Eric Coffin interview


Apparently nobody else considered him important enough to interview in Toronto instead of someone like Jay Taylor. Or even instead of Eric Sprott's Pet Chimp.

So here's Scott Gibson single-handedly trying to raise the level of discussion in the goldbug world by interviewing Eric Coffin a couple weeks ago:



He comes off as a voice of sense in a world of clowns. His view on gold price, the taper, the new TSX-V share consolidation rules, and so on.

MADONNA OWNS A PENIS BONG: here's what you need to know


Huffpo - Madonna owns a penis bong. This post is a test of this.


Wednesday, September 18, 2013

Cambridge House interviews: Adrian Day


And here's Adrian Day:



Adrian, a question for you. Why is it all you talking heads love to natter on about the Fed? I mean, why aren't you mentioning Abenomics? Or even the growth in Chinese credit formation? Are these other countries just figments of a deluded imagination, and ther really is no monetary expansion happening anywhere else in the world?

Seriously, Adrian. Is the US the only economy in the world? Is the USD the only currency in the world? And what the hell does the Fed balance sheet have to do with gold? Seriously - you've got your LSE BA in Economics, so can you explain this to me using first-year economics principles?

Otherwise, he happily notes that the present gold slaughter has really not proven itself to be anything other than a major correction in a long bull market. Which is a nice reminder, except Jim Rogers said it already months ago.

And by the way, guys: just because someone mentions China and India doesn't mean they have a clue. It means that I was a lone voice screaming into the wilderness last year, and now all the little goldbug talking heads have stolen my India & China arguments because they can see the "hyperinflation devaluation money-printing Zimbabwe" argument has become a fucking joke.

So for example, Jay Taylor mentioning India does not mean Jay Taylor has a clue about gold. Thus this is the last of the Cambridge House interviews I'll be linking to.

And hey, goldbug world? Here's a pic of your new crush, Vanessa Collette:


Sorry Daniela! That's what happens when you skip Cambridge House Toronto. I'm already getting "is vanessa collette married" searches on my blog, and the stats for you have just plain vanished.

I've now decided, by the way, that henceforth I will only give interviews to Vanessa Collette. Sorry, Dominic.

John Kaiser at Cambridge House


Here's John Kaiser:



"When these companies go back to the accountants next year to do their numbers, the accountants are going to ask for cash up front."

He also thinks Goldman Sachs are a bunch of lying scum.

And he thinks getting gold back to $1600 is plausible. No timeframe given. Interesting.

And get this:

"The buying in gold is not people fearful of the apocalpyse; it's been by people in India, China, the Middle East. People who aren't buying because they're afraid. These are people buying because they have experienced growing prosperity. They are stashing some of their accruing wealth into a portable form that they privately possess because they don't quite trust their governments in the medium term or long term. These are people buying gold because they see the world becoming a better place, not a scarier place."

I wonder where he got that from. JK, feel free to comp me to a free lifetime subscription to your website. You can get in touch with me via Cookie.


Evening news - but more importantly there's a new Terry Gilliam movie


I will allow myself one comment on the taper nonsense:

BI - Bernanke had to delay the taper because of the threat of Republican jihadist terrorism. Plus perhaps a little desire, as Bernanke says, to get some confirmatory empirical data (confirmation? Empiricism? Ever heard of those, Mr. Internet Blogger Fucktard?) before pushing on.

Now here's the real news. As it turns out, I was too busy at work to post at noon, but this works out well for us cos now that the taper bullshit is over, I can tell you what's really going on and you'll find it easier to pay attention without the screams of retarded children in the background:

Bonddad - the nonexistent inflationary threat. Where's the inflation? There is none in the US. The inflation is in the EMs whose currencies are collapsing due to foreign money outflows.

Ritholtz - Dow theory, or buy and hold? Really, any trend-dependent system should make you money. As long as you tune out the shills who are trying to drive you out of the market.

Bonddad - OECD DM LEIs increasing. This is the important data, all else is just ignorant American opinions. If you fail to pay attention to LEIs you are going to get fucked.

FT Alphaville - a German election primer. As of next week, there's an outside chance that an insufficient win by the Merkel axis could foce a grand coalition, and then the ignorant American fools at BI and CNBC will have something else to create FUD with.

Bloomberg - internal Chinese shipping costs pop to 16-month high. What does that data tell you?

Black China Blog - a weird pattern in Chinese aluminium production. This is a guy who knows aluminium smelting, and he says the Chinese aluminium data is incredibly fishy from a smelting perspective. He posts rarely but informatively, so it's a great blog to add to your RSS even if you don't care about aluminium.

Bonddad - recent Indian bounce is purely technical. I don't consider Hale Stewart a useful source for EM data, but his opinion of the chart does jibe with the Indian fundamentals, despite anything you might hear from the lamestream media.

FT beyond brics - tough choices for EMs in a post-QE world. And despite the fact that the OMG TEN BILLION DOLLARZ REDUCKSHUN IN FED TREASURY PURCHASES has been postponed for a few months, make no mistake - the EMs are still fucked. In precisely the way this article explains. Read it. Everyone right now is talking about the correlation they're seeing between current account and currency strength - it was even in an ETF booklet that the nice people at Horizons sent me this week. This is why EMs die at the beginning of a US secular bull. If you fail to grasp this you are going to get fucked.

Mineweb - Goldman Sachs suggests gold miners hedge their output. Really? Hedge it with who - Goldman Sachs maybe? Starting, say, before 2PM today, perhaps? And dear Lawrence Williams, please shut up about India. I assure you they're still buying as much gold as before. They have almost a billion peasant farmers in the countryside who literally have no other investment avenue available, including cash.

Gold Report - Cookie on high-grading, and what that means for gold supply. High-grading turns reserves into waste. Please read this article instead of those Goldman Sachs shills at Bloomberg.

Wikipedia - The Zero Theorem. New Terry Gilliam movie coming out soon!

miner shorts feel butthurt


Is this what a short-covering panic looks like?


Let's look at one miner in particular:


Yamana was massively shorted in the past couple weeks.

There are now only three dates on this chart over the past two months where a short taken would still be in the black.

Here's a picture I took of myself as I saw thew short-covering panic take hold:


Now you fucking coke-snorting assholes can fuck off from the gold mining scene. Take your yellow journalist shills from Bloomberg and Reuters with you.

The bullshit season is over. Now we go back to the gold seasonality.

And so the textual algobots screw up the entire market for everyone. Not just for goldbugs.


Considering GDX has popped 6.6% and GDXJ 7.4%, GLD 2.3% and SLV 3.3%, you have to wonder exactly how much leverage is behind the short positions that were built.

Certainly it made great sense to short gold and the miners into the ground if you felt gold was going to $1000 per Goldman Sachs and SocGen and all the other guys who are busily re-writing their year-end targets as we speak, now that the gold market isn't going to collapse on an imminent withdrawal of $10bn/month of UST buying.

I dunno if you can say anyone's rung the bell, but Buenaventura's up 11%. Sandstorm's up 8%.

UUP's painting a big red candle 1% down, while IEF has gone from the mean to >+2SD on literally no change to the economic outlook. Seriously guys, the US economy is exactly the same as it was when the Fed wasn't going to taper 2 weeks ago.

The answer to your question


Today's ottotrans: Lydian International


Lydian just came out with some news, and people are buying again.

Marketcrotch - Lydian provides update on progress of the Amulsar joint working group.

Quote:

Government Resolution 749-N which modified the Lake Sevan Immediate Impact Zone to include the horizontal zone 3000m on each side of the Vorotan-Sevan Water Tunnel (see Press Release 24th July) was promulgated on the 3rd of August 2013. The Law on Lake Sevan prohibits the allocation of mineral processing facilities in the Immediate Impact Zone. The effect of this and earlier modifications was to prohibit processing on sites previously identified. There are no restrictions on mining, crushing and milling within the Immediate Impact Zone.

Lydian's previously revised Amulsar gold processing facilities are located within the newly defined Immediate Impact Zone.

The Government of the Republic of Armenia and Lydian have established a joint Working Group to

-- review the implication of Resolution 749-N on the Amulsar operation
-- to explore alternative heap leach and gold processing facilities; and
-- to propose a mutually acceptable solution to the current situation
The Working group consists of senior representatives from the Company and from the Armenian Government including the Ministry of Economy, the Ministry of Energy and Natural Resources, the Ministry of Nature Protection, the Ministry of Urban Development and the State Committee of the Real Estate Cadastre.

The Working Group have held regular meetings since July 31st, 2013 and have visited Lydian's Amulsar site. The Working Group have located a new potential valley-fill heap leach and gold processing facility for Amulsar which is situated approximately 7km away from the current pits. Initial conceptual design of the heap leach has been prepared and shared with the Working Group. Final feasibility design of this new facility is subject to further engineering, geotechnical and environmental and social impact studies.

Lydian expects to commence geotechnical drilling and environmental and social baseline studies at the new proposed site. The Company expects to commence preliminary economic assessments of potential new mine designs this month and to resume the environmental approvals process and revision of the feasibility study in the fourth quarter of this year.

"There has been positive engagement and interaction within the joint Working Group following successive changes to the Lake Sevan Immediate Impact Zone. We remain committed to developing this outstanding new gold discovery and seeking to resolve issues with the Government" said Tim Coughlin, Lydian's President and CEO; "The impact of the resolution has forced changes to the development of Amulsar, but will not in any way compromise the Company's commitment to sustainable development and implementing industry best practice. The preliminary economic assessments currently underway will review alternative mine designs and revisit and optimise mine construction and operating costs."

And here's the translation:

Government Resolution 749-N which modified the Lake Sevan Immediate Impact Zone to include the horizontal zone 3000m on each side of the Vorotan-Sevan Water Tunnel (see Press Release 24th July) was promulgated on the 3rd of August 2013 with the express intent of destroying the project for Lydian so that it can be stolen by the Russians. The Law on Lake Sevan prohibits the allocation of mineral processing facilities in the Immediate Impact Zone. The intent of this and earlier modifications was to screw us over.

The Government of the Republic of Armenia and Lydian have established a joint Working Group to

-- delude ourselves into thinking we can stop the Russians from stealing our project

[...] The Working Group have held regular meetings since July 31st, 2013 and have visited Lydian's Amulsar site. The Working Group have located a new potential valley-fill heap leach and gold processing facility for Amulsar which is situated approximately 7km away from the current pits. Initial conceptual design of the heap leach has been prepared and shared with the Working Group. Final feasibility design of this new facility is subject to further Russian interference.

Lydian expects to commence geotechnical drilling and environmental and social baseline studies at the new proposed site. The Company expects to commence preliminary economic assessments of potential new mine designs this month and to resume the environmental approvals process and revision of the feasibility study in the fourth quarter of this year. When that is done, the Russians will just pull another stunt to kneecap the company again.

"Well, at least there has been positive engagement and interaction within the joint Working Group following successive changes to the Lake Sevan Immediate Impact Zone. We have no way out now except to continue trying to develop this outstanding new gold discovery until the Russians kneecap us again," said Tim Coughlin, Lydian's President and CEO; "The moral of this story is, don't do business with Russians."

Tuesday, September 17, 2013

Hey look, gold just puked again


Hey look.

Gold just puked below $1300, sometime like 8:30 or so.

Does gold actually trade in Tokyo?

More news


The bonehead media is back to blathering about the imminent Republican terrorist attack on the US government. I guess that's yet another thing that'll hold the S&P back for now.

Here's the real news:

BI - blah blah crisis blah blah doom. See? Like I said, the bonehead media.

Reformed Borker (Bork Bork Bork!) - I went to cash because [please check one]. Josh, don't quit with the sarcasm just because you've now got a real job. The most hilarious excuse is "Mark Faber web video appearance on cnbc.com" - doing anything at the behest of Faber is about the stupidest thing you could ever do, even dumber than feeding your own genitals to a pack of wild boars.

Michael Shaoul - German ZEW finally goes all-bullish. Good outlook for Europe. Which is a major world economy by the way. Quote:
Where we are today is the more rational portion of a bull market, when investors recover enthusiasm for today and hope for the future based on a tangible improvement to the local economy. Eventually this will develop into something more problematic but right now German sentiment is tracking an encouraging trend higher that suggests more local participation in the equity rally.
FT beyond brics - EM currencies: hedge your bets. A few days of rebound from a crackhead-induced oversold condition doesn't change anything. Quote:
Capital outflows in the coming year could cause liquidity crises in certain markets, according to FSG’s 2014 Global Performance Drivers report. Ukraine, Poland, Argentina and Turkey – countries with the highest short-term foreign debt as a share of their reserves – are the most at risk. Other nations, like India, China and Brazil, are much more able to pay back their debt to short-term external lenders.
Poland, you say? At risk, you say?

FT beyond brics - more super, less cycle. A good argument that commodity "supercycles" aren't just a goddamn on-off switch; this pretty much backs up anything calming that Adrian Day might say about the long-term outlook for the industrial metals.

Mining.com - exploration budget hit all-time high in 2012. New report by SNL Metals Economics Group.

Permashave Dave - John Kaiser interview. There. Now I don't have to go post it myself.

Nature World News - Australian wild pig gets drunk on 18 beers, gets into fight with cow. Australian beers? What a lightweight.

Monday, September 16, 2013

Holy shit, it's the Wholly Discordian Pentagon


Holy crap, the internet never kills good things, and what is dead may never die!

I just came across the article on the Wholly Discordian Pentagon that I reprinted in a zine like 20 years ago almost to the day.

It really, honestly makes sense in you understand both Wicca and Discordianism.

I'm going to reprint the entire thing after the break, just for posterity's sake:

Strangely, Barrick Gold is up strongly


Is there are a reason for Barrick to be up 5% today?


Is this the start of short-covering for the miners? GLD is still down 0.4%.

Newntime noos


And now, the news, brought to you by Google, the company that won't let me use IE or Firefox to post on this website:

Michael Shaoul - Summers' exit's impact on treasury curve. He says:
We never saw any great difference between Summers and Yellen since neither candidate seemed to recognize the degree to which FOMC policy has fallen behind the trajectory of the US economy. We also believe we have reached the point at which FOMC accommodation has started to actually undermine the foundations of the bond market, as the risks of an inflationary impulse start to grow in stronger portions of the US economy. We have also reached the point at which bond returns simply cannot keep up with equities, and even today's rally in bonds seems likely to be a fraction of the gains for those enjoyed by the broad US equity market, which looks to be pushing further into blue sky territory.
Therefore while this morning's violent rally may bring some much needed respite to those heavily exposed to the bond market it is likely to blow over soon enough and be replaced by another grind towards higher yields and lower prices as investment capital continues to head for the exits. Clearly the risks of an imminent breakdown in the bond market have diminished for the time-being, but we would still expect substantial difficulties to be encountered in the weeks ahead making this rally an excellent selling opportunity for those who remain over-exposed to fixed income.
This is more useful Summers commentary than all that crap I had to wade through last night. Seriously people, the econ blogging world may as well just give up and move to chattering about Miley Cyrus.

Bonddad - manufacturing and transport break out to the upside. The summary for last week's data.

Michael Shaoul - Italy trade balance and current account. He's positive on Italy, here's why.

And now, some stuff on India:

Reuters - inflation headaches for Rajan. How does your hero look now? If this whiner bitches about the Fed taper when it comes, you can write him off as just another idiot Indian politician. Quote:
"It looks like over the next few months WPI inflation might be headed up towards 9-10 percent," said Daniel Martin, Asia Economist at Capital Economics in Singapore.

That makes the central bank's job more difficult because measures to stifle inflation, such as raising interest rates, could at the same time undermine economic growth, already strained and running at a decade low.
FT beyond brics - India food inflation. This author notes some people think the food inflation is temporary and will recede by next month. However, this author also believes the India trade balance data for last month, which said gold imports collapsed by 95%. So I think this author will be proven wrong.

FT Alphaville - Rajan, onions and the Fed. Nomura is not hopeful:
The current state of demand (and the effectiveness of monetary policy in dealing with food inflation) suggests a repo rate hike is unlikely. High CPI inflation, elevated inflation expectations and now the rise in WPI inflation also limits the RBI’s ability to boost demand. Therefore, the economy is caught in a quagmire. Fiscal tightening has become essential despite the current slowdown. We see no more short-cuts. We expect weak domestic demand, cost-push inflation, rising fiscal risks and a likely reversal in growth-sensitive flows to exert pressure on the balance of payments in coming months. We do not see the current optimism as sustainable and remain negative on the economic outlook.
Elsewhere in India,

Mineweb - India's would-be PM 'beacon of hope for the gold industry'. Great article from Shivom Seth introducing you to Narendra Modi, India's next PM if they have any sense, and his involvement with the jewellery industry. His leadership in Gujarat coincided with the city of Surat growing its diamond industry to the point where it's now responsible for 9% of all India's exports. "Exports", in this case, means "that stuff that India is otherwise utterly incompetent at producing, thus leaving them with a massive trade deficit and no way even to profit from a collapsing currency".

FT beyond brics - five things you need to know about Narendra Modi. The same author who believes that last month's Indian gold imports truly collapsed by 95% also thinks Modi is a dumbass.

Sunday, September 15, 2013

Sean Brodrick on gold and the +3 Stick of Ugliness, Double Damage Versus Goldbugs


So The Chronicles of Brodrick has a useful post up showing the charts for gold and the gold miners, among other things.

He considers $1275 to be not particularly strong support for gold.

Far as I'm concerned, if gold isn't following its normal September plan, it's because Americans have gotten so disproportionately wound up over this $10B/mo taper nonsense that they're dumping all their long gold positions and articifially driving the price down below its supply-demand fundamental price. Which we've seen before.

So if we start to see more strong outflows from GLD, gold can continue diving for a while. I'm sure that, despite the suggestion from some that "the taper is already baked into the markets", there are still people who will sell on the news and not the rumour. That is evidenced by the way that gold hammerblows by $40 every time Bernanke's beard approaches a microphone.

Brodrick also notes GDX has fallen below Fibonacci support. Remember, as we saw before, there are a lot of people who really sold short the miners, and I expect that until we see the covering volume in the shorted decent names like Yamana, the miners will continue to go down. The people who shorted a couple weeks ago have been proven to be very foresighted, and so I expect them to extract maximum profit from this move, which means they'll cover at the bottom.

It might also be that they're large enough in the market that their trades will cause the bottom.

Back to Brodrick, I also particularly like how he can put forward a bad case for gold and a good case for the NASDAQ without blathering on about "a dishonest system coming apart at the seams". Politics and dogma are idiotic bullshit that will only ever detract from your trading performance, and while certain other bloggers still have no fucking clue about this, Sean Brodrick seems to be of a higher sensibility.

So what I'm trying to do in my head today is revisit whether an EM secular bear market (ex-China) could still set up a long-term bear market for gold.

Certainly the speculative premium in most commodities still needs to be wrung out if we get an EM secular bear, but gold only had a bear market in 198?-2000 because annual production doubled over that period (partially due to the invention of leaching) while many gold-buying EMs had major banking crises which destroyed a lot of wealth.

Unless gold production can double yet again, or (ha ha) India sells 30,000 tons of temple gold into the market (likely story), I don't see why gold should drop even below $1000. There's not enough gold in GLD to kill the market down below $1000 anymore, I think. And China should still avoid a banking crisis; the countries to watch would be those with major current account deficits who got too dependent on debt and have no way of fixing their problem - or in the case of Rajan, are too incompetent to fix the problem.

On the topic of Rajan - I came across an article by him at Project Syndiccate. Here, go read it.

Now here's a quote:
An increase in gold imports placed further pressure on the current-account balance. Newly rich consumers in rural areas increasingly put their savings into gold, a familiar store of value, while wealthy urban consumers, worried about inflation, also turned to buying gold. Ironically, had they bought Apple shares, rather than a commodity (no matter how fungible, liquid, and investible it is), their purchases would have been treated as a foreign investment rather than as imports that add to the external deficit.

There are gross and unignorable structural problems in India: really miniscule exports, no infrastructure whatsoever including no electricity, and a government that has taught all foreigners that it is unsafe to allocate capital to Indian ventures - as unsafe as investing in Venezuela. Rajan fobs these off as if they don't matter.

But even worse, he thinks that Indians are going to buy Apple shares. I guess he's of the impression that the few million rich kids in Bangalore are more important to the Indian economy than a billion rural peasant farmers.

I can guarantee you that Rajan has never walked down a dirt road to visit peasant farmers in his life. This is one of those cloistered elite-class Congress Party intellectuals who is going to govern without any comprehension whatsoever of the country that he lives in.

I'm going to try to force myself to remain open-minded and moderate in my consideration of Rajan, because I don't want to end up flat-footed. This is a point where we're going to have to read the situation correctly. Perhaps. I dunno. Thus, caution. But this Project Syndicate article simply made me shake my head.

Anyway, I'll stop now before I get even more tangential.