Saturday, December 6, 2014

Some interesting Saturday reading and a junior gold developer's chart


Stuff:

New Deal Demoncrat - comment on November jobs report. Quote:
All of the internals of the employment survey were strong. Job gains were across the board, revisions remained strongly positive, and aggregate hours also increased sharply.
Data is reality.


Calculated Risk - the future's still so bright I gotta wear shades. It looks like he's pinning a secular bull market in the US on a coming demographic boom. Quote:
The good news is the prime working age group has started to grow again, and should be growing solidly by 2020 - and this should boost economic activity in the years ahead.

These young workers are well educated and tech savvy. And they will have babies and buy homes soon.
Demographics are a powerful force in economics, don't fight them. I also wonder what this demographic trend will do to the Republicans once these young people start voting: how many of them will choose the party of institutionalized racism, sexism, fundamentalism, science denialism, war and insanity?


Bespoke - we're so clever look at our China prediction. To be fair, yeah they caught the downtrend break. Their comment:
While the breakout has been huge recentlty and leaves significant room for a short-term pullback, in the long-term these charts are still very bullish. When a long-term trend breaks, it can have a powerful effect on prices.
Fair nuff, they're smart. I guess the Shanghai chart also puts the lie to the idea of a China slowdown, no?


Mining.com - pot of gold in Ireland. Speaking of which, Dalradian has had a very interesting chart recently:


It already broke above its SMA(50), and until someone puked 48000 shares on Friday afternoon this stock was gently riding down the SMA(50) line on mild selling volume, not wanting to cross below. Maybe I'm just thinking hopefully here (got some at something like .65 this week), but that chart action does seem like a gentle response to its November recovery before a move higher.

Then again, like I said, maybe I'm just thinking hopefully here.


Sprott Globule - interview with Rick Rule. Quite honestly, some very useful grown-up commentary here. He still thinks a powervom must come in the junior space.


Another blast from the past: Mila Kunis beats all hedge funds in 2013


Here's one of my own favourite posts from the past:

My blog is awesome and yours isn't - Mila Kunis beats all hedge funds in 2013: let's dive into the details. And, if the hedge fund clowns bother to publicize this year's pathetic results, I'll be writing another post soon comparing their performance this year to the Kunis Benchmark.

I have to, because these arrogant Wall Street fatties need to get it beaten into their heads how inferior they are to Mila Kunis. The added bonus of searching for new pics of Mila in her underpanties doesn't even figure into it.

Anyway, let's repeat the post in its entirety forthwith, and see if Ritholtz finally admits he owes Mila an apology:




While I've temporarily got Wall Street paying attention to my blog, there's something I need to get off my chest:

Bloomberg - Mila Kunis annihilates hedge funds' 2013 performance.


If you don't remember, the story back in March was that Mila Kunis decided to take her enormous pile of wealth - gained not just from her transcendent beauty and heart-warming charm but also her fantastic acting and skill at World of Warcraft - and get it the hell out of CDs where it wasn't earning a goddamn penny. She said she was putting money into stocks.

And by the way, Mila Kunis is precisely this beautiful:



So, anyway, she was made the target of merciless mocking for her desire to get out of CDs and into some sort of proper investment for a young person.

And among her detractors was... who? A bunch of idiot clown bloggers and internet blowhards, of course. Chris Adams, Janet Paskin, Ben Hale, Mark Lichtenfeld, Daniel Gross, and of course Zerohedge and maybe a few dozen sheep at Reeking Alpha.

And yes, even Barry Ritholtz:

Barry Ritholtz, director of equity research at Fusion IQ, tweeted that he was glad she was sticking with her movie career.

"If she was giving up acting to become a daytrader, we'd have great contrary indicator!"

But since then, how has she done? Since March 15 when she gave her interview, the S&P is up 17%. QQQ is up 26%. IWM and $SOX are each up 21%. I'd have to think that her performance should be somewhere between those numbers. Let's say she's made an even 20%.

While everyone was laughing at the silly girl. Ha ha, silly girl, iz teh dumz, shut up Meg, and so on.

Meanwhile:
Tudor Investment Corp., the $13.4 billion macro hedge-fund firm run by Jones, climbed 3.7 percent in November in its Tudor BVI Global, bringing gains to 12 percent in 2013, a person familiar with the matter said.
That's not your average hedge fund clown, either. That's Paul Tudor Fucking Jones. Mila Kunis wiped the fucking floor with Paul Tudor Jones.

That's supposed to be as unlikely as me clobbering Vitaly Klitschko til he cries like a baby girl and pees himself.

But it is what it is, eh? She whipped Paul Tudor Jones' ass, and made him cry wike a widdle baby, boo hoo, while she's smacking him with his own hand, "why you hitting yourself, Paul Tudor Jones? Stop hitting yourself, Paul Tudor Jones!", and eventually he poos his pants and has to get sent home to mommy.

But it doesn't stop there:
Pershing Square Capital Management LP, the $12.1 billion activist hedge-fund firm run by Bill Ackman, posted a 1.2 percent net gain in its main strategy in November, according to a performance update obtained by Bloomberg News. Pershing Square International’s monthly return brings its year-to-date advance to 9.4 percent. The fund has $5.1 billion in assets.
That's not your average hedge fund clown either. But he, also, had his ass handed to him by Mila Kunis.

Hey Billy boy, here's what Mila Kunis looks like when she's laughing at you:


So cute! Almost takes away some of the sting of being beaten by a girl, eh? A girl who's not even a hedge fund manager, even.

I bet she even owned some Herbalife.



Let's look at some more comparisons with the Kunis Benchmark, shall we?
Bridgewater Associates LP, the $150 billion firm run by Ray Dalio and based in Westport, Connecticut, posted a 0.1 percent gain in its $16 billion Pure Alpha I fund, bringing this year’s return to 4.1 percent, according to a person briefed on the results. Pure Alpha II, with $64 billion, increased 0.1 percent in November and 6.1 percent in 2013.
Translation: Ray Dalio has also had his ass handed to him by Mila Kunis.

Whose stunning godlike radiance, by the way, unsurpassed through the ages, humbles even the immortal sun in photographs such as this:


Let's see if there's even more embarrassment of hedge fund clowns!
Jeff Vinik, the former Fidelity Investments stock picker turned hedge-fund manager, told clients in May that he was returning their capital after performance at his Vinik Asset Management LP slumped since July 2012.
What a clown. This guy can't even stay in business in a bull market! Jesus fuck, dude! You suck!

as industry assets quadrupled and the number of hedge funds almost doubled, managers have mostly trailed the S&P 500.
Holy shit! "Mostly"? That means "hedge fund managers have mostly trailed Mila Kunis"!

Trailing Mila Kunis, by the way, might look something like this:



It gets worse. And by "worse", I mean you arrogant Wall Street fatties all fucking suck and should just fucking kill yourselves right now:
Hedge funds, which stand to earn about $50 billion in management fees this year based on industrywide assets, are underperforming the benchmark U.S. index for the fifth year in a row
What? People are paying hedge fund morons fifty billion dollars to get outperformed by Mila Kunis?

Every one of you clowns out there who went "herr derr Mila Kunis top sell sell" should feel fucking humiliated. You should publicly shame yourselves in blag posts and twerts and whatever the fuck else, for the rest of the year, proclaiming Mila Kunis as your new god, and admitting your own worthlessness in the face of the transcendent beauty and infinite investing wisdom that is Mila Kunis.

I now end this post with another pic of Mila Kunis laughing at Wall Street:


You are all bad, and you should feel bad.

My resolution for 2014: no more reading investment advice from anyone who isn't Mila Kunis.

Friday, December 5, 2014

UC Berkeley Intro to Economics - free lectures


I've been watching these lectures the past while, and he's a pretty good prof.

YouTube - UC Berkeley intro to economics.

By the way, one thing I like about the concept of putting lectures online is that it is a new market force that encourages profs to improve their lecturing skills.

Seriously, there are people teaching at university who have no right to be on a stage. They are incompetent at public speaking and incompetent at even getting ideas across.


This is what it means to be going down ex-USD


Here's oil ex-USD:


The US dollar obviously doesn't matter. Oil is going down with a vengeance in a basket of ex-US currencies.

Here's silver ex-USD:


Even just since last June, silver has been trending slowly downward even ex-USD. It broke into a new downward trend in September.

Here's gold:


See a difference?

Since April it's done literally nothing ex-USD. Except pop above its SMA(50) and stay there, of course.


Morning charts for gold and the miners



Well, GDX has sorta failed. It still looks like an upward channel at this moment, but that also makes it look like the start of a bear flag.



 GDXJ has really failed, no doubt about it. Then again, GDXJ is full of companies that have no hope.




And yet, gold ex-USD is still where I want it to be.




And gold has lost the SMA(50), but is still above its Bollinger mean.

Dunno what's happening. Gold needs to lose another $10 or so for this to be a true fail. Can we get that today?


The problem with the "long Nikkei short gold" story


Well, I did say it was a pile of Zerohedgery....

IKN - long Nikkei short gold.

The author of the article linked to has a misunderstanding of what GOFO is, is ignorant about the Japanese economy and depression economics generally, doesn't bother (or know how) to calculate actual correlations, and lovingly quotes Zerohedge (a Russian disinformation site) every two pages.

So it's no wonder that the article got reprinted at Turd Ferguson's site!

Turd Ferguson - Paul Mylchreest details the gold Nikkei link.

And, of course, now it's also made it to Zerohedge:

Zerohedge - an inside look at the shocking new normal.

And, most distressingly, everyone in the comments section is calling his paper a breathtaking work of staggering genius.

God no. Please god no.

This is a beautiful example of one of my most cherished benefits of being a sociopath: I always get an uneasy feeling when I see a herd of dumb chimps jumping up and down, shouting oogity-boogity. The most perfunctory research then proves that, indeed, the dumb chimps are dangerously fixated on something irrational, and I should stay away.

This really makes me want to short gold right here. If a bunch of clueless Zerohedgers are oogity-boogitying about the imminent collapse of the Nikkei-gold pair, then you damn well know the trade is going to continue.

As for Mylchreest, I have even further criticism:

1. Identifying an overextended pair isn't good enough. You have to be able to tell me when it will break. Otherwise, the banksters can continue making money on long-Nikkei-short-gold forever, and any attempt to get in the way is just like stepping in front of a steamroller. My gold ex-USD chart is meant to be a vague, amateurish, beginner's attempt to identify a turning point; what did you offer? Commentary on GOFO without comprehension of what GOFO is.

2. The long-DM-short-gold trade in general is exactly what the banksters do in a secular DM bull market. It can go on forever because they have more money than us, and their position is always perfectly hedged so they'll never break a sweat.

I'm not saying there's no turning point coming, and I've not given up that the bottom for gold has been/will be right around here somewhere. (Check out the V-bottom reaction to the BLS chokeslam this morning! Fuck Blythe Masters indeed!) What I am saying is I don't ever consider it wise to be in the same trade as a bunch of ZHers and a guy who doesn't know what GOFO is.

Friday videos: the Organ's "Memorize the City" and "Brother"


It's hard to improve on the first album by The Smiths, but five girls from Canada did just that:





Eat your heart out Morrissey.

Thursday, December 4, 2014

Four important charts before the close


Fuck, I dunno buddy, what to make of this:


GLD ex-USD is still where I want it....



GLD has been a bit weak today but it's still perched above the SMA(50), which is where I want it....




GDX's chart looks weak, but not dead yet. It sucks but I'm willing to let it go to the Bollinger mean.




But GDXJ simply looks like puke. DPM.to and AKG and SVLC and GG also look like puke. They shouldn't look like puke if I'm right. Them looking like puke means I might be wrong.

I really hope my own thesis (GLD vs UDN) is right, and this little bounce wasn't simply driven by clowns buying the ZeroHedge GOFO line.


Bron Suchecki on GOFO


By the way, the LBMA is discontinuing GOFO on 31 Jan 2015.

Now read this:

Bron Suchecki - how historic is this negative GOFO? Because some people think it means gold to da moon Alice, here's a fucking dash of common sense for you:

So is this occurrence of negative GOFO a "Gold Shortage, Worst In 21st Century" as Zero Hedge recently claimed?

[...]

Note the unusual chart pattern where GOFO moves up in a straight line from 2004 to mid-2006, is then flat for a year and a bit and then drops sharply over the next year and a half. I wonder what was going on in the gold market during that time to account for that behaviour?

For the answer go to http://www.lbma.org.uk/pricing-and-statistics and select LIBOR in the chart drop down box. Isn't that amazing, US interest rates during 2004-2008 exhibit exactly the same chart pattern as GOFO.

In actual fact, there was nothing going on in the gold market. GOFO is mathematically equal to US Interest Rate minus Gold Interest Rate. Thus if US interest rates go up and Gold's Interest Rate is stable, then GOFO will rise. If you select "LIBOR minus GOFO" (ie, Gold's Interest Rate) in the LBMA's chart, you will see that it was indeed flat during 2004-2008.

If you look at that "LIBOR minus GOFO" chart you will see that while the interest rate on gold has moved up, it is not "historic", for which we would need to see interest rates above 2% (which at ZIRP would equate to circa -2% GOFO). The only reason current GOFO rates look historic is because cash rates are basically zero. Comparing GOFOs over time is not really comparing apples to apples - the only way to look through the effects of ZIRP is to look at gold's interest rate. It is like looking at cash interest rates during the 70s and 80s and noting how much better depositors were off compared to today because bank deposit rates were 15%, and completely ignoring the differing inflation rates between now and then.

This then leads on to the question of why would lease rates be rising (or it could be GOFO falling, it is hard to tell which market is in the driving seat sometimes)? I've said this a few times, but there are only two things you can do with borrowed gold:

hold it
sell it

For the first, JP's suggests that gold manufacturers and merchants are willing to pay to hold stock of gold to cover them for any future supply disruptions or choppiness. Another explanation may be that some gold businesses are very busy converting gold Westerners don't want into forms that Asians do, which would cause them to temporarily increase their working inventories. Another may be that bullion banks, who engage in maturity transformation, have a liquidity mismatch and are needing to borrow gold to cover unallocated redemptions until their gold loans mature.

For the second reason, sell it, this basically means that people are shorting gold. It could be speculators, or maybe miners have resorted to hedging again (I note there was a 55 tonne increase in the global hedge book in Q2 2014). Consider that when miners stopped hedging and started to reduce their hedges in 2002 that gold interest rates crashed to their current low levels.

So while Zero Hedge may spin a falling GOFO as bullish, it could be indicative of a rising interest rate on gold, which could be an indicator of short selling/hedging, which would result in a falling gold price. And what has gold been doing recently? I'm not saying this is the explanation, mostly likely all the explanations mentioned in the last two paragraphs are in play, we just don't know which is the main driver at this time, but at least here you will get some of the negative explanations to weigh up.

I'm fine with some people wanting to be bullish gold at $1200; but please, people, don't turn into fucking Turd Ferguson.

A zerohedge comment worth reading


The poor guy is probably banned from ZH now for posting this, so I'll reprint it here as a caution to goldbug wackaloons:

I don't understand why people on a financial blog are recommending catching a falling knife. I get lectured all of the time on "this is Econ 101 yada, yada, yada", but last time I looked at entry level economics, it was to "buy low and sell high". As for financial advice (which is at your own risk according to the ZH disclaimer) I would rather listen to a man wearing a suit and tie and being chauffeured to his penthouse with art on his walls, than to listen to a prepper goldbug whose "wealth" are expired cans of food in a trailer with a Mosin Nagant and spam can ammo, bragging about his 20 year old car still runs like a champ. This is a financial blog and some of you posters are comical. I remember in the RichDad novels in the 90s to never take advice from someone who is broke. Most of you brag about how broke you are, yet you want to give advice on how to remain broke. This is a financial blog so I don't get your point. A lot of you should be taking notes, instead of giving out tidbits for others to take notes on your fluff.


"This is what happens when you sell things that don't exist to manipulate a market."

So if the market is rigged, why do you think as a joe blow sixpack like you will some how hit it big in it. If its rigged, you WILL be screwed. The stock market is a rigged casino, but at least it is rigged on the upside so you can not lose, because with bailouts and QE, you will not be allowed to lose. For PMs, you will get played like a fiddle, and many prepper patriots got a taste of that in 2011 just like they did on Silver Thursday back in 1980. Same old, same old. This SHTF meme is nothing new, as my parents were trained to hide under their desks when they were schoolchildren in the 1950s from when the Soviets were going to get us. Keep hiding and avoiding life. I wish you all the best doing that.

As for the USD "not having intrinsic value" it actually does. It's called we get to live another day on this planet by accepting USD. These banksters would rather have all-out nuclear annihilation or some bioweapon release, than to have their paper printing alchemy game shut down. That is guaranteed. The "paper it is printed on" is blackmail, and looking at the fluoridated public pacified with NFL rigged games and NBA players flopping around on the floor on their HDTVs, I don't see any change in the forseeable future.

The reason why I post these things is to not win a high school popularity contest with upvotes, but I post contrary opinions to most on here because I want to challenge and expand your beliefs.

There are other opinions out there besides regurgitating Peter Schiff talking points and contrasting them to Paul Krugman.

It just floors me that people missed out on the biggest bull market ever in stawks to buy PMs that have gone down 70%. This is why these "stackers" don't have anything of "wealth" like they claim to have. I've read a lot of your posts over the years, and you talk about buying houses and ford trucks and other things when gold hits $5,000 or $10,000 or some other King World News pie in the sky figure. You could have already had that stuff by now, had you gotten into the bailed out TBTF stawk market. Instead you are stuck with metals that only coin shops want, as I have discovered in my own experience that no one out there is interested in bartering with silver or gold coins. They want USD. If you don't believe me, try it for yourself.

I used to drink the Austrian school koolaid myself back in 2008 and 2009, but quickly realized after doing further homework that these guys are full of it.

I wish you guys all of the best, but I have to go "run and hide" according to the mom's house crowd who spend 14 hours a day on here because I have things to do today. I'm sorry if I can't reply to your kneejerks in a timely matter, but by the time I return, this article will be on Page 3 and no one will read my replies anyways as it has ran off the homepage.

I wish you "stackers" all the best, I really do, but to me the chance to do well in precious metals was last decade, not the one we are in. If there is another bull market in metals, count me in, but until then, falling knives aren't my interest.

One last thing, if you are one of those prepper stack patriot dudes, at least load up on magazines and ammo right now, at these relatively low prices. You'll be better off with that than some gold or silver coins. Those are EASY to sell. If crap really were to hit the fan, you'd be better off with a pallet of PMAGs than a stack of physical. I'm sure if you live in an area that turns into a Ferguson type scenario, magazines are a better utility than an ASE.


Some Thursday news


Here's some good reading stuff of words:


Trader Feed - some dark clouds on the market horizon. Any other blog I'd ignore, but this is Brett Steenbarger. I was thinking things looked a bit rolly-overy recently. I've also sold some US positions because RSI's been over 70 and it seemed like the wrong time to not have cash; sold some Europe because if the US goes down, Europe might too.


IKN - long Nikkei short gold. Link to a paper on a topic parallel to what I've already been talking about for weeks. Here's just a short quote:
We suspected that gold might be the short in a long/short trade when we noticed a reasonably close correlation between gold and interest rates in the repo market. The more the cost of repo funding declined, the more the price of gold declined. The repo market is a major part of the aptly-named “shadow banking” sector. It is also the nexus for investment strategies involving leverage and short selling. If gold was the short in a long/short trade, the next question was whether there was a corresponding long? We think that the answer is yes, the Nikkei.
Personally I think the long side is USD. And, while I'm tempted to write more later about this, I'll just say right now the author is demonstrably clueless about depression economics and about Japan. Also, he quotes ZeroHedge every two pages: if you ever hung out at Turd Ferguson Metals Report, you'll feel a sense of deja vu reading this. And no paper can be serious analysis if it uses phrases like "common sense says", "is an authority on", and "the correlation is obvious". But still, the thesis is interesting.

But I already gave you the thesis without the ZeroHedge quotes.


WSJ - dollar longs join the club! Like I said: long USD short gold makes more sense as the heavy side of the boat right now. Here are two quotes:
Investors also appear unfazed. “We continue to hold long position in the dollar [and] we expect further broad based strength,” said ‎James Kwok, head of currency management at Amundi Asset Management, which has $1 trillion of assets.

“We are not concerned about the overcrowded trade and we expect the dollar to regain strength as we move closer to a Fed reduction in accommodation,” said Jennifer Vail, head of fixed income at U.S. Bank Wealth, which has $120 billion in assets. Ms. Vail expects the euro to lose about another 3% before March.
Great! People who aren't concerned about an overcrowded trade! I certainly hope they're short gold.


FT Alphaville - Bill Gross is a loony still. The fruit is now writing entire newsletters revolving around nursery rhymes. I predict within a year he'll be writing about his bowel movements and how he doesn't like the look o' them teenagers.


Jim O'Neill - you let me worry about emerging markets, laddie: I invented the fuckers. This is a brilliant quote that everyone in the investing world needs to read:
The slowing of China's expansion is a constant theme these days. Yes, but remember that China will be a $10 trillion economy by the end of 2014; that during the course of this year's slowdown, it added roughly $1 trillion to world output; and that slowing growth in China is still quite rapid by most countries' standards. Adjusted for purchasing power, China's economy is now about as big as the U.S.: Growing at the supposedly disappointing rate of 7.0 to 7.5 percent, it's adding more than twice as much to global output as the U.S.

Yet the median financial commentator is excited about the U.S. and downbeat about China. What am I missing?

In current-dollar terms, China's economy is now twice the size of Japan's. Again, investors seem more energized by the smaller case. Japan would have to grow at a rate in excess of 10 percent to make a bigger contribution to global output than China. Or look at Europe. China is bigger than Germany, France and Italy combined: The biggest euro economies would need to grow by more than 7 percent to rival its addition to global activity. In other words, a sense of proportion would be good.
Seriously. China growth has nothing to do with the drop in oil and copper. If you think it does, there's a rough old bastard waiting for you in the Malmaison Hotel bar in Manchester who'd like to set you straight.


Bonddad - my post-election rant. Just barely angry enough to get a reccie from me.


So where are my stop loss points?


Well, GLD wasn't able to advance at all through yesterday's close today, and a few miner stocks were really rolling over bad (AKG's one).

It might just be that the breakthrough has to wait another couple days. Or, of course, maybe it's never going to come and gold miners will suck forever.

So, I figured it would be a decent idea to set up some stops.

GDX <$19.40 would mean it lost its EMA(11), and GDX<$19.06 means it's lost its Bollinger mean.

GLD<$115.60 means GLD has lost its SMA(50) and <$115.20 means it's lost its EMA(11).

Upon those, I'd probably look at selling stuff. I've already gotten rid of my double-long gold miners ETF.

In any case, I'm puzzled by the relative strength of KGC and SLV.


And after 11AM?


These past few days, gold has often weakened after 11AM.

Let's see what happens today.

Probably the same. Gold sucks.


Two major miner charts that look hopeful


Well, the two following charts lend a vaguely hopeful taint to the air:


I!Am!Gold! has already popped above its SMA(50). What, are we not going to fire Steve Letwin now?



If Kinross sucks so bad, why has it popped through its own SMA(50) too?

In both cases, the charts show at least two intraday challenges and failures at the SMA(50).

Hey, I didn't make it up, it's right there in the chart. Sometimes spooky stuff happens.

Maybe in these cases, the turnback at the SMA(50) was just technical sellers saying "the SMA(50) is a good place to sell this stock, because reasons"? If so, I would think the breakthrough is something positive for the stock price in each case. I dunno.

The foregoing is not a recommendation to buy or sell securities. Because gold miners suck.

But for me to remain hopeful in a gold miners position, I want to see if the GDX can close today above $19.92 or so. Cos that's the GDX's SMA(50) and we want to get above that for this to mean anything. So if KGC's share price continues to power upward, and if IAG pops above maybe $2.45, those will lend believability to the idea that gold miners might go up from here.

Now watch some lizard people come along today and puke 5 million magical ounces of pretend gold into the bid.

Fuck I hate gold.


I RUFFLE FEATHERS IN IMPORTANT PLACES: especially around the cloaca


Important people follow this blog:


OK, important people follow IKN's blog, but then they come over here for the real news.

Gold ex-US dollar charts for this morning


Well, thankfully Draghi did nothing to gold, just like he did nothing to anything else this morning either. Poor guy - if I were him I would actually quit my job, then go to a newspaper of record and explain in detail how pig-headed the Euro-austerians are and how asinine their economic beliefs are.

Sometimes you need to sacrifice yourself for the good of the people.

Anyway, here's what I am interested in:


That line there defined the top of the horizontal trend, and now gold ex-USD has popped above it.

Which might mean nothing, it might pop back below it. But if gold-USD correlation was -0.96 over the past few months as Mickey Fulp said (and remember, he's admitted that he lied to get out of university stats class), I'd think that has to break down at some point.

Cuz gold is supposed to correlate to other things too. Otherwise, it's a magical currency with a fundamental value determined by God. Which is silly.

But if it does correlate to other things, it shouldn't correlate -0.96 to USD, right? Unless all those other supposed inputs to the gold price (10s-2s, US real rates, US inflation, fear of imminent war, Chinese corruption, Indian weddings ha ha) also correlate at a very high rate to the US dollar.

That chart up there does have some neat TA things: first, the fourth-last and third-last candle together depict a fakeout and recovery of the EMA(11). Also, the third-last (the big white candle) totally engulfs the nine candles before it, which I guess TAs would call a very strong affirmation of a coming upward move.

The very next day after the big white candle, the price overcame overhead resistance that had been tested 4 times before in the past 6 months. So that makes the big white candle even more bullish, I guess, according to TAs, not that it matters what they think. But that's where we are now.

So I guess a TA would say we shouldn't even expect to see a retest of the resistance-support line, at least not soon.

Anyway, point being that as long as GLD:UDN stays above 4.75 or so, this is a new and interesting thing, and other interesting things could come from it. And that's the only reason I'm interested.

However:


Thing about the weekly chart is that yes, $GOLD:UDN is above its SMA(50) right now, but it's not really giving us any reason to expect it to move out of the 48-50 range for the next few months. I mean, it could just stay here forever.

Though staying in this range would still mean gold going up in tandem with the US dollar, which I'd think would have to freak out the market eventually, no? It'd suddenly not be a magical God-ordained antidollar, and that's just freaky.

So maybe this long gold trade is going to be a very slow, very long trade? Maybe gold goes almost nowhere for the next three months. Like, maybe a very slow rise to $1300 with lots of ups and downs along the way.

I'm not hoping for anything, I'm just fairly certain I might have identified an interesting inflection point.

We'll see.


Wednesday, December 3, 2014

Oh, and as for the new blog colour scheme....


The blog now looks different because a certain individual said if I want more readers, I have to make my blog look like everyone else's blog.

This blog never has been anything like anyone else's blog before, has it?

Aren't I to trade on my own uniqueness? Isn't that what you come here for? How do I differentiate my brand? What next, am I supposed to stop swearing too? This guy is always on about me not swearing as much.

But, oh well. Let's see if the money flows in with this new blog colour scheme.




Wait, are IWM and GLD supposed to be positively correlated?


Um...


I'm going to love taking those Econ stats courses if I go back to university.

Because then I'll be able to explain precisely in numbers why the above chart is freaky, instead of just saying "hey look at that! If you throw out Monday, gold has been positively correlated to the R2K at some amount that's easily above 0.6."

Any reason why the two should be correlated? Any reason at all?

Is there a reason to be long USD short IWM right now?


Some boring ol' news


Let's see what's in the news today:


Calculated Risk - ISM non-manufacturing increased in November. Bill McBride says:
This was above the consensus forecast of 57.7% and suggests faster expansion in November than in October. A solid report.
So that's good then.


BI - oh shit Draghi's speaking tomorrow. Expect a hammerblow to gold at 7:45AM Eastern time. Unless of course nobody expects anything from Draghi. Which they shouldn't, cos just last month he was threatening behind closed doors to quit and leave Europe twisting in the wind unless they pulled their heads out of their asses and started letting him perform his fucking mandate. You don't come back from that in just a month.

Doesn't matter, Europeans don't buy gold anyway. Except neo-Nazis and the rich, of course.


FT beyond brics - cheap oil may change India's destiny. Here's the first paragraph:
Petroleum prices touched a new four -year low of $72.5 per barrel after the Organization of Petroleum Exporting Countries (OPEC) decided last week against reducing production . The 35 per cent price drop is a huge relief for India, where petroleum products comprise a third of the import bill. Cheaper oil means narrower current account and fiscal deficits, and reduced prices at the pump for consumers shopping for food-grains, vegetables, cement and steel.
You can skip the rest, it's boring.


BI - Russia's brain drain is astounding. Yeah, Pooty-poot, one thing you forgot: the last time Russia was a fascist dictatorship that executed its enemies and waged war on freedom and liberty, you also had closed borders. Might wanna look into who's going to drive your trams and distill your vodka when anyone with above 90 IQ has fucked off to the free world.

This bit was funny though:
"Russia not lose anything if entire so-called creative class leave. What creative class anyway? For me, woman who get up at 5 a.m. to milk cow creative because she produce something. Not some guy with stupid haircut who sit in cafe all day long writing in blog," said Vitaly Milonov, a Member of the Legislative Assembly of Saint Petersburg.
As someone with a significantly unstupid haircut, I agree.

Reminds me, I need to get my head shaved sometime this week.


Washington Times - Balrog HUSSEIN Taxbongo to defund Medicare coverage for penis pumps. I am almost certain that this is meant as an explicit bitchslap of the Republican base. I guess the Demoncrats have given up on winning the old-men-with-erectile-dysfunction vote?


How's your anium trade doing right now?


Hey, remember just a few weeks ago when the buzz was that your anium was advancing into a stealth bull market?

How's that working out?


Oh.

Well, I bet it looks better on the weekly cha-

Oh.


Will GDX cross the SMA(50) today?


By the way: when you see a flurry of posts coming out of my blog like what's happening this morning, that means I feel something interesting is going on in the markets and I'm busy figuring out what positions to take.

In contrast, when nothing is going on in this blog except abuse and cartoons, you can know it's because the market is being boring, nothing new has popped up, so I've left things on set-and-forget.

Anyway, here's another interesting thing that might call for a change in position:

GOLD POPS ABOVE SMA(50): the party is on!


UPDATE: no, I didn't say what IKN says I said.



Well, there you go:


Gold just popped above the SMA(50). By TA definition, it's now a buy.

Not that I give a crap about TA, of course; but I do give a crap about what the entire rest of the market thinks. And I was suspecting that the entire rest of the market was thinking the wrong thing. If it now has to think a new thing, that'll be a few pennies profit for the nimble.

If it turns around today and paints a red candle, that's bad for gold. For a day at least. But the pops this morning have been happy ones, so it looks good right now.

I am not counting on this being the beginning of the magical bull run to $5000 gold. I would be utterly incredulous if the bull move even lasted until PDAC. As far as I'm concerned, til proven otherwise this is nothing but a compensatory bull reaction to overzealous shorting that is not consonant with the market size of the PMs and miners.

I grabbed BTO, DPM (yeah, my ugly old girlfriend), RIO and some HGU.to (2x gold miners bull ETF) to fill it out just cos I'm otherwise out of ideas.

Let's hope this is the fat pitch I was waiting for. If not, hopefully I can at least run out a double.



UPDATE: again, for IKN readers, note that all I said above was

If it turns around today and paints a red candle, that's bad for gold. For a day at least. But the pops this morning have been happy ones, so it looks good right now
and
I am not counting on this being the beginning of the magical bull run to $5000 gold. I would be utterly incredulous if the bull move even lasted until PDAC. As far as I'm concerned, til proven otherwise this is nothing but a compensatory bull reaction to overzealous shorting that is not consonant with the market size of the PMs and miners.
But it would be nice if those of you IKN buddies from the big investment houses suddenly put on huge long-gold long-miners trades to help me out here.

:-)

TWO INTERESTING THINGS IN THE GOLD CHART: you won't believe what happens next!


Well, I said these were interesting, so we have to address them today:

Liz-Ann Sonders says you should quit piddling yourself


Liz-Ann Sonders - individual investors are still piddling their frilly little pink panties. Has some clown with a newsletter been feeding you the line that mom & pop investors are bullish this market? Well:

The next chart below shows the results for a question asking investors about their confidence in the market going up over the next year. Interestingly, individual investors’ confidence has generally been in a weakening cycle over the past 14 years, and today’s confidence (or lack thereof) is even lower than it was during the heat of the financial crisis. Institutional confidence has been a bit steadier, albeit with more short-term volatility.

[...T]here was a very large gap between individuals’ and institutions’ confidence earlier this year; with institutions well more bullish. Both cohorts have recently become much more bearish, although the spread remains quite wide. Notable is the fact that individuals have a record low level of confidence in the history of this survey.

Read Liz-Ann Sonders, not some clown with a blog.

As an aside, I wonder if the long downward trend in Main Street investors' attitudes has anything to do with the continued confiscation of all the world's assets by the rich, per Piketty?


DEAR JEFF CURRIE FROM GOLDMAN SACHS: how did that $1050 gold call work out, buddy?


Just in case y'all forgot: in September 2013, Jeffrey Currie from Goldman Sachs called for $1000 gold in the near term. Back at the end of last year, he refined his target to $1050, by end 2014.

He reiterated his call in Jan 2014. He stood by that call in April.

So Jeff, how did that call work out?

Are you still hoping for $1050 gold by the end of this month? Because 2014 is almost over, Jeffy, and gold's still at $1200. And with the US dollar strongly advancing and everything.

What are you going to do if gold doesn't fall from here? Are you going to say that November's $1130 was "close enough"? Because that's not going to be much of a boost to your credibility, Jeff.

Or will you reiterate your $1050 call and push the date out? End Q1 2015? End Q4 2015?

Because if $1130 was the best you managed to do given Goldman's credibility and market power, with the entire world with you on the short gold trade, with the US dollar advancing strongly, then how can you expect gold to be even weaker next year?

And what happens if some other pundit, say from Deutsche or CS, calls for an average of $1400 gold next year?

Then the market will see a tug of war, between the guy who botched his $1050 gold call and the guy who didn't.

It's going to be a big blow to your mojo, Jeff.

And you'd also be contradicting your own prediction of September 2013 that
For 2015 and beyond, Goldman’s forecast remains at $1,200 an ounce.
If 2014's low was 7.6% above your $1050 call, does that mean you have to revise your 2015 prediction to $1291 then?

Because that contradicts your prediction in April 2014 that
“It would require a significant sustained slowdown in U.S. growth for us to revisit our expectation for lower gold prices over the next two years,” Currie wrote in the report, dated yesterday. “While further escalation in tensions could support gold prices, we expect a sequential acceleration in both U.S. and Chinese activity, and hence for gold prices to decline.”
So how will you justify a $1200 gold price in 2015 without predicting a slowdown in US and Chinese activity? Because it certainly doesn't look like the US economy will slow down in 2015, and China doesn't really look all that bad either.

And how can you call for $1200 gold in 2015 if the price of gold is dependent entirely on the US dollar, or the 10s-2s, or all those other ignorant white people theories?

Are you worried, Jeff, about India's loosening of gold import restrictions? What happens when all the smuggled gold comes back into the official stats? Why would you expect India to toughen its stance on gold again when it's just seen the fuel component of its CAD drop by 30%?

And when you said back in January that
Currie said gold still worked as a hedge against inflation; he just doesn't see any strong inflationary pressures in the next few years. He said once the economic recovery picks up more momentum, inflation would follow and gold may become attractive again. Gold's early 2014 rally won't last, he said.
Does that mean that in 2015 you'll expect the gold price to go back up as the US approaches full employment and Yellen's inflation indicators start to pick up?

Why? Do Americans buy gold or something? That's news to me, Jeff. You got stats to back that up?

And why does American inflation have anything to do with the price of gold, Jeff? Is gold a "currency" whose value depends on American dollar "debasement"? Are you one of them, Jeff? Or do you still believe in supply and demand?

And why doesn't Indian inflation matter to gold demand, Jeff? Inflation in India was still 5.5% in October, and India buys a big chunk of the world's gold production: wanna include that in your little "dollar debasement gold wharrgarbl" theory?

Wanna suddenly discover the existence of India, and assert that 2015 will see a gold price drop because of lowering inflation in India due to reduced fuel costs? Maybe that'll work, Jeff; then again, it'll confuse all your readers who have spent the past several years hearing you assert that gold's price is determined entirely by Wall Street honky crackers.

I'm curious to see your reply, Jeff. You can use the comments box below. A lot of your buddies at other houses are reading this blog, as well as bigmouths like Ritholtz and Josh Brown who appreciate a good mocking, so you might want to reply quickly before you start getting mocking phone calls or your Christmas party invites suddenly disappear.

Let me know, Jeff!


Tuesday, December 2, 2014

Just three charts for Tuesday



HYG still looks bad. Then again, any reaction to oil prices shouldd play out over months and not days.




Then again, $VIX calmed down today and punched back through to a downtrend.




US dollar seems to have finally decided to break upward. So probably more pain for PMs on the way.

Those are the only three charts I find interesting right now. Oh, there's also the chart of B2Gold which is bucking the trend and going up very strongly on high volume. But if there's money to be made on B2, it's to be made on a long run upwards and not on some 2 day reaction to a PM puke.

I see Ritholtz is still blathering on about gold, by the way, so that's still about as contrarian bullish as you'll ever find.


Monday, December 1, 2014

THE KRUGGINATOR, IN HIS OWN WORDS: everything you never wanted to know


The Krugmeister recently linked to a file on his MIT website which tells us all about how he went into economics because Isaac Asimov's psychohistory hadn't been invented yet:

Mit.edu - all about my life.

It's a good read, check it out.


Some Monday news


Well, gold has popped above its SMA(50), and with a big nice white candle too. So is it party time yet? I'm going to wait and see.

Anyway, here's some reading:

New Deal Demoncrat - ten year gas chart. Money in consumer's pockets, therefore sell.

Calculated Risk - November ISM at 58.7. New orders up, prices down. Therefore sell?

FT Alphaville - an end to the great European bank deleveraging? God, I hate headlines with question marks.

Gavyn Davies - oh great, UK is going to pursue austerity again. Sell the UK, they're going to go back into recession. I guess they haven't slaughtered enough of the working class yet.

FT Alphaville - the commodity ecosystem is collapsing. I don't doubt that's what everyone thinks. However, I think it's only happening because the price-gouging international banker speculators are all leaving the market.

Mineweb - miners "covering their eyes" as China commodity cliff looms. Huh? What? A transition to a consumer-led economy doesn't mean the end of commodity consumption. Consumers consume commodities!

New York Review of Books - how Putin and his cronies stole Russia. The idea is that he's been at it for 20 years, not just the past few. Oh, and Gerhard Schroder is one of his paid stooges, as are a large number of German politicians and businessmen - what's that about Germany not being corrupt again? Oh, and a link to the Interpreter, which seems like an interesting Russia blog.


Railways are experiencing passionate lovemaking in the bottom


So, being unemployed, I woke up late and turned on CNBC to see Jim Cramer giving his pre-open chat.

One of the things he said was he wanted to watch how rails reacted to the oil price drop.

So let's take a look:


Union Pacific is experiencing passionate lovemaking in its bottom right now.




Norfolk Southern is also experiencing very passionate lovemaking in its bottom, which looks weird to me because I just looked at its system map and it only services the US east of the Mississippi, where there ain't no oilfields to my knowledge.

So that's a knee-jerk puke, to me.


And here's a few Canadians:



Kinda funny that they're dropping, considering their shipping backlog was so great that wheat was being left in the elevators to rot. Serious, this was a big scandal in Canada.

They have more than enough business to stay afloat and energy costs are going down, so what the hell is the selling for?

So I guess this big oil move is generating a lot of hasty repositioning among all the Wall Street honky crackers, which will mean some companies get very much made love to in the bottom for a while.



WHY SOME JUNIOR MINERS SELL OFF WORSE THAN OTHERS: a theory


B2Gold:


Every single person who bought B2Gold since September 2010 (except maybe those who received B2 in a buyout - I haven't looked that up) is carrying a 0-60% loss on this position.

That is why I'd think it'll take a stunning event (e.g. people flocking back into the miners en masse) before B2 ever sees north of $2 again. It doesn't matter what its book value is worth or what its production does with Otjikoto coming onstream; it matters how many sellers want to take the loss and GTFO.

Stock is broken unless a miracle can overwhelm the pain-driven selling. It takes an awful lot to overwhelm that float.

Argonaut:


Every person who bought Argonaut in forever is sitting on a 25%-80% loss. So, again, I'd never expect it to come back and I don't care what its book value is or its earnings are. I don't need to read up on them, I don't care about their financials. The chart is broken until something new comes along that can overwhelm the pain-induced selling.

Meanwhile, Rio Alto:


Yes, its chart does look somewhat bad, but the fact remains that anyone who bought and held Rio since July 2013 really isn't feeling any pain at all right now. Certainly not an "80% loss" level of pain.

The only people who think Rio sucks will be those who bought between, say, Nov 2011 and May 2013. So this stock is really no worse than any other miner that isn't broken, and I wouldn't be surprised if (given good news) it performed well in the future. Existing shareholders (post-mid-2013) are happy so new shareholders will have to pay a premium to get in the door.

So, in reference to two miners whose charts I haven't shown, when you ask the question "why is the one trading at >2x book value and the other is trading for <1x book value?", I suspect the answer is right in the chart.

The miner which is trading at high book value has a lot of happy shareholders whose positions haven't crossed the pain threshold. The miner trading at less than book has a lot of shareholders in extreme pain who just want out.

Price is determined by relative number of buyers to sellers.


Monday morning chart observations


Let's look at some charts to see what's going on:

Sunday, November 30, 2014

And hey, what about silver? OUCH


Hey, but what about silver?

Maybe the slam just hit gold and oh my god what the fu


An instantaneous one dollar puke, eh?

OK, I know how this week is going to shape up for goldbugs:


This is precisely how much it sucks to be a newsletter writer


This precisely illustrates why trying to predict the gold price sucks.



Literally.

Newsletter sent as an email attachment, timestamped by my mail server eleven seconds before 6PM Eastern time.

On the bright side, seems we didn't have to wait long for confirmation, did we?


Some weekend reading


Well, here's three newsbits for this weekend:


New Deal Demoncrat - weekly indicators. Corporate bonds are weakening, but we've been seeing that for a few months - it's what drives the one-week ten-percent pukes in the market. Other than that, no, everything is fine.

Brett Steenbarger - surprising pockets of weakness in US markets. Quote:
Recent posts have stressed that it takes more than a pullback of buying interest to sink a rising market: we need to see outright evidence of weakness. Not only among energy stocks, but also the smaller caps, we're starting to see such weakness. I couldn't help but notice on Friday that 128 stocks in the NYSE universe closed above their upper Bollinger Bands, an above average reading. A total of 300 stocks, however, closed below their lower bands.

That is not supposed to happen in markets sitting near their highs.
So... another 10% rollover imminent? High yield is already rolling over, so maybe we get another ten percent puke next week? I'd really love the opportunity to short $VIX at 30 again, can we do that? Or maybe buy Union Pacific for 10% off again, can we do that? And to think all this volatility is driven by a little drop in the price of oil upsetting all the tradebots. Exciting times, exciting opportunities!

Ritholtz - bad habits of unprofitable traders. You probably have some.


Our man in Peru on the Swiss gold referendum, and my own thoughts


IKN - that Switzerland gold thing. Quote:
I was asked about the Swissie gold referendum thing weeks ago (literally) by a subber. My answer was that I didn't care because there's no way in the world that the Swiss will vote to change their banking system in any way shape or form. Arguably the world richest nation, arguably the most educated nation about financial matters, all based on a banking system that has served them better than (again arguably) any other nation on earth...and they want to change it? It's asinine (this time word used no holds barred). Just another goldbug wet dream, waiting for the result to shoot it down in flames, which will then give them another excuse to shake their collective fists at the world and mutter about The Powers That Be and our illuminati Bilderberg extraterrestrial lizard people rulers.We good now? Thanks.
I have little to add, except that the recent decision by Marine le Pen to advocate a similar gold repatriation in France makes it rather clear that gold repatriation has become the new pet project of the European neo-Nazis.

Y'know, come to think of it, now that the American right wing have given up their blather about the gold standard (except for the few die-hards of course), maybe a new Balkanist anti-Eurocurrency pro-gold-standard movement among the numerous Nazis of Europe would provide a good floor to the gold price!

Is anyone looking into selling these people gold coins? Hey Kitco, Europe seems to be a growth market for gold coins - are you taking care of it yet?


Anyway, one other thing I'd like to add is that, while IKN makes reference to some supposed "exit polls that indicate 78% of Swiss have voted against the initiative", I can find utterly no reference to this supposed Bloomberg article on ZeroHedge, so it must just be another anti-Soviet lamestream media lie.