Sunday, May 12, 2013

SAUSAGE

After a lengthy bear correction in a gold and silver secular bull run time seems to favor the bulls as the physical market (the real market) is colliding head on with the paper market. Reports of bullion banks now settling customers holding allocated gold in paper should make anyone that's holding paper gold realize their game is coming to an end. Liquidation of GLD may have more to do with the fear of paper redemptions not even being made in a real crisis and of course that's why many own gold.......for a crisis. As the big boyz go net long on the leveraged contracts on the COMEX one has to wonder just how long they can carry the paper short on gold without creating a critical loss of bullion. Price can rectify some of the wrong but it can also stampede a run of bullion accumulation.

Grinding the miner trade into sausage has been brutal and is also nearing a turn but of course the damage has been extensive. Anyone remaining in this trade with 20/20 hindsight can see just how damaged their portfolio is. The big question is will they now turn the trade for their own profit having created a dramatic low that has forced all but the most stalwart trader out. Some smaller miners are trading at less per share than their revenue/share. Some miners have P/Es less than 4. NO ONE wants in the trade. Can you blame them?

Right now the battle is how long the illusion that fiat currencies backed by promises only can hold the sheeple in the system until the East drains the last of the bullion from the West. The East knows the system is in peril but then so are they. Killing off the West without being in the strongest position yourself to support an alternative reserve currency is not a mistake the East wants to make. So how and when the plug gets pulled is only a guess at this juncture. For hints at what is in store for you if you reside within the Western banking system just look at what is taking place now as the confiscation of assets begin in earnest in the debtor countries. Wealth cannot be created for the West....it can only be confiscated now. Money printing is only for the survival of the over-leveraged bank balance sheets and for propping up the Government deficit spending. All of which ends badly.


48 comments:

  1. Hey Kli, sorry to stray off topic right away but this is a must read about Obamacare and Consumer credit agencies.. This is scary...

    http://www.nakedcapitalism.com/2013/05/obamacare-rollout-feds-to-use-consumer-reporting-agencies-to-determine-eligibility-despite-penalty-for-perjury.html

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  2. Yes chuck it should be a complete minefield for participants and providers here is a paragraph further down that sums it up for me

    The real problem is simple, and it’s the basic flaw in ObamaCare’s system architecture: Income (eligibility) determination should not be a system requirement. (Proverbs for Programmers: “The cheapest, fastest, and most reliable components are those that aren’t there.”) Sleazy and error prone credit reporting firms should not be involved in determining your access to health care through ObamaCare’s exchanges, because the only eligibility requirement for health care should be your birth certificate (or, more pragmatically, your SSN). I know this may be hard to believe, but there actually is a system they have right on this continent, somewhere up north, I think in Canada, that works exactly like that, and it’s been very good for patients, doctors, taxpayers, and just about everybody but the rentiers.******* They call it “Medicare”. Look at that cost curve bend, eh?
    Read more at http://www.nakedcapitalism.com/2013/05/obamacare-rollout-feds-to-use-consumer-reporting-agencies-to-determine-eligibility-despite-penalty-for-perjury.html#2LYR6BsiD3YRu00M.99

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  3. Methinks we have a sausage problem here

    http://www.brotherjohnf.com/archives/167992

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  4. http://www.zerohedge.com/news/2013-05-13/india-trade-deficit-deteriorates-gold-imports-soar-138

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  5. Front page story on Yahoo news this morning:

    Has the gold rush come to an end?

    http://news.yahoo.com/gold-rush-come-end-163634795.html

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  6. seems like every talking head that shows up on the tube talks about the fed ending QE in the near future. I have no crystal ball, so I have no clue, but talk of QE ending makes me laugh anyway. good luck everyone.

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  7. Now is the time to buy miners,gold and silver,sell all other stocks.JMO

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  8. I hope the boys hold this down for another two months. I'm prepping a big purchase of SVM, PAAS, and SLW. Love the prices and divvys.

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  9. Rude: Maybe that's why gold has plunged so much?

    Those insiders at Goldman Sachs probably have a direct hotline to their servant Bernanke. That's why they made the big announcement a few weeks ago.

    I'd personally love to see Bernanke end Zimbabwe Economics 101. But I think he's likely addicted to printing press 1000 times more than an addict craves heroin.



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    1. maybe, i don't discount your theory, I just wonder if it's true that QE is coming to an end. I just laugh writing that last statement. the mkt has been on the juice for 4 years, almost seems unlikely the mkt will function without it. if the mkt is so fragile that it can crash instantly on a false twitter rumour, my guess it's not even close to handling QE ending anytime soon. but, I don't have any clue. I am just a minion in this world.

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  10. makes me think, if this rally is just another bubble, and at some point the balloon pops, the mkt robots will dump first ask questions later. almost like " the last one out, is a rotten egg". after watching the mkt tank within minutes, of the twitter rumour weeks ago, if mkt ever tanks, it would seem it could get dicey pretty quick. but then again, I am sure everyone that is long, will not face any problems, they have an escape plan if the mkt ever tanks. we all know nobody wants to be the rotten egg.

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  11. one more comment about the false twitter rumour that temporarily tanked the mkt weeks ago. it seemed nobody cared about mkt valuations at that time. it was more like, run for the exit and don't let the door hit you in the ass. hehe. I am sure this rally is different though, the mkt will never go down again, easy money to be made. hehe

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  12. BTW, there are a few hedge funds that spend the entire day scanning twitter for any little blip they can use. They've got their algo computers tied directly to twitter.

    Given that Twitter is extremely easy to hack, I find it a bit amusing.

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  13. the game remains physical accumulation IF they keep it in this range or lower.....YOU HAVE to have it in your possession otherwise you are playing Russian Roulette....which of course I am playing with the miner trade...There is SO much noise on the ending of QE and its all they have to keep gold and equities in check....equities cannot rip much higher or it exposes them just as though they had let gold run over the last two years. THIS is just jawboning.....They will end QE ONLY when the prices of essentials begin to scream higher.....until then ...all noise

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  14. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/13_Disappearing_Gold_Inventories,_Financial_Collapse_%26_The_Fed.html

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  15. Obamanation: WASHINGTON (AP) - The Justice Department secretly obtained two months of telephone records of reporters and editors for The Associated Press in what the news cooperative's top executive called a "massive and unprecedented intrusion" into how news organizations gather the news.

    This country is becoming more Orwellian by the day.

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    Replies
    1. becoming??? We are well past that stage. Now we enter the "hard down" phase

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    2. http://www.wired.com/threatlevel/2012/03/ff_nsadatacenter/

      Yeah we B there alright!

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  16. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/14_Global_Banks_Massive_Criminal_Conspiracy_In_The_Gold_Market.html

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  17. yep, "happy days" here again. run the mkt to infinity. let's make everyone rich. hehe

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  18. Are you guys starting to see food inflation in your areas of the country?

    The last 2 times I've went Jack in the Box or Mc Donalds for breakfast, it's been over $6 here in the Seattle area. Granted, we have the highest minimum wage in the country. But even at the grocery store... $5-6 a pound ground beef is the norm. Fish costs a small fortune. Gas is back at $4 a gallon.

    This QE infinity is starting to show consequences.

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    1. food prices have been terrible for awhile. but , yea its getting worse. spaghetti used to be 1 buck a pound. now unless it's on sale, where I am at its $1.25 to $1.59 a lb. or to keep the price lower, they are selling more 13oz boxes. sometimes I get a whopper with cheese, sandwich only, with tax it's around $4.50. it sucks.

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    2. Beef its what's for dinner @ $ 9.99 a lb for a good sirloin! Heheeee food has been and still is ridiculous plus don't forget stealth inflation, smaller portions for same or increased costs....

      Its cheaper to brown bag and make your own, Fast Food ain't food plus its to expensive!

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  19. Looks like Tesla got bitcoined today:

    Tesla Motors, Inc. (TSLA)

    82.65 Down 5.15(5.87%) 2:22PM EDT - Nasdaq Real Time Price

    Day's Range: 81.15 - 97.12

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  20. food inflation is insidious.....very managed until it isn't.......

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  21. Hi, gang. Been in the Land of Oz again. Mixed climate there. Hope all are well here. Re: food inflation less in all sorts of products rather than so much price increases. There's always some weather excuse...too much rain, a drought, too much snow. But we know the real reason. Reading FT on the way back today saw where the Chinese gov't. is urging hedge funds to invest up to 80% in equities.

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  22. Sorry, I miswrote that a bit. FT says "the CSRC is putting pressure on mutual fund managers to reduce their cash positions" and increase their "equity allocation from 60 to 80% of their fund assets". Hmmm. Even the Communists like equities? LOL.

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  23. Thanks for the video Kli, System of a Down is one of very few bands that get it.

    I think you'll really like this...

    http://m.youtube.com/#/watch?v=_DboMAghWcA

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  24. Fed is holding up equity market here and in most countries through USD printing.....its making money managers absolutely frantic. Everyone knows this does not end well and are just hoping when the music stops they can find a chair otherwise they know it a complete fraud.....they had hoped in 10,11, and 12 that there was a true exit strategy with a "real" improving economy ...they know now there is no real improvement other than funny money......gl

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  25. Droke still sees no turn on the paper gold front

    He's watching XAU to see if it closes above 110 over the next few days for a "confirmed" bottom.......GL!

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  26. I'll take his years and wisdom over about any other pundit

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/14_Richard_Russell_-_We_Are_Witnessing_Unprecedented_Events.html

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  27. France now officially in recession......GDP contracts 2.2%

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    1. correction 0.2% they expected a 0.1% Germany +0.1 ..... even their rigged numbers show the implosion

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  28. Yeah it was just a matter of time before the weaker economies began to really impact the stronger ones...now it's game over! The Euro is doomed, probably from day 1.

    For us, the question is can they print enough and keep it together long enough to convince the majority of the pop. that things are actually getting better, get them to spend/invest and use stock gains to do so, at least partially. You're right, cannot logically work, creating wealth out of thin air is just too good to be true!

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    1. its a question of "how long" ....ultimately nature's law will take over

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  29. Metals & Miner's ouch!

    Looks like a good day to go shopping....

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  30. I think Gold will revisit the 1320 area again, and then maybe lower after that.

    Inlet could be right. His cycles show the market grinding higher until early June. I suspect investors are dumping their paper Gold for stocks--seems like stocks are the only game in town for now.

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  31. Find the comments on food inflation interesting. As Kli has commented in the past food costs are a small per cent of American budgets compared to many areas of the world where food may be 40%, 50% or more of a household budget (about 10% here). So a 50-100% increase in food costs are a disaster in some areas, but should not be a disaster here.

    I was watching this AM and saw PPI was down .7% (the most in 3 years) and this spells overall deflation possibilities not overall inflation possibilities.

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  32. Gold is getting mauled today....

    Gold
    1,391.30
    -33.20
    -2.33%

    Those Goldman traders must be grinning from ear to ear. A couple weeks ago, they took it down in a coordinated attack using CNBC, Bloomberg, Yahoo, the works. Then they realized that it wasn't going to work if dealers were running out of physical all over the world.

    I'm sure they've got all the bugs worked out now and I expect this trouncing to be severe. Especially if Ben abandons QE infinity.

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  33. Poll question on Yahoo Finance today:

    POLL

    Fortress Investment Group's Michael Novogratz believes the gold bubble is ready to burst, sending prices as low as $500. Do you agree?

    Yes, I agree
    No, I think prices will go higher
    I think prices will stay where they are

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  34. And the results are...

    35%
    24%
    41%

    So 76% believe gold price is staying put or dropping! We're in the minority, which is good.

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  35. Holding my nose and staying with equities for now. It's been a winning formula for the past 12 months or so (longer if you got on the bandwagon earlier).

    If gold falls below a certain level, I'm guessing it will be impossible to find physical, or pay a very heavy premium. But the matter of cost for the miners will come into play, most will shut down production or go under. Kli said something about the miner trade being like Russian roulette, well, I agree and it's like playing with 5 in the chamber.

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  36. budfox: Why do people play with miners when the risk/reward ratio is so horrible?

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    1. Jay......perhaps miners will continue to tank...now way to say in a manipulated game....on the other hand not so sure that "risk/reward" at this point being described as horrible is accurate......time will tell but I think that would more accurately apply to some of the high flying general equity ponzies like Amazon netflix aapl etc....now those are poor risk reward

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    2. when a miner that has a P/E of 4 and has been knocked down 70-80% its hard to call that a poor risk reward

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  37. It's true that some of this high flying junk will come back to earth when the funny money from the Fed stops, but won't the already beaten miners also go down in a market correction/crash? That to me is what's troubling, that the miners have not even remotely participated in this equity rally. Do you see the miners rallying, while the rest of the markets tank (if/when that happens)? That would be quite a reversal.

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    1. My concern is that the miners won't do well until the selloff on the Gold price is complete & stabilizes. I listened to a show about the miners a week or so ago. The show indicated that the miners may have Gold in the ground (millions of ounces in fact), but the cost to mine it is higher than the present Gold price. The rich veins of easy-to-mine Gold are rare. So, the miners need to let their Gold sit there until the price is better.

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