I started my summer hours this week and rode early to beat the heat of the day. When I left at 7:00 am gold was up $1.20. When I returned I saw silver down .28 cents and gold off $4 so I figured some sort of shenanigans. The dollar was weak when I left and weaker upon return so it had nothing to do with the dollar. Then I read this…$3billion worth of gold sold …again for perspective, this is nearly 4% of global production or almost two weeks worth. And again, who would sell like this if they wanted the best price for their gold?
Fast forward 30 minutes and gold is now positive for the day. Over the last few weeks we have seen weakness early in gold and strength toward the close. This is a big change. A much BIGGER change will be if gold can hold positive for the day and maybe even close stronger. This would be if my memory serves correctly, the first time a massive amount of paper raided the market which then closed the day positive. Also keep in mind how many “new” contracts (fake supply) it has taken to keep gold’s rise in check.
As Jim and I have said, we are at major inflection points in many (all) markets, a strong gold close today followed by a breakout from here would be a very bad signal for paper markets. An out of control gold market will spell doom for paper markets and lead to the plug being pulled! Monitor this closely!
2017 Debt Crisis Looms: Congress Will Have 4 Days To Avoid A Government Shutdown On April 29 April 11, 2017
April 2017 could turn out to be one of the most important months in U.S. history that we have seen in a very long time. On April 6th, Donald Trump attacked Syria on the 100th anniversary of the day that the U.S. officially entered World War I, and now at the end of this month we could be facing an unprecedented political crisis in Washington. On Friday, members of Congress left town for their two week “Easter vacation”, and they won’t resume work until April 25th. What this means is that Congress will have precisely four days when they get back to pass a bill to fund government operations or there will be a government shutdown starting on April 29th.
Up to this point, there has been very little urgency by either party to move a spending bill forward. It is almost as if everyone is already resigned to the fact that a government shutdown will happen. The Democrats will greatly benefit from a government shutdown because they can just blame the entire mess on the Republicans. But for the GOP, this is essentially the equivalent of political malpractice.
To me, there is simply no way that Congress is going to be able to agree on a bill that funds the entire government in just four days. And it turns out that this upcoming deadline comes exactly on the 100th day of Trump’s presidency…
This is the article Bill and Jim discussed for subscribers.
Junior Gold Miner ETF Suspends Creation Orders Due To Shortage Of Underlying Instruments April 15, 2017
Over the last several weeks, two years after Howard Marks first brought attention to the topic with a letter in which he asked “What Would Happen If ETF Holders Sold All At Once?” some investors have once again quietly voiced concern about the inordinate and rising influence passive investing in general, and ETFs in particular, exert on stocks but especially on fixed income securities, including illiquid bonds and loans. To address some of these concerns, earlier last week, Goldman Sachs released a report titled “A closer look at years of passive (aggressive) investing in credit” in which it observed that the growth patterns shown in Exhibits 1 to 3, particularly the increase in the ownership share of ETFs…
– Substantially Adverse Economic Circumstances Have Begun to Unfold, Threatening FOMC Hopes for Normalizing Monetary Policy
– Amidst Mounting Income and Credit Stresses on Consumers, Headline Retail Sales Suffered Major, Near-Term Downside Revisions; Recent Auto Sales Were Not As Strong as Advertised
– First-Quarter Real Average Weekly Earnings Declined Year-to-Year, Along with Back-to-Back Quarterly Contractions, Circumstances Not Seen Since the Stalled GDP of Second-Half 2012
– Real Growth in Consumer Credit Outstanding Has Faltered in a Manner Also Not Seen Since the Stalled GDP of Second-Half 2012
– Headline CPI-U Inflation Fell by 0.29% (-0.29%) in March, Pushing Annual CPI-U Inflation Lower to 2.38% (Was 2.74%), with CPI-W at 2.35% (Was 2.82%) and ShadowStats at 10.1% (was 10.5%)
– March Final-Demand PPI Annual Inflation Hit a 60-Month High of 2.28%
“No. 880 : March CPI, PPI, Retail Sales, Real Earnings, Consumer Update”
The Next Crisis is the Mother of all Counter-Party Risks (Part 2) – Gijsbert Groenewegen April 15, 2017
In the first part I have been explaining the counter-party risk that is all around us and will come to the fore in the next financial crisis. In this part I reflect on the rescue operations of the Fed following the 2008/2009 recession and the following QEs and ZIRP policies that have led to diminishing returns and that will ultimately weaken the US dollar: the biggest counter-party risk of all counter-party risks.
Ad 8 – CDS, Credit Default Swaps. Ultimately it should be considered that when we encounter these systemic events that it will impact the underlying currency. For example when the pension underfunding gets so problematic that the Government has to print more money to meet and rescue the obligations the counter-party risk will be reflected in the devaluation of the currency or the loss of purchasing power, the goods that you can buy with the same amount of nominal money will tumble.
We saw one of the most poignant examples of counter-party risk in 2008 when AIG that had given off numerous CDS (Credit Default Swaps) to banks because it never expected the markets to tank the way they did (typical Wall Street view, things can only go up, that is what the Japanese thought till 1989!!). So issuing CDS or Collateralized Debt Obligations (CDOs) was a “no-brainer” for AIG. Anyway a breakdown of the system will happen again but this time it will be 10x worse than in 2008 and then the system can’t be saved because all the tools in the toolbox will have been exhausted and therefore won’t carry the weight, credibility or effectiveness they had “solving” the 2008 crisis. It will mean we will go deeper and longer (5 years!?).
This illustration was drawn for the last rally in gold and is uniquely correct. It does however provide a warning that trying to maximize profit by waiting for the last magnet can be very difficult. Be that as it may, its accuracy on the bull move was a great assistance to the traders. I intend to expand this illustration to $3500 which, in my opinion, will be the only considerable resistance to the next great gold/currency reset on its way to $50,000 or more.
Keep in mind that each gold bar acts like a magnet putting demand into gold market prior to some sort or reaction. Looks at this as a sort of Fibonacci or momentum indicator. Clearly the inability to rise above a bar followed by a drop back through the previous bar is not good news. The opposite is a reason for celebration by the bull. Bill and I publish this now only because the manipulators have clearly lost their nuclear mojo of previous years, with the bulls asserting themselves in a way not common to the past few years.
Here is a simple message for the gold producer. Why sell gold sat $1058, a key number for Jesse Livermore’s system, instead of in the $2000s, where the price of gold is headed now.
I wish to give credit where credit is due. I wish to thank Monty Guild for finding this illustration in a 1923 edition of the Wall Street Journal.
My birth name was Jesse E Seligman. The rest is a long story based of the courage of my father. He was the greatest of the of lone wolf traders in the business. Bertram J. Seligman was born from the line of David Seligman. The history of the Seligman family can be found in the book titled “Our Crowd”. My father traded like a old master painted and acquired control of businesses along the line of Thermo King, Hayloid Xerox, Inflight Motion Pictures, The Pink Sheets with the Walker Brothers and multiple others. He worked during his career with Jesse Livermore and was an partner of old man Kennedy before he headed the SEC.
Gold and silver will be the last men standing.
The $2025 Gold Magnet’s Math
You could solve this by factoring:
(maybe at this point we recognize 81=92, but let’s continue pretending we don’t)