PMI was weaker than expected.
Dollar sank more than anticipated.
Bucks poured into equities, metals and miners.
Tomorows Fed had today's numbers.
We'll see but the set up is looking significant.
On that note, James Turk did an interview with King World News yesterday which really caught my attention for a number of reasons. One of them had to do with Barrick’s Pascua- Lama operation in Chile…
The short position in both gold and silver is now so huge, it won't take much to push the shorts into a buying panic. I have been looking for possible triggers that could panic the shorts, and we got a hint last week of one possible event which may do this. Because of various problems, there have been news reports that Barrick is considering what to do with its huge Pascua-Lama deposit after a Chilean court ordered it to stop development work.
The project is already well behind schedule, with big cost overruns from its initial plan, but here's the important point: The market has been expecting that when production begins, the mine would produce 800,000 ounces of gold and 35 million ounces of silver annually. Those ounces will of course never materialize if development work remains suspended.
But also consider that according to its 31 March 2013 financial report, Barrick has hedged 65 million ounces of silver, which is 8% of the world's annual silver production. What is the bullion bank, who sold that hedge to Barrick, going to do if those 65 million ounces don't get mined and delivered to it?
What is Barrick going to do if the bullion bank forces it to deliver physical silver to close the hedge? What are the shorts in silver going to do when they realize that there is a potential time bomb here that could substantially reduce the near-term forecast of silver supply?
In other words, it is pure insanity to be short silver here, and for that matter, gold as well. Round two of the buying panic may be just around the corner when the paper shorts rush to the exits. They will learn the age-old and time-proven adage about the precious metals, namely, that it is easy to sell gold and silver in large quantities, but very, very diff
I don't know who Turk is. I don't follow the "bugs", although I occasionally read some of what they write.
I do know this. Most of their stories are "conspiracy theories" that have little or nothing to do with the prices. If guys like Paulsen or Einhorn get it wrong occasionally, and they know a lot more than most "bugs", then we can get it wrong also.
These guys invest billions.
Sovereign funds invest 100s of billions.
Are games played? YES
Does it have to do with Pascua and Barrick? I don't think so.
But I don't argue with them, or you or anyone who believes.
I think todays action was exactly what I wrote.
PMI spooked currency traders. Pure fundamentals.
And when the dollar started dropping,,conversely, metals, miners reversed the down trend.
GL to you. Same church........just different pew.