More than the actual timing of the coming price penetration of the moving averages in gold and silver, there is another possibility that looms large – how easily (or not) will the commercials let the technical funds buy back their short positions and establish long positions? This is the question I ponder more than any other. Simply stated – unless the commercials sell fairly aggressively as the moving averages are penetrated to the upside, there is a real possibility of disorderly pricing to the upside. I’m back to the thought that a market that can fall $200 (gold) or $5 or $15 (silver) in days can also rise by such amounts. It comes down to how easily the commercials will let the tech funds off the short hook. Time will tell, but let me remind you that the commercials (and particularly JPMorgan) will rip out the financial lungs of anyone on the wrong side of a trade if it suits them. - Silver analyst Ted Butler: 04 January 2014
Heads the Fed Wins, Tails You Lose
By David Howden
Thursday, January 9th, 2014
With the Senate’s recent confirmation, Janet Yellen will soon become the most powerful woman in the world. When she takes over the reins of the Federal Reserve from Ben Bernanke on February 1st, she will become the 15th Fed Chairman and first woman to hold the position. And as I’ve said before, she’s the right woman for the job. At least by the standards set by the position.
Yellen is an ardent supporter of the Phillips Curve, an idea that relates changes in inflation to the amount of slack in the economy. She is a monetary policy “dove”: one who thinks reducing unemployment is more important than halting inflation.
While she might not give the best balancing act to the Fed’s dual mandate of promoting full employment and fighting inflation, at least she considers both. Unfortunately, the Fed’s dual mandate just isn’t what is used to be.
The Quantitative Easing policies enacted under the Bernanke Fed are geared more towards supporting general asset prices than with controlling inflation or supporting employment directly.
Indeed, some Fed officials, like William Dudley from the New York district, have admitted that the Fed does not know how these QE policies work to help the economy. This would be a humbling admission, if it were true. Actually, there is quite a bit of evidence available to Fed economists that says QE is counterproductive and harmful to growth. And this evidence is not just from Austrians warning of the dangers of promoting further malinvestments and stopping those already made from being remedied. Evidence also abounds from mainstream economists.
Robert Hall warned last August at a Fed conference in Jackson Hole that QE is responsible for a buildup in reserves which contracts the economy. He also commented that the attention on new central banking tools, such as forward guidance and GDP targeting, are misplaced and that attention should be given to building up bank capital. (Perhaps by increasing reserves to, say, 100% of the deposit base?)
Three unemployed Americans for every one job opening, admits Obama adviser
In an effort to extend benefits to over one million Americans whose emergency unemployment coverage expired, White House economic adviser Gene Sperling said there is a 3-to-1 ratio in the number of unemployed looking for jobs.
Although the Senate agreed to extend the program on Tuesday, political analysts say the House is unlikely to do the same.
Sperling rejected the notion that some Americans were able to “game the system,” in other words, receive benefits for as long as possible without making an honest effort to find work.
"Most of the people are desperately looking for jobs," he told CNN. "You know, our economy still has three people looking for every job (opening)."
Hunt for Food Sends Venezuelans to Colombian Border Towns
Venezuelan taxi driver Jose Sotomayor drives four hours through army checkpoints every week from the city of Maracaibo to buy rice in Colombia for his family at 10 times the government-set price back home.
“You can’t get anything in the shops here, I don’t even bother going to them for basics anymore,” Sotomayor, 39, said in a phone interview. “All of our food is taken to Colombia, it’s like a locust plague.”
Sotomayor hasn’t seen rice for sale in the shops of Venezuela’s second-largest city since July, as smugglers snap up the staple for a maximum of 7.2 bolivars ($1.14) per kilogram, just $0.11 at the black market exchange rate. While many Venezuelan shelves go bare, the country’s rice exports to Colombia have doubled this year and now represent 11 percent of the market, according to the U.S. Foreign Agricultural Service and Colombian rice growers association Fedearroz.
This very interesting, but fairly long Bloomberg news item was posted on their Internet site early yesterday afternoon Denver time...
Spain Youth Unemployment Rises To Record 57.7%, Surpasses Greece
There has been much speculation recently about some immaculately conceived Spanish economic recovery. And while it has certainly sent the local Ibex stock market soaring, we fail to see any indication of such a recovery, at least in official economic data.
The latest example being, of course, today's European unemployment for November, which at the Euroarea level remained flat at 12.1%, which also is the all time record high following a prior revision.
However, what is more troubling is that according to the official European statistics keeper, Spanish unemployment in November was 26.7%: tied for the all time high seen in October and hardly an indicator of some imminent economic renaissance. There is, of course, always December - that month in the New Normal when hiring really picks up.
This short Zero Hedge posting from yesterday contains three excellent charts
Proof Gold's Latest Slam Was Not A "Fat Goldfinger"
Market data provider Nanex in Winnetka, Illinois, produces proof that Monday's smash down in the gold futures market was not a mistaken "fat finger" trade but the product of a high-frequency algorithm trading program painstakingly designed to take the market down.
Now that there's proof, do you think that the CME or CFTC will investigate??? Don't hold your breath, dear reader. Nanex's report, with great charts, was posted on the Zero Hedge website yesterday...
JPMorgan metal futures unit included in commodities sale: sources
JPMorgan Chase & Co., the world's biggest dealer in over-the-counter metals derivatives, has added its metals futures brokerage to the sale of its physical commodities business, sources familiar with the matter said.
A JPMorgan spokesman initially declined to comment, but later said: "JP Morgan's metals futures brokerage is not up for sale and we continue to be committed to that business."
The sources said the sale would include its London Metal Exchange (LME) open outcry floor trading team, one of the largest on the world's premier metals marketplace. A deal could come later this month.
I asked Ted Butler if this included their precious metal division as well...and his reply was " don't think so, because of previous statements, but don't know for sure." I'll keep my eye open for any story that clarifies the situation. This Reuters piece, filed from London yesterday evening GMT
Gold’s weakening outlook threatens miners’ credit ratings
Moody’s Investors Service cut its gold price forecast for the year, putting the credit ratings of Canada’s largest precious metal producers at risk of a downgrade as they battle an industry slump.
Reflecting the sharp drop in gold prices, Moody’s on Wednesday said it will use an average bullion price of $1,100 (U.S.) an ounce instead of $1,200 to determine a company’s credit rating.
“The increasing risk of lower prices suggests that key credit metrics of certain producers are stretched for current ratings in the absence of mitigation through cost reductions or other actions,” Moody’s said in a report announcing the lower gold price outlook.
2014 Silver Eagle Bullion Coin Sales Begin January 13
The United States Mint will begin accepting orders for the 2014-dated American Silver Eagle bullion coins on January 13, 2014. Coins produced at both the West Point and San Francisco Mints will be available, although sales will be subject to the US Mint's allocation program which rations available supplies amongst authorized purchasers.
The start of sales for the 2014-dated coins follows an extended gap in availability for the popular bullion product. The US Mint made their final weekly allocation of 2013-dated coins on December 9, 2013. For several weeks leading up to this date, available quantities had been lower than typical, presumably since production had partially shifted towards 2014-dated coins. The start of sales for the 2014-dated coins on January 13, 2014 leaves more than a one month gap in availability that will likely add pent up demand to the already seasonally high demand for the coins.
The US Mint anticipates that they will have approximately 3.5 million coins to allocate on January 13, 2014. They have indicated that allocated quantities for the following week will be much lower. The initial amount of coins available will be lower compared to the prior year.
Last year, the US Mint recorded sales of nearly 4 million Silver Eagle bullion coins on the opening day of availability for the 2013-dated coins. The strong opening was followed by a temporary sell out, with sales resumed under the allocation program which remained in effect throughout the year. In January 2013, Silver Eagle sales had totaled 7,498,000 coins. Full year sales would reach 42,675,000 coins, setting a new annual record.
I get the distinct impression from reading this article that the U.S. Mint is not going to be meeting all the demand that there might be for the U.S. silver eagle in 2014. However, you can make up your own mind about that when you read
One Week Into 2014, U.K. Royal Mint Runs Out Of Gold Coins
Just two days after their release, The U.K.’s Royal Mint said it ran out of 2014 Sovereign gold coins “due to exceptional demand.”
The mint added "Since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating."
The mint expects to have stocks of the coins again by the end of January, it said in a statement e-mailed yesterday.
Too much truth in this.
An obituary printed in the London Times... Absolutely Dead Brilliant!!
Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as:
- Knowing when to come in out of the rain;
- Why the early bird gets the worm;
- Life isn't always fair;
- And maybe it was my fault.
Common Sense lived by simple, sound financial policies (don't spend more than you can earn) and reliable strategies (adults, not children, are in charge).
His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children.
It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student, but could not inform parents when a student became pregnant and wanted to have an abortion.
Common Sense lost the will to live as the churches became businesses, and criminals received better treatment than their victims.
Common Sense took a beating when you couldn't defend yourself from a burglar in your own home and the burglar could sue you for assault.
Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
Common Sense was preceded in death:
- by his parents, Truth and Trust,
- by his wife, Discretion,
- by his daughter, Responsibility,
- and by his son, Reason.
He is survived by his 5 stepbrothers:
- I Know My Rights
- I Want It Now
- Someone Else Is To Blame
- I'm A Victim
- Pay me for Doing Nothing
Not many attended his funeral because so few realized he was gone.