November 2011 Market

[shinnosuke]

http://www.youtube.com/watch?v=bdob6QRLRJU&feature=player_embedded#t=0s

Fancy a spot o' tea, do ya? Well, watch this lively British chap go on about the Euro project. Tells the European side of the November 2011 Market.

[68Camaro]

He's bloody brilliant - couldn't get enough of him! Had to go look for more of his speeches.

[texcollex]

http://www.youtube.com/watch?v=bdob6QRLRJU&feature=player_embedded#t=0s

Fancy a spot o' tea, do ya? Well, watch this lively British chap go on about the Euro project. Tells the European side of the November 2011 Market.

Sad thing is it seems no one is listening.

[shinnosuke]

http://www.youtube.com/watch?v=bdob6QRLRJU&feature=player_embedded#t=0s

Fancy a spot o' tea, do ya? Well, watch this lively British chap go on about the Euro project. Tells the European side of the November 2011 Market.

Sad thing is it seems no one is listening.

Watch for the guy behind the speaker who is applauding by slapping the table when the speech ended. They listened alright. Some squirmed. Some exulted. Some wished they had the gonads to say what he said.

[68Camaro]

The guy behind Nigel is a Brit, as are one or two others in the vicinity. It's in another speech on youtube (but now I can't find it) where they all pick up and start waving their Union Jacks and cheer.

[Saabman]

WOW!!! Great speech!! Fascism for the sake of freedom?

[68Camaro]

Markets will be down today, though likely propped up with a capped bottom.

PMs continue down overnight, regardless of the cause of it. Those predicting a major PM crush coming this last week before US Thanksgiving holiday are finding those coming true.

I happened to look at historical charts of the major indices with a different eye this morning, and (especially in inflation adjusted terms) they are showing a big-picture (entire market), long-term (12+ year) chart symmetrical triangle pattern. See the chart for the FTSE index and read the wiki entry for the triangle. This started in the late 90s, and shows a complete lack of conviction, with decreasing highs and increasing lows, converging while waiting for "something" to happen.

http://finance.yahoo.com/echarts?s=%5EF ... E;range=my

http://en.wikipedia.org/wiki/Triangle_(chart_pattern)#The_Symmetrical_Triangle

This pattern is a bit disguised if you look at the Dow, at first, until you realize that the basic DOW needs to be inflation adjusted by all the US dollars that have been printed, which adjusts the curve enough to get the same pattern.

The something that happens at the end of the convergence can be either GOOD or BAD. In this market, that something doesn't look good. It looks to me like the entire system is setting up for a large crash, and it is converging. First down cycle was just over 36 months - second was about 18 months - this third should be about 9 months and we are 4 months into it. So we will either hit a mini-low in the next 5 months, and start another mini-rise for a next very short convergence cycle (if they manage to kick the can) or we will end the pattern with either a crash or a boom. The fundamentals don't point to a boom, unless there is a complete takeover of the US elections next fall by the conservatives. So, from this, looks like we have between 5 months and 25 months left before a crash.

Timing is difficult, and I don't trust the above for critical decisions, but I can use it to support planning.

[68Camaro]

Mid-day note. Dow Ind down 300+, but that's not really a big deal. That is "only" 2.5%. Only if it continues for the day it will become a bigger deal - a 5% down market starts to get some notice. However, I fully expect the PPT to come into the market by mid-pm, and start buying targeted items in order to optimally affect index prices. I have no direct insight into this next speculation, but I would be shocked if they didn't have index optimization trading computer programs that have been created just for this purpose - to affect the maximum index rise with minimum input - very easy to create such a thing.

The standard mid-day short sell in PMs has driven both silver and gold down, but silver recovered up over 31, while gold has continued down. Gold will be the one that is most sold in the moment. Could be another good buying opportunity is coming up to the dock. Maybe one of the last.

(Read some articles over the weekend on market manipulation in commodities - while there have been many attempts to downplay such, I've come to realize that it is generally accepted among the insiders as a common evil and there have been significant studies on actual cases, which don't get enough airtime. For some info on a major recent one involving copper, see

http://en.wikipedia.org/wiki/Sumitomo_copper_affair

The settlements over this were in the upper hundreds of millions - approaching a billion.)

[68Camaro]

Sure enough - a PPT mid-day breather at circa the 300 point level. Even odds that it heads back up toward the baseline, vs heading lower, for the balance of the day.

[shinnosuke]

It's nice to go see the statistics every once in a while. Yes, gold is off a bit now. How's it doing comparitively?

http://finviz.com/futures_performance.ashx?v=17

Silver's a bargain.

[68Camaro]

USD index now back over 79. I think it fair to point to that as the main driver of the most recent PM push down today in gold (silver, again overreacts) - prices aren't so much going down as dollar getting stronger. Except for a blip up to 79 last month, the USD index has not been at 79 since the early part of this year, when silver was in upper 20s and gold was in the upper $1300s to low $1400s. PMs are holding their own and have advanced for the year, even with USD index at same value.

CNBC idiot yesterday said the S&P would hold 1185, absolute worst case would be 1162. It's at 1168 as I type this, and going down.

[68Camaro]

A "disastrous" German bond auction led to the drop in the Euro this morning. Hardly anyone showed up for it, and yields for German bonds increased above US T-bills, until they pulled the balance of the issue.

While gold is down against the dollar (or was, it is recovering as I type this, nearly up to previous close), it is up against the Euro today. Given the change in strength of the dollar, if gold stays even in dollar terms that's a positive.

[68Camaro]

A "fall off the table" finish for the Dow, which turned around from a PPT-enhanced -140ish number to down 236. Good thing tomorrow is a US holiday or it would be an ugly day. Europe should still be open tomorrow (I think) - that will be interesting.

Wife stopped at grocer last night on way home from her work to grab a couple of missing items needed for dinner. She picked up an 8 oz package of shredded cheddar cheese, and did a double-take. Yep - 8 ounces - half a pound. Item was on SALE at a low, low price of $4.99, discounted from the new price of $6.99. Cheese is now $14 a pound. When did this happen? Well, the gain is starting to get cranked up, and people are going to start waking up. Though too late. The heat is being turned up on the water, and the frog is shortly going to start to notice.

[68Camaro]

USD index now back over 79. I think it fair to point to that as the main driver of the most recent PM push down today in gold (silver, again overreacts) - prices aren't so much going down as dollar getting stronger. Except for a blip up to 79 last month, the USD index has not been at 79 since the early part of this year, when silver was in upper 20s and gold was in the upper $1300s to low $1400s. PMs are holding their own and have advanced for the year, even with USD index at same value.

CNBC idiot yesterday said the S&P would hold 1185, absolute worst case would be 1162. It's at 1168 as I type this, and going down.

Oh - S&P close today - 1161.80. Guess that dude is sucking wind tonight...

[68Camaro]

Europe started up earlier today, but that changed late in their afternoon when the debt of Portugal was down-graded to junk. The indices then reversed and all the major bourses ended the day negative. Should be an interesting day tomorrow...

[rsk1963]

Blood in the streets...

Drops, a liter or a few gallons?

[68Camaro]

Euro continues to drop. PMs measured in USD drop with it as the USD strengthens.

We've mentioned it before, but there is a real possible affect here where - for a short period of time, as the Euro collapses - PMs (and much else with it) will drop. For people with USD - if the time span is long enough to actually allow it to move down into the physical market, and if there is enough physical to actually go around - this will be fire sale time, until it causes US investors to freak and move into PMs. Then we will see a price spike in PMs like has never been seen before. It will happen quickly, with almost no time to react. Prepare in advance. Don't bank everything on trying to time this.

Stay the course.

[68Camaro]

And Italian bonds approach the nearly unsellable, unsustainable. At this rate they will have kicked the can down the road only a few months, at best.

http://finance.yahoo.com/news/awful-ita ... 00518.html

[shinnosuke]

Euro continues to drop. PMs measured in USD drop with it as the USD strengthens.

We've mentioned it before, but there is a real possible affect here where - for a short period of time, as the Euro collapses - PMs (and much else with it) will drop. For people with USD - if the time span is long enough to actually allow it to move down into the physical market, and if there is enough physical to actually go around - this will be fire sale time, until it causes US investors to freak and move into PMs. Then we will see a price spike in PMs like has never been seen before. It will happen quickly, with almost no time to react. Prepare in advance. Don't bank everything on trying to time this.

Stay the course.

What I am beginning to fear is that even if the price of PMs drop, dealers will attach such a high premium to them that we won't be able to enjoy the full effect of the temporary USD strengthening. But by that point, the writing on the wall should be very clear and we should just buy PMs anyway...or rice and beans or flashlight batteries or whatever.

[68Camaro]

Fortunately for the markets they ended early today. Started up, ended down.

So, today, Belgium had its rating dropped; next?

[68Camaro]

And to wrap up the week with items I had missed over the past couple of weeks:

http://en.wikipedia.org/wiki/List_of_co ... dit_rating
11/21 Armenia downgraded (European, but not in the EU)
11/24 Hungary further downgraded to junk

Workers in Portugal have a 24-hour national walkout (now that's helpful...)
Spanish Treasury cancels new 3yr bond auction
Italian 5-yr bond goes to 7.847%
Nation with the greatest combined debt (government, corporate and household) to GDP in the world: the UK, which no one has been talking about
(next are Japan, Spain, France, Italy, S Korea, US, Germany, Canada) - Hmmm, France and Germany are trying to bail out Spain, Italy, (as well as rest of the PIIGS)?

http://en.wikipedia.org/wiki/European_F ... y_Facility

The heralded EFSF bailout fund, which was to take the existing funding and leverage it 4-5x by selling Euro bonds (think about this - they are simply smearing out the worst and mixing them with the less-worse) so they could buy national bonds, is now damaged because the ability to leverage is now gone - and no one is mentioning this?

[68Camaro]

Even when basic reporting is sound, headlines are tweaked for a political effect. Teaser link headline just seen on Yahoo Finance starts "Germany, France post solid growth, outlook bl..." While the sentence is cut-off, what does this suggest to you? Something positive, right?

However, when you go to the article, the full headline is "Euro zone barely grows in Q3, recession looms" and you find out that the latest quarter growth rates in Germany and France were only .5% and .4% - statistically flat - that their economies are shrinking, and they are the best economies in the Eurozone with the rest far worse.

[68Camaro]

What's the end game here? I'm trying to sort it out, haven't had any light bulbs go off, but it seems to me like US QE3 is going to have will happen very soon, which will flood US banks with liquidity that they don't really need, but instead of injecting that into the US economy I'm thinking they are going to be told to either buy Euro-bonds with it (whether new true Euro-bonds, or individual sovereign debt of specific countries) or buy the distressed assets of Euro-banks so that they can buy the Euro-bonds with the new cash flow. Either way, it amounts to (no matter what they say, or will say) the US funding of the Euro debt by the printing of US dollars.

This will kick the can down the road a couple of years, possibly. But in the process it will create increasing inflation, and it will cause PMs to continue to inflate at a slightly increasing rate (not parabolic, but with a changing slope).

From today's Yahoo Finance: http://finance.yahoo.com/news/pressure- ... 45478.html

Italy had to offer a record 7.89 percent yield to sell 3-year bonds, a stunning leap from the 4.93 percent it paid in late October, and 7.56 percent for 10-year bonds, compared with 6.06 percent at that time.

The yields were above levels at which Greece, Ireland and Portugal applied for international bailouts, but European stocks and bonds rallied in apparent relief at the strong demand, with the maximum 7.5 billion euros sold.

Yeah - apparent relief, at a tailored auction, where - I'm sure - people were told to show up and buy, or else.

[68Camaro]

So, it seems the path forward has been made more clear. The US Fed will continue to print vast amounts of USD, and will print enough to buy US bonds back from the Europeans, as well as execute currency swaps (to the extent the Euros have Euros to swap), as well as flooding US banks with USD so that they can buy Euro assets. Thus the US will be propping up Europe, for a time. None of the countries involved, however, US included, have made any significant inroads into controlling their sovereign debt, so the printing will continue. What does this mean?

Significant inflation, for years to come.... Eventual complete erosion of your savings, pension, social security. Not necessarily hyperinflation (yet), but - in a way - far worse. At least hyperinflation has a quick end; like a fever which spikes and burns itself out. Whereas long-term high inflation is a boil that won't heal, but continues to fester, slowly growing, making life increasingly more painful and miserable.

PMs are now sure to increase - significantly - over the next 2-5 years. $2500 gold and $60 silver by end of next year.

[NHsorter]

Woo hoo, so I need to start buying even more gold, fast. I guess I should ease up on the gun purchases and divert that money to PM's. Dang. What is the optimum Gold to Silver to Lead ratio?