Oldtent Archives 2007 - 2008

you still get mail at aol?

rno

 is just that no one can figure it out most of the time. Especially this sector where fundamentals mean less.

  Sure Aurum can claim some bragging rights for his call on the dollar and the top in the HUI. If we get to 353 then 290 Rambus can claim victory, if 150 or whatever TQ will be the new master.

   If 640, then PMF can say “toldya so” even if a year or two late.

   If 1200 - all hail to ment!?

   The only thing that appears true to me is that when ya feel good ya gotta sell and when ya feel bad ya gotta buy some.

   I have my doubts about today being the bottom - maybe tommorrow. Seems like we usually reverse intraday. Predictive value is nil. Bought some at 390, some yesterday and some today and will buy some tommorrow if we open lower.

   Bought some UNG today also. Nat Gas has been obliterated.

   I get comfort from CNBS parading guests who say this is the end of the commodity cycle. Maybe, but not without a fight.

Here’s the part that the entire gold community is missing

by sabregold @ 20:08 pm.

and this is fascinating because I never would have dreamed it to be the case.

$Gold goes down in periods of rising “normal” inflation or what is thought to be imminent “normal” inflation. That is what happened TODAY!

=======================

~ ~ ~ ~ I don’t think so, as you said back around the top for OIL, GS came in and carpet bombed the USO, etc…..while the rules were changed for shorting the financials, and God only knows what else.  It was a triple stick save because they absolutely needed to rally the financials into August or September……..they need to build buffer zones of support between here and the basement for the financials because a panic will wipe everything out.   They will avoid a panic (outright deflationary environment at all cost) no matter how many rules they have to change.  They waited for Gold to hit natural resistance in the 980 to 990 area on the chart, and they came in to carpet bomb oil because they need massive leverage on the upside to pull it off, just as they have been doing the whole way since 2001 as Grin and I have shown in the charts.  That is why JS is getting all of those leverage e-mails and calls.

============================

Look at oil. As oil goes up in price the financials go down. The whole freaking world screams inflation because oil is going up when the EXACT OPPOSITE is true. If banks are tanking and conserving capital they are not lending and that is DEFLATIONARY.

~ ~ ~ ~ No, I disagree.  This chart does NOT bear that out. You are looking very short-term.  You have to remember that Dollar inflation …………leads to price inflation…………leads to investors diving for cover in Gold, and there are lag times between all of them………..and there are times when GS as the trading arm for the Fed short-term will hammer an area to help protect the financials where the bulk of the worthless assets are.  If the banks are having problems it is in the form of asset deflation of loans which might or might not lead to currency deflation.  It all requires a  “panic” which the carpet bombing by GS helped to prevent.  How?  Well, the Fed needed a reason “not to raise rates” so they usually orchestrate a drop in things like oil at crucial times, like into today, then they let things fly since they don’t have to answer to the question of not raising rates after today for a period of time.  That part about banks not lending being deflationary is correct, but not if it is met with massive currency inflation, and it is not immediate without a panic- The Fed is controling the psychology of the markets quite well- witness this conversation.

 http://stockcharts.com/h-sc/ui?s=$WTIC&p=W&st=1997-01-02&id=p77018091542

==============================

 Oil trades the inverse of the financials. Further proof is seen in the short end of the curve. Gold tanks when the short end rises. I have shown that chart a dozen times.

~ ~ ~ ~ No, the below chart does not bear that out in terms of the financials and Oil.

http://stockcharts.com/h-sc/ui?s=$WTIC&p=W&st=1997-01-02&id=p53349663048

==================================

What completely differentiates this gold market from the 70’s is clear as day. Gold and oil are a bet against the financial system in its current form. The evidence is overwhelming IMO.

~~~ ~ No way.  It is actually very similar to the 70’s where the 70’s was a stagflationary recession, and today is deeper in the form of a stagflationary depression.  The real difference is in degree.  In the 70’s, the rolling bubbles took the form in terms of geography where today the rolling bubbles are in economic instruments……the Dow, then the Real Estate market, then commodities……….and will end with the PM sector true parabola.  That is why the Gold chart is almost a twin to the 70’s.  If it is going to be an “identical twin”, the PM sector will fly from almost this precise point up over 1250.  {Note- if it does, after that rise we will see another GS/ FED hammer put to the PM sector one last and final time, meaning the PM sector will get hit pretty hard from somewhere I expect to be North of 1250……………Because hammering things is the only way from here on out that they can get the job done.

===============================

The perception that inflation is licked with a falling oil price is perversely untrue. It is clear that as oil rises above the comfort zone, consumers feel threatened and pull in the reins. That is deflationary.

~ ~ ~ ~ ~ Yes, they start to panic so the Fed and friends smoke up the mirrors in several ways to avoid the panic.  Yet, the fundamentals do not change as the Fed is fighting the massive deflationary backdrop with massive currency inflation…………….psychology……….and chicken entrails.   BUT, it is not demand destruction- it is GS carpet bombing destruction for a very short period of time.  That is why oil just keeps on going.

========================== 

I’ve tried to make that point ad nauseam but few seem to think it true. How else do you explain, rising inflation expectations via rising yields today and oil and gold getting crushed?? It makes no sense unless you understand the above concept.

~ ~ ~ ~ ~ Well, let’s review.  The Fed talks “up” the Dollar and offers to backstop everything.  GS steps in to carpet bomb oil as you said once there is massive leverage in the oil play.  A vast number of individuals like yourself start screaming “deflation” to help scare the rest of the investors…………………and Greeny and Pauly sit drinking wine laughing their butts off.

============================

IMO, and until further notice, any semblance of normalcy via financials or the belief that things are getting better is a bet against gold. Gold is a bet that the FED has lost control.

~ ~ ~ No, not really.  Gold is either a bet that the Fed has lost control, OR a bet that inflation is rising at a rapid pace.  The major current is the rapid rise in inflation due to currency inflation………the minor current is the “deflation scare.”  As soon as the pressure comes off from the minor current, then the major current is the dominant influence, again.

================================== 

 I believe they have but it will be another few months or several months before the public wakes up to the fact that the financial system of years gone by will never recover. When the world realizes the FED is pushing on a string, gold will melt up and nothing will stop it.

~ ~ ~ ~ Oh, everybody knows it.  Just nobody knows for sure what to do, especially when the Fed and friends hammer what they want when they want to create massive volatility.  That volatility will continue to grow for sometime, yet.  It is a “traders market” until the real parabolic part of the PM parabola starts……..but you don’t want to miss the momentum moves on the upside as a normal investor, either………that still requires knowledge of the sub-sector rotations.

==============================

It makes perfect sense because the world believes the FED will fight deflation tooth and nail and they are right. Ultimately the FED will have to do something drastic in an attempt to save the system. This is simply the first round.

~~ ~ ~ Will?  They already have massively printed Dollars, screwed up the CPI, cloaked M3, allowed the financials to trade assets kinda like trading wives……………..BUT, we are much closer to the end game than most think.  All they have to do is to make it through this last deflation scare, then they are pretty well home free- that is why they are now free to change rules as they feel like it. 

 ================================

 So gold is dead money for a bit IMO. Bounces are sales.

~ ~ ~ ~ If you consider a bounce to 1250 or 1371 or 1437- then, I agree.

indication that you “use” the french curve method.  I assume this means you have been clever enough or lucky enough to find a particular french curve that neatly fits the bottoms of the daily or weekly or monthly bar charts.  So what does that prove?  That you have on your desk the “right” french curve?  Go into a drafting store because there you can find a different french curve that will fit a different set of actual share price data points.

I think you are totally bluffing that you “use” the french curve method.  Even if your favorite french curve fits the bottom line of a trend chart of a set of real market date, what does that particularr  french curve tell you about what is going to happen in the next five years, or three years, or two years?

Also,   I have noted that french curves often loop back on themselves like a Cirque du Soleil trapeze artist or like  a wave breaking on the shore of the Olympic Peninsula.  And you claim that you “use” the french curve?  

I  guess it all depends on what “use” means.  In my opinion french curves are of no use whatever to predict what is coming in the PM market.  And yes I  have read the JS editorial advice and listened to JS instructional CDs, and because I have  taken note of what JS says I think you are having a big joke on Goldtent readers trying to indicate that you have found a “use” for the french curve method. 

So now you have an Equiz rant. 

After all, he gets everything else.

water .. air . place those first ..

next comes tacos lol

yes he does… cyclyst .. but like all .. he gets the up or down wrong sometimes .. been following him

and what would you say that % is ,, more than fifty fifty .. say 60% 60% lol

looks like your answer was taken over by the ventriloquist for aurum.. either that or voice of the thingy on the right hand ‘

hard to tell ..

thingy = hand puppet in ventriloguist lingo …

What that means is you totally blew it around the top.   I’m not sure you can even admit it to yourself.  Personally, I don’t think you could have been much more wrong which your direction or timing.  Go back and read the history of this board around Feb & March for a refresher.  All you spoke about was “blue skies” from here on out — north of POG $1000 — HUI on the way to unbelievable heights very soon.  Screaming at everyone to get the spacesuits on …. THIS IS IT!!  I remember you harassed me so much a couple of weeks before the top, I flat out told you don’t even include my handle in your posts.  No need to buy any insurance — not required for quite some time (oh..whoops that was Ment’s ST call at the time).

all sorts of pre-Olympic news items from the Beijing area.  One item was on how they are trying to assure  an adequate water supply during the period of the Olympics, in which the news  item mentioned that the aquifer below Beijing is being drawn down an average of 20 feet per year now.

I hope that those who live above, or draw water from, the Ogalalla aquifer in the ellipse surrounding Kansas are taking note.  The regressions reproduced below ( go to the bottom couple of lines)  indicate that the Ogalalla aquifer was at an average of 135 feet below ground level in 1999 and is projected to be at 145 feet below ground level in 2010.  This is not as fast a rate of annual depletion  as the depletion rate for the Beijing aquifer, but groundwater is very precious whether you are sucking it out at an unsustainable rate, as in Ogallala, or at an alarming rate, as in the Beijing area.

Maybe the above is irrelevant for those who think that the strong American dollar and financials and PMs are more important topics than water, but I place my bets that water and its careless misuse is going to emerge as a more important item than PMs and base metals and food commodities.  Just my opinions.  Cheers.  Equiz.

http://tinyurl.com/654hec

The Bail out……. I can’t believe there isn’t more outrage………Lets face it, yesterday’s news is ‘Old News’ that’ll haunt us forever……..

——text———

Remember when I said that I believed that Asian Central Banks had threatened Paulson regarding Freddie and Fannie?

Here ‘ya go from Bloomberg:

“Concerns about the financial health of the biggest U.S. mortgage finance company had driven Fannie Mae’s borrowing costs to the highest since March the previous week and its shares had tumbled 45 percent on the New York Stock Exchange. Investors in Asia, the biggest foreign owners of Fannie Mae’s $3 trillion of bonds, were asking the Treasury to bolster the government- sponsored company and its smaller competitor, Freddie Mac, said three people with knowledge of the talks.

Paulson told Mudd he had a plan to restore confidence in Fannie and Freddie, the core of the Bush administration’s efforts to revive the U.S. housing market. “At that point, the proposal began to take form,” Mudd, 49, said in an interview. “We’re trying to solve a crisis of confidence. Would this do it?”

The next afternoon, before financial markets opened Monday in Asia, Paulson announced the rescue plan, saying he would seek authority to buy unlimited equity stakes in the companies and their bonds if needed, while the Federal Reserve would lend directly to Fannie and Freddie. Congress included the proposals in a broader housing bill that President George W. Bush signed into law last week.

Asian investors were among the most important groups to soothe because central banks, financial institutions and funds in the region own $800 billion of Fannie Mae and Freddie Mac’s $5.2 trillion in debt, according to data compiled by the Treasury. U.S. officials were concerned that sales from the region would push lending rates higher, said the people, who declined to be named because the discussions were confidential. ”

$800 billion dollars. The precise amount that Paulson asked for, and got, in debt ceiling addition so he could buy $800 billion, potentially, worth of Fannie and Freddie’s debt.

Don’t you think the American People deserved to know BEFORE our government signed over $800 billion of taxpayer money to CHINA that FOREIGN INVESTORS AND CENTRAL BANKS - THAT IS, FOREIGN GOVERNMENTS - had effectively BLACKMAILED our government?

Are you prepared to sit on your ass while FOREIGN GOVERNMENTS dictate what our government does, to the tune of $800 billion United States Dollars we do not have, constituting a personal debt of about $2,200 per person in The United States?

That’s right folks - every man, woman and child had extorted from them $2,200 (or nearly $10,000 per family of four!) plus interest (forever, since we will never pay this debt down) and you weren’t even told that it happened.

Had this article not been published by Bloomberg you still wouldn’t know because Paulson, Bush and Congress DID NOT TELL YOU.

They claimed this was about helping homeowners.

THEY LIED; this was and is about bailing out FOREIGN GOVERNMENTS who made bad bets at YOUR expense.

Angry yet?

Angry enough to DEMAND that this bill be rescinded, and take every (lawful) action available to you as a United States citizen until it is?

If not now, then when will you insist our government NOT respond to blackmail by foreign interests - especially when they do so without telling you first?

No? You don’t think you need to act on this right now, today?

Then take your accumulated wealth and earnings capacity - all of it - and kiss it goodbye. Your government is no longer standing in protection of our own economic sovereignty.

By the way, having gotten away with it once, they will do so again. $10,000 per family is, in fact, quite cheap compared to what’s coming.

Go read The Ticker below this one and contemplate what happens in the Capital Markets when they “wake up” to how this bill got done.

You heard it here first.
Credit Tsunami Approaches Shore…..

…. while politicians ignore.

The economic news of the day is that personal income and spending were quite weak - better than expected, but weak. Real income, measured with price inflation counted, fell.

“And the band played on” in political circles.

It won’t for long.

Folks, everyone has said this is a “subprime” problem, then a “housing problem.” People have assumed that prime loans would be “ok.”

For 30 year fixed mortgages with 20% down payments and 36% DTIs, where no HELOC has taken place, this is almost certainly true. They will not default in serious numbers.

But to think that this is just a housing issue is horribly naive, and yet this is what the Capital Markets are thinking.

They are “conveniently” forgetting that this credit problem was not limited to either subprime or housing.

The markets will not ignore this for long. So-called “prime” mortgages are going to default in significant numbers as well, and “ALT-A”, or liar loans and “exotic” mortgages made to people with high FICO scores, are defaulting at rates that rival “subprime” - but they are a much larger portion of the marketplace!

Furthermore, we are going into this economic difficulty with a very high degree of leverage in corporate debt. Whether it be LBO loans or other forms of financing, the credit “bubble” made it “not worth it” for corporations to spend (or restrain themselves) to keep leverage reasonable and thus debt ratings high.

The claim has been, up until now, that “defaults are historically low.” True.

The danger is that with more debt rated “junk” than ever before going into a recession, defaults are unlikely to remain low - or even reasonable - for very long.

This bad lending has already crunched auto leases, with Chrysler withdrawing the option entirely. Ford and GM are likely to follow suit. Even firms like BMW are realizing that having 60% of their sales volume made on lease is likely a really, really bad idea when you have to place bets on residual values when you write the paper - and eat the cost of being wrong.

This foolishness in lending literally extends to everything. Credit cards, LBOs, student loans, automobile loans, C&I, all of it. None of these areas are immune.

The government has totally botched managing this crisis with their incessant attempts to bail people out and continue to allow people to lie. $1.3 trillion has been thrown on the table - none of it money that we already have - in an errant attempt to bail out people who made bad bets along with Fannie and Freddie, who are in effect giant hedge funds operating at insane leverage levels.

The proper response is to withdraw the excess liquidity and support and force prices in all of these areas to correct. This is especially critical in both housing and education, with the latter being incredibly sad. College costs have grown at an unreasonable and unsustainable rate, fueled by - you guessed it - cheap credit. As a consequence our young people come out of college with levels of debt never before seen - an especially cruel bit of exploitation by the “ivory tower jackoffs” who are, of course, those who do their damndest to indoctrinate those very same young people - and their employers.

I guess this should be expected - after all, that’s what politicians and ivory-tower idiots do (lie and spend money they don’t have), right? But in this case, all they’ve managed to do is further damage confidence, and trust is crucial to properly-functioning markets.

When - not if - the Capital Markets get their arms around this, you are likely to see the Mother and Father of all flushes in equities.

At the beginning of the year I predicted we would hit 1220 in the SPX before the end of the year. We got down to 1200.

I now expect a three digit handle on the SPX within the next six to twelve months, with a 75% probability (three out of four) that we see it before the election.

Folks, 80% of America did not benefit from this credit bubble in any material way, but the prudent are now being told that we must pay the price.

That’s backwards.

The underlying fallacy here is that the government (or anyone for that matter) can prevent these defaults and damage. This is false, because the damage to the economy and the losses have already happened. They occurred when the bad loans were made; we are now arguing over when they will be recognized and upon whom they will fall, not whether or not the loss will take place.

Get your arms around that folks, because it is reality.

Oh, the first major home builder went down today. WCI filed Chapter 11.

The first of many.

www.bloomberg.com/apps/news?pid=20601109&sid=azswcZQvmUX0&refer=home

http://biz.yahoo.com/bw/080805/20080805006752.html?.v=1