Filed under: Trader Dan Norcini
Dear CIGAs,
Nervousness ahead of yesterday’s FOMC announcement concerning its QE plans led to a mild sell off in both gold and silver in the past session but all that did was give buyers a chance at grabbing the metals at a lower level before they were jammed higher today in the commodity buying frenzy that resulted from the Fed’s assault on the US Dollar.
About the only commodity markets that were lower today were the feeder cattle and natural gas markets. Corn is back at levels last seen in August 2008. Soybeans are working at reaching the $13 level while wheat is above $7 once again. Cotton is once again limit up as it continues to trounce one record after another and is now well above levels last seen when Rhett Butler was running Yankee blockages during the era portrayed by “Gone with the Wind”. (We are organizing a raid on neighborhood clothes lines where a rich stash of cotton underwear and T shirts has been sighted).
Crude oil is gearing for a run towards $87 while sugar is well above $0.30. Copper is nearing $4.00, palladium is closing in on $700 and platinum is at $1750. Get the picture? The dollar is collapsing while commodities are surging stoking the fires of inflation which the nitwits at the Fed believe that they can somehow control once they let the genie out of the bottle. What they cannot control is the Foreign Exchange markets which are breaking the back of the green”back”.
Gold has not quite managed to take out its recent all time high but silver is surging into new 30 year highs. It was able to reach the gob of buy stops just above the $25.10 level which was all she wrote. Once those were taken out, the pain inflicted on the trapped shorts was too much for many of them and out they went. I am going to be extremely interested in seeing what the open interest readings look like tomorrow morning when the exchange releases them to see if we might be witnessing the beginning of a commercial signal failure.
I think it goes without much saying – the markets have voted and rendered a verdict on the effect of the Fed’s QE – inflation is coming – as such they are buying tangibles to protect themselves from its ravages on their wealth. The Dollar has been slammed lower and has crashed through support near 77 and looks headed for a test of critical support near 75.
The HUI has put in a huge upside breakout on the weekly price charts as a result of today’s performance. It is a bit tough for me to read what is happening because of the strength across so many markets but it looks like the hedge fund ratio trades involving the mining sector shares have now effectively blown up in their faces and some of them are finally getting out. I would once again counsel them to exit those trades and if they must insist on spreading something, then buy the mining shares and short the broader equity indices.
See my notes on the bond chart as action in that venue holds great interest for all of us as citizens.
What more can be said about the rally in equities than has already been said – you are witnessing a liquidity rally which is part of the Fed’s gambit to stoke inflation. The money masters are hoping that a strong rally in the stock market will create an upbeat consumer confidence level which will lead to additional spending. People are not spending however because they are worried about jobs – until we see lasting job creation, the rally in stocks has no fundamental underpinning but that will not stop the equity markets from moving higher. The problem is stocks are not keeping up with gold so in real terms, they are going nowhere.
DAN'S CHART:
http://jsmineset.com/wp-content/uploads/2010/11/November0410Gold.pdf
Nervousness ahead of yesterday’s FOMC announcement concerning its QE plans led to a mild sell off in both gold and silver in the past session but all that did was give buyers a chance at grabbing the metals at a lower level before they were jammed higher today in the commodity buying frenzy that resulted from the Fed’s assault on the US Dollar.
About the only commodity markets that were lower today were the feeder cattle and natural gas markets. Corn is back at levels last seen in August 2008. Soybeans are working at reaching the $13 level while wheat is above $7 once again. Cotton is once again limit up as it continues to trounce one record after another and is now well above levels last seen when Rhett Butler was running Yankee blockages during the era portrayed by “Gone with the Wind”. (We are organizing a raid on neighborhood clothes lines where a rich stash of cotton underwear and T shirts has been sighted).
Crude oil is gearing for a run towards $87 while sugar is well above $0.30. Copper is nearing $4.00, palladium is closing in on $700 and platinum is at $1750. Get the picture? The dollar is collapsing while commodities are surging stoking the fires of inflation which the nitwits at the Fed believe that they can somehow control once they let the genie out of the bottle. What they cannot control is the Foreign Exchange markets which are breaking the back of the green”back”.
Gold has not quite managed to take out its recent all time high but silver is surging into new 30 year highs. It was able to reach the gob of buy stops just above the $25.10 level which was all she wrote. Once those were taken out, the pain inflicted on the trapped shorts was too much for many of them and out they went. I am going to be extremely interested in seeing what the open interest readings look like tomorrow morning when the exchange releases them to see if we might be witnessing the beginning of a commercial signal failure.
I think it goes without much saying – the markets have voted and rendered a verdict on the effect of the Fed’s QE – inflation is coming – as such they are buying tangibles to protect themselves from its ravages on their wealth. The Dollar has been slammed lower and has crashed through support near 77 and looks headed for a test of critical support near 75.
The HUI has put in a huge upside breakout on the weekly price charts as a result of today’s performance. It is a bit tough for me to read what is happening because of the strength across so many markets but it looks like the hedge fund ratio trades involving the mining sector shares have now effectively blown up in their faces and some of them are finally getting out. I would once again counsel them to exit those trades and if they must insist on spreading something, then buy the mining shares and short the broader equity indices.
See my notes on the bond chart as action in that venue holds great interest for all of us as citizens.
What more can be said about the rally in equities than has already been said – you are witnessing a liquidity rally which is part of the Fed’s gambit to stoke inflation. The money masters are hoping that a strong rally in the stock market will create an upbeat consumer confidence level which will lead to additional spending. People are not spending however because they are worried about jobs – until we see lasting job creation, the rally in stocks has no fundamental underpinning but that will not stop the equity markets from moving higher. The problem is stocks are not keeping up with gold so in real terms, they are going nowhere.
DAN'S CHART:
http://jsmineset.com/wp-content/uploads/2010/11/November0410Gold.pdf
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