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A 1414.50 Target in Gold…Has Been Exceeded

By Rick Ackerman Posted on April 15, 2013, 12:01 am EDT Last Updated April 15, 2013, 2:25 pm EDT

[The Sunday night massacre has exceeded my worst-case Hidden Pivot target, with the June Comex contract hitting a so-far low of 1385.00. Switching to conventional technical analysis, there are now two numbers we should keep in mind as possible bear-market lows: 1) 1341, representing a 50% retracement of the rally from 2008’s watershed low of 732; and 1188, a 0.618 retracement. RA]

Gold fell hard on Friday, pushed to its worst loss in more than a year. The Comex June contract settled at $1501, down $63, after having traded as low as $1476 intraday. Adding insult to injury, Goldman Sachs – aka the Bad Guys – had seen it coming and told investors to get short two days earlier.  We’d seen it coming ourselves, having projected a decline to at least $1487.90 when the futures were trading $80 higher.  A headline here a week ago noted that Gold Has Trashed a Key Support.  As indeed it had. Our plan was to bottom-fish near the target with a very tight stop-loss, and although gold took a promising bounce from $1491 that lasted four hours, our implied long position from there didn’t survive the second wave of selling.

Goldman is still bearish on gold — and so are we, because of the ease with which sellers demolished our “Hidden Pivot” support at $1488. Because of this, we are now projecting further downside to at least $1414.50. That would represent a 7% fall from these levels and a 28% correction from the $1933 all-time high recorded in September of 2011. The target is not of the highest quality according to the proprietary technical system we use, but, as we told subscribers, it is “good enough for government work.”  What that means in practice is that it can serve as a reliable minimum downside target from these levels, but also as a place to attempt bottom-fishing if and when it is closely approached.

Still Bullish

We remain long-term bullish on gold simply because the central banks of the world seem hell-bent on destroying their currencies.  Because of this, it is our practice to buy gold on weakness, usually at Hidden Pivot correction targets, but always using tight stop losses or a risk-averse trading tactic that we call “camouflage.”  We’re aware that some are forecasting much worse for gold than $1414. In a discussion thread at The Korelin Economic Report, where forecasts from Rick’s Picks are featured regularly, one investor saw gold falling to $800. We are skeptical about the usefulness of such predictions, much as we are skeptical about ultra-bullish seers who have predicted that gold will trade $5000 or higher. Either prediction, or perhaps even both, could be right, but we’d rather focus on a more immediate picture that can be predicted with a very high degree of confidence.  From a trading standpoint, our goal is to make money for subscribers even when our forecasts fail to pan out. If you’d like to know more about  “camouflage” trading, which aims to put this goal within your grasp, click here for details concerning the upcoming webinar on April 24-25.

  • a giles April 15, 2013, 10:08 pm

    For Rick Ackerman.
    Leibowitz said he bought 8000 spxu for 26.84. Unless I missed something, thats about $20 million, no? (8000*2684). Are my calculations correct? If so, is he for real? Doesnt sound right to me.
    Thanks,
    A Giles

    &&&&&&
    I don’t recall the quantity, but his timing has not been too bad, and he may have exited the long position earlier. RA

    • Jill April 15, 2013, 11:19 pm

      Giles, 8000 spxu for 26.84 is a total of around 215K or so. You just multiply the numbers. Yes, Gary closed his last long position last week at a loss. Overall his fibonacci spiral method, which I don’t know much about, seems like it wins more than it loses so far.

      Of course, Rick, your hidden pivots are great, and the spread trades you do with them do an excellent job of limitin risk.

    • Cam Fitzgerald April 16, 2013, 12:39 am

      I will say I admire the guts of the guy. He was right in the neighborhood of what I also think is near the top but entered prematurely and had to exit. Nobody can criticise him too much for that. Very few will catch it when it comes though. You need to make your bet before the wheels start to spin. Pick a Friday and say three Hail Mary’s before putting your chips on the table then hope for the best. Every weekend is a crapshoot.

      Just like Vegas.

  • ms April 15, 2013, 3:44 pm

    with this bullion swoon exceeding all the hidden pivot tragets the worthiness becomes questionable

    • Dave April 15, 2013, 6:14 pm

      Rick is priceless regardless of HP targets demolition. Even aspirin can’t stop a massive coronary.

  • John Jay April 15, 2013, 2:40 pm

    Mario,
    To try and figure out exactly what is going on with Gold and Silver in the markets would require someone with a lifetime in the Gold and Silver business. There are the people taking physical delivery for manufacturing, Central Banks that are buying, selling and manipulating it, the miners producing/hedging it, futures markets gaming it, on and on. There are laws and regulations involved but their application is spotty at best, and the Players are exempt from the law. Plus you have the ever present threat of counterfeiting of coins and bullion. It is over my head for sure.

    Here is an amusing gold market story.
    A futures broker called me in February trying to get me go along with his scheme to sell Dec 2013 put options on gold futures on margin of $1000
    I told him no, but I have been tracking the price of those options right around the price he sold them at where he said they would expire worthless.
    The 1300 puts have gone from $7 to $42
    The 1350 puts have gone from $11 to $64
    The 1400 puts have gone form $16 to $77
    I wonder if he has thrown in the towel yet, that was some scheme!

  • Andrew Gutterman April 15, 2013, 2:19 pm

    I’ve published my target price of $1100/$1150 many times. I saw it coming, just couldn’t say when. And no, I did not go short. Every dime I get these days goes to pay the bills with nothing left over to play the markets.

    I learned something some time ago: If you cannot play the markets full-time, don’t play the markets. Playing the markets takes focus, lots of focus.

    I’m a sideline observer who enjoys reading about every-one’s take on reality. Its absolutely fascinating.

    A friend just sent me an explanation for the drop based on yet another JPM conspiracy. For gold bugs the only true path is up, so anything that says down must be because of outside market manipulation. I wonder if they manipulate the tides as well…

    Andy

    • Tiburon April 15, 2013, 9:29 pm

      Good for you, Andy! Very prescient!
      Me, I didn’t do so well in math, so my comprehension may be flawed, but as far as I can make out, the Bills cannot be paid. Ever.
      So it’s nothing to do with ‘the only true path (being) up’, but rather that there’s gonna have to be something to stabilize the ongoing currency wars, with or w/o ‘global financial meltdown’. And if I waz Them, I’d need to have Au at the table, period.
      I mean, not likely at anything like 100% backing, but 20 – 30%? Sure, why not? (i.e. in IMF SDR’s).
      And irrespective of risks of ‘bonfire of the fiats’, covering just M1 level currencies, let alone M2, M3 at that percentage – well, lets just say it’s not “$1100/$1150”, ‘K?
      All that said, I flashed just now on Terry Gilliam’s film (Monty Python), “Jabberwocky”where the protagonist nearly gets into the castle with a potato (min. 20:30).
      http://www.youtube.com/watch?v=Vd–f5nC3ZI
      So who knows!

  • Tiburon April 15, 2013, 2:18 pm

    Oh…probably too late already, but what a great time to be looking to buy puts on GLL and DZZ.

    • Tiburon April 15, 2013, 9:07 pm

      Thanks for comment, Cam –
      Totally agree about the ‘dead air’. I’ve always suspected (tin foil hat: ON) that the deal was to claw down the paper market to give access to AU for the Chinese, so they don’t dump their T-Bills. (tin-foil hat: – OFF)
      It’s gettin’ pretty cheap as I type, $1350 spot on way to Rick’s ‘classic technical’ $1341 – 50% retracement.

      I dunno from where I pulled the ~$1280 figure – wasn’t implying more damage was impossible, but only that if the paper market couldn’t be driven below this number, the TBTF, have “failed”.

      Personally, yes, I wouldn’t touch this paper market without my eyes on the 3 min chart(s), in everything possibly related, so ‘day traders’ only, ya…
      Now buying physical? Who could resist. As you say, a bounce may be another bull trap, but then maybe not. Me, I started buying in 2001, so y’know…”out of my cold dead hands’ ;-).
      And for me, Ag is groceries and gas if it comes to all that, so while I’m displeased (bought at ~$18), I’m not despondent on that front, either.
      I’d start buying warrants on certain Juniors if I had the spare… – they require very little on the table.
      Way I look at it, perhaps the Train decided to back up a little and let a few more long-view types on board – if they’ve been getting the ‘long view message’, that is.

    • Cam Fitzgerald April 15, 2013, 10:29 pm

      Warrants? Shares in miners?…..100% yes. Get ready.

      I would stay the hell out of physical metals altogether. Won’t touch that crap with a ten foot pole anymore and think it is a huge mistake. Far too much politics involved.

      You will want miners with cash in the ground and lots of upside potential. Better yet if they pay dividends. We are deflating and so cash (or cash potential) is what you need and being a shareholder is the key to tremendous future sources of revenue.

      The risk of confiscation grows each day that gold prices decline. Europe will be the first to pull the trigger and I now believe it may come within months as prices are becoming very favourable for regulatory intervention.

      They could miss the chance but I strongly doubt that will happen. Gold is now seen as a solution to Western debt nightmares and therefore capital controls/ taxes/ limits on trading/ outright seizure are all in the cards. We will witness a significant revaluation in price as Gold passes not from West to East as is oft repeated but from private hands to the public purse and Central Banks.

      I don’t know why this is so hard for some people to understand. Recall if you will, the idea bandied about of making a trillion dollar coin? That was a trial balloon and a unique innovation. The idea stuck though and there is an intuitive understanding amongst most people that by controlling the free flow of precious metals that governments might turn the vast power of precious metals appreciation to their collective advantage.

      That means that banks with reserves will be recapitalized on the basis of gold holdings and if those holdings need to be 3 or 4 or 5 times current price levels then so be it. Then that will happen.

      The object is very clear. If we are going to continue to have currency devaluations then the worlds major CB’s will strike while the iron is hot and seize control or they will simply lose control.

      There is no doubt in my mind that as precious metals fall in value under the current circumstances that they will become the subject of CB management and the object of future control. Perhaps we should welcome that idea as the West is still in a strong position with regards to CB metals hoards.

      If anyone doubts that then just ask yourself what other mechanism is available today that might be employed to quickly stabilize the financial system?

      Other than the seizure of pensions few good options exist. That is why we are nearing the moment of truth in gold and it is why you want to be out of physical and invested in PM equities instead.

      In this environment, Gold will not be overlooked.

  • Tiburon April 15, 2013, 2:11 pm

    My 2 cents is that I only wish I had resources to ‘average down’ (at my level, I’d have little trouble buying physical – those who buy in size, different story perhaps).
    Read over the weekend that on Friday, the computers that run the physical buying had an unfortunate glich, and froze for hours. What an awful coincidence.
    Meant anyone holding physical in size had no choice but to short in the paper market. The drawdown in JPM and Comex physical stocks in the last few days is stunning – so I guess ‘They’ had no choice – roll the dice.
    http://www.safehaven.com/article/29484/how-the-gold-market-was-crashed
    If I understand it, that is. Some others postulated that over 500 tons of ‘paper gold’ were sold Friday. It’s more now, of course, given we’ve seen $1390 in Spot this morning. My take is that if we DON’T see ~$1280, then the TBTF have overplayed their hand. Back Up The Truck, you who can. And remember that in some ways, irrespective it’s all smoke and mirrors, it’s still people, and we’re living through the culmination of the obvious bear since ’11.
    http://wallstreetwindow.com/node/8077
    On the lookout for Slouching Beasts.

    • Cam Fitzgerald April 15, 2013, 4:22 pm

      Lots of dead air space between where we are and where we could be going Tiburon. I would not be backing up the truck anytime soon. Fear is high. It is palpable. Even a bounce could lead to tears if you are not nimble enough to get the hell out of the way of what the metals markets are now undergoing. Going long is for the pros…..not the faint of heart.

      Incidentally I am again curious to know how Einhorn and Paulson are doing. The latter was estimated to have lost 300 million last Friday alone. He will be another 500 million in the hole before this week is out.

      Unless he hedged his fund with short positions. Hmmm.

    • Cam Fitzgerald April 15, 2013, 4:47 pm

      On the other hand, the five minute chart says we are in for a nice healthy bounce in Gold tomorrow. But I expect it to get pummeled again once completed. The bottom is not yet here. Day traders only.

  • Cam Fitzgerald April 15, 2013, 1:55 pm

    Like a smoking hot knife through butter. Yeah….we blew right through the target of 1414 on gold crashing to much deeper lows before a small bounce off 1385. Prognosis is very negative now. From bear market correction to outright free-fall this will give anyone trying to buy the bounce second thoughts before they wade back into buying this morning. Nobody can divine the bottom now and to my knowledge nobody has even called this one. All I can say is this points out the hazard of so many investors using “tight stops” to ensure they didn’t lose their shirts if gold suddenly reversed. Well….it reversed and we are getting carnage now. The shorts knew it too and waited until the opportune moment to handily capitalize on the smell of an easy opportunity. The point though is that the very act of so many people employing very tight stops at the same time almost assured a setup was in place for a massive stop-induced correction cascading through to unplumbed depths. We should have seen this coming in retrospect. All the sentiment signals were there. Will the same thing play out in the broad markets later though? Will the bears also take control if fear runs high enough? This is why we have to use our heads and make an attempt to see the coming risk in the emotion driven behavior of millions of retail and commercial investors and why their collective actions can create the conditions for a crash in equities too.

    • Cam Fitzgerald April 15, 2013, 2:06 pm

      And just to point out the obvious again…..all those who kept saying a massive short squeeze was going to destroy the Hedgies are again proven to be dead wrong. I don’t know what their positions are today but for those who held on to their shorts and did not break from the crowd have made out like kings transferring a massive amount of wealth overnight from the gold-bugs and into the hands of more strategic players who could generally care less if gold rises or falls just as long as they are on the right side of the trade.

  • BKL April 15, 2013, 11:52 am

    Yes, isn’t it interesting and instructive, that the land of the free is incarcerating millions of victimless criminals, and farming out their labor to private corporations?

    As regards the current shakeout in gold, watch for the following contrarian indicator: A daring 60 Minutes expose devoted to the victims of the “gold scam”.
    Weeping, speechless retirees explaining how they were duped into buying a worthless yellow metal.

    They will need to produce a new segment because the original one from 1977 will be pretty grainy.

  • Cam Fitzgerald April 15, 2013, 9:46 am

    Interestingly enough, a stock market that could potentially go on the ropes more or less coincidentally with gold finding a bottom may be the least of our troubles.

    Over in Beijing they have mass culls of chickens underway according to one news report as the latest incarnation of Bird Flu H7N9 has made itself known in China. Poultry trading is now banned and the World Health Organization is on the scene assessing the issue.

    Fatalaties are still low in numbers but their odd distribution is cause for concern as the outbreak is not localized.

    This is leaving some to conclude that it is indeed being spread by birds and so cannot be controlled at a locational level. Culling pigeons and other domestic birds is obviously the answer in big cities though even if it is a complete waste of time. We saw this play out once before and it was devastating for the poultry industry at that time as regulatory bodies imposed large scale culls of birds on poulty farms.

    Erich Simon had written a fascinating piece here last fall on the potential for a new pandemic. I would love to hear his thoughts on this latest outbreak if he is still out there (besides saying I told you so!). Obviously this subject should again be a reminder of one of the biggest untold risks of living in very large urban settings. You are at high risk when surrounded by too many other people.

    Not that I will be taking any special precautions if this is the real deal and it takes flight. Being a fatalist I rather expect if my own number is up this flu season there is not much to be done to prepare. The new version seems especially adept at killing older males for some odd reason meaning a few of us here might just become casualities.

    So all you younger people who have been screaming bat-shit crazy about unfunded pension liabilities (and how old people were ruining your lives) might finally get some sleep for a change if this new flu is really the one that will clear the rubble from the past.

    For those who had been waiting for a “Black Swan” event meanwhile, it is doubtful they will be surprised when it actually comes in the form of a Dove. We are long overdue for an outbreak that reduces population numbers. So overdue that most people doubt the possibility of such an event even probable. We cannot forget though that past pandemics were efficient killers and millions perished as the disease made its way around the globe.

    I would be getting out of airline stocks and fast food franchises if this thing really takes shape and grows. The possibility of not getting a flight anywhere for a time is a distinct possibility.

    • Rick Ackerman April 15, 2013, 2:39 pm

      Coincidentally, Cam, I just heard from Erich Simon for the first time in a long while. His comments concerning bird flu echo your point about the airlines. As Black Swans go, bird flu would certainly seem to be an outlier. On the other hand, a pandemic wouldn’t be a Black Swan if “everyone” had seen it coming. Will it prove to be the catalyst for a global financial collapse that many have long viewed as inevitable? With bullion prices free-falling, we may be about to find out.

      Here’s an excerpt from Erich’s latest letter      :

      “A high path H7, the only other ‘H’ beside H5 capable of high path mutation (no doubt mated with 2009 Pandemic H1N1!) is ready to ground all flights out of China (and crash the markets). Gold and Silver are getting ready to tank. Assassinations of key lawmen, in Colorado, DAs in Texas, the Sheriff in W Va… the fact that between 2007-2011 38 cops were killed in the USA but since 2011 AN INCREDIBLE 584 COPS HAVE BEEN KILLED, MOST BY AMBUSH… so we are now entering stage 3 civil war/martial law/Fema internment, where I pointed out how groups would soon go on the attack pending ever more prolific attacks by individuals given a system fostering gross corruption in response to exploitation of a finite resource environment. The North Korean petri is the Chinese first strike ‘plausible deniability’, another bubble in a cauldron of seething and overboiling, socio-demo economic overdevelopment and denouement playing out right on schedule.”

    • Cam Fitzgerald April 15, 2013, 4:11 pm

      Thanks Rick. Say hello to Erich. His article was probably the one amongst many hundreds (thousands) I read last year that really made a lasting impression on me. I never thought it was alarmist though. He was just speaking to the truth of the risks we all face and how these bugs have been mutating as time goes by. Perhaps he will do an update for us. My theory meanwhile of gold finding a bottom more or less coincident to a top in equity markets is looking more and more likely as the days go by. We need to watch this one very closely as we are nearing the hair trigger point in my opinion. You just cannot leg into corrections or large declines though. Either you get it right before it happens or you miss it altogether. That takes guts, and honestly, most don’t have what it takes which is why the vast majority are losers when the big one finally arrives. I now believe it is time to prepare though.

    • Cam Fitzgerald April 15, 2013, 4:15 pm

      PS: It is time to take some physical cash out of the bank.

    • gary leibowitz April 15, 2013, 7:07 pm

      A pandemic is a scary thought. Why is it always coming from China?

    • mario cavolo April 16, 2013, 4:40 am

      Hi Guys,

      Why China?….perhaps dense population and the troubles of sanitation that go with that challenge, so easily a westerner forgets what life might be luck including the strain on societal infrastructure if you dropped an additional 1 billion people inside U.S. borders. China and the U.S. are geographically around the same size. In the case of SARS it was Hong Kong, and there was a micro-rapid spread within one apartment complex, understanding that an “apartment complex” in Asia is more typically twenty 30 story buildings, not ten 4 story buildings.

      Concerns for nasty bugs as Cam mentions referencing Erich’s knowledge, however, I’d like to inform all of you that locally it is not viewed at all with such a level of concern so far. Indeed, the govt is slicing thousands of chickens and the fresh chicken section of local farmer’s markets are now all closed. These are overkill measures but in fact, wise. But meanwhile, we had twenty people at our place for a Sunday BBQ which included my BBQng around a hundred chicken wings and to be honest, not one single person ever even mentioned the bird flu thing.

      One of my concerns is that govts and organizations say stuff to confirm their self-importance, justify their existence and salaries, when in fact they are really not that connected into what is really going on and what the implications area.

      Additionally in the world of supposed free capitalism, one mans troubles is another man’s fortune. If chicken consumption drops substantially, hooray for the pork, beef and fish producers who will be earning more…

      I’m also one of those older males Cam 🙂 ….I admit my concern that if I ever did get a nasty new bug it would do me in…something like that happened to Jim Hensen the muppets guy I think….life has its scary parts we can’t control no matter how hard we try…

      Cheers, Mario

  • gary leibowitz April 15, 2013, 7:05 am

    This move is more indicative of another deflationary cycle. If so then equities should also get hit initially. The only reason I say “initially” is because this long standing bull run will have many investors rationalizing that lower commodity prices will benefit the consumer, and the fact that the “buy on dips” has worked so many times.

    Curious to see if the commodity hit gets rolled over in equities soon. The possibility of a flash crash in equities has just increased exponentially.

    The timing is so damn good also. I am now thinking that Rick’s bet shorting equities has a good risk/reward given the very stretched bull run.

    I will be watching and waiting over next few days. If SPX does cross over the 1600 mark I will make that bet.

    For all the emotionally charged investors that thought the gold miners stocks had already bottomed months ago, I guess this shakeout has done it’s job. Take out the weak hands and allow for another bottoming process to start.

    • gary leibowitz April 15, 2013, 7:27 am

      China is also showing trouble ahead. A commodity hit over a slow down there is a big issue since they control a big chunk of the demand.

      Looks like volatility is back!

  • Marc Authier April 15, 2013, 5:35 am

    Markets ? What markets ? It’s a racket ? A total FACIST nazi economic model. Mister Gutterman you should know that these are rigged markets like in Nazi Germany and USSR. It has nothing to do with real markets or free market. USA is runned by Nazis. So are other ”free” markets. Somehow you dont know, for a strange reason ? the markets dont agree ? What markets ? You must be joking I hope. You Wonder why ?

    • Andrew Gutterman April 15, 2013, 12:45 pm

      Nothing like a few facts to get in the way of your fantasies…

      Carnage Explained – SPECIAL REPORT
      Sunday April 14, 2013 12:42

      When I submitted my muse on Friday morning, I believed the $1,527 level would hold, but indicated a breach, if it came, would occur before 11:30 EST. The breach occurred in dramatic fashion at approximately 10:40 EST. with gold being slammed to $1,492, before re-covering. Why? With the European close at 11:30, traders were assessing the extent of the margin calls, they would be required to meet, subject to a $1,527 close. Then Draghi’s not so subtle suggestion that although the EU had no power to force Cyprus to sell its gold reserves, such an event may be appropriate. This again became “not” a Cyprus story, but an EU story. What if Italy, Spain, Portugal, Greece et al were to find themselves in a similar position. Selling gold reserves may be a necessary option. With the Cyprus news “timed ?” ahead of the close, traders took no chances on a rebound and liquidated on mass to avoid the inevitable margin calls.

      Once that selling ran its course, the market re-bounded back over the $1,500 level where it stayed until the NY settlement close at 1:30 EST. By around 3:00 p.m. the longs knew what their margin calls would be for Monday morning and did not have the stomach to hope for a bargain hunter rally out of Asia. Then, in a thin market, they headed for the door, which created the additional drop of $22 by the close at 5:15 p.m.

      Is the capitulation over? Probably not. I suspect holders of ETF’s will be aggressive in their redemption demands, unless we get a surprise (serious) rally over $1,510 on Monday. These redemptions will force the funds to continue to add bullion to a weak demand picture.

      By Peter Hug
      Global Trading Director
      Kitco Metals Inc.

    • Dave April 15, 2013, 2:10 pm

      Ah hah, truth revealed! About time someone astute blamed dose American Nazis and not dem darn GS and JPM Joos! Should have been obvious when Obama added Wiener Schnitzel to the White House dinner menu. what’s really going on.

  • Andrew Gutterman April 15, 2013, 5:07 am

    What I see is an almost 2 year descending triangle or a symmetrical triangle with a strong downside breakout. Using classical measuring methods I come up with a minimum downside target of $1100 to $1150.

    I’ve heard all of the arguments for a runaway bull market, but for some strange reason the market doesn’t agree with them.

    I wonder why?

    Andy

  • mario cavolo April 15, 2013, 3:00 am

    While in the west, gold/silver shenanigans are manipulated by the gigantic short positions held by JP Morgan and others with their agenda, the consumers of expanding, growing Asia are facing relentless inflation along with having a less flexible set of investment asset choices compared to the west; all especially the case in China. So do keep in mind that 300,000,000 + new rising middle class with ALOT of cash and no debt are considering where to “park” their money. Traditionally, that has been real estate. But now real estate prices look to have flattened out, all the sweet gains have occurred during the past few years. An other choice for allocation, the Chinese stock market is still regarded as a scary place risk wise, even though it is at a relatively attractive low at this time. I make these points to suggest that the Asia/China block may serve well to keep a floor under gold/silver prices in the 1400’s.

    Plus, with increasing levels of sovereign govt accumulation of gold, do we or they really think gold will do a plunge far below?…not likely in the new world of liquidity and stealth inflation we are in and probably staying in for another decade or so.

    I don’t see how the banking system edifice can “collapse” anytime soon, though we can confidently cite the ruse of what it is to suggest that it will. I still say no on that; stealth inflation and relative decline of purchasing power will continue on as it has historically…

    Cheers, Mario

    • John Jay April 15, 2013, 5:02 am

      Mario,
      And the US Treasury is always suspending production of silver coins, sold out again!
      Hmmmmm…………
      How very strange!

      Fed’s Kocherlakota: “May not hike rates even under 6.5% job threshold. Monetary policy should be more accommodative.”
      OMG! What a surprise!
      Good cop, bad cop at the Fed!

      This entire world has become a poorly produced, low budget, made for TV movie.
      Their cover stories are less and less credible every day.
      I fully expect the surviving oligarchs to start wearing crowns and purple robes before this is all over!
      The entire planet, carved up into Feudal Estates!

    • mario cavolo April 15, 2013, 8:02 am

      Hey JJ, I was recently reading about the American prison system, where we already know there are more prisoners than anywhere in the world as a percentage of population. I read that 80% of the incarcerations are for drug possession, not sale, most being marijuana. Now don’t get me wrong, cuz here in Asia, drug dealing as all crime is much more severely punished and I’m all for harsh punishment that fits a crime.

      But in America, the privatization of the prison system has created another business opportunity! Just like war. Prisoners are working for the government and private corporations making their stuff. So then, what do we actually have here? A system with incentives and interest to in fact jail the lower rung trash of the society and put them to work in a factory of sorts! The problem is from what I understand that it costs $50k or so per year to reside an inmate, like tenement housing with forced employment! But that cost includes employeeing the prison system’s employees so it does create jobs! This is some really twisted sh*t….

      Next thing we know they’ll have them digging for gold. I had to say that to get back on topic for Rick 🙂

      Cheers, Mario

    • gary leibowitz April 15, 2013, 6:23 pm

      Mario, you are too one-sided on this. Keep an open mind. Clearly China is witnessing some problems. No manipulation is seen. Oil and all other commodities are falling in response to lower demand. The notion that demand is outstripping supply for oil is not showing up. If anything the huge disparity between domestic deflation and externally induced inflation is now coming in line. Are you suggesting that China can’t over expand? They have allowed the real estate market to bubble by preventing it’s citizens of other investment options. A large percentage of the middle class have already parked their money into real estate. You can’t deny that any adverse affect on it’s value can cause a big contraction in speculative spending. The other problem you mentioned is inflation. How can the Chinese government reduce inflation without slowing the economy and causing real estate to be adversely affected? I believe their introduction to a capitalist economy is being tested right now.

      Make no mistake, China can cause deflation to take hold world wide. Their internal problems combined with a world trying to pay off it’s debt can result in an extreme deflation spiral. Too early to tell if that is what will happen, but my money is on a vicious deflation cycle where gold might just hit 1100 before it is over.

  • martin schnell April 15, 2013, 2:22 am

    I would not say that resistance was taken out easily. Someone (I wonder who) threw a crap load of gold out the window all at once to make that happen. The London am fix will be interesting to say the least.

    My take is that gold will hit bottom when the S&P stops going up. If you watch the trading closely you will see very programmed BUY S&P and SELL Miners trades. Almost every small spike in the S&P is accompanied by a instantaneous drop in the miners. It is so obvious as to be ridiculous. Where will it stop? Don’t know but it will be interesting to watch when it does.

    &&&&&

    Concerning the resistance not being taken out easily, I’ll let what has occurred since speak for itself. Meanwhile, the E-Mini S&Ps topped last Thursday 1.25 points beneath a longstanding target at 1594.25. I agree that the top in stocks will mark the bottom in bullion, but the effect of a couple of days’ worth of latency could prove devastating for many bullion bulls who are getting blown out tonight.

    The good news — “Ding, dong the wicked witch is dead!” — is that if the bull-market hoax begun in March 2009 is indeed over, then we can finally get on with the Second Great Depression that alone can purge the economy of dysfunction, corruption and catastrophic malinvestment. RA

    • Jill April 15, 2013, 3:04 am

      No need to wonder who is selling gold:

      http://www.reuters.com/article/2013/04/11/us-cyprus-bailout-gold-idUSBRE93917M20130411

    • gary leibowitz April 15, 2013, 6:06 pm

      Central Banks actually using their reserve to pay off debt. Now I bet not one person here thought that would happen. Just goes to show you that once the mindset is fixed it becomes very hard to anticipate events that go against major assumptions.

      This scenario actually helps stabilize paper fiat, reduces real consumer inflation due to high commodity prices, and gives world governments more time to shore up the huge debt problem.

      As far as equities and gold is concerned the relationship as opposing factions is just not there. In fact any hint of deflation taking control has brought selling in both investments. If we are experiencing a bout of deflation, gold will drop less than equities, but I don’t expect gold to shine.

      China is either slowing much faster than anticipated, or the government is putting on the brakes to stem their own rise in inflation. In any event it will have a major impact on commodity prices and real inflation.

    • gary leibowitz April 15, 2013, 7:20 pm

      BTW, bought 8,000 SPXU at 26.84. Couldn’t resist such a slow response to the world correction. I still stand by my assumptions that you can easily beat the market on an early entry point for a steep slide. My experience is that the stock market is a super-tanker when it comes to changing direction. It should telegraph its intent well before the event. The individual has a great advantage since it is not entrenched in the notion that cash must be invested. Mutual funds and the like are forced to stay in the game way longer than is prudent. The SP500 could see a 10 to 12 percent haircut without breaking the uptrend.

  • Phil McKreviss April 15, 2013, 1:26 am

    so, from where would we want to look to short it if not already short ? look for a bounce first or no ?


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