The Doctor Is In – Thu 8 May, 2014

Thursday and The Doctor Is In

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Featuring:
Al KorelinRichard Postma

Comments:
  1. On May 8, 2014 at 1:33 pm,
    CDs says:

    Casey on usawatchdog.com is interesting

    • On May 8, 2014 at 2:00 pm,
      Birdman says:

      Except he looked a little pickled to me. Then again, maybe it was just that Argentine sun and the lack of air conditioning!

      • On May 8, 2014 at 5:27 pm,
        Big Al says:

        Or maybe it was just the enjoyment of some great Argentinian red!

      • On May 8, 2014 at 6:55 pm,
        har says:

        Says he is a libertiarian because he thinks he should be able to smoke a cigar anywhere he wants, if it is another person’s property, without asking the owner’s consent first.

        • On May 8, 2014 at 9:17 pm,
          Birdman says:

          OK, now I really like him. I feel the same way. Cigars should be allowed in elevators too.

        • On May 9, 2014 at 3:28 am,
          Irwin says:

          I guess it’s okay if I piss on his front porch, eh?
          -no hay problema

          • On May 9, 2014 at 6:40 am,
            Birdman says:

            Whatever gives you a thrill Irwin.

  2. On May 8, 2014 at 1:59 pm,
    Birdman says:

    Just one word of caution. If you guys noticed today that after Mr Draghi spoke the Euro dropped sharply on comments he made regarding interventions. Gold fell almost immediately and sympathetically. So it was not that gold was responding to dollar strength that we usually assume but rather that gold was being impacted by Euro weakness. Should the ECB cut rates to zero at Junes meeting and/or bring forward more discussion and confirmation of debt buying intentions (QE) then gold could be in for a rough ride. And that is what is the strongest candidate for a torpedo into the side of precious metals this summer so pay close attention as the next ECB meeting comes into sight.

    • On May 8, 2014 at 2:11 pm,
      Skeeta says:

      Bird,
      The next meeting of the ECB is 21st May.
      BUT…the next press conference won’t be held then,
      The next press conference will be after the meeting held on the 5th of June

      …pencil in your torpedo attack in a month’s time then if your correct.
      Cheers.

      • On May 8, 2014 at 2:38 pm,
        Birdman says:

        Correction noted Skeeta. I should have said “face time” instead……

        • On May 8, 2014 at 2:52 pm,
          Skeeta says:

          It’ll be interesting to see the outcome of that press conference Bird,
          You might be onto something there ?

          • On May 8, 2014 at 5:34 pm,
            Big Al says:

            Bird is always on to something!

          • On May 8, 2014 at 9:21 pm,
            Birdman says:

            My mother was a channeler. It could be in the blood.

        • On May 8, 2014 at 5:33 pm,
          Big Al says:

          Bird,

          We just got from a meeting of an organization that asked Kathy and I to help them. It is called Tembo Trading and the two gals involved are involved in educational efforts in Kenya. To date they have built one school; taken over an existing college; and started an early childhood center.

          One of the ladies and her husband have also “rescued to big cats (a lion and a tiger) which they house on their property just outside Bellingham. (The cats would have been killed had they not done this.)

          This cause looks very worthwhile and I will be putting some information on this site shortly.

          Figured this might interest you. (www.tembotrading.org)

          • On May 8, 2014 at 9:56 pm,
            Birdman says:

            Sure, lets here about it Al. I am a firm supporter of educational initiatives in these parts. For example, there are not public libraries here as we know them back home and technical schools are notoriously short of equipment needed to train workers. We have a cooking school near me that does not have a single stove, fridge or even a set of knives for students to work with. Nor do the kids get to see video demonstrations. What students face in many cases are educations by blackboard alone with little or no opportunity for hands-on experience. They are therefore poorly equipped to enter the workforce as real world experience is needed for most trades. Try learning to be a welder, electrician or sheet metal fabricator from a paper and pen education! That might work well for the study of mathematics or philosophy but it does not enable students who need to learn manual skills through repeated hands on practice. If anyone wanted to make a big difference to development in East Africa then setting up training facilities with *real* equipment would have to be their focus. It is a key weakness that has not been adequately addressed in the past by donors. If you know anyone who wants to really make a difference in the lives of these young people Al then here is my suggestion. Just tell them to load up a container with an entire woodwork shop as one example and arrange to supply an existing school with enough books and educational materials for their classes. That is one donation that would be most welcome and if I am not mistaken the donation would be permitted tax free.

      • On May 8, 2014 at 5:29 pm,
        Big Al says:

        A torpedo attack on gold/silver is only worth a “cheers” if you are trying to keep your blood pressure down!

    • On May 8, 2014 at 2:47 pm,
      original jj says:

      Next ECB meeting of which the whole market will be keyed into is June 5th….and Draghi has boxed himself in…..between now and then there should be a continued fed speak and data supporting some type of Euro$ devaluation….and that is what gold reacted off this am Draghi’s comments:

      http://www.zerohedge.com/news/2014-05-08/not-doing-anything-next-month-would-completely-shatter-ecb%E2%80%99s-credibility

  3. On May 8, 2014 at 2:02 pm,
    Martin says:

    Now is the time to be establishing criteria for an exit strategy out of Au/Ag. Let’s say we have 50 oz. of gold. Prudence might say we start selling say 1/5th at intervals of 3/1, 2/1,1/1, .5/1on the Dow:Gold ratio and maintain the other 1/5 for posterity. LUCK is often no more than a prepared mind!

    • On May 8, 2014 at 2:06 pm,
      Birdman says:

      Not sure I would jump on that idea too quickly. There is always something else to counter the gloom. For example the CAD (Loonie) looks to be breaking out and that can be a positive signal for both energy and gold. We note that the Canadian dollar has been in a downtrend almost since the month when gold lost its luster. But is a reversal there actually a positive?

      • On May 9, 2014 at 8:19 am,
        Birdman says:

        And bye-bye CAD breakout as the US dollar rises sharply. That did not last long.

    • On May 8, 2014 at 2:22 pm,
      Marc, San Diego says:

      OK…Martin,
      But make sure you KNOW where you are going to put that “paper currency” whatever that is….SDR’s…’s__t dollar as Willie states……into some of real value – whether farmland, RE, other undervalued hard assets…business op, etc???

      • On May 8, 2014 at 5:37 pm,
        Big Al says:

        Of course Marc. Going ahead with no plan is simply stupid!

    • On May 8, 2014 at 5:36 pm,
      Big Al says:

      A prepared mind is critical.

      If someone is “all in” in au and ag you may have a point. But then again, they probably will not listen.

  4. On May 8, 2014 at 2:28 pm,
    Martin says:

    Ok Mark
    I would suggest by then there may be a whole lot of low hanging fruit back into dividend paying stocks to start.

  5. On May 8, 2014 at 2:57 pm,
    original jj says:

    Doc toss up your US$ Index chart and your S&P chart, $YEN falling in the background sent the Nikkei way higher…as currency devaluation unfolds.

    You’ll see some of the S&P’s big runs have been while the US$ is falling, using the last two years highs in the $ June-July before falling sent the S&P higher

    2012 US$ 84-78 S&P up 1266-1474……….2013 US$ 85-79 S&P up 1560-1729

    Just as the $Yen fell from Nov 2012 129-96 the Nikkei rose from 8700-16,000

    • On May 8, 2014 at 3:06 pm,
      original jj says:

      Of course if the above mentioned continues to play out the same why would Japanese investor buy gold when then can see 100% gains in their equity markets while gold continues trending lower.

      If the S&P continues to attract global capital flows while the US$ falls in the background why would money flow into gold, selling gold Sept 2011 and buying the DOW was a perfect trade as that would have the US$ holders enjoying 60% gains while gold owners have lost 32% of their value off the highs.

      • On May 8, 2014 at 3:08 pm,
        original jj says:

        sorry the DOW equity holders enjoying 60% as gold fell

      • On May 8, 2014 at 5:40 pm,
        Big Al says:

        That is absolutely correct “Original”!

    • On May 8, 2014 at 5:39 pm,
      Big Al says:

      Thanks for the observation “Original”!

  6. On May 8, 2014 at 3:36 pm,
    original jj says:

    SLW earnings report…..and this is a silver streamer, not a miner. How this could be spun positively is beyond me.

    40% less profit caused by lower metal prices, down 22cents per share and costs rose!

    http://finance.yahoo.com/news/silver-wheaton-profit-shrinks-due-220314011.html

    • On May 8, 2014 at 5:43 pm,
      Big Al says:

      Cannot be spun into a positive situation. (At least to me!)

  7. On May 8, 2014 at 5:04 pm,
    Silverbug Dave says:

    I remember using this same chart which was from sharelynx.com (with permission) in 2008 on my blog:
    http://1000gold.blogspot.co.uk/2008/04/chart-hints-at-financial-disintegration.html

    • On May 8, 2014 at 5:06 pm,
      Silverbug Dave says:

      and here – it’s a mega megaphone pattern
      http://1000gold.blogspot.co.uk/2008/06/megaphone-top-in-dowgold-ratio-2008-06.html
      but I am not sure that it is going to work out as of now. We have been assuming the possibility of a return to 1:1 Dow:Gold but I wonder if it is going to happen in the near future.
      I doubt it. It should have happened by about 2012 on the pace of the decline in the ratio from the early 2000s.

      • On May 8, 2014 at 5:08 pm,
        Silverbug Dave says:

        However, if the megaphone actually did its measured move the Dow:GHold ratio would go to much less than 1 on a log scale:
        http://1000gold.blogspot.co.uk/2008/06/mega-move-from-dowgold-megaphone-2008.html
        eventually. This could occur only in a hyperinflation and is similar to what happened in Germany in 1913-23 when the stock market went up 250000x but the price of gold went up one trillion times.

        • On May 8, 2014 at 5:10 pm,
          Silverbug Dave says:

          The last article on this topic:
          http://1000gold.blogspot.co.uk/2013/10/could-dowgold-ratio-go-close-to-zero.html
          but I don’t see this coming anytime soon. Maybe one day.

          • On May 8, 2014 at 5:45 pm,
            Big Al says:

            I have to repeat you guys, I wish that I understood technicals!

          • On May 9, 2014 at 5:30 am,
            original jj says:

            That is some very interesting work Silverbug Dave…..time will tell, perhaps we will get a backtest towards -20 before resuming the downward trend.

            Tops and bottoms are definitely made at the extremes and those megaphones are the extreme!

  8. On May 8, 2014 at 5:29 pm,
    Bill says:

    Please view this interview from BNN.com.. Regarding gold price fixing
    http://www.bnn.ca/Shows/Commodities.aspx
    Click on Gaming Gold

  9. On May 8, 2014 at 7:11 pm,
    bj says:

    The problem, Al, with ‘if and when’ is that most honest investors will run out of money before the Fed does; thus, the cliche: “don’t fight the Fed”.

    Even so, western central banks and IMF may have overreached; thus all the hubris in the world and Fed double speak won’t stop the BRICs plus Russia from setting up their own swaps and trading blocs. Days, weeks, months, whenever, the implosion is unavoidable as it the geopolitical blow back from all our hegemony and failed attempts to overthrow governments to advantage a select few multinationals list in the S&P, if not the DOW.

    Will gold go up or the market go down to achieve Doc’s ratio? Guessing yes and yes because all this mischief is unsustainable.

  10. On May 9, 2014 at 6:36 am,
    Birdman says:

    And then KAPOW!…..the stuffing got knocked right out of the Euro on comments from Mr Draghi and the ECB. So now it remains to be seen how the opening will go and how golds day unfolds. Although we cannot know for sure; this will be a first good test and might offer insights into how the rest of the summer plays out if the Euro/gold correlation gains strength.

    Note to Gary and Doc: I know you guys have no faith or belief in my dollar strength thesis but can you finally give it a little consideration? The dollar, in see-saw fashion versus Euros is up 1/2% against the basket of currencies this morning and taking aim at .80 again.

    I had little doubt about its direction.

    • On May 9, 2014 at 7:13 am,
      Birdman says:

      And as an aside……the ECB and key speakers warned us in clear terms they were going to take steps to reduce the strength of the Euro if it threatened 1.40 and they have kept their word. The Bundesbank was suddenly compliant which was just huge news for anyone listening closely.

      A great many articles have been published in the past weeks dissecting the topic of pushing the Euro lower. Even I have been talking to you for weeks that this was likely in the works. So this trade was a freaking gift from on high. Too obvious. Too clear of signals.

      All that awaited was yesterdays confirming tone and the quicker traders added up two plus two and jumped to front-run the trade ahead of the pack. You can make a fortune being the right side of a currency when it moves like that. The Euro will weaken more. The dollar will strengthen. This is likely just the beginning as we await June and Europe’s ZIRP as the last half point rate is eliminated.

      Gold will most probably take the torpedo I mentioned yesterday and the gold crowd will weep as we do indeed go back to retest lows. But hey, don’t forget Goldman made that 1150 low call prediction for gold. I suspect their analysts looked off into the future and correctly estimated the dollar would be driven up by a falling Euro and that Eurozone QE was inevitable. Indeed, if I am not mistaken they have a strong dollar call out.

      As we say here…..Don’t fight the Fed. Perhaps we can also add, Don’t fight the ECB.

  11. On May 9, 2014 at 7:02 am,
    J........the Long.............ootb says:

    As we can see………..FRIDAY……..AND LONDON HAS COVERED…….going long into the WEEKEND.

    • On May 9, 2014 at 7:27 am,
      Birdman says:

      Can I say KAPOW! again…..gee that feels good. I might be a screwup calling the market top but nobody here can criticize my call the the Euro would drop at the 1.40 line in the sand and the dollar would rise. Since that has now happened we need to reassess our positions on precious metals again. Change is in the air and past bets are now off.

      • On May 9, 2014 at 8:41 am,
        Birdman says:

        Well that didn’t take long. Gold just took a seven dollar nosedive off the high board after making a double top (five minute chart) around 8:00 Am this morning. How far she falls is anyone’s guess but judging by the dollars rise….well….we shall just watch and see.

      • On May 9, 2014 at 9:23 am,
        J........the Long.............ootb says:

        Just got back from the beach, and the sand dollars were no where to be found.
        I see NY , is thinking all is ok for the weekend, and they can tinker around with the pm mkt…….besides, if they get into problems over the weekend with Putin, they can always borrow from LONDON…….

  12. On May 9, 2014 at 9:51 am,
    J........the Long.............ootb says:

    I think the market should wake up by the end of the day……….
    NEWS:1:00pm FRIDAY………
    Russian Fleet…….shows up in The BLACK SEA…. Putin showing some muscles…….