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Is the Saudi action directed at Russia?

Big Al
December 5, 2014

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Discussion
48 Comments
    CFS
    Dec 05, 2014 05:31 AM

    Phrased differently, your question is:

    Do you believe supply-demand determines prices or is everything manipulation?

    CFS
    Dec 05, 2014 05:35 AM

    Read:
    http://www.zerohedge.com/news/2014-12-04/inside-look-shocking-role-gold-new-normal

    Is this imagination or the cause of the price of gold?

    Dec 05, 2014 05:36 AM

    Gary, Al has a point.. and the stupidity of our foreign policy really screwed us as well…

    Dec 05, 2014 05:39 AM

    Full-Time Jobs Down 150K, Participation Rate Remains At 35 Year Lows, “No Job Market For Young Men”

    While the seasonally-adjusted headline Establishment Survey payroll print reported by the BLS moments ago may be indicative of an economy which the Fed will soon have to temper in an attempt to cool down, a closer read of the November payrolls report shows several other things that were not quite as rosy. First, the Household Survey was nowhere close to confirming the Establishment Survey data, suggesting jobs rose only by 4K from 147,283K to 147,287K, and furthermore, the breakdown was skewed fully in favor of Part-Time jobs, which rose by 77K while Full-Time jobs declined by 150K. http://www.zerohedge.com/news/2014-12-05/full-time-jobs-down-150k-participation-rate-remains-35-year-lows

      Dec 05, 2014 05:58 AM

      Stop nitpicking! We’re in a recovery, dammit. Now go buy, buy, buy. Max out those credit cards. Add more debt to your debt pile. We have to show the rest of the world why we’re #1. Don’t let your government down.

    Dec 05, 2014 05:40 AM

    Gary, you’ve been wrongly predicting the demise of the $USD for more than 5 years now.

    Here’s one of the many http://blog.smartmoneytrackerpremium.com/2014/12/chart-day-52.html#comments

    Suggestion: If you are gonna brag to no end about your correct calls, or rather to the end to obtain more paying subscribers, it would be dignified, human and up front honest of you or anyone to own up to one’s own many wrong calls as well.

      bb
      Dec 05, 2014 05:12 AM

      Bruce, ya gotta take everything from all these sites with a grain of salt,
      None of them Im aware of actually realised we changed to a bear market in gold around 1800 etc. (experts like morgan shciff embry keiser etc)
      There were a couple people of course but they literaly got thrown off sites for thinking diferntly.
      Everyone of these sites looked smart when PMs were headed higher, but, gold headed lower was and still might be beyond comprehension.

      My point is maybe not fair to be so hard on Gary, I have always liked Gary as he attempts to take corruption into account for trading, not many do that, some write about it but for trading is only Gary Im aware of.

        Dec 05, 2014 05:24 PM

        Not only that, each of the ta’s take time out of their day and give us their views for free…both Rick and Gary have made me $ when I heard their opinion backed up with other sources.

    CFS
    Dec 05, 2014 05:41 AM

    What foreign policy? To me, the Ship of State appears rudderless, while racism is being emphasized/inflicted in the US.

    Dec 05, 2014 05:59 AM

    Very good discussion. To Cory’s point about miners and oil shale companies; A difference in my mind is the financing. Most miners use equity, whereas the oil shale industry is heavily into expensive debt. Remember, equity can disappear but debt gets paid, by someone. That is the major risk to the oil shale people IMO.

    Dec 05, 2014 05:01 AM

    “Everything but gold”

    That was Mario Dragis’ answer when asked what assets would the European Central Bank consider when purchasing assets with a QE program.

    That is the mindset in today’s world of central bankers and Ponzi scheme criminals

    If this doesn’t tell it all I don’t know what does.

    Clearly gold is public enemy number one.

    The banksters have to find a way to create inflation and yet keep the lid on gold and silver.

    Quite a task they have.

    Nothing to that end will be ruled out.

    Today’s gold smack down was very telegraphed

    The week started with a move that was so powerful it really looked like gold would take off.
    Tuesday’s pullback of only $12 was perfect.
    After a very powerful move the sellers couldn’t even take it down below $1200
    It looked like they were exhausted.

    But by Wednesday the rally was fading.
    Yes it was a nice up day but I pointed out the price action looked terrible.
    It couldn’t reclaim the previous day’s losses and it didn’t close at the highs.

    Thursday’s price action confirmed the rally had stalled.
    Gold struggled in the red all day.

    The setup was on the table for a non farm payroll Friday gold smack down and that is what we got.

    So is the bottom still in?

    There is no doubt gold faces steep head winds.

    Every news item is an opportunity to smack down gold

    It is clearly on the defensive and has been for three years now.

    A few people jumped off the curb and now are afraid maybe they jumped off too soon.

    Maybe being on the sidelines was the place to be.

    Gary is still calling for a bottom, but will use manipulation as his trump card.

    Doc is looking at 200 month moving averages.

    Now TR is even back hawking his wares.
    That guy would miss shooting a hockey puck into the ocean.

    Nothing is as simple as it is made out to be.

    Right now the United States is doing ok, and ok is good enough.

    With Europe and Japan crashing investors will gladly park their money here.
    With that said the U.S. Stock market has no ceiling.

    This will continue to be a competitor for gold.

    With yields so low this too will put wind in the back of stocks.

    The dollar is the best of the worst. This will mute golds move.

    Oil is crashing. Rick says its a natural market.
    If that is a natural market then I am going to Atlantic city tonight.

    Too many cross currents, too many political back room deals, too many variables.

    One thing appears certain. There is no impetus for higher gold prices.

    No black swan, no central planner announcement.

    This site is mostly for traders.

    For those of you who are traders good luck.

    I am not a trader. I am buy and hold. That has totally come off the tracks.

    When this economic crises started (or finally came unglued) gold (and silver) were supposed to be the asset that could weather the storm. It was suppose to be the safe haven asset to protect people’s wealth.

    Now here we are a few weeks from 2015 and the verdict is in.

    Gold and especially silver failed miserably.

    An asset that was able to go up for 12 straight years has been battered so badly that all the gains were wiped out.

    Are we finally at a bottom?

    I thought we were.

    Even if we are this could take many many months to base and as doc says there will be no v shaped recovery.

    Bottom line is for all you traders good luck.

    For me, I am tired of the noise, this has gotten very old and very stale.

    Time to walk away and move on.

    Taking a long long break. Don’t know if I will be back.

    Happy New Year to all.

      Dec 05, 2014 05:08 AM

      Off course gold is enemy #1. The guys suggesting ECB will buy gold is kidding themselves. They have no idea who they are dealing with. However, CB’s action will defeat themselves. Eventually all hard assets have to go up in value because printing money will make money cheaper. Any fight from central banks only has temporary effect. Nobody can fight the economic law.

        Dec 05, 2014 05:08 AM

        So buy some real estate too.

      Dec 05, 2014 05:39 AM

      As for a ‘Buy & Hold’ strategy in gold, it would be better to hold bullion in something like a ‘GoldMoney’ account where one can buy it in gramms – convertible into any fiat currency. But because of Bankster manipulation, paper gold is more of a trader’s sport, not a buy & hold income investment. Too many spoiled sports want a gold price equivalent to the Dow in dollar terms RIGHT NOW. But it is better to play gold now while the dollar still has value. Gold will buy tons of paper by the time the zombie apocalypse rolls around, however, you will have to shell out more post-apocalypse dollars to pay for goods and services. Gold BULLION is a preserver of wealth – more of a hedge – than income producer. As a contrarian, i am not at all happy to say i am encouraged by all the Tail-Between-The-Legs capitulation. Let the music play till she stops! In the mean time, hedge your bets…

      bb
      Dec 05, 2014 05:48 AM

      James, you might want to take a look when gold gets to about 1000.
      There is a chance, (an actual logical one) that the gold price turns around in there somewhere.
      If it doesn’t there, boy are goldbugs gonna look foolish.

      LPG
      Dec 05, 2014 05:04 PM

      Happy New Year to you James.

      4 small things, if I may:
      1) TO ME, gold shall be views as insurance – not speculation. For speculation, there are PM stocks. Just my 2 cents.
      2) It is a marathon, not a sprint.
      3) PSYCHOLOGY:
      when the last bulls/believers become bearish/give up, then this is the beginning of bull markets. Personally, I find your comment VERY encouraging from this perspective (not trying to pick on you or make fun of you -> just an honest remark from a contrarian standpoint).
      4) When going through hell, keep walking.

      Best to you, and looking forward to see you back – maybe if/when gold price picks up.

      LPG

      PS: I posted the YTD perf of gold in various currencies somewhere else: +14% in JPY, +12% in EUR, +6% in GBP, about 0.5% in USD. So in USD terms, no great. In other currencies, not bad. AGAIN: it’s an insurance (in Ukraine, currency is down >50% in 2 yrs since I went there in late 2012…. those who own gold are not doing as badly as the rest –> INSURANCE).

      PPS: 4) again: When going through hell, keep walking.

    Dec 05, 2014 05:12 AM

    KSA is knocking out the highly leveraged frackers.

    CFS
    Dec 05, 2014 05:19 AM

    Jaes, I was watching the volume in gold trading this morning from about 6 a.m. E.T. and it was extremely high.
    The initial penetration below $1200 was rapidly rebuffed. Then it bounced around $1200 for about 20 minutes until a sledgehammer amount of shorting was put on and the price dropped from $1205 down over $15 in seconds. I wasn’t watching earlier this week or last week (did not have access to a fast enough connection), but the volume this morning was the highest I have seen in months.

    Dec 05, 2014 05:26 AM

    Equities need to correct to some degree within the next two weeks so that we can get the usual holiday rally and january effect. maybe that will be PMs opportunity to rally a tad.

      Dec 05, 2014 05:30 AM

      Corrections have been banned by the Fed. Straight up we will go until all hell breaks loose. Plus, everyone loves a smooth Santa Claus rally.

    Dec 05, 2014 05:42 AM

    I think your one listener summed it perfectly, “Time to walk away and move on.” Unfortunately, the horrific bear market wore out many and I believe we are in the “Disinterest Phase” now. Gold may trade for 1-3 months in a narrow range to digest the recent bottom. I would expect to see relative strength in miners during this period, but nothing extraordinary. Again, hard to analyze, but gold is obviously being lent out heavily and sold to invest the proceeds in other assets, i.e. govt. bonds. This could be the reason Draghi joked about gold.

      Dec 05, 2014 05:09 AM

      I had got into GDX around $18.22 hoping for $22 to $26 rally. Stopped out today. Trade based on oversold conditions. Other than oversold conditions I guess there is just no reason to own the metals. Citigroup broke out to the upside, maybe I’ll go there.

      LPG
      Dec 05, 2014 05:09 PM

      Agree with you on the first part of your comment Richard.
      For me, that’s a great sign that we are in the final phase of the leg down. How long will it last I don’t know, but we are getting there.

      What strikes me is that nobody mentions the IMF working on the SDR. Obviously, the weight of each currency will have to do with something… and I suspect gold will be the #1 suspect. Therefore, at some point, I suspect the leases have to slow down in intensity…

      Best to all,

      LPG

    BDC
    Dec 05, 2014 05:56 AM

    The dollar index is too close to the 94-95 gap now.
    That will likely be closed soon. Then … ??

      Dec 05, 2014 05:23 AM

      BDC
      “The dollar index is too close to the 94-95 gap now.
      That will likely be closed soon. Then … ?? ”

      How long has this Gap been waiting to get filled ?

      Dec 05, 2014 05:47 PM

      This is an excellent point BDC! Richard/doc I wanted to add that I have a long term target for the canadian loonie at 77/78 that has been the total opposite side of the trade vs the us dollar. If you look back to when the loonie broke down, it’s precisely the 2011 top in guess what? Gold.. Ya got it.. I have about i have six points going both ways for the dollar up to that gap that bdc mentions and the opposite for the loonie. Wti 35/40..Crb contines down into early next year. Look for loonie to hit 77/80 and that could turn out to be the final bottom. The charts are surely screaming it to me. Those ones that I dusted of the other day and LPG was asking about. This is very key as it puts us in a one week/two week parabolic and price action like never before.

    Dec 05, 2014 05:33 AM

    There is a currency war going on Al and that dictates the price of assets and commodities.u.s. dollar is strengthening relative to other currencies and that puts pressure on commodities including oil.If stock market truly reflects reality then it should be in a bear trend by now but buy backs and low interest rates are keeping it afloat.The growth that we are witnessing is artificial.If it was organic then crude should go up too due to higher demand.Oil is reflecting how corrupt the stock market is.Central bankers are trying to inflict as much damage to pms as they possibly can to give the investor no choice other than invest in stock market and housing.It is crystal clear and mario draghi has made it that a point today .Central bankers want to give the impression that their respective currencies are still valid albeit the massive qe that they have been doing the past few years.Bitcoin and pms are their worst enemies at the moment and they will do everything to smack them down

    Dec 05, 2014 05:49 AM

    Al, you really need to look deeper into the Russia thing – it is not what you think. You suggest Putin “..should not be allowed to get away with what he’s doing”. What if it were the exact opposite? Should George Soros, NATO and the State Department get away with what THEY are doing in Ukraine? – https://www.youtube.com/watch?v=5scCadSTMFg

    ken
    Dec 05, 2014 05:52 AM

    it’s always currency
    anything is simple thinking…..

    The gold manipulation is nothing but USD increases. I have said time and time again, watch the reserve currency. It will go far higher as the rest of the world collapses…

    capital is flying into the US, this movement causes higher dollars.
    Why is this a challenging for people.

    Everyone continues to accept the talking heads argument that Saudis are pounding Russia. It is misinformation from the elites… It has nothing to do with politics. That is a byproduct of currency movements.

    Stop reading zero heads and think for yourselves. The job numbers today were awesome…. Come out of the cave folks – you were lied to….

      Dec 05, 2014 05:40 AM

      Lied to about what and by whom? Chapter and verse, please. Seasonally adjusted Part-Time Jobs numbers are awesome? If you say so…but its true there is capital flight from abroad…into an overcrowed market. Who knows? -We could very well see DOW 30,000 by 2020. Enjoy while it lasts! Frankly, i will not be chasing stocks up the stairwell…i will wait till its time to take the elevator down. For now i’ll take the batterd sector underdogs. No fleas.

    CFS
    Dec 05, 2014 05:19 AM

    Ken,
    The gold manipulation is nothing but USD increases, as you say, the graph of inverse gold over the dollar would have a flat line.
    It does not!

    Mathematically, therefore, the gold price is not simply a dollar effect.

      Dec 05, 2014 05:43 AM

      Agreed. Besides, dollar index increases are a latecomer to Gold’s three + year take down.

    Dec 05, 2014 05:15 PM

    Let me offer another way of looking at this. OPEC can look into the past and realize that if they had kept oil below $70/barrel, it might never have been economical for companies in the US to develop the technologies and resources to produce tight oil from shale in the first place. But now that the technology has been developed and there are enormous in-the-ground resources that have been identified and assayed, the ability of companies in the US to expand production is only limited by whether it is economical or not.

    The drop in prices that we have seen thus far are largely a result of the fact that production capacity in the US has outpaced demand growth in India and China. But as I said above, there’s a lot more where that came from – as long as the price supports it.

    So if OPEC keeps the price elevated by cutting production in member nations, it could enable more production growth here. In other words, any cut in production over there could become permanent (or be extended for a very long time while demand in China and India grow).

    I don’t think this is collusion on the part of the US and Saudi Arabia to hurt Russia. I agree with Gary that, as silly as our politicians can be at times, surely they MUST see that doing this would hurt us more than it would hurt Russia. If the economy weren’t such a big factor in the elections, I can see them being that foolish, but they’re not going to destroy the domestic economy to hurt Putin, who is more of an impediment to their ambitions than a real and present danger.

    No, I think that OPEC sees what a mistake it was to ever allow fracking to become economical and they don’t want to permanently lose market share by letting it remain economical. They want to see some of our new production capacity go offline while putting the fear of Allah into future investors.

      Dec 05, 2014 05:25 PM

      I am not sure I understand. US production out pace the demand in India and China. Is us an importer or exporter of oil? I thought it still import 40% of oil even though it is declining. I maybe wrong

      Dec 05, 2014 05:15 PM

      Back from 2011, the Saudis noted that they felt comfortable moving forward with $70 – $80 oil and claimed that was a fair price. When they said this, oil was in the 90’s.

        LPG
        Dec 05, 2014 05:52 PM

        Richard,

        To be honest, when it comes to the Saudis with oil, I personally do the same as what any major player in any important/critical market: I watch what the player does, not what it says.

        There were also instances since 2011 where the Saudis – via the Min. of Oil – said that $100-110 was fair price for oil, if my memory doesn’t fail me.
        So it seems that when the needle changes, the view changes… -> back to my point: I watch what they do, not what they say.

        I would also like to point out that since 2011, a few social programmes have been put in place in KSA (following the “Arab spring”), which by themselves increased gvt expenses. So all things being equal, the budget break-even price for oil in KSA has moved up a little since 2011.

        Best to you,

        LPG

      Dec 05, 2014 05:16 PM

      ALP. Welcome , & some good points……Keep posting.

      Dec 05, 2014 05:22 PM

      Final thought, I suspected the Saudis would dump supply on the market to kill US shale plays once they got up and running, but this was more the trader in me. I think that is what the market is doing now and I DON’T think that there is a conspiracy going on. I think the Saudi’s realize with higher oil prices will apply pressure and limit growth in the economy. They want to ease this condition and then let oil price rise as consumption increases and the economy strengthens. Many changes have taken place recently, supplies coming online in Middle East, Japan restarting reactors, etc. If oil stabilizes at $70 to $80, that would be beneficial to all. I am more concerned with the price of gasoline falling and then having the politicians feel that it is acceptable to raise the gas tax for more tax and spend.

        LPG
        Dec 05, 2014 05:21 PM

        Just to add 2 angles, from a financial standpoint…

        1) as mentioned in a post last week (something to which Chris Temple’s “guts” seem to agree), I believe lower oil/energy prices enable the Fed to not hike rates for a while as inflation expectations are unlikely to move up, IMHO.

        2) lower oil prices enable Japan’s economy to not go under (i mean more under than what it currently is….).
        Let me elaborate here just a touch:
        The japanese exporters have benefited from a weaker yen, but the domestic producers (ie the japanese firms which are not exporting) have had to face RISING input costs (same as the exporters) via the weaker yen, BUT have not been able to hike prices to consumer in return –> they and their margins have been seriously “squeezed” to say the least.
        For these domestic producers, lower energy costs are a welcome relief as the number of bankruptcies in Japan was starting to tick up, as indicated by some articles recently in Zerohedge.

        Bottom line: it is not, IMHO, crazy to think that central bankers have a big interest (both in the US and in Japan) in witnessing low energy costs for the time being…

        Just my 2cts.

        Best to all,

        LPG

    Dec 05, 2014 05:26 PM

    for an in depth look at oil being used as an economic weapon against the Soviet Union and China read James Norman’s “The Oil Card” there is a few interviews on you tube with the author explaining his conclusions.

    Dec 05, 2014 05:40 PM

    I believe that the world is not running out of oil but running out of cheap oil. So if we want enough supply, only way to get it is increasing price. Supply destruction is resulted from price decline in real time.

      Dec 05, 2014 05:38 PM

      This oil price thing is “NOTHING” to do with hurting Russia…If Russia wanted to it could undercut the Saudi price & destroy shale into the bargain……The people behind the curtain play some weird games…….Never assume it is raining outside, until you look out the window , & can confirm it .

    Dec 05, 2014 05:29 PM

    I agree with Gary that killing the Oil price would be shooting ourselves in the foot since energy is the number one job producing industry, but the truth is that our national foreign policy hurting Russia and conservative-leaning oil crowds, not to mention, increasing people’s reliance on government assistance is a three birds with one stone (lower oil prices) for Obama and the left. It’s political genius.

      Dec 05, 2014 05:34 PM

      However, it does hurt his cronies in expensive alternative energy.

        Dec 05, 2014 05:59 PM

        Wiseguy…..There have been lots of cheap alternative energy developments made over the years , but they get mothballed by big oil & GOVT restrictions…
        IE…Tidal power…Salt water & many others……Ban lobbying.

    Dec 05, 2014 05:51 PM

    The Saudis are double agents supporting the US and funding terrorists too.

      Dec 05, 2014 05:04 PM

      Paul….The US are the bodyguards of the Saudis…If the US turned their backs on them tomorrow the Royal family would not last a month….But at the same time they are playing the US like a fiddle.

      LPG
      Dec 05, 2014 05:06 PM

      Paul,

      Let’s assume one second that you are right/correct on your statement.
      So let’s “de facto” assume this is a fact (ie that what you are saying is “proven”).

      Here’s my (double) question then:
      1) If you, Paul, came to know this (fact), don’t you think that many people within the US Gvt and various US Gvt agencies also came to know this (fact) as well ?
      2) And if you and many people within the US Gvt and various Gvt agencies came to know this, don’t you think that within the high Saudi circles, some people know that “the US” know ?

      The question then becomes:
      why is the relationship still ongoing then ?

      Best to you,

      LPG