Tuesday Market Close with an all-star cast.
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Today the DJIA closed up significantly. The big question is will this trend continue until year- end and after?
who needs a US constitution when there’s no manip from the banksters?
We don’t.
avi understands that confiscation is not manip… it’s people-helper action from the Gman. How wonderful, can i take a red pill too and hand in my gold?
Back in 2013, Saudi Arabia went on a rampage kicking people out of the Kingdom who were not properly registered or did not have valid work permits. It was then estimated that more than a million people, primarily from Africa and Asia, had been expelled.
At the time some of us were really scratching our heads as to why that action was taken and I don’t think anyone connected their expulsion strategy to falling oil revenues. Saudi depends heavily on foreigners to do the hard work and a substantial proportion of the economy is based on the labour of migrants.
I was thinking about that tonight and I just realized that the Royal family must have already known at that time that oil prices were going to collapse. Crude oil was already tracing out a multi-year bear flag on the weekly chart then that finally terminated in the middle of 2014.
Oil prices did indeed crash as some good analysts were predicteding.
But what is most interesting are the economic reasons the Kingdom no doubt had for expelling migrant workers. During 2010 for example, remittance outflows by foreigners to their home countries stood at an amazing 6% of GDP. To stop the bleeding the answer was obvious.
Anyone who was not authorized to be working had to leave. And it had to happen quickly.
Had they not taken that action there is little doubt the current deficit of Saudi Arabia would be substantially worse than is currently reported. Even as it stands those foreign remittances represent a drain of tens of billions of dollars during this current year and it stands to reason that a strategy in the future to close the budget holes will require putting Saudis back to work in their own homeland and even further restricting outsiders from taking available jobs.
Isn’t it curious then? Perhaps the current oil slump was written in the cards as far back as early 2013 when the discussions to push out migrants first became news. This cannot be a mere coincidence.
Hello Bird,
Hope all’s well.
Actually, back in July 2013, the forward curve for WTI for in MASSIVE backwardation.
Erik Townsend, who publishes the quarterly “Peak Oil Newsletter” and who used to be on J.Puplava’s Financialsense Newshour had discussed it back then. (if you can find it on the web, check his Q3 13 newsletter, written July 5, 2013. If you can’t find it and are interested, let Big Al know and I’ll get this emailed to you).
In hindsight, futures market were telling where oil was heading…
Best to you,
LPG
If you are trying to tell me that backwardation in July 2013 was not indicating that oil was headed for a steep sell off then there is no point in looking up anything on the topic Puplava may have published.
The fact is that oil DID crash in middle 2014 and the futures charts clearly indicated such. It is the futures charts incidentally which is what I was referring to. I did not post the chart when I was writing that post last night but it is linked below.
In retrospect the pattern is obvious. But at the time few were worried a major sell off was in the wings and most were bullish which just goes to prove that the market fools most of the people most of the time.
Follow the pattern that was created at that time as the price range narrowed from a high of 120 to a low of 80 during 2011 on the WTI weekly chart through to its final termination point.
The warning signs were growing increasingly clear through to middle 2013 when the decisions to expel migrants finally came. That was the point of my post which hopefully you can appreciate.
I was not discussing how most of the market judged the final conclusion wrong but rather how the country who stood to lose the most from falling prices likely had better insights than the majority on where the oil market was going to head.
Had any of us investigated the expulsion of a million or more migrants with an eye to the Saudi budget we may even have gained an insight to tip us off that major trouble was brewing under the surface in crude oil markets.
Weekly futures chart of WTI Crude Oil courtesy of FINVIZ.com
http://finviz.com/futures_charts.ashx?t=CL&p=w1
very interesting bird…. thanks
Yes, that’s what I thought too Agatha. Unfortunately I did not make the connection back then even though the topic was discussed on this site. Seems we instead got distracted by rumours of war in the Middle East and the idea that local borders were being shut had more to do with internal security threats to the Kingdom. That makes no sense now though.
To get right to the point…..this action was more purely an economic issue. It all boiled down to cold hard cash and what was a major drain on Saudi Arabia at a time when conflict was being contemplated and the Royal family was becoming increasingly certain that high oil prices were not sustainable based on the chart pattern that was developing.
LPG is clear…..
Cory– you said Gary… & you meant Jay….
WOW– Jay believes in manipulation of gold…. thanks Jay..
Good to have you here…
Jay has also featured a whole lot of gold companies on his show over the past few years that have been utterly destroyed where stock prices are concerned. So I would not get too excited about his ideas. He lets his theories cloud his better judgement and if he invested according to what he featured on air then his portfolio has been wrecked on the rocks of disappointment since 2011.
Like Al always says….listen to everyone before making up your OWN mind. Personally I am very thankful I never took any of Jay’s advice on metals or miners.
Crazy day in the markets – not at all manipulated. Was today LPG’s fake move?
LPG – Am I right to assume that the place you are looking for that 20, 30, 40 percent is in the energy and base commodities sector? You have mentioned these a few times in the past week or so.
I am in the same camp as Jay regarding gold. It is pointless following it IMPO due to it being so heaviy manipulated.
I think LPG makes a lot of sense about buying into the oil sector around the 30 buck area and that whilst it might go much lower in the 20s I doubt that it will stay there for long.
Any rally out of a mid-20s area could prove to be considerable IMPO as I think there will be some banging of heads if / when oil got that low.
Hello Bob UK,
I look at any battered sector/equity name/country.
If you take a very simplistic view of the world, you realize that commodities (nat. resources) AND emerging markets have, as a whole, been beaten-up over the past few years. To various degrees, but you get the drift.
So the idea is to look into what has been beaten-up and that could have some respite at some point in 2016 OR, even better, a shift in paradigm.
A respite, to me means a bear market rally.
A shift in paradigm, to me, means the end of a cyclical bear market and the resumption of a bull market.
Based on that, the world is, literally, your oyster.
So here are 2 names that I’m looking at, for ex: FCX, VALE.
Both FCX and VALE are large caps, industry leaders in what they do, and have been massacred. So they get my attention.
Now, can they go lower ? AB-SO-LU-TE-LY !
Can they go down another 20, 30% from here ? AB-SO-LU-TE-LY. (ie: I suspect we still have time to grab some pop corn 🙂 )
But what I mean is that they have my strict attention on a daily basis. I watch the chart and big newsflow on those names. And I’ll pay strict attention to their next set of financials and any further write-offs in their asset base (I’ve discussed this w. Richard in private today).
Country wise, I mentioned yesterday the UAE and Qatari markets can be played via ETFs. Both have my strict attention as well.
And when sanctions on Iran are lifted, I’ll be looking for any ETF that gives me exposure to that market.
*******
As an aside, not sure if you are BASED in the UK, but if you are, here’s something that I have in my mind and that I am still thinking about.
Please note/realize that I am still thinking about what I wrote below to make sure my thought process makes sense (remember: I try to evaluate RISK FIRST as opposed to upside. So I always try to think where I could be wrong FIRST before deploying capital):
so the idea for the UK is:
potential further weakness of the GBP vs. the USD
+
potential capital leaving the UK real estate sector (due to new laws put in place – sure you’ve heard of them)
= capital going to UK equities (in my book)
Again, I might be totally wrong about that one.
But based on precedents in other countries I’m familiar with, when capital finds the real asset sector less attractive, it has to go somewhere else.
For capital that will stay in the UK, UK Equities might be a prime destination.
The point where I might be wrong is that a decline in UK real estate prices might transpire to the banking system… and therefore this might not be good for the stock market overall.
This, I agree, is where I could be wrong. But I just wanted to mention it as food for thought.
Best to you,
LPG
Good thoughts as per usual LPG. Thanks for all your insights.
I’m looking into investing in certain countries using targeted ETFs within sectors that have a turn-around or change in narrative developing. Once Oil, base metals, bottom, then there are also many commodity driven economies that will do well in that environment. Currency and central bank policy has also really had an affect on Emerging Markets, but there are some areas that continue to develop in Asia, Africa, The Middle East, and S. America.
It is interesting you brought up watching Freeport and Vale. I’ve been watching (in horror) the commodity conglomerates continue to dive. There was a nice little upswing the last week or so in some of the metals and Oil, but not much, and we are likely still on track for a bottoming process in 2016 and a shift in the paradigm.
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Here’s a 200 day composite chart of some larger Commodity Conglomerates:
Teck Resources, Vale, BHP Billiton, Rio Tinto, Freeport-McMoran, Glencore Xstrata, First Quantum, Turquoise Hill, Antofagasta, and Anglo American PLC.
http://stockcharts.com/freecharts/perf.php?TCK,VALE,BHP,RIO,FCX,GLCNF,FM.TO,TRQ,ANTO.L,NGLOY#
Here is 200 day composite chart covering some of the Mid-tier and a few smaller Commodity Conglomerates. Mitsui has outperformed in this group and done about the same as Turquoise Hill has done in the prior larger producer chart up above.
Companies featured:
Exxaro, Hudbay, Jiangxi, Vedanta, Lundin, Kaz, Mitsui, OZ, Capstone, and South 32
http://stockcharts.com/freecharts/perf.php?EXXAY,HBM,JIXAY,VEDL,LUNMF,KAZ.L,MITSY,OZMLF,CS.TO,SOUHY#
South 32 is one that I am keeping an eye on. It is mainly a coaler though and there would have to be a sizeable upturn in global coal demand I think for it to turn around.
Bob UK – Yes, I swapped out another commodity company for South 32 after you brought them up. Yes they are a bit too coal focused for me, but they are worth keeping an eye on since they were a spin-off company, (and one that could likely get picked off by another Major or Mid-Tier in a takeover). I’m personally more interested in the Nickel, Tin, Zinc, Iron, Copper, PMs, PGMs, Oil, Uranium, and specialty metal projects, but many of the conglomerates have some coal exposure.
Here’s another article that is going to make the road a bit tough for coal, and why I’ve been favoring Uranium as a solid energy play instead for China/India/rest of Asia/Middle East for the growth they are still experiencing.
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China won’t approve new coal mines until 2019
Cecilia Jamasmie | December 30, 2015
http://www.mining.com/china-wont-approve-new-coal-mines-until-2019/
Anglo American sells NSW coal mine for US$36 million
Michael Allan McCrae | December 24, 2015
http://www.mining.com/anglo-american-sells-nsw-coal-mine-for-us36-million/
I posted a related article earlier in the week, but there still are companies and key investors planning on a rebound in coal in certain areas, and there are always opportunities in any sector. Here’s the other side of the story on the coal mine Anglo American just sold:
_______________________________________________________________________
Former Aussie coal magnate Nathan Tinkler buys Anglo American mine
Cecilia Jamasmie | December 29, 2015
Former Aussie coal magnate Nathan Tinkler buys Anglo American mine
The Dartbrook coal mine has been mothballed since 2006, when Anglo placed it in care and maintenance….
http://www.mining.com/former-aussie-coal-magnate-nathan-tinkler-buys-anglo-american-mine/
Here’s another positive move for Coal’s expansion in the big port they are building. However, I still see it as encumbered by environmentalists and politicians, and it is a dirtier form of energy that creates smog and destroys many mountain tops. It is an error, however, for those environmentalists to think countries can just walk away form coal though. Coal is cheap energy, it is a huge part of the current energy mix, and the infrastructure is already in place (unlike Nat Gas or developing Nuclear plants or renewable plants). Coal is a mixed bag, but Australia is going for it:
_____________________________________________________________________
Australia OK’s vast coal port expansion near Great Barrier Reef
Cecilia Jamasmie | December 22, 2015
http://www.mining.com/australia-oks-vast-coal-port-expansion-near-great-barrier-reef/
Thanks for all the info – will have a good read of them a bit later.
Yep, South 32 could be a buy out candidate.
I think India and China are going to be dependent on coal for many years to come. Will have a read of your links later and get back to you.
Are the above big miners to big to fail? Or will we see one, or more, of them go under in 2016?
I think we may see a few of the smaller producers on the second chart go out of business or get acquired, and I think we may see one of the majors have to do a restructuring of the their balance sheets, which will wipe out current shareholder value a bit further. What seems to be happening lately is that, just like in Gold, the Majors are selling off their non-core assets to other specialized or neighboring companies, and they are all high-grading, fast tracking their best assets, and just trying to survive. The commodity bottom will come in 2016, but some of their financial pain will not be quite over until their revenues get going again. It is at that time near the tipping point, that the best values will present themselves and the skeletons will be out of the closet.
Good luck to all in their investing.
Yep, only South 32 is really of interest to me on that sec ond chart of yours.
I think we will get a big sell off in conventional stocks early in 2016 and I think that will take all the base metal miners down to new lows. I may be tempted to start weighing in then.
Thanks Bob UK. On the smaller commodity chart I’m also watching Hudbay, Vedanta, Lundin, and Mitsui. I also wonder if Capstone may very capsize this year. The financials on these smaller commodity companies aren’t looking real rosy at present, but yes, when they bottom in 2016 it will be time to go bottom-fishing.
Here is an interesting article showing that the Chilean Copper miners are doing a little better than what one would expect, due to the lower fuel input costs:
_________________________________________________________________________
Chile’s copper miners still making money despite price collapse
Cecilia Jamasmie | December 29, 2015
http://www.mining.com/chiles-copper-miners-still-making-money-despite-price-collapse/
Thank you for replying LPG and taking the time to write out all of that.
IMPO the UK economy is purely based on a ludicrous housing bubble at the moment and, as figures out a few days ago showed, a return to massive consumer debt. The housing bubble in the UK never burst in 2009 and just went on to crazier and crazier highs. Already, even in small towns and cities, estate agents are bragging that there will be 10% rises in house prices this coming year. It is out of control and there seems little incentive to try and control it.
I have looked at the likes of Barclays but, like yourself, am a bit hesitant about UK banks just in case the UK housing market does go down resulting in UK banks taking a big hit – but it is hard to see, short of a global crisis, anything stopping the madness in UK house prices.
The FTSE has done so badly, as you no doubt now, due to all the commodity and oil companies in it. If the FTSE is going to turn around in 2016 I think you would have to see a big turn around in the price of oil, copper, iron and coal. This is what I have my thoughts on at the present time.
I think the likes of FCX or a TCK (Have not looked at Vale myself recently)- not so sure about that one – offer potential better returns in any upturn in commodities than perhaps something like Rio Tinto or BHP Biliton.
Listening to the audio, I realized that I got messed up w. something:
at 16mn13sec in the interview, I said “I’ll put some capital between $30 and $30”.
I meant between $20 and $30.
So again, in case it is not clear, the idea is
1) to deploy some capital when oil nears the $30 zone
2) deploy more if it goes below $30. The closer to the $20 zone, the better.
==> this way, my average cost for exposure to oil should be <$30. And that's the rationale of the capital deployment.
If my capital gets deployed that way, it just becomes "sit and wait".
GL to all investing/trading.
LPG
Your handle says it all, so I am sure you will be right. LPG = Liquefied petroleum gas 🙂
I think if you buy at this level or lower you can’t lose if you are willing to wait long enough.
boy — thats not clear– its just an oyster…
I am sure you will find a pearl of wisdom in that oyster. 🙂
The world is your oyster. 🙂
Nice.
Who doesn’t like oysters?
They are up there with Whiskey…..the nectar of the God’s.
I do enjoy Whiskey, Irish Whiskey, Bourbon, and Scotch……..
I’m bullish on:
Noah’s Mill, Jefferson’s Small Batch, Rowan’s Creek, Blanton’s Single Barrel 93, High West Campfire, High West 16 year Rocky Mountain Rye, Angel’s Envy 86, Bowan’s Brothers Small Batch, Eagles Rare 17, James E Pepper 1776 15 year Rye and 15 year Bourbon, Woodford Double Oak, Willett Pot Still Reserve, Four Roses Small Batch, Makers Mark 46, Bulleit Rye and Bulleit Bourbon 10 year, Resevoir Rye, Hudson River Manhattan Rye, Bushmills 21, Bushmills Black Bush, Red Breast, Michael Collins, GlenLivet Nadurra 16 Year, GlenLivet 15 year, Glenfiddich 18 year, Glenmorangie LaSanta Sherry Wood, Glenmorangie Quinta Ruban Port Wood, Macallan 18 year, Johnnie Walker Blue, Laphroaig Quarter Cask, and Kavalan.
These trade in a range for me but I’m constructive on:
Knob Creek, Makers Mark, High West American Prairie, High West Bourye, Woodford Reserve, Old Forester 1870, Old Pogue, Buffalo Trace, Ezra Brooks Single Barrel, Ridgemont Reserve, Four Roses Single Barrel, Elijah Craig 12 year, Gentleman Jack, Jameson, Wellers Special Reserve, Leviathan, Chivas 12, GlenLivet 18 year and 12 year, Glenfiddich 15 year, and Glenmorangie The Original.
I am currently bearish on:
Old Crow, Old Forester, Old Grandad, Fighting Cock, Lexington, Jim Beam, Canadian Club, Wisers, and Cutty Sark.
HA HA HA
you crack me up Excelsior.
Very good….funny stuff.
Cheers to you.
Looking forward to you reviewing the oyster producers next !
LOL
😉
That makes two of us Skeeta. Are you talking about drinking all those or investing in the companies Excelsior? Personally I am glad I swore of booze once and for all. What a damnable curse that was.
Here’s an oyster story for you,
Back 4+ decades ago I went out (apparently) fishing with my Uncle & me Da.
We spent many hours nestled over near the rocks as I (a 6 year old) fished whilst me Da & Uncle spent all their time over the side of the boat wrenching oysters of a lease (apparently).
Eventually with a couple of fish on board thanks to me (& a boat load full of oysters thanks to them) we headed home.
As we approached the boat ramp….the fisheries & wildlife ranger appeared…..we motored away….he disappeared…..we motor in & bingo he is there waiting for us again.
No way Dad & me Uncle were giving up their ill gotten gains.
So we sped away fer many miles down the coast. They eventually dropped me & their oyster haul of at a secluded tiny beach with a bottle if soda & promises of picking me up as soon as possible.
It took them 6 hours to drive around the bay & eventually find me…but they did…it was sometime after midnight I remember.
My Mum was ropable when she found out.
It was that night as a 6 year old I tasted my first ever oyster.
It was only then that I understood what those two theiving b@stards were chasing.
…..a seafood sensation.
Cheers.
I believe in buying the “physical,” over the paper equivalents, where whiskey investing is concerned. I do enjoy a well-balanced beverage about twice a week, and have some stocked up as a currency of last resort (along with batteries, soap, and toilet paper).
Birdman – I was only joking around on the bullish/trading range/bearish statements because it was my pallet and not my wallet doing the investing 🙂
I was just highlighting the ones I enjoyed since Skeeta mentioned that Whiskey was the nectar of the Gods. Yes, many a good man and woman can have a rough time with many temptations, and alcohol in excess, can be a curse as you mentioned. This is why I’d much rather have 2-3 good high quality stiff drinks in an evening, and not a massive amount of paint thinner. Quality over quantity is the way to go…..for your liver’s sake. Same goes for Wine & Beer & Cheese & Tea & Chocolate.
Cheers!
Skeeta that was a tragically funny oyster story. I never developed the taste for them unless in a soup. We have friends that go absolutely bananas and will travel a great distance for great great oysters though.
I know what nice means. 🙂
Sorry to make you suffer through such bad humor but I could not resist. It is a character flaw, I admit.
Eddie, you are always either bitching about things you can’t change or telling awful jokes. Eddie, it’s old and tired man. Take it somewhere else.
You’ve made me laugh quite a few times over the years Ebolan. Much appreciated.
I laugh so I will not cry.
Good Market wrap today with 5 amigos. Thanks.
******* WOW! DUPONT TO CUT 1,700 JOBS IN THE US, 28% WILL BE CUT IN DELAWARE! *******
With the Dallas Fed falling to -22% and the Baltic Dry Index closing the year down at 478 points, things are really looking up for our economy!
http://www.bloomberg.com/news/articles/2015-12-29/dupont-to-cut-1-700-delaware-based-jobs-ahead-of-dow-merger
Question…………….why are so many of our comments being removed from this board?
I placed various comments on here the other day and they were all removed!
What is going on!
Extreme censorship??????
Al says the problem has been fixed.
Chip Kelly fired from the Eagles……………yea!
That’s what he gets for getting rid of Tebow. 🙂
Off topic but does anyone here use anything like this?
Pyle Sports PHRM24
https://www.youtube.com/watch?v=-7owvOfDaeU
Tebow?……………..you mean Desean Jackson, Shady McCoy and so many others!
Theralase
Announcement today: 3.5 of 4.0 goals completed
Fascinating end-of-year, tax-loss selling for this company (HINT: It did not happen)
Brian
Jay,
I listen to your show weekly….& enjoy it, so thank you.
I really like it when you interview people involved in the mining companies….be it a CEO, geologist etc.
When you interview people regarding manipulation etc then I sort of just tune out.
I want to hear stories of potential success in mining….not excuses for the gold price blamed on the powers that be.
But its your show afterall.
Cheers.
Gold’s 2011 high (1923.70) divided by two is 961.85 while the 200 month exponential moving average is currently 962.15 — at this point, a quick move to that level probably wouldn’t even result in a new low for the miners.
http://schrts.co/j7tiUg
Thanks for the input, Matthew.
And Jim Rogers would be happy because he wants to buy at $965.
I do agree that the miners don’t necessarily have to sell off as hard as the physical though, and they have independent balance sheet, asset valuations, cost reduction methods, royal streams or royalty payments, different management teams (the good, the bad, and the ugly), different currency factors, different effects from reduced fuel costs, and different taxation considerations. Some will do quite well, some will grow exponentially with discoveries, or in takeovers/mergers. It is an interesting time where the cream will rise to the top even in a tough market.
Meanwhile, the 330 month EMA is holding so far for silver. It peaked in 2011 about four months before gold so it just might bottom well before gold as well. So just as both metals plunged after silver peaked in April 2011, both could rally sharply from here and silver might have bottomed. Then, just as gold made its high in 2011 while silver failed to come within 10% of its earlier high, we just might see gold bottom months from now while silver doesn’t come close to taking out its 13.62 low.
Such a divergence is certainly possible just as the miners have refused to go to new lows for many months despite the pressure on gold. This, btw, is consistent with Gartman getting bullish on gold (which is going to get smoked by the miners and even silver).
http://schrts.co/wisYDE
Great thoughts as per usual Matthew, and yes, Gold will get smoked by the miners and silver longer term.
Silver Won’t Be Fantastic, But Is Expected To Outperform Gold In 2016 – Analysts
by Neils Christensen for Kitco News
Wednesday December 30, 2015
BTW – Lawrence if you’re out there I did finally bite the bullet and picked up some Silvercorp, after looking into their Chinese operations and all in costs a little more closely. Thanks for making me take another look. Cheers to the silver mining bulls!!
Agree with you Jay 100%.
Nice to have you here.
I think you’ll find this interview very interesting with another lawer: Avery Goodman.
https://www.youtube.com/watch?v=-zYbxgyYn94