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Big market movements today worth talking about

May 24, 2016

LPG and Chris Temple join Cory to wrap up the markets. They discuss the moves in the precious metals and USD as well as the S&P and oil. Most of these moves are a continuation of short term trends but are they forecasting a continuation?

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Discussion
30 Comments
    LPG
    May 24, 2016 24:22 PM

    So just to clarify what I’ve said at the beginning of interview as I was mumbling…

    Simon Mikhailovich (Tocqueville Asset Management) was interviewed by RealVisionTV earlier this month (1st week of May), and was just back from a trip in Europe.

    Large gold refiners in Switzerland told him during his trip was gold demand was NOT REALLY there. Interestingly, they also had seen some CHINESE S-E-L-L-I-N-G.

    So the way Simon interpreted gold’s price action in the days/few weeks prior to the interview was the move up was NOT due to stronger demand but rather that “people” were playing (bidding up) the paper market for gold…

    Hope that portion of today’s interview is clearer now.

    Best to all,

    LPG

      b
      May 24, 2016 24:21 PM

      Chinese selling? They start selling and the price is toast.

        LPG
        May 24, 2016 24:39 PM

        b,
        Chinese have been buying for a few years… yet gold price has come down…
        Best,
        LPG

          May 24, 2016 24:17 PM

          Yes, the Chinese bought weakness for several years and now they are selling strength. They will be selling for years as the price-chasers of the West buy.

          The miners are going to smoke gold for years to come.

          GDXJ priced in gold:

          http://schrts.co/NgpWyR

            May 24, 2016 24:10 PM

            Matthew,

            I’m confused about “the miners are going to smoke gold for years to come”.

            Bix Beir just announced to the world that come the September/October 2016 time-frame that all digital money including stocks held in brokerage accounts and even the DTCC that maintains stocks in street name will be zeroed out and just disappear into digital heaven. No one will have currency digits or mining shares.

            How in the world could any of these little mining stocks in a brokerage account still be around in a few year to reach your goals?

            Truthfully I’m with you on the mining stocks performance related topic. I hope you caught my sarcastic slant about the Bix Weir prophecy.

            May 24, 2016 24:33 PM

            Wow, is that what Bix thinks? I guess I should be thankful that so many are so afraid of so much. It keeps them from competing with me for cheap mining assets.

            May 24, 2016 24:38 PM

            Yes, I think I’m about 99% correct on his views. The interview is over on USA Watchdog if your so inclined to view it.

            GH
            May 25, 2016 25:08 AM

            Bix Weir also thinks that Alan Greenspan was a trojan horse, whose goal all along was to restore the gold standard. The odds on that being true seemed so small that I’ve never paid Weir the slightest attention again.

      May 24, 2016 24:40 PM

      LPG, I understood you fine. As I have been reminding the last several months, ALL equity positions could disappear suddenly and/or remain inactive for a protracted period of time for a variety of known or nebulous reasons. So, own some metal if you have none or a minimal amount.

        May 25, 2016 25:17 AM

        Marty: You may be correct. One of the black swans I’m watching is Deutsche Bank. If and when they seize up, a week later the entire banking system seizes up. The 583 trillion in derivatives goes into a deep freeze with massive amounts of fraud floating to the surface. We could have a frozen system for 6-12 months. If you aren’t sitting on some cash and metals, you may as well be holding a billion dollar Venezuela bond. I’ hearing a lot of panic from bankers across the spectrum.

          b
          May 25, 2016 25:37 PM

          Bob, should the system “freeze up”, how would people make loan/mtg payments?
          Banks make adjustments I suppose?
          Just in time delivery could slow to a crawl if it continued at all.

          Hard to imagine the devistation, medicines for example, good grief.

          Wouldnt the banks impliment SDRs quickly?
          Increase printing?
          Frozen 6-12 months just seems extreme.

            May 25, 2016 25:41 PM

            All debts get paid. We are awash in debt. In 1931 a single bank crash in Austria brought down the entire system. The system is a lot more unstable than I have ever even imagined. Look at Venezuela, how do people do any business? They aren’t different, they are just first.

            All the banks are interconnected. Their “assets” consists of mortgages and bonds in other banks. When one goes down, they all go down. I think we are going to see total chaos.

      May 25, 2016 25:55 AM

      I found that very useful information LPG. Fascinating.

    May 24, 2016 24:42 PM

    Oil now has a buy signal on the weekly chart which happened a few days ago. It has had a strong buy signal on the daily chart for quite a while. I think it heads toward 60 later this year. It has reached my 48+ target I had a long while back.

    May 24, 2016 24:55 PM

    More Greek trouble ahead:
    By Rodney Johnson, Senior Editor, Economy & Markets
    If you lent a guy money and he failed to pay you back, would you lend to him a second time? How about a third time?

    That’s exactly what’s going on in Europe.

    The European Central Bank (ECB), European Commission (EC), and the IMF – the three entities collectively known as the Troika – bailed out Greece in 2010… then again in 2012.

    All told, Greece received 216 billion euros, and defaulted on a chunk of debt to private investors. Now the Greeks are back at the bailout door, hoping to finalize a deal before their next debt payment is due on July 1.

    The ECB and EU have agreed to more austerity in Greece in exchange for just under 100 billion euros of bailout bucks, but the IMF is holding out. Officials at the international bank don’t think Greece can make good on the new promises. They want remaining creditors – like the ECB and central banks across Europe – to discount their Greek bonds instead of asking for budget cuts from the ailing country.

      May 25, 2016 25:49 AM

      Good one. I am anxiously waiting to see how this will unfold..

    May 24, 2016 24:42 PM

    Appreciated the insights and humility of LPG.

    However, re: LPG’s last comment about cash positon of asset managers, which is still high. I agree w/that, but I don’t see how these asset managers are going to convince their clients (who own the cash position) to enter the market. QE is over. Stock buy backs are over. Un and underemployment are > 20%. The banks are having currency wars, and the talk and actions of neg int rates and bail in’s must have most folks pretty scared. And now, on the monthly chart, after a 4+ yr correction, gold may have bottomed. No surprise.

    What my basic question is, what will enable investment managers to convince their clients to put more money into the markets?

    I’m just one little rat on this big ship, but I’m in cash and am looking to buy gold, not the SPY, for instance.

    LPG
    May 24, 2016 24:00 PM

    Bill in Tokyo,

    I’m afraid you get something wrong:
    ” I don’t see how these asset managers are going to convince their clients (who own the cash position) ”

    –> the cash position is the cash that is invested in funds, managed by the portfolio managers.
    –> It’s up to the portfolio manager to allocate between equities/cash at his own discretion, within the parameters of the prospectus of the fund.
    –> cash managers raise cash WITHIN the funds when they are afraid of market declines. Once wrong, they need to play catch-up.

    For more granularity on the data I eluded to, please refer to Urban Carmel’s blog.

    Best,

    LPG

      May 24, 2016 24:18 PM

      Oh, sorry, I had no idea about that. Thanks for explaining.

        LPG
        May 24, 2016 24:45 PM

        Most welcome Bill.
        Glad it helped.
        Best,
        LPG

    May 24, 2016 24:37 PM

    A move down to at least 190 looks like a sure thing for the HUI…

    http://schrts.co/IgLQsQ

    May 24, 2016 24:26 PM

    I think $16 will provide enough support for silver, but if it doesn’t, $15.50 could come quickly. Then $15…

    http://schrts.co/DCkTLK

    May 24, 2016 24:55 PM

    Gold has fallen almost 50% versus oil since February and is going lower…

    http://schrts.co/XKT4Jh

    May 24, 2016 24:40 PM

    WE’RE DOWN WITH LPG, YEA YOU KNOW ME. LIKE LPGs PRUDENT ADVICE AND MR T’s CANDOR. KEEP UP THE GOOD WORK FELLAS. CONGRATS TO BIG AL ON HIS ANN AND THX GUYS FOR A BALANCED AND FAIR PERSPECTIVE FROM KERN. SORRY ABOUT SAVAGE

    May 24, 2016 24:44 PM

    Ok so the metals are going to give back about all they have gained just doesn’t make much since to me in a supposed bull market or a baby bull whatever you want to call it, just seems to me that nothing has changed! Sorry I just had to rant!!

      May 24, 2016 24:20 PM

      Lewis,

      That’s why you take profits on strength and re-buy positions on weakness while following the trends and dynamics closely. Mining stocks in general, excluding some very special, high quality situations are not buy and hold equities.

      May 24, 2016 24:29 PM

      Lewis – this action is typical of silver. In fact, it was more trying after the 2008 low: It gained almost $2.50 (almost 30%) before quickly giving back $2.10 (almost 20%). From there, it gained about $1.90 and quickly gave back about $1.60. Then it gained 2.50 and gave back 1.50. All of that happened in 8 or 9 weeks. The next 9 weeks took silver up $4.50 (45%) followed by a decline of $2.95 (20%) over the next 9 weeks. I’ll stop there but that pattern didn’t stop there.

      The action this time has been serene by comparison. Silver gained $4.44 (33%) in about 20 weeks and has now given back $1.85 (10%) 3-4 weeks. Slow gains with followed by quick pullbacks is typical bull market action because slow boring gains and attention-getting declines is exactly the recipe for skepticism and the resulting “wall of worry” that is required nourishment every big healthy bull.

    May 25, 2016 25:00 AM

    UUP (USD) is at resistance…

    http://schrts.co/FZS9AT

    May 25, 2016 25:03 AM

    The Markets

    Strength in technology and financial stocks fuelled a rally on Wall Street during the Tuesday session as investors become comfortable with the prospect of a federal funds rate increase when the FOMC meets in the months ahead. The S&P 500 Index jumped above resistance presented by its 20 and 50-day moving averages, as well as declining trendline resistance that formed the basis of the upper limit of a descending triangle pattern. The move above this pattern violates the short-term negative setup that would have suggested a downside target down to 1980. Momentum indicators for the large-cap benchmark are once again curling higher as the index moves back towards the middle of the trading range that spans between 2040 and 2100.
    http://www.equityclock.com/2016/05/24/stock-market-outlook-for-may-25-2016/