Comment by phil

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phil
July 20th, 2015 at 5:13 am

Good morning! 

Fututres rocketing higher, as usual.  Only up about 0.15% but flying off lows at 3am, possibly Europeans moving cash this way.  

Gold fell all the way to 1,087.70 on a spike down at 9:30 last night and just failed $1,120, now $1,112.  Silver hit $14.49 and back to $14.80 already, which is where we started but, obviously, it would be foolish to bet these futures as the chance of getting burned for 0.30 ($15,000) isn't worth it. 









My cynical view is that "THEY" are trying very hard to flush people out of longs on metals but not much you can do but ride it out if you want to be a bull.  "THEY" have a lot more money than we do…

YEN 124.27 so /NKD is popping back to 20,800 – another one we have to let go for now.  Dollar topped out (so far) at 98.20, now 98.015.  Euro $1.085 after tasting $1.08, pound $1.56.  

Asia was not exciting this morning but Europe is opening well:



The short story, if you like fairy tales, is that the Global economy is booming, markets are at record highs, but there's no demand for oil, gas, metals or any other commodities or shipping. Yikes! 

GG/Jomp – If you are willing to go long-term and ride out the pain, I think it's an excellent time to get in but you got out of ABX and SLW and GG will be no different than doubling down on those – not different at all.  To make investments in commodities and expecting the cycle not to take years is foolish.  

Last time gold bottomed, it bottomed from 1996 to 2004, hitting about $250 in 1999, when the market was topping and any "fool" knew that putting money in the markets was better than putting it into gold. 



Of course people who kept buying gold from $400 to $250 (-37.5%) were ultimately rewarded with a run to $1,800 (+620%) over the next decade, at which point I began shorting gold right about the time people were getting out of stocks to buy gold and silver because any "fool" could see that commodities were better than stocks.  

So I don't like saying "buy gold" or "buy silver" because very few people are on my time-frame and it will be years before I'm right and just like when I was saying "buy AAPL at ($85/7=)$12.14" in 2008/9 – by the time it plays out, who even remembers?  That makes it a no win for me to tell people to buy gold or silver because you are buying PAIN and maybe years of it before it pays off but, do I think it's a good investment – yes, one of the best.  

This is not a complicated premise, the SUPPLY of money has become HUGE, globally it's almost TRIPLE where we were in 2008.  The VELOCITY of money, on the other hand, has crashed.  That means money is out there but sitting around not moving in the economy – so no inflation.  



The velocity of money has fallen almost 50% since 1999 and maybe the Global Recession persists and it never goes anywhere but, while it does – the Central Banks are printing more and more money in an attempt to get the velocity of money moving again.  Once it does move, the multiplier effect will lead to inflation (this is the stated goal of the Central Banks) which they HOPE to control.  What is a hedge against inflation getting out of control?  Gold, silver…..   

When will this happen?  Well, it's been 7 years and not yet….

Oil/Jomp – How can you trade anything when we're so disconnected from reality?  It's a roulette wheel at the moment, especially with Wednesday being the contract rollover day and still 52M open barrels so about 40M they have to dump today and tomorrow.  

Click for Chart	Current Session								Prior Day		Opt's
	Open	High	Low	Last	Time	Set	Chg	Vol	Set	Op Int
Aug'15	50.76	51.26	50.56	51.03	04:51 Jul 20	–	0.14	6979	50.89	52690	Call Put
Sep'15	51.11	51.58	50.89	51.36	04:51 Jul 20	–	0.15	16423	51.21	494408	Call Put
Oct'15	51.47	51.94	51.26	51.71	04:51 Jul 20	–	0.13	1302	51.58	170602	Call Put
Nov'15	52.02	52.45	51.78	52.22	04:51 Jul 20	–	0.09	772	52.13	80535	Call Put
Dec'15	52.55	52.93	52.35	52.79	04:51 Jul 20	–	0.09	1255	52.70	238009	Call Put
Jan'16	53.09	53.30	53.07	53.28	04:51 Jul 20	–	0.08	162	53.20	70955	Call Put
Feb'16	53.56	53.81	53.56	53.81	04:51 Jul 20	–	0.20	74	53.61	36800	Call Put

After next month (Sept), things get really hard as Dec will become the 3rd month and already it has 238,000 open contracts, so it will get stuffed very quickly and traders don't want to roll past Dec for tax reasons.  Not only is demand not likely to pick up by Dec (my constant mileage pressure theory) but supply from Iran will certainly be adding pressure by then.

So it will be a heroic struggle for oil to hold $50 between now and Dec though, of course, that doesn't mean it won't pop on any thin excuse off the $50 line, especially as they get the Aug contracts under control.  Certainly nothing I'd place big bets on but I'd expect a test of $50ish and then $52.50 into the weekend and, don't forget, we have Labor day at the end of Aug, so hope springs eternal for demand to come back.

Remember on Friday I said the way to play /RB was not to short it at 2:41 but to short it when trading re-opened at 6pm last night:

Gasoline is probably being pumped up into the weekend and, if nothing happens between now and Sunday, it should turn lower at the open (6pm) and head back down but I wouldn't be crazy enough to play that because it's too dangerous.  Sunday night might be playable but I REALLY hope I have something better to do on Sunday night than stare at gasoline Futures…   



That was easy!  



It's a RIGGED market – it's easy to predict a rigged market BECAUSE IT'S RIGGED!