Guest Post: Some Thoughts On The Recent Commodity Correction

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Wed, 05/11/2011 - 19:02 | 1265659 lolmao500
lolmao500's picture

I'm waiting for QE3.

Wed, 05/11/2011 - 19:09 | 1265686 NoBull1994
NoBull1994's picture

Hard to take a post seriously that refers to "Wall-mart" and "Bernake."  This guy is a clown - does not belong on ZeroHedge.

Wed, 05/11/2011 - 22:18 | 1266242 Sophist Economicus
Sophist Economicus's picture

Wood it make yew feel beter if yew new he waz drunk wen he rote it?

Wed, 05/11/2011 - 22:24 | 1266274 Sqworl
Sqworl's picture

Please leave and don't let the ZH door hit you on the way out.

Wed, 05/11/2011 - 19:13 | 1265688 NoBull1994
NoBull1994's picture

Hard to take a post seriously that refers to "Wall-mart" and "Bernake."  This guy is a clown - does not belong on ZeroHedge.

Wed, 05/11/2011 - 22:23 | 1266270 Sqworl
Sqworl's picture

Tyler: please remove this a$$hole from Zerohedge.  Thank you.

Wed, 05/11/2011 - 23:02 | 1266361 Keri at Bankste...
Keri at Bankster Report's picture

Then you'll be interested in this video, because so is Edel Tully at USB.  She was on with Tom Keene today, and she seems to be expecting QEn (n=interger).  We can add her to the list which already includes Jim Grant, et all:

http://www.bloomberg.com/video/69610518/  (5:01 minutes)

Her observations on seasonality are interesting, too, if indeed the market is "becoming less seasonal that it once was."  

 

Wed, 05/11/2011 - 19:11 | 1265679 mynhair
mynhair's picture

Too visual, and sad, about what's in a house.  Don't even know if that NC valve maker still exists.  (Give the name, but it's deep in the bowels of the boat.)

Meanwhile, AVL held the 7.42 support, which surprises the shit outta me, as it was very weak.

Wed, 05/11/2011 - 23:42 | 1266492 ZapBranigan
ZapBranigan's picture

 

Wow, "sad" seems to be the emotion of the week.  It is truly depressing when the “sale comes first and the truth comes second” (I seriously hate quoting a Brit, but it's applicable and fitting at this juncture)

 

But, I'm even more depressed from the general consensus of the board.  How easily you forget the strategy that Ward employed to defeat Gatti: STAMINA.

 

Be comfortable being pinned against the turnbuckle...taking a beating, because the law of energy dynamics still applies regardless of what any troll whispers in your ear.

 

Make no mistake gentlemen, you are witnessing a second late-stage preservation campaign.  And don't fool yourself, they already have the third and fourth preservation campaign blueprinted.  So, please remove yourself from the game immediately, so that us true men can savor the pain of their uppercuts while we strategize, whilst being brutalized against the turnbuckle.

 

Character has to start somewhere.

 

Thu, 05/12/2011 - 00:41 | 1266603 Dantzler
Dantzler's picture

Nice reference.

That was one of the better fights I have had the pleasure of watching.

Wed, 05/11/2011 - 19:12 | 1265685 kengland
kengland's picture

Correction? This contradicts prior posts on the CME. This is an outright terror story playing out on speculators. It's become "retarded" for sure. A correction occurs in a somewhat normal market.

 

Why would anyone put money to work with the government armed to the hilt against them

Wed, 05/11/2011 - 21:27 | 1266090 jaffi
jaffi's picture

Yes, correction is the wrong word.  Consolidation would be a better word to describe this phenomena; even if it is a CME-forced consolidation.  The fact is that you can game markets to a point to force a pullback, but if the fundamentals are all there then you cannot force a correction, you can only force consolidations; the overall trend-line still goes positive in the longer run (as opposed to daily/weekly noise).  

I must say that I saw silver's trend go parabolic for a minute there and knew that it had to consolidate.  I had an auction bid that closed at $40 an ounce last Friday.  While it is true that it is a few bucks below that right now, that is where I saw silver being valued.  I don't pay any mind to the spot price on a day to day basis, because I know that $40 is a fantastic price for silver given the dollar market.  

 

But, be ready for a drop in silver for July.  You can sell and take advantage of the short dollar rally, but I'd rather just hold my silver for the next round of monetization. We all know that it is coming.

Thu, 05/12/2011 - 01:14 | 1266647 TraderTimm
TraderTimm's picture

Don't forget the fun the members are having at your expense. Check out this post. Some of the infractions by the NYMEX traders were from 2008 and were only being punished this May.

http://www.zerohedge.com/article/energy-futures-market-halted#comment-12...

Backed up by the CME Group's own report on the matter:

http://www.cmegroup.com/rulebook/files/20110502_May_Update_electronic.pdf

 

Cheers.

Thu, 05/12/2011 - 02:09 | 1266686 jaffi
jaffi's picture

At my expense?  I purchased roughly 90% of my silver holdings when they were going for $5 a troy, and about half of my gold holdings when they were going for $500 a troy.  I am not at all worried.  

Lately, I only pick up a few kilos here and there, depending on the market noise.  Other than that, I don't make any big purchases.  Whatever I save, I put into metal, and have been since '02.  If metals go down in any particular period, that only means that the dollar is strong internationally, in which case I win either way.  

Having bought and sold metals over the past 9 years, I still break even with regard to consumer goods and services, and that is all I really care about.  I work to live better and increase my quality of life, I buy metal to ensure that my savings keep pace with my earnings at any given time with regard to goods and services.  When my metals go down, then I can use fewer strong dollars for my purchases.  When my metals go up, I can use more weak dollars for my purchases.  I don't buy metals to make a profit, I buy them to ensure that my savings are commensurate to my past earnings (i.e. my savings don't lose or gain value with regard to goods/services).  

 

Now, if you want to talk about investments, that is a different story...  Metals aren't investments in my mind, they're merely savings.

Thu, 05/12/2011 - 04:23 | 1266845 TraderTimm
TraderTimm's picture

Actually, if you follow through to the link I provided, you'll see I'm commenting on a publicly available pdf about NYMEX traders front-running orders and pre-arranging trades. In some cases, infractions from 2008 weren't punished until *now*. I'd call that 'at your expense'.

I wasn't making any comment on silver, or precious metals. I believe in their store of value and the precarious position the dollar is in.

Cheers.

Thu, 05/12/2011 - 07:32 | 1266960 tarsubil
tarsubil's picture

How did you figure this out 9 years ago?

Wed, 05/11/2011 - 19:18 | 1265708 NoBull1994
NoBull1994's picture

Hard to take a post seriously that refers to "Wall-mart" and "Bernake." This guy is a clown - does not belong on ZeroHedge.

Wed, 05/11/2011 - 19:30 | 1265760 lolmao500
lolmao500's picture

And while this is happening, the media is still silent on Fukushima CLUSTERFARK... with 3 reactors in full meltdown...more radioactive water leaking, more radioactive steam being released, building of reactor 4 about to collapse, radiation going even higher...

Wed, 05/11/2011 - 20:35 | 1265983 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

There are a few of us still cognizant of this situation.  I and my loved ones are taking potassium Iodide drops and zeolite and lots of viitamin C.  Other than that all you can do is pray and stay out of the rain.  Good luck!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 05/11/2011 - 21:41 | 1266111 Stormdancer
Stormdancer's picture

Yes, some of us are still keeping track as best limited information flow allows.  When the inevitable aftershock/new system failure finally rips the veil off the presently slow degradation of the situation we'll be around.

Early on I speculated that they'll have no choice but to dump all that radioactive water in the basements directly into the sea.  I've learned nothing since that makes that look like a bad bet.

No word on the "mega-float/barge" that was supposed to be on site late last month.

Maybe it'll show up soon and buy some time, but they're fast running out of storage and can't possibly build enough new containers to hold the mess.

It appears some modest progress has been made at reactor #1, but even that may be more spin than reality.  No mention of reactors #2-4 in days except for another leak into the sea near reactor #3 in the past day or so.  Oh...there was some new footage of SFP #4 a couple of days ago, but still no detailed information about what is happening to any of them internally.

And water levels are still rising faster than they're pumping.  They're still basicly sitting on square one after two months.

Edit:  I'm going to pimp Lapri's EX-SKF blog again.  I hadn't checked it for a day or so and he's got a lot of new info up.  Indispensible resource for those trying to keep track of this mess.  Lapri translates a lot of Japanese language info I can't access due to the language barrier.

http://ex-skf.blogspot.com/

Thanks for the time and effort Lapri...I appreciate it!

Wed, 05/11/2011 - 19:32 | 1265766 Smartie37
Smartie37's picture

Fed View ???

RUT = M3 * Consumer Demand

Consumer Demand = 1/CRB * 1/10yr * Consumer Credit

But...........they forgot:

Consumer Credit = Employment% * Avg. Wage !!!!!!!!!!!!!!!!!!!!!!

Wed, 05/11/2011 - 19:36 | 1265774 mynhair
mynhair's picture

Christ, had to go to ZH.org.

Truth hurts.

Wed, 05/11/2011 - 22:21 | 1266249 Sophist Economicus
Sophist Economicus's picture

Was this before or after He rose from the dead?

Wed, 05/11/2011 - 20:35 | 1265781 bob_dabolina
bob_dabolina's picture

Good article. 

I thought this article was not only about the inflation of money and the correction in commodities but it also brushed across the wide concept of the fall of America. 

It is true, that in the post WWII era much of the industrial capacity of developed nations was obliterated, leaving a vacuum that America was ripe to satisfy (with one of the only intact industrial complexes) However, a concept not often talked about relating to the WWII era was the exodus of brilliant minds out of Europe and into America, and this gave us an incredible edge. For example, you had the likes of Einstein, Oppenheimer, Werner Von Braun, Edward Teller, and many others that emigrated to the United States. This gave us an incredible advantage in the space of innovation for a plethora of industries ranging from nuclear science, to rocket science, and hundreds of other industries, which allowed us to create fields of opportunity never before imagined. The technology garnered from these individuals gave us a leading edge in becoming more efficient, innovative, and advanced than any other country. I don't think there was any other time in history where such a concentrated pool of brilliance coagulated behind the same flag. 

Another key issue not addressed was the industrial revolution prior to WWII. The regulatory relaxedness of the time allowed people like Rockefeller, Carnegie, and others to build massive infrastructure in their respective spheres of influence. The fact is, is that in the current environment it is very difficult to build a business from the ground up in many places because of the strict rules/regulations. Also, tying into this concept is the supply/demand paradigm that exists in the input of labor. Can anyone tell me what the labor restrictions are in China? Well of course there are none. So China has the supply of workers and the demand for their wages is reflective of the markets prices. If the FED wants to use hedonics to measure inflation in good/services, it is disengenous at best to ignore the same principles towards wage deflation. With all the laws regarding employment in the US it is a very hostile environment towards employers and thus, the jobs are outsourced. This doesn't really have to do with inflation, yet, it is a deciding factor when considering the abhorrent labor market the US is forced to stare at. 

Obviously the printing of money causes prices to rise but I feel it is equally important to understand the reasons WHY there is a NEED to print money. I have found categorically that when a nation becomes lazy, entitled, and hostile towards it's productive citizens that the preponderance for printing money becomes from the necessity to maintain, and enable, the very citizens that have taken advantage of the fruits of it's labor. 

Wed, 05/11/2011 - 21:08 | 1266070 wirtschaftswunder
wirtschaftswunder's picture

Extend the idea of the post WW2 industrial revolution and a case can be made that the democratization of eastern Europe added as much economic and financial heft to America and the west as did the internet/tech revolution of the same era. Now, one can take these two examples and submit that the acceptance of democracy in the Arab countries and the greater middle east will "buy" a little more time for the economic munificence to flow outward.

Wed, 05/11/2011 - 19:42 | 1265802 legal eagle
legal eagle's picture

The obvious question is "is it better to sell my stockpile of silver and gold now, and buy back after the upcoming correction in June and July, or better off to hold fast"  This is the question that haunts me.

Wed, 05/11/2011 - 19:50 | 1265818 T-NUTZ
T-NUTZ's picture

silver's going to 17 real quick..., so you tell me. 

Wed, 05/11/2011 - 20:12 | 1265892 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

So you are short futures here with a buy stop at 17 huh!?  Good luck with that one!  Ha ha, ha!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 05/11/2011 - 20:29 | 1265949 T-NUTZ
T-NUTZ's picture

you are clearly new to the white metal. it has a history of schooling people like you real bad. hey dude look at a chart for Christ's sake!

Wed, 05/11/2011 - 21:09 | 1266076 wirtschaftswunder
wirtschaftswunder's picture

The gold/silver ratio will adjust to 60:1. For this and many other more technical and supply/demand reasons I'm looking for 24/oz w a shot at 13. Enjoy.

Thu, 05/12/2011 - 09:58 | 1266465 Ag Tex
Ag Tex's picture

By the time "the white metal" hits 25, every physical investment milligram will have been purchased and taken delivery of.  Investors will be lunging to catch falling knives.  Focus on the fundamentals and not the charts.

Wed, 05/11/2011 - 23:27 | 1266440 Ag Tex
Ag Tex's picture

You're supposed to only look into the ether not inhale it.

Wed, 05/11/2011 - 20:02 | 1265867 Quinvarius
Quinvarius's picture

You must make your own decisions and not seek the counsel of trolls.

http://www.nowandfutures.com/weimar.html

 

Wed, 05/11/2011 - 20:20 | 1265916 legal eagle
legal eagle's picture

I get it, irony.

Wed, 05/11/2011 - 21:01 | 1266060 wirtschaftswunder
wirtschaftswunder's picture

No. Stop. Seek the advice of tin foil hatted kool aid providing doomers. Buy silver each and every day and bury it in your local park every night.

Wed, 05/11/2011 - 23:20 | 1266419 Keri at Bankste...
Keri at Bankster Report's picture

I'll take my tin hat and Kool Aid over your magic-symbol-linen-notes any day, thank you.  And if anyone was burying silver in my local park, I'd be the first one to know about it.

 Son.

Wed, 05/11/2011 - 20:07 | 1265879 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Unless you have a better place to put it, such as your own business or something else "real" sit on it.  Otherwise, you get stuck trying to time the market and most importantly you will be selling wholesale and buying retail as you jump in and out.  The beauty of buying the physical is that you can, theoretically any way, detach yourself from the daily swings that the paper traders lose sleep over.  You don't have the leverage, but you don't have sleepless nights either.  I have been on both sides of the "sheets" and I much prefer the latter.  Buy the physical as "insurance" not as a speculation.

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 05/11/2011 - 20:50 | 1266028 sellstop
sellstop's picture

You must decide if your stockpile of PM is a trade or an investment.

Is it your "Ace in the hole" for the end of the world. Or is it just a quick profit.

I think there will be better prices to buy in the next couple years. But that don't mean I will sell my physical. I will look for the opportunity to buy more. But it will depend on what is going on in the world. I don't always buy just because prices are going down. Prices are usually going up when I buy. But it will be a judgement call at the time as to what the future will likely hold.

Wed, 05/11/2011 - 23:18 | 1266409 Rhodin
Rhodin's picture

So you're thinking there will be an actual correction after they are done with the smackdown?

Wed, 05/11/2011 - 19:42 | 1265803 Muir
Muir's picture

And now for your viewing pleasure.
The Mistress of the Macabre. The
Epitome of Evil. The most sinister
woman to dance on the face of the
earth. Lowly dogs, get on your
knees
, bow your heads and worship
     at the feet of SANTANICO
           PANDEMONIUM!

 

      _____________________

      Blasphemers and apostates of the precious:

                          Repent!

                    Bow your heads

        Beg for mercy for your lowly souls.


Wed, 05/11/2011 - 19:46 | 1265816 TheArcangel777
TheArcangel777's picture

Attention all speculators with long positions on any of the commodities exchanges:

Don't fuck with WHOREX!

Sincerely,

The CME Group

Wed, 05/11/2011 - 19:53 | 1265828 RobotTrader
RobotTrader's picture

"The average American is being squeezed ever more by rising prices and diminishing real value of their savings." 

Apparently not enough to stop them from buying:

- $150 jeans riddled with holes in them from ANF

- Chain-shopping with "One Click" buying from Amazon.com

- Bras and panties from Victoria's Secret (LTD)

- Gambling at Wynn and Encore

All of which have hit highs this week...

Wed, 05/11/2011 - 19:57 | 1265848 Muir
Muir's picture

And that my friend, surely is a sign that this market is topy. 

Same old same old as always, nada changes.

Wed, 05/11/2011 - 20:18 | 1265911 rocker
rocker's picture

Speaking of ANF and their phony all time high. Lets look at it.  Net Income: Expressed in millions

2007...... 422

2008...... 476

2009...... 272

2010...... 0.25

2011...... 150

This is a long way from where the company was.  Best earnings were over a buck a share. This year 30 cents. Enough said. Go watch some more CNBC and listen to their next pump.   I said before: CSCO is a tell that a double dip is on it's way.  It is just a matter of time now when the market prices it in.

Wed, 05/11/2011 - 20:17 | 1265913 Fiat2Zero
Fiat2Zero's picture

Those aren't average Americans doing the buying there (and at Wynn and Encore, maybe not even Americans as these are globally appealing vacation properties).

Recent Gallup poll showed 1/3rd of Americans thought we were in a recession, 1/3rd a depression, and 1/3rd thought "things were getting better".

But hey, we shopped our way out of 9/11, maybe it could work again!  What do you mean my credit is maxed out?

Wed, 05/11/2011 - 20:22 | 1265935 legal eagle
legal eagle's picture

The problem is that the gubermint's credit card is maxed out, now begging for a credit increase.  Boehner should hold tight, let us default and get it over with.  If it is an eventuality, let's get it over with already.  Rome took too long to burn, I am hoping the internet will speed our demise. 

Wed, 05/11/2011 - 23:49 | 1266500 lawrence1
lawrence1's picture

I just learned that "increasing the debt ceiling" is not increasing the debt but actually allowing debts already incurred to be officially acknowledged. To refuse to "raise the debt ceiling" would be to default on debts already incurred. To refuse to do so would be defaulting on US Treasury Bonds, the lynch pin of the world economic system and would bring the whole world economic system down. That's my new understanding.

Wed, 05/11/2011 - 19:58 | 1265845 Quinvarius
Quinvarius's picture

This guy took some really interesting week old information I read in other places and regurgitated it in a way that I am now totally uninterested in it.

Wed, 05/11/2011 - 20:11 | 1265899 VodkaInKrakow
VodkaInKrakow's picture

You are all being played like a bunch of 'bitchez'. Ever get the feeling that you are behing the curve? Taking the contrarian view? Loading up on gold and silver in the hopes of inflation? I bet you are. Suckerz. Buying into commodity inflation that is all too real... like a bunch marionettes whose strings belong to the puppet masters. Thinking you are smarter than the average bear. i like your ego. I revel in your pain and vanity. It gives me pleasure and joy watching all of you twist upon your marionette strings.

 

Your contrarian view? You read Zerohedge - a most excellent blog. One of the most, if not the most, popular financial blog in ze' world. And that, you consider a contrarian view? Doing what everyone else does? Bunch of fucking lemmings if you ask me and many others. Doing what everyone else does. Reading Zerohedge for the truth and expecting to be different. News for you: You ain't special. You are doing what you are programmed to do... lemmings. Yet, you laugh at the other lemmings as the price of gold and silver and commodities shoot to The Moon. Never mind that those commodities are priced in fiat paper. Never mind, that come a collapse...

All bets are off. You ever think about that? Yeah, you got physical. There is one small, very important matter you forgot about. The application of violence and force. The State has a commodity on it. And if it doesn't, there are companies like Xe, Inc, who are employed by the gub'mint. That is more valuable than your land, gold, silver, or physical commodities. Yeah, some of you may 'Rambo' up... but you're still meat.

What? You are so pathetic that you are looking for an uprising? Look at Egypt... managed from beginning to end. Greece? A backwater. Ireland? About to be bribed into accepting her fate. Iceland? Forget about it. Too far away for anyone to care - even The Brits have written off all those savers who lost, just noise in the background. The black-and-white speckles on an old analog television tuned to nothing.

The World is coming to The End? That may be. Yet you still play the 'contrarian' game. Pathetic. No balls. No ovaries. Parroting what many already know. And you still find yourself on the losing end. Everyman for himself. Fuck your neighbor. Which is what all the peasants do for a scrap from their master's table. Lapdogs to the end. Thinking you are smarter than everyone else.

News for you... you are not. Your complacency in loading up on physicals while endlessly debating The End mean one thing...

You are sheeple that belong in The Camps.

Talking about The Fed's relentless easing. The criminality of Goldman Sachs. The bailout of banks. Etc... etc... etc... boring. You are too civilized to have any testicles or ovaries whatsoever. Talking your facts and figures and how much you loaded up on guns, ammo, silver, gold, or commodities. Watching the Oligarchs, who after all this time, have not failed yet. While you get shafted. Used like a two-dollar (post-inflation) whore.

Blah... blah... blah... blah... blah...

We are all still waiting for the end. Maybe it will come. Have you ever asked yourself the question, "What if it doesn't?" Well, the answer is, "You did exactly what your master wanted." And if The End comes? Well, your master's already have a back-up plan. Meanwhile, you wait for your hoped for revolution.

 

The Revolution Will Not Be Televised. The Revolution Will Be Controlled.

Wed, 05/11/2011 - 20:22 | 1265932 Smartie37
Smartie37's picture

Psy-Op to demoralize ignores key facets:

1)  Simple math of implosion

2)  Dynamics of bribery post-collapse

 

What is the motivation to demoralize others ?

Do NOT follow this link or you will be banned from the site!