On Buying The Commodity Dip

Tyler Durden's picture

With Gold, Silver, and Oil down quite considerably since the second LTRO from the ECB ended the immediate elevations in global central bank stocks and flows and now all marginally positive/negative year-todate, the question of the day is whether this is a dip to be bought or a liquidation to be sold into. Sean Corrigan, of Diapason Commodities, provides some guidance:

At this uncertain juncture, to use commodities primarily as a means of obtaining an element of inflation protection, of owning a call option on monetary and fiscal stupidity, seems to be the more pressing imperative, especially since it is one which also offers a growth kicker in a manner which more traditional instruments - such as index-linked bonds - certainly cannot hope to approximate given the ruinously negative real yields which attach to them in this Looking Glass world of deliberately falsified interest rates.

 

Each successive resort to the printing press may well bring less and less material relief to a world still trying to maintain the pretence that the pre-Crash reckoning of prosperity was a sound one and still striving therefore to return valuations to those that prevailed in that particular vision of El Dorado, but the repeated recourse to inflationism will teach people that they should seek out ways of protecting themselves from its malign effects.

 

As they do so, they will eventually act upon their newfound understanding and then, instead of assuaging the fever as they are today by holding money, they will begin to aggravate it by accelerating their purchases and building up their precautionary stocks of goods. It is against the dawn of that evil day, as much as for any other reason, that holders of predominantly financial assets should contemplate the need to buttress their existing investment framework with a few solid girders of good, hard commodities.

 

In other words: Nothing Has Changed; Central Banks have only one trick which they will use when necessary; normal assets will waver in risk-on/risk-off mode because of that; commodities offer protection from the profligacy with an upside growth cover.

Gold, Silver, and Oil post March 2009 lows...

 

and as far as those global REAL interest rates (courtesy of Gresham's Law):

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5880's picture

Deflation before inflation

SilverTree's picture

Yep, its gonna hurt too. (For those who have no clue)

Dr. Richard Head's picture

Clue?  I love Clue.  It was Professor Bernanke in the Conservatory with the Printing Press.

CPL's picture

And there is the RSI flip.

 

...then off like a no volume rocket to somewhere.

Levadiakos's picture

 

 

 

....................................................I buy cash

 

 

 

:-)

SilverTree's picture

No, you really don't. You may exchange your labor or an asset for cash.

knukles's picture

Just ya'll fuckin' wait.
It's gonna get real hard, nasty and downright messy.
Austerity bites.
We're locked into a credibility trap that manifests itself as a liquidity trap.
The CB's have the only option at hand (supposedly) since TPTB will not reform the system.
Meaning....
In the not too distant future, like pretty damned soon, the data world wide is gonna turn to shit and the CB's announce another round of QE whateverthefuck.
Then the Commodity Complex will once again, Rise to The Liquidity and Inflations Expectations Occasion.

Nothing has changed.
Nobody cares.
It's all Ex Cathedra Pabulum and Horse Shit
So why would anybody expect anything different from the same madness?

Enjoy whatchu got while you gots it.

iDealMeat's picture

Ahh but something has changed..  That something is Japan and is/was Fukushima.  As a result Japan has shut off its Nuke Plants. 

They're going to be buying Oil by the tanker load to keep the lights on..  That, with hints of QE is change..

and lots of it..

 

donsluck's picture

Hmmm, maybe:

oil consumption in japan jan 2011: 4.3 mbpd
oil consumption in japan in feb 2012: 5.1 mbpd
oil consumption in US jan 2011: 18.7 mbpd

I see a 25% increase, still about 25% of US consumption. I think a recession in Europe and US would negate the effects of Fukushima on oil consumption, which is why oil dropped. Combined with the surge in natural gas in the US, going forward I see oil going down.

emersonreturn's picture

donsluck, how far do you expect oil to drop, and how long do you believe it will remain down?

TrumpXVI's picture

Buy it cheap.

Stack it deep.

HarryM's picture

Another big comeback today

We are just flies on their windshield

 

DoChenRollingBearing's picture

@ CH1,

+ 1

Out of town bearing made a special trip to the bank to fund his BTFD just today.  I wonder if TSA will want to grope my coins...?

New American Revolution's picture

PRICELESS!!!   SERFS UP AMERICA!!!

Spitzer's picture

Ok Mish...Or is that Prechter...

How did that DOW short go over the last 3 years ?

jimmyjames's picture

How did that DOW short go over the last 3 years ?

**********

It went about as well as the long real-estate trade-

DosZap's picture

Deflation before inflation

Totally what we have said here time and again,I have fully expected to lose fiat worth on PM's when we got to this point.

And, when it really hits in earnest, the prices will drop even more.And ask me if I care, NO.

I did not purchase my first once, with any intent of making a profit,I am doing this strictly to retain value.(somethng fiat can never do, esp over time).And any more I may purchase will be for the same reason, preservation of capitol,v.s. paper.(insurance)

Because the way I see it is the longer they dick with the paper world,its like they are trying to push a fricken rope............ the more stacking WE all can do.

And I will do what I always do, BTD,if it merits it, and keep the bulk of my powder dry and possibly get the chance to back up the truck.

BlandJoe24's picture

Would someone please translate the Sean Corrigan quote: i don't get the language.

rickadoh's picture

My precious......come to papa....

Cognitive Dissonance's picture

The Chinese say dog soup is delicious.

Wait...what are you talking about? :)

http://www.youtube.com/watch?v=WCSZfmbFJyQ

Dr. Engali's picture

A little deflation is the cover Ben needs to print. It's all coming together as planned.

Cognitive Dissonance's picture

I so love it when things come together as planned.

Holding physical Silver and Gold? Check. Plenty of food and ammo? Check.

Bring it on asswipes.

 

niktamere's picture

guns will run dry eventually

youre toast, Cog.

Cognitive Dissonance's picture

That's Mister Cog to you buster.   :)

Manthong's picture

If you are considering running out of ammo before you commandeer more, you need to revamp your tactical plan. : D

EBR MOD 0's picture

I don't own any 40s ...yet. I'll just add some when the boyz in black show. Should be some toyz around for pick up.

Hulk's picture

I got your back Mr Cog, just head down the valley and I'll be there

http://www.youtube.com/watch?v=Ma09CIqapwk

Cognitive Dissonance's picture

They just don't sing them like they used to.

Doubleguns's picture

Run dry?! Maybe ammo...not guns, but there is always the command "fix bayonets" for that day.

I will still protect my beans, bandaids and stack when the bullets run out. Ummm dont forget the diesel and ammonium nitrate.......spectacular to say the least.

niktamere's picture

All Im saying is get familiar with HTH..

Upswaller's picture

You've never heard of re-loading, have you?   

AL_SWEARENGEN's picture

Guns do run dry. Which is why you want to own a battle ready sword, short sword, or battle axe as part of your survival pack. Don't fall for a cheap replica that will break in half when you go to use it. $500 and up should get you a quality piece of steel that in trained hands is as effective as any small arms close range. Find a sword smith and get something right for you, they still exist if you look for them.

niktamere's picture

Bingo. Maybe keeping them blind would have been best

Lord Koos's picture

Swords and guns vs drones.

DosZap's picture

niktamere

guns will run dry eventually

you're toast, Cog.

No, guns will never run dry,nor will ammo.

Reason, everyone against you has them, all you have to do is take theirs, and their ammo.............supply possibly endless.Just make sure you are not the target first.

MeelionDollerBogus's picture

you can make & find re-loads. You can also use crossbows.

worbsid's picture

Ah, don't forget toilet paper ... wait, I guess you weren't talking about TP.  Sorry.

Dr. Engali's picture

That's what I keep an extra roll of tens and twenties around for.