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Commodities Gone Wild-ish
While it might be a little premature, we thought an early reflection on the day's moves in commodities worthwhile. As COMEX copper closes -1.7%, its biggest one-day drop since 12/14, Gold and Silver are suffering similarly weak performances - even as the USD weakens. Oil, on the other hand, has staged its largest 5-day rally since 10/27. It seems the reasoning behind all of these moves is beyond mere mortal investors as newsflow is irksomely flip-floppish.
Performance since the 12/23 close is rather divergent (chart above). Clearly Oil is outperforming - more below - but we note that Gold (which lost $1600) has held up relatively well versus Silver and Copper - as the USD modestly weakens (-0.27%).
Copper's drop (above), while not a total plungefest, is the biggest single-day loss in two weeks.
As WTI crosses $101 on its way to three-week highs (managing its largest 5-day rally in two months - above), we thought a reflection on the newsflow this morning would be both instructive and modestly humorous. At 1111ET, Bloomberg pronounced (on the loss of the $100 level, the drop in Commitment of Traders long positions, and impending doom that spells)...
Oil Traders Flee as Crude Price Swings From $100: Energy Markets
And then at 1131ET, 20 minutes later (as consumer confidence jumped and WTI breached above $100)...
Oil Rises as U.S. Consumer Confidence Gains Amid Iranian Threat
The Iranian threat headlines were, however, at 0944ET
*IRAN TO CLOSE STRAIT OF HORMUZ IF OIL SANCTIONS IMPOSED: IRNA
so what is driving oil now?
It is evident that noone has any idea what is going on but for sure, the discussion we pointed to earlier that the equity market (and implicitly the macro-economy seemingly) can only go up if credit creation is 'impulsed' and with the baseline here for energy, we are becoming more and more sensitive to credit shocks and less and less capable of breaking into a virtuous circle of growth (as antithetically the energy 'tax' anchors us to low/no growth given the monetary drivers).
We have seen bigger moves and more volume obviously but on a day with little real newsflow and macro data that is mixed at best, these moves are notable.
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Europe's biggest Oil Refiner "Petroplus" to go bancrupt because banks stopping credit lines ?
http://www.ft.com/intl/cms/s/0/f8a9e4bc-3094-11e1-9436-00144feabdc0.html...
http://www.reuters.com/article/2011/12/27/petroplus-idUSL6E7NR0L620111227
Verrrrrry interesting.
Silver has stayed in a tight band here in India because the Rupee has plunged against the dollar and India is almost 100 % import dependent for Silver.
INR and Silver Spot has had a crazy correlation for th epast 6 months.
ori
http://aadivaahan.wordpress.com/the-plan/
commodities on target for deflation by Fed before Iran war.
Psssst! You wanna do some LOLing? Here:
http://www.bloomberg.com/news/2011-12-27/u-s-says-iran-elite-profiting-f...
Manipulation. Not hard to figure out at all.
I guess the Fed and PPT has the S&P on autopilot now.
Sooner or later folks are going to realize that going ballistic means the propellant is gone.
Light volume, easy to manipulate. Wait until the start of 2012 when vol increases; Bernanke will need to flip that freshly printed $1.2 trillion from the Treasurie to the PDs back to the Fed in large quanitities. This will increase volatility, but with all Central Banks primed with zero interest rates it should mean lquidity will be in overdrive. Grab a life vest, it's about to get wet!
And the CME is in deep doodoo because of the failure to backstop MF Global's customers, as their agreements and literature claims they will. Their exchange blew an integrity gasket. I think commodity trading is just getting shuffled to new venues, and in the cases of gold and silver, delivery. When they punched gold under 1600 for OPEX today and it didn't trigger any stops, that said it all.
@EPS
Typically the last 2 weeks of the year are marked by thin markets that lack commercial participation. Many has been the time (back in the old days when US markets had daily price limits) that US markets would move limit-up or limit-down while their European counterparts were steady or closed for the holidays. If you and the rest of the simpletons who comment here about market action could get a little less paranoid perspective by familiarizing yourself with historical/seasonal market behavior maybe you would realize that everything is not mindlessly explained by "manipulation".
What does the thin market have to do with the fact that the prices of the almost everything tradeable are manipulated to the death these days? Except that during these times, it takes less cash to do it. Oh I am sorry, I forgot that we live in a free market democracy. No manipulation is possible because it is not moral, and no one would dare to do it anyway, because SEC is watching....
Someone's gotta keep pr0n actors employed...
Sorry, but the KING of rigged is the REIT's.
Again, of course, being ramrodded higher (and higher, and higher, and higher...) for no good reason.
The IYR and SPG are fucking as rigged as the day is long. They are literally the only financial instrument that never, ever, fucking ever, goes down irrespective of any actual market conditions.
Why would they when the real estate market is the most fascist thing since I.G. Farben.
2012 will not be as kind to them.
What exactly do you mean by rigged? Can you elaborate?
Do I really need to?
Yes
Rigged means it's going in the direction that makes you unhappy. It's a close cousin to conspiracy. If you ever lose money you can be sure that one or the other is to blame.
Is one place where money has piled in for the returns. Some of the REIT funds are generating incredible returns. That will change at some point. But, for now, it appears backstopped.
Until someone flinches and decides to sell their winners
Right. Commercial Real Estate is just rockin' with record sales and rents. Sure. Now, if you went long ply-wood, maybe.
JNK also has incredible returns. He with biggest smile also has the biggest crack.
Selling PMs before the new year....political uncertainty, thus regulatory/taxation/legislative uncertainty. Those that don't see PMs as insurance are going as liquid as possible.
I was thinking of buying now. Hmmm
http://www.youtube.com/watch?v=S4Bc5K9LMmk&feature=relmfu
Bondage Goat Zombie
It was fun to watch gasoline prices jump six cents in the Pittsburgh area between Friday the 23rd and Saturday the 24th - better known as Christmas Eve here in the USofA.
Hey, Robo - that's pretty damn cheap, huh? Almost makes you want to do a little dance, make a little love with your cheez-doodle bag, and get down tonight, now doesn't it?
Considering we will be a two-person, five-cat, one UC-benefits check income family starting in two weeks' time, I know I feel relieved by the "plumetting" price of gas about which you constantly crow.
You should've seen the gas spike in my locale.
Left for work one morning and filled up on the way in for 2.89 / gallon.
On the drive home that night, gas was 3.29 / gal. I think that was on the 22nd.
What are "UC benefits"?
Is that when your kids get pepper sprayed by tax payer funded university mall cops?
If you bring your 5 cats to OWS protest, would they call animal abuse watchdogs when they spray cats with pepper spray?
At the rate (and direction!) things are going, someone is gonna luv eatin' those pepper-flavored kitties...
Correct me if I'm wrong, but didn't copper prices fall in summer of 08 while DXY was floundering way down and oil was to the moon?
Here is my ADD riddled thought on oil http://www.zerohedge.com/news/guest-post-are-commodities-topping-out#comment-2014128
Oil up and other commodities down means the market is expecting trouble in the Middle East.
trouble as in WAR?
you need money to make money?
you need oil to steal oil...
You don't need an actual war. Domestic unrest or insurrection in any of the oil producing countries of the Middle East could do it. An Iranian blockade of the Straits of Hormuz would do it. An "industrial accident" at an Iranian nuclear facility followed by an Iranian hissy fit would do it.
Iranian on again/off again threats to block the Straits of Hormuz are on again, courtesy of some 'Vice President' character:
Iran will block oil shipments through the Strait of Hormuz if sanctions are imposed on its crude exports, the official Islamic Republic News Agency reported, citing Vice President Mohammad Reza Rahimi.
“We are not interested in any hostility and our motto is friendship and brotherhood, but westerners are not willing to abandon their plots,” IRNA cited Rahimi as saying.
http://www.bloomberg.com/news/2011-12-27/iran-to-block-oil-through-hormu...
(article notes earlier threat and retraction from a different official)
Bernanke is rooting for this on/off threat from Iran. The greater the swings in the oil market, the more PDs can flip their USTs and hit their daily shorts/longs on oil. These big moves keep the PDs pockets primed, and keeps the Fiat Ponzi alive. Bernanke is loving the Fiat Ponzi roller coaster.
Bankers love wars.
Destroy someone else's home just to rebuild it again using your company. Demand boosting while selling debt to governments around the world.
Politicians love wars too. Their popularity sky rockets as populace is united under a common "enemy"
so long as you bitches don't panic and start buying too early I suspect I'll be able to get my whole investment year 2012 wrapped up before the new year if Silver would kindly slip below $25ish.. if only for a few moments.
Hold your fire!
I wonder though if the fed intents to keep the pm's crushed under the weight of higher oil prices / higher rents (with their monopoly on housing via mbs) and if need be occasional spikes higher in interest rates to swat them back down. If you buy the metals at this point I'm thinking it's for the revolution triggered collapse of our current system.. just a thought.
I'm buying at 28, 26, and on down every two dollars. Increasing quantities at every step down in price. You just never know when the drop will stop and reverse. So why not average in/down?
if you don't know, then you are just speculating against hedge funds with army of analysts & politician insiders.
Might be better to stick it in bonds and sleep sound at night.
When bottom guessing remember,
less is more.
Look at a 50 year chart and tell me where the bottom is in silver.
Dont get me wrong, In 2010 bought more than I can carry at $18, but it was banging on the attic door for months.
good luck!
I might change my handle to "irksomely flip-floppish".
It would be an improvement.
Timing uncertain but eventually, people will realize safety resides in that which is real and substantial as opposed to paper claims and contracts.
Chased a gringo last night through a field
Wasn't me. I'm armed. Nobody "chases" me. lol
I hear ya. Sorry, that line always comes to mind when I see the word "gringo". From The Cisco Kid by War. Great tune.
.....possibly preparing for denominator dollar strength next year as the printing presses hit the Eurozone and further affect EUR/USD......those in the know getting out early?
From Wikipedia: Iranian threats
On June 29, 2008, the commander of Iran's Revolutionary Guard, Ali Mohammed Jafari, said that if Iran were attacked by Israel or the United States, it would seal off the Strait of Hormuz, to wreak havoc in oil markets. This statement followed other more ambiguous threats from Iran's oil minister and other government officials that a Western attack on Iran would result in turmoil in oil supply.
In response, Vice Admiral Kevin Cosgriff, commander of the U.S. 5th Fleet stationed in Bahrain across the Persian Gulf from Iran, warned that such an action by Iran would be considered an act of war, and that the U.S. would not allow Iran to effectively hold hostage nearly a third of the world's oil supply.[7]
On July 8, 2008, Ali Shirazi, a mid-level clerical aide to Iran's Supreme Leader Ayatollah Ali Khamenei, was quoted by the student news agency ISNA as saying to Revolutionary Guards, "The Zionist regime is pressuring White House officials to attack Iran. If they commit such a stupidity, Tel Aviv and U.S. shipping in the Persian Gulf will be Iran's first targets and they will be burned."[8]
An article in International Security contended that Iran could seal off or impede traffic in the Strait for a month, and an attempt by the U.S. to reopen it would likely escalate the conflict.[9] In a later issue, however, the journal published a response which questioned some key assumptions and suggested a much shorter timeline for re-opening.[10]
In 2 words: FIREWORKS BITCHEZ !!!
More dead Americans, no dead israelis while we are forced to fight for them.
2 words: Ron Paul.
look at it this way....they more idiot patriots die off, less idiots in US of A supporting war for Israel.
Ron Paul has few friends among the strong "Israel First!" lobby in the US Congress.
Lemme rephrase akak. Ron Paul has few friends among the Israel First lobby, the U.S. Congress.
The robots are on "auto". It's a short week.
Gents,
Crude is being bought and stored in tankers or in the SPR. Jim Kramer and other internet sources are hinting at this, otherwise there's no reason for backwardation.
My speculation # 1:After Iran is attacked they will flush the market with oil. High probability in my opinion.
My speculation #2:They're all hoping that China will print quadrillions of yuans and will continue to build anything and everything that is qualified as ghost without caring about food inflation. Idiotic thinking in my opinion.
fed is screwed. face it. qe3 would bring oil to 200. no qe3 and the deflation goes into warp-speed
Right on. Inflation harms the people and helps the banks. Deflation helps the people and harms the banks. Seeing what Bernank said to the republican senators, he'll choose the 2nd right now.
agreed. ive been saying for a while that ben will choose the dollar and his legacy over printing the dollar into oblivion, since it wont help anyway.
Hmm, personal legacy..... New perspective for me. Thx a lot.
do you want to be known as the central banker that printed america into hyperinflationary collapse?
or do you want to be the fed president that did his job by imploring congress to fix the mess, while preserving the currency and the power of the independent central bank, and his legacy?
hes f-cked one way or the other, why should he choose the path that ruins his power?
besides, a deflationary collapse would give the country a better chance of recovering alot quicker............
Any perspective that includes personal feelings is much closer to reality, in my opinion. However, it's tough to focus on personal feelings and personal characters of policy makers. For example, a lot has been written about Merkel being a PhD in Quantum Chemistry. As an experimenter, she'd try sth and check results. If good outcome, then go ahead, if bad outcome than change course. She's done exactly that. Thx a lot for this new perspective.
Ben a Keynesian economist, the only thing Keynesians know how to do is inflate the money supply, QED.
one may be an atheist until they are in a foxhole................
Tell me about it, literally...
The utter ruin of the currency didn't seem to ruffle Gideon Gono's printfest in Zimbabwe one bit, and it is interesting that the man is STILL the head of the Zimbabwean central bank --- what makes you think that any amount of currency debasement would upset Ben's apple cart?
Besides, as much as you deflationary flat-earthers keep expecting an appreciating fiat currency to ride in on the back of a unicorn, and just love to pose the false dichotomy that it is either that or HYPERinflation, what is ACTUALLY going to happen will be a sudden, quick, sharp devaluation of the US dollar, on the order of 75%, almost exactly as was experienced by Icelanders in 2008 and Argentinians in 2001-2002. We can still have a currency crisis without seeing classic hyperinflation --- and almost certainly will.
It's the biflation conundrum
It's not that simple but we cannot discuss it here.
Why not? Say sth?
We are under surveillance and have moved all telecommunications to AMTOR.
Biflation can and will kill the global economy as we know it. It is an unsustainable path. Today is just a perfect little illustration: as house prices are reported to drop even more than expected and Chicago and Texas manufacturing indices are in contraction mode, and an iconic retailer teeters on the edge of bankruptcy right in the holiday season....we get a spike in oil and grain prices. Even copper's little retracement today still puts the price near the peak of the commodity boom years of 07-08. Gasoline hit records for the month of November and is threatening to go higher even as US road miles driven has plunged in the ultimate sign of a slowing economy with demand destruction. There will be plenty of blame to go around so take your pick. And idiots spewing inappropriate blame on all but the correct sources will ensure that there won't be a recovery any time soon.
A timely addition to my post re miles driven plunging! In case you still doubt that we're in a depression and in case you still doubt the raw power of biflation's might (from calculated Risk):
DOT: Vehicle miles driven drop 2.3% in October
Cumulative Travel for 2011 changed by -1.4% (-36.0 billion vehicle miles). In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.
Currently miles driven has been below the previous peak for 47 months - so this is a new record for longest period below the previous peak - and still counting! And not just moving sideways ... the rolling 12 months is declining.
Yep. Don't underestimate Americans willingness to change in response to high gas prices. I just moved closer to the city and between my wife and I we now spend about $500 less in gasoline per month. That is permanent.
Demand destruction at work my friend.
Agree. The gameplan is changing
Where would unemployed Americans drive to M-F?
Strongly positive correlation between employment and US oil consumption.
Only place they are driving to is their parents house....one-way.
Hope the shithole in Chicago goes under.
Sorry, he's in DC now.
Watching the automated metals prices it almost seems there is an office at the IMF with a row of big black rheostats with a greasy little employee who listens to his headset as he nudges this one up a bit, cranks that one way down, keeping the "It's a Real Market" show going while bankers call the moves in from their holiday hideouts. It's best not to watch, for now. Too aggravating.
My party host here in Aspen was phoning from his after-ski hot tub. Not sure what he was saying tho.....
"So take another toke, have a blow for your nose
One more drink, fool, will drown you! (Hell, yeah!)"
+1 - long LS.
Conax: Back to the bunker for you.
You know too much, be careful out there. They are listening...shhhhh
Must have lower gold and silver prices until the machines figure out that the debt ceiling is going up another 1.2 Bil, that swap lines increased USDs on the planet by another 400 Bill and that ECB just printed 500 Bil EUR. Machines just ain't what they used to be when they were manufactured in the good ole US of A.
Weak PMs is a sign that the hedgies are in trouble...
Today SLV looks set to print its lowest close since early February 2011.
Somebody's dumping their losers at year-end.
A close below 28 could mean 25 is the next support.
for spot, i was looking for a close below 29, got it today, now looking for a run down to 25.
Just safer to hold confetti until we get a trend, one way or the other. This shit just chews you up and spits you out. Not worth it. (Does not include physical).
0
Who can blame the SLV/GLD gang from bailing out. I would.
JPM vs MFG sent quite a message. Get out of our papergames, we want the whole sandbox to ourselves. So far they have run out one of their strongest detractors, clipped the balls from most bulls, butt-boinked the technicals, and glommed a million oz of PMs plus a big stack of OPM. The politicians are running interference for them, so they can do anything. Except print silver.
Well said . . . and don't forget Libya -- the first "revolution" ever to form a central bank before winning. Of course NATO support came after that. Did the new Central Bank "lease" the gold to US/UK banksters? Then there is talk of the Greek gold. The banksters go around grabbing up sovereign gold like battlefield scavangers prying out gold teeth from the fallen.
Invest heavily in drug companies.
Ben will do what he's told to do.
Obama says to Ben, I've got Iran war and election coming up, "print Ben print!"
Crude + Condensate extraction rate is not increasing. The other liquids don't feed people. C+C does. It's not increasing.
Population is.
So is price. WTI opened the year at $91.43, the all time record close for a year and a decade. It's on the way to a $100+ all-time record yearly close this Friday. Brent, the real price of oil, has spiked far more extremely this year and was part of last year's (decade's) record.
Note that for both WTI and Brent, the 2008 spike was long before printing. Forget monetary explantions. 2008 takes that off the table.
This all has nothing to do with Bernanke, printing, inflation, gold, or anything other than flow rate out of the pipes that lead up from underground . . . and consumption by a growing global human population.
There is nothing anyone can do about all this.
The party is over. The cops are coming. On horseback. Four of them.
Weak PM's?
The futures in gold are showing significant backwardation of nearer months over the further months. (they did not yet remove the December 2011 contract.)
http://finance.yahoo.com/q/fc?s=GCZ11.CMX
Ancient sunlight use to be easy to extract; 1 unit of energy to extract 100 units. Times be changing and the book learned blokes say we be close to the dreaded 1/5 ratio. AG and it's lessor utilitarian cousin AU exchange rates must go nose up with full after burners once the TIR (third industrial revolution) comes.