Precious Metals Plunge And India's Industrial Production Crashes
The metals space has had a rather disconcerting start to the week this evening with Silver and Copper dropping almost 2% from their opening levels and then Gold following suit. All this as the USD inches very gradually up tracking almost perfectly with Crude for now. These moves seem very liquidation-like in their velocity but have for now stabilized at the lows. The last few minutes saw some of the ugliest macro data we have seen in a while come out of India as it's Industrial Production growth missed expectations by a mile falling to levels only seen in the middle of the global economic shutdown in Q1 2009. So another leg in the EM-will-save-us-all stool just got kicked out and still we are to believe the US will decouple and 'muddle-through'?
The metals are 'decoupling' from oil for now and it was interesting that the reaction in Gold was 'delayed' a few hours on the simultaneous drop in Copper and Silver. They are extending their losses now after the India IP print...
ES is leaking back from its highs but is trading in a narrow range so far and maybe 3-4pts rich to broad risk assets for now.
Charts: Bloomberg
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Damn, I am long.... So long you could call me gold member, and I just got circumsized (for the second time).
Go Physical.and dont look back.
The dollar may trace a nice parabola, but the point will come when that parabola arcs into a rapid inexorable decent, and everyone with skin in the game will have peed their pants.
But you will have gold,
fofoa has somethng to say about zero hedgers
From FOFOA
Square bracket comments are mine. And from the comments, a view that FOFOA appears to endorse ...
As they say, read the whole thing.
Never cared much for FOFOA. He equates verbosity with insight. Let's be honest: if you can't make your point--and make it clearly--in less than 100,000 words, you have some sort of underlying psychological defect. To quote Orwell's 3rd rule of writing: "If it's possible to cut a word out, always cut it out."
I like the concept....basically all currencies are measured against a fixed gold and currencies are allowed to float. If I understand the idea, correctly. I find it difficult to read a rambling, third party, anecdotal conversations.
Free banking.
How about free "from" banking?
ORI
I guess silver is "on sale" again?
Yes, just like Netflix.
Only to the witty, intelligent, and handsome.
To the stupid, arrogant, and boorish it appears otherwise.
FOFA's big sell is Gold to $55,000. Or whatever ridiculous number.
A bubble, is a bubble, is a bubble. $55,000 gold will be a miserable world to live in.
ORI
/the-plan/
It's the bag of potatoes costing an oz of gold world that I worry about.
Then I suggest you start growing potatoes.
If it comes down to food products being that much more valuable than gold, then someone who is properly prepared will be even richer. Just make sure you have enough food to last through the next growing season, when you can be quite certain that non-food crops will not be planted.
Absolutely disagree!
Every time you want to go deeper in a complex subject you have to spend more than just a few words! Sometimes even books!
Even cutting all the words out (IF it is possible without altering the message) which can be cut out there are a tons of arguments in life which will require a long explanations to avoid generalisation or too much simplification. Of course at the beginning you will tell small children a general simplified idea of things, but later you should widen their horizonts with more complex details.
If you think only in black or white you will completely miss reality. And if you are unable to read texts longer than 10 words you should visit some therapy center because you are the one with an "underlying psychological defect". It is called ADHD (attention deficit hyperactivity disorder).
And by the way for the readers who are really interested (not you Boba, you obviously wont read it), and are ready to invest more time than 5 seconds to learn something read also this: (Warning! It is even longer than FOFOA!!)
http://www.usagold.com/halldiscussion.html
Maybe you are both right: IMHO, in a well written article constructed properly, you should be able to read the first couple paragraphs, to understand what it is about, and the last two paragraphs which should summarize the conclusions, the unanswered questions and the suggestions.
If one then is interested about more, the middle of the article should be scanned quickly by eye for key words and read thse paragraphs and if one is totally interested, read the whole thing.
With so much stuff (most of it bad) being available, one must use some type of quick screening method.
Be alert my ZH friends. Something big is coming
I reply to this because I think it is a very important topic, although very few people will come back and read an "old topic" and the comments. Anyway:
Very good point Dona K.! The quantity of information today availible is impossible to be even scanned by one human. And the situation is getting worst day by day.
The process should be (of course only my opinion) scanning for relevant material, scanning relevant material for quality, reading the quality material, be sure to UNDERSTAND the read material, THINKING about the new information, INSERTING the new information into the already existent knowledge/opinion about the subjekt. Perhaps it will be even necessary to adjust the existent model in the light of new information.
FOFOA has said that he tried to be direct and that didn't work, so now he does the cryptic/parable (forget his exact words) route. The $55k gold/floating currency idea is fine with me. It is the 'Euro was designed to avoid the problems of other fiat currencies because it is partially backed by each countries gold' or some such that sounds like hokum. Throw in some mysticism about arabian oil, and the store of wealth can, but doesn't have to be used in trade. And if you don't accept his pronouncements then you haven't thought about it enough, throw away all your previous knowledge because what you know is wrong. One more, Freegold will eventually rule because of it is the obviously better system.
Mr Markets have just gifted us another buying opportunity. Very welcome with the Christmas Bonus on its way.
If only Farther Christmas would leave a nice large reinforced fireproof safe in the stockings at the end of the bed to accommodate all these Krugerrands and kilo silvers and I’ll be a happy boy indeed.
It doesn't look like Europe will be printing their way out of their hole. Implosion looks increasingly likely...
On the eve of the greatest credit unwind in history -- you may wish to reconsider.
"On the eve of the greatest credit unwind in history -- you may wish to reconsider."
Meaning what? Stay liquid and use the deleveraging as an entry point for the physical?
Speaking of history.
gold 2011 low print- January 26
gold 2010 low print- February 5
gold 2009 low print- January 14
Anyone chucking their metal out the window on bullshit stories deserves paper.
they are fighting it tooth and nail it seems. But it took the Fed a year from BSC to make the announcement.
We quite possibly may be in for substantial additional selling
This was just your average transient discount. The big going out of business sale is yet to come IMO.
www.pmbug.com
double....
How do you spell global depression?
B-A-N-K-E-R-S.
http://fucklloydblankfein.blogspot.com
Price goes up, buy a little; price goes down, buy a lot.
That's not a plunge. It's called your average daily gold and silver chart.
Why do you think everyone has been screeming Manipulation the past few years?
Yeah, look at the weekly Au and Ag charts. Au is still above the lower trend line and calling this a plunge for Ag is ridiculous to me considering the other more recent movements in April and September. Buy the dip folks. Actually, buy whenever. People could wake up any second and it seems like to me that the people are groggily talking to themselves wondering why the snooze button doesn't turn the fire alarm off. The realization may come like a thief in the night.
Well, we have a short squeeze on teh dollar, it will continue to hurt Gold in teh short term. The short squeeze in prompted by EURO zone long emerging market 3trillion plus claims against emerging markets, while the Dollar is acting as safe heaven for now. So that is a short squeeze on the carry trade. That will cool inflation temporarily, that will cool precious metals, that will hurt the base metals. If you are long Gold in Emerging market currencies you are ok actually. However the strong dollar hurts the deleveraging attemps of the US. So Gold and Silver will be so so as long as the balloon of fiat money is being squeezed out of the emerging market currencies, euro, Gold into the Dollar.
If the US pulls a recovery and increse in exports in that context I guess Gold will get hurt even further,and then it would an oddity to see if the US can both deleverage, decrease unemployment and have its dollar strengthen that would be very very odd and quite negative for Gold/USD.
if the US does not pull out a recovery but gets stuck with lackluster economy it will pull down Gold temporarily but it will make the system even more unstable forcing the Fed to print more. At that point when the squeeze is released you will see Gold shoot up.
Actually if you guys want to see Gold move up, you should vote for teh most likely candidate who will strike Iran, not Ron Paul.
I thought this was going down. Looking at the historic charts it will go down but is, and will always be a good buy. I will definitely be buying this.
The Gold chart for this year shows a wedge formation starting in early July. The rising lows and falling highs converging on 1725 (approx) within the next 2-3 weeks. We are seeing the third cycle of testing a high and then a low within that formation. Currently 1675-80 is the low in this part of the wedge. There is no more room to repeat this cycle after this. We either break down to the down side and head back to the 1500-1600 range or we shoot higher in a week or so, breaking out of the top of the wedge and poising for a run to 2200-2300.
If we close this week below today's lows then I would suggest we will break lower, and run to the 1600 level.
IMO the long term secular trend in gold will continue IE - we will break to the up side.
The YTD gain has been 23%, which has been the average yearly gain for the past 10 years.
As sovereigns and financials get rapidly shredded IMO we will see more and more effort for a portion of portfolios to move to physical gold.
The counter trend to this will be that the PM paper futures markets will end up failing as delivery becomes more fashionable. In May 2011 University of Texas took delivery of $1 B in bullion amounting to 40% of available gold on deposit at COMEX.
Do the math.
The money printing in the West (aka crude oil prices) are having a huge impact on countries like India. inflation is rampant and really out of control. The middle and lower classes are getting crushed yet again !!!
The wings have fallen off the plane.
Wings are a transitory phenomenom.
Transitory as the world is going from death spiral to lawn-dart.
The ground will be the terminal phenomenon.
“Another thing that got forgotten was the fact that against all probability a sperm whale had suddenly been called into existence several miles above the surface of an alien planet.
And since this is not a naturally tenable position for a whale, this poor innocent creature had very little time to come to terms with its identity as a whale before it then had to come to terms with not being a whale any more.
This is a complete record of its thoughts from the moment it began its life till the moment it ended it.
Ah … ! What’s happening? it thought.
Er, excuse me, who am I?
Hello?
Why am I here? What’s my purpose in life?
What do I mean by who am I?
Calm down, get a grip now … oh! this is an interesting sensation, what is it? It’s a sort of … yawning, tingling sensation in my … my … well I suppose I’d better start finding names for things if I want to make any headway in what for the sake of what I shall call an argument I shall call the world, so let’s call it my stomach.
Good. Ooooh, it’s getting quite strong. And hey, what’s about this whistling roaring sound going past what I’m suddenly going to call my head? Perhaps I can call that … wind! Is that a good name? It’ll do … perhaps I can find a better name for it later when I’ve found out what it’s for. It must be something very important because there certainly seems to be a hell of a lot of it. Hey! What’s this thing? This … let’s call it a tail – yeah, tail. Hey! I can can really thrash it about pretty good can’t I? Wow! Wow! That feels great! Doesn’t seem to achieve very much but I’ll probably find out what it’s for later on. Now – have I built up any coherent picture of things yet?
No.
Never mind, hey, this is really exciting, so much to find out about, so much to look forward to, I’m quite dizzy with anticipation …
Or is it the wind?
There really is a lot of that now isn’t it?
And wow! Hey! What’s this thing suddenly coming towards me very fast? Very very fast. So big and flat and round, it needs a big wide sounding name like … ow … ound … round … ground! That’s it! That’s a good name – ground!
I wonder if it will be friends with me.
http://www.goodreads.com/quotes/show/198068
Thanks for the quote. Great book!
+42
Doug don't like wales.
Why couldn't he substitute a bicycle riding CDS trader instead?
He died?
one of the few writers that I have their entire published works of. miss him very much.
42
They recently discovered an earthlike planet hundereds of light years away. So far away even the equipment and computers sent there would disintegrate before getting a tenth of the way.
I am sure there are billions of earths out there, and I think it is great that people on this planet have absolutely zero opportunity to go there and fuck them up with their pollution, greed, and religion.
That is true religion in my book. That we will never ever get to touch one of them.
Have a fun few hundred million years other earths. I hope you build lots of cool creatures like this planet once did. I can only imagine.
over on apmex, i just so happened to be on its still over 2000 an ounce for a 1/10,,,,ebay even more, i'm sure other places may be a little cheaper but physical price has held up,,,,let see if gld collapses and physical holds up
long platinum - short gold for a low risk 10% return in 3 months
The last time there was a dip the prices on Bullionvault stayed well above Kitco's quoted spot price. But not during this phase.
Anyone who isn't positioned for a liquidation event hasn't been paying attention.
the only "liquidation event" is the sea of liquidity just OK'd for the ECB to save the rotten bankrupt Eurzone banking system
...that follows the Feds $600bn this month and the Bank of England also about to trash Sterling (Mervyn King is a total lacky/moron)
waiting for silver to drop so i can stock up some more
It's a criminal system. Any of those relying on Federal Reserve Notes to save them... you deserve what's coming. History is clear on this...
the raiders' radio announcers, ex-coach tom.flores and greg.papa, were so uninspired by the raiders' collapse in greenBay that they started watching the denver game and announcing that one, simultaneously, which was bongloads of f-u-n, until...
GAAAAHHHHHHHHHHHHH!!!!! denver strikes again!
if PMs are selling off a bit, the folks doing it don't seem to be cashing out in euroz
one thing i'm watching is the soybean price, to see if it stays north of $11; been a while since it's been in the $10's; given the price of cattle, will this "protein" stay up?
Commodity Futures Online Trading - Bloomberg shows a year-long graph of commodity index prices. i would invite you to lQQk at this graph, since it is what the doves will invoke to demonstrate that inflation was, indeed, transitory
as time progresses, if prices stay right where they are, we will have GAAAAHHHHHHHHHHH!!!!! deflation strikes again!
i had some cattle tonight; tasty; no sign of deflation at the meat counter...
india might also be at the place where QE seems like a great idea, other wells and founts of cashola drying up
it doesn't matter that none are credit-worthy; the banksters hafta lend moMoney or we won't be able to pay them the interest on what we already owe
Slewie... about India...
India is importing so much gold that it's having a major impact on thier trade/current account deficits and is being blamed for Rupee weakness. Interesting read this... expecially the author's 'solution'...
"The macro picture is interesting. Next to petroleum products, which accounted for $94.1 billion of imports in April-November, India’s biggest import is gold.
These massive imports are tipping the external trade balance heavily against us, and Commerce Secretary Rahul Khullar says that the overall trade deficit will be in the range of $155-160 billion in 2011-12."
http://www.firstpost.com/economy/rs-2150000000000-thats-our-gold-import-bill-so-far-this-year-152879.html
That works out to 40 billion USD annual purchases by India. That is hefty for PM markets. If you add that to petroleum imports it accounts for 80% of Indian trade deficit. Wow, Can they keep this up, if Oil prices continue to spike? If gold purchase slacks, as this is pure fiat devaluation/inflation HEDGE play, that ZH promotes in USA, it could momentarily inundate the market with unbought PMs in 2012/2013. Especially if China plays the same game, and the economic slow down makes both markets less liquid for gold imports...
falak pema... This story contains a paradox:
On the one hand, "When gold soaks up a part of the domestic money supply, it reduces overall demand and curbs inflation."
On the other hand, "The paradox is that as the rupee depreciates, inflation worsens since imported goods cost more in rupee terms. And when inflation worsens, it makes more sense to hold gold to retain the value of your wealth. But as more gold is imported, it skews out trade gap, contributing to the rupee’s weakness.
The upshot: what is smart investment for the average Indian is making things worse for the country. If the government wants to cut down its current account deficit and ease the pressure on the rupee, it should try and curb gold imports in the short term."
As pointed out in the article, if the Indian Gov decides to curb gold imports for individuals it will be good news for smugglers. Smuggling gold into India via small wooden Arab Dhows under sail is a long tradition. Of course gold is smuggled in all manner of transportation. Smuggled gold will have a price well above spot and will soak up more Rupee than legally imported gold.
A similar situation already exists in Viet Nam, among other places.
Is it possible that the gold market noticed Indian production and realized present demand
was unsustainable?
If Indians could just manage to borrow enough western fiat, hypothecated with more western fiat to buy this stuff,
they could come out smelling like gold!
Judging from their plunging industrial production, that's not the case.
And... gold has no smell, only the greedy sweaty palms handling it.
I don't know the size of black market smuggling. But you can be sure that the Government in India like elsewhere will curb Gold imports to protect balance of trade and to encourage local spending and defend money. Those will be the priorities as soon as the economic slow down becomes alarming as every where else, USA included. It is quite possible that the US inspite of its global bias to please the Oligarchs indulges in selective protectionism to calm the sheeple and to reindustrialise certain sectors like MIC/Automobiles/pharma-medic services etc.
We may be in a scenario where gold hoarding by private accounts wil be discouraged world wide by fiscal and quota type measures. Making the black market do what the speak easies did to prohibition.
Yep, a legally mandated ponzi scheme.
So tell us history; I love a good story told by a woman. The mystery thickens. Light my lantern. I'm all ears.
From all I've been reading the damage done to the confidence of the investors is going to cause a dash for the exits in paper silver. We get to take another shellacking, but the undercurrent is looking like a little movement toward the disconnect between paper prices and phyzz. Let the speculators dump this and jump on that, it's all panicky and temporary. Hey CME, go ahead and jack the margin requirements. We know you want to, so gahead. Let's be all cash and carry.
India shouldn't be in the Emerging Market in the first place. They are the only country in the BRIC having a massive trade deficit and what's their industral production about?
They stopped producing guys named "Ray" to answer technical hot-lines.
From a look at their demographics, its obvious they haven't stopped producing "Rays". Maybe
they are just running out of unanswered phone lines
With massive YUAN outflows going on, your deficit will be locked in next. Prepare.
China/India doomsday trade is on.
Then China import less and the Yuan will become cheaper for the export. I wonder who the Fuck US or EZ is going to export to. In the mean time, China can sell more treasury bonds because of the outflow of Yuan. Bitch
To give you a fact straight. There's no way a hardlanding of China will Not crash on the heads of Eurozone and United States. Be prepared for a WW3 if that happens. War can always generate growth and China is prepared for it. Bitch
Getting married to a thesis because of ethnic bias is just so rational.
Yes, and divorce is costly. Hence the saying, one an done. No marriage, no thesis.
pharmaceuticals, industrial equipment, auto parts, cars- India is very big into engineered products and even printing pressess that compete against Heidelberg of Germany. Watch out after India gets the nuclear power turned on. You thought outsourcing is bad now? It will be the end of the job in the West when India gets extra power. All it needs is juice .......220volts and 3-phase and the world changes permenantly.
Absolutely. All they need is electricity and then they'll break out. That and basic water sanitation would help too. Oh, and TP, that would help a lot too.
Don't forget competent IT guys. It would be nice to work with one that was competent for a change.
And some leadership that wasn't corrupted or incompetent (or both).
So, all they need is:
Power, Engineering, Water, Sanitation, Organization, Moral backbone, diseases that can be cured by antibacterial medicine (they are all resistant now)...
Is that _all_?
Pfft.
BTFD
Not sure i'd call 2% a 'plunge' when SP500 does that every other day. When silver dropped to $26, that was a 'plunge' but it was over before i could even place an order.
Brutal. Metals were selling Asian session, silver looks like it might be a Sept 23rd bidless trade again. Stocks have to correlate with the indust metal sell off. On thin volumes and HFT supports, shouldn't be too hard. Risk aversion about to kick in.
0551 GMT [Dow Jones] The USD/INR extends its gains after a disappointing data print reinforces the growing view that India's growth could be set to moderate dramatically, says a trader with a foreign bank.
China is next.
Proof?
Industrial production down 5% in October.
http://www.dnaindia.com/india/report_india-s-industrial-output-contracts-by-5-1pct-in-october_1624628
This is off-topic, but I noticed some striking....let's call them "similarities" between the Reuters article on MF Global's re-hypothecation shenanigans [http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_De...] and Martin Armstrong's latest summary of the situation, from about pg13 onwards [http://www.inflateordie.com/files/MF%20Global%20Disaster%2012-09-2011.pd...]. The similarities are just too great to be ignored and neither party appears to credit the other. Interesting.
Martin is always an interesting read, and he is right this time. No one should be playing a game in which there are no rules.
During the first Depression the banksters "lost" peoples money. Without the FDIC, no one would "trust" the banks. Now that MFG/Corzine have ripped off billions in customer money without immediate restitution by the exchanges, no one should "trust" the brokerage firms with a dime of their capital. The theft is real and blatant, just like being mugged in broad daylight. The plane has hit the building, it's time to get out while you can before the whole thing comes crashing down.
With sensationalist headlines non-stop, I expect ZeroHedge will be available for perusal
in the checkout line of my local supermart soon.
Italians selling their gold? Polish Central Bank seems to have started already.
Was it "sold" or confiscated?
wojtekj
Yeah, TO EAT.....................
Italians are sellling their personal Crosses for cash, to live on.Rather eat, than have a necklace.
Poland sold all they have for the same reason, both tons.
Metals will suck till year end. People selling their winners. Rest assurd. Another round of global money printing next year. I think we will see a bottom in the metals in the next two weeks.
why does ZeroHedge rarely discusses India?
FYI the Anna Hazare led anti-corruption campaign could be a true inspiration for the OWS although the Indian govt is too corrupt to budge
Anna Hazare is protesting against rampant government corruption in India to pass the lokpal bill through fasts, rallying the masses and the Gandhian principles of non-violence. Why can't the OWS protesters take a page off Anna's book?
http://en.wikipedia.org/wiki/2011_Indian_anti-corruption_movement
It is worth noting that Gandhi's non-violent bit isn't what drove the Brits out of India. During WWII the Indians received weapons from the Japanese and used them. The non-violence bit was just the tail-end of the story.
It was really the combination of severe losses during WWII and the NON Co-operation movement that did the Brits in. There was no way they could manage a country of the size of (then undivided) India without the support of local populace in administration and law and order. Note how that as soon as the Brits left, India was engulfed in race riots/civil war following the separation into India/Pakistan. It was precisely because of the lack of administrative ability that this happened. If there is any sensible Indian out there, please keep in mind that this can very well happen again if the resources to support such a large population run short.
A primary condition of the Marshall plan (Post ww2 rebuild financing from the USA) demanded that the Brits give up their Empire so the USA and Fed could run the planet, google that.
And then the USA learned the lesson of "Be careful of what you wish for ... you might get it" Those crafty Europeans saved up their marshal plan dollars and tried to cash them in for gold (Nixon Shock) but it did not happen. But the USA was required to continue to give up the blood if not the treasure. Something the neo-cons still embrace today. The libs embrace it too but for "humanitarian" reasons, knowing that the feel good parts of Keynsianism can, in the long run, always be paid off with a terrible, but "unavoidable" war.
Then there is a guy like Ron Paul who sees through the crap, knows the history, and would like to move the nation and the human race a little past unified neo-colonial ways of thinking.
Spot on. FDR's ALgiers summit in 1943 where he laid down the rules of then PAx Americana. Churchill and DE Gaulle were not buying it. But Attlee at Potsdam did. He sent Mountbatten with the NEW UK labour brief; it was in line with FDR's vision that Truman largely executed; after all he wasn't elected into office.
France went rogue and it led to Dien bien Phu. By then with China going red, Korean war aftermath and the Dulles brothers "roll back doctrine" the rules changed content and thrust of PAX Americana in third world. Nehru was now on their hit list; like all the other Bandungist crowd leaders. He was the only one the US and CIA didn't get. But India's problems are endemic to its huge slothful bureaucracy, legacy of two thousand years of caste system and then Moghul and British rule. Layers over layers of non homogenised cultural paradoxes, now inextricable local Gordian knots; Pakistan being the destabilizing factor geopolitically today. India will have a long painful road ahead to manage all these idiosyncracies. It may even implode.
Definitely.
Remember a while back when there was a severe shortage of onions?