Fed Nonsense and Error Bars

By Michael Ashton

Wages follow inflation, rather than leading it

[Yesterday’s] news was the Employment number. I am not going to talk a lot about the number, since the January jobs number is one of those releases where the seasonal adjustments totally swamp the actual data, and so it has even wider-than-normal error bars. I will discuss error bars more in a moment, but first here is something I do want to point out about the Employment figure. Average Hourly Earnings are now clearly rising. The latest year-on-year number was 2.5%, well above consensus estimates, and last month’s release was revised to 2.7%. So now, the chart of wage growth looks like this.

ahe

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Wall Street Feels the Bern

By Tim Knight

[biiwii comment: yeh, biiwii goes political.  What of it?]

Hillary Clinton, Wall’s Street’s lap dog (I was going to write “whore”, but I get slammed for such things, so I wisely decided on a different word), shows how forceful she has been dealing with the likes of Lloyd Blankfein and Jamie Dimon. She said………and I quote………..”Cut it out!”

If we have the horrid misfortune of this wretched person becoming our President, you can expect more fiery rhetoric aimed at Wall Street, like “Knock it off”, “Stop, you guys!” and “Thanks for the six-figure speaking fee!” What a disgusting, criminal, money-grubbing hypocrite. Here’s the clip from last night’s debate. The Moral Man is on the left. The Anti-Christ on the right.

IKN Does Lakeshore Gold/Tahoe Resources, Biiwii Does IKN

By Biiwii

Seriously, I do not even have the time today to read these posts, but since they revolve around one of my miners (Lakeshore Gold: LSG, LSG.TO) and the posts are by Otto @ Inca Kola News, well, that means I trust them to be good content.

Tahoe in talks to buy Lakeshore Gold

Three more things about IKN’s Tahoe/Lakeshore deal exclusive

All I know is that I had held LSG off and on for a couple of years as a favored junior gold miner, but when Otto gave it the seal of fundamental approval I became a better holder.  I have also noted him talking on and on about this company being acquired.  So, there ya go.  Anyway, here’s LSG’s chart liking the news.

lsg, lakeshore gold

 

 

Explaining Gold’s Relative Expensiveness

By Steve Saville

[biiwii comment: the chart below illustrates perfectly why we call the gold-silver ratio a “metallic credit spread” (hat tip Bob Hoye).  This chart is gold-commodities, but it’s the same dynamic…]

In the blog post “Some gold bulls need a dose of realism“, I noted that relative to the Goldman Sachs Spot Commodity Index (GNX) the gold price was at an all-time high and about 30% above its 2011 peak. I then wrote: “Rather than imagining a grand price suppression scheme involving unlimited quantities of “paper gold” to explain why gold isn’t more expensive, how about trying to explain why gold is now more expensive relative to other commodities than it has ever been.

A rational explanation of gold’s relative expensiveness begins with the premise that major trends in the gold/commodity ratio are invariably associated — in an inverse manner — with major trends in economic confidence. Since credit spreads are one of the best indicators of economic confidence, with generally-widening credit spreads signifying declining confidence and generally-narrowing credit spreads signifying rising confidence, it would be logical if there were a positive correlation between the gold/commodity ratio and credit spreads. As evidenced by the following chart, that’s exactly what there is.

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Gold Stock Sector: Rubber, Meet Road

By Biiwii

As posted at NFTRH.com

Gold stocks’ technical rubber meets the fundamental road

You may have noticed that I have written relatively little publicly about the gold sector over the last few years (we have covered it consistently in NFTRH to keep subscribers aware of the bear’s status, and protected against it). Is that strange for a writer who was probably known first and foremost as a ‘gold guy’? Not at all! It’s just that it is not desirable to get bogged down obsessing on a sector in a bear market when there are other fish to fry on the global macro landscape. But the process of finding and confirming a bottom in the gold sector is now front and center as more of the fundamentals that actually matter come into place. To those fundamentals, we need to marry the technicals.

We have consistently worked a theme that sees a comparison to the 1999-2001 bottoming phase in the gold sector. That was a time when stock markets topped out, an economic counter cycle took hold and gold began out performing most other items. Within this, we have also been considering the possibility of a final washout within the sector, whereby prices decline despite continually improving fundamentals. This condition was in play in Q4 2008, which was the last great buying opportunity.

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Resurgent Interest in Gold

By Tom McClellan

GLD Assets Show Resurgent Interest in Gold

GLD Assets
February 04, 2016

In spite of dollar strength, gold prices have rallied up from the low we saw back in mid-December.  It took a while, but this rally has finally started to bring more interest from retail gold investors.

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US Stock Market, Updated

By Biiwii

US Stock Market: 3 Amigos bouncing, broad market (including Amigos) remains intermediate bearish

The 3 major US indexes are on a ‘bounce within a bear trend’ plan and as of now that plan is intact.  Yesterday was hairy and I am glad I was out for the last couple of hours so I could not out think myself during the whipsaws.  It was a very profitable day (gold miners and energy playing a nice roll).  I took profit on one of my 4 short positions and have some light long exposure in a few non-gold stocks.

You can see the green shaded (short-term support) areas and up north, a lot of red (resistance).  NFTRH subscribers get updates as needed during the week in order that they, and I, can maintain perspective at all times during the volatility.  More and more I find it is dangerous to be reactionary to markets from the perspective of any one day (day traders, I don’t know how you do it and stay sane… assuming you are).  It’s all about understanding what the trends are, within which all this whipsawing takes place.

spx, ndx and dow daily chart, us stock market

So the bounce scenario lives, but so too does the intermediate-term bearishness on the broad US stock market…

wlsh daily chart, us stock market

The disappointed

By Tim Knight

Stock indexes should be permitted to do precisely what interest rates are doing these days: go into negative territory

I confess that I was worried this morning. I had 120 short positions, 0 longs, and the intraday ES looked absolutely bullish. I’ve tinted the pattern below, and it looked like a very painful day ahead. However, as you certainly know by now, the rally-that-was-to-be fell to pieces immediately, and my profits are again soaring.

0203-es, stock market

Given the torture I endured for years with these bullish turds, the amount of sympathy I have for such disappointments is simply too low to be measured, even with the most modern scientific instruments. As far as I’m concerned, the stock indexes should be permitted to do precisely what interest rates are doing these days: go into negative territory.

The bulls? Screw ’em all.

[biiwii comment: easy Tim, they ain’t dead yet]

Hulbert Does Harvey & Erb, Who Did the CPI Adjusted Gold Price

By Biiwii

Much more than CPI inflation needs to be considered with respect to the gold price

Yes folks, it’s the return of the two egg heads (Campbell Harvey and Claude Erb) who first put the scare into gold bugs back in 2013 with the research paper The Golden Dilemma (PDF), which found that as adjusted for CPI, gold was very over valued.  Enter Mark Hulbert with the updated warning for inflation-centric gold bugs.  Gold has no business being this expensive.

market hulbert, gold price vs. CPI

I have never understood who would want to be one of these “gold traders” (other than the miners with a need to hedge and bullion banks with a need to hedge and manipulate, ha ha ha).  Why would you be a trader in an element that is a measure or barometer of other items and conditions?  It don’t get it.  I guess slick traders speculate with insurance policies, so why not gold too?  Everything’s a play after all, in the casino.

To answer Hulbert’s points, beginning with the above…

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