Dollar's 30 Year Slide May Be Gold's New Life: 2014 Outlook

Today’s AM fix was USD 1,241.75, EUR 918.59 and GBP 766.75 per ounce.
Yesterday’s AM fix was USD 1,248.50, EUR 929.64 and GBP 775.76 per ounce.

Gold fell $1.50 or 0.12% yesterday, closing at $1,243.20/oz. Silver climbed $0.14 or 0.71% closing at $19.99/oz. Platinum rose $4.60 or 033% to $1,389.50/oz, while palladium climbed $3.78 or 0.53% to $714.75/oz.

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Many traders and investors are still scratching their heads at the peculiar gold trading Wednesday which pushed gold below the important technical level of $1,250/oz. Support at $1,250/oz has been breached and gold is vulnerable of a fall to test support at $1,200/oz and the June 28th low of $1,180/oz (see charts below).


US Dollar Index – 1983 to Today (Bloomberg Industries)
 
And yet gold still seems to be stuck in a downtrend. This week’s sell off may have been due to trading shenanigans on the COMEX and many, including the UK Financial Regulator are asking questions as to whether gold price rigging is taking place.

Gold’s falls come despite there being many compelling reasons for gold to rally. These include uber dove Yellen at the Fed’s helm, the near certainty that the Eurozone debt crisis will erupt early in the New Year, signs ETF outflows are stabilizing and China picking up the slack with regard to physical demand, after India’s demand fell from near record levels.


Gold in U.S. Dollars, 5 Days – (Bloomberg)

THE U.S. DOLLAR has been on a 30 year slide versus other competing paper currencies, in particular the Chinese yuan. If the dollar’s decline, as measured by the DXY Index continues, gold may be the main beneficiary.

The dollar may be printed in unlimited quantities, though the global stock of gold increases by just 2% to 2.5% annually. Irrespective, of the huge increase in money supplies globally today. Indeed, should gold prices fall more, gold production is likely to begin falling.

This is seemingly lost on Janet Yellen and central banks, who continue to print money at record rates.

The smart money who understand gold’s importance as a diversification continue to accumulate gold.

The very poor state of the U.S. economy bodes badly for the U.S. dollar in 2014 which should help gold resume its multi year bull market.


Gold in U.S. Dollars, 1 Year – (Bloomberg)

DATA FROM THE INTERNATIONAL MONETARY FUND today shows that central banks continued to diversify into gold in October.

Turkey’s holdings rose the most, with the central bank adding a large 12.994 tonnes – 16.18 million oz vs. 15.762 million oz.  Kazakhstan’s gold reserves rose 2.4 tons and Azerbaijan’s gold reserves increased 2 tonnes last month.

Germany, the world’s second biggest holder of gold reserves, cut its bullion holdings by a tiny amount in October for the second time in five months.  Germany’s gold holdings dropped to 108.9 million ounces from 109.01 million ounces in September. The reduction was likely for domestic gold coin sales.


Gold in U.S. Dollars  and Suspensions Of COMEX Gold Trading – 3 Month (Bloomberg)

GOLDMAN SACHS Inc. has come out with another of their widely covered market predictions.

Gold, iron ore, soybeans and copper will probably drop at least 15% next year as commodities face increased downside risks even as economic growth in the U.S. accelerates, according to Goldman.

As we noted before, Goldman’s gold calls and crystal gazing have been poor at best. Indeed, some suspect that while Goldman is advising clients to sell, they may be on the other side of the the trade going long.

News This Week
* China to Start Interbank Gold Swap Trading November 25
China, on track to overtake India as the world’s largest gold consumer this year, will start interbank swaps trading next week in a move to further open up the domestic precious metals market. China gold swaps to trade on China Foreign Exchange Trade System, according to a statement on CFETS website yesterday. Gold swaps to settle and deliver via Shanghai Gold Exchange.
(Bloomberg)

* China’s planned crude oil futures may be priced in yuan 
 The Shanghai Futures Exchange (SHFE) may price its crude oil futures contract in yuan and use medium sour crude as its benchmark, its chairman said on Thursday, adding that the bourse is speeding up preparatory work to secure regulatory approvals.

China, which overtook the United States as the world’s top oil importer in September, hopes the contract will become a benchmark in Asia and has said it would allow foreign investors to trade in the contract without setting up a local subsidiary.
(Reuters)

* Germany Lowers Gold Reserves in October, IMF Data Show
Holdings drop to 108.9 Million ounces vs. 109.01 Million ounces in September., data on IMF website show. (Note: Likely for domestic gold coin sales)
(Bloomberg)

* Gold-Put Options Surge as Futures Slump to Lowest in Four Months
Put options on gold, giving the owners the right to sell Dec. futures at $1,200/oz and $1,250/oz, more than tripled on the Comex in New York after the metal slumped to a four-month low.
Puts giving the owner the right to sell at $1,200 rose to $2.30 from 70c on estimated volume of 1,259 contracts, the third most-active option.

Puts giving the owner the right to sell at $1,250 jumped to $15.10, the highest in a month, on estimated volume of 2,206 contracts, the most-active option
Futures for Dec. delivery fell as much as 2.6% to $1,240.20/oz, the lowest since July 9
(Bloomberg)

* China Oct. Silver Imports 230.8 Tons, Customs Says
Silver imports by China were 230.8 tons in Oct., compared with 243 tons in Sept., according to data released by customs agency today
(Bloomberg)

* UBS Estimates 36% of South Africa Gold Industry is Losing Money
Estimate based on spot price of $1,260/oz, UBS says in report dated yday.
In 3Q, 28% of SA gold industry was loss-making, based on gold price of $1,330/oz
Sector lowered 3Q all-in costs by 20% q/q to $1,138/oz
“Further unit cost reductions will be challenging to deliver”
(Bloomberg)

* CME Lowers Gold and Silver Margins
CME lowers Comex 100 Gold futures (GC) initial margins for specs by 9.4 percent to $7,975 per contract from $8,800
CME lowers Comex 5000 Silver futures (SI) initial margins for specs by 11.1 percent to $11,000 per contract from $12,375
(Reuters)

Conclusion
There is likely a floor under gold prices at the $1,200 level and that should again provide strong support. There are no guarantees regarding price ever – particularly in the short term. However, gold production may fall at prices below $1,200 as it becomes uneconomical for man
y gold mines to operate profitably.

In South Africa, no longer the world’s largest producer, (which is now China) but still a major producer, there are estimates that 36% of the South African gold industry are loss making even at today’s spot prices – $1,250/oz. In 3Q, 28% of the South African gold industry was loss making, based on a gold price of $1,330/oz.

The short term technicals remain poor and the trend remains lower so we remain bearish for next week despite the strong seasonals. November, December and January are traditionally strong months for gold due to year end fund allocation and in recent years Chinese New Year demand.

It remains prudent to ignore short term noise and day to day price movements. Instead focus on physical gold’s importance, either in your possession or in allocated gold accounts, as financial insurance and as a vital diversification for investors and savers today.

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/60xAd5YJI10/story01.htm GoldCore

Close Encounter Of The Tornado Kind: Watch What Happens When Nature’s Fury Is Unleashed

Aside from the impressively calm demeanor of the gentleman holding the video camera, this disturbing clip of the Washington Tornado’s power offers a helpful (if not terrifying) analogy for how quickly calm serene surroundings (e.g. stock markets) can be “freaking destroyed” almost instantly by an external force.

 

 

And for the Keynesians, before you start babbling about the GDP growth in the rebuild – please visit the Broken Window Fallacy truth page.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nX2Vf8vovok/story01.htm Tyler Durden

Close Encounter Of The Tornado Kind: Watch What Happens When Nature's Fury Is Unleashed

Aside from the impressively calm demeanor of the gentleman holding the video camera, this disturbing clip of the Washington Tornado’s power offers a helpful (if not terrifying) analogy for how quickly calm serene surroundings (e.g. stock markets) can be “freaking destroyed” almost instantly by an external force.

 

 

And for the Keynesians, before you start babbling about the GDP growth in the rebuild – please visit the Broken Window Fallacy truth page.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nX2Vf8vovok/story01.htm Tyler Durden

Jacob Sullum on How Poker Became a Crime

Jacob Sullum reviews
Straight Flush: The True Story of Six College Friends Who Dealt
Their Way to a Billion-Dollar Online Poker Empire-and How It All
Came Crashing Down. He says the engaging, novelistic style
brings home the human consequences of the moralistic crusade
against online gambling. 

View this article.

from Hit & Run http://reason.com/blog/2013/11/22/jacob-sullum-on-how-poker-became-a-crime
via IFTTT

Spot The Manipulated FX Market Moment

With regulators finally catching on that banks are manipulating every asset class, the largest of them all – foreign exchange – has come under scrutiny. Most specifically, there is considerable attention being paid to manipulation at the “London Close” around 11amET each day. Judge for yourself – see anything ‘odd’ around that time of day?

 

 

 

Source: Nanex


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bbd3Vte2O5g/story01.htm Tyler Durden

Did a Top Obamacare Tech Official Mislead Congress About the Decision to Delay Obamacare’s Shopping Feature?

Did a top Obamacare tech
official lie to Congress about whether or not a key Obamacare
website function was delayed for political considerations?

In a congressional hearing earlier this month, Henry Chao, the
Deputy IT director for the Centers for Medicare and Medicaid
Services, was asked whether there were any political considerations
involved in the last-minute decision to delay the “anonymous
shopper” function at Obamacare’s online insurance portal,
Healthcare.gov.

He responded that there were “none whatsoever.”

“I look at the facts of whether—if a system is going to be
ready,” Chao
said, “and of course not everything is going to be 100 percent
perfect, and there are certain tolerances. But in this case it
failed so miserably that we could not consciously use it.”

But that’s not what happened,
according to CNN, which reports that insider documents confirm
that, in fact, the feature passed a test of its functionality
shortly before the October 1 launch of Healthcare.gov. From CNN’s
report: 

When the troubled federal health care website came online,
the key “Anonymous Shopper” function was nowhere to be found —
even though it passed a key test almost two weeks before
HealthCare.gov launched.

That successful test, noted in documents obtained by CNN and
confirmed by a source close to the project, contradicts testimony
from an Obama administration official overseeing HealthCare.gov,
who told lawmakers earlier this month the function was scrapped
because it “failed miserably” before the October 1 launch.

Perhaps the CNN story is missing some key information. We don’t
know, for example, if there was perhaps another test that did
fail—one that convinced the health site’s tech team that the
function wasn’t worth implementing.

But there’s some reason to think that CNN’s story is not
incomplete, and that Chao, in his response, did not tell the truth.
The CNN report backs up, and seems to confirm, an October report in
The Wall Street Journal, which
said that the federally run insurance portal “was initially
going to include an option to browse before registering, but that
tool was delayed.” The Journal report included an
explanation for why the function was removed—an explanation that
said nothing about technical failures. “An HHS spokeswoman said the
agency wanted to ensure that users were aware of their eligibility
for subsidies that could help pay for coverage, before they started
seeing the prices of policies.”

In other words, officials didn’t want people to see the true
price of the insurance premiums on offer through the exchanges, so
they created a system which only allowed for plan shopping after
subsidy eligibility was confirmed. 

That doesn’t sound like it was simply a question of system
readiness, as Chao claimed before Congress. And if Chao lied about
the test results, it’s reasonable to wonder whether he also misled
about the reasoning for disabling the feature.

from Hit & Run http://reason.com/blog/2013/11/22/did-a-top-obamacare-tech-official-mislea
via IFTTT

Did a Top Obamacare Tech Official Mislead Congress About the Decision to Delay Obamacare's Shopping Feature?

Did a top Obamacare tech
official lie to Congress about whether or not a key Obamacare
website function was delayed for political considerations?

In a congressional hearing earlier this month, Henry Chao, the
Deputy IT director for the Centers for Medicare and Medicaid
Services, was asked whether there were any political considerations
involved in the last-minute decision to delay the “anonymous
shopper” function at Obamacare’s online insurance portal,
Healthcare.gov.

He responded that there were “none whatsoever.”

“I look at the facts of whether—if a system is going to be
ready,” Chao
said, “and of course not everything is going to be 100 percent
perfect, and there are certain tolerances. But in this case it
failed so miserably that we could not consciously use it.”

But that’s not what happened,
according to CNN, which reports that insider documents confirm
that, in fact, the feature passed a test of its functionality
shortly before the October 1 launch of Healthcare.gov. From CNN’s
report: 

When the troubled federal health care website came online,
the key “Anonymous Shopper” function was nowhere to be found —
even though it passed a key test almost two weeks before
HealthCare.gov launched.

That successful test, noted in documents obtained by CNN and
confirmed by a source close to the project, contradicts testimony
from an Obama administration official overseeing HealthCare.gov,
who told lawmakers earlier this month the function was scrapped
because it “failed miserably” before the October 1 launch.

Perhaps the CNN story is missing some key information. We don’t
know, for example, if there was perhaps another test that did
fail—one that convinced the health site’s tech team that the
function wasn’t worth implementing.

But there’s some reason to think that CNN’s story is not
incomplete, and that Chao, in his response, did not tell the truth.
The CNN report backs up, and seems to confirm, an October report in
The Wall Street Journal, which
said that the federally run insurance portal “was initially
going to include an option to browse before registering, but that
tool was delayed.” The Journal report included an
explanation for why the function was removed—an explanation that
said nothing about technical failures. “An HHS spokeswoman said the
agency wanted to ensure that users were aware of their eligibility
for subsidies that could help pay for coverage, before they started
seeing the prices of policies.”

In other words, officials didn’t want people to see the true
price of the insurance premiums on offer through the exchanges, so
they created a system which only allowed for plan shopping after
subsidy eligibility was confirmed. 

That doesn’t sound like it was simply a question of system
readiness, as Chao claimed before Congress. And if Chao lied about
the test results, it’s reasonable to wonder whether he also misled
about the reasoning for disabling the feature.

from Hit & Run http://reason.com/blog/2013/11/22/did-a-top-obamacare-tech-official-mislea
via IFTTT

Wisconsin Bill Aims to Limit Police Use of License Plate Readers

A bipartisan group of Wisconsin politicians are
working on legislation to limit the use of automatic license plate
readers by police. Local police chiefs have voiced their
disapproval, but the politicians contend that protecting civil
liberties must take precedence.

The Wisconsin State Journal
explains the basic features of a new bill, which Republicans
Rep. David Craig and Sen. Tom Tiffany and Democrat Rep. Fred
Kessler (D) circulated for co-sponsorship this week:

The bill would allow the cameras to be turned on only during the
investigation of a crime. It also would prohibit sharing the stored
information with non-government entities and require data
destruction within 48 hours, unless it was necessary for a criminal
investigation.

This would be a dramatic reduction of what officers are
currently allowed to do. The State Journal
revealed earlier this year that police agencies in Dane County,
where the capital city Madison is located, used 24-hour
surveillance to record over 4 million licenses plates in 3 years.
They planned on holding onto those records for 7 years.

Local police chiefs responded critically to the bill, stating
that no civil rights violations have occurred and that limiting
their use of license plate recorders would impair their ability to
effectively solve crimes. Nevertheless, they offered this week to
limit the license plate data retention to a single year.

This is not enough for Craig, though. “Seven years is
unacceptable. One year is unacceptable,” he said to the State
Journal, explaining that the practice is “imperiling civil
liberties. You have this technology that has been used that without
limits by the Legislature can lead to some very, very bad outcomes
for constitutional rights.” The representative told
WXOW, a local ABC affiliate, that he’s “concerned not about
criminals, I’m concerned about ‘John Q Public’ that obeys the
law and how long his information is on the books,” because
“government has the propensity to bungle personal information.”

Craig’s concerns may not be unwarranted. As Reason‘s
J.D. Tuccille and Scott Shackford have highlighted, the use of this
police technology in other states has led to behavior that ranges
from
creepy to outright
abusive. The American
Civil Liberties Union and Electronic Frontier
Foundation have also covered the various dangers license plate
readers pose.

from Hit & Run http://reason.com/blog/2013/11/22/wisconsin-bipartisan-bill-aims-to-limit
via IFTTT

Bill Ackman Admits $500 Million Herbalife Loss, Stock Surge Adds To Pain

Herbalife shares are soaring this morning. The reason, it seems, is unclear; but Bill Ackman's appearance on Bloomberg TV to press his shorts a little more may just have emboldened those looking to squeeze the asset manager:

  • *ACKMAN: HERBALIFE LONGS DID PRETTY GOOD JOB OF SHORT SQUEEZING
  • *ACKMAN SAYS HE'S LOST $400M TO $500M ON HERBALIFE SHORT
  • *ACKMAN SAYS `LOTS OF WAYS WE CAN BE SUCCESSFUL' ON HLF
  • *ACKMAN SAYS HE'LL TAKE HERBALIFE BET 'TO THE END OF THE EARTH'

Ackman added that he "skeptical" of Icahn's long-term interest, and "puzzled" by Stiritz' motivations. It seems – other than fear-mongering – the stock is rising on the basis Ackman has nothing new to add…

  • *ACKMAN SAYS HE DOESN'T KNOW WHAT FTC IS DOING ON HERBALIFE
  • *ACKMAN: RE-AUDIT IS A SHORT TERM CATALYST IF NOT DONE BY DEC
  • *ACKMAN SAYS HERBALIFE FITS FTC OCT PYRAMID WARNING
  • *ACKMAN'S PERSHING HAS MET WITH FOREIGN REGULATORS HERBALIFE
  • *ACKMAN: HERBALIFE RE-AUDIT SHOULD HAVE BEEN COMPLETED BY NOW

 

As we noted in January 2, 2013

In short- could HLF, with 24% of its stock short, and where institutions control more than 76% of the shares outstanding, become the next Volkswagen squeeze play, and send the stock soaring far higher than ever before, in the process destroying Ackman (assuming he has still not covered his short), Tilson, and anyone else still short the name?

Maybe the answer to this question is just how much animosity does management harbor toward those very publicly short its stock. We hope to find out soon enough.

  • *ACKMAN SAYS AN HERBALIFE LBO IS MORE OPPORTUNITY TO GO SHORT

and the final nail in the coffin…

  • *ACKMAN SAYS HERBALIFE SHORT `NOT A TRADE FOR ME'

One has to wonder what his JCP "trade" started out as?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/fR5r_AbQC9Q/story01.htm Tyler Durden