-- Posted Monday, 24 June 2013 | | Disqus

The Metals:

Gold fell to as low as $1276.00 at about 1PM EST before it bounced back higher in the next couple of hours of trade, but it then fell back off again in the last hour of trade and ended with a loss of 0.9%.  Silver slipped to as low as $19.453 and ended with a loss of 2.14%.

Euro gold fell to about €977, platinum lost $39.50 to $1331, and copper fell 6 cents to about $3.04.

Gold and silver equities fell over 5% in the first hour of trade before they rallied back to see only about 2% losses by midafternoon, but they then fell back off again in late trade and ended with over 4% losses.

The Economy:

Kocherlakota: Wanted to fix hawkish Fed perception MarketWatch

Fed's Fisher: 'Feral hogs' reacting to taper talk MarketWatch

There were no major economic reports today.  Tomorrow brings Durable Goods Orders, the Case-Shiller 20-city Index, the FHFA Housing Price Index, Consumer Confidence, and New Home Sales.

The Markets:

Charts Courtesy of http://finance.yahoo.com/

Oil fell in early trade on worries about slow economic growth in China, but it then reversed higher in early afternoon trade and ended with a decent gain on some new fed commentary that pared back some of last week’s hawkishness.

The U.S. dollar index rose in early trade on continued expectations that the fed will begin to taper its stimulus program, but it then reversed back lower and ended near unchanged after those fed comments mentioned above.

Treasuries fell ahead of this week’s bond auctions.  $35 billion of two-year notes will be sold tomorrow, $35 billion of five-year notes will be sold on Wednesday, and $29 billion of seven-year notes will be sold on Thursday.

The Dow, Nasdaq, and S&P fell on worries about China and the fed, but notable early losses were reduced somewhat modestly by the close.

Among the big names making news in the market today were Vodafone and Kabel Deutschland, Tenet and Vanguard Health, and Neiman Marcus.

The Commentary:

“In previous posts I had laid out what I believe has been happening across the financial markets this past week on the heels of the FOMC statement and Chairman Bernanke's comments.

In summary - the Fed, the ECB and the BOJ, have created an environment in which the word "RISK" had no meaning. Once upon a time, in a galaxy far, far away, investors looking to put rare, scarce and hard-earned capital to work weighed the costs of so doing against the potential yield or earnings that they could expect. All things considered, if the reward was sufficient, they would choose to allocate that capital.

That all died with the advent of Central Bank intervention into the marketplace. Hailed by many, who are too short-sighted in their thinking in my view, as necessary saviors and as a sort of cosmic fire hose used to extinguish various financially-related infernos, they gave the green light to hedge funds, institutional buyers and sovereign wealth funds to throw any caution or reservations they might have to the wind and jump into a host of markets with little regard as to what might happen when the spiked punch bowl would be withdrawn.

In a near zero interest rate environment, yield hungry investors were focused on only one thing - how much they could make. Ne'er a thought flit through their minds about how much they might lose. After all, who was going to lose a dime if the almighty Central Banks were there continuously pumping liquidity into the financial systems? When this sort of environment is created, history has already taught us what to expect - a proliferation of highly leveraged, one-way bets. As long as the general consensus of the market players is that the status quo will continue, the game proceeds according to expectations and the seas are smooth.

Let a few rogue pebbles be introduced into the serene pond; a few stray gusts of wind arise, and suddenly, the sleeping mariners are startled from their complacency. That is what occurred this week.

I find it particularly insightful to observe what has happened in the interest rate markets. I have said many times, that those markets are the most significant on the planet, far more so than the equity markets and even more so than the currency markets.

Look at this chart of the US long bond. Notice the continued plunge even in the face of a sell off across the equity markets. Typically we see the exact opposite occurring when equities sell off, namely, bonds rise as money flows into safe havens. In other words, if "RISK OFF" is the play, bonds rise when equities sink.

What we had this week was BONDS FALLING right alongside EQUITIES. This is something far more than "risk off". It is a shift in perceptions aggravated by an enormous unwinding of one way bets in the interest rate and equity markets. Remember, the drive higher in stocks has been the continued expectation of unlimited amounts of liquidity. Same goes for bonds in the sense that $45 billion of Treasuries were going to be bought each and every month by the Fed as part of QE4's $85 billion per month.

Large speculators had positioned themselves accordingly in these markets to take advantage of that continued liquidity. The slightest fear that it would slow or cease altogether has set off a chain of uninterrupted selling as those massive positions built up since the start of the new year are being violently unwound en masse. Selling fuels more selling as margin calls proliferate and losses compound due to that same leverage now working against its owners. One has to wonder if we are seeing the beginning of the Central Bank encouraged bubble bursting?

Selling of the nature that we are witnessing in these markets can continue longer than many expect because it is all about money flows, reducing risk, rethinking exposure, cutting losses, etc. It will continue until all of that repositioning has been accomplished. Then the dust will settle out and we can re-evaluate.

In watching these things for as long as I have been trading, I keep coming back to the same thesis - the SOLE CAUSE OF THE WILD, INCESSANT AND UNPREDICTABLE VOLATILITY IN TODAY'S FINANCIAL MARKETS IS EVERY BIT THE CONSTANT INTERFERENCE BY THE CENTRAL BANKS. They refuse to leave the markets alone and are thus distorting the signals that would otherwise be generated. Their actions move markets from one extreme to the other by herding speculative forces and directing them in whatever direction those policies are designed to drive them. In the process of so doing, they create the perfect environment for reckless leveraging which always ends in creating more havoc and chaos. You would have thought they might have learned something from all the crises faced since the year 2000. Apparently not. Humility is certainly not a virtue found roaming the halls of the buildings that house these Central Bankers.”- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

GATA Posts:

Barrick laying off 30% of corporate HQ staff

BIS tells central banks to stop pumping, start watching inflation

Bitcoin exchange Mt. Gox halts U.S. payouts

The Statistics:

As of close of business: 6/21/2013

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 5.411 tonnes.

COMEX Gold Trust (IAU) Total Tonnes in Trust: 183.89: -1.66 change from yesterday’s data.

Silver Trust (SLV) Total Tonnes in Trust: 10,073.98: +90.06 change from yesterday’s data.

The Miners:

B2Gold’s (BTG) production update, Lake Shore’s (LSG) improving operating performance, Freeport’s (FCX) resumption of operations, Barrick’s (ABX) job cuts, and Huldra’s (HDA.V) update on mill operations and exploration plans were among the big stories in the gold and silver mining industry making headlines today.

No “winners” today.

LOSERS

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

Please see Yahoo’s Mining/Metals News Wire for all of today’s mining news.

- Chris Mullen, Gold Seeker Report

- Would you like to receive the Free Daily Gold Seeker Report in your e-mail? Click here

Additional Resources for today’s Gold Seeker Report can be found:

• http://www.capitalupdates.com
• http://www.goldseek.com
• http://www.silverseek.com
• http://www.goldreview.com 

© Gold Seeker 2013

Note: This article may be reproduced provided the article, in full, is used and mention to Gold-Seeker.com is given.

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions.  The author of this report is not a registered financial advisor.  Readers should not view this material as offering investment related advice. Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  Past results are not necessarily indicative of future results.  Any statements non-factual in nature constitute only current opinions, which are subject to change.  Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein.  Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

-- Posted Monday, 24 June 2013 | Digg This Article | Source: GoldSeek.com

comments powered by Disqus
Previous Articles by Chris Mullen, Gold-Seeker.com

© 1995 - 2019

Live GoldSeek Visitor Map | Disclaimer