Sorry I haven't posted since last Monday, but I've been really busy in SPA-A-A-ACE!!!
It's tough battling space monsters and stuff.
Seriously, I just was buried in work after spending a week in Carlsbad. I've dug myself out, though, so look for regular posts to start this week.
Sunday, April 6, 2014
Monday, March 31, 2014
Pain and Gain at Your Gas Pump
Are you paying too much at the gas pump? Are you sure?
On Saturday, I posted four energy charts, three of which had to do with crude oil. Here are two more energy charts, from Bespoke Group, having to do with the price of gasoline ...
Yes, gasoline prices are going up ...
In fact gasoline prices are up 12% since November. However, gasoline prices ALWAYS rise this time of year. Going back to 2005, the average price of a gallon of gas has risen in the first quarter every year for an average gain of 15.4%, according to Bespoke's analysis.
Bespoke doesn't explain that it's what happens when the refineries make the switch from the winter to summer blend of gasoline. So, there's no voodoo involved.
As refineries switch to cleaner summer blends, inventories go down and prices go up. Gasoline inventories decreased by 5.1 million barrels to 217.2 million barrels in the most recent count. At 217.2 million barrels, inventories are down 4.0 million barrels, or 1.8% lower than one year ago.
The interesting thing is comparing the daily change in the average price of a gallon of gas so far this year to the 'typical' annual pattern going back to 2005.
So why did consumer sentiment fall in March? The Thomson Reuters/University of Michigan's final March reading on the overall index on consumer sentiment came in at 80, down from 81.6 the month before, and below consensus estimates.
And this is despite the fact that consumers are spending more money.
Bonddad, writing at XE.com, reports on Consumer spending
ICSC -1.5% w/w. +1.7% YoY
Johnson Redbook +3.1% YoY
Steel production is up. Railroad transport is humming along. Money supply is increasing. So why are consumers feeling so down?
On Saturday, I posted four energy charts, three of which had to do with crude oil. Here are two more energy charts, from Bespoke Group, having to do with the price of gasoline ...
Yes, gasoline prices are going up ...
In fact gasoline prices are up 12% since November. However, gasoline prices ALWAYS rise this time of year. Going back to 2005, the average price of a gallon of gas has risen in the first quarter every year for an average gain of 15.4%, according to Bespoke's analysis.
Bespoke doesn't explain that it's what happens when the refineries make the switch from the winter to summer blend of gasoline. So, there's no voodoo involved.
As refineries switch to cleaner summer blends, inventories go down and prices go up. Gasoline inventories decreased by 5.1 million barrels to 217.2 million barrels in the most recent count. At 217.2 million barrels, inventories are down 4.0 million barrels, or 1.8% lower than one year ago.
The interesting thing is comparing the daily change in the average price of a gallon of gas so far this year to the 'typical' annual pattern going back to 2005.
In other words, you're feeling pain, but not as much as usual. And that's a gain for consumers.
So why did consumer sentiment fall in March? The Thomson Reuters/University of Michigan's final March reading on the overall index on consumer sentiment came in at 80, down from 81.6 the month before, and below consensus estimates.
And this is despite the fact that consumers are spending more money.
Bonddad, writing at XE.com, reports on Consumer spending
ICSC -1.5% w/w. +1.7% YoY
Johnson Redbook +3.1% YoY
Steel production is up. Railroad transport is humming along. Money supply is increasing. So why are consumers feeling so down?
Sunday, March 30, 2014
Silver Eagle Sales in 2014 -- Bullish Chart
This week, we heard news that Silver eagle sales for March hit a record. And the month's not over yet.
Here's a chart of U.S. silver eagle sales in the early months of 2013 and 2014 ...
You can see that many more silver eagles were sold back in January of last year compared to January of this year. The bullish news is that silver eagle sales picked up in February of 2014 and again in March.
However, there's a good reason that silver sales dropped in January year over year. There simply weren't any more to sell.
What happened was the US Mint didn't start selling the 2014s until the end of the second week in January. What's more, authorized dealers bought every allocated silver eagle they could get their hands on that month. So, they literally couldn't buy more than the 4,775,000 silver eagles they bought in January of this year.
All in all, this seems pretty bullish, at least for silver sales in the United States.
Here's a chart of U.S. silver eagle sales in the early months of 2013 and 2014 ...
You can see that many more silver eagles were sold back in January of last year compared to January of this year. The bullish news is that silver eagle sales picked up in February of 2014 and again in March.
However, there's a good reason that silver sales dropped in January year over year. There simply weren't any more to sell.
What happened was the US Mint didn't start selling the 2014s until the end of the second week in January. What's more, authorized dealers bought every allocated silver eagle they could get their hands on that month. So, they literally couldn't buy more than the 4,775,000 silver eagles they bought in January of this year.
All in all, this seems pretty bullish, at least for silver sales in the United States.
Saturday, March 29, 2014
Violin at Sunset
I was prepared for another lonely night away from home when I walked by a window of the hotel and heard beautiful violin music coming from the grassy esplanade behind the Park Hyatt Aviara in Carlsbad, California. It turned out to be violinist Martin Shaw ...
Let's see if I can upload a video of a piece of his performance of Ashokan Farewell ...
What beautiful music. He played a lot of old time favorites. A couple of girls, daughters of guests at the hotel, ran around behind him. One wore blue butterfly wings, the other orange. They danced to the music, which was wonderful. Another young girl showed up to do cartwheels.
So, I had a top-notch music performance, kids dancing around, the crisp, clear air of Carlsbad in March, and all framed by an excellent sunset.
He didn't have any of his music for sale, so I'll have to look him up online at martin.shaw@gemsong.com.
After all, I'd like to hear his music without people chattering away in the background.
That was the one unfortunate thing.
A group of transient Visigoths behind me chattered away about the banal inanity of their lives, and did it very loudly. They would not shut up. They were like a bunch of monkeys gibbering away on the steps of a temple, blind to the grandeur and beauty around them.
It's probably because they're part of the generation brought up watching entertainment at home. So they have no class, no sense of how to act at a public performance.
I found out (because they're so frickin' loud) that they were a bunch of golfers. That means they're here with the LPGA tournament. I only hope I have the opportunity to show up at an LPGA tournament and talk VERY LOUDLY when they're trying to do their jobs.
Anyway, it was great music, Martin, monkeys and all.
Gold Charts, Energy Charts, The Russians Are Coming!
Some investors are backing away from gold, as the prospect of higher U.S. interest rates and an easing of tension in Ukraine sends them in search of riskier assets.
On the other hand ...
10 Indicators Russia Might Invade Ukraine
Sean's note: Many of these seem spot-on. However, the author makes a point of referring to Russia as the "Fatherland." While Russia is sometimes formally referred to as Otechestvo (отечество) or Otchizna (отчизна), both of which mean "fatherland," the more colloquial and widespread word used is Rodina (birthland). And Rodina is a feminine words and typically personified as a mother (Sometimes referred to as birthland-mother). Hence, "Mother Russia."
My point is, the author has an ax to grind, and is willing to bend facts to make his point. That said, I gave a natural gas presentation this week in which I lay out my case for Russia invading Ukraine. Interestingly, my point -- that Russia covets the energy-rich areas in Eastern Ukraine -- was not among his points. So I guess now there are ELEVEN indicators/reasons why Russia could invade Ukraine. Holy crap!
See also: Ukraine: Divvying Up The Breadbasket Of Europe for a fascinating read. And it brings us to one more fascinating map of Russia ..
So, let's make it 12 reasons why Russia could invade Ukraine -- the last being to get China on its side. Do you hear about any of this from the mainstream media? No. And that brings me to one more story ...
State of Journalism: The Lost Art of Fact Checking
Even by the end of the 1990s, the fact checker model was fading at Time Inc. At that time, it wasn’t so much financial pressure, I don’t think, as it was the need for speed. What piece could afford to sit with a fact checker for two weeks before publication?
Enough of that. Let's move on to less fear and more greed.
White House strategy to cut methane takes aim at oil industry
he first big target is the oil industry, with new Interior Department regulations coming later this year to curb venting and flaring of natural gas at wells on public lands and wider air mandates possible from the Environmental Protection Agency in 2016.
In other news, natural gas storage in the U.S. is at a 10-year low.
That has big implications for prices for the remainder of the year.
And also interestingly, US oil & liquids production hit 10.58 million barrels per day in January, the 2nd most since March of 1986
So, we must be swimming in oil, right? Not exactly. In fact Crude oil inventories at Cushing, Oklahoma, hub are down 32% over the past two months
But where did all the oil go? Well, US exports of petroleum products rose to 245,000 barrels per day, according to the EIA
Finally, China is now the world’s largest net importer of petroleum and other liquid fuels
Have a great weekend.
Friday, March 28, 2014
Friday Wrap Up -- Gold, Cybersecurity, and Happy Birthday
I wrote a story for InvestmentU.com on Monday that was published Thursday ...
How to Play This Pullback in Gold
There's no sugar-coating it. Gold got off to a no-good, horrible, very bad week on Monday, and it hasn't yet recovered. I expect to see the yellow metal test important support this week or next. The question is, what should active traders do when gold slumps? Let me show you some options.
First, let's look at what has pounded gold.
Read the rest ...
And I wrote a story for Free Market Cafe on Thursday that was published Thursday, making me look quite prolific ...
ARE YOU BEING HACKED RIGHT NOW?
This week, I spoke to a room full of 500 people. Most of them had experienced some kind of cybersecurity breach. And yet very few of them had taken the most basic precautions. That worries me.
Read the rest ...
Gold Today
Gold is finding support at 1,292, where its 50-day moving average crosses up through its 150-day moving average. Maybe we'll see it reclaim $1,300 to end the week, or maybe we'll see it go down and test support around $1,284.
The bears think gold will go lower because they see improvements ahead in Europe and the US, and generally improved health in capital and credit markets. In other words, they think the fear trade is dead.
I think the fear trade will come back. I had dinner with Frank Holmes, of US Global Investors,last night at Rick Rule's gorgeous California home. And Frank can tell you a lot about the fear trade. Frank had some very interesting insight he shared last night. But I won't steal his thunder. He's speaking today at the Investment U Conference I'm attending in Carlsbad. If you aren't attending the conference, US Global recently released a report titled "How Government Policies Affect Gold's Fear Trade."
But for me, the more important aspect of gold is the love trade. We see the love trade in China continues to pick up steam. India's restrictions on gold imports could be changed ahead of elections starting next month -- at least, we keep hearing that will happen (see also this) -- but we haven't seen that market budge yet. So stay tuned.
A Special Note for My Daughter
Finally, it is my daughter's birthday. I could write whole pages about how much joy she has brought into my and Cindy's life. Ellie is brilliant, witty and bursting with love and goodness, an inspiration to everyone around her.
But one thing that sticks in my memory is when Cindy and I brought a baby girl to a beach house in St. Augustine, where we spent a wonderful long weekend with friends. Ellie was just a toddler then, and she was overjoyed to run and run and run around on the beach, entranced by the water and the sand between her toes.
She had so much fun, that that night, she actually fell asleep in her high chair during dinner, going face down in her spaghetti.
But as much fun as she had, we had 10 times that much just watching her and experiencing things through her eyes and laughter.
Fast forward to today -- Ellie is awesome. She's everything you could want in a daughter and more. And I'm so glad she's part of my life.
Happy birthday, Eleanor.
How to Play This Pullback in Gold
There's no sugar-coating it. Gold got off to a no-good, horrible, very bad week on Monday, and it hasn't yet recovered. I expect to see the yellow metal test important support this week or next. The question is, what should active traders do when gold slumps? Let me show you some options.
First, let's look at what has pounded gold.
Read the rest ...
And I wrote a story for Free Market Cafe on Thursday that was published Thursday, making me look quite prolific ...
ARE YOU BEING HACKED RIGHT NOW?
This week, I spoke to a room full of 500 people. Most of them had experienced some kind of cybersecurity breach. And yet very few of them had taken the most basic precautions. That worries me.
Read the rest ...
Gold Today
Gold is finding support at 1,292, where its 50-day moving average crosses up through its 150-day moving average. Maybe we'll see it reclaim $1,300 to end the week, or maybe we'll see it go down and test support around $1,284.
The bears think gold will go lower because they see improvements ahead in Europe and the US, and generally improved health in capital and credit markets. In other words, they think the fear trade is dead.
I think the fear trade will come back. I had dinner with Frank Holmes, of US Global Investors,last night at Rick Rule's gorgeous California home. And Frank can tell you a lot about the fear trade. Frank had some very interesting insight he shared last night. But I won't steal his thunder. He's speaking today at the Investment U Conference I'm attending in Carlsbad. If you aren't attending the conference, US Global recently released a report titled "How Government Policies Affect Gold's Fear Trade."
But for me, the more important aspect of gold is the love trade. We see the love trade in China continues to pick up steam. India's restrictions on gold imports could be changed ahead of elections starting next month -- at least, we keep hearing that will happen (see also this) -- but we haven't seen that market budge yet. So stay tuned.
A Special Note for My Daughter
Finally, it is my daughter's birthday. I could write whole pages about how much joy she has brought into my and Cindy's life. Ellie is brilliant, witty and bursting with love and goodness, an inspiration to everyone around her.
But one thing that sticks in my memory is when Cindy and I brought a baby girl to a beach house in St. Augustine, where we spent a wonderful long weekend with friends. Ellie was just a toddler then, and she was overjoyed to run and run and run around on the beach, entranced by the water and the sand between her toes.
She had so much fun, that that night, she actually fell asleep in her high chair during dinner, going face down in her spaghetti.
But as much fun as she had, we had 10 times that much just watching her and experiencing things through her eyes and laughter.
Fast forward to today -- Ellie is awesome. She's everything you could want in a daughter and more. And I'm so glad she's part of my life.
Happy birthday, Eleanor.
Wednesday, March 26, 2014
Gold Struggles Despite Big Purchases
Gold looks like it's going to go down and test $1,300 today. If support breaks, I wouldn't be surprised to see $1,280. However, there are a lot of bids waiting for gold at $1,300. That could be the next bottom.
In this next chart, you can see how gold is testing support.
Now, this is expiration day for April gold options, and so that may have something to do with it -- the market makers are simply screwing with option buyers. So maybe we'll see movement in price tomorrow.
Short-term price action aside, the news on gold SEEMS to be bullish. Let's start with the huge amount of gold that China bought in February.
China imports of gold through Hong Kong for February were 30% higher than in the previous month, AND 79% higher than in February 2013 according to calculations from Bloomberg based on the latest Hong Kong official data. You can read a more in-depth examination of Chinese gold demand from Koos Jansen HERE.
And it's not just China.
Also, gold held by exchange-traded products jumped 6.9% in February, the first increase in 14 months. That's also according to Bloomberg data. You'll remember it was massive selling of gold by the ETFs that hammered the yellow metal lower last year. More recently, ETFs bought gold on Monday and sold it on Tuesday. Maybe they're confused.
The Bearish View
Still, the bears will tell you that the fact that gold is NOT rallying on the back of all this bullish news is, in itself, bearish.
Are they right? We'll see. I would remind you that 90% of the contracts on the COMEX are never delivered; they're just paper. Meanwhile, people in China take delivery on 95% of the contracts on the Shanghai exchange.
Meanwhile, the prices of most gold mining equities are at the lowest levels they have been since the depths of the previous gold bear market in 1997-2002, according to research from CPM Group. So if you're looking to buy gold miners on the cheap, now is a good time. More on the recent carnage in miners here.
If your'e trading short-term, I hope you raised stops on positions you have gains in. If you're trading longer-term, this probably won't amount to much. The lows of last summer are probably the lows for gold. And that means pullbacks like this should be buying opportunities.
In this next chart, you can see how gold is testing support.
Now, this is expiration day for April gold options, and so that may have something to do with it -- the market makers are simply screwing with option buyers. So maybe we'll see movement in price tomorrow.
Short-term price action aside, the news on gold SEEMS to be bullish. Let's start with the huge amount of gold that China bought in February.
China imports of gold through Hong Kong for February were 30% higher than in the previous month, AND 79% higher than in February 2013 according to calculations from Bloomberg based on the latest Hong Kong official data. You can read a more in-depth examination of Chinese gold demand from Koos Jansen HERE.
And it's not just China.
- Iraq bought 36 metric tonnes of gold this month valued at about $1.56 billion in the largest purchase by a nation in three years.
- Russia has increased its gold holdings by 7.247 tonnes to 1,042 metric tonnes in February.
- Turkey and Kazakhstan also raised their bullion reserves, according to IMF data. Turkey's gold holdings rose 9.292 tonnes to 497.869 tonnes, the data showed.
Also, gold held by exchange-traded products jumped 6.9% in February, the first increase in 14 months. That's also according to Bloomberg data. You'll remember it was massive selling of gold by the ETFs that hammered the yellow metal lower last year. More recently, ETFs bought gold on Monday and sold it on Tuesday. Maybe they're confused.
The Bearish View
Still, the bears will tell you that the fact that gold is NOT rallying on the back of all this bullish news is, in itself, bearish.
Are they right? We'll see. I would remind you that 90% of the contracts on the COMEX are never delivered; they're just paper. Meanwhile, people in China take delivery on 95% of the contracts on the Shanghai exchange.
Meanwhile, the prices of most gold mining equities are at the lowest levels they have been since the depths of the previous gold bear market in 1997-2002, according to research from CPM Group. So if you're looking to buy gold miners on the cheap, now is a good time. More on the recent carnage in miners here.
If your'e trading short-term, I hope you raised stops on positions you have gains in. If you're trading longer-term, this probably won't amount to much. The lows of last summer are probably the lows for gold. And that means pullbacks like this should be buying opportunities.
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