Bearish News

Who is this Kelly Evans? I approve. Fascinating interview, especially the section around 5:30 where JPM’s Kasman burps that “The Fed is still our friend”, to which Evans replies, “I wonder if what we haven’t learned throughout this whole thing, is that the Fed is our enemy, to some extent.” Evans displays impressive knowledge of the issues at hand, has obviously done her homework, and she don’t pitch softballs. Good luck getting interviews with bank execs in the future, Kelly, but bravo!

By Jesse of Jesse’s Cafe Americain

[Note from admin: Jesse nailed this run in PMs, particularly silver. Read his stuff. If you aren't familiar, the "Blythe" he makes reference to is Blythe Masters, head of commodity trading at JPM. It has been alleged that they're short quite a bit of silver.]

Gold Daily and Silver Weekly Charts – Blythe On Her Own In the Cold, Après Ski

Yesterday was options expiration and the precious metals were clubbed mercilessly and clumsily, with little attempt to hide it.

Today the metals markets rebounded strongly after a somewhat weak start.

As I had mentioned I came out of cash and bought the dip in the precious metals sector yesterday, rather heavily, running cash to effectively zero. There was picking up the fallen among those wild tigers, the silver miners, and in some size. Their beta is pretty impressive, and nice when it runs your way.

The buys in the stocks that had fallen to long term support were big fat targets. And they bounced with a vicious flourish today, gaining momentum steadily after the FOMC announcement.

I flipped the hedges early, and just let the metals run into the afternoon, trimming back into the close to raise some cash back again for more opportunistic buys. I like to get my money off the table and let the profits run.

So what next? The formation on the gold chart looks good, and the support on the correction helped to draw the cup of the inverse head and shoulders a little more firmly. Yes there will be draw downs and corrections along the way, but gold looks headed for 1590 and probably beyond, but one leg at a time.

Silver is a juggernaut. I had to force myself to buy heavily in that rugby scrum of a market yesterday and it paid off extraordinarily well.
If they want to be really Machiavellian they’ll hit the metals tonight and tomorrow again, but its getting so old it might not work, and they’ll have to retreat to try and defend another level higher.

And thanks Blythe. You’re the best, baby.

Gold:

Guest post by Jesse, who I’ve found to be spot-on with his trading and market analysis – Adam.

A rather volatile day to say the least, particularly in silver.

If you are an intraday trader there were numerous opportunities to make money and take positions. As noted in the intraday metals commentary, I took positions at what I considered throwaway prices in the metals, while flipping out of some of the short stock positions I had carried into the weekend.

Now there might be a better case for a short term correction or consolidation, but its all contrived really. The trends are clear and intact, and the fundamentals are aligned for gold and silver to go much higher.

There is extended comments on what is happening in the gold and silver markets posted today here. I strongly suggest that you look at it.

As I noted last week, there was something on the tape, an indication of an approaching event. I think it was the SP downgrade, and that word had been quietly leaking out to insiders.

Gold:

Silver:

More at Jesse’s Cafe. Re-published with permission.

Official statements on the Fukushima nuclear accident reek of bad data. “100x safe levels”, “only 10 percent of”, “10 million times greater than”. Examples:

MSNBC – Radioactivity in water at one earthquake-crippled Japanese nuclear reactor soared to 10 million times its usual level Sunday.

Marketwatch – radioactivity in water that had pooled in one of the buildings had reached 10 million times the normal level found in the reactor core, The Wall Street Journal reported. But the company later said the reading was faulty and revised it lower to 100,000 times the normal level, the paper said.

Inquirer.net – Japanese media were quick to point out that the new rating put the latest disaster on a par with Chernobyl, although officials say only 10 percent of the amount of radiation leaked in 1986 has so far escaped from the Fukushima plant.

ABC – Officials there said radiation was 10 times normal at one point but not a threat to human health in the sprawling high-tech city of 13 million people.

NBC affiliate – A “rough analysis” of the radiation exposure in Japan and projections of excess cancers that are likely there appear to be roughly 10 to 100 times greater than with the Three Mile Island nuclear disaster.

Marketwatch – The government estimated the total amount of radiation contained in the released water at 150 billion becquerels—exceeding the legal limits by about 100 times.

Australian – A Japanese safety panel says radiation is 1000 times above normal at a nuclear plant in the country’s northeast

Guardian: The release of water that is 100 times the legal limit is an unprecedented breach of operating standards, but it is considered necessary so workers can concentrate on containing more severe leaks.

VoR – At the beginning of  this week, the radiation level at the 4th generating unit was 10,000 times more than the legally permissible level.

Obviously, there is some number-fudging going on here.

I only retained one thing from college stats classes, and it was from a lecture about spotting fudged/faked numbers. In an exercise, the professor left the room and had students write two sets of single-digit numbers on the chalkboard.

One was randomly generated by a computer. The other was hand-picked by students who were told to “make it look random”.

Prof came back in, pointed at the hand-picked set, and said “that’s the fake”. Apparently there wasn’t enough repetition. It was too random. Repetition is common in real sets of numbers, so a lack of repeating numbers is a dead giveaway.

Once you understand the implications of this, all sorts of data start to look funny.

Back to Fukushima. At least some of the official releases are questionable, and likely understate the real risk.

Give the people who live in affected areas all the data. Let them decide what to do. Do not coddle, do not attempt to protect the population from information.

The risks are significant. As Greenpeace and others have noted, there is ~24x as much fuel at Fukushima than Chernobyl. And Japan is 40x more densely populated than the evacuation area in the 1986 meltdown.

It is vital that the situation be evaluated scientifically. Downplaying and underestimating the disaster has already caused significant harm and delay.