Eric De Groot

Subtle Changes In Paper Control Will Mark Big Money's Transition Into Gold

2012-01-27T12:25:00.006-06:00

Big money will be forced to act with or without understanding. So, rather than listening to their words, I watch the little things such as sutble changes in paper control to time the inevitable shift in capital. Scatter Plot: Net Long As % of Open Interest (NL%OI) for Commercial Traders vs 6-Week Natural Logarithmic Change in POG Since 2002 Hi Eric, Have been reading most all your updates...

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Have You Noticed The Growing Strain In Silver?

2012-01-27T07:05:00.000-06:00

Have you noticed the growing strain in silver? Probably not. While silver may be managed by paper over the short to intermediate-term, its paper control has been slowly deteriorating since 2004. Net longs (long minus short positions) as a percentage of open interest (NL%OI) have been steadily increasing with the price of silver. The invisible hand has been covering its shorts during sideways...

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Gold to Silver Ratio Anticipating A Shift In Tactics Soon

2012-01-27T07:01:00.002-06:00

A break in the up trend of the gold to silver ratio (GSR) suggests not only a shift in money flows from gold to silver but also (monetary) policy tactics. A resumption of the 2008 down trend suggests another round of currency devaluation caused by direct or indirect quantitative easing (QE) is approaching. Chart 1: Gold to Silver Ratio (GSR):

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The New New Gold Rush - Don't Think So

2012-01-27T07:00:00.000-06:00

The flow of capital from the public to private sector as the sovereign debt crisis intensifies has been sending the price of movable assets higher since 1999. Subtle difference among these assets, such as varying degrees of liquidity, sensitivity to currency devaluation, and global demand and control translates into difference in money flows and rates of appreciation. While a rising tide of...

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New home sales fall in December

2012-01-26T09:44:00.005-06:00

Housing continues to work off it supply overhang created by credit excesses not seen since the housing bust of the last Great Depression (to end all depressions). Expect housing to struggle for years to come. It will be time to buy again when Americans have sworn off housing as the single most important investment of their lives. The few that stuck with gold will find a vast array of real...

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Wal-Mart Pulls Greeters From Night Shift as Walton Legacy Ebbs

2012-01-26T08:01:00.004-06:00

Sam Walton built an empire because he knew that some things were more important than money. Follow the money! Capital has been anticipating the "cost savings creep" and the death of Sam Walton’s legacy for years. Wal Mart (WMT) Headline: Wal-Mart Pulls Greeters From Night Shift as Walton Legacy Ebbs Wal-Mart Stores Inc. (WMT), the world’s largest retailer, has removed greeters from the...

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Mainstream Entities Will Now Enter Gold Market

2012-01-26T07:29:00.003-06:00

Jim's discussion below will attract more attention as the price of gold and silver blast through consolidation patterns in the coming day/weeks/months. Mainstream entities will quickly find out that strong physical demand for gold and silver is slowly pushing the COMEX paper price towards irrelevancy. Today’s developments are watershed events that are discussed in the following interview with...

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China’s Treasury Holdings Fell in November as Yields Declined

2012-01-26T07:00:00.003-06:00

The United Kingdom through its various fronts for backdoor money and Japan easily cover China's reduction in holdings. The movement of capital responds not to can but rather how the deficits are financed. A slow withdrawal by the Chinese represents a unique challenge of "finding" the money without raising red flags created by unusual money flows. Major Foreigner Holders of US Treasury...

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Fed says no rate hikes until at least late 2014

2012-01-25T11:55:00.004-06:00

Excuse my crudeness, but I believe the proper American response to this headline would be "no shit." Headline: Fed says no rate hikes until at least late 2014 WASHINGTON (Reuters) - The U.S. Federal Reserve on Wednesday said it will not raise interest rates until at least late 2014, even later than investors expected, in an effort to support a sluggish economic recovery. Without making major...

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More Davos Fodder

2012-01-25T11:24:00.005-06:00

Does anyone remember the Davos foddered in which gold was described as the ultimate asset bubble in 2010? In comments delivered on the fringe of the World Economic Forum, Mr Soros said: "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold." Perhaps his words were misinterpreted, but I do recall...

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Stock Market Rally Still Missing One Thing: A Crowd

2012-01-25T07:00:00.003-06:00

Today's market, spot-shadowed by the green circle in neutral territory, certainly reflects a rally without a crowd. Most retail investors still scarred by memories of the 2007-2009 cyclical bear market patiently wait for the return of “the crowd” at higher prices before returning. The red boxes of 1925-29, 1936-37, 1995-2000 and 2007 illustrate not only the return of the crowd but also the last...

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Gold and Equities, Gold Wins This Cycle

2012-01-24T07:00:00.002-06:00

Gold and global equities will move higher together. Those that have not succumb to short-term fear understand that this move will not be equal. Gold's surge relative US large cap stocks (equities) is not done. Chart 1 and 2 provide an indication of both duration and magnitude of the move yet to come in this cycle. Chart 1: U.S. Large Cap Stocks Capital Appreciation Index (LCSCAI); S&P 500 to...

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Goldman: Data May Look Better Than They Are

2012-01-23T12:49:00.004-06:00

Economic data have been managed for control purposes for centuries. Aspiring minds not taught to question everything either learn this lesson quickly or get used the idea of having their pocket’s picked regularly. Most of today’s economic series time series so badly polluted by statistical tweaks and techniques that historical comparisons have become meaningless. Simply follow the money that’s...

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Professional Accumulation In Commodities

2012-01-23T07:00:00.001-06:00

Previous resistance is often support during secular bull markets. Charts 1 and 2 illustrate this tendency for the CRB Spot and CRB Foodstuffs indices not only in 2008 but also 2012. The sharp decline in trend velocity towards -20% suggests an intermediate bottom is near. Chart 1: CRB Spot And Year-over-Year (YOY) Change Chart 2: CRBFoodstuffs And Year-over-Year (YOY) Change Money...

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Accumulation In Copper, Euro, Gold

2012-01-21T08:29:00.003-06:00

Copper's green box breakout marks yet another transition from accumulation to markup phase. How many are even watching copper at this point? See chart 1. Chart 1: Copper (JJC) And Copper Diffusion Index (DI): The death of the Euro is highly advertised by likely premature. Looks like the crowded Euro short trade, accumulation illustrated by high DI readings, will be pressured soon. The...

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From US Treasury Bonds To Global Equities, Says The Market

2012-01-20T10:51:00.005-06:00

Capital is reallocating from US Treasury bonds (public sector assets) to global equities (private sector assets). Emotional dependency on short-term volatility, however, prevents early recognition of this shift by most investors. Adding insult to injury, denial about the death of an old trading paradigm, often supported and repeated by headline chatter, ensures late entry for most. Large Cap...

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1-2-3 Bottom In Gold

2012-01-20T07:00:00.000-06:00

1 and 2 of 2012's 1-2-3 bottom completed. The emergence of a third count depends on the cycle of TIME. London PM Fixed Gold and GLD (ETF) Total Assets WA Stochastic

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Recognize & Anticpate, Let Historians Classify

2012-01-19T13:03:00.006-06:00

Hyperinflation represents a political event? Interesting….then what distinguishes the difference between a monetary and political event? Monetary events tend to be result of centralized mismanagement through "political meddling" that invariably sacrifices liberty for the benefit of control. Deflation and inflation are competing interests right now. The deflationary impact of the sovereign...

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Markets Already Discounting

2012-01-18T13:46:00.004-06:00

The number of risk-on signals continues to grow as capital anticipates more liquidity in 2012. Small cap stocks lead during periods of aggressive currency devaluation. Chart 1: Russell 2000 to S&P 500 Ratio Chart 2: U.S. Large Cap Stocks Total Return Index (LCSTRI) to U.S. Small Cap Total Return Index (SCSTRI) Ratio

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Silver's Lease Spread Has Turned Positive

2012-01-18T07:00:00.005-06:00

Negative lease spreads setup Silver's D-wave decline(s) of 2008. Once price collapsed, lease spreads turned positive and peaked. Spreads peaked as price bottomed in late 2008. This setup the accelerating advance of 2009-2011. Real Silver Lease Rates (1-Month LIBOR less 1-Month SOFO) and London PM Fixed Silver Price Silver's lease spread has turned positive in 2012.

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Are You Ready?

2012-01-17T12:52:00.005-06:00

The talking heads talk so much their teeth fracture from the constant chattering. Let's be clear, capitalism is not "in crisis". Poor decision making from leadership to citizen has brought debts to unsustainable levels across the Western world (see charts below). The market's solution will be to purge the bad debt through default or monetization, but no one from leadership to citizen wants it to...

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Economic Deterioration Or Increased Debt Monetization?

2012-01-17T09:49:00.004-06:00

The mass downgrade of European nations reminds us all that the monster called the sovereign debt crisis has not be slain. While centralized governments "drastically" slash their staff and critical office supplies such as computers and staplers in an effort to balance the budget, their actions are ignored as meaningless by global capital flows. There is no plan whatsoever to reduce or payoff...

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Currency Devaluation No Pocket Change

2012-01-16T19:56:00.003-06:00

Kevin reminds us all that changing composition and shrinking circulations of smaller denomination coins more often than not unrecognized symptoms of rampant currency devaluation across the globe. Awesome blog, Composition of loonies and toonies will be switched to a steel core from nickel Thought you might find this interesting... montrealgazette.com Kevin Headline: Canada to mint cheaper...

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The Churning Process In Gold Takes Out the Weak Hands

2012-01-16T11:07:00.008-06:00

Sorry, but that's how this game is played. Global currency devaluation has been holding equities in a depressionary box and coddling the illusion of economic growth since late 1999. The purchasing power of the US dollar has been sliding hard since 1934 (see chart 1) Chart 1: Purchasing Power of the USD Global capital adapts to the currency devaluation by seeking inflation hedges such as...

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Yield Spreads Suggest Favorable Backdrop For Gold

2012-01-15T11:40:00.003-06:00

The expectation that gold will be hammered by an equity takedown in 2012 has not been confirmed by the markets. The majority of equity takedowns are foreshadowed by an upside blowout or cluster in yield spreads. The spread between AAA seasoned corporate bond yields and US Treasury bond yields, illustrated in chart 1, and BAA yields and AAA yields, illustrated in chart 2, reveals tendency....

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