This is the last daily for the month of August. We won’t be publishing a newsletter next Monday, September 2 and the office will be closed as well. See you on Tuesday!
On Thursday morning, I happened to tune into CNBC’s Chat Box.
The reporters were giddy about the revised Q2 GDP numbers. It reminds me why I never watch these guys. Here is what SHOULD have been discussed, but of course, it wasn’t and never is….
Submitted by Tyler Durden on 08/29/2013 – 08:45
On the surface, the just printed revised Q2 GDP number was great: following a preliminary print of 1.7%, the just revised number of 2.5% (beating expectations of 2.2%), up from 1.1% in Q1, should make everyone happy (well not the market which desperately need bad news to go higher). However, as usual, the real news is underneath the surface, which is where we find that both real components of GDP growth, Personal Consumption and Fixed Investment were actually revised lower from the preliminary print. Specifically, Personal Consumption as a contributor of the 2.5% final number was revised from 1.22% to 1.21% (well below the average Personal Consumption number since 2010 of 1.58%), while Fixed Investment was revised from 0.93% to 0.90%. So where did the 0.8% upside come from? It came entire from net trade, which contributed precisely 0.8%. Imports were revised from detracting 1.51% from GDP to just -1.11%, while exports added not 0.71% as previously expected but 1.11%, thus changing the net trade contribution from -0.80% to 0.00%. The remaining two components, Inventories and Government Consumption, were a wash, with one adding 0.2% while the other subtracted 0.1% from the preliminary number.
Here is what actually happened, with all due apologies to the clowns at CNBC.
Here is what John Williams (Shadowstats.com) had to say below:
GDP Revision Reflected Previously Discussed Trade-Flow Distortions
Well Removed from Real-World Activity, GDP Numbers Remain Nonsensical; There Never Was a Recovery and There Is None Pending
With Consumer Liquidity Issues Deepening, Broad U.S. Economic Activity Is in Renewed Contraction
Fed Pullback on QE3 Remains Unlikely, Amidst Suggestions of Intensifying Banking-System Stress
–Shadowstats.com, August 29, 2013
Both gold and silver are very “overbought” now.
The recent run-up has been strong and a correction is probably in order. I don’t expect it to be long lasting or severe, just normal business as usual. Day to day forecasting is not our focus. We are big picture, long-term buyers of gold and silver. Looking ahead four months, to the end of the year, we have every reason to be optimistic. Gold at $1500 or $1600 is not a pipe dream. This is not the time to be out of the market. There are too many unknowns like the debt ceiling, “tapering” of QE and the Middle East to name some of the most visible road bumps.
The following chart shows that gold is still bullish and has strong support at $1384.
I presented the following two charts yesterday, but here they are again – note the “overbought” level of the RSI (top of the charts). The MACD (bottom of the charts) are also moving into an “overbought” condition, but it could go a lot further before correction. A market can stay overbought for a long time – but a normal market will correct. The only question is if this is a “normal” market? Let’s see if $1400 holds, or if not, how quickly the price moves back above $1400 and $24 in silver.
Just remember, the Gold Cartel does not want a rapid rise in gold or silver. Measured is O.K. but not too fast or too far. The hedge funds and bank trading departments make money trading. They use moving averages, MACD and RSI data. They make their money on the way up and on the way down. They are traders, not long-term investors. To them, gold and silver is a “thing” not money.
Let’s see how things unfold for the next week or two. Let’s see if the lit fuse sputters out or sets off a regional explosion in Syria and Israel. This kind of information is most useful for the day traders. It has little long-lasting affect on the metals.
Here are Ed Steer’s comments below on the “oversold” gold and silver markets. Our views are identical.
In gold, it’s a pretty simple story, as the price rally is attributable to one fact – JPMorgan’s corner on the COMEX gold futures market. Everything about the gold price this year, both down and up can be attributed to JPMorgan; the $500 engineered price decline to the 50% retracement to the upside. The evidence is stark – a 20% market share and corner on the short side by the bank at $1,700 in December to a 25% market share and corner on the long side near the lows of $1,200. Market corners are all about price control and that’s what JPMorgan is all about in COMEX gold and silver. What’s simply amazing is that this crooked bank seems to turn up as being corrupt in just about every line of business it is engaged in (judging by recent government actions); yet the most obvious proof of wrongdoing in gold and silver is ignored by the CFTC. It doesn’t matter what definition is used to define a corner on the market; JPMorgan’s COMEX gold (and silver) positions, both long and short, would meet that definition. – Silver analyst Ted Butler, 28 August 2013
Once again it was obvious that both silver and gold wanted to rally on Wednesday, especially in the afternoon in Hong Kong, and those attempts met their usual fate. More disturbing to me is the contrary action in the precious metal equities. I said it before and I’ll say it again, the powers that be are making every attempt to keep interest in the precious metals to a minimum, and a 7 percent decline in share value over the last two days in the face of rising or stable prices, is just another method from their bag of dirty tricks.
As I’ve mentioned a couple of times this week, it wouldn’t surprise me at all if JPMorgan made an attempt to bomb the precious metal markets now that both gold and silver are well into overbought territory. But whether they are successful or not remains to be seen, and if they are, how bad could it get? I don’t know for sure, but the news out there will not help their efforts.
It’s a pretty good bet that these last two trading days in August might prove interesting, and Thursday’s price action in Far East trading certainly indicates that could be the case.
–Casey Research, August 29, 2013
Don’t think it won’t happen here – in DOLLAR GOLD
The gold price in India has moved into uncharted territory – an all-time high price…