Friday Vue - 4/12/2013

Friday VUE - 4/12/2013

1. Yesterday turned out to be a trend day to the upside, after a very large move to the upside the day before.  I can't help but think of that old country song:  Yesterday is dead and gone, and tomorrow's out of sight, let the devil be alone, lord help me make it through the night -- OK that is not how Kris Kristofferson wrote it, but that is how one must approach the market I think.  Hey if you want to be upbeat listen to Madonna's Celebrate -- that will get your blood pumping.  
2. Overnight, the markets overseas are down.  At the moment, the futures markets are going to open down, which will at least at first cause the DOW to drop.  Then who knows in such crazy exuberance (and huge amounts of liquid cash) floating around.  
3. Cyprus is in the news again.  So what?
4. Producer Price Index was announced today.  It is pretty weak while missing expectations.  Market expectations were for a .2% decline.  Food and Energy were pretty constant year-over-year at 1.7%.  Basically, this was/is a mixed bag.  Consumer Sentiment is due at 9:55...  
5. US Dollar is way up, as the overnight market turns toward risk-off trading.  
6. Gold is way way down.  I hope you have followed my blog on when to know if/when Gold has turned around.  In the meantime, if you do not have your store of physical bullion for safekeeping, now is the "golden" opportunity while the Feds can control the gold market.  When they fail (and they will), it may be too late to buy bullion, but a great time to buy gold/silver miners for intermediate term investment.
7. Remember, there is a slew of economic data to be reported today.  Go to http://bloomberg.econoday.com/byweek.asp and you can find all the reports on the calendar.  

Comment on Commodities: 

Gold is a commodity along with soybeans, wheat, rye, corn, meats and so-on.  The one thing to remember about commodities is they are seasonal, and you can track that seasonality.  Gold's seasonality is tied very closely to India.  When the consumer in India buys, Gold goes up (normally). However, as pointed out, the Federal Reserve through the too-big-too-fail banks have been shorting the market to drive the price down.  In the longer term, Gold is cyclical based on the cyclic nature of the economy. 

The IMF just published a report highlighting the importance of understanding commidity price fluctuations for commodity producing nations (South Africa, Australia, Canada, New Zealand, Brazil and so-on) and consuming countries - USA, Japan, China and so-on.  Commodity prices play an immediate and impactful role in economic growth, inflation and fiscal policies on both sides of consumer and producer country.  They went on to explain the Supercycle, which was amazing since almost every economic professor I've taken training from debunks "cycles", but then turns around and studies them constantly. 

At this point commodities are in the midst of bull super cycle.  At the moment, the central banks from consumer countries have been successful at printing unimaginable sums of money while keeping the price of commodities low.  

When you hear all the big banks and hedge funds talking against gold, remember, they are almost always (maybe always) trying to take advantage of the retail trader.  They could (and do) have ulterior motives -- they could be super-short and need the price of the asset to go down so they can cover the shorts.  

Be sure to use your head if you are intending to invest in gold or silver for investment.   On-the-other-hand, now is the time to accumulate a portion of your wealth to gold and silver coins when (not if) the USA government decides to become Cyprus on steroids.

USA:

I'm still thinking about the USA.  The economic reports were mixed this morning.  Some analysts will claim it is good - some will say "the sky is falling".  

Retail Sales were awful -  weakness was broad based.  Don't worry... @ 7:25 PDT the market is chopping since the opening.  It tried to go up, but then was brought down for whatever the reasons (could be the economic reports at 7:00 PDT).  Anyway, at this point, the full stock market is about where it opened.

CHINA:

• People's Bank of China (PBOC) is pushing the renminbi / Yaun higher vs the USA dollar.  Isn't that what the Obama-nation wants?  The Yaun hit a 19 year high overnight against the $, even though most currencies were down against the dollar.  
• The renminbi / yuan has had six straight weeks of appreciation.  
• Of course, this means that foriegn investment is flowing into China by the boatload.  Ultimately (assuming China wants the Yaun to be currency all trade is traded in - instead of the US $), the PBOC must keep appreciating the Yuan in order to keep investor's interest there. 
• China has leaked through one form of official and un-official channels their desire to have a floating currency backed by some percentage of gold.  Readers: That is a strategy to become the #1 economic super power in the world.  
• As long as all this optimism for China holds, Australia and New Zealand currency will benefit.  Please note my points on commodities and producer countries.