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Sometimes a chart is all you need

Manipulation of the Gold Market?

Submitted by Roanman on Thu, 04/12/2012 - 18:40

 

This one might be a bit obscure for those of you that don't trade, still if you can get your mind around the idea of "selling short" Gold you don't have via futures contracts or options and then buying the stuff back in order to make whole or reconcile your position, it should ... OK, Ok maybe could ... fall into place.

This set of charts first showed up as a trading strategy proffered by SK Options Trading.com.

It is now being bandied about as evidenceof manipulation of the gold markets.

The first chart from Kitco is for the daily closing price of Gold or "PM fix" from January 2002 until January 2012 on the Comex, located in New York City and demonstrates what I consider to be just a wonderful upward sloping trendline.

 

 

Starting in 2001 with an index arbitrarily set at 100, the chart below shows what would have happened to that investment of 100 whatevers if it had been used to purchase Gold daily at the AM fix on the Comex in New York City and subsequently sell that Gold daily at the PM fix again in New York City on the Comex, replicating the daily percentage performance of Gold in the U.S. intraday market.

What you need to keep in mind here is that the morning fix on the Comex is seldom if ever the same as the previous evening's fix.

This is true of most markets and every exchange.

What this chart is telling you is that had you taken $100,000 and invested it all daily by purchasing Gold to the maximum you were able at the morning fix and subsequently selling all of it back at the evening fix, beginning January 1, 2001, your account would have been reduced to somewhere around $32,000 on or about March 1, 2012.

 

 

The following chart is barely more complex.

The red line demonstrates the gains you would have enjoyed employing a buy and hold strategy if you had purchased and held some amount of Gold on Jan 1, 2001 again arbitrarily set at 100, and held it through March 2012.

The blue line demonstrates the gains you would have enjoyed had you bought gold daily at the evening fix on the Comex in New York and then sold it daily at the morning fix, again on the Comex in New York City and then sold short Gold at the morning fix and repurchased Gold to close your short at the evening fix.

Got that?

Buy at night, sell in the morning, go short with the proceeds then close your short position at the evening close and using the proceeds from that trade repeat the whole process.

 

 

Gold goes up all over the world while we sleep and goes down in New York when we're open for business.

It's a fascinating world we live in.

 

How much are you askin' for that BTU?

Submitted by Roanman on Tue, 02/14/2012 - 06:57

 

Gregor Macdonald's fine site Gregor.us is a new and welcome addition to our list of places we hang out at in the middle of those nights we have failed to take our medicine.

Gregor provides outstanding analysis of the sources and markets for energy and conveys that analysis in short and simple articles.

Recommended.

As always, click the chart for the entire work.

 

For A Million BTU

The price differential for a million btu is blowing out once again, between Global oil and North American natural gas. The extraordinary discount has persisted for some years. But today, with West Texas Intermediate (WTIC) oil above $100 and Brent oil above $110, the spread has reached new highs. The energy content of natural gas is trading at an 83% discount to WTIC Oil, and at an 85% discount to Brent oil. 

 

And we're paying the Saudis and Hugo Chavez mas o menos a hundred bucks a barrel because?

 

Criminal Prosecutions of Financial Institution Fraud Continues to Fall

Submitted by Roanman on Sun, 02/12/2012 - 15:00

 

From Syracuse University's Trac Report program via Chris Martinson (sort of) and The Economic Populist (moreso).

All three pieces are very good and worth the time.

 

Criminal Prosecutions for Financial Institution Fraud Continue to Fall

 

Federal prosecutions for financial institution fraud have continued their downward slide despite the financial troubles reported in this sector. The latest available data from the Justice Department show that during the first eleven months of FY 2011 the government reported 1,251 new prosecutions were filed. If this activity continues at the same pace, the annual total of prosecutions will be 1,365 for this fiscal year, down 28.6 percent from their numbers of just five years ago and less than half the level prevalent a decade ago.

 

Number Year-to-date 1,251
Percent Change from previous year -2.4
Percent Change from 5 years ago -28.6
Percent Change from 10 years ago -57.7
Percent Change from 20 years ago -56.5


Table 1: Criminal Financial Institution Fraud Prosecutions

 

 

I'm thinking that the Obama/Democrat excuse here should be that the failed policies of the Bush Administration and it's mismanagement of the Justice Department among other agencies has forced him to continue this deficit of prosecutions.

 

Reading on a Sunday Morning ..... most of the night actually

Submitted by Roanman on Sun, 02/12/2012 - 07:46

 

First from Physician's Committee for Responsible Medicine via Chart Porn via Katie (who is now somebody's Grandma) a side by side comparison of Federal Subsidies for Food Production and Federal Nutrition Recommendations, niether of which would exist at all were it up us.  

This is followed up by a three para story on how U.S. government food policy became as screwed up as U.S. government everything else.

I'll sum up ...... politics as usual.

You should read it anyway.

 

 

Next from Zero Hedge via the U.S. Energy Information Administration which also would not exist were it up to us.

 

 

I'm feeling charitable this morning and feel like you need to gain the conclusion drawn within this article so I've cut and pasted it below.

 

There are no data-supported broad-based drivers for dramatically lower gasoline consumption other than austerity and lower economic activity.

The code-word for "austerity and lower economic activity" that is verboten in the Mainstream Media is "recession." Indeed, if you examine the EIA data, the only causal factor that has backing in the data is recession--or if you prefer, austerity and lower economic activity.

 

Then there is the price of fuel.

People have to go to work, pick up the kids, get their meds, etc., and few urban centers in the U.S. have mass transit systems that are up to the task of replacing autos. So most Americans have what we might call non-discretionary driving. But as the price of fuel rises, people find ways to lower their discretionary driving by combining trips, shopping less often, shortening or eliminating vacations, etc. Enterprises reduce costly business travel with teleconferences and other digital technologies.

 

Data supports the notion that high oil prices lead to recession.

For example, Chris Martenson recently made a compelling case for this in Why Our Currency Will Fail ("Note that all of the six prior recessions were preceded by a spike in oil prices.")

Household income doesn't rise just because oil is climbing in cost, and so the extra money spent on fuel is diverted from other consumption or saving (capital accumulation). Higher fuel costs lower household capital formation and reduce consumption/economic activity.

Oil has been elevated for months, kissing $100 and rarely dipping below $90/barrel. Do higher oil costs explain the decline in gasoline consumption? Once again, they undoubtedly influence consumption, but that cannot explain the 40% drop in consumption. After all, when oil spiked in 2008 to $140/barrel, deliveries only dropped by a few million gallons: from 58.8 MGD in July 2007, before the spike, to 54.8 MGD at the point of maximum pain in July 2008.

The cost of oil has declined sharply from mid-2008, yet consumption has tanked from 54.8 MGD in July 2008 to 42.4 MGD in July 2011. That's a hefty 21% decline.

 

What other plausible explanation is there for the decline from 42.4 MGD in July 2011 to 30.9 MGD in November 2011 other than a dramatic decline in discretionary driving? 

That 27% drop in a few months in unprecedented, except in times of war or sharp economic contraction, i.e. recession.

If we stipulate that vehicles and fuel consumption are essential proxies for the U.S. economy, then we can expect a steep decline in economic activity to register in other metrics within the next few months.

Such a sharp drop would of course be "unexpected" given the positive employment data of the past few months. But as the data above shows, employment isn't tightly correlated to gasoline consumption: gasoline consumption reflects recession and growth.

In other words, look out below.

 

 

A Global History of Debt by Region

Submitted by Roanman on Tue, 02/07/2012 - 19:23

 

From Credit Loan here's another pretty good infograph.

As always, click on the graphic for a short article that will offer some details the generalities of which you probably already have down.

 

 

I love the part about Argentina having reduced their national debt over the past decade.

Default and subsequently becoming an international credit pariah will do that for you.

 

 

Charts, Charts and more Charts

Submitted by Roanman on Mon, 02/06/2012 - 18:28

 

The Bureau of Labor Statistics announced last week the creation of some two million "seasonally adjusted" jobs and a reduction in the rate of unemployment to 8.3%

The press release was breathlessly reported by all the major media outlets across the nation if not the world, none of whom bothered to pull out their calculators and check the number.

The problem with 8.3% aside from the "seasonal adjustments" the formulas for which have never (to my knowledge) been explained anywhere, is the fact that millions and millions ... and millions and millions of Americans of employment age have and continue to be dropped from the count.

For a discussion of how these particular numbers get massaged by the Bureau of Labor Statistics, click on the first chart below for John Williams' outstanding primer at Shadow Government Statistics.

Take note of Mr. Williams calculated rate of about 23% and consider that unemployment during the great depression hit it's high of about 25% in 1933, which number I believe was calculated using Mr. Williams preferred method (the blue line).

 

 

 

The following chart is a simple history of the Fed Funds Rate since 2007.

The second chart is all over the place in multiple formats usually with a notation to note the decline since 1914 when the Fed came into existence with the expressed charge of preserving the purchasing power of the dollar.

The third chart demonstrates the comparable success of the Bank of England in it's pursuit of the exact same charge.

 

 

Remember when we were gonna fix that too big to fail thing?

 

 

Finally as stated, the total credit market debt owed from 2001 through 2010.

 

 

Have a pleasant evening.

 

 

The Periodic Table of Commodity Returns ... not really but so what?

Submitted by Roanman on Fri, 02/03/2012 - 07:21

 

Here's a nicely done graphic from Bloomberg and US Global Funds of the yearly return over the past ten years for many of the most commonly traded commodities.

Click on the table for an enlarged version that you can actually read.

Click the gears above pointing at US Funds for Frank Holmes short, clear and simple piece with some more simple and clear charting from US Gobal Research who would like for you to open an account.

 

 

And should you choose to read Mr. Holmes article, do so with the wisdom of Casey Stengel firmly placed in the front of your mind.

 

 

 

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