Aaaaand We're Back: Oil, Guns, Butter, Gold, Soybeans, and OMG WTF LOOK OUT!!
Sell in May and go away didn't really work out like it was supposed to this year, and that shouldn't come as too much of a shock to any of you out there with a brain cell or two left. Trust me, it's rough out there, and if you're the type with balls large enough to go against the Goldman rats in the razor pit, I commend you. We have seen what this market can do to one's sanity (see: Jeff Macke's nervous breakdown on CNBC - or was he speaking in some secret code to tell us something MSM won't let slip during prime time?) and if you're in it, you're probably already incredibly aware that not only is it dangerous to play in the sandbox with the Goldman rats, it's potentially lethal.
From AP, proof that the "rally" is losing steam as the curtain crumbles and truth at last prevails (psst, PPT, it always does):
NEW YORK (AP) -- Commodity prices soared across the board Friday as a sinking dollar stoked fears of inflation.
The Reuters/Jefferies CRB index, a widely used measure of the global commodities markets, rose 1.3 percent. The index jumped 13.8 percent in May - the biggest monthly jump since at least 1975, the farthest back data is available on Thomson Reuters.
"Commodities are definitely in vogue again," said Rob Kurzatkowski, futures analyst with OptionsXpress.
Prices for gold, oil and grains moved higher as the dollar sank to its lowest level in months against the euro and the British pound.
The dollar has weakened considerably since March as investors move out of cash holdings and into riskier assets like stocks on hopes for an economic recovery. Investors are also worried that the massive amounts of money the government has been pumping into the system could lead to inflation.
That has been a boon for commodities like gold and oil. Demand for gold tends to rise when the dollar is weak as investors seek protection against inflation, which can be triggered by a falling greenback. And oil is priced in dollars, so when the U.S. currency falls it becomes cheaper for foreign buyers.
This, kids, is nothing to joke about. When all that remains are commodities and hard assets, you might consider this that day of reckoning we have been talking about for weeks. You can only conjure up healthy balance sheets through the magic of creative accounting for so long before the whole house of cards crumbles.
After its bombing in the open market by unknown sources last week (I shall not name names but any time something like this goes down, you can guess who I am wont to point the finger at), gold is finally poised for a breakout - you can only hold these things down for so long, after all.
Wait a minute... breakout? More like getthefuckout. Told you gold wasn't going to sit there and take all of that manipulating lying down forever.
Making things worse for Zimbabwe, as if vulgar hyperinflation and a currency worth more to wipe your ass than to actually buy anything weren't enough, gold output in the impoverished African nation is down 50%. That sucks for Zimbabwe, especially since China is just itching to unload those $2 trillion in useless US dollars they've been squatting on. Oh snap!
Gold isn't the only hard asset making a run for the fire escape. Platinum and palladium (um what?) are - at least for the long-term - showing far more potential for performance than, say, the acid trip of financials. Well fucking DUH!
May 29 (Bloomberg) -- Platinum rose to the highest in almost six weeks on speculation that demand will revive for the metal mostly used in auto-emission filters and jewelry amid signs that the global recession is easing. Palladium also gained.
U.S. gross domestic product shrank at a 5.7 percent annual rate from January through March, compared with an initial 6.1 percent estimate, a Commerce Department report showed. China’s growth prospects improved from three months ago, according to a Bloomberg News survey of 14 economists.
“Indications from the physical platinum market, and flows and implied stocks, suggest the platinum supply-demand balance is in good shape,” John Reade, UBS AG’s head metals analyst in London, said today in a report. “If the worst global recession since 1945 can only take the platinum market back to balance, surely this has to be pretty bullish for the long term.”
For the last day in May, call me crazy but I'd say precious metals kicked everyone's asses, at least in this peyote-drunk market:
- Gold - +20.60 (+2.15% chg)
- Silver - +0.64 (+4.22% chg)
- Platinum - +49.00 (+4.30% chg)
- Palladium - +10.00 (+4.44%)
As we said on Wednesday with the kickoff to the bond market implosion (which is coming, kids, don't fool yourselves into believing otherwise - and yes, I'm talking to you Federal Reserve, you bastards should be on top of this shit WTF!), the ominous signs are starting to outweigh the manufactured green shoots (beyond Richmond Fed's manufacturing survey released this week, there aren't too many bright spots to be found amongst the static of doom-and-gloom). Are we paying attention? Good.
Want my advice?
Disclosures: no gold positions as I'm a broke 20-something some $20k in debt like the rest of my pathetic Gen Y brethren sold into a lifetime of debt by the delusion of easy credit. Also: bullish on paying my rent.