Midas sur SILVER et core inflation...extra et pédagogique++

Silver Takes Off, Rare Stunning Bullish Close At Bell

J'ai coupé un max pour vous la faire courte et j'ai mis en gras et rouge les phrases clé...alors lisez ça..."Sade et Sheer"

You can discover what your enemy fears most by observing the means he uses to frighten you." --Eric Hoffer

08:30 Sep CPI reported 1.2% vs. consensus 0.9%; core rate 0.1% vs. consensus 0.2%
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The CPI number was the highest in 25 years. Retail sales were half of what was expected. Did it matter what they were? The Working Group on Financial Markets was ready and waiting. The S&P leaped nearly 9 points in seconds. While in the interest rate sector, yields on bonds and T notes immediately fell.

Planet Wall Street spin, along with these orchestrated markets, knows no bounds these days. The inflation number didn’t matter because the core was less than expected. I heard it was down because the housing number fell. Right! The retail number was OK because ex-autos it was a bit stronger. In other words after you strip out the most important factors (energy in the CPI’s case) which affect the ordinary American … everything is fine.

More on that below.

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As has happened so often of late, the shenanigans of the US Orwellian market manipulators didn't get too far. The orchestrated instantaneous, ludicrous response to the numbers held the fort and that was about it. Too much of the smart money in the world is seeing through this bogus market manipulation scheme. As recently mentioned, this smart money is waiting for its move and then fading the Gold Cartel and PPT.

How about that silver! After falling ten cents early in sympathy with the gold trouncing, silver crept back quietly. As mentioned here so many times recently, silver is trading completely differently than in years past. It does not want to go down and is trading as if something big is up.

While it rallied quietly off its lows during most of the Comex trading session, then going up on the day late, it rocketed on the close, going up 15 cents on the day before settling 13 cents higher.


The move higher this afternoon came out of nowhere and is vintage silver. Silver is like a mule. It does what it wants to do and when it wants to, as you have heard me mention often. The biggest silver moves of all occur when silver moves on its own, regardless of what is occurring in other markets.

December silver
http://futures.tradingcharts.com/chart/SV/C5

Could this be the Arab silver play MIDAS has brought to your attention? Today’s stunning late move up fits into that sort of a scenario. Makes all the sense in the world.

There is something else which could be going on or happening concurrently. Many of the silver bulls, like me, have long touted the notion the market should take off because of the continuing supply/demand deficit. But, it never has. At some point it will and this might be IT! If so, there are substantial shorts who will not be able to cover at anywhere near these price levels. If the Arabs are causing this, the major shorts are toast.

One of these coming days silver will rally around a $1 in a single Comex trading session.

One additional point to make on silver. The market popped nearly 8 cents on the closing bell. Many shorts were stunned and many had no time to cover. The Comex floor said if DEC silver closed above $7.81, it would fly next week, and a close above $7.83 would clinch that. The floor then told my people, "That will never happen because it is too late in the day," as it was trading around $7.78 with 3 minutes left in trading when this comment was made. DEC closed at $7.86.

What silver did late is VERY rare and further suggests something extraordinary is up. That assessment is supported technically by silver putting in an outside day key reversal to the upside, setting up the probability for some serious fireworks next week.

The silver open interest went up again yesterday by 711 contracts to 136,729 a new multi-decade high, which gives further indications somebody of size is in there making a play for silver. To do so one must have designs on the physical market. This fits into our Arab story. The pieces of the puzzle all fit so far. Next week could be spectacular.

While gold was $5 lower at one point, it would not fold and was gradually drawn back up because of the strength in silver. A precipitously falling dollar was having little impact on gold; while not crashing, it was still not far off its lows. Late in the day the short locals were forced to cover.

Two days in a row The Gold Cartel had gold on the ropes and it came right back. Can never recall that happening over the last 7 years of watching this market so closely.

The reasons to own gold are going off the charts and this should be reflected in a soaring price in the weeks ahead. The gold open interest only fell 557 contracts to 366,380, which confirms there were these new buyers waiting for the break to jump on board. This must be so because a fall like yesterday could have given us a drop of 10 to 20,000 contracts.
We know there was huge fund selling, and Gold Cartel short-covering would further reduce the OI, not keep it relatively steady. The Gold Cartel is in BIG TROUBLE.

Any technically overbought condition is being worked off easily.

December gold
http://futures.tradingcharts.com/chart/GD/C5
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Adrian on the state of US economic affairs:

Bill,
I am so happy that inflation is so benign at only 0.1% for the famous core inflation rate once everything that rose in price has been excluded. The actual (and I use the term lightly!) 1.2% increase is stunning. One can only marvel at what the "real" inflation rate could be if the BLS didn’t massage everything in its index.

I am also pleased that the core weather today is only 85 F when you exclude the volatile effects of global warming from the 95F read by my thermometer.

The people on the Gulf Coast will be happy to know that Katrina and Rita were not that bad because the wind speed was only 15 MPH when you strip out the volatile cyclonic effects from the measured 135 MPH.

I am very happy that the core profit on my investment portfolio this week was 10% when I exclude the volatile losses from all the stock that went down.

The notion of the "core" rate and the actual rate is to see if higher energy and food prices have spilled over in to raising the price of a basket of other goods. But this is a measure of the breadth of price increases not a measure of average price increases.

Companies can not exclude energy and food costs from their balance sheets, nor can households exclude them from their monthly budgets. The inflationary effects of a promiscuous monetary era are finally showing up, and try as they may they can not be "excluded" from the economy.

With Alan Greenspan shortly to end his 18 year run as the Chairman of the FED we can say that if we exclude all the volatile bubbles that he created in his tenure his "core" achievements have been quite benign.

Cheers
Adrain