US house price drop accelerates

Long-term readers should not be shocked by this news. The real estate decline began as a slow motion train wreck in 2001. It picked up speed in 2005. The trend in real, currency adjusted prices, illustrates the both past, present, and future pain in this heavily-hyped market. Market forces will continue to pressure housing into the cyclical low still years away, but an unsuspecting public won’t likely accept it until near the end.

History is repeating, but few recognize it. As a result, history repeats and the public finds itself shocked by these seemingly ‘new’ and unusual events.

U.S. Median Home Price (MHP) And MHP to Gold Ratio


S&P Homebuilders Index (HB) AND HB to U.S. Median Home Price (HBMHPR)


Headline: US house price drop accelerates

US house prices have suffered their biggest quarterly fall since the collapse of Lehman Brothers, underlining the scale of the headwinds still facing the world's biggest economy.

Average house prices slumped 3pc in the first three months of this year, a decline that pushed the number of homeowners in negative equity – where a mortgage is higher than the value of a property – to 28pc from 22pc a year earlier, according to new research from Zillow, a major US property website.

Source: telegraph.co.uk

Thanks Bob!

To Quote A Friend, We’re Nowhere Near a Top in Gold!

While the ebb and flow is becoming more violent in gold and silver, its increasing amplitude does not alter the secular trend.

A parabolic or extended run, like clown at a formal business convention, will be obvious. The acceleration from the primary trend will reveal itself through a statistical ‘spike’. All the chatter about an exhausted parabolic run is unsupported from a long-term, primary trend perspective.

Gold, London P.M. Fixed (Gold) and Z Scores from Primary Trend


Silver, London P.M. Fixed (Silver) and Z Scores from Primary Trend


Gold to Silver Ratio (GSR), Monthly Average Price

Dear Friends,

With gold and silver still recovering, today King World News interviewed the legendary Jim Sinclair. When asked about the volatility in gold and silver Sinclair replied, "The bonds are indicating that the psychology which is most supportive to gold is returning to the market place. And the action in gold after the recent reaction in gold, is so stout, so strong, as is silver itself, so stout, so strong in its recovery, that the only conclusion that you can come to is that we have not established a top in silver and clearly we're nowhere near a top in gold."

Here are a few more snippets from Sinclair's interview:

"The recovery in silver, the fact that it got plowed down, but its character now seems to deny the recent break, I think silver is acting very, very well and as previously stated, I don't believe we've seen a top in silver yet.

When asked about gold specifically Sinclair stated, "$1,764 is calling on gold now and the market is reacting to it. It is calling, it is the magnet pulling most heavily on gold right now."

When asked about the shares Sinclair had this to say, "I know what kind of money these companies are going to make. I understand what kind of cash flow that can be generated from this type of price on gold. There is no way on earth at this point that the hedge funds (short miners) are going to be correct. In fact they are the ostriches with their heads in the sand. No share will remain under pressure of a hedge fund when it begins to put out the type of cash flow that the price of gold now will result in."

From Jim Sinclair.

Click here to read the rest of the written interview and listen to the verbal interview on KingWorldNews.com...

Source: jsmineset.com

Ireland Is Not The United States

Ireland is not the US. The US can issue debt in the same currency that it prints. The printing press solution is not an option for Ireland. With that said, only the naive would assume that all 'options' will not be considered if the printing solution fails in the US.

Headline: Irish Bombshell: Government Raids PRIVATE Pensions To Pay For Spending

The Irish government plans to institute a tax on private pensions to drive jobs growth, according to its jobs program strategy, delivered today.

Without the ability sell debt due to soaring interest rates, and with severe spending rules in place due to its EU-IMF bailout, Ireland has few ways of spending to stimulate the economy. Today's jobs program includes specific tax increases, including the tax on pensions, aimed at keeping government jobs spending from adding to the national debt.

The tax on private pensions will be 0.6%, and last for four year, according to the report.

Source: businessinsider.com

From Bob

There's No 'Money' Gene

The vast majority of the headline analysis about oil implies the recovery in price since 2009 has been a direct result of rising demand from the economic recovery. The sharp rebound, however, is largely currency induced. While the slow upward drift in the ‘real’ (ounces of gold) price suggests demand outstripping supply over the long-term, its muted rebound reveals the influence of currency devaluation on US dollar prices over this period. In other words, the sharp rally fanning the nation’s fear over rising gasoline prices has more to do with excessive money creation than market fundamentals or CME margin increases.

Does this distinction matter? Is there a difference between night and day? Although human DNA is encoded by millions of years of evolution that helps discriminate the difference between night and day, science has yet to find the ‘money’ gene. This is why the cycle of boom and bust regularly repeats within the game of money and capitalism.

West Texas Intermediate Crude Oil (OIL) AND Oil to Gold Ratio (OILGLDR):


Headline: Crude Oil Futures Drop on CME Margin Increase, Projected U.S. Supply Gain

Crude oil dropped in New York after CME Group Inc. raised margins and on speculation U.S. stockpiles increased to near the highest level in two years.

Oil fell as much as 2.4 percent after the exchange late yesterday increased the amount of money traders must hold as collateral for their crude, gasoline and heating oil transactions, effective after the close of business today. The Energy Department will probably report tomorrow that supplies rose last week, according to a Bloomberg News survey.

“The market tumbled hard on news that the CME was raising margins,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’re up from the day’s lows because of strength in the equity markets.”

U.S. Mint Gold American Eagle Coin Sales Quicken This Month

Forget quicken, gold coins sales will go ballistic once “Three Taps and Out” completes faster than expected. The signs of secular bull market remain clear and obvious, yet despite them emotions of greed and fear rule the short-term.

The U.S. Mint sold 62,000 ounces of American Eagle gold coins in the first week of May, heading for the highest monthly amount since March 1999.

This month’s sales are already 57 percent of the total in April, according to the mint’s website. May sales would be about 240,250 ounces if the current pace continues. The mint sold 231,500 ounces of the coins in December 2009 and 269,000 ounces in March 1999, its website showed.

Source: bloomberg.com

Bearish Setup Forming In US Long Bonds

Be wary of 'logical' arguments that lack support from fundamental market drivers. Money flow illustrate the formation of another bearish setup into strength. There's been no buy sign for Treasurys. That fact that Gross, Sinclair, et. al. continue to fade (sell) strength better reflects the health of the bond market than any headline analysis.

When money concentrations on the short side only the blind risk takers will be long bonds. This group is also known as nonreportable traders or retail money.

US Treasury Bond 20YR+ (TLT) And Bond Diffusion Index (DI)


Headline: A 'Buy' Sign for Treasurys?

Some Bet End of QE2 Will Be Boon to Bonds

Even before last week's selloff in risky assets, investors worried about slowing growth were buying up Treasury debt. To some, this is a preview of what is going to happen when the Federal Reserve ends its bond-buying program less than two months from now.

Over the past four weeks, the yield on the 10-year Treasury note has fallen from 3.58% to 3.16%, its lowest level since December. The bond market rallied even though the biggest buyer of Treasurys over the past several months is planning to leave the market at the end of June.

Gains in Treasurys have been driven largely by weak economic data. Even a better-than-expected jobs number Friday couldn't derail the market.

Source: finance.yahoo.com

Gold & Silver: The Path To Concentration of Funds

The probability of higher-order trend acceleration increases once the upper channel resistance has been breached. Money has been supporting the breakout by repositioning from short to long as previous resistance is tested as support. This suggests that "Three Taps and Out" should be resolved and confirmed by June 2011.

Gold London P.M Fixed And Gold Diffusion Index (DI)


By way of comparison, silver's trend accelerated substantially with the breach of its 2003 upper channel. This acceleration (breakout) is marked by the green circle below.

Silver London P.M Fixed and the Silver Diffusion Index (DI)


While the headline analysis and Street chatter the new flavor of the day - fear, they always miss the quiet movement of money. Money continues to reposition against the grain of consensus. That is, money is moving from short to long. The devastating decline yet to be recorded in the COT data should extend the formation of the bullish setups already underway.

Strong hands continue to aggressively cover their shorts.

Silver London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Long & Short As A % of Open Interest


Money flows are beginning to show concentration. It's not statistically extreme, but it's close. Concentration of funds by 'strong hands' will provide the fuel for the next advance.

Silver London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Net Long As A % of Open Interest


Example of Flavor of the Day Headline
Headline: Talking Numbers: Silver Loses It's Luster

It's been a volatile week for commodities and Russ Koesterich, BlackRock iShares Group says silver may still be overvalued despite its steep decline.

Source: custom.yahoo.com