Natural Disaster (Sandy) and the Price of PM's??

The decrease in the price of gold and other commodities weren't really a sell-off, as volumes were not heavy outside of 3 peaks where certain technical levels were broken. Many people who own the PM ETF shares still set "Stop loss-sell orders" a certain fraction below their limit, and when a large "market price" order comes down, the market goes deep into these to fill the order, and then it triggers another "sell limits" until an equilibrium is reached. Once a persons " stop loss limit" is broken , it may sell below the limit as it becomes a market order, and the cycle carries down.

IMO, the downward direction of commodities and stocks were caused by the world's impression that the USD$ is gaining strength against the major foreign currencies. The big flurry of activity were in the Foreign exchange markets with the world trying to buy USD in exchange for their currency, and the USD had a bull day. Since commodities are priced in USD, as the strength goes up, the commodity prices are forced downward.

Also since the expectation is increasing strength in the USD, a number of funds, decided that the life of current QE, may decrease and so they sold what they felt were susceptible stocks/categories. Whether they will be right or not is still assumptions.

The thing is that we can not have a strong US dollar and increasingly higher PM, unless fear factors increase IMO.

It is interesting to me that many want higher PM prices, but decry a decreasing strength dollar. but they probably won't get both ( high PM prices, High Dollar )unless a whole world conflict occurs. IMO.

Jim

 

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On the chart of the most expensive hurricanes in US history, below:

Although POG +30 days might be arbitrary, you can see that Gold is typically UP in the 30-day period following major hurricanes: Big East Coast storms were bullish for Gold. Also, historically and statistically we expect to see November (the most bullish month for Gold Seasonality) to be UP ~3% or so. Thanksgiving Mittens Rally, anyone?

Otherwise normal, Gold's 2011 Summer Seasonality was of expected duration but very mild (a -3.76 decline, 5/5/11 - 7/1/11) and November was also UP +2.77%. But note the aberrant 'big' decline in 2011, following Hurricane Irene. That NY/NJ storm surge (and the first ever total shutdown of NY's subway!) was different than previous storms in the Gold charts... did it also signal a new correlation for Gold market retracements? Maybe.

At this point (10/29/2012) an -8% Decline or worse (on 11/29/2012) would again illustrate disrupted Seasonality or some other atypical pattern. Perhaps, it's a market sensitivity to East Coast superstorms. If 'putative storm correlation' happens two years in row (2011 and 2012) it's time to look beyond chartist excuses like 'short term overbought technical indicators.' Anticipate future superstorms (2013 and beyond) as predictors for that new pattern. Investors can only ignore the 'new normal' for so long, at their own peril.

I'm not yet convinced but three times' the charm. I'm more keen to know if/when plunging POG signals returning deflationary episodes in 2013, 2014 and beyond. Either way, we shall see.

[TABLE="width: 482"]

[TD="width: 65, bgcolor: transparent"][/TD]
[TD="width: 355, bgcolor: transparent"][/TD]
[TD="class: xl66, width: 136, bgcolor: transparent"]Storm Date
[/TD]
[TD="class: xl66, width: 87, bgcolor: transparent"](+4 weeks)
[/TD]

[TD="class: xl65, bgcolor: transparent"]1
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Katrina of 2005
[/TD]
[TD="class: xl67, bgcolor: transparent"]8/29/2005
[/TD]
[TD="class: xl68, bgcolor: transparent"]9.77%
[/TD]

[TD="class: xl65, bgcolor: transparent"]2
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Andrew of 1992
[/TD]
[TD="class: xl67, bgcolor: transparent"]8/24/1992
[/TD]
[TD="class: xl68, bgcolor: transparent"]1.83%
[/TD]

[TD="class: xl65, bgcolor: transparent"]3
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Ike of 2008
[/TD]
[TD="class: xl67, bgcolor: transparent"]9/13/2008
[/TD]
[TD="class: xl68, bgcolor: transparent"]10.83%
[/TD]

[TD="class: xl65, bgcolor: transparent"]4
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Wilma of 2005
[/TD]
[TD="class: xl67, bgcolor: transparent"]10/24/2005
[/TD]
[TD="class: xl68, bgcolor: transparent"]5.86%
[/TD]

[TD="class: xl65, bgcolor: transparent"]5
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Ivan of 2004
[/TD]
[TD="class: xl67, bgcolor: transparent"]9/16/2004
[/TD]
[TD="class: xl68, bgcolor: transparent"]4.21%
[/TD]

[TD="class: xl65, bgcolor: transparent"]6
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Charley of 2004
[/TD]
[TD="class: xl67, bgcolor: transparent"]8/13/2004
[/TD]
[TD="class: xl68, bgcolor: transparent"]0.64%
[/TD]

[TD="class: xl65, bgcolor: transparent"]7
[/TD]
[TD="class: xl70, bgcolor: transparent"]Hurricane Irene of 2011
[/TD]
[TD="class: xl71, bgcolor: transparent"]8/27/2011
[/TD]
[TD="class: xl72, bgcolor: transparent"]-7.21%
[/TD]

[TD="class: xl65, bgcolor: transparent"]8
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Hugo of 1989
[/TD]
[TD="class: xl67, bgcolor: transparent"]9/21/1989
[/TD]
[TD="class: xl68, bgcolor: transparent"]-0.07%
[/TD]

[TD="class: xl65, bgcolor: transparent"]9
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Rita of 2005
[/TD]
[TD="class: xl67, bgcolor: transparent"]9/20/2005
[/TD]
[TD="class: xl68, bgcolor: transparent"]-0.11%
[/TD]

[TD="class: xl65, bgcolor: transparent"]10
[/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Agnes of 1972
[/TD]
[TD="class: xl67, bgcolor: transparent"]6/19/1972
[/TD]
[TD="class: xl69, bgcolor: transparent"]5.77%
[/TD]

[TD="class: xl65, bgcolor: transparent"][/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Floyd of 1999
[/TD]
[TD="class: xl67, bgcolor: transparent"]9/16/1999
[/TD]
[TD="class: xl68, bgcolor: transparent"]23.39%
[/TD]

[TD="bgcolor: transparent"][/TD]
[TD="class: xl65, bgcolor: transparent"]Hurricane Camille of 1969
[/TD]
[TD="class: xl67, bgcolor: transparent"]8/17/1969
[/TD]
[TD="class: xl68, bgcolor: transparent"]-0.54%
[/TD]
[/TABLE]

 

As i said earlier would not be surprised if gold and silver drop another 5%, the big test will be the following bottom at $1600 if it drops below that 1500 is not unfathomable.

 

The India gold season didn't hold up last year, and I don't think it will this year either. Instability is typically bullish for metals, but not so much with the weather which doesn't have as much of a political effect.

 

Global warming has more to do with solar activity than anything else. In 2008 when we had historic lows in activity we also had record cold temperatures. I remember Colorado specifically, but there were others. We may very well be going through a solar cycle, but I don't underestimate the effects of releasing charged particles into the ionosphere either.

 

Most hurricanes are abour 200 miles in diameter. Sandy was about 820 miles in diameter. The hurricane categories get higher when the wind speeds go up. Sandy, had 80-100 mph wind gusts and a storm surge around 17' in some areas.

Sure those little homes right on the beach, at sea level, and those farther inland aren't well protected from the ravages of a storm like Sandy. But at any unwalled sea level area, you will suffer great damage. The power of water always wins.

 

Little homes? In the Hamptons? And what pray tell will this - the second huge storm in two years - do to the hedgies' RE prices and insurance premiums?! (Have no fear - rest assured that Mittens will feel their pain LOL.)

Don't mean to sound cynical, but if 15,000 Haitians died in a Cat 5 cyclone you know the NY markets would just shrug. Hurricane Sandy barely qualified as a Category 1 - that is NOT the issue.
Market-makers in downtown Manhattan were out-of-office and bailing water at home or the summer McMansion, that's why Hurricanes Irene and Sandy matter so much.

"Tuesday {10/30/2012} marks the first time since 1888 that the NYSE remained closed for two consecutive days because of weather. The earlier shutdown was caused by a massive snow storm."

 

The dumbest sentence ever written on this forum!

 

You are correct that people here build right up to the water, a normally safe practice. But it is misleading to say the storm was unremarkable. The damage was pretty bad not because the infrastructure is bad but because the oak and maple trees still have leaves for the most part and fell in large numbers taking down power lines and crushing houses and cars. It would have the same effect as there would be if an unremarkable blizzard with 40mph winds, zero degree temperatures, and 20 inches of snow fell on Florida orange groves. Any storm out of character for a region will do damage out of proportion to it's size.

 

I agree with Jim in the answer to the OP's question. Globally I do not think it can have an effect.

As to all of the other, "my storm is bigger than your storm", yada yada yada, I kind of skipped over it. I doubt many will blame me. We are all Americans, and band together when bad things happen anywhere in this country. I personally don't give a rip as to the relative size, if Americans are suffering I contribute to the Red Cross, period.

 

I've mentioned this before, but if you look at a 2 year gold chart, it is in the process of forming a cup and handle basing formation. The recent move down fits perfectly with this. I have no idea whether the formationw will succeed or fail, but it would not be out of character to see a drop as low as about $1625 before the next leg of the bull market starts, or it could start earlier. If the price subsequently breaks above $1800 and holds for 3 days or so, it might be off to the races. A trader would wait for the breakout to buy to minimize downside risk.

I didn't believe in technical analysis for a very long time. I don't know why this stuff works, but it seems to.

 

Sandy was barely a Category 1 storm. And in hurricane season, those trees ALWAYS have leaves on them. We cannot declare Sandy "out of character" on those counts.

But something has changed, to be sure. Intensity and direction? Sea-level, too. This IS the new normal - adapt (or suffer) accordingly.

Prediction: The major US bourses (currently in coastal New York/New Jersey) will radically transform
and ALL move inland & elsewhere within 10 years.

From wikipedia:
"Sandy was second to 1938 New England hurricane for the most intense storm, at 946 millibars, to hit land in the United States north of Cape Hatteras, North Carolina. (The 1938 storm was 941 mbar at landfall.)[49] The barometric pressure hit a record low of 948 mbar (28.0 inHg) over Atlantic City, New Jersey, breaking the previous record of 961 mbar (28.4 inHg) low set in 1938.[50] Sandy also broke the record for producing the lowest pressure in Philadelphia, with a minimum of 954 mbar (28.2 inHg); this broke the 962 mbar (28.4 inHg) record set during the 1993 Storm of the Century.[47]"

Sea levels don't rise uniformly across the globe; the ocean has risen faster than average on the East Coast of the USA. These predictions are "old news" but date from the period when 'global warming deniers' were most virulent that no such event was occuring, LOL Are we still trying to wish it away, playing make-believe, praying it'll stop? Uh-oh.

http://news.nationalgeographic.com/...-east-coast-us-science-nature-climate-change/
"Analyzing tide-level data from much of North America, U.S. Geological Survey scientists unexpectedly found that sea levels in the 600-mile (1,000-kilometer) stretch of coast from Cape Hatteras (map), North Carolina, to the Boston area climbed by about 2 to 3.8 millimeters a year, on average, between 1950 and 2009." Seven inches?!

onalgeographic.com/news/2009/03/090315-new-york-sea-level.html
"Yet New York, Boston, and Washington, D.C., area seas will rise 14 to 20 inches by 2100, according to the study, published online today in the journal Nature Geoscience."

Do you think the New York metro area can become a flood-prone hurricane alley without massively eroding national GDP? No, and we're obviously not "European socialist Dutch" to save New Amsterdam with a new system of levies and dikes. It WON'T happen - we have NO MONEY for that. "No new taxes!" Our gandiose imperium (with extortionate satraps in the 'stans, the Pacific Rim, etc.) and the military-industrial complex (global corporate welfare clients) need our dwindling tax dollars more. Hard choices ahead, people: do the math! So what's Gotham's future look like... and did you forget that film already?

Kurt Russell! Ernest Borgnine! Donald Pleasence! Harry Dean Stanton! Isaac Hayes! Adrienne Barbeau!
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