Thursday, December 31, 2009

MARKET CRASHES !!

Jeeze I love hyperbole.... couldn't resist the headline after the little puke at the end of the day. Don't get your panties in a wad. It may or may not carry over. What it does tell you is that the solid longs are not as cohesive as the PPT would like. That selling was "insiders" moving out of positions that they are well aware of as overbought.

Joe has been actively preparing me for next year now for a couple of days and I will pass along his advice. Be aware that last year is it for "buy and hold". Any position can take a beating if you stay too long. On the other hand don't move out of your winners too early if you think the short term trend is intact. This is NOT something that novice traders can determine easily so be very carefull what you own. For me (and novice traders) remember the miners can take a beating and STILL make solid rebounds in a longer term up trend. That philosophy may not hold for many equity sectors. Over time we will try and help you with more specifics regarding "some" sector plays but for now I will only add the "defense sector".

Watch DTO if oil breaks 80 hard wait till 85 to add. I own a small DTO position and will not add until I see how 80 plays.

EGO ANV still strong as were miners in a weak market. I still am hoping for a pullback and do expect pain in miners with market correction. BUT they are still your safest trade.

I will do my best to pass along useful info but in the end it will be your call ultimately and your confidence must be strong or don't trade. BUY physical gold or silver if this rigged casino is not your cup of tea. gl and happy new year.

Tuesday, December 29, 2009

As We Near End Of The Yr

As we close out 2009 and look forward into 2010 and beyond, this has been a year of near financial catastrophe and monumental change ( although Stock market did well thru FED's injection of massive PRINT money and a few made a killing), none of which benefited America or ordinary Americans. Late in 2008 and throughout 2009, events have happened in the US which would have been labeled unfathomable just a few short years ago, and yet already these monumental changes are expected to be filed into the memory hole and Americans are expected to believe nothing has changed.
As we exit the year, we are told the US is a laissez-faire free market economy and yet the US government is now the largest owner of housing in the US as well as the owner of last resort for some of the largest and completely insolvent US corporations. The Federal Reserve, a privately and anonymously owned and controlled corporation chartered with issuing the nations currency, were given the green light by themselves to transfer to themselves and their shareholders the people's wealth in the form of their future labor. The FED balance sheet has ballooned to become a junk bond warehouse as they overtly and covertly buy their own debt, immune from any sort of oversight, regulation or auditing and operating above the law. Along with that, increasingly coercive brute force measures are now routinely necessary to manage and manipulate so called "free market" asset prices which are cheerled by so called "financial news media" whose board members and management are all the same people who transferred the people's wealth to themselves. The corporate media party line idea of a "free market US economy" now seems like a distant memory and it all feels like systemic fraud, corruption, malfeasance and organized crime at the very highest levels.
Over a period of decades and with one FED induced serial bubble after another, the financial system finally reached an unsustainable level of debt and leverage in 2008. When the FED started raising interest rates, when the real estate bubble burst, it involved so much debt and leverage that the whole system failed, pricing models and risk models failed, and the banking system quickly became insolvent.
I believe we have already had a systemic collapse, and the only thing the FED can do now is alter the look and feel of the collapse and to manage the allocation of the remaining wealth. In the end, whether by deflationary collapse or inflationary decay, the result of the collapse will feel the same to the US general population regardless of the interim path taken.
If the FED had done nothing, the whole system would have quickly degenerated into a deflationary collapse and failure of the financial system due to insolvency. The course the FED chose however is the one myself and many others predicted beforehand... the FED chose to solve the problem of too much debt by creating even more debt by taking the unprecedented action of buying it's own debt under euphemisms like "quantitative easing" and "debt monetization" and also covert buying to artificially force negative real return rates of interest. Through this course of action, the FED so far has been able to turn what would have been a rapid deflationary collapse into a decaying price rise reflation which is euphemistically called "a recession that is now over" by the six people who control 96% of the global media and attempt to pass off propaganda as "news" to a woefully misinformed, dumbed down and apathetic general public.
Although they have been somewhat successful in reducing the insolvency of the banking system, they have effectively created a giant wealth transfer mechanism whereby all the money that disappeared in the collapse was re created out of thin air and given to the banks and wall street. I think of it as a sort of shell game. The money disappeared from Mom and Pop's 401k and re appeared on the balance sheets of the banks via freshly created new money (debt). As a result, we have something still called "free market capitalism" which is not free market capitalism at all. We have emerged from this crisis with a sort of financial oligarchy where a few entities who control all the wealth and power also control politics and media. Understanding this will help to understand issues like "healthcare reform" which will involve you paying more and getting less, with the primary beneficiaries being the oligarchies who control health care and insurance.
Going forward, if the FED doesn't buy enough of their own debt, then interest rates on the long end would rise and the risk becomes a deflationary collapse into insolvency for the FED and it's banking system. If interest rates remain effectively at zero on the short end and artificially suppressed by quantitative easing on the long end, then FED's hope is that the real estate market can recover and the banks can regain solvency. If interest rates rise as the free markets would argue for however, then the real estate market sinks even further, the US dollar rises, and greater insolvency of the banks follows. The higher interest rates go, the thinner the knife edge gets and the FED would quickly find itself staring into another October 2008 collapse kind of situation. On the other hand, if by buying enough of their own debt they can keep short and long term interest rates down, then the free money percolates through the banking system, puts pressure on the dollar, lifts commodity and real estate prices and pulls out of the collapse via inflating away the debt so long as they can avoid run away hyperinflation in the process. This is the path we have traveled throughout 2009.

DON'T BOTHA ME

Market on pause while the big boys on vacation. Last years vacations were cancelled or abreviated and lost time is being made up. They were under great duress last year and weren't going to be cheated after feasting on the sweet bread of retail shorts and fava beans.

But we small fries are traders and fighting, besides we don't have enough money to go on vacation after the butchery of last year (other than Joe). I also like the casino and prefer this to being stripped searched at an airport and having my orifices probed by some TSA lackey. But to each their own.

Love the DTO action yesterday and today. Trading in this range is a little comforting but be careful they can get this to 85 near term.

Nice reading last night. How bout that story on the Fed being the de facto "BAD BANK". I love it. Now they have the treasury backing their balance sheets of toxic mortgage assets by taxpayer (you and me) backing of Fanny and Freddie. DOES IT GET ANY BETTER THAN THAT!

Keep focused not to heavy and try and trade EGO and ANV on gaps. Accumulating if the really take hits. I don't own LCC here. gl gang

BTW I am one happy camper minus a kidney stone...yeeeehahaha.

Monday, December 28, 2009

PREP COOK PREPARATION

For the slaughter of course. I can't help my culinary inclinations. Let us see now...hmmmmmmmm...Market up today ..imagine that. As we approach a new year I hope all of you can appreciate the majical musical tour of 2009. CONfidence is the game and will remain the game. This is a continued result of a complete collapse of our world financial markets last year. It will not change until the law of nature steps in. I enjoy reading articles like the following excerpt,

With recent reports of a resurgence in manufacturing and employment, the mirage of “green shoots” conjured up by Obama’s spinmeisters and hyped by a credulous news media has mutated into full-blown hallucination. Check out this upbeat headline from Saturday’s edition of the Wall Street Journal: “Manufacturing, Job Market Show Progress”. This follows on the heels of an equally surreal story in the Journal a few days earlier suggesting that the yields on Treasury bonds are rising in order to discount a recovery that now looks stronger than anyone had expected. Hello?? Is it possible money has been flowing out of T-bonds simply because relentlessly rising share prices have raised the opportunity cost of being in Bonds?

http://news.goldseek.com/RickAckerman/1262027436.php

My feeling is you can still trade the miners on pullbacks here. In fact, this week will probably provide another trade entry for EGO ANV. Also juniors are in a nice corrective TLR VGZ. Do not load yet on those. Just trade the aforementioned.

DTO is getting warm.

Put on your seatbelts for January...gl.

Sunday, December 27, 2009

2010....PREPARE FOR SLAUGHTER

This hyperbole is to get you to focus on what may be the most difficult trading market you will ever encounter....at least if you believe that standard trading strategies can be employeed. As 2010 begins "long and strong" will become "dead and red" as in "blood red". Even the miners may become a frothy mess of sniveling newbie investors....impaled on their crosses of greed. The purpose of this thread is to make you think and to question if you should even be trading in the coming year.

After all...in retrospect this year was all predictable and an "easy trade". Did you make money? After all that IS the criteria for a successful trader. I have to confess that the mid May thru June was devastating to my profit this year and I was calling for an up market from March 1 thru September. I still lost money KNOWING the direction of the market. All due to RETAIL TRADER STUPIDITY. I have been in similar situations throughout the years trading this market and learn with each lesson. If you don't go broke you can become stronger.

The "market" is composed of dynamic forces. If you understand how they are interacting you might survive. But essentially it is designed to take money from your pocket and put it into someone else's pocket. You are trying to determine essentially where the market is going and to avoid where the herd is. A classic example was the commercial real estate sector. Every talking head told you it was toast in January of 2009. It is of course. What was not anticipated was the level of manipulation by the Fed to put money into CRe through the various back doors with the printing press operating in overdrive. Thats cheating...right? Of course. But that is what the "market" is.

So again ....ask yourself ...do I want to play this game? If you answer yes, then you have to ask yourself what the plan for investing in this type of market should be for 2010. Are miners the answer? Is physical gold the answer? Silver? Paladium? I really don't know for certain, but equities are getting long in the tooth and miners are going to have problems when equities correct. As an old, wise investor told me recently ...."2010 is gonna be a mthrfker...this market is so screwed up right now that I wouldn't be certain of anything in the next few months." And I am telling you guys this guy is one of the best. If he is straddeled here ...then you had better be cautious.

So where does that leave us? Hopefully cautious. But not toooo cautious. Take some positions in the miners you like AUY EGO ANV SLW SSRI GORO GG JAG GDXJ. Hold cash heavy 60-70%...try and gap trade them. Hope they get killed in the next few months and increase your percentage. Read updates on the blogs like these and skf and Dano's.

Most importantly take the next 3 months to build physical gold or silver. best wishes to all.
The European Central Bank (ECB) decision to downsize its annual gold sale in 2009 to 155 tonnes is expected to further boost yellow metal prices in 2010. The ECB has sold 400- 500 tonnes annually the last 10 years.
Of late, there is a tendency among central banks of many countries to hold a major portion of their reserves in gold. The emergence of new net buyers is expected to add strength to the bullish trend in the metal. China had acquired 450 tonnes, India 200 tonnes and Russia 120 tonnes from the International Monetary Fund this year.
The US government holds 8,133 tonnes of gold, the Euro Zone 10,800 tonnes and the IMF about 3,000 tonnes. Governments across the world own close to 30,000 tonnes.
Mr Ajay Mitra, Managing Director (India), World Gold Council (WGC), said that gold is more relevant as an asset going into 2010. Increasing signs of recovery have heightened inflation concerns suggesting a favourable environment for investment demand.
While the ECB has a high gold reserve, many emerging economies have very low stocks or no gold at all. "In aggregate, Asian countries hold only 2 per cent of their reserves in gold. Were the Asian central banks to increase their holdings by just one percentage point, they would need to buy about 1,000 tonnes. Official sector activity will be a key metric to watch in 2010," said WGC.
Mr Navin Mathur, Associate Director, Angel Broking, said though gold prices depend on the rupee-dollar movement, gold sales by the central banks are always keenly watched as they impact sentiments. "With the gold price on a high, jewellery sales are likely to struggle with the exception of China, where the outlook remains cautiously positive," said WGC.
In 2009, investment demand almost made up for the weakness in jewellery and industrial demand as investors bought large quantities of coins and bars, besides exchange traded funds and other products.

http://www.thehindubusinessline.com/2009/12/26/stories/2009122652460100.htm

addendum from comments: I agree with Palmer's post that we are entering a long period of trading range(s) - it will be more than one level on SPX. When people hear something like trading range, they imagine some simple consolidation phase where they can ride positions long and short. No way this happens here at all. First, this will be a market to draw in all the bears, false hopes of P3 will dominate the posts of amateurs with little to no knowledge of TA. I'm not saying that to be egotistical, it is just the reality of the human psyche. Even a slight dip in the past has caused calls for P3, you will not get P3 in 2010. Do not assume you can predict market direction off the next two weeks, I posted that I am sidestepping it, that is not for random reasons off my model. The consolidation phase upcoming has a few factors involved, USD/GLD decoupling, USD/Commodity decoupling. Did you notice how the santa rally was used to flatline SPX but compared to the Swiss Franc you just saw great "upside"?. Nice way of baking in USD recovery while commodity plays still ramped to reset the bottom higher off the general USD to commodity model, so that a consolidation range on currencies could be achieved. LOL. The people running this ponzi are the best worldwide, the overall goal is not what you may think. Catastrophic failure of the model is already planned, and will actually be defined as a great achievement, while everyone worldwide thinks failure has occurred, victory will be declared since this is all in order to institute a new age of one worldwide global "currency", but not in the terms anyone currently thinks of buying power. Everything will be flatlined to have everyone equal, albeit you need to sign up for the model. No greater dupe to mankind than to define failure as victory, and to appear to tear down structure (current market model) as a way to institute another. Frame of reference is what counts. The challenge of the market in 2010 will be to keep switching around to various industries to float everything. There will be no logic to it at all. The past year saw currencies dominate market direction, and HFT from GS turn what used to be a semi-free market system into a Casino mockery. The HFT has existed in a simple form for quite some time as a brute force market driver, but only as technology has increased has this model been enabled to its full potential over the past couple years. The reality is they will keep using the HFT model to contrive things, but the failure point comes similar to what happened in the dot-bomb model. What is a free market? Another ponzi scheme that has credibility to draw in investors. Viability and logic is irrelevant. You may notice that recession recovery parameters are usually based off a logical recovery by sector, that has not occurred here, we have seen weird things like staples ramping while technology was in bearish broading pattern, only to be saved by contrived news events. This is why 2010 will be so difficult to trade. You have a hybrid model of long term rotations that has been skewed to drive the overall market higher, but there appears to be no reason to it. GL in 2010, you'll need it. - Analyze.

Thursday, December 24, 2009

Ackerman's Gold Analysis

Gold’s slippage in recent weeks has closely mirrored the U.S. dollar’s rise. For bullion bulls, the good news is that the dollar is rallying not for fundamental reasons that might persist indefinitely, but because of short-covering by carry-traders who effectively went short against the dollar. Mostly, they borrowed greenbacks in size in order to plow them into something else offering either higher yields, greater leverage, or both. That’s what happens when the Fed artificially lowers interest rates: financial speculators, including most of the biggest banks, borrow all the dollars they could conceivably wish for, practically for nothing. The big losers are pensioners and other savers, who effectively supply the dollars at the going rate – currently close to zero — fixed by the Federal Reserve. Lately, however, the dollar has been rising, putting pressure on the carry-traders to repay their loans in an appreciating currency. The result is a short-squeeze that has pushed the dollar relentlessly higher for nearly three weeks with nary a correction on the daily chart. The rally is just a minor, bear-market blip when viewed on the weekly chart. However, under the magnifying glass of a dollar-obsessed financial world, the rally is being hailed as the beginning of a major upturn in the dollar. We disagree. The dollar is intrinsically worthless, and merely comparing it to other currencies that are almost as worthless is no argument for a long-term bull market. Only a comparison to gold is valid, and in that respect, the dollar, euro, yen and British pound can only fall over time. Remember, no matter how strong the dollar looks right now, it’s only a mirage. It could persist for quite a while – for several months, even — but ultimately, all short-squeeze rallies can only end in collapse. So where does that leave gold? Our current forecast calls for a correction down to at least $1028, basis the Comex February contract. That’s $59 beneath Tuesday’s settlement price of $1087. We began Monday looking for support near $1090 to hold, since that is not only very close to two “Hidden Pivot” supports, but squarely on a long-term trendline. By day’s end, However, February Gold had smashed the support, trading as low as 1075.20 intraday. The breach was sufficient for us to infer that the correction has further to go. Even so, we don’t like to chisel such expectations in stone. And that’s why we’ll be watching closely to see whether the February contract takes a bounce from 1059.80. That’s a minor Hidden Pivot, as far as it goes, but not so minor that it should fail to provide discernible (and presumably tradable) support. If the pivot gives way easily, though, we wouldn’t touch gold until it comes down to at least 1028. That’s not a Hidden Pivot, incidentally, but it’s significant nonetheless for having provided the launching bad from which gold went ballistic in late October.
http://news.goldseek.com/RickAckerman/1261581753.php

Wednesday, December 23, 2009

TaxPayer Burden

In order to make money in the market driven by FED cheap money and control, you NEED to understand FED behavior, those who paid attention this yr made good money. The next challenge for Government is timing so that the lagging indicator of employment doesn't come about just as stagflation takes off--which is no mean feat because it is those excess dollars, ten to fifteen percent of your buying capability, that will put those ten to fifteen percent underemployed into the workforce. Just as that heats up, there aren't enough remaining workers to fuel the recovery the old fashioned way, by the spirit of the unemployed finding private industry work--there won't be enough workerbees left, so private industry--it now has to compete with government to get jobs. As the employment picture lags, we'll look like we're stagflating while we are actually inflating. Folks in power will wag their heads. Bernanke will have his dance cut out for him as he explains why the numbers don't match the economic stimulus, and even more so if the unemployment numbers don't go down just as he puts a lid on these low rates. The market will cringe, unless the band is tuned up every quarter with much sweeter music than the band be credited with playing.

Expect more lies about "adjusted" employment figures at the beginning to provide three quarters of cover and concealment. Watch what Bernanke does to inflation rates and watch what happens when overnight rates start to pop.

Somehow all those folks who hate stimulus and govt "investment" which is in its infancy next year have their mouths wrapped around the breast of government--the moment the govt pulls that stimulus, if joe sixpack doesn't see employment improvement, or isn't convinced by smoke and mirrors coming out of DC, you could see the hit in the market next yr.

There's no trickling in this balloon buster. Here's round two coming up, the Fed is caught between a rock and a hard place, and the article below means the Obama administration is touting investing in the real economy, READ:

http://bloomberg.com/apps/news?pid=20601109&sid=ac8_SSGoo5V4&pos=10
As far as today's action and finishing the yr, SLW, EGO, SGY, and CENX should do well between now and end of the yr.

Tuesday, December 22, 2009

PATIENCE

Don't complain about the paint job on the no bid market....its the holiday season. I am sorry for the short posts and ill temper (if you detect it) but I am passing a kidney stone....and it aint fun bein tuff when you are deep down inside a puss.

Great day to trade if you had LCC or the miners ...nice lil swings. I am now out of LCC unless it pulls back at close.....and that is unlikely at this juncture.

Miners were up with gold down so please take note traders....this will happen often in the months to come. AUY was strong today. Still holding a core.

BE VERY CAREFUL with gold and miners.....down trend near term seems still strong. Look for gold to test 1030 area several times to confirm that is the bottom...if it breaks it then it could go sub 1000 .....no problem.

The bad GDP number confirms more stimulus to be headed for the pipeline next year so get ready for stagflation galore. We know gold is going higher at some point. gl

AirLine Stocks

Those who read and follow my blog should recall I suggested LCC during the month of November and December due to seasonality factor and also most Airline stocks did not fully participate in the overall market bull run since March. When LCC was around 2.90 in early November some of you took the recommendation and bought it. Today it hit $5. Combination of season and lower price of oil has contributed to airline stocks edging higher.http://finance.yahoo.com/q?s=lcc

Monday, December 21, 2009

Gold Market Update

We can see this latest action on the 1-year chart on which we can also see that although gold has broken down from the parabolic uptrend, it has yet to breach the “last ditch” support of the lower boundary of the parallel uptrend channel, which is shown as a dotted line. Until that happens a significant bounce is possible particularly as it is now quite deeply oversold on a short-term basis, as is clear from its RSI indicator and stochastics and in the vicinity of its rising 50-day moving average. In the situation of a continuing intermediate uptrend we are now at a classic “buy spot”, and even if, as we believe, the intermediate uptrend has now reversed, it would be quite normal for a bounce to occur here although in this case it will turn out to be a trap. If the lower boundary of the parallel uptrend channel shown is decisively breached it will be a signal to close out all long positions, as such a break will call for a initial drop to the strong support at the top of the 20-month trading range, which starts to come in at about $1030. There is a possibility that Gold can have the correction it had in 1975 before resuming upside.
TAKE A LOOK AT GOLD's 1 YR CHART AND 3 YR CHART along with USD CHART BELOW:

http://news.goldseek.com/CliveMaund/1261390953.php

MONDAY MONDAY

The trade is still on ....dollar up.... gold trend down....market trend up. The miner trade/accumulation is ON. Let's be careful expecting any ramp up in the miners soon. But I am still going to trade around my core on gaps. EGO has been the best performer. I want you to realize longer term this is going to be a sunami. Here is one gold follower excerpt this weeekend.....

Up to this point, central banks have been buying mostly U.S. Treasuries. Over about the last 10 years they organized so-called sovereign wealth funds (SWFs) and have been buying trophy properties mostly, but also some operating U.S. businesses as a way to recycle those dollars. The most interesting thing I've seen in a very long time is that suddenly some central banks have decided to begin to exit the dollar system by using trade surpluses to buy gold instead of either U.S. Treasuries or U.S. assets. I happen to believe that this is a sea-change in the gold and monetary system that will ultimately result in a return to at least a de facto gold standard.

http://news.goldseek.com/GoldSeek/1261174176.php

Should be a quiet week but you can still trade small and make money. gl to you all these holidays.

Friday, December 18, 2009

LET'S BID THIS BIATCH TO IMMORTALITY

Or in the bull's case that stay too long for the party to HELL. My next inspiration will be when the 61.8 fib is achieved (or nearly achieved). Obviously I am not a clairvoyant so believing me that we will hit the 1240 SnP means that you are a sucker. But keeping it as a possibility and the reasons I have been throwing this number out to you is that I believe it is the maximum they can achieve. It still does not really matter in terms of my overall philosophy in trying to trade the BEAR of all bear markets.

Many of you that read this blog remember my posts on yahoo last year when we discussed how treacherous this market would be for bears and bulls alike. The bulls are enjoying the last buy and hold period that this secular bear market will see until 2012. Pay very close attention to my explanation here. Then the next two years will be a traders market only. That means long or short ....you must be nimble. If you hold physical gold you may hold. But as some very experienced gold traders say....take half off the table at 2000 for a trade. We will revisit this advice later. As far as shorting goes nimble will remain the key.

Back to the task at hand. Next week I will venture a guess they paint it monday and tuesday for Xmas. Other than that my crystal ball is worthless. Wait...its worthless anyway that is why I am playing the miners and speaking of.....OMFKNG.......WTF....did you see that EGO....I am really waiting for GS to kick the chit out of it but they won't. BASTARDS. Happy holidays gang

http://jessescrossroadscafe.blogspot.com/

good advice from Analyze's comment below:

One thing for sure is true, the market this year was a cake-walk compared to what trading it in 2010 will be. Only those willing to admit if their premise is wrong and adjust accordingly on the fly will survive it. It will not be an environment to make predictions and stick doggedly to them while your account evaporates before your eyes. It will not be a utopian time for amateur prognosticators posting their best guess in hopes of 5 stars on a message board - run from those kind of people. Trade to a premise to have enough conviction to be successful in the trade, but sidestep when unsure and adjust at the first sign your premise is invalidated. Conviction comes from YOUR premise, not someone else's, that is the only way to have enough confidence to handle dicey trades. The way to lose in trading is to not follow strict rules despite your emotions, or to stick with a loser when anyone else would have bailed to save their account instead of holding on in hope of saving face. - Analyze.

Thursday, December 17, 2009

Fed's Spring Tightening Won't Stop Price Hikes

The Federal Reserve's free money policy is coming under even greater scrutiny following release of the November Non-Farm Payroll Report and latest Bureau of Labor Statistics inflation data. The spate of "less bad" news on the economy, and increases in certain price levels, has brought some bond vigilantes out of hibernation. Meanwhile the cacophony from hard-money guys--me chief among them--is now calling on the Fed to raise interest rates sooner rather than later.

Unfortunately, I expect the Fed to watch the economy from the bench through nearly all of 2010. The reason is simple: The central bank has already scheduled a tremendous de facto monetary tightening. It will occur at the end of the first quarter. That's because the Fed's purchases of $1.25 trillion in Mortgage Backed Securities (MBS) are scheduled to end in March.

For now the dollar is enjoying a nice bounce because traders believe the Fed will react to the latest inflation data and "less bad" economic data. The truth is the Fed knows the recovery will be weak, it is unsure how the economy will deal with rising mortgage rates and a possible resumption in home price declines. That is why Fed officials mean it when they say "the Fed Funds Rate will remain exceptionally low for an extended period of time." For once you should believe what they say and make sure your investments reflect their easy money posture.

http://www.forbes.com/2009/12/17/michael-pento-commentary-personal-finance-federal-reserve.html?partner=yahootix

Also backwardation on the comex bears a response ...here is an excerpt

This bout of both silver and gold with backwardation is likely minor or immaterial. With gold it is likely due to delivery considerations. With silver there would need to be a prolonged condition to merit much more attention. Either way this is a condition to observe. Backwardation in the monetary metals implies loss of confidence in the paper instruments and both the desire and ability to take immediate possession without the use of margin.

Dollar & Gold

Short term to intermediate term outlook :

I am hoping for Dollar index strength to 82 in coming days and Gold retracement to 980/ 1000 level, if market gets there then I will load up on favorite miners.
Impulsive traders who jumped in and bought Gold in the 1100-1200 ranges could take quite a wallop in the short term, if the dollar mounts a strong rally to 82. If, for some reason the Chinese stop providing a floor for Gold in the 900-1000 ranges, then Gold could drift even lower. The dollar has already traded past 75.80 for 5 days in a row, today it's close to 78, so the first confirmation is in place for a possible move to the 80-82 ranges.
While the long term up trend is still in force for Gold, painful corrections can occur on the shorter term time frames. All this should be viewed as good news for if it comes to pass it will provide the astute investor with yet another lovely buying opportunity. If Gold breaks below the 1080-1100 ranges for several days in a row (3-5), it should lead to a test of the 980-1000 ranges. Ultimately, the correction in the Gold market will be based on how strongly the dollar rallies. Almost all the sovereign funds took profits on the money they had invested in the financial sector and presumably these profits are still being held in dollar. Holding onto cash is indirectly going long the dollar. Perhaps these chaps are cashing out now, waiting for the dollar to rally and for Gold to pull back.

http://news.goldseek.com/TacticalInvestor/1260983700.php

Wednesday, December 16, 2009

THE BASTARDIZATION OF HEALTH CARE

As many of you know I had hope that Obama just might be an agent of change last year. I was wrong. It is a difficult pill to swallow so I will just shove it up my ass. There.....thats over with. Tonight a final epiphany of clarity....we are all owned. The system is compromised. The republic is toast.

A health care bill that many of you have heard about is about to leave the senate. Calling this bill a bastard does not do justice to the public prostitution that our senate has exhibited for our country to view. I do not want to debate the merits of covering 60 million uninsured, or the millions that go bankrupt do to health care bills,or the inequitable distribution of quality health care geographically secondary to the distribution of uninsured. No.....that is not debabtable unless you are in total denial. We CAN debate the solution to this disgrace. But if you have a solution then please state it. Right now I see some very clear villains.

For example lets talk about an individual that epitomizes the current tragedy that faces our nations healthcare delivery and our nations entire moral fabrick...Bill McGuire ex CEO of United Health. In just 10 short years this guy robbed our health care system blind in the name of FREE MARKET CAPITALISM....Dollar Bill" has made lots of news with cash-and-stock paydays that have topped $100 million in recent years -- and he's still sitting atop stock options valued at $1.6 billion. McGuire's admiring outside board members -- 10 of whom have become millionaires through the sale of their own appreciated stock in recent years -- have defended his league-leading compensation on grounds that the giant health insurer's stock price has been a superb performer. http://www.startribune.com/business/11093081.html

If this were an isolated example of the industry it would only qualify as an outrage deserving the gallows....but alas just because there were women children and babies that died as a result of United Healths policy of denial of treatment and payment to enhance their bottom line. So that their board and executives could live in a lifestyle of decadence is beyond an outrage. I have no moral description.....just shame that my country has allowed this in the name of capitalism. This is NOT capitalism ....it is fascism/murder.

Back to the rest of the scum.....the Democratic Senate and President. May I ask you gentlemen and ladies. Where did you leave your SPINE? The republicans have an excuse.....they are proven schills. You democrats were elected to lead....but then you and I know that is a charade. You are elected to masquerade as leaders. The only guarantee in life is change and death. Your obligation to humanity will stare at you from the abyss and be waiting for you when you see your end coming. Karma standing with the Law of Nature will reconcile your travesty on your people.

This country and its people cannot allow this system of legalized theft and rape to continue as a legal robbery on our health care but apparently Wall Street and its Insurance thugs have hijacked our country completely. I have friends who were multi millionaires 2 years ago.....now broke. I know they have no health care. I know working people who have lost their jobs and are being asked to pay Cobra coverage of over 1200 a month for a family of 4. Hell they can't afford their food or house payments.

Mr. President...I voted for you but you have failed to lead. The last President at least had an excuse..... What's yours?

Sincerely yours, Guy Kline aka kliguy38

ORAL ROBERTS PASSES

And so goes another ponzi into the rectum of history. A moment of silence for the true believers. That's enough. Now for the real ponzi. 2010 The Year of Explosions.
Prepare for the Gerald Celente link to follow at The End. For now you get me.

I do not like any of the current global developments (Celente will add his own). I like mine for likelihood. As I previously stated several days ago my suspicion is Eastern Europe may be the start of a global financial implosion. Do I believe they will hold it for the near term? Yes. How long? I do not have a CLUE.

My hope is they keep this illusion going on fumes for another couple of years as the Kress Cycle predicts. But that is looking less certain. Prepare for the doomsday scenario but hope they let you keep trading. One major concern I have is the collapse of money markets which are almost completely backed by MBS's. Which means your trading accounts will not be retrievable. Remember you were warned on this.

This is a reason I recommend those of you with large trading accounts consider removing a portion that you can accept and pay the penalties and taxes and use that for bullion. Maybe it is too conservative but I guess time will be the judge. If you do go into bullion then keep your eyes on assets you will want to exchange for gold down the road in 18 to 36 months.

Short term I still think we get a continued pump into the first week of January. Continue to watch the dollar and gold. Can't imagine a Houdini act getting us out of the mess gang. Play those miners and Ben may give us a pump this afternoon when he carefully presents us the FOMC report saying NOTHING. Remember one wrong word and we see a monster sell off.

http://www.radio.goldseek.com/players/celenteplayerdec15.php

Tuesday, December 15, 2009

BLACK SWAN ALERT

This is not entirely hyperbole....busy right now pardon my abruptness. Eastern Europe defaulting as evidenced by the collapse of Austrian banks. Be cautious in all long positions. Even miners will take hits if it falls apart. Again only an alert and I am sure the ponzi will be able to hold awhile longer but beware. Also watch your own FDIC accounts here. Wisely you need to be cautious if contagion occurs. True Black Swans come without warning so lets call this a grey one.

Monday, December 14, 2009

APOLOGY TO THE PRESIDENT

It seems that there has been a misunderstanding Mr. President. My colleagues and I wish to extend a heartfelt apology for any pain or inconvenience we may have caused with our miscalculations of public response to our bonus's that we have paid out to ourselves and our loyal employees this year. As you are aware we are doing god's work (really its what you instructed us to do in February when the market was crashing)....and that type of work requires a commensurate compensation.

Sure we are not insensitive curmudgeons....We are well aware that some of our citizens are losing their jobs, but we aren't losing our jobs and its isn't fair to punish us just because we are more shrewd than the average American. After all this is capitalism and Larry Kudlow knows that the old addage of American enterprise and free market capitalism MUST be honored. You know....."we got ours now you get yours" or "its mine ...I won it fair and square...I cheated".

OK sure...maybe there is validity to the schmucks that ruin a good parade by saying that we were very much a part of the problem with the securitization of mortgages and then leveraging them into a 400 Trillion derivative scheme...but why confuse our bonuses with these trivial facts. Sir....we respect you and you must be aware that our system depends upon our nation having a banking system that is the envy of the world. Please overlook the minor problem we are having right now with some of these countries that are blaming us with infecting their financial system with our derivatives. They are only sore losers and simply don't know how to take a joke.

In conclusion sir we wish you and your family a very happy holiday and we have recommended that all of our top executives to give one hundred dollars to a Salvation Army bell ringer this holiday with one of their business cards so the public is aware we care. This can be a great way to redeem ourselves. After all we are all in this together.

Sincerely yours, Jamie Prescott Dimon

COMFORT FOOD

One of the reasons that I encourage traders to trade the miners is that I believe you have to have confidence in your choice if the trend turns against you. Setting stops in the miners here for me is not necessary since I am heavily weighted in cash and acually should be accumulating. Having faith in your sector choice gives you the ability to "hang on" if your stock takes a hit. Today was no exception. My small core miner holding was added to this morning and was rewarded with a nice trade on ANV. The news continues the same on bloomberg.... The U.S. Dollar Index, a measure against six counterparts, fell as much as 0.4 percent after Abu Dhabi pledged to bail out Dubai. Futures, which typically move inversely to the dollar, dropped to four-week low of $1,110.20 an ounce on Dec. 11, as the dollar climbed to a two-month high against the euro.

This is not retail buying in these miners and I believe that even though a nice pullback may occur it is troublesome that after a roughly 12% pullback you are seeing this type of buying. Time will tell. Also it was noted.... We’re seeing weakness in the dollar,” Sagiv Perez, a senior dealer at Finotec Trading U.K. in London, said by phone. “There was such a big correction. Now people are looking for a reason to buy it back.”

I do not want to be a "pumper" here so sit tight an see what happens this week and play gap trades. I have a nice small core and will slightly expand this week but nothing too aggressive.

LCC may be a play tomorrow if oil is weak at the opening but be careful oil is due for a move up.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVZusQBj2hAo

OBAMA BLASTS BANKERS

That should make the sheople feel better. Our Prez is givin um hell. Just like Harry S Truman. NOT. What is more sad is that the Feds balance sheet is stockpiled with toxic derivatives that have been exchanged for treasuries and freshly printed dollars. Furthermore they refuse to let ANYONEsee what they have done to our currency. How sad. This once great country has been reduced to a president knealing down before bankers begging them to quit robbing the country into oblivion. Sounds about par for where we have been going for the past 30 years. We are toast.

On a happy note....XOM bot XTO. Wow. Watta deal. HUGE. again NOT. This is nothing more than commodity buying to get rid of dollars. XTO hold huge nat gas reserves. This is more Warren Buffet dollar play. The dollar is done for. Get over it. If you hold dollars you're a fool ......sorry.

Play LCC if you get a chance. But mainly watch the miners . ANV JAG AUY EGO. Have a happy holiday and gl gang.

http://news.goldseek.com/CliveMaund/1260724320.php

Saturday, December 12, 2009

THE GREAT BEAR EMERGES

Market crash monday? No, that's not what I am speaking about. I want you to do an examination of an article on Bloomberg regarding some recent comments by the true legend of bankers...Paul Volker.

Goldman Sachs does “a lot of proprietary trading” and General Electric “does a lot of kind of complicated financial services,” said Volcker, an economic adviser to President Barack Obama. “This is one of those kind of things that have to be sorted out.”

Since January, Volcker, who was Fed chairman from 1979 to 1987, has called for regulators to provide government support only to banks that provide essential services like deposit- taking and business payments. He has suggested prohibiting them from owning or sponsoring hedge funds, private-equity funds or from engaging in proprietary trading.

What does this mean? Well for one thing it tells you why Volker is on the outside looking in at the current administration. Truth's reward is usually a cold seat in the outhouse and Volker is no exception. But you see this is not a problem for Volker. He realizes the die is cast and one way or another the piper will be paid.

The article goes on to mention.. Goldman Sachs, the most profitable investment bank in Wall Street history, has reaped more than 90 percent of its pretax earnings this year from trading and so-called principal investments, which include market bets on securities and stakes in companies. The other 10 percent came from advising clients on takeovers and capital-raising and from asset management, which includes managing hedge funds and buyout funds.

Many of us that have watched this market this year and the daily machinations realized this months ago. Noth the GS was trading but that GS was essentially trading the entire market with the explicit backing of the Government. It is obvious that people outside the market discuss it including evening comedy shows. But again note the following words carefully...David Viniar, Goldman Sachs’s chief financial officer, said in October that the firm doesn’t benefit from any implicit government guarantee.

“We operate as an independent financial institution that stands on our own two feet,” Viniar said in a conference call with reporters on Oct. 15


If one did not know better you would have to think thou doth protesteth too much. But that is probably just me. Anyway the importance of this exercise if there is one, is to apply it to our longer term investment strategy. If you believe that we are trying to by time to find an escape from years of rampant greed and overleverage as I do then you want to remind yourself what the past 9 months is all about. It represents a failed strategy that will bring down the market and more importantly is doing nothing to repair the Real Economy. Volker knows. You know.Most importantly The law of Nature knows and The law of nature does not suffer fools lightly. Enjoy your weekend gang

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.O8G_pyd5ZE&pos=1

Friday, December 11, 2009

50 FIB REMAINS HUGE

I have no reason yet to believe they can't crack the 50 fib and roar to glory. It looks like a consolidation here before the ponzi begins its final assault to the 61.8 fib. I must admit though this is indicative of pure desperation here. Countries are now in the early phases of global default and it will be hard to supress this damage..... Spain Greece Iceland Ireland all convulsing. My guess is it will be in the eastern Eurozone first. That will be a signal that it is over. But that is just my guess.

Hope you are adding the miners here. I picked up a little ANV today and some AUY. Holding JAG and some juniors. Will expect and hope for a severe takedown and try and trade it and accumulate for the Kondratiev winter.

Hope that you played LCC today ....I did yummmyyyy.

Out of DTO and did not play it.

Have a happy holiday and enjoy your family.....its bad here and I am trying to help...It makes me feel like I am worth more than the shit that we are fighting here.

Addendum and furthermore: "We recommend China increase its gold reserves to 6,000 metric tons within three-to-five years and possibly to 10,000 tons in eight to 10 years," said the paper, citing Ji Xiaonan, chairman of the supervisory committee overseeing large state-owned enterprises under the State Council.

Thursday, December 10, 2009

Velocity Of Money

velocity has become the key driver in the entire world-wide economic crisis, so here is a quick explanation of it. Money responds to the law of supply and demand just as everything else does. If people do not want a particular currency — let's say the British pound — then the value of a pound will fall.
Sellers will demand more pounds in trade for their goods or services, and prices in Britain will rise, even if there has been no change in the supply of pounds. On the other hand, if the demand for pounds rises, the value will rise and prices will fall even if there has been no change in the supply of the currency.
Velocity is the speed at which money changes hands. When demand for the money is high, money changes hands more slowly, and velocity is low. When demand for the money is low, velocity is high. A key point is that velocity and money supply can act as substitutes for each other. A 10% rise in velocity has the same effect as a 10% rise in money supply. The biggest problem with velocity and money demand is they can turn 180 degrees overnight. If people trust the currency, and suddenly perceive some kind of big threat to their futures, money demand can shoot up. That's exactly what happened last year. The supply of dollars certainly did not go down, but when the real estate crash happened, people became so frightened they were afraid to let go of their dollars. Within a few days, money demand shot up, people stopped spending and held onto their dollars, and this had the same effect as an instantaneous deflation of the money supply. If you don't spend your money, that's the same thing as taking it out of circulation. This can instantly cause the equivalent of a sharp deflation of the money supply by 10 or 20 percent, or more.
The velocity of money is not CONSTANT. Instead, velocity changes as consumers' preferences change. It also changes as the value of money and the price level change. If the value of money is low, then the price level is high, and a larger number of bills must be used to fund purchases. Given a constant money supply, the velocity of money must increase to fund all of these purchases. Similarly, when the money supply shifts due to Fed policy, velocity can change. This change makes the value of money and the price level remain constant.

The relationship between velocity, the money supply, the price level, and output is represented by the equation M * V = P * Y where M is the money supply, V is the velocity, P is the price level, and Y is the quantity of output. P * Y, the price level multiplied by the quantity of output, gives the nominal GDP. This equation can thus be rearranged as V = (nominal GDP) / M. Conceptually, this equation means that for a given level of nominal GDP, a smaller money supply will result in money needing to change hands more quickly to facilitate the total purchases, which causes increased velocity.

Also there is a huge difference between Demand pull inflation and stagflation. Stagflation ( stagnation of economic growth + inflation in essentil cost of good & services) is a direct impact of currency devaluaion thru printing press and monetizing debt. So distinguish between inflation & stagflation and also distinguish between ASSET deflation which is credit contraction vs REAL deflation ( contraction of credit + drastic reduction in essential cost of goods & services including food, tuition cost, home & car maintenance cost, taxes, insurance,,etc).

DEFLATION SCHMAFLATION

We need to review terminology from a macroeconomic view and why it effects your decisions here. This is vital if you are going to survive this mess. I have had a couple of different inquiries on investing today both were questions over medical stocks. This was an are of expertise for me at one time and as you know I still dabble in them.

Unfortunately I think that the market has run far enough here that these plays need to be made very carefully. If you get caught on these trades and this market tops out in the next month or so. It is very possible that your trades may never pay you off. In other words ask yourself this. Are you confident that a losing position can with certainty come back in a few months.

There is a big bad wolf out there and he is waiting. He is "true deflation" and he is going to wipe everyting out. Prices of everything will collapse. I believe its coming and we cannot stop it. Its the law of nature. But we can certainly slow it down. Right now we are engaged in every Keynesian trick there is. After all Ben is a doctoral degree in the Great Depression.

Please understand that between now and 2012....we may recieve a heavy dose of STAGFLATION. This can be devastating if you think there is only Inflation or Deflation. We are currently in asset deflation with a flagging economy. This is why they are throwing everything including the kitchen sink at the stock market. They know that CONfidence is the key to getting a 70% GDP based CONSUMER economy recovering. This is where a lot of economists make mistakes comparing previous downturns with this one. We have NO manufacturing to lead us out of this. We are whipping cajoling prodding a consumer that is maxed out in credit to spend MORE. We are doing this by creating the illusion that everything is going to get better by putting money into the back door of Large Banks by exchanging valueless toxic CDOs for fresh greenbacks as the banks through "indirect buyers" take longer dated treasuries.

In a nutshell its just another ponzi and it will fail when the real economy does not recover true earnings and the contrived earnings with continued unemployment destroy the ponzi. It will happen there really is no alternative.

But in the meantime be careful Asset deflation continuing with stagflation ramping up can have devastating investment effects. Beware your long stock plays can be destroyed if you are not a deft trader.

Wednesday, December 9, 2009

More News From The FED

More bail outs coming from FED thru October 2010:

http://news.yahoo.com/s/ap/20091209/ap_on_bi_ge/us_bailout_extension

My DTO is doing great, also I like the action today on Gold, getting cheaper, beautiful:http://finance.yahoo.com/news/Gold-Bulls-See-Recent-Slide-indie-1502611276.html?x=0&.v=1

Great day in the miners gang ......hope its not the bottom for them. But today's action was concerning if you are hoping for them to get whacked. Anyway let's party like it's 1999. bumped Analyze T/A below

Ah...When in doubt, always trust the ponzi lol. AAPL had very nice action today as expected off the reversal yesterday with front month calls scorching hot (I had Dec calls here, also had GS calls with its bounce off the bottom of its descending wedge), and a good bottom pattern was initiated on SPY to maintain the bullish intermediate term stance, with GLD recovering and UUP slapped down after hitting its target as noted yesterday. ANV is one of my horses that I am looking at for re-entry, it is in a bullflag since 12/2 but did not reverse yet to break out of it, but watch this and other positions that have retraced similarily to put in reversals, otherwise scalp off the bottom of the retrace average ranges and trail stops to the upper ATR. Trade day to day, but trade to a premise that favors support of the lower end of the SPX range being held at 1084, with a possible breakout of the top of the range at 1110. For breakouts wait for daily closes for determination, since midday spikes can just be traps of late-processed orders by MMs to catch over-eager retail in false breakouts. - Analyze.

Gold Bounces from $1125, Safe-Haven Investors "Will Buy Dips" as Japan's GDP Slides, also JAG Technical Analysis

Let's see what the rest of the day brings, I like to see Dollar get stronger and Gold drop to low 1000, so far THE PRICE OF GOLD bounced from a new 3-week low of $1125 in Asia and London on Wednesday, rising back above what several analysts called "key support" at $1138 as the US Dollar eased back on the forex market.

European equities moved in a tight range, unchanged from nine weeks ago.

The gold price for UK and Euro buyers ticked higher from early two-week lows, trading just shy of £700 and €775 respectively by lunchtime in London.

"We could see some people very excited to get back into gold," said Bernard Sin, head of forex and metals dealing at MKS Finance, a division of the Swiss refinery group.

"If you're seeking a safe haven, people will buy gold on dips."

Tokyo's finance ministry today slashed its estimate of Japanese economic growth for the third quarter from 4.8% to 1.3% annualized, sparking talk of a "double-dip" recession.
http://news.goldseek.com/BullionVault/1260367682.php
Technical Analysis for JAG:

JAG is one of my favorite miners:

There is a upward channel which JAG has breached to the topside twice in the last six months. Stockcharts would produce a nice chart. First time was in Sep with a move from $7.50 to $12.++. Sweet thing about that move was the retrace came all the way back down to $8.00. Recent move from $8.10 to $12.76 mirrored the Sep move, climb from the bottom of the channel thru the top and into the stratosphere. Now we are seeing the retracement. Possible bottoms= some support at the Oct highs in the mid $10's. If JAG pierces that to the low side ( I hope it does), that would cause clear sailing down to the low $9's and high $8's.

http://stockcharts.com/h-sc/ui?s=JAG&p=D&yr=0&mn=6&dy=0&id=t17074037829&r=339&depth=24&listNum=&cmd=chartnotes,889|761

Tuesday, December 8, 2009

Good News to Bring Bad News Bears For Stocks

I personally like to see Gold retrace to 1030, how ever the following article talks about 1100, we will find out. The recent treasury auction will be over this Thursday, that along with hedge funds taking profits are contributing to this correction which is healthy and needed.
"In terms of magnitude, if my larger degree count is correct, any correction here should only take gold back down $100 or so, making accumulation between $1100 and $1125 spot on. From there it should be up to $1300 in tracing out the widely followed inverse head and shoulders pattern so many traders are tracking, and then possibly to $1500 in potentially tracing out the larger degree Fibonacci resonance related projection seen here in Figure 1 before the first wave of Super Cycle Degree C higher is completed."
http://news.goldseek.com/CaptainHook/1260294023.php

Remember your miner trades on gaps. Dollar correction may be longer than a few days but don't count on it. Once the ponzi is reestablished then you will be a chaser as the miners ramp. Or just be smart and buy the physical stuff. gl gang

SELL SELL SELL

Sell oil ...sell gold....sell stocks...Time to cash the chips in. Close the casino. Game over. Well...seriously that is what actually should be done. But don't worry, without a swan this scenario will not play out more than just a whiff here.

I must say the sell off in gold is lovely. Pound it hard. Oil pound it too. DTO looks good still. Hopefully I can ride the DTO trade but it is a wild one. It is much easier to just invest in physical gold. Remember that advice.

Fear in the air. California and our country in freefall. How will it all play out? How many stimulus and targeted tax programs will be attempted. This is all very compromised after all our capital was place behing the largest banks that put us in harm's way. Now we have to figure out how to help mainstreet. Remember them (hint,its you). Yes how do you get the banks that loan to mainstreet to expose their balance sheets to risk. Notice they are being closed right and left. But not the big boys that put us in this mess. So essentially we handed all of our ammunition to the guys that murdered our citizens. GL with that one.

Watch the miners for a trade today not sure if I will accumulate yet.

From comments on move today.

From my post last week - UUP target 22.5 attained with the expected dampening in commodities, SPY maintained trading range despite this as expected, and AAPL bottomed and showing green today, so it has played out as planned. Will the ponzi kick in? Should be interesting. If my premise of tech up fails here Uncle Ben may have a problem. - Analyze

Monday, December 7, 2009

China Calls For More Gold Reserves

BEIJING, Dec 8 (Reuters) - China should increase the proportion of gold in its foreign exchange reserves to ensure the safety of its overall portfolio, an official Chinese newspaper said on Tuesday.
The commentary, which was written by an academic and appeared in the overseas edition of the People's Daily, also said that a bigger holding of gold was a crucial building block for the yuan to become an international currency.
Gold has soared to record highs over the past month, in part on expectations that China will step up gold purchases to boost its official reserves of the precious metal.
"Although the return on gold may not be high, its safety is widely acknowledged. We should put safety first in managing our foreign exchange reserves and do our utmost to ensure that we can maintain the value of our current assets," Jing Naiquan, an assistant professor of economics at Zhejiang University, wrote.
He added that the dollar's credibility has been supported over the decades by sizeable U.S. gold reserves, and that gold is an important backstop for all free-floating currencies.

http://www.iii.co.uk/news/?type=afxnews&articleid=7660988&action=article

Will China ‘Amnesty’ Birth the Black Swan?

For those who have been unsettled by gold's corrective weakness in recent days, I've reprinted a reassuring letter below from a friend and longtime subscriber who also happens to be a U.K.-based gold-dealer and metals trader. Andy, as he is known in the Rick’s Picks chat room, is bullish as ever on gold and sees a potential "black swan" bearing down on the financial system in the form of a Chinese derivatives-default. This is a looming catastrophe that we've written about here before, as some of you may recall. The threat surfaced with an announcement by China a couple of months ago that the government would take no legal action against its own banks if they walked away from derivatives deals gone bad.Imagine what this would mean if you were running one of those banks yourself. In effect, it would allow you to build extremely risky derivatives positions, but with no exposure if they didn't work out. Here's an analogy: Picture yourself being allowed to use counterfeit money in a casino. You make huge bets in roulette, blackjack and baccarat, and although most of these bets lose, the casino pays your winners in real money. You bank the winnings -- buy gold bars with it, perhaps -- and continue to gamble with funny money until you've used it up.

Heads or Tails: Who Cares?

This, in effect, is undoubtedly what some Chinese banks are doing right now: laying highly leveraged bets all over town, knowing they won't have to cover them if the derivatives market starts to implode again. Moreover, the mere fact that the Chinese government has promised legal amnesty to those who lose big at this game is probably causing the volume of such bets to explode. We'll find out for sure when reality comes calling once again on the banking system, which, with the help of regulators and the central banks, has done little more than sweep a $600 trillion derivatives problem under the rug. Make no mistake, when the festering creature under the rug emerges one day breathing fire, we're likely to see a panic into gold that will make bullion's ascent so far from $260 to $1227 look relatively tame. What will be the catalyst for this Day of Reckoning? Nick Guarino, a well-known seer, thinks Dubai's troubles are about to take the global financial system down. But he also believes the resulting panic will be into U.S. dollars rather than gold, which he says is in a bubble along with oil and stocks.

http://news.goldseek.com/RickAckerman/1260255720.php

DECEMBER 7TH

Day of Infamy? OR a forgotten footnote in global history. I will have coffee this week with Bob....he was on Iwo Jima at age 17...Now he is starting to deteriorate...a life slipping away...the law of nature. No one escapes. Not you nor I. And NOTthe greed that destroyed the country our founding father's established with the blood our forefathers shed.

Now for today's action. More pain for gold. Beware this move may last a week. But it could be a bigger move so pay close attention to this. I am watching several levels.Watch the 1030 level. Trade it though but don't get in heavy on the miners yet.

DTO......need I say more. Trade it.... oil breaks 75 today. 70 is next trade.

LCC TRADE ITremember LCC is seasonal and it is a proxy short on oil

GOOD LUCK TODAY. We are going to get out correction in gold just don't know how much.

Saturday, December 5, 2009

Gold During Deflation/Inflation

Gold's value goes up during instability and the flight to safety. In fact, a disconnect between the dollar and gold during those years wouldn't surprise me ( it already occured last yr and from January to march of this yr). Inflation is not the end-game for this super-cycle. The major long-term problem we're facing is deflation. The final years of the 120-year cycle ( 2012-2014) bring severe deflationary depression. I know it sounds contradictory to say that gold would outperform in a deflationary environment, but, actually, the two best times to own gold, historically, are during hyperinflation and also hyperdeflation. This is because it is viewed as a safe haven and investors will flock to it when they see major economic instability. Those who expect TRUE DEFLATION next yr which is drastic drop and reduction in the overall cost of essential goods/services would be disappointed. Public's ASSETS including savings, stock investment, job security, value of house keeps getting DEFLATED, so from that perspective they are facing deflation, how ever overall cost of living is not coming down to accomodate the loss of ASSETs, therfore we are not in TRUE DEFLATION yet.

We remain in asset deflation including deflation of home prices, job market,,etc but the essential cost of goods/services including taxes will remain high till 2012 due to print machine and monetizing debt, then true deflation will take over from 2012 thru 2014.

For those with lack of knowledge whom by the way happen to be the majority in this country in regard to economics & the value of Gold, look at the tape last yr. Gold hit the top range around 1030 an ounce in March 08 and once the overall asset deflation and market tanking started around september, gold retraced back and formed a bottom around $700 an ounce and that bottom was achieved one month later in October of 08 while rest of the market bled till March 09. After October of 08, Dollar and Gold formed a decoupling relation. Gold was around $900 an ounce in March when S&P was bottoming around 670. So the point is whether you believe in deflation or hyperinflation, Gold will do well.

Friday, December 4, 2009

EUREKA!

Just another day at the office? Not quite. Watta day. No adjectives can describe a gold traders elation with today's action. Joe came out of a two day hibernation to jump up and down with golds takedown today and could not supress his desire to see gold get clobbered here. If you have been readers of this blog, you are aware that I have been waiting for a true tradeable pullback in the miners and gold to buy heavy.
I even notified you a couple of days ago that I had closed ALL of my miners at the close that day. I was not happy to know that gold even moved up the next day as the dollar strengthened. Well...today we may have the start of a correction here. Time will tell but I encourage all doubters of gold to sell now and sell hard. Get out now and never look back...because I know some sharks that want your gold bad. Here is an excerpt yesterday that tells ya the play for Ricks pick.

With yesterday’s thrust to within a hair of our number, we are now focused on an unachieved target of larger degree at 1337 (as noted above). That is our minimum upside objective for the next 10-14 days, but as is our custom, we won’t consider it a done deal until certain technical benchmarks are met. The first would be a successful test of support at exactly 1198.80, a little less than $3 beneath the correction low as of 7:30 p.m. EST Thursday. That number is a Hidden Pivot, and it is sufficiently compelling to imply that it will provide a tradable bounce if and when the February Comex contract touches it. If there is no bounce, however, it would be akin to the groundhog seeing his shadow : six more weeks of winter, or something like it, for this correction in gold.

I will close on the observation of LCC. I am out now but will try to continue the trade if oil breaks 75...The seasonal run may still be intact and we will see. gl
http://news.goldseek.com/RickAckerman/1259910060.php

Thursday, December 3, 2009

MARKET CONVULSING UPDATED II

Market trend was flat until the close then dumped. If you are in the conspiratorial camp you have to look at that tape and wonder if they are painting it then something is anticipated as very negative tomorrow. My guess is the number is worse than anticipated.

It is all noise and in a manipulated market you are going to have to use any pullbacks to start adding some miners. Do not get too exuberant but remember we can trade them.

DTO still may be a buy here and could be getting ready to break the 75 resistance level. Again...be cautious but watch that level closely. I still own some DTO that I traded today.

Added some miners at close and will hold tight. If market breaks up strong then fine the trade will be correct. Otherwise if you are in cash here.....you may want to put some shorts on if we touch 1120 tomorrow.

Watch the tape tomorrow....breaks red you want to add some miners gl gang.

Addendum....all wrong possibly..bear trap is perfect for am....so add shorts if they ramp it up on better than expected jobs number ...a little SH and/or DTO

http://news.goldseek.com/RickAckerman/1259823660.php

Addendum II Well it played out like a champ.....may want to add some miners at close but my suspicion is they have further to go so don't get greedy. Dollar is the entire game. If this is the long awaited reversal then look for gold to hit 1072 area....rumor is the margin calls today on gold were horrendous.......gl

BERNANKE BREAKSDOWN IN HEARING

A relatively benign Senate hearing today over the Ben Bernanke confirmation erupted into a shouting match between Dr. Bernanke and several Senators.

Initially the questions posed to the scholarly Fed Chairman were directed and very polite, but Senator Jim Bunning (r) Kentucky began a rather pointed examination of Dr. Bernanke with several accusations that directly accused the esteemed chairman of gross incompetence. At one point Senator Bunning pointed a finger at the Chairman and stated "you sir are a moral hazard".

According to our reporter the Chairman remained calm but was noticed to be nervously picking at his Rolex (probably a present on his Princeton salary). The questioning intesified with Bunning making references to Dr. Bernanke's prior statements to the Senate regarding the need for the emergency bailout of the banking system last year and then rewarding the banks with 100% payment on the swaps with AIG. Dr. Bernanke winced noticeably at that mention but maintained his calm demeanor.

It was at this juncture that Senator Bunning asked the Chairman "didn't you then stoke the pot" referring to the added liquidity stimuli. Bernanke recoiled and stood up and pointed a finger, raising a cracking voice...."sir..I only held the pot for a brief period of time for my roomate"..."I have seen those pictures of my college days on the internet"..." this was uncalled for and I will not stand for your implications" ... At this point their was an uneasy silence in the hearing room. Senator Shelby interjected, realizing what had happened and said no one believe that the Chairman was a "god damned pot smoker".

Dr. Bernanke, visibly shaken, pause and looked around the room, and with his voice quivering and mumbled that he hoped not. He apologized to the room for his outburst and then stated that his you could assault him for destroying the American economic system and helping to condemn generations to come into a substandard living scale, but he had to draw the line at being called a "pothead".

At that point there was another pregnant pause and several senators began conferencing with their aids. Bernanke appeared to become increasingly agitated watching this and began twitching his beard. Senator Dodd suddenly banged the gavel and said the meeting was adjourned that Tiger Woods was appearing on all networks in 5 minutes. Bernanke appeared relieved.

http://blogs.wsj.com/economics/2009/12/03/bunning-statement-on-bernanke-you-are-the-definition-of-a-moral-hazard/

Wednesday, December 2, 2009

BANK OF AMERICA BOMBSHELL

NOT. No worries. Just more noise. This is released prior to more important news on friday.....unemployment. Never in the 40 plus years that I have monitored the market have I observed such a never ending barrage of news blatantly attempting to manipulate the stock market. It is transparent to the everyday person not in the market that the daily market news is staged. That is becoming very unhealthy for public psychology. Which is strange since that is the exact purpose of this exercise. When will this ponzi cease? When will the rain stop being wet. When will the sun stop rising in the east. Only nature knows. And she aint tellin.

My strategy remains the same. Keep physical gold and buy more over time. As far as stock plays......the miners.....DTO......LCC. I am getting very low on my LCC. But will keep trading on gaps for now. DTO is still a play.

Market is at a near term crossroads so be careful.

addendum.....from pocomotion...

http://www.dunwalke.com/3_RJR_Nabisco.htm

TO DA MOON ALICE

Watta day so far....gold still ramping up like a gusher. Miners racing (I am out totally of my miners now). Oil inventories out of site on EIA inventories report. DTO didn't budge so far on the news. Stocks up. All is good. Dubai is now but a distant memory.

Just one little problem....underneath this smoldering morass of chit is complete financial disaster that our President decided to cover-up with deceit. So enjoy the pump pollyannas....you are living on borrowed time. Don't forget I have predicted this rally will achieve 1240 level, but remember that is only my call,and I count for zero. This call was made on the presumption that the powers to be had decided to choose a course of re instilling the Con in CONfidence. In other words they felt the best course of action for our country was to re inflate the ponzi.

Rather than assume financial responsibility which would have place the country in a depression..they kicked the can down the road and went all in on the ponzi. This will not end well. Our price for this decision will effect our country for decades instead of a few years. The devastation coming is not even comprhensible to those of you that are doom and gloomers.

For now lets continue to party. Game on. Casino is OPEN.

Let's play DTO and the miners on pullbacks.

Most of all hope gold (physical) pulls back and buy buy buy.

http://www.marketwatch.com/story/obama-leading-us-right-to-great-depression-2-2009-12-01?pagenumber=1

Interview With Prechter

Mr. Deflation, Robert Prechter of EW whom I am not really a fan of ADMITS that Gold is real money and people should own gold and silver coin:
http://www.radio.goldseek.com/players/prechterplayerdec1.php

Also, from Rick Ackerman on what to look for as far as Gold junior stocks:
http://www.rickackerman.com/2009/12/what-to-look-for-as-gold-juniors-launch/#more-12159

Tuesday, December 1, 2009

CAN YOU BELIEVE IT ?

Global collapse and watta ya know......green shoots everywhere. You cannot assume that fundamentals will win out when the end game is to preserve the ponzi at any cost. For those of you that say I am sick of this and am not gonna take it anymore. I completely understand. Unlike some people, I believe we have zero chance of changing this game. I know I am inviting stones here......but I have spent over 25 years now watching this game play out and feel that our constitutional rights and process have been completely destroyed. So sorry ...I am not a hero only a survivor with reality as a partner.

So I will try and play the game that is on the table and that is the casino in front of us and it is open still to play thanks to the financials being bailed out by my tax money and our country's future.

Today was a wonderful trade with the miners I held as Gold is hitting 1200.
Excellent news on SSRI:

http://finance.yahoo.com/news/Silver-Standard-Resources-iw-3626902367.html?x=0&.v=1

Remember now if the market pulls back the miners will take a beating. As Palmer likes to reinforce gold may go down 10% but the miners may go down 30%. So be aware and forewarned. Watch DTO. Have a small position. gl gang