Wednesday, June 1, 2011

Simultaneous devouration

9:56 am (Hawaii) Market is about to close for the regular session and the flames are at their highest. Nasdaq down 2.3%. S&P 500 and Dow Jones down 2.2%. Gold and silver taken down by the puppet masters. The only stuff still standing are ZSL (+10.1%), FAZ (+9.3%) and other bearish ETFs and ETNs. Even AAPL (345, -0.6%) got pelted, to no surprise, along with the rest of the market. It had been at 351 and among the few greenies.

This thing could whipsaw every day the rest of the week, no problem. A whiff of good news out of the Euro zone would reverse the action in FAZ (and FAS). But there's no real telling how far the puppet masters will ream gold and silver, especially the latter. That's why I stayed out of the white metal this week.

77% of my Metals list is red. 85% of my regular list is red. 85! Technicians have been saying that the market was due for a decline, and with summer just about here, the timing was right. Now there's going to be doubt whether there will be enough volume either way to push the market up or down for the next month or two. Best to be in cash and be patient. I'm still 90% cash. If anything, I might open a small FAZ position, but nothing more.

My DGP position had been up 2% or so before getting pounded in the final 30 minutes with the rest of the gold and silver plays. It retreated to about 48.85, then bounced back above to 49.13. It's a small position and I still think gold is in play due to the Euro debt crisis. They will keep flocking to gold there.

My favorite gold miner play, XG, held tough and finished down just 1 penny at 11.41. Two news reports (good news) in three days, I'm not sure how much more Extorre can report, but it could continue like this with the success they're having. That's not enough for me to feel comfortable with a large position, however. A small slice might be proper. After all, which will be more stable and positive over time, the price of gold or the declining value of fiat currency?

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