Thursday, August 4, 2011


5:51 am (Hawaii) Ever since late night local time, the futures were a bright red across the board with the exceptions of gold and silver. Now, midway through a session that officially puts the market in correction mode — Dow -334 points (-2.8%), Nas -91 (-3.4%) and S&P -39 (-3.2%) — only gold is holding up.

That's the positive news for anyone holding gold stocks and physical gold. But even DGP is selling off in the past few minutes, now up just 0.5%. Silver, as expected, is taking a breather. AGQ was as high as 238+, but got hit with lightning and is dow down 4% to 221. Maybe it was the CME mafia, but I think it was simply a waterfall of stop-loss orders in this wicked environment.

Yes, the smackdown in Italy and Spain exacerbated an already weakened market. So, my forays into DGP is sturdy, but XG is down 10%, kneecapped along with the rest of the market. It rallied last week to 14+ and I had a chance to sell at break-even, but stubbornly, I held on. I'll continue to hold on having steeled my nerves in anticipation of more abuse. The miners are all being shot today, from XG to EXK.

GSVC is being hammered, as well, to the extreme as a small cap. I can live with that and XG on this awful tape because the positions are small. They're bleeding badly, but they will be back at some point. Gold will keep climbing and miners eventually will have their up days. GSVC still has 15% of its holdings in Facebook, and with few other options in the market, that spotlight will draw traders at some point as moths go to a lamp.

(I'm still 30% in equities with the small positions, waiting for better prices to add more physical metal. And absolutely, positively no margin for years. Today's exactly the kind of day, and reason, why margin is too dangerous for most people.)

FAZ is at 56.25, up 8.6% on the Euro bank carnage. I didn't get back in last week in the mid-40s. I didn't get back in yesterday at 51. Yesterday, when Faz should've been rallying, it was down and half the banks on my Debt Spiral List were up. It looked like some puppeteering was coming down the tracks. I didn't trust my hunch or the obvious wreck coming. I should've scaled in at that point.

Even the 10-year note is down 4.4%. That's how much the world hates the dollar, and the byproduct is gold's strength. Gold as in anything golden that doesn't require actual labor, employees and thus, health care. Yes, it's the metal itself that is proving indestructible. But, as I type this, DGP is only 9 cents up for the day. Fear has crept in, and everyone is cashing out, just when it seems the market may have bottomed out for the day.

Or is this the beginning of the real collapse? It has to resemble one before the Fed installs QE3, after all ...

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