Monday, August 8, 2011

War rooming

9:32 am (Hawaii) Planning for tomorrow. DGP remains attractive, whether or not JP Morgan is bullish ($2,500/oz call today after Friday's $1,850 call). AGQ is moving off its low (196) of today, but it's apparent that JPM is probably shorting/yoyoing silver for sure profits. I can't completely escape the puppetry of JPM/CME mafia. They are involved in just about every aspect of the market, and after they got the TARP billions, why wouldn't they assume they've been rewarded for such manipulative behavior? (Same with BAC, which got bailed out and still tried to foreclose on homeowners, even people who had paid off their homes and had nothing to do with BAC.)

FAZ is still in my picture, bouncing off the 73 level and now at 76+. I'm not going to bet against Helicopter Ben, but FAZ will move one way or another tomorrow, so FAS is also in play for a quick trade possibility.

He, Mr. Bernanke, is inescapable, as well. If he gives the slightest hint that he will print beeeeellions of dollars, that's bullish short term for the economy and silver. But if he purses his lips and refuses to print, we'll get a selloff that will make today and Friday look like nothing.

Jeff Christian on CNBC now. Says gold is topping. Could get to $2,500, but can't see the economy getting that bad. Prefers platinum, palladium. I remember a few months back, he called for silver to drop to the 20s. Is he a mouthpiece for JP Morgan? He's not offering fundamentals. All he's saying is the economy won't or can't get worse. That's his analysis?

He adds that not that many people are buying physical gold despite low premiums. He says the pricing pressure comes from the futures market. But didn't CNBC just report earlier that 18 million ounces of gold were sold last month? Maybe Jeff Christian is correct. But he's not exactly selling gold. He advises to use puts, which is wise. But in this guy, I just sense someone who is responding not to fundamentals, but to the full breadth and skill of the puppeteers. He knows silver and gold can be toyed with, gold less so with this kind of microscope. I doubt he'd ever go in any direction 100%, even if he believed so.

Update 9:43 am (Hawaii) There goes FAZ, now above 77 again. Wow. I expected more selling, but the pullback "only" went to 73+, which was the 38.2% Fibonacci retrace level for today's gain. Still too tough to call because of FOMC tomorrow.

Still long small positions in DGP, XG and GSVC.

Update 10:00 am (Hawaii) That wasn't easy. DGP was so tempting at 60.27. FAZ moved toward 80 in the final minutes. But it all comes back to the FOMC meeting tomorrow, and if there's a rumor or clue long before that of QE3, FAZ would give back possibly most of today's gain, and gold would sell off some. Best to wait.

Update 10:17 am (Hawaii) Yesterday, I pictured FAZ (62 at the time) selling off on Tuesday's FOMC/possible QE3 hint meeting down to previous support levels (44-45). That wasn't a bad guess, but it's all moot with today's huge move. If Helicopter Ben comes out with both barrels blazing, FAZ could get knocked back to yesterday's closing price (62.30) or lower. But eventually, it's going to 100. I still think this.

Update 11:44 am (Hawaii) Just back from some errands and FAZ just showed 81.20 afterhours. Amazing. DGP holding steady at 60.45.

Update 11:56 am (Hawaii) Top gainers on my lists include FAZ, TWM, FSG, QID, SCO, DGP, UGL, AGOL, GOLD, AGQ, GLD, IAU, SGOL, NGD, TBAR< EGO, UBG, DBP, GLTR — all at least 2% higher. SLV was up 1.98%. Overall, my Metals list was 43% green today, leaving rare earths and other metal plays behind.

Watching my recording of Fast Money and, as usual, they cut off Peter Schiff and Seymour had no real answer for Schiff's ongoing bullishness on gold. They're both right to different extents. Schiff has been dead-on right about everything the past few years. Seymour doesn't have a real macro view going forward. This is why I read and watch Schiff more than any of the Fast Money guys, though Jon Najarian always has interesting info. Also, Terranova views gold as a barometer for market sentiment. If and when gold pulls back, it's bullish for equities, Terranova says.

I think that's true, but gold won't pull back a ton. The long-term effects of economic disaster are still intact. Instead of moaning and groaning about it, it should be played accordingly.

So ... FAZ is 81.30. I feel a little like Charlie Brown.

Back to war rooming.

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