All in all

The Golden Rule:

Eventually, he who has the gold makes the rules

11:09 am (Hawaii) All in all, my teeny amount of sedentary physical gold did far better today than my active thumbs and fingers in trading. Something to be said there. I tried to outguess the market, the algo machines, and lost on the GSVC trade. Is S&P 500 heading back to 1,333? If it is, GSVC is going back up to 19 and beyond. Even with the ridiculously wide spreads. (Btw, GSVC is now at the original pullback area 15.55) I was hoping for on the move last month to near 20. Lesson is clear: let price come back to your level of conviction instead of chasing!)

But that's the big question, is it not? Are we just going to whipsaw in this range until Jackson Hole on the 26th? Or is this just a dead cat boingboing?

I'm gray area about this, so a small position in AAPL is on deck. BIDU.

Update 11:18 am (Hawaii) Doug Kass on Fast Money says the lows for the year are in. Maybe he and a lot of people really believe this is a repeat of last year. Maybe he knows QE3 is coming. For sure.

"We're now as oversold as we were when Germany invaded France (in WWII)."

If the market rallies from here to New Year's in rip-em-a-new-one fashion, it begins here. Or rather, it began two hours ago — one hour after the FOMC's statement. If the market tanks, I don't want to be 100% long and stubborn.

Which of these possibilities happens first?

• AAPL from 370 to 400
• GSVC from 15 to 20
• Spot gold from 1750 to 1650
• Spot silver from 38 to 35
• FAS from 15.50 to 20
• FAZ from 60 to 40
• FAZ from 60 to 100
• S&P 500 from 1172 to 1333
• Dow Jones from 11239 to 14000
• Nasdaq 2482 to 2700
• AGQ from 188 to 382 vs ZSL from 14.66 to 24
• DGP from 61 to 80 vs. DZZ from 4.90 to 7.25

And finally ... spot gold from 1725 to 2000.

To boot, how about this:

• US credit downgraded by another major rating agency
• US Dollar from 74 to 70
• US Dollar from 74 to 78
• Euro (vs USD) from 1.43 to 1.50
• Euro (vs USD) from 1.43 to 1.35
• Geitner resigns before Labor Day vs. Geitner survives to the end of Obama's term
• Bernanke installs official QE3 by Jackson Hole vs unofficial stimulus after Jackson Hole

Defense

6:33 am (Hawaii) So, it's too late to get defensive, or is it?

What's working today? Off my Metals list 19% green, 81% red), it's ZSL (+9.6%), SCO (+8.7%), DUST (+8.4%), FAZ (+7.3%). The only non-bearish plays in green are GOLD (+3.8%) and GLL (+1.5%). DUST has appeal for me since it's the 2x bear ETF on gold miners. It would have really helped hedge my position in XG. Hindsight.

But if the global selloff today continues into tomorrow, there's no catalyst to buck the downtrend. All that remains is the probability of QE3, and most traders aren't expecting that until Bernanke goes to Jackson Hole. That's not for a few more weeks.

My Regular watch list is at a pathetic 9% green, 91% red. Only the bear plays are green. WNR is down 15.8%, AMRN is -13.3% and RBY is down 9.5%. WNR, as noted by Le Fly, hedged itself out of a great quarter. Again. The time to sell is often before earnings reports with few exceptions. Like AAPL.

The indices are bouncing a bit off lows now. DUST's appeal can't hide the fact that it's so thinly traded, but it's a possibility I have to consider. Or just go back to sleep.

They can't milk gold and silver dry this time

12:54 pm (Hawaii) Charts and ETFs don't mesh often times, but with Spot Silver and Gold prices locked in a range, it's possible, just possible that we see certain patterns remain for the coming weeks.

• ZSL has run from 17 to 19+, back to 17, and up to 19.58, all in the past two weeks.

• DUST ran to 52, down to 44, then up to 48.92 since June 16.

• QID went from 54 to 57, back to 54, up to 56 since June 14.

• MCP pure kookoo in two weeks. 46 to 52 in two days, then down to 47 and up to 54 in another two-day span. then 52 to 56 between yesterday and today. It's one of those you can trade like a madman, or just pocket it and forget about it for a year. Rare earths are here to stay and the Chinese are going to make sure supply (they control 97% of the stuff) is limited.

• Other rare earth princes like REE have been roller-coaster nauseating. REE went from 9.00 to 11.40 in two days. Sank to 9.40, rode up to 11.10 and is at 10.67 after hours today. All in two weeks.










• Puppet masters knocked gold down as it was about to break to new highs, which means DZZ went from 6.35 to 6.89 since Wednesday. Same move for GLL, from 22.40 to 24.12 in the same time frame.

• FAZ is hovering between 46+ and 52. As more and more banksters (and insurance companies) announce huge writedowns and losses in the coming weeks due to Euro debts, fear of bank collapses and closings should drive FAZ much higher. Nothing would surprise me, though, including some devious plan that would keep the banksters solvent and maintain their current levels of stock price and Monopoly currency.

• JJC, the copper subindex ETN, has been stuck between 53 and 55. Currently 53.83. If stagnant, almost predictable action is your thing, let 'er rip. China's not coming to a complete standstill anytime soon.

• AGQ is a sight. From 165 to 186 in steady action for almost two weeks, then blindsided by the CME mafia the past two days. By CME mafia, I do mean all the powers that manipulate the "Free Market" of commodities, such as crude oil. I am NOT for blatant naked shorting, but I don't see the point of kneecapping any price discovery, especially when the LONG-TERM effect will be negligible at best.







Same goes for all the silver plays that were hammered the past two days, even though MINERS SHOULD BE GAINING DUE TO DECREASED ENERGY COSTS! It's mind boggling to see it all play out. I'm not advocating a full swan dive into miners (gold and silver) here, but AGQ is among many  metal plays now near YTD lows. At 160, AGQ is only a couple of bucks higher than its low a month ago.

It all comes back to what Mike Maloney has said for years and years: The Fed, that private entity that runs our finances, may not have any gold and silver in its vaults. Meanwhile, central banks across the globe have wizened up in recent years and started to accumulate mass quantities of metals to hedge against their valueless US fiat currency/IOUs. So how does the Fed respond? By holding gold and silver hostage.

It ain't pretty. They've got one, maybe two bullets left and they're up against Justice. You can't fuck over the world this long, borrow to the hilt, and not pay back WHILE STILL ASKING FOR MORE FUNDS TO BORROW. It would be best to restructure and concede rather than drag out the hostage crisis. By doing this to us, the Fed and banksters are simply prolonging the inevitable. I have no doubt that they are personally stocking up on all the gold and silver they can at these levels, and I would not be surprised if this is also a way to benefit all our debt masters, particularly China. This gives them ample opportunity to stock up at low prices.

Meanwhile, the value of the dollars we make by working every day (if we have jobs) is eroding by the day. A fucking candy bar at Safeway costs $1.29 now. This is like shopping for snacks at the movie theater. It's just getting worse. And it's been far worse in other countries for a much longer time.

I am not sweating the decline of spot price. I am just anxious to buy at the best discount I can get. That might come on Monday in two weeks or two months, but it's coming. I'm loading. I'm stacking. I'm not waiting for my bank to re-open after some strange "inventory" closing when one of our debt masters calls our bluff at the poker table. I think some of the experts are right. Jeff Christian is probably right when he says silver will drop to 26, then go up, up, up from there late in the year. Jim Sinclair is probably right when he says silver will rocket this year. Maybe not this summer, but eventually, yes.

By then, it won't be a question of how much we paid to protect our assets. It'll be a matter of how much protection we accumulated. I feel for the hard-working folks who were stretched to the limits, but there are also a lot of lazyass bitches who borrowed off their credit cards to the hilt. They bought stuff they couldn't afford for decades, and I'm not about to let them get me again. If they aren't ready this time, that's their effing problem.

Denise Milani

Not quite minus squared

9:37 am (Hawaii) Market is down (Dow -99.83/-0.8%, Nas -31.77/-1.2%, S&P -13.09/-1.0%), but it's not convincing of an onrushing disaster, either. Dollar is up 6/10th of a percentage point, crude oil down again (SCO up 1%). The Metals list is 27% green, 73% red with a majority on the plus side being bear plays. But the key is low volume up and down. Maybe it's a respite of sorts and Monday begins a bloodbath. Or maybe this market will remain choppy, indignant and petulant.

ZSL is up 5.3% to 19.46. DUST, QID, gold bears GLL and DZZ are among the leaders on the list. REE, MCP and AVL have kept rare earths near the top.

Meanwhile, the finnies faded. Three were in the green in the opening minutes today, but now all are in the red. NBG, which got up to 1.43 yesterday on the positive news of austerity psuedo-measures, is down 7% to 1.32. Pulling back is no surprise, but I thought there might be continued momentum after profit-taking. It's tough to make it when you're a bankster.

Silver plays are getting minced again, not a shock. AGQ down 5.4% to 161.54, EXK (-5.2%), SLW (-4.3%), PAAS (-3%), GPL (-4.5%), SVM (-5.1%) are among the bruised silver miners. XG (-2%), NUGT (-5.3%), GG (-3.7%), GDXJ (-3.1%), DGP (-3%) are among the gold plays getting stomped. DGP's descent is unusual; it's normally not a big mover up or down. It's my lone play, a small position, and Spot Gold has room to fall, maybe to 1450. Not fun, but the puppet masters will do what they deem necessary to justify implementation of the next bailout/quantitative easing/big lie.

My Regular watch list is 26% green, 74% red. AAPL is down 1.6% to 325.95. TVIX (+7.5%) and VXX (+3.7%) are up big, as is QID (+3.5%). No buyers, and it seems some hedge funds have emptied out. It's nice to rest easy on summer vacation.

It gets interesting on the Regular list. CMG (+1.1%), RLOC (+0.8%), CSTR (+0.3%) are up. Then it's red, red, red, red ...

Heavy Metal Movement

10:25 am (Hawaii) Bouncy day in precious metals today. Moves of 1.5% and higher in dozens of PM plays. Smaller miners gained huge chunks on light volume. GPL (+10.9%) to 2.85. AG (+6.4%) to 18.69, XG (+6.1%) to 11.30. EXK (+5.9%) to 8.44. AVL (+5.1%) to 6.41. But again, the soft buying isn't convincing.

GPL 2.5 mil shares traded yesterday, 1.8 mil today
AG 1.36 mil yesterday, 976K today
XG 257K yesterday, 230K today
EXK 4.1 mil yesterday, 2.0 mil today
AVL 2.5 mil yesterday, 1.5 mil today

It goes on and on. My gut said, Get some EXK and XG before the bell. But the numbers spell out the truth: PMs are still on thin, thin ice here. After six sessions in a row of struggle, the dead cat bounced high. But now it's flat on its face again.

My Metals list is 72% green, 26% red. It feels not good to have not a shred of profit off this, but I don't need to be early to make money. If this bounce is for real and PMs are ready to rally, I've got time. But gold has flopped about in the past two summers even in the midst of a bull market. Instead of following risk-crazy fish out of water to be dead on some boat, I'll be a pilot fish and follow the whales and sharks carefully.

The worst plays on my Metals list: MCP (-4.1%), DUST (-3.5%), ZSL (-3.1%), FSG (-1.4%).

Still have my small position in DGP, which is up 0.9% to 49.44. I'm 90% cash.

A crude hump day

5:52 am (Hawaii) There's crude oil up 3.8%. There's LNKD up 0.8%. The rest of the greenies on my Metals list is sparse. At 19% and mostly bear ETFs, it's a supremely negative day so far for the metals. DUST is up 4.7%, UCO rising higher on news that there's no news out of that Middle East meeting on production, ZSL up 2% ... Spot Gold is down to 1536 and Spot Silver at 36.62 (after dipping close to 36.00).

MCP (-8.4%), SVM (-8.1%), EXK (-7%), REE (-5.6%) and VL (-5.2%) are just a few of the players getting pinata-ed today. XG (-3.4%), AGQ (-2.2%), PAAS (-2.9%), it's fugly. It's not shocking. It's summer and the doldrums are here. I'm glad I mistakenly set my alarm for 1:21 pm instead of 1:21 am. How many traders opened positions in ZSL yesterday? It closed at 17.11 and opened today at 17.57. Now trading at 17.36. Unless you opened a position yesterday, you're in the red today. Did I need to 4+ hours of sleep for that? Naaah.

I'm now down almost $300 on OWW even though the position is teeny. This is a great reminder of why I stopped playing (getting played by) penny stocks in the first place years ago. The price almost always provides all the explanation necessary. But down this deep, near it's all-time low, it's pointless to sell. Another piece of positive news and OWW goes back up. It could double, triple, quadruple. Even with a Vegas-play-money mentality in this play, it still sucks to be holding the bag.

In case you're not convinced that OWW is a horrible buy, go back some years. OWW was a rumored takeover target with a buyout price of $26 to $28. Talk about cruel jokes. Priceline they were not.

Turd: Hoping to be wrong (June 8 2011)

(video) KSL News: Utah precious metals currency takes effect (June 1 2011)

The next move

Update 11:40 am (Hawaii) Sure, Spot Silver and the rest of the PMs could continue lower. I'm thinking Spot Silver goes to 30 even though there's been enough correcting (i.e. carnage) and 34 should be the pivot point. But are physical silver buyers waiting? Looks like they aren't. I already wrote about one site running out of Johnson Matthey 10-ounce silver bars. Now another shop has gone out of stock of Silvertowne bars. This comes after the shop ran out of Academy bars and an "our choice" bar, both being the cheaper end of their collection. I still haven't talked myself into buying bars, especially since I decided yesterday to wait ... and prices declined huge today. 

If the physical buyers are right — and traders like Jon Najarian have already ended their SLV put/ZSL call trades — then Spot Silver may bounce soon enough. But there's also this: Spot could bounce here for a day or two, then sell off again next week. I wouldn't put it past CME and the Fed to shoot down commodities to square one, as a talking head said earlier. Nope, if I'm getting in it'll be with a very small position, both paper and physical. 

So what is the next move? I already missed the 'easy money' with ZSL. I'll project and reject out loud here ... if Spot Silver sinks to 30, ZSL will be around 30. If and when Spot Silver then rallies to 40, ZSL will pull back to 18 or 19. Then, if and when Spot Silver craters back to 25, ZSL would run to 35, closer to 40. I don't know exactly why Spot Silver will sell off more in empirical, fundamental terms. I do know human nature, and the metal bears in control will continue to devour without end, with a bit of a pause coming soon. 

Is that enough of a projection? 

So, if equities then follow commodities into the toilet in a week, maybe by mid or late May, what would be the short-term play, especially as June (QE2 coming to an "end") nears? There's always FAZ, which I haven't touched in at least a year. There's QID, EDZ ... and not a whole lot more. And DUST, DZZ, GLL, DGZ — all gold and gold miner bear ETFs. And there's UUP if the dollar keeps climbing, which I doubt will happen. But it all comes back to Spot Silver and ZSL. If CME and the Fed decide to punish Spot Silver to the fullest, it goes back to 19 and ZSL could go to 50, where it was last fall. 

Going into tomorrow's economic news and the end of the week, I probably will remain out of the market. Nothing is worth holding over this weekend. I could buy some Spot Silver and/or Gold plays, but I'd be forced to get some bear ETFs as a hedge. A net zero result, probably, which is a waste of time for peon retail traders like me. The thesis here is no thesis, and therefore no game plan. Yet. 

Update 1:19 pm (Hawaii) Leaning toward no physical purchases for now. Much as I love the look and feel of metal (granted I have a teeny collection of silver coins), it makes no sense to buy physical when it's still at a relatively high level. The time to get physical was a year ago, when Spot Silver was 18 or less ... when Spot Gold was at 1000. When a lot of people did not want to buy ... two years ago. The lack of access to trade for physical PMs is the deciding factor for me. Sure, there are dealers that will pay over spot for your physical. But that's worthwhile only while Spot prices are rising, not declining. So I'm holding off. Probably. 

Meanwhile, ZSL is up to 24.41 in afterhours trading. The volatility of PM tools like ZSL and SLV provide far more opportunity for profits (and losses) than hoarding gold or silver coins/bars. So the plan here for physical is to wait for continued bottoming, and if that means wait until Spot Silver loses another 30%, so be it. Until then, my focus will be on trading. 

And ZSL is now at 24.50 with 35 minutes left before afterhours trading ends. A lot of fear still in the PM market? Isn't the 5th margin hike already built into prices? Then again, this may encourage me to finally get my first silver bar or a few more coins. 

Update: 1:27 pm (Hawaii) I'd love to get both a few more coins and a bar. The Scottsdale Silver Stacker (10-oz) is beautiful and aesthetically appealing, but it hasn't come off its $394.99 price since the new price was posted earlier today. At that time, Spot Silver was roughly at 38 or 37/oz. With Spot Silver now at 34.40, I don't see the Stacker fairly priced until it gets to 375 or lower. I'm a little greedy that way. 

Same with the Scottsdale Silver Academy (hand poured 10-oz) bar. It's been at $397.99 since the price change earlier today. Needs to get lower. 

Sydney taking Spot Silver lower and lower ... Spot Gold, too. 

Silver American Eagles are murky to me. Sure, they're minted by the US, but paying $5 over spot ... I'm more interesting in accumulating PMs, not the collectible panache. That might sound hypocritical since I like the look of that Scottsdale stacker, but the American Eagle just isn't overly pretty to me. I'd take a few at a cheap price, though. 

Scottsdale Silver "stacker" = $394/10-oz bar

Update 2:02 pm (Hawaii) Spot Silver at 34.33. Sydney not bullish. Hong Kong opens shortly. 

Spot Gold at 1474. 

ZSL closed AH trading at 24.57. 

Update 2:54 pm (Hawaii) Avery Goodman's piece on the roiling silver market. He believes both silver and platinum will rise sooner rather than later. 

Hong Kong has opened. Spot Silver at 34.70. Spot Gold at 1486. 

Avery Goodman: The last great opportunity in silver and platinum (May 4 2011)

Update 7:31 pm (Hawaii) Always a welcome sight, a chart interpreted artistically by The Fly. I think this one should auction off in the six figures, minimum. 

But seriously, he has already indicated that Spot Silver is heavily oversold according to his in-house algo, the PPT. In fact, Le Fly has noted that there has never been a single vehicle as oversold as silver. Then again, when machines are running everything, there's no telling when the end of the carnage will happen. If ever.