Wednesday cinema & library

Charts

Is this the bottom for spot gold and silver? Is 1800 the floor in gold? Is DGP worth a small position here? Maybe a small scale-in ... but there are too many wolves out there and nobody needs to be a sheep right now.

Blogs

Le Fly: This is NOT as easy as it looks (Sept 7)

"I am now +80% overnight on my TNA calls. I am not selling until the PPT registers OVERBOUGHT. ... If you want to become a pro in this business, you need to control your fucking emotions. The most important aspect of investing is knowing your talent."

Turd Ferguson: WARNING (updated) (Sept 7)

"In an attempt to mitigate the 'negative' effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. ... Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity. This all wreaks of malicious manipulation."

Chart Swiss Francs: 700,000 ounces dumped on the Globex while London and New York are closed

(Update) "If you believe as I do that this current beatdown in gold is being engineered by the SNB, then why would you think they would rest before pushing gold all the way back down ... to somewhere between 1700 and 1750? It may take until tomorrow or Friday but confidence is high that gold is headed there."

Zero Hedge: Gold Flash (Sept 7)

"Was it a European bank selling more gold to fund itself? Hedge fund liquidation? Hillebrand needing some funding?"

Institutional Investor: Market conditions make Appaloosa's David Tepper cautious(Sept 7)

"Sources say he has gone 30 percent to 40 percent in cash, which is very high for him. Some of his cash is invested in U.S. Treasuries, which have in turn risen in value in recent weeks."

Le Fly: The bubble in non-risk is popping (Sept 7)

"At the open, I doubled down on my TBT position, with cause. It appears the power elite are dismantling the 'risk off' trades, namely Swiss Francs, gold, silver and very soon Treasuries."

Le Fly: Enter the meat-grinder (Sept 7)

"We're due to bounce hard off oversold levels. I am anticipating a 200-500 point move higher from here. ... What if the FHFA lawsuit is a way to threaten the banks, in order to make them open the spigots? Perhaps the government is using a little leverage in their efforts to get those fuckers to start lending again."

Sy Nejem: War (Sept 7)

"Within the past week, the Swiss National Bank dismissed the possibility of interventions to manage the Swiss Franc and then did a complete about-face on that stance. These are efforts undertaken during the latter stages of a battle, when one side starts gaining an obvious edge." 

George Maniere: Why silver may currently be one of the best long-term investments (Sept 7)

"Silver has put in seven confirmed bottoms along the trend line. Once it breaks this resistance level ($44) it will have the $50 level of resistance to break through."

Jeff Nielson: 'Unsinkable' gold (Aug 29)

"Gold is the only asset class capable of outperforming other asset classes in either an 'inflationary' or 'solvency' crisis ... the only asset class capable of protecting us from these simultaneous economic calamities." 

Vlogs

Keiser Report: Fake Assets (Sept 6)

> Artist Alex Schaefer ("Chase Burning")

Audio

Goldseek: James Turk (Sept 6)

Blog commentary
Shelby (GoldWeTrust.up-with.com): WARNING: Massive crash in gold & silver coming in November (Aug 29)

"So what is happening now in 2011, is the same as 2007-2008. The mad movement up of silver and gold is exactly the same as what happened after the SPY peaked in 2007. ... it will end up the same as 2008 because big money cannot buy gold, the only liquid market in the world is the US Treasury market, and 'bug heads' are going to get another lesson in this." 

"Oct 24-Nov 4 2011, (S&P 500) will gyrate around the 200 wma for up to 2 weeks, then crash. There is no limit to how far it can crash, as it could bottom anywhere between 666 and 950."

"After Oct 7, 2011, gold will rise for 2 weeks to about $1850 while the S&P 500 is crashing down to its 200 wma to 1030. On Oct 24, gold will start its worst crash to go down below the 50 wma within about 2 weeks. ... gold will go down to $1370."

Reports

MarketWatch: Feds say Bank of America worse than Countrywide (Sept 7)
AP: Stocks surge after Germany upholds bailout plan (Sept 7)

CNBC: Gold may top $6,000, silver $600: Asset manager (Sept 5)

Minyanville: Silver, silver stocks forming bullish cup and handle pattern (Sept 6)

Wikileaks: US embassy cable - 09BEIJING1134 (Sept 3)

"China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Video

Metal bling

Quality Silver Bullion: September Discount Code (Sept 2)

eBay: US Treasury silver bar (95.83 oz) sells for $3,127 - $36.43/oz (Sept 3)
Private Collection: Chinese Silver Dragon Beads (Jan 20 2010)

Let them have it

8:26 am (Hawaii) It's times like this, when I'm still lying in bed, a cool breeze blowing through and a warm Hawaiian sun rising above the mountains that I feel thankful. Especially when the market is sometimes puzzling, as it has been this week. But I'm at peace for one reason: I didn't have any conviction about direction and stayed out of the game.

When the Swiss National Bank devalued the Franc yesterday, it could have (should have?) been bullish for gold. Instead, the Franc lost 10% (no surprise) and gold swooned. Brother Turd Ferguson explained this morning that it's the SNB that is playing the yellow metal like a seasoned poker player using a rigged deck. So, until the selling in gold ceases — Turd sees a dip to 1750 or even 1675 — what to do? Turd advises sitting out.

Sitting out is fine for an uber-bull, which I'm not. I'm no bear on gold or silver, but I don't trust the puppeteers, whether they be CME mafia or SNB. I'd rather wade into the fiery river of paper gold and paper silver when a multitude of factors are in my favor. Not just one or two, but many factors. Otherwise, I'm just fine laying here and studying events and the twists and turns from afar.

An agnostic or bear would've stepped in by now to ride gold down via puts, shorts on paper gold, or an ETF like DZZ. Or ZSL (silver ultra bear). I mentioned recently that the downside effect of DGP at 60 or AGQ at 200, or FAZ at 55, even 50 would whet my appetite again. Right now, we have DGP at 66.33, AGQ at 223.03 and FAZ at 55.08.

The Dow Jones is +253, right about at the high of the day. AAPL was up 1.5% yesterday, which I noted as a possible tell for the market. Sure enough, AAPL is up another 1.3% and pulling the market up with it. This is bizarro, of course. AAPL at 384 is still rather cheap based on fundamentals. But with so many companies ready to announce lower expectations for Q3 and Q4, this move up by the indices is purely technical and I suspect owned by the space alien HFT machinery.

I don't bemoan these algo computers. I just stay out of their way unless I'm brainy enough to anticipate the next move, then plant my seeds accordingly. A genius like Le Fly was buying in yesterday, dumping his bear trades along the way. He has his own set of indicators (the PPT) and it has worked quite well for him (and his subscribers) from what I've seen over the past year or so.

As for gold, with the margin requirement hike in China over the weekend, plus the SNB/gold shenanigans, that's far too much to overcome for peon traders (like me) if we are strictly on the bull side of the battle. If spot gold returns to 1725, as Turd says, then it's not far away. After hitting 1920 overnight on Monday, then dipping below 1800 today, another 75 points down could happen in the next 12 hours.

In other words, it's probably too late to trade on the bear side at this point. Fine with me. My guess is that the monster machines will read the chart, as it did with FAZ on the recent massive gap up, and take DZZ higher tomorrow. The shorts will ride this out further and lower as DZZ makes traders more fiat. But like FAZ and most gap-up plays in this murderous market, the run will be done soon enough.

Today's gap higher on strong volume will unlikely be followed by a change in direction overnight. Intraday tomorrow is another story. Spot gold went from a one-time high of 1818 to 1700 in days. The recent high of 1917 was met by a steep decline (to 1700), and was topped by the run to 1920 on Monday. If today's slide to just below 1800 proves to be support, so be it. If not, cheaper entry points will be welcome. I'm not trying to time the bottom and be perfect. It's just good to be aware on a pristine autumn morning in my favorite place in the world.

Pains of labor

7:18 am (Hawaii) Slept in early and still didn't get up until 6:30 am. If I hadn't been all cash, it would've been alarm-clock-get-up-at-1:55 am time. And it would've been nuts if I'd held FAZ over the long Labor Day weekend. FAZ went from 60+ on Friday to 66+ this morning and has since dipped back below 64. That's quite a run from a recent low of 50. You had to know it would eventually start running hard to 100, even with a u-turn or two along the way to 55 or 50. The US govt lawsuit against the big banksters just put this FAZ move into warp drive.

I expected the banksters to make a tricky maneuver over the long weekend. Nothing really happened except this: the Swiss diving into the pool of piranhas and sharks with the Euro. Why are the Swiss going against all logic and sacrificing their Francs? Are they being bullied behind the scenes by Euroland?

Swiss: So what's this meeting about?

Greece: Nothing much. You're looking so healthy and young.

Swiss: Yeah. Right. So what is this about?

Germany: Come here.

Swiss: We can talk right here at the table.

Germany: No, let's get some fresh air outside.

Swiss: You're not going to smoke, are you?

Germany: Come along.

Outside on the porch...

Germany: Swissie, you do know the predicament we are in?

Swiss: We?

Germany: Cut the bullshit. I'm about to have civil unrest because of all these bankrupt neighbors. It's not like I can move to a nicer location. I'm stuck.

Swiss: Yes, this is quite a problem you have.

Germany: I'm stuck as long as I'm the only reasonably solvent player on the block.

Swiss: What about your buddy, France?

Germany: Don't fuck with me.

Swiss: Woo so moody.

Germany: I am sorry. I'm cranky these days.

Swiss: Yes, you are trapped.

Germany: Need you to toss a lifeline, my old friend.

Swiss: Me?

Germany: We're asking you nicely.

Swiss: Oh not that again.

Germany: What?

Swiss: You guys just take my kindness for weakness.

Germany: We should work together on this. If I have to deal with hooligans in my country, it would destroy us. So my natural alternative is to seek your help.

Swiss: My Francs!

Germany: We can do this nicely, or ...

Swiss: You bitch.

Germany: I know, I know. It's an ugly thing. Can you blame me?

Swiss: Shit. (long pause) Can I have one of your cigs?

Germany: Of course, my friend. Take the whole pack.

Simplified, yes. But it ain't that complicated, either. Euro goes up. Dollar follows. Markets sell down. Precious metals take a hit. But it will be temporary. Poisonous, toxic assets do not disappear overnight.

And there goes FAZ, back up to 64.32. Dare I step in here? Think I'll wait this one out.

Thursday night library & theater (updated)

Tama Art University Library, Tokyo

Zero Hedge: 'China will convert quite a bit of US trade deficit from dollars into oil' (June 23 2011)
Zero Hedge: Cantor will propose balanced budget amendment (June 23 2011)
Mike Krieger/Zero Hedge: 'They have no freaking clue' (June 23 2011)
Zero Hedge: Another algo gone wild (June 23 2011)
David Galland: US monetary system, descent into facism: Edwin Vieira (June 23 2011)
Vedran Vuk: Russia's grip on gas (June 23 2011)
Chuck Butler: Trichet deep sixes Euro's rally (June 23 2011)
Jason Hommel: The temple tax (June 23 2011)
Zero Hedge: Another exchange halts levered OTC gold, silver trading (June 22 2011)
Frank Holmes: Will gold equity investors strike gold? (June 21 2011)
Eric Janszen: The Next Ten Years: There Will Be Blood (June 21 2011)

(audio) Norm Franz: Financial armageddon (2008)

• Franz has a lot of interesting observations, but be warned he ties everything to biblical prophecy, in case that's not your belief. 

(audio) Norm Franz: The world wide financial collapse (Sept 26 2007)

(audio) Norm Franz: America's financial humpty dumpty (Feb 21 2008) 

(audio) Norm Franz: Debt for equity swaps

Video
Jim Comiskey: AFLAC forced to sell $1.2 billion in debt for losses in Greece, Ireland, Portugal (June 23 2011)

streetmoney21: The 2-minute bell just hit and the stadium is real quiet (June 23 2011)
CNBC: Mark Fisher on 'government bringing a knife to a gun fight' (June 23 2011)
• Fisher enters at 3:40
Bob Chapman: Trolls, sock puppets and the world we live in (June 23 2011)
Bob Chapman: The Fall of the Euro and Greece (June 23 20110
James Turk: Bruno Bandulet interview (June 23 2011)

Pam Aden: Gold and silver not in a bubble yet (June 23 2011)

Andy Miller: Everybody in commercial real estate is lying (June 23 2011)

endlessmountain: Silver indicator - direction from (June 23 2011)
Kitco: Was today a disaster in the gold market? (June 23 2011)
CNN: How will US fare after QE2 'life support' pulled? (June 21 2011)

• El-Elarin: 'We can't find another buyer for treasurys.'