Coffee, cream and METAL MANIA! (updated)

8:24 am (Hawaii) It rained overnight in Honolulu. Weather was cool for a July night. Perfect sleeping weather. I just got up after a productive workout last night, and it's almost the end of the session. Did I miss anything?

Hell yes. I remember Turd Ferguson noting yesterday that, technically, he expects gold to break out to a new high, and if that happened ... fully bullish. Turn on the TV. Turn on the computer. I sorta dread this. If gold breaks out, good. My XG and DGP will do nicely, even at small quantities. But I sold out of AGQ two days ago at a loss of $12/share. Small, small position, but still.

The Metals list I keep is almost all green (79%). It's a wipeout day for Metals bears. Only the bearish ETFs and ETNs are red. The indices are all up. XG is up 5%, DGP up 1.3%. AGQ is up 10% to 195. I sold at 172. Again, my timing ... not so good. I'm glad I held some gold stocks. It's like selling FAZ last Friday instead of holding until Monday. That cost me some. But the AGQ sell just cost me roughly $600. That's on a small position, really small. And if silver continues to rise, AGQ keeps going up at double warp speed, who knows, maybe to its all-time high at 382 (April 28).

I can imagine it's been a wonderful day so far for metal bugs. But Turd's site is down. Has it been overwhelmed by all the excitement? I need my Turd & Turdites fix.

James Turk, in his consistent, almost monotone voice, has been pounding the table for gold for a few months. He keeps repeating that this will be (not could be) a breakout summer for gold. Yesterday, he said it would be like the summer of 1982, when Mexico's default led to a golden rocketship. Holy cow, Mr. Turk is probably correct.

Everything at the top of my Metals list gapped up and is already enjoying bigger volume than yesterday: AGQ, AG, NUGT, EGO, SVM, SIL, DBS, XG, SLV, PSLV, GOLD, GDXJ, SLW, PLTM, EXK, REE, GDX, COPX ... wait, I take that back. PLTM hasn't matched yesterday's volume yet. It's all almost too good to be true. Like a setup. But on this kind of volume? I doubt it. It's usually a thin market that gets toyed with and peon traders like me get puppeteered.

Is it this simple? Obama threatens to yank Social Security, and the market reads it as a desperate threat and confirmation that QE3 is on? Or what's-his-face on Capitol Hill, the Republican who caved in and compromised on the Democrats' offer yesterday ... that's what's driving this? I haven't had time to check yet. Maybe after a bowl of cereal.

Update 8:51 am (Hawaii) On the 15-minute chart, AGQ has never exploded like it did this morning at the open. There was major volume two days ago, when shares sold off. But this morning was to the upside in a gap up. Trying find an entry point is difficult here. After closing yesterday at 177.68, there's a lot of room to pull back.

Has the CME mafia and the govt lost control of the price? Is the manipulation over? Probably not on both counts. But yesterday and today show that even in the middle of what's supposed to be the summer doldrums, the market may be too powerful to shackle 100% of the time — especially when it comes to gold. That is where old money resides. Old BIG money.

Update 9:07 am (Hawaii) Excellent post at SilverGoldSilver.com by guest writer SRSrocco about commercial shorts losing grip on silver. I'll add it to the library reading list later today. I got to eat some cereal. Kept watching AGQ but couldn't find a suitable point of entry. Now it's pulling back below 196, it looks like ... feeling desperate to get in near the highs is never a good feeling, and rarely leads to good results. I like the feeling of buying cheap, it's just that I really don't expect AGQ to go back near 177 any time soon.

Only a rocket ship loaded with 10 trillion ounces of gold and silver from another galaxy could save the US economy here. And that would be bullish for PMs. Production/GDP/jobs aren't about to spike high in the next several months. Not even space aliens can repair that.

Reign of the metals

8:11 am (Hawaii) Just up from a nice night of sleep. It's cloudy and somewhat cool in Honolulu, a day after the 4th of July. The real fireworks are happening in precious metals.

SVM is up 11.3% to 10.12 on massive volume. EXK up 10.2% to 9.03 on massive volume. AGQ up 8.8%, average volume. AG up 8.2%, massive volume. GPL up 7.1% on solid volume. NUGT up 6.3% on good volume. SLW up 6% on decent volume. EGO up 6% on good volume. PSLV up 4.6% on average volume. DBS up 4.5% on modest volume.

SLV, SIL, NGD, XG, FSG, GDXJ, GG, PAAS, DGP, UGL, WITE, ABX, GDX, GLTR, PSAU, PALL, DBP — all up more than 2%. Just about all are also off their highs of the day. Why such bullishness? Is it rumor that the debt ceiling will be increased (again)? Possibly.

73% of my Metals list is green. What's not working? ZSL, obviously. DUST also down big. REE is sinking, -5.4% after Japan released news of a major rare earths find on a nearby seabed. Getting all that up to surface is challenge, but the info was enough to hit REE and AVL hard. MCP is down "only" 1.1%.

Crude is up, the indices are flat. Metals up big. I remained heavy in cash going into this week. If we have already hit a bottom in silver and gold, if James Turk and other goldbugs are correct in predicting a monster run in PMs this summer, this would be the time to move in. (Actually, it would've been last week when spot silver was below 34.) But I'm still in wait-and-see mode. My favorite miners remain EXK and XG, but I've got no position in them. I won't be walking in at these levels. If anything, I'll start with a small position on a dip and see how the week plays out.

One thing is for sure: volume in silver is heavy today, for whatever reason. Maybe hedge funds are piling in because they already loaded up on stocks last week. That money has to go somewhere and the hedgies tend to move in packs.

Update 8:33 am (Hawaii) Between AAPL, AMZN and BIDU — big boys with growth — BIDU continues to move up with strength in volume. AAPL and AMZN are up today, but volume has petered out. Not touching any of these for now. BIDU could reverse any time and the flaky behavior of the indices seem to indicate that the bull run of the past week is slowing.

NFLX is up 6.8% on major volume, now trading at 286+.

Frazzled and dazzled

10:02 am (Hawaii) Yes, that was a wild ride, but unexpected, at that. Spot Gold was volatile and hostile today. I slept in while GLD rose to a high of 153.61, which put me up at nearly $4 per share. Small position, modest paper gain. By the time I woke up around 6 am, it was noon in NYC and GLD was lower, hovering around 152. Consider me one of the latecomers who got shaken out of the golden tree. I dumped the position at 150.38 just before the close. Naturally, GLD rallied a bit into the bell, and is rising again, now 150.60 after hours.

I don't regret entering this position. It was still net positive, though I sold at more than $3 off the high. Sometimes there's no telling what a stock will do and there's no way to really read it until there's some skin in the game. I was all right with GLD tricking and cascading down to 152 or 151; it was too late at 151+ to get out with a good profit, but too early to depart. A bounce could've arrived and my position was small enough that the dollar amount between an exit at 150 or 151 wasn't much. So I waited.

Because I still don't trust the alien algo machines when an avalanche hits, I prefer to get out with a little profit or break even than wait around for a loss, and that's what I did. When things settle down, I'll be happy to re-open a GLD position. Or something in NGD or DGP. But 100% cash is always fine for the short term.

Had I been in GLD 10 or 20 or 50 dollars ago, it would've been easy to let it ride through this storm. Either 150 would hold as support or simply cave in; I'd bet on holding. But managing risk is key in this oddball market, especially with such a high entry point (149.69). Volume was light overall and all three indices were down fractionally. However, the PMs got trashed. 80% of my Metals watch list is red, just 15% green. Those in the green were bear ETFs.

Spot Gold is 1545. Spot Silver is 43.87. I watched SLV and the miners a bit. It's tough when two elephants are sitting on you. It might be awhile before the elephants leave the room.

ACQ down 16.7% to 298. PSLV down 10.5% to 19.44. DBS down 8.7% to 77.00. SLV down 8.2% to 43.01. (SLV was below 43 for the past hour or so.) EXK -7.6% to 10.61. SLW lost 7% to 37.78. On and on. Relative to the big gains of the past few months, silver is still a winner, but I'm not thinking of buying anything but physical here.

My regular watch list was throttled, as well, with 71% in the red and 28% in the green. The day started far more bullishly, but AAPL ended up down 1.1% (346.22) as low volume kept the market in the doldrums. AMZN was up 2.7% to 201. Amazing ride since that earnings call when shares plummeted from 181 to 172 in a couple of minutes, then rallied back.

NFLX rose 2% to 237 on an upgrade from Citigroup. Ridiculous. However, where there's a cult following of unabashed, bullish traders, that's where there's quick money to be made on either side. I've never shorted a thing, but I can see how money can be made on NFLX riding it up and down. Same with silver.

Update 1:51 pm (Hawaii) A third margin rate on Spot Silver??? Three hikes in one week at a total of 35%. Holy crap. That explains everything about Spot Silver's collapse today. It also says a lot about the devious shit going on behind the scenes.

Turd Ferguson is who I read when I want instant info on the truth behind silver. He writes:

The CME/EE complex is desperately trying to squash demand for silver. The entire price discovery and delivery process of the Comex is collapsing. These desperate times are calling for desperate measures and you are seeing them play out in real time.

See Turd's latest at his blog. 

Lives have been destroyed for silver and gold since the beginning of colonial tyranny. It continues today. But who wins this battle in 2011? I can't say for sure.

Spot Silver bouncing a bit since Sydney opened shop. Now 44.71.

Spot Gold also pushing a bit higher thanks to the Sydney trade, now at 1541.

It looks especially dire for SLV, the most manipulated instrument I know of. Traders don't want to be stuck holding the bag when JP Morgan/Comex can't disprove the widespread belief that its physical silver vaults are ... empty. Then there's major naked shorting, an elephant stomping on ants. And, naturally, the profit-taking in a stock/ETF that's run from 28 to 49 in mere weeks. 

It's a tough place to be. Gold seems so much simpler, from ultra ETF DGP to small miners like XG to more standard GG. Even GLD is safer than SLV from my perspective. But I am not walking away entirely from Spot Silver. There's still so much potential left, so much money to be made for the nimble-footed. 

4:55 pm (Hawaii) From Jesse's Cafe Americain:

What does not kill this rally makes it stronger.

Fighting the paper price is becoming counter-productive, because it opens the door to additional buying of physical bullion from Asia. It is starting to look like a feedback loop, in which the struggle of the shorts to extricate themselves merely tightens their bonds.

So, which side wins? The one with an infinite line of credit from the Fed, or the one with an army of ants (retail peons)? I have no skin in the silver game this week, but it's no less compelling.

8:55 pm (Hawaii) Nice to see Spot Silver above 45 now, but that waterfall on the chart is still incredible to see. 

Spot Gold just drifting. Volume in May could be the lightest of any month so far this year. I'm expecting Spot Gold to remain in a tight range, while Spot Silver will fluctuate and gyrate many, many times, mostly to the downside. No need to be a hero here.