No use using reason

10:17 am (Hawaii) There wasn't much logic to the procession of dominoes from time to time in this fugly global economy, but the disconnect is a little more common now. Greece comes up with a backup plan that only a crackhead would love. Stave off payback by minimizing austerity measures? Sure. Go ahead. Greece can do its thing, so why would the market reward it? Why would FAZ finish in the red and FAS go green as a result? 1. Short-term nature of traders, and more so 2. the machines don't give a fuck.

It appears, according to the space-alien trading robots, that the naughty banks and finnie stocks involved with this mess can't get any worse as long as the lie is perpetuated. Not that anyone believes it. But just feigning appropriate measures is enough to keep the fins from the roughshod they truly deserve on the open (?) market. No less or more crooked than Big Brother's protectionism in the Middle Kingdom. It is what it is.

It was a weird day in the metals. ZSL fell way, way, way off its high but still was the biggest mover to the upside (2.5%). REE (rare earths), MCP (rare earths) and DUST (gold bear) were the other top gainers. Just about everything was either fractionally up or fractionally down. Money left the PM market and, to be sure, hardly any entered. Just no buyers.

Silver got crushed, as did gold, but gold recovered somewhat. Silver dipped almost down to 36.50 with a little help from friends at the Comex. Today's worst metal losers on my list: GPL (2.99, -4.5%), EXK (9.55, -3.3%), AG (19.61, -3.2%), AGQ (182.00, -2.7%), SVM (10.66, -2.7%), PAAS (32.33, -2.5%), PSLV (16.46, -2.4%), ABX (46.22, -2.2%), SLW (35.24, -1.9%). That's eight out of the worst nine being silver. Can't say I didn't expect it. I don't like it, but as Brother Turd noted, if it wasn't spot wasn't heading over 39 soon, it would retest 36.50. That's precisely what the puppet masters did. From here, who knows?

If they dare bring price below 35 to 33 or 30, I'm prepared to add more physical. Savings in greenbacks just hasn't been worth it lately. Why would I keep something that I had 79 of in February and was reduced mysteriously to 72 by May? It may be worth 75 or so now, but will it stay there amidst all this devaluation? I really wouldn't be surprised to see Spot Silver retest 26 or lower at some point before vaulting higher. That kind of volatility is partly why I'm shopping for gold at discount prices this summer, if seasonal swoons are on cue. Eventually, gold and silver will rise. Gold, in particular, won't flake and flame out, not when the world's biggest bankers are stocked in it.

It may seem like an old fart's kind of fetish, but I'll tell you this: It has to beat being a crackhead.

Turd's take: Minimize risk (June 2 2011)

SGS: This is summer of 2007 (June 2 2011)

Le Fly: Jobs number will be better than expected (June 2 2011)

Perchance to sleep

5:31 am (Hawaii) I must realize this: trading the market on no sleep is a bad situation for me. In the past two weeks, my worst trades have come on no sleep, staying up into premarket at 2 am and the opening bell at 3:30 am. The winning trades have come on a few hours of sleep going into the market, or simply sleeping through part (or most) of the session. This am, I thought FAZ would be an advantageous play. It was, except when I got in at 46.40, it was fairly close to its high of the day and proceeded to drop to 45.55 or so. I sold, naturally, at 45.60, and instantly FAZ ran back to 45.45. It's all about timing, isn't it? That small trade cost me way more than I expected, $160 loss. My thesis was right; there's no way this market can support the financials. And yet, I panicked and ran for the exit at just about the worst time.

In the meantime, an even smaller trade in OWW went downward to 2.75 or so. It's currently at 2.82 and I had to remind myself of something I'd forgotten with the FAZ trade: on a decline, sell early or don't sell at all. My target on OWW is 4, and beyond that 6-7. I told myself I wouldn't sell on the downside unless it returned to yesterday's pre-close level (2.21).

My Metals list has reversed course and looks like yesterday again at 79% red and 21% green. ZSL, which I passed on early this morning, is running hard, up 4.6% to 18.56. FAZ is hovering at 46.45 and clearly has room to rise, but I'm done chasing that one. Logic is one thing, but I have to respect my own psychology, flaws and all.

DGP and the PM sector are being pummelled. DGP is at 48.01, down more than a buck. Again, the summer is when gold wavers up and down, but this position is small enough that I won't mind holding it through. On the flip side, if and when the Euro zone's fiscal crisis deepens, DGP and gold will get "bonus" moves up during a season when they normally peter out.

All in all, with the indices down fractionally and light volume, I would've been better off sleeping.

Pre-game Thursday

3:11 am (Hawaii) Big economic numbers due tomorrow that will sandwich with yesterday's manufacturing numbers. I guess that makes today the meat and cheese, or lack thereof. 52% of my Metals list is green, but it is a totally shallow, superficial layer. Almost all of those green premarket movers are less than 1.5% up, a truly lame sign.

AGQ is up 2.4%, but is off its HOD of 194 to 191.65. Most of the upside movers are less than 1% up, mostly in the 0.5% or less range. Looks fake, fake, fake.

As for OWW, it's hovering just above 3 and I'm underwater, which means I'm down about hardly anything. It's a teeny trade, but enough to keep my interest piqued. I may or may not hold down to 2.21, which is where it was at yesterday's close before the news from the courthouse (American Airlines). The 38.1% Fibonacci retrace level from yesterday's afterhours high is 3.05, which is just about where OWW is right now.

DGP is slightly up, and between DGP and OWW, I am still 87% cash. Lots of work to do this morning, so I may not pay much attention to the market. I will be watching gold and silver closely, though, for the possibility of buying more physical on a bigger dip.

Drill and win?

2:29 am (Hawaii) For what it's worth, Tanzanian Royalty Exploration Corp. announced its review of drilling results in Australia. See details here. What's interesting is this: TRE hasn't traded a share in premarket yet, but is priced 50¢ higher at 7.64.

Precious gain in Asia

Hong Kong is bouncy

11:17 p.m. (Hawaii) As Hong Kong nears the close of day, Gold and Silver is securing modest gains. This looks more like consolidation than any outright bullish or bearish behavior, with the one caveat being the potential for the puppet masters to flog either metal into the gutter at any time. Of course, every time they bring price down, buyers enter and collect both physical and paper PMs.

The next few hours are often enough the time of night when the puppeteers do their string-pulling, when there is little resistance in a lightly-traded market.

Jed Handwerger: Why currency volatility should support gold, silver (June 1 2011)

Fly: This could explode upward

7:26 pm (Hawaii) Le Fly chimes in with his eloquent, finesse-oriented suave style. I agree with him about the overreaction of the market today. When stuff gets sold off as broadly as this in one fell swoop, it rarely duplicates for the next day and next. I don't know if the market will bounce back in the morning or keep puking its guts out, but I do know that there's no certainty one way or the other. Had the market sold off just slightly today because of economic tremors, it would probably need to puke a lot more tomorrow and Friday.

That's why, when Le Fly notes that the infamous PPT system has flagged major overbought levels on Tuesday, he knew the pukefest was coming real soon. The bounce-back on these days has been rather consistent, he writes.

Le Fly/I Bank Coin: If history is going to repeat itself, the market is about to explode to the upside (June 1 2011)

Bottom line

2:42 pm (Hawaii) Zero Hedge with a piece about total physical silver at Comex dropping to less than 30 million oz, which Turd explains is the primary reason why the puppet masters crushed Spot Silver price today.

Thing is, I've seen all these wars within wars before over the years. Just when something seems so definite, so guaranteed (Dendreon's Provenge), guess what can happen? Yep, the naked shorters can win and the regular joes get smoked. I'm not saying it will happen with the silver market, but all the logic in the world will not ensure victory just because it makes sense. He who has the gold, no pun intended, will make the rules, and in this case, if the Fed and JP Morgan and the CME decide to cave in the majority, they'll do it. For whatever justification.

So I'm staying out of the way, mostly cash, not playing paper silver at all. If and when physical silver (and gold) get cheap, I'm ready to get more. But I'm not subscribing to an us-versus-them mentality. I believe the system is screwed, no doubt, but I have nothing to gain by yielding to emotion. Ask the people who were long DNDN at 7 when the FDA pulled one of the most heinous rejections of a medical treatment in history. That sent DNDN back to 4 and stalled the approval of Provenge for another two years. None of it made sense except that there were numerous conflicts of interest within the FDA. And there was nothing anybody could do about it.

Silver is no different. The good news is that DNDN eventually did explode, but not without further bullshit and naked shorting — as well as the first real flash crash incident — on the way to 50. But losing to emotion is just that, nothing but a guaranteed loss. Stay cool.

Zero Hedge: Scotia Mocatta loses 60% of physical silver in 1 month to 'reclassification' (June 1 2011)

Turd: Deserving of its own post (June 1 2011)

Natural beauty of Australia