Cara's Commentary & Community Chat, Wed., Jun 3, 2009

CP,

I been thinking about your question from yesterday.

Late yesterday I read "Boom Times Are Back",(subhead, "Just not here in the United States") by Newsweek writer Fareed Zakaria.

Then I read Bill's WSJ excerpt:

"Mobilized by low levels of public trust in official statistics, a U.K. agency is embarking on the delicate task of questioning other agencies on the numbers they release."

Many, if not most of us, are long past believing US government data and are cautious of the general media. A lot of us are convinced there is market manipulation at record levels in the US. We seek honest, reliable data or at the very least odds in our favor.

It has seemed to me for some time now that data and info from China is often taken as gospel these days. OK, they are still probably better off than the West, but how much better and for how long — what do we really "know"?

I remember reading how Microsoft and others catered to their government by tailoring software to allow censoring of the net. To look better during the Olympics were pretty sure they shut down a lot of their pollution temporarily. They can't keep a lid on everything, but they have better tools there than most countries.

Timmy said China will support the dollar. The students laughed at his comments, but isn't it likely China will say or do (just as Timmy did) whatever suits her immediate interests?

The same goes for European Central Bankers, the IMF or whatever. The US has no corner on the manipulation of data or policy propaganda. Our scammers may have begun the game, but others were quick to join in.

Back to your question: "What could cause a dollar rebound?"

My guess is — a phone call, an email, a face-to-face, or even an outlandish sounding public statement. The rule today is... There are no rules. It can change in a blink.

Good morning. Hang on to your hats.

Downgrades:

AET - to Market Perform @ Wachovia
KGC - to Neutral @ JP Morgan

New Coverage:

COST - Robert W. Baird Initiates Coverage with a Neutral. Price Target = $53
TGT - Robert W. Baird Initiates Coverage with an Outperform. Price Target = $50
WMT - Robert W. Baird Initiates Coverage with an Outperform. Price Target = $60

Price Targets Lowered:

AET - from $38 to $35 @ Deutsche Securities. Buy
AET - from $42 to $35 @ Barclays. Overweight

Price Target Raised:

ADBE - from $25 to $40 @ Deutsche Securities. Buy

Other Stocks of Possible Interest:

ABX - Upgraded to Outperform @ RBC
NEM - Upgraded to Overweight @ JP Morgan
NG - Downgraded to Underperform @ RBC

What fun we're gonna have today. As you know, a charter member of the triumvirate of currency destruction is speaking before congress today. One can expect the dollar to get a goose, and gold and silver to get shafted (at least for the morning). The PPT will be on the job to provide strategic cover for Bernanke's treasonous malfeasance. After he leaves the hall the destruction of the dollar-value can renew itself in earnest.

will look into trying again today.

You never know where UNG will open in the morning. I've seen bids printed at 15.09 and 15.22 in just the last 5 minutes.

Sounds like Hank Paulson is back...

A day after filing for bankruptcy protection, General Motors sent ultimatums to all of its 6,000 U.S. dealers on Tuesday: Follow our new rules or face almost immediate franchise cancellations in court.

For the 2,000 dealerships targeted to lose their franchises, GM said it would soften the blow if those retailers don't oppose the automaker's restructuring plan.

http://tinyurl.com/ol4hcu

2nd
DZZ look like a short term play?

I used to do sometimes 7-10 different trades in a day. The one or two good or real ones, a couple of other questionable ones which sometimes would and sometimes wouldn't work out, and then a couple of demonstrably "wrong" things like re-purchasing a stock already sold at higher levels, which CAN work once maybe but usually not twice. Then at the end of the day it was a miracle that I would only be down maybe 40-50 bucks.

No more. When I do a trade it has to be for a special reason. I now consider myself an objective observer of the market who has the ability to occasionally trade. It's empowering because I never worry about trying to make money anymore. I never force anything, and if it doesn't feel exactly "right" whatever that has come to mean to me (feels kind of "wrong" in a right way) or if I miss the ideal or next to ideal entry I just watch and let it go by.

Now I do a trade, maybe 2 every couple of days. And I never feel any pressure to trade anymore. The rest of the day I just watch and try to learn.

interesting action overnight touching $990 then a stead plunge down.
reminds me of the last few times we move towards $1000 where it seemed like the surges higher were always outside of trading times before the plunge at pre-market, cathing all the eager bids from fresh money goldsters hoping to get in before its too late....

and as always the prices come back down to levels we never thought they would what with all the money printing and winds pushing against the dollar....

so we sit here with gold cratering today, i suspect a gap down for gold stocks followed by heavy selling through the session if the POG does not make an aggressive move up. period. this is my theme these days, the bull resumes on a short-term basis when gold stocks move higher with enthusiasm, not reluctantly dragged higher by a skyrocketing POG price. as noted, when gold is flat or down a few bucks, a sinking miner means sentiment has changed imho.

too many people are on about the US dollar "collapsing" even though we are still above levels from last year's dollar lows. the same for the usual China is "laughing" at american attempts to sell bonds, despite china having the largest US bond position and still continues to purchase bonds. but not a few billion in currency crosses with a sencond rate world power like agentina and its all over the news. China buys more t-bills in a month or two than all these deals with foreign states in their own currency. these stories are carefully constructed propaganda to make it seem as though China is in control which they are not, or that any moment now china will become the worlds reserve currency simply because the USD has fallen.

pull up a 5 year chart of the US dollar. whatever was going to happen certainly didnt materialize when the USD index was at $72. so we have a long way down before hitting a low that even back then didnt provoke anyone to dramatically alter their currency purchases.

remember for the past 3 years we have been fed a diet of ridiculous claims about china and other dumping t-bills. yet magically china continues to buy t-bills. we laugh at pundits and talking heads who say things like "we lost 1 million jobs but the rate of job losses is slowing down compared to 2 million lost the month before", yet we feed off of foolish statements like "china has purchases 100 billion of US treasuries in april, a %10 decrease from the month prior" and do a jig proclaiming "the chinese are buying less treasuries, soon they will abandon t-bills!!!!" yet forget how many billions they continue to amass...

USD was due for a bounce, so we are getting it. how long it lasts who knows, all i know it any strength in gold stocks is suspect without gold advancing hard and fast forward. more talk about insurance companies and pension funds amassing gold is propaganda as well considering pension funds were brilliant market timers pilling into commodities last year right before they fell off a cliff or were tied up in risky SIV's, why would anyone consider their movements into the gold space bullish? wake up. who ever is buying gold for their pension fund is being sold the gold from someone else... why no news stories about who is selling such mass amounts of gold?

obsfucation.

It is my understanding GLD trades below physical gold because GLD has a annual cost (0.40%) to cover the management/storage etc fees. This fee is paid by selling a portion of the gold in the fund.

When GLD was introduced into the market, it traded at par with gold but each month the applicable fee is deducted resulting in a lower NAV.

The discount spread will continue to grow each month.

UK FTSE100 has a lot of Big International miners in it these days 11 I reckon with nearly as many Oil Companies.It is useful for getting a quick handle on commodity trends by having a quick look at how they are performing before the NYSE opens, I like to see how Randgold is trading as it is a big stock for a tell of the Gold miners.
Also the Financial sector has taken a knock as
" An Abu Dhabi sheikh sold his Barclays shares for a £1.45bn profit on Tuesday, igniting fears that the recent rally in banking stocks is over and that cash-rich investors will not support banks at current prices."
Although this story seems to have been removed from the headlines as the day has worn on.

...

AET - Downgraded at Credit Suisse to Underperform from Neutral. Increasing costs and lowering 2009 EPS guidance led to the ratings cut. Decreased target price to $23 from $24.

check out DO

Are you still watching porn on CNBC? It ends in Cramering.

has had the most run from march. What do you guys think of it? - green shoots will keep it going higher?

http://www.youtube.com/watch?v=ShF8E55pS9w

Obviously CNBC buried the snake....The snake story that is.

I hate Bernanke....Doesn't he sound like every word out of his mouth is a lie? His voice quivers when he's telling a particularly big whopper.

purchased 100 UUP @ 23.6867 with a hidden stop at 23.20

I bought some DZZ this morning. Limited downside here if you set your stops right.

I've been making out rather nice on the latest rally, and this seems like a good time and place to hedge.

Craig- That, along with 'Down by the River,' were killer songs to jam to. The first time I heard 'River' was at a high school concert in Pittsburgh- a bunch of talented seniors let loose on that one and brought down the house.

Les, check the 7 day RSI, its turning downwards. If there is a sell-off better to wait till the previous May lows & see how it reacts there.

Sure Shiva, but interested in opposing fundamental/technical macro-views.

Ok, so after testing my spam-prevention code last night, I just turned it on. What SHOULD happen is that new users comments are moderated by default. After they've posted a certain number of approved comments, they will be allowed to post comments without approval. For you guys who have been around a while, if you've posted more than the magic number of comments, it should give you permission to post without approval automatically.

So, in general, only relatively new users should even notice it. Hopefully this will raise the bar high enough that the spammers don't bother. Let me know if there are any problems. You can always use my contact form or just email me at jeff at billcara dot com if you have issues.

DR, COSA,

"Eschew obfuscation" — One of my favorite bumper stickers, and still good advice :—)

My 90-year-old next door neighbor always gives me his magazines when he's finished. The cover of the latest Kiplinger magazine, says in letters 1-1/4" high...

"CASH IN ON THE RECOVERY"

(in regards to precious metals miners) to look at for investing in. already have positions in the underlying metals and bigger miners but want to get into a few smaller miners? What do people like best here? thanks.

the honest trader

Okay, there's HB&B's pinata. Now the only question remaining is how low they'll take the market.

Good point. Always have a number to call to get you out of trades when the net is down.

Les- Time will tell. I just wanted to be clear as to my intent here as it is far different than any other trade I make. Like I've said before...1% for cash sitting in my brokerage account just doesn't do it for me.

These are all good points to follow.

The fly in the ointment with this latest iteration of the gold story may be the collapse of sovereign debt. As we saw a good deal of support for gold with the rise in the dollar during the commodities/stock collapse, a deflation in bond prices is sure to support the gold price. The gold/vs dollar trade is two iterations of trade ago.

Any dumping of the carry trade in U.S. bonds would be involuntary. The part I find hard to figure out is the lack of movement in the Japanese long term bonds interest rates. Generally, this would mean that any long term sell off in the sovereign bonds would lead to a massive rally in the world's reference currency.

My plan, should this selling spree develop into a clearly defined trend, is to short a section of the Cara-100 via TZA.

I received the following fatal error(see attached), however, I'm probably not pointing out an unknown by now.

my favorite little penny stock announced that its products are now in Costco.

...

Sorry guys, I accidentally put a bug back into the code when I made a minor change this morning. Hopefully things are working ok now.

Les,
"Did anyone look at the charts? Thoughts?"

I e-mailed the writer of that article yesterday asking for clarification on some items, and offering my opinion on others.

Here's a portion of what I wrote (between lines):
--------------------
When you state, "During the bearish paradigm, natural gas has repeatedly failed the 50 day moving average with penny-point precision (blue line):", that statement is slightly deceptive. UNG didn't penetrate the 50 dma, but $NATGAS did (Nov08, Mar09). UNG had some big tracking errors in 2007 - 2008, and in my opinion should not be used as a substitute for $natgas when doing technical analysis. Select the longest timeframe with the slider on stockchart.com's "Performance Chart" feature and you'll see what I mean (link below).

http://stockcharts.com/charts/performance/perf.html?$NATGAS,UNG
------------------
In a separate e-mail I sent the following (between lines):

-----------------------
"You stated, "Natural gas is in heavy decline in North America . . .".
What data point(s) are you using to come to this conclusion? I am aware that drilling rig count has been dropping significantly, and track it weekly at Baker Hughes. However, there is a lag between drilling cessation and production decline, as the recently drilled wells come on line. And there are still 710 rigs drilling, many shifting to the prolific shale gas plays. The last production report (March) shows a 2% increase over March, 2008.
http://in.reuters.com/article/oilRpt/idINN01549289...

You made no reference to the current storage situation, which combined with current production rates could easily result in storage being filled before the end of injection season. In the event that this becomes a serious possibility there could be a major downward price spike in late summer or early fall that should violate the 15-year trend line lows shown in your excellent chart. I think you owed it to your readers to at least have mentioned that possibility."
--------------------
I also pointed out that the ratio of $wtic to $natgas hit a high of about 17.5 last week. The ratio had been peaking at just over 15 in recent years. This could be adding some "pull" to NG prices as traders may tend to put on a spread trade long NG, short oil. That doesn't mean the spread can't widen to 20, or 25, just because it hasn't been there.

Having said that, I have been scaling into an NG position with GAS.to (Canadian equivalent to UNG, but tied to Alberta NGX index), and taking high single digit profits on rallies on part of my position. The position is currently over-hedged with HND.to, so I am net short.

As oil drops, and NG with it, I will add to the GAS.to position, and remove the HND.to hedge. When NG seems appropriately low, and I expect a decent rally I will switch the GAS.to to HNU.to.

I haven't used GAS.to before, and am not pleased with its tracking performance. It tends to move in spurts, then stall out despite NG prices still moving. It has under-performed UNG significantly this last week (currency exchange issue?). Also I believe the NAV is marked to the NGX price at 2:30 pm EST, so daily percentage movement cannot be directly compared to UNG which is marked at 4 pm. I'll tinker with GAS.to a little more, but suspect I will eventually go back to HNU.to if the tracking doesn't improve.

So did I and its already up to 14.40.

one of the annointed

Nasty gold breakdown, now down -12
(I think that was a breakdown of support)

If you have a job, don't bother opening that resume.

http://tinyurl.com/oem5qh

WASHINGTON (AP) -- Jobless rates rose in all the largest U.S. metropolitan areas for the fourth straight month in April, according to government data released Wednesday.

The Labor Department reported all 372 metropolitan areas tracked saw their jobless rates increase in April from a year earlier. Indiana's Elkhart-Goshen's rate jumped to 17.8 percent, up 12.7 percentage points from a year ago. The Indiana region, which posted the largest increase from last year, has been pounded by layoffs in the recreational vehicle industry.

The second-highest jump occurred in Bend, Ore. Its rate rose to 15.6 percent, up 9 percentage points from last year. The region of North Carolina's Hickory-Lenoir-Morganton saw its unemployment rate rise to 14.9 percent, a gain of 8.8 percentage points from last year.

The figures aren't seasonally adjusted, making month-to-month comparisons far more volatile.

El Centro, Calif., continued to claim the highest unemployment rate in the country -- 26.9 percent. The jobless rate there is notoriously high because there are so many unemployed seasonal agriculture workers.

Following close behind were Yuma, Ariz., with a jobless rate of 20.3 percent, Merced, Calif., at 18.3 percent and Yuba City, Calif., at 18.2 percent.

Will add @ $13.90

Thanks F57. That was my main concern in contemplating another covered call on UNG today - that economic fundamentals and overcapacity take out that support. That's a good enough reason not to trade today.

I don't know how Bill does it. First he called a spurt in gold price was coming, then he said the price would top between 980 to 1000. Gold reached around 990 a couple of times in pre-market trading recently. That is simply amazing.

Bill, I know you are expecting a significant pullback in the short term. What price level do you expect gold to pull back to?

Bought the crash small size set stop let's see.

Here in Edmonton, Alberta employment insurance (number of people newly unemployed) has tripled over the last year. However the unemployment rate is still very low, probably around 5%. But it's a start.

In terms of sentiment, I had dinner with my family this weekend and my brother (who does outsourced IT consulting for a couple of large US firms, but probably never picks up a business/investment paper) declared this recession a 'brief glitch'. My dad pretty much agreed. I feel like such an Eeyore in comparison :)

So it seems like the 'green shoots' propaganda is working on the masses. And if mass sentiment is a contrary indicator, we're all doomed ;)

With gold again approaching the psychological $1000 barrier, it was only a matter of time before London and NY teamed up to do their usual rain dance on gold. It was expected. As occurred at the previous two break-out attempts, the tag team activity starts as soon as Hong Kong closes. This is what exactly occurred today and is the signature of "official" intervention. What is KEY to watch is how gold bounces back from this raid. In the past, it took weeks and sometimes months to recover. If this turbulence passes in only a few days, gold will propel itself above $1000 in very short order.

Sorry but I disagree...

# Advertising by the National Association of Realtors in 2005 and 2006 after home prices had doubled in five years telling all Americans it was the best time to buy and that buying a house is always a great investment.
# Both liberal and conservative ideologue pundits skewing every issue in order to prove their pre-ordained position.
# Corporate titans like GE own TV networks and slanting the reporting of the news in a way that aligns with their corporate interests...

Followed you Billy selling a couple of $75 calls. GOLD has yet to fall hard through distribution like the other miners. If POG has failed support then I'll hold the calls until 50% gain.

will add at 13.70 and my DZZ is doing good in at 19.40 this morning

If you think GLD is having a tough day, look at SLV. GLD -1.9%, SLV -4.4%.

I observe that what is happening to silver looks similar to what happened on Feb 23, when SLV dropped $0.75 in one day on high volume after reaching the peak price of $14.50 the day before. After the day of the big drop, silver dropped for the next four days, culminating in a drop of $2.00 over that period.

SLV RSI then: 80
SLV RSI yesterday: 85

Is the same thing happening now?

FD: small position in CEF

Traded my rules, I played my setup, and got blown out within 15 minutes. Such is life.

I like UNG long term, but I won't look at again until it trades right around the 14.50 area or falls to the 13.50 area.

My uranium stock price re-entries are coming to me. I am not experienced at honing in on "sector rotation," but could this be an organized move away from energy related stocks?

...

i'm watching it, to my chagrin since i sold out yesterda (despite being very bullish on the company's prospects - I was going to buy in on another pullback). I wonder if the movement up, especially yesterday afternoon was due to some advance knowledge of the costco announcement this morning.

So what makes you think its going to double quickly?

I am watching much to my chagrin since I sold out yesterday despite being bullish on the company - I was planning on buying in again on a pullback.

Perhaps the movement up in the afternoon was due to someone having advance knowledge of the costco announcement.

So what makes you think the stock will double in the near future?

I'm curious as to what would cause the 6 month carts of the EUR/USD to almost exactly match up with the charts of TBT and XAU. If our(American) indexes track the exchange rate almost exactly, just how much American cash is currently invested? Wouldn't this mean that more (non dollar) investments are causing the waves and calling the shots?

So if the silver/gold ratio is true to form and we are seeing a peak in that measure, then perhaps three weeks from a now a bond rout might occur. All other markets seem to be co-ordinated in their peaks and declines today.

Could be true very soon:

http://seekingalpha.com/article/140852-congress-to...

One of the intriguing comments on the article:

There's a strong rumour out there that a large financial institution who works with the US govt to keep gold in check is heavily short gold at the COMEX and in big trouble because they won't be able to deliver on their contracts for June. Some contractors have called for delivery and the whole system is wobbling.

The US govt is bailing them out apparently by freeing up the IMF gold. Interesting story and interesting spin, no doubt the elites are shaking in their boots as China fills it coffers with real money.

Sound the klaxons and raise the “caution flags.” Commercial traders really piled on the short side. As gold rose $26.44, or 2.9%, COT reporting Tues/Tues, from $925.70 to $952.14, the COMEX commercials added a whopping 25,071 contracts (13.7%) to show a very high 208,136 contracts net short. This, as the open interest for gold rose 29,034 to 396,965 contracts open.

This past week saw the largest one-week increase in the net short positioning by the commercials since the December 16, 2008, report, when they clobbered the gold market with an increase of 28,239 net short contracts as gold was in the $850s. That action did result in a (modest) pullback for gold, but not really for all that long a time, by the way.

This is also the first time that the COMEX commercial net short positioning has been over 200,000 contracts since the infamous July Massacre, as BMO’s Donald Coxe dubbed it, in 2008

No surprise

It really shouldn’t surprise us that we are seeing a big increase in the commercial net short positioning now, because gold is rapidly nearing an obvious technical resistance zone and the commercial traders nearly always load up heavily net short at such times. Forget the reasons why for a moment, both legitimate and otherwise, it’s just a fact of life in the gold biz that the commercials always seem to stand in the way of gold to the best of their ability.

It has been a while since we have been at this kind of condition on the gold market, so it is probably a good time to repeat that we expect there will be colossal commercial net short positioning when gold finally does go vertical or parabolic to the upside. Although it has nearly always been the case that the very high commercial net short positioning has proved to be more of a bearish signal than not (thus the caution flags), at some point in time that condition will instead become like 100-octane aviation fuel for the ultimate gold rally engine.

In other words, when the Big Breakout (the day when gold powers on up aboveand well into four digits) finally arrives -- just as the last big short covering breakout did in 2005 as gold finally advanced through the $450s -- it will almost certainly be while the COMEX commercials are very, very strongly net short just as they were then, in 2005, with over 212,000 contracts net short and the open interest at 370,844.Some goodly portion of that commercial short selling is probably legitimate hedging. Hedging of offsetting positions owned or sold via derivatives in other markets. After all, the big short sellers are bullion banks and they and their clients hold or produce large physical positions. We know now, from the good work of really dedicated people that the very same bullion banks who hold the lion’s share of the commercial net short positioning in gold and silver are also direct agents of the U.S. central bank (the Federal Reserve) and the U.S. Treasury Department. We are talking about only three big U.S. banks at most, by the way, but they are the big dogs in the bullion kennel and one of them isuno perro grande for sure (JP Morgan Chase).It is not hard to imagine that our Uncle Sam takes offense when the price of gold might look “too high,” which could threaten confidence in the under-backed paper dollar. Such “management” of a global market for gold metal might seem essential to people in the business of printing paper “money” and keeping citizen’s confidence in it.

http://tinyurl.com/l9qeqc

UUP and TLT are up so commodity went down but IYR and FAS hasn’t cracked yet. They need to go down next.

MoKat,

Excellent objective analysis on PM market. Thanks for pointing it out. It sure is reassuring to know that a large portion of valuable market information published daily gets covered by the aggregate membership of this community.

I LOVE this one....

Increase the float to unimaginable levels BUT without increasing the ability of those who might be stupid enough to buy this trash from voting in their own interests. Increased float, not increased votes? SELL, SELL, SELL!!!

I have to correct myself. it' no longer "Citibank." Citigroup.

Is Opel about to turn Russian? That may seem farfetched, but it is the question that some commentators in Germany are asking following a deal struck on Friday that will see Russian bank Sberbank acquiring a 35 percent minority stake in the carmaker -- the number of shares equal to those being kept by General Motors and significantly more than the 20 percent of shares to be bought by Magna, the Austrian-Canadian auto parts company that had been promoted as the best bet to rescue Opel.

http://www.spiegel.de/international/business/0,151...

So far today, I am seeing a "bearish kicking" candlestick pattern for KGC, a high reliability bearish reversal pattern.

http://www.candlesticker.com/Cs49.asp

FD: no position, especially after reading this :)

I am wondering if the gold trade is crowded. It doesn't appear to be from what I read hear or am I mistaken.

Also, along your thesis, are there any forces of demand that could compete with New York, London, or other members of the Cartel? Would it be possible for China to be a spoiler? Would they want too with all there US bonds? Dr. Cosa does talk about this at times.

greenblatt,

Actually only the first paragraph is from the WSJ, the other two are just my opinion.

Grym

Forget natural gas; we've discovered huge new reservoirs of natural gas, which are both cheaper and easier to drill for than oil. Proven reserves of natural gas grew by 12% in 2007— the ninth straight year our proven gas reserves increased. (The data isn't available yet for 2008… but it's certain that reserves grew again, probably by double digits.) Over the last nine years, our proven natural gas reserves have increased by about 50%— the steepest gain since 1944 to 1953. It is hard to exaggerate how massive the gains in proven natural gas resources have been over the last few years. By end of 2008, the U.S. was producing 26 trillion cubic feet of natural gas per year, the most in the recorded 72-year history of natural gas production. So much for 'peak' oil.

Yet oil is cheap right now— about as cheap as it ever gets. That's the time to buy oil.

Imposter! There's nothing negative about Obama in that opinion. This must be a spammer!

Looking at the econoday list for tomorrow there is a lot not to mention Ben speaks again and EIA nat gas. (link to econoday is in the WIR)

Question, what is the difference between the bond "announcement" and the actual auction.

TIA

Sitting on an 12% return and thinking of adding here. Any thoughts? Dave?

“Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” Bernanke said in response to a question. “The Federal Reserve will not monetize the debt.”

how many really consider that this statement may actually be true?

imo, running up a huge bubble ensnaring nearly the whole of the world, cutting said bubble off at the knees and leveling a mass of idiotic consumers, buying all the good assets in the wake of the economic chaos that ensues and then, and ONLY then, revaluing the currency (by Congress) as a welcome reprieve to those same pleading consumers seems like a pretty good plan. after all, it worked beautifully during the Great Depression and, now, all the people who were there to see how it worked are gone.

can anyone explain why the Fed HAS to monetize the debt?

Right on schedule. 3:40pm

Thanks, Dave. I agree about the headwinds, and yes, I feel like the dollar is still headed south. So that must= wait.

Without a doubt i have my SPY.

2nd...had a similar trade FAZ @ 4.76 Off at 4.93...had similar thought as well, I'll take the few points and didn't want to hold overnight.

Nice CP, right at the low for the day. Hopefully, JUST, today. GL

Mark - the dollar heading NORTH is what will cause the market to head SOUTH. :)
And right now we've got a big dollar bounce going on, which may continue if the
reversal pattern that showed up today is confirmed, which will be the headwind for
TBT that I'm talking about.

Wow that SPY stuff really works. Perhaps its one of these self-fulfilling things.
Started by the PPT, everyone jumps on board, and now it happens every day,
rain or shine.

honesttrader - some candidates to check out:

Eastmain (ER.to) is a favorite of a few of us; 5 yrs. burn-rate in the bank; share-holder-friendly, penny-pinching management; canada only exploration; relationships/deals with a couple of seniors; follow JV model - which removes funding risk.

Riverside Resources (RRI.v) is micro-cap, led by a geologist's geologist; has an exploration deal with KGC for central Mexico, and a property in Arizona. I've met the CEO and believe he has integrity and knows something about biz as well as rocks; bare-bones, penny-pinching operation; has at least 1.5 yr's burn rate in the bank; also follows JV model.

Guyana Goldfields (GUY.to) founded by "Mr.Platinum" (friend of Bill's) just got WorldBank/IFC funding, which greatly reduces political risk; has apparently a great deposit; too pricey right now.

Fronteer Development (FRG) has properties in Nevada, Turkey, Uranium in Labrador, $165M in the bank; reporting good results; too pricey right now.

Minera Andes (MAI.to) Rob McEwan just took control; own half of a producing silver mine in Argentina; lots of prospective land; a massive copper deposit; cashed up.

Northern Star (NSM.v) I just met their VP corp finance, who seemed smart and hones; will write them up tomorrow; starting production (after delays) in Val d'Or, Quebec in world's 2nd most prolific mining area with 180M oz produced.

Rusoro (RML.v) just announced profitable Q1; producing something like 200K oz/yr, soon to reach 400K, with something like 6M oz M&I, AND have a shot at Venezuela's 30M+ ounces in Bolivar state; GFI owns 37%, BUT run by Russians, in Venezuela, perhaps good for a trade, but need to be watched like a Hawk; probably one of the most undervalued junior producers in the world - for obvious reasons!

DYODD, juniors are VOLATILE, and thinly traded; don't be the ranch on them; (consult Alex Elder's books for position sizing and risk control).

disclosure: in all the above cases, my money is where my mouth is ...

Dave- I understand your point. What I meant was long term the dollar is headed south and short term the market is headed south. Thus...hand sitting. Except for adding to my piggy bank when I can.

and the fact no one investigates is even more amazing. Wall st should just move to the boardwalk.

http://tinyurl.com/qmc853

3:41pm today.

Kaimu said:

"why don't you add up all the news stories about which central bank announced how many tons it is selling at the drop of a hat?
Whats REALLY missing is who is BUYING those hundred ton central bank sales ..."

answer:

other central banks or in the case of china clandestine state-sponsored entities. who else can buy so much gold en mass other than GLD?

my point being these purported news stories of gold purchases are only half the picture as there is a seller to these buyers. so i believe there is a fallacy of logic embedded in these stories about so and so buying gold simply because if it follows that someone buying gold is good for hte price, then someone selling gold should be bad for the price.

we know neither to be the case.

Really the only thing to explain that is that the price is of no interest, but the control of assets is.

The control of the bullion passes out of the public trust and ownership of the Central Bank into the waiting hands of the bullion banks, because they exert a certain fiduciary totalitarianism over the entire range of sovereign assets they deal in. Mostly because of derivatives.

Yet again, per usual, the market magicians engineer another run into the close. This seemingly daily action is probably starting to build on itself as whomever is doing it, is doing it, so traders are jumping on board this "trend" at the end of the day which amplifies the action into the close - just what the market magicians want I suppose. Plus, today we ripped commodities lower, dollar higher and limited equity damage with that last 15 minute jig. Well played. Funny thing is if we continuously sold off into the close CNBC and the media army would be talking about hedge fund manipulation and the need for the SEC to investigate, etc. But, since it is an up move - no reason to question the irregularity. CNBC is a puppet show.

the honest trader

To add:

approximately 60% of Cara 100 or about 110 at this time, if I counted correctly, are >RSI 7 level of 70 or green or in overbought territory.

The dollar needs to rally soon. I'm sick & tired of weak dollar policies.

Mark - I've been accumulating $US for two weeks, makes me nervous holding onto cash.

Even blind squirrels find acorns. Managed to catch G.to yesterday at $40.5 and sell at $42.2, reload today at $40.35. Holding overnight.
Sold SU, and remainder of HNU and half AGU .to yesterday reading between the lines of what Bill was saying.
Today, re-initiated trades in cnq.to. Often good for interday scalps of $1.00. More volatile than SU.to so plan to get back to trading it. Also I think they have a more diversified output and very good management. Any thoughts?
Also reinitiated small HNU.to at $6.25 (on the way down). Knife catching.

About Bernanke: Isn't the federal reserve the major cause of government borrowing and deficit spending? Why does he get away with chastising same now?

Pillzilla,

We must have the same watch list and seem to trade the same equities. I have been in and out of gild a few times this year. Nice channel in the 41.00 to 46.00 range. Good trade cogratulations. Did you ever buy VZ.
Bob

I may be able to create a "thread view". I'll look into it. I can set it up so people can switch ALL comments to a threaded view, but that looked like a feature that would cause a lot of confusion the way it was implemented. Thanks for the idea.

Can't go wrong with 6% yield in a company that just generates cash. I will certainly add if it goes lower. Do you trade PM as well.
Bob
I mean Phillip Morris not Precious metals.

Kaimu,

Your early recognition that the dollar would do what it has done combined with your ability to put the concept into action early over the previous decade places you in the ranks of the ace investor. One tiny point, perhaps not of disagreement...You state that you are "done" buying gold and I think that may be a potential error. I feel that as gold approaches and then exceeds say, 990 spot, and sees, say, a couple of closes above that level, all kinds of people are going to throw a ton of new money at the precious metals market. I would, if I were you and if your future income warrants it, consider buying more at least up to, say, $1150. I really think gold sees $1250 this year, and ultimately $2000 AT THE VERY LEAST... So what I'm saying is, if folks keep buying flowers, don't hesitate to participate in the break above a thousand. Even that price will soon seem low, and even that will be quite a buying opportunity indeed. And it will never ever come back below a thousand after that. It'll be off to the races. Either that or you could consider sending your future income to a MUTUAL FUND where they can IGNORE IT TO DEATH!

NYUgrad,

"...the fact no one investigates is even more amazing."

Who is left to investigate? They are all in on the deal — Fed, SEC, Congress, rating agencies, the media (well, most of it).

"I won't tell if you don't tell."

Bernanke's comment about "no monetizing" says it all. There is so little honesty these days people don't even blink. (I'll bet his nose grew another inch though.)

Those who have spoken out — Elizabeth Warren, the guy who blew the whistle on Madoff, David Walker — the reports come out and die on the vine.

Bill has called it a "Dance". By Jove, I think it's starting to sink in! Goes something like this, no?

http://www.youtube.com/watch?v=stHUypwr-V4

Dave- Thanks for the link. It mentions that the roll-forward dates for UNG are "a bit murkier." Do we in fact know over which days of the month they space out their purchases of futures (or in this case, mainly swaps), or are we left guessing?

I don't have any details on this. Swaps in other funds are basically agreements with a counterparty to provide particular performance, and presumably its up to the counterparty to hedge his swap commitment however he feels motivated to do so.

The 2x ETFs are basically the same thing - the contents of the funds are swaps with several different banks. They run off and hedge using futures, equities, options, or swaps with still more banks, etc. So instead of the fund managers doing the hedging themselves using futures, they pawn the job off on the banks using swaps. Presumably for a fee. And each bank handles hedging in their own way.

But given the size of the fund is 80% of the size of the natgas market itself - well, that's not good. :)

Sometimes things just stick in your head. It was the mid 1980's and I remember Lester Thurow interviewed on TV. He was and still is professor Of Economics at MIT. The thing I remember was his take on where we were headed. He warned that budget deficits were a slow cancer on the economy but trade deficits were a fast cancer. He seems to have been premature but are we now in that perfect storm?

No. ;)

I was afraid that would be the response 2nd ;)

Casey - The only thing you missed lately was Bill's call yesterday that so far is hitting the nail square on. I'll take a couple of those McLobsters with extra butter please... ;)

Yum, yum... Those guys in Boston have it too good.

2nd
We shouldn’t run away from their game. We can also play their game by using call and put and make money of it. I will be looking at it.
I wish we get some help from SIO2

9 times out of 10 wisdom is simply patience. :)

being patient enough to wait is a hard thing to do, especially when the whole system is design to distract us from truth...

thankfully we have both Bill and Jon Stewart

AMGN, GILD, BIIB all up today. $BTK has been going up for a few days. And oil services got hammered, all of them rolling over.

Since the issue has been raised in the discourse today:

From the Hearings on Monetary Policy and the State of the Economy
Committee on Financial Services, the U.S. House of Representatives
July 20, 2006, Washington, D.C.

MR. PAUL: Good afternoon, Chairman Bernanke.

I have a question dealing with the Working Group on Financial Markets. I want to learn more about that group and actually what authority they have and what they do. Could you tell me, as a member of that group, how often they meet and how often they take action; and have they done something recently? And are there reports sent out by this particular group?

MR. BERNANKE: Yes, Congressman. The President’s Working Group was convened
by the President, I believe, after the 1987 stock market crash. It meets irregularly, I would guess about four or five times a year, but I am not exactly sure. And its primary function is advisory, to prepare reports. I mentioned earlier that we have been asked to prepare a report on the terrorism risk insurance. So that is what we generally do.

MR. PAUL: In the media you will find articles that will claim that it is a lot more than an advisory group you know, if there is a stock market crash, that you literally have a lot of authority, you know, to impose restrictions on the market. And we are talking about many trillions of dollars slushing around in all the financial markets, and this involves Treasury and, of course, the Fed, as well as the SEC and the CFTC. So there is a lot of potential there.

And the reason this came to my attention was just recently there was an article that actually made a charge that out of this group came actions to interfere with the prices of General Motors stock. Have you read that, or do you know anything about that?

MR. BERNANKE: No, sir, I don’t.

MR. PAUL: Because they were charging that there was a problem with General Motors, and then there was a spike in GM’s stock prices.

But back to the issue of the meeting. You tell me it meets irregularly, but there are minutes kept, or are there reports made on this group?

MR. BERNANKE: I believe there are records kept by the staff. These are staff mostly from Treasury, but also from the other agencies.

MR. PAUL: And they would be available to us in the committee?

MR. BERNANKE: I don’t know. I am sorry, I don’t know.

heavy put action in sep/oct months as well, besides near months

It was "bought", more like combined, with New Gold. 1 share of NGD + .0001CD for each share of WGW. Happened about 2 weeks ago. GL

CP - Did anyone get the number off the bus that hit gold today? Wow, it looked great this morning just before London opened... Tough $US talk did a real number on it, didn't it?

The bus's number was the US Dollar. My opinion. The buck rallied strongly, which made gold and all the commodities (priced in dollars) go down. Stocks too, but to a lesser extent.

It might have had some help from the RSI at 80 too. I saw it happening in real time, I even had a sense the buck was close to the end of its run and ready to snap back, and I kinda had the sense that would hit gold, but did I short gold, or even better, silver? Sadly, no, I did not. All that information, and all I did was watch.

Morning?, Dave- I'll 2nd, 2nd's thank for the link. I don't want anyone to control 80% of my piggy bank. I might have someone who will know what the deal is.

Re- your program for sentiment. How are you setting the parameters as to what is bullish/bearish? No techno stuff, just the basics if you have time. TIA

Shiva- I agree, thus the cash on hand. I've scalped a few times but not often.

I have spent many months on my technicals trying to not only instill discipline, but try to develop my own system that removes emotion in trading also. I retired after 32 years working as an engineer, but this has been the hardest task I have ever undertaken!

My program tracks 40 diverse ETF’s every day using PSAR, 13dma, RSI(8), pivots, and some pre-selected ranges. I calculate my stops and entry points and follow them religiously. I have a fixed percentage of my funds I trade, the rest in CD’s and conservative mutual funds.

I do not think of myself as a day trader as my trades usually last several days or on occasion a week or so, but then I am testing my program so I spend a lot of time fixed like a zombie (LOL) to the StreetSmartPro screens. Everyday I think I learn more form my experiences and slowly but surely I do feel I am finally achieving some sense of real discipline…fingers crossed.

I am not into puts/calls and options..I tried to make my program simple and one dimensional as I am just not emotionally into such finer details. I do track many, many statistics to try to examine my performance on a impartial basis. For 2009 my trades have been positive 71% of the time and I am positive at the moment about 16% for 2009. Of course I learned a valuable lesson last week with VXX, left to eat lunch and when I returned I was nuked. LOL

Currently, I see rotation out of emerging markets, commodities, oil, and gold. My inverse funds look within striking range of offering buy signals, so I have placed 10% under today’s close limit orders for QID, EEV, and SMN just in case…

I sold FXA today on a sell signal and stopped out of MOO, then bought it back about $1.00 under my previous stop and ended up. When the Dow dropped over 120 pts I picked up SSO and QLD…that turned out well also.

Overnight I am holding LQD, EEB (very tight stop), IWM, MOO, SSO, QLD, IYR, and SMH. Monday was a fantastic day and I am hopeful the market will do well tomorrow and Friday before any serious weakness attacks my portfolio.

Sorry to be so long-winded, I do read the wonderful posts here everyday but do not post often. I am just sharing my experiences and believe that discipline and technicals can work very well if you can remove the emotion out of your trades.

MK

RE:>That to secure these rights, Governments are instituted among Men

That line of thinking is derived from Hobbes, who asserted in Leviathan that strong, centralised government was a necessity, given that the experience of people in society would otherwise be "short and brutish". It has been the mantra of the political class since. It is of course an ideal, not an inalienable truth.

Sammas I think Kaimu is imagining another society where we organise ourselves. I (shudder to think of a society as riddled with guns as America organising itself) will have to go through my university books, one of which contains url links of communities that have created their own money and organised their own economic development.

I cannot recall a great deal about these communities, except that the defining characteristic of the money is that it doesn't pay interest, it costs the bearer depreciation value, for a certain period that is defined (say every month) so there is zero benefit to hoarding and every benefit in circulating this money through the ongoing exchange of goods and services. That, I suspect is the sort of equalizing economic plain that Kaimu would like to see and would address a significant number of societal problems that we witness today.

ALOHA !!

So if you think your "unemployment checks" are guaranteed then look at this map. Go to your state to see how bad off your state unemployment dept is.

Link: http://tinyurl.com/p9o7ay

So 18 out of 53 states in America are having difficulties making their unemployment benefits. Since none of these states have printing presses that means the US government will have to print it for them! No wonder the US FED is so popular ...

As an example look at California. Their trust fund balance is $116.35mil and it has borrowed $816.25mil. Man! Then look at the percent of California unemployed who are actually receiving benefits ... 37%! Where are the other 63%?

If you think California is bad go look at New York!

Contrast the state of California with the state of Hawaii and you'll see one more reason I moved out of California.

WOW ... now look at the trust fund balance for the states of Washington and Oregon!

So who is going to pay for all these states that are broke or about to be broke?

How will that effect a AAA rating and their costs to borrow in the future or will S&P just look the other way!

Hey ... at some point we Americans will have to face up to our DEBTS and our EMPIRE. Plain and simple the EMPIRE spends too much!

Our elected leaders will not pre-announce or give us all a weeks notice that they will default. One day you will wake up and it will be done!

IT ALL WORKS UNTIL IT DOESN'T ...

Any relation to Silver Wheaton?

Funding itself with highly dilutory share offerings, both to outsiders and insiders. But appears to be finding its feet.

Loss this quarter attributed to advanced income tax payment as they changed over from Canadian dollars to American Peso.

http://www.goldwheaton.com/_resources/financial/GL...

Anyone following it?

US Dollar Index

The US Dollar Index reached its target of 79 and is now retracing to test the upper trend channel at 80. Upward breakout would signal a secondary reaction to test resistance at 83. Narrow consolidation above support at 78.50 would warn of another primary down-swing.

ALOHA !!

PAYDAY LOANS ... gone online.

Watch this video and see how a small company in MALTA is charging US borrowers 704% interest rates.

Link: http://tinyurl.com/qkh6v8

The standard answer from credit card companies is this "ACCESS TO CREDIT" as the reason why high interest rates are needed. The real reason the credit card companies need higher interest rates is because they dumped huge volumes of unsecured loans out onto the public without any consideration of RISK. If you had a pulse you could get a credit card! Now not only do these companies want the US TAXPAYERS to bail them out but they want to charge us 50% to do it!

I believe if we let American Express and other banks fail then I have no doubt that other more prudent lenders will fill the void. Hey, let the failures fail. Imagine what the human race would look like now if there was no survival of the fittest ... we'd have the speed and agility of Gary Coleman and the brains of Larry The Cable Guy! Hummmmmm .... IDOCRACY? I think it could apply to US Banks! IDIOBANKRACY!!

Unreal ... as you watch the video check out what your elected leaders are doing about the situation. They're all up for sale to the highest bidder! So much for the Home Of The Free And The Brave!

So the couple in the video would have been better off to run up their credit cards and then quit paying. But then what? Did you hear their solution after all else fails? The NANNY STATE! Hey, where is their family and community? Where's their farm?

The founding principle of any human society has always been that those who produce will take care of those who don't. But with the US government in the way ... those that produce in America are not allowed to succeed. Eventually those that produce will just leave ... I can get a better deal from Ghana or Panama to start a small business(ten years tax free)!

Is America really "wealthy" OPRAH?

Welcome to DEBT WORLD USA!

Ay-y-y-y ...

A play on food shortages and inflation.

http://www.financialsense.com/editorials/schmidt/2...

Mark - this morning the Reuters headlines say they have raised their target for oil. See below

The energy sector will be in the spotlight after Goldman Sachs (GS.N) raised its end of 2009 oil price forecast to $85 a barrel from $65 and introduced a new end of 2010 forecast of $95, the U.S. bank said in a research note.

Les,

You may already be aware of this, but...

• 48 of 50 states have must-issue carry permits for firearms.

• There have been no wild west type shootouts due to this.

• Cities (like Chicago) where a ban has been in force for decades have had no appreciable decline in shootings.

• In Great Britain, where increasingly stringent gun laws have been enacted the result has been an increasse in "hot burglaries" (armed robbers entering when homeowners are in) since they don't obey the law and expect no armed resistance.

Banning booze, drugs, books, "assault weapons" or whatever, only sounds like a solution. People's morals and ethics are the route to peace and justice — slow, imperfect, but more effective.

When this country was conceived, nearly every homeowner had guns. The alternative of only the government having them led to the Second Amendment.

I did not find your post "long-winded." Rather, I thought it was a very good summary of your style and methodology.

RBY
but not now