Here is a message to some trading friends this morning with gold around support at 1710.
They normally hit the miners hard before a smackdown in gold and silver. They did this on Friday. But today we saw the opposite happening, at least this morning. Earlier I had sent out a message saying, 'I think the bottom is in.'
Denver Dave and I had come to the same conclusion after some email exchanges and a search of the news.
See Hecla?
They are buying the miners while smacking down bullion.
And now it reverses.
I bought it pretty hard bullion and some miners.
I hedged the stocks with index shorts keyed on the SP.
They started buying some of the miners, especially some of the silver miners, in numbers and aggressively even while they were still smacking down gold and silver spot prices to the lows.
Those lows were an almost perfect hit on the accumulation-distribution trend on my chart.
I think this type of price action gives them the opportunity to buy some decent positions in the higher beta miners without trading against themselves in the market. The negative bullion price action keeps most of the public buyers on the sidelines.
It is not illegal to buy one thing and sell another. I am running long bullion/miners and short the SP at the same time.
But it is not allowed to manipulate prices in commodities on the futures markets to game the stocks. And today's action in the precious metals futures was especially heavy handed in smacking price and running stops. Is anyone trading the futures markets anymore except for insiders? Probably not so many directly, but through things like ETFs and some funds, perhaps more than they realize.
I am not sure we are out of this nonsense yet because of so many guys standing for delivery this month, and the negotiations that are always going on in cash to buy out the longs w/o taking delivery.
But these sorts of moves tend to set up bigger moves higher. Barring the disintegration of Europe in the short term of course.
Speaking of heavy handed, is Standard and Poors working off some sort of community service sentence? Do they have to wear orange jumpsuits while issuing negative statements and downgrades on foreign sovereign debt in high coincidence with US policy measures?
The pressure they are putting on the Europeans to back up Timmy's policy advice (thinly veiled directives) to them is a bit much. I understand the advice is to cut their rate 50 bp or more tout de suite to stop making Ben look bad and smooth the way for the US QE3 without knocking the dollar off its pedestal. And of course they must act to bail out the TBTF banks.
Is Tim going to be appointed financial Viceroy of Europe by the Banks? Would that be an IMF or Treasury title?
One can only look on in wonder these days.
P.S. I have had no position in Hecla today at all. I watch it and a few others as bellwethers.
