25 October 2011

Gold Has a Go to the Upside as Stocks Slump on Euro Fears - Flight From Fraud

"The desire of gold is not for gold. It is for the means of freedom and knowledge."

Ben Davies

Gold and silver diverged from US equities today as fresh jitters over the Euro bailout put a damper on stocks.

Keep the $45+ rally in context of the current trading range however as is shown below. It has not yet broken out.

If you are trading with Level II market view in something like the miners or a less liquid ETF, you may place a bid or ask of a thousand shares or more, and it quickly finds a lot of 'friends' of a lesser amount jumping in front of it. And when you place a sell into a group of bids, a tiny amount may be filled, but then the bids disappear and drop lower.

These are thin, volatile markets, permeated by fraud, deception, and front-running of everything from global headlines down to individual bids. The talking heads and Wall Street demimonde are spinning stories and alternatively feeding hysteria and euphoria, greed and fear, under cover of the lax regulation and co-opted public policy.

The US financial system has gone predatory. The political system has given itself over to the corporate interests. Nothing could be more clear in the regressive tax proposals coming out of the Republican debates, and the Democrats are feeding greedily at the same trough of foul campaign funds and special privileges.

If you are a daytrader and can make money playing the momentum in this then good for you. But I think that most people who attempt to trade these markets will make very little on net, and are more likely to lose money. Better to stay with the longer term trends based on fundamentals. This will get worse before it gets better.