Gold, Silver, Miners, and Big Daddy

Gold Daily

Gold is on the verge of breaking out of the handle of the cup and handle formation. A pullback and consolidation of the recent gains would not be unusual. However it will be most interesting if US stocks correct, and there is a flight to safety in gold. Let's see what happens.



Mining Sector (HUI)

The miners have not yet confirmed the break out in silver. This may be because of the thinness and uncertainty accompanying the rally in US equities, despite the impressive levels reached thus far.



Silver Weekly

Silver is a juggernaut having broken out of its big wedge, targeting 22. If the stock market corrects we should see a pullback in silver, but it may be short lived.

I cannot help but notice that the commodities in general have been rallying since the big banks started closing their proprietary trading desks.



US Ten and Thirty Year Treasuries

Since we said they looked toppy, the bonds have been in a swoon.

This will reverse if the stock market rally abates. Even with the low volumes they are shoving a lot of portfolio allocation around the plate, looking to hand off the hot potato in stocks to mom and pop, at the top.

US Bond: Our Hearts Belong to Big Daddy

As crowded trades go this flight to safety into the long end of the curve and the 30 Year Bond, nicknamed Big Daddy by the bond traders, is about as jammed up as it gets. It will be interesting to see what happens with the equity markets over the next two to three months given this measure of fear and uncertainty.



30 Year Treasury Weekly Chart

SP Daily Chart Into End of Second Quarter: Not With a Bang But a Whimper

US equities went out of the second quarter on new lows.

There was a surprising amount of tape painting in individual stocks, that was almost funny at times. It is hard to hide behind the tape in these thin markets. I suppose that if I were fund manager carrying a large short position, I might want to artificially drive the price down to make things look better as I closed my books on the quarter.

The junior miners in particular are a real hoot to watch with their wide spreads, large short interests, openly aggressive naked short selling, and thin volumes. It takes a special kind of masochism to trade anything on the pink sheets, much less Canadian listed stocks.

Unemployment report out tomorrow, after which time the adults will be heading out to the Hamptons for the long holiday weekend, leaving the underclass of traders in charge with strict instructions and most likely a short leash.

The Non-Farm Payrolls report will be out on Friday, July 2. The consensus is for a loss of 100,000 jobs. The ADP report came in this week with a gain of 13,000 jobs, which was well below expectations of 61,000. A recovery in the US economy is an illusion.

It is typical Wall Street arrogance when they say that 'no one will be there to even hear the number, much less trade it.' As I recall, Asia and Europe will be open for business on Friday and Monday. But some might imagine them to be junior traders, taking their orders and queues from New York and London as well.



I am still running the long gold / short stocks hedge, with the add of a slight short in the long Bond which is probably anticapatory of a decline in July unless we get another leg down in equities that has legs.