Gold Driving Higher: Spec Flambé

What do you get when you add the volatile sauce of a 'flight to safety' to the hot pan of a record net short in the large and small speculators?

A short squeeze, also known as speculator flambé.

They probably caught a lot of the other peoples' money crowd as well, momentum players and the managed mayhem merchants.

But don't blame the poor beleagured goldbugs for this one.  They are just glad for a break from the pounding they have been taking.

It requires some 'juice' to get the minions in the media and the pros on the exchanges to all dance to the same tune, and lure the specs in for 'Pee Wee's Big Adventure' with their Big Bad Short, not only on the metals, but the miners, the ETFs, yada yada.

Finger lickin' good.

A lot of cool money, and a lot of powerful connections.   The grifters giveth to themselves, and the grifters taketh away, from everyone else.

Official reports will no doubt cite an excess of animal spirits in the bearish outlook that took them to an excess, and the markets, in their glorious efficiency, were merely reverting to the mean.

That might be plausible except that it took a lot of energy to drive the futures prices as low as they had gone, starting with that $50 overnight mugging in the quiet early hours of the gold markes few weeks ago.   No one sees Mackie Messer, and no one knows.

Especially with China dragging gold in by the tonne.  About 302 of them in July according to the second chart below.  Nothing to see there, move along.

No one wants a pet rock, until you have to provide the one you sold but didn't have.

And lets not forget about silver.   That's in chart three.  Plenty of tinder for a short squeeze there.

Or a bonfire of the inanities.

Let's see how far it goes.  Is it just a flash in the pan, or the first act in something different.

Must be nearly time to tighten up those margin requirements.

Gold Daily and Silver Weekly Charts - Flight To Safety - One More Silver Dollar

Gold and silver got legs today in what was clearly a 'flight to safety' led by gold to the upside.

The US dollar sold off, in a bit of a twist from its usual role as a haven, and helped the price of the gold-dollar cross.

Pet rocks. Who would have thought it?

The metals have a distance to go yet, as is clear from the charts, before they clear the bearish shoals into more bullish waters.

There was no delivery action yesterday at The Bucket Shop® .  What a surprise.

And there was little enough activity in their 'stockpiles of bullion' as noted below in the reports.

There is still room for caution as the paper markets have not suddenly become transparent or honest, or tied closely to the physical supply and demand markets in the East.

And this bear market has taken its toll, along with the steady drumbeat of drivel from the usual sources.   It is sad that so many who had ever dared to see the obvious have been pushed into despair and silent obscurity and given up.

But some are bound to keep on riding.   And the road goes on forever.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - September Song

"...The broken wall, the burning roof and tower,
And Agamemnon dead."

W. B. Yeats, Leda and the Swan

North and South Korea were exchanging live artillery rounds over their troubled border today.

And US equities were in a Daedalian swoon, falling through support lines on the charts as if they were merely insubstantial constructs.

Surprisingly to some, so far this is just a stiff rinse, certainly to be expected to clear the floor after this choppy back and forth action.  What else is there to do after the long run up for the past few years on the back of the policy errors and malinvestments of the Banking system and their Fed.

The next moves if they go lower still will be much more significant.  And we will have to wait for that.

This is where charts prove helpful.  You can clearly see the big, big support on the SP futures chart below at about 2030.  Even if we should gap lower tomorrow, it only really counts if we break that support and stick it on the weekly close, and fail to recover that support next week.

There is a similar position on the NDX futures chart, which is the key confirmation factor since the Nas has led the way up with a narrowing phalanx of big tech names that provided a fairway for the momentum players.  The key support there is at 4340, about another 30 points lower.

At some point I expect the Fed to jawbone the markets in some manner, with the designated stooge of the day saying something essentially meaningless, but perhaps sufficient to 'whistle up a wind' in the windiness of the markets which they have blown into being.

If we break down further still, it may be a long, long time until September, and the stormy season in which the denizens of market crashes past tend to dwell.  The deadliest pattern is a market break and then a rally back up that fails to make a new high.   And then when it falls, enter the abyss.

So I would be quite careful in chasing anything here, up or down.   Our markets are like the words of our politicians and economists:  it is hard to be too cynical or too skeptical about their substance and veracity.

But if we should see a more serious break in the markets, and trouble and fear in the economy, then what rough beast, its hour come round at last, may slouch towards the November elections next year to be born?

Have a pleasant evening.