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"The thing is right now we are nowhere near bubble territory. If gold were $10,000 we’d be having a conversation about whether that was a bubble, but at the $1,800, $1,900 level that’s absolutely not the case. If you are going to ride this long-term trend at the very high levels that we are talking about, you are just going to have to bear this volatility...."
Jim Rickards
This certainly appears to be a 'risk off' scenario for the metals and the dollar, as statements from Europe rallied stocks and caused some money to flow back into riskier assets and out of safe havens.
But the action in the metals for the past few days has smacked of a determined effort by some large entities, quite possibly central banks, to drive the price down and keep it from breaking out and running higher over $2,000. The timing of a determined gold price action in light trade with the Swiss Bank intervention in the franc.
I suspect we may see additional interventions over the next few weeks, as suggested by the ECB today, and of course in conjunction with the FOMC meeting next week.
The central banks of the West appear increasingly desperate to avert a financial crisis, and the discoveries that proceed from market breaks such as this. And desperate people do desperate things, especially when it involves conflicts of interest and potential charges of malfeasance in office.
I had warned that with the FOMC and a Comex expiration next week we should brace for a rough time in the metals. That comes with the territory. We are having a correction in a bull market.
Stay away from leveraged and short term betting, and play the longer term fundamentals if you find this sort of volatility to be unpalatable.
Gold-Backed Dollar Puts Fair Value at $10,000 Per Ounce - Bloomberg
As a reminder, tomorrow is a 'quad witching' day for equities in the US.
Next week there is a two day FOMC meeting, and the Comex will have an option expiration.
Volumes were light on the NYSE today with under a billion shares traded.
I found this story on the $2 Billion trading loss at UBS to be interesting. I was going to write something in this vein, but he says it quite well. Rogue Trader My Ass - Matt Taibbi
The Banks must be restrained...
Today was a 'risk off' day, and the safe havens were scorned in favor of riskier red meat, namely stocks.
The meme on the desks was that the markets had priced in a disorderly Greek default, but now expectations are set for an orderly Greek default, hence the rally. The Street is still expecting a default, but one with a tighter blast perimiter, namely confined to continental Europe, with all the best people in their shelters and unscathed.
Its like beating EPS by a penny, after having guided lower in the prior quarter.
Personally it looked like an excuse for a 'technical trade,' that is, an opportunity to squeeze the speculative shorts.
VIX remains elevated.
As a reminder, I do not accept any money or gratuities for this Cafe which at least for now is self-sufficient. The markets have been kind through the past ten years, and we keep our needs simple.
If you feel that you wish to do something for benefits received, a noble emotion to be sure, I would ask that you 'pay it forward,' that is, be kind and loving to someone who may not have done anything to deserve it.
If you wish to send money, a worthy charitable interest for many years has been St. Francis Friends of the Poor in New York City, which does good work with the homeless, and is always in need of funds since the homeless and the afflicted are numerous.
But please don't send anything to me. I am very grateful for the thought. If you really wish to do something for me personally that I will value, remember me in your prayers. And if you ordinarily don't pray, all the better if you put a little effort to it, and get the kinks out of your knees. Looking up to something greater than yourself may do you good. lol.
Remember me, as I do you and yours, every day.
There are many in need. When someone says, 'Why doesn't God do something about it?' I think, 'He did. He sent you. Why do you think you are here?'
So there is always something to do, even if it is a small thing, little and unnoticed by the world. You have not been created in vain. You have your work in this life, you have a calling that no other person can perform in the same way as you.
Have a pleasant evening.
The buzzword for today is orderly, as in an orderly default for Greece, which is what the Street put forward as a means to squeeze the short interest and rally stocks today, although they faded a little bit into the close.
The US economy is slumping and the political leadership is dysfunctionally obsessed with campaign contributions, so optimism appears to be a bit misplaced.
