Gold Daily and Silver Weekly Charts

Retail Sales had stocks on the move higher while gold saw a bit of a pullback after its run higher.

Silver was relatively strong as it continues to play 'catch up' for the year.

Tomorrow we will see the PPI numbers.

Someone presented an argument that the price of gold went down so that the wiseguys could make better buys and ride it back up.

I think this is quite likely, but it is not the only or even the primary reason.  The wiseguys needed some sort of sanction to engage in such a profound market operation.  And making money on the side which they jigger prices goes without saying as a perk.    Few things in life are due to simply one thing or another, but have a buffet of motivations as they have a number of participants with their own motivations.

Much of this back and forth action in trend channels is the 'wax on, wax off' phenomenon, and the point of the Dr. Evil strategy is to disrupt a market to make money on both sides of that gimmickry.

But to disrupt the entire world market in a very visible way requires a bit more latitude than the average trading desk can provide. And understanding this helps one to interpret the data with a bit more insight. There is little doubt in my mind that some very big players found themselves 'staring into the abyss' when the Bundesbank asked for the return of the German people's gold. And this has long term implications. That the market operators were able to use this information for their own gains goes without saying. They are not charitable institutions. They always get to wet their beaks in the pool of official corruption.

Make of this rather obvious comment on the markets what you will. 

SP 500 and NDX Futures Daily Charts - Complacency

Typical summer day trading in stocks with light volume and plenty of games.

Carl Icahn took a largish position in AAPL, and then boosted the price of the stock by announcing he had taken a big position in APPL. Carl would like to see AAPL spur the growth of their stock price by using more of their cash to buy back shares.

Gold and Silver Performance From the Recent Bottom and Year To Date

I wanted to take a look at the relative performance of gold and silver from the bottom of the precious metals market which seems to have occurred around the end of June.

As you can see in the first chart, silver has recently outperformed gold, rising a little over 16% with gold rising 11%.

However if one looks at the year-to-date chart, gold is still outperforming silver by quite a bit, since it did not drop nearly as far in value.

Does this mean that one is better than the other? No, it just means that they are different, that they have different risk factors. Silver is much more volatile than gold, with bigger upside recoveries, but commensurately larger losses on price declines.

One needs to take this into account for your portfolio and your investment objectives. I tend to 'blend' the two metals in my overall portfolio, and hedge them against declines a bit differently.

Silver has a greater industrial usage than gold, which is more of a monetary play. Silver is also more favoured by a different category of investors because of its lower unit price, and greater storage and handling costs for the same monetary amounts.

For purely short term trading purposes silver is the 'hotter play' given its gearing to volatility, provided one is capable of 'timing the market.' 

Sometimes it takes on the nature of a religious debate, silver vs. gold, from those who have bought into the concept of precious metals.  Again, I think both have their functions and attractions, and their particular place in constructing a portfolio.   Most non-professionals don't 'get this' and that is what makes the markets interesting.

To put it in le mode de cuisine, gold is the meat, and silver is the sauce and the spice.  Too much of either can spoil the outcome. 

But most often the particular mix is a matter of taste.

Gold Daily and Silver Weekly Charts - Stand and Deliver

The metals popped nicely today, even while stocks were wallowing in a low volume slump because of fresh evidence of a lack of a global recovery out of Japan.

The area just above and through 1360 will be key resistance as should be evident on the gold chart.

I have included the economic calendar below. Each piece of data will help to sway traders with regard to the big 'taper debate.'

SP 500 and NDX Futures Daily Charts - Dog Days

Weak Japanese GDP had the markets back on their heels at the open, but there was a low volume, gradual rise through the day.

More economic news this week may stimulate some real action.

Gold Daily and Silver Weekly Charts - Slouching Through August Delivery

There was intraday commentary on the gold inventory situation and Bullion Heading East here.

I doubt that we are in a normal market correction or even a bear market in the precious metals.  Instead what we are seeing is tied intimately with the inability to repatriate Germany's sovereign gold from its custodial holders, without a seven year wait.

The drops in COMEX registered gold suggest higher prices and a trend change is probably coming. I documented the latest big drop in inventory late last night here.

The German Federal Elections are coming next month on 22 September.  Just in time for Oktoberfest!  Zicke zacke, zicke zacke, hoi hoi hoi!

Peer Steinbrück, the Bundesministerium der Finanzen, or BMF, is running against Angela Merkel.  I think we have a number of would be "BMF's" running around Wall Street, these past ten years.

Remember Herr Steinbrück?  He has been in the café before, as we show in the old cartoon below, with some recent topical adjustments.

I wonder if the question of Germany's missing gold will be raised.

Let's see what happens.  Only fifteen or so days of August delivery to go, excluding weekends.

Speaking of which, have a pleasant weekend.  See you Sunday evening.

Dramatic Depiction of a Certain Bullion Bank's Highly Anticipated August Gold Delivery Victory Tour from Zurich to Munich, where they have used the proceeds of their commodity trading to achieve the rentier's dream: a corner on the Toiletten market at the famed München Oktoberfest.

Vielen Dank an alle dem deutschen Volk für das Gold!