The Working Class

Gold and SP 500 December Futures Daily Charts

Net Asset Value of Certain Precious Metal Trusts and Funds

We had some very unexpected news today.

One tries to prepare for anything, hope for the best and prepare for the worst, but sometimes when we least expect it, are completely surprised by joy.

Thanks be to God and thank you for your good encouragement and especially your prayers.

Gold Daily and Silver Weekly Charts

SP Daily Chart: US Equity Rally Reverses on SEC Probe of JPM and Magnetar CDO Issuance

The US equity market reversed its rally with the better than expected ISM number on news that JPM is under SEC investigation as reported by Bloomberg.

It appears as though JPM put together a CDO with Magnetar, which helped to select some of the components. While Magnetar bought some of the CDO, it also invested a significant amount in CDS that bet on the failure of the CDO.

The implication is that JPM and Magnetar did some of the same things that Goldman and Paulson had done.

This reversed the rally and took the financials down.

Personally I think US equities are still in their trading range with 1168 as a lower bound and 1194 as the upper bound. The wiseguys are doing a daily wash and rinse on the specs. Volumes are thin and positions are almost without any substantial foundation with the average holding time of most positions under a minute. This is a market that seems primed and ready for a flash crash, but it requires some 'trigger event' to materialize. So timing a trading decline is a bit of a fool's game in the short time.

There are three events that could affect US equities this week.

First is the national midterm election tomorrow, in which the Republicans are widely expected to take control of the House of Representatives. The Senate is a much less certain outcome. Most likely there will be 'gridlock' in the US for the next two years with power more evenly balanced between Republicans and Democrats. Any divergence from expectations in the elections results could provide some momentum out of this trading range.

The next event will be the FOMC decision on Wednesday with wide expectations of a $500 billion commitment to quantitative easing. A significant deviations from this number could provoke a market reaction.

And finally back to the real economy there will be a Non-Farm Payrolls report on Friday that will be closely watched. Consensus is for 60,000 jobs to be added.

In the background there is the 'cargo cult' of new terrorist threats permeating the news with the revelation of disguised bomb packages originating in Yemen.

This market is so artificial that it is difficult to forecast just what it will do that is out of trend.

Chart added at 4:20 PM NY Time

Sprott Physical Silver Trust

Here is a link for the Sprott Physical Silver Trust

I will be tracking the progress of their silver accumulation and will be working them into my Net Asset Valuation calculations as time permits this week.

I do own some shares which I bought in the IPO. I may add later if the markets indicate this. I would like to build a long term position but will  'make haste slowly' as the Romans said (Festina lente).

This is a busy week for me in a non-market related matter. For those of you who have offered their prayerful support and encouragement I thank you from the bottom of my heart.

Things can be replaced. People can't.

Gold Daily and Silver Weekly Charts

The charts seem to be fairly obvious. Gold hit the pivot point for a 'significant decline' and rallied sharply. Silver is just a juggernaut, using the top of the old trend channel now as support.

Unless and until US equities crash, I would expect both gold and silver to continue to rally. The reasons are obvious to anyone who is following the markets and has even a basic understanding of money and economics. These are not charts so much as economic IQ tests.

People who lost money trading silver futures or options on the New York Commodity Exchange since 2008 are eligible to join the class-action price-manipulation lawsuit brought this week against J.P. Morgan Chase & Co. and HSBC Bank in U.S. District Court for the Southern District of New York. To express interest in becoming a member of the class of plaintiffs, contact:

Kellie Lerner
Labaton Sucharow LLP
140 Broadway
New York, NY 10005
Telephone: 212-907-0700
Fax: 212-818-0477
KLerner@labaton.com

SP 500 December Futures Daily Chart

If a close look at this chart suggests to you that someone is inflating US financial asset prices you might very well be right.

Except for hedges and scalps I would not even consider shorting this market until it breaks the obvious trendline. I'd be willing to miss the first 10 percent of a down move to catch the meat of it, and not exhaust myself trying to anticipate a correction. Only amateurs make calls and chase 'bragging rights.'

At the same time the 200 week moving average has proven to be formidable resistance in the last rally, and so I would not feel comfortable taking determined longs here either. The average holding time of a position in this market is literally less than a minute, so the potential for another 'flash crash' seems rather high.

Sprott Physical Silver Trust: PSLV To Debut at 500 Million Dollars

Keep an eye on the Sprott Physical Silver Trust which will begin trading this week as symbol PSLV.

Reuters
Sprott silver trust IPO to raise $500 million
Fri Oct 29, 2010 8:34am EDT

TORONTO Oct 29 (Reuters) - Sprott Inc, the Canadian fund manager specializing in resource investments, said on Friday that it planned to raise $500 million in the initial public offering of the Sprott Physical Silver Trust.

The offering will consist of 50 million units priced at $10 each.

The trust, which will be managed by Sprott Asset Management, will invest and hold nearly all its assets in silver bullion.

It will be listed on the NYSE Arca and the Toronto Stock Exchange under the symbols "PSLV" and "PHS.U," respectively.

The offering was made simultaneously in the United States and Canada through a syndicate of underwriters led by Morgan Stanley (MS.N) and RBC Capital Markets (RY.TO).

As part of the offering, the underwriters have been granted an overallotment option to purchase up to an additional 7,500,000 units at $10 each.

The Canadian syndicate includes TD Securities Inc (TD.TO), Canaccord Genuity Corp, National Bank Financial Inc (NA.TO), BMO Capital Markets (BMO.TO), HSBC Securities (Canada) Inc, GMP Securities LP, Wellington West Capital Markets Inc, and Mackie Research Capital Corp.

Sprott did an initial public offering of the Sprott Physical Gold Trust in March, which raised $400 million. The value of that trust crossed the $1 billion mark at the end of last month as gold prices soared.