As I have talked about - JPM et al need to keep a lid on Gold and Silver and today they did. Gold dropped $ 80 and Silver $ 2.50 in a matter of minutes. This is pure and illegal manipulation that would appear to be approved by the regulators and FED. When ever they do this they knock prices to the new floor that is being set by China. China controls the floor because they buy physicals not paper and these downward manipulations end badly because we ( the US ) end up exporting all our physical metals to Asia. The Chinese see us debase our currency and protect themselves by setting up a long term corner on Gold, Silver and to a degree Copper. They encourage their citizens to buy metals - our government doesn't . Instead it wants us to hold worthless paper. If ever there was proof of a dishonest financial system it is these sanctioned manipulations that will fail in the end. If you own Gold or Silver and have it in your posession these fluctuations don't matter as much. Stocks haven't dropped and they need Gold and Silver even lower so that they can cover millions of ounces of shorts that they put on over the last week or two - so I think they have to break stocks. Who knows what will happen ? - except a few people at the center of power who have access to unlimited government money for their own gain.
The Gold/Silver ratio has narrowed from around 56:1 a few weeks ago to 48:1. In December there was a chance of a squeeze that was interrupted by the MF Global failure. Many people believe one reasons MF was allowed to fail is that it handed over around a Million ounces of client silver to JP Morgan as well as cash held by clients who intended to take delivery of silver on Comex. This time around it looks as if the longs are set to try again. It wouldn't surprise me if "they" ( if the US Government dba JP Morgan and HSBC ) take the stock market down and silver in the process to disrupt a March silver squeeze. One of the main differences between Gold and Silver is that Central Banks own a lot of gold - so they have the means to supress prices. India and China own silver but the rest of the world Central Banks do not and so it isn't as easy for them to play games.
Durable Goods - way down. Housing starts - way down. Stocks drop and guess what someone ( nod nod wink wink ) comes in as a buyer. This won't end well.
This is one of the best technical ( chart) reports. I still have FAZ. http://pretzelcharts.blogspot.com/
Todays stock trading volume was less than 50% of its 2004-2007 average. Updays versus downdays now exceed all laws of gravity and in the meantime the public is gradually selling out. To me this is a market controlled by the government with a view to holding up 401 K positions so that the public can feel at ease and the President can get re-elected. I have held my FAZ even though it doesn't usually pay to fade the unlimited sums of money that the government can print to hold up prices - infact at some point stocks will go up because the government has printed so much money as a function of their inflated assets. Gold and silver are ready to pop but that probably means a big bear raid by the banks on Monday or Tuesday - the next drop may well be the last buying opportunity.
I am selling AGQ here at a nice profit. I am hoping the Cartel, as some people call it, will try to raid the market to shake out some of the Option and March delivery longs. I am leaving FAZ on for now.
I liked the way this trade worked today. If we have a big drop in stocks I think FAZ will do well and while AGQ will drop it will drop less. On the other side if metals do well stocks may hold but will under perform - so I have this on as a paired trade.