I have not posted much since I stopped out of all long positions a week or so ago. Lesson ONE is always be willing to take a loss and I am glad I did. I took the view that with a presidential election coming up we would see inflation accelerate. MF Global has been the tip of the iceberg in the other direction in that it has undermined investor confidence in all things Wall Street. People just do not trust the banks, the government, the exchanges and paper of any type ( even stocks you own and have paid for are not yours if a broker is holding the certificates). So the public are packing up their bags and going home. If there was one thing that was supposed to be sacred it was that if you bought and paid for something it belonged to you - now we see things are different http://www.businessinsider.com/james-koutoulas-jp-morgans-involvement-in-mf-global-is-suspicious-2011-12 and the natural reaction is to get out of Dodge as fast as possible - what we are currently seeing is people re-assessing their investment strategies and that takes time and this may be what is holding gold and silver down as much as anything. At some point gold and silver are a buy but only as physical metals and only away from the banking centers - it is possible that mining stocks will be a way to go but for now we have governments "juicing' up the value of worthless paper and the public cashing in what chips they have and we may well see a crash in everything.
The continued lack of trust in paper continues while those that can usse this opportunity to switch to physical metals. Silver Eagles are trading at anything between a $ 3.50 - $ 4.50 premium over spot but I have been buying here.
12 December 2011 Gold Daily and Silver Weekly Charts - Bear Raids and Perception Management
The lease rates indicate that someone dumped physical gold in a non-profit seeking manner into the gold-paper markets last week. I wonder who that could be. I suspect it helped fuel the bear raid on gold today.
Bloomberg TV was having an all day anti-gold festival, so I will surmise that something gold-friendly is coming up in the next few weeks.
Perverse logic perhaps. But it is what it is.
Gold is in a triangle and given that we have an FOMC day tomorrow I will not be surprised to see another determined bear raid.
Although Silver was hit, it seemed remarkably resilient compared to gold.
Zynga IPO will be out this week along with online fashion store Michael Kors. Perhaps you can take your US paper dollars, which were stronger today on euro weakness, and buy some shares in this zynga based virtual farming economy. Maybe they can send some virtual crops over the homeless victims of the increasingly virtual US ponzi economy.
Within a few minutes of opening gold dropped $ 20 in Asia - on no volume. As apart of the double counting of warehouse receipts the banks need gold and silver down to flush out all the longs. This is a good report to read. As the markets drop I will be buying physical gold and silver.
It is quite possible that holder of AGQ, SLV, GLD and the other leverged ETF's will dump their holdings and convert to physica to get away from the manipulation. Sprott's PSLV is trading at around a 17.5% premium to spot and that is nearer to being the true price of silver. AGQ may rally from here but I am liquidating the position at a loss - there is no point holding paper that you know is worthless.