Wednesday, August 31, 2011
The madness ends at some point, possibly friday.
On a wave of confidence, rumors, and hope, we are seeing another rally. Can't really put my finger on any positive data driving it.... but attitudes are still positive. Rallys on hope usually come to an end when some of the important indicators come out, so jobs info on friday might derail it.
Friday, August 26, 2011
Called it, bernanke punts...
Bernanke punts, puts off any QE3 announcements to sep. 20th, where he will likely punt again. In the knee jerk reaction phase in the markets right now, we had a flash crash followed by what is now becoming a flash boom. I don't think it will take more than a week for everyone to eventually decide that this is bearish news, and the ensuing plunge will occur.
Thursday, August 25, 2011
Everything going to fall.
I'm going to stack up on some puts tomorrow morning as soon as I can, I believe we are looking at a tank tomorrow. It is my belief that trouble in Europe and a delay of QE3 is going to bring about mass destruction. Gambling, yes. +EV, yes.
Wednesday, August 24, 2011
Gold, QE3
Gold still on the fritz after margin hikes and some selloffs, expect it to continue a little more. The next buying oportunity is going to be before QE3 announcement, all though i'm now fairly confident that that will be delayed past friday.
The markets recent rally is premature. Fueled by a falling dollar and a possible QE3 announcement on friday, I beleive this rally is going to come to an adrupt end on friday. My reasoning behind this is that things are no where near bad enough for bernanke to justify any more QE outside of the ~0% interest rates held low by printing he has promissed to keep around until 2013. There has been a lot of public scrutiny towards bailouts, assett purchasing programs, and other forms of QE. We were all expecting bernanke to fire on friday and if he doesn't it will likely trigger a mass sell. With gold prices where they are and this recent rally, the chairman has, in my opinion, his hands tied.
The markets recent rally is premature. Fueled by a falling dollar and a possible QE3 announcement on friday, I beleive this rally is going to come to an adrupt end on friday. My reasoning behind this is that things are no where near bad enough for bernanke to justify any more QE outside of the ~0% interest rates held low by printing he has promissed to keep around until 2013. There has been a lot of public scrutiny towards bailouts, assett purchasing programs, and other forms of QE. We were all expecting bernanke to fire on friday and if he doesn't it will likely trigger a mass sell. With gold prices where they are and this recent rally, the chairman has, in my opinion, his hands tied.
Gold Margins Hiked Across Europe and China
I foretold this occurring, its whats driving the pullback in gold. Unfortunately we haven't seen any margin action from the CME, so gold might still have some ways to go in its pullback Of course rumors and disclosure of QE3 or equivalent will nullify all this and send gold to the roof.
Monday, August 22, 2011
Speechless
Not sure what to say about this. I'm not usually one to believe in conspiracy theories but ..... Earlier today the CEO of the S&P spontaneously stepped down from his position and will be leaving the company, to be replaced by a CEO of Citibank (banking unit of citigroup). This comes just weeks after the S&P made the bold move to downgrade US debt from AAA to AA+. The US government immediately launched a full scale investigation of the S&P after the downgrade on the premises of making misleading mortgage ratings back in 2008!?!?! 4 days into the investigation....nothing surfaced of course.... and the CEO, Sharma, steps down (today). As if it needed to get any fishier, the CEO replacement from Citibank, Douglas Peterson, was a large critic of the S&P downgrade of US debt as part of a to-big-to-fail bank. In a direct conflict of interest, Peterson stands to gain tremendously from reinstating the governments AAA rating. Its funny how the one man telling the truth among the raters has just been kicked to the curb by Uncle Sam. Tax Payers will end up shelling out some serious extra dough for moves like this one day.
LOL GS
At approximately 3:45, 15 minutes before market closing, Goldman Sachs hired renowned defense attorney Reid H. Weingarten. Mr. Weingarten is a high profile lawyer with a stunning resume for defending rich white collar criminals. He represented Enrons chief accounting officer, as well as Mr. Ebbers, a worldcom executive whos fraud led to worldcom's bankrupcy. Other high profile clients include the former head of teamsters and the former secretary of agriculture. Anyways, he now represents goldman sachs, and the news of this dropped goldman stock 2.5% in less than 10 minutes. I can't wait to find out what goldman is getting sued/charged/investigated for.
Friday, August 19, 2011
Gold Margin Hike Coming
Warning!!! get out of short term gold options real quick they are about to hike margins. Long term gold: ignore this message its just going to mean some volatility.
Dollar Bill
Don't be tricked into thinking the markets are up today, the dollar is just down. Thus people, particularly foreigners, are getting out of the dollar and into assets. Compare DXY, GLD, and the Dow. You will see that GLD is higher than the dow and DXY has taken a huge plunge, meaning there's no growth here, just inflation. Rumors on the street is that information about QE3 has been leaked and it is probable. When it is actually announced later this month i'm going to make sure i'm out of all short positions and i'll try to have as little as possible in cash.
Thursday, August 18, 2011
How do low interest rates and the Federal Reserve cause inflation?
Read:
http://en.wikipedia.org/wiki/Federal_funds_rate
and read:
http://en.wikipedia.org/wiki/Open_market_operations
If you want the summation without all the how it works stuff. Banks are required to have a certain amount of money in reserve, depending on how much they have lent out. To increase their reserve of cash they themselves get loans by selling government bonds for cashmoney. The federal reserve prints money to buy these government bonds, buying enough so that supply and demand set the interest rate on the loan to what they decide the target rate is. Very low interest rates means the fed is giving money to the banks at very low interest rates, allowing them to profit buy simply turning around and loaning that money to other people at a slightly higher interest rate. Yes, the fed kinda gets screwed in this deal, because the money they recieve from interest on the bonds does not make up for the money they would lose if one of the banks they were lending to fails. This is all okay though because the fed can print an infinite supply of money and the government will always be there to bail out the banks.
Markets
Markets took a nose dive today with the root cause seeming to stem from poor economic data and problems in europe. A foreign exchange transaction rattled investors in europe: it was observed that there was a central bank liquidity swap of 500 million dollars late yesterday, meaning a bank had urgent need for 500 million dollars cash. Banks being broke is no big surprise in europe these days but it seems at least one bank in europe is on the verge of collapse. Just a little bit ago right after market close today there was another such transaction for 200 million in swiss francs. While i'm still at a loss to explain exactly what these central bank liquidity swaps really mean in the long run or why it is so necessary to have 500 or 200 million extra cash on hand, i know that it doesn't indicate bank healthiness. Since the 500 mil helped startle the markets yesterday, I predict the 200 will do the same thing tomorrow. I can't think of any informative economic data that comes out tomorrow either so there should be nothing to be joyful about. It's all very pessimistic, but the truth hurts sometimes.
Europe, Morgan Stanley
Europe said F@#$ the short selling ban, we're okay with just selling. Morgan Stanley caught wind of the rest of the worlds sentiment on the global economy and decided "WE ARE CAPITULATING", as in morgan stanley made the decision to sell off stock assets at a loss in order to re-position them in safer assets like gold.
Tuesday, August 16, 2011
Goldman Sachs: "QE3 is part of baseline estimates"
Goldman Sachs has priced it in. With their government influence and endless stream of inside information I wouldn't doubt their assessment. Look for a place to exit shorts before the last week of august... that's when its expected to come out and get your gold now while the gettin is good.
Monday, August 15, 2011
Addressing Physical Silver vs. ETF Silver
I've stated before that physical silver is my preferred investment choice over silver in the form of ETF. One obvious reason for holding physical silver is that you can do transactions in cash, thus avoiding any paper trail and consequentially any capital gains tax.
The next reason for owning physical silver is that it benefits all other silver investors, while owning silver in ETF form does not.... let me explain. JP Morgan and HSBC Bank are the custodians behind the two silver ETFs: SLV and SIVR, respectively. As custodians, they are paid and trusted to keep the reserve supply of silver to back silver ETF purchases, so that in theory buying the ETF is essentially like buying silver. Problem is, the custodians DON'T buy the necessary amount of silver to back up the quantity of silver that is sold as ETFs on paper. Example, say there's 800 million silver ETFs that people own, it would be likely that the ETFs, and more specifically, the custodians for that ETF only have about 100 million worth of silver purchased. Yes, these custodians submit to inspection, but NO THEY DO NOT ACTUALLY HAVE TO PROVE THEY HAVE THE NECESSARY AMOUNT OF SILVER RESERVES TO BACK ALL OF THE "SILVER" THEY HAVE SOLD IN ETF FORM.
Does this mean Silver ETF's are not safe? No, not really, the ETF price is still pegged to the price of silver. What it does mean is that the custodians have infinite amounts of power to manipulate the silver market. They combine short selling with buying insufficient quantities of silver to back the ETFs to make huge profits.
Example: Say Joe is a custodian for my silver ETF. I buy 1 million dollars worth of my ETF at 40$, I expect joe to take that 1 million and buy 1 million worth of silver. Instead, he doesn't buy any silver, he Shorts my ETF with 500k! Since joe didnt buy any silver, the demand for silver has fallen and the price decreases. Take your pick on why my etf falls, whether it be all the shorting or an artificial peg to silver pricing, my ETF moves down. Then while its down at say 20$, joe buys some silver, say 500k. Joe simultaneously gets out of his short positions on which he made a killer profit, and the price of silver moves back up to around 40$. After the price increase, joe has 1 mil worth of silver, an additional 500k of mine, and probably an additional 500k he got from shorting. Good Deal!!!!!!
This is exactly what happens in real life. By having simultaneous ability to effect the supply of silver that backs an ETF and the price of silver on which the ETF is backed, this type of ridiculousness is possible. The losers in all of this become people who buy into silver at high points before these manipulation runs happen. In reality it is even worse than in my example as banks can also utilize rate hikes and pretty much never buy enough silver to fully back the ETF commitments.
Point is: if you buy physical silver you are not giving the banks ammo with which to fire against the silver markets. The banks control over the market is illegal, and it is fading due to overwhelming demand in the silver market and the introduction of other outlets in china to buy and regulate the trading of silver.
Silver is the investment of a lifetime due to this unprecedented amount of manipulation to lower the price, and as soon as JP Morgans grip fails it cannot do anything but skyrocket. So buy physical silver and help the train along : )
The next reason for owning physical silver is that it benefits all other silver investors, while owning silver in ETF form does not.... let me explain. JP Morgan and HSBC Bank are the custodians behind the two silver ETFs: SLV and SIVR, respectively. As custodians, they are paid and trusted to keep the reserve supply of silver to back silver ETF purchases, so that in theory buying the ETF is essentially like buying silver. Problem is, the custodians DON'T buy the necessary amount of silver to back up the quantity of silver that is sold as ETFs on paper. Example, say there's 800 million silver ETFs that people own, it would be likely that the ETFs, and more specifically, the custodians for that ETF only have about 100 million worth of silver purchased. Yes, these custodians submit to inspection, but NO THEY DO NOT ACTUALLY HAVE TO PROVE THEY HAVE THE NECESSARY AMOUNT OF SILVER RESERVES TO BACK ALL OF THE "SILVER" THEY HAVE SOLD IN ETF FORM.
Does this mean Silver ETF's are not safe? No, not really, the ETF price is still pegged to the price of silver. What it does mean is that the custodians have infinite amounts of power to manipulate the silver market. They combine short selling with buying insufficient quantities of silver to back the ETFs to make huge profits.
Example: Say Joe is a custodian for my silver ETF. I buy 1 million dollars worth of my ETF at 40$, I expect joe to take that 1 million and buy 1 million worth of silver. Instead, he doesn't buy any silver, he Shorts my ETF with 500k! Since joe didnt buy any silver, the demand for silver has fallen and the price decreases. Take your pick on why my etf falls, whether it be all the shorting or an artificial peg to silver pricing, my ETF moves down. Then while its down at say 20$, joe buys some silver, say 500k. Joe simultaneously gets out of his short positions on which he made a killer profit, and the price of silver moves back up to around 40$. After the price increase, joe has 1 mil worth of silver, an additional 500k of mine, and probably an additional 500k he got from shorting. Good Deal!!!!!!
This is exactly what happens in real life. By having simultaneous ability to effect the supply of silver that backs an ETF and the price of silver on which the ETF is backed, this type of ridiculousness is possible. The losers in all of this become people who buy into silver at high points before these manipulation runs happen. In reality it is even worse than in my example as banks can also utilize rate hikes and pretty much never buy enough silver to fully back the ETF commitments.
Point is: if you buy physical silver you are not giving the banks ammo with which to fire against the silver markets. The banks control over the market is illegal, and it is fading due to overwhelming demand in the silver market and the introduction of other outlets in china to buy and regulate the trading of silver.
Silver is the investment of a lifetime due to this unprecedented amount of manipulation to lower the price, and as soon as JP Morgans grip fails it cannot do anything but skyrocket. So buy physical silver and help the train along : )
Dispelling the Myth that Gold Is in a Bubble
Gold is appropriately valued, bordering undervalued pending future politcal and fiscal policies that look to be bullish for gold.
Below is the inflation adjusted price of gold. This chart shows clearly that not only are we a long way from any real high point in gold, and also that there isn't too much room for gold to fall.
Below is the inflation adjusted price of gold. This chart shows clearly that not only are we a long way from any real high point in gold, and also that there isn't too much room for gold to fall.
LOLS Warren Buffet
Warren Buffet came out and stated that the US debt is worthy of a AAAA rating, and then the S&P downgraded Berkshire Hathaway to AA+ from AAA. Retaliation?
Friday, August 12, 2011
Stories Behind the Story for Friday
Markets up today but an in depth look into todays numbers would make the most interesting man in the world quite nervous.
Lets start with the short selling ban in europe. Today is the first day of the short sale ban and while i'm certain they have successfully prevented plently shorts sales from weighing on market prices, it doesn't look good when a government has to intervene to prevent people from shorting. If an economy was healthy, there wouldn't be such a large mass of people shorting everyting, and thus no reason for the short selling ban.
Second, retail numbers came out today much better than expected. I don't think it's too much of a surprise but I think it bodes warning. In my opinion these are unsustainably high and combine mild overextension by consumers with boosts from a weakening dollar (a weak dollar increases reported earnings measured in dollars, especially earnings made in foreign markets). Earnings will correct themselves in the coming months if the weaking dollar did have an effect as baseline company costs will be increasing. A third possible explanation is that expectations were just much too low for retail sales, which is a very real possiblity.
Another number coming out today was consumer confidence, which hit a low point. Now what does it mean when consumer confidence hits lows while retail sales hits highs? Historically, it's a surefire indication of consumer debt. This same behavior can be noted during the "growth" from 2004-2007 after the bush tax cuts.
Consensus on todays news: Retailers are still a poor investment decision.
Lets start with the short selling ban in europe. Today is the first day of the short sale ban and while i'm certain they have successfully prevented plently shorts sales from weighing on market prices, it doesn't look good when a government has to intervene to prevent people from shorting. If an economy was healthy, there wouldn't be such a large mass of people shorting everyting, and thus no reason for the short selling ban.
Second, retail numbers came out today much better than expected. I don't think it's too much of a surprise but I think it bodes warning. In my opinion these are unsustainably high and combine mild overextension by consumers with boosts from a weakening dollar (a weak dollar increases reported earnings measured in dollars, especially earnings made in foreign markets). Earnings will correct themselves in the coming months if the weaking dollar did have an effect as baseline company costs will be increasing. A third possible explanation is that expectations were just much too low for retail sales, which is a very real possiblity.
Another number coming out today was consumer confidence, which hit a low point. Now what does it mean when consumer confidence hits lows while retail sales hits highs? Historically, it's a surefire indication of consumer debt. This same behavior can be noted during the "growth" from 2004-2007 after the bush tax cuts.
Consensus on todays news: Retailers are still a poor investment decision.
Thursday, August 11, 2011
2008 deja vu
* Europe Banning the shorting of stocks again... didn't work out well in 2008 likely won't work out here.
* First time since 2008 the market has experienced +400 point losses
* First time since 2008 the market has seen back to back 300+ point losses in a week.
* Same problem, different bank: Bank of America struggles to deal with toxic mortgage assetts and other debt similar to lehman brothers.
* Google and Apple still go up?? Well I guess this is a constant for just about any given year.
* Mortgage insurers back in big trouble
Differences
*This time around the CPI shows that we have experienced quite a bit of inflation, and the Fed is going to have its hands tied a little more this time around.
*As a result of the above, commodities have somewhat decoupled from the rest of the market and aren't expereincing as significant losses.
*Currency issues and default scares are driving the price of gold/silver sky high, which will only get worse with more measures of easing and or threats of default.
* We are in more debt than before, and have more expenses that we can't pay than before.
* People now blame Bush and Obama for the mess. Although personally, I blame fiscally irresponsible political and economic policies put in place since the time of Franklin D. Roosevelt: Creation of the federal reserve, a dollar backed by confidence, political ability to create programs and departments without a means to pay for them, congressional ability to raise the debt ceiling, the keynsian idea that the root of economic growth comes from spending rather than savings, the idea that 2% inflation each year is actually good for the economy, dramatic increases in leverage and liquidity, ect.
* First time since 2008 the market has experienced +400 point losses
* First time since 2008 the market has seen back to back 300+ point losses in a week.
* Same problem, different bank: Bank of America struggles to deal with toxic mortgage assetts and other debt similar to lehman brothers.
* Google and Apple still go up?? Well I guess this is a constant for just about any given year.
* Mortgage insurers back in big trouble
Differences
*This time around the CPI shows that we have experienced quite a bit of inflation, and the Fed is going to have its hands tied a little more this time around.
*As a result of the above, commodities have somewhat decoupled from the rest of the market and aren't expereincing as significant losses.
*Currency issues and default scares are driving the price of gold/silver sky high, which will only get worse with more measures of easing and or threats of default.
* We are in more debt than before, and have more expenses that we can't pay than before.
* People now blame Bush and Obama for the mess. Although personally, I blame fiscally irresponsible political and economic policies put in place since the time of Franklin D. Roosevelt: Creation of the federal reserve, a dollar backed by confidence, political ability to create programs and departments without a means to pay for them, congressional ability to raise the debt ceiling, the keynsian idea that the root of economic growth comes from spending rather than savings, the idea that 2% inflation each year is actually good for the economy, dramatic increases in leverage and liquidity, ect.
Tuesday, August 9, 2011
Twas the Morning Before an FOMC Announcement
Twas the Morning Before an FOMC Announcement, and all through the streets,
The markets were cheery, expecting more Q E.
The time passed quite slowly, with no other news,
We all searched the internet, looking for clues.
Then in the afternoon, the news hit the screen,
The fed said no QE, but low rates until 2013.
Investors panicked, not knowing how to react,
QE3 was dead, and NASDAQ got sacked.
"But wait one minute", Goldman Sachs directed,
"This news is bullish!, and just as expected!"
"The fed won't just let the market destroy,
And there's a range of policy tools it's prepared to employ"
Then just as the Dow hit an intraday low,
Something amazing happened, prices started to grow!
To one percent, two percent, three percent, four!
The S&P 500 continued to soar.
But in the back of the crowd Andy Lee cried "doomsday!"
"We just can't recover, there's too much debt to repay."
But a massive sell off will just have to wait.
Until then, we have a currency to inflate!
Alas, much hope lies on a meet at Jackson Hole,
But the fed doesn't bring presents, it only brings coal.
So ready your defenses for a QE assualt,
but know nothing we do can save us from default. : (
The markets were cheery, expecting more Q E.
The time passed quite slowly, with no other news,
We all searched the internet, looking for clues.
Then in the afternoon, the news hit the screen,
The fed said no QE, but low rates until 2013.
Investors panicked, not knowing how to react,
QE3 was dead, and NASDAQ got sacked.
"But wait one minute", Goldman Sachs directed,
"This news is bullish!, and just as expected!"
"The fed won't just let the market destroy,
And there's a range of policy tools it's prepared to employ"
Then just as the Dow hit an intraday low,
Something amazing happened, prices started to grow!
To one percent, two percent, three percent, four!
The S&P 500 continued to soar.
But in the back of the crowd Andy Lee cried "doomsday!"
"We just can't recover, there's too much debt to repay."
But a massive sell off will just have to wait.
Until then, we have a currency to inflate!
Alas, much hope lies on a meet at Jackson Hole,
But the fed doesn't bring presents, it only brings coal.
So ready your defenses for a QE assualt,
but know nothing we do can save us from default. : (
Monday, August 8, 2011
Big Market Plunge
On bright side, my portfolio experienced its biggest up day ever.
Its not rocket science, the country is in a 50 ft pit with a 8 ft ladder. While we may be able to get up to the top of that ladder via more fed quantitative easing and such, were not getting out of the hole.
The formula to combat this is simple:
1. Short US stocks and indexes
2. Buy silver.
3. Your value stocks should be mostly foreign relying on markets in countries where shit isn't hitting the fan.
4. US Bond funds/US treasury bonds are NOT the safest place to be by any means.
Part 7 of the educational talking bears
www.youtube.com/watch?v=eJlzhnZMChY&feature=player_embedded
Its not rocket science, the country is in a 50 ft pit with a 8 ft ladder. While we may be able to get up to the top of that ladder via more fed quantitative easing and such, were not getting out of the hole.
The formula to combat this is simple:
1. Short US stocks and indexes
2. Buy silver.
3. Your value stocks should be mostly foreign relying on markets in countries where shit isn't hitting the fan.
4. US Bond funds/US treasury bonds are NOT the safest place to be by any means.
Part 7 of the educational talking bears
www.youtube.com/watch?v=eJlzhnZMChY&feature=player_embedded
Friday, August 5, 2011
Silver
Buy. Silver. Now. Or forever regret it.
* Traditional silver to gold ratio: 16:1
Current silver to gold ratio: 43:1
* Overextended leverage, 160 ounces of silver is traded on the market for every 1 ounce of physical silver.
* Price/supply imbalance, inability to satisfy the above problem because there is not enough silver mined in a year to satisfy the amount that is traded in a week at current price levels.
* Market Manipulation, JPmorgan and others found guilty of taking massive short positions on silver in order to affect the price of gold and profit on gold derivatives trading. Rinse and repeat. Now stuck billions in the hole in leveraged long term contracts. Still playing the same game, trying to drive price lower in waves in attempt to get out of toxic derivative positions. (silver market is much smaller than gold and big money buying or selling has a significant effect.)
*Central bank monetization. The monetization of debt, or printing of money to pay for debt, is occuring in multiple european countries as we speak, and has been a long standing tradition in the US, this is a bullish point for both gold and silver.
* Traditional silver to gold ratio: 16:1
Current silver to gold ratio: 43:1
* Overextended leverage, 160 ounces of silver is traded on the market for every 1 ounce of physical silver.
* Price/supply imbalance, inability to satisfy the above problem because there is not enough silver mined in a year to satisfy the amount that is traded in a week at current price levels.
* Market Manipulation, JPmorgan and others found guilty of taking massive short positions on silver in order to affect the price of gold and profit on gold derivatives trading. Rinse and repeat. Now stuck billions in the hole in leveraged long term contracts. Still playing the same game, trying to drive price lower in waves in attempt to get out of toxic derivative positions. (silver market is much smaller than gold and big money buying or selling has a significant effect.)
*Central bank monetization. The monetization of debt, or printing of money to pay for debt, is occuring in multiple european countries as we speak, and has been a long standing tradition in the US, this is a bullish point for both gold and silver.
Thursday, August 4, 2011
!!!! Inside scoop on todays market bloodshed and gold/silver
Dow, S&P, and all major indexes got hammered today in massive stock selloffs. Gold began the day on a high note then after the dow reached -3% or so it tanked, whiping out all its gains for the day and posting a significant 1% loss (silver moved in a similar manner, sliding even further late in the day). One may think that Gold followed suit with the rest of the market today and sold off for the same reasons as everything else, but that is completely false.
The drop in gold comes solely from large hedge funds and banks that were forced to liquidate (sell off) some of their most valuable assets at the current time in order to meet margin calls on positions that got hammered at the beginning of the day. Margin calls explanation: trading on margin describes a trade that you make with borrowed money, usually to obtain leverage. To meet a margin call is to obtain additional cash or other assets to make up for losses in a position that exceeds your cash or liquid assets available to pay for the loss. Think of not meeting a margin call as bouncing a check. Anyways, losses on positions in the morning forced hedge funds and banks (many rumored to be based in London), to sell some of their valuable assets such as gold and silver in order to pay for the losses, or meet their margin call.
Why this is an obvious buying spot for gold/silver: Banks/funds did not want to sell their precious metal assets, they were forced to in order to pay for losses incurred on stocks. This is not a trend that is sustainable, as companies liquidating their gold and silver assets will run out of gold and silver to sell off, and healthy corporations that just sold to meet margin call requirements will buy what they sold back when they can afford to.
Conclusion: buy silver/gold (silver preferred), and if it dips more in the coming days, buy some more.
The drop in gold comes solely from large hedge funds and banks that were forced to liquidate (sell off) some of their most valuable assets at the current time in order to meet margin calls on positions that got hammered at the beginning of the day. Margin calls explanation: trading on margin describes a trade that you make with borrowed money, usually to obtain leverage. To meet a margin call is to obtain additional cash or other assets to make up for losses in a position that exceeds your cash or liquid assets available to pay for the loss. Think of not meeting a margin call as bouncing a check. Anyways, losses on positions in the morning forced hedge funds and banks (many rumored to be based in London), to sell some of their valuable assets such as gold and silver in order to pay for the losses, or meet their margin call.
Why this is an obvious buying spot for gold/silver: Banks/funds did not want to sell their precious metal assets, they were forced to in order to pay for losses incurred on stocks. This is not a trend that is sustainable, as companies liquidating their gold and silver assets will run out of gold and silver to sell off, and healthy corporations that just sold to meet margin call requirements will buy what they sold back when they can afford to.
Conclusion: buy silver/gold (silver preferred), and if it dips more in the coming days, buy some more.
Wednesday, August 3, 2011
The Way to Play the Game
A tip off monday alerted me to the very strong possibility that jobs numbers, one of the most influential pieces of data the market chooses to act on, will be far below expectations friday. Tuesday and Wednesday market performance seems to think that expectations are already below expectations, if that makes any sense. Anyways, I was planning on riding some debt deal thunder then laying down a massive put on the S&P before friday. However, the debt deal thunder lasted about an hour and was only good for ~1%. Fear not, I am still going to make my put, and i'll chose the expiry to be sometime around november/december. I'm going to let this ride for a little bit, I think there is much further to fall in the near future until the fed decides to do something.
Tuesday, August 2, 2011
China Not Happy With us
China's primary credit rating agency downgraded our credit rating a notch. China owns about 1.3 trillion in US debt, this is them telling us to get our crap together.
Also, Just found out that 14.5% of the US population now receives food stamps. Maybe we could teach some of them to fish instead of giving them fish? Or maybe instead of food stamps start a rice + potato bank, i bet food stamps wouldn't be so popular if all you could get was rice and potatoes.
Also, Just found out that 14.5% of the US population now receives food stamps. Maybe we could teach some of them to fish instead of giving them fish? Or maybe instead of food stamps start a rice + potato bank, i bet food stamps wouldn't be so popular if all you could get was rice and potatoes.
No Real Spending Cuts in Debt Deal, Just Another Nail
Its no surpise why this bill passed without support from more than 40 fiscal conservatives in the house. According to a number of politcal figures, including Ron Paul, the debt deal does not elimate any current spending, instead focussing on cutting projected future expenses. This is just another nail in the coffin of the US economy, and is the beginning of an age that i'm going to call: Age of the Black Swan and the Big Long. The black swan refers to the catastrophic event of the eventual US default, and the profitable shorting of the US economy as a whole. The big long refers to the value of Gold/Silver, which will ultimately gain in value until the day the US defaults, and even then it may serve as a safe haven depending on politics and current economics. The swiss franc is a less volatile alternative to gold/silver.
Monday, August 1, 2011
Markets, this week
Dissapointing manufacturing data is killing the thunder of a nearly complete debt deal. Thats okay, look for the same kind of volatility tomorrow. Negating other negative data, im still expecting a small rally as the debt issue is cleared up briefly.
In other news, there is a strong rumor from a few credible sources that fridays jobs numbers are going to be much lower than estimates, and by much lower than estimates I mean they could be as low as half. This may settup a unique money making opportunity that I will talk about more on tuesday/wednesday.
In other news, there is a strong rumor from a few credible sources that fridays jobs numbers are going to be much lower than estimates, and by much lower than estimates I mean they could be as low as half. This may settup a unique money making opportunity that I will talk about more on tuesday/wednesday.
Markets Ahead of Debt Deal
Markets are pricing in the debt deal as we speak, get rid of your shorts and get ready for at least a day of solid gains in the market.
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