AuGod!

Is a Crash Impending?

Many commentaries speak of this rally as unsustainable or sustainable in terms of bottoms or tops or tanking altogether. But how can such a market tank? Probably for the same reason it can't reach new "historical" highs. I think most of this rally is machine buying. Computer trading programs running a market? Heresy!!! I could be wrong and don’t know if this is a global thing but if correct in believing that most (one commenter claimed as much as 73%) of the trading volume of the NYSE is HFTPs then who are being bought – who are they? And what does it mean? In poking around some interesting factoids - and as has been said before, there are five companies which account for as much as 40% ( - who cares about absolute numbers – the number is very very large by any reasonable measure – ) of the NYSE trading volume. According to several sources, those five : “ ... Citigroup, CIT Group, Fannie Mae, Freddie Mac, and AIG., out of thousands, are accounting for 40% of trading.” OK, so let’s say that most trading is done by computers and most bought firms are those five, which are propped up by the U.S. government in one form or another and what does that tell us?

Sobering Stat: ARMS Index Indicates Market Is at Peak, Not Bottom

I agree with those who believe that this is a gigantic shell game or shill game.

Major Market Averages Likely to Move Sideways for Years to Come

You can't bounce until you hit bottom. There is a there there but we haven't found it yet. In the end, it may be that a new economy will arise first in the U.S. making this century better than it began for "America". Post industrial America, fecund with promise, sustainable organic agriculture, water conservation, green housing, cleaner air and maybe not so much into world domination. Now those and more that add not subtract from quality of life are worthy American values.

Canadian Dollar Rattled by Shanghai Meltdown, Interventionist Talk

Gary, I believe it is Kidd Creek Mine not Kidds Creek Mine and the Canadian dollar spot gold at 12:53 ugust 18, 2009 is CD1035.58 bid.

No One Saw This Economic Crisis Coming?

The critical mass for crisis was obvious as far back as 2000. All one needed to do was scan the credit levels within American households to know that we were sitting and building on quicksand. Here below is an interesting article which you can quickly read: re "FOMC and the dollar devaluation is the goal".

www.forexpros.com/news...

Going forward, the macro results from micro failures have yet to fully play out. It might not be exactly a nuclear winter but it will be winter come November or so. Best I think, to prepare for it.

Why the Dow Is Headed to 6000

The number 6000 should not be fixated on in this article in my opinion. As a target it is as good as any. It could be any number above or below that number and still the article would be only two things - namely correct or incorrect. That is, if we give it a specific time window and a date certain. Let's say the DJIA is at 8,529.38 this morning. It will go up and/or down finishing either up or down. Serge figures that the market will trend lower hence his article's title "Why the Dow Is Headed to 6000" . Nothing happens in a straight line and he's correct when he says structural improvements in the economy are not evident. Anything is within the realm of probability, depending on how far you take it into the future. In a very real way, this entire article is a non-item, meaningless except within the cleverly crafted context of the article's title.

As for gold's purpose, I will assume that poster diddy means physical gold with good delivery. Fresh, abeit possibly acidic water will fall from the skies. Gold will not. That will probably continue to be the case for the duration of our physical universe. An ancient market defines gold bullion. The greater market is indeed a house of cards.

Wall Street Breakfast: Must-Know News

Bye Bye Bernie - 150 years for a 65 billion dollar ponzi scheme or

150 divided by 65 billion = 2.30769231 × 10-9

an incomprehensible calculation for most of us, while many of his investors are living day-to-day trying to cover their debts, working as housemaids and eating out of dumpsters. Counter-party risk on an institutional level is almost the norm on 2009 Wall Street, while Main Street picks up the tab through their hard earned and easily spent tax dollars. But in this case a man who began with $5000 and worked as a lifeguard stole equally from the rich, the poor and the in-between. Equal opportunity theft including charities.

It is easy to condemn this man. Madoff is a scoundrel on a gigantic scale and deserves to spend the rest of his life in prison. But he will have a roof over his head, four walls and three square meals daily with time out for recreation and health care available when needed. That is more than some of his investors are left with.

There can be no forgiveness perhaps, nor redemption but in the end, Bernie will die and his name will go down in History as a liar, cheater, thief, leaving a trail of plunder which rivals Attila the Hun. I need to add however that the negativity which this episode has exploded in the minds and hearts of his trusting, perhaps too trusting investors is itself a burden. Time to refocus, take heart and move on. Impossible for some who have literally lost everything, but allowing Bernie to have your hearts and minds too, your first thought in the morninng and last thought at night, is, in the calculus of all this madness, yielding too much to him.

I hope the victims, true victims, learn and grow and prosper. For those who will not have the time left in their life-spans to recover, I can only hope that somehow, some way, they will find comfort. Trusting, like loving, "not too wisely but too well" is as great a risk as any in nature. A hard lesson and huge tuition but it is what it is and naught can change that I'm afraid.

Three Must-Read Market Articles

Nice article with some good meaty stuff to consider. As for gold bullion, if the US$ strengthens, gold bullion now held will, as spot is marked to the US$, appreciate relative to other currencies. Demand may suffer, especially jewellery and in India. If and when the US$ weakens, the metal will climb that wall of worry and demand will increase especially jewellery and in India. If the US$ weakens and the metal weakens with it, vis all fiat, then expect the end of the universe as we know it. If the US$ strengthens and gold bullion strengthens with it, then we will likely be back to something approaching what we used to refer to as "normal" albeit only in terms of a US dollar which has lost much of its purchasing power since 2000 and most of it since 1913. On an individual basis how much can be expected on the spread likely depends on where you are geographically. Is the expected price inflation within the next few years a universal thing or more focused on a specific nation or economic region like North America or Europe as opposed to Asia? Will Canada suffer as much as the United States, England more than France etc., when inflation takes hold? Is Princeton University correct that "inflation where and when everything gets more valuable except money"? Investment decisions and economics have an imprecise relationship and depend on how far in the future one is with their respective probabilities. Some things are clear. Though shrinking, we, in June 2009, have a world GDP around 50 trillion, a US GDP of around 13 trillion and a world-wide derivative position of more than a thousand trillion which will eventually need to be unwound, a probable commercial real-estate mess including additonal ARMs (variable-rate mortgages) CDOs coming up by May 2010. Aside from glooming and dooming it, buying a farm, getting off the grid and locking and loading, I have to believe that being long the general market is a recipe for personal financial disaster. Your money health in any economy depends on where you sit within it. You can't eat gold bullion, it is heavy and inconvenient to store and has no real value other than that placed on it by demand and the corresponding fiat or commodity (read bread) value of the other side of a trade. In that spirit I will venture that vestiges of ancient economies remain with us, even as barbarous relics. One of them is gold metal, so I will continue to buy on dips and stay long. I hope I never need to sell it or barter it for food. But the concept of "unprecedented times" is a bit like "innocent people" and as Catwoman said to Batman, "no one is truly innocent." Keep the faith and stay strong but buying and holding gold bullion has a certain appeal to those who want to pass on more than debt to our grandchildren. They deserve it and in the circumstances we can only do our personal best ... and they are truly innocent.

Using Gold as an Indicator for Market Cycles

Yes I also see the "Bear trap" or "Obama rally" but no "dead cat bounce" because I don't think bottom has been reached. Maybe a bottom as one analyst puts it but not "the" bottom. In any case, holding some physical gold makes sense to me. I don't want this to become a freight train on steroids market just enough to keep troughs and peaks within reasonable balance. Jewellry is proabably out of the market and Inda imports while significant are down y o y and investors are looking at paper gold or gold ETFs when they should buy some bullion. As for equities the smartys will bail soonest leaving the longs holding the bag as usual. Timing is critical as always but those wise enough to manage their own money well, should and will proabably go to cash now. As for the overall economy, again timing the gap between deflation and inflationary spiral is critical for all governments' central banks and I can't see that happening in any concerted way. The Swedish K is the best currency for a reason. The USD may be weaker but as the "biggest midget in the room" still, it has a way to go and where depends on Obamanomics. Housing, both paper and physical is still the central issue so efforts need to be directed to those who have a fighting chance of keeping their homes and pare down the CDOs into something edible. That might remove some pressure from CDS's everyone is up-in-arms about vis foreign counterparties. People who can, will buy new and pre-owned homes. Consumer spending can't get out of hand and probably won't because so many on mainstreet are tapped. Unemployment is rife as can be expected when a revolution (of sorts) takes place, but that should not be allowed to result in disenfranchisement if you want to walk the streets in relative safety. But even (non-TARP)solvent lenders are caught between shareholders and government pressure while the others have yet to fully disclose and are on a cliff edge if not largely owned by central governments. So the fundamentals are bad. Summer markets may be uncharacteristically frenetic, October will have a nasty surprise and then we may begin to see the end of all this. It is really like a big and very bad meal which we all have experienced at one time or another. It has to be expunged from your system and this is the case here with all toxicity with it. Blue skies as we knew them are unlikely in our time, but all ills will pass if we stay focused. Just a few thoughts while Spring manifests its own and most important version of rejouvenation.