Gold and silver continue to soar as the world continues to lose faith in currencies. When you look at the chart below () why wouldn't they?
As you can see above, our financing needs vs. GDP are now worse than Greece's. If it wasn't for the Fed buying Treasuries we probably would be seeing near double digit interest rates over here.
Japan's debt issues are startling to say the least. What's crazy is their currency continues to soar despite their awful balance sheet. Sometimes things just don't make any sense. There is a lot of hedge fund action that's driving the JPY/USD currency trades according to what I have read.
However, with $4 trillion a day in volume, the FX markets are not easily manipulated so there are other forces at work here other than the hedgies.
I wanted to throw up a chart on silver ():
Quite an amazing run isn't it? Glad I have had the opportunity to enjoy this. I have sold some on the way up but I gotta be honest: I have a hard time getting away from metals right now given the money printing.
I think if stocks begin to wallow around like they did yesterday, it's only going to increase the money flows into gold and other commodities.
Owning something hard is increasingly looking like the best thing to do as we all continue to drown in trillions of dollars of debt.
The Bottom Line
I don't know what to tell you here folks. I am holding onto metals, a few shorts, and cash(including bonds) and praying the financial system can stay in one piece.
With every passing day I lose more and more hope that we can actually find a way out of this.
IMO, there is 1 data point everyone needs to watch this week. There is a 30 year bond auction today, Wednesday. Pay CLOSE attention to this. The Fed is going to avoid buying 30 years like the plague because they realize they could take a bath on them as they attempt to create inflation.
The Fed is helpless when it comes to protecting the 30 year auctions. With all of the money printing going on it's going to be fascinating to see how this auction goes. The last 30 year sale was awful.
This could definately be a huge market mover. Other than that it's a fairly quiet week relative to last week's insanity.
I am anxiously waiting to buy a huge chunk of TBT which shorts the long end of the Treasury curve. I want see how today's 30 year auction goes before I make this trade.
This is the one trade I continue to drool over, but I need to see what effect last week's QE announcement has on Treasuries before I pull the trigger.
Bonds still might have one more move higher thanks to the Fed.