I don't like Mondays. At all.
Metals Gone Wild
Gold is going crazy and silver is the first bubble that burst then came right back to life. I don't want to get into a long discussion about the metals. Long time readers know my beliefs on precious metals and how they compete with what I call the "notional" idea of fiat money.
That said, I see plenty of new born metal traders getting long the metal ETF's and especially the miners. This is no joke, the miners will crack your skull. Always one run up away from some wacko secondary offering that dilutes you dead by 20%. Miners tend to over correct when bullion does and only party to the upside a third or so of the metals themselves. Not saying you can't trade them, and you are all adults. Just don't be surprised in a week or so. And there will be a gold/silver correction on the way, believe it. I am not a hater by the way:
How Important is Friday?
I think this week will be muddled until Ben Bernanke's Jackson Hole song and dance on Friday. Expectations run from nothing new to targeting the long end of the yield curve (Operation Twist) to full blown QE3. As recently as a few weeks ago I figured QE3 (and 4,5-etc) was an easy prediction but now I am not so sure.
The total failure of QE2 is now clear. What is more important is even the street guys are saying it out loud. There is real pressure on Bernanke this time to stop fucking around. I really have no idea if he will or not. I am always pretty hard on the FED, but they are in a tough spot. Monetary policy CANNOT fix the structural issues we face, but an inept CONgress cannot get anything done and instead put all the pressure on the FED to create miracles. Miracles by interest rate manipulation. Wishful thinking.
Business is not going to hire more people in the face of a worldwide slowdown, I don't care how much lower rates go. And anyone that is honest will agree rates are as low as they can be, it's still not doing anything. The cost of borrowing is not a consideration right now.
Anyways, I think there is a real risk that the FED does not do anything new on Friday. As mentioned in the lead off section, the metals won't like that and neither will the equity market. I still think they roll out some new fangled trick, but the risk of that not happening has gone up quite a bit over time.
Have a good night.