Monday, August 22, 2011

How Important is Friday?

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:
THE PRECIOUS!!!!

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.

13 comments:

Stagflationary Mark said...

Metals Gone Wild

Gold priced in aluminum is certainly screaming to new highs. Amazing.

It's moving so fast that I nearly posted an update to this chart . The ratio has climbed 4% in just the last 2 trading days. Go figure.

getyourselfconnected said...

Mark, my trendlines and such are screaming CORRECTION AT HAND! I fear for the newer players getting in on a "sure thing".

Stagflationary Mark said...

One would think that even if the dollar goes to zero that someone somewhere someday will sell some gold to buy a soda.

That's assuming that soda will still be sold in aluminum cans, and not ones made of gold. (Seems like a relatively safe assumption with gold at $1900+.)

Just a theory of course!

getyourselfconnected said...

By weeks end I think you are gonna have a victory lap!!! Can I be more clear GET OUT OF MINERS AND METAL ETF's!

Mr Slippery said...

The statistical model I was using to guide my gold trading broke down a few weeks ago when the gold price was 4 sigma above the predicted price. I sold half my gold ETF then expecting a correction.

There are a short consolidation between 1720-1800 then vertical again. I am moving my stops up on the other half of my ETF expecting a sharp correction again.

I think a lot of people just figured out the allure of gold with stocks taking, 10 year bonds at 2%, and savings at 0%. Maybe they figured out the fundamentals, too. Even still, this looks a lot like silver in March and the set is ideal for multiple margin hikes and an op-ex beat down.

Not selling physical yet. We have a bad situation that our political leaders are likely to make much worse before finally coming clean. Arghhh.

scharfy said...

QOTD

"This is no joke, miners will crack your skull"

So true. I rode Drooy up and down. So poorly managed - so much potential, so much disappointment.

There is ALOT of hot money in this sector right now. Even Hugo Chavez is wanting his physical.

Maybe France should "nationalize" it. Like he does so frequently with outside oil investments!!

Nice pic.

Stagflationary Mark said...

"How Important is Friday?"

"I don't like Mondays. At all."

I've been giving this some thought.

I don't think Friday is that important. Monday isn't that great. To be honest, Tuesday, Wednesday, and Thursday could be improved if we built enough robots.

Let's just make a new calendar where every day is called Entitlement Saturday.

We could pay for it the same way we pay for everything else. We deserve it. We won! Mission accomplished!

What could possibly go wrong?

I do think it would complicate our language but I bet we could learn to live with it.

Any interest in seeing an apocalypse movie? What are you doing the day after Entitlement Saturday?

Are you counting today?

No. I'm talking about this coming Entitlement Saturday.

Ah, so you mean next week's Entitlement Saturday?

I'm not sure you are getting it. It's the day after tomorrow!

I've already seen it. That's the one with Dennis Quaid. Right?

Bah!!!

GawainsGhost said...

"I Don't Like Mondays" was a great song by the Boomtown Rats.

http://www.youtube.com/watch?v=LDxFtQgoWt8

But for Friday Night Entertainment, I recommend David Bowie, "Diamond Dogs."

http://www.youtube.com/watch?v=36lWAcY9IXE

"This ain't rock and roll,
This is genocide!"

Watchtower said...

Spacebot tweet:

"Those electrons feel GOOD! One small step for man, one giant leap for tinman kind."

http://tinyurl.com/44cu88y

I guess us waterbags should enjoy what time we have left, remember it hath been foretold both here at Economic Disconnect and in the ancient cellulose film scrolls:

"Listen, and understand. That terminator (terminator...just a fancy word for robot) is out there. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead."

Yep.

Watchtower said...

GYSC, I assume by your tweets that you are OK after the quake?

getyourselfconnected said...

Yes I am ok!! Did feel the building move though, crazy!

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