So Much Bullshit, so Little time

First a warning, this is a classic Traderneal rant, and therefore has good amount of pissing and moaning, i.e. cursing. You have been warned.


Where to even begin.

First, gold had a real nice rebound from the overnight low of about $919 to finish the day up a few bucks. But it was the silver that was the real star, at one point going over $17, which is a contract high, but closed slightly under that. The rest of the day was bullshit.

1. Today was month end, would there be any question whatsoever that "they" would allow gold to close over $17? No, of course not. On the 1:30pm close"they" painted the tape so it closed under $17. That's usually important for technical analysis purposes.

2. How in the world could the dollar possibly ralling off the economic news of the last two days? Yesterday, the Fed cut another 1/2 point and today, the jobless claims were through the roof . The Euro which was trading at 1.4912, got whacked down to $1.4850.

3. Let's talk about the biggest abortion out there today, the fucking gold stocks. The market was up over 200 points, gold at its highs was up $6 but spent the majority up $2-$4 and HUI got fucking whacked for 11+ fucking points. There are two or three reasons for this.

1. As Jimmy S. said tonight: This could/prolly be a complete bear attack from the shorts. I watched several gold stocks today, literally tick by tick, and the trading was very indicative of short selling. Take AEM for an example, the stock would try and lift its head and literally would be whacked down .20 in a blink of an eye. I am talking a quote of 60.47, then the trade takes place at $60.27 which was below the stated bid. NO ONE SELLS A STOCK DOWN LIKE THAT BUT A SHORT. Silver took out $17 today, and the silver stocks were down? PAAS was down over $1. You've got to be fucking kidding me.

2. Goldman Sachs, who in December, said that gold was going to trade around $700 in 2008, only to change their mind earlier this month when they upped that forecast, downgraded ABX, by taking them off their conviction list but kept their price target of 66. Now, I don't trust any brokerage firm as far as I can throw them. (Remember, I used to work for a major wirehouse and I promise a lengthy column about the bullshit that goes along with for one). But, to have Goldman, who, in my mind, is prolly very short gold, downgrade one of the major miners but keep the same price target is a perfect example of a churn. It allows the brokers to call thier clients for a trade. This knocked the stock for almost two points.

3. Now this is the important part. If I am wrong and this is not a short operation, then the price of gold is in real trouble. I mean big trouble. I am telling you, I have seen this exact movie before back in April/May 2006. Gold was sprinting to new highs on a daily basis and the gold stocks were acting as crappy as they have been over the last couple of weeks. Then in the second week of May, wham, the trap door fell out beneath both, gold and the stocks. Be careful. I would be very hesitant to take any new gold positions until the gold stocks start acting better. For those of you who actually trade the metal (I do not, I just buy and hold and trade the stocks and GLD), I would have some stops in to play safe. Keep in mind, this is just my opinon. FWIW, I AM VERY LIGHT GOLD STOCKS IN MY TRADING ACCOUNT AND IF THIS CONTINUES I WILL START SHORTING SELECT NAMES!!!

Please do not whine to me about how wrong I am. I am not saying that the run is over, I still think gold is going to over $1600, but I think we could have something more than just a shallow pullback. If I am correct and gold does pull back and the stocks pull back more dramatically, I will be in there buying with both hands.

On a similiar note, the media is starting to warm up to gold. This I do not like. The WSJ, had a full column on how wonderful gold is and it should be a part of your portfolio. To me, this is death. I want the general media/public hating gold, I mean really despising it with a passion. I have often said, I want the gold party to be exclusive as possible. When the time is right and the fundamentals for gold no longer warrant a higher price, only then should we throw open the doors to the great gold party to the unwashed masses and sell our gold to them.

Tomorrow is jobs Friday. The prediction is for 75k (wow, there is some strength). I have no idea where the number will fall, but I am sure the number will be a contrived one. How gold reacts is anyone's guess. I will say that gold always acts funky on jobs Friday. It would not shock me to see a terrible report (i.e. job loss), have the dollar rally and have gold fall off a cliff. I have seen this before. I hate to be so negative, but the action of the gold stocks has me very spooked.

Ok, so Ben gave the markets its shot of heroin that it needed/wanted in the form of a .50 rate cut. In addition, like any good drug dealer, he added that he would be happy to give the markets another snort if necessary. And given the current economic climate, it will be, it will be.

The markets, at first, enjoyed the incredible high it got when the drug hit its veins. But, like any good high, it must end (or so, I'm told, as I wouldn't know about things like that (wink)). Charlie Gasparino, on CNBC, broke the story that S+P might down grade both bond insurers, MBIA and Ambac, and then a little after that, Fitch downgraded FGIC, another bond insure to AA from AAA.

Before you could say "the CB's are losing in their attempt to suppress gold" the markets gave up 140ish dow points and closed lower on the day. Gold, at one point, was up $11 in the after hours, but was up about $6 around 6pm. The HUI which was up also 11, closed up 4.5. Whaddya, know gold is still attatched to a down S+P and the gold stocks are hopeless.

Around 5pm tonight, S+P did downgrade a small amount of mortgage bonds. Small, meaning, half a trillion dollars worth. Nothing cutting rates won't fix, even though when I left the office tonight at 6pm, the S+P futures were down 16. FWIW, I think we rally tomorrow, as usually the day after a Fed cut is usually a good day.

As Jimmy "Goldenboy" Sinclair, frequently says, "This is it!!!!" For Ben, to have cut 1.25 in a weeks time in the face of incredibly inflationary pressures, shows how worried he is about the economy. He is clearly sacrificing inflation, and the dollar for growth. Couple these cuts, with the $156 billion stimulus package that is coming, and you have the perfect storm for gold. But, you already knew that.

Speaking of the dollar, after the cuts, the dollar index hit 75 and bounced slightly. This was the second lowest closed in the index on record. The dollar low is 74.75, do we hit it tomorrow? It's quite a possibility we do.

Spot gold is quoted up a little less than $3 at slightly over $924. Earlier today spot hit over $931 for a new record. The April contract went over $940. But, then the Fitch news, gave DA BOYZ, plenty of reason to come in and sell the market, and sell they did; cutting the gains in half from the highs. I was not impressed with the action after hours, nor am I impressed with action in Asia. It would not shock me to see gold down tomorrow, which I think would be a huge joke.

One thing that I thought was pretty funny was at some point in the CRIMEX session, gold was down as much as 9+. Who the F' is dumb enough to sell or short gold down that much in the face og a Fed announcement? The shorts, that's who. Will they ever learn?

zzzzzzzzzzzzzzzzzzz.........

That's what it felt like watching gold today. After an obvious cap, once again at $930, gold started it's usual 6am melt, and from there it pretty much flipped and flopped around all day. At its low it was down $6 and at up $2 at its highs, before closing down $3. The gold stocks, once again in the face of a strong market, were a nonevent. At least AU was up .70.

The SA mining companies say that by Friday they will be operating at 90% of full electrical power. How that will affect the gold prices, I have no idea. But saying that gold was only up $3 on Friday, when the shortage was first announced, it will prolly be down $30 when the announcement is made they are back to full operation. That's just the way the gold market works.

So tomorrow is the day where we find out how much Ben intends to grease the wheel. The smart money is praying for a half point, but I still think it's only a quarter, as he really wanted to cut a full point all along. Again, if he cuts a half, gold should rally, a quarter and it gets hurt, along with the market. If he does nothing, watch out for gold and the market as both will crack hard.

I think today's durable goods number will have nothing to do with his decision. But is it possible that Ben tells the market that he is no longer their bitch, then says F.U. and does nothing.? It wouldn't shock me.

Sorry, for the short update, but nothing really happened today and I have nothing else witty to add.

DANGER, WILL ROBINSON, DANGER!!!!

Gold had a spectacular day, there is no other way to put it. Almost a textbook type of up day. The yellow fella' closed up $17 to $926 on spot and actually hit $930 intraday. The reason for this great windfall was due to the dollar getting the stuffing kicked out of it once again. The world has realized what is going on and hyperinflation is thy name.

After a sluggish start, the stock market, smelling Ben's cut that is coming on Wednesday, also took off like a bat out of hell and closed up 175 points. Very impressive, indeed.

Oil, after being down over $1.50 closed up .30. Finally, due to the electricity problems in SA, Platinum was up $50 to close over $1725, another record high (this also helped to fuel gold).

So, let's see, gold, plat, oil, the market and commodities in general had a great day. Hmmm..am I forgetting something, did I miss anything? Oh yeah, the HUI was up 50 points on gold's breakout.

Ha..Ha..Ha..Ha..Ha..ha..guffaw...laugh..knee slap.

As said earlier, after being involved with gold for the last six years, I can honestly say this has been the shittiest performance I have ever seen by the gold stocks. The HUI up 6.5 on a day like this is a crime. I know, I know, it could be worse, the HUI could have been down.

But, AU to be down $1.50, when they said they will be up and running by the end of the week? Gold down $1.50; did they develop SA operations? There seems some bad news could be coming on this one. MFN, flat?

Ok, I have seen this show before. BACK IN MAY OF 2006, THE GOLD STOCKS WERE UNDER PERFORMING THE METAL. DAY AFTER DAY, THE METAL WAS MAKING NEW HIGHS WHILE THE STOCKS DID NOTHING. AFTER A FEW DAYS, THE METAL ABSOLUTELY CRASHED GOING FROM SLIGHTLY OVER $700 TO ABOUT $550. The crash was brutal and thankfully relatively short.

Now, I am not saying or even suggesting that this is going to happen now. In fact, I would be shocked if it did. I am just pointing out the gold stocks are not confirming the move in the metal. The stocks had every chance to rally today and they didn't. They have been acting drabby and under performing the metal for all of 2008. I will say I am concerned.

To make matters even worse, on Fast Money tonight, Jeff Macke, who on Friday said the metal was overbought, said it's a fact, gold is going to 1000. And in a real sign the apocalypse is coming, they were bulling the mining stocks. Guy Adami said nothing.

Yes,I know it's different this time. The dollar is almost in a free fall and we have Ben running the Fed and another interest rate cut coming on Wednesday, with either a .25 or .5o cut. Hmmm...maybe the gold stocks are telling us he is gong to do nothing.

Quck Note.....

In my six years of being involved with gold, I can honestly say that as of noon, this is the most atrocious display that the gold stocks have ever put on. Gold is up $18 F'ING dollars and the HUI is up 4?
Give me a break.

Did GOLD develop SA operations that I don't know about it? The C' sucking stock is down 2! 2! with gold up $18.

From watching the action it seems the shorts are pressing the issue. Either that or the stocks are not confirming the move in the action.

This is horrible action.

Questions, I get questions....

A Mr. Richard Faylor from FT. Lee, NJ writes....

Hey Traderneal:

I believie you when it comes to gold, but I don't own anything physical. What's the best way to get me some gold? Also is it possible for me to get something that might give me some more upside than just the price going higher. Now keep in mind, I ain't rich folk, I can't be affordin' full ounces and stuff like that. I don't trust that GLD, did you ever read the prospectus?

That's a great question Dick, and believe it or not there is one vehicle that might work, and that would be US gold commemorative coins.

US commemorative gold coins have been around since 1982 and contain slightly less than 1/4 ounce of gold for the $5 denominations and the $10 denominations contain slightly less than 1/2 ounce of gold. I have been buying these things up left and right whenever I saw them at spot or less. Yes, spot or less. There have been times, when gold was $400, I was buying them for under $100. Now, keep in mind, for the most part, these coins have little numismatic value as they were produced in great quantities. Just recently, the US mint started a First Ladies gold coin series of 1/2 ounce coins, based, oddly enough, on the wives of the Presidents. These coins are known in numismatic circles as the First Hag coins. Anyhoo, the coins have maximum mintage's of 40k, and the first two series sold out in hours. When the coins first hit ebay, you could have sold them for about double from where they were issued. However, you can now buy the coins for melt. No big deal--just yet.

Coin dealers around the country have been buying these Presidential Wives coins, as well as any gold commemorative, left and right strictly to be melted. IMO, if you believe the price of gold is going higher, then you might want to grab a few of these coins and sock them away. You could make out twice as nice. First, the bullion value will go higher, and second, if these coins keep getting melted, and there is no law against melting these coins, the numismatic value could rise as well. Like I mentioned, the First Ladies series has a maximum mintage of 40k, so assume half eventually get melted, which is not unreasonable, you now have a coin that is that more scarce.

The Dolley Madison coin has sold about 9k. This in itself is on the rare side and could be a sleeper. You can still buy this coin directly from the mint, but why would you? It is about $100 over spot.

http://coins.search.ebay.com/gold_Modern_W0QQfromZR4QQfsooZ1QQfsopZ1QQsacatZ41106QQssPageNameZWLRS

Above, you will find a link to ebay that has only modern gold commemorative coins. As you would for anything on ebay, buy from established dealers who have good feedback, be careful, and don't get ripped off. If it seems like it's too good of a deal, it isn't and you will get burned. I haven't heard any stories of fake gold commemorative coins, so I think you would be ok. If you you want to play safe, then buy coins that are graded from, PCGS, NGC, ICG, or Anacs. The higher the number on the grade, the better.

Commem's that are very common that you might be able to find at or below spot are, the First Hag coins, US Olympic coins, Mt. Rushmore, US Constitution, US Congress, and World Cup coins. If you can find Jamestown, and the San Francisco coins near melt, buy them as they were issued in less quantities.

Good luck.

I lost before the game even started.......

Imagine how happy I felt when, driving into the office I heard that gold was up $14!!! I guessed the reason was because the dollar was tanking. I guessed wrong. No, the reason was because the South African miners were all shut down because of an electricity shortage. Now, imagine how, in my head, I quickly scanned my trading portfolio. Phew, only one stock, AU, had operations in SA. Wait, does GOLD (Rangold Resources) have anything in SA. Shit.

Ok, I get to the office and quickly see that AU is down 4 points or 10%. Ok it hurts, but it's survivable. Now, imagine my surprise when I noticed that I had 14 positions on versus the 13 I had when I went home with last night. I quickly scanned my portfolio run and compared it to the listing on my computer. FUUUUUUUUUUUUUUUUCKKKKKKKKKKKKKKK!!!!!!!! I forget that before I went home the previous night I stuck a low ball bid in for some GFI and as is my luck, I got hit for half my order. So, instead of battling one position that was down huge, I now had two huge losers. Not fun.

Needless to say I was in a funk. Now when you are day trading you are supposed to eliminate emotion entirely. Whoever said that, prolly never had two positions go against him this badly. Anyway, I figured my other gold positions would make up for this loss. Luckily, GOLD, which closed up $48.80, was bidding over $50. And to make things better, the April gold contract, which had hit $930, was trading at $924 up $20! Good times were about to be had.

Then the fun really began. Gold, the metal started to come in, and all of a sudden GOLD, the stock(when I type GOLD, I am referring to the stock) started to crater, and before I knew it, the stock was bidding flat. Being very pissed off and as well as distraught over the SA twins, I bot some more. Next thing you know, the stock was almost $1 in the hole. I was seething.

I have previously written, in the premarket there are two stocks that trade counter to where gold is trading, and those two stocks are GOLD and AU. If gold is up $10, I have seen both stocks trade down as much as $2 only to come right back and be up $2 points right after the market is open; the opposite has happened also. I have made a lot of money trading those two stocks that way.

I will honestly admit, that because of the SA twins, I was trading a little on the scared side. Normally, seeing GOLD bid down $1, with gold up almost $16 dollars, I would have bot thousands of shares and dumped them up much higher. I have seen these two stocks do this enough times to be comfortable to take on this risk. Today, I did not. Did GOLD have any SA operations? I didn't think they did and a quick check on their website showed they did not. But, more importantly, did the market think they had SA operations? I sure hope not, but because of the way I was feeling with my two losers, I was in no mood for additional risk.

Of course, as sure as the gold market is controlled, GOLD roared up a point right before the market opened, and soon after 9:30 it was right back at fifty. I could have had a great day and obliterated my paper losses on the SA twins, if I had done what I knew was going to happen. At least, because of the good gold stock opening, I was able to get my losses to something less than despair.

I could tell by the way the gold stocks were trading that the pop in gold was not going to last and decided to blow out of most of my gold positions. For the most part I was correct, as with the exception of AEM and ABX gave back most if not all of their gains. Many stocks finished in the red.

What I find "interesting" is the reason for golds rise was given as the SA problem. Ok, understandable. Platinum was shooting towards the heavens also. Spot Platinum at it's peak hit $1696 and closed at $1676 up $66 or slightly more than 4%. Now, compare that to spot gold which hit a high of $922 and closed at $911 up $3.50 or less than 1/2%. Why the difference? Did the SA miners find a way to mine just gold? Did they bring in generators for this purpose. Were they going to mine it by hand via flashlight? I guess I will chalk it up to this just being the gold market.

The stock market, after being nicely higher in the AM, tanked in the PM over the usual worries of the financial system falling apart and more write downs over in Europe. I will say, given the sharp sell off in gold, the gold stocks performed admirably, with the HUI off a little over 1 point.

The following is from Dan Norcini over at the bible of all gold websites, http://www.jsmineset.com/, and basically spells out, hopefully, the new paradigm in the gold market.


Gold and Dollar Market Summary Author: Dan Norcini

Dear Friends,

The following comments are included on the weekly COT charts that I regularly send your way although I wanted to call your attention to something that was rather interesting this past week which occurred over the reporting period from Wednesday of last week thru Tuesday of this week. Over the reporting period for this past week's COT data, gold dropped as much as $50 before it moved higher during that wild ride it took on Monday of this week. That was one of the wildest days we have seen in the gold market in a long, long time.

Yet in spite of a $50 plunge, the speculative community did relatively little as far as liquidation goes. The funds only dropped about 6000 longs while they added some 1050 shorts. The small specs were even more daring - they added new longs and new shorts doing no liquidation overall. That, coming on the heels of a $50 plunge in the gold price is nothing short of astonishing!

It should be noted that the spreaders dropped 15,500 of their positions – a fairly sizeable reduction by any standard of historical comparison.

The liquidation came from the commercial category with both the long commercials and short commercials (the bullion banks) doing significant liquidation. The longs shed 20,000 of their positions while the bullion banks wasted no time covering a massive 28,000 shorts! And one wonders why the price of gold hit new highs this week. They simply could not push it lower because the specs refused to run! Apparently, the bullion banks ran into a wall of buying down near the $850 level in gold that was simply too much for them and they began covering at a frantic pace. That no doubt caught the attention of some of the spec community which then plowed right back into the market further punishing the would-be shorts. The culmination of this strong wave of buying continued past Tuesday of this week with gold being driven over $20 higher in yesterday’s session with follow through buying seen in today’s session that took it past the previous record high establishing a new price peak in the process. All said, the market moved from $850 to $925 over the course of 4 days. I can say this with absolute certainty – this was a week that the perma-shorts in gold will long remember!

Apparently it has been getting much more difficult for the bullion banks since they are no longer able to have their way with this market. In times past, a $50 rout to the downside would have seen massive fund long liquidation alongside that of the general public as well with shell-shocked bulls licking their wounds for several weeks at least while the wholesale exodus from the long side continued. Not this time around – and who says that gold’s safe haven status is in question? Someone wanted gold and they wanted it badly enough to step in front of a market that appeared to be in a free fall, not only stemming the decline, but completely reversing it and driving it to a record high in the process!

There will be many more battles along the way for gold as it climbs past the $1000 level on to $1650 and higher in the years ahead but this week belongs to the bulls who administered one helluva thrashing to their enemies.

Dan

Tonight on Fast Money, our boy, Guy Adami, finally cried uncle and acknowledged the power of the gold market. He did not sound happy doing this, but actually said nice things about a few miners. Look for gold to crash $600 on Monday.

It was up to Jeff Macke, to bash gold tonight saying he didn't like it and would short it. I know and like Macke so I will not question his manhood. But I will send him a kindly email detailing all the reasons why he is wrong and telling him he should stick to the retail stocks and leave gold to the pros.

Next week, Ben is on tap, with the FED announcement coming on Wednesday. This means we get to hear 2 1/2 days of analysis of whether he cuts .50, .25 or nothing. Like I previously said, I think he if he cuts .50 the market and gold take off. Not necessarily on Wednesday as it might happen on Thursday. If he cuts .25, which is my prediction, we have a huge sell off, and if he does nothing, then watch out as it will be a blood bath.

This call is very hard to make. Will he do .50 as he feels the economy, meaning the market, really needs it? Will he cut .25, which would be a total of a point, which I think is his ultimate goal? Or, will he show some balls and do nothing to show the Fed is not the market's bitch? I think there is a small possibility he may do this, but would still wager on the .25.

So where does gold head? The metal is very over extended, no, make that extremely over extended. A pull back would be nice, or at least, treading at this level for a while. But, this is a raging bull market, and we could also power higher. Do I hear $1050 before it rests? Now if SA gets its power back what happens? I know, that will be the day I come in to the market short GFI and AU.

Laughing our gooney goo goo asses off.....

Overnight, Trichet, once again talked tough on inflation and pretty much postulated that the ECB would not be cutting rates anytime soon. Whether he means or not, we'll see.

The result of this statement was the euro strengthed tremendously against the dollar and that meant it was fireworks time in gold as driving in, gold was up $18. I was very pleasantly surprised to hear this as when I went to bed, gold was up $8. NOICE!!!!!!!!!!!!!

Gold went on to have one of those days where, previously, one could only dream about. There was barely a negative tick all day as gold closed up roughly $23 at $910 on the April contract. The gold stocks responded in kind as the HUI was up 22.

What's kinda funny is last night I wrote about have a trifecta: gold, gold stocks, and the overall market higher all at once. Today was that day. Except for me. I came in relatively light my full load of stocks, but I did manage to add some in the premarket. Now, of course the gold stocks I had underperformed the other gold stocks. I did make money, but not as much as I have on other days like this. Oh well, that's life, it happens. Maybe I need a quadfecta: higher gold, gold stocks, overall markets, and the gold stocks I own.

IMO, at some point the ECB is going to cut rates, I think they are jawboning the way the Fed did. If and when this point comes, obviously, the Euro would weaken tremendously against the dollar. In the past that would mean disaster for gold, however, we are now quite clearly at the point where trillions of dollars are being pumped into the system. Gold knows this, that' the reason we were up as much as we were. So, if the ECB cuts, look for the dollar and gold to rally together. There are many shorts in the gold market just waiting for the dollar to weaken, thinking their pay day will come. Boy, will they be shocked. That's when the fireworks will really start and we, as gold bugs can sit back and laugh our gooney goo goo asses off.

Surprisingly, I heard very little about gold today on TV. Wait, where were all the pundits who just as early as yesterday were saying that gold along with the great commodity boom was over? Tonight on Fast Money, gold was not mentioned at all. My boy, Guy Adami literally did not have a word to say about it. To me that is the height of cowardice, as you know, if gold was getting crushed, he would be dishing out the "I told you so's."

I could get used to having gold break out and not have the mindless media commenting about it.

Can we for once get the trifecta?

Over the last few weeks all I heard on the media is "WE NEED RATE CUTS AND WE NEED THEM NOW!!!!! All I heard yesterday on TV was "WE WANTED A FULL POINT CUT, NOT 3/4!!! Today, driving in, all I heard was "WHY DID HE CUT 3/4 OF A POINT, WHAT DOES THE FED SEE OR KNOW THAT'S COMING DOWN THE PIKE?!?

Gotta love the financial media.

This morning gold was down $13 and the market was heading for shitsville with the S+P down 20. Soon though, gold was turning things around and briefly won back all the $13 it lost and then crossed $900 up about $6. (The brick wall is up again at $900) After the stock market opened, the gold stocks were up nicely as the the market almost went positive. Something funny then happened, the gold stocks started to tank hard and this gave a glimpse of things to come.

After the market came back to the flat line, it quickly went right back into the crapper and soon we were at the lows of the days, down almost 40 S+P points. Commodities were having the life squeezed out of them. Oil was down over $2, sugar was getting crushed, cotton was limit down. It was like every single financial market, with the exception of bonds, was getting whapped with the ugly stick. Gold, to it's credit had given up it's gains (naturally) and was only down about $3. However, as the market worsened, gold gave up the ghost and some late selling forced it to closed down about $10. (I am speaking about the April contract, I realized spot closed down $5ish.)

Of course, gold started to dump the second I hit the send button on an angry email I sent to a commentator at RealMoney.com. I was angrily chastising this guy because he wrote on the site that he was going to short gold simply because every other commodity was going down and gold would soon be next.

I am getting fed up with those in the media constantly bashing gold; especially those that haven't a clue, which is most of them. People who are bashing gold simply because of the slowing world economy are going to lose money as they don't get it. They have to start realizing that gold is losing it's commodity status and gaining it's currency status. Read last night's entry to find out what I am mean. I am getting tired of repeating it.

Anyway, after being down 40 points in the S+P, the market had a bunch of false starts before it really got going, and once it did, there was no turning back. The Dow finished up 300, while the S+P closed up 30. Gold gained back everything it lost and was up a few bucks in the access session. The HUI which at one point was down 25, closed down 9.

Last night, ECB's Trichet, stuck to his guns and said he was concerned about inflation and not about to cut rates anytime. Now, I don't know if he is just jawboning like Ben, but that was prolly the reason the markets were down so much in the morning. One would think that given his stance, that would be dollar bearish and bullish for gold. After all, Ben is cutting rates, and the ECB is not. That wasn't the case though as the dollar was strong against the Euro. However, by the end of the day the dollar was flat.

I thought about where the stock market would be going over the next few days. No matter what you hear, interest rate cuts are good for the financial stocks, at least in the short term. (History has shown that after the third cut, the market is lower than where it was after the first cut) I guessed that the market would soon be bottoming as the market was way oversold. I was somewhat shocked to see the carnage in the early going. I did not think we would rally today. However, I think the markets will rally into the Fed announcement a week from today. I think he will cut .25, the markets will not like that and the bear will feast again. The bear, like the monster in Cloverfield (excellent movie BTW, go see it) will destroy everything in its path if Ben does not cut.

One of the reasons for the rally was a NY regulator proposed a bail out of the monoline insurers. Also, a Senator suggested a Federal Bailout of the bad mortgages. However, for now he only suggested a fund somewhere between $10-$15 billion, but since the problem runs into the hundreds of trillions, I have a feeling the fund, as proposed, won't cut it.

Ok, we now have talks of two Federal bailouts that will cost the US taxpayer trillions of dollars. And I'm supposed to sell gold because commodities are down, or worldwide economic growth is slowing? Please.

For once, I would like to see the trifecta: gold, the gold stocks, and the stock market rally all at once. Is that too much to ask? When was the last time that happened?

Oh, It's On Baby..It's On....

WOW! What do you say after you see gold make a $50 f"ing dollar reversal from the dead lows? After bottoming out at $850 and after the rate cut, gold actually touched $900 (April Contract) before closing down a couple of dollars. Gold actually like it was supposed to. In my wildest dreams I never thought I would see what I saw today. I have seen it plenty of times the opposite way though. I guess the first clue that something was up, after the market opened, the gold stocks, got clobbered but made a light speed type of recovery. It was prolly no more than 15 minutes before ABX went green, followed by AEM and NEM. GOLD was bid down 4 points in the pre-market to close up almost $3.

So, it's on baby. We are witness to history; the greatest attempt to inflate the economies of the world. As predicted by many, the Fed cut rates by .75%, a huge move. The are prolly going to cut next Wednesday at their meeting. The smart money says they are going to cut .50%, but I think it's only going to be .25%. The markets wanted to see 1% today, but will have to wait until the 31st to see the rest of that wish.

In reality, Ben should have done nothing. Gold, oil, and many other commodities are at record high. The Fed played politics and caved to the stock market. A recession is a healthy part of any economy and in a normal economy recessions are usually quick and only a bit painful. This is far from a normal economy. This Fed cut is not going to help in the long term. Yeah, it may allow for some refinancing of bad mortgages, but it's going to drive all commodities sky high; even higher than they are now and gold will be the biggest beneficiary. This was evidenced by the action today.

IMO, if Ben had done nothing, history would have viewed him as one of the better Fed Chiefs. I say this from talking to several people who were active when Paul Volcker was Fed Chairman. People hated him and were openly cursing him when he kept raising rates back in 1980. However, history now views him as the best Chairman in history. He put the country's long term health over the short term market action. The opposite is true of Easy Al or as I call him Elmer.

I arrived at the office at 7am today, about an hour earlier than usual as I was long too many gold stocks. My gold stock trading portfolio was worth about $100k, and I was looking at a $10k loss right off the bat. In my career I have never started a day off more than $2k in the hole. To say I was unhappy was an understatement. After the Fed cut, that loss was cut in half. I did not like the action after the cut, the S+P's went back to the lows and gold had gone to where it was before the cut. I dumped whatever I didn't have too much of a loss in. Yes, I know it was a dumb move, but when you trade on a daily basis, capital preservation comes first. Who knew where this market was going and I was not going to be a hero. To make a long story short, I bot back what I sold at higher prices, when it looked like gold was going to make a stand, and ended the day down less than 1% overall. I will take that. Also a big shout out to NEM for giving back it's gains from this morning and closing up a whopping .22! Thanks!!!! But kudos to AEM, ABX and GOLD for having great days.

As Sinclair has said, this is it. The game is on. Strap in and enjoy the ride. It will be bumpy at times but I think we are finally going to be rewarded. (Even though gold is trading down $3.50 now, I still think the Asian sessions just don't matter any more as Europe and NY dictate the action.)

It's sad when a person who has been dead wrong for over $100 and does not admit he is wrong and keeps trying to sell his story that the security in question is doomed for failure.

Yes, I am talking about your friend and mine, Guy Adami, who once again on Fast Money, bashed the hell out of gold, basically repeating what he has been saying all along: He knows the fundamental story(he doesn't), he knows the CB's are buying, BUT, he has seen this movie before and it will end bad, the miners take off their hedges at the top and put them on at the bottom. It sounds like a broken record.

Guy, I have said this before, how in the world were you ever a gold trader? This bull market is in it's sixth year. Yes, it has had it's drops and will continue to do so, that's the nature of the beast. But for six straight years gold has outperformed, well, almost everything. What movie have you seen before? This is not 1980 where gold spike $450 in five weeks, this is 2008, where inflation is running rampant, children run the Fed, and we are facing an economic meltdown on a daily basis. Please give us one fundamental reason why gold will be down. Please, just one. I beg you.

After the cut there were incredible reversals in all the European and Latin America stock exchanges and most of the Asian bourses are nicely higher. I have a feeling, barring any financial blowups, the markets might rally from here into the fed meeting. After that, all bets are off.

The ride is just beginning for real, strap in.

CRAAAAASSSSHHHHH!

OYYYYY!!! My aching portfolio, and the market is not even open. Those loud bangs you are hearing are the worldwide markets crashing in unison. Asia and Europe are both down anywhere between 3%-7%, oil is down $2, silver is down .50 and gold is down $17 (off the lows of being down $21.), S+P futures are down 60 and the Dow Futures are down 520! The only thing higher, that I can see is the dollar and prolly bonds tomorrow. (They are not trading now).

It is my opinion that sometime later today (it is 1pm now) you will see probably the largest worldwide injection of liquidity in history. I would expect the fed to massively cut rates before the open. If nothing is done tomorrow morning, look for Dow to open down at least 1000 points.

On the brighter side of life, I can still roll around in my gold coins and bullion pretending I am King Midas, not so much my gold stocks though.

As Jim Sinclair would say: "THIS IS IT!!!"

Our Fearless Leader.....

will be announcing a framework of a stimulus package tomorrow to help stave off the recession that is already here. While all the details have not been worked out, some highlights include an $800 tax rebate per individual tax payer which is more than double the previous $300 rebate that was given out in 2001, business tax cuts, and a country wide party with free beer to make everyone feel better about themselves. Because Bush, is not demanding that his previous tax cuts, due to expire in 2010, become permanent, there is bi-partisan support for the plan. Final details are still being worked out and should be announced the next week for the State of The Union Speech.

The Japenese stock market which was off almost 400 points is now slightly positive. This is a huge positive for gold, which is now down less than $5. (Hmmmm....good news for gold....prolly be down $30 tomorrow. I kid! I kid!).

I guess my four years of business school was for naught. I was taught that a recession is a natural part of all economies. Something to do with peak and valley thingies. Yeah, throw money at the situation, that will help.


Party on Garth. Party on Wayne.

Could it be any worse.......

Today was a brutal day all the way around. From the incredible shitty Philly Fed, to the incredible shitty stock market action, to the incredibly stupid shitty Congressmen who grilled Ben. One moron Congresswoman thought she was talking to Paulson when she asked:

Kaptur (D - Ohio): Seeing how you were the former CEO of Goldman Sachs...
Bernanke: No...no...no.... You are confusing me with the Treasury Secretary!
Kaptur: Where were you sir?
Bernanke: I was the CEO of the Princeton economics department.
Kaptur: Sorry, I got you confused with the other one.

That's our elected leaders.

All news today was extremely bullish for gold; there is no debating, nor doubt about this. The economic news is downright dreadful and we clearly have a lack of leadership in Congress, in the White House and at the Fed. The Fed seems to think the economy is in 'ok' shape and that a recession could happen later in the year, but not to worry, as they will use interest rates to save us all. They are also worried about inflation. In my nearly 20 years working on Wall Street, I have never seen the worldwide economy look worse. Rate cuts are just a band aid. This market and this economy are going down--hard. Jim Sinclair is correct....THIS IS IT!! PREPARE FOR THE WORSE.

Any who, I am even with everyone who doubled down on my beer be as I was expecting gold to come into NY down $7, and it was actually up $3. Shortly after the CRIMEX opened, gold was up $9 on the heels of the Philly Fed and it looked like it was going to be good gold day.

But, silly me, this is gold. Before you could scream "fix" gold completely reversed, and at one point was down $4 all the while the dollar rallied back to roughly flat. That type of action is is one the hallmark tenants in the gold market, reversing the gains of a good gold day. Today, for the most part was a huge upward struggle in the gold market. Every tick was met by selling. It hit up $9, gave back a few bucks, rallied then finally sold off. It closed down $1+

Now compare today's upside action to yesterdays downside. Yesterday, the gold market went pretty much straight down without a fight. Yeah, it may have rallied a dollar or two here and there but pretty much the bears/shorts had their way with the metal. Today was a fight from start to finish.

The HUI, at one point was up $11, gave that back and was actually down $10. However, around mid-day, the HUI rallied and was actually up nicely. However, the overall crush in the market also affected the gold stocks and the HUI close down $7. I guess all in all, when looking at whole picture, the performances of the metal and the stocks were ok, I guess.

The Fed has promised drastic "substantive" rate cuts, but so far all they are doing is jawboning. The market does not want that. They want action and they want it now. Listening to Ben, today, there was no sense of urgency, no sense that the economy is falling off the cliff.

There is tremendous speculation that the Fed is going to cut rates before the market opens tomorrow. They did a surprise cut back in September the day options expired (expiration Friday). Well, tomorrow, options expire. Almost everyone I deal with expects a cut. If the Fed does not cut tomorrow, the stock market will be a bloodbath. Screw the fact that IBM had good earnings tonight, it won't matter. Only a Fed cut will save the market and that will only be for a short time.

Back to gold for a second. Again, as Sinclair has said, the Federal Reserve boards of the world will do what they do best, and that is inflate, and obviously that is good for gold. Now, gold had every reason in the world to be much higher today, it was not, it was flat. Now you could argue that gold sold off in sympathy with the market and/or oil. Whatever. Gold needs to find it's sack and start acting on its own volition. Enough of this crap falling in harmony with other markets.

Tonight, we are not off to a good start as gold is currently off $8 as the world stock markets crash. This is not good.

Financially speaking, I think we are in the fight of our lives. Now more than ever, all roads point to gold. Let's hope it does not get road blocked.

And just like clockwork.......

The decline begins, now down $3. It was about the same time last night that the sell off began. Did anyone take my double or nothing beer bet?

Turns out it IS your Father's gold after all.....

Well, where to start?

You all know the what happened yesterday, it was a debacle. Around 5pm last night gold was down roughly $16, at 10pm it was down around $3 as the dollar was getting killed again. I wrote in the blog that I would bet anyone a beer that the dollar would rally and gold would get crushed.

Well anyone that took that bet, owes me a beer. Imagine how I wasn't surprised, when, driving in I heard gold was down $16---why didn't that number by itself surprise me? It was where gold had left off around 5pm.

Ok, I get into the office, fire up the computer and see gold is down around $12 with the dollar slightly higher. I thought that maybe the new and improved gold would rally and turn this thing around. When all of a sudden, it did exactly that!! Before you could say "manipulation" the dollar was flat, and gold was only down $5! BUSTA MOVE!!

Ok, then the shit hit the fan. One of the ECB governors spouted off something about how all of a sudden the ECB was open to cutting rates. Well, that's all the dollar needed hear, as the euro fell about .02 against the dollar. That is a HUGH move. Now keep in mind, the schmuck that said this, is the equivalent of one our Fed governors speaking. You know those guys, they love to verbally masturbate all over themselves. In addition, all the while the dollar was rallying, oil was getting absolutely smashed as the oil inventory numbers were somewhat bearish. (It briefly dipped below $90) Tie both of these factors together and next thing you knew gold was down $25. (It closed the CRIMEX session down $20) Let's not even talk about the gold stocks; the HUI is off about 10% in two days. Oh yeah, the CPI came out also, and inflation is running at it's quickest rate in 17 years. Surprise y'all.

Ok, at 2pm, the Fed's Beige book came out and told us pretty much what we all knew, that the economy is in the shitter. This actually caused gold to rally about $5. YIPPEE!!

Also, about this time, ECB chairman Trichet came out said, "whoaa....what the F....., I'm the man here, we aren't cutting rates, our policy remains the same." This comment pretty much went unnoticed by the markets.

The stock market was on a see-saw almost all day. INTC shit the the bed last night and that set the stage for the ugly open, and it was ugly. But, the open was bought and before you knew it, the S+P was up 5. That was quickly sold and we went to lows of the day to only bounce higher. Around 3pm, the S+P futures were up around 10; at 3:30 they were down 10. One cannot trade a market like this.

Ok, so what about gold. IMO, all the news today was bullish for gold. Higher inflation, check. The ECB not raising rates, check. The ECB raising rates while Ben does, check. Shitty economic situation, check. But what did gold do with all this "great" news? It shit the bed worse than Intel.

Today was a perfect example of everything that is wrong with the gold market, and showed every aspect of what happens when "they" want it down. What happened today has ocurred several time gold has "corrected."

1. Bullish news for gold doesn't matter.
2. Bearish news for gold is disastrous
3. $20 down--when was the last $20 up day.
4. Every single rally sold, and sold hard
5. An attempted rally from the lows, to almost flat, was squashed down hard.
6. The HUI down almost 10% in two day? How much it up during this last run higher?
7. The dollar rally--when has the dollar ever sold off like the way it rallied today?
8. Gold attaching itself to any market that is down--in this case the S+P and oil. And not rallying when the other markets do. (Oil once down $2.50, closed down $1.)

And all this happened just today!!

I know this all sounds crazy. It was a fact that gold needed to come in a bit, but I would have liked to have seen it done on its terms and not because of the crazy crap that went on yesterday and today.

So where now? When I left the office, gold was down an additional six dollars from the CRIMEX close. I haven't the guts to look to see where it is trading now. Not that it matter where it is trading now as no matter what gold does in the overnight session, it gets slammed coming into Europe and then slammed again coming NY. Could it be more obvious what's going on?

Hold on, it's 9pm, let me gather the testicular fortitude to see where the yellow beast is. Lo and behold it's flat to the NY close, that's a rally of $6. Why am I not excited? Let's call it double or nothing on that beer bet that gold will be down at least $6 by the time the CRIMEX opens. Also, the dollar is slightly down, I am sure that won't be the case nine hours from now.

I only saw about 1/2 hour of Fast Money, and gold was not mentioned. However, Guy Adami, was on CNBC around 3:30ish, with a huge I told you so (even though he did it kindly). I could not believe the following statement: "Right now Gold is 90% in the hands of speculators." He also went on to say that he understood all the arguments for holding gold. But, gold is not something that is used for anything, and once again reiterated that gold is heading no where but down. He has seen this movie before.

How was this guy ever a head trader anywhere? He doesn't get it. To say gold is owned by 90% speculators is an asinine statement. Gold, is clearly under accumulation by the Asian and Middle Eastern CB's. Are they speculators, or just looking for a hedge against their dollars? You tell me.

So where are we going from here? Probably down. How far? I don't know. If I had to venture a guess, I would $875, then $850ish. I don't think the shorts are going to let up just yet. I think the action in gold stocks tells us more pain is coming. On the other hand, it's not too late to have a quick correction if gold turns around tomorrow or Friday.

Uughhhh...the gold stocks...don't get me started. They have been a disaster. I really don't even want to talk about them except to say that for you traders out reading this, there are some great buys in the pre-market. For example, GOLD was down over $3 this morning. That was an excellent pickup to make a quick point. This happens quite frequently with some names, usually GOLD or AU and happens on both the long and short side.

Given the action of gold, I really thought we were past this shit. I thought wrong. Gold can still easily be fooled with as has been evidenced over the last two days. Gold is clearly not ready to be it's own man.

Everything I hate about the gold market....

Has come back in the last two days:

Down on no fundamental news, the dollar "magically" rallies out of no where, any attempt at rallies are squashed, etc. etc.

I was correct in my last post. The dollar rallied off of nothing, and gold at its worst was down to $880 or almost $22. It has since rallied to down $12...yeah, lucky us.

Should be a fun one.

Oh, wait, the TIC report came in, showing net inflows of $90 Billion. Gee, surprise, surprise.

I don't mean to keep whining like a school girl, but this is the type of action that just reeks of the third hand.

It never ends.

Take notice......

It is 11:30pm EST, and gold is only down $3, which is a $13 comeback from the lows of the access session. Once again the dollar is tanking. A beer says gold is attacked coming into Europe, and then again coming into NY. At some point the dollar will "magically" have a rally.

I hope I am wrong, but don't think I am.

Gartman's view.....

Right before I had to leave the office, Dennis Gartman was on Fast Money giving his view on today's debacle. He thought that since gold was literally the only thing that was higher today, that traders decided to sell gold in order to pay for margin calls in other areas of the market. He went on to believe that gold has had a nice run and was due for a pullback.

Earlier today, before the sell off, I was thinking something like Gartman described was possible, but the market has been down this much before without any selling of the metal, so I don't agree with his thesis. I believe "the invisible hand" decided to step in and protect the dollar and in turn caused the gold sell off. Gold was looking for a reason to correct and once the dollar rallied, it found one. IMO, that's it, that's the reason.

I 100% agree with the second part of Gartman's thesis. Gold was ready for a pullback, but I wanted to see it done on it's own terms, not something like today where it was forced.

The action after the CRIMEX closed was just as criminal. The slow drip in the uber thin electronic market was a laughable attempt at pushing the price down. At it's worst, gold was down an additional $15. Notice that now it has come into Asia it's only down $5. Because Kitco was down from about 2:30 to about 5pm, it is not reflected in the charts.

In all, an extremely frustrating day, the type that harkens back to the bad old days of gold. I really thought we were past that. In the past, a day like this usually lead to a vicious downdraft often last weeks. I sure as hell this is not repeated here. I am in no mood to hear all of gold's enemies slapping each other on the back about how they knew "the barbellious relic was a terrible investment" and what a bunch of idiots the gold bugs are.

Tomorrow should be fun in gold and the overall markets. We have the TIC data and if it's negative, that should crush the dollar and propel gold. "Should" being the key word.

The more you think it's changed......

The more it stays the same.

(warning--those who know me, this could be a classic Traderneal rant--those who don't, that means I turn off the profanity filter. You have been warned.

Gold once again last night was up $10 only to be slapped down in Europe. Nothing new there. Retail sales were a joke when they were announced today at 8:30am, the reaction in the dollar was a quick flush down with the Euro going over $1.49. Gold, in turn had a nice rally and threatened to take out Sunday's night highs of $915. I guess someone, somewhere had decided to step in and halt the dollar's rout, as out of nowhere the dollar rallied back to the flat line. This, in turn led to a HUGE sell off in gold as it then gave up all it's gains and at one point during the CRIMEX session was off $8. In all almost a $25 reversal. Gold managed to close down roughly $1 and change. However, once the access session started, the gold bear pussies stepped in and did their job sending gold down another $15 by 5pm.

I really thought gold was past this type of shit. Earlier in the day, I had sent an email to a buddy commenting that I was impressed that gold seemed to be in stronger hands given the fact that it was much higher in the face of sinking crude and a market that knows no lows. BOOM! Then gold gave it up. The selling pressure must have been immense. The dollar was flat and gold reversed for a total of $25.

I really thought this time around gold was see all through the bullshit that is thrown its way. Yes, I wanted gold to correct some, but ON ITS OWN TERMS!! Not some manipulated rally in the dollar. Needless to say, the gold stocks which were holding their own before the reversal, got absolutely smeltered, with the HUI down over $20 at one point. NEM acted like the leader it has become once again, closing down a dime.

So where now. Well, it appears gold is still in the hands of a bunch of pussies. I would look for it to be killed over the next few days barring any economic news such as a rate cut. How far down? I have no idea. But hopefully it will the kindlier and gentler correction that gold has been having.

INTC shit the bed tonight and as of 5:30, the S+P futures are down 13 on top of the 35 they fell today. The NASDAQ futures are down 40. Tomorrow should be fun.

Tonight on Fast Money, as of 5:30, gold has not been mentioned. But Guy Adami, who bulled INTC last night, gave a simple"I am sorry." That's all. Funny, but no apologizes for NILE, which was down another $5+. That about 15 points since Thursday night.

People ask me why I get so pissed on days like this. I compare gold's action from today, as if someone came into my house and stole everything I owned. It is theft, pure and simple.

The only ray of sunlight about this debacle is that the gold going to $1000 talk might lighten up.

I am in a mood. I might be back tonight.

You have got to be F'ing Kidding me....

As I was absolutely exhausted, I went to bed early last night with gold up about $6. Just noticed at it's high, it was up to about $911 on spot or up $9. It is now up .90. You have got to be F'ing kidding me. This is the second day in the row this game is still being played. Have the shorts not learned their lesson? All this happened with the dollar at it's lows. For all that's happened, and yes it's been a real nice run, examples like this, show why the marketplace is a joke. Some will even say, a crime.

The shorts are getting desperate, as I can't see how this is profit taking or long liquidation. Right now, there is a lower high in place as on Sunday night gold topped at around $915.

The NY, Crimex open should be fun.

A Big Feh.......

I quickly noted last night that gold crossed $900 around 2am. It hit a high of roughly $915 and came into NY around $910 and closed up about $7 giving up half it's gains. In other words, typical trading on the Crimex. The HUI at it's high was up about $14, and closed up $6. I was not thrilled with the action in the metal nor the stocks.

Hate to be a Debbie Downer, but IMO, this upward leg of the gold bull looks a tad tired and could prolly use a pullback or to base here for a little rest. The stocks especially, look tired. AEM was down .75, RGLD was down $ 1.07 GG and ABX were up a few pennies. This was not the type of action I wanted to see on a clear breach of $900.

Now on the other hand, many people are thinking like myself and are looking for a pullback. This in itself could propel gold higher, but I don't think so. Then again, I thought, that on Friday, when gold couldn't get through $900 it would sell off. So, what do I know.

The dollar got whacked again today for a couple of reasons. First, Bernanke is cutting rates and cutting them dramatically. (So much for the thought that cutting rates is good for the dollar. That was the reason given in December when the dollar was having a short covering rally.) And second, there is plenty of nervousness in front of the banks earnings which start this week. Somehow, the Street thinks it's very good when the largest banks and brokers on the Street are taking handouts from anyone in the world. I think this might come back and bite us in the ass.

So where are we going? Honestly, I hope down for a bit to clear off the gold bandwagon. It makes me nervous that everywhere I look all I hear or see is talk of $1000 gold. I imagine that CNBC will have a countdown ticker in the corner when it gets close. I liked it better when all you read or heard was that it was crazy to own gold. At least none of my non-financial friends are asking me about it--yet. I want the gold party to be exclusive as possible. A nice little shakeout will get rid of the riff-raff that has crashed the party.

Sorry for the short update, but I am tired. I was up late watching gold (exciting, huh!) and today I was very busy trading the gold stocks.

DING DING DING.....

We officially hit $900 on January 14th 2008 at 1:59 am.


My mood has improved!

I am in a foul mood......

Having computer issues, kids have been acting up all weekend, and I can't make it too Green Bay next weekend to watch what should be a great game between the Pack and the Giants. I am a diehard Eagles fan, but have really liked the Packers after I ventured to Green Bay to watch an Eagles game. The people are the salt of the Earth and every true football fan should go to Lambeau at least once. It is the mecca of pro football. I can't say enough good things about Green Bay. In fact I still wear a very nice leather Packers jacket I bot at Lambeau and it still looks brand new.

Anyway as for gold, it's a couple of bucks; spot is around $898, and if my computer was working a little better, I would be able to tell you where Feb gold is trading, but it's not, so I can't. But, if I had to guess, I would say it's close if not over $900.

Given my mood, and looking the way gold is trading, I still think there is a brick wall at $900 and would expect a retreat. The shorts are not going to give up the ghost that easy. But as I have been saying, if gold breaks $902, I am buying gold stocks in quantity. Big if, though.

The stock futures look higher. But, like gold, they have been higher overnight only to fade as NY opens. Gold has been higher but fades into the European open and then gets smacked down as NY opens. In other words, business as usual. But this could change in a nano-second as the Fed could cut rates any second now.

Let me go sit in a corner and brood for a while. Maybe I will be back later with an update, depending if I am in a better mood or not.

Knock, Knock, Knocking on Heaven's Door.....

It tried, it mustered all it's strength, but like a horny guy trying to get with a hot blond, gold just couldn't get past $900, hitting $900.10 and backing off. It turned out that $900 was nothing more than a CT!! After flirting with the magical number for a while, gold backed down to as low as $896 and tried a few more attempts but ended the day at $898. Oh well, there is always next week, hopefully.

I dunno, on Friday, the financial stocks were very strong as it was indicated that some this county's former stalwarts of economic strength, such as Citibank, Merrill Lynch, and Bear Stearns, have to go hat in hand to the Asian and Arab countries looking for yet another handout. Is it a positive that blue chip companies have to sell themselves like a $2.00 hooker to stay financially viable? One of the reasons why gold can hit $900, is the suprime mess and corresponding derivative problem, coupled with collapse of the banks.

Gold, on Friday, still acted like a toddler out of pullups, it was unaffected by the weakness in crude (somewhat) and a flattish dollar. As usual, this is good to see. What is starting to annoy me though, is gold failing to hold it's Asian gains getting slapped down in Europe on a nightly basis. The latest slap down started around 6am EST when gold was trading towards $900. This is a common theme and is starting to piss me off.

On the heels of the wildly successful video series "Girls Gone Wild" I am going to produce a series titled "Grains Gone Wild." Yesterday, several grains opened limit up, including wheat and corn. What that means is they opened the most they could up in a single day. This is yet another example of inflation that the world is facing and another brick in gold's foundation.

Last night on Fast Money, my boy, Guy Adami started his speech on gold saying "I apologize, I have been dead wrong on gold for the last $100." That was a good start. However, he then added, "but folks, take a look at this chart, gold has done nothing but gone straight up, I have seen how this movie ends. Right now, the miners are taking their hedges off, but I guarantee you they will be putting these hedges back on $200 lower. Trust me, I USED TO TRADE GOLD FOR 15 YEARS." (I am basically paraphrasing here, you get the drift.)

As a former trader, he just doesn't get it. This is not gold in 1980 off of a parabolic spike. This is gold in 2008, where, after 6 years of a bull market, the perfect storm still exists for gold to go much, much higher. At last look, Bernanke is still going to cut rates dramatically, inflation is increasing, and the housing and derivative situation is still with us.

Look, folks, gold is gonna correct at some point. It has to, nothing goes straight up. And knowing gold, it is going to be a violent correction. The type where it makes the gold bugs think the move is over, including me. It will make us hate, and I mean HATE being in gold. But that is business as usual in the gold market. However, the last correction in the gold market was more a kinder, gentle correction. It went from roughly $840 to $800 and only lasted a couple of weeks. If this is the type of correction we can look forward too, then it won't be so bad. Just, when the correction hits, I don't want to hear Adami patting himself on the back.

I don't mean to keep picking on Adami, but he is typical of a lot of people who keep calling for gold's demise and who are constantly wrong. You know the type, those who keep hailing for gold to come down, and when it does, they proudly and arrogantly say, "I told you so!" If Adami, listed his reasons as to why gold would fall and even say: "Look folks, gold has had a tremendous run here, I would take some money off the table and look to re-enter at lower prices," I would be fine with that. Hell, if he even said that gold should be sold now and never go back into that, and listed valid reasons, I would still be ok with that as you must always respect but not agree with an opinion that is based in someones logic. But just to say, I have been a trader for 15 years, sell now, I know how this ends, is the height of arrogance.

Oh yeah, Adami's pick from Thursday, Blue Nile, was off $5.71 or just a little more than 9%. Funny, but no mention of that last night.

The stock market is in huge trouble. Yesterday, one of the areas considered as safe, the consumer staple stocks got slammed. Stocks, like Proctor and Gamble, Clorox, Coke and Unilever, which are viewed as recession proof as people will still need those products, were down across the board, as it starting to dawn on the market that consumer spending is slowing at a dramatic pace. Also, tech continues to be drek, as consumers as well as businesses, don't buy technology in a recession. In light of this, the gold stocks held their own. NEM, ABX, GOLD and a couple of other gold stocks are either at or near their 52 week highs. That being said, the stocks are lagging the metal, and that sometimes means a correction is in store.

One stock that did not participate in the reindeer games was AEM, which was down .40, still stinging form an intra-day downgrade from Merrill Lynch on Thursday. Later this weekend I will have a piece why this downgrade was a complete joke, and why Wall Street is trash.

So, where to from here? I dunno. I kinda remember that gold sliced right through $800 and ran to $847. But I also seem to remember that gold kinda fiddled right below $800 before it broke through. So, I guess it's safe to say, if gold breaks $900 it's off to the races, and if it can't, well it will go lower for a bit.

An open letter to Guy Adami....

Below is an open letter to FastMoney host, Guy Adami. I would appreciate everyone forwarding this to him at fastmoneynoreply@nbcuni.com. If someone has a better email, please let me know at echocalls@aol.com.

thx

Neal


Guy,

Was it really just two weeks ago that, with gold trading around $790ish, you called for $700 gold? Now, I don't mind anyone having an opinion on an investment vehicle as long as they can back that opinion up with some reasoning. From you, I only heard the dollar is going to rally and that will sink gold. However, you failed to give a reason as to why the dollar would rally given the horrible economic climate. Fine, you made a market call. Your years of experience trading gold as head trader at Drexel give you this privilege

Fast forward two weeks, gold is skyrocketing as are the gold stocks. Gold is now upwards of $850ish, and to your credit you admit that your $700 call is wrong. However, you then go on to tell America that they should not own gold as "You could wake up one morning and it could be down $100--I have seen it before." Guy, Guy, Guy, you know as well as I do, that back in 1980, gold ran from $400 to $850 in the matter of five weeks. Like any parabolic rise, gold was going to crash back down Earth and relatively quickly. (I was only twelve years old when gold hit $850 in 1980, so I have no clue what the actual trading was like).

You also very well know this is the sixth year of the gold bull market. During these six years, gold has been on a roller coaster, zooming higher and lower on a regular basis. Lucky for the gold bugs, the trend has been higher. You also know, the economic conditions this time around are ripe for gold to go much higher. Back in 1980, the Federal Reserve had the balls to raise interest rates in order to break inflation's back--even though that meant plunging the economy into recession. Compare that to today, where Bernanke pledged to cut rates dramatically, sacrificing the dollar and stoking inflation. (Let's not even get into the mortgage mess, nor discuss the derivative disaster) Does this sound like the characteristics where gold can fall $100 in a single day? I think not.

Don't get me wrong, gold will surely have it's scary corrections like it has over these six years. Corrections which make even the most hardened gold bugs think the move is over. When one of these corrections hit, I hope you will have the class not to say "I told you so"

Now, also, over the last few weeks, the gold stocks have been on a tremendous tear. Yet, you constantly bash Newmont Mining for have a PE of 28. Now, I am not a rocket scientist, but tonight you bulled Blue Nile as something that should be owned. Now, I am sure Blue Nile is a lovely company, ran by lovely folks who love their families. But, Guy, NILE, sports a PE of 66! And, it's main business is selling jewelry. I don't think recommending a high beta stock that sells expensive discretionary items in a receding company is the way to go. But that's just me.

I can't understand why you bash NEM. It's underlying business is in a six year bull market that shows no sign of abatement. Are there cheaper gold stocks based strictly on price to earnings, definitely. But, NEM, is considered one of the best of breed, and for that, one pays up.

I also found it kind of amusing that your regular guest, Dennis Gartman just happened to mention on Wednesday's show that the party was over and he had sold half his position in gold. He also recommended that it was too late to take any new positions in the metal.

So, why the constant bashing of gold and NEM? A person less trustful than myself might think that to bash both without giving a credible reason, that person might be short these instruments and be stuck. So they go out and destroy the credibility of the investment and try to scare folks into selling.

Boy, I am sure glad I don't think that way.

Or could it be that an out of control gold price means that something economically is out of whack? Market pros also know that you do not want to see gold stocks leading the market. If this were to continue surely that would be bad for the overall markets, and bad markets would mean lower viewership for CNBC. We couldn't have that now, could we?

Guy, if you would like to discuss this with me, I can be reached at echocalls@aol.com. Please leave your phone number and we can chat.


Traderneal

Hammer Time...Ba-Ba-Ba-Dump....

Imagine my disdain driving into work this morning and hearing gold was down $6. Now imagine how pleased I was to hear, literally just ten minutes later, that gold was down $13 because the BOE and ECB left rates unchanged. I figured it had to go down sometime.

When I got to work and fired up my computer I saw gold attempt a feeble rally to down about $8. But this being gold, I figured we would soon be at the days low. And sure as sh$t, I was right. Gold took out the previous low of being down $15, and pretty much plummeted through the day, closing down $30 and the HUI also crashed down $38. Silver wasn't much better closing down more than $1.50, at $14.23. Shades of May 2006 rang through my head as I seriously contemplated selling anything and everything gold. When this type of crap happens, I get fed up with gold. I lost a bundle today. All this happened in the face of a strong stock market.

As early as three weeks ago, that would have been the beginning of my post, except with a lot more cursing. But as I have been saying this is not your father's gold. Hell, this isn't even my gold. I don't recognize this strong beast.

When I got to work, gold was down $11; I figured it had attached itself to crude which was down $1.50 even though the dollar was flat. However, I did notice it trying to come back. Now, I have seen this movie many times before. Gold is down a bunch, tries to rally, gives me a headache and then falls into the pit of Zool(copyright owned by Brian Pascal). But, lo and behold, all of a sudden, gold was down, $8, now down $6, now down $4, oh shit, now down $7, crap gonna be a long day. Whoa, down $4, down $3, down $1. Holy $$#*@, its GREEN!!! OH MY F"ING GOD, I HAVE NEVER SEEN GOLD DO THIS!!!!!!!!!!!"

The turnaround was primarily because ECB President Trichet was relatively hawkish on rates. That sent the dollar lower vs the Euro and gold higher even though oil was now down $2+.

Gold meandered around from up $2 to up $6 until around noonish when Helicopter Ben told the markets, "Don't worry, I got your backs--they don't call me Helicopter Ben for nothing!" That ignited a spark into gold and up it went. It looked like for a second, that once it breached the $894 high of a couple of nights ago, it might hit $900! ($900! Who woulda thunk it). I was waiting with buy baskets lined up for my favorite gold stocks if gold went past $902ish, as I felt a strong breach of $900 would send the gold stocks up through the next level.

In all it was a great day for gold, closing up $12 and the HUI up $10+ (knocked down from $16). Gold was it's own man today, trading higher in the face of weaker oil. It was correlated with the falling dollar. The gold stocks were actually correlated with gold. In essence, everything that was supposed to happened, did. Next thing you know, dogs will be chasing cats, and men and women will be living in harmony.

Hmm...gold having a mind of it's own, I kinda like that. I need to remember these good times, for at some point, there is going to be a hammer time, just hopefully not tomorrow, as I am very long gold stocks.

Two things I want bring up quickly: 1. I only caught the first half hour of Fast Money and did not hear a word regarding gold. However my boy, Guy Adami did recommend NILE, a stock selling at a 66PE. 2. During the day, the geniuses over at Merrill Lynch downgraded AEM on a valuation call. In their models they used to generate this flash of brilliance, the figured AEM's numbers on gold being at an average price of $750 in 2010. Look for separate columns on both of these items, including comments from the MER analyst.

Another Wild Day in the Gold market............

WOW! What a day. First it's up a bunch, then it's down a bunch and finally it closes up slightly. Like my friend's father who died while having sex, gold didn't know if it was coming or going.

After hitting $894 in the overnight session during China's first day of gold futures trading (boy, were they excited) gold sold off coming into Europe and received the final smackdown when, what else, the Crimex opened.

I would like to personally thank the a'hole who was driving 15mph under the speed limit, for the whole 10 miles while I was behind him! As I was driving, it was quite frustrating to hear the 10 minute update on Bloomberg as gold was first up $6, then up $5 then up $4 and so on. When I finally got to work and fired up my computer up, imagine how great I felt to see gold tick red. I wonder how much money that grandparent cost me as I prolly could have gotten out of my gold stocks higher than I did.

In all, I have been very impressed how gold well has acted over the last couple of days in face of weak oil and a much stronger dollar. This is not your father's gold.

And for those of you wondering, Guy Adami still hates gold and thinks NEM should not be held by anyone other than a mutual fund with assets over $10 Billion. Gotta watch those high PE stocks. But I guess stocks like AAPL (50 PE) are fine; no matter that the consumer is slowing.

Also, Denis Gartman has come out and said that he has sold half his gold. Now, I really don't follow Gartman that closely to comment on his actions in specific. But, I have heard more than my fair share of guru's call the top and sell. I heard it at $450, $500, $600, and $700. When gold hit $800, Guy Adami swore it was going back to $700.

Is gold going to correct, you betcha. When? I have no idea. The last correction from $840 to $800 was pretty quick and shallow, especially for gold. I think it lasted, what, two weeks?

My point is, you don't know when the next leg is going to kick in. You don't want to be left without any exposure when that happens. As a trader, who gets his P+L marked on a daily basis, I have to weigh my risk exposure every night before I go home. That means making a call as to where I think gold might be going the next day. I will freely admit, since New Years, I have not gone home with a full rack of gold stocks as I felt the hammer could fall at anytime. I have been playing catch up and having to pay up in the morning. (Compare that to September, when gold was deeply oversold and I went home almost everynight with a full compliment of stocks.) In general though, the average person has to decide for himself what he or she feels comfortable with. FWIW, in my retirement accounts I always carry a full slate of gold funds and gold stocks.

So, what now. Gold is currently up $2.50. However, I am finding that the overnight session really doesn't matter that much anymore, as gold has been doing the opposite during the NY session.

I am sure whatever happens in the next few days will be wild and woolly.

I hate it when I'm right.....

Especially when it means gold goes down.

After hitting $894(!) last night, I had the feeling it wasn't going to last, and damnit, I was right. At it's lows this morning gold was down $6(!) to $874. It is now flat. This volatility is nuts. I will say, gold is impressing me rallying in the face of a stronger dollar.

Strap in kids, it's gonna be wild.

Ahhhhhhhh....................

Tonight, gold at it's highest was up $13+ to $893!! However, it is now up $7.70 at $886+. Color me skeptical but I don't think this rally holds tonight. I am guessing that since, I think $887 is resistance, and gold smashed throgh that and went over $893, only to come back down, that a pullback might be in order.

Writing live from the Emergency Room.....

With my second heart attack of the day. It was 8:30pm and I keeled over when I saw gold was up ANOTHER $10 F'ING DOLLARS!!!! This is not the gold I have come to love and hate.

Strap in kiddies, we are resistance and could sell off from here. But like I mentioned earlier, starting at 8:20 tomorrow (when the Crimex opens) if gold can blast throug say $892, say hello to my little friend $900+! However, keep in mind, 8:20AM is tweleve hours from now and a lot can happen.

Gotta go, the Dr. wants to check my vitals.

Hold on 'Lizabeth I'm comin....this is the big one.....

Sorry I haven't updated recently, but I was recovering from a heart attack when I heard this morning, while driving into work, that gold was up $15 while the dollar was flat.

Why was gold up $22 at it height you ask? I think folks are realizing the US financial system is imploding before our very eyes. Gold is finally being realized as a currency and not as a commodity.

This is a editorial from today's FT Times:

"Gold Is the New Global Currency"

"In today's uncertain world, the yellow metal is back in fashion." I might point out that gold has always been a store of value, a.k.a., money, but it hasn't always been recognized as such. The editorial proceeded to agree with that thought: "A better way to think of gold may be as central bankers used to before America dropped the gold standard: not as a commodity, but as another currency. As long as the dollar stays weak, gold's bull run will last."
The FT points out that "the U.S. Federal Reserve's aggressive rate-cutting response to the credit squeeze has created a risk of a sharp rise in American inflation. That in turn creates the risk of a precipitous fall in the dollar and so makes gold more attractive as a hedge."


The gold stocks were having an orgasmic type day until the overall market cratered and the HUI gave back a quick 8pts from the high. Needless to say, I was not thrilled to have that happen. But Oh' well, 'it happens.



This move today, was not completely oil based. Oil was up over $2 at it's highs and gold was up $22. Yesterday, gold was down $3, yet oil was also down $3. raw your own conclusions.

IMO, this is the action that I want to see. Gold rallying on it's own merits. Now if only, gold, gold stocks and the overall market would rally at once. That would be nice.

The schmucks at CNBC still don't get it. While I did not hear any bashing of gold during the day, on Fast Money, my boy Guy Adami is still warning folks away from holding gold stocks. The reason, NEM trades at 28x earnings. Now, I admit, I do not have a list of his prior recommendations, but I would be willing to wager a fair amount that many have PE's greater than 28. But because they are not gold and prolly tech, that makes it acceptable. Oh yeah, he still is calling for $700 gold. First it was $700 before $800 now just a call for $700 and you should be careful because you could wake up one morning and gold could be down $100.

The guy doesn't get and IMO he is talking his book. A book that is taking a beating.

Great, now Dennis Gartman has just said that it's too late for people to get into gold. He actually sold some gold today.

I see gold hitting $887ish then having a bit of a correction, to where, I have no idea. But unless things change dramatically, I can't see gold NOT hitting $1000 by the end of the first quarter.

Now, if gold goes through $887 convincingly, say $892, it will make a moonshot higher. I can't tell you how high as I really don't know.

9:45pm and down $6.....

Interesting, flat dollar, crude down a bit and gold cracks $6 in Asia. With the weather supposed to be in the upper $50's tomorrow and Tuesday, Iwould expect crude to be under pressure and you know what that means. But let's wait and see.

Rules of the Gold Market.....

These are some observations, rules if you will, i have observed from trading the gold markets over these last few years. They are in no particular order. And keep in mind, these things don't always happen, just most of the times. (This list is meant to be tongue in cheek--somewhat)



1. Bad economic news is bad for gold while good economic news is disasterous for gold.


2. Gold around 2am coming into London, gets slammed


3. Gold around 8am, coming in NY gets slammed


4. If gold is down more than $7 coming into NY, that loss at some point will be doubled in the NY seesion.


5. If gold is up more than $7 coming into NY, that gain will be halved almost immediatley.


6. If gold is up more than $12 coming into NY, then that gain, at the minimum will be halved by the close of NY.


7. If gold is down more than $7 coming into NY, and makes a comeback to flat, more often than not the metal will close on the lows of the day.


8. Gold is almost always down the day Bernanke makes a major speech or policy movement.


9. Gold is almost always down on jobs Friday.


10 Gold rarely closes above $10 in a single session. (This rule seems to be changing).


11 Gold takes the stairs higher yet the elevator down.


12 The gold market is a 2 steps higher 1.95 steps back type of thing.



13. Gold will almost always certainly sell off the 10 minutes of trading in NY



14. Gold will always sell off on Friday, right after NY closes when trading is at its thinnest. This is especially true if gold has been higher that day.



15. Gold attatches itself to any market that is down. If pork belly futures are down in Lichenstein---watch out!

So Gold Closed Down $3.....

I bes' not be hearing "I told you gold was going to fall" on CNBC tonight. I will go apeshit. (I already went apeshit, especially when gold was down $11. But, gold had the testicular fortitude to have a nice comeback. Like I said earlier, gold always acts funky on jobs Friday. I guess the gold stocks hold in there well given the fact the market is off 200. Ah screw it, the gold stocks act great, so far, in spite of the fact they had a HUGE run this week.


Now more than ever, all roads point to gold.

A person less cynical than myself might say........

The downdraft in gold last night was convenient, as if it didn't occur, then gold would be up another $10, and we couldn't have that. I am not saying that...just someone less cynical than myself might.

Gold down $4 in the face of a breakdown of the US economy.

Jobs report a disaster......

The dollar is getting CRUSHED, yet gold manages to be only be up $2 into the green. GOLD ALWAYS ACTS FUNKY ON JOB FRIDAY'S!!! BE CAREFUL!!!! GOLD FLAT NOW.

Please......Do the bears ever give up.....

Gold was down as much as $10 overnight and came back to down $3ish. Now down $5. Why in the world would gold be down or up so much in front of such a number as the jobs report? Do they ever give up? Prolly the ECB unloading another few tons.

On pins and needles.......

OK, this is the gold market. We always expect the worst, and usually we are not disappointed. Even though I was quite pissed to see the early strength disappear, I was even more surprised to see gold hit it's highs later in the day, up $11+. In all my years of watching gold, I have never seen it give up a $11 gain completely, only to get it all back later in the day. That was something!

As of 12:30am, gold is holding steady down $1. I do not expect any moves until the jobs report in about eight hours. Speaking of which, look for the official "You've got to be Kidding Me" monthly jobs prediction. I am going to pull a number out of thin air and see if I can move the markets just like the ADP report. It amazes me the ADP report, which has been wrong for a year, is given much credibility and can move the market. Hey, can I do any worse?

Talk about whiplash. I came into the day, long a slug of gold names and was shocked when Mr. Market gave me an opportunity to get out of those names at a small profit when it seemed that gold was heading for a huge loss. I was even more humble when I was able to get back into those names when it appeared that gold took a stand and was going to get much higher. Like I wrote earlier, today was an exhausting, yet nicely profitable day. I ended the day long only a couple of names. I am concerned for the jobs report as who knows what type of fiction is going to spew from the gov't. Plus, being a gold bug, I could wake up and "gold could be down $100!"

At my trading firm, CNBC is on all day. I have no choice in the matter. But, there has never been more of a time where CNBC's true hatred of gold shined brighter than today. Any time gold was mentioned it was usually in "I can't believe gold is higher, it won't last, sell it today," type of attitude. I must have heard Guy Adami's "gold could be down $100," at least 15 times today. The anchors on CNBC are morons, they have not a clue, they cannot think for themselves. There is no other way to put it. At least later in the day, I heard a couple of guests accurately describe the gold situation and why gold prolly wasn't going to fall $100 in one day.

Shall I talk about Bob Pisani and his reaction to the gold stocks? CNBC reporters for the most part are not allowed to own individual stocks, or so I believe. But, I could have sworn every time Pisani, was on the screen, he was acting like he was short thousands of shares of the gold miners. He constantly pointed out the "overvaluations" of the big names in the mining industry and how they were up so much since in two days.

I am not going to argue whether he is right or wrong. But I am going to argue how I don't think I have never heard him point out the valuations of other high fliers. I have never heard him yelling how the entire solar industry is ridiculously overvalued. I don't hear him yelling about how SOLF has almost doubled in three weeks. Why pick on gold stocks?

And of course on Fast Money, for the most part they were out bashing gold again. They just don't get it. Which I guess as a gold bug is good. Let's keep this party exclusive for as long as possible. When I am in line at the supermarket, and if I hear two housefraus talking gold, then I know the common folk have crashed the party.

As far as the gold stocks go, Jeff Macke, who I know and respect, does make a good point that for MOST, GLD is a very safe way to play gold. Unless you can do your homework, there is considerable risk in the smaller gold names. I have been on both sides of the coin; heads, where my small miner has been bought out (MNG-NEM) and tails, where my miner has blown up--thank you NG.

So where are we going now? I still maintain that gold will bounce off of $887 before any meaningful correction takes place. What kind of correction that will be is unforeseen. But I am sure when the correction hits, I will rue the day I ever heard of gold. It will cause me untold agita, I will bitch, I will complain and I will hate gold. But in the long run, gold has been my best investment vehicle----ever! I see no reason for this to change anytime soon.

All roads point to gold.