Both gold and silver are now solidly above their 200 day moving averages and the divergence between stocks and metals may be reversing a bit with stocks falling and metals rising. Certainly, metals are the better inflationary hedge as evidenced by currency collapses throughout history, but in today’s technologically advanced stock market focused society anything can happen so long as the puppett masters can still control their Frankenstein-like creation of bubbles and super-bubbles.
Do we need more regulation? Against monopoly and those who seek to end competition, yes. Against mom and pop farmers and the chick who owns a small shoe store in Albuquerque? Hell No. Leave the small business owners and Dairy Farmers alone.
dairy farmers, Federal Reserve, gld, gold and silver, monetary policy, QQQ, regulation, SGOL, SIVR, SLV, stock market regulation
Were traders really expecting more QE today? Seems pretty bizarre and more likely the work of some HFT BS than anything else.
Silver dropped by 5% erasing all of yesterday’s gains and threatening to reverse below important support/resistance lines. While the breakout is not completely negated, traders will likely play it safe in Silver until the highly volatile trading picks one direction or another. For now, I would hold all physical and buy more on days like today. That said, Silver has come pretty far over the past few years so investors may want to put money into hard assets than have not risen so much like housing, farmland, timberland, etc…
And it may happen where we have a financial/banking collapse first and hyperinflation second. Either way gold, silver, color diamonds, and farmland make a lot of sense as a hedge against paper money and the people who love to print and spend it. The governments of the world seem to have bizarre agendas to create inflation at any cost. The result is that gold and silver will likely trade at much higher prices in the coming months.
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Hedgephone readers know we have been in cash for most of August, but they also know that we are scared for the US Dollar here and define our portfolio position in cash a bit differently than most people. To us, cash is a concept that includes foreign currencies, gold and silver, US Dollars, etc…
When we say cash in our market model we mean something along the lines of this:
10% Canadian Dollars
10% Australian Dollars
10% British Pound
10% Swiss Franc
20-40% US Dollars
Right now we feel that equities are fully valued and that liquidity risk factors including margin debt and low mutual fund cash levels could see near term pain ahead for stocks. Over the longer term many names are beginning to look cheap at current valuations and many others appear overvalued. The use of diversification can help long short equity investors profit in down markets as well as up markets.
Investors have pushed silver above the recent channel high at around $39 or so per ounce and I fully expect a retest of $50 if any more talk is given about QE3 — Silver rises because of the rising digital money supply, not from speculation. Owning cash is speculative whereas owning metals is conservative or a safe haven at current prices.
Many people will tell you that silver and gold are in a bubble but the fact is that commodities in general are one of the only asset classes that work here because the consolidated banking system is holding our economy hostage and Bernanke is solely focused on saving the banks. Right now, shorting European banks and going long silver and gold looks to be about as good of a “trade” as possible — investors are essentially betting that Europe will face massive credit problems because of the obvious insolvency of Greece, italy, Portugal, Spain, and Ireland.
The next shoe to drop is the US… We are facing the exact same issues as Greece. Japan is also a debt zombie and has been for years now. There deflationary spiral is confusing to say the least, but they are essentially bankrupt as well in my view.
Low global interest rates are the only thing holding the current order afloat, but any hike in interest rates could derail the system and for that reason owning real assets outside of the financial system makes a good deal of sense.
Hope that helps, Gold is a little overbought but it’s in a long term bull market. Silver is looking solid here.
The deficit and debt trade — IE going long gold and silver, look very strong this morning… Paper FIAT is looking weak again… I like GOLD and Silver here and I am more bullish on them than I am in stocks…
Silver up 4%
Gold up 1.5%
Oil up 1.3%
EUR/USD lower by .3%
Bonds look higher (IE risk on)
Stocks look flat here…
Buy GLD, FCX, SIVR, DBO, DBA calls here That’s my gut feel but watch closely…
I would rather buy the commodity dip than the equity rip…
Looks like our Sunday Macro Madness was right on the money: http://hedgephone.com/?p=984
Expect stocks to recover a bit from the lows as the POMO money dump takes the overvalued GMCR’s and TZOO’s of the world a little higher, which will put the speculation back in the speculators via the POMO desk and Brian Sack… The market is getting a full Zap of POMO juice for the rest of the week, so investors may want to take some profits on incremental short positions in equities and buy some FCX, VALE, and SGOL… These are just three of my favorite names here, but I expect all of them to significantly outperform the averages over time (and apparently so does Soros on the FCX anyways, as he bought 300K shares after dumping his GLD at a huge profit)…
I will be looking to cover some things this afternoon, but will remain fully hedged in the stock market and long some metals because valuations for equities are ripe while QE is driving asset prices higher regardless of the expensive valuations for stocks — QE is a tough call and not what I would have done, but then again I’m no central banker!
In the end, every red blooded American like me hopes for Blue Skies ahead, but in my heart of hearts I can’t help but feel skeptical of the stock market which is up 110% from the lows…
Best wishes for successful investing HP’s!