THE CLOWN SUMMIT

                                EU Summit List Of Participants

It’s only Tuesday, yet once again markets are held hostage through the next weekend, as the caterers ramp up yet again for another clown summit that is going to “fix” things in Europe.

“No seriously, this time we really, really mean it. As soon as the shrimp cerviche is finished we are going to really tackle the issues. Well, maybe after the raspberry soufflé for sure.”

“Uhm, yea whatever.”

So, expect the usual Central Planner nonsense all week; yup it’s fixed, Merkel says “Nien”. That the beggars, also known as “PIGS”, will be yakking all week with hand out and then trying to coerce Germany for more money, should be good entertainment. After all, when you are totally bankrupt and threaten to bring the system down, you are entitled to name your conditions – natch.

Anybody but me noticing hardly anybody is trading gold anymore? Volume is down, and except when the Central Planners got a 10,000 lot at-the-market to send prices down sharply in 2 seconds, intra day ranges and volatility aren’t that hot either. Gee, who could have seen this coming?

Once the weekend buffet summit is over, expect nothing new and the assault of the EURUSD to begin in earnest. It should be quite a show.

Have a good day everyone.

-vegas

IT’S QE OR ELSE

                              The Bernank: Man Of The Moment

Next week, the world literally turns its lonely eyes to the Mariner Eccles building for more “Hope & Change”.

“Ohhhhhhhh, Chalky Soetero is giving his umpteenth campaign speech?”

“Errrrrr, not quite.”

The world is hoping, praying really, that Weimar Ben opens the money printing monetary easing floodgates at the June Fed meeting. As with all things, the devil is in the details, and even if he comes through, the key will be if it was enough. Hide the kids if he does nothing.

The monkey wrench in the equation is Greece; with a newly elected socialist government only a couple of days old, and ready to tell the banksters in Brussels to go pound sand, how much of the taxpayers money does Ben give away?

Not to worry, Vampire Squid [GS] will let the moneycrats know what to deliver early next week before the meeting. The real question is which Belgian or French caterer is doing lunch. Remember, “The private sector is doing fine.”

Gold especially is subject to the “buy the rumor sell the fact” mantra of Trading 101. How many times have I warned [and been right by the way] that the rock gets rolled up the proverbial hill, only to be rolled back down when the Central Planners sense the public is now just a tad long the yellow stuff?

And on cue today, the EURUSD put on a blistering short covering rally because of course too many people are short the pair. Forget the disappointing retail sales figures; it’s all about QE and the “Hope” the Fed bails out Europe and saves the day; the “Change” of course is that something but failure will be the result. Now that’s what I call “Hope & Change” trader style.

Too bad it won’t change anything because Italy is next; say goodnight Europe, the party is over in 3 …. 2 ….. 1

Have a good day everyone.

-vegas

EVERYTHING IS FIXED NOW, RIGHT?

                                         Europe In A Nutshell

For you grown-ups out there, this is like watching your kids get a free credit card from their grandparents; not a pretty sight. But not to worry, because everything is now fine in Spain because the smartest-guys-in-the-room have just thrown a check their way to the tune of a “1” with “11” zeroes behind it. Where this money comes from nobody has a clue.

But we are all smart enough to know by now that politicians solve a problem, not by actually solving anything, but by talking about it. Because you see, talking about it to them means it’s on their radar now, and not to worry, we are on it. Uh huh.

The Germans, natch, are expected to lend their AAA credit rating to this hair-brained scheme, but in all things like making sausage and passing out 100 billion Euros, the details are gonna get a bit sloppy. For one, nobody in Germany, except the Pols, are for this. Second, it ain’t gonna matter because on June 17^th, the Greeks say adios to the Euro. And third, as if we need another reason, every other deadbeat sovereign member of the PIIGS gang now wants the same deal as Spain.

“Hey, where’s our hundred billion with no strings attached?”

I swear, it’s enough to make you think the Pols are really in the biz of herding cats. A tough gig no?

                                         Politicians Take Note

Of course, with record spec short positions via the Crimex CME in EURUSD, it’s not really a surprise that we gapped up 100 big ones on the opening in Asia last night. Did you hear the big – WHEEEEW !! – whoosh out of Europe last night? But sadly, with all Ponzi schemes the half-life on this “solution” hasn’t even lasted 12 hours.

And gold? Firmly in control of the Central Planners and weakening as I write.

“But QE3 and QE4; c’mon man, money printing, ya know?”       

Yea, I will make sure and tell that to the prop desk over at JPM that is selling with both hands.”

And so, we find ourselves on countdown to next Tuesday, when we know for sure the Greeks are deadbeats, and the newly emboldened leftists tell Europe to go pound sand with their debt.

 Anybody want to make book on this?

Have a good day everyone.

-vegas

BRITS PARTY EUROPE DROWNS

                                  Her Majesty Queen Elizabeth

Really, who can blame the Brits for wanting to party for four days to celebrate one of the world’s best loved Monarchs? I mean, after having to read and listen to all the hooey news out of Europe these days, partying might be the only way to stay sane.

Who cares if your currency is down 1000 pips in the last month? After all, it just means all those people who had to buy Pounds to play now get ‘em cheaper and can spend more. What’s not to like here?

But lest we forget, let’s go back in the vegas hot tub time machine and remember back this time 20 years ago when the cry from the political elite was for the Brits to join the EU and give up the Pound for the Euro. If I remember correctly, it was John Major who told the EU to go pound [pun intended] sand. And of course, the bloatacrats in Europe were aghast.

Well, who’s partying now and who is drowning in debt?

Meanwhile …… in marketville, plan on nothing happening in London for the foreseeable next few days as people first party, and then need the upcoming weekend to recover. If it’s gonna happen, it will be in the Asian or U.S. trading sessions.

Meanwhile ….. in the hallowed halls of Europe, the Central Planners are still trying their collective alchemy skills to make 2+2 = 22 and find a way to make trillions in cow chips [otherwise known as European Sovereign Debt] look and smell good to the public.

“Can we just get one trial balloon you guys in the market might like?”

“Errrrr, no.”

And then we have Greece; now that we are 2 weeks within elections, no more opinion polls. So, it’s back to normal for the 40 year old philosophy students at university who can’t bear the thought of life without somebody else paying for it. It’s your basic SNAFU all the way here.

Have a good day everybody.

-vegas

IF YOU’RE NOT NERVOUS YOU SHOULD BE

                                       Good For Traders Too

The real news today isn’t that Europe is toast; geez, we’ve all known that for some time. Only the politicians think that with just one more conference they can fool pretty much all of us find an answer to a non computable problem. Who else would sit around and try to figure out how 2 + 2 = 22 and then with a straight face tell you it is true?

No, the real news is that interest rates around the world are flattening big time. Pick a maturity, it doesn’t make any difference; everything is approaching zero or below.

The ramifications of this are mind blowing. What the Central Planners are attempting, while everyone else flees to safety in Germany, Japan, and U.S. government paper, is forcing you out of cash and into just about anything else. The rationale here is simple: money that lies around getting interest just isn’t productive.

So, while the Cntrl-P button over at the Mariner Eccles building is on full speed ahead and the dollar is getting debased by the minute, as of today your after tax yield on 10 YR. U.S. Gobermint toilet paper is less than 1%. Break out the party hats; you can loan spendaholic deadbeat politicians money for 10 years and get nothing back. Ten years from now what is that money going to be worth?

That this is terribly destructive to those who are near or in retirement isn’t really a concern of the Hope & Change crowd. So, how do Ma & Pa Kettle, besides the Ponzi known as Social Security, earn a return on their life savings and work? Easy Peezee; they don’t.

Don’t worry, we have all kinds of Gobermint benefits for you folks; food stamps [oops, I mean nutritional assistance], section 8 retirement housing, heating & cooling bill help, supplemental Medicaid and/or Medicare, and the list could go on for pages.

Rights enumerated in our Constitution are God given; benefits dolled out by Government are given and taken by the whim of the political elite.

“Hey Grandma, you haven’t eaten your broccoli today! Get with the program or we may just have to cancel your Medicaid. You are undermining the future of your grandchildren by unnecessarily raising health care costs.”

Given the fact that, on the whole, the Amerikan public is dumber than a bag of carrots, this won’t dawn on the masses until their IRA’s and 401k’s are confiscated or forced to buy Gobermint paper. Even then, though, I’m betting more than half will care more about American Idol and college football than the fate of the country.

At every step of the way, government will do whatever is necessary to keep the masses soothed and stupid. That they are intentionally robbing people of their life savings and productivity, right in front of their eyes, should make you nervous.

You are nervous aren’t you?

Have a good day everyone.

-vegas

QE WHERE ARE YOU?

                                      Gold Trading Directions

Just a friendly reminder from our pals at JPM that the rock needs to be rolled up the hill one more time; in a research note today they are now predicting more QE from the ECB at the June and July monetary meetings with a cut in rates in September.

So, after a $40 rally off the lows, muppets clients now have an official reason to buy gold at today’s highs near 1577. Maybe some day the public wakes up, but I doubt it; after all, these are the smartest guys in the room remember? That the market will undoubtedly back off from here on “profit taking” [thank you CNBC money honeys] isn’t anything to worry about. Neither is the probable fact your investment adviser sold the market aggressively in the 1575-ish area while you were buying.

“Hey man, it’s just a coincidence.”

So, we now have QE baked into the gold cake not only from the Fed, but now from the ECB as well. Super; when they don’t deliver what then? Who is left to buy? Even if they deliver, if we are still in this price area of 1550 – 1600, who is going to take the lead and take on the Central Planners above 1630?

One thing I am fairly certain of is the desire, on the part of Chalky Soetero and his pals, to keep gold out of the news as election season heats up by the day and week. No way do they want the sheeple people of Amerika to wonder why gold is rising? They might get ideas.

On  the currency front, if it’s daylight in Europe, some politician is lying and desperately trying to convince someone, anyone, that Plan G will work [even though the trial balloons of Plan A-F were dismal in approach and can’t work]. We will get fireworks on the upside as over leveraged shorts will bail in a panic [like today for instance] but the big money knows Europe and the EURUSD are toast.

It isn’t a question of if, it’s only a matter of when; what weekend do they announce Greece is gone out of the Euro? Come every Sunday afternoon from here on out, every money manager on the planet will be glued to the screen to see what’s happening at the open in New Zealand.

And lest you think it’s only Greece, the fellas in Spain and Italy will be watching very closely to evaluate their exit options as well. Forget the politicos; if there lips are moving they are lying.

Have a good day everyone.

-vegas

MICROSECOND TRADING: TUESDAY EDITION

                                         Out In Force Today

Another day where the Central Planners were out in force in the gold market. Not content to gobsmack it down $20 in Asia and early Europe, the rock got rolled back up the hill for another move down.

The problem with piggy-backing them is that they care not about profits/losses; they only care about getting the price down. If they are $10 or $20 [or even more] early they don’t care; you and I should.

Since last week you have to be blind and/or stupid not to be able to see them in the market above 1580. It slowly climbs and then BOOOOOOM! Down $2 or more in a second or two; climb again rinse and repeat. Cover under 1580 and start fresh again.

“Errr, we only represent customers and do no proprietary trading”

“Yea, sure; by the way is my check in the mail?”

Gold continues to be plagued by extremely sharp moves both up and down in a fraction of a second. You get yourself on the wrong side of one of these, and it isn’t a very easy task to then try and make it back. What goes out of your pocket in a heartbeat might take many hours or even days to get back, and that’s if you are lucky.

This is what I call a lack of “trader volatility”; multiple trend moves within the same day in the same direction. Without it you have almost no chance of making losses back during the day if you get on the wrong side of a trade. What we get now are micro-bursts; gold pops up $5 in 3 seconds, spends the next 3 hours going up $2, and then drops $6 in 10 minutes. Very tough trading scenario.

Still, I think what will drive the market until the next Fed meeting [and Greek elections] will be one of perceptions about QE3; will they or won’t they? Thing is, this is about there last chance to do anything before the election and make it count [if it works, which is a big if]. So, the market is particularly interested to see what Weimar Ben has up his sleeve.

Any thoughts the Cntrl-P button isn’t pushed and it won’t be a pretty picture for gold.

Have a good day everyone.

-vegas

STOP HUNT MONDAY

                              Some Days You Feel Like The Fox

Ever since gold rallied above 1580 the other day, the “nibble nibble BOOM!” orders from the Central Planners have been hot and heavy. The manipulations can especially be seen in the last 30-60 seconds of most 5M candlesticks; only somebody who could care less about price would consistently allow Blythe and her crew to butcher their orders in this way.

I don’t think I can ever remember another time when price, from second to second, has been so chaotic and disjointed in gold. Watching prices, you have no idea if the next second is going to quote a bid anywhere near where it was a second earlier. What looks good one second literally stinks the next.

“Run little fox, run!”

Overnight, as if on cue, the “Lemmings in Asia” took the market up to the 1599 level. I guess when you sell it from 1560 all the way down to 1528 the previous 2 days, 1599 looks like a bargain buy.

“Mrs. Wantanabe, please go find a job will ya?”

Over in the currency arena, we got the “Flying Wedge of Death” going on in some of the majors, particularly EURUSD. We got record short positions in the Euro, so until some of these weak hands get shaken out, the market is subject to quick, sharp, and vicious short covering rallies, especially in the off hours and near the European close [9:30 A.M. – 10;30 A.M. Chicago time].

After the $140 sell off [1670 – 1530] in gold, we’ve now rallied back half-way to just in front of 1600. I would expect a few attempts at 1600, but ultimately I think the market needs to step back and do some backing and filling below 1580 before it can really go higher.

Ultimately, it’s going to be the Fed June Meeting that holds the short-term key for gold prices. If Weimar Ben throws cold water on further QE, price action is going to get ugly quick. Until then, prices probably will be contained in the 1550 – 1610 area; price will move on perceptions of change in the QE dynamic.

Really, what choice do they have but to print?

Have a good day everyone.

-vegas

ROLL ROCK UP HILL REDUX

                                       Attention Gold Buyers

I’ve had this nightmare dream before; I’m driving along and everything’s fine and then out-of-the-blue the rocks come falling down crushing my car and me inside. You wake up and realize it ain’t happenin’, but nonetheless for a few seconds it’s a little disturbing.

How many times have we seen this scenario: sharp rally, crush shorts, turn common tech indicators bullish, get public long [again] at or near the top within 100 hours?

As the world falls apart and specifically Europe implodes, the smartest people in the room have just bet, in the last 48 hours, that Weimar Ben will hit the Cntrl-P button over at the Mariner Eccles building and start QE3 in June. If we don’t get it, a whole lot of people are gonna be trapped inside my dream.

I’m going to go out on the proverbial prediction limb here.

I think we have seen the low in gold up and until the Fed meeting in June. I can see about 1550-1557 on the low side and maybe 1610-1625 on the upside until then. But here’s the rub; if we don’t get QE3 from the Fed in June, and 1530 -1525 subsequently gets taken out, we are headed for a major debacle in price on the downside. And with that comes many months of price congestion and basing before gold can ever hope to go higher.

Around the 1580 level and higher today I have seen the “nibble nibble BOOM!!” phenomena from the Central Planners. There’s no doubt in my mind they were heavy handed in the market today. What do you suppose that means?

While the entire world goes ga-ga over the FaceBook IPO today [expecially California State Tax Apparatchiks], Greece is toast, Spain implodes, and European GDP is falling rapidly. Granted we needed some kind of rally because so many people have piled into the short side of gold.

[Here’s a thought; what if FaceBook opens higher and closes lower? What happens then?]

But remember this: in a bear market [not just gold but any market] the rallies are killer – they come out of nowhere and they are vicious – and they convince a whole lot of traders that the trend has just changed and now we can pile into the long side of the trade. If you look at a daily chart of gold this is the type of action we have seen since 1800.

Ultimately, after the stupid money has piled into the wrong side, price rolls over and we get the rinse & repeat cycle we have seen ad infinitum nauseum  since last Fall; buy the rally get stopped out [pick number of days here ___ ] later.

You can rationalize a lot of things, but you can’t ignore the math; Europe is complete toast and the U.S. [add Japan too] is next. Stocks are so overvalued, pumped up via the Fed to get Chalky Soetero reelected, and give the illusion that things are just fine.

We have started to see stocks roll over world-wide; practically every major stock index is lower on the year. When the complete “risk off” comes, just remember gold isn’t immune.

Meanwhile … Chuckle of the day before the weekend.

Have a good weekend everyone.

-vegas

Update 3:15PM Chicago Time

In case you were wondering why I have Friday rules, I present EURUSD as prima facie evidence of what the Central Planners can do when conditions are thin and stops are on the plate. At 2:00 P.M. we had a melt up stop hunt in the EURUSD of about 60 pips within a few minutes on zero news.

Whatever can make your weekend can destroy your weekend. I wonder how many Euro traders are crying in beer as I write; only it won’t just last a few minutes, it will be there all weekend into the open on Sunday night. Been there done that once in 1980; ain’t ever happened since.

Sometimes it may seem to those who are new to trading and creating wealth that my methods can be restrictive and that I may miss some profit opportunities for no apparent reason. Lesson #1; first do no harm, then make money. I rest my case.

The Dow 30 closed near the lows of the day as FaceBook closed at $38. Another pump and dump scam Ma & Pa Kettle will eventually lose money.

Over the weekend [probably Sunday] I’ll have a special post. Tune in for details.

MRS. WANTANABE PLEASE STOP TRADING

                                          Is She Hurting You?

And while she is blowing up the Japanese bond market, she ain’t exactly doing gold any favors either. Somebody at the Central Planning prop desk over at JPM has obviously forgotten to email me and let me know she is back in the market.

“Mrs. who?”

[For your personal education and amusement I introduce you to her famed exploits.]

 http://online.wsj.com/article/SB10001424052970204422404576594493550582376.html

http://ftalphaville.ft.com/blog/2011/10/27/713866/but-what-does-mrs-watanabe-think/

She hasn’t been this active since she got caught on the wrong side of the GBPJPY carry trade in 2008 [June 2008 GBPJPY about 215.00 – January 2009 GBPJPY about 120.00] and took a 40% + haircut on a ‘sure thing”.

Amazing how many sure things ain’t that sure.

Think back a second to the Asian trading session following the “Leap Year Massacre” in gold on February 29; which in about 4 hours gold tacked on about $40 / oz. in price [1685 to 1725] on a straight up bargain of a lifetime massive demand spike from Asia.

They should have used my advice from yesterday: “If you are gonna buy the dip, you better be willing to sell the rip.” Sadly, no can do and/or no wanna do. Why sell it higher when you can easily sell it lower later?

Subsequent sessions since then have seen gold stage some pretty good 2 and 3 day rallies, only to be crushed by the Central Planners. Undaunted, Mrs. Wantanabe bravely kept buying. Interesting thing happened though the third time gold came back to the 1630 area from loftier heights; Mrs. Wantanabe and her pals [affectionately dubbed the “Lemmings in Asia” by yours truly] started selling, and selling, and selling some more.

Which brings us to the present day $140 haircut ain’t-this-fun-waterfall in gold. Not interested in seeing the mistakes of the past repeated, most notably the above mentioned carry trade and multiple trading debacles in Spanish and Irish bonds, they simply are doing what every trader at some point has to do: puke.

                             Bullwinkle J. Moose Shows The Way

“Hey Rocky, watch me pull a rabbit out of my hat. Button up my sleeve ...”

We all know how that turns out.

Have a good day everyone.

-vegas

BUYERS ON STRIKE

                           That’s Right; We Ain’t Buyin’ Nuttin’

I know it’s hard, but imagine this for a moment; Greece is totally out of money! They got about € 1.98 in the bank [if it’s still open]. I mean, who could have seen this coming?

Tomorrow sees a Greek bond auction, and if this somehow gets undersubscribed and they can’t raise the necessary scratch to pay the bills, I’m sure all the public sector union thugs employees not getting paid, the 40 year old philosophy students not getting their University tuition, and the pensioners who see their monthly checks slashed,  won’t be a problem. Peace and love in Syntagma Square.

So, the only thing left to do in Europe is sell gold. Even the “Lemmings in Asia” have caught on to the scam game. Yes, Mrs. Watanabe and all her pals, who have been accumulating gold from the 1800’s, 1700’s, and 1600’s, are now bailing in the mid 1500’s. As predictable as they were going up, they don’t disappoint on the way down either; only, on the way down it happens a lot faster.

Not to be outdone, that stellar Wall Street firm Morgan Stanley is telling muppets clients today that gold is still a buy and that the future looks bright for the “barbarous relic”. Seems their prop desk has more proprietary selling to do.

We’re due here, in just about everything financial and especially gold, for a smart 2 or 3 day rally that takes prices back up some. Whenever it finally does happen, look for the rally to start sometime after the Crimex Comex closes for the day. After all, the dealers and Central Planners have to shove the rock back up the hill, in the least volatile time of the trading day, to get everybody else to buy it in “prime time”. Rinse and repeat.

Meanwhile, at JPM …….

                                             Ina Drew Is Gone

Somebody had to fall on the”It’s-my-fault-the-firm-lost-2-large-on-the-trade” sword; making a paltry $15 million per year I’m thinkin’ soup kitchen isn’t in her future. Perhaps there is a good job in Chalky Soetero’s administration somewhere; Treasury Department would be appropriate.

Have a good day everyone.

-vegas

THE HANGOVER

                            Hey Tracy? We Can’t Find Bruno Iksil

When you claim you walk on water, funny things always seem to happen.

I’m thinkin’ even the Central Planners couldn’t get in to talk to the JPM prop desk today. Not that they needed any help taking gold lower; economic stats over night in China and India were horrible. And any news out of Greece … well, it is Greece after all.

But here’s the million dollar question I have for Jamie & Blythe over at JPM: how much of what came out last night [prop trader Bruno Iksil’s $2 billion loss] did you know about in the last month, and did you relay that information to large hedge funds and the Central Planners so they could sell every rally in gold? And, just as importantly, did your metals prop desk use this info to short gold for your own account so you could capitalize on “Bruno’s disaster” when the news broke?

Inquiring minds would like to know.

“vegas ol’ buddy old pal it’s just your normal $100 / oz. drop in 9 days that happen all the time in gold. No story here; please move along everyone.”

What’s even more disturbing is the mentality these supposed “hedges” truly reveal. Last time I checked, hedging means one side goes up and the other side goes down thereby canceling out losses. Excuse me for asking, but how do you lose 2 large when hedging?

If you were an investor in my gold mine and I told you we mined 5,000 oz. of gold last quarter, and our cost of production was $400 / oz., but we lost $100 million as a company for the quarter, what would you think?

“Err yea, just a glitch in out hedging. No bigge.”

“Say what?”

Of course the real meaning of all this is that JPM will get to borrow 10 large at 0.01% from the Fed so they can sink it in some Treasuries at 1.75% and be guaranteed to make it all back thanks to the taxpayer via the spread. [Excuse me while I go puke. OK, I’m back]

Heads we win, tails you lose.

We will never know the full extent of the corruption and back room dealing behind the news of the $2 billion loss. But I know one thing for sure.

“Yea Tracy, we can’t find Bruno; we screwed up and there is no way he is gonna be available for comment on this.”

Meanwhile …….

Friday chuckle time.

 Have a good weekend everyone.

-vegas

A LINE IN THE SAND

                              I Bet He Loves To Trade Gold Too

It takes a brave soul to be long gold these days; you got the “Lemmings in Asia” throwing in the proverbial towel, a disintegrating Europe that sells everything, and of course the ever present Central Planners along with the JPM prop desk.

However, Vampire Squid [GS] is telling their Muppets that this is the time to buy gold.

[ http://www.zerohedge.com/news/goldman-sees-%E2%80%9Ccurrency-last-resort%E2%80%9D-15-1840oz-6-months]

Here’s my question: Is the recommendation for real, in order to really enrich clients, or is it a ploy to be on the sell side when the Muppets take their advice? Based on past history you would be better off running quickly from The Squid.

But has anything really changed to warrant a lower price in gold sub $1600? Me thinks not. As hard as it might be to get gold back over $1800, it might be even more difficult to get it lower than the $1550 area. Governments all over the world have the printing presses going full tilt, debasing currency on a monthly basis that 5 years ago you would have thought literally impossible.

I think you have to give gold the benefit of the doubt [buy breaks and be long sub $1600], up until the time it breaks [if it ever does] the $1550 area. It may be a tough hold, but fiat creation is everywhere and not going away. Anybody that thinks Europe or the U.S. will opt for “austerity” is nuts: they will print money until the revolution forces a change.

A definitive break of this area [by more than $10 or $20] and I think gold has some real problems going forward; not the least of which would be it would be lower on the year. What would real panic selling look like? You’ll find out if it goes lower on the year.

Have a good day everyone.

-vegas

THE SECOND SHOE DROPS

                                     Gold Looks Good Huh?

With the world in the condition it is in, how many more $40 drop [or more] “shoes” are still out there waiting to be liquidated? Mind-numbing boredom in the gold trade day-after-day for weeks; then Boom! All it took was 7 5M candlesticks and it was mission accomplished.

I’m going to repeat this because I think it is important: forget the Central Planners for a minute [if you can]; think more about the GLD. GLD is the ETF [exchange traded fund] that is in the top ten of gold holders in the world. Gold has been higher 11 years in a row. The market is now within about $40 - $50 of the 2011 close [1563].

What happens when all the “Ma & Pa Kettles” of the world decide it’s time to take some profits from holding gold the last [pick a number between 1 and 11] years. How does GLD sell [within two days for settlement] tonnes of gold into a weak market without absolutely killing it lower? And if that happens, won’t lower prices induce more panic selling?

Fact is, since the GLD was formed gold has been higher every year. Maybe, just maybe, we get to see what happens when the other 800 lb. gorilla in the room gets seriously grumpy and needs to sell. Think it could get a little ugly?

“Oh boy.”

Everybody [meaning blogs and pundits] talks about the day when there is no offer and gold is bid at $3,000 / oz. and there are no sellers. OK, how about when you wake up some morning and Europe is wall-to-wall riots and gold is $350 / oz. lower? If you own gold and the GLD is selling 1,000 tonnes of gold with more to come, and you own some gold yourself, what do you do? You gonna just sit there? [Maybe, but I doubt it. Why do you think it is called panic selling?]

First and foremost I am a trader. When I come to the trading table [pit or electronic] all my senses are on alert. I don’t buy hype; I try and look at things objectively and the quickest way I can make money via the algorithm. Right now, gold looks very, very sick and reminds my stomach of the early 1980’s. Talk then was exactly like it is now.

Maybe gold goes ballistic from here and ends 2012 at $3,000 / oz. All I’m saying is be prepared for something a lot lower than where we are at now.

Opinions kill.

Have a good day everyone.

-vegas

OVER THE CLIFF

                                            Europe Today

It’s gonna be an interesting next 6 months or so; wait a minute, what am I thinkin’? We don’t have to wait that long; come May 15 the Greeks have to come up with a cool half a billion Euros to pay the idiots  investors who hold Greek bonds that didn’t go along with the bailout.

Add to that a new Greek Government that is made up of Neo-Nazis and God knows what else, and oh don’t forget France now has a socialist President, and you have the makings of the wheels coming off the goods.

Let’s not forget, however, it’s going to be all euphoria from the politicians down to zero. After all, when you go off a cliff, nothing really happens to you until you hit the ground; that’s when it hurts.

The implications of this weekend in Europe are enormous. Expect louder cries of nationalism, confiscation of wealth through higher taxes, more bailouts and giveaways to the masses, and ultimately markets to work lower; maybe much lower.

I wouldn’t be long European stocks or bonds if they gave them to me for free. Now, maybe that means the bottom is close at hand, but looking at the political landscape of Europe, all I see is 1930.

Gold’s initial reaction is one of indifference; opening lower and maintaining a tight range throughout the trading day. The problem I have with gold at the moment is threefold; 1) the daily chart pattern looks horrible, 2) it is the asset of choice to sell when people need to raise money, and 3) the Central Planners are the ever present 800 lb. gorilla in the room.

The sad fact is that the money printing will continue unabated in Europe, Japan, and of course the U.S. Markets will eventually sort these developments out, but it is going to be a very bumpy ride. Which country gets to zero first?

Not much has happened in the markets today; but not much happens in the eye of a hurricane either. Just wait.

Have a good day everyone.

-vegas

SEND IN THE CLOWNS

                                Politicians Speak Markets Plunge

Schaeuble: “Being a member of EU is a voluntary decision”.

German Finance Minister Checklist:

Step 1: Ok, first tell mistress to sell EURUSD at 17:00 [check],

Step 2: Tell mistress to cover EURUSD after the drop and before she goes shopping [check].

Step 3: Go find a TV camera and say something stupid [move the market lower] [check],

Step 4: End interview and go meet mistress with Dominique Strauss Kahn [check].

Sounds like an awfully productive day. Use the cover of a U.S. NFP report as cover so you can deflect blame for the move. And who says these guys are stupid?

Meanwhile ……….. at the U.S. BLS [Bureau of Lies & Statistics]

                                         Chief Statistician BLS

More lies, damned lies and then statistics out of the U.S. today that sent gold and other financial markets on a double reversal move guaranteed to allow you to pursue those 2012 tax loss strategies you have been thinking about.

Add to that the du jour “loose lips sink ships” talk from Europe, the Central Planners lurking about, and you have markets that are approaching mental breakdown.

This chart [courtesy of zerohedge.com] pretty much sums up Amerika today:

It’s easy to lower the unemployment rate when the number of workers in the economy plunges compared to the number of jobs lost. Duhhhhhhhhh.

I weep for the future.

And, as all this plays out gold sits precariously right at support in the 1620 – 1630 range. I don’t like the action right now in gold; maybe I’m wrong, but my guts tell me gold is about one inch away from getting clobbered to the downside. We’ll see next week, but with the break in oil and the dollar rallying, it’s going to be tough to get this stuff back over 1680.

Have a good weekend everyone.

-vegas

ASYMMETRICAL TRADING

                                         USS Federal Reserve

Back in the day when I stood in a trading pit and was a member in the “Masters of the Universe” club, one of the very first things you learned was to be early. Early made you money; early saved your life; late led to losses, and the inevitable fatal insult to a trader which was leaving the business for a real job.

“Would you like fries with that order?”

The stark reality in trading is markets go up differently than they go down. Stair steps up; out the window down. Falling isn’t so bad; it only does damage when you hit the ground.

More than any other manipulated market, gold gets skewed lower much, much faster compared to when it rallies. Take any 5M candlestick chart and look at the breaks and then look at the rallies. If you are selling on the way down or buying on the way up, good luck with the extra slippage if your timing isn’t totally impeccable.

Add in the USS Federal Reserve, and your trading rowboat gets lost in the wake.

Which means that you have to be one of the first rats off the ship when it takes on water; it doesn’t matter if price goes any farther. With the Central Planners in charge, being late liquidating your trade could mean gaps of anywhere from $4 - $20 with the outlier of maybe $50 - $70 [remember Feb. 29?].

I guarantee if you get caught in one of these the first thing that hits you is denial.

“Dude, this can’t be happening.”

It’s the nature of asymmetrical trading. Planning for it can help you sidestep the large landmines that litter the landscape. Don’t fall into the trap of thinking that a market “has to do something”; that is only an idea in your head. Reality isn’t mirrored around your opinions.

Ultimately, the only reality in trading is up money or down money. Opportunity cost is the cheapest form of capital to lose [like in zero] and happens to all of us every single trading day. Being early out of a move usually guarantees better prices; allows us to “book” the profit; and keeps us objectively focused on price.

“Oh yea, it eventually makes you rich too. Duhhhhhhhh.”

Have a good day everyone.

-vegas

THE PUMP & DUMP

                                          Yes Kitty It’s Real

As gold spiked higher this morning after the bogus government BS GDP report, I had the gnawing feeling the market was being set up. We get these $4 - $5 price spikes in a microsecond and then a few candlesticks later …..

Are the Central Planners going to allow this and we end up with a strong Friday close?

“C’mon vegas, you know better than that.”

“Boy, I sure do.”

And while the public is buying with abandon above 1660 all the way up to 1666, it all goes away in a microsecond with the $5 drop at 8:45 A.M. [Chicago time]. Welcome to the pump & dump: Friday Edition.

We’ve seen this before; some days it’s almost surreal, as if you have been in this nightmare before. Oh yea, last week, and the one before that, and the one before that, etc. The charts look soooooooo good now; reversal off the bottom and strength into a weekly close. Got to be higher next week.

Well, maybe we are higher next week, but before you pick out the color of that new car, just remember what has happened every other time we have gotten a nice rally in the last 4 months. The Central Planners are going to stop you out.

We are quickly approaching a “moment of truth” in gold. If this current rally doesn’t hold, and we break back down into the 1620’s I think the market is in deep trouble and could see prices below 1600 faster than you think.

Don’t think too hard Thinker Kitty.

Meanwhile ….

 It’s time for the Friday Chuckle; below with no comment needed. It speaks very well for itself.

Have a good weekend everyone.

-vegas