Sunday, September 25, 2011

Gold and silver in liquidation mode

     Gold and silver were in total liquidation mode on Monday morning as European and Asian traders are looking to raise cash anywhere they can.  Gold continued it's decline from the past 3 days as the dollar strengthened versus major currencies.  Gold was down 3.5% while silver was down a whopping 12.4% to 26 and change after earlier dropping as much as 17%!

     There is full blown panic in the commodities space as oil and copper were down big as well.  Oil was down 2.50 to 77.50 and copper was down 5.5%. 

      Well it looks to be another roller coaster day on Wall Street after a weekend of talks between central bankers and policymakers from around the world failed to produce any agreement on how to deal with the European debt crisis.

     "There was very little official detail on the talks however as speech after speech outlined how worried global policy makers were, without offering any clear signals on what the response will be to the debt crisis," said a CNBC article.

     There was talk of a shock and awe trillion dollar upgrade to the European Financial Stability Fund or EFSF but little consensus about implementation of such a plan.  Markets have been reacting negatively to all the confusion.

     Asian stocks are down across the board as of 11:35 PM PST with the Hang Seng down 3% and the Nikkei down 2.1%.  US DJIA stock futures were down over 100 points.

      Angela Merkel in an interview earlier today said that allowing Greece to default would put tremendous strains on European markets and would perhaps precipitate a Lehman like banking crisis.

     ""What we can't do is destroy the confidence of all investors mid-course and get a situation where they say that if we've done it for Greece, we will also do it for Spain, for Belgium, or any other country. Then not a single person would put their money in Europe anymore."

Stocks I'm Watching
     IAU-  After tanking overnight to a low of 1530, gold has rebounded to 1625 today as it has bounced off trendline support and bargain hunters step in.  Gold looks ripe for a speculative trade here but I'm staying away as I have had no luck trading gold or the gold miners.

     AAPL-  Apple tanked in the early going down over 3% as a JP Morgan analyst said parts orders for the Ipad from Apple to Hon Hai precision were down 25%.  This could be the first signs of the slowdown in the world economy affecting sales of the wildly popular Ipad.  Buyers stepped in around 391 and quickly sent the stock back over 400 were it settled at 403 today.  It looks like that was a great buying opportunity for AAPL which I missed.

     SLV-  Silver recovered along with gold today with SLV finishing only down about .7% after being down 10 pct in premarket.  Silver is too crazy for me to trade.

     C-  Banks were the strongest sector today on hopes for a plan for solving the European debt crisis.  Citigroup was up 7% today!  It's probably time to bargain hunt in the bank sector as it looks like Europe might be getting it's act together.

     XLE-  Energy stocks were strong as well today as XLE is up over 3%.  All the stocks that had been punished the most recently were up the most today, mainly cyclical stocks that do well when the economy is good. 

Market Recap
     Market action today was very bullish with the DJIA up over 250 pts!  We have been stuck in a range bound market for the past 2 months between 1120-1230 on the SNP and it looks like we are going to head back up in the range once again.  I am very very encouraged by today's action in the markets and purchased some more European large cap stocks for my long term portfolio.  It finally looks like the European policymakers understand the enormity of the situation and are taking steps to address the problems in the eurozone.  I am very encouraged by the news flow out of Europe and think a plan to either ring fence the banks or increase the size of the EFSF along with ensuring that Greece will not default can cause an enormous rally.  European stocks are down over 30% from the highs and Emerging Market stocks have been pounded as well, so that is the first place I would look for bargains.  US stocks are down 17% from the highs so I believe there is less room to run up.
     It still looks like the worldwide economy is slowing down so I wouldn't back up the truck here but it's fine to nibble.  Emerging markets have much better fundamentals than the US and I believe have been unfairly beaten up because of strong commodities exposure.  China and Brazil are growing at a healthy clip and have little debt and valuations are attractive as well. 

     I am definitely looking to put some more longs out there and AAPL is the first thing I am looking at.  I don't believe the news today out about a 25% less part order from AAPL for the Ipad2 is that significant.  There is no way in hell the ipad 2 sales are off that much!  As such, today's dip was a nice buying opportunity.  I am looking to get back in on a dip back down to 400. 



Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!


  1. Damn, this means Canadian stocks must be plummeting as well.

  2. Interesting to hear. The meltdown continues.....

  3. >Gold going down in price
    Must buy gold before great gold meltdown occurs.

  4. I really need your blog these days.

    A few days ago, I casually mentioned the economic situation of the world (shamelessly plagiarized from your blog, of course) to my father and he was pretty darn impressed.

    I figure that if I do this a couple more times, I can get an allowance raise.

  5. I'm not sure if I should be happy or sad, I've sold my gold before all of this, I wonder if the price will raise again, meaning I've made a mistake..

  6. @Lemons Don't Make Lemonade

    I'm glad I can help :)


    Your not the only one confused about gold, I don't know what to do about it either! So, I'll just sit on my hands.

  7. Holy crap I knew things were getting bad, but not that bad! Gold so low? Silver?!

  8. In africa you can buy a piece of bread for 0.10 grams of gold, but you die of starvation with coloured papers with presidents faces on it.

  9. By the way, just discovered your blog and you have a new follower, nice one :]

  10. Its the end of the world as we know it.

  11. Everyone run. Buy ammo, canned food and water. Sky is falling. Oh wait, it isn't. It's just the satellite falling.

  12. @Hasidic Plumber

    As Art Cashin says, "never bet on the end of the world because it only happens once!"

  13. interesting post! +followed, come check my blog out when you get the chance!

  14. I wanna say there has got to be an internal connection to this and all the gold buying hype before this happened - I'm almost positive it's no coincidence, granted I dont know how things work - but it seemed like a setup from the start

  15. ooh nows the time to buy some bling bling for mommy ;)

  16. Nice blog, great to read!

  17. @Bersercules
    And I feel fine... :D

  18. Good think Gold is finally going down again. I prefer Fiat money.