I Hope You're Ready

This is certainly setting up to be a wild and wooly week. Traders around the globe are back from "holiday" and realizing that things are seriously messed up. The latest symptom of which is this:

http://www.zerohedge.com/news/guest-post-immediate-effect

Now, the proper question to ask yourself is "why?". Why would the Swiss attach their currency to the dreadful and soon-to-be-meaningless euro? What do they know that we don't know? What are they afraid of? I suppose we'll have our answers in due time.

To no one's surprise, The Cartel used the Swissie headline as cover to initiate their usual 3:00 am raid. As you can see, gold was immediately bid back up.

paper_9-6amgold5.jpg

Speaking of being bid back up, gold made new alltime highs before the raid, topping out at $1923.70. This gives us a rather interesting statistic:

1) Gold margins were hiked on 8/11 with the price at 1818. After a quick 5% correction, price had fully recovered one week later and was trading back above 1818 on 8/18.

2) Gold margins were hiked again the day after gold reached 1918 on 8/23. After a quick 10% correction, price has fully recovered nine days later.

Hmmm. I guess we know to buy the dip the next time gold margins are raised. Probably in another week or so or once gold trades through $2000.

For today, expect lots of volatility and wild swings, even on the 1-minute chart. Price may dip again into the targeted area shown below and I'll be waiting for it if it does. By the way, there is no double-top. That talk is all EE-inspired nonsense. Remember, the Forces of Darkness will always attempt to create selling by painting double-tops, reverse H&Ss, ORDs, etc. Do not fall for this foolishness. Gold is going higher.

paper_9-6amgold2.jpg

Silver is once again caught up in the whole "is it a currency or is it a commodity" thing. Today, the world apparently thinks its a commodity as it is down about $1 in sympathy with stocks, crude and all of the other "risk off" trades. Whatever. BTFD. For today, if I get a chance to buy it under $42, I'll be all over it like stink on sht, like white on rice, like ugly on an ape, like...well, you get the picture.

paper_9-6amsilv2_0.jpg

That's all for now. Gotta go. More after the close. TF

228 Comments

agNau's picture

Check

Been ready!

33 and a turd's picture

Would love to know what the

Would love to know what the Swiss are at. Expensive esperiment

I’m just reading some research estimating that the SNB will need to spend $500 billion to $1 trillion in order to keep the CHF at 1.20 if the Eurozone crisis continues. You have to question the wisdom of pegging your currency to a something that may be in the early stages of collapse.

http://www.forexlive.com/blog/2011/09/06/a-trillion-here-a-trillion-there-2/

bigmark99's picture

sitting tight for now, watch the show.

think I'm gonna sit tight, in fact I'm gonna play golf, have fun girls and boys.

agNau's picture

Global QE.

They all know what is at stake.
"if we all don't hang together, surely we will all hang separately!"
A concerted denial of the truth. All the while increasing their "insurance" policy. (buying physical)
They are stacking.

DeltaCharlie's picture

Swiss Cheese

Nothing but a desperate attempt to save their banks... and the Hungarians, etc. who all took out CHF loans at close to 0% interest. Strength of the CHF would have put all those poor, misguided home owners with CHF loans underwater, risking a major housing default.... again, it's saving the banksters, putting at risk the welfare of the nation.  It's print or its Swiss Cheese for the bankers. 

Irene's picture

The Swiss:  educated into

The Swiss:  educated into insanity.  Seriously sick. 

Larry's picture

Got it

"if I get a chance to buy it under $42, I'll be all over it like stink on sht, like white on rice, like ugly on an ape, like...well, you get the picture."

Like flies on... uh, you know. :)

agNau's picture

Check out the HUI.

The run for the door by the increasingly well informed has begun. More fiat for my stacking.
:)

speconomist's picture

Volatility, BEWARE!

Beware of volatility to justify upcoming margin hikes. That's all I'll say.

OC15's picture

More Wynter Benton

When will The Morgue be in the 20s? 5-Sep-11 10:24 am

before or after silver is above $50? Any guesses?

Will the Morgue even be in the 20s after it reports earnings in Oct? Will it be "deaded" before the end of the year?

Stay tuned ladies and gents, The Morgue is about to go bye bye!!

Revenge is a dish best served cold. - suggesting that emotional detachment and planning ("cold blooded") are best for taking revenge. No colder than Blythe when she fired her traders!!

...........do da do da............

The Vet's picture

Gold - All time highs

Have any of these high points ever been set during COMEX trading hours... 

So which markets are the price setters?

I can't recall it ever happening but somebody with a better memory than mine may....

agauinvest's picture

JPM

33.22 Down1.41 (4.07%) 9:53AM EDT

aha69's picture

alpha/beta

I have been reading "Against the Gods": The story of Risk. A truly fabulous book.

This lead me to  look closer at the price relationship of gold silver. Hope you all find this interesting. Can anyone create a more uptodate chart for the community

This is fromhttp://pragcap.com/visualizing-the-gold-silver-relationship

The financial media have been getting really excited about gold and silver lately.  Gold has seen postings above $1500 for the first time, and silver is closing in on the $50 mark last seen when the Hunt brothers tried to corner the silver market in 1980.

Silver is a lot more volatile on a daily basis than gold is.  Silver seems to attract the hottest of the hot money, and moves around a lot more as a result of that speculative intensity.

This week’s chart shows a comparison of the daily percent changes in gold and silver prices each day since the beginning of 2010.  It is helpful in terms of visualizing the relationship between these two metals.  Each dot represents one day’s value for the percent change in cash gold and cash silver.  If we instead looked at gold and silver futures, it would look slightly different due to the inherent inefficiency in the gold and silver “fix” reporting.  And if we had a different period in history under examination, that too would make it look different.

One point which jumps out is that even though there is a great deal of variability, there is an obvious linear relationship that is highlighted by the linear regression line drawn on the chart.  For Excel users, it is easy to create a linear regression line like this one.  Just create the chart, then select CHART-ADD_TRENDLINE, and choose “Linear” for the regression type.  You can also select the options to add the regression line equation and R-squared value for display on the chart.

A couple of points are worth noting about this regression line.  The first is that a 1% move in gold produces, on average, a greater than 1% move in silver prices.  This is not a surprise; silver is more volatile than gold.  So in the language of portfolio analysis, silver has a “beta” that is greater than 1.0 when compared to gold price movements.  This means that silver’s daily moves upward and downward are bigger than those seen in gold.  This is similar to how a tech stock might move up and down by greater amounts than the SP500 or some other benchmark, whereas a utility company stock might have quieter moves.  Beta is the measure of those greater or lesser movements.

Beta shows up in the regression line equation for this set of data as the 1.2731 factor multiplying the X variable.  This means that on average, if gold moves 1%, then silver will move 1.2731%.

The other number in that regression line equation is 0.0018, which represents where the regression line crosses the Y axis.  In portfolio management jargon, this is “alpha”, which refers to the performance of an asset (silver) relative to the benchmark (gold) on a risk-adjusted basis.  In real terms, the meaning of that 0.0018 number is that since Jan. 2010 the price of silver has outperformed gold by 0.18% per day.  If we looked at another period, when metals prices were not in a protracted uptrend, the figure for alpha would likely be different, but the beta figure should be similar since silver prices tend to magnify the movements in gold prices.

It should be understood that the normal use of alpha is in terms of grading a portfolio manager’s performance relative to a benchmark like the SP500, after factoring out the market risk.  But the same math can be applied to the relationship of silver prices versus the benchmark of gold prices.  And doing this regression analysis helps us see more precisely why silver’s price movements seem to be bigger than gold’s on a daily basis.

Bstone's picture

Gold 2000 oz.

Thanks Turd,

I fight fires for a living and trade on my days off, well buy gold and silver if you call that trading. I have to admit this GLD and SLV thing is just about as fun as fighting a 2 alarm commercial fire. Everyday is different and exciting.......bring on 2000 Gold.

Hang10-Hawaii's picture

Maybe we're getting somewhere...

A funny thing happened on the way to one of my kids' soccer games this weekend.  I was stopped at a traffic light and noticed that the convertible behind me suddenly pulled around and alongside.  An animated young guy in perhaps his mid-twenties or so indicated for me to roll down the window, which I did, not certain what to expect. 

He said "Hey Man!  I just read 'End the Fed', and wondered where you got your 'End the Fed' bumper sticker (which is prominently on display on the back of my truck) - we need to get the message out!"

How about that?  A random event, and I'm once again encouraged that perhaps there really is a grass-roots following developing behind efforts to audit and/or end the Fed. 

Oh, and BTW, I took the liberty of inviting him to join us on the watchtower...smiley

Shill's picture

Beware of volatility to

Beware of volatility to justify upcoming margin hikes. That's all I've to say.

Meaningless at this stage, it will eventually be all cash. Margin hikes will be ineffective from here on in. Sure you will see minor dips, but nothing on the order of a mad rush to the door. Again

Hike away. Don't threaten me with cheaper prices.

Shill's picture

10:01a ISM services index had

  1. 10:01a

    ISM services index had been projected to decline

  2. 10:00a

    ISM services index rises to 53.3% in August

OC15's picture

When the big money

comes pouring into gold for safety, margin hikes won't mean squat.  They will have the effect of someone getting shot in the face with rubber bands (margin hike) while running away from a pack of lions (global financial collapse).

Monedas's picture

The Swiss are different !

Sound money ! Only their cheese is full of holes ! Monedas 2011 Inverse universe comedy plan.

beinki's picture

Soon, very soon

schmederling's picture

Weeks Ahead:

I think we could very well see a correction in the $400 to $500 range in Gold. IMHO it is currently overbought and due for a large correction. This will scare the S&^&T out of everyone that got on the bus in the 1700 to 1800 range - a "Perfect Storm" is forming to knock gold down as a safe-haven for the short-term. ( Weak hands)

Silver could follow along for the ride  - we should see a large sell off from those who jumped in the game in April in the 44-46 range - they will be happen to break even. ( If we even see this range in the next few weeks)

We have a couple weeks leading up to the 20th Fed meeting allowing for these formations to play themselves out. The expected fall PM run could be delayed or not happen as traditionally expected. If we know anything it's that we should by now expected the unexpected in this environment.

PM long-term have a ways to go but IMO the ride is no longer the same. We could still see a deflationary period happen before we enter the hyperinflation stage.

THANKS!

Pining 4 the Fjords's picture

Strength of the miners

The strength of the miners so far in the face of Dow down -210 (at least as I type) is REALLY encouraging...  could it be that rational analysis is taking hold in a portion of the market?  That people are starting to see the real implications - cause and effect- of currency debasement and are starting to deploy their capital accordingly?  No freakin' way...

As John McClean said at Nakatomi Plaza, "Welcome to the party, pal."

D E's picture

Swiss Watch Federation

Welcomes the Swiss National Bank Decision...about time!...

You got to roll me, and call me the Tumblin' Dice!

bikerspade's picture

Swiss franc and gold "raid"

Turd: I disagree that the short-lived drop in gold this morning was an engineered "raid". Once the Swiss franc dropped, traders (whether robotic or human) were programmed to sell gold because typically they are correlated. It was a shoot-first, ask questions later. The rebound moments later was probably when traders found out why the Swiss dropped in the first place.

Tom L's picture

Silver

Turd's right, the 'will she/won't she' behaviour of silver is putting a damper on the silver stocks.  EXK is capped right now at resistance, which we should expect to be stiff.  HL is being capped below $8.00 which is where the shorts begin to lose their grip.  SVM is in the same boat.  $8.00 should be where they make their stand today. 

If silver gets through the COMEX above $42.40-.50 I would think those holders should get paid pretty quickly.  Remember, they are stalling for OE on HL and SVM. 

The HUI should have some resistance in this 628-632 zone, we'll see how formidable it shapes up to be.

Ta,

BagOfGold's picture

Rick Rule...Let me repeat...

Has mentioned two forces prevail...greed & fear...hence the volatility...a "trader's paradise"!...We may have to get used to this...going forward!!!...

Bag Of Gold

Larry's picture

Swiss neutrality

Switzerland has avoided all manner of financial, social calamity and destructive forces for so long by staying out of wars, international power plays and political kerfuffels. They began to slip when some of their banks were bullied by the 'west' to out "tax evaders" who were keeping private bank accounts there. Now they enter the currency war.

Are they being sucked into a global Fascist, anti-privacy, anti-middle-class-owning-gold Cartel where only the elite will be enriched and protected? Are we witnessing the end of the historic Swiss neutrality?

If I had bullion in any of their "safe haven" banks I'd be looking for the exits. Maybe they'll continue to make fine chocolates and precision watches, but no longer as a neutral money/political zone if they are hitching their cart to a team of EU horses that are headed for the glue factory.

Maybe Santa should call Uncle Harry before gold hits $2000.

Shill's picture

Employment trends index slips

Shill's picture

a "Perfect Storm" is forming

a "Perfect Storm" is forming to nock gold down as a safe-haven for the short-term.

And then what should we do? Rush into dollars...Lol or better yet US treasuries?  Good knock it down, I would like to make a purchase this week.

Tom L's picture

HL

There's a triple top in HL around $8.00 on the hourly chart that is in danger of being broken down.  That should be good for a run back to the $8.50 range. 

Ta,

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