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Wednesday, October 5, 2011

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saveyourassetsfirst3

Four reasons to store some gold overseas immediately

Posted: 05 Oct 2011 09:18 AM PDT

From Sovereign Man:

... Why am I telling you this? Because it makes a hell of a lot of sense to store precious metals overseas:

1) Like it or not, confiscation is a risk. The higher the gold price becomes, the more it ends up on the radar for creditors, bureaucrats, or anyone who’s just plain litigious. Banks and storage facilities in your home country fall within the same jurisdiction as you do, so if you get dragged into court or onto some bureaucrat’s list, the risk of asset seizure is very high.

2) For US taxpayers, gold stored overseas in your own vault is currently not a reportable asset, so it’s an effective, legitimate means of storing wealth privately. I’ll get into the new FACTA reporting requirements another time.

3) If you move gold overseas to a stronger economy with...

Read full article...

More on gold:

Top gold trader: This is 2008 all over again

An answer to the question every gold stock investor is wondering now

Gold WARNING: France bans cash purchases of gold and silver over $600

Gold MANIA: Why we could be on the brink of the biggest bubble in history

Posted: 05 Oct 2011 08:50 AM PDT

From Jeff Clark, editor of Casey's BIG GOLD:

It may not feel like it after a 12% correction in the past 30 days, but Mike Maloney – founder of GoldSilver.com – is convinced that we're in a gold bull market that will be life-changing for those who participate.

I interviewed him for our current edition of BIG GOLD and am sharing some of what we talked about here. You may be shocked at what you read, because he's devoted a larger allocation to gold and silver than we have. See why he's convinced a bubble is ahead for precious metals, how high prices will go, and why he stores some gold overseas.

Jeff Clark: For those who don't know you, why is Mike Maloney such a big believer in gold and silver?

Mike Maloney: Around 1999, my mother needed help with the estate my father had left her. My sister and I interviewed a dozen financial planners and picked the one that had the most glowing recommendations and gave him control of the assets. He lost about 50% of them in the next year and a half. What I've found is most financial planners get it wrong. They're always chasing yesterday's news. To be fair, there was a market crash, but with 50% of her assets gone by 2001, I ripped everything away from him, moved it to cash, and started studying the economy like crazy.

I discovered that the people concerned about budget deficits and trade imbalances at that time were in the precious metals sector, the hard money advocates. All the rest of the economists and newsletter writers didn't really care. Concerns about international trade imbalances and how they were going to come back to bite us one day were coming from the hard money analysts. They also wrote about monetary history, something I just fell in love with. The fact that things just repeat over and over again is amazing.

I have hard data from...

Read full article...

More on gold:

Jim Rogers: The gold selloff is not over yet

This is the cheapest place in the world to buy gold today

Reports say billionaire George Soros has dumped all of his gold

Why Gold Isn’t $2000 yet…

Posted: 05 Oct 2011 08:24 AM PDT

From Julian D. W. Phillips of GoldForecaster.com:
The gold price went over $1,900 and looked as though it was going to mount $2,000, but since then has fallen back to $1,600 and is in the process of consolidating around the lower $1,600 area. It was expected that it would have moved a lot higher faster, but that hasn't happened, yet.

In the face of Italy's downgrade to A2 by the ratings Agency, Moody's summary that:

"There has been a profound loss of confidence in certain European sovereign debt markets, and Moody's considers that this extremely weak market sentiment will likely persist. It is no longer a temporary problem that might be addressed through liquidity support, and several euro-area governments are increasingly affected by the loss of confidence."

The downgrading was expected as are further downgrades for the different Eurozone members. Why shouldn't the gold price be on its way through $2,000 to higher levels?

Today the shape of the precious metal markets is quite different and particularly that of gold. In 2008, central banks were sellers; today they are buyers. In 2008, the Chinese gold markets were small. Since then they've grown to such an extent that they're soon to overtake India. These are two dynamic features that give demand a totally different shape to 2008. More than that, the impact of the developed world, long-term, has diminished quite considerably. It now represents less than 21% of jewelry, bar, and coin demand. The emerging world, as a whole, represents over 70% of such demand now.

The bulk of the world's physical gold that comes to the market is dealt at the London twice daily Fixings. The balance that's traded outside the Fixings is the most short-term price influential amounts, producing the swings that resemble the waves on the seashore. It's these traders and speculators that often persuade long-term buyers to stand back and wait for the prices to swing to the point that persuades them to enter the market. The drop from $1,900 had this effect on investors. Now that the fall has happened, we see a surge in demand from the emerging world to pick up the slack in the market. We've no doubt that central banks are buying the dips as well.

More @ GoldSeek.com

LISTEN: Korelin and Murphy on SILVER Manipulation

Posted: 05 Oct 2011 08:16 AM PDT

From The Korelin Economics Report:

AL Korelin and Bill Murphy discuss the silver market and manipulaiton.

More @ KEReport

Gaming Legislation Could Mean Tremendous Upside For Nevada Gold

Posted: 05 Oct 2011 07:17 AM PDT

By Jeff Moore:

Before my interview with Bob Sturges, I had absolutely no idea how good the legalization of Electronic Scratch Ticket Games (ESTGs) in Washington state could be for the casino market up there. Well, I had an idea, but nothing like I now think. And I had no idea how good these new games could be for Nevada Gold (UWN).

After the interview and doing a little bit of math, it seems pretty apparent to me that if these things are legalized, it will be one of those moments where the company's profitability could go up by multiples, and its revenue could more than double. Before you get excited and say that I am overblowing this (in either direction), let's take a look at why I think this.

Please be sure to read my disclosure/disclaimer, as there could be something incorrect in this post. The purpose of this post is for


Complete Story »

Mining Shares Bear Trap?

Posted: 05 Oct 2011 07:12 AM PDT

From the Chart Book, and the "Hope We Don't Jinx it Again" department:  The recent attempted breakout to the upside by the AMEX Gold Bugs Index (HUI) turned into a bull trap right after we commented on the breakout in these pages. "Obviously" our commenting on it jinxed it, so we provide the comments below with a full measure of trepidation and only AFTER taking the appropriate anti-jinx countermeasures … ahem! (No we are not really superstitious, it's just a quaint icebreaker.)

As shown in the graph below, the HUI traveled below all implied support (a little), which constitutes a breakdown attempt.  As we write in the late going on Wednesday, September 5, the HUI is rallying back up to above a roughly 490 implied support line.  Nicely above it, actually.

20111005HUI 

(HUI, 1-year, daily.  If any of the images are too small click on them for a larger version.)

Continued…


As of this minute we have the makings of a bear trap (a failed breakdown).  If the HUI continues to hold and/or move higher it will mean we have seen it confound both trend-jumping bulls and bears inside a two-week period.  "You just don't see that very often."

Judging by the aggressive action in the smaller issues on our monitors, The Little Guys are also catching more of a bid, which is to be expected from such an oversold condition.  Just below is the Market Vectors Junior Gold Miners Index or GDXJ as a proxy for The Little Guys.

20111005GDXJ 

(GDXJ, 14-month, daily)

The panic downside momentum has at the very least paused as of today, apparently, but the underperforming small resource companies sure have a long way to go to even get close to being "in the game" again. 

Eurozone Contagion Recap

Posted: 05 Oct 2011 07:09 AM PDT

By Calafia Beach Pundit:

The big market moves in the past few months have been all about Europe, as I've been pointing out since early August. The above chart should make that as clear as a bell. It compares the value of Eurozone bank stocks to the yield on 10-yr Treasuries. You couldn't find a better fit between two entirely different variables if you tried. A quick summary of what's been happening: As the sovereign debt crisis has intensified, as Greek yields have soared, as PIIGS default risk has soared, Eurozone banks—who are stuffed to the gills with PIIGS debt—have been crushed. The prospect of a PIIGS default leading to a Eurozone banking collapse has electrified the world, creating huge and even unprecedented demand for the safety of Treasuries. Moreover, it's a good bet that almost $400 billion of deposits have fled Euro banks for the relative safety of U.S. banks since last June.

Complete Story »

Advantage: Trader

Posted: 05 Oct 2011 07:09 AM PDT

Last Thursday evening, I sat down at a small Hold'em tournament in my neighborhood.  The competition at this event is pretty strong – with a number of players making regular appearances at major circuit events.

I was seated to the left of Ralph – a talented amateur who cashed in the most recent WSOP main event.  You might recognize this guy as he received a good bit of TV time – seated at the ESPN featured table this summer.

As we got started, the small talk chatter began.  Everyone was pretty relaxed and a few at our table were already "loosened up" with a  few drinks under their belts.  At one point, the gentleman across the table took a look at my shirt (with a Mercenary Trader logo) and asked what I did for a living.

I casually replied that I had was a swing trader – active in stocks, ETFs, currencies, and a few other areas.  The reaction was actually pretty funny…

The whole table suddenly got quiet.  Another guy turned to me and said "I guess this has been a tough period for you guys."  His eyes conveyed a mixture of pity and a hint of twisted pleasure.  (The poker crowd can be a bit of a cut-throat group below the surface).

I smiled, folded my deuce seven off, and replied – "we've actually had a strong quarter."  The guy nodded, but had obviously lost interest.  The action was heating up and pretty soon he was all-in with his pocket kings about to get cracked by an ace on the board.  I was struck once again by how many parallels there are between a Texas Hold'em tournament and this dynamic business of trading…

In both poker and markets, the key to winning is first understanding when you have an advantage and then exploiting that advantage using the proper strategy or tool.  Turbulent markets don't have to be a death sentence for traders – but they certainly require a different skill set to survive and advance…

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The Advantage of Flexibility

The first advantage that true traders have is the ability to respond to changing markets with flexibility.

If you find yourself at a poker table with a maniac – or volatility machine – the first thing every skilled player will do is reduce the range of hands he will play.  A setup that might be attractive in a more "normal" game now becomes just another opportunity to lose chips.

Because this maniac has no regard for risk management, it becomes very difficult to gauge what type of hand he has.  This player typically only has one mode:  Full Steam Ahead.  So for this type of player, it only makes sense to engage when you have the nuts – or at least the possibility of flopping a monster hand.

In this case, the goal is chip preservation – rather than winning a larger stack.  The primary tool here is patience.  If you flop a set or hit your flush, you're likely to felt him.  Otherwise, you're not interested in a firefight.

The same is true for volatile, unpredictable markets.  When prices fluctuate wildly – on a daily basis – responding to headlines and bi-polar maniac traders, the best approach is to scale back and trade small.  Sure, you may miss some tremendous profit opportunities.  But you're also going to miss some tremendous opportunities to sustain losses.  Losses that could come at you out of the blue – while you sleep – because a politician in Europe or China spooked the market.

Now this doesn't mean that the best approach is always to trade small.  There are periods where it makes sense to go all in, to plow your capital into a trending position, to bet aggressively when the stars align.

If you're a trader with a mandate that allows you to vary your exposure levels, you have a tremendous advantage over your competition.  Most mutual fund managers, pension fund advisors –  even financial planners and RIA portfolio managers – have certain investment thresholds they have to meet.  But as a nimble trader, embracing the concept of selectivity and spread allows you to dynamically change your exposure levels to match the current market environment.

A close friend of mine manages individual accounts for a prominent advisory, and he claims to have full "discretionary trading authority" over the accounts.  But when talking about ideas for managing risk, it quickly became apparent that this authority had some material restrictions.

My friend was required to keep a sector allocation within a few hundred basis points of the S&P 500.  So if the index is overweight financials, my friend has to own a material amount of financials.  This handicap may still allow a skillful manager to generate positive relative performance (compared to the index), the probability of creating absolute performance in today's market is essentially zero.

Take a look at the two graphs below.  These are screen shots from the Mercenary Live Feed – our service that offers real-time observation of our trading book.

The graph on the left shows our exposure this summer as markets began showing signs of topping out.  The environment was predictable enough, that we felt comfortable allocating 2/3 of our capital to bearish positions (with risk points in play and risk sitll managed carefully).

The graph on the right shows our exposure to close out the third quarter – after capturing material profits on bearish positions, and scaling back due to more volatile and unpredictable market environments.

If you're a trader with flexibility in terms of exposure levels and asset allocation, your advantage is tremendous.  Don't buy into the lie that you have to be fully invested, 100% of the time.  Trading with a flexible strategy is one of the best advantages that sets traders apart from less nimble institutional investors.

The Advantage of Size

In the business of trading, account size can be a material advantage…

Individual investors like to gripe about how multi-billion dollar fund managers have access to information before the little guys – or they can employ a huge research staff to cover much more ground.  Sure, these are definitely advantages held by the Goliaths in our business.

But there's an inverse size advantage that is perhaps many times more powerful.  Pension fund managers have to take long-term positions.- there's just no way around it…

When you manage billions of dollars, you forfeit the ability to make tactical decisions.  Every position takes several trading days (if not weeks – or even months) to put on, and if a manager decides to bail out of a position, the same is true for selling.

Small traders (less than a few hundred million) can benefit in a number of ways.

  • Risk Management is easier to handle because you can blow out of positions quickly.
  • Security Selection is wider because you have the ability to trade smaller, less liquid securities.
  • Tactical Implementation is more efficient because you get less slippage on executions.

The bottom line is that as a small, nimble trader, you should be outperforming the major funds because of your ability to turn on a dime.  This goes back to the concept of understanding what your advantage is – and employing the right tools to exploit that advantage.

For most individual and small-shop traders, it's very difficult to have an informational advantage.  You're not going to get the first call from the analysts, and unless you have a brother or cousin on the board of directors, you're not going to have a lock on the minute fundamental details. (Note: Mercenary Trader does not condone the use of non-public inside information for investment purposes…  we're just sayin,)

The Advantage of "Doing Nothing"

There is a time to act aggressively, and a time to lie in wait…

A number of active (sometimes hyperactive) traders like to say that there is an opportunity to profit from every market environment.  This is surely true if you get tomorrow's newspaper each morning and you know the closing price of the market ahead of time.  But in the real world, there are target rich environments, and periods where good trades are much harder to come up with.

Over the past month (September, 2011), it has been very difficult to find attractive setups with a strong reward to risk ratio.  It's not that we're unable to come up with interesting scenarios.  Shippers have looked like washed out value opportunities, luxury retailers appear poised to crack, dividend yield stocks are attracting capital – just to name a few areas…

But for most of these trades, the risk has simply dwarfed the potential gain!

With news headlines regularly causing a 200 point move in the Dow futures – during the overnight session – it has been very difficult to effectively manage risk for new positions.  Uncertainty levels have been at multi-year highs, leading to a choppy, directionless market.  That's simply not a good environment for swing trading.

Our friend Peter Brandt said it very well this week:

…when in doubt, get out. I feel no obligation to always have an opinion or a position…  Am I still a long-term bear on stocks? Absolutely. But what does that have to do with carrying a position. An opinion does not demand a position. I do not want to have money at risk.

Opinions and scenarios are helpful in determining where to focus your attention.  But understanding the price environment and adjusting your trading activity to adapt to that environment is what separates the long-term winners from the losers.

For more wisdom from Peter Brandt, check out our Interview With a Trading Legend…

At this point, we continue to hold a very large cash position with a minimal amount of exposure in-play.  That could change quickly as the market has broken out of it's 2-month range and may now be poised for a sharper sell-off.  Regardless, we will be measuring the risk and the levels of uncertainty before we commit capital (long OR short).

The Difference Is In the Losses

Ask any trader about his profitable year and he'll immediately bring up one or two of his most successful trades…

It's human nature.  We all do it.  Everyone's proud of the trade where the situation set up well, the trigger was pulled, and everything went according to plan.

Take, for instance, our recent bearish trade in Netflix Inc. (NFLX).

On August 17th, we took a short position in NFLX at a price of $231.04.  For some time we've been watching this "cult stock" – noting it's high multiple, business challenges, and rising competition.  But any bearish trade forays had been cut short quickly as the price action didn't line up right.

This time, we got the timing correctly and were able to ride the trend.

On September 12, we took half of our profits off the table at $199.59 – a respectable gain…  But then things got interesting as Netflix fell out of bed, the CEO went on the defensive, and investors headed for the hills.  We covered our second half a couple of weeks later at $130.38.

Live Feed subscriber Ken O. wrote in:

PS – On Netflix, come on guys.  Is $100 per share the best you can do? :-)

Good point, Ken – we'll try to do better next time…

But seriously, aside from successful trades in Netflix, some gold miner positions, and a few strong currency trades; the majority of our success last quarter came from managing our losing trades…

That's right!  I attribute our success last quarter NOT to picking winners, but to managing our losing trades.  And there were plenty in that category:

  • In mid-July, our EEM short was closed for a loss of 12 basis points.
  • Later that month, we closed out a WIFI short at breakeven.
  • On 8/3 we closed out a long position in BEXP for a 13 basis point loss.
  • In late August, we got stopped out of a long position in IPI – losing 12 basis points.
  • In September, we exited our long AZK position with a loss of 6 basis points.

And these are just a few of the negative trades logged.

It's no fun taking a loss.  It doesn't matter how long you've been at this game.  We're all wired to WIN, and taking a position off the table without a profit is almost always a disappointment.  But losing trades don't have to be demoralizing.

From our perspective as swing traders, it's helpful to look at each trade like an at-bat for a professional baseball player.  Even the very best hitters still fail in 2/3 of their at bats.  During certain market periods, our win/loss ratio will be even worse than that.

But the key to trading is the equity curve – not the win/loss ratio.  Our goal is to position ourselves to hit the ball hard when we connect, and to manage our losses when we swing and miss.  So in a very real sense, we can almost expect to miss when we take a trade.  But with properly managed risk controls, the magnitude of our losses will pale in comparison to the winners.

It's not apparent in any one trade – not in any one week or even in any one month! But over time, damage control and giving ourselves the chance to successfully connect will yield positive performance – like a winning quarter when the indices are down 14%…

Back to the Poker Table…

So back to Thursday night (er, Friday morning that should be…)

As we approached 2:00 AM (EST), we were down to just three players left.  "Coach" was on my right, and a new player "Craig" was on my left.  All three of us had similar stack sizes – and all of us had knocked out a number of strong opponents to get here.

I wound up with pocket 10′s in the big blind with a limp and a call ahead of me.  Time to make my move…

All-in with a call from Coach… He turned over AJ suited and we were off to the races.  A harmless flop was followed by an Ace on the turn.  My 10′s got beat and it was time to head home.

I collected my winnings, set my alarm for a few hours later, made the drive home, and browsed through a few charts before hitting the sack.  It was going to be an early morning for the final day of the quarter – but we were in good shape.  Our exposure was light, the market was volatile, and there were few setups to chase until the volatile range was broken.

Ahhh, the life of a trader…  I wouldn't have it any other way.

To your trading success!
MM

PS. If you want to see our trading approach in real time, take advantage of a FREE 14-day trial to the Mercenary Live Feed!

An Argument For Gold And Gold ETF

Posted: 05 Oct 2011 06:36 AM PDT

By John Mylant:


Gold holdings in the SPDR Gold Trust (GLD), the biggest exchange-traded fund backed by bullion, decreased 2.72 metric tons to 1,229.51 metric tons as of Oct. 4, according to figures on the company's website. So does this mean that we now should stop investing in Gold and look to other things?

Not if we listen to what some people are forecasting about Gold. Goldman Sachs reiterated its 12-month gold price target of $1,860 an ounce and cut its 2012 forecasts for oil and copper prices. If copper is being cut, we know the economy is not going to be moving in a bullish direction yet. People always look for gold in hard times for stability. "As we expect gold prices will continue to be driven in large measure by the evolution of U.S. real interest rates, and with our U.S. economic outlook pointing for continued low levels of U.S. real


Complete Story »

Embry Talks To King World News About Gold And Silver

Posted: 05 Oct 2011 05:13 AM PDT

The fundamental View

Silver, Gorillas, Madoff and Financial Regulators –Will They Ever Learn?

Posted: 05 Oct 2011 05:10 AM PDT

LISTEN: Kerry Lutz interviews Bob Chapman

Posted: 05 Oct 2011 04:03 AM PDT

From KerryLutz.com:
Bob drops by to discuss the recent romp in precious metals and why you don't need to worry about it. He's buying gold and silver and maybe you should be too. Can Europe possibly survive? Certainly the Euro is headed for the dustbin of history. Bob breaks a scoop, China is negotiating to purchase three troubled French banks that are headed for insolvency.

SIlver Update

Posted: 05 Oct 2011 03:48 AM PDT

The Gold Price Conspiracy Uncle Sam Doesn't Want You to Know About

Posted: 05 Oct 2011 03:38 AM PDT

Is it really so preposterous to believe the United States and Europe would conspire to keep pole position in the global financial system?

Is the Correction Over in Gold & Silver?

Posted: 05 Oct 2011 02:26 AM PDT

Goldman and BOA Maintain 12 Month Gold Forecasts of $1,860 & $2,000…

Posted: 05 Oct 2011 01:29 AM PDT

Is Gold Bound to Rebound?

Posted: 05 Oct 2011 01:00 AM PDT

SunshineProfits

Acid testing for silver. Need some help. Why is this so hard?

Posted: 05 Oct 2011 12:33 AM PDT

I have a seller of silverware that I've bought some old utensils from, & now he says he has a lot more to sell.
So I don't want to screw myself (or him) by buying or not buying.
I've gotten pretty good at acid testing gold, but silver I'm still not so sure of myself.

So,
when acid testing silver with "silver testing solution", how long do you leave the acid on the piece before blotting it off?

I tried comparing results with known pieces: a .999 round, a 64 Kennedy, a spoon stamped "Pure coin", and a modern nickel clad dime.

The dime turns bright blue/aqua. The others stay red for about 30 seconds, but all eventually after a minute, turn a dull muddy brownish blue.

Sure could use some finesse from you old hands here. Thanks.

Trust that gut!

Posted: 04 Oct 2011 11:04 PM PDT

Yesterday I took out a few SLV PUTS, but covered 3/4 of them on that idiotic rally from 3-4. Kicking myself now as the metals have gapped down significantly. ALL OTHER COMODS ARE HEAVILY IN THE GREEN.

Un-fucking-real.

I guess there was another 'liquidation' at 3 am sharp! I'll be back for lunch. Let see how this plays out.

Again, if you think this is the bottom, or just want to park some fiat and buy bullion and forget about it, you can use my discount: sgb-sgs www.silvergoldbull.com
If you are yankee, change the currency Flag at the top to USA baby! Thank me lots!

China-US trade war looms

Posted: 04 Oct 2011 09:30 PM PDT

Precious metal and commodity prices fell yesterday, with continuing strength in the US dollar putting a lid on gains in dollar-denominated assets. Hedge funds and other private investors remain ...

Turk Interviews Zulauf

Posted: 04 Oct 2011 09:26 PM PDT

James Turk interviews Felix Zulauf. Mr. Zulauf is a bright, no-nonsense analyst who is worth listening to. Likely Related Posts Economic Mess and Gold Martenson and Turk on Gold and Currencies Zulauf Interview — Very Worthwhile James Grant and James Turk on the Fed Bank and Government Insolvency Share/Save

CFTC Lets Morgan Get Away With Rigging Silver Market: Ned Naylor-Leyland

Posted: 04 Oct 2011 09:05 PM PDT

¤ Yesterday in Gold and Silver

As I commented in 'The Wrap' section of this column yesterday, every rally in the gold price that looked like it had the potential to take the price sharply higher, got sold off in Far East and early London trading on Tuesday...with top coming just a few minutes after the London open, when it looked like the gold price was going to blast up to the $1,700 spot price mark.

That proved to be gold's high tick of the day...and once the London a.m. gold fix was in at 10:30 a.m. British Summer Time [5:30 a.m. Eastern], the selling pressure began anew...and it was basically a one-way trip to the low of the day which came in the thinly-traded New York Access Market just minutes after 3:00 p.m. Eastern time.

The gold price recovered about $30 going into the close...and finished down $36.70 from Monday's closing price.  Net volume was pretty chunky at 200,000 contracts.

It was just about the same for silver.  The silver price was up about 75 cents by the time London opened...with the big smack down coming minutes later...just like in gold.  Then once the daily silver fix was in around 12 o'clock noon in London, the silver price came under immediate selling pressure.

There were several attempts at rallies during the Comex trading session in New York, but every one got sold off hard...and once electronic trading began at 1:30 p.m. Eastern time...JPMorgan et al had silver down another dollar plus by 3:10 p.m.

From the high at the open in London, silver 'fell' about $2.65 to its absolute low of the day, which was $28.58 spot.

The silver price made a rousing recovery from there...and only finished down 55 cents on the day.  Net volume was rather large at 50,000 contracts.

The gold shares gapped down at the open...and then headed for the nether reaches of the earth.  At one point the HUI was down well over 8%...but the big rally in everything late in the day took more than five percentage points off that loss in very short order...and the HUI finished down 'only' 3.27%.

Up until the big rally began shortly before 3:30 p.m...the silver stocks got absolutely smoked.  Some of the well known companies were down double digits for a while.  Most losses were cut in half by the end of the trading day.  This was cold comfort indeed, as Nick Laird's Silver Sentiment Index was down another 2.70%.

(Click on image to enlarge)

The CME's Daily Delivery Notice is hardly worth mentioning, as only 5 gold and 5 silver contracts were posted for delivery on Thursday.

There were withdrawals from both GLD and SLV yesterday.  GLD reported a withdrawal of 87,587 ounces...and SLV declined a rather small 163,102 troy ounces.

The U.S. Mint reported selling another 50,000 silver eagles yesterday...and sold no gold coins of any description.

The Comex-approved depositories did not receive any silver on Monday...and reported shipping 286,982 troy ounces out the door.

I decided to steal another short paragraph from silver analyst Ted Butler's weekend commentary...

"The big 4 [JPMorgan] now holds their smallest net silver short position (less than 32,000 contracts) as far as my records go back [to 2005. Thanks, Turner]. I would estimate that JPMorgan, alone, now holds 16,000 contracts or so net short, their smallest net short position ever, or at least since acquiring Bear Stearns' concentrated short position in March 2008. Next week's Bank Participation Report should help further clarify the amount. The two-week reduction in the commercial total net short position totaled 21,000 contracts, confirming and exceeding the 100 million oz. reduction I predicted last Wednesday."

Once again I have a fair amount of reading material for you, so I hope you have the time to skim most of it.

Can prices of both gold and silver be driven lower from here? I suppose, but there aren't many leveraged tech fund long contracts left to liquidate at these price levels.
Government has to crush gold as equities plunge, Embry tells King World News. The Greatest Bubble in History Is at Our Doorstep: Jeff Clark. CME raises margins on copper, platinum futures.

¤ Critical Reads

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Key reversal day?

Might the stock market have hit a major bottom on the very day that it also satisfied the official definition of a bear market?

That distinct possibility is raised by the market's stunning recovery in the last hour of today's trading session, which appears to satisfy the definition of a "key reversal day"—a technical event that some technicians believe to be potentially quite bullish.

A key reversal day occurs when the market records a new low and then rallies to close above the previous day's close. And that's exactly what happened Tuesday.

Mark Hulbert is skeptical in this short piece posted over at marketwatch.com.  He should be, as not too many investors with deep pockets would have been prepared to catch a falling knife that late in the day yesterday.  Only the President's Working Group on Financial Markets...a.k.a. the Plunge Protection Team would be involved in a market operation that size...and once the inevitable short-covering rally kicked in...then 'Bob's your uncle'. The link is here.

View full GSD edition

Soaring Financial Volume Leads CME To Announce A 33% Margin...Cut!

Here's another story from the top drawer of the 'You-can't-make-this-stuff-up' filing cabinet.

While soaring volatility in gold and copper, not to mention silver, results in one after another margin hike to "cool off the speculators"...when it comes to financial stocks, especially in the "tail wag the dog" variety where the synthetic drives the stock price, a surge in volume means a cut in margins, or 33% to be precise.

Expect more margins cuts, this time in ES offset by margins hike in all other instruments, especially of the public enemy #1 variety, such as precious metals and crude.

Casey Research's own Bud Conrad sent that story around today.  This very short zerohedge.com story is a must read...and the link is here.

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Bernanke downbeat about job outlook

Bernanke wasn't optimistic about the outlook. He said a close reading of recent economic data doesn't show any hint of improvement ahead for the weak U.S. labor market.

"Recent indictors, including new claims for unemployment insurance and surveys of hiring plans, point to the likelihood of more sluggish job growth in the period ahead," Bernanke said.

This marketwatch.com story from yesterday was sent to me by reader Donna Badach...and the link is here.

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The Next Economy [After This One Dies] - Bill Bonner

Life in the future won't necessarily be so bad. The lust for MORE will become a lust for BETTER, says Bill Bonner, founder of the Daily Reckoning.

Yes, the age of easy growth is over. You probably won't make any money buying stocks. And your house will never return to the levels of '05-'06. And oh yes...you may not be able to get a job.

But that's the good news. We'll deal with the bad news some other day.

It's not often that something from Bill is posted in the clear...and when it is, it's normally well worth reading.  I've read it...and yes, it is.  It's posted over at the bullionvault.com website...and I thank reader Thorsten Winkler for sending it along.  The link is here.

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'Everything You Say Is S***' - Merkel Ally Under Fire for Profanity-Ridden Tirade

The euro crisis is nothing if not stressful for European politicians. Now, though, Angela Merkel's chief of staff, who is also a member of the chancellor's cabinet, is under fire for a profanity-laced tirade he directed at a fellow conservative in the run-up to a crucial vote on the euro backstop fund. Many are calling for him to be replaced.

Signs of strain have become impossible to ignore in Athens as well. Indeed, according to a story in Tuesday's Financial Times Deutschland newspaper, Greek Prime Minister Giorgios Papandreou is considering resigning. The story claims that he has twice spoken with confidants in recent weeks about throwing in the towel.

On Tuesday, a government spokesman declared that the story was "nonsense." But it isn't difficult to imagine that the challenges of steering his country through the debt crisis might be getting to the prime minister.

This Roy Stephens offering from the German website spiegel.de is a short read that's well worth skimming...and the link is here.

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Profit Warnings and Greek Debt: European Banks Show Signs of Ill Health

Germany's Deutsche Bank issued a profit warning on Tuesday and a Franco-Belgian bank wobbled significantly as Greek debt begins to drag significantly on Europe's financial industry. The European Central Bank is expected to make emergency credit available this week for the first time since the Lehman collapse.

Deutsche Bank on Tuesday said in a statement that the company's earnings targets for 2011 were no longer realistic and that third quarter results were well behind expectations. CEO Josef Ackermann, who is set to vacate his current post next May, had hoped to earn a record pre-tax profit of €10 billion ($13.27 billion) this year. But the bank was forced to write down €250 million in Greek debt in the third quarter after similar write downs of €155 million in the second.

In addition, share prices for stock in the Franco-Belgian bank Dexia plunged on Tuesday, the most recent symptom of its significant holdings of Greek debt. The stock dropped by as much as 38 percent on Tuesday as officials in Belgium and France struggled to come up with a plan to prevent it from collapsing altogether.

This is another Roy Stephens offering from spiegel.de...and this one is definitely worth reading.  The link is here.

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Dexia Gets Pledge From France, Belgium as Possible Breakup Hammers Shares

The French and Belgian governments pledged to support Dexia SA as shares of the lender plunged in Brussels on concern it will require a second government bailout.

France and Belgium will take "all necessary measures" to protect clients and will guarantee all Dexia's loans, French Finance Minister Francois Baroin and Belgian Finance Minister Didier Reynders said in a statement today. Belgium's cabinet met in Brussels last night to review the options for the lender. Both governments have stakes in the bank following its bailout in 2008.

West Virginia reader Elliot Simon sent me this must read Bloomberg story from yesterday...and the link is here.

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Two Interviews: King World News interviews Norwegian bullion dealer and Rick Rule

Posted: 04 Oct 2011 09:05 PM PDT

Two Interviews: King World News interviews Norwegian bullion dealer and Rick Rule

Eric King sent me both of these stories yesterday...and since Chris Powell was kind enough to do all the work for me, I'll leave the rest to him.  The link to both of these must read blogs is contained in this GATA release here.

Soaring Financial Volume Leads CME To Announce A 33% Margin...Cut!

Posted: 04 Oct 2011 09:05 PM PDT

Soaring Financial Volume Leads CME To Announce A 33% Margin...Cut!

Here's another story from the top drawer of the 'You-can't-make-this-stuff-up' filing cabinet.

While soaring volatility in gold and copper, not to mention silver, results in one after another margin hike to "cool off the speculators"...when it comes to financial stocks, especially in the "tail wag the dog" variety where the synthetic drives the stock price, a surge in volume means a cut in margins, or 33% to be precise.

Expect more margins cuts, this time in ES offset by margins hike in all other instruments, especially of the public enemy #1 variety, such as precious metals and crude.

read more

The Greatest Bubble in History Is at Our Doorstep: Jeff Clark

Posted: 04 Oct 2011 09:05 PM PDT

The Greatest Bubble in History Is at Our Doorstep: Jeff Clark

It may not feel like it after a 12% correction in the past 30 days, but Mike Maloney - founder of GoldSilver.com - is convinced that we're in a gold bull market that will be life changing for those who participate. I interviewed him for our current edition of BIG GOLD and am sharing some of what we talked about here. You may be shocked at what you read, because he's devoted a larger allocation to gold and silver than we have. See why he's convinced a bubble is ahead for precious metals, how high prices will go, and why he stores some gold overseas. - Jeff

read more

Government has to crush gold as equities plunge, Embry tells King World News

Posted: 04 Oct 2011 09:05 PM PDT

Government has to crush gold as equities plunge, Embry tells King World News

Sprott Asset Management's John Embry told King World News yesterday that governments and central banks can't let gold look good when the stock market is falling hard, which explains the latest counterintuitive action in precious metals prices.

I thank Chris Powell for wordsmithing the introduction. An excerpt from the interview...headlined John Embry - Silver is Completely Flushed out to the Downside...is posted here.

Gold Tests $1600, Eurozone Politicians Fear "Banking Crisis"

Posted: 04 Oct 2011 09:01 PM PDT

Gold & Silver Market Morning, October 5, 2011

Posted: 04 Oct 2011 09:00 PM PDT

Wall Street Journal Examplifies Mis-information on Gold

Posted: 04 Oct 2011 09:00 PM PDT

LISTEN: Jeff Christian- “Precious Metals Best Asset in a Financial Crisis “

Posted: 04 Oct 2011 08:31 PM PDT

From Jim Puplava and Financial Sense:
Jim Puplava welcomes back Jeff Christian, founder of CPM Group, to talk about the precious metals market.

Jeffrey Christian:
"Gold and silver prices to be higher by year end."
"Precious metals may be best asset to own in a financial crisis."

Much More @ FinancialSense.com 
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