A least we HOPE (not a valid strategy) it’s the bottom!
Holy cow, what a mess the World has become in the past 7 days. It’s amazing how the markets can ignore everything for two whole weeks and then freak out about the same exact stuff they freaked out about last time for another week and undo all of the progress of those two weeks.
While we were on top of things, nailing the turn last Wednesday, we weren’t that aggressive on our downside betting as we thought those -10% lines would hold up without much trouble. Today we’ll find out if we’re right or wrong but yesterday it looked like we were wrong already as Europe plunged about 5% in one day while the US markets were closed.
All kinds of crazy stuff has been going on, including the Dollar rising to 75.53 WHILE GOLD IS GOING UP TO $1,900. So what happens now if the Dollar goes back to 74 (down 2%) – that could be enough to lift gold over that magical $2,000 mark. And why not – investors are fleeing every other kind of asset except, of course for German, US and Japanese bonds. What a perfect scam the industrialized nations are running – able to borrow infinite amounts of money at virtually no interest despite their own insane debt levels – this could not have gone better if they had centrally planned it!
Don’t forget that Governments and their Central Banks have lots and lots of gold. In fact, the US has over 8,000 tons of gold, now worth about $500Bn, China 4,000 has tons while Germany has 3,500 tons, the IMF 3,200 tons, Italy (yes, Italy) 2,800 tons, France 2,700 tons… Where do people think that GLD is getting all it’s gold? That fund is growing at a rate faster than gold is being pulled out of the ground – those bars have to come from somewhere and I would not be surprised if our wise Central Bankers are going to pay off a little debt with some of that shiny stuff they have laying around.
Switzerland also has plenty of gold (1,200 tons) and it’s the Swiss that are yanking the markets today with a MASSIVE currency intervention in which the Swiss National Bank has announced this morning that they will buy "unlimited" quantities…