Euro gold pair busted

The Dennis gartmans of the world got destroyed on this one with a near 3% move on the euro and more on gold. That's greater than a 6% loss on a leveraged trade. Ouch. I expect more deleveraging ahead but see this as a buying opportunity for yamama (auy) under $10.


- Posted using BlogPress from my iPhone

Sds stops adjusted

Set stops on Remainder of shares (500) at 36.8

Looking for a possible bounce here on employment surprise tomorrow and don't want to be caught too short.


- Posted using BlogPress from my iPhone

Lightened up the shorts

Sold 200 SDS @ $39. 16% profit.

More shorts

Bought 400 more SDS @ 36.10 yesterday. No revisionist history here, just didn't update the blog.

Market Probing

The market is probing for any support from the PPT. So far, not so good. Bombs away. Next stop 980 on the S&P.

Wal-Mart

RVASpeculator and I agree -- Wal-Mart is cheap by historical and forward looking valuations.
He believes that Wal-Mart may be beaten up because of two main reasons:
1) Yuan revaluation makes chinese goods more expensive
2) Large component of retail ETFs and mutual funds, which are being sold or sold short.

Wal-Mart is currently sporting a trailing 13 PE and forward 11 PE. It is carrying a 2.7% dividend yield. It's historical low point is in the low 40s for price in the past 5 years. Wal-Mart is a buy anywhere in the 40s.

I will be writing puts, In the money, on WMT if it gets down into the lower 40s.

Another Ponzi?

The paper gold (futures) market recently made a few changes. One of the ones cited by GATA and others is that COMEX can actually make delivery in shares of GLD instead of providing physical gold. I agree this is rather odd, but even worse is something I believe has been completely overlooked:

The GLD fund itself can not take delivery of gold immediately. It would be impossible to arrange delivery to vaults on demand. I suspect that GLD has predetermined delivery dates. Until then, it probably holds Gold Futures and takes delivery of those futures. This is why GLD doesn't experience any contango or other issues with its valuation because it takes physical delivery.

However, this presents an interesting conundrum...

You buy Gold futures, COMEX gives you GLD shares instead, in which GLD holds gold futures to take physical delivery.


Let me say it again. $GOLD is backed by GLD which is backed by $GOLD.

Does anyone else see a problem with this?

Now granted, I realize that "supposedly" GLD holds a fair amount of actual physical gold. And I believe it does, contrary to popular belief. But I believe it holds a substantial portion of gold futures contracts (with the intent to take delivery, granted) that constitutes a circular ownership trail of nothing but paper.

Finally, a few disclosures:

1) I am a conspiracy theorist.
2) I believe that physical / spot gold is not a ponzi.
3) I own lots of Gold and gold stocks.

First published on my blog, permabullybear.blogspot.com