For Historical Purposes 13 - 15 April 2013 <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3780893>
I heard on CNBC this morning that for the first time in history, both gold and equities went down triple digits the same day. Commodities tumbled. So the dollar must have soared upward strongly, eh ? Nope; flat against all currencies where only weakness showed a little bit against Canadian dollar. Practical answer ? (Give me some latitude for a dose of cynicism.): (1) Exuberance on high octane for months in the stock market and needing to let some air out of the balloon. Money managers have made this call for months. (2) Gold in a bear posture, trending downward for a year and a half continuing the trend and getting kicked in the face for months with "better places to put one's money" like a great, long stock market with additional fuel from QE out of Japan increasing world trade and a strengthening dollar against that currency. PIIGS from Europe not heard from very much. Cyprus sinking into depression is too small to move anyone's needle who lives off that island. Except for Boston (with my apologies and sorrow), the world is safe ! (Korean missiles get intercepted by ours.) Gold can go take a nap for quite a while. (Until it can't... unless the U.S. is embraced with fairy god mothers to save its butt.) (Hmmm....Then there is the argument that gold in your basement when Great Recession Part 2 turns into Great Depression #2 in the U.S. doesn't get you a whole lot when there is nothing to buy in the stores and First Responders can't be paid to protect you, and U.S. government controls are in place for you not to move it overseas. But I digress. Nevertheless, John Mauldin's book End Game, all about the need for Western societies to seriously delever maybe means it, and the effects it has, brings humility across all asset classes...equities, currency AND precious metals and commodities. And Delevering WILL HAPPEN either by great central planning of the respective sovereigns (good luck on that one) or by nature (the science of economics). Scenario 1: We hit the proverbial brick wall, and it happens as fast as Greece; or Scenario 2: It is a process. Maybe the fire under the increasingly heated pot of water that has allowed the frog to acclimate and continue swimming, albeit more and more slowly, grows with intensity and disables the frog eventually. Can markets simultaneously across all asset classes be this deeply reflective and start the Scenario 2 process now ? That would be a stretch. All traders discount the future in that way all at once ! Scenario 1 (hitting the brick wall) would be most likely for any "simultaneous" action occurring. But aren't markets required to provide full disclosure before they pull their triggers ? After all, I might not be ready yet.
ONE DAY AFTER ....... Gold and Silver <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3781618>
Answer to if this is a Dead Cat Bounce: Gold ... Silver <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=3781646>