Stocks Have Worst Days Since Credit Crisis: Dow Drops Over 600 Points, to Below 10,900; S&P 500, Nasdaq Skid 6 Percent (Click for More)

 

Coming to a Neighborhood Near You...Sooner then You Think...

Live Webcast From Second Day Of London Riots

Just in case anyone wonders what is eventually coming to our own shores, here is a live webcast.

 

 

 

Unwinding The Zero Hedge "Great QE Unwind Trade" At 18%+ Relative Return

Back on May 17, Zero Hedge proposed a simple trade idea, something what we called the "Great QE Unwind" trade. The trade consisted of two legs: "long Utilities and Consumer Staples while shorting Industrials and Consumer Discretionary, leaving Financials alone." We unwind this trade today, one day ahead of the announcement of QE3, as it has since returned an absolute +3.7%, and a whopping return 18.7% over the broader S&P index. Obviously this is for the less than three month period the trade was held, and not annualized. We now unwind the trade. To those who piggybacked on this trade that not only protected capital, but generated absolute return, congratulations! To everyone else, better luck next time.

 

Gold Clears Through $1,700/oz, Sky is the Limit

Author: goldnews | Filed under: Central Bank News, Economic News, Political News, Precious Metals News Ahead of US markets opening, gold prices have surpassed $1,700/oz and are showing no sign of slowing as investors seek safety after the US credit rating was downgraded. Read the rest of this entry »

Ron Paul: ‘I’m Surprised it Took so Long for a Downgrade’, ‘We’re in for a Lot of Trouble’

Author: goldnews | Filed under: Economic News, Political News In short Fox News interview with host Neil Cavuto, Ron Paul discusses the recent US credit down grade. Read the rest of this entry »

Flash Crash Part 2

With QE3 to be announced tomorrow, is anyone really surprised that we just experienced Flash Crash part 2? After all Bernanke has to be thanked for rescuing the Russell 2000. Dow dropping as much as 600, BAC down 22%, Citi down 21%, and everything else bidless, Level two does not work... Total market shut down.

Guest Post: So Why Is The Initial Reaction Of The S&P Downgrade Of Treasuries For Treasury Bond Prices To Go Up?

The S&P downgrade was not as much a comment on the numbers of credit service as a comment on the political process. The political process is about confronting the probability of a hyper-inflationary collapse of our currency if fiscal irresponsibility, entitlement spending and bank bailout mentality are not addressed. If the credit rating firms had continued the charade of AAA quality, it would merely enable the not sustainable march toward hyper-inflation. Ultimately, the S&P downgrade of Treasuries is a downgrade of all dollar denominated assets. If we can print dollars to pay Treasury debt, it is the currency that is at risk. A nominal default of Treasury obligations is not going to happen. Yet, a real default as a currency event is the risk. In order to save the currency,  we must sacrifice the money center banks. A sacrifice of the international banking system is a deflationary event. For Treasuries to rally in a flight to quality as a market reaction to their own downgrade is a flight to the relative safety that remains. Anticipation of the deflationary political discipline of an S&P downgrade is the rational reaction of capital flight away from securities propped up by the reflationary status quo.





David Morgan: $75 Silver Looming
Sally Lowder of The Gold Report - The new normal could be $75/oz. silver. In this exclusive interview with The Gold Report, David Morgan, editor of The Morgan Report, maps out a path for silver that could sink as low as $5/oz. during the summer pullback and then bounce up to $75/oz. to establish a new base level. A consistent Silver Institute Production Cost Standard could help investors make smarter decisions during the coming upswing. (8/8/11)

The Crime Against Silver
Rick Mills, Ahead of the Herd - "Silver-denominated notes, reminiscent of turn-of-the-century American silver certificates, are experiencing renewed popularity." (8/8/11)

Gold Climbs; ECB Is "Last Line" of Eurozone Defense Ben Traynor, BullionVault - "The gold prices soared past a record $1,700/oz. in Monday's trade following Sunday's announcement by the European Central Bank suggesting a new phase in the Eurozone crisis." (8/8/11) 




 

Gold and Market Volatility
Clif Droke - "Stock market volatility, including for the mining stocks, has waxed and waned throughout 2011, but has been recurrent more this year than in the previous two years." (8/8/11)

Why 2011 Is Not '2008'

With many investors now having descended back to full-fledged “panic mode”, it is obviously the perfect time to explain why 2011 could never be another event like the Crash of ’08. In distinguishing 2011 from 2008, many of the distinctions involve the degree of collapse which is possible/probable. Thus, I am not rejecting the suggestion that we are on the brink of another “crash”, but rather pointing out that the nature of any such crash would be remarkably different.

While most sectors of the economy (and most markets) are in worse shape than when the Crash of ’08 commenced, there are a couple of sectors which are quite clearly much stronger than in 2008. When we explore this dichotomy, it will quickly become obvious why events could not repeat the scripted “crash” of 2008.

Much less leverage in commodities:

Though there are many significant differences between 2011 and 2008, I will argue that none are as significant as the dramatically different dynamics which exist in commodities markets today versus the Summer of 2008.

In 2008, commodities markets were more leveraged (on the “long” side) than at any other time in the history of the global economy (and by a wide margin). Not only is this (arguably) the largest/strongest “bull market” for commodities in the history of the global economy, but it is the first commodities-boom since the explosion in the “hedge-fund” gamblers. These reckless speculators amplify volatility, risk, and leverage in any/every market they touch.

It is important to understand that there was absolutely no reason for commodities markets to crash in 2008 (just as there is absolutely no reason today). There is no plausible economic scenario in the future where the world economy will have sufficient amounts of most commodities. We are headed unequivocally toward a future of chronic commodities shortages.

The collapse of commodities in 2008 was nothing less than an “assassination” – an assassination which was only possible because of the unprecedented levels of leverage which existed in those markets. The obvious parallel is the silver market.

By any “fundamental” basis, the price of silver should already be in excess of $100/oz today. Yet in May the anti-bullion cabal was able to manage a ruthless and signficant take-down of the silver market – despite the fact that inventories are exhausted, “market sentiment” has never been more bullish, and silver was still grossly under-priced at $50/oz. How was this possible? Via leverage. In the case of the silver market, the “excessive leverage” had to be “manufactured” (artificially) through the five, rapid-fire increases in “margin requirements” by the CME Group. Even though this leverage was totally artificial, the banksters were able to take-down the market of the world’s most undervalued commodity by over 30% in a matter of days.

In the summer of 2008, not only was all of the commodities leverage very, very “real”, but it was at a level which dwarfed what existed in the silver market in May of this year. As a result, the Crash of ’08 saw plunges in commodities prices which roughly ranged from 50% to 75%. More leverage means greater manipulation is possible. Period.

In the summer of 2011, leverage in commodities markets is much, much lower than in the summer of 2008. For this we can thank the propaganda-machine and the banksters themselves. Ever since commodities began their inevitable bounce-back, beginning in 2009 we have had a farcical (and very public) “debate” about literally “inflation versus deflation”.

Since deflation is unequivocally bearish for all commodities (but not gold and silver as “money”), the relentless propaganda in never allowing this “debate” to die down for even a single minute has not only greatly reduced the ratio of “longs” versus “shorts” (compared to 2008), but those who are long are much more cautious than their 2008 peers.

In 2008, we had a massive, uninterrupted “run” in commodities markets more than two years in duration.  Since 2008, every time there is any sort of “spike” or “froth” in commodities markets, the deflation “Chicken Littles” start their shrieking and the banksters start another shorting “operation”. The result is much, much less overall exposure. Less leverage means less “crash potential” – a lot less. Read more: Why 2011 Is Not '2008'

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