End Of Year 12-26-2011

Gold is down around 15% since August.  The Wall Street Journal attributes it to the slowdown in India's economy.  It grew 6.9% last quarter.  In 2010 India was the biggest buyer of gold jewelry, but it dropped off significantly this year due to a weakening of the rupee.
Another reason for gold's decline is the strength of the dollar.  As the Euro falls the dollar becomes the safe haven.  There are many potential problems in the world now that could affect gold.  The banking system is stressed and there are rumors of major banks in trouble.  Stocks of Bank Of America have fallen to around $5 a share.  It is thought that they were bailed out last summer and that they are being helped again now.  Of course the Feds will not comment.  On Friday Bloomberg News released data on the Fed emergency lending of 50,000 transactions made through seven different financial mechanisms.  These programs represented 1.2 trillion dollars in loans to banks and financial institutions.
IMF Chief Christine Lagarde said "Currently the world economy stands at a very dangerous juncture."  She called it a crisis of slow growth and high unemployment.  Europe, the US, and the BRIC nations are all experiencing down turns.   The world economy is so intertwined that most countries are feeling the pain.  For us here in the US we have the added problem of gridlock in our government.  Our government can not manage their checkbook.  Our national debt amounts to around $136,000 per household and is climbing at the alarming rate of almost $1000 per household per month.  It seems that this insane spending will eventually crash the system and the only thing the Fed can do is print!
Gold should shine in this environment.  We may not be there yet, but it is a good bet it will happen.  Many economists feel the QE3 is just around the corner, possibly starting in January.  Right now gold is $300 an ounce cheaper than it was in August.  Silver is down almost 40% from the high.  Have your cash ready!

Gold's time is coming! 12-18-2011

One wonders if those responsible for our current predicament will ever pay for it.  On December 16th the SEC filed civil suits on 6 former Freddie and Fanny executives.  Of course Barney Frank wasn't included even though it was his job to oversee them.  It will be interesting to see if anyone goes to jail.

Four co-authors on a website of the Federal Reserve Bank of New York presented some findings from a recent study.  According to the study, more than a third of the homes purchased in 2006 at the peak of the housing boom, were by people who already owned a home.  In some of the biggest bubble states like California, Nevada, Florida and Arizona it was almost half.  Almost 20% owned more than two.  Many of these people simply walked away from the properties when they saw no more appreciation in the future.  More unintended consequences from government policies.

What about Europe?  Senator Bob Corker, a Republican from Tennessee, said Bernanke made it very clear that no additional aid will be given to the region's sovereign debt crisis in a meeting with law makers. Lindsey Graham, a South Carolina Republican said Bernanke told lawmakers the he doesn't have the intention or authority to bail out countries or banks.

Question:  A Greek, and Italian and a Spaniard walk into a bar.  who picks up the tab?
Answer:  The Americans!

Reuters reported that Fitch Ratings, the third biggest credit rating agency, downgraded Goldman Sachs, Deutsche Bank, Barclays Pic, Credit Suisse AG, B of A,BNP Paribas, and Citigroup.  This is the  result of economic developments and regulatory changes they said.  They also cited a policy momentum against using tax payer money to support banks.

French President Sarkozy said the legal basis for a new accord on debt and deficit rules in the 17 nation euro area will be put together by Christmas and hopes to have a treaty by March.  Sarkozy also said, "you have to understand this is the birth of a different Europe.  The Europe of the euro zone in which the watchwords will be the convergence of economies, budget rules and fiscal policy.

What is hard to get your head around is that we are in worse shape and we are trying to tell the rest of the world how to respond to this crisis.  We have to borrow 40 cents on every dollar the government spends.  Not a shining example!  In fact we fully expect the printing presses to be unleashed in the new year and the European Central Bank will most likely buy more bonds to keep interest rates low.  

This brings us to our point of this article.  Gold and silver.  When the Fed and the ECB start "easing", gold and silver will shine again.  They have shined since the start of the financial crisis and there is no reason to believe that will change.  This latest downturn has created a potentially great buying opportunity.  Many pundits are predicting gold at well over $2000 in 2012.  In addition the gold and silver stocks have been hammered and are oversold giving extra leverage to any uptrend in the metals.  Below is the spot gold chart.

Here is the chart for the gold stocks.

Both may have some downside to go but we are getting close to a place where we should be accumulating.

Safe Market? 12-11-11

After all the dust settles it looks like the UK is the odd man out.  They are refusing to join in the fix.  They may be the smart ones.  Not too many good options for the other 26 countries.  The one difference between them and the US is we have control of the printing presses basically for the world.  How long that will continue is the question.  It looks like the UK doesn't want to give that option up for themselves.  Being in the union limits your choices.  The smart move for some of the countries might have been to get out of the union and default.

There are some other big problems for the markets to digest.  Hedge Fund Research says " the average fund lost 4.3% this year.  They report that 213 of them have gone under this year.  Jeff Holland managing director of Liongate Capitol says "It is sentiment, rather than fundamentals, that has driven markets this year."  "Markets have been dominated by high correlations and continue to behave based on political decisions,"  "The biggest risk is investing in a market that is uncertain. Guys who have tried to predict the political events in Europe are the guys who have got their fingers burned this year,"  


At EconIntersect we have always said sentiment trumps all else.  If you perceive there is no fix for the problem, facts and charts don't always matter.  Sentiment and trend are your friend!  Neither is going our way at the moment.


The next big problem: corruption in the market place.  Why have no Wall Streeters gone to jail for the corruption?   Could it be the perpetrators are in bed with the politicians and bureaucracy? In a recent interview with Jim Puplava, Ann Barnhardt, who recently closed her brokerage business, Barnhardt Capital Management, because she believes her clients money is not safe there anymore had this to say.   "The actions, specifically by the Merc after the MF Global collapse were unprecedented, unfathomable and completely and totally intolerable. The Merc itself basically did the equivalent of sticking a nine millimeter in their mouth and pulling the trigger by not stepping forward, backstopping the MF Global client accounts and at the very least, the Merc should have allowed the MF Global customers to liquidate their accounts and then transfer to other firms. What the Merc did was the worst possible thing, they froze those people out of their accounts and did not allow them to liquidate while the markets continued to trade.  This has never happened before. This was a complete breach of fiduciary duty by the Chicago Mercantile Exchange itself to the point that it literally has destroyed the entire paradigm."   How could those customer funds be missing. They are not missing. They were stolen. They were stolen by Jon Corzine and his cadre of associates at MF Global.  Nothing even close to this has ever even happened before and it is the function of the Mercantile Exchange itself, the reason why the exchanges exist is that they stand in the middle of every transaction and they act as the de facto counterparty to every single transaction so that, for example, my clients never had to worry about the credit worthiness of the other individual, whoever it might be, who is on the other side of any trade that they did."


We have reported on this in the past.  If Ann's assessment of this problem is correct there may not be many places to hide.  She goes on to say:  We are now living in a lawless, Marxist, Communist, usurped, what used to be a representative republic but is no more. This is no longer a nation of laws. This has now transformed into a nation of men. It does not matter what crime you commit. In the case of Jon Corzine, this man has stolen in excess of a billion dollars."  Why would a man like that even engage in a nefarious plot like this? Because he knew going into it he could get away with it. And the reason he could get away with it is he is in tight with the Obama regime. He is a crony of the regime. This is Marxist Communism. There is no rule of law. And these people, these poor MF customers are just sitting out here helpless to do anything because there is no law enforcement because this is no longer a nation of laws. The rule of law no longer exists. "  "The only lesson that these criminal degenerates learned from the 2008 situation was that they could do anything they want and that pimp daddy government would bail them out."  "And we now know that the government is absolutely stuffed to the gills almost exclusively with this same type of moral degenerate culture. These people that are in the government not just the Congress and Executive Branch but also in the bureaucracy, they are in it for themselves."  "These people are nefariously trying to destroy everything in this country. It is called the Cloward-Piven strategy. Go in and destroy and collapse the entire economy, everything and then rebuild a new Marxist, Socialist, fascist state out of the burning rubble of this destruction. This is intentional. This is nefarious. This is not a function of incompetence. It is a function of malice of forethought and conscientious theft and destruction."

According to Ann we could be on the verge of a total collapse of our financial system.  Europe is too big to solve, the government is corrupt, and nobody is doing anything about it.  There is no integrity in the system anymore.  If this is the case what can we do to protect ourselves?

Get out of all paper and not just the commodities markets. This is going to cascade through everything. It is going to get into the equities. It is going to get into 401ks and IRAs, it is going to get into pension plans and so on and so forth. Total systemic collapse. Get out!"  "Anything that is on paper anything that involves a promise or a commitment is no longer valid because as we said there is no rule of law anymore. People can steal from you. Your money can be confiscated. And think how easy now it is to confiscate wealth. Most of our wealth in this society exists as zeroes and ones on a computer server. It takes no effort whatsoever to steal zeros and ones on a computer server. So what I have been telling people is you need to get into physical commodities. And the rule of thumb is if you can stand in front of it with an assault rifle and physically protect it, then it's real, it is a real commodity. That includes food, that includes water, that includes long guns and ammunition. That includes fuel. That includes precious metals, gold and silver coinage. Most especially silver coinage because silver is the metal of barter and transaction and currency. Gold is the storage metal because it's so valuable per ounce. And also, silver is extremely undervalued relative to gold because that market has been synthetically suppressed for the last several years by again, these nefarious actors. So yeah, reallocate into physical commodities.


At EconIntersect we have been advocates of the commodities for some time.  Wheather Ann is right or wrong we feel you can't go wrong with physical gold and silver.  The whole world is going through a metamorphosis and we believe safety is paramount.  The Aden Sisters who write the Aden Forecast agree.  "We recommend staying put for the time being. The market is volatile, mixed and risk remains high.  We are far safer staying on the sidelines. Maintain caution, be patient and let the market tell the story.

Crisis? 12-4-11

Europe's debt crisis is hopefully coming to a head this week.  Emma Marcegaglia, the head of Italy's industrial lobby says the coming days "will decide if the euro will survive or not"  If the summit is a failure, France's  Sarkozy warned last week, "the world will not wait for Europe."  "What will remain of Europe if the euro disappears?"  "Nothing."


Here is part of the FOMC press release last week.  
"The Bank of Canada, the Bank of England, The Bank of Japan, The European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system.  The purpose of these actions is to ease the strains in financial markets and thereby mitigate the effect of such strains on the supply of credit to households and businesses and so help foster economic activity."
  
Expectations are high.  How high?  Look at the market last week.  Nothing has really changed except the bank rate, yet the market surged.  Imagine if they actually make some progress! 


Jack Crooks of The Weiss Research Investment Newsletter says "This is only the third instance of this particular type of announced collusion.  He points out the first was in December 2007, the second in September 2008.  You can see the results in his 2 graphs below.

QE2 and QE3 had these results.


You can see from the charts what the market likes and dislikes. From our point of view neither option solves the problem, only kicks the can farther down the road. However, the market certainly likes the easing.

Steven Hansen of EconIntersect says "The timing of the beginning of a new financial crisis might be tomorrow or never (because of change of policy, regulation or direction before the crisis could begin).  There is almost zero chance that the status quo can remain for any extended period of time."  
George Soros "The world financial system is on the brink of collapse, with developed markets running full speed ahead toward disintegration."


Our take is the markets will not be happy very long no matter what happens this week, or next.  There are too many problems to be solved with the flip of a switch, no matter how big the switch.  


On a more positive note, the Green Bay Packers are offering their first stock sale in 14 years.  They are tying to raise $130 million to renovate Lambeau Field.  These stocks do not go up in value, there are no dividends and has virtually no resale value.  You do get voting rights and invitations to annual meetings.  Might be a good Christmas gift.  

Where Are We? 11-27-2011

At EconIntersect we like to take a long view of the economy and not worry about the short term swings.  The changes are happening so fast in our world  it is hard to determine a long or short view.  Here are a few thoughts on our world situation right now by some prominent voices on the economy and our problems.

 Peter Schiff  head of Euro Pacific Capitol

"While the outcome of the Super Committee shouldn't have come as a great surprise, the sheer dysfunction displayed should serve as a wakeup call for those who still harbor any desperate illusions. 

In the mean time, the prospect of sovereign default in Europe is driving "safe" haven demand for the dollar. So contrary to the political blame game, Europe's problems are actually providing a temporary boost to America's bubble economy. However, a resolution to the crisis in Europe could reverse those flows. And given the discipline emanating from Berlin, a real solution is not out of the question. If confidence can be restored there, each episodic flight to safety may be less focused on the U.S. dollar. Instead, risk-averse investors may prefer a basket of other, higher-yielding, more fiscally sustainable currencies.

There is an old saving that one often does not appreciate what one has until it's lost. The nearly criminal foolishness now on display in Washington may finally force the rest of the world to cancel our reserve currency privileges. The loss may give Americans a profound appreciation of this concept."

Excerpts from an article by John Reeves on Mike Mayo, a bank analyst who has been covering Wall Street for more than 20 years.

"Our recent financial crisis "didn't occur because of something that banks did. No, it was the natural consequence of the way banks are, even today."  In his new book, Exile on Wall Street, Mayo argues that the big Wall Street banks are set up nowadays to take excessive risks, while providing outsized compensation for bankers. And despite numerous though lightly enforced regulations, the federal government is there to bail these institutions out when things go wrong.  Mayo believes that Citigroup (NYSE: C  ) , which he describes as the "poster child for the financial industry's problems," provides a perfect example of all that is wrong with our big banks right now.  Mayo shows us that over the past decade Citi has been "involved in virtually every major financial screw-up, from Enron to WorldCom, to the analyst scandals of the tech bubble, to the mortgage fiasco.  Perhaps the worst part of the entire Citi story of recent years is that nothing has changed, according to Mayo. He feels that the dubious accounting, excessive risks, and outsized executive pay "are still happening." He writes, "It's like we've learned nothing.  It's Wall Street."

Mike Larson of Safe Money Report

"Governments and central banks around the world have borrowed, printed, and spent far too much over the past few years bailing out anyone and everyone. Those moves temporarily postponed a massive wipe out in global capital markets. But they also transformed the PRIVATE credit crisis we were experiencing in 2007-2009 into a massive SOVEREIGN credit crisis. Now, the second phase of the crisis is taking down country after country, bond market after bond market, and even government after government!"  "Now is the time to prepare for a Dow crash."

The Aden Forecast

Events in Europe are dominating all of the markets, in one way or another. The situation is intensifying and this is putting downward pressure on stocks, currencies, commodities and metals. U.S. bonds and the dollar are still the best safe havens.

The weakness in the stock market has now been reinforced, across the board. That goes for stocks in the U.S., as well as the international stock markets. The markets are basically worried about the way the European debt crisis is evolving and the effect this will have on the world economy. They are looking ahead and for now, they do not like what they see.   All of the stock indices have turned bearish and the major trends will remain down by staying below their moving averages. Continue to avoid stocks for the time being.

Here is another way to look at the economy.  Copper is considered a barometer of the economy.  When all is well, construction is robust, therefore increasing the need for copper.  Here is the current chart for copper.

You can draw your own conclusion.  Our thoughts are downward, so we are out of stocks and we may start shorting the market.  

What a week 11-20-2011

Many things for the market to devour this coming week.  First, there is news leaking out that the super committee is going to be a failure.  Could have huge ramifications depending on what if anything was accomplished.  Second, Jack Abramoff was on many TV and radio talk shows telling how our government is hopelessly broken.  According to him many of our legislatures are in the lobbyist's pocket.  He gave examples of how our government really works, and most of it is legal due to special laws that apply only to our elected officials.  Third, this one will send shivers down your spine.  Ann Barnhardt who is the manager of Barnhardt Capital Management is closing her business.  Here are excerpts in her own words.
"The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy."
"I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm."
"And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism."


With all of this happening it is our recommendation that we be an all cash position at the moment. We will be closing all positions on Monday.  

Strategist Tim Staermose wrote just last week that cash is a great place to be right now… and we’ve been arguing for months that markets are completely broken. The market’s price discovery mechanism has given way to rumor and political innuendo.

A real economy cannot function under such circumstances. With Europe on the precipice and roughly $600 TRILLION in global derivative notional value lurking in the system, can a real collapse be that far off?

Famed hedge fund manager Mark Mobius recently said, “There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis.”

Not only have the major issues not been resolved, but governments continue making things worse. More bailouts, more printing, more deficits take an enormous problem and make it unfathomable.

In addition Robert Wenzel of Economic Policy Journal says of the banking situation:

The Financial Stability Board has released a list of 29 banks that it considers global systemically important financial institutions (G-SIFISs) and thus considered Too Big To Fail.

The initial list of G-SIFIS:

• Belgium: Dexia
• China: Bank of China
• France: Banque Populaire, BNP Paribas, Crédit Agricole, Société Générale
• Germany: Commerzbank, Deutsche Bank
• Italy: Unicredit
• Japan: Mitsubishi, Mizuho, Sumitomo Mitsui
• Netherlands: ING
• Spain: Santander
• Sweden: Nordea
• Switzerland: Credit Suisse, UBS
• UK: Barclays, HSBC, Lloyds, Royal Bank of Scotland
• US: Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, State Street, Wells Fargo
• According to the FSB, Systemically Important Financial Institutions are firms whose disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity.
  Bottom line: These are the banks through which the banksters operate. Of note, apologist for TBTF bailouts, Warren Buffett holds major positions in at least three of these banks, Bank of America, Bank of New York Mellon and Wells Fargo.

Sell NG 11-16-2011

We just took profits on NG today.  The stock jumped around 25% after the announcement that they are spinning off part of the company and there will be a new CEO.  Here is the release.

NovaGold (NG) announced this morning that it would spin off part of the company. The portion of the company that will be spun off will remain a NovaGold subsidiary, but will have separate stock. Shares of the subsidiary, which will be called NovaCopper, will be distributed to NovaGold shareholders, who must approve the spin-off. NovaGold's CEO and President, Rick Van Nieuwenhuyse, will step down from his current position and become the CEO of the new subsidiary, NovaGold said. In early afternoon trading, Novagold jumped $2.36, or 26.79%, to $11.17.

Investing 501 11-14-2011

Today you need an advanced degree to navigate the market.  Even seasoned pros are having a difficult time.  One tool that can help is to take the long view.  Do your research on what you want to buy and look 6 months to a year out.  If your research shows it has a good chance of appreciation in the next year, it is probably a safer bet than to stick your money in your mattress.  There is really no safe place to put your money any more.  Just best bets.  Even governments are giving haircuts on their bonds.
We still like gold and silver.  It has been money for thousands of years.  It has been appreciating for the last 10 years and we see no reason for it to stop.  As long as the government acts as recklessly as it has been, it should be a safe place to invest.  The stocks are poised to outperform the metals short term.  They have been lagging and this may make leverage an important factor in your decision.  Although some physical possession of gold may not be a bad idea either.
Here are charts for gold and gold stocks.  Choose for yourself.

Stock purchase 11-7-11

We just bought 2000 shares of EXK @ $12.10, 1000 shares of NG @ $9.62, and 1000 shares of NGD @ $12.39.

Pitfalls 11-6-2011

Pitfalls and landmines are what traders are looking at these days.  The headwinds can change at a moments notice with information out of Europe, the banking community or even the demonstrators.  The Fed left things pretty much as is for now, but there are rumblings of QE3 around the corner.  There are also talks of attacks on Iran from, you take your pick, Israel, The UK, The US or any combination with Germany and France.  Just your normal trading day.
The DOW, S & P 100 and the NASDAQ 100 all moved lower last week.
We have liked gold and silver for a long time now and the charts are starting to look good for them again.  Gold was up a little last week and silver was down over 3%.  Here are the charts for gold and silver.

You can see both charts show a W formation with the last part of it much higher.  This is usually a very bullish sign.  It may be time to start accumulating both metals now.  Here is a list of the stocks we think are the best buys right now for gold and silver.  Gold first in order of preference.
1. NG
2. IAG
3. NGD
4. AEM
Now silver
1. EXK
2. AG
3. SLW
4. HL
Here are the charts for our top gold and silver stocks.  NG & EXK

Charts or sentiment 10/30/2011

By now you realize the markets have a mind of their own.  They climb walls of worry, and tank on positive news.  There has been much negative news lately, both at home and abroad, and yet the market has had one of its best months in recent memory.  Here at EconIntersect we follow the charts, read all the economy data, follow government reports, and try to figure out where the markets will be in 6 months.  If the future looks bright we are willing to take more aggressive moves short term.  We may even take aggressive short moves if data shows a down side.  Right now the data is showing a sideways trend for the economy, not necessarily for the market.  You would think they go hand in hand but many times they diverge.
Some people even say there is manipulation.  Consider the silver market. Recently, the metal was very hot until the margin requirement was raised a few times in a weeks time.  And then there is sentiment.  No matter what the fundamentals, people do strange things when they are scared and there are many reasons to be worried now.  We believe sentiment pretty much trumps everything.
At the moment we are in cash, waiting to start buying the metals and our other favorite stocks.  This should happen very soon.  It seems the markets want to go higher heading towards the New Year.
Here is the recent chart for the Dow.

Another week of Euro Nation

Wednesday is supposed to be the day that Greece is saved.  We'll see.  So far lots of posturing and not much substance.  Last week the DJIA and the S&P 100 moved higher while the NASDAQ slid lower.  If there is any direction in the market it seems to be slightly lower.
There are times to be mostly in cash, and this is probably one of them, but that could change soon.  One could make the point that equities and commodities are much cheaper than a few weeks ago and this may be the time to start leveraging in.  We agree if you can do it with money you can afford to lose.  We would much rather the market have a trend.  If the market likes what comes out of the Europe meetings this week we could see a new trend start.  So do you jump in, or wait!  Unless you have inside information we recommend treading lightly.  Below is the chart for the DOW.

And Now Ladies & Gentlemen-What's Next?

The stock market finally got back to where it started at the beginning of the year.  Gold is down recently but still up over $300 for the year.  Interest rates are at historical lows.  What do you do?  Most safe havens aren't safe any more and if they are they give very little return.  Protests and down graded governments all over the world don't make you feel any better about investing.  Markets up-down and all over the place.  New mattress to hide my cash please!
At EconIntersect we love trading trends.  That can be a difficult task at the moment.  We still think gold, silver and their equities offer a good chance of appreciation.  This may be a good chance to acquire stocks and physical metals on the recent softness.  We believe they are going higher in the future, so even if the metals didn't hit bottom yet you should not get hurt acquiring them if you hold for the longer term. Our favorite gold stocks are NGD, EGO, IAG and NG.  For silver AG, EXK, SVM, and SLW.   Two juniors we like are BAJ and NAK.  NAK traded above $21 earlier this year and is around $7.50 now.  Below is the chart for gold.

Sell GDX calls

We just sold our Nov. 22 GDX 57 calls that we bought on Oct. 6th for 1.82.  This is the exact price we bought them for even though gold was up in that time.

What do we see?

Last week December gold was up around 1% and silver close to 3%.  The sovereign debt crisis in Europe will most likely be the market driver this week.  Chancellor Merkel of Germany and President Sarkozy say they will have a plan by the November 3-4 G20 summit in Cannes.
Our feeling is that although the crisis is mostly good for gold and silver, if the market tanks it usually initially takes everything down with it.  There are no really good places to be at the moment which makes the dollar look good as a safe haven despite the economy.
We see gold going up this week on safe haven buying but longer term depends on the debt crisis medicine dished out.  If the market isn't satisfied we could see a wild ride to the down side.  Below is the Yahoo chart for GLD in blue, SLV in red, and Dow for last week in green.  You can see silver was the winner.  We currently hold GDX calls for October.

Gold

We bought some call options on GDX yesterday because the momentum seems to be going up for the moment.  This is also a good time to layer in some gold and silver stocks.  Some of our favorites are EXK, AG, NGD, SLW, SVM, EGO, AUY, and IAG. We will try to add in the next few days.  We must remember that in this climate the momentum can change very fast so even though we like to hold stocks for the long term, it is best to keep an eye on all our holdings.

GDX calls

We just bought 10 GDX Oct. 22 calls, strike price 57, at 1.82.

Gold 10/4

Gold's free fall may have ended Monday.  However the stocks may not follow as the market still looks weak.  For the last few months gold has out performed the equities.  You can see from the 2 charts below.  The chart on the left is Gold, the one on the right is Gold Stocks.  Notice on the bottom MACD shows a very over sold condition.
                                                                                                           

Monday 10/3/11

This week Econintersect will launch a new investment vehicle.  This service will be free for a while.  You will be able to follow in real time every trade made.  These will be actual trades made.

Econintersect investing

Our goal is portfolio appreciation through the purchase of equities and the use of options.  See our overview below.

This chart shows gold's history for the last 5 months.  Econintersect has paid special attention to gold and silver as they have been the best performers for the last few years.  We expect to buy gold and silver through ETF's and stocks,  and buy and sell options on the metals and their equities.  From time to time we hope to trade some of the junior miners as well.

From Bloomberg:

In October 2008, [gold] prices tumbled 18 percent as the worst financial crisis since the Great Depression spurred losses in global equity and commodity markets. The metal then rebounded and gained 23 percent in the next two months.

Gold is down around 20% in this correction!  

These are not our only focus.  We will follow the major indexes and some stocks that we like.  Most of our trades will be on equities and options that have high volume and are very liquid.