Stock Market Oct 20-24

[richmanch]

This website is starting to get a little nutty. I hope it will pass when the election is over and gold stocks go back up.

Here's my only two cents: I kind of get the conspiracy theories about gold, but I also know that if it was simply going down for a legitimate reason (like deflation) all the gold bugs and conspiracy theorists would still be manufacturing conspiracy theories. Know what I mean? All the gold bugs and conspiracy theorists have been so spectacularly wrong in the last year, it's hard to take them seriously.

JDH--thanks for the link for BNN. It will be interesting to see how that plays out.

I own gold mining stocks--a bit, and the value has plummeted--too late to sell for me. So I will hold, for a long time perhaps. If for some reason we go on the gold standard (welcome what if), I imagine they'd do pretty good.

[Uboat]

Lots of gold in the street

[MetalMeister]

Today's Good News...

Wall Street ready for another drop

8:08am: Futures tumble as turmoil sweeps markets worldwide. Slew of economic reports on tap this week. more
Hong Kong shares plunge 13%, Nikkei hits 26-year low
Check futures, world markets

By CNNMoney.com staff
Last Updated: October 27, 2008: 8:08 AM ET

NEW YORK (CNNMoney.com) -- U.S. stock futures tumbled early Monday as turmoil gripped markets around the world.

At 8 a.m. ET, Dow Jones industrial average futures were down about 200 points. S&P 500 and Nasdaq 100 futures also fell sharply. Those declines, while off of earlier lows, still pointed to a more than than 3% opening drop in both the blue chip S&P and the tech-heavy Nasdaq.

Futures measure current index values against perceived future performance and give an indication of how markets might perform when trading begins in New York.

The Dow has not closed below the 8,000 mark in five years, but another bad day could take the closely watched measure below that benchmark. It has only fallen below 8,000 once, during intra-day trading on Oct. 10, during the recent market upheaval.

Sometimes investors will use an arbitrary market level to trigger automatic buying or selling programs, which can put a floor under stocks during a selloff. But many market analysts said they can't count on the 8,000 mark being such a floor at this point.

"I don't know that anyone can legitimately forecast what the bottom is going to be or where the market starts to turn," said Rich Yamarone, director of economic research at Argus Research. He said it's not clear when major investors, such as hedge funds, will be willing to return to buying.

"You don't go out in a hurricane, you wait until it blows away," he said.

Global markets: Global stock indexes continued to slide Monday. Losses piled up in Asia, where Japan's Nikkei tumbled 6.4% to close at a 26-year low, while Hong Kong's Hang Seng plunged 13%. In Europe, major markets fell in morning trading, with major markets there off between 3% and 6% in early trading.

David Kelly, chief market strategist for JPMorgan Funds, said that it's fear about the selloff in overseas markets, more than any economic or company news driving futures lower early Monday. He also is reluctant to predict when investors will put a floor under the recent downward plunge.

"The market is in a manic phase," Kelly said. "It's like a kid throwing a tantrum. At some point you have to let them cry themselves out because there's no reasoning with them. Eventually, the market will respond more to fundamentals."

In currency markets, the dollar continued its recent rise against the euro, but the yen gained on both currencies once again. The relative strength of the dollar briefly pushed oil futures below the $62 a barrel mark. The price rebounded slightly after hitting that low but was still off $2.15 to $62 for a barrel of light crude for December delivery.

The group of the world's seven major economies, the G-7, issued a statement early Monday voicing concern about "recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability."

The statement was seen as a green light for the Bank of Japan to intervene in currency markets to stop the currency from gaining too much strength. A stronger yen can hurt the competitiveness of Japanese exports by driving up the price of that country's goods.

Stocks have suffered heavy losses amid growing concerns of a deep and prolonged global economic slump. The Dow Jones industrial average fell 3.6% on Friday. The Standard & Poor's 500 index fell 3.5% and the Nasdaq composite slid 3.2%.

Economy: A report on September new home sales was on tap at 10 a.m. ET. Economists are again forecasting that new home sales fell to a new 17-year low.

The release is the first of several due out this week. Readings on consumer confidence, gross domestic product and personal income and spending are all due later in the week.

Corporate news: Eight regional banks, including Key Corp (KEY, Fortune 500)., Fifth Third Bancorp (FITB, Fortune 500) and Capital One Financial (COF, Fortune 500), announced they would be getting their own influsion of capital from the Treasury Department as part of the federal government's $700 billion Wall Street bailout. Those three will receive a total of $9.5 billion. The announcements follow the original investment of $125 billion of taxpayer money in nine of the nation's largest banks earlier this month.

In another move to try to help frozen credit markets unfreeze, the Federal Reserve is set to open its commercial paper funding facility. Commercial paper is the primary source of short-term borrowing major companies and banks to fund their daily operations running.

The credit crunch has caused major sources of that funding, such as money market funds, pull out of that market in the last six weeks, causing the amount of borrowing to tumble 20% during that time. The hope is that by the Fed starting to lend directly to companies by its purchases of commercial paper, there will be a significant improvement in frozen credit markets.

Dow component Verizon Communications (VC, Fortune 500) posted slightly improved earnings that met the forecasts of analysts surveyed by Thomson Reuters. are forecasting a narrow gain in earnings and revenue, but the company's outlook will probably be of greater interest to investors. To top of page
First Published: October 27, 2008: 5:39 AM ET

[MetalMeister]

http://money.cnn.com/2008/10/27/markets/stockswatch/index.htm?postversion=2008102708

Futures tumble as turmoil sweeps markets worldwide. Slew of economic reports on tap this week.


NEW YORK (CNNMoney.com) -- U.S. stock futures tumbled early Monday as turmoil gripped markets around the world.

At 8 a.m. ET, Dow Jones industrial average futures were down about 200 points. S&P 500 and Nasdaq 100 futures also fell sharply. Those declines, while off of earlier lows, still pointed to a more than than 3% opening drop in both the blue chip S&P and the tech-heavy Nasdaq.

Futures measure current index values against perceived future performance and give an indication of how markets might perform when trading begins in New York.

The Dow has not closed below the 8,000 mark in five years, but another bad day could take the closely watched measure below that benchmark. It has only fallen below 8,000 once, during intra-day trading on Oct. 10, during the recent market upheaval.

Sometimes investors will use an arbitrary market level to trigger automatic buying or selling programs, which can put a floor under stocks during a selloff. But many market analysts said they can't count on the 8,000 mark being such a floor at this point.

"I don't know that anyone can legitimately forecast what the bottom is going to be or where the market starts to turn," said Rich Yamarone, director of economic research at Argus Research. He said it's not clear when major investors, such as hedge funds, will be willing to return to buying.

"You don't go out in a hurricane, you wait until it blows away," he said.

Global markets: Global stock indexes continued to slide Monday. Losses piled up in Asia, where Japan's Nikkei tumbled 6.4% to close at a 26-year low, while Hong Kong's Hang Seng plunged 13%. In Europe, major markets fell in morning trading, with major markets there off between 3% and 6% in early trading.

David Kelly, chief market strategist for JPMorgan Funds, said that it's fear about the selloff in overseas markets, more than any economic or company news driving futures lower early Monday. He also is reluctant to predict when investors will put a floor under the recent downward plunge.

"The market is in a manic phase," Kelly said. "It's like a kid throwing a tantrum. At some point you have to let them cry themselves out because there's no reasoning with them. Eventually, the market will respond more to fundamentals."

In currency markets, the dollar continued its recent rise against the euro, but the yen gained on both currencies once again. The relative strength of the dollar briefly pushed oil futures below the $62 a barrel mark. The price rebounded slightly after hitting that low but was still off $2.15 to $62 for a barrel of light crude for December delivery.

The group of the world's seven major economies, the G-7, issued a statement early Monday voicing concern about "recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability."

The statement was seen as a green light for the Bank of Japan to intervene in currency markets to stop the currency from gaining too much strength. A stronger yen can hurt the competitiveness of Japanese exports by driving up the price of that country's goods.

Stocks have suffered heavy losses amid growing concerns of a deep and prolonged global economic slump. The Dow Jones industrial average fell 3.6% on Friday. The Standard & Poor's 500 index fell 3.5% and the Nasdaq composite slid 3.2%.

Economy: A report on September new home sales was on tap at 10 a.m. ET. Economists are again forecasting that new home sales fell to a new 17-year low.

The release is the first of several due out this week. Readings on consumer confidence, gross domestic product and personal income and spending are all due later in the week.

Corporate news: Eight regional banks, including Key Corp (KEY, Fortune 500)., Fifth Third Bancorp (FITB, Fortune 500) and Capital One Financial (COF, Fortune 500), announced they would be getting their own influsion of capital from the Treasury Department as part of the federal government's $700 billion Wall Street bailout. Those three will receive a total of $9.5 billion. The announcements follow the original investment of $125 billion of taxpayer money in nine of the nation's largest banks earlier this month.

In another move to try to help frozen credit markets unfreeze, the Federal Reserve is set to open its commercial paper funding facility. Commercial paper is the primary source of short-term borrowing major companies and banks to fund their daily operations running.

The credit crunch has caused major sources of that funding, such as money market funds, pull out of that market in the last six weeks, causing the amount of borrowing to tumble 20% during that time. The hope is that by the Fed starting to lend directly to companies by its purchases of commercial paper, there will be a significant improvement in frozen credit markets.

Dow component Verizon Communications (VC, Fortune 500) posted slightly improved earnings that met the forecasts of analysts surveyed by Thomson Reuters. are forecasting a narrow gain in earnings and revenue, but the company's outlook will probably be of greater interest to investors. To top of page
First Published: October 27, 2008: 5:39 AM ET

[sunseeker]

Thanks to Yellowcake for the link:

[

Ted Butler on the Jim Puplava show.  This is really good listening!

http://www.netcastdaily.com/broadcast/fsn2008-1025-3b.mp3

Listen to it if you haven't done so already.

Gold has been better for me than most of you because living as I do in the UK the $ has strenghened so much against the £. I will probably have to accept a trade off at some point when the $ starts to weaken. I can see my strategy of Bullion, and Buffet (Berkshire Hathaway) starting to look promising. For those who don't like paying out so much for a BRK.A, or BRK.B share you could consider:

http://www.boulderfunds.net/BTF%20Holdings.htm

I don't like put all my eggs in one basket no matter how convinced I am by the logic. Past experience has taught me that much. I feel by doing this I am covering myself to some extent.

[pinetree]

I agree Rich.

This whole manipulation thing is getting so tired.  I mean, we've been hearing it all along so what's the surprise?

What kind of investment "professional" advocates buying heavily into a rigged market with no stops, no risk management?  Now they're saying buy physical metal.  Well, if it's not a free market, and they knew it all along, why weren't they advising people to abandon equities in favor of physical in the first place?  Like you said earlier, these guys now have some serious credibility issues and IMO are not very good stewards for my money. 

They call Dennis Gartman an idiot for disputing the idea that there's any real physical shortage.  Well, Dennis's portfolio is up for the year, so clearly he's not an idiot.  They called Jon Nadler 'Moron Of The Year' for predicting gold would be trading 650-850 at this time this year.  I thought he was full of it too, but turns out he was right.  So who's the moron now?

Here is an excerpt from an interview with Nadler, basically he's saying the same things Gartman was saying about the physical shortage.  Why shouldn't I believe him?  He's got a better track record than the conspiracy theorists.  If I'd been listening to him and Gartman I'd have done a hell of a lot better this year.

http://www.kitco.com/ind/GoldReport/oct242008.html

TGR: The gold bullion coins appear to have a very high premium over the gold spot price, so there still seems to be some fear out there, or is it shortages?

JN: Some issues in the physical market are really grossly misinterpreted. Observers are not doing anyone any favors. My perception is that we have a contingent of pundits who are extremely panicked that this is a very poor reaction by gold to the crisis, and it will make them look bad. It already has. Now they’re trying to manufacture this global stampede into gold by panicking investors and by scaring them with stories of supplies running out. No one will argue that there are higher levels of individual investor interest, but it’s nothing “unprecedented.” They’re trying to make it out as unprecedented, and that’s simply not the case. Perhaps it says more about how short a time such pundits have spent in these markets.

TGR: Just how real is the shortage in coins, then?

JN: Specifically, what’s going on with the coins is that most of the mints of the world do not operate on a “produce-then-wait-and-see” basis. They don’t pre-mint hundreds of thousands of coins and put them on the shelf waiting for buyers to materialize. They basically operate on a mint-to-demand policy.

Because of the prolonged bear market in the '80s and '90s, most of them had slimmed down to bare essentials and, in fact, a lot farm out some components of the coin manufacturing process, such as blanking. The U.S. Mint is one of them. They ran into some blank coin quality problems in silver back in March, with about half a million silver blank rejects. That put them behind the production schedules, and when demand indeed kicked in for physical small coins, they were unable to fulfill commitments on a timely basis. This does not mean they ceased production. In fact, most of these mints consider small-item production quite profitable, which implies that they have added shifts, are finding new suppliers of blanks and new refiners for material, and augmenting production to meet the demand. Inventory build-up is one of their top current priorities.

Look back in recent history at the classical gold rushes, if you will. During the first one, in that inflationary period in the late '70s and early '80s, some 16 million Krugerrands were sold globally. The market events of 1987 brought on the next wave of buying, and that is when the U.S. Mint sold more than 1.25 million ounces of gold. Nor should we lose sight of the fact that in the ’91 recession, just a few short years later, they only sold a quarter million ounces. And then we go to about 1999 before Y2K. Again, they suspended sales of certain products like silver rounds, which were being hoarded by people expecting the end of the world. Next would be May of 2006, with the North Korean and Iranian political tensions. Again, very good robust sales, but nothing of the magnitude of ’80 or ’87, and similar to what we’ve had since last year. But at best, I think this year the U.S. Mint will sell about 750,000 or 800,000 ounces. It’s not the level of 1987’s stampede or panic, so I don’t see why they’re trying to make it out to be something bigger than it is.

TGR: Why is there such a premium, though? Just because they’re undersupplied?

JN: Yes, once the retail shops saw the Mint selling coins on an allocation basis, with some restrictions to build up inventories, the retailers started raising premiums on coins that they couldn’t basically get to fulfill previously sold orders. They raised their bids; they also raised their offer. It’s really limited to items like the silver rounds and some of the smaller fractional coins.

But in terms of Kitco getting supplies, basically we took the attitude that if we could not get a commitment from our distributors and suppliers as to a firm premium and/or a delivery date or both, we simply removed the items from the order pages in the online store. Those order pages are limited to items we are confident we can deliver at a decent price within a decent number of days. I know that the list is looking pretty slim, but we do have product to sell, and our pool accounts have never had any shortage of underlying material to secure; namely, 1,000-ounce bars of silver and 400-ounce bars of gold. We continue to offset 100% of all pool account purchases for the peace of mind of our clients.

And we’re adding back a lot of the items that had been removed. For instance, we just got several tens of thousands in gold coins and about a quarter million in silver coins from the Royal Canadian Mint. We’re getting Austrian gold and silver coins in very soon, and I’m sure that the U.S. will restart its sales to distributors once they switch dates on the coins to 2009. This is, coincidentally, the period when mints cease producing old (current year) dating and start with the new ones, and the switchover generally creates a bit of a glitch, too. At any rate, there will be product. We have eggs, thus we will have the omelet as well.

TGR: So it would be prudent to wait a bit.

JN: Absolutely. People are not good consumers if they go out and pay $5 over spot on $10.50 silver just to secure something that they think they’re going to have to barter at the grocery store. First of all, that likelihood is not there. Second, the liquidity of such items for such a situation would be questionable. When the supplies do come out, they will be priced at the previous norm. The Mint is not selling the New Olympic Silver Maple Leaf at more than the $1.50 they normally charge. That means they shouldn’t retail for more than $2.50 anyway. If people want to go on eBay and pay $5—well, as I said, try to be a good consumer.

....

TGR: Given that, if we’re looking at gold as insurance against the financial markets and cash, why wouldn’t gold go up? Why would it stabilize around $650 to $850?

JN: By and large it has already proven its insurance attributes by virtue of the fact that it outperformed the S&P just sitting around stable. It basically functions that way. If it stays in the $845 and $945 range, as it has this year—the overshoot was a blip—maintenance of these levels has already enabled those who hold some percentage of gold to mitigate the under-performance of the S&P and the Dow and everything else in their mutual funds. In that sense, it’s certainly done its job.

Gold doesn’t need to go to $1,200 or $2,200, as all of the doomsayers were saying, to prove itself. That would be more like proof that something has gone extraordinarily wrong in the global system and it’s a scenario you really don’t want to wish for. Should it come to that, you can pretty much be assured that other assets have totally vanished—not just a major damage hit, but you can write them off. That’s not desirable and the G7 and G12 seem prepared to do anything at their disposal to prevent a scenario where you would see both the Dow and gold at $4,000. That’s not what people are gearing up for, obviously, considering the social disruption and violence and all that it might engender. So stability is preferable.

Yes, I think some things are not going to go smoothly. There will be more pain, and more banks will still fail, and you will have occasional runs and blips where gold takes off out of the gate, but the bigger picture really says that this is about it. There’s no valid reason for it to really go up much, much, higher because a lot of the pressure now is on the deflationary side. With all the money that's been thrown into the system, there are many people expecting a Weimar Republic-style hyper-inflation to become the necessary result. However, as in many previous instances, a lot of this excess liquidity is expected to be mopped up out of the system on an orderly basis when things stabilize.

[Bottomfeeder]

Richmanch and Pinetree....thanks....I was beginning to feel like "The Only One" with all the gold conspiracy stuff.  Pinetree I had heard/read several things supporting the article that you had posted.  That was quite interesting on the mint information.  I had been more focused on bulk gold vis a vis sluming indian demand, which represents 20% of global consumption, of which 70% is for jewelry.

I have followed Gartmen and Guy Adami (fast money) for most of my gold insight, as those guys are not goldbugs, but rather making money bugs.

Adami had advised (when gold was rising) to buy the GLD, if you want to take advantage of the gold move, NOT THE MINERS.  Stating repeadedly I JUST DONT GET IT.

Before anyone says he doesnt know what he is talking about, I present his brief biography below:

Guy Adami was an executive director at CIBC World Markets in their U.S. Equities division where he was the sector head in charge of the Industrial/Basic Material group. In this role, he has been a frequent contributor to many of the daytime shows on CNBC including guest hosting "Squawk Box." He is currently a contributor on "Fast Money."

Prior to his current position, Adami worked for Goldman Sachs where he held several positions. He joined Goldman Sachs in 1996 as the head gold trader and one of the many proprietary traders within the Fixed Income Currency and Commodity division. In the spring of 2000, Adami joined the U.S. Equities division of Goldman Sachs where he was put in charge of their Industrial/Basic Material group.

Adami began his career at Drexel Burnham Lambert in 1986 and was quickly promoted to vice president and head gold trader at the firm where he cemented trading relationships with famed financiers Sir James Goldsmith and Kerry Packer. Adami also held similar positions at AIG International Inc.

IF ANYONE GETS IT, I WOULD SUGGEST GUY PROBABLY DOES!

For anyone that doesn't watch that show I highly recommend it.  It is a tremendously sharp panel of PROS.  These guys aren't just TV anchors and pundits.

With that being said, Friday, there was a change in sentiment, with Tim Seymour, suggesting GoldFields and Harmony were a tremendous value, based on the devaluing of the South African currency, trading in US dollars.  Pete Najarian recommended the GDX (gold miners index) as it was down 60 something % with gold down about 30% from its high.

That is the first time in a while I have heard either of those guys talking in a positive way about gold.

Merv Buraks P&F charts have targets set at around $650 then possibly $480.

The U's.....getting hammered again today, brutal.

[MetalMeister]

I wonder how Nadler would counter the fact that junior and producers are shuttering up their doors as it pertains to supply because they cannot afford to operate in today's economic environment with a loss, not even breaking even?   

This whole manipulation thing is getting so tired.  I mean, we've been hearing it all along so what's the surprise?

Here is an excerpt from an interview with Nadler, basically he's saying the same things Gartman was saying about the physical shortage.  Why shouldn't I believe him?  He's got a better track record than the conspiracy theorists.  If I'd been listening to him and Gartman I'd have done a hell of a lot better this year.

http://www.kitco.com/ind/GoldReport/oct242008.html

[MetalMeister]

Mints struggle to meet metals demand

Full article is here: http://www.canada.com/calgaryherald/news/story.html?id=5fc11134-5617-40d4-8a9a-d10f1e92ca5f

Gina Teel, Calgary Herald; with files from Canwest News Service
Published: Monday, October 27, 2008

Safe-haven investors are on a shopping spree for precious metals, snapping up gold and silver as an antidote to topsy-turvy markets -- if they can find any, that is.

Demand for physical gold and silver is gobbling up product at nearly every mint around the globe and in Canada has the Royal Canadian Mint allocating its supply among its distributors, who in turn are limiting the number of coins they sell to dealers, who sell to consumers.

"Virtually every mint in the world is sold out of product and as fast as we can produce it, all of us, there is more demand," said David Madge, director of bullion services at the Royal Canadian Mint.

[john77]

The U's.....getting hammered again today, brutal.

Whenever I type in the title of this site, I think that for me personally, the name should be changed to "buy-high-never-sell-and-pray-this-top-wasn't-THE-top"

[Bottomfeeder]

Johns....good one....I am right there with you!