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Prepare for Panic Selling if the Lows are Taken Out!
By Gary Kaltbaum
TradingMarkets.com
March 7, 2008 9:30 AM ET
“Win Over $13,000 in Cash Prizes Predicting the Direction of a Stock!”
Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show "Investors Edge" on over 50 radio stations. Gary is also editor and publisher of "Gary Kaltbaum's Trendwatch"...a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary's Daily Market Alerts click here or call 888.484.8220 ext. 1.
Letting loose.
Isaiah Thomas, Ben Bernanke, Hank Paulson, Angelo Mozilo... no difference to me.
The Carlyle fund raised $300 million in July and used loans to buy about $22 billion of AAA rated so-called agency mortgage securities issued by Fannie Mae (FNM | news | PowerRating | PR Charts ) and Freddie Mac (FRE | news | PowerRating | PR Charts ). The outcome: Carlyle Group?s publicly-traded mortgage bond fund failed to meet margin calls and said it received a notice of default. Carlyle Capital missed four of seven margin calls yesterday totaling more than $37 million. The fund expects to get at least one more notice of default related to the margin calls. Let me get this straight. A fund margined from $300 million up to $22 billion... and who allowed this to occur? This one instance should serve as your poster child as what you are going to continue to see going forward as we have only seen the tip of the iceberg as to how much leverage is actually out there.
All that noise from the National Enquirer Channel turned into what? Losses. They were drooling all over themselves about how they move markets. They ran ads about it every half hour... and when it turns out all that Ambac Financial (ABK | news | PowerRating | PR Charts ) did was a secondary, the clown who reported the so-called rumors has the nerve to say that he was always wondering why the stock moved on his words in the first place. This is irresponsibility at its highest level and deserves nothing but scorn. I feel no sympathy though for those who followed the lead and bought ABK stock.
Speaking of ABK and speaking of grapefruits, this is what the CEO of ABK amazingly said: "In this offering, we are targeting our core investor base, the long term holders of our stock, who have been loyal to Ambac." Does this imbecile realize that ABK stock has gone from $96 to $7? I am speechless.
And speaking of ABK's AAA rating, let me be blunt. THE RATING'S SERVICES ARE LIEING. Is that blunt enough? It is a boldface, over the top, easy to identify lie... and they know it, the banks know it and ABK knows it. Is there any wonder that confidence in the markets continue to move southward? How can anyone pretend that a company which needs a bailout deserves a triple-A rating? I can't wait until ABK trades under $5... an AAA rated non-marginable security. Too funny!
This all brought to you by one word... GREED. Greed by the lenders,borrowers,bankers,hedge funds, rating's services, investment bankers and the rest. I knew there was credit problems. I knew there was leverage that needed to be unwound. I did not know that there could be in excess of the trillion dollar number that could feed on itself with forced selling... as no one is backing no one. This leads into exactly what has and is happening in stock markets around the world.
Most major indices are now closed at bear market lows... as FINANCIALS continue to lead the market down. My best guess continues to be that lows will be taken out and as I said last time... do not be surprised if we see a tad bit of panic selling if lows are taken out. At the very least, this remains no hill for a climber. The tens of millions that I manage remain at or near their high water mark... as I got the heck out of the way when I thought the bear market started in October. I have not been the least bit tempted to plunge back in in a meaningful way.
I am now hearing rumblings again of an intra-meeting fed cut if the job's number is not thrilling. Before you get all excited, here are the numbers from when the fed first started to cut fed funds back on September 18th... S&P down 15%...GOLD and OIL up 30% plus...the DOLLAR down over 10%. The Fed has no control as the massive de-leveraging of our financial system continues. But don't worry... as Bernanke has said... "SUBPRIME IS CONTAINED AND INFLATION REMAINS ANCHORED!" At this point, I don't think Bernanke could do better than Mugabe in Zimbabwe.
I wish I had better news... but it is what it is.
With contracts out there worth at a total of $us 700 trillion
WOW how many o s is that ??
700,000,000,000,000.00 is that right ?they have to start making ck bigger i dont think it will fit in the space ?
GOLD comes into its own in a crisis - and this is one. In fact, the 2008 business crisis may turn out to be the worst since the 1930s.
We don't know how bad it is going to get but, with every week bringing further disclosures of ill-advised investments now mounting into the hundreds of billions of dollars - if not trillions - we can assume that it is going to get a lot worse.
Warren Buffett has declared the party over. Nobel economics laureate Joseph Stiglitz now estimates the Iraq war will end up costing $US5 trillion ($5.3 trillion), money that will plunge the US fiscal deficit further into the deep. And you could, blindfolded, throw a dart at a list of major global corporations and have a good chance of hitting one that has already announced write-downs or will in the next few months.
All this brings joy to the heart of the gold bugs who've been waiting for something like this to prove them right. Well it has - up to a point. In January, gold broke through its nominal 1980 record high of $US850/oz (although in real terms it needed to get to $US2200/oz). Then it was on to the $US1000 mark. But even before that latter milestone was reached, the bugs were looking ahead. Suddenly people were talking about $US2000/oz.
On Thursday came yet another pause - but that is all it was. The metal for April delivery fell by $US11.40 to $US977.10/oz after getting within a whisker of its $US1000 destiny the previous day.
The prevailing view in New York and London was that there was an element of profit-taking. That and investors liquidating gold positions to plug holes elsewhere in their portfolios.
Said one US analyst according to Reuters: "People are just taking a temporary time-out. There is no fundamental news and there are no technical signals to hang your hat on."
Gold's rise over the past five years has been peppered with price retreats, big and small. Every one of these pull-backs has been reversed within days or, at worst, weeks. With the US market players now calling on the Federal Reserve for a further 0.75 per cent cut in interests rates, there is only one way for the US dollar to go - and that means that little stands in the way of a further gold price.
But there is another side to the question. When the crisis is over, gold is just as likely to go into a large-scale retreat as the greenback's value is restored and the inflationary beast is tamed. We don't care much for safe havens in good times.
And it's not always true that gold bolts when times are tough. Sometimes it does (in 1973-74 and famously in 1980). The 1973-74 period may be instructive as our present predicament is concerned. The Dow Jones industrial average and the S&P 500 both lost about half their value in that market crash. But gold went from an average of $US97.39/oz in 1973 to an average $US154.00 the following year, and the gold companies listed in North America significantly outperformed the market.
Stocks and bonds stank in the early 1970s - just as they do now. In that climate, gold makes sense. But, as Phoenix-based precious metals analysts Casey Research show in their latest gold bulletin, the 1990 and 2001-02 recessions did not cause any noticeable spike in the yellow metal's value. By contrast, the metal began making spectacular gains in 2005, when the world economy was on full throttle (although there were signs that the greenback was under pressure and the debt and derivative mountains were starting to look ominous).
Nevertheless, while not always soaring, gold has never plunged during any recession since the Nixon administration cut the link between the US dollar and gold in 1971.
The great appeal of gold is that you can't suddenly create any more of it. In fact, gold can't keep up with the demand.
Production in Australia stagnated in 2007, according to industry analysts Surbiton Associates. Meanwhile, South Africa's production is under threat as the industry is caught in the pincers of unreliable electricity supplies and mounting costs as the mines go ever deeper.
The prospect of the International Monetary Fund selling off some of its gold to repair its balance sheet does not seem to have had any impact yet, even though that could boost world supply of the metal by about 10 per cent for a year. Recent sales by various central banks have not halted gold's march.
Nor have cautious predictions by analysts. Commodities analyst Jim Steel of HSBC Securities is talking about the US dollar recovering in the second half of 2008 and gold stalling.
Maybe. But the past few years have been littered with bearish gold forecasts from various analysts. It may be that we are all suffering from analyst fatigue.
The gold fever is now spreading outside the ranks of the traditional enthusiasts of the metal and the hedge funds.
Mums and dads are buying up the metal with their ears pinned back, according to the Perth mint, which now stores more than $1.5 billion worth of bars on behalf of investors.
On balance, the mums and dads may have got it right. Further interest rate cuts out of Washington will only propel gold to new heights.
No one knows how the derivatives market - with contracts out there worth a total of almost $US700 trillion - will resolve itself. Badly, at a guess.
The global asset market is worth about $US140 trillion, according to Shayne McGuire, a Texas-based fund manager who has just published a book on gold. If, he pondered, only 1 per cent of that was flicked into the gold market, the metals price would skyrocket.
Then those dreams of $US2000/oz might all come true - at least for a short
Temperature: 30°F -1°C
Conditions: Fair/Windy
Winds: W 28 MPH W 45 KPH
Relative Humidity: 36%
Barometer: 30.07 Rising
Visibility: 10.00 Miles 16.09 Kilometers
Feels Like: 16°F n/a
see the feels like well i would say it feels like a 4 letter word (yea that one ) dammmm i got to make some money so i can move to a warmer place
ken +jrp this is u please keep it there
http://www.cnn.com/2008/US/weather/03/08/march.snowstorm.ap/index.html
making a come back dkgr
i see u there i have 2 or 3 stocks u will like 7.00 est yes hey mmg time to show up if u can
hehe
cool now i have home work
u bet only the best for me hehe
u are asking a sag to be more adventuresome ??? hmmmmmm ok
Temperature: 55°F 13°C
Conditions: Partly Cloudy
Winds: SSW 20 MPH SSW 32 KPH
Relative Humidity: 88%
Barometer: 29.27 Rising
Visibility: 10.00 Miles 16.09 Kilometers
Feels Like: 55°F n/a
lemmy
u still in ivan? u think it can take out that 1.74 ?
thanks
thanks teapee
whats everyone thinking the markets going to do ??
so what u trading or are u in cash ?
43°F 6°C
Conditions: Cloudy
Winds: E 15 MPH E 24 KPH
Relative Humidity: 87%
Barometer: 29.93 Steady
Visibility: 3.00 Miles 4.83 Kilometers
Feels Like: 35°
i like ur better
u are right just making money
sorry
ocean county new jersey now 2.95 not so bad wow 3.29 ur winning
wow did u see oil 105. what is everyone paying for gas ? Im paying 2.95 for reg you ?
watching
lol :)
what ever floats your boat
hey tea good to have u out
but ur just 67 today ha ha lol
hmmm im at 64
hello all very busy at work now but i wanted to update my trading sold out of all gold options for a total profit of 600% my one trading acct is up 150% for this yr and its all thanks to ken and the options trading have a good day will post when i find a good buy im off to the dentist for a root canal uhgggg fun can i hear a YABBA DABBA DOOO
how right u are the 5th 18 , and 25 th in feb is when gold turned in feb
ok till u get back in NJ
52°F 11°C
Conditions: Fair
Winds: SSW 12 MPH SSW 19 KPH
Relative Humidity: 71%
Barometer: 30.01 Falling
Visibility: 10.00 Miles 16.09 Kilometers
Feels Like: 5
hi life u closed over kens .64 line in the sand so thats call for a yaaba dabba dooo
the futures market is coming back some dow only down 64 now and gold at 978. looks like a whipsaw day. is that a word ? whipsaw have a good one
watch it tomorrow the dollar is falling and the metals are all climbing up gold at 980.50 now and the djia futures are down 101
i hope he does too lol
in jail why ?????
hey u ok its going to 58 up here tomorrow
somrthing we all need to know
http://www.321gold.com/editorials/schiff/schiff022908.html
It is only the artificial demand created by inflation that is pushing up prices.
u sould not tell me things like that hehe
keep it up u may find me at ur door step
tea ok how hot are u today ?
ok this is for fun (scroll down )
one LOOK at
that may GAP
as its AGO
spck can vol build and it climb over .13 ?
rnin