"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

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Wednesday, May 11, 2011

China still struggling against inflation

Look for continued buying in the gold market coming out of China as that nation contends with serious inflation problems. Their version of the CPI showed a gain of 5.3% in April, down from 5.4% in March, but above what most of the market was looking for (5.2%). Keep in mind that real rates in China are currently negative on one year savings accounts.

This helps explain why gold is holding much better than silver right now. Silver is being seen as a speculators' playground while gold is keeping with its historic role as a safe haven. The reason for its downdraft today is related to hedge fund selling algorithms which blindly sell every single commodity across the board with no discrimination whatsoever.

Such things are welcome in Asia as opportunities.

Gold has bounced back above $1500 in late session trading as the session nears an end in New York. Silver is currently acting as a drag on gold but if it can hold above $35, gold should bounce moving into Asian trading this evening as the margin related selling winds down.


  1. Dan,

    Any comments on this ? http://pricewatch.pro/images/Screenshot4.png


  2. Hi Dan, would you be trading/investing in any gold stocks at this point? Laggard seems to be the pain and I feel like most investors share the same feeling as me. I think its a good entry point though, since many are so bearish, angry, and confused about how these gold stocks work. What's your opinion sir ?

  3. It is clear that the "Powers That Be" are forcing investors out of resource plays and into names like Macy's and Cisco. Basically, individual sectors can be manipulated with ease to contour the public mood in front of the elections. On top of that, inflation can be controlled by the implementation of 3, 4, or 5 margin hikes. So far, this strategy has played out brilliantly. And look at the 10 year yields, now approaching 3% again while we are hitting the debt ceiling. Never before have financial markets been choreographed with such ease.


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