Wednesday, March 19, 2008


Gold dropped 70 bucks today. It that the biggest move ever for gold?
I just gotta say, holy crap to that. The dow is up over 400pts yesterday and now down 300pts today. I told you that this market was going to go nuts the next 12 trading days. Just waiting for next Tuesday. Is it time to buy gold? Is this a massive shakeout of the longs, or is this the top?
I think the Euro is headed back up, and along with it gold is too. And I think the stock market is going down. I could be wrong on both. Time will tell.


eddie on 10:03 PM said...

Hello david. Ive been reading your blog now for a good month and would like to say thanks. I was trying to get into some puts on the DIA yesterday before the bell but thought I cuould get a chance today on little more strength. Oh well. But I have a few qeustion for you I hope you can answer.
1) I was reading the market ticker entry today that you refereced-- What exactly is deleveraging by a hedge fund. I ve heard that there is worldwide deleraging going on. What eactley does this mean. Is it that they have to sell the assets they bought with borrowed money to give it back to the big banks because the investments are losing and dont want to be debtors to the bank. Im guessing this is a margin call. And beyond this, cant that money being paid back to the banks be used again to prop up eqwuities. So isnt it the same money only by a different investor? BUt i read in another article that this moeny used for or from house mortgages, will just implode into nothing, becuase it was money that was magically made up by wall street. That is there is no money on the sideline, when the deleveraging is over, the money that was created by house appreciation will be destroye?
2) I also read that if there is an explosion at one of the bond insurers it will create a cascade effect of exposing the "wrapped investments" at the investment banks. This will cause cascading cross defaults in other places. What does this mean and How exactley does this work? ANd what is a capital ratio violation?
3) How did the fed screw BSC. I kind of get how it helped jpm, but what if anything did the fed do to hurt bsc. And if the did why would they do it? Plus how and who decided bsc was only worth $2. Jim cramer makes it sould like JPM is just that astute. Others make it sound like the fed and JPM are crooked. I know it a lot but im on a mission to learn. My trading hs been profitable but I want to learn the overall picture better. Thanks. Eddie B.

eTrader on 6:57 AM said...

Gold dropped 70 bucks today. It that the biggest move ever for gold?

Largest single day drop since 1980, and worst percentage loss since 2006

Brian on 9:48 PM said...

I would like to comment on Eddie's comment about BSC. I think that the reason they got shot was becuase they were defaulting on the money they borrowed. (From the FED) Now correct me if I'm wrong, please. But BSC was leveraged something like 40 to 1, and they were defaulting... yeeeouch. So the FED tried to find a buyer. Low and behold JPM. They couldn't do it at 20... 15... 10... finally a restatution of $2 a share to bail out the defaulting BSC. Since then the share holders of BSC have been going crazy, of course. And JPM agreed to I think $10 per share to keep the share holders from disrupting the take over.

If that's how it went down then great. If not please let me know, cause I hate being wrong.

The funny thing is that I've been watching Mad Money too. And BofA bought out Country Wide with share holder money. Where as JPM bought out BSC with 3.1, or so, billion of borrowed money. Trump change to them probably. LOL... So this makes BofA look really stupid, because JPM came out smelling like roses by not using share holder equity.

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