GOLD 2011 - Special Report - Ways to invest in Gold - "CNBC".....Clear Signs of Top !!!

http://www.cnbc.com/id/43974871/

Cannot help but think...we might have formed significant top at US$ 1917.....

Can Bank of America (BAC) do to 2011, what Lehman Brothers did to 2008 !!!

Can Bank of America (BAC) do to 2011, what Lehman Brothers did to 2008 !!!

• BAC company executives spending more time with Media, Just at Lehman did...
• BAC claiming "tangible" book value at $12, yet stock trades at $7....seemingly cheap yet expensive
• Frequent rumors of capital raising...Just the way Lehman had....
• Rumors of BAC taken over by JPM...Just the way Lehman had....
• Large enough to shake Financial Mkts...Just the way Lehman was....

BAC CDS

GOLD – Known Strong Bull Case, Unaccepted Threatening Bear Case!!!

GOLD – Known Strong Bull Case, Unaccepted Threatening Bear Case!!!

Known Strong Bull Case...

Collapse of Monetary System

Uncertainty on account of Debt Problems

Unaccepted Threatening Bear Case...

Betting on end of the monetary system is dangerous

When Credibility of Established authority is at stake...desperate measures will be taken...

Dice is loaded on massive bull side on account of KNOWN STRONG BULL CASE....

Unknown/Unaccepted has higher probability of winning against known...!!! GOLD SILVER ARE POTENTIALLY STARING AT MASSIVE FALL IN MONTHS AHEAD!!

Nifty (India) - Quality of Pullback....Not Comforting!! Capitulation Months Ahead !!

Nifty (India) - Quality of Pullback....Not Comforting!!

• It may be bit too early to judge quality of pullback but pullback from 4800 has been led by sectors which were battered the most i.e.  Infra, Mid-Cap, ADAG stocks,etc. while the strongest sector like IT and Bank Nifty have been laggards.
• On yearly basis, IT Index and Bank Nifty has been one of the best performing major Indices. Yearly, IT and Bank Nifty is down 17% and 15% respectively, almost in line with Nifty's fall of 11%...however these Indices which combined account for 32% of Nifty have started to significantly fall on weekly and Monthly basis. This clearly shows that Quality has begun to be sold.
• Any durable bottom shouldn't be led by beaten down stocks like Infra, Realty...but by sector leaders (unless leadership shifts to Infra Realty !!! )....Given the way relatively stable (were strong in each of the previous fall) stocks like ICICI, AXIS, TCS, Telco, etc have fallen in this fall clearly shows that we might soon be approaching capitulation fall....
• Since Rally that began in 2009...worst months (double digit fall) have been Jan 2011 (-10%) and Aug 2011 (-11%)...Given the way quality stocks have started to behave it is likely that soon we will have capitulation months...

	Daily			Weekly			Monthly			Yearly
INDIA VIX	-7.2		CNX PSU BANK	-7.8		CNX REALTY	-23.5		CNX REALTY	-52.7
CNX IT	-0.5		BANK NIFTY	-7.6		CNX IT	-19.7		NIFTY MIDCAP 50	-26.5
BANK NIFTY	0.0		CNX REALTY	-7.4		CNX PSU BANK	-16.5		CNX PSU BANK	-23.6
CNX PSU BANK	0.1		CNX IT	-6.1		BANK NIFTY	-14.9		CNX INFRA	-21.2
CNX SERVICE	0.3		CNX SERVICE	-5.6		S&P CNX DEFTY	-14.1		CNX PSE	-19.3
CNX REALTY	0.4		NIFTY MIDCAP 50	-5.2		CNX SERVICE	-14.0		CNX MIDCAP	-19.0
CNX MNC	0.5		CNX MIDCAP	-4.5		NIFTY MIDCAP 50	-12.6		CNX ENERGY	-17.9
CNX NIFTY JUNIOR	1.0		S&P CNX DEFTY	-4.2		S&P CNX NIFTY	-11.6		CNX NIFTY JUNIOR	-17.4
S&P CNX DEFTY	1.0		CNX NIFTY JUNIOR	-3.7		CNX 100	-11.4		CNX IT	-16.8
CNX 100	1.1		S&P CNX 500	-3.7		S&P CNX 500	-11.3		BANK NIFTY	-14.8
S&P CNX NIFTY	1.1		CNX 100	-3.5		CNX INFRA	-10.7		S&P CNX 500	-14.1
S&P CNX 500	1.1		S&P CNX NIFTY	-3.4		CNX NIFTY JUNIOR	-10.6		CNX SERVICE	-13.0
CNX PHARMA	1.2		CNX INFRA	-2.6		CNX MIDCAP	-10.1		CNX 100	-12.1
CNX FMCG	1.2		CNX MNC	-2.4		CNX ENERGY	-8.9		S&P CNX NIFTY	-11.0
CNX PSE	1.5		CNX PSE	-1.9		CNX MNC	-8.0		S&P CNX DEFTY	-8.8
CNX MIDCAP	1.5		CNX PHARMA	-1.9		CNX PSE	-7.1		CNX MNC	-2.9
CNX INFRA	1.9		CNX ENERGY	-0.8		CNX PHARMA	-6.6		INDIA VIX	0.0
NIFTY MIDCAP 50	1.9		INDIA VIX	0.2		CNX FMCG	-3.4		CNX PHARMA	5.9
CNX ENERGY	2.3		CNX FMCG	1.0		INDIA VIX	44.4		CNX FMCG	15.6

(Nifty F&O Turnover 2lac+ cr....since bull mkt began in 2009)

Date	F&O Turnover	Nifty	Return	FII	DII	FII+DII
30-09-10	211605	6030	0.6	2497	-1522	975
27-10-10	206568	6013	-1.1	-9	-518	-527
28-10-10	252505	5988	-0.4	-950	-60	-1011
18-11-10	216055	5999	0.2	-453	118	-334
23-11-10	249758	5935	-1.3	-1493	1503	10
24-11-10	215180	5866	-1.2	-473	-95	-568
25-11-10	251965	5800	-1.1	-1208	198	-1010
14-01-11	210495	5655	-1.7	-749	290	-458
25-01-11	206028	5687	-1.0	273	-170	103
27-01-11	211339	5604	-1.5	-1651	-256	-1907
24-02-11	277277	5263	-3.2	-2702	1030	-1672
31-03-11	254501	5834	0.8	3325	-1717	1608
26-04-11	219852	5868	-0.1	-554	162	-392
28-04-11	223206	5785	-0.8	-833	533	-300
26-05-11	212284	5412	1.2	124	234	358
28-07-11	233519	5488	-1.1	65	409	474
05-08-11	203812	5211	-2.3	-1789	1372	-416

Will Gold Silver Survive Sep-Oct 2011 Storm !!!

Looks like we are entering 2nd round of fall (one which started in last week of July)...typically such massive oversold condition would have taken some time to get balance but such is the intensity of underlying problems that mkts hardly got week of reprive...

2nd round of deflationary fall seem to have started despite extreme bearish sentiment and oversold condition...if that is the case it is typically the case of liquidation...we are also entering seasonally dangerous Sep-Oct month....

it is the case for massive deflation given the way 10yr and 30 yr have behaved in US and massive disappointment in economic data....

Gold silver both fell hard during last panic sep-oct 2008..though gold was indeed the best performing asset (of course barring USD)....If we are to see replay of sep-oct 2008..then given the way ppl are positioned in Gold...it is likely to disappoint....

Mkts were massively oversold with sharp fall that started in late July....

Gold - Big Correction or Reversal ???

Similar Price Spike (Nature and Time wise)

• Glaring similarities between silver spike (last week of March – 25^th April 2011) and current gold spike (1^st July – 10^th August 2011)
• Silver had massive media coverage during that spike which was very understandable given the extent of rise...and various brokerage houses had published silver “fundamental” reports...Gold off late has been having massive media coverage...and most of the investment houses (GS,JPM...) have massively upgraded gold post massive rise...(GS – 1800+, JPM – 2500 !!!)

Similar Policy Reaction

• Policy Reaction to silver was massive increase in margin requirement (Both initial and maintenance) Margin was raised 5 times in matter of 8 days..Initial and maintenance both was increased by 84% !!
• Silver had huge whipsaw movement after initial margin hikes...every attempt to reach $50 was met with higher margin requirement...effectively 5 margin hike in span of 8 days resulted in massive silver price collapse from $50 to $34 in matter of 15 days...
• Gold margin was hiked by 22% on 10^th August 2011, the very day gold peaked at around 1814 and closing at 1746 on 12^th August 2011, registering fall of around 4%...

Now, Gold surely didn’t have as vertical spike as silver but then silver has always been more volatile...however sentiments had turned massively bullish with end of the world scenario and currency collapse debates and gold as only alternative currency...if such massive bullish set up (both in terms of price rise and sentiment) is met by margin attack, then it should certainly call for caution...if gold indeed bounces back towards 1800 over coming days and if same rise is again met with  margin hike..then its time to be extremely cautious...because set up is very very classic for either a big correction or reversal....!!!

GOLD RISE HAS BEGUN TO MASSIVELY HURT CENTRAL BANKS CREDIBILITY (PARTICULARLY FED) AND MOST OF THE PLAYERS HAVE PLAYED THIS TRADE EASILY FOR QUITE SOMETIME NOW...WHEN A TRADE HAS PLAYED SO WELL AGAINST AUTHORITIES FOR SO LONG...THEN ITS TIME TO BE CAUTIOUS....VERY CAUTIOUS !!!

(source - http://www.thechartstore.com/)

More than meets the eye...

The Intensity and Co-related movement across asset class shows that something big is coming over next few months. What we have seen in last 2 week seems to be trailer of things to come. Also, it shows that someone big has panicked and it seems that one who panics first panics best. Below points highlight that what has transpired over past 2 week indicates something more than meets the eye

• Major European Markets like DAX (Germany), Swiss, CAC (France), Italy have erased gains of last 2 years in last 2 weeks. Many are close to 2009 lows. All this have happed in last 2 weeks (28^th July- 10^th August)
• Commodities based Indices Brazil and Australia has performed similar to European Indices erasing 2-2.5 years of gains in last 2 weeks.
• Many Large developed markets have been more oversold than they were in panic months of Sep-Oct 2008.
• First time in Dow’s history it has moved by -635, +430, -520, +423 points on four consecutive days.
• Swiss Franc soars 5% + against US dollar, most since 1971 (beginning of Bloomberg records) on 9^th August 2011 (Post Fed announcement to hold rates till mid 2013) and one day later on 11^th August 2011, Swiss Franc falls 5%+ vs Euro, most since euro was introduced in 1999.
• Panic of last 2 week didn’t happen with any major appreciation of dollar index but with massive appreciation of Swiss and Gold...This is unlike 2008, when panic resulted in massive appreciation dollar Index.
• Asian Indices are fared better with most of them within one year low (while Hangseng and India little more than one year low)

Policy Response similar to 2008....??

Belgium, France, Italy, Spain have imposed 15day financial stocks short-selling ban. This is similar what was imposed in US during the worst part of crises by imposing ban on financial stocks...Following couple of months post ban were worst part of the 2008 crises....