David Schectman

Quotes of the Day

"Congress Addresses Data Falsification in Unemployment Survey

"September Unemployment Rates: 5.9% (U.3), 11.8% (U.6), 23.1% (ShadowStats)"

"September Labor and Monetary Conditions, August Trade Deficit and Construction Spending,"

- John Williams, Shadowstats.com, October 3, 2014

Nonsense. That Number is a Pre-Election "Promotion".

Real Unemployment in the U.S.A. is 23.1% if one counts all discouraged Workers, per Shadowstats.com, which calculates the numbers the way they were calculated in the 1980's.

Even Congress, via the House Committee on Oversight and Government Reform is now Investigating "Data Falsification."

As John Williams says

"...Irrespective of whether there was politically-motivated falsification-.... There appears to have been enough falsification of data to affect the significance of reported numbers, such as the unemployment rate.

IBID.

And worse

"...the broad economy had grown perhaps by two-percent in the last year, but that included gains from inflation. Take out roughly two-percent for the government's understated inflation rate, and annual growth has been flat."

IBID.

- Deepcaster.com

But the other important point is that while the technical funds are selling in all these commodities with a reckless abandon, the commercials are buying with just as much abandon. Both in my mind and according to past history, you want to bet on the commercials to prevail in the end, particularly in silver. As bad and rotten and sickening as the price declines have been, the commercials have bought the whole way down. Prices only dropped because the commercials wanted to buy and declining prices are the only way that they can buy. In other words, I'm still convinced the next major move for silver and these others commodities is up (he says with blood dripping from his eyes).

- Silver analyst Ted Butler, Butler Research, October 4, 2014

At first glance, the Commitment of Traders Report (COT) looks marginally better today than it did back then from a conventional perspective. And that's saying something since November 2008 proved to signal a price bottom that has held to this day. In other words, we have less of a commercial net short position and less of a non-commercial net long position in COMEX silver today than we had on November 18, 2008. Likewise, the concentrated short position of JPMorgan and the 4 largest traders is less in silver today than it was back then. But these marginal improvements are not what make the current set up so spectacular to me. Rather, the current set up is spectacular when you look at it in the manner I have gravitated to over the past couple of years - by looking closely at the managed money category.

In effect, the emergence of the technical funds on the short side of silver (and gold and other commodities) over the past two years has transformed a marginal improvement into something so spectacular that I can hardly believe it has occurred. Simply put, the headlong rush by the technical funds onto the short side of silver (and gold and copper) has created the opportunity for a price explosion that didn't exist in 2008.

- Silver analyst Ted Butler, Butler Research, October 8, 2014

Today's Featured Articles

Andy Hoffman (Are You Taking Nenner Seriously?)

Ed Steer (Gold: Time to Prepare for Big Gains?) (China is maneuvering to get its currency included in IMF's super-currency) (Bank of Japan to Significantly Increase Monetary Base)

LeMetropole Caf� ("The Calm Before the Storm in the Gold Market.")

Jim Sinclair (Popular Movement in Switzerland Looks to Repatriate Gold and Increase Reserves) (Richard Russell - We Just Saw Ultimate Bottom In Gold & Silver) (China plans to sign about 50 agreements with Russia)(China Outlines Plan to Ease Capital Controls, Boost Yuan Use)

Sovereign Man(Just like yesterday's post about the renminbi / euro convertibility, this is truly a canary in the coalmine moment for the future of the US dollar... as well as gold's emerging role in the financial system of tomorrow)

Kira Brecht(The gold market is approaching a key line in the sand around the $1,180 level. There will be volatility around this level. Expect it.)

The Fed Admits Failure - Part I

October 9, 2014

Yesterday, we both wrote and spoke of our belief "it" has begun. Sure, TPTB are working overtime to fight powerful winds of change in the financial markets they have long controlled by manipulating, manipulating and manipulating some more. However, watching the average global interest rates plunge to an all-time low this morning, the "most damning proof yet of QE failure" could not be more obvious. Contrary to mainstream belief, we have shouted from the rooftops that Western interest rates will go to zero as the investment community front runs universal "QE to Infinity," guaranteed to be implemented by all Central banks as the global economy collapses. Below, Zero Hedge highlights Europe's complete "Japan-ization" - i.e., a financial cancer that can never be cured, but must be treated with exponentially expanding money printing. And unlike actual cancer, "Japan-ization" is as contagious as Ebola - to all nations with fiat currency regimes. Which is to say, in today's horrifying financial world, all of them.

Zero Hedge

As for the U.S. economy, which we're to believe is "recovering" whilst the rest of the world implodes, the benchmark 10-year yield not only breached its 52-week low of 2.31% this morning, but blew through it like a knife through hot butter, touching 2.28% before the Fed intervened with yet another "new hail mary trade." As for said "recovery," in last week's "painting the tape" we predicted "better than expected" NFP employment data, as it was the last such report before the mid-term elections - supplementing our case by citing the verifiable fraud of the October 2012 report. We've already been over the fact that last week's report was, despite being "better than expected," one of the ugliest yet - care of hideous internals revealing a U.S. labor situation in unprecedented decline. And guess what? As it turns out, this report, too, was completely fraudulent; as yet again, the New York Post's Jon Crudele uncovered a "whistleblower" admitting NFP data is fabricated.

Since Friday's report, U.S. stocks and interest rates have plunged as have most commodities. In other words, it didn't fool anyone - 5.9% "unemployment rate" and all. In fact, European stocks have plunged dramatically - and even after this morning's cursory bounce, they are declining anew. Even hope is disappearing in Japan and Europe, as they join countless second and third world economies in the throes of recession, currency collapse and social unrest. And the worse things get, the higher the odds that various "secession movements" gain momentum. Trust us, if Caledonia votes to secede from Spain on November 9^th - taking with it 25% of Spanish tax revenues - it could spell the collapse of the Spanish nation state as we know it. Worse yet, if the Cartel loses control of gold in the ensuing chaos, yielding a material upward spike, the odds of Switzerland voting to re-back the Franc with gold on November 30^th will increase dramatically. In other words, the ramifications of four-plus decades of insane monetary policy are coming home to roost; and frankly, if it doesn't result in significant revolutions and wars we'll be shocked. History doesn't lie and "Economic Mother Nature" doesn't lose.

Of course, the main cause of the global cancer is its "head Central bank," the Federal Reserve. Created by the chicanery and bribery of a handful of evil bankers led by J.P. Morgan himself, the Fed has not only destroyed the American dream but catalyzed untold financial losses, inflation, and social unrest the world round. When its Ponzi scheme was co-opted by similarly greedy, short-sighted bankers and politicians in 1971, the world's population was sentenced to financial death with a "commuted sentence." That commutation represented the time it took for their governments, armed with unfettered printing presses, to reach "peak debt" - which occurred around the turn of the century and accelerated when the financial system broke in 2008. Today, the Fed is printing more than ever - and care of the "final currency war," so is everyone else. Global debt is now increasing parabolically, which is why we couldn't be more confident the "end game" is commencing.

To that end, yesterday afternoon the Fed perpetrated one of its biggest lies yet; and simultaneously, inadvertently admitted its failure. However, per today's title, this is just "Part I" of its ignominy, with Part II coming in the near future, when it overtly ends its "tapering mirage" - by reversing course completely and announcing QE4.

As readers know well, FOMC "minutes" publication have become one of the Cartel's most reliable "key attack events." Since its "tapering" propaganda scheme commenced last Spring, every time the Fed speaks, PMs are attacked; as well as every time the minutes of their meetings are released, despite the fact nothing incremental ever emerges.

However, not so yesterday, when the Fed validated everything we have been passionately writing of this year. In fact, not only did precious metals surge (with gold's gain capped at, what a shock, EXACTLY 1.0%), but interest rates plunged into the abyss, enroute to this morning's 52-week lows. Frankly, our long-time suspicion that said "minutes" are doctored was strengthened as well, as there is simply no way such comments would not have been divulged in the FOMC's original statement - let alone, subsequent FOMC member speeches. And oh yeah, some of the comments that supposedly emanated from meetings in mid-September appear to be directly in response to events of the last few weeks.

Irrespective, despite one's views on such "conspiracy theory," the Fed first validated our contention that the U.S. economy does not function in a vacuum when the entire global economy is in freefall.

*FED OFFICIALS SAW GLOBAL SLOWDOWN AMONG RISKS TO U.S. OUTLOOK

Next, it referred to its fear of bursting the bubbles it created.

*FOMC SAID SOME DEVELOPMENTS COULD UNDERMINE FINANCIAL STABILITY

And most importantly, it addressed what we have been screaming of for the past month of how the "strong dollar" not only exports massive inflation to the rest of the world, but decimates U.S. corporate earnings. In other words, that "final currency war" again, as plain as the nose on one's face. And in this kind of war, it is mathematically impossible for anyone to win - with everyone ultimately losing to hyperinflation.

*FED SAW RISING DOLLAR AS RISK TO EXPORTS, GROWTH, MINUTES SHOW

The PPT immediately hopped into action, eager to convince the world that the same old Fed-subsidized "carry trade" could boost stocks indefinitely, particularly with the Fed essentially guaranteeing its "considerable time" of ZIRP policy is on the verge of becoming infinite. However, U.S. stocks are losing their bloom already this morning; and as noted above, European stocks are actually down for the day. As usual the MSM writes of the "good news" of the Fed warning of an economic downturn, just as last week's "better than expected" NFP report was "good news" as well.

As for precious metals, it won't be long before the entire world realizes Sunday's night's gold raid, stopped cold at $1,183, likely created the massive triple-bottom signifying the end of three-years of merciless Cartel attacks - which most likely, have drawn the world's physical metal supply down to fumes. The great Steve St. Angelo, who will participate in next Thursday's "Miles Franklin All-Star Silver Panel Webinar" put the absurdity of the past 18 months' paper price declines in perspective in his latest article - as depicted by the below graphs of how physical demand reached all-time highs in 2013, whilst paper prices hit multi-year lows, well below the cost of production.

SRSRocco Report

SRSRocco Report

Readers this is officially "table pounding" time for precious metals ownership. If the current, historically unprecedented bullish fundamentals can't convince you to at least partly insure your assets with real money, I'm not sure what will. NOW is the time to act; and if you do, we humbly ask you to call Miles Franklin at 800-822-8080 and give us a chance to earn your business.

Andy Hoffman on Butler on Business Show - October 9, 2014

October 10, 2014

Andy Hoffman joins Alan Butler from the Butler on Business show (1:33:20) to discuss gold and silver, the U.S. dollar, the cost of living rising in the U.S., debt accumulation increasing and unemployment.  To listen to the interview, please click below.

 Andy Hoffman says...

Well, it's "official," I guess.  His July low, turned September, is now "next week." 

Of course, since he writes of generational trend changes, why is it just the "next short-term low?"

Video: Charles Nenner: Scary Deflation on Horizon, Gold Update and Nuclear War

If it rises, he will say he called the bottom.  If not, he'll say it was just a "short-term low."  And this is Sinclair's main guy.  Sheesh.

Funny thing is, he'll probably be right - but not due to sunspots!

On gold, Nenner predicted a low of around $1,150 per ounce.  Now, Nenner says, "The next short term low is next week, and I think we are going to take it.  We are going to do some buying.  The long term low should be in, and every short term low should be seen as a bottom."

-USAWatchdog.com, October 8, 2014

Gold: Time to Prepare for Big Gains? - www.caseyresearch.com

October 8, 2014

Years of a severe downturn in the gold market have left very few bulls to speak out in favor of the yellow metal. Here are some positive opinions on the future of the precious metal, from the recently concluded Casey Research Fall Summit.

David Tice, founder of the Prudent Bear Fund, believes we are heading for a "global currency reset" that will reduce the role of the dollar in global trade. Central banks, he says, don't possess all the gold they claim to, and the unwinding of the paper gold market probably isn't far down the road-it could even ignite the next major crisis.

The paper gold market (for example, exchange-traded funds like GLD) has massive leverage, with a ratio of 90:1 or 100:1 of paper claims on gold bullion. If only a small fraction of owners convert their paper to physical gold, says Tice, it will create a "no bid" price environment and cause the price of gold to explode.

He believes that once the paper gold market collapses, gold will be priced on the basis of supply/demand for the physical metal-which means it could be headed for $3,000 to $8,000 per ounce.

Continue reading on Casey Research.com.

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Russia, South Africa Seek to Support Platinum Price - www.caseyresearch.com

October 8, 2014

By Ed Steer

Critical Reads

China is maneuvering to get its currency included in IMF's super-currency

Protests over democracy in Hong Kong may be preoccupying the Chinese leadership, but a subject of still greater international importance is being played out this week behind closed doors in Washington.

China is bidding to enter the heart of global finance by establishing its currency, the renminbi, as part of an ubiquitous monetary unit used in official transactions around the world.

The issue of whether the Chinese should be part of the International Monetary Fund's Special Drawing Right, the composite reserve currency used in official financing, is highly technocratic, but the political questions at stake go to the core of world money and power -- and will be discussed, in the background, at the annual meetings of the IMF and World Bank in Washington this week.

The decision on a new SDR structure, to be made in the next 15 months, will influence how China and its currency can play a bigger part in driving world trade, investment, and capital flows. The renminbi eventually could challenge the dollar and its pivotal position in world money -- which is why the U.S. government and Federal Reserve are examining this with intense interest.

Whenever the SDR makes its appearance, it will spell the end of the U.S. dollar a reserve currency.  This must read news story put in an appearance on the usatoday.com Internet site at 5:25 p.m. EDT on Tuesday afternoon---and it's something that I found over at the gata.org Internet site.

Read more...

Bank of Japan to Significantly Increase Monetary Base

The Bank of Japan is set to increase the annual pace of growth of its monetary base by 60 trillion yen ($550 billion) to 70 trillion yen ($645 billion), a statement posted on the bank's website Tuesday read.

"The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 60-70 trillion yen," the statement said.

The bank also intends to extend the scale of its asset purchases. Specifically, it will purchase Japanese governments bonds (JGBs) in a bid to increase their amount at an annual pace of about 50 trillion yen.

Print, print, print!  This article was posted on the RIA Novosti website at 11:31 a.m. Tuesday morning Moscow time, which was 3:31 a.m. EDT in New York---and I thank reader M.A. for sharing it with us.

Read more...

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10/8 Dan Popescu - The Calm Before the Storm in the Gold Market - www.lemetropolecafe.com

Physical gold is being accumulated and used in exchanges but very discretely as of now. In a recent report mentioned in the UK Telegraph it is revealed that a record number of super-rich elite are buying gold bullion bars weighting 12.5 Kg. The report says "The gold buying secrets of the UK come as it was recently revealed the number of 12.5kg gold bars being bought by wealthy customers has increased 243% so far this year, when compared to the same period last year."

To read the full article, please subscribe to LeMetropole Cafe.com.

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In The News Today - www.jsmineset.com

Posted October 8th, 2014 at 6:13 PM (CST) by Jim Sinclair

Popular Movement in Switzerland Looks to Repatriate Gold and Increase Reserves

There is a peoples' movement in Switzerland to repatriate their gold and increase the percentage of gold reserves. This story has received very little attention in the media, even within the precious metals community. It could have significant ramifications for the gold market, increasing central bank demand and putting upward pressure on the gold price.

This November 30th, a popular Swiss Gold Referendum is going to a vote. Nearly one-third of the Swiss Franc used to be guaranteed by gold reserves, now it's less than 8 percent.

If this vote goes through, the Swiss will be forced to raise the gold reserve back up to 20 percent.

Radio host Charles Goyette has spoken with Ron Paul about central banks at great length on his radio show. In the video below, he gives his input on the Swiss Gold Referendum.

The "Save our Swiss gold" referendum contains the following key elements:

The SNB should stop selling its gold.

The gold has to be stored in Switzerland.

Gold should represent at least 20% of the SNB assets

If the referendum passes the Swiss National Bank would have to buy about 1,500 tons of gold over the next three years. This equates to half of the world's annual production and they would have to compete with China to secure supplies. COMEX manipulators can keep the paper prices low for so long, but eventually the overwhelming demand for physical is going to blow up that fraudulent exchange.

More...

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Jim's Mailbox - www.jsmineset.com

Posted October 7th, 2014 at 11:44 AM (CST) by Jim Sinclair

Jim,

Richard feels the bottom is set and we should be getting ready for a rising market.

CIGA Larry

Richard Russell - We Just Saw Ultimate Bottom In Gold & Silver

Today the Godfather of newsletter writers, 90-year old Richard Russell, said we have witnessed the "ultimate bottom" in the gold and silver markets.  The 60-year market veteran also warned that the world is going to see a new monetary system, which will feature gold as the centerpiece.

Russell:  "Currently, the world is beset by a multitude of emergencies. The water shortage and the change in the earth's climate along with the disasters of Ebola and ISIS must be solved. As a rule, we don't address problems until they become emergencies. My belief is that in coming years, we will address all potential disasters and emergencies.

World Wars I and II plus the Holocaust may stand out as the worst episodes in human history (other than communist regimes, considered responsible for 85-100 million deaths).  The three worst epidemics in history were the bubonic plague, which wiped out one-third of Europe, the influenza epidemic which killed 50 million people in 1918 and most recently the AIDS scare, which has killed 36 million since its inception, according to the World Health Organization. As a sign of human progress, the world is taking the Ebola epidemic seriously. It remains to be seen whether Ebola can be confined to Africa. Time marches on and the human race really does make progress.

More...

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In The News Today - www.jsmineset.com

Posted October 9th, 2014 at 10:37 AM (CST) by Jim Sinclair

China plans to sign about 50 agreements with Russia

BEIJING, October 9. /TASS/. Prime Minister of Chinese State Council Li Keqiang will visit Russia on October 12-14.

The two countries plan to sign around 50 inter-governmental, inter-departmental and corporate documents on different aspects of bilateral cooperation, Chinese Deputy Foreign Minister Cheng Guoping said.

"This will be his first visit to Moscow as the prime minister of Chinese State Council. We hope that this visit will promote stronger political trust, higher mutual support between Russia and China in the field of sovereignty and territorial integrity," Cheng Guoping said. China also plans "to build up practical cooperation with Russia in aviation and space, energy, high-speed railways, finance, innovations and projects for infrastructure development," he added. Beijing will "develop humanitarian exchanges, particularly during the Year of Youth Exchanges between Russia and China, as well as joint preparation for celebrations on the occasion of the 70th anniversary of the Victory in World War II in 2015." "China intends to expand cooperation with Russia in international issues," the country's deputy foreign minister added.

During the visit, Li Keqiang will focus on developing energy cooperation with Russia, Cheng Guoping said. "Gas cooperation is an important aspect of Russian-Chinese energy cooperation. Russia and Chinese energy agencies are working closely on creating 'a western route' (for Russian gas supplies to China). We hope to reach progress in this issue this year," the Chinese high-ranking diplomat noted.

More...

Jim Sinclair's Commentary

This is the path to a reserve currency by popular demand.

China Outlines Plan to Ease Capital Controls, Boost Yuan Use

By Bloomberg News 

October 9, 2014 5:35AM EDT

China outlined plans to allow citizens to invest in overseas stocks and property as well as let the nation's companies sell yuan-denominated shares abroad, furthering efforts to internationalize its currency.

Chinese nationals will be able to buy equities and real estate via a Qualified Domestic Retail Investor scheme, Wang Dan, a deputy director general at the central bank, said today at a conference in Beijing. There are also talks under way to give locals access to yuan capital markets in Singapore and London, she said, without giving any start dates or sizes for the programs. Agricultural Bank of China Co. announced plans today to become the first company to offer yuan-denominated Global Depository Receipts in London.

China, which is also scheduled to start an exchange link between Hong Kong and Shanghai this month, is seeking to give its citizens more investment channels amid a slumping property market and increased risks from local wealth-management products. The world's second-largest economy is also trying to promote use of the yuan, which ranked seventh for global payments in August from 12th a year earlier.

"It's a continuation of yuan internationalization and capital-account liberalization," said Yii Hui Wong, Singapore-based currency and rates strategist at BNP Paribas SA. "Singapore is a hub for Southeast Asia and the U.K. is in a different time zone altogether, connecting China to European investors. They won't just have Hong Kong and be dependent on Hong Kong only."

More...

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Gold is making a dramatic comeback in the financial system - www.sovereignman.com

By Simon Black on October 2, 2014 

Santiago, Chile

In 1324, Mansa Musa, the tenth emperor of the Mali Empire, set off from Western Africa on his pilgrimage to Mecca.

This was no Spartan journey. He was accompanied on his way by a procession of 60,000 men and 12,000 slaves, each of whom carried up to four pounds in gold bars.

Musa is might just have been the richest person of all time, with an accumulated wealth estimated at $400 billion valued in today's increasingly worthless dollars.

But it wasn't just kings and emperors who held gold. Gold has been the most widely used medium of exchange in world history... across all points of the globe.

Ibn Battuta was a 14th century traveler and explorer whose famous grand adventure spanned 75,000 miles over the course of 24 years, much like Marco Polo's.

Everywhere he traveled- North Africa, Middle East, Central Asia, India, Southeast Asia, China - gold was either the dominant currency or an easily accepted medium of exchange.

This barbarous relic has stood the test of time across cultures around the world for millennia as a form of wealth.

Most people in the West have completely lost sight of this.

They view the value of gold through the lens of paper currency, i.e. an ounce of gold is 'worth' 1,215 US dollars.

This is a deeply flawed perspective.

Looking at the gold price moving up and down in US dollars is something like sitting in a rowboat on choppy waters believing that it's the beach that's moving up and down.

Einstein might say that it's all relative, but only one has any real stability.

But perspectives can and do change.

There once was a time when most people believed that the entire universe revolved around the Earth.

This was flawed (and arrogant) view, and it was eventually corrected.

Thinking that the global economy revolves around the US dollar is just as flawed and arrogant. And it will soon be discredited just the same.

History tells us that dominant monetary systems invariably have an expiration date.

From the Byzantine solidus to the British pound, this is especially true when a superpower enters into decline and plays destructive games with its currency.

Today's system where an unelected central banking elite conjures trillions of dollars and euros out of thin air is no different. It has an expiration date too.

Change is never easy. People don't like it, and will resist change even if their current situations are terrible. Inertia is the most powerful force in the universe after all.

Desirable or not, it's happening. The US dollar's days are numbered.

Now, gold, with its millennia-long history is making a comeback. We're not just talking about it as a store of wealth or a speculation, but as a regular form of currency.

Moving us back in this direction, Singapore Exchange launched a new arrangement this week where institutional-sized gold contracts will settled not in cash, but in 1kg bars of gold.

This means that each of these contracts is intended to deliver and store gold in Singapore on behalf of large financial institutions, central banks, and even governments.

Sure, Singapore wants to advance itself as THE gold hub of Asia. We've been writing to our premium members about this for years

But more importantly, it's quite telling that major insiders within the financial system itself are pursuing this contract.

They're effectively setting up a new system, in Asia, to afford governments and central bankers the opportunity to trade in their US dollars for something real.

Just like yesterday's post about the renminbi / euro convertibility, this is truly a canary in the coalmine moment for the future of the US dollar... as well as gold's emerging role in the financial system of tomorrow.

Until tomorrow, 

Simon Black 

Senior Editor, SovereignMan.com

Continue reading on Sovereignman.com.

Gold Nears Moment Of Truth: Will Physical Demand Come To The Rescue? - www.kitco.com

Friday October 03, 2014 12:44

The U.S. dollar index has been on a tear in recent months, climbing 8.75% since July 1. The greenback is gaining steam, amid expectations for Federal Reserve rate hikes in 2015, which will improve rate differentials versus other major currencies.

While the dollar outlook is bullish, that in turn, has been weighing on gold. The gold market is nearing a so-called "moment of truth." Will physical buyers step in to rescue the yellow metal near the $1,183-1,182 zone?

Take a look at Figure 1 below, which shows a weekly continuation chart of Comex gold futures. There were two previous occasions in which gold retreated to this price zone -and both times active and aggressive physical buying helped prop up the market. The first marked "A" occurred in June 2013 and the second marked "B" was seen in January 2014. On both occasions, long-term gold investors were attracted to the lower price zone and used the dip as a buying opportunity.

Will that happen again now? The jury is still out. Keep an eye an intermarket dynamics. It could be key.

The U.S. stock market is rebounding higher. But, will the recovery prove to be a dead cat bounce? There are many who warn that the U.S. stock market rally in recent months was based on growth and inflation expectations that have not been met, and that the equity market is vulnerable to a more substantial pullback or correction on the downside. Sure, the labor market is improving. But, the bond market -the financial market's inflation watchdog -isn't showing any signs of concern about growth inspired inflation. The 10-year Treasury yield has slipped lower from 3.03% to start 2014 to its recent 2.45% reading.

Besides its October. Watch to see if U.S. equities are able to continue to rebound or falter in the days ahead. October gets a bad rap when it comes to the stock market and there is good reason for that. Historically, October has some of the ugliest memories for stock market investors. It turns out when you look at the numbers, September scores high as a pretty dangerous month as well.

Here is a look at the Five Worst Days (largest single day percentage drops in history of the Dow Jones Industrial Average), according to djaverages.com

FIVE WORST DAYS

9/29/2008                   -6.98%

10/15/2008                 -7.87%

9/17/2001                   -7.13%

12/1/2008                   -7.7%

10/9/2008                   -7.33%

This is just a small sampling and the month of October throughout history is littered with crashes, pullbacks and market stumbles, including of course October 1929, October 1932, October 1937, October 1987, October 1989, and October 1997.

In the early 20th century there actually was a rationale behind the month of October's poor U.S. stock market performance. Looking back, the reason was at that time, the U.S. economy was dominated by agriculture. Farmers often had to borrow money in order to finish the fall harvest, which pulled money out of the financial system and left the market without liquidity needed to drive stock prices higher.

Today, of course, there is no lack of liquidity thanks to the U.S. Federal Reserve.

But, the liquidity-fueled stock bull run will need to readjust if the U.S. economy fails to deliver the growth and inflation expectations that the market has already priced in.

There are speculators, hedge funds and big money players who have been riding the U.S. stock bull higher in recent years.  These are trend following players simply riding the trend and looking to book their profits along the way. Once the trend turns, they have no loyalty and will be out in a flash looking for the next trend to ride across the global marketplace.

If the current U.S. bull market in stocks begins to turn into a bear, there is a traditional cycle which sees investors shift from paper assets (stocks, bonds) into hard assets (commodities, real estate).

After all, if a paper investment goes bust, it always feels good to have something you can hold in your hand that has value.

There are many reasons that investors buy gold, as a portfolio diversifier, as an inflation hedge, as a currency hedge and as wealth preservation tool. Time is running out for the current U.S. bull market in stocks, gold continues to offer investors the peace of mind of a hard asset that you can hold.

The gold market is approaching a key line in the sand around the $1,180 level. There will be volatility around this level. Expect it. The bulls and bears both know this is a major price zone. Physical buyers, however, could choose to wait in the wings a bit on this retreat. Everybody wants to get a better price. Physical buyers could hold back to see if there will be a better "sale" price on gold ahead in the days or weeks ahead.

A sustained a strong downside breakout under $1,180 would trigger a bearish technical triangle pattern, seen on the weekly chart below. There will be fresh physical buying in the gold market ahead, but for now, it is not clear if buyers will step in now or wait for better levels.

Kitco.com

By Kira Brecht, Kitco.com

Follow her on Twitter @KiraBrecht

The views and opinions expressed in this e-mail are solely those of the original authors and other contributors. These views and opinions do not necessarily represent those of Miles Franklin Ltd., the Miles Franklin Ltd. staff, and/or any/all contributors to this site.  

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