Market Anthropology: Full Moon Rising

Friday, July 15, 2011

Full Moon Rising

Boy is it getting cinematic out there.  

It’s just like 2008 – just without the losses and the volatility… 

Perhaps they really have exorcised risk from the system. If you can stomach the headlines and the crushing logic of currencies colliding, sovereign debt-death-differentials (say that three times) exploding and generally palpable public discontent – just trade price without the soundtrack. 

I mean come on. 

Full moon? Options expiration? US debt downgrade? Europe trading on the pink sheets? 

Yes, but Google is up over 12% in the premarket and we all know that the internet holds the truths – therefore it surely can’t be as bad as it seems. 

Random thought – How blessed is this US? Just when it looked like we were doomed from an energy and job creation perspective along comes the realization that the US is the “Saudi-Arabia of Natural Gas”. Granted we were the Saudi Arabia before they were – but to have it come back around again for a second lap is truly an embarrassment of riches. From the perspective of a geologist, don’t underestimate the potential here – its enormous. And they are just getting started on tapping  the oil deposits as well. 

Random thought – Stop citing central bank gold purchases (ie. China) as a rationale for remaining bullish on bullion. If anything it should be used as a contrarian indicator. Old Gordon Brown comes to mind when he was the Chancellor of the Exchequer and decided to sell half of the UK’s national gold reserve at what proved to be rock-bottom prices. Needless to say he wasn’t the only central banker partaking in the poorly timed sales. The Canadians, France and even the Swiss followed suit. 

In my opinion, investors should be more weary of the silent gorilla in the room – the growing influence of ETF holdings in the precious metals space. That sword will eventually cut with the backside of the blade. 


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(Position in UUP, ZSL, GLL)

Disclaimer: This is not investment advice. Always do your own due diligence. Erik Swarts is not a registered investment advisor. Under no circumstances should any content from this website be used or interpreted as a recommendation for any investment or trading approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor.