Kool-Aid, Kool-Aid, Tastes Great | Kool-Aid, Kool-Aid, Can't Wait

Last Friday our headline for The Weekend Report read "Lock 'Em Up Till They Reach An Agreement." Well, no one was locked up exactly, but conditions have finally forced the parties in Washington back to the negotiating table regarding the budget and debt ceiling.
 
Now we are faced with dithering and dickering over particulars. We are not terribly optimistic. The scuttlebutt around Washington that we've picked up is that the right wing is insisting that Social Security benefits be cut. What Kool-Aid are they drinking? Having alienated almost the entire country except for the most conservative 5% of voters, now they're going to ask older Americans to take a pay cut? "Heck, granny, you're only 87, you still have a couple of good working years - months? - left in you."

Gold and silver have been put off the party buss for the moment. All major indices in Europe, Asia and the U.S. are up, though not quite as sharply as yesterday. The dollar is up. Crude is down.

Gold is down, although it has come off of its earlier lows. Most of the loss is coming from regular trading and not dollar strength. 
Gold lost $25 in about two minutes this morning as the market experiences a lightning-bolt surge in volume that triggered a trading halt in the midst of the plunge. The move knocked gold down to a three-month low and the effects rippled across the commodity markets. And incredibly, a single sell order might be behind it all. 

"It appears to have been an order to sell 5,000 gold futures contracts at market," Eric Hunsader of Nanex told news outlets. 

CNBC said this: "So huge [was the sell order], in fact, that the trade's impact was felt across the commodity market. Silver and platinum were hit at about the same time, and even crude oil appears to have been affected.

This (presumed) hedge-fund selloff triggered other buy orders around the 1275 mark.

We are left this week with a large question that can only be answered through technical analysis looking forward: Why hasn't gold performed as a solid safe haven throughout the crisis in D.C. up to this moment? The short answer is that equities speculators feel fabulous about stocks and they're awash in cheap money, so what normally would seem risky now seems safe. 

Wishing you as always good trading,