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Richard Russell: A thoroughly ugly close. Dow and Transports down a rare triple digits on both. Market drastically oversold — and what? No sign of a rally.  Down volume was 90% of up + down volume, making this an incredible 9 consecutive 90% panic down-days since mid-February. Something ugly is definitely brewing on Wall Street.

December gold closed up 22.80 to a record 1644.50. GDX, GDXJ and GDM were all higher boding well for the lagging gold mining shares.

It will be both remarkable and ominous if the stock market doesn’t put in a rally tomorrow. Question — Are we moving into “Great Recession” number 2? Market acts like it.

Red Alert

by Tov Hazel

The equity markets ‘shit the bed’ today. US investors got tattooed for $2 trillion of market cap. And this was supposed to be a good day. Talk about, “Sell on the news.”

I don’t think the Deciders really give a damn about stocks. It must ‘smart’ a bit to see the results of the day, but there is not much they can do about market positioning. The gold price was another slap in the face. Most folks in the country don’t really give a damn about gold, so neither do the deciders.

There are three things on the plate this afternoon which are much more important than stocks and PMs. I see them as being (I) the Yen, (II) the Swiss Franc and (the mother of them all) (III) Liquidity. I’ll take these three in order.

For argument sake we are at record lows in the USDYEN. The last time we saw this was in March after the earthquake. In response to that market instability the key central banks intervened in the market to weaken the Yen. IT’S UNLIKELY THAT WILL BE REPEATED.
Yes, I would expect the BOJ to step in one evening soon and push the Yen crosses around for a few hours. IT WILL NOT WORK IF JAPAN INTERVENES ALONE. Its quite possible that the BOJ action (when it comes) will have the reverse (and perverse) consequence of attracting additional dollar sellers.
Japan is already (functionally) in a recession. The move in the currency is adding to the deflation. It is happening very fast. Without global cooperation there is not a damn thing the Japanese can do about it (possibly buy a week or two at best).
The Swiss are in a similar position. Their currency is at record levels against both the Euro and the dollar. Who is bitching about this? Answer: Everyone.