– IMF Board Approves Sale of 403.3 Metric Tons of Gold (Bloomberg)

That’s what you call insider selling!

– New Gold ETF Takes On GLD, IAU (IndexUniverse.com)

Backed by one tenth of an ounce. More derivative securities that are based on hedges.

– Troubles Ahead for Barrick Gold (ABX): Company May Not Survive (Shocked Investor)

Always good to know what insiders are doing as opposed to what they are saying.

– 7 August 2009 - Joint Statement on Gold (ECB)

The plot thickens…

The S&P closed +2.81 at 1068.30. Spot gold ended at $1,006.15/oz. The USD index closed +0.237 or +0.31%. Comex Copper was off 3.83% or 11.10 cents at $2.7850 per lb. The dealers I spoke to said copper weakness was due to talk of a slowdown in Chinese imports.

China

The Shanghai composite closed -3.20% before Friday’s open in the states. After topping in early August, Shanghai found support in Early September and has rallied from a low of 2770. The rally has taken the index to the lower end of my regression analysis. A short has signaled with stops above last week’s high and target at +/-2700.

Shanghai Composite - Daily

Housing

Toll Brothers has been raising capital — most recently on 15 September $250M of 10Y notes — to pay off shorter term maturities. By paying down shorter term debt, the company is attempting to protect itself from cash flow troubles. Coupled with paying off shorter term debt, insiders are hitting the sell button in large numbers. The CEO recently sold 1.58 million shares on 16 September. In light of these data points, JP Morgan upped the shares from neutral to overweight ($29 price target).

Disconnect

Ubiquitous as the signs of fundamental weakness are, the trend in equities remains one of re-risking as opposed to de-risking. Vol term structure (VIX/VXV) is indicating risk ahead. The credit market has priced in far more risk than equities. As tough as it is to fade this move higher in equities — on a technical basis — the earnings multiples have definitively priced stocks for a V shaped recovery.

Opportunity

In light of these cross currents, these times offer tremendous trading opportunities. In conversations with several traders last week, I sensed frustration at their performance to date in 2009. Odds are, if you were short last year, you were not long this year. It was very tough to nail it both ways. No matter, it’s about what lies ahead. The fourth quarter is upon us. Gains of large proportions tend to manifest themselves in Q4 each year. Are you ready?

Ready or not, one thing is certain. The beat goes on.

After some investigative journalism in the windy city last night, I find myself back in the office looking at the final scores. The S&P closed off 3.27 points at 1065.49. Spot gold sits at 1,012.20/oz. Trade was relatively tame today. Technically, there wasn’t much change in the short term bullish outlook on US stocks.

Sports Television

On business television this morning, there was an in depth discussion whether Corona beer is good with or without a lime. As business TV gains market share, the likelihood it attracts sponsorship from the major brewing companies becomes more certain.

The 20% Above Buy Signal

There was also mention that the S&P is 20% above it’s 200 day moving average. A historical study was presented and viewers were assured that this is a sign of strength. The market remains overbought but it remains tough to be short stocks here. However, I’d be cautious viewing this stat as a buy signal. No two periods in history are the same, and our history is built by surprises.

The Dollar

Dennis Gartman of The Gartman letter commented that the “gold trade is crowded, but you can’t be short of it.” I agree. If the dollar suddenly catches a bid, gold is vulnerable to a quick move lower. As time goes by and the dollar trades lower (equities higher) we become more and more vulnerable to a treasury intervention. In the currency markets, the key is to catch traders off guard. Robert Rubin did this in the 1990’s. A sudden spike in the dollar would come as a surprise to most — and the surprise factor could be a catalyst for other news.

Back at the office, the daily scores are being posted while analysts on television are being pushed by commentators to offer whether they would “increase their position in Oracle (ORCL) or not” given the latest figures out of the tech behemoth.

The cash scores are as follows: DOW +108.30, $SPX +16.13, NASDAQ +30.51.

2.74 billion shares traded on the NASDAQ and 1.58 billion on the NYSE.

Spot gold continued higher and currently trades at $1,017.30 per oz.

Paul Volcker

Economic advisory board member and former fed chairman Paul Volcker came over the wire today and said that recovery from the recession will take a number of years and the United States needs to decrease it’s reliance on financial acrobatics. The market obviously does not understand the extent of the acrobatics that are still happening as can be seen by the upward ascent the S&P has engaged in since it pulled back slightly in late August.

S&P 500 Cash Index

Sensationalism

While the sensationalism of the crash of 2008 continues, the troubles at hand here and now are being left out in the cold. Perhaps we’ll worry about today’s troubles after this year long anniversary passes. A year from now, I wonder whether we’ll be celebrating the 2nd anniversary of the crash of 2008 or the 1st anniversary of the crash of 2009 or both. Stay tuned.

If one thing is certain on Wall Street it is this:

The beat will go on.

Meanwhile, back at the office, I am consulting with one of the most important people in my network, X. We are talking about a few different ways that quant traders at Goldman Sachs are making money right now. The number one trade over at the trader’s pit of government workers — Goldman — is gunning the S&P higher by going long the euro yen spread against the dollar. Thanks to the overweight of euros to yen in the dollar index, as you buy EURJPY with dollars, the dollar is pushed lower, and the S&P higher. As soon as this structure is in place, you lever long S&Ps.

These are the trades that are making Goldman’s trading stats so good right here and now — a tremendous record to say the least. I know tons of traders over at Goldie, and we speak on a regular basis. Some of them are my very good friends. Speaking to one of them the other night, I said, “Your track record is really good.” If nothing else, good trader’s know that the tape can be very humbling. He agreed.

Sometimes when trading records are too good — like with Enron — no one asks the right questions until it is too late. Whatever happens, I hope my trader pals at Goldie will be all right.

After that, we recapped today’s scores.

The S&P 500 is up 16.5% YTD and was up 3.29 points or .31% today.

The move higher in gold continued. The only bearish thing I can ask about gold is this: if the price index numbers released today were more inflationary than expected, why was gold not up even more? Other than that, it seems like the move in gold is holding and strengthening. One miner of note — Newmount (NEM) — sold bonds in exchange for $2 billion dollars ($900 million senior notes 5.125% due 2019 and $1.1 billion of 6.250% due 2039). The raise was 8.7% of the companies market cap. The smartest traders of gold are likely the miners themselves. It is notable that more than one of them is raising cash — through one mechanism or another.

If you are watching the scores all day, be sure that the symbols of the big five (Citigroup, AIG, Citi, Fannie and Freddie) are on your screen. Those five are making up 30% of the volume in today’s exchange of cash for shares. It was reported today that the US government may sell it’s 34% stake in Citigroup (C) over the next 6-8 months, starting as early as October. The government would not be announcing selling their stake unless they could show a trading profit. I’d think if the US government is selling, they won’t be selling into a down tape.

As I write, The Financial Times is reporting that some of Lehman Brothers’ creditors are challenging the sale to Barclays. They are claiming that up to $8 billion in cash and securities was transferred without the court’s knowledge!

At the same time, Warren Buffet is on sports television talking about Lehman one year ago. The sensationalism of the crash of 2008 is at all time highs, but momentum markets are tough to fade.

And the beat goes on.