A currency trader in London alerted me to the following about 10 minutes ago:

UBS analyst John Reade recommended that nimble investors take profits on any long gold and silver positions.

He would look to re-enter long positions after a correction.

Mr. Reade has a price target over the next month of $950/0z.

Reade is a winner of the London Bullion Market Association’s forecasting prize.

Lots of chatter about the EURCHF (Euro Swiss cross) seeing levels not seen since March of this year.

Futures -10.50 on SPX. Nymex Light Crude Oil -1.19 at $68.10. Dollar is up a tad against Euro off +/-72 pips. Spot gold of $3.20 at $1,003.2 per oz.

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I was transmitted this earlier from one of my reporters whom I quote:

“Wall Street Journal Currency Trading section expects accelerated USD decline this week if economic data shows further improvement.”

Does it seem odd that currency traders are programmed to short the dollar as data comes in “better than expected.”

I think something that may really catch people off guard here is if the dollar moves suddenly higher.

Again, the risk aversion trade is the dollar. If the dollar starts to go up with any strength, there are vast ramifications for all dollar denominated assets. They’ll all go lower.

Keep the dollar front and center on the radar.

A generally quiet session with some action, but not much. The S&P closed about flat at -1.41 or -.14%.

Overall, something seems not right with the market. Whatever that is may pass or it may lead to further volatility. As of now, there doesn’t seem to be an argument in town that can stop this thing. To that end, the S&P could potentially soar from here. All things are possible.

If the S&P does continue it’s ferocious march, it is VERY tough to know what to buy up here. Most of the breakouts I am seeing are concentrated in the stocks under $5 bin–the junk.

Gold seems to be on everyone’s radar. This is good. In a bull movement, it is best to have lots and lots of players interested in a market, betting on it as the next big thing. Good bull markets are born of enthusiastic participation. Whether the next 10% move in gold is to be up or down remains to be seen. Stay tuned. Spot gold closed the week at a high not seen since the week of March 17,2008 for a $1,004.86.

Treasuries were up slightly on the week. Treasury rates may find support here, but for my money, they must eventually head lower. That said, next week’s move in anyone’s call.

10 Year Rates

Will claims (derivatives) on gold (GLD, futures contracts, options, options on futures) cause the spot price of gold to be more volatile than it’s been in prior inflationary cycles?

Remember, there are far more claims to gold available for trading than were available in the 1970s.  In the 70’s we lacked the widespread access to derivatives that are available to us now.

This will likely make the movements in gold, silver and the miners more volatile during this inflationary cycle.

For all these reasons, gold will be a great market to trade over the next few years.

As for now, gold continues to trade in it’s recent range.

Gold Futures

The S&P moved higher out of the gate. About midway through the session, it sold off about 10 points and found support at yesterday’s high. The pit was quiet all day, save a few minutes before and after the Fed beige book was released.

S&P Futures - 15 Minute

On the daily chart, the market has rebounded from it’s (ever so slight) sell off last week. Over the last four sessions, there has been a relative increase in volume in the pit traded contract. Any time volume veers from it’s average, it is worth noting.

S&P Pit Contract - Daily

All eyes are still on gold, which is consolidating after last week’s ascent.

Spot Gold

I am flying home from Singapore and will be back tomorrow.

And that’s a rap.