InformedTrades

What's behind the volatility is unbridled speculation and computer-type HFT trading gone wild. Oil didn't drop $20 a barrel or copper 25 cents a pound because there was a sudden fall-off in demand or increase in supplies. This was all about speculative trading gone haywire.  Let me be more specific. The whole premise of the economic justification behind commodity futures trading has been bastardized.  US law has sanctioned the trading of commodity futures for the express purpose of allowing legitimate producers and consumers to hedge or transfer their price risks to speculators. But the wild price swings we are witnessing are not related to legitimate hedging. The volatility is as a result of speculators battling speculators, with real hedgers largely on the sideline. This is relatively easy to demonstrate.

Sure enough, in the 3 weeks following, M2 dropped to very much unremarkable weekly change levels. Until the week of August 1, or the week in which the specter of a US bankruptcy came to life, and in which the market took its first notable leg down. In that week, the broadest publicly released monetary aggregated - the M2 - soared to an all time high $9.5 trillion, or a $159 billion weekly change. This make it the third largest weekly spike in history After the Lehman bankruptcy and September 11.

1. Those holding gold to hedge the systemic risks of the Western Financial world simply stay in your position. 2. Traders lighten up your positions as gold approaches the next two Angels. 3. No market fails to have reactions at some point. 4. Reactions in this market will be deep, but brief when they occur. 5. The undervaluation of good gold shares has passed manic. 6. Utilization of some of your gold profits into good gold shares is pure logic. Respectfully, Jim

Given this backdrop, here's today's big question: If the dollar and euro implode... ...will the next global currency be gold or networked virtual currencies (like bitcoin)?   Until the new currency platform emerges, the safest hedge for the future is building, buying, or trading for anything that can produce food, energy, water, and products locally.

European Union states are unlikely to impose a blanket ban on short-selling of stocks in response to volatile trading in bank stocks, a regulatory source familiar with the situation told Reuters.

South Korea said North Korea fired artillery salvos near a disputed sea border that was the scene of a deadly shelling in November, a charge North Korea denied.

South American finance officials are considering creating a $10 billion to $20 billion emergency fund to assist nations that experience capital flight should the global economic crisis deepen, two government officials involved in the talks said.

More executives at Standard & Poor's 500 Index companies are buying their stock than any time since the depths of the credit crisis after valuations plunged 25 percent below their five-decade average. Sixty-six insiders at 50 companies bought shares between Aug. 3 and Aug. 9, the most since the five days ended March 9, 2009, when the benchmark index for U.S. equities reached a 12- year low, according to data compiled by Bloomberg. Morgan Stanley (MS) Chief Executive Officer James Gorman and two other managers purchased 175,000 shares of the New York-based bank as the shares fell to the lowest level since March 2009, according to filings with the U.S. Securities and Exchange Commission.

The yuan strengthened beyond 6.4 per dollar for the first time in 17 years, supported by the Federal Reserve's pledge to keep interest rates at a record low and signs China will use currency gains to help rein in inflation.

Individual municipal-bond investors aren't fleeing the market after Standard & Poor's lowered the credit rating of thousands of bonds.

The franc tumbled the most against the euro since the shared currency's debut in 1999 after Swiss National Bank Vice President Thomas Jordan said a temporary peg to the euro would be legal as policy makers try to stem the franc's gains.

Two Reasons If the ECB does not straighten this mess out, there will not be a Euro, or if there is one, it will be a Euro minus some countries. That is of paramount importance. The Fed is simply printing money. In the Eurozone, there is an implied assumption that taxpayers, primary German taxpayers but secondarily French taxpayers will bankroll whatever idiotic thing Trichet does.

Fitch cut Cyprus' credit rating by two notches to BBB on Wednesday due to fiscal slippages, saying the island state was likely to require a bailout to meet its funding needs.

Apple Inc. (AAPL) and Exxon Mobil Corp. (XOM) will vie for the title of world's most valuable company again today, letting investors decide whether high-tech growth prospects are a match for the oil industry's gushing profits.

The biggest plunge in stocks in more than two years is prompting U.S. options traders to pay the lowest prices for bearish contracts compared with bullish ones since December 2009.

The S&P GSCI Spot Index of 24 commodities surged as much as 2.5 percent to 629.64, the most since July 7. The gauge fell to 598.46 yesterday, the lowest level since Dec. 2. Oil jumped as much as 4 percent after falling to a 10-month low yesterday and copper gained as much as 3.1 percent, the first rise in six days.

Gilt yields slid the most in more than two years, reaching a record low, while the pound weakened against the dollar after the Bank of England said inflation is likely to moderate as economic growth deteriorates. U.K. bonds extended their gains as European bank shares plunged, boosting the appeal of government debt outside the euro region. British near-term growth is "likely to remain sluggish" and inflation should be "a little below target in the medium term," the Bank of England said in its quarterly Inflation Report today. The Federal Reserve pledged late yesterday to keep interest rates near zero through the middle of 2013 to boost the economy.

The Swiss National Bank may introduce "unorthodox measures" to curb currency gains, according to a report by Bank Sarasin published yesterday. The SNB trimmed borrowing costs to zero on Aug. 3 and said today it will "significantly increase" the supply of liquidity to the money market, after the franc yesterday strengthened to record levels versus the euro and dollar.

U.S. stocks notched the biggest gain in more than two years amid a seesaw session Tuesday following the worst selloff since the financial crisis, as investors applauded the Federal Reserve's pledge to keep interest rates near zero at least through mid-2013. The Dow Jones Industrial Average finished up 429.92, or 3.98%, at 11239.47, in whipsawed trading action. The index, which gained as much as 243 points at its morning high, saw its rally fade ahead of the Fed decision and turned sharply negative after the statement was released. It fell as much as 206 points at one point before it turned positive again and surged higher in the final trading hour.

The US municipal securities regulator has issued guidance to market participants following the decision of Standard & Poor's to downgrade the country's long-term sovereign credit rating to AA+. In its statement, released on Monday, the Municipal Securities Rulemaking Board insisted that MSRB rules on fair practice, trade pricing, suitability and disclosure, should not be subverted amid the market disruption.