10:17 am - Market Report II by Bill Wermine

Dear Traders,

Continue to run your long gold position as the US Dollar Index broke major support at 80.00 Friday and appears to be in freefall. Use an ATR risk on futures/ ETF/spot gold which is at USD 865. If gold breaks USD 1000 we will raise our stop again. To hold our position we must give at least USD 110 stop. Any less than that the natural volatility will take you out.

You can use this risk benchmark for your purchases in the Am Precious metals fund

Sir charts, my research service run by Gary Dorsh a former CME floor trader reports the Russians/ Chinese are quietly selling their long dated US T bond holdings.

The US treasury is denying this so it must be true. If the Chinese/ Japanese / Russians/ brazil slows funding the US deficits, higher interest rates are the result and Dow collapse is in the cards.

The bond market vigilantes are trying to pull the plug on Quantatative Easing and impose discipline on Obama and his free wheeling democrats.
in Washington. If Obama does not heed this warning it could leed to Sharply higher interest rates which can choke off the recovery and cause world stock markets including the Dow Jones to collapse and break the March lows.

Other headwinds are sharpy higher crude oil/ grain and precious metals prices. These markets are not fooled by the Obama smokescreen and the propaganda from CNN/ CNBC/ .

For our KLSE positions we deal in consumer/ plantation/water and power shares and high quality dividend shares. Avoid manufacturing , property and banking issues.

We must maintain our defensive strategy and lock in profits as our shares reach resistance areas such as Dutch Lady . I took profit on F & N and added Guiness,JTI tobacco and Nestle- all dividend payers for our managed accounts.

Do not get caught up in the media/ stckbroker hyping machine.


Our shares are defensive as people will drink beer and smoke when they are depressed. In fact studies show that tobacco and alcohol consumption goes up when the economy slows down.

The AUD is also well supported and that helps our Man investments. I anticipate a positive performance from Man in the next reporting period- their models support catching the US Dollar collapse and rise in commodities.


Have a good week and stay the course.
Bill