Stocks and Precious Metals Charts – The Willful Mispricing of Risk

Stocks and Precious Metals Charts – The Willful Mispricing of Risk by Jesse – Jesse’s Crossroads Cafe’

TDC Note – When I saw the image Jesse had created I knew it was going to be a good one – he did not disappoint.

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Today was a stock options expiry.

Gold and silver rallied smartly, back up to the levels where they roughly were before they were bushwhacked on the Comex into the FOMC meeting and Non-Farm Payrolls boogie woogie.

I guess the theory that this smackdown of gold to retest 1270 earlier this week was a gambit ahead of stock option expiry was tradeable.

We are in a new era. I am hearing this on TV and in comments and on chat forums.

We are in an era where risk has been abolished by the central banks and their free money. So there is little difference between prime and subprime, between 2 year and 10 year Treasuries, and between stocks and bonds.

According to some of the Pied Piper pundits stocks are better than riskless cash, because stocks are going to keep rallying forever after, and cash is trash.   Buy buy buy, and don’t be left behind.

This is the kind of mantra that the sell-side and the wiseguys of the Street too often resort to when they are taking profits from their pool after a big price run higher, and unloading mispriced junk on mom and pop, through the funds and institutions.

Once the selling starts in earnest, and it will beyond any doubt at some point, by whatever event that may happen to trigger it, this is going to get ugly very quickly.  But this is the system that we have today.  This will be the third bubble and bust since the repeal of Glass-Steagall, one of the highest funded PR and political campaigns in modern history.

And no one could have seen it coming.

Who runs Bartertown?

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Jesse

NEED LITTLE - WANT LESS - LOVE MORE THE BANKS MUST BE RESTRAINED, AND THE FINANCIAL SYSTEM REFORMED, WITH BALANCE RESTORED TO THE ECONOMY, BEFORE THERE CAN BE ANY SUSTAINABLE RECOVERY. WELCOME TO JESSE'S CAFÉ AMÉRICAIN - THESE ARE PERSONAL OBSERVATIONS ABOUT THE ECONOMY AND THE MARKETS. IN PROVIDING INFORMATION, I HOPE THIS ALLOWS YOU TO MAKE YOUR OWN DECISIONS IN AN INFORMED MANNER, EVEN IF IT IS FROM LEARNING BY MY MISTAKES, WHICH ARE MANY. AS A STANDING POLICY I NEVER PROVIDE INDIVIDUAL INVESTMENT ADVICE TO ANYONE. I WILL ONLY OCCASIONALLY DISCLOSE MY PERSONAL POSITIONS FOR PURPOSES OF ILLUSTRATION. UNDERSTAND THAT MY OWN CIRCUMSTANCES COULD DIFFER GREATLY FROM YOUR OWN, AND THEREFORE WHAT IS SUITABLE FOR ME MAY NOT BE SUITABLE FOR YOU. MY COMMENTS ARE INTENDED TO BE REFLECTION ON GENERAL MACRO FINANCIAL AND ECONOMIC EVENTS AND TRENDS.