Is There Blood In The Streets?

Fear is the key element to control. Panic, induced by fear, generates selling. Bouts of intense selling keep buyers disorganized just enough to prevent physical demand from overwhelming paper supply and maintain confidence in the old paradigm a little longer. Investors that recognize TA and money flows extremes, or what traders often refer to as recognizing and buying "Blood In The Streets" survive and prosper despite ruthless, organized takedowns.

COT money flows in the coming weeks should confirm and quantify the extreme nature of the current decline in gold, silver, and equity related plays.

A Technical Look "Blood In The Streets"

Arrow mark extreme speculative flushes during organized paper operations. The earliest inflection point would be October.

Gold 2x to Gold Ratio


The selling in silver, likely motivated behind the curtain, has been even more extreme. A two standard deviation decline of leveraged silver to silver ratio suggests not only an intense but also extreme speculative flush.

Silver 2x to Silver Ratio


Extreme selling, likely margin related, has been punishing the junior miners as well. Here the relative selling is approaching three standard deviations; three standard deviation setups are extremely rare.

Junior Gold Miners Index to Major Gold Miners Index Ratio


As a rule, extreme or “blood in the streets” tend to precede major inflection points. This, however, is usually recognized well after the fact by the public. Don't expect the organized takedown to subside until Friday's options expiration passes.