Equity trade failed

Markets are still completely unable to price anything. They are holding at the lows of the last three days – but today the Euro crisis has spread to France. Societe Generale has fallen 20% today. Too much downside risk. Something has to resolve itself – or explode cathartically – in Europe before any rational human buyer steps in. And the real downside risk of a Societe Generale collapse is a 1931 CreditAnstalt.

Gold is the immediate beneficiary of this. I still prefer platinum though. If Europe does explode, the CME will eliminate all margin for gold – and all the speculators will either have to ante up the full $180,000 per contract or sell. Add to that – even if Europe merely continues to hemorrhage, margin calls and hedge fund redemptions are gonna be a real problem.


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