US Bank Gold Positions Explode By Highest Rate On Record; Short Positions Collapse

To clarify investor class labels, "speculators" as defined in the Bank Participation Report, are considered the "dumb money", while the "market makers" are the bullion banks--the so-called "smart money" who are the most-funded and best-informed players in the CME futures pits.

And while large hedge funds and institutions are normally considered "smart money", that's only relative to the retail investor class who are considered the biggest suckers.  In this context, the speculators are "dumb money" while the retail investors are "dumber money."  Don't be insulted, the game has been rigged and set up to be this way.  Don't shoot the messenger.

http://bullmarketthinking.com/us-bank-long-positions-in-gold-explode-at-highest-rate-on-record-short-positions-collapse/

SEC mulling curbing limits on short selling

http://finance.yahoo.com/news/Ahead-of-the-BellSEC-poised-apf-4172165911.html?x=0&sec=topStories&pos=3&asset=&ccode=

In addition to restricting short selling, the SEC needs to expand their enforcement of naked short selling, including elimination of the market maker exemption (so-called the "Bernie Madoff exemption" after the infamous Wall Streek crook), which enables them to create phantom shares. This method of "married puts" allows shorts to deploy illegal bear raids on stocks without actually shorting the underlying shares, and keeps their illegal price manipulation activities under the regulatory radar.

See Chapter 2 of Deep Capture on how the "married puts" strategy works. In fact, reading all 15 chapters will help investors understand better how the markets are rigged.

In the "couda, wouda, shouda" department...

Most investors who stayed the course with DNDN yesterday, and did NOT put any stop market orders in place turned a profit, averting a total disaster by not having shares sold away to market makers looking to take out nervous retail investors.

But this was a "black swan" scenario that I did brainstorm--but did not carry out in practice, because I stupidly didn't think a bear raid of that magnitude would happen.

I could have purchased more shares cheaply by placing a good till canceled (GTC) limit buy order (usually good for 30 days) at $7.50, $10, $12.00 etc, or wherever I thought it might drop to. I actually brain stormed every scenario, even selling puts (buying at the strike price), but decided against it as I didn't think it would happen.

Another stupid non-decision on my part, because that's exactly what happened.

But to reiterate: always use limit orders, whether to buy, sell, or stop loss...always, especially in volatile markets. When implementing a stop loss order, do not tell your broker what your price is, and always use a stop limit order if you're going to put in a stop loss. A few readers of my blog have already told me this piece of advice has already saved them thousands of dollars.