A Good Way to End the Day

The broad market finished surprisingly well considering the horrible news on new home sales. Fourth quarter GDP numbers were also revised down sharply to 2.2% growth from the 3.5% that was previously reported. But don't waste too much sweat on that one. Ben Bernanke soothed investors by saying that growth is on track. Anyway, it was a good day after Tuesday's shellacking.

Gold closed down $14.70 on the day. It was a liquidity squeeze and a margin squeeze. The liquidity squeeze was investors fearing that China and other central banks might tighten money, and just the fear of that hammered gold. The margin squeeze was in the futures markets, where hedge funds and other speculators had to sell something to meet margin calls as prices headed lower after the open.

But things turned around. In fact, gold is still holding up well, and silver is holding up even better. And the mining stocks in Red-Hot Canadian Small-Caps bounced back just fine.

They followed (more or less) the action in the Canadian mining sector. Here is a chart of that...I have to say this sell-off is just what we needed to get some froth out. In fact, if we'd had a bigger sell-off, it would have been even better. 10% pullbacks are very common in bull markets. Maybe we'll go lower; wait and see.

Australian markets open up in an hour and half; we'll see how this plays out on the other side of the world.

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