Concerning gold let’s not firstly something sent to us by

our old friend Mr. John Brimelow, who had a most

interesting piece in his commentary this morning

regarding the violence of the recent price changes. He

noted a piece written by Mr. Russell Rhoads, CFA of the

CBOE Option Institute, who wrote the following:

Friday was a 4.88 standard deviation move in

the price of gold. For simplicity sake let’s call

it a five standard deviation move. Statistically

we get a five standard deviation move

approximately once every 4,776 years. So we

should not expect another move like this out

of the price of gold until May 17,

6789….Currently the two day price change in

GLD is 16.65 which can be converted to just

over eight standard deviations. I wanted to

share what this comes to, but the table I use

only goes up to seven standard deviations.

Let’s just say the sun is expected to burn out

first.”

We shall confidently say that we will never, ever see a

day such as we saw yesterday in the gold market in our

lifetime again. It will not happen. The sun will indeed burn

out before we see anything such as that again… nor shall

we ever want to see anything such as that again. WE

can reasonable deal with deviations from the norm of 2-3

or perhaps even 4, but 8+ standard deviations is beyond

our ken or that of anyone else anywhere. Yesterday’s

price action will go down in history as an aberration of

truly historic proportions.

We judge the violence of the market’s movements by the

numbers of requests for interviews made of us, for the

correlation between high numbers of such requests is

nearly 1:1 with peaks and valleys of various markets. A

large number of requests made of us is 4 or 5 a day; a

truly large number is 8… yesterday we had 12, and we’ve

agreed to give several more today that we could not fit

into our schedule yesterday. This befits an 8+ standard

deviation day.

We suspect that the margin selling has run its course,

although we cannot be certain of that fact; however,

we’ve a very, very strong belief that the o/n low in spot

gold at or near to $1338 shall not be seen again in a very,

very long while. It shall take today’s trading action, and a

fully-fledged diminution of margin call selling to allow us

to truly make that case and to believe it; but for now, it

appears that the panic has run its course; that the

liquidation has ended and that the bear market that

began in gold nearly two years ago when gold in US

dollar terms traded very near to $1950/ounce has run its

course. We do not make this statement lightly.

We are more bullish of gold then in Yen terms than we’ve

been before, for as the chart at the upper left of p.1

makes clear the trend in gold’s favour going back into ’09

remains fully intact… not, however, without the breathtaking

action of yesterday that certainly gave us reason to

doubt ourselves and our

thinking utterly and

completely. Amidst the

turmoil of the moment rest

very much assured that

we were near panic, as

was everyone. Those

who were not panicking,

or near to doing so, were either not near their screens

watching the action, or were so shocked by what they

saw that they froze in place.

What is turning things around this morning? Nothing.

There is no news to account for the fact that gold is now

nearly $50/ounce from its low other than the fact that the

margin liquidation does seem to have run its course.

There is only the notion that the Bank of Japan intends to

press ahead with its policies of expanding reserves…

doubling them within two years… and nothing shall

dissuade Abe, Kuroda & Company from that appointed

task.