With continued uncertainty in global markets, today two legends in the business sent King World News powerful pieces about the recent carnage in the gold market and the riskiest rate hike ever.

Jeffrey Saut's note regarding the carnage in the gold market:  Yesterday, however, I got some really interesting questions. One came from a portfolio manager who wanted to know, "Have you heard any chatter regarding margin calls within gold and or the gold miner sector?" Given the carnage in the gold space, it is certainly a question to ponder. In my view, gold entered a bear market in 2012, but the recent Gold Gotcha' began in earnest last June when the Chinese stock market lost about one-third of its value.

As it turns out, Chinese brokerage firms were allowing gold to be used as collateral in margin accounts for participants to buy Chinese stocks. When the Chinese stock market started to melt down, not only were stocks liquidated, but so was gold. That exacerbated the decline in gold prices around the world with a concurrent "hit" to the gold mining stocks. As a sidebar, a 50% retracement of gold's entire 2001-2011 rally comes in at $1088 per ounce.

Art Cashin discusses: The Riskiest Rate Hike Ever? – For weeks now, the FOMC has been playing Hamlet on when they should begin to raise rates. We think the delay may be as much about the Theory of Games as it is about economics.

The IMF and World Bank have publicly counseled the Fed to wait until 2016 before they begin to hike rates. That raises the stakes for the Fed significantly.

Without those cautions, the Fed might raise rates assuming that if it had a negative consequence they could quickly reverse or undo the policy and only suffer a loss of face, albeit somewhat large.

Having been publicly warned, however, a negative result might cost the Fed a great deal of credibility, maybe even all of it.

A negative result would inspire critics to say – "What were you thinking?" "You were warned by your peers." "How did you not see what they saw?" "Why should we trust your next move or even why should we trust you?"

The possible negatives are more than a few. Will a hike halt the already slow growth in the economy? Will it cause the dollar to spike and pull the rug out from under the emerging markets? Will it collapse the already threatened commodity sector? The list goes on for pages.

Next week's FOMC meeting may be very animated, possibly far more animated than we will know for months to come.

Overnight And Overseas – Asian picture a minor puzzle. China markets are up with Shanghai strongest amid lots of rumors that "government support buying" was rampant. Tokyo was up a bit as the currency weakened. Taiwan sold off as small techs got clobbered on Apple fallout. Australia fell as commodities drag.

European markets firmed on earnings but then sputter, leaving them near unchanged as we go to press.

Gold is finally up after ten days on the canvas but it looks like it's on one knee for the mandatory eight count. Oil and natural gas remain under pressure but other commodities bounce slightly, probably on the softer dollar.

Consensus – Minor technicals and the "hold" of 2110 open door to a potential bounce but futures are mixed as earnings continue to come in with asterisks. Stick with the drill – stay wary, alert and very, very nimble. ***ALSO JUST RELEASED: WARNING: The Last Time This Danger Signal Flashed RED Was In 1999 – 2000 CLICK HERE.

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