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Credit Suisse Gold Supply And Demand Forecast; And Why Clients Should Sell Their Gold To CS

Tyler Durden's picture




 

Cutting straight to the chase:

Our analysis of the gold market leads us to take a bearish stance with regard to the gold price in 2010. In 2009 we reasoned that the main drivers of the gold price were significantly linked to the trade weighted dollar, increased investment demand, central bank purchases and market sentiment. The increase in investment demand for gold ETFs, in our view, had an “accelerating and reinforcing effect” on market sentiment and the safe haven status of gold which resulted in upward pressure on the gold price which rose 24.6% during 2009. We do not expect the 2009 rate of investment in ETFs to continue at the same pace in 2010.

We are of the view that the gold market will likely be dominated mainly by the demand side of the equation in 2010. We believe that the likely decline in investment demand for ETFs, year on year, will play a pre-eminent role as a swing factor in our supply-and-demand balance in 2010. Jewellery,  industrial and dental demand will likely strengthen marginally year on year. The secondary supply of scrap will depend on the gold price but will likely remain above 50% of mine supply. Central banks will likely become net purchasers while de-hedging will reduce significantly as the major players in this arena accelerate their 2009 de-hedging activities. Our calculations show a large oversupply of around 420 tonnes in our supply-and-demand equation for 2010.

In summary, we believe that the steam has run out of investment demand as the economic environment has and is changing to the positive. Muted investment demand coupled with a change in market sentiment and a projected large oversupply in the supply equation all point to a downward correction in the gold price from the highs reached at the end of 2009.

Such optimism, even as the global economy is poised on the edge of the double-dip. On the other hand, we wonder who Credit Suisse recommends its clients sell their gold to? Could it be... Credit Suisse?

Full report:

 

 

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Mon, 01/18/2010 - 11:04 | 197115 Master Bates
Master Bates's picture

Gold will peak at 1300 / oz before beginning its downtrend (according to TA).  2000 / oz is merely wishful thinking, despite the wishes of the staff and posters at ZH.

There just isn't that strong of a demand for gold, aside from the marginal investor, which will quickly run for the exits when their bet gets killed by the downtrend.  Then it's "Look out below!"

It's not like Mr. T is going to buy 50 new necklaces and chains in THIS economy.  To better phrase his wishes "I'm looking for work, foo!"

Mon, 01/18/2010 - 11:13 | 197121 Anonymous
Anonymous's picture

mr bates. how many times does it have to be said. gold is not a investment. it is a holder of wealth. it is protection from what is to come. that "event" evidentially has been put on hold for a bit, but nevertheless it is coming. this postulation sounds more to me like someone talking their hedge book in paper gold. maybe one of these days, we shall not be held captive by the shenanigans in the comex, etc. watch what happens when the chinese continue their buying spree in gold bullion for physical delivery. yep, watch out below my arse....

Mon, 01/18/2010 - 11:56 | 197158 Master Bates
Master Bates's picture

The dollar has devalued about 75%, and gold is up 400%.  It's not like gold hasn't had its run with the weaker dollar.

Now, the dollar is strengthening and in a bonafide uptrend.  Gold has less demand, both in commodities markets and among investors.

It's in a bubble, not unlike the housing bubble that we've all come to love so much.

I remember people telling me I was a fool when I didn't buy a house in 2006 and 2007 either.  Now I'm really glad I didn't.  The same thing will happen to gold bulls as well.

For gold to get to the 2000 dollar mark, we'd nearly have to print twice as much money as exists now.  I just don't see that happening.

What I do see is deflation, as the demand from the consumer sector has been overextended for some time and tapped out.  Our situation is different than in 1982 where a decade of pent of demand existed.  People already have their second bathroom and granite countertops.  With deflation, the prices of all assets - including gold - will decrease.

Housing was a holder of wealth too, until it worked against everybody and diminished their wealth.  Just like the Nasdaq, just like every other bubble in history.
When the guy changing my tires and Glenn Beck are giving me advice on what to do with money, I know that the trend has run its course.

Mon, 01/18/2010 - 11:59 | 197163 Shocker
Shocker's picture

Just remember one quote " Gold and Silver is all you can rely on"

Mon, 01/18/2010 - 12:06 | 197173 Master Bates
Master Bates's picture

I'll leave you with another quote.

"Housing is the best investment you can make because it's outperformed very asset class for the last decade!"

And now even Glenn Beck is telling me the same thing about gold.

Mon, 01/18/2010 - 12:15 | 197186 Shocker
Shocker's picture

Thanks, what your not understand is one key figure. Technically Gold could go to 8 dollars / oz and it will still have more value than any paper currency. Any natural resources that can't be printed or just made will have value. Forget trying to put it into dollar terms. Thats all I'm saying.

Mon, 01/18/2010 - 12:23 | 197198 Master Bates
Master Bates's picture

Paper money buys me houses, cars, food, etc, etc, etc, etc.

Gold buys me paper money.

The only real worth gold has is for jewelry, semi-conductors, and pretty chalices for the pimp of the year.

Paper money, although only backed by faith, has the faith of most people.

Mon, 01/18/2010 - 12:35 | 197222 Unscarred
Unscarred's picture

Paper money, although only backed by faith, has the faith of most people.

Eloquently stated.  Both a Master Bater and a cunning-linguist.

Mon, 01/18/2010 - 14:30 | 197398 VegasBD
VegasBD's picture

Paper money, although only backed by faith,

has the faith of most people, *today*.


Amended.

Mon, 01/18/2010 - 16:05 | 197553 Gordon_Gekko
Gordon_Gekko's picture

Exactly. What happens when it no longer has the faith of "most" people? See this is where Gold comes is - IT DOES NOT REQUIRE FAITH, only a functioning brain (which, admittedly, is not present in at least 50% of US population).

Mon, 01/18/2010 - 17:01 | 197621 Master Bates
Master Bates's picture

I wholeheartedly agree with what you say, and I even know that the dollar is on the outs because that is the historical norm of all fiat currencies.

I think that where we tend to disagree is the timeframe that it might occur.  I don't think that the dollar is going to collapse tomorrow, or even in a few years.  I think that gold has had a nice run, and I think that it could even go a little bit higher.  I just don't see that the dollar is going to poop out tomorrow, or even in ten years, and I think that people tend to get TOO negative when it comes to the future sometimes.

The birds will chirp, the sun will shine, and we won't be fighting in the streets over gold nuggets any time soon.  We all have our opinons, though, and I hope that I'm not wrong.

By the way, I've been lurking in the comments and reading them all for a very long time (since about April, actually), and I'm glad that I can finally begin talking to you all.

Nice to meet you all, and have a nice day!

Tue, 01/19/2010 - 15:39 | 198517 Anonymous
Anonymous's picture

I think what you missing is a bad attitude about the financial world. We are in the start of a world wide collapse for the first time ever. The only upswing we will have will be in the next 3-6 months. A phony, engineered, dangerously optimistic upswing. Money people, investors, etc currently are in a state of mind similar to what manic depressants get just before a major mental breakdown. This global crisis isn’t going to end nice or soon. There is no room for optimism anymore, only sober survival and investing in things that hold value. I suggest buying cases of whisky and buying acorns (or any other food). You’d be surprised what people will pay for booze when all is hopeless.

Mon, 01/18/2010 - 16:07 | 197556 Gordon_Gekko
Gordon_Gekko's picture

And a bankster minion too.

Mon, 01/18/2010 - 17:29 | 197655 Unscarred
Unscarred's picture

"Smoke and a pancake, Goldmember?"

Share with us, oh great one, exactly what percentage of your holdings do you have in PMs?

Mon, 01/18/2010 - 17:40 | 197673 Master Bates
Master Bates's picture

Will you take off your tin foil hat, or what?

I'm an accountant who used to work in the construction business, and lost my job in November.

I interviewed to be an accountant for a medical supply company today.

I work full time (usually), go to school full time, and live in Colorado, which is far from all banks.

I am far from a bankster minion.

Mon, 01/18/2010 - 21:58 | 197931 Gordon_Gekko
Gordon_Gekko's picture

I'm an accountant who used to work in the construction business, and lost my job in November.

Good riddance.

Mon, 01/18/2010 - 16:45 | 197602 WaterWings
WaterWings's picture

If I could pay my taxes with something else I would, but it's the law. So it's more about control and a lack of alternatives than faith, IMO.

Mon, 01/18/2010 - 12:32 | 197213 Unscarred
Unscarred's picture

I agree with much of what you have said, but we must also be mindful that "value" is always subjective and relative to prevailing sentiments.  In acknowledging as much, sentiments change as time passes.

I believe that gold has gone "peak."  I believe that paper currency has little to no value.  But so long as society continues to place value in fiat money and diminish the perceived value of gold, I find it prudent to wait for a better entry point before storing wealth.

As Keynes said, "Markets can remain irrational far longer than you or I can remain solvent."

Mon, 01/18/2010 - 18:02 | 197709 Anonymous
Anonymous's picture

As Keynes said, "Markets can remain irrational far longer than you or I can remain solvent."
Don't ever take a position that you haven't researched well
, don't fully believe in and/or don't have the ability to maintain.
Gold, over the past two years, is an excellent example
Its been a difficult horse to stay on, but is now well
worth the effort...

Mon, 01/18/2010 - 12:38 | 197227 Anonymous
Anonymous's picture

"Technically Gold could go to 8 dollars / oz and it will still have more value than any paper currency."

Then (((technically))) it's value to the open market is 8 dollars / oz. It may have "more value than any paper currency" to you personally. And while you are a special and unique butterfly and your opinion matters greatly, unfortunately in the grand scheme of things that doesn't mean dippity shit.

Gold is not the public medium of exchange and it probably will not be allowed to be ever again. You can all jump around and scream that it is has more value than all the paper in the world. But in the end it is only worth whatever value it is currently given.

Mon, 01/18/2010 - 12:17 | 197191 Shocker
Shocker's picture

And yes, I see the dow easily going to 20,000. But does that mean anything... ponder on that :-)

Mon, 01/18/2010 - 18:48 | 197760 jimmyjames
jimmyjames's picture

Gold is not the public medium of exchange and it probably will not be allowed to be ever again. You can all jump around and scream that it is has more value than all the paper in the world. But in the end it is only worth whatever value it is currently give"

 

Totally off base--if  i thought gold would be again used as a medium of  exchange--I would view it as nothing more then a stable money--

one of these major currency's will eventually blow up--

When-not if--that happens--look to central banks going into the open markets and buying in a panic--buying at any price-while shorts run to cover at any price--that is why--you want to be in gold--

laugh at Iceland--VietNam--Argentina--Baltics etc--

They're sending a ripple through the currency markets--world wide--

They're "all" joined at the hip--all related--all have the same gene--

Coming to a currency--near you

Mon, 01/18/2010 - 12:23 | 197196 Anonymous
Anonymous's picture

The public participated heavily in both the tech and real estate bubble which is why we are in such a mess. As far as gold to public is busy attending sell your old jewelry parties. CBs have been selling for years and just last year saw the error of their ways when the entire system collapsed. So who has bee buying? Dumb money, just ZH posters? If you are looking for the current bubble turn your attention to the government finance bubble.

Mon, 01/18/2010 - 12:26 | 197200 Anonymous
Anonymous's picture

The public participated heavily in both the tech and real estate bubble which is why we are in such a mess. As far as gold to public is busy attending sell your old jewelry parties. CBs have been selling for years and just last year saw the error of their ways when the entire system collapsed. So who has been buying? Dumb money, just ZH posters? If you are looking for the current bubble turn your attention to the government finance bubble.

Mon, 01/18/2010 - 13:14 | 197288 Anonymous
Anonymous's picture

Its comments like Mr Bates makes that just dont make sense. He says gold is in a bubble. If it hasnt kept pace with inflation since 1980 then how is it in a bubble? Its either ahead of inflation and due for a correction or its under and has room to run. And that before you even consider the proposition that gold is possibly returning to being used as money - which further increases demand (and therefore price).

Mon, 01/18/2010 - 15:35 | 197496 Crime of the Century
Crime of the Century's picture

It is impossible for gold to be in a bubble, yet mining shares not outperforming by a wide margin.

Mon, 01/18/2010 - 19:16 | 197786 Anonymous
Anonymous's picture

Wayne? Is that you?

Mon, 01/18/2010 - 19:42 | 197808 Anonymous
Anonymous's picture

I bet 1 in 100 people do not own gold. People that own gold are still viewed as kooks.

Tue, 01/19/2010 - 10:04 | 198155 Anonymous
Anonymous's picture

Yes, if we're talking bullion, not jewellry.

I'd say 1% owning bullion is a very safe bet in Canada, where I live. Probably less than 1%. Mind you, Goldbugs are viewed as less kooky by the day as the price continues to rise.

Bubble?? You must be joking.

Mon, 01/18/2010 - 11:50 | 197150 10044
10044's picture

let's see who gets to say "I told you so" first.

$1500 by June 2010 (maybe earlier)

Mon, 01/18/2010 - 11:59 | 197162 Master Bates
Master Bates's picture

I'd bet you a lunch, 10044.  1300 is the peak before the fail...  If it even gets that high.

Mon, 01/18/2010 - 12:38 | 197226 10044
10044's picture

keep the ham sandwich to yourself.

1) China wants to import thousands of tons of gold within the next few years.

2) There will be wars in the middle east.

3) Middle east WILL abandon the dollar

4) Dollar WILL be devalued (http://www.business24-7.ae/Articles/2009/12/Pages/26122009/12272009_b60d...) fyi, when Martin Wolf talks people listen, because he is part of the illumanati.

 

5) you must an absoloute moron not to think gold will go to stratosphere based on the above and MANY MANY more reasons, incl. the suppression of gold by the fed in the last 20 years. (http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_v...)

6) PPT will be disolved because of HR-1207. Hence gold WILL rise to around $5-$6k to reflect the 1980 inflation model.

 

Mon, 01/18/2010 - 12:45 | 197236 Master Bates
Master Bates's picture

1.  China has already been the largest importer of gold the last five to ten years.

2.  There have been wars in the middle east for the last five to ten years

3.  No they won't. 

4.  Ooohhh... the illuminati.  Maybe you can throw in some Nostradamous predictions  next!

5.  You must be an absolute moron to believe that the countries with large dollar FX reserves would let the dollar plummet another 80% in the near term, which is what it would take to get gold to 5-6k.

6.  Look how much HR-1207 is having an effect, despite being in existence for a year now... yep, still nothing happening.

Mon, 01/18/2010 - 13:44 | 197323 10044
10044's picture

just out of interest, do you work around 33 Liberty St??

just wait till you're hungry and can't get food

http://www.marketskeptics.com/2009/12/2010-food-crisis-for-dummies.html

and Nostradamous has nothing to do with illuminati, the council on foreign relations, the trilateral commission and the Builderberg group do.

You're too dumb for me to even waste time on, go get your UST and Citi stock recommended by Jim Cramer and do  me (actually all of us) a huge favor and GET THE FCK OUT OF ZERO HEDGE, THIS IS NOT HUFFINGTON POST.

 

Mon, 01/18/2010 - 13:47 | 197327 Master Bates
Master Bates's picture

Actually, I've made quite a few bucks going against Zerohedge's predictions.  It sure was nice buying BAC at 5 bucks and still owning it.  I bought F at 1.50 too!  Good thing I didn't listen to all the Gloom and Doom before..

I wish I worked at 33 Liberty.

While you have little substance to your arguments, you have plenty of personal attacks in each post.  Sure sign of somebody with little substance to their arguments...

Have a nice day!

Mon, 01/18/2010 - 14:18 | 197375 Anonymous
Anonymous's picture

Interesting point-counterpoint.
I fall on the Au side of the arg, having
significant holdings of PM.
Good position statements Master Bates.
The one fact not mentioned though is that
fiat currencies always fail, historically.
That fact,coupled with the level of fraud and
corruption in our financial/political system, along
with being a welfare state, doesn't bode well.
But you are correct, the gloom and doom
gets a bit overdone, which clouds our
investment decisions.....
For an excellent history on fiat currencies see
Ralph Foster's book "fiat paper money, the history
and evolution of our currency"
Its a very sobering account of paper monies and their
catastrophic failures

Mon, 01/18/2010 - 16:55 | 197612 Master Bates
Master Bates's picture

Hey, I'm willing to admit that I could be wrong, and there are defnitely strong arguments for gold being a great store of value when compared to fiat currencies in the future.

Fiat currencies are unstable, and do usually fail as they deflate over time.  This coupled with our current policies could easily bode bullish for gold over the long term.

I think that where I differ with most people is on the scale of time that the deflation could take place.  It took more than 300 years for Rome to start failing after its empire and deflation statuses, and I think that people are a little bit too quick to think that the U.S. will go from the world's number one power with the most wealth, to the poorest country in the world, in a matter of ten years.

I will read Mr. Foster's book about currency, and thanks for responding to my thread. 

Have a nice day!

Mon, 01/18/2010 - 17:51 | 197694 Anonymous
Anonymous's picture

The time factor on this crisis has been interesting.
We were hours away from a world wide meltdown
on or around sept 18th, 08. A "stop event"
It was amazing to watch the treasury and fed
pull out all the stops to prevent a complete meltdown.
There are more "stop events" lurking in the shadows,
otherwise this will be a long "death by a thousand cuts"
Personally, I prefer pulling the band-aid off in one
quick motion
Either way,the coming years are going to be painful
The stop events are one of the reason's I owm PM's
10 percent of NW in PM's, 50 percent in real estate
Too old to go 100 percent in anything, but I understand
the reasoning .....
consider a 4 percent position in PM's...own physical

Wed, 01/27/2010 - 22:13 | 208563 Anonymous
Anonymous's picture

The US empire would be a continuation of the British empire, time is running out. The dollars days are numbered. As for glenn beck, well then you must be an al franken supporter since you bash gold, by the way I do not support glenn beck.

Any other empire in history never had to deal with a $600+ trillion derivatives bubble. The bubble not only keeps asset prices high, but also yields low and us debt servicing costs relatively low. It also allows for creditor nations of the US such as japan to continue to be creditor nations and buy up us debt.

Mon, 01/18/2010 - 19:18 | 197788 whacked
whacked's picture

+1 Master Bates

Enjoy the site but ignore the posters, as they denigrate a good web site.

 

 

Mon, 01/18/2010 - 14:06 | 197344 Unscarred
Unscarred's picture

You're too dumb for me to even waste time on, go get your UST and Citi stock recommended by Jim Cramer and do  me (actually all of us) a huge favor and GET THE FCK OUT OF ZERO HEDGE, THIS IS NOT HUFFINGTON POST.

There's a saying that says "We can disagree without being disagreeable."  These types of remarks are both unproductive AND unnecessary.  It's these types of comments that prevent the free exchange of thoughts and ideas- the very premise that ZH was founded upon.  So...  Why don't YOU get the FUCK out of ZH!?

Mon, 01/18/2010 - 14:26 | 197394 Master Bates
Master Bates's picture

I know.  What a terrible thing to say, right?

I for one have never read the Huffington Post, and would never call somebody that I disagree with one of Cramer's fans.  That's like the lowest insult around! :)

I'm just a 20-something working as hard as I can to stay employed and go to school as much as I can!

Mon, 01/18/2010 - 14:37 | 197418 VegasBD
VegasBD's picture

Disagree with you completely, but thanx for being a rational normal person. If they kicked everyone out of ZH that I didnt agree with I dont think I would learn as much.

But saying you wish you worked at 33 Liberty might be crossing the line...heheheh

Mon, 01/18/2010 - 14:56 | 197448 Unscarred
Unscarred's picture

Keep doin' your thing bro, both here and away from ZH.  I enjoy dialogue with people who are open-minded, even-tempered, and stick to their views in the face of prevailing sentiments.  I'll look for your comments in the future.

Mon, 01/18/2010 - 17:04 | 197627 Master Bates
Master Bates's picture

Hey, it's great to finally talk to you all.  Usually I just lurk around and read the comments from the many people who I consider to be much smarter than me!

But yeah, I hope to be a contributor here in the future.

And just because I disagree with some of the stories here doesn't mean that it isn't a wonderful learning experience and that I don't vastly appreciate the work of Tyler and Marla.

It's always good to get both sides, you know?

Anyway, have a wonderful day!

Mon, 01/18/2010 - 17:32 | 197661 Unscarred
Unscarred's picture

I hope that you are able to keep such a great perspective in the years ahead.

Mon, 01/18/2010 - 13:55 | 197338 chumbawamba
chumbawamba's picture

Will be funny to see the expression on your face in some not too distant future.

I am Chumbawamba.

Mon, 01/18/2010 - 14:28 | 197396 Master Bates
Master Bates's picture

If the scenario that you say happens, I'll cash out of equities at that time.  Then I will be smiling like a mofo counting my stacks of dollars.

So, in the interest of being friends, can I just say "Gold Bitches!!?"  That way, I can be the man around here and gain your respect.

Mon, 01/18/2010 - 15:08 | 197461 chumbawamba
chumbawamba's picture

And what will your "stacks of dollars" be worth at that point?  You will have done better to stay in the equities in the longterm.

Look, don't change your argument to try to impress me.  I'm nobody. Stick with your guns and let's see who comes out right in the end.

I am Chumbawamba.

Mon, 01/18/2010 - 16:15 | 197565 Anonymous
Anonymous's picture

Chumba, you must be back on your meds. It's not like you to be so docile and complacent.

I am Chumbawynnonajudd

Mon, 01/18/2010 - 16:28 | 197580 MarketTruth
MarketTruth's picture

Chumbawanba, you must remember that DollarBugs are not that bright, so be very kind to them. If they truly knew how the longer they hold dollars the lower its buyer power has... So be kind to those Dollarbugs, they'll need 2x to 3x more of those dollars to buy a candy bar 3 years from now just as candy bars are 2x to 3x the cost than they were 3 years ago.

Gold, on the other hand, has better buying power/value in the past 3 years... and 10 years.. and the past 40 years.

Mon, 01/18/2010 - 17:12 | 197637 Master Bates
Master Bates's picture

There are better ways to get returns than gold though, is all I'm saying.

I got 7x on my Ford investment since March.  The greatest gold investor in the world got 4x on their gold investment in ten years.

And in the end, you're only using your gold to get the same things that I'm getting with my dollars.  You're still going to buy the same dollars with your gold that I'm going to buy with my shares of F.  The only difference is how many more dollars will I get with shares of F than you will get with your gold?  That's all.

So it's not like I'm holding my dollars hoping for a brighter future either.  I just don't think that gold is necessarily the best way to get there at this point.

Mon, 01/18/2010 - 18:00 | 197705 chumbawamba
chumbawamba's picture

Sure, it's all fun and profitable until the music stops.  Then you realize you don't have a chair.

I'm not trying to be an investor.  I'm just trying to survive.  This will make more sense once the dollar breaks .62 on the DXY.

I am Chumbawamba.

Mon, 01/18/2010 - 19:23 | 197792 Master Bates
Master Bates's picture

Damn homey!  The P&F charts say it's going to stop at 63, although I don't even agree with that...

That's one point short of the 62 you're looking for!

Mon, 01/18/2010 - 22:45 | 197966 mtguy
mtguy's picture

Ya know, each is probably right in your own way -assuming you have the investments that fit your risk tolerance and time-frame. I own PM's -gold and silver -probably about 10%-15% of NW, and I don't care about what the price does on a daily or monthly basis as I'm not going to sell it (well, unless it's Armageddon time and that's all that's left). Now my stocks on the other hand I will sell at any time as I have no emotion to them except to make me money. In fact, I don't buy one without setting a stop-loss on it. I've spent a lot of time raising stops in the past year! For me, I'm in the capital preservation mode as I want to retire at 55 (4 years). To lose a lot of money now would be stupid. So, to come around full circle -I wouldn't have wanted to touch Bof A or any of those other TBTF banks as the risk was too high for my taste. Not to mention I do not invest in any company where I don't trust the management or like their ethics or I'd probably own GS right now as they seem to be in bed with the Treas/Fed. Sorry, just my deal. If I leave money on the table, so be it. I refuse to make money by investing in unethical corporations with slimy management.

Now do your home work Bates:~)

Mon, 01/18/2010 - 17:07 | 197630 Master Bates
Master Bates's picture

The stacks of dollars will buy me food, shelter, and many other things.

I'm not changing my argument at all.  I'm just trying to be friendly.  I still think that gold isn't going to the moon, and that it has had most of its run up.

I know you're a regular here, so I wouldn't want you to bring down the wrath of wolves on me!  Or something like that...

Mon, 01/18/2010 - 18:02 | 197710 chumbawamba
chumbawamba's picture

Your paper will only get you those things if your paper has more "value" than they do.  When the shit really finally and for true hits the fan, I hope you'll have something with a bit more density with which to barter.

I'm not anyone to fear.  Just have facts to back up your argument and stick to your guns.

The bets are in.  Hands off the roulette table until the wheel comes to a full stop.

I am Chumbawamba.

Mon, 01/18/2010 - 18:07 | 197716 Anonymous
Anonymous's picture

There is an end?
Long CH4
Long Au
Long Ag

Mon, 01/18/2010 - 12:15 | 197185 Hephasteus
Hephasteus's picture

Sounds like the right price and the right time. Someone is paying attention to saturn timing and venus valuation.

Mon, 01/18/2010 - 11:52 | 197152 Anonymous
Anonymous's picture

The $ reserve currency global economy is toast. A new system must evolve where one country does not have the ability to dominate all others simply by owning the print press.

2010 may be the year where Gold takes over this role leaving all currencies to float around gold. This is the only way to get the economies of the world back on track.

Paper will separate from physical. The paper price of gold may very well crash but the price of physical will do a moonshot.

Mon, 01/18/2010 - 12:45 | 197237 jailnotbail
jailnotbail's picture

The SDR has already been picked for that role.  Gold will be part of the SDR, but only a fraction, primarily intended to invest it with the appearance of legitimacy.  Sovereign nations - well, their elites anyway, who are all rent seeking bloodsuckers - don't want a hard currency.  The whole idea of being in charge is you get to rig the system so it rewards you and the people who funded you.  And this is only possible by exploiting the national wealth for personal gain, or stealing from the citizenry.  Hard currency backed systems severely impede the efficiency with which the crimes to accomplish this can be committed.  This IMF SDR is perfect for that.  In fact, it's better than a regular fiat currency dildo to screw your citizens with - if you're in charge of running the composition of the SDR - and that's what our friends the Chinese and the Indians are figuring on, then you get to oversee the periodic 'rebalancing' of the percentages of each member country's currency in the SDR.  So  instead of stealing from your own people, who after all have the annoying habit of dragging out the guillotine when they've had enough from time to time throughout history, you get to screw other countries citizens.  I'm sure Hu Jintao loooked a that and thought: Cool.

Mon, 01/18/2010 - 14:01 | 197347 chumbawamba
chumbawamba's picture

This brings up a good point.  It does us no good to debate why the dollar will perform better than gold or whatever.  That sort of thinking just perpetuates the status quo.  The status quo is paper money, something that governments control, and that control extends to everyone who must use that paper money.  In effect, we are in the thrall of whatever government is in power, good or bad.  When that government inevitably turns tyrannical, the control exerted over the currency becomes a prison shackle.

So those defending the dollar or any paper currency defend their own slavery.

I don't care if it makes you "money", the fact is your continued submission to the dollar god hurts me and my family, and you and your family.  Your mediocre short-term personal gain ultimately leads to long-term subjugation.  Do you really want this?

Hard money is the answer.  Accept it.

I am Chumbawamba.

Tue, 01/19/2010 - 03:30 | 198070 Anonymous
Anonymous's picture

The SDR will not work. It is still controlled and printed by man. Gold is taking over the role out of necessity, not choice! The more Gold a CB has the stronger their currency will be as the Gold is marked to market and not pegged. A currency peg will always break and if using gold as money they will always run out of gold. Neither is possible. Currency for spending, gold as the wealth reserve par excellence for saving. TPTB do not have the control that many truth seekers fear. They can buy time, they cannot control evolution. This is the evolution of the monetary system that must happen if business is going to pick up, if trade is going to continue, and if TAX RECEIPTS are going to continue to come in leaving TPTB in control. Without a stable system to provide taxes they are out of a job!

Mon, 01/18/2010 - 13:19 | 197297 Anonymous
Anonymous's picture

Praytell how does a country emerge from long-term zero interest rates and monetization? Isn't that the sign of an imposed end game?

How, when:

heavy industry is nationalized, gov. motors
health care is nationalized
mortgage backed securities are basically nationalized
The central bank itself has levered above 40:1 with very impaired assets
gov't cannot downsize

The physical economy is crashing. Construction down more than 50% in most areas of the country. Corporate taxes are down more than 35% from the peak. GE's turbines, locomotives, power generation has tanked. Boeing's airline order book is down almost 90%.

Yet the easily tradeable financial securities continue to skyrocket as they respond to Uncle Heroin's interventions. Monetary aggregates have no historical parallel in this country and are a moonshot.

Undeniable physical collapse function.

Gold will be the only thing to emerge out the otherside of this voodoo-turned-black-hole economy.

But then again maybe just printing enough fiat currency unbacked by works/materiel was all that was required to correct the financial damage.

The debt IS NOT being paid down or defaulted upon.

We are past the zero point of diminishing return upon debt.

Further debt introduced into the system subtracts from GDP.

Then again, keep up the mantra, "All is well, All is well."

Take no precaution against epic failure, the system is correcting itself.

Mon, 01/18/2010 - 12:32 | 197214 Anonymous
Anonymous's picture

Mr Bates

According to TA, 1300 is the target of the IHS formation, this is true. But to say that this is the top is not based on TA, it is based on your opinion. TA does not provide a projected reversal point, at least not any kind of TA I've ever heard of.

Try picking a top or a bottom and you'll get a handful of shi* every time.

I should say I have sold all my gold stocks in anticipation of a major dip in the stock market as we approach major resistance at 1250 and fairly ridiculous valuations, but I don't think gold has provided any technical reason for bearishness yet.

So while I agree that gold may dip, the major downtrend you seem to anticipate seems founded only on your subjective opinions and not price action.

Mon, 01/18/2010 - 14:36 | 197416 Master Bates
Master Bates's picture

I will agree that the target of 1300 comes from the IHS formation.  I will also agree that my aversion to gold investments is merely a "feeling" rather than the absolute truth.

Yet, there are so many others that are basing their economic predictions on even more feeling, and less reality and facts.

I would say that the general economic picture points more to deflation than inflation and is against gold.
I would also say that too many countries have large amounts of FX reserves in dollars, because they need the dollars to trade.

It is in nobody's interest to see dollars fall as low as many on this site and post may suggest.

People have been preaching the end of days since the beginning of time, and every recession brings the belief that nothing will ever recover.  This simply is not true.

My reasons for picking gold to decline are fundamental, and not technical, although I do see the technical arguments for near term bullishness to 1300.

Then again, with the dollar in its current uptrend, 1300 may not even come.

While my opinions may seem subjective, so are those of many others, which is why they are opinions.  Still, the economic data seems to lend more objectivity to bearishness in gold than "the sky is falling, gold bitches!!"

I would place my bets with global macroeconomics and the dollar's uptrend rather than chicken little-esque statements made by Glenn Beck and those that have pessimistic glasses on in perpetuity.

Have a nice day!

M. Bates

Mon, 01/18/2010 - 18:10 | 197721 SWRichmond
SWRichmond's picture

Thank you for ending your silence.

I would say that the general economic picture points more to deflation than inflation and is against gold.

No argument; it is not the general economic picture that will cause the currency debasement, it is the central banks' response to it. 

People have been preaching the end of days since the beginning of time, and every recession brings the belief that nothing will ever recover.  This simply is not true.

By any objective measure, this is not a mere recession; the response to it by government has dwarfed their cumulative responses to / expenditures on WWI and WWII, the New Deal, the Marshall Plan, etc.  Trying to minimize it might help you convince the unwary.  I am not expecting Mad Max, but this is certainly not just a recession, and calling it one greatly lowers your credibility.

Maybe you'd like to tell me

  • what happens to government receipts during a persistent deflation?  
  • What happens to government debt service during a persistent deflation?  Are there current examples we can examine to find out?
  • Why did FDR revalue gold during GD 1.0?  Did he do it because the dollar was in an "uptrend"?
  • Is there any precedent for deleveraging an economy that begain from such a high overall leveraged condition? 
  • What is the life expectancy of a fiat currency? 
  • Do managed economies work well, or do they misallocate capital?  Is the central bank model even viable?
  • How does the collapsing marginal utility of debt influence the outcome (does government borrowing even influence economic activity anymore)?  Have we simply run out of demand that we can pull forward?
  • From where on the globe will the capital be made available for U.S. sovereign borrowing?
  • Is there enough capital for governments and for the productive economy?
  • What happens to tax receipts if there isn't enough capital?

I'd love it if we could start there; I'd be happy to answer your questions as well.

Mon, 01/18/2010 - 19:35 | 197802 Master Bates
Master Bates's picture
  • what happens to government receipts during a persistent deflation?  

    They go down, but in theory, so would the price that the government now pays for things.  Still, the deficits weren't a problem in the Carter years, the last time there was deflation.  Inflation, like in the Volcker era was more of a concern for deficits.

  • What happens to government debt service during a persistent deflation?  Are there current examples we can examine to find out?

    Japan would be a current example.

  • Why did FDR revalue gold during GD 1.0?  Did he do it because the dollar was in an "uptrend"?

    I honestly don't know.  Perhaps to strengthen the dollar?

  • Is there any precedent for deleveraging an economy that begain from such a high overall leveraged condition?

    Japan was more leveraged than we are.  China and Australia are currently more leveraged than we are.
     

  • What is the life expectancy of a fiat currency? 

    It can go on a lot longer than it has.  Look at Rome, for example.

  • Do managed economies work well, or do they misallocate capital?  Is the central bank model even viable?

    China is a managed economy and it has the highest growth in the world right now.

  • The central bank model is viable if it is not mismanaged, as it has been.

  • How does the collapsing marginal utility of debt influence the outcome (does government borrowing even influence economic activity anymore)?  Have we simply run out of demand that we can pull forward?

    The lack of demand stems from the fact that demand was overstimulated for so long.  Demand will return when people deleverage.  Government borrowing is not influencing economic activity because there is simply no demand for the use of currency because of excess demand in the past.
    Also, most government debt goes to programs that are useless to the economy anyway, like wars, etc.

  • From where on the globe will the capital be made available for U.S. sovereign borrowing?

    The same places that it's being made available now.

  • Is there enough capital for governments and for the productive economy?

    Yes, if the government stops wasteful spending and focuses on needs instead.

  • What happens to tax receipts if there isn't enough capital?

    The same thing that happens to tax receipts when you cut taxes, like was done years ago.
    But with the deflation comes less need for government capital, because the government will also pay lower prices.

  • Mon, 01/18/2010 - 21:03 | 197884 SWRichmond
    SWRichmond's picture
    • what happens to government receipts during a persistent deflation?   They go down, but in theory, so would the price that the government now pays for things.

    That's a nice theory; so why has the U.S. fiscal deficit skyrocketed instead of falling?

    • What happens to government debt service during a persistent deflation?  Are there current examples we can examine to find out? Japan would be a current example.

    Would this be the same Japan that is now trying to lower the value of its own currency?

    • Why did FDR revalue gold during GD 1.0?  Perhaps to strengthen the dollar?

    No.  FDR revalued the dollar down versus gold, from $20.67 an ounce to $35.00 an ounce, a devaluation of nearly 70% in the buying power of the dollar.  He did this to cause a step change in inflation, in a desperate attempt to reignite an inflation-biased economy that was producing tax revenue.

    • Is there any precedent for deleveraging an economy that begain from such a high overall leveraged condition? Japan was more leveraged than we are.

    And many consider them next up on the sovereign default bandwagon.  They are trying to devalue their currency to reignite inflation and spending.  Is devaluation in the U.S.'s future?  Many think so.  It's what FDR did, and he did it on purpose. 

    • How does the collapsing marginal utility of debt influence the outcome (does government borrowing even influence economic activity anymore)?  The lack of demand stems from the fact that demand was overstimulated for so long.  Demand will return when people deleverage.

    Not only when people deleverage, but also when institutions deleverage.  Deleveraging can be done quickly through writing down assets and closing insolvent institutions, or slowly a la Japan by lying about it for decades.  And now, Japan is considered by many to be on the verge of a controlled soveriegn default.  Is this Yen-positive?  Would a U.S. default be dollar-positive somehow?

    Note: IMO there is no Japanese-style long drawn out deleveraging process for the U.S.  The comparison breaks down in many areas: reserve currency, global military empire, export-based vs FIRE economy.

    Government borrowing is not influencing economic activity because there is simply no demand for the use of currency because of excess demand in the past.

    Let me introduce you to the marginal utility of debt:  http://www.docstoc.com/docs/19817534/WHAT-DOES-A-DOLLAR-OF-DEBT-GET-YOU

    • From where on the globe will the capital be made available for U.S. sovereign borrowing?  The same places that it's being made available now.

    Exactly where is that place?  That's been the subject of some speculation recently.  Eric Sprott wrote an excellent article evaluating the supply of global capital and concluded that the existing lenders to the U.S. probably wouldn't be able to pony up enough capital.  http://www.sprott.com/Docs/MarketsataGlance/June_2009.pdf

    • Is there enough capital for governments and for the productive economy?  Yes, if the government stops wasteful spending and focuses on needs instead.

    Are you suggesting that there is enough money if only government waste would be eliminated?  That's the oldest canard in politics, my friend.

    • What happens to tax receipts if there isn't enough capital? The same thing that happens to tax receipts when you cut taxes, like was done years ago.

    And how do we pay for the ever-increasing deficit spending in this situation?

    Mon, 01/18/2010 - 20:07 | 197839 trav7777
    trav7777's picture

    Let me say this the most diplomatic way that I can:

    Do you freaking UNDERSTAND that the gd'd DXY is SOLELY a measure of comparative worth of currency?!?

    If EVERY country with reserves uses them to buy dollars, they merely SHIT THEIR OWN CURRENCY down in comparison to the dollar!  They do not change the OIL PRICE or GOLD PRICE or any other dollar price of goods!

    If EVERY country were to begin printing tomorrow, the DXY could go UP, over 100, to 200, wherever.  Gold would still rise as would all real things as denominated in whatever paper currency based upon future growth that won't happen!

    Dollar's fucking "uptrend"?  WHAT fucking uptrend?  The trend of the dollar is DOWN AGAINST EVERY REAL THING.  Do not tell me the DXY is going up and that means that the dollar is WORTH more.

    It is exchangeable for HIGHER AMOUNTS of other fiat debtmoney currencies, NOT against real goods and/or services.

    Mon, 01/18/2010 - 13:36 | 197316 DosZap
    DosZap's picture

    MB,
    Perhaps your right..........maybe CS is.....no one knows.
    That said, as has been stated Gold is not an Investment, it's insurance.
    Regardless of what the dollar does, the uptrend will be short term.
    With a 160T Debt staring us in the face long term.14.2T+/- short term.............
    I'll keep my money on real money.
    Fiat is called fiat for a reason, and confidence,trust, is ALL that makes them tradeable for anything of value.
    Anyone not keeping at least 10% of their total net worth is PM's, is IMHO, making a serious life judgement error.

    Mon, 01/18/2010 - 14:35 | 197411 Anonymous
    Anonymous's picture

    CS is not right. They dont even look at all the data that has an impact on price. How about overlaying on all their pretty charts one more data series containing the commercial short position (# of contracts). It certainly makes their discussion of the supposed $1,000 barrier and resistance to further increase of price much more relevant. They either dont have a clue, or they are complicit in the gold bashing scheme to always underplay its role and importance in its function as money and a check against unlimited fiat money creation (see the Federal Reserve)

    Mon, 01/18/2010 - 14:10 | 197361 trav7777
    trav7777's picture

    lol...TA

    Someone who believes that you can foretell the future by staring at lines on a chart...hahahahaha

    Mon, 01/18/2010 - 18:13 | 197727 SWRichmond
    SWRichmond's picture

    Even if it ever was valid, which I don't believe, to believe that it is now in the face of all the market manipulation is just....silly.  Bootomless pockets can paint the tape anytime and any way they want.

    Mon, 01/18/2010 - 14:32 | 197404 chumbawamba
    chumbawamba's picture

    [W]e suggest a distinctive tactic for breaking up the hard core of extremists who supply conspiracy theories: cognitive infiltration of extremist groups, whereby government agents or their allies (acting either virtually or in real space, and either openly or anonymously) will undermine the crippled epistemology of believers by planting doubts about the theories and stylized facts that circulate within such groups, thereby introducing beneficial cognitive diversity.

    Cass Sunstein, "Conspiracy Theories: Causes and Cures"

    I am Chumbawamba.


    Mon, 01/18/2010 - 18:14 | 197730 WaterWings
    WaterWings's picture

    While the American public wakes up, drinks coffee, goes to pick more job applications, debates inflation/deflation online, watches TV, etc they have no idea they are about to be run over by a Federal Mack truck. 

    Mon, 01/18/2010 - 18:15 | 197735 SWRichmond
    SWRichmond's picture

    Chumba, we're gonna see more and more from the ministry of disinformation as time goes by, peddling hopium to the unwary.  What it boils down to is "Keep your money in the markets and the banks where we can steal it."

    Tue, 01/19/2010 - 02:58 | 198066 Mr Lennon Hendrix
    Mr Lennon Hendrix's picture

    Gold.  Is.  Money.

    Paper is for dreaming.  So dream on.

    Tue, 01/19/2010 - 15:24 | 198494 Anonymous
    Anonymous's picture

    Master Bates, master bates.

    Mon, 01/18/2010 - 11:04 | 197116 Anonymous
    Anonymous's picture

    In summary, we believe that the steam has run out of investment demand as the economic environment has and is changing to the positive.

    tyler, you post a blog about how gold has outperformed for the last 10 years and still they come. they just don't get it. "the economic environment is going positive? gads, what are they smoking over there?

    Mon, 01/18/2010 - 12:00 | 197164 Master Bates
    Master Bates's picture

    The housing market outperformed for ten years too.

    "Housing is the best investment you can make, better than gold, better than stocks, because it goes up more than 10% every year!"

    - every financial analyst on the planet in 2006

    Mon, 01/18/2010 - 12:28 | 197206 Anonymous
    Anonymous's picture

    sir, you keep making the bogus analogy between gold and housing. that is comparing apples and oranges. there simply is no comparison. the gold bull will continue on as it started in about 2001. there is no stopping it. one thing you must know. nothing and i do mean, nothing has been fixed. they have taken 700B and much more, and still nothing has been fixed. the proverbial writing is on the wall. so you do what you think is best. continue on putting your money (whatever that term means these days) in whatever "investment" (whatever that term means these days) and see how it all works out for you. the end of the road is about here. i don't know about you, but i like it when i can take my wealth out and hold it and know that no one has a lien against it about anything. perhaps you still have some faith in the system. well that is nice. but i don't and i never will again. no one should really. but this too shall pass.

    Mon, 01/18/2010 - 17:16 | 197641 Master Bates
    Master Bates's picture

    It is comparing apples and oranges.  The key difference between the two concepts is that people actually NEED houses.
    People don't really NEED gold.

    Mon, 01/18/2010 - 19:43 | 197809 Anonymous
    Anonymous's picture

    It is not about needing gold so much, as much as it is about the potentially infinite amount of dollars battling the price of gold which is a finite element.

    Hyperinflation is never demand-pull, it is cost-push. The dollar and other currencies which have also been depreciating relative to gold will continue to decline.

    With the housing market, people could no longer afford to continue to purchase houses at such prices, the same could be said for the US Treasury market. China has already stated that there is not enough money to purchase the incoming treasuries over the next few years. Sovereign debt crises go in tandem with currency crises. It is not so much people buying gold that cause gold prices to go back, although that is a factor, but it is the currency depreciating against the price of gold even without demand. As for Glenn beck, all of the gold buying has been from institutions and central banks. Individuals barely make a dent in the market at this point, it is STRICTLY professional. Read the COT reports.

    Mon, 01/18/2010 - 12:33 | 197217 Nout Wellink
    Nout Wellink's picture

    There are only two reasons gold can go down: deflation and sound monetary politics. I regard deflation as a real possibility, but sound monetary policy is impossible anymore with this fiat paper money system crumbling down. We have the same reaction by the Fed and the central banks as after the dot.com crisis: zero interest rates and a wall of liquidity. It let the gold price soar from $ 250 to $ 1200. Now the situation is worse compared to 2002/2003 and they need to print more money (i.e. pile up debt) to prevent a total collapse. This is NOT sound monetary policy and hence good for gold.

    Paper has an intrinsic value of zero. The dollar has been bashed by 96% since the Fed came in 1913. They will make it worse and the dollar will end in hyperinflation.

    Mon, 01/18/2010 - 12:49 | 197246 Master Bates
    Master Bates's picture

    There is already TOO much money now.  There's no demand FOR that money, which is why we're in the recession that we're in.

    Liquidity is abundant, but there is no demand.
    Deflation will be rampant without that demand, and monetary policy can't get out of control because nobody cares about or has access to the money that is being printed as it stands now.

    You can make as much money supply as you want, but if there is no demand for the money supply, nothing will inflate.

    Consumer demand will be weak for the next five years because of all the excess demand and overstimulation of the past.

    Deflation is the only way to go, because nobody wants to borrow the "excess liquidity" in the system.

    Mon, 01/18/2010 - 14:11 | 197362 chumbawamba
    chumbawamba's picture

    If as you say there is no demand for the money then that means it's a commodity without a buyer, yes?  And when you have an oversupply, price goes down, yes?

    Sounds like a bad investment, this dollar, with trillions upon trillions of them out there, and yet somehow you make the reverse argument, that the dollar will go up while gold (experiencing supply shortages off and on for the past couple years) will fall?

    Sorry, that makes zero sense.

    If nobody cares about the money then that's when you have hyperinflation.  That would mean that nobody would want the bills no matter how many you had.  Get out the wheelbarrow.

    As others have pointed out, gold is not an investment, it's insurance.  But in this case, it will also perform as the investment of a lifetime, and when I'm sitting on my private island drinking the sweet nectar of my investment in the form of a pina colada, I will remember you.  And chuckle.

    I am Chumbawamba.

    Mon, 01/18/2010 - 14:15 | 197371 trav7777
    trav7777's picture

    Yes, the low demand for money is why interest rates are so low.

    If nobody is borrowing, banks cannot lend at 10%.  They have to drop rates to entice in the borrowers.

    The problem is that most activity now is uneconomical even at tiny rates.

    No monetary policy can make pumping water uphill to get the energy out of it coming back down into a profitable venture.  This intersection of the real world and laws of physics with economics is something they apparently don't teach in economics courses.

    Mon, 01/18/2010 - 17:26 | 197654 Master Bates
    Master Bates's picture

    There's no demand for the money to consume goods.  When goods aren't being consumed because of a lack of demand, then you can print 50 bajillion dollars and still have deflation, which bodes poorly for commodities in general.

    Further, you seem to be making the argument again and again that I'm "all for" the dollar or something like that.

    I never said that, just that I believe that gold has had its run up.  It's valuable, but it's NOT THAT valuable either.  You can't do much with gold, and I'm sure that somebody dying of dehydration would pay all the gold they have for a bottle of water.

    As far as your insurance argument goes, it's a good one, but only assuming that you will NEED insurance.  A better question would be what kind of premiums are you paying for that insurance, and is the premium paid worth the return at this price point?

    The only reason that there have been shortages of gold is because everybody and my barber wants to buy gold.  There were shortages of askjeeves.com stock in 2000 too.  Yes, you can't just "poop" more gold like you can make shares of askjeeves.com, but that doesn't mean that there won't be significant downside in the price of gold either.

    The only shortage comes from people hoarding it.  Eventually, those people will get back in the real world and realize that they'd rather have a fast car or food than a big brick of gold, especially when times get better - and they WILL get better.  Once that shortage eliminates itself, it becomes very poor insurance and is even likely to be undervalued at some point again, not overvalued.

    We'll see who is chuckling later, although I would never wish bad things for you on your investments.

    Mon, 01/18/2010 - 18:15 | 197728 chumbawamba
    chumbawamba's picture

    If we print 50 bajillion dollars and there is still no demand, that's hyperinflation.  In fact it's the very definition.

    Ok, so if not gold then what?  The only thing that trades as good as gold is the dollar itself.  But somehow, I don't see it taking the place of gold (it's had almost 100 years to try and failed).  Someone dying of dehydration would also be pretty pissed if you gave them paper dollars, or worse yet, the PIN to your ATM card.  So again, if not gold then what?  If you tell me guns, bullets, seeds, etc. then fine, but you're more apocalyptic than I am (though I don't doubt that such a scenario could play out, which is why I'm also prepared for that potential eventuality).

    As insurance, once you buy gold there are no premiums, there are no rating agencies, there are no actuaries or counterparties or anybody.  It's just you and the gold.  This assumes you've bought physical and not some scam investment vehicle such as GLD.  All the gold I've bought since 2008 is all in the money (premiums included).  So far so good.

    I can only imagine you have a barber that subscribes to Austrian economics.  Or perhaps you live nextdoor to Jim Sinclair or something if "everybody" wants it.  Can you please provide some data points to back up that claim ("everybody wants it")?  Some general articles publish in the press over the last several months would be good.  All I've been able to find in the mainstream financial press is how gold is a barbarous relic and is in a bubble and has reached its top.  Go figure.

    There will ultimately and obviously come a time when gold will shed its insurance attributes and become a trade again.  That time is not now, nor will it come for quite some time, if perhaps ever in our lifetimes.

    And hey, gotta feed my smug occasionally.  That's why I'll be chuckling.  It won't be about you.  I hope you find peace (and food) with your paper.

    I am Chumbawamba.

    Mon, 01/18/2010 - 12:47 | 197244 Anton LaVey
    Anton LaVey's picture

    Because you believed financial analysts? Poor you.

    Mon, 01/18/2010 - 14:12 | 197364 trav7777
    trav7777's picture

    Gold entered permanent supply decline in 2000.

    THAT is why the fkin price has gone up.  It hit peak supply and there is less produced every year since.

    That was never true of housing.  They cannot build more gold; the two things are nonanalogous.

    Nobody looks at gold as an "investment," it's a savings vehicle that doesn't depend upon credit bubbles.

    Mon, 01/18/2010 - 16:56 | 197613 WaterWings
    WaterWings's picture

    GLD is being printed all the time.

    Mon, 01/18/2010 - 11:26 | 197132 Anonymous
    Anonymous's picture

    I love these articles where a big bank talks down the one investment which could mean freedom for the common man.

    Mon, 01/18/2010 - 12:34 | 197220 Nout Wellink
    Nout Wellink's picture

    Me too. The message is clear: CS needs more gold.

    Mon, 01/18/2010 - 11:28 | 197133 Anonymous
    Anonymous's picture

    Gold going up. Dollar going down.

    Mon, 01/18/2010 - 11:43 | 197146 Shocker
    Shocker's picture

    That has got to be the dumbest graph I seen in a while. First of all, no one should be selling any gold or silver. And if you actually believe that it will take 10 years to rise to 1,400 - 1,500 an oz, wow is all I got to say. You been punked.

    Mon, 01/18/2010 - 12:46 | 197243 Anton LaVey
    Anton LaVey's picture

    If you buy gold as an investment, then, yes, there is a time and a place to sell gold.

    If you buy gold as an insurance, or a store of value, there is also a time and place to sell gold: when you absolutely need it. But you certainly won't sell all your gold in one go.

    This being said, agreed on the 10-year rise: US$ 1,400-1,500 could be right around the corner.

    Mon, 01/18/2010 - 11:56 | 197156 Anonymous
    Anonymous's picture

    Remember what Stewart Thomson say's 5,000 yrs of gold bear losers. CS joins them.

    Mon, 01/18/2010 - 11:56 | 197157 Anonymous
    Anonymous's picture

    Remember what Stewart Thomson say's 5,000 yrs of gold bear losers. CS joins them.

    Mon, 01/18/2010 - 11:57 | 197159 jimmyjames
    jimmyjames's picture

    Master Bates--using only his best researched data,to make his case--pulls the old jewelry demand card--

    Guess what?

    The Jewelry market collapsed 2 years ago--

    Back when gold was in the mid 600's--

    The price has doubled since then--

    Next?

     

    Mon, 01/18/2010 - 12:03 | 197167 Master Bates
    Master Bates's picture

    That isn't the only card I'm using.  But it's okay, because we'll see who's right in the long run.

    I'd rather believe Goldman Sachs and Credit Suisse, along with my guts and own logic, than a blog that has two different advertisements for gold companies on the sides of its page.

    When a commodity goes up 400% in less than a decade, is it likely that it'll go up much higher?  I doubt that.

    The pride cometh before the fall, and bullishness cometh before the bubble bursts.

    Mon, 01/18/2010 - 12:43 | 197231 SilverIsKing
    SilverIsKing's picture

    "I'd rather believe Goldman Sachs and Credit Suisse"

    Now I understand where you are coming from.  Take note that housing was in a bubble because of cheap credit.  That's not the case with gold.  When people start borrowing cash to buy gold and my barber tells me to buy gold, then I might believe we are topping out.  People (and other creditors) want out of the dollar so as the dollar loses value, gold will continue to rise.  Why do they want out of the dollar you ask?  Because our government will continue to print money.  Deflation, deschmation, it doesn't matter.  In a deflationary environment, the tax base will shrink even more so where is the government going to get the money they need to fund their useless programs?  You got it, they will print more.  There's no way out of this mess without the government severely cutting their spending and reducing taxes.  Not sure that would work even temporarily.

    GOLD STANDARD, BITCHES!

     

    Mon, 01/18/2010 - 12:54 | 197255 jailnotbail
    jailnotbail's picture

    A gold standard is the last thing the central bankers want.  It reduces them to elevator operators, all they get to do is push the button that opens and closes the door, because the flow of the gold supply to settle trade imbalances runs everything else on autopilot.  Even a common idiot likethe average voter recognizes that you don't need an elevator boy these days.

    You might want to drop by to see your barber a little early this week. Ask him if happened to see the cover of this month's Money magazine. I think he may have some news for you.

    Mon, 01/18/2010 - 17:01 | 197622 WaterWings
    WaterWings's picture

    When Jesus was whipping the money changers he was yelling, GOLD BITCHES!!!

    Mon, 01/18/2010 - 12:44 | 197233 Anonymous
    Anonymous's picture

    Gold is not a commodity. That is, physical gold is not a commodity - paper gold you can call whatever you want. And you can try to "make profit" on it for as long as you like - or rather for as long as the $/paper/derivative/debt/etc system works. Paper gold (eg. most EFTs) is no different than any other paper. Thus, when the system crashes, all paper will burn, gold paper included.

    Physical gold, on the other hand, is the wealth asset par excellence. It's "price" in any fiat is completely arbitrary and, in all fairness, laughable. Gold is the reserve of the world.

    Many (really) big players know this, and they play accordingly. What stands in our view to follow the footsteps of giants? No matter the size, we call all walk this trail. It's not about being a bull (making profits) at all - it's about possessing wealth.

    If you're interested, here's a blog where you can find more information on what I wrote. Fortunately, there's more of us.

    Mon, 01/18/2010 - 13:18 | 197296 Anonymous
    Mon, 01/18/2010 - 15:43 | 197511 DoChenRollingBearing
    DoChenRollingBearing's picture

    Yep re fofoa.blogspot.com.  I have always been a fan of gold, but fofoa has IMHO the right take on gold: that it will become "Freegold" soon, take its role as the best form of wealth preservation and see its price go WAY UP.  He does say it could down as well (maybe a lot), but in the end WAY UP.

    I am still trying to get a more complete understanding of fofoa's gold role.

    Interestingly, fofoa likes gold WAY MORE than the other PMs.  I will still hold and buy Au, Pt and Ag as income permits.

    Mon, 01/18/2010 - 17:32 | 197665 mhhe
    mhhe's picture

    Sir, I too believe that FOFOA and his friends are spot on indeed. It is nice to see a person having the same Thoughts :-)

    I would like to point out, however, that the price of gold is largely irrelevant - as Anonymous says, arbitrary. It is not important how much dollar/euro/yen can one's gram of gold buy - but rather how many grams can one afford!

    To clarify this position a little (and this something I believe FOFOA tries to do as well), I will offer the following line of argument:

    Nowadays, people view wealth through the prism of "money" (that is, paper currency). Thus, also gold is viewed in this way - as in "An ounce of gold is x dollars." or "How much gold do my £y buy?"

    The most important transition at hand is one of Thought. It includes seeing gold as the proper wealth asset. Accordingly, any connection of gold to any and all fiats is thus rendered secondary at best - the only important question becomes "How much gold can I have?" or "What fraction of the total amount of gold do I own?".

    I will quote FOFOA here:

    The value of gold is completely arbitrary.

     

    Gold is neither expensive nor cheap. It is theoretically free. It is a monetary conversion, like buying a Treasury or a money market fund. To the Giants, do you think gold is a game of "how big is my slice of the pie?" Or is it "how much is my slice of the pie worth?" Is it better to have a 15% slice of a commodity pie, or a 5% slice of the wealth pie? Is it more likely that all the gold in the world combined, when used as a wealth reserve, will be worth a large percentage of everything? Or that it is worth only 30% of the known oil reserves?

     

     



    http://fofoa.blogspot.com/2009/12/gold-ultimate-wealth-reserve.html

    I believe FOFOA presents these Thoughts with utmost clarity. What scenario does make (more) sense indeed? 

    Is it not then of importance for everyone of (any perceived) wealth - even for man of little wealth like myself - to own the biggest fraction of "wealth in the world" possible, in order to preserve this (perceived) wealth?


    Kind regards,

    mhhe

    Mon, 01/18/2010 - 12:49 | 197247 bokapita
    bokapita's picture

    When a commodity goes up 400% in less than a decade, is it likely that it'll go up much higher

    Oil anyone, post the Arab Israeli war in the early 1970s?

    Mon, 01/18/2010 - 17:32 | 197662 Master Bates
    Master Bates's picture

    And then it took a big crap, and gas was back to 99 cents a gallon again by 1999.

    I'm not saying that it CAN'T go up more, but that doesn't mean that it will, and with each climb higher, the likelyhood that it'll go down again gets larger.

    Plus people NEED oil.  What do you NEED gold for?  Semiconductors?  Mr. T's gold chains?

    Mon, 01/18/2010 - 19:50 | 197819 Anonymous
    Anonymous's picture

    No one NEEDS gold. When the gold prices rises, it is due to cost-push inflation as the amount of dollars available increase relative to gold. The credit bubble has still not popped, and is in fact holding up the entire treasury market. Without this credit, the treasury market collapses as does the dollar.

    The higher treasury prices and the us dollar goes, the likelier that they will collapse, rather than commodities. The whole treasury market and the dollar are being held up by unbacked swaps which are collateralized literally in the hundreds of trillions of worthless dollars.

    Mon, 01/18/2010 - 12:49 | 197249 Anton LaVey
    Anton LaVey's picture

    You'd rather believe Goldman Sachs and Credit Suisse??!! And I suppose you also believe in Santa Claus, perhaps?

     

    Mon, 01/18/2010 - 13:12 | 197284 Gordon_Gekko
    Gordon_Gekko's picture

    We don't need your bullshit here, bankster minion.

    Mon, 01/18/2010 - 17:36 | 197669 Master Bates
    Master Bates's picture

    I'm an accountant, thanks.

    Mon, 01/18/2010 - 22:04 | 197937 Gordon_Gekko
    Gordon_Gekko's picture

    Well, now we know why American companies/banks are so good at "accounting". Subprime? No problem. Alt-A? No problem. CRE? C'mon in - the water's fine.

    Mon, 01/18/2010 - 22:12 | 197948 Anonymous
    Anonymous's picture

    Now now Gordon, we know now that this wasn't the
    accountants fault, this crap was ordered by the
    CEO's. The analysts and accounts asked for data
    to analyze and were told to go take a hike
    by the CEOS's...pure fraud, not incompetance

    Mon, 01/18/2010 - 15:47 | 197519 Crime of the Century
    Crime of the Century's picture

    But it's okay, because we'll see who's right in the long run.

    That's pretty funny coming from a "20-something". I hope you are including history in your studies.

    Mon, 01/18/2010 - 17:35 | 197668 Master Bates
    Master Bates's picture

    1.  What does my age have to do with anything?

    2.  Yeah, I love history, and scored very highly in it.

    3.  Even if I'm wrong, does it matter?  If gold goes to the moon, great for you.  If it doesn't, told ya so.

    Just because I'm in my 20's doesn't mean that I can't have an understanding of economics or commodities.

    Mon, 01/18/2010 - 19:52 | 197827 Anonymous
    Anonymous's picture

    Then stop spamming zerohedge, if you are so confident in your worthless FRNs go back to Digg, Huffpo or the dailykos and enjoy your time with the lemmings.

    Tue, 01/19/2010 - 22:03 | 198929 strike for retu...
    strike for return to reality's picture

    Dude, glad to know you believe the squid.

    BTW, I've locked up the rights to moon.  Send me a note if you'd like to get in on the ground floor.

    Mon, 01/18/2010 - 14:19 | 197380 trav7777
    trav7777's picture

    No...he is using "TA"

    Which means basically he is using lines on a chart along with fibonacci ratios contrived from points on a chaos plot to attempt to forecast the future.

    It's utterly absurd.  There are EW forecasters who've been calling SP tops since October. 

    The weather cannot be forecast even 5 days out reliably, but someone can tell you the behavior of another chaotic system based upon a line plot of price along with other metrics derived from price.  Utterly absurd.

    Mon, 01/18/2010 - 11:58 | 197161 Crime of the Century
    Crime of the Century's picture

    Foolish CBs, buying in this environment. Thank goodness CS is here to save us from following in their folly. And how about JPM, accepting bullion for margin requirements - could those clowns have worse timing? Open your safes and weep, Chicken Littles! You got punk'd... go buy another flat screen.

    Mon, 01/18/2010 - 12:07 | 197175 duo
    duo's picture

    When the Chinese say the dollar needs to rise and gold is too expensive, expect the opposite.  Deception and mis-direction are pillars of the "Art of War".  Watch what they do, not what they say.

    Mon, 01/18/2010 - 14:46 | 197430 Anonymous
    Anonymous's picture

    Exactly. Right on. And what has China been doing? Increasing gold reserves from mid 2000's to 2009 when they announced an increase from the 400 tonne level to now at 1,000 tonne level. They left it at a stated 400 tonne level while they were buying all along. So what makes anyone think they arent doign the same thing right now.

    They also had commercials on state tv late last year advertising to their citizens that gold and silver were good buys/investments at around $1,000 Au and $15 Ag. So yeah, all you people that want to own paper go right ahead. I'll keep stuffing my dollars into the hands of bullion dealers for whatever I can get until China really does quit buying many thousands of tonnes from now. Oh yeah, and India too. And wait until the western CB's cant sell anymore or even have to buy from the completely decimated position their paper currencies will be in a few years down the road...

    Mon, 01/18/2010 - 22:19 | 197954 Apocalypse Now
    Apocalypse Now's picture

    Nice point, in addition the Chinese were lined up for the IMF gold but it went to India, a more strategic partner.

    In addition to Art of War, I would look at Aesop's Fables, where height = high price and where grapes = gold.

    THE FOX AND THE GRAPES

    A Fox one day spied a beautiful bunch of ripe grapes hanging from a vine trained along the branches of a tree. The grapes seemed ready to burst with juice, and the Fox's mouth watered as he gazed longingly at them.

    The bunch hung from a high branch, and the Fox had to jump for it. The first time he jumped he missed it by a long way. So he walked off a short distance and took a running leap at it, only to fall short once more. Again and again he tried, but in vain.

    Now he sat down and looked at the grapes in disgust.

    "What a fool I am," he said. "Here I am wearing myself out to get a bunch of sour grapes that are not worth gaping for."

    And off he walked very, very scornfully.

    There are many who pretend to despise and belittle that which is beyond their reach.  If gold is beyond reach, try silver.

    Mon, 01/18/2010 - 12:08 | 197179 Anonymous
    Anonymous's picture

    ...with the FED buying 80% of T Bills somebody run the numbers on how that will affect moneysupply (ie inflation)

    Mon, 01/18/2010 - 12:09 | 197180 jimmyjames
    jimmyjames's picture

    I'd rather believe Goldman Sachs and Credit Suisse, along with my guts and own logic, than a blog that has two different advertisements for gold companies on the sides of its page

    No longer a wonder why we're fucked--unreal

    Mon, 01/18/2010 - 12:15 | 197184 Master Bates
    Master Bates's picture

    I remember starting to read this same blog when they posted about the "imminent black swan event" with "extreme bearishness" about the markets.

    And how much did that prediction turn out?

    I guess it's better to believe investors that invest by their own emotion and beliefs than analysts that write 20 page reports why gold has reached it's bubble.

    We're fucked because people thought that Bush was a great president, even as he continued to keep monetary supply loose for way too long.

    The same lack of demand for other assets translates into the lack of demand for gold.
    Further, too many people rely on a strong dollar for the dollar to devalue by another HALF, which is what it would take for gold to hit 2000 / oz.

    It just isn't going to happen, just like the black swan event never happened in April of 2009.

    Mon, 01/18/2010 - 12:58 | 197261 Anton LaVey
    Anton LaVey's picture

    *Yawn*

    Repeat after me: Gold (and Silver) is not just an investment, it's a form of insurance.

    Deflation? Sure, gold will lose value, but probably slower than other assets. And I have cash on hand, just in case.

    Inflation? Man, if you own gold you are all set.

    Complete meltdown? Gold becomes the ultimate insurance, and, quite possibly, the only currency still in use.

    Wot? No Black Swan? Read ZH again: commercial real estate, country (including several US states) defaults, US$ replacement, etc... All of these are potentially disruptive. And a "real" Black Swan (meaning totally unforeseen) is always possible.

    Is gold going to go down in 2010? Yes, quite possibly, which will give me time to add to my stash. Because, let's face it, this whole mess is not going to end well.

    Mon, 01/18/2010 - 15:37 | 197500 Anonymous
    Anonymous's picture

    But we are in a deflationary environment,
    yet PM's continues to go up.
    More factors at work here than deflation.
    Lack of confidence in all currencies
    being a big one...
    Past two years have been a real learning experience
    for me (asian centrals coming to the rescue of the
    USD, for example)
    I think 2010 will hold great educational experience

    Mon, 01/18/2010 - 15:50 | 197526 DoChenRollingBearing
    DoChenRollingBearing's picture

    +10E10E10

    Insurance: check

    Deflation / Inflation: check

    Black Swan(s): never know what and when

    Mon, 01/18/2010 - 12:14 | 197183 Hephasteus
    Hephasteus's picture

    I'll sell my gold to credit suisse. For a pony. But not a regular pony. A wish produced pony made of magic and fairy dust.

    Mon, 01/18/2010 - 12:44 | 197234 SilverIsKing
    SilverIsKing's picture

    Make it a double.

    Mon, 01/18/2010 - 12:50 | 197250 Anton LaVey
    Anton LaVey's picture

    A "pony"? I want a freaking UNICORN!!

    Mon, 01/18/2010 - 17:07 | 197631 Anonymous
    Anonymous's picture

    I want the goose that lays golden eggs!@!

    Mon, 01/18/2010 - 12:17 | 197190 Anonymous
    Anonymous's picture

    Governments around the world have ceated trillions of dollars of fiat currency in the past 12 months. Has there ever been an instance in recorded history that such as situation has not created inflation? I don;t think this Genie is going back into the bottle until the day that paper fiat currency is finally ended once and for all and until that day gold and silver and other real assets will be stores of wealth and paper will end up being seen as the fraud it is.

    Mon, 01/18/2010 - 12:26 | 197201 Master Bates
    Master Bates's picture

    How dare you use such logic and history to back your claims?

    You should merely say "Gold bitches!" while you lose 30% of your investment and continue wishing upon a star...

    /end sarcasm

    Mon, 01/18/2010 - 14:25 | 197391 DosZap
    DosZap's picture

    Andy,
    When the Euro goes to ZERO,where do people go?.

    If you use the US $ as that Flight to Saftey, with our worthless currency, add % of GDP to Debt ratio, IMHO, not a smart move.

    Out of a crashing currency into another?.I think it needs intrinsic value.......

    As far as the 20yr Gold Bear...........
    All I can say to that is look at then, as compared to now.
    IF things were the same, it might hold water.
    Folks we are in totally uncharted waters.....Globally.

    We are in the middle of a MAJOR PARADIGM Shift.

    Mon, 01/18/2010 - 18:37 | 197751 Anonymous
    Anonymous's picture

    That MAJOR PARADIGM Shift may be a global cashless currency. We use credit cards for almost all our transactions,so the shift would not be that disruptive.

    Mon, 01/18/2010 - 13:32 | 197310 Anonymous
    Anonymous's picture

    http://www.schillerinstitute.org/graphics/fidelio/believe_knowing/fig2-5...

    How does the "pop" of the greatest credit bubble in history of mankind show itself?

    Supernova and then lights out.

    Mon, 01/18/2010 - 14:49 | 197435 chumbawamba
    chumbawamba's picture

    Um, excuse me, I have (C) and TM'd that phrase, so let me introduce you to a new one: ROYALTIES BITCHES!!!

    I'll have my agent contact your attorneys.

    I am Chumbawamba.

    Mon, 01/18/2010 - 21:36 | 197914 Anonymous
    Anonymous's picture

    So you're an accountant right? You'd rather throw your lot in with GS and CS? Ok then...

    I think I'll throw mine in with John Paulson, Jim Rogers, Marc Faber, Mark Mobius, Jim Slater etc.

    Some of the greatest minds in finance today are saying gold has at least another five years to run.

    One more thing, you keep talking about deflation but missing the single most important point. The US government is trying to inflate another asset bubble.

    Low interest rates, rampant borrowing and spending, a large deficit all lead us to this crisis. Look at any commodity's price in 2000 vs. 2010. Oil went from $9 to $80, natural gas from $1.50 to $6.00, sugar from around $5 to $27, gold from $250 to $1,100, silver from $4 to $18...

    And even though ALL of the same factors that were in place in 2000 that brought this crisis around are not only still in play, but even worse than they were... you think deflation and lower gold prices are around the corner? That this time the outcome will be different from last time?

    Ok, then buy bonds and we'll talk again in five years to see who's right.

    Mon, 01/18/2010 - 12:31 | 197212 Shocker
    Shocker's picture

    hehehe, If you wouldn't mind please don't buy any metals.. I'm already having a hard enough time getting some.... Again dollar value means nothing, you got to look at the real value not in terms of currency. If I bought gold at $2000 and goes to "$8 oz" there will be no tears. Because if you don't understand the system, then your doom to fail.

    Mon, 01/18/2010 - 12:36 | 197225 Shocker
    Shocker's picture

    Nope all post are good, Thanks!

    Mon, 01/18/2010 - 15:58 | 197543 DoChenRollingBearing
    DoChenRollingBearing's picture

    I agree w/ Shocker.  Post away! 

    Gold could come down in 2010, maybe kind of a lot.  But, to me fiats will come down in the end, gold will go up.  How much?  Beats me.  Although I like the idea of $5000 or even the really radical $50,000 / toz. 

    I'll be on an island close to Chumba's sipping ice cold vodka if the latter...

    OK, if gold does move down soon, then I'll buy more.

    Mon, 01/18/2010 - 12:53 | 197252 bokapita
    bokapita's picture

    Before that, there will be tears in gold land as the euro heads to 1.

    One of the very best reasons to hold gold is that it hedges you from any given currency's collapse. Euro to 1 USD; UK pound to 1 USD; USD to 25 Eurocents; etc etc - it is likely that the gold price will stay with the strongest currency.

    Mon, 01/18/2010 - 12:57 | 197260 lizzy36
    lizzy36's picture

    too logical, as usual andy.

    Mon, 01/18/2010 - 13:13 | 197286 lizzy36
    lizzy36's picture

    no questions.  just keep my fingers crossed.

    Mon, 01/18/2010 - 13:14 | 197289 Gordon_Gekko
    Gordon_Gekko's picture

    Well Andy, like they say, it takes bulls to make a bull market!

    Do NOT follow this link or you will be banned from the site!