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As Debate Over Bond Bubble Rages On, Gold Surges To Highest Since July 1
As more and more pundits, and amateurs, debate the endless futility of the bond bubble, as in does one exist or are nominal rates, in addition to swap spreads, going negative, the one real asset - gold - is surging to highs last seen in early July. Of course the bond debate is silly: it merely indicates a flight to safety in a time when stocks continue to live in a fantasy neverland of "timid" inflation, when the reality is accelerating deflation for levered goods, and rising inflation for goods "for the rest of us." As for those who never see a bond auction failure (and no, explaining the dynamics of a ponzi dutch auction is neither necessary nor sufficient), they will be absolutely correct- until they are wrong. And since we have gotten to a quantized state where even a rise in rates (due to the Fed's stance on liquidity) is virtually equivalent to a failed auction, the distance from the base orbital to the energized level, to keep the quantum analogy, is far closer than most believe. But such is the way in a ponzi non-gold standard system, in which endless credit is chasing extremely finite cash flows. Ssince we have now moved past the point where incremental debt creation can fund viable, cash flow generating assets, any incremental debt serves no role save for window dressing. Whether or not there is a formal announcement by the UST of a failed auction is irrelevant. In the meantime, gold is brushing all these pointless discussions aside and doing its thing. However, gold likes to keep it complicated, and has once again inverted its 120 day correlation with stocks, hitting the lowest level since March 2009. In other words, if stocks are correlation to inflation, gold is now a deflation benefiting asset. Which is also wrong, as gold merely is seen increasingly as an alternative to the great alchemy experiment in the bottom of the 9th being conducted by the Central Banks of the world, which is the last hope to preserve the status quo. In other words, gold is merely the hedge to whether either side in the bond bubble debate is right.
Gold price:
Gold to SPX chart:
Gold-SPX Correlation:
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Johny Cowardvo, where are ya boy? Reading your precious textbooks to figure this out I guess?
Johnny is, most likely, in class right now.
Remember, he readily admits that he is currently a college student.
For his sake, I hope that one day soon he'll awaken from his public education stupor and actually begins thinking for himself and learning from real-life experience. Until then, he will continue to blather based upon his misplaced self-confidence and relative inexperience.
Are you guys sure you want JB back? You just abuse him when he's around, somehow immune to his brilliant insights.
I believe that as well. It is depressing to see so many apparatchiks and future camp guards being produced by that Marxist Assembly Line, better known as Higher Education.
I have not seen him post since the day he accepted my wager. More than likely, he's around, building up time on a new user name so he can continue trolling after he loses our bet.
Class.... lol
who cares
That little bitch.
Amateurs = Leo
and we're heading into September...
very impressive move even as sovereign CDS continues to tighten and open interest still well below highs. Looks like real fundamental demand here.
My new normal will be when I sell a small portion at $3,000-$5,000/troy ounce and liquidate all my outstanding debt, reducing my cashflow demand by 75%, and still have a handsome hoard of the yellow and white shiney stuff to buy income producing streams, and STILL have plenty of the aforementioned metals to assure a decent SOL.
You really think people are going to give up productive assets in exchange for your pieces of shiny metal?
Why not? They will willingly give up productive assets now for little bits of green paper. That's only a small step away from using seashells or feathers. Whatever is generally accepted as money will do just fine as a medium of exchange. Only in the last few decades has this NOT been, as you put it, 'Shiny Metal'.
So yes, I think people will, in fact, revert back to doing what they have always done before the great (and soon to fail) experiment with paper began. I can't think of a good reason why they wouldn't.
Well, 5000 years of history would say "Yes". 1.2 Billion muslims would say "Yes". 2.5 billion Asians would say "Yes". It's only neo-liberal Western retards that say "No".
i would
What productive assets are you thinking of?
Bonds that pay less than inflation? Stocks that have lost money over the last 10 years?
Hey, Spig, those prices would work for me.
My new normal will be when I sell a small portion at $3,000-$5,000/troy ounce and liquidate all my outstanding debt, reducing my cashflow demand by 75%, and still have a handsome hoard of the yellow and white shiney stuff to buy income producing streams, and STILL have plenty of the aforementioned metals to assure a decent SOL.
I also (currently) plan to start selling lightly at about that price range and with similar objectives, though my debt service is nowhere near what yours apparently is. By that time the miners in my IRAs will be at price levels to accomplish the objective of buying cash flow streams (if I haven't cashed out the accounts by then), and the rest of the unspent precious goes to the kids as capital.
Spigot, SWR,
That is about the price range when I will likely sell some gold ($3000 - $5000), but it will be a small amount of my position. For me, it will be "taking some small pofits", but the great amount I keep will be for insurance and/or FOFOA's event.
Just look at the crooks push gold higher, it's all rigged.
Sometimes it's helpful to take a look in the mirror and gain some perspective.
The Japanese bond bubble has been going on for close to 15odd years, no?
The only people holding Jap bonds are Japs. They paid for their bonds with theur own real production and 15% savings rate for 20 years. Just the opposite as the US.
And the consensus opinion is since Americans dont save and most USTs are now bought by overseas buyers thus this bubble must pop?
What's to stop such a scenario playing out in the States?
As the boomer population retires they move from "risky" assets to "safe" ones like bonds?
or that the savings rate turns upwards?
Can we dismiss such possibilities out of hand?
Yes I believe we can dismiss those possibilities US economy is simply not capable of servicing the US debt. Japan is an export powerhouse. Toyota, Hitachi, Toshiba, Yamaha, ect, it is capable of servicing debt.
This debate over a bond bubble has only been going on for a few weeks really. BTW if the bubble pops or shows weakness, that is inflationary. Or to put it in words that a deflationist might understand better, devaluationary.
Gold is like a bomb shelter.
And that my friends tells you where we are.
Tyler _ "But such is the way in a ponzi non-gold standard system, in which endless credit is chasing extremely finite cash flows. Since we have now moved past the point where incremental debt creation can fund viable, cash flow generating assets"
This comment initiated a leap of understanding for me. Funny, I read volumes ever day to try to make sense and learn. There are days with all that work nothing seems to crystallize. It's sweet though when one acute statement delivers such a bolt of meaning to me.
Thanks
Zero Hedge FTW!
I've read speculation that when TSHTF happens gold and silver will be the de facto currency until a global currency is established. But if the Euro didn't cut it in Big Europe, why would we want to trust a global currency? On the other hand, countries that have little gold and silver will be at a huge disadvantage. Maybe the Loser in Chief will want to redistribute yours and mine. Just thinking happy thoughts here.
You need to quit reading speculation. We already have red currency in the Treserve vaults. Of course, it may need to be gold or silver-backed before it can be accepted.
Your Cramer wtf moment for the morning
Market Views Jobless Claims as Good News
11:00 AM EDT
The only sensible thing he said there was, "This market seems to be trading on a whole lot of issues other than stock fundamentals." Of course he says that for all the wrong reasons, believing market movement in August is tied to an anticipated GOP win in November which in turn will slow down FinReg et al. I'm not buying that, way too many massive issues in play to chalk up market moves (or lack thereof) to future election results that are still months away.
They haven't even listed all the little bomblets hiding in all these mega bills. A conservative Congress can only hold back funding for the fundamental transformation to totalitarian socialism. It will take a conservative president to repeal and replace all that garbage. A massive economic collapse will help to sober up the debt junkies and shills for Wall Street. I hope. We're all just guessing, who knows how it will all play out? All we know is this debt yoke will be lifted at some point.
hmmm, me thinks one is currently not profiting with Cramer, right now :)
I'm just going to cut and paste this all day long:
For all of you wondering WHEN this debt defaulting will begin I submit to you this evidence:
https://marketforceanalysis.com/articles/latest_article_081810.html
My reading of this is that the Central Banks have lost control of the last plug in the creaking dike holding back an alternative currency that will wash away all debts.
Yes ladies and gentlemen the end is nigh, Central Planning is about to go the way of the dodo. Gold is the catalyst that will precipitate debt to fall from the system like crystals dropping from a super saturated liquid in a high school chemistry class:
Interest Rates and the Price of Gold are inversely proportional.
A rising Gold price will pull dollar holders into Gold because it's an alternative currency.
To keep dollar holders the Fed will have to raise Rates to attract them (like Volker did in 1980).
Rising Rates will pop the ridiculous USTreasury Bond Bubble.
And Worse....wait for it.....waaaaiiit fooor iiittttt.....cause the Treasury to "restructure" their debt.
They will go through great fiscal gymnastics before they raise rates an iota.
Reminds me of when Ron Paul would be questioning Uncle Ben, and the one question he would never get a response to was, "what would have to happen before you would concede your approach was wrong and you had to reconsider your strategy?"
"They will go through great fiscal gymnastics before they raise rates an iota."
My point is that won't matter. The market will decide for them buy driving the price of Gold through the roof. People will see the hand writing on the wall and use their dollars to chase gold.
Gold holders will demand more and more and more dollars to sell their gold. That means the value of the dollar will go down and down and down.
That means inflation will go up and up and up.
To keep dollar holders the Fed will have to raise Rates to attract them (like Volker did in 1980).
Never gonna happen. The Fed can print dollars, I heard. Therefore no need to pay interest.
"The Fed can print dollars, I heard. Therefore no need to pay interest."
I'm affraid you've got that wrong. Interest is the price of dollars. The more the fed prints the more it devalues dollars and the more it will have to raise rates to attract buyers for those devaluing dollars.
So there will be very much a need to raise rates to keep dollar holders. Just look at what happened in 1980 when Volker had to raise rates. He raised rates to fight inflation (devaluing dollars).
Where is Johhny Bravo..gold up..Bravo down....amazing how the shit for brains runs for the hills..hopefully his parents have money..because an idiot like that will never survive in the real world....now Johhny ..call Steve Leisman so he can give you weasely advice forr your counter attack..if Leisman is not in..try that other douchebag...Nadler
lmao
I guess we all miss Johnny. He has a lot of nerve to disrespect the holy metal the way he does. I can't wait till he gets back so we can dump on him.
Sr. VPs Nadler and Bravo at JPM must have been told to lie low for the moment as their talk to bash gold down is not working.
Expect them back soon to a gold thread near you!
Nice article on how the Central Banks have painted themselves into a corner with their non-stop manipulation of the gold price.
http://www.financeandeconomics.org/Articles%20archive/2010.08.18%20Gold.htm
My friends here, like Jimi LennonHendrix, will recall that when the gold market began its 8% correction back in July, I stated that gold would trade in a 1165-1245 range through Labor Day. I'm sticking with that.
Once gold pushed back thru 1225, it was free money that 1245 was coming. However, expect stiff capping efforts to materialize around 1245 and those efforts will, most likely be successful in the short term. A beatback to 1220-1225 will follow and then more consolidation between 1220 and 1245. The first breakout to the old highs will occur in early September where The Evil Empire, having failed at painting a H&S at 1245, will desperately try to paint a double top at 1265. This may work in the short term, too, and you will get a brief pullback to 1245.
In the end, however, gold is about to rush to new all-time highs. Pausing around 1290 and then on to 1350 by mid-October. Another brief pullback and then on to 1500 before the end of 2010.
Okay, Buffalo Chip. I'm planning my miners trades on your prophetic insights. What could go wrong?
Been at this for quite a while and I'm just trying to help.
Rational people would see that its quite bold to actually put price and date in the same sentence. Please save my post for your own education but also to rub in my face by year end if I'm proven to be dead wrong.
Brave man, but you might be overly conservative, depending on the macro circumstances.
All it takes is one revaluation of the Yuan, and everyone will drop dollars all at once.
A Study of the Seasonality in Gold Prices A look at seasonality suggests the best of 2010 is in the offing. http://rosenthalcapital.com/blog/
Philly Fed numbers spell it out: Prices Received plunge ~50%, while Prices Paid near unchanged. Double Whammy Everywhere you look. what you're worth is deflating while the cost of living and doing business inflates.
From this week's data alone:
1) Deflation News:
-Housing inventory rising to near 12 month supply, pressuring housing prices
-New layoff wave hits 1/2 million/week, pressuring incomes again
2) Inflation News:
-Copper up 13%, Wheat up 17%, Coffee up 7.5%, Lumber up 7% in 1 month.
-Average consumer credit card rate 8/15/2010: 16.79%, cost of financial services up.
-WSJ: "Big employers Estimate Healthcare costs to rise 8.9% in 2011"
http://blogs.wsj.com/health/2010/08/19/big-employers-estimate-health-car...
-Google this : Tuition Rises
-Taxes anyone? Check your wireless bill lately?
My Gold holdings have not only protected my money but increased my worth in both relative and absolute terms. Even in a horrendous week of economic news. Gold is the safe haven away from economic and growing political risks. Investors will back away from corporate bonds once they perceive that the Fed is overwhelmed and guarantees are no longer unquestioned or implicit. What if GM fails again?? Will bondholders get a bailout??? What if corporations can't issue more junk bonds to fund and roll their debt? As far as treasuries, more QE and more money printing will scare off the smart money as it becomes clear that the Fed will follow Japan's lead and keep THEIR funding costs low with QE, but thereby hurting investors who need to protect their buying power as the cost of living rises.
+ $1225 Caviar Emptor
Another great reply. Of course everyone's situation is different (as is every physical gold owner's situation is different), but holding enough gold to BOTH be relatively and absolutely better off is a great thing.
Upping my physical to 7% of my wealth is urgent.
This should be urgent for all readers of ZH, particularly if you have children.
Gonna bring back a term from ZH days of yore here:
Gold: "growthyness"
Ha - almost a year to the day since the post:
http://www.zerohedge.com/article/raymond-james-discusses-growthyness-reits
I've been meaning to re-post this for a few days. Thought today and this thread were appropriate. Below is from the "Morning Gold Fix" of 7/28/2010. When the gold market was at the low of its 8% correction. I couldn't respond at the time because I was on vacation with my family. I recall, however, being quite pissed off at the pussiness/whining of the post. Bull markets correct 10% all the time and no one ever says anything, in fact its expected. Gold corrects 8% and all the AGAs get nasty and whining pussies like "Rasputin" give up their positions and question their rationale. Fucking pathetic.
by RobotTrader
on Wed, 07/28/2010 - 08:30
#491781
An excellent post by our friend Rasputin over at Wall Street Bear Chat
Those "cackling, over the top, gloating, gold bashing hyenas..."
Rasputin - Wed, Jul 28, 2010 - 08:51 AM
For the record, I have become disillusioned (note: in order to become DIS-illusioned, one must first suffer from an ILLUSION) with the whole idea that one day, I swear, the world is gonna regain its sanity and:
1. Gold will again become the basis of our monetary system
2. Fractional reserve lending will be outlawed--under penalty of death
3. Same for central banking
4. Securitization will be heavily regulated, and any of the gamblers who partake in this casino would enjoy NO bailouts whatsoever
5. Same for other derivative instruments.
Instead, after YEARS of research, study, ruminating, posting about and intensely debating the subjects of money, economics, finance, politics, history and human psychology, I have finally arrived at the following conclusions:
1. Nothing's gonna change, anywhere, because the world is FILLED with sheeple who beg to be slaughtered and sheared by the Alpha Thugs who are in charge
2. The vast majority of wanna-be GHSers are really nothing more than NASDAQ-style, bit-flipping, F12 monkeys, who are only trying to skim a few fiatscos by TRADING in and out of either buggy whips, mining stocks or both
3. There is an entire community of charlatans who prey upon the fear, paranoia, and gullibility of the GHSers, bilking them while assuring the fools that "We're your friends, we're not like the others".
...so please forgive me if I poke fun at BOTH myself (for having been so idealistic, naive, and stupid) and the still-deluded, Walter Mitty crowd of goldbugs, who continue to cling to the same old tired fantasies of phantasmogorical riches and power, and who also fall for the same old tripe of "Any minute now, we swear (fill in the blank here), and then it's gold to da mooooon, baby!"
Finally on this point, I also find that those who are most offended by good-natured ribbing by a fellow GHSer, or even a "gold-hater" are the most insecure about their "investment" (translation: gamble, with the intent of one day dumping their position on a "Greater Fool) in whips.
(Ras Conclusion): There is nothing, I mean NOTHING more pathetic than the whiny, crybaby, CIGAs, who profess to be "hard money advocates", but are in reality no better than the AAPL-speculating sheeple about whom they constantly complain.
And I personally am ashamed that I fell for all the hype and tripe that the gold-shill community pumps out.
However, I am slowly regaining my sanity and coming to grips with the reality that, at best, GHSers will simply never become filthy rich.
And at worst, they will be hunted down and punished for their bad little "seditionist" ways.
Perhaps every goldbug should do some deep introspection and ask themselves some of the questions I have been prodding them to consider.
Honest answers on their part might just be an enlightening experience.
Wow. I missed that one, apparently.
It is a bit surprising that this move would shake ANYONE out. This is the smallest correction I think I have seen since I started investing in PMs.
MMMM Margret Brennan can read the market news to me all day.
Gold reversing. A close below 1218 and the likelihood of a Head and Shoulders Top increases. Copper about to put in a Reversal day as well. Largest open interest in SPY options is on put side 105 - 100.
hehe
TA don't matter none when it's rigged, pal.
Hmmm. Not so much.
OH GOD IT TICKED DOWN SELLSELLSELL
And if you haven't taken time to watch this yet, please do:
http://www.cnbc.com/id/15840232?video=1569699046&play=1
There is an inverse correlation on CNBC between the attractiveness of the presenter and their intelligence. At 7:36 into the clip, Sylvia Wadwa of CNBC speaks and asks a reasonable question, framed for the viewers I guess, re whats the right price for gold when viewed from a $ perspective. Unfortunately, she looks like a bulldog chewing a wasp.
"she looks like a bulldog chewing a wasp."
Very nice. +++
The next leg down ...
http://stockmarket618.wordpress.com
As Spigot touched upon earlier in the thread,
"when I sell a small portion at $3,000-$5,000/troy ounce and liquidate all my outstanding debt, reducing my cashflow demand by 75%, and still have a handsome hoard of the yellow and white shiney stuff to buy income producing streams, and STILL have plenty of the aforementioned metals to assure a decent SOL.",
More attention needs to be paid to EXIT PLAN for sure. Without going into $55k+ territory and problems of nightriding raids, cans of food in a bomb shelter, shotguns, ammo, etc, and all the fun stuff that come with that kind of a price level, let's assume a ten-bagger from here and a relatively sane society - what kind of "income producing streams" are we thinking about?
I would like JohnnyBravo to come on this thread and ADMIT this his call in July about gold going back to 1220 before collapsing was WRONG.
Will you please come on and admit that JB?
Respectfully yours,
Nathan Wind
Margret Brennan is a "conviction buy".
Chart: ZB
The Long Bond futures continues with its moonshot.
http://www.screencast.com/t/ZjNhYjIwOW
Houston...we may have a problem.
going parabolic...
I wonder where the hyperinflation is???
Have you checked the Supermarkets lately?
when herding sheep, first get their attention with your dog (volatility), then they'll go the other way (into bonds). once the pen is filled and the gate is closed, they're ready for fleecing (credit crisis 2).
http://classic.cnbc.com/id/15840232?video=1569848850&play=1
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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