Doug Kass Calls For Gold $250 Lower: Puts Pop Before the News

An FMX Connect Exclusive

Gold Options activity took a turn towards the bizarre late Friday. Between the hours of 2pm and 4pm Eastern, put buyers came out of the woodwork. We are almost certain that Doug Kass's interview on Fast Money was the sole cause of this activity. He was interviewed at 5pm. The put buying frenzy came in a full 2 hours beforehand on a Friday.

Mr. Kass runs Seabreeze Partners Mgt.  and is known for timely accurate market calls in the past. Here is what he said about Gold for 2011. "Gold will drop $250.00 in a span of four weeks" The reasons for his bear stance are simply that rising interest rates will cause money to flow out of the metal as a hedge and into higher returning assets. His reasons are logical and represent a growing contingency of managers that think many economies are doing better. China, Brazil and others are raising rates to battle inflation. This would reduce demand form these countries for Gold as a hedge. We don't necessarily agree, thinking that the U.S. cannot follow their lead, the result of which just means a weaker dollar. Hence gold remains firm in dollar terms. But his track record speaks for itself. 

He closed by stating "Gold will briefly touch $1050.00/ OZ. and should finish the year $150 lower than where it is today.

What we are focusing on is the option activity that occurred before his interview.

Pre Interview Put Party

The Comex floor day ends at 1:30. Friday's activity was largely uneventful during floor hours. There were some put buyers scattered in the back months and some call sellers in the mid months. Other than that trading was dominated by dealers and market makers squaring up their February positions as we head towards expiration this week.

But post floor close activity became pointed and focused on one thing, mid month put buying. Between 3,000 and 6,000 puts traded between 1:30 and 4:15 (that is GLD equiv of 30 to 60k volume). It started at the April 1000 strike, a 4 tick option. but the buying spread virally from there to June, then Dec, back to August and finally to April and March strikes. Back month put premiums  expanded by 2 to 5 percent, while shorter dated options like the April 1250 strike went  from a 10.50 offer to an 11.90 bid, a premium change of 10%.  Yet the market was $2.00 higher when the bids came in.

Normally post Comex close, Globex order flow is driven by GLD ETF business. Retail and equity side business usually dictates volatility for this part of the day. But that wasn't the case Friday. The business came in on the commodity side first this time, and it  most definitely was not retail in size or sophistication. Fast Money Fans were not the buyers.

We decided to model the market's pre to post activity to get a handle on just how big the changes in put values were.

• March 1200           From 1.40 offer to 2.00 bid
• April 1000              From .40 offer to .60 bid
• April 1100              From 1.40 offer to 2.10 bid
• April 1250              From 10.40 offer to 1190 bid
• June 1100             From 5.00 offer to 6.20 bid
• June 1200             From 22.50 offer to 24.50 bid
• Oct 1150               From 16.00 offer to 18.00 bid
• August 1280         From 46 offer to 48 bid
• Dec 1000              From 10.50 offer to 12.70 bid

Calls Were Not Invited

This only tells one side of the story. It's obvious puts were bid. What isn't is that calls were offered, because so few traded. What we really had was a large skew change with no market movement.  Vix followers take note: ViX predicts nothing. ViX  changes are reactionary to market movement, not predictive. But changes in skew, while not predictors of direction do tell you what will happen to the ViX if the market moves. In summary: A move lower will cause a pop in the Gold ViX. while a move higher, will almost certainly result in a sell off in volatility.  Take a look at this smile, pre to post activity. it tells a simple tale: People are hedging long positions or are outright bearish. Any move lower  from here will be emotional. Fear if you are long the market, and greed if you are short. Take your pick, but it won't be pretty if you are short options and Kass is right.

April Options Smile

Key: Orange represents closing market values, Blue represents post market values

Who Bought?

So where did this buying come from?  We don't know. Fund managers have been talking their positions for generations. If a guy is on the cover of Barron's is telling you to buy IBM, it ain't because he's short it. Maybe he Kass was buying pre his interview. Maybe it was some friends who share his view. He twittered his opinion at 2:00 PM. Maybe it was a coincidence. Regardless, people are saying Gold will go down, and are putting money on it. 

Gold Bull Despair

Most of our readers are bullish Gold. Here is our advice to those people. If you are bullish on Gold and trade options, ( Disclaimer: and have money you can afford to lose) buy hedged puts or hedged put spreads. In a rally, the hedge will offset any decrease in volatility, while naked long calls will be offered every step of the way by trapped longs. And if you buy hedged puts and we do sell off, you wont be sorry. Options exhibit Giffen Good qualities at times, and that is beginning to happen now.  If the market has a strong day higher, do not expect put bids to go away, expect call offers to trickle in. That would potentially change if we breached and stayed above the 100 Day Moving Average which comes in around 1351.

Final note, keep an eye on silver spreads. They continue to come in, indicating a squeeze may be on the table despite the paper sell-off.

Comments

[Sudden Debt]

I was planning on buying some gold coins because I only have a few so a drop to 1000 would be welcome :)

KRUGERS BITCHEZ!!

[BlackSea]

Go with .999 products. Easier to sell (no sales tax) over the border in Canada if US market has hickups.

[66Sexy]

I can imagine if there is a sudden drop to 1050, there will be a physical depletion.

[Pladizow]

Dont worry about the price, the weight remains the same!

[66Sexy]

This guy could just be another poison breeding Robert Prechter. We know how HIS calls have done (pfft)

[Pladizow]

Kass 2009 Prediction:

Gold never reaches $1,000 an ounce and trades at $500 an ounce at some point during the year.

Kass 2010 prediction:

The price of gold topples. Gold’s price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.

Kass 2011 prediction:

"Gold will briefly touch $1050.00/ OZ. and should finish the year $150 lower than where it is today.

See a patern - What anus would listen to this shill?

[Don Birnam]

+1

[JonNadler]

I listen to him. See that's the great thing abount CNBS they don'd post your past predictions, that's why i like going there and Bloomberg. Now don't post my past predictions please!

[downrodeo]

It's like weather forecasting. You can be wrong almost all the time and somehow keep your job and all of the esteem you've gained for being right some of the time.

[Pladizow]

Why did God make economists?

To make weather men look good!

[A Nanny Moose]

We eliminated weathermen in favor of weather bimbos. Economists are no longer required. Washington didn't get the memo

[A Nanny Moose]

What I am hearing is BTFD

[Thomas]

"Since 2004, annual returns averaged around 8 percent"

This number was printed in late 2008 but certainly does not include the collapse that occurred at the time it was penned. Thus, Doug is mediocre.

[Gaston]

"Doug Kass is such a fukking tool,...

Here is this dumb fukk's record since September:

Sept 17th "Staring to short the market" (SP is 1125)

http://www.cnbc.com/id/39232968

Oct 1st "We're about to hit a wall" (SP is 1146)

http://www.cnbc.com/id/39463659

Nov 8th "The market has hit the TOP" (SP is 1223)

http://www.cnbc.com/id/40071629

Dec 27th "I am moving to a NET SHORT position" (SP is 1257)

http://www.cnbc.com/id/40822917

Jan 6th "In cash, waiting to make the big short trade"

Oh really Doug? You stupid lying fukk. That one was a real laugh after seeing every call for the previous three months including your NET SHORT article not a week prior, but here it is...

http://www.cnbc.com/id/40822917

Jan 13, 2011 "Commodities look attractive".....

http://www.cnbc.com/id/41056793

I guess after missing the entire short since you're "In cash and waiting to make the big short" the last I heard....

Fukking retard."

[caconhma]

Remember Elane Gazzerely (if spelling is correct). She too had a perfect record for a 6-12 months interval prior to 1987 crash. Her call for the crash was the best! Then, it was all wrong and she never recovered.

Yes, China and Brazil have inflation. They are raising interest rates. So what?

China, Brazil, FED, EU, etc., are still printing fiat money like there is no tomorrow.  

[TheJudge2012]

China prints more RMB when it raises interest rates in order to keep the dollar peg. Then we get cheaper Chinese import prices.

[caconhma]

Doug Kass's 20 Surprises for 2010: Goldman Private, Gold Tumbles, etc.

By Paul Kedrosky · Monday, December 21, 2009 

My friend Doug Kass of Seabreeze Partners has out his list of 20 market/political/economic surprises for 2010. These are always fun reading, and he did surprisingly well with his list of 2009 surprises, so let's have a look at the latest list. The only one I think is completely outrageous is the Tiger Woods prediction -- what the hell are you thinking, man?

1. There is a glaring upside to first-quarter 2010 corporate profits (up 100% year over year) and first-quarter 2010 GDP (up 4.5%). It grows clear that, owing to continued draconian cost cuts, coupled with a series of positive economic releases and a long list of company profit guidance increases in mid to late January and early February, there is a very large upside to first-quarter GDP (up 4.5%) and, even more important, to S&P profit growth (which doubles!). The upside on both counts is in sharp contrast to more muted growth expectations. While corporate managers, economists and strategists raise earnings per share, full-year growth and S&P target estimates, surprisingly, the U.S. equity market fails to respond positively to the much better growth dynamic, and the S&P 500 remains tightly range-bound (between 1,050 and 1,150) into spring 2010.    
2. Housing and jobs fail to revive. An outsized first-quarter 2010 GDP (up 4.5.%) print is achieved despite a still moribund housing market and without any meaningful improvement in the labor market (excluding the increase in census workers) as corporations continue to cut costs and show little commitment to adding permanent employees.
3. The U.S. dollar explodes higher. After dropping by over 40% from 2001 to 2008, the U.S. dollar continued to spiral lower in the last nine months of 2009. Our currency's recent strength will persist, however, surprising most market participants by continuing to rally into first quarter 2010. In fact, the U.S. dollar will be the strongest major world currency during the first three or four months of the new year.
4. The price of gold topples. Gold's price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.
5. Central banks tighten earlier than expected. China, facing reported inflation approaching 5%, tightens monetary and fiscal policy in March, a month ahead of a Fed tightening of 50 basis points, which, with the benefit of hindsight, is a policy mistake.
6. A Middle East peace is upended due to an attack by Israel on Iran. Israel attacks Iran's nuclear facilities before midyear. An already comatose U.S. consumer falls back on its heels, retail spending plummets, and the personal savings rate approaches 10%. The first-quarter spike in domestic growth is short-lived as GDP abruptly stalls.
7. Stocks drop by 10% in the first half of next year. In the face of renewed geopolitical tensions and reduced worldwide growth expectations, stocks drop as the threat of an economic double-dip grows. Surprisingly, though, the drop in the major indices is contained, and the U.S. stock market retreats by less than 10% from year-end 2009 levels.
8. Goldman Sachs goes private. Goldman Sachs (GS) stock drops back to $125 to $130 a share, within $15 of the warrant exercise price that Warren Buffett received in Berkshire Hathaway's (BRK.A) late 2008 investment in Goldman Sachs. Sick of the unrelenting compensation outcry, government jawboning and associated populist pressures, Warren Buffett teams up with Goldman Sachs to take the investment firm private. The deal is completed by year-end.
9. Second-half 2010 GDP growth turns flat. The Goldman Sachs transaction stabilizes the markets, which are stunned by an extended Mideast conflict that continues throughout the summer and into the early fall. While a diplomatic initiative led by the U.S. serves to calm Mideast tensions, flat second-half U.S. GDP growth and a still high 9.5% to 10.0% unemployment rate caps the U.S. stock market's upside and leads to a very dull second half, during which share prices have virtually flatlined (with surprisingly limited rallies and corrections throughout the entire six-month period). For the full year, the S&P 500 exhibits a 10% decline vs. the general consensus of leading strategists for about a 10% rise in the major indices.
10. Rate-sensitive stocks outperform; metals underperform. Utilities are the best performing sector in the U.S. stock market in 2010; gold stocks are the worst performing group, with consumer discretionary coming in as a close second.
11. Treasury yields fall. The yield of the 10-year U.S. note drops from 4% at the end of the first quarter to under 3% by the summer and ends the year at approximately the same level (3%). Despite the current consensus that higher inflation and interest rates will weigh on the fixed-income markets, bonds surprisingly outperform stocks in 2010. A plethora of specialized domestic and non-U.S. fixed-income exchange-traded funds are introduced throughout the year, setting the stage for a vast speculative top in bond prices, but that is a late 2011 issue.
12. Warren Buffett steps down. Warren Buffett announces that he is handing over the investment reins to a Berkshire outsider and that he plans to also announce his in-house successor as chief operating officer by Berkshire Hathaway annual meeting in 2011.
13. Insider trading charges expand. The SEC alleges, in a broad-ranging sting, the existence of extensive exchange of information that goes well beyond Galleon's Silicon Valley executive connections. Several well-known long-only mutual funds are implicated in the sting, which reveals that they have consistently received privileged information from some of the largest public companies over the past decade.
14. The SEC launches an assault on mutual fund expenses. The SEC restricts 12b-1 mutual fund fees. In response to the proposal, asset management stocks crater.
15. The SEC restricts short-selling. The SEC announces major short-selling bans after stocks sag in the second quarter.
16. More hedge fund tumult emerges. Two of the most successful hedge fund managers extant announce their retirement and fund closures. One exits based on performance problems, the other based on legal problems.
17. Pandit is out and Cohen is in at Citigroup. Citigroup's Vikram Pandit is replaced by former Shearson Lehman Brothers Chairman Peter Cohen. Cohen replaces a number of senior Citigroup executives with Ramius Partners colleagues. Sandy Weill rejoins Citigroup as a senior consultant.
18. A weakened Republican party is in disarray. Sarah Palin announces that she has separated from her husband, leaving the Republican party firmly in the hands of former Massachusetts Governor Mitt Romney. An improving economy in early 2010 elevates President Obama's popularity back to pre-inauguration levels, and, despite the market's second-quarter decline, the country comes together after the Middle East conflict, producing a tidal wave of populism that moves ever more dramatically in legislation and spirit. With the Democratic tsunami (part deux) revived, the party wins November midterm elections by a landslide.
19. Tiger Woods makes a comeback. Tiger Woods and his wife reconcile in early 2010, and he returns earlier than expected to the PGA Tour. After announcing that his wife is pregnant with their third child, both the PGA Tour's and Tiger Woods' popularity rise to record levels, and the golfer signs a series of new commercial contracts that insure him a record $150 million of endorsement income in 2011.
20. The New York Yankees are sold to a Jack Welch-led investor group. The Steinbrenner family decides, for estate purposes, to sell the New York Yankees to a group headed by former General Electric (GE) Chairman Jack Welch.

================================

The man is a fkig clown and a shill.

[caconhma]

Doug Kass's 20 Surprises Of 2009

As Doug explains, these predictions are outliers, not events that have a high likelihood of occuring (if they did, they wouldn't be surprises).

1. The Russian mafia and Russian oligarchs are found to be large investors with Madoff. During the next few weeks, a well-known CNBC investigative reporter documents that the Russian oligarchs, certain members of the Russian mafia and several Colombian drug cartel families have invested and laundered more than $2 billion in Madoff's strategy through offshore master feeders and through several fund of funds. There are several unsuccessful attempts made on Madoff and/or his family's lives. With the large Russian investments in Madoff having gone sour and in light of the subsequent acts of violence against his family, U.S./Russian relations, which already were at a low point, are threatened. Madoff's lawyers disclose that he has cancer, and his trial is delayed indefinitely as he undergoes chemotherapy.
2. Housing stabilizes sooner than expected. President Obama, under the aegis of Larry Summers, initiates a massive and unprecedented Marshall Plan to turn the housing market around. His plan includes several unconventional measures: Among other items is a $25,000 tax credit on all home purchases as well as a large tax credit and other subsidies to the financial intermediaries that provide the mortgage loans and commitments. This, combined with a lowering in mortgage rates (and a boom in refinancing), the bankruptcy/financial restructuring of three public homebuilders (which serves to lessen new home supply) and a flip-flop in the benefits of ownership vs. the merits of renting trigger a second-quarter 2009 improvement in national housing activity, but the rebound is uneven. While the middle market rebounds, the high-end coastal housing markets remain moribund, impacted adversely by the Wall Street layoffs and the carnage in the hedge fund industry.
3. The nation's commercial real estate markets experience only a shallow pricing downturn in the first half of 2009. President Obama's broad-ranging housing legislation incorporates tax credits and other unconventional remedies directed toward nonresidential lending and borrowing. Banks become more active in office lending (as they do in residential real estate lending), and the commercial mortgage-backed securities market never experiences anything like the weakness exhibited in the 2007 to 2008 market. Office REIT shares, similar to housing-related equities, rebound dramatically, with several doubling in the new year's first six months.
4. The U.S. economy stabilizes sooner than expected. After a decidedly weak January-to-February period (and a negative first-quarter 2009 GDP reading, which is similar to fourth-quarter 2008's black hole), the massive and creative stimulus instituted by the newly elected President begins to work. Banks begin to lend more aggressively, and lower interest rates coupled with aggressive policy serve to contribute to an unexpected refinancing boom. By March, personal consumption expenditures begin to rebound slowly from an abysmal holiday and post-holiday season as energy prices remain subdued, and a shallow recovery occurs far sooner than many expect. Second-quarter corporate profits growth comfortably beats the downbeat and consensus forecasts as inflation remains tame, commodity prices are subdued, productivity rebounds and labor costs are well under control.
5. The U.S. stock market rises by close to 20% in the year's first half. Housing-related stocks (title insurance, home remodeling, mortgage servicers and REITs) exhibit outsized and market-leading gains during the January-to-June interval. Heavily shorted retail and financial stocks also advance smartly. The year's first-half market rise of about 20% is surprisingly orderly throughout the six-month period, as volatility moves back down to pre-2008 levels, but rising domestic interest rates, still weak European economies and a halt to China's economic growth limit the stock market's progress in the back half of the year.
6. A second quarter "growth scare" bursts the bubble in the government bond market. The yield on the 10-year U.S. Treasury note moves steadily higher from 2.10% at year-end to over 3.50% by early fall, putting a ceiling on the first-half recovery in the U.S. stock market, which is range-bound for the remainder of the year, settling up by approximately 20% for the 12-month period ending Dec. 31, 2009. Foreign central banks, faced with worsening domestic economies, begin to shy away from U.S. Treasury auctions and continue to diversify their reserve assets. By year-end, the U.S. dollar represents less than 60% of worldwide reserve assets, down from 2008's year-end at 62% and down from 70% only five years ago. China's 2008 economic growth proves to be greatly exaggerated as unemployment surprisingly rises in early 2009 and the rate of growth in China's real GDP moves towards zero by the second quarter. Unlike more developed countries, the absence of a social safety net turns China's fiscal economic policy inward and aggressively so. Importantly, China not only is no longer a natural buyer of U.S. Treasuries but it is forced to dip into it's piggy bank of foreign reserves, adding significant upside pressure to U.S. note and bond yields.
7. Commodities markets remain subdued. Despite an improving domestic economy, a further erosion in the Western European and Chinese economies weighs on the world's commodities markets. Gold never reaches $1,000 an ounce and trades at $500 an ounce at some point during the year. (Gold-related shares are among 2009's worst stock market performers.) The price of crude oil briefly rallies early in the year after a step up in the violence in the Middle East but trades in a broad $25 to $65 range for all of 2009 as President Obama successfully introduces aggressive and meaningful legislation aimed at reducing our reliance on imported oil. The price of gasoline briefly breaches $1.00 a gallon sometime in the year. The U.S. dollar outperforms most of the world's currencies as the U.S. regains its place as an economic and political powerhouse.
8. Capital spending disappoints further. Despite an improving economy, large-scale capital spending projects continue to be delayed in favor of maintenance spending. Technology shares continue to lag badly and Advanced Micro Devices (AMD) files bankruptcy.
9. The hedge fund and fund of funds industries do not recover in 2009. The Madoff fraud, poor hedge fund performance and renewed controversy regarding private equity marks (particularly among a number of high-profile colleges like Harvard and Yale) prove to be a short-term death knell to the alternative investments industry. As well, the gating of redemption requests disaffects high net worth, pension plan, endowment and University investors to both traditional hedge funds and to private equity (which suffers from a series of questionable and subjective marking of private equity deal pricings at several leading funds). Three of the 10 largest hedge funds close their doors as numerous hedge funds reduce their fee structures in order to retain investors. Faced with an increasingly uncertain investor base, several big hedge funds merge with like-sized competitors in a quickening hedge fund industry consolidation. By year-end, the number of hedge funds is down by well over 50%.
10. Mutual fund redemptions from 2008 reverse into inflows in 2009. The mutual fund industry does not suffer the same fate as the hedge fund industry. In fact, a renaissance of interest in mutual funds (especially of a passive/indexed kind) develops. Fidelity is the largest employer of the graduating classes (May 2009) at the Wharton and Harvard Business Schools; it goes public in late 2009 in the year's largest IPO. Shares of T. Rowe Price (TROW) and AllianceBernstein (AB) enjoy sharp price gains in the new year. Bill Miller retires from active fund management at Legg Mason (LM).
11. State and municipal imbalances and deficits mushroom. The municipal bond market seizes up in the face of poor fiscal management, revenue shortfalls and rising budgets at state and local levels. Municipal bond yields spike higher. A new Municipal TARP totaling $2 trillion is introduced in the year's second half.
12. The automakers and the UAW come to an agreement over wages. Under the pressure of late first-quarter bankruptcies, the UAW agrees to bring compensation in line with non-U.S. competitors and exchanges a reduction in retiree health care benefits for equity in the major automobile manufacturers.
13. The new administration replaces SEC Commissioner Cox. Upon his inauguration, President Obama immediately replaces SEC Commissioner Christopher Cox with Yale Professor Dr. Jeffrey Sonnenfeld. The new SEC commissioner recommends that the uptick rule be reinstated and undertakes a yearlong investigation/analysis into the impact of Ultra Bear ETFs on the market. Later in the year, the administration recommends that the SEC be abolished and folded into the Treasury Department. Dr. Sonnenfeld returns to Yale University.
14. Large merger of equals deals multiply. Economies of scale and mergers of equals become the M&A mantras in 2009, and niche investment banking boutiques such as Evercore (EVR), Lazard (LAZ) and Greenhill (GHL) flourish. Goldman Sachs and Citigroup announce a merger of equals, but Goldman maintains management control of the combined entity. Morgan Stanley (MS) acquires Blackstone. Disney (DIS) purchases Carnival (CCL). Microsoft (MSFT) acquires Yahoo! (YHOO) at $5 a share.
15. Focus shifts for several media darlings. Though continuing on CNBC, Jim "El Capitan" Cramer announces his own reality show that will air on NBC in the fall. At the time his reality show premieres, he also writes a new book, Stay Mad for Life: How to Prosper from a Buy/Hold Investment Strategy. Dr. Nouriel Roubini continues to talk depression, but the price of his speaking engagements are cut in half. He writes a new book, The New Depression: How Leverage's Long Tail Will Result In Bread Lines. "Kudlow & Company's" Larry Kudlow proclaims that it's time to harvest the "mustard seeds" of growth and, in an admission of the Democrat's growing economic successes, officially leaves the ranks of the Republican party and returns to his Democratic roots. Yale's Dr. Robert Shiller adopts a variant and positive view on housing and the economy, joining the bullish ranks and writes a new book, The New Financial Order: Economic Opportunity in the 21st Century.
16. The Internet becomes the tactical nuke of the digital age. The Web is invaded on many levels as governments, consumers and investors freak out. First, an act of cyberterrorism occurs that compromises the security of a major government (similar to the attacks this year emanating from the Chinese military aimed at the German Chancellery) or uses DoS against media and e-commerce sites. Second, a major data center will fail and will be far worse than the 1988 Cornell student incident that infected about 5% of the Unix boxes on the early Internet. Third, cybercrime explodes exponentially in 2008. Financial markets will be exposed to hackers using elaborate fraud schemes (such as liquidating and sweeping online brokerage accounts and shorting stocks, then employing a denial-of-service attack against the company). Fourth, Storm Trojan reappears. (Same as last year.)
17. A handful of sports franchises file bankruptcy. Three Major League Baseball teams fail in the middle of the season and seek government bailouts in order to complete the season. The Wilpon family, victimized by Madoff, sells the New York Mets to SAC's Steve Cohen. The New York Yankees are undefeated in the 2009 season, and Madonna and A-Rod have a child together (out of wedlock).
18. The Fox Business Network closes. Racked by large losses, Rupert Murdoch abandons the Fox Business Network. CNBC rehires several prior employees and expands its programming into complete weekend coverage. Two popular CNBC commentators "go mainstream" and become regulars on NBC news programs.
19. Old, leveraged media implode. The worlds of leverage and old media collide in a massive flameout of previous leveraged deals. Univision and Clear Channel go bankrupt. The New York Times (NYT) teeters financially.
20. The Middle East's infrastructure build-out is abruptly halted owing to "market conditions." Lower oil prices, weakening European economies and a broad overexpansion wreck havoc with the Middle East's markets and economies.

[High Plains Drifter]

Does it really matter?  They have been trading  a lot more paper gold and silver for a long time now, a lot more on paper that they have physical and the regulatory authorities have given then a wink and a nod. If it wasn't for those bogus ETF's they created as another vehicle to screw around with the metals market, the COMEX would have already blown up. They simply do not have the product to cover the paper shares and options. It is simply criminal what is happnening and nobody will do a damn thing about it. Meanwhile the FED continues on playing their games with QE and purchasing of our own damn treasuries. The whole thing makes me sick. It is quite obvious to me, they are postering now for the next take down.

[6 String]

I agree High Plains. The silver manipulation can go on for at least another 3 years under current production/sales/inventory trajectory. So, don't expect any meaningful change in the spot price manipulation for at least that time frame....because, other than Sprott, I don't see any large money coming in and asking for delivery. That's the only thing that can put an end to the charades sooner rather than later. But it seems like it's all hands off....

Meanwhile, in three years, the marginal buyers--the odd lotters, could very well throw in the towel one after the other--punishing the price to nadirs not seen for awhile.

Why not? You've got a total take-down happening in silver, no one gives a crap, you've got major accumulation taking place at the Mint and in China, Sprott can't get physical in a timely manner.....all of this taking place THIS MONTH, and what has the spot price done?

You're indeed right: the whole thing is sick. Everything.

[bonddude]

Barack Obama on bank fraud

http://www.xtranormal.com/watch/8287439

[Math Man]

The March 120 puts on GLD look pretty good at 67 cents.

21 implied vol.

If gold hits 1050 ($102.48 in GLD), they'll be worth over 17 bucks.

[TeMpTeK]

Paper Assets are easier to carry...

http://www.youtube.com/watch?v=YQ63g9Gyn5I

[JW n FL]

All Hail King Tyler!

Thanks Bro!

[Turd Ferguson]

Yes, this is very good info. Thanks, TD.

[aint no fortuna...]

It ain't "Fast Money."

Its "Frontrunning Money."

[TheJudge2012]

Thanks for nothin.

[Cdad]

Every day that gold is cooler than banker products, bankers will attack gold.  Ergo, to win the war from the gold side, bankers need to be put down in their constant attempts to force misallocation of capital.

As well, it is a KNOWN that The Blow Horn [CNBC] is a propaganda tool and a frontrunning tool for big market bullies. 

You combine these two facts, along with the fact that no one at the SEC or the FCC or the CFTC [and any other agency you might mention] gives a rip about rules, laws, or the integrity of the market...and you get a gold sell off.

Presto.

[SheepDog-One]

Last thing the world banksters want now is the peasants owning gold. CNBC red light district for Wall St will help their glorified used car salesmen in any way they can. 

BTW I'd stay far away from gold puts as the article suggests doing, already big ramp in gold puts mean a pool of money bankrupt banksters can snatch away fast. Options on gold....forget it just buy and hold, dont momo trade gold thats not what its for.

[umop episdn]

The 'peasants with gold' scenario is probably the second to last thing the banksters want. The absolute worst thing for banksters is when the commoners own productive assets or scarce commodities instead of the fiat 'notes.' As the prices on all things rise, the confidence in the paper vanishes and the fun begins. Disclosure- I'm long torches and pitchforks with a garden backstop. 

[Cdad]

I'm long torches and pitchforks with a garden backstop. 

Sweet call, man!  I am jealous.

[Dr. Porkchop]

LED hand-crank flashlights, much more efficient and long lasting. Not as effective psychologically in a lynch mob, granted.

[JW n FL]

http://www.mwands.com/index.php?main_page=product_info&cPath=43_45&products_id=254&zenid=7775503387be9a01bfa1fc1f1901e43b

[SheepDog-One]

Cool thing about this Cdad is it doesnt make me want to sell my gold plated Desert Eagle at all! Buy n hold.

[JW n FL]

if gold see's 1050.. I will go long in a way that will make the earth move from under any fucking paper traders feet inculding jp. fucking quote me.

[Sabibaby]

You aren't the only one!

[Sudden Debt]

Did you head just got bigger?

[DoChenRollingBearing]

+ $1350 JW n FL

+ a whole lot more oz if gold goes down that much.

NONE of our financial problems have been solved.

...

Enjoyed all the firearms commentary w/ you and the Colonel last night.

[JW n FL]

happy to share with the other fight club members... what ever is palatable enough to go down.

[Sudden Debt]

I'm pretty sure gold will go up very soon.

Banks are in deeper shit then everybody expected so there will be a lot of money running out of those this week.

Just look at BAC that has current annual dividend yield of 0.28%!

They run at a mega loss and still they give a div.! HA!

STUPID IS AS STUPID DOES!

[TeMpTeK]

Kass..is a Hack!

[DoctoRx]

Some close friends lost a ton of $$ w him in the '90s.

[TheJudge2012]

Not such a great track record after all.

[JonNadler]

he can kass his a** goodbye

[Snidley Whipsnae]

Gold is often weak in first quarters of years...So, now gold's enemies are saying that gold is going into a major price decline because it is performing as it has in many years past?

I call bs on this gold decline prediction.

Nothing has changed. Fiat monies continue to be printed to the Nth degree. The banks sitting on rediculously bad assets are still afloat. The Fed is still acting as a prop for many economies...etc.

Gold is still the best money on earth. PMs in general are far superior than any fiat currency. Time will show what is sound money, regardless of how it is priced in various fiats.

[Sean7k]

One, China, India and Russia don't listen to Kass or CNBC. Every evening, I watch gold and silver go east. Two, I will be first in line at a significant correction. 

I don't know about you, but I will take as much time as the elites are willing to give to transfer assets out of FRN's and into real assets. Retirement funds are tricky. That is where you need a real strategy for getting your 401k money out without paying huge fees and taxes. 

Hey Tyler, do you know any advisors with some grey strategies concerning the protection of retirement funds from government gropnicrats?

[eigenvalue]

Maybe a bit off the topic. I saw you mentioned the other day the agricultural products in the US are highly subsidized. However, I checked on the USDA website and found that the Commodity Program (the subsidies) in the USDA budget is only around 9 billion USD annually. That's in fact not a lot of money in my opinion. Care to explain? Many thanks.

[Sean7k]

Even wikipedia places the number of direct subsidies at 20 billion. This does not include other subsidies which include : CRP, Forestry, Soil Conservation, Marketing and farm energy grants. The list is endless- if you caught the latest Republican salvo to cut costs, it targeted the 1 million dollar angora goat subsidy. 

Farmers do not just grow corn, soy and wheat. There are subsidies for organic, fruit growers and livestock as well.

" The U.S. government heavily subsidizes grains, oilseeds, cotton, sugar, and dairy products. Most other agriculture—including beef, pork, poultry, hay, fruits, tree nuts, and vegetables (accounting for about half of the total value of production)—receives only minimal government support. U.S. farm programs have cost about $20 billion per year in government budget outlays in recent years. But budget costs are not a particularly useful measure of the degree of support or subsidy. Some subsidy programs, such as import tariffs, actually generate tax revenue for the government but also impose costs on consumers that exceed the government’s revenue gain. According to Organization for Economic Cooperation and Development (OECD) figures, the average rate of “producer support estimate” for the heavily supported commodities in the United States ranges from about 55 percent of the value of production for sugar to about 22 percent for oilseeds. For the less-supported commodities the rate is typically below 5 percent."

The problem, in my mind (and I am a Farmer), is that these are your tax dollars. They are forcibly taken from your wallet and then dispersed-more often than not, to large corporate farming operations.

[traderjoe]

Sean7k - I always enjoy your posts. Didn't know you were a farmer. Full-time? What crop? What region? Not trying to get specifics. In the back of my mind, I want to be in farming over the next few years, likely starting by leasing the land. So, I'm just curious about these things. If you choose to respond, thanks...

[Math Man]

Actually, Russia is planning to buy half as much Gold in 2011 as they did in 2010.

[technovelist]

If you have a corporation, you can set up a corporate profit sharing plan that can hold assets such as foreign annuities. Check with your financial and tax advisors for the details.

[Sean7k]

Yeah, but it must be held in a domestic bank custodial account. Checked that one.

[Oh regional Indian]

Watch Silver's resilience in % terms compared to Gold's un-nerving swings.

I'll stick with my forecast of long ago.

It's Ag and Agri time. Gold may well lose it's shine (I do have 10% or so in Au, more for sentimental (or should that be senti-metal)) reasons.

ORI

http://aadivaahan.wordpress.com/2010/10/18/an-opportunity-and-a-golden-w...

[Snidley Whipsnae]

I own all PMs and keep as little fiat as is possible. Per centage allocation to a particular PM is not a concern to me.

I believe that after the world understands that all fiats are suspect that silver/gold will return to their historic relationships of about 15:1.

I see nothing wrong with this ratio since that is about the ratio that the two PMs occur in the real world of mining...and, yes, I realize that silver is money as well as a necessary commodity...But, when backing for new currencies are necessary, gold will be very necessary, along with the other PMs.

[Oh regional Indian]

Agree Snid. Back of my mind, I have that ratio, a reversion to the mean.

ORI

[rassillon]

I agree Snidley,

I allocated much the same as you. I do heavily buy silver in expectation of the ratio correction down the road.

I have at times gotten down so low on fiat that I only had my stash of "bank holiday" cash left. I have gotten pretty good at budgeting so that I can throw as much at PMs at any point in time.

[nmewn]

"Watch Silver's resilience in % terms compared to Gold's un-nerving swings."

I'm with you there ORI...I take a longer term view...sittin on a pile in the 14-17 range waiting to swap into gold. My thought has always been if they did manage to re-inflate and economies show any signs of life, silver would be the beneficiary because of it's more widely used industrial properties and there are and have been supply issues along with a massive short interest. If they didn't, I had the silver.

Gold is more solidly in the hands of those we oppose in my view. The trick has always been to remove it from their hands ;-)

With a drop to 1050 (Kass) it would make it around 1050/30...a 35:1 ratio, which I would be comfortable with for the exchange. If it moved to it's historical range of half that again, I have plenty of cash for that.

My thoughts anyways.

[Xibalba]

Bankers want in on the party?  I'm bearish on anything I don't own too!

[DoctoRx]

Correct, the guy who touts a stock in Barron's isn't short it.  He however may well be planning to short the stock just after the suckers buy at the open.  

Separately, if I understand this post correctly, the author is bearish on gold while advising that silver may soar.  WTF?   

More GIGO is my impression . . .

[blunderdog]

...bearish on gold while advising that silver may soar.

Makes a great deal of sense if you believe that industry dependent on Ag as a commodity, say electronics and medical devices, will boom and currencies will remain "strong."

I think the guy's wrong, but there's fine logic to support the view.  The Ag/Au ratio is currently a bit out of whack from a long-term perspective.

[Stuck on Zero]

I'm going to sell all my gold and buy 3% 30 year bonds, immediately. Oh boy, I'll get rich fast.

[High Plains Drifter]

Yeh those bond are backed by the FED doncha know. If you need any coupon interest payments they will just print you up some FRN's to give to you.

[Common_Cents22]

U can get real rich off that trade.   First, get free money from the fed, leverage up, buy the treasury, sell it back the next day for profit.  rinse, repeat.

its Taxpayer Funded Arbitrage.

[eigenvalue]

Does anybody have the data on silver spreads when Buffett bought silver in 1997? I can't find it on the LBMA website. Was silver in contango or backwardation at that time?

[Arius]

dont even try...does it really matter??

[eigenvalue]

I just want to draw some hints from the history. The last time silver was in backwardation was in Dec 2008. There was very strong demand for physical silver. Silver then went up despite a strong dollar and a complete collapse of other commodities.

[strannick]

Of course it matters. Good luck in your investigation. Would love to see what you come up with.

[fmxconnect]

backwardated. one of our staff traded it.  1 yr of spread was backwardated 40% of spot value at peak.

[eigenvalue]

Thanks. If this is so, I highly suspect that silver is going to explode very soon, just as Jams Turk said.

[High Plains Drifter]

It looks like the memory of 2008 is fading now.  Setting up for another fleecing of the sheep, ala, pension funds etc. Greed is good , or so says Gordon. As I look around, I see that nothing has changed. Nothing has been fixed. Many nations of the world are in fact financially broke, as well as many cities in this country etc.  So now we are lead to believe that we live in a world that is less risky simply because naked short sellers continue to put pressure on the noble metal. But be of good cheer my metal head friends. This too shall pass.

[Pladizow]

"We will learn an enormous amount in the very short term, quite a bit in the medium term and absolutely nothing in the long term". - Unknown.

[spartan117]

Here's Doug's calls for 2010:

http://blogs.barrons.com/stockstowatchtoday/2009/12/21/doug-kass-2010-pr...

So, how's that $900 gold call from last year working out for you Dougie? 

[66Sexy]

good find. What we have here is another money losing Robert Prechter.

[Snidley Whipsnae]

The central bankers are worried and for good reason.

Fed printing and printing by other central banks are causing run ups in food prices around the world...but if they stop printing the outcome will be total collapse of economies and loss of central banking jobs.

Of course they are going to attack PMs with every hack and tool at their disposal.

When the dust settles the PMs will be winners.

[johnnymustardseed]

That is funny , guys that are about 100% wrong all the time deserve to be on CNBC

[johnnymustardseed]

That is funny , guys that are about 100% wrong all the time deserve to be on CNBC

[packman]

IMO gold should only be bought as an investment using play money; i.e. not using money that's planned for retirement and such.

Otherwise it should be bought as insurance only.  As such - price swings really don't matter, unless perhaps you're looking to buy and hoping for a swing in order to buy some more insurance.

Like life insurance, homeowners insurance, car insurance, etc. - it is worth practically nothing (small jewelry and industrial value aside) until the time comes when you really need it.  Then it's worth everything.

As such - its price relative to fiat money is going to swing wildly, and its "fundamental value" based on the winds of politics and manipulation.  If you try to guage these winds for investment purposes - you're just begging for heartache.

[bingaling]

"MO gold should only be bought as an investment using play money; i.e. not using money that's planned for retirement and such"

You should keep your opinions to yourself . Seriously , if I am retired or about to I want all of my cash in gold . Why ? because X amount of dollars will not buy the same amount of goods in the future but x amount of gold will . Gold is the perfect way to guard wealth .If one ounce of gold can buy 1000 loaves of bread today it will be able to do so tomorrow or five years from now whether there is inflation or deflation it doesnt matter the purchasing power of gold stays relatively the same unless of course there is hyperinflation then you just won lotto .

[packman]

bingaling - you're a fool.

If there's one thing that this downturn has proven - is that the market can stay insane longer than you stay solvent.  That includes gold.

You say "if one ounce of gold can buy 1000 loaves of bread...", to which I say - where?  Not too many grocery stores will accept actual physical gold; they want cash, or electronice equivalent.  All fine and good for a gold holder - it's easy to exchange various places; however you still have to exchange it for cash and then use the cash.

Even if you get lucky and find a grocer that accepts physical gold - what are you going to do - slice off a few flakes whenever you need to buy some bread or milk or broccoli or gas or whatever?  That's just stupid, and you know it.  Yeah there's silver, but still the ability to use it in very small quantity is extremely limited.

As such - the exchange rate between gold and cash very much matters.  And thus it's not true that it'll be able to buy 1000 loaves no matter how many years down the road or whether we have inflation or deflation.  Gold may well be $2000 five years from now - but there's also a very decent chance that five years down the road gold will be $800 or even $600 again - and thus you could only buy 500 or so loaves of bread, not 1000.

Right now the PTB are doing their dangest to make the economy look normal.  They are doing a very good job, at least as viewed by 80% of the people on the street, and 90% of the MSM.  As a result, gold prices are going down because of this view - that the eocnomy is stabilizing.

We all know that it will blow up eventually, and when it does gold will probably shoot to the moon (barring FDR-like outlawing/confiscation).  However that time may be 10, it may be 20, it may be 30 years down the road or even more.  Until that time comes - there's a very good chance gold will just trickle back down slowly below $1000 and further.

Don't say you weren't warned.

[RockyRacoon]

You are freakin' doomed.

(My apologies to the Mogambo.)

[packman]

Why?  I've got my insurance.  You?

[viahj]

no, you're the one missing it.  say bingaling converts $13xx fiats into gold today.  the exchange rate between gold and fiat varies as you implied but when the time comes that bingaling needs those 1000 loaves, he will go the coin shop and convert his gold back into fiats so he can then trade fiats with the grocer for some bread.  his purchasing power in terms of fiats will roughly be the same before and after the conversion into and back out of gold.  it's not a perfect situation but show me a better one to preserve wealth. 

[packman]

"his purchasing power in terms of fiats will roughly be the same before and after the conversion into and back out of gold."

And you know this how?

See my example below for 1980.  Gold went from $800 to $250.  I wouldn't call that "roughly the same", especially when compared with most other "investments".

Not that I'm saying gold will go to $300 or whatever.  But I think that there's more than a minute chance we'll see a similar situation, but on a smaller scale - with the economy "stabilizing" for an extended period (based on tremendous public and then private debt growth - like what we had 1982-2007), resulting in a secular bull market.

I'm not saying that will happen.  I'm not even saying it probably will happen.  I'm saying it might happen, and that if it does - then an "investment" in gold will do very poorly relative to most other investments.  I'm saying that gold is worth buying, but not as an investment in traditional thinking (something you plan to grow over time and then draw down during retirement) - instead it should be considered a hedge against a SHTF scenario.

[bingaling]

look at the charts of the last crash in the markets . Take wheat for example or oil whatever you wish , and the rate that the 2 dropped was much greater than gold . During that period though you could buy essentially the same amount of bushels of wheat or gallons of gas with one ounce of gold . That is my point . It can work as an annuity especially if there is dollar cost averaging when buying .

[bingaling]

Gold is liquid -it can be cashed in at jewelry stores for cash if need be . Dealers will also take it off my hands ,yes even in tough times .

Gold may well be $2000 five years from now - but there's also a very decent chance that five years down the road gold will be $800 or even $600 again - and thus you could only buy 500 or so loaves of bread, not 1000.- look at the last drop off in the stock market then look at gold and commodities . Even though the price of gold dropped other commodities dropped harder and the song remained the same .

Right now the PTB are doing their dangest to make the economy look normal.  They are doing a very good job, at least as viewed by 80% of the people on the street, and 90% of the MSM.  As a result, gold prices are going down because of this view - that the eocnomy is stabilizing. I talk to people on the street as well, 80% of them say this is a depression , your full of shit on this one .

Your the one who is gonna get owned not me . Play money in gold under these circumstances is just plain stupid because this isn't a game .

[packman]

Put another way - think about someone who was about to retire in 1980.  They wanted to preserve all their assets, as you, and put much of it (say 50%) into gold, since inflation was going crazy with no end in sight, it was looking more and more like a nuke war was on the horizon, etc.  Yes gold was up big the past few years (700% plus), but there was no reason to think it would turn around.

Fast forward to 2000. They're now on their death bed.  The economy didn't blow up the way they thought it would, and we never had a nuke war.  Their 20-year retirement just pretty much sucked, because they put half their savings into something that went down 60% in value over a 20-year period, instead of diversifying into other things that would have made probably 200% over the same period.

P.S. let this not be construed as a "do not buy gold" statement - or even a "do not buy gold using any portion of your life savings" statement.  I'm not saying that at all.  It's insurance.  It's very appropriate to allocate a portion - even a significant portion - of your savings towards insurance; like life insurance, homeowners, auto, health, etc.  But - like insurance - you have to expect that you may end up not only not with capital gains, but possibly losing a significant portion of your principle, if an "event" never happens.  That's the way insurance works.

[Sean7k]

Why do people continue to post this cherry picked statistical argument? You pick an abnormally high point in gold rather than say 1971? Where we have a legitimate starting point? You ignore the the effects of Volker"s actions as FED, the state of the economy at the time and the differences in debt and manufacturing capability, then ignore the dump of Russian gold onto the markets in the 90's.

Further, you fail to account for the biggest reason for the rise- the debasement of the currency and the debt risk of the FRN. Has this stopped? Moderated? No it hasn't.

Next, you completely fail to mention dollar inflation. A dollar in 1980 was worth a lot more than in 2000 and even more today. While the bankers have been keen to maintain downward pressure on gold and silver, it is starting to unravel. Making the protection of one's wealth the most important financial activity we can pursue.

This USA is not the USA of the 1980's. Europe is not the Europe of the 1980's. The amount of debt, both realized and unrealized makes money the most overpriced instrument on the planet. Bingaling is doing the prudent thing. In a world of financial thieves and liars, it pays to be contrarian and protect your wealth from the places where governments and banks have the opportunity to steal it.

[blunderdog]

It's bogus and artificial because it's such a completely low-probability set of initial assumptions.  But I wouldn't take that specific example too seriously.  I doubt for a moment that the previous poster was saying such initial starting conditions would ever obtain--like someone had a half-million dollars in cash, bought 250,000 of Au at the peak of that market surge, and sold all other forms of investment to sit in cash.

The way I read the example is exactly what everyone with any kind of sense has always known: diversify holdings.  How many forms of assets really exist?  Physical commodities (in which I'd slightly sloppily class Au), land, currency, stocks, bonds.

If you're only covering 2 of those categories, you run a significant risk of losing big. 

I generally favor the inflation predictions and thus weight commodities/land a great deal higher than the paper investments, but JUST IN CASE I'M WRONG I really don't want to be completely 100% divested from paper.

http://static.safehaven.com/authors/casey/19022.png

[Sean7k]

Nor do I, but for a retired investor with a minimum amount of wealth, diversification can be more dangerous- especially if they are not traders or if they are depending on fund managers.

Land can be problematic as well- the possibility of property tax increases are high. Farms are great, but you have to be able to produce something and pay for the equipment and material costs.

Bonds are a potential nightmare and stocks require nimble feet. Currencies are problematic the world over- outside the Singapore dollar and even that in a bank holiday scenario. 

Lastly, sometimes, piece of mind is worth two birds in the bush, which is what the original poster was referring to.

[packman]

Thank you blunderdog.  You pretty much hit on what I was talking about.  Diversification is the key.  Gold should be a significant part of everyone's portfolio - however it should be considered a risky part.

I would say that gold is kind of like an IPO stock in a startup company - there's a small chance you may hit it big.   However - the big difference vs. a startup is that gold has a "base" price - you're pretty much guaranteed to not lose everything.  In that respect yeah it's a way to "protect your wealth".   As long as by "protect you're wealth" you mean that you're willing to lose a certain percentage of it - maybe as much as 30-50% (knowing that of course instead you may hit it big, and see it go up by 1000% or more).

However - keep in mind - even though gold has a "base price" - it's not guaranteed to actually be legal to exchange either.  Don't forget what happened in 1934; it may happen again.  Yes I know we're not on a gold standard now - but if an attempt is made to put us back on it - I wouldn't discount the possibility of a similar move at all.

In the end - please don't forget that gold has gone up over 300% in just ten years.  And while the economic turmoil has certainly warranted such a rise - it's quite feasible for the vast majority of the public to be led to believe that the turmoil is over, and therefore for gold to go significantly lower - and for a significantly long period of time.

[packman]

"Why do people continue to post this cherry picked statistical argument? You pick an abnormally high point in gold rather than say 1971? Where we have a legitimate starting point? You ignore the the effects of Volker"s actions as FED, the state of the economy at the time and the differences in debt and manufacturing capability, then ignore the dump of Russian gold onto the markets in the 90's."

Several points in here worth addressing (hear me out before judging):

- 1971 is not a valid comparison point.  It generally didn't become legal to exchange gold in the U.S. until public law 93-373 went into effect at the end of 1974.  Gold immediately shot up above $100, bouncing around wildly before its 1980 peak at $800, then finally settled in the $300-400 range in the 80's and 90's.

- 1980 is only "cherry picked" after looking at it in the rear-view mirror.  We don't yet have that luxury for 2010, so we don't yet know that the comparison is invalid.  Prices peaked at $1425 in December.  If in 2013 gold is at $600; then the comparison of 2010's $1425 will be perfectly matched with 1980's $800.  In both cases there will have been a turmoil-fed price bubble.  Let's not forget that gold was in the $600's (and flat there for some time) as recently as mid 2007 - after we were already in the throws of the subprime problems.  I think it could feasibly go back there again.

- Re: Volcker's actions - he raised rates to cut inflation.  Rates are currently at zero.  Do you not think the Fed will eventually raise rates?  They certainly can't lower them.

- Re: 1990's dump of Russian gold - I hadn't heard of that actually (post a link if you have one - I can't really find muchy by googling it).  Though I am familiar with the UK's dumping of 415 Tons in 1999.   Certainly these contributed to the $250 bottom in 1999.  In general the real base price without this dumping would have been in the $300-400 range still.  I don't think it's out of the realm of possibility to see more dumping, in part to try and drive down prices again.   That's why I warn of the dangers of manipulation.

Please keep in mind I'm acting as Devil's Advocate here.  I'm not saying gold will go down.  I'm just saying that there's a chance it will, and it's not an insignificant chance.  And as such - I don't think it can be consided a primary part of a "preserve your wealth" strategy. 

Maybe "preserve some of your wealth" would be a better way to put it.

[bingaling]

: "Volcker's actions - he raised rates to cut inflation.  Rates are currently at zero.  Do you not think the Fed will eventually raise rates?  They certainly can't lower them"

and as has been mentioned everyday here for the last 2 years they can't raise them either or it leads to another meltdown .

[packman]

As it did in 1982, with the second dip of the 1980/1982 double-dip recession.  In fact the second dip was much worse than the first, with unemployment topping at 10.8% in 1982, and GDP growth falling much farther.

Nevertheless the economy improved (as far as the public is concerned) greatly after that, starting in 1983.  So the precedent is set.  If inflation starts to get high the Fed can easily point to 1982 and say "look - even though we know raising rates will cause a short-term second dip - look what can happen later!".

IMO it's not an unlikely scenario at all.  We could enter a similar situation - where the economy is "growing", though in reality just fed by growing debt levels (both public and private).  The main difference is that now our base level of debt is much higher - 340% of GDP vs. 150% back then.  However I don't really know what the ceiling is on that - do you?  We may be able to grow our debt to 500% or 600% of GDP, and go two or three more decades before it all really finally collapses.

Under that scenario - I could easily see gold "settling" in the $600 range.  Yes it'll certainly take off again; way above $1400 - but it may be after we're dead (depending on how old you are).

[TeMpTeK]

(same interviw) Kass also called Brian Kelly a "Gold Bug" which proves he'll say anything to pump up already over valued equities regardless of the fundamentals for gold's price...

[Common_Cents22]

yep, disagree w/ obama and you are a racist.

bullish on gold you are a gold bug.

the elite will always use ridicule.

[LooseLee]

KASS IS A SHILL FOR THE ESTABLISHMENT. OFF WITH HIS #$%^&@!

[Arius]

i am not sure i understand Dougi kass correctly...is he saying gold will reach $250? does that mean it will erase all the 10 years and go back to 1998 levels ? then it will not be called the Brownie Bottom...Gordon brown for one will be smiling and say hey...i told you soo...

wow...that is a call - guy got balls...if true this will be the Dougi Kass bottom...wow...no wonder the guy is so rich...

[Don Birnam]

Young Arrius,

Kass predicts gold will drop $250, to $1050, or thereabouts.

We shall see...personally, I find it quite doubtful, but a glaring buying opportunity indeed such a quote would present.

[JW n FL]

Monday, January 24, 2011 Currency Currency amount under Rule O-1 Exchange rate ¹ U.S. dollar equivalent Percent change in exchange rate against U.S. dollar from previous calculation Euro 0.4230 1.35530 0.573292 0.274 Japanese yen 12.1000 82.87000 0.146012 -0.036 Pound sterling 0.1110 1.59420 0.176956 0.082 U.S. dollar 0.6600 1.00000 0.660000 1.556260 U.S.$1.00 = SDR 0.642566 ² -0.106 ³ SDR1 = US$ 1.55626 ⁴

http://www.imf.org/external/np/fin/data/rms_sdrv.aspx?Month=01&Day=24&Year=2011&submit=Submit

[Sofa King]

I'm a little concerned about Gold holding these highs...only because all the news of gold being smuggled out of Third World Shitholes.  This gold will hit the market (remember that the mantra "people hold gold forever" is what's keeping the prcie up right now), on the other hand there should be enough suckers out there being duped by Goldline to absorb the extra inventory.  My little point and counter-point for the morning.

[VFR]

These are miniscule amounts in the market

[Sofa King]

A couple of Tons is just a bag of shells, I guess.  I still think everyone holding PM's in this market has some serious balls.  Playing chicken with the Fed is a dangerous game.  As prices go up in the stores at an accelerated rate, political pressure will build to tame real inflation and all it will take is just the hint of a rate hike to crash the whole commodity space.  It is interesting to watch. The suspense is killing me!

Then again I could be wrong, like the time I said that the best indicator that the economy will go into the shitter is when Starbucks starts closing stores. Oh, wait...

[Mike7.62]

Count me as having "serious balls" then. Explain just how "a hint of a rate increase" is going to crash the price of gold. The 10 year has increased 75 bp since QE II was introduced, and I haven't seen a crash in the commodities sector, quite the opposite in fact. Volcker had to place the FF rate well above the real rate of inflation to get a handle on the beast in 1980. Doing so this time would put the FF rate well north of 8%. How does the debt service stay manageable at that level? More printing? How would that affect callable construction/CRE loans? Rate increases are a huge negative for the banks, as it drives a stake through any hope of a recovery in RE, and given the exposure of the sector to both commercial and residential RE, would the Fed harm its shareholder's in such a fashion? Doubtful.

I will continue to place my faith in real money, as opposed to a politically manipulated fiat that can and will be produced in any quantity necessary. That seems to be the smart trade, if not a ballsy one.

[LooseLee]

Just let these clowns start 'fighting' inflation and watch what happens to the economy of the good old USSA....again, their 'threats' are like the hairs on a baby's ass and only co-conspirators and other establishment shills (and fools) will sell their PM's. As has been preached on this site; Buy only Physical (or CEF PHYS, PSLV, goldmoney.com etc.) and do not be 'shaken' by the paper market. If you have the real deal, what can they do (I suggest you do not buy where a paper trail is left BTW). Keep your stash in your possession (never hold at a bank or other corporation--bury in the backyard if needed). When TSHTF (finally, and it will), you will be able to protect yourself. It wouldn't hurt to have some training in martial arts and firearms as I see violence and a police state in our future. Those who ride this 'mirage' of a stock market will be sought out by those of us who know better. It is not wise to hide behind the facade of the establishment and then beg for mercy when your hand is called....you will be revealed as the fraud you are (nod, nod, wink, wink robotrader and harrywanger et al....) Abiding by the 'Truth' (if that means non-participation in this stock market fraud) will give you the energy and intelligence to intuit those who have betrayed 'Truth' and to hand them their 'Just' rewards....

[VFR]

He may be right about the next 4 weeks , but for completely different reasons. He is a coincidental foreskinster.

[uno]

probably more front running of margin requirement being raised, CME is in panic mode

[satansanus]

well that makes gold a pop for sure till those put buyers get smoked for a 3 day +++% punch in the face

[satansanus]

i mena really setting up gold shorts on a friday goes against the all thing lucre

[Snidley Whipsnae]

Gold has shown weakness in the first quarter of many years...only to rebound to 15 - 30% gains by year end.

Unlike Kass, I see no fundamental changes that would alter this pattern.

IOWs...nothing, absolutely nothing, has been fixed. All has been papered over.

Gold is a necessary asset for protection against the continued printing of fiat money...along with other PMs, ag land if you are convinced that taxes will not force one to sell it...

The attack on PMs is a desperate measure. See it for what it is.

[ElvisDog]

If you're a long-term gold bull, the way to treat any gold price decline is simple - just hold on to your physical gold. I've always thought of gold as a long-term insurance policy anyway, not something I trade. If my kids find out someday that they've inherited 100 ounces each from their dad, I'm guessing they'll be pretty happy.

[fmxconnect]

We have no opinion. FMX merely seeks to uncover thedrivers adnpotential drivers behind future market moves. The reader decides which you want to put more weight on. Our site is forthemost part objective.

[ageofreason]

What is the expression...

A fool and his gold is soon....?

[ageofreason]

But as far as the Kass record goes...he hasn't called a top right yet!

[israhole]

Whether Dougie Kass is correct on this call or not, he is still a drunk.

[SheepDog-One]

And a pederast.

[monopoly]

I usually do the opposite of what Kass suggests. He does not know any more than anyone else. Too many moving parts for any human to know where we are headed.

Full core and very comfortable here.

[tmosley]

Gold is likely to decouple from silver at some point, but this isn't it.  In addition, gold won't fall when this happens, it will rise precipitously.  It just won't rise nearly as quickly as silver.

When the industrial panic comes full steam, and the users are crying out for the metal at any price, I will be there to supply it to them, but I will only take gold as payment.

[tmosley]

I should add that those looking to BTFD would likely do well to wait until later in the week, given that this is options expiration week, and there is a lot of incentive for for JPM and others to drive down the price at this juncture.  I personally am looking to buy on Wednesday or Thursday.  I would also suggest you wait for the traditional morning waterfall.  Perhaps a buy around noon-time or so.

[goldmiddelfinger]

You better post more and paddle faster. There's banjo music playing up in the woods.

[SheepDog-One]

Goldmiddlefinger is the one PLAYING the banjo in the woods!

[rassillon]

goldmiddlefinger likes touching your junk bro

tmosley, you are spot on. trade silver for gold at the right time!

[High Plains Drifter]

Interesting point. Do you have lots of stanky junk?

[goldmiddelfinger]

You wouldn't know a top from a toothbrush. Doomers don't trade so you "rationalize" that failure by calling for a long term hold but the "long term" will never arrive for you. You will sell for walking around money or die with your hoard. Neither event will be controlled by you so the price you, or the probate court, get will be totally arbitrary.

[tmosley]

Nobody cares what you say.

[goldmiddelfinger]

14,000 followers on twitter

[jomama]

and you're his #1 fan.  fail.

[goldmiddelfinger]

Fuck you

[tmosley]

Sounds like someone has a messy diaper.

[DoChenRollingBearing]

How many times do I have to tell you goldmiddelfinger?  Argue in an impolite way with tmosley is asking to get your butt kicked!

The Bearing himself has a nick or two from tmosley (I had a "fact" wrong), and I am on his side.

[Hephasteus]

He's like an australian blue healer growling and snapping at cows legs. Only he doesn't realize we aren't cows.

[ageofreason]

It really proves how right Carlin is....

Think about how dumb the average person is...the realize the other half is even more dumb....

[satansanus]

DZZ is far superior as a hedge over puts IMO. It has anticontango and antidecay built in, where as all puts will die somewhere on the road to zero with many making it all the way to bidless

DZZ has bond backing creating a small income stream that fights decay like poisoned tap water

[ms1408]

Maybe this guy will snatch the 2011 MOTY award with this drivel.

[TheJudge2012]

Or today is at or near a low in gold.

[DaBernank]

I hope to god it drops so my FRNs and Euros will buy more of it. This idiot sure didn't do very well with his 2010 predictions:

http://wallstreetpit.com/13213-doug-kass-predictions-for-2010

How about 2009 Dougie?

http://wallstnation.com/KASS_12302008.html

I see he's recycling his "cyber-terrorism" prognostication from 2009 for this year as well. Even a broken clock is right twice a day. Anybody in this comment thread could score 50% with market prognostications.

[AGoldhamster]

emphasis: "7-Commodities markets remain subdued. Despite an improving domestic economy, a further erosion in the Western European and Chinese economies weighs on the world's commodities markets. Gold never reaches $1,000 an ounce and trades at $500 an ounce at some point during the year. (Gold-related shares are among 2009's worst stock market performers.) The price of crude oil briefly rallies early in the year after a step up in the violence in the Middle East but trades in a broad $25 to $65 range for all of 2009 as President Obama successfully introduces aggressive and meaningful legislation aimed at reducing our reliance on imported oil. The price of gasoline briefly breaches $1.00 a gallon sometime in the year. "

Nuf to be in "ignore category"

[ATG]

Talking his book or front-running?

Where is the SEC when you need them?

Buying options one of the bigger sucker bets around

A broken clock right twice a day, while DK annual lists right less than 50% of the time

Gold seasonality often down now; not always

Last year he called for gold to go down to $900

It did not

Silver beeches

[lunaticfringe]

If gold goes to 1050, I am going to buy several pounds. At 17 grand a pound, I think five is doable. I will be buying all the way down. This kind of bullshit rhetoric is designed to freeze buyers and induce sellers. Fuck this guy.

[DaBernank]

Wouldn't it be satisfying if we all could orchestrate a big short squeeze on a particular day? Since many of us are buying gold regardless of a $100 price move.

[lunaticfringe]

I'd love to. I've been buying small amounts but I'd certainly pull the trigger on a few ounces on any orchestrated day. The great thing about guys like this mo-mo is that they are entitled to their opinions. Watching aapl double or triple every few years is expected. A tangible store of wealth- not a chance. I wanna see this mo-mo's puts on a notarized form. Let's see if he's got his money where his yap is. betting not.

[Common_Cents22]

orchestrated.  twitter is your friend.

[LooseLee]

I'd like to be part of a 'short-squeeze' on the establishment fraud. Anyone know of such a formation?

[VFR]

listening to Kass he comes across as a patronizing, sarcastic, egotistical individual with an inferiority complex. why even give him airtime. His voice is full of desperation to be proven correct.

[CorporateSerf]

Doug Kass’ Predictions for 2010

By editor|Dec 28, 2009, 12:35 PM|Author's Website  

Hedge fund manager and financial columnist Doug Kass shares in this CNBC interview his 20 possible outlying events for the coming year.

According to Kass:

1. Corporate profits soar 100% in the first quarter of 2010 from a year ago, while GDP jumps 4.5%.

2. Housing and jobs fail to revive.

3. The U.S. dollar explodes higher.

4. The price of gold topples.

“Gold is going to break $900,” he said. “It’s one of the most crowded trades.”

5. Central banks tighten earlier than expected.

“We might see a policy mistake, everyone’s concerned about it,” Kass said. “I think we’ll follow China. China’s already trying to stem the property speculation…So one of the surprises will be a much earlier increase in the Fed funds rates than generally expected”.

6. A Middle East peace is upended due to an attack by Israel on Iran.

7. Stocks drop by 10% in the first half of next year.

“If we look at the consensus forecast, [stocks] are really clustered in a narrow range,” said Kass. “We get a decline and the first surprise is that corporate profits double in the first quarter and then you have an exogenous event, which hurts the market and then we get nothing for the second half of the year.”

7. Kass predicts that Goldman Sachs (GS) goes private.

9. Second-half 2010 GDP growth turns flat.

10. Rate-sensitive stocks outperform; metals underperform….

[AGoldhamster]

Emphasis: "10. Rate-sensitive stocks outperform; metals underperform. Utilities are the best performing sector in the U.S. stock market in 2010; gold stocks are the worst performing group, with consumer discretionary coming in as a close second."

Funny - given gold made new highs at 143x. And Silver ...

So much for his records.

[PulauHantu29]

Yawn..."gold will fall"...they said that when gold was $950 as the Fed began it's ad infinitum Money Machine Printing Spree.

Ben now has Janet "The Printer" Yellen from California to spur him on to many more QEs. I do not see a change in the near future.

Plus, many investors see gold as a hedge against Deflation. The CEO of NWML bought $400 Million gold for that reason he said.

Good luck!

[VFR]

so as we are junking Doug Kass here is some more

Is this the Doug Kass who predicted a major crash in the market after 1994 — just before the market nearly tripled?

Is this the same Doug Kass who on April 15, 2005 on CNBC predicted oil would soon be at $40 a gallon? it reached $60 by August 11, 2005

He's been aorund along time and hardly ever get it right. In fact I have been right more than him. Why is this guy even on TV?

He is just wrong...wrong...wrong.

[Common_Cents22]

why is he on TV?

Your assumption that TV seeks the truth and independent opinion is wrong.   CNBS is propaganda for the most part.   That is why the kass's of the world are contintually on it regardless of record, they are doing Lloyd's work.

[DosZap]

WSJ,has an article saying the ViX will be up 60% very shortly, if that happens, we definitely will see $1k again.

And buy like a bitch....I do not see dealers having it in stock for long at those numbers.

As TD said, and others here, The FUNDOS have not changed.(97% of the NEWS we have rec'd, by the MSM, is designed to separate you from your money).

I told my wife, I used to be antsy owning a lot of PM's, but, this time is different, and I am at peace.Wherever it goes, it wont stay long.(down).Because the world is still ASS DEEP in everything bad, and I see no way out.

[topcallingtroll]

buy the widowmaker....the TIVX if you really think volatility will go up.  You will be such a fucking hero.