This page has been archived and commenting is disabled.

FMX Connect Explains Today's "Comical" Gold Move To Near Record Highs

Tyler Durden's picture


Submitted by FMX Connect

Connect Gold Options Report – July 12, 2011


August Gold settled at $1562.30 per troy ounce, a gain of $13.10 for the day.

Market Recap:

Gold opened the day firmer on continued European sovereign concerns. The euro was weaker, the dollar was stronger and gold made new highs in Euro terms. As it did six months ago, the first time the Greek crisis was unveiled, gold is now competing with the dollar for safe haven status.

Tuesday saw Irish government bonds downgraded, debt ceiling negotiations deteriorated, and the curtain lifted on the June 22nd FOMC Minutes. This statement was most notable for its consideration of additional quantitative easing, contingent on economic conditions. This news was enough to spur gold higher, taking out the congestion area that had been giving it such a hard time.

We think what’s happening is almost comical. Most Western governments are in a race to the bottom to get their currencies as low as possible. This is an attempt to cheapen their debt by debasing their currencies. Every time the dollar spikes it must make Bernanke pull the hair he has left out of his head. Every time the euro weakens the Fed does what it can to strengthen it. One way is by opening swap desks with the European banks to give them all the dollars they need. Another way is to say the magical phrase QE3. While the timing of this news is in many respects a coincidence (because the minutes are released weeks after the event) we do recognize that Western economies must devalue their debt. We are in a race to the bottom and the euro is winning, hence the rally in gold.

Gold goes up for two reasons now. The first is obvious: gold is a dollar-denominated asset and as the dollar weakens it will increase in value. The second is sovereign or default risk, which is actually deflationary. Europe and the U.S. will continue taking turns driving gold higher with the Chinese chasing it all the way up.

Volatility was stable to lower with the market slightly higher in the morning. Options remained orderly while we stayed under the congestion in the 1557 area . Once we printed 1560 the landscape changed dramatically. Liquidity providers ran from bids, abandoned their markets and left OTC brokers cursing constant flakers. Skew and volatility both moved upward considerably. The volatility curve you see below is a representation of where volatility was at 4:00 pm and is in no way related to the settlement volatility that the CME generates.
Directional Commentary:

Options: Options told us to be bullish yesterday and they did not lie. It appears that volatility has legs to run now. There are approximately 27,000 lots of open interest at the 1600 strike in August. The majority of these purchases were initiated by a large hedge fund. We have to figure this option will come into play. One item that gives us pause is that the August 1630 Call and 1650 Call were sold near the highs, so someone may be expecting a pullback. So while that mitigates options’ bullish sentiments a little we’re sure that futures longs will be selling calls to create dividends at these volatility and skew levels. Conclusion: Bullish

Technical: Yesterday we said gold was looking for a settlement above 1556 before it began to break-out in earnest. Having eclipsed that level we are expecting a run on all-time highs, actually we are only a couple of dollars away. We expect this rally to make an attempt at 1600 and for the large open interest at this strike across the term structure to be a major factor. Large open interest at a specific strike is a cause for concern and even more so when a large percentage is in the hands of a few players and their counterparties are undercapitalized and fragmented; this is a classic recipe for a short squeeze in the option. In general the fragmented undercapitalized professionals are professionals who will buy futures in a rallying market to mitigate their adverse change in delta. The long isn’t hedging or selling futures to sell positive gamma, he wants his options to go in the money and has the pockets to be patient. Many times the mere size of the open interest and the fragmentation of the short-side counterparties creates the gravitational pull needed to go through the strike or at least to the strike. In this particular instance, we think the long is strong and that August gold will print 1600. Past that point, gold could try for the top of the trading channel. We become more neutral with a settlement below 1560.



- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 07/12/2011 - 20:17 | 1449975 living on the edge
living on the edge's picture

I bought more Gold last Friday and again yesterday. Glad I did. 

Tue, 07/12/2011 - 20:52 | 1450060 doesmybuttlookf...
doesmybuttlookfatinthis's picture

I like the junior miners. You can pick them up for chump change. And when gold goes ballistic they will out pace the increase in gold by 3 or 4 times.

Tue, 07/12/2011 - 22:20 | 1450296 living on the edge
living on the edge's picture

Care to share some of your favorites?

Tue, 07/12/2011 - 22:52 | 1450367 Crisismode
Crisismode's picture

You are dreaming and smoking great dope.


The miners are dead meat, and you know it.


Stop talking your weak book.

Wed, 07/13/2011 - 01:09 | 1450596 Whalley World
Whalley World's picture

Shit's real,

them miners are set to make folks rich for those in early (ten years on,still early)

when the crap comes down, those golden claims on ounces will catch fire.

Wed, 07/13/2011 - 01:44 | 1450630 Oh regional Indian
Oh regional Indian's picture

I think for a while, starting sometime next week, everything, including gold and silver, are going to be in deep doo. A buying opportunity of a life-time perhaps.

I see a super-deflationary snap, short and brutal and then the hyper-I episode begins.

By the way, not sure how many people are followign the great temple treasure discovery in India, but they've discovered over 3 tonnes of gold already.

I say the three swimming pools full theory is total rot. Gold will tank, it's rare, but it's been mined for millenia.



Wed, 07/13/2011 - 08:02 | 1451056 Reptil
Reptil's picture


It's not a question of rarity, it's value is increasing in reference to the £€$ because it's fungible, accepted money everywhere. That it's use and ownership is widespread is one argument for it's use as (intermediate) currency. (Before the next system of fiat, after the collapse is put into place.) For those that want to stay liquid, in a deflationairy collapse, there is not equal currency, in that no other has no counterparty risk, the Swiss Franc included.

Now silver, there's an interesting case. A tandem with gold for currency? Or "just" a valuable commoddity? There's not that much of it available above ground. It too is widespread though.

There may be a spike in the dollar, next week. Then it'll be time to "back up the truck" as people here put it so aptly. I'm not counting on it. Shit is hitting the fan, and the yellow metal is a life-boat. Once it's gone, that's it.



Wed, 07/13/2011 - 00:41 | 1450539 DoChenRollingBearing
DoChenRollingBearing's picture

@ living,

Good for you!  I wonder if there will be any physical left upon my return to the USA...

The lowly Bearing has been here in Peru on, well, bearing business.  So, I have not had the opportunity to have purchased from just above $1500 of not long ago.

But, we had an extremely positive meeting today with Mr. Maekawa.  I will post details at my blog, with luck tomorrow (Weds.).  A long and arduous meeting, but very positive!

I know that some ZH-ers have asked to be linked to my blog, and I will get to that when I am at our ¨secure¨ computer at the office here in Lima.

I can hardly wait to get back in the gold game when I return...

Wed, 07/13/2011 - 08:27 | 1451121 living on the edge
living on the edge's picture

The world just moved 10-steps closer to the edge. Can the monetary magicians pull the world back from the brink? That is the question for the ages.

Tue, 07/12/2011 - 20:19 | 1449982 mynhair
mynhair's picture

Why was it comical?  Cuz it didn't hit $2000?

Tue, 07/12/2011 - 20:27 | 1449997 tmosley
tmosley's picture

Because there was no reason for it, except the reason that has been in full view since 2008, but no-one wants to accept that, but they apparently do in fits and starts without admitting it.

Wed, 07/13/2011 - 00:43 | 1450546 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1560

(or whatever, I have been working too damn hard here south of the equator these recent days to keep up!)

Tue, 07/12/2011 - 21:23 | 1450136 SheepDog-One
SheepDog-One's picture

$13 gold rise 'comical'? Why arent they calling 100 P/E stocks comical?

Tue, 07/12/2011 - 21:31 | 1450148 Tejano
Tejano's picture

Maybe because it's like slapstick - predictable. You know it's gonna' happen. You see it coming. When it goes 'BAM', you laugh anyway.

But here, unlike in slapstick comedy, there may be actual physical damage inflicted.

Tue, 07/12/2011 - 20:20 | 1449983 BC6
BC6's picture

Gold is transitory

Tue, 07/12/2011 - 21:35 | 1450156 goldenbuddha454
goldenbuddha454's picture

so are my huevos

Tue, 07/12/2011 - 22:54 | 1450372 Crisismode
Crisismode's picture

Huevos Rancheros. Spicey and hot. Smack the lips now.

Tue, 07/12/2011 - 20:23 | 1449990 Hannibal
Hannibal's picture

Keep stacking.

Wed, 07/13/2011 - 02:00 | 1450649 mr_T
mr_T's picture

Bought more buffalos two weeks ago and those nice 5oz silver national parks... APMEX rocks they ship international.. small plug... Hard to find a good EU online dealer... About 70% pm now.. loaded up on some miners as well. Average up.. I will buy more Au above 1650..

Tue, 07/12/2011 - 20:25 | 1449994 chump666
chump666's picture

More comedy.  The clowns of the market (China and Japan) are begin the intervention cues.  Japan on the AUD/JPY cross and China saying it will drop a trillion yuan into various economies.

Tue, 07/12/2011 - 22:56 | 1450377 Crisismode
Crisismode's picture

China and Japan can carry the water from one side of the ocean to the other, and you know what? Sea level remains the same.

Tue, 07/12/2011 - 20:28 | 1449998 spinone
spinone's picture

I'm afraid a bout of deflation when the monetary interventions finally fail will kick the legs from under all asset classes.

Tue, 07/12/2011 - 20:38 | 1450021 Kali
Kali's picture

Thats when ya back up the truck!

Tue, 07/12/2011 - 21:40 | 1450177 mayhem_korner
mayhem_korner's picture

It's still about relative purchasing power.  Doesn't matter if gold drops to 500 FRNs per oz  if it still is able to purchase 300 gallons of diesel.

Tue, 07/12/2011 - 23:33 | 1450437 FeralSerf
FeralSerf's picture

A Sopwith Camel won't run very well on diesel.

Tue, 07/12/2011 - 20:29 | 1449999 caerus
caerus's picture

New highs?  Adjusted for inflation?  long the all-star game...out

Tue, 07/12/2011 - 20:29 | 1450001 ddtuttle
ddtuttle's picture

Small correction: gold is not a dollar denominated asset, the dollar is a gold denominated asset.

Tue, 07/12/2011 - 21:03 | 1450085 ATM
ATM's picture

as are all currencies

Tue, 07/12/2011 - 23:36 | 1450430 cranky-old-geezer
cranky-old-geezer's picture

Neither is correct.

It's a forex thing.  GOLDUSD, GOLDEUR, etc.

Gold has been true money for 5,000 years.  Paper currencies are a flash in the pan.  They come and go, as will the US dollar, as will the Euro, etc.

Gold and silver are the only constitutional money in America. And no, it doesn't mean gold-backed paper nor silver-backed paper.  It means gold and silver.  The actual metal.

Tue, 07/12/2011 - 20:31 | 1450002 jack stephan
jack stephan's picture

I get "Youre overbearing", fine, great.

"Ok, well why is it nation after nation is buying gold stockpiles?"

Duhhh, which way did he go, boss? Best Mel Blanc voice

Tue, 07/12/2011 - 20:31 | 1450003 SilverIsKing
SilverIsKing's picture

Gold tastes great too.

Tue, 07/12/2011 - 21:52 | 1450210 Frankie Carbone
Frankie Carbone's picture

Yes it does. One thing you might want to do when drinking Goldschager is to recycle the gold that passes through your system.

Think about it. You've got a case of Goldschager stowed away for sippin'. It's late 2012 and you're watching the human tragicomedy play out from your front lawn (AR-15 at your side of course).

And you're sipping a Goldschager. Gold's price is out of the stratosphere.

Ahh, but a problem...

Later than evening, or with the morning dump, you're gonna crap out enough gold flakes to buy a month's worth of groceries. Perhaps even a side of beef.

Might want to figure out how to get those flakes out of your steamy pile, if you know what I mean.

Tue, 07/12/2011 - 23:00 | 1450384 Crisismode
Crisismode's picture


Do it on the front end.

Pour the Goldschlager through a coffee filter BEFORE you drink it.

1. You still get all the alcohol into your belly.

2. The coffee filter is still there in the morning with all the flakes intact.



Wed, 07/13/2011 - 08:06 | 1451072 Reptil
Reptil's picture

you actually thought about this ahahaha


I'm heading for the liquor store now...

hahaha wat a nice waste of time.

Tue, 07/12/2011 - 21:53 | 1450223 MagicHandPuppet
MagicHandPuppet's picture

Less filling!

Tue, 07/12/2011 - 20:32 | 1450005 Helena Bonham-Carter
Helena Bonham-Carter's picture

  And then believe me, my love is as fair,
  As any mother's child, though not so bright
  As those gold candles fixed in heaven's air:
    Let them say more that like of hearsay well,
    I will not praise that purpose not to sell.

Tue, 07/12/2011 - 20:33 | 1450007 apberusdisvet
apberusdisvet's picture

Within a month we will know the effects of the PanAsian Exchange; let's hope the Chinese go all in.

Tue, 07/12/2011 - 20:43 | 1450031 DavidPierre
DavidPierre's picture

One more huge reason the New Pan Asia Gold Exchange will end Western naked shorting. The Asian Exchange plans to open with 100 million ounces of silver in hand.


This alone could easily cause severe silver shortages that will directly affect the ability of all naked shorts to cover.

First, the new exchange will have rules against naked shorting any contract and unlike the West, the rules will be inforced with severe penalties for braking them.

Secondly, when the world's traders see that naked shorting will not be tollerated on the new exchange, honest traders will flock to the new exchange and abandon the corrupt Western Exchanges.

Third, the growth of the new exchange will force all exchanges to clean up their act or lose most volume and all trust. Investors will embrace the exchange they trust the most.

Fourth, All demands for delivery will be honored with actual bullion, not cash. If redemption is fast, all investors will take notice and a huge amount of bullion could quickly transfer from the West to the East causing the Western exchanges to implode.

Tue, 07/12/2011 - 20:59 | 1450075 doesmybuttlookf...
doesmybuttlookfatinthis's picture


Tue, 07/12/2011 - 21:44 | 1450185 Tejano
Tejano's picture

Trust the party bosses to run a "clean" market? Maybe, maybe not. But who needs aircraft carriers when you've got a PAGE?

Tue, 07/12/2011 - 21:40 | 1450178 cosmictrainwreck
cosmictrainwreck's picture

and if they implode.....good riddance. sleazy, lyin' bitchin' hoes

Tue, 07/12/2011 - 21:59 | 1450243 Saxxon
Saxxon's picture


Tue, 07/12/2011 - 22:58 | 1450380 bakken
bakken's picture

Gee, when was the last time anyone held an honest Chinese Fan-tan game over there?  The Chinese come over to Vegas to play here since they only have to worry about the actual bad odds not the "Big Fix".

I will be truly shocked if the Pan Asian exchange doesn't collapse within two years.  That's just the odds for new 'financial" product.

Tue, 07/12/2011 - 23:39 | 1450448 Manthong
Manthong's picture

" the world will only supply about 979 million ounces this year from mine and recycling of scrap, of which it is estimated that 657 million ounces will be used up for non-investment purposes so, in effect, that leaves only 322 million ounces available this year "

Your guess is as good as mine.

I just know I'm not letting go of my ounces until the G/S ratio is in the teens and maybe not even then.

Wed, 07/13/2011 - 00:29 | 1450517 Vint Slugs
Vint Slugs's picture


Rate you -1. 

The hundred mil oz will come from mainland China.  They're the big short that the conspiracy theorists just don't understand.  Short -- but not naked.

Wed, 07/13/2011 - 00:49 | 1450556 DoChenRollingBearing
DoChenRollingBearing's picture

Always insightful DavidPierre, thanks!

Tue, 07/12/2011 - 20:33 | 1450008 static
static's picture

nice po in the miners today

Tue, 07/12/2011 - 20:34 | 1450013 static
static's picture

that was "pop"

Tue, 07/12/2011 - 23:03 | 1450389 Crisismode
Crisismode's picture



Looked like "poop" to me.

Tue, 07/12/2011 - 20:35 | 1450009 disabledvet
disabledvet's picture

this is not true. as i've tried to point using the movie Animal House as my sock-puppet "they can't do that to our pledges. Only WE can do that to our pledges!" In short while Japan and Europe move heaven and earth towards uber-dollar bliss (excellent job Japan! WTF are doing Europe???!) the USA is going all in on "the gutter." Is it good for gold? Yeeeeessssss. "And toto (silver) too????!!!!" Yeeeeeeeessss. From whence arrive the inflation? "Alas, tis but a foreign thing." Methinks they're angry, sir! "Yeeeeeeessssss." And the point is? While everyone pounds the table on "earnings! earnings! earnings!" which of course is "the mother's milk"...THERE'S ALSO THE BOOB CALLED INTEREST RATES. I'll let Robo give some examples of what...coneptually speaking of course...a "Beranke Boob" looks like...and...leave it at that. Having brought up the subject however i will "subject you" to yet another one of "Hollywood's Great Contributions to Civilization"...

and this one goes out to all you gold bugs:

Tue, 07/12/2011 - 20:37 | 1450022 zorba THE GREEK
zorba THE GREEK's picture

  Gold keeps on rising, rising, rising, into the future.

Wed, 07/13/2011 - 00:38 | 1450536 AwlDone
AwlDone's picture

Tick-Tock, Tick  Do, Do, Do, Do

Tue, 07/12/2011 - 20:38 | 1450023 DavidPierre
DavidPierre's picture

So which is it? Is Gold a "risky asset" or a "safe haven"?
You have heard both of these terms used, probably in the same day and maybe even by the same talking bobblehead on financial TV. Risk on, risk off. "Gold is up because risk is being bought today...Gold is up on safe haven buying...Gold is down because the Dollar is up on safe haven buying...Gold is down blah blah blah".
So which is it really?

First off you need to understand that we live and have lived most of our entire lives in a fiat money system where the governments have decreed their currencies as the only ones that can be used and that these currrencies have absolutely zero value behind them except for the ability of the issuer to tax. These taxes pay interest and (were supposed to) pay down principal. Secondly you need to know that these governments hate Gold because it competes with their fake currencies. This is obviously because the governments can print their currencies at will whereas Gold must actually be mined with a cost of time, labor and capital.

That said, Gold is NOT a risky asset though Washington and Wall St. would like everyone to believe this, they want to keep you in "the system", THEIR SYSTEM!.
In fact, Gold is simply money, real money. It has value because it is a "thing" that best fits the description of money. It has value because it has a cost to produce or obtain, it has value simply because it "is". In today's monetary system Gold is best described as a "safe haven" because ALL of the other currencies are not safe. Back in the old days (prior to 1932 or thereabouts) Gold was not a safe haven, it was simply money. It was "cash".
In the sense that you saw a bear market in stocks or bonds or real estate on the horizon it was a safe haven just as today when a money manager goes to a high "cash" position to avoid a market downturn or panic.
Gold WAS "cash" and "cash" was readily exchangeable into Gold.
Bank runs occurred when rumors started that their bank was running out of Gold, not Dollar bills.
If a bank made bad investments in loans or bonds or whatever, they were required to pay in Gold which in turn would spark fears that they were low on Gold!

Gold has always been a safe haven because it was "cash", however in today's world it has taken on a new definition of "safe haven". It's safe haven status now includes safety VERSUS "cash". VERSUS any and ALL paper currencies no matter which one you are using.
"The Money" needs to be replaced with something investors and savers will "trust"
THIS will happen because the current system has been abused to the point of collapse and will end as ALL Ponzi schemes have ended.

The MOST IMPORTANT characteristic of "money" in the near term is it's ability to "store value". It is for this reason that savers and investors have for 10+ years running been turning their paper currencies in for Gold, they fear losing their purchasing power.
Gold has not "gone up", it is the global paper currencies that have gone down because of overissuance!
Truly THE most important benefit to purchasing, holding and owning Gold right now is to "make it" through to the next monetary system with your wealth in tact, period! The current monetary system is in it's "death throes", a new one WILL be devised and the easiest, safest and surest way to have a head start in this new system is with a pile of Gold (and Silver). The way to be a "charter member" of the next banking system is to have ownership in the production of both Gold and Silver.

If you understand the most basic of basics (the money), then you understand all that is needed from a financial standpoint.
Gold (and Silver) are nothing more than your "bridge" from this monetary system to the next. Your mining shares because of their operating and financial leverage are what will increase your "current wealth" and make you WEALTHY as and when the next system gets up and running. Hold as much as you can and sell as little as possible to survive until the "revaluation", your true wealth depends on it!

It seems that The Perfect Storm has arrived for gold, with silver right behind it. Kicking the financial can down the road in Europe is hitting the wall … with the monster US financial market problems becoming more glaring by the day. The reasons for owning both precious metals are becoming clearer by the day too.

And what an irony. A visible Muppet host on CNBC spoke of the "crowded" gold trade this morning. Her commentator colleague then said he was short silver. The irony is that both gold and silver are among the least crowded trades ever.
For one, the open interest in both precious metals is light years off their highs.
Two, the bullish sentiment indicators are lackluster at best.
And three, there is more talk of the price vulnerability floating around than talk of grandiose higher prices. Most of the market commentary is about the risk of owning gold on the downside.

Tue, 07/12/2011 - 21:04 | 1450062 lawrence1
lawrence1's picture

A "gold bug" is someone who knows monetary history and has debugged the current fiat current system of its myths, lies and other distortions and reached the conclusion that gold and silver are the real deal, stores of value. And, thanks to the still uncrowded gold and silver trade, and to the general ignorance of the US population, we realize that gold and silver are far below their value when priced in fiat dollars, and other fiats for that matter and that is why many of us are buying PMs like there is no tomorrow because soon these trades will, indeed, be crowded. CNBC muppets are like sopranos who have resonance where there should be cerebrum.

Tue, 07/12/2011 - 23:09 | 1450400 Crisismode
Crisismode's picture

"CNBC muppets are like sopranos who have resonance where there should be cerebrum."


CNBC muppets are like sopranos because they are castrati.

Tue, 07/12/2011 - 21:08 | 1450095 James T. Kirk
James T. Kirk's picture

 ++++   Fiat money is a violation of the Prime Directive, because it is the MOST effective means, bar none, to control a population.  So, when all of us keep talking about the "value" of gold and silver in US fiat dollars, we actually lend strength to the psychological belief matrix by which the international bankers ensnare and control us.  To be blunt, every time you play the fiat markets to try and "profit" from "price moves" in gold or silver, you are actually CONTRIBUTING to the problem, by doing your part to PERPETUATE THE CURRENT SYSTEM.  To quote the Book of JAMES, "a double minded man is unstable in all his ways."   


Wed, 07/13/2011 - 08:11 | 1451086 Reptil
Reptil's picture

it is the MOST effective means, bar none, to control a population


Food. Water. Air.

Tue, 07/12/2011 - 21:27 | 1450144 Bastiat
Bastiat's picture

Her commentator colleague then said he was short silver.

I hope he is levered up and committed!

Wed, 07/13/2011 - 00:59 | 1450567 DoChenRollingBearing
DoChenRollingBearing's picture

dupe, sorry.

Wed, 07/13/2011 - 00:54 | 1450571 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, yes, yes to DavidPierre (again) and above repliers.

I have never been able to understand why people who have savings do not have at least 5% (or more) in physical gold.  A complete mystery to the lowly Bearing.

We will see what happens, and it seems like ¨it¨will happen soon...

Tue, 07/12/2011 - 20:38 | 1450025 equity_momo
equity_momo's picture

Its still taking people this long to work it out? Even before QE i think it was obvious how gold was operating. Heck go back 8 years and see how its acted every time theres been a rate cut. Outperformed equities continually.

Deflationary wipe out : flight to safety (now gold)

Hyperinflationary  money printing : flight to safety (gold)



Tue, 07/12/2011 - 20:47 | 1450046 monopoly
monopoly's picture

Funny how Robot splits when we the yellow metal moves higher.

Tue, 07/12/2011 - 21:20 | 1450128 r101958
r101958's picture

Now, now....don't speak of Robotraitor in deleterious terms?

Tue, 07/12/2011 - 21:22 | 1450133 SheepDog-One
SheepDog-One's picture

Robo is busy sending hate emails to Gentleman Jim.

Tue, 07/12/2011 - 23:12 | 1450402 Crisismode
Crisismode's picture

Robotrader is a shill for TPTB. He is a cipher for the Elites.

Pay him no mind, for he is a traitor.

Tue, 07/12/2011 - 20:48 | 1450050 gwar5
gwar5's picture

I was thinking gold would take off again in the Fall, but me rethinks it might go off this summer as some like James Turk and others have speculated.

There's a perfect clusterfuck setting up for gold. Europe is cracking up, and Bernanke can announce QE3 to bail the world out again and bring the USD in balance with the Euro and Yen.
QE3 will light the fuse.

Tue, 07/12/2011 - 22:16 | 1450285 Bay of Pigs
Bay of Pigs's picture

In the last 10-12 years, I've never seen a more bullish scenario for gold than right now. Nothing even comes close. Why? Sovereign default.

BTW, the biggest one day gain for gold is $80 on 9/17/2008. From $780 to $860. Over a 10% move.

Hardly a stretch to think it could happen again under these circumstances.



Tue, 07/12/2011 - 23:16 | 1450412 Crisismode
Crisismode's picture

Just wait until September 2012.

It will move from $1770 to $2680 in one day.

And to $3230 the next day.

As the currency collapse continues, it will pass $4500. before the end of the month.

Book it Danno.

Wed, 07/13/2011 - 01:03 | 1450588 DoChenRollingBearing
DoChenRollingBearing's picture

If society stays intact, I can hardly wait...    :-)

Read and study (requires time and effort):

$55,000 anyone?  Contact me for party details...

Tue, 07/12/2011 - 20:58 | 1450071 Atomizer
Atomizer's picture

Debase the DXY to prosperity.

Timmah tells us we have until Thursday to settle debt ceiling issues, because we need to debase our problem and shift monies to allocate IMF membership community $$ obligations.


Tue, 07/12/2011 - 20:59 | 1450076 Stoploss
Stoploss's picture

Can someone please tell me how utterly stupid i was for buying gold back at 500.

I miss that..

Tue, 07/12/2011 - 21:13 | 1450111 FeralSerf
FeralSerf's picture

I felt pretty stupid for quite some time with those K-rands I bought for $450 back in the late 1980s, especially after holding them for 10 years and they were only worth about $250.

But I was too stubborn to admit my mistake, so I still have them.

Tue, 07/12/2011 - 21:45 | 1450187 mayhem_korner
mayhem_korner's picture

Your sins are forgiven.  Please forgive me mine, as I have foolishly kept clutch on some pre-1933 coins out of nothing but sentiments.

Tue, 07/12/2011 - 23:18 | 1450419 Crisismode
Crisismode's picture

You didn't obey FDR's directive to turn them in?

The black Escalade with the black suits and sunglasses will be at your front door tomorrow.

Sorry about that.

Tue, 07/12/2011 - 21:09 | 1450099 slewie the pi-rat
slewie the pi-rat's picture

lol---what volatility curve? 

the miners confirm this report's bullish outlook for the near future, i wld say:  XAU = 210.19 + 5.56 & the HUI = 545.89 + 16.35

since yesterday, the asian, european and US markets printed red;  toronto, rich in mining stocks, closed ^up^TSX = 13234.07 + 54.32 

what about silver?  gold seems to still be the lead horse of our pair, but if gold trades as this report suggests, i think silver is well-positioned to participate fully. 

still, we know when we dig in, a good pitcher may just throw a fastball up & in, right at our head, and send us diving into the dirt.  or the hospital, if we're not ready. 

this looks like a great set-up, but that doesn't mean it is gonna pop this week or even this month. 

sure would be nice if it did, tho.

with all the talk about the crimex silver inventories going out the door, the inventories went down to the 98 million oz handle, but the banksters have re-loaded a bit to 101.5+ MM toz.  DJ Comex Gold And Silver Warehouse Stocks-Jul 12

also, there will be quite a few USDA crop reports in the next few days.  in general, prices seem to have firmed leading up to them.


Tue, 07/12/2011 - 21:09 | 1450100 zorba THE GREEK
zorba THE GREEK's picture

 "comical" gold move...

  I thought it was pretty funny too: How much $ I made while i was at the supermarket. 

  Nuk nuk nuk

Tue, 07/12/2011 - 21:11 | 1450108 Youri Carma
Youri Carma's picture

Greece set to default on massive debt burden, European leaders concede (The Guardian)

The Negative Real Interest Rates of course and the the launch of a new gold and silver exchange in China help too.

Tue, 07/12/2011 - 21:49 | 1450206 Sambo
Sambo's picture

from The Guardian:

Accepting that a Greek default was now impossible to avoid, EU governments are hoping it will be brief and "selective", not triggering a "credit event" on the financial markets that could wreak havoc on the credit default swap markets, also in the US, and unleash contagion.

Last week two of the three big ratings agencies predicted a Greek-style scenario for Portugal, downgrading its debt to junk, while predicting any private-sector involvement in the second Greek bailout being negotiated would be viewed as a default.

Those verdicts provoked rage from the EU. Viviane Reding, the EU justice commissioner, said: "Europe can't allow three private US enterprises to destroy the euro."

Either their "cartel" was smashed or "independent" European and Asian ratings agencies would be set up. "We can't have a situation where a cartel of three US enterprises decides the fates of entire national economies and their citizens," she said.

Tue, 07/12/2011 - 23:23 | 1450425 Crisismode
Crisismode's picture

And why not?

The US has decided European fate for about the last 100 years.

What else is new?


Wed, 07/13/2011 - 07:07 | 1450932 el-greco
el-greco's picture

So what has Vivian Redding been doing all this time? Did she only just discover that 3 US influenced credit rating agencies run the whole system, and that Europe doesnt have any of its own? What the hell do we pay these people for? Its a bit late to complain Vivian; go back to making stupid comments on why France has an obligation to house and feed the gypsies for free, that's about your max level of competence.  

Tue, 07/12/2011 - 21:24 | 1450129 SheepDog-One
SheepDog-One's picture

PM bashers pulling their hair out in clumps.

Tue, 07/12/2011 - 21:48 | 1450200 mayhem_korner
mayhem_korner's picture

Indeed!  I am especially chipper today, as I received a couple of nice sleeves of 2011 Austrian Philharmonic silver oz that could pass as proofs.  I think I'll email a photoshop collage of them over to JPM's PM desk pronto.


Tue, 07/12/2011 - 21:29 | 1450142 DCFusor
DCFusor's picture

Having been buying GLD on dips for the last few, I happened to have TDAmeritrade's "trade by trade" plot up today, updating about once per second on GLD; I trade the paper, core position is physical -- I think that's the best of both worlds -- I'm out of the paper more often than not, just play the fear premium there.  If the paper is ever discovered, as some suspect, to be fake, chances are I'd have been out of it anyway.

A poster above asks, so is it a risky trade or a safe haven?  Answer -- it's both.  Very long term, buying power about flat -- except you can buy more things in the future that didn't exist in the past (no ipads in cowboy days).  Shorter term, with that fear premium going on and off -- risky but profitable if played right.

At any rate, and I've never seen this before, ever -- GLD just hopped up (about $5/oz worth) between two ticks.  Utter step function in the trade dots, and the bids/asks - perfect discontinuity.  I started searching around the web for related news, nothing till this place had a mention some minutes later.  It would sure be interesting to see a better time resolution plot from maybe Nanex on that one -- very strange.  I've never seen this plot get overwhelmed like that before, never just jump several divisions between two dots with nothing between.


Tue, 07/12/2011 - 21:32 | 1450149 somaplease
somaplease's picture

Can someone please help a dummy out..

Why is this the case : "gold is now competing with the dollar for safe haven status"??

If the US economy is on the verge of default, why would anyone consider the USD a safe haven?

Furthermore..Why would this make sense: "Every time the euro weakens the Fed does what it can to strengthen it"?

You'd think the Fed wants the Euro to go to crap, to remove the Euro as a legitimate option for a possible change in reserve currency status?  Thoughts?

Tue, 07/12/2011 - 21:51 | 1450212 Sambo
Sambo's picture

The Fed is not a US entity...

Tue, 07/12/2011 - 22:13 | 1450276 AmCockerSpaniel
AmCockerSpaniel's picture

Safe haven, but for a very short time period. Gold is just the opposite. Long term (years), physical gold is the choice, because it takes more than a few clicks on the keyboard to buy and sell (also there is a price mark up to). Think of  physical gold as the super CD. Paper gold (ETF's), are not as safe as physical (you must trust others not to fraud you). So for most it's 5~10% of investments in the physical (you do trust yourself).

Tue, 07/12/2011 - 22:49 | 1450353 Jack Napier
Jack Napier's picture

JPY has actually been more of a safe haven than USD this week which probably has at least some to do with the spike in dollar denominated gold and silver. Of course metals are a better safe haven, but some people only play the paper game, and still don't get it.

The Fed wants to print away our debt, hence the race to the bottom. If the Euro tanks then the USD will get stronger as one of the better (and yes temporary) options.

The world reserve currency will either be IMF Special Drawing Rights or else a new yet to be determined currency that is beyond the oversight of mere nation states.

Tue, 07/12/2011 - 23:13 | 1450403 FeralSerf
FeralSerf's picture

". . . why would anyone consider the USD a safe haven?"

Because somebody's stupid.  A lot of expensive resources are committed to making a lot of people stupid.  There's the clergy to begin with.  Then the media, the banks, the government, the "educators".  The list goes on.  Faith is what holds it all together.

Tue, 07/12/2011 - 21:44 | 1450184 AmCockerSpaniel
AmCockerSpaniel's picture

I once owned Lucent (LU). It was a very big company, and had allot of employees. I worked for AT&T, and could see and talk with the men installing all the expensive equipment. It was my "core" holding in the market. All my life I worked for AT&T, and bought their stock (thou the company). Well in 1983 the courts broke up AT&T in many pieces. I could see Lucent making a lot of money, what with all the new start up phone companies having to buy telephone equipment. So I op'ed out of all the new companies except LU (I put all that money back into LU! I even sold some of the shares I had of stock in the market to buy... LU. It was so good for years! First I was a millionaire, then a multi millionire. LU kept going up to $90 and splitting 2 for one shares. I did not sell! The taxes would have been unthinkable. Well one night in April 2000 I went to bed thinking this quarter LU will split again. I woke up and went to my computer to see if any news was out about LU splitting again. The share price was pre opening $45. This must have been a typo?? Three margin call later in June I sold ALL @ $7.00 a share. With in 30 days LU was trading @ $ 0.86, and there was talk of delisting the stock. I said to my wife of forty years, You need to divorce me, you may be able to keep the house (I owed the IRS a lot for taxes on sell the IRA's and 401k's). Well I have come back a little, but now it's all in gold. I didn't think they could cook the books in a company like LU, what with the autoing ect. Now I think my US coins must be real too. Time will tell.

Tue, 07/12/2011 - 22:34 | 1450331 caerus
caerus's picture

Difficult to read...make it easy on yourself and buy some eagles...

Wed, 07/13/2011 - 03:16 | 1450779 AmCockerSpaniel
AmCockerSpaniel's picture

That is what I've done. I live in fear, because no one is policing the market (these hand slaps don't count.

Wed, 07/13/2011 - 01:58 | 1450644 bigwavedave
bigwavedave's picture

idiots always go all in.

Wed, 07/13/2011 - 02:58 | 1450764 AmCockerSpaniel
AmCockerSpaniel's picture

I could not agree with you more, I was a very big (all in) idiot. It was something I thought I would see coming. The number of men working ect. What I did not know was all this work was not getting payed for. All these little phone companies got deal of we will order the equipment now, and pay LU when we start making money! Well these start ups were made to fail. Start selling at way below cost, and pay big wages to the top management. At some point it would fail, and they would go down the street, and start up again under a new name. The customers got a great deal for 6 months, then switched back to the old phone company for a month or two, and them over to the next low cost start up. LU showed sails, and book the non existent payment. Every month was better than the one before. Well no one was even charged by the SEC. I'm clearly an old idiot. I just find it hard that this crime go unpunished in America. The LU CEO McGines left with a very gold parachute. The new management restated earnings going back three and half years (showing major losses to get some of the tax money back). They only went that far back because IRS rules only going that far.

Tue, 07/12/2011 - 21:44 | 1450186 Stoploss
Stoploss's picture

OMG.  I can't even respond to this.


Tue, 07/12/2011 - 21:49 | 1450201 Frankie Carbone
Frankie Carbone's picture


Tue, 07/12/2011 - 22:31 | 1450325 Juice Box
Juice Box's picture

I hear crickets chirping!

Tue, 07/12/2011 - 23:28 | 1450432 Crisismode
Crisismode's picture

The night is still young!

Wait unti you hear Uncle Ben Bernanke chirping.

Then, you will have something to worry about.

Wed, 07/13/2011 - 00:29 | 1450520 whaletail
whaletail's picture

OT: I love this site. It is so subversive it is outstanding. 

Wed, 07/13/2011 - 00:38 | 1450537 whaletail
whaletail's picture

OT: I love this site. It is so subversive it is outstanding. 

Wed, 07/13/2011 - 02:21 | 1450678 thunderchief
thunderchief's picture

Buy Silver.  It's just a better deal than gold.  You really can back the truck up at these levels.  Good luck loading up a truck of 1500+ gold. 

Wed, 07/13/2011 - 04:21 | 1450738 cranky-old-geezer
cranky-old-geezer's picture

The biggest scam of all time, which has fooled more people than anything else in human history, is:  The US dollar.

"dollar" is a unit of measurement.  Like pint or quart or gallon.   We say "a pint of milk" or "a quart of milk" or "a gallon of milk".

Originally it was a dollar of gold, or a dollar of silver.   Back when the dollar was redeemable in gold and silver.   Quite a while back.  So far back most people have forgotten it.   Or never knew it.

Today it's just "dollar".   But "dollar" by itself doesn't mean anything.   A dollar of what? 

Look at a dollar.   It says "one dollar".  That's it.   It doesn't say "one dollar of (whatever)".  It just says "one dollar".

That's the scam.   Today's dollar is just a fancy looking piece of paper.  It's not redeemable for anything. 

The Fed prints dollars on a printing press.  And we believe they have value.  That's the scam.

It's conditioning.   Decades of conditioning:

1)  We start out way back with dollars redeemable in gold and silver.   Back then everyone knew it was a dollar's worth of gold or a dollar's worth of silver.

2)  Then the Fed comes on the scene and starts issuing "Federal Reserve Notes" that look like dollars and say "one dollar".   But it's not a dollar of gold.  It's not a dollar of silver. It's not a dollar of anything.   That's where the scam started.

3)  People are conditioned to think "dollar of gold" or "dollar of silver".     The new currency, FRNs, say "one dollar".    Nobody recognizes it's a dollar of ...NOTHING.

FRNs are worthless.  They have no value.   But the entire world believes they do.  

It's the biggest scam in human history.

We think we're smarter than previous civilizations.  

But they would never have accepted worthless pieces of paper coming off a printing press, not redeemable in anything, as money.   

We bash bankers here incessantly.  I've bashed bankers  incessantly like everyione else here.

But bankers really aren't the problem.   We're the problem.  We believe their little pieces of paper have value.  

They could reduce the size of the FRN to a business card, or monopoly money,  and we'd go right along using them.  

Bankers laugh as they run more and more currency off their printing presses.   Because we think it has value.   We accept it as money.   They're not the problem.  We're the problem. 

We're the fools.  They're just taking advantage of fools.  And there's really nothing evil about that. 

Wed, 07/13/2011 - 07:20 | 1450953 SilverDosed
SilverDosed's picture

I moved all my money out of dollars and into thalers, much cooler word.

Wed, 07/13/2011 - 07:41 | 1450989 el-greco
el-greco's picture

I wonder if anyone can help out. From a US govt perspective there seems to be an argument both for and against a strong dollar. A Weak dollar, for all the reasons pointed out above in the commentaries, ie. a race to the bottom, devaluing debt etc... But arguing for a strong dollar there are also valid reasons why they would want that too; for example to preserve reserve currency status, to maintain military supremacy, to perpetuate US dollar hegemony. How can the US desire a strong euro without risking its reserve currency status? how can the US government carry out its geopolitical aspirations with a weak currency? how can the US retain the interest of creditors with a weak dollar policy? so, which is it? Would appreciate your comments, thanks.

Wed, 07/13/2011 - 07:43 | 1450995 el-greco
el-greco's picture

I wonder if anyone can help out. From a US govt perspective there seems to be an argument both for and against a strong dollar. A Weak dollar, for all the reasons pointed out above in the commentaries, ie. a race to the bottom, devaluing debt etc... But arguing for a strong dollar there are also valid reasons why they would want that too; for example to preserve reserve currency status, to maintain military supremacy, to perpetuate US dollar hegemony. How can the US desire a strong euro without risking its reserve currency status? how can the US government carry out its geopolitical aspirations with a weak currency? how can the US retain the interest of creditors with a weak dollar policy? so, which is it? Would appreciate your comments, thanks.

Wed, 07/13/2011 - 07:46 | 1451002 el-greco
el-greco's picture

I wonder if anyone can help out. From a US govt perspective there seems to be an argument both for and against a strong dollar. A Weak dollar, for all the reasons pointed out above in the commentaries, ie. currency race to the bottom, devaluing debt etc... But arguing for a strong dollar there are also valid reasons why they would want that too; for example to preserve reserve currency status, to maintain military supremacy, to perpetuate US dollar hegemony. How can the US desire a strong euro without risking its reserve currency status? how can the US government carry out its geopolitical aspirations with a weak currency? how can the US retain the interest of creditors with a weak dollar policy? so, which is it? Would appreciate your comments, thanks in advance.

Wed, 07/13/2011 - 08:16 | 1451097 nathan1234
nathan1234's picture

The US$ has been self destructing under the Fed. Soon it will be no more.

Whereas Gold can never be destroyed

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