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Gold Below $1,200 As Asset Liquidations Spread Like Wildfire
The European liquidations we discussed earlier courtesy of the ECB MRO and the repo rate spike, which resulted in a massive EURUSD covering squeeze, have followed through into industrial commodities such as oil and lastly into gold. And as liquidations are merely emblematic of a broken liquidity system (as the name implies), the unwind behind the scenes must be fierce. On the other hand, as the only recourse to prevent an all out systemic collapse should the deflationary trend continue, from Ben Bernanke's perspective, is just to print more money and thus solidify the position of the precious metal as undilutable and a currency which can not be backed with toxic MBS and Greek Sov Bonds, today's sell off is a much welcomed respite for the commodity which traded at record highs as recently as this week. Also, our recent disclosure of PM market manipulation via disclosed COMEX-OTC arbing by such former behemoths as AIG then (and presumably JPM now), should only add to your comfort that once the finger on the scales is removed, the natural reaction will be that of a coiled spring.
In the meantime, here is a one year gold price chart.
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What you describe has been going on for more than 3,000 years, though for a long time it was just the growth of the mercantile class.
The playerz all play the same field, but they make up some of the rules as they go. They all know each other but most have never met. They share motivations, went to similar types of schools, and love their mothers. The faces change over the years but the knowledge gained is passed from parent to child, and eventually becomes enshrined business practice.
The game really took off about 30 years ago, hit a whole new level of intensity. Yes, someone thought they knew how to read God's playbook. A charming notion, so typically human.
3,000 years of practice at anything is pretty good. They know how to do this. The pace has gotten away from them of late, but they have new tools and they think they can manage. They've got a copy of the playbook, they know what they are doing and they think they can keep it going.
They cannot.
In the heart of every great machine sleeps its destruction. They have built a great machine to consolidate wealth. It worked, they now have all the wealth. But in success lurked failure.
The machine has nothing more to feed on and is now feeding on itself, happily tearing itself apart. They will pretend to manipulate and manage for a while, but the damage is both complete and sufficient. It will not go forward except that it devours itself entirely.
Hail the banker class, scions of the merchants of old, despoiler and destroyer of worlds.
Black Tara should be most pleased at these her favored offspring.
A very nice description. I just want very exact and correct information as the wheels are coming off.
Which is why I come here. Best site on the web for SHTF.
Yep.
cougar,
The Great Whore is about to fall............
Hey cougar
You're a pretty good writer. Enjoy your posts. Thanks for bitch-slapping that asshat too.
For those with the patience, read John Murphy's book called 'Intermarket Analysis.' It is the single most - best book on the connection between gold and deflation and then repost your replies because many people hereon don't know diddley about gold, deflation and what is coming....and it is not the messiah-dearest leader.
I am partially invested in PM's. I am not under the illusion that PM's are a panacea for every economic catastrophe. It is merely a hedge.
Can you say that you are 100% confident that we will only have a deflationary event? Even when you base your disdain on PM's in a textbook-case of deflation, you cannot be certain that the overall results will be the same as the last time it occurred. You cannot take for granted that the populace will react in exactly the same way. Remember, we have now become a nation of entitled whiners. We are "Mare-kins", we deserve this, we deserve that. Your deflationary models only hold true if there is no disruption in the economic "platform" (for lack of a better term). If things really come unhinged because folks want things - and they don't have money to buy them, what happens then? In order to appease these rioting masses, the government may decide that certain asset classes should be terminated and the wealth spread amongst the people. PM's held in the hand can be shielded from just such action.
And, my AE's are just plain purdy to look at. Like impressionist art, it takes a trained mind to enjoy them.
From Amazon's peek into the book
"Another reason for golds popularity during deflationary times is the federal Reserve's attempt to reflate [authors italics] the economy. It does this by weakening the dollar in an attempt to create a little inflation."
__
Seems pretty clear.
Now weather the attempt succeeds or not is a good question.
My great grandpa buried 50 20 dollar gold pieces in 1933. That was worth a $1000 in paper of the day. Wonder why he didn't bury 50 $20 bills, instead?
I'm guessing he was a "gold-tard"
Yeah he must have been a 'tard, huh? $1000 in 1930s was real money. You could buy 50 nice men's suits with that back then, now you can only buy one witht he grand but those 50 Double Eagles buy 50 nice suits today, or a very nice car or a hell of alot more ammo and food than that sorry ass paper bullshit.
The paper-tards want to believe so badly they'll suspend rationality in an attempt to maintain their sanity while those of us who know that a printing press cannot convey stability need not.
Paper-tards are the ones who will end up roaming the streets in search of anything to steal, anyone to kill for the meagerst scraps of real things. They are going to be the enemy.
If it comes to roaming the streets to eat/kill in major developed nations - I wish you the absolute best of luck with those gold coins. The second you produce one in hopes of some kind of barter/trade even if you think its in private, you put a mark on your head and people will come from all around to take them. If that's the scenario you are far better off with canned food and guns (which incidentally are a nice hedge against inflation in their own right and an effective call option on someone's food/gold in your scenario).
Slim,
Bro, If that is the scenario, then your canned goods, and guns, will provoke exactly the same response.
I see tons of very savvy , and intelligent people on this site(me being an exception to that ), but, I am going to sleep easy over their saftey if that situation arose.
The mindset of 98% of PM holders is Self Preservation.
That includes food,and weapons..of that I am certain.
Ironically I've had the gold conversation with a number of apparently savvy people and very very few "get it" that if it really comes down to needing physical gold inside the US because everything is finished: 1) the rest of the world was toast long before so lots of warning and 2) you best have an army to defend it and sleep very lightly at night. I'd agree that it's kind of odd that so many people are not considering this but I'd say 4/5 at least.
ATM
That's like saying in 2005 that you could buy so many suits with a McMansion. McMansions were in a bubble (and still are) just like gold is now. Gold is a commodity, and like any other asset class of this era, it will deflate as does the global credit bubble.
"I have all my money invested in blackjack. It never fails me."
"Idiot. Slot machines are the way, they yield 7% YoY, I have a spreadsheet to prove it."
"Fools all of you. You cannot beat the house. I'm in waitresses and single-malt and my returns are steady and reliable night after night."
Damn.
There were once days when a gamble meant loading up a sailing ship with local goods, setting a course for a distant land to buy their local goods, and hoping to arb the novelty factor on both ends.
Sure there were hurricanes and cannibals and the Horse Latitudes. But it was productive work creating real value. And a pale skinned quant scribbling by candlelight in the bottom of some money exchange couldn't front-run you. Much.
"Gold falls below $1200 as 200,000 recent speculative longs blow out in the Comex." A big hustle on the fourth of July weekend is common; sometimes up sometimes down. There may be some follow through on Monday / Tuesday; but not much; basically it's a buying opportunity. Neither peace nor prosperity has broken out yet.
Am I paranoid that while I WANT to buy a truckload of call options on gold at $1,300/ounce, I think the counter-party risk is so ridiculous I'd rather own actual PMs than call options on 10x as much.
Am I insane?
No
Part of being sane in an insane world.
Serious question to Gordon Gekko or the ZH community at large.
What's my counter-party risk to buy calls at $1300 (or higher) if I'm not looking to take delivery? I'd LIKE delivery, but given delay in delivery by COMEX I'd prefer to be paid in fiat and buy PMs down the street immediately.
There isn't any counter-party risk. The futures options are traded on a regulated market by a market maker that guarantees the payout, (The CME). The only risk is P&L risk.
If JPM or whoever's writing my option fails, and then CME as the guarantor breaks in turn due to a ton of naked paper shorts writers defaulting (is this possible?), then who underwrites the CME, is what I'm trying to figure.
Not to mention I'm trying to figure out how long til the merry go round ends...for all i know JPM and NYFed can run this bullshit game another 2 years before the price becomes real...
I know I'm paranoid, but i'm worried i'm not paranoid ENOUGH...
If QE2 lands what price will gold be? I want real responses not just BS.
You could mow my yard and I'll mow your yard. What an economy that would be and all we have else to do is figure out how to pay the govt the taxes we owe them for our work.
Capitol idea, but isn't that what we're doing?
Other than having an IQ over 50, one sure way to tell if an investment class is in a bubble is to gage the emotion involved in a trade. Is it possible that there is any asset class more emotionally charged than is gold? Not only that, but people still believe that gold can be used as money. That's like telling people that a sheep can be used like a woman (works for some, but not very many).
Since Gold is money, it cannot be a bubble.
lol
it sure fucking can when there's not enough gold in the world to satisfy delivery to all the futures contracts and ETF's being traded.
That would create a vacuum, not a bubble.
Bullshit. Very FEW people have ANY gold exposure at all. I'd say 2 or 3 in 100 or maybe even 1000. As far as being used for money, yes, it is. I cashed in one coin last winter and the coin shop owner plunked down $1150 cash in hundreds and fifty's. Is that clear enough for you Mr IQ above 50?
I have sold many things that are not money. Money is the sort of thing that you really don't sell for money. Money, to be used as "money," should be nearly universally accepted as such. How many stores do you know that will accept gold for payment?
You should first distinguish between a medium of exchange and a store of value. You are correct that, at present and likely for the future, the FRN is a better medium of exchange. However, gold is a much better store of value (by any number of metrics). I anticipate that this distinction will become quasi-official in the not too distant future.
If you insist that only one "money" must fill both roles, I would note in passing that, in my opinion, it is much easier for gold to become a functional medium of exchange via fractional backing through accepted media (e.g., GoldMoney) than for FRNs to become a store of value (unless as a society we intend to abolish the Fed and return to the Constitution, which is very unlikely).
Gold is off $60 bucks and people are calling for the end of a 10 year rally? Since 1980 money supply in the US has increased 10 fold and nearly 20 fold if you include revolving credit and other forms of money. Gold has to and will revalue itself to account for the increase in fiat paper.
Value gold as a ratio to anything else and you will find its undervalued. In 1980 the average US home could be purchased for 100 ounces of gold and the DJIA for 1 ounce. US home prices and the DJIA either have to fall or gold has to increase dramatically. Even in the 1930s gold performed realtively well vs. other asset classes
Finally for those arguing there is no inflation, inflation is an increase of the money supply not an increase in CPI. CPI as well know is manipulated anyways. 70% of all fiat money is USD and 50% of all dollars are held outside the US. Just wait until the foreigners (mainly asian CBs) unload their dollars in a panic and gold will skyrocket.
Nothing wrong with a correction to get the weak hands into the open
Not terribly suprising, this is pretty much what happened the last time equities started nose diving. Note, of couse, that even the heavily manipulated paper gold market significantly outperformed equities during both the last downturn and consequent bear bounce, indicating that there is significantly more confidence that even getting 1/100th of a promised delivery on gold may be less risky than holding most equities.
Great points rhyzimmer02 i couldnt have said it any better
By the way the sad thing is that the USA and W Europe will one day wake up and realize that the rest of the world has moved on without us, dumping EUR and USD to the thrash heap of history
What a surprise!! Gold is down!!! http://hopersomianonna.blogspot.com/2010/06/gasoline-is-over.html
my little friend #Alfie is growing up http://hopersomianonna.blogspot.com/2010/06/new-channel-is-borned.html when He was born was so loooonely!!
But Alfie is an inquiring mind, little bit Romantic (bear kiss on NG) and suspicious
http://hopersomianonna.blogspot.com/2010/06/ng-novagold-resources-inc.html
But pleeeease, Be polite with Him: is only a Cub!! For now....
wat
http://hopersomianonna.blogspot.com/2010/07/alfies-favorite-song.html
Well, I took one look at todays action (well, last night, I live in Australia) and was impressed. What it tells me is that gold can still move quickly. We have had a long run up now, and some sort of correction has been due. Things go down faster than they go up, so this is not entirely surprising. If you look at the long term chart you can see a few examples of this sized move before. This is hardly unprecedented, in fact, I'd go further and say it's normal.
I think quite a few things in the world are on a collision course, volatility is coming back. If you time your purchases right, you can do very well indeed, quickly. I'm itching to pick up some more silver, but want to see if it will go down any more first...
A lot of folks with their panties in a bunch tonight. For good reason.
However, today's action was utterly predictable. Next prediction: gold will now be range-bound between 1180-1260 until Labor Day or so. Only a major reversal tomorrow and a weekly close back above 1217 can prevent this now.
by Turd Fergusonon Tue, 06/29/2010 - 08:59
#441162
I'm sticking by this. Feel free to pile on if I'm dead wrong by Friday.
by Turd Ferguson
on Mon, 06/28/2010 - 16:10
#439487
I don't know if anybody really gives a shit what the fuck I say but here goes anyway.
The Evil Empire, upset that last Monday's takedown failed to produce the intended result, came back today with the exact same move, at the exact same time. Do not be surprised if they have a little more short-term success this week. In fact, in an attempt to ensure success, they will continue their interventions all the way down past 1225 this time. By sometime tomorrow or Wednesday, gold will trade all the way down to the 50-day MA, around $1220. At that point, things turn critical. If its enough to scare some weak hands, then you may get a serious rout down to 1200 and the technical damage on the weekly chart will be sufficient to keep gold penned in till Labor Day. However, after last week's action, I am optimistic that most longs are beginning to see through the manipulative powers of JPM et al. I suspect that anyone with the courage to start/add positions between 1220 and 1225 will be greatly rewarded. The move from there will blow through 1262 next time, set off all kinds of buy stops above 1265 and charge all the way to 1290 and then 1350.
The 1220 low that I predict is coming, probably within 36 hours, will be the last time you will be able to buy at that price for a long time to come, if ever.
But what do I know, I'm just a caveman...
Chin up. Events will dominate not TA.
I hear ya, J.
Santa Sinclair proclaimed months ago that, while gold was headed to 1650 on this leg up, we all had to be prepared for terrific volatility. He claims $200 intraday swings are coming. That type of shit will make today's action seem boring and uneventful.
Hey Gus,
If your game, try this one. I trade DGP and AGQ online and periodically cash out when my triggers get hit. I then exchange half the profits for physical. Re-enter the trade (I use 25% per trade to average in), once your below spot, adjust stops accordingly. Rinse and repeat.
When the tax bill comes due, just sell the ETFs to pay the bill. I'm up 50% in the online account plus physical at the house.
Hey Turd,
Your at your $1200.00,$20.00 below your called low.............
Are you TWO fisting it yet?.
Just trying to keep the faith!
Like I said, I suspected that 1220 would hold. Wrong. The momentum was just too great.
Gotta figure there will be a bounce tomorrow but I would not expect a close over 1217. The Empire has used too much force this week to allow 1217 to happen. Monday or Tuesday will probably see the first test of 1180.
Again, I could be wrong. I'm just a caveman.
Good call, Turd!
how the trolls come out to play when gold is down!
HA ha ha. ooh ooh it's all over, ha ha ha
poor shmucks
I hear ya, gf, and I don't really get it. Gold can go up almost every day and nothing is heard. Then, you get one good sharp downdraft and its like every asshole with a keyboard shows up to talk about bubbles and other nonsense. Just trying to pick fights. A lot of strange motherfuckers out there.
thanks T, I bought a piece of gold today and will continue to buy as low as JPM can knock it . And I know people who missed the boat who are telling me I was right and who will start buying for sure as it goes lower.
Gold can't lose, baby
And Jon Nadler can come here with different names and bash gold and can kiss my ass
Nadler is a gigantic douchebag, at the level of Bawney Fwank.
I wonder if he"s related to Gerry Nadler, the fat-ass prick congressman from NY? Wouldn't surprise me.
This is easy to answer....
US home prices and the DJIA either have to fall or gold has to increase dramatically
My guess is 1, Home prices and the Dow will take a huge haircut.
Johnny, don't forget to chart pairs when you are doing your TA. Chart dollars against gold since 2001, for example. Do that for gold and the Dow as well. Also, do some relative strength analysis. Report back on this homework assignment and tell us why gold has traveled far since 2001 while the Dow companies whose stocks and income are priced in dollars has gone nowhere. And please, inflation is a monetory phenomenon. Inflation has already occurred. Dollars are presently tied up on Feddie's balance sheet. When those dollars are freed up, then you will see price inflation and they will go through the economy like crap through a duck. Go to Mises.org if you would like to learn economics to go along with your TA. Good luck to you!
Bigfoot,
It is to be expected, no? We go from 7.8 oz to 8.0 oz to buy the DOW and suddenly gold looks weak? The end of the gold bull market? Just let the nay-sayers crow for now, we will need them later.
I hope all you people can pay your bills when 30 yr treasuries are yielding 2 % in 2030 and gold is back in the low hundreds. This the beginning of the end for golds 5000 year bubble. Who knows, I could be wrong, maybe there are enough Glenn beck viewers out there to make a market in the severely outdated bullshit.
Happy trading.
This statement is so economically incoherent that it doesn't even deserve a substantive reply.
Nothing to see here...move along, move along.
Bite the wax tadpole!
Languid anguish, anon.
Six purples titrate soft spasms!
SAULYSW: Buy silver when you are the most scared to buy it. Either physical, or the Central Fund people have a Canadian ETF called Silver Bullion Trust, SBT_U on the Toronto exchange, which sometimes has adequate liquidity to buy in the US as SVRZF (pink sheets).
I'm only scared of missing a bottom. I have patience, I can wait. I have some already too, just adding to the position. The curly here is that this is also somewhat an FX play, as I buy in AUD. I know what you mean though.
Don't loose your core position.Just keep on adding on big price-drops.
Wait for Q.E part 2 and then we will talk again.Happydays for real
goldbugs.Going to buy that golden buffalo on sale .jippee yeah!!
Ahhh man I just don't know about gold. Not because it isn't valuable.... But oil is($75/b), was, ($150/b), will be ($30/b) valuable.
While my brain leads me towards precious metals - my heart says stand back - invest in nothing. Buy what you need and spend your time thinking about yourself, your family and the future - rather than (clearly easily manipulated) wiggly blue lines on a chart.
Personally speaking when this whole shit-house crashes down (and soon) I don't want to care who owes me what for which holding. I want to be sat on a mountain-side laughing into my beer... purely and simply *not caring*. When you've given up on humanity, is there a higher aim?
Putting a little something away for a holocausty day is safe and easy. If $1100+ gold is a little rich for you, get into some silver. About $18 an ounce, and it's lovely to look at and hold.
A really conservative investment is some Silver Eagles from the U.S. Mint at about $22. It's a bit of a markup, but people are turning these into collector's items.
Or buy good old U.S. silver coins. "Junk Silver" coins are 90% silver and people love them Even if everything goes into the dumper, people will still sell you stuff in exchange for these babies. Current exchange rate is about 13 times face value.
I've bought coins at NW Territorial Mint
http://bullion.nwtmint.com/
I have been happy with the experience. Also, if you're willing to wait 2 months, you can buy junk silver coins at 4-10% above spot silver prices from these guys by insured mail.
No, I'm not whoring for them. I only buy their metal and don't get favors. They don't even know my name! There are lots of other dealers, including local coin shops.
No matter how much humanity sucks (and God knows it does), you've gotta be ready with something more than paper.
I'm an idiot. Just went long August silver 18.35 calls. Woot woot!
i.e. screw "money". Whether it be denoted in sheep, rectangles of paper or shiny bits of metal.
Screw money and we've got a chance. Not trying to sound like Jesus Christ here - it's just that reading these threads is a bit like a "but how can I still get rich" primer. Money is a debased concept. Your skills, your time, your presence in the lives of people around you are all that matters.
Thus endeth the lesson on money. Natural next question is "but how will "I" matter in this universe?
Good question - with a painful answer.
Each of us matters only in regard to how we have impacted the lives of others as we travel our own little path.
Money isn't the answer. It's merely a tool. It can become the goal of a demented journey, or it can be the mule that carries us along the trail.
It's hard to live without money. But it's pointless to live without a soul.
All this manipulation is chaffing my ass. Still it brings the endgame closer. Paper-tards will soon be paper targets.
Sounds familiar that one. Oil 2008?
Not trying to be a nay-sayer. But do you know who you are up against? Little man?
Completely different fundamentals. Straw man argument.
What're you worried about DV you have a metal ass!
how much of this was manipulation? I mean, look at the chart, NY opens and the usual watrfall, NY closes and it starts to slowly go up
just thought this old whore better put in a hilow.
1,034 bitchez!
back back back
back up the truck
lalalalal
whoopi, hey Toxic don't fret bud, when the wall streeters realize they are about to be bent over in the melee of the mobs looking for banker blood they'll think of you. Ahhh I can hear them now "God I wish I has built self sufficiency when I had a chance
Ouch that hurts stop that!!!"""
I can hear them now............................
Too funny
Now of course I do feel badly for the 99% of the population who have no fucking clue what's coming but that's another story. At least they'll get to bend the wall streeters over for a bit to ease their own suffering.
Timing one's physical gold purchases.
The question is how far and for how long does the unravelling occur with intermittent reflation events before the ultimate currency event (otherwise presented as hyperinflation).
My advice is just to keep buying as you have the means to buy. Wait for the dips if you can, but don't wait too long. Just keep buying.
Slow and easy fills the treasure sock.
Certainly a lot of details like that to take into consideration. Thanks windows vps | cheap vps | cheap hosting | forex vps