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Gold Breaks Out (Again) - $1,250 Breach Imminent

Tyler Durden's picture


The only question now is who will hit 36,000 first - gold or the Dow. Sorry Bernanke - you can't have both. The good thing with gold is that unlike stocks, gold actually trades after 10 am, unlike stocks, when just the liquidity rebate algos churn ultra high volume on ultra bankrupt companies during that time. Also, breakouts are actually validated by high volume, unlike stocks where the opposite is true as banks hope to fool gullible mom and pops into throwing their money into the Keynesian fire pit.


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Wed, 05/12/2010 - 12:58 | 346544 Hx3
Hx3's picture

To da Moon Norton! WOOT

Wed, 05/12/2010 - 13:19 | 346643 Janice
Janice's picture

Hull breach is imminent Captain Pickard.

Wed, 05/12/2010 - 15:28 | 347211 john_connor
john_connor's picture

I think everyone should start bartering in gold via your preferred online market place, e.g. craigslist or ebay.  If they don't allow asking for gold payment in the heading line, just write in the description that you will accept payment in gold only.  If enough people start doing this, well, you get the picture.


Wed, 05/12/2010 - 15:59 | 347298 Bananamerican
Bananamerican's picture

"unlike stocks, when just the liquidity rebatealgos churn ultra high volume on ultra bankrupt companies"


OH SNAP! Oh noze you di'int say DAT!!!!!!

Wed, 05/12/2010 - 12:58 | 346546 Turd Ferguson
Turd Ferguson's picture


Wed, 05/12/2010 - 12:59 | 346547 spartan117
spartan117's picture

My first post.  Gold, bitches!

Wed, 05/12/2010 - 13:01 | 346556 e_goldstein
e_goldstein's picture

"Gold, bitches!" indeed.

Wed, 05/12/2010 - 13:12 | 346595 Howard_Beale
Howard_Beale's picture

The Zazzle ZH approved fundraiser store was conceived two weeks ago when a comment was posted that a "Kill the Squid" T-Shirt was needed. In a flash of inspiration, I decided to make it and have the funds go to ZH.

So for those of you that haven't perused the store, have a gander.  New items are put up every day. So go and take a look. Window-shop--GOLD BITCHES! with an American Eagle mugs available.

Wed, 05/12/2010 - 13:16 | 346624 schoolsout
schoolsout's picture

let me replenish my FRN stash and I will gladly purchase some things


Great stuff, Howard...first time I actually looked at the site

Wed, 05/12/2010 - 13:20 | 346650 Crab Cake
Crab Cake's picture

Howard, I have not purchased my shirt yet.  I know accountability in the age of the internet is problematic, but I give you my word to support the 'Hedge and your efforts as soon as I am financially able. 

Thank you for your service, and keep up the good work.

Wed, 05/12/2010 - 13:25 | 346676 WaterWings
WaterWings's picture


Wed, 05/12/2010 - 14:03 | 346847 Howard_Beale
Howard_Beale's picture

Thanks CC....!

Wed, 05/12/2010 - 13:23 | 346664 e_goldstein
e_goldstein's picture

bought a "timmay" mug from you last week for a friend of mine.  fun stuff.

Wed, 05/12/2010 - 13:57 | 346827 waterdog
waterdog's picture

Great stuff Beale, I be putting in my order tonight for shirts and a few of the bumper sticker.

Beale, I am in Florida and it is hot as hell down here for the next 5 months. Need white caps with 'no bailout' symbol and other symbols that will fit. White tees will sell better here, dark in the fall.



Wed, 05/12/2010 - 14:46 | 346845 Howard_Beale
Howard_Beale's picture

I'll get on the white shirts...have it ready in the cue. And I'll get that hat up for you too.

Hat and T-Shirt are up!

here's the hat:


Thu, 05/13/2010 - 01:15 | 348467 abalone
abalone's picture

How about Bernanke with a ZH insignia gold chain around his neck

Wed, 05/12/2010 - 14:48 | 347058 Problem Is
Problem Is's picture

"Gold, bitches!" indeed."

You Mean, Golden Bitches?
Like the overly tanned overly stacked blondes in oh so many Robo picture posts?

Or you mean the yellow medal that gives Bernank-ster and
Timmay G that constipated look...

Wed, 05/12/2010 - 13:14 | 346607 MarketTruth
MarketTruth's picture
Welcome aboard:

1st RULE: You do not talk about FIGHT CLUB.

2nd RULE: You DO NOT talk about FIGHT CLUB.

3rd RULE: If someone says "stop" or goes limp, taps out the fight is over.

4th RULE: Only two guys to a fight.

5th RULE: One fight at a time.

6th RULE: No shirts, no shoes.

7th RULE: Fights will go on as long as they have to.

8th RULE: If this is your first night at FIGHT CLUB, you HAVE to fight.

Wed, 05/12/2010 - 13:26 | 346680 WaterWings
WaterWings's picture

9th RULE: If you have bitch-tits you can keep your shirt on.

Wed, 05/12/2010 - 14:06 | 346860 faustian bargain
faustian bargain's picture

Unless you're actually, uh, not male.

Wed, 05/12/2010 - 14:23 | 346945 WaterWings
WaterWings's picture

Maybe velobabe wants to fight! Tie both of my hands behind my back!

Wed, 05/12/2010 - 14:23 | 346950 Gordon_Gekko
Gordon_Gekko's picture


Wed, 05/12/2010 - 14:50 | 347070 Problem Is
Problem Is's picture

10th RULE: You laugh when GOLD laughs.

11th RULE: You laugh when Bennie Bernak-ster cries like he has bitch tits.

Wed, 05/12/2010 - 13:16 | 346622 JJ McApe
JJ McApe's picture


Wed, 05/12/2010 - 13:20 | 346646 Janice
Janice's picture

Yea, but we says bitchez 'round here.

Wed, 05/12/2010 - 14:22 | 346939 Hulk
Hulk's picture

Gold Biatchies!

Wed, 05/12/2010 - 22:38 | 348239 A Nanny Moose
A Nanny Moose's picture


Wed, 05/12/2010 - 13:55 | 346725 Grifter
Grifter's picture

But did you bring Noble Team with you?  ;-)

Wed, 05/12/2010 - 13:51 | 346805 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

If you could fight anyone who would you fight?

Wed, 05/12/2010 - 14:24 | 346953 Hulk
Hulk's picture

The yipster. dollar to donuts he's probably 4'9"

Wed, 05/12/2010 - 14:53 | 347080 Problem Is
Problem Is's picture

"If you could fight anyone who would you fight?"

"His ass is a wad of cookie dough..."

Wed, 05/12/2010 - 15:32 | 347232 Johnny Bravo
Johnny Bravo's picture

I'd like a crack at perchprism.

Wed, 05/12/2010 - 16:02 | 347310 Bananamerican
Bananamerican's picture

no diggety......Lloyd

Wed, 05/12/2010 - 13:03 | 346563 Popo
Popo's picture

It's important to keep in mind though, that Bernanke *will* make war on gold very soon.

The questions are:



And will he be successful in the short or long term?

Wed, 05/12/2010 - 13:07 | 346580 jkruffin
jkruffin's picture

If Bennie decides to attack Gold, then just switch to Silver and shut JP Morgan Chase out of business,  simple.

Wed, 05/12/2010 - 13:15 | 346614 Howard_Beale
Howard_Beale's picture

IMHO it is safe to own both metals long term. Until the storm is over (say a few years) there may be large price fluctations but when the global fiatsco ends, the holders of the PM's will have the goods.

Wed, 05/12/2010 - 13:09 | 346591 BobPaulson
BobPaulson's picture

Yes, yes, please Ben, take a run at gold. I want another buy opportunity. 

Wed, 05/12/2010 - 13:17 | 346627 Howard_Beale
Howard_Beale's picture

I'm with you. Give me that buying opportunity..hard to buy right now with gold bulls at an all time high of 96%.

Wed, 05/12/2010 - 13:09 | 346594 tmosley
tmosley's picture

Not really.  It was always Bernanke's intention to devalue the dollar against gold, because he thinks that is one of the things that got us out of the great depression.  He is fundamentally wrong on that, but he won't believe he is wrong under any circumstances.  He will always think that he just didn't devalue it enough.

Wed, 05/12/2010 - 13:11 | 346601 hedgeless_horseman
hedgeless_horseman's picture

Already been happening.

EVERYONE relies on the same "reported" price.

Short term, partially.  Long term, no.


Wed, 05/12/2010 - 13:16 | 346619 Misthos
Misthos's picture

Attacking gold would be monetary suicide. Which Central Bank dumps their gold first?  And wouldn't there be another Central Bank (Russia, RBI, PBoC) that would scoop it up thereby increasing their arsenal?

The US *doesn't* want China, India, or Russia accumulating too much gold, too fast.  Otherwise they could be more influential in creating a new int'l reserve currency - to the detriment of the US.


Wed, 05/12/2010 - 13:18 | 346638 Howard_Beale
Howard_Beale's picture

Attacking gold does not mean any Central Bank would dump their gold...that is a ludicrous thought. It's not for trading or profit that CB's own gold. It's not a trade.

Wed, 05/12/2010 - 19:52 | 347928 harveywalbinger
harveywalbinger's picture

Monetary suicide for whom?  How does it hurt them to have JPM continue to add to the enormous short position or accelerate the attack?   They own our ass.  If there is a run on physical PMs, the'll shut off the market channels & they always have the option to confiscate gold.  It's been done before under similar circumstances...  

The Central Bank (in our case the Federal Reserve  Bank), may be headquartered within the USA, but certainly does not shares the interests of the citizens of the USA.  

If  you believe the central bank gives a shit about maintaining the US dollar reserve currency status, you are mistaken.  I would even go as far as to say the central bank is totally bent on destroying the dollar & are gleeful at the thought of a new reserve currency.  And the current crop of critters are all in on it.  

The central banking system is a sovereign entity.  The sovereign to rule all sovereigns.  I suspect the Central Bank considers the US to be nothing more than a temporary leading actor in a long running play (and the poor guy happens to be nearing the end of his run at the top)...  

Wed, 05/12/2010 - 13:19 | 346645 bada boom
bada boom's picture

I don't think the central banks really care about the price of gold unless it threatens their fiat currency. 


To do that, people will have to be able to use it at the supermarket.


On the contrary, I think they would prefer people to buy gold versus buying oil, copper, and other commodities.


Gold is a harmless outlet for their inflation. 

Wed, 05/12/2010 - 13:45 | 346779 Popo
Popo's picture

Greenspan openly admitted that he cared very much about the price of gold -- but his reasoning was that it was a confidence metric for the USD. (Which is sound reasoning, imho).

If Bernanke shares the same point of view, he must be watching with increasing concern.

I think there is almost certainly a smackdown coming. Will it work? Not in the long run, no. But I do think it will shake weak hands, especially those who bought in here.

My bet is that the old goldbug truism "Sell in May, and go away" is as true as ever. I can't tell you the number of times I've seen gold run in May and June only to collapse during the summer months, and rebound in the Fall. (This timing, btw, would also inversely correlate to what I think equities will likely do over the next few months: rise sharply over the summer, and tank in the fall)

Wed, 05/12/2010 - 14:13 | 346889 faustian bargain
faustian bargain's picture

I dunno...the record seems kindof spotty on the sell-in-may thing. Maybe I'm not reading the chart right:

Wed, 05/12/2010 - 16:34 | 347385 bada boom
bada boom's picture

That metric doesn't apply when all the central banks are inflating.

Currently, the usd has risen with gold because of euro inflation.


Wed, 05/12/2010 - 13:23 | 346660 Turd Ferguson
Turd Ferguson's picture

Here's what I'm expecting any moment now:


"To fund our European obligations, the IMF hereby announces an emergency sale of 500 metric tonnes of gold. In order to expedite this process, we will accept offers as low as $1100/ounce. Thank you. Good day."

Wed, 05/12/2010 - 13:37 | 346742 tmosley
tmosley's picture

Someone would happily buy every ounce of that, and then the price would go right back up.

5000 tons might be enough to keep the price down, but 500 could be absorbed just by private demand.

Wed, 05/12/2010 - 17:12 | 347496 Cow
Cow's picture

IMF: "and of course we don't actually deliver gold, we make an entry on our official book, (aka "official gold book") that says you own it. 

You have to send us real dollars though.  Have a nice day"

Wed, 05/12/2010 - 13:50 | 346798 trav7777
trav7777's picture

no.  The shit comes unhinged when he completely loses control of the POG.  If he tries to short using paper gold, the physical market will call his bullshit.

See, bankers cannot create real gold, only derivatives of it.  Nobody holding is going to sell physical.  They will create fatal and irreperable backwardation until the fiat market comes apart. Gold's street price will rise so much that it will end up being a substitute currency or backer thereof.

Bankers can only control the price of financial instrument, not real things.  Imagine if the Fed tried to "target" the cocaine price.  Bankers have only tricks and paper products that they can control.  The real world marches to its own beat.

If BB wants to target, he will have to sell real gold.  They can only lease until the stresses crack the futures market completely.

Wed, 05/12/2010 - 13:51 | 346801 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

He has been waging this war his whole life.....

Wed, 05/12/2010 - 13:03 | 346566 SWRichmond
SWRichmond's picture

Pounce!  Pounce!  Gold Bad, fiat good!

You cant eat gold!

Beans and bullets beat gold!

Goldbugs are stupid!

TPTB always win!

We're all freaking doomed!

There now!  Just point to my post instead of reposting all this nonsense again and again in an ongoing effort to refute the truth.  Think of the effort I've saved you radical fiat bugs!

Wed, 05/12/2010 - 13:11 | 346599 SheepDog-One
SheepDog-One's picture

SWRichmond- I think for the coming times its not one or the other, gold or being well armed and supplied well against California riots on Swarzeneggers 'big massive struedel sized cuts coming' announcement today, do BOTH!

Wed, 05/12/2010 - 13:34 | 346724 DoChenRollingBearing
DoChenRollingBearing's picture

Do everything.  While you still can.

Wed, 05/12/2010 - 13:28 | 346691 Baron Robber
Baron Robber's picture

excellent, lucid posts lately SW

Wed, 05/12/2010 - 13:38 | 346747 jimijon
jimijon's picture

"We're all freaking doomed" I think originated from the Mugambo. He was an ardent gold bug years ago.



Wed, 05/12/2010 - 14:06 | 346857 WaterWings
WaterWings's picture

05/11/10 Tampa, Florida – I spend a lot of time worrying about how “We’re freaking doomed!” and thus I spend a lot of time crying in fear and occasionally screaming in outrage, a fact that has gotten me thrown out of a lot of bars, and which has not made me any new friends, either, which Suits Me Fine (SMF), actually, since everybody I meet seems to be a moron who cannot see the wisdom of buying gold, silver and oil to protect themselves against the ruinous inflation in prices that will follow the Federal Reserve’s creating So Freaking Much Money (SFMM) and all the rest of the world’s banks creating SFMM and all of the world’s governments (except Norway, Saudi Arabia and Hong Kong) deficit-spending their little pea-brains out.

Wed, 05/12/2010 - 14:24 | 346960 Howard_Beale
Howard_Beale's picture

Food is definitely a serious priority SW. I think levels of preparedness are far and wide. You can think you thought of everything and there will still be one item you needed. Thus in comes the thought of bartering. Will you trade your food or ammo for what you don't have or perhaps silver for that which you need?

I don't see myself as a "gold bug" but I own some, silver too. I see it as a long term hold since I own it from a long time ago. We don't know how it is going to go down. Most of us just think we are doomed and want to survive. We all have different viewpoints on how it will play out, from deflation to stagflation to hyperinflation. I see a global depression--that's my viewpoint. But we could all be wrong. Earth cycles could make all this fiat talk irrelevant.

Wed, 05/12/2010 - 14:54 | 347090 SWRichmond
SWRichmond's picture

Most of us just think we are doomed and want to survive

Please don't take this wrong: I am sure I am not doomed, and I am not only going to survive but prosper into the future.

Wed, 05/12/2010 - 13:04 | 346568 LoneStarHog
LoneStarHog's picture

My name is Karl Denninger and I am here to tell all of you Gold Bitches that this is all an illusion and you are being tricked. Now, knock it off with all of this gold/silver crap.

My name is Karl Denninger and I HAVE SPOKEN...You must LISTEN...Any disagreements will result in PERMANENT SUSPENSION!!!

Get off this board and get your Kool-Aid ass back to The Market Ticker...NOW!

Wed, 05/12/2010 - 13:10 | 346598 BobPaulson
BobPaulson's picture

Man, he really hurt you dude. Don't let the prick get you down.


Wed, 05/12/2010 - 13:56 | 346823 trav7777
trav7777's picture

Naw...pompous idiots are just fun to make fun of.

TF acolytes come here to rain the deflation parade on us.  Someone for shits and giggles resurrected a post from 2007.  The great "NoThing" poster, the chief deflationist on TF said that gold at 800 was a sell, soon to be boat ballast.

I've been banned from TF for like half a dozen times, the first few were for arguing peak oil and inflation.  Douchinger was himself at first an inflationist until he was talked out of it by NoThing.  He probably sold all his gold and now is hurting because his paper assets are soon to be wallpaper.  At least if goldbugs were wrong, we'd have some ballast or a rustproof doorstop.

Wed, 05/12/2010 - 14:05 | 346856 aerojet
aerojet's picture

I learned a lot from Denninger's site in 2007 and 2008, but yeah, he jumped the shark.  I got selectively banned from each forum until there were none left to post on, then I left.  I never said anything rude, just disagreed with a lot of what he was saying and I totally disagreed that "call your Congressman" accomplishes anything.  Talk about denial!  Hey, holy shit, I'm agreeing with the gold bugs today.  Damn.

Denninger is really an attention whore.

I dunno, gang.  Buy gold if you want to.  I still think you'll be taken to the cleaners somehow, it's all baked into the scheme and gold is part of that universe, too.





Wed, 05/12/2010 - 18:30 | 347680 akak
akak's picture

I have equally been befuddled by Denninger as well.  He frequently does a stellar job at analyzing the multitude of high-level crimes and insider backscratching in our financial system, yet he adamantly refuses to see the elephant in the room, the Federal Reserve, and attacks and maligns gold, its historical value in times of monetary chaos, and its advocates with a hatred and loathing matched only by that of Jon Nadler himself.  For this reason alone I am very suspicious of Denninger.

Then there is the completely iron-handed, capricious and outright authoritarian manner in which he controls his online forum.  That is his right, but I'll be damned if I'll take part in such a closed and close-minded forum.  His intolerance of dissenting opinions, and unwillingness or inability to engage in honest debate, immediately mark him as ungrounded and insecure in his own professed beliefs.  And his Prechterite insistence on the chimera of deflation under a fiat currency regime (yeah, tell me that everything going on in Europe right now doesn't prove you to be a fool on that score!), and his simplistic and frequently wild ramblings on fundamental monetary theory, all make me want to take one giant step back from this man and his theories.

Wed, 05/12/2010 - 13:51 | 346803 trav7777
trav7777's picture

You misspelt "Douchinger"

Wed, 05/12/2010 - 16:15 | 347340 Bananamerican
Bananamerican's picture

somebody recently posted over there that Karl would end up banning himself.

KD is like Captain Queeg in the Caine Mutiny muttering to himself about douchebags....

He recently had another mass purge and hissy fit...TF has become a low post count ghost town shadow of its former self...

I tried to warn KD some time back that TF was not just him...that blogs are "communities" NOT dictatorships....He banned me (lol)

Wed, 05/12/2010 - 13:04 | 346569 jkruffin
jkruffin's picture


Schwarzenegger Warns of "Terrible Cuts, Absolutely Terrible Cuts" Coming in California


United States of Greece coming?

Wed, 05/12/2010 - 13:06 | 346576 SheepDog-One
SheepDog-One's picture

'Kill me! Come on kill me nooowwww come on what are you waiting for, Im right heeeeere!!'

Wed, 05/12/2010 - 13:21 | 346654 chet
chet's picture

Get to da chop-aaah!!!

Wed, 05/12/2010 - 14:17 | 346908 Mr Lennon Hendrix
Mr Lennon Hendrix's picture
Austrian Death Machine "Get To The Choppa":

Thu, 05/13/2010 - 00:06 | 348386 A Nanny Moose
A Nanny Moose's picture

ADM rulz!

Wed, 05/12/2010 - 13:15 | 346617 PhD
PhD's picture



but dont forget the terminator has connection to skynet

Thu, 05/13/2010 - 00:07 | 348388 A Nanny Moose
A Nanny Moose's picture

but all those Dead Kennedyz own his huevoz

Wed, 05/12/2010 - 13:04 | 346570 tmosley
tmosley's picture

Why can't we have both gold and the DOW at 36,000?

Or is me brain no work good?

Wed, 05/12/2010 - 13:17 | 346629 PhD
PhD's picture

With gold at 36,000 DOW will head towards infinity

Wed, 05/12/2010 - 13:05 | 346572 SheepDog-One
SheepDog-One's picture

Everyone in my family laughed and laughed at me when I loaded gold bars at $600. So now the new paradigm (for the present millisecond) is gold up, equities up, dollar down, Euro crashed? What happened to that 'dolla carry trade'?

Wed, 05/12/2010 - 13:08 | 346584 ratava
ratava's picture

i think the swiss may have put it to sleep for good

Wed, 05/12/2010 - 13:08 | 346585 papaswamp
papaswamp's picture

Silver is at $19.65...I smell $20 coming..

Wed, 05/12/2010 - 13:22 | 346656 WaterWings
WaterWings's picture

Hells yeah! merehuman will be a king in Silver City.

Wed, 05/12/2010 - 13:32 | 346712 seventree
seventree's picture

I remember when it hit $21, I had put a big chunk of retirement savings into vaulted silver at $13, I felt so smart and so rich. Until it fell off the table and before long I was underwater and feeling like an idiot. I don't know if I will have the guts to hang in for the long term payoff, or just take the money and run.

I don't expect silver to crash big time but this is too vertical to last. Even without deliberate intervention, eventually profit takers and nervous nellies like me will force a correction that could last months or until the next financial tsunami.

Wed, 05/12/2010 - 13:38 | 346744 DoChenRollingBearing
DoChenRollingBearing's picture

Don't sell your silver.  Gold and silver should be held as insurance for loss of confidence in the system and .gov.

Don't be nervous, be happy.

Wed, 05/12/2010 - 13:39 | 346753 tmosley
tmosley's picture

More crashes are just more opportunities to stock up.

Thing is, this is much worse than 2008.  There isn't anyone in the world big enough to bail out the system this time.

Wed, 05/12/2010 - 15:46 | 347259 Bow Tie
Bow Tie's picture

yup, i don't know which rules apply right now and the sell in may rule goes out the window too if the euro-melt up continues.

2008 was a liquidity crisis with private debt at the centre, now it's sovereign debt and conversely currencies that are on the line. banking crisis turned central banking crisis?

Thu, 05/13/2010 - 00:12 | 348399 A Nanny Moose
A Nanny Moose's picture

There are two kinds of bankters in this world....those who crash, and those who print.

Place your bets ladies and germs

Wed, 05/12/2010 - 14:20 | 346924 WaterWings
WaterWings's picture

I dunno. T-bill auctions edging towards failure. No real future for 97% of Americans. What, another bailout - is that what will save us? I think we're really coming around for the final lap before something epic happens. Who knows what, but the most benign event would be devaluation. Jeez, we should be thankful for the problems we already have: Gulf disaster, volcanic disaster, socio-political disaster (we are so freaking divided and polarized), Israel has a window to attack Iran before August, South K is shrugging off a torpedo attack (WTF?) - what if H1N1 decides to cries wolf again and then actually culls the herd because we aren't "worried about that anymore". 

Who cares about the price of silver. It won't matter here pretty soon. It won't be priced in dollars, that's for sure.

Wed, 05/12/2010 - 14:29 | 346984 Gordon_Gekko
Gordon_Gekko's picture

If you own physical DO NOT SELL. The price you see posted today is completely FAKE and manipulated. Trust me, you'll find the wait well worth the time.

Wed, 05/12/2010 - 14:00 | 346826 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Once it hits $20.92 (or if JPM is done with their shorts, which they may already be) the market will begin to capitulate violently.  I estamate this should last roughly six weeks.  After, then it is REALLY of to the races.  This ends with silver being $1200-$1500 an OZ in REAL terms.

Wed, 05/12/2010 - 15:50 | 347270 Bow Tie
Bow Tie's picture

would be quite happy with $25 over the next few months. but a lot of people think it will rally pretty hard to over $30 if the lid comes off. over $1000 though?

Wed, 05/12/2010 - 16:24 | 347363 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

First Scenario:  Fine Monetary Policy

Gold should have been valued at $2500 going into this depression.  That was in '05-'07.  Then it goes up as it is a flight to safety.  Gold tops out at $5000 in 2012 and we have made it into recovery.  This scenario is with strong monetary policy (raising interest rates, etc).  In '12 Peak oil should now be obvious to anyone with an ounce of brain, and gold stays at $5000 due to diminishing returns on diminishing growth.

What they did instead:

Now consider what they did instead.  First they held gold down.  That will result in it popping up through its real price at a high velocity; instead of weighing the depression, it counters it.  Now that the momentum is gaining it pushes by its real high of $2500 and takes out $5000 before the average person has any idea what happened (this within the next 1-2 years).  Then your average Joe does not want a flatscreen TV, he wants gold.  Joe runs at gold and a bubble forms (there was no bubble in the first scenario, because monetary policy prescribes no bubbles).  Joe and Co. push prices from $5000 to $10,000 quick.  So this is the scenario of gold.

How does silver play? 

Now consider silver.  Silver has been more easily manipulated because it is a smaller market, and is also controlled by even fewer people/banks.  Silver should be $250 an Ounce with gold at $2500, and these are their fair value prices in today's world.  So then run through the latter scenario with silver, and you see the end result is $1250-$1500.  This all in REAL terms.

Wed, 05/12/2010 - 14:09 | 346872 aerojet
aerojet's picture

Seems way overpriced to me.  Better sell and buy tulip bulbs.

Wed, 05/12/2010 - 23:11 | 348297 dumpster
dumpster's picture

a burger at a buck would probly be to costly for you

Wed, 05/12/2010 - 13:09 | 346588 boeing747
boeing747's picture

Uncle Ben is the most busy man of year 2009&2010.

6:30am still in his nightmare of subprime, phone rang: stock crashed, he had to get up early to attend a rescue meeting but helicopter pilot kept knocking his door, meanwhile all phone lines rang, AIG asked for bailout when he was talking to Ken and putting Citi on hold.

Every time Gold&Oil price rising, he gets nervous when he is preparing for endless Congress Hearings. Now Paul and Grayson called his name time to time and threated to audit the Fed while he tried hard to balance .gov 'budget' every week. Here comes GS, Euro dilema and MS probes. What a life!

Why I happen to be the Fed chief of 20xx Great Depression?

Wed, 05/12/2010 - 13:10 | 346593 Missing_Link
Missing_Link's picture

Also, breakouts are actually validated by high volume, unlike stocks where the opposite is true as banks hope to fool gullible mom and pops into throwing their money into the Keynesian fire pit.


Tyler, I'll have you know that throwing your money into the money hole is a great American tradition!

(Sorry for the repeat  ...  that skit just never gets old!)

Wed, 05/12/2010 - 13:18 | 346635 John McCloy
John McCloy's picture

  Good video. Now after watching that any American Idol Zombtard should at least be able to put together how terrible the actions are taking for the long term health of this country. Laughter turns to tears and eventually turns to rage.

Thanks for the post

Wed, 05/12/2010 - 18:02 | 347619 nuinut
nuinut's picture


Oh yeah, that was fucking awesome!!


"If you love America, you throw money in it's hole."

Wed, 05/12/2010 - 13:12 | 346602 John McCloy
John McCloy's picture

Well now that the Euro and Dollar are inveresely correlated they can either let the Euro appreciate and the dollar die along with gold but not all 3. Then again when 4 out of 4 banks never lose money trading in an entire quarter becauses they collectively decide where to move the markets I suppose they can just make up new rules.

Anyone wonder how they communicate with one another and decide on the direction and moves? With the kind of money they have I am sure they each have a department thats sole purpose is to covert exchange message especially since the cellphones can be tapped so easily.

In other news Vornado with its 4,000 P/E defaulted on a loan today and the markets love it so much they gave em 2%.


Wed, 05/12/2010 - 13:28 | 346690 citizen2084
citizen2084's picture

only 2% ? based on recent trends thought at least 5%


Wed, 05/12/2010 - 15:34 | 347230 seventree
seventree's picture

Anyone wonder how they communicate with one another

Shouldn't be hard to tunnel messages inside the trade order stream. Each bank's colocated server would know how to detect and extract them. No need for encryption either, lord knows nobody is looking at these transactions.

Wed, 05/12/2010 - 13:13 | 346605 BlackBeard
BlackBeard's picture

Big fucking red light flashing in Bernanke's face.  He proceeds to mash his foot into the gas pedal.

Wed, 05/12/2010 - 13:32 | 346713 primefool
primefool's picture

Bennie Mae doesnt know from gold. They dont teach gold at Princeton. Well maybe they sometimes snigger about it in the corridoors - but in the classrooms - why gold doesnt exist .

What they teach is to monitor nonsense like "output gaps" and keep pedal to the metal at all times unless aforementioned nonsensical output gap hits some magic number. That is their religion - and they dont care how much destruction they create in its pursuit. And the congresscritters dont know nuttin bout birthin no baybies mith thcarlet.

Wed, 05/12/2010 - 13:18 | 346612 plocequ1
plocequ1's picture

Schwarzenegger just warned, " I vant your Boots , Your Jacket and Your Motorcycle"

Wed, 05/12/2010 - 13:19 | 346644 SheepDog-One
SheepDog-One's picture

'Your clothes, give them to meeee'!

Wed, 05/12/2010 - 13:18 | 346633 bernorange
bernorange's picture

"Traders and coin dealers said consumption was exceptionally strong from German and Swiss investors. The spike appears to have happened because of deep concerns in Germany about the potential inflationary impact of the European Central Bank's decision to buy up eurozone government bonds in the wake of the Greek debt crisis."

Looks like European capital is not fleeing into US Treasuries...

Wed, 05/12/2010 - 13:22 | 346658 papaswamp
papaswamp's picture

Smart move on their part.

Wed, 05/12/2010 - 13:19 | 346642 snakeboat
snakeboat's picture

So if you're a lil guy (like me) with assets stuck in a 401k... how do you go for physical gold holdings without taking out a loan or taking the early withdrawal haircut?

Wed, 05/12/2010 - 13:23 | 346659 Janice
Janice's picture

Go to and phone them....they must know something because they advertise IRA suitable holdings.

Wed, 05/12/2010 - 13:26 | 346679 Barmaher
Barmaher's picture

CEF comes to mind.  At least there is a high probability that they have the metals they say they have and it won't devolve into a ponzi scheme like GLD/SLV

Wed, 05/12/2010 - 13:32 | 346711 chet
chet's picture

I'm in the same boat for the most part.  I just started putting other money aside which I've used to buy some gold and silver.  Not much.

Only you can decide how fearful you are about your 401k, and how much you want to get into gold.  Is it worth cashing out?  It's a gamble, but up to you.  Another option would be to just cut back on what you contribute to your 401k, get that money in your paycheck, and use it to build a stash of savings (cash and/or gold) under the mattress so to speak.  It's good to have some emergency funds available anyway, not just in these "interesting times" but always.

Personally, I've moved the assets within my 401k into the conservative fund options, including a large share in money market.  Especially after last Thursday, I just don't trust the stock market.  Don't want to play in Wall Street's casino.  I think deflation is likely, so the lack of a good return doesn't bother me right now.

Wed, 05/12/2010 - 13:44 | 346772 LeBalance
LeBalance's picture

Sell it. Take the tax hit. Buy something real.

Wed, 05/12/2010 - 14:45 | 347046 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I was harping on friends to cash them, and let me burn their CASH in a bonfire.  This because a) it would be more fun for us to do it than to let BS do it and 2) it would happen no matter what.  This was two weeks ago and they thought me crazy.  I laughed so hard when I saw them this week, I said, "If you had sold when I told you, and then bought gold, you would have already made up for almost half of the tax."  Yeah I am sort of brash, but what else will it take?

Wed, 05/12/2010 - 13:48 | 346789 Pladizow
Pladizow's picture

1st - Call your 401K plan administrator and find out if you can do an in service distribution.

2nd - If you can, open a self directed IRA that allows you to buy Physical gold, dont fall for an ETF.

Wed, 05/12/2010 - 14:26 | 346964 snakeboat
snakeboat's picture

Good ideas all - phone calls to be made now.  Thanks much

Wed, 05/12/2010 - 14:28 | 346978 Hulk
Hulk's picture

Consider taking the haircut. these plans are going to end up being confiscated eventually, argentina style

Thu, 05/13/2010 - 00:30 | 348417 A Nanny Moose
A Nanny Moose's picture

indeed. USTreas already "soliciting input" on similar ideas...Camel's nose, meet Mr. Tent

Telling these fuckers "no", is like telling a 3 yr old they cannot have the friggin' cookie. So what do they do? Go get a candy bar from the cupboard, and eat that instead. When questioned about it, they point out (correctly so) that you did not say they could not have the candy bar.

At which point the beatings begin.


Wed, 05/12/2010 - 13:20 | 346648 thesapein
thesapein's picture

Don't forget to check out gold priced in EUROs. It's the most beautiful thing, especially if you look at the five year.


Wed, 05/12/2010 - 13:23 | 346653 Apocalypse Now
Apocalypse Now's picture

This should be expected.  Just yesterday I deposited a U.S. Treasury check that was a tax return refund.  The bank informed me that the check would clear to the account on Thursday, a two day delay.  I asked when my .000001% interest would begin accruing and the teller stated "Thursday".  I then stated that the situation must not be very good if the bank had to wait two days until the US Gov check clears, that apparently check kiting for any one other than a bank is illegal, and that the bank must be making a killing giving out zero interest, borrowing at zero interest, and riding the yield curve.

The teller just looked at me with a blank stare, she didn't understand a word.

Bank of Zero Hedge? I am in.

Wed, 05/12/2010 - 13:24 | 346666 WaterWings
WaterWings's picture

"That guy was weird."

"Yeah, I've seen him around town with a doomer A-board on."

Wed, 05/12/2010 - 14:07 | 346864 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Did you see "The Hills" last night?"

Wed, 05/12/2010 - 14:21 | 346934 WaterWings
WaterWings's picture

If I had a sexy girlfriend the answer would be yes. Instead I fall asleep with silver rounds in my underpants, thinking about how they will be chanting my name someday.

Wed, 05/12/2010 - 14:38 | 347021 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You and me both buddy. 

and I can't stop laughing at that comment.....

Thu, 05/13/2010 - 00:33 | 348418 A Nanny Moose
A Nanny Moose's picture

me neither...maybe its the beer?

Wed, 05/12/2010 - 16:04 | 347315 Temporalist
Temporalist's picture

Some people like metal underpanties...cha-ching!

Wed, 05/12/2010 - 15:02 | 347119 Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture

Me too. First product/service on the list: Safekeeping.

Wed, 05/12/2010 - 13:21 | 346655 Herne the Hunter
Herne the Hunter's picture

As long as I can buy oil <$200 I don't really care about gold. Oil, bitches!

Wed, 05/12/2010 - 18:25 | 347669 Moneygrove
Moneygrove's picture

Got a wood stove ???? long fire wood and spam and tuna !!!!!!!!!!!

Wed, 05/12/2010 - 13:23 | 346663 Barmaher
Barmaher's picture

Currently the best offer to sell at Bullionvault's Zurich vault is 61.1 oz at $1244.08/oz.

Meanwhile the highest bid to buy in the same vault is 93.3 oz at 1241.03/oz.


Try finding that kind of spread ANYWHERE else!


Wed, 05/12/2010 - 13:32 | 346709 thesapein
thesapein's picture

Oh, yeah, what if I looked at silver, eh?

Wed, 05/12/2010 - 13:38 | 346745 Barmaher
Barmaher's picture

Well, yeah, the current spread is 15 cents in BV's London vault for silver but at a G/S ratio of more than 63 I like that spread for gold even better. 

Wed, 05/12/2010 - 13:29 | 346693 Dr Hackenbush
Dr Hackenbush's picture

"Keynesian fire pit"  - Now THAT is funny! 

Wed, 05/12/2010 - 13:30 | 346701 strannick
strannick's picture

'as banks hope to fool gullible mom and pops into throwing their money into the Keynesian fire pit'

ahhh i love it here....

Wed, 05/12/2010 - 13:33 | 346714 lizzy36
lizzy36's picture

This is fucking insane.

Why when the market melts up 5000 points on the pitching and catching of algo's, is it rational? Why when the market goes down 1000 points one afternoon, caused by those same algo's going dry, is it irrational?

Everything has been rendered subservant to the Federal Reserve. 

Nothing matters anymore.  It is time to pack it up and go home.



Wed, 05/12/2010 - 13:42 | 346767 jimijon
jimijon's picture

Let's start a depository.

Wed, 05/12/2010 - 13:44 | 346774 Barmaher
Barmaher's picture

Who will be the custodian? Harry Wanger?

Wed, 05/12/2010 - 15:23 | 347192 akak
akak's picture

He said a depository, NOT a suppository!

Wed, 05/12/2010 - 23:13 | 348300 dumpster
dumpster's picture

you mean like a hemorrhoids depository lol

Wed, 05/12/2010 - 14:05 | 346853 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Platinum bitches!

Wed, 05/12/2010 - 14:41 | 347031 TheClub55
TheClub55's picture

Re:in service withdrawal from 401k, this can only be done if allowed by the plan (about 70% of plans allow this).  But, you have to be 59 years old... very sad for those of us a bit younger.


Wed, 05/12/2010 - 15:06 | 347139 RichardENixon
RichardENixon's picture

You can start taking it out prior to age 59 if you do it in equal increments over time, with no penalty.

Wed, 05/12/2010 - 15:02 | 347120 Seal
Seal's picture

USA monetary base = $2200 billion ; SUPPOSED USA gold supply = 8300 tons == $8283/oz Actually, we will have the DOW and the price of gold become co-incident, probably in the area of 7,000 to 10,000. I made a “vacation” trade some time ago – long gold, long silver AND TOOK DELIVERY. I’m going camping in the mountains with the dog for the rest of the week.

Wed, 05/12/2010 - 15:49 | 347267 Johnny Bravo
Johnny Bravo's picture

But that's the stupidest calculation (and reasoning) that I've ever seen in my life.

The 2.2 trillion in the US financial system is there to buy a LOT more than gold.  It's not like that money is ONLY based on gold.

The reason they eliminated the gold standard long ago is because it was no longer practical for natural growth.  (variable e, approximately 2.7)

Gold is finite.  Most other resources are not.  Growth is not.  Population growth is not.
We will NEVER return to a gold standard because our currency is backed by so much else.

The people that say our currency is backed by nothing are on dope.

We have buildings, farmland, production, etc, etc, etc.  THAT is what the dollar is backed by.

Wed, 05/12/2010 - 16:24 | 347362 Burnbright
Burnbright's picture

"The people that say our currency is backed by nothing are on dope."


No, the dollar is backed by NOTHING. Can you redeem it for something, no. It is printed or digitized at a cost next to nothing of the value it is supposed to represent. Being backed by something only ever implies that the paper is a reciept rather than a note or a debt. You are completely wrong.


"Gold is finite.  Most other resources are not.  Growth is not.  Population growth is not."

Wrong again. Every resource is finite, growth is finite, capital in all its forms is finite, population growth is finite. Secondly you can have a relatively fixed money supply and still maintain a sound currency with economic growth. In that scenario goods and services become cheaper "deflation" which benefits everyone who has saved or works.

A fiat money system only benefits the money printers and those with access to the money printers. It is the ultimate form of capital destruction as it bleeds capital dry and creates disincentive to create more capital (because you lose it through taxes, levies, inflation, etc).

Why are you paper bugs so god damn stupid?

Wed, 05/12/2010 - 17:54 | 347599 Not For Reuse
Not For Reuse's picture

Dollar is backed by the threat of violence. Internationally, oil can only be paid for in USD; domestically, taxes can only be paid for in FRN. Once two those hegemonies collapse, bye bye dollar.

Wed, 05/12/2010 - 18:54 | 347745 Burnbright
Burnbright's picture

"Dollar is backed by the threat of violence."

This is really the only unspoken backing the dollar has.

Wed, 05/12/2010 - 17:56 | 347604 ozziindaus
ozziindaus's picture

Well Johnny does make some good points. The dollars are backed by many things besides the full faith and credit of the US government.....the military for instance. Or maybe the fact that it's use is required for exchange for resources such as oil. And actually I can redeem dollars for anything imaginable that's up for sale just about anywhere in the world at anytime whether it's gold, silver or labour. It's just that the rate of exchange floats both up and down. 

But you're right, resources are finite but so are dollars. They are obviously not printed or digitized willy nilly but instead securitized. QE and all the recent liquidity injections prove that. Also check the latest SGS M3.

So if you think dollars are only worth the paper and ink required to create them, then print some up for yourself and get ready for the force you are about to face. 


Wed, 05/12/2010 - 18:55 | 347739 Burnbright
Burnbright's picture

My overall point ozzi was this,

1) To be backed by something means unequivocally that it is a receipt for some form of deposit. The dollar is not a receipt it is a debt.

2) Just because you can "trade" dollars for something does not mean it "backs" the dollar. Hence once again, it is not a receipt.

3) Just because it is finite now how many zero's does there need to be in existence for it to be infinite? It is all relative right? It is not so much that it is finite or infinite that is the problem, the problem is the production of dollars is controlled and centralized allowing for that governance to steal unchallenged.

4) Why would I counterfeit money when we all know that only the FED can "Legally"? And I don't even get your statement I wasn't advocating printing money at all.


Want to know how I know all this money printing is leading to inflation, its because ultimately through the transfer of wealth through inflation it centralizes money, so markets become more volatile, the poor become poorer (hmm and entire decade of flat household income growth), the ultra rich more wealthy (all to obvious). Look at what has been happening, we have higher volatility than ever while at the same time 5 banks in this first Q had perfect trading for the entire Q (no losses on a single day). How can that happen? There is only one possible reason. The government has decided that the banks win and we fail.

So you can either choose to subject yourself to debt slavery and keep your cash, or you can try and do something about it and use tangible assets.

Wed, 05/12/2010 - 18:40 | 347700 akak
akak's picture

"Why are you paper bugs so god damn stupid?"

Because, like the sheep who are their soul mates, it is in their nature.  Asking them to think "outside the box", or to go against the herd, or to question the orthodoxy fed to them by their masters, or to rebel against authority, no matter how corrupt, is simply inconceivable to them --- they would rather sacrifice themselves and die than do any of those things, and all too often do precisely that.

Thu, 05/13/2010 - 00:41 | 348427 A Nanny Moose
A Nanny Moose's picture

Hey man, they can only print a many fiats as there are trees on the planet. It ain't lookin to good as they cut down rainforests to make govt subsidized, enabled by money printing, enabled by....trees. Poetic Justice.


My beer expanded mind is saying Audit the Fed....then end it.

Thu, 05/13/2010 - 00:36 | 348421 A Nanny Moose
A Nanny Moose's picture

Tell that to your rugrats, and their rugrats, because their future is what backs that buck

Thu, 05/13/2010 - 00:48 | 348433 Papasmurf
Papasmurf's picture

You think most other resources are not finite?  The only thing that can be made in infinate supply is FRN's.

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