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Gold - The Other View
With gold now dislocating from its ordained function as a dollar collapse safe haven, and today being a rare example of when both gold spot and the DXY are up, it would appear there is nothing left that can prevent gold from hitting escape velocity in the immediate future, as more and more investors tell the Fed they can take their secret bail outs of Goldman, also known as "Systemic Risk" threats, and smoke them using worthless, newly printed dollar bills, while everyone will be happy with a few extra ounces of Au, thank you very much. Yet is it time to consider the contrarian play? We present a piece by Capital Economics titled "Gold is expensive insurance against bubbles" with whose assumptions we do not necessarily agree, yet which does at least attempt to provide a counterpoint to what some (but not Ben Bernanke) consider a bubble in the making.
The problem with the report is that it really does not say anything new: the core underlying assumption is the rate of collapse of the dollar will moderate. Yet the key analysis that is sorely missing is the capital markets' perception, and evaluation, of Federal Reserve policies, as well as the continued balooning of the Fed's balance sheet, which last Thursday hit a record level. In full honesty, the CE report does present some opinion on this issue, however their conclusions that "valuations in most markets have simply returned to more normal levels and second, thatcentral banks still have the tools and the opportunity to withdraw the monetary stimulus if required to prevent bubbles from developing" leave much to be desired. Any discussion of the price of gold can not avoid at least a rudimentary perspective on the viability of the Fed's recreation of the Japanese fia(t)sco, as well as the massive amounts of excess liquidity which in our opinion are now hitting the gold market with a greater impact than stocks, as algos realize the marginal buyer in spot gold has much more pricing power than in most other asset classes.
From the report:
Our forecast that gold prices will fall back below $1000/oz by the end of this year and as low as $800/oz in 2010 depends crucially on the assumption that the dollar stages at least a partial recovery. The continued rally in gold is therefore a challenge to this view not just because prices are going up (obviously), but also because this has happened despite the recent stabilisation of the dollar. (See Chart 1.) Against the euro, for example, the US currency has been hovering at or just below $1.50 for a month, and yet the price of gold has risen by another $100/oz or so over this period. Other key asset prices have also been relatively stable in the last few weeks, including oil and equity indices, confirming that gold has developed some independent momentum.
Full report below for your consideration
h/t Robert
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Gold back to $800 would be sweet. One can only hope.
Would allow the buying spree of a lifetime.
I hope these guys are right.
Rusty (if that is your real name) I agree!
I've got just a little more "dry powder" left just in case of that eventuality, but I'd be selling some guitars and guns if we ever got below $900 (not all, of course).
Beware the man with one guitar, because he likely knows how to play it.
HAHAHA Love the man with one gun reference!!
Have to agree, if gold fell to $800 I would dance a jig. Hell gold is an investment I've been hoping I'm wrong on. I live in the US and I'm all for a strong dollar even if all our policy makers are against it. Having said that if gold hit $800 I would be with you on that buying spree...hell I'd be on a buying frenzy at any price below $1000 now.
$800 would be great! I 'backed up the VERY big delivery truck' when au was at $716 last year. At $800 the truck would be put to good use once again for large delivery. As more and more entities are demanding physical delivery and not ETF paper promises (scam) there may be only one way this ends as the US dollar, Euro and other currencies find their inherent, intrinsic and true value.
Keep buying physical gold guys/gals. Time to suffocate The Beast... and Turbo Timmy and Heli Ben.
Although, I suspect that if the "official" spot price ever got anywhere close to $800 again, it really wouldn't matter because you would likely be unable to find anyone willing to sell you any gold at that price.
Then you would end up with two prices - the official one, and the real one.
Assuming gold will hold an inverse correlation with USD is to ignore the power of "loss of confidence" in driving gold higher regardless of what the dollar is doing. We are seeing that right now with gold steadily marching higher and the dollar bouncing off the key 75 level for weeks now.
On short term basis that would be possible, then I'm going all in because when that happens EVERYBODY will be all in for gold!
I wonder how much Gold (and Silver) prices are constrained due to people just not knowing how to go about buying? Maybe these "Government Gold" ads are effective and I'm just underestimating but the big metals dealers should be getting their asses in gear and hitting the retail market with a fury.
How stupid are people??!!!
Seriously, if you can go through the loan process to buy a house, then you should be able to figure out how to buy Gold.
Idiots buy stuff on-line all the time! It's just as easy to buy a Kook or a Krug as it is to buy a DVD or a sweater...
"How stupid are people??!!!"
Is that a rhetorical question?
~more gold = ~more intelligence
~more silver than gold = ~more intelligent than above?
(that is, if historical ratios between the two return...)
But when you buy a dvd online you see the price and maybe get free shipping. Those who see a gold price , then see $100 or so tacked on for cc and shipping feel somethings wrong.
How stupid are people?
How deep is the sea?
Never underestimate the stupidity of people. That being said, I'm waiting for a retrace before I buy more gold. It's hard to get rich by buying an asset at record prices every time and now idiots I work with are talking about buying gold. To me, that means time to cool down a little.
I bought at record prices over the past 3 years and Ill tell ya, Im feeling pretty rich today! Look at that price go!
I started buying gold when it was at 320toz and silver was 4.15toz, so yeah I'm feeling pretty good today too. I'm still waiting full a pull back before I buy more gold. Silver, I'm still buying.
I didn't buy a record or a dvd or even a cd--just downloaded Don Fagen "The Nightfly" from itunes.
SilverIsKing,
You make a good point. Actually, now that you mention it, any recommendations for where to buy?
APMEX.com
BullionDirect.com
are two outfits I have used with 100% success and satisfaction over the past 5 years (although a lot more experience with APMEX).
Never had a problem with either.
http://www.gainesvillecoins.com/category/292/Gold.aspx
Great prices and service.
I have started seeing TV ads for gold 'clad' american eagle coins. I don't know if that's a new ad or not. But it's targeted at all those people who don't know how to buy real gold.
Or even why they should own gold in the first place. Sitting in La-Z-Boy: "I mean, who in the heck would pay over a thousand dollars for a shiny piece a goddang metal!"
damn. that sounded just like my father-in-law.
It's been my understanding that for a market to be in a bubble, the fundamentals supporting it would have to be weak. I don't see that with gold.
Most over applied, annoyingly overused term to date: Bubble
Most under applied, annoyingly underused term to date: Systemic Fiat Currency Collapse
"fall back below $1000/oz by the end of this year"
Are they fucking crazy? Have they been smoking the hopium instead of snorting it? Do they actually believe in a US Fiatcon rally?
I call bullshit on the bullshit!
who will bring the gold down? how and why? China will continue to buy gold despite a very unlike rally in the USD. China will depag the renminbi from the USD at a higher goldprice in nominal terms and back its own currency against their gold then. it will happen when a gold coin's value coresponds to the DOW Index in points.(4000-5000).
This argument is getting really old. We have been hearing about a dollar correction since September and now it is almost December. I do not doubt that a dollar correction could happen, I just do not think any of these people really know if, when, or why a dollar correction would occur other than their continued failed logic that because the dollar went down (in value) that it must also go back up.
Secondly they associate the purchasing of gold/silver with "speculation". Is every kind of purchase a speculative purchase now? To me speculation is when someone buys some form of capital investment without the knowledge of its value, I do not find this to be the case with gold because most investors who don't understand its value tend to hate gold and dismiss people who talk about its value as "goldbugs" to write off completely our sanity on the issue.
Thirdly I can't speak for others, but for myself, the value of gold to me was getting away from inflation. I could honestly care less if other central banks around the world try to buy up gold because the real value of it to me is not in the pent up demand for it, but as way to not suffer through any more inflation. I think the last decade of continuely lowering interest rates, bank bailouts, and yearly increasing budget deficits points to massive inflation.
While the word "speculation" used in conjunction with traditional investments is considered good or healthy, the word when used by Gold haters is considered derogatory and demeaning. It's simply a polite way of saying those fool Gold bugs have their panties in a bunch again and are chasing an archaic and useless metal who's time has come and gone.
We all know how to dis someone in polite company don't we? They are dissing Gold. When they can no longer use logic or reason to dismiss an idea, there last resort is to use ridicule and personal attacks. First they are polite, then they become malicious. Then they belly up to the window and buy.
These are some interesting comments and it's always curious to see everybody's opinions as they relate to, in this case, Gold. There's an awful lot of information out there as well as a lot of contradiction. What about these items in particular from elsewhere on ZH?
- "Most people are too stupid to know how to buy gold" (but apparently there's a large demand for it among individual investors)
- Re: Speculation in gold and from the comment above: "I could honestly care less if other central banks around the world try to buy up gold..." (couldn't this in itself continue to fuel the very speculation referenced?)
- There was an article on ZH yesterday (?) regarding the momo algo's jumping into the gold trade now and potentially having gold "go parabolic" (again, that certainly sounds like a speculative trade by the banks to me)
There's no denying that the gov't is printing insane amounts of money at an insane rate. I can't seem to get Kindleberger's quote out of my head however referencing the rise in gold from the 1970's: (paraphrased) "At one point, the price of gold was rising because the price of gold was rising."
Who knows, the fiat collapse could be right around the corner but it's all sounding just a little too 'Y2K' to me...
I need to always remind myself that the average Zero Hedge reader and/or commenter is not your average "Joe Sichs Pach" (LOL) by any stretch of my imagination. So I need to actually get away from ZH and listen to the voice of the beast.
And IMHO Gold is only now beginning to show up on average Joe's radar and only then with respect to the price getting up there. I don't think we're even close to bubble territory.
When someone walks into my office and plops down a 401(k) distribution check of say $400,000 and says they want to buy Gold because the weather man told her to do so, I will be selling that afternoon.
BTW, that happened to me in Feb of 2000 with a lady who had just retired and wanted to buy a (NASDAQ) stock IPO that morning because the channel 5 weather man said she should. I kid you not.
Consider if every man woman and child on the earth wanted just one ounce of gold? Its not possible as there is simply not enough gold above the surface scrap or otherwise.
Is that scenario unrealistic? I think not.Consider the price impact if only half of the world population pursued one oz.
The PM market is so small and has so much room to grow the thought of a present bubble is quite amusing. We haven't even touch inflation adjustd prices yet. When purchasing grams of gold becomes more prevalent then ozs bc of prices then and only then will I consider trading in SOME gold for paper and at that point it will be the yuan not the dollar. When most believe a bubble does not exist -- a bubble will exist.
Only one problem with that assumption... That every man, woman, and child on the earth has the spare purchasing power in their own currency to purchase 1 oz of gold. Remember how many people on this earth are still fighting a daily struggle for food, shelter, etc.
A better reference might be to point out how many oz.s of gold all that money on the "sidelines" could buy, and compare that to what's been mined. In which case Gold should still be upwards of the DJIA =).
If Zimbabwe is any guide, most transactions will be priced in 1/10ths of a gram.
(http://www.youtube.com/watch?v=7ubJp6rmUYM)
An interesting post could be the comparison of GOLDS Cmdty with VNGOGD99 Index ; demand in EM world is still here, it seems.
There is a fundamental piece of the puzzle missing to assume that the dollar value in other fiat currency will always have a perfect negative correalation to gold prices. In a world of massive fiat currency expansion (which we are in) then one would expect that movements of fiat currencies against each other would be muted compared to the overall inverse relationship between gold and all currencies.
Don't forget about silver, platinum, and palladium. Palladium is still massively undervalued.
Disagree; palladium and platinum never were and will never be stores of wealth or even barter material.
Trade it the way you would cobalt or any rare earth, but don't treat it like gold.
I would go mainly for gold and a bit for silver if you're planning to buy PMs.
Palladium and platinum are mainly used by industry and don't have the same kind of background as gold and silver. I don't expect they will be as good as gold as a store of wealth.
No we don't know when the dollar will rally, but it will. What gold inflation folks don't understand is that in a credit based monetary system, many (most) of te dollars in existance are credit dollars. All it takes is a strong up day on the dollar and the carry trade unwinds, asset prices collapse, and te dollar goes through the stratosphere, because real dollars (not new dollar debt) are in short supply.
Gold may hold value compared to the dollar and to other assets, bit we won't see inflation, much less hyperinflation until m1 catches up with the crumbling credit dollars.
We all ready had the inflation (muted by outsourcing labor to china) and as outstanding credit falls, deflation will continue.
M1 M2 M3 Dollar to the stratosphere blah, blah, blah...
What happens when people wake up and realize that this whole fake electronic/paper monetary system is a scam, and dont have faith in it any more?
GOT GOLD SUCKA!
When people find out dollars are in short supply, they'll run on the banks, and when the runs on the banks start, I think people will lose confidence in FRNs and in the Federal Reserve System. And I think that will be the collapse of the dollar.
You'll have a momentary dollar spike which will be impossible to time, and then hyperinflation, which will also be impossible to time.
Exactly!
WE GOT GOLD SUCKAS!
Maybe you missed the other day when ICE cancelled the USD rally.
In a fiat system the government can always create inflation. You should go read Bernankes' speech 'Deflation; making sure it doesn't happen here' to see what comes next.
Speech is too long, what's next? Huh, Tough Guy?
Whats ICE going to do when COMEX goes bust!
Can you say tungsten? Mmm just feel it as it rolls off your tongue!
When someone can present a bullet proof scenario whereby our fearless leaders won't have to continue printing money to pay our debts, I will begin to listen to arguments supporting a gold price drop of any significance. When you can print dollars endlessly with no means by which to avoid printing dollars, you cannot have an oversold condition of the dollar. In other words, how can something with an endless supply ever be oversold? More dollars, hence a weaker dollar, is a fact of life. Get used to it.
But if someone shuts-down Chopper Ben's presses (or hides the ink, toner and paper), then perahps all bets are off, no?
Not that I see that happening, mind. Just asking.
Bingo.
It seems the most common reasoning for a dollar rally is:
"Well, the DXY has been going down for quite a while now. I think we're due for a rally."
Akin to someone being in a Titanic lifeboat and saying, "Hell, everybody's clamoring to get into this lifeboat. It's a crowded trade. Let's get back on the ship. Think of the profits!"
lol...after all, 'what goes down, must come up'! ...Right?
EX-FUCKIN-ACTLY.
...sez the man with the yacht-sized lifeboat.
Gold is whatever you want it to be; inflation hedge; government hedge; real money; wealth storage; dental filler. This adaptability is the reason it has always outlived its' rivals from yap stones to fiat currency.
chart says $1,350
Well burnbright, speculation is when speculative contracts are at record highs and the price jumps $30 a day.
THE LONG OVERDUE BEAR RALLY IN THE USD STARTS ANY MINUTE
How do I know this? Because I finally put on my trades to hedge my USD revenues. As an internet business based in Canada that does 50% of its revenue in USD, we've felt the decline for years. Back around 1.20 on the USD (just after the last rally peaked) I looked at instituting a series of vanilla collars to hedge our exposure - and I dithered.
Today I finally put on the hedge, locking in rates on a sizable chunk of our USD revenues for the next year after which we'll go out another month each expiry.
So the rally starts any day now. My plan B for this, if it happens, is to lock in at higher rates even further out (adding another year on).
Good luck with that Pope. Youre still just a Paper Ponzi Shill at the end of the day, supporting an evil paper system that destroys true wealth and harms the weakest members of our society.
Good for you , making that fake paper profit with your fake paper trades!
YOURE MY HERO!
GOT GOLD SUCKA!
That was actually pretty funny, Pope.
Not as funny as Pretentious Dumbass Gold Bug 140718's response, though.
Zero Hedge was way cooler before it became a giant echo chamber of douchebag me-too metal hoarders who perpetually miss the point.
Yes, Mister Godot will be here any minute. Invest everything you have in Mister Godot's arrival. You can take that to the bank.
Or maybe not.
WHY CANT THE PAPER PONZI ZOMBIE FOLKS JUST SEE THAT THIS FAKE SYSTEM IS FINISHED.
How can the FED stop printing fake paper money? If they stop printing the Zombie banks fail (causing stupid people to run to printed dollars and the more enlightened ones to hoard Gold )still at the end the banks fail and our economic system collapses.
If they keep printing more and more funny money. Paper Ponzi Zombie citizens of the world will wake up to the scam and exchange fake paper money for Gold and our economic system will collapse.
Oh but you really brain washed Ponzi Zombie freaks are now saying, but it could be like Japans "lost decade". Really? Did Japan have the worlds reserve currency? Was Japan the worlds biggest debter nation? Was Japan fighting two endless wars?
Wake up Ponzi Freaks, the system was meant to collapse!
Got Gold Suckas!
fofoa.blogspot.com
There is a reason why everybody is not rich.
I think its good for ZH to present alternative opinions on subject matter like this-- if nothing more that to give a quick reality check into our thinking.
That being said, I don't agree with the dollar correction argument or its timing. I really don't see much getting in the way of the Fed freight train to buy MBS and agency debt. And as long as this remains in play there will be dollar pressure and gold buying.
I will, however, insert a note of caution regarding the Fed. And it goes along the lines of "watch what they do, not what they say". And actually in terms of retiring loan facilities, the Fed has actually matched talk with action. They ended the Treasury purchase program pretty close to expectations.
In other words, they are slowly reversing course from liquidity injection to liquidity neutrality. The key will be the MBS purchases. In many respects, I think the comments from the new FOMC member serves as a bit of a trial balloon in extending MBS policy. If the Fed allows the current MBS program to end on its own and delays the next round of purchasing, the dollar will correct in a big way -- and gold will go with it inversely.
Sure, I know-- "there's no way the Fed CAN end MBS purchases" will be the argument. I don't disagree. But I do know that the Fed is checking in with banks on their asset/liability status, making sure they are strong enough to bear the next wave of asset markdowns. That implies to me they are going to allow some form of liquidation event, whether that's through recognizing FASB 139 in 2010 or though halting the MBS program after March.
I would hedge accordingly at this point.
Why are there so many contrarians out there? Oh I get it - the real bubble is in contrarians! Time to short the shit out of them - and the only way I know is by buying Gold.
This is an interesting perspective...never thought of it that way. It seems that all contrarians are pointing to how many bulls there are...and maybe it is also the other way around? Which indicator tells the truth of how many are in each camp and who are these people in each camp and why are we paying attention to them? I'm getting confused.
Im shortn' the hell out of some contrarians!
In all due repect, your focus on the only an only asset class you likely own is a little blinding. Eventually, gold will win out. We get it.
In all honesty, the real bubble is not in gold-- or contrarians, for that matter.
The real bubble, as we sit here today, is in paper-related assets that have benefitted from money printing and plunge protection activities (risk premium compression).
Sure, the printing could last well over the horizon, and gold will be... golden. But then again, there may be a period when it stops-- and the volatility event stands to be huge. Some are preparing for such events, whether they happen or not.
While I have a fair share of my own portfolio in gold, I'm also partially taking hedges. I've found a great time to buy gold is when investors are fleeing like crazy out of risked-based paper assets into riskless paper assets... like this time last fall (I can't complain). The ultimate problem is that its all paper.
I'm not looking at $800 for Au like some are saying, but there are likely to be better buying opportunities. The downside is that Ben Bernanke is a money printing nut-job that won't let anything get in his way. Well... I'll take those profits, too.
Assuming one day the carry trade in the dollar will unwind, then wouldn't the dollar go up considerably, since everyone will need to unload the assets to pay back the dollars, before the value of the asset drops below what they paid for it in borrowed dollars. This would only affect the price of gold to the extent people borrowed dollars to buy gold. If this is logical, the dollar would spike, but gold would only level off at most, if not even shoot up faster, since the economy would be having another heart attack.
I think inflation is still a long ways off, since the amount of debt still far exceeds the amount of currency. After the Fed finally buys up every defaulted mortgage and the amount of currency exceeds the debt, than wouldn't that be where inflation really takes off? And in that case, the Fed owns a quarter to a third of the housing and real estate in the country and the bankers and other investors are holding the worthless money. Am I getting this all wrong? Somebody have a little knowledge here?
brodix, google waterfall through a garden hose.
If and when the carry trade unwinds its going to be a magnificent event!
GOT GOLD SUCKA!
Chill. Instead of worrying about trading short term moves, just hold gold and know that the dollar is going to die - soon. If you can do that it won't matter how many hoops the dollar jumped through before plunging to its death.
Do you really think the dollar will die? That seems a bit far-fetched. I totally disagree with the Fed's actions and I am very upset with the BS they are pulling...but I have a hard time considering the ultimate demise of the dollar...weakening yes (as it has been)...but becoming extinct? Hard to believe.
Is it possible that there are too many gold bulls out there? In my life, I haven't seen so many...and that always seems to end badly...but that doesn't mean that it can't shock me at how crazy it can get.
I don't think it's too far-fetched. If the US were to inflate away their debts, but destroy the currency, they could tie the entire thing off afterwards with a North American currency union.
This is typically the province of tin-foil-hatters ("ameros", "One-world-government", "Bilderbergers and Tril-lateralists) but it doesn't take a conspiracy theory to make this route look attractive, and from a certain angle: sensible.
argh...that would be a bummer. So if you are just sitting on cash like a responsible human being, you are sitting on a pile of chocolate in the desert sun?
is it that Bernake and company see this as the only route and they are going to go down that path unchecked? is it possible that even they have a stopping point? Or their lenders? Or...?
....Id rather be sitting on chocolate in the desert sun.
"So if you are just sitting on cash like a responsible human being..."
Responsible human beings dont support Ponzi Paper Debt Systems that enslave their fellow human beings.
Geezus, what a nutbag you are.
So tell me, do you buy your groceries and clothes with gold bullion so you aren't complicit in a fiat money conspiracy? If so, then you're a fool.
poop, time for a reality check.
fofoa.blogspot.com
Read that 'Day the Dollar Died' blog story...there's a link to it somewhere...
here: http://johngaltfla.com/blog3/2009/11/18/the-day-the-dollar-died/
it's in three parts, you have to click on subsequent blog entries for the other two.
Very well written...he is a good writer. That would suck to say the least...but it is hard for me to believe that Bernake is THAT stupid. Can't they see that this is a very real outcome and something that they want to avoid at all costs?
And...what is someone going to do with a brick of gold in this scenerio? Buy gas, water and food?
I think that's why you see people advocate also stocking up on gas, water and food, as well as buying smaller silver coins for trade.
Right now I see people selling 1 oz gold coins for FRNs on craigslist. If and when the dollar goes away, I am guessing this will become one forum for exchanging gold/silver coins for goods and services.
A lot of things seemed "far fetched" before '08, didn't they? I mean if I had told you 3 of the 5 investment banks on Wall St. will go kaput in a week, would you have believed me? Th real craziness is so many people holding dollars. Just ask around your community how many hold dollars and how many Gold - you'll get your answer. The dollar is the real bubble!
True...
I sold my real estate, because that is going down...but wtf to do with the cash? Gold...yeah...a bit maybe...but that isn't without its risks/volatility...a basked of foreign currencies like the Canadian Dollar, the Loonie, Kronor, Swiss Franc? I'm not having any fun anymore...
Trying to be risk averse, but probably sitting on a pile of TNT.
I agree real estate is going down, but trading a real asset for a currency backed 100% by toxic mortgage debt?
Talk about out of the frying pan and into the fire.
Wouldn't "soon" be considered somewhat short-term in nature?
Just sayin'...
maybe the unpredictable dollar spike is 'extra-soon'...?
At the rate the looting is progressing, I'm guessing a couple of years max.
Point well taken, Mr. Gekko.
While I'm hedging between gold and a volatility event(s), I'll admit that my biggest fear is counterparty risk on the volatility side.
In other words, "greed is good", I think, will be a dangerous phase going forward.
I think people are going to have to start amending that phrase to "greed is good when fear is also present."
Doesn't roll off the tongue quite as nicely, though.
Assetman,
I adore Gekko, Chumba, and many others who post here. I am a fan. They are spirited, funny, aggressive, and sort of wonderful assholes, like me (though I may just be an asshole). They are also sharp as hell and confident which is really appealing. I am soooo conservative, I got the courage to get into PMs because of them. I am a big girl and if the whole thing tanks, it is mine to bear the burden.
Nevertheless, you may be (notice the hedge) my favorite poster here. You are bright, minimalist, thoughtful, and don't rely on a lot of theatrics to get your points across. No brag, just the facts. This kind of strength is, well, wow. Thought I'd drop a note to tell you I appreciate you. My husband is this kind of strong. Good stuff. ;-)
Ah... way to hedge your bets, MsCreant... a creature of my very own nature!
Your comments are very much appreciated... thank you.
Gekko, Chumba and others who have articulated the "get physical with gold" theme certainly deserve a whole lot of respect, and one would be a fool to dismiss their arguments.
If there's an end game to all this, I'm in their boat.
Yeah I got a little knowledge here. PAPER MONEY IS FAKE AND IS A CRIME AGAINST HUMANITY! And if you keep putting your faith in it and the corrupt governments peddling it, your fate will be the same as theirs. TOTAL DESTRUCTION!
GOT GOLD SUCKA!
"Our forecast that gold falls below $1000/oz in 2009 and as low as $800/oz in 2010..."
Boy, I'd like a couple of bottles of what these guys are drinking and a couple of pairs of the rose colored glasses they must be wearing!
If these guys were any good they'd be making boatloads of money themselves instead of peddling their shitty forecasts - just like Prechter's EWI.
This is how it goes. Dollars will be converted to Gold and commodities. As long as the conversion is going dollar benefits from the swap spread. That extra amount that you pay when you buy gold. This will bouy dollars as the conversion goes through several iterations. Once dollars have lost monopoly status and monopoly status has been shifted over to gold the bouy effect reverses. Each conversion is a loss for the dollar and you have the wiley coyote falling off the cliff effect. His running in place keeps him afloat for a second then he falls then the rock falls on top of him.
The dollar drops during the conversion but it doesn't reveal it's true value until it's monopoly status is dissolved.
This is a planned devaluation which will lead to a loss of confidence in all paper currencies. First step was Euro. Second step is a North American currency. Eventually there will be only one paper currency. May not see it in our lifetimes but it will happen. It's all about control and monitoring what the citizenry does.
not wishing to advertise. However I buy gold through bullionvault.com and have dealt with them for 2 years. cost you 4$ storage a month. very happy with the service, taken profits 3 times and increased holding twice. They have vaults in london, new york and Zurich
"not wishing to advertise."
Have you had this problem for long?
Get delivery! How you gonna get yer gold if the house of cards collapses?
my gold is not in the in the US. so hopefully no confiscation. mmmm.... you might have a point on delivery but then I do under UK law I own the gold under bailment which is well established in UK law. There again it really depends on the severity in the collapse of the house of cards.. but if it is that bad then we're all fucked anyway.
Here is something which has contributed to me at least stockpiling physical gold, what is gold worth with the whole world coming alive; "the whole world wanting to be middle class". Them possibly wanting gold as a protector of wealth and too jewelry, now what’s gold worth??? I say without all the “drama crap” in the U.S. $3,000/ounce
Here is something which has contributed to me at least stockpiling physical gold, what is gold worth with the whole world coming alive; "the whole world wanting to be middle class". Them possibly wanting gold as a protector of wealth and too jewelry, now what’s gold worth??? I say without all the “drama crap” in the U.S. $3,000/ounce
The whole world needs dollars at least over 600,0 trillion!
So if FED,GS,Plunge team wants to make it short they will!
That is why gold is an illussion!
They all went on with this game theory dollar.
Please do not ask me what will happen with the USA.
But FED etc will win this game.
Good luck with those vaults when governments decide they need to help themselves to some of your gold. Plus a shovel is way cheaper than the storage fees your paying, Im sure.
I think gold is gold. Looking at the correlation between gold and dollar might not be the correct. Silver looks like more correlated with gold moves.
I was always intrigued by the difference between politics and economics. while politics were never considered a science 'per se', economics were presented to me as the 'master of universe' science, capable of identifying inefficiencies in the capital/quality of life production process just like physics were capable of distinguishing one quark from another. This is wrong and the econometrists <- an insult in this day and age) know it. Most of the crony mismanagement may after all be occurring due to inefficiency and stupidity, not actual willful malfeasance as we all assume. How do we change it? Your guess is as good as mine, meet you at the barricade.
Started as an econ major. Never finished. It all seemed like BS to me.
Lots of theory, never considered all the variables [which is impossible], thus, it is simply a best guess.
They can wag the dog only so many times before the fleas shake out and the dog gets shy of rolling in the grass.
The real bubble these days is in bubble calling.
For any confused Ponzi Zombies, struggling to understand the financial world we live in.
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GET GOLD SUCKAS!
As a gold bug , I've been watching the arguments for and against dollar rallies for a while now.
Fundamentally, we need a sound mathematical reason for the dollar to go higher, such as fleeing from other currencies to something considered more stable. I've seen that touted as a reason to fear a sudden rise in the dollar killing all those that have piled into commodities. Then again the natural direction of all these 'surplus' dollars the fed is printing and giving to the banks IS commodities, which leads to inflation, which leads to hyperinflation. It's purely logical.
This is not tea leave mumbo jumbo, this is fact based mathematical science. Accordingly, we need the reason for a dollar rally.
Can someone here speculate on a good reason for a dollar rally?
margin calls my friend. the system runs on leverage. if people think the stock market has topped and the dollar is being supported by foreign central banks at USDX = 75, then they will sell their equities and get back into cash.
The black boxes will go to the short side and you will see a margin call extravaganza which will put further upward pressure on the USDX and the entire CRB index (including gold) will take a hit
You don't necessarily need a "good" reason, i.e., the Chinese might devalue.... Eastern Europe might implode... Iran might explode, etc. You're looking for a rational, mathematical reasons in a very irrational world.
Good luck with that.
I think this is where the 'black swan' theory kicks in.
war
thats about it
If you guys dont think that the dollar would rally on the next financial meltdown you're kidding yourselves.
look how the dollar rallied last year from July 08 into the mess.
Bernanke et al know they've got everbody over a barrell.
This shell game will continue until such time as they see fit to release the hounds.
Remember, we invented this game and its our sandbox and we'll show everyone how to play.
In the meantime, dont fight the tape and keep some powder dry - because when this unwinds it will be hell to pay on the markets, gold, commods etc. dollar will rally as will treasuries.
by the prickling in my thumbs something wicked this way comes
Unlike Zimbabwe, our system of fiat money is based on debt. Money is created through the banking system as debt, not green pieces of paper with dead presidents' pictures on them. It is literally a license to make money. The Fed's Quantatative easing has not resulted in more cash in the system, but more credit...which needs to be paid to somebody.
That works so long as debtors can pay. When the level of debt in a system gets so big - even at essentially zero interest rates - people lose the ability to repay. That's when the pyramid of debt collapses on itself. The Fed is trying to counteract that by monetizing treasuries, mbs's, and swapping good collateral for crap collateral on struggling institutions books.
Inflationists believe that is a one-way tickets to ruin. Deflationists think that the Fed's ballooning balance sheet is no match for the tens of trillions of debt and derivatives that started to collapse last year, and they believe are on the verge of resuming collapse soon. That tidal wave of debt being retired will overwhelm the quantative easing done to date.
Most deflationists believe that inflation will ultimately kick in in a big way, but not until debt has first unwound much more. Some further believe that the underlying money system that has existed since the Federal Reserve Act was first passed has already fostered a slow motion hyperinflation, with the value of the dollar having lost some 95% of it's value since that time, at the same time fostering the giant expansion of debt.
Either way, unless laws are changed and a "greenback" money system of US Notes reinstated (and thus bypassing the Fed in money creation), all that debt money represents someone's promise to pay . More claims exists than can be satisfied.
When more claims exist than can be satisfied, there will be a scarcity of dollars to pay those claims. Thus the improbable dollar rally.
I like and own lots of gold, but I think you have to keep things in perspective to gain the most wealth.
If gold goes back down to $1000 ask: why?
Does it look like they will be raising interest rates?
Remember, Gold has been tamed before, by Paul Volcker.
If they get rid of Helicopter Ben and bring out Volcker, I would dump half my holdings that day.
It may be time to consider the contrarian play, but only if the dollar strengthens from here.
admin
http://invetrics.com
No one wants to hear this but the reason fiat currencies exist worldwide is because the world wants a handout. The banksters argued that creating fiat money would provide the "elasticity" needed for economic growth and the avoidance of recessions--but the argument was disingenuous. What they really wanted was leverage over you.
What if you're getting the biggest dollar handout ever (Goldman-Sachs)? You're not producing wealth.........and you know it. Think all that money will ever get spent or do you any good? Won't it just lay dormant in some account somewhere? Think Teddy Kennedy lived a happy fulfilled life? Seems to me the Kennedy family is (and was) perfectly miserable. Not exactly what old Joe Kennedy (the GS of the 20s/30s) had in mind. Are youe paying attention Lord Blankfein?
Or what if you're a lesser offender? A starving musician on food stamps has that hand out. Think s/he would ever produce the sounds of a Don Fagen ("The Nightfly")? Not likely.
I doubt Lord Blankfein has ever heard Don Fagen.
Whether the taxpayers bail out those with their hands out or not is irrelevant to those of us who know how to produce wealth and pioneer on. We have confidence that we know why we're on the planet. Get out of debt. Buy silver, platinum, palladium, and gold (no counterparty risk). Play the markets if you want to. Leave enough FRNs in the bank to pay your taxes (if the Feds devalue they can go float for their taxes).
My definition of success is to shoot your age in golf. Remember, in this world there is no free lunch.
have you considered that it's the DOLLAR that is a bubble, and gold is just reflecting that? wouldnt india's purchase at 1,045 and china's 980 +/- set those firm support levels? isn't there a huge underlying, pent up demand on dips for a gold bull market? is the dollar going to get more valuable?
hedge either way. cash and gold for the extreme position.
only way gold goes down is a strong dollar. no way rates go up. that kills EVERYTHING: housing, international corporate earnings, stock markets, and the debtor government.
a strong dollar benefits the american public. do you REALLY think anything will happen that actually benefits the people of this country?
Got one small question. United States Bullion Depository has a half a ounce of gold for every man, woman an child in the country.If the Government was going to default or not be able to pay its debt, an sold gold, all its gold, what would the price be? I dont think it would be 1200 very long.
You mean a 1/2 oz au-plated TUNGSTEN don't you?
This would NEVER happen.
Why sell a real asset in exchange for FRN's that you can simply conjure into existence for free?
The US/FED have an infinite ability to pay US dollar denominated debt.
@141389
Did you know that the Lebanon has greatest gold security?
Intrigued by the idea that the dollar was approaching full backing by gold in the 1970s, we looked into "gold security", measured as GDP($)/gold reserves($). And guess what? The Lebanon is the most gold secure country, followed by Switzerland. The US is (just) above trend; the UK well below. And Canada and Hong Kong are languishing near the bottom. See chart: http://blogs.ft.com/money-supply/graphics/#20