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Gold outperforms as more bad news from EU emerges
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The market digested some negative news today with the release of the initial claims data coming in at 484k. On the European front, news came out that the Eurozone CBs are buying Irish bonds, while Greek GDP came out at a horrendous -1.5% in Q2, well below the -1% consensus and the -0.8% in Q1.
Gold outperformed today, gaining about a percent, as sovereign debt worries come back into the picture, as well as potential reactionary policy from central banks to fight off economic contraction. Though I don’t see any convincing technicals in precious metals charts developing yet (beyond the long-term uptrend I’ve been playing on the long side on swings), there may very well be some buy (or short) triggers develop in the charts soon.
However, risk did not react altogether that poorly, and after the gap-down in equities this morning (tied to news of Cisco’s earnings report, which included very cautious comments), stocks were bid all day long and finished well off session lows, touching the 50d.
The euro had a choppy session, but is trading about 60 pips off its recent lows, bouncing off its 38.2% retracement level from its August cycle highs. The potential of a head & shoulders pattern to be developed around this level as the neckline is significant. If the EURUSD can rally to the 1.30-1.31 level, I would be inclined to add to my short position, and would consider a likely candidate for the level defining the right shoulder of the pattern. At this point this is speculation, but there are a variety of confluencing support levels around current exchange rates (the Fibo level, 100d, etc) and the EURUSD could find a short-term bid before it sets up its next wave down. Again, I’m short and expecting eventual parity; this is a short-term bullish possibility.
The AUDUSD found some buying interest around its 0.89 support level today and I’m expecting it to rally to around mid-July highs at about 0.9050. A subsequent selloff from that level (and piercing back through its 200d) would define it as a head & shoulders reversal, as well. These pervasive support levels in risk right now, regardless of if they develop into necklines of head & shoulders patterns, are very significant and should be watched carefully. Breakdowns through these levels should trigger further selling and really bring the new downtrend in full motion.
In yesterday’s piece, I noted, “I still expect the important 85 level to eventually be broken, even as early as this fall, but a bounce up to about 87.50 or its 200d may be in the cards for USDJPY and going long this cross presents an attractive risk/reward at these levels.” Today, the USDJPY bounced about 100 pips and is sitting just above 86.00 right now and is following my analysis so far. Lots of tenors of Tsy prices are at or near resistance levels, especially the 7- & 10-yrs, and as US yields see short-term oversold bounces (and as 10s30s flatten from overbought 10yrs retracing some gains), USDJPY should respond with a short-term rally. Again, I expect 85.00 to be broken eventually and on that occurrence I expect big selling in this cross.
Meanwhile, crude is approaching the apex of a large symmetrical triangle. With the double-dip economic backdrop and deflationary risks both present in the financial system and now also beginning to be priced into assets, I suspect the triangle will resolve to the downside. This setup suggests a large move is imminent and I will probably be shorting in the mid- to high-70s (if it gets there), targeting mid-50s and possibly even lower. An interesting point regarding crude is that a 100% move up in oil prices has never not preceded a recession, and the post-crash rally from $33/bbl to $87/bbl fits that criteria and adds even more credence to the double-dip thesis.
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Gold, Bitchez
That felt good.
To DoChenBearing: I did not pull out $500.
But I did go on Ebay a few weeks ago and bought a phat stack of $100T Zim notes. I've been handing them out in birthday cards and interoffice memos, etc... Most people did not think they were real. Then conversations begin. It's set off a firestorm of curiosity.
I suggest if you want to enlightened the dim bulbs, $100T Zim Bux do the trick.
I had the same experience. But I got the feeling the discussion went only as far as they saw the money then it was over.
That's an interesting idea 22nd.
Now since you responded and looking at your moniker, I'll probably have go figure out what the 22nd prime number is. Thought I was going to have an easy day...
Dupe post, sorry!
97 maybe? If I'm wrong, JUNK ME then, for trying to calculate it in my head and fingers.
Junqued. Your google machine down? :)
22nd prime=Stephen Harper of Canada...
Nope. Not a minister, political or religious.
Bearing is oh so close. The question is why the 22nd?
The 22nd prime is 79.
The atomic number of gold is 79.
Good Luck all..
You're so money, baby!
Check out the avatar, baby. I bought the 100BZD bills last year for the same purpose. Out of date.
I'm mid term bearish on EURUSD for all the reasons already known on ZH but I still think it's too early for the next leg down. Sure Greek GDP was bad but German and French GDP were quite good. (NB : France + Germany = 15 x Greece).
Pretty sure in the near future you will be sending out US$100 bills in your cards to help with the cost of parking your car for an hour while you do your shopping ..............
Question to all the gold bugs. How will gold make our country run better? TPTB already own most of the gold, therefore if we did go to the gold standard again how will that change things for the better? All forms of money throughout the ages have made those in power corrupt and those not in power slaves. They know how to manipulate fiat and they own the vast majority of gold in the world. Tell me how what little you all own will make any difference in how the US and the world is run.
As for the argument of TSHTF, I pose this. The current financial hiccup our world is experiencing is only strengthening the banksters. They are taking over the assets of failing banks, institutions and hell even countries for pennies on the dollar if not outright theft. While they keep us in fear of the sic. "Economic Collapse" underneath it all they are growing stronger. Most of us don't see this, we see the fear propaganda they are selling us and we worry and we wait. The US will come out of this stronger as a country but weaker as a class structure. The middle class is being forced to either succumb to lesser wages and more govt control or they are fighting to move up the financial ladder. Most are succumbing, it is easier. As long as they have their sports and tv they are happy.
TPTB need to have one dominant force in the world to maintain control - America is currently it. Whether this is right or wrong I am not one to judge. I just know that I would rather have the country I live in be the top dog.
That is pathetic nationalism that lead to the likes of most dictators and facist regimes. "We are better than you. We're number one!"
Who cares if everything "we" do is wrong and crushes others for resources? "Gettin' paid" is all that matters.
What happens when the "one dominant force" turns their barrels on their own people?
As far as gold, what it does is make you a sovereign entity, not as wealthy as a nation but your own individual nation free to do with your resources as you will and able to leave or stay where you see fit. Gold is freedom.
"What happens when the "one dominant force" turns their barrels on their own people?"
Agreed, however what else would you propose to rule the countries/world. we can't all go around holding hands and hoping everyone else will join with us. There will always be someone who corrupts a perfect harmony for their own rise to power. It is human nature. If all of us were holding hands and being all lovey and you were the last guy holding a weapon. By default you would be in charge. The majority of people need to be led - plain and simple.
First off, there is no "their own people." TPTB have polarized damn near everyone in some form of us vs. them ideological divides.
As for your question for proposals, my view is that one cannot rule the world, for the very reasons you lay out. The problem arises however, when the idea that one can rule others is accepted as a given, creating the apparatus that allows a tyrant to rise to power.
Hitler was empowered because he took over the remnants of one of the most advanced political social structures of his day (pre-WWI that is). Question is, without this power structure, how much power could he have gained as a mere civilian, without being seen as just another gangster lacking legitimacy as a ruler?
The world rules itself. The worst thing that can happen, is that occasionally people manage to succumb (usually in fear) to the idea that force is required to rule over others, and a small minority use this idea to create the organized crime syndicate d.b.a "government."
Temporalist is right on. Your comment is similar to FOFOA's suggestion that each of us can create our own Hedge Fund and our own Central Bank by buying gold.
in the interest of context:
Indians are the largest holders of gold per capita, how are they faring?
In a fiat world, gold is fiat by definition.
Nice to own a little but practically, useless. Without labor, capital of any form is dead.
That is somewhat disengenuous. Many Indians live as they have based on their cultural norms and acceptance of their conditions. It is your perspective that is biased on what you determine to be their "faring" when they may consider their position normal in their own country. And their caste system historically skews the per capita gold holdings.
And I agree that labor, if by which you mean ability to make money any way possible (without harming others), is the source of capital. Gold is a historic measuring stick for that labor.
Blankman,
The difference between gold and fiat money is that they have to actually have the gold in order to spend it (which is questionable at the moment), and further, they can only spend it once. They also can't slip purchasing power out of your pockets without you knowing about it. The only way they can get your money is legitimately (by producing goods or services that you will willingly trade your gold for), or through taxation (which means there is a fundamental limit beyond which you get civil unrest).
You must understand that the world progressed rapidly under a free market system through the use of a gold standard. There is no fundamental limit to the progress that is available through the use of sound money. The math just doesn't work in a fiat system. It is too easily corruptible.
Even if they do have most of the gold in the world, all they can do is spend it into the economy (meaning it is in the hands of the people), or they can sit on it, meaning that the gold that remains in the hands of the people is more valuable. As such, instead of spending a half ounce of gold to buy a hamburger, you spend a tenth of a gram. No big deal. Gold enforces honesty in government. You can't hide your spending by obscuring it with a press.
Nothing but utopian daydreaming here. How did we end up in the great depression? We were in a gold standard at the time..study the Romans.
Dude, no matter what system you design, someone is going to find a way to game the masses.
"Dude, no matter what system you design, someone is going to find a way to game the masses."
My point exactly.
Duplicate
Hi Blankman,
putting aside for the moment your last paragraph, those are excellent questions and very relevant.
Note that as a goldbug myself, I am a goldbug because I have a view on where the train is heading, and am hedging my bets so as to have a ticket on that train. Views on where we are heading, and where we ought to be heading, are of course different things; we dream about one, but prepare for the other.
Regarding your last paragraph, the ruling nation will not necessarily be a great place to be a citizen. You could well be micro-chipped, and downtrodden, and it is totally a separate issue from the monetary standard in principle (except for the country that had but loses global reserve currency status, and the problems that will explode from that).
Both the Romans and the British Empire were the world power once. Within the Roman capital, the majority I hear, were slaves. In the British Empire, read Charles Dickens to read about that society, where the upper and middle class were a skinny section, and the numerous poor were tantamount to vermin. Indeed, tiny children were used by chimney sweeps to climb up the chimneys and clean them from the inside. What good did it do them, the power of the empire?
Jim Rickards recently noted on King World News, that the Eastern half of the Roman Empire, aka Byzantium, survived its western cousin by a thousand years (it finally fell in 1453 I think, ultimately to Ottoman conquest).
Eastern Rome was perhaps the longest stint of any major power in the world. Unlike their Western Roman cousins, they were not predicated on ongoing conquest, and elected to shrink their territories to those that were loyal, and to also shrink the state. Critically, they had a gold standard throughout, and did not debase their money, like the Western Romans did. They had a flat tax of 10%, which was deemed reasonable by the citizens.
Rickards suggests that the state funded everything from taxes, and nothing by debt. So, low tax, small central government, gold standard / solid money, avoidance of debt and foreign adventures, and they lasted over 1500 years. Co-incidence?
And the once might British Empire, was on a gold standard throughout, and suffered deflation for much of the Victorian era. In spite of this, the economy and prospects for ordinary citizens were generally improving. Ditto for the USA in the similar period.
Like you say, the problem today, is where did all the gold go? Who has it?
Max, the only problem I have with what you're saying is that countries that went off the gold standard emerged from the Great Depression quicker than those that did not.
I understand the basic reasonings behind the gold standard (governemnt can't spend what it doesn't have), but being on the gold standard didn't prevent the Great Depression and hewing to it seems to have increased the length of the GD.
So with my limited faculty, it doesn't seem that a return to the gold standard is a cure-all for all that ails us.
thunderous applause.
You'll never get a gold fanatic to agree, however.
I'll make their arguments for them.
They'll just post the same tired quotes from the same failed economist about how gold is real money, etc, etc, and how the dollar will be worth nothing in three weeks, etc, etc.
Gold is the only real money, etc, etc, etc. Hyperinflation next week, etc, etc, etc
Blah blah blah.
You are correct, returning (no, progressing) to a new gold standard would only be a necessary, but not sufficient, prerequisite for economic freedom and prosperity.
But it must be pointed out that post-1913 the USA (and post-WWI, Europe) were NOT on a true gold standard, but a corrupted and Ponzified version, with the Federal Reserve having been put in place to expand the money supply by various surreptitious means with which we are by now already so familiar. Following World War I, the "gold standard" as it existed was just a facade and a fraud, and as destined to collapse as was the gold exchange standard of the Bretton Woods System that followed World War II.
As Ron Paul has often stated, we should not be seeking to return to the corrupt quasi-gold standard as it was known in the USA prior to 1933, but to move forward to a new (and hopefully honest and uncorrupted) one.
akak,
I am not sure that a gold standard is necessary or even desired. Even if it were to be a hard standard, not a corrupted one we had post 1913.
I am a big time gold bull. But, I do not think that our .gov would want to, or even could, go to a gold standard.
FOFOA may be right: he has a concept called freegold, in that gold does NOT back any currency, that gold just be left alone to reach its natural level as best wealth preserver.
I am still having trouble getting my head around the concept of freegold. But, I can be sure that gold is GREAT protection against .gov and banksters.
Of course, Ron Paul is very respected, so whatever he says is worth close examination.
DCRB, I understand you completely here. Indeed, Ron Paul and others have pointedly stated that by far the most desirable goal, above any attempt to return to a gold standard, should be to remove government from the issuance of money! THAT is the real and necessary action we should all be working toward! After that, it is his opinion that the free market would chose gold and/or silver as its monetary standard, as it almost invariably has when free to do so, but other forms of money should not just be tolerated but encouraged as well.
The only philosophical problem I have with FOFOA's "Freegold" concept is the implicit and continued acceptance of purely fiat, depreciation-prone fiat currency within it as the day-to-day circulating monetary medium. I suppose I would far prefer such a system, with gold as the ultimate store of wealth, to the corrupted and unsustainable system we have today, but why tolerate fiat at all? And really, we can already individually use gold as a store of wealth, so just how different is his Freegold system from what we already have today?
I'd love to add to your comments and that of DCRB... but, you guys have covered it very well. The old gold standard became a ghost of the real gold standard, thereby leaving a bad taste for returning to it. Treating gold as a competing currency would be best (a la FOFOA), but TPTB will not allow it! Greed hates competition.
Good perspective Max, thanks.
the top dog will be the puppy that controls the fed. any ideas.
also on gold and silver heres jeff,
http://www.bullionbullscanada.com/
"I just know that I would rather have the country I live in be the top dog.
Yeah, and people in Hades want ice water.
Dont we all, we had it, and we lost it.............it WILL never return ever.
We do not have the Government willing to live up to the stds that it takes to be #1.
Banks do not make Great Nations, the PEOPLE do.
Crush the will of the people, cause them to lose HOPE. Once HOPE is gone, the will to PRODUCE is gone.
Remove the INCENTIVE for a better life, and you just signed the death of your nation.........
And you will have exactly what every Socialist/Marxist country has/had.
A shithole.
Depends on how high up the food chain you are.
Martin Hennecke on CNBC about Gold, Silver and Ags manipulation:
http://www.cnbc.com/id/15840232/?video=1565354860&play=1
Good stuff!
Can we have dedicated forex section? It seems that zh pretty much on target with currencies and ew need mroe analysis and info.
In relation to Britain and its Empire, the First World War fatally wounded the patient, and the Second effectively killed it. Thereafter, it was a question of allowing its former imperial possessions self-rule. If the American Empire falls apart any time soon, the irony will be that it mostly occurred not out of warfare, but due to out-of-control bankers.
Don't forget out-of-control spending by .gov.
And it was we who elected the scum all these years...
The baby boomers bankrupted and ruined America.
Yes, it is all and entirely the fault of one particular age segment of the American public who is at blame! ALL their fault! Bad Boomers, bad bad! Of course all the younger Neocon-brainwashed warmongers who supported the Bush/Cheney regime, or all the Obamabots with their hands held out (and their minds shut tight) shouting "Gimme gimme GIMME!" have no blame whatsover.
But such simplistic drivel is right in line with the rest of the nonsense that you spout in this forum.
We did play an outsized role. But, as I mentioned yesterday, there MANY factors behind our economic problems.
And, it is YOUR generation that elected Obama! How's that Hope & Change working out for us? And we get to see spectacles like Michelle "Antoinette" Obama carousing around Spain with 40 rooms at the hotel for her close friends. On your nickel and mine.
The electoral college elected obama, not whomever you refer to as your generation.
Glenn Beck relayed a story about the Weimar Republic hyperinflation....two women with giant baskets of paper money were going to the market. There was a scene they stopped to gawk at and when they turned around their baskets had been stolen and the money dumped in the street.(Baskets=value, paper money#value). Those with gold could relocate, buy necessities, spend it anywhere in the world and not worry about inflation. Sounds like a more practical plan for survival to me.
The gold bugs have a good argument for owning the metal when things fall apart. I work with a Vietnamese (now American) lady who experienced Vietnam during the war. People would spend all their money on jewelry and wear it to protect their savings. This is a good example during unstable political and economic times.
The problem I have with the gold bugs is as long as the world economy holds together in reasonable shape (that might be a while), gold has little practical value in industry or other manufacturing needs. What is going to stop investors from dumping physical gold when a panic strikes to gain access to cash, which does have value at that point? Gold can not be traded into food at your local grocery store. You can not directly buy things at any store with gold. Get the picture?
Please no manipulated paper versus physical market arguments.
Ask your Vietnamese friend how homes and other high value assets change hands in Viet Nam today. Prices are settled in gold and are paid for in total upon settlement date. Many more countries in SE Asia have the same arrangements. They learned long ago that banks and interest rates were a drag on every individual's economy. They also have very high personal savings rates and when they make a large purchase a great deal of bargaining and consideration is involved prior to settlement. In SE Asia one is considered a fool if a great deal of thought does not take place prior to a purchase. The concept of instant gratification is reserved for a take out order at a restaurant, not the purchase of a new auto, motorcycle, home or business expansion. Gold never stopped being money in SE Asia.
Vampyroteuthis .. Gold will be a means for barter as it was in biblical times. You can at least wipe your ass with paper currency!
Gold is the ultimate reserve currency,it is the only everlasting sustainable form of money.
Gold has and will always win over fiat,3000+times before.Dollar became wold reserve currency
when U.S had 25.000tonnes of gold.Gold will raise 15%per an until the gold has been transfered
from west to east,then the price will explode to infinity,because the dollar will no longer be accepted
as medium of exchange.
With gold you are always 100% sure you have money to provide for yourself and your loved ones,
gold and silver providing this service for 6000years without any default ever.Any more stupid arguments against gold????????
Golden calf idolatrers haven't changed one bit.
You'll end up drinking burnt gold powder too!
Please get back to us after the crack wears off.
Since gold is very valuable realtive to its size, how do you go about protecting it from theft and fire. If you have a safe it can be stolen, or if your gold is in a safe and there is a fire a melted or partially melted gold coin will be of little value, no?
For thousands of years people around the world with limited imagination have figured out how to protect their assets, including gold.
16oz of gold equal a pound. Check with your local coin/bullion dealer to find out what a pound lump of gold is worth in dollars. Form makes little difference.
If you have a fire what are your dollars worth afterwards? Zero, because paper does burn and leaves little but ashes. Try spending ashes.
chartology. i sure hope it's making money for somebody. cause it's so god damn boring to read.
Gold is no ones liability, and does not represent a promise to pay. Fiat currencies are "a claim on future production" (A. Greenspan), whereas gold is a refined material product. If a nation's finances are mismanaged, gold will in time protect the holder from that mismanagement. If a nation fails, or its currency fails, then gold provides a means to retain one's wealth during the transition to a new regime. Gold in hand is very high in value compared to its mass volumn, so transporting one's wealth to a different locale is entirely practical and does not depend upon entities such as banks or governments to allow you to move or transact business.
Europeans typically keep between 5 and 25% of their wealth in gold bullion. Asians often keep ALL of their net wealth in gold bullion. I would argue that in regions where political and economic instability has been a historic and repeated problem, then you will find those who have wealth to preserve will be using gold to do that function.
In places like the USA, where there has been relative political and economic placidity, gold is not vey well esteemed. Interestingly, though, the estimate of bullion and other forms of gold held by Americans is about 8,000 metric tonnes, estimated to be about the same amount held by the US government. So, possibly, there is a strong contingent of Americans who hold gold as a means of wealth preservation but do not talk on internet forums about their holdings.