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Gold Plunges; Paulson Liquidation Speculation Abounds Again As Fund Rumored To Be Down $1 Billion For The Day

Tyler Durden's picture


There are some crocodile tears over at the 50th floor of 1251 Avenue of the Americas this morning. With a holding of 168 million shares of BAC and 506 million in Citi, Paulson and Co. is down nearly $300 million on just its top two positions alone. When one adds the other top ten positions, which include $3.5 billion worth of GLD, as well as massive positions in ANG, CMCSA, STI, TRE, RIO, BSC, COF, WFC, MGM and many others, it is not surprising that the market is rife with rumors that the once vaunted bearish and now very much bullish (who according to Goldman's carefully crafted settlement press release yesterday, only achieved his subprime-related wealth due to prospectus misrepresentations by Goldman, which is now permanently in the public record) is down about $1 billion for the day so far. Of course, on a NAV of $31 billion this is not all that big, but likely will not help with the recent surge in redemption requests.... Or the need for liquidations. Gold is plunging, and according to market rumors the primary culprit is once again JP, whose GLD holdings that are merely a type of share class (which needs to be indexed lower as the AUM drops) are getting liquidated, pushing spot far lower. 

As a reminder here are Paulsons & Co.'s recent holdings:


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Fri, 07/16/2010 - 11:51 | 473530 Pamela Anderson
Pamela Anderson's picture

This guy James "Austin Powers" Altucher leaves in another planet!!!!!!! He is just nuts!
Is out there in CNBC saying that everything is fine... just buy!!!

I think he used to work for Cramer...

If you haven't met him yet... here you have him...

Fri, 07/16/2010 - 12:02 | 473557 knukles
knukles's picture

And Jimbo's an ex-Goldmanite............

Fri, 07/16/2010 - 12:03 | 473563 unwashedmass
unwashedmass's picture


literally making me ill watching this and KNOWING our government and the "regulators" are colluding in what is nothing more than outright theft.



Fri, 07/16/2010 - 12:17 | 473608 Mr. Anonymous
Mr. Anonymous's picture

For my money, Althucher is THE biggest douchebag in the kit.  By comparison, Abby Cohen and Cramer are positively sagacious. This guy must be subsidized by TPTB, because he is the worst stock picker I have ever seen.

Fri, 07/16/2010 - 12:27 | 473643 bonddude
bonddude's picture

He looks like a young Abbey, don't he ?



Fri, 07/16/2010 - 12:37 | 473681 russki standart
russki standart's picture

This guy is the worst stock picker because he is an entertainer, and is following orders from above. Personally, I mute the F@cker because his BS hurts my ears.

Fri, 07/16/2010 - 12:03 | 473564 b_thunder
b_thunder's picture

Yes, he and Lenny "Nails" Dykstra were the two "investment stars" discovered by Cramer. He bragged about "discovering" them that and gave each of them a column on his web site.

While Dykstra is a common fraudster and a moron, Altucher is provocateur.  His main idea is to legalize insider trading, and to have Fed openly buy e-minis every day at 9am and 3:50pm in order to "create recovery."  HA!  Try putting both of them together:

a) Fed uses unlimited resources (printing press) to buy securities en perpetuity;

b) You are at the Fed or one of the Primary dealers, you know when, and how much the Fed will buy.  *AND* you can use this info to trade for yourself!


Fri, 07/16/2010 - 12:27 | 473630 Pamela Anderson
Pamela Anderson's picture

+ 100 Bwuaaa  haaaaaa Lenny "Nails" Dykstra.... Cramer touted him as one of the best 5 traders in the world! Bwuaaaaa Buaaaa....

Please watch this video (after short ad.) ... I promise that you are not going to waste your time...


Fri, 07/16/2010 - 13:05 | 473753 thesapein
thesapein's picture

that was great, and today's latest from same, even better:

Is it true that pot was made illegal mostly because white people didn't want white girls having sex with black men?


Fri, 07/16/2010 - 13:21 | 473800 Janice
Janice's picture

No, the reason that marijuana was made illegal was because it would lead to more violent crimes ~ public media reason


Marijuana was made illegal because the young people were smoking it, having free love and sex, and did not conform to the traditional way of life, education, marriage and paying taxes. ~ whispered in the halls, a way of controlling the masses

Fri, 07/16/2010 - 15:34 | 474245 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Hemp oil would make Petrolium obsolete....

Paper monie?  Print the gold and silver certs on hemp, mang!

Yes it alters the mind, can't have that!

Bomb who?  Just pass the bong, mang!

Fri, 07/16/2010 - 18:22 | 474421 Rusty Shorts
Rusty Shorts's picture

Let's not forget the lumber industry, they lobbied to make hemp illegal, as hemp makes a much higher quality paper, and as Hendrix said, hemp seed is 50% high quality oil.


"Why use up the forests which were centuries in the making and the mines which required ages to lay down, if we can get the equivalent of forest and mineral products in the annual growth of the hemp fields?"
- Henry Ford

Fri, 07/16/2010 - 20:39 | 474730 thesapein
thesapein's picture

Enemy of Big Pharma, too:

(skip to about 5:50 in vid)

Fri, 07/16/2010 - 21:51 | 474822 AVP
AVP's picture

I'm all for it!

After the collapse, it should be all the rage?!

And no tax either. Hey... this Armageddon thing doesn't look like such a bad deal after all!

<sarcasm off>

Sat, 07/17/2010 - 19:12 | 475565 juangrande
juangrande's picture

Was watching a doc. on the original prohibition. Apparently just before prohibition, Henry Ford was making a substantial number of his Model T's to run on ethanol (alcohol). Just after, he stopped completely. The original Diesel was run on veg. oil.  Apparently Herr Diesel had a mysterious disappearance on a cruise liner. Hmmmmmm.

Fri, 07/16/2010 - 21:39 | 474793 StychoKiller
StychoKiller's picture

No, because those of the southern, brown, Spanish-speaking persuasion were using it instead of the legally sanctioned alcoholic beverages of white folks!

Fri, 07/16/2010 - 12:29 | 473649 bonddude
bonddude's picture

I saw the Dyke touting his investment service

AGAIN on cnbc about a month ago.

Almost fell outta me chair !

Fri, 07/16/2010 - 13:21 | 473796 thesapein
thesapein's picture

Legalize insider trading? I kind of like that thought. The rest is junk, yes, but I've never quite got why insider trading was illegal, unless insider trading pertained to a tiered system of power, but that sort of power structure in the markets is what shouldn't be there. What I mean is that, say a bunch of us nobodies are just trading amongst ourselves based on the best knowledge we have, maybe each other, maybe our research, it shouldn't matter; There's no such thing as insider trading so no law is then required. The problem arises when something external grants a party a privileged power, introducing the tiered power structure, which is why, yes, what you're saying is correct, (a) and (b) are bad.

Fri, 07/16/2010 - 12:59 | 473734 ZackAttack
ZackAttack's picture

Altucher is some little long-only fund-of-funds "manager." He founded the stock tout board, affiliated with and currently media whores in order to talk his book.

Fri, 07/16/2010 - 11:53 | 473536 miker
miker's picture

People selling gold now because convinced of deflation.

If all the world equity markets tank and the bond markets freeze up, won't gold skyrocket as safe haven?

Fri, 07/16/2010 - 11:57 | 473543 Mark McGoldrick
Mark McGoldrick's picture

No.  Look how gold performed in late 2008.

Fri, 07/16/2010 - 12:17 | 473611 GoinFawr
GoinFawr's picture

No. Look, this isn't 2008.

Fri, 07/16/2010 - 12:25 | 473641 Abiggs
Abiggs's picture

Get ready for a rush into the dollar; DXY headed to 90 - skunky, I checked your supposed dollar/gold positive 2-year correlation theory... I think you're living on another a different planet bud.

Regards to you

Fri, 07/16/2010 - 12:32 | 473663 bonddude
bonddude's picture

Got some old coins which I love.

I won't even look at gold until it's under

800. Eventually, it will roar again but it will take

some time IMHO.

Fri, 07/16/2010 - 14:15 | 473989 goldfreak
goldfreak's picture

keep waiting

Fri, 07/16/2010 - 14:40 | 474066 Johnny Bravo
Johnny Bravo's picture

Three words.


Meanwhile, I'm up a ton on my vxx since yesterday!

How's that "buy physical gold at 1365" tripe working out for the goldbugs?

Fri, 07/16/2010 - 15:33 | 474242 Spitzer
Spitzer's picture

Just great in Canadian dollars

Fri, 07/16/2010 - 16:11 | 474330 RockyRacoon
RockyRacoon's picture

Guessing is not projection nor prediction. 

If you don't know why gold moves it will always be a surprise.

The gold purchases represent only 3 percent of the University of Texas Investment Management Co.'s $22.3 billion in investment funds, but it indicates how deeply the fund managers are concerned about the global financial future.

Gold ETF Assets May Grow Eight-Fold in Japan in Year, Mitsubishi UFJ Says

Assets held in Japan’s first exchange-traded funds backed by gold and other precious metals may increase eight-fold in a year as investors seek to protect their wealth in the country with the world’s biggest public debt, its largest publicly traded bank said.

ETFs backed by gold, silver, platinum and palladium stored in Japan may hold as much as 30 billion yen ($337 million) in July next year, from the initial 3.5 billion yen, said Osamu Hoshi, deputy general manager at Mitsubishi UFJ Trust and Banking Corp., a member of Mitsubishi UFJ Financial Group Inc. The yen-based funds from the bank were listed on the Tokyo Stock Exchange on July 2.

Concern that Europe’s sovereign debt crisis would spread sent gold to a record high of $1,265.30 an ounce on June 21. Japanese individuals with combined financial assets of 1,453 trillion yen, as well as institutional investors, may shift some of their money into physical metals as a store of value, he said. Public debt in Japan amounts to $80,000 a person.

About 10 million people who have accounts in securities houses in Japan for trade in equities and bonds will now have access to physical metal markets, Hoshi said. Bullion for immediate delivery was little changed at $1,207.05 an ounce at 4:11 p.m. Tokyo time.


Fri, 07/16/2010 - 14:30 | 473900 GoinFawr
GoinFawr's picture

I am flattered that you even bothered Abiggs. But you obviously need to try again. I recommend you adjust for the anomalies that occur almost immediately following any 2%+(ie 'sharp') increase in the spot POG in USD, as well as any manufactured naked paper drops of 1% or more.

"I think you're living on another a different planet bud"

Indeed I am, it's known to many as 'Earth'. Enjoy your time in the 'Amusement Park of Paper Bubbles' while it lasts. Heh, I am, I've been watching you and your duped ilk blithely dance around in it for many years now.

"DXY headed to 90". Suits me; the higher it goes the more real wealth I get for my empty paper promises. Anytime someone forces on me a contract laden with debt I didn't incur I pass it off at the first decent opportunity to any rube willing to part with hard assets for the apparent delusional 'privilege' of possessing such an onerous obligation. Trust me, it always works out for me and mine in the long run.

Bring on more deflationary hocus pocus~!

<washes hands>

Fri, 07/16/2010 - 14:52 | 474105 Abiggs
Abiggs's picture

"it always works out for me and mine in the long run." - have you discovered the fountain of youth? Like I said earlier, at least you will have the shiniest casket in the whole graveyard with all of that gold...

Dream on Ponce De Leon, reality sinks in rather fast when you take your bag of gold coins and try to buy something at the grocery store...

There is nothing wrong with being a dreamer/poet but do try and keep it to yourself - otherwise you only confuse yourself and others into believing that your philosophically imaginative statements are true: "the dollar is trading more and more in line with gold" 

Fri, 07/16/2010 - 15:13 | 474171 trav7777
trav7777's picture

Fuck, what an idiot.

How did it work for the Argentines after they locked the banks and revalued the paper, you retard?  Try going to the store and buying something with obsolete FRNs if they pull an Amero on you.

Yeah, the Dollar will last forfuckinEVER just like every other fiat currency.  What does it take to get through to you morons?

Fri, 07/16/2010 - 15:46 | 474278 Abiggs
Abiggs's picture

Maybe you should take it easy on the coffee goldbugger, nobody is forcing you to read/respond.

Maybe you also think that gold has been positively correlated to the dollar during the previous 2 years - oh wait, you weren't part of this conversation so you wouldn't know that your goldbug friend was actually bragging about this in a previous post...

If you want to jump on that boat with him, go ahead it only shows how objective you guys are...

Fri, 07/16/2010 - 16:36 | 474395 trav7777
trav7777's picture

Whatever the fuck you say, moron.

these people are not my friends nor do I agree with them OR you.

I am AGAIN surrounded by Philistines.

Among 100 of you perhaps 1 or 2 get it in any meaningful sense.

Fri, 07/16/2010 - 15:59 | 474291 GoinFawr
GoinFawr's picture

"...reality sinks in rather fast when you take your bag of gold coins and try to buy something at the grocery store..."

Heh, which grocery store is that? 'Food Flood'? 'StupidStore'? 'UnSafeway'? You're absolutely right, with the majority of cashiers being domeless wonderboys and girls at those parking lagoon situated institutions I wouldn't risk bothering to ask if they can tell specie from fiat. But I try to feed my family as little Monstrous Santa as possible, so I'll let you be a guinea pig for GMO's, or eat guinea pig infused veggies; I think both might apply.

Now at your locally owned producers' Farmers' Market. Well, those guys have some saavy, and clean food...

Post civil war, how well did paper confederate dollars spend at any grocery store compared to their gold coin siblings?

Abiggs, look today, and don't forget about the anomalies; never forget to adjust for the anomalies...


Fri, 07/16/2010 - 16:48 | 474428 Abiggs
Abiggs's picture

I didn't know that you were around during the Civil War..

Fri, 07/16/2010 - 18:05 | 474580 GoinFawr
GoinFawr's picture

Hehe, nope I'm not quite that old... but I try to learn from past mistakes, mine or otherwise.


Fri, 07/16/2010 - 22:56 | 474922 udecker
udecker's picture

"reality sinks in rather fast when you take your bag of gold coins and try to buy something at the grocery store..."

I still don't get this argument.

I don't take my bag of gold coins to the grocery store. I take one coin out, take it the nearest dealer, bank, etc, and exchange it for the currency du jour. While that currency I get is still worth whatever the market says it's worth, I'll take it to the grocery store and exchange that currency for something of value to me: food.

How much of a market disruption do you think rational holders of gold expect? So much that no one will exist to exchange their gold into something that others may consider to have value? In that case, why hold anything at all, except lots of farming labor and a trebuchet?


If that's how bad they think it's going to get, they wouldn't be holding gold. Why do you assume that's what they think?

Fri, 07/16/2010 - 13:12 | 473682 Red Neck Repugnicant
Red Neck Repugnicant's picture

If you want to make a bet on gold, you need to consider four things:

1.  The threat of inflation

2.  The threat of deflation

3.  The threat of a currency crisis

4.  The threat of fraud in the metal market 

These are the four macroeconomic conditions that will drive the price of gold. Which one do you think will happen first?

Answer:  Deflation.  Gold goes down. 



Fri, 07/16/2010 - 14:20 | 474002 JLee2027
JLee2027's picture

Fiat currency does not deflate sorry.  It always dies in a hyperinflationary spiral.

Fri, 07/16/2010 - 14:42 | 474071 Johnny Bravo
Johnny Bravo's picture

If only there was some member of zerohedge saying that gold was in a rising wedge and about to fall for the last few weeks... imagine all the money that wouldn't have been lost today.

I wonder where we could find such an astute and handsome person to warn us next time.
If only somebody like that existed.

Oh well.  GOLED BITCHEZ!!!!!  Let's have a ZH picnic when it gets to 25000!


Fri, 07/16/2010 - 15:15 | 474180 trav7777
trav7777's picture

Wow a whole $17.  Jeez.

I am short ZION, it's down like what 4x that?

Fri, 07/16/2010 - 15:22 | 474204 Johnny Bravo
Johnny Bravo's picture

I was bearish at 1265, and warning of a rising wedge before that.  That's more than 17 bucks, partner.

Fri, 07/16/2010 - 15:37 | 474250 Spitzer
Spitzer's picture

Just like when you where barish at $720

Who cares now asshole ???

Fri, 07/16/2010 - 15:47 | 474279 Johnny Bravo
Johnny Bravo's picture

Nope, I was only bearish since 1220.

You must care, since your faggedy ass has to reply to all my posts.

Fri, 07/16/2010 - 16:40 | 474403 trav7777
trav7777's picture

Dude you're fucking AMAZING.  Bearish at 1220!  WOW.  A whole $30 above current spot!

Fuck man, your talent is REALLY wasted trolling ZH for goldbug morons.  You sure you're not really a professional trader?  I mean with calls like that and huge payouts that take months to deliver, it's amazing we can get your sagacious advice for free.

Fri, 07/16/2010 - 19:35 | 474667 Bay of Pigs
Bay of Pigs's picture

Trolls like Abiggs and Bravo are probably the same douchebags over at Mish's site posting as Tasty G and Clinton. I suspect they have other motives than to try and rattle the gold veterans around here.

Fri, 07/16/2010 - 21:51 | 474823 Spitzer
Spitzer's picture

That short cover at 450,600,759 and 900 did you in eh ?

I reply because you are the only one that is dumb enough to short  gold.

Fri, 07/16/2010 - 16:13 | 474339 Sands8oo
Sands8oo's picture

It got to $1265 (US Dollars)?


I would cover those shorts if I were you - consolidation made for a nice correction to the downside, and good for you catching it, but the gold bull will totally freight train through anyone in the way by end summer/fall - put it down on paper - gold will be at 1500 by year's end.


Yours Truly,

Nathan Wind

Fri, 07/16/2010 - 15:36 | 474247 Spitzer
Spitzer's picture

What the fuck are you talking about ???

I am up on the day on my gold in Canadian dollars. I am Canadian BTW

Fri, 07/16/2010 - 15:48 | 474280 Johnny Bravo
Johnny Bravo's picture

Do you want a cookie?

Does America Jr. even have cookies?

Fri, 07/16/2010 - 16:14 | 474344 GoinFawr
GoinFawr's picture

@jb: WHOOSH.

Fri, 07/16/2010 - 16:44 | 474418 trav7777
trav7777's picture

yeah it was up in AUD, down a speck in BRL, GBP, CHF, and a host of other currencies.

In case people hadn't figured this out, gold is portable.

Fri, 07/16/2010 - 15:19 | 474187 Red Neck Repugnicant
Red Neck Repugnicant's picture


What?  Holy Fuck!  

Since this is a conversation about the price of gold, are you trying to tell me that fiat currency only moves in one direction against gold? Sure, on a long enough timeline, the purchasing power of a fiat currency diminishes.  But that's not the conversation we're having here.  We're trying to decide if the next movement in gold is significantly up (due to inflation), or should we wait for a better price as it moves significantly down (due to deflation). Your post is no more insightful than saying, eventually everyone dies.

Fiat currency does not deflate sorry

First, you're forgiven.  Apparently you knew your post was extremely stupid while you were writing it. 

You're misusing the word deflate. Are you speaking of price or quantity?  No matter which you choose, you're wrong on both. Both price and quantity can go both up and down. It appears that perhaps you saw this quote somewhere, and now you're just reposting it randomly regardless of context. 


Fri, 07/16/2010 - 15:42 | 474263 JLee2027
JLee2027's picture

Thanks.  I shall re-phrase. I do not believe a deflationary spiral (as we saw in the Great Depression) is possible when the money system is based on fiat currency. So, to answer the question, Gold may pause for a while, but inevitably the move is up.

And no, I didn't read that elsewhere, it's my own little Jack pet theory.

Fri, 07/16/2010 - 15:54 | 474301 Red Neck Repugnicant
Red Neck Repugnicant's picture

..and inevitably, we die.  Investment advice is worthless when it disregards time. 

On a long enough timeline, I'm sure gold will go up.  But that is of little consolation to those who are told to buy gold on a $17 dip, when there is a significant risk that a deflationary buzzsaw will price gold below $1000 in the next 9 months. 

Lastly, if you do not think that a deflationary spiral is possible, what do you think happened from October 2007 --> March 2009?

Fri, 07/16/2010 - 18:40 | 474621 JLee2027
JLee2027's picture

Lastly, if you do not think that a deflationary spiral is possible, what do you think happened from October 2007 --> March 2009?

What because Oil, Gold, and Silver dropped?  No, it's wasn't. A deflationary spiral shuts production, closes factories, lays off 10's of millions and affects virtually all prices. Did that happen?

..and inevitably, we die.  Investment advice is worthless when it disregards time.

Nice dismissive answer using the same language and technique that Johnny Bravo does.  Are you Johnny Bravo? Well I think you are, so your answer really doesn't matter.  

No more questions for the troll.

Fri, 07/16/2010 - 18:48 | 474624 Red Neck Repugnicant
Red Neck Repugnicant's picture

Oil, gold, silver...

What about everything else?  Every asset class on Earth dropped.  I don't understand why you are trying to make a point using those particular three commodities. 

To your point, factories did close; prices did drop; jobs were scarce; wealth imploded. If it wasn't for massive government intervention, we would have had a modern day depression. 

Fri, 07/16/2010 - 18:10 | 474588 Geoff-UK
Geoff-UK's picture

Even if a deflationary spiral WERE possible with fiat currency (who the hell knows for sure?); who is willing to bet that Helicopter Ben Bernake will STOP THE PRINTING PRESSES? 

I keep looking for someone to convince me WHY govt and the Fed would ALLOW deflation politically...this isn't a free market people, so textbook evaluations of what will happen are irrelevant.


Fri, 07/16/2010 - 18:40 | 474622 Red Neck Repugnicant
Red Neck Repugnicant's picture

I keep looking for someone to convince me WHY govt and the Fed would ALLOW deflation politically

Allow it?  They can't control it. God created gravity.  Don't fuck with God. 

If deflation is something that can be effectively controlled/managed by our government, how do you explain the deflation of housing prices, the deflation of our equity markets and the overall deflation of our paper wealth that has occurred in the past 3 years?

Our government can dampen the collapse (as they have), but they cannot force someone to bid on a stock price or move into a new house.  They can inflate the money supply, but they can't force its velocity.  

Fri, 07/16/2010 - 17:28 | 474494 Hephasteus
Hephasteus's picture

It does when it's "supposedly" backed by fractional reserves of gold. We had deflation in the great depression for a short while. If you check historical prices you'll see that the "inflated" economies had more deflation than the normal ones. In other words you have to go someplace expensive to even get a tiny bit of deflation for an extremely short window. You'll see deflation for 2 to 6 months max in california, new york, and florida.

Fri, 07/16/2010 - 15:06 | 474147 augmister
augmister's picture

+1   ..... This is nothing...wait till we see sub 666 on the SPX and gold will be????

D-E-F-L-A-T-I-O-N.....  Air out of the balloon, most things are cheaper, less of everything.... Grab those FRNs with both hands.   Wait till the season of Banking merry, merry, blenty of BAH-Humbug!

Fri, 07/16/2010 - 15:18 | 474188 trav7777
trav7777's picture

The USSR and Argentina endured deflationary collapses.  what happened to their paper?

Don't worry, this is an easy one.

Less of everything = cheaper?  Must have flunked supply/demand 101.  The problem with you people is you do not understand basic economics, neither does Krugman or Bernanke.

Deflationary collapses always lead to worthless paper...that's what happens when debts get discounted to ability to repay and all FRNs are someone's debts.

Fri, 07/16/2010 - 11:58 | 473548 tmosley
tmosley's picture

If they own gold, they aren't convinced of deflation.

If they own paper, they might be.

I, for one, will gladly take gold from weak hands at a nice discount.

Fri, 07/16/2010 - 14:45 | 474079 Johnny Bravo
Johnny Bravo's picture

Like I've been saying... if you keep waiting, the discounts will get even better.

Goddamn.  It's like I TOLD you MFers that it was going to go down.

tmosley: 1240 is support, dawg!  Back up the truck!  Buy that physical at 1340.

J. Bravo: Y'all MFers are high.

goldbugs:  JUNK HIM!!!!!!!  THE U.S. is going to die tomorrow in a Zimbabwe-esque hyperinflationary collapse and goled will be at 50000 bitchez!!!

J. Bravo: Y'all MFers are high.

Fri, 07/16/2010 - 15:03 | 474132 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Let it Burn like Usher....I'ma be here for the next 10 summers"

Pop quiz hotshot, what are you going to do with your FIAT when the SDR replaces the doelarr as the world's reserve currentsea?

Fri, 07/16/2010 - 15:09 | 474158 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"I don't care about stats as long as my team winning."

What is monie Bravo?  C'mon with it.....

Fri, 07/16/2010 - 15:23 | 474206 Johnny Bravo
Johnny Bravo's picture

How about you ask me that question when that actually comes true?

Until it does, you're just speculating.

The only dollar is still the dollar.  When whatever you say is going to happen happens, THEN ask me what I'll do.

Fri, 07/16/2010 - 15:37 | 474249 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The UN reports that the Doelarr should be replaced by the SDR, which Soros thinks is backed by "goled".

It is in the works....

And the doelarr is getting its ass handed to it hand over fist.

You do TA, come on Bravo!

Fri, 07/16/2010 - 15:39 | 474252 Spitzer
Spitzer's picture

im up on the day in gold

I am Canadian

Fri, 07/16/2010 - 15:52 | 474305 GoinFawr
GoinFawr's picture

"Only in Canada, you say? Pity."

Fri, 07/16/2010 - 15:24 | 474209 tmosley
tmosley's picture

Ok, retard boy, I never said 1240 was support.  And I never bought at $1340.  You are just a moron with your head up your ass, who lies like a five year old that got caught stealing candy.

You are filth.

Fri, 07/16/2010 - 16:07 | 474307 living on the edge
living on the edge's picture


I know you like having fun and I also believe and have posted a major gold take-down is coming, albeit for different reasons then you believe. Time will tell if this is the big one or not. With that being said, I believe there will be a small window to load up on gold or silver with this coming manipulated take-down. I don't trade PM's just hedging against what I believe will be the inevitable conclusion to this saga. We will see the dollar devalued or crash as a result of irresponsible government and corrupt financial institutions. There will be a run on gold and silver at some point, dwarfing the purchases seen to date. All asset classes will lose value relative to gold. The have's and the have not's will be measured by those having gold or not having gold. Time is not on our side.


Fri, 07/16/2010 - 12:09 | 473585 JLee2027
JLee2027's picture

Deflation in a fiat currency?  

Fri, 07/16/2010 - 12:10 | 473588 Oso
Oso's picture

Miker - left to its own devices, the world would have settled into a hard deflationary spiral already.  And, if it were left alone now, that is what we would have.


HOWEVER - there is zero chance the powers that be wont try their one play again, QE 2.0 on a massive scale.  And every day the market goes down before mid-term elections is a step closer to it happening (if it isnt already). 


SO, while i am a firm deflationist in the real world, some of you (GG, Cheeky, and others i have argued with over the years, etc) might be thrilled to know that i made my first physical gold purchase today.  Not that i dont think gold might correct hard (hope it will, frankly), but, i dont want to be caught out when it is announced officially.

Also, do NOT short treasuries, even here, except to trade.  There is also zero chance they will let yields rise beyond 4%. 

Fri, 07/16/2010 - 12:50 | 473708 Cheeky Bastard
Cheeky Bastard's picture

Dude; why do you mention me in the inflation camp. I have been preaching deflation since, at least, March and said 3 months ago sell gold. I'm bearish on gold right now; ultra- bearish. Go into cash or Ts; gold is the worst asset to be in right now [and equities are right there with it. Gold should be trading at 950 [1K max] and that is where it is heading. I dont care for absolutes many here preach re: gold; you dont argue with the market. 

Fri, 07/16/2010 - 13:02 | 473745 Red Neck Repugnicant
Red Neck Repugnicant's picture

I absolutely agree.  The buzzsaw of deflation will cut across all asset classes, including stocks, housing, and gold.  The bond market agrees, and typically it's a better barometer of the truth.   

Paulson's market positions give me pause, though.  Because he appears to have squarely bet on inflation and economic recovery. 

The next significant move in gold is down, as deflation trumps all concerns.  

Fri, 07/16/2010 - 13:11 | 473773 Cheeky Bastard
Cheeky Bastard's picture

Make no mistake; we will see QE-II; but will it be efficient it depends only on the velocity of money [that is why we now have slight deflation although 3T has been injected into the system in the past 1.5y] [translated; will banks be willing to lend or not [my take is; no; well not enough to cause the inflation rate Paulson and Gold Bugs hope it will cause]]. Commodities, housing and commercial real-estate will get mauled. Equities might hold on a bit, but even they can not defy market conditions for long. Gold will be trading sub-1K before it trades at 1500. Christ; its good to see someone here has a mind that is not plagued by static thinking. I was bullish on Gold most of 09 and first 3 months of 10; but things have changed; and you either adapt to change or you extinct.

Fri, 07/16/2010 - 13:17 | 473787 Ned Zeppelin
Ned Zeppelin's picture

The problem is the mechanism of transmission whereby all those QE FRNS find their way down into the food chain. The bankers want it to be via loans, but in a contracting economy credit demand is down and deflation drives it further into the ground.  Absent Ben's helicopter dropping the bills into consumer laps, I don't see how it gets from point A to point B, and that is the conundrum and the failure of QE.  QE does provide a less than obvious source of sovereign debt monetization.

Fri, 07/16/2010 - 14:04 | 473957 Cheeky Bastard
Cheeky Bastard's picture

There are only 2 mechanism or transmission. 1) Banks via credit 2) Government via what-ever-the-fuck. No others. 

Fri, 07/16/2010 - 14:20 | 473996 GoinFawr
GoinFawr's picture

Interesting. Question: in your opinion is #2 currently deflating? Another Question: Have the banks stopped lending altogether?

Also CB, I would be very interested to hear your opinion on the significance of the True Money Supply.


Fri, 07/16/2010 - 14:22 | 474010 JLee2027
JLee2027's picture

This is not 2008.  What you think will happen is 180 degrees off.  

Fri, 07/16/2010 - 15:04 | 474137 Hephasteus
Hephasteus's picture

Have people really studied the 2nd crash in the great depression and learned that gold doesn't crash again. Problem this time is once money becomes value (gold) bound there's no way to cheat (squirm) out of things. It's not 1933 and theres not a billion gallons of gas to be digging up gold and a shit pile of gold coming in the door to play the fractional reserve gold game. It's 2010 and we've mined it all, it's played out and this is going to make 1933 look like a freakng party.

Fri, 07/16/2010 - 14:49 | 474092 Johnny Bravo
Johnny Bravo's picture

Cheeky is a LIIIIAARRRR!!!!!

You were the most hypinest goldbug on this site.  I still remember your post that gold could go to 50000.


I mean damn dude!  Not only were you bullish, you were retardedly bullish.

Fri, 07/16/2010 - 14:57 | 474114 Johnny Bravo
Johnny Bravo's picture

I couldn't find the 50000 an ounce post, but you made it.  

Here, however, is another post that you made in MAY saying that gold should be higher because it's MANIPULATED, and NOT that it's going lower because of deflation.

How do you even put on a straight face and act like you've been a gold bear (since March, no less)?


Fri, 07/16/2010 - 15:06 | 474142 Hephasteus
Hephasteus's picture

You're an idiot Master Bates. You don't know the difference between cheeky and gordon gekko.

Fri, 07/16/2010 - 15:14 | 474177 Johnny Bravo
Johnny Bravo's picture

No sir, it was definitely cheeky.  Who else wrote that article?  May 23rd or whatever it was.  Bearish on gold since March my ass!

Although, gekko has been as irrationally bullish as well.

You call me an idiot?  Who else predicted this drop in gold?  
*crickets chirping.*

That's right.

At least acknowledge the master, and maybe even apologize for your name calling and general assholishness to me about being RIGHT.

Fri, 07/16/2010 - 15:28 | 474225 tmosley
tmosley's picture

Everyone predicts drops in gold.  Down 1% is not a conviction drop.  

I love how the trolls come out every time gold drops by a % and say "I TOLD YOU SO!!!!!", even though in the meantime it's gone up 2+%.  Each time, they tell us how stupid we are, as the price of gold moves ever higher.

Heads up their asses, heads up their asses.

Fri, 07/16/2010 - 15:29 | 474231 Johnny Bravo
Johnny Bravo's picture

Dropping from 1265 to 11 whatever-it-is is not a 1% drop.  Learn math.

Fri, 07/16/2010 - 15:44 | 474273 tmosley
tmosley's picture

Stupid comment.  Gold was not at $1265 yesterday.  You come out every time there is a 1% drop to talk shit, even as your stupid ass has been bearish since sub $900.  How's your fakie short on that doing?  College kid.

Sat, 07/17/2010 - 02:13 | 475103 John_Coltrane
John_Coltrane's picture

O.K. I'll actually do the "math" for you.  Go if you have any doubts.  For the last two week of June $gold traded around $1240(20) for about two weeks. Then it dropped to 1200(20) for the last two weeks.  The parenthesis is the normal day to day fluctuations in an random price variable and is meaningless for trading.  So the loss if you bought at the mean peak plateau of $1240 and held for the last month would be 40/1240 = 3.2%.

Not even meaningful since the noise is 1.5%.  More importantly, $gold is above its 40 week 200 day and just slightly below it 50 day MA. 

Fri, 07/16/2010 - 16:23 | 474364 Sands8oo
Sands8oo's picture

I'm sensing a lot of emotion in your posts JB...


60 dollars to the downside does not a victory make my friend - be careful - your exubberance could be your undoing


Yours Truly,

Nathan Wind

Fri, 07/16/2010 - 16:42 | 474401 Hephasteus
Hephasteus's picture

You've got no reading comprehension and memory. You're so wrapped up on burning people that you don't even pay attention to who says what and when. You never get any of your burns right. Just like your $2000 dollar gold by July burn where 70 precent of us said it wouldn't get that high that fast. Now you're trying to burn cheeky for something that gordon gecko said. Face it master bates. You're a fuck up with information. You don't know how to use it. You don't pay attention and you're just a sloppy wet fuck to argue wtih. You just want to be right so bad you'll even try to do it when your WRONG.

You even distort 1265 from 1256 just because you have NO accuracy. You are neither forceful nor surgical nor halfway comprehensible. Get off drugs.

Fri, 07/16/2010 - 15:40 | 474261 Spitzer
Spitzer's picture

im up on the day in gold

I am Canadian

Fri, 07/16/2010 - 16:15 | 474335 GoinFawr
GoinFawr's picture

"Only in Canada you say? Pity."

Jeez Spitzer, everyone is bearish on gold now, where've you been? The charts painted by TPTB say so. How dare you disregard the TA generated by such hard fought naked shorting. You make it sound as if this whole fiat thing is a race to the bottom vs. real money, and for today the CAD is in the lead.


Fri, 07/16/2010 - 15:00 | 474121 GoinFawr
GoinFawr's picture

Wow JB, you can't even score a win with any class. CB 180's to your sentiment and you're too stupid to recognize what a valuable ally he would be?

If he is a liar now... apparently you fail to realize how that reflects on your insipid assertions.  Speaking of 'retardedly bullish' on whatever: you might want to avoid reflective surfaces for awhile.

Fri, 07/16/2010 - 15:16 | 474183 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This is the best advice Bravo.

Fri, 07/16/2010 - 15:19 | 474195 Johnny Bravo
Johnny Bravo's picture

I don't need allies here.  I've never had them since I was MB, and I never will have them.

I'm nice and respectful to the people that are nice to me.  The rest of people can fuck off.

I sure don't need an "ally" though.  I've been right all by myself.  Now people want to take credit like they have been too.
Fuck that.

Fri, 07/16/2010 - 15:43 | 474253 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yeah ok, do whatever you have to do.  My bad.


Continue to ruin this whole thread.


PS, Your TA on gold is horse shit.  There I said it.

Fri, 07/16/2010 - 16:31 | 474381 still kicking
still kicking's picture

I remember when I was a young badass who didn't need anyone either, I was always right!  Fortunately I and probably most of the people on here had the benefit of a decent future ahead to take our lumps get kicked around some and learn a little humility.  You probably won't have that luxury given the current state of this nation and world.  Careful of your attitude JB, you may be right on this from a trading perspective but look 5-10 years down the road, no one can be sure how gold will relate to the dollar, there are a thousand different factors that could change everything.  Time to grow up a little, offer your advice, respect others opinions and quit being such a little ass and other people might come to respect you.  Being arrogant instead of confident is like a big bright neon sign over your head saying someone come kick my ass.

Fri, 07/16/2010 - 15:17 | 474184 Johnny Bravo
Johnny Bravo's picture

I don't need somebody lying that they've been bullish all along when they obviously haven't been.

As far as "scoring a win with no class."

Who has been classy to me?  Nobody.  They can eat my butt.

As far as being bullish... ummm... I've been long VXX since yesterday.  Hardly bullish.

Fri, 07/16/2010 - 16:33 | 474386 RockyRacoon
RockyRacoon's picture

Golly gee, Johnny, don't shit yourself.  You've said your piece.

Now move along.  It's over.

Cold comfort for the rest of us:  Gold outperformed (lost less) than stocks today.

Fri, 07/16/2010 - 14:04 | 473851 Muir
Muir's picture

I've been also warning about possible deflation.

What is missed is that credit/securatization/derivatives = $ in this economy.

Yes, same as money, treated as money, circulated like money.

A lot more thatn 2.5 T was destroyed.


I've been in the inflation camp since April 09, but for a month now have been very uneasy.


Fri, 07/16/2010 - 14:04 | 473958 Oso
Oso's picture

haha, ok, i didnt realize you had altered opinion!  good to know you're not static. 


anyway, i still think gold ought to have a big correction (god knows i ve been saying this for a while), but i also cant handicap what might happen with QE 2.puke.  we all know what happened the first time around.


stay frosty.

Fri, 07/16/2010 - 15:20 | 474202 Johnny Bravo
Johnny Bravo's picture

Damn, I must have missed that big prediction of a big correction when I was the only person saying it was going to triple digits and people were assholes.

Sure could have used a "Hey, maybe JB is right" back then.
Didn't see you though...

Fri, 07/16/2010 - 15:53 | 474309 trav7777
trav7777's picture

Lemme get this straight, fell all of 1.5% today, a whopping SEVENTEEN dollars and some change, and you're acting as if it has ALREADY fallen to triple digits?

Are you fuckin stupid or something?  It's at 1190.  Has $200 to fall before you can CROW about its ACTUALLY being in triple digits.

Until then shut the fuck up.

Fri, 07/16/2010 - 16:22 | 474360 Oso
Oso's picture

dude, there are a bunch of us who were having big arguments wrt inflation/deflation long treasury vs long gold, back before you apparently started up.  After a while, the arguments stopped, mostly because no one agreed, but also because being long treasury and long gold has worked (odd, i know).


but, I am of the camp that doesnt really care who claimed what.  You should think about joining, will tack on a few years to your life.

Fri, 07/16/2010 - 14:05 | 473961 Strider52
Strider52's picture

I think TPTB will want to avoid deflation at any cost. Especially in light of the upcoming elections. No, they're going to start QEII, but this time, the public won't be privy to it. It will just quietly happen.

Fri, 07/16/2010 - 14:33 | 474046 BrianOFlanagan
BrianOFlanagan's picture

Agree 100 percent with CB. Gold bugs need to open their minds.

Fri, 07/16/2010 - 14:44 | 474077 SWRichmond
SWRichmond's picture

How do you avoid getting caught offside?  If you're in long term, why take the risk?  Weekly / monthly / year-long perturbations don't matter to me.  Absent leverage (I have none) why should I care?

Fri, 07/16/2010 - 16:08 | 474332 trav7777
trav7777's picture

Look, this is simple shit really.

I feel like I have to moderate between the deflationists and inflationists everywhere I go.

Gold is not a trade.  Gold is not "money."  Gold does not have "intrinsic" value.  It's a commodity that currently a lot of people will trade things for.  Simple as that.

Those thinking gold will go to 50000 and gas will not go to $100 are fools.

Those who think we'll deflationarily collapse and their FRNs will be worthful are ALSO fools.  At the end of EVERY deflationary collapse is a currency revaluation.  WHY?  Because it's the ONLY WAY to make the MATH work!

As we SPEAK, other forms of "money" are self-expressing around the country in the ABSENCE of credit (which is money in our system).  MONEY will NEVER be scarce!  Only FIAT money or a particular BANK's money.  And you know what happens when that occurs?  Do you know WHY deflationary collapses always lead to currency reset?  Because the MONEY starts to LOSE its "moneyness."

Scarce FRNs stop serving monetary purposes!  They cease becoming currency and WITHOUT that, they have NO value!  People in depressed areas are already using Real Bills Doctrine to coupon out their own services and real assets.  Why?  Because nobody has any FRNs.  In those places, OTHER things are money.  Sure, they'd love to have FRNs, but the only way to get those is to borrow them from a bank.

People are eventually going to REJECT the FRN as money and repudiate its moneyness by repudiating DEBT.  This is the way of things.  When Brazil's Cruzeiro Real collapsed as a result again of deflation, or the USSR Ruble collapsed due to deflationary collapse of the USSR, people spontaneously repudiated the moneyness of the fiat note!  The government cannot LEGISLATE worthfulness and it certainly cannot force you to borrow.  It can only tax but it does so at its own risk.

It is not as if MONEY in the abstract came about as a result of BANKERS.  We will be JUST FINE without them.

The MARKET will determine the ratio of bushels of wheat to buckets of coal, of ounces of gold to pussies, and of hours of doctors' time to cattle.  Real Bills Doctrine glues that all together by putting those entitlements, which are real assets, onto paper which circulates as money.  Scrupulous bankers will emerge to discount these bills and provide printing and liquidity services for them. That's how society WORKED for 1000 years, before the dark times...before the BANKPIRE.

I don't know what the hue and cry is over the freaking "value" of the FRN as if it's some eternal INSTITUTION of some kind or of gold for that matter.  They are both supply and demand instruments like any other!  Pussies command a good price here in the US, but among, for example these grasseater Japs, they command next to nothing!  That is the beauty of the market.  NOTHING has absolute, instrinsic's all supply and demand.

The FRN will not live forever, no other note has.  Just start planning for when real things matter more than bullshit promises and whizbang financial "engineering."  Stockpile coal, oil, wheat, cattle, pussies, it doesn't matter.  Whatever floats y'alls boats, for the love of God.

Fri, 07/16/2010 - 16:37 | 474396 RockyRacoon
RockyRacoon's picture

Here is where I go for peace and solace amidst the turmoil:

Real bills, Bitchez!

Fri, 07/16/2010 - 19:59 | 474686 SWRichmond
SWRichmond's picture

I enjoyed reading that post more than any other in a long time.  Agree that trade will continue in the absence of FRN's.

I don't recommend stockpiling pussies as they are known for high carrying charges.

Sat, 07/17/2010 - 15:59 | 475459 RichardP
RichardP's picture

Morph, not start over.

Fri, 07/16/2010 - 15:27 | 474219 trav7777
trav7777's picture

You know that most people are not buying gold here for a trade, right?  I mean, at least that's my perception.

I'm a deflationist too, but I know that every deflationary collapse ends in worthless paper.

If you want to "trade" this, you'd better have an exit in mind.  The window to get out of your paper won't be that wide.  Real Bills will begin to spontaneously express in response to lack of creditmoney.  This is already occurring in depressed states such as MI.

Banks ARE willing to lend, dude...nobody is willing or able to BORROW.

I have NO IDEA as to the fascination with this fiat paper that some have, like this is "value"?  It's just a monopoly that the larger market will ADDRESS insofar as this "precious dollar scarcity" is concerned.  The market will create other currencies as emergent phenomena.  IOW, paper money will NEVER be scarce.

The freakin FRN has only been around for 100 years and people look at it as if it's as old as the Sun.  Even IT won't last forever.

Fri, 07/16/2010 - 16:35 | 474393 still kicking
still kicking's picture

You nailed it trav.  I personally agree with you unless the Chinese and Russians pull a rabbit out of the hat and convince the world to accept a new world reserve currency, if that happens given the debt we hold, the entire US economy goes up in a hyperinflationary puff of smoke.

Fri, 07/16/2010 - 19:20 | 474653 Freebird
Freebird's picture

Exactly. So everybody keep fuckin cool, take out a short to hedge your physical positions, watch gold go down, close your position to cover losses, edge back in as your personal situation allows and be happy. Play the game.

Fri, 07/16/2010 - 13:41 | 473869 Janice
Janice's picture

When I purchased my gold, I couldn't decide inflation or deflation.  It is in the best interest of the US government to have inflation.  It appears that they may be losing the battle. 

I purchased physical gold at $998, but kept a substantial amount in cash and have been jumping in and out of the stock market as the mood strikes. 

I think it all depend on what your investment objectives are.  Personally, I just want something of value to pass to my children....whether that's a pretty shiny golden coin with a $50 face value that sits in their underwear drawer or a ounce of gold worth $5,000 that is hidden in a safe. 

Either way, cash & gold, I am set for the future.  Not to mention, an ample supply of guns, ammunition, seeds, water filtration unit, swimming pool, food, fruit trees, and a garden....and books.   Bring it!

Fri, 07/16/2010 - 14:47 | 474086 Johnny Bravo
Johnny Bravo's picture


Bullshit you did you liar!  I bet we can still find your gold to 50000 an ounce prediction in the ZH archives somewhere.

Don't even front.  You were the biggest goldbug hyper with the most outlandish target.

Now you wanna act like you were bearish the whole time?

Hah!  There's only been one consistent gold bear on this site, and it sure wasn't you.

Fri, 07/16/2010 - 15:12 | 474166 Johnny Bravo
Johnny Bravo's picture

Junk me all you want.

Who was right?

Not you.  

GOLED TO 50000 bitchezsz!!!!!1111!!!!

"Let's have a zerohedge convention when it gets to 25000!"


Fri, 07/16/2010 - 15:30 | 474233 tmosley
tmosley's picture

Tyler, seriously, this guy doesn't contribute anything to any conversation he is in.  All he does is pop up whenever gold is down a % and tell everyone how stupid they are, and then proceed to lie about them.

Just get rid of him.

Fri, 07/16/2010 - 16:41 | 474406 Marla And Me
Marla And Me's picture

tmosley, that's the stupidest thing I've read all week.  You don't agree with JB/MB, so we should get rid of him?  Should we get rid of Leo too?  How about the jew-haters?  Chumbawumba has already been whacked.  The last thing we need is for ZH to stifle dissent because somehow its community of commenters isn't adult enough to handle dissenting views.  Use facts and logic, and leave the censorship to the NWO please.

Fri, 07/16/2010 - 19:22 | 474655 Geoff-UK
Geoff-UK's picture

Chumbawumba got whacked?  What's that mean?  I thought he was practically a paid for PR spokesman for Hamas, and he pissed me off on numerous occasions.  But I thought this was one of the last free speech zones?

Like Johnny Bravo--junk him when he's incoherent (ergo, most of the time)...but a lifetime ban?  Come on...

Fri, 07/16/2010 - 20:58 | 474750 tmosley
tmosley's picture

Bullshit.  You haven't been paying attention.  All this guy does is troll, troll, troll.  I also disagree with Cheeky and JW, but I have never called for either of them to be banned.  I don't like Leo, and think he's a moron, but I have never called for him to lose his spot here.  The reason is because they do offer differing opinions, but this guy does nothing but insult people, lie, and brag.

To be honest, I'm surprised ANY of this guys comments last any amount of time at all.  I've taken to junking everything he says, because I have not seen one insightful comment from him EVER, not in a gold thread, or in any other (he only posts where he can troll, in the last case, trolling Mac lovers).

Fri, 07/16/2010 - 15:13 | 474169 John Self
John Self's picture

JB:  "Now you wanna act like you were bearish the whole time?"

CB:  "I have been preaching deflation since, at least, March and said 3 months ago sell gold."

Ergo, junk.

Fri, 07/16/2010 - 15:28 | 474226 Johnny Bravo
Johnny Bravo's picture

Yeah, it'd be junk if he wasn't LYING about what he said.

I even posted an article up above from May 23rd where he was saying gold is just manipulated and should go higher.

If he was bearish since March, why'd I get his post from May where he was bullish then?

"Demand delivery" - Cheeky Bastard, May 23rd.

LOL.  Yeah, because bearish people buy stuff and demand delivery.

The guy is outright lying.  I don't lie about my old predictions.  I know how to say "I was wrong."

I don't change my story halfway through.

Fri, 07/16/2010 - 15:09 | 474156 augmister
augmister's picture

+1  Refreshing.  and TRUE.

Fri, 07/16/2010 - 13:33 | 473836 fearsomepirate
fearsomepirate's picture

IMO, people need to stop saying "deflation" and say "deleveraging" instead.  The latter is going to happen regardless of whether or not the Fed prints or burns.  Credit contraction is going to happen, period, because borrowers have shitty credit, the government is scaring the piss out of everyone, and capital is either dissolving or fleeing the country.  This is normally associated with price deflation...but only in a stable currency.  Problem is, most of what we have to compare to in world history happened in the universe before global fiat.

So price deflation is going to happen...but against what currency?  Maybe not agains the dollar, not if Helicopter Ben dishes out QE 2.0, and 3.0, 3.1, 95, XP, Vista, etc.  But maybe against gold.  Maybe against AUD.  Maybe against CAD.  The wild card is QE.  The real market value of goods and services can fall *even as* the value of the paper dollar falls even faster.  Price-wise, it looks like "inflation" to dollar holders, but in real economic terms, it has all the look and feel of deflation.  Credit contracts as a fraction of money supply, and no one can afford to do anything.

In this scenario, the purchasing power of gold actually goes *up,* not down, as you have flight from the dollar *and* falling real value of goods.  But, if we have economy-wide deleveraging and contraction, but the Fed puts the brakes on QE, lots of people who were protecting themselves against an expected devaluing of the dollar will leave gold, so the purchasing power goes down.

Like I said, the wild card is the Fed.  "Deflation" is going to happen, but the question is against what kind of money is it happening?  You can deflate against gold and inflate against dollars, and vice-versa.

This could all be incoherent rambling, so take it with a grain of salt.  I'm just an engineer, not a fancy-pants trader.

Fri, 07/16/2010 - 14:49 | 474094 SWRichmond
SWRichmond's picture

Most of the fancy-pants traders lose money anyway, though they'll never admit it.

A sustained deflation destroys the government's ability to service debt.  It therefore cannot be allowed.  The U.S. deficit-spent 10% of GDP last year and called it economic growth that indicated a recovery.

The last time we had a sustained deflation the government deliberately debased the currency by 70%, overnight.  Traders: get caught offside if you want.

Fri, 07/16/2010 - 15:05 | 474139 fearsomepirate
fearsomepirate's picture

Of course, the trick that hides the decline is that the government's debt is mostly short-term.  It's going to lose its ability to service debt because no one trusts it, and no moneteray shenanigans can hide that.  The only question is whether or not they'll wipe out everyone's savings on the way to insolvency, and how fast.

Fri, 07/16/2010 - 12:20 | 473615 Mr. Anonymous
Mr. Anonymous's picture

C'mon, let's put this in perspective.  Even after today and last week and whenever, how much is gold off its all-time highs?  Stocks gyrate more than this in the last fifteen minutes of trading EVERY DAMN DAY. 

Fri, 07/16/2010 - 13:10 | 473770 Red Neck Repugnicant
Red Neck Repugnicant's picture

And that's the exact reason why everyone should be extremely cautious.  If you're betting on deflation, you better get the fuck out of gold before everyone else does.  It will fall hard, because it's one of the few remaining corners of the market where everyone still has gains. 

Fri, 07/16/2010 - 13:56 | 473935 Mr. Anonymous
Mr. Anonymous's picture

Winners get their heads cut off when the shit hits the fan, true dat.  But the deflationary-gold argument runs counter to what we saw in Great Depression I and, hence, even in a winners' butchering amid a deflationary dip, gold will come back. 

Of course, one can argue, why not take some winnings off the table before someone else does?

Fri, 07/16/2010 - 15:18 | 474189 augmister
augmister's picture

" But the deflationary-gold argument runs counter to what we saw in Great Depression"

Roosevelt confiscated and repriced all the gold.  WTF you talking about?  Gold will come back but who wants to take a 30% haircut and wait 2-6 years?   Remember, rule one, the bankers never loose.  Rule two, remember rule one.   Deflation first, sinking gold, prizing dollars, inflation eventually kicks in and the dollars are toilet paper and gold goes back up.... only to be confiscated?????   What is the risk reward here?  Really.  You want to bet on Mad Max.   Never bet against the banks.   And what are the banks doing now?   Hording dollars.  So are businesses.  Follow the dollars.... or someone's mental masterbation?

Fri, 07/16/2010 - 16:18 | 474349 trav7777
trav7777's picture

Roosevelt repriced the DOLLAR, dipshit.

You wanna take "winnings" off the table, go ahead...what are you gonna store them in?

The FRN is a confidence racket, a pure ponzi.  THAT is you guys' idea of wealth preservation?  Treasuries???  Of a bankrupt State!?!??!

This is what happens when people get mindfucked by unbacked currencies built on pyramids of debt and bullshit.

Let them suffer the same fate as hoarders of the ruble in 1989.  I mean I can tick down the list of paper that went bust.

Yes, yes, this time will be different and the FRN will live forever!

The bankers LOSE (with ONE fucking 'o') all the time.  They just keep coming back because there are always ready supplies of idiots to salivate over their confetti.

Fri, 07/16/2010 - 16:48 | 474429 RockyRacoon
RockyRacoon's picture

Thanks for pointing that out.  Saves me the time.  You did it better anyhow.

What's so hard to understand about "purchasing power" over "value in fiat dollars"?

It's not that hard if one has a grasp of economic history.

Fri, 07/16/2010 - 11:57 | 473541 Species8472
Species8472's picture

I don't see a hedge in there.


Fri, 07/16/2010 - 12:11 | 473591 Thalamus
Thalamus's picture

Why would a hedge fund have a hedge?

Fri, 07/16/2010 - 13:40 | 473863 Muir
Muir's picture


Was waiting for someone to point that out.

Hedged? I think not!

Fri, 07/16/2010 - 11:58 | 473542 Village Idiot
Village Idiot's picture

Couldn't have happened to a nicer paulson.

Fri, 07/16/2010 - 15:04 | 474136 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

Thats punny

Fri, 07/16/2010 - 11:58 | 473544 Get_to_the_choppa
Get_to_the_choppa's picture

I'm still waking up this morning but I figured this was just the usual pre op-ex shenanigans.

Fri, 07/16/2010 - 12:10 | 473589 JLee2027
JLee2027's picture

Options expiration day.

Fri, 07/16/2010 - 12:25 | 473638 Get_to_the_choppa
Get_to_the_choppa's picture

You are correct sir.  Like I said, still waking up. 

Fri, 07/16/2010 - 14:24 | 474016 Strider52
Strider52's picture

I think we can safely predict the POG will drop on the 3rd Friday of every month. Nothing new here..

Sat, 07/17/2010 - 02:28 | 475109 John_Coltrane
John_Coltrane's picture

That's why the traders rule is:

Never hold calls until expiration because the market makers (i.e. the house) sells more calls than puts and have a vested in seeing them expire worthless (as 90% do).


Fri, 07/16/2010 - 12:00 | 473551 Rogerwilco
Rogerwilco's picture

Liquidation, it's what's for dinner. Eat hearty boyz!

Fri, 07/16/2010 - 12:33 | 473552 John McCloy
John McCloy's picture

  Hey has a ton of BAC & C also and I believe he is underwater on his Citi. I do not think he is entirely too happy with Goldman after the SEC settlement.

Fri, 07/16/2010 - 12:35 | 473671 bonddude
bonddude's picture


Sorry buddy, joke's on you !

Fri, 07/16/2010 - 12:03 | 473565 -Michelle-
-Michelle-'s picture

Who's selling? 

Fri, 07/16/2010 - 12:11 | 473590 JW n FL
JW n FL's picture

Gold is plunging, and according to market rumors the primary culprit is once again JP, whose GLD holdings that are merely a type of share class (which needs to be indexed lower as the AUM drops) are getting liquidated, pushing spot far lower. 

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