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Gold To Rise On $14.3 Trillion U.S. Debt Limit Increase – Bloomberg Chart of the Day

Tyler Durden's picture





 

From Gold Core

Gold to Rise on $14.3 Trillion U.S. Debt Limit Increase– Bloomberg Chart of the Day

Gold is flat in U.S. dollars and New Zealand dollars but marginally lower in most currencies today as increased risk appetite has seen risk assets rally despite poor fundamentals. Most Asian indices were higher, except the Chinese and Indian markets, and European indices have also risen.

Gold is trading at USD 1,587.00, EUR 1,116.1, GBP 983.50 and CHF 1,302.10 per ounce

Bloomberg Chart of the Day from Korea Investment

Respite has also been seen in Eurozone debt markets with bond yields falling. Rumours of ECB intervention through peripheral bond buying have helped steady things but the ECB has not given any indication that it is supporting vulnerable European sovereign debt markets.

For now markets appear more interested in Apple’s massive profits than Uncle Sam’s massive debts.

Cross Currency Rates

The Republican controlled U.S. House, defying a veto threat, voted last night (234-190) to slice federal spending by $6 trillion and require a constitutional amendment for a balanced budget to be sent to the states in exchange for averting a threatened Aug. 2 government default.

Treasury Secretary Timothy Geithner has said the government will run out of options to prevent a default by August 2 – in 13 days time.

Standard & Poor’s Ratings Services and Moody’s Investors Service have said they are likely to downgrade the U.S.’s credit rating if Congress doesn’t act.

An increase in the $14.3 trillion U.S. debt ceiling is inevitable and is a question of when rather than if.

The Bloomberg Chart of the Day (see above) shows how gold in dollars is correlated with increases in the U.S.’s debt limit, particularly in the last 10 years.

Bloomberg Composite Gold Inflation Adjusted Spot Price – 1970-2011

Julia Yoo, a Seoul-based analyst at Korea Investment told Bloomberg that “gold’s rally is quite explosive.”

“Increasing the debt limit means you print more dollars, which will weaken the dollar and consequently lift the gold price,” adding to gains this year that were driven by demand from countries including China.”

Gold is 12% higher in dollar terms so far in 2011 and is the best performing currency in the world in the last 12 months.

Gold has risen 33% against the U.S. dollar over the past year, outpacing all of the more than 150 currencies tracked by Bloomberg.

United States Debt Ceiling 1940-2011

However, over the long term gold remains undervalued or at worst fairly valued.

Admittedly, gold has risen by nearly 6.5 times in the last 11 years.
However, in the last bull market in the 1970’s, gold rose 24 times from $35/oz to over $850/oz in 9 years.  Gold remains well below its 1980 record high of $2,400/oz when adjusted for inflation.

The macroeconomic conditions today are even more conducive to gold than they were in the 1970’s.

Most industrial nations such as the US, Japan, Germany etc were creditor nations in the 1970’s.
Today they are debtor nations with the US the largest debtor nation the world has ever seen. The fiscal situation in the US is appalling and deteriorating – with a National Debt of nearly $14.5 trillion and unfunded government liabilities of between $60 trillion and $100 trillion.

As long ago as 2003 we said that this inflation adjusted high price from 1980 would likely be reached and surpassed. We said that at that stage gold could be in a bubble and it would be time to reduce allocations while keeping a core financial insurance holding in gold.

In 2005, we said that the growing property bubbles in the UK, the U.S. and the massive debt levels in the western world (household, mortgage debt and in the banking system) would likely lead to a deterioration in government balance sheets and sovereign debt crises which in turn could lead to currency crises.

We are entering the late intermediate to final stage of this process and the real risk of a currency crises in any one of the major fiat currencies rises by the day.

NEWS

Gold inches up on light buying; Europe debt fears persist
http://www.reuters.com/article/2011/07/20/businesspro-us-markets-precious-idUSTRE7592IU20110720

Record Gold Price Fails to Deter Buying in India, Jeweler Says
http://www.bloomberg.com/news/2011-07-20/record-gold-price-fails-to-deter-buying-in-india-jeweler-says.html

Retail gold buyers in UAE spot booking purchases to beat price rises
http://www.emirates247.com/business/retail-gold-buyers-in-uae-spot-booking-purchases-to-beat-price-rises-2011-07-20-1.408809

More gold found in Sathya Sai Baba's cupboards
http://www.starnews.in/india/34-more/13597-more-gold-found-in-sathya-sais-cupboards

COMMENTARY

How to Make Sense of the Gold-to-Silver Ratio - Silver Catching Up to Do – Myra Saefong
http://www.marketwatch.com/story/how-to-make-sense-of-the-gold-to-silver-ratio-2011-07-19

Gold price floor to remain above $1000 for at least the next decade -Jeff Christian
http://www.mineweb.com/mineweb/view/mineweb/en/page96985?oid=131881&sn=2010+Detail&pid=102055

Matt Badiali: The Case for Gold Price Manipulation
http://www.theaureport.com/pub/na/10268

Exposing China's Mysterious Multi-Trillion Shadow Banking System
http://www.zerohedge.com/article/exposing-chinas-mysterious-multi-trillion-shadow-banking-system

Time For Tim Geithner's Annual Top-Ticking Op-Ed, In Which We Learn That It Is Time To Panic About America's Banks
http://www.zerohedge.com/article/time-tim-geithners-annual-op-ed-which-we-learn-it-time-panic-about-americas-banking-sector

Gene Arensberg: Are the big gold and silver shorts being overrun?
http://www.gotgoldreport.com/2011/07/recent-comex-commercial-opposition-to-gold-silver-prices-overrun.html

Why decline of the euro is good for gold – and for Switzerland
http://www.independent.co.uk/news/business/news/why-decline-of-the-euro-is-good-for-gold-ndash-and-for-switzerland-2317176.html

Is Silver Still a Good Investment Option?
http://www.commodityonline.com/news/Is-silver-still-a-good-investment-option-40871-3-1.html

 


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Wed, 07/20/2011 - 07:09 | Link to Comment Gordon Freeman
Gordon Freeman's picture

So I've got that going for me--which is nice...

Wed, 07/20/2011 - 08:06 | Link to Comment GetZeeGold
GetZeeGold's picture

 

Be the Ball.....GUNGA GALUNGA!

The Lama has left the building.....out the back door....as usual.

http://www.youtube.com/watch?v=LSawRbeTjkY

Looks like we're making 14 dollars the hard asset way.

So I've got that going for me--which is nice...

 

Wed, 07/20/2011 - 09:52 | Link to Comment JW n FL
JW n FL's picture
by Gordon Freeman
on Wed, 07/20/2011 - 07:09
#1473115

So I've got that going for me--which is nice...

 

*****************************************************

 

http://www.youtube.com/watch?v=8x-nQ-vPw5k&feature=related

 

http://www.youtube.com/watch?v=etpHKueh6S0

 

and for our gun tip of the day!!

http://www.youtube.com/watch?v=ytM_2PG6joU

 

Wed, 07/20/2011 - 07:11 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

$1800 after the "ceiling" is raised for King Ponzi.

Wed, 07/20/2011 - 07:35 | Link to Comment equity_momo
equity_momo's picture

We will have escape velocity after this debt ceiling gets raised. And once QE is confirmed again , gold breaks 1700 quickly  then 1800 and then you'll see the sheep take note as it approaches 2k.  But there will be very little physical for sale (the old adage of higher prices cure tight supply will not work for Gold. Buying will beget buying as trust in all things paper is lost)and premiums are going to widen dramatically.

We are close now. I hope you're all ready.

Wed, 07/20/2011 - 08:17 | Link to Comment SWRichmond
SWRichmond's picture

A friend asked me yesterday "You're not stll buying at THESE prices, are you?  This sucker has a long way to run.

Wed, 07/20/2011 - 08:37 | Link to Comment El Viejo
El Viejo's picture

But Ben says it will be different this time. (He may actually mean it) No QE unless growth less than 2% . I think he's feeling a little guilty about the starving and dying in the Middle East and now in China.

Wed, 07/20/2011 - 08:53 | Link to Comment equity_momo
equity_momo's picture

real growth has been below 2% for a long time. soon nominal growth will also dip below that as the Govn and the Fed realize the corner they have painted themselves in.   GDP is going to plummet and take risk assets with it , but not gold this time.  The reaction will be obvious: print. And then rinse/repeat the last 2 years but i think the stick save will only last 6 months next time.

Wed, 07/20/2011 - 09:08 | Link to Comment El Viejo
El Viejo's picture

Ha! When has the govt ever used real numbers?

Indo-China effect may now be the driving force for Gold.

(It's a global village now.) (with discretionary income)

Sorry this post was for Gold below. I got cornfused.

Wed, 07/20/2011 - 09:30 | Link to Comment Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Crack up Boom per Mises:

 

This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.

But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against ‘real’ goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last.

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 07/20/2011 - 10:59 | Link to Comment Frog-And-Toad
Frog-And-Toad's picture

What a fantastic quote... I literally just sent this to 5 people I have had heated debates over what is happening concerning our fiat system, as they believe everything is alright as stock prices have increased. Thank you for this.

 

+1

Wed, 07/20/2011 - 10:00 | Link to Comment DosZap
DosZap's picture

equity,

I do not think the Sheeple of the last two Generations GET IT.

Of course the ZH one's do,but as a WHOLE, they are not paying attention, were never taught to observe these types of issues.And, frankly could care less(until they get gored).

The prices going up, will not RING ANY BELLS for them.

It WILL NOT COMPUTE.

When the SHTF, they will be the Lemmings off the cliff, as will the very elderly, on fixed incomes.

Wed, 07/20/2011 - 10:20 | Link to Comment equity_momo
equity_momo's picture

Very true.

I spoke to some old colleagues recently .

They always thought me crazy post 08 in urging them into gold around 8 or 900. I said i wish i knew what i did then all the way back after the tech blow up as id be long gold from 3-400.

Gold is now 1600. They still havent bought any and still think im a little crazy. I doubt Gold 2k will change their views.

Ho-hum.

Wed, 07/20/2011 - 10:09 | Link to Comment DosZap
DosZap's picture

equity,

I do not think the Sheeple of the last two Generations GET IT.

Of course the ZH one's do,but as a WHOLE, they are not paying attention, were never taught to observe these types of issues.And, frankly could care less(until they get gored).

The prices going up, will not RING ANY BELLS for them.

It WILL NOT COMPUTE.

When the SHTF, they will be the Lemmings off the cliff, as will the very elderly, on fixed incomes.

Wed, 07/20/2011 - 11:13 | Link to Comment Hugh_Jorgan
Hugh_Jorgan's picture

You're right, they don't and won't get it until they can't buy their food from the grocery store on a regular basis. At that point it could be too late.

 

On the other hand, for those of us with a clue we might want to be armed against these people who will likely be hysterical and feeling like they have nothing to lose. Just sayin'...

Wed, 07/20/2011 - 07:12 | Link to Comment unky
unky's picture

if you look very carefully at the diagram you can see that most of the times there was a significant drop in gold prices directly after the debt ceiling increase.

Wed, 07/20/2011 - 07:15 | Link to Comment slaughterer
slaughterer's picture

Immediate reaction of PMs are to drop after a debt ceiling rise.  But long term the debt ceiling rise pushes PMs up.  

Wed, 07/20/2011 - 07:16 | Link to Comment Version 7
Version 7's picture

Good point. Notice also that trend stops around 2006.

Wed, 07/20/2011 - 07:34 | Link to Comment Gordon Freeman
Gordon Freeman's picture

I think that happened yesterday.  Maybe that was it...

Wed, 07/20/2011 - 08:31 | Link to Comment El Viejo
El Viejo's picture

Vector 1  =  Buy on rumor(fact in this case) Sell on news.

Vector 2  =  Typical August Dip in Gold Then shoot the moon till Jan'12

Wed, 07/20/2011 - 10:48 | Link to Comment DosZap
DosZap's picture

Vector 3 = This is not like any August in the History of the USA.

Chunk Typical OUT the window.

Wed, 07/20/2011 - 07:13 | Link to Comment Version 7
Version 7's picture

Admitting that the US debt ceiling continues to go parabolic, so we have it for gold.

Wed, 07/20/2011 - 07:14 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Yoo Hoooooo!

Wed, 07/20/2011 - 07:15 | Link to Comment Paralympic Equity
Paralympic Equity's picture

Debt is bad, mmmkay

Wed, 07/20/2011 - 07:27 | Link to Comment Freewheelin Franklin
Freewheelin Franklin's picture

No, no, no. Debt is good. Debt creates currency. Actually, debt is currency. The more currency that there is, the richer the country is. More money = more wealth. I know, because Pauly Krugnuts said so. Something about the "multiplier effect".

 

Hahaha. I just found out that I was blocked by Krugnut's FB page.

Wed, 07/20/2011 - 09:01 | Link to Comment FEDbuster
FEDbuster's picture

And of course this instant classic interview of Congressman Pete Stark for the debt=wealth crowd:

http://www.youtube.com/watch?v=UjbPZAMked0&feature=channel_video_title

Wed, 07/20/2011 - 10:16 | Link to Comment pops
pops's picture

After watching that video, I just had to watch another one....this one.

http://www.youtube.com/watch?v=8JHD8QuuWpE&feature=fvwrel

Priceless stuff.  Not the subject matter (although it's important) but the closed captioning.  It was hilarious.  Where do they get the people to do this?

Watch it without anything in your mouth and read the bottom.  You'll love it.

 

Wed, 07/20/2011 - 10:52 | Link to Comment DosZap
DosZap's picture

Free,

The reason we have not seen Inflation taking WAY off,is the fact Bernak is NOT printing any currency.

Just entries in a computer,

Sooner or later, he or whoever has his Job, will have to actually PRINT.

When that happens, look out.

Wed, 07/20/2011 - 07:17 | Link to Comment youngman
youngman's picture

That is because the press spews that the world is saved because we raised our debt ceiling....when the truth is the country and the dollar just got weaker because of it....bad press..easy Economics..just like yesteray....it looked like a deal was close..so the fear trade was OFF...but it should be ON

Wed, 07/20/2011 - 07:19 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Gold is flat in U.S. dollars and New Zealand dollars but marginally lower in most currencies today as increased risk appetite has seen risk assets rally  ...... despite poor fundamentals.

It's all makes so much sense. 

Wed, 07/20/2011 - 07:22 | Link to Comment cossack55
cossack55's picture

fundamentals are transitory.

Wed, 07/20/2011 - 07:31 | Link to Comment francis_sawyer
francis_sawyer's picture

funny mentals

Wed, 07/20/2011 - 10:58 | Link to Comment DaveyJones
DaveyJones's picture

Funny postal

Wed, 07/20/2011 - 07:35 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

And now, taking centre stage, supporting the fundamentals with scintillating insights, is the classic gold top caller, Mr 100:1 himself, Mr. Jeffery Christian of CPM Group with his latest call (Cue drum roll) ......... Ta Daaahhh! "Gold to maintain $1000.00 floor for the next decade".

Mr. Christian!

Mr. Christian?

Mr. Christian seems to be late. Again.

Priceless.

Wed, 07/20/2011 - 07:41 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

I noticed this also. Jeff Christian has to be the biggest clown in the PM analcysts game. Or Nadler.

Wed, 07/20/2011 - 10:41 | Link to Comment oddjob
oddjob's picture

My vote goes to Gartman, he will continue to sell half his gold forever.

Wed, 07/20/2011 - 07:43 | Link to Comment GetZeeGold
GetZeeGold's picture

 

Heh heh.......Mr. Christian has left the building...out the back door.....as usual.

How bad is it when the whole world knows you're dirty and makes fun of you?

 

Wed, 07/20/2011 - 11:32 | Link to Comment GoinFawr
GoinFawr's picture

Hey, that's just not true. Kid Dynamite thinks he's great!

Wed, 07/20/2011 - 09:27 | Link to Comment Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Wow!  Gutsy call!

 

Tuco

Wed, 07/20/2011 - 07:21 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Gold will rise. In dollears.

When there is no more dollear, it will sink in Ameros.

What will silver do? That is the bigger question.

While everyone splits hair on Gold's role (perhaps even Silver), we might, in these ever new times, an altogether new store of value. The even bigger question is, what will that be? 

Think.... it's all about value in the coming times.

ORI

http://aadivaahan.wordpress.com/2010/07/24/value-vs-price/

Wed, 07/20/2011 - 07:24 | Link to Comment cossack55
cossack55's picture

Easy. Brass, lead and some copper.

OBTW, either you erred in spelling dollars or you were correct in your spelling, pointing out that dollears do in fact hold more value than dollars.

Wed, 07/20/2011 - 08:03 | Link to Comment Oh regional Indian
Oh regional Indian's picture

On purpose Coss. ;-) And I'm thinking beyond the survival paradigm here!

ORI

Wed, 07/20/2011 - 07:39 | Link to Comment equity_momo
equity_momo's picture

Thats easy Ori.  Energy.   Whether thats calories you put in your mouth or gas you put in your car or electricity you get when you flick a switch.

Whatever new currency is created will need to be backed by gold and energy. Currently the dollar is only backed by energy and we have the US Military to thank for that. There will be no new currency unless the US Military decide to back it. Before the dollar falls be prepared for some major carpet bombing.

Wed, 07/20/2011 - 08:10 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Ah, but there is a big assumption on yoru part that the US military is going to be a force into the coming paradigm as well.

I would not assume that for anything more than the short term (year or a bit at most).
Then we all fall down together and wake to this new paradigm.

Energy indeed, but not newtonian or amperic either.
ORI

Wed, 07/20/2011 - 08:32 | Link to Comment Tortfeasor
Tortfeasor's picture

Methinks you underestimate the raw power of the US military.  It is stretched and weary, but when mobilized outright it is a dramatic force.  Even with Afghanistan and Iraq, we have not seen the total power that can be unleashed on the world.  Like the waters of a dammed up lake...break the dam (the government control of the military) and beware the flood.

Wed, 07/20/2011 - 11:02 | Link to Comment DaveyJones
DaveyJones's picture

True but you sound a little roman. And isn't all money a symbol for energy or work

Wed, 07/20/2011 - 08:33 | Link to Comment equity_momo
equity_momo's picture

I agree with Nial Ferguson , in his book Colossus , when he argues the point that the US Superpower provides a status quo of sorts. Throughout the ages Empires have created order - regardless if you think thats good or bad- but without one we create a vacuum and i doubt that is good for anyone. History suggests a power vacuum causes more imbalances and chaos.

I see no alternative to paper defaults and war. The US Military will fight to keep order until there is an obvious competitor to take over.   I do wonder why Americans get angry at military spending and Middle Eastern wars. They dont seem to realize what the alternative is.

 

Wed, 07/20/2011 - 09:18 | Link to Comment FEDbuster
FEDbuster's picture

Don't you think that those whom have grown tired of the US control (via the US military) might be sensing an opportunity at this point in time?  I think there are some major forces in the world willing to "test" the US military's resolve to back the dollar.  Only time will tell.

Wed, 07/20/2011 - 10:37 | Link to Comment equity_momo
equity_momo's picture

I think possibly they are yes. But its David v Goliath.  I dont see a parallel in history to what we are going through until you get back to the Roman Empire.  Essentially Rome defeated itself as wil the US.

 

The Romans shifted their power base to Constantinople. I wonder where the new DC will become. Sydney? 

Once the US can no longer afford to project outward power to secure energy resources its Dark Ages II.

 

Wed, 07/20/2011 - 11:09 | Link to Comment DaveyJones
DaveyJones's picture

It's David(s) and Goliath. Good posts

Wed, 07/20/2011 - 09:32 | Link to Comment prole
prole's picture

Those alternatives scare me as well em: Liberty, the end of our bondage to a foriegn power, us not killing a bunch of Arabs, being freed from theft by taxation. I'm shaking just thinking about it.

Wed, 07/20/2011 - 11:00 | Link to Comment DosZap
DosZap's picture

Ori,

Old truism, when is an animal the most dangerous?.

One, when it is cornered, and two,when it is injured, three, when it is cornered and injured.

With 6000+ nuclear warheads, I do not see the US being weak in any sense of the word.

As long as we are capable fo putting a 50 kilo ton warhead in your backyard, weak is the wrong word.

Wed, 07/20/2011 - 11:15 | Link to Comment DaveyJones
DaveyJones's picture

Worked for the USSR. Last time I checked were not the only one with the doomsday device. That bluff game will never work

Wed, 07/20/2011 - 11:50 | Link to Comment Oh regional Indian
Oh regional Indian's picture

MAD is just that DoS. That crap is in too many hands now, most known, many un-known.
In that firestorm, all best are off.

ORI

http://aadivaahan.wordpress.com/2010/07/03/new-clear-meme/

Wed, 07/20/2011 - 08:58 | Link to Comment mess nonster
mess nonster's picture

Doesn't all that carpet bombing require jet fuel? Which requires money? Which, after all, requires something more substantial than trust, or (lately) faith, or (now) hope?

I like the dip in GDP relative to debt ceiling right about 2006...that's your Peak Oil talkin'.

Wed, 07/20/2011 - 07:25 | Link to Comment themiestro
themiestro's picture

Tyler,

     I know this is off topic, but it just struck me.  The prepayments that the Fed uses for it's QE-Lite, does refinancing also add to that pool?

Wed, 07/20/2011 - 07:31 | Link to Comment Tyler Durden
Tyler Durden's picture

It has to be a replacement of notional. The Fed is not an active mortgage processor.

Wed, 07/20/2011 - 08:08 | Link to Comment themiestro
themiestro's picture

Okay, thank you for clarifying.

Wed, 07/20/2011 - 07:31 | Link to Comment BigDuke6
BigDuke6's picture

Hmmm, yes we do love this and fear it too.

As gold goes up the influence of the USA on the world declines and the upstarts build their carriers and increase their gold reserves.  Why has gold not corrected seriously?  The chinks are buyin the dips.  Reserves of China are now over 1000 tons and they have stated they want 8000 tons.

July (and beginning of august) has always been a favourite buying time of mine. i found a averaged price chart throughout the year in a book one time and there are patterns.

the best link on the net i could see with a brief search was

http://www.usagold.com/analysis/doldrums-2008.html

Gold can still pull back to $1450 and be in a bull market.

Look for some heavy manipulation soon... martin armstrong suggests a temporary rigged pull back...

and then its all in for me.

Wed, 07/20/2011 - 07:42 | Link to Comment equity_momo
equity_momo's picture

I agree but the risk of trying to time a 10% pullback makes waiting seem....unwise. Just keep averaging in and if you have too much fiat in the bank , then just pull the trigger. Can always hedge it by buying paper puts on GLD or SPY.

Wed, 07/20/2011 - 08:05 | Link to Comment BigDuke6
BigDuke6's picture

Haahhah, 10% pullback?  

we would be waiting indeed..  if it gets to 1550 that would do me.

i've been in paper too long, its been good but i just get the feeling physical is getting more important.  i've been listening to 'gold to the moon' stories for years now, maybe its beginning to get to me but somethings changing.. dont u think?

i'd be getting 5kg of silver too.

ah its just my thoughts/plans - we'll see.

Wed, 07/20/2011 - 09:00 | Link to Comment equity_momo
equity_momo's picture

I was referring to Martin Armstrongs 1450 call.  Gold is 1585 why the hell are you waiting for a mere 35 bucks pullback? It could easily shoot to 1650 next week.

A 10% pullback once we have some major risk off moves is possible with margin selling. Hedge funds are going to blow up this year and disorderly unwinds will play havoc with various asset classes.

Wed, 07/20/2011 - 17:44 | Link to Comment BigDuke6
BigDuke6's picture

could be good advice - being in australia the strength of the aussie dolar comes into it - 

but you are right...  

Wed, 07/20/2011 - 07:42 | Link to Comment Gordon Freeman
Gordon Freeman's picture

You'll be waiting a long time...

Wed, 07/20/2011 - 07:35 | Link to Comment doesmybuttlookf...
doesmybuttlookfatinthis's picture

The market is like a junkie strung out on heroin, it is taking more and more to keep the same high. Until one day it either ODs and dies, or the H gets cut off and it goes into withdrawals. Either way its going down.

Wed, 07/20/2011 - 11:22 | Link to Comment DaveyJones
DaveyJones's picture

Unfortunately the market has an in with a number of corrupt physicians who keep writing prescriptions that will kill him

Wed, 07/20/2011 - 07:37 | Link to Comment kridkrid
kridkrid's picture

When the unit to which you assign value is based on debt, rather is debt, of course debt and GDP will rise or fall together. It should be the central focus on the debt debate which is precisely why nobody ever mentions it (outside of Ron Paul). This system is finished, the battle is for what's next. With history as our guide, we'll loose that battle as well.

Wed, 07/20/2011 - 08:46 | Link to Comment toothpicker
toothpicker's picture

+10

Wed, 07/20/2011 - 07:44 | Link to Comment nathan1234
nathan1234's picture

Finally it has started.

The first of many downgrades for the US. No wonder Blythe is playing her last hand today depressing silver.

http://www.ft.com/intl/cms/s/0/b13d5d56-b16a-11e0-9444-00144feab49a.html...

Wed, 07/20/2011 - 11:08 | Link to Comment DosZap
DosZap's picture

Link shows nothing about a downgrade?.

We should be at a F-,but, I see no article, or newsflash.

Wed, 07/20/2011 - 07:45 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

invest in what must be. PM's. There are no answers to the mess world wide except inflation of fiat money..PM's will move up and down but the trend will be higher...

you cannot derail a locomotive with tooth picks.

trading on "news" or politicians words is a rigged game. invest in what must be.

Wed, 07/20/2011 - 07:51 | Link to Comment letsgetreadytorumble
letsgetreadytorumble's picture

WHAT A BLOODY SHAME!!  They are in Panic mode...............

 

http://www.youtube.com/watch?feature=player_embedded&v=Y--jCrDOSjk

Once again, there was stunningly blatant paper manipulation in the silver market on Tuesday. 250 million paper ounces of silver – $10 Billion dollars worth – was sold into the market in one minute. As our friend Brother John disects the crime he notes, The Comex is a completely and utterly corrupt market.”

Wed, 07/20/2011 - 08:11 | Link to Comment nathan1234
nathan1234's picture

With the Hingkong Mercantile exchange starting silver trading this Friday 22nd July one can expect the nail in the coffin for Comex.

They deserve their demise for having been in cahoots with JPM and the CFTC for their extraordinary manipulations.

Hopefully the Silver inventory get exhausted  by the September contract.

And those who have their silver in the Comex vaults should remove it before it goes missing like the missing trillions in the Pentagon and the soon to be confirmed missing gold from the US reserves

Wed, 07/20/2011 - 09:15 | Link to Comment Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Keep it cool, dry and nearby or say goodbye!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 07/20/2011 - 09:54 | Link to Comment Bastiat
Bastiat's picture

Yep, I quit trading COMEX silver last Dec -- sometimes its a market and sometimes it's a crime scene.  Also took delivery to a private insured vault of all bullion.  Let 'em play--the end is near.

Wed, 07/20/2011 - 11:09 | Link to Comment DosZap
DosZap's picture

Bastds do it every time.................

WHY is it they are so concerned about the price of silver?.

Wed, 07/20/2011 - 13:51 | Link to Comment RockyRacoon
RockyRacoon's picture

The supply of physical comes from the shorts, and the bullion banks are very short silver.  They can't supply the physical, that's why they've received the option to settle in fiat.  When it becomes obvious that they don't have any silver the prices will explode.  It's all about the massive short positions.

Wed, 07/20/2011 - 08:06 | Link to Comment equity_momo
equity_momo's picture

Thx for posting that - articles like that confirm im doing the right thing in adding to gold every few months. 

Its a little inaccurate though - in the 30s and 70s dow/gold ratio was much lower than 1:5. It almost got to 1:1 in the late 70s and was 1:3 in the 30s.

Even if we get to 1:4 thats a 3k gold price if market stands still or a Dow price 50% lower.  Im betting we go much lower than 1:4 though.

Fun times.

Wed, 07/20/2011 - 11:21 | Link to Comment DosZap
DosZap's picture

Fun times.

 

Surely you jest,this is the most screwed up mess ever seen by modern man.

Global Destruction..............

Wed, 07/20/2011 - 15:31 | Link to Comment equity_momo
equity_momo's picture

Gallows humour DZ.

Wed, 07/20/2011 - 11:27 | Link to Comment Raymond Reason
Raymond Reason's picture

That title would be accurate.  Gold hoarders have lost all hope that the ponzi can be sustained. 

Wed, 07/20/2011 - 08:15 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

Gold remains well below its 1980 record high of $2,400/oz when adjusted for inflation.

TPTB were caught flat-footed in 1980, no PPT and similar market manipulating mechanisms to suppress gold (and silver) like they have today.

Market suppression will continue working, keeping gold & silver down, till the US dollar collapses ...suddenly ...without warning.

Yes, it will be sudden, without warning.  

Watching the Fed won't help, becuase Fed actions won't do it.

It will be actions elsewhere in the world that cause sudden loss of confidence in the US dollar worldwide.

That's when we'll see $5,000 gold, maybe $10,000 gold. 

It'll be sudden, catching everybody flat-footed.

Wed, 07/20/2011 - 08:26 | Link to Comment bill1102inf
bill1102inf's picture

10,000 gold, why not 25,000??? Ever see a tulipmania chart? Or a .com chart? or a chart of any other commodity that goes parabolic?

Wed, 07/20/2011 - 09:06 | Link to Comment GetZeeGold
GetZeeGold's picture

 

14 trillion......why not 16 trillion?

Why not 100 trillion......oh wait.....it is.....we just don't talk about it.

 

Wed, 07/20/2011 - 09:33 | Link to Comment i-dog
i-dog's picture

Gold is not a commodity ... neither are tulips ... neither are dot.coms. Tulips (luxuries) and dot.coms (speculations) can go parabolic against most/all currencies simultaneously, but gold will only go parabolic against the weakest currencies.

Wed, 07/20/2011 - 08:45 | Link to Comment Tortfeasor
Tortfeasor's picture

I hate that statistic.  Inflation adjusted gold...bah!  

Much prefer to compare supply of gold v. monetary supply.  Shows me what I consider the "true" price of gold.  Taken that way, we got a looooooooong way to go.

Wed, 07/20/2011 - 08:46 | Link to Comment El Viejo
El Viejo's picture

What about the collapse of the Euro when they realize Austerity is not working and there is a liquidity crisis and have to print. It is a race to the bottom and Europe got a late start.

Wed, 07/20/2011 - 09:12 | Link to Comment Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Agreed Cranky, just like the British Pound in the 80s!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 07/20/2011 - 08:27 | Link to Comment Chump
Chump's picture

Increasing the debt limit means you print more dollars, which will weaken the dollar and consequently lift the gold price...

No it doesn't.  Shitty analysis there, Julia Yoo.

Wed, 07/20/2011 - 09:06 | Link to Comment DIEKeynesianEco...
DIEKeynesianEconomics's picture

It's actually a pretty obvious analysis.

It does mean we print more dollars, no country in the world has enough USD anymore to loan us enough for our debt ceiling hike. Only those with the power to issue USDFRNs can loan us money now.

You see, China giving us a loan wouldn't debase the dollar anywhere near the Fed giving us a loan. It's not like the Fed has reserves that were printed and devalued the dollar years ago. It's an ongoing process. If they were just loaning out reserves and not new issued paper, the dollar would decline at a drastically slower rate.

Wed, 07/20/2011 - 09:10 | Link to Comment DIEKeynesianEco...
DIEKeynesianEconomics's picture

Sigh...I still slip up and call fiat currency money sometimes.

My bad.

Wed, 07/20/2011 - 09:29 | Link to Comment Chump
Chump's picture

No worries.  It is still money, believe it or not.  My mortgage lender still accepts digital 1s and 0s that represent fiat money.  The grocery store still takes pieces of green paper and lets me carry food out their doors.  Fiat money is...money...until it isn't.

At any rate, did you notice how you made a few caveats about the relationship of the debt ceiling to money printing?  (If China stops buying our issuance, if there are no other buyers, if the Fed has to step in, if in doing so the Fed prints).  That's a decent analysis.  Ms. Yoo's was not.  It is not true that raising the debt ceiling means we will be printing more money, therefore gold will rise.  These things may indeed all happen, but none are guaranteed (Tyler's assertions aside...where's QE3 btw??) and they may or may not even be related to one another as Ms. Yoo boldly claims.

So, shitty analysis, but you salvaged it.

Wed, 07/20/2011 - 11:34 | Link to Comment DosZap
DosZap's picture

Dudes,

They are not PRINTING new PAPER yet.

If they were, we would be going into overdrive on inflation, until they actually PRINT it, it won't happen.

Wed, 07/20/2011 - 13:22 | Link to Comment oddjob
oddjob's picture

The failure of USD hegemony will mimic printing by 10 fold, where do u think those FRN's will end up?

Wed, 07/20/2011 - 14:18 | Link to Comment RockyRacoon
RockyRacoon's picture

You don't think there are warehouses full of paper currency already printed?  How many pallets of $100 bills did they "lose" in Iraq?   A requisition for a C5a load or two would solve the problem.  Then they just load up the helicopters at the regional distribution centers and DROP according to Bernanke's game plan.

Wed, 07/20/2011 - 14:53 | Link to Comment Chump
Chump's picture

Wow, whole pallets of hundred dollar bills?

Do they have this many times like 5?

http://www.youtube.com/watch?v=Tym9AhMNcP0

Save me a wheelbarrow load when the helicopters come.

Wed, 07/20/2011 - 11:37 | Link to Comment DosZap
DosZap's picture

*

I hate windows 7.

Wed, 07/20/2011 - 11:37 | Link to Comment DosZap
DosZap's picture

*

Wed, 07/20/2011 - 09:07 | Link to Comment DIEKeynesianEco...
DIEKeynesianEconomics's picture

It's actually a pretty obvious analysis.

It does mean we print more dollars, no country in the world has enough USD anymore to loan us enough for our debt ceiling hike. Only those with the power to issue USDFRNs can loan us money now.

You see, China giving us a loan wouldn't debase the dollar anywhere near the Fed giving us a loan. It's not like the Fed has reserves that were printed and devalued the dollar years ago. It's an ongoing process. If they were just loaning out reserves and not new issued paper, the dollar would decline at a drastically slower rate.

Wed, 07/20/2011 - 08:45 | Link to Comment monopoly
monopoly's picture

Gold was up 10 days in a row. What is wrong with a correction. Nothing has changed to make gold, silver less attractive. These idiots are going to increase the deficit by 2 Trillion dollars, 2 Trillion. That is insane. And do you think that will be the last increase. I would  not bet my Ipad on that.

Remember we have had numerous corrections of 10-15% in this bull market. So we are down 25 dollars from an all time high and guys are getting nervous. Weak hands moving out. That is what we need. Patience and keep that hand on the tiller. This is working just fine.

And, would some one get Cramer off the idiot box. I mean, it is 6AM on the West Coast and this shill is on TV so early. Cannot stand it. Back to Bloomberg.

Wed, 07/20/2011 - 08:57 | Link to Comment Gordon Freeman
Gordon Freeman's picture

"Gold was up 10 days in a row. What is wrong with a correction"

Amen, bro!  Every fucking tick down sends some of these guys into a conspiracy spasm...

This is a bull market...

Wed, 07/20/2011 - 09:27 | Link to Comment TheJudge2012
TheJudge2012's picture

Ron Paul on HR 2560, the Cut, Cap, and Balance Act:

"This bill only serves to sanction the status quo by putting forth a $1 trillion budget deficit and authorizing a $2.4 trillion increase in the debt limit."

http://www.infowars.com/ron-paul-deficit-cutting-bill-maintains-status-q...

Wed, 07/20/2011 - 09:32 | Link to Comment mess nonster
mess nonster's picture

Why I'm not buying gold:

1. I don't have any money.

Beyond that, here are a few reasons why I wouldn't buy, if I had money.

-Under a collapse scenario, when the collapse comes, the gold becomes nothing more than savings. Sure, it's good to have some money to fall back on when one loses one's job,  to buy food etc, but when the gold is gone, it's gone, unless one finds a productive occupation in the meantime. Ahh, the ability to provide needed goods and services... which brings me to-

-Under a collapse scenario prices will be very, very high, because everything (as in food clothing, and heated shelter) will be scarce. If I have a stick of firewood and you have a gold coin, what do you think the price of my stick of firewood is going to be?

- Under a collapse scenario, either the gov't collapses and dissipates, or it gets really strong and really mean. If it dissipates, well and good, but if it gets really strong and mean- well the guys with HK's and black ski masks are going to show up at your door and take your gold (and you) and that will be that. The mere suspicion of gold ownership will bring the SWAT goons calling.

Therefore, gold only makes sense if somehow the current paradigm continues to stumble along. If at some point, "they" (gov't, central banks, investment banks, markets, etc) get their shit together, you will be able to sell at the peak and make a tidy profit, and then go out and buy a new car or pay for your child's college education. Despite all the blather here about "collapse", by buying gold, you show you have no conception of what a collapse really entails.

As for me, I'm investing (my time, which is all I have) in useful trade skills, like food production, and developing the cleverness to fix just about anything. I'm investing in a certain (my presence here betrays me) anonymity, at least an attempt to stay below the radar, just in case gov't decides to go cannibalistic on my ass. (maybe you need a place to hide? Please give me all your gold in return-you'll do so gladly).

You are the gold miners in '49er California. I'm the bread merchant. HaHaHaHaHa!

Wed, 07/20/2011 - 09:49 | Link to Comment Gordon Freeman
Gordon Freeman's picture

You're a moron.  There--I said it.

Wed, 07/20/2011 - 10:00 | Link to Comment i-dog
i-dog's picture

"Under a collapse scenario, either the gov't collapses and dissipates, or it gets really strong and really mean"

Thank you, sincerely, Monster, for stating the obvious in so few words!

Too many here believe that collapse will be the former ('Mad Max'), while those watching the antics of DHS, TSA, FEMA, and the federalisation of state and local cops, are expecting the latter.

I'm even expecting that all those troops being pulled out of Iraq and Afghanistan will be used for imposing martial law at home next year (to "protect" US citizens from "all those terrorists" among them), rather than marching them off to another MENA theatre.

Wed, 07/20/2011 - 10:12 | Link to Comment Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

I think you are correct!

 

Tuco

Wed, 07/20/2011 - 11:46 | Link to Comment DosZap
DosZap's picture

The American public will never allow it.Do not say we will have no choice,we do.

We have not defeated anyone Iraq, or Trashcanistan, and we never will.

How many troops and years have we been there, and STILL are?

And this is against insurgents.

Come w/the HK's,piss ant weapons............

There will have to be a HUGE Reichstag moment(even larger) before it will be allowed.

Too many people are onto their shit.

Wed, 07/20/2011 - 09:53 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

you lost me after you said "...I have no money."

 

Wed, 07/20/2011 - 09:55 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

you lost me after you said "...I have no money."

 

Wed, 07/20/2011 - 09:57 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

you lost me after you said "...I have no money."

 

Wed, 07/20/2011 - 10:11 | Link to Comment Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Are you trying to convince us or yourself?

 

Tuco

Wed, 07/20/2011 - 11:47 | Link to Comment DosZap
DosZap's picture

Tuco,

For whatever reason we have a server issue.........I do not think it can handle the traffic.Same thing is happening to me.

Wed, 07/20/2011 - 10:38 | Link to Comment Clay Hill
Clay Hill's picture

Hi, n_m...

I'm with i-dog, you 're right about the way gov't can can get mean, in a lot of ways, that's already here. Now take it one step further.

An unfavorable encounter with big bad gov't goons may leave you unable to perform those clever Mr. Gadget type services, or produce food.

Then what?

Accumulate the goods while you can, bro.

Wed, 07/20/2011 - 11:02 | Link to Comment Boxed Merlot
Boxed Merlot's picture

Gold is 12% higher in dollar terms so far in 2011 and is the best performing currency in the world in the last 12 months.

 

Is there a difference between "currency" and "money"?  We know that in (frn) dollar terms gold is not money so evidently currency is not money either.

 

...You are the gold miners in '49er California. I'm the bread merchant...

 

Even the bread merchant valued gold though.  California's gold and Nevada's silver provided much of the foundation for the NY moneied interests that continue to this day.  JPM, Wells and others benefitted from the combination of natural resource development and an infrastructure of law abiding conduct.  I understand that by today's standards, the methods of extraction and the land transfer / ownership laws are viewed as rather primitive and unacceptable, but considering what was in existence beforehand, the results were quite remarkable.

 

The US civil war was won on the back of this activity, and very possibly because of it, especially when you factor in the struggle of whether these resources would fall in the hands of southern sentiments as these territories had gained statehood.

 

By the way, as far as US "PIIGS" go, CA's Mother Lode and NV's Comstock were only developed to the extent of the then existing technology.  If PMs are ever redefined to mean "money" or "currency" again, I suspect the other states will gladly accept the contributions these areas would make in unifying the nation again.

 

Wed, 07/20/2011 - 14:27 | Link to Comment RockyRacoon
RockyRacoon's picture

@mess nonster:  Having "no money" is certainly an important variable in the equation as to how much gold you buy.   Consider silver as a suitable substitute.  Here is the reason that silver will be better for you:

You have the notion that gold will be used to buy firewood, or some such idea.   It will not be used for common daily barter.   Gold is the mechanism whereby we store our wealth to ride out the financial/economic/societal storm(s).   One should prepare to survive on the hard assets that are on hand when the collapse occurs.   Think of gold as ammo; you don't want to use it unless it is a case of life or death.  (To carry the analogy a bit further, you can also swap ammo for daily needs.  Hoarding the caliber that fits common weapons, whether it's what you have or not, is moot.)  A nice supply of firewood would do you just as well.   You'll go into the crisis cash poor, and emerge cash poor.   No bid deal.  You have held your ground.   That's how it is supposed to work.

If you have silver you will have a much better day-to-day currency than you'd have with gold.  That puts you in a better position to survive.

Wed, 07/20/2011 - 09:34 | Link to Comment GiantWang
GiantWang's picture

Those charts show geometric growth for sure . . . flat for a very long time, inflection point, and then almost straight up.  Sustainable?

Wed, 07/20/2011 - 09:56 | Link to Comment So Close
So Close's picture

Those charts show our debt limit/inflation.  So no.  Not sustainable.

Wed, 07/20/2011 - 10:09 | Link to Comment kridkrid
kridkrid's picture

Compounding interest has a way of doing that.  Money defined by debt with interest attached.  Unsustainable by definition.  The end is near.

Wed, 07/20/2011 - 10:58 | Link to Comment rosiescenario
rosiescenario's picture

"For now markets appear more interested in Apple’s massive profits than Uncle Sam’s massive debts."

 

...crows, too, are attracted to bright and shiny objects...

Wed, 07/20/2011 - 11:06 | Link to Comment Doyle Hargraves
Doyle Hargraves's picture

"Gold is 12% higher in dollar terms so far in 2011 and is the best performing currency in the world in the last 12 months."-But the Bernank says gold is not money! I cannot wait till that helicopter flyin' sumbitch has to eat those words!

Wed, 07/20/2011 - 11:50 | Link to Comment DosZap
DosZap's picture

 The Bernank LIED......................what else is new?.

Gold is money, and is used all over the world as such.

He needs to get out more.

Thu, 07/21/2011 - 00:04 | Link to Comment honestann
honestann's picture

If Ron Paul had more than 5 minutes, it would have been fun to watch him ask Bernanke:

Q:  What is money?

Q:  Is this money (holding up a federal reserve note)?

Q:  Have you seen any money in the past year?

The answers would blow most average folks off their couches.  There IS no legal money any more.  To be sure, a "federal reserve note" is a NOTE, which is a debt.  Which means, the next question for Bernanke would be:

Q:  This is a "federal reserve note", which is a debt.  The question is, who owes who?

Q:  Who is the debtor and who is the creditor?

Q:  And finally, WHAT does the debtor owe to the creditor?

Asked these questions, we would certainly see Bernanke's head spin around in a full circle at least a dozen times, then steam shoot out his ears, then... well, what happens next would be fun to watch.

Wed, 07/20/2011 - 19:02 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

Americans are creatures of habit.  

Give 'em a couple generations to get used to green paper currency redeemable in gold / silver.   Trust is built and habit is formed.

Them quietly remove gold / silver redeemability.   Americans don't seem to care.   They go right on using the green paper currency like before.

They don't realize said green paper currency has lost 97% of its purchasing power (98% now).   Because it happened slowly over a 90 year period.

If loss of purchasing power happens slowly, say 1% - 2% per year, nobody notices.  

It's somewhere around 10% loss per year that people start noticing.  But all they do is bitch about it.  They don't actually do anything about it.

The Fed is well aware of this. They can inflate the money supply 1% - 2% per year and nobody cares.

Inflating an $8 trillion money supply 2% is $160 billion.  That's $160 billion of "free money" the Fed can spend any way they want.

Inflating an $8 trillion money supply 10% is $800 billion.  That's $800 billion of "free money" the Fed can spend any way they want.

Hopefully now you can see why central banks love having control of a nation's currency.

Hopefully now you can see why the Fed was created and substituted their currency (FRN) for the American government's gold & silver redeemable currency, which was taken out of circulation ...slowly, quietly, so people wouldn't notice. 

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