Gold Surpasses $1,364 As 2 Year Drops To New Record Of 0.37%

Tyler Durden's picture

It is getting scary out there. The LBMA has now lost all control over the gold market, even as the Fed now has the entire bond market in the palm of its hand. A little earlier spot gold passed a new record price of $1,364, which as the chart below shows, demonstrates a parabolic blow off or something in the precious metal, while in bond land the 2 Year has collapsed to 0.37%, an unprecedented low yield. There is a possibility gold will take out $1,400 within days. Not to be left alone, the 10 Year has also surged and is now touching 2.39%, bringing it to within 11 bps of the Bund, the tightest spread since December 2009. In other news, today will be another day in which both deflation and inflation win at the same time, leading to major confusion for everyone in the prediction game. And with gold already up 1% on the day, stocks will continue to be down in real terms.

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Gen X Gen Y Hybrid's picture

If there is a gold correction (there has to be a pullback at some point)....where is the retracement?

EscapeKey's picture

There's no way I'm trading - I fear not being able to get back on board if I do.

If this is the foot of the parabolic curve, there doesn't need to be a retracement. Not saying I believe it is, but I wouldn't rule it out, either.

The USD has another horror day. USD/JPY 82.3. So much for the BoJ currency intervention.

Hansel's picture

+1, No way I'm giving my position up now either. A reason not to.

Pladizow's picture

The smart money will buy on dips, not sell and therefore makes retracement that more difficult.

MSM starting to recomend gold - this is what scares me.

They push the sheep into the GLD with the hopes of continuing to manipulate.

Henry Chinaski's picture

Paralyzed is a good description.  Can't bring myself to sell and plan to buy on the dips.

"MSM starting to recomend gold - this is what scares me."

First, I am not sure about that.  If you go back and read tha last several MW articles on gold, they are mostly putting it down and hyping the risk and disadvantages. Second, isn't that what all the gold bugs have predicted.  At some point the masses jump in and gold goes ballistic.

thesapein's picture

Right, we can't be ahead of the curve if the rest never actually follow that curve...

snowball777's picture

The BOJ will come to their senses once it breaks 82. If Japan doesn't have its exports, it doesn't exist.

unum mountaineer's picture

hope there is, but I get the sense shit is picking up in feces meet fan event(s), hence small to mid pull back, then sky rocket...this shit is money man..I'm not one to be an unwilling participant of these egomaniac's pissing contest.

Turd Ferguson's picture

I would be wary of being long tomorrow morning at this time. The Evil Empire will seize any moment they can to cause a sharp pullback by scaring out the new weak-handed, momentum-based longs.

The BLS BS that will be released in 24 hours will somehow be construed as enough of a surprise to cause some type of short-term, short-squeezing dollar bounce. The EE will then try, once again, to paint the tape with an "outside reversal day"...maybe drive gold back down through 1350 toward 1330. The question is, will our buyer(s) of size step in and bring gold back to down only a few dollars? Recent history suggests that they will. They've got the EE on the mat. There's no sense in letting their collective feet off their throats.

unum mountaineer's picture

damn, i'll be in meetings all day. I should <cough> <cough>, mail it in so I can watch this play out tomorrow. Friday will be an interesting day..

Clark_Griswold Hedge Mnger's picture

I agree, I plan on taking some off the table today.

At some point there will be a push down, granted it could be for a day or a few hours only.

How many times have we seen it open down 1% only to recover and climb 1% by days end.

I think today's little price gift, is worthy of cashing out a bit, and reassessing tomorrow mid day.

unum mountaineer's picture

very useful metal indeed. I'm always on the look out for digorno if you know what I mean...what to do with what's on ice is a little easier.

flacon's picture

And I have a "Learning Tree" exam tomorrow! Shucks!

John Bigboote's picture

Nice call on $1350 by the end of the week, Turd.

Turd Ferguson's picture

Thanks, John. No reason not to expect $1500 by 12/10/10 to play out, too.

Lots more to come. December and February calls, though expensive, should payoff handsomely.

MrMorden's picture

I hope so, that's my birthday and would make a nice present!  :D

Max UK's picture

Hi Turd,

love your comments, but have some observations.

Dollar weakens, all other things constant, price of commodities in dollars goes up. Additionally, dollar weakens, safety is sought in commodities & PMs. Fed has a policy to weaken the dollar, and we are seeing it happen real time. Its a tough call now for the cartel, with a plunging dollar, to smack gold and keep it down, no?

Secondly, if the 'buyers' are represented by one or two heavyweights, they will squeeze the cartel in a controlled fashion, so as not to ramp up the price of the thing they want to acquire. The spiralling price suggests that several buyers are now competing with each other, it is now a disorderly scrum for the metal.

These two factors are already powerful argument to suggest that the cartel has lost control, but there is a third. Gold/silver ratio has fallen to 58 for the first time in ages; silver is blazing a trail, and is the long lever on gold.

My hunch is that any smackdown will be short lived; this is game-on!

JLee2027's picture

The spiralling price suggests that several buyers are now competing with each other, it is now a disorderly scrum for the metal.

Wait till the real action starts in a few months.

Turd Ferguson's picture

Max, I'd go along with all of your observations, particularly your reference to silver. This move in PMs/$ has seemingly taken on a life of its own buy it all started in the Comex silver pit. It became quite clear, about 6 weeks ago, that the Comex was flat out of silver...and they still are. This realization caused many gold investors, who for years had been skeptical, to begin to wonder: "hmmm, if the Comex is out of silver, they're probably out of gold, too.". 

Now, with the ongoing global currency devaluations only exacerbated by the imminent "qe2", you have the proverbial "perfect storm" overwhelming the Evil Empire. HAHAHAHAHA. Fuck em.

I have long maintained that gold would trade at 1350 by Halloween and 1500 by 12/10/10. Santa Sinclair has had, for the past eight years, a price target of 1650 by early 2011. All of these targets are now not only possible but likely. I mention this again not to tout how brilliant I am...I'm most certainly not. It's just that once you realize that the end of the Keynesian system to which we are all accustomed is upon us and once you admit that the Comex is the most manipulated "market" in the world, price action in gold gets quite predictable. "So easy a Turd can do it."


Buy all dips. Wait for the buyer(s) of size to show up first but buy all dips.

Vergeltung's picture

thanks for posting such informative stuff here on ZH. I am sure 1000s of readers appreciate it!

DocLogo's picture

indeed. when it comes to PM's...turd is the shit ;)

unum mountaineer's picture

DIPS... bux - check


fuck it..early lunch for me.....

Spigot's picture

If you believe in using the fibo retrace and the 1190-1210 range was the last major basing figure than you could go from the intermediate top price and drop to 32%, 50% pr 62% for the difference between the two as a potential low mark before reasserting the trend upward.

I disagree with the "parabolic" blow off terminology. If you look at the above chart we are really just getting back up to the lower trend line which started in 2005-ish. IMO I believe we are seeing a siutation where an artificially foisted selling pressure (TPTB) tried to supress the price action and then finally failed. In which case this would/may be similar to the 1976-77 gold drop before the REAL blow off which was 400% above those figures.

That would mean $5000-6000 gold price would be a peak-ish looking price.

Spigot's picture

But really, what is releasing gold? Its the final dis-investment of those with money from the "yada-yada" BS saying "everything will be better by and by". The upper 1% are turning away from this yammering and making their own decisions, and some of that goes to gold, hence, price appreciation.

The limiter here will be IF TPTB can get this train wreck under control and people start to believe again, then gold will soften, otherwise any dips will be buying opportunities. Its not a mania until everyone and the shoe shine buy are buying gold and silver.

trav7777's picture

Goled, bitchez...

gold's previous parabolic phases ran pretty hard...recall the multiyear move from 250 to 750

SWRichmond's picture

Parabolic, not anywhere near it.  We haven't had any $100 days yet.  By the time this thing has run its course we'll have seen $500 days, up and down.  The real mania phase is going to be a wild ride.  Why?  Simple: the failure of fiat money, and everything is denominated in fiat money.

RockyRacoon's picture

Goled, bitchez...

Get a new one.  This one is old...

unum mountaineer's picture

dont forget about Ag.

snowball777's picture

Pd, bitchezziz! +46.7% YoY (did you know that the S&P is down over 10% when denominated in relatively obscure platinum group metals?)

Clark_Griswold Hedge Mnger's picture

January Leaps Bitchez!!!!!

fresbee's picture

Gold in EURO terms is the right metric to look at. 

tmosley's picture

If you are European.

Most of us don't get paid in Euros, moron.

macroeconomist's picture

Well, he's not a moron, he has a good point I wanted to mention as well. Gold priced in  euros is the right metric to understand the level of "rush into gold".The price struggles to exceed the 970Euro level for quite some time, which shows that it is not escape from fiat into gold as some suggest here. Same applies to price of gold measured in a lot of other currencies (franc,yen, aussie dollar and many developing country currencies that have experienced massive appreciations), the prices are high but the levels at the moment are below maximums seen in May, and gold is not such a huge discussion. The stock markets in developing countries are soaring with carry trade, etc. So it is indeed dollar depreciating more than anything else at the moment, and some U.S investors are investing these dollars in gold. The real rush to Gold was in May, this is nothing compared to that..The real shitstorm will start when the all these charades stop simultenously..

fiddler_on_the_roof's picture

Scared a bit about your short Gold trade?
Pompous Gold traders will be crucified on a
Golden cross. As "Another" said Paper Gold will
make a big fire

Anton LaVey's picture

And your point is...?

Gold has been rising continuously, for the past 5 to 10 years, over all currencies you care to name. The US$ and the EUR prices have been rising, overall, pretty much in lockstep.

Currency debasement is a game many can play...


Gold was up against the Euro in 2006, 2007, 2008, 2009 and so far in 2010

I read all your posts, please keep posting. I don't pretend to be a financial whiz, that's why I hang out at ZH all day and read most posts except those by insane Belgium meth heads.

Just for the record my GUESS is gold will certainly out perform all stock indexes, bonds and currencies and get to $5,000-$50,000 per Oz within 2 years.


Thunder Dome's picture

YOU CAN'T EAT GOLD!!!  I'd rather buy Yellowcake (aka Uranium).

mrgneiss's picture

I heard Yellowcake sits heavy in the stomach.

You can drink colloidal silver!

thesapein's picture

Just because some idiot doesn't know how to break silver up into small enough pieces so that it doesn't get trapped in the skin, doesn't mean you have to be an idiot, too.

Idiots can get sunburned. Does that mean everybody should stay out of the sun?

Sorry, I'm just so sick of this myth spreading around about silver, as if I live in a dark age of mass ignorance. No one is capable of researching the science, just passing links like rumors...