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Gold Vertical As Market Realizes That After QE 2 Comes....

Tyler Durden's picture


So finally, after much delay, the market lemmings realize that after QE2 comes QE3.

Just ~$20 more till the all time nominal highs.


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Wed, 06/01/2011 - 10:47 | 1328533 Rodent Freikorps
Rodent Freikorps's picture

Like night follows day.

Wed, 06/01/2011 - 11:09 | 1328718 The Deacon
The Deacon's picture

A $5 move is 'vertical'?  Not even worth mentioning.

Wed, 06/01/2011 - 11:14 | 1328731 Duck
Duck's picture

Don't you know, that's a whole one-quarter of one percent.

Wed, 06/01/2011 - 11:15 | 1328737 GeneMarchbanks
GeneMarchbanks's picture

A $5 move so far... you forgot to add

Wed, 06/01/2011 - 12:17 | 1329134 trav7777
trav7777's picture

now up 12 while silver is getting blowtorched.

Some hard lessons to be learnt here

Wed, 06/01/2011 - 12:27 | 1329167 Burnbright
Burnbright's picture

Lets see silver is up over 20% for the year and gold only 10% thus far... butt hurt much?

Wed, 06/01/2011 - 12:47 | 1329257 Bay of Pigs
Bay of Pigs's picture

Five minute attention span + denial of the facts = loss of credibility

You sound like Robo now Trav...

Wed, 06/01/2011 - 16:41 | 1330238 trav7777
trav7777's picture

take a look at kitco while more of your life savings get blowtorched.

I am going to buy you and mosely-claven and all of the silverbugz and use your hollow skulls as ashtrays

Wed, 06/01/2011 - 20:42 | 1330972 Hephasteus
Hephasteus's picture

Ya but we got something you'll never have. Safety in a crowd of black people.

Thu, 06/02/2011 - 10:53 | 1332258 GoinFawr
GoinFawr's picture


Wed, 06/01/2011 - 11:15 | 1328761 SheepDog-One
SheepDog-One's picture

$40 move just in the last few days.

Wed, 06/01/2011 - 11:22 | 1328818 francis_sawyer
francis_sawyer's picture

Not worth mentioning??

Hey, I just earned enough to dig an ounce of silver out of the ground...

So consider it a 2-fer


Wed, 06/01/2011 - 12:40 | 1329225 Jeremy Roenick
Jeremy Roenick's picture

Hey, I just earned enough to dig an ounce of silver out of the ground...


Wed, 06/01/2011 - 12:09 | 1329084 BigJim
BigJim's picture

After the beating we took in May, a little bit of hyperbole is to be expected.

Note to self - is a 'little bit of hyperbole' an oxymoron?

Wed, 06/01/2011 - 11:16 | 1328745 Don Quixotic
Don Quixotic's picture

IWM August 2011 Call at $89 just moved 14,000 options when there's 22,000 open interest out there... QE3 is a comin'!!!

Wed, 06/01/2011 - 10:44 | 1328534 Turd Ferguson
Turd Ferguson's picture

Turd happy but the real battle will be at 1560.

Wed, 06/01/2011 - 10:50 | 1328564 Silver Shield
Silver Shield's picture

More inflation is baked in the cake...

Wed, 06/01/2011 - 11:28 | 1328834 sheeple
sheeple's picture

man looks like they are really trying to paint a double top...some interesting forsights you got there dude

Wed, 06/01/2011 - 12:18 | 1329138 Temporalist
Temporalist's picture

Yea a big problem with trading is they, the manipulators, know what gets trader's rocks off...or off the rocks.

Wed, 06/01/2011 - 10:45 | 1328542 the not so migh...
the not so mighty maximiza's picture

Bada bing bada boom

Wed, 06/01/2011 - 10:45 | 1328544 RobotTrader
RobotTrader's picture

I doubt the market selloff is going to last very long, especially with WYNN rocketing up to new highs today.

Wed, 06/01/2011 - 10:50 | 1328557 the not so migh...
the not so mighty maximiza's picture

With QE3, physical metals are looking

Wed, 06/01/2011 - 11:29 | 1328858 francis_sawyer
francis_sawyer's picture


Wed, 06/01/2011 - 10:48 | 1328569 BIGBOHICA
BIGBOHICA's picture

With the excellent auto sales rolling in, I'll take the under. STFT!!

Wed, 06/01/2011 - 10:48 | 1328576 firstdivision
firstdivision's picture

I would say the selloff will continue...Central Limit Theorm Suckas!!$SPX&p=D&b=5&g=0&id=p01415536738

Wed, 06/01/2011 - 10:54 | 1328597 Arius
Arius's picture

LKND - thats the future...thats what we do in this country...real work is for the chinese...

Wed, 06/01/2011 - 12:11 | 1329118 strannick
strannick's picture

The post-industrial, post-service, post-finanical, socialnetwork economy

Wed, 06/01/2011 - 10:55 | 1328602 snowball777
snowball777's picture

Good luck with your chips, sir.

Wed, 06/01/2011 - 10:58 | 1328622 baby_BLYTHE
baby_BLYTHE's picture

So we should sell our gold? Please tell. Some of us are not privy to millionaire advice.

Wed, 06/01/2011 - 11:41 | 1328943 InconvenientCou...
InconvenientCounterParty's picture

Inflation, barring a few niggly side effects, is politically superior. Deflationary collapse doesn't work well for the upper 1% or the banks, corporates, military industrial complex, big oil, or anyone else that matters.

Pool your investment funds in dollars and prepare for the next series of comex margin increases. Buy those dips, as they are temporary.

Of course, if you think the US will deflate it's rate of borrowing anytime soon, just hold the dollars. What they lack in stability, they make up for in liquidity.


Wed, 06/01/2011 - 12:16 | 1329126 strannick
strannick's picture

Dang!! +1

Wed, 06/01/2011 - 12:42 | 1329245 Chump
Chump's picture

But we're not talking regular 'ol inflation anymore.  QEIII, IV, V, and so on are supposed to be pit stops on our trip to hyperinflation, right?  Hyperinflation allows us simple-minded proles to get out of all debt for mere fractions of a penny on the dollar, thus releasing us from debt slavery and opening the gates of Paradise to us.

That is the politically unpalatable option, not deflation.  It's not that deflation is welcome, but hyperinflation is unthinkable to TPTB.  It means they die, too.

Wed, 06/01/2011 - 13:07 | 1329367 Dr Zaius
Dr Zaius's picture

Seems to me that the TPTB believe they can navigate the fine line between high inflation and hyper-inflation. Deflation is fraught with to many unknowns if the little folk lose everything. People who have nothing left to lose tend to get uppity and turn on their overlords with pitchforks, torches and rope. Plenty of rope.

Wed, 06/01/2011 - 13:41 | 1329521 Chump
Chump's picture

See that's the thing, if we wait until deflation takes a firm hold to start hanging these fuckers we'll be too late.  How are you going to march on Wall St. and D.C. if you're starving and dealing with militarized police forces along the way?  Short answer: you're not.

Wed, 06/01/2011 - 11:46 | 1328973 ColonelCooper
ColonelCooper's picture

Neither is Robo, but he likes to talk that way.

Wed, 06/01/2011 - 11:57 | 1329027 JW n FL
JW n FL's picture
by baby_BLYTHE
on Wed, 06/01/2011 - 10:58


So we should sell our gold? Please tell. Some of us are not privy to millionaire advice.


NO! do NOT ever.. or until its $10k an ounce sell your gold! and even then if you dont have to dont!


You should have a blended basket of things..


some gold.. 10% That never goes away unless and emergency and you can add too but always keep a lil bit "O" Gold!

some silver.. as froggy as you are feeling..within a split of 50% between silver and treasuries..

some treasuries! Canada v. the U.S. right now if you are looking for earnings.

Cash on hand should be 40% of what you have..


This is a safety basket.. if you had more money to play with you could set a different set of rules for yourself.

this is just advice on line.. you dont have to take it and always consult with your own finance people (in real life, in their office) before making any purchases!


Gold works whether the world changes or not.

Silver as well works whether the lights are on or off.

Treasuries as well are as safe as I can make you.

Having cash on hand to pick up deals for gold / silver and then sell them off.. short term buying to sell for modest gains.. consider making 10%.. or 5% even.. now consider making that 5% twice a month.. multiply that times 12 months and you can see that you have earned some money.. which you ca then add into your mix.

Stocks are hot air.

Bonds can go no higher or very little higher!

tangibles.. guns are a Great! Investment!! which the old timers in my family sold me on.. so you can add some quality fire arms into the mix as well as an investment that works in times of good and bad.


Good Luck!


Wed, 06/01/2011 - 16:08 | 1330084 falak pema
falak pema's picture

You only sell gold the night you have had five true oxxxxx...that is the true sign of the heavens that you are in the platinum class...Until then hang on to gold!

Wed, 06/01/2011 - 11:10 | 1328702 Fiat2Zero
Fiat2Zero's picture

Robo-Tard Replicant, you woke from your slumbering to post your drivel.

Your Rothschild Masters will be pleased with your knee-jerk alacrity.

Keep those FUD (Fear Uncertainty Doubt) posts coming and you'll keep getting your JPMorgue paycheck.

Wed, 06/01/2011 - 11:10 | 1328732 trav7777
trav7777's picture

yes, but all your other picks are getting monkeyhammered

Wed, 06/01/2011 - 10:49 | 1328551 silvertrain
silvertrain's picture

look for leaks any minute now that soros has sold all of his gold again..Followed by margin increases and then more leaks of the possibility of qe3..

Wed, 06/01/2011 - 11:08 | 1328708 Fiat2Zero
Fiat2Zero's picture

QE3 is unthinkable. JP Morgan analysts just said it yesterday...


Wed, 06/01/2011 - 11:37 | 1328913 NotApplicable
NotApplicable's picture

Which is why they act without thinking. No reason to stress when one can just apathetically muddle-through it.

Wed, 06/01/2011 - 12:29 | 1329174 Long-John-Silver
Long-John-Silver's picture

Soros sold his paper gold for Physical Gold. He knows whats coming......

Wed, 06/01/2011 - 16:14 | 1330096 falak pema
falak pema's picture

I think Soros is a four nutted cat with nine don't do what he does...unless you have four nuts ...and nine...

Wed, 06/01/2011 - 10:50 | 1328563 swissaustrian
swissaustrian's picture

CHF vertical too, but to the downside.

Wed, 06/01/2011 - 11:16 | 1328749 Fiat2Zero
Fiat2Zero's picture

Yes very interesting. It seems that gold is becoming the default flight to safety for an increasing number of investors.

Swiss banks are massively exposed to Greek insolvency. I wonder if this has finally started to dawn on people.

Wed, 06/01/2011 - 11:21 | 1328808 Rynak
Rynak's picture

Even without the bank exposure, escaping a crisis zone, by buying into a country that is in the center of it, from a geopolitical POV is just idiocy.

Wed, 06/01/2011 - 10:48 | 1328573 camoes
camoes's picture

Margin hike in gold soon...reason => voltatility

Margin reduction in ES soon...reason> = volatility


Wed, 06/01/2011 - 10:51 | 1328574 brian0918
brian0918's picture

Does anyone have some Tums? FUUUUUU...

Wed, 06/01/2011 - 10:52 | 1328575 HUGE_Gamma
HUGE_Gamma's picture

HOPE Obama 2012

Wed, 06/01/2011 - 10:55 | 1328621 camaro68ss
camaro68ss's picture

DOPE, Obama 2012

Wed, 06/01/2011 - 11:33 | 1328888 francis_sawyer
francis_sawyer's picture

COPE Obama 2012

ROPE Obama 2016


Wed, 06/01/2011 - 11:04 | 1328679 g
g's picture

Ohbummer had his chance and blew it. There are more Americans than ever that have become disenfranchised because of Ohbummer's change that never happend, that is what people get for smoking hopium. So who is going to be the next great Presidential dissapointment?

Wed, 06/01/2011 - 11:33 | 1328886 Thisson
Thisson's picture

Proposed anti-Obama campaign slogan: "Where's the change?"

It sort of harken's back to "Where's the beef?" with the additional connotation of "where's my money?"

Wed, 06/01/2011 - 11:42 | 1328942 Mesquite
Mesquite's picture

 So who is going to be the next great Presidential dissapointment?

Bilderbergers meet this month..

Then we'll know..(The Next President..)

Wed, 06/01/2011 - 12:30 | 1329198 Long-John-Silver
Long-John-Silver's picture

He's lost the Black vote. They are staying home during the vote. Every one of them I personally know and have as friends call him a sellout Oreo. He's done worse than nothing for them as everything for them is worse now, not better.

Wed, 06/01/2011 - 15:06 | 1329801 trav7777
trav7777's picture

after 30 years of filling blacks' heads en masse with complete bullshit as to their entitlements as a result of EXISTING, how could ANYONE fail to disappoint them?

Literally, the narrative is that they be's kings and queens n'shit.  Any departure from the realization that Obama NOT goin be payin mah mortgage, Obama NOT goin be payin my gayus leads to severe disillusionment and the belief that they are being cheated again by whitey.

Wed, 06/01/2011 - 15:40 | 1329890 GoinFawr
GoinFawr's picture

Thanks for the flat synopsis of "American History X", trav; you cover all the hate, ignorance, and defensive knee-jerking, etc... minus the ending, the truth, or the FUCKING POINT, excepting the one on your head of course.

Wed, 06/01/2011 - 16:39 | 1330246 trav7777
trav7777's picture

wow...gettin called a rayciss by a sniveling white person, gosh why that's never happened before

Thu, 06/02/2011 - 11:08 | 1332246 GoinFawr
GoinFawr's picture

ah yes of course, anyone who can see past their own screen door is a `sniveller` according to trav`s tiny self-righteous delusional world of the oppressed lily white.

trav, no one has to call you anything as you go out of your way to make your bigotry so painfully obvious.

Will somebody please kick his idiot ass into the 21st century?

Wed, 06/01/2011 - 13:08 | 1329378 SilverDosed
SilverDosed's picture

He defeated most of his opposition on the way in, its smooth sailing through the 2012 election for him now. With the banks behind you polls dont matter. The repubs wont put out a strong candidate despite Obama's political woes. Think Kerry vs Bush, guy didnt stand a chance, and the dems couldnt come up with anyone stronger cause it wasnt worth their time. He's also got the full support of MSM and they've set up some of the dumbest people on earth as his only media opposition (faux news.) I watch politics like I watch sports, mindless entertainment at best, and the fix is usually in.

Wed, 06/01/2011 - 11:17 | 1328775 SheepDog-One
SheepDog-One's picture

HOPE Obama keels over dead 2011

Wed, 06/01/2011 - 16:17 | 1330112 falak pema
falak pema's picture

Y? Obama II... will be like... Ramases II or Memophis II or Akhenaton II or GWB, son of GHB....! We are now in Oligarchy doesn't matter who is on top of the heap!

Wed, 06/01/2011 - 10:52 | 1328582 RobotTrader
RobotTrader's picture

Hard to tell which item is in more demand today.

Yellow rocks at $1,545 or 10-yr. Treasuries at 2.98%???

Wed, 06/01/2011 - 11:04 | 1328662 lieutenantjohnchard
lieutenantjohnchard's picture

vz at low of day: check

hd at low of day: check

mo at low of day: check

jpm at low of day: check

gold at high of day: check

robottrader's portfolio at low of day: check


Wed, 06/01/2011 - 11:22 | 1328793 SheepDog-One
SheepDog-One's picture

Only an asshole such as yourself would be confused over real money gold or worthless paper promises of bonds to redeem in worthless USD FRN's. Youre doing a terrible job MomoFader whoever is paying you for this crap has got to be PISSED!

Wed, 06/01/2011 - 11:26 | 1328821 in-Credible Banker
in-Credible Banker's picture

Why RU being harassed?  I see nothing offensive in your post(s)....... 

Wed, 06/01/2011 - 11:38 | 1328919 Thisson
Thisson's picture

Because he appears to be some kind of paid schill for the Keynesian kleptocracy.

Wed, 06/01/2011 - 11:52 | 1328987 ColonelCooper
ColonelCooper's picture

Not a shill.  A wannabe suffering from terminal normalcy bias and CNBCitis.

Wed, 06/01/2011 - 13:30 | 1329472 GetZeeGold
GetZeeGold's picture


The UN-Credible Banker doesn't get it....not surprised.


Wed, 06/01/2011 - 12:05 | 1329078 equity_momo
equity_momo's picture

You must be getting hosed today RT.  Not too late to get on the gold bus and off the insolvent paper bus. You'll be living in a bus if you dont.

Wed, 06/01/2011 - 10:49 | 1328584 firstdivision
firstdivision's picture

Does anyone have any idea what the implications would be if the US defaluted only on the coupons that the Fed holds?  Would they even need to announce it?

Wed, 06/01/2011 - 10:50 | 1328592 topcallingtroll
topcallingtroll's picture

Not a chance.

No qe3 any time soon.

Wed, 06/01/2011 - 10:55 | 1328599 the not so migh...
the not so mighty maximiza's picture

If they don't QEIII instant collapse, rich people in cardboard boxes, they won't let it happen.

Wed, 06/01/2011 - 11:28 | 1328835 SheepDog-One
SheepDog-One's picture

They only care about themselves...prepare accordingly, you are not part of their plans.

Wed, 06/01/2011 - 12:22 | 1329159 sun tzu
sun tzu's picture

Those rich people don't matter. The only ones that matter are the billionaires and their lapdogs like Geithner and Bernanke.

Wed, 06/01/2011 - 11:12 | 1328744 trav7777
trav7777's picture

then we will see a UE spike and ISM crash, along with consumer confidence and the President's approval rating, right into the election year.

Color me skeptical of that, especially with the hawkish rhetoric from the right.

Wed, 06/01/2011 - 12:15 | 1329131 equity_momo
equity_momo's picture

QE is not a infinite panacea for ISM or stock prices. The next 12 months will prove that. QE3 and 4 will be a dud for the Dow. Youve had your double up , if youre still expecting nominal gains from here just due to money printing youre gonna be disappointed , election or not. ISM has topped. Its just Happy Days from here.

Wed, 06/01/2011 - 12:19 | 1329144 trav7777
trav7777's picture

i stick primarily with energy and yield plays, thanks.

As yields fall, the prices of yielders will rise.  Energy is a beta off of Brent.

Sure I'm envious of the GGP and WYNN returns but I know as soon as I dive into them, they will crash lol

Wed, 06/01/2011 - 12:32 | 1329193 equity_momo
equity_momo's picture

Everything paper will start to burn in the next 12 months , theres going to be a huge correction into 2015. You might yield 10% on a utility but youll lose double that at least on the underlying. The trash that Robo is long of will probably goto zero. 

Physical FIAT and physical GOLD. Everything else is gambling.

(i realize thats a slightly contrarian strategy and fiat is paper but the goons running this show arent giving away the levers of power by hyperinflating it away , thats just a fact...)

Wed, 06/01/2011 - 15:09 | 1329814 trav7777
trav7777's picture

I trust KMP to pay dividends before I trust FRNs to hold value

Wed, 06/01/2011 - 17:50 | 1330489 equity_momo
equity_momo's picture

Thats a great company in fairness.

Wed, 06/01/2011 - 11:42 | 1328928 Thisson
Thisson's picture

There will be a QE3.  The people will demand it when the crisis resurges.

Wed, 06/01/2011 - 10:54 | 1328598 TheTmfreak
TheTmfreak's picture

Noooooooooooo don't riseeeeeeeeee. Unless my fiat paycheck will rise at the same level...

Wed, 06/01/2011 - 10:55 | 1328600 Math Man
Math Man's picture

Wow. Gold is up 50 basis points!!!!!

Throw a party!!!!

Woohooo!!!! Never mind that the only buyers are the Chinese and Indians - who are only buying because they have massive inflation problems. And that both governments have started tightening monetary policy. Most of you morons don't even know what you are buying... Going long inflation in China and Indian while they are tightening monetary policy is just STUPID.

Wed, 06/01/2011 - 11:04 | 1328666 EscapeKey
EscapeKey's picture


Wed, 06/01/2011 - 11:01 | 1328669 LongBalls
LongBalls's picture

The Chinese and Indians view gold like the west views fiat currencies. It is a cultural thing. Unless you hedge with gold I would get that lawn mower of yours tuned up and prepare to commence the push.

Furthermore, there are plenty of other reasons gold is going up that have little to nothing to do with events in China and India.

Wed, 06/01/2011 - 11:08 | 1328706 firstdivision
firstdivision's picture

Only Chinese and Indians want it....and it is spiking during US market hours...ummm okay.  It makes perfect sense in a sort of blind retarded way. 

Wed, 06/01/2011 - 11:14 | 1328754 whaletail
whaletail's picture

What? Your trading platform doesn't show where buy orders originate? /sarcasm

Wed, 06/01/2011 - 11:15 | 1328738 whaletail
whaletail's picture

Bag holder says "what"?

Wed, 06/01/2011 - 11:28 | 1328854 RichardENixon
RichardENixon's picture


Wed, 06/01/2011 - 12:32 | 1329201 whaletail
whaletail's picture


Wed, 06/01/2011 - 11:15 | 1328740 lieutenantjohnchard
lieutenantjohnchard's picture

must be terrible to be short a rising security or commodity. my sympathies.

Wed, 06/01/2011 - 12:33 | 1329206 sun tzu
sun tzu's picture

You can see the anger and fear in methman's posts

Wed, 06/01/2011 - 11:14 | 1328752 THE DORK OF CORK
THE DORK OF CORK's picture

As long as "they" keep open credit deposits in Banks western money will flow towards Gold - they will have to vapourise bank deposits to stop this Gold Juggernaut.

Did you notice the Bini smagi games recently ? - openly saying there will be instability in Greece.

The Euro masters need much higher Gold to finish their objective of laying waste to sovergin money.

Wed, 06/01/2011 - 13:40 | 1329520 Charles Wilson
Charles Wilson's picture

As usual DoC, you are perceptive.

However, when the wolves surround the sheep, there is a certain amount of randomness to the question, "Who's over for dinner tonight?".

Some of the thinning of the herd is going to take down some of the , "Hey! I thought I was in the club!" types - It's getting too crowded at the Tea Parties these days.

Who do you see as getting taken down by the throat in Euroville "unexpectedly"?



Wed, 06/01/2011 - 11:18 | 1328759 tmosley
tmosley's picture

Yeah, you idiots.  Only half the population of the Earth is buying!  

Don't you know that you can stop a house flood by turning off the faucet?  It doesn't matter where the water is coming from, turning off the tap will get rid of it.  Just like tightening lending standards will stop inflation caused by the import of Western inflation.

Same thing.  You guys are all nuts.  Imma go buy me sum interweb stocks! 

Wed, 06/01/2011 - 11:23 | 1328802 SheepDog-One
SheepDog-One's picture

Wow! Gold is sitting at its all-time high! 

MethMan 1 question- How do you go long Indians? I dont get it.

Wed, 06/01/2011 - 11:25 | 1328831 in-Credible Banker
in-Credible Banker's picture

"Never mind that the only buyers are the Chinese and Indians"


Uhhhh, dickhead....and these Chinese and Indians are what percentage of the world population???




Wed, 06/01/2011 - 12:28 | 1329173 TheTmfreak
TheTmfreak's picture

"They are the population that doesn't matter to the value and scarcity."

For some reason when they buy it the item's scarcity and value remain the same or suppressed.. Hmmm.

I guess his assumption is that speculation is the only price built into this. "Once china and India curtail their inflation (which they won't), there will be nobody buying those commodities anymore. Therefore the price will crash."

Yeah ok. I guess lets go ahead and forget countries all over the world are diversifying their reserves.

Wed, 06/01/2011 - 18:11 | 1330545 LudwigVon
LudwigVon's picture

Yeah, "Only" a majority of the global population are buyers in this tiny market.

Wed, 06/01/2011 - 11:46 | 1328953 Stoploss
Stoploss's picture

Just wondering.. Where were you when we were buying gold at 400 and silver at 10? Granted, this was in '06 -07, or a couple of ZH servers ago. And, may i ask, what exactly is your motivation for your endless campaign against PM's?

I have been reading these same posts for five years on this site. If you are trying to "save" us by bashing PM's, you have been proven wrong over a five year time period.

We appreciate your caring, but it is not necessary to advise on something, and then expect to be taken seriously, when you have no time frame or perspective to back your argument.

I normally don't give advice, but here goes: Worry about yourself, don't worry about us. In the end it will be us that you turn to for survival, and you may not be met with open arms... Good Luck.

Wed, 06/01/2011 - 11:50 | 1328959 fiddler_on_the_roof
fiddler_on_the_roof's picture

Did you forget the 800lb gorilla ? the Central Banks of the world are buyers as well. I told you to get out of your gold shorts 2 weeks ago. I think Gold going into short strokes and high volatility unlike past 6 months.

Also the Indian CB tightening is lagging the "actual" inflation rate. Don't know about China.

If PIIGS default and they along with dictators move towards Gold, more fireworks start.

Wed, 06/01/2011 - 12:02 | 1329033 earnyermoney
earnyermoney's picture

Any you're emphatically stating a housing rebound will commence next year? LOL

Wed, 06/01/2011 - 10:55 | 1328607 russwinter
russwinter's picture

Notice that the bank stocks are being hammered as 10 yr goes to 2 handle. This is killing killing interest earning assets and margins. These rates are doing favors to no one other than an out of control Treasury. It will slow down lending even more. 

Chris Whalen discussed this.


Wed, 06/01/2011 - 11:20 | 1328774 trav7777
trav7777's picture

Whalen is getting his shorts blowtorched.

Look; it really doesn't matter what the Fed does except for the fact that every single fucking commentator is trying to play jewgames on its coattails.

ALL the people who want the Fed to back off are looking to short and get rich speculating.  ALL the people who want the Fed to QEx are looking to margin long and get rich speculating.

There is not a goddamned person who voices an opinion who isn't talking his effing book.  The REALITY is that the economy is saturated and there isn't much to do profitably at higher yields.  Yields follow the natural evolution of what the economy can bear.

Does ANYONE really believe that you could turn a profit borrowing at 8% in the USA?  With all the regulations and laws we have, with every square inch developed?  This is like SimCity when you got the screen full; there's nothing left to DO in the game- growth stops.  We are there.  If there is no organic growth to be had in the economy, there is no way ANY coupon can be supported.

"Interest earning assets and margins," lol, a euphemism for speculators trying to get something for nothing.

Wed, 06/01/2011 - 11:32 | 1328856 Bay of Pigs
Bay of Pigs's picture

No need to short anything.

Goldbugs have talked their book for 11 years running and have been proven entirely correct. Close to a 20% annual return. Silver even better than that.

Wed, 06/01/2011 - 11:41 | 1328922 trav7777
trav7777's picture buys about the same amount of oil as before.

Or haven't you noticed the rise in general price level?

Wed, 06/01/2011 - 11:43 | 1328952 Thisson
Thisson's picture

Ok but OIL buys more of everything else too.  So gold holders have made a net gain or at least kept pace while everyone is losing.  Effectively, Peak Oil is rationing oil to the disadvantage of non gold-holders.

Wed, 06/01/2011 - 16:01 | 1330044 RockyRacoon
RockyRacoon's picture

Don't even try.  When he says everyone talks their book, he meant his own as well.

Wed, 06/01/2011 - 11:46 | 1328951 VisualCSharp
VisualCSharp's picture

Excellent, concise post, trav. I appreciate it.

Wed, 06/01/2011 - 12:10 | 1329109 jaffi
jaffi's picture

"with every square inch developed"

The US has far more undeveloped land than it does of developed land.

Wed, 06/01/2011 - 12:25 | 1329161 trav7777
trav7777's picture

you might want to ponder why that is the case.  You may discover it has something to do with the unprofitability of development of that land.

When you understand this concept, the mechanics of prevailing interest rates will become much clearer.

That is when you will start to see money and debt as instruments subject to supply and demand forces like all the rest.

Yields' being negative is simply another way to say that shit is now UNPROFITABLE.  I'm surprised it never dawned on any of the commentators what the implications of their statements are.

The Fed cannot raise rates because there is NO DEMAND for credit at that price.  There's hardly any demand at ZIRP.

The liquidity trap is discussed by some economists who throw their paper models and idiotic bullshit around without sticking their head out of their office to see what causes it.  Economic saturation does, an aggregate zero yield climate.  All the credit in the world even at 0% will not be borrowed if there is nothing to do that will earn a >0% yield.

Wed, 06/01/2011 - 20:31 | 1330942 StychoKiller
StychoKiller's picture

I'd be more than happy to start a business, several in fact, but NOT until AFTER the Great Implosion™!

Govt at all levels HAS to be severely pruned back, any business I do does NOT need a bunch of useless meddlers -- that's what employees are for!

Thu, 06/02/2011 - 17:00 | 1333932 jaffi
jaffi's picture

Actually, a great majority of that land is in the Federal government domain, and thus cannot be developed.  The next largest portion is owned by state governments, and has the same limitation to development.  Also, you are confusing money as the root of economic activity when it is merely a medium of exchange.  All economic activity is to increase utility, to do this we produce things, to better increase our utility we utilize the division of labor as well as the process of exchange.  The only purpose of production is for consumption, and exchange increases the ability of use to increase our utility.  Whether goods are exchanged through barter or through monetary means, you are always exchanging goods for goods.  You do not work/produce for money, you work/produce for what money can be sold for.  While credit and money help to increase the effectiveness of trade and investment, it is not a necessary component.  And, as is the case throughout history, when a money dies, trade and investment don't cease, they just use a different medium of exchange than they had prior.


Essentially, your theory is bankrupt and without merit.  

Wed, 06/01/2011 - 10:59 | 1328616 TruthInSunshine
TruthInSunshine's picture

Further QEeesing of any kind is akin to pushing on a string....or dangling from a noose.

There is no spoon.

To Those About To Die, BuyingTFD, We Salute You!

Wed, 06/01/2011 - 10:55 | 1328617 Caviar Emptor
Caviar Emptor's picture

I don't think Gold is up on just QE3 speculation. Else you'd see stocks higher than they are, financials not selling off hard and other commodities surging. 

In a negative yield environment it's an obvious play. With a slumping US economy it's even more obvious. Rates are stuck

But there's more and it's big: 

Gold is now the flight to safety trade. It's the trade that lets wealth and savings sleep at night. The period of transition where this was hoped but doubted is officially over. 

Wed, 06/01/2011 - 11:09 | 1328694 whaletail
whaletail's picture

+1 Gold is all that's left after the dollar and treasuries were shat upon as safe havens.   

Wed, 06/01/2011 - 11:32 | 1328855 A Man without Q...
A Man without Qualities's picture

What people forget is that the policies of the last couple of years were always a massive gamble.  The probability of success was always slim, and if it had been any other nation trying it, the markets would have laughed in their face (as happened with Greece, when their stimulus program that just caused imports to jump).

Fact is, QE2, 3, 4 whatever, it's just not working.  Money is not going into NEW investments, merely causing the price of existing assets to rise.  The debt crisis is not just the Treasury market, it's entitlements and these things are inflation adjusted, so we need real growth, not just nominal.  The banks don't want to face these facts, or admit the country is in a debt trap.  They want to revert to the old play book of negative real yields to transfer wealth from the middle classes to the banks, but there is no more wealth to transfer.  

So, yes, basically it's all over bar the shouting, or should that be shooting?

Wed, 06/01/2011 - 11:47 | 1328962 Thisson
Thisson's picture

Gold is going up because as global governments are becoming increasingly irresponsible, real interest rates are decreasing and the likelihood of future international trade being settled in gold only is increasing.

Wed, 06/01/2011 - 12:24 | 1329171 trav7777
trav7777's picture

if gold is to be a future reserve asset, it needs to find a higher price level to prevent speculative attack against sovereign reserves.

Right now, gold is too cheap to be defended against the mountains of paper seeking to expatriate it.

Wed, 06/01/2011 - 12:28 | 1329187 Thisson
Thisson's picture

I believe it will slowly attain that higher price level.

Slow and steady wins the race.

Wed, 06/01/2011 - 12:43 | 1329247 Long-John-Silver
Long-John-Silver's picture

Gold would need to inflate to $42,400 an ounce to cover the current worlds fiat currencies. This assumes that all fiat currencies would be backed 100% by Gold with no cheating by printing more paper gold certificates than the physical Gold backing them(like that would ever happen).

Wed, 06/01/2011 - 15:01 | 1329762 Temporalist
Temporalist's picture

Very true Trav and that is what some expect, Jim Rickards, John Hathaway, Ron Paul, Peter Schiff to name a few.  I think that is the finest thing you've said about gold.

Wed, 06/01/2011 - 11:50 | 1328979 dugorama
dugorama's picture

Like your discussion until you say "entitlements".  what?  The debt crisis is caused by tax revenues being significantly less than expenses.  That gap is currently $1.5 trillion.  

SS and Medicare did not suddenly explode in the last decade.  Defense, unemployment and the rich not paying taxes did.

"Defense" is a $1tillion expense.  10% unemployment is a lot of people not paying taxes.  GE paying $0 in taxes matters.  So does everyone in what used to be the top tax brackets no longer paying as high a percentage as they tip their waiter at the yacht club. 

Wed, 06/01/2011 - 12:16 | 1329129 Alasdair
Alasdair's picture

Thank you!

Wed, 06/01/2011 - 12:26 | 1329177 Thisson
Thisson's picture

Lowering corporate taxes increases the number of jobs retained here rather than outsourced, providing the government with income taxes paid by employees.  When American labor becomes more competitive globally, we will stop losing jobs to outsourcing.  For our labor to be competitively priced, we need to reduce the burdens on our labor.  Right now we treat people as tax donkeys, which means they need to take in more gross income to have the same standard of living.  The solution is to default on our debt (lowering the cost of debt service), have a massive debt workout (more of same), and to eliminate government meddling which results in the mispricing of everything from interest rates to real estate.


Wed, 06/01/2011 - 15:01 | 1329763 trembo slice
trembo slice's picture

I agree with what you said, but how does defaulting on our debt play out pragmatically?  Do we just say, "welp thanks for the mula suckers?" to our international creditors?

Once we default do they stop shipping us goods?  I just don't see how this will play out except through massive inflation to pay off our debt with debased money... which will essentially price Americans out of the international marketplace as well.

We've got to drastically cut spending, pay off foreign creditors, and then waterboard the Fed's Board of Governors.

Wed, 06/01/2011 - 16:09 | 1330071 RockyRacoon
RockyRacoon's picture

Do we waterboard the Fed Govs because we need info, or just for the fun of it?

I'm in either way.

Wed, 06/01/2011 - 12:40 | 1329222 Chump
Chump's picture

You can stop making things up now and address our very real entitlement spending problems.

Side note: the IRS requires you to report and pay taxes on received unemployment benefits.  True story.

Wed, 06/01/2011 - 12:39 | 1329234 whaletail
whaletail's picture

I think what the man is saying by tying entitlements to "inflation adjusted" is that the allocation necessary to fund those things will continue to rise because the goods and services purchased by those entitlements, to make them effective, also rise.  The entitlement line items in the budget are moving targets and the target is moving northeast up a chart along with inflation. No doubt, the tax shortfall has quickened this problem, but the entitlement problem would have eventually been here, 2008 or no 2008, it just arrived sooner because of poor central planning (redundant?)

Wed, 06/01/2011 - 12:47 | 1329253 A Man without Q...
A Man without Qualities's picture

Don't misunderstand me - I am not saying entitlements are evil or to blame, I am just pointing out the fact they are inflation adjusted, so the Fed targeting nominal growth, via negative real interest rates could actually make the problem far worse.  The SSTF does not have enough inflation linked assets and the pv of the liabilities in these off balance sheet entities are far higher than the $14 trillion of bonds.  It's the same in all nations in the West (though Norway has a higher proportion of other assets such as equity and property).


My overarching point is the long standing policy of fixing a banking crisis via negative real rates is an attempt to transfer the wealth of the middle classes to the banks.  It's been done many times in many countries, but the problem is that I do not believe there is enough wealth in left.  For most people, their two largest assets are their pension (private and public) and their home.  The pension asset is supposed to be inflation adjusted, so where does the money come from?  Holding rates too low for too long sets up the mother of all pension crises....

Wed, 06/01/2011 - 12:44 | 1329256 SYantiss
SYantiss's picture

Um... No the debt crisis is due to entitlements and their future liabilities:

SS and Medicare did explode this decade, between Bush and the Boomers...

GE, and all corporations simply pass taxes through to consumers through what they charge for goods. A tax on you and me. Go ahead and lobby for some rate increase on Exxon... Just don't complain too loud when gas hits $5.

Nearly 50% of the US population pays nothing in Federal income tax, and a large percentage get paid back. The top 1% of wage earners pay nearly 40% of Federal taxes... Seems unfair... LOL!

Wed, 06/01/2011 - 12:48 | 1329258 A Man without Q...
A Man without Qualities's picture


Wed, 06/01/2011 - 12:54 | 1329306 sun tzu
sun tzu's picture

You're dead wrong. It is increased spending that is causing most of the deficit.


2008 budget was $2.98 trillion

2008 tax revenues was $2.52 trillion


2011 budget is $3.83 trillion

2011 tax revenues is expected to be $2.57 trillion


Tax revenues are flat. Spending increased.

Defense spending increased from $500 billion in 2000 to $825 billion (including wars) in 2011. 

My solution is to cut the federal budget back to year 2000 levels adjusted for inflation for every agency. Get rid of DHS. End the wars. The federal civilian payscale needs to come under instense review. I'm not talking about the low level workers making $50K. I'm talking about the leeches making $175K as "program analysts" who could get a job at McDonalds. 

Wed, 06/01/2011 - 11:00 | 1328634 tekhneek
tekhneek's picture

$100 would be vertical, not $5

Wed, 06/01/2011 - 11:42 | 1328949 writingsonthewall
writingsonthewall's picture

I remember when the Gold fell by $5 and it was lauded as a 'collapse' recently.


Funny how things only look one way when you're getting caned on your short position. Serves you right for choosing the banks over the people.

It's the people driving the Gold market - the very real fear that the $ and other currencies will be worthless in the future.

One thing that is reliable in the world is that the majority are usually right - and even when they're wrong - their size and influence makes them right.


You keep your paper currency - got any gold you want to swap for it? I've got paper all day but it's real value I'm after.

Wed, 06/01/2011 - 11:00 | 1328635 pazmaker
pazmaker's picture

silver not following...???

Wed, 06/01/2011 - 11:00 | 1328638 tekhneek
tekhneek's picture

LOL and this surprises you?

The Fed's giving you a discount window! Thank them by exchanging your fiat for physical!

Wed, 06/01/2011 - 11:03 | 1328652 achmachat
achmachat's picture

patience, Yago.

Wed, 06/01/2011 - 11:23 | 1328799 trav7777
trav7777's picture

silver is an industrial metal.

All the pumpers who predict "silver to 60 by next week" then always justify their case by "look at all the growing industrial demand."  Also, they throw in "silver isn't mined except as a byproduct of base metal production."

Ergo, silver is clearly an industrial metal.  That doesn't imply a low price; rhodium and other PGMs are primarily industrial and yet still precious in a price sense.

But, know what you are getting into when you are stacking silver.

Wed, 06/01/2011 - 11:37 | 1328893 Bay of Pigs
Bay of Pigs's picture

Your ignorance on silver is something to behold.

Do you do any real research or just talk out of your ass?

Wed, 06/01/2011 - 11:39 | 1328927 trav7777
trav7777's picture

where is your dispute of anything I said, jackass?

Lemme guess, another silver pumper looking to "get rich" off of an industrial metal.

Wed, 06/01/2011 - 11:44 | 1328961 XenoFrog
XenoFrog's picture

Let me guess, another silver dumper angry because he had a stop loss on his paper silver at $32.

Wed, 06/01/2011 - 11:47 | 1328975 Thisson
Thisson's picture

Silver is being bought by both optimists and pessimists - someone is wrong:

Optimists believe silver will be needed industrially as the economy improves.

Pessiments believe silver will be needed monetarily as the economy declines.



Wed, 06/01/2011 - 11:51 | 1328999 XenoFrog
XenoFrog's picture

As long as it's being purchased, I don't give a shit if some of the buyers are wrong.

Wed, 06/01/2011 - 12:29 | 1329195 trav7777
trav7777's picture

naw, bitch, I been long the physical since...$12?  Hell, I had 100oz at $6.52 per ASE.

I was a buyer at the bottom, son.

Wed, 06/01/2011 - 12:04 | 1329053 Bay of Pigs
Bay of Pigs's picture

The fact you don't even acknowledge silver as a precious metal as well as an industrial metal tells me all I need to know about it Trav.

You are wrong on this point. A glaring mistake for all to see.


Wed, 06/01/2011 - 12:28 | 1329188 trav7777
trav7777's picture

silver's PM role is an anachronism.

Look at where the silver production goes.

Fuck man, read some of what the silver pumpers say about it. 

Here's some help for you:

It's an industrial metal now.  Half of the demand is industrial.  If industry crashes, your silver isn't spiking to the fucking moon.

Wed, 06/01/2011 - 12:36 | 1329203 Thisson
Thisson's picture

The problem with silver is that it isn't needed as money in a world where we have gold.  ANY amount of gold works to support a monetary system.  That being said, Silver is still a real asset (in contrast to fiat) so in a restructuring of the global economy, it should do well even with a substantial reduction in industrial demand.  This relates to my previous statement that both optimists and pessimists are buying silver and someone is wrong.

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