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Goldman Tells Clients To Buy COMEX Gold At $1,364.2, Raises 12 Month Gold Forecast From $1,365 To $1,650, Silver To $27.60

Tyler Durden's picture




 

Alarm bells are ringing everywhere as Goldman (which joins UniCredit in boosting its gold price target) may have just picked the short-term top in gold, after it revised its 12 month target from $1,365 to $1,650. And while David Greely's track record is nowhere near as atrocious as that of Goldman's FX team which manages to top tick the EURUSD every single time, the fact that Goldman is now opening Long Gold recommendations (to go with its current trading recommendations of long Corn, Copper, Platinum and WTI) is reason for big worry. Recall which bank was getting its clients to go all in in crude 2008 when oil was $140+. We would be very cautious when Goldman is on "your" side of the trade. Nonetheless, the firm is pretty much spot on "We believe that a return to quantitative easing will act as a strong catalyst to carry gold prices to even higher levels."

Here is Goldman's full revised target. Compare this to the most recent 12 month gold target by Greenlaw from August of $1,365.

And here is Goldman's extended thesis on gold, which is a simple one, and fundamentally identical to what we have been saying for years: buy gold until the Fed begins to tighten. Which means forever and never.

Gold rally to continue, for an extended period

Gold prices have rallied strongly since early August. The rally began as net speculative long positions rebounded from what we argued were oversold levels (see Precious Metals Update: Gold market poised for a rally as US real rates head lower, August 11, 2010). The initial rebound, however, extended into a new rally as 10-year US TIPS yields plummeted with the growing prospect of another round of quantitative easing by the US Federal Reserve, sending the price of gold through our $1,300/toz 6-month price target and to new record nominal highs above $1,350/toz, just shy of our $1,365/toz 12-month target (Exhibit 1).

US real interest rates have fallen with the slowdown in the pace of the US economic recovery and the growing prospect of another round of quantitative easing. With TIPS yields now closer to 0.50% then the 1.00% embedded in our prior forecast, we expect gold prices to continue to climb (Exhibit 2). Despite the rebound in net speculative length, it remains well-below levels consistent with the current low US real interest rate environment.

We expect positions to continue to climb with quantitative easing a catalyst to lift positions and prices higher. Accordingly, we are now raising our gold price forecasts to $1,400/toz, $1,525/toz, and $1,650/toz on a 3, 6, and 12 month horizon, respectively. This raises our 2011 average gold price forecast to $1,575/toz, $175/toz higher than previously. We are also opening a trading recommendation for a long position in the Dec-11 COMEX Gold contract.

While we view the level of US real interest rates as the primary driver of gold prices in the current environment, stronger monetary demand for gold from both gold-ETFs and central banks than we currently expect creates upside risk to our gold forecast. In particular, gold- ETF holdings have been quite stable in recent months, suggesting that gold prices could move even faster to our year-end target should ETF buying return following the new record highs in gold prices and the announcement of quantitative easing, which our US economics team expects to occur as early as the November FOMC meeting.

Speculative positions rebound from oversold levels, but continue to chase falling US real interest rates

Gold prices have rallied strongly since early August, trading through our 6-month $1,300/toz price target and setting new nominal highs above $1,350/toz. The first leg of this rally took place in August with prices returning to their June $1,260/toz highs on the back of a strong recovery in COMEX net speculative length from what we argued were oversold levels (see Precious Metals Update: Gold market poised for a rally as US real rates head lower, August 11, 2010). Speculative long positions tend to move inversely with US real interest rates (see Exhibit 3), with more speculative length translating lower US real interest rates into higher gold prices. As of early August however, there had been a large disconnect between the light COMEX net speculative positioning and low US real rates.

Specifically, net speculative length had declined to near year-to-date lows just as US real rates, as measured by the 10-year US TIPS, dropped to a decade low 1% (Exhibit 4). As we argued then, the real rate to net speculative positioning relationship suggested that a correction would increase net speculative length by 9 million toz. This move has mostly taken place.

However, even as speculative longs were moving back in line with low US real interest rates, US real interest rates began to plummet with the growing prospect of another round of quantitative easing by the US Federal Reserve. After gold prices stalled at their June highs, the break to the upside came on September 13 amid a heightened market focus on the potential for a return to quantitative easing, with US 10-year Treasury and TIPS yields falling, and the US dollar declining against the euro. Gold prices were further propelled to their current new highs after the US Federal Reserve signaled in the September FOMC statement that it was willing to ease further. However, as US real interest rates have fallen, the increased in net speculative length in COMEX gold futures has lagged behind, and is well-below levels consistent with the current low real rate environment, pointing to further upside to gold prices.

Specifically, the recent real rate to net speculative positioning relationship would suggest that the current 0.50% US 10-yr TIPS yield should push net speculative length to a record 37 million toz. Historically, a 1 million toz increase in COMEX gold futures long positions translates into a 0.87% near-term increase in gold price (see our report Commodities: Frameworks: Forecasting gold as a commodity, March 25, 2009 for details). This implies that this 7 million toz increase from last Wednesday levels would point to a 6.1% rally in gold prices, all else constant, taking current prices to new highs of $1,425/toz, pointing to further near-term support to gold prices (Exhibit 5).

While the recent decline in US real rates suggests further upside to gold prices in the near term, our US economic outlooks suggests that US real interest rates will stay lower for longer and support a continuing rally in gold prices.

Our US economic outlook suggests US real interest rates will stay lower for longer with renewed quantitative easing an effective catalyst to carry gold prices higher We had previously based our outlook for gold prices on the expectation that US real rates would remain in a 1% to 1.5% range; however, the recent deterioration in the US economic outlook and the prospect for renewed quantitative easing has brought 10-year TIPS yields below 0.50%. Our US economist and fixed income strategist outlooks suggest that these levels are sustainable and we expect this to support COMEX gold net spec positions at significantly higher levels and in turn push USD-denominated gold prices significantly higher.

Specifically, the key driver of the sharp decline in US real rates has first been the re-pricing lower of US growth expectations as the economic recovery has lost a considerable amount of its momentum. Our US economists forecast the significant slowing in US growth in 2H10 to extend in 2011 and, in turn, our fixed income analysts see 2.50%-2.75% as the new likely yield range for 10-year US Treasuries into 2011. Our US economics team also expects that the Fed will return to quantitative easing measures with purchases of US Treasury securities of $1 trillion which in turn should likely keep US bond yields depressed. They further expect that such a program will be announced at the November 2-3 FOMC meeting. The growing likelihood of such a move has been the key catalyst to push US real rates sharply lower since early September. We believe that a return to quantitative easing will act as a strong catalyst to carry gold prices to even higher levels.

These outlooks suggest that the current low US real rate environment will persist and in turn support gold price. At current US TIPS yields of 0.50% and in the absence of net buying or selling from gold-ETFs and central banks, our gold framework points to average gold prices of $1,600/toz (see Exhibit 6). We expect further monetary demand for gold and are accordingly raising our COMEX gold price forecast higher to $1,400/toz, $1,525/toz, and $1,650/toz on a 3, 6, and 12 month horizon, from $1,260/toz, $1,300/toz and $1,365/toz respectively. Our updated forecast points to a $1,575/toz average price in 2011, $175/toz higher than we previously expected. We are also opening a trading recommendation for a long position in the Dec-11 COMEX Gold contract.

Longer term, we continue to expect that prices will come under downward pressure once the US economy strengthens and the US Federal Reserve begins to tighten monetary policy. As discussed by our US economists, models suggest that it might in fact take until 2015 or longer before a rate hike became appropriate although they emphasize that this is a scenario, not a formal forecast (see US Views: Sealing the Case, October 11, 2010). While they do not expect tightening to happen before 2012 at the earliest, we view an earlier than- expected tightening of US monetary policy as the primary downside risk to our gold price forecasts. Specifically, our modeling of gold prices against real rates suggests that a recovery of US real rates to 1.5% would bring gold prices down to $1,220/toz over the medium term.

 

 

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Tue, 10/12/2010 - 09:43 | 642904 Cookie
Cookie's picture

Haha...buy Comex!!!

Tue, 10/12/2010 - 11:38 | 643269 perchprism
perchprism's picture

 

This comes just as the Vice Chair of the Fed lowers expections of QE2:

http://news.yahoo.com/s/ap/20101012/ap_on_bi_ge/world_markets_12

Tue, 10/12/2010 - 13:28 | 643600 midtowng
midtowng's picture

I remember an article from several years ago. It pointed out that the best time to buy gold is when real interest rates turn negative. I believe that is where TIPS are currently.

Tue, 10/12/2010 - 12:32 | 643427 dlmaniac
dlmaniac's picture

hmmm, 1650. Did they copy it from Jim Sinclair?

Tue, 10/12/2010 - 12:41 | 643453 Thunder Dome
Thunder Dome's picture

No, Goldman bets big using Armstrong's numbers.  Next May, market is in for horror show.

Tue, 10/12/2010 - 13:08 | 643541 Turd Ferguson
Turd Ferguson's picture

Just for fun...here's another top-caller who has been left for dead. Btw, what kind of idiot calls for a "triple top"? There is no such recognized technical formation. Note the date, too:

http://www.minyanville.com/businessmarkets/articles/precious-metals-prec...

Tue, 10/12/2010 - 19:20 | 644738 Hephasteus
Hephasteus's picture

Goddamn. WTF was that? Now I understand astrologers that just babble shit to pictures calling it analysis.

Tue, 10/12/2010 - 09:43 | 642905 trip nixon
trip nixon's picture

short gold

Tue, 10/12/2010 - 10:10 | 642987 ssp2s
ssp2s's picture

Afraid so.  Or at least go neutral.

This tells me that QE2 may not be a done deal.

Tue, 10/12/2010 - 11:22 | 643211 LowProfile
LowProfile's picture

Agreed.

I think this is a pump for paper gold, prior to a dump of paper gold and equities.

This does two things, it gives Wall St. Corp yet another chance to suck even more money out of the middle class, and will drive many into bonds (the last bubble).

My analyisis puts gold at $1264.00 on a pullback.

Buy physical with both hands once it hits.

Tue, 10/12/2010 - 10:18 | 643006 tmosley
tmosley's picture

Short COMEX and/or GLD, long physical gold.

Hedged bet on default.  

Tue, 10/12/2010 - 10:30 | 643041 e_goldstein
e_goldstein's picture

short paper gold, or as I like to refer to it: "gold."

Tue, 10/12/2010 - 10:44 | 643070 Turd Ferguson
Turd Ferguson's picture

I may be "whistling past the graveyard" but GS may not have any luck top-calling gold at this moment in time.

Recall that on Thursday of last week, the Evil Empire succeeded in painting the tape with an outside downward reversal day. This is significant if gold either moves through and/or closes below the low of that day which was 1326. They have tried twice to get the avalanche rolling, the latest being overnight last night. By the way, if anyone still doubts the malicious presence of the EE, see the price action since 6:00 EDT yesterday for proof. (The EE tried to jam it down Sunday night before taking Monday off. Gold rallies all day Monday. As soon as gold re-opens at 6:00, down she goes.)

At any rate, our new best friends, the buyer(s) of size, continue to appear and buy dips at what appear to be pre-determined levels. Yesterday was 1335. Today was 1340. You can plainly see it on the chart. This has to be seriously pissing off the EE. Never, ever have they been unable to control the gold market in the past. Never. Yet now, they seem to have met their match in a determined group of buyers who are calling their paper bluff. Truly an amazing thing to behold.

OK, what's next? If the EE can succeed in driving price down through the lows of last Thursday, they will generate more selling from weak-handed, momentum-based longs. Expect 1275-80 by late week or early next week. The EE will, most likely, not be able to accomplish this without the cooperation of a dollar rally so, amazingly, this is not the most likely scenario. Instead and conversely, if gold can trade up through the highs of last Thursday at 1366, it will have begun to negate the outside reversal day damage. If/when gold closes above 1366, we will be off to the race once again with 1400 squarely in our sights.

The key to this may, in fact, be silver. As I've mentioned (ad nauseam?) for some time now, the silver Comex appears to be in serious crisis. Silver has rallied from 18 to 23 over the past 6 weeks and it is bringing gold along with it because "if the silver Comex is out of gold, the gold Comex must be a charade, too". The weekly close, back on Friday, above 23 is extremely bullish. On the chart, there is nothing overhead until $35 or so. We may see silver rapidly accelerate to the upside in the coming weeks. If so, no amount of EE price-capping will be able to contain gold.

Again (ad nauseam), I've maintained for months that gold would trade at 1350 by Halloween and 1500 by 12/10/10. Nothing, so far, has caused me to change my mind.

Tue, 10/12/2010 - 11:24 | 643222 LowProfile
LowProfile's picture

We already hit $1350.  I'm expecting a pullback to $1264.  Buy with both hands when it hits.

Tue, 10/12/2010 - 11:38 | 643266 SwapThis
SwapThis's picture

well said Turd.  It may be that EE will use INTC & JPM earnings spin as a good inflection point to try to 'risk off' the market, at least temporarily. If Jamie doesn't have a good answer to the foreclosure flap all the Big Cap banks could founder on tomorrows JPM conference call word as has happened in the past.  Also, INTC tends to sell off post earnings, which they have pre-announced would be soft.  Also the DXY is stronger today which may be the EE beginning to apply the brakes....for now.

Tue, 10/12/2010 - 12:08 | 643349 Slewburger
Slewburger's picture

Is GS trying to pull money into the CMX silver before they know it will pop?

The shorts have been unwinding and covering since the Maguire scandal, so what gives? The paper fraud probably won't be covered by the MSM and it will happen after the PM bubble bursts.

Tue, 10/12/2010 - 13:45 | 643651 SRV - ES339
SRV - ES339's picture

EE... love the handle Turd!

I'm with you on the EE / market struggles... with the market seeming to get the upper hand since the Maguire revelations (funny how cold that story got... not a word since May... I guess Andrew decided to continue breathing for a few more years) 

Question... do you see any tie to pre T-Bill auction activity (raid gold price to drive funds into bonds... of course, stocks get choppy as well, but that's just hitting HAL's sell button a few hours a day)? Example... the last few days gold price activity prior to this weeks auctions.

Tue, 10/12/2010 - 15:24 | 643986 Turd Ferguson
Turd Ferguson's picture

Interesting thought, SRV.

If you pull up a chart of gold dating back to the end of the most recent correction in July, you'll plainly see that about 80% of the $200 or so gain since can be attributed to price action on Mondays and Tuesdays. I find this somewhat strange and I can't seem to get a handle as to why this is occurring. Maybe later week auctions are soaking up $? I dunno. Have to look into that one.

Tue, 10/12/2010 - 09:44 | 642906 beastie
beastie's picture

Aw crap! price will collapse tomorrow.

 

Tue, 10/12/2010 - 10:14 | 642996 umop episdn
umop episdn's picture

I'm thinking along these lines too. Glodman gets it's customers to buy, then massive short selling of paper gold by Glodman's friends takes the price down, which causes some to sell. Then the squid buys back the paper (and the physical if they can) and the price of Au and Ag continue to climb.

Tue, 10/12/2010 - 09:47 | 642916 Internet Tough Guy
Internet Tough Guy's picture

A disgusting tentacular display. This cephalopod speaks with forked beak.

Tue, 10/12/2010 - 09:55 | 642943 French Frog
French Frog's picture

when qe2 fails to materialise as much as expected and the price goes down, gs can just blame it on the fed

Tue, 10/12/2010 - 10:19 | 643011 ATG
ATG's picture

Bingo.

Wasn't GS propping $300 oil in 2008?

Tue, 10/12/2010 - 09:49 | 642921 mrgneiss
mrgneiss's picture

They're also urging miners to hedge for 2012.  Isn't that kind of them.  I guess 2012 is when PM's go parabolic.

Tue, 10/12/2010 - 09:49 | 642922 Silverhog
Silverhog's picture

Buy Comex? Yeah if they have a physical shop.  I don't think so

Tue, 10/12/2010 - 09:49 | 642924 scratch_and_sniff
scratch_and_sniff's picture

i'm still not 100% sure that the dredful reserve will go all-in, this could drag on for ages...i'm not holding any gold at the minute, so on the fence with respect to the bling. Its broken my heart to be honest.

Tue, 10/12/2010 - 09:49 | 642925 firstdivision
firstdivision's picture

Time to short it once Goldman raises their price target.  "Goldman, the best contrarian indicator money can buy".

Tue, 10/12/2010 - 09:59 | 642962 Dagny Taggart
Dagny Taggart's picture

...but this time its different. Hahaha, I know.... but trying to figure if Lloyd is pulling a Bennie is tricky stuff. Head fake? This is akin to a really bad made for TV whodunnit. What if GS knows gold is about to shoot for the moon and needs to say it told the clients and the White House? Does anyone still work at the White House?

 

Tue, 10/12/2010 - 10:08 | 642979 gmrpeabody
gmrpeabody's picture

Agreed, this is win-win for GS.

Look, we gave our customers a heads up. We can't help it that the FED failed on their end.

Tue, 10/12/2010 - 10:29 | 643037 DosZap
DosZap's picture

No just wait staff, the only one's working at the WH is PoUS, and he works for the Big 4 Banks.

Tue, 10/12/2010 - 10:35 | 643056 Dagny Taggart
Dagny Taggart's picture

Right? Can you see Michelle O, plopped on the floor, counting the silver after summers and rahm left?

Tue, 10/12/2010 - 09:52 | 642935 Bruce Krasting
Bruce Krasting's picture

Who knows where gold will be in a year? I could give you a scenario that it could be $5,000. I could also make you a case for 800.

I think GS is on the right track. A year from now gold will be higher. But it sure scares me when these guys are the ones pushing the "buy" talk. They ALWAYS have an axe to grind....

Tue, 10/12/2010 - 10:20 | 643012 tmosley
tmosley's picture

I can make a case for Gold $800.  The Fed calls the currency and reissues one with three zeros chopped off.

Tue, 10/12/2010 - 10:33 | 643052 DosZap
DosZap's picture

Bruce,

They are close to Jim Sinclair, he has a million dollar bet it hit's $1650.00 by Jan 2011.

Which I am sure you know about.

How do you make a case for $800.00 in a year, with what we have coming at us, with no way to derail it?.

Tue, 10/12/2010 - 12:42 | 643457 VWbug
VWbug's picture

he doesn't 'have a bet'   he has a publicity stunt.

as soon as anyone steps up to take the other side he will come up with a million excuses why he can't do it.

 

Tue, 10/12/2010 - 13:05 | 643539 Ace Ventura
Ace Ventura's picture

I may be misinformed, but I seem to recall the bet has indeed been formally taken? Supposedly some hedge fund agreed to the terms and the wager funds are being held by a third party.

I'm not 100% positive, but maybe some of the diehard Sinclair readers might have official info on this?

Tue, 10/12/2010 - 13:21 | 643583 VWbug
VWbug's picture

hey you could be right, i said somewhere else here that every trader in the world would take him up on the offer.

here's my bet:

They can't come to terms, and it will be Sinclair that walks away.

Second bet: The hedge fund does not lose money, even if the prediction is correct, (unless Sinclair welches on the bet of course.)

 

Tue, 10/12/2010 - 09:53 | 642936 trillion_dollar...
trillion_dollar_deficit's picture

If they can forecast ZIRP to 2015, then where's the forecast for gold in 2015?

Tue, 10/12/2010 - 09:54 | 642940 rolo
rolo's picture

Typical - just when i thought we might get a nice move, GS and the rest of the banks start upgrading their price targets!

Oh well, I guess there is the possibility that they might actually be correct this time.

Tue, 10/12/2010 - 09:54 | 642941 system failure
system failure's picture

Keep your physical gold and silver and sell any and all paper gold and silver now is the correct interpretation of GOLDMAN SUCKS conviction buy!!!!!!!!

Tue, 10/12/2010 - 09:55 | 642942 Commander Cody
Commander Cody's picture

GS contrarian.

Tue, 10/12/2010 - 09:56 | 642945 VWbug
VWbug's picture

but i thought GS was part of the giant conspiracy?

You know, the one to manipulate gold prices lower to protect somebody's short position (why they wouldn't just cover it is beyond me, that would be a lot easier).

Damn, now I have to rethink everything! Just when I thought the giant squid was running everything.

Tue, 10/12/2010 - 09:57 | 642955 system failure
system failure's picture

JPM Chase took over Bear Sterns GOLD/SILVER manipulation, Goldman Sucks just front runs the work of JPM/Fed.

Tue, 10/12/2010 - 10:26 | 643025 VWbug
VWbug's picture

ooohhh   so JPM is behind everything? Now I get it.

But didn't GS get the memo from JPM and the fed?

I thought all the CBrs were GS alumni?

And why doesn't JPM just cover their short position, it'd be so easy, I mean it can't be very big as gold is so under-owned  right?

 

Tue, 10/12/2010 - 10:02 | 642969 TheGreatPonzi
TheGreatPonzi's picture

Shut the fuck up, idiot.

Tue, 10/12/2010 - 09:56 | 642947 lsbumblebee
lsbumblebee's picture

"And don't forget everybody...make sure you buy paper gold."

-David Greely

Tue, 10/12/2010 - 09:57 | 642952 CashCowEquity
CashCowEquity's picture

Goldman is for fruits. BOHICA !

 

Gold wins !!!

SIlver not bad either !!!

 

I own both PHYSICALLY !!!, Woo HOO Bitchez !!

Tue, 10/12/2010 - 10:04 | 642959 ArrestBobRubin
ArrestBobRubin's picture

Hey, even a broken clock is right twice a day... But I do think the squid has this one right. They are in very good company in making this call but are playing it on the conservative side compared to many other price targets.

 

Tue, 10/12/2010 - 10:01 | 642966 Alex Lionson
Alex Lionson's picture

Would be nice to hear what JPM or HSBC are saying in this regard

Tue, 10/12/2010 - 10:27 | 643029 Ripped Chunk
Ripped Chunk's picture

GS discussed it with them over the weekend.

Tue, 10/12/2010 - 10:06 | 642976 johngaltfla
johngaltfla's picture

Which means that you shouldn't buy until the correction hits $1120 to $1180 and only buy for delivery, not paper. However shorting it looks pretty good in this area.

Tue, 10/12/2010 - 10:11 | 642988 Dagny Taggart
Dagny Taggart's picture

But John dear, what if you wait for $1180 and there is no physical available?

Tue, 10/12/2010 - 10:17 | 643000 johngaltfla
johngaltfla's picture

There's always one desperate sucker. Usually the same ones that said Bear Stearns is a hold but bought gold on the QT. Panic stricken people during a correction do stupid things. It's fun to watch and profit from them.

Tue, 10/12/2010 - 10:27 | 643032 tmosley
tmosley's picture

One desperate sucker for 10,000 hungry sharks.

Good luck getting the gold.  It probably ain't gonna happen, unless you made some kind of arrangement beforehand.

Tue, 10/12/2010 - 10:31 | 643044 Dagny Taggart
Dagny Taggart's picture

Considering I know whats probably sitting on your desk right now, I am surprised you are not compassionate. Even Hannibal Lecter was touched by the silence of the lambs. It isn't fun to watch the panic, its so sad. What a waste of human potential out there.

And who wants to hunt down suckers to obtain PMs? So far all physical deliveries work like the stupid pet-med commercials. Just order online and bars magically appear at my door, same week. Either the postman is flirting with me or he knows what he's handing me. Not sure whether to be flattered or well armed.

Tue, 10/12/2010 - 10:31 | 643048 VWbug
VWbug's picture

But John dear, what if you wait for $1180 and there is no physical available?

typical realtard tactic: "They aren't making any more land you know? You'll be priced out of the market if you wait"

And there are always suckers who believe it.

Tue, 10/12/2010 - 10:40 | 643065 Dagny Taggart
Dagny Taggart's picture

Not sure what a realtard is, but I've continually bought land and PMs over time and its working out really well on both. Does someone need a hug?

Tue, 10/12/2010 - 11:39 | 643270 CrockettAlmanac.com
CrockettAlmanac.com's picture

Dagney had offered a hug,

To clunky VWBug.

He couldn't be held,

By promise of geld,

Which simply caused Atlas to shrug.

 

 

Tue, 10/12/2010 - 12:09 | 643347 VWbug
VWbug's picture

realtard is the name given by zhrs to RE agents who would sell their gramma for a nickel and come up with the same old scare tactics for why people should buy right now, such as the one you mentioned.

Hugs are always welcomed, if you're hot and in lima peru or cusco give me a call!

Tue, 10/12/2010 - 12:21 | 643389 Dagny Taggart
Dagny Taggart's picture

I'm hot, but let us not "get off" topic. Are you saying that you are pretty sure the retail gold sellers will have plenty of available bars for the foreseeable future? Even though a mad man is crashing our currency? With a debt of $70Trillion, unfunded liabilities and agency toxicity, QE2 all in, you can't see a shortage as a distinct possibility? Just because every fiat currency ever has collapsed, usually with a reversion to PMs as new money base, and just because the US dollar is 94% down the toilet, that because it used to be "the" world reserve currency, that its all good, dog?

Tue, 10/12/2010 - 13:10 | 643552 VWbug
VWbug's picture

thinking about your hotness i forgot to answer your questions.

No, I don't think it's all good. Put me in the Marc Faber camp.

Shortage of physical? Possible, but I very much doubt it. I was around when gold/silver  hit the real highs and although for a while there were line ups at the bank to buy physical, everyone got all they needed and a few short months later they were desperate to sell it.

Meanwhile, the smart money, otherwise known as peasants in India melted all their hoards of silver and drowned the poor Hunt brothers in a river of physical supply they never even thought about.

Oh, but I forgot, this time it's different : )

 

 

Tue, 10/12/2010 - 14:08 | 643663 VWbug
VWbug's picture

funny, i just picked up a copy of 'el comercio' here and they have a BIG article on gold production rising 3% this year, and talking about how the high price is making all kinds of previously uneconomical mines profitable.

It's titled 'las mineras mueven cielo y tierra para hallar oro en areas remotas'.

See? Markets work. High prices increase supply which eventually brings back equilibrium.

Tue, 10/12/2010 - 15:11 | 643936 tmosley
tmosley's picture

*looks for 20% interest rates*

You're right, by golly.  No 20% interest rates!  No way to stop the dollar collapse this time!

Tue, 10/12/2010 - 12:17 | 643373 VWbug
VWbug's picture

Hey Dagny if you ever need any physical, just ask me, I have a whole list of zh'rs who brag about having physical in their possession, lots of it!

In fact, you could probably just dig up any backyard in florida and find the stash by the sounds of it.

Tue, 10/12/2010 - 12:25 | 643401 Dagny Taggart
Dagny Taggart's picture

Well Bug, that would be stealing. Its creepy that you have a "list" of ZHers. But what kills me is the memo you missed. Most who have physical have ammo as well. I'm just a 110 lb. girl, but even I have a glock 26 snug, under my sweater.

Tue, 10/12/2010 - 13:24 | 643497 VWbug
VWbug's picture

well now you're starting to sound hot, but i still have my doubts.

you people take things far too literally.

I like making fun of people who say we are going mad max and that we all needs guns, ammo and a bomb shelter, and then they tell the WHOLE WORLD they have a stash of PMs.

Too funny.

Like the guys who would take your stash are unarmed, lol. Did they even see the mad max movies??

Anyway, back to gold, I do think the dollar is doomed, and gold will go much higher, eventually.

I just think the timing is off. Not going to happen yet, and we could see a major correction first.

If not, no biggie, I am not afraid of my neighbours and would hate to have to shoot Mrs. Bartz anyway, she makes the best carrot cake ever.

BTW, I bet I was attending objectivism lectures while you were still a gleam in daddy's eyes. Not a judgement, just saying I am not unfamiliar with austrian economics.

But you know, Ayn Rand preached REASON, and a lot of the crap I read on here is just so far from reality it's funny, so I enjoy pointing that out.

What can I say, I'm retired and not a big fan of TV.

Tue, 10/12/2010 - 14:35 | 643793 Dagny Taggart
Dagny Taggart's picture

But we're all using "other" names here. Are you assuming that if a person has said they have a PM stash here on ZH, that the criminals who would steal it can find us for real? Or do you assume if they'd blab it here, they probably broadcast to actual people/sheep?

Tue, 10/12/2010 - 16:53 | 644359 VWbug
VWbug's picture

Both (see my man mack below).

The irony is, the guys who believe in 'TPTB', massive conspiracies, black ops, 'assisted suicides' etc., are the same ones who seem to think they can't be tracked.

Of course, in reality no one gives a damn about these guys, who have some jars of dimes buried.

(Well, except for a few of the real whackos here, you know the ones who get orgasmic when talk turns to shooting someone. I dunno, but I suspect TPTB are watching a few of those to prevent the next Timothy Mcveigh or columbine)

Tue, 10/12/2010 - 14:03 | 643655 Meatier Shower
Meatier Shower's picture

Is that why one boob looks funny?

Tue, 10/12/2010 - 14:32 | 643780 Dagny Taggart
Dagny Taggart's picture

You noticed that too? They never appeared off til I started to carry. Fortunately, I am naturally well endowed enough to pull it off. If the other side of the holster needs more weight than a few extra clips, I can always shove some gold bars in the pouches. ...talk about the scales of justice...

Tue, 10/12/2010 - 16:41 | 644321 VWbug
VWbug's picture

I am naturally well endowed enough to pull it off

ok now you're just teasing us.

good thing I am in the land of the friendly 'peruchis', or I'd be miffed.

Tue, 10/12/2010 - 15:43 | 644066 macktheknife
macktheknife's picture

Everyone in my town knows I own gold - they ask - is it buried in your backyard?  I tell them, yes it is -  you can find it right under the three landmines I buried on top of it.

They usually get nervously silent after that.  You are kidding,right?        Kinda funny.

Tue, 10/12/2010 - 16:44 | 644331 VWbug
VWbug's picture

wow, your stash really is safe!  I mean no one would ever find a way around that, like pointing a gun at you or a family member's head and politely asked you to hand it over.

Tue, 10/12/2010 - 20:15 | 644833 macktheknife
macktheknife's picture

No - VW;   I was making a joke -  it is not ACTUALLY buried in my backyard - and, I think, if I truly had landmines sitting on top of it - I wouldn't be announcing it on ZH - invites a HurtLocker like scenario.    But, you know, VW, you do raise the very real point that , really, anyone with wealth - or appearance of wealth, should be worried that some meth heads in local trailer park will pay a visit.      My general way of dealing with it is-  I live WAY below my means, to all appearnaces, I am just a long-distance trucker, a yahoo.  

You are generally correct -  I can't tell you how many times I have seen people proudly displaying their BIG SAFE at cocktail parties, etc.        No one - including me - should rest easy with their plans- should always reassess.   What is very interesting about past five years is-  at least for me-  I am about equally scared of having my money in bank-  as having it in my mattress.     I never really thought of getting an alarm system - becuase it also advertises you have something to protect - but, as some other ZHers have said,  probably smartest thing in the world would be setting up some good fencing, and having atwo or three Rotweilers in the yard.    That would keep most of the half-wits out.  Also, motion sensitive lights are cheap and reasonably effective.    I doubt many people actually bury their gold in their backyards.    If I see the kid who mows my lawn, trailing a metal detector, I may need to move, or pay him more.

Tue, 10/12/2010 - 10:09 | 642981 Martel
Tue, 10/12/2010 - 10:39 | 643063 oddjob
oddjob's picture

I doubt 'Big Jim' is worried.

Tue, 10/12/2010 - 10:47 | 643089 Turd Ferguson
Turd Ferguson's picture

Trust me, he's not.

Tue, 10/12/2010 - 12:23 | 643395 VWbug
VWbug's picture

what a pathetic publicity stunt.

I mean, gold will go a lot higher than $1650, although I don't think it will happen so soon.

But anyone can see if he was even half serious he would buy some calls and make far better than 100% if he's right.

I imagine every trader in the world would take him up on his offer if he had any credibility, which he won't have after this gets around.

Tue, 10/12/2010 - 15:28 | 644006 Turd Ferguson
Turd Ferguson's picture

"But anyone can see if he was even half serious he would buy some calls and make far better than 100% if he's right."

Sorry, bug, but I've got to respond to your ridiculously myopic "point". Between his physical holdings and the millions of shares of TRE that Sinclair owns, he probably feels adequately leveraged to the price of gold such that he does not need to add "some calls". Sheesh. 

Tue, 10/12/2010 - 17:04 | 644397 VWbug
VWbug's picture

ohhh I see, he knows it's one of the stupidest bets ever, but he's made so much money he wants to give some back to a smart hedge fund. /sarcasm off.

Do you seriously not get that if he actually went through with the bet he would be in fact be buying a call? He'd be paying a STUPID premium of course, which is why anyone would be happy to take the other side.

I think you might want to think this one over again, and please stay away from trading options, you could get hurt.

Sheesh.

 

 

 

Tue, 10/12/2010 - 18:59 | 644693 Turd Ferguson
Turd Ferguson's picture

Whatever you say, there, buginator.

Tue, 10/12/2010 - 10:09 | 642982 Rantor
Rantor's picture

Yup,  GOldman Sachs, we were already supposed to have $200 Oil and $2000 Gold.  I have safely bet against their public pronouncements. 

Tue, 10/12/2010 - 10:09 | 642983 DarkMath
DarkMath's picture

Velvet "currency devaluation/gold revaluation" Weekend (bitchez)

Tue, 10/12/2010 - 10:09 | 642984 Jake Green
Jake Green's picture

Fuck a price target anyway, I'm using my physical as a store of wealth, not as a trade.

Tue, 10/12/2010 - 10:17 | 643001 Cpl Hicks
Cpl Hicks's picture

Seems to me that if your not going to consider your gold as tradeable then it's hard to classify it as wealth.

Tue, 10/12/2010 - 10:23 | 643018 Jake Green
Jake Green's picture

let's just say, I'm not trading it for the current regime of fiat

Tue, 10/12/2010 - 12:00 | 643323 Cpl Hicks
Cpl Hicks's picture

Isn't Marchionni the godfather of that family?

Tue, 10/12/2010 - 10:12 | 642989 bigdumbnugly
bigdumbnugly's picture

1365... we have 1365 bid here... do i hear 1380...  1380? yes, that man in the third row... 1380, do i do i,do i hear 1380... now 1430!  1430 bid by the nice gent with unicredit... now 1465.... 1500?  do i hear 1500?  yes!  unicredit back at 1500...  whoa! 1650!  1650 bid by that squid-like dude in back.  1650...1650...  timeout.  a guy named sinclair said he was first with that bid...  i'm sure it will all work out...

2000? who will be first at 2000?

Tue, 10/12/2010 - 10:14 | 642994 treemagnet
treemagnet's picture

Perhaps the longest article ever written when "just buy gold" would do.

Tue, 10/12/2010 - 10:29 | 643021 steve from virginia
steve from virginia's picture

Goldman sez ... "Top in the gold market years away".

I dunno, there are a lot of other 'assets' (currency and liquidity traps) competing for cash. Better figure out what you are going to DO with the gold before you buy.

I would look for declines first, only go Comex if you intend to take delivery of 100oz. You may lose money ... just keep that in mind.

 

 

Tue, 10/12/2010 - 10:28 | 643033 Rusty Shorts
Rusty Shorts's picture

Max Keiser, very telling report.

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

Tue, 10/12/2010 - 15:45 | 644074 benb
benb's picture

Max Keiser has some great calls... along with some ethics.

Tue, 10/12/2010 - 10:41 | 643068 Porkbellytrader
Porkbellytrader's picture

the corn, wheat, cotton and bean numbers make no sense....6.25 corn and 9.25 beans? DOES NOT PENCIL

Tue, 10/12/2010 - 10:42 | 643075 FluffyCone
FluffyCone's picture

Help a layman out here...  I already know that I'm an idiot, so please don't belabor that point.  So here is my question.

If I buy physical gold at the spot price today.  Who do I sell it to tomorrow?  There just seems like there is not much of a secondary market for this stuff.  As an exercise, I purchased a 1 oz gold coin for spot.  I then tried to find a place to sell the coin (like pawn shops, friends, etc.).  The pawn shop only wanted to pay half of the spot prices.  Friends and family were not interested.  The grocery store would not exchange it for a fair amount of food, etc. etc. etc.  So how do I spend it?  What do I not understand.  How does gold help the guy on mainstreet?  What would be the use case?  Thanks....

Tue, 10/12/2010 - 12:07 | 643343 blunderdog
blunderdog's picture

In a real currency collapse, the fiat-exchange rate would show a huge nominal "profit."  The coin you paid $1400 for will be "worth" $15000 or $25000, so even a significant cut on spot price would show a nominal gain.  That's not a satisfying answer, of course, if that amount of notes is worth a fraction of what it would be worth today.

But importantly--you will likely have the option of spending the gold, rather than selling it.  You want a car?  A rifle?  A windmill?

One gold coin just might trade for such a thing, regardless of how many or how few paper notes you can exchange it for.

Tue, 10/12/2010 - 12:15 | 643366 digalert
digalert's picture

Find a PM coin dealer, I have several. Ask if they will buy back what they sell. They sell with whatever their premium/markup is. However, they buy back charging the same premium.

Tue, 10/12/2010 - 16:22 | 644243 bilbert
bilbert's picture

Assuming you're not kidding:

1.  Buy Silver in 1 oz units (stay with known brands - Silvertown, Pan-American, NWT Mint) as Gold  at $1350 an oz is very pricy for many.  1 oz Silver units go in the $25 range - much more liquid.

 

2.  Where to sell??  Any reputable place you buy it from will buy it back from you at VERY close to what you paid for it.

 

3.  If you want to see what the REAL price of Gold and Silver is, go to e-Bay, and search for 1 oz Silver Bars - yup you can sell Gold there too......... 

 

Tue, 10/12/2010 - 10:54 | 643119 Xibalba
Xibalba's picture

there are 'gold-for-cash' shops popping up all over the place.  they'll pay you spot with zero premium. 

Tue, 10/12/2010 - 10:59 | 643134 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Go dwarf ... or can't you loosen your knuckles from your coins?

It's not a religion, its an investment ...

Tue, 10/12/2010 - 11:07 | 643166 wiskeyrunner
wiskeyrunner's picture

Goldman says buy...... means sell sell sell sell

Tue, 10/12/2010 - 11:53 | 643304 wafflehead
wafflehead's picture

I am tired of these stupid comments about going short because Goldman is raising the target. Goldman said the price would go to 1300 when it was trading in the low 1220. Obviously if you went short trying to be smartass contrarian you would be holding the stick now.

Tue, 10/12/2010 - 12:02 | 643327 VFR
VFR's picture

Oh Fluffycone, you really don't understand. Gold is not for the common man. It is for the rich and governments . even if  fiat collapsed it will be used as a transfer for extremely large transactions at country level. If that happens silver will be for the common man or you wil be bartering packs of 200 cigarettes. If you really want to buy gold and be selling it as soon as you buy it then try biullionvault.com. Otherwise hang on to it ofr  afew years and then judge if the decsion was right to buy it.

Tue, 10/12/2010 - 12:14 | 643364 Downtoolong
Downtoolong's picture

I don’t think Goldman really cares whether the gold market goes up or down. Their main goal is to get investors involved in commodity markets that they and a handful of other players largely control so that they can shave everyone else coming and going.   

Tue, 10/12/2010 - 13:03 | 643526 VWbug
VWbug's picture

you say that like it's a bad thing : )

I mean, that's essentially the definition of broker dealer.

Are they supposed to be doing something else?

Tue, 10/12/2010 - 12:19 | 643376 Thunder Dome
Thunder Dome's picture

Gold going lower.  This is a kiss of death.  Goldman been selling gold assets all morning long.  Guaranteed.

 

Buy whiskey.

Tue, 10/12/2010 - 12:23 | 643394 FreedomGuy
FreedomGuy's picture

I think Jake got it right. It depends on why you are trading gold as to how you look at any predictions short or long term. My bottom line is that the U.S. and even most countries in Europe cannot, will not and have no intentions of ever paying their debt obligations...at least in real money. It is an impossible task regardless of which party is in power. While I figure that Republicans are better than Democrats, most of them are economic morons and don't or won't have the capability to make sound nonpolitical difficult economic choices. Libertarians cannot get elected en masse and have only a small chance of taking over the Republican party.

About two years ago I was buying currency hedges against the dollar and doing moderately well when I realized that over time there would be worldwide competitive devaluations. Then you have to buy real things with real value.

I buy physical gold and silver to replace linen and paper with something of value. I'm a long term holder. It gets more urgent when I read about QE II and even potential plans by members of the U.S. Congress to nationalize 401k's. So, I am a long term holder against worst case high or hyperinflation scenarios. My kids may inherit my metals for all I care. I still predict that a safe deposit box full of precious metals will still be worth more than a box full of dollars or even many other investments over a long time period. Plus, I am hedged against economic meltdowns particularly of the Weimar Republic type.

If you are a trader or short term investor then you need to read more carefully what Goldman and others project for the near term because you are taking shorter positions. You need to guess whether or not you are being manipulated, arbitraged or otherwise fooled as some here post, lol. Good luck!

As a long term investor, I can buy on significant drops and enjoy the appreciation on the inevitable rises. I buy because I believe in a dark gray to black economic future for the United States and the West in general thanks to populist politics, socialism and fiat currencies. The rules of economic physics will bend in my favor, I believe.

Tue, 10/12/2010 - 13:27 | 643597 Mariposa de Oro
Mariposa de Oro's picture

Well said, FreedomGuy.  I'm doing the same thing you are.  I have only $1500 to play with each month.  I'm almost priced out for an oz a month.  I can buy 1/2, 1/4 and 1/10 oz increments for a while longer.  I see my au as an insurance policy or as something pretty to leave to my daughter if the policy isn't needed.

Tue, 10/12/2010 - 21:08 | 644956 FreedomGuy
FreedomGuy's picture

Consider silver with the smaller denominations. In a worst case scenario it will be easier to trade for things you need because of its smaller unit value. Imagine now if you could take a 1oz gold coin into the grocery store and buy something. You'd have to ask for change for the equivalent of a $1300 bill, lol. Silver at about $24/1oz coin would be easier. Buying smaller gold coins is better in that respect, but you pay a higher price per ounce doing that. A few different metals seems like a good idea, too. Good luck. I agree with your thinking, at least. 

Wed, 10/13/2010 - 03:03 | 645485 Mariposa de Oro
Mariposa de Oro's picture

Thanks FreedomGuy. I already have about as much silver (various denominations) as I can carry, literally. I'm in a unique situation. I'm an Army contract employee on a small island outside of CONUS.  There are two ways out of here: fly or float.  If need be, I suppose I could mail my PMs back to the US, assuming that's where I decide to go.   Right now, its looking like the US is the last place I want to be.  When I leave here, chances are it'll be with whatever I can carry and nothing more, unless of course, things rapidly improve for the US.  I don't see that happening.  So I'm sticking with the gold since per unit weight it has more value than silver and weight is a very important consideration for me.

Tue, 10/12/2010 - 12:41 | 643456 lawrence1
lawrence1's picture

Ignore Goldman, ignore Soros.  Fundamentals will prevail ... as Sancho Panza opines, Whether the stone hits the pitcher, or the pitcher hits the stone, its going to be bad for the pitcher.  With all the grey and black swans in the air, its going to be good for PMs, and most everything else will be covered in swan shit.  Read Martin Armstrongs latest about the Greek bankers... Goldman is going down.

Tue, 10/12/2010 - 12:54 | 643499 Thunder Dome
Thunder Dome's picture

Time to buy and hold equities will be when Goldman goes belly up.

Tue, 10/12/2010 - 15:04 | 643916 Stuck on Zero
Stuck on Zero's picture

If Goldman says it's going higher it can only mean one thing ... the big guys are selling.  Goldman is in the business of making money for the big guys and misleads the little guys.

 

Now I think I'll sell my little gold piece. 

Tue, 10/12/2010 - 17:55 | 644554 DoctoRx
DoctoRx's picture

The gold market is even larger than GS.

Ever since gold was floated in the 1970s, the only important correlation is that zero to negative real ST interest rates correlate with rising gold prices.  The easier the Fed is, the faster gold prices rise. 

Wed, 10/13/2010 - 02:06 | 645454 No More Bubbles
No More Bubbles's picture

ROFLMAO!

Wed, 10/13/2010 - 03:12 | 645489 boogey_bank
boogey_bank's picture

GS and UC are trying to call a top on gold. Is there an impending takedown on gold? In the past the big boys have been always able to sink the gold price. This time they can't succeed  without chinese compliance.

We all have seen what has happen to usd/jpy when chinese merely started to diversify their currency basket buying jgb.

So it's quite strange that a chinese dissident was given Nobel.  

All is up to China. Maybe they gan give big boys the middle finger. Maybe this is an occasion for another chinese load up on gold.

QE2 is almost priced in so the most unespected event should be a QE2 refusal.

HFT could limit the damage (perhaps) on stock market. Panic could save the day for treasuries (perhaps) specially if joined with a paper gold crash

But how to underpin the shattering banks that today are more levered up than in 2008? The money parked in the sidelines will be enough?

Wed, 10/27/2010 - 13:09 | 680868 TheMonetaryRed
TheMonetaryRed's picture

So Goldman is saying that gold will go up until the yield on TIPS is done going down. 

At that point, they turn their HFT machines in both markets to SELL. 

Good to know. 

 

Gold to $1700. 

Wed, 10/27/2010 - 13:15 | 680889 TheMonetaryRed
TheMonetaryRed's picture

Looking at the charts, I think I might be a DGP buyer somewhere in the next couple weeks (in this market, I go more by timeframe than absolute price).  

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