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Guest Post: The FED Cannot Keep Stocks Up
From Mike Krieger of KAM LP
What the future will hold is such a dramatic sharp burst to astonishing new price levels of several thousands of dollars. This does not even require hyperinflation. It is not likely that the United States would enter a hyperinflation mode. The system would collapse long before that takes place. The much more likely result will be a complete currency default with a replacement of a new currency. This is one way government defaults by using a shell game so that the average person does not understand he was just taken to the cleaners.
- Martin A. Armstrong on Gold
The FED Cannot Keep Stocks Up
What a difference a month makes. As I prepared to begin my Labor Day weekend in late August the financial media was abuzz with predictions of stock market doom. You could barely read anything without being confronted with several references to the dreaded Hindenberg Omen and how the appearance of several of these had all but guaranteed an imminent stock market collapse. There were plenty of reasons to be bearish. The market performed horribly in August and the economy was clearly still in the dumps despite a continued endless propaganda to the contrary. Nevertheless, the constant predictions of doom was indeed a great contrary indicator and barring some monster reversal today we are about to finished the month of September +10% in what is typically the worst month for stocks. It is set to be the best September in 70 years.
The truth of the matter is while the relentlessness and strength of the rally did surprise me a bit the fact that we bounced hard did not. Ironically, the reason I thought this could happen is because I am SO bearish. At the end of the day, if you are coming from the angle that I am you need to assume the stock market is a political tool for those in charge. I have said this time and time again. The manipulators cannot stop the cycles of markets any more than they can the cycles of nature in the end, but in the interim they can create a lot of problems and seriously damage your P&L if you do not know who you are up against. When it is the system itself that is fighting for survival as it is today, the system will fight back with everything it has. People in positions of power in the United States today are much more Machiavellian than most good natured citizens could ever fathom. If you do not wake up to who your leaders really are you will be led to the slaughter with the rest of the sheeple. I want this to happen to as few people as possible. This is the main reason I write.
Ok, so all of this action in the market is ancient history and the bigger question is what happens next? What I find so interesting about sentiment right now is that it has done an complete 180 from just a month ago. Those that have bought significant out of the money protection on stocks are suffering big losses on their insurance due to the rally and the action in the VIX. From a sentiment and positioning standpoint, this was where the pain trade was into September and therefore it has happened. Bears are terrified to short and this notion that the soon to be extinguished Federal Reserve can prop up stocks forever has entered the psychology of investors and traders everywhere. This is DEAD wrong.
What I find so hilarious about the last week or so is the amount of complete garbage that has come out of people’s mouths, which then gets spun by the media and others to justify higher stock prices and keep this ridiculous rally going. I don’t care if someone is worth $100 trillion dollars and made $5 trillion last year, if what comes out of that person’s mouth is Orwellian 1984 style 2+2=5 drivel I don’t simply accept it like some mindless drone. I don’t check my common sense at the door because of someone’s paycheck and neither should you. I also don’t mindlessly worship a billionaire who acts like some dopey/humble grandfather figure in front of the television cameras all the while lecturing us serfs that it was necessary for the government to bail out the elites at the taxpayer expense. The good news for us is that when I watch many of the elites and power players I see fear behind their veneer of arrogant self-righteousness. Their statements while seemingly brimming with confidence are becoming more desperate. They are losing and they know it. The stock market and money printing is all they have left as a tool to keep people asleep and it’s not working. What I find so hilarious is that no one seems to ask themselves why a big money manager might come on CNBC and tell everyone stocks can’t go down. Perhaps in a market with little to no liquidity someone needs liquidity to dump their garbage on some unsuspecting sucker. Based on the volumes in the market I shudder to think what happens if someone actually tries to sell positions in size.
Are We Near a Major Top in Stocks?
I typically do not talk about the broad market in aggregate unless I feel we are at some sort of major turning point. I think we may be at one currently. When you have a stock market up this much on vapors and the belief that the Fed can keep it up you have nothing short of a disaster waiting to happen. Let’s just think about some of the nonsensical logic out there. So people think the Fed can just launch QE2 and push stocks higher. Really? First of all the market just surged 10% this month and is trading at the highest level since May. Food prices are soaring, gold is above $1,300/oz and silver is above $22/oz (gold is at a nominal record and silver is at the highest price in 30 years). Does anyone realize how ridiculous an announcement of QE2 would look in that context? It would probably freak people out and stocks could collapse. Ok, so if I am right and they can’t do QE2 with asset prices at these levels what do you think is going to happen to stocks once people realize QE2 is not about to be launched. Whereas in late August the pain trade was the rally we just had, the pain trade may be an equally powerful although much quicker plunge down to the 1,000 level in the S&P500.
Oil Closing in on $80/b
This is almost a perfect setup for a big selloff in stocks. As I have pointed out for several years now, the broad stock market has never sustainably rallied as oil breaks the $80/b level. We are trading just under that now in WTI, Brent is nearing $82/b and Asia Tapis is above $85/b. What’s worse is that other commodities are way higher today that than they were the last several times oil approached the $80/b mark.
Mortgage Gate
If you are not up to speed on “Mortgage Gate” I recommend you get there and fast. While the whole issue of put-backs to the banks has been in the news for a long time I don’t think too many people appreciate the implications of all of this. What is so interesting to me is that many people seem to think the fraud that happened earlier this decade is behind us and we can just brush it all under the rug like a bad dream. Wrong. This is only NOW starting to really hit a head and for once in my life I am happy that we have an excess supply of lawyers in this country because we need an army to go through all these documents and put people away. If they had succeeded in reflating housing perhaps a lot of this stuff would have just gone away but they didn’t and it hasn’t. Once people find out how much trouble they will be in they will sing to the authorities and rat out those above them. This is going to get really ugly really fast. The best quick summary I have heard on this issue is by Chris Whalen. The interview is here and is a MUST listen.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/9/24_Chris_Whalen.html
GDX/SPX Trade Should Take Off Shortly
One thing that almost nobody thinks can happen is surging gold share prices amidst a falling equity market. In fact, I see no more attractive trade currently although I do acknowledge that in the initial sell-off (look at today) the gold shares could take it on the chin. Nevertheless, I wouldn’t try to be too cute about timing it since I do not think we will see the 2008 trade again. Like I said, I think gold shares will surge as the stock market languishes. This is because big money will buy physical gold on dips while paper longs panic. I expect this spread to be one of the most powerful trades we may ever see later this year and into 2011.
All the best,
Mike
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It will be fun to watch.
Collapse Bitchez!
say goodnight Gracie.....
the smart money moves out this afternoon...wait and see.
Beans, bullets and a warm dry place to sleep.
Btw, just as I'm watching for an outside reversal in gold today signaling a possible short-term top, the same is true for the ES.
UI can't imagine the Fed and the PDs will allow it. Expect at least a little 3:30 ramp job just to turn things green on the close.
Turd
A little off topic, but have to ask, what do you see as the downside risk of gold/silver assets held physically? All I could think of is a situation of rapid powerful economic growth to power up the delusion that the system can work long term. But I can only see that with a cheap, powerful, new source of energy, or massive easy oil. Because of the problems worldwide and the now common knowledge of a currency war it seems that gold can only move up in the long term as every nation tries to impoverish it's workers and savers by destroying their own currencies.
So am I right that only real threat to gold is a new super energy or maybe finding 5ish Ghawar fields someplace easy to get to? I'm already moved all in, but just trying to think on how I can get screwed here.
Martin Armstrong noted the $600 IRS 1099 reporting meant gold could break down to 900s by June next year...
http://www.washingtonpost.com/wp-dyn/content/article/2006/12/01/AR200612...
Hmmm, you might want to consider that all of the Russian, Chinese, Japanese, Saudi and European buyers of gold will be not subject to this tax. Just sayin.
+1
The #1 downside risk to owning physical gold
is the possibility of one of your neighbors owning a philosopher's stone and turning it into lead.
Lest you laugh, Smith and Wesson have been manufacturing them for years ...
Oh yeah that would go over well. "Hey give me your gold." "Yeah ok, let me go and get it from my safe where I keep other things too." And by the way, the only real philospher's stone is a pen.
It's a fear weapon but ultimately useless. What is to stop goldbugs from getting fake IDs for their sales. If it's good enough for teens to go to a bar then it's good enough for me!
"I'm John Smith and I'm here to sell a Krugerrand, sure I have my social right here"
The next answer would be cashless transactions and if things go cashless the next move is simple, GET OUT! Full wealth confiscation and work camps are not far behind...actually with our legal system and prison pop it's pretty much already here. Also as Turd points out this does not impact the global market which I see as a bigger driver then the US market.
Unfortunately the people who would like the price of gold to fall do not have enough of it to make it happen. It's called a good money for bad scam and it ends when the good money is gone.
At this point I almost would like to see 30 more million unemployed just to see the webuygold crowd finally bring this thing to it's inevitable conclusion.
I'll just buy 1/4 ounce bullion instead. Stay under the radar!
Shame: I tell you what, that was an amazing day in the gold pit. Gold would have settled unch if it weren't for end of quarter Market on Close orders that took $2 out of it right at 1:30.
The EE has to be scratching their heads. Anytime in the past, they would have gotten $20+ taken out of the market which is at alltime highs in price and OI. Not today, however. Our buyer(s) of size continue to accumulate on any and all dips. The big, ugly black candle they were trying to paint on the chart is instead just a little line that is so thin you need a magnifying glass to see if its black or white. Hah hah hah hah hah! Fuck em!
Now, that said, the EE ain't going away anytime soon. With today's action in their back pocket, you can bet your ass they'll try to take it down when it approaches $1315 again. Anything they can do to scare the weak-handed recent longs, they'll try. But until and unless our buyer(s) of size decide to let them whack it just simply to create an even more compelling buy opportunity, the EE will continue to be frustrated. If I had to guess, because of today we may be pinned in through next week between 1315 on the upside and 1285 or son on the downside. We'll see.
On to your question about physical. You raise some interesting scenarios regarding a resumption of global growth and prosperity. Though certainly anything is possible, I think you have to err on the side of calamity. If you believe as I do that the world is awash in debt, public and private, to the point where only continued debasement of fiat enables that debt to be serviced, then physical gold is your answer. Do NOT, under any circumstances, hold an ETF like GLD and proceed to rest well at night believing you own gold. Buy physical whenever its reasonably attainable. The amount you hold should be commensurate with the degree to which you think fiat/keynesianism is doomed.
Nice work Turd. Besides these panic sellers, one also has to remember the effect of the race to the bottom of currentseas. Even when someone comes in sellside, the weakened currentsea market pushes right back up. I am still shocked we did not see any massive dumps in September. Then again, this farce is so far gone that even those who have rigged the game know that they have to find a chair before the music stops.
What do you think the October play is? I have the DXY moving to 73 by November 15th (and to 66 by Dec 21st) with gold trading from $1300 to $1400 by November 1st, $1400 to $1600 by Nov 1st, and $1600 to $1850 by the solstice. You have seen my numbers before, as this has been my frame for awhile, but I was wondering how you think it will go?
PS Flash Crash trends are in line today.
Hi, Jimi. I like the way you're thinking and I'm with you on the trend, though not quite up so fast. I've long maintained $1350 by Halloween and $1500 by 12/10/10 but if you're right about the dollar, your numbers may be low.
At any rate, it is truly all about the dollar at this point. Whether for trading or for long-term FA, dollar direction is certainly the key. That said, I've got to figure there's some dollarbounce in here shortly. Keeping in mind that all the currencies are pegged to each other, not to gold, so the dollar may rally a bit as the euro, yen and swissy decline some. In the end, however, hard not to see the USDX rolling down toward 72, probably sometime in November.
In the meantime, watch that Crude contract. Might be some money to be made if you can pick some up on a pullback near $78. Damn near every single other $-based commodity has been screaming higher. Looks like crude has finally decided to participate.
Trading gold, silver, platinum, and oil is a perfect combo play. Although they correlate, sometimes one out does the other, and there is no reason not to catch those moves. As the dollar falls, the...EE (what is EE?) will spin the losses towards these "commodities" one at a time. I think that the only thing stopping gold from hitting $2000 will be small players trying to sell what the MSM will undoubtedly call, "a top". It will be an inversely ascending waterfall, hitting a few rocks on the way up.
I thought there would have been a dollar pullback around a week ago, but alas, the doll ain't as pretty as she used to be. Other CBs are trying to devalue their currentsea, I think this works well for dollar devaluation. The more foreingers buy, the more BS Bernanke "prints". So CBs buy dollars to try to get their own down, but the question is, who will be left holding the bag? Or better yet, who is not holding the bag? The way I see it, anyone holding gold is in the clear, which is interesting once one considers that CBs have massive reserves in tungsten, er....I mean gold. That and corporations should do well when the bond market moves from buying T-bills to buying corporate. Watch corporate bonds track T-bills inversely when this all happens. Note, I am not for this corporate takeover, but want to remind you that I think that this is the overall plan. One that is too seldom discussed. THIS, THIS WHOLE FIASCO, IS A CORPORATE TAKEOVER OF SOVEREIGN FREEDOMS.
Jimi, I took to calling the JPM-led, bullion bank cartel the "Evil Empire" (EE) some time ago. Its an image that always worked for me. The cartel is the Empire and their Death Star is the Comex. However, we "rebels" have the "force" of truth behind us and the laws of economics on our side.
Nice! I dig it.
Thanks for asking Mr. Hendrix, I thought it meant Evil Economists.....
Well I took to putting all my savings into the metals because of my lack of faith. I see the breakdown as inevitable because it will break without growth. We can't even handle a no growth model, the system was not built that way. Thus far they have shown that they will do whatever it takes to try to save the present system so I can only assume that action will continue. I'm not even saying there is peak oil or energy, but we need something soon to reignite growth up to the level where we can manage the debt loads. Otherwise we are faced with a round of sovereign and private defaults which should rattle the currency market or a wave of debasement which should rattle the currency market. It seems to me that both doors out of this involve the fiat faith-based currencies getting pulverized.
This buyer in size is clearly not playing ball with the big boys. So any opinions on who it might be? Foreign central banks, billionaire investors?
And all in physical. Resting in a safe in a home full of Rottweilers and guns. It's about as safe as I can make it at the moment :)
Great trialog Turd, Mr Lennon, Shameful.
Gold is BIG PART of what we as individuals can do to keep us and our families through this.
Let the EE try and bash gold down. Let 'em do it, and when I come back, I buy, buy, buy.
Until we reach $55,000.
"So any opinion on who it might be? Foreign central banks, billionaire investors?" - I trust you've already seen this, but in case not... ~ SGT
http://www.youtube.com/watch?v=iPvBQ1qscpg
Yes, I saw that earlier this week. Ole Jim Willie may very well be right on. The chart certainly looks to confirm what he says.
That said, the slick production and spooky music kind of detract, for me anyway, from the validity of his hypothesis.
One thing to watch out for. When the paper and physical markets disconnect - ie, the paper gold holders figure out that their paper claims are unenforcable - then the "market" price of gold may plunge to near zero as all of the paper holders attempt to sell that paper and it reveals it's real value of zero. Just know that if gold "prices" are plunging as a shortage is revealed, that's what's happening. Physical gold, while technically priced with the paper gold, will keep it's real value, so don't sell into that trap.
@Rogue:
If it's worthless, nobody would buy GLD or SLV.
Right, and Ben Franklin's pic on the $100 makes it a rival in value to a Rembrandt.
Turd,
I thought you were a Swaimee,the prices of Gld and Slvr dropped under 1,300.00,for about 10 mins...and I thought your train was on TIME.
Tommorrow they suceed.Until Monday morning.
JUST FREAKING BUY SILVER AND GOLD!!
bunch of gaps - 1109, 1090, 1049; downdraft time
Well said, Mike ! David Tepper´s comments are just ridiculous hilarious !
You've got to give that guy credit for correctly interpreting governmental action on stocks over the past year but that interview did have a "famous last words" tone to it.
It's almost like he was tempting karma to bitch slap him.
Don't know just who he was trying to persuade to buy stocks, but it didn't work on me.
That's what Elliott Wave's Robert Prechter said too. Since Jan. Feb. he has said the market should start a strong decline real soon. Well, how wrong can one be. It is even rumored now that he is telling his regular subsrcibers to short and his institutinal investor to buy against it. Prechter has also said the FED does not matter for more than a day or so.
Woooooo, How wrong can that statement be. Prechter even said to sell, (short), silver at 16 and 17.
I believe this, follow who has been right. Marc Faber, who gives free advise, says the FED will print like crazy every time the dow goes under 10,000. He has said you will never get him to give up his Gold. So far, he's the man. Go Marc.
Prechter is an A+ douchebag of the first order.
Your too kind. How about a F- Scumbag.
That works, too.
He's a criminal thief praying upon unsuspecting dupes. A charlatan like a 19th-century traveling snake-oil salesman. He can "cure your ills" with two spoons full of his worthless, nonsense TA.
Phrenology is making a comeback! </sarcasm>
And meanwhile, the establishment's shills and their media lackeys are frantically peddling the intellectual laudanum of pseudo-deflation on every streetcorner.
faber has been the most right of any of the talking heads.
what i really like about him is he has a good time while proclaiming 'we're all doomed!'
he realizes it just means economies will go to hell, but the smart ones will still make money and live very well indeed.
i think i'll go join him in chiang mai soon.
right up there with Paulson's $4000 gold and buy a home.
http://www.streetinsider.com/Corporate+News/Paulson+Sees+$4,000+Gold+and+Says+%22Buy+a+Home%22/6003620.html
Someone tripped over HALs power cable and commodore lost its internet connection... probabbly IP address conflict.
IPv6, bitches.
"Does anyone realize how ridiculous an announcement of QE2 would look in that context? It would probably freak people out and stocks could collapse. Ok, so if I am right and they can’t do QE2 with asset prices at these levels what do you think is going to happen to stocks once people realize QE2 is not about to be launched?"
wtf is this guy on? i vote that if someone even thinks there is a chance bennie wont unleash wave after wave of QE their article doesn't deserve to be posted.
A paper tiger is still paper. We'll certainly find out what happens when it hits a stiff headwind, because eventually it will.
I agree. He's saying they're not going to announce QE2 because it "would probably freak people out". Seriously? That's all he's got? Sure this is an interesting piece, but his whole premise of stock decline is based on the Fed not doing QE2 becuase it might freak people out. No supporting or historical data...it just might freak people out. Wow.
I think the point he is trying to make is that the market has to decline from here before they can safely administer QE2. If we have a 2 month, 3-400 point selloff in the S&P, declining economic indicators, declining homeprices, and increasing unemployment, a lot more people will be against QE2.
i vote that if someone even thinks there is a chance bennie wont unleash wave after wave of QE their article doesn't deserve to be posted.
Amazing how quickly some people will discard the First Amendment.
Good luck with that QEII trade.
Fed chiefs said yesterday it ain't happening, thus cancelling out BSB's bluff.
0 needs better poker players.
http://www.northjersey.com/news/business/092910_Fed_officials_clash_over...
There IS a difference between censorship and "deserving" a hearing/reading.
The best real-world example of the effectiveness of "wave after wave of QE" is Japan, circa 1990-2010. Except that Japan was far better situated to tolerate wave after wave of QE. Are you one of the sheeple who thinks that QE2 will have any intermediate- to long-term positive effects?
Gold,
We have someone in the woodpile.
The Nov elections, promise to be a slaughter,if the Fed(Bennie) goes ahead (forget the election),with QE 2 the natives will go freaking arseswipe nuts!.
When the NEW members come in,in Jan and ( if O'Donnell wins she's in immediately), there goes the 51st vote.
With the peoples mass sentiment in their back pockets, best have a place to go, and your bags packed........
I forsee a major shitestorm on the horizon, and it's not the economy.
We may have bread lines, but we MAY be having trials and prison sentences handed out like cotton candy at the fair for YEARS to come.
DosZap, yeah, Dems & Banksters better have bags packed if they get shellacked and they start real investigations.
100% agree major shitestorm ahead. Gold, guns and ammo.
On the other hand, Shameful and I are ready with OUR bags packed if "they" come for us...
Peru Putaz!
The GDX/SPX trade does and will work if you have the Balls!
CNBS is certainly trying it's best to keep the market up I think they have mentioned that it's the best September since 1939 about 100 times already.
early this morning they ran a plea for people to send in stories of strength in the economy under a banner about the continuing recovery
CNBS is the market's daily Cialis saying whatever they can to keep the market up. They are just a bunch of overpaid fluffers.
It is important to get to a doctor if your market stays up for 4-hours or longer in order to avoid permanent damage to your, uh, portfolio.
That was very funny!
mt,
Yes ,very clever playoff........LOL
CNBS may have well said that, but you should not be watching that crap channel. And for all of you that say that you watch for the "ticker" (like saying you read playboy for the articles), or watch with the "sound off", you are still providing those lying criminals (and socialist/marxist loving owners) with advertising numbers.
Bottom line is don't bash CNBS and then say you watch it because they don't care if you like them or not, only that you tune in and when you do, you are directly supporting liars, criminals, corruption, socialism, and marxism, the NBC trademark.
Except Adami, great for fade trades
Rick Santelli issuing beat downs on Steve Liesman, watching anyone from Euro Pacific interupt and confuse the fluffers with the truth and Mandy's cleavage on low cut sweater day. Those are the only things worth watching on CNBS.
What evidence does this guy have for a major top in the stock market, other than conjecture? Waiting...
Other than market fundamentals?
Other than Technical Analysis?
Other than historical facts?
Other than knowledge of the material facts?
Other than an opposition to the fabricated governmental provided data?
Nothing. Just facts.
Evidence, bitchez!
Opinions...
Is this Uncle Ben Sholom ? Maybe it has something to do with the mortgage gate/mbs/ponzi?
Trolls are still buying. Who's money are they using?
I'll give you two guesses, the first one won't even cost any reserve notes
In my opinion, your opinion is wrong.
Crystal ball? Time machine? Magic 8 Ball? Chicken's feet?
What the fuck are you looking for? Ever read the red print at the bottom of the prospectus...the part about forward looking statements? It is all conjecture.
I would just suggest looking at copper, Dr. Copper. It's so obviously way the fuck overbought. But you probably named yourself Dr. Copper in order to rah-rah the market on the idea that copper over $3 is bullish. Which would indicate to me that you have no understanding of any market whatsoever, especially commodities.
But hey, that's just conjecture too, amiright?
look what happened after the sep 39 rally - a 40% drop over the next 2 1/2 years. not a comparison to take comfort in.
and a World War....
sweet, can't wait.
I don’t check my common sense at the door because of someone’s paycheck and neither should you. I also don’t mindlessly worship a billionaire who acts like some dopey/humble grandfather figure in front of the television cameras all the while lecturing us serfs that it was necessary for the government to bail out the elites at the taxpayer expense.
Nice
In other words, "Fuck Warren Buffett!"
That's what I heard. Ugly mental picture, though.
Same here, zactly.............
Ugly mental pisha?........not to Bawney Fwank.
The bottom pit of Hell for me would be to have to spend eternity chained to a naked Bawney Fwank and having to feel and smell his bloated, fug-funky flabby body next to mine until the end of time as he continually put his hands on me in a never-ending, clumsy and infinitely-unwanted attempt at homo-geriatric-kleptocratic seduction.
God, now I have to go give my mind a shower!
Ms Quick has that franchise.
Are they trying to paint an outside negative reversal on Gold for the chartists ?
LOL
Throw your charts out the door on this one.
+1929 Exactly... Forget Technicals.. unless you are trading on a 5m chart..
AM so glad my friends at the Comex could smash gold finally- go Jamie!, you came through finally. Now if he can only smack down the gold mining shares I can continue to dish out some of the gold stocks-not confirming kool aid and negative divergence
People in positions of power in the United States today are much more Machiavellian than most good natured citizens could ever fathom. If you do not wake up to who your leaders really are you will be led to the slaughter with the rest of the sheeple.
And talking about being slaughtered and things Machievellian, Barry and his friend want you to buy stocks out of a sense of national duty:
http://www.ritholtz.com/blog/2010/09/so-what-could-really-turn-the-econo...
What a fucktard.
Same damn thing the Brit Banker Mr. Bean said yesterday (no, not that Mr. Bean),LOL.
The dumb sob, told the retirees to stop whining( about their lifes savings drawing .000001 APR) and get out and SPEND!,you poor pitifull ungrateful wankers!.How do you spend, when your using principal to buy food, and pay rent,and utilities?.
Typical Banker...........bitch.
This is the absolute truth............he better be damned glad he lives in the U.K.,had he said that here, he likely would not have made it home.
I can still picture in my mind the time Mr. Bean got his head stuck in a turkey! Rowan Atkinson is absolutely hysterical
Gold again! So why is the piece of crap down 1%. The great preserver of wealth is actually down. Guess after all it is not preserver. Just another leveraged speculative s!@# which ZH laps it up saying everyone is buying cause it preserves wealth.
Freesbe
You have to wait for a bigger drop before you can say that. Wait for a big correction and then you and I and JonnyBravo can terrify these dumb goldbugs with gold is in a bubble, you can eat gold, gold will go to 200....etc
I know that drop was nothing but portfolio balancing end of quarter. But am just trying to highlight to the puffed up idiots here who actually think Gold is everything. It is as if these archaic nuts who have been preserved and transported from Mesopotamia and Abraham times who do not understand absolutely nothing about forex and trade and economy.
As for Gold, am just waiting for this to complete its cycle of rises which can go as long as as being allowed by CBs and then I am waiting to see the bugs melt away. Infact the trigger for the crash could be Yuan free float, EURO displacing Dollar as currency, China increases borrowing costs etc. Any of those factors are enough to crash the leverage bet called Gold and in the process take down the entire set of bugs. That will give me a lot of comfort.
Who here thinks that gold is "everything"? It's part of a balanced portfolio as well as part of a practical set of physical tools like having a garden, preparations for social adversity, and a soporific.
So, you'll be comforted if some people lose a portion of their wealth. Nice.
Rocky & Tmo: I don't understand why you allow yourself to be drawn into "arguments" with clueless morons like fresbee and Nadler. A complete waste of your time.
Be patient. Hold physical. Simply laugh at and disregard anyone too closed-minded to see what's coming.
I'm in recovery. I used to write dissertation-like responses for that kind of crap. I'm down to one-liners, which is pretty good.
I have to admit that I have to restrain myself too.
Sometimes I find myself opening a "reply" window and even start typing. Then I stop and ask myself why I give a shit what some douchebag troll thinks. If he/she is so utterly stupid to seriously believe the tripe they've written, there's no point in arguing. Force quit and move to trash.
Johnny had some of us trained like a circus monkey. I'm weaning myself off the troll-mobile. Thanks for the encouragement!
+1,313
I know what you mean.
You idiotic paper bugs will burn long before we gold bugs melt away.
Fahrenheit 451, baby!
Versus 1675 degrees Fahrenheit.
Not sure what burns at 1675?
:)
Explain to me how EURO displacing Dollar as currency would be good for a paper dollar holder? All of a sudden my currency which is backed by being the reserve currency is now worthless, so instead of current $250K buying a house and land it now buys a tv? Whereas my $50K (today dollars) in physical gold can now be sold for new reserve currency EURO at the prevailing rate.
Huh? Some of us aren't trading on a 1/4 second time horizon.
Does your mom know you're on the computer?
U do not want an answer to that.
You need to go join Johnny. I hear he's currently bashing over at Mish's place.
There, there, Girlfriend. Breathe in, breathe out ...
Shaddup, Johnny.
sounds like JB . I dont miss him
The moves in stocks are minute compared with the moves in Forex, Treasuries and commodities. It's a dog and pony show that used to be the only one accessible to mom and pop at home. The stock market is so totally dead. Money is being pulled week after week from mutual funds, people don't trust equities and it's an open secret that the Fed has been behind the manipulation in price. But the biggest piece of the puzzle is this: money is being pulled from America Inc. at an alarming pace. And that, friends, is the sound of the death knell
I like Mike, but come on. Cannot keep stocks up? The question is will the Fed or won't they not can they. If the Fed wanted to they could enter the market directly and push the prices from here to infinity. Sure gold might also become unavailable and we might be hitting McDonalds for the Trillion Dollar Value Menu, but to say they cannot is just wrong. The only limitation they have to printing is the size of the floating point variable in their system which might as well be infinity. Also they need not announce QE2, it's not like they will be audited and it will come out.
Yeah, they can keep pumping stocks up in nominal terms, and trash the USD.
It won't be Dow 10k. It will be Gold 10k.
Inflation is the plan. We'll see on gold, but just as in the 1940s, the bear market in stocks adjusted for the price of bread etc. is likely fated to continue.
GOLD: they're calling an 0.6% retrace a "smack down!" :-) lol
Gold as a wealth preserver? Consider this:
If your dad had planned for your inheritance and his retirement by buying the Dow Index in 1972 (typical time span for a full work life), the investment would currently be worth 10X more. Including the mega Fed pump after the near-death experience of 2008-9. Otherwise the value would be about 6X.
If he had bought GOld at that same time, his investment would be worth nearly 40X. Quite a difference.
And the reason for it is very simple: the value of the currency underlying the Dow stocks has slid in value by a factor of nearly 40X as money printing inflation and debt replaced growth in this country. The gold price in dollars just reflects this devaluation. Imagine if you win at the table in Vegas only to find out that they devalued the value of the chips in terms of dollars. That's the appropriate analogy.
Anyone holding dollar-denominted assets for the long run is playing a losing game since the dollar has no where to go but down.
One reason I think is overlooked about the critics of gold is motive. After all if gold out preforms stock or bonds then what purpose would we have for the Street? If granny is better served by buying a coin vs plowing money into stock or bond they lose their fees. Not only is gold honest money an the enemy of dishonest men, in this case it also has the chance to take money away from the trader class. Naturally a man will always defend his profession including making himself believe what he needs to, to be right.
++
Hence the current psy-ops on CNBS sounding more and more shrill
Bingo! We have a winner!
+1
I read an article the other day (can't remember who to give them creidt it) but they had a great example as well:
1930s 1 oz gold was pegged at about $35 dollars.
You could walk into a tailor shop in New York and buy a suit for 1 oz of gold or 35 bucks.
Today you walk into that same tailor shop, and can buy a nice suit for 1 oz of gold, but what can you get for 35 bucks?
So we all argue over gold bug not gold bug, to the moon, crash and burn, its buying power over retaining and preserving wealth.
The gold I buy today is primarily for my kids and grandkids, and maybe me in the event of a total chernobyl meltdown for me in the here and now; like my great grandfather buying 1890-1904 Brit Sov at $25-$35 an once.
They are worth more today because the fiat is worth less today. But a hell of a percentage return.
Phreakin' awesome avatar.
"Let's burn dust! Eat my rubber!"
which illustrates that gold is a pretty good hedge against inflation, and not much else.
some people here have said that gold will make them rich however, for example, an oz of gold will buy them an apt building.
they seem to misunderstand that inflation will increase the dollar price of all real assets.
Even suits will go up in price.
But we will not only be looking at inflation, we will be looking at a currency crisis. Strange things happen in a currency crisis. A wise man once said the best time to make money is when there is blood flowing in the streets. People do strange things in a currency crisis, and gold tends to be highly valued.
I'm certainly not saying that 1oz of gold will by an apartment building, or even a house (Except in Detroit, can already buy one there). I'm just saying is that the value will be higher then it would be if it was just inflation.
sure, it could and probably will have (already has?) a 'security' premium in it, but there's no way to know if that will be the case.
this is the only real problem with gold, IMO, its price is based on sentiment, and not much else.
the price could double or drop in half tomorrow, and there is no objective way to determine if it is justified or not.
You complain about not being able to value gold? Then how do you value the exponentially-growing debt and paper promises of a bankrupt, corrupt and out-of-control government?
Why beholdest thou the golden mote in thy brother's eye, and not the paper beam in thine own?
And if you bought 14% zero coupon tax exempts like XOM Special Projects in 1981, you had over 44 times your money...
I have been watching this market for a long time and waiting for the collapse. But it hasn't happened. I'm starting to worry that the bullion banks, the fed, and the rest of the bunch will just keep this market hovering around for years. How long can this thing go on?!?
You're missing the point. As the dollar keeps sinking the value of stocks drops daily. You ultimately have to exchange the stocks for dollars and then use the dollars to buy stuff. If that stuff has inflated by 40% in a year (as grain prices have), you'd be a fool
Couldn't say better. The real crisis is not happening and will not happen in stocks, neither in bankruptcies, but in the dollar value. The FED will not surrender before blowing the dollar up.
In the 2010 America, companies don't go bankrupt, and people don't need to pay their mortgages. Banana Ben will give them free money.
Hence your name-sake: Ben is playing out the end-game of a secular policy spanning 40 years. He doesn't know it yet, but he's reached beyond diminishing returns on the value of "easy money". The situation is quickly devolving to a vicious cycle
The end-point is if the USD loses Reserve Currency status.
Feddie Ben is turning that if into a when.
At what point will they run out of gold or be unwilling to sell more gold to the masses? There will be a tipping point where the central banks will scream "No Mas!". When will the people storing their gold at the banks and the custodians take delivery? The Sword of Damocles is hovering above it and it will drop at some point.
And define keeping it going, this has been a fighting delaying action. Gold has been moving at what 20% year to year for the last decade? All they have done is keep it to a bloody retreat instead of a full rout. I would be pleased as punch if my net worth were to rise 20% a year (granted in fait terms) for the next decade with no trading or holding fees, but that's just me.
There's a glitch in the Matrix, however. After 4 decades of selling gold to foreign powers and central banks whom they thought were "fools", they can't stop the process. You'd see capital flight to currencies and bonds backed by more gold. You'd see black markets rising up offshore where wealth would disappear to seek higher gold-backed ground.
What happens if the fed had asks for gold as the rest of the cb's dry hump'd our swap lines over the last few years to service their debts that are denominated in dollars.... ? Another reason you always see lust for our dollars ...
Keep telling yourself that, hope is one of the key things still holding the dollar up.
So you think that issuing debt in dollars to purchase further debt (of the bad kind) from bad deals is a good thing for the dollar? Maybe the right way to look at this is that the SNB doesn't want to dilute its own currency by issuing CHF denominated bonds. Smart. It's another form of dollar dilution. There are so many dollars all over the world that they can be treated like nobody will miss them if they vaporize.
Hey, just pointing out that would have been the smart thing to do, they need dollars, ok, give us your gold. If you are uncle ben, why not, what are they going to say no? OK then by,by banks ....
100%
Not my problem, their banks issued those loans. Lots of debt needs to be serviced abroad... or default.
How long can this thing go on?!?
Until the moment we capitulate...
That would be past tense for me. Not in the stock market since 2001.
"In the Fed We Trust"
WTFed?
Special Report: The ties that bind at the Federal Reservehttp://www.reuters.com/article/idUSTRE68S01020100930
Dopey humble Grandfather figure? Who could that be?
Not Bill Gates! He's more like 'Creepy Uncle'
I give up trying to guess the stock market vs dollars. When 1 oz of gold buys 1/2 the DOW, I will start averaging into stocks no matter where they are...SLOWLY.
Do we have a bi-directional outside reversal on Gold today ?
Starting to look that way !
Chart away Chartists
Excellent article - Chris Whalen is DA BOMB - although his analysis could be aligned with Wes Craven - his analysis is impeccable - ZH Rules!
oil bitchez
"The FED Cannot Keep Stocks Up"
Do you wanna bet?
There's no need to sully the good name of honest wagering by associating it with this debauchery!
They can and they will.
Banks are outperforming today.
I'd consider laying out some short lines, but not as long as the banks are acting well.
We are due for a correction, but gold and stocks keep bouncing back.
Paper gold will drop. Physical gold will not be available at any price.
Hey WW, I look forward to Harvey Organs column each evening describing how the Comex is near to bust. Better days are coming for those who have prepared.
Agreed. I am somehow looking forward to, and dreading, the day I have to open up the #10 cans. The system is evil and must be reborn.
Have you spent any time over at vimeo.com? Beautiful stuff. I think you would like it.
http://stockcharts.com/charts/gallery.html?s=ABX
http://stockcharts.com/charts/gallery.html?s=AUY
http://stockcharts.com/charts/gallery.html?s=f
http://stockcharts.com/charts/gallery.html?s=gdx
http://stockcharts.com/charts/gallery.html?s=ge
http://stockcharts.com/charts/gallery.html?s=gld
http://stockcharts.com/charts/gallery.html?s=jpm
http://stockcharts.com/charts/gallery.html?s=NEM