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Guest Post: Gold A Bubble? Think Again!
Submitted by Global Macro Monitor
Gold a Bubble? Think Again!
Think gold is a bubble driven only by animal spirits and speculation? We think not and have consistently maintained
the fundamental driver of gold has been the massive accumulation of
foreign reserves by global central banks and their need for
diversification.
Nothing illustrates this better than the chart below. We have
included the table to illustrate how much gold China and Brazil would
have to buy to get to the same proportional gold position as their
fellow BRICs, India and Russia.
We calculate the “global monetary base” as the sum of central bank
reserves less gold and the U.S. monetary base. Notice, the gold price
broke out in late 2003 along with every other commodity and asset,
including housing prices.
The Fed takes a lot of heat for its role in fueling the past bubble
but foreign central banks played their part through depressing their
currencies, accumulating reserves, and recycling the dollars back into
U.S. markets. This created a very powerful positive feedback that drove
every asset to the moon and pancaked market and implied volatility.
Our view is that investing in gold is a journey and not a
destination. There is no right target price for gold or a fair or
fundamental value for the yellow metal. When the major central banks
are maintaining a zero (or close to) interest rate monetary policies and
foreign central banks are accumulating reserves at a rapid clip, the
trend in gold prices is north.
In a tightening mode or when foreign central banks stop accumulating
reserves the trend will turn south. Until then, all else is noise and
we will be buyers on the “french” dips as the bubbeistas provide the
opportunity. We were hoping gold will move back to its 200-day moving
average to provide us a nice reentry. We’re not so sure we’ll receive
such a gift, however.
One last point. Gold is a relatively benign “store of value” as
opposed other commodities such as crude oil, copper, and foodstuffs,
which have negative economic and societal consequences during price
spikes. We believe we’re close to “tipping point” prices in some of
these commodities. If central banks have been buying them, say, though
their sovereign wealth funds, for example, we think they may pull back a
bit.
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it insults our intelligence to discuss gold as a bubble...i mean really common...
Agreed. Only brainless Keynesian status quo hacks believe in this "gold bubble" nonsense.
On a lighter note, I'm quite fond of this latest note and I encourage you to take a moment to read it. The short answer: DONT BE SHORT ANYTHING!
http://tfmetalsreport.blogspot.com/2011/01/you-dont-tug-on-supermans-cap...
thanks for sharing - great work, please keep it up!
from The Man:
"Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves."
–Norm Franz, Money and Wealth in the New Millenium
1 out of 3
#3 Bitchez
There's no gold in Fort Knox, now what?
I don't think the graphs are right!!
I BET THE US HAS AT LEAST 1 GOLD OUNCE EAGLE LAYING ARROUND!!
AND THAT'S WOULD BE 100% OF IT'S RESERVES!!
A NUMBER HIGHER THEN INDIA, CHINA...
Nice post, Turd. The blog is coming along quite nicely. You are now part of my regular sites I visit while enjoying my morning coffee.
Your morning coffee and your morning Turd.
"Goes together likes peas and carrots".
V for VENDETTA
+ No. 2
LOL...
Thats sick and wrong, but................TRUE. Coffee and the turd, works for me.
Don't forget the Corn. A turd without corn is like a day without Zero Hedge.
You got that right....man, I paid the price last year on my shorts and finally threw in the towel last Oct. when it finally sunk in that (after 40+ years of investing) it really is different this time....the Bernanke put is for real....now I am only long silver miners, oil exploration, and one biotech (you gotta do a little bit of gambling).
You might try being long uranium mines too.
Anyone ever notice that the big accumulation of physical gold by a government didn't really start until it became a nuclear power? Clearly they didn't want to bring a big target into their country until they had the means to defend it from any potential invader.
Or long copper/zinc.
What most Americans (especially Goldbugs) don't understand is that we are on the copper/zinc standard here in America.
Like it or not (and not by any intent of the government) -- the dollar *is* backed by copper/zinc in the form of pennies.
This is a fascinating read:
http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/an-easy-inflation-killing-idea-save-the-penny/article1866280
Harvey Organ is warning tonight of a bankers' raid tomorrow....we're coming to the do or die point for them now....they sent Gartmann over to CNBC today to dis gold....
Harvey says this is their signal.....the "Gartman buffoon".....
so i guess we're going to get one last buying opportunity.....i'm in a real quandary, gold or silver? sold out all my stocks today and going into the hard stuff.....gold or silver, gold or silver......
looking forward to taking a few more ounces of something off Jamie's hands tomorrow....
thanks, Jamie... in advance.
Silver. No question. Buy much silver now. Trade silver up to gold when the price ratio shrinks to more traditional levels.
Be the Silver Gentleman today and the Golden King tomorrow!
My opinion would be different than the good doctor just above.
Half (by weight) in gold, the other half in silver.
"JOMO"
You may want to call around and see if the choice is really still up to you; don't forget Platinum and Palladium.
My suggestion is :: 2/3 gold, 1/3 silver BY VALUE not weight.
So if you have $3000 to blow, spend $2000 on gold and $1000 on silver.
Harvey Organ is warning tonight of a bankers' raid tomorrow....we're coming to the do or die point for them now....they sent Gartmann over to CNBC today to dis gold....
Harvey says this is their signal.....the "Gartman buffoon".....
so i guess we're going to get one last buying opportunity.....i'm in a real quandary, gold or silver? sold out all my stocks today and going into the hard stuff.....gold or silver, gold or silver......
looking forward to taking a few more ounces of something off Jamie's hands tomorrow....
thanks, Jamie... in advance.
lets see how the initial unemployment numbers look like..I think it will not be good..so they will attack before 8.30 EST... ..but the report hits at 8.30...will be interesting to see how it plays out in next 2 days.....
Brainless Keynesian status quo hack bitches that is; Turd, I read you quit ZH?
I decided to stick to PM and commodity threads, only.
Been told that I'm too stoo-stoo-stoopid to comment on other matters.
Stoopid is as stoopid does. Commodities, Gold and PM's -- both are affected by other Economic problems, such as Euro-debt, etc. Contribute what you can.
To anyone who "expects gold to only go up"
Can you please explain the following chart to me?
http://www.shadowstats.com/alternate_data/money-supply-charts
Despite all of Bernanke's "printing," the money supply growth is clearly shrinking. In fact, in the past year - even with all the QE - money supply growth is NEGATIVE.
Perhaps you could use the following graph to help in your answer:
http://research.stlouisfed.org/fred2/graph/?s%5b1%5d%5bid%5d=CONSUMER
Here, we see that consumer loans are rocketing upwards.
So....with money supply growth clearly decreasing - negative, in fact - and consumer loans rocketing through the stratosphere, what is going on?
Does this reflect a country facing inflation or deflation?
Please explain this phenomenon, and how it will relate to gold once everyone pulls their head out of their ass.
Under your scenario, nobody will pull their head out of their ass until they're using FRNs as toilet paper. Then it will be too late to consider the concept of not using dollars as the final arbiter of value in a real world situation.
Inflation and deflation are both bullshit concepts. Keep your real stuff close, swap the paper to anybody who wants to give you something real for it.
RNP...I will let Barons reply to your idiotic comments...
"Money has lacked a golden anchor for 40 years. It has proved a stupendous failure."
From the Forbes article... 1-10-11
There Is No Getting Around Gold"Earlier this week Thomas Hoenig, president of the Kansas City Federal Reserve, went out of his way to call the gold standard a "very legitimate monetary system." In November, World Bank President Robert Zoellick and Indiana Republican Congressman Mike Pence both called for a serious look at using gold as the centerpiece of international monetary reform.
The fact that a Fed leader, the highest-ranking American official in international economics, and a potential presidential candidate are talking up the gold standard indicates that floating money is running out of political cover, and that the obstacles to gold replacing it are narrowing."
Read the rest and weep...
http://www.forbes.com/2011/01/10/gold-dollar-world-bank-opinions-contributors-jeffrey-bell-rich-danker.html
I understand the concept of fiat money perfectly. Everyone here does, and I too believe fiat money will eventually reach its true value - zero.
But not before a series of other catastrophic events, one of which is the realization that there is not enough money to go around.
There is nothing in your response that addresses my questions.
I'll ignore the fact your a certified grade-A partisan asshole that continuse to help perpetuate this mess by participating in the red team vs. blue team bullshit the oligarchy uses to control the masses (I guess everybody's good at something, but in your case it's clearly a superpower) and give you a clue:
The price of gold does most poorly when the fiat it's priced in is held a STABLE INFLATION RATE OF 1.5-2.5%
Got that? INFLATION HELD AT A STABLE RATE. CAN'T GO OVER THAT RANGE, OR UNDER, NEEDS TO STAY STABLE IN THAT RANGE.
Don't believe me? Go price gold in Sing dollars over the last three years. Pretty shitty investment, wasn't it?
And there will be plenty of money to go around, believe me.
...Especially when the Fed goes to sell those assets to quell inflation...
...And discovers it can't get a fucking bid on MBS backed by tens of thousands of McMansions that haven't had anybody living in them and therefore maintaining them for the last seven years (and other worthless crap)!
And there will be plenty of money to go around, believe me....
I don't believe you, and you haven't provided any evidence to back it up - just a "believe me" statement. Why are banks hoarding reserves? Why are consumer loans skyrocketing, while money supply growth is declining? How do you reconcile over $40T in bank debts, not to mention unregulated derivative exposures that tally into the quadtrillions? Why are money multipliers crashing? It all paints a picture of a country desperate for cash, and a commodities market that hasn't gotten the memo yet. Everyone is betting on inflation, and I'm telling you that it's just a temporary bet based on hype, paranoia and propaganda. Over the past few days, I've provided numerous links and charts to support my claim and no one has been able to convincingly refute me.
...Especially when the Fed goes to sell those assets to quell inflation...
The Fed will NOT sell those agency securities unless it knows there will be a profitable bid for them. If you're trying to make the argument that the Fed will fight inflation by pulling cash out of circulation, you should focus on other levers, like reserve requirements. But, really, the most useful tool to fight inflation is adjusting interest rates. Either one of those two levers will be manipulated long before the Fed tries to fight inflation by selling those agencies, which the Fed has no urgency to. Your focus on MBS's shows a fairly shallow understanding of the Fed's inflation fighting mechanisms.
Furthermore, your meaningless drivel about gold, stable inflation rates and Sing dollars is rather peculiar. No one is arguing that gold appreciates against declining currencies - everyone knows that. I'm trying to draw your attention to something most people are missing or just temporarily ignoring: how the US dollar will respond to the massive hand grenade of debt that looms over this country that must be reconciled. Demand for US dollars will increase dramatically. The 10's of trillions in looming debt will provide a near endless bid for US dollars, and eventually the latent power of that bid will become increasingly obvious.
And backing up all these claims are irrefutable charts that clearly show a country going insolvent from too much debt and not enough money to service it. All you've got are "believe me" statements.
Fortunately, they can print money to alleviate that scarcity.
Trying to drive credit growth by the sword of damocles won't last long
Yep. Bernanke can print, in whatever manner you want to define it.
But only so much as various markets allow him. So far, he has been able to "print" without much consequence. That will change, and the Great Deflation will resume.
From John William's page, the actual look at what the M3 is.
SO if you look at the pullouts of money in mutual funds and stock funds.....it would affect the M3, to which you are judging is deflationary/inflationary, where it is just actual money in America.
The arguement makes no sense.....it just means that Bernanke's dollars is chasing money around the world Or in McDuck's money bin!....and doesn't give him a green light just to keep printing because there is no inflation!
M3 (and SGS Continuation after February 2006)
June average (SA): $13,835 billion, year-to-year change: 15.8%
Significant correlations (year/year change): 77.4% with M2
Description:M3 is M2 (56% of M3) plus large savings instruments, repos and Eurodollars. Per the Fed, the non-M2 components were balances in institutional money market mutual funds; large-denomination time deposits (time deposits in amounts of $100,000 or more); repurchase agreement (RP) liabilities of depository institutions, in denominations of $100,000 or more, on U.S. government and federal agency securities; and Eurodollars held by U.S. addressees at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada. Large-denomination time deposits, RPs, and Eurodollars excluded those amounts held by depository institutions, the U.S. government, foreign banks and official institutions, and money market mutual funds.
The whole fiat system is a confidence game. The idea that the future state of something sovereign has better prospects than another. The money supply is eaisier to juice now then ever with all the debt instruments, electronic payment instruments etc.
Examples of how the Fed can prevent deflation:
1. "Tax cuts", which when running a deficit, might be called giving free money away.
2. Various forms of debt forgiveness, increasing household cash flow.
3. Inflating the stock market which helps hosehold balance sheets.
4. Gov't programs like food stamps could be expanded.
5. Could subsidize the purchase of gasoline.
6. Oh hell, they could be sending out checks to everyone by the time this is over.
The thing is I think most commenters miss is that we live in a globalized world. The USD is the globes currency but when we hear stats, it almost always is in the closed system of the US. If 70% of the money supply is outside of the US, would it not be important to pay attention more to what is happening outside the US than just inside?
Case in point. The US prints dollars, these dollars find their way into say China. Now the factory owner in China is getting dollars and needs to pay his employees and suppliers so he takes those dollars down to a Chinese bank and exchanges them for Yuans. So now China has more Yuans floating around and now they must deal with these excess Yuans. We see they are trying price controls(lol) and raising interest rates and other capital controls which ZH keeps us updated well. If you are sitting in the US and not looking at this, you may think, what inflation? But once you view it in the globalied world it becomes easy to see that inflation is indeed happening and a way to protect yourself from this is to own gold or other commodities.
As a side note, what is with the one letter copycat?
RNR, shadowstats is referring to shadow banking credit destruction from toxic assets that are being discounted (housing, derivatives). The next graph is a 300 billion spike in consumer credit- versus the trillions in credit destruction- there is not all that much of a relationship.
I would suggest we are facing both: inflation in commodities (food, oil, PM's, clothing) and deflation in all malinvestment (CRE, Housing) and of course, major inflation in currencies.
Gold and silver reflect the inflation in currencies. When CB's stop printing, buying and moving debt on to opaque balance sheets, the price of gold and silver will drop accordingly. Do you think they will stop creating new credit and money? Make your bet.
there is not all that much of a relationship...
Yes there is.
Consumers and banks are going insolvent because there is not enough money to go around. Such a sharp decrease in the money supply growth, coupled with a sharp increase in consumer loans means that people are taking out loans to service old debt. Banks are hoarding cash (hence the excessively sharp increase in reserves) to protect themselves from further write downs.
There is not enough money to go around.
You have inflation in commodity prices because that's the hottest table in the Wall Street casino right now. Eventually, the massive debt overhang will crush any inflationary bubbles that Bernanke has been able to temporarily create. There are other reasons for commodity inflation, but I would argue that speculation is the strongest force.
Eventually, the market will beat Bernanke and he'll get crushed.
If there was not enough money to go around, the dollar would be appreciating. It is range bound and falling. There is a difference between money supply growth and credit destruction. You are assuming credit is for servicing old debt, most stats I see show consumer credit is being written off, not being paid down.
If there was not enough money to go around, the dollar would be appreciating...
I could argue the opposite equally convincingly. Why hasn't the dollar collapsed in light of multi-trillions in various Fed interventions and rates at zero?
The dollar is being torn between demand for them in one direction, inflation concerns in the other direction, while yet other factors like a volatile Euro pulling it back and forth constantly. There is a very, very hot table in the Wall Street casino right now and it's the inflation table. There's a ton of money being made on those temporary bets. Any bets tethered to that table are being affected accordingly. It is my thesis that inflation will prove to be a dud, and demand for dollars to service the massive $40T+ debt overhang will win.
At some point, the chips on the inflation table will be removed. When? I have no idea, but ignore this argument at your own risk.
If the supply of something falls and demand increases, the price goes? Up. You are smarter than that, so let's assume we are debating something else entirely.
I would suggest that the demand for dollars is in reality, a desire by other countries to sell exports. The problem is, what will they do with all the dollars? Thus the discussions of trade wars and currency wars.
The next consideration is more insidious: faith in a currency. This is what keeps inflation from becoming hyperinflation. This is the bet on the table and a ton of this same money is being made playing chicken. Why would you trash a your own currency? Would our government actually do that?
If we call it, we throw our individual worlds into the maelstrom, but it get thrown in there anyway. We are currently incapable of servicing the 40T+ debt and if interest rates rise, the pants drop and all will be seen for what it is.
Japan has not just been wallowing in deflation- it is in a cultural shit storm. Young people are refusing to have children, the population is aging and the whole problem is buffeted by remaining an export nation with a penchant for saving- which we are not. The standard of living in Japan is continuing to fall.
What happens when that happens here? Total unemployment exceeding 20% for ever, continuing spiral down in wages and living standard, Loss of industry and manufacturing, loss of wealth to maintain living standards as long as possible, increases in taxation to service the debt. Additional military expenditures to control the population. Capital flight.
You may very well need a light, easy to carry form of wealth you can use on your way out. You ignore this argument at the risk of your life.
The other countries are buying treasuries because they are keeping the dollar peg, thats the only reason. Thus they import inflation.
So the countries buy treasuries/dollars over the last 10-15 years keeping a low peg against the dollar and thus have a robust export driven economy, but those same countries also must borrow in their own currency to fund this treasury crack high. And if they break the peg the banks get monkey hammered because they borrowed money cheap because of the peg.
Well now they drink inflation.
because it is the reserve currency and right now everyone is stuck with it..but they are doing everything to get rid of it..why do you think china and russia just signed a deal to dump the dollar and only trade in their own currencies..some people can see 6 months ahead..other morons..such as yourself ..can only see yesterday..enjoy your soon to be trailer home....the time is coming....and it will shock the world...
You seem to be fairly simple minded, so let me give you something simple to consider:
Everyone is already expecting inflation. Everyone. Some people have dug holes/shelters in their backyard because of it. It's the worst kept secret in the Wall Street casino. Worst kept secrets are never very profitable.
You are very simple-minded as well.
do you know WHY everyone expects inflation?
It is because THIS SYSTEM WE HAVE *cannot function* in any other operative modality. There IS NO OTHER REALITY than inflation. By hook or by crook, this motherfucker cannot run in reverse, get it?
Deflation is not an option...it very quickly leads to catastrophic implosion and the "end of days" from a monetary perspective. Smart money understands this and does not bet for this outcome.
As soon as the Fed were to withdraw its artificial inflation, the compounding parasitic drag of interest would collapse the money supply within hours. HOURS. They know this. They monkeyed around with this shit during BSC, during LEH, during the dark days of Sep/Oct when it looked as if this sucker could go down. They figured out what I know; the system will collapse immediately upon withdrawl of inflation support.
Deflation is not an option...it very quickly leads to catastrophic implosion and the "end of days" from a monetary perspective. Smart money understands this and does not bet for this outcome.
So are you trying to convince me "the smart money" just learned this? Because just 2 years ago there is ample evidence that this is bullshit. Deflation nearly decapitated us.
Otherwise, I agree with most of your post except another thing:
The bouncing ball has another bounce left. You are suggesting that it's only up from here.
Nothing has been solved, the arguments for insolvency are very strong, and there is no reason to believe that ball won't come back down and break your spine. In the process, there will be yet another mad rush into the US dollar.
Bernanke will huff and puff and blow until his lungs liquify....
Whilst I agree the massive amounts of debt which cannot be paid will eventually result in defaults and deflation I see inflation before that as the massive amounts of money being printed and handed to banks get invested in commodities driving up the cost of living and interest rates, which in turn will cause defaults as people cannot borrow new money cheaply to service old debt. For the next two years I see central banks printing more money, heck Japan has been doing it for twently with interest rates at zero, then the big shit storm will hit the fan and it will be the greatest depression in history and probably another world war, either that or they will come up with a world currency to replace the dollar as it get pummelled
Politicians and central bankers around the world have ALL, publicly announced an "Inflation Target" as sound monetary management. I haven't heard one banker announce a deflationary target and in fact, from a income stream perspective, (lost tax revenue and interest earned) mightily fear that scenario.
I had this same argument on TF ad nauseum.
I understand that the math of the $40T debt overhang plus its compounding nature make it appear that deflation will win.
The Fed will continue to print the coupon.
Look; it really is as simple as they print it or the system collapses. A deflationary collapse would proceed to conclusion within hours, as it was threatening to do in Sep 08. A slow burn of dilution has a chance to not implode; it can just fade away.
this simply isn't accurate to say.
There is PLENTY of credit available, just little demand. And why would there be demand here? The aggregate economy has obviously peaked.
Irrespective of all this, the FRN as a debt instrument is in the process of being discounted according to its ability to pay the future's debts vis a vis real articles.
The deflationary crunch will not happen; it tried to and they crushed it. The Fed has discovered that they can oppose the deflation forces as long as they print the interest owed. The "market" will not beat The Bernank because the Fed CONTROLS the FRN.
It's really as simple as this and deflationists simply fail to understand the fundamental nature of the articles in question.
The existing mechanisms of credit creation are failing in a contractionary environment. There is no issue with the "availability" of money.
The deflationary crunch will not happen...it tried and they crushed it....
Well, I respectfully disagree. It nearly crushed us to death. Bernanake won't beat it twice - he'll get crunched the next time around. And don't be so naive to think that ball doesn't have another bounce left. If the bouncing ball doesn't make him go splat, it will certainly crack the back of this country. This past time he escaped by the hair of his chiny chin chin.
At any rate, I absolutely agree that there is credit available. I provided a chart that proves that. My question, though, is why are consumer loans expanding while money supply growth declines?
Well, I guess the Faux Red Neck will not be joining us at the party we are going to have once gold reaches FOFOA's $55,000 / oz.
Ta.
Even though I don't particularly like your point of view Red Neck, I'll answer you.
And yes, I've noticed you've attempted to make some worthwhile 'opinion contributions' into ZH comments, so you deserve to be treated as other than a troll.
--------
Most folks out there are far more vulnerable to inflation rather than deflation.
Everyone has to eat, needs petro based products, etc. And most are wage earners
who have very little wage increase leverage these days, in this economy.
Inflation/deflation.... all the major bloggers are/have gone at it on this issue with some really good arguments. Some even say we'll have both; sequentially according to some, simultaneously according to others.
Who knows, personally I just figure it will all translate into lower living standards for most and work from that premise rather than attempting to be too analytic. Besides, a lot of our future direction is dependant are just how far Ben can get with his schemes. As such, it's a movie whose ending hasn't yet been written.
Many of the PM bugs here have put alot of their 'eggs' into the PM basket
and so have something riding on it. This no doubt influences their outlook and makes them protective towards their investment.
Many bugs no doubt have read the predications of dramatic jumps in price and have $$$ in their eyes and are gaga with thoughts of this 'easy' wealth that will come their way merely by buying in.
To answer your question, about ShadowStats report about M3 declining and al.
If fiat currencies are shinking in outright physical availability to the average person (despite Bens gift to banks), if real estate is deflating, bonds are timebombs, stocks are Fed pumped up bogus... then there's few other investment/store-of-value options out there.
Far as I can see, the purest, most unadulterated of the lot is Precious Metals.
There are no counterparty claims or encumerences on physical in-your-possession PMs. Heck, you can even wear it (try that with fiat). PMs have thousands of years track record while fiat seems to have lasted to longer than 50 years or so...ANYWHERE.
I don't consider myself a PM 'bug', but I am not uncomfortable around them.
Doubt I could say that about being around brokers & bankers.
i dont think its about money supply, i believe its about financing the fedreal govt. the interest on the outstanding debt has to be paid, financing the military, financing the govt employees, etc etc etc is what its all about. if you look at how 600 billion, some think its is 10 trillion( swaps with other fed reserve of the world, yes we financing the world) can you really sell all those treasuries right now( hell no, you"ll definitly shrink the money supply) thats why they do this this backdoor love affair, print the money buy the treasuries on the open market, hopefully inflate the securities market, then collect the tax revenues. NOT sure about my opinion but it makes sense to me. in the process kill the currency and starve us to death with higher prices
Careful, you might hurt the feelings of the Rothschilds errand boys
No bubble can happen in standard (recognized or not by some) wealth measurement unit.
the new currency
Dude, they are BOTH in a bubble. You can't see that and the correlation. Both will pop at the same time.
wait for harry..... wait for it.......
Gold is in a bubble. I can tell from some of the technical analysis and from seeing quite a few bubbles in my time.
You left off the <sarc></sarc>
but you cannot tell bubbles - thats what i recall maestro said...or is gold an exception that anyone can tell??? hmmmm may be...why i didnt think of it???
Know your meme.
http://knowyourmeme.com/forums/meme-research/topics/14-origin-of-this-lo...
I hope that's you being funny.
"Technical Analysis" is a joke, anyone who believes in it a fool, and here's why:
In order to chart anything, you must decide what units to use as a constant, and you guys pick the US Dollar and pretend it's a constant. Your charts would look very different if you used anything else, wouldn't they?
My apologies if you were joking.
Yes, so frustrating why nobody gets this. Let's measure Gold in shares of PCLN.
the fundamental driver of gold has been the massive accumulation of foreign reserves by global central banks and their need for diversification.
I think it would be more accurate to say the fundamental driver of gold will be when global central banks need to diversify their massive accumulation of 'foreign reserves', read UST's & Eurobonds.
So far the government bond bubble just keeps on bubbling.
The dollar is crashing, and will continue to crash, until it no longer exists. Every single fiat currency in the history of the universe has crashed, burned and vanished.
And the price of gold is mostly just the inverse of the dollar, though the more smart people realize what's happening, the more gold gets a slight extra boost (beyond the simple inverse).
Take out the dollar with the trash.
In gold we trust.
Gold = wealth/money
Equities/bonds/cash = credit fungible with money/wealth, for now.
You cant get hurt taking profits. Stop looking at gold like it's the holy grail. These extreme feelings were felt about 30 years ago and we know how that ended. When Mr. T says its time to buy gold and the Discovery Network has a gold mining show, sell your position in gold.
If I remember correctly Mr. T was trying to get people to sell Gold not buy.
Mr. T's pity for the fools. Is not genuine.
Then you should have sold gold for every second of the last thirty years, jackass.
I would highly suggest you go all in short on gold with 10X leverage. That way you can get all that you deserve.
Gold is money. It is the baseline. Gold ended right where it began and right where it had been the whole time.
@ Whalers,
Most of us here who like gold have no intention of taking profits, we are interested in wealth preservation.
...
Disclosure: The Bearing nears the end of his physical gold accumulation, holding approx. 9% in PMs with the great bulk in GOLD.
30 years ago we were the biggest creditors in the world...now we are the biggest debtors..and 30 years ago it took interest rate of 22% to bring gold down..... and today what do you think will happen if rates went to 2%..man are idiots like you a dime a dozen or what.....try to stop listening to shills..or you will end up with red neck repugnant in a trailer park...
"You cant get hurt taking profits."
And go into what,? Dollars?
You seem to forget, or don't know, that dollars are a "futures" contract. They have an implied promise to deliver value sometime in the future. Now, if you can exchange your futures contract for the same amount of goods in 1 to 10 years, then go long $s. If you believe that the dollar cannot be worth much because they can't be redeemed for anything from the issuer, then short them.
That is the essence of a lot of thinking about this money conundrum. Because gold as exchange has been removed from the delivery promise of the dollar contract, and it hasn't been replaced with anything other than the yoke of taxation and inflation as the security, then the writers of these notes are in default.
In China, you decorate Jade with gold. In China, Jade is the precious...not gold.
And how many tons of jade does the Bank of China hold as reserves?
You are a moron.
Why do you think that only one thing in the world can be precious?
Was I discussing 'the world'? Or the midset of the Chinese? moron....
In the west, diamonds are set in golden rings. This says NOTHING about the reletive value of the two.
You are claiming the Chinese don't value gold, but only jade, which is one of the dumbest things I have ever heard.
I would appreciate any good advice.
It happens I can buy physical silver at about 20 per ounce. I can short it at 29 per ounce in the market ...does this sound a good idea?
I kind of prefer to just buy the thing, but shorting it in the markets should lock in the profit of the 9 dollars per ounce should it not??
You can't eat gold.
I don't know what that means either...just sayin'.
I can eat gold... it's just a little heavy in the stomach after, not to mention I am sifting through my shit 24 hours later. That part isn't so fun.
You can't eat paper either but you can wipe your ass with it.
Seems something is about to burst:
From HalfPastHuman.com (the web bot guys)
Home
Damn...update from Markets entity...Too many immediacy values with too high sums in the impact, duration, and tension levels to ignore so had to stop work to extract and post the update below. Rest of the report better not be like this or it will take forever....
Extract from upcoming Shape Report: Markets entity:
As 2010 fades rapidly from sight, and mind, we note that the Markets entity is pretty much as its primary supporting descriptors would have it, a [basket (of) crises]. The [basket-case markets] set has secondary support coming from [interwoven] and [inextricably twined] which are themselves both supported at their primary levels by [bad foods] which, given its supporting sets, we are interpreting as [indigestible products]. These [indigestible (financial) products] are about to make [minions (within markets)] go into [spasms] of [violent puking]. This is indicated to be a [planet wide] level event, that in its turn brings [international grievances] and [inter country tensions] to a [visible] and [frightening] level that will be described (in the msm propaganda press) as being a [boil over] situation. The interpretation that we have about the [indigestible products] is that they fall into the category of [derivatives] in general, but specifically there are linguistics around the idea of a [gold price tied/bound] form of [derivative] that [fails] in an [instant] due to a [crisis] in the [gold/precious metals market]. This forecast is based on a lot of immediacy data value sets and so may be within days of happening, and likely will be occurring by the time that this Shape report is published.
clif
January 11, 2011
They also said something was going to blow up big time in November on or about the 11th. Exactly what not specified but something world shaking.
So what happened? Nothing.
Are you sure? I do agree with you they have been pretty iffy to me. But what if these things are going off you just don't see the explosions. What if world leaders are talking right now and everybody decides these derivative products are crap and it creates a huge amount of tenison.
Just judging from my own observations of things. I can say that banks are getting more and more untruthful about the forex markets and I'm sure it's straining things. Somebody may have done a goldie special swap that has got to work it's way through the system of outrage.
I'm waiting for the gurs dressed as Myans to start wearing the 2012 end of the world sandwich boards. Undoubtedly, they'll have their suitcases packed and all their legal matters finalized.
How about a chart comparing price of gold to the unfunded liabilities of the US Government. Then ask which one is in a bubble!
Gold is not money. You guys always think that you can sell your gold at the top, and convert back into cash that you can spend. It will not happen. Gold =Shit.
Phish Much?
Only when I'm driven to spew my opinion. I love Z-H and their jump over MSM, but there is a major flaw to the thinking here that something dug up with a shovel is worth more than ANYTHING. Its impossible.
Ya. I'm sure potato farmers would agree with ya there.
Ironic Idaho has both potatoes and silver/gold.
Hooked....
Your novice arguments aginst gold, shine a bright light on just how green you are.
These are the same flawed arguments that people have spewed for the past 1, 3, 5, and 10 years.
We've heard them all.
Perhaps, but have you "cashed" in yet? You need to consider this.
How much leverage have you taken on to short gold?
A: What meat do Priests eat on Fridays?
Sorry, you've attempted a real conversation which I value, I don't mean to fall into the Fight. I own old silver coins, pre-1965 that I can spend as money. The fact that we are discussing armeggedon is pathetic, Armeggedon +1 is what you should be thinking about.
NUN!
A: What meat do Priests eat on Fridays?
Q: What are altar boys?
Bastiat for the win.
If I have your attention, take a look here after 10am thurs. click on Auctions
https://www.broward.realforeclose.com/index.cfm?zaction=USER&zmethod=CALENDAR
You can click on the property ID and see the appraised value vs. owed, these banks are losing their asses and not saying anything in the media. PS don't bid on anything that has a ASSOCIATION attached to it, either Condo or HOA.
The amount of ass loss is directly proportional to the number of "buyers" who are actually another branch of the same "seller." In which case, the ones losing their asses on the distress sale are not the banks but the poor bastard investors who own the mortgage at the original purchase price.
I see that going on here in Cascadia. House goes up for sale a fraction of the original sale price. Only one interested neighbor shows up for the auction. Property is suddenly taken off the market.
After a few times, one might suspect that the bank isn't actually trying to sell it to the highest bidder at auction so much as it's trying to sell it to its secret subsidiary at the lowest price, thereby screwing the mortgage bond holder out of the difference.
As long as the bank and the "trustee" keep rescheduling the sale, eventually everybody else will give up and go away.
Sweet deal if you're a poor, long suffering bank.
Actually there are quite a few people who intend to never sell their gold, expecting gold will BE money again. Paper has not historically been money, only gold and silver. This foray into paper currency has been a relatively recent phenomenon and it won't last much longer. The writing is on the wall. The control freaks in power are already talking about gold and a new monetary standard. China is starting to open up their currency -- They're opening it up to the U.S. even. Sometime this decade they will probably announce their intention to monetize their gold and silver reserves. Whoever does that first, wins.
China- Are you kidding me?
Here's the problem. A lot of people like myself aren't nearly as smart or sophisticated as you are.
We'll just do business among ourselves using gold, silver, ammo, etc, thinking that it has perceived value within our crazy cult members. Since we're too stupid to know any better, we just keep doing it, year after year.
Sad really, but perhaps we can extend and pretend until a really good fiat currency comes along and replaces our sorry charade.
Are you talking about woman in general or about your village community? :)
There are quite a few people who intend to sell their gold, just not for dollars. In fact you cannot sell your gold for dollars since the dollar is government debt (the obligation of the central bank), not money. Money is of course what extinguishes debt.
Thus if you 'exchange' gold for dollars you are in fact loaning money to the government & if you continue to hold dollars you are rolling over the debt of the government in perpetuity.
The situation we find ourselves in today is that governments everywhere are running a gold loan of fantastical proportions.
Enjoy your dollars, then. Surely nothing is wrong with holding those. Surely increasing their supply by large multiples will have no negative effect on their value.
Surely.
I'm going to have to side with the Swinger. Gold is a soft metal but it's still hard to chew. Why not base your currency on kimchi or salted fish. They store well and have some intrinsic value.
Those 2011 quarters chew real well too don't they. And those $100 Clown Bux.
Some times, money isn't money. Money is something we use to facilitate exchange. It's value is relative. If the value begins to fluctuate to a degree it jeopardizes trust, people will find a different money.
Gold has been used as money, Silver has been used, Tobacco, Sea Shells,Talley Sticks, you name it. I gladly accept and prefer gold and silver rather than FRN's. I intentionally limit the number of FRN's I keep, because I can no longer trust them to hold their value.
Gold and Silver could crash tomorrow, but I still think they are a better bet than FRN's.
you haven't figured out that we have crossed a significant epoch in the viability of paper and debtmoney, have you?
Everyone is still thinking that EVERYTHING is just cyclical. The joke is going to be on you.
Hey This went for 250+ back then http://www.flexmls.com/cgi-bin/mainmenu.cgi?cmd=url+other/run_public_link.html&public_link_tech_id=u46qlmb5j2w&s=7&id=1&cid=1
The golden-antlered aliens came in peace, ready to provide answers to the mysteries of the universe.
Unfortunately, Swingforce came with his coke-bottle glasses and hunting rifle!
Lot of stupid in this thread.
The only stupid thing is that people think they can walk into Publix and spend their gold.
Haha! Maybe at Town Center in Boca! What a joke. Assholes.
I own a business. If someone offered to pay me in gold I would say HELL TO THE YES!!
me too
Me three.
I will mention that to my homies in Peru about taking gold and/or silver for the bearings we sell... I don't know how they would do the accounting though...
swing force, I've always been curios about the pay structure for commissioned trolls. If you would be so kind to share, do you get paid by the day or by the post?
Your misunderstanding of Gresham's Law will be the cause of your starvation. Savor the pangs of hunger. They are your reward.
SF
Correct. Intelligent people do not intend to sell their gold. FRN's yes. Treasury Bonds yes. Gold no. Supernova coming, goodbye.
An interesting site per fiat currencies:
http://dollardaze.org/blog/?post_id=00405
If the CBs think gold is money then it is unanimous.
Gold (a linear line) vs Nasdaq (during 1990s - a parabolic line).
You tell me which one is a real bubble...
http://www.planbeconomics.com/2010/09/07/chart-what-gold-bubble/
I've been a bull on commodities since 2002 and I believe the secular bull market will continue until 2015-2020. I've been trading gold and now silver mostly long for the last 9 years. Trying to be dispassionate about it, the charts suggest gold is out of gas. The relative strength line is rolling over despite the metal making higher highs. This non-confirmation is setting up a topping formation. I'm looking for a final push higher starting now and lasting until mid Feb, but that will probably be the top for the year. A 20 to 30% correction over 6 months is normal, and should be welcomed. But the question is, do you want to ride down a 20-30% correction? I don't. And certainly not when you can trade along with The Bernank, buying equities and have the wind at your back. During QE1 there were no pullbacks greater than 2% until QE1 was done. Now during QE2 pullbacks have been less than that. I'm intendind to play it long equities from now until at least April and attempt to gracefully exit my PM's over the next 3-4 weeks. If the final push doesn't come and the metals undercut last weeks lows, I'll just cut bait there.
I am taking a smallish trading position in Palladium. With auto sales improving, Palladium demand for catalytic converters should stay firm.
Regarding a precious metals bubble, we ain't seen nothing yet. A 10 year bull market doesn't end in a whimper, it goes out in a blaze of glory. My guess is we'll be making inflation adjusted highs in gold and silver in 2013.
Suffering from Egomania; you have no idea what you're talking about.
You don't get it. That is no wind at your back, but rather Benny's bad breath that everyone is trying to run away from.
look; you're not in PMs. You're in futures.
I take it by all the junks that you don't like my new screen name Swingforce? I know everybody realized right away that it was me.
I am officially a discredited joke
Jon, you're always "Number 1" with us. Don't ever change.
She's got that right Jon!
Maybe Blythe can make you feel better (or maybe worse)!
Very straightforward to equate the price of gold with forex reserves. One thing that the commented bearish on gold forgets, is that gold is a liquid item both at the bottom of the market and the top.
And gold being a risk-free asset has served well in the short-of-gold contracts at the heart of the derivatives pyramid.
Secondly, gold out of the ground needs refining. Once refined, it will virtually last for millennia, due to its inert properties. It's a short stretch that central banks will be keeping their gold as a part of forex reserves. One thing that most don't realize is that gold must be mined, refined and sold into the market first before confiscation. Miners will always give you the benefit of the average price fir the year.
When a mainstream rag like Forbes makes some very positive comments about gold it's time to believe that change is in the wind... Gold is the once and future money. Fiat tied to nothing is no different than Monopoly Money.
From Forbes 1-10-11...
"
There Is No Getting Around GoldJeffrey Bell and Rich Danker, 01.10.11, 12:00 PM EST
Money has lacked a golden anchor for 40 years. It has proved a stupendous failure."
Earlier this week Thomas Hoenig, president of the Kansas City Federal Reserve, went out of his way to call the gold standard a "very legitimate monetary system." In November, World Bank President Robert Zoellick and Indiana Republican Congressman Mike Pence both called for a serious look at using gold as the centerpiece of international monetary reform.
The fact that a Fed leader, the highest-ranking American official in international economics, and a potential presidential candidate are talking up the gold standard indicates that floating money is running out of political cover, and that the obstacles to gold replacing it are narrowing."
All you gold trolls can read the remainder of the article and weep...here...
http://www.forbes.com/2011/01/10/gold-dollar-world-bank-opinions-contributors-jeffrey-bell-rich-danker.html
That's nice. If your a gold bug just know that your fucking is temporary. This isn't a marriage. The banks control gold they have alot more of it than you do. If we stick to the gold fuck we're still not free.
Don't get bogged down and tied to anything. We'll be demanding silver standard which they DON'T monopolize and many other things before it's all over. We are dealing with monopolists and they must be overwhelmed with options. Once they get the message that we know how it works and that they are going to be forced to come clean about money before it's all over. And do not allow any system without everyone being fully concious of what it is and how it works and just who is on who's side.
Oh and buy a credit default swap. They are about to go extinct and will make good collectors items.
A fasces bundle of rotten wood is no way scare anyone.
I have been a nusmatist since childhood. I have been purchasing PMs in rare coin form since ~1955. I have been a believer in currency backed by PMs since Nixon closed the gold window to foreign govs and central banks.
I doubt that you know anything that will add to what I have learned about PMs over the last half century.
But, since neither of us have a crystal ball I will concede that there will be corrections in any and all asset classes...EXCEPT...gold/silver are not commodities and are not an asset class...they are money. When you finally realize the truth of this I hope you will have already have bought some 'real money' insurance. Best unload that some of that fiat while some fools are still willing to trade real money for it.
PMs = the once and future money. All others need not apply.
Yes I know snidley. But think about it. You've been around a long time and seen the progressions. You probably know this isn't going to be allowd to go on and that people are sick of it. The ordinary people have their idea of sustainable and the powers that be have thier idea of sustainable. And really none of us are going to get our way befeore it's all said and done. PM's are a perfect form of money and monopolized.
Once enough people jump to them it won't solve the problem. It will create a much much worse problem.
This will likely end up in a cash society without any global aspects as the global aspects simply create self rewarding no loyalty companies out to screw everybody.
Do not get married to a gold standard. You will regret it. Do not dump your gold. You are hurting banks with it right now. Do not ignore silver.
Hep, I'm not in favor of a 'gold standard'. Never was.
I believe that PMs are the ultimate store of value and that there will always be fiat currencies that co exist with PMs.
What I believe will happen is similar to what Zoellick stated a while back. Various fiat currencies will be judged against the yard stick of gold. IOWs the measure of a fiat will be the amount of that fiat in circulation in comparison to the amount of gold that the central bank issuing the fiat has in reserve.
It is not a 'gold standard'. Gold is now, and will become more so, the measure of a fiat's worth against other fiat currencies.
In many ways this arrangement is better than a 'gold standard'...imo. Gold and other PMs become the yardstick and the club to keep central bankers in line.
"One last point. Gold is a relatively benign “store of value” as opposed other commodities such as crude oil, copper, and foodstuffs, which have negative economic and societal consequences during price spikes."
Money quote.
Yes, but to the Fed and other central banks gold does not represent 'a benign store of value'...since a rise in the price of gold priced in their respective fiat currencies points a very definite middle finger at the weakness of their currencies compared to gold.
What are we really saying when we say that gold is now ~ $1380 per oz?
In the West we say gold has risen in price.
In the East we say fiat is sinking relative to gold... which opens up a very large can of worms.
The Fed has taken all possible steps to suppress the price of PMs except the outright outlawing of PM ownership (setting aside FDRs ruling for the moment). The East has taken an opposite approach...making the purchase and holding of PMs for it's populations legal and easier by opening PM outlets for the general population.
Euroland has taken a novel apporach, letting gold float against the Euro and offically revaluing gold each quarter.
Which approach or combination of approaches makes more sense? A Treasury that insists that gold is worth ~ $42 per oz (even though they are unwilling to sell anyone gold for that price)? Letting gold float against a fiat and revaluing it quarterly? Or letting world markets set the price of PMs and encouraging your population to purchase and hold PMs as a store of value?
actually, you can eat gold, and silver too. google it
I'd rather sit on gold, thank you.
Gold is obviously in a bubble! The only reason anyone buys it is to sell it on, gloat over one's hoard, or show it off to impress chicks and plebes! How more bubbly than that can you get?!?!
On the other hand this bubble seems to have lasted at least several thousand years already. Go figure.
You have to think about it in terms of Catch 22.
Gold is a high quality asset, no one's liability. This means that when shit hits the fan, it will be the 1st thing to get sold to meet margin calls for shittier assets. Since a. too many assets are purchased on credit and b. no one wants to take a loss, higher quality assets will be sold 1st in order to wait out the losses on shittier assets. This should be clear as day to everyone.
omi,
You are only half correct. Gold is no one's liability so when the SHTF it will be the 1st thing to get bought. Remember, the truth will set you free.
Paper gold will be sold off, very little physical gold will be sold off.
IMO, paper gold is no better than any other form of paper asset...so, I personally don't care if paper gold is sold off.
The disconnect between paper gold (and all PMs) and physical gold is on display daily as the crimex and lbma fail to deliver and offer clients a premium to accept fiat currency instead of PMs.
When enough soverigns/individuals refuse to accept fiat instead of PMs the exchanges will be in default. Then the disconnect between paper PMs and the real deal will become evident with the implosion. After that date no one will want paper PMs.
Gold bulls are putting their money where their mouths are, they're buying gold.
Gold bears should be putting their money where their mouths are, they should be selling gold and / or shorting gold.
When gold bears can demonstrate they're selling and / or shorting gold, then they'll have some credibility.
Actually they won't have any credibility. They'll be taking losses and going broke.
There may come a time when people won't be able to swap gold for food. People won't be able to swap dollars for food either.
Don't think the feds for one minute will ever allow gold to supplant the US dollar as a currency. Can you say confiscation. It happened before and it will happen again. Deperate times call for desperate measures.