This page has been archived and commenting is disabled.
Guest Post: Is The Gold Trade “Crowded”?
Submitted by Jeff Clark of Casey's Report
Is the Gold Trade “Crowded”?
It’s true that GLD’s assets just passed the $50 billion mark, and
that it’s the second largest U.S. ETF. Yes, mints had difficulty
filling orders when the Greek crisis broke. And yes, the gold price is
up nine years in a row.
But those who look at statistics like these are missing the other
side of the equation. I think it’s less about how much money is already
invested in gold and more about what’s available to invest.
After all, one could be impressed that China, for example, invested
$14.6 billion in gold over the past few years – until you realize they
have $2.45 trillion sitting in reserves.
So, how much is invested in gold, and how much is available?
According to hedge fund Paulson & Co, if you added up all the
money invested in gold ETFs, it would total $78.3 billion (at $1,200
gold). The amount of money currently sitting in U.S. money market
funds, on the other hand, comes to $2.849 trillion.
In other words, all the money invested in gold ETFs represents just
2.7% of what is sitting in cash. Put another way, if just 5% of
available money market funds ($142.4 billion) were to move into the
gold ETFs, it would almost triple the current value.
But what if it’s 10%? And what if Doug Casey’s call for a modern-day
gold rush comes to pass?
Those who claim the gold market is crowded will also point to
Paulson’s extraordinary high percentage of funds sitting in yellow
metal investments. Yes, he’s got a $3.4 billion stake in GLD – but the
critics didn’t look under the hood. Most of those holdings are from the
fund’s employees (including John himself), not outside
investors. Not exactly an overheated trade.
To some, the amount of money invested in gold may “feel” high, but
it’s a relative pittance compared to what’s sitting idly on the
sidelines, waiting for a reason to move and a place to go. And when you
consider that the vast majority of U.S. citizens don’t own any
form of gold, this is a market that is the opposite of crowded. There
is a lot of money that could hit our sector.
And it’s not just precious metal funds. I interviewed Andy Schectman
of bullion dealer Miles Franklin, and Kevin Brekke, our
Switzerland-based editor, told me it was the most informative interview
we’ve published this year. Why? Because based on what Andy sees week
after week regarding supply, he’s come to the conclusion that we’ll see
a serious drought of bullion when the average citizen begins to buy
gold. Meaning, if you wait to buy until everyone else does, you may find
yourself out of luck. And the data I present this month backs up that
claim; in fact, you may be surprised at some of the findings.
»
- 11704 reads
- Printer-friendly version
- Send to friend
- advertisements -
Be careful what you wish for...Soon the gold market will become so crowded that the papergold charade of the Crimex will fail. When it fails and the world comes to a collective realization of just how little physical gold really exists, the price will explode and the entire, fiat-based global currency system will collapse.
Have a nice weekend!
So, by this argument, since AAPL has a market cap of $227 Billion then Apple is not at all a "crowded trade" since so much more money can flow into it?
Yes, I realize this is somewhat an Apples to Oranges comparison (pun intended), but the argument is a somewhat specious one.
I tend to agree that Gold will more and more become a hold of wealth for the average investor. It reminds me of the old man in our neighborhood who died at 92 in 1984 and had nothing in the bank, but hundreds of thousands of dollars in gold items in his house. He had live through the depression and knew that paper money is ephemeral. Most of us in the States have never known truly difficult times.
On its own, you're totally right. However, it still works as a counter argument to make void what the other side says about this being a frenzy. Back to the drawing board for them. Now, they need some real numbers showing how many people should own gold (i dunno, how many?) and how many people currently do. This article might help us along, no?
I understand the point that you are trying to make but I think of Gold as hard money so its not really even close to comparing even two different types of fruit, and in reality comparing cash to AAPL stocks is far more equivalent being that they are both paper assets.
and that's the point of contention here: those who "think" of gold as hard money and those who just want to make a buck (or avoid losing one). In order for the physical to become permanent, it would have to be incorporated by an existing and much larger series of participants (i.e. central banks would certainly do the trick). Barring that, you will never see the physical become anything more than a passing fancy, a trade. As case in point, we have gone from rabid speculation of gold 5k to how low can it go analysis, in a matter of weeks. Were gold truly headed up, I highly doubt interest in it would recede as quickly. Let's face it, in an environment where yield has become so scarce, the lack of utility in gold has become a liability. Gold becomes interesting again at 800 or so.
bmoreland said:
"He had live through the depression and knew that paper money is ephemeral. Most of us in the States have never known truly difficult times."
You seem to believe that paper money lost value during the depression. It did not. A dollar then would buy more than the time before the depression or any time thereafter. The depression was about deflation.
Yes, because FDR confiscated to prevent a run on the Fed which would have collapsed the dollar, then revalued it to prevent a run on the USG. The bond collapse made a revaluation necessary.
The USG is a much huger debtor now than then and our funding is increasingly duration skewed towards the short term
why not just buy an island and a cannon? fu too smiley.
You seem to believe that paper money lost value during the depression. It did not. A dollar then would buy more than the time before the depression or any time thereafter. The depression was about deflation.
Wait, gold went from $20/oz to $33/oz overnight in the great depression.
True. The dollar was strong because it was backed by gold. Not true today.
Those who held gold were rewarded when the devaluation occurred.
Nowadays, a deflationarry depression will never be tolerated by politicians. It will hapen but it will soon turn to high inflation and possibly hyperinflation. Gold will rule the day.
US salvation can only come with a hyperinflation, repudiation of all debt and replacement of new money backed by gold.
Pray that repudiation of debt happens, that the banksters and the corrupt politicians face Themis and Tartarus, and buy physical gold and silver a bit every week or every month.
The bottom line is it does not matter if the price of gold goes up or goes down the COMEX makes money on each and every trade. But they make more money if the price goes up. So if they have more Gold, Real or Fictitious to trade the more money they make. The investors of the Paper Gold Make money from the Next GLD Investor and so on and so forth It’s called a Ponzi Scheme.
It has been going on in GLD since 2005. It like all other Ponsi Schemes will collapse.
And like all other Fiat Currencies it will collapse.
The only difference is that Physical Gold will never go to Zero, it will always have some value, like it always has before the Modern wizards found a way to make Gold from paper. When the Real demand for Gold was under $400 dollars an ounce.
So when the GLD Ponsi Is removed from the market where will Gold End up?
Back where it has always been?
Will the price drop as quickly as it rose?
Will holders of Physical Panic and loose faith in it’s value?
What is shiny yellow metal really worth?
The Island of Manhattan was Bought for shiny beads, and a few bit’s of metal. But somehow I don’t think that will ever happen again. Then again I could be wrong.
Good Luck.
?
I can't believe Turd's comment was junked!! (no sarcasm)
"we’ll see a serious drought of bullion when the average citizen begins to buy gold."
Hmmm.
ok
"Meaning, if you wait to buy until everyone else does, you may find yourself out of luck."
Aha.
Yes, cause they ain't making it anymore.
edit: just like they said about land in 07
Uhm, actually, gold was never made here. Our star is too much of a runt to make the heavier elements.
All of the gold here was "imported" during the formation of our solar system, in a way.
If we want more, we'll have to go get it. Boy, that would be hard money.
When will you people learn that gold is not an investment, it is money. You are thinking about gold in a backwards way.
Who are you trying to confuse?
I'd like to know who the idiot who flagged this as junk is.
Burnbright is correct. If I asked you, "how many monopoly dollars would you accept in exchange for your house?" You'd scoff, because monopoly dollars have no value.
US dollars are fundamentally no different than monopoly dollars - ink on paper. The joke is not that gold is worth money, it's that there's still people out there who think our "money" is worth gold.
It is truly astounding how many can't make that connection.
That might had been me. I can be an idiot.
The post seemed out of place for whom it was addressed to, aside from my disagreement.
I do think of gold as money in many ways and an investment and as a metal and a chemical element and all sorts of things. I'm tired of people telling me to only think of gold in their favorite way.
From on gold bug to another, if gold is only money, then what is money? If it's a currency, then I mostly see currencies as simply commodities. A hard currency is a commodity made up of recycled hard assets. Soft currencies are debt based accounting entries.
I don't deny that gold is money. I have an account at goldmoney.com. However, gold is also many other things to me. I'm also big on actually using gold as a resource in many industries including tech, and I don't see the sense in saying an electrical contact was plated with money. Please, don't start calling things made with gold as being made out of money.
I have to respect that response.
The average citizen has no money left.
i've recently helped a number of clients and friends reallocate 401k and pension holdings. Most did not know what they owned. They were surprised to discovery 85-90% equities via bland mutual funds.
Most of the plans I reviewed had no option or vehicle to own PMs even by mutual funds. Dont think its crowded but maybe not accessible for some.
Hope you advised them to cash out.
I thought most 401k's had a Self Directed Fund option. They just don't advertise it.
PS I stopped giving anyone advise on their retirement. Too much of a guilt burden on me especially since most people these days are getting it wrong, hence dumb money.
NOT,
And we of course believe this WHY?.
"Most of the plans I reviewed had no option or vehicle to own PMs even by mutual funds"
Because it will not make them money..........
Same reason it's getting kicked in the head,every time it get's close to $1300.00..................
They know once it get's PAST a certain dollar figure, THEY lose control,( flight from fiat to PM's) and the Dollar will turn to shit, overnight,and THE flight to Gold will happen, exactly like TURD said.
This is one time they cannot OUTWAIT the Depression, instead of a Recession to turn...............it's not going to...
considering some of the posters on ZH maybe the right question is:
is the gold trade hated?
Maybe shows that this is also a moral question in many ways.
Seems like we got used to talking about money absent morality and are now realizing the mistake.
Lots of anger on both sides, highly justified.
Right on. Why not put your faith in an investment that is a moral investment? Physical gold. What could be better in uncertain times? Well.........the only thing better is to try to be in the center of God's will for your life. Jesus has the best insight in this regard.
Are you going to go through life and never read the ENTIRE New Testament?
If not, do you realize what a dufus of an intellect you are?
Faith and intellect are mutually exclusive terms. You have to pick.
what a great answer. +s
"Faith and intellect are mutually exclusive terms. You have to pick." not really if you have faith in your own connection to the divine/god then your intellect aligns with your faith. i'm not a religious person but i have faith in my own intuition and my intellect has followed. at this point in time the only thing that can kill the gold bull market is a global fiat currency because not enough people have woken up yet to see that it will be a trap.
i'm not in the least bit worried about the recent decline in gold it will be up again shortly and this brief episode will just be another 'forgotten about'blip on a chart.
Maybe your intuition has worked out well for you, and you've come to trust it because of its track record.
I don't trust myself enough to go the next step and introduce a kind of faith that may prevent me from questioning myself again. I'm sure many people here will be relieved to hear that I'm always struggling to find errors in my own ways and admit that most of whatever I say is probably mostly wrong.
I also don't like staying consistent in my own views for too long. To be 100% consistent is to be dead. Change is way more sexy.
"Is the gold trade hated?"
What I sense from reading a lot of different blogs is that those that are up to their eyeballs in debt hate those that are prudent.
On one site I was told 'saving and buying gold are unAmerican'... go figure
SHOWS YOUR INTELLIGENCE..OR LACK OF..IF THEY RAISE RATES TO EVEN 2%..THE WORLD WILL FALL IN ONE NANO SECOND..ITS IMBECILES LIKE YOU WHO WILL BE RUNNIN FOR THEM THERE HILLS...LOOKING FOR ROAD KILL..IDIOT..
No, watch the US collapse into a black hole.
20% interest on our national debt? The whole GDP might be able to make the interest payment.
And who exactly is going to raise the interest rate? More importantly, how?
PS Doesn't the Fed own the largest single gold reserve? But they would just love to see it's value smashed, right?
http://en.wikipedia.org/wiki/Gold_reserve
Ohh that's right, it hasn't been audited since the 50's but still managed to FOOL THE ENTIRE FUCKIN WORLD THIS LONG.
A few points won't stop Gold from rising but would probably implode the economy.
with the US economy slowly getting fuct, what do you think the quality of US bonds will be going forward ?
Safe, secure and rising. Thanks for asking.
http://globaleconomicanalysis.blogspot.com/2010/07/treasury-bull-market-...
Do you not understand that the gold they have is miniscule compared to the promises they have made and the lies they have told and the ponzi they have sold?
Now put that in a rap.
The US treasury has not vouched any of it's 8000+ Tonne gold reserve to back the USD or any other operation. The USD is admittedly the most expanded currency but only by international government edict. It's the reserve currency and nations requiring USD reserves for oil purchases would have cried foul if the US treasury did not expand it's money supply over the years, through the FR to keep up with global expansion. Now that global production has fallen, USD reserves are held as security or used to strengthen local currencies and not so much for commodities but are in all deflating.
"Deflation" today is nothing but a lie and a particularly egregious bit of pro-establishment disinformation. Do not fall for the lie!
With regards to gold - you are quite uneducated.
Are you retired at 42? Have you only got stuck putting 29K into SS?
58 now.
Beg your pardon Hairy?
ANY RETARDED FIAT PLAYERS OUT THERE WANT TO ADDRESS THIS ONE...WHAT DO YOU THINK WILL HAPPEN WHEN THE WORLD REALIZES THE PONZI SCHEME IS OVER..THEY WILL RUN AS FAST AS THEY CAN TO THE PRECIUOS METALS..WONT MATTER DEFLATION OR INFLATION..THIS ONE IS A CURRENCY CRISIS WHICH THE WORLD HAS NEVER SEEN THE LIKENESS OF THIS SCALE EVER BEFORE....AS ASSETS PLUNGE TOWARDS EITHER ZERO...DEFLATION..OF TO THE MOON..AS IN HYPERINFLATION..THEN GOLD WILL SKYROCKET UNDER EITHER SCENARIO..ALWAYS AHAS AND THIS TIME WILL BE NO DIFFERENT.....BUCKLE UP...IT IS GOING TO GET CRAZY..ESPECIALLY IF YOU DO NOT OWN THE PM....LIEK RED NECK OR JHONNY BRAVO..THEY WILL HAVE TO HUNT FOR ROAD KILL AS THEIR FIAT DOLLARS WILL BE LAUGHED AT ..
dang, please stop yelling, reminds me of my first wife. - ned
There is this wonderful case called "lower", you should give it a try.
He is a ROMAN.
Gollum: Sneaking? Sneaking? Fat hobbit is always so polite. Smeagol shows them secret way that nobody else could find. And they say sneak! Sneak? Very nice friend oh yes My Precious very nice...
stop shouting, its bad form. plus undermines your credibility
Please go away.
Speaking of going away....I went on a 12 day vacation and Velobabe went away. Did you piss her off? I hate that I missed it. I had gotten used to her incomprehensive rant as it reminded me of why I don't socialize with the in-laws any more. : )
ROTFL
She's guilty of PUI....
H E L P
S O S
If he doesn't go away, maybe he could steal someone else's avatar!
Regardless of what you beleive, the current short term trend is down; the uptrend from the 2008 lows is in jeopardy. It looks like the Fiat Banksters are winning the current round, sell some and rebuy at lower prices...
When gold finally goes parabolic, it will quicky in a matter of days become unavailable at any price as the so-called exchanges go down in flames, with all buyers, no sellers. Then government will attempt (but fail) to confiscate and a black market will develop when a near final equilibrum price is achieved after paper goes worthless.
If you're keeping gold in a warehouse, be prepared to lose it.
There's no such thing as "unavailable at any price."
I doubt the government has the willpower or the popular support to confiscate. The military could, but not the bureaucracy. But even the military could have trouble maintaining order without an ability to pay its soldiers and mercenaries.
After all, the military relies on contractors for logistics. If it has no more money to pay, it loses its ability to keep itself supplied. And now the organization has had its logistical self-sufficiency eroded.
We have a zombie government that doesn't realize that it's been bitten.
I'm afraid you are wrong, Apostate. There is indeed such a thing as unavailable at any price. Try buying gold with Zimbabwe dollars and see how far you get. You might be able to scrape up an oz or two by selling them as novelty items on Ebay, but the price difference between a 100 million Zimbabwe dollar note and a 100 billion dollar Zimbabwe note is not 1000. Both will go for a few dollars online--as novelty items only, and even then, you will fast saturate the novelty market, and no-one will want any more.
I agree with you otherwise, however.
You could buy gold with Zimbux, it would just take a huge number that would probably increase by the second. People in Zimbabwe do trade labor directly for gold and vice versa, and that labor could theoretically be denominated in Zimbux.
You could even buy gold with baseball cards, toilet paper, and commemorative Obama inauguration issues of the NY Times. It would just take a lot of them.
I would say that the major funds that currently have large gold holdings use the gold as a cash substitute. It's just as liquid and is less liable to sudden price shocks. One issue with gold that isn't often discussed is capital gains.
If the dollar appreciates you don't pay capital gains on your dollar holdings - despite the fact that dollars are securities like any other. They're a uniquely tax privileged security class. Without that onerous tax, 100% backed gold securities would almost certainly become the de facto global reserve currency immediately.
Show me. Go make a transaction where you buy gold with the Zimbabwe dollar. No-one with gold wants Zimbabwe dollars. Period.
If you still don't believe me, try it with an abandoned currency. Take a truckload of Reichmarknotes to your local gold dealer and see how much you can get. There are plenty of them out there. You'll probably have better luck selling them for their inherent value, that of used paper. Might make nice kindling.
The government can create a certain level of demand for its scrip through legal tender laws. If those laws dissipate, the currency does become worthless except as a souvenir.
*edit*
Undead currencies sometimes circulate long after a new one has been imposed, if only because they're by nature full-reserve. In post-war Iraq, the old dinar circulated at a higher level than the new one, because the Bremer administration ran a Bernanke-style fiscal policy.
Good answer.
The question is, who in Zimbabwe is going to pay taxes with gold?
No one.
Greshams law in action, good money driving out bad.
Regardless the Zim dollar is demonitized and the Rand and US dollar are now used for domestic trading.
However, I do like my 100 Trillion note from 2008. It is hanging on the wall of my gold buying operation :-)
Confederate dollars, bitchez!
An interesting exchange.
As for the issue of capital gains tax on gold vs none on the dollar, I would say that the hidden tax on dollar holdings has always been inflation. Not one man in a million can spot it, apparently.
They don't have to seize all physical--suppose they just seize 401-K and IRA holdings in GLD and PHYS? And "reimburse" in dollars at $1200/ounce as the price skyrockets to $3200 or higher?
I'm sitting on my IRA "cash out" button with a very itchy trigger finger.
but what military? the national guard in my state has done five rotations in afghanistan/iraq....recruiting is a complete nightmare, and we don't have anyone to do the jobs that our guard used to do....(northern state; most were trained in emergency services for floods, and major snowstorms/hurricanes....)
you expect these guys/girls to start marching into homes confiscating gold? don't think so.....
after the third tour most are clocking days until they can leave....
Ah, so that's why the U.S. has so many overseas bases. Keeping the troops on ice, and pissed, in order to bring them home to "restore order". They are not as stupid as we like to give them credit for.
No, the Ruling Class keeps soldiers deployed overseas to make it easier to deploy them to "nation-build"<---a policy that all Democrats and many Republicans (neo-Cons versus the isolationist Paleo-Cons) are in favor of.
Of course, the Ds and the Rs disagree on what type of nation they'd like to build.
Me, I'd like to fix our nation first, and fuck the rest of the world.
From the gov't point of view, the best thing to do would simply be to issue a new currency and pray to god you have some real gold left in those vaults.
Unlike a third world economy, the ruling class has too many lower-order members to support itself by merely issuing a new currency.
They're done for. They can keep issuing ponzi scrip, but the market will ultimately prefer a new money.
The Fed is caught in a Mexican stand-off. If they raise rates, they can possibly save the dollar, but kill the government and a lot of other corporate players. In that case, the dollar dies anyway because the institutions that kept it propped up will flop over.
If they maintain ZIRP4EVA they will kill the dollar and its supporting institutions - eventually.
Internationally they will need a new form of hard currency, but domestically I don't think the average American would know the difference between hard and soft currency and would gladly except new fiat notes once some form of stability is restored.
Average Americans, sure but corporations, maybe not.
http://www.ritholtz.com/blog/wp-content/uploads/2010/07/FT-Corp-cash.png
You see, the attached chart has a lot to do with the deflationary condition we're in. Until that corporate liquidity gets unleashed, I would not hold my breath waiting for a collapse in the USD.
I didn't even read this comment; but let me guess; its a tirade against government. Oh, most of the junks you get are from me.
You are on a roll today!!!
As are you my friends...
Apostate,
The Fed is caught in a Mexican stand-off
That's just it, the game is over period. Doesn't matter how they flip the coin.
FRN's = 60% haircut
If they raise taxes (possibly by imposing a VAT) they will fuck up the economy and cause a corporate rebellion. If they cut spending, the bureaucrats, tax eaters, and unions will rebel.
If they recall the legions and are unable to pay their pensions and healthcare, they'll face a rebellion from the professional soldiers.
Apostate...I agree...and, TPTB have to keep that thin blue line (police) in place at all costs. The blue line is what is between the 10% and the worst nightmare of the 10%.
Anyone here that has read Zinns American History knows well that the thin blue line came first and then the bureaucrats followed. The bureaucrats, all but the truly essential, will disappear prior to the police.
A lot of people become confused when the state cuts teachers and others before reducing police spending.
It's because all teachers can do is talk. When the police get cut, the ex-cops revert to mafioso behavior. They can overthrow the government easily; all teachers can do is talk and march.
Statism is modernized feudalism.
Cops = militia captains
Military = knights
Teachers = priests
Bureaucrats = theologans
The cops can overthrow the government easily? There are 20,000 different law enforcement agencies in the US. There are municipal, county, state and federal agencies. All are relatively independent and don't work all that well together. They cannot easily overthrow the government as they lack the necessary equipment and organization.
Dunno about where you live, but the NYPD have the training, manpower, and armaments to take down both the city government and Albany.
As for the military, an organized and equipped battalion could probably mount a coup against Washington D.C. - they just wouldn't have the manpower to control the whole country.
I'm obviously not in favor of this, but I think it clarifies the political situation well. Most people refuse to see that government is force. When democracies run out of money, the knives come out.
Good point, Apo. However, large and well equipped agencies are the exception, not the rule. There are less than 50 departments with more than 1,000 officers. 80% of law enforcement agencies in the country have 20 officers or less. Also, they all answer to different bosses which are generally local. I can't see them getting together to rise up. Heck, most cops are conservative and might well fight against a takeover. I wonder if the same is true for the military?
Starving people with guns only have to agree on a target.
Yeah, sure. Show me the Gold. For Knox is either empty or full of mostly Tungsten bars. There is not enough gold in U.S. custody to start a new currency. The only hope is "partially backed by actual gold. See, we have almost 4 pounds in Fort Knox."
Just curious, how much would it take? Seriously. Anyone?
Just curious, how much would it take? Seriously. Anyone?
I have not a clue and find it an interesting question as well. I would suggest whoever does answer it does so in two parts.
1: a new domestic currency?
2: a new global trade currency?
That was a leading question that Akak and I always ask. It's easy to say there is not enough gold (or fiat, or whatever) to sustain the current level of thievery. But NOBODY has ever answered this question. Rather odd don't you think?
The answer is that there is plenty of gold right now to sustain any level of backing for any currency. It's the price that matters, not the quantity. THAT is the problem that presents itself, and the anti-gold folks won't admit that gold would have to increase in "price" by quite a bit to satisfy the need. That runs counter to their arguments about the utility of gold.
'In other words, all the money invested in gold ETFs represents just 2.7% of what is sitting in cash. Put another way, if just 5% of available money market funds ($142.4 billion) were to move into the gold ETFs, it would almost triple the current value.'
Bullshit, this is half baked analysis at best. The size of the fund would triple at the current gold price, not the value. The value of the fund would be a function of both buying of gold, plus impact of those selling. The impact of fresh liquidity would suggest a rise in the price of gold, but it is not guaranteed.
Exactly. It all depends on how much gold is out there and available and at what price. That is a tough analysis to make, moreso due to the opacity of bullion banks and the US Treasury (and others).
And.....the amount of gold increases only slowly, while the amount of "paper" for money market funds is growing seemingly without limits.
The reason I would buy gold now is not based on its current price or inflation fears. Instead I would buy based on my fear that others will fear inflation and pile into gold thus crowding me out. Its not that I love gold but I love the idea of being able to get it if I wanted to.
Is my train of thought off on this?
yes
No, yes, maybe.
Understandable, you don't want to miss the gold train, should it come, but you're not impressed by the train made of gold.
What if I told you this was also about honesty? Do any of us remember what that means?
You outsmarted yourself in your reply.
He said " Instead I would buy based on my fear..."
Then said the following.
Is my train of thought off on this? "
_
His thought starts in fear; therefore, "his train of thought" is off to begin with.
QED, my friend.
which kind of also makes me think that the whole safe haven thing is overplayed, too. It's like calling real food safe food. Then people "resort" to it instead of defaulting to it, mostly out of fear, as you pointed out.
Thanks for the replys
I doubt I would even consider buying gold if we lived in a slightly more pleasant time. Its the fact that I would normally not be attracted to buying gold that makes me question if my actions are fear based or more rational.
Self reflection on what drives me to invest always leads to me ask "Wait why am I doing this again?"
Not all fear is irrational though, come to think of it.
Yes, lots of self reflection and reflecting on self reflection and reflection on reflection of... ad nauseam, but also don't forget to take action here and there.
Seriously, I remember many upon many examples of my own being wrong when I wasn't even sure there was a question. So, how much do I believe myself this time? Still, if I don't even trust my own word, why trust my trust in somebody else? Every once in awhile I just have to make a best guess and go with it.
should it come lol.. COT data would imply the train left a while ago... maybe zoom out your chart
I was trying to speak his thoughts .
I'm already on this train, too, sitting at the bar having a martini.
I'm putting thoughts in your head as you read this.
You have just defined "mental masturbation".
The BIS has a plan for years now and it all started with the invention of the Euro.
Where as the IMF considers gold a competitive currency, the Euro will treats it as a wealth reserve. this is freegold and why physical gold will be the winner in this game.
here is the ECB's latest balance sheet. compare that to the Fed Balance sheet. 65% backed by physical gold.
http://www.ecb.int/press/pr/wfs/2010/html/fs100713.en.html
The PIIGS and the French politicians are really screwing with the original purpose of the Euro, which is why I love this chatter of the "Nordic Euro" and the German-Russian talks to have a hard currency for international trade/settlement.
How are you getting 65% ? Gold appears to be around 15% of total assets, per your table.
Yeah real men swim in gold coins.
Flamebait.
Don't feed the troll Ragnarok......
Racists?
Ifn it ain't gold-colored, itn be bad.
I dig silver too, it's just such a bitch to store and transport in any amount approaching wealth preservation.
ah yes, the NAACP argument against gold.
Gold bugs weaken the dollar.
Making it harder for President Obama to give out "Obama money" with the same purchasing power.
Thus putting up a roadblock to "hope and change".
Ergo, gold bugs are racist.
Geoff,
If you are serious, your a Fkin IDIOT.
Even if you were right, then I Would be a racist.
Everyone is a racist...........everyone.
Reverse racism ~ the modern method of hate.
Picture it, a LARGE Gold brick (slice of lemon optional!) smashing the "hope and change" out of the Leviathan -- we can dream can't we?
Nobody in here has a sarcasm meter?
mynhair,
Not a Gold Bug, and I never look at mine,know where it is,.........just purchased as insurance,because I CAN see my USD's are going to go down.
Fiat currencies are of value(hold value) for One reason, and only one..............they have a solid stable Gv't/and a decent economy backing the CON-fidence in that fiat currency.
When you lose either(in our case it's both, your Anal-ialated).
I am positioned where if/when(we're almost at a 100% chance now),of the currency being totally debased, and/or devalued,( to a point where you lose 5-1, 10/20/50, I will not have my lifes savings in worthless paper.No one in their right mind WOULD.
This is DOUBLY true now that we KNOW we are going to lose most, if not all of the money SS,and medical care we paid for all our lives,because the Democrats SOLD US OUT.( and dumped it into the GF, by LBJ).
And exactly what do you think is going to happen, when the RESERVE currency of the PLANET goes tit's up, or loses that status?.(nations are already starting to slide away,CB's are holding less and less,currency, Bonds, and Treasuries are slowing being cashed out by Soverign nations............they have our #).
Newsflash, if it was not the Reserve currency, we would have already taken a shit bath.............
Make fun all you want, the time for your smart ass remarks will soon be over....and you will be left w/ a bloody orfice, and a pocket full of IOU's, and a tube of Prep H.
I hope YOU are the only ONE you are responsible for.
Scrooge McDuck
Zeitgeist said:
"ANY RETARDED FIAT PLAYERS OUT THERE WANT TO ADDRESS THIS ONE..."
Is that you Mel?
LOL
anyone else see this provision as a way to control "physical" gold supply, and not only of jewelers and refiners, or is my tinfoil too tight?
from the National Jeweler's site
JA warns of gold provision in Wall Street bill
July 12, 2010
New York--Jewelers of America (JA) is warning retailers about a piece of legislation designed to clamp down on trade in "conflict" gold and minerals that the organization predicts could be a "nightmare" for the jewelry industry if enacted.
In an alert sent to National Jeweler and addressed to the chief executive officers of firms using gold as well as the minerals coltan, cassiterite and wolframite, JA warned that the "Dodd-Frank Wall Street Reform and Consumer Protection Act," legislation that is designed to bring sweeping changes to Wall Street, includes a section that would have a big impact on the jewelry industry. The addendum to the bill is meant to ensure minerals aren't subsidizing conflicts in the Democratic Republic of Congo, as well as nine surrounding countries: Angola, Zambia, Tanzania, Burundi, Rwanda, Uganda, Sudan, the Central African Republic and Congo.
According to JA, the provision, section 1502, dictates that companies using gold or any of the other minerals mentioned above will have to file annual reports with the Securities and Exchange Commission (SEC) regarding the source of those materials, a step that the organization believes will surely require companies to hire a third-party firm to audit and validate the reports.
"We cannot imagine making a disclosure to the SEC if you didn't do an audit to know for a fact it would stand up," said JA Chief Operating Officer Robert Headley.
If a company's gold or minerals did originate from one of the 10 African countries included in the bill, then that company would have to show what steps they took to trace their materials back to their source.
Headley said that while JA is against materials of any kind that support conflict, it views the bill--which would impact a large number of industry players, including retailers--as "impractical" as written now given the current lack of traceability in the supply chain.
"How would anyone know [where their gold is coming from] unless you're buying it from a particular mine only?" he says. "Bottom line, it's too hard to trace."
In addition, the provision dictates that the materials information be placed on the company's Web site for public review; there is no allowance in the bill for those companies that may not have Web sites.
The Dodd-Frank bill already has passed the U.S. House of Representatives and is now being readied for a final vote in the Senate. Senators, who have been on a break, are slated to return to their offices on Tuesday.
Headley said that the provision that could potentially impact the jewelry industry, Section 1502, was "quite recently" introduced and is a random add-on to the bill, which is a piece of financial regulatory reform legislation.
"I think we would all acknowledge this has nothing to do with this bill," he says.
In the alert, JA recommends members of the jewelry industry contact their U.S. senators to ask them to defeat this provision of the bill (Section 1502) or the entire bill if the provision cannot be defeated. Contact information for each senator can be obtained here.
To download a PDF of the Dodd Frank Wall Street Reform and Consumer Protection Act, click here.
To download a PDF of the portion of the bill containing Section 1502 that could impact the jewelry industry, click here.
their follow up article today:
Conflict gold provision in Wall Street bill passesJuly 16, 2010
Washington-A legislative addendum that aims to regulate the gold industry to keep "conflict gold" out of the United States passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a financial reform bill that was approved by the Senate Thursday and is poised to become law.
On Monday, Jewelers of America sent out an alert to warn jewelers that the legislation, which was aimed at reforming Wall Street, could be a "nightmare" for the jewelry industry if enacted, and JA called for industry members to contact their U.S. senators to ask them to defeat the addendum (Section 1502). The provision sets up a major logistical challenge for jewelers, who would have to ensure that the gold they buy is not subsidizing conflicts in the Democratic Republic of Congo as well as nine surrounding African countries.
The Dodd-Frank bill passed in the U.S. House of Representatives last month, before passing yesterday in a 60-39 final vote in the Senate. President Obama is expected to sign the bill into law next week.
While primarily focused on financial reform legislation, the Dodd-Frank gold provision would require that companies using gold as well as the minerals coltan, cassiterite and solframite file annual reports with the Securities and Exchange Commission (SEC) regarding the source of those materials. According to JA, compliance with the gold provision would likely require that companies hire a third-party firm to audit and validate their gold-sourcing reports.
If a company's gold or minerals did originate from one of the 10 African countries included in the bill, then that company would have to show what steps they took to trace their materials back to their source. The provision also dictates that materials information be placed on a company's Web site for public review.
On Friday, JA released a statement in response to the bill's passage, saying "While we strongly believe in the goals of this legislation, we are very concerned that the bill--as passed--could encourage jewelry companies to avoid trading in gold from the region, in order to bypass the issue completely. Of course, this unintended consequence will help no one, and end up hurting legitimate miners and their communities. Therefore, we hope to work with the U.S. Securities and Exchange Commission (SEC) regulators and both industry and non-industry stakeholders to ensure that implementation achieves its goals, without hurting jewelry businesses or the very communities in DRC and neighboring countries that it is meant to benefit and protect."
This would have a secondary effect: U. S. gold bullion coins are mandated to be produced using U. S. mined gold only. This could raise the value of U. S. Eagles considerably since this gold is traceable. The Act could be a way of insuring the use of Eagles by jewellers thereby stabilizing the value of Eagles in the secondary markets. Most of the activity in these coins is not by large gold holders. This warrants a continued eyeballing.
Geez, you gold bugs are soooo easy.
Bunch o'bitchy little girls.
Obama-Dodd-Frank FinReg Monstrosity Delays Derivatives Curbs until 2022!
The Obama-Dodd-Frank financial regulation bill, a miserable excuse for real Wall Street reform, is now about to gain final approval in the Senate. This wretched bill is now supported by the New England liberal (meaning Wall Street) Republican clique including Olympia Snow, Susan Collins, and Scott Brown, who are joined by the notoriously corrupt reactionary Democrat, Ben Nelson of Nebraska. This bill will create a multitude of new regulations and a number of large new bureaucracies, but it is utterly devoid of any bright-line prohibitions against the causes of the financial panic which struck the United States in 2008, and which continues to the present day in the form of a world economic depression.
The cause of the 2008 banking panic was that zombie banks and hedge fund hyenas were speculating with toxic and highly leveraged derivatives. The new bill does virtually nothing to attack the causes of this ongoing financial disintegration. It is a total defeat for the interests of the American people, and an historic victory for the Wall Street financier oligarchy which owns both the Democratic and Republican parties.
Stockbrokers and investment bankers have battled mightily to avoid any legal compulsion to act in the best interests of their clients, who are often the retail investors which both parties claim to care so much about. The new bill will not prevent unscrupulous used-car dealers from ripping off their customers through inflated financing costs. There is nothing in the bill to stop the plague of foreclosures, which last year turned almost 4 million American families into displaced persons on the home front. There is no ban on the disastrous use of Adjustable Rate Mortgages (ARMs), the financial equivalent of time bombs, which are ruining the lives of so many millions of Americans. There is no cap on leverage banks can use in financial transactions. Despite widespread complaining about the Federal Reserve, this bill gives the Fed more regulatory power rather than less. It represents the complete triumph of the Wall Street derivatives lobby, so much so that even hardened cynics are astounded by the impudence and insolence of Obama and both parties in the Congress.
The graveyard of Hope and ChangeSenator Dorgan proposed an amendment to abolish the concept of banks that were too big to fail. His amendment was rejected. Senator Kaufman tried to limit the size of banks, but his amendment was deleted. Senator Whitehouse tried to limit interest rates on credit cards and predatory payday loans, or at least to allow states to regain their regulatory role in this area, but he was defeated. Granted, many of these amendments were mere public relations exercises that were always virtually doomed to failure.
Senators McCain and Cantwell tried to restore the firewall, contained in the landmark Glass-Steagall Act of 1933-1999, which rigorously separated commercial banks with FDIC insured deposits on the one hand from investment banking and stock-jobbing on the other. Glass-Steagall was one of the signature legislative achievements of the New Deal, and there are few better illustrations of the deep hostility of the modern Democratic Party and of Obama in particular to the heritage of Franklin D. Roosevelt than the stubborn refusal of the degenerate Democrats of today to force through the necessary restoration of the Glass-Steagall protections – even in the wake of a breakdown crisis of the entire Anglo-American banking system.
Senator Blanche Lincoln of Arkansas, who is fighting for her own political survival because of her record of subservience to Wall Street, tried to redeem herself with paragraph 716 of title VII of the bill, an attempt to ban trading in credit default swaps (derivatives) by FDIC banks. Notice that by this point there was no effort whatsoever to prevent these banks from dealing in collateralized debt obligations (CDOs), which were the toxic derivatives which destroyed Bear Stearns, Lehman Brothers, Merrill Lynch, and Citibank. Nor was there any effort to curb the use of structured investment vehicles (SIVs), toxic instruments which are often used as the final packaging of a mass of CDOs and other kited derivatives. Still, since credit default swaps had been the main culprits in the bankruptcy of AIG, costing the American taxpayer $182 billion and counting, it would have been a meritorious project to keep commercial banks away from these diabolical instruments.
But it was not to be. In a dirty deal negotiated far away from the C-SPAN cameras, Dodd, Frank, and Rahm Emanuel completely gutted any effort to get commercial banks out of the business of placing side bets using credit default swaps. At a certain point in the televised reconciliation hearings, Congressman Peterson of Minnesota, the chairman of the House Agriculture Committee, came forward with a compromise which made paragraph 716 into a macabre joke. The infamous Peterson demanded that banks be allowed to trade credit default swaps in the form of foreign exchange swaps ( thought to be the largest category of swaps), interest-rate swaps, and credit derivatives – provided that the underlying securities were investment-grade. Since these categories represent the vast majority of swaps, and since it is not hard to procure an investment grade rating on junk paper from corrupt agencies like Standard & Poor’s, Fitch, and Moody’s, this alleged compromise meant that nothing was left of Senator Lincoln’s attempt. Treasury Secretary Tiny Tim Geithner had vehemently proclaimed the irreducible hostility of the Obama regime to any interference with this type of derivative. Interestingly, the German government had already explicitly banned naked credit default swaps issued as bets on government securities denominated in euros.
Since the restoration of the real Glass-Steagall firewall had been defeated early in the process, Senator Cantwell attempted to provide a weak face-saving substitute in the form of the so-called Volcker rule, which posited that commercial banks were not allowed to engage in speculation and other proprietary trading for their own account. This Volcker rule was already vitiated by the obvious gray area between speculation and so-called market-making, which entities like Goldman Sachs and Morgan Stanley were sure to exploit to circumvent any new legislation. However, zombie banks like State Street Bank and Bank of New York-Mellon (the latter the back-office of the TARP program. i.e. the October 2008 Wall Street bailout) found even the weak Volcker rule to be too onerous.
Demagogue Scott Brown Drives His Truck Through the Volcker RuleSenator Scott Brown of Massachusetts won election last January by duping gullible voters with a cultural populist prop in the form of a pickup truck. At this point in the haggling, Senator Brown documented his subservience to Wall Street by driving his truck through what remained of the Volcker role. He forced through a provision allowing commercial banks to use 3% of their capital for speculation through hedge funds. It might seem that 3% is a minute fraction of a bank’s Tier I capital, and that Brown’s amendment might not be so dangerous after all. But this is not the case.
If you buy stocks and their price falls to zero, you can lose 100% of your investment, but no more. But when you are dealing with derivatives, your losses can be geometrically pyramided into interplanetary space. This proposition is not a matter of theory, but has been documented through a decade and a half of bankruptcies by hedge funds which had been speculating with derivatives, all the way back to Long-Term Capital Management of Connecticut in 1998.
Cantwell RecantsIn the case of two Bear Stearns hedge funds which imploded in 2007-8, losses of about 50 times the original capital were attained. Under Scott Brown’s loophole, losses of 50:1 would already be enough to bankrupt the bank. But the 2008 crisis offers cases in which derivatives losses might attain or exceed 100:1 on the capital being wagered. These cases occur when debt instruments are wrapped into a mortgage-backed security or other asset-backed security. These latter are then included in a collateralized debt obligation, which together with other collateralized debt obligations can be made into a super CDO or CDO². Credit default swaps can be attached to these super CDOs. A number of super CDOs thus equipped can then be wrapped up in a structured investment vehicle (SIV). At every level of this cancerous mass of kited derivatives, leverage comes into play geometrically. The investment of 3% of capital in such a poisonous concoction can easily bankrupt any financial institution many times over. This phenomenon is one of the basic reasons why losses were so great in 2008, despite the fact that subprime mortgages are a relatively marginal area of the financial world. The losses became so monstrous because derivatives are the most effective tools yet devised for magnifying and multiplying financial destruction. As for Senator Cantwell, she capitulated and announced that she would support the resulting phony bill anyway.
Perhaps the members of the Massachusetts Tea Party would like now to contemplate their own roles as dupes and useful idiots for the Mitt Romney faction of Wall Street asset strippers and hedge fund hyenas, who are the people who put Scott Brown into office. From now on, Brown should be referred to on Capitol Hill as the senator from Bank of New York-Mellon, since he has no regard for the welfare of the people of Massachusetts.
But even this 3% loop hole, big enough to drive a truck through, was still too restrictive for Wall Street. The army of Gucci-clad lobbyists decided that even these nominal restrictions had to be postponed for more than a decade, quite possibly in the hopes that they may be overturned by some future reactionary majority likely to emerge amid the shipwreck of the feckless and treacherous Obama regime.
Plenty of Time for More Financial Catastrophes Before 2022At the time of the reconciliation hearings, the remaining Volcker rule provisions were apparently supposed to take effect after seven years, allegedly to give the swaps-jobbers time to unwind their positions. But after the C-SPAN televised reconciliation proceedings were over, dark forces loyal to Wall Street revisited the conference report and introduced even longer delays in implementing even the meager restraints on credit derivatives. This crime appears to have occurred on June 28-29. On the Bloomberg Business Week website we read a report dated June 29:
The London Guardian also detailed the ingenious dilatory tricks for stalling, dodging, and postponing which the Wall Street lobbyists had built into the bill:
The Revenge of The SIVsEncoded in the 12-year delay are most emphatically those structured investment vehicles which cause so much damage in the second half of 2008. As Business Week pointed out:
No account of these tragic events would be complete without some attention to the systematic betrayal of the national interest by the reactionary Republicans. The Republicans are in practice more fanatically committed to derivatives than even the Democrats, and they wear their love of derivatives on their sleeves. At one point in the reconciliation process, Senator Shelby of Alabama proposed an amendment which would have removed any and all destructions on the use of derivatives by anyone whatsoever, period. The Republican method is to pretend that derivatives are used exclusively for the traditional hedging which has been carried out from time immemorial by the users of certain commodities, specifically to protect themselves from price fluctuations during the time these raw materials are being turned into finished commodities. The GOP simply ignores that 99% plus of the notional value of today’s $1.5 quadrillion derivatives bubble has nothing to do with the end users of any commodities. If the Republicans were acting in good faith, it would be easy to craft a narrowly defined exemption for the end-users of raw materials and other commodities, but this is not their real purpose. The GOP serves the derivatives-mongers and the swap-jobbers cynically and blatantly, while the Democrats do this under a veil of deception and anti-Wall Street rhetoric.
As Senator Harkin pointed out, Shelby was really arguing that a hedge fund of the first magnitude was really a mom-and-pop Main Street business. Shelby’s goal of opening the barn door wide to any derivatives to be issued by anybody at any time was not successful, but the Peterson amendment and similar Democratic betrayals substantially accomplished the same goals under a cloak of deception. Intervening along the same lines in defense of Wall Street come out hedge funds, and derivatives were hardened reactionary Republicans like Senators Corker, Gregg, and Chambliss. Caught between these Republicans and their own venal Dodd-Frank leadership, the small positive initiatives of figures like Blanche Lincoln, Cantwell, Harkin, and Kanjorski were surrounded and crushed.
The last Democrat in the Senate: FeingoldThe one principled no vote of a Democratic senator is now likely to come from Feingold of Wisconsin, who is fighting for political survival against a reactionary Republican opponent. Feingold says that his litmus test for the bill is simply the question of whether this measure can stop the next financial meltdown. Since the answer is so obviously no, and since the fingerprints of Wall Street are all over the bill, he promises to oppose it. Feingold has voted in the past against the Iraq war powers resolution of 2002, against the Patriot Act of 2001, and against the Wall Street bailout of October 2008. He points with pride to his opposition to the Interstate Banking Act of 1994, which would have prevented the emergence of “too big to fail” by maintaining the sensible New Deal ban on commercial banks operating in more than one state. He also voted against the catastrophic Graham-Leach-Bliley Act of 1999, which opened the door to the derivatives bubble by completely deregulating these toxic instruments.
The utter failure of Wall Street reform means that the door is now wide open for the second wave of the current world economic depression to continue, as the world descends still further into the financial maelstrom. As for the Obama regime, they are preparing an austerity program of unprecedented savagery which they intend to impose on the American people with the help of large numbers of defeated Congressmen during the lame duck session of November-December of this year. You were warned: Obama is a Wall Street puppet, and the events of this year are a first installment of the tragic consequences of such an administration.
Thanks for the great article. Do you have a website where you post your commentary (other than ZH)?
http://tarpley.net/2010/07/15/obama-dodd-frank-finreg-monstrosity-delays...
Courtesy of the Bing Machine.
Haha, thanks for googling that for me.
RT interview with Webster Tarpley @
http://www.infowars.com/obama-dodd-frank-finreg-monstrosity-delays-derivatives-curbs-until-2022/
Acording to Jim Rickards on his most recent King world news interview, gold and silver were the ONLY two commodities left out of the new futures regulations in the new reform bill. He is amazed that they finally tipped their hand, that gold and silver are being manipulated.
@geopol
It is montrosities like this "reform" bill that keep me buying Gold!
And distrusting the system... Imagine some 4 years ago I thought the system was actually "honest" in a way, sure sharks in the water (etc.), but honest.
Since then, no. Gold baby!
The big risk is the viral email that gets sent that spreads across the whole world recommending people buy a small amount of Gold. With today's technology anything could happen and it probably will.
I thought that the CPC had already sent that out nation-wide?
Based on the above, let's play 'What If'
After recommending that their one billion plus citizens load up on PM's, I doubt the CPC would allow the value of those investments to take even, say, a 20% haircut. That might piss a whole lot of people off, and by whole lot I mean a number that could easily be more than twice the population of the US. I don't think that would be prudent, and the CPC knows it wouldn't be.
So, should all this hocus pocus of 'deflation' drive Au spot down compared to fiat, then the CPC could always protect their masses' investments' value by utilizing any strength in FIAT as an opportunity to support PM's. I mean A TRILLION dollars buys a lot of ounces. And any deflationary prestidigitation that increases the illusionary value of fiat makes such actions all the more effective. I mean YOU may be experiencing personal deflation, but the CPC has access to way more USD than they need. (As do all your major banks, incidentally).
Any thoughts? (other than Abiggs: you had your chance)
Regards
But Jim, you promised $1,650!!
Nyuk Nyuk. It was mildly amusing the first time Robot-t-t-trader, b-b-but: yawn. Seriously. Show me some nipple if you need some attention for other people's work.
I hadn't seen it.
Thanks.
A parabolic move in the gold price is still a long way off. The general public is still totally in the dark. A video on youtube recently, where a guy was trying to sell a one once maple leaf for fifty dollars, had no takers!
Until the average citizen starts buying gold, there still exists an open window to get yours at these cheap prices. Gold and gold bug bashers need not apply! Keep your faith in fiat. Someone has got to clean up after the party!
It was Mark Dice.
http://www.youtube.com/watch?v=hCjzpdivl0I
people not buying $50 gold coins off a random guy off the street has nothing to do with an ignorance of gold, and everything to do with not trusting hucksters approaching you on the sidewalk with "too good to be true" deals.
Or are you saying you'd pay $50 for a gold-coloured coin off any shady stranger who approached you as you walked out of starbucks? If you REALLY think you're getting 1oz of gold for $50 in that situation you're either psychic or an idiot.
Gold a crowded trade? You could have made the same argument in March 2008. Oh, wait a 'sec...
All the smartest minds seem to gravitate to the gold markets (and oil).
They fill the Internet with convincing fundamental arguments why gold has to do this or that.
And then they get slaughtered by the markets.
(Sigh) Maybe people are too smart for their own good. Maybe all those arguments for gold, which are undoubtedly true, ignore the one controlling fact for trading gold. It's in the self interest of all the powerful people in the world to screw you. It doesn't matter what gold "has to do" in the long run if it goes to the moon after you are already screwed. If you take a position in gold before it starts it's moon shot, you're not trading, you're just gambling in the most manipulated market in the world.
Smiddy,
"All the smartest minds seem to gravitate to the gold markets (and oil)."
Well, most here know that, but, WHY did ZH get's some of the dudes w/70 IQ's?.
Waiting for the SHTF is not where smart folks want to be..........thinking they will GET IN then,is sheer lunacy.
I don't know why people think that anyone is getting killed in gold. It's 5% off its all time high. My cost average for gold is less than $800 (I don't have the figure in front of me, it's probably closer to $600), and I started buying WAAYYYYYY back in 2000, and I'm a fairly young guy, as I started buying gold when I was in college. Most gold bugs have been buying gold for ages, and watching it appreciate despite the sharp spikes downward.
I mean, jeez, you'd think that normal investments always went up, and did so with great speed, and that thus gold is a shitty thing to own from the way all these gold trolls talk (I don't think YOU are a troll). There are all these morons bragging how they made 8% yesterday, or some stupid shit, where you don't hear about how they lost 16% the day before. And still, they hate gold, as it is just off of its all time highs. It's going to have to go to $50,000 before they even start to believe in it. They'll be talking shit all the way up, just like they have been for the last ten years.
And then they get slaughtered by the markets.
Excuse me? I bought gold in 1999 at $250/oz, when the Nasdaq was 3500, and the Dow was just over 10,000. In the last ten years, I see my gold up 400%, the Dow is flat, and the Naz down 40%. But buying gold gets me slaughtered?
Kill me some more, baby!
Some people may laugh at this but I bought Gold partially because it was the closest thing I could do that had some element of rebellion.
Sure there was a element of greed involved but only after its huge rise in Euro terms from late last year but I bought it out of a combination of fear and anger and that is the God honest truth.
I cannot understand why the average Joe cannot buy a ounce or two - it has me stumped why people in the west are not attacking this corrupt fiat system after the obscene transfer of wealth to the bastards that caused this mess.
It may not be a entirely rational decision but fuck it - I have dug my trench and have cash reserves and I am waiting for their assult on my postion.
Well, I at least applaud that you know why you did it and did it because, to hell with it, you wanted to do it.
-
Capt. Richard N. Jenson: What are you doing there, soldier?
Soldier getting up from floor: Trying to get some sleep, sir.
Patton: Well, get back down there, son. You're the only son of a bitch in this headquarters who knows what he's trying to do.
You may be wrong in some areas, Dork, but you have it right in this particular case. Holding gold is a rebellious position, as well as a contrarian play. Those who are trading in this market, in any way, are merely feeding the Ponzi. Holding gold is putting the fiat cash trash on the sidelines and starving the beast. If you really hate the way things are going, hate the system, hate the pols, hate the Squid -- hold gold. It takes away their monopoly money. Simple, eh?
I read the Andy Schectman interview. He said he is only seeing buyers of gold and no sellers. He said the ratio was 99 to 1. He also said he spoke with one of the big old money management funds in Minnesota and they didn't know the first thing about gold. With only buyers out there and most US citizens not yet aware of precious metals coupled with worldwide demand from individuals and governments I have to agree with him that this is hardly a crowded trade.
Sorry, not trying to be overly critical. I have listened to the gold bug argument, and it is convincing, but the timing is all buggered.
Proposition A: Gold always surges during financial meltdowns and there are numerous historical examples to support this. (true)
Proposition B: This is the biggest financial meltdown in history. Globalization of prosperity has also led to globalization of crisis. (also true)
Conclusion #1: Gold is going to go to the moon. (Sure, EVENTUALLY)
Alternate viewpoint:
Proposition A: Price never moves in one direction all at once. There's usually a retest and shakeout.
Proposition B: Most market participants are wrong, and most of the remainder that are right miss the move because of the shakeout, either because they didn't have the money to hold their position or they lost their nerve.
Proposition C: The bigger the move, the bigger the chances the shakeout will be equally large.
Conclusion #2: History's greatest financial meltdown will be accompanied by history's greatest surge in gold prices, but most of the gold bugs will miss the party. The size of the shakeout is likely to scale with the size of the crisis, and most people just don't have the guts to sit there and wait for a multi year event to unfold.
IMHO, most of the gold bugs are in for an ass whooping of epic proportions, and then a lifetime of recriminations over having sold their gold. Me, I'm just going to check the price action every day and wait for the shakeout to end. That entry will be the trade of a lifetime. It shouldn't be hard to spot (pun).
Endnote: I held my short position through this most recent rally. Today was a good day. The gold bugs who are positioning themselves for the final rise of gold are putting themselves in a very tough psychological place. Even though they are right, the emotional costs of being right too early are devastating.
Well for some time I have realised that I am a Dork and the one advantage of such a Psychological makeup is to accept that I cannot outpace all those other emmm participants in this great game - egos can destroy the best of us - you cannot really beat the central banks in the short term and if you do you are just lucky or have inside information.