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IceCap Asset Management Looks For The Gold At The End Of The Interest Rate Rainbow
Zero Hedge is happy to present the latest members of our little club: IceCap Asset Management, whose market insights we will share with readers on a periodic basis. In the inaugural piece, "Somewhere over the rainbow", Keith Dicker looks for the treasure at the end of fiat rainbow and, as expected, finds gold (to misappropriate the symbolism of a bankrupt country to that of one of the world's strongest economies). The presentation, which is from July, is prophetic to the dot in our rapidly changing (and devaluing) times, and those who may have listened to the presented advice, would have been about 20% richer: "Gold is the ultimate store of value and insurance policy, and has proven to be a terrific asset in times of market uncertainty. After all, isn’t that what you would expect to find at the end of a rainbow?" What is it with Canadians, first Sprott and now IceCap, and their unabashed willingness to express their love for the metal: don't they know it is a barbarous relic which the shamans of Keynesianism, especially those who have found their last refuse in the NYT Op-Ed pages, enjoy ridiculing with every last breath of credibility they have left in their turgid ideological bodies? So for those who wish to leave failed economic dogma behind, here is IceCap.
Somewhere Over the Rainbow (pdf)
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Didn't read but this to say 'bout that -
Gold / Silver / others have gone parabolic. I'm not against gold (best anti dollar out there) but typically believe once something is parabolic something big's 'bout to happen...
some one pull up an inflation adjusted monthly gold chart for this guy preferably going back to the 70ies... anyone with chart posting previledges ?
Again, I'm not against gold...but look at a chart over the past year and look at the hockey stick end on it. No longer any slow, sleepy moving up.
Just sayin', it's on!!!
http://1.bp.blogspot.com/_H2DePAZe2gA/TLeAVX0MDgI/AAAAAAAAO3o/_Jzsa5f_BSI/s1600/golddaily16.PNG
I hear what you're saying but you could pretty much make that argument for everything from SPX to AAPL to a zillion other stocks. Seems everything has gone parabolic.
Something has to give, whether or not it's gold, I don't know but I'm not betting against it.
Yeah, we were hoping for that move up.
I don't know if you recall or were aware of the CFTC scandal? Caught red handed -- JPM and HSBC illegally suppressing PM's March 2010? JPM is the custodian, using GLD paper gold position (leveraged 100:1) to short physical?
The CFTC did not shut the illegal activity down, but JPM/HSBC seem to have gotten the message. PM prices have been liberated with steep climb as shorts going away. Enjoy the ride my brother. Mystery solved.
.
I guess you guys are all using "parabolic" in some kind of colloquial (trading?) sense because a parabolic curve, like y=x^2, is one that gets steeper. The gold price since August is just the most amazing straight line. Its not parabolic at all. Yet.
Here are enough historical gold charts to keep you up all night. Enjoy. http://www.chartsrus.com/#PRECIOUS Just scroll down to Precious Metals...
Dag, thanks for the historical charts. As I said above, you could make the case that everything is parabolic historically speaking. Otherwise SPX would be at a nicely sloping 200 area.
Wow - Thanks for sharing the chart site.
...something big's 'bout to happen...
Fiat currency collapse.
1 gram gold set at 1 bbl crude oil?...as used in a basket of payment terms?
[31.1 gms/troy ounce]
Since the money gold backs go parabolic gold goes parabolic relative to the money it's backing. Gold goes nowhere relative to gold.
Gold's 3 Step Program.
1. Flight to safety during time of currency debasement (read over supply, printing) and thus, inflation. No need to wait, its' here, now and real. regardless of how we got here, events or conspiracies, we're here. Forget the immediacy of the inflation argument, for the monetary expansion/debasement eventually will manifest itself in higher specific or general price levels. Period. If one subscribes otherwise, guess they inhabit a land where history has no relevance or application.
2. Rule of law disintegrates. Regardless of one's political opinions (Another thread for another time as to who, what, when, how and responsibility or lack thereof. ) Mortgage-Gate and the Earls are Hallmarks, Watershed Events indicative that the Rule of Law No Longer Functions. A Harbinger Of Societal Breakdown. Not allegorical, not comparative, but real time FUBAR. Here, in the Now. Period. (Please don't try to distract by/with polemics.)
3. And not yet here, but betcha, betcha, betcha.... One even minorhiccup in the delivery mechanism, vaulting and storage (accounting or theft), assay failure or other quality assurance (Got Wolfram?) and the truly speculative rush for physical or unencumbered, allocated insured (only one or two of 'em out there. folks!) putative ownership goes parabolic.
Most importantly, this is not why one should like gold.
Why one might like gold is that two of the three hallmarks for one in a multiple generation recognition of it's value are now fully intact, present and accounted for, not rumored, not mentioned in passing or posed as what if's. They are what they are. Now. Reality. Period. There is reason to favor precious metals.
Society's thin veneer of civilisation is eroding quickly, the last superficial vestiges of the rule of law are evaporating. Apologies to Yeates from the "Second Coming", but "things fall apart the center cannot hold" appears superfluous.
There appears no center to hold.
Is there nothing that's not broken anymore?
A wonderful opportunity to properly construct a Risk Off portfolio in the midst of Risk On Trading Days.
And somebody, somewhere, once upon a time in a fairy tale land, denigrated those who wished to cling to their guns and Bibles. Oh, how strangely prescient, that ever so critical analysis. Never ask for what you think you want, for you might just get it, hard.
700 to 1380 in 24 months hardly a parabola.
more a steady 45 degree angle with a blip from July ...
gold does well when real rates are close to/below zero; Fed is increasing money supply faster than inflation consumes that supply. Money has to go somewhere so it goes into gold.
Don't worry. It's only a matter of time before gold bugs are labelled terrorists.
+1!
Refusing to be robbed is unpatriotic!
Already specified in DHS materials that amongst other, ownership of gold is a hallmark of terrorism. Public record.
In addition to not being believers in unicorns and rainbows I guess these guys aren't global warming alarmists either if they named their asset management company Ice Cap!
Manowar-Die for metal
http://www.youtube.com/watch?v=JJdzm9h6rfI
We do have to be careful and determine whether these Johnny-come-latelys are one-trick-ponies. Do they have anything other than gold in their plans? Is this just GoldLine in disguise?
Luckily inflation was killed post Volcker by Hedonics and substitution adjustments. Problem solved, no cost of living increase in 2010 or 2011 for granny and grandpa.
deflation is how the free market provides standard of living increases. inflation robs us this. gold FTW!
I have PM and prefer physical. I like Sprott and other allocated fund sources, but they don't dispel possibility of confiscation through excessive taxes.
Long trend of gold supports current spike, as does past history of price suppression. We were told suppression schemes are losing the ability to suppress PM prices, to expect rapid rise to price discovery, and it appears they were right.
It's time to light up a cigar and enjoy winning one.
I keep waiting for the Sprott physical Silver fund to trade. July 14 was when they announced plans and filed, no word since then.
Somewhere Over The Rainbow
http://www.youtube.com/watch?v=QhzbzwPNgXA
Chicks dig gold. Guys dig chicks. Therefore, gold will always be valued highly.
It is a rule, or something.
Consider your junks patronage to your thought. Where women go men (thus money) will follow. Women create, Men Destroy.. it is natural law..
I think you have that backwards. Like totally.
This was prepared in July, when the markets were going south. Perspective is a bit different today and those interest rates could have bottomed. Didn't the 30 yr rise today?
That is precisely my problem with gold. TLT broke a nice trend line and could pretty easily trade down hard. I don't see higher long-term interest rates as anything but incredibly bearish for gold.
I don't have the nuts to be short gold, especially when I am naturally dubious of fiat, but I wouldn't be long it right now.
Rising interest rates (Fed Funds from 1.0 to 5.25%) in 2004-2006 did nothing to stop gold's simultaneous advance. This time, it's different (really!).
Charles De Gaulle
Gold was weak most of the day like the stocks. It looks as if gold were a risky asset. Since there is such a number of shorts do I need to sell gold and silver?
By all ways and means go short gold now, go triple short figuring Iran/Syria and Israel will all go smoothly, ditto for Straits of Hormuz oil tanker shipments and all Chinese Nobel dissident winners. No rift on the Korean peninsula or Pakistan / Afghan border will impinge on your profits. Short it all, especially nuke reactors in North Korea, Pakistan and Iran. What could possibly go wrong with your short? Not even the US dollar or its problems with China could rain on your endless parade of profits. And this mortgage thing, pfft! don't mean a thing.
Man, you are some kind of genius! Who wudda thunk gold was weak for a day!
Dr. Franz Pick
Mark Skousen
Murray M. Rothbard
Hans F. Sennholz
Yes dear,
You do need to sell it.
To me. Now. (physical only)
Yes. Sell them to me.
IceCap has prettier pictures and graphs than Goldman Sachs or Morgan Stanley. It matters. Nice to see a rainbow theme amongst the same old drab apocalypse. Kinda makes me feel like RiverDancing...
Spot on with the assessment of gold's value. However, the firms that compose these reports always always assume that whatever scenerio they are taking into consideration will happen in the orderly course of business, in an civilized manner. Right... we'll just flip over to that liberty-inspired gold standard at a happier G20 moment?
Ben Bernanke, Timmah, and the remaining administrative cancer are summarized as Don Quixote. They can see the windmill turn, yet cannot figure out how to stop it.
http://www.veoh.com/browse/videos/category/comedy/watch/v16030181GW8x6DpF
The irony to this story. It's the shit fan we have all been talking about for years.
This is getting boring - of course if you print money to create more junk and therefore run down more BTUs for no wealth creation - and the BTUs after a awfully long time of increased extraction begin to reduce output then of course any money printed will go into a very unproductive but usefull asset that has expressed the monetory value of unproductive debt for 100s of years.
Rainbowz, bitchez?
We're about to see what a real divergence looks like. Tech v. Financials. This is going to be interesting. I don't think anything like what we're about to see has ever been seen before. I have no idea how to play it, and so I won't.
Exactly. Was going to go 3x long for tomorrow's POMO ramp--but not sure how to play it now that the wheels are coming off the banks, will skew all the mkt. averages, no?
As the ramifications of foreclosuregate become Windex clear. bank stocks will dive. As soon as there are indictions that the fall will be 20% or greater, there will be a bank holiday. I wouldn't be keeping too much in the banks until this shakes out; certainly do not have your PMs in a bank safe deposit box; the fascists will "not let a crisis go to waste".
Maybe we should play a "would you rather" game. If you inherited one million Federal Reserve Notes tomorrow, where would you put it?
I agree with FischerBlack. I think we are going to see something we have never seen before on a worldwide economic basis. If you are a "trader" of gold and you want to get in and out and take profits at some point...well, good luck!
I like the economic view that IceCap uses. The bottom line is too much debt, too much currency, too few products...and what they do not add...enormous unsustainable social programs. All will combine to break the bank. The only way out is high inflation which is tricky because it easily becomes hyperinflation at some point. If you suscribe to this belief then you buy PM's and hold for an indefinite period. You turn your savings, including long term savings to PM's or something that will hold value. Appreciation is incidental and a function of deteriorating currency/ies not clever trader timing. This is my view. My kids might inherit my PM in the will. I would not sell until we have come out the other side of a financial calamity with a twenty year economic stability horizon.
About 90 or 95% of the long term U.S. and world financial scenarios are ugly to extremely ugly. Volcker type medicine is not going to happen. Depression era analogies will break down because back then we did not already have massive debts on the books and there were no social obligations with payments due on pyramid schemes like social security ad infinitum.
Like the movie "Secretariat" I just watched I would go outside and yell, "You gonna see something you ain't never seen before!" I think in this economic race gold is the Secretariat investment compared to any others...at least for the long term. I wish you traders well. Stocks, bonds, commodities all are having at least short term runs and I wish you well getting in and out with purchases and shorts at the right time, but it's a crap shoot to me. I'm not playing.
Great newsletter but the statement that no country has experienced deflation with the exception of Japan is not quite right. All products not controlled by the governments and unions get cheaper every year thanks to productivity improvements. Computers, agriculture, autos, any manufactured good gets cheaper with time. Where government has the most influence such as education, health insurance, law, public union salaries, taxes, etc. prices skyrocket. Deflation is good for savers and the middle class. Inflation is good for billionaires.
deflation = bad for banks. bad for government.
bad for biggest fish. Deflation good for pretty much nobody. Corporations exist on leverage too, there goes the jobs.
Gold $1000 or less by Xmas.
If you say so.
The market seems to be saying otherwise.
That would be a nice Christmas present for me.
$10,000 is more likely than $1,000, sadly. The case for either is pretty weak.
From your lips to God's ears. Need 10 more ounces to feel complete.... actually, never enough PMs. PMs for ever!!! viva el oro!!!!
Dollar index to 48 by christmas.
Western central banks and the Fed are wreaking havoc in emerging market economies, including the BRICs, by flooding the world with fiat currencies.
Rest Of World are beginning to trade in their local currencies, circumventing the dollar and ignoring the IMF with it's SDR proposals.
If Western CBs stay the current course of QE they go down in flames.
Any increase in interest rates by the Fed crash the US economy and will have the exact opposite outcome they desire...a reflation of the housing market.
PMs are the only place to be if you want to avoid having your azz handed to you.
If gold ever hits $1000 I'll liquidate to buy all I can! I think $1000 would be the minimum long term floor for gold in the next 10 years.
If gold ever hits $1000 I'll liquidate to buy all I can! I think $1000 would be the minimum long term floor for gold in the next 10 years.
Double tap...bang bang! Sorry. :)
Really this is a great post from an expert and thank you very much for sharing this valuable information with us.
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