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Meet The New Regime: Gold And Dollar Coincident
For all those who expect to see a strong dollar result in lower gold prices: our condolences. Gold is now as much a flight-to-safety target, as the the ra(p/b)idly devaluable dollar (and all other fiat currencies), as has been repeatedly observed on Zero Hedge. The chart below demonstrates that over the past three weeks, not only has dollar strength resulted in gold strength, it has resulted in gold strength at a 6X multiple.
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Well super...so now what do I have to root for a collapse in gold prices?
Perversely, the route to Gold $5000 goes through Gold $500.
Not likely Prechterite.
Not a Fib guy.
That's that technical analysis voodoo! ZHers don't believe in TA.
They believe in "hold and pray" or "throw darts and make investments."
MB . why come here but to put us down! Are you having a mental abberation?
whaddaya mean???? I love Tits n Ass
Why? Now I hope you re right since that would be a great buying opportunity, but why will gold collapse 50%? Will the dollar rally to that degree where it will be seen as that powerful and people will move from the perceived safety of gold to perceived safety of dollars?
If gold collapses 50% we are truly screwed. That would be a deflationary crunch, which did not even occur in the Great Depression.
In GD1, debt destruction in Europe jacked the dollar resulting in a 40% currency devaluation.
You can look it up!
$5000 gold makes DXY what... a teenager?
As above so below, the route to $5000 gold goes through $500.
You have to root for your country to wake the hell up.
Well that would be great, but I think it's not to likely. Well not until people can't afford cable TV anymore.
"what do I have to root for a collapse in gold prices?"
I see one good possibility: Dr. Bernanke hangs himself in a shower.
On a serious note, looks like nobody yet understands that the USA cannot maintain its global status continuously participating in Four international wars: Afghanistan, Pakistan, Iraq, and Somalia (yes, Somalia). Our "good friends" zionists would like to see us in another war in Iran. Looks like the good old USA is in a deep shit.
PS
After the WWII, the USA became an empire thanks to its industrial might but now we have a consumer society.
What can China do with their excess industrial capacities? Well, they may want to have superpower military capabilities.
After World War II the US thrived because we were arms dealers to the world!
You are almost correct. We still manufacture more than ever before, but we do it with far fewer jobs with humans. robotics continues to take more 'jobs' away, as well as some going away through outsourcing, but the reality is that a large outsource of manufacturing jobs is the USA when they turn to automatic lines and CPU's.
http://management.curiouscatblog.net/2009/12/07/the-biggest-manufacturing-countries-in-2008-with-historical-data/
Whoops!
gold is decoupling, snitches............
Thanks.
After having to endure a continuous barrage of articles over the past 6 months on how the overwhelming dollar short trade, or the unwinding of the dollar carry trade, would end up with a rally in the dollar that would decimate the gold price, it is somewhat satisifying to see gold and the dollar rising in tandem. (Still, I make no assumptions regarding any short term trend in gold and its significance).
Don't know why it is so difficult for so many to grasp that in a system with more than two components, component "US$" going up does not necessarily mean component "Au" goes down, even that has been the case when these two components have been charted together in the past.
...which means (just to be pedantic) the dollar is actually still getting weaker. It's just that it's also losing the race to the bottom with other currencies. (I assume the chart is DXY vs gold spot.)
The statistical insignificance of this post is overwhelming and mind-numbing. Data mining on 13 days of data. You can show pigs flying more scientifically.
Pigs or PIGGS?
Just askin'.
here's 3 years of DXY vs GLD (dunno if this link will work). Granted it's GLD, I didn't know how to put actual spot gold on there.
http://www.marketwatch.com/charts/int-adv.chart?symb=US:DXY&sid=3044712&...
**edit: sorry, 2 years. DXY started in 2008.
Pigs ARE flying - just look at he DOW
+100
Data mining is what ZH is 50% of the time.
By the time it's statistically significant it'll be to late. Some people like to be ahead of the curve, not behind. It's significant when viewed from a multifaceted analysis, rather than a narrow linear one.
This gold-dollar rising in tandem may be only temporary, as investors flee the euro into FRN$ and gold (and today, yen).
However, if the dollar tanks, gold will rise for sure. Gold will never fall in sympathy to the dollar.
So, gold goes up with the dollar, or without the dollar.
Gold goes up vs. all fiat. Because fiat supply is increasing much faster than gold is mined.
So gold can only go up. Right, just like umm, House prices.
You people are delusional.
Cool, short gold then if it's the realm of madmen. Please short gold, go on, it's easy, you'll make a killing.
Oh you mean how I've been short gold since 1200? Or rather, for full disclosure, I have been short GLD since $120.
Eat it.
Eat it? You can't eat gold. Suck it.
Awesome! More power to you man! I hope it goes down and I hope you make a killing! I want gold down, I want everyone to pile in and short it. Double up your position and help to drive it down for the big win!
"So gold can only go up. Right, just like umm, House prices. You people are delusional."
Look, chap, we are in a global position where all currencies are being deliberately weakened and most underlying economic performances are crashing, with no credible government plans to address these issues.
Analogously: in a world where almost everyone was living in leaky tents and a very few actual rainproof, windproof houses with running water, sewerage, heating, etc etc existed, it would be a fair assumption that house prices would rise. Particularly when it was difficult or even prohibitively expensive, also very time consuming, to build more houses. See?
Seems to me the Tylers are considered the sharpest knife in this drawer -
ever wondered 'Why so many ZH posts on GOLD?'
Are they trying to tell us something? Hmmmmmm......
I know there are some pretty smart folks frequenting this joint, but sometimes answers are obvious, and simple, and historically proven.
And sometimes people can be a little too clever for their own good.
If you don't already have some physical, the time for action may be here.The Cartel is struggling to beat gold down today, so naturally equities are beginning to recover from their lows. So predictable.
+1000
THANK YOU, THANK YOU ZH!!!
Watched the SPY times and sales today at key levels.
12:46:50 - 325,000 on the buy side. This after last minute was over 100,000.
Then to watch more buys flood the SPY soon after.
Thanks for the helpful tip-off!
20 million SPY shares bought between 2o'clock and 2:10. No manipulation at all.
20 million times $110 per share equals $220 million. Fat finger at JPM?
Euro is up vs C$.
C$ is touted "flight to safety" currency.
The money masters are out playing everyone else - again. Nothing new and not disturbing unless you listened to the "Dollar is kaputt" or the "Euro is strong" crowd.
Great post. Any Econ 101 student could tell you that the vastly superior supply/demand characteristics of gold dictate its rise in terms of fiat money, especially dollars and euros. . They just aren't making as much of it as they used to.
"Peak Gold", pass it on.
shit. somebody at UNC needs to give me a refund. my econ 101 professor told us gold is a useless monetary relic of past societies and which is now a just a commodity of minor use.
I'm thinking of buying GLD with a 2012 protective $100 put. My thinking is that the put would protect me not just from declines in the gold price, but also the remote possibility that GLD does not own as much gold as it says it does.
The way I figure it - inflation will bump the gold price, deflation will increase the value of the put. Worst case we muddle through and I lose 12% of my portfolio when the put expires worthless.
Any other downsides to this strategy?
Looks like JPM came in basket buying a few minutes early today. What the heck, money is free and losses do not belong to TBTF's, so no reason whatsoever not to do what at least makes .001% of the country happy.
Money now .75%,
6.75% in real terms adjusted for -6% GDP last year,
and headed higher with credit insolvency default risks...
that dollar strength is euro weakness. lets see a chart of gold and the euro, and the dollar and then lets trim those last few days, that spike off the edge, to balance the thing my own gut feeling is that the market is going to trade in a range for the next few months, the vix supports the thesis, and next month you might get a slightly different result, before we jump on the decoupling bandwagon
Completely copied and pasted from FOFOA (hope he doesn't mind).
It is a synopsis, in the form of a story, of the Thoughts of "Another" and "Friend Of Another", which were posted on Kitcos', and later USAGolds' discussion boards between 1997 and 2001.
The King and His Gold
In his very first post on the Kitco forum, October 5, 1997, Another wrote "gold and oil can never flow in the same direction". This was a major theme in his writings. To understand Another is to understand what is going on with the gold market now. And in that spirit I have written a short story that will hopefully help you understand this first important message from Another:
Many decades ago the Saudi King realized his barren kingdom was sitting on a gold mine. Only it wasn't gold, it was oil. From his high perch as king, he was able to see the wide and very long view of the world, way off into the future. He saw a future filled with many riches, but he also knew that those oil reserves under foot were only finite cavities of value. As a king, he knew the workings of money and fiat currencies. He knew that the Western World needed his oil treasure, but he didn't want to exchange it for only paper. He wanted to turn his virtual "gold mine" into an actual pile of gold.
Back then, the paper which paid for the oil was redeemable for gold directly from the US Treasury. So there was no problem. He would take the paper and then turn it in for gold. Later, after much inflation, the US Treasury defaulted on the promise of gold. Chaos ensued for almost 10 years. The price of both oil and gold skyrocketed and there were long lines at the gas pumps. For this kingdom was only willing to trade it's finite supply of oil for an equally finite store of value, gold. And without a secured source of gold at a stable price, the oil wells just didn't have the incentive to run at peak production.
Then in the early 1980's, the markets were brought back under control. A secret deal was cut between the King and a few very high, and very powerful leaders in the West. These leaders probably included central bank chairmen and top level leaders in the US and the UK. The Western World was on it's way to world domination, both financially and militarily, but to maintain this power it needed cheap oil. The Kingdom was a good way through it's reserves of oil, and to part with this valuable commodity, the King needed the promise of an equally scarce store of value, gold. So the deal was that oil would be shipped to the West in exchange for dollars AND gold. The dollar price of oil would be kept low as long as the much more valuable gold could be had for those same low costs. The CB's involved in the deal guaranteed this to the King by backing up the deal with their own vast stores of golden bars.
But these top bankers, like the King himself, were not as dumb as they may seem. In fact, they were the best and the brightest, for they knew that the true value of gold was probably somewhere around $50,000 per ounce in today's dollars. And that was the value of oil to the King as well. His oil reserves might only last his kingdom a mere century, but if he traded it for gold, not dollars, he would enjoy the wealth of his treasure for 1,000 years or more.
The central banks that backed this deal with their own gold NEVER intended to give the King any of their precious treasure. They knew they had a way around that. By using the open markets which traded paper contracts for gold, they could keep the price of gold down to $300 per ounce and the public would be none the wiser. Then, the King with his $30 per barrel of oil could buy future gold delivery straight out of the mines in backroom deals for a premium of perhaps 100% (which is a guess). So for 20 years, vast amounts of gold flowed from the West to the Middle East for maybe $600 per ounce (twice the spot price on COMEX at the time), and those sales were hidden from the price discovery exchanges so as not to affect the price, and the oil flowed to the west freely, at the seemingly cheap price of $30 per barrel. But in reality, the King was getting one ounce of gold for 20 barrels of oil, and if gold is really worth $50,000 an ounce, that's a price of $2,500 a barrel.
So who is paying that price? In a way, all of us are. The mines are making a profit for what they pull out of the ground. They are getting twice the cost of mining. That's a good profit. But the gold in the ground under us is flowing east, while the oil in the ground in the kingdom is flowing west. So who is getting the better part of this deal? I say the King is.
Sure, we have seen unprecedented prosperity for 30 years now. But that is about to end. On the other hand, the King has seen 50 years of amazing prosperity and is looking forward to another 950 years of extreme prosperity. You see, once the oil runs out, the kingdom does not become poor. In fact, that is when the party really begins! They have sold to the West 30 or 40 years of prosperity in exchange for a thousand years of unimaginable wealth.
Then, around 1997, some big money in the Far East became aware of this bargain on gold. But they couldn't get in on the back room deals that traded large amounts of physical without affecting the price. So they had to accumulate physical on the open market which started to drive the price up. This started the 10 year rise in the price of gold..... and oil! For now that the King has to pay more for his gold, we have to pay more for his oil.
And somewhere along the way, too much physical gold was heading east, both to the desert and to the great wall, and the mines could not cover it. This threatened a default in the paper gold price discovery markets used by the Central Banks to protect their own gold reserves. So they were faced with the option of either watching the whole monetary system crash, or parting with some of their own gold. They finally had to ship some of their precious treasure to the King. After that near disaster, they fought the markets even harder, with larger and larger short positions. But now, at this very time, they (the CB's) have maybe half the gold they once had, and they have probably the largest short positions ever too. So they are standing right on the edge of a cliff, holding the end of a rope that's trying to pull them over.
It won't take much for this deal to fall apart. And when it does, we'll see the price of gold go up to probably $5,000 an ounce and then all trading will stop. No market will exist for gold at it's true value. For those that have all the gold in their possession are only buying, not selling. Oil will skyrocket too... if it flows west at all. This is coming, and soon. Buy gold. Hold gold. It only has to meet it's true price once in a lifetime and that will be more than worth the wait. I believe this is not a once in a lifetime opportunity right now, but possibly a once in the history of the world opportunity. Silver, platinum, commodities... they may all do well. But nothing will come close to the true value of gold. $50,000 an ounce may even be low.
FOFOA.blogspot.com is a veritable goldmine of information on gold, and thoughts on its' role in the largest possible context.
Anyone with an interest in gold, or indeed with contempt for it, should at least expose themselves to these ideas. I see a number of ZH regulars already have.
Man, you people are on DOPE. Here's one interesting tidbit from the article:
"There won't be a market for gold at its TRUE price." (emphasis mine)
<i>So if there's no market for it, how is that the TRUE price?</i>
Also, why would the central banks be selling gold if it's going to go up?
Why would they be short an asset that is rising?
THEY WOULDN'T.
I'm sure central bankers know a lot more than some bloggers.
lol, then why would the BoE sell all their gold for $200?
Western central banks play games trying to control markets. Eastern central banks see the writing on the wall, and are stocking up.
I wish you success in talking down gold (might I suggest you try somewhere where people might actually listen to you? Perhaps the Motley Fool Forums?), as I want to get more at these low, low prices.
Stop disrespecting weed.
+35
Agree... Although gold could go awol, like everything, gold does have a fundamental achilles heel and also, what is the "true price", i've never been able to comprehend that haha...
Unless one believes we are heading back to barter and the stone ages, gold will only have monetary value if our dictators ah hmmm, excuse me, governments say it does.
And given the behaviour of the elites from history past and present, my bets are that if gold ever went to eg. $50,000, you'll be handing it in for twenty amero's/ounce or letting it sit idle in the ground waiting for the next global economic collapse to come...
So I would like to know folks, Are you gonna sell this gold in todays fiat currency's before the top, then buy something of real value?
Or are you gonna wait for the big collapse and redeem it, devalued against tomorrows new fiat currency because gold standards don't work and if they do try one again, then they are not going to buy it back for whatever equal purchasing power the new gold standard currency takes...
You want to protect your wealth? Take your wife and kids, go buy a 10 acre property with arable land,warm winters and a good water supply cos they are never going to this "value" for money again... Oh, and get to know your neighbours...
Sit back and whittle sticks, and think about how lucky it was that you wised up and say a little prayer for those city folk who died after locking themselves in there suburban mcmansions trying to protect their valuable precious metals...
People may say I'm exaggerating but if one believes gold to the moon, then you believe we're heading for the new dark ages and I wouldn't trade an ounce for a can of beans. (unless its green ;-)
The game is rigged, your all playing buy someone else's rules and they have the right to change them as they see fit...
Gold has value because when it works to their gain, they allow it too...
http://www.zerohedge.com/article/prechter-gold-buy-signal-has-been-triggered
Also, anyone shorting gold stocks or gold etfs was blown away today.
Just another day ... don't make too much of it.
China has confirmed it is buying the IMFs 191.3 tonnes of gold.
Link?
Source?
http://english.pravda.ru/business/finance/25-02-2010/112369-china_gold-0
http://harveyorgan.blogspot.com/
snips: ...Please note the huge 209229 oz of silver leaving the customer inventory. This is really strange as we have witnessed continual removal of silver from the customer inventory.
Why would investors all of a sudden decide that their inventory is not safe at the comex?
...Approximately 9000 contracts of silver standing will eliminate the entire inventory. This is very ominous.
....Going into first day notice tomorrow, there are 22,545 contracts still standing. I have never seen it this high. However I will wait until Friday to give you my verdict.
Suffice it to say, the cartel may be in serious trouble with respect to silver.
COMEX will just use "cash deliveries" or exchange-for-physical with SLV, if there are any problems.
But will investors accept these paper proxies? Or will they only settle for physical Ag?
Stay tuned...
Or coin melt or other futures.
Will they have a choice?
Lawyers get expensive and don't guarantee justice.
Defaults drive prices down...
Huh?
As with Bluto - "don't stop him, he's on a roll"
Just because it is greek week...
Toga, toga, toga, toga...
Perhaps you are not familiar with the Hunts,
the potato exchange or any other number of
defaults?...
Can you name a commodity, debt, derivative, equity or exchange default
that drove prices up?
Temporary Fed Treasury government tax usury primary broker games notwithstanding...
nickel
Actually August 2006 default was a serious peak,
along with the BRE-X fraud...
https://www.kitcomm.com/archive/index.php?t-27366.html
Remember that there was a nickel default about 2 years ago.
Did that result in Nickel going to the moon? No in fact it marked the high point in nickel price.
The corrupt exchange arranged for setlement in cash at a price that was (going from memory) spot +10% + there was some penalty for delays.
As a result, investment interest in Nickel just died off.
Given how Comex is run I wouldn't be surprised to see something similar.
That would also give further reason for the crooks to short the hell out of the market just before default. i.e. drive the market down 30% and then default and settle on spot +10%. That way they can make a profit from defaulting.
That would be the day to take out the pitchforks and light the torches.
Truth and honesty in markets defaulted
leading to higher prices of many stocks
So… because the Chinese are hedging their bubble (to be televised in Technicolor)… Gold is hot?
So risk how much to make how little http://www.kitco.com/charts/livegold.html ? Trading the swings for what percentage of perceived upside, possibly? At what risk? Unless you are hedging your winnings into a loser purposely… The majority here honestly believe Gold is a buy at http://www.blanchardonline.com/lp/price-of-gold.php?focus=10year ?
Really? Seriously? A Buy (and hold)? A running of the Bulls? He jumped off the bridge so it now is en vogue for all to jump off bridges? http://www.youtube.com/watch?v=DDpMSFHBT8Y please put on your Speedos to take the plunge… and feel free to record the event so others may learn from your mistakes as well...
Follow the money… not the sovereign wealth money that’s hedging its own bad luck either…
Blanchard bailed out of gold in 1999.
Have their thick glossy research report to prove it...
And the Rothschild's bailed out of the London Gold Pool in 2004. BFD. They, however, kept their stores.
The point was even respected firms can be most
bearish at the bottom and most bullish at the top...
1100 is the zerohedge "bates" bottom
bates, this bud is for you pal...
ha ha
We've already been to 1044.80 since 1226.40...
Presumably the junk rating is by someone
who does not let facts get in the way of fuzzy warm fantasy...
Bates Bottom, 1,100.00 baseline lol
Thats too funny
Luckily for all of us the debate will end very soon. the revolution will not be televised.
lets start
The revolution will no be televised - Gill Scott Heron
You will not be able to stay home, brother.
You will not be able to plug in, turn on and cop out.
You will not be able to lose yourself on skag and skip,
Skip out for beer during commercials,
Because the revolution will not be televised.
just purchased his new, I'm new here. only 2 stars.
This is a Peter Schiff day if their ever was one.
Have you followed his reco's?
Right up there with Cramer, Kudlow and Liesman...
Junk all you want free speechers.
Truth and profits not a popularity contest...
http://online.wsj.com/article/SB123327685671031439.html?mg=com-wsj
http://www.erictyson.com/articles/20090213
Luckily for all of us the debate will end very soon. the revolution will not be televised.
dollar chart 1970-2010
http://www.chartingstocks.net/wp-content/uploads/2009/09/US_dollar.png
Gold Chart 1970-2010
http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx
In 2000 gold at 250-dollar was round 100--fast forward-dollar cant break 81--gold at 1100=hmmm
I wonder if the Fed will just try and push down the dollar on days gold rises with the dollar.
Then the Master Bates of the world will still think that gold is a risk asset and will still think that gold is not decoupling.
gold bitches.
IMF wants to sell the gold on the open market. China commented before that they might buy the IMF gold at about $800/ounce. So someone puts a rumor that China is buying gold, the gold jumps and the IMF sells it on the open market at over $1100. Then the gold may continue to go down. Just briliant move IMF.
@Master Bates
"Do you mind if I answer your question with a question or two?
Q: "Why so many ZH posts on gold?"
A: "Why so many gold advertisements on ZH?"
"Why are there so many goldbugs on ZH?"
(It's called catering to your advertisers and readers.)
I bet there's a correlation there, somewhere..."
For a guy that runs off at the mouth about conspiracies and lack of research you sure know how to fit both feet in your pie hole.
Ever look at where the ads generate from? That would be Google Adsense, I assume you don't know shit about net ads, as adsense generates ads based on the content on any said site ie. if ZH had posts on say Male Pattern Baldness then you'd see effin ads on "Male Pattern Baldness".
Your not the first nor will you be the last to toss that claim out there, but I find it funny as hell when you guys demand facts whilst talking out your own arse...
"assume you don't know shit about net ads"
I would add that using Adblock Plus seems also beyond the ken.
On one hand, when a cashier hands you a ratty, tattered $20 bill, you think, "What is this piece of shit?" On the other hand, I've never had that thought when handling a gold coin.
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