The Midas Touch

Submitted by Nic Lenoir of ICAP

We had recommended getting structurally long Gold at 1,085, but atfer the recent pull back we tempered our enthusiasm a bit. While the market reacted after reaching the initial downside target at 1,187, we felt 1,215/1,225 would be a strong intermediary resistance. We have reached 1,215 (1,214.7...) on the highs of the last move up and are now in the process of shaping an inverted H&S. Until it is triggered I would not get long again as the risk looking at the wave pattern on the daily chart is to complete a wave IV which could take us down to 1,110 or even as low as 1,044.

Long term I do not believe the market has topped. For one thing let's consider other commodity markets' tops, whether it's gold in 1980, crude oil in 2008, or natural gas in 1996: the last wave up is always the steepest as wave 5 of a commodity rally is always driven by panic due to lack of supply. There are fears in the market, but I don't think we have seen panic at all. Panic will come after the Euro is disbanded, if Japan defaults, or the USD loses 15% in one week, but certainly not on fear of inflations with a CPI which is still going to be negative YoY by December (I do not give any credibility to CPI when it comes to measuring real inflation, but it's the benchmark...).

So the game plan here is to take some profits if you have not, adding back into the trade once we break 1,215 and then again 1,225, or waiting for a more significant pull-back. Heavy selling of physical reported in Europe recently has definitely weighed on the market, and we can definitely count on central banks in the Western world (they have started discussing gold as a bubble) to try to fight the rally at all costs. If all the money they print goes into precious metals it will neutralize their monetary policy and with a US economy based 60% on services stockpiling of metal is not exactly what will drive a recovery.

Good luck trading,

Nic 

Comments

[DoChenRollingBearing]

First, I do not trade Gold.  I buy it when money comes in.  I never sell.  I pay attention to the price, but when I have the dough, I just go and buy it whatever it is.

Wealth preservation.  I now want to bump up to 7% of what I have in physical gold

Sure, Gold could go down, maybe hard, I don't care.  I will dollar cost average in small bites for years to come.

...

New Gold thread, let's RUMBLE!  Haven't seen ol' Chumba around for awhile, maybe he will drop by to recommend something for us!

[ZeroPower]

Informative post, but you forgot to add how youre waiting for either of:

1- collapse of the USD

2- 10000% inflation

3- SPX at 10.

[Silver Bullet]

+1

[Papasmurf]

4) All of the above

[DoChenRollingBearing]

@ ZeroP and above replies.

I have mentioned in other threads other things I am doing (guns & ammo, some food storage, other PMs, spending less, etc.).

But, realistically, I live in a condo near a major city, do not own farmland and would be unable to learn farming quickly enough in a "Mad Max", so I just hope that what is coming will not be THAT bad...

[UncleFester]

You might be surprised how fast you can learn something once your life depended on it.

[Shameful]

I'm not sure how far it can go down in price without the paper price diverting from the physical price.  After all if physical demand went up as prices fell then might hit an interesting supply problem, and we can't know for sure how the overseas buyers would respond to lower prices.  Would Russia, China, Saudi Arabia, India be buyers at 900?  Seems the world wants to be out of dollars, and they are looking for something.

[DosZap]

Shameful,

Russia,China, India, Arabs.........................are all scarfing it up, if it back pedals to a $1k, you will play hell getting delivery....

India set the base @ $1045.00 in MHO.

The entire routine is fools thinking it's getting MO BETTA, and the Gv't trying to make weak assed players fold their hands and dump it.

It's OUT & OUT manipulation, if people have not figured out this lame ass game by now..they deserve getting Prep H'd.

My money is on holding...........wherever it goes, and if it drops another $200.00....Party ON Dudes.

[Shameful]

That's my point.  Which is worse for stability a higher price then they may want or a low price that will put a lot of pressure on the supply system?

Those nations want gold because they know the West is playing games with them.  After all for years we have in effect given them magical paper promises for real things, like oil.  If we had to trade a real thing for those commodities and imports then the US would find itself in dire straights. 

I'm in for the duration.  Mainly because I'm looking at the numbers, even from the CBO, and short of a miracle (cold fusion or better and soon) the US is locked in a debt death spiral.  Sure we can say our % (officially) is not bad compared to others, but the sheer size of it makes it difficult for the world to fund, especially at record low rates.

[UncleFester]

There's a saying..."A bull market cures all timing mistakes"...or something like that.  The trend is your friend until she's not.  When is this 10 yr secular bull over?  Is this it?  Where would you rather park your wealth/savings?  In REITS? What about MBS or CDS? How about CAT or AAPL?

If you're in it for the short term, then by all means sell your Au and buy it back at $1225 and gyrate.   

[dnarby]

People trade gold?

...What do they trade it for? :/

[JuicyTheAnimal]

BS.  One of these days you will see the stocks tank and the gold ramp like the good ole days of what...a month ago?  My gut tells me it's going to be soon. 

[AnonymousAnarchist]

Howard's Latest - The Chart is True

[Calculated_Risk]

Secret gold swap has spooked the market

http://www.telegraph.co.uk/finance/markets/7884272/Secret-gold-swap-has-spooked-the-market.html

if it was secret, how could it have spooked the market?

[RockyRacoon]

What is significant about this or these transactions is that gold is being used in international settlements after so many decades of being sidelined in the monetary system! The transaction itself confirms that gold is being used in this manner, which is a dynamic confirmation of gold's return to the monetary system. A "Swap" might be the first desperate step in such a transaction with the swapping bank hoping to repay the foreign exchange, but should it fail, the B.I.S . would have to decide either to keep the gold on its books or to sell it. Again, keeping it on its books is part confirmation that gold is active again on the monetary system, a big boost by itself!

Gold is back and alive in the monetary system!

BIS gold swap - best news to hit gold in 30 years.       As the reported BIS gold swap transaction effectively represents back door remonetisation of gold, it is extremely positive for the yellow metals future path.

[brushfire]

furthermore, for the BIS swap to be gold negative, one must assume the BIS intends to sell the collateralized gold in the event of a default. why they would do this is beyond me. the BIS has a long track record of holding and transacting in gold - to think they would suddenly do otherwise is idiotic at best. the BIS is transacting from a position of strength and will not face a liquidity crisis; therefore, they will have no need to sell thier collateralized gold. this is extremely bullish for gold, as it is placing a large amount of physical with a strong hand that will not sell.

[nuinut]

from telegraph article:

11 Jul 2010 (Telegraph.co.uk) — It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion.

… The disclosure was a large factor in the correction of the gold price this week, which fell below $1,200 for the first time in more than a month.

Concerns hinged on whether the BIS could potentially sell on this vast cache of bullion in the event of a default, flooding the market with liquidity. It appears to have raised $14bn for whoever’s been doing the swapping – small fry on the currency markets, but serious liquidity in the gold market.

Denominated in euros, gold has fallen 8pc since the beginning of the month and is now trading at a seven-week low of €937 per troy ounce…

Meanwhile, economists and gold market-watchers were determined to hunt down which bank is short of cash – curious about who is using their stash of precious metal for what looks suspiciously like a secret bailout. At first it looked like the BIS was swapping gold with a troubled central bank. After all, the institution is the central bankers’ bank and its purpose to conduct transactions with national monetary authorities…

However, the day after original reports about the swaps, BIS emailed a statement saying that the swaps had not been conducted with monetary authorities but purely with commercial banks.

This did nothing to quell the sense of mystery surrounding the deal or deals. It is almost inconceivable that a single commercial bank could have accumulated so much gold alone. And cynics have suggested that the whole affair still looks like a secretive European bailout that a single country wants to keep quiet.

In this case, one or more of the so-called bullion banks – which act as wholesale market-makers and include Goldman Sachs, Deutsche Bank, JP Morgan, HSBC, Barclays, UBS, Societe Generale, Mitsui and the Bank of Nova Scotia – would have agreed to act on behalf of a monetary authority.

This would add an extra layer of anonymity. “So the BIS swaps look like a tripartite transaction,” writes Adrian Douglas of the Gold Anti-Trust Association. “The commercial bank or banks made a swap with a central bank or banks and then the commercial bank or banks made a swap with the BIS.”

To which Randy Strauss  comments:

RS View: Frankly, that’s not a plausible conclusion. First of all, throughout this entire crisis it has been the commercial banks which are highly stressed and in need of liquidity, NOT the central banks. (The CBs already have ample fire-power to create domestic liquidity at will or to access forex liquidity through preexisting bilateral loan agreements with their peers.)

Secondly, if (and that’s a hugely dubious ‘IF’) … IF it were indeed a central bank seeking to temporarily convert gold liquidity into forex liquidity, and if privacy/secrecy was indeed a motivating factor, the CBs surely would NOT have involved the increasingly incompetent commercial banking sector as a superfluous counterparty in the equation because transacting with the BIS directly would have done more to ensure superior privacy for such an operation.

While the blogosphere tends to be either immediately misguided or else ten years late reaching closer to the truth of these matters, in this particular case the more rational conclusion to the slender body of evidence is simply the continuing need/desire for forex liquidity on the part of the profoundly stressed commercial banks. In an effort to make the most out of the unallocated gold deposits managed by their various bullion banking departments, it takes no stretch of the imagination to see these employed in every manner of conceivable derivative utilization, with swaps ranking high among them in this current economic environment. But with so many of their commercial peers swimming in the same soup, it does not take terribly deep thinking to fathom how or why the BIS would emerge as a principle counterparty.

As the bullion banks are casting derivatives of their unallocated gold deposits time and again into the thusly-polluted waters of the market (note to self: never commit your physical gold to an unallocated account at a bank!) the central banks of the world who adhere to mark-to-market accounting principles can become understandably dismayed that the commercial banks, poised along the shoreline with their garbage, are creating a superficial blight upon the market’s perception of and confidence in this most important of all reserve assets — gold. It is no surprise, therefore, that the BIS would emerge — as a sort of vacuum sweeper — to suck up a goodly quantity of these filthy commercial derivatives and thereby working to clean up the gold market by taking the corresponding tonnage out of commercial circulation (even if only a temporary step), removing it for the time being from risk of any further derivatization and fractionalization.

As a bit of corroborating evidence, I would again point out that the European’s quarterly MTM revaluations on June 30 took place in a distinctly favorable environment — with gold prices residing near record high levels, thus allowing the gold portion of the European central banks’ reserves to strengthen the books at this critical juncture with a chart-topping €65.4 billion quarterly gain. Subsequently, the July 1st price drop was of no account — a nice physical buying opportunity for the rest of us ahead of future quarterly advances in the status and value of gold.

R.

[OutLookingIn]

 This gold swap is very good for the price of gold. The spin masters are trying to paint it in a grim light.

Some bank has had to sell the "family jewels" to lay their hands on some cash. Gee! That means gold is truly back to being accepted as reserve money again.  

[RockyRacoon]

I fear the spy masters more than the spin masters.  Locating my stash will get easier as time goes on.

10 Ways We Are Being Tracked, Traced, and Databased         Are technological advances infringing on our right to privacy?

[zaknick]

O/T, I know, but this guy is such an ass:

by Brett in Manhattan
on Sun, 12/27/2009 - 13:12
#175447

I would bet the opposite. The Fed is getting ready to shore up the dollar via higher interests rate, and the lifting of the fred/fann loss cap is in preparation for the rising defaults that are sure to follow.

[Snidley Whipsnae]

" in preparation for the rising defaults that are sure to follow."

...I would characterize it as a tsunami of defaults to follow...and the job shortage might be solved by detective agency employees looking for missing loan docs that more judges are demanding to see...

[UncleFester]

Have you paid those back taxes Wesley Snipes?

[DosZap]

From the vintage Gold man, courtesy of Eric de Groot.....the facts.

http://edegrootinsights.blogspot.com/2010/07/bullish-money-flows-in-gold-follow-up.html

[Arius]

i wish we all know when big boys buy it...but again how can they make their money trading?

if goldman has no trading day losing money in a quarter, its stupid to trade it and hope to win against them...when they are smarter, professional and arguable have inside information...

the music plays for the dudes who have ears....do you?

[MGA_1]

Doesn't feel strong.... could go down to 1150, perhaps lower.

[DosZap]

WHO cares?,opportunity to BUY............unless your Playing it,helping the Sqid..............

Your fiat is SHITPAPER...........already many banks are dumping their percentages of it, and that alone will drive the value down, once it goes mainstream.

It's doomed,no way it lives.............at the current valuations.

[Arius]

good luck on your hopes...if you are betting based on your feelings you are better off going to Las Vegas....at least, there you got a few % chance of winning....here you got none -- if you already do not know it you have to pay a price to learn it....good lucj ....my bet is on goldman

[RockyRacoon]

Two-edged sword:  Price goes down, demand for physical goes up.

And as was pointed out above, exogenous factors outside your charting will surprise.

Bad news for COMEX and the rest of the ETF toilet paper.

[UncleFester]

Rocky,

Most do not get this...when the $/Au goes up, sane people hold it.  When it goes down, the sane buy more.

[RockyRacoon]

Common sense just ain't that common after all!

[UncleFester]

Eventually, all that is paper must return to the source.  No, that is not the mainframe Neo.

Or, in other words, at some point in the future all contracts must be cleared, gold and silver must be bought!  Only then can more promises be made.

[DoChenRollingBearing]

Yo Uncle & Rocky. 

If Gold starts moving UP in a big way (whenever that should be) I would recommend buying at least some so that you can show the authorities that your cost basis is, say, $1800 / oz if you decide to sell...

Yessir, Mr. IRS Man, check out my Invoice showing I bought X oz at $2000, so my average cost indeed was $1800.

[RockyRacoon]

Why would the IRS want to know about our jewelry?  That's odd DCRB.

(wink...wink...)

http://www.flintski.com/coin_bezels_wholesale_prices.htm

[DosZap]

Europes problems abating..............?.LOL

Uh Huh............dump that metal Europeans.

http://www.nytimes.com/2010/07/12/business/global/12refinance.html?_r=2

[RockyRacoon]

Hell yes.  And if Treasury yields go any lower we'll be able to bandrupt ourselves for free!

As the Mogambo would say, "This investing stuff is easy!"

[Snidley Whipsnae]

Don't forget the 'Wheee'. I have a Mighty Mogumbo Ranger Ring (MMRR)...it allows me access to the Might Mugambo Bunker (MMB)...

[DoChenRollingBearing]

Lucky you!  I do not have MMRR, but I do have my own "Bunker in the Sky".

Actually the Mogambo himself once mentioned some info in his column I passed along to him when I was in Lima, Peru.

Does that make me a Junior Mogambo Ranger (JMR)?

[CrockettAlmanac.com]

I'd say that makes you a SMR.

[DoChenRollingBearing]

SMR?  Or is that something I do not want to know...?

[RockyRacoon]

Try Senior Mogambo Ranger!

[Goldenballs]

Once there was a man who found a pot of Gold in a field.He converted all his gold into paper money.He then started to buy up all the steel in the area.The price rose and more people brought Steel and when the price had gone up 500% he sold and made a profit.When he had done the same with all the markets he could think of and they had eventually collapsed  he decided to do the very same thing with the commodity which had given him his wealth,Gold.After one month the price had gone up 500%,so he sold and went on a long holiday for 6 months to a tropical island where he was alone and received no news.On his return he decided to put his fortune back into the item which had given him his original fortune,Gold.But when he went to purchase some he found the price had risen by 2,500% and he couldn,t afford to buy any and he was now in effect poor,when he asked the reason why Gold was so highly priced he was told that every other type of investment had failed so everyone brought Gold because they didn,t trust anything anymore.

  The arse has been kicked out of everything and when you really need to buy something it won,t be available or affordable,Gold.

[beastie]

Everyone is waiting in line for these declines which tells me you ain't going to be able to buy physical at that price as the dealers know it's a correction and will jack the physical premium. Much the same as eveyone is waiting in line for the next market crash with dry powder and buying small tranches of puts every now and then. A million twichy nose picking fingers ready to buy that double or triple inverse and short apple could be scalped alive.

If gold goes drifts to to lows and stays there for a while then it'll be no problem grabbing some gold but don't count on it. If you are trader/ gambler that's your game. if you are buying insurance don't wait until you need the insurance.

[DoChenRollingBearing]

Rocky Racoon is probably in a good position to let us retail Gold buyers (buying, say, 1 - 5 pcs of 1 oz Gold Eagles) know when a physical squeeze may be coming.

You be sure to let us know Rocky, don't keep it ALL for yourself.      :)

[RockyRacoon]

Piece o' cake!  I use the eBay sales numbers as a guide.  Perfect correlation to premiums found just about anywhere (except the back alleys in Greece).

Predicting a squeeze is hard to do, however.  If I could do that I'd be writing this from my yacht anchored just off my newly purchased Greek island paradise.  One does get a feel for the market however, but watching it is like watching paint dry.  Try it yourself:

You can see all the closed (sold) bullion coins at this URL:

http://tinyurl.com/2awzcdb

That will give you an idea of what the market movement is.

Here 'tis:   http://www.goldprice.org/ebay-gold-prices/

12 July 2010  -- American Gold 1oz Eagles:

High 1375   Low 1272  Average 1308  Change -4.00

Take a look for all silver and gold generic gold as well as coinage.

eBay Gold Prices

The purpose of eBay Gold Prices is to provide a true or real gold price indicator for physical gold bullion available for delivery today and to show the premium above the spot gold price for physical gold bullion. Gold coin prices are provided for the American Gold Eagle, Krugerrand, British Sovereign and Candian Gold Maple Leaf Coins based on sales data taken from the US eBay site.

Prices are published every other day around 2AM Pacific Standard Time (GMT -7).

Keep in mind the fees that the sellers are paying to sell on eBay.  That could be subtracted from your buy price from a one-on-one buy.  Also, buying on eBay is fine if you find the right seller, and there are some great, honest sellers I've dealt with for years.  I don't buy all that much on eBay any more but I have the phone numbers of the good dealers.  Just pick up the phone and place an order.  I send my check or a money order as needed.  Most dealers will just add a flat rate, like $5, for shipping any size order.  Very easy, very private, and very secure.  Shipping rates for the retail sellers is a rip-off since they are covered against loss thru their insurance.  What they charge for shipping above USPS rates is pure profit.  I know because that's how I ship, cheap and easy.  Shipping costs should NOT be a factor is how much you pay for your goods.

[DoChenRollingBearing]

Thanks Rocky!

I buy almost all of my PMs from 2 coin shops in my area.  I do not like the whole ebay thing, although the spread between spot price and ebay is easily seen at:

www.24hgold.com

I will re-read your reply after finishing the thread and having another beer...

[RockyRacoon]

You pay sales tax?  I've never bought in my own state for that reason.  It would be an extra 5% to 8% added to the cost.  The eBay "thing" is what some folks fear, but it's not eBay that is the problem.  It's an aura that surrounds it.  If you were buying beanie babies you'd be all over eBay!  Gold is no different.  The seller is the key.  As I said, I buy very little thru eBay these days except for silver bullion in small lots for resale. I also buy from individuals who find me thru the ANA (American Numismatic Assoc.) website.  I bought a few gold coins and a bunch of junk silver from a retired older couple just a while ago and it was a pleasant experience.  Wowed 'em with a roll of uncirculated silver eagles and it was all honest and straightforward from there.... right off my kitchen table.

Gold is bought from old time sellers I've met and bought from.  I can't list them here because they could not handle the business from dozens of phone calls in one day.  Small time, but honest and reliable. 

[DoChenRollingBearing]

No sales tax on buying Gold in my state, "Gracias a Dios"!

[WeeWilly]

Same here, Rocky. I've bought no gold through ebay, but have bought silver. Probably a dumb observation for the ZH regulars but for the newbies, consider buying gold in 1/10 oz, 1/25 oz or half oz quantities. Having an ounce of gold in tough times is like having a $10,000 bill. Hard to get rid of.

[RockyRacoon]

You are right, and most people will point out the premium on fractional ounce coins.  I think back to the roll of 1/10th ounce gold eagles (50 coins) that I bought a few years back.  Paid $2,100 for it and the Texas dealer shipped it free.   So, it's all relative.  I hated the premium at the time but the buyer's remorse fades over time!

I had almost half the roll sold on eBay when the light finally went on over my head.  Then the rest of the roll got put away.  Some folks don't regret their purchases to this day I'm sure.

[AR15AU]

If I want to trade, I'll pick something more volatile, like Pets.com

Gold is for protection / physical.

[ColonelCooper]

Gold is also for stacking up in a little pile and jerking off to.

[RockyRacoon]

I see you are one of the secret clan!

[DoChenRollingBearing]

OMG!  Colonel & Rocky!  Now the secret is out!

Maybe Bravo / Bater is somehow in the club as well!

Agghh!  The mind reels....

[RockyRacoon]

Johnny B gets the soggy biscuit since he's the last to post.

[chistletoe]

http://vietnamnews.vnagency.com.vn/Economy/201425/Gold-imports-resume-to...

[paladin]

2 days to go for the 6 month count down.

I am in hold.....2 days

[Pladizow]

Gold is my savings account - its where I hold cash.

I simply continue to save and buy.

Has that been a bad decision over the past 10 years?

[Hunch Trader]

No, but plenty before that.

[paladin]

However, the Fed, like the central banks of England, Japan, and Europe continue to let people think that they are a long way from wanting or able to raise rates. But do they really have a choice? LEAP/E2020 wrote nearly two years ago that the Fed had lost control of interest rates. We are still of the same opinion and would add that the Fed will have to suffer the impact of two developments between now and mid 2010:

. what the Chinese and European central banks decide to do

. having to confront the problem of the US economy’s domestic and international solvency.

If China, in order to avoid an inflationary explosion of the speculative bubble created by its policy of easy money these last 18 months, is obliged to continue tightening monetary policy (which our team believes will happen), all the Asian economies (including Japan) will be obliged to follow suit and will become the favourite destinations for world liquidity which all the big economic players need so much at the moment (7). The Eurozone, which didn’t gladly accept this « forced » reduction in the cost of money, will follow in Asia’s footsteps. The only solution left to the United States to avoid finding itself internationally bankrupt at a time when it needs to continually attract capital to finance all its deficits, is to continue the trend even if it doesn’t want to (accelerating monetization - whilst denying it - to try and counteract the negative domestic effect). Thus it will brutally discover that it no longer has the ability to control world developments.

The ongoing growth in T-bond purchases by the Fed cannot go on remaining hidden from the world and its citizens forever. Growing domestic political pressures over the Fed and its opaque activities (which is a new development in its very popular appearance) will require the US central bank to show increased prudence on this issue. Sell its debt or, more exactly, gain access to real liquidity (which it hasn’t printed itself and paid to financial and commercial partners) will become increasingly difficult … and increasingly expensive: whether Ben Bernanke wishes it or not.

In parallel, the increase in deficits of all kinds (households, businesses, banks, local authorities) domestically will increase political demands and the sums needed to finance the country, making it even more necessary to attract the rest of the world’s savings. This development, currently taking place, leaves little room for the intentions and opinions of US leaders. As in Britain’s case, the attempt to hide these events between now and November’s elections seems unlikely to us and we think that, from the second quarter, interest rate increases will become necessary, despite the decision makers wishing otherwise. In an economic environment characterised by a large number of businesses kept alive by free credit (8), this increase in interest rates will lead to a collapse of the zombie economy (see previous GEAB issues), a fatal fall of nearly 30% of the world economy.

http://www.leap2020.eu/The-inevitable-rise-in-interest-rates_a4891.html

[paladin]

I will post it again..

The Reagan Diaries, which follows Ronald Reagan's 8 year term through
his daily dairy entries, and lo and behold, early on at page 25 comes this obvious bombshell
from economist Arthur Laffer: "Art Laffer dropped a grenade on his colleagues when he said we weren't
going to solve the fiscal program until we returned to convertibility of money for gold. I would have
liked to heard the discussion among the economists after I left" - Ronald Reagan

I will keep posting it until someone calls me out on it.....please....paladin

2 days to the 6 month count down

[Privatus]

Of course, the key is knowing what to touch...

[Turd Ferguson]

Well, opinions are like assholes, we all have one.

I've followed Nic's prognostications since joining ZH and he usually does a nice job. In this instance, he's way overdoing it. Gold will be range-bound through August. 1180-1245. Maybe a onetime breakdown to 1160. Maybe a onetime run-up to 1260.

However, the fundamentals have not changed. All that's changed is that The Evil Empire has been able to drive the 10-day MA down to the 50-day MA...just enough to freak out some weak-handed momentum assholes, hedgies and algos. Take a good, long look at the two-year chart above. The secular bull market continues.

[chistletoe]

http://vietnamnews.vnagency.com.vn/Economy/201425/Gold-imports-resume-to...

[dnarby]

Yep...  Sort of like decriminalizing marijuana!

[Hephasteus]

Everyone keeps talking about how gold will move big but it's seems to barely budge even with the paper selloffs. I'll be shocked if it goes under 1180. Each time they say they are going to smash it down and each time they set higher bars to the smash down. It won't be long till they keep claiming it will fall through to 1360.

[GoinFawr]

IMO most interesting section of the post is,

"Panic will come...but certainly not on fear of inflations with a CPI which is still going to be negative YoY by December (I do not give any credibility to CPI when it comes to measuring real inflation..."

Well good, CPI is not credible for measuring much of anything since the 80's, especially not price increases in daily necessities ( a clear symptom of  real inflation),

"...but it's the benchmark...)."

Hunh? Benchmark of what? Prestidigitation for obscuring the surreptitious wealth transfer from middle class to the plutocrats? Benchmark of how far gov'ts will go to hide the Δt of their respective ponds of frogs?

Essentially he seems to be saying,

"CPI is unreliable, but rely on it."

My gold isn't for taking profits, it's for kicking ass and taking names.

Regards

[UncleFester]

1) Prices are nominal not cardinal.

2) Never use CPI to measure inflation.

3) Always use M3 to measure credit, but realize differnet times require differnet multipliers.

4) When #3 contracts, see #1.

[GoinFawr]

Ask yourself: Who's supplying my M3 figures?

[paladin]

what do you all not understand that gold is money

paladin

[trav7777]

who cares about the price?  Gold is something that has value in all nations, all currencies.  It's a sovereign-independent savings vehicle.

Gov'ts can fuck up pretty badly and destroy all your currency denominated wealth, but they cannot fuck up gold.  Sure, they can seize and confiscate anything they can find, but your bank accounts are a lot easier to find than some coins.  A phone call or mouse click is all it would take to seize your bank accounts

[paladin]

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one -- so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates.

The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market -- triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.

by Alan Greenspan
1967

http://www.usagold.com/gildedopinion/greenspan.html

usagold.com

the keeper of Another.......the gold bud...the keeper of the Faith

[paladin]

The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market -- triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's

do you see this today.....

[paladin]

in 1967 Greenspan told you the truth.

yes I have info......he did not sell you out..

he is still the man who said this...

[UncleFester]

Maybe he pulled a Fransisco, invested a few $Trillion to wipe out a $Quadrillion.

[technovelist]

You're not the first person to make that hypothesis.

[Instant Karma]

The prices of many goods, services and commodities go up over time. Gold is one of them. When I was a kid in the 1960s and I went to afternoon movies for 50 cents. Now, an afternoon movie is 5-7 dollars (up 10X). A good hot dog was 50 cents too, now its about 3.50 (up about 7X).

I bought silver dollars in the 1970s for $20. Now, they're $20 (a big loss adjusted for inflation). However, had I bought in the 1990s, that silver dollar would have been only $6-$10 dollars. Generally, to make money in anything, real estate, stocks, commodities, you have to buy things that other people don't want at the time, and wait. Buying the popular investment is a sure fire way to under perform.

Nonetheless, having piles of paper with pictures of our founding fathers on them has proven to be a horrible store of wealth over time. So it is best to convert those piles of paper into some form of tangible asset.

For example, it wasn't until the 1990s that just about everyone agreed that stocks were the place to be. Bonds were for losers. Who wanted 5-7% yield on longer duration paper? Turns out, just as everyone agreed that stocks were for winners and bonds were for losers, the next ten years featured zero returns for stocks and great returns for government bonds.

So what is the consensus today? The smart money is out of stocks, hiding in bonds, and precious metals, and commodities. Hmmmmm.....And you can't give away stocks yielding 4% plus. With lots of cash on the balance sheets. And bonds yielding 1% are being gobbled up. And gold commercials are all over TV.

The contrarian in me thinks stocks are the place to be. But I won't sell my metals or my house and I don't have bonds.

[Dismal Scientist]

Finally, someone says it. 'Buy Gold' is everywhere. Too rich for my blood, as are bonds. And you didn't get junked. Chapeau...

[streetwise]

Look at the age of the kids making this movie and then tell me that this system will continue for much longer... ohcanadamovie.com

[Temporalist]

Competing currency being accepted across Mid-Michigan

http://www.connectmidmichigan.com/news/story.aspx?id=481793

[New_Meat]

I've seen this in Ithaca, NY.

http://www.lightlink.com/hours/ithacahours/

And it is more widespread.

http://www.ratical.org/many_worlds/cc/localmoney.html

All makes sense when local taxes approach 10%.  I get it, we're all Greeks now!

- Ned

[Duffminster]

Today continued the trend of major buying in the double short ETN (DZZ). From what I understand we may have recently had the largest day yet. Coupled with all this surge in shorts is the Hulbert Survey Gold sentiment being extremely low and Market Vane's extremely low readings, we may well have a contrary indicator confirmation of a major bottom in the precious metals.

I continue to believe that a massive reflation effort will catch the hyper-deflationist by surprise.  This may also mean a good summer run up in the stock market in my opinion.  I'm not certain on the latter or for that matter the former but I am weighting the contrarian indicators.  Here is an article on the subject.  Like me, it has a bias of long Gold and Silver (physical gold and silver).

[herry]

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