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Morning Gold Fix: August 12
Courtesy of www.fmxconnect.com
Gold opened Wednesday’s trading at
$1202.8 per 100 troy ounces. While it rallied as high as 1208, the
metal could not sustain these gains and fell below 1200 again, closing
out the day at 1197.5.
Today,
August gold was up 5.6 to $1202.4 per 100 troy ounces as of 8:21 AM
EST, this morning. The September U.S. dollar index was up .806 to
81.730. October platinum was up 2.3 to $1539.3 per 50 troy ounces.
Silver was up 5.2 cents to 18.210.
Gold Headed for $1300?
Yesterday Goldman Sachs released its latest commodity recommendation.
It is calling for Gold to touch $1300 by year end. The report is pretty
sparse in comparison to some of the other serious research we have read
from Tudor, Barclay’s and other banks. But that does not mean it is
wrong. It means that Goldman has its finger on the pulse and think a
tipping point may be near, fundamental, structural, cash flow or
otherwise. So they are putting out a red herring. Here it is in the
nutshell:
· We like Gold
· Real interest rates are at zero.
· Opportunity cost to own anything with real rates at zero is very low
· The dollar will weaken in the face of Fed debt monetization
· Buy dollar denominated assets.
· Buy Platinum (go figure)
· But be careful because we could be wrong.
We’d
like to add the following as long term gold bulls on a relative value
basis. Real interest rates will remain near zero for an extended period
of time. Even as the fed raises rates to “combat” inflation, they must
keep the opportunity cost of owning stocks low. Therefore interest rates
will lag in the rally and real rates will remain subdued. Even in
deflation, gold will drop less than other assets we feel, tallest pygmy
and all…
And remember the great
depression? When dollars were scarce and most valued? That was because
of fractional reserve banking. And the dollar was backed by Gold. Not so
much today. The fed will find a way eventually to sufficiently punish
hoarders of dollars. Inflation will come.
Historically
when Goldman recommends something to its clients in a public fashion
like here, it has almost always (in our opinion) positioned itself long
in advance of the report. Nothing wrong with that. It is putting its
money where its mouth is in my opinion. Clearly that ability can be
abused, and has been at different times by different banks. We published
a humorous primer on flow trading here.
What
will be interesting to us is how will the market react. In the past, a
recommendation by GS was as good as …well… Gold. And often times its
target would be hit and penetrated well beyond expectations. This was
more of a comment on faith and trust in Goldman’s word by the public
than a fundamental move upward. How much does the public believe in
Goldman’s commitment to the client these days in light of recent
events? We’ll just have to see.
If the market responds well i.e. if they get a lot of buy orders from their “idea”,
then expect another recommendation , a reiteration if you will of their
opinion with much better reasons. Right now, let’s call this a red
herring recommendation. One caveat, this could just be its exit
strategy, although we doubt it in light of recent bad press.
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Grade 4 math not your forte, eh JB? Allow me to provide assistance:
1979 Bag o' chips: 25c
Plus
1979 Cola : 25c
Total =50c
2010 same snacks 1.25 each (as stated above), so
2010 Total = $2.50
Two fi'ty is fi' times fi'ty cent... I sure hope you are 'there' by now, or at least still with me.
As to your attempt to deflect everyone's attention away from yet another of your simple errors (hey, I make 'em too; nobody's perfect little buddy)
"How does that equal a five bagger increase in gold"
Well it hasn't yet. But that is kinda the Goldbugs point, isn't it? Y'know: the one you constantly miss even though it is slapping you in the face.
Regards
So I missed the point of your math due to poor wording. I'm sorry.
It doesn't equal a five bagger increase in gold, but it might? That's the argument? Based on what?
Speculation?
Yeah, people thought oil at 147 was the new price of oil too. Look what happened there. Same thing will happen in gold, only worse.
People actually NEED oil. Not gold.
"My poor wording..." hey, CA didn't seem to have any trouble deciphering the simple example I presented, perhaps it was more your poor comprehension. Relax, I forgive you: spam trolling must tax your ability to concentrate.
Oil doesn't make for a great medium of exchange (nasty stains on your pants); that is all that a real currency need be. Well, that and it must possess physical properties which are at least difficult to undetectably devalue. You're comparing barrels to ingots, a logic 101 fail.
"It doesn't equal a five bagger increase in gold, but it might? That's the argument? Based on what?"
Look, JB wake up, please; the 'argument' is staring right at you, and has been made time and time again here on ZH, there, and everywhere for anyone who wishes to look with open eyes. Not the droopy-lidded torpor you struggle to remain concious through. I'm not about to waste any more time rehashing the bleeding obvious with you any more than I already have. End of.
Regards
You want me to get in line with your speculation, and I want to point out that all your argument is based on is speculation.
Oil is actually useful. Gold is used for conductors and jewelry.
Nobody uses gold as an exchange anymore. It's only a commodity, like soybeans.
"Nobody uses gold as an exchange anymore."
Riiight. Oh, except Central Banks, Commerical Banks, Banks, Sovereign Wealth Funds, Vietnamese Real Estate agents, etc. etc. And saavy shop owners, Farmer's markets, black markets...do I really need to continue?
Indeed, I would imagine that no one in a pitiful circle of utterly duped narrow-minded paper-worshipping rubes would even consider using it (yet) as a monetary instrument, just everyone who has more real wealth and intelligence in/on their little fingers than you have in your whole unjustified, untenable opinion of the egregiously inflated USD JB.
WOW! Simply wow!
You are clearly not just a liar, but outright delusional.
I don't know what more can be said in light of such glaring absurdity.
Ummm, how about the inconvenient little fact that overall prices and the cost of living are up at least 150% since 1985?
So you've had 150% increases in everything that matters, and a 500% increase in gold, and somehow that's justified.
Only I need food and shelter, and nobody needs gold.
Beanie babies were selling for 100 bucks a piece in 1998 too. I wonder how much they're worth now?
If you want to preserve your wealth and savings in a compact and convenient form from the ongoing ravages of inflation, not to mention the very real, indeed probable, risk of currency collapse, you WILL need gold --- or platinum, or something else of recognized value with a high value-to-weight ratio. Gold is not the only such vehicle, merely the historical standard and arguably the best such wealth transfer vehicle.
But keep pumping that declining fiat, Johnny old boy ---- we need somebody to make all the idiotic pro-establishment arguments so that they can be refuted and thereby teach the newbies here some valuable lessons!
I should have bought gold at 850 in 1980, to preserve my wealth, huh?
Then I could have been underwater for 28 of the last 30 years.
.
No, but why do you paper bugs keep bringing up the short-lived price peak of 1980 as the only possible entry point? Of course we know why: because it is the only way that disingenuous, gold-hating, malicious propagandists can try to make their anti-gold case.
What if I DIDN'T buy in 1980? What if I bought in 1990, or 1995, or 2000, or 2005? Little different scenario then, isn't it?
You are SO easy to refute!
Hey, Dollars were selling for 1/35 Oz in the early 70'es, and 1/1200 now.
But that was a terrible investment, obviously, because you need food and shelter, and you can't eat gold or build a house of it.
So does that mean that you should have bought at the top at 850 in 1980 and held on while it went to 250?
Because that's what people who are buying gold are doing now...
Yeah, because EVERYONE who ever bought gold, bought in 1980 - NOONE bought in 1999.
I believe that is the source of most of the heavy sell side pressure, mining companies dont hoard gold, they make money to pay themselves. Not that there is some piling on to win on the short side, much less to keep up appearances for currencies sake. Sell it forward while the prices are above production cost, always has been, always will be. Gold is running into thick walls of resistance, but they are walls built of paper, and there is smoke all around.
Mining costs are rapidly rising, though, and the richest ores are mined. Worth keeping in mind.
And JohnnyB, of course, is as usual dealing with old and/or inaccurate statistics ---- the average world cost of producing an ounce of gold in 2010 is closer to $700 an ounce, taking into account ALL costs, including amortization and interest.
My morning coffee.
In its heyday, everyone road the train, but it became too overloaded as the town grew, so everyone found a different easier way to go, but that way is dying out. Sure the train has added a few cars over the last 100 years, but not nearly enough to carry everyone who will need to get aboard one day. I often pace on the platform with my little bag of gold, the train sits with its boilers hot. With my little bag I cannot get a seat on the train, but I can jump in one of the open hoppers. My frustration builds with each passing day month and year. I go back and forth, chain smoking cigarettes and looking at the town of Keynesia I know is going to be destroyed one day, but when? I wonder would it be a good idea to sell out of Keynesia and buy a real ticket for a seat? I have often forgotten about the train in the past decades, but something seems wrong with things around me. This train is the only stable way out, the whistle has blown a few times, it even left the station about 30 years ago, but backed up and has sat since. The front sleeping cars are full of Central Bankers who tell me I dont need to get on the train "go back to your cave, fire light, and chains young man", as they sip brandy and laugh through the haze of Cuban smoke. I notice lately that there are a few less seats in coach, and more people milling around with little bulges of gold. Im very hesitant to actually board the train, sure I have a cheap ticket, but I might miss some more fun in the town that will happen before the train leaves! Im sure there will be more good times, and great parties, there always has been! But oh the agony I will feel if the train leaves while I am not at the station. The town calls me back often, will I miss the train? you?
Waiting for the gold train:
http://www.youtube.com/watch?v=Ve4TybVfMh8&feature=related
Don't mistakenly board the ETF train:
http://www.youtube.com/watch?v=QrE17OVVW_E
The Station by Robert Hastings...
http://www.thestationessay.com/
As to gold, for those of us who bought alot below $300--my first bull market aggressively bought aggressively at its inception if not a little early--this is all noise. There may some day be indicators that tell me to sell, but it is not going to be some sentiment thingie or some counter argument against a Goldman report. I am going to have to see the fledgling bull market in monetary and fiscal sanity and, as we all know, bull markets are very tough to spot at their inception.
"bull markets are very tough to spot at their inception"
So are bear markets. Are you spotting the one that's forming now with lower highs and lower lows?
No
Well good luck to you then! You'll need it.
Tell your bosses at JPM that just because price smashes might have deterred physical demand last time, that that was then, and the public mood is harder to predict.
There are circa 300 million people in the Euro zone who still stinging from the recent Euro turbulence, will see a price fall as a superb opportunity to buy physical.
The dynamics are changing Johhny.
And what will happen to the price when public mood starts believing in recovery?
Trends don't go on forever, you know. The sun comes out tomorrow, etc.
Then you have a 75% whoopin in a short amount of time.
I'd rather not buy at the top.
Yep, your claims rest on the notion that recovery is just around the corner.
Good luck with that one too.
I believe more that the economy will recover over the next couple of years than that the entire Western banking system will fail and that there will be riots in the streets.
Recovery is much more likely than the Mad Max scenario people would need to see further gains in the gold price.
Recovery is much more likely than the Mad Max scenario
And there is your failure of imagination.
You can only picture sunshine and roses or complete ruin. No middle ground for you.
We're at the middle ground now. Either it gets better or it gets worse.
Given the current climate in this country, it is unlikely that things will get much worse.
Goldbugs rely on a scenario where dollars are worth less than toilet paper and people need to carry automatic rifles down the street to protect themselves.
That is an unrealistic expectation, not the expectation that the economy will gradually improve over time.
Goldbugs rely on a scenario where dollars are worth less than toilet paper and people need to carry automatic rifles down the street to protect themselves.
That is an unrealistic expectation, not the expectation that the economy will gradually improve over time.
Let's rework that:
Goldbugs rely on a scenario where dollars are backed by gold and/or silver. Once that is accomplished, the expectation is that the economy will gradually improve over time.
.
You are either a blatant and ignorant liar, or a disingenuous fool.
Your inability to imagine that the economy and the monetary and banking systems could worsen from here, WITHOUT your strawman of the extreme "Mad Max" scenario, only highlights your limited historical knowledge and failure of imagination, not to mention lack of insight and willingness to acknowledge reality.
Your entire framing of the debate here consists of the most classic (and simplistic) strawman argument, as well as the Boolean Fallacy of "If not A, then only B". It is the most elemental of logical fallicies, and yet you and so many other fiat defenders and paper bugs make it time and time again, as if it can not be recognized and refuted by any 10 year old.
Nah, he's neither. He's bought and paid for. No-one's that ignorant without a reason.
recovery????recovery????????????????recovery????????????????????????? how many floors did your mom drop you from again ???????
I guess you must have missed the historic rally in equities and the increase in jobs over the past year and a half.
The only guy I know who didn't move his IRA out of funds and into cash lost money in 2009. At least he didn't have to pay any net income tax, so he had that going for him.
Rise in jobs? Come again?
Oh, you mean if you don't count discouraged workers, and include all the long-term workers including BP cleanup staff and census workers.
Yeah, those jobs are totally grounds for going all in.
You can't seriously think there has been a rise in jobs? There is no way you can think that. There hasn't been one speck of positive news anywhere in jobs, housing, soveriegn debt, fiscal responsibility, credit...what drugs are making you so delusional?
... and apparently SOMEONE (hint : initials are JB ) clearly missed the historic rally in gold ... and can't stop crying about it !
@ Max UK and all gold friends here.
Do recall that Bravo masks himself as a student doing technical trading, but he and hiss boss JonNadler are really Senior VPs there at JPM. How else could he be making enough money to take care of a family of four? If JB and JN get the gold down to $900 and they get their $10,000,000 bonuses for saving their bank.
Bravo LIKES his work at ZH! What a great way to be paid like a bankster! What fun!
...
I hope that as many of you as possible have taken $500 out of the ATM... I have $500 more in FRNs right now, what to with them...
JPM would even get signal!
So, a judgement call by GS is posted with an opinion that agrees with the ZH consensus -- BUT we are not to trust them. That should confuse the entire discussion. Couldn't we just wait for some credible information from trusted sources?
that's just it, who can you trust these days, we are all contrarians now!
You see, Younger Bear had become a contrary the most dangerous of all Cheyenne warriors because the way they live drives them half-crazy. Except for battle, a contrary does everything backwards. He says "goodbye" for "hello", "yes" for "no",walks through bushes instead of on trails and washes with dirt and dries with water.
Little Big Man: I thought you were dead.
Younger Bear: Why have you come back when nobody wants to see you?
Little Horse: You mustn't speak to Little Big Man like that. You owe him a life.
Younger Bear: I'm glad I said it. Hello.
Little Horse: That was supposed to mean he was sorry he said it, goodbye.
Little Big Man (Voice Over):But that warrior wasn't sorry. He hated me still.
I have a few coins around because it looks and sounds wonderful; but profitwise I am in an ETN. I'm not at all sure how liquid 1-oz coins are going to be at the local pawnshop. As they say, "You buy retail and sell wholesale." The shops running GLD or DGP may blow up but I think not.
Once it becomes common knowledge that ETFs like GLD are running on fractional-reserve paper gold, it will start a run for the exits as the money heads for physical, instead of a worthless proxy. (I would also be willing to guess that fund participants are using the fund to gain physical when they redeem their baskets, which may have been filled with nothing but paper when they sold them to the fund.)
The result? Physical zooms while paper crashes.
I've got some old IRA money in CEF at the moment, but still, I won't be surprised if a future audit turns up tungsten bars in the vault, instantly collapsing its price.
I have a question relative to transporting gold out of the country. I have a son living in Norway. Not that I don't trust the government but it seems to make sense to take some of my gold over there for safe keeping. Anyone know the rules relative to taking it from the US to Norway?
I hope someone can answer you question more fully, but I would guess that your ability to expatriate gold will depend largely on the attitude of your friendly TSA inspector.
Seems to me that the easiest way to get the gold out would be to purchase and wear some 18k jewelry. Make friends with your local coin shop owner or jeweler and ask to buy any old 18k that comes in the door. You can probably get that at close to spot.
Have your gold pounded out into sequins and get a trusted tailor to fashion you a three piece suit.
It'll probably be heavy, but DAMN you'll look fine for the airline stewardesses!
Regards
DOW and SP500 bearish megaphone wedge charts continue ...
http://stockmarket618.wordpress.com
There are 134 comments on this page by Johnny Bravo (to the time of this post). I am not anal enough to do a time line but I see plenty within a minute of each other. I've seen desperation in my day, but this really takes it. Anyone go along with the supposition that he is a crew rather than a single person? The time frames show a multiple scan of the page by Mr. Bravo to make replies -- over and over. The poor guy(s) needs some counseling.
Hey Rocky, it could just be divine inspiration (does working for JPM count as God's work?)
Anyway, The World According to Johnny Bravo - as evidenced from this thread:
1 - Monetizing debt is so gooooood; gimmee another fix baby!
2 - We are in recovery phase, the worst is well behind us.
3 - The financial markets are bastions of integrity and fair play. You can take them at face value. Load up on TA & dive in!
4 - Gold is for retards. I strangely feel I must sacrifice a normal life, to fight these retards on every ZH blog, and to stop innocent lambs from falling prey to this cult. It is verily why I wear a superhero costume as I type.
5 - Regarding history: (paraphrasing) 'I'm only a young student. I don't do that history shit. I'll leave that to you limp-dicks.'
6 - Careful what you say to me, else I'll twist your words and quote you ever-after out of context, but you better not do that to me.
7 - You are all liars.
Did I miss anything?