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Morning Gold Fix: August 3
Commentary courtesy of www.fmxconnect.com
Gold opened Monday’s trading at
$1181.8 per 100 troy ounces. Throughout the day, it managed to rally
ten dollars and fall seven from its opening price, but closed out the
day nearly unchanged at 1183.4.
Today,
August gold was up 3.9 to $1188.0 per 100 troy ounces as of 8:49 AM
EST, this morning. The September U.S. dollar index was down .385 to
80.670. October platinum was down 4.3 to $1597.9 per 50 troy ounces.
Silver was up 4.1 cents to 18.460.
Gold’s Disappointment
As Tiger Wood’s Dad would say: I am disappointed in you, Gold.
The
Gov’t is clearly preparing the field for QE 2, Stocks, Bonds and
Commodities all get the picture but Gold (don’t call it a commodity
please) is struggling. In a world where every asset has a 100%
correlation, where hedges add risk instead of mitigate it, Gold still
underperforms. It is annoying to say the least. The Fed sure is having
its way, and I am wondering if waiting for them to be wrong is as good
a trade as riding the fiat wave of bubbles they are recreating.
Bernanke announced yesterday, that they are going further out on the
curve to combat deflation.
Relevant quote (emphasis ours)
"Although
conventional interest rate policy is constrained by the fact that
nominal interest rates cannot fall below zero, the second arrow in the
Federal Reserve's quiver -- the provision of liquidity -- remains
effective," Bernanke said in a speech Monday in Texas. "The Fed could purchase longer-term Treasury or agency securities on the open market in substantial quantities. This approach might influence the yields on these securities, thus helping to spur aggregate demand."
The Policy Answer Key
His 2002 Deflation paper telegraphed this approach. Here are the arrows in his anti-deflation quiver for use after ZIRP fails.
- “the
Fed to begin announcing explicit ceilings for yields on longer-maturity
Treasury debt (say, bonds maturing within the next two years). The Fed
could enforce these interest-rate ceilings by committing to make
unlimited purchases of securities up to two years from maturity at
prices consistent with the targeted yields.” - “Of course,
if operating in relatively short-dated Treasury debt proved
insufficient, the Fed could also attempt to cap yields of Treasury
securities at still longer maturities, say three to six years” - “If
lowering yields on longer-dated Treasury securities proved insufficient
to restart spending, however, the Fed might next consider attempting to
influence directly the yields on privately issued securities.” - “Yet
another option would be for the Fed to use its existing authority to
operate in the markets for agency debt (for example, mortgage-backed
securities issued by Ginnie Mae, the Government National Mortgage
Association).”
Here is the reason I believe this will all end badly:
- Intervention
generally only helps in the direction of the grass roots trend, and
stimulus is really just government intervention in free markets - Spending
Demand can be stoked by printing money, or by lowering prices. The Fed
wants to print money, what would be wrong with a clearance sale of
assets (deflation cleans out the fluff.) - Be careful of
guys who say ALWAYS and NEVER: “The conclusion that deflation is
always reversible under a fiat money system follows from basic economic
reasoning.” Ben Bernanke
If by basic economic reasoning he means conventional wisdom, then sure. But we doubt it.
-Elizabeth Thawne
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Paper to physical, 100:1
I am disappointed in you, Elizabeth.
Must be tough to have to write a column everyday.
Having said that, this gal seems to be wrong about gold more often than right, at least in the short and middle term.
Gold still targeting 1050 and there is no QE II as M3 is -10%, Monetary Base growth is -90%, and money multiplier still below One...
She seems right about the failure of monetary (and fiscal) policy.
Buying Treasuries or Mortgages might bail out primary dealers and brokers that sit on the money or use it for unproductive HFT.
The Fed and Treasury assumption that a manipulated up market is essential to economic recovery may be one of the more Titanic Policy Failures since the collapse of the Roman Empire...
http://stockcharts.com/charts/gallery.html?s=%24gold
Not sure I care wether the "empire's" pricing of fraudulent paper representations of the real thing goes up or down. All I know is that they don't want folks buying and holding the stuff and I sleep better knowing I'm not playing into their unholy machinations. I also know all illusions fail in time. Be Strong.
Bold, Gitches!
gold, tiger, son, daughter disappoint‡
It all comes down to "Monkeynomics"
www.ted.com/talks/laurie_santos.html?utm_source=newsletter_weekly_2010-0...
So his thoughts are to cap yields as they continue to plummet? Only a PhD could come up with something so, so, so useless.
Ben's big thesis is to reinflate. Wow Ben. Really turning over academia with that thought provoking thesis.
"Well, our defense let in a goal. So our solution is to go score two more. That will put us ahead by one." Brilliant on paper Ben. How ironic. Paper.
Nothing like getting out in front of a parade or train...
This crap isn't worth reading. I will stick with The MIDAS Report at LeMet Cafe (GATA).
Kinross overpays for Redback. Dumb fucks.
no doubt, these mining companies are the biggest bunch of dopes in the universe. Even if gold went to $5,000, they'll still figure a way to lose money.
That is just stupid. Way too broad a statement. Be nice and I'll give you the symbols to some exceptions to this rule of yours. Identify and bet on the right players in the junior mining sector now and you'll reap mad gains going forward. I've done it beofre, am doing it now, and have no plans to cut my income.
Unless you don't like returns on your investments, in which case leave them where they are now.
Ok, I agree, perhaps too broad a statement. If you'd share your insights on any attractive juniors, it would be greatly appreciated.
Arrest,
I agree w/ Brian, pls share your WEALTH machine........tired of sitting on cash.........worth noting, faster every second.
Happy to share...
3 great companies to invest in at a very good time (now:-)
- Silverquest (SQIFF; .67 today, bought it at .47 2 weeks ago)
- Timmins Gold (TMGOF; 1.73 today, bought it at 1.45)
- Alexco Resource (AXU; 3.13 today, bought it at 2.77)
I'm not a financial adviser nor am I in the business. These are just picks of mine that resulted from tons of research. Do your own diligence and please realize that any junior resource investment is a highly speculative play and thus represents risk for loss, sometimes big. Great way to make money but this is not for the faint hearted.
Identify companies with great management and great financials in addition to big potential resources. Buy them before they announce drill hole results and then sell 1/2 your holding when the price doubles. Buy another who is ready to go, or better, play home Alchemist and turn those silly, low shelf life FRN's into Au or Ag. And you'll still have your original position, keep it or sell it depending on the company's outlook.
I use only 1 newsletter to help identify my picks: Hard Rock Advisory (http://www.hraadvisory.com/). The Coffin brothers offer a superior product well worth the $75 per quarter. Be smart and you'll make that back in no time. I was doing just fine without them, but even better with 'em. Mostly, just get started. Establish the biggest initial positions you can afford, and then dollar cost average to build them up. I stongly recommend using the same approach to build some physical silver and gold holdings ASAP. At <$20 per, owning as many 1oz American Silver Eagles as one can afford is just smart. I've bought PM from a few online sellers and have settled on www.bulliondirect.com. Best prices (eg lowest markup to spot) and overall service I've found.
Good luck mate.
Interesting, thanks.
AXR is one of my bigger holdings.
CGA, LMA, PEZ,
What do you think of New Gold ?
I like New Gold a lot. Own it. Pierre Lassonde is involved in Mgmt and that guy is like a French Canadian Midas or something- - everything the guy touches come up BIG...
But realize the Mexicans just pulled NGD's enviro permit for one of their biggest projects. This is probably just a stick up by those super ethical and oh-so environmentally concerned Mexicans, but losing it would shoot about a 25% hole in their rev stream. In spite of the risk, I bought more as it went from 6 plus to 5 or so on the news. I do think it's just a mugging down there and things will will be fine for NGD...
I am on the fence on this deal. I had some Redback for $13 and more Kinross at $20. Kinross paid $30 for Redback. I just got more Kinross at 15. 70, I think.
I got some picks, how about AXR or LMA ?
http://www.telegraph.co.uk/finance/economics/7923054/Federal-Reserve-to-start-the-deflation-fight-next-week-expert-claims.html
TWAT
Time Will Always Tell
Everyone: Just keeping buying physical gold and taking delivery of contracts. Do not trust gold being held in an unallocated account or ETF.
Gold: If you do not hold it you do not own it.
And if you own it it may go down...
...just like dollars may, so own both.
+ $1180 hamurobby
Diversification is the name of the game. Buy and hold gold.
Keep a nice chunk of FRNs in the safe (air ducts, mattress).
If you can hold some (some!) real estate. If you can hold some assets overseas.
I like gold a lot, but not so much that I put too high a percentage of my holdings in gold.
Do,
I agree Diversification is the way...............
But,I have never been so disgusted with where to invest,and have a feeling of saftey, of keeping it.
Land, in the US......ZERO guarantee's you will be able to keep it( they can & will tax it from under you, or claim Eminent Domain...........Presto your screwed.
Assets Overseas, same here...........their is nothing out of reach of Sam.( this includes PM's in PHYS,Or BV).
If you can't hold it, your not in control of it.........
Wait till the Capital Inflows start, we think the USD is dropping now.......Weimar #2.
China is telegrahing it's intent, scaring the hell out of everone else holding( as well they should be scared), once QE 2.0-3.0 is announced, the Capital Infolws will make the USD worth ZERO in a nano second............appears we are headed that way,real soon.
DosZap,
I agree that there are no guarantees. I also share your disgust with TPTB and the general crookedness of "investing" nowadays.
The property I own is a condo and a tiny piece of income generating CRE.
Assets overseas are pretty safe in my case, no worries there mate! Overseas assets can be pretty varied... The nice thing in my case is that it is ALL LEGAL! Hahaha!
DosZap, I hope you are going to join Village Idiot and me (and we hope thousands more) at the ATMs on Thursday August 12 to pull out $500 in protest of the general sliminess.
Get there early! Avoid the long lines!
...
ANY OTHERS out there pissed off and use Twitter (I do not), please tweet your pissed off friends to pull $500 (500 Euro, 50000 Yen, etc.) out of the machines on Aug 12.
Thanks! Let's send a message that some us can ACT!
I am not only disappointed, I am disheartened, Elizabeth. Not by today's gold fix though. Who, except for a couple of die-hard tea baggers who think they'll survive a potential end to the fiat system by stirring their children's meals with a gun in their underground bullion vaults, really cares? Gold is not an investment and it will do little to save our days if our currencies become worthless. If anything, it is a maybe a hedge for those who rather trust in the eternal scarcity of certain raw materials than in the abundance of human resources (the genuine greedy - eventually due for extinction by definition). For a forum supposedly populated by responsible financial professionals trying to do a meaningful service to society, I am surprised at the rate of support that this pretty useless metal has garnered among those who keep demanding a less deceitful handling of the crisis from their political authorities. That I find annoying, Liz. And no, I don't give a damn if you or anyone else makes a buck riding their golden yachts across the fed's fiat bubble waves, really.
Your post betrays how completely you have swallowed the thesis that the only alternative to a 100% Fiat system is living in a cave. Well done you for being a compliant Fed sock-puppet.
The fact that Prior to 1971 western society was notable for, among other things, NOT requiring its members to live in caves and that, upon further investigation, it transpires that gold has been the monetary foundation for human civilizations for most of recorded history clearly holds no weight in your world view.
Fiat systems fail all the time. It is as routine as it is inevitable. People do not revert to hunting each other with sticks when that happens, they generally find an alternative to use as money. Most recently, use of the dollar has been a frequent fallback position, such as in Zimbabwe. Of course when the dollar itself falls, the only option left to will be to put gold back in the position it has held for millennia.
Right on, dude. Not only am I paid (in physical, of course) by the Fed to suffer your historical transpirations, I am also at large for the IMF in Zimbabwe to pursuade the authorities that only a return to the gold standard will feed their kids.
An incoherent response, and one which bears almost no relationship to the substance of my post. I enjoyed the (presumably) unintentionally comic double-entendre in your use of 'Transpirations' though.
kapillar,
Ok, so you said your say AGAINST the yellow metal, what's YOUR plan?
Instead of beating on those that think differently than you, please SHOW US a better way................yours?.
Don't bring us a problem without a solution...........
A saying an old company President used to tell me............until I told him, if I had the SOLUTION, why would I NEED HIM.
a forum supposedly populated by responsible financial professionals trying to do a meaningful service to society
Who is John Galt?
I AM DISAPPOINT in my editor for correcting my grammar.
1) “the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields.”
Please take a couple of minutes to give serious thought to the possibilities of this Fed action...Ben has bought the MBS/GSE market, is he ready to buy up the entire world supply of short dated treasuries? He's stirring the petri dish again...My supply of popcorn is going to run out before this ends.
Is Ben related to Mel Brooks?
This is easily the dumbest post I've seen on ZH in ages. Better get a clue and then you'll know why gold is "underperforming". Fine for you to parrot dumbass "gold commentary", I'll just keep buying at these prices.
It's not easy writing a column on gold every day. If you do not like what you are reading, please share your thoughts. That is what blogs are for - you learn not from the posts, but from the comments.
Much obliged. there are do'ers and there are reviewers.
I did not read the post to be bearish on gold. The author was just astutely observing that gold's recent price action was disappointing in light of dollar weakness, Chinese Central Bank pronouncements, scary Fed talk re further monetization, heightened tensions in the Middle East and Korean Peninsula, etc.
Hell, I'm disappointed too: gold had a ton of momentum and should have risen from 1265, not reversed! But PM's have been beat to sh*t since June and it's one thing to moan about it but quite another to see and realize the real deal: that bullion bank naked short sales are done to drive down the PAPER price of gold and silver. Their forays are carefully orchestrated (and well documented) events. These actions are hardly the hallmarks of free market forces shaping things. There IS NO free market, it's actively and continuously manipulated.
I believe the recent smashdown from 1265 to 1165 has much to do with the JP Morgans and HSBC's of the world reducing and/or exiting some of their ridiculously massive short positions at more favorable costs. Perhaps due to FinReg position limits, or the hinted-at upcoming Class Action lawsuits, or maybe just because lots of seriously wealthy and powerful people are sick & tired of having the valuations of their PM holdings f*cked with, there are many signs that a sea change could soon be coming.
So if and when free market forces return and prevail, I'll have lots more time for a gold performance description such as "disappointing".
What's really "Disappointing" to me is that this market rigging is in reality a public/private (FED/UST/Bank) partnership that is allowed to continue b/c it's just that: the USG at work in cahoots with the worst global financial terrorists. It's done because PM market rigging was, and remains, a central supporting column in Bob Rubin's "Strong Dollar policy". See, here in the ponziworld that arch criminals like Bob have worked so hard to create, it's really really important that the cattle think their funnymoney is worth something, and that PM's "are a bad investment", when what the poor dummies should really do is run from it and immediately denounce fiat money's proponents. Better, arrest them.
It's also disappointing to realize how many otherwise well informed people parrot the silliest lines that paid gold clowns like Nitwit Nadler and all the others crap out daily.
jackass. im long. physical, stocks, and short contango. 15% of my net worth. i apologize if this content is not the dogmatic tripe that true believers need to continuously hear through their tin foil headphones to be reassured that they are right. sorry, no hand holding here. this is a mix of trading analysis and fundamental analysis. if you cannot hold these two potentially opposite views in your head at the same time, I suggest you try harder.
Only 15% you say? Umm, who's the jackass?
All the interventions are supposed to spur spending, but they only ever effect practitioners of high finance. It is like Bernanke and crew live on a different planet. They only see the banking system. Fixing the banking system will not fix the economy. Fixing the economy will fix the banking system. Just do that one time refi of existing mortgages to .5% and see what happens. Enough with buying Treasuries that tax dollars will never be enough to pay back.
academics. all of them.
http://www.bloomberg.com/news/2010-08-03/china-plans-to-help-bullion-producers-expand-overseas-central-bank-says.html
My limited deductive reasoning abilities tell me that China is going to take actions in the future that will seriously weaken the value of the USD, and are getting themselves positioned to benefit from a spike in the real value of gold that will result from said actions.
so the spike in open interest on july 29 was due to rolling the contracts forward?
Thanks for the reference - I haven't read or heard about the book, but the synopsis does sound interesting.
There are certainly a lot of details like that to take into consideration.I read and understand the entire article and I really enjoyed it to be honest.
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