Morning Gold Fix: January 14

Courtesy of GoldCore

Gold and
silver have fallen in most currencies today but are higher in the
“commodity currencies” of Canadian, Australian and New Zealand dollars,
and flat in Swiss francs. Gold and silver are both slightly higher for
the week in US dollar terms but weaker in terms of other currencies.

Gold is currently trading at $1,365.95/oz, €1,023.11/oz and £861.20/oz.

Baltic Dry Index – 5 Years (Daily)

European equity indices are lower after a mixed night on
Asian equity bourses which saw the Nikkei flat and the Chinese CSI300
fall 1.36%. US equity index futures are marginally lower. Bond markets
have not seen much movement but UK and Swiss (10 year) bond yields have
risen to 3.63% and 1.81% respectively.

Gold in USD and British Sovereigns – 10 year (Weekly)

The risk of growing inflation was acknowledged by Trichet
after European inflation accelerated to the fastest pace in more than
two years in December, led by surging food and energy costs.

Stagflation risk in some periphery euro nations is further
complicating the ECB’s efforts to deal with the sovereign debt crisis.
Not helping matters is the fact that the ECB looks increasingly like the
buyer of last resort of euro government bonds and ‘quantitative easing
European style’ will have ramifications for the multi-state currency.

Interest rates must rise internationally in the coming
months to protect fiat currencies and contain inflation, but the risk is
that this can lead to a sharp decline in economic growth and
potentially a severe recession or global depression.

Gold in USD and British Sovereigns – 60 Day (Daily) – Sovereign Premiums Rise

China’s central bank, responding to surging inflation in
China, said that it will raise the reserve requirement ratio for the
nation’s banks by 50 basis points. Once the inflation genie is out of
the lamp it is very difficult to get it back in as was seen in the
1970s.

The extremely fragile nature of the recent global recovery
is seen in the Baltic Dry Index (see chart above) which is back near
levels seen during the financial crisis in late 2008. This may be a
harbinger of a global recession.

George Soros’s Biggest Buy is Gold - $64 Million in the Last Quarter

Many of those calling gold a bubble have done so simply on the
basis of George Soros’s recent comments regarding gold being the
ultimate asset bubble or becoming the ultimate asset bubble. Soros’s
comments were somewhat cryptic and had some commentators claim that
Soros was saying gold is a bubble and others claiming that Soros was
simply saying gold would become the ultimate bubble.

George Soros said subsequently “It’s all a question of
where are you in that bubble ... The current conditions of actual
deflationary pressures and fear of inflation is pretty ideal for gold to
rise.” This would suggest that he is bullish on gold, contrary to much
of the media headlines and commentary.

As ever with hedge fund managers and large investors it is
important to watch what they do rather than what they say. In the last
quarter, Soros's biggest buy wasn't actually a stock. His firm spent $64
million on shares of the iShares Gold Trust (IAU).

When George Soros begins liquidating his gold holdings, it
may be an indication that the gold bull market has run its course and it
is time to reduce allocations.

Demand for Physical Bullion Sees Silver Eagle Sales Soar and Premiums Rise

This week has seen further confirmation of very robust physical
demand internationally and especially in Asia. This was seen in
premiums rising to near 2 year highs in Hong Kong and Singapore and
reports of shortages of gold kilo bars. The Perth Mint also reported
unrelenting demand for gold bullion bars.

The tightness in the bullion market is not confined to
Asia. There has been another surge in demand for silver American Eagles
as seen in the figures from the US Mint. Zero Hedge reported that Mike
Krieger made a disturbing observation on the trend: "In the first 12
days of January 3.4 million silver eagles have been sold. I have never
seen anything like this. The amount of physical being taken off the
market on this paper sell off is extraordinary. We must be very close
to the end."

By “the end” Krieger means the point in time when the
physical demand for silver bullion (which is a very small market) is
large enough to force some Wall Street banks to close their massive
concentrated short positions, thereby creating a short squeeze that
propels silver to above its nominal high of 1980 (near $50/oz) to much
higher prices.

Further confirmation of growing tightness in bullion
markets is seen in the growing premium being paid for British Gold
Sovereigns. Sovereigns are one of the most widely traded bullion coins
in the world and the price of Sovereigns is correlated with the spot
price (see chart above). Lately there has been an interesting
development which has seen the spot price of gold fall while the premium
paid for Sovereigns has risen (see chart above).

Demand for Sovereigns remains strong especially in the US
where investors like the liquidity and smaller size (0.2354 troy oz) of
the coins, and in the UK where they are Capital Gains Tax (CGT) free
with CGT having recently been increased.

It is too early to tell whether this is a trend that will
continue but with the continuing robust demand for Sovereigns it is
likely to do so and it is worth keeping an eye on it. The trend strongly
suggests that the recent weakness is short-term momentum players and
that it is short term tech-driven rather than long term technical and
fundamental-driven.

Silver

Silver is currently trading $28.45/oz, €21.31/oz and £17.94/oz.

Pltanium

Platinum is currently trading at $1,803.25, palladium at $790/oz and rhodium at $2,375/oz.

News

Bloomberg) Gold May Rise on Speculation About Chinese Demand, Survey Shows

Gold may rise on speculation that demand from China, the world’s
second-largest consumer after India, will increase, according to a
survey. Seven of 12 traders, investors and analysts surveyed by
Bloomberg, or 58 percent, said the metal will climb next week. Four
predicted lower prices and one was neutral. Gold for February delivery
was up 1.1 percent for this week at $1,383.80 an ounce at 11:45 a.m.
yesterday on the Comex in New York. Futures were heading for a third
weekly gain in four weeks after rallying 30 percent in 2010, the 10th
consecutive annual increase. Some investors purchase bullion as a hedge
against inflation, which was running at the fastest pace in more than
two years in China as of November. The country’s central bank raised
interest rates last month. “Fundamentals remain strong, with strong
physical demand, especially from China,” said Mark O’Byrne, executive
director of brokerage GoldCore Ltd. in Dublin. “From a technical point
of view, the trend remains bullish.” The attached chart tracks the
results of the Bloomberg survey, with the red bars derived by
subtracting bearish forecasts from bullish estimates. Readings below
zero signal that most respondents expect a decline. The green line shows
the gold price. The data are as of Jan. 7. The weekly gold survey that
started six years ago has forecast prices accurately in 196 of 345
weeks, or 57 percent of the time.

(Bloomberg) China Should Boost Gold Reserves, Academic Writes in Newspaper

China should consider increasing its gold reserves given the “record
growth” in the nation’s foreign exchange reserves, Jin Baisong, a
research scholar with the Chinese Academy of International Trade and
Economic Cooperation, which is affiliated with the Ministry of Commerce,
wrote in a commentary published in today’s China Daily newspaper. China
should keep its foreign exchange reserves at a “reasonable” level of
$500 billion to $800 billion, with the remainder of reserve assets
entrusted to financial institutions for investment in “profitable
ventures,” Jin wrote. The nation also needs to hold U.S. Treasuries as
an important economic “safeguard,” Jin wrote. If China sold its U.S.
Treasuries, it may cause “panic selling” and trigger a “dollar crisis,”
Jin wrote. That would weaken China’s economy and the nation’s security,
Jin wrote.

(Bloomberg) European gold coin sales rising from early 2011

European gold coin sales have risen
from “very low levels” at the beginning of the year, UBS AG
said. Sales over the next few weeks will be “an important
barometer of public reaction to any new Eurozone strategy,” UBS
analyst Edel Tully wrote in a report e-mailed today. An
expansion of European steps to help indebted countries “could
drive a disillusioned German public to turn to gold, as they did
in the second quarter last year,” she wrote.

(Bloomberg) Gold May Rise to $1,600 on Low Rates, Debts, GFMS Says

Gold may rise to $1,600 an ounce in 2011, 16 percent more than
today, as low interest rates and the possibility of sovereign debt
defaults spur demand for the precious metal, according to London-based
researcher GFMS Ltd. Gold may attract a “major expansion in investment
before the gold bubble inevitably bursts,” London-based GFMS said today
in a report. Gold investment, including in bars and coins, will jump 15
percent in the first six months of this year from the same period last
year, the researcher estimates. “We are looking at more of the price
strength to occur later into the year,” said Neil Meader, head of
research at GFMS in London. In the first half, “I certainly don’t think
we could rule out a correction of substance. That could easily mean the
low $1,300s” an ounce,” he said. Gold climbed 30 percent last year,
rising to a record $1,432.50 an ounce in New York, as governments became
net buyers of the metal for the first time since 1988, led by Russia’s
purchase of 135 metric tons, according to GFMS. Jewelry demand rose 16
percent and bar hoarding more than doubled, the researcher estimates.
“For prices to stay firm, the market is clearly dependent on
investment,” GFMS said. “Investors and some official sector institutions
will be very concerned at the growing risks of currency debasement, be
that via inflation or depreciation, and of sovereign debt default.” Gold
futures for February delivery fell $2.80, or 0.2 percent, to $1,383 an
ounce by 11:58 a.m. on the Comex in New York.

(Bloomberg) Gold ‘Overdue’ for Drop, Rice Will Gain, Rogers Says

Gold is “overdue for a rest” and probably will fall after a decade
of gains that sent prices to a record, said Jim Rogers, the chairman of
Rogers Holdings who predicted the start of the global commodities rally
in 1999. While gold “may go down for awhile,” the metal is “going to go
over $2,000 in this decade,” Rogers, who owns gold, silver and rice,
said today during a presentation to business executives in Chicago. Gold
touched a record $1,432.50 an ounce in New York on Dec. 7. The price
closed today at $1,387. “I’d rather own rice,” Rogers said. “I’d rather
own something that’s more depressed than gold.” Agricultural commodities
are “going to boom” as demand increases in developing markets,
primarily in Asia, he said. All commodities will be supported by the
weakening dollar, which is losing value because Federal Reserve Chairman
Ben S. Bernanke is “printing money” by buying Treasuries in an effort
to shore up the U.S. economy, Rogers said. “Paper money is made of
cotton, and I’m long cotton, by the way,” Rogers said. “One reason I’m
long cotton is because Dr. Bernanke is out there running the printing
presses as fast as he can.” Rogers said he doesn’t own shares in U.S.
companies and is short U.S. long-term treasury bonds. The Chinese
renminbi may provide “almost sure profits over the next five to 10
years,” he said. “In the future, it’s the stock broker who’s going to be
driving the cabs,” Rogers said. “The smart stock brokers will learn to
drive tractors, and drive them for the farmers, because the farmers will
have the money.”

(Financial Times) Gold price bubble a “high probability” says Deutsche Bank

The formation of a gold price bubble is a “high probability event”, warns Michael Lewis, commodity strategist at Deutsche Bank.

Mr Lewis says that the price of gold would need to rise above
the $2,000 an ounce mark to represent a bubble but he notes that the
factors that have driven the market higher in recent years are likely to
continue in 2011.

... Mr Lewis also warns that a collapse of the dollar “cannot be
dismissed out of hand” given the significant fiscal consolidation
required in the US.

... He also expects central banks, particularly in Asia, to
diversify their foreign exchange reserves further by increasing their
holdings of gold and he says inflows into gold exchange traded funds
will continue to increase, reflecting investors’ desire to find
protection against the twin threats of deflation or rising inflation.

... Suki Cooper, precious metals analyst at Barclays Capital,
says that investment demand for gold is likely to slow towards the end
of 2011 but it will still be strong enough to push the price to a fresh
record high.

Barclays is forecasting that gold will trade this year between a
low of $1,300 and a high of $1,620, helped by the growing interest in
physically backed ETFs and buying by central banks.

Comments

[unwashedmass]

rolling with laughter. can we just call a spade a spade, the Comex is going thru another "operation" engineered to let out the massive cartel short in gold and silver...

take advantage. buy.

[Turd Ferguson]

Right on, unwashed. I hope this info helps, too:

http://tfmetalsreport.blogspot.com/2011/01/that-was-then-this-is-now.html

[flacon]

Thanks Turd. I always love reading your thoughts about what is happening. 

[Turd Ferguson]

Thanks, flacon. I'm always a little self-conscious about spamming "Tyler".

[Spalding_Smailes]

Turd,

I have been talking about China rate hikes for months, this should not be a new concern. China's hikes will come quickly this year, wait when its .5 or .75....

China is gulping down inflation because of the peg. The banks borrowed money at low,low rates its a mess ....

[Turd Ferguson]

Hi, Spalding.

It doesn't concern me for the longterm, its the day-to-day trading aspect that's relevant. How, when, where and why this information gets released is of import when trying to ascertain the short-term trend.

[dryam]

Help me on this.  I understand China is trying to cool down the inflation, but it seems like rate hikes aren't the answer.  The more hikes they have the more money will flow into China which causes more inflation.  It seems like the real answer is depegging.

[Spalding_Smailes]

Your right.

More money will flow into China. Mike Pettis China Financial Markets in Tylers blog list talks about this inflow issue.

http://mpettis.com/2010/11/chinese-inflation-and-european-defaults/

Part 2.  Will Beijing raise interest rates to combat inflation?

The big concern in China now is rising inflation.  The market is obsessed with fears over what steps Beijing will or will not take to combat rising prices.  Beijing has already hiked interest rates, raised reserve requirements, imposed price freezes, and is reportedly going to tough out the existing lending quotas. Beijing may even throw in the towel and declare a “new normal.”  According to an article in Wednesday’s South China Morning Post:

Beijing is likely to raise next year’s official inflation target and tighten monetary policy, state media said Wednesday, amid expectations for consumer prices to continue rising.

The Central Economic Work Conference, which is expected to meet next month, will probably hike the government’s annual inflation target to 4.0 per cent from 3.0 per cent this year, the China Business Newssaid, citing an unnamed source. The conference is the most important economic policy making event of the year and gathers top Chinese leaders, usually including President Hu Jintao and Premier Wen Jiabao.

As I mentioned in an entry last month, it was going to be very hard for the banks to stay within this year’s RMB 7.5 trillion quota, and there was a real question about whether or not the regulators were going to enforce the quota.  On Tuesday evening the PBoC even announced that it was going to face challenges in controlling the lending pace for the rest of the year. Separately, Tuesday’s Bloomberg had an interesting article on the subject:

China’s biggest banks are close to reaching annual lending quotas and plan to stop expanding their loan books to avoid exceeding the limits, according to four people with knowledge of the matter.  Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and Agricultural Bank of China Ltd. are only extending new loans as existing ones get repaid, the people said, speaking on condition of anonymity. Lenders are also cutting holdings of discounted bills to make room for longer-term debt, they said.

Tuesday’s People’s Daily is suggesting that next year’s loan quota will be below this year’s:

Financial institutions forecast that the new bank loan scale will reach between 6 trillion yuan and 7 trillion yuan in 2011. Although the figure is lower than the 7.5 trillion yuan of new bank loans for 2010, its upper limit will possibly reach 7 trillion yuan. This is mainly associated with the loans to be allocated to reserve projects.

I am very skeptical that they will be able to reduce the loan quota next year, especially if trade tensions worsen, which I expect, but I did notice that there was sort of an “out’ in the PD article:

Furthermore, a certain amount of new loans should be extended in order to ensure continued economic growth and structural adjustments in 2011.

On the subject of interest rates there was also this article in Bloombergabout concerns that interest rates would rise:

China’s benchmark money-market rate rose to the highest level in almost seven weeks on speculation policy makers will lift borrowing costs again after raising lenders’ reserve requirements last week to tame inflation.

China’s central bank adviser Xia Bin said the nation should further tighten monetary policy next year due to the pressure of excessive liquidity at home and abroad, the Shanghai-based Oriental Morning Post newspaper reported yesterday. The People’s Bank of China said Nov. 19 it would lift the amount of cash banks must set aside as reserves by 50 basis points from Nov. 29. A press official at the central bank, who refused to be identified, declined to comment.

“Future rate hikes and inflation-curbing measures are now more adequately priced in but the bias for higher rates will remain until the next rate hike materializes,” said Delphine Arrighi, a Hong Kong-based strategist at Standard Chartered Plc. “We still see another 25 basis point interest-rate increase by the end of this year, and another three increases, all of 25 basis points, within the first half of next year,” she said.

Last month I said I doubted Beijing’s resolve to hold firm on the loan quotas, just as I doubted we would see much action on the interest-rate front, but it seems increasingly likely that the hawks are going to win this argument.  So are interest rates really rising, and if so will it matter?

The answer to the first question is: No.  Inflation this year is rising much faster than interest rates, which have only managed a 25 basis-point hike.  It will take at least 200-300 basis points, probably a lot more, just to bring real deposit rates back to where they were earlier in the year.

As for the second question, I am not sure raising rates will reduce inflation at all.  On the contrary, in China they may actually increase inflation.  I know this is going to seem pretty controversial – how can raising rates make inflation worse?

Bear with me.  In the US, I think, most of us agree that raising interest rates is anti-inflationary, but why?  I would argue that it reduces inflationary pressures primarily through three channels.  First, raising interest rates makes it more expensive for consumers to borrow money to finance purchases.

Second, because most Americans save in the form of stocks, bonds, and real estate, rather than bank deposits, higher rates are associated with declining asset prices, and so Americans feel poorer.  This (the “wealth effect”) causes them to reduce their consumption.  Finally, raising rates reduces investment and so raises unemployment, further reducing consumption by increasing uncertainty and lowering household income.

In other words raising interest rates in the US puts downward pressure on prices by reducing demand.  But will raising interest rates reduce demand in China?

I am not at all sure it will.  Take the first of the three effects.  Excluding mortgages (whose pricing reflects other concerns) there is very little consumer financing in China, so increasing its cost is not likely to have much effect.  You might argue that it will affect demand for automobiles, where there is some financing, but this is a small part of the consumer basket and most of the inflationary pressure is anyway on food prices.

What about the wealth effect?  Here raising rates may actually be counterproductive.  The vast bulk of Chinese savings is in the form of bank deposits, and China’s artificially low interest rates are effectively a major hidden tax on household income, as I have argued many times before.  In this case raising the deposit rate is like reducing taxes, and this is hardly likely to reduce demand.  On the contrary, by raising disposable household income it will actually raise household consumption, although this may take several months before it is significant.

Finally what about the effect on investment and employment – will raising rates cause unemployment to rise?  Maybe, but with real lending rates so low, perhaps even negative, and with the credit risk on much of the lending effectively socialized, the mechanism by which interest rates regulate lending does not work in China they way it does in the US.  What limits credit growth in China is primarily the new lending quota, not interest rates, and perhaps not even reserve requirements.  Interest rates themselves are likely to have little impact on the amount of lending – at least in the formal banking system, but in the informal banks, where there is no financial repression, it might.  Anyway I am very skeptical that the State Council will let rates rise enough to let rising unemployment bring down demand.

In a funny way, then, rising inflation creates its own resolution in a financial system that is severely repressed.  As inflation rises, real interest rates decline.  This reduces real household income and so reduces demand.  It also reduces the real borrowing cost for manufacturers, and so supply rises.  In my opinion this is the main reason why countries with severely repressed financial systems can accommodate rapid monetary growth and low inflation, as China has for most of the past two decades.

This doesn’t necessarily mean that inflation won’t be a problem in China next year.  Many things affect inflation besides the monetary response.  My point is not that thanks to financial repression China can never experience inflation, it is merely that raising interest rates might not be nearly as effective in combating inflation as we might otherwise think and may even be counterproductive.

My former student and Shenyin Wanguo associate, Chen Long, after he saw the early version of this piece made a strong counter-argument that one of the consequences of inflation and negative real deposit rates is that households are reducing deposits and rushing to anticipate consumption – i.e. buying stuff now that they don’t really need as a store of wealth.  This drives up consumption today, albeit at the expense of consumption tomorrow, and in that sense it may add inflationary pressure.  Hiking interest rates, Chen Long pointed out, may reduce the incentive to do so.  He is right, of course, but it is not clear that this effect outweighs the wealth effect.

While financially repressed systems are very good at combating inflation, this comes with a cost – overinvestment and low household consumption.  Already we are seeing household deposits flee the banking system and much of this money is going to end up fueling even more asset bubbles.  Meanwhile the value of Chinese savings continues to drop, making Chinese fell poorer and so reducing their consumption.

In my opinion this is the real reason the PBoC wants to raise interest rates.  They want to slow down the massive capital misallocation China is experiencing and they want to rebalance the economy towards consumption by increasing household wealth.  But are they succeeding?  Not really.  It would take an awful lot of interest rate hikes just to bring real interest rates to where they were a few months ago.  Chinese growth is getting more, not less unbalanced.  But perhaps we won’t have to worry about inflation too much longer.

http://mpettis.com/2010/12/chinese-growth-in-2011/

http://mpettis.com/2010/11/qe2-and-the-titanic/

[dryam]

Excellent read.....thanks.

[Spalding_Smailes]

Also. Victor Shin from Northwestern in Chicago. Great info-

http://chinesepolitics.blogspot.com/

Sunday, April 04, 2010 A Reply to my Critics on Local Debt

Victor Shih

Since the publication of my editorial in the Asian Wall Street Journal on local debt, there has been a wave of interest on this issue. Several investment banks have issued reports on local debt, and some of them have disputed my main finding that current local government investment vehicle debt stands at around 11.4 trillion RMB. The World Bank likewise addressed this issue and came up with a much lower estimate on local investment company (LIC) debt. In the discussion below, I outline some reasons why I still adhere to my estimate that existing local investment vehicle debt stands at around 11 trillion RMB. Furthermore, I once again reiterate that local debt is a serious problem which will require decisive actions from the Chinese government. 

Some points people have raised about my estimate of local debt:
1. The Chinese government claims that there is only 6 trillion RMB in local investment vehicle debt.
My response: A. This widely cited figure was produced by a 6/2009 CBRC survey of the situation. The exact methodology is unclear, but informants state that the CBRC extrapolated this amount on the basis of a partial study of a few provinces.
B. Other government agencies have provided conflicting and higher amounts. For example, a MOF research team uncovered "well over 4 trillion" in late 2008 (excellent Credit Swiss research even states that the 4 trillion was a YE 2007 figure).
C. The CBRC finding concerns only bank loans, but total debt should also include bond issuance and accounts payable, which constitute triangular debt.
D. if we sum the gross debt of just the top 50 or so LICs, we quickly arrive at gross debt of over 2 trillion (try adding the gross debt of Guangdong Highway, Guangdong Transportation Group, Chongqing Highway, Beijing Basic Construction, Shanghai Urban Construction and Development Company, Shanghai Pudong Development Co., Tianjin Urban Basic Infrastructure, Binhai Development...etc.), so the remaining 8000 or so entities only owe 4 trillion (on average 500 mln RMB each)?

2. The 11.4 trillion is too high when compared with total bank loans in various categories.
My response: A. First of all, total loans outstanding at the end of 2009 was well over 40 trillion RMB, and I think it is completely reasonable to believe that nearly 1/4 of it was loans to LICs. In fact, I wouldn't be surprised that a higher share of bank loans ended up in LICs. 
B. Some analysts have trouble believing that such a high share of medium and long-term loans ended up in LICs. When we consider how many LICs there are and the vital role they play in the local economic strategy, it is not surprising that likely as much as 3/4 of new medium and long term loans in 2009 ended up in LICs. 
C. Beyond medium and long term loans, many LICs are holding companies with subsidiaries engaged in a wide range of businesses. For example, the LICs run thousands of hotels across China, and loans to these hotels would be classified as loans to the service industry. Thus, in addition to medium and long term loans and loans to infrastructure, it is perfectly reasonable for a sizable share of working capital loans, trust loans, and loans in the "other" category to end up in LICs. Again, gross debt of these entities would also include bond issuance and debt owed to each other.

[Richard Head]

Gold futures may have fallen more than spot prices today because of a shortage of the physical commodity, said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin.

“Demand for physical bullion in the form of gold bars in Asia remains firm as seen in the higher premiums and there are reports of actual shortages of 1-kilo gold bars,” O’Byrne said.

[slow_roast]

BTFD in silver today...well, there isn't much of a dip is there?

Agriculture, Ag, and Au; the three As of a healthy portfolio!!!

[unwashedmass]

whoopsie....here we go again!.......come on CTFC, close those eyes!  turn on that porn!

can't wait for the next "hearing"...

at this point, i'm serious, what do we think the payoffs are for the CTFC people? Can't be nothing -- i mean, watching this and knowing that the entire world knows now, they have to be compensated in some manner for putting their entire careers and few shreds of credibility that they have at risk...

let's have a pool on how much we think the payoffs are....i'm thinking its got to be at least a million per raid when you think of how much JPM is taking off the table.

[Spalding_Smailes]

Jim " the Godfather " Rogers - Jan. 13 2011

Gold is “overdue for a rest” and probably will fall after a decade of gains that sent prices to a record, said Jim Rogers, the chairman of Rogers Holdings who predicted the start of the global commodities rally in 1999.

While gold “may go down for awhile,” the metal is “going to go over $2,000 in this decade,” Rogers, who owns gold, silver and rice, said today during a presentation to business executives in Chicago. Gold touched a record $1,432.50 an ounce in New York on Dec. 7. The price closed today at $1,387.

“I’d rather own rice,” Rogers said. “I’d rather own something that’s more depressed than gold.”

http://www.bloomberg.com/news/2011-01-13/gold-overdue-for-drop-after-dec...

[flacon]

Does Jim Rogers think that Quantative Easing is "overdue for a rest"? Does he think that raising the debt ceiling is "overdue for a rest"?

Gold won't rest until The Ben Bernank takes an overdue dirt nap. 

[Turd Ferguson]

+++++

[Sophist Economicus]

Dirt nap...

[Bastiat]

Right, flacon. Is fiat money creation "overdue for a correction?"

[Hephasteus]

It's all timing. They don't want it broke just yet. And they sure don't want it breaking when they are not pushing the break buttons.

[Spalding_Smailes]

Mr. Rogers understands dollar denominated debt. 

If hyperinflation is " right around the corner " why would he be telling investors to run and risk his fantastic reputation for making calls on all commodities ...

Keep buying then .... good luck trading against Capone. Lol'

[umop episdn]

So sayeth Spalding "the troll" Smailes, who has to quote we just read above with no additional comment except to stick a rather nasty name to Jim "Santa" Rogers. 

[Spalding_Smailes]

What do you want to talk about dollar denominated debt/credit or the dollar peg across the globe, the shadow banks ? RIMM, X, NVDA, CAT, MIPS ....?

[Diogenes]

Jim Rogers is a student of history and an expert at spotting long term trends, but confesses to being the world's worst market timer. He backs his opinions with his own money, but tends to get in too soon and get out too soon.

[Snidley Whipsnae]

As long as the Fed and other central banks continue to print fiat currencies in rediculous amounts in order to keep their currencies competitive in export markets, we will continue to see rises in all Precious Metals and all commodities.

Why is this so difficult to understand?

I respect Jim Rogers...but I also suspect Jim Rogers motives...He is a hedgie and as such cannot be trusted to tell us what he is actually doing...although buying futures in rice and other food commodities is almost a no brainer with the amount of monopoly money being printed now.

[Turd Ferguson]

'I respect Jim Rogers...but I also suspect Jim Rogers motives...He is a hedgie and as such cannot be trusted to tell us what he is actually doing...although buying futures in rice and other food commodities is almost a no brainer with the amount of monopoly money being printed now."

This is 100% correct. (imho)

[goldmiddelfinger]

Gold ain't looking too good today troll

[Hephasteus]

Why is it going on 50 or 130 pip fucking hopscotches?

We're in some real strange shit here.

[Goldenballs]

Thats because its paper Gold as against the hard,physical,non-ponzi variety my friend.

[Spalding_Smailes]

But , but, but .... With 13 trillion in new dollars backstops since 2007 & QE1, QE2 ... It should be booming, not having a top called by Jim Rogers.

[dryam]

"today"  So, sounds like you are quite the day trader......good luck with that.  All of the investing legends have very long time horizons. 

So,

....................../´¯/)
....................,/¯../
.................../..../
............./´¯/'...'/´¯¯`·¸
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[Snidley Whipsnae]

Hi Turd, I enjoy your site and read it daily.

Keep the faith! Keep up the good work and as Red Green says... 'Remember I'm pullin' for ya...we're all in this together.' :)

[Kina]

Whilst the global economy is walking on the edge you cant not have PM.

[ACjourneyman]

But look n the bright side, at least are friends at JPMORGUE were able to make 17 billion dollars profit last year. Or should I say transferred 17 billion dollars from our pockets to theirs.

[Pegasus Muse]

Good stuff.  GoldCore would improve their product by adding links to the original news articles.

[Arius]

in defense of all the bubble/top callers as Maestro himself said it is difficult to recognize a bubble when it develops...sometime  in the future they will get it right...like the broken clock....

btw, soros is another level (who knows...)

[lsbumblebee]

Mr. Gensler has just released his preliminary findings from yesterday's CFTC hearing.

http://www.fotosearch.com/bigcomp.asp?path=CSP/CSP148/k1489086.jpg

[DaBernank]

Are those who are concerned about daily moves in Gold using it as a trading vehicle? It's not, it's a long-term wealth preserver. At least physical is. If you're trying to pick tops and bottoms of GLD, then we're not talking about Gold anymore. Go buy Coinstar instead, - quite a dip there yesterday!

[Spalding_Smailes]

Yup.

Turd keeps getting his trades blown out ... The rants on the EE are epic after the fact.

[apberusdisvet]

The game will end when it will end; but i imagine that it is getting harder and harders to play it.  It's funny that TPTB think that China will never be a participant when, in fact, they and other Asians will be the drivers of PM prices going forward.  Looking at the Kitco charts, it's hard not to see the manipulated flash crashes; Tyler: take notice (chuckle chuckle)

[unwashedmass]

i think the game is ending now. it is hard to preserve even the pretense of credibility on the part of our "regulators" aka the CTFC.

they might as well close up shop as far as all the regular participants in the market are concerned. but this news is now getting out to the general trading public. the scam is ragingly public.

you have to wonder exactly what or how the CTFC people are getting paid off to take the risks here......i mean, at some point, when this all blows up, there are going to be indictments, i would hope.....and at that point, amid the rubble, it could be hard for the banks to just pay off the usual suspects to let their pet "regulators" off.

people are going to be out for blood.

[unwashedmass]

the metals community is certainly going to be watching what happens to gensslar when he tries to tell everyone "no one knew it was happening"....

[youngman]

They just turned the computers on....straight down....what a joke.....did we just employ 5 million people

[dryam]

deleted

[Duffminster]

This is management of perceptual economics (MOPE) designed to help the central banks change market direction (short term).

The Fed can not actually remove QE and here is why:

If the Fed removes QE the bond market will collapse because the Fed is now the primary buyer of most of the US debt.

If interest rates climb much, it will cause the US budget deficit to spike because even at 5% interest, most of the money in the US federal budget would have to go towards paying the debt service, rendering the US not only technically insolvent but functionally insolvent.

If the bond market collapses, interest rates fly. If interest rates fly the already extremely weak real estate market nose dives.

If the Fed stops its QE program and its related Permanent Open Market Operations programs, then the stock market will crash. This is because the primary money keeping the stock market afloat is coming from the Fed primary dealers who use the POMO money to buy the index futures.

Outflows from retail and insider sales have been very high for months.  Take away the QE for any length of time and the crisis of 2008/2009 comes back but multi-fold.

Given the recent revisions in the Philly report and Chicago PMI, I don't see real basis for long term growth accept among giant derivatives traders who make money because they are market makers and benefit no matter what happens.