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Morning Gold Fix: June 2, 2010
Courtesy of www.fmxconnect.com
The fundamental gold story has not changed. In fact, it has only exacerbated in the last 24 hours.
China is taking more aggressive steps to deflate what many are regarding as a real estate bubble. Meanwhile in Euro Land, reality is setting in. No credit, and no currency strength is putting a crimp in the consumer's ability to continue to buy Chinese goods. Low demand of finished product from China leads to less demand from China for raw commodities. We may now be in the middle of a large disinflationary commodity bear market, at least for industrial commodities. For Gold, not so much.
Futures came out strong yesterday in the face of a weaker Euro, Oil, and equities. This is to be expected and part of the pattern. What was not expected was when the Euro popped at mid day. Equities proceeded to pare losses but mysteriously Gold remained firm. (PPT lacks multi-tasking skills?)
As a result, we are keeping two different headline templates next to our keyboards now.
1- Gold was higher today despite_______
2- Gold was higher today as______
We expect a battle with the mainstream media on copyright usage of said phrases, but will take the risk for our readers.
Why will gold continue upward? Because we are buyers of it $300.00 lower, that's why. Not theoretical buyers mind you. Buyers for our P.A.s. We fully expect to be unfilled. Our interest is exactly like a trapped short beneath the market. That said, if we go to market, you will be informed, as only then will Gold once again become a commodity and not a competing currency. Get short when we get filled!
August gold was down 5.1 to $1221.8 per 100 troy ounces as of 7:45 AM EDT, this morning. The June U.S. dollar index was up .295 to 87.020. July platinum was down 4.3 to $1545.1 per 50 troy ounces. July Silver was down 1.76 cents to 18.375.
- Elizabeth Thawne
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futures are up. gold is down.
today is run up?
UPDATE, sorry I was not replying to you.
You are in a deflationary death spiral folks, cause by the use of an unsustainable equation. The US consumer peaked in 2007 in requesting the commercial banks to manufacture new credit, since then the US consumer has started to collapse. Eventually those factories in China will have to be shutdown.
Right now to keep the game going a little longer, China will have to eventually drop the Yuan against most currencies.
What I find most interesting is that the gold investors on ZH have understood your argument for some time before you came here, yet they still invest in gold. On the other hand you seem to only to understand a low level gold argument based on hyperinflation. This knowledge level is only about one level above 'you can't it' eat it in it's simplicity. But at least you're doing a little better than Mr. Denninger.
For the record, I have never said gold can not or will not be useful. On the other end of that, it's not going to stop what is going to occur. I actually have some, some silver as well, but when the SHTF I don't pretend for a second that gold is going to make one ounze of difference, most probably it won't at some point.
Someone has got to go, whether they hold gold or not is not going to be material.
I dunno if it will or not, but it's more likely to than paper.
One troll talking to another troll bashing gold, and both trolls are probably the same troll
.
Why is this trolling, this board has no requirements to be pro anything. If anything you are the troll, you believe in fairytales.
Do yourself a favor, stop reading stupid Peter Schiff books.
Peter Schiff's been right, unlike your father Jon Nadler who said gold should be at 600 by now
I never once said where gold should trade, you are a liar probably to fuel your delusions.
Peter Schiff was right alright, he predicted that Europe would decouple, and it did, it decoupled and fell right into the Med. He has no understanding of how the financial system operates.
He's turd riding the same waves as all the other paid advisors.
Perhaps you, with your vast knowledge of the financial and monetary systems and your profound intellect and insights, should be speaking on CNBC instead?
Maria Bartiromo: "And now, speaking from ZeroHedge is our guest Mako."
Mako: "Hello Maria ..... Hello Maria .... Hello Maria ..... Hello Maria ...... Hello Maria ...... Hello Maria ....... Hello Maria ......"
Maria: "Oops, we appear to have a broken record here ...."
Ok Prechter. I still have that gold I bought from you for $400.
Correct.
Life has entered backwardation
"DISINFLATIONARY???" who you kiddin...it called DEFLATION!
but both are right you know :)
doggis
They are still waiting on Helicopter Ben to show up, don't bust their bubble. They all think there is a Wizard of Oz coming to save them.
I've actually seen the wizards shadow. The man is a GIANT!
He'll save us! And if he won't SCOOBYDOOOoooo WHERE ARE YOUuuuu!!!
:)
Fuck I wish he did exist. He should have sent over the free pizza, free 12 pack and 99 virgins I requested the other day.
Yeah, but the pizza is soggy, the 12-pack is flat, and the virgins are all fat & ugly. Consider yourself fortunate.
I seriously doubt I will see 99 virgins show up at the door no matter what appearance they have. Point well taken though.
:)
There simply is no Wizard of Oz, the system will implode, liquidation of the non-performing liabilities, then most probably humans will choose to rinse and repeat.
Mako, you've got all your fantasies mixed up. Even my young son knows that if you want gold, you need to catch a leprecon. His question to me last night was, when is the best time to catch a leprechaun? Can you catch one on St. Patrick's Day or do you have to wait for a rainbow? He was wondering if he could catch one with a net or do you have to hit him in the head?
Any advice? My son knows I have gold. I hope he never hits me in the head.
I come from a long line of leprechauns and we have never been caught.
Unfortunately we are not friendly creatures and are prone to violence when our precious is threatened so therefore my advice is best not followed given your family connection.
However you could reassure him by displaying your will and legacy........ then again better not
Everyone in Ireland knows that you have to throw a potcheen (very strong alcohol distilled from potatos) party, anywhere near Muckross Lake (also called Middle Lake) near Kilarney. The leprechauns will show up in droves after midnight.
That was not true since the start of the millennium as our tastes became more sophisticated , now however its back to basics for us small folks.
LOMA FAS
An iron bitch by any other name smells just as sweet.
So, what will The Chinese Politburo decide to do about the millions and millions of citizens who left the rural areas and relocated to the cities in search of work/money? Without export demand, there is no labor demand.
My guess, the Chinese military-industrial complex will kick in. They will spend their $1T in reserves on the greatest military buildup the world has ever seen. This will spending will provide jobs and, more importantly, internal political stability.
What happens next? Hold on to your hats...
A portion of the Chinese went back to the villages in late 2008 and early 2009. As with all of life, cycles occur, since that time a stablization has somewhat occurred which stopped the factory closings in China temporarily. Eventually all the US and yes, the China sugar high that cause a large up move will be exhausted, resume of the downward cycle will continue.
The system peaked in 2007 when the US consumer peaked, it's over now. See Federal Reserve Z1 report for more info.
Yes, eventually mass factory closings in China.
http://www.nytimes.com/2008/11/14/world/asia/14china.html
Back then, it's really only beginning. Enjoy the uptick in the much larger downtick movement while you can.
Super link, Gracias
My guess is they will do the same thing the US did after WWII. Nothing. The market will automatically and very quickly retool for domestic consumption. The Keynesians at the time suggested we keep building battleships and sinking them in order to keep the economy rolling. Common sense prevailed back then. Hopefully it will do the same in China.
Hilter and Japan wiped out most of Europe and a good portion of Asia. Liquidation will have to occur first, without war probably a generation or two event first.
Common sense did not prevail back then, they just switch the players around. It was actually a lack of common sense that Man continue to go down the same path expecting different results.
The only thing dumber than loaning an American $500,000 for a house on income of $2000 a month would be lend a Chinese factory worker $500,000 for a house on $400 of monthly income. There is no retooling, the system is not setup the way you are trying to make people to believe.
"Decoupling" is a myth, like the Wizard of Oz Ben everyone keeps talking about.
Yeah, just revalue the Yuan higher and watch those Chinese factories implode.
1 trillion is nothing for a war machine. The U.S. spend at least $500 billion every year.
. . . sigh.
Yes, a trillion just ain't what it used to be.
A trillion here, a trillion there, and pretty soon, you are talking about some serious money...
god I wish I had a trillion for every time I heard that one : )
A trillion USD still goes a pretty good long way in China. Point taken, but just saying.
A trillion in China buys alottta bodies to catch bullets. The Romans put the vast legions to work in public construction when not fighting. China will just wait for something hot to happen, and jump in. My guess, NK. The Chinese are tired of the brat boy, blow him out and take it over, why not?
They certainly have an over resource issue and only made worse with depleting global demand. But that's just half the issue. What to do with all that investment from the west? Companies like Apple and Nike fired their US employees and moved production to China only to now see that depleting sales erode profits regardless of the margins (China has hit bottom on their margins). I believe their solution would be a page from history where the Chinese will be forced to consume. Although iPODs may not be as seductive as opium, I certainly come across more tech junkies in the US than those on the horse.
Sorry...inadequate oil supply to facilitate that.
That is the silver lining in the cloud, the merciful shortness of WW3 due to energy supply constraints.
JPM is working really hard this morning...silver taking the brunt, but no surprise there.
wonder who has the xanax concession next to their prop desk? with a third of the world's annual silver production held short.......that's the hot dog stand i want....
Buy the dips,physical, its a gift that will pay off huge in the future..The us will use all of the us mined silver production of 40 mill oz this year in eagles alone,how long is that going to last?
Indeed - that was a pretty nice Crimex take-down of Silver this morning. Pretty typical, but still nice to see that clocks still work, occasionally.
all ben has to do is pick up the phone. 'it's on the way'
ben's first answer is actually: "Do you take a check? I'm good for it!"
china's big worry is not the us or anything other than all those citizens getting pidded off at the same time. neighborhoods burning police cars is not unusual over there.
where's goldbitches now that golds headed to $5000????
chicken.....
Hello, my name is Mako.
But you can also call me Broken Record.
Or Hijacker of Threads.
Newsflash to Mako: WE GET IT ALREADY!!!
You do NOT need to repeat your same tired and simplistic rant for the 12,684th time!
he's just another gold fearmongering troll
I agree with you on the broken record thing. But I understand his point. I don't think he's a gold hater, he's just forecasting a problem that goes deeper than money.
All I know is that if I was that certain the apocalyptic end was so near, I'd be out living life a bit more, rather than repeating myself endlessly on a forum of people who don't pay me any heed. Either that or eat a bullet, because a life so devoid of hope cannot be very enjoyable.
If you eat a grenade, you might be a Redneck.
Mako doesn't have a fucking clue.
His thesis is absolutely correct, IF GOLD DID NOT EXIST. He just does not believe that gold is money. He is like Denninger, he thinks that money is only credit against all assets.
Iran to sell 45 bln euros, buy dollars, gold -Xinhua
http://www.reuters.com/article/idUSLDE65111120100602?type=marketsNews
Mako does too have a clue. He is right that in a worst case scenario gold isn't where its at. In anything less than worst case, however, gold will be very useful to have. You can't eat it, but people know it is valuable, so you can trade it for something to eat. I can store more value in a small space with gold than I can with bic lighters, beans, bandaids, or bullets.
Where Mako goes wrong on gold, as do so many goldbugs themselves, is in assuming that civilization is going to utterly collapse with the credit markets and fiat dollar. Well, there have been dozens if not hundreds of credit and currency collapses in just the last 100 years, and guess what? Civilization survived! Things sucked, sure, and many people lost their savings, and quite a few lost their hope, and some even lost their lives, but civilization plodded onward.
Even if one is willing to assume that civilization takes an unprecedented hit as a result of the upcoming credit and currency collapse, that is still NOT the end of the story. Sooner or later, there will be a recovery, and even if gold does not serve one well during the crisis, it will allow one to carry their savings forward into the better times to follow.
Believe me, I have been accused by more than one person of being a "gloom and doomer" in the last few years, but really, this idea of some indefinite Mad Max future is simply unrealistic.