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Morning Gold Fix: June 28, 2010
Courtesy of www.fmxconnect.com
Gold activity was mostly muted this weekend as heads of state gathered for the G20 and the rest of the world tuned in for the start of the World Cup knockout rounds. Gold is mostly unchanged for the day, opening slightly lower than Friday’s close.
G-20 Observations
In the tug of war between the U.S. urging the European nations to buy more stuff, and the EU insisting it was that very behavior that got us into the problem in the first place, score one for the Continent. It is clear that the U.S. does not carry as much weight as it used to internationally. While the Krugman-Geithener-Bernanke troika scratch their heads as to why the EU can be so stupid on this, let us remind the KGB that while U.S. memories may carry the scars of the Great Depression, theirs is a different reality, one heavy with the Weimar Republic and inflationary collapse.
But let’s be practical. Any austerity measure imposed by a government only becomes tolerable to a people when that government has the ability to print its own money. So, whether the Germans admit it or not, there will be money, and lots of it.
What other way is there to quell the civil unrest that will accompany a spoiled populace having its candy taken away? Believe me, the only countries that will abide by strict austerity measures will be those with printing presses.
It is the countries without printing presses that you have to watch. Do you really think Greece’s population will stand for entitlement pullbacks without getting more money? And while the U.S. is trying to jawbone the world into aiding to export its own recession, don’t you think the EU is thinking the same thing? How will the Germans sell their finished goods to Russia ( a relationship that bears closer scrutiny) if the Euro is strong?
Bottom line is, Europe also seeks to export its recession via currency depreciation and reduce its debt by the same method. In our musical chairs scenario, it will be the U.S., Germany, Japan, and the U.K. trying to sell overpriced luxury yachts to lower middle class China, Russia, and India. And we haven’t even discussed protectionist tariffs yet.
Austerity is a noble thing, and on an individual level the best way to go. But try telling that to the mob. Once the effects of shrinking tax revenues begins to show up, the pedal will be to the metal on the money factory. Give the people what they want.
August gold was up 0.4 to $1256.6 per 100 troy ounces as of 7:13 AM EST, this morning. The September U.S. dollar index was up .136 to 85.715. July platinum was up 16.2 to $1586.6 per 50 troy ounces. Silver was down 3.5 cents to 19.075.
-Elizabeth Thawne
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I'm diggin' the "KGB" acronym now.
Awesome post. I always see it as a battle between the balance seeking demand side driven system and the JIT, unstable, bloated Supply side system we have right now.
In every sphere of our lives, I see the overextended rot of the supply side.
Even when it comes to money, they are supply siders. We'll print for now and sell on the debt.
Someone flush something or is that the sound of value gurgling down a black hole?
ORI
http://aadivaahan/wordpress.com
Where can you buy 100 troy ounces of gold for $1256.6 or 50 ounces of platinum for $1586.6?
You can't. PM Sellers have to eat as well, you know.
Dio,
That's the price if you buy 100/50, less cost's more.
Dio, she's referring to the futures contract where 1 contract is 100 oz for gold and 50 oz for platinum. Its poorly worded for sure.
Gold just tipped over $1260 and this is the day after the G20 meeting. Someone knows to get out of paper currencies.
Yep, and they just slapped it naked, $1249
As i recall, on JSmineset that Dan said $1262 would produce 'pain' for a certain qty of contracts. As such, keeping gold below 1262 is key it appears. Of curious note is that the slap down happened just before Europe closed.
I don't totally agree with this line of thinking. Ireland is a great example of a company without a printing press and taking austerity as well as could be expected. While there has, indeed, been pockets of instability there-- the populace sees the reality at hand and are working their way though it.
The UK is going to be the greatest experiment in realtime, though. It's great to have a printing press-- and at least for the U.S.-- it's great to have the world's reserve currency. But the reality is that every printing press measure by the heavily indebted has marginally less and less effect-- and there clearly are nasty side effects from printing to oblivion. That, I beleive, is what is finally beginning to sink in-- especially in the Eurozone.
Here's what I do agree with though-- having a printing press is like having a morphine drip. Using it sparingly-- while curing the patient of its ills-- can work. Unfortunately, most of the developed world doesn't have a clue on how to adequately manage the printing press. And the Federal Reserve may well be the best example of that...
Gold reaching $1262.9
I also don't get the part about revving up the printing press = austerity?
Austerity measures will be counterbalanced in part by printing money to ease the pain. buy less... but here is a little more money to feel better. Fiscal policy counterbalanced by easy monetary policy.
1265 will be vigorously defended....but.... lots and lots of buy stops beyond there. Once 1265 goes, look for a quick move to the 1289 area.
$1246
Holy shit! I've seen some impressive and blatant smackdowns from The Evil Empire before, but this one is prizewinning. The fucking cocksuckers took $10 out in 2 minutes!!
Is it Monday the 28th or Monday the 21st? I feel like I've dropped through a wormhole and gone back a week.
It's the politicians who are addicted to the spending. They have come to think that is their main job. Upholding the Constitution is like so yesterday for these guys. We have to send these clowns to rehab in the next three national elections and from every state house. We see the probabilities, but the details are guesswork. I expect a totalitarian power grab by those who think Marxism is just dandy if you have brilliant people to finally do it right.
Well, the SCOTUS just slammed their Dicks in the door........
5-4, Weapons(GUNS) for every city, state in the country...........
The LEFT will shit.
Sure, printing trillions is the way to go.I´m scratching my head as to why Elizabeth can be so stupid on this.
dude, Really?
KGB! that's it I am going to have trouble holding my sides in! that's funny right there! :)