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Morning Gold Fix: June 3, 2010
Courtesy of www.fmxconnect.com
Good recovery news in U.S. housing and automobile sales made for strong equities stateside yesterday. Gold didn't like this. But it wasn't a disaster. Usually good economic news triggers the fear that the fed will have room to tighten and squash a devout gold bug's inflation scenario. But not lately. Sure, futures sold off, but not much.
Today's activity will continue to be influenced by the "risk-on" crowd. Sell bonds, buy stocks, buy oil, sell gold, rinse repeat. But we see less and less people selling what they buy in the gold market. Sell side activity is more dominated by hot money liquidation than ever before. PIMCO's El Arian said their fund cut its gold holdings in half, citing the liquidation deflation drivers at play. That will not help today's activity either. We can only hope he is right. Our order underneath remains unfilled.
It seems that as soon as the sovereign default type buyers take a breather, the hyperinflation crowd steps in. Remember the goldilocks economy, where everything was just right? We might be entering the anti-Goldilocks phase of the economy where you just can't win.. Unless you own gold.
Where we once had soft landings, now we have stagflation. Where we used to be in the sweet spot, now we are between a rock and a hard place. The policy choices of our governments are constrained by their previous policy choices.
Asian markets followed through nicely last night reacting to the potential for revitalized US consumer demand. The US consumer as savior of global growth shtick was dusted off again. How hi can a dead cat bounce?
August gold was down 5.6 to $1217 per 100 troy ounces as of 8:00 AM EDT, this morning. The June U.S. dollar index was down .097 to 86.78. July platinum was up 7.2 to $1557.6 per 50 troy ounces. July Silver was down 8 cents to 18.235.
-Elizabeth Thawne
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weeeeeeeeeeeeeeeeeeeeeeeeeee!
You know what you get when you draw a channel line at the top of the chart as well? A rising wedge.
It's clear as day.
Have fun holding gold...
Who cares. Gold is such a tiny market and it's useless. I mean do you even care if it goes up or down?
Have fun shorting it.....
I wouldn't play in the gold market either way. It doesn't have enough of a risk/return for me.
I'd say that your wedge still has a few more months until it breaks down, so it's not like the drop is imminent... I don't see a huge breakout either though. You might get to 1300ish before the drop occurs. I haven't calced out the target of the wedge, so I'm not going to pretend that I know what the drop will go to.
On longer range charts, we have supports at 900 for the current wedge, and 611 for the wedge that has occured over the last decade.
You can laugh now, but I think that these targets will be met eventually, especially the 900 target. The longer range wedge is questionable.
I really don't see the rising wedge pattern here. Looking back at several charts I see nothing but a strong bull market underway. Perhaps short term we can look for a handle to form before another leg up.
Sure it's recovering. I will believe it when the forclosures on my block get their owners back and paying their mortgages. Until then, I cannot even begin to think we have a "recovery" afoot. What a bunch of bs.
Hope, what a great investment strategy. Don't forget prayer.
um....someone should tell the asians that because Ben Bernanke didn't share the free money with the peasantry, the American consumer is deader than a doornail....
and what free cash he/she has is already spoken for by the banks (why should the peasants have ANYTHING?), or the state and local governments (the Feds are cutting us off)...
its a fantasy that the American consumer is coming back.... Ben has guaranteed their deaths and made them pay for the coffins.
Wile E Coyote economy. It won't fall until it looks down and sees the gigantic canyon that has opened up beneath them.
Gold holders are the Roadrunner in this scenario.
Don't forget that distressed governments confiscate gold and any other life preserver people try to grab.
The only Roadrunners I see are those who are already fit to survive without oil. Can't produce and sustain your own food supply? Gold won't save you.
Thats a good one. tooo funny.
Gold holders are the Wile E Coyote.
They believe that they are seeing a cup and handle when they're really looking at a rising wedge.
Look out for that anvil...
A Plague Upon The World: The USA is a “Failed State” by Dr. Paul Craig Roberts, Assistant Secretary of Treasury under Reagan
Another outstanding summation by Roberts. I love reading his work.
Question: Dr. Roberts, the United States is regarded as the most successful state in the world today. What is responsible for American success?
Dr. Roberts: Propaganda.
Loved it. Even if it's biased by one of the creators of the plague. Is this an over compensation piece?
How come he left out the Kardashians?
Note to self : The Chinese are gold purchasers and have been #1 gold producers for the past three years. The middle eastern cultures value gold as currency. China will back the Yaun with gold to be better able to trade with their middle eastern neighbors.
What's there going to be left to trade? The Arabs have been lying about their oil production, they are in terminal decline.
The new camel trade?
What's left to trade? Everything under the Sun. Not everyone has offshored their industrial base like we have.
Sorry, you're not going to be trading much of anything unless you can find a way to force people to take on enough credit to pay the interest on the debt and find a way to retool the world with a sustainable free energy infrastructure. The system has entered entropy because it is based on exponential growth and we can no longer supply the growth rate.
All other arguments are chasing after the wind. There is no getting past it.
yes and that is gold bullish
Sand.....because the Chinese need to build more land.
I am not sure that they have been lying; I'm not saying that they are telling the truth. But if the OPEC nations had more of an incentive to sell to China than the US, where do you think the remaining oil willl go? In addition, if the largest oil consumer is cut off wouldn't that mean more oil for China?
There are oil pipelines being proposed and there is a copper mine in Afganistan and the Chinese want direct access.
Camel meat is fine eating!
Why not cut out the US?
They are already the economy built on sand, more sand won't help them. The Chinese were sold a lie. The truth always wins. There is no more cheap oil to run their factories and send their crap overseas, their profit margins will soon go negative. China must be liquidated accordingly. Their population problem is going to take care of itself soon.
Peak oil is bullshit
doesn't matter anyway, lots of nuclear and nat gas to go around
Ostrich
Try fertilizing millions of acres of farm land with nat gas derivatives or uranium.
Everything you find disagreeable is "bullshit".
Wake up, world as we know it is not sustainable. Wake up. Wake up. Earth to Spitzer. Wake up.
" China will back the Yuan with gold to be better able to trade"
Shit. This is a great idea. I am bloody serious. Yuan+Commie China is not a good sale. But Yuan+Commie China+Gold will have a strong appeal to its trading partners.
I think it is a formula for success.
I think it's a formula for world dominance and Yaun as reserve currency. India & Pakistan have a rising middle class. Bring oil via pipeline to China, it's cheaper than shipping it to the US overseas. Chinese people continue to manufacture and stay employed, sell good to rising middle class. Win-Win-Win for everyone except North America.
I like to think of this as the "Used car salesman economy". Our gov't telling us what a little creampuff this baby is. Only drove to town once a week by a little old lady.
Sawdust has been poured in the transmission to keep it from slipping, A big pool of oil leaking underneath with no way to stop, no parts available because the men that made the car are now termed great depression has beens. The sales man can get me zero interest if I will just buy it.
Don't forget to get the CarFux!