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Morning Gold Fix: June 7, 2010
Courtesy of www.fmxconnect.com
Friday's activity was a microcosm of the drivers influencing gold of late.
The market opened under pressure Friday morning on the back of weaker-than-expected jobs numbers. Some estimates called for as many as 600,000 new jobs created, but that number was not even on the radar when the reflation reality-check of 431,000 was released. This caused most asset classes to sell off, precious metals included. The only thing that fared well was the US bond market. As we've said before, a deflationary selloff should occur before the much vaunted inflationary scenario can rear its head: a massive puke of all assets to cover margin calls, liquidations of profitable trades to cover losers, etc. Gold should not be spared.
Alas, our thesis is just that however, as Europe just cannot keep its story straight. Every time the Germans get things under control by balancing bailout money with a weaker Euro to prop up their exports, some knucklehead like Hungary steps out of line and flat out says, "We can't pay, please help us". This time it was Hungary. The immediate effect was to morph the orderly (more or less) slide of the Euro into a melt-down of accelerated proportions as deflation risk becomes default risk. Come Friday afternoon, the orderly selloff in gold was replaced by yet another sovereign warning shot across the Euro Zone bow, taking gold up $7.70 on the day, a reversal of $24.00 from low to high.
Futures opened firmly last night, despite the Hungarian President's retracting his comments and toeing the line. The euro was smashed to a low of 1.893-ish and most markets reacted poorly to that news, especially Asian equities. By the end of the evening however, the Euro, oil, and western equities stabilized showing small losses. We are still sticking with our opinion. Once Europe gets its junior partners to stop crying "Uncle" in public, Gold should sell off at least one time on a portfolio puke.
August gold was down 2.1 to $1215.6 per 100 troy ounces as of 8:10 AM EDT, this morning. The June U.S. dollar index was up .045 to 88.36. July platinum was down 20.7 to $1520 per 50 troy ounces. Silver was up 6.1 cents to 17.36. For Market Prices Click Here
-Elizabeth Thawne
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good post -Silver is leading and GC/SI ratio >68 is macro tell for derisking
Hey don't mention Silver...that price needs to come down just a bit more so i can go on another Silver buying spree. I love my poor man's gold.
i want more, but the real stuff is disappearing fast, and the premiums are skyrocketing.
Yeah, my local dealer said people are coming in like vacuum cleaners and wiping him out. He saves some for my mother and I cause we're regulars. Normally he sells AEs for $21, now he charged us $23... which is lower than his non regulars sales price.
Gold going down? I hope so. I got a pile of paper to trade for some shiny stuff.
A Gold puke would work perfectly for a run at $1500 this year. Bring it on! Buying small at every step on the way down...
It's held 1176 support way too many times. I don't think anything beyond massive armageddon could get it below that line. It's getting really really good resistance at 1221 that should be the new support line by end of week.
If Gold pukes, be early at your dealer, and cash in hand,you will be lucky to get ANY if the price even get's close to a $1000.00.............
Max Kieser is now a deflationist. Mish convinced him that the USD is going to reverse its 100 year trend down with Ben bernanke at the wheel.
We could deflate for june and july. But it won't last.
Deflation, then total debasement of the USD.
In regards to countries with relatively healthier currencies, deflation.
Gold just wandered into the + side...
Is this where we discuss gold's latest parabolic move?
http://www.kitco.com/charts/livegold.html
Still waiting for that deflation to hit so I can buy gold at $800. I guess it's not going to happen today.
Yeah, me too!
Why should gold necessarily go down? We're currently seeing gold and the dollar rising in unison. My guess is that redemptions are already taking place and the money is immediately finding gold. Perhaps.
I'm not saying that gold can't or won't go down in the next plunge, but I think it's more likely to be shallower than in 2008 and for a shorter period of time as people finally find the asset of ultimate resort.
I am Chumbawamba.
Sounds exactly like late 2008 when "deleveraging" was used as the excuse for the $300 takedown in the price of gold. There were no fundamental reasons then and there are no fundamental reasons now for selling gold.
There is no reason it should crash but never underestimate the stupidity of your fellow investors.
With fellow investors like these (http://www.zerohedge.com/article/december-sovereign-gold-reserve-holding-update) you should never underestimate the stupidity you may encounter in the market.
Though, if you have gold and keep it for a few more years, or get some gold and have it for a few years, I doubt there will be much regret for lost value in your future.
Because it's like shooting liquid nitrogen on a cup of water. It instantly freezes.
Fiat money plays an alchemy game of liquidity. Because of the compounding interest charges the system starts off with x amount of solid (monetized assets) and y amount of liquid (currency for the monetized assets). As it runs you end up turning the solid into liquid but since you create vastly greater amounts of fictional valuation in the solids versus the liquid it stops adding up. Eventually it ends up needing to correct. You can do it by deflating the value of the solid assets by liquidating them against the available liquid currency. But that makes wealthy men poor and poor savers wealthy. So instead it just vapor locks. You'll know when oil goes through the roof and gold doesn't drop. Because oil is priced in both gold and dollars and when it skyrockets it's because it's being priced in gold instead of the hybrid system.
At this point you have 3 formulas to balance.
X solid assets
Y liquid assets
Z number of participants in the system.
The favorite balancing act is simply to kill a massive amount of people through world war. The problem is we've made war to deadly and specialized. You can't get a time component to modern global warfare. As it stands you go in with assets of hardware and soldiers run the war and once you run out of those assets the game is over. Because you can't train people and equip them fast enough to do any good. If the balance is equall and no big machine assets survive then it can simply degrade to a trip down history lane situation where eventually you have a bunch of soliders with little training and guns on a battelfield and you achieve your population reduction.
The H1N1 plan didn't work. People were so far up their ass they couldn't sneeze without it getting pinned on them. They are having trouble minimizing a single group enough, though that could be what happens. Beat up north korea or afghanistan or iran enough sneak a nuke to them and let em rip it off.
Power doesn't like to lose. So it's just a matter of waiting till it locks up with liquidity starvation. But it will follow same principles of 1933 crash. Everything will crash but gold which will go up. And then EVERYONE will have to keep an eye out for the depopulation strategy and simply attempt to force the peope who don't accept loss to either accept it or get the fuck out and stay out.
If the stock markets crash all over the world and gold goes down to say 1130 or 1080 my jaw will hit the floor because at that point you will be seeing bill gates offering to shovel peoples snow for food. But oil shouldnt rise until shortly after stock market crashes. Oil could go to 90 by end of summer though because I was watching the oil reports that Tyler's been posting and it's showing that either someone is stocking up oil for war or someone is playing Exxon Act II - The Extreme Fakeout edition.
Here, here. We also may see the third 1249 test shortly...
$30 spike up starting at 1030.
Somebody's buying.