Stocks Close At Day's Indexed Lows, Down -0.76% In Gold

Tyler Durden's picture

As long noted, the long gold trade continues to outperform stocks. The daily "beta" in gold, as wrong as this statement is, continues to be higher than stocks, with risk assets underperforming gold on a daily basis now, which incidentally closed at a fresh all time high spot level north of $1,370. And yes, gold has far outperformed the stock market rally since September. In short: stocks, priced in gold, are down -0.76% for the day. This is better known as visualizing the Fed's dollar devaluation in relative and absolute terms. With each passing day, the upside in stocks lags the loss in purchasing power. Which is precisely what the Fed is hoping to achieve.

 

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tmosley's picture

Silvers not half bad either, having breached $24 in a rather sharp sudden spike.

Might be taking the family for that fancy dinner before the week is out at this rate (promised at $25/oz silver).

hamurobby's picture

My old lady owes me for all the crap I had to endure for buying a bunch of silver earlier this year.

cheers to you! 

and GOOOOO silver!

Shameful's picture

I got a call from my mom to thank me.  I got them into their first big buy of silver at 13.  People notice when you don't blow their money.  Though grandma is never happy "It's to expensive to buy!", and after it goes up "You should have made me buy it if you knew it was going up!"  :)

Cyan Lite's picture

Any word on mutual fund outflows/inflows?

Tyler Durden's picture

The BLS is currently adjusting them seasonally and conforming to birth/death expectations of a $1 quadrillion inflow

Max Hunter's picture

Hmmm... and the revision will net??..

AccreditedEYE's picture

$1 quadrillion inflow

LMAO!! Nice! And sadly, it will come to that.

Ragnarok's picture

Any update on the shadow liquidity?

midtowng's picture

My CEF just keeps going higher and higher. Too bad it is barely keeping up with the fall of the dollar.

NotApplicable's picture

Meanwhile at my local coin dealer on monday, I was the only person purchasing. Everyone else it seems fills his day (both by phone and in person) trying to get some fed notes for junk jewelry.

Sudden Debt's picture

I alredy said it a few times: Jane and Jhon Doe KNOW SHIT ABOUT WHAT IS HAPPENING!!

Nobody believes this!

Today I was talking inflation prospects to some collegues. I said this is going to spike to 4 to 5% at years end. All they know was deflation and all is well.

The second scary part is, people have no clue about the international economy, globalization! They just don't want to hear it, and everybody is spending like it's 2007 with a paycheck 1990 style.

Also, international politics JUST SUCK EVERYWHERE! It's like every country is waisting time on stupid projects!

TODAY OUR POLITICIANS WHERE TALKING ABOUT USING IPADS IN THE SENATE AND WHY THEY ALL NEED ONE BOUGHT WITH TAX MONEY!!!

WE DON'T HAVE A WORKING GOVERNMENT FOR THE LAST 4 YEARS!

6 ELECTIONS, AND A NEW ONE COMMING IN JAN. 2011!!

VIVA LAS BELGIUM! CAPITAL BLA BLA BLA OF EUROPE!

It kind of all starts to piss me off...

yabyum's picture

My coin guy seems to sell alot more than buy...always someone in line. Sellers are shuffled off to the back for their buisness. Alot of people have to be selling! There is a sell yer' gold on every block...who owns these stores?

mmlevine's picture

I can get my head around the idea that currency should be backed by something of value and that gold had been the value until the US went off the standard.

What I can't seem to get a handle on is what happens if a a brilliant mining company finds a motherload of gold - some ridiculous amount like a million tons.  Wouldn't that new supply crush the value of the currency?

 

Sudden Debt's picture

Dude, America invented the international Morgan silver dollar.

The dollar went global with the silver trade dollars.

1 oz gold used to be a year salary in the 1900's.

DID I MENTION SILVER? BUY SILVER!!! SILVER I SAY!!!

mmlevine's picture

But I'm still confused.  If I change my statement to "silver" mining company could you help me understand my question about finding new supply.

 

cossack55's picture

They will find that 1M tons right after they find John Galt's static energy motor.  They have only been looking for 3000 years.

Dr. No's picture

Your thought expirement is interesting.  But the anwer needs to be taken into context with the odds of it happening.  Yes, if they discovered the mother lode, price would drop.  Before using this as a rationale on why not to use the gold standard, think is finding the mother lode as probable as Bernanke leaving the switch on for an extended period of time?  A currency needs to float and I wish it would float on real supply vs demand terms.  Not the artifical suppliy terms we are currently experiencing.

RockyRacoon's picture

Read about the drastic effects the Aztec gold and silver had on the Spanish economy.

http://en.wikipedia.org/wiki/Spanish_Empire

Boba Fiat's picture

Google "Comstock Lode."

NotApplicable's picture

While possible, what you have to realize is that gold has the largest stocks-to-flow ratio of any commodity, with nearly every ounce ever mined being in someone's hands. New mine supply is tiny compared what's already above ground.

tmosley's picture

If there is a large find like that, the value of gold will simply readjust to the new size.  Unless they start finding mother lodes like that that are easily accessible once a month, we will still be far better off using gold as money rathe than paper which can be infinitely diluted in a second should those in charge of the press choose to do so.

AugmentedFourth's picture

I'm in the same boat. 

It's an interesting question. But as far as the current situation and my current holdings, it's purely academic. I mean we're NOT on a gold standard and my current investments are for insurance (If SHTF) and a hedge against inflation/currency collapse.

I do think the situation would be a bit more complicated. No matter how big and close-to-the-surface the "find" was, there is no getting around the fact that it STILL must be dug up and processed because it means nothing in the ground. Plus, it would be entirely against the interests of that mining company to destroy the value of their product. At least with it "in the ground" it is not in circulation and not affecting supply/demand. But for the mining company with resources to extract, it IS as good as "in the bank" for them. In other words, they WOULD NOT be financially motivated to dig it all up at once...Sure it might cause a small amount of gradual inflation as they profit on an increased supply. But, like everything else it would be physically limited and the market would have time to appropriately adjust.

I'm just thinking out loud. I could be way off. But the way I see it, even with the small possibility of a "massive find" like you mentioned, there are still PHYSICAL LIMITS that force restraint unlike with fiat. The way things work now, Ben Bernanke can create a "mother-lode" out of thin air whenever he sees fit. 

Sure, Gold isn't perfect...nothing is. But, it sure would be harder to manipulate.

 

RockyRacoon's picture

Provable gold ground reserves have tremendous value.  Ever heard of a hedge book?

AugmentedFourth's picture

Right. What I was trying to say is that "ground reserves" don't have an immediate effect on the supply mechanics. It has to be mined and put in to circulation to have the inflationary effect that mmlevine was asking about. 

I'm sure that "proven reserves" if officially booked could have an effect too. But, what would be the motivation of the "finder" to purposefully debase the currency in this realistically-impossible hypothetical situation anyway?

saulysw's picture

How about gold in seawater? Earth's oceans contain about 25 billion ounces of gold. We have dug up about 3.3 billion so far, for comparison.

 

You can't get at it economically, of course, but it's there.


mmlevine's picture

I appreciate the replies - thanks.

Sudden Debt's picture

I wonder how the Azian markets will react and how they will start dumping dollars.

And if the Azians don't trash it, the Europeans will.

The dollar will go down to 1.52$ = 1euro in a short time.

Also, everybody is talking about gold, BUT WHAT ABOUT SILVER!!! +3,69%!!!

traderjoe's picture

There's smoke coming out of the Crimex...

tmosley's picture

Looking like fire now.  $24.35

George Costanza's picture

I have heard no one outside of the Zero Hedge world (or outside of CNBC) mention to me a word about Gold or Silver.    There is no bubble in precious metals, at least if the retail investor is an indicator.  

I also think the Fed does not really care if gold/silver rise, it is a consequence they can live with  ( Oil, not so much, at $82.98 they have room to let that run ... but can become a big problem )

Sudden Debt's picture

I have bought a shitload of silver and also quite a lot of gold, and all my wife asks me is what the fuck I'm going to do with that.

Even my family thinks it's just some weird new collection Mc Scrooge phase.

But who cares, they have been warned.

And for the sellers of silver: I've bought 300 silver eagles today at 17$ per Oz. That's 7$ below spot. It's like a lot of sellers are dumping but on the other hand prices go up. Very strange.L

cossack55's picture

I like to lather my naked body in silver cleaner and roll around in Morgan/Peace dollars.  Some say its hotter in Eagles.  Your opinion?

tmosley's picture

!!  Where the hell are you getting silver eagles for $17/oz?  I want in on that action!

homersimpson's picture

Sudden Debt - please don't hold back. Where'd u buy silver eagles for $17/oz?!

digitalhermit's picture

He bought them from some dude in Nigeria. Should be here any day now...

Misstrial's picture

My records show that silver Eagles were in the $17.00+ per oz range on August 20, 2010.

There was a dip on that day....next day price went higher and hasn't been back in that range since, AFAIK.

Eagles and other coins aren't sold at spot. They're sold at spot plus the coin premium which for silver Eagles is about $2.00- $3.00 per coin.

~Misstrial

John McCloy's picture

  Haha..

When your cliff diving into the Scrooge McDuck money bin we will see who is laughing. Also keep in mind if you remember Scrooge Mcducks vault there is only gold coins and no fiatskis.

http://www.youtube.com/watch?v=CMU2NwaaXEA

 

Life is like a hurricane here in Ponzburg.

lettuce's picture

Nice one but I think this is the one that readers of this site would prefer to see...

 

http://www.youtube.com/watch?v=y3KRQSpORW0&feature=fvw

FreedomGuy's picture

Watch Fox Business News. It's on every day and virtually every show. Eric Bolling 8pm EST is doing the best job and has been looking at the rapid inflation of all commodities from the restaurant level to the exchanges. Great shows all around. I have started watching them more than Fox News because I like the business and economic angle better.

Misstrial's picture

Agree. Even on weekends, FBN has interesting shows & guests.

~Misstrial

Fred Hayek's picture

Maybe I'll check that out.  I watched a little bit of CNBC and found it to be completely biased and largely worthless, an opinion that was reinforced here.  But I thought I had read folks here saying Fox Biz was no better.  No?

Mr Lennon Hendrix's picture

BS has now said he will commit finance sepaku and buy all remaining "assets" imaginable.  Once the Fed owns everything-bonds, etfs-along with his buddy Shirakawa, and gold reserves- how will they manage to set prices appropriately?  This leads me to the scare that Nathaniel Rothschilde pulled on London after Waterloo.  He knew that because war is such a mindset, there was literally blood in the water for the finance structure.  If there was another financial panic now, or worse, how would the Fed respond?  Could the Fed pull something off that stands for them to benefit?

The fact that China has become a somewhat formal banker (however formal a banker is another question) has now determined a new player; but physics says from carbon comes carbon, so what was dusted?

Was the US put up for prosecution last weekend?  Why no words from the "emerging" nations concerning the currentsea wars and the trouble it brings as the endgame?  'Because there are no, and will be no currentsea wars.'  Says Timmah, and the man makes the suit.

The Yen is trading tight right now; an intervention would have gold responding accordingly.  The Fed has their back up against the wall: China will not loosen, and the Yen is set to marginally increase the value of the dollar but only to lift the price of gold more.  This and equities have kept their leverage.  The whole thing is ripe for a takeover, and there is blood in the water from years of financial destruction.  I think there will be a silent coup d'etat for nature; I expect man to be shrugged back to his place among, rather than ontop, of mother nature.  The great balance should be renewed soon.  Unless the US goes and does something dramatic and stupid, like trying to start another war.

daneskold's picture

This is complicated.

I shorted gld puts last Friday. GLD was up 1.6%

/gc was up 1.92%.

Nominally I am up 125% on the position, but effectively about 120%.

What a ripoff!

Sudden Debt's picture

you made money with gold puts... please explain.

Internet Tough Guy's picture

This article is for Harry Wangers who want to learn to be rich and don't read about real value good.