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Threshold of Pain
In late September the weak dollar and strong gold story were becoming obvious on the charts. I made a comment on someone’s blog:
“IF
gold gets to 1200 and the Euro reaches 1.5 and the Yen is at 85, then
Bernanke will be forced to give up the QE policy and reverse the
emergency zero interest rates.”
I could not
have been more wrong on that call. We have achieved the levels that I
thought would be a, “Threshold of Pain” for the Fed. As of today the
likelihood of the Fed amending its monetary stance anytime soon is nil.
For
me this means that the pressure on the $ and gold has to continue. We
are already at some galactic levels for gold and the dollar. I would
have thought we would be in a “panic mode” if the screen read 1.51 and
1200. But there is no sense of panic at all.
I am revising my forecast for the threshold of pain: IF the
Euro gets to 1.55 and gold goes to 1400 Bernanke will be forced to
accelerate the timetable for reversing the emergency monetary measures.
(I think the Yen is now a side show, it may add to $/Euro weakness)
Note:
It is not possible to forecast short-term currency/gold movements. I
have learned that a number of times. Therefore do not read this as a
prediction of the next currency blow up. Rather it is a prediction that
the Fed bows to the market to avoid a currency blow up. If we do see 1.55 and 1400 there will be a sense of panic.
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DX @ 68-ish by April-ish.
Sovereign defaults will reverse the decline at which time the Fed will be forced to raise interest. The first 3 months of the new year will see record Fed intervention.
I agree with you, but us young people would still like more gold. And at $1200 an ounce it takes a little while to save up for purchases. Every other paycheck I try to dump most of it into gold/silver and the price increases are killing me. Can't wait for the fireworks when we start seeing delivery problems.
Hell I don't even want gold to go up in $, all that means to me is that Uncle Ben's Fun Bux are losing value rapidly.
As an old timer said, "don't count your chickens until they hatch."
"Can't wait for the fireworks when we start seeing delivery problems."
Fuck dude, WAKE-UP for GOD'S SAKE!!!
We already have delivery problems!!
"Well take a look at something new, at least for me, in Monday’s comex preliminary volume and open interest report. On page 3 of the attachment, notice that in addition to futures contracts listed under the EFP category, a new category is listed: “Delivery Cash Settled” = 2866 december gold contracts. Just so happens 2866 was exactly the number of delivery notices issued on FND as reported in the Nov 27 vol and op int report."
Catch that?
Total Dec Delivery notices = 2866
Total Dec Deliveries Settled via CASH = 2866
GOLD IS IN DEFACTO BACKWARDATION AS WE SPEAK.
Please! For the LOVE OF GOD, WAKE UP BEFORE YOU CAN'T EVEN PROTECT YOURSELF ANYMORE, OKAY? Please? For ME?
http://jessescrossroadscafe.blogspot.com/2009/12/gold-comex-and-exchange...
I've been noticing that when the dollar rises 1% the markets decline 1.5% gold declines 0.75% (spitball numbers here to make the example)...