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Gold And The Next Great Monetary Easing
Gold's rise over the past few years has been driven by a number of factors. Aside from the unprecedented monetary easing and skepticism over the global financial system in recent years, Morgan Stanley notes that 1) a persistent increase in investment demand, 2) acceleration in producer de-hedging, 3) a decline in net official sector sales, and 4) a persistent failure on the part of the mining companies to respond to the incentive of a steadily rising price and materially lift production; all also impacted gold's premium.
In 2012, gold’s investment premium was driven by investors seeking a safe haven from widespread fears of a hard landing in China, systemic risk to the European single currency posed by the possibility of a Greek default and risks to US recovery posed by the impending Fiscal Cliff and Debt Ceiling. A re-evaluation of gold’s security premium followed from the various mitigations of the numerous risks to global growth.
However, as they note, a decisive break lower heralding the end of the bull market has not appeared and they believe we are about to witness the third installment of the Great Monetary Easing that started to play out when the credit bubble burst five years ago and that the gold bull market will enter its strongest phase.
Decelerating liquidity surprises have limited upside over the past year. With the benefit of hindsight, this sideways trending price pattern appears to be consistent with an environment where upside surprises in central bank liquidity creation and financial market stress have slowly declined. As this has happened, gold has returned to what BCA Research Inc has called its default setting – a tick-for-tick correlation with a range-bound US dollar in TWI terms.
In the past, these periods of particularly strong and close correlation with the USD have proven to be consolidation phases before the next upside gold catalyst has appeared.
But more monetary easing is coming. We are about to witness the third installment of the Great Monetary Easing that started to play out when the credit bubble burst five years ago and the gold bull market entered its strongest phase. This third phase is being driven by central bankers’ concerns over excessive non-yen currency appreciation as Japan works to fight deflation, and worries about a further significant rise in bond yields and the implications for private and public sector debt sustainability. In this environment, the priority of monetary policy is to avoid excessive exchange rate appreciation as the yen continues to depreciate and alleviate the debt burden of the private and public sector. The implicit continuation of low interest rates in an emerging cyclical recovery argues quite strongly, in our view, for a potential upside surprise in central bank liquidity creation, something that in the very recent past has been positive for gold prices.
In these circumstances, we believe that gold has demonstrated considerable technical strength, offers good value at current prices both as an entry level to the trading range between US$1,540/oz and US$1,800/oz and as an option on any remaining upside surprise above this range that might result from the third part of the Great Monetary Easing.
Source: Morgan Stanley
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The bubbles are caused by capital dislocation caused by printing. I don't know when, but they will get what they want eventually - inflation (that they will not be able to put back in the box). Gold will be in a bubble. There will be many more rides up and down, but the peaks will be wider appart. The croud will run there for cover, only to realize it was an artificially inflated cover, so they'll run back, only to realize that it was better to stay over there. The process will be repeated until the clear winners emerge who will then call the shots, and the losers (most of us, with or w/o PMs) will abide.
I think Sinclair will be proven correct - Gold will trade at $4-5,000 within the next 2-3 years, but bulls and bears will both be wiped out three times in the process of getting there.
Mother Goose Berranky Will Give Us...
GOLD $50K ...
OT but fucking hilarious.
Women Take Biden's Advice on Guns: http://www.youtube.com/watch?feature=player_embedded&v=A0IVSGctQIg
Bye Bye Fiat, Buy Buy Gold!
Buy buy Miss Amerikan (Cow) Pie!
horse
Boris is see what you do there! Not is real cow, but fraudulent horse substitute! Now pardon while Boris clean vodka from nasal passage.
+100
I do enjoy your comments!
Spasibo!
@ Plasdizow,
It's definitley been a buying time the past 2, 3 weeks, like a blessing. Keep stacking! Precious PM's, Lead for the Criminals and other natural resources.
Pack a Gun & Pay NO TAX.
I always abide by whatever Biden says. He's my man. If he can't do it, nobody can.
/sarc
<Just in case there's any confusion about my comment.>
Boris is hear of 59% (some report is say 76%) of Tuna not is real Tuna. Food Manufacturing Industry instead is use Escolar, cheap white meat comprising of indigestible fatty solids, like Olestra. Side effect is uncontrolled anal leakage. Boris is also learn of profligate money printing by Central Bank. Boris is think, maybe is not coincidence, that is called Quantitative Easing. Maybe QE and anal leakage linked, no?
In close, Boris is write lyric...
Once is bank run by Brothers Lehman,
Put in margin squeeze by Jamie Daimon,
Destroy free market for hell of it,
Now can't find real halibut,
But non-soluble long chain fatty acid is make for oil slick in gastro-intestinal tract of population for to make embarrassing moment of unaware dining citizenry during seemingly harmless fart when in fact is discharge into underpants, similar to unfettered monetary expansion of diarrhetic central bank system.
(work in progress)
In Russian that was potato in vodka of former USSR, caviar sold by street vendor marked as Beluga, Osetra or Sevruga, cause intense oily anal leakage.
Boris need to guard against counterfeit caviar from Escolar, Tilefish & Seahorse.
Once is eat fish sandwich in Odesta,
But full of insoluble Olestra,
Think is eat cod,
But really is fraud,
In shorts have unmitigated disaster!
Sea Horse is not real beef!
What!? Sea weed is not real weed?
You won't be wiped out if you buy physical and ignore the volatility.
so should I sell my gold that I bought for 890 an oz, and my silver for 12 an oz?
//sarc
how many freakin times can these clowns ease until the sheep wake up and realize its worth as much as monopoly money?
We've all asked that same question since 2007.
Believe me on this. Don't bother educating anyone except yourself on the subject, it doesn't work. People have to come to their own conclusions and rationalizations. Or you'll just give yourself a headache trying to get people smarten up (which isn't happening that fast).
Once WTI Oil breaks 120 and stays there, that's the point that people will understand fully and totally how deeply screwed they are and not a moment before unless they've sought their own answers.
I swear to god, if I went out on the street today and held a 1 oz. gold eagle in my right hand and $500 cash in my left and asked the sheeple which one they would rather have, 99% would take the paper.
don't try this outside the US - particularly not in continental europe, russia or china
haha... duly noted sir.
I forgot to say: in India even the lowest peasant would be able to quote you the daily price in two or three currencies - I'm exaggerating, but not much
Maybe is most time correct, but if Boris in woods to defecate, much is prefer paper, even fiat paper, for clean up. So dollar is have some valuable.
Well put. I kid you not, go to a watering hole and ask the average person about QE and they think your talking about Queen Elizabeth. The Economist magazine had an article (Feb 16) recanting that a majority of Americans can not do simple math. I would venture to say that "that majority" is very comfortable with handouts from the defunct US Gov. As soon as the handouts stop, then and only then will they put down their I-phone and ask themsevles.." WTF?"
Look at the Banking industry. The hotest product they're selling on the retail front is "Reloadable Debit Cards." People can't handle checking accounts so employers give their employees debit cards and each payday they load money onto the card. When the employee swipes his card and there isn't enough $$ on the card to buy smokes, he then realizes he's broke.
That's all they would get by selling that GAE to the "We Buy Gold" store.
Mark Dice did this a couple times in San Diego, get ready to rage:
http://www.youtube.com/watch?v=qf_ENBaAna0&list=UUzUV5283-l5c0oKRtyenj6Q...
You gotta give the man props for guts. I'd have been within a few percent on any given day, and taken his coin.
500? LOL - try 50, 25, even .99 - heck, just try to give it away...
Has been done before:
Mark Dice tries to sell $1100 one ounce gold coin for $50; no takers.
...countless times:
Buying a 99¢ taco with 1 ounce gold coin (worth $1400)
McDonalds Silver Dollar Experiment
Selling 1 Oz Gold Coin for $25 (when it's worth over $1,500)
Man Offers Random People A Free One Ounce Gold Coin
Trying To Sell Silver Dollars For .99 Cents Outside a Coin Dealer
Free $5 Bill or Free Silver Dollar? It's Up To You
Otoh, I bet this got plenty of takers:
Gold plated coins marketed to morons on TV
Oh, and...
People sign petition to "increase inflation to 100%" to cause hyperinflation.
Americans sign petition to repeal the First Amendment
People sign "I am a moron" petition without reading headline
I totally agree i've been trying to educate my family and it is like talking to brick wall. I give up
I totally agree i've been trying to educate my family and it is like talking to brick wall. I give up
Bubble, bubble, toil and trouble,
Paper assets turn to rubble.
And one, two, three or more,
HP's in theiving heads galore!
five, six, seven, eight, (Trillion:)
is fiat money not so great!
Gold about to go red on the day, on the way to $1,500. $1,500 is within hailing distance and they will take it out.
It might be spot, but like Silver, try finding someone willing to sell it if it's been tested, validated and tungsten free.
Inflation makes more than prices outrageous. It also cheapens everything so caveat emptor always with silver and gold now.
The problem with taking out ~1500 is that this is the bottom of the range, or a huge line in the sand, that if broken, could send gold plunging lower, much lower.
As a long-only investor in gold, I don't like what this would do to my existing portfolio, but I've got to be realistic and prepare for this......by keeping dry powder available to buy more gold at lower prices.
1250 is my downside target (and this does NOT violate the long term uptrend, if you start around the year 2000). Despite this target, I'm still a long-term gold bull.
1250 is about 35% below the 1900+ peak, which is similar to the sell-off % in the 2008 collapse.
1250 is roughly a measured move from the bottom of the channel, using the delta between the top and the bottom of the channel.
Am I highly confident this will happen? Nope. But I'm mentally and financially prepared if it does, and if it doesn't go all the way down to 1250, my plan is to buy down every 50 dollars, to take advantage of any discounts that do materialize.
$1250? You will have massive shortages of gold and silver if that happens.
do you have any idea about the mining cost of gold?
Exactly.
That's why, if they pull the chute all the way down to $1200, they will require an equally speedy and decisive return to above $1550...at least. The Beagle Boys are heavy players in the miners, and will need that sector of their full spectrum dominance to be boosted up after the shake down of the remaining dupes. Gold and silver miners will be supported. Nothing could be less true than the myth that 'central bankers don't like gold' ... they luv it...
Inflict maximum damage, fill pockets, inflate market. Nothing new under this ol sun.
yours truly,
Jamie("I like to Hurt People")Dimon....http://www.cduniverse.com/productinfo.asp?pid=8903858 = (1985, Not Rated, 83m. Wrestling Superstars Collection DVD )
$5 per ounce, right?
Only if you're digging it from the ground.
Boston,
my plan is to buy down every 50 dollars, to take advantage of any discounts that do materialize.
$50.00 barely covers the premiums,not worth it.
BUT, like you if it even gets into the 1300-1400 range I am backing up the truck.
This biatch is going to ultimately be used in the NEW currency, and the prices will be LONG term bullish, until it happens
Todays move in the DOW is like winning the 100 meter dash...but doing it by cheating...it just does not feel right....gold and silver have to be being bought up....somehwere...I just can´t see how printing money to infinity is going to work long term..at some point it becomes trash paper...
Must print moar...must break the chains of the yen manipulation...
(why is Morgan Stanley breaking meme-ranks with its brethren? Inquiring minds want to know...)
These guy always take turns playing both sides of the market.
Bankster brethern JPM's sidekick Barrick Gold is in big trouble*...and in need of a boost of investor confidence\aka fresh blood...the scammers only get rich when they can entice new money in, to shake down later. As investors have been running for the exits(as in much of the mining sector)pickings have been getting too thin lately.
No broken ranks here...tag team the muppets, wash and repeat.
*http://www.zacks.com/stock/news/93977/barrick-gold-slips-to-underperform ///classic limited hangout....analyst tries to stem really bad damage tidings by offering a partial glimpse of reality...but fails to come even close to using the actual cash cost numbers which
by Barricks own admission involve an upward revision 4th quarter to $941
-50% higher than the numbers they were purporting to use in the previous three! But the fun doesn’t stop there; that’s 49% higher again than the numbers they were using for the same three quarters in the two years previous. During that same time frame, gold rose 35%. No pocket calculators needed!
Gold is the honey trap set for China ... just as real estate was the honey trap set for Japan. Because Japanese were historically and culturally real estate challengted, due to living on an island, it was easy to destroy the upcoming master race by enticing them to buy foreign real estate and then at the appropriate time deflating the value of the real estate and trapping them as debt slaves to the global banking system.
China has some of te same weaknesses. Real estate not-so-much, but they love gold and food and the appearance of wealth and liesure. Gold could be pr become a trap for the Chinese. Entice them to buy the barbarous relic and then deflate the price, trappening them hugely underwater on their gold holdings. Even though China may have the ability to use all of their reserves to buy gold, they do not seem to be taking the bait.
you are trolling, aren't you? I don't even know where to start... how can you "trap" someone that buys physical without leverage, btw?
The price of the precious metals are simply a physical reflection of money or market dynamics. Equity is always equity.
WTF? LOL...
You can't be "underwater" on a thing that is already paid for. No debt, no problems. You wait out dips in nominal prices and stand assured that the money supply / velocity / etc will increase and thus your gold will hold its value. Zero debt means you ride at water level at all times.
If you purchased the gold using debt, then you have problems because you have the burden of servicing the debt with income, which is unpredictable or may lag / be misaligned with changes in money supply.
Dig?
I know, it is difficult to conceive of actually owning something without debt nowadays.
But, but.... gold is not backed by anything! I seen a lady newscaster splain that on the teevee.
Gotta be true!
You seem to be implying the price of physical can be reduced at will.
Sorry, you can only do this if you're a seller, and only to the extent of the amount you're capable of selling.
But no matter how much you sell, there's always more and more buyers because they want to hold real money to stay out of the crooked markets.
When market forces do their job, they can finally invest again into something profitable.
How do you propose we "deflate" the price of gold once they're trapped?? Hell.......they can buy all of the gold in the world with just their reserves........He who owns the gold makes the rules. I think you will find it very difficult for your true masters to part with all of their gold to the Chicoms.
Third but not final wave of easing.
Why bother charting the CRIMEX price? What credence can be placed in such a "metric" when nearly an entire year's supply can be traded in a single day (source: Eric Sprott)
The fiscal policy death star is almost complete...
but it's fully operational already
Trying to buy gold these days makes you feel uncomfortable because you have to pay so much more than the price the banksters quote.
qEXACTLY! spot goes down, demand goes up, premiums go up.
same shit, same hours, same fucking fraudulent pattern, same culprits...
http://www.silverdoctors.com/here-comes-your-daily-gold-silver-smash/#co...
Here is how Western central banksters have been suppressing gold as explained by Eric Sprott:
For example, on Feb. 19, nearly an entire year's supply of gold traded on the Comex in a single day. The same volume of silver trading happened on the commodities exchange. You and I both know that the people selling that much metal cannot deliver it because it is just not available. Yet somehow they are out there, pounding down these contracts and keeping the price suppressed.
I would hypothesize that the central bankers know their policy of printing money is the most irresponsible thing imaginable, and they are suppressing gold and silver prices to hide their irresponsibility. When one is printing that much money, gold and silver prices are the first things you would expect to rise. If we saw gold going to $2,000/oz, the price of oil would probably go to a new high and the price of agricultural commodities would go up. Then you would have a huge inflation problem on your hands.
Based on my research, I believe the Western central banks have been surreptitiously supplying gold to the market. I say this because the demands I see for physical gold are way beyond the supply of gold. The annual gold supply has not changed in 12 years, and demand just keeps increasing from China, India, the U.S. Mint and silver and gold coin sales; even the non-Western central banks are buying gold. Where is this gold coming from? I think the Western central banks are selling gold to keep the lid on the price so everyone thinks their monetary policies are benign. Nothing could be farther from the truth.
http://www.theaureport.com/pub/na/15052
If the central banks want to give their gold a way, we will take it all!
I think the Western central banks are selling gold to keep the lid on the price so everyone thinks their monetary policies are benign.
Gordon brown sold UK's gold for the same reason*.
*Allegedly
@ Colonial Intent,
I bought up that same point 2 weeks ago. Where did the UK's Gold go and who was the buyer/leased to? And where does BitCoin fit into all this?
looks like gold is heading to $1300
oh my... goldbugs were finally wrong
;-)
and Turd Ferguson is an idiot
I think Turd is the shit.
I think Gold is going to $1300 too, but even that move will not even put a dent in golds long term trend.
Only when we are finally scared of the drop in Gold will we finally see the price bottom. When gold finally approaches the long term support at $1200-$1300 is when most gold holders will start sweating. That's when I am buying, and then I am not selling until we hit $5000.
While waiting for the price of gold to drop to $1200-$1300, there is also the possibility that you will end up buying at $5000.
it is impossible to catch the bottom. be content if you can make your move within the 10-20% above it. you know what you are risking, right?
Would there be consequences if the stock of Berkshire Hathaway was slammed down, on NO news, every day at 8:20-8:30am and, failing that slamdown, at 10:30am? Do you think anyone at the SEC would keep watching porn in that circumstance? Do you think Warren would be called a conspiracy theorist on TV if he complained?
Not so sure. Can easily see PMs getting hosed to prop up the abomination and make fiat look more desireable. Would also fit with an attempt to discredit the prepper-stacker 'domestic terrorists'.
You bastard preppers, this is all your fault, prepare to be mocked, vilified and outlawed!
(btw, if you want a laugh check out GBP/USD since 1/3/13, bipolar fiat disorder...)
The Trade Weighted Index is based on the USD vs other fiat currencies. The reason that gold and the TWI became uncoupled is because the ECB and the other major central banks all started massive co-inflation in order to save their respective banking systems.
De Gaulle talking about Gold Standard
In 1965, former French president Charles De Gaulle called for an international return to the gold standard.
We consider necessary that international trade be established as it was the case before the great misfortunes of the world, on a indisputable monetary base, and one that does not bear the mark of any particular country. Which base ? In truth no one see how one could really have any standard criterion other than GOLD !”
Very intersting video:
http://homment.com/pdzUzsajsY
Good article. Must be why all the Central Banks are buying gold.
I just love the new FED trolls on ZH; the frickin idiots don't understand that you cannot take gold down below the cost of production. Already too close for comfort now
Mining company stocks can plummet just like all the rest.
Yup:
Centamin LSE:CEY
52 Week High: 108.30 - 19-OCT-2012
52 Week Low: 19.00 - 13-DEC-2012
What are the costs of production for gold, silver, platinum, palladium?
When I owned some CEY (see my comment above) I think they said they were producing finished gold bars for around 1300 per all costs inclusive. Shame about Centamin really, loads of gold holdings, no debt, decent management team, big Sukhari mine in Egypt and another big mine looking to open. A few mining equipment issues knocked their production timescale, it kept the price low, but they upgraded and were ready to rock. Then the Mubarak fiasco happened and I got a bit of a haircut on the way out. Still, at least the old bastard is gone.
Then the Mubarak fiasco happened and I got a bit of a haircut on the way out. Still, at least the old bastard is gone.
Yeah and a whole new set of WORSE bastards in his place,like Libia.
And behind them all, pulling the strings? All of the bastards we rely on for our way of life and condone by buying into their system day after day. Holier than thou is a tough sell these days...
The sideways trend since 2011 demonstrates golds desire to get back in coorelation with the dollar.
Either gold down or dollar up but the pull has been to magnetic.
Gold's next level of support is around $1525. A close below this and we may see $1300.
http://bullandbearmash.com/chart/gold-daily-continues-fall-gold-stocks-f...
Gold stocks are falling fast than gold - while the market indexes are heading higher. Should be an interesting month.
"In these circumstances, we believe that gold has demonstrated considerable technical strength"
So has ammunition. Technically speaking of course.
2 of 3 largest banks here in Canada now sell silver/gold coins - TD just added the service in the last few months (Scotiabank has offered for a while). But each of the times I have gone in to place an order at my local branch the clerk didn't seem to even know they even offered the service. They usually apologize saying "this is the first time I have done one of these orders". Yet, on the way home from work yesterday I drove by a 6 foot tall sign in high traffic retail district that screamed - "Cash 4 Gold". This buy side of this trade still feels awful lonely down here on the ground.
Not sure what you are trying to say there but I do collect Canada silver. I only have a cursory selection though.
"don't try this outside the US - particularly not in continental europe, russia or china"
Imo continental europe is as sumb as most of the U.S. We've been both brainwashed by virtuality incl. virtual money...
Guess I was wrong about gold. With Morgan Stanley bullish, I can only conclude the bull market is over. Gonna go hang myself now.
"A well established channel".....I guess I'll put my sell stop under the well established channel. Fact is there is an old saying on the floor that (correctly) states THE MARKET GOES TO THE PAPER. Huge amount of sell stops under 1460 and under 1442.
great easying, daily pomo: http://www.newyorkfed.org/markets/tot_operation_schedule.html