'Cleanest Dirty Shirt' Or 'Greatest Fool'?

Tyler Durden's picture

Little comment necessary here except a reminder for US investors that return of capital is a higher priority than return on capital and the divergences are becoming increasingly unsustainable. As investors stare blankly, pointing fingers at gold, we also address what it means when Gold and Treasuries are rallying at the same time...


Year-to-date performance...

If its earnings that US equity investors are hoping for - don;t hold your breath... Via Goldman Sachs:

So far, 46 companies have reported 1Q results (14% of total cap). 41% of companies reporting have beaten earnings estimates (below the historical average of 47%) and 9% have missed estimates.


The average EPS surprise has been 3.7%, below the 4.8% historical average. Excluding Financials, there are fewer positive surprises (40%) and similar negative surprises (9%).


Excluding Financials and Utilities, 29% of companies reporting have beaten sales estimates (below the historical average of 38%) and 20% have missed estimates (vs. average of 18%).


The average revenue surprise has been 0.7%, below the 1.3% historical average.

Since yesterday's close (despite the overnight excitement in Japanese stocks), Gold and Treasuries have been rising together...


One of the best explanations we have seen for the phenomena of Gold and Treasuries rising at the same time is from David Goldman:

Why should gold and Treasury bonds go up together?

Gold is an inflation signal and bonds are a deflation hedge.


At first glance it seems very strange for both of them to rise together.


Why should this be happening?

The answer is simple: bonds are an option on the short-term interest rate, and gold is a perpetual put option on the dollar. Both rise with volatility.

It’s like the old joke about the thermos bottle: “How does it know if it’s hot or cold?”


If the policy compass is spinning and there’s no way to predict how governments will react, you don’t know whether to hedge for inflation or deflation, so you hedge for both.


By put-call parity, if there is huge volatility in the policy responses of governments, the option-value of both gold and bonds goes up.


So today's rise in bonds and gold (and this weakness in risk assets) is not complex  - it is simply a realization that "the policy compass is spinning" and government responses are increasingly uncertain once again.

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Bearwagon's picture

This policies are formulated by people who vastly overestimate what the Euro means for the Europeans, for the Euro-area.

TheSilverJournal's picture

Seeing that the world monetary system is one giant fiat fractional reserve government debt savings destroying malinvestment manufacturing ponzi, all holders of fiat at just about any price are fools.

Manthong's picture

..and they vastly overestimate the value in terms of virtue of the political capital they have expended.

DJ Happy Ending's picture

Really? Maybe I'm sheltered but it seems like people with this worldview are in the minority, with the majority either addicted to Dancing With the Stars or swallowing MSM propaganda without an afterthought.

illyia's picture

The Sheeple are minor players in the expenditure. Political capital is traded among the Players. It is the Players who must lose confidence in the game.

I sympathize with your frustration, however.

Dealyer Turdin's picture

Unless of course, the little guys are presented with a paradigm that  gives them a way out of their shitty, little dead-end worlds, and the leisure to pick off the parasites.  I know, I know, unthinkable!

rich_wicks's picture

In finance, the majority is always wrong.


ziggy59's picture

Im thinking roulette wheel, not compass needle

malikai's picture

Russian roulette sounds more like it to me.

Seer's picture

And only one cylinder is empty...

Jonas Parker's picture

Or Russian roulette with a semi-automatic pistol.

fonzannoon's picture

Today's rise in gold?

agent default's picture

By looking at the chart we could be in for another leg down.  But I could be wrong.

disabledvet's picture

I know the thermos is hot because why would i put cold water in a thermos? I have no idea what was masturbated above..but I do know a war trade when I see one...and gold "hanging on" while treasuries "are forced to the moon" says war...war...war...war...war. I do agree and why I love this site (yes I feel the live back) is Ye olde "WTF with equities?" thing just really does stand out. Simply put "I have no phucking idea." and that's that!

lotusblue's picture

Ok Gold Has had its run. Get on to the new "realities" present NOW.

Spitzer's picture

Yeah, like the 33 year bull market bubble in western bonds, specifically of the US variety.



Clowns on Acid's picture

the Federal budget deficit @ $17T is a growing bubble, the fiat printing pn Ben Shalom Beranke is a 3 year $3T bubble and growing..... have you factored thta bit of intel into your thin as gruel analysis ?

Then bow your head in shame and get back to the drawung board....

rich_wicks's picture

The national debt was  $398,129,744,455.54 in 1971

Multiply that for every year that has passed until today by 1.094.

Check your number compare against the current national debt.  If you bothered to do this, and you haven't, you'll find out our national debt has gone up (on average) at 9.4% a year for 42 years now.

Now check these numbers out:

2013 $17,576,468,099,680
2014 $19,228,656,101,050
2015 $21,036,149,774,549
2016 $23,013,547,853,356
2017 $25,176,821,351,572
2018 $27,543,442,558,620
2019 $30,132,526,159,130
2020 $32,964,983,618,088
2021 $36,063,692,078,188
2022 $39,453,679,133,538

That's what our national debt will be (at the end of each year) if this continues.

Now if you want some real fun, divide federal tax revenue into the debt for every year.  I'd post the graph, but the fucks here won't let me post pictures anymore.

RougeUnderwriter's picture

Whats up with Brazil

Dr. Engali's picture

Nothing ..... except the cost of living and corruption.

johny2's picture

the cost of living can be  $1000 per month for a single person, if you live modest lifestyle. The corruption exists in Berlin, London, Shangai, Washington and so on,  so it is obvious it will exist in Brasilia too. The main concern in Brasil is the security. It makes it bit less attractive, but the nice climate, lack of natural disasters, nice beaches and pretty girls make up for that. but if you want

Bearwagon's picture

That's the title of an excellent movie, every ZHer should watch...

rich_wicks's picture

What have you done with my husband's body?!

wattie's picture

Unless I'm mistaken Central banks haven't cleared out all the worthless bullion in there vaults and replaced it with newly printed and obviously more valuable FIAT have they!!!!

Seer's picture

Picked a heck of time to be eating lunch!  And I was always concerned about consuming beverages while reading ZH! (didn't see that one coming!)

Take away: one can eject food as well as beverage from one's mouth given appropriate comments posted here on ZH.

nofluer's picture

You're mistaken.

The word of the year is rehypothecation.

The phrase of the year is "naked short selling" (of about anything - stocks, gold...)

Spitzer's picture



I just got back from Scotiabank Edmonton. They are cleaned out. Nothing in stock, not even 10 oz. So I asked the manager if I can just make an order and pick it up in a week or so like I have before. He said Toronto is cleaned out too so they are not taking orders. He said Toronto will get their inventory in 2 days and then the rest of Canada will get their inventory in 2 days after that. He said ScotiaMaccota online might have some but their markups are a lot higher then the main bullion bank branches.

Can anyone confirm this in Toronto ?


All this talk about the COMEX, silver, GLD (gold ETF's), manipulation, bull vs bear,  is all noise to me. Even I have been caught up in this.

Why should anyone care what is going on in any gold market, paper or physical until something happens in the US and Japanese 33 year bubble bull markets ?

I still maintain as I said 2 years ago, that the onset of freegold happens when there is selling/trouble in the BOND markets mainly in the US and Japan.

$1000 dollar gold, $2000 gold , what is the difference ? Who cares ? I have paid close to both. As long as BOND prices keep rising and the FED can do no wrong, nothing matters. As long as BONDS are the premier store of value for shrimps and giants alike, long or short term, nothing matters.

Nothing matters in GLD, nothing matters at the coin dealers, nothing matters at the bullion banks, nothing matters at King World News et al.

This is like being in late 60's and early 70's yaking about the price of gold as it bounces between $35 and $60. It didn't matter if you bought at $35 or $80 then until there was trouble in the BOND market and it doesn't matter now as it bounces between $1000 and $2000 now.

  Wake me up when the 33 year bull bubble grenades. Then we can talk gold prices.


Cleanest dirty shirt ?


Mark Carney's picture

Im in Edmonton too and vowed never to deal with Mccota again.


Silver Gold Bull (calgary based) is where I go.


Put my order in today and they are saying 20day lag time....never seen that EVER!

Relentless's picture

I'm in Calgary using a smaller distributor (Albern). They were all out of silver last week, but they called this morning saying that they've had their delivery and are putting aside some 10oz bars for me.

Mark Carney's picture


FROM SILVERGOLD BULL: Sorry, we can't price match today because most of our competitors don't have product available.

When purchasing precious metals, our Best Price Guarantee ensures you always get the best price on your orders with us.


Silver Gold Bull - Your Trusted Bullion Dealer




nope-1004's picture

If y'all are buying PM's from a bank whose slogan is "you're richer than you think", then might I suggest having some way of testing those bars?  They might be "more pure than you think", if you get what I'm sayin'.

Harv Organ has outlined a number of times how that bank is aiding and abetting the crooked comex.  I would go to that bank only to piss in the foyer, never to deal with them.


Spitzer's picture

If they print their corporate logo on a bar of tungsten, they would be liable for some serious lawsuits. I don't think they are doing it.

Commissions are under 1% there depending what you buy..

Spitzer's picture

Mccota is online. The main city branches are the bullion bank. For buying 5 or 10 oz bars, they have  good commissions and the more you buy, the better exchange rate you get. So I dunno... I deal with them.

fonzannoon's picture

Maybe not everything happens at the same time.

Seer's picture

Sometimes the simplest statement is the most profound!

All is subjected to time, things will happen at different times and at different rates/tempos.  We'll get a taste of it all in due time...

bluskyes's picture

Ask to buy a certificate (with storage fees attached) When they sell it to you, demand the physical that you're paying storage fees for. 

Buzzworthy's picture

Not necessarily.  If VtC is correct in his assessment, then the signal we need to see is a >10% puke of physical from GLD.  http://fofoa.blogspot.com/2012/06/gld-talk-continued.html

Then there is this from FOA in August 2001: Knowing that the Euro is a fact, we must have a super gold price if the dollar is to stay in the game! The question becomes one of supporting a cheap paper price for the sole function of keeping the market and all its bullion players alive.

In other words, paper market failure is related to dollar failure and yet another signal that FG is not far away.

dick cheneys ghost's picture

Victor is an interesting fellow......



Nehweh Gahnin's picture

I don't think anyone will be around in 30 years to wake you up.  Better set your alarm.

Dr. Engali's picture

The fact that I can get a dollar per crappy Wolf ammo .223 round tells me that lead is outperforming all other asset classes.

WAMO556's picture

You should try finding primers, brass, projectiles and powder.

Relentless's picture

Just don't try to do it in the NE

Dr. Engali's picture

I don't shoot Wolf ammo. I made the mistake of buying 1000 rnds once. I shot less than 100 and decided I wasn't running that crap through my gun.

nofluer's picture

If you bought Egyptian 9mm you wouldn't have to worry about running it through your gun... well... 80% of it anyway. But the hidden benefit of Egyptian is you get to build up your grip and your arm muscles ejecting that 80%.

A82EBA's picture

I'm looking for CCI Green Tag .22LR, can't find it anywhere.

I do watch gunbot.net for it though

wattie's picture

Unless I'm mistaken Central banks haven't cleared out all the worthless bullion in their vaults and replaced it with newly printed and obviously more valuable FIAT have they!!!!

q99x2's picture

APMEX Price hasn't fallen much on the physical market only on JP Morgans market.

Why don't physical dealers get together and create their own market? F the Morgue.

Volume Pricing: Qty Check or Wire Credit Card 1 - 9 $1,457.59 $1,501.32 10 - 19 $1,452.59 $1,496.17 20 or more $1,447.59 $1,491.02


Jonas Parker's picture

Check the APMEX site for SAEs - they're damn near all out of stock!