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Guest Post: Is Gold At A Turning Point?

Tyler Durden's picture





 

Submitted by Adam Taggart of Peak Prosperity blog,

There's no way to sugarcoat the dismal performance of the precious metals in recent months. But a revisitation of the reasons for owning them reveals no cracks in the underlying thesis for doing so.

In fact, there are a number of new compelling developments arguing that the long heartbreak for gold and silver holders will soon be over.

A Hard Look in the Mirror

The past two years have not been kind to holders of the precious metals. The price of gold is down over $500/oz since the record high (nominal) price it hit in August of 2011. That's a decline of 28%. Silver has seen a decline of 56% over the same period.

A healthy amount of that decline came in the past seven months, which have pretty much seen a steady price deflation punctuated by sharp (and historic) downdrafts:

On top of these grim charts, daily headlines touting, often with delight, the demise of gold appear nearly everywhere in the media.

And forget about PM mining stocks. They have been absolute widow-makers for investors:

(Source)

It's hard to argue that PM mining stocks aren't the most hated sector in today's markets. The chart below shows that last month, the bullish sentiment on gold miners dropped to 0%. Can't go any lower than that:

Wasn't reckless central-bank money printing going to flood the world with paper currency, sending gold prices and those of its "poor man's" sister, silver to the moon? Weren't the markets going to crack as the unresolved economic and financial rot in the U.S., EU, and Japanese systems became further exposed, sending capital fleeing into the bullion market and driving prices much, much higher? Weren't escalating mining costs going to march up the price floor for the precious metals?

Why haven't any of these scenarios happened? Were we wrong in our reasons for purchasing gold and silver?

Are we the clueless patsy at the poker table?

The Way of the World

These are very understandable questions to be asking. You wouldn't be human if you didn't.

So, it's wise to return to the #1 lesson of investing: Never fall in love with your positions. Be sure to question your rationale regularly and often. Remove emotion from your decision-making, look to what the data tells you, and continually ask yourself: Ignoring my past decisions, would I purchase this investment today? If the answer is no, lightening up your position is almost always the right decision.

Chris and I follow the precious metals markets on a daily basis, and we frequently challenge the logic behind our support of them. But at this time, we can find nothing nothing that has happened over the past two years that invalidates the principal reasons we've laid out for owning precious metals. You can review these reasons in detail on our foundational report, The Screaming Fundamentals for Owning Gold & Silver.

The hard truth for us investors is that secular market trends take time to play out. Nothing moves in a straight line. And they are many false signals along the way. There are no sure bets, no risk-free winning options to pick.

But the good news is that the laws of physics and rationality always prevail in the end. If you can identify the right endgame and position yourself for it patiently, the messy volatility along the way really won't mean much in the big picture.

But Has Anything Really Changed?

Let's look at the key reasons why we originally recommended that investors look to the precious metals as a safeguard:

  • Negative real interest rates
  • Fiscal deficit spending and unserviceable sovereign debts
  • Loose, if not reckless, monetary policies
  • The price of newly mined ounces continues to climb higher and higher, due both to reduced ore grades and higher costs for fuel and equipment.

Negative real interest rates have always been supportive of gold prices. While admittedly that's not been the case for the past two years, we now see that historic relationship re-expressing itself.

After all, when the return on cash savings is virtually nothing and the money printers are running, inflation eats away at fiat purchasing power. Gold, as money, offers protection from this.

Perhaps things are different this time, but we're thinking not.

The degree of fiscal and monetary recklessness has taken us by surprise, both for the intensity of the actions already taken, but also for the fact that financial markets have adjusted to the practices and now treat them as normal, if not desirable. While the U.S. deficit has been declining from its record highs, much of that is due to accounting shenanigans, all while our dangerously high debt-to-GDP ratio (as well as those of most other developed countries) continues to worsen.

Mining costs have been on a steady march upwards over the past decade, setting an average "all-in" cost floor now very close to the current price of gold:

Even exploration costs have skyrocketed, which, importantly, is happening in parallel with a marked decrease in discovery volumes: 

(Source)

Gold, it seems, is getting both harder to find and harder to get out of the ground.

And to the above list of original fundamentals, we must sadly add several new drivers:

  • MF Global proving that client accounts can be looted and then drawn into a lengthy and unsatisfying bankruptcy/creditor process
  • Cyprus proving that the banking system intends to make depositors pay for its mistakes
  • Politicians openly calling for various wealth taxes to be levied on anybody who has managed (dared? bothered?) to save up funds

And one last big one: a new secular change in rising interest rates that threatens to create havoc in world economies and financial markets across the world.

(Source)

After a decade of low and declining interest rates, yields are back on the rise. The low cost of debt that the markets have become used to has created a worldwide bubble in bond prices, about which experts like Bill Gross have been increasingly vocal in issuing dire warnings. A popping of this bubble will increase borrowing rates for governments/business/consumers, depress home prices, make mortgages more expensive, and basically act like kryptonite to any "recovery" in the world economy.

Wall Street has certainly taken notice. And it's worried about the implications:

In a Shift, Interest Rates Are Rising (The New York Times)

“I think you all should be ready, because rates are going to go up,” Jamie Dimon, the chief executive of JPMorgan Chase, told a financial industry conference at the Waldorf-Astoria Hotel in Manhattan on Tuesday.
 
As investors brace themselves for a new era of higher interest rates, global markets in bonds, currencies and stocks have experienced spasms of turmoil.

Bond bubble threatens financial system, Bank of England director warns (the guardian)

A key Bank of England policymaker has warned of the risks to global financial stability when "the biggest bond bubble in history" bursts.
"Let's be clear. We've intentionally blown the biggest government bond bubble in history," Haldane said. "We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted."

60% chance of global recession: Pimco (CNN Money)

Pimco's founder and co-chief investment officer, Bill Gross, argued last month that central banks' ultra low interest rate policies and ongoing bond-buying programs have resulted in a financial system that is "beginning to resemble a leukemia patient with New Age chemotherapy, desperately attempting to cure an economy that requires structural as opposed to monetary solutions."

Lastly, there is the wild-card possibility improbable, but certainly worth considering because of the gains to be had of gold being re-monetized as a means of balancing and settling international accounts.  Should that transpire, gold will be worth many multiples of today's value.

The Light at the End of the Tunnel

For all the reasons above, the bruised precious metal investors out there should still sleep well at night, secure that the foundational rationale for holding gold and silver remains intact.

 


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Thu, 06/13/2013 - 12:37 | Link to Comment icanhasbailout
icanhasbailout's picture

Shorter version: Gold - BTFD

Thu, 06/13/2013 - 12:42 | Link to Comment slaughterer
slaughterer's picture

Author misses one big counter-argument: Tapering leads to lower PM prices.

Second counter-argument:

Blythe will read this article and then monkey hammer PMs once retail has bought the dip once again.  

Thu, 06/13/2013 - 12:48 | Link to Comment nope-1004
nope-1004's picture

I love those charts.  CPI down to nothing, mining input costs rising.  It appears CPI is calculated "ex-everything".

Joke.

 

Thu, 06/13/2013 - 12:54 | Link to Comment flacon
flacon's picture

$1,380 is NOT the price of gold.  Gold has no price. It's a shame that we can't see what it's really worth in dollar value just yet. But soon enough. 

Thu, 06/13/2013 - 14:09 | Link to Comment NotApplicable
NotApplicable's picture

This quote sums up the entire strategy of the government/fed.

"The degree of fiscal and monetary recklessness has taken us by surprise, both for the intensity of the actions already taken, but also for the fact that financial markets have adjusted to the practices and now treat them as normal, if not desirable."

It's the exact same thing as when you go into a grocery store, and are numb to the ever high prices as compared to X number of years ago. The past becomes one big blur as you get used to paying the higher price.

Question is, just how long can each of us continue to muddle through this New Normal?

Thu, 06/13/2013 - 14:23 | Link to Comment PlausibleDenial
PlausibleDenial's picture

You will never know the value of gold until you need it....

Thu, 06/13/2013 - 14:54 | Link to Comment negative rates
negative rates's picture

They tried to plug old faithful with it, and it didn't work.

Thu, 06/13/2013 - 15:15 | Link to Comment augustusgloop
augustusgloop's picture

same with Pb

Thu, 06/13/2013 - 14:31 | Link to Comment gorillaonyourback
gorillaonyourback's picture

You r right. The golden jackass jim willie speaks very about this topic. We invade libya and mali to steal gold just to deliver gold to the banks. The gld sells large sums of gold driving down price ,the banks buy it.

Thu, 06/13/2013 - 14:58 | Link to Comment Bay of Pigs
Bay of Pigs's picture

That's just one point this author misses among many (FED, COMEX, JPM, POMO, naked shorts, etc...)

What a complete waste of time reading MSM dogshit like this. 

Thu, 06/13/2013 - 13:13 | Link to Comment Silveramada
Silveramada's picture

charts in a manipulated world mean very little... the dilemma of gold vs paper should not be a dilemma

http://zysites.com/silververitas/

Thu, 06/13/2013 - 12:54 | Link to Comment oddjob
oddjob's picture

Who in the USA is buying Gold?...ZIRP is subsidizing the banks to take it down, when the free money stops it will go up, not down.

Thu, 06/13/2013 - 13:04 | Link to Comment THX 1178
THX 1178's picture

+1 I believe you are right

Thu, 06/13/2013 - 13:10 | Link to Comment Canadian Dirtlump
Canadian Dirtlump's picture

Isn't that perverse. Using freshly printed money in the crimex casino to short sell paper, and pay premiums for cash settlement.

 

you need to get to work with that hat of yours mister.

Thu, 06/13/2013 - 13:13 | Link to Comment SRSrocco
SRSrocco's picture

However, the Commercial Banks now are NET LONG GOLD whereas the Hedge Funds are now NET SHORT.  At some point in time we are going to see a huge Short Squeeze as the Commercials have transfered the short exposure to the Hedge Funds.

Furthermore, the top gold miners have to HIGH GRADE to produce profits.  This means in a few years, they will have much lower ore grades which means much higher costs:

The Big Squeeze Continues in the Top Gold Miners
Thu, 06/13/2013 - 13:58 | Link to Comment SILVERGEDDON
SILVERGEDDON's picture

Is gold at a turning point ?

Is the pope Catholic ? 

Does a bear shit in the woods ?

Are corporations a cancer ?

Is Bernanke a retard behind the curtain of Oz ?

Are Zero Hedgers BTFD Bitchez ! ????

What is your point, zipperhead - spit it out. 

Thu, 06/13/2013 - 16:11 | Link to Comment fuckitall
fuckitall's picture

"Tapering leads to lower PM prices."

There won't be any tapering.

Thu, 06/13/2013 - 13:37 | Link to Comment Midasking
Midasking's picture

Currency digits are being created by the Trillions and that can't stop or things go oofty magoofty.. a word to the wise should be sufficient. Got Gold? or you really believe in the Bernank? http://tinyurl.com/lq63ahd

Thu, 06/13/2013 - 14:04 | Link to Comment Dingleberry
Dingleberry's picture

I'd be more concerned if Heli-Ben was at his turning point. Mortgages at 4% now.

Gold just sits and does nothing. I don't think it really cares.

Thu, 06/13/2013 - 12:37 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Wake me when it's under $300 an ounce (dollar cost average on my physical holdings).  Then I might care.  One simply rule applies in today's market; when fraud is the status quo, possession is the law.

Thu, 06/13/2013 - 13:44 | Link to Comment IrritableBowels
IrritableBowels's picture

The record is broken and the horse died long ago.

Thu, 06/13/2013 - 14:40 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Does not change the purchasing power of the physical one bit. That's the great thing about gold.

Thu, 06/13/2013 - 12:37 | Link to Comment Rodders75
Rodders75's picture

Yeah but where the f*** is inflation?

Thu, 06/13/2013 - 12:39 | Link to Comment LawsofPhysics
LawsofPhysics's picture

For starters, plot the cost of diesel, food, education, and heatlh care over the last 5, 10, 15, or 20 years.  Certainly you expect to live for more than 20 years (although your government might not want that)?

Thu, 06/13/2013 - 12:42 | Link to Comment EmmittFitzhume
EmmittFitzhume's picture

exactly! How do you prevent inflation? Ignore this things that are inflating

Thu, 06/13/2013 - 12:52 | Link to Comment fonzannoon
fonzannoon's picture

October 27th 2013

"A report surfaced today that JPM' gold vault has been receiveing massive notices to deliver several tons of gold. According to inventory reports JPM has not shown ay gold in their vault, eligible or otherwise, for weeks. Initially, delivery requests were being settled in cash. Lately though, those notices were not being settled in cash, but instead with photographs of Jamie Dimon's balls. In other news the dow closed up 135 points and gold was down another $25 on the day".....

Thu, 06/13/2013 - 13:09 | Link to Comment jbvtme
jbvtme's picture

what's the ask on dimon's nuggets?

Thu, 06/13/2013 - 13:23 | Link to Comment TheEdelman
TheEdelman's picture

You all laugh... until you see the photo

Thu, 06/13/2013 - 13:53 | Link to Comment nugjuice
nugjuice's picture

Yeah, they will be covered in the saliva of our elected officials

Thu, 06/13/2013 - 14:58 | Link to Comment negative rates
negative rates's picture

I bet on a one horse to win, and she bet on another to show it.

Thu, 06/13/2013 - 12:49 | Link to Comment InTheLandOfTheBlind
InTheLandOfTheBlind's picture

if pms were to go to the values they should be at, the "there is no inflation problem" crowd would be eating their own words... this is motivation enough for the fiat fucks to manipulate

Thu, 06/13/2013 - 13:06 | Link to Comment Rodders75
Rodders75's picture

 

The overstated inflation danger

 

http://im.ft-static.com/m/img/railBg.gif); font-family: Arial, Helvetica, sans-serif; font-size: 16px; line-height: 18px; background-repeat: no-repeat repeat;">
http://im.ft-static.com/m/img/components/common/standfirst-border.png); background-attachment: scroll; background-position: 0% 0%; background-repeat: repeat no-repeat;">
http://im.ft-static.com/m/img/components/common/standfirst-border.png); background-attachment: scroll; padding: 0px 0px 14px; font-size: 21px; line-height: 27px; margin-bottom: 9px; background-position: 0% 100%; background-repeat: repeat no-repeat;">A high rate may be a risk in the very long run – but right now the risk is that it may be too low

 

 

 

 

 

 

 

 

 

 

 

Almost three years ago, at the World Economic Forum’s “Summer Davos”, in Tianjin, I heard a Republican politician say that the US would be in hyperinflation within two years. I was stunned. Yet a large number of people believe that hyperinflation is coming. If the US is in trouble, so, surely, is the UK. Is there anything in such predictions? The answer is: possibly, in the very long run. At present, however, the risk is that inflation may be too low, not too high. Paradoxically, that increases inflation risk in the long run.

 

http://www.ft.com/intl/cms/s/0/e779acb2-d1de-11e2-b17e-00144feab7de.html...

Thu, 06/13/2013 - 13:18 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Dear paid troll

please plot the price of diesel (per gallon), your favorite food (per ounce), heathcare costs, and education (tutition per year) in dollars over the last 30 years.

 

Must be our "lying eyes".

Thu, 06/13/2013 - 16:43 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Martin Wolf, fresh from the Bilderberg meeting.

Thu, 06/13/2013 - 12:43 | Link to Comment EL INDIO
EL INDIO's picture

Where are you living ?

Thu, 06/13/2013 - 12:57 | Link to Comment Meme Iamfurst
Meme Iamfurst's picture

 

 

So....are you a banker or do you work for the govenment?  One of the two, no other explaination for such hog wash.

Unless,you were kidding, in which case I will give you my Harharharhahahaha, now.

Thu, 06/13/2013 - 13:05 | Link to Comment Vooter
Vooter's picture

Make a list of everything that's gone up in price over the last decade (or two or three) and another of everything that's gone down in price over the same period, and then get back to us....

Thu, 06/13/2013 - 12:39 | Link to Comment greatbeard
greatbeard's picture

The good news is the patient looks great.  The bad news is the patient is dying.

Thu, 06/13/2013 - 12:45 | Link to Comment F. Bastiat
F. Bastiat's picture

Socialism is like an ideolgoical AIDS virus.

Fri, 06/14/2013 - 17:57 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

where's the socialism?

All I'm seeing here is Fascism

Thu, 06/13/2013 - 12:40 | Link to Comment Canadian Dirtlump
Canadian Dirtlump's picture

THe market will turn when there is a legit supply shock, or the world shits the bed. I'm comfortable with either, and we'll likely see both.

Thu, 06/13/2013 - 12:41 | Link to Comment Buzzworthy
Buzzworthy's picture

I'll take the wild card possibility for $500, Alex.

Thu, 06/13/2013 - 12:42 | Link to Comment nope-1004
Thu, 06/13/2013 - 12:54 | Link to Comment Almost Solvent
Almost Solvent's picture

Just like in Goodfellas - when the DOJ attorney grins and nods his head at the Judge, this case will be dismissed post-haste.

 

Thu, 06/13/2013 - 16:47 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

"Plaintiffs Charles and Mary Ann Strange are the parents of Michael Strange, a member of Navy SEAL Team VI who was killed when the helicopter he was in was attacked and shotdown by terrorist Taliban jihadists in Afghanistan on August 6, 2011."

The way I understand it, those SEALS were already dead (murdered/silenced) and the helicopter crash was the cover story, the way you 'write off' the bodies, make things nice for the death certificate, the official story, and the family back home (who in this case, rightly, didn't buy the story).

Thu, 06/13/2013 - 12:42 | Link to Comment F. Bastiat
F. Bastiat's picture

There are three proven antidotes to tyranny:

God, gold, and guns.

Thu, 06/13/2013 - 12:50 | Link to Comment knukles
knukles's picture

Gosh... and on what side of that truism rests our leadership?

Thu, 06/13/2013 - 13:06 | Link to Comment THX 1178
THX 1178's picture

Our leadership likes guns... and gold... but only for themselves. No one else.

Thu, 06/13/2013 - 13:58 | Link to Comment upWising
upWising's picture

And far too many in the "leadership" THINK they are god(s)

Thu, 06/13/2013 - 13:12 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Call my finicky, but I prefer Gold, Guns and Ammo.  Unless you use golden bullets.  ;-)

Thu, 06/13/2013 - 13:25 | Link to Comment F. Bastiat
F. Bastiat's picture

Your mind is your sharpest weapon; continuously hone your blade with the simple truths of mankind's nature.

Thu, 06/13/2013 - 14:52 | Link to Comment tenpanhandle
tenpanhandle's picture

"There are three proven antidotes to tyranny:

God, gold, and guns."

 

Unfortunately there are four very stubborn symptoms to overcome:

government, graft, gulags and goons.

Thu, 06/13/2013 - 12:43 | Link to Comment JJ McApe
JJ McApe's picture

the problem here is: the markets and government are totally rigged and nobody knows what they will do with gold. make it illegal to own or buy? drop the price furhter with selling more paper gold?

in the end its just a few shiny bars and coins in your safe, or wherever you burried it. if you want a store of real value buy a house or land... and to be fair, gold was cheap below 1k, 1.4k is still not that cheap. a lot of buyers are holding the bags now.

Thu, 06/13/2013 - 12:50 | Link to Comment fonzannoon
fonzannoon's picture

If the markets are totally rigged than how can you or anyone else determine what is cheap and who is holding what bag?

Fri, 06/14/2013 - 17:27 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

because the motivation of the rigging and its mechanism are blatantly obvious

How could anyone come to any other conclusion?

Thu, 06/13/2013 - 12:53 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

That's not a problem, that's an indicator, pointing to the value of gold, that those in power would go to great lengths to conceal its true value. 

"It is like a finger pointed at the moon, don't watch the finger!  You will miss all that heavenly glory..."

And, it a bottle of finest scotch just a liter of grain alcohol?  No, it is the rare spirit of the harvest, with much human labor and expertise sunk into each drop.  How can you say it's just a "few shiny bars"?  Are we bags of water with a little salt and iron?

Thu, 06/13/2013 - 13:10 | Link to Comment Scro
Scro's picture

What about taxes? Don't think a city, county or state that is dying won't raise raise taxes.

Thu, 06/13/2013 - 13:32 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Sure, but how do you collect something that does not exist?

Fri, 06/14/2013 - 16:14 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

by taking anything else that's in reach.

Thu, 06/13/2013 - 13:54 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Lots of stuff that's easier to go after before they even consider gold, which I'll remind everyone is a tiny market when compared to stocks, bonds, money markets, and unsecured deposits.  Why go after a few tonnes of gold (grand total, spread out amongst hundreds of thousands of people), when you could do shit like:

1.  Straight up take unsecured deposits and convert them into worthless common stock.

2.  Randomly Corzine brokerage accounts.

3.  "Voluntarily" nationalize 401K accounts by making only .gov run funds tax deductible (of course, you would need a private bank partner to actually run those .gov funds, like, say, JP Morgan, who already runs our food stamps).

4.  Eminent domain domestic gold/silver mining.

All those things have such a tremendous nominal ROI compared to gold confiscation.  In the very unlikely event that things get bad enough that "rounding up the last few ounces" is actually necessary, there would be a fairly obvious benefit to paying several multiples of present buy prices in USD.  If you buy into the false logic that gold holders are potential miscreants, nothing would really tamp down the "miscreant" behavior faster than a high multiple nominal gain in USD in exchange for their gold holdings.  Really, gold holders are just riding the coattails of central banks who are stacking phys and settling cash.  We are bugs on the windshield compared to these big players.

Thu, 06/13/2013 - 18:28 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Very nice post.

Thu, 06/13/2013 - 12:44 | Link to Comment youngman
youngman's picture

I agree..the fundimentals have not changed one bit..in fact they get stronger every day for PM´s.....more money is printed everyday..and the "faith" it is based on is getting lost every day....

Thu, 06/13/2013 - 12:47 | Link to Comment Platinum_Investor
Platinum_Investor's picture

Reasons not to buy....

1.  Most powerful governments are dead set to keep the price down.

2.  Read #1 PLUS they have no choice but to keep it down so they can continue to signup new credit cards to pay off old credit cards.

I also see only change is a supply shock.  Comex is being drained so may be coming soon.

Thu, 06/13/2013 - 12:56 | Link to Comment TheEdelman
TheEdelman's picture

Been undecided for about 8 months now.  This week I am officially going into reason you placed in (1).  

Gold will get baby seal clubbed several more times to sub 1k.

However, I still think the stackers are correct about Au.  They are just about five years too early.  That said, I'm with Tylers thesis that Au is simply getting siphoned to offshore safety (the elites hold outs) slowly but surely.  

Hence, I'm long Ag but not buying anytime soon.  

 

Thu, 06/13/2013 - 12:57 | Link to Comment TheEdelman
TheEdelman's picture

Errr long Au

Thu, 06/13/2013 - 13:01 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Lack of collateral, +1.  PM is an excellent collateral device for trade.  It is the crystallization of a promise. 

Entymology of the word "precious":

mid-13c., from Old French precios "precious, costly, honorable, of great worth" (11c., Modern French précieux), from Latin pretiosus "costly, valuable," from pretium "value, worth, price"

...

Thu, 06/13/2013 - 12:47 | Link to Comment Bully
Bully's picture

Sort of amusing as gold drifts down to $1000. At one point you gold bugs will be right. Just keep posting this type of article, and eventually you'll be able to say "YOU SEE"

Thu, 06/13/2013 - 12:51 | Link to Comment ohhhhhbaaaaahhh...
ohhhhhbaaaaahhhhhhhhhmaaaaaahhhhh's picture

If it reaches $1200, miners will make no money, so no supply. 

Thu, 06/13/2013 - 13:13 | Link to Comment jbvtme
jbvtme's picture

the bid is on a commodity that can not be delivered.  in what other market does this happen?

Thu, 06/13/2013 - 13:34 | Link to Comment HungryPorkChop
HungryPorkChop's picture

Many of the majors are losing money or treading water at best with gold under $1400.  Major silver prodcers tend to start losing money around $25 and we're already below that support.

The only companies able to turn a good profit with silver and gold are base metal miners like copper and zinc.  These mines produce only a small amount of gold but it's all gravy.  The problem is they don't produce near enough to support world demand or consumption. 

Most refiners don't even want to mess with silver when its under $30.  So there goes a lot of your scrap and recycling. 

Mines are laying off and cutting back big time.  It doesn't take a rocket scientist to see where this goes!  To some extent this is what propelled the 2008 rocket ship of gold and silver after the 2007 bust.  Everything got cancelled, laid off, closed down but the demand was still there.

Thu, 06/13/2013 - 15:08 | Link to Comment Bay of Pigs
Bay of Pigs's picture

The miners are already losing money. If prices don't rise substantially, and fairly soon, it will be over for many of them.

This sector is completely FUBAR and has been left for dead.

Thu, 06/13/2013 - 18:34 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Its just the prelude to the big miners acquiring the (viable) juniors. The stock price will be $1.25 a share, down from $2, and then the big boys will come in and buy, and what do you know, the purchase price will be $2, not $1.25.

Thu, 06/13/2013 - 12:51 | Link to Comment Conax
Conax's picture

Gold was $288 in  January of 2000, now it's $1378.  Not a bad show.  We already said "you see" for years, and we will say it again.

Thu, 06/13/2013 - 13:04 | Link to Comment Bully
Bully's picture

Your argument assume that no gold bugs bought at 1700 to add to their positions. And you know that's not how that went...

I can cherry pick numbers too. S&P 500 has done 100% in the last few years. I don't need to go back to 2000 for that.

Thu, 06/13/2013 - 13:16 | Link to Comment Conax
Conax's picture

As JPMs stocks ride off into the sunset, and the demand from the far east fails to die out, those $1700 buyers will say, "you see?" 

I'm fairly confident  that it can't be printed up by the chairsatan, he'll have to go buy a shovel at some point.

Thu, 06/13/2013 - 13:34 | Link to Comment LawsofPhysics
LawsofPhysics's picture

" S&P 500 has done 100% in the last few years. " - all fine and good if you only expect to be around for "a few years".  How has gold done over the last 20 motherfucker?  Yeah, thought so. 

Fri, 06/14/2013 - 09:29 | Link to Comment Bully
Bully's picture

Lol how many gold bugs have been hoarding gold for 20 years? But if you take the S&P 500 back 20 years, you're looking at something like 700%. So again, not sure what you're talking about. Good luck with your gold this year. Market's printing money. 

Thu, 06/13/2013 - 13:44 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

"Figures lie an liars do a lot of figuring" -Proverb

"Not a bad show", you say?  Gold was $1778 in 2012, and is now $1378.  Nice $400 drop in 8 months.  ['Embarrassed Smile' emoticon here]

It all depends on when you got in*.  It's like the Economy: It's a 'Recession' if you have a job, and a 'Depression' if you don't.  The ONLY time that it "does not matter" (to borrow from Dick Cheney), is when you have your own fiat printer that's backed by the US Army.

And please folks, don't give the red-herring/BS argument or bluster that... "You're holding on for the long run"**.  The scumbag stock brokers say the exact same thing when the stock tanks by 30%.  The point is:  You could have (a) spent less money for the same gold and used the rest for other stuff, or (b) could have bought more for same money.  Pfff!

** Most of us are not holding on for the Mortal Afterlife (stacking like a Pharaoh), but the Financial Afterlife -- to convert into 'Money' after The Big Reset. And then "buy stuff".

Sorry dude, nothing personal, but facts are facts.  And context is context.  Note that I did not down-arrow you, merely disagreed.  And I happen to be a stacker also, with no boating accidents (tippy canoe, actually) since last year.  ;-)

Thu, 06/13/2013 - 15:06 | Link to Comment tenpanhandle
tenpanhandle's picture

99.9% of all people who own guns never have to use them for their intended purpose.  Does that mean they never needed them.  I contend the only time you need a gun is when you don't have one.  Same with precious metals. My physical is where it belongs.  In my hands for use as insurance.  Waiting for a crash before I buy is like waiting for a crash before I buy auto insurance. And finally, I look at my buy price and I see that for physical in hand, I am not that much underwater on my purchases.  If I hadn't purchased PM in the past would I still have the money to purchase them now - maybe, maybe not.

Thu, 06/13/2013 - 15:26 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Those who believe a reset must come have to live with being wrong every single day...for now.

Thu, 06/13/2013 - 18:32 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Ahh, but you can think very long term when it comes to gold.  Like gold for your children and grandchildren.

Fri, 06/14/2013 - 16:07 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

SIMILAR drops in 2006 and 2008 did no harm to us gold buyers. That's how we save up for discounts and then profit from them later. What will you say when gold is at 2500?

Gold is not paper. PAPER bugs chasing stocks into crashes can't be compared to getting physical assets like gold, silver, farm land, etc., at discount paper prices.

Fri, 06/14/2013 - 16:05 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Buyin' at the "top of the bubble" since 1200. You're only fooling youself.

Thu, 06/13/2013 - 12:49 | Link to Comment Bastiat
Bastiat's picture

Love the PM miners sentiment chart.  This virtually shuts off access to capital.  That why many of the smarter juniors/explorers have gone to private placement deals.  Those that have a strong cash postion will survive.  The rest will get vacuumed up by the majors for pennies.

Thu, 06/13/2013 - 13:10 | Link to Comment James_Cole
James_Cole's picture

Private placement are you kidding? Do you know what private placement is?

The miners are laying off staff, scaling back expansion of current operations and cutting projects. Practically none (particularly juniors) have a strong cash position.

Thu, 06/13/2013 - 14:05 | Link to Comment Bastiat
Bastiat's picture

Actually I do know, having done a few years as a private placement underwriter.  I also have friends in the mining industry.  What a borrower might arrange, privately with an investment group, anywhere in the world, is totally a matter of negotiation.  So knowing "what a private placement is"  doesn't really tell you anything about what kind of deals have been done.  There are private placements done through bankers and there are deals done directly with investors, say from the East, by miners with the in-house financial skills to protect their interests.

Also, though I can't see my previous post as write this, I don't believe I made any blanket statement about the juniors/explorers.  Just that smart ones have done smart things and are in a position not to be scooped for pennies.

Thu, 06/13/2013 - 14:43 | Link to Comment James_Cole
James_Cole's picture

That why many of the smarter juniors/explorers have gone to private placement deals.  

That's what you said, which may have been true last year or two years ago but definitely isn't true at the moment unless you're talking on a real small scale. 

Very few funds seem to have an appetite for this considering how burned they just got from as recently as the fall. It seemed amazing to me that people were able to raise money then, would be way more incredible to see it now. 

there are deals done directly with investors, say from the East, by miners with the in-house financial skills to protect their interests.

Lol, investor relations love spouting lines like that -- in-house financial skills, that'd be the day!

Fri, 06/14/2013 - 16:46 | Link to Comment Bastiat
Bastiat's picture

You arrogant fuck, you must be from NYC.   This is the day. 

I know of one explorer that brought on a Fleet St. banker last year and not long after put together a placement with some Asian money.  I've met the guy and had a nice chat with him about why he left a fat career to throw in with this explorer.  He told me of some similar deals being done.   Jim Sinclair is another who has some financial skills.  

Thu, 06/13/2013 - 12:49 | Link to Comment Mojeaux18
Mojeaux18's picture

Except as real rates go up gold goes down.  And rates are going up.

Thu, 06/13/2013 - 12:51 | Link to Comment fonzannoon
fonzannoon's picture

Until real rates bankrupt soveriegn countries.

Thu, 06/13/2013 - 12:57 | Link to Comment Antifederalist
Antifederalist's picture

Yes, rates are going up.  BUT not real rates.  Inflation is going up faster.  The FED is WAY behind the inflation curve.

When the inflation becomes more obvious gold will soar.  In the late 1970's gold soared with increasing nominal rates.   

Inflation and debasement expectations drive gold.

Thu, 06/13/2013 - 13:22 | Link to Comment Quinvarius
Quinvarius's picture

You know, there is no example anywhere in history of that being true.  100% of the time, the opposite has been the case in a bond collapse or debt crisis where yeilds rise.  It is a dangerous lie the media spreads.

Thu, 06/13/2013 - 12:50 | Link to Comment A is A
A is A's picture

"bullish sentiment on gold miners dropped to 0%" WTF????? Are you serious?

Thu, 06/13/2013 - 12:51 | Link to Comment fonzannoon
fonzannoon's picture

I agree, it's below 0%

Thu, 06/13/2013 - 12:55 | Link to Comment A is A
A is A's picture

Wall Street is officially 100% stupid.

Thu, 06/13/2013 - 13:15 | Link to Comment disabledvet
disabledvet's picture

Wall Street can buy a gold mine for pennies on the dollar moron. even better would be if Union Pacific or Burlington Northern started buying out these "non performing assets." if you're looking for solid reason why Peter Schiff has stopped making sense on gold here it is: http://seekingalpha.com/article/1499382-peter-schiff-has-it-totally-back... in other words in order to be consistent you can't say "because of loose money policy my gold is going to the moon" and then say "because the Fed is now tapering off QE gold is going to the moon." neither made any sense in the first place...although without a rigorous study of what QE is in the first place (which never happened from pretty much ANYBODY) then "why not double down on stupid." of course you can't account for luck in these things i must say. "formulas are one thing...Fukushima, the Arab Revolt, the implosion of the EU" etc, etc are all another. still, i used to have a girlfriend who would say to me...in bed of course..."it's better to be lucky AND good."

Thu, 06/13/2013 - 13:26 | Link to Comment fonzannoon
fonzannoon's picture

from your link...

" Mr. Schiff's theory is that because interest rates are going higher, the economy will slow and therefore the Fed will have to print even more money to keep the economy afloat

The current logic Mr. Schiff is using it truly backwards. He is now claiming that when the Fed "tapers" i.e. quits printing money, interest rates will increase. The increasing interest rates will stall the economy, forcing the Fed to return to QE to re-stimulate the economy. By not printing money, the Fed will be forced to print even more money is his theory"

That does not make sense?

Thu, 06/13/2013 - 14:00 | Link to Comment HungryPorkChop
HungryPorkChop's picture

A 1% or 2% interest rate rise would require a massive rise in interest payments needed to service existing state and govt debt. 

They must do whatever is required to keep interest rates very low.

Even a small 2% or 3% would stall the fragile housing recovery.  We are living on cheap credit right now and without that the economy stalls.

 

 

Thu, 06/13/2013 - 18:49 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

There's a whole chain of events that unfolds when rates rise, the key one IMO being: Banks have to actually lend out 'reserves'. 

We all know there aren't a surplus of fast-growing investment opportunities out there.  So where does the money go?  Car loans, mortgages, student loans, credit cards, the capital spending that has been put off will have to occur, renovations to the rundown houses (or not, alternatively) by hedge funds, and THEN the US gov't launches its "New Deal" infrastructure program. 

This causes prices to surge.  Once people notice any sort of inflation watch out, because most people are oblivious to the price they pay for groceries, so for them TO NOTICE the price of milk has gone up over the last month, its a big deal.  People start spending money as soon as they get it...  Loss of reserve currency status/loss of confidence in the USD/hyperinflation.

Thu, 06/13/2013 - 15:16 | Link to Comment tenpanhandle
tenpanhandle's picture

Talk of "tapering" is nothing but talk. It will not happen.  If they taper in one sector they will paper in another.  They are painted into a corner and no amount of bullshit can undo that.

Thu, 06/13/2013 - 12:54 | Link to Comment EL INDIO
EL INDIO's picture

This thing is definitely ready to reverse:
Inflation is thought to be dead but it is picking up a la 2010,
PMs are super hated;
Speculator are super bearish whereas Bullion banks are net long, that’s right net long for the first time since 2001 !

Check this:

http://www.gotgoldreport.com/2013/06/new-ggr-video-posted-in-the-public-...

Thu, 06/13/2013 - 13:16 | Link to Comment disabledvet
disabledvet's picture

BTFD BITCHEZ.

Thu, 06/13/2013 - 16:05 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Any discussion of gold should recognize that it is currently valued as a commodity. Its price is set in a largely paper market and the physical stuff is getting much more difficult to source. This means that the value of gold is not even closely represented by its price. Jewelry is not the main use of gold. It is held by the wealthy to carry their wealth through currency transitions. These happen in long term time so most gold does not move. It sits in vaults. It is only the bit that is 'in play' that sets the price.

We are at a point at which we will soon see a currency transition. Gold will once again be used by the wealthy to transition into this new system. Those who flip gold like some do houses may or may not make a few dollars. Ultimately it is not dollars but gold that should be held.

We have the opportunity to mimic the action of the very wealthy by holding physical gold.

I believe that soon I will wake to the news that no further physical can be had. At that point it will be too late to get more. Paper promises will be kept and holders of paper gold will be cashed out. They may get lots of dollars or they may get a few (more likely). Those who have physical, in their possession, will then find out what the true value of gold is.

Thu, 06/13/2013 - 12:54 | Link to Comment slaughterer
slaughterer's picture

Sentiment on miners cannot be 0% as Soros just bought into them.  

Thu, 06/13/2013 - 13:00 | Link to Comment IamtheREALmario
IamtheREALmario's picture

Gold was overpriced because of the fear trade hype pushed by this web site and others. It is still overpriced relative to its utility and the dollar price of other commodities. The ONLY argument that can be made for gold at its current or higher price is that the world will one day revert to a gold standard ... either officially or on the black market.

However, the hypesters can decide to ignite fear trade mach 2. Or maybe the horse will fly...

Is gold at a turning point? ENQUIRING MINDS WANT TO KNOW ... oh, please.... lol.

Thu, 06/13/2013 - 13:09 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Real Mario

If you wish to see the 'gold standard' of the future look to the ECB balance sheet. It holds (in total of all participating countries) 10,800 tons. It is this plus USTreasuries that make up the assets of the ECB. Their gold is marked to market. I believe that this will be the future of all large currencies (sans the USTreasuries.) Gold will act as a balance sheet asset only. The idea of countries setting (manipulating) a 'price' of gold will be a thing of the past. Ultimately this will be a good thing.

Thu, 06/13/2013 - 13:35 | Link to Comment disabledvet
disabledvet's picture

that's possible...and interesting to know as well. the euro has been doing quite well YTD actually. I'm not sure how the EU avoids a MASSIVE deflation here though. the USA has been consolidating it's massive military presence in the Eurozone for many decades now so "no consumption from that quarter." gonna go toe to toe with East Asian economic tigers? good luck. and their emphasis on retail? "only in the Nordic lands and Paris do they care about the totality of retail." (strong in media throughout the whole sales process.) East Asia? they do New Media better than New York BY FAR. "We'll see what's left of the Eastern Seaboard as a consequence." we already have the empty highways in these here parts "if they want to know what's coming." http://www.advisorperspectives.com/dshort/updates/DOT-Miles-Driven.php

Thu, 06/13/2013 - 13:00 | Link to Comment RhoneGSM
RhoneGSM's picture

Repeat after me: There is no voluntary exit from ZIRP. Taper happens when pigs fly.

Thu, 06/13/2013 - 13:11 | Link to Comment IamtheREALmario
IamtheREALmario's picture

IMO, the taper story (let us not forget pushed by ZH, as was Bitcoin, as is gold ... blah, blah) is a scam designed to get people to react too quickly and lose their shorts to the bank. The next attack on America will be per the biblical judgment timeframe and will happen in 2015... maybe September. Yes, every 7 years. And, it is not necessarily just that the US has been judged to be in noncompliance with God's laws or that the punishment is Lloyd Blankfein's to mete our per God's instruction, but that some people believe in many things that those of us with a public school education have never been taught and they use their knowledge of these things to exacerbate situations and take advantage of them.

... or so it is "written".

And, as Hillary says: "what does it matter?" That is a more important question, IMO.

Thu, 06/13/2013 - 13:11 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Rhone

If the USG has a smaller deficit it will be possible to decrease QE by that amount.

Thu, 06/13/2013 - 13:01 | Link to Comment katchum
katchum's picture

There is one problem with the analysis: rising TIPS yields are bearish for gold, as investors have lower interest in inflation protected assets.

Thu, 06/13/2013 - 13:02 | Link to Comment mogul rider
mogul rider's picture

The pumpers handed you all you your heads and you still dream their dream.

When you sell your 2 ounces finally then we can continue forward.

Please sell so we can move on..

 

one more thing

When there are 4000 comments here and 3996 are BTFD

Sell this time.

Thu, 06/13/2013 - 19:32 | Link to Comment jomama
jomama's picture

you act like people have 5 grand to throw down every time the price gets smacked down.

you've missed the fucking point.

Thu, 06/13/2013 - 13:05 | Link to Comment MxBonanza
MxBonanza's picture

Two months after the gold smack down and it still is very cheap. Horrible economic news that should be bullish and nothing...

The same tune that COMEX is about to implode, that physical is scarce etc. I think that is wishful thinking, COMEX is doing fine and physical is available.

I can buy as much gold coins as I want here in Mexico, no big premiums. I am still accumulating, but I wonder if I should wait for cheaper gold.

Thu, 06/13/2013 - 13:07 | Link to Comment Ignorance is bliss
Ignorance is bliss's picture

Rampant fraud and trade wars are another couple of reasons to hold precious metals. Fraud is everywhere we look. IBOR manipulation, money laundering, energy markets, real estate, equities, bonds, etc all steeped in fraud and manipulation up to their proverbial necks.

The trade and resource wars are heating up between the BRICS and the western alliance. Who knows how that will play out. The big boys are swinging at each other. Japan's monetary debasement, Syrian hot war, Russia's new Mediterranean fleet, currency wars, Iran, North Korea, PIIGS etc. We are in a deflationary period as third world national currencies loose value relative to the historic safe haven dollar, but that is illusion in my mind. I don't want to bet my future on illusions supported by fraud.

Keep your paper promises. Give me solid value. Give me precious metals. 

Thu, 06/13/2013 - 16:02 | Link to Comment Black.Swan
Black.Swan's picture

Just keep posting articles like this and eventually one can claim being right at the right time.

Gold will go up eventually, anyone reading ZH should be aware of that. Do we really need articles like this? Less is more.

Thu, 06/13/2013 - 13:20 | Link to Comment Crash Overide
Crash Overide's picture

You really can't go wrong holding PM's... just saying.

Thu, 06/13/2013 - 13:21 | Link to Comment Peter Pan
Peter Pan's picture

The end of QE will cause such convulsions to the system that gold will move in a way that will surprise.

Thu, 06/13/2013 - 13:24 | Link to Comment gatorengineer
gatorengineer's picture

On a micro level gold prices in Euro's.  The euro is going to go lower, they have to print, we taper, they print  5% swing to a stronger dollar comming soon.... $1300 before 1500....

Thu, 06/13/2013 - 13:30 | Link to Comment bluskyes
bluskyes's picture

The price is more affected by available margin than anything else. As long as we take our price signals from the margin account dominated trade of "securitized gold", The price will remain a poor reflection of real-world market conditions.

There will first need to be a full-blown collapse of margin, and a complete mainstream loss of confidence in the comex's ability to settle futures contracts - before we see the sort of "super gains" predicted by some of these super bugs. By this time the gains will be tempered by the loss of the dollar's purchasing power.

Thu, 06/13/2013 - 19:03 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Owning gold isn't about 'getting rich'.  Its more about not losing your ass.  Because as you say, the purchasing power will be decreasing at the same rate as gold's increase.

I like gold, because I think it will outperform RE or large caps going forward.  Price matters, though, so when an oz of AU buys the Dow again, it will be time to reconsider.

Thu, 06/13/2013 - 13:41 | Link to Comment catch edge ghost
catch edge ghost's picture

Draw a line from today, at about $1360, out to $2000 in April 2015.
If you prefer, start the line in 2001, at around $250.

It's "The Promise" (tm).

Thu, 06/13/2013 - 13:41 | Link to Comment q99x2
q99x2's picture

Become your own central bank. Print fiat.

Thu, 06/13/2013 - 13:59 | Link to Comment bluskyes
bluskyes's picture

The printing is the easy part. First you need to make a law stating that your paper must be taken in exchange for debts, and then must amass a group of thugs to enforce that law. Then you can go around stealing others property, and deny it, by saying that you gave them a piece of paper in exchange for their property.

Thu, 06/13/2013 - 13:44 | Link to Comment IMACOINNUT
IMACOINNUT's picture

As an official indicator of inflation: AAFES (army & airforce exchange service) just increased the price of all liquor by 10%. I doubt it was just for those of us who place long term storage value on glassware and the CBO decided they were losing money on its class six stores. As long as the fed continues to help me stretch my dollar with precious paper sinking, me happy.

Thu, 06/13/2013 - 14:02 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

I see a classic 'Dead Cat Bounce' in the gold prices.  In the 'Falling Fridge' analogy, I avoid catching the fridge on the way down and prefer to let it bounce a few times, before I pick up the pieces.

Look, don't get me wrong: I like gold.  Heck, I love it!  And also own it.  I also like Taggart and his buddies.  But, but...

I trust Rubini's crystal ball ("Gold down to $1000") more than Adam's.  And right now I prefer King Cash over Emperor Gold -- who lost some of his golden clothes recently.  No shortage of coins and bullion either (after an initial buying binge), in spite of claims to the contrary.  Sorry.  :-)

My intel says that gold bulls are waiting it out on the sidelines, waiting for the price drop to find a solid floor of support.  But I can see how some gold bulls, who are paid to promote/sell gold bullion or mining stock, wish and 'see' it otherwise.  We all gotta make a living.

Thu, 06/13/2013 - 14:13 | Link to Comment xxxxx
xxxxx's picture

The good news is JPM have closed their massive short Gold position on their engineered smackdown and are now net long Gold.

Thu, 06/13/2013 - 14:43 | Link to Comment unununium
unununium's picture

Got a reference for that?

Thu, 06/13/2013 - 14:49 | Link to Comment xxxxx
Thu, 06/13/2013 - 19:41 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Says it all about low gold prices.  AS LONG AS WEAK HANDS EXIST, miners or otherwise, the price of gold will be held down.

"Of course, if JPMorgan can continue to accumulate inventory on lower prices, we will get lower prices temporarily"

Thu, 06/13/2013 - 14:44 | Link to Comment blindman
blindman's picture

the/this/our/modern/fixed and scamming economy is dependent on liquidity and the velocity. liquidity and velocity are dependent
on credit and creation of credit (the trend). credit is the assumption of debt to be paid back with interest and over time and in a particular and "pro-scribed" manner.
so what some might ask?
.
the so what is there is no money required in the above description.
the only thing required is law, trust and energy of motion.
trust , you need that you must earn it. energy , you must have it,
find it and integrate it. law can be created upon demand. the fed thinks it can do this all without money entering into the public imagination.
.
review. when the representations of obligations, financial, run into
the structural designs and defaults of the systems doublespeak definitions,
as they do from tie to time and here and there, the trust erodes and the
extended credit and energy transfers dry up. only then do people
ask the question, "what is money?" .
.
or maybe I lost me marbles in the bright lights and deep shadows
of bernankeville?

Thu, 06/13/2013 - 14:48 | Link to Comment fijisailor
fijisailor's picture

I suggest that all of you antigold people have achat with 2 billion Asians.

Thu, 06/13/2013 - 14:55 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Wait for it.  When WWIII starts, they will get the opportunity to meet them face-to-face.

Thu, 06/13/2013 - 14:49 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

Yesterday on ZH, gold was was "surging". Today, not so much. 

When are you guys going to realize that in the late 2000's the AM Radio hucksters ran out of refis to sell and they needed something new - something even dingbat retiriees who'd been burned multple times in the stock market could understand: GOLD!!!!!

So, they sold them gold, they blew their bubble and, just as with every pump-and-dump they and their masters on Wall Street arrange, now they're out the door and you're holding the bag. The gold price is set by HFT traders in Chicago and metal manipulators in London who have been doing this for hundreds of years now. 

Sure, they're not above making a little more money off this gold thing, but the smart money is out. The boiler rooms are closing, The web ads are getting less and less productive. 

Gold's going to $900. You can go down with it, waving your flag of "Liberty" all the way down, or you can admit that the game is rigged, realize that the elites couldn't care less about the tiny gold horde of the common investor and start actually doing something about the way the game is run instead of sticking your head in the sand with your buried gold and silver coins. 

Thu, 06/13/2013 - 14:53 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

 

 LOOK, YOU DID YOUR JOB. YOU HELPED SOAK UP EXCESS LIQUIDITY. BERNANKE THANKS YOU, BIDS YOU GOOD LUCK AND GOOD DAY, SIRS. 

 

 

Thu, 06/13/2013 - 14:56 | Link to Comment fijisailor
fijisailor's picture

Just for your info, JPM is net long.

Thu, 06/13/2013 - 16:32 | Link to Comment SAT 800
SAT 800's picture

Unlike you I won't need any "good luck"; because the liquidity I soaked up is going to remain liquid and valuable. And good day to you; I hope.

Thu, 06/13/2013 - 19:46 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Its almost a compelling narrative.  I tell you what, though, say gold was valuable, but superrich didn't have the same ownership in gold (maybe own 40% of the worlds gold?) that they have, for e.g. in Federal Reserve shares (100%).  Wouldn't they try real hard to convince us its not valuable?

Here's another question. Gold $900, what do you see milk costing, $0.90 a gallon?

Thu, 06/13/2013 - 14:53 | Link to Comment put_peter
put_peter's picture

The market is pricing huge deflation. Whether this is manipulation or not i cant tell. However i suspect that gold and copper know something but aint telling it yet.

Thu, 06/13/2013 - 19:50 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

See KaPoom theory.  Deflation = USD gains purchasing power.  Deflation turns the USD into the biggest bubble, right before it goes pop. 

Thu, 06/13/2013 - 15:01 | Link to Comment The Abstraction...
The Abstraction of Justice's picture

Time to stop crying wolf for the thousandth time. When the wolves come we are ready for them, but stop giving warning when so many forecasts have failed.

Thu, 06/13/2013 - 15:56 | Link to Comment fuckitall
fuckitall's picture

Paper markets and paper price don't matter anymore.  These stupid paper-gold articles are just that, stupid, ridiculous.

Thu, 06/13/2013 - 16:29 | Link to Comment SAT 800
SAT 800's picture

The Precious Metals, as investments, are essentially a bet that the "leaders" will fuck it all up. Of course, they won't anounce that they fucked it all up; it'll be "someone elses' fault"; but nevertheless. So, do you feel lucky? well, huh, do ya?  I don't feel that lucky; I think overall the results of the present leadership will be on a par with Uncle Adolphs'; the world's worst general.

Thu, 06/13/2013 - 16:57 | Link to Comment paint it red ca...
paint it red call it hell's picture

Not investments, insurance policies....

Thu, 06/13/2013 - 17:14 | Link to Comment DowTheorist
DowTheorist's picture

One thing we do know. The secondary trend of the gold and silver miners ETFs (GDX and SIL) turned bullish last week. While this is not a primary bull market, the change from bearish to bullish of the secondary trend may bring some hope to the beleaguered bulls. Here is the full explanation of the new trend

 

http://www.dowtheoryinvestment.com/2013/06/dow-theory-update-for-june-11...

 

Thu, 06/13/2013 - 18:35 | Link to Comment blanketof ash
blanketof ash's picture

Looking around the world it would appear that gold its' self is not hurting at all. what is in deep shit is all of the paper that pretends to be gold.

Thu, 06/13/2013 - 19:16 | Link to Comment Silver Plan-Man
Silver Plan-Man's picture

Gold will preserve your wealth, but silver has the capacity to make you rich.

Thu, 06/13/2013 - 19:37 | Link to Comment dragoneyes74
dragoneyes74's picture

Anyone who has a long-term bearish outlook on gold simply needs to explain to me how the US is going to pay off its debt without a loss of confidence in the dollar.  

In the short-term, I do think the metals go lower.  But we're overextended on the downside now.  It's only a matter of time before the cycle reverses naturally.  And if we get some kind of event like war, or a debt ceiling debacle, or a physical supply shortage it could very well lead to a forced short-covering overextension to the upside.  Then we'll see how much metal is left in the vaults and what kind of interest rate pressure the bond market is putting on the world.   

 

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