Gold Breaks Below $1200

Tyler Durden's picture

From the moment Bernanke spoke, Gold and Silver began to accelerate to the downside. Gold legged lower into the NYMEX pit close and faded further in search of the $1200 round number (trading at $1199.90). Down around 12% from the FOMC (gold is now -38% from its highs in 2011).



Silver is following (down over 14% from FOMC) as the Gold-to-Silver ratio test 65x (double its lows in April 2011 around 32x) and back to the ratio that existed as Lehman failed.



As we noted yesterday, somewhat oddly, as goes gold so goes AAPL...


The other interesting on-again-off-again relationship of interest is Gold vs Housing (i.e. QE-driven excess vs the thing that supports QE or not)...


So to sum up today's remarkable market... Equities and Bonds are rallying hard on the basis that there will be no end to QE; and gold is crashing because QE is ending?

Perhaps some context is in order...

Charts: Bloomberg

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TheCanadianAustrian's picture

Is it time to whip out the credit cards?

TheSilverJournal's picture

...for silver. Look at that silver / gold ratio.

THX 1178's picture

Holy Fuck its wholly fucked.

Killtruck's picture

Come to Papa, my precious! I will not treat you so badly. You are not a zero in my arms, you are priceless. Come, come.

Ham-bone's picture

GLD will continue to puke up it's phyz inventory to folks who will treat it so much better - and never sell it back when GLD might like to buy again.

Amazing also oil straight up, silver hanging in there...but gold attacked in after pit close.  Somebody is desperate.

geewhiz190's picture

gold's weakness sticks out versus most other commodities today which are either flat or up.  my guess is distress in the hedge fund world, someone is getting margin calls.  could be close to a low as quarter ends as most gold stocks not falling with the metal.

fourchan's picture

my pms are unimpressed by papers manipulation of the fiat price, try buying any at crimexes price lol.

SafelyGraze's picture

I told my associate that it costs 1200 to mine Au

he laughed. 'you mean below-ground mining'

I said I guess so

he said 'above-ground mining is cheaper. I pay a fellow minimum wage to stand at the curb and spin the sign that says We Buy Gold'

I asked what he paid for the product

he said 'we pay about half of spot .. plus there's tax on the storefront, the utilities, the property rental'

I asked what the cutoff is before they are unprofitable

he said, 'let's say I pay 0.5x on a spot price of x, then re-sell for 0.8x to my guy in nyc .. I clear 0.3x .. I have fixed costs of about 20k per month for wages and taxes and rental, so I've got to move enough ounces to stay in business"


Stackers's picture

Got $10k in AAPL short profits sitting waiting for $15/silver.

augmister's picture

Good luck trying to find some!!!   The well is dry in my backyard.

WhiteNight123129's picture

When TSYs get to 2.20 or below, SHORT TREASURIES BITCHEZ.

Paper pushers want to hurt PM holders, retaliate and SHORT TREASURIES if they rally to 2.20 on the 10 Years, the 30 Years strip is the sweet spot.


The whole palladium, platinum, and to a lesser extent SILVER is up. This indicates a support from industrial demand, Gold unforunately does not have the industrial demand support which makes it harder to manipulate.






BooMushroom's picture

Rumors that cigarettes were to be reclassified as a scheduled drug would manipulate it quite nicely, I think.

LongBallsShortBrains's picture

I would agree with you if the game were fair. However. You will run out of paper before they do. Guaranteed. Either get on their side, and profit, or get out. Trying to fight the beast is futile

Bastiat's picture

People always talking about gold liquidated to meet margin calls -- who the hell is long gold?

Spitzer's picture
The price of gold is headed for extinction. I for one don’t believe that the price of gold is headed for five digits. Long befor e that might happen, permanent backwardation* would shut down the gold f

utures markets.

Ghordius's picture

New Austrian? Fekete? Still struggling with that point. If true, the man is a genius - and yet... we'd be facing a complete new paradigm. A New Age, in earnest

Meat Hammer's picture

The price of gold is headed for extinction.

If that ends up being true it'll only be relevant to the price in global fiats because gold never has been nor will it ever be worthless.  

LongBallsShortBrains's picture

I'm going to slip a bid on 20,000 tons at 50.03 an oz.

Who knows? They might flash crash it there. I'll line my garage with it if it becomes worth less.....

Ghordius's picture

a bit rich on lines like "dispensing Judaic barbarity" - this makes it propagandistic and so less trustworthy on it's factuality, do you realize? In fact, I think I spotted a few canards that would be quite damning

Kirk2NCC1701's picture

After a massive correction or crash, There are 4 words you will NEVER hear from a Stock or Gold Bull:  "Sorry, we were wrong".

Remember also the following:

  1. You can make money in a Bull market or Bear market, and pigs get slaughtered.

  2. A gold mine is a hole in the ground, with a liar on top

  3. There were more millionaires made during the Gold Rush by selling pick, shovels, etc to gold prospectors, than from prospecting for gold.  This is still true today for every market out there -- including the PM bullion market, and the Libertarian products & services market.  That's a FACT, Jack!

Diversify and hedge your portfolio accordingly.  Or get slaughtered for being a dumb, greedy pig.

dryam's picture

No legit explanation for the drop a little past 1:00pm for gold/silver with NO other move in ANY other asset class (btw, palladium & platinum did not move either).

Ignatius's picture

The 'legit' explanation is the banking syndicate protecting their usurious franchise.

Taku's picture

Gold & PGMs now in opposite direction

kliguy38's picture

hehehe........mortimer....SELL SELL SELL!!!!!!...........hehehehehhe

Ham-bone's picture

"somebody" is trying to shake lose as much phyz from GLD as possible before end of quarter - ALMOST LIKE SOMEBODY HAS TO DELIVER SOMETHING THEY HAVEN'T GOT??????????????????????


duo's picture

They are going to pay $200 over spot to NOT take delivery, so the lower spot is, the better.  Reasonable plan.

xtop23's picture

Over the last few years I have spoken with friends and family regarding a need to have a goodly portion of their wealth in metals.

Yesterday I sent out blast emails that were somewhat more ....... emphatic?

I hope a few take it to heart.

When this explodes, and it will explode, I have a feeling the word "parabolic" won't even begin to describe the pricing for physical.

And yes, I put my money where my mouth is. I made a fairly substantial purchase yesterday and a bit smaller one this afternoon.

Listen to me or don't, I'm calling a bottom in physical.

Premiums will adjust to price movement from here.

ebworthen's picture

I'm with you.

However, you will likely get a roll of tin foil in the mail soon from said friends/relatives.

Just send them an index card with "March 2009" written on one side and "S&P 666" on the other side.

xtop23's picture

lol we'll see.

Compared to the upside potential, downside risk looks damn near non-existent.

Anything's possible in this mess, I suppose, but this is approaching outright stupidity. Maybe I'm reaching for the falling knife /shrug.

I went over it again and again and just don't see how it can be a losing proposition at these valuations.

Ham-bone's picture

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."

Sir Eddie George, Bank of England, in private conversation, September 1999

XitSam's picture

In my experience, people don't want advice. They want confirmation that what they are already doing is the right thing.

However, you may tell them to put 10% of their investment money in PMs. That way if other investments go south, and gold goes up 10x they break even, and gold has never in several thousand years gone to zero.

Pareto's picture

There is no downside risk!  There is no downside risk!  There is no downside risk!  There is no downside risk!  There is no downside risk!  There is no downside risk!

There is no downside risk!  There is no downside risk!  There is no downside risk!  There is no downside risk!  There is no downside risk!  There is no downside risk!


I stopped reading after "downside risk looks damn near non-existent."

You're buyig for the wrong reasons.

new game's picture

my guess?!? 1,022.50 on August 23rd at 14:55 east coast dst usa...

LongBallsShortBrains's picture

I hope you are right. But I got a good hunch my screen will show 950.00 for December 2013 gold futures......for thanksgiving.

Just a hunch

; )

Alexandre Stavisky's picture

Staggered buys, no huge impulsive acquisitions, buy through thick and thin, buy high, buy a little more when low. Put your hard earned in the FREEZER.  You won't lose anything.  And you'll have the satisfaction of starving the banking fiat system of leveraging yours to further theirs.


Takes willpower, takes discipline, but long run you'll prevail.  Plain as the nose on your face.

augustusgloop's picture

The Kanzlerin wants her gold

SAT 800's picture

Over a period of a few years this ratchet effect will probably be significant. I don't think the people that get their hands on the bullion bars that GLD is releasing into the LBMA are going to let go of them, either.

fallout11's picture

I will buy more, a 'golden' opportunity for physical.

GVB's picture

Backwardation only when cities are on fire and 1 trillion dollar bills are being printed. That's for sure. 

Maybe (but unlikely, I think), when COMEX becomes cash settlement (which is equal to "out of physical")


If you're young, keep your stack. If your old, pas it to your (grand)children.

Better times to come, for sure. But I would not count on backwardation.

Stackers's picture

Look at a 1974 to 1979 chart for some good reference. Up 300%, down 50%, Up 800%.

TheSilverJournal's picture

And the big rise took place while rates were being RAISED. This is when the malivestments of artificiall lowering rates were exposed and freaked everyone out.

duo's picture

during a time when the bills from Vietnam were coming due.  This decade we have Afghanistan, Iraq, and the security state to pay for with printed money.

Oh, and we had a trade surplus.

eddiebe's picture

Youp and unbelievably it's working. I feel like I'm in the twilight zone.

JuliaS's picture

As soon as Nixon shuts the gold window again, we're all gonna be rich!

Any moment now... any moment now...

Kirk2NCC1701's picture

Goes to prove once again that The Fed can print longer than you can stay solvent.  Still wanna fight The Fed with a 1-string instrument? 

Diversify with other instruments and locations.  Or get your instrument broken by guys who are richer and stronger than you.

FL_Conservative's picture

Besides being purely a "paper" sell-off, this appears to be a coordinated takedown to get people out of PM's and into those truly "safe haven" investments, you know, equities and bonds.  Manipulated like anything else in today's "market".