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Guest Post: Gold's Under-Valuation Is Extreme
Submitted by Alasdair Macleod via GoldMoney.com,
The price of gold fell last week to the $1,200 level. The lemming sentiment in capital markets is uniformly bearish, yet every price-drop brings forth hungry buyers for physical gold from all over the world. Even hard-bitten gold bugs in the West are shaken and frightened to call a bottom, yet it is these conditions that accompany a selling climax. This article concludes there is a high possibility that gold will go sharply higher from here.
There are three loose ends to consider: valuation, economic and market fundamentals.
Valuation
So far as I am aware nearly everyone is overlooking the obvious. You cannot consider the value of gold without taking account of the changes in the quantities of the currency and the above-ground stock of gold over time. The chart above shows the adjusted US dollar price of gold rebased to 100 in January 2005 when the gold price was $422. In 2005 dollars, using True Money Supply plus excess reserves as the currency adjustment, gold has risen only 13.9% to an equivalent price of $481.
TMS, or Austrian Money Supply, represents cash, checking accounts and savings deposits that can be redeemed for gold under a full convertibility regime. Excess reserves represent the funds deposited by banks at the Fed, which similarly can be redeemed for gold. The sum of TMS and excess reserves are therefore the comparable currency measure.
In 2005 we were in the sunny uplands of growing economic confidence, when systemic risk appeared to have been banished forever. We had recovered from a destabilising economic crisis the previous year, and both stock markets and house prices were rising. Today, eight years later governments are committed to monetary inflation from which there is no practical escape, yet at $1,200 gold is only 13.9% higher today.
The chart above is clear evidence that gold is mispriced to an exceptional degree given the deterioration in fundamental monetary and economic conditions.
Fundamental monetary and economic conditions
The recent episode about tapering, when it dawned on the big-wigs at the Fed that their plan to save the world was not working and that they were caught like rats in a trap with no exit, exposed an important truth. When you rely, credit cycle after credit cycle, on debasing the currency to stimulate economic recovery there comes a time when it fails to work completely, and instead you need to keep issuing new currency to avoid debt liquidation.
The Fed has begun to realise this truth applies today and is trying to find a way out of their mistake. Meanwhile prestigious economic and financial commentators, used to lapping up Fed policy statements, interpret the tapering episode as a “policy signal”, with which the Fed conditions the markets for monetary tightening. This optimistic view does not accord with a realistic assessment of economic prospects, the condition of the banking system and government financing requirements.
It has become clear in the last few months that the US economy is not recovering and if a realistic deflator is applied it is contracting in real terms. At the same time the largest economic area, the eurozone, is sinking into a deepening depression, Japan has resorted to printing yen just so the government can pay its bills, and the UK is in a similarly precarious position as the US.
The major economies have become hampered by too much debt, too much government and too much regulation. Their ability to recover and generate the tax revenues to rescue government finances and the profits to bail the banks out of their bad debts is therefore fatally impaired. It is this dawning realisation that has become every central banker’s worst nightmare.
Meanwhile, the global financial system was brought close to crisis by the mere whisper of higher interest rates, should the Fed try to reduce the pace of currency expansion. Markets were destabilised, and probably rescued only by exchange stability fund intervention.
The issue of rising interest rates is particularly sensitive because there are in Europe undercapitalised banks which cannot afford the losses on government debt from even a modest rise in bond yields, and are almost certain to collapse from the effect of unexpected interest rate increases on their interest rate swap exposure. Indeed, the parlous state of Europe’s banks was paraded before us only last week as the European Commission insensitively debated how to stick bondholders and depositors with the rescue costs.
The governments of the US, Japan and the UK have now become accustomed to financing their deficits by expanding the quantity of currency, and in the case of the eurozone, the expansion of bank credit to finance government debt. The dynamics of this debt trap on governments are concealed by manipulated and self-serving statistics misleading the governments themselves with respect to the true state of affairs. The four major currencies are now irretrievably committed to monetary hyperinflation, and this is illustrated in the chart below, using the example of USD True Money Supply plus excess reserves.
The dotted black line is the exponential rate of growth, which is the maximum rate at which TMS can grow without destabilising the monetary system. Since the Lehman crisis the rate of growth has become hyperinflationary. Another way to consider this issue is that to revert to a stable exponential rate approximately $3 trillion would have to be withdrawn from circulation by the Fed. A monetary contraction on this scale is inconceivable, even if it is spread out over a number of years, not least because it would almost certainly collapse the whole monetary system.
The world is now committed to monetary hyperinflation, yet since 2005 gold at $1,200 today has only risen by $59 in adjusted terms.
Market fundamentals
In my preview of 2013 published by GoldMoney six months ago, I identified silver markets as a systemic danger, with the potential to create problems for gold. The problem appears to have been understood by both the central and bullion banks and partially deferred through what can only have been an engineered price slump.
Today the bullion banks have now balanced their gold derivative books on the US futures market, with the four largest actually long by 25,782 contracts on 25 June, and most probably more so on the last price fall. They have achieved this remarkable feat through a combination of increased short positions to record levels in the managed money category (hedge funds), and by producers in the Commercials category selling gold forward to protect themselves from falling prices. The extreme managed money short position is shown in the next chart, and last Friday the level of short contracts was probably even more extreme reflecting the most recent price falls.
Hedge funds’ short positions amount to about 240 tonnes, which is unprecedented.
In the last six months on the US futures market, the bullion banks – with the assistance of hedge funds – have booked enormous profits by closing their shorts and have virtually eliminated their exposure to systemic risk from rising gold prices. This can be seen in the chart below.
Silver, which I originally identified as the likely trigger point for a systemic crisis, has not been so easy to deal with and is an entirely different situation. The largest four traders (bullion banks) are still short by 18,846 contracts, but nevertheless have reduced a highly dangerous short position in illiquid conditions.
The problem in silver is that manufacturers are running long positions. Mindful of silver’s volatility they are locking in low silver prices to secure their operating margins. Nevertheless, the bullion banks have managed to stick it to the managed money category, whose short position is truly extreme.
Think about it for a moment: here is a bunch of amateurish hedge funds which has sold expecting lower silver prices and is now short of 133,000,000 ounces in an illiquid market, where the manufacturers cannot get enough physical at current prices.
Meanwhile physical is disappearing fast
If ever there was proof that gold is under-priced, it is the remarkable appetite low prices have developed for physical delivery. This is now so great, particularly from China and India, that not even the liquidation of ETF holdings has been enough to make up the difference. I wrote about this two weeks ago where I demonstrated that the western central banks must be supplying the market with bullion. Their motivation is clear: to avert a developing market crisis which was evident last year as a combination of ETF, Chinese and Indian buying led to persistent bullion shortages.
The acceleration of Asian demand from China and India alone last April and May increased the global shortage of physical bullion to record levels, requiring an increased supply to the market from central banks.
The important point to note is that it is erroneously believed in the capital markets that with respect to physical supply ETF liquidation has been sufficient to match increased Asian demand. An examination of the facts shows this to be untrue: the fall in prices has generated global demand on such a scale ETF liquidation is only a minor part of the whole supply picture, and the balance of supply can only have come from western central banks.
This is now the missing piece in the jigsaw: how much more gold will be fed into the markets by central banks? We don’t know how much they have left. We don’t know how short the bullion banks in Europe are, nor do we know the true positions of other members of the London Bullion Market. But we do know central banks are panicking, as evidenced by the tapering episode. We can surmise that they expected to quash the gold price by their actions, only to find that record and unexpected levels of global demand were generated instead.
Conclusion
The conditions are in place for a spectacular price readjustment on valuation and economic grounds alone. Furthermore, the short positions on Comex have been transferred to the hedge funds, leaving the bullion banks less exposed to escalating systemic risks. It is now in the latters’ interests to keep their gold and silver books as level as possible as a bear squeeze on the market shorts gets under way and starts the revaluation process.
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Max Keiser 461 has a good interview with Jim Rogers about Gold. Roger's says anyone can naked short Gold futures. That's how it is done he says. He was not to specific as to whether or not the physical was about all sold off by the FED and JP Morgan.
There is an oversupply of gold - much more than can be absorbed by a record level world population. You can't eat gold /sarc
We will drone you if you try to get it back - US.Gov
Gold is going much lower probably to 900....sell sell sell....its your last chance before it falls hehehehehehhehe....no bottom in sight.....buy bonds and stocks now while you still have a chance....hhehehheheheehehheeh
If u looktat the last year in review, from ABS amro going tits up to Germany requesting to the Swiss allocated lawsuits you can see pretty clearly why the USG must try and keep a lid on it. I can wait years for it to be free so am not concerned because I know where this is headed, as with all corrupt price controls.
And we forget that it costs gold miners more to mine gold than spot - i'll buy gold thank you very much and watch the miners fold.
http://seekingalpha.com/article/1346991-the-true-all-in-cost-to-mine-gold-complete-2012-figures
I think banksters forgot that they actually have to mine gold...
There are many ways to spin the gold story when trying to justify a fundamental valuation for the metal. Nick Barisheff is still arguing for $10,000/oz gold!
Chris Martenson interviews Nick Barisheff on gold, etc.:
http://www.planbeconomics.com/2013/06/chris-martenson-and-nick-barisheff...
"You can't eat gold /sarc"
yes you can.
mono atomic gold . google it.
never tried it myself. it's supposed to give an enormous energy boost.
y u no read /sarc you quote?
Maybe you can't eat gold, but when the dollar/yen/euro/pound crashes due to oversupply, you can buy a restaurant with your gold. In 1923 Weimar Germany, a bellboy bought the hotel he worked in for one ounce of gold. The central banks of the world are just counterfeiters.
Anyone can "naked" buy (go long) futures as well. In fact "naked" buying and selling is mostly what is done. Sellers seldom plan on delivering and buyers seldom plan of accepting delivery in the futures market. They're speculators. That's what they do.
But calling it naked shorting makes it sound so much more evil.
It's evil when the goal is to manipulate the price instead of speculating.
465 not 461
And yes, anything from wheat, corn, gold, silver, etc. I imagine normal market dynamics then imply failure if you bet wrong & have to cough up cash, unable to deliver would also imply liability by contract law. The rigging, here, is if those writing the shorts are back-stopped by central banks with infinite money & no rule of law to stop them.
4 sandy vaginas, apparently, can't handle the truth. Glad I'm not one of them.
Red triangles are not a cure for sandy vagina.
Gold is undervalued? I'll drink to that! Oh wait, I can't...
I just did buy a little more today, gold being on sale and all...
The glass is half full
The gold trade today is interesting. Wednesdays have now become stealth buying days for the Cartel to cover off more shorts as it is the first day after the COT reporting cutoff so they can hide their moves for another week by doing so. Even with the NFP numbers coming out on Friday, and weaker buying interest as a result across the sector, it does appear that some steady buying is part of the story today.
The Cartel does not want to see gold take off higher on a day when Egypt is experiencing a transfer of political power. Nonetheless note the trading action where some buying has stepped up on every dip during the session and the trend is up. Perhaps the shortage of physical to meet delivery demands has generated a short term bottleneck against the longer term plan to suppress the metals on any day of bullish news.
The glass is clearly half full now. Sure the media clowns are entrenched in this notion that a gold bubble has burst, and the stories presented are of the bearish variety. However behind the scenes the driving forces for gold continue to be more bullish than ever.
In a thin trading week, and with most of the bulls severely hurt over the last 2 years, the media remains overwhelmingly bearish. It does not surprise that the recovery so far has been rather lackluster and there is limited traction. This will pass.
Note that when local bullion shops were completely sold out, the bears were quick to debunk this information by saying that retail buyers are not a factor in the overall trade. Fine, disagree but let that commentary stand. Why is it then that now we have more readily available supplies at many large retailers, and the same bears are quick to point out that this is proof that the demand for bullion has declined?
You cannot have it both ways, unless of course you are an approved agent of disinformation for the media shills on the bearish case...
Once the spin is stripped away, the big picture is extremely bullish. Retail demand has surged and this has been reported and confirmed by so many of the high volume retailers. Significant transactions have also surged, as has been reported independently by dealers representing high net worth accounts. And Central Bank buying has been on the rise, another factor that is dismissed by the bears.
Recall that when CBs were actively selling bullion it was broadcast far and wide by the bears, but now that they are net buyers, it has been downplayed. The final piece of the puzzle is the continued surge in imports from China and India on a scale that dwarfs all of the other market demand.
I once kept track on my website of the number of analysts that had presented bearish stories on the metals that would indicate that 'the top was in' and it was time to get out. I read intense commentary to this effect since before gold broke above the $500 level, and it has continued all the way up.
The shrill top callers are more in evidence today than at any other time in the past. One of these bozos went so far as to state that gold buyers today are 'suckers'. That kind of analysis offered by these clowns is superficial at best, and as we have seen at each significant correction in the past, these people will disappear back under a rock somewhere at the first sign that they were dead wrong (again).
Some things never change.
I am bruised and battered in the midst of this enduring selloff but I have never felt like the glass is not at least half full. There is no need to panic and the future outcome for sector will transform into higher highs yet ahead. The decline in reputable inventory numbers for both gold and silver tell where the long term trend is headed, despite the intense volatility and the regular appearance of top callers contributing to the background noise like cuckoo-clocks.
If those that have been on board this sector for more than a few years are indeed suckers, it is because we believed in the integrity of a free and fair market, where criminals would be prevented from the kind of manipulation that has contributed to these lows.
However this too will just amount to a bit more noise in the bigger picture because the twin drivers of declining mine output and increasing investment demand will overwhelm the paper gold (and silver) scam for good.
We are close to that point.
Watch for the Cartel rats to abandon the sinking ship before that happens. On the way down through this correction many have correctly asked, who is selling?
Now the question comes down to, who is buying?
Connected players have stayed one jump ahead of the market all the way through this volatility precisely because they ARE the market. The Cartel has been buying aggressively lately trying very hard to make the market think lower lows are still ahead. This recovery will be one for the ages when they are ready to make their move.
http://www.lemetropolecafe.com
Your post totally reminds me of 2010...
~~~
Around the 4th of July... 'Financials' were taking on water big time, then, miraculously turned around...
6 weeks later... surprise, surprise... comes 'The Bernank'... Jackson Hole... QE2...
Just keep buying folks, chart smarts don't do it for me, 5000 years of history does.
Agreed. We can technically analyze the shit out of these charts, but none of that matters in a fraudulent, manipulated market. I'm stacking in preparation for the day the Crimex goes to zero...
I find it helps map the pattern of the fraud. It has a shape, size, limits on the lower & upper bounds of its reach, and it has specific goals.
That being said the mappings of price vs date and gold vs silver price, like this http://flic.kr/p/f17z1s , generally are best for pricing risk vs return on options (gld, slv) and mining stocks, short-term. Long-term and up front you best have metals in pocket so in that case, easily precede any chart, or replace it entirely, with "gold, bitchez" and the core truth, "if you can't hold it you don't own it"
I gotta say "thank you for these charts, especially ones unencumbered with technical lines; they say it all as they stand".
I will agree, though, on your of "5000 years of history". Fundamentals are represented by long understood and proven truths, through the ages. They are the balancing line for reality. Any extreme deviation will be countered by an equal or greater (<) counter reaction (timeline = extreme + 1). Fundementals rule the middle and longer timeframes (time is coming due).
I consider Holding PM's in my hands as a fundamental. I bought on the way up and I bought on the way down. I consider Au a barbarous relic, but considering the Human Race has a wide streak of barbarism running down its collective back, I say my bet pays in the near future.
Silver, FTW.
When did Gold bottom relative to the last crash?
edit.
wrong thread
adult beverages?
Why yes, thank you.
yeah, no shit Ruprecht...
~~~
Now help me decide which side of the horizon the sun is going to rise tomorrow...
When gold finally gets its overdue revaluation I will most likely get cocky as fuck; all the women who passed me over as marriage material in the last decade will get phone sex pics of all the gold they WON'T get to play with because they were dumbasses and went for the real estate broker instead!
AM,
You are, for sure, in a better position because of their having passed you over.
Continue to stack as much as you can BEFORE you get married.
Any stacking you would have done as a married man would be subject to the 50% clause........
Don't tell her.
Let her know that you have about 10% of what you really have, never let her think she can cash in on a divorce. The 10% will be your excuse for your interest in the PM market.
He owns it before the marriage, therefore it is his. Sign a prenup and you should be all set. Gold isn't mooney remember? It is a physical thing,
so just like his bed and stereo equipment are his, so is the gold. Cash on the other hand is something else. But fuck! Why on earth would you want to get
married?
that is one of gold's umpteenth advantages. when you divorce the bitch she gets zilch.
Exactly.
I wait until she is out on errands, then stash it in the hidey place.
A. Magnus
I'd be happy to draft a prenup agreement for you. However, my experience has been that when it comes to women, character is all that matters.
My strong advice to you, my forend, is to sign a one-year exclusive contract with a really hot hooker. Better still, two! Your choice at the end whether or not to renew your lease, or trade them in for newer models.
Much cheaper than a divorce.
You went for the wrong type of woman! Sounds like you haven't learned yet either!
I have a good friend who starting buying gold (large) in the 70's when it became legal to own again.
He has 1000's of ounces of Au and he's in his 70's now.
I've asked him what he thinks about the current gold and silver prices. He just laughs and says: "all short term noise".
But....But.....But.... Martin Armstrong thinks gold bugs are deluded and deceived, arguing that we have until Q3 2015 before gold resumes it's bullish climb.
How in the @*%$!& can everyone be so incredibly divergent in thought about this subject?
Seriously, does anyone have any ideas as to why MA reads the numbers and trends on this subject so different?
Could it be that metals are so gamed at this point that his rational models CAN'T be properly applied?
In the end, it really makes little difference to me.
My personal tea leaf reading screams that we are fucked good and proper.
As such, I just keep stacking.
Thanks in advance for any insight yall might have.
Who gives a hoot in Hell what Martin Armstrong thinks. He used the metals community to help his cause, then cast them aside once he gained his goal of release. He is the worst of the worst, and I wouldn't piss on him if he was on fire.
I think anyone with half a clue can see that gold (and silver), are not only hugely undervalued, they are also grossly far underowned (physical metal).
BOP...the grossly underowned part is very important in my opinion. One of the reasons (among many) that I continue to buy physical gold and silver is the contrarian view of not only is it very undervalued, but underowned (by an immense margin compared to other asset classes).
I think silver will be the bigger mover over gold once the fun starts. Before you know it gold will be out of reach, price wise, for most folks. But they will still be able to get onto the silver bandwagon when the fiat currency shit storm is in full force since the price will still be reasonable ( until it's not !). It may be too late for a lot of people, but once the momentum starts, it will be very interesting.
Main driver/final nail in the coffin will be fiat currency confidence...and the lack of it. Only a small percentage of the population are ahead of the game on that front.
The first rotation cycle of Equities/Bonds => Fiat currency in all forms is gaining more momentum each day
The second rotation cycle of Fiat currency in all forms => PHYSICAL PM's and other tangible assets is still in it's infancy among the common folk and is only occuring within a very small percentage of people who have been in that cycle all along. When the newbies join in, the momentum will be quite a phenomenon to witness.
This is just my opinion and how I am have been investing/converting my fiat. Been ramping down on cycle 1 since most of the EQ/B assets have been converted to dollars, and ramping up more on cycle 2 since this last smash in PM's.
Will the prices go down more....who knows, but that is just another opportunity to ramp up some more !
This of course is based on my contrarian/fundemental investment strategy that I have embraced.
I don't get the part where gold will be out of reach and will be a reson for silver buying. If gold would cost 10x todays price it would be 400$ a gram. If you can't afford that i guess PMs isn't your thing.
No not groosly under owned. Commonly owned in India. With gold you need to keep your viewpoint global.
Here is one more chart. In terms of the Fed's balance sheet vs. the 8133 tons of the gold the US has, gold is now cheaper than it was in 2001.
Back up the truck now!
http://s17.postimg.org/8w0jnab3h/Picture1.jpg
It's almost, almost like this guy knows something about the way this rig works. I mean where some of the lines are connected to the counterweights. Mains power, most of the large pieces.
As they say, "All will be revealed to the patient man."
Maybe those positions keep the hedge funds on "good terms" with their lenders.
He said: The world is now committed to monetary hyperinflation, yet since 2005 gold at $1,200 today has only risen by $59 in adjusted terms.
DUH! That's because there ain't no such thing as Gold Fundamentals. You just got a bunch of people who think it is Magically Valuable. But, they are subject to things that really matter like needing food, energy, clothing, etc. So, at some point they have to quit pretending, and actually pay for the stuff they need. This reduces the amount of funds available for foolish expenditures on Gold.
Squeeky Fromm, Girl Reporter
There was a time when your 'contrarian' views were occasionally amusing. Sadly, they've become almost uniformly tedious, and transparently built on a foundation of sand.
Tedious??? OMG, I write poems, and do videos and things. I am even working on a Gold Bug Adventure Novel!!! Here is chapter 8:
The Adventures of Melvin, the Gold Bug
Chapter 8. Out of His Mother’s Basement.
The neighborhood streets were dark, and the only light to be seen was a faint glow on the horizon where Melvin presumed another fire was consuming yet another building. Always the careful planner, he checked his bug-out bag once again as he silently climbed out the window of his mother’s basement. Yes, it was all there, two bags of smushed up malted milk balls, a change of undies, his last 6 Imodium caplets for his spastic colon, the nerf gun he had spray-painted black to intimidate bandits, a well-thumbed copy of The Erotic Escapades of a Chartered Accountant by some English guy named Anonymous, and 10 ounces of gold.
Ever since the economy crashed, Melvin had been hunkered down in the damp basement, windows blocked out by tin foil and cardboard. He knew the day was coming when civilized urban life would give way to the law of fang and claw as the over-leveraged economies of the world imploded. Some of his friends had invested their money in rural land, food, and guns but Melvin knew these would be nearly worthless when the so called poopie hit the fan.
No, the way to store your wealth and survive until the lights came back on was GOLD! So Melvin sold his various collections; his comic books, his action figures, his library of Jenna Jameson DVD’s in pristine condition, his stamp albums, his Franklin Mint Collection of toy cars, and even his dead mother’s Thimbles of the World sets in genuine mahogany shadow boxes.
He plowed all of that, and the $17,500 he had left from his mother’s life insurance policy, nearly $18,000 in total, and bought 10 ounces of GOLD! Then, when Darkness Fell he climbed down the stairs to the basement. He lived off water from the hot water tank. He ate cat food his mother had stored back in the days when her cat, Fluffy Bucket, was still alive. It wasn’t bad, and he actually began to look forward to his nightly smorgasborg of Tender Tongol Tun, and Sea Bass & Shrimp.
But still, it had been a rough month. When the canned cat food ran out, Melvin started in on bags of Meow Mix. He covered it with ketchup squeezed out of old McDonald’s condiment packages. Then, in an upstairs closet, he found an Easter Basket his mother bought him several years ago, before she died. The Peeps were a little stale, and the old chocolate was hard on his spastic colon, but Melvin was a survivor. True, maybe if he had spent what he paid for one ounce of GOLD! he would have had enough food for a year, but people could always steal food. And food would eventually go bad. And plus, he needed to lose a few pounds anyway to get down to his fighting weight of 140 pounds.
No, Melvin didn’t regret his decision to buy GOLD! But now, he was out of Meow Mix and he was headed to the country where his GOLD! would insure his survival. He quietly closed the basement window behind him.
Squeeky Fromm, Girl Reporter
Tedious???
YUP!
Tell the truth Squeeky, cross your heart and hope to die.... were you dumped by a goldbug boyfriend?
Philooze:
No, I wasn't. As you will see when I finish Chapter 10 and Chapter 11, that would be unlikely.
Squeeky Fromm, Girl Reporter
Ah I beginning to see.... you have a penchant for other girls.... and one of those loved things made from gold, like rings, bangles and necklaces. Still no reason to hate GoldBugs I'm sure.
ROFLMAO... thats so much fun to read. great stuff!
Your poems were wearing thin, and I was inclined to junk you from the outset here. But as I read further, I actually had to change my vote to a green +1.
It is healthy to get a dose of levity here in what can tend towards a mono-culture of PM accumulation, survival rhetoric, and general anti-establishment sentiment.
Who is the real SqueekyFromm?? Any relation to Erich Fromm of the Frankfurt School?
Hi dalkrin!!!
Yes, that is where the "Fromm" is from. It's all about freedom from self destructive stuff. I would try to do a monograph here on The Hoarding Orientation in Gold Bugs, but what's the use??? The only people who would appreciate it are people who aren't Gold Bugs. Better to just laugh at them, and sadly, ridicule will change more minds than logic or rhetoric ever will. I think maybe it has to do with some primal apelike instinct to fling poo, and the associated reflexive poo-avoidance behavior.
Squeeky Fromm, Girl Reporter
Hey, I'm not saying I agree, but this was entertaining!
I'm really glad Melvin found some Peeps. :)
I think you forgot the prequel where his best friend had bought at $300 with the money he made selling his Vivid DVD collection, then sold at 1800, and was now living in Costa Rica with Ms. Jameson in the flesh.
It was a LOT of DVDs.
The world is heading for economic disaster and social unrest the likes we have never seen before and you're wasting time writing silly stories? Don't be surprised if you end up financially slaughtered one day. Maybe then you can start writing about the paperbugs.
That was actually fucking awesome, we should get drinks sometime.
Hahaha!! I read this to the family. They loved it. I understand that they are starting a chapter of Gold Bugs Anonymous on one of the Ron Paul discussion boards.
You gold buggers need to buy and hold onto your gold, but try not get so emotional over the metal. Gold Bug addiction is treatable, though. You are powerless over gold unless you get help.
tedious, vacuous & lacking insight. Useless propaganda.
...unlike treasuries, $ or electronic bits on a bank's computer system, which are truly and non-arbitrarily valuable. Thanks for the deep insight.
I agree with you and laugh at this article.I don't think people selling or not buying gold are the dummies ? poor thing just you got caught holding the bag.
stop being in denial. gold is just an asset to jump on when there is a scare. some smart ass will always find a correlation ...after the fact , but never hold on the the long term.
There is no hyperinflation simply because there is no transformation in the banking system. I dont know if the author is aware but banks all over the US and europe are deleveraging or hoarding not expanding.
Central banks monetary expansion is strerilized, and they KNOW IT. At some point this will change. Granted, like in 1994, investors will be scared , rates will zoom, but not for long since we are no more in an economic boom.
Maybe you'll explain for us all how the FED is going to get out of the catch 22 it finds itself in now. Sitting on trillions in USTs that it would like to get rid of, but can't sell because that would trigger a collapse in the bond market, causing rates to skyrocket, causing its current holdings to be worthless. So all it can do is keep buying, continuing to suppress rates to maintain it's portfolio value. Meanwhile, the only way it's keeping all this new money (because that's what debt monetization is after all, regardless of how much trickery you use to hide it) sterilized is by paying the banks to leave their reserves at the FED instead of lending them out, so eventually the rate the FED earns is lower than the rate it's paying banks for their deposits, and the only way it can prevent this is to sell it's bonds, but it can't sell it's bonds because that would trigger a collapse...
Al....squeeky is likely a self hating gold bug.....
they will simply write it off as losses. It hurts noone
Yeah, sure. You know that whole 'fiat currency' thing, where unbacked currencies are implicitly backed by faith in the issuing sovereigns to not abuse their priviledge and rampantly devalue? Apparently not.
simple.
either prices increase sharply or interest rates increase sharply, or first one and then the other, and then both, which would surely cause a total economic collapse.
the only way to escape this is death.
Yes, it's enough to give one a migraine!
Do ye swaller?
Sqeeky....you do realize that if...if...gold becomes the primary means of wealth preservation...that the common redneck would have very little to do with price movement....it will be large investors and sovereigns looking to bump up their diversification with as much bullion as possible....any redneck holding gold that preserves value would be nothing more than an ancillary player...and if it comes to that...a lucky one.
got a bunch of people who think gold is magically valuable?
this topic is apparently way over your head, sister.
1. Gold is a referencepoint for value.
2. The very fact that gold is almost "useless" is what makes it a good referencepoint.
3. Currency doesn't flow into gold, it moves trough it. The same amount of money can flow trought it multiple times.
4. If you bought gold and need food you obviously planned badly.
Odd how the "selling climaxes" all seem to come after hours, instantaneously, on huge volume. All those petty ass, small time gold bugs are a monolithic bunch. Much like spawning grunion, they all sell at once. Maybe it's a moon phase they react to? Makes more sense than the fed defending the petro dollar.
"Even hard-bitten gold bugs in the West are shaken and frightened to call a bottom, yet it is these conditions that accompany a selling climax." I am bullish on gold looking out 5 years, but I'm so tired of hearing about a supposed selling climax that I keep hearing about which has not yet occurred. These experts don't have a clue what a selling climax is. It is a purely technical event where the manipulators of whatever market it happens to be, corral the sheep massively on one side or another of that market, which causes an extremely high volume and powerful move back in the other direction. I keep coming back to this. We will NOT see a major bottom in gold until there is a true selling climax. It's getting near, but please be patient. BTW, Richard Wyckoff was the gentleman who popularized the terms selling and buying climax.
i would suggest that the propaganda about a selling climax that will take gold to 975-1000 is now so thick and deep, it is doing nothing more than herding the shorts into the kill zone. there are so many crammed in now,
and JPM/Fed's cupboard is really really bare, that if they do this, they risk being trampled the the stampede of all the stackers (like me) holding back just a bit to grab whatever we can....
and i don't think it will be much because if they push things down that far, china, india, and russia are going to take it all....and even jamie dimon's underwear.....
this is really a pig fest on the part of JPM and the Fed....and given what's going on (massive transfer of PMs to Asia) during what they've done so far.....i think -- even inspite of their massive egos and their mastery of the universe --- it is going to backfire big time......
There will come a time when the only place you will find dollars is in landfills or dumps. I can't quite point to a time in the past 5,000 years where people were putting their gold into trash containers waiting to be picked up from the curb....
Aliswhat MacCleod? Blaque Nova Scotian?
FIAT currency == WORTHLESS ..Nuff said .....Print More and where does it get us. ENOUGH IS ENOUGH...Fuck off .....
Outside the Box, from John Mauldin, today features Ben Hunt of Epsilon Theory. Here's a quote on gold.
"There is no stand-alone Narrative regarding gold today, as there was in 1895. Today gold is understood from a Common Knowledge perspective only as a shadow or reflection of a powerful stand-alone Narrative regarding central banks, particularly the Fed … what I will call the Narrative of Central Banker Omnipotence. Like all effective Narratives it's simple: central bank policy WILL determine market outcomes. There is no political or fundamental economic issue impacting markets that cannot be addressed by central banks. Not only are central banks the ultimate back-stop for market stability (although that is an entirely separate Narrative), but also they are the immediate arbiters of market outcomes. Whether the market goes up or down depends on whether central bank policy is positive or negative for markets. The Narrative of Central Banker Omnipotence does NOT imply that the market will always go up or that central bank policy will always su pport the market. It connotes that whatever the central bank policy might be, it will drive a market outcome; whatever the market outcome, it was driven by a central bank policy."
" It connotes that whatever the central bank policy might be, it will drive a market outcome; whatever the market outcome, it was driven by a central bank policy."
Thus ending the terms 'free market' and 'price discovery'
"three loose ends to consider"
Bull fucking shit...
There is ONE loose end to consider and that is the USSA and the Exchange Stabilization Fund (ESF)
I SUGGEST IF YOU DON'T KNOW WHAT THIS FUND IS AND WHO IS IN CHARGE, than you go learn it on up,until then you know nothing about gold that is as important as knowing about this fund, and the Gold lease rate manipulation scam .
Ps ....
Fuck You Lew
From a long-term value standpoint, gold is like land. The reasons for holding it may change, but compared to paper money, stock in companies, sovereign debt, and anything else, it holds its value.
Except that land is taxed every year.
So "buy", right?
ah, whatever. i started buying gold at 400 and silver somewhere around 5 an ounce. right now, with all this hysteria, i have three baggers.....they take 'em down to two baggers, whatever, i sleep well at night.
its a long, long way down to my breakeven. wake me when we get there, and maybe i will sell some. maybe. i may need it myself to buy some gold-backed yuan.
Pleeze don't bother the Sheeples with Facts...it gives them a headache.
i've never felt better about my stack. er, that's at the bottom of that lake by where i live.
Gold will never crash on sentiment. Look to Asia. When your average Indian needs to sell to stay alive, then you will see a real crash in price. When that time cones Americans will be murdering each other in large numbers and houses will be worth almost nothing. Your gold will buy those houses if you can survive but it will all be largely immaterial at that point. That's only one scenario. The future is a mystery.
Marc Faber has warned Americans not to keep their gold in America; it will be confiscated. Look, either the gold bugs believe we are going to have a total collapse, or we won't. They can't have it both ways. If every thing collapses (which I believe it will), gold will either buy you food; passage out of this country, or an arrest and permanent detention in a FEMA camp.
I'm not convinced that it won't be confiscated by most governments here in Europe, either.
So we get a short squeeze, prices goes up, people buy more.....than it stops. No more buyers, price starts to fall, the buyers get worried, price continues to fall, these same buyers cannot belive prices have fallen so far....again. New lows, panic, big selloff as the 'gold to the moon' paradigm has been shattered. Everybody is ignoring gold and looking at the new way to make a fortune. Meanwhile gold stabilizes and is being bought. Slowly it rises, and its ignored. Goes higher and is still ignored. Gold shoots up and gets attention, media starts looking at it, folks start moving in again, shoots up quickly. I sell on the blowoff. Everyone has bought. Price collapses, again....lol. And now all the profits for those who bought recently have evaporated. I don't pay much attention to fundamentals or the analysis of, that usually leads to losses. Oh, the current gigantic demand is being met, right? Yes? Yes.
Agreed. If we can use it at the top to buy arable land.
Gold bugs need to come up with creative ways to use their gold instead of letting it just sit and do nothing. What if you set up Lincoln Logs as cabins and fences and play "Civil War" with the gold; where gold coins and bullion are the Confederate soldiers, and FRNs represents the Union soldiers?
Women gold bugs could drag out their old Barbie dolls and Ken dolls and have Barbie fall in love with Ken because of all the gold he owns. They get married; she divorces him, and takes all his gold.
There are numerous ways to keep gold busy!
I put my PMs to work.
I have begun to store gold for friends. I noticed that not all of them want to get their gold at the same time, so I have been loaning it to other friends for a fee + the spot price.
I also have Achmed, my assistant, converting tungsten into gold with some spray paint.
What could go wrong?
http://www.dailymail.co.uk/health/article-2348220/Vaccine-using-GOLD-DUST-mimic-viruses-boost-immune-system.html
gold dust as a vaccine: it causes no harm to the body & needs no preservatives.
I bought about $4000 worth of gold and silver cons yesterday - some of those American eagles and various sovereigns.
I literally 'cleaned out' the dealer as he only had a few coins left in stock - the demand is mental.
I am buying another 20 silver britannia's today - I'd rather have gold and silver sitting at home than risk my money being 'bailed in' at the bank.
At current prices you can't lose - if the world does 'recover' - then I shall merely sell off my PM's over time.
Anyone not taking this precaution is asking for it.
Sorry but the statement "There are three loose ends to consider: valuation, economic and market fundamentals." is mostly irrelevant to gold
Since Gfukermints and central Bwanksters got involved these things only matter if they lose control of the 'markets' and they are doing their utmost to CONTROL and MANIPULATE anything that would show them up to having no clothes or not in full charge. Gold cannot be seen to be a good investment at all. Remember it is not their money they are using to control the price so they don't care if they make huge losses on trying to hold the price down. They will do it no matter what the cost.
Squanks.
Squawking wankers.
congrats to tyler and crew for hitting the point where it really starts to fuck up the site. I haven't been able to read a siongl;e article without an add that I have to close first. Put them on the side, etc. not on top of content!!!!
Here's an easy solution if you are using FireFox - Install Ad Blocker Plus and Track Me Not addons.
Mind you if everybody did this ZH would soon be a pay site.
sigh
I've read a lot of articles and comments about gold. In the top 1% is one that appeared two days ago, "Gold: Last Friday Was Likely the Bottom," at:
http://seekingalpha.com/article/1532442
And its predecessor (both should be read) at:
http://seekingalpha.com/article/1201471
The author picks tops and bottoms in gold based on extremes in the positioning of the Commercials (producers and big banks) vs. the Large Traders (Hedge Funds). He says that the former are almost always right (they are long now, as they were at the bottom in 2008) and the latter tend to "pile on" in the wrong direction because they chase the trend too far at turns in the tide (they are massively short now). He says that the latter will all try to cover their shorts when the price stabilizes or rises, which could create extreme upward spikes.
People do get that the S&P 500 historically has been a much better yield producer than gold, right?
covered calls on SPY or GLD can get better "yield" than S&P500 itself with far less risk.
There's an inverse relationship between the length of a post here and it's intrinsic value. Nothing can be more simple- gold is junk, the price has tanked, the war is over gold fools- you lost!!!