Gold Tumbles Most In 6 Weeks As USD Surges

Tyler Durden's picture


It appears JPY weakness (or generalized USD strength) is mirroring the demise of precious metals (and oil) this morning. Gold's 1.7% drop is the biggest in 6 weeks and drops the yellow metal to near 3-month lows. Treasury yields are up 5-8bps at the long-end. Troublingly, for the carry bulls, equity futures are not playing along with the JPY weakness.


Gold and JPY inseparable...


S&P fuitures bumped back up to VWAP but are not following through with JPY carry...


Charts: Bloomberg

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Tue, 09/02/2014 - 10:37 | 5170975 LawsofPhysics
LawsofPhysics's picture

Yes, because there is no inflation and everything is "fixed".


same as it ever was...

Tue, 09/02/2014 - 10:39 | 5170983 nope-1004
nope-1004's picture

Controlled until revaluation.  Desperate central bankers MUST control the only true barometer of USD.  Irony here is that the corruption and malfeasance in USD is astronomical, so too must be the manipulation of gold.


Tue, 09/02/2014 - 10:45 | 5171018 Divided States ...
Divided States of America's picture

Tyler, I suggest you stop posting these useless correlations, we get it. Basically its either a gold smackdown, a stocks going up OR both.

I hope EKM's call this time is more prescient in terms of time.

Oh look, Dow is green now...big fuckin surprise.

Tue, 09/02/2014 - 11:13 | 5171136 Took Red Pill
Took Red Pill's picture

I, for one, like to hear when there are significant drops in PM's and the reasons why. If you don't, then you do not have to read it.

Tue, 09/02/2014 - 11:50 | 5171270 Gringo Viejo
Gringo Viejo's picture


The paper beatdowns will continue until the dollar is supplanted as the world's reserve currency.

It's a matter of time.

Nothing more.

Tue, 09/02/2014 - 13:55 | 5171787 JuliaS
JuliaS's picture

In 3rd world countries where it is physically hard to access PM's or even USD we can talk about posted vs. street value of a commodity. In Brazil and Venezuela for instance, the bank will quote you a USD exchange rate, but you will not be able to buy more than $20-50 USD at a time, if anything at all. On the black market you have access to sensible amounts of dollars, but they'll cost you 5-10x more, which is the price people are willing to pay to fight near hyper-inflation.

In the US there is no shortage of physical, unless you're dealing in tons. The talk of paper is silly.

I offer any person who claims "it's only paper" to buy mine at Summer 2011 prices. You see, if they did, I'd go to any of the half a dozen bullion dealers in town and buy the gold right back at those silly paper prices. None of them have had any shortage since Fall of 2008 and even then the interruption was temporary, as producers had quickly picked up the slack in response to demand. There was never any shortage of 1kilo bars. Just coins. All they had to do was cut big chunks into smaller chunks and presto!

For a consumer there is no shortage of anything except the actual currency. People don't have any money. Everyone's broke. There is no shortage of gold or silver available to consumers. I make custom jewlery and there is no shortage of metal, period. Even when the bullion sellers had problems I mentioned, none of my raw metal suppliers did. Why? Same reason. People are broke. Consumers are broke. The banks may be printing billions and trillions. To them it paper vs. physical might mean something. To you and I it means nothing. The measely amount a person can buy with his paycheque is always available.

Silver? You want it real cheap? Do what I do - scout second hand stores for sliverware. You can get .995 purity sterling for a tiniest fraction of "paper" price. You can get a trojan ounce for a dollar easily! A propane/oxygen torch, a $10 ceramic crucible and a mold allow you to mint your own goddamn silver bars. Add a PVC pipe with ball bearings connected to a drill and you've got your own tumbler. The things coming out will be as polished as ones you get from a PM retailer.

I'll say it again - there is no shortage of metal. There is shortage of dollars people can spend on things. Paper talk is bullshit.

Tue, 09/02/2014 - 12:30 | 5171513 SAT 800
SAT 800's picture

Timing often tells more about "reasons why", then coherent analysis. today, for instance, as soon as Hong Kong closed, (not a player on the team), London slamed down Silver, followed up seamlessly, (by agreement, otherwise; "seams" would show), by the whores in New York. Manipulation is the "why". Sadly.

Tue, 09/02/2014 - 10:49 | 5171038 actionjacksonbrownie
actionjacksonbrownie's picture

The problem is, gold and silver are not in short supply. As long as you and I can buy almost unlimited quantities of the PM's with a click of a mouse, then there is little reason for "rare" metals to rise. When the coin dealers begin to run out of supply, and start raising mark-ups to unseen levels, then we may begin to see a rally.


Until then, just forget about any rally on political or financial malfeance - it ain't gonna happen "folks"

Tue, 09/02/2014 - 11:02 | 5171073 nope-1004
nope-1004's picture

Supply has nothing to do with it.  You've taken 4,000 years of real money and turned it into industrial metal, claiming "supply" is the only way in which the fiat price of it should be valued.  You are doing what most who rely on USD do - try to ignore how gold and silver have been 4,000 years of money and the only accurate and fair medium of exchange which can't be duplicated, printed, or violated at will.  The reason why we are off the gold standard since 1971 is because gold held the printing, corruption, and MIC financing in check, which is not how bankers wish to operate today.

If you are correct, why are central banks buying gold?  Seems a little stupid of them... no?  Why don't central banks buy zinc, titanium, copper, or bronze?


Tue, 09/02/2014 - 11:03 | 5171096 juggalo1
juggalo1's picture

Because those are not as valuable.  Central banks do buy platinum and other actual precious metals.

Tue, 09/02/2014 - 11:15 | 5171142 LawsofPhysics
LawsofPhysics's picture

Silver and platinum have numerous applications in industry.  Who give a fuck about useless paper-pushers at central banks?

Tue, 09/02/2014 - 11:26 | 5171197 A Nanny Moose
A Nanny Moose's picture

Bingo. We found out over the weekend exactly what CB's are doing in just about every market known to man.

Tue, 09/02/2014 - 11:28 | 5171207 actionjacksonbrownie
actionjacksonbrownie's picture

"why are central banks buying gold?"


Very few central banks are buying gold. And the ones that are buying, are not buying in quantities that are causing any shortness of supply. (by design???)


The entire world is run on fiat. The money printers have no desire to see a rising Gold price. Therefore, they will suppress the price, until physical supply is such that orders from Joe Bloe cannot be filled by the coin dealer on the corner.


Some of you are expecting the speculators in the markets to drive the price of Gold higher during these times of turmoil, but just ask the Bond vigilates how they made out fighting the money printers a decade or more ago - they got annihilated. Don't expect anyone to risk fighting the red shield again. Until mines start closing, or demand for physical greatly excedes available supply, the paper price will dictated by the banksters.

Tue, 09/02/2014 - 11:52 | 5171337 nope-1004
nope-1004's picture

Then there should be no problem sending Germany her gold back.  Except......uhhhh..... lots of supply...... uhhhhh ..... central banks don't want gold..... Bundesbank is....  not a central bank?  lmao


Tue, 09/02/2014 - 12:52 | 5171613 fockewulf190
fockewulf190's picture

Post of the day.

Tue, 09/02/2014 - 14:20 | 5172100 actionjacksonbrownie
actionjacksonbrownie's picture

I don't recall stating that Central Banks don't want Gold, or that the Bundesbank isn't a Central Bank. Do you have a reading comprehension disability?


Germany demanding their Gold back is a political move. U.S. saying FU is also a politcal move. Neither stance has had any effect on the Spot price of PM's. Perhaps you haven't noticed how quiet Bundesbank has been since the fed told them to pound salt?


You are forgetting the Golden rule. And right now, "they" have the Gold, and there are not enough buyers to overwhelm their supply. Therefore, "they" control price. Until Gold/Silver become scarce, price will be set by the sellers, not the buyers.

Tue, 09/02/2014 - 14:47 | 5172252's picture

What about the private entities to whom they owe gold but won't deliver.  This surely must be a political move too, right? 

Tue, 09/02/2014 - 12:31 | 5171522 Abitdodgie
Abitdodgie's picture

" nope" you have a very good point , but if nobody wants to buy the gold then it's not worth shit , central banks buy gold because it belongs to the gods, and guess who think they are a little above themselves . If it was that inportant to them then I am sure 1 trillion dollers would buy the lot up and then it's value would be zero because only they would have it and we the pee ons would find somthing else to trade and fuck there gold for control.

Tue, 09/02/2014 - 14:10 | 5171909 JuliaS
JuliaS's picture

I look at Platinum as an example of precious metal / industrial commodity.

Few people know that in tzar Russia they used to make buckets out of platinum. Yep. Regular buckets for carrying water in from the well. It was just a rust resistant metal - exotic, but in not too special. It was heavy. Aluminum made much bigger impact when it was first refined. It was instantly worth more than gold until a better chemical method was derived, producing it in abundance.

What made platinum valuable all of the sudden at the end of the 20th century? Industrial process and microelectronics had a litte to do with it, but the dominant factor was... the clean air legislation in the US that demanded use of catalytic converters in all cars! All of the sudden, the not very cost efficient heat-resistant metal became "a thing". It's limited supply was quickly chewed up by the carmakers. It rose in price, even surpassing gold and became a precious metal. NASA has always had use for highly conductive and heat-resisant materials also. Space was a growth industry until few years ago when they ran out of money.

Today, the demand for autos is down. The demand for high quality space stuff is also down as Russia does it for cheap with copper and plasticine instead of gold and titanium.

When the industrial demand dropped, we saw platinum slide to almost half of gold value as oppose to being worth twice as much few short years ago.

Economy affects both, industrial and investment use of metals. Gold is predominantly money. Silver currently is about half and half when it comes to acting as investment / raw material. Platinum? I quit tracking it in 2008. I don't even know the current supply deman stats. All I know is that gold makes a much better barometer of the economic condition.

Gold/silver ratios? All bull - spread by people like Mike Maloney, tyring to find a niche. In reality, nobody knows what's going on. The times are irrational and the metals are behaving irrationally.

The great benefit of gold ownership is that it offers privacy. Banks claim many different things, yet if you superimpose all the news of transactions - purchases, sales and vault relocations - nothing adds up. Just like gold in individual possession - what banks and governments hold is truly unknown. Those who have it, pretend they don't. Those who hold nothing, pretend they have lots. What is really going on? That nobody knows and price movements are a total mystery to people like you and I.

Tue, 09/02/2014 - 11:25 | 5171188 quadratic_equation
quadratic_equation's picture

You're right, it's my thought as well.  I can still go online and buy at spot plus the usual premium wait a couple of weeks and I have my gold.  So until the dealers show no stocks, the manipulation will continue and might even drop the price below mining rate.

Tue, 09/02/2014 - 13:04 | 5171672 Bemused Observer
Bemused Observer's picture

It's really a question of scale. Folks like you are making relatively tiny is the BIG consumers that will see the pinch first. So yes, you can still buy your coins and bars, but when Germany wants its tons, or big industry needs to reorder the tons it needs, it is where the squeeze starts to show.

Tue, 09/02/2014 - 12:13 | 5171447 Badabing
Badabing's picture

"The problem is, gold and silver are not in short supply."

tell that to Germany who wants the gold that the NY Fed dont have!

Tue, 09/02/2014 - 13:01 | 5171647 Bemused Observer
Bemused Observer's picture

You may not see the squeeze just yet, as there IS still availability. But these shoved-down prices have made mining unprofitable, and industry CONSUMES these metals. How many tons of the stuff is used in electronics, medicine, etc?
Mines are closing, and it takes time and money to get 'em back up and running. Not at THESE prices though. So, the amount in circulation WILL start to dry up at some point...where is hard to say. But the math, and the physics, are clear. There WILL be supply issues if prices stay low. Which will fix those low prices once and for all.

Tue, 09/02/2014 - 10:54 | 5171060 Kirk2NCC1701
Kirk2NCC1701's picture

So what's the 'problem'?   Think of it as "subsidized buying".  Just back up the truck and BTFD.

Unless of course, you're hurting financially and need it much higher.  If that's the case, blame yourself for being a "one trick pony", instead of diversifying your investments.

Tue, 09/02/2014 - 11:12 | 5171132 Huckleberry
Huckleberry's picture


I ain't in no hurry for an collapse. We are already over the cliff, just waiting to hit the bottom. You're dead from 5000 foot or 50,000 foot drop. Just a bit more messier...

Tue, 09/02/2014 - 11:15 | 5171145 Took Red Pill
Took Red Pill's picture

Blue light special! Stock up while it's cheap!

Tue, 09/02/2014 - 10:47 | 5171024 Tabarnaque
Tabarnaque's picture

Maybe there is debt deflation fear for the banksters. But everytime I go shopping I can swear you that prices are going only one way: up, up and up! And by much more that the rigged CPI number they feed the sheeple.

Tue, 09/02/2014 - 11:17 | 5171147 LawsofPhysics
LawsofPhysics's picture

"Debt deflation is here."  -- perhaps, but it's completely fucking irrelevant as well.  Fuck the central bankers.

Tue, 09/02/2014 - 11:39 | 5171279 quadratic_equation
quadratic_equation's picture

There's deflation because of high unemployment or better known as more people not working.  How can anyone spend when they have none to spend?  How can people borrow when they have no jobs nor collateral?

Yes, indeed I read this morning that the production jumped to all time high but it's mostly in food and beverage also in construction but as you can observe there's inflation on all these because people can't survive without them and they're not included in government estimate of inflation.

Tue, 09/02/2014 - 11:52 | 5171346 TVP
TVP's picture

Maybe banks will start accepting EBT cards as collateral...

Tue, 09/02/2014 - 10:49 | 5171034 Sudden Debt
Sudden Debt's picture

Everything today will depend on Detroit for the US and what the courts decided what will happen to it's finances.

Gold is just a diversion for it I think.

Tue, 09/02/2014 - 11:02 | 5171090 Al Huxley
Al Huxley's picture

I don't know - Detroit's a tiny drop in the bucket, I doubt anyone gives a fuck.

Tue, 09/02/2014 - 12:30 | 5171516 SAT 800
SAT 800's picture

Good buying opportunity if you're dealing with a quick response entity.

Tue, 09/02/2014 - 10:37 | 5170976 90's Child
90's Child's picture

Poor mans gold down -.27


Tue, 09/02/2014 - 10:38 | 5170977 Maplehood
Tue, 09/02/2014 - 10:44 | 5171015 juicemoney
juicemoney's picture

Given the data and news as of late this is THE contrarian indicator.


BTFD while you still can.

Tue, 09/02/2014 - 11:00 | 5171075 Kirk2NCC1701
Kirk2NCC1701's picture

Keep your eye on the bullion SPREAD.  It's already up, from 3-5% 6 months ago, to 10% now.

The Spread is the "Canary in the coalmine", the Early Warning Radar.  Tick, tock ZHers.

Tue, 09/02/2014 - 11:02 | 5171094 Al Huxley
Al Huxley's picture

Which spread are you talking about?

Tue, 09/02/2014 - 10:38 | 5170979 pazmaker
pazmaker's picture

King Dollar! for how long????

Tue, 09/02/2014 - 11:01 | 5171085 Ignatius
Ignatius's picture

I've been thinking about this question for some time.

I'm thinking that, perhaps,  alliances trump gold.  As long as the alliances hold, gold will be held down.  It was the NATO allliance that decimated Libya and stole their gold outright.  The PTB have an invaluable money creation enterprise and as long as the alliances hold they can continue the manipulations.  My 2 cents.

Tue, 09/02/2014 - 11:40 | 5171285 TVP
TVP's picture

It's true, the key to propping up this fiat fiasco involves infinite destruction of smaller, weaker nations, in order to either plunder their resources (Oil in Iraq, opium in Afghanistan), or force them to abide by dollar hegemony and use FRN's, thereby avoiding inflation at home (Libya planned to create a gold-standard currency, and now the BRICS nations may be planning to do the same).  

Until a viable alternative to the dollar arises, and people feel they can use it without being bombed to bits by NATO, the military-industrial complex will continue to save the day, for the banksters that is.    

Tue, 09/02/2014 - 10:39 | 5170980 Godisanhftbot
Godisanhftbot's picture


Tue, 09/02/2014 - 10:44 | 5171014 Charles Nelson ...
Charles Nelson Reilly's picture

you have the wrong website, let me redirect you -


Tue, 09/02/2014 - 13:49 | 5171920 messymerry
messymerry's picture

Better to be a sodomite than an assomite.  What rock was it you said you lived under???

Tue, 09/02/2014 - 10:43 | 5170996 bescobar
bescobar's picture

Still holding my breath!

Tue, 09/02/2014 - 10:43 | 5171000 Hulk
Hulk's picture

So much excitement over worthless paper, in both cases !!!

Tue, 09/02/2014 - 10:43 | 5171004 ...out of space
...out of space's picture

silver under 18,60 will start move real fast

Tue, 09/02/2014 - 10:45 | 5171019 Monty Burns
Monty Burns's picture

If we were to go on what's been said here for a number of years we'd by now have had a dollar and stock market crash and gold would be at 2000.  I believed that too but am now beginning to think that normal rules and outcomes no longer operate.

Tue, 09/02/2014 - 10:47 | 5171031 Seasmoke
Seasmoke's picture

Then that would only be because of Manipulation and Fraud. 

Tue, 09/02/2014 - 11:49 | 5171324 TVP
TVP's picture

Normal rules still operate - reality will ultimately win, as it always does...everyone just underestimated the degree to which manipulation could be carried out, and the length of time it takes for reality to prevail under such circumstances.  

The dollar and stock market will continue to "rally" (it's all an illusion, markets rally due to devaluation, while fiat rallies due to other fiats collapsing) until every last investor on Earth has been forced into USD-denominated assets.  

Then, when we least expect it....boom.  Yellen will raise interest rates, right when it will cause maximum destruction, just like Roy Young in 1929.

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