Gold Falls, Stocks Record Highs as Japan Goes ‘Weimar’, “Here Be Dragons”

GoldCore's picture

Stocks globally surged, while gold fell sharply today despite renewed irrational exuberance on hopes that the Bank of Japan’s vastly increasing money printing will fill some of the gaps left by the apparent end of Federal Reserve bond buying. 

The BOJ decided to increase the pace at which it expands base money to a whopping 80 trillion yen ($726 billion) per year. Previously, the BOJ targeted an annual increase of 60 to 70 trillion yen.

The BOJ sailed into deeper uncharted monetary territory with the announcement that they would triple annual purchases of exchange-traded funds (ETFs) and Japanese real-estate investment trusts (REITS) to 3 trillion yen and 90 billion yen respectively. 

The Nikkei surged 5% in minutes to a seven year high after the Bank of Japan decision, while gold fell.

These unprecedented monetary events remind us of the old English mapmakers who used to write on uncharted territories on their maps - “Here be Dragons”.

The BOJ claimed the surprise action was due to concerns that a decline in oil prices would weigh on consumer prices and delay a shift in sentiment away from deflation.

BOJ Governor Haruhiko Kuroda portrayed the decision as a preemptive strike to the ‘lost decade’ economy, rather than an admission that his plan to reflate the long moribund economy has so far failed.

The prime reason for the extraordinary monetary policies is likely that the Japanese economy remains very weak and risks tipping over into a depression. Bankruptcies more than doubled to 214 in the first nine months of 2014 compared with the same period a year ago.
Japan has introduced quantitative easing to stimulate the economy and to spur inflation. But it may backfire and lead to stagflation and in a worst case scenario a German ‘Weimar’ style hyperinflation. 

The yen's real effective exchange rate has dropped to its lowest level since 1982. With Japan easing likely to deepen, the yen may fall to an unprecedented level. Though the fall of the yen may promote exports - energy, food and raw material costs will rise, especially imports.

Given the current weakness what should gold owners do?
Gold, in the short term, looks prone to further weakness. We could see gold test lows of $1,156  which is a 61.8% retracement of the move from the October 2008 low to the all-time high at $1,921.  If clients are worried about their gold position and have short term commitments there are a number of ways to manage downside risk, which may be of interest, please call our office to discuss further.

See Essential Guide to  Storing Gold and Silver In Switzerland here

MARKET UPDATE
Today’s AM fix was USD 1,173.25, EUR 933.45 and GBP 733.47 per ounce.
Yesterday’s AM fix was USD 1,205.75, EUR 958.09 and GBP 753.59 per ounce.
Gold fell $12.50 or 1.03% to $1,198.90 per ounce yesterday and silver slid $0.58 or 3.4% to $16.49 per ounce. 

Bullion for immediate delivery lost as much as 2.6% to $1,167.49, the lowest since July 2010 and looked vulnerable to further falls to $1,100/oz. 


Gold in U.S. Dollars - 5 Days (Thomson Reuters)

Silver slid as much as 3% to $16.00 an ounce, the lowest since February 2010. Platinum fell 0.9% to $1,239.75 an ounce. Interestingly, palladium bucked the trend and rose 0.5% to $790 an ounce, after a six days of gains.

Gold fell below $1,200 an ounce as equities and bonds surged - even bonds from Italy to Portugal climbed.


Gold in U.S. Dollars - 10 Years (Thomson Reuters)

Gold is heading for a decline of 4.4% this week, the most since September 2013. The metal is also set for the first consecutive monthly loss in 2014.
Silver is set for a fourth monthly decline that’s the worst run since June 2013. An ounce of gold bought as much as 73.3154 ounces of silver today, the most since April 2009.

If the mooted end of QE in the U.S. is bearish for gold and silver, then it is also equally bearish if not more so for overvalued stock and bond markets. Yet, those markets saw far less volatile trading and many stock markets are back at multi month highs or indeed all time record highs.

The sharp move lower today took place in illiquid Asian markets, soon after the BOJ announcement of the extraordinary new money printing experiment in Japan. This news in itself should have seen gold bounce higher as it is very gold bullish. Instead, gold plummeted lower.

The move lower this week also took place against a backdrop of very high global coin and bar demand in recent weeks which would ordinarily have led to higher prices. It also comes at a time of heightened geopolitical and economic concerns and the emergence of the Ebola virus. Not to mention, the bullish “Save Our Swiss Gold” initiative which will continue for the next four weeks.

As we wrote yesterday, the sudden sharp selling of precious metals this week despite robust demand could be another example of manipulation. Central banks want equities and bonds higher and precious metals lower. The counter intuitive trading action has hallmarks of continuing manipulation of the gold and silver futures market.

Prudent money will continue to dollar cost average into coins and bars on price weakness.

Get Breaking News and Updates on the Gold Market Here

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Kina's picture

. 50 tons of paper gold dropped on the market in a 3 to 4 minute time frame during low volume trading.

 

 

Now if anybody else not TPTB did that they would be doing 25 years.

They have done the same with gold and silver in the past, and on regular basis at smaller levels......the extreme effort they put into supressing the metals speaks volumes.....these guys are scared to death of gold and silver being let lose in any sort of real market.

 

If this was a real market I would have more bullion, but the heavily controlled nature of it restricts me to 10%... and that is insurance for a total fuck up....which you know will come one day and you get your payout.....just don't hold your breath. Like all insurance, pay your premium and put the policy away.

theprofromdover's picture

So does this make China/Japan/Korea/China wars more or less likeyl?

Can the Chinese just stand back and laugh at Japan, and then offer a few bucks for these islands when Japan collapses?

dead hobo's picture

No, not yet. First Japan needs to become a part of the Eurozone, convert all their yen to Euros, and groom Kuroda to replace Draghi when his term expires. Now that's entertainment.

olenumbersix's picture

I have a question. If the boj prints and buys, and prints and buys, and they kill the econ. Do they get to keep all the cool new stuff they bought ?  Seems like a sweet deal to me. How can I get some ?

layman_please's picture

ETF-s and REITS are all the cool new stuff? central banks balance sheets are full of shit.

Spungo's picture

Expect gold to get smashed lower in anticipation of the Swiss referendum. Need to quickly acquire physical gold if that thing passes and they ask for their gold back. Remember that gold only started getting slammed when Germany asked for their gold back.

The price slams are great if you're buying metal. The people who are betting on mining companies are the ones who should be a bit worried.

bitterwolf's picture

gold...already peaked at1500 and shit is so much worse now...price falling...buy something rare like stamps

bitterwolf's picture

Lol,try buying gas,guns,food, etc. with g o l d coins or bullion...it aint any kind of money anymore than platinum or copper ingots.Only credit cards and any fiat currency is money...jus sayin.gold bugs are cult worshipers.

bitterwolf's picture

Lol,try buying gas,guns,food, etc. with g o l d coins or bullion...it aint any kind of money anymore than platinum or copper ingots.Only credit cards and any fiat currency is money...jus sayin.gold bugs are cult worshipers.

Ned Zeppelin's picture

Always keep in mind that the USD is worth, and gold is worth, what the guy with the really big gun says it is.

Guns and gasoline trump gold everytime.

Just sayin'

luckylongshot's picture

History says this claim is BS. Fiat currency has a bad habit of losing all its value, meaning it cant be used to buy guns and gasoline, meaning gold comes out the winner eventually and always.

MalteseFalcon's picture

"The BOJ claimed the surprise action was due to concerns that a decline in oil prices would weigh on consumer prices and delay a shift in sentiment away from deflation."

A decline in oil prices is bad for a country that has no energy resources (except for nookular)?

AM I TAKING FUCKING CRAZY PILLS?

AlaricBalth's picture

Debt becomes more burdensome in a deflationary environment. According to the IMF, Japan's debt/GDP is 237% and climbing. The narrative that deflation is bad is being served up to the people by debt laden governments, such as the US and Japan.

That Crazy Pill of which you refer is being shoved down our throats, and it is laced with debt and bullshit.

I recall when I was a kid in 1974 the "Whip Inflation Now" campaign started by President Ford.

"encouraging personal savings and disciplined spending habits in combination with public measures"

http://en.m.wikipedia.org/wiki/Whip_inflation_now

Currently governments are encouraging inflation due to their undisciplined spending and the masses insatiable appetite for free stuff.

The US, Japan, Europe - 40 years is all it took to destroy these once vibrant economies. A blink of an eye really.

On a long enough timeline the survival rate for everyone drops to zero. Indeed!!! And on that same timeline the narrative will always change to suit the needs of the self professed overlords.

calltoaccount's picture

"Currently governments are encouraging inflation due to their undisciplined spending and the masses insatiable appetite for free stuff."

 

and the bankster-military industrial gang's even more insatiable appetite for corrupting gov, and stealing as much as they can 24-7.

disabledvet's picture

See below and "Japan could run on geothermal power alone." They don't need oil and certainly don't need gasoline. That does make the statement pretty strange though too...if you don't need the product in the first place mean a lower price is a problem...

Ban KKiller's picture

Oh yeah, Fuck off prudential!

Lordflin's picture

GC... keep predicting, you are bound to get it right sooner or later... How is that September surge going for you. Told you at the time that the only game in town is paper... the printers will have it their way until they don't. Doubt even they could come up with a firm timeline. But you... this blog is a joke.

Guess I am forgetting my manners...

numapepi's picture

A stopped clock is right twice a day while a slow or fast clock is wrong all the time.

Vooter's picture

And yet ANOTHER reason why 9/11 was hilarious...

Squid-puppets a-go-go's picture

look at the inventories of jpm, comex, shanghai

the flame draws ever closer to the paper

Lordflin's picture

Yes... I am well aware of the fact that paper is on life support. I am a strong advocate of holding physical metal. Doesn't take anything away from my response to this man 's blog. He makes one prediction after another, invariably incorrect, predicated upon false assumptions, and if you wish to credit the fellow great. But I am tired of seeing people led astray.

IMHO anyone attempting to invest in this market, and I mean the market at large, who is not an insider is playing a fool's game. Hold physical as a means of wealth preservation. Now is as good a time as any to stack. Will the price go down from here... certainly possible. Although the break even point for mining gold is roughly 1250 an ounce, 20 an ounce for silver. But until delivery can no longer be made paper will rule... seems that the BIS was the entity in last weeks smash... 50 tons of paper gold dropped on the market in a 3 to 4 minute time frame during low volume trading.

This man makes prediction after prediction hoping to nail it... you would be better off in Vegas.

Silverstar's picture

Weimar in full overdrive.

Grats Master Kuoda. You will be named in the same breath with Weimar and Hyper Inflation....

razorthin's picture

Is it just me, or does that bottom chart still look like a bull flag?

Fix It Again Timmy's picture

How low could gold go?  Well, remember that there are no limits to insanity....

RaceToTheBottom's picture

The guys who said that there would be no gold to the moon until there is deflation first, appear to have sold their story to the movers and shakers....

FieldingMellish's picture

Its not manipulation you shills, its extreme leverage applied to a market which has 100 paper ounces for every physical ounce. This is normal operations and it will continue until the "market" no longer exists which can be many, many years away.

Lordflin's picture

I doubt we are looking at 'many, many years'... although the interesting fact of human history is that it moves at a snail' space, until it doesn't.

The difficulty with knowing is that no one but the new mafia no where all of the hard assets are hiding and in what quantities.... nor does this line of analysis account for geopolitical pressure. Putin, as an example, has been suggesting a major war is coming, and soon. He certainly has been probing NATO and US defenses. Is he onto something or just letting off steam for home consumption... time will tell.

But frankly, seems the world is subject to far too many stressors to suggest years... would be nice though. Perhaps, by then, I would be old enough, and senile enough, to no longer care...

Consuelo's picture

It could be 'many, many years away' indeed.   Or, it could be several Days, depending on how stupid U.S. foreign policy gets Or, when there isn't any more physical available for China to purchase.   It's only a matter of which scenario arrives firsrt, but they're Both Coming regardless.    And not to get all 'Shilly' on you but...   It does the credibility of the $USD worldwide, and the 'confidence' therein, no good for gold (and silver) to reflect their true market price.   The rest I leave to your own reasoning.

disabledvet's picture

First off "no one ever sells their gold."

Second...who would ever sell their gold to China?

You certainly would never want to KEEP your gold in China or Hong Kong or Singapore!

This is all about fiat monies....not gold. If there wasn't the biggest energy production boom in human history going on inside the USA I would probably look at things differently. As it is...

0b1knob's picture

< Japan goes "Weimar".

< Japan goes "full retard".

Pickleton's picture

Holy shit a silver eagle was 18.87 on silver.com today! 

 

Unfortunately, I cant afford to buy a monster box.

 

 

Taint Boil's picture

 

 

http://www.aydincoins.com/buy-silver/grouped-coin-specials?utm_source=DS...

 

"Free" shipping, always in stock and always on time - no waiting. Beats Silver.com. Last time I bought from a "bullion dealer" waited about 2 months for 10 oz.  .... never again.

Pickleton's picture

That blows.  I've never had it take more than 2 weeks to get to my door from silver.com or providentmetals.  Thanks for the link, but right this very moment 1 roll of eagles there is 404.45 and 1 roll at silver.com is 378.80 + 8.95 shipping = 387.75

 

 

 

gmrpeabody's picture

I'd be backing up the truck right now..., except I'm waiting for the Great Pumkin to come. He'll be here you know. He'll be here tonight..., and you'll miss him. And then you'll be sorry...

silvermail's picture

Our Coin shop “KDG Gold” in Cyprus (EU), for Thursday and Friday, sold all the gold that we had. Now we have no gold in our stock. Our stock is empty and we are awaiting a new delivery.

TeethVillage88s's picture

Sounds like Democrats. They have no plan since they spend days in the ally giving hand jobs to Lobbyist:

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Serious, they gave up war powers, they gave up budget powers, they gave up legislative powers to lobbyist who write all major US Laws.

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Examples of Brain Dead Politics:
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REID TRIES 'BEGGING'...

One Million Senate Ads -- And Counting...

NYT: 68% REPUBLICANS TAKE...

WASH POST: 95% CHANCE...

WIRE: Fired-up Republicans have edge in turnout war...

Record Wall Street Money Flows to GOP...