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Gold Warns Again
Submitted by Jeffrey Snider via Alhambra Investment Partners,
With all the problems right now beyond Greece and China, from Canada’s “puzzling” recession to Brazil’s unfolding disaster, and even the still-“shocking” US economic slump, it is interesting that gold garnered the most attention in early Monday trading. The fact that gold prices were slammed in Asian trading was certainly significant, but that really isn’t why gold is being highlighted all over the world. With gold prices at a five-year low, economists have some “market” indication that finally, they think, is moving in their favor, thus distracting, minutely, from all the global conflagration.
“We have breached significant support levels, we know U.S. rate hikes are coming, there is no inflation and there is no catalyst to hold gold when other markets are doing better,” Societe Generale analyst Robin Bhar said.
It is far more indirect than in 2013 when economists were positively crowing about the slams in gold, but the same basic setup remains even if almost coded; “U.S. rate hikes” are supposed to occur when the FOMC judges the US economy, and the globe by extension, quite sufficient so the drastic fall in gold is once more an indication, though indirect this time, that all will be well soon enough. You would think that after being so wrong about gold in 2013 that economists would be far more careful about appealing in that direction, and maybe they are since they have so far remained, as noted above, more muted than openly projecting great economic recovery with low gold prices this time.
That may itself be significant, in that while economists remain gold haters (literally) they aren’t, contra two years ago, declaring decisively its death as evidence of at the same time central bank omniscience. Of course, gold prices are not limited to simple-minded appeals upon interest rates or even differentials, as clearly mainstream commentary continues to have great trouble with gold behavior in any direction.
The exact reason for the selling was unclear. Recent strength in the U.S. currency and expectations for higher U.S. rates have undermined the case for holding gold and other precious metals, while analysts also noted that China imported a record volume of gold in 2013 that has created an oversupply situation. Still, the swiftness of the decline surprised traders and resulted in two separate trade halts in U.S. gold futures.
Again, 2013 provides a guide as to why gold prices may be declining in sharp moves, especially right at the open or in weaker trading hours, and it has very little to do with interest rates apart from fixed income suggesting the same factors about the “dollar.” Whether it is growing unease about the global economic picture or the “sudden” recurrence of financial irregularity almost wherever you wish to gaze, the “dollar” is once more wreaking havoc. This isn’t controversial at all, but somehow economists can miss that gold is global and universal collateral and when the eurodollar system is stressed it becomes activated in that manner. The correlations alone are strongly suggestive of these financial factors.
The relationship between gold and the real, for instance, is quite indicative of eurodollar financing trends. Apart from the sharp rise in gold just before the January 15 franc event, gold and the real have been almost inseparable in both timing and degree.
The damage extends beyond that affiliation, however, as the “dollar” (bank balance sheet factors) is again moving quickly. Copper has been pushed back under $2.50 and crude oil, at least at WTI spot, is nearly back into the $40’s again for the first time in months (despite recent drawdowns in both inventory and production).
In other words, there was a brief respite once Greece slipped on its noose and the Chinese rewrote their stock market, but that short enthusiasm hasn’t at all disrupted the renewed wholesale retreat. Since early to mid-May, the “dollar” has been spotty in its effects, but those negative pressures have clearly started to unify into renewed irregularity in late June and early July. In that respect, Greece and China may have just been visible sideshows of all that.
Even the Swiss franc has found its way below 0.963, a low not posted since April. The catalyst may be the FOMC’s increased publicity about its preferred intentions to get “markets” to reflect the recovery and economy that isn’t there, but even that is rather unclear as eurodollar futures aren’t really anymore suggestive of that potential then they were back in March.
The futures curve had sunk to an unusual level in early July (maybe that was Greece), so recent trading has simply pushed the curve back into the same cluster as dominated in May. In other words, it doesn’t appear, and certainly not decisive, that “higher U.S. interest rates” is actually being predicted here, rendering the mainstream ideas about gold once more grasping at straws.
In my view, the “dollar’s” destructive tendencies here are more primal rather than exclusively policy-specific. I think in this accumulated view these “dollar” proxies suggest that regardless of the FOMC’s stated tendencies there is already more than a fair amount of volatility and disorder evident not just in these markets but in the global economy (“unexpected” only to economists). Thus, any perceptions about the FOMC raising rates (whatever they think they can) is just another element of amplification of that existing and underlying syndrome and distress.
The initial “dollar” behavior after the March FOMC meeting strengthens that reading as I think it amounted to not better fortune but rather just some less distant hope that the without a suicidal FOMC “dollar” pressures might on their own ease and abate – that without a forced policy shift the underlying torment might be able to in shorter order resume more stable behavior and existence free from further depressive influence. The “dollar” and fixed income world had grown so bearish especially after December 1 that it was due for at least a minor retracement on even the most marginal of hope. I really believe that was the animating factor of credit and “dollars” out of 2013; that gold correctly predicted growing eurodollar problems that were parallel and related to fomenting economic decay. The FOMC’s role was simply to further antagonize those concerns, which they did repeatedly on the flimsiest of narratives.
Yellen’s May 6 speech about stock bubbles and “reach for yield” was thus damaging in that respect; that the FOMC was instead going to push on with its amplification of negative pressure and send the world further into its tailspin regardless of how much discontent and disquiet was already evident.
The action in gold in 2013 was a warning about the “dollar”, a warning that went completely unheeded yet has been largely fulfilled. Current gold prices and the rest of the “dollar’s” proxies are, if only in smaller doses this time, suggesting the same tendency. In short, while the magnitude might be diminished now that is only because the time component is so much shorter and the “wavelength” so much more widespread; the point of no-return may be at hand or already surpassed.
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please $500 gold, so I can buy even more.
yes please but I prefer Ag
All of this gold hype is nauseating. How hard is it to understand that it is simply the world's true lasting and trusted currency with inherent worth? (Fiat paper "money" has none.) The games the manipulators play will be coming to an end soon - then see which "money" still holds any value.
FUCK gold. Fuck Greece. Fuck Bush. Fuck Clinton.
"You'd fuck Clinton? Bill cast his vote on her in '98... " - Bernank
Please tell me you are not suggesting fucking Hillary.
Anyway, hold on to your gold. Period.
Gold is little different than fiat. The price of gold is driven by desire, little else. Yet we get many people that are completely fascinated by gold. They BELIEVE it's worth something, and they plan to trade it among other true believers.
Ever hear a gold bug say anything other than gold will go up in the future?
Hi, I'm a gold bug.
Guess what. In the future, 500 round bricks of .22 caliber are going to go up. #10 cans of food storage are also going to go up.
The likelihood that you will like gold more in the future is also going to go up.
the demand of gold is driven by TRUST - or rather, mistrust in counterparties and an unstable policy environment
the price of gold, currently, however, is driven by aforementioned unstable policy environment
I find myself on a triple- edge sword with regards to All of the opinions expressed here. The facts are that gold HAS been historically a hedge against government. Cash is a piece of paper backed by 'trust' of a corrupt government with no other goal than their own self-power (whether they realize it or not - think about that for a second - they think about how they can advance their career NOT how they serve the people, which was the entire structure of this fucking country) guns and ammo are a hedge against tyranny and government (similar to gold but it hurts more). Now -government wants to ELIMINATE cash I'm not a genius, but anything govt wants to ban I want to own. SO I have gold, cash and bullets. Food and water too obviously. Let see how it plays out but cover your ass I say.
I have stated many times that margin calls will smash the price.
Will gold go up in the future? In what terms? Cows? Dollars? Yuan? silver? copper? fish? housing?
I'll take Housing for 100ozt Alex.
Gold has thousands of years of human history behind it. You make the common mistake of seeing only the events that have occurred in YOUR own very short lifetime...
Gold, and silver, are the ONLY currencies that have been able to successfully segue between economies. NO OTHER CURRENCY has been able to do that consistently, for thousands of years, as PMs have.
You may not 'get it', or understand why it IS, (and I don't either..) but you argue with the facts at your own peril.
Gold has value beyond it's "face value" as a currency. It has value as a commodity as well. It can never go to zero, like your pocket full of dead Presidents. Also, since gold is respected and used on most of the planet, it can't be owned and controlled by any one country. (Don't mistake what is being done now with "control"...it only looks that way. Like a kid tormenting a bear behind bars may SEEM to have the upper hand. Wait till that kid finds out the zookeeper forgot to lock the cage and see what happens then..)
I also prefer Ag, especially at $500 (although that's probably not what you meant.)
I stopped reading the article when the author quoted some liar who said there is no inflation. Or maybe it's an AI that said that, since computers don't eat real food or need to enroll in Obamacare.
So sick of waiting for gold to rise. Fuck gold.
You have the wrong attitude. Think about it...if there was something you wanted to have more of, and for whatever reason the price of that thing was being kept artificially low, would you really be complaining? Would you really want the price to spike?
Only if you were a short-termer, hoping to make a quick killing. Like I said, wrong attitude.
I just got a 1oz Pt, it's at 6yr low. And 50g Aug ! Stack high!
90/1 leverage on gld etf. so gld holds a fractional amount of gold compared to the size of its market value and makes it easy for hedge funds to drive the price of gold down. The govt wants you to hold paper not real assets.
Stayed hedged, my friends.
Man, if I could just pay of that $15k in credit card debt and get the youngest two kids graduated from college...
I hear/see alarms going off all over the damn place. Things are speeding up.
Markets are manipulated to save someone's financial ass, or to lie and steal from all the players. With no regulation, we're right back to the Ol' Wild West, where a sociopath with a gun could do well until the day he was shot down. Today, the sociopath uses a Bloomberg terminal.
"With no regulation,"
What's the name of your planet?
re. "With no regulation,"
Yes there is no market regulation, unless you happen to be an Indian and they need a scape goat. Yes, the regulatory aparatus was captured a long time ago, along with the rest of the government in the US of A, planet Earth.
They are going to need a big false flag to blame the collapse on so people don't storm Washington and Wall Street. They have already set Putin up as the boogie man. It's only a matter of time.
They wont need a false flag, just tell the shitheads Kim K is preggo with another baby and Iphone whatever # is out, the sheep wouldnt give two shits about a collapse then.
tell em Kim K's baby misused an ETF from within the womb, causing a stock market meltdown. Thats the narrative's direction
"They are going to need a big false flag to blame the collapse on"
You ever seen the show Jericho...
August is False Flag Preparation Month. That time of year when people are on vacation and towers can be wired.
Making mountains out of molehills.
Gold is falling in $US because US credit is being bid with gold. US credit is inflating like any sucessful Ponzi scheme, you can't read any rationale into it.
gold down gold down. short the shiny reluzent metal. close your eyes to the lure of gold, bahh
OK somebody 'splain it for me...gold is a leading indicator that the dollar is gonna drop?
Podbay....I dont know why ZH posts articles such as this. The price of precious metals (gold), is in no doubt being manipulated, most likely to keep the illusion of the dollar, or a combination of another thing or two. Articles like this are not relevant whatsoever in the world we live in.
When you own the printing press and your financial system is going over the cliff, until you reach the event horizon, you can short the PMs all day long with zero consequences. When the dollar dies and markets settle in physical, it wiil be at a higher price.
Gold is insurance, forget about the dollar. You save your wealth in gold, and use it to purchase whatever fiat du jour you need in your economy.
If you look at the history, you will see that, contrary to prevailing wisdom, gold does NOT go up and down all that much. It is the FIAT that changes value compared to gold. When gold goes up in dollar price, it is because the dollar has become worth less, so you need more of it to buy the gold. But that's exactly when most people want to sell their gold for dollars...
It's not that way at the moment, and the lower gold price is reflecting our dollars strength, but do you trust that to continue? If this was happening in a normal, healthy economy, perhaps gold wouldn't be that important. But this economy is too fucking WEIRD for me to trust it. I'm sticking with REAL money for wealth storage, and buy fiat with it as needed if I have to.
This is not the behavior of a healthy economy.
>90% of “new” jobs are temp positions- low pay, no benefits, zero job security
There's no need to draw distinctions here. I work high income jobs with plenty of benefits, usually from larger companies and I know for a fact there's no such thing as job security. We're all expendable on a whim.
I'm not. I'm my own boss.
"Over the top defeatist pessimism makes cowards of us all." - Lambeau Field.
I liked the article. Lots of uncertainty to accelerate due to currency changes.
I remember really well when gold dipped into the 800s then went straight up & local coin shops almost never had more than a few ounces on hand all the way up to the 1800s.
So what we have now is global upheaval and the same US real estate bubble. So lets see it go right up again it wouldn't surprise me at all.
Yup. Someone else here who remembers '08-'09. The article is reminding (some of) us that we've heard this song before.
However, 'up again' back then, was because the markets had some degree of freedom. The POG was buoyed by actual buyers, and back then the Comex had some inventory and reflected that. When it dove during the Panic, you could be relatively certain that a big part of it was to offset market losses.
Now, as the 'markets' are entirely propaganda, and nearly ALL price signals are hidden, I wouldn't be surprised to see gold 'down' until the markets just fail to open one day. From what I understand, COMEX is pretty much an empty office these days.
'COMEX to zero', we used to say. Today, some people are calling for 'force majeure'. Or maybe it'll all just stop like a switched-off propaganda box. But either way, real gold in COMEX inventories isn't what's driving this price action. When it does go up again, I don't think its 'price' in USD will even matter.
Who ever heard of a market where the seller, setting the price, has no inventory and no real intention of obtaining any? Hello Flim Flam.
"No price is real until the dollar dies." (paraphrasing from memory) - Rocky Racoon.
It is because dollar strength has nothing to with demand for dollars for commerce. It is there due to central bank cooperation and intervention. And part of that was beating on paper gold. And that is why the USD will now start turning down again. It is at the top of its allowed trading band. And this means nothing for paper gold. Nothing at all. The economy will continue to implode. Money will be printed. Physical gold will leave the system to never be recovered. Paper gold will continue its way to a default or other reckoning. Too many people are highly invested in the systemic gold fraud for it to end normally.
Too true Quin. I just want to add that in the event of an impending systemic seizure, the insiders FRNs could start to rush the exits ahead of the paper PMs being exposed. That is, before paper PMs are exposed as worthless. Are these big dumps the beginning of this rush?
Sure, the thing that gold is warning us about is that the central banking cartel needs to slam gold to prop up fiat. That's all. No need to obfuscate with complicated rigamarole.
But there is, at least now and for the past year, plenty of physical bullion available. All the talk of manipulation is compelling but we need to see empty glass display cases at LCS. When that starts to happen, prices shoot up in my opinion. Keep a close eye on retail availability. When silver ran above 30 it was very difficult to get a monster box. Gold buffalos were $50 higher than eagles. Unfortunately I lost mine in a boating accident but that's another story...
I lost mine at the circus. Damn egress got it.
Magnum, look up Giffen good. Its all about perceptions of Central Bank omnipotense. Most people won't be interested if they perceive that the CBs have it under control. Will they be able to keep it under control? If we were at economic war and I was China, I would be dumping treasuries now, conveniently coinsiding with their need to mitigate domestic equity market drops, Who can blame them?
look at providents inventory
Sure, the thing that gold is warning us about is that the central banking cartel needs to slam gold to prop up fiat. That's all. No need to obfuscate with complicated rigamarole.
If only you could have put this at the beginning of the article, you could have saved us the lost time. I'm off to read about these exciting Chinese Treasury dumps.
U.S. rate hikes are NEVER coming
lots of cute chart porn.
useful analysis?
not so much.
next time just write The Short Version.
... that would be the last two lines.
Remember when Goldman said "Gold is a slam dunk sell" and you didn't believe it?
Gold has been the only wealth that is easily moved and exchanged. (land, house and factories are not easy to move).
It was based on Gold that the Prime Bankers in the world printed the initial seed money. (read, UBS, Credit Suisse, BOE etc).
If price of Gold goes higher, the Gold owners will demand higher price for the use of their Gold. The Bankers have no choice but to push the price of Gold down.
The Bankers also created bogus Gold assets to print more money. That blowed up in their face in 1998 in ASEAN.
It is actually fun to wait and see the end of this saga. Will the gold owners be killed? to destroy the source of credit. Or will the Bankers be pushed by Law to find and return the money. All indications are that the Bankers have managed to pay out to a large group that can defend their interest.
If I am the Gold owners, I would be shaking at my knees. The chaos in Ukraine, Middle East, ISIS, Nuke war saber rattling, Media control, US self destruction of its role as reserve currency manager are all symtoms of the crazy Bankers and their paid minions.
The Russian elite and land owners were similarly wiped out in the name of Bolshevik revolution. All assets seized and everyone was forced to become equally poor. Of course, it was done in the name of Kings and Queens but by the same Bankers who controlled East India Company and their associates. Today, only the old English, Spanish, and other European Kings are alive and wealthy. (The spanish not so much anymore) Their time is about to come soon. We the Bankers are not going to pay back anything. when possible we take others money to pay you back. This time, there is nobody around to bully and steal. so, Shake your knees babies. shake. Your time is coming.Good luck getting mine.
So, Molon Labe then...better bring plenty of friends.
Is That a Threat, or a Warning?
the magnitude might be diminished now that is only because the time component is so much shorter and the “wavelength” so much more widespread; the point of no-return may be at hand or already surpassed.
Just in case there is someone out there who doesnèt know why we are in the twighlight zone.
1. UST are at 0% interest rates or 1% whatever because central banks buy them. No one else is. In fact the mystery Belgium buyer is probably the fed itself.
2. Gold goes down because it is shorted in incredible amounts at the most illiquid times. No thats not illegal of course until you try something similar.
3. Interest rates are not going up any time soon because the U.S. and the entire world really cannot afford for interest rates to increase. So savers will continue to be raped of their hard earned savings.
The rest is just bullshit and noise..
@ goldendonuts - this is the smatest post I have read - It can be put no simpler!!
www.teamramgold.com
ok so 1kg of gold buys you about 178Metric Tons of wheat today....in 2005, or 10 years ago, it was about 100MT. In early 2012, it was 250 Metric Tons.. so 50% retracement from the high is about 125MT. So if the price of wheat stays the same, gold could go down to $780/oz...
If technical charts were road maps I wouldn't trust them to find my own backyard. These days I'm running strictly on hunch and ZH articles to make my course corrections.
full of shit artilce.
Its interesting to go through the Comex trade reports.
Between 8:29pm and 8:30pm on Sunday, someone dumped 5.6 tonnes worth of gold August futures contracts, wiping off 4% off the price.
Its too bad the exchange does not disclose the identities of those behind this blatant market manipulation.
Lowest $ price in 5 years equals a SALE - not the end of the world!! If you have NONE now is the time to get some.
If you have some - now is the time to get some more!!!
we gold bugs dont sell gold, we stack gold... its a 10, 20, 30 year plan..
www.teamramgold.com buy in 1g 2.5g and 5g units - open a free account today... save in bullion not in fiat!
The best time to buy assets is when they are hated and cheap.
I'm a believer in what I'm doing so the conditions are good for me.
The real question is how far can they go before something breaks that they can't hide or cover up.
my crystal ball is foggy on that one Mr JPMorgan .... but my own balls are telling me to go for it over the next two weeks - so im stacking the phyzz right now..
as an aside Balls (and by that I mean someone with the guts to actually do something insetad of just sitting whinging on ZH) are in short supply...
nothing worse than keboard warriors ...with big ego's and no assets