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In Case Of NEW QE, Gold To $1,900-$8,500 Says SocGen
In a previous post we showed how, despite Goldman's best wishes, the market may have just priced itself out of a treat from the Fed tomorrow, and right into a trick. That said, in case the Fed has in fact succumbed to the pleadings of its superiors (read Primary Dealers) and does proceed with some seriously unsterilized dollar mauling, the next question is what is the best hedge. SocGen asked the same, and provided several strategies to take advantage of central planners exhibiting a rare case of Einstein's definition on insanity... over and over. Their "Strategy #1: Bolster Positions In Gold Ahead of QE3." Why? Because once the next round of the gold juggernaut is unleashed, gold may go to anywhere between $1900, just shy of the all time nominal high, and $8500... just a tad higher than the nominal high.
From SocGen:
- USD 1900/Oz: To close the gap with the monetary base increase since July 2007, gold would have to rise to $1,900/oz, assuming full transmission from the monetary base increase to the gold price
- USD 8500/Oz: If gold catches up with the increase in the monetary base
since 1920 (as it did in the early 80s), its price would rise to USD 8500/Oz.
The latter scenario is the price only catching up with where it should be. Add another $700 billion - $1 trillion for a potential NEW QE, and you get a 5 digit (and increasingly more meaningless) number.
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ABSCAM, a sting operation happened, where FBI agents posed as rich Arabs and bribed politicians with cash for favors.
(maniacal laughter)
Unless, of course, the moon hits the earth.....
Gold $9000 means there will be not much left to buy in the shelves
To the idea that gold is not in a bubble because people don't own it...how can one know where we are in gold ownership? What percentage of Americans for example owned gold at the peak of the 1980 gold bubble? That era of gold ownership might be a good place to start as a comparison.
don't know for the US but in Germany most people owned gold at that times. Actually even the dumbest people in the smallest village. And most of them still own their coins and/or gave it to their kids.
Interest rates of 15-19% were responsible for popping the PM bubble in the early 80's. Paper money stuffed into a 10 year C/D actually paid well and was relitively safe. Negative real interest rates guarantees loss of purchasing power of the capital invested. Nowhere safe to hide except for old trusty.
Just a tad higher please - $8000 sounds just fine
Ben S. Bernanke
I like that new " All SEEING Eye" . Or is that Ben eclipsing the sun with bags of "FIAT"?
And pretty soon you got a traditional barbarous relic :)
(accompanied by dumbass look)
Re Gold $1900-$8500
Yeah.... right... if SuckGen sez so... why not... rock on.... moonshot baby... whateverrrr.... Zzzzzzzz......zzzzzz......
gold at 3000 would mean the world would be in complete chaos.
The world is in complete chaos at $1620... Go fish...
using the deteration rate of QE 1, 2 and twist.
QE3 will last 25 weeks, and have a upper range of 1600 on ES_F. However thats upper bound. If we see QE, will be building a bitch of a short US equity above 1500 and 14,000 DOW. Also VIX may fall to 15/6 where I will be buying.
using the deteration rate of QE 1, 2 and twist.
QE3 will last 25 weeks, and have a upper range of 1600 on ES_F. However thats upper bound. If we see QE, will be building a bitch of a short US equity above 1500 and 14,000 DOW. Also VIX may fall to 15/6 where I will be buying.
Greece 24 hours, Spain 12 hours, The Fed. " Still Born"...
Hey dummies remember-
If 1 guy can say "we are off gold" (Nixon) and the whole entire world follows then why couldn't 1 guy say gold is worth nothing.
Look how retarded it is getting on Greece and in the EU- they will do anything to keep that Heinz 57 mutt together.
Digital money in, gold out.
In what time or place have the bankers ever lost?
(btw I do like gold, own some but could take a 100% deval on it and would not be surprised. )
Now SoGen is losing it. The Fed does QE3 (official) and you get your gold spike. You might as well close up shop in Europe. As the Fed will send a wave of inflation to the PIIGS/EZ that will wipe their economies off the map.
But yes, markets still have days of rallies left even with no QE3.
as in oil inflation.
You mean $US = 1/8500th oz of gold.
perfect. +1000
Time to splurge on the exotic car of your dreams.
The USD 8000 fig'r is throwing you all off. If we see QE4 (not QE3... that's already happened), then gold will hit USD 1900? Then rely on gold going to USD 1900. Silver at USD 60 but more influenced by haircuts. Debt monetization will continue not because it is an intelligent alternative, and in spite of political risk, because it is all that is left. People don't jump from burning buildings because they think it's a good idea.... they jump because it seems like the best idea at the time.
"The gold standard has been the ruin of States which adopted it, for it has not been able to satsfy the demands for money, the more so as we have removed gold from circulation as far as possible." Protocols of Zion, No. 20
The Rothschilds and their tribe have acquired most of the gold already. Prepare for checkmate.
The gold standard has been the ruin of States which adopted it, for it has not been able to satsfy the demands for money
*************
Another clueless Keynesian who believes the money supply must expand to meet the market-
Gold sits in a gold standard-"everything" else adjusts to the money supply-
I'll draw you a picture-
I work for $20/hr and pay $5 for a beer-
I work for $1/hr and pay 25 cents for the same beer-
Is the velocity of the 25 cents less than the $5 when either can pay for the same good and services?
If gold goes to $1000 I might buy it. If it hits $1700 in the next month, sell it all and your Granny's teeth.
$8500, what an f-in joke.
$8500, what an f-in joke
***************
The Fed balance sheet holds debt ie: liabilities and gold-
Should the bond market decide to puke-guess what the Fed will need to do-
This chart was from 2010 and the balance sheet was much smaller-here's the formula-
The Fed's liabilities divided by official US gold reserves –you should be able to figure out what price it would take today--with your knowledge?
http://bit.ly/LdYbv8
Tomrrow will be a PM buying opportunity. QE3 will be in August if markets stop front running it. They'll extend twist.
i would settle for 8513.50
They will confiscate it before it goes that high. The world does not work like it did in 1500 AD.
It's hard to beat Warren Buffett for some old-fashioned fundamentals-based investment analysis so I loved his take on gold which includes the insight that if you gathered up all the outstanding gold in the world and melted it down you'd get a large cube measuring 68 feet per edge. At current market prices, the cube is worth $9.8 trillion:
None of that is to deny that people have made money in the past betting on gold and may do so again in the future. But rather than being the ultimate hedge against risk, gold is something like the ultimate pure speculation play. You're betting that in the future more people will want to bet that future people will want to bet on gold.
At 8500 an ounce the total value exceeds 72 trillion dollars. More money than even exists in the world. Why do we need a "gold standard" again if we got rid of it before. We are going backwards. This is fucking nonsense.
So don't buy any gold.
You're betting that in the future more people will want to bet that future people will want to bet on gold.
*************
Another clueless analysis from someone who don't know what he speaks of-
"People" are not going to be buying gold in the future and they haven't bought any in the past and yet the price has climbed from $250 to 1600 with no public participation-how could that be possible from what you say?
You gold market experts should really have a look at the facts before you have a go at it?
http://bit.ly/xPhPSI
Do you believe every stupid gold chart you see? This is the internet.
Do you believe every stupid gold chart you see? This is the internet.
**********
Prove it wrong then smart ass-
I don't even have a fucking clue what this chart is trying to show.
Finally, I scroll-read to the end. That was stupid. Why do I read this f'd up stuff?
so at the end of it all, you can pro-offer a comment (& get junked for it)...
Anymore questions?
Well now... this is interesting. Posted on Jim Sinclair's blog yesterday: http://www.jsmineset.com/
Jim,
Since I haven’t read this public information anywhere yet today, I thought I might try to cheer you up a bit. After all these years of not being able to speak of gold in public company, I am beginning to have a smile on my face.
If gold isn’t money, it sure seems to beat cash from the BIS point of view. Now it appears gold is acceptable as currency beyond sovereign currencies. Sovereign currency can’t say that! Bernanke, Munger, Gates and Buffet have some explaining to do with this public announcement today. Granted, this is only a final proposal, but it is now in documented print. It might be interesting if the bullion banks try to nix one of the zero percent RW items that require zero capital reserves, and qualifies as low RW collateral. What a fraud the media puts upon us! Frankly, they should have put Gold bullion at the top of the line.
http://www.fdic.gov/news/news/financial/2012/fil12027.html
A. Zero Percent Risk-Weighted Items
The following exposures would receive a zero percent risk weight under the proposal:
For more information, please refer to sections 32(a) and 37(b)(3)(iii) of the proposal. For exposures to foreign governments and their central banks, see section L below.
Q. Treatment of Collateralized Transactions
The proposal allows banking organizations to recognize the risk mitigating benefits of financial collateral in risk-weighted assets, and defines financial collateral to include:
In all cases the banking organization would be required to have a perfected, first priority interest in the financial collateral.
1. Simple approach: A banking organization may apply a risk weight to the portion of an exposure that is secured by the market value of financial collateral by using the risk weight of the collateral – subject to a risk weight floor of 20 percent. To apply the simple approach, the collateral must be subject to a collateral agreement for at least the life of the exposure; the collateral must be revalued at least every 6 months; and the collateral (other than gold) must be in the same currency.
Note: Gold does not have to be in the same currency! YES! There would be a few limited exceptions to the 20 percent risk weight floor:
Fed monthly flow purchases not stock -> Market too high for QE -> Gold $1900-$8500
Was Zerohedge always so broken clock, twice right; or have I just economics 'leveled up'
This place is beat
look at the second to the last word again, just to the left of the )
i think tyler's tongue may be more in his own cheek than in the QE-seeking french bank's ass
the chart is very interesting b/c it is a log chart from 1920 to today, base 100; eveything starts at zero which as the log, = 1 = base in 1920
every time the log increases one digit, the function doubles
you knew that, right?
I've read a few too many negative posts in this thread regarding gold. I'm bored, so I'll try to set the record straight. Gold is going up for several reasons that are undeniable, and the only thing that can prevent this increase in value (and it could very easily reach $8,500, although my target is a more modest $5,000) is an orchestrated global government manipulation (i.e. taxation or conviscation).
What are these reasons:
1) Peak oil. Oh, this is another controversial topic, with many believing we have plenty of oil. But trust me the decline rate is now bigger than than what future projects can deliver. Look for oil prices to reach $200 by the end of 2015. And gold will follow oil prices higher.
2) An increase in the money supply. Today gold should be valued higher based on the increase in the money supply the past decade. As the money supply continues to increase, gold will be pushed higher.
3) Lack of economic growth. We are reaching the end of growth for our current econcomic system. As global growth stagnates and then declines, the financial system will implode causing a default in bonds and a run to gold.
4) The default on US Treasuries. Oh! This one could never happen, you say. Well, I'm telling you not only is it going to happen, but that it is inevitable. We are adding debt at the rate of $100 billion per month. All we are doing is digging a deeper hole. The bubble is building and it will pop.
5) The default on European and Japanese Bonds. This one will probably come first, but it will be the other four that really drive gold higher.
6) Lack of physical gold. This is coming. Last month the Chinese imported 100 tons of gold. At that rate, we will be out of physical gold inventory in a few years. They are leading the way, but soon others will join the train to get physical gold.
7) Fear and sensibility. Once some of the above begin to occur, people will realize that this time it is different, and that the US economy is not coming back. That realization is a few years away. It will be the smart money that buys gold below $2000. But fear and sensibility will drive it to $5,000.
8) The utter collapse of the US and global economy. This comes last and will be the final spike in the gold price that takes everyones breath away. If you think this cannot happen, get ready for one hell of ride. It's already underway and it's just getting started.
Newager
I just updated a collection of "Fed Watch"-articles:
http://morelivers.blogspot.com/2012/06/19th-jun-fed-watch.html
If I didn't buy gold at 750 I don't see how I'm going to buy it at 8500. That's pretty expensive.
Why not trade gold with CFD? It is cheap, easy and you can set your own leverage.