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Gold Breaks Out and Consolidates Above $1,700/oz – Financial Alchemy Risks Severe Inflation
From GoldCore
Gold Breaks Out and Consolidates Above $1,700/oz – Financial Alchemy Risks Severe Inflation
Gold is trading at USD 1,708.20, EUR 1,230.11, GBP 1,071.37, JPY 129,700, AUD 1,650 and CNY 10,864 per ounce.
Gold’s London AM fix this morning was USD 1,713.00, GBP 1,070.69 and EUR 1,229.54 per ounce.
Yesterday’s AM fix was USD 1,656.25, GBP 1,036.19 and EUR 1,187.96 per ounce.
Gold in USD – 30 (Tick)
Gold has extended yesterday’s 4% rise in the US, with further gains seen overnight in Asia and consolidation in Europe. Safe haven demand continues due to increasing risk of a failed outcome from the European Union leaders' meeting scheduled later today and due to significant macroeconomic and monetary risks.
The cancellation of a European finance ministers meeting and downplaying of expectations by euro-zone officials about the outcome of the EU summit is adding to investor concerns about contagion emanating from the nexus of European banks and large sovereigns including Italy. There are conflicting reports that Berlusconi has agreed to step down.
U.S. Treasury Secretary, Timothy Geithner warned of the “catastrophic risk” posed by the turmoil.
The Bank of England dismissed the chaotic efforts to save the eurozone from financial meltdown as a temporary solution to the region’s woes.
Governor Sir Mervyn King said long term issues such as towering levels of debt and structurally weak economies still needed to be tackled.
‘The aim of the measures to be introduced over the next few days is to create a year or possibly two years’ breathing space,’ he said.
King’s warning follows that of former Fed Chairman Alan Greenspan who warned on CNBC two weeks ago that the EU was doomed to fail because the divide between the northern and southern countries is just too great.
The key problem facing bureaucrats and bankers of massive swathes of debt in the European and global financial system is not being tackled. They are attempting to rectify a problem of too much debt by further electronic and paper money creation and the creation of even more debt.
The growing risk now is that in a desperate attempt to solve the crisis, bankers and bureaucrats in the EU, US and elsewhere are practicing an extreme form of financial alchemy which risks stagflation and possibly in a worse case scenario hyperinflation.
Monetary economics and history shows that there will be costs and ramifications for the creation of billions and trillions of euros, dollars, pounds, yen and other fiat currencies.
The European Monetary Union (EMU) rightly expressly forbid the printing and electronic creation of money to bail out banks and sovereign nations.
A look at a history of currencies—including the mighty Deutsche Mark—shows the unavoidable results of currency debasement.
Other news
Bild reported, without citing how it obtained the information, that the Bundesbank’s gold reserves may be used as collateral in the event that the European Financial Stability Facility can’t meet its payment obligations.
For the latest news and commentary on financial markets and gold please follow us on Twitter
NEWS
(Reuters) -- Gold hits one-month high ahead of EU summit
http://www.reuters.com/article/2011/10/26/us-markets-precious-idUSTRE78M...
(Bloomberg) -- Gold Advances to One-Month High as European Debt Risk Stokes Haven Demand
http://www.bloomberg.com/news/2011-10-26/gold-advances-to-one-month-high...
(Reuters) -- Analysis: China's gold frenzy triggers birth of small bourses
http://www.reuters.com/article/2011/10/26/us-china-gold-exchanges-idUSTR...
COMMENTARY
(Money Week) -- The Gold Bull Market: The 144-day Moving Average Works Again
http://www.moneyweek.com/investments/precious-metals-and-gems/gold/hang-...
(Wall Street Journal) -- Hey, Look Who’s A Safe Haven Again! (Hint: Gold)
http://blogs.wsj.com/marketbeat/2011/10/25/hey-look-whos-a-safe-haven-ag...
(Goldseek) -- Chris Martenson: The Real Contagion Risk
http://news.goldseek.com/GoldSeek/1319472172.php
(ZeroHedge) -- Everybody Print! BOJ Will Reenter Global Currency Devaluation Frenzy To Kill Yen
http://www.zerohedge.com/news/everybody-print-boj-will-reenter-global-cu...
(MarketWatch) -- Why Gold is Rallying
http://www.marketwatch.com/story/why-gold-is-rallying-2011-10-26
Coins to Credit Cards, a Short History of Money: Neil MacGregor
http://www.businessweek.com/news/2011-10-25/coins-to-credit-cards-a-shor...
»
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In the mist of gross market manipulation. And it don't make sense
The futures market wagging the physical market's tail doesn't make much sense. But given the role gold is playing in the currency wars these days, true price discovery is coming.
Max, perhaps you meant to say midst, but really mist works better in this market, eh?
Optically Misty days ahead...
ORI
Nuclear Echoes etc.
Yes Max, this is a puzzler. I can't join the gold fans by saying it's because of events in the EU. The EU has been a basket case for some time now. This is definitely not news related, or if it is, it's related to news that has yet to become public knowledge.
I also can't agree with the author that a close above $1700 and trading in the $1700-$1710 range in the premarket constitutes "consolidation". We will see today if this thing has legs or not, but as far as I'm concerned, it needs some sort of a confirmation day to show it's for real.
Don't get suckered by the news explanation. The news was just as bad when gold tanked recently.
Substitute "tanked" with "got raided and had 5 margin raises in a row here and overseas". Then you will realize your logic is backwards. The move down was the paper baloney.
Absolutely, and the five weeks of ranged bound trading were the result of manipulation. I get that. So what made TPTB stop manipulating the price and allow it to rise to the top of the range (and beyond now that we are at $1712? What has changed? My point is there is something going on that we don't know about that removed their foot from the brake.
Tuesday at 1:30 PM EDT New York is the cutoff for this Friday's COT report. We know that the bullion banks (JPM, HSBC, etc.) are quite often 'tardy' reporting their numbers for the preceding Tuesdays trading at the cut off.
Me thinks they have used this same old, same old, to cover some more of their massive short position and then attempt to hide the fact, by delaying their timely reporting of numbers to this Friday's COT report.
Just more market fiddling. When they cover their shorts to that amount, has the same effect as a buyer with deep pockets showing up. Watch the COT report for hints, but you may have to wait an extra week!
Sorry - double post.
Gold is not breaking out to the upside, but to the downside.
http://finviz.com/futures_charts.ashx?t=GC&p=w1
You must live in an upside down world then!
Not on a weekly chart my friend. Look at the positions of large traders on the USD index. This move in precious metals is merely a fakeout.
http://finviz.com/futures_charts.ashx?t=DX&p=w1
Your view is terminally short-sighted, at best.
Go call up the ten-year chart of the gold price, and then come back here and dare tell us that "gold is moving downward". You daytraders are such a hoot --- always driving by looking at the pavement directly outside their open door, rather than looking forward and getting the big picture through their windshield.
Have fun with that "rising dollar", LOL.
Day trader? If you look at the chart I posted it is a weekly chart. We are talking near term future. While you are talking 10 years? Yeah gold will always continue to rise with the structure of the Fed but are you honestly telling me gold cannot take a hit here because it's gone up for the last ten years. It will hit the 61.8% retracement level at 1450 I can promise you that.
You can promise us nothing.
If all your charts and squiggles were SO infallible, you would be relaxing on a beach somewhere after having retired a billionaire, rather than trying to convince us of your clairvoyance and prescience in an online forum. But thanks for the laugh anyway.
I am not a greedy pig like most investors. I guess time will tell in regards to gold. Maybe I can recruit some investors out of all of this. Look me up when I am right.
Have you seen this?:
http://newsspank.com/UserImages/smokeskull1282goldupdate.png
Quinvarius
As long as the CME doesn't JUMP IT yet again, and raise margins looks good.
They were a factor we did not have to put up with when they show/ed they kicked the crap out of the rise.
GS, gold breaking out to the downside.. I sure hope so, I missed the wagon on gold.. Please let it be...
Calmyourself
Unless the CME raises margins again, and the market doesn't tank BIG,like down to 7500, you missed your shot at 1600,I fear.
From here out I think I start buying silver,or plat,pall.
Gold will be 1450 at year end.
I think your crystal ball may be in need of a cleaning --- it evidently has a rather thick coating of bankster shit all over it.
No need to be rude. I am just one man expressing his opinion.
Greenspan Shrugged
Appears the Comml Hedgers are moving the market here..............not a good sign.
All I have to say is...
http://www.youtube.com/watch?v=1gTwfw3-SOc
They probably should have turned off their ceiling fan light before recording this on their reflective TV screen...
Agreed - but it was the only daffy duck gold video I could find strait away. I wanted the video where he swims in a pile of gold...
And the printing of money and adding more debt to "buy time" is exactly what the US has done with not a whiff of a plan to actually create growth. Structural competitive disadvantages and lack of technological productivity growth cannot be magically fixed with refinancing underwater mortgages or paving more roads. The next 5 years are probably lost so the real question is whether the government will take a longer view, and start allocating capital to R&D, fix the patent system, withdraw troops and from the IMF, and raise tarriffs to protect jobs. A little period of isolationism here is exactly what the doctor ordered..
You lost me at, "start allocating capital to R&D."
I don't want the government allocating anything nor spending any money on R&D for anything. Leave that to the private sector.
The headings on those graphs are inaccurate. Please replace the word 'Money' with 'Currency' or, my personal favorite, 'Jew Confetti'.
First post as a new member of the fight club (although a long time lurker). Looking forward to mixing it up with you guys (and gals).
Silver is a better play than gold - in my opinion (although both will do well).
I may have to change my name if you're wrong. Welcome aboard.
You and me both. And welcome to the FNG. :-)
Never saw so many Netflix ads as I see here after reading about them.
Indeed. You'd be surprised how many Jim Cramer ads appear here too...which I assume is some type of comic relief.
The ads are based on your viewing habits. All I get are ads for porn sites (probably a glitch)
All I get are PM dealers. But now that I think about it, no gun ads. Very weird.
Just as well - my 870 gets jealous when I look at other "girls"...
Et vive Adblock plus plugin (firefox, chrome, whatever... it works so well) !!!
So you can think freely without your brain being compromized by all that shiny blinky brainwashy ads.
Amen!
Three words: Ad block plus
Just don't forget to select the "Donate" link at the top of this page.
"U.S. Treasury Secretary, Timothy Geithner warned of the “catastrophic risk” posed by the turmoil." ... after looking in the mirrow this morning
This coming from Timmah "Zero Risk of US Credit Rating Downgrade" Geithner?
Color me amused.
An open strongly above $1700 would be very telling. We'll see.
EU won`t be able to do any money printing via ECB because Germany(the no1 EU member) clearly opposes it, although Sarkozy would love it. http://srnnews.townhall.com/news/us/2011/10/25/germany_against_eu_draft_...
China won`t lend to them and today Brazil said they won`t either. Without BRICS, leveraging the EFSF, they`re pretty much doomed. They`ll have to let some banks fail and we`ll see a big Lehman type scenario unfolding again. Following the pattern of 2008 crisis, gold and silver might tank for a while.
US Fed might restrain from more printing due to political opposition and riots accross the country. Printing more money would make matters worse for people, lowering purchasing power and creating even more riots in an election year.
Bashing the FED rethoric has become widely popular on both Occupy Wallstreet and in Tea Party and some FED members are afraid of being sacked if they don`t abide to political pressure. They`ll most likely do what`s good for them and restrain from printing.
The Austrian school wins over Keynesian and Monetarists.
When have they ever NOT done "what was good for them"?
In the end, they will print, and print with wild abandon --- it is their nature.
Hey Mr. A.
What blog are you paying your visitations to for Leo? I'd also like to drop by periodically to pay my respects... if you know what I mean : )
Hey WB,
Actually, I had been blasting leo in absentia here on ZH --- cant' remember which thread it was now, but it was a couple of days ago. No, haven't seen his sorry statist ass anywhere online, not that I have been looking for him, or would want to run across him either.
ohhh Ok. I thought you'd found another hole that he was occupying.
Thanks Mr. A.
+1 There will be more time to back up the truck on gold but not now. We will have a rush to FRN's and the dollar will spike with the metals headed south. This move is a head fake so keep yer powder dry and get ready to back your truck up to the loading dock!
Timmy could straighten this all out if he just could pay attention (and his taxes).
This is what de-industrialzation, welfare state, abuse of the fiat money system, un-payable debt, etc... hath wrought. Only a matter of time before the wheels fall off the fiat wagon.
The markets smell desperation and renewed currency inflation. What wouldn't the Fed do to energise BO's campaign when the indicators and confidence levels now appear so grim?
Very bullish price action in the premarket, not the usual whack-a-mole where gold drifts up, only to get hammered down. It looks like the bulls are frothed up and ready to get it on.
No M2V?
Kind of a biggy for inlfation, no?
the scales have fallen from our eyes and we can see clearly now.. we have eaten from the tree of knowledge..and we must pay the price
fiat FRN's for the masses - PMs for the few - and for the 1% oil, food commodities and a ranch in Argentina ..
The dark fascist night rolls closer and closer..HSA ridden by a womanman monster..outright manchurian candidate at 1600 PA ave.
EU/ME the flames of war flicker done and done
even PM's will not be enough to keep us from this fall of society into the nightmare that is coming ..Freedom is what will be the most precious thing we ever owned and it is gone gone gone ..they have stolen my country and borrowed my sweat to buy mamon..
a one eyed man in the land of the blind
Gold’s move was just a catch up of the commodities move which had recovered and went higher than the last two weeks highs.
Gold recovered late which is very unusual.
There is also anticipation/speculation of a solution in Europe based on money printing which is bullish for Gold but this solution may not come.
Not until Europe is truly on the brink of collapse.
That’s my bet anyway, how about yours?
Once detail of Europe's "solution" emerge, expect gold to go up quickly as EM realize how fucked EU really is
If they say they are going to print 2..5T then may be markets will go up if not expect the opposite.
"That’s my bet anyway, how about yours?"
I usually have too many opinions for my own good, but I am really baffled by this one. Gold didn't just "catch up" to the commodities move, it was allowed to catch up. Whatever was holding it down relented for reasons of its own. In the past, those motivations have been downright malevolent, so I am wary and willing to give up the beginning of this move.
My guess is they won't print and the gold bulls will get sheared, then the real move up in gold prices will begin (The second mouse gets the cheese).
Thanks for your comments, your posts are always great.
Own physical. Be both mice. Secure 2x the cheese.
And physical silver too, mmmm, cheese.
I agree with you.
It is not easy to make money, that is why 99% are losers (I hope I’m not going to be one of them).
Thanks for your reply.
I'm a PM bull. However, the amount of technical damage that was done on both gold and silver in the last correction makes it very difficult to believe that PMs are about to rip again. A longer base is needed, in my view. This was the second go around for silver...where it corrected bigtime, recovered a bit, and then declined bigtime again.
Plus, in the recent market correction of July-August, the correlation between equities and PMs were very strong. Whether it was margin liquidations or what, the PMs declined with the market...same thing happened in 2008.
So, I'm not hopeful for PMs in the near-term.
Gold has not corrected at all from it's August levels unlike silver and stocks.
This is the illusion paper pushers want to give people like you.
Geithner warns of the catastrophic risk. What a douche bag. The guy who lost 40 billion cash? What does Timmay have to say about that? Can we make him take the loss out of his paycheck? http://thecivillibertarian.blogspot.com/2011/10/government-completely-lo...
Gold is likely headed higher in the weeks ahead. In the short term the ES, DX, GC, and CL all are pointing towards more "risk on" is likely ahead. http://bit.ly/sPGyGW
Wheres the troll that told me the last exit on gold was $1705....TROLLS OF ZH Show yourselfs!
And remember, M1/M2 only count what is in the US banking system. Whatever we shipped overseas still exists. Those M1/M2 calculations can balloon at any minute if foreign cash comes home. And no one will understand where it all suddenly came from.
The growing risk now is that in a desperate attempt to solve the crisis, bankers and bureaucrats in the EU, US and elsewhere are practicing an extreme form of financial alchemy which risks stagflation and possibly in a worse case scenario hyperinflation.
"Risks stagflation"? More like we are already in it, at least for the common man......his wage ratios towards the top and against he USD have stayed the same for over 15 years! Hyperinflation is next ala Argentina; policy bullets from politicans buying time (and creating more debt) are only fanning flames to a huge brush fire.
U.S. Treasury Secretary, Timothy Geithner warned of the “catastrophic risk” posed by the turmoil.
You mean the turmoil HE and other central banks have created by waging a war on precious metals and the avergage investor's ability to acquire them?
A little isolationism IS what the doctor ordered...China is in the process of going to a gold standard within 7-15 years. Once that happens, USA workers will be the ones working in slave wage conditions. Either the US Govt needs to take it ball and go home....or the AMerican people will do it for them if they continue to pander to these central banker douchebags.
As soon as the US shithole opened Gold dropped $20 from where it was overnight. Manipulation, fraud, deception, courrption and lies are the hallmark of the US finacial markets. For those of you Goldbugs, Gold is not a safe haven, just listen to the media, the dollar and US treasuries are the place to be. lol!!
Just realized that even with the breakout silver is still trading just under JPM haha
Transitory??
if you bought the dip.. then you are happy..
if you bought on the way down.. then you are happy..
if you know that tangibles will out perfrom paper that is being printed away..
then you must be happy.
Long Silver 33... Just a taste. I didn't follow my own advice on Oil and I regret it. Markets are nutz, but robots are still helping technicals have some validity. Or not....
That one worked... Sometimes you can get a hand.
Greenspan Shrugged
That's a USD chart, what is it telling you?
Appears the dollar is headed down,UNLESS EU goes to hades, then it will become King Kong.
It won't matter at all a couple of $100 here or there in the flux of gold prices... the bottom line is ARE YOU HOLDING PHYSICAL? All that matters.
Looking for Europe to implode and a rush to the dollar, which will temporarily tank the PM's and give anyone who has not gotten on board, ONE LAST CALL. What is truly precious about PM is holding physical.
Nothing else matters. Everything is going to hell and this is the only way to insure you will have something left when we emerge later, on the other side.
a MUST read for sobriety testing...
http://news.goldseek.com/GoldenJackass/1319659200.php
What does Kitco know? $32.99 for 2011 silver dollar bullion on 1 Sale a Day!