Gold: Knock, Knock, Knocking On Record's Door

Tyler Durden's picture

Update: gold is now at a fresh all time nominal high, with a price equivalent to that fateful year in which the world's biggest and perfectly legitimate criminal cartel was founded on Jekyll Island some years ago.

When it comes to gold, one can now officially skip the foreplay (because apparently there is such a thing s a 2G spot). Unlike two weeks ago when the latest Shanghai margin hike caused gold to temporarily lose its equilibrium and flop, however briefly, somewhere in the lower 1700s, as of tonight it has valiantly processed, and completely ignored, news from the Shanghai Gold Exchange that trading margins for the gold forward contract, Au(T+D), will be raised, temporarily starting Sept 9 to 13 percent from 12 percent, while the daily circuit breaker would be lifted to 10 percent from 9 percent, and has proceeded to rise to within nickels of the all time high, with spot trading over $1910 at last check. Since Europe is about to open shortly, and since the free fall in risk will resume now that virtually every rhetorical gimmick has been used and abused ad inf, it appears that absent the CME doing away with margin altogether, we will see $2G spot within hours.

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bullionbaron's picture

With Gold stocks still languishing around prices seen when Gold was around $1400-1500 this is the sector to be for the largest gains from here in my honest opinion:

Look for companies who have good cash reserves, a Gold/Silver resource & conservative management who do right by their shareholders. Where you are not comfortable looking at specific companies, then an ETF which tracks a basket of companies might be suitable alternative such as the GDX.

mcguire's picture

for those addicted to the juice, the 2x leveraged etf is NUGT.. 

Thomas's picture

For those addicted to the juice, you might note that it did a $50 flash crash at 4:00 AM. Although it did recover, ddiction kills.

DefiantSurf's picture

That would be funny if it wasn't so sad

Thomas's picture

There may be a top in gold but there does not have to be. If the dollar goes to zero, everything (including gold) goes to variants of infinity.

The Deleuzian's picture

Some of juniors are selling like it's 2002....

The accumulation mode is upon us.....

Never forget where the companies are...

Mexico-US-Canada are the only places I would park money

Freddie's picture

Park your money in Obama's USA/Detroit/Baltimore America? 

Howard_Beale's picture

Yes, but, where do you park your car? Becase paper miners are gona go down with the ship. If gold takes a major hit then these guys realy get smushed. If you have to play in paper, stick with those out of the junior minors (no earnings) for the play. The beta is far higher, there are no proven earnings or only minimal ones, so keep your powder dry.

If you insist on trading paper then the GDX is far less volatile. If you need alpha and want to play the run-up then the double gold ETF is where you should play and be nimble. Otherwise, for instance, write out of the money calls, and selling in the money puts at the level you want to own it. This way, you make money selling calls and selling puts, making your break even much lower than your buy price.

I personally only buy physical and store it by the squirrels. I would not bet on mining stocks ever. But I like my paper strategy enough that I may just suck in some premium enough to offset any selloff and I would get out at break even if there was a rout.

Snidley Whipsnae's picture

Swissy just pegged to Euro... Swiss Gov announces that the Swissy will be defended at 1.20 Swissy to the Euro...

Hell is coming to breakfast...

Howard_Beale's picture

Munch munch Interesting day ahead. They did what?????!!!! Madness, sheer madness,


youngman's picture

an amazing drop in the gold price from that announcement...why???  Now gold is the last safe haven....?????

fockewulf190's picture

"When it comes to gold, one can now officially skip the foreplay (because apparently there is such a thing s a 2G spot)."


Once my 5G spot is stimmed, I´ll be spazzin so hard I´lll be belted into a chair and babblin´Timmah Timmah Timmmmmah!!".

tmosley's picture

Jesus, am I the only one noticing the complete and utter collapse of the Swiss Franc?  Down 8 FUCKING PERCENT.

Numerous forex traders will be jumping out of windows when they wake up and see this insanity.

tmosley's picture

Damn I hate the smell of collapse in the morning.

Does anyone know exactly how they are implementing this peg?  Are they just flooding the market with francs, or have they implemented a Chinese style system.

I don't really understand how they could implement something like this overnight against the will of investors.  That is, unless FOREX investors are stupid, and took the price down for them after they announced the devaluation, in which case the Franc is stupid undervalued.

Need more information so we can guess what the outcomes of this move will be (other than generic failure).

dwdollar's picture

If you play hot potato with fiat currencies guessing on actions of central bankers and outcomes of political decisions, you're liable to be burnt... sooner or later.

Long-John-Silver's picture

What happens to Gold and Silver stock when nations nationalize their mines? They instantly go to ZERO.

As Gold becomes the worlds reserve currency and Silver becomes the citizens money once more can you imagine a nation not nationalizing the mines operating under their sovereignty? This is the reason Gold stocks languish.

KingPin 999's picture

yippie ki yay mother f-----ers

Hugh G Rection's picture

Vhere are mein detonators?

C'mon Blythe, where were your monkees last friday?  Non farm payroll and no beatdown?  Losing control of this thing???

Howard_Beale's picture

In my best Blythe voice:

"Oh but whatever do you mean?"

"Let me see...My Monkees had a hit show in the 60's and I watched it in rerun. I loved Davey Jones! Who knew he was 5'5?"

"Oh, we're talking about commodites? I love silver and gold all over my body but I am basically a trained seal. Jamie gives me a good piece of wood when I do what he says. It's not that I think it is good to continuously lose money in the metals markets--but I have my marching orders. But seriously, it's not like I am Rebekah Brooks, guys! What a despicable whore! I mean, at least my boss is a sexual sociopath, still good looking, and the Debt Brother from Planet O loves him. Rebekah Brooks was with Murdoch! Oh the horror!"

'I have to tell you that sex with a sociopath like Jamie is incredible. Give that puppy a Viagra and he forgets his own name. It's kinda dreamy--check out the Banzai dog of Jamie, it's surrealistically seductive with those beautiful blue eyes and calming demeanor. I think Obama fell in love with him at first sight. And if you watched him on CSPAN being called "Mr. Demon" he was as good as Dexter at keeping his cool."

/Blythe Masters

Mentaliusanything's picture

2G spot ....... Right on so many warped levels. I think I shall have to Tip my hat to the Writer - You sir have a wicked sence of humour.

Now back to regular programming (after I dry my eyes)

Good laugh my dear sir


Blorf's picture

I like the temporary price margin hike with a specific reason cited.

It's almost as if the shanghai exchange is adjusting margins to actually protect investors instead of helping bail out favored traders from their losing positions.

F the CME.

DoChenRollingBearing's picture

Agreed.  Gold would do just fine with no margin at all.  Bring it!

Unless you trade and are good, I would stick to just buying the rfeal physical gold.  Not the paper stuff.

Alpha Monkey's picture

Unless you trade and are good, I would stick to just buying the rfeal physical gold.  Not the paper stuff.

Unless you can time when the paper market will implode from the mass realization of the fractional status of gold paper, I wouldn't touch paper gold.  Why spend money competing in a relatively rigged casino, worrying about what numbers are going where when you can just buy a stack and have peace of mind.

Snidley Whipsnae's picture

"Unless you trade and are good, I would stick to just buying the rfeal physical gold. Not the paper stuff."

Excellent advice DCRB... and, who can know when a margin hike, new 'jobs' program or a Fed annoncement is coming? It's by guess and by golly... Anyone that 'times' an announcement and makes some benny bucks gets a swelled head and begins to think that they are a great market timer... This is a sure fire recipe for a wiped out trading account...

Physical is the best option...

Waffen's picture

Someone remind Gold that he needs to drag that bitch we call Silver up with him.

X.inf.capt's picture


pre-65 dimes

p.s. nice rack,waffen

Alpha Monkey's picture

According to the "Gold Trail", FOA, Another, and FOFOA, gold will be seen as the exclussive world wealth asset of choice.  Silver, while gaining value from falling fiat values, does not hold the same qualities as gold, nor does it hold the same history.  Golds price action will outperform everything else, including silver.

I traded my silver for a few ounces of gold not too long ago.  I don't regret my decision, even if i'm putting all my eggs in one basket, my gains have thus far outperformed silver.

I would argue, that when gold starts making it's real moves, we will find that silver will be sold off by others to buy gold.  People shy away from gold because it is expensive, but anyone can get denominations in fractions of grams... which are not that expensive, when holding for long term.

Reven's picture

I tend to agree with the FOFOA perspective on gold versus silver.  But I also think you'll want some silver if you want to do any basic bartering during hyperinflation.  Gold needs to be held till a new, stable currency is introduced.  I have a small stash of silver in case I want to buy more ammo or whatnot during the shit storm.  But there's no fucking way I'm trading gold for ammo/food during the chaos unless I absolutely have no choice.  That's going to be the ultimate loser trade of the millennium.  I hope people who own significant quantities of gold have at least 1-2 year's worth of supplies to ride out this storm.

DaBernank's picture

You bring up the important monetary role of Silver, use as monetary specie in barter. If you cannot trust a central bank today, why would you trust central bank paper in the future, especially during a transitional phase? Or do we believe that one day we will wake up and freegold will just "be in place" with Politicians & Banksters acting honestly vis-a-vis honest money.

Silver has great historical monetary status. Silver, being "useful", will not have identical "store of value" status as gold but it has been money in all of recorded history. We can look at the modern day UK £ , and trace back through the history of various empires, back to ancient Lydia (modern-day Turkey)  in the pre-classical world.

"The Lydian Trite is considered by many experts to be one of the first coins used as money. It was made of “Electrum”, a silver and gold mixture, by a mint established by King Ardys of Lydia at around 652-615 BC"

Athens, Egypt, and Rome all had silver currencies.

I was in Cadiz (Spain - "Europe's Oldest City") not long ago and at the archaeological museum, they refer to the primary early settlement being a Phoenician colony of Tyre founded at least by the 9th century BC, and perhaps as early as the 11th. The Rio Tinto silver mines appear to have been the driving force for Phoenician occupation of the region.There were bronze-age people there prior to the Phoenicians, known as the "Tartessians" who mined tin and held their wealth in Silver.

Long-term store of wealth = gold ; Money = gold and silver.

tekhneek's picture

Give it 5 years. You'll wish you held all silver when the gold/silver ratio hits 12:1.

Think about it logically: $2,000 for 1oz Gold American Eagle

At current prices (if you bought silver today and held it til the ratio drops more):
At 16:1 - $688/oz of gold ($1,312 difference)
At 12:1 - $516/oz of gold ($1,484 difference)

Hell, even at 30:1 - $1,290 ($710 difference)

When I see the biggest investment opportunity of all time, it's not gold my friend. It's silver. Look at the numbers. You will be able to buy more gold simply by storing your purchasing power in silver then transferring it later.

Hephasteus's picture

Silver did what it was supposed to do. Broke golds arm. It won't go anywhere till golds broken arm is done snapping and crackling. Then it will launch and break it's legs. Then copper will crash down to you just dug a bunch of tons of it out of the ground for 1/4 the cost of the gas.

Gold silver and copper are the true trinity of the planet.

Gold is the cruel father.

Silver is the bitch mom.

And copper is the child named damien. The unholy spawn of wage arbitration, relative money mechanics and inflating fiat currency with everything deflating versus gold behind the curtain.

The consipiracy is too complete though. The government wont let business fail and business won't let goverment fail because they are both so co-dependant on each other if one of them goes down the other goes down. Because you can't have stupid fucking cities building 10 billion dollars worth of roads to prepare for a future without fucking cars while they pay TSA 80 grand a year to abuse the fuck out of you to keep you out of planes and burning gas so they can save it for their war engines. You're in the middle of a psychosis and following the rules is about as smart as eating right and exercising before your date with jeffery dahmer.

theMAXILOPEZpsycho's picture

Silver up over 100% over 12 months
Silver up as much as gold for the year
Silver up twice as much as gold since the start of the bull market
Silver which means "money" for more than half of the worlds population

I've been on your guys site and don't agree at all. He basically says: Banks hoard gold, therefore gold will be remonitised. He fails to realise that its the free market, certainly not banks that choose gold. Because of that banks are forced into hording it. And the free market is/has/will choose silver as well.

Both Turk and Sprott sell more silver than gold (on a cash basis), and so does every bullion dealer I've talked to. And i think we all know about the amount of silver avaliable for investment demand compared to past bull markets.

My money says silver will outperform gold for the next 6 months as well.

spdrdr's picture

Don't forget that Another and FOA were cheerleaders for the Euro experiment, and held resolute faith that the Euro would become the new world reserve currency, supposed to backed by a mandated 15% gold holding.

I am sure that they (both) read ZH, and in fact I'm sure one of them comments here occasionally - it would be interesting to hear their analysis of the apparent fate of the Euro...


DaBernank's picture

Just read the comments of "Spitzer" to understand the kind of denial that is possible by Euro cheerleaders. It's as if it were still 1998 and he works for the ECB as a media mouthpiece: "These European bank problems are USD/Fed problems, not ECB problems. The ECB has the world's largest gold horde. The ECB has no debt." what misinformed rubbish!

By buying bonds from governments and providing cheap credit to banks around Europe in a bid to stem the debt and bank crisis, the Eurosystem which underpins the ECB has become hugely leveraged. With only €81.187 billion in subscribed capital and reserves, compared to €1.895 trillion in assets, the ECB is now leveraged 23.4 times. In contrast, strong central banks such as the Swedish Riksbank, the Norwegian Central Bank and the Swiss National Bank, are leveraged only 4.7, 5.9 and 6.3 times respectively. Meanwhile, the average hedge fund is leveraged around four or five times.

(Alignment not working in the chart but I think you can figure it out)

Table 1: Spot the difference between the ECB and other central banks

(€m)          Capital     Reserves     Assets         Leverage     C+R as %ratio of Assets
ECB           10,761       70,426     1,895,870       23.4: 1        4.25
Swiss NB    36,174         -           226,641         6.25:1         15.96
Sweden      110         7,235        34,757          4.73:1          21.1
Norges Bank  8,441         -          49,345         5.85:1          17.1

Source: ECB weekly financial statement 24 May 2011, SNB Balance sheet, Swedish Riksbank weekly financial statement and Norges Bank Balance sheet April 2011

Alpha Monkey's picture

That is something that has been bothering me too.  I wish they would provide analysis.

spdrdr's picture

To be clear, I have an enormous respect for A/FOA/FOFOA, insofar as they are highly intelligent and erudite commenters.

I was personally turfed from USAGOLD in 2004 or so because I expressed "anti-Bush" thoughts; I pleaded with Kosares (or whomever) that I was merely expressing an opinion, got re-instated as a "member", and was finally and conclusively turfed in 2007 because I expressed my sorrow at the self-induced passing of Kurt Vonnegut Jnr, one of my favourite authors.

Jesus Christ.  Haven't been back there for 4 years.  Does it still exist?

Nevermind.  I was there when FOFOA started his commentary.  Both A/FOA were spot on in terms of gold. I was there shortly after 9/11, when they disappeared.  They led me on the Trail, and I have accumulated since then a sufficient amount of PMs in order to protect my family.

These guys ROCK!

However, I think that their belief in the Euro may have been misguided...  




spdrdr's picture

AND further let me clarify:

I have NO respect for Vonnegut's political views, but great appreciation of his writings.

Go figure!

rwe2late's picture

spdrdr - "I have NO respect for Vonnegut's political views..."

That's a rather blanket disrespect:

Vonnegut was a lifetime member of the ACLU.

In 1968, he signed the “Writers and Editors War Tax Protest” pledge, vowing to refuse tax payments in protest against the Vietnam War.

"The only difference between Hitler and Bush is that Hitler was elected” In a 2003 interview Vonnegut said, "I myself feel that our country, for whose Constitution I fought in a just war, might as well have been invaded by Martians and body snatchers.”

Speaking of Bush and Kerry, he said that "No matter which one wins, we will have a Skull and Bones President at a time when entire vertebrate species, because of how we have poisoned the topsoil, the waters and the atmosphere, are becoming, hey presto, nothing but skulls and bones."

Dyler Turden II Esq's picture

"Haven't been back there for 4 years. Does it still exist?"

Yes, still exists - after a fashion. But the idiots (the USAgold people) essentially kicked EVERYONE off, except for USAgold employees. So the "forum" still exists, shorn of any real forum-like activity. They had had enough of that "freedom of speech" nonsense. Fuckers. They never understood that fora are RIGHTFULLY CO-OWNED BY THE CONTRIBUTORS, who are the ones creating all the value, while they stand there and rake in the profits from sales.

passwordis's picture

     Far outperformed silver?  Perhaps over the past few weeks but in terms of years Silver has outperformed Gold by a factor of 2 to 1.  You would have made twice as much in silver over the last 10 years.

The catalyst, at least for me, for trading silver for gold will be when / if the world goes to some type of gold backed system... not when Gold starts making "real moves" (hasn't gold been making real moves for a long time?) 

 The fundamentals as I understand them suggest to me that there is absolutely no reason to believe silver will not continue to outperform gold. Perhaps this is partly due to my bias as I'm 100% physical silver  but every real indicator says silver is significantly under priced compared to gold and the fundamentals are stronger today then they were in 2001.


Enceladus's picture

Got Gold bitchez

X.inf.capt's picture

the bad part is,

gold is THE hedge against turmoil.

and judging by the barometer of gold....

a bad day is coming....

DoChenRollingBearing's picture

@ X.inf.capt

+ $1905 and green

Everyone possible should own some gold, especially parents...


That would be + $1913 (1:03 AM ET) now.  Fed's year of birth!