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Gold Leading Equities Down As Bernanke Disappoints

Tyler Durden's picture


Treasuries seemed to shrug off the QE-on trade from yesterday in the lead up to this morning's big disappointment from Bernanke. Gold lost it first and then as the statement came - with no mention of hyperinflation, helicopters, or new printers - so equities dumped - gapping down to converge with the rest of risk assets. The USD rallied as its cloests relative neighbor in disaster the EUR legged lower and the USD strength exaggerated commodity weakness further (Silver and Copper worst but all falling). ES is back to the post-ramp open on cliff on Friday at the magic 1340 level but momentum is not in its favor now and Treasury yields are reverting lower now also. Financials were the early laggards and have extended losses with GS back in the red and JPM down notably.

Yesterday's QE-on divergence has been fully unwound and now risk-off is correlating lower...

and commodities are being hit hard...

as the USD strengthens...


Charts: Bloomberg


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Tue, 07/17/2012 - 10:50 | 2624201 Lost Wages
Lost Wages's picture

I'm making that whistling sound, like a bomb coming in for a landing.

Tue, 07/17/2012 - 10:58 | 2624229 nope-1004
nope-1004's picture

Cubicle pinnies (that look like Gensler, lol) are monky hammering it, that's all.  Gotta keep the manip train going.  USD needs to stay afloat.  Ben keeps the ponzi going another month.


Tue, 07/17/2012 - 11:00 | 2624256 Marginal Call
Marginal Call's picture

I'm tired of waiting for Bernake to act.  I nominate Pacman Jones to take his place. 

Tue, 07/17/2012 - 11:01 | 2624258 YuropeanImbecille
YuropeanImbecille's picture

"with no mention of hyperinflation, helicopters, or new printers" that is fugging funny :-)

Tue, 07/17/2012 - 14:15 | 2625065 francis_sawyer
francis_sawyer's picture

"Gold "leading" equities down? (as if: "OMFG" let me dump this worthless metal so I can hold onto my very valuable Facebook shares)...


Yeah ~ I guess...


Tue, 07/17/2012 - 11:00 | 2624254 Crispy
Crispy's picture

Ben Bernanke riding the bomb ala - Dr strangelove


WB7 Where you at on that one?

Tue, 07/17/2012 - 11:03 | 2624270 Randall Cabot
Randall Cabot's picture

From MarketWatch this seems especially ominous:

July 17, 2012, 10:56 a.m. EDT

QE3 is pointless as we head over the cliff

Commentary: Fed’s powerless about Europe or U.S. fiscal crisis


By MarketWatch

WASHINGTON (MarketWatch) — The U.S. economy faces two major risks, and there’s nothing Ben Bernanke or the Federal Reserve can do about it.

Tue, 07/17/2012 - 10:51 | 2624204 FieldingMellish
FieldingMellish's picture

Gold is a safety asset, not a risk asset. It will simply take some time for folks to realize this. Treasuries and the dollar are the risky assets here.

Tue, 07/17/2012 - 11:07 | 2624248 Manthong
Manthong's picture

Treasuries and the dollar are in a bubble.
There will be return to real value.

Just keep accumulating..

and spend a lot of time on the lake.


Tue, 07/17/2012 - 11:02 | 2624262 agent default
agent default's picture

Ever notice how gold and silver rise and then COMEX opens and everything gets crushed?  Look  at intraday charts, it is the norm.  Libor is peanuts.

Tue, 07/17/2012 - 11:20 | 2624363 Fred Hayek
Fred Hayek's picture

It's more than that, too. 

Watch how gold and silver will rise and then as soon as they hit a 1.0% gain, selling comes in from the ether to stop prices from going up. 

If gold and silver, especially the latter were not outrageously manipulated their prices right now would be multiples of what they are. 

It will happen anyway. 

Tue, 07/17/2012 - 11:35 | 2624425 EL INDIO
EL INDIO's picture

No its not the norm.

The opposit happens too.

How do you explain golds 6X gains in 11 years ?

Tue, 07/17/2012 - 11:06 | 2624285 tmosley
tmosley's picture

People confuse gold, the safety asset with paper gold, the risk asset.  This is not helped by the fact that we price physical gold through a paper mechanism.

Tue, 07/17/2012 - 11:58 | 2624471 Max Fischer
Max Fischer's picture

Amazing isn't?

People think there's a difference, and there's not. There's absolutely no instance since the inception of SLV or GLD where an equity holder has been burned. NONE. In fact, the only ones who have been burned are SPROTT'S lemmings when he drove them into the ditch with his secondaries on PSLV and PHYS. Wrap your head around that one! Deliberately creates a closed-in fund with no arbing mechanism so the NAV premium can get whacked out, and then crushed into profitability for him and his underwriters.

Some people go so far as to claim that paper and physical prices have decoupled, when clearly they haven't. Every week for the past three years, these whacked-out fanatics have been claiming that physical and paper are decoupling. For proof, they'll cite some random coin store or random eMerchant who are taking advantage of their buyers' stupidity and gullibility by jacking up margins. BIG, WORLD-WIDE SILVER SHORTAGE!

In the end, they're holding a bag of inequity and eagerly hang on every word of various MetalHead carnival barkers who give them another days worth of ether.

Tue, 07/17/2012 - 12:17 | 2624588 madridisburning
madridisburning's picture

How dare you come in here and inflict reality on the loony toonies here. Don't you realize that truth is not welcome among the Paulites? It is 2012. The apocalypse is tomorrow. Even the Mayans knew that. Stop bing an apostate to th religion of fools.

Tue, 07/17/2012 - 12:34 | 2624644 fuu
fuu's picture

"How dare you come in here and inflict reality on the loony toonies here."

Your cliche is burning.

Tue, 07/17/2012 - 12:42 | 2624672 devo
devo's picture

So don't buy silver.

Tue, 07/17/2012 - 13:09 | 2624801 ParkAveFlasher
ParkAveFlasher's picture

I'll buy your silver, Max.

Tue, 07/17/2012 - 11:49 | 2624490 caconhma
caconhma's picture


Let us being honest. Gold is NOT going down. No, gold is manipulated down.

The USA prosperity comes from

1.   Petrodollars

2.   Weapons trades

3.   Narcotics trades

4.   Prostitution & pornography

5.   Gold and PM trade/manipulation

American government is fighting narcotics business the same way it fights Al Qaeda. No wonder Al Qaeda is a loyal American ally in Libya, Syria, and the rest of the world. The only problems American have are Al Qaeda splinter groups outside of CIA/MI5-6 control.


Tue, 07/17/2012 - 10:51 | 2624205 Hedgetard55
Hedgetard55's picture

Graham Summers is a genius, dudes, admit it. Ben Shalom out of bullets.

Tue, 07/17/2012 - 11:01 | 2624257 EL INDIO
EL INDIO's picture

I’m always surprised/amazed by how many ZHers insult or make fun of Graham Summers posts !


Yes, he’s been right for a year now !


I always look forward for his posts because his analysis is pretty good, relevant and makes sense (to me at least).

Tue, 07/17/2012 - 11:17 | 2624342 Al Huxley
Al Huxley's picture

He's been calling for a gigantic deflationary crash for the entire time.  Market hasn't really obliged him.  I agree with his assessment of general conditions (as I suspect most readers here do as well), but I disagree with the whole 'no more QE, no more printing' idea.  Plus, he makes every post an ad for his newsletter...

Tue, 07/17/2012 - 12:30 | 2624623 savagegoose
savagegoose's picture

once the world stops accepting fiat notes the deflation hits like a meteor storm. oh wait gov prints those notes dont they, well we'll see how long it takes.

Tue, 07/17/2012 - 10:51 | 2624207 fireangelmaverick
fireangelmaverick's picture

I think Bernanke mentioned the negative printer feedback loop....more money printing increases cost of printer ink which will automtaically limit further printing as the Fed is on a tight budget.

Tue, 07/17/2012 - 10:56 | 2624218 Gringo Viejo
Gringo Viejo's picture

Watching this repetitive nonsense is tiresome. I suppose gold will continue to drop until the Chinese have it all. National suicide.

Tue, 07/17/2012 - 11:02 | 2624265 Al Huxley
Al Huxley's picture

That's something you're not supposed to talk about.  But in any case, the Chinese won't get it all, as the swap dealers are now also net long (for only the 3rd time in history).

Tue, 07/17/2012 - 10:56 | 2624220 Inthemix96
Inthemix96's picture


For some strange and disturbing reason, some of you have the impresion that my fault here lies in that I may be a filthy zionist jew?

Nothing could be further from the case your honours, I genuinely have not got a fucking clue what the fuck is going down round here, according to zerohedge it is because all you fucking lot over there are bitchez.

Right, next question, erm, would you like some chips??...........

Tue, 07/17/2012 - 10:57 | 2624224 Anne Ominous
Anne Ominous's picture

"Shalom, and thanks for all the fish."

Tue, 07/17/2012 - 10:58 | 2624232 kaa1016
kaa1016's picture

Bernanke says nothing about QE3 and the market sells off. What a shock. Why is anyone surprised that he just repeated the same exact thing as before? Oh, I know why, the Fed is the only thing that is keeping the S&P above 1000, which in turn keeps long only managers of other peoples' money employed. It's as simple as that.

Tue, 07/17/2012 - 10:59 | 2624237 DeadFred
DeadFred's picture

There really isn't much 'down' room left for gold with 1525-1550 being long time support. I doubt that they can take it out today. In a couple weeks it will break one way or the other.

Tue, 07/17/2012 - 10:59 | 2624246 Zola
Zola's picture

The ambush of Gold everytime Bernanke speaks is really becoming tired. Its so blatant its a joke.

Tue, 07/17/2012 - 11:11 | 2624319 Al Huxley
Al Huxley's picture

I agree with the sentiment, but $15 isn't an ambush.  This is stupid and gullible speculative selling (probably short selling) to 'follow the winning trend', as they stick their heads further into the snare that's being so amicably held open for them by the commercials, who's short-long ratio is as low as it's ever been (while the swap dealers are net long for only the third time in history). 


The character and magnitude of this selling is way too tepid compared to the manipulative mark-downs earlier this year.

Tue, 07/17/2012 - 11:17 | 2624348 FieldingMellish
FieldingMellish's picture

Final bout of short covering?

Tue, 07/17/2012 - 11:27 | 2624389 Al Huxley
Al Huxley's picture

From what I see, they don't have much in the way of short positions to cover.  More likely selling puts to the specs, the better to put the squeeze on when they suddenly stand aside and let the price rise.

Tue, 07/17/2012 - 11:50 | 2624498 FieldingMellish
FieldingMellish's picture

Quality. Roll on happy day!

Tue, 07/17/2012 - 11:51 | 2624501 Jay Gould Esq.
Jay Gould Esq.'s picture

Sound observations. Agreed.

Tue, 07/17/2012 - 12:33 | 2624642 Winston Churchill
Winston Churchill's picture

From your lips to God's ears.

Tue, 07/17/2012 - 11:12 | 2624322 Village Smithy
Village Smithy's picture

I'd be the first one to agree that the markets are manipulated, but don't you think that at this point in time the PM trade is all about dollar devaluation caused by QE? At some point when the SHTF the PMs will become a safety play but right now they are devaluation hedges. No QE, no printing, no devaluation... until the world gets a good look at what's hiding behind our curtain.

Tue, 07/17/2012 - 12:07 | 2624379 Fred Hayek
Fred Hayek's picture

The problem is that QE has never stopped since QE1.  Who's buying U.S. Treasury bonds but the Fed at this point?  If QE ever stopped you'd immediately have failed bond auctions in the U.S.  Immediately. 

This idea that that fascistic manipulation of the U.S. economy ever paused is a joke.

Tue, 07/17/2012 - 11:01 | 2624259 Village Smithy
Village Smithy's picture

So when do the next round of QE3 rumours get floated?

Tue, 07/17/2012 - 11:14 | 2624330 FieldingMellish
FieldingMellish's picture

QE3 will come when it has been completely priced out of everything. Only then can it be (mildly) effective.

Tue, 07/17/2012 - 11:29 | 2624401 Rip van Wrinkle
Rip van Wrinkle's picture usual.

Tue, 07/17/2012 - 11:02 | 2624263 EmileLargo
EmileLargo's picture

If they don't print money, how will the US government finance its deficits?

Tue, 07/17/2012 - 11:08 | 2624304 Mitzibitzi
Mitzibitzi's picture

Stealing someone else's money would be the traditional way. Taxpayers, Iranians, Syrians... doesn't matter, so long as they got something worth stealing. Hell, it worked for the British Empire for well over 100 years; why change what works?

Tue, 07/17/2012 - 12:44 | 2624678 Winston Churchill
Winston Churchill's picture

Funny you should say that.

Said to the missus just this morning that the atmosphere in

the US now  is just how being in the UK just pror to WWI,

must have been like.

Same hubris.Same 'exceptionalism' mentality.

God is English ,and plays cricket mindset.

Pride before the fall.

Tue, 07/17/2012 - 11:03 | 2624267 tony bonn
tony bonn's picture

and to think that equities have no growth potential apart from qe....what a strong asset class.

Tue, 07/17/2012 - 11:05 | 2624279 Father Lucifer
Father Lucifer's picture

All hope is lost.

Wave 1 of 3 of 3 starts today.

Tue, 07/17/2012 - 11:09 | 2624281 Monkeyfister
Monkeyfister's picture

The Banksters are sad that Bernanke isn't going to fill up their Casino ATM, again, so their Going Galt. FUCKTHEMFUCKTHEMFUCKTHEM. When, oh when will Open Season, No Limit be declared on these criminal bastards?

I am so sick of their petty-assed temper tantrums.

Tue, 07/17/2012 - 11:06 | 2624288 RationalPrepper
RationalPrepper's picture

And yet, VXX is negative.  WTF?  I'm damn close to selling all my miners shares and closing my hedges (i.e., VXX calls and XLF puts) and just walking away.  I'm losing at both ends...kind of like when you have a stomach virus and liquid shoots from every orifice.

Tue, 07/17/2012 - 12:59 | 2624750 Winston Churchill
Winston Churchill's picture

Try dysentery.

Had it twice in the Far East.

Then it turns to blood coming out both ends.

Tue, 07/17/2012 - 11:08 | 2624299 RobotTrader
RobotTrader's picture

So much for the "acclaimed experts" at King World News, LOL...


Gold down $16, U.S. Dollar and Treasuries are flying.

And the S & P 500 is now breaking out to record highs in Euros and Swiss Francs as we speak.,spy:FXY,spy:...|D


Tue, 07/17/2012 - 11:20 | 2624357 Al Huxley
Al Huxley's picture

Really?  You're willing to call the day's outcome 2 hours into the trading day?

Tue, 07/17/2012 - 11:33 | 2624412 bnbdnb
bnbdnb's picture

RT - What will happen in 24 hours?

Tue, 07/17/2012 - 12:08 | 2624561 Lost Wages
Lost Wages's picture

Doesn't King World predict the same thing every single day?

Tue, 07/17/2012 - 12:40 | 2624669 ParkAveFlasher
ParkAveFlasher's picture

I was just reading their archive from late 2010 and early 2011, specifically Turk's words.  Turk gets the most abuse as a silver permabull.

In any case, he called $50/oz "shortly" then, when it was around $20/oz.

It's a free service.


Tue, 07/17/2012 - 12:31 | 2624622 FieldingMellish
FieldingMellish's picture

Your were saying? Gold and silver now green. Long bond down 50bps. Dollar only 6bps away from pre-Bernanke bullshit.

Tue, 07/17/2012 - 14:54 | 2625223 robertocarlos
robertocarlos's picture

I'm not going to do a damn thing untill I see 100 dollar a day ups and downs.

Tue, 07/17/2012 - 11:16 | 2624338 east paris trader
east paris trader's picture

Bernanck has to print, but to have "affect" it must be huge.  He can not do this without blood in the streets.  He will only print under the cover of collapsing markets.   It is the only way he can justify the magnitude of the liquidity injection.... 

Regarding the paper gold market, does anyone really think that they have worked the market down to this area only to give up?   They will drive it through support to get the stops.    You see it every fucking day in the intraday charts.  Do you really think they'll give up right above support?  They will break support and attempt to create a panic dump of physical.   Of course, the central banks will be buying like mad.  As will Diamond, Ben, Blythe, etc.... they will continue loading up.   It's a beach ball held under water --- all they have to do it quit forcing it down --- and they will once they can no longer get physical.

The entire paper gold market is a set up.


Tue, 07/17/2012 - 11:19 | 2624353 orangegeek
orangegeek's picture

Gold Bugs Index has been declining faster than gold.  Sign of more bearishness in Gold?  Wave count remains bearish.

Tue, 07/17/2012 - 11:20 | 2624362 HungrySeagull
HungrySeagull's picture

And so the Gold and Silver continues to drop.

And we continue to buy cheaply and more.

We must be a pathetic and brave few, we happy stacking few.

Tue, 07/17/2012 - 11:29 | 2624398 The worst trader
The worst trader's picture

Can anyone explaine to me why the vxx is down while equities are down two days in a row?

Tue, 07/17/2012 - 12:25 | 2624609 Quinvarius
Quinvarius's picture

The flavor in my gum lasted longer that utterly expected bid pulling attempt to create a selloff.  And I am still chewing it.  I guess being predicatable is asking to be slaughtered.

Tue, 07/17/2012 - 12:30 | 2624627 noses
noses's picture

Who bloody cares? It didn't take gold half as long to get up to its former level as it takes Bernanke to get his dick back up again to ass-rape the economy again. Even Viagra doesn't help him anymore.

Tue, 07/17/2012 - 12:31 | 2624632 savagegoose
savagegoose's picture

woot cheaper gold

Tue, 07/17/2012 - 12:33 | 2624639 Madcow
Madcow's picture

I think people are missing the fact that deflation is actually good for the banks. 

as time goes on, they will be able to foreclose on more and more private property.

the money they are "out" never really existed in the first place - so this is a win win for the banks. 

eventually, you get to the place where the banks own 99% of the farms, houses, CRE, city parks, etc - and that would foment revolt - 

but the banks can gobble up a lot of real assets before that happens.

Tue, 07/17/2012 - 14:51 | 2625211 robertocarlos
robertocarlos's picture

I see dead bailiffs and dead bankers.

Tue, 07/17/2012 - 12:35 | 2624647 Al Huxley
Al Huxley's picture

Bullion bank to spec short - "How's that noose fitting on ya, snug enough?  Here, let me just tighten it up a bit for you.  Yea, I agree, it's really weird, I don't know where the selling went either... a little tighter maybe?  There ya go"

Tue, 07/17/2012 - 14:49 | 2625200 robertocarlos
robertocarlos's picture

Gold is not that big a deal. When you or the Chinese have all the gold and paper is frowned upon then we shall be at the beginning of a new era. Then you will have to trade me some gold for some of my pigs or whatever, You get the first trade for a pittance but after that you will have to work for a living.  

Tue, 07/17/2012 - 19:38 | 2626360 VekTor
VekTor's picture

It just looked like gold was leading the drop.  Really, it was these.

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