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Guest Post: Does Central-Bank Gold-Buying Signal The Top Is Near?

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Submitted by Jeff Clark of Casey Research

Does Central-Bank Gold-Buying Signal The Top Is Near?

Doug Casey told me in January, "The only thing that scares me is that central banks are buying a lot of gold; they're historically contrary indicators." When it comes to buying gold, central banks have such a poor timing record that they're frequently joked about as a contrary indicator.

Recently, they have been buying, quite literally, tonnes of it. Consider the following:

  • Net central-bank purchases in 2011 exceeded 455 tonnes. This was only the second increase since 1988 (the first in 2010) and the largest since 1964.
  • Turkey has added over 123 tonnes since last October, buying 29.7 tonnes in April alone.
  • Mexico has purchased over 100 tonnes since February 2011.
  • The Philippines added 32 tonnes in March, its second-largest monthly purchase ever. Largely under the radar is the fact that it's buying some of its local production.
  • Russia continues buying, adding 15.5 tonnes in May. Its total reserves now stand at 911.3 tonnes, the highest level since 1993.
  • Thailand has raised its holdings by more than 80% since mid-2010.
  • South Korea has bought 40 tonnes since May 2009, an increase of 180%.
  • The World Gold Council (WGC) reported that central-bank purchases totaled 80.8 tonnes in Q1 2012, about 7% of global demand.
  • Over the past 12 months, net purchases have averaged almost 20% of total annual supply.

Here's the picture of what has transpired since the financial crisis hit in late 2008.

(Click on image to enlarge)

Central banks have added a net of 1,290 tonnes since the fourth quarter of 2008. This total excludes China and other nations that don't regularly report their activity, as well as countries that have been surreptitiously buying their own production.

That's a lot of gold buying. One has to wonder whether so much buying may in fact signal a top for gold. After all, a number of prominent analysts have claimed for some time that gold is in a bubble and that it's all downhill from here.

Not so fast. Like many mainstream reports, looking at the short-term picture usually leads to erroneous conclusions. Let's put central-bank purchases into historical perspective.

(Click on image to enlarge)

In spite of the recent activity, world central-bank holdings are far below what they were in 1980. Clearly, a few years of net buying does not a bubble make.

The difference is greater than you might realize. Consider that since 1980…

  • The global population has grown 55%
  • Worldwide gold supply has grown 120%
  • Foreign-exchange holdings have increased 650% since 1995, and now total $10.4 trillion.

It seems rather obvious that a lot more "catch-up" buying is needed before we start talking about a top for gold on this basis.

Meanwhile, we think the trend of central-bank gold buying will continue. It's not hard to see why: central bankers around the world know what it must ultimately mean to run the printing presses the way the US has since 2008, even if price inflation is not immediately obvious. It's no surprise that they want to hedge their bets, moving more reserves into something with actual value... something that can't be debased with a few keystrokes. The US dollar has been the world's reserve currency since WWII, and that's beginning to change – the movement into gold is just one facet of that change.

The entire world may indeed be beginning to understand that it's operating on a fiat currency system backed by nothing. At the same time, the sovereign debt crisis in the Eurozone is intensifying, and some countries have succeeded in inflating their currencies faster than the Fed has inflated the USD. It doesn't take Nostradamus to read this writing on the wall… and while the world's central bankers can lie to the public, they themselves know how bad things are.

In fact, the WGC is so confident that central banks will continue to buy gold that it's changed its reporting structure: it's added "official sector purchases" as a new element of gold demand, while eliminating "official sector sales" as a negative supply factor.

Of course, gold will someday top, and Doug Casey believes a bubble in gold and related equities is highly likely at some point, courtesy of the trillions more currency units governments will create in a desperate (and ultimately unsuccessful) attempt to stave off the Greater Depression.

But we're nowhere near that point. There's a long way to go before we start legitimately using the "B word" (bubble) or "S word" (sell).

In the meantime, I suggest using the "B word" (buy) or "A word" (accumulate) to make your decisions about gold.

 

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Sat, 07/14/2012 - 11:06 | 2615615 flacon
flacon's picture

When the debt and derivatives get cleared out (MARKED TO MARKET and fully absorbed) then we will have the top in gold. Not before then.

Sat, 07/14/2012 - 11:07 | 2615624 Flakmeister
Flakmeister's picture

Top relative to what??? Fiatcos??

The only useful metric is food and energy....

Sat, 07/14/2012 - 11:13 | 2615631 flacon
flacon's picture

The only useful metric is food and energy....

 

Which have zero flow if there is no trade (money); gold and silver is money and nothing else. What good are stuffed grain elevators and ships full of oil if there is no money to buy it? Gold will be revalued relative to the physical needs of the world (food and energy are good examples). 

Sat, 07/14/2012 - 11:21 | 2615657 Flakmeister
Flakmeister's picture

Hey, I'm a gold bug as well, but you are deluding yourself...

All economies are first and foremost local....

And for shits and giggles, if their flow was zero, what would that do to the price?

Sat, 07/14/2012 - 11:43 | 2615694 flacon
flacon's picture

what would that do to the price?

 

What is price if the only useful metric is food and oil? (I'm just playing devil's advocate here).

 

If what you suggest is true then the price of a kilo of tomatoes might be 1.5 kilos of green peppers, or 100ml of gasoline. Can a society function that way for long, on direct barter?

 

I suppose one could say that gold will be priced in food and oil, or food and oil will be priced in gold. But either way gold (money) is the mechanism of wealth transfer, the "conduit" if you will. With no conduit there is no flow (except direct barter which is fine on a small village/hamlet scale, but not on a city/state/national/global level). 

 

Some good reading from "FLOW OF VALUE" blog (a distant cousin of FOFOA):

http://flowofvalue.blogspot.com/p/archive.html

Sat, 07/14/2012 - 14:49 | 2616078 LowProfile
LowProfile's picture

Not surprisingly, (if one actually bothered to investigate, that is) during the hyperinflation in Zimbabwe they used US dollars, gasoline and placer gold as mediums of exchange. 

From what I could glean Zimbabwe society seemed to function about as well as it did before their gov't blew up the currency, it's just that those who tried to save in Zim dollars had a difficult time of it.

 

edit:  LOL, down arrows for pointing out what actually happened.  Somebody can't handle the troof!

Sat, 07/14/2012 - 15:29 | 2616221 cranky-old-geezer
cranky-old-geezer's picture

 

 

I rather doubt our economy will function well at all after the Fed blows up our currency, which they will do eventually.  Actually they're doing it now, it just takes a while to reach a collapse point, we're not there yet ...but getting closer all the time.  Ongoing printing is the only way to keep the growing debt bondzi bubble going, and ongoing printing will collapse the currency eventually.

Gold is a natural way to preserve wealth during a time of debasing currency and eventual collapsing currency. 

Anyone speaking against gold is speaking against 5,000 years of human history, so their arguments are worthless bullshit.

And they're speaking against what central banks are doing, loading up on gold again.  Central banks don't give a fuck what they think.

On the other hand remember that central bank gold holdings are meaningless as far as the currency is concerned.  The currency isn't redeemable for any of that gold.

Sat, 07/14/2012 - 15:39 | 2616238 LowProfile
LowProfile's picture

 

I rather doubt our economy will function well at all after the Fed blows up our currency

True, and our economy will suffer quite a bit more than Zimbabwe's did (as they didn't have much of one to speak of anyway).  The main thing will be access to energy, specifically liquid fuels for transportation.

On the other hand remember that central bank gold holdings are meaningless as far as the currency is concerned.  The currency isn't redeemable for any of that gold.

Not redeemable, but it is still exchangeable (you can use it to purchase gold).  When they start to screw with that here (e.g. Argentina has now made it illegal to hold exchange pesos for US dollars - Can gold be far behind?)  I think the endgame will be nigh.  Gold would move to the black market, and absolutely explode in price...

Sat, 07/14/2012 - 15:49 | 2616258 cranky-old-geezer
cranky-old-geezer's picture

 

 

Yes I agree about eventual outlawing and black market.  It may well happen here.

I was speaking about central bank gold holdings making the currency more valuable, which they don't, because the currency isn't redeemable for any of that central bank gold.

No, "gold backed" means nothing.  It's meaningless.

"redeemable" is the only thing that counts, and then only when it says right on the currency how much gold, i.e. grams or portion of a gram.

Sat, 07/14/2012 - 16:02 | 2616275 LowProfile
LowProfile's picture

While preferable to our current state of affairs, I'm not sure redeemability in gold is the answer, given the history of gov'ts always printing more receipts than they have specie for.

I'm for eliminating all forms of paper gold - Futures, ETF's, margin on exchange-tradable trusts (such as PHYS), etc.  Trusts, redeemable in metal, are probably fine, as long as they cannot be borrowed against (margined).

That way we get a true free market in gold, something we haven't had for quite some time.  This allows the savers to save without being forced into the stock/bond/CDS/ponzi to maintain their savings against inflation (and w/o any currency risk).

Sat, 07/14/2012 - 17:39 | 2616399 cranky-old-geezer
cranky-old-geezer's picture

 

 

I don't participate in fantasies.  I live in the real world.  None of those things you propose are going to happen. 

America is heading toward a feudalistic society of rich aristocracy and serfs living in poverty.  Gold will be forbidden to the serfs.  Anything beside the "currency of the realm" will be forbidden to the serfs.   A currency by which the rich aristocracy will loot what little wealth the serfs have, just like they do now.

America has no future.  The nation is finished.  All that's left is the looting.

Sat, 07/14/2012 - 22:54 | 2616722 mkkby
mkkby's picture

You don't engage in fantasy, then you go off the deep end about some future you've imagined.  Please don't go off the meds.  Fucking funniest comments on the thread.

Sat, 07/14/2012 - 15:33 | 2616226 MillionDollarBoner_
MillionDollarBoner_'s picture

To understand the Zim inflation one has to think outside the box.

Mugabe only wanted to destroy the white farmers. He pretty much achieved this by destroying the value of the currency in which they held their savings.

He knew the impact on his power base would be limited because 1) he tipped his affluent supporters off in advance and 2) the rest of his supporters did not have any savings in the first place.

 

Sat, 07/14/2012 - 15:48 | 2616255 LowProfile
LowProfile's picture

Well maybe...  I'll have to ponder that one.

Frankly, I'm not sure Mugabe thinks or thought that much (never struck me as an intellectual), I suspect he's a puppet of TPTB.

Sun, 07/15/2012 - 11:10 | 2617244 prole
prole's picture

MDB I think your Zim premise is wrong-

Mug wiped out the White farmers by having them invaded and shot by swarms of ~persons~ with defacto military/police sanction.

The White farmers didn't care about the local currency, as they were already savvy to operating in African economies, and thus (now I am guessing here) held their wealth in Land. They had the land and food products, when the zim dollar crashed and food was only available for gold, they are the ones with the food, and the productive land. (which Mug eradicated)

IMO absent a government backed genocide against them, (to which the west of course was totally indifferent, while crying rivers of crocodile tears about 'bosnians" and Kuwait) the white farmers of Zim would have been fine regardless of the fate of the local currency.

Sat, 07/14/2012 - 14:30 | 2616107 The Monkey
The Monkey's picture

Maybe gold will blow off to $2,000+. If we have reached the point where central banks are constantly on the gas pedal, then why not? All assets should move higher.

That's a pretty gutsy call for the central banks though. If the tendency of the world enonomy is lower growth and central bank action will not provide it, then what does central bank action really do? It:

-- defers action on the fiscal side
-- lifts speculative sentiment and prices
-- distorts the message that prices send to producers and consumers
-- artificially increases corporate profit via price and translation effects from FX rate of change
-- inherently creates massive sentiment overshoot
-- delays recession, but not indefinitely, but increases the potential magnitude (see my first point)
-- causes us to act differently with respect to saving, taking on credit, and our vote

The central banks are busy working up it's next "save the world economy" concoction, inviting speculators to the party and promising ever greater amounts of monetary stimulus. In the end, this will make for a magnificent top that has so much slack that it will fold into itself in a humongous crash. All the work to instill confidence, encourage consumers and businesses to borrow (and banks to lend) will be for naught.

In 1928, the Fed was very aggressive, stepping on the gas hard when economic weakness presented itself. The result was a huge set-up for short-sellers who were patient enough to let every ounce of buying dry up. The massively leveraged pyramid went into reverse as recession presented itself again.

Bernanke is a very smart guy who has studied the Great Depression. He has followed the script layed out by Irving Fisher. Now, instead of a durable recovery, central banks find themselves in the same spot they were in during 1928. Will they punch the gas and give us that last manic speculative top again? Or, do they take it on the chin during an election year?

Plan on it. Congress will do close to nothing and the Fed is already communicating they will step in, likely without any corrective action this time (see Lockhart's comments). The house of cards will have one last speculative burst, setting up the best short since 1929.

Sad, but the only thing to do now is front-run the Fed (because time is short before massive action), or sit on the sidelines with cash or treasuries waiting to short the blow off top. What a total cluster.

Sat, 07/14/2012 - 15:20 | 2616211 OpenThePodBayDoorHAL
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Seems to me that interest rates are the "price" of money. Right now that price seems to be headed to zero. I agree with Bill Fleckenstein, the 40-year experiment with all-paper money is nearing a conclusion of some kind.

Sat, 07/14/2012 - 15:35 | 2616229 MillionDollarBoner_
MillionDollarBoner_'s picture

"Maybe gold will blow off to $2,000+."

Wow - aim high, why doncha?!?

Sat, 07/14/2012 - 20:32 | 2616568 steve from virginia
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From what I see dollars are scarce but gold will be moreso.

From a quantity of money standpoint dollars will be worth a lot, however:

Dollars = discredited government and bankrupt finance.

Gold = not a discredited government and bankrupt finance.

Gold could be worth $15k or more.  Buy a house with an ounce.

Sat, 07/14/2012 - 11:37 | 2615700 Hobbleknee
Hobbleknee's picture

"All economies are first and foremost local...."

Really?  Everything in my house was made in China.

Sat, 07/14/2012 - 13:28 | 2615970 HoofHearted
HoofHearted's picture

If the US and UK ever get into the buying act, then it is time to drop whatever you hold in favor of something else. The UK may be the best contrarian indicator thanks to their sales when gold was at its low...

Sat, 07/14/2012 - 13:43 | 2615996 Citxmech
Citxmech's picture

I think economies expand to the limits provided by transportation/engery.  They will become more local only as energy/transportation costs rise.

Sat, 07/14/2012 - 13:55 | 2616028 Au Shucks
Au Shucks's picture

do you live in China per chance? 

Sun, 07/15/2012 - 10:32 | 2617179 _SILENCER
_SILENCER's picture

Really?  Everything in my house was made in China.

Bwahahah!

Goddamn, I almost sprayed my coffee on the monitor with that one!

Sun, 07/15/2012 - 12:02 | 2617354 akak
akak's picture

Made me laugh.  A typical reaction from your usual blobbing-up, overconsumpting, pulling all into center and pushing blame to exterior US Citizenism-practicing US Citizen, whose nature is eternal (because I say so!).

 

(And if I keep saying the nonsensical phrase "US Citizenism" enough times, maybe I can actually make it something real instead of just the creation of the bigoted imagination of an autistic and mentally deranged Chinese troll.)

Sun, 07/15/2012 - 11:10 | 2617242 pacu44
pacu44's picture

Then i will be king locally :)

Sat, 07/14/2012 - 12:30 | 2615713 HardAssets
HardAssets's picture

"What good are stuffed grain elevators and ships full of oil if there is no money to buy it?"

Hmmmmm.

I'm long the PMs (and waiting for the freakin' miners to get with it someday too). But, seriously, read Murray Rothbard on the origins and nature of  money and how it relates to gold.

Gold and silver are the commodities which were found to be generally valued by people. Farmer Jones didnt have to find a cobbler who needed eggs, in order to buy a paiir of shoes for his kids. Rather than using direct exchange (that is, barter), one could employ indirect exchange. The cobbler who was allergic to eggs could accept gold and/or silver for his shoes. He knew the metals were valued by people in general and that he could trade them for things he needed.

Various money units such as the British pound sterling, American dollar, etc - - were the names given for certain weights of precious metals. Later paper receipts were issued to represent those metals, and the bankster fraud of printing more receipts than metal held for customers in their vaults, got the whole fractional reserve fiat mess started.

pdf version of Rothbards writings on the origins and nature of money, and how this relates to gold can be down loaded for free from these webpages:

http://mises.org/money.asp

http://mises.org/daily/1829

 P.S. - - you probably know all this, and I may have only misinterpreted or took your statement above too literally. In any case, the links above are good ones for people to research this topic. - - The whole point of trade is for people to get the final goods that they consume - - including oil and grain. They can trade for this using direct or indirect means - - but the 'stuff' itself is what counts in the end. Money facilitates the trade but isnt absolutely required. Given the added convenience for trade, people are likely to invent it in one form or another, however. This is especially true as transactions become more complicated. (Though Iran has been trading oil for goods they need lately.)

Sat, 07/14/2012 - 13:10 | 2615846 SheepRevolution
SheepRevolution's picture

You should do some more research and find that gold was, up until 1971, the banksters choice of money. Since it is very rare, therefore it is also easy to control the supply. It isn't primarly about what backs our money, but who controls the quantity of it! The banksters fought fiercly to make gold the only PM to back money, and in 1900 they finally made it with the Gold Standard Act (fuck you William McKinley). Up untill then, gold AND silver was money. And the banksters hated silver because the couldn't controll the supply of it.

 

What's scary about central bank now buying so much gold, is that less and less of it is in the hands of We The People. If we one day would switch to a gold standard again, the banksters will still be in controll.

Sat, 07/14/2012 - 13:39 | 2615992 foxenburg
foxenburg's picture

That may be true, but, since I've stacked more gold than the average person, I hope to get a good ride on their coat tails.

Sat, 07/14/2012 - 16:27 | 2616312 LowProfile
LowProfile's picture

 

What's scary about central bank now buying so much gold, is that less and less of it is in the hands of We The People. If we one day would switch to a gold standard again, the banksters will still be in controll.

80% of all gold is privately held.

Sun, 07/15/2012 - 10:21 | 2617166 passwordis
passwordis's picture

80% of all gold is privately held.

Private means Corperate interests (not you and me)

Data from the International Monetary Fund Financial Statistics Report says governments, central banks, and investment funds are the world's largest holders of gold reserves.

Sat, 07/14/2012 - 12:37 | 2615822 El Tuco
El Tuco's picture

It all depends on how bad things get. If you think that everything will unwind in a controlled fashion, sure PM's make sense. If we get into a situation where it resembles Eastern Europe c.1940-45 or Bosnia War c.1992-1995 then I think it would mean shit. But then again those things happened long ago and so far away that they could never happen here or probably again. We are way more civilized now. I can't think of anyone who would kill to save his family.

 

Sat, 07/14/2012 - 21:45 | 2616631 Irene
Irene's picture

During WWII, the Nazis and others were happy to trade and traffic in gold.  If you wanted to save you life, say, gold was what you paid.  If you were some little country about to be overrun by the the Nazis or Soviets, you wanted to get your gold out to some safer haven.

Gold never meant shit.  Only Americans think that way.

 

Sun, 07/15/2012 - 11:20 | 2617247 passwordis
passwordis's picture

  Germany was the victim of international/Zionist financiers.  Germany was left with no other option but to defend itself. Everything you think you know about the history of war is false. The Jews within Germany (German Citizens) and their brethren around the world conspired to destroy Germany because Germany was economically independent and would not play the Jewish finance game. 

 All we hear is that Hitler was a madman who "hated" the Jews. No one asks why. Was Hitler born with Jew Hating DNA? Did a Jewish women spank him too hard when he was a young boy? Most people do not posses the cognitive ability to consider the most basic questions.  What caused Hitler to "hate" the Jews?

  The truth is Hitler did not "hate" the Jews. The truth is the Jews were attempting to destroy Germany from within. High placed German Jews (German Citizens) stabbed their own country in the back. International Jews declared economic war on Germany because Germany vowed to remain independent of the Jewish financiers. Hitler was protecting his country from the Jewish financiers.  And before someone tells me that none of this justifies the killing of millions of Jews, allow me to reference the words of former Chief of Staff (Ronald Reagan) James Baker in an interview with DER SPIEGEL magazine in 1992.

 

 

(DER SPIEGEL, 13/1992)

 
"WE MADE A MONSTER OF HITLER, A DEVIL. THAT IS WHY (THEREFORE) WE COULD NOT AFTER THE WAR SAY OTHERWISE.
 
WE HAD PERSONALLY MOBILIZED THE MASSES NEVERTHELESS AGAINST THE DEVIL. THUS WE WERE FORCED AFTER THE WAR, TO PLAY ALONG WITH THIS DEVILS' SCENARIO.
 
WE COULD NOT POSSIBLY HAVE MADE OUR PEOPLE CLEAR (TO THEM) THAT THE WAR WAS ONLY AN ECONOMIC PREVENTATIVE MEASURE!"
 

--JAMES BAKER , EX-US FOREIGN MINISTER

 
SOURCE: DER SPIEGEL, 13/1992

Sat, 07/14/2012 - 13:03 | 2615900 Citxmech
Citxmech's picture

"The only useful metric is food and energy...."

Don't forget land and men's suits.

Sat, 07/14/2012 - 12:22 | 2615782 oleander garch
oleander garch's picture

Good point on the relativity scale, Flacon.  Overall, this total position is interesting but the relative amount of fiat money is a good deal higher than in 1980.  I would assume that the total tonnage would have to be on the order of 100 times or more to back all that trash tied to derivatives.

Sat, 07/14/2012 - 14:21 | 2616081 NJBDeflator
NJBDeflator's picture

I just wrote a piece called "Welcome To The Future" that pertains to this:

 

http://njbdeflator.blogspot.com/2012/07/welcome-to-future.html

 

How the hell do I submit a guest post? 

Sat, 07/14/2012 - 15:31 | 2616220 LowProfile
LowProfile's picture

Submit to tips@zerohedge.com

Or post your article here in a comment as a 'trial balloon' (post links to your charts).

Fair warning though:  I believe the readers here will not be kind regarding your conclusion.  You ignore much of the negatives regarding China, and assume much regarding the efficacy of central planning/command and control.

Sat, 07/14/2012 - 16:58 | 2616345 SHRAGS
SHRAGS's picture

NJB, here's a leaked cable from wikileaks:

C O N F I D E N T I A L SECTION 01 OF 04 BEIJING 001760 SIPDIS SIPDIS E.O. 12958: DECL: 03/15/2032 TAGS: PGOV [Internal Governmental Affairs], PREL [External Political Relations], ECON [Economic Conditions], SOCI [Social Conditions], CH [China (Mainland)] SUBJECT: FIFTH GENERATION STAR LI KEQIANG DISCUSSES DOMESTIC CHALLENGES, TRADE RELATIONS WITH AMBASSADOR REF: SHENYANG 26 Classified By: Ambassador Clark T. Randt, Jr. Reasons 1.4 (b) and (d). Summary ------- ¶1. (C) Liaoning Party Secretary Li Keqiang, a front runner for elevation to the Politburo this fall and potential successor to President Hu Jintao in 2012,

 

 

¶4. (C) GDP figures are "man-made" and therefore unreliable, Li said. When evaluating Liaoning's economy, he focuses on three figures: 1) electricity consumption, which was up 10 percent in Liaoning last year; 2) volume of rail cargo, which is fairly accurate because fees are charged for each unit of weight; and 3) amount of loans disbursed, which also tends to be accurate given the interest fees charged. By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are "for reference only," he said smiling.

 

http://www.cablegatesearch.net/cable.php?id=07BEIJING1760&q=electricity%...

Sat, 07/14/2012 - 14:21 | 2616084 runlevel
runlevel's picture

maybe its because SILVER will be the asset of choice? CB's dont have any silver... so going by the premise that theres a top in gold due to CB buying and that being an contrarian indicator wouldnt you then be able to say SILVER is the asset of choice?

Sat, 07/14/2012 - 14:22 | 2616087 NJBDeflator
NJBDeflator's picture

My new article "Welcome To The Future" touches on a lot of this stuff:

 

http://njbdeflator.blogspot.com/2012/07/welcome-to-future.html

 

How do I submit a guest post??

Sat, 07/14/2012 - 15:47 | 2616254 Freegolder
Freegolder's picture

I think gold could settle at a much higher level, based on physical-only pricing, no more paper gold. We will watch together!

Sat, 07/14/2012 - 21:14 | 2616609 Margie
Margie's picture

Thank you for an informative post. I believe individuals should be buying gold and silver bullion. I encourage my friends, family, and associate to buy gold. I have been fortunate that I have found a supplier that caters to the small investor, http://www.cherishedgold.com . They have great service.

Mon, 07/16/2012 - 02:36 | 2619468 Gavrikon
Gavrikon's picture

Die, Spammer!  Die!!!

Sat, 07/14/2012 - 11:06 | 2615618 fonzannoon
fonzannoon's picture

Gold stocks and bubble in the same sentence. Now thats funny.

Sat, 07/14/2012 - 11:07 | 2615623 flacon
flacon's picture

Do you mean gold stocks, or stocks of gold?

Sat, 07/14/2012 - 11:27 | 2615674 fonzannoon
fonzannoon's picture

gold stocks. the ones down fifty oercent year over year. 

Sat, 07/14/2012 - 12:38 | 2615828 Treeplanter
Treeplanter's picture

Gold and silver miners have paid off very well since 2008.  Will sell what I have left on next dead cat bounce.  Then wait patiently for great bargains ahead of the best bull market in history.   Gonna be a fat cat.  Hooray for the 1%!

Sat, 07/14/2012 - 13:00 | 2615887 Implicit simplicit
Implicit simplicit's picture

Good point. Buy low and sell high. Great opprortunity prior to the dollar being devalued again at the next Fed meeting. Gold and silver plays seem to be the most logical safe bet at this point.

Sat, 07/14/2012 - 11:12 | 2615632 FieldingMellish
FieldingMellish's picture

Only if the chart is upside down.

Sat, 07/14/2012 - 11:18 | 2615650 GOLDTEETHSILVER...
GOLDTEETHSILVERFILLINGS's picture

Follow the yellow brick road...

Sat, 07/14/2012 - 18:51 | 2616479 smiler03
smiler03's picture

14 of your last 25 posts have been this. I think you should see a professional and tell them you think you have OCD, or that you think you're a boring bastard.

Sun, 07/15/2012 - 11:19 | 2617256 prole
prole's picture

Speak for yourself. Maybe he needs to repeat his message to reach the dumbed-down American Sheopleopouriam.

Sat, 07/14/2012 - 11:06 | 2615620 Bindar Dundat
Bindar Dundat's picture

If you do not hold it , you do not own it!

Sat, 07/14/2012 - 15:39 | 2616239 MillionDollarBoner_
MillionDollarBoner_'s picture

...and if it can be shorted, it ain't worth a shit!

Sun, 07/15/2012 - 12:08 | 2617391 akak
akak's picture

Shitted-up shorts are never a good thing.

Sat, 07/14/2012 - 11:08 | 2615625 Towhog
Towhog's picture

Off topic, buttt!

 

Beware of the Central Midwest drought in the USA.  While Europe collapses, Middle East prepares for war, China crash lands, the corn and soy bean crop in the midwest is scorched.

 

Agriculture is the last product produced in the USA.

 

This may be the black swan many have been forcasting.

Sat, 07/14/2012 - 11:20 | 2615648 flacon
flacon's picture

I live near New York / Michigan / Ontario and I can tell you that were I live we have had ONE DAY OF RAIN in the past 11 weeks (give or take). There were scattered thunder storms yesterday, but all I got was a two minute splattering, not enough to make my car dusty let alone wet. It is very, very dry around here. 

Sat, 07/14/2012 - 12:50 | 2615865 FEDbuster
FEDbuster's picture

"Agriculture is the last product produced in the USA."

Military armaments, too.

Sat, 07/14/2012 - 22:20 | 2616673 Real Estate Geek
Real Estate Geek's picture

And don't forget porno!

Sun, 07/15/2012 - 12:11 | 2617409 akak
akak's picture

And US Citizenism!

(whose nature is eternal!)

Sun, 07/15/2012 - 12:18 | 2617432 i-dog
i-dog's picture

Made me laugh!

Sat, 07/14/2012 - 13:25 | 2615964 stocktivity
stocktivity's picture

A bushel of corn up 30% since the beginning of June.

Sat, 07/14/2012 - 17:31 | 2616393 lotsoffun
lotsoffun's picture

i forgot that ny, mich, and ontario aren't the same place separated by a few hundred miles.

it's raining here.  but i'm not sure where i am.  somewhere near califorinia.  but i thought ca. was part of seattle?

 

Sun, 07/15/2012 - 01:35 | 2616906 jonjon831983
jonjon831983's picture

Perhaps I am mistaken... How do you forecast a Black Swan?

Sat, 07/14/2012 - 11:09 | 2615627 kensdad
kensdad's picture

Maybe if the likes of the Fed, BOE, and BOJ (i.e. the serial money printers) were the ones buying gold, then it might be a contrary indicator.  The central banks that have been doing the buying are a bit different.  They are the ones who are exposed to the reckless behavior of the serial money printing CB's.

Sat, 07/14/2012 - 11:11 | 2615630 Long-John-Silver
Long-John-Silver's picture

Are they really buying Gold if they don't demand physical delivery?

Sat, 07/14/2012 - 11:15 | 2615640 flacon
flacon's picture

That is a very good point. Hugo Chavez, though a dispicable character, so far is the only one who had the guts to get DELIVERY!

Sun, 07/15/2012 - 01:41 | 2616909 jonjon831983
jonjon831983's picture

Anybody hear of Ghana wanting to repatriate?

 

http://www.bullionstreet.com/news/ghana-may-withdraw-gold-reserves-from-euro-zone-banks/2137

 

Not sure about the source and haven't heard anything about this afterwards.

Sat, 07/14/2012 - 12:44 | 2615845 granolageek
granolageek's picture

You have to figure that the ones buying their own country's production are taking delivery. Of course they're also paying in local curency, so it's basically invisible.

Sat, 07/14/2012 - 11:13 | 2615634 I am Jobe
I am Jobe's picture

Bernanke is going to fuck it all up again. I guess Ivy league Education lets u do just that.

 

Sat, 07/14/2012 - 11:14 | 2615635 alfred b.
alfred b.'s picture

 

   There may eventually be enough gold to go around...once it reaches the 8 to 9K usd area!   Until then, accumulate.

  Buy physical gold and silver.

 

Sat, 07/14/2012 - 11:21 | 2615658 Crimedog
Crimedog's picture

So, as ZH breathlessly points out that CBs have been buying gold hand over fist for the past few years, the total amount of gold has only gone up by 1290 tonnes??  That may be a lot, but relatively, that does not seem like much at all.

 

Then, the author says that CBs are doing this because:  "The entire world may indeed be beginning to understand that it's operating on a fiat currency system backed by nothing."

 

Really?  The world is just starting to realize this?  BS - the world has always known this, and will do whatever is necessary to maintain the fiat money system.

 

Sat, 07/14/2012 - 11:50 | 2615708 disabledvet
disabledvet's picture

"backed by nothing" is a plain a simple falsehood...though it's the kind of falsehood i like of course so i say nothing while all you people keep endlessly claiming that. It may be backed by a DEPRECIATING ASSET however. That would be called DEFLATION...something we haven't had in the USA for DECADES...but use to ALWAYS have. Hence "dee Americans are so pathetic...they have no Army" was one of the biggest crocks of shit in world history. We had a HISTORY of creating an ARMY OF UNEMPLOYED PEOPLE...and this time around has been no exception. Of course gold is a good buy...but in the USA there has always existed...and truly exists today..the problem of a SCALED ECONOMY. If you want to know "just how prices can fall" in these so called "United States" the easiest answer is "you don't want to know." That's why the most important indicator for me is the RATIO of DEBT MONEY TO EQUITY and not "the gold price" as the determinant for "where to find value in the marketplace." In my "unicorn land" view you want 75 percent debt money to 25 percent equity as it "keeps the aggressive speculations where you want them: in the equity space." Instead we have about...and i'm just guessing but ask anyone ANYWHERE and they'll tell you "he's a damn good guesser"...we're about 1000 to 1 debt money to equity money. that says to me not only gold but equity offers extraordinary value...whereas debt...is shit. the problem of course is that debt is "government money"...and who can't wait to get their hands on "all those levers of power and start pulling"?http://www.youtube.com/watch?feature=player_detailpage&v=-BjU-e01zQ4

why do movies end by telling us "The End" anyways? I mean "it's not like we don't know"...the movie literally "ends." And what if it was a real good movie? Wouldn't you want it to never...you know..."end"? Kinda creepy if you think about it...

Sat, 07/14/2012 - 19:05 | 2616490 Babushka
Babushka's picture

In times of analog films very common things were a tear, derailment or burn of frames, so folks would wait, wistle, get they hands loose and hassle the progector operator. If you see THE END you better pack up and f@ck off.

Sat, 07/14/2012 - 19:32 | 2616509 bigkahuna
bigkahuna's picture

The only thing it's backed by are a bunch of sociopaths who will export an ass whoopin to you if you don't take it. The irony is that the people who make up this force are paid in it and if it goes to the dirt, they go home.

So it is backed by something, though not what most sheeple think.

Sat, 07/14/2012 - 12:10 | 2615747 tmosley
tmosley's picture

Up to and including losing their power?  I think not.

Gold is used when cooperation breaks down between nations.  That is probably not too far off.

Sat, 07/14/2012 - 12:18 | 2615765 JustObserving
JustObserving's picture

1290 tonnes is peanuts. Indian consumers imported about a 1000 tonnes in 2011 and now hold 18000 tonnes of gold.

Sat, 07/14/2012 - 13:57 | 2616032 DosZap
DosZap's picture

1290 tonnes is peanuts. Indian consumers imported about a 1000 tonnes in 2011 and now hold 18000 tonnes of gold

 

that figure has been updated to 22,000 tons.

Indias population has more gold than ALL the soverign nations combined (if the stats are correct the keepers put out).

personally, I do not think we have 8100 tons of gold, I think most has been stolen.

Otherwise there would be little reason not to allow it to be audited.

Someone is hiding something, it's obvious.

Sat, 07/14/2012 - 11:27 | 2615672 Caviar Emptor
Caviar Emptor's picture

I thought the top in gold was 1980, or was it 1971. Oh wait, 1933. That's it. Well, actually 1921. Don't forget 1650...now that was some top! 

Sat, 07/14/2012 - 11:28 | 2615676 Bagbalm
Bagbalm's picture

This is possibly the stupidest article I have ever seen here. Is gold plunging back to 1930s levels in response to any possible sceanario? Will the flood of toilet paper money suddenly buy more oil and copper, corn and steel too?

Who is responsible for quality control here that such crap can get space?

Sat, 07/14/2012 - 11:39 | 2615704 Crimedog
Crimedog's picture

This is what happens when you have to trot out daily articles propping up gold and silver.  Eventually, the quality of said articles diminishes as you are more or less meeting a quota rather than providing new, meaningful information.  Look, I understand the argument for gold and am not against some gold buying (Note: I am only concerned with the price of gold, hence GLD is just fine for me as the vehicle to trade the price).  But, I think it would serve ZH to be a little more selective in their articles pertaining to gold and silver.

Sat, 07/14/2012 - 12:20 | 2615769 shuckster
shuckster's picture

Well, if you  consider where most peoples' money is tied up, it isn't gold. That being said, gold at $1600 is expensive no matter how you look at it. Does that mean the dollar is worth less or that gold is overpriced? Probably the first - however, my money is on the second because a market actually exists for dollars. Mostly, though, I just don't like crowed markets. You can buy gold and you'll probably get more for it in the future, in dollar terms, but right now, dollars are valuable and scarce (for the layman anyways). So long as politicans are still talking about the deficit as if it's a real consideration, I am assuming that they still plan to default on it - that means that dollar value will continue to rise - until the public relents and begs for more free money ala Greece. And yes, ZH does plug gold relentlessy. TD must have been compromised somewhere along the line...

Sat, 07/14/2012 - 13:24 | 2615958 Citxmech
Citxmech's picture

$1,600.00/oz. is only expensive if you don't hold it.

Sat, 07/14/2012 - 13:51 | 2616022 HoofHearted
HoofHearted's picture

So glad that AAPl isn't a crowded market. Nor is SPX. Because not many people hold stocks while a ton of people hold gold. Damn. Missed it by THAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAT much....

Sat, 07/14/2012 - 12:35 | 2615817 madridisburning
madridisburning's picture

AGREED! Amen.

Once something becomes an almost religious axe to grind, it starts to lose its effectiveness. The record needs to be turned over.

Blind cheerleading does not win over the portion of the population that does not wear tin foil hats.

Sat, 07/14/2012 - 16:32 | 2616316 LowProfile
LowProfile's picture

"Stocks for the long term"

"Buy and hold"

"Gold has no yield"

"Productive assets are best"

"You can't eat gold"

Once something becomes an almost religious axe to grind, it starts to lose its effectiveness.

And THAT kids, is how you do irony.

Sat, 07/14/2012 - 17:26 | 2616387 lotsoffun
lotsoffun's picture

i'm long freddie mac, and fannie mae, and bank of america, and citigroup.  and general motors and general electric and generally anything.  homebuilders also.  even microsoft, cisco and intel.  great stuff!!  i'm 'dollar-cost-averaging' every pay check.    i also like jpm and facebook.  facebook rules!  and i think i'm about ready to start buying some apple, now that i'm confident nobody else could possibly ever figure out how to compete with an i-phone.  and rimm too.  i'm thinking long term.  i don't look at the price.  any dip is an opportunity for this dipshit to buy the dip.

i'm hoping that the FED goes public also.  now - that's where i'd really like to buy into.  the fed.  they know how to make money.

 

 

Sun, 07/15/2012 - 01:47 | 2616912 jonjon831983
jonjon831983's picture

Dude... you totally forgot to add some Groupon into your portfolio!  Getting FB doesn't diversify you enough on the internets!!!

Sun, 07/15/2012 - 11:27 | 2617264 prole
prole's picture

Can you imagine anyone who 'bought and held" GM over the years?

You can cost average, you can buy the dips, after all whatever you did besides selling you end up at -ZERO-

Sun, 07/15/2012 - 12:17 | 2617433 akak
akak's picture

RobotTrader, is that you?

Sat, 07/14/2012 - 11:29 | 2615682 narnia
narnia's picture

Do you expect these countries & central banks to park excess reserves in $, EUR, JPY or bid up agricultural assets?

I believe central banks directly or indirectly are buying up all the physical they do not currently store or can easily cease & shorting rights to it. This is stealth confiscation.

Gold & silver go from being an enemy of the state to its greatest asset. That's why I reject gold buggary.

Sat, 07/14/2012 - 11:31 | 2615685 americanspirit
americanspirit's picture

"The entire world may indeed be beginning to understand that it's operating on a fiat currency system backed by nothing."

Sorry but fiat money isn't backed by 'nothing' - it's backed by the full faith and credit of the United States. What more solid backing could anyone want? I mean, the world still has faith in the creditworthiness of the US, right? They'ld better, or else they get a little hellfire-style reminder who they're messing with.  

You send us your natural resources and manufactured goods and we send you a pretty little piece of paper full of all kinds of mysterious symbols of our supernatural powers - that eye on top of the pyramid, for example. Too cool! How could anyone doubt that America is as good as our word? In God we trust - says so right here.

So let's not hear any more carping about fiat money, OK? It's good as gold. Better even, because you can't eat gold and in a pinch those hundred dollar bills are not only edible, they have a certain tanginess that makes your tongue tingle. How do they do that?

Sat, 07/14/2012 - 12:55 | 2615879 FEDbuster
FEDbuster's picture

Plus, you can wipe your ass with FRNs!   I have been saying this for awhile now, the US FRN is backed by the US military.  The big boys can challenge the dollar in a game of chicken, but smaller countries tow the line.

Sat, 07/14/2012 - 12:56 | 2615882 grekko
grekko's picture

I have to agree with certain points you made.  1. They are edible, but taste like crap.  2. When they are really old, they get softer than toilet paper (a great use?)

Sat, 07/14/2012 - 13:58 | 2616034 MeelionDollerBogus
MeelionDollerBogus's picture

Yuck. Gold is not poisonous even though it lacks nutritious value. Cotton, cellulose and ink are not nutritous and the ink IS toxic.

Sat, 07/14/2012 - 23:05 | 2616737 mkkby
mkkby's picture

True.  Backed by a big printing press.  Which is why it's a good medium of exchange, but a very bad store of value.

The world isn't just beginning to notice.  They've always know, but didn't have a better choice.  Someday that will change, and then it's all over for the dollar and the US ability to buy real goods and services with printed paper.

Sun, 07/15/2012 - 10:50 | 2617210 yogibear
yogibear's picture

Correction...

but fiat money isn't backed by 'nothing' - it's backed by the nuclear arsenal of the United States.

Sat, 07/14/2012 - 11:32 | 2615686 Towhog
Towhog's picture

Amen Flakemeister

Sat, 07/14/2012 - 19:04 | 2616489 Flakmeister
Flakmeister's picture

Appreciate the support(?) but it's flak....

Sat, 07/14/2012 - 11:32 | 2615688 Vint Slugs
Vint Slugs's picture

This is a somewhat informative piece but what I really would lilke to see is an article that deals with the sell side.  So what if the CBs are buying, more importantly is the question, "Who is selling"? 

Sat, 07/14/2012 - 16:35 | 2616321 LowProfile
LowProfile's picture

Mines and scrap.

Cash4Gold, bitchez!

Sat, 07/14/2012 - 11:35 | 2615697 Kurpak
Kurpak's picture

 

Consider that since 1980…

  • The global population has grown 55%      

 

Fuck Me!  No wonder things are so fucking shitty these days.

 

Sat, 07/14/2012 - 11:45 | 2615707 Tom Green Swedish
Tom Green Swedish's picture

What else can central banks buy besides gold since its "tradition"?  I know they can buy toxic assets, but most of their balance sheet is a mystery.  The financial industry is creative yet, their creativity is only to mask their theft.  They are like criminals, if only they decided to use their intelligence on something productive other than to front run, steal and play some silly casino game with our money, while attempting to deceive American's they are doing god's work.

 

What cost $1 in 2010 would cost $0.05 in 1913.

 

On the Fed's 100 Year Annivesary, they are going to magically turn a dollar into a penny.

Sat, 07/14/2012 - 11:51 | 2615720 RobotTrader
RobotTrader's picture

If gold breaks below that 9 month support line, then all those guys who have been "buying the dip" around the low $1,580's are going to dump their positions.

 

They will probably use the money to start buying Dow stocks or muni-bonds instead, since those are still in a confirmed uptrend and represent the highest quality asset next to U.S. Treasuries which are way too extended right now.

Sat, 07/14/2012 - 12:01 | 2615732 disabledvet
disabledvet's picture

I highly doubt the Central Banks will "dump their positions" relative to gold. So now that i've been learning about "technicals" a "three bagger" is defined as a "thirty percent retracement from the all time high" and is considered a major technical barrier "where all out major resistance and support exist." since the euro peaked at 1.60 and i divide that by .3...which, let's see here..that equals...hmmm, is that .48...which would be...hmmmm, 1.12...that says to me "they'll head to the dump position" once we start heading towards that number.http://www.youtube.com/watch?v=t2AzdkxO0MY

Sat, 07/14/2012 - 12:22 | 2615781 bob_dabolina
bob_dabolina's picture

You could have easily said that the Japanese 10Y was WAY over extended trading at around 3% in 1996.

14 years later the Japanese 10Y is trading sub .8%

Sat, 07/14/2012 - 12:25 | 2615793 ffart
ffart's picture

Come on... Muni bonds? That's way too obviously trolling.

Sat, 07/14/2012 - 12:53 | 2615877 grekko
grekko's picture

I agree, trolling!  (but the profile pic is really hot!)

Mon, 07/16/2012 - 02:06 | 2619450 Gavrikon
Gavrikon's picture

I dunno.  Fake tits = Fake facts.

Sat, 07/14/2012 - 12:42 | 2615836 Implicit simplicit
Implicit simplicit's picture

It is more probable that it breaks resistence, and starts an uptrend according to cycle theory, the timing- approaching August, the likelihood of continued easing through the purchase of MBS. and the dollar peaking. The miners, and commodities are due for a run.

Sat, 07/14/2012 - 13:43 | 2616006 MeelionDollerBogus
MeelionDollerBogus's picture

There is no 9 month support line.

Linear support lines DO NOT EXIST in any market.

This is the real support for gold 2012 apr 17 gold ROC trends | 52week ROC gold to 2400/oz

and this is the short-term outlook for gold, red=support on a per-day basis, to end of 2012 - 2012 06 18 277week roc 02 goldpricemodel 2011 Jan to 2012 Dec 28

Sat, 07/14/2012 - 15:42 | 2616248 MillionDollarBoner_
MillionDollarBoner_'s picture

Some will happily refer the the sixty-two-and-a-half week line if it "proves" their thesis ;o)

Sat, 07/14/2012 - 21:27 | 2616618 steve from virginia
steve from virginia's picture

This correction is similar to that in 2008.

The correction lasted about a year. Price declined about 30%. The bottom did not fall out.

The current correction has not been a year and even a longer period would not break the long-term trend. A 30% decline from last Fall's high would be appx $1300 - 1350./oz.

This is not happening as there is buying @ $1,550. There is plenty of credit in finance not much in the way of collateral.

What will the price be in six months? Who knows, but the tenor of the times suggests dissatisfaction with the establishment. Its 'money' cannot succeed while it fails by itself. What remains is 'non-government' monies.

Decline has to do with margin calls and sale of assets by European banks. This is a conventional deflationary outcome, not a indication of a rout.

BTW: debt money is backed by nothing but (excessive) debts, the debt is also ... debt. There is no escape from it all forms of money are forms of debt. Nothing exists as money to organically pay for- or service this debt.

Don't look at gold! Nobody will use gold to (attempt) to repay stupid debts. (One reason for the low price.)

Right now non-debt assets are being liquidated (by their use) leaving little available to reduce the debts. Debts = irresponsible establishment. That includes incompetent military ...

something to think about.

 

 

Mon, 07/16/2012 - 19:45 | 2622247 MeelionDollerBogus
MeelionDollerBogus's picture

It actually looks even more like 2006 than 2008:

2011 dec 27 gold 01 | goldpricemodel | 277 week ROC visual confirmation

2012 05 03 gold silver 2012 performance comparison | goldpricemodel http://chart.ly/w42yco7

hence the prediction model from rolling forward the trend-channel detected using the 277-week rate-of-change:

2012 06 18 277week roc 02 goldpricemodel 2011 Jan to 2012 Dec 28

Mon, 07/16/2012 - 19:43 | 2622241 MeelionDollerBogus
MeelionDollerBogus's picture

hehheh indeed, and such oddities as the 200 DMA and "death crosses" and "triple-tops". If trading was that easy the algo's would only use that, not series of data in complex fractal models.

Sat, 07/14/2012 - 12:15 | 2615743 Joebloinvestor
Joebloinvestor's picture

As soon as gold gets re-classified as a "zero risk" asset, the banks are gonna start lending against holdings.

The spanner in the works will be the removal of self certification, but that will be after the first scandal.

Mon, 07/16/2012 - 07:45 | 2619639 shuckster
shuckster's picture

It's a gold CRUNCH - they're corning the market

Sat, 07/14/2012 - 12:15 | 2615761 FranSix
FranSix's picture

No clear demarcation between the investment phase and the mania phase. The mania phase lies ahead, but the macro calls have been wildly out of whack and anything less than actionable.

What's more, the inflation paradigm has taken hold, and whatever fatuous argument besides both for and against.

Sat, 07/14/2012 - 12:18 | 2615770 SqueekyFromm
SqueekyFromm's picture

Actually, the reason for CB's buying gold has to do with a Secret Report called "Gold Addiction, And How To Profit From It" which I have a copy of due to my connections inside the Jungian community. Here is an exceprt:

Gold Addicts place an undue amount of faith in the powers of Gold to the point it would not be incorrect to say that they attribute "magical powers" to it. A recently commissioned covert study consisted of placing clearly facetious stories on various financial websites to the effect that Gold prices could reach $5,000 or more per ounce in the near term. While any sane person would expect pushback, the Gold Addicts glommed onto the obviously planted story to justify their continued purchases.  

In addition, Gold Addiction has crossed the man-mineral "love" barrier, and there are reports of Gold Addicts fondling their Gold, and often "sleeping with it."

The wise investor will attempt to profit from this affliction before rehab centers and Gold Addiction self-help groups spring up. Remember, the Early Bird catches the Gold Bug."

This is scary.  

Squeeky Fromm, Girl Reporter

Sat, 07/14/2012 - 18:05 | 2616433 NidStyles
NidStyles's picture

Social Engineers, otherwise known as quacks, like to fabricate all sorts of intelligent sounding bullshit reasoning for their actions. In reality though, they are just bullshitting themselves.

Sat, 07/14/2012 - 18:44 | 2616473 AU5K
AU5K's picture

Gold will go to $5,000 per ounce and higher.  My gold speaks to me, sometimes.

Sat, 07/14/2012 - 22:53 | 2616717 Praetor
Praetor's picture

Once they realised how obnoxious* you are they decided to sleep with their gold instead of you.

 

* I was going to say ugly, but then ugly people have character and charm which you do not.

Sat, 07/14/2012 - 12:22 | 2615779 RiotActing
RiotActing's picture

A top!? are you high!? Why has the quality of articles on ZH suddenly reached crap levels? What is this crap?

Sat, 07/14/2012 - 12:30 | 2615806 Implicit simplicit
Implicit simplicit's picture

The article agrees with you.... now stay after school, and read the article this time. There will be an unannounced quiz.

Sat, 07/14/2012 - 13:48 | 2616019 Tom Green Swedish
Tom Green Swedish's picture

Who really knows.  If China / Asia stop buying it will be a top.  Watch inflation in Asia / the rest of the world.  This isn't an American problem this time its a Global problem.  There was a relationship to inflation and gold in America in the 80's but thats no longer true. The rest of the world will dictate the gold price.  So far, Gold has went parabolic since 2000 for some unknown reason.  I believe the Chinese thinks it has some value.

Sat, 07/14/2012 - 18:08 | 2616437 NidStyles
NidStyles's picture

Inflation always drives the price of tangible goods, especially the PM's and commodities. There is nothing different now than from what was going on in the 80's. Any suggestion to otherwise is bullshit. 

Sun, 07/15/2012 - 12:23 | 2617460 akak
akak's picture

We will only see a top in gold when we finally see a bottom in the dollar.

Who here is willing to call THAT one?

Sat, 07/14/2012 - 12:23 | 2615789 Snakeeyes
Snakeeyes's picture

Seriously, look M2 Money Velocity, lowest since WWII. Do you think the Central Banks have a clue about ANYTHING?

http://confoundedinterest.wordpress.com/2012/07/13/lockhart-thinks-more-qe-will-be-needed-as-more-people-go-on-the-dole-disability-and-food-stamps-than-become-employed/

Sat, 07/14/2012 - 12:26 | 2615790 quasimodo
quasimodo's picture

Not far from here they are chopping it up for silage, since there won't be any corn to combine this fall. They figure at least get something of value for it. Even tho the forcast is not that bad compared for last year as far as yields go, I promise they will use this as a reason to raise the fuck out of foodstuffs, etc. Ethanol can KMA, and there is a backlash slowly awakening to this fact-right here in corn and beef central.

oops-my bad, this post ended up where it was not meant to-sorry

 

Sat, 07/14/2012 - 12:35 | 2615816 RobotTrader
RobotTrader's picture

Comparing XAU to XRT or IYR says it all.

 

Investors, whether they be central banks or not, are accumulating U.S. retail stocks and REITS and dumping gold-related investments.

This trend has been in place for more than a year now.

And don't even get me started on the plethora of fixed income and muni-bond ETF's which appear to be soaring into Outer Space:

The moves are simply breathtaking.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=72197115

In a battle of "Paper" vs. "Physical", the paper assets are winning by a long shot.

Sat, 07/14/2012 - 12:49 | 2615859 Implicit simplicit
Implicit simplicit's picture

Its become mathematically impossible for CBs to not print; therfore your wrong. 

Sat, 07/14/2012 - 14:13 | 2616070 New_Meat
New_Meat's picture

"your wrong" is that like "my bad?"

Sat, 07/14/2012 - 15:36 | 2616230 Implicit simplicit
Implicit simplicit's picture

Yes, it is like your bad

Sat, 07/14/2012 - 19:09 | 2616494 Flakmeister
Flakmeister's picture

Robo is bang on....but the screw will turn, and it will be violent, me thinks...

Sat, 07/14/2012 - 22:38 | 2616694 francis_sawyer
francis_sawyer's picture

Robo is like the Nostradamus of 'yesterday'...

Sun, 07/15/2012 - 13:29 | 2617694 akak
akak's picture

More like the Nostradumbass of yesterday ...

Sat, 07/14/2012 - 12:51 | 2615868 grekko
grekko's picture

Sure, paper rules today, but the cat is almost out of the bag. 

http://gata.org/node/11574

http://gata.org/node/11570

Physical will rule the day.

Sat, 07/14/2012 - 23:21 | 2616751 mkkby
mkkby's picture

Yes, Robo - fools and imbeciles are trading paper promises back and forth in a rigged casino.  Which piece of paper is the best "investment" now, or tomorrow?  Thanks for letting us know... but who cares?

When it all vaporizes down the the miniscule amount of collateral backing, it will be the greatest show in centuries.  Better have something real if that happens.

Sat, 07/14/2012 - 12:48 | 2615856 grekko
grekko's picture

I'm all in for the three precious metals...Gold, Silver, and Lead.

Sat, 07/14/2012 - 12:55 | 2615880 New American Re...
New American Revolution's picture

The fiat money system is backed by oil, at least for the dollar.   All currencies must be backed ultimately by something, by either defacto or fact.  It is inescapable.  The obvious problem is that the value of both float, which is like two ships trying to come along side one another and trade while on the high seas.   The problem however is that the seas are growing and the mother of all storms approaches.

Sat, 07/14/2012 - 13:03 | 2615895 prodigious_idea
prodigious_idea's picture

When I look at the three ETF's - XAU, XRT & IYR - I see an immediate buying opportunity, and two not-just-yet shorting opportunities.  Funny how perspective works.

Sat, 07/14/2012 - 13:06 | 2615910 engineertheeconomy
engineertheeconomy's picture

Since we supposedly have to pay off an imaginary debt that the government spent buying commodities, does that mean we are in debt and have to pay the government back for buying Gold too?

I should keep my mouth shut, don't want to give the cocksuckers any ideas...

Sat, 07/14/2012 - 13:10 | 2615925 spanish inquisition
spanish inquisition's picture

Consider that since 1980…

  • The global population has grown 55%
  • Worldwide gold supply has grown 120%

Isn't one of the big arguments against a gold standard that it doesn't grow as fast as populations?

Sat, 07/14/2012 - 13:37 | 2615972 Citxmech
Citxmech's picture

The rate of change for both are/will not be linier.  Population increases the demand for money, but the money is more closely tied to the commodities that will be purchased with it.  Hence the statements above that gold is more tied to things like oil, etc. 

A gold-backed money system doesn't need to be "fixed" to be superior to fiat, it only needs to resist the ability of the powerful to debase it at will.

Sat, 07/14/2012 - 14:04 | 2616052 DosZap
DosZap's picture

Consider that since 1980…

  • The global population has grown 55%
  • Worldwide gold supply has grown 120%

So your saying that the 65,000 metric tons # espoused by nearly everyone in the know, has now DOUBLED + 20%?.

Sat, 07/14/2012 - 13:12 | 2615927 bankruptcylawyer
bankruptcylawyer's picture

I don't believe this article because I don't believe central banks release honest pictures of their own asset holdings. 

why would i believe what they say about their gold holdings when i don't believe what they say about their holdings of paper?

 

it is well known that a russian spy girl was caught a few years back trying to smuggle some optics out of the country and in the news she was supposedly reported on gather financial information about gold in the u.s. ---who knows---point is. gold is important, and like many important things, the truth is never readily available. 

Sat, 07/14/2012 - 13:13 | 2615928 paladin
paladin's picture

Does Central-Bank Gold-Buying Signal The Top Is Near?

should say:

Does Central-Bank Gold-Buying Signal The End of the Game

there fixed it for you all

Sat, 07/14/2012 - 13:44 | 2615993 DutchR
DutchR's picture

Damn the comments are moving fast @ZH

 

On a survival scale,

Air = Free

Water = Gold

Food = Silver

Barter = Everything

 

paper = paper (it will keep you warm, yes and buy's stuff, few countrys where paper = nothing)

 

sorry for the edit  /ethanol

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