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The Imminent $2.5 Trillion Debt Ceiling Hike Will Unleash A Gold Price Surge To $1,950 And Higher

Tyler Durden's picture


Two weeks ago we presented a chart that shows the uncanny correlation between the debt ceiling and the price of gold. Now that we know the final amount of the next debt ceiling hike, somewhere in the $2.5 trillion ballpark, it allows us to extrapolate where gold will end up as a result of the debt ceiling hike which will likely be voted into law at 7pm PDT. A simple correlation rule of thumb allows us to predict that gold will be at $1,950 by the end of the year if it simply retains it close correlation to the debt ceiling. Should Bernanke announce that he will additionally need to monetize some or all of this incremental debt amount, we anticipate that gold will be well over $2,000 by the end of the year, courtesy of yet another round of accelerated dollar debasement, which also means that real gains in US stocks will be negated courtesy of the devaluation of the currency in which they are priced. The same, however, does not apply for gold, which with every passing day is priced in nothing but itself.

The Bloomberg chart of the day first presented on July 20.

And our revised version including the projected gold price.


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Mon, 08/01/2011 - 17:04 | 1514391 zilverreiger
zilverreiger's picture

by mid 2012?

Mon, 08/01/2011 - 17:04 | 1514393 Rahm
Rahm's picture

Gold, bitchez!

Mon, 08/01/2011 - 17:24 | 1514466 Fish Gone Bad
Fish Gone Bad's picture

I am sooooooo glad I figured out how to strip copper metal away from gold. 

Mon, 08/01/2011 - 17:28 | 1514474 bankrupt JPM bu...
bankrupt JPM buy silver's picture

THIS IS ALL WRONG! Ned Schmidt just said to sell your gold and silver for dunkin donuts stock.  This is not a joke.

Mon, 08/01/2011 - 19:28 | 1514813 akak
akak's picture

Ned Schmidt is an arrogant and ignorant old fool who is only one small step away from Jon Nadler in his willful ignorance of monetary history and in his venomous dismissal if not hatred of those who wisely advocate the buying and holding of gold and silver during times of economic and monetary upheaval and insanity, such as the present.

I have had two separate email exchanges with this arrogant and blinkered bastard (one to politely correct an error in one of his grossly confusing and cryptically labeled graphs, upon which he almost psychotically outright attacked me), and in his flippant and irrational replies he came across so much like Jon Nadler (with whom I have had several more, and much more lengthy, exchanges) that I have to wonder if the two men are not in fact the same disingenuous anti-gold propagandist.

Mon, 08/01/2011 - 19:37 | 1514878 High Plains Drifter
High Plains Drifter's picture

would you mind showing us some examples?   or is totally private?  if so i can understand.  today , i just need a good laugh........

Mon, 08/01/2011 - 19:41 | 1514893 akak
akak's picture

Sadly, I cannot provide such examples, as I did not save my email exchanges with Ned Schmidt.

I did, however, save some of my email exchanges with Jon Nadler (even having posted them in two online forums for all to read, LOL), and they are positively surreal in their disingenuous evasions, malicious half-truths and lies, and flat-our irrationality and denials of reality.

Mon, 08/01/2011 - 19:44 | 1514905 MrJingles
MrJingles's picture

False prophets Bitchez!!

Mon, 08/01/2011 - 19:49 | 1514930 High Plains Drifter
High Plains Drifter's picture

yeh nadler is a piece of work. i remember not long ago,  he and mish shedlock got to be real good buddies as they attempted to gang up on the gold bugs etc...........yep i remember it like it was yesterday. 



interesting photo collection. modern day detroit. what is coming to this land from sea to shining sea. for all to see. just remember this. you are going to have to be real tough and it is not going to be easy to stay above ground.

Mon, 08/01/2011 - 20:04 | 1515004 akak
akak's picture

I used to frequently drive by many of those ruins of Detroit, and I can confidently state that NOBODY who has not seen them, and the city of Detroit in the entirety of its decay, can possibly comprehend just how profoundly a once-great city that was a vibrant manufacturing hub just half a century ago is now a rusting, collapsing, hopeless, utterly depressing empty husk of what it once was.  The only fundamental difference between the wreck of the Titanic and the city of Detroit is 13,000 feet of elevation and several thousand miles.

Mon, 08/01/2011 - 22:33 | 1515455 living on the edge
living on the edge's picture

I traveled to Detroit on business over the years and at one time careers were made or lost in Detroit. I came from the steel industry and I am both saddened and appalled at what remains of this once great industrial city.

Tue, 08/02/2011 - 02:36 | 1515900 Freddie
Freddie's picture

The only good thing about Detroit is more and more is being bulldozed or old houses are being overtaken by trees.  Let nature take it back.  Today - I felt a bit like the passengers on The Titanic must of felt w/o the terror that is probably coming.  Just total hopelessness.  Less than three years to totally destroy what was sort of a civilization.   

Mon, 08/01/2011 - 22:17 | 1515426 Bay of Pigs
Bay of Pigs's picture

HPD, I gave up trying to educate Shedlock on gold and silver. He's irrelevant on those topics. Schmidt and I had a run in years ago as well. And Nadler, well, need to talk about that clown....

Mon, 08/01/2011 - 23:48 | 1515638 Real Estate Geek
Real Estate Geek's picture

That Detroit photo gallery included two pics of abandoned, garbage-strewn libraries.  Each still had hundreds of books--untouched.


"Them books be like Kryptonite."

Mon, 08/01/2011 - 20:12 | 1515033 Savyindallas
Savyindallas's picture

Let me get this straight  -to summarize, are you saying that Ned Scmidt is an ignorant asshole? 

Mon, 08/01/2011 - 20:36 | 1515089 akak
akak's picture


And besides that, he STILL can't seem to figure out when to use "a", "an" and "the" in his missives, displaying a positively Slavic disregard (despite his Germanic surname) for the definite and indefinite articles that can sometimes leave the reader scratching his head in confusion.

(Note: the Slavic languages do not have any equivalents to the English words "a", "an" or "the", leading native-born Slavic speakers to frequently leave them out or misuse them when they speak and write English or the Romance languages.  How they manage to get by in their own languages without the use of definite and indefinite articles is quite beyond me.)

Tue, 08/02/2011 - 05:00 | 1516011 e_goldstein
e_goldstein's picture

gold near 2K? Who would have thunk it? Certainly not us :/

Mon, 08/01/2011 - 17:34 | 1514495 Rodent Freikorps
Rodent Freikorps's picture

Copper Melting Point: 1083.0 °C (1356.15 K, 1981.4 °F)

Gold Melting Point: 1064.43 °C (1337.5801 K, 1947.9741 °F)

Like that's hard.


Mon, 08/01/2011 - 17:24 | 1514467 DoChenRollingBearing
DoChenRollingBearing's picture

"Everything else  will be left behind when the Gold Mothership takes off."

-- Zero Hedge member Gordon_Gekko.


How about: 

$55,000 / oz

Mon, 08/01/2011 - 18:17 | 1514607 GetZeeGold
GetZeeGold's picture


Front running the ceiling hike bitchez.


Mon, 08/01/2011 - 18:49 | 1514694 Chappaquiddick
Chappaquiddick's picture

How about $350,000/toz??  40 years and 10^4 devaluation.

Mon, 08/01/2011 - 19:38 | 1514881 High Plains Drifter
High Plains Drifter's picture

when he supposedly drove off the bridge, how much water was under that bridge?

Tue, 08/02/2011 - 05:02 | 1516012 e_goldstein
e_goldstein's picture

Why, I think then, I could totally afford those serfs that I always wanted. Certainly beats toiling in the fields.

Mon, 08/01/2011 - 17:07 | 1514401 mayhem_korner
mayhem_korner's picture

When is $/oz price going to exceed the number of the year?

Dec. 2011?  Feb 2012? 

Mon, 08/01/2011 - 17:46 | 1514524 Aquiloaster
Aquiloaster's picture

When is $/oz going to be a useless metric? Perhaps barrels of oil/oz or bushels of wheat/oz gold will be a more useful measure in the coming few years.

Mon, 08/01/2011 - 18:35 | 1514657 nmewn
nmewn's picture


And this..."courtesy of yet another round of accelerated dollar debasement, which also means that real gains in US stocks will be negated courtesy of the devaluation of the currency in which they are priced. The same, however, does not apply for gold, which with every passing day is priced in nothing but itself."

Something the Leo's & Robos of the world will never caged hamsters running on their wheel ;-)

Mon, 08/01/2011 - 19:32 | 1514862 Bobbyrib
Bobbyrib's picture

I hope the dollar keeps value for a long time. When it does collapse, it's confiscation time.

Mon, 08/01/2011 - 17:10 | 1514412 Pladizow
Pladizow's picture

?Top 20 quotes on gold going over $1600



"Ron Paul last week asked Chairman Bernanke during the Humphrey Hawkins type hearings if he thought gold was money and he (Bernanke) said, 'no.' My answer would have been, it's better than money. Yes, $1,600 gold is insulting central bankers in the following fashion, it's saying gold is going up because what you are doing to the fiat currencies of the world is not tolerable to smart investors."


      Rick Santelli, CNBC analyst


    "They'll print money until we run out of trees."

    Jimmy Rogers


"[I]n 1980 the only players were the Americans, they were essentially the only players in the gold market, or the dominant players. Today the dominant players are China and India, 58% of all the gold sold this year will be sold in these two countries. So they are by far the dominant players and as I've said the Chinese love gambling. When we reach that phase (the mania) I told you and I will tell anyone who wants to listen, watch out because it will truly make your head spin."

Pierre Lassonde, famed mining entrepreneur


"I pay attention to the price of gold. But I think it reflects a lot of things. It reflects global uncertainties. I think the reason people hold gold is as protection against of what we call tail risks, really, really bad outcomes. And to the extent that the last few years have made people more worried about the potential of a major crisis then they have gold as a protection."

Ben Bernanke, Fed chairman


"China's frenzy for gold prompted the central bank to step up sales this year of gold and silver Panda Coins.The People's Bank of China plans to sell 500,000 1-ounce gold coins, or 66 percent more than its earlier target of 300,000. It also tripled sales targets for half-ounce, quarter-ounce, 1/10-ounce, and 1/20-ounce gold coins to 600,000 each from 200,000 earlier."

Reuters report, 7/21/11


"Record high prices won't scare away [Chinese] investors, Investors are likely to chase the rally and continue to buy gold because paper money feels increasingly worthless and they are worried about inflation."

Shi Heqing, Antaike - China state-backed metals consultancy


"I think it was the foundation for people to start thinking that maybe gold's not headed to $1,650 an ounce or $1,700 an ounce, maybe it is headed toward $1,800 an ounce or even $2,000 an ounce."

Michael Jansen, J.P. Morgan


"A close above $1,600 on gold, similar to silver closing over $40, would create a huge bunch of short-covering. The commercials have been adding short positions in gold, but should we get a close above $1,600, I think you will find the smaller of those shorts are going to start covering their shorts because it's going to be too much pain. This could result in a $50 move overnight."

Anonymous London gold trader quoted at King's World News


"If you held gold or silver, it was a pretty good week. If you own your own house, it pretty much amounts to where you live. If you live in Vegas or Phoenix, you bought in the wrong area. If you bought in San Diego or San Francisco you've done right. If you saved your dollars for "a rainy day," you probably wonder what you can buy with your dollars. If you saved your gold for your old age, you've probably already sold your gold for dollars, and what the hell, 'let it rain.'"

Richard Russell, the dean of investment newsletter writers


"Warren Buffett's problem is that he only understands balance sheets and earnings. The value of a Picasso or a gem diamond or a bar of gold is outside Buffett's understanding. Which is sad, because Buffett's lack of understanding has kept many an American on the sidelines while gold surged higher in terms of Buffett's beloved paper currencies."

Richard Russell, the dean of investment newsletter writers


"Central banks have the will to increase gold holdings, but it is not a practical option and rather difficult. Gold supply simply doesn't grow as fast as China's foreign reserves. Only the increase in U.S. debt can match that. . .We can buy whatever with our money without causing price distortion, but a $2-trillion, $3-trillion [gold purchase] elephant will certainly cause distortion."

Dong Tao, Credit Suisse


"One of the big US banks texted me today to say that if QE3 actually happens, . . We could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money."

Peter Hambro, chairman, Petropavolsk


"We expect $1900 gold by October."

John Taylor, FX Concepts


"[As an option] the US Treasury could eliminate the Fed's entire holding of Treasury bonds at a stroke, gaining an extra two years. This would be a simple accounting transaction. Ben Bernanke might feel uncomfortable, and gold might blast to $3,000, but the Bernanke Fed has proved itself supple."

Ambrose Evans-Pritchard, The Telegraph


"The 'fiat' dollar is one of the world's astounding monetary creations. That a currency of no intrinsic value is accepted as money the world over is an achievement that no monetary economist up until not so many decades ago could have imagined. It'll be 40 years next month that the dollar has been purely faith-based. I don't believe for a moment it's destined to go on much longer. I think the existing monetary arrangements are so precarious, so ill-founded, and so destructive of the economic activity they are supposed to support and nurture that they will be replaced by something better."

James Grant, Grant's Interest Rate Observer


"I think there's a really high chance, this is the year that you do not want to fight the gold market. This is a trend that you just have to bite the bullet and be invested and go with it, I feel very strongly about that. Various liquidity is going to be coming from all corners of the world. At no time has gold pulled back throughout any of this credit tightening process, the market is going higher. We are in my opinion going to see a $2,000 handle this year."

Ben Davies, Hinde Capital


"I just calculated if we take an average gold price of say around $350 in the 1980s and then we compare that to the average monetary base in the 1980s, and to the average U.S. government debt in the 1980s. But if I compare this to the price of gold to these government debts and monetary base, then gold hasn't gone up at all. It's gone actually against these monetary aggregates and against debt it has actually gone down. So I could make the case that probably gold is today very inexpensive."

Marc Faber, The Boom, Gloom and Doom Report


"We have liked gold for a long time and we remain very constructive. It is more than just a hedge against recurring bouts of global financial volatility. The growth rate of gold production is roughly stagnant while the growth rate of fiat currency in most parts of the world continues to accelerate. It's all about relative supply curves - the supply curve for bullion is far more inelastic than is the case for paper money. It really is that simple."

David Rosenberg


"Internationally, precious metals will become the preferred reserve assets, not just an important one. Their prices will then relate more closely to the total volumes of each international currency in the world. As you can imagine, the prices of precious metals will then have to be higher than most people even thought possible. With the gold market being such a small one in volume terms, silver will then become a monetary metal too, at considerably higher prices."

Julian Phillips,?Gold Forecaster


"July/August is traditionally a weak time for gold. Purchasing from Asia - perhaps the main gold price driver - falls off, picking up again once festival seasons start in late Summer/early Autumn. Yet gold is standing at an all-time high as August approaches. That should indeed be telling us something. The chickens are coming home to roost and gold will continue to be the major beneficiary. This writer was looking to see gold in the $1700s by year-end in Mineweb's January gold price competition. This is beginning to look as if it could be a very conservative prediction indeed!"

Lawrence Willliams, Mineweb

Mon, 08/01/2011 - 17:14 | 1514432 SovietCong
SovietCong's picture

Nice quotes, but your post is sure longer than the whole Raise the Debt Ceiling Act. Looks kind of spamish to me, dude.

Mon, 08/01/2011 - 17:15 | 1514438 fuu
fuu's picture

You couldn't just post a link?

Mon, 08/01/2011 - 21:15 | 1515253 PhysicalRealm
PhysicalRealm's picture

I agree -- and I hate it when people steal material.  Here's the link for the piece you re-published, which was easy to find via Google.


(looong time lurker; first time poster)

Mon, 08/01/2011 - 17:21 | 1514458 SwingForce
SwingForce's picture

Put a muzzle on it, or a bra maybe. Ever heard this one>> More than a mouthful is wasted? Oops, wrong quote, sorry. 

"Extreme Opinions, shared widely, constitute the single most reliable indicator of an impending change of direction for a market." 

Or how about this, "I'll put one in my ear, the other in my mouth, and I'll phone home...." Honey, hush.

Mon, 08/01/2011 - 19:30 | 1514843 So Close
So Close's picture

Define widley.  If it is widely known by your wife's girlfeinds she is having an affair is that different than if it widley known by everybody in town that she is cheating on you?  Understand the scope of your truisms before you start throwing them around.   Marc Faber travels WIDELY around the world.  He to this day asks his very well heeled audiences how many people actually own gold as part of their portfolios.  There have not yet been more than 2 or 3% that raise their hand.  Just because it is widely known among fiscal conservatives that this fiat ponzi can not run forever does not mean that the general public understands or is seeking to profit from it yet. 

Mon, 08/01/2011 - 20:41 | 1515147 SwingForce
SwingForce's picture

Widely is spelled correctly 62.5% of the time by you. Gold cannot be held wildly (sp) just becuz' there ain't enuf ot it!

How about as it refers to GOLD on this website, WIDELY is 99.9% of you sheeps who can't spell. In the words of Sean Connery, Suck it , Trabeck!

Mon, 08/01/2011 - 22:37 | 1515398 GoinFawr
GoinFawr's picture

Sos un perdedor

SF, I think there may be a widely held opinion on ZH that you have been widely accepted as an outspoken gold bear for a widely extended period of time, and if your paper promises have been where your wide mouth is that whole time the red side of your ledger must be widening at a wildly terrifying pace; IE you've been consistently WRONG. So since Costanza-ing you has been so widely wildly successful, who's really the ovine here, primate?

In the time of Chimpanzees, are you a monkey?

Tue, 08/02/2011 - 00:37 | 1515752 Yen Cross
Yen Cross's picture

  You get a gold star for having "BRASS " TOOLS!!! 


                                                                        YEN +!

Tue, 08/02/2011 - 03:55 | 1515962 FlyPaper
FlyPaper's picture

Thanks for posting the quotes~

Mon, 08/01/2011 - 17:16 | 1514444 Mike2756
Mike2756's picture

That would put the dollar index in the low 60's?

Mon, 08/01/2011 - 17:27 | 1514473 Manthong
Manthong's picture

Very possibly.. and silver solidly at $ 50.00 assumming 40:1 G/S.

But I should think even higher by then as the secret of the shiney stuff really starts to get out.

Mon, 08/01/2011 - 17:05 | 1514392 chinaguy
chinaguy's picture

CHF has been loving it...

Mon, 08/01/2011 - 17:09 | 1514409 margaris
margaris's picture


The swiss laugh at the gold price.... because lucky for them its debased in dollars, not franks. Tee-Hee!

Mon, 08/01/2011 - 17:24 | 1514465 swissaustrian
swissaustrian's picture

We laugh at the price of the CHF. Totally overvalued fiat issued by a central bank hoarding 200 billion in EUR + USD and 8 billion of toxic UBS MBS/ABS-trash. For such a small country this is a huge amount of garbage. Once UBS and CS "need" a bail out, the chf-bubble is going to burst. Additionally, we have a huge real estate bubble forming.

For us all this just means buying opportunities in gold...

Mon, 08/01/2011 - 17:28 | 1514477 DoChenRollingBearing
DoChenRollingBearing's picture

Gold is going to the moon, Alice.

Mon, 08/01/2011 - 17:50 | 1514533 Ratscam
Ratscam's picture

backup by data please

Mon, 08/01/2011 - 18:37 | 1514667 swissaustrian
Mon, 08/01/2011 - 19:01 | 1514729 Doña K
Doña K's picture

If I were the swiss central banker, considering that the Frank is going so strong, I would print and print Swiss Franks, flood the market and start buying Gold, silver, Platinum, Paladium, and all other strategic metals I can get my hands on.

Same with Japan. 87yen/dollar is just ridiculous for a country that is going bankrupt. Start buying PM's, mines and other recources with printed money.


Mon, 08/01/2011 - 19:20 | 1514799 swissaustrian
swissaustrian's picture

UBS made a similar suggestion.

They said that the swiss government should set up a sovereign investment fund.

Mon, 08/01/2011 - 20:10 | 1515024 magpie
magpie's picture

which will invest in US treasuries and Chinese RE ?

Mon, 08/01/2011 - 20:29 | 1515097 swissaustrian
swissaustrian's picture

No, thats what the SNB does.

The proposal says it should be a broadly diversified portfolio of asset denominated in fx, meaning stocks, bonds, and commodities.

something like this:

Tue, 08/02/2011 - 00:39 | 1515755 Yen Cross
Yen Cross's picture

  BRZ comes to mind... It would go along way on that fx and import tax?

Tue, 08/02/2011 - 06:50 | 1516067 johny2
johny2's picture

Brazilian real is not even close to CHF in overvaluation terms. 

Mon, 08/01/2011 - 17:52 | 1514535 margaris
margaris's picture

I so hope you are right. I will cherish the day when swiss starts to fall apart!

EUR/CHF of 1.1 kills my business... I used to work for 1.5-1.6


In the meantime I buy gold.

Mon, 08/01/2011 - 21:34 | 1515303 technovelist
technovelist's picture

I don't think you are going to see a lower CHF any time soon. In the meantime, don't you like being able to buy raw materials for ever-lower prices? Since Switzerland imports most raw materials, that should help compensate for your strong currency. And you're also doing well with your gold, although it's down in CHF this year, I believe.


Mon, 08/01/2011 - 18:03 | 1514566 Ghordius
Ghordius's picture

You really have to trow those two out of your republic, soon...

Mon, 08/01/2011 - 17:04 | 1514394 narapoiddyslexia
narapoiddyslexia's picture

OK by me. I just bought more today.

Mon, 08/01/2011 - 17:05 | 1514397 eisley79
eisley79's picture

physical metals, bitches

Mon, 08/01/2011 - 17:29 | 1514480 DoChenRollingBearing
DoChenRollingBearing's picture

Exactly right.  Physical only.

Mon, 08/01/2011 - 17:05 | 1514398 mayhem_korner
mayhem_korner's picture

Where O where can the top-callers be?

O where O where can they be?

Mon, 08/01/2011 - 17:23 | 1514462 Bay of Pigs
Bay of Pigs's picture

Really haven't seen many of the gold bashers around here lately. Seems odd when they used to post non stop bullshit anytime gold went down a dollar or two.

Maybe the facts simply speak for themselves?

Mon, 08/01/2011 - 17:30 | 1514484 DoChenRollingBearing
DoChenRollingBearing's picture

mayhem, Bay,

Yeah not seen many around since about, say, $1400.

Mon, 08/01/2011 - 17:53 | 1514539 stewmint
stewmint's picture

I'd never 'bash' gold. But did short it 4/29, same day I sold my silver longs. Shoulda shorted silver, duh.

Nope. Don't bash anything. Just use it for the direction it's going to take.

Mon, 08/01/2011 - 19:03 | 1514734 Doña K
Doña K's picture

I think that they can not figure out how to use the new format and they bailed out.

Mon, 08/01/2011 - 19:37 | 1514873 akak
akak's picture

I as well have noticed the lack of gold and silver-bashing trolls, for the first time in fact since I started participating here 18 months ago.  Remember how ANY gold-related thread used to instantly bring out the trolls like flies on shit?  Strangely quiet now, indeed.  Maybe Cass Sunstein's pro-government troll brigade funding was axed in the latest budget deal?

Mon, 08/01/2011 - 18:00 | 1514555 zorba THE GREEK
zorba THE GREEK's picture

You haven't seen many gold bashers around lately because they probably shorted gold and now

they are busy bashing their heads against the wall.

Mon, 08/01/2011 - 19:54 | 1514953 snowball777
snowball777's picture

wherefore art thou...

Johnny Bravo?

Harry Wanger (the original, not his Hamy Wanq'ing replicant's)?





You can always go reminisce on the archive server to get that old gander up again though...

Mon, 08/01/2011 - 20:09 | 1515018 akak
akak's picture

You forgot JayBayBaker, as well as some of the more recent trolls such as Spalding_Smells, Dangertime, TexasGunslinger, WilliamTheBastard, and MathMan --- ALL of whom have curiously disappeared.

Mon, 08/01/2011 - 20:35 | 1515120 RiverRoad
RiverRoad's picture

akak @ 20:09:    They're on the floors of their collective closets sucking their thumbs in the fetal position.

Mon, 08/01/2011 - 20:39 | 1515138 akak
akak's picture

It was probably quite easy for them to revert to sucking their thumbs, after having sucked Bernanke's, Geithner's and Obama's wizened and cheesy members for so long.

Mon, 08/01/2011 - 17:06 | 1514399 midtowng
midtowng's picture

the question is when it will unleash gold stock prices? My miners are lagging my physical.

Mon, 08/01/2011 - 17:08 | 1514405 mayhem_korner
mayhem_korner's picture

Heigh Ho, Heigh Ho, it's off to work we go...

Mon, 08/01/2011 - 17:11 | 1514419 SovietCong
SovietCong's picture

They sort of always are. But it seems like a plenty of catch-up potential, particularly for those with limited/short-term hedging positions.

Mon, 08/01/2011 - 17:12 | 1514421 electronpaul
electronpaul's picture

thats a sign of market correction coming, see 10/07 thru 3/08

Mon, 08/01/2011 - 17:12 | 1514422 Clint Liquor
Clint Liquor's picture

Soon, and it is going to give you a nose-bleed.

Mon, 08/01/2011 - 17:30 | 1514483 Long-John-Silver
Long-John-Silver's picture

The reason Mining Stock always lags is simple. That mine is subject to nationalization the moment the host government desires it. Not a single mine is immune to nationalization including the USA. 

The moment that mine is nationalized the stocks and bonds associated with it immediately become worthless.


Mon, 08/01/2011 - 18:12 | 1514589 Temporalist
Temporalist's picture

While that may be the ultimate outcome it is pretty clear that presently that is not the political climate.  Oil would be first of course as an indicator; they'd nationalize the wells and fields.  Then maybe the mines...then liberate Canada from the wolverine and penguin attacks.

Tue, 08/02/2011 - 01:28 | 1515831 Religion Explained
Religion Explained's picture

"... then liberate Canada from the wolverine and penguin attacks."  literally lol, ty :)

Mon, 08/01/2011 - 17:07 | 1514403 glenlloyd
glenlloyd's picture

should surprise no one.

Mon, 08/01/2011 - 17:07 | 1514404 bullionbaron
bullionbaron's picture

I personally feel we are staring down the barrel of a correction in metal prices before we see those sorts of figures...


With around 50-60% of my capital in metals and related stocks I would love to be wrong, yet lower prices would allow me to top up!

Mon, 08/01/2011 - 17:11 | 1514417 mayhem_korner
mayhem_korner's picture

At 50% to 60% in metals, you ought to have the conviction to stick it out through some nettlesome corrections.  Hope it's all physical. 

Mon, 08/01/2011 - 17:11 | 1514418 midtowng
midtowng's picture

I haven't seen anyone remark on the fact that the SPX is sitting right on its 200DMA right now.

If it breaks below it, we could see a very steep drop. If that happens people will sell everything, including gold, in order to get cash. That's what we saw in 2008.

Of course the correction in gold would be temporary, and be a buying opportunity, but its something to watch for.

Mon, 08/01/2011 - 17:23 | 1514463 B-rock
B-rock's picture

ES (S&P e-minis) is now 8 points BELOW its 200ma.  It shrugged off the bullshit rally at close.


Tue, 08/02/2011 - 08:00 | 1516142 cat2
cat2's picture

I don't know anything really but I was 100% cash in 2008 for the drop because I thought TARP/etc was BS.  Now I get the feeling that ES will drop and real assets not encumbered with government control (gold, ???) are going to surge.  Assets that can be tapped by the government (fiat, real estate, stock market (companies), etc.) are going to continue to fall.  Gold is certainly on the safer side.  IMHO.


Mon, 08/01/2011 - 17:38 | 1514506 Long-John-Silver
Long-John-Silver's picture

We  (USA) are in an economic depression that will at the very least, equal the '29 depression. During the first dip everyone sold everything and went to cash in US Dollars.

When the second dip hit and the markets crashed again people sold everything again and ran to Gold. No one trusted the government because they had been telling everyone

that everything was fine and the economy was recovering (sound familiar?). Not only did they not trust their government they did not trust it's money. That's when FDR

attempted to confiscate Gold because it was in direct competition with the US Dollar and Gold was winning big time. We are experiencing the '29 depression again. This

time people will again run to Gold and Silver.

Mon, 08/01/2011 - 18:12 | 1514590 TSA Thug
TSA Thug's picture

AND WE WILL confiscate AGAIN!

Don't forget to fill out your 1099 form when you purchase so we can get your address!

Mon, 08/01/2011 - 20:46 | 1515159 akak
akak's picture

Yeah, just like the government has confiscated all illegal drugs, leading to their complete absence in every corner of the USA.

No government, no matter how tyrannical (and ours is more and more so every day) cannot "confiscate" that which is neither surrendered to it nor which it cannot find.

Tue, 08/02/2011 - 05:05 | 1516014 Jerome Lester H...
Jerome Lester Horwitz's picture

To quote Charleton Heston..."From my cold, dead hands!".

Tue, 08/02/2011 - 02:43 | 1515906 Freddie
Freddie's picture

Yes but all my schools books talked about how wonderful FDR was.  gag.

Tue, 08/02/2011 - 02:43 | 1515907 Freddie
Freddie's picture

Yes but all my schools books talked about how wonderful FDR was.  gag.

Mon, 08/01/2011 - 18:46 | 1514691 DosZap
DosZap's picture


"I haven't seen anyone remark on the fact that the SPX is sitting right on its 200DMA right now.If it breaks below it, we could see a very steep drop. If that happens people will sell everything, including gold, in order to get cash. That's what we saw in 2008."

While I get your drift the bottom line is this AIN'T anything like  '08, and we were not in a condition anywhere close to where we are now.(just look at the new debt levels).

I think smarter heads will prevail this time,weak hands will, maybe be shaken loose,if a $300-$600.00 correction took place, it would be gone in a nano second.Everyone and their dog would be in on it.


Mon, 08/01/2011 - 19:57 | 1514970 snowball777
snowball777's picture

If that happens people will sell everything, including gold, in order to get cash.

Only the ones screening nasty margin calls with their voicemail, g.

Mon, 08/01/2011 - 17:08 | 1514407 Hulk
Hulk's picture

As easy as shooting fish in a barrel Bitchez!


Mon, 08/01/2011 - 18:13 | 1514594 TSA Thug
TSA Thug's picture

Exactly what I tink.

Mon, 08/01/2011 - 17:10 | 1514411 SovietCong
SovietCong's picture


The $1950 prediction does not adjust for the reserve currency demand that will continue to grow. To wit, today Putin, speaking of a possible merger with Belarus, called the United States the world's biggest "parasite" (or leech, depending on translation) and spoke rather bluntly about the debt ceiling hike (kicking the can down the alley, etc.). It seems to me this point of view is rather representative of the BRIC and other emerging markets that are major institutional buyers of bullion with plenty of fiat reserves to convert into something of value.

Mon, 08/01/2011 - 17:16 | 1514425 THE DORK OF CORK
THE DORK OF CORK's picture


1 January 1999

1 january 2002.


Mon, 08/01/2011 - 17:14 | 1514434 SilverRhino
SilverRhino's picture

What's amazing is that silver is just sitting around in the doldrums with all this.   Gold is higher than ever .... is silver just going to trail it or stay in the manipulated channels for a good long while?

Mon, 08/01/2011 - 17:16 | 1514445 mayhem_korner
mayhem_korner's picture

Patience, young Skywalker.  All things in time.  (plus a JPMorgue short overhang)

Mon, 08/01/2011 - 17:40 | 1514511 Long-John-Silver
Long-John-Silver's picture

+ $100oz

Mon, 08/01/2011 - 23:01 | 1515532 Man Bear Pig
Man Bear Pig's picture

don't get your hopes up on silver... not to be downer, i own a good chunk myself, but the dynamics in gold are monetary in nature. silver has no place in the monetary world. only gold will hold the title of ultimate wealth reserve.

Tue, 08/02/2011 - 04:03 | 1515968 FlyPaper
FlyPaper's picture

This is a reasonable point in terms of broader recognition and supply of gold.  That said, people will go toward the cheaper metal to get something  as things fall apart.

My biggest concern is market makers when the metals top and prices collapse?  I talked with a coin dealer and on the silver sell-off he had more metal than he could offload.

Anyone want to comment?

Mon, 08/01/2011 - 17:15 | 1514436 Rodent Freikorps
Rodent Freikorps's picture

I'm feeling more Texan, and less American by the day.

I wonder why that is?

Mon, 08/01/2011 - 17:25 | 1514470 Sudden Debt
Sudden Debt's picture

Everybody feels like this. Not Texan of course :) even if I do like ribs :)

It's more easy to identify yourself to your local state, with people who are like you than to people living 2000 miles from you who say that they're the same but don't agree with your way of thinking. Who think you should change. Adopt their way of thinking.

The reason is that there are to many people who speak in our name, but don't give a rats ass about us.

They talk like they know us... but probably never been where we live.

And in the end, it's like you always need to pay more taxes for "mistakes" somebody made 2000 miles from your door, who don't care about you or anybody you know.

How can anybody identify with that?



Tue, 08/02/2011 - 00:41 | 1515760 Yen Cross
Yen Cross's picture

  You both got Yen'erated...   Nice multiple posts...

Mon, 08/01/2011 - 17:34 | 1514494 DoChenRollingBearing
DoChenRollingBearing's picture

I loved those years I lived in Texas.

+ $1620

Mon, 08/01/2011 - 19:59 | 1514977 snowball777
snowball777's picture

Maybe it's the lack of water.

Mon, 08/01/2011 - 17:16 | 1514443 slaughterer
slaughterer's picture

The goldbugs on ZH must be quaking in their boots, pushing up these historical charts.  Gold always plunges significantly after a debt ceiling hike--for a short period of time.   That is why Commercial and Spec Short positions massively increased last week.  Plus: JPM is out to get you.   Well, at least you get another "buying opportunity" at $1500, ha ha.     

Mon, 08/01/2011 - 17:20 | 1514453 mayhem_korner
mayhem_korner's picture

We're gonna beat the Morgue.

We hold.  We wait.  We win.

Tue, 08/02/2011 - 04:07 | 1515972 FlyPaper
FlyPaper's picture

I'm not at all sure you can beat the Morgue.  Yes, the comex will run out of physical and they will pay major bucks to get out of their contract.

But the Morgue is the Federal Reserve.  So even if they do, the US taxpayers and other dollar holders will get screwed when the Fed rides to the rescue with more dollars.

The regulatory agency (who I will refuse to name) is clearly there to maintain the status quo - they are only regulatory to help the Fed and the Comex stabilize metals prices so their fiat doesn't look so bad.


Mon, 08/01/2011 - 17:33 | 1514493 Bastiat
Bastiat's picture

World-wide bid out there will never let it get near 1500.  Delivery is a bitch.

Mon, 08/01/2011 - 17:37 | 1514502 DoChenRollingBearing
DoChenRollingBearing's picture

@ slaughterer,

I buy.  I wait.

Gold is going MUCH higer.

I have always (almost always) BTFS for decades.  I have won big time.

We will win big.

Mon, 08/01/2011 - 19:50 | 1514934 Hulk
Hulk's picture

I'm ready to jump out of my basement window...

Mon, 08/01/2011 - 17:19 | 1514447 Camtender
Camtender's picture

Has anyone else given up on the gold stocks and thinking of bullion only at this point?  King World News still stands behind the stocks, but even the non-physical GLD and SLV are performing when the stocks are falling.  

Mon, 08/01/2011 - 17:32 | 1514489 Caviar Emptor
Caviar Emptor's picture

Stocks are now political instruments, not obeying the laws of supply-demand. The spectrum of "blessed" stocks is getting narrower and narrower, an ominous sign. All boats will not rise as in prior bull markts. That's because investors have left the building for all intents and purposes. Just bots and daytraders left. Any hiccup in QE will send Wall Street spiraling and stocks with it

Mon, 08/01/2011 - 17:39 | 1514507 DoChenRollingBearing
DoChenRollingBearing's picture

Physical metal only.  Ollanta Humala (new president of Peru) is a perfect example of politcial risks to miners.

Mon, 08/01/2011 - 19:08 | 1514750 snowball777
snowball777's picture

Repeat after me: Fuck paper.

Mon, 08/01/2011 - 19:52 | 1514944 Hulk
Hulk's picture

Fuck paper, Fuck Paper, Fuck paper...

Howd I do???

Mon, 08/01/2011 - 19:59 | 1514981 snowball777
snowball777's picture

Not bad. One more time... with feeling!

Tue, 08/02/2011 - 00:43 | 1515764 Yen Cross
Yen Cross's picture

Effin PAPER... Joe biden has the secret service in his guest house...


      I feel better now Snowball...

Mon, 08/01/2011 - 20:41 | 1515082 DosZap
DosZap's picture


IMHO, the ETF's have taken the mining sectors money............

Once this animal bares it's fangs, the ETF holders are going to wish they had physical, (always 1st), and Stocks in selected miners 2nd.They are going to wake up needing a quart size tube of Prep H...............IMHO.

My $ is still on physical, the .Gubs may nationalize the mines,and then your SOL.Physical will be targeted also, but far easier to at least hide.

The most difficult part of the current situation, is getting your investment(insurance) outside the states,all the depositories will be hit first IMHO, after they steal the cash, thru retirement conversion tactics, or outright seizure.

I see no way (unless your uber wealthy) of keeping your lifes earnings and stay here at the same time.

When this first started, I thought that the problem MIGHT stay here, and amongst a couple of other Western nations.......and saving in other currencies could be a life raft.No longer, it's gone global ,and few places that are most safe financially, are places you would not want to live, nor likely could.

Mon, 08/01/2011 - 17:18 | 1514449 Sudden Debt
Sudden Debt's picture

I just would like to spend my christmass bonus on cheap silver! JUST 4 MORE MONTHS!!!

I hope it takes a few more months... not that I'm greedy... I JUST WANT MORE!!!


Mon, 08/01/2011 - 17:40 | 1514510 DoChenRollingBearing
DoChenRollingBearing's picture

I think you do have months.

But, not years.

Green for you Sudden Debt!

Mon, 08/01/2011 - 17:20 | 1514455 YesWeKahn
YesWeKahn's picture

If you guys read the $ bill, it says:


This note is legal tender for ALL DEBTS, PUBLIC AND PRIVATE (is all caps, engry treasurer).

Yes, we will have to print a lot more notes ($ bills).

Mon, 08/01/2011 - 17:22 | 1514460 vast-dom
vast-dom's picture

what 'bout SILVER bitcheyz?

Mon, 08/01/2011 - 17:23 | 1514464 Cdad
Cdad's picture

Dennis "the fuck" Gartman trashing out your silver on the BlowHorn, bitchez...specifically citing that stupid retailers are responsible for the rise and need to be shorted.  

At what point does the FCC simply declare that the BlowHorn [CNBC] is in violation of regulations regarding distribution of toxic waste?  Pull their license to broadcast, already!

Mon, 08/01/2011 - 17:31 | 1514485 Bastiat
Bastiat's picture

A very large ass or two will be lost on the next silver leg.  Of course JPM can offset their short with an OTC contract with a Nigerian counterpary.

Mon, 08/01/2011 - 18:29 | 1514643 Temporalist
Temporalist's picture

Greetings.  I am a Nigerian prince looking to exchange my millions of dollars for physical silver.  I am willing to pay many times the amount but I have a problem with my bank.  If you'll please just deposit your physical silver into my unallocated account I will deposit to you three times what that silver is worth in dollars.

Mon, 08/01/2011 - 17:28 | 1514471 mpath
mpath's picture

I really do not think Ben has an option for QE3. Oil will have to be much lower than current levels and unemployment numbers will not be the reason to launch QE3. The bulls are soon to be standing on the stage naked..with nothing what so ever to stop the rub down they about to take. Short all rallies until you see oil down in the 70's..maybe then Benny B and the QE band will come out for another round. But the way it is lining up, spx may be trading below the May 2010 levels as well.

Mon, 08/01/2011 - 19:07 | 1514745 snowball777
snowball777's picture

You assume a level of rationality not supported by empirical evidence collected to date.

Tue, 08/02/2011 - 04:12 | 1515979 FlyPaper
FlyPaper's picture

Curious: where do you think the US government is going to find buyers for all this new debt, if not for the Federal Reserve?... and at the same time try to keep interest rates down?

The only answer I can come up is Treasurys will sell if the Euro dives first *and* the Fed does not bail them out with more electronic USD.  That *might* rescue Uncle Sam's sorry ass.  

The other answer is 'risk off' and a major market retreat - will send money where?  Into bonds perhaps?

Capital flows are so fast now that I'm not seeing safe-haven bids for USD except for short periods.  

Anyone else have ideas on how the US is going to fund the deficit other than QE3....?

Mon, 08/01/2011 - 17:28 | 1514478 Caviar Emptor
Caviar Emptor's picture

Within 6 months: Gold to $2,400

There's a rush to gold going on. That's not news. Here's what's changed: it's not just Asians and Asian Central Banks anymore. Europeans are cleaning out supply of physical gold available (see Bloomberg today). Citizens are taking action to protect what they have or have left. Middle-East demand is rising as petrodollars look increasingly dubious. And US domestic demand keeps ticking up again and again as concerns and now real problems multiply. 

We're not in 2008-9 anymore. The situation is way more fragile. And the solutions proposed by the Fed have failed. Worse, it's gone global in the wake of insane amounts of monetary stimulus. And it's now not just economic and financial, it's political and strategic. The stakes have never been higher since the 1930s


Mon, 08/01/2011 - 17:37 | 1514503 LawsofPhysics
LawsofPhysics's picture

Yep.  On that note, Tyler would you please run this chart back to 1911.  Thanks.

Mon, 08/01/2011 - 17:43 | 1514519 DoChenRollingBearing
DoChenRollingBearing's picture

When I bought more gold last Friday, the coin shop had NO 2010 or 2011 Gold Eagles.  He had enough of other years, but now that gold is so high, I want PROOF that my cost basis is going up.

Lots of funny stuff going on in the physical gold world.

Mon, 08/01/2011 - 17:48 | 1514530 Caviar Emptor
Caviar Emptor's picture

Yup. I thought that the mere fact that a physical gold run/shortage was reported anywhere in the MSM at all today was a big tell. 

Mon, 08/01/2011 - 18:35 | 1514658 Temporalist
Temporalist's picture

You mean like this:

Buy Gold ETF Calls to Hedge Against Uncertainty, JPMorgan Says

"Buying options on the SPDR Gold Trust exchange-traded fund can help protect against financial-market uncertainty that is likely to boost the price of the metal, JPMorgan Chase & Co.’s Amyn X. Bharwani said in a note today."


Gold Coins Selling Out in Downtown Lisbon as Biggest Wager Sees 11% Gain

"Rui Lola says gold sales at his foreign exchange and coin store in downtown Lisbon almost doubled this year, draining inventories faster than he can replace them."

Tue, 08/02/2011 - 02:26 | 1515893 Don Keot
Don Keot's picture

The MSM think the US controls the price of gold.  Stay low and keep moving.

Mon, 08/01/2011 - 17:32 | 1514487 kevinearick
kevinearick's picture

The primary root of the Corporation is to capture  the individual in time, leaving both the master and slave in Prisoner’s Dilemma, depending on a ponzi scheme to grow faster than increasingly scarce resources exploited, TBTF. The drop dead date is the tipping point of the system, which has nothing  to do with the derivative behavior in Washington DC. Only profit timing, spring release characteristics, depends upon the herd.


An intelligent kid asks for a rental. The proprietor says I’m sorry, the rent is $800/mo because I have to pay a stupid mortgage from Wall Street, but if you go down the street, you can get a very nice rental for $400. The proprietor then negotiates with everyone else.

Mon, 08/01/2011 - 17:33 | 1514488 HamyWanger
HamyWanger's picture

1950? Give me a break. 

Mon, 08/01/2011 - 17:36 | 1514500 Caviar Emptor
Caviar Emptor's picture

Yeah, right

Mon, 08/01/2011 - 17:41 | 1514513 HamyWanger
HamyWanger's picture

Drop the 0 and it may work. 

I've sold all my physical two months ago and I ain't looking back. Sure, I've lost a bit on the last ride up, but the boner runs were better on stocks like LuluLemon Athletica or Green Mountain. 

Gold will be at <1200 in less than three months. If it isn't the case then well, I would have lost a lot a credibility.

Mon, 08/01/2011 - 17:43 | 1514518 Caviar Emptor
Caviar Emptor's picture

Your call, Hamy. Some believe the Ponzi can't ever fail

Mon, 08/01/2011 - 17:48 | 1514529 XenoFrog
XenoFrog's picture

You can't lose credibility if you never had it.

Mon, 08/01/2011 - 18:41 | 1514681 Stax Edwards
Stax Edwards's picture

Guess your days are numbered around here then.  What might be the impetus for the sharp decline?  I certainly don't believe we will see 1200 anytime soon.  What do you base your 1200 call on?

(Goldbugs presumably bookmarking this thread as we speak)

Mon, 08/01/2011 - 19:55 | 1514960 Central Bankster
Central Bankster's picture

Guys, you don't want to scare him off.  He is what you call the classic "fade".  He says get long gold, we are at an intermediate high.  He suggests get long LULU, time to get short.

Mon, 08/01/2011 - 19:30 | 1514854 YHC-FTSE
YHC-FTSE's picture

The only way gold is going to be <1200 is for demand to drop as if it is radioactive AND a concerted effort by all the major central banks to sell their bullion (Or as has been the case in the past, announce selling then do nothing). Within 3 months? No chance. 


As for stock performance -v- PM performace, you are most likely to be right in the next few months of QEiii pumping up the markets, but let's face it, it is a lot more hard work picking stocks than buying gold. And of course the spectre of a dollar collapse (Though less likely for a year at least) is always hovering in the background. 

Mon, 08/01/2011 - 19:42 | 1514898 mayhem_korner
mayhem_korner's picture

I've sold all my physical two months ago

Both 1/4 oz coins?

Mon, 08/01/2011 - 20:23 | 1515073 akak
akak's picture

Naw, they were just ChuckECheese tokens.

But they looked like gold!

Mon, 08/01/2011 - 17:33 | 1514490 Seasmoke
Seasmoke's picture

just hope silver coattails gold up to over $60

Mon, 08/01/2011 - 18:21 | 1514618 zorba THE GREEK
zorba THE GREEK's picture

Last August silver was at $18. It had lagged gold for quite a while.

After following silver and gold prices closely for over 10 years, I had the strongest feeling ever that silver

was going to jump higher in short order. Using a credit line I had established for my business but had

not needed, I purchased several 100 oz. bars. Needless to say it paid off. I sold 40% of my position and

paid off the loan. If gold goes much higher and silver doesn't follow this month, I will do the same thing

again. Once again I will recommend the trade to my friends as I did last time. I have a feeling more of

them will listen this time.

Mon, 08/01/2011 - 17:33 | 1514491 bbq on whitehou...
bbq on whitehouse lawn's picture

1825$ looks good in 2012. So does 4$ gas and 5$ meat. 2$ for a pound of rice or some noodles looks good as well.

Inflation is not your friend. How many kittens would you burn in your oven or microwave. How many dogs; how many human children will you watch go hungery.

I may profit but it doesnt make the suffering of others less.

I may live and prosper but it does not detract from the horror other familys need to face.

We  need to have compasion and simpathy to those who who will suffer of their own ignorance.  Ignorance is not a sin iits a curse.

What does a child know of cotten candy but its fun and good. Same with debt.  They would starve if not for guidance.


Mon, 08/01/2011 - 17:46 | 1514525 DoChenRollingBearing
DoChenRollingBearing's picture

Keeping it real.

I have enough so that I can help a limited number of others should it come to that.

Do NOT follow this link or you will be banned from the site!