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From Negative 5Y5Y To $2200 Gold?

Tyler Durden's picture


For the first time on record (based on Bloomberg's data) 5-year / 5-year forward inflation expectations turned negative today. This kind of deflationary impulse has occurred twice in recent years and each time has been accompanied by dramatic Federal Reserve easing. The anticipation of the move by the Fed has caused Gold each time to surge higher on yet more expectations of the fiat-fiasco unwinding. Given the 5Y5Y inflation print currently, we would expect action from the Fed and one could argue that this would cause the price of Gold to rise to $2200 per ounce as the deleveraging continues.

The red arrows show the deflationary impulse (5Y5Y inflation is inverted) and the orange curve arrow shows the reaction function post Fed reaction to the blue arrow levels of the deflationary impulse.


Chart: Bloomberg


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Tue, 06/05/2012 - 17:46 | 2497526 veyron
veyron's picture

Who else is buying gold hand over fist?

Tue, 06/05/2012 - 18:00 | 2497560 nope-1004
nope-1004's picture

Fed is in a conundrum.  No easing -> markets tank, pensions tank, financials tank, insolvency shows.  Fed eases -> inflationary pressure builds, PM manipulation has to increase, JPM swaps further exposed, and Ben exporting inflation becomes a defense dept problem.  Other nations not impressed, but neither are most awake US citizens.

It's all Bush's fault anyway, so who cares.  "Hope and Change!"


Tue, 06/05/2012 - 18:22 | 2497647 Mark123
Mark123's picture

The problem goes wayyyy back before Bush, Reagan, Carter, Nixon etc....they all just played their part in a very well organized looting of the incredible wealth that was America.


The only difference with Obama was that some people initially believed he was an outsider that beat the 2 party selection system since he was black.  Turned out he was as bad as all the rest.  In my books that was the last chance we had to turn things around.  All Obama did was to signal full speed ahead.

Tue, 06/05/2012 - 18:40 | 2497702 RockyRacoon
RockyRacoon's picture

...wayyyy back before Bush, Reagan, Carter, Nixon etc....

Maybe it's just me, but I see some common denominators in all those administrations.  A shining example of that common factor would be Larry Summers, et al.   The same folk are leading and operating the parade.  All we see are the fools waving and grinning from the floats.  They throw us a cheap string of beads now and then just to distract us.

Tue, 06/05/2012 - 19:02 | 2497758 nmewn
nmewn's picture

"Maybe it's just me, but I see some common denominators in all those administrations."

No, it's not just you Rocky.

What is needed is common sense, not pinky fingered extended, pedigreed prima donnas with awards and plaques hanging from their walls.

Government can no more spend what it doesn't have to spend than families can...not on a long enough timeline anyways. Debt must be extinguished/written off or paid...and the government crossed the threshold of paying it off a long time ago.

So now, who among them has the cohones to tell the Ben Bernank that the bonds they bought are now worthless? ;-)

Tue, 06/05/2012 - 20:41 | 2498003 FeralSerf
FeralSerf's picture

Bernanke knew those bonds were worthless when the Fed bought them.  They were just window dressing to show the public they really weren't just giving the money to their banking friends which is what they were doing of course.

Tue, 06/05/2012 - 22:29 | 2498205 DoChenRollingBearing
DoChenRollingBearing's picture

@ veyron and the whole ZH gang.

I bought gold just today.  Eating my own dog food!



+ 1 to all above comments.  Lots of blame to go around, though some have caused more damage than others.

Tue, 06/05/2012 - 22:48 | 2498236 living on the edge
living on the edge's picture


You are out of control buying all that gold and I wish I was there buying with you again. Be well...

PS. I am buying too..



Thu, 06/07/2012 - 01:57 | 2502426 Alpo for Granny
Alpo for Granny's picture

I am eating my own dog food too sonny!!!!

Tue, 06/05/2012 - 20:44 | 2498007 BKbroiler
BKbroiler's picture

bring on the junks, I just don't buy it.  Obama was handed the keys to a lamborghini on cinderblocks.   Rob the place blind, split with the money and blame it on the black guy, totally original.  He is a politician, and he does pander, but I truly believe he wanted to do good.  There's just no room for that shit in the world today.

Tue, 06/05/2012 - 20:53 | 2498030 tarsubil
tarsubil's picture

I believe he might have honestly wanted to do good up to the community organizer task of finding union workers from a closed plant jobs. People that sat at a press and pulled a knob got paid 35-40 an hour and they had no real job skills. Obama realized then that everything was a total joke and sold out completely for the benefits. He doesn't give a shit and he hasn't given a shit for a long time.

Tue, 06/05/2012 - 21:07 | 2498064 BKbroiler
BKbroiler's picture

People that sat at a press and pulled a knob got paid 35-40 an hour and they had no real job skills

Agreed there, but the flip side of that coin is competing with 30-40 cents an hour overseas.   Unions keep stupid people employed.  Yes, it sucks and makes no sense in a purely capitalistic system, yes it's socialist, but you all have a stupid brother, sister or cousin.  That guy.   What are you gonna do with him?  He'll cost society more in entitlements or in jail than in union dues.   There will always be the slow, the dumb, the mediocre, and they will always make up more than 50% of the population.  You can't theory them out of the equation.  It's either school, work, or jail, or someone's couch. Beat down the unions down but don't kill em.

Tue, 06/05/2012 - 21:36 | 2498115 tarsubil
tarsubil's picture

Did you read the part about the plant closing down and the people losing their jobs and being unemployable?

Tue, 06/05/2012 - 21:44 | 2498125 dark pools of soros
dark pools of soros's picture

The police and government unions are by far more corrupt than any private unions. 

Look at the non-union jobs, the outsourcing of them are at a ridiculous pace and for what? Short term gains and bonuses? 

Everyone wants to be a plantation owner again with a team of slaves and child labor

Globalization can suck my dick




Tue, 06/05/2012 - 22:28 | 2498206 Diogenes
Diogenes's picture

I've worked in factories and all I can say is, if the so called smart people in charge were as smart, honest, hard working and as good at their jobs as the union workers we would not be in this mess now.

Wed, 06/06/2012 - 00:35 | 2498410 Oracle of Kypseli
Oracle of Kypseli's picture

People are on to you and unions.

Wisconsin's governor won recall election overwhelmingly tonight.

Wed, 06/06/2012 - 07:27 | 2498712 kralizec
kralizec's picture

Wisconsin's governor won recall election overwhelmingly tonight.

By 7 points, the outfits predicting a 6-8 point margin were dead on, and The Regime knew it, which is why they didn't send in Duh Wun to get tainted by trying to support Barrett.

Tue, 06/05/2012 - 21:41 | 2498121 Ookspay
Ookspay's picture

socialism is expensive and unsustainable

Wed, 06/06/2012 - 07:09 | 2498692 Machination
Machination's picture

Hey BKbroiler are you really that ignorant?

There is a complete difference from "wanted to do good" and "told everyone he wanted to do good", he did the latter.  From his actions it is clear there was no intent to carry through on what he said, he was either 1) lying when he said it, or 2) a complete sociopath and prone to 180 degree swings in all his core beliefs at any momment for no reason, or 3) is not the one making the decisions, and is doing a very fine acting job.  I am going to give him the benefit of the doubt and go with #1.

Now as to your analogy, you forgot to finish it so I'll do that for you:

  • Obama was handed the keys to a lamborghini on cinderblocks.
  • The wheels and tires were being used in overseas "theaters of conflict", instead of driving economic, social and educational infrastructure in his front lawn.
  • Instead of getting the wheels back, he proceeded to gut the wiring harness (the constitution), take it to the pawn shop, and get pennies on the dollar for it, take the money and buy more wheels and tires for use in overseas "conflict theaters".  
  • He then proceeded to take a loan out on the car from the mob, and use some of the proceeds for even more wheels for "conflict theaters" and the rest he dumped onto a new paint job because his paint shop buddies were going out of business (banks).  
  • Then he went back to the lenders and said look, the car looks fantastic with this new paint job, better up the loan capital you front me for this car.  Then took that money, threw more money at "conflict theaters" while simultaneosly gutting the undercarriage. 

And here were are today, the banks have been bailed, citizens fleeced, the defense budget is bloated as ever, and funny enough, Obama did nothing that he said he would do while on the campaign trail, he did the total opposite.  He is a professional politician...go figure.


Fri, 06/08/2012 - 18:25 | 2508990 Ookspay
Ookspay's picture

+ 1000 -Fucking Brlliant!

Tue, 06/05/2012 - 18:42 | 2497708 The Monkey
The Monkey's picture

The biggest open market purchases may be ahead, but that doesn't mean they will do much of anything.

Tue, 06/05/2012 - 18:47 | 2497728 GernB
GernB's picture

With all due respect, there was nothing in Obamas past to indicate he would be even slightly fiscally conservative, much less more fiscally conservative than Bush. Just the oposite, as an admirer of Rules For Radicals and critic of capitalism, he seemed much more likely to want to crash the system so he could engender revolt and get the fundamental change he was constantly referring to.

Tue, 06/05/2012 - 20:07 | 2497915 ultraticum
ultraticum's picture

And the New Years Eve NDAA signing is how he crushes the "revolt" you mentioned he engenders? 

Just another authoritarian Fascist, but this one's wearing Acorn Marxist clothing.

Tue, 06/05/2012 - 22:19 | 2498185 Ranger4564
Ranger4564's picture

I didn't want to spoil the surprize, but since everyone is guessing and embarrassing themselves, I decided to step in and reveal the truth.  Obama is really an Occupier on Wall Street, but we sent him to Washington to pass all those unconstitutional laws, to throw off the banking cartel nutjobs, who just want to cheat / steal / smirk... looking at the comments here, I think that tactic worked.  No one but you suspect O is an occupier.  Please don't tell anyone else or you'll ruin the master plan, a surprize communist takeover of government.  We have a new flag ready.

You're right that his history suggests a different outcome, but it turns out He's a freaking right wing capitalist nightmare, masquerading as a left wing commie bastard, so that the right wing go even more nutso right.  His job is to drive the nation to the far right, and good god it worked.  Every American hates every other American, and can't wait to dick the first jerk he comes across.  Women too, this is an equal opportunity dicking. The fiasco is so blatant, the far right is robbing us blind, complaining about left wing entitlements, spins everyones head around, they continue looting. 

They're distracting you and everyone else.  They have initiated a class war, but they have you and others fighting over scraps.  They're watching, laughing, as we quibble over how much so and so doesn't deserve their wage, while they're sitting pretty giving themselves raises on raises on the bonuses they collected, while firing tens of thousands, and otherwise stagnating the global economies.  Please for god's sake, focus your frustration and anger against the oligarchs / wealthy bankers who are stealing, defrauding... you can deal with the union workers later, if we still have a union.  Get a grip people.

Wed, 06/06/2012 - 02:02 | 2498486 Clashfan
Clashfan's picture

I'm not sure what you mean, Ranger, with words like communist and capitalist above. I do think, though, that this is class warfare. I do think one of the reasons why I'llbombya has been thrust upon us is to help the divide and conquer distraction as you indicate. I do wholeheartedly agree with your conclusions. I am glad to see someone on this site pointing this out.

Wed, 06/06/2012 - 07:22 | 2498706 Ranger4564
Ranger4564's picture


Obama presented / presents himself as a man of the people, and is often criticised for being socialist, but he's actually a right leaning, capitalist enterprise supporting plant.  In addition, don't get fooled by things like the health plan, it's the same timebomb as was NAFTA... brought to you by another popular scumbag... with NAFTA, even though millions of people opposed the plan for the correct reasons, even though millions predicted the outcome, the oligarchs pushed that policy through and we're where we are.  Everyone knew what would happen, even though the oligarchs claim no one could have known.  And similarly, millions opposed the health plan, for the wrongish reasons this time... people do deserve a lot of things for being alive, because we as a society can provide those things... we just need to put that as our focus and that sort of support is achievable... but lots of people worried about expense, and that concern was corrrect but misplaced.  The reason the health plan passed was not to insure the poor, it was to rob the middle class insured people of even more money.  Insurance premiums went up 25% first year and 40% second year, or vice versa, for me, for example.  No improvement to health care for anyone, reduced benefits to me, higher cost to me.  What's the lesson?  This was an engineered heist to exrtact money from the insured, to shovel it to the insurance companies. So it's not a health plan, it's a wealth plan, their wealth.  Which unemployed family can afford $500 / per mo / per pers premiums?  That's the gist of the health plan.

People need to start reading between the lines, as I've said, the truth sits behind the lies.

Wed, 06/06/2012 - 11:47 | 2499567 hoos bin pharteen
hoos bin pharteen's picture

The righy word is "feudalist.". The difference is that lefties claim to support the "common man" and the righties at least, where hypocritical, just lie about whether the playing field should be even.

Wed, 06/06/2012 - 20:54 | 2501692 Ranger4564
Ranger4564's picture

What is Feudalist?  If you're saying the system they're reconstructing for our benefit is feudalism, you definitely don't need to educate or convince me of that, I've been saying that for over 10 years.  Probably longer.

I know what the argument between the left / right ideologies are.  I don't know what people think is happening or think I said, but I stand by what I wrote... i.

Tue, 06/05/2012 - 18:29 | 2497664 Dr Paul Krugman
Dr Paul Krugman's picture

It isn't just about the markets, although they play a role because of internal funding mechanisms such as pensions, etc.  It is about getting out of a recession, and as I have been declaring for quite some time, the way to spur growth is to keep markets liquid while we recover.  And the way to do this is through government spending.

Government can provide the ways for the means.  By future revenue we can solve the economic problems now.  Without the present, afterall, there is no future.  We must make our future by using the policies that have always solved the problems.  Grow now, and pay later.  Without growth now, their is no later,and by that time we will have recovered and can pay for the growth.

Of course government spending has risen, but obviously not enough.  The Federal Reserve Bank has pushed things along, with the help of the Treasury, but this is the world's greatest economy, not some tin can.  We must create growth now, or else suffer the consequences.

Deflation would be an end all to the recovery we have hoped for.  We must fight deflation tooth and nail.  Now that Europe is affecting the U.S. we must remedy the problem by lifting the U.S. up above, and this will help Europe's problems too.  No, we can not solve their problems for them, but we can help, and by helping ourselves.  At the very least, we can not sacrifice our future because we didn't do enough, and also because of Europe's policy mistakes.  We must create growth, and we must do so now.

Tue, 06/05/2012 - 18:37 | 2497694 Umh
Umh's picture

If it's not you then good job. If it is you then why don't you read some of the comments here and learn something.

Tue, 06/05/2012 - 18:44 | 2497712 RockyRacoon
RockyRacoon's picture

The name, avatar, and views all match.  What are we to conclude absent a /sarc?

Tue, 06/05/2012 - 19:09 | 2497778 MsCreant
MsCreant's picture

Same puppet master as MDB.

Tue, 06/05/2012 - 19:11 | 2497782 Bay of Pigs
Bay of Pigs's picture

This guy is halarious. Definately <sarc>, probably one of the Tylers having some fun.

Tue, 06/05/2012 - 19:15 | 2497785 Likstane
Likstane's picture

Nah, just another hack.  The word 'there' is mis-used in the second paragraph.  These intellectual types pride themselves on using correct grammar and syntax, even if they can't figure their ideas are hogshit.

Wed, 06/06/2012 - 02:04 | 2498487 Clashfan
Clashfan's picture

Good eye, Likstane. I was going to point that one out. There (yes t-h-e-r-e) are other errors, too, that indicate that this poster is an im-poster.

Tue, 06/05/2012 - 18:41 | 2497704 Missiondweller
Missiondweller's picture

Bullshit. Let the markets clear.

There's a reason nobody talks about the depression of 1920. The market was allowed to function.

Artificial spending just prolongs the pain of deleveraging and our social safety nets are not set up for a 10 year deleveraging, its set up for brief recessions/depressions.

Tue, 06/05/2012 - 22:58 | 2498259 Bicycle Repairman
Bicycle Repairman's picture

In 1920 they let the markets clear very early in the "game".  To do it now would be worse than 1938.  I'm not saying not to do it, but I am saying this is decidedly not 1920.

Wed, 06/06/2012 - 05:02 | 2498598 jeff montanye
jeff montanye's picture

particularly true of the too big to fail banks/counterparty risk syndrome.  if the banks don't know who is solvent, and they don't, lending for efficient, practical purposes cannot happen so puts off organic recovery.

for twenty years plus japan tried what the u.s. and europe are trying.  it did not work/has not worked.  in a similar banking crisis the nordic countries did real reorganization of banks and recovered (and got back all of the government expenses) in five years.  

government has a crucial economic role in this crisis, just not the incredibly stupid one the u.s. and europe have taken on for themselves.  if one can't figure out the future, at least learn from history. 

Tue, 06/05/2012 - 18:49 | 2497731 Everybodys All ...
Everybodys All American's picture

You call it growth when in reality it is all inflation. This Keynsian growth plan is nothing more and nothing less than printing and is debasing the US dollar which is going to eventually end up in hyper-inflation. Good luck then...

Tue, 06/05/2012 - 19:48 | 2497736 THECOMINGDEPRESSION

We must create growth now, or else suffer the consequences.


Dumbest post ever! What would you produce besides air? There are NO factories in the USA. They are OVERSEAS working for .50 an hour. Can we do it for .40? LOL. There is no Future, lets collapse everything already. we''ll sort it out later.

Tue, 06/05/2012 - 22:58 | 2498258 Oldrepublic
Oldrepublic's picture

50 cents an hour is not correct for China;

base salary of Foxconn employee is around $4.35/hr;

average state employee gets $3.48/hr 2011

average private employee gets $1.96/hr 2011

Wed, 06/06/2012 - 01:36 | 2498466 prole
prole's picture

Hey what's wrong with you Old? You're not keeping to the narrative!!

Don't you know? Foxconn BAD!! Foxconn human slave labor bad!! Apple Bad!! Expoiting slaves BAD BAD BAD!!!

OK are we all back on the same page again?

/Sent from Iphone

Tue, 06/05/2012 - 18:51 | 2497739 Beam Me Up Scotty
Beam Me Up Scotty's picture

You can only pull so much future demand into the present. If I dont need a new car until two years from now but you force me to buy it today, then I won't be making a purchase in two years. Where does that leave the economy? All you advocate is a bigger house of cards. The bigger they are the harder they fall!!

Tue, 06/05/2012 - 18:56 | 2497749 trebuchet
trebuchet's picture

Pardon my naivete but why would deflation be an end -all to the recovery we hope for?

Becuase it would lead to a deflationary wage price spiral in an economy?

Or might it provide the much needed savings as the MPS of households expand, provding much needed capital to the banking system, while asset prices that matter to the average household such as houses  go through a much needed "correction" in value?

also,  please could you enlighten us about which economies collapsed from deflation compared to the number of economies collapsing rom hyperinflation?

Tue, 06/05/2012 - 21:00 | 2498041 Unique Snowflake
Unique Snowflake's picture

Most people are so stupid that they'd cry like babies if the number on their pay packet went down, even if the goods and services they buy with it all went to zero. Inflation make more money richer.

Wed, 06/06/2012 - 00:22 | 2497835 FutureShock
FutureShock's picture

This is almost a logical argument for Europe they don't have the private sector like the US with the Gov. doing it all.  They will still bring a reckening in the future but arguably it could buy time for growth with deep austertiy and some fiscal sanity.

In the US this is flat out stupid. Cut Gov. spending and shrink the size of Gov. Term limits and end Union and Political Cronies, Let private sector take the ball in a stable enviornment.

Oh and end the Fed - Private elites are making all the interest money, we don't need this, google Colonial Script.



Tue, 06/05/2012 - 20:03 | 2497905 fuu
fuu's picture

Still no lasers.

Tue, 06/05/2012 - 20:14 | 2497922 Soul Train
Soul Train's picture

Hey, this is in reply to "Dr Paul Krugman" :

Horseshit. Let's start with making sure that the crooks go bankrupt first, and quit having us bailing us the banksters, who have been in bed with the Fed and Washington DC politics for years. Once all the crooks are gone, then we start with a clean slate. We the people can eat rice and beans. The fat boys from Jersey, Long Island, Lower Manhattan and the Hampshires with their side mansions in West Palm can't survive. They wilt and die. Once the rats are gone, we the people take it back.

Let's let those organizations "too big to fail" go bankrupt, and get rid of the root of the problem. This means JPM, GS, MS, BAC, AIG, and all the rest of the crony money bite the dust. Goodbye dirt.

You think you are so smart. Get you head out your ass. If deflation means the end of the crony central planned mess we are in now, then bring deflation on. Bury the form of crony capitalism we have today.

Fight Club Rules.

Tue, 06/05/2012 - 20:30 | 2497980 shovelhead
shovelhead's picture

Sounds zany enough to be the real deal.

Ok, I'm in. Let's grab about 3 trillion and create hundreds of new Executive Branch alphabet agencies to move vast piles of paper through the system.

The untold amounts of resulting GDP from real Govt. wealth creation will allow us to give trillions more to fix Europe.

There. All fixed.

Please don't embarrass me by a Nobel nomination...

I do it only for your love and devotion.

Tue, 06/05/2012 - 22:53 | 2498250 Al Gorerhythm
Al Gorerhythm's picture

Obamney's policy wonk?

Wed, 06/06/2012 - 00:15 | 2498386 prodigious_idea
prodigious_idea's picture

The grammar and sentence structure are way off for most with Doctoral degrees.  But the theme fits.

Wed, 06/06/2012 - 03:56 | 2498546 TWSceptic
TWSceptic's picture

Creating growth yes, but not through inflation but through increasing productivity. Maybe some inflation where needed but not as the main driver. Govt should not be the engine of this growth, it should rather facilitate so businesses can breath and have confidence to invest. We need to save money to be able to do that. We can't spend and consume our way to prosperity.

Why are we so worried about deflation? Are we afraid people stop spending when plasma TV's become 50% cheaper? When houses reach a true bottom making them more affordable?

But I'm sure you are not the real deal, since he doesn't have the balls to debate someone formally, let alone post on ZH.

Wed, 06/06/2012 - 04:58 | 2498597 Fort Mac Flatlander
Fort Mac Flatlander's picture

The issue is that soon we will be facing a slow down in the velocity of money at the same time depressionary forces are going to overwhelm us.  If Bernanke is going to print, Obama should redistribute properly.  Quit fucking around with $3000 per head.  Buy them properly with a cool $100,000.  See how that will help drive the dollar down.

Tue, 06/05/2012 - 18:33 | 2497678 augustusgloop
augustusgloop's picture


no easing- pan-sovereign defaults trigger $1.14 quadrillion notional value derivatives becoming actual. system reset.

easing-inflationary pressure builds, buy a few years. 

Tue, 06/05/2012 - 17:58 | 2497565 SilverTree
SilverTree's picture

China, India, Russia and me.

Tue, 06/05/2012 - 18:34 | 2497685 Thomas
Thomas's picture

I already am so long the metals. I have begun baby steps to rebalance, arbitraging the big gap between equities and metals. I think there is a factor of two gain in this play (but am too much of a chicken shit to go balls to the wall in one fell swoop).

Tue, 06/05/2012 - 22:31 | 2498210 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

And me!

Tue, 06/05/2012 - 18:01 | 2497570 lemonobrien
lemonobrien's picture

i'm always buying golds cause i don't care about anything else; except my childs.

Tue, 06/05/2012 - 18:23 | 2497648 sunaJ
sunaJ's picture

All your childs are belong to us!

Tue, 06/05/2012 - 18:47 | 2497721 RockyRacoon
RockyRacoon's picture

Yes.  We shall hold them hostage in exchange for his golds.  Promise we won't boil and eat any of them.

Tue, 06/05/2012 - 19:12 | 2497781 CPL
CPL's picture

Promise we won't boil and eats any of them nasty Hobbitsess..


fixed Zero Hedge gramur gud we has.

Tue, 06/05/2012 - 18:12 | 2497616 FL_Conservative
FL_Conservative's picture

How can this be the first time on record if it happened twice in recent years?

Tue, 06/05/2012 - 18:34 | 2497628 Al Gorerhythm
Al Gorerhythm's picture

Considering the increasing strength of gold's move following the previous cross-overs, is there a chart genius out there who can estimate the move for the next leg? Trilliondollarboner's $2000 call seems a bit under-done.

Edit: My old man used to say: "Some people raise stupid kids." I failed to absorb $2200.

Tue, 06/05/2012 - 18:33 | 2497680 THECOMINGDEPRESSION

The FEDS are probably buying GOLD like no tomorrow. I bet you 100 000 000 oz.

Wed, 06/06/2012 - 00:02 | 2498365 Overfed
Overfed's picture

Silver. I'm too po' for gold. :-(

Wed, 06/06/2012 - 05:10 | 2498605 adamas
adamas's picture

I bought two weeks ago at 1535. and silver @27.40. if you're going to buy "gold" now the price chasing fever is upon you don't do it on a 40-1 leveraged spread betting account or you will fry.

Tue, 06/05/2012 - 18:00 | 2497527 TrillionDollarBoner
TrillionDollarBoner's picture

<-- Gold breaks $2000 first.

<-- Gold breaks $1000 first.

Tue, 06/05/2012 - 18:12 | 2497617 LawsofPhysics
LawsofPhysics's picture

breaks $1,000 breifly then starts heading to $20,000 but before it can get there we have bank runs, confiscation, capital controls, price controls, rationing, FEMA internments...  Can't see much beyond that.  It's an old crystal ball.

Tue, 06/05/2012 - 18:19 | 2497637 Troll Magnet
Troll Magnet's picture

by thetime gold reaches 20k, a loaf of bread will cost $500. and we'll all be living in guantanamo bay. don't drop that soap, bitchezzz!

Tue, 06/05/2012 - 18:45 | 2497709 TrillionDollarBoner
TrillionDollarBoner's picture

That fits your no stimulus thesis. My balls are saying you might be right, but if some kind of stimulus is forthcoming, then 2000 first, perhaps by some way, then maybe back through 2000 and even 1000. Either way, I can see these events being followed with increasing rapidity by maybe a few more wild-eyed oscillations, before the moonshot (with rapidly escalating complications along the lines you mention).

A fork in the road is coming. We find out soon which way we're headed in the short-term. But all such roads are headed to the same destination in the end. 

Strap in safe and enjoy the ride. 


Tue, 06/05/2012 - 18:50 | 2497734 RockyRacoon
RockyRacoon's picture

When you come to a fork in the road, take it. -- Yogi Berra

Tue, 06/05/2012 - 19:08 | 2497773 malek
malek's picture

The only way gold will ever break $1000 again (and at the same time be physically available to buy), is after the New Dollar gets introduced effectively eliminating a few zeros on the denomination of the old dollar.

Tue, 06/05/2012 - 20:04 | 2497908 Al Gorerhythm
Al Gorerhythm's picture

<--------Dollar repriced $2000 first.

<--------Dollar repriced $1000 first.

Either way, both shitty.

Wed, 06/06/2012 - 00:20 | 2498393 prodigious_idea
prodigious_idea's picture

Massive stimulus spending could pull down prices temporarily - perhaps to $1k.  But the long-term trend is decidedly up.

Tue, 06/05/2012 - 17:47 | 2497529 Tortfeasor
Tortfeasor's picture

Converting my change to nickles.


Tue, 06/05/2012 - 18:26 | 2497658 iDealMeat
iDealMeat's picture

I've gotten in to a practice of taking $ 40 FRN's to a random bank once a week.. Getting quarters, search em. take back to bank and convert to nickles.

Pulled 2 pre '64 quarters so far..

Change you can believe in..

Wed, 06/06/2012 - 02:53 | 2498515 The Navigator
The Navigator's picture

I saw guys selling rolls of Kennedy 1/2 dollars on ebay for $14 plus shipping and wondered WTF was this about - went to my local bank and got 1 roll (20 coins), in which there were 4x40% (1965-1970) coins. The next day I went back and got all 11 rolls they had, not a single roll had one 40% coin.

WhyTF those buyers just don't go to their own bank and pay $10/roll instead of $14 plus shipping is a mystery to me.

And last week a kid running the cash register gave me a Mercury dime in my change - that took $2 off my total cost at the store.

Free money out there if you look for it.

Ounces of Silver in Each Coin (1964 and older): Silver Dollars - 0.77344, Half Dollars - 0.36169, Quarters - 0.18084, Dimes - 0.07234 ...... Silver in Kennedy 1/2 dollar 1965-1970: 0.1479


Fri, 06/15/2012 - 01:42 | 2528436 iDealMeat
iDealMeat's picture

ssssssssshhh, Quiet Navigator.. 

You're waxing terriost..


Tue, 06/05/2012 - 17:50 | 2497533 brewing
brewing's picture

to be followed by hyper-inflation...

Tue, 06/05/2012 - 17:55 | 2497553 trebuchet
trebuchet's picture

Precisely more chance of that. 


AS this ZH article points out, when develeraging is a threat CBs "PRINT", i.e release money into the wider economy, increasem oney supply. 


This article at direct odds with previous one just put up - and more likely IMHO




Tue, 06/05/2012 - 18:08 | 2497603 SmokeThatHog
SmokeThatHog's picture

Velocity is a greater threat to inflation than supply.  Supply hasn't done shit thus far, and just because there is a lot of it doesn't mean it gets spent.  Inflation likely, but not before a terrible bout of deflation.

Tue, 06/05/2012 - 18:15 | 2497626 trebuchet
trebuchet's picture

money supply has contered the reduction in velocity that is what qe x etc is about from policy makers perspective - compensating for the reduction in velocity. 

and they will keep doing it coz they took in so much crappy assets in return for that money that the CBs are under waterthemselves if they had to mark to market. 

so that have to move the market to the mark. 

Look at my previous post on the previous thread about why deflation is not on the current CB target.



Tue, 06/05/2012 - 18:41 | 2497655 razorthin
razorthin's picture

Correct.  CBs are just pushing on a string.  It is not so much that banks are not lending as it is individuals and businesses want price discovery and business cycle certainty rather than suspended inflation (yes, deflation is GOOD).

In other words the TPTB and TBTF refuse to lose while the rest of us are slowly drained.  They know damned well if they step back and let things crater that we would be on the road to a decades-long recovery within a year.

Wed, 06/06/2012 - 00:39 | 2498413 Problem Is
Problem Is's picture

A Rhetorical Question:

Is it really deflation if you are simply taking the...


out of the system and returning to the trend line???

Tue, 06/05/2012 - 17:51 | 2497534 yabyum
yabyum's picture

Maybe you should all take canoe lessons.....or maybe not!

Tue, 06/05/2012 - 17:51 | 2497536 drink or die
drink or die's picture

I was considering buying silver, but FB is $2 less per share.  Who can pass up a deal that good?

Tue, 06/05/2012 - 18:07 | 2497594 Lost Wages
Lost Wages's picture

Warren Buffett is proud of you, grasshoppa.

Tue, 06/05/2012 - 18:07 | 2497595 Lost Wages
Lost Wages's picture

Warren Buffett is proud of you, grasshoppa.

Tue, 06/05/2012 - 18:13 | 2497621 Poor Grogman
Poor Grogman's picture

Silver is too heavy,

Damn stuff sank my last canoe and I couldnt save even one bar


Tue, 06/05/2012 - 18:30 | 2497671 SilverTree
SilverTree's picture

I lost all mine in a gardening accident. :-(

Tue, 06/05/2012 - 18:35 | 2497688 Thomas
Thomas's picture

I ate mine.

Tue, 06/05/2012 - 18:47 | 2497724 Miffed Microbio...
Miffed Microbiologist's picture

Better opt for the TSA groping rather than the scanner.


Wed, 06/06/2012 - 02:22 | 2498498 Clashfan
Clashfan's picture

Miffed, I wish that ignorant, sheepish Amerikkkans would do just that, in droves. What a great form of protest it would be. Planes would be delayed. The TSA would have to hire more gropers. Imagine no one going through the scanners and everyone getting groped, youtubing it, complaining about it, etc.

But that's what's wrong with Amerikkka and the world. People just do what the fascist government says. If we all had the balls to stand up, we could change things. There are many more of us than there are of them.

Reminds me of an old Shelley poem, but who reads anymore?

"Rise like lions out of slumber..."



'And if then the tyrants dare
 Let them ride among you there,
 Slash, and stab, and maim, and hew, -
 What they like, that let them do.

 'With folded arms and steady eyes,
 And little fear, and less surprise,
 Look upon them as they slay
 Till their rage has died away.

 'Then they will return with shame
 To the place from which they came,
 And the blood thus shed will speak
 In hot blushes on their cheek.

 'Every woman in the land
 Will point at them as they stand -
 They will hardly dare to greet
 Their acquaintance in the street.

==not to mention that this was written long before Gandhi


'Rise like Lions after slumber
 In unvanquishable number -
 Shake your chains to earth like dew
 Which in sleep had fallen on you -
 Ye are many - they are few.'
Wed, 06/06/2012 - 03:04 | 2498521 The Navigator
The Navigator's picture

Mine's in the fake batteries in the secondary battery bank (even hooked up in series and paralell for the "so called 24v system")

Before you glue to tops back on, add water for 'sloshing' sound effect - water won't hurt gold or silver.

How you design a floatation system (in case you really have a "boating accident") is your own problem - but one worth considering.

Wed, 06/06/2012 - 05:11 | 2498606 Cast Iron Skillet
Cast Iron Skillet's picture

I dissolved mine in nitric acid and keep the solution in a pond out back.

Tue, 06/05/2012 - 17:52 | 2497537 CClarity
CClarity's picture

When do you think the Fed will realize that lower interest rates aren't the answer to inadequate demand?  Growth is not eroding, eventually contracting, because interest rates are too high.  Confidence isn't just what the S&P 500 number is.  Confidence comes from a belief in the future with fair (at least mostly fair and reasonably understood) rules, taxes, income producing jobs, and a sense that the next generation will be living better than their parents.  Also without fascist tyrant leaders running the system - which many people and small business leaders believe is now the case. 

So, ease further away Fed.  Don't be surprised by the results though.

Tue, 06/05/2012 - 17:53 | 2497544 LawsofPhysics
LawsofPhysics's picture

Yes, plus one for you sir.  Of course there is that whole moral hazard rule of law issue as well as the socialization of losses issue.

Tue, 06/05/2012 - 17:55 | 2497549 drink or die
drink or die's picture

The Fed doesn't have any other options though.  If they do nothing, then all that will do is cause a panic. As long as there is a plan, then no one panics (despite it being a terrible plan).

Wed, 06/06/2012 - 00:27 | 2498400 prodigious_idea
prodigious_idea's picture

Thumbs UP if you think the Fed will inject at least $2 trillion before giving up (or the system collapses).

Thumbs DOWN if you think the Fed will choose/be limited to spending no more than $2 trillion.

Wed, 06/06/2012 - 03:14 | 2498532 Clashfan
Clashfan's picture

You mean besides the 17+ trillion they've already injected? That's an easy one.

Tue, 06/05/2012 - 18:16 | 2497631 NotApplicable
NotApplicable's picture

Strange, you act as if those at the Fed seriously consider these concepts. I'd recommend that you'd be far better served just dismissing it all as spin.

The only thing you need to know is that the ponzi will be maintained at ALL costs, up until the instant that it breaks.

Tue, 06/05/2012 - 20:09 | 2497886 CPL
CPL's picture

The price of oil is that hammer.


Think gold reacts to printing.  Nothing as fucked up as the energy plays.  WTI backed it's ass over 110 and broke the system again.  Like last time it backed it's ass over broke everything.


Look how Oil is signaling a CTRL-P...alternatively market volume making unfortune500 company chart look like a piece of shit OTC stock.  With the Euro floating in it's own koolaid, Canadian dollar strength against the Euro will kick all Euro members square in the ball sack once the price change is reflected in the exchange rate in Europe as a whole.  Not a lot Russia can do to fight price without destroying it's own credit swap facilites that handle the Oil and NG exchanges.  With the Canuck buck bump that creates a stronger Ruble which is as well backed as an American dollar. 


If they pull the trigger it will, not might, will end the central reserve.  It was never the money that controlled nations over the last century.  It was technology and the fuel that drives it.  When the conditions of price increases or/and lack of availability happen, that's the end game.  Fed knows it, every army on the planet knows it, every power player.  If there is one thing all can consistently agree on, it's no energy is a bad place to be.

Worse yet, since the Western world has forgotten the concept of work and manufacturing...even basic repair.  As the people we depend on run low on fuel or end up in a rolling blackout situation we start to miss things like clothes, canned goods, food, furniture, TVs, cars, bikes, tires...because we exported it all to somewhere cheap to make it all.  Problem is 80 dollars a barrel is all those countries can afford.  Problem further compounds, countries start to shut down, planes cannot be fueled.  Diesel cannot be found for any do i know this is going to happen?


Its happening across the planet right now, from Pakistan to Japan.   

Wed, 06/06/2012 - 00:49 | 2498425 kumquatsunite
kumquatsunite's picture

Well, we do see the incipient resurgence of American manufacturing. The various programs have been featuring those who make goods in America. So it may be a bit bumpy, but the new manufacturing economy will emerge. As to gold, given that it ran up the way it did, it's already too high for most to want to buy it. Too many have gotten fingies burned in recent runs of stocks, housing, and will be very cautious from here on in.

Wed, 06/06/2012 - 07:08 | 2498689 Winston Churchill
Winston Churchill's picture

You are delusional.

US manufaxturing will not resurect until:

The dismantling of Govt. regulations.

Wage levels meet those of Chindia.

The Hopium is strong in you.

Tue, 06/05/2012 - 17:52 | 2497540 LawsofPhysics
LawsofPhysics's picture

In the absence of any sovereign debt (a.k.a. socialized losses) repudiation it will either be death by deflation or inflation, period.  In both cases, having physical assets, silver, gold, copper, and any coinage will be wise.  Although in the deflationary death, the pennies and nickels may be more desirable for those everyday transactions.

We borrowed from the future to make a relatively few very wealthy and guess what, the future is now.

Tue, 06/05/2012 - 17:56 | 2497554 RationalPrepper
RationalPrepper's picture

It seems that ZH can't decide if the Fed will ease this month or not.  Tyler's posts keep implying both outcomes.  What's the scoop?

Tue, 06/05/2012 - 18:12 | 2497614 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Just sharing differing opinions on possible outcomes.  But at the end of the day whatever happens is a policy decision, Ben can stand by and watch a deflationary collapse or he can get in his helicopter and force inflation.  Seems to me it’s up to Ben and the Fed.

Tue, 06/05/2012 - 20:50 | 2498027 Quisat_Sadarak
Quisat_Sadarak's picture

You forgot the brass....


there fixed it for ya! ;-)

Tue, 06/05/2012 - 18:13 | 2497620 Silver Pullet
Silver Pullet's picture

I imagine there are 5-10 Tylers. Surely they don't all agree.

Tue, 06/05/2012 - 18:17 | 2497632 XitSam
XitSam's picture

Are you saying that Tyler Durden has a split personality?

Tue, 06/05/2012 - 18:28 | 2497661 TheCanadianAustrian
TheCanadianAustrian's picture

Do you honestly believe that one person writes all the content for this site?

Tue, 06/05/2012 - 18:56 | 2497748 Oldrepublic
Oldrepublic's picture

at least 15 writers, using same name

Tue, 06/05/2012 - 20:35 | 2497986 Flocking swans
Flocking swans's picture

Hey buddy.... You do not talk about Tyler's past... Unless you want to Fight... 

...So join the Club... and DO NOT talk about Tyler's past......

Also: Tylers will go on as long as they have to.

Tue, 06/05/2012 - 18:30 | 2497666 Silver Pullet
Silver Pullet's picture

A couple of them do yes, but the rest are okay.

(Have a split personality that is)

Tue, 06/05/2012 - 18:18 | 2497634 Pairadimes
Pairadimes's picture

Welcome to the Schrodinger economy!


The Fed won't print until they do,

The dollar is worth something until it isn't,

and everything will be fine until the shooting starts.

Tue, 06/05/2012 - 18:20 | 2497640 NotApplicable
NotApplicable's picture

Anybody trying to predict the timing of a con-game takes on the role of the rube (assuming they aren't in on the con).

Besides, if the Fed engages in double-speak, then what's an analyst to do other than to dissect all elements looking for the true tell?

Tue, 06/05/2012 - 17:56 | 2497555 Divine Wind
Divine Wind's picture




Congrats! You have just the skill set we need here at Goldman Sachs. Here is your desk. Now go get 'em, Tiger.

Tue, 06/05/2012 - 17:56 | 2497556 mammoth mo
mammoth mo's picture


Tue, 06/05/2012 - 18:02 | 2497573 Random_Robert
Random_Robert's picture

The Fed is going to buy Gold

Wed, 06/06/2012 - 03:14 | 2498533 The Navigator
The Navigator's picture

No need to buy it, they'll just steal what Germany (and any other country stupid enough to "Trust" US) left in our safe keeping.

Tue, 06/05/2012 - 18:05 | 2497584 rqb1
rqb1's picture

silver will be the main winner of any qe

Tue, 06/05/2012 - 18:35 | 2497686 honestann
honestann's picture

... closely followed by gold, ammo, and small but comfortable digs on some remote [semi]-tropical beach.

Tue, 06/05/2012 - 18:08 | 2497600 reTARD
reTARD's picture

Where's the "gold bitchez?"

Tue, 06/05/2012 - 18:13 | 2497619 yabyum
yabyum's picture

Gold bitches! Silver and all my lackluster miners too eh!

Tue, 06/05/2012 - 18:08 | 2497602 Panafrican Funk...
Panafrican Funktron Robot's picture

Invest in life simplification and removal of self from consumerism.  That's pretty much the only investment that absolutely, for sure, will make you wealthier, regardless of economic conditions.

Tue, 06/05/2012 - 18:30 | 2497673 Whalley World
Whalley World's picture

But, but Obammy says to buy Thingamajigs.  That dude is smart, going long Thinngies.

Wed, 06/06/2012 - 03:19 | 2498538 The Navigator
The Navigator's picture

Just make sure those thigamajigs are .999 pure silver - that would make a sound $3,000 investment and would make Max Keiser very happy.

Tue, 06/05/2012 - 18:09 | 2497605 ebworthen
ebworthen's picture

Cramer talking markets undervalued and Germany will come to the rescue of the Eurozone again.

What was that about Margin Stanley being down 40% since he said it was undervalued and a "buy"?

Tue, 06/05/2012 - 18:10 | 2497608 Lost Wages
Lost Wages's picture

Is everyone rich yet?

Tue, 06/05/2012 - 18:19 | 2497639 Cangoroo
Cangoroo's picture

Cramer is wrong, the Dollar needs a major rescue.It is all about money supply and the Eurozone had no major QE. If the dust has settled, the truth will emerge. The Eurozone's trade balance is fine. The US trade balance and likewise the UK trade balance are negative. When fundamentals rule again, the US and the UK are in uncharted waters. How to raise cash by getting capital inflows.

Tue, 06/05/2012 - 18:24 | 2497652 LawsofPhysics
LawsofPhysics's picture

Easy, just like some South American countries.  Nationalize everything and sell access to resources and technology for gold.  Well the U.S. can anyway, the U.K., not so much.

Tue, 06/05/2012 - 18:36 | 2497693 trebuchet
trebuchet's picture

eu  "positive" trade balance = german +nordic exports.  rest pof countries is imports.  

France, Italy, Spain lost positive trade balances at beginning of Euro to Germany. Greece never had nything of note but lost that too. 


Go tell the french, spanish, italians their public and private savings are funding their net imports and german net exports... Germany got rich off the euro and its payback time. 


Tue, 06/05/2012 - 18:47 | 2497727 Cangoroo
Cangoroo's picture

One could argue catchup time. A positive trade balance means capital epxorts. These capital exports funded a long lasting party. So a couple of years more to go capital opposite direction. If it is balanced it is fine.  In German it says Sozial ist, was Arbeit schafft. So work , export and we will buy with your money and build nice obsolete condos and highways for another 7 years.

Tue, 06/05/2012 - 19:10 | 2497779 jimmyjames
jimmyjames's picture

Cramer is wrong, the Dollar needs a major rescue.It is all about money supply and the Eurozone had no major QE.


The Euros make the Fed look like pikers when it comes to printing-

Tue, 06/05/2012 - 19:22 | 2497816 Cangoroo
Cangoroo's picture

Balance sheet figures are misleading, the ECB can write down both sides and clean it up, the FED cannot.

Tue, 06/05/2012 - 22:11 | 2498164 jimmyjames
jimmyjames's picture

Balance sheet figures are misleading, the ECB can write down both sides and clean it up, the FED cannot.


How would they do that when their balance sheet is full of toxic PIIGS debt?

It still has to be sold on the market to value in order to unwind the balance sheet debt-to my understanding-

Tue, 06/05/2012 - 22:09 | 2498158 americanspirit
americanspirit's picture

Cramer is wrong??? Tell me it in't so! God - what's left to believe in?

Tue, 06/05/2012 - 18:24 | 2497654 swamiluv
swamiluv's picture

Here is the issue oil ie gas prices in the US. Gas is currently $4 - $4.50 a gallon oil $84 bal. If the fed eases gas goes to $5.50-$7 a gal the american people will go nutz! Obama will have no chance of re-election. So what will the fed do?

The Fed will drive down oil prices and hope that oil falls quick enough that the stock markets are effected minimal.

This is the corner that they have painted themselves into. CL chart (oil)

This is the game of chicken that the fed faces now, they will have their minions sell CL in hopes of driving the price down so it gains momentum to the downside and let the pros do their dirty work.

The question is how far will markets fall by the time gas gets to $2.50-$3 a gal so the fed can launch QE3. dow jones

Plus they have Nov elections in USA, Fed is getting squezed. Watch oil and USA gas prices when they get low enough the Fed will launch QE3...then BUY BUY BUY and ride the Fed's coat tails.

My 2 1/2 cents!


Tue, 06/05/2012 - 19:33 | 2497844 paulbain
paulbain's picture

SwamiLuv wrote:


Here is the issue [regarding] oil (i.e., gas) prices in the US. Gas is currently $4 - $4.50 a gallon, oil $84 [per] [barrel]. If the [federal Reserve Bank] eases, gas goes to $5.50-$7 a gal [and] the american people will go nutz! Obama will have no chance of re-election. So what will the fed do?

The Fed will drive down oil prices and hope that oil falls quick enough that the stock markets are effected minimal.



Uhm, no. When the price of gasoline breaches $5.80 per gallon, Obama (or Romney, if he wins) shall impose PRICE CONTROLS on fuel. And he shall blame the price increase on, e.g., speculators, oil companies, Iran, etc.

You can count on it, Jack.

-- Paul D. Bain




Tue, 06/05/2012 - 19:42 | 2497866 swamiluv
swamiluv's picture

Price controls? Please explain how this can happen?

Tue, 06/05/2012 - 20:08 | 2497917 CPL
CPL's picture

Yeah it's a supply question with PM's, not a cost problem.  Finite world, etc.etc...

Tue, 06/05/2012 - 21:31 | 2498105 LawsofPhysics
LawsofPhysics's picture

Explain what. Pick up a history book. This has happened many time before and in many countries.

Tue, 06/05/2012 - 18:30 | 2497672 econprof70
econprof70's picture

Not sure what this post is talking about, the Bloomberg 5Y/5Y sits at 2.73% right now:

Wed, 06/06/2012 - 00:30 | 2498343 RomeoFayette
RomeoFayette's picture

I could be wrong because I'm not near my Bloomberg right now, but I think it's the 5Y5Y forward. The Fed uses a slightly different formula than some Street vendors, but the methodology, simply put: a spot 10yr Treasury vs. 5yr swap, which creates a structure that kicks-in 5yrs from now to hedge rising rates/inflation risk the 5yrs thereafter.
Your link is for the more conventional 5y breakeven, which incorporates TIPS breakevens from those 5 & 10 yr maturities to express inflation expectations for that period. The more esoteric the greater the arb opportunity!

Tue, 06/05/2012 - 18:47 | 2497726 junkyardjack
junkyardjack's picture

Gold futures are soaring, oh wait...

Tue, 06/05/2012 - 20:06 | 2497913 CPL
CPL's picture

Look at Oil futures.  That's the canary.  Gold reacts on something being printed, not if, when and second it's printed. 

If it makes you feel better, gold could be bought for 500-650 an ounce 2008.  Took nearly four years to lose exactly the same amount of buying power if holding any paper currency.  Burger is good indicator as well.  JIT industry and their drivers are very focused on immediate costs.  The difference of a nickle can break a farmer or an oil company.



Tue, 06/05/2012 - 18:54 | 2497741 Oldrepublic
Oldrepublic's picture

impressive analysis by Dr. Paul Craig Roberts

Financial Collapse At Hand: When is "Sooner or Later"?

Tue, 06/05/2012 - 18:54 | 2497743 New American Re...
New American Revolution's picture

The top of the channel line in gold is $2250, so this makes sense.

Tue, 06/05/2012 - 19:05 | 2497764 lsbumblebee
lsbumblebee's picture

It has been reported that Bob Chapman has lost his battle with pancreatic cancer.

He will be missed.

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