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Nomura Explains Why Gold Went Down, And Why It Is Going Back Up

Tyler Durden's picture




 

Tired of all the trite meaningless propaganda from Economic PhDs who crawl out of the woodwork every time there is a downtick in gold, proclaiming in big bold letters that the Gold "bubble" has burst, only to crawl right back in when gold soars $100/oz in the days following their latest terminally wrong proclamation? Or, alterantively, wondering what will happen to gold from this point on? Then the following report from Nomura is for you. As Saeed Amen analyzes: "In this article we explain why the price of gold has fallen in recent weeks. Notably, price action during Asian hours has become very bearish, which had not been the case in previous unwinds earlier in the year. In addition, it is likely that losses in risky assets such as equities helped precipitate unwinding of very heavily extended long gold positions. However, the key reasons for being bullish gold remain; namely, a very low interest rate environment and the potential for long-term demand from Asia. Also, the potential for gold’s status as a safe-haven hedge to tail risks arising from various uncertainties due to the European debt crisis is likely to be enhanced, especially now that short-term speculative positioning is relatively light. Also on a short-term basis, we have begun to see some reversal in gold  back upwards during Asian hours, after the unwind." Overall, informative but nothing new to regular readers: gold liquidations on market plunge (confirming ironically that gold is now among the most liquid types of investments in the market) as had been predicted months ago, and the same long-term fundamentals for the metal once the current stock downturn shakes out all the weak hands.

Full note:

Why Did Gold Go Down:

Introduction

In recent weeks the gold price has fallen significantly from around $1900 to $1535 (intraday). Gold is now trading near our Q3 target of $1650. The size of the move was far more significant compared to other recent unwinds, like those in May or August. One of the key factors for our long-term bullish view on gold is Asian demand. As discussed in FX Insights – Gold, gold, 6 July 2011, the majority of end-user demand for gold is from Asia. From an Asian valuation perspective, gold is also relatively cheap (

Gold has not been supported during Asian hours

One way to proxy Asian demand for gold is to look at how gold performs during Asian trade. Over the past few years, gold has generally appreciated during Asian hours, reflecting strong demand for the metal. However, recent weeks have shown weakness in Asian hours (Figure 1). On previous occasions when gold traded poorly, such as in May and August, it remained relatively robust during Asian hours, with any sell-off tending to come in London and New York hours, suggesting that Asian investors were supporting an unwind of Western investors’ long gold positions.

This contrasts with the recent fall, which has been noticeable across multiple time zones. In the very short term, we believe a reversal would need to be led by appreciation in Asia. Although a few data points do not constitute a trend, on Tuesday and Thursday gold rose by 2%, its largest moves higher during Asian hours since October 2008 and perhaps a signal that it could be turning back up.

Gold has declined more than would be suggested by moves in rates

The last FOMC meeting did not expand the Fed’s balance sheet (i.e. QE3), which would have been bullish for gold (see Give Gold Some Credit, 19 August 2011 for some discussion about the relationship between QE and gold). However, the Fed has committed to keeping rates low until mid-2013, as well as embarking on Operation Twist, which should be gold-supportive. Indeed, in Figure 2 we plot inverted real rates against gold and find that the price action has been detached in recent weeks. This suggests that it is difficult to attribute the fall in gold purely to the lack of QE3.

Gold sold off at the same time as equities

Although gold can trade like a tail-risk hedge, it often trades like a risky asset. This has been evident in recent weeks where we have seen a strong positive correlation between gold and the S&P500 (Figure 3), which we use as a proxy for risky assets. The rationale is that heavy losses in risky assets forces investors to unwind other positions to free up cash. As a liquid asset and also with heavily extended net long speculative positioning heading into this episode, gold has suffered (Figure 4).

Speculative positioning is lighter in gold – back to tail-risk hedge?

However, with positioning now at relatively low levels, it is likely that gold will trade more in line with the fundamental factors we have discussed, namely low real rates and the potential for continued Asian demand, which are broadly positive. The lack of positioning could also enhance gold’s status as a tail-risk hedge in the continued uncertainty around the European debt situation.

Tail risks in Europe

Developments in Europe have become the main market driver recently. In recent publications we have analysed both our base case, which involves no Greek default and the tail risk of a Greek default (see EURUSD: Our Central Case, 5 September 2011 and EUR/USD – The Greek tail risk, 7 September 2011). In short, we think that both our central case and the tail-risk scenario are likely to be negative for risk sentiment.

Even if Greece continues to meet its obligations and avoids a disorderly outcome, there are serious doubts regarding the EFSF’s capacity to intervene credibly in the sovereign debt markets of Italy and Spain once it takes over this role from the ECB without significant leverage (for a discussion on how this may be achieved see EFSF 2.0, 3.0 and beyond, 30 September 2011). Despite  the barrage of policymaker meetings next week and the fact that the various options regarding EFSF leverage are on the agenda, we do not expect any decisions to be made any time soon (see also G10 FX Insights - The Missing Bazooka, 30 September 2011). Until we have better visibility on this issue, however, we believe markets are likely to exert renewed pressure on Italy and Spain as we approach the takeover date. Furthermore, the Greek saga continues with Troika inspectors’ delayed return to Athens causing further delay in the disbursement of the sixth instalment, EFSF 2.0 ratification pending in many EMU countries and various headlines regarding the possibility of a change in the terms of the 21 July agreement.

The bottom line is that both our central case and Greek tail risk are likely to cause a new round of risk aversion in global markets in the next few weeks and exert further downside pressure on EUR. We have been trading EUR/USD from the short side since 25 August (see Sell EUR/USD spot) and have recently restructured our shorts (see Positioning for the euro break, 22 September 2011).

Bar the unlikely event of a major breakthrough by European policymakers in the next few weeks, we expect gold to benefit from a new bout of risk aversion as the market re-assesses yet again the chances of a new systemic crisis. This point is further enhanced by noting that the correlation between gold and EUR/USD has turned negative recently. A similar, albeit greater, correlation shift occurred during the first phase of the Greece crisis in May 2010 (Figure 3). This lends further support to the idea that gold tends to function as a safe-haven hedge in cases of European risk events that have a systemic impact.

Conclusion

We have seen that gold’s recent fall has been accompanied by heavy deprecation in Asian hours. This contrasts with relatively robust Asian price action during earlier periods of gold weakness in May and August. We think that a reversal of this trend back to gold appreciation in Asian hours is the key to a short term reversal and we have begun to see this in recent days. We also find that the correlation between risky assets and gold has been higher than usual in recent weeks. Hence, we suggest that heavily extended speculative net long gold positions have unwound to free up cash for other losses in risky assets, like equities. With short-term speculative positioning net longs at relatively low levels, it is likely that fundamentals, as opposed to positioning, are likely to drive the price of gold again.

We continue to view long-term fundamentals, such as low real rates and the relative cheapness of gold when viewed from an Asian perspective, as bullish for gold. At the same time, gold’s attractiveness as a tail-risk hedge against the continued uncertainty in Europe is likely to be another factor that should support the price of gold in the short term.

 

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Mon, 10/03/2011 - 07:40 | 1732522 HoofHearted
HoofHearted's picture

So, does it need to be said?

Gold, bitchez.

Mon, 10/03/2011 - 08:15 | 1732614 GetZeeGold
GetZeeGold's picture

 

Ok.....DAMMIT....can we just pick a direction and stick with it!

 

Mon, 10/03/2011 - 08:34 | 1732661 tmosley
tmosley's picture

Ok, volatility will rise.  That's about the only direction you can be assured of in paper markets during a fiat currency collapse accompanied by mass fraud.

Mon, 10/03/2011 - 09:06 | 1732737 GetZeeGold
GetZeeGold's picture

 

 

Ok....so when does the mass fraud hit......cause I sure want to be ready for that.

 

Mon, 10/03/2011 - 08:22 | 1732631 cccmachine
cccmachine's picture

Always

Mon, 10/03/2011 - 08:51 | 1732706 Mister Ponzi
Mister Ponzi's picture

Must be true when the name of the guy who wrote the article is "Amen"...

Mon, 10/03/2011 - 07:41 | 1732524 FoieGras
FoieGras's picture

I find it hilarious how 'experts' love to explain market moves with the benefit of hindsight. This is such a futile exercise.

Who cares *WHY* it dropped? Does it matter? Gold's in a bull market as far as the technicals are concerned. I am long a couple contracts and I got my stop around 1500, that's all I need to know.

Mon, 10/03/2011 - 08:19 | 1732622 GetZeeGold
GetZeeGold's picture

 

That's why we all watch CNBC.......they nail it everytime.

/SARC_THE_SIZE_OF_PLUTO

 

Mon, 10/03/2011 - 12:15 | 1733391 Mad Cow
Mad Cow's picture

Yeah, history sucks, who needs it! /sarc

Mon, 10/03/2011 - 07:41 | 1732525 no2foreclosures
no2foreclosures's picture

Try gold has not been supported during European Central Banksters hours.

Trust me, the Asians aren't selling their gold.

Mon, 10/03/2011 - 07:57 | 1732557 Oh regional Indian
Oh regional Indian's picture

I think the point is the lack of buying support in Asia these past couple of weeks. Same probably for silver too.

ORI

Mon, 10/03/2011 - 08:18 | 1732621 no2foreclosures
no2foreclosures's picture

Prices don't just go down because of a lack of buying, it takes active short selling, probably naked short selling, to make make gold prices go down $50-$100.  This article is a shitty cover story for the Central Bansters manipulating gold prices.

Mon, 10/03/2011 - 13:32 | 1733752 caconhma
caconhma's picture

Ben and his fellows need to bring commodities and PM prices down (even for a short-time) to claim a deflationary threat and to start the next money printing spree.

This is no different from what they have done in 2008.

 

Mon, 10/03/2011 - 08:47 | 1732695 cynicalskeptic
cynicalskeptic's picture

Asia saw a chance to let the price drop - and buy on sale.    They're not dumb.  Whiel the US is worrying about paper prices you can bet Aisa bought physical on the drop.  I wonder where the gold coming out of GLD went?   Presuming any real gold DIDget sold out of GLD........

Mon, 10/03/2011 - 07:41 | 1732526 hourglass86
hourglass86's picture

Nouriel Phucking Douchebag Roubini always tweets shit when theres a dip in gold. 

Mon, 10/03/2011 - 09:00 | 1732645 GetZeeGold
GetZeeGold's picture

 

Does he have a Nobel prize? I'm losing track of all the geniuses.

 

 

Mon, 10/03/2011 - 13:34 | 1733761 caconhma
caconhma's picture

Does he have a Nobel prize? no, he is not Jewish.

Mon, 10/03/2011 - 15:25 | 1734116 akak
akak's picture

True, Roubini is a fraud of an economist, and a shameless defender of the central bank-controlled financial and monetary status quo --- but he did stay at a Holiday Inn last night.

Besides, he has had the ultimate honor: having a breakfast cereal created in his image.
You know the one I mean ---- "Count Chocula".
Which is, perhaps unsurprisingly, full of sugar and short on fiber and any real nutrition.
You can find it on grocer's shelf, right next to the boxes of "Denninger Flake(s)" and "Special K(eynes) with Dead Theories".

Mon, 10/03/2011 - 07:42 | 1732528 eigenvalue
eigenvalue's picture

But if Greece defaulted, gold and silver could be taken down again as in 2008.

Mon, 10/03/2011 - 07:57 | 1732537 agent default
agent default's picture

Not necessarily, in 2008 we had a debt crisis not a currency crisis.  People needed liquidity and got it from wherever they could.

 A Greek default on the other hand, however well managed (which will not be) will create a huge confidence crisis in the Euro and the EU banking system, sending aftershocks throughout the world.  The survival of the Eurozone under such a situation looks increasingly unlikely.  People will probably flock to PMs as they are shocked by the risks behind central bank controlled currencies.  Not  the big institutional investors mind you, I am talking about ordinary people who have never held gold or silver before.  The demand for physical PMs will come from the bottom.  The exchange traded PM backed securities are a different story, and I think that there will be some sort of a separation between the two markets.  It will just be another floor of the banking/financial system coming down hard.

Mon, 10/03/2011 - 07:59 | 1732563 eigenvalue
eigenvalue's picture

My guess is that gold and silver would be hammered again in the case a Greek default and turmoils in Europe. But when the European debt crisis ends and people start to focus on the US debt crisis, then gold and silver would soar.

Mon, 10/03/2011 - 08:40 | 1732670 Smiddywesson
Smiddywesson's picture

Yes.  Any event of such magnitude that it is guaranteed to be good for gold will draw the ire of the Fed, the ECB, and apparently, the Chinese central bank.  That means more manipulation and lower prices UNLESS you are willing to bet your money that this one event is of such magnitude that it breaks their ability to manipulate prices lower.  That's one Hell of a bet. 

I wouldn't take that bet, so I will step aside and see if Greece is too big for the manipulators.  Why?  Because if the manipulation machine breaks, there IS NO ceiling for PM prices.  I am not going to miss that move if I sit on the sidelines for a few days.

They can only cheat you if you are greedy.  Don't try to catch the whole wave when you are hunting a tsunami.

Mon, 10/03/2011 - 08:40 | 1732671 Pladizow
Pladizow's picture

For the same reason as gold is NOT in a bubble, is why it will be slaughtered in the event of a Greek default; i.e., not enough people/institutions own it.

In a panic the money will not immediately flow to PM's, but to the unworthy $.

Familiarity breeds complacency and people will go where they have always gone.

Gold is not yet a focal point.

When the dust has settled in Europe and the US once again becomes the center ring, then gold will enter phase 3.

Mon, 10/03/2011 - 09:11 | 1732750 glokk26L
glokk26L's picture

If it gets hammered down, that means its time to buy more.

Though there's a limit to buying metals that aren't lead.

I find that a good move is 2 bricks of .22 lr per week with assorted boxes of other calibers.

Meijer has .357 JSP 158 gr in my neck of the woods.... hope to try some in the Redhawk.  Should be a screamer!

Mon, 10/03/2011 - 07:53 | 1732544 GeneMarchbanks
GeneMarchbanks's picture

Greece defaulted a while ago, arithmetically speaking, so if you are still looking to the deranged Eurocrats for direction, may I suggest investing in a clue stick and smacking yourself with it.

Mon, 10/03/2011 - 07:54 | 1732549 GoldBricker
GoldBricker's picture

I should hope that particular contingency would be priced in by now.

That said, there is always room for a short-term deflationary downdraft as gold longs (especially the paper kind) close their positions to free up funds to raise cash. I suspect that the game won't be over until physical decouples from paper (i.e., has its price quoted separately).

Mon, 10/03/2011 - 08:45 | 1732686 Alea Iactaest
Alea Iactaest's picture

Like Brent and WTI.

Mon, 10/03/2011 - 12:40 | 1733511 FeralSerf
FeralSerf's picture

It already has its price quoted separately in SGOL vs GLD.  There's about $30 difference in the price now.

Mon, 10/03/2011 - 08:04 | 1732581 Quinvarius
Quinvarius's picture

First of all, look at the chart of gold vs the S&P in 2008.  Gold was already at all time highs when the S&P was at 666.  So good luck trying to time a dip based on your theory.

Second, we are talking about the death of paper currency this time around.  I am not fooled by a bunch of margin raises and clown action manipulation to move paper gold down during key bullish gold events, even while physical demand goes up.

One of the things that sealed German fate in Weimar was their ignorant attempts to sell gold into the market to stop their worthless paper from dumping.  So when the time came to put a stop to the currency death spiral, they had no gold left to create a new currency.  They ended up making a land based currency to save themselves, but that eventually died too because no foreigner could collect on the land.  Gold is the only way to build or save a currency.  Hopefully the central bankers are not so stupid that they are unable to learn from 10's of examples of currency deaths in the past hundred years.  Either they push gold up to a price where we can back our currency, as happened to the US in 1980, or they go to a gold standard.  If they keep pretending they can base paper money on unpayable debt and possibly give up their gold, there is no bottom in paper money. 

Mon, 10/03/2011 - 12:45 | 1733542 DrunkenMonkey
DrunkenMonkey's picture

Or 'they' raise interest rates to entice people into bonds and cash deposit accounts, no ?

Mon, 10/03/2011 - 17:28 | 1734701 Quinvarius
Quinvarius's picture

Honestly, I can not see one example of where that ever worked.  People like to say Volcker did it.  But the dollar continued to plunge no matter what he did until it was 100% backed by the US gold supply.  IMO, the Volcker rate raises being a factor are a Keynesian central banker myth.  All Volcker did was hose the economy up.

Mon, 10/03/2011 - 08:44 | 1732684 AmCockerSpaniel
AmCockerSpaniel's picture

He said "could", not would. So he said nothing. This "may" be a last post??

Mon, 10/03/2011 - 08:50 | 1732703 cynicalskeptic
cynicalskeptic's picture

Didn't one of the Gulf states just trade Greece dollars for an option on their gold?,,,,,,,,,     Wouldn't that lock up their Gold so even in case of a default that wouldn't hit the open maarket?  Paper games can be played but when it comes to physical...  no fundamental changes....

Mon, 10/03/2011 - 07:48 | 1732532 DormRoom
DormRoom's picture

gold @ 1100 by New Years.

 

when correlation = 1, after further drops in all asset classes, gold & silver will collapse, like in '08.

Mon, 10/03/2011 - 07:53 | 1732543 eigenvalue
eigenvalue's picture

History doesn't repeat itself although it rhymes. I don't think gold can reach $1100 again.

Mon, 10/03/2011 - 07:57 | 1732559 GeneMarchbanks
GeneMarchbanks's picture

That's fine. If no one buys the dip @ 1400 1300 1200(which I highly doubt) I'll step in @ 1100 enough to sink a cruise ship. Here's a question: in that scenario, where are the European banks and BAC & MS?

Mon, 10/03/2011 - 08:07 | 1732593 GoldBricker
GoldBricker's picture

Maybe they've got put options on each other that they can cash out.

Mon, 10/03/2011 - 08:08 | 1732588 GoldBricker
GoldBricker's picture

So duh, sell it short now and watch the money roll in. You won't even need to finish college. It's obvious you're already way too smart to need that.

Mon, 10/03/2011 - 09:05 | 1732736 lunaticfringe
lunaticfringe's picture

Too funny.

Mon, 10/03/2011 - 08:09 | 1732598 Quinvarius
Quinvarius's picture

Gold is already cheaper now than it was in 2008.  It is $550 an ounce in 2007-2008 money and $51 in 1980 money. 

Mon, 10/03/2011 - 08:23 | 1732632 Jendrzejczyk
Jendrzejczyk's picture

 Is there a link to that data or how it was calculated? Not trolling, just interested.

Mon, 10/03/2011 - 08:25 | 1732636 Michelle
Michelle's picture

Based on that logic, which is what the inflationists will tell you, imagine how cheap gold was in 2001 at $250? What about silver at $3? Was the money supply not laarger then, too?

My point is that Gold and Silver don't trade on fundamentals otherwise their prices would almost alway be on an upward trajectory. This asset class is in a bubble and will pop like everything else. This time isn't different either.

Mon, 10/03/2011 - 08:46 | 1732690 tmosley
tmosley's picture

Deflationsists don't understand that there can be bubbles in fiat currencies too, not to mention bonds.

This is why they have always, and will always continue to lose absolutely everything.

Mon, 10/03/2011 - 09:58 | 1732866 Snidley Whipsnae
Snidley Whipsnae's picture

The world's biggest bubble now is in US Treasuries.

We continue to hear that US Ts are the worlds 'deepest and most liquid market'...but, no one, with the exception of a few savvy bond fund managers, stops to consider why this is.

US Ts are created with a key stroke on a computer.

US Ts are just another god damned piece of paper.

Anyone that prefers to hold computer generated electronic pieces of paper over physical gold is a fucking moron.

When the dust settles there will be only PMs left standing as true stores of value... Well, there will be some precious stones, art works, and productive ag land if one can afford the taxes (read about Roman farmers)...  

Mon, 10/03/2011 - 11:56 | 1733306 Smiddywesson
Smiddywesson's picture

All paper is a house of cards dependent upon the system.  When the system goes, it all collapses, revealing PMs as the only surviving liquid assets.  They were the only real liquid assets all along, it's just the house of cards concealed that fact.

Mon, 10/03/2011 - 08:18 | 1732623 doomz78
doomz78's picture

If there is a collapse i would think 1400 is as low as she'll go.  Then the bull market will resume once they print the money to "save" us from the banking crisis. 

Mon, 10/03/2011 - 08:28 | 1732649 Quinvarius
Quinvarius's picture

It takes 2 to ten years to translate a spike in currency supply to inflation based on my observations of other inflations.  I'd say we are still looking forwards to the TARP and multi trillion loan effect from the 2008 crisis.  Then after that we will still have the QE2 effect and now thr EFSF effect.  We are probably just now getting the Bush inflation effects.  When it really starts rolling, no layman will understand it because the cause will be so far behind us.

Mon, 10/03/2011 - 08:58 | 1732719 cynicalskeptic
cynicalskeptic's picture

We're still in the low velocity induced deflation.  People are scared, keeping money in cash or T-Bills so it's not moving.  When people see how fast that money is losing purchasing power, THEN you see velocity take off as people look to swap their paper money for somethjing with tangible value.  As inflation increases, velocity increases since nobody wants to hold depreciating cash.... buying power drops mopre, people spend it faster, value drops more... vicious cycle   You saw it in Weimar, and places like Argentina and Brazil.  You spent money as fast as you got it because it would buy less tomorrow.  You bought anything you needed as soon as you got cash and spent any left over money on ANYTHING with tangible value.  Unfortunately your buying power doesn't keep up with the increase in prices so you get to the point where you don't have any 'extra' cash - and indeed don't have enough  to buy necessities.  

Better hope inflation doesn't hit the lift off ppoint to hyperinflation.  Things get nasty.

Mon, 10/03/2011 - 12:56 | 1733594 FeralSerf
FeralSerf's picture

The Proles can't spend their cash, which is denominated in bankster ATM units rather than Ben Franklins now, if the banks fail or refuse to allow the transactions.  It really is different this time.  This time the people don't have any physical currency to speak of.  A shortage of physical currency will (and is) causing it to be hoarded.

There's a lot of cash outside the country, but DHS and their security is not going to allow the currency to be repatriated so it would be able to actually buy stuff like gold, farm land, and bullets.

Mon, 10/03/2011 - 07:48 | 1732533 DormRoom
DormRoom's picture

gold @ 1100 by New Years.

 

when correlation = 1, after further drops in all asset classes, gold & silver will collapse, like in '08.

Mon, 10/03/2011 - 07:55 | 1732550 bigdumbnugly
bigdumbnugly's picture

 remember, everything in moderation, dormroom.  too much beer pong leads to reduced brain matter.

Mon, 10/03/2011 - 07:58 | 1732560 BadKiTTy
BadKiTTy's picture

Is there an echo in here.... .?

Mon, 10/03/2011 - 08:04 | 1732579 GeneMarchbanks
GeneMarchbanks's picture

BK, if you repeat the delusion enough times...

Mon, 10/03/2011 - 08:06 | 1732589 EvlTheCat
EvlTheCat's picture

He's trying to play Battlefield 3 Beta and post economic predictions at the same time. Considering it's early, his multitasking may be a little off.

Mon, 10/03/2011 - 07:51 | 1732538 ivars
ivars's picture

Here i did some further checking on patterns to make some sense in future events predicted by some of my charts:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&start=580#p34357

By comparing the interesting way DJIA follows Greeces Athens General index with a 1,5 year delay, including current drop ( august/september) . The patterns match almost exactly, and also compare well to my own prediction of DJIA 2011-2013 ( see in the post I referred to).

Briefly: First, have a look at the pictures :

DJIA/Greece comparison April 30, 2011:

 

DJIA / Greece comparison October 3rd, 2011:

Longest DJIA prediction I have made on April 26th, 2011( not from Greeces graphs, from other patterns I use) :

 

Since both currencies are pegged ( Greece to EUR, USA to being a world reserve currency) , at the moment where the predicted DJIA stops falling like Greece but becomes stable or even grows due to inflation, the USA DEFAULTS and deflation is replaced by inflation. By looking at Greeces graph that takes a sharp downturn(on Greeces graph, April 2011)  into levels DJIA will never reach, and calibrating the time axis of DJIA graph forward, the day of inflection point  is Jan 1st, 2015, or roughly, H2 2014. That is the day when USD will be unpegged ( as Greece is still pegged) = meaning the USA will default VERY soon after that or at that time, and USA  deflation will change to inflation.

That gives some time for silver stackers, I guess, since as long as USD stays as a reserve currency and deflates, and the price of silver in USD goes up at the time deflation begins, it will allow them to purchase more other things with this silver. This period will last for 2 years-long enough to prepare for what comes next. This crisis is much more stretched out than 1929 crisis.

The question still remains, why at deflation start, silver will move up 3 times while gold only 10-20%? from todays levels? But now its more clear where to look for answers as the scope has been narrowed.

Mon, 10/03/2011 - 07:52 | 1732541 PulauHantu29
PulauHantu29's picture

Barbaric, simply Barbaric!

You can't eat gold!

Mon, 10/03/2011 - 08:49 | 1732701 AmCockerSpaniel
AmCockerSpaniel's picture

GOLD = FOOD There for; One can eat GOLD.

Mon, 10/03/2011 - 10:29 | 1733003 PulauHantu29
PulauHantu29's picture

You might be right. I was reading Adam Fergussson's book, When Money Dies and one of the few htings that maintained its value (in fact, it wen tup in value) was gold.

How Barbaric!...but I bet it goes good on rye bread with mayo ?!~

Mon, 10/03/2011 - 12:02 | 1733325 Smiddywesson
Smiddywesson's picture

Another good take away from that book was the market rising 27x between Oct. 1922 and Oct. 1923, meanwhile the "profits" could buy less than the principal due to debasement.  Moral of the story:  Even with a 2700% increase, you couldn't hide from printing in stocks.

Mon, 10/03/2011 - 19:49 | 1735142 Diogenes
Diogenes's picture

You can't eat paper either but you can wipe your ass with it!

Mon, 10/03/2011 - 07:53 | 1732542 mess nonster
mess nonster's picture

Up, down, all around... it doesn't matter. Gold stays constant in purchasing power. There is no investment potential, unless you buy and sell and make fiat on the trade. In that case, go ETF's and who cares if you ever see the real thing?

I say in the long run, only not so long, months- that gold will plummet as devastating deflationary depression sets in. Then physical may be a good thing- the holders of physical will be able to buy beans and rice when everyone else is starving.

Mon, 10/03/2011 - 07:54 | 1732545 7bit
7bit's picture

A bullish Gold article on Zerohedge is a strong sell signal!

Everytime the Gold salesmen come out of the woodwork and post their bullish phantasies in order to unload more of their Gold to the unwashed masses at absurd prices the price will collapse dramatically only a few days later.

 

Mon, 10/03/2011 - 08:05 | 1732586 BadKiTTy
BadKiTTy's picture

I think I would rather be one of the unwashed masses with a stash of pm's than one with a stash of paper. Ask the North Koreans after they changed their currency and were given something like 10:1 old for new!

K@

Mon, 10/03/2011 - 08:11 | 1732603 Sophist Economicus
Sophist Economicus's picture

Yes, Yes.   Afterall, this must be the top for gold, a useless shiny metal.   Much better to load up on paper with lovely engravings on them.    Afterall, those are RARE in a debt crisis and cannot be manipulated by those nobellest of all humans, POLITICIANS.   LOL

Mon, 10/03/2011 - 09:10 | 1732746 cynicalskeptic
cynicalskeptic's picture

The engraved paper becomes rare - you can't print that fast enough so you start printing notes with litho alone.  Intaglio (engraved printing) notes are time consuming and (relatively) expensive to produce - especially now with the multi color litho backgrounds.

The stuff loses value so fast it's not worth counterfeiting by thern so your oonly limit is the amount of paper you can get.  That's what finally stopped Zimbabwe.  They couldn't get any more banknote paper - it came from Germany and they didn't have the foreign reserves to pay for any more.

Mon, 10/03/2011 - 13:03 | 1733627 FeralSerf
FeralSerf's picture

If Zimbabwe had had ATMs, their inflation would have progressed differently.  Not saying it wouldn't have inflated, just saying it would have been different.  What would have been different?  Don't know -- we don't have a good model yet.  But I think we'll get to find out.

Mon, 10/03/2011 - 19:53 | 1735152 Diogenes
Diogenes's picture

But hardly any of our money is paper, therefore there is no limit to the amount they can create. Electronic 1's and 0's can be created without limit.In fact they are being created right now.

Mon, 10/03/2011 - 08:21 | 1732627 Motley Fool
Motley Fool's picture

You are correct, it is a strong sell signal.

One should now be strongly selling equities and bonds to buy more gold.

Mon, 10/03/2011 - 09:07 | 1732740 lunaticfringe
lunaticfringe's picture

Government troll.

Mon, 10/03/2011 - 07:54 | 1732546 Enkidu78
Enkidu78's picture

Since the new Greek default fears we are seeing the Gold price rising not falling, this is the complete opposite to the markets a week ago.

Mon, 10/03/2011 - 08:05 | 1732585 Michelle
Michelle's picture

It'a all about liquidity and without it, everything goes down regardless of fundamentals.

Mon, 10/03/2011 - 12:09 | 1733354 Smiddywesson
Smiddywesson's picture

Since the new Greek default fears we are seeing the Gold price rising not falling, this is the complete opposite to the markets a week ago.

Yes, it invalidates my reverse logic theory (gold moving opposite to fundamentals).  But if one accepts that gold and silver prices are manipulated, then one would also expect that the manipulation will not be carried out in a predictable fashion.  Otherwise, it could be traded off of and that would defeat the purpose of driving me completely out of my friggin mind.

Mon, 10/03/2011 - 07:59 | 1732551 ivars
ivars's picture

I think this is a better explanation- overbougt/oversold:

See the chart from May 4th, 2011, where  this coming overbuying  after silver collapse in May was already predicted.

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...

Also the accuracy of the chart from May 4th-today:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...

Short term prediction from the same charts for Oct-Dec:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...

1) Silver may fluctuate around 30 USD (+- 3?) for 1 month or so (except very short sharp peaks, perhaps) , then move up sharply about 5 USD to 35-40 and drop again, now to little higher level of 33-35 +-5, and not change much anymore this year. So the bottom will be kind of close from time to time during October.

2) Gold, on the contrary, seems to be posed for relatively steady growth till 1800 in November, around which level it should fluctuate for few months (+- 50 ?) .

Kind of suggests may be more commodities will have relatively flat period from Oct-Nov till the end of the Year. In USD, while stocks will continue falling.

 

 

Mon, 10/03/2011 - 09:14 | 1732758 cynicalskeptic
cynicalskeptic's picture

How well do charts work when you have a manipulated paper market......  especially when the physical market begins to detach from the physical?  

The physical price NEVER got as low as the paper price did in 2008.  Supplies dried up - the metal wasn't being sold even WITH greatly increased premiums.

Mon, 10/03/2011 - 07:55 | 1732553 PaperWillBurn
PaperWillBurn's picture

price goes up and price goes down but the physical is being taken off the plate. It's a game of golden musical chairs. Don't be caught standing when the music goes out on the physical gold market and only papers for sale.

 

Grab a seat, bitchez

Mon, 10/03/2011 - 07:56 | 1732554 BadKiTTy
BadKiTTy's picture

So nothing about the coordinated take-down of gold just as the safe haven Swiss Franc gets taken out of play! There is likely a coordinated effort to keep gold from being a safe haven bet as its rise delegitimises fiat. If fiat is your 'product' then you will do what you can to avoid substitution.

Imagine a headline like 'All paper currencies are going to Zero, collapse of Paper Wealth' playing on CNN/CNBC etc! If the masses bailed out of fiat it wouldn't just be a run on Drexia, but on the whole system.

When the Zimbabwen dollar went to zero the country functioned because the USD was the defacto currency. If the USD collapses then what?

Part of me wants to find out...... The other part doesn't!

K@

Mon, 10/03/2011 - 08:15 | 1732616 The Limerick King
The Limerick King's picture

 

 

With anti-gold shills out in force

And misinformation their source

The blog wars are here

The end is now near

Was gold taken down?...but of course!

 

Mon, 10/03/2011 - 07:57 | 1732556 GoldBricker
GoldBricker's picture

"fat-tail hedge", eh? Gotta love it. This tail is getting so fat that not only will it wag the dog, it'll be the dog.

Gold, lady dogs!

Mon, 10/03/2011 - 08:00 | 1732558 thunderchief
thunderchief's picture

I did not read a thing on physical demand.  Were the terms physical/demand even used?  So the paper pushers are going to push the paper price back up, just like they knocked the paper price down.  Just like in late April in silver.  Yawn.

 

Mon, 10/03/2011 - 08:02 | 1732572 GoldBricker
GoldBricker's picture

Premiums (buy and sell) are up at my local dealer in Brussels. The spread is the same (~2.5% for the most popular coins), but they're paying and charging more than usual, which indicates that coin buying is strong.

Their website has the current spreads:

http://www.gold4ex.be/servlet/javaparser?pgm=lst_or_new&lg=uk

Mon, 10/03/2011 - 08:34 | 1732663 thunderchief
thunderchief's picture

Massive short covering in Silver and Gold will lead to the paper price rise.  Massive physical accumulation will at some point have to address the paper price, hopefully through a comex default at some point.  These paper pushers don't amount to much either up or down if they never take delivery.  I love how price and physical demand work inversely in gold and silver.  

Mon, 10/03/2011 - 07:58 | 1732561 alswill
alswill's picture

I got a $829.99 iPad2 for only $103.37 and my mom got a $1499.99 HDTV for only $251.92, they are both coming with USPS tomorrow. I would be an id!ot to ever pay full retail prices at places like Walmart or Bestbuy. I sold a 37" HDTV to my boss for $600 that I only paid $78.24 for. I use. CashHuge.com

Mon, 10/03/2011 - 08:14 | 1732612 D-Man
D-Man's picture

Damn spammers!

Mon, 10/03/2011 - 09:16 | 1732763 cynicalskeptic
cynicalskeptic's picture

If you tell me where I can get an ounce of gold or silver for 90% off I might be interested... the REAL thing not Chinese counterfiets (with or without the 'COPY' stamp) - otherwise pplease go away....

Mon, 10/03/2011 - 10:33 | 1733018 DosZap
DosZap's picture

alswill

Good Grab, how long where they in the saltwater?

Mon, 10/03/2011 - 08:00 | 1732566 Dan The Man
Dan The Man's picture

I'll be honest, there were very few so called experts who came out of the woodwork to downplay gold this time.  Everyone i've read thinks gold is going waaaay higher.  Ominous...

Mon, 10/03/2011 - 08:05 | 1732587 EL INDIO
EL INDIO's picture

There exeptions:

Mark Faber, Jim Rogers, Bill Bonner

Mon, 10/03/2011 - 08:03 | 1732576 EL INDIO
EL INDIO's picture

Gold went down because it went up too high too fast thanks to the leveraged buyers.

You got to love those idiots buying paper gold thinking they are hedged against inflation and defaults. They still don’t get, the dumb fucks !

Gold is probably ok at these prices but it is still vulnerable. Mark Faber thinks it could go as low as $1200/oz if $1500/oz doesn’t hold. Jim Rogers thinks that Gold might be overdue for a 50% drop as it went up for 10 year without something that bad happening.

These two have had spectacularly correct calls and they are right most of time, so you better listen to them. Faber called the latest top in Gold before it happened when others were saying it was going to $2500 and that we have a new steeper angle of assent now. Steeper my Ass.

Be careful, this shit isn’t finished yet.

Mon, 10/03/2011 - 08:25 | 1732638 eigenvalue
eigenvalue's picture

Gold to $1300+ and silver to $18?

Mon, 10/03/2011 - 10:23 | 1732859 thunderchief
thunderchief's picture

I'm sure Jim Rogers is really backing the truck up on his Corn contracts right now.  Probably renting and IL-76 to carpet bomb North Korea with it.  He keeps telling everyone to become a farmer, but he just does not say where.  Yeah Jim, like becoming a farmer is really that easy. 

I keep saying keep an eye on physical demand, and that is where this price drop is eating the Silver market alive right now.  Gold maybe not so much, but who is selling?  Where are the physical sellers?  Is Jim Rogers dumping all his physical gold holdings because gold is going to drop like a waxed brick? 

I guess he's not perking up on that one.  His Pie hole too stuffed full of overpriced rice and corn contracts.  

Never trust good old boy rich kids, starting with George W.  Never trust a billionair with a bow tie.  There is something fake about the whole getup.  

So is Jim Rogers selling his physical today?  That is all you have to know.  I sure this billionaire  good old boy "Farmer" like himself and Old Warren B portray themselves as are not dumping it on the market.   They talk out of two sides of their mouths.   

Hey Jim, just keep in mind.  When wall street gets rich, people riot.  When Farmers get rich, people starve.  Then you have a revolution. 

Mon, 10/03/2011 - 12:13 | 1733379 Smiddywesson
Smiddywesson's picture

Not so long ago, wasn't Jim Rogers telling everyone that China was taking over the world and would pull all of our economies out of the mud?  That Jim Rogers?

Mon, 10/03/2011 - 11:27 | 1733068 DosZap
DosZap's picture

ElIndio

Jim Rogers thinks that Gold might be overdue for a 50% drop as it went up for 10 year without something that bad happening.

If it does wonderfull,it's already had a 20%+ correction.

If it goes to anywhere close to $1000.00, I will be fighting like hell to find any, and the prems will be $200.00+ an oz.

Mon, 10/03/2011 - 08:04 | 1732584 ncdirtdigger
ncdirtdigger's picture

It all due to those damn backward asians.

Mon, 10/03/2011 - 08:06 | 1732590 redytogo
redytogo's picture

Gold and Silver will continue to rise as the worlds economies collapse.  I tell everyone that will listen, you are not purchasing to invest and make money, you are buying in one ounce bullion coins to take possession and use it to barter with in the very near future.

Mon, 10/03/2011 - 08:12 | 1732607 EL INDIO
EL INDIO's picture

Not correct.

PMs purchasing power will continue to rise over time but their price is not sure to rise all time.

You have to understand the difference.

If there is inflation prices will rise but if there is deflation prices will fall but the purchasing power will rise because other things prices fall harder.

Mon, 10/03/2011 - 09:07 | 1732739 Smiddywesson
Smiddywesson's picture

If there is inflation prices will rise but if there is deflation prices will fall but the purchasing power will rise because other things prices fall harder.

Yes.

Scenario 1:  Deflation.  Gold prices fall at a slower rate.  PM holders win

Scenario 2:  Inflation.  Gold prices rise.  PM holders win

Scenario 3: Hyperinflation/currency destruction:  PM holders win, BIG

Mon, 10/03/2011 - 09:49 | 1732836 jimmyjames
jimmyjames's picture

Scenario 1:  Deflation.  Gold prices fall at a slower rate.  PM holders win

Scenario 2:  Inflation.  Gold prices rise.  PM holders win

Scenario 3: Hyperinflation/currency destruction:  PM holders win, BIG

******************

Gold price falls during Inflation--1980--2001

Gold price rises during Hyper-Inflation--2001--2008

Gold price rises during Deflation--2008--2011

http://goldprice.org/charts/history/gold_30_year_o_b_usd.png?0.874928907...

Mon, 10/03/2011 - 11:00 | 1733096 EL INDIO
EL INDIO's picture

BS man,

2008 Deflation, Gold goes down 30% from $1000 to $700;

2008-2011 Money printing starts, Gold goes up from $700 to $1920;

2011 Money printing paused Gold down to $1650 and may be more.

Mon, 10/03/2011 - 11:38 | 1733209 DosZap
DosZap's picture

El Indio,

Well, lets see.

SNB Puts CHF on par w/ Euro

CME hits us w/ margin hikes after hours

And Benny announces nothing but TWIST.

Gold was over bought, now extremely OVER sold.

This time will not be 2008, the fundies have changed dramatically,home and globally.

Caveat( I FULLY expect you to be correct short term), when this diseased system hits us full on, we move out of deflation, into at minimum VERY high inflation.....................all world currencies will have basically cratered.Whats LEFT?.

All the LONGS are basically out of the Mkt, and phys holders/buyers are keeping it up,until/unless the idiots (think they are returning to the safe haven of the 140 Trillion dollar US ponzi) only to be burned to the ground.

Mon, 10/03/2011 - 12:24 | 1733383 jimmyjames
jimmyjames's picture

INDIO

BS man, ******************* Obviously you don't understand what happened in 08-or what's happening today- There was a rush to cash so Gold was liquidated to cover over levered hedge funds- We've been in Deflation since 08- Do you suppose those negative leveraged CDO/CDS bets that are sitting in Level 3 assets are not and have nor been winding negative since this shitshow blew up? You people who do not look at the credit markets and only the piddly amount of printing in comparison-have this game assbackwards-

http://research.stlouisfed.org/fred2/series/BASE

http://research.stlouisfed.org/fred2/series/TCMDO

http://bit.ly/r6KvXV

Mon, 10/03/2011 - 12:44 | 1733534 EL INDIO
EL INDIO's picture

"...You people who do not look at the credit markets and only the piddly amount of printing in comparison-have this game assbackwards..."

 

Well we live in the real world: when prices of food and energy go down that's deflation and when they go up that's inflation.

 

How do you know your CDO/CDS ... are real shit or represent real shit.

 

Get real man.

Mon, 10/03/2011 - 14:04 | 1733891 jimmyjames
jimmyjames's picture

Well we live in the real world: when prices of food and energy go down that's deflation and when they go up that's inflation.

 

************

Typical Keynesian-

We're talking "Gold" "Credit" "Cash" = Monetary phenomena-

And you somehow think "Prices" fit into that?

Mon, 10/03/2011 - 12:32 | 1733475 Smiddywesson
Smiddywesson's picture

I won't call BS on that, but as the central bank ponzi scheme nears the rapids, the old game of convincing you gold is not money goes out the window.  Making gold prices fall during inflation (1980-2001) was a neat trick, but did prices do so naturally?  This river is reaching the falls and the ability to control PM prices will go over the edge along with everything else, so I would be very careful of using the historical data too rigidly.  The only thing that is going to "work" is logic, and even that can (will) be used against you in the short term.

 

Mon, 10/03/2011 - 13:04 | 1733629 EL INDIO
EL INDIO's picture

Well said man,

That’s why the best strategy is to always have cash and gold at the same time.

When prices go up too much you lighten up a bit (but keeping a good core position)

and when prices go down substantially you load up.

Mon, 10/03/2011 - 14:40 | 1734010 jimmyjames
jimmyjames's picture

 


I won't call BS on that, but as the central bank ponzi scheme nears the rapids, the old game of convincing you gold is not money goes out the window.  Making gold prices fall during inflation (1980-2001) was a neat trick, but did prices do so naturally? 

*************

Of course Gold is money and i have a load of it-USD too--

Yes CB selling had an influence on lower Gold prices-80/01

The problem with Inflation and Gold is-

"No risk" sentiment in the market-

When money "Credit" is cheap and easy-Gold gets past over for higher yielding instruments such as houses with no money down and the demand drives prices higher which the masses are able to see and participate in-

The high yield debt instruments that spawned from that market is where the money went-

In 2001 we had the mania phase of that market and there were two risk indicators that could see it for what it was-Hyper-Inflation of the Credit/Derivatives markets

The long Bond and Gold reacted in sync-

http://research.stlouisfed.org/fred2/series/TP30A28

You know what Gold did in 01-

You know what Gold did in 08-

Look at the yields in 08-

"Risk" came out of the market with the Stimulus expectations-

Bonds crashed and Gold crashed-House prices shot back up-the Stock Market went up-

Then Gold and Bonds started their rise about a year later as credit risk sentiment reinserted itself-

http://4.bp.blogspot.com/-dFFEBbWWha4/TolNeu_aAYI/AAAAAAAAMsE/oSkGDuaRxe...

The smart money got into Gold and Bonds at the lows in 01 then again in 09-

Today-Bonds are hot and so is Gold for the same reasons-"Fear" has replaced Greed-

Mon, 10/03/2011 - 11:59 | 1733319 Thisson
Thisson's picture

Some might consider me a gold bug, but you do need to consider the possibility of scenario 4: Real interest rates rise, PM holders lose.

Mon, 10/03/2011 - 12:22 | 1733426 Smiddywesson
Smiddywesson's picture

4: Real interest rates rise, PM holders lose.

LOL, I actually typed that, but then erased it because the probability of TPTB doing the right thing and trying to save the system has now reached zero.  In terms of motivation, if they intended to do so, they would have attempted to fix the system rather than just kick the can and buy gold.  Even if they had a change of heart, we are well past the point of no return.  Also, the amount of debt levels we have run up would crush the US and EU if rates rose to realistic levels.

Mon, 10/03/2011 - 10:25 | 1732848 slewie the pi-rat
slewie the pi-rat's picture

you're "arguing nuance" with a guy who is looking for a "faith & survivalist" support group!

he doesn't "get" zeroHedge &/or anonymity and actually posted a "bio" as he apparently hopes to find new "friends" on zH, just like FB, by golly!

(paste):

Biography

Chris Mosser, Owner and Survivalist, brought Faith & Survival to life in June 2010, with one goal, “Prepare today for societal breakdown tomorrow”. Chris is delivering on that mission statement through many different forms of communication including blogging, public presentations, training classes, team meetings, and guest speaking as a subject matter expert. Chris’s dual path of daily training in his skills of physical survival as well as his decades of business management experience brings expertise to those seeking advice and council in:

Preparing to resist inflation, hyperinflation, economic collapse, societal breakdown, and civil unrest, followed ultimately by loss of freedoms or martial law. Resistance techniques include preparation, building self reliance, communication, and team building with others that share like minds, and attitudes.

History
Member for
1 week 4 days

 

faith and survival!  join the "resistance" here! 
decades of business management experience, too!
join a winning team!
join zeroIndividuality!
join now!

 

OT:  RanSqwk's:  Libya's interim government says oil production is improving at a...
unhhh...libya does not have an "interim gov't" as US-puppet jibril continues to make a world-class fool of himself and his bilary "handlers"
jabril keeps trying to appoint himself prime mini and for'n mini, with his family and friends taking over everything else and the libyans keep telling him to STFU!!!  now, bilary seems to have also told him to STFU b/c he is now claiming he won't serve in the "interim" goobermint,
now in the second month after toppling tripoli, the NTC is a tower of babel-tribalism and the "resistance" in sirta is being bombed into the future stone age, as NATO re-invigorates its mission to protect civilians from the moQ!!!   the "winners" haven't been able to do much of anything except secure limitless WMDs for the moslem brotherhood all over africa & the ME as they keep running outa ammo in the battles of sirta & bani wahlid, probably b/c everytime "allah" pops into anybody's head, said "warrior" is obliged to fire off an entire clip skyward, rather than just point as per barry bonds, sammy sosa, or even mark mcgwire, the cream, the clear, and the breakfast of champions home run kings! 
they were gonna do the interim goobermint thing, but postponed it, and promised it for next week, which was last week...or maybe the week before...
am i a hopeless optimist or have the fuking nannies finally met their match? 
Mon, 10/03/2011 - 09:01 | 1732727 slewie the pi-rat
slewie the pi-rat's picture

but everybody wants to trade and "make money"  L0L!!!

gold and silver US Mint-produced coinage is not for now, BiCheZ, but for later, alley-gatorZ! 

do something for your kids and grand-kids besidez indebting/enslaving them!

as we enter another counterparty shit-storm, get shelter!

Mon, 10/03/2011 - 09:18 | 1732769 cynicalskeptic
cynicalskeptic's picture

Copper jacketed lead in prudent amounts as well.......

Mon, 10/03/2011 - 08:25 | 1732637 papaswamp
papaswamp's picture

I purchase gold (and silver) as an insurance policy against a possible collapse of the fiat system...end of story. I don't think it should be purchased for any other reason (but that is just me). This mentality worries me:

"..the potential for long-term demand from Asia."

Yes it is, but there also seems to be a large potential for the continued downswing in the big economy...China. If things get too nasty they may panic and sell off their substantial Gold holdings...this in the short term would absolutely tank gold (silver will chase). For those like me...this provides a nice time to purchase more. For people trading to ride the price highs and lows...a very dangerous place to be.

Stay positioned for very quick moves for the next year at least....this roller coaster is just leaving the station...the wild ride hasn't even begun yet.

Disclosure..opinions are my own and only work for me. 

Mon, 10/03/2011 - 12:38 | 1733498 Smiddywesson
Smiddywesson's picture

Virtually every central bank in the world is playing the kick the can game and buying gold.  They are literally destroying their balance sheets to do so.  Their need is so great, that mortal enemies like the Chinese and the Americans are coordinating their margin hikes.  Could central banks take turns and sell a portion of their holdings to further depress prices?  Yes, on the short term, but right now they don't have to because they can play with paper prices.  There is no chance at all that some nation will dump in a panic.  They are buying for a panic they know is coming. 

Mon, 10/03/2011 - 08:26 | 1732640 chubbar
chubbar's picture

I get a chuckle out of these multi-month predictions that have gold wafflying around, perhaps up or down a couple hundred FRN's.

We have an imminent default of Greece. A potential loss of Germany to the EU. A possible slew of bank nationalizations along with the potential for cascading cross defaults among every bank in the world because of the derivative problem, among other problems just to start.

I personally don't know where gold/silver would go should all or some of these come to pass in the next month or so. I'm positioned for gold to go up but will admit that I don't "know" for sure.

However, one thing I'm pretty sure about is that gold/silver aren't going to be trading around in a 5-10% range if the EU fails or the banking system seizes up.

Mon, 10/03/2011 - 08:27 | 1732644 Dingleberry
Dingleberry's picture

SO I guess the USDX is the place to be, if not in gold????  With Ben at the helm??? How long as it been hovering just above the crash line of 72???  I think I'll take my chances with gold.  No one wants to talk as to why the USD stays at that range, after dropping 40% over the last decade.  Manipulation, perhaps? Nah................

Mon, 10/03/2011 - 08:33 | 1732658 Raymond Reason
Raymond Reason's picture

Explains why the apparently stupid levered longs keep going back for more shearing. 

http://www.youtube.com/watch?v=yzq1Ovil-rY&feature=player_embedded

Mon, 10/03/2011 - 09:29 | 1732787 lunaticfringe
lunaticfringe's picture

She could use a Dale Carnegie course or two.

Mon, 10/03/2011 - 09:05 | 1732734 glokk26L
glokk26L's picture

An economist is somebody who can tell you tomorrow, why the things they predicted yesterday, didn't work out so well today.

And they probably spent 8 years in Kollij to learn that much too....

Mon, 10/03/2011 - 09:11 | 1732751 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

First of all T. D., he misspelled "depreciation":)  Secondly, no mention of margin hikes, manipulation or fact that one does not have to be Asian or domicile in Asia to trade the Asian markets during Asian trading hours.  Hence, this analysis carries zero weight with me.

Mon, 10/03/2011 - 09:25 | 1732781 lunaticfringe
lunaticfringe's picture

Read the whole thread, spammers and all.

I have been buying phyiscal gold and silver for a little over a year now. My allocation model was 50% of my fiat, 30 parts silver for every part gold. Right now I have a silver lean. With a 6-1 leverage ratio, paper silver is essentially gone. The banksters and the crimex margin fucked silver to death which is a good thing. Because of that, I am adding as quickly as I can to silver.

Do not concern yourself with all of the bullshit and economic geniuses. We have a world fiat bubble that is bursting. There is no way out for these central banker assholes. The inverse relationship between PM's and worthless paper is historically well documented. Side with factual and historical precedent. Get physical, watch the game tonight, rest easy. You'll be fine.

Mon, 10/03/2011 - 15:40 | 1734199 akak
akak's picture

We have a world fiat bubble that is bursting. There is no way out for these central banker assholes. The inverse relationship between PM's and worthless paper is historically well documented. Side with factual and historical precedent.

And that is precisely what all the clueless and ignorant deflationary flat-earthers adamantly REFUSE to ever do: examine monetary history as a guide to what is overwhelmingly likely to happen going forward.  And hint, it is NOT a magically and never-before-seen appreciating fiat currency.

Mon, 10/03/2011 - 09:30 | 1732791 dixonge
dixonge's picture

I gotta call bullshit on that last sentence. 

"gold liquidations on market plunge ... as had been predicted months ago, "

I clicked that link, and I read the following:

"It will be interesting if the only real dip worth buying will see buyers come out of the woodwork or if gold will proceed to plunge alongside everything else."

There is a big difference between "I predict" and "It will be interesting" - there is no prediction there, just a comment.

Mon, 10/03/2011 - 09:41 | 1732820 HurricaneSeason
HurricaneSeason's picture

Gold's only up 18% for the year, same as the last 10 years. If it were a true safe haven, it'd be going up 50% per year. The U.S. markets are only down 6-10%. If they can find someone to buy $2 trillion in treasury bonds per year at 0%, then the U.S. markets will skyrocket even without jobs. The Hang Seng is down 27% for the year. The U.S. markets and bonds are the place to go because they will share the wealth.

Mon, 10/03/2011 - 12:50 | 1733564 Smiddywesson
Smiddywesson's picture

LOL you got 3 junks.

Any attempt at sarcasm here will get you instant junks from those too juiced on Red Bull to notice your wit.

If it were a true safe haven, it'd be going up 50% per year. The U.S. markets are only down 6-10%.

Too funny.

Mon, 10/03/2011 - 09:50 | 1732841 Mr_Wonderful
Mr_Wonderful's picture

You don´t hear that elusive - Death of the Dollar - mentioned much anymore. Also "hyperinflation" seems to have been downgraded to just plain vanilla "inflation". Given tanking prices of commodities, (almost all industrial metals included) that´s not very surprising.

Mon, 10/03/2011 - 10:22 | 1732977 Volaille de Bresse
Volaille de Bresse's picture

"Gold's only up 18% for the year, same as the last 10 years. If it were a true safe haven, it'd be going up 50% per year. The U.S. markets are only down 6-10%. If they can find someone to buy $2 trillion in treasury bonds per year at 0%, then the U.S. markets will skyrocket even without jobs. The Hang Seng is down 27% for the year. The U.S. markets and bonds are the place to go because they will share the wealth."

 

Silly! The Dow is obscenely overvalued now and is due for a severe correction. The Munibonds bubble has not yet exploded and the housing Sh!t In The Fan is about to happen. And you want ME and the rest of the world to give you my savings.

I'll walk the yellow road...

Mon, 10/03/2011 - 11:00 | 1733097 slewie the pi-rat
slewie the pi-rat's picture

great post...

...from my favorite french chick(en)!

Mon, 10/03/2011 - 12:52 | 1733578 Smiddywesson
Smiddywesson's picture

No, no way he was serious.  That would be even funnier.

Mon, 10/03/2011 - 10:27 | 1733000 Bansters-in-my-...
Bansters-in-my- feces's picture

Did you say the MANIPULATORS are doing thier dirty deeds during asian trading hours.?

I thought so.

Mon, 10/03/2011 - 10:45 | 1733066 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey 7bit...

You sound more like a "2bit"  keynesian whore.

Mon, 10/03/2011 - 11:41 | 1733225 Fred C Dobbs
Fred C Dobbs's picture

I bought 10 more St. Guadens and Libertys this past week.  

 

 

Mon, 10/03/2011 - 12:35 | 1733483 Ye Ye
Ye Ye's picture

"Paulson Advantage Plus" fund had to unload because of redemptions.

Meanwhile "Paulson Disadvantage Minus" is currently accumulating gold and is expected to outperform once again.

Mon, 10/03/2011 - 16:04 | 1734305 Youri Carma
Youri Carma's picture

Gold? Sure, We’ll Take More of That, Says CME

Excerpt:

The step is the latest in a string of moves by exchanges and other financial services firms to increase the use of gold as collateral, which essentially places the precious metal in the top tier of asset classes .

It was back in October 2009 that the CME Group announced it would allow physical gold to be used as collateral for margin requirements. Rival IntercontinentalExchange Inc. followed suit in November 2010.

Then last February, J.P. Morgan Chase & Co. also said it would start accepting physical gold as collateral in some financial transactions.

Meanwhile, the World Gold Council also is gaining traction in its push to have the Basel Committee on Banking Supervision accept the precious metal as a Tier-1 asset for banks, along with government bonds and currencies.

Market participants say such moves are re-establishing gold’s role as a monetary and financial asset .

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