What Does Gold Know That Stocks Don't?

Tyler Durden's picture

A quick glance at today's cross asset class market moves shows a clear standout. The massive outperformance of Gold (relative to USD strength, Stock weakness, and Treasury yields tumbling). However, focusing on a slightly longer-term context shows that it appears you can't keep a good gold market down as it has merely recovered from its over-zealous selling pressure of earlier in the week - to resync with FX, stocks, and bonds. Most importantly, as we pointed out yesterday, it is now clear once again that 'sexy, smart' stocks knew nothing then (for the fourth time this week) - but keep on believing, as we will focus on 'other' asset classes as a signal.

 

Today - across asset classes...looks like Gold is onto something...

 

but on a longer-term context, things have come back into line...

but more importantly note the green ovals where 'sexy, smart' stocks (blue) tried and failed to push higher again and again and again...seems gold was onto something.

Charts: Bloomberg

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ITrustMyGut's picture

so is Okie_oil_man! he says its all going down now baby!  LOL

/moan

nope-1004's picture

What Does Gold Know That Stocks Don't?

Counterparty risk.

Clint Liquor's picture

Ding! Ding! Ding! We have a winner!

GetZeeGold's picture

What does AAPL know, then?

 

No competition from FB.

 

Reflate Bubble : ON

 

strannick's picture

same that zh knows that cnbc doesnt. same that einhorn knows that munger doesnt. same that vienna jews know that civilized buffteers dont

Xkwisetly Paneful's picture

can't keep a good gold market down

exactly what is taking place unless one is off their anti psychotics.

if could step out of the bubble and see how ludicrous this piece is from outside the bubble,

even you would be staggered.

no bubble or mania here, gold is special.

the world is going to end.

 

Poor Grogman's picture

I love your well balanced and informative posts, you obviously have much expertise to share.

 

Thomas's picture

Gold got one look at the Snorgtee Girl.

tmosley's picture

The COMEX gold contract has counterparty risk.  That is what everyone thinks of for some inexplicable reason when you say "the price of gold".

Madness.  From top to bottom, from left to right, from statist to anarchist, everyone in this world is fucking nuts.

nope-1004's picture

Agreed.  I was referring to physical only - that I unfortunately lost - in that tragic boating accident - 9 miles off the coast of NC.

ZeroAvatar's picture

You, too?   I had my gold forged into an anchor.  With gold's specific weight, I thought, "Wow, it'll make a great anchor"!  I shoulda spent a little more on the rope, though. 

TonyCoitus's picture

Me too!  I lost my gold in a tragic boating accident in Lake Michigan, near the Mackinac Bridge.  Fortunately, no barbarians were lost in the melee!

Likstane's picture

Mine is in the surf next to the Edmunds ferry stop with the remains of my Coleman.  Still hoping to recover a few ounces.

Spirit Of Truth's picture

"everyone in this world is fucking nuts."

Bingo....and now a Puetz eclipse crash window has opened:

http://thespiritoftruth.blogspot.com/2012/05/puetz-eclipse-crash-window-...

Everyone is focused on the Eurozone, but few recognize how deep the mass psychosis goes.  The potential for war is also a concern, and this might explain the spike in gold.  Syria bears watching in particularly IMHO.  Trouble there could lead to a chemical SCUD missile attack on Israel like I 'foresaw' in my 1991 apocalypstic vision:

http://www.spiritoftruth.org/Thesis/Intro/#4d

Nobody For President's picture

Tmos sez: everyone in this world is fucking nuts.

 

Except me.

DoChenRollingBearing's picture

If you do not own physical gold, then it is the BEST single diversification out there is to buy some!  Gold is its own unique vector.  Everyone should try to reach 10% in gold (physical only), even the mainstream financial planners say it's OK to have 5% - 10% in gold.

Clint Liquor's picture

10% of your wealth in Gold(and Silver) protects 10% of your wealth.

DoChenRollingBearing's picture

There is a leverage effect.  That 10% will protect a lot more as gold goes up in value.  Besides, only 1% - 3% of Americans own non-jewelry gold.  When more people start wanting to buy, meeting reluctant sellers..., then it's FOFOA like numbers.

Temporalist's picture

DCRB I don't think it's near 3%.  It has not gone up 100% or more since they were reporting under 1% globally in the past years.

mayhem_korner's picture

 

 

DCRB,

I disagree.  If gold "goes up" in value, what is really happening is that everything else is going down in value.  That is the rest of your wealth eroding.  CL is right, your protection is limited to that which you store in things that retain value, chief among them gold. 

Ghordius's picture

In strict material terms, I agree. In social terms, it's more. Funnily for many the socialeconomic side is much more important. Otherwise there would be no "keeping up with the Joneses" conspicuos consumption.

Nothing To See Here's picture

Damn, you just made me realize that I'm only 75% protected. Trying to figure out when to protect the rest, the barbarian way.

UP Forester's picture

Just wait a week.  By that time, the 75% should be up in percentage, as everything else will have fallen.

I mean, shit, yesterday I bought a pound of bacon, WITH A COUPON, for $3.48.  Things are fucked up.

Ratscam's picture

Anybody thinking of platinum which is more rare and at a discount to gold of at least USD 160?

I mentioned this pair trade earlier in the year. It went back to 0. Now it appears again, this is the best trade I can think of. Long PLz12 vs. Short GCz12.

Or buy it physically, it looks shiny as well.

Spitzer's picture

Platinum doesnt stand a chance buddy

For 6,000 years gold has been used to store wealth. Only a small percentage has ever been used by industry. This means that the vast majority of all the gold ever mined is still available for use. 170,000 tonnes of gold has already been mined and is still available for use. This is commonly known as the ‘stock’.Each year about 2,400 tonnes of newly mined gold arrives in the market. This is known as the ‘flow’. It is from these two amounts that the ratio is derived. When the stock is divided by the flow we arrive at 71. This means that the stock to flow ratio is 71 to 1.

Even if gold production were to be doubled, then the annual growth in the stock of gold would still be less than three percent. It is almost impossible to imagine how mine supply could be doubled. All other metals have a stock considerably less than the flow.

Because of its scarcity, platinum has been suggested by some as a new monetary metal. However, in the event that flow was to stop, then stocks of platinum would be exhausted in a matter of weeks. In those circumstances the value of platinum would skyrocket. That makes platinum far too volatile for use as money. Platinum is a precious metal; it can never be a monetary metal. Likewise if the flow of copper were to stop, easily available stock would be exhausted in a matter of weeks and the price of the copper would also skyrocket.

 

DoChenRollingBearing's picture

+ 1

Explanations like yours, Spitzer, that emphasize the flow / stock ration always get a green.

 

fofoa.blogspot.com

Hulk's picture

Why are you apologizing and just who is this dupe ???

Ratscam's picture

thank you spitzer, but how low can PLT go compared to gold?
ok dowturn in economy, less cars being sold and lets not forget that PLT isnt around since 6000 years. Simply looking for a devils advocate to convince me not entering this trade that looks so profitable.
heck, how low can we go? lower than in 30 years?
similiar to nat gas, as low as 20 years ago excluding inflation.

constantine's picture

So platinum will not, like gold, ever be money because it will go up in value too fast... I'm in.  Where can i get some of this non-money?

Tirpitz's picture

Shorting Gold against Platinum currently looks not that great. The daily GCQ chart is technically stronger (Slow Stochastic trends upwards after a recent crossover, recovering from the 1530 range at good volumes) than the PLN chart (which still shows lower lows on higher volumes), so likely gold will have to lead the charge towards a new leg up.

Add the industrial metal quality of PL and half the world going into depression while the prudent heads try to keep their assets safe from madly printing central banks, add the low percentage of gold bulls and the lack of interest in gold mining shares, both GDX and GDXJ, which sports a pretty solid chart as well, and I'd go with gold for now on the long side.

On the other hand, Silver's chart improved a lot over the recent days, so maybe going long in the white metal ain't such a bad idea either. GCQ needs a close over 1580 to take off, though, and SIN over 29. A weekly close under 1550 in GCQ, however, would be very bearish in my view.

davinci7_gis's picture

People wake up!  You need at least 33-50% of your assets in GOLD - especially right now!

GOSPLAN HERO's picture

Thomas Andrews: [perspiring and trembling] Water... fourteen feet above the keel in ten minutes. In the forepeak, in all three holds and in the boiler room six.
Ismay: When can we get underway, damnit!
Thomas Andrews: That's five compartments! She can stay afloat with the first four compartments breached, but not five!
[tersely to Smith]
Thomas Andrews: Not five. As she goes down by the head, the water will spill over the tops of the bulkheads at E deck from one to the next. Back and back. There's no stopping it.
Smith: The pumps... if we opened the doors...
Thomas Andrews: [interrupting] The pumps buy you time, but minutes only. From this moment, no matter what we do, Titanic will founder.
Ismay: [incredulously] But this ship can't sink!
Thomas Andrews: She's made of iron, sir! I assure you, she can... and she will. It is a mathematical certainty.
Smith: How much time?
Thomas Andrews: An hour... two at most.
Smith: And how many aboard, Mr. Murdoch?
1st Officer William Murdoch: 2,200 souls on board, sir.
Smith: [turning to Ismay] Well, I believe you may get your headlines, Mr. Ismay.

prole's picture

Verbatim dialogue from the JPM shareholders' meeting

fuu's picture

Yes, appreciating the humor was cheerleading, moran.

5880's picture

sorry your vagina got hurt

fuu's picture

I was expecting something more creative from a big brain like yourself.

slaughterer's picture

Gold knows the same thing as AAPL today. 

sitenine's picture

Actually, no. Gold is, as the saying goes, "good as gold." Paper is shit. You only own what you can hold - all else is just a claim, and probably a subordinate claim at that, of some supposed wealth that only a greater fool would buy. We're running out of greater fools.

Panafrican Funktron Robot's picture

I tend to agree, working my investment allocations from 10% phys up to 100%.  We're in discount territory on a USD basis, as it's USD price per ounce will eventually and inevitably move towards approaching infinity.

Think for yourself's picture

Invest in skills and tools for self-sustainance, in food for 6 months to 2 years (always starting small but varied and building up), in guns for those so inclined, cash to cover all expenses for 3-6 months, and THEN the rest in PMs. It doesn't make much sense to do so before the rest; otherwise you could end up needing to sell your PMs at suboptimal levels to buy some food because you didn't stockpile enough and only had cash for 2 months.

Of course this can be adapted to your specific situation: since I am a traveler with little room and no fixed residence, I only have a few all-around tools that can fit in my backpack while maintaining it light enough for mobility. Having no fixed residence also means that I cannot have a nice food inventory; when moving somewhere new I quickly build up a 1-2 months supply and simply stop buying food except fresh produce when I know I'll be moving again. But I live in agrarian rural sectors of central america with very resilient and decentralized means of production, so attaining food independance for long periods is not as vital as within a large north american cities. 

Whatever you do, don't simply apply a cookie-cutter method, but adapt to your own circumstances!

Poor Grogman's picture

big reversal out of the blue

hmmmm