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Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree

Tyler Durden's picture





 

Wondering why gold at $1850 is cheap, or why gold at double that price will also be cheap, or frankly at any price? Because, as the following leaked cable explains, gold is, to China at least, nothing but the opportunity cost of destroying the dollar's reserve status. Putting that into dollar terms is, therefore, impractical at best, and illogical at worst. We have a suspicion that the following cable from the US embassy in China is about to go not viral but very much global, and prompt all those mutual fund managers who are on the golden sidelines to dip a toe in the 24 karat pool. The only thing that matters from China's perspective is that "suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB." Now, what would happen if mutual and pension funds finally comprehend they are massively underinvested in the one asset which China is without a trace of doubt massively accumulating behind the scenes is nothing short of a worldwide scramble, not so much for paper, but every last ounce of physical gold...

From Wikileaks:

3. CHINA'S GOLD RESERVES 

 

"China increases its gold reserves in order to kill two birds with one stone"

 

"The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Perhaps now is a good time to remind readers what will happen if and when America's always behind the curve mutual and pension fund managers finally comprehend that they are massively underinvested in the one best performing asset class.

From The Driver for Gold You’re Not Watching (via Casey Research)

You already know the basic reasons for owning gold – currency protection, inflation hedge, store of value, calamity insurance – many of which are becoming clichés even in mainstream articles. Throw in the supply and demand imbalance, and you’ve got the basic arguments for why one should hold gold for the foreseeable future.

All of these factors remain very bullish, in spite of gold’s 450% rise over the past 10 years. No, it’s not too late to buy, especially if you don’t own a meaningful amount; and yes, I’m convinced the price is headed much higher, regardless of the corrections we’ll inevitably see. Each of the aforementioned catalysts will force gold’s price higher and higher in the years ahead, especially the currency issues.

But there’s another driver of the price that escapes many gold watchers and certainly the mainstream media. And I’m convinced that once this sleeping giant wakes, it could ignite the gold market like nothing we’ve ever seen.

The fund management industry handles the bulk of the world’s wealth. These institutions include insurance companies, hedge funds, mutual funds, sovereign wealth funds, etc. But the elephant in the room is pension funds. These are institutions that provide retirement income, both public and private.

Global pension assets are estimated to be – drum roll, please – $31.1 trillion. No, that is not a misprint. It is more than twice the size of last year’s GDP in the U.S. ($14.7 trillion).

We know a few hedge fund managers have invested in gold, like John Paulson, David Einhorn, Jean-Marie Eveillard. There are close to twenty mutual funds devoted to gold and precious metals. Lots of gold and silver bugs have been buying.

So, what about pension funds?

  

According to estimates by Shayne McGuire in his new book, Hard Money; Taking Gold to a Higher Investment Level, the typical pension fund holds about 0.15% of its assets in gold. He estimates another 0.15% is devoted to gold mining stocks, giving us a total of 0.30% – that is, less than one third of one percent of assets committed to the gold sector.

Shayne is head of global research at the Teacher Retirement System of Texas. He bases his estimate on the fact that commodities represent about 3% of the total assets in the average pension fund. And of that 3%, about 5% is devoted to gold. It is, by any account, a negligible portion of a fund’s asset allocation.

Now here’s the fun part. Let’s say fund managers as a group realize that bonds, equities, and real estate have become poor or risky investments and so decide to increase their allocation to the gold market. If they doubled their exposure to gold and gold stocks – which would still represent only 0.6% of their total assets – it would amount to $93.3 billion in new purchases.

How much is that? The assets of GLD total $55.2 billion, so this amount of money is 1.7 times bigger than the largest gold ETF. SLV, the largest silver ETF, has net assets of $9.3 billion, a mere one-tenth of that extra allocation.

The market cap of the entire sector of gold stocks (producers only) is about $234 billion. The gold industry would see a 40% increase in new money to the sector. Its market cap would double if pension institutions allocated just 1.2% of their assets to it.

But what if currency issues spiral out of control? What if bonds wither and die? What if real estate takes ten years to recover? What if inflation becomes a rabid dog like it has every other time in history when governments have diluted their currency to this degree? If these funds allocate just 5% of their assets to gold – which would amount to $1.5 trillion – it would overwhelm the system and rocket prices skyward. 

And let’s not forget that this is only one class of institution. Insurance companies have about $18.7 trillion in assets. Hedge funds manage approximately $1.7 trillion. Sovereign wealth funds control $3.8 trillion. Then there are mutual funds, ETFs, private equity funds, and private wealth funds. Throw in millions of retail investors like you and me and Joe Sixpack and Jiao Sixpack, and we’re looking in the rear view mirror at $100 trillion.

I don’t know if pension funds will devote that much money to this sector or not. What I do know is that sovereign debt risks are far from over, the U.S. dollar and other currencies will lose considerably more value against gold, interest rates will most certainly rise in the years ahead, and inflation is just getting started. These forces are in place and building, and if there’s a paradigm shift in how these managers view gold, look out!

I thought of titling this piece, “Why $5,000 Gold May Be Too Low.” Because once fund managers enter the gold market in mass, this tiny sector will light on fire with blazing speed. 

My advice is to not just hope you can jump in once these drivers hit the gas, but to claim your seat during the relative calm of this month's level prices.

h/t Simon via TF Metals Report

 


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Sun, 09/04/2011 - 02:29 | Link to Comment slvrizgold
slvrizgold's picture

DURRRRRR!!! (imagine the time Cartman pretended to be retarded so he could win in the Special Olympics)   Do yous guys thinky maybe wes oughts ta be buyin some gold and seeelver???   LOL

Sun, 09/04/2011 - 02:32 | Link to Comment LucazBrewz
LucazBrewz's picture

 

 

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Sun, 09/04/2011 - 02:47 | Link to Comment MsCreant
MsCreant's picture

I guess those are blue pills, huh?

Sun, 09/04/2011 - 03:35 | Link to Comment X.inf.capt
X.inf.capt's picture

just stay away from the green pills...........

Sun, 09/04/2011 - 04:02 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

he shoulda taken the placeboZ

Sun, 09/04/2011 - 14:01 | Link to Comment Ganja Jane
Ganja Jane's picture

I'm looking for red ones. I'm plotting to spike the water supplies of the USA with them!!!!

muah-ah-ah-ah!!!!

Sun, 09/04/2011 - 02:48 | Link to Comment bob_dabolina
bob_dabolina's picture

I win, you're childish.....bitch

Sun, 09/04/2011 - 02:50 | Link to Comment LucazBrewz
Sun, 09/04/2011 - 03:39 | Link to Comment suckerfishzilla
suckerfishzilla's picture

Oh I wonder how much physical Silver is in those pension funds.

Sun, 09/04/2011 - 03:59 | Link to Comment slewie the pi-rat
Sun, 09/04/2011 - 04:00 | Link to Comment slewie the pi-rat
Sun, 09/04/2011 - 04:01 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

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Sun, 09/04/2011 - 04:03 | Link to Comment slewie the pi-rat
Sun, 09/04/2011 - 04:40 | Link to Comment Arkadaba
Arkadaba's picture

You are so young. 

Sun, 09/04/2011 - 06:16 | Link to Comment falak pema
falak pema's picture

Young is the opposite of old, but not in the distorted mirror where its story is untruly told. Its ironic, that form of 'plasticised', siliconised, artificialised youth; as its looks on towards its real counterpart, devoid of all artifice, as by definition 'innocent as youth'. This new latter day youth, enhanced-pill-life-giver, that we all admire now, hashed out, so beautifully 'trashed' out,  as... "parceque tu le vaux bien'... The Madison Avenue + Big Pharma+ Big Cosmetic's new mantra. Rejuvenated under a scalpel, like lead turned to gold by ageold alchemist!

The day we learn how to sustain truly youth in mind and body we will have entered a new age!

Genetic engineering anyone?

Sun, 09/04/2011 - 12:47 | Link to Comment Hulk
Hulk's picture

Growing new teeth from stem cells:

http://www.zmescience.com/research/scientists-grow-new-teeth-from-stem-cells-432434/

I am now going long appalachian women...

Sun, 09/04/2011 - 14:39 | Link to Comment WmMcK
WmMcK's picture

Check out these chocolate bullets, too.  (Found via above link)

http://urbansavior.com/wp-content/uploads/2011/09/odd-products-4.jpg

Sun, 09/04/2011 - 04:25 | Link to Comment e2thex
e2thex's picture

x

Sun, 09/04/2011 - 05:10 | Link to Comment Highrev
Highrev's picture

Hunt Bros. II China release?

Sun, 09/04/2011 - 06:30 | Link to Comment english serf
Sun, 09/04/2011 - 06:40 | Link to Comment hinter uns das all
hinter uns das all's picture

Are you serious?! This Wikileaks cable is no big thing. I would be surprised if it had much impact on the flock. It just sums up what was told in chinese media two years ago. That the chinese are looking for an alternative to USD/EUR is not new at all. It's also kown (since >1'000 y.) that chinese prefere indirect ways of fighting on economical or ideological levels instead of direct military confrontations.

I don't think the chinese accumulation of gold is primarily for weakening the U.S. and to prepare for a currency backed with gold. I guess it's more about getting the physical gold back to china - which for sure has an impact on the price of gold as it reduces the influence of western marketmakers on the price. But this is more a kind of personal speculation than an analytical fact.

Currencies are backed by armies, alliances and subjects. Gold is an indicator of this system but not a driver. Economical stories about currencies make it easier for the players to accept that fact. 

Sun, 09/04/2011 - 06:43 | Link to Comment Youri Carma
Youri Carma's picture

For the ones who mist it A Must See!

Mike Maloney on Debt Collapse & the Case for $20,000 Gold http://www.youtube.com/watch?v=tj2s6vzErqY

Sun, 09/04/2011 - 11:35 | Link to Comment PulauHantu29
PulauHantu29's picture

Maloney is a MUST SEE. I read his book,,,,,,,excellent!

Sun, 09/04/2011 - 18:11 | Link to Comment Ganja Jane
Ganja Jane's picture

Thanks a ton, doll!

Sun, 09/04/2011 - 06:59 | Link to Comment saulysw
saulysw's picture

Hmmmmmmm.

 

A few things bother me about this post and thread. 

 

  1. The "shocking" wikileaks revelation is old news at best, and of the multiple GB of data this is the best that can be found?
  2. After a paragraph, this changes to generic pro-gold article by Casey Research? Huh? Might be valid, but it seems very disconnected.
  3. The comments are a train wreck, more so than usual. Although amusing in places, very low on insight. The trolls are out in force.

 

This doesn't bode well for Zerohedge, it seems like a hobbled together pro-gold beat up - thats been pinned to the front page no less. There are plenty of valid reasons to own physical gold, but there is something else going on here. I'm not sure what gives.

Sun, 09/04/2011 - 10:28 | Link to Comment MsCreant
MsCreant's picture

Thanks for voicing that saulysw. 

Sun, 09/04/2011 - 15:37 | Link to Comment malalingua
malalingua's picture

in regards to your #3 I agree.  It's a holiday weekend so a lot of drunk posting I'd much rather them drunk post then out driving. 

Sun, 09/04/2011 - 17:43 | Link to Comment Use of Weapons
Use of Weapons's picture

Saturday night matinee post: Allows the boys to pass off steam whilst drunk, with no proper meat until Sunday/Monday - also, never begrudge a good churn post, those adverts pay bills.

You can also treat this as a stress test / investor advert: there's few sites on the web that can generate 800+ posts in under 12 hours, let alone blogs [barring Apple ones]. Helps weight ZH's influence sphere, which sees it cited (however 'pityingly') by MSM / other sources.

 

[Disclosure: I was fully involved in the trolling]

Sun, 09/04/2011 - 18:38 | Link to Comment saulysw
saulysw's picture

I think I have been spoilt by the initial very high standards here. Lately it seems to be slipping.

Sun, 09/04/2011 - 20:56 | Link to Comment Use of Weapons
Use of Weapons's picture

There's a few ways to look at comments sections online:

#1 Traditional media [i.e. NYT, WSJ, Guardian etc] only open up comments sections on two understandings: firstly, they moderate them heavily [and in the case of major media outlets, actually flag up 'danger' posters to gov. parties - the USA & UK media are especially focused on this] and secondly, they are there precisely to negate the ideological axis they represent. #opMetalGear is very real, and all major interested parties now engage in (paid or state run) ideological warfare. MSM is all about constraining the debate into acceptable channels - thus a 200 post reply section is a success because it allows the contributors to do nothing, whilst feeling good that their "voice" is being heard. Given the behind the scenes agreements, MetalGear posters rarely get torn apart / banned.

#2 Blogs comment sections are only really useful when there's a tight knit group of specialist posters. Be it a gardening blog, or a tech blog - specific expertise has a much smaller user base, and has real world connections behind it. You can see this here, however the nature of this blog, and the competitive real world activities of posters necessarily results in codification / hidden meaning [very bluntly - no-one is going to show their cards if they're making money unless more parties piling into a trade is useful]. This is why 'meta' aggregate sites that link to interesting stories on blogs [reddit, metafilter, hacker news, PloS blogs etc] attract such huge numbers of visitors - aggregate filtering is useful to non-specialist audiences; ZH will (obviously) get more traffic when it is covering stories that the MSM are also covering. (It is also why the drive to PMs is viewed as slightly suspect.)

#3 ZH is unique in two ways - unlike 95% of blogs, it has a direct real world impact [most blogs are there, really, for entertainment or distraction] but it also has at least three layers of meta content behind posts. These are probably very much required - there's no chance that every poster here isn't actively traced, and given the current level of tools [Fuck the Foca] due to the contents of this blog. The authors are also very smart, and there's some very real reading of comments > posts being done. This alone is worth-while - ZH authors can pick up trends / ideas / tips and then feed them back into the mass readership. A certain level of craziness / noise reduces the non-specialised and paid MetalGear posters from gaming this too much. [I'm also hoping that ZH employs some decent / active input traces / defences, but there we go].

#4 I missed the start of ZH, purely due to being very busy RL - I'd love for more specialist posts, however, a lot of noise is never a bad thing, given the economics / weighting structure of how internet sites work. http://www.google.com/trends?q=zerohedge http://www.google.com/trends?q=zero+hedge&ctab=0&geo=all&date=all&sort=0 Churn is a business factor of any online site - but in this case, more active profile actually has a real world effect, in that there's more chance of 'random confused peep' reading the content and doubting their MSM filtered food. Not everyone has had the chance to be able to 'read between the lines' that broadsheet MSM requires [and by this, I really do mean the 'people in the know' producing MSM content to provide effects]. ZH has the same goal, however it is at least honest about it, and there's a maturity level of meta-awareness amongst a decent percentage of the posters.

#5 ZH does do paid content. ZH also does content designed to engage non-specialist traders. ZH also does propaganda. At the very least, it is honest about those goals. ALL online content is an echo chamber. If you aren't trained to deal with echo chambers, the best thing for them to do is remind you constantly that they're false. This is why /b/ and the recent history of the web is so useful - everything is meta, and requires objective analysis - this lesson is forgotten by many (older) posters. ZH isn't changing the world - however, it is changing the boundaries of the worlds of the readers (sounds pretentious, sure - but that is the goal of ZH, apart from making money). If those boundary changes result in different choices, then you've got change - it is also why the super-fluid externaties of the web are so dangerous to the current players. They can't react fast enough, and their reactions are modeled on old dialectics - modern state agencies are playing with these [MENA FB protests, fake lesbian bloggers etc] so none of the above will be news to the sophisticated investors in this game. What they don't yet get is how obvious / gamable their plays are.

#6 An extra 2 million hits, and lessened entry / posting requirements will of course cause slippage. Personally, I have never seen you post before - judging by only two posts, this is probably my loss. Old timers / heavy hitters should at least attempt a few posts / month to teach the newbies the ropes.

#7 The Sea, The Sea - every web site is a rock-pool within the online ocean. Within this is a multiplicity of algorithms - automatic bot driven feedback, pattern analysis, advert hungry spiders and so on. Then there's active traces, active dredgers [such as Foca] and people looking to sift through the data to get information for their own usage. The language you see on a post is about 30% of what is actually going on in a site. That's not even considering the tendrils that impact other rock pools. Old style system theory is a poor way to analyse this data - people who can play with the flows are the really scary people these days. Just don't think you're simply posting your opinion to other human beans - there's much more going on.

 

So, yes - decent comments are a plus. Just don't think that when a poster goes "weird" on you, they're not thinking of the analysis tools being used rather than direct 1-1 conversation. ZH operates on Inception levels - or, being traditional, "games within games within games". An ability to fuck with the squares is a necessary condition of reading a counter-culture blog, allegedly.

 

tldr;

 

Long boring post designed to state some of the obvious rules in play.

Mon, 09/05/2011 - 12:17 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

Jack -- "On the contrary, Aunt Augusta, I’ve now realised for the first time in my life the vital Importance of Being Earnest." (wink, wink)

Tue, 09/06/2011 - 16:19 | Link to Comment Use of Weapons
Use of Weapons's picture
          

 

THE LEAVES, like women, interchange   
  Sagacious confidence;   
Somewhat of nods, and somewhat of   
  Portentous inference,   
 
The parties in both cases        
  Enjoining secrecy,—   
Inviolable compact   
  To notoriety.

 

 

My tale is far more weird, and I lay my head on the female aspect, I'm afraid.

Wed, 09/07/2011 - 00:06 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

One can be weird or one can be enigmatic, but one can't be both.

"Gwendolen, the carriage!"

BTW, My rap sheet is weirder than yours.

Wed, 09/07/2011 - 21:44 | Link to Comment Use of Weapons
Use of Weapons's picture

Triple play - or let's show our cards, and see who holds a straight, and who holds a flush:

#1 Authors. You played Oscar, I played Emily - male homosexual extrovert highly involved in society vrs female heterosexual introvert who had no contact with the world barring her white knight editor, who she never got to meet. Deliberate counter-axis / opposition, for effect.

#2 Analysis.

Importance of Being Ernest -social comedy, the importance of falsitude in society. We'll assume we've both read it.

Compare themes:

THE LEAVES, like women, interchange   
  Sagacious confidence;   

[Nature & the female, wisdom of the real as opposed to trite gossip that fuels the world of Ernest, and gets him into so much trouble - as the meta-snark is that Ernest isn't ever going to love the persons he's expected to love. Meta-meta-snark - compare the authors: one fucked lots, and blew through passionate lovers, the other.. loved a single man, forever alone]

Somewhat of nods, and somewhat of   
  Portentous inference,   

[Direct match and play - I.O.B.E. is all about social winks & nods, and people assuming the wrong things through inference, but Emily is making a wider reference]

 
The parties in both cases        
  Enjoining secrecy,—   

[Of course, a theme of I.O.B.E.]

Inviolable compact   
  To notoriety.

 [The point of I.O.B.E is to avoid notoriety. Emily is doing something a lot larger here]

 

Sorry, very late, and wasn't going to analyse the whole thing.

 

#3 Point of post - and the joke: My tale is far more weird, and I lay my head on the female aspect, I'm afraid.


And, I'm afraid, this is a duel level joke, both disgustingly puerile and somewhat challenging at the same time.

The puerile: Wilde, homosexual, Ernest play - concealing sex and love; we know meta-level he was taken to court for being gay, and ruined for it, and so, he was hiding who he was from society - and thus the duel meanings of his plays (obviously).

Parse this: Emily Dick-In-Son, I place my head (common slang) on the female aspect (not the male) - i.e. it was a rebuttal of your very cute homosexual offering

The challenging: You were parsing the male 'cave' aspect, and the social niceties of pretend / lying / acceptance of being Ernest as a male. I was being honest, and stating that my understanding of our current issues are that the female cave has more to offer, and one I'm bound to. The E. Dickinson poem is about an organic bonding and the female, whilst Wilde is all about the distance that civilisation gives from our baser desires (not that it helped him at all, but that's at least the ethos of the play).

Emily never had a physical relationship so the counter-point is how emotionally & intellectually you can be engaged with "love" and not.. get touched. (We must remember: the land before rampant rabbits)

 

If one wants to get cliched, its about the male artifice of logic/rationality vrs the female organic emotion.

 

Ergo: I chose the female. I chose the organic. Logic is a closed system designed to entrap aspergers sufferers. There's no real joy there.

 

 

Rap sheets? "When the going gets weird, the weird turn professional."

 

Hope you enjoyed that, damn I'm drunk. Still in the female cave though. Nicer furniture.

Thu, 09/08/2011 - 04:01 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

Enjoyed it? That was the best thing I've read since "Sodome et Gomorrhe"

"Introducing the men-women, descendants of those of the inhabitants of Sodom who were spared by the fire from heaven". (Another gay author. What's the matter with me?)

Not to be unkind, but you put the word 'weird' on the table. You forced my hand. I'm really not that weird. I just like to think I am.

"To see the little Tippler
Leaning against the -- Sun --"

Thank you for all that.

Thu, 09/08/2011 - 08:10 | Link to Comment Use of Weapons
Use of Weapons's picture

Ahhh.. beautiful choice.

Warm glow ensues.

Thu, 09/08/2011 - 01:54 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

.

Mon, 09/05/2011 - 00:37 | Link to Comment chindit13
chindit13's picture

"there's few sites on the web that can generate 800+ posts in under 12 hours"

If the end of the month comes and there are still bills to pay, I'll bet Tyler already has in inventory an article about Rothschild's "Joo" Gold that was spirited away from WTC7 on 911, then put on a CIA rendition flight (a lease of a Rockefeller jet) to Tel Aviv, where Zionists used it to pay some outsourced Bangalore code writers working on a DARPA Stuxnet program that would destroy Iran's nuclear facilities just before a US mid-term election.  The Contributor George Washington would quote from and list at least 400 links backing up his discovery.  Nobody would verify the links.

There would be four thousand comments, a few million reads, and it would be biscuits and gravy for the whole Zerohedge crew.

Sun, 09/04/2011 - 07:08 | Link to Comment Sathington Willougby
Sathington Willougby's picture

I'd buy more gold if that Beck smug mug wasn't smirking all over those ads.

What next Rick Perry on those ads in his cheerleading uniform? 

Pigmen touchers.

Sun, 09/04/2011 - 07:19 | Link to Comment nachtliche
nachtliche's picture

Considering China's trade credit & their large holdings of US debt it DOLLARS, they aren't exactly eager to destroy the value of the dollar. That's why they aren't faciliating it as much as you would think. I guess it's more satisfying here to just proclaim that China is shooting gold prices to the moon and ignore the facts. China is not a lead catalyst of gold prices.

Sun, 09/04/2011 - 07:20 | Link to Comment thunderchief
thunderchief's picture

A problem big funds have with gold and silver, as well as JPM and HSBC, which have huge short positions, is the small size of these markets.   That is why they have so many unbacked non-deliverable short positions, and create a massive paper derivatives market.  If they went long they could not request physical delivery, as this would lead to rapid price explosion, or comex default.  Too small a market and not enough money for these crooks. 

Closing out their short position may have the same effect.  A rapid price spike the instant they start to cover.  So it seems it's too small a market for them to go long, and they make real money shorting or manipulating the price.  A hedge fund may have better luck taking delivery, but they tend to pump and dump paper.  I have no respect for hedge funds. 

They can not go long physical silver to counter their short positions, as there is not enough to deliver.  So you have this yo-yo game of pulling bids, knocking the spot price down, creating mini-panics and then covering shorts.  It's that or going short on any big rallies to stop an advance.

I think this is coming to an end with the Chinese.  They are simply collecting the metal on any of these yo-yo games.  This is disasterous for the Physical Metals market in the USA, and a threat to national security.  Call a crime a crime I say.  

Sun, 09/04/2011 - 07:30 | Link to Comment TuesdayBen
TuesdayBen's picture

What about farmland? Buddy of mine farms 1,000 acres in Iowa.  We spoke yesterday.  He tells me that recently, next to his home farm, a field sold for $9,000/acre.  Seller was the estate.  Good land, not great, smaller field requiring lots of turns.  The local small town banker bought it.  $9,000/acre is plenty more than a field like that in that area had sold for, ever, until very recently.  Now, why are folks pumping money into farmland?  One reason is that corn and bean prices are up strongly, so the land generates better income than in the past.  My friend says it would rent for around $500/acre/year.  But I gotta believe that investors seek to avoid being left holding bags of fiat stuffing.

Sun, 09/04/2011 - 22:53 | Link to Comment chindit13
chindit13's picture

Hedge funds are the new farmers, at least they are the ones driving the rise in farm prices.  The "smarter" ones are leasing the land back to real farmers, since the HF guys know what they don't know (how to grow food).  My understanding (a farmer will correct me if I'm wrong) is that land with substantial topsoil has gone from about $5000/acre two years ago to $11,000 an acre now.

It still seems cheap, at least by international bubble standards.  Where I am, madness has ensued in the last ten years, as Chinese (We Don't Do Feasibility Studies) acquirers have driven prices into the realm of the absurd.  I recently spoke to someone trying to buy a small plot two hours from our major city, land covered with tall grass, weeds, cobras and Russell's vipers, for $60,000/acre.  The seller wants $100,000/acre.  If you had a sharp machete, you might make 200m/hour tranversing the land.  Per capita income here---on the rise---is now up to $300/year.  The yield on the land is about .000001% a year.  Banks---a new addition to the economy---pay 15% interest.

Politely, I asked the hopeful buyer what his intent was.  "I can sell it for $70,000/acre".

Sun, 09/04/2011 - 08:03 | Link to Comment alphabrew
alphabrew's picture

Info like this is why Zero Hedge is so valuable.  Blue horseshoe loves physical gold!

Sun, 09/04/2011 - 08:29 | Link to Comment Setarcos
Setarcos's picture

Things really are stuffed every whichway, aren't they!

There is the de facto WW3, which reminds me of 1939 and the "phony war", before all hell broke loose in 1940-1'

Then, as now, the causes had to do with control of resources and/or strategic territories, e.g. neither Britain nor Germany had oil fields, unless by conquest.  It is deja vu all over again though, this time around, crises are truly global, i.e. WW1 was really mainly confined to Europe and WW2, though more widespread, still did not encompass the entire world.  In those contexts the fomenting wars presage World War One ... the first war to involve the entire planet.

Parallel with this is the first time ever that banking/finance affects everyone on this planet, as a giant Ponzi scheme which could only continue if it could expand infinitely by sucking in other populated planets to make loans to, at compound interest.

This is not going to happen.  In his own small way, Bernie Madoff proved this.

I have a lot more I could say, but I really cannot be bothered; because it would make no difference (or worse).  Look at what has happened to Libya, since bucking global banksterism.

Sun, 09/04/2011 - 08:51 | Link to Comment bill1102inf
bill1102inf's picture

Gold at $5000.00 then almost worthless. Right on.

 

Its funny, all this talk about 'fund managers' jumping into gold at ever increasing prices.  NOT GOING TO HAPPEN.  Would they also buy Tulips knowing what they know? Nope. And they are not going to buy gold either.

Sun, 09/04/2011 - 09:02 | Link to Comment VFR
VFR's picture

Surely gold halts the repatriation of the dollar and therefore  a high gold price is good fo the US (at least short term ) as the dollar decline is slowed.

highligted here in this short Jan 2009 article, suggest ed back then that China planned or was already doing this. theorizing from a slightly different angle. 

 

http://www.spartacus-news.com/2009/01/dollar-and-gold.html

 

of course then it will be followed by the collapse. same result.

Sun, 09/04/2011 - 09:01 | Link to Comment VFR
VFR's picture

Surely gold halts the repatriation of the dollar and therefore  a high gold price is good fo the US (at least short term ) as the dollar decline is slowed.

highligted here in this short Jan 2009 article, suggest ed back then that China planned or was already doing this. theorizing from a slightly different angle. 

 

http://www.spartacus-news.com/2009/01/dollar-and-gold.html

 

of course then it will be followed by the collapse. same result.

Sun, 09/04/2011 - 09:27 | Link to Comment dcb
dcb's picture

Enjoyed the start of the post, but then well bad. Should have discussed moreon why killing price of gold  is good for the dollar as a reserve currency. Now had there been more news flow and material I would have sent it out to my blog group. it reads as an add, that pretends to be an article

Sun, 09/04/2011 - 09:35 | Link to Comment bill1102inf
bill1102inf's picture

It does not matter how much it cost you to buy it.  How much it costs for you to hold it. What your average cost per ounce is. How much it costs to mine it.

All that matters, is what the next person is willing and able to pay you for it.

 

Look up the Elmo doll, beany babies, cabbage patch kids, tulips, AAPL (99-01), CSCO, VW, US House prices, Daewoo autos.

 

Maybe one day a person will exchange an OZ of gold for a House, big deal, they exchanged Tulip Bulbs for houses at one point too.  And people commited suicide for being on the wrong side of THAT trade.

 

 

Sun, 09/04/2011 - 10:35 | Link to Comment Spastica Rex
Spastica Rex's picture

People didn't buy Beanie Babies becasue they had lost confidence in the US economic/political system.

Sun, 09/04/2011 - 09:57 | Link to Comment silver is money
silver is money's picture

Thank you very much for providing this kind of information!!! really interesting I did not know about this:) learning something new everyday and think about what is going to happen is fun

Sun, 09/04/2011 - 09:59 | Link to Comment Flakmeister
Flakmeister's picture

Wow.... I guess standards at the Hedge have fallen, I had to double check I wasn't at Yahoo! or Marketwatch... I suppose it was only a matter of time.

Sun, 09/04/2011 - 10:36 | Link to Comment Spastica Rex
Spastica Rex's picture

Weird thread, huh?

Sun, 09/04/2011 - 10:59 | Link to Comment RSloane
RSloane's picture

Perhaps, but its a fun read all the same.

Sun, 09/04/2011 - 13:51 | Link to Comment knukles
knukles's picture

Yes, indeed, most interesting, Captain.
Mayhaps there is truth in the olde adage regarding idle hands and masturbation.

Sun, 09/04/2011 - 11:55 | Link to Comment tmosley
tmosley's picture

What do you expect when all the anti-PM trolls are injured and they have to send in the fourth string?

Sun, 09/04/2011 - 10:46 | Link to Comment sellstop
sellstop's picture

So China is manipulating the price of gold. I guess they are committed to making their products more expensive for U.S. to buy... Next they sell their U.S. bonds, crash our economy, and they eat all those plastic toys! Brilliant!

Sun, 09/04/2011 - 10:59 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

money = trust..i trust $1 will buy a breakfast sandwich at McD's..

McD's trusts they can sell it at a profit that has value 

the fed & gov is in the trust business

destroy that trust and then PM's become the only option until the new reserve $$ is produced

I do not trust the fed or gov how many more loose trust is the game.

Sun, 09/04/2011 - 12:14 | Link to Comment bankruptcylawyer
bankruptcylawyer's picture

besides the fact that the wiki cable linked by this article was in 2009 when gold was at or under 1000 bucks. 

the premis of this article shows a clear lack of insight. 

 

if we are to believe china , when they say the u.s. is SUPPRESSING THE PRICE OF GOLD----

and the u.s. for all practical purposes means , the federal reserve bank. 

 

what in the WORLD makes you think the fed will allow u.s. , or european pension funds to start buying up a lot of gold. 

these fund managers are directly under the thumb of the fed. not only that, but the federal government has recently passed laws on behalf of the fed excplicity forbidding the purchases of even small amounts of gold without reporting to the government. 

as long as the government knows what a pension fund has, the fed will use its influence to stop the fund from buying. 

 

the ONLY players who are in the west, with alot of money , enough money, to move the price of gold against the will of the fed, are the ultra wealthy, many of whom have a direct stake in the fed. 

 

they are so rich, they don't WANT their hoards of gold to be worth anything. their gold is insurance. and the cheaper that insurance is to HOLD. the better their stock of overall wealth will operate for them. 

 

moral of story, GOLD is a costly way to fight the fed and the ultra-wealthy.  what's new?

if i saw a leaked cable about china collaborating with russia to buy gold. that might be ineresting.

Sun, 09/04/2011 - 11:05 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Does anyone make gold and silver ammo?  Then I can acquire two great doomsday asset classes in one. 

Sun, 09/04/2011 - 13:48 | Link to Comment Moe Howard
Moe Howard's picture

Silver bullets for werewolves.

Sun, 09/04/2011 - 11:13 | Link to Comment props2009
props2009's picture

Charts on the World is slowing

http://capital3x.com/?p=659

Sun, 09/04/2011 - 12:01 | Link to Comment eaglefalcon
eaglefalcon's picture

What the heck is going on???  Let me get the story straight:

My tax money funds some SOB CIA agent who works at the US Embassy in China as a diplomat, who is banging a Chinese hooker while the radio is on, and happens to hear something on a Chinese radio station which MILLIONS listen to.  So in order to pretend that he is actually doing some real job (beside drinking booze and banging hookers), this asshole packages this piece of "intelligence" (which by the way is known to MILLIONS) as "classified information" and sends it to the State Dept in a "diplomatic cable".  After receiving this secret dispatch, the folks at the State Dept analyze it with utmost diligence and guard it with utmost vigilance (never mind that MILLIONS know it) until one day another SOB, Julian Assange, mysteriously intercepts it.

 

And here at ZH, we are treating this as though a 2,000-lb daisy-cutter stink bomb has exploded.  I can count 700 comments and 20 different conspiracy theories, all for the sake of something an SOB CIA agent heard on the radio (which btw was broadcast to MLLIONS) while banging a Chinese hooker,   

Sun, 09/04/2011 - 23:33 | Link to Comment chindit13
chindit13's picture

I believe the State Dept (not CIA) cable was written by then-Ambassador Jon Huntsman, who as a Mormon, might not be a "boozer", though I'm not sure.  As a rule, most anything sent by an Ambassador is sent at least "Confidential", even if it is from open source material.

You might benefit from studying the entire Wikileaks story in more depth.  The whole story is on the Web if you have the time and inclination to learn rather than just pull opinions out of your arse.

Virtually everything they have released in the last year came from the batch download of Bradley Manning.  Manning got the data from a database created by the USG post-911 so that the various agencies (some agencies, but not all, e.g., nothing above "Confidential" from NSA or CIA unless by accident) had a more simple means of sharing data.  Most Federal agencies who contributed to the site had in-house filter systems that limited personnel to information based on the "need to know".  For reasons that say a lot about DoD security and competence, at least regarding IT, all DoD personnel were given access to the entire database.  Manning downloaded the whole thing and got it into Wikileaks hands.  Manning made Wikileaks a household name.

What is most interesting to me about Wikileaks is how little access they have, as just about everything that has gotten the site media play has come from the Manning download.  One is then left with three possible conclusions:  there aren't many whistleblowers, there aren't many secrets, or potential whistleblowers don't trust Wikileaks to keep their identity secret.

Note that I have left out the conspiratorialists favorite explanation, which is that Wikileaks is a psyop.  The reasons are obvious to anyone who can think rationally and logically.  Or just go ask poster "Geoffrey T".

Mon, 09/05/2011 - 12:49 | Link to Comment eaglefalcon
eaglefalcon's picture

I sure hope (and believe) that no Ambassador of the United States is burdened with with the lowly task of intelligence collection from Chinese radio.  Otherwise it'd be an outrageous waste of tax payer's money.  Thus the "boozer" you talked about was clearly not Huntsman.

 

Totally aware of the earlier wikileak story and the released files seem to be genuine diplomatic cable.  What's shocking is that these government folks are blowing millions or billions just to make such crap, sort of like the $600 halliburton toilet.

 

The buzz aside, there is absolutely no "shadow" buying spree at all.  There is an open, blatant, conspicuous buying spree that the chinese want the entire world to know about.  I was on a 1-week biz trip to China in February and it appeared to me that the government officially encouraged the people to buy gold.  Every commercial bank branch featured a section that retailed gold bars.   Coin shops and Jeweler's were packed, gold commercials could be found in shopping malls, subway stations and even on elevators in apartment complexes.  BTW, these are not "we pay top dollar for you gold" ads, but "buy gold and secure your future" ads.  what puzzled me was "how come them commie guv appears to act responsibly, while our fed and msm try their best to discourage the american people from protecting their own rear ends?"

Sun, 09/04/2011 - 23:35 | Link to Comment chindit13
chindit13's picture

I believe the State Dept (not CIA) cable was written by then-Ambassador Jon Huntsman, who as a Mormon, might not be a "boozer", though I'm not sure.  As a rule, most anything sent by an Ambassador is sent at least "Confidential", even if it is from open source material.

You might benefit from studying the entire Wikileaks story in more depth.  The whole story is on the Web if you have the time and inclination to learn rather than just pull opinions out of your arse.

Virtually everything they have released in the last year came from the batch download of Bradley Manning.  Manning got the data from a database created by the USG post-911 so that the various agencies (some agencies, but not all, e.g., nothing above "Confidential" from NSA or CIA unless by accident) had a more simple means of sharing data.  Most Federal agencies who contributed to the site had in-house filter systems that limited personnel to information based on the "need to know".  For reasons that say a lot about DoD security and competence, at least regarding IT, all DoD personnel were given access to the entire database.  Manning downloaded the whole thing and got it into Wikileaks hands.  Manning made Wikileaks a household name.

What is most interesting to me about Wikileaks is how little access they have, as just about everything that has gotten the site media play has come from the Manning download.  One is then left with three possible conclusions:  there aren't many whistleblowers, there aren't many secrets, or potential whistleblowers don't trust Wikileaks to keep their identity secret.

Note that I have left out the conspiratorialists favorite explanation, which is that Wikileaks is a psyop.  The reasons are obvious to anyone who can think rationally and logically.  Or just go ask poster "Geoffrey T".

Sun, 09/04/2011 - 12:01 | Link to Comment MoneyWise
MoneyWise's picture

"Wondering why gold at $1850 is cheap"

It's not f*cking cheap, (and I'm not talking about to $USD)

it's overvalued to everything and that's

my point.. Overvalued to Silver, to Platinum, to Uranium, to

Diamonds, to Oil,

to Beef, to milk, to water.. To whatever...

Check any correlations.. Silver is also money by the way.

Sun, 09/04/2011 - 12:06 | Link to Comment MoneyWise
MoneyWise's picture

Gold is a BUBBLE to any class asset:

"7 Reasons Why Diamonds Are a Good Investment:

1) Diamond/Gold Price Disparity. While gold is up nearly 500 percent in 10 years, has surpassed its all-time record price of around $800 in 1980, and is nearing its inflation-adjusted record price (also in 1980), diamond prices have almost completely flat-lined since the early 80s.

Take a look at the charts:"

http://seekingalpha.com/article/239445-forget-gold-buy-diamonds

Sun, 09/04/2011 - 13:32 | Link to Comment narapoiddyslexia
narapoiddyslexia's picture

It was my understandoing that the price of diamonds is managed to keep it elevated. Had there not been cartel interference, the price of diamonds would have fallen 50%. The supply is restricted and there are huge inventories of unsold diamonds.

 

Sun, 09/04/2011 - 14:04 | Link to Comment Ganja Jane
Ganja Jane's picture

+1

That's DeBeers, if I am not mistaken.

Sun, 09/04/2011 - 18:45 | Link to Comment saulysw
saulysw's picture

And they can now be synthesised so that an expert has trouble picking the man made to a natural diamond.

Sun, 09/04/2011 - 14:13 | Link to Comment WmMcK
WmMcK's picture

Try substituting "silver" for "diamonds" in reasons 1-4 and 6.  OK, squint a little -- and silver can not be "man-made" like diamonds can.  Just saying ...

Sun, 09/04/2011 - 12:09 | Link to Comment spinone
spinone's picture

If you had trillions of fiat confetti you could trade for gold, wouldn't you?

Sun, 09/04/2011 - 12:39 | Link to Comment PulauHantu29
PulauHantu29's picture

RE is still sinking as gold rising. A no brainer here. House prices will drop 40% while gold rises 40% th enext two years...

 

Duhhhhh.

Sun, 09/04/2011 - 15:14 | Link to Comment IronShield
IronShield's picture

Yeah, at least. Real estate corrects a minimum 90% peak to trough. Gold and silver will have corrections in this amazing bull market; just another opp to buy. But, convert silver profits to gold!

Once a peak is achieved in gold, it will remain elevated. This time really is different.

Sun, 09/04/2011 - 12:22 | Link to Comment marcusfenix
marcusfenix's picture

Russia too, as everybody here already knows is buying copious amounts of gold as well. It seems the old lines are being drawn again in the MENA region-

“No prospects” for cooperation between CSTO, NATO

the winds of war are blowing my friends...

Sun, 09/04/2011 - 12:23 | Link to Comment prole
prole's picture

More confusing to me is those Chinese Ghost Cities.
Can anyone explain what is going on with Ghost Cities (tm)??
As far as I can tell there has never  been anything like it in the world.

Will I be able to move out of the apartment I share with 9 families?

Sun, 09/04/2011 - 13:35 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

Without appearing insensitive, where the Fukk are you? And how come you can afford internet?

Sun, 09/04/2011 - 12:39 | Link to Comment Lester
Lester's picture

About Nixon closing the "gold window"...   Some Facts that nobody ever mentions

Gold window was only open to Nations.  Individuals could not redeem.  Amereicans still could not own physical gold and there were no other ways to invest in gold.

At time gold window was closed, only nation redeeming dollar for physical was France.  Where were they getting the hard currency in the quantities they were submitting to run the American gold reserves?

I submit to you that France was acting as a proxy for TPTB who were funneling cash to it for redemption and Nixon's action preserved America's gold and earned him the enmity of TPTB and thus was the real reason for Watergate which was the only coup ever successful against a US President.  If Nixon hadn't taken action by closing the gold window, America would have fallen before 1980.

 

Sun, 09/04/2011 - 12:40 | Link to Comment Atomizer
Atomizer's picture

Ni Hao (A Gold Farmers Story)

http://www.youtube.com/watch?v=0dkkf5NEIo0

Think BRIC chess strategy

Sun, 09/04/2011 - 12:45 | Link to Comment Nawaralsaadi
Nawaralsaadi's picture

The best reserve out there is Oil not Gold, similar to Gold oil can not be printed or duplicated, however it has the added advantage of being a useful reserve and not just a precevied valuable reserve; while it is true China may be accumulating some Gold, but the amount of oil reserves they are buying and securing around the world dwarf their oil purchases many times over.

 

 

Sun, 09/04/2011 - 13:08 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

As oil in the ground is impossible to quantify, this is true only of oil that has been pumped up and stored above ground (or in caverns like the Strategic Petroleum Reserve). However, oil stored above ground is vulnerable to destruction in a way that gold is not.

If Au (gold) were not an element of the periodic table, TPTB would have to invent it.

It acts like the attractant in the yellow jacket trap I just hung out side. Those winged devils can't get enough of it outside the trap. Once they fly in, it's a different story.

They are under the thrall of a pheromone stronger than the Swim Suit edition of Sports Illustrated.

Sun, 09/04/2011 - 13:18 | Link to Comment Atomizer
Atomizer's picture

Oil was built around US global currency reserve status. Don't take my word for it, read the NY FED document below. When a global currency is threatened, what do you think happens? Saddam program is being repeated by a new Gaddafi threat. In the future, the process will be repeated again by a person called Ahmadinejad.

http://www.newyorkfed.org/research/current_issues/ci12-9/ci12-9.html

Sun, 09/04/2011 - 13:22 | Link to Comment zerozulu
zerozulu's picture

Oil and gold are different. Oil represent power. The power to move things and wormth to handle cold. Any alternative( which are being suppressed by oil cartel ) will immediately devalue oil. So oil is not a mode of storing wealth. 

Sun, 09/04/2011 - 16:11 | Link to Comment malalingua
malalingua's picture

I like the idea of being an 'oil bug' but I think putting oil barrels under the mattress might seem silly.  :P

Sun, 09/04/2011 - 16:16 | Link to Comment Temporalist
Temporalist's picture

So you get to have oil as a reserve currency for what. 30 more years before it's gone?  50 years?  That is pretty shortsighted.  Why not just make it monopoly money for 50 years that way it won't run out at least.

Sun, 09/04/2011 - 13:32 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

Hokey Smokey Rocky! This has been a most interesting thread.

Over at "survivalblog.com" the comrades have been going on about having their power out for 3!!! days because of puny storm Irene. Y'all don't have any idea about what a REAL hurricane is like. Yes, even you Bitchez in Vermont. NO IDEA. 

Gold is wonderful if you are preserving WEALTH. Not "making change" to survive. Silver sounds better, but toilet paper really works!

For "Joe Sixpack" stick with beans, rice, toilet paper, ammo for your gun....Here is hoping Joe "gets it" before it is too late.

Currently enjoying the torrential rain from TS Lee. 

 

Sun, 09/04/2011 - 14:27 | Link to Comment falga
falga's picture

well either China does it first or the US does it first... one way or another deflation is coming as there is not enough Gold to justify today's world trade and debt!

Sun, 09/04/2011 - 14:44 | Link to Comment Precious
Precious's picture

The problem with gold is that it's just too expensive to melt into bullets.

Sun, 09/04/2011 - 14:48 | Link to Comment Temporalist
Sun, 09/04/2011 - 16:32 | Link to Comment Inibo E. Exibo
Inibo E. Exibo's picture

Wow.

Sun, 09/04/2011 - 17:06 | Link to Comment IronShield
IronShield's picture

Bullshit; no gold standard, read FOFOA...

Sun, 09/04/2011 - 15:05 | Link to Comment bill1102inf
bill1102inf's picture

the new reserve $$ has alrady been created, it is sitting in vaults. Trillions of it. and its paper, not gold

Sun, 09/04/2011 - 17:01 | Link to Comment IronShield
IronShield's picture

Yeah, give me some of dat shiznit...  Remember, like Clinton, don't freakin inhale...

Sun, 09/04/2011 - 15:12 | Link to Comment MoneyWise
MoneyWise's picture

I see most is still in denial, while I'm not against Gold as

a long term wealth protection, I'm against HYPE and BS!

You know what hurts the good stocks most? When Cramer mention it

on his show as a "buy, buy, buy" , right after bunch of flip

flappers

and coin artists show up to pump the price up and dump little

after..

Gold has been overhyped and while it will more likely run up in

the short term

in the middle term I'm expecting sizable correction, hurting

bunch of retail all time high buyers.. Gold is a buy, but I'd wait

until it settles down, and it will, as we have huge swings (IV) in

GOLD lately. Short term overhyped and overpriced doesn't mean it

could go even higher, but if you long term holder it will do more

harm than good.. Just wait and see..

Sun, 09/04/2011 - 17:03 | Link to Comment IronShield
IronShield's picture

Where are the troll brothers when we need them?

Sun, 09/04/2011 - 15:14 | Link to Comment MoneyWise
MoneyWise's picture

Long-Term Sentiment - BUY

Short-term Sentiment - hold.

Sun, 09/04/2011 - 17:04 | Link to Comment IronShield
IronShield's picture

Brilliant, purely brilliant...  Fail...

Sun, 09/04/2011 - 16:14 | Link to Comment EL INDIO
EL INDIO's picture

Hi Everyone,

This my first post here.

I'm a PM investor and I'm very sad to see Gold do what it is doing.

I don't understand how come PM investors are happy to see them go up so quickly !

The only people for which this is good are retired people with sizable holdings who no longer earning and traders.

Investors should be pissed, because they'll get a lot less for a lot more money.

No offence to Gold lovers but I hope we'll get a 40% correction in the near future, that would be awesome.

Sun, 09/04/2011 - 16:28 | Link to Comment malalingua
malalingua's picture

another way to look at this is that gold isn't necessarily going up but that the dollar is going down. 

Sun, 09/04/2011 - 16:36 | Link to Comment Temporalist
Temporalist's picture

Only based on charts that is correct but because of the suppressed demand, negative propaganda and open assault, new available demand from whole populations (some like Russia and China until recently prohibited from owning gold), new vehicles like ETFs, central bank purchases...it is surprising that it hasn't gone up farther and faster to me.  Silver also has gone up fast and far but I think it should be higher.  People also mention that the corrections in both gold and silver are less and shorter in duration as well.  Perhaps there are fundamentals that you aren't considering.

Sun, 09/04/2011 - 16:43 | Link to Comment Inibo E. Exibo
Inibo E. Exibo's picture

Welcome aboard.  I'm a relative newbie mself.  I've only been reading ZH for about 6 months.  

I tend to agree about the big spikes up.  They are exhilerating, but also deceptive.  I'm in it for the long haul, though.  Regardless of where it is today it is going to be more valuable next year compared to everthing else (except maybe silver).  I know there are a lot of people who say they can't afford gold.  I was one of them.  Eventually it just became obvious once I finally grasped that we are in the fiat fractional reserve central bank debt money end game. I couldn't aford it, but I cashed out of my 401-k and into PMs anyway.  As someone said futher up this thread, we are all going to lose.  The trick is to lose as little as possible.  I intend to come through this with as much of my wealth--meager as it is--intact as possible.  I don't have many years left, but I do not intend to spend them living out of a shopping cart.

Sun, 09/04/2011 - 16:55 | Link to Comment malalingua
malalingua's picture

it's not about losing it's about protecting and maintaining value.  Not sure when you cashed out your 401k but I am sure the penalties that you paid  have been recovered with your pm gains.  I am trying to get family and friends to do the same but unfortunately these people listen to their financial advisors and take zero responsibility. 

Sun, 09/04/2011 - 17:09 | Link to Comment IronShield
IronShield's picture

LOL  You gotta be kidding!?  

"I don't understand how come PM investors are happy to see them go up so quickly !"

"No offence to Gold lovers but I hope we'll get a 40% correction in the near future, that would be awesome."

So you missed the gold train and are begging to get aboard?  Man, take that hat somewhere else; no "Gold lover" feels for ya...

Sun, 09/04/2011 - 17:15 | Link to Comment MoneyWise
MoneyWise's picture

*LOL* of course... Leave another 30 years, learn and comeback

to talk about it.. here is your MOMO train:

http://img402.imageshack.us/img402/3118/trainwx.jpg

Keep riding it..

Sun, 09/04/2011 - 17:30 | Link to Comment IronShield
IronShield's picture

Yeah, well, them don't look like no "Gold lovers" to me.  Late to the party, clingons, lumpenproletariat, what have you...  Us "Gold lovers" be in the club car; but you wouldn't know about that.  Please, let me get onboard...  I promise not to disparage that most precious of metals.  No son, keep shoveling that coal...  Bullshit flag thrown again...

Oh, and corrections?  Yawn, been there done that; since 2002.  Buying ever since.  Same for *gasp* silver.  And talk about corrections there...  curl your freakin toenails...  so what...  Rich motherfukker...  And we ain't close to done yet; go scare some other kiddies with your crap...  cost average in and you will be fine; don't try to time it, you won't win that way in this motherfukker of ALL bull markets; ride that all the way...  to FOFOA's projections...

 

Sun, 09/04/2011 - 17:43 | Link to Comment MoneyWise
MoneyWise's picture

"Yawn, been there done that; since 2002." ha-ha-ha,

Hope you got good harvest there on your farm, redneck.

Keep counting your 10oz of Gold at night, like a Scrooge.. :)

 

Sun, 09/04/2011 - 17:55 | Link to Comment IronShield
IronShield's picture

Nuff said...  You're a poser, nothing more, much less...  Yeah, redneck...  If that means far beyond your means, then yes, I can live with that.  Too bad you missed the boat; no, not really.

Sun, 09/04/2011 - 18:04 | Link to Comment MoneyWise
MoneyWise's picture

Good, Thanks a lot, have nice holidays.

Sun, 09/04/2011 - 17:12 | Link to Comment MoneyWise
MoneyWise's picture

"another way to look at this is that gold isn't necessarily going up but that the dollar is going down. "

Going down against what? Give me an example to justify

400$/oz move from July 1550 price.. 25% + move is based on

Dollar devaluation? Or 25% inflation? What are you smoking?

This trade completely emotional and have no ground what so ever,

(Other than hope on EZ collapse and US banks default) and

ones stress is off, 500$/oz will be retracted from actual price.

I do see gray hair on your avatar, but I think you are still 18 yo,

pap's..

Sun, 09/04/2011 - 18:12 | Link to Comment malalingua
malalingua's picture

"going down against what"?  Seriously, what are you inhaling?  I appreciate the compliment of being '18' I was also accused of being '25' too.  The 'gray hair' is Ron Paul, though I am sure someone like you wouldn't appreciate someone like him because he doesn't appeal to neomaxizimdweebies.  I would love to post links refuting you but I feel it would be a waste of time since it appears you either are a financial advisor/bankster or a puss-cake, neither of which I like to spar with because the results are the same.  So go back to your wine cooler and enjoy your Paul Krugman book. 

Sun, 09/04/2011 - 17:34 | Link to Comment geekgrrl
geekgrrl's picture
This is an interesting cable.

http://cables.mrkva.eu/cable.php?id=145596
"SUBJECT: Fake Gold found at Ethiopia's Central Bank
2. The saga began on December 7, 2007 when the Ethiopian Federal
Police announced the arrests of four NBE employees. A random check
conducted on gold reserves in NBE's vault had found that 96.5
million birr worth of "gold" bars were actually gilded steel or
stone. In the past, NBE sent its gold to Switzerland to be
inspected and verified. However, in 2005 the responsibility shifted
to Ethiopia's Ministry of Mines and Energy (MME). "
Sun, 09/04/2011 - 17:34 | Link to Comment MoneyWise
MoneyWise's picture

The only thing which keeps demand "so high" Gold ETF's

"Gold exchange traded funds were down 2% Wednesday morning following the previous session’s steep pullback as the precious metal corrects following a run above $1,900 an ounce.

Gold holdings in exchange traded products declined for a third day on Tuesday and the most since January as bullion holdings slid 24.8 metric tons to 2,181.6 tons, Bloomberg reported. Assets climbed to a record 2,216.8 tons on Aug. 8.

Investors pulled almost $1.5 billion from SPDR Gold Shares "

If you think GOLD trade is GUARANTEED Income

without risk? Please Reply.. :))) Otherwise, I don't understand

why would everyone just buy GOLD here and collect 20-40% yearly

with no risk..

Sun, 09/04/2011 - 17:57 | Link to Comment Use of Weapons
Use of Weapons's picture

Counter-point: two major tech IPOs have been pulled recently [Groupon / Zynga] due to concerns over revenue & behaviour of investors / major shareholders.Other major plays [MS / Skype, Google / Motorola] look to be strategic plays in the ever-more-vicious mobile patent wars [http://www.idownloadblog.com/wp-content/uploads/2011/08/Reuters_Patent_C...].

Silicon Valley VCs aren't happy, and I'm doubting that the 'entrepreneur' revolution has any real long term ability to upturn the economy. Tech 2.0 looks set to implode.

 

This hasn't been costed in yet, and even Apple's invincible pedestal means little if both China & Brazil go into downturn [which looks likely]. i.e. people counting on BRIC & globalisation 3.0 aren't looking too green at the moment.

 

Feel free to add your own counters, but that's what I'm seeing at the moment.

Sun, 09/04/2011 - 17:51 | Link to Comment gwar5
gwar5's picture

Well, we knew China was hoarding gold as a strategic weapon and, likewise, the Western PTB were doubling down on fiat through mutual assured debasement. And we at ZH knew that they each knew. What's new is that it's now out in the open, and it's time to get serious, and it's on like Donkey Kong!!

 

Institutional investors are going to feel pressure to buy gold, now, and to disregrad any previous market manipulation directives from the Chairsatan so they can save themselves. 

Donkey Kong, Bitchez!

 

 

Sun, 09/04/2011 - 17:52 | Link to Comment geekgrrl
geekgrrl's picture

Another interesting cable discussing a very deep gold mine in South Africa. Note the massive energy requirements:

http://cables.mrkva.eu/cable.php?id=27289

"At 2890 meters, virgin rock temperatures are 50 degrees
centigrade. To maintain comfortable work conditions, cooling
is provided by 10 MW of site-specific underground
refrigeration. In addition, about 760 kilograms of air per
second gets cooled to 6 degrees centigrade in 35 MW worth of
bulk air coolers on the surface and force ventilated through
subsurface air drifts into the main shaft. "

It also says: "
When production reaches full potential, management
expects costs to decline to R60,000 per kilogram (about
$10,000 in today's dollars)."

By my calculations, that comes out to $311.04 per troy ounce in 2005 dollars. Just to get it out of the ground. And the power company is reported in a later 2008 cable (http://cables.mrkva.eu/cable.php?id=146311) to be having production problems, and that as a consequence, the mines were running on 90% of required full-production power.

It is difficult to see this situation improving going forward.
Sun, 09/04/2011 - 17:58 | Link to Comment MoneyWise
MoneyWise's picture

It's all about demand after all.. Don't matter what is

production costs.. Faster and higher it's going to go, harder

it's going to drop, like a f* stone.. Watch and learn..

Sun, 09/04/2011 - 18:04 | Link to Comment IronShield
IronShield's picture

So what?  And the funny thing is, you still won't be able to afford to buy.  Actually, that's not funny, that's quite sad...  Bwahahahaha...  Just funnin ya...  Ya know ya be my bitch, forever...

Sun, 09/04/2011 - 18:18 | Link to Comment MoneyWise
MoneyWise's picture

I already have what I need.. About 95% Silver and 5% Gold

in total PM holdings since 2006..

I'm no buyer here, no way.. I can afford it,

but I'm not an idiot, sorry.. Since those f*ckers can print money

and buy Gold at any price, I cannot compete with those guys..

Sun, 09/04/2011 - 18:43 | Link to Comment IronShield
IronShield's picture

Now see; why didn't you say that before?  Though I would be concerned about that heavy weighting in silver it seems like you are on-track.  Sure, corrections are a possiblity; but as you say, we can't game those guys.  The only thing we can state with certainty is "Bull Market".  Until proven otherwise and act accordingly.

Sun, 09/04/2011 - 18:03 | Link to Comment Use of Weapons
Use of Weapons's picture

There's a new investment in N. Spain, and the Solomon islands to look out for as well.

In 2006, riots aimed at running Chinese businesses out of the capital Honiara caused renwed concerns about security among foreign investors. Only after tensions eased for a second time did Allied agree to purchase the mine, spending $150 million to bring it back into service...With gold fetching record prices, and with an "intervention mission" of Australian, New Zealand and South Pacific military forces assuring security, the mine has been given a second life.

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=126028&sn=D... 

 

Comment: gold mines tend to ruin the local ecology, cause massive social disruption / pollution, and end up having to be policed by military. These costs are not costed into extraction prices. You might be able to take it out of the ground for $5, but paying that guy with an AK47 to make sure you can work without disruption isn't as cheap.

Sun, 09/04/2011 - 18:07 | Link to Comment IronShield
IronShield's picture

Uh, yeah...  Get ye ze phyzical while ye can...  Oh wait, the price is going down; get ye mo phyzical while ye can...

Sun, 09/04/2011 - 19:03 | Link to Comment tip e. canoe
Sun, 09/04/2011 - 19:59 | Link to Comment geekgrrl
geekgrrl's picture

Oh, this Wikileaks dump is just a treasure trove of interesting facts. And names. Lots of names.

You folks interested in miners should do a little research. Some great first-hand info produced by human int paid for with our own tax dollars.

Another interesting cable (http://cables.mrkva.eu/cable.php?id=44464) mentions that Taiwan now has a level 4 pathogens ward, saying:

"On November 3, NHDetect CEO and President David Trudil discussed with AIT COMM and ECON officers a formal advocacy request that his company is submitting through the USDOC Advocacy Center regarding its bid on the first phase of a planned level 4 pathogens ward. Trudil explained that level 4 pathogens are "genetically-engineered bugs that can destroy the world;" far more dangerous than anthrax, SARS, or avian influenza. He said Taiwan already had an operational level 4 laboratory, and that he had recently arranged a tour of these facilities for U.S. DOD and CDC personnel in exchange for DOD allowing Taiwan MND and CDC to tour the U.S. level 4 ward located at Fort Detrick, Maryland. (AIT ECON and COMM were unaware of these visits. Reftel report on the DOD tour noted that the Taiwan facility claims to have a sample of a smallpox strain that produces a 100% fatality rate.) Trudil noted that there is currently only one other level 4 ward in the world, located in Siberia."

Just one more pistol on Chekhov's wall.

 

Sun, 09/04/2011 - 21:09 | Link to Comment Use of Weapons
Use of Weapons's picture

Trudi is lying - there's more out there. http://www.cdc.gov/eid/content/14/11/1685.htm

In June 1999, the Canadian government opened its first BSL-4 research facility. Located in Winnipeg, Manitoba, the Canadian Science Center for Human and Animal Health is a state-of-the-art complex for studying dangerous infectious diseases. The Center is unique among BSL-4 labs in being able to handle both human and animal diseases, infected livestock, and zoonotic agents that can jump from animals to people.

France has built a new BSL-4 lab over the top of the former Institut Pasteur building in Lyons. This ultramodern construct of metal, glass, and plastic rests on concrete stilts and will complement Europe's oldest BSL-4 lab at the Bernhard Nocht Institute for Tropical Medicine in Hamburg, Germany.

Farther to the north, Sweden is building its first BSL-4 lab at the Institute for Infection Control in Solna. The United Kingdom has two such labs under construction. One is at the National Institute for Medical Research in London, and the other is a Ministry of Defence facility at Porton Down called the Chemical and Biological Defence Establishment. When those new facilities are completed, U.K. researchers will have five hot labs capable of handling nature's most dangerous microbes.

http://www.engineering.com/Library/ArticlesPage/tabid/85/articleType/Art...

 

[Note - yes, there's a difference between a BSL 4 lab and ward. Practically speaking, the UK has a ward, for sure, amongst the five labs - Porton Down is known for anthrax, btw]

 


But Taiwan really shouldn't have small pox. That's really, really, really fucking stupid.

Sun, 09/04/2011 - 23:23 | Link to Comment geekgrrl
geekgrrl's picture

Oh, I figured there were more level 4 labs capable of creating these WMDs, but one thing I find curious is the claim of 100% fatality.

The main difference between a lab and a ward are patients. Who do you think signed-up for that experiment voluntarily?

Sun, 09/04/2011 - 20:13 | Link to Comment geekgrrl
geekgrrl's picture
9/22/2008: SOME SHANGHAI BANKS NERVOUS ABOUT US TRANSACTIONS

http://cables.mrkva.eu/cable.php?id=170825

"High-level executives of Citigroup, JPMorgan, and Wachovia privately related to Econoff on September 22 that some Chinese banks are less willing to complete transactions with foreign banks -- especially U.S. banks, according to one contact -- and others are refusing deals."

Mon, 09/12/2011 - 17:21 | Link to Comment fatalerr5
fatalerr5's picture

What happens when China decides to sell off it's gold just to manage to screw over american investors?

Wed, 01/25/2012 - 06:55 | Link to Comment groundedkiwi
groundedkiwi's picture

So Assange has done a deal. This leak is absolutely golden. 

Sun, 01/29/2012 - 10:29 | Link to Comment Colonial Intent
Colonial Intent's picture

Ignatius Trebitsch Lincoln

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