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Gold falls on optimism crisis may have bottomed

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  • Thu, Apr 02, 2009 - 02:18pm

    #1
    switters

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    Gold falls on optimism crisis may have bottomed

Wishful, delusional thinking: Gold falls on optimism crisis may have bottomed.

We should keep a file of silly headlines portending the economic rebound "just around the corner", similar to Chris’s Pompous Prognosticators blog post outlining the same phenomenon during the Great Depression.  

Could be amusing, if not instructive.

  • Thu, Apr 02, 2009 - 03:19pm

    #2
    Peak Prosperity Admin

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    Re: Gold falls on optimism crisis may have bottomed

Should make a good buying opportunity for gold while the rest of the world rejoices. 

  • Thu, Apr 02, 2009 - 03:33pm

    #3
    Peak Prosperity Admin

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    Re: Gold falls on optimism crisis may have bottomed

I can’t wait to see how they generate good news from the Unemployment Numbers /Jobs Report on Friday, should be hilarious.  The news lately seems to validate the observation that "the news doesn’t make the markets, rather the markets make the news" (or something like that).

  • Thu, Apr 02, 2009 - 04:03pm

    #4
    Peak Prosperity Admin

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    Re: Gold falls on optimism crisis may have bottomed

You got that right.  I don’t know how anyone in their right mind can suggest that the crisis has bottomed based on the data we’re seeing. 

People believe what they want to believe.

  • Thu, Apr 02, 2009 - 04:19pm

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    Peak Prosperity Admin

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    Re: Gold falls on optimism crisis may have bottomed

Maybe the crisis has somewhat bottomed from the perspective of the top 1 or 10%. Maybe they feel that they’re on the cusp of another period that will allow them to extract a little more wealth from the system before a wider, more complete breakdown.

Ever notice how the stock market usually goes up when there’s bad employment data? Less employees to pay fattens the bottom line. I should know. I worked at a retailer that shall remain nameless several years ago, whenever sales were slow they send people home. That’s actually standard operating procedure in retail. But the macroscopic reflection of that is that when sales are slow in the long-term, people aren’t just sent home for the day they’re sent home for good. So if a retailer can cut enough costs — usually employee related — they may actually experience a net accounting gain while still contracting from a YOY perspective.

The great bull run leading up to the last millennium saw stock wealth rise astronomically while the vast majority of Americans experienced worse, flat, or only slightly better standards of living.

If anything the last thirty years or so shows — via numerous data — that there’s at least a direct correlation between Wall St. wealth and Main St. stagnation/decline, if not a causal relationship.

  • Thu, Apr 02, 2009 - 04:23pm

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    Peak Prosperity Admin

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    Re: Gold falls on optimism crisis may have bottomed

JAG – I just saw on Fox News that there was "good" news with jobless numbers. Then it went on to state that people continuing unemployment jumped. That was all he said. Maybe if they wish hard enough it will be so. Maybe other anchors will have a different take on it.

  • Thu, Apr 02, 2009 - 05:08pm

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    Re: Gold falls on optimism crisis may have bottomed

[quote=SPM]JAG – I just saw on Fox News that there was "good" news with jobless numbers. Then it went on to state that people continuing unemployment jumped. That was all he said. Maybe if they wish hard enough it will be so. Maybe other anchors will have a different take on it.[/quote]

As an employer in Missouri, I just got a notice from the state that the unemployment fund was insolvent and currently operating via loan from the Recovery and Reinvestment BS, er a act.

I guess that even though more people are getting laid off, were not actually planning on paying all the unemployment benefits, so Good News everyone!!! Party!

Rog

  • Thu, Apr 02, 2009 - 06:45pm

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    Re: Gold falls on optimism crisis may have bottomed

my opinion (perhaps flawed):

The reason the market is skyrocketing is that these traders "want to believe" that the present system actually works and that the Bush/Geithner/Paulson/Obama/whoever plans, in addition to the G20 hoopla, is really "turning things around."  The key to this hypothesis is that they cannot conceive of the present order of the banking system existing any other way. In addition, systems don’t die easy.  If traders, bankers and politicians have been benefiting from something for so long, they’re going to do everything they can to prop it up, even if it’s based on illusion. 

Now if these traders who think that we’ve "bottomed out" are wrong, then they’re obviously headed for a severe awakening (and loss of value in their equities). The reality is, however, that the economic reports coming out don’t point to any "recovery."  One report comes out that isn’t as bad as they thought it would be, and then they all go out and purchase equities.  I’m not a veteran of monitoring the market, but it’s clear from my limited observation that a large part of it is psychological.  It’s like the old adage "something is worth whatever someone is willing to pay for it.’  And while this mass psychology exists, these traders are going to keep partying at the market, thinking that they’re making great buys. 

I have participated in the appraisals/inspections of literally hundreds of foreclosed properties in one of the biggest areas in the country hit by the real estate bubble, that is, Riverside/San Bernardino, CA.  You look at houses that were selling for half a million dollars and you just scratch your head to why anyone could ever fathom that these properties would ever be worth that much.  Some streets will have 6 or 7 foreclosures on the same block.  People got caught up in the psychology of buying these properties, thinking that it would never end. 

As I see it, this is how the stock market is functioning right now, in their own bubble.  They’re buying and buying because they don’t want to miss out on these "great deals."  They’re caught up in the psychology of the moment.  Only time will tell.  Maybe I’m wrong.

  • Thu, Apr 02, 2009 - 08:24pm

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    Peak Prosperity Admin

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    Shhhh!!! Don’t spread reality… Fantasy is working in my favor!

Hey guys, don’t let the word out! As long as the market participants want to believe in their own fantasies, I say let ’em! I’m waiting for a higher level on the S&P to enter my shorts!!!

I sold the LAST of my equities today. Actually, I thought I sold the last of my equities months ago, but then realized I still had some old lingering mutual fund positions in my IRA. Liquidated that on today’s market strength.

This is absolutely amazing! FASB announces that institutions are now permitted to go back to the practice of lying to investors about what the stuff they’re selling is worth, and this news causes the buyers to come running into the market in droves.

Despite having a very large position in gold, I’m loving the weakness this is causing. I lost over 3% today on gold’s weakness (both the metal and the mining stocks), and don’t mind a bit. I really want to buy some $700 gold. And I mean a lot of it. After the monetization announcement I was thinking we’d never see that level again, but recent news makes me much more optimistic that we’ll see a serious pullback as the masses tell themselves the bottom is in for equities.

Erik

 

  • Thu, Apr 02, 2009 - 08:28pm

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    Peak Prosperity Admin

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    Re: Gold falls on optimism crisis may have bottomed

[quote=slabinja]I’m not a veteran of monitoring the market, but it’s clear from my limited observation that a large part of it is psychological. [/quote]

I couldn’t agree more. 

John Michael Greer just wrote an interesting blog post advancing the notion that the biggest challenges we’re facing as a nation (and world) aren’t technological, but social, psychological and even spiritual.

 

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