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Spot gold blows through $1,200

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  • Mon, Dec 07, 2009 - 04:11pm

    #31
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    Re: Spot gold blows through $1,200

[quote=FinPro]

[quote=janjee]

….. As a regular person trying to protect my nest egg, I am interested in gold and silver.  ….  It would seem that as the price and demand for gold rise, the extraction of gold would  intensify… which would lead to a glut… kinda like Beanie Babies Smile.  Which would drive down the price, no?

[/quote]

Don’t think of gold in terms of supply/demand consumption.  Its recent run up was driven by its “store of value” reputation.  A reputation that was particularly fueled by a limited perception that floating currencies, such as the dollar, won’t survive.  The reversal in price since Friday showed perception has swung the other way.  That’s because positive job growth will give the fed liscence to raise interest rates, which in turn will restore the dollar…

Trying to see out of this looking glass is why gold is regarded as a speculative, not for the faint of heart, investment.  I think its price performance generally shows that it corrects when economic recovery begins.   

[/quote]

Fin,

What economic recovery are you speaking about?  Do you read ANY of the reports that come out via CM.com?  If you did, you’d realize that the “jobs report” of Friday was a farce.  And “limited perception” of a floating FIAT currency won’t survive?  Has there EVER been a currency in which you speak that HAS survived?  None that I’m aware.  And if Gold is so “speculative”, why has it been a store of wealth for over 5000 years?   

Please take some time to read the info provided on this site, and keep an open mind while doing so.  In reading all of your posts you’ve shown ZERO ability to actually discard your “Mainstream” propaganda driven thought process.  Personally, that type of attitude isn’t what this community is about.  Just my opinion though.

 

  • Mon, Dec 07, 2009 - 06:58pm

    #32
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    Re: Spot gold blows through $1,200

[quote=LogansRun]

[quote=FinPro]

[quote=janjee]

….. As a regular person trying to protect my nest egg, I am interested in gold and silver.  ….  It would seem that as the price and demand for gold rise, the extraction of gold would  intensify… which would lead to a glut… kinda like Beanie Babies Smile.  Which would drive down the price, no?

[/quote]

Don’t think of gold in terms of supply/demand consumption.  Its recent run up was driven by its “store of value” reputation.  A reputation that was particularly fueled by a limited perception that floating currencies, such as the dollar, won’t survive.  The reversal in price since Friday showed perception has swung the other way.  That’s because positive job growth will give the fed liscence to raise interest rates, which in turn will restore the dollar…

Trying to see out of this looking glass is why gold is regarded as a speculative, not for the faint of heart, investment.  I think its price performance generally shows that it corrects when economic recovery begins.   

[/quote]

Fin,

What economic recovery are you speaking about?  Do you read ANY of the reports that come out via CM.com?  If you did, you’d realize that the “jobs report” of Friday was a farce.  And “limited perception” of a floating FIAT currency won’t survive?  Has there EVER been a currency in which you speak that HAS survived?  None that I’m aware.  And if Gold is so “speculative”, why has it been a store of wealth for over 5000 years?   

Please take some time to read the info provided on this site, and keep an open mind while doing so.  In reading all of your posts you’ve shown ZERO ability to actually discard your “Mainstream” propaganda driven thought process.  Personally, that type of attitude isn’t what this community is about.  Just my opinion though.

 [/quote]

Logan,

I see propaganda in your message, too.  Just because Fed propaganda goes over some peoples heads doesn’t mean it wasn’t for their benefit (ie, stress tests).  While perhaps you have concluded that Bernanke’s efforts are entirely business as usual, I would genuinely suggest that since Lehman they have been what was necessary to avert a deflationary depression.  That’s the vacuum that’s left when some from both ends of the political spectrum and the “grass roots” movement try to paint a different, more mischievous, picture of the Fed’s behaviour.  They don’t explain, and aren’t accountable, for the effects of what they would have done.  Note, I’m not trying to excuse the policy of the fed beforehand. 

We haven’t had inflation, yet, and there’s political cover to be a dove because of the debt run-up that so many, including those on this site, are upset about.  And who would loose more in that scenario than banks who wrote the loans?  We already know a system of insuring against bad debt failed miserably.  Why don’t we reconcile how we can believe severe inflation is coming and at the same time why the big banks would do it to themselves, if they are in so much control?   The answer is If they are in control, we’ll have less inflation, higher unemployment and an eventually stable currency.  If they aren’t and the Fed acts with autonomy, we will have higher inflation, lower unemployment and an eventually stable currency.  Either way, the dollar survives and it might be another 70 years until something like this happens again.  If you want to bet on gold, at this moment, be my guest.

Mine is not a  “‘Mainstream’ propaganda driven thought process”, but I try to keep an open mind.  Any chance you can keep an open mind about the “group think” you tube influenced doom mindset that empowers itselfs on the irrational notion that the enlightened minority must be correct?  The important aspect of this communitiy is to share what we believe, not believe the same thing.  I’m not done with the CC, but already sence an attempt to divert away from comparable data on subjects such as debt.  This, and when Chris Martenson rejects more common ratios, is a disturbing trend because it hides the fact that this country has managed high debt in its past and gets us to form more radically negative conclusions about our future.  I’m not into that.

  • Tue, Dec 08, 2009 - 01:44am

    #33
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    Re: Spot gold blows through $1,200

FinPro wrote:

Why don’t we reconcile how we can believe severe inflation is coming and at the same time why the big banks would do it to themselves, if they are in so much control?   

I am not sure what you mean by this.  Clearly the big banks are not in control because they nearly all needed to be bailed out.

The answer is If they are in control, we’ll have less inflation, higher unemployment and an eventually stable currency. 

Big banks or any debt owners love low inflation as long as the interest rates they are charging are greater than inflation.  High unemployment is not ideal but it does tend to keep inflation down so the banks would certainly prefer the people to suffer with high unemployment than to risk their own existence.  As for the stable currency, it will remain stable as long as problems don’t get so bad as to create civil unrest.

If they aren’t and the Fed acts with autonomy, we will have higher inflation, lower unemployment and an eventually stable currency. 

This is where I completely lose you.  I agree with the higher inflation but at this point I don’t see how unemployment gets permanently lowered.  Sure the FED MAY be able to fake prosperity for one more cycle and get the unemployment down to 7-8% but they are running out of tools and time.  Rates can’t get much lower which only leaves two other options, higher rates or money printing. 

Higher rates may work for the FED but they are suicide for the US government due to +1 trillion $ deficits as far as the eye can see and 10’s of trillions $ of unfunded liabilities.  Can you explain how any of these numbers ever be repaid once we start rasing rates?That then only leaves money printing (QE or whatever you want to call it).  Once that begins in earnest, I would like to know how the dollar survives. 

Either way, the dollar survives and it might be another 70 years until something like this happens again. 

For my children’s sake I hope you are right but I just don’t see any way it works out that well.

This, and when Chris Martenson rejects more common ratios, is a disturbing trend because it hides the fact that this country has managed high debt in its past and gets us to form more radically negative conclusions about our future.  I’m not into that.

I assume the debt you are referring to is post WWII.  At that point we had a few things going for us that I don’t think will apply this time.  First most of our world wide competition was in fairly bad shape.  Second we could switch our war economy to a smaller cold war economy.  Most importantly, the government budget was not dominated by social programs and untouchable entitlements.

Do you really think that America is just going to walk away unscathed from that smoldering wreckage called our economy?

  • Tue, Dec 08, 2009 - 09:10pm

    #34
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    Re: Spot gold blows through $1,200

[quote=Morpheus]

I suspect gold to be at  $1,130 or before New Year’s. Silver? My big toe tells me $16.85 or so. 

In fact, I anticipate a short-term blowoff in both Ag and Au before they resume their climbs. 

It’s running too high, too early in the process. In this environment I believe a sharp correction is in order. 

I hope so. I’ll buy more of both if they do. 

[/quote]

Prophetic.

Honestly folks, I am not at all surprised. They (Ag and Au) were headed North at way too rapid a slope, way too early in the game.

The correction is healthy. When confirmation of a bottom hits it’ll be my entry point. Very nice. The stuff was getting a wee bit pricey for the amount of “scraps” that I take home every week.

 

  • Wed, Dec 09, 2009 - 11:44am

    #35
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    Re: Spot gold blows through $1,200

This should come as no surprise. How many times has housing, employment, retails sales “good news” or “less bad news” 

come out of Washington or one of it’s apparatchik tentacles, only to be proven bogus or later revised? 

Fin, I have a question that perhaps you can address. Why should I believe ANYTHING coming out of Treasury, the WH, The B(L)S

or any other gov’t agency when this happens? Particularly when “good news” is spread, only later, sometimes more than a month later, that good news is revised downward to “crappy news”? But the announcement is fanfared, while the revisement receives no play? 

Why should I believe any of this, pardon me,,,, crap? 

Take the “good news” last week for example. Then ZeroHedge (who have been stunningly accurate in their ability to smell BS) digs a little deeper and finds this…..

Collapse In Tax Withholdings Refutes Improvements In Either Unemployment Or Corporate Profitability

 

Even as the BLS and the administration are trying to cover up the real state of unemployment affairs using assorted semantic gimmicks of just what it means to be unemployed, and as companies provide adjusted EPS numbers, while actual earnings continue to collapse, the true barometer of spending, provided by the Financial Management Service,tax withholdings (net of refunds), continues to paint the truest picture of just what is really happening with both America’s consumer and the corporate world. And it ain’t pretty. On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company witholdings are down a whalloping 64%from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury’s pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America’s short, medium and long-term future.

 

read the rest please. This is the NORM, not the exception, with the spun spun spun economic garbage coming from the

Potomac..

http://www.zerohedge.com/article/collapse-tax-withholdings-refutes-improvements-either-unemployment-or-corporate-profitabilit

  • Thu, Dec 10, 2009 - 08:29pm

    #36
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    Re: Spot gold blows through $1,200

Morpheus,

Nice call on gold (1130).  That sums up most of today, AFAIK.

[quote]
when “good news” is spread, only later, sometimes more than a month later, that good news is revised downward to “crappy news”? But the announcement is fanfared, while the revisement receives no play?
[/quote]
from the last unemployment numbers, didn’t they revise downward the previous ~190k loss to something like ~130k?  I’d take that as positive news and not one of the negative revisions you imply are happening.  Are you effectively suggesting the BLS is lying?  Even Bush admitted no WMD was found.  And what an easy lie that would have been.

I don’t know what “gimmicks” zerohedge is suggesting, but it’s nothing new that the unemployment number has a roll-off of the long term unemployed, who argueably should still be counted.  Is that the “gimmick”?  And the EPS numbers being adjusted probably refers to the banks.  No?  FASB gave up the jewels in letting them carry clearly impaired loans at book value, instead of market, but the EPS of other co’s actually do look good only because they were so bad beforehand.  Nothing artificial there that I know of.

I don’t think the Potomac is positively spinning tax receipts.  The bright side is maybe we should begin to attribute deficit spending to falling receipts instead of feeding into this notion that its all wacky new spending ideas.

[quote=Goes211 wrote:]
This is where I completely lose you.  I agree with the higher inflation but at this point I don’t see how unemployment gets permanently lowered.  Sure the FED MAY be able to fake prosperity for one more cycle and get the unemployment down to 7-8% but they are running out of tools and time.  Rates can’t get much lower which only leaves two other options, higher rates or money printing.

Higher rates may work for the FED but they are suicide for the US government due to +1 trillion $ deficits as far as the eye can see and 10’s of trillions $ of unfunded liabilities.  Can you explain how any of these numbers ever be repaid once we start rasing rates?That then only leaves money printing (QE or whatever you want to call it).  Once that begins in earnest, I would like to know how the dollar survives.

Do you really think that America is just going to walk away unscathed from that smoldering wreckage called our economy?

[/quote]
RE: Inflation and lower unemployment
If it is acceptable to attribute unemployment’s first sign of falling as a product of the current interest rate/QE/Fiscal cocktail, then I do believe it can keep happening.  A second stimulus will meet with dicey support, but with or without one, the idea was to stop the freefall and get the private economy to take stock in the capital it has to reach its potential GDP.  That capital is technology, natural resources and labor.  Loose monetary policy to kick it in gear may hopefully meet with “fool me once, shame on you, fool me twice shame on me” sentiments with regard to asset bubbles (ahem, like gold is becoming IMO), but it will hopefully also serve its legitamate purpose in times of distress, which is to jump start a natural rebound in the business cycle.  I don’t see this as some neoclassical pipe dream.  It can happen and debt/GDP can stall out long before 100% if we stop being ignorant and push back hard enough on our politicians to do something right.  If unemployment bottoms at 7% instead of 5%, then maybe that’s the new “natural unemployment rate” we have to get used to.  We won’t know until wage-push inflation begins and we’re a long way away from that.

  • Fri, Dec 11, 2009 - 01:35am

    #37
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    Re: Spot gold blows through $1,200

On Dec 2, 2009 when gold was at $1218/ oz and silver was at $19.21/oz. we had this from Morpheus:

[quote=Morpheus]

I suspect gold to be at  $1,130 or before New Year’s. Silver? My big toe tells me $16.85 or so. 

In fact, I anticipate a short-term blowoff in both Ag and Au before they resume their climbs. 

It’s running too high, too early in the process. In this environment I believe a sharp correction is in order. 

I hope so. I’ll buy more of both if they do. 

[/quote]

The next day both PM’s started a plummet to 3-day averages as of today for gold $1130, silver about $17.50. WOW!!

But this raises some questions:

1) What is your big toe’s pick to win the Super Bowl?

2)  What card am I holding in my hand?

3) How the hell did you do that?

4) Can I borrow your big toe? If not, then what next, where does gold go from here?

  • Fri, Dec 11, 2009 - 02:38am

    #38
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    Re: Spot gold blows through $1,200

[quote=earthwise]

On Dec 2, 2009 when gold was at $1218/ oz and silver was at $19.21/oz. we had this from Morpheus:

[quote=Morpheus]

I suspect gold to be at  $1,130 or before New Year’s. Silver? My big toe tells me $16.85 or so. 

In fact, I anticipate a short-term blowoff in both Ag and Au before they resume their climbs. 

It’s running too high, too early in the process. In this environment I believe a sharp correction is in order. 

I hope so. I’ll buy more of both if they do. 

[/quote]

The next day both PM’s started a plummet to 3-day averages as of today for gold $1130, silver about $17.50. WOW!!

But this raises some questions:

1) What is your big toe’s pick to win the Super Bowl?

Don’t know, don’t care.. to be honest. 

2)  What card am I holding in my hand?

None. You’re typing. 😉

3) How the hell did you do that?

I’m no financial expert, trust me. But I am a huge precious metals researcher. And I cheat too. Hee hee hee. Cheat? Yeah, 

Ted Butler’s newsletter, Shadow Government Statistics, Financial Sense, John Mauldin’s newsletter, Casey Research…. a lot of little birds tells me stuff. That, and I get so research oriented that I even dig in junior mining company’s balance sheets, geological data, bond market movements, BLS nonsense… blah blah blah. 

Truth is that JPMC and HSBC were going to go thermonuclear with their shorting positions on gold and silver (gross manipulation, I know, say it ain’t so!!!!) if “something” wasn’t done about the parabolic moves in the PM markets. The sovereigns, particularly Russia, China, and India (BRIC nations) have been pressuring the metals markets for months. Banks can’t fight sovereigns directly. So some “good news” was generated, which like most of the other “good news”, will be revised into “not so good, actually kinda-really-crappy news” at a later date.

I was certain that a blowoff was coming because their were no natural corrections and that the Treasury-Fed-Banks would intervene in some way. I was caught off guard that it happened in this manner. That said, I think 1130 is too high. I am now looking at 1025 Au and 16.20 Ag. That’s what the big toe is telling me. 

4) Can I borrow your big toe? If not, then what next, where does gold go from here?

Down I suspect. Farther than what I expected. Looks like all-out war is being waged on metals. 

However, I think Gold, more than Silver at this point, has a ton of underlying enthusiasm behind it. So, I could be wrong. 

Only if you clear the toe jam before you give it back, fair enough? 😉

[/quote]

*Big Fat Disclaimer: These words that I type are mere opinions, and not that of a professional investment advisor. If you take them to heart, then it is at your own risk. If you seek professional advice, don’t get it from an internet messagboard. Disclosure: Gold, Silver, mining stocks, water stocks, agriculture stocks, put options on retail electronics and mid-tier department store chains. 

  • Fri, Dec 11, 2009 - 04:02am

    #39
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    Re: Spot gold blows through $1,200

Very insightful, Morpheus. But then again, it sounds like we both rely on many of the same sources for news and insight, so it should come as little surprise that we have similar views.

I’m absolutely convinced that the pattern we’re in is a correction to shake out the latecomers, trend followers, and other weak hands. Then I expect the next upleg to be much bigger than the last one.

For now, it’s all a timing game. I trade gold futures (i.e. with leverage, meaning just hold and wait isn’t an option), and have been debating the question of whether the correction is 90% over or 50% over almost continuously since it began. There seems to be some pretty solid support around 1120 at the moment, but I think that if we decisively break that level the next stop is probably just above $1000, as you suggest. That will be the “high confidence buying opportunity”. Meanwhile, I’m tempted to start to rebuild my positions with buys just above 1120 in case THIS turns out to be the bottom, but I’m becoming more and more convinced that a number closer to $1000 is in our near future.

Please keep the insights coming, and by all means don’t stub that big toe of yours!

Erik

 

  • Fri, Dec 11, 2009 - 10:55am

    #40
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    Re: Spot gold blows through $1,200

[quote=ErikTownsend]

Very insightful, Morpheus. But then again, it sounds like we both rely on many of the same sources for news and insight, so it should come as little surprise that we have similar views.

I‘m absolutely convinced that the pattern we’re in is a correction to shake out the latecomers, trend followers, and other weak hands. Then I expect the next upleg to be much bigger than the last one.

For now, it’s all a timing game. I trade gold futures (i.e. with leverage, meaning just hold and wait isn’t an option), and have been debating the question of whether the correction is 90% over or 50% over almost continuously since it began. There seems to be some pretty solid support around 1120 at the moment, but I think that if we decisively break that level the next stop is probably just above $1000, as you suggest. That will be the “high confidence buying opportunity”. Meanwhile, I’m tempted to start to rebuild my positions with buys just above 1120 in case THIS turns out to be the bottom, but I’m becoming more and more convinced that a number closer to $1000 is in our near future.

Please keep the insights coming, and by all means don’t stub that big toe of yours!

Erik

 

[/quote]

I agree. Do you follow the COT (CFTC Commitment of Traders Report) report? If you do then you can find the numbers nicely summarized at http://www.silverseek.com and http://www.goldseek.com for both gold and silver respectively. Have a look sometime. In the columns for Commercial Speculators, have a look at the long/short imbalance. Then look at the trend for the past few weeks. You’ll see something fish alright. I use the COT reports to aide in trying to get a prediction on entry points. 

Also, last Friday’s COT showed massive swings in short open interests from the Large Speculators. Something was brewing. A correction. My hunch is that the market was going to correct anyways, but the “jobless” news was just an accelerant. 

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