Gold falls on optimism crisis may have bottomed

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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.

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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. 

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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).

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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.

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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.

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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.

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Re: Gold falls on optimism crisis may have bottomed
SPM wrote:

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.

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

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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.

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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

 

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Re: Gold falls on optimism crisis may have bottomed
slabinja wrote:

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.

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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Re: Gold falls on optimism crisis may have bottomed

I don't know if any of those have been our strengths for some time, if ever.

 

SG

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Re: Shhhh!!! Don't spread reality... Fantasy is working in ...
ErikTownsend wrote:

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.

I couldn't agree more. Even though I have felt the need to buy more gold recently, I just couldn't bring myself to do it given the 90+% bullish sentiment readings for the gold markets as of late. I will be much more comfortable buying more gold when sentiment has reversed a bit more. 

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Re: Shhhh!!! Don't spread reality... Fantasy is working in ...
ErikTownsend wrote:

I really want to buy some $700 gold. And I mean a lot of it.

Exactly.

I really wouldn't mind gold and silver crashing because I don't see how they're not winners in the long run.

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Re: Gold falls on optimism crisis may have bottomed

I posted this on another site but seems fitting here as well: The two political parties are really one party....and only really end up distracting us from the truth and getting us to argue with each other.  As well, there is so much selling of recovery koolaid going on out there that it is really hard to fathom how people who don't do their own studying can possibly understand what is going on. Worse yet is the fact that the folks in the gov't are wrapped up in their own world where perception means everything and substance counts for squat. They don't realize that we are in a situation that can not be corrected by perception. I have a question for them; how many of them have ever bought a car with a pocket full of perceptions?

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Re: Gold falls on optimism crisis may have bottomed
Chris Kresser wrote:

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.

Good contrarian thinking, Chris.

In
early March, when the Mainstream Media was wringing its hands in
despair over the fact that we would all soon be unemployed and standing
in bread lines, Jeremy Grantham and Guy Lerner both wrote that the
pessimism was too extreme. Do some two-fisted buying, they said. Those
bullish calls were issued just a day or two before the exact bottom.

Now
the very same Mainstream Media, which was utterly, spectacularly wrong
just four weeks ago, is confidently, even obnoxiously, announcing that
the crisis is over. Everybody back in the pool, they urge. This is before the fate of the U.S. auto industry is sorted out, mind you.

Well,
these Wrong Way Charlies are sure as frick-hell wrong again. Don't take
investment advice from ink-stained wretches with frayed shirt collars
made of shiny synthetic fabric. If they knew how to make money, they'd
be traders, not scribblers.

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Re: Gold falls on optimism crisis may have bottomed

Slabinja - I agree with the collective psychology. Its like the news anchors have a stake in the market that prevents them from realizing and/or speaking the truth.

Also, just updated again, Bret Bair from Fox News said jobless numbers were at 642,000 for March. Hmmmm, I wonder where an even 100K dissapeared too? If it was 674K or something like that I could say OK, they got a bad number. But 642, exactly 100k under the real number, seems like someone lied.

I also don't mind if Silver or Gold goes down, I will just buy more.

Just wait until consumer real estate fails. Then the MSM will be like, we never saw this coming, we thought we were out of the bottom, blah blah blah. Oh and sorry everyone that we told you to dump all your money back into the market only to have it all dissapear. NBC, FOX, CNN all the same.

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Re: Shhhh!!! Don't spread reality... Fantasy is working in ...
mainecooncat wrote:

Exactly.

I really wouldn't mind gold and silver crashing because I don't see how they're not winners in the long run.

I've encountered few commentators who disagree with the "long on gold" sentiment.  For those that have already bought it, my advice would be to simply hang on and not worry about short-term fluctuations.  For those that haven't bought it yet, but want to, I'd say... good luck timing the market! 

(Really, I mean it.  I do wish you luck, because it's not easy to do.) 

Gold could dive in the next couple of months to $700, or it could break $1,000.  The question is, would you regret it more if you bought now and it went down for a couple of months before going back up again, or if you didn't buy now and it broke the $1,000 ceiling and kept going up?

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Re: Gold falls on optimism crisis may have bottomed

And all this renewed optimism seems to be gaining strength around the beginning of April?  Is it just me or does this seem part of a very unfunny April Fool's Day joke?  "Haha April Fool's!... Now you're broke and living in your parents' attic!"  Tongue out

Nickbert

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Re: Gold falls on optimism crisis may have bottomed

Thanks to all who post here.  I am certainly the least smart on economic matters & I have learned alot.  I do need help sorting out an 'issue' I have around investments in PM's now.... 

Let me start by saying that I do think gold is a good investment but...only in the VERY long run, and ONLY IF economies return to a 'status quo' resembling what we have today. (Is that what we want?) 

 I'm only posting here I guess hoping that someone will have some answers to some nagging doubts I have now.  I think gold is a good hedge but I am cautious about putting too many eggs in one basket right now. 

 My point of view...

 I think deflation will rule the roost for the next long while in a sort of 'stagnant' economy.  With unemployment rising (the real #'s being worse than the reported numbers), wages falling & oil prices rising modestly (eating up your disposable income but also preventing a 'rapid recovery') and 'debt' being defaulted on ($$ being wipedout) on a unimaginably massive scale then I just can't see inflation coming into the picture until the economy has turned around.  Which is a couple years away at best. In my humble opinion. 

 I think the prudent financial move right now is to reduce your exposure in the market for sure & DO NOTHING (investment wise).

I think the world like America will do anything to prevent the dollar decline as a great deal of government reserves (held in US treasuries) around the world would lose value.  If the dollar was dumped & a panic move to buy gold ensued everyone would lose out (except holders of gold)....BUT ....  If this flee to gold mentality happened & currencies worldwide devalued (against gold)  then you would see an international movement to fix a 'basket' of currencies to a given amount of gold.  (return to the gold standard).  Given the huge QE that's gone on I think our 'masterful leaders' would peg the value of currencies relative to gold well below current values to curtail Hyper-inflation & renew (artificially though) the value of fiat currency........this would wipeout any potential 'store of value' assigned to gold purchased under current "free market" conditions.  Or do I have this completely backward?

Of course all of this is lose / lose for the average person $ vs. gold.  Which given the current plans out there may be exactly why it would go that way.

In line with the 3 E's CM talks about ..'energy' or it's most common form -  OIL - maybe the best 'store of wealth'  People ultimately need oil to live/survive not gold.

I don't want to hijack the thread but....Help

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Re: Gold falls on optimism crisis may have bottomed

Chris_M - You're smarter than you give yourself credit for. Any one unforseen event could cause mass exodus from the dollar to gold. On the other side, things could all be fine, who knows?

I think the jump to precious metals is so that people have tangible wealth in their possesion. As far as oil, aside from holding a fund or expoloration company, there is not much for tangible goods that you can hold in your hand. I don't think its a bad idea, but gasoline in storage is only good for 6 months, a year (thats pushing it). It is not feesible to hold crude in your possesion because you can't do anything with crude, except refine it into usable forms of energy.  

I do not know if I would leave my money in the market long term, but I think playing oil right now could be a good bet.

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Re: Gold falls on optimism crisis may have bottomed

Here is a little straw in the wind. While gold was getting whacked
this week as the IMF cracked its whip over the cowering yellow dog, the
Continuous Commodities Index curiously continued to rise.

In
fact, the CCI has been 'drawing a line' for almost six months, banging
into resistance just above 380 several times since last October. As of
Friday's close, it is just below resistance again, at 378.53.

http://futuresource.quote.com/charts/charts.jsp?s=CI%20A0

If
the CCI breaks out to a six-month high, I expect that gold will follow
it higher. In other words, gold may be the anomaly here. Commodities
have been pounded down far enough that outright price deflation may be
abating. Feel the power of the fiat, working to change your life for
the better.

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For Erik Townsend (And others, too, of course!)
ErikTownsend wrote:

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. Erik

Erik - Many of you guys here are much smarter investors than I am, which is one of the reasons I enjoy reading the threads; There's a lot of info to glean through.

Could you elaborate? Are you saying that you pulled the $$ out of your IRA, and took the hit on penalties and taxes, based on the recent "rally"? I've been watching the Dow everyday, and comparing with my Vanguard index funds. Trying to decide if I should pull it, or leave it. If I have to pay penalties and taxes, (a rate of 10% penalty + 28% my tax bracket = 38%, if I understand it properly.) then I'm still a long way off from having my original contribution amount, six years ago. I'd like to at least break even, discounting inflation in th elast six years, etc.

I've read the trader's thread, and I understand all the standard caveats - But, I'd like it if you could elaborate on your recent move. Thanks.

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Re: For Erik Townsend (And others, too, of course!)

I think he just got out of managed money, but the money is still in the IRA as a vehicle.  Sittting in cash waiting for the next bus to come along, am I right?  Hopefully we're still a long way from the politicians raiding our IRA, but they will do that with taxes eventually.  I am hoping my new Roth-IRA will be safe when the time comes for me to spend it.

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Re: For Erik Townsend (And others, too, of course!)

Hi tx_floods,

No, I didn't cash out my IRA and pay the penalty. I just sold the remaining mutual funds in my IRA in favor of cash. I also put in a limit order to buy some SLV (paper silver) in my IRA as a hedge against continued collapse of the USD.

Erik

 

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Riverside/San Bernardino
Slabinja
 
Im changing the subject a little bit.  I grew up in Riverside.  I did my residency training at Loma Linda University Medical Center.  In 1999, we bought 1/2 of a duplex house in Loma Linda for about 100,000.  Decent neighborhood.  1/8 acre lot.  literally 30 yards from railroad tracks.  about 40 trains would go by every day.  quite loud.   In 2005 the "value" of our house increased to about 300,000.  At the time my wife and I could tell there was a housing bubble, but had no comprehension of the magnitude of the problem developing.  When we sold our little "shack", we almost felt like criminals for selling at that price.  But people were literally kicking in the door to buy.  It truly was a frenzy.
 
Are you considering leaving the Riverside/San Berdu area?  Not exactly the place I would want to be when TSHTF
 
doc blue  
 
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Re: Gold falls on optimism crisis may have bottomed

I think the central banks agreed at the G20 to sell gold in order to fund the IMF and emerging economies? 

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Re: Riverside/San Bernardino

Bluestone:

I live in Southern Cal, but not in Riverside/SB.  My friend is part of a small company that does rehabs, short sells, and buys and holds.  I assisted him during the summer and got to see a lot of the foreclosures in that area.  Corona and Norco seem to have the most, and there are communities between Riverside and Temecula that are packed with them. I read a few months back that 1 out of every 7 properties in Temecula is a foreclosure. 

You're right, that area would be a disaster during a crisis.  It's overbuilt, and the traffic is overwhelming.  I've cautioned my friend about this.  The company bought a condo in Perris for 140 k a year ago when it looked like a steal, now the same model in the same community is selling for 90k.  I heard of a property in Moreno Valley that at one time listed at 350k that just sold for 50k.

That's good that you got out ahead of the game.  A lot of people, unfortunately, ended up not so lucky. 

 

 

I

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Re: Gold falls on optimism crisis may have bottomed

So the concensus is go long on oil now, and buy gold on the pullback?

Does anyone here read the Cyclist thread on Kitco? He seems to have a lot of cred over there for calling good trades.

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Re: Gold falls on optimism crisis may have bottomed

As for how low gold can go, ask yourself - Has the dollar bottomed?

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Re: Gold falls on optimism crisis may have bottomed

Arrgh, I am really tempted to get more PM's at this price... Recently I went for the paper gold instead, and that is an assumption that we will continue to see price fluctuations and therefore have a chance at these prices again, but I am having my doubts about continued deflation deflating PM's any more than they are now. 

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