Spot gold blows through $1,200

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Spot gold blows through $1,200

It happened on Tuesday morning, around 11:20 EST according to the Kitco ticker, which now shows a daily high of $1,201.80 and a current price of $1,199.90.

This is a classic 'dance of the round number.' It wouldn't be unusual for the price to fluctuate around $1,200 for a few days. On the other hand, if it just blows through $1,200 and never looks back, then we may be on a rocket ride.

The reclusive Martin Armstrong has written a new article about gold, which includes some fascinating glimpses of 19th and 20th century monetary history. Armstrong is a bit too rigid for my taste in his cyclical turn dates. BUT -- some of his turn dates have nailed market reversals to the day.

His basic conclusion is that if gold advances to a new monthly record close in December -- as it seems to be on the way to doing -- then it likely will continue rising into a turn date in April 2010. In such an event, Armstrong's 'upper channel' target is as high as $1,500. Cheers!

http://www.scribd.com/doc/22417671/GOLD-5000-11-11-09

p.s. You'll need the 'Magnifier' function of your browser or OS to read the small print.

 

 

 

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Spot Dollar falls through 1/1200th Oz.

 

 Question:  Does gold revolve around the dollar, or does the dollar revolve around gold.. ?

 I think we need a "copernican revolution" in perspective...

...  if you use the emerald glasses ($), things make no sense..

 viewed through gold, equities are silently crashing, so is housing, wages.. classic deflation.

 

 

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Re: Spot gold blows through $1,200

A more convenient place to get Armstrong's "Gold $5,000+" PDF directly:

http://www.martinarmstrong.org/economic_projections.htm

http://www.martinarmstrong.org/files/GOLD-5000-11-11-09.pdf

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Re: Spot gold blows through $1,200

Of course, this overlooks the fact that Armstrong projected Gold to be sub $600 a few months back. Not to mention the his predictions for the DOW at 3,800 by years end.

BTW, due to the calls of many supporters of his work, the prison system is not going to transfer him to the high-security unit. Thats great news.

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Re: Spot Dollar falls through 1/1200th Oz.
plato1965 wrote:

 

 Question:  Does gold revolve around the dollar, or does the dollar revolve around gold.. ?

 I think we need a "copernican revolution" in perspective...

...  if you use the emerald glasses ($), things make no sense..

 viewed through gold, equities are silently crashing, so is housing, wages.. classic deflation.

Well, given that the aboveground supply of gold rarely changes more than 1 or 2% per year ... while worldwide dollar reserves are climbing at a percentage in the high teens ... I'd nominate gold as the more stable yardstick.

Armstrong makes a distinction in his paper between periods when gold is an official monetary asset, versus periods when it trades as a commodity. During monetary gold periods, gold acts as a hedge against deflation, as it did in the 1930s. When gold is demonetized, it can act as a hedge against inflation, as it did in the 1970s, and arguably is doing again now.

Agreed, many asset classes are falling, when priced in terms of grams of gold. Partly this is an artifact of timing -- gold is anticipating an inflation; meanwhile, we've had a post-Bubble demand shock. But a few years out, some asset prices may 'catch up.' Probably not equities or wages, though. Equity valuations fall under high inflation. And wages don't advance in a sick real economy. Inflation is monetary Oxycontin -- it masks debtors' pain without fixing the structural rot, which may be terminal.

Steve R., thanks for the better link to the paper.

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Re: Spot gold blows through $1,200

G IV

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Re: Spot gold blows through $1,200

And the silver! Don't forget the silver!!!

Busted past 19 scraps of paper per oz today. 

Me so happy! Happy to be in the gold. Happy to be in the silver. 

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Re: Spot gold blows through $1,200
JAG wrote:

Of course, this overlooks the fact that Armstrong projected Gold to be sub $600 a few months back. Not to mention the his predictions for the DOW at 3,800 by years end.

BTW, due to the calls of many supporters of his work, the prison system is not going to transfer him to the high-security unit. Thats great news.

+1

You're on a roll lately. I feel like I'm on my way to being a JAG groupie here. 

No. I don't accept cheeseburgers and beer for payment. Pre-64' dime will work though. Tongue out

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Re: Spot gold blows through $1,200
Morpheus wrote:

And the silver! Don't forget the silver!!!

Busted past 19 scraps of paper per oz today. 

Me so happy! Happy to be in the gold. Happy to be in the silver. 

When it pops up past 20 scraps, my buy of 8 days ago will be in the money (after paying the vig).

After years of not making many smart money moves, it feels strange to be on the + side of the equation.  Ehrm...for now.  Heh.

Viva -- Sager

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Re: Spot gold blows through $1,200

I have been watching the Tulving website for months now.. having made my first gold purchase at $1053.  What I have been noticing is this....... HE is running out of everything.  Same at Coloradogold.com.  

This is a leading edge indicator in my opinion... the most liquid forms of gold that regular folks can get their hands on ... US and Canadian coinage... are soon to be sold out.  This may presage a more parabolic move in my opinion... a more disorderly move, to use a word that I believe Chris has used before.  Just reading the tea leaves........

 

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Re: Spot gold blows through $1,200
hannah_351 wrote:

I have been watching the Tulving website for months now.. having made my first gold purchase at $1053.  What I have been noticing is this....... HE is running out of everything.  Same at Coloradogold.com.  

This is a leading edge indicator in my opinion... the most liquid forms of gold that regular folks can get their hands on ... US and Canadian coinage... are soon to be sold out.  This may presage a more parabolic move in my opinion... a more disorderly move, to use a word that I believe Chris has used before.  Just reading the tea leaves........

 

This same phenomena was occurring early last December.  On 12/4/08, one of my gold dealers was offering me $14+K to trade in a holding of American gold eagles for kilo bars because they couldn't get their hands on ANY eagles.  The spot price was $770 then.  Most of the demand is being driven by the present economic and monetary events but some of it may just be seasonal.  Eagles and maple leaves will most likely be back in stock within a month or so and the price will probably pull back a bit, if not a lot ... before the next leg up.

 

 

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Re: Spot gold blows through $1,200

With spot gold having reached $1,218 this morning, the next round-number target may be $1,250.

Of course, it could always retest $1,200 first.

Nice symbolism that gold is soaring as President No-Change amps up his crappy colonial war. War is inflationary -- a fact you may not have learnt in law skool. Or maybe that's just your clumsy way of pimping my house. In which case I should say 'thanks,' huh?

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Re: Spot gold blows through $1,200

 

machinehead

",,,pimping my house" ??  What does that mean?

Doug

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Re: Spot gold blows through $1,200
Doug wrote:

",,,pimping my house" ??  What does that mean?

Doug, I think MH is making a very hilarious reference to Cribs on MTV:

LOL!

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Re: Spot gold blows through $1,200

My local dealer www.ajpm.com is BUYING for over spot.  Not sure how long that's been going on but last time I looked, that was not the case.

BTW, things are getting so funky that we took the plunge we've been talking about and nuked the IRA and paid off the mortgage.  Hope that wasn't foolish but we simply do not trust this system.  We don't trust that taxes won't be vastly raised in 2010, don't trust that we would BE ABLE to get our IRA funds easily later, don't trust the commodity ETF's we held, don't trust the banks, etc... Hope that does not qualify us for tinfoil hats!  Working on getting the final touches on the "bodega" but we are feeling more ready for what may come.

 

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Re: Spot gold blows through $1,200

As gold surges above US$1,200 /oz :

http://www.fgmr.com/federal-reserve-buying-mortgage-backed-securities-debases-the-dollar.html

The Federal Reserve Becomes the ‘Buyer of Last Resort’


James Turk

November 29, 2009 – While the debate continues whether inflation or deflation will be the dollar’s eventual fate, the Federal Reserve is pursuing a pernicious policy that is insidiously debasing the dollar.  This policy has generally been met with indifference, if it has even been noticed at all.

The inflation/deflation debate focuses only on the ‘quantity’ of dollars and completely fails to address an equally important monetary facet, the ‘quality’ of the dollar.  The Federal Reserve is debasing the dollar by purchasing inferior assets of poor quality.  These assets are mortgage-backed securities issued by federal agencies like the insolvent and for all practical purposes bankrupt, Fannie Mae.

These are assets neither the banks nor other investors want.  If there was a demand for these assets, the Federal Reserve would not need to buy them.  Instead of acting in its historical role as the ‘lender of last resort’, the Federal Reserve has on its own expanded its mandate to become the ‘buyer of last resort’. 

By purchasing mortgage-backed securities, the Federal Reserve is debasing the dollar.  Just how pervasive – and therefore serious – this debasement has become is apparent from the following chart prepared by BusinessInsider.com.

According to its latest report, the Federal Reserve now owns over $1 trillion of mortgage-backed securities, which is 45.6% of all assets owned by it.  One year ago mortgage-backed securities were only 0.6% of the Federal Reserve’s total assets.

The Federal Reserve is very highly leveraged, much more than most banks.  It is carrying $2,157.0 billion of debt on $52.8 billion of capital, giving it a leverage of 40.8-times more debt than capital.  The mortgage-backed securities it owns are 19-times greater than the Federal Reserve’s capital, meaning that if the true value of these assets is 5.3% less than their book value, the Federal Reserve’s capital is depleted, effectively making it another insolvent institution. 

Given that Fannie Mae is itself insolvent and most other mortgage generating federal agencies are not far from perilously sliding down to that same dire financial condition, it is reasonable to assume that the true value of these mortgage-backed securities is less than 94.7% of their book value.  Consequently, the Federal Reserve is therefore – on a strict accounting basis – insolvent.  It remains liquid because banks continue to provide it with funding and because people continue to accept in commerce and use without question the Federal Reserve’s liabilities, i.e., the paper currency it issues.  But for how much longer?

On December 3rd, Federal Reserve chairman Ben Bernanke will be center-stage at the Senate for his re-confirmation hearing for another term.  What should be center-stage and examined closely, however, are this professor’s chalk-board theories that he is using in his untried and untested experiments to solve the ongoing financial crisis. 

One doesn’t even have to read a book on monetary history to know what the Federal Reserve should be doing.  We only have to recall what Paul Volcker did when he was Federal Reserve chairman at the end of the last boom-bust cycle.  He kept raising interest rates to defend the dollar. 

Mr. Bernanke of course is doing the exact opposite with his zero interest rate policy, on the theory that he can save the economy without damaging the dollar.  However, it is becoming clear – and the above chart is only one example – that the dollar is being irreparably damaged.  Consequently, rather than saving the economy, Mr. Bernanke is hastening the further downfall of the economy and the dollar’s inevitable collapse.

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Re: Spot gold blows through $1,200
JAG wrote:
Doug wrote:

",,,pimping my house" ??  What does that mean?

Doug, I think MH is making a very hilarious reference to Cribs on MTV:

LOL!

Yeah ... thass the idea! My humble cottage don't have no swimming pools, palm trees, gas station or Lamborghinis. But now that I think about it, there might be room to mount a pole in the bedroom -- for the 'chicks for free' corollary of 'money for nothin' ...

Seriously, if Benny Bubbles and Barack W. Bush III can slice the dollar in half, then my house should double in price. No more mortgage crisis! Or as Huey Long used to say -- EVERY MAN A KING!

 

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Re: Spot gold blows through $1,200

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. 

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Re: Spot gold blows through $1,200
Morpheus wrote:

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. 

I think you're right Pete.  Not that I care as I don't buy for profit but IMO these two are in a "bubble" at this time.  I do agree that there's a bottom at $1040 due to the India buy but in between it's been overbought in the paper form.  Now obviously, physical is a totally different animal as the supply is fairly limited.  And because of the change in CONEX rules I'm no longer taking physical delivery from them and have decided to keep my "hoard" in a Norwegian bank vault and buy through them as well.  

I've upped my buying of PM's to 75% of my monthly cash intake though.  I'm lucky enough to not really need my family's "salary", so I can take it all and invest.  But instead of putting it into a paper investment, I've decided to buy 70% Ag and 30% Au.  15% is going into foreign currencies.

I would think by the end of the year Au will be in the $1100 range and Ag $17.  

But IMO, the dollar could implode at any time.  If you're buying for the right reason then it doesn't matter what the price is.....buy when you have the funds.

Cheers!

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Re: Spot gold blows through $1,200
Morpheus wrote:

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. 

Guy Lerner, a technical analyst whose views I respect, has just posted an essay on this subject at safehaven.com. He cites Market Vane's sentiment survey, which shows bullish sentiment on gold at 88%. This is high, but not yet a record.

On the other hand, 52-week momentum of gold versus a basket of eight major currencies has hit a record high, indicating tremendous momentum behind the move.

http://safehaven.com/article-15183.htm

Bullish sentiment is going to boil over one of these days. It's possible that gold will reach $1,250 first. I've been lightening up on gold stocks in one of my accounts, cutting them back to 75% instead of 100% weighting. If gold reaches $1,250, I'll cut back to about 60%. But going naked with no hedge against a collapsing dollar? Too scary -- couldn't sleep at night!

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Re: Spot gold blows through $1,200
machinehead wrote:
Morpheus wrote:

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. 

Guy Lerner, a technical analyst whose views I respect, has just posted an essay on this subject at safehaven.com. He cites Market Vane's sentiment survey, which shows bullish sentiment on gold at 88%. This is high, but not yet a record.

On the other hand, 52-week momentum of gold versus a basket of eight major currencies has hit a record high, indicating tremendous momentum behind the move.

http://safehaven.com/article-15183.htm

Bullish sentiment is going to boil over one of these days. It's possible that gold will reach $1,250 first. I've been lightening up on gold stocks in one of my accounts, cutting them back to 75% instead of 100% weighting. If gold reaches $1,250, I'll cut back to about 60%. But going naked with no hedge against a collapsing dollar? Too scary -- couldn't sleep at night!

Dow theory as you know defines three trends (range bound is not a trend): 1. uptrend, downtrend, and correction. 

Corrections are normal in a bull market. In fact, I would argue that they are stabilizing factors for enabling secular markets, be they a secular bull market or a secular bear market. 

That said, I would actually welcome a retracement at this point, and do anticipate one. And I have to strongly disagree that we are in a bubble market environment, particularly for silver. See, the industrials haven't "freaked" yet due to investment demand. In our "just in time" inventory model, an acute silver shortage could, and WOULD, shut down production of electronics, polymers, medicinals, ect. 

When the BIG industrial players violate the inviolate axiom of "just in time" inventory to mitigate their supply chain risks, THEN we can consider stage 3, or the manic phase, as they will drive silver into the stratosphere. When that happens, the sheep's ears will perk up, the herd will pile on, and then we'll all be arguing over what fraction to sell off before the parabolic blowoff. 

I see things very differently that many. In the end game, I see silver blowing gold through the roof, not vice versa. Silver has both monetary and industrial pressures. And it's rarity is way greater than 99.999% of people think it is. 

We ain't there yet. And that's my 2/100ths of a Federal Reserve Note. 

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Re: Spot gold blows through $1,200

 

I see things very differently that many. In the end game, I see silver blowing gold through the roof, not vice versa. Silver has both monetary and industrial pressures. And it's rarity is way greater than 99.999% of people think it is. 

 

Yes Sir!

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Re: Spot gold blows through $1,200

http://www.telegraph.co.uk/finance/china-business/6712676/China-wary-of-gold-bubble-danger-after-quietly-doubling-its-reserves.html

China wary of gold 'bubble’ danger after quietly doubling its reserves

The Chinese authorities have given the clearest indication to date that they view the surge in gold to an all-time high of $1,217 (£730) an ounce as a speculative frenzy.

By Ambrose Evans-Pritchard
Published: 8:22PM GMT 02 Dec 2009

Hu Xiaolian, the vice-governor of the central bank, said Beijing would not buy gold indiscriminately.

“We must keep in mind the long-term effects when considering what to use as our reserves,” she said. “We must watch out for bubbles forming on certain assets and be careful in those areas.”

China announced this year that it had quietly doubled its gold reserves to 1,054 tonnes, the world’s fifth largest holding. India has also joined the rush, gobbling up half the IMF’s gold sale.

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Re: Spot gold blows through $1,200

The true, longest-running Bubble on this planet is the ad hoc Bretton Woods II floating currency arrangement. Under it, the U.S. dollar retains major vestiges of its obsolete 'universal reserve currency' role decreed under Bretton Woods I -- even as the underlying U.S. economy has been hollowed out, systematically corrupted, and driven into Third World banana republic indebtedness by our reckless political authorities.

Like cartoon character Wile E. Coyote, the dollar has remained inexplicably suspended in midair above a bottomless canyon of doom for lo, these 36 years since unbacked fiat currencies were set free to chaotically float against each other.

Compared to the absurd, unbelievable dollar bubble which has prevailed for more than half our lives, gold is a rock-ribbed value investment. Unlike paper currencies, which can simply go 'poof' if their demented sponsoring regimes default, gold ain't gonna disappear. Silver neither.

The Dollar is the Mother of All Bubbles. And U.S. Treasurys are probably the Godmother of All Bubbles. Everything else, you can pretty much buy blindfolded. LOL!

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Re: Spot gold blows through $1,200

Many of the posters on this site seem like professional investors.  As a regular person trying to protect my nest egg, I am interested in gold and silver.  However, there is something that concerns me about this plan for protecting my assets.  I have a feeling that you folks have already thought this one out.  Here is my question:  Since gold is unlike other commodities in that it does't get used up the way oil or tobacco (or even silver) do, won't there eventually be a glut of it on the market.   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?

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Re: Spot gold blows through $1,200

janjee

Quote:

Since gold is unlike other commodities in that it does't get used up the way oil or tobacco (or even silver) do, won't there eventually be a glut of it on the market.

I think that depends on the extent to which the world still views gold as real currency.  As fiat currencies worldwide lose value, more countries, institutions and people will ultimately flee to safety, i.e. gold.  At least that's the theory.  There is a limited amount of above ground gold in the world, and production is, to my understanding, decreasing.  We are beginning to see institutions like the insurance industry add gold to their reserves, and nations, particularly China, buying gold as fast as they prudently can.  Meanwhile, in the US less than 1% of the population owns bullion.  So, with an effectively static amount of gold on the market a relatively small increase in demand from people, institutions and governments could force gold prices to increase rapidly.

OTOH, we as a world might just continue to muddle through with ever devaluing currencies and hope for the best.  It might even work, for a while, but ultimately there will be a flight to real value.  Given gold's history, I'm guessing it will be a large part of what is deemed real value.  It just seems prudent to own some.

Doug

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Re: Spot gold blows through $1,200
janjee wrote:

...won't there eventually be a glut of it on the market.   It would seem that as the price and demand for gold rise, the extraction of gold would  intensify... which would lead to a glut...

Like Doug said, production (mining) is not increasing right now.  Even if it did, it would be slow to ramp up. 

Another way to look at the supply and demand equation is that the population has increased at a very strong expodential rate whereas gold production has not.  When people realize they need to leave the dollar in favor of gold or silver, there will be a flood of people fighting over the small amount of gold on the market.

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Re: Spot gold blows through $1,200
janjee wrote:

Many of the posters on this site seem like professional investors.  As a regular person trying to protect my nest egg, I am interested in gold and silver.  However, there is something that concerns me about this plan for protecting my assets.  I have a feeling that you folks have already thought this one out.  Here is my question:  Since gold is unlike other commodities in that it does't get used up the way oil or tobacco (or even silver) do, won't there eventually be a glut of it on the market.   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?

A glut is highly unlikely considering that there is far less than one ounce person per on Earth available.

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Re: Spot gold blows through $1,200
janjee wrote:

..... 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?

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.   

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Re: Spot gold blows through $1,200

Production will increase if the price stays in excess of $1000, but I think the production is still less than 1% of the total supply per year -- even if production ramps up.  Compare that to the printing press we now use.

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Re: Spot gold blows through $1,200
FinPro wrote:
janjee wrote:

..... 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?

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.   

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.

 

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