marceau

My trading platform has gone insane, like a fireworks display of blue and red. This is nothing compared to what will follow over the next few weeks, volatility is back!

In the face of all this selling gold looks so strong. Everything else has taken a severe haircut, yet gold holds above $1000, there must be a huge number of buyers out there at the moment.

The market at the moment has simply moved down to fill the gap created outside NY trading hours. Personally I can't see much more downside in the current environment, especially with a rate cut looming, and would expect quite a significant bounce. I could be wrong though, so don't bet the farm on it!

I think those that thought they'd jump on the PM bandwagon for an easy ride have been taught a brutal lesson this morning. Never buy strength in gold or silver.

I knew I'd need my brown trousers this week. 100th post! Yay!

Oh boy, this is too much. It's bouncing around like a tennis ball filled with frogs.

Actually, I did buy there. I somehow found my old cast iron balls and bought 200$ per cent at 2028.

Now THAT'S what I call a smackdown.

Apparently silver lost 5.7% in just 3 hours there. Not the place to be if you don't like volatility, then.

Holy moly, that was the mother of all silver dumps there. I'm guessing now the pre-NY gap has been filled it will rally strongly. Would take a braver man than me to buy after that drop though.

Is anyone else a little ashamed at the lack of vision UK traders are showing at the moment. It's almost as if they know they should pull the plug and sell, but have to wait for confirmation from their US mentors before they actually do. It's like they have no mind of their own, the FTSE should, in reality be another few hundred down by now, and no doubt will be this afternoon when NY opens. Why UK traders don't have the balls to play the facts is beyond me.

An excellent day so far, gentlemen, and there will be more to come. This week will force the Central Banks hands, they must choose and adopt a policy onceand for all; either let it fail or totally monetize. I think I know which it will be and I'm sure they are loading the monetization rocket as we speak. In their minds if they do otherwise history will condemn them as those who allowed a depression for not easing with sufficient pace. The next few days charts will no doubt make me seasick, but I'm holding until this has played out. The implications of the Bear Sterns debacle are little realised at the moment, this situation will not last long, and when the truth hits home gold will fly. Stay long. Stay strong.

Chris Laird is a good commentator with his eye very much on the macroeconomic picture. He has made some very good predictions over the years. You'll like this one goldfinger, one of his predictions was for gold at $30,000 an ounce.

I just posted this over at ADVFN in response to someone arguing against Fed intervention. Now I'm all for letting things go pop and agree completely that by inflating we are merely prolonging the inevitable. But it is worth baring in mind what is at stake here and realising what a knife edge our way of life could be on. They are panicking precisely because we are beyond the point of simple recession. If they let it unwind fully we are talking about a depression, the sort of thing which prompts revolution and war. The 'paper' trillion figures will be converted in real losses just as sure as they were used to generate real profits. Do not make the mistake of thinking this is the endgame of the last few years of the housing bubble. If handled incorrectly this will be the endgame of the last half-decade of credit expansion. The scale is unimaginable, as will be the deleveraging. Take a look at Brazil, credit barely exists there, everything that is bought has to be paid for in full, 100%. Transpose that situation to the western economies and imagine the carnage. My point about transposing Brazil's credit market into our own economies I think brings home the scale of the problem. Everything must be paid for outright in Brazil: cars, houses, small businesses. What loans do exist carry interest rates you would not believe. This rule only applies to the locals of course, the corporate monkeys play by a different set of rules and always will, but imagine having the 'locals' in the UK, US etc constrained in the same way. THAT is what we face if this all collapses. I sometimes forget the underlying reason I'm playing the gold game and occasionally something will give me a stark reminder. There is no way the Central Banks will capitulate to deleveraging and deflation, even though they may well know they will lose in the end. When they do finally lose, gold will suffer. Maybe not as much as everything else, but it will suffer. We all need to be ready to adapt when circumstances change, holding on to an idea when it has become incorrect will lead us down the same path as those who cling to the UK housing market today.

We could be looking at the last bounce on Tuesday. After all, following the Fed's (presumably monstrous) cut, where will the market get its next injection of fantasy? I can't see anything on the horizon, so I think this will have played out in a big way before the end of the month. Either the Fed throws caution to the wind and monetizes completely, or we go into the black hole.

I copied this from bullion vault, but I think it gets the point across quite well. Take a look at the gold price on the BBC chart between 1976 and 1980, it looks pretty clear to me that the IMF failed miserably. Would selling some IMF gold help push the Gold Price lower – and by extension, help the US Dollar to recover? It's been tried before, and with little success. Between 1976 and 1980, the IMF sold gold in a bid "to reduce the role of gold in the international monetary system," selling one-third of its total gold holdings – a massive 1,600 tonnes. Well over 60% of the world's current annual gold-mining production today, half of that IMF gold was dumped onto member nations at just $35 per ounce – the old "fixed" Gold Price up until the US Dollar was finally cut free of gold in 1971. Mid-way through the 1970s bull market in gold, that was less than one-third the abiding Gold Market price. The other half of that IMF gold was sold via auction, but the auctions were so well subscribed, the impact on Gold Prices was to actually force them higher and the auctions were eventually suspended. The other thing to remember is that the amount proposed for sale this year (I believe 400 tonnes), is only equivalent to the amount sold by Gordon 'Ignoramus' Brown in 1999. During the 90s almost all gold owning nations sold off large amounts, totalling many thousands of tonnes. The link below was written in 1998, but it makes interesting reading on drivers for the gold price over the years. Paul Van Eden - 1998

The central bank sales of the 90s were of an entirely different magnitude to those proposed by the IMF at the moment. I'll have to dig out some figures. The other thing to consider is that those sales occured at a different point in the cycle, with low demand and relatively benign economic conditions. This far increased the negative impact.

Fantastic interview, Schiff is a real asset, he puts his point across so clearly and forcefully, and he backs it up with sound reasoning. I don't think next week will be one for a dithering market. We'll pick a direction and head in it with force. My current thinking is a panic sell after the Fed cut on Tuesday, when the market realises that the Fed is running out of ammo and effectively painting itself into a corner. I think this will drag gold down with it, but I don't think it will be very far, possibly the old $972 battleground. After that gold shoots higher, much higher as the muppets realise their precious bubble world is gone. However, there is also the possibility that Monday will bring a bout of fear-based selling that takes the financials and general indices temporarily into massively oversold territory. This could create ideal conditions for a great sucker rally when the Fed does cut, the end result will be the same, but I may be tempted to have a day trade punt on some of the better banks if they get hammered on Monday morning in NY. Bull or bear, it's brown trousers time in the markets this week.

What does everyone reckon now? A full 100bps cut on Tuesday? If it does happen gold will go to the moon. Could be another great week. See you all there.

I thought they'd disabled his PMs too. Very good of him though, what a nice guy.

Welcome Kingfisher, curious to know how you found us, I thought the Mods had blocked all reference to this site? Anyway, enjoy the ride.

I'd line my boots with dollar bills, they are great insulators, and far cheaper than socks.

I don't think you'll get anywhere near $820, if there is a big correction the absolute lowest I can see is $850. I think the correction will come, but not until the current Fed antics have been played out and the DOW has made its mind up about where it's going to go (down in my opinion). Your right about the flow of news, this negates the usual TA. I don't see a problem with that, the news (with the exception of the Fed/investment bank positive spin bullsh*t) is effectively relaying the fundamental picture to the masses, and it's fundamentals which will allow sentiment to take gold higher. I'm operating on a large core position (mostly equities, some physical) built up years ago, which I never trade, but occasionally add to. In addition to that, I have my 'play money' for trading, which moves around on a more regular basis. If gold goes above $1030, I may take profit in my trades and wait. But my core position will still be there, so I'll still be in the market. This has worked for me for years, and kept me sane during the May 06 nightmare. It was far easier to not rush into buying when I knew I wasn't out of the market altogether. It's all about risk at the end of the day. As Jim Sinclair says - you don't want to be THAT guy who went bust trading gold in a massive gold bull market.

Is anyone else feeling pretty good about how orderly this has all been? No blow off top, no parabola, it all bodes well for further steady upwards movement and lessens the chaotic impact of the big round number. I'm thinking $1050 is a good bet now before any significant correction.

Let's not forget to thank HPC for giving us the ultimate contrarian boost. They kick the gold thread off the site and a few weeks later it breaches $1000. I wonder if there is any way we can get the thread back on the main HPC forum and then get them to kick us out again? That could give us $2000 by year end.