Gatesy

Nice one HM I needed a chuckle today. They're not the easiest are they. I love a chart unaccompanied by any explanation.. I think this one is suggesting that it's getting very expensive to borrow gold (for the purposes of shorting). Proabably cos the owners are more keen to keep hold of it or want more paper compensation to lend it now that things are looking more and more like a pikey's picnic.

This is my main concern in any apparent strength. The scramble to unwind positive positions to offset losing ones will surely have a negatve impact on gold?

Showing my (lack of) class, I once thought I'd invented the word 'crud' but then years later I heard Rambo say it in his first film.

Yep, I don't disagree with that or the others comments on this. I think the consequences of an economy which does not seek growth need to be thought through very carefully however in terms of social consequences. I guess everything from population figures to matters of choice in goods and services various markets would need to be considered in an attempt to ensure everything stayed just finely balanced at the right levels of activity. Sounds a it like a command economy.... But maybe to get to that brave new world a small step would be going back to a gold standard whereby we could get used to the limitations on growth which may be ultimately necessary to achiev the new model you propose.

To me a "half gold standard" as proposed doesn't solve the problem of a fiat system and such a system would not be workable on a global scale either. TPTB would still be in charge of the money supply, even if there was a well intended objective at the outset to control the money supply in relation to the demand for money/goods and services in the (global?) economy. That's how fiat systems start but the temptation to manipulate for political means and greed is too much to resist and the system will start to fail. To me the reference to gold at $500 is a red herring and an irrelevance to the propsed system which is actually just suggesting managing money supply in relation to goods and services. IMO in an ideal world the best system would indeed be a floating/flexible money supply which does alter in relation to the demand for money (via goods and services), and probably not a gold standard. The main reason I believe a gold standard is not ideal is because with only a 2% or so supply increase per annum it will not always be able to keep up with economic growth and demand for money, hence acting as a drag on growth, limiting capital when it is needed. However, as long as humans are involved in this world it will not be ideal, and as such a gold standard is far better than a fiat system or half way house which will likely always be manipulatted.

I wanted to do that. How do you do that?

That's a very good point. I also have seen a significant welling of opinion on here towards accepting deflation in the medium term, but their seems to be a lot of hope/expectation (form a holding PM perspective) that inflation will be back with a vengeance to wipe it out. That obviously wasn't Japan's experience but I'm sure someone can tell me why this is different this time (inflation in the dollar as global currency no doubt). I've also seen numerous statements that deflation is far harder to deal with than inflation and thus is likely to stick around when it arrives.

You could swap them for gold bricks.

Hmmm, I will ponder this overnight in my sleep and possibly post tomorrow.

I go along with GF on this one, that money in banks pockets doesn’t need to find it’s way to joe public as credit in order to stoke inflation. The money will sidestep JP straight into whatever asset is flavour of the week. The money supply and credit is created by the CB giving the money to the bank. Totally. If you take the EW model of waves, even Large waves will correct 20-30%, let alone Major waves. For me the hypothesis that this is corrective Large Wave II of up leg Major wave 3 has not yet been disproved.

"If it ain't it'll do till the mess get's here"

Then I must be rational.

A further comment from James Turk regarding paper v physical:

I have a response from James Turk, with my repsonse below that. Very impressed with the personal attention given to my query.

Grrrrr. Head hurts now. Panic Selling in Gold: What's Next? http://www.minyanville.com/articles/index/a/18537 The author (a former racehorse tipster and philosophy graduate !) seems to think deleveraging will neutralise and overpower inflationary pressures. Anyone like to comment on that?

I just sent this to goldmoney: Dear Mr Turk GATA, with whom you are closely associated, have published the view that the US Mint's suspension of silver and now gold eagles is "overwhelming evidence that the futures contract price of gold on the commodities exchanges is substantially below the physical market price". Please could you lay out for me your plan for ensuring that the mechanism for selling physical gold and physical silver via Goldmoney reflects prices for the physical metals rather than 'paper' markets as we see further divergence between the two. I would like to post your response on the Global Edge Investors (globaledgeinvestors.com) website with which you may be familiar, for the benefit of members there. ref: http://www.gata.org/node/6489 Kind regards

To me as I posted last night before TSHTF if gold holds $790 then technically Elliot Wave threory holds the bull together; the ABC correction from 1033 to 790 will have had two identical(ish) nominal (A&C) drops. I chose $790 to give a slight margin of error as ideally it would have held at $800. This for me is the only thing holding this bull together technically right now; if ew went 50% down like in the 70's then there is no more reading it technically which will mean this market can only be invested on fundamentals goign forwards (if you believe them). Silver has shocked the bejesus out of me this morning and all I can say is "well done" to those that say physical 100% as this would appear to be the point at which physical prices and paper prices diverge significantly. Goldfinger - how does this play to your gold/silver ratio upspike before the downspike? Is 63 too high?

So at what point to Goldmoney start quoting silver at physical prices rather than "market spot" then? Think I'll ask.

I don't feel that gold will close much lower than say $790 tomorrow. If it does then I think this bull is pretty sick and a BIG rethink will be required. In addition, should we stay above $790 then I don't feel there will be any further meandering moves as in 2006/07. The correction we have just seen appears to be in reaction to a much shorter upleg of about 18 months, compared to the correction of March 2006 which appeared to be fixing the 5 year run up from 2001 to 2006; thus a longer correction required. IMO we may see $1200 by March and c. $1500 by Feb 2010, with doldrums in between.

GF is looking for a singificant lowering in the gold/silver ratio. ie. silver appreciates relative to gold such that if say gold was $1000 then silver could be say $28 if the ratio fell to 35 ounces of silver to one ounce of gold. edit: "jinx"

Buying (or selling) futures. Chance would be a find thing... Real enough until the system blows up, then it won't matter will it.

And it's back again. $14.65 v $14.79 now. I've never seen this before. I can't see how etrade could be manipulating this as the prices should reflect what's available in the market, certainly on the actual futures contracts themselves.

Gap now gone. Weird. There was a c.$0.25 gap for about half an hour. I think the error was on etrade as well.

Strange divergence on silver here since NY pre trading at 1.30 between spot futures prices (via etrade) and spot prices on IG index. What gives?.. $14.57 on etrade versus v $14.82. edit: $14.57 on etrade

Anyone feel that the progress shown in silver this morning is bullish for a bottom, or just irrelevant? ps. mods - any chance this Silver thread and cgnao's Watch Silver can be merged?