warpig

Controlling the price of gold was part of the plan, it wasn't a conspiracy, it was an open secret. Yes at some point the game stops, it doesn't go on for a generation or even another decade, the system will collapse under it's own weight. They know they can't fix it, the best they can do is stall for time. Hyperinflating the currency would cause more problems than it solves, they won't do it.

Thanks for the reply. Yes you can use the ratios to swap from one asset to another, but that doesn't guarantee you're getting the best price for either. What if when you sold your silver you stayed in cash and bought gold now, you'd be significantly better off than playing the gold:silver ratio. If you've been in precious metals for the last 3 years, you've suffered a significant loss of profits the same as the rest of us. If you look at the CCI since late 2011, the decline in commodities is unmistakable and yet to this day, I've barely seen it mentioned let alone discussed on any of the goldbug sites. It seems to me that gold-[bulls|bugs] refuse to accept gold can still act as a commodity, yet the last 3 years clearly prove this wrong. My mistakes were believing gold would "only" act as a monetary asset since 200[7|8] and not having a full appreciation for money cycling in and out of asset classes depending where we were in the business cycle, I drew some wrong conclusions. It's not that I don't believe there's manipulation, after all that's what the anonymous HFT bids and dark pools are, it's just I don't think long term market trends are surreptitiously manipulated, although in the short term everything is. I accept the impact of loose monetary policy, but this isn't manipulation, it's mismanagement. The London Gold Pool and gold leasing were open secrets and were clearly connected with the gold standard, so this was "different..." IMO. I also don't believe in the hyper-inflation thesis anymore, so I "may" consider going to cash when gold peaks next. Clearly inflating the debt away isn't working and I am confident they won't try and push the string much harder, because they'll sacrifice the currency if they hyper-inflate. Having said that I reserve the right to change my mind as conditions change!

Conspiracy theories haven't been able to predict the price of gold for the last 3 years. I'm really pissed off with myself for not seeing the top in 2011 and I'm prepared to admit a lot of what I described as sinister shadows controlling the gold market, was actually a lack of knowledge and putting too much "faith" in others. I'm of the opinion that unless we work out where we all went wrong in 2011, we're likely to make the same mistake at the next peak. Doesn't that worry you?

It absolutely isn't reflected in the price and you should be concerned.

I agree, silver rose about 14% compared to gold which rose about 9% since the beginning of the year, margins are expected to rise as the price rises. Isn't it about time we stopped seeing conspiracy in absolutely everything..?

I agree, I've been an idiot too. It's now clear to me commodities are in a significant bear market and since 2011, gold has been acting as a commodity not as the money of last resort. I think it's very healthy to acknowledge your mistakes or you're bound to repeat them. The dollar is going to rally much higher from here and it could push gold down in dollars to $680, in Martin Armstrong's own words, "This is the extreme target we have to respect is possible." He believes gold won't resume it's bull market until 2016, I believe he's said Q1 in the past. However it should then rally until 2020. He says this is all about the dollar and it's the process of repatriating the dollars that will cause the system to fall apart. I suppose it should also be said, this doesn't necessarily reflect the price of gold/silver in local non dollar currencies. As the dollar strengthens, presumably other currencies are in decline which will cushion gold/silver. Non of this is what I want to hear either, but I can't help but feel it's going to come true.

This chart paints a clearer picture IMO.

Pixel8r spotted this today, see if you can spot Brown's bottom.

Fundamentally there's every reason to be a permabull in gold, but that doesn't reflect the real world. People don't always make the right logical decisions, there are other influences. Having said that, what perplexes me is how the price can decline for 2 years and yet inventory levels are so low. I think it shows the gold market doesn't reflect the underlying commodity any more, it's more about the wallstreet casino than hedging genuine production and that sort of mentality is exactly what put the financial world in it's current predicament. The western economies must go back to manufacturing, where real things have real value. Trading is just educated gambling, it's distorting all of the markets everywhere. I think history will look back at precisely now and label western governments naive for sending all of the western gold east, in exchange for paper promises that we all know are going up in smoke. Countries were invaded for gold in times gone by and now we vilify gold in a brazen effort to promote fiat currencies. What madness... BTW - I think the (double) bottom is in.

We'll see what happens, but I'd rather know it's a possibility and mentally prepare to sit and wait longer.

Latest from MA's blog: http://armstrongeconomics.com/2013/12/15/time-price/

This is an interesting chart.

Full circle... I've just reread it and I think I agree with his closing sentiment: QEIII has been slated to end mid 2014, is gold going to trend lower until then?

I should have refreshed the page before I replied to Jake. Yes I guess that's mainly it, but why didn't we see it coming? We should have IMO...

Hi Jake, Good to see you too. Are you still in Japan? I just took a look at gold in JPY, I'm surprised it's come off the boil, I assumed it would still be at all time highs. I assume you sold at the top... I really like your theory, although I've always thought shale oil/tar sands was a negative EROI, but perhaps I'm wrong on this. I know it's heavily dependent on low IR's, perhaps there are other influencing factors. Yes that's the irony, nothing's changed, in fact that's not true, everything's magnitudes worse! I can appreciate the world's chasing yield, but I never thought it would have this much of a detrimental effect on gold. Adding further insult to injury, western inventory's going down whilst eastern demand seems to be higher than ever... can that be right? Surely only a lack of demand or a glut in supply can cause a lower equilibrium! Whilst I was hunting around your oil theory earlier I can across this - I thought the timing was interesting, so I wanted to remind myself of the dates of different iterations of QE. If you look at the end date of QEII, the duration of operation twist and the start of QE III against a gold chart, it looks to me like it's caused stark behavioral changes as far as gold investors are concerned. I appreciate it hasn't happened in isolation, there are of course many other influencing factors like oil, the velocity of money, European fragmentation etc... etc... but it's hard to ignore those dates on those charts... Why would QEII encourage people to buy gold and QEIII encourage people to buy equities..?

Of course.

Exactly.

Interesting... (6-10/2) 8 years for the top of the mania in gold is inline with Martin Armstrong's ECM, but as he said he expects healthy gains in gold up until that point. I was hoping to drop out around 2016 assuming MA's ECM holds true, but this of course all hinges on what's happening... So with that article in mind, why did investors decide gold should be considered more of a commodity rather than a monetary asset at the end of 2011? What changed?

Whilst true and if we trust the current price, then supply must still have been greater than demand. Do you know anyone that predicted the current 2 year decline DrBubb?

I broadly agree it's "stored" in certain financial and consumer asset classes, but I still can't help but wonder if there's something else we've missed. Martin Armstrong has a 2014 metals report coming out early next year and whilst it isn't cheap, I'm tempted to buy it given he was the only one who nailed this correction AFAIK. It would appear he has an insight in to the gold market. Yes that sounds about right, as the rich get richer and the poor get poorer, high earners are spending their `winnings` on high end items and inflating high end asset prices. Sounds like you got a bargain!

Yes when potential inflation becomes kinetic inflation, the financial landscape will look very different.

I accept the velocity of money is very low, but bubbles are still appearing in other asset classes. Look at equities, London property, yachts, fine wines or art, fine art has doubled in 6 months. So there is a lot of money sloshing around, it's just the love affair with gold ended. It seems nonsensical to me, everyone has such a short term mentality... I don't understand the mindset that would have someone sell their gold and buy fine art. Collectibles are notoriously bad at retaining value in a financial crisis.

This seems to fit in with the charts I've posted above. It feels like there is light at the end of the tunnel now.

Thanks for the reply. I've just realised I wrote something interesting above - "especially considering everything was falling apart?", perhaps that's it, it "was" falling apart and now it isn't, gold is certainly a hedge against uncertainty. I'm not sure what's changed in terms of the Euro's stability, but there's very little reported anymore and I don't recall anything being fixed... Do you see the declining velocity of money as a symptom or the cause? Martin Armstrong has stated all markets are gamed in the short term, but you can't influence the long term trend. The longer this continues, the more I've come around to his point of view.

So what did the gold [bugs|bulls] overlook? I have to say I didn't expect a 2 year decline in gold and silver and even now it's hard to appreciate why this happened. Martin Armstrong predicted a 19 month decline, but I'm still at a loss as to why. Now I appreciate everyone's chasing yield, but what was wrong with chasing capital gains, especially considering everything was falling apart? What caused the fundamental switch? Does anyone have any credible ideas? It's not as if anything appears to have changed, but clearly something underneath the surface has... Anyway, a couple of charts to ponder, both of which hint gold is just about to complete a huge double bottom IMO, although MA believes there's still a small amount further to fall from here, $900 being the absolute possible bottom IIRC.