bitbigt

There goes GoldUS$ = 920

 

That's nice to wake up to

...and nice to go to bed to (in Asia just now)

as good as a done deal now if you ask me, dow up well, McCain reckons it's in the bag and the red herring compensatory payments being squeezed will be the token win for the abstainers

I agree, and generally felt the bail out was a very distasteful but necessary step. But now its getting ridiculous... They're apparently now extending the plan to give money not only to Walt St but also to Main St.

Think of the US situation as a family budget...

If dad (financial world) gets into excessive debt, perhaps his son (taxpayer) should be expected to bail him out. But that is only reasonable if you assume the son has money, and he's going to use it only to bail out his dad in a real emergency.

But what they are now moving towards is more akin to taking out a family loan to pay off family debt bills that they already can't service each month. It's like paying your mortgage with your credit card.

I say all this because

- the US tax take can't cover all this bailout money

- the money is going to everyone (Main St and Wall St) and not just to the broken bits of the system

So where, really, is all this money coming from? I doubt foreign investors will keep buying US treasuries to fund it all, as they're already selling those bonds and raising yields. An actual run on bonds starts to look like a real possibility. If I'm wrong, and those foreign investors do buy massive new US debt, then the dollar will be weakened and that will cause inflation, so making everyone a lot poorer. But if I'm right, then all that is left is the option of printing new money to pay for this bail out, which will dilute the dollar and weaken it that way, again causing massive inflation.

...time to bet against the dollar ?!!

In short: Wake up America - there is no such thing as a free lunch!

The US can't buy its way out of it debt mess without being realistic about where that bail out money is coming from, and what major downside there are in getting their hands on that money

Looks to me like silver started to take off exponentialy, raising some automated alarm bells for the PPT.

They probably then just squished all PMs by triggerring some compensatory selling.

Hence, silver shot up, and then turned 180 degree and went South. Whereas poor old gold was just bumbling along and got dumped on.

You can also justify this interpretation by what happens next - gold (which had merely been pushed down) will now be deemed 'too low' by the market and will hold these levels or even creep back up today, whereas silver (which went up and then down, so is where it started) may fall somewhat further. They'll probably both end up about 1% down from where all this nonsense started.

...unless the 700B early Christmass gift for bankers is given out today

I did say 'might'...

 

At the minute I think high inflation is certainly likely as a result of all this. Although that's only if they actually succeed in averting the deflationary collapse first, which is far from certain at this point.

 

The point is one needs to understand that this is a period of deflationary deleveraging first, and beyond that it is anyone's guess how the 'inflation cure' will work. It will either destroy or devalue the dollar for sure, but how rapidly all the consequences will play out is far from certain.

 

But I would say the last week has shown how very determined they are to pump in as much money as it takes and in that respect the balance of probability has shifted towards high or hyper inflation in the medium term.

Surely, we had 10-15 years of massive money supply, which was bound to cause inflationary pressures. Then came the credit crunch...

Things that had been inflated before the credit crunch started to deflate (e.g., houses, and commodities to a degree), but these will now deflate less or maybe no further due to the latest injection of new money.

And things that were still only part way through their necessary inflation (e.g., cost of living items, wages) will now have their ongoing inflation dramatically accelerated.

This planned universal bale out of all financial groups with bad debt in the US is truly historic!

The US government has now openly committed to printing unlimited amounts of new money to try to inflate its way out of the mess it's in (as several on this board have been predicting they would).

The cost of living inflation/deflation debate is now settled!

The only thing I admire about this action is how they managed the spin:

- had they baled out each organisation as it began its death throws (as they've been doing this last week ) then the progressive loss of confidence in the US would soon have become overwhelming

- but by saying up front they're going to bale out everyone their action actually seems strong and has inspired confidence amongst the sheeple

...but baling out everyone has to be either a good thing OR a bad thing for the US economy - it can't be both. ...each of us must now decide which it is, and position ourselves accordingly

My view:

This might be a time for Hank Paulson and Ben Bernanke to be reminded of another well known American who did something historic and amazing, receiving widespread praise and acclaim at first ...but for whom things seemed very different when the full consequences of his actions inevitably became apparent:

"I am become death, the destroyer of worlds" - Robert Oppenheimer, Trinity 1945

And whats the quadroplegic patient called when thrown in the doctor's bathtub of liquidity?

...call him whatever you like, he can't fight back!

me too, clincks glasses together....sante.

don't forget - you are the patient in my analogy !

DJIA up, Gold up.... crazy days!

DJIA up ...patients relatives buying that

Gold up ...doctors buying that

The patient (US economy) has badly infected limbs (toxic debt) and the doctor (fed and treasury) have been using every trick they know to heal the individual. Minor surgery to remove infected tissue (lehmans) antibiotics and skin grafts elsewhere (AIG). But they realised they were lossing the battle, and they'd have to tell the patient's relatives that the infection is extensive and spreading. The wise decision would be to resort to extreme actions such chopping off digits and use of harmful medication (let banks fail, and suffer a deflationary recession). But then they had a brain wave: they just chopped off all the limbs at the base (offered to take on all the bad debt in the system)

Today they told the patient's relatives the good news: all the infection has been cleared, and the relatives (markets) are feeling very happy.

Tomorrow, the relatives will visit and see what is left of the patient - they may then not be so happy !!!!

A nice, non-judgemental, overview or what's going on...

"Worst Crisis Since '30s, With No End Yet in Sight"

http://online.wsj.com/article/SB122169431617549947.html

Anyone know the precise all time intra-day and closing highs for gold in Sterling?

We must be getting close now

Fuk me!

Sure lover!

But it will have to wait until this rocket stops moving so I can take my seatbelt off ...and that might take a few months

Gold: exactly a USD 100 rise in exactly 24 hours ...even without China deserting the dollar!

UK residents (i.e., Sterling investors) - do you realise gold is now just 5% off of its all time high

ermmm...

My feeling for some time is that deflation was absoloutely on the cards

I may have been wrong

Certainly, the picture has been very confusing these last few months. My analysis of it all has never waned from an overall inflationary view when it comes to cost of living items. ...but at times I really felt concerned that I might be missing something.

Only time will tell what actually happens, and if it is inflation then its best to fall into that camp sooner (i.e., now, as you are) rather than when its to late

If the silver belongs to the investor, what security is used to obtain the leverage?

The silver belongs to the investor in the case of the unleveraged ETFs

The leveraged and inverse ETFs are simply tracking indexes produced by AIG. Investors in those would have lost all their money should AIG not have been baled out. But as I mentioned, ETF Securities is now going to change the relationship with AIG (or perhaps move to another partner) so that risk is eliminated in the future.

Honest to God...

At mid-day today my mother in law bought 1kg of gold intending it to ultimately be a gift for my kids. To buy and make this gift was her decision, but to buy at these prices was based on advice that my wife and I gave her yesterday. I am so glad she didn't wait a few more days

When we phoned to tell her what had happened this afternoon, she didn't believe us

Horse - don't worry. It all OK

 

The silver ETF is not part of the AIG debacle, there is a general lockdown in ETFs just now, whilst the markets are so volatile.

 

And even if it was (e.g., like the AIG commodity ETF/Cs) that also will settle down in new few days as market makers get back to trading those securities now that AIG has been baled out

 

The only thing you might worry about according to some on this board (but let me state: I also have a lot in silver ETFs and am not worried) is whether there is real silver backing those ETFs. If I am to worry about anything, it would be the question of who legally 'owns' that silver. If its you - then everything is really OK. But if it is Barclays (who I believe holds the silver) then should Barclays go bankrupt you (and I) would be considered unsecured creditors and we'd loose the lot ..if Barclays goes bankrupt

 

As always, DYOR, as I'm not an expert!!!

SORRY - I NEED TO CHANGE AND CLARIFY THIS....

I just noticed you referred to a "leveraged" silver ETC. That places it in the same category as the AIG backed commodities ETFs, but its still no cause for concern (for the reasons I gave)

To make 110% sure of all this, I've just come off the phone with Nigel Phelan from ETF Securities (one of their top guys)

The main points to come out of that discussion were:

- Now that AIG has been made stable (at least for a year or two) ETF Securities has been able to reach an agreement with the market makers such that normal trading will resume tomorrow morning

- That trading will be based upon the price of the underlying commodity or index, regardless of whatever pannick selling might take place

- Had AIG gone bust, investors would have lost all the money that was backed by AIG. ETF Securities is now restructuring the basis of their AIG backed ETFs such that the investor would not loose the money should AIG ever go bust in the future

- Nigel is one of the few people that has been privaledged enough to actually see the silver that DOES EXIST and which backs their unleveraged silver ETF.

- That silver belongs to the investors, and so even if the banks that stores it should go bust, then its value will be returned to the investors

EDIT: I wish to add how impressed I am with the professionalism of ETF Securities. They have had top people phone me back twice these last two days, and on each occasion given clear and complete answers to my various questions. Shame they can't be put in charge of the government

As an avid reader of the gold thread on HPC and now on here, I'm writing my first post in a state of panic.

 

Just checked my leveraged silver ETC expecting to find a huge increase and found all trading has been suspended. It transpires these are by not backed by physical, but by the ropey, teetering on the verse of bankrupty AIG!

 

Anyone else got ETC's?

Horse - don't worry. It all OK

The silver ETF is not part of the AIG debacle, there is a general lockdown in ETFs just now, whilst the markets are so volatile.

And even if it was (e.g., like the AIG commodity ETF/Cs) that also will settle down in new few days as market makers get back to trading those securities now that AIG has been baled out

The only thing you might worry about according to some on this board (but let me state: I also have a lot in silver ETFs and am not worried) is whether there is real silver backing those ETFs. If I am to worry about anything, it would be the question of who legally 'owns' that silver. If its you - then everything is really OK. But if it is Barclays (who I believe holds the silver) then should Barclays go bankrupt you (and I) would be considered unsecured creditors and we'd loose the lot ..if Barclays goes bankrupt

As always, DYOR, as I'm not an expert!!!

I have to say it.... I TOLD YOU SO

The full original post (#207, 4th September):

"I'll also stick my neck out with a prediction for this month...

- next few days DOW and FTSE start to fall precipitously, such that they reach 10000 and 4500 by month end {almost there, and still 2 weeks to go, and may fall even lower}

- emergency base rate cuts happen or are signalled (BoE missed its chance today) {give it a few days}

- commercial bank baleouts extended / increased {yep!!}

- Sterling will fall further, reaching 1.65 vs USD, with the fall only minimised by the fact the USDX will peak out and start to slide {still on the cards}

- oil does not fall below 90 (and possibly not even or much below 100), and the fact that its refusing to go lower will become a palpable concern to economists/media {true so far}

- inflation stats rise significantly {thats for the following months/years}

- all the above will cause a ramp up in fear, and gold will start to rally (6-8% up in USD, 10-15% in GBP, by months end) {...at least!}

[EDIT: and my bones even sense a black swan approaching ...Russia? major bank collapse? terrorist attack? high-profile Western assasination?] {spot on}"

...SO THAT CRYSTAL BALL WAS WORTH THE MONEY I PAID FOR IT

Implosion of all the investment banks on Wall Street is the cause in my opinion. Goldman Sachs and Morgan Stanley are now in crisis mode. Real banks will probably swallow them up in the next few days.

 

Real banks will have their turn when the currency crisis hits.

Yes - I just saw the prices for those on the TV news. That explanation would make sense

8% rise in 3 hours

We all know what the fuel is, but what was the trigger?

I think something will be revealed as the catalyst...

- embassy bombing in Yemen?

- DOW turning negative after an initial rise today, despite AIG rescue?

- big buyer (China?) having decide not to support US any more?

Now the world is waking up to the economic reality and the recent inflationary new money creation, that realisation will only get stronger ....and gold will soar

Then oil will bottom, and inflation will refuse to come down - and I daren't imagine how hight gold and gold stocks could go

...Indeed, one week ago I predicted an imminent large fall in stocks and a run up in gold, and I suspect this stock market collapse may now accelerate this week as real pannick sets in.

I have to say it.... I TOLD YOU SO

WHAT THE HELL HAPPENED....

I've been on planes since 7 am this morning, and just got home and checked the gold price

Yipee!!!!

Someone please tell me what happened - I'm too impatient to read all the websites etc

Keep in mind...

- oil down 5% today

- marging calls left, right and center will be making people sell gold to raise cash

- yet, gold rises >3%

I predict more of the same tomorrow

...Indeed, one week ago I predicted an imminent large fall in stocks and a run up in gold, and I suspect this stock market collapse may now accelerate this week as real pannick sets in.