bitbigt

Looks like gold will today have its 3rd try at breaking through 900 convincingly.

I start to suspect the manipulators are dumping on gold at 900, because if it gets through there then 1000 is again on the cards

But the 2nd drop below 900 this week was small and short-lived, so we're getting close to the point where 900 is passed resoundingly ...hopefully today / this week

Oil's looking like the only game in town at the moment . . .

I was thinking about that today...

...Surely, price of oil (POO) has doubled from a strong starting price of 75 dollars partly because of a supply/demand squeeze (solid rise due to fundamentals) which has been dramatically exagerated by speculators.

But one has to ask: why has there been so much speculation to create this massive and fundementally-unjustified bubble?

My view is that loads upon loads of cash is sitting out there (thanks to last decade of 'cheap money' issuance) with nowhere else to go. Property values tanking, stock markets in bear market (and in middle of another big fall), and even PMs have been knocked down (after getting a bit ahead of themselves, and due to CB manipulations).

As and when POO starts to correct back down (this summer/autumn?), then all that oil money will look for a new home. And by that time gold will be looking quite healthy again, and hence very attractive as the next best place to create and chase a bubble. And remember - the oil market is far, far bigger than the gold market - so that redirection of speculative cash from oil to gold will have an absolutely massive positive effect on the price of our yellow friend.

I sincerely hope this is a forced sale situation otherwise, as Marceau says, a heavier correction could permanently scare new blood outta the market. Oil's looking like the only game in town at the moment . . .

I'd think that those who are gonna be scared out of the market went running during the precipitous fall from 1030. People buying in now will have their eyes open to the increased volatility and the solid floor of 850-900 now established.

There are simply too many people now aware of the inflation monster, all of which thereby recognise that in the 850-900 range gold is a stonking buy, regardless of wierd one-day falls and jumps! Todays drop will be balanced out tomorrow or soon thereafter.

In general, as I've suggested before on this bb, it seems we're likely to bounce around these levels with some volatility for some time. And come mid-September - at the very latest (when buyers come back from hols) - the BIG run-up will begin.

...IMHO

Just logged in to my account and what the hell? I can't see any reason for this sell-off at all. I mean, the euro dropped but not THAT far, and oil is up on the day and threatening to go for $140.

Worry not Marceau: its just noise in an environment of high volatility for gold. That's exactly what is needed for gold to be able to have equally dramatic lurches upwards. I fully expect a partial recovery today, and then a big jump up on US openning tomorrow - betcha!

Inflation, oil/commodity price rises, house price falls... ...all shown graphically:

http://news.bbc.co.uk/1/hi/business/7457886.stm

Well worth a look!

I'd agree with mattboy: many forces affect the price of 'things' (PMs, oil, labor, houses etc), but ultimately the core overriding influence is the money supply.

CBs have been flooding the system with 10-20% increased money per year (via overly cheap ineterest rates) for a decade or more. Therefore, money is now worth 2-3 time less than it was 10 years ago. Naturally, this must feed through into things going 'up in price' 2-3 fold. That increase in pricing of 'things' has been delayed because Asia took that extra money out of our Western economies in return for cheap priced goods. But the money didn't dissapear from the planet - and it is now revealing itself by increasing prices of many 'things' globally (most noteably oil at the present time)

On the matter of wage-price inflation spiral: first remember that UK salaries are just another 'thing' and so prices must go up. Politicians can try to delay that, but ultimately they'll fail. Against that reality, we can recognise the wage-price inflation spiral to be nothing more than the 'mechanism' for that wage increase, i.e., the main process by which the cost of good and wages tend to normalise to where they should be given the true current value of money. So sure, the 'wage-price inflation spiral' is real, but its a mechanism not a cause. If the government can reduce how well this mechanism works they will slow down the rate of change (i.e., reduce inflation), but they'll not ultimately stop wages getting to their fair value against goods, commodities, services, and money.

But stay focussed on the take home messages from all of this

- politicians are now running scared of the wage-price inflation spiral kicking in big-time

- gold will rocket as inflation rises, largely overwhelming any CBs manipulations

Its a joke isn't it? Typical ass-backwards thinking from our elected representatives. Governments are so desperate to hold wages down, they are completely blind to the fact that by doing so, they will send the housing market and economy into a tailspin, as the working and middle classes get crushed into financial oblivion. In holding down nominal wages, they completely short-circuit about the ONLY advantage of currency devaluation - relieving the real debt burden on the people, so instead, we just get all the negatives of inflation. How exactly is the economy supposed to recover when all our wages won't afford enough food to eat and gas to heat?

I'm usually the last one to agree with the actions of this government, but on the issue of wage restraint I can see their logic. They are not, as drminky suggests, doing this to keep wage inflation low to "send the housing market and economy into a tailspin", but instead they are simply VERY scared that a wage-price spiral could develop which really would devestate absoutely everything.

So that's the main point to notice in all of this - a wage-price spiral as we had back in the 70's is now a VERY real possibility. ...and I would argue, actually quite likely! PM's will rocket in such a scenario, and we may find ourselves there in just 12-24 months on current trends.

I notice we had the traditional NY trading dump today, nothing new there, very predictable. What I liked was the fact that it seemed to run into a wall of buyers at varying support levels, the result of which has been a nice 'v' recovery.

Looks very bullish to me, so I've added a small long.

...and same thing happend at the start of the UK trading day. Indeed, all good evidence that there is investor buying interest. So once the traders decide they want to help move the price up rather than down, the thing could fly - so long as CBs don't spoilt the party (or get swamped as they did in the run up to 1000)

UK CPI at 3.3% - higher than economists expected. No big reaction yet in PoG (but may now drift up during the day)

Interesting thing in explanation letter from King to Darling, and in the chancellor's response letter, was an open admission that inflation will be well above 3% until well into 1009. Since those guys aren't in the business of scaring the populus - that probably means way over 4% with no respite until 2010.

All good for PoG!

Weehee! Mighty Bernanke-speak lets gold drop.

...I think this drop is more than just Helicopter Ben's words having convinced the market. There must be some PPT shorting of gold going on here. They got a real fright last Friday, and decided to talk up the dollar and sell down gold dramatically, to make sure they nip the recent dawning of reality in the bud

Assuming you guys are invested in gold because you're open minded and cognisant of of the unpalatable realities of this world, you might like to spend some evening watching this video.

http://www.loosechange911.com/finalcut/

...be scared, be very scared! ...and buy more gold!

Woh, still coming down from yesterday :-) Sadly London closed before the real liveliness kicked in late on in the session...

Plotting the last 5 years, and seeing what happened yesterday, it looks like we're going exponential...

They try to hold this big ball filled with air under the water.

EDIT: Someone with a big golden @$$ is sitting on $900.

This is exciting: ...its like watching a baloon getting more and more air pumped into it. The size doesn't grow (PoG hardly rises), whilst the pressure sure does. You know that any moment the thing will blow (i.e., the upward pressure on PoG will outstrip the PPT's ability to hold it down). The upward explosion in PoG will then be a beautiful thing to behold!

Edit: I should be driving home now, but I can't tear myself away from the 'puta - this is so much fun to watch

900 before the day is out, IS again on the cards (898.65 just achieved). In either case, we're looking at almost a 3% jump in PoG today, despite whatever manipulations may have been going on to suppress the rise.

If this sanity remains next week, the run up to 1500+ could just have started!

With today's various market moves (big falls in employment and house prices, main indices and dollar tanking, oil up, PM up), one 'almost' starts to believe there is some common sense in the market for once: gawd knows its taken enough evidence and long enough for them to 'get it'. But where the hell, other than PM, can one put ones funds these days to retain value??

Can't wait to hear what Bush say's about all this in his speach later today - I almost feel sorry for the nerd!

I dunno, those gold traders in the US... No subtlety!

It's either sudden surges or dramatic drops -- nothing in between!

"No subtlety" - that's because they're American, not because they're traders

Seems I was right - USD weakening, and so gold going up. I think this will continue over next few weeks.

I still expect CBs to try to fight this increasing PoG later in the week (Fridays are their favorite time), but buying momentum is growing, and so they may have a hard time keeping a lid on this.

So whereas I debated earlier whether the big run up in PoG will start now or wait until the autumn - on balance I'm now leaning towards the view that what we're seeing now (i.e., the rise since 850) is actually the start of this big run up. Of course, 1000 will be a struggle this summer, but that will yield. ...IMHO

Oh... POG on the way up this (UK) morning.

I wonder if we'll have a repeat of yesterday -- UK puts the price up, US batters it down?

...probably (see my posts from yesterday for why).

But the balance of forces was only slightly downwards during the overall US session, so I'm hoping/guessing we'll NOT see another major pullback in the next week or two. ...and perhaps just the opposite if the dollar starts to weaken from here.

...looks like its option '2': the battle begins, CBs vs the rest of us :-)

To clarify... I think CBs are bound to *try* to knock gold down over coming months, especially this week given recent price increase and increasingly positive sentiment towards gold. The question is how succesful they'll be. They've dived in to doing it today, and only time will tell how succesful they'll be in the long run (though they'll probably manage to suppress the price these next few days). Ultimately, I don't think they'll be able to keep gold below 1000 this year, because the increasing buying pressure will eventually just outstrip their capacity to fight back. And once it does break free of their constraints, the sky's the limit.

...two scenarios of equal probability;

1) this is the start of the big run up to 1500+ by autumn (with perhaps a little hesitation/struggle to get convincingly through 1000)

2) this will get knocked back down this week, by blatant central bank manipulation

...looks like its option '2': the battle begins, CBs vs the rest of us :-)

It's been a steady but cautious continuation on Friday's gains so far... any thoughts on direction as NY opens?

With current rising inflation and rising awareness of inflation, I see two scenarios of equal probability;

1) this is the start of the big run up to 1500+ by autumn (with perhaps a little hesitation/struggle to get convincingly through 1000)

2) this will get knocked back down this week, by blatant central bank manipulation, and they keep doing that until the upward pressure becomes to too great for them to keep a lid on, causing 1500+ to be achieved year end / early '09

...so either way, just chill out and enjoy the ride (assuming you're invested by now)

[and if I'm wrong, its just that the 1500 target is far too low] ...IMHO!

...at some point the MASSES of money sitting on the sidelines waiting to be 100% convinced that the correction is over, will feel its time to get back in or miss out. And as those investors/speculators watch the gold screen with one eye, the other eye will be watching the rising inflation figures making them even more nervous about delaying

 

So the only question is whether a dramatic rush back in begins in the next few days, weeks, or months.

Just busted through 900, and now continuing up at a rate of 1 USD per minute!!!

Above 900 many will feel the bottom is behind us for golds recent correction, and so they may well pile in NOW!!

IMO, people who trade like this will be panicked back into the market when we see a few bullish days in a row.

I fully agree. ...at some point the MASSES of money sitting on the sidelines waiting to be 100% convinced that the correction is over, will feel its time to get back in or miss out. And as those investors/speculators watch the gold screen with one eye, the other eye will be watching the rising inflation figures making them even more nervous about delaying

So the only question is whether a dramatic rush back in begins in the next few days, weeks, or months.

My guess is that it won't be later than this autumn - as we'll then have inflation far higher, the global slowdown will be undeniable, 'stagflation' will be the hot topic at the drinks cooler, and the usual end of year upswing in golds price will be due. Overall, I suspect its 50:50 whether things range in the 850-950 window for 2-3 months before the jump, vs that jump starting (though perhaps not going all the way in one go) in the next few weeks.

And if anyone needs further evidence that things have changed from the April knock-back, just re-read postings on this bb. During and just after the big drop to 850, even goldbugs here were uncertain, scared, and definitely not buying. Now I'm reading far more positive comments from pretty much everyone who is posting here. That positive sentiment and confidence will feed on itself, via buying that causes price rises (like today) causing more confidence, causing more buying etc... ...IMHO!

Now at 885 and still not obviously slowing!

...oops. Sorry folks. Keep my mouth shut next time!

WOW!

Someone in the PPT just pressed the wrong button again!

...I logged in to make exactly that comment - great minds think alike

Now at 885 and still not obviously slowing!

I guess this jump won't do any harm to the recovering market sentiment in gold, pushing the TRUTH value even higher

...and its only just the start. As the true mess things are in becomes increasing clear to the masses, this kind of jump will probably become routine

Gold did not drop today ! You're all imagining it :-)

There was a temporary and irrelevant drop plus recovery due to margin covering.

DOW's on its way down bigtime next week ...IMHO

I love it when the Americans in the NY session start selling their gold because oil has just hit $125 and higher. But, hey, it seems to be a sell-it-all situation right now.

Timing and scale suggests this drop in gold price is just our US buddies selling gold to cover their margin calls from this mornings 1% drop in the DOW on openning.

Swiss franc and Yen strengthening for same reason (people repaying carry trade loans)