wrongmove

I do not think that gold is really seen as money by most in the 21st century. This has to change if we are to see big, sustained gains, IMHO.

I would add that anyone holding gold is no worse off than they were last Friday. In fact they are slightly better off, depending on their currency. Compared to holders of commodities and stocks, they are much better off, but bonds seem to have done very well. So gold has been a "safe haven", whereas bonds have been profitable. However, silver seems to have little remaining "monetary" status, just going by the price movement. Gold looks to me like it is trying to find a bottom here, at least, if not rise a bit. But silver charts still just look plain nasty to me.

It does but the Daily View for yesterday was surprised at how small the move was...

 

 

http://www.ft.com/cms/8787ae00-2a26-11dc-9...mp;fromSearch=n

I do not think that gold is really seen as money by most in the 21st century. This has to change if we are to see big, sustained gains, IMHO.

Silver got another kicking today then - G:S ratio dropped a bit more. Arse.

Another day. Another 5% off silver. Ho hum.

Gold definitely has a "safe haven" image, which silver does not seem to share in the eyes of the market. It is still just tracking commodities, as far as I can see. But folk here are bullish on commodities, so I guess that's just fine.

Will the Fed cut tomorrow?

 

I do not think they will. They will not want to look like they are panicking.

I can almost guarentee that the FED will not cut tomorrow.

The decision is today!

Note how, when he starts to talk about gold, he mentions he expects a massive re-inflationary play - after the deleveraging.

What time scale does he give? You could say the same about houses - now deleveraging, but eventually, they will probably reinflate. Usually takes about a decade though.

Perhaps some of the more experienced PM investors can shed some light on this, personally I would like to see some evidence of this. I'll look later and post back if I find any dependable info.

Some info here: The Great Silver Deflation 1919-1948

"At New Era Investor, we very much hold to the maxim that the past is the key to the future. In the arena of money, the study of price action and human response offers insights into the great cycles of investment as one asset class gives way to another and then again in reverse.

Such was the case with silver from the period 1919 to 1948. Readers will be more familiar with the great spike of 1980 followed by the deflationary bust that recently ended. But the previous cyclical spike of 1919 is not so well known. Using the average annual fixing price from London, the great silver deflation of silver can be seen in the chart below (if anyone has access to the monthly or weekly data I would appreciate an email!).

It is a sorry tale as an inflationary peak of $1.34 per ounce was hit in 1919; this is at least $15 in current dollars. It got so bad that Great Britain (and no doubt other countries) debased its silver coin content from 0.925 to 0.500 purity in 1920.

But then we had a spiral all the way down to 25 cents per ounce followed this ending in 1932 giving a total price drop of about 82%. A bad time to be holding silver and only surpassed by the great equity crash of 1929. Fans of Elliott Wave analysis will note the three-wave ABC correction that completed that crash.........................."

I can see it. The ECB has just printed another €30bn, the BoE £5bn.

 

Wait a minute ...!

They will try to play Canute, but I personally don't think they will succeed. Of course they have to try though. £5B is peanuts.

A question to the chartists - is 785 technical resistance? If so, where is the next resistance should 785 get broken? cheers.

Dollar fall starting to gain momentum. If there is a BK, then it will be very interesting to see if gold and commodities diverge.

I would have thought that a BK would send out a recessionary message, and a "dollar not good" message, so I would would guess that non dollar currencies (exc. Au for now) would rise, and stocks and commodities would fall. But gold also has safe haven status.

But I am probably seriously oversimplifying.

Still a lot of uncertainty out there - lehman bankruptcy is not a given yet: it's being reported as the most likely scenario unless I've missed some news in the last 30 mins

I agree. I would be pretty wary of a last minute deal or bailout until firm confirmation was in. We do seem to be being softened up for a BK though. I wonder if the LSE will manage to get through tomorrow?

The dollar is being traded now. It's down, but not by much - nearly a cent on the euro. Not as dramatic as F&F night.

Soon be posting nice rocket pics again this week

Well, we'll see. I'm not sure that the kneejerk market reaction will be raised inflation expectations, but it should certainly be anti-dollar, I guess.

Derivative traders open session to reduce Lehman risk

Sun Sep 14, 2008 3:05pm EDT

"NEW YORK (Reuters) - An emergency trading session has been opened between Wall Street dealers with Lehman Brothers counterparty risk, the International Swaps and Derivatives Association said Sunday.

The session will run from 2 p.m. to 4 p.m. and will involve credit, equity, rates, foreign exchange and commodity derivatives, the ISDA said in a statement.

The aim is to reduce risk associated with a potential bankruptcy filing by Lehman Brothers Holdings Inc.

"Trades are contingent on a bankruptcy filing at or before 11.59 p.m. New York time Sunday," said the statement. "If there is no filing, the trades cease to exist."

They may be letting this one go to the wall?

As long a Silver Eagles sell for a 90% premium on Ebay, I consider this to be a paper problem, and not a physical one.

How does the premium compare to before in pounds, rather than as a percentage? It seem to me the premium is generally fixed at an amount, rather than a percentage, so you would expect it to rise (in % terms) as the price fell, but remain more constant in £/$.

You think the Fed and US treasury will set a precedent and let one of the big four fail?

I've not been following this story but I think that there are emergency meetings expected to conclude before the Asian markets open today. I think they want to put pressure on the other banks to bail them out, I don't expect the banks to take this on completely but I'm expecting to see some news in the next few hours on it.

I think there is a limit to what they can do. At the moment, they are still containing the damage fairly well - money supply growth is 'holding up' despite apparent credit contraction is most sectors. i.e. SLS etc are plugging the gap.

It has to move to "damage limitation" soon, and then just "damage". I'm looking forward to seeing how far the Fed (and other CBs) will take it. I still can't see them literally printing (rather than lending), but who knows. I'm pretty sure they must be running out of ammo, re F&F style bail outs.

I believe the logic they say they are following is, bailouts are ok (though undesirable) if the trouble that caused the bailout is just panic (i.e. potentially curable), rather than due to deep underlying problems. Beats me how they decide is which is which though.

Anyone heard any "soothing" announcements about Lehman? Below is non-"soothing"

Barclays quits Lehman sale talks

Beginning of article by Nouriel Roubini (I don't have subscription for the rest)

If Lehman collapses expect a run on all of the other broker dealers and the collapse of the shadow banking system

"It is now clear that we are again – as we were in mid- March at the time of the Bear Stearns collapse – an epsilon away from a generalized run on most of the shadow banking system, especially the other major independent broker dealers (Lehman, Merrill Lynch, Morgan Stanley, Goldman Sachs). If Lehman does not find a buyer over the weekend and the counterparties of Lehman withdraw their credit lines on Monday (as they all will in the absence of a deal) you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers (Merrill Lynch first but also in sequence Goldman Sachs and Morgan Stanley and possibly even those broker dealers that are part of a larger commercial bank, I.e. JP Morgan and Citigroup). Then this run would lead to a massive systemic meltdown of the financial system. That is the reason why the Fed has convened in emergency meetings the heads of all major Wall Street firms on Friday and again today to convince them not to pull the plug on Lehman and maintain their exposure to this distressed broker dealer.

Let me elaborate in much detail on these issues…"

So any announcement on Lehman today or early tomorrow may be crucial. Will confidence be restored or shattered? Looks like markets may respond sharply either way, and st leger's day was this weekend, so the "silly season" is officially over.....

Should be "interesting"............

Quite amusing - this is "a gold is money" guy, who uses a money supply model, but he also reckons gold is now fair value!

Paul Van Eeden and the Fair Market Value of Gold

Gold ($) has just made a "double top" followed by a "lower high" followed by a "lower low".

It's still not exactly a textbook chartist's wet dream.

edit: though I guess it depends which text book you read!

gold broke out of its 4 day down trend started from 820 area. high probability of a bottom in place.

now waiting for oil to close above 102.50

I posted the following on one of the "backwater" threads this morning. Ker and other traders - do you see this a temproray bottom (i.e. a good entrance point for traders) or as a potential long term bottom? I would still be a bit nervous, bearing in mind that the next support under $736 is about $100 lower.

Would $750 be regarded as resistance? (I know it was a support level, and it looked like resistance until it broke).

 

If so, this must be the first "break though to the upside" for a while......

And gold has fallen to the cost of production at some mines, according to: Hope glitters amid cost pressures

 

"...........AngloGold Ashanti's Australian-born chief executive, Mark Cutifani, said the gold price had to climb if mines were to remain open. "Thirty per cent of the industry is cash negative when gold is somewhere between $US700 and $US800 an ounce," he said. "If the gold price trades around $US800, I see a continuing slide in Australia's gold production."..........."

 

 

So even to me, who can only understand the "fundamentals" of physical demand (80-90% of which is for jewelry in a 'normal' market) gold has reached something like a "fair price", but not a "bargain price".

 

I'm not calling a bottom - if "investors" continue to shed gold, especially after the jewelry buying season is over, then the price can still fall (for a while), and some mines produce gold more cheaply than the Australian ones - they have stricter pollution and employment laws than most - but even I would be able to 'sleep at night', at these levels. I wouldn't be expecting to get rich any time soon though, but as "insurance", this price doesn't look too far off right, based on my rather 'idiosyncratic' view of things.

ps. yes - I am now a 'neither'!! Look out below!

Hi notanewmember - yes, I gave it a listen. I found his fundamentalist christian bible-bashing too off-putting really, but I did listen to the end. I find it hard to listen to someone (even if they are correct) given their stated belief in magic moonbeams. He claims strict application of terms to his search for the truth about money and yet is able to swallow the contradictory drivel written in the bible.

 

Shame really as I quite enjoyed it apart from that

There does seem to be a bit of a correlation emerging between fundamentalist views on reality and [funda]mentalist views on gold.

People's religion is their own business, but like you, I find it hard to take seriously people who can just swallow a story whole like that, and I have to question their analytical ability in other areas.

OK - as some have pointed out, 'teeny-weeny' coins wont set the market alight, but if you want some coins best get em soon eh?!

Bows head in shame.

Look, i wasn't taking the proverbial. They are very pretty, IMHO.

Why would a bank (or anyone) hold 5% to 10% of their assets in a metal which has very limited industrial/commodity uses and is otherwise only used as jewelry, unless that metal was also considered to be money or money's equivalent?

I disagree with you about jewelry. Where do miners sell their wares when speculators are away elsewhere? They have to cover their costs.

Jewelry demand should keep gold above the cost of production. When it doesn't, mines close. So gold generally keeps up with oil, but is much easier to store longterm.

So if you are totally loaded, a few % in gold seem sensible to me. Especially if you are a central bank and are supposed to keep plenty of oil tradable readies handy. If you are not, you generally have more important demands on your money than hedging oil, IMHO.

Sorry if this doesn't fit the theories, but I enjoy formulating my own, based on what I see and understand. But of course they are just theories, just like everyone's beliefs about the future.

This seems a bit self-contradictory to me. As I already noted, gold has very limited industrial/commodity use. I can see the logic of CBs divesting themselves slowly so as not to cause huge price falls, although similar logic didn't seem to trouble Gordon Brown when he flogged the UK's gold at rock bottom prices.

 

Paul van Eeden has convincingly argued jewelry demand has only minimal impact on price. (Have a listen to this interview on CWR from last year: http://commoditywatch.podbean.com/2007/10/...chael-hampton.)

 

So why would banks hold 5% to 10% of their assets in gold, if gold is not money or money's equivalent?

 

(EDIT: Incidentally, van Eeden has been spot on in his calls on the PoG this year. In April he said "I would not be surprised to see the gold price drop $150 an ounce, taking it well below $800 again" and in a newsletter from mid-July he gave his estimate of the theoretical "true" price of gold based on the money supply and gold supply growth at $757. I just wish I'd paid more attention! )

I haven't listened to the interview, but if it was last year, I agree. Jewelry demand had dried right up on high prices. However I would say at the moment, that jewelry was the main prop. At least they are buying. Investors aren't.

The banks have inherited this gold from years ago. Now they are slowly getting shot. Not a strong argument for "gold is money", IMHO.

Silver too shows signs of capitulation. Good day today for silver. Only lost about 2.5%. Been running at about -5% DoD.

But I have read in many articles that from a TA POV, $11 was "major multiyear support". $11 has gone, so I guess it represents resistance now, rather than support? (not at all sure about this, sometimes support and resistance are the same level, sometimes not. Most posters here only seem to analysis support, rather than resistance)

From a TA POV, is it best to wait for a "break through on volume", rather than pile in based on a support level that hasn't yet been properly tested?

All a bit mixed up there between Au and Ag, but hopefully you know what I mean.

......

Relative currency values, plus a bubble in PoO have simply clouded the data,......

A PoO bubble!

Sounds messy - I don't want to be around when that one bursts!