GOLD

[Bobsta]

Silver down well over 10% from its highs. I think the best profits will come from recovery in silver rather than recovery gold. As always, the trick will be not to buy too far from the bottom.

 

Gold:Silver ratio now ~54.6 ... either Silver's very cheap or Gold's expensive.

[Pluto]

I think they'll let inflation rip for a while - its in their interests to do so for now. As long as the public keep swallowing the line that the inflation is only temporary and will moderate in the future recession/depression. The public have done a good job at buying this spin so far - at least in the west. This is what those low bond yields are about. They got lots of mileage yet before the public fully wake up to the inverse robin-hood game of stealing from the poor to give to the rich going on. Just look at all the people on forums repeating the mantra that 'oils gonna come down to $20-$30' and all that. They fully buy it! Its when the ten year and 30 year bond yeilds head sharply north that the inflation game will be up for the Fed..

 

Just look at today. JP Morgan up 9%; Silver down 9%. Silver has crashed this week, there is no way round it. It went from over 21 at the start of the week (four trading days ago) to 16.75. That is a 25% reduction in four trading days.

 

As for letting inflation rip - I keep going back to the bond markets - and they should be pricing in inflation and they aren't. This is what is enabling Bernanke to keep lowering rates. Now in the US, I can tell you this: Rents are down, property prices are down, price for contract labor is down. Now fresh food and veg and petrol is up - but it seems everything else is heading south.

 

A brand new Ford Focus 2.0L can be leased for $169.00 per month. That is down from last year. Once commodity prices really start filtering down even more, then is game set and match for Bernanke. I think he is getting the banks recapitalized and on sure footing as much as possible before he pulls the rug from the economy and sends it into a recession/depression. I understand the hyperinflationary depression, but I can't see them getting away with it. Lots of news outlets seem to be priming everyone for a depression right now.

[Errol]

Looking for $800-850 for the next round of buying. Hoping it will get there!

[Bobsta]

Once commodity prices really start filtering down even more, then is game set and match for Bernanke. I think he is getting the banks recapitalized and on sure footing as much as possible before he pulls the rug from the economy and sends it into a recession/depression. I understand the hyperinflationary depression, but I can't see them getting away with it. Lots of news outlets seem to be priming everyone for a depression right now.

Pluto, you seem to be making more and more sense lately. Maybe I'm just unnerved by the latest events and more inclined to agree... But to my way of thinking, you're onto something.

 

Are you short gold, or do you still see a role for it in "Pluto's future world"?

[Steve Netwriter]

Yes, I'd noticed that also. Seemed a bit ironic after mentioning them being in synch earlier...

 

If the world can make me out to look like an idiot, it never misses its chance!

 

Are you sure you're not me ?

You said "I sound like you". Well, you sound just like me

 

[Pluto]

Pluto, you seem to be making more and more sense lately. Maybe I'm just unnerved by the latest events and more inclined to agree... But to my way of thinking, you're onto something.

 

Are you short gold, or do you still see a role for it in "Pluto's future world"?

 

I have physical gold, silver and palladium. I don't intend to sell one oz. It is not only my savings, but my insurance policy which never expires and can be passed on. Remember, when banks fail you lose your lolly. And you can forget about those insurances like FDIC in the US or the 35K in the UK. They aren't designed or meant for total bank failures, especially multi-national clearing banks. Anyone who has ever read my ramblings will know that I believe in physical gold under my total control, as it is my insurance policy. I do want to be scrambling around on the internet or phone begging someone make good on their promises, when I need cashing in. If gold goes to $200, that is fine with me, it means my insurance never needed to be cashed in and everything is fine in the world. Somehow, I am not that optimistic.

 

Most corrections I've seen haven't been like this one. As I have said before, this happened after a 1/4 then 3/4 slashing of interest rates, and a top investment bank being stolen by the Federal Reserve (JPM are stockholders of the Fed). Also, the short term treasury yields sunk to a 50Y low. Gold's recent climb has been mainly because of inflation expectations for the future; however, if we've had our inflation burst then expectations looking forward may be declining, which the bond market is indicating. I also said, I would not be in the market for PMs right now until we get a clearer reading from the markets on inflation expectations. I know we have what seems to be horrendous inflation right now, but that may not be the case in the future.

[marceau]

Pluto, you seem to be making more and more sense lately. Maybe I'm just unnerved by the latest events and more inclined to agree... But to my way of thinking, you're onto something.

 

Are you short gold, or do you still see a role for it in "Pluto's future world"?

 

 

I disagree strongly with this analysis. It's perception based in the extreme and we all know how easy it is to manipulate perception.

 

I have to ask you Pluto, what brought you into gold in the first place, was it inflation? If so, then the only change which has occurred over the past week (other than prices) has been a vast increase in inflationary pressures, not a decrease.

 

Bernanke will not at any point 'pull the rug from the economy'. He will carry on intervening and inflating as long as he has the weaponry to do so. We get deflation not when Bernanke decides, but when he fails, and that hour has not yet come.

 

Do you really believe the commodity bull market is over? I don't. All I see is a lot of panic and fear, a lot of margin calls and a lot of investors making classic bull market mistakes.

 

I think gold will fall further, but purely based on the technical fall out from the last few days. That, in my opinion, will present the last great buying opportunities to be had below $1000.

[Steve Netwriter]

Bullion Vault have their say:

 

http://www.housepricecrash.co.uk/forum/ind...t&p=1024411.

 

I think that deserves being quoted on here (in case it disappears):

 

Copied from another forum:

 

From Adrian Ash at BullionVault.com...

 

SOMEONE WHO'S NOT a customer of BullionVault brought this thread to our attention. So just to clarify two points – both of which have been answered on the HousePriceCrash forum before – and also to correct the slander above.

 

First, BullionVault is not a "closed system". Instead, we operate as a buffer-zone where private individuals can access the otherwise closed-shop of London's professional gold market.

 

http://www.bullionvault.com/help/FAQs/FAQs_whyBV.html

 

BullionVault regularly re-stocks its inventory by buying gold from the professional market. This new gold is then added – physically, in the form of real, 400-oz Good Delivery gold bars – to the stock of gold held by our customers in secure, accredited vaults in London, New York and Zurich.

 

We act in open competition to buy and sell gold with our customers. They post live prices on our online Order Board. We use simple trading "robots" to quote prices and accept offers.

 

Any customer owning a whole 400-oz bar also has the right to deal directly onto the main London bullion market, just as we do. So any material discrepancy in price between "spot" and BullionVault prices – caused, let's imagine, by large numbers of BullionVault customers all looking to sell at once – would offer the chance of easy arbitrage profits to our bigger clients, whose trading would quickly close the gap in prices.

 

London's professional gold bullion market remains one of the world's deepest and most liquid capital markets. There is always a clearing price for gold bullion – unlike in the market for, say, subprime mortgage-backed bonds.

 

Just how do our customers know that their gold really exists? The three secure vaults that hold our customers' property (New York, London and Zurich) are run by ViaMat International, a privately-owned Swiss company founded in 1946.

 

http://www.viamat.com/viamat/index.php?navid=2

 

Every time the quantity of gold they hold for us and our clients changes, ViaMat issues BullionVault with a full Bar List. It is published on our website for everyone to see. And until that list is superseded, it is reconciled – daily – with the quantity of gold belonging to each and every individual BullionVault customer.

 

http://www.bullionvault.com/audit.do

 

We publish this Daily Audit on our homepage for all customers and visitors to scrutinise. Anyone can check it, daily, to make sure the gold owned by our customers matches exactly the quantity of gold held on their behalf by ViaMat, right down to the gram. It also acts a central register of all current gold holdings, ready for presentation to our liquidators if BullionVault were to go into administration.

 

In short, BullionVault gold is very real and it belongs to our customers outright. It has nothing whatsoever to do with the so-called "collateralized gold obligations" imagined by two posts on this thread, and it is a slander to claim otherwise – even as an uninformed, off-the-cuff jibe.

 

Adrian Ash

www.BullionVault.com

[lowrentyieldmakessense(honest!)]

I disagree strongly with this analysis. It's perception based in the extreme and we all know how easy it is to manipulate perception.

 

I have to ask you Pluto, what brought you into gold in the first place, was it inflation? If so, then the only change which has occurred over the past week (other than prices) has been a vast increase in inflationary pressures, not a decrease.

 

Bernanke will not at any point 'pull the rug from the economy'. He will carry on intervening and inflating as long as he has the weaponry to do so. We get deflation not when Bernanke decides, but when he fails, and that hour has not yet come.

 

Do you really believe the commodity bull market is over? I don't. All I see is a lot of panic and fear, a lot of margin calls and a lot of investors making classic bull market mistakes.

 

I think gold will fall further, but purely based on the technical fall out from the last few days. That, in my opinion, will present the last great buying opportunities to be had below $1000.

 

this will be the reason we get deflation then

18% increase in money supply

 

[Pluto]

I disagree strongly with this analysis. It's perception based in the extreme and we all know how easy it is to manipulate perception.

 

I have to ask you Pluto, what brought you into gold in the first place, was it inflation? If so, then the only change which has occurred over the past week (other than prices) has been a vast increase in inflationary pressures, not a decrease.

 

Bernanke will not at any point 'pull the rug from the economy'. He will carry on intervening and inflating as long as he has the weaponry to do so. We get deflation not when Bernanke decides, but when he fails, and that hour has not yet come.

 

Do you really believe the commodity bull market is over? I don't. All I see is a lot of panic and fear, a lot of margin calls and a lot of investors making classic bull market mistakes.

 

I think gold will fall further, but purely based on the technical fall out from the last few days. That, in my opinion, will present the last buying opportunities to be had below $1000.

 

I understand what you are saying, but what vast inflationary pressures are you referring to? Now be specific here, not just the Fed printing money, because that is not inflationary unless it has velocity, and until it has a conduit into the economy its velocity is zero and not inflationary.

 

What I think is really irrelevant, but what the markets are telling us is. The bond yields have reached a 50Y low and all asset classes have or are deflating. Now this very well may be a correction, but until the signs point to more inflationary expectations I will not buy anymore.

[Pluto]

this will be the reason we get deflation then

18% increase in money supply

 

You are looking in the rear view mirror. What is important is what the M3 numbers will be like in 6 months and noone knows.

 

Even if your predict 18% in the future, where and how is this money going to get into the economy creating inflation?

[Steve Netwriter]

Before someone spots this one as we are not back to 05/01 levels - my profit is wiped out due to a recent purchases - so much for £ cost averaging!

Still holding tight - even if it takes years to make a profit ( I sound like a BTL landlord!!).

 

I think this has taught me that perhaps I need to be a little less risk averse (might have to change my Avatar ) and perhaps sell out 50% of my holding when 'I feel' it's a peak - even at the risk of missing more upside. Less painful to buy back in the on the up and miss 1-2% gain as opposed to a 12% drop!

 

SafeBetter

 

IMO that's not going to help you. I think you'd end up getting the timing wrong a lot of the time. You'll sell to early, wait and watch it go up more, and start to panic you're missing the rocket. You'll then buy in above what you sold for. Then it will immediately dip, and you'll end up selling in panic on the way down.

 

It would work if you could guarantee it correcting below what you sold for every time. But it won't.

 

If Jim Sinclair says buy and hold, and he is VASTLY more experienced than me, that's what I'm doing.

 

IMO, if you believe in the long-term trend, then buying and holding, even if you go through a year of bad times, is actually the safest method.

It's those who are more accepting of risk who trade in and out in an attempt to make more.

 

Just my view.

 

[Steve Netwriter]

I've learnt a lot about gold+silver this week (I'm definitely holding onto my physical gold for the next year or two plus regardless).

 

This volatility is survivable for me (40% savings in PMs, bought in over time - including recently - to an average $930) and I’m still convinced by the long term arguments.

 

But I think Joe Public will be scared off by this correction, especially given its proximity to the smashing of the $1000 barrier. I don’t expect any more “Invest in gold” articles in the press for a while that’s for sure.

 

Agreed. And it's ironic that this is exactly the right time to invest. Invest when the mood is bad. Worry when the mood is good

 

[lowrentyieldmakessense(honest!)]

You are looking in the rear view mirror. What is important is what the M3 numbers will be like in 6 months and noone knows.

 

Even if your predict 18% in the future, where and how is this money going to get into the economy creating inflation?

 

IMO either the banking system fails or they are able to allow the banks to sort out their balance sheets via inflation

 

Hat Trick Letter

 

 

The gold price will not stop at the $1000 milestone. The silver price will not stop at the $20 milestone, and will vastly outperform gold. The crude oil price might go below the $100 milestone briefly, but will return and shoot past the century mark. No no no!!! All are heading much higher, because the banking problem is not to be soon fixed, the bond problem is not to be soon fixed, the economy is not to be soon fixed, household distress is not to be soon fixed. Maybe none can be fixed, even as money thrown at the problem accelerates parabolically. The limited power of USFed solutions, and limited arsenal of devices to treat the problem, will ensure that monetary inflation will be the main tool. Still, adding liquidity in rescues, repairs, and bailouts is not seen as the cause of the problem. It still is seen as the immediate solution. SUCH IS THE HERESY THAT HAS DESTROYED THE US BANKING SYSTEM. They operate under an objective to revitalize the housing market, and stop its price decline. They must enable the bank system to become solvent. All that administered inflation means much more gains to gold, silver, and even crude oil. Bigger problems than rising gold, silver, and crude oil come if Consumer Price Inflation starts to grow without bounds. The USTreasury Bond market will suffer heart attacks, the beneficiary being gold, silver, and crude oil!!!

[Pluto]

IMO either the banking system fails or they are able to allow the banks to sort out their balance sheets via inflation

 

Hat Trick Letter

 

Yes, but for prices to rise in the economy the money has to make its way into the economy somehow. This can done three ways as far as I am aware: 1) Wages 2) Borrowing 3) Give it away.

 

Now, we can agree on 1) no happening 2) has stopped 3) Well that is all they have left, but even then if they give it away and folks hoard it because they thing tough times are coming, this won't work.

 

Now, there are lot of dollars off shore, if these found a way back they would be very inflationary, but that is not more fed printing or increases in M3.

[Steve Netwriter]

Here's an interesting one:

 

Dear Friends,

 

Yesterday was actually a dark mistake of sorts by the PPT and a misunderstanding of the money supply acting as cover for loans to investment banks for as much as asked for.

 

The thought that the Fed is going to a POLICY of draining liquidity is brainless due to the credit problem. Even if they talked hawkish, the implosion would be worldwide.

 

The purpose of yesterday’s spin on the two major investment banks borrowing funds and concerted intervention in the euro/dollar relationship was to further communicate that the Fed open window to investment banks has been a function policy that would go far in settling the credit market. Apparently some people at the Fed were not talking with the others when the dark error hit the marketplace.

 

Apparently three things happened. The spin on two major investment banks going to the Fed was to show no stigma and therein fell flat on its face. Intervention in the euro, energy and gold accompanied by the mad idea that the Fed had embarked on liquidity draining helped the general commodities to crater and the stock market melted down.

 

The last thing that the PPT and the Fed wanted was the Dow in the red by about 300 points.

 

Apparently the fact that the hedge funds were up to their respective ears in grains and gold did not dawn on the PPT, which looks to the health of the equity markets.

 

The Fed must have had a coronary after going to such efforts to say nobody will fail because they will create the funds required to bail out a move into an assumed policy contraction, nullifying all that bluster inherent in the willingness to lend to all comers in the investment industry.

 

Gold is going to $1650.

 

The US dollar is going to .5200

 

The Fed is not moving to a policy of draining liquidity.

 

M3 is the key to what is happening with the Fed and looks not to technical occurrences, but to trends.

 

With present credit market still frozen, there isn’t a snowballs chance in hell of the Fed turning hawk by draining.

 

Major support is of course the Angel at $887.50 but gold need not get anywhere clear that.

 

The number to pass on the upside for technical repair is $934.50

 

Nothing has changed.

 

Regards,

Jim

 

Have they shot themselves in the foot ?

 

[Justin Thyme]

 

None of the cuts made in the Fed funds rate have really made it into the pockets of Joe Sixpack and Sally Housecoat. Mortgage rates continue to rise just like they're doing here so all this effort is aimed at supporting the banks . . . period. There was a full 100 bps cut this week but was very cleverly presented with the discount rate cut by 25bps on Sunday night with another 75bps on Tuesday. The herd saw what the Fed wanted them to see.

 

The Fed have pulled off a masterstroke - they've bitch-slapped commodities into line, strengthened the greenback against the euro, pushed the Dow back up over 12300, eased liquidity by pledging to take on moody mortgage paper from anybody upstream of the hedge funds and given the impression they're getting tough on inflation by giving the market 75bps when they obviously wanted 100.

 

 

 

 

 

[marceau]

I understand what you are saying, but what vast inflationary pressures are you referring to? Now be specific here, not just the Fed printing money, because that is not inflationary unless it has velocity, and until it has a conduit into the economy its velocity is zero and not inflationary.

 

What I think is really irrelevant, but what the markets are telling us is. The bond yields have reached a 50Y low and all asset classes have or are deflating. Now this very well may be a correction, but until the signs point to more inflationary expectations I will not buy anymore.

 

 

I am not talking about them printing more money, although I do believe that regardless of it's filtration into the real economy it still ultimately produces inflation (it does get through eventually).

 

What I am talking about is the clear signal given that intervention will be unlimited, Freddie and Fanny, Bear Sterns, the discount window, the .75 bps rate cut. All point to a high possibility of complete monetisation of the system in the future and all act to remove the consequences of bad decisions. Due to the increased solvency issues of the base level consumer, deflationary pressures will increase, you are right. But the Fed will continue to act in a more and more extreme manner to prevent this. The point being that the Fed haven't made their biggest inflationary moves yet, they are only just starting to do so. They pulled some neat tricks to disguise the real effects of their actions over the past week, but if these tricks don't work (and they won't), the deflationary pressure will kick back in and the Fed will abandon all pretence of an inflation fighting/strong dollar policy.

 

The Fed's actions last week were hugely inflationary in my opinion, but this will not appear immediately. It may not show up in today's official inflation figures, but it will show up eventually, no matter how manipulated those figures may be. When inflation shows up officially the global bond vigilantes will murder US treasuries, the dollar will be back on the way down (that's assuming the present upmoves aren't a dead cat bounce, in which case it will already be falling) and commodities (again, if they haven't done so already) will magically spring back to life. The perfect storm for an explosive rise in the PMs, don't you think?

 

I'm not discounting your opinion, but I'm moving with the balance of probability. I would suggest that your thoughts are exactly those of the mainstream at the moment. Let's not forget that the mainstream, including the supposedly smart big players, were among the last to get into the PM bull market. That they are leaving it now suggests they never really understood it in the first place. Most of my profits (and no doubt yours) were from buying while these bozos were still dabbling in sub prime and CDOs. They were wrong then, they can just as easily be wrong now.

[marceau]

Yes, but for prices to rise in the economy the money has to make its way into the economy somehow. This can done three ways as far as I am aware: 1) Wages 2) Borrowing 3) Give it away.

 

Now, we can agree on 1) no happening 2) has stopped 3) Well that is all they have left, but even then if they give it away and folks hoard it because they thing tough times are coming, this won't work.

 

Now, there are lot of dollars off shore, if these found a way back they would be very inflationary, but that is not more fed printing or increases in M3.

 

 

Pluto, it is not the effect of the action on joe six pack, but the impact of the action on big dollar holders that will send inflation fears through the roof. Even if the masses never see a cent of the Fed's giveaway, the threat of increased money creation will send those holding large amounts of dollars into the safehaven of commodities.

 

The herd will not produce the main upmoves. They will ultimately make little difference until very near the top.

[narco]

IMO either the banking system fails or they are able to allow the banks to sort out their balance sheets via inflation

 

Hat Trick Letter

It's hard to argue with Jim Willie.

 

Check his gold predictions from 6 years ago!!

 

http://www.321gold.com/editorials/willie/willie111202.html

[lowrentyieldmakessense(honest!)]

I understand what you are saying, but what vast inflationary pressures are you referring to? Now be specific here, not just the Fed printing money, because that is not inflationary unless it has velocity, and until it has a conduit into the economy its velocity is zero and not inflationary.

 

What I think is really irrelevant, but what the markets are telling us is. The bond yields have reached a 50Y low and all asset classes have or are deflating. Now this very well may be a correction, but until the signs point to more inflationary expectations I will not buy anymore.

50 year low, guess they should start rising then

 

my opinion on deflation/inflation is this (and has been for a few years)

 

we are going to get inflation in things people need (energy, food) and deflation in things people dont need (second homes, investment property)

[Pluto]

I am not talking about them printing more money, although I do believe that regardless of it's filtration into the real economy it still ultimately produces inflation (it does get through eventually).

 

What I am talking about is the clear signal given that intervention will be unlimited, Freddie and Fanny, Bear Sterns, the discount window, the .75 bps rate cut. All point to a high possibility of complete monetisation of the system in the future and all act to remove the consequences of bad decisions. Due to the increased solvency issues of the base level consumer, deflationary pressures will increase, you are right. But the Fed will continue to act in a more and more extreme manner to prevent this. The point being that the Fed haven't made their biggest inflationary moves yet, they are only just starting to do so. They pulled some neat tricks to disguise the real effects of their actions over the past week, but if these tricks don't work (and they won't), the deflationary pressure will kick back in and the Fed will abandon all pretence of an inflation fighting/strong dollar policy.

 

The Fed's actions last week were hugely inflationary in my opinion, but this will not appear immediately. It may not show up in today's official inflation figures, but it will show up eventually, no matter how manipulated those figures may be. When inflation shows up officially the global bond vigilantes will murder US treasuries, the dollar will be back on the way down (that's assuming the present upmoves aren't a dead cat bounce, in which case it will already be falling) and commodities (again, if they haven't done so already) will magically spring back to life. The perfect storm for an explosive rise in the PMs, don't you think?

 

I'm not discounting your opinion, but I'm moving with the balance of probability. I would suggest that your thoughts are exactly those of the mainstream at the moment. Let's not forget that the mainstream, including the supposedly smart big players, were among the last to get into the PM bull market. That they are leaving it now suggests they never really understood it in the first place. Most of my profits (and no doubt yours) were from buying while these bozos were still dabbling in sub prime and CDOs. They were wrong then, they can just as easily be wrong now.

 

I agree with most of what you are saying, and don't get me wrong I believe in Gold regardless of inflation of deflation. The point I am trying to make is this: At the end of the day it doesn't matter what Fed does, they print as much money as they want and they to, they can bail out every single bank in the US even. However, if the money the create or print never makes it into the economy prices won't rise.

 

In recent years the money has made its way into economy via mortgages, refis, and MEWs. These were the conduits for getting the money into the masses pockets so they could spend, which were shown in M3 stats. Now, lets fast forward to the future, what conduits are there going to be for getting the predicted 18% / annum M3 money into the economy. What you are saying is that money created in the future will find its way into commodities. If that is true, there is going to be a few problems like the CPI numbers, which will flag increases in commodities, but did not with housing.

 

 

[G0ldfinger]

Look what is happening if you try and buy physical:

...

Good post. My experience is that buyer of physical are much less scared by drops like this even if they're new to the game.

 

[Pluto]

Pluto, it is not the effect of the action on joe six pack, but the impact of the action on big dollar holders that will send inflation fears through the roof. Even if the masses never see a cent of the Fed's giveaway, the threat of increased money creation will send those holding large amounts of dollars into the safehaven of commodities.

 

The herd will not produce the main upmoves. They will ultimately make little difference until very near the top.

 

So, by big dollar holders you are implying that commodities will increase in price regardless of M3 numbers. Then the money would have to moved from somewhere else, which would cause a collapse in price somewhere else.

 

No, we need new money for more rising prices.

[Pluto]

Gold closed at 911 today. Sometimes I think they do stuff like that on purpose just because they can.