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This is the problem: not only are all shorts exposed now that the tide is going out, but some of the CBs are calling their gold back or are simply buying more. This will become stronger and stronger the higher gold goes, because people and institutions will simply panic.

Meanwhile, all this is supported by the China Gold Put, i.e. the fact that any sizable conversion of a part of China's $3.2T reserves into gold (I am only talking a few billions here!) would mean the price going times 10 overnight. Of course they won't do it, instead they buy wherever and whenever possible without too big of a market distortion, which is why there is and will be a huge buyer under each and any correction.

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I don't think it would have any effect after maybe a small correction. The graph below shows the response of gold to real rates since 1970, which you can see is positive till rates are 3% over the inflation rate. So really for gold to start turning negative we would need rates to be around 8% currently, which is miles away from the current rates.

 

20110704-nhnep1ix3kw9pmcjf2mr37t1in.jpg

 

I was pondering the idea that the only way the authorities can instill confidence in their own monetary systems and currencies, is to allow interest rates to increase, albeit marginally. A very minor increase will surely induce a short to medium correction in POG.

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I thought I better post this update here as well. I have been creating this graph since 2008 which many of you will have seen, I am amazed that it is still working.

 

It is a log chart of gold in UK pounds, the curve has proved as it has been tested and the reaction from it has been dramatic.

 

If this continues to hold we should be seeing at least £1800 an ounce by this time next year.

 

20110818-n7frah69frss41cg5wsg5a72c3.jpg

 

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I was pondering the idea that the only way the authorities can instill confidence in their own monetary systems and currencies, is to allow interest rates to increase, albeit marginally. A very minor increase will surely induce a short to medium correction in POG.

The trouble is that they can't due to the amount of debt and mortgages they now have on their books. Ben Bernanke has just promised to keep rates at zero until at least 2013.

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Recently at the Chavez mansion.

 

Secretary: Mr President, a phone call for your excellency.

 

Chavez: Who could it be?

 

Secretary: The JPMorgue, your excellency.

 

Chavez: The JPMorgue! Always nice talking to them, put them through.

 

JPMorgue: Hello Mr President. How are you doing?

 

Chavez: Fine, fine. What's up?

 

JPMorgue: Mr President, regarding your gold...

 

Chavez: Oh, yes, yes. Just ship it back to us as soon as you can.

 

JPMorgue: Errh, Mr President, the gold...

 

Chavez: Is there a problem with our gold?

 

JPMorgue: Mr President...

 

Chavez: This is the gold of the people of Venezuela. I want you to ship it back to us right now.

 

JPMorgue: Mr President, the gold...

 

Chavez: You still have it, right? You have it right there in your vault in Manhattan, right?

 

JPMorgue: Mr President...

 

Chavez: You gross little bastewards, you immense morons, are you trying to tell me that the gold of the Venezuelan people is not there anymore?

 

JPMorgue: Errrh, Mr President, let us explain...

 

Chavez: I'll sent my agents over with the next flight!

 

JPMorgue: Mr President...

 

Chavez: I can't fudging believe it. What have you morons done to my people's gold?

 

JPMorgue: Mr President, your gold is still on deposit with us.

 

Chavez: Good, good. Just ship it on the earliest flight tomorrow morning.

 

JPMorgue: Mr President...

 

Chavez: I know that I am the President. Just ship the gold, okay?

 

JPMorgue: Mr President, "on deposit" does not mean that it is immediately available for physical delivery.

 

Chavez: WHAT? Who do you try kidding here? I'll sent my agents over!

 

JPMorgue: Mr President...

 

Chavez: I knew it, you bl00dy morons have sold it! You simply SOLD the gold of the people of Venezuela?

 

JPMorgue: Mr President...

 

Chavez: Admit it!

 

JPMorgue: Mr President, it is not...

 

Chavez: Admit it, or my agents will visit you tonight!

 

JPMorgue: Yes, but, ...

 

Chavez: What BUTT? I will spank your butt! Give us back our gold NOW!

 

JPMorgue: Errh...

 

Chavez: Why have I paid all these storage fees to you crooks?

 

JPMorgue: Mr President, errh, the JPMorgue would like to offer you a deal.

 

Chavez: A deal?

 

JPMorgue: Yes, a deal.

 

Chavez: WHAT deal?

 

JPMorgue: Mr President, we offer you to pay back the gold in freshly printed U.S. Dollars. Professor Bernanke is down in the basement right now, cranking up the press for you.

 

Chavez: You bl00dy morons, I want my GOLD!

 

JPMorgue: Mr President...

 

Chavez: You better give me the gold soon, or...

 

JPMorgue: Mr President, why would you not take our freshly printed Federal Reserve Notes?

 

Chavez: You insane morons, because I want gold!!

 

JPMorgue: Mr President, we don't have the gold.

 

Chavez: Then buy it back!

 

JPMorgue: Mr President, this would cause a huge price spike in the market, since there is not much physical gold around these days.

 

Chavez: I don't care. You idiots buy it back for us, no matter what the price is.

 

JPMorgue: Mr President, are you sure you would not like to take our freshly printed Greenbacks? You would not even have to take physical delivery, because we would store them electronically for you at the Federal Reserve...

 

Chavez: You IDIOTS!

 

JPMorgue: Mr President, please...

 

Chavez: BUY BACK THE GOLD NOW, OR...!

 

JPMorgue: Mr President, this could mean a huge financial loss for the JPMorgue, a massive upward correction in the price of gold, and a further weakening of confidence in the global financial system and the U.S. Dollar.

 

Chavez: YOU IDIOTS, I WANT MY GOLD!

 

JPMorgue: Mr President, please...

 

Chavez: Anything else?

 

JPMorgue: Mr President...

 

Chavez: HASTA PRONTO!

 

JPMorgue: Mr President?

 

Secretary: Can I help you...?

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Gold totally parabolic now. Realistically only the big round number at $2000 will be significant enough to stop an advance like this.

 

Then a correction to $1650 (please)? B)

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Looking a little toppy here. Wouldn't be surprised to see it consolidate around these levels for a bit.

 

jj.gif

 

RH is turning into GEI's very own contra indicator, call a top again please. laugh.gif

 

20110819-1p2d41t7shfswpsbx9fh7hdry8.jpg

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Longterm Logarithmic Gold USD Chart. The big question for me is, are we going to break on through to the other side?

 

20110819-q179d74nw8snxpakehtnag3um7.jpg

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Longterm Logarithmic Gold USD Chart. The big question for me is, are we going to break on through to the other side?

 

20110819-q179d74nw8snxpakehtnag3um7.jpg

 

 

I reckon it won't be too long before the curve makes gold actually start to move backwards in time. :lol:

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Gold has gone up by a factor(!) of 6.2 (5,200%) or so since 1999. HOWEVER, had you bought gold at every London AM Fixing and sold it directly at the PM Fixing the same day, you would have made -0.81% a month(!) every single month since 1999. Expressed differenly, you would have turned $1.00 into $1.00*(1.0-0.0081)^(12*12+8) = $0.29, i.e. -71.0%!!

 

Tell me there is no manipulation!! Everytime COnMEX in New York wakes up, it is bad news for gold.

 

http://gold.approximity.com/since1999/Gold_USD_AMPM.html

Gold_USD_AMPM.png

 

But then, overnight, Asia and then in the morning Europe turn it all around and make good for it:

 

http://gold.approximity.com/since1999/Gold_USD_PMAM.html

Gold_USD_PMAM.png

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Let's see how Garth's latest advice works out:

 

"Once it’s clear even to the sackcloth set that America will never default, never devalue, that minor European countries can keel over largely unnoticed and the global economy is actually expanding, PMs go back to being interesting rocks that impress dentists and werewolfs."

 

 

http://howestreet.com/2011/07/bet/

 

$247 of market failure so far for the big fella Garth.

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$247 of market failure so far for the big fella Garth.

Oh, yes. And remember this one here:

 

http://gold.approximity.com/Fortune_gets_it_wrong_on_gold.htm

Fortune gets it wrong on gold

 

In a recent report published by CNNMoney.com (link), Fortune Magazine (vaguely referring to research by Professor Didier Sornette of ETH Zurich) examines "5 investing bubbles". ...

Verdict: a major bubble

Gold has already started slipping. It declined 6% in July to a recent $1,160 an ounce. Some economists are warning that continued weakness could lead to deflation. If that happens, expect gold to crater.

We are not sure what the people at Fortune Magazine smoke,...

These people are outright dangerous, because they they talk other people out of their only financial insurance.

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That's the $1,849 angel taken out... :D Ben Davies of Hinde Capital thinks we will have taken out the last $2,025 angel by Christmas. Predicting $2,100. What was Jim's next number $5,000?

 

image_thumb2.png

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Will get a massive correction hopefully. Perhaps something really shocking like back to $1100-1200. That would be fun.

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My thesis is that as this bull market goes on, corrections become gradually smaller in percentage terms.

Does anyone remember the brutal correction from 720$ to 550$? Initially, corrections were deeper.

I expect a correction by 100-150$ any time, however, a correction to 1300$ is unthinkable, given the strong interest in gold and the number of people waiting in the sidelines. Besides demand by the jewelry industry will pick up shortly. The implication is that trading gold to buy back at lower price, will become increasingly more difficult.

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My thesis is that as this bull market goes on, corrections become gradually smaller in percentage terms.

Does anyone remember the brutal correction from 720$ to 550$? Initially, corrections were deeper.

I expect a correction by 100-150$ any time, however, a correction to 1300$ is unthinkable, given the strong interest in gold and the number of people waiting in the sidelines. Besides demand by the jewelry industry will pick up shortly. The implication is that trading gold to buy back at lower price, will become increasingly more difficult.

 

YES..... Or just trying to find a good entry point to put new money into this bull market!

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The idiot shorters just get burned every time they try. So, they have less and less money to fool themselves with. Meanwhile gold is rising, so the fools' impact gets smaller and smaller, until they'll have completely died out. :)

 

My thesis is that as this bull market goes on, corrections become gradually smaller in percentage terms.

Does anyone remember the brutal correction from 720$ to 550$? Initially, corrections were deeper.

I expect a correction by 100-150$ any time, however, a correction to 1300$ is unthinkable, given the strong interest in gold and the number of people waiting in the sidelines. Besides demand by the jewelry industry will pick up shortly. The implication is that trading gold to buy back at lower price, will become increasingly more difficult.

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Can anyone who has access to The Times post their editorial fro today on gold here?

 

I read this and it was absolutely hilarious. A work of comic genius - for I presume it was supposed to be this. Worthy of Private Eye or Monthy Python.

 

https://picasaweb.google.com/lh/photo/92iQKoPpQmXxj29tjmWZpA?feat=embedwebsite

 

Link to Keiser story - http://maxkeiser.com/2011/08/20/browns-bottom-gordon-brown-sold-12-of-britains-gold-at-250-an-oz/

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