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I'm looking forward to hearing Bernanke's thoughts and actions.

 

Are they his own?

Is he not just a front line puppet, with sparkling 'ologies to give credibility?

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and we're back over £1100 again - so much for that crash :P

 

This is a pathetic showing from the Evil Empire isn't it? Come on boys, pull your finger out - I want some more cheap gold4cash.

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Are they his own?

Is he not just a front line puppet, with sparkling 'ologies to give credibility?

I have no idea. Probably. But he is the representative. And I want to hear the views, regardless.

 

BTW when does the show start? Getting late here.

 

 

 

Wait, did I miss it? Shucks! Must have been brill,zzzz.

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Further to PE's explanation below:

 

http://en.wikipedia.org/wiki/Margin_%28finance%29#Initial_and_maintenance_margin_requirements

The initial margin requirement is the amount required to be collateralized in order to open a position. Thereafter, the amount required to be kept in collateral until the position is closed is the maintenance requirement. The maintenance requirement is the minimum amount to be collateralized in order to keep an open position. It is generally lower than the initial requirement. This allows the price to move against the margin without forcing a margin call immediately after the initial transaction. On instruments determined to be especially risky, however, the regulators, the exchange, or the broker may set the maintenance requirement higher than normal or equal to the initial requirement to reduce their exposure to the risk accepted by the trader.

And, yes, it is all on credit. It's a levered paper shuffle game. 100% margin would mean that you'd as well could buy the real deal, i.e. actual bullion, which would be sort of the end of the paper shuffling COnMEX.

 

...are we saying that speculators are borrowing to invest in Gold?

100% guaranteed. On the COnMEX, all the gold and silver trading youy see is according to chris_ct's post 95%-96% on credit (as the margin is 4%-5%). So, the banks who provide the credit control it all. ;) Therefore: buy physical!

 

I'm not a futures trader but this is how it works how I understand it:

 

One futures contract in gold represents 100oz of gold. If you buy a futures contract you reserve the right to buy the underlying asset when the contract is due. However, at this stage yoy do not have to put down the full amount (i.e. $1,800 x 100 = $180,000) but only a small fraction of the price (margin requirement).

 

As it stands, this margin requirement was raised from $7,425 to $9,450 (initial margin), and from $5,500 to $7,000 (maintenance margin) per contract. Don't ask me what the precise difference is between the two ;) but the margin requirement onlz remains a small fraction of the price.

 

I guess this enables speculators to get leveraged exposure to the gold price.

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Got it! I have been searching for this chart...

A GREAT CHART:

Gold price divided by S&P500 dividends

 

Gold-to-SpxDivs.jpg

(it was published in the MONITOR column of today's SCMP)

 

And it shows three peaks, with each on topping at, or near 80x dividends...

and the latest peak is now very near to it.

 

Tom Holland's comment:

"I was intrigued to get a copy of the ... chart from Hong-kong based research house GaveKal showing that relative to dividends on US blue chip stocks, gold is now as expensive as it was during both the second oil shock of 1980 (when it hit $850) or the Great Depression of the 1930's.

 

That implies that either stocks will rise or gold will fall in the near future. Take your pick."

 

S&P500 dividends Data: http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/spearn.htm : from 1871

 

Current Dividend: 24.36 / Last reported June 2011.

/source: http://www.multpl.com/s-p-500-dividend/

 

Recent Gold high: $1910 / 24.36 = 78.40

 

/some similar charts : http://advisoranalyst.com/glablog/tag/robert-shiller/

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"Save us, Ben!"

 

Ben: "I cannot hear you."

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Hmmm ...

 

9,173 Ounces Of Gold Transferred From HSBC To JP Morgan Gold Vaults Overnight

 

While we have no information as to who or why (we do know when and where) engaged in a transfer of 9,173 ounces of eligible gold (for a total of about $16.5 million) from HSBC's gold depository into that of JP Morgan, according to today's closing CME Group Metal Depository Statistics, we can merely point out that it happened.

One back of the envelope hypothesis: we have counterparty risk at the bank level (which is currently manifesting itself at both the CDS, the stock price, and the Li(E)bor level; are we going to start seeing counterparty concerns at the gold depository level next? What next: a run on the [ ] gold depository in a self-fulfilling prophecy? The second hypothesis is by now well known- JPM needs all the gold it can get.

 

http://www.zerohedge.com/news/9173-ounces-gold-transferred-hsbc-jp-morgan-gold-vaults-overnight

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For any gold bugs on an apple mac, check this post out on 24knews - http://www.24knews.c...&p=14595#p14595

 

It's a cool way of adding the kitco gold and silver charts onto your desktop and having them auto update (you get to specify how often they are updated), you can also control size and opacity. My desktop now looks like this; cool.gif

 

20110827-c7chyqc6jew3k15y1yimcjf16x.jpg

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I wonder why we do not see this chart from the self-assured Gold-purists ?

 

Gold is keeping up with monetary inflation and price inflation.

 

What that chart may show (indirectly) is that S&P dividends have failed to keep pace with the expansion of the monetary base and the money supply. This would be consistent with the idea that monetary stimulus eventually looses its effect.

In my role as truth-teller (of even some unwelcome truths)...

 

I have to disagree with that. Gold is not "keeping up with monetary inflation and price inflation."

It is soaring far ahead of price inflation, as it wins new converts who think that Gold must keep touch with some exotic measures of monetary inflation.

 

Here's Gold versus a more convention Monetary measure - M3

 

US-M3-VS-Gold-1970-2011.jpg

 

/see: http://www.howprofit.com/portfolio/future/us-m3-money-supply-vs-gold-chart-1970-2011.html

 

Gold would have to fall to bring it back to the Mean: M3-to-Gold Ratio.

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Gold is not going up because of inflation. It's going up (among other reasons) because of the monstrous debt crisis and the deflationary black hole that governments around the world are trying to escape from.

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I may as well add this here:

 

Moreover, gold can be expected to respond to increases in base money. "Inflation is always and everywhere a monetary phenomenon..."

 

In 1985 the monetary base was $200 billion, today it's $2700 billion, an increase of 1250%. A proportional increase in gold takes gold from $350 to $4725.

 

BASE_Max_630_378.png

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I may as well add this here:

Thx. Carlton. And that does not even allow for the expansion of the base money via fractional reserve lending.

Of course, at the moment all that base money is building behind a dam as 'excess reserves', but when the dam bursts and lending happens we will see vast and rapid expansion of money velocity and... then it's £10000 for a mars bar before you know it.

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Gold would have to fall to bring it back to the Mean: M3-to-Gold Ratio.

:rolleyes: Only if you think that gold was not ridiculously undervalued in the late 1980s and 1990s.

 

Also, that M3/gold chart will look very different in the log version, which should be considered here.

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Ben has extended the next policy meeting to two days...

 

http://www.bloomberg.com/news/2011-08-27/bernanke-may-use-longer-meeting-to-forge-consensus-on-easing.html

Federal Reserve Chairman Ben S. Bernanke’s decision to extend next month’s policy meeting to two days stoked speculation the extra time may allow him to forge a stronger consensus on monetary easing.

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This is from Sovereign Man aka Simon Black

(I suspect nearly all here know this already but perhaps some newbies might be interested)

 

Date: August 25, 2011

Reporting From: Zell am See, Austria

 

As usual, the CNBC hosts were completely dumbfounded.

 

Phoning in from Sao Paulo, Brazil, investment guru Marc Faber was a guest on CNBC last week, once again telling the unvarnished truth about the state of the world economy and bankrupt western nations.

 

This time, Faber had a very clear message: that everyone should own *physical* gold... and what's more, they should store it outside of the United States.

 

"I prefer if investors hold physical gold in a safe deposit box, ideally outside the US, in various locations... Switzerland, Singapore, Hong Kong, Australia, Canada... I think it's important in today's very uncertain world to diversify, not only the various asset classes... but also the custody of your assets should be in different jurisdictions."

 

His hosts couldn't believe it. -NOT- store in the United States, the bastion of freedom and security??!?! What lunacy!

 

CNBC: "Uh, so do you thus not trust US banks or US custodians? Do you think they might fail or abscond with the gold?"

 

Guffaws and incredulous snickers emerge from the hosts.

 

Faber: "I don't trust anyone."

 

Uncomfortable silence.

 

CNBC: "Hmmm. Interesting."

 

Completely devoid of anything intelligent to say on the topic of sovereign diversification, they quickly changed the subject to talk about equities... but Faber soon came back to his original point.

 

Among other things, he mentioned that banks in Asia are FAR more stable and sound than they are in the west for not having invested so heavily in dead weight assets like Greek bonds or US mortgage-backed securities.

 

I couldn't agree more.

 

This is a point I've been pounding on from day 1: internationalization, what I frequently call planting multiple flags, is absolutely critical to reducing your risk.

 

You won't ever hear about it from the talking heads on state-sponsored media like CNBC. They refuse to look at the real world where America is no longer the center of the financial universe or the safest place to put money.

 

Truthfully, though, bankrupt nations like the United States pose the greatest risk of all to our prosperity and livelihood, regardless of whether we're just starting out or have already achieved it.

 

This is because politicians will stop at nothing to maintain the status quo; the more they try to 'fix' things, the worse the situation becomes. They think they can borrow their way out of debt and spend their way out of recession. When these tactics don't work, they just borrow and spend more.

 

In recent remarks during an official visit to Japan, Vice President Joe Biden said that China became the world's second largest economy only because of US troop presence in Asia.

 

This line of reasoning only makes sense to a politician: China's growth has nothing to do with its huge population, massive accumulation of savings, burgeoning technology, or culture of productivity... and everything to do with US military installations in South Korea, Japan, and Okinawa.

 

Such logic truly tests the patience of rational, thinking people, yet it exemplifies the kind of out-of-touch, mindless bureaucrat who is running the country.

 

Marc Faber has it absolutely right: entrusting the preponderance of your assets to these moronic sociopaths is a foolhardy endeavor. Own physical gold as a hedge against their idiotic fiscal policies, and store it overseas to make sure they can't get their thieving hands on it.

 

Here in Austria, there's a great secure storage facility in Vienna called Das Safe. You can rent a safety deposit box from them completely anonymously, and the box contents are insured for up to $50,000.

 

This is financial privacy at its finest... and if you want to take Marc Faber's advice, you should definitely consider Das Safe. As an aside, Austria is also a great place to buy gold; you can purchase the gold 'Philharmonic' coin at almost every bank in the country at premiums as low as 3%.

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Gold is not going up because of inflation. It's going up (among other reasons) because of the monstrous debt crisis and the deflationary black hole that governments around the world are trying to escape from.

Some sense at last. Once gold is shifted from the asset side of the ledger to the cash side.... no problemo.

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In recent remarks during an official visit to Japan, Vice President Joe Biden said that China became the world's second largest economy only because of US troop presence in Asia.

 

This line of reasoning only makes sense to a politician: China's growth has nothing to do with its huge population, massive accumulation of savings, burgeoning technology, or culture of productivity... and everything to do with US military installations in South Korea, Japan, and Okinawa.

 

To be fair, the US and the US military have contributed disproportionally to world peace and freedom of the seas, conditions that have made globalization, the expansion of trade, and investment in place like China possible and attractive.

 

Moreover, if the US had opposed GATT/WTO China and other developing countries would be much poorer, with less savings, and less technology.

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I posted this at HPC soliciting comment in regard to a statement made by _w_ that most newsletter writers and providers of subscription research were playing their clients for "suckers". HPC link

 

http://www.youtube.com/watch?v=RnZGgrXicQU

 

The reply from "_w_"

 

I have spent months and now even years trying to understand gold and am still none the wiser. I feel it would be irresponsible of me to give anyone advice since I am not qualified to do so, and it is also my belief that one should make up his own mind on these matters before taking action. The positive contribution I can make however is to debunk any theory when I think I know it to be wrong. I can also warn readers when a path is suggested that has led me to a lot of wasted time and sometimes money. So you'll get mostly negative comments from me and the very few positives will be unqualified opinions of little use. I'm hoping that by doing this I am helping others avoid some of the pitfalls I have fallen for. And perhaps that will help someone smarter than I find the definite analysis faster for the rest of us.

 

In the video, the man's comments on gold for example are devoid of substance. One of many such thousands of unsubstantiated opinions from more or less serious sounding people. That's my assessment.

 

Here are the two things on gold that are keeping me busy:

 

- A year or two ago I posted an analysis from someone on the internet that showed a stunning level of correlation between changes in the price of gold and the difference between the 1 year treasury notes and real interest rates in the US. Someone else posted a link to another version (which I think was on Financial Sense) of that gragh and I remember it being of interest to some posters. I don't have this paper handy now but perhaps someone else has kept a copy and can repost it here. It very clearly predicts the major price rise we got after the last Fed meeting. It would also give what could be a fairly reliable target price until 2013.

 

- The second area of interest to me that I think might yield results is the issue of CB reserves. I think CBs may be up to something in terms of their reserves make up. My latest theory is that the BIS may have agreed a rule that CBs should hold a certain percentage of their reserves in gold. This could be a useful balancing mechanism to reduce global imbalances. Say that China wants to accumulate several trillions of dollar reserves, then according to this rule it would have to buy gold at murderously increasing prices to abide by the rule. It would also be a mechanism to limit increases in CB balance sheet. It's worth pointing out that the current President and Vice President of the BIS (which used to be a mostly European concern and then Euro-US organisation) are the Charimen of the Chinese and Japanese CBs respectively. These guys are working together. The IMF sales may have been carried out to help CBs reach required ratios. Japan's unprecedented annoucement last week that it would begin recycling some of its reserves could also be explained by this theory. But at this stage it's all conjecture unfortunately.

 

WRT these two theories, no commentator that I know of talks about them. Most commentators' opinions IMO are just extremely time consuming noise that goes with the flow such as 'gold went up a lot lately so at some stage it should come back down somewhat'... Riight. I've read hundreds and perhaps thousands of these kinds of analyses and none gave me any insight or had any predictive capability.

 

That's it. I hope you find something in this post that you can make use of.

This post has been edited by _w_: Today, 12:00 PM

 

Can anyone provide pointers to further discussion of "these two theories"?

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In the video, the man's comments on gold for example are devoid of substance. One of many such thousands of unsubstantiated opinions from more or less serious sounding people. That's my assessment.

 

A year or two ago I posted an analysis . . . I don't have this paper handy now

 

I think CBs may be up to something in terms of their reserves make up. My latest theory is that the BIS may have agreed a rule that CBs should hold a certain percentage of their reserves in gold . . . But at this stage it's all conjecture unfortunately.

 

 

Pot . . . kettle . . . black

 

In any case, Fuller does substantiate his opinion - this guy is of course free to disagree with his interpretation, but at least Fuller provides some facts.

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I posted this at HPC soliciting comment in regard to a statement made by _w_ that most newsletter writers and providers of subscription research were playing their clients for "suckers". HPC link

 

http://www.youtube.com/watch?v=RnZGgrXicQU

 

The reply from "_w_"

 

 

 

Can anyone provide pointers to further discussion of "these two theories"?

Strictly speaking, they are not theories but facts that need to be explained by a theory. That central banks are diversifying reserves into gold, and then that treasuries and gold are moving together as an "asset" class suggest gold needs to be thought of as a form of liquidity [a currency] and not merely an asset [or inflation hedge].

 

A theory interprets phenomena, but will break down in the face of "anomalies" that problematize of falsify it. The crucial fact today is that gold is performing well in a deflationary environment [low interest rates/ performing treasuries]. A new theory is needed to "save all the phenomena", one which puts forms of liquidity at the centre... not assets, or inflation hedges. Consider Exter's reverse liquidity triangle: assets are predicted to deflate in value against currencies, and then currencies* in turn deflate against gold. A theory, with explanatory and predictive power, can be formulated with it in mind. I've termed it hyper-deflation. Theory should be as universal as possible... and the beauty of this theory is its ability to escape from a focus on particular prices [say of consumables] within particular economies.

 

*Currencies can be distinguished between minor/ major/ commodity currencies, and then placed in mid-tiers on the triangl in order to "globalize" it. So far example, the pound would be situated above the dollar. Of course certain periods of volatility [the "risk on" trade] may see liquidity flow upwards, but the big picture trend is clear.

 

Exetersinversepyramid.jpg

 

This theory also predicts that the US dollar will not collapse and the gold price will not explode overnight. Rather gold is predicted to appreciate at a relatively steady rate against the dollar.... as if it was being re-monetized as a currency.

 

l.gif

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BIG BEAR CALL ...in stocks

 

 

Another great podcast from Larry Pesevento for TFNN

 

MP3 : http://www.tigeruniversity.com/mp3/TWS082911.mp3

 

He believes we are at a highly reliable turning point, which he thinks should provide a peak in stocks today-Monday or tomorrow-Tuesday, and by Wednesday's close the market should be lower. (If not, you should exit the trade.)

 

I listened hours after this post:

 

Here's one of the main things that drove those trades:

 

SPX was at the 377d MA... update : Weekly : 10yr-chart : 6mos

 

SPX-aug30.gif.jpg

 

BIG BEAR CALL - will it work?

 

Other things which drove this decision were:

 

+ The light volume on the rally up since 2009, which compares with much heavier volume in the recent selloff

 

+ HISTORY: shows that big debt problems such as we have are seldom fixed with a single selloff. We had two big legs down coming off the 1929 high. And we saw something similar after the 1836-7 peak.

 

There are many parallels with the economic situation from Andrew Jackson's time, and I have started a thread about it, which I recommend that people read. Back about 180 years ago, there was a big land boom fueled by easy credit. It was followed by:

 

- The

- The Panic of 1839 and a depression

 

800px-Panic1837_crop.jpg

"My dear, can you not contrive to get some food for the children. I do not care for myself."

 

The US did not begin to pull out of the depression until 1843, after many banks failed, and jobs were lost all across the US.

 

/see Jackson thread: http://www.greenenergyinvestors.com/index.php?showtopic=15283

 

Perhaps Bernanke was a student of the wrong Depression. We would have done better in Greenspan's time if we had a Fed Chairman who was a student of booms, and knew how to prevent them.

 

 

(BTW- Can anyone recall when I last made such a clearly Bearish call? It was many months ago. That doesn't mean I will be right. But if nothing else, I have been patient.)

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