GOLD

[G0ldfinger]

Time to move to Sweden IMHO.

Sweden's Reinfeldt Sees National Debt Falling to About 15% of GDP in 2011

http://www.bloomberg.com/apps/news?pid=206...&refer=home

[wrongmove]

I've got to cross-examine you on that one !

 

US growth is below REAL inflation I believe, and has been for quite a while. Therefore the US has been in recession for quite a while.

 

It all depends whether you take the fiddled numbers, or the real ones

 

What do you mean by REAL inflation? Money supply growth or the rise in price of a particular basket of goods?

 

I have no idea if the quote is accurate, and it is impossible to say unless more clearly defined what you mean - the most currently widely used definition, or another one.

 

The quote is from this article: US dollar rallies as extent of worldwide recession becomes clearer

 

"..........The psychology of global markets has shifted hugely over recent days as it becomes clear that Europe, Australasia and parts of Asia are sliding into recession.

 

The US dollar has launched its best rally in half a decade, reflecting a recognition that half the world is in even worse shape than the US. In fact, America is the only G7 country to eke out modest growth this summer.

 

The US dollar index - currencies watched closely by traders - smashed through resistance yesterday in the biggest one-day move since the long dollar slide began seven years ago............."

 

 

More talk of key resistance breakthroughs in the FT: US stocks surge on ‘watershed’ dollar jump

 

"US stocks soared on Friday as the dollar saw its biggest one-day jump against the euro in eight years and oil prices plunged.

 

The moves marked a key reversal of a trend that many investors had followed profitably for months – betting that high commodity prices would keep the dollar weak.

 

The dollar reached its highest in five months against a trade-weighted basket of currencies, while oil fell more than $5 to $114.87, 22 per cent below its record high of $147.27 last month. The S&P 500 closed 2.4 per cent higher in New York.

 

The shift in sentiment was triggered by Jean-Claude Trichet, president of the European Central Bank, who warned on Thursday that third-quarter eurozone growth would be “particularly weak”. This sparked talk that the ECB would be forced to abandon its hawkish policy stance and start cutting interest rates, thereby weakening the euro.

 

“This is the watershed week for the US dollar,” said Marc Chandler, currency strategist at Brown Brothers Harriman. “The magnitude of the dollar’s moves and the breaking of key technical levels suggest that a major shift in the outlook towards the dollar is occurring as massive positions are adjusted.” Other analysts described the widespread buying of dollars as “capitulation”................."

 

 

 

I don't know how they can read all that into a couple of days' trading, but I guess that is the job of journos!

 

 

 

 

 

[bitbigt]

...some of the optimism is being driven by falling commodity prices, in particular oil. This is considered "good" for everyone.

Absolutely, and on this point I would add two additional comments

 

- "falling commodity prices" has been triggered by the strengthening USD, which has been dramatically manipulated recently. The CBs probably feel this targetted manipulation was a smart move, since by concentrating on altering one parameter (USD) they've induced 'beneficial' changes to many others (EUR, oil, gold, stocks,...). But its still all false. 1 + 1 still equals 2, even if they've made people now think, at least for a while, that 1+1=1.5

 

- however, oil at >140 was acting as the brake on global economies that was needed to quell inflation (and represented the only hope of achieving that, since CBs cannot put up base rates). But by getting it down to <120 people can afford it again, and so growth will not slow. Quite simply while oil is in an affordable price range then increasing its price promotes inflation, but above that range it actually has the opposite effect. So the clever CBs have now helped feed the inflation monster.

 

In short - we all know the worlds got some incredibly hard times ahead the next few years, but the big economic question is whether the world will suffer an inflation spiral and crash that way (stagflation - great for gold), or just go straight into a massive slowdown (deflation - perhaps great for gold). Recent events make it much more likely that the former will occur,

 

So yet again, the clever CBs forgot to think about "the law of unintended consequences" that Perishabull and others keep mentioning

[wrongmove]

Absolutely, and on this point I would add two additional comments

 

- "falling commodity prices" has been triggered by the strengthening USD, which has been dramatically manipulated recently. The CBs probably feel this targetted manipulation was a smart move, since by concentrating on altering one parameter (USD) they've induced 'beneficial' changes to many others (EUR, oil, gold, stocks,...). But its still all false. 1 + 1 still equals 2, even if they've made people now think, at least for a while, that 1+1=1.5

 

- however, oil at >140 was acting as the brake on global economies that was needed to quell inflation (and represented the only hope of achieving that, since CBs cannot put up base rates). But by getting it down to <120 people can afford it again, and so growth will not slow. Quite simply while oil is in an affordable price range then increasing its price promotes inflation, but above that range it actually has the opposite effect. So the clever CBs have now helped feed the inflation monster.

 

In short - we all know the worlds got some incredibly hard times ahead the next few years, but the big economic question is whether the world will suffer an inflation spiral and crash that way (stagflation - great for gold), or just go straight into a massive slowdown (deflation - perhaps great for gold). Recent events make it much more likely that the former will occur,

 

So yet again, the clever CBs forgot to think about "the law of unintended consequences" that Perishabull and others keep mentioning

 

It sounds plausible, but there seems to be a bit of self-inconsistency about the argument, or rather, it only makes sense if you are American. A rising dollar (which seemed to start several weeks after commodities began their fall) is going to wipe out all the "benefits" for everyone else. So why would the central banks (outside of US) collude?

 

 

 

 

[bitbigt]

It sounds plausible, but there seems to be a bit of self-inconsistency about the argument, or rather, it only makes sense if you are American. A rising dollar (which seemed to start several weeks after commodities began their fall) is going to wipe out all the "benefits" for everyone else. So why would the central banks (outside of US) collude?

"rising dollar...seemed to start several weeks after commodities began their fall"

...indeed. I would not argue that the strengthenning dollar is the only reason for commodities to weaken, its just one of the more important influences at the moment. Slowdown fears, and the pullback of speculative funds probably caused the initial move downwards.

 

"A rising dollar...is going to wipe out all the "benefits" for everyone else. So why would the central banks (outside of US) collude?"

...it will only partially wipe out the benefits. Sentiment has (temporarily) been changed and so the oil price is also falling in other currencies as well (i.e., dollar price of oil is falling faster than other currency exchange rates to the dollar).

 

But I suspect the CBs colluded on this dollar manipulation regardless of questions of oil price for them, I think they all realised that we're getting close to there being a run on the dollar - and that would be financial armageddon for the world!! They are very scared, and starting to pannick. They've avoided disaster for now, but there are many more pressures in the pipeline. ...plus black swan events. I think they know they've just fed the inflation monster, but that perhaps seems like a price worth paying given the alternative.

 

In short - the CBs seem to have decided to go down the stagflation route, as that has a predictable and tolerable outcome for the West. They are avoiding the deflation option at all costs, as that would involve loosing the dollar as the worlds reserve currency, China becoming the pre-eminent economic superpower, geopolitical turmoil, and probably war!

[Steve Netwriter]

What do you mean by REAL inflation? Money supply growth or the rise in price of a particular basket of goods?

 

Apologies, slack writing.

I meant price inflation. The real one, without the substitution, hedonics etc.

 

GDP is adjusted for price inflation. But as the real price inflation is way over the official number, the real GDP is a lot less than the published one.

 

I think it was this one: http://www.chrismartenson.com/inflation or maybe a bit later.

 

 

Edited to add: I'm sure the quote is accurate, because they do use the fiddled numbers, so the US appears to have been much better than reality.

 

[frizzers]

Some real danger here, as this chart shows:

 

 

source: http://www.kitco.com/ind/Wiegand/aug082008.html

 

Still, I was buying GLD calls

 

What is it in that chart that spells danger here, Dr? The close below the previous May low?

[Pixel8r]

It sounds plausible, but there seems to be a bit of self-inconsistency about the argument, or rather, it only makes sense if you are American. A rising dollar (which seemed to start several weeks after commodities began their fall) is going to wipe out all the "benefits" for everyone else. So why would the central banks (outside of US) collude?

 

I think other central banks have been buying dollars, which I believe was worked out at the recent G7 meeting. The reason would be to support the world reserve currency, which they all hold plenty of, and also to start a bear market in commodities and oil, to benefit all (except us).

 

To quote James Turk from his recent article;

 

"In the final analysis, it is fundamental factors that determine the course of markets and the process of price discovery that results from them. Central bank intervention - like fiat currency itself - is ephemeral. In contrast, gold lasts throughout the ages. So what would you rather own? A sick dollar that it requires central bank intervention to prop it up? Or gold?"

 

[Errol]

These efforts are doomed to failure. They will only succeed in making the situation worse.

[G0ldfinger]

http://goldismoney.info/forums/showthread....494#post1230494

Tulving may be the biggest dealer out there....I know this much....his website says he has done $70MM in sales in the past 7 months.....that's $10MM month....or roughly $300,000/day (he operates nearly 7days x 24hours).

 

I asked him today if he was seeing much selling.....and this is what he told me:

 

"I keep a pretty accurate running total score through the day.....and so far today (it was 11:30A Local Pacific Coast Time) I've sold $900k and had ZERO people selling to me"

 

[Steve Netwriter]

http://www.chrismartenson.com/Central-Bank-Intervention

 

To summarize, foreign central banks followed up their ‘words’ over the past few weeks with $52 billion dollars of direct dollar support over only a three week period. And this is only the purchases we know about. The BIS (Bank of International Settlements, the ‘bankers bank’) has several openly published research papers that explore the best ways for central banks to manipulate currencies using proxy banks to hide their tracks.

 

Chris comments on the James Turk article. All becomes clear

 

[bitbigt]

http://goldismoney.info/forums/showthread....494#post1230494

I've seen various indications of this kind of buying this last week, showing that many people are diving in at this discount prices.

 

However, I can't rationalise that with the fact that the price has fallen steadily - at a faster rate than the dollar has been strengthening.

 

Anyone got any explanation for this contradiction? ..is there some major CB selling also taking place?

 

[Compounded]

I bought over $500,000 worth of Gold yesterday (thru calls on GLD).

That's my most ever, at least in one day.

 

You are big, calling the oil price decline really impressed me too.

 

Thanks again for this wonderful site

 

 

I also believe in the law of unintended consequences, the failure of man to recognise that his actions are contributing to problems rather than mitgating them is a widespread problem, I believe.

 

What are your thoughts?

 

These efforts are doomed to failure. They will only succeed in making the situation worse.

 

Everyting the government does is a boondoggle (american term I believe) All government solutions to problems seem to cause more new problems and make the overall situation worse.

 

Issac Newton also said someting like, "I can calculate the motions of the planets but the folly of men is a mystery to me"

 

Newton liked gold he had an obsession with it and spent most of his life's creative energy on alchemy, as master of the mint in 1717 he was responcible for sterling moving to a gold standard (from a silver standard hence "sterling silver"), and created a currency that begat the UK as the centre of a great trading empire.

 

WW1 ended it and that was the start for this unfolding catastrophy.

 

 

 

 

[drbubb]

Dont Forget - the SEASONAL CYCLE in the Dollar

 

After a mid-August peak, a multi-month slide often begins. That's the usual pattern

 

/MORE: http://www.greenenergyinvestors.com/index.php?showtopic=3996

[id5]

...

as master of the mint in 1717 he was responcible for sterling moving to a gold standard (from a silver standard hence "sterling silver"), and created a currency that begat the UK as the centre of a great trading empire.

...

 

Err...you might want to be a bit careful with what you find on the web. Sterling as a currency existed from the 13th century. The relationship between gold and silver had existed for many centuries before this.

 

Since the 1670’s various groups had complained about the bullion price, rate of exportation, state of the country coinage from clipping, etc, the Bank of England was created in 1696, as part of the ongoing solution to the problem. Newton was asked to be the Warden of the Mint after the Bank had been created to oversee the great re-coinage of currency. Later he took the junior but more lucrative role of Master of the Mint. Part of that role was report to the Lords Commissioners on the difference in prices across the globe between gold and silver, he pointed out that Johnny Foreigner was still ripping off the country by paying in silver and being paid back in gold. This information was used to change the ratio which was then enforced by Proclamation rather than the previous Act of Parliament because of the great re-coinage that was in process.

 

In the late 1600's, governments and global banking had increased the value of silver against gold by some 25%. Even then the market was being manipulated for profit.

 

 

 

[torino]

Hi everyone,

 

I have had the unfortunate role of defending the "impossible" , i.e. gold going

as low as 666. I was myself suspicious when the number 666 came out, but

not being in occultism, I take it as a mere number

 

- how would you, gold holders, react if gold was to go to 800? 750? 700? 666?

up to which level would you hold? when would you expect call margins?

how low would have gold to go for you to sell? If you were to sell, would you

sell bit by bit or all in one go? would any of these numbers make you sweat or bring panick?

 

- how would you react if this movement was slow and steady?

- how would you react if this movement was accompanied with a lot of volatility?

 

- for this to happen : what % of world bank, IMF and other CBs gold reserve would have to be sold?

 

- who would benefit from these falls?

 

What do you believe is the likelihood of these levels being reached ( may be a why would help me win )

and what amount in loss $ this would represent

- 800 : likelihood / why / loss

- 750 : likelihood / why / loss

- 700 : likelihood / why / loss

- 666 : likelihood / why / loss

[headmelter]

Hi everyone,

 

I have had the unfortunate role of defending the "impossible" , i.e. gold going

as low as 666. I was myself suspicious when the number 666 came out, but

not being in occultism, I take it as a mere number

 

- how would you, gold holders, react if gold was to go to 800? 750? 700? 666?

up to which level would you hold? when would you expect call margins?

how low would have gold to go for you to sell? If you were to sell, would you

sell bit by bit or all in one go? would any of these numbers make you sweat or bring panick?

 

- how would you react if this movement was slow and steady?

- how would you react if this movement was accompanied with a lot of volatility?

 

- for this to happen : what % of world bank, IMF and other CBs gold reserve would have to be sold?

 

- who would benefit from these falls?

 

What do you believe is the likelihood of these levels being reached ( may be a why would help me win )

and what amount in loss $ this would represent

- 800 : likelihood / why / loss

- 750 : likelihood / why / loss

- 700 : likelihood / why / loss

- 666 : likelihood / why / loss

 

I haven't thought of it in terms of 'loss'. I intend to hold for a minimum of 1 year and re-evaluate.

There is a possibility my holdings may turn into a 'present' for the kids. Alternatively it may preserve some of my purchasing power over the next 2-3 years.

I feel there are more reasons to hold it than to sell it.

[torino]

Is there any level which would make you uncomfortable?

[Errol]

Is there any level which would make you uncomfortable?

 

For me, no. Gold is gold. I didn't buy it for an investment.

[Gatesy]

Newton liked gold he had an obsession with it and spent most of his life's creative energy on alchemy, as master of the mint in 1717 he was responcible for sterling moving to a gold standard (from a silver standard hence "sterling silver"), and created a currency that begat the UK as the centre of a great trading empire.

 

I visited Newton's ancestral home at Woolsthorpe Manor recently. I stood in his bedroom overlooking, as he did, the orchard which provided his "apple moment" in 1666/67. At the age of just 24/25 he was developing his ideas of calculus, optics and the laws of gravitation. I kid you not that there was this weird feeling of immense intellectual power in that room and it was very moving; it made the hairs on the back of my neck stand up. The intellect was not emanating from me !

[goldenbee]

Is there any level which would make you uncomfortable?

 

When gold hits $5000 I will probably feel uncomfortable going uptown to change up a soveriegn.

[romans holiday]

I've seen various indications of this kind of buying this last week, showing that many people are diving in at this discount prices.

 

However, I can't rationalise that with the fact that the price has fallen steadily - at a faster rate than the dollar has been strengthening.

 

Anyone got any explanation for this contradiction? ..is there some major CB selling also taking place?

 

Heard an interesting comment on Howestreet today. Something to the effect that many are going "long on the dollar"; with the hot money coming out of commodities [and gold... yes, yes I know... it is also money] and sitting in cash. Maybe these players are more concerned with deflation than inflation.

 

http://howestreet.com/audiovideo/index.php...mediaplayer/920

 

Interesting insight into Wall street psychology I thought.

[bitbigt]

Trying to understand THESE LAST TWO WEEKS (since the CBs undertook a concerted effort to strengthen the dollar) I like to reflect upon why we've seen:

 

Oil price falling as far as it has:

> no surprise here, as a tight market was being bid up by weakenning dollar and some speculation. Dollar strengthenning lowered prices and terminated those speculative longs. But there is still limited supply and low supply growth, for a rapidly growing global demand (even if growth might slow a little, it not going to become a reduction), and add in peak oil for good measure. So at point soon people will start buying again (100-110 dollars is my guess) - exactly the price where economies don't need to slow, with obvious impact upon the deflation/inflation balance

 

Gold price falling as far as it has:

> could be similar buying fundamentals as for oil, but I note lots of evidence that the public globaly is buying like crazy at these reduced prices. So why is the price falling so much? Perhaps it is the big players ('hot money' perhaps, or CBs more likely) that are selling. But again, there comes a price where its too cheap not to buy, given global money devaluation - and I suspect we're at or close to that price about now

 

Stock Markets behaving in contradictory ways:

> US DOW - going up, of course, due to the strengthenning dollar and increased confidence that inspires in the US

> UK FTSE - going up, perhaps because the pound has also been strengthenning with the dollar

> European markets - going up !!!???, even though the dollar bulls are telling everyone the Eurozone is about to collapse and the EURO has been tanking

> UK small cap market - going down, suggesting that fear is high and rising for Joe Bloggs investor

> Emerging markets - going down bigtime, whereas they've been in lock step with western markets for the last several years! This suggests the basal level of fear is increasing in those who know and place longer terms investments

> 'Informed Investor' indices - going down, relentlessly ...say no more!

 

In summary, I feel the manipulated dollar is a charade that has convinced very few, and changed absolutely nothing in reality. Some hot money is chasing the short terms trends this manipulation has spawned, but joe sixpack investors, long term institutional investors, and the commodity investor will benefit from not falling for this futile (and expensive) deception.

 

But don't listen to me - listen to Warren Buffett ..."If our current account deficit keeps running at present levels, the dollar I think is almost certain to be worth less five to ten years from now compared to other major currencies" ...and I don't see the US doing much to dramatically cut that deficit

[bitbigt]

Worth a read: concerning gold, deflation, inflation...

 

http://www.gold-eagle.com/editorials_05/milhouse051005.html

[Bobsta]

The Contrarian Investor feels deflation is here: http://cij.inspiriting.com/?p=514