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Not too shabby today. Another all time high versus the pound. No surprise there. Those fools who STR'd and did not protect themselves will soon only to able to afford a big mac and fries.

Fascinating times we live in.

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You don't read this every day !

 

In full from GATA:

http://www.gata.org/node/6983

 

Fear triggers gold shortage, drives Treasury yields below zero

Submitted by cpowell on Wed, 2008-12-10 22:41. Section: Daily Dispatches

 

By Ambrose Evans-Pritchard

The Telegraph, London

Wednesday, December 10, 2008

 

http://www.telegraph.co.uk/finance/economi...below-zero.html

 

The investor search for a safe places to store wealth as the financial crisis shakes faith in the system has caused extraordinary moves in global markets over recent days, driving the yield on 3-month US Treasuries below zero and causing a rush for physical holdings of gold.

 

"It is sheer unmitigated fear. Even institutions are looking for mattresses to put their money under until the end of the year," said Marc Ostwald, a bond expert at Insinger de Beaufort.

 

The rush for the safety of US Treasury debt is playing havoc with America's $7 trillion "repo" market used to manage liquidity. Fund managers are hoovering up any safe asset they can find because they do not know what the world will look like in January when normal business picks up again. Three-month bills fell to minus 0.01 percent on Tuesday, implying that funds are paying the US government for protection.

 

"You know the US Treasury will give you your money back, but your bank might not be there," said Paul Ashworth, US economist for Capital Economics.

 

The gold markets have also been in turmoil. Traders say it has become extremely hard to buy the physical metal in the form of bars or coins. The market has moved into "backwardation" for the first time, meaning that futures contracts are now priced more cheaply than actual bullion prices.

 

It appears that hedge funds in distress are being forced to cash in profits on gold futures to cover losses elsewhere or to meet redemptions by clients. But smaller retail investors -- and perhaps some big players -- are buying bullion in record volumes to store in vaults.

 

The latest data from the World Gold Council shows that demand for coins, bars, and exchange-traded funds (ETFs) doubled in the third quarter to 382 tonnes compared to a year earlier. This matches the entire set of gold auctions by the Bank of England between 1999 and 2002.

 

Peter Hambro, head Peter Hambro Gold, said the data reflects a "remarkable" shift in the structure of the market. The rush to safety reflects a mix of fears about the fragility of world finance and concerns that the move towards zero interest rates could set off an inflationary surge further down the road, and possibly call into question the worth of some paper currencies.

 

The near paralysis in the "repo" markets may prove to be no more than pre-Christmas jitters as banks square their books.

 

However, there are some signs that extreme monetary stimulus by the US Federal Reserve and other banks is starting to have unintended consequences.

 

The Bank of Japan is reluctant to cut its rates to zero again because of the damage this causes to the money markets, which serve as a key lubricant of the credit system. The US is now starting to face the same dilemma.

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Thanks Steve and Wren. B)

 

Good glad to hear everyone still stands by their golden beliefs. Personally I think by early February we are going to see some big moves. Does this concur with anyone else's thoughts?

 

Stand by them ?!

If I didn't feel so safe (pardon the vulgarity) I'd be stocking up on toilet paper right now :D :D

 

I hope those who do not have gold have a good supply of the paper on rolls ;)

 

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Interesting you say that! This very evening I said to my boss (the missus!) something along the lines of "mark my words - something changed today! The dollar has topped out. Oil, silver and gold have started an upswing. People are finally seeing through all the wasted money in the US and UK fiscal stimuli, given the way they are being applied"

 

Damn glad I doubled up my OILB shares last Friday :-)

 

Yes :D

I think we all knew it was never going to last. Personally I think I still suffer from too short-term a view. Or impatience.

I think looking back, the past year was the tide going out.

Now is when we need to start to really worry.

 

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Not too shabby today. Another all time high versus the pound. No surprise there. Those fools who STR'd and did not protect themselves will soon only to able to afford a big mac and fries.

 

What allocation of protection do people think is needed ???

 

Lets say you had £100k, general "old" rule of thumb 10% of worth, means £10k gold.

As it turns out, if you had spent the £100k on 290 ounces last year ( £340 oz ), today you would have in the region of £158k today. Hindsite is a wonderful thing :lol: , but this would not have been prudent investing but more of a gamble that paid off. What about the future, if you have £100k today, what allocation do you give to gold ???

 

And back to my old bug bear 10% of 100k is 10k, but 10k will buy you 18oz today but would buy you 29oz last year, so do we measure gold allocation against net worth by weight or by currency ???? What is 10% of 100k by weight ?????? :unsure::blink::unsure::blink:

 

 

 

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Must read article: http://www.marketoracle.co.uk/Article7722.html

 

Quote I like:

Our present experiment with irredeemable currency can last only as long as it is able to support futures markets in gold. The declining gold basis is the hour glass: when it runs out and the last grain of sand drops, gold fever will bleed the futures markets of cash gold, and the days of the regime of irredeemable currency are numbered.

 

Previous episodes of experimentation lasted no more than 18 years, or half as long as the present one which has taken 36 years so far, a world record. Of course, none of the earlier episodes were supported by futures markets. Forewarned, forearmed. Get ready and move closer to the doors. When the curtain falls on the last contango in Washington, there will be panic and some people may get trampled to death at the exit.

 

Dear Mish, lower your gun. The topic of gold backwardation is not for you.

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Have finally got my parents' to seriously look into PM's and their cash cleared on GM yesterday morning. Quite a hefty sum - buying in Sterling.

 

Can't decide - buy now or pray for a dip and buy later?

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Have finally got my parents' to seriously look into PM's and their cash cleared on GM yesterday morning. Quite a hefty sum - buying in Sterling.

 

Can't decide - buy now or pray for a dip and buy later?

 

Drip feed your way in - buy some now, evaluate, buy some more, evaluate, rinse, repeat.

Nobody can tell you what to do, but have they got any physical?

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Of course I could be wrong. But I am starting to get "that feeling".

 

I agree and also am getting that feeling :D

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What allocation of protection do people think is needed ???

 

Lets say you had £100k, general "old" rule of thumb 10% of worth, means £10k gold.

As it turns out, if you had spent the £100k on 290 ounces last year ( £340 oz ), today you would have in the region of £158k today. Hindsite is a wonderful thing :lol: , but this would not have been prudent investing but more of a gamble that paid off. What about the future, if you have £100k today, what allocation do you give to gold ???

 

And back to my old bug bear 10% of 100k is 10k, but 10k will buy you 18oz today but would buy you 29oz last year, so do we measure gold allocation against net worth by weight or by currency ???? What is 10% of 100k by weight ?????? :unsure::blink::unsure::blink:

If you are persuaded the pound is toast then obviously 100% into gold. If you are less concerned about the pound but still worried about the general economy then 50%. Straight in. Gold, more than protection or insurance, should be thought of today as an alternative currency imo.

 

825 :)

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Hmmm, this is very puzzling. I've been told by quite a few people since March 2008 that gold was a bubble and it's going to down down down down.

A bull market turned into a bear market.

 

OK, fine.

 

But, if that is the case, should the "gold price" keep hitting new highs ? ;):D

 

£554.00/oz

 

:lol: :lol: :lol:

 

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Of course I could be wrong. But I am starting to get "that feeling".

 

 

I agree and also am getting that feeling :D

 

What? Not.........??????

 

post-1492-1228995950_thumb.jpg

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If you are persuaded the pound is toast then obviously 100% into gold. If you are less concerned about the pound but still worried about the general economy then 50%. Straight in. Gold, more than protection or insurance, should be thought of today as an alternative currency imo.

 

825 :)

Interesting that the much-talked-about "Pound to Euro parity so that the UK can enter the Euro" theory is now entering UK mainstream media. Apparently it was discussed on Radio 4 this morning.

 

Front pages of quite a few newspapers this morning also reporting £1 = €1.07

 

Makes me sick. Should've bought far more gold a year ago!

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Well that's interesting.

 

The EURUS$ is rising fast.

 

The US$JPY has just dropped below 92. Now at 91.4.

 

And of course, what else could happen, gold and silver are rising fast.

 

I thought we'd have to wait a bit longer !!!!

 

£557.70/oz

 

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Well that's interesting.

 

The EURUS$ is rising fast.

 

The US$JPY has just dropped below 92. Now at 91.4.

 

And of course, what else could happen, gold and silver are rising fast.

 

I thought we'd have to wait a bit longer !!!!

 

£557.70/oz

 

 

This is definately gold in currency mode, the broader markets (from what I can see at least) are barely changed. Optimistically I could say that some important people just cottoned on to the fact that certain currencies are toast, and are only likely to become blacker toast (or in the dollar and sterling's case, cinders) as time goes on.

 

Proportionately, I hold very little cash, so this all suits me fine. I had been using the last few months to build up some cash for some selected buys in the new year. Based on the recent performance of the £, I'm starting to wish I hadn't.

 

I just wish Gordon Brown was taking some flak for this. Anyone holding large amounts of cash must be able to see their wealth disappearing before their eyes, why aren't they complaining? He's robbing them blind while telling them he's a hero.

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Interest note on Marketoracle...

 

Item 6 : Even allocated and segregated metal account gold is not safe. The temptation on the account providers to default will be irresistible. They are not going to release the gold until expressly ordered by the courts, and will make sure that no gold will be left by then.

From: http://www.marketoracle.co.uk/Article7722.html

 

Anyone else worried about GM?

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This is what is happening:

 

Imploding_USA1.jpg

 

 

It's a shame this doesn't show the UK, where the gold and silver rockets have long since gone. Those wanting to escape now will have to pay extra for the privelage.

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Well that's interesting.

 

The EURUS$ is rising fast.

 

The US$JPY has just dropped below 92. Now at 91.4.

 

And of course, what else could happen, gold and silver are rising fast.

 

I thought we'd have to wait a bit longer !!!!

 

£557.70/oz

 

Also the USDX has just broken it's 50 day MA. This is the first time this has happened since the bounce.

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