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Yes, but consider how much of that quadrillion is not really paper money at all but debt money.... or anti-money. This changes the equation quite a bit.

The deleveraging and the deflation occured because those people running the system didn't "get" the problem.

 

Now they "get" the problem and have back stopped the global system with a virtually unlimited flow of dollars.

 

They "get" it but for some reason you are stuck in 2008

 

oh deary me.

 

FOMC today no doubt they wil raise rates :lol:

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Debt deflation and then a rush to liquidity. This is not Weimar. The Die Hard currency will not simply roll over here. Gold will also do well as the most liquid asset.

 

 

bruce.jpg

See me for some Botox, Bruce.

 

Your face looks like an old scrote.....

 

Nick

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http://www.mineweb.co.za/mineweb/view/mine...4&sn=Detail

 

Gold heading for $1,500 before mid-2010- SocGen

The bank suggests buying into the recent commodities correction as it expects precious metals to outperform the rest over six months as investors' fears intensify about inflationary pressures exacerbated by political interference.

 

Author: Rhona O'Connell

Posted: Wednesday , 16 Dec 2009

 

LONDON -

 

In its latest quarterly Commodity Review, investment bank Société Générale forecasts continued strength in investor flows into commodities in the first half of 2010, helped by central banks keeping policy rates at extremely low levels. The bank suggests that, not least due to the size of the output gap in the United States, the recently developed fears of an increase in FOMC interest rate policy has been overdone and therefore recommends buying into the latest correction in commodity prices.

 

The bank's foreign exchange strategists are looking for new lows for the US dollar against the euro during the first half of 2010. This, combined with the persistence of "exceptionally lax" monetary conditions, high investor cash holdings looking for a home and the secular trend of "long-only" fund managers for diversification into commodities as a hedge against inflation as well as mitigating equities exposure, all points to very strong investor flows into commodities during the first half of 2010.

 

Further out, the dollar is expected to stabilise if not bounce in the latter part of the year as the market starts to focus on the US rate hikes that are expected in early 2011. The US is not the only country that has to contend with a large output gap; the EU and Japan are facing a similar problem and this is likely to delay the start of interest rate rises in general until the start of 2011 - although the major central banks are expected to reverse some of their quantitative easing measures during 2010.

 

This likely course of interest rates has a dual impact on investor psychology; a) the expectation of rate hikes in 2011 is likely to reduce investor flows into commodities in the second half of 2010, and B) another full year with interest rates at record lows, combined with large structural fiscal deficits in the major OECD countries, will extend ongoing market concerns about potential longer-term inflationary forces.

 

Add this to the fact that, in SocGen's view, "The market is becoming concerned that the governments of the major OECD countries may put pressure on central banks to keep interest rates low for too long in order to help reduce the huge structural fiscal deficits in real terms (higher inflation would tend to reduce the real fiscal burden)" and we have another recipe for higher exposure to gold.

 

SocGen therefore expects precious metals prices, led by gold, to rally sharply in the next two quarters and the bank is looking for gold at $1,500 before mid-2010, with the view partly driven by the weight-of-money argument that revolves around gold's relatively small market size by comparison with other asset classes. Other bullish gold drivers include flat mining supply and the expectation for ongoing Asian central bank gold buying.

Asia, most pointedly China, is expected to maintain its spending on infrastructure projects next year and this should underpin base metal prices, with nickel expected to be the outperformer due to lower inventory cover at stainless steel manufacturers. The reverse is true for aluminium, which is labouring under a heavy burden of inventory and structural overcapacity.

 

The bank is also looking for moderate increases in crude and refined oil prices, aided by a gradual recovery in demand, particularly from Asia combined with restrained supply from OPEC. Global refinery overcapacity will, however, mean that the expected rally in refined products would be likely to stem from the rise in crude per se rather than being driven by strength in any one refined product.

 

Furthermore a distinctly bearish long-term weather outlook for the US is underpinning the view that US natural gas is likely to outperform the majority of the rest of the energy sector and that the market is not fully discounting the substantial risk of a much colder US winter than normal.

 

The study, which goes into all these sectors in depth, carries an interesting summary of how its quarterly average price forecasts compare with existing forward prices; the highest premium in terms of these differentials is, on a three month view, natural gas while among the metals gold and silver are in pole position. Looking further out to the fourth quarter of next year silver carries the laurels in the metals sector overall with nickel in the vanguard for the base sector (and outperforming gold), while tin and zinc bring up the rear.

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ROUBINI -On Gold

 

...since gold has no intrinsic value, there are significant risks of a downward correction. Eventually, central banks will need to exit quantitative easing and zero-interest rates, putting downward pressure on risky assets, including commodities. Or the global recovery may turn out to be fragile and anemic, leading to a rise in bearish sentiment on commodities – and in bullishness about the US dollar.

 

Another downside risk is that the dollar-funded carry trade may unravel, crashing the global asset bubble that it, together with the wave of monetary liquidity, has caused. And, since the carry trade and the wave of liquidity are causing a global asset bubble, some of gold’s recent rise is also bubble-driven, with herding behavior and “momentum trading” by investors pushing gold higher and higher. But all bubbles eventually burst. The bigger the bubble, the greater the collapse.

 

The recent rise in gold prices is only partially justified by fundamentals. Nor is it clear why investors should stock up on gold if the global economy dips into recession again and concerns about a near depression and rampant deflation rise sharply. If you truly fear a global economic meltdown, you should stock up on guns, canned food, and other commodities that you can actually use in your log cabin.

 

/more: http://www.project-syndicate.org/commentar...ubini20/English

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http://hosted.ap.org/dynamic/stories/U/US_...-12-16-17-06-53

 

By SARA LEPRO

AP Business Writer

 

NEW YORK (AP) -- Gold prices bounded higher Wednesday as the Federal Reserve reaffirmed its pledge to keep interest rates low for the foreseeable future.

 

Gold for February delivery rose $13.20 to $1,136.20 an ounce on the New York Mercantile Exchange.

 

As widely expected, the Fed kept its benchmark interest rate at a level near zero, where it's been all year, in an effort to spur lending and further support the economic recovery.

 

The ultra-low rates have been a drag on the dollar since March, encouraging investors to sell the greenback and buy assets like stocks and commodities that can earn bigger returns. Gold has been one of the biggest beneficiaries of the drop in the dollar because of its use as a hedge against a weak currency as well as inflation.

 

 

 

From:

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saturday-east_java_265846d.jpg

 

An illegal miner leaves a cave after mining for gold in the mountain of Tumpang Pitu in Banyuwangi, East Java, 21 November. The miners can collect about 1 to 5 grams of gold and earn up to 175,000 rupiah ($18) a day. The mine has been in operation since June 2009 and local villagers have began protesting because the waste produced by the mine is polluting the environment.

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A weak Euro, has helped bring strength to the Dollar ... update

xxxtr.gif

Comment from Ken Rogoff:

"Europe’s income is projected to fall a staggering 4% this year. Unemployment will soon be in double digits throughout most of the Continent, with Spanish and Latvian unemployment on track to exceed 20%. Europe’s banking system remains sickly, even though many national governments have gone to great lengths to hide their banks’ woes.

 

Yet, ugly or not, the downturn will eventually end. Yes, there is still a real risk of hitting an iceberg, beginning perhaps with a default in the Baltics, with panic first spreading to Austria and some Nordic countries.

 

One shudders to think what will happen if Europe does not pull out of its current funk. Certainly, Europe would lose traction as a badly needed counterweight to the US in world economic policy. Europeans may not mind this right now (one sees more Obama t-shirts in Europe than in the US), but they might not be so happy if a George Bush III comes along. Fortunately, Europeans will probably not wait so long to start moving ahead again."

@: http://www.project-syndicate.org/commentary/rogoff58

 

Where are all those posters now ("FOPPs" - Followers of Pied Piper),

who thought the Dollar was a one-way bet ?

 

Seems that they are Wrong-and-Gone, and GEI is a quieter, and saner place

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Even Schiff is now Bullish on the Dollar ?

"It is possible that the Dollar could rally" (he says after a 4% move) - not before it.

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Even Schiff is now Bullish on the Dollar ?

"It is possible that the Dollar could rally" (he says after a 4% move) - not before it.

 

Nah, still the same old tune from Schiff:

 

"I still think you shouldn't sell Euros, Swiss Francs etc and buy dollars because the risk is you're in the dollar and it collapses."

 

The guy is so focused on the "fundamentals", he can't see the dynamics right under his nose. :lol:

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But are not the fears about America more relevant and pertinent today? I remember it was in your writings (the great levelling) that forewarned about the transition from West to East many years ago. If those fears are real, and I believe they are, then we will have another 'aberration' but next time it might not bounce back up (trumpet shape) as we have seen in that graph. Dollar will probably have lost its reserve status, gutted manufacturing base, financial (Shanghai overtakes London) etc etc. America sure seems like she is losing her hegemony on the world...

 

All true, Jake.

And I havent stopped worrying about those things.

But just now, and maybe for most of 2010, you should be worrying about The EURO, and its future.

 

That's what the Gold Bugs somehow forgot.

They have good reason to worry about the Dollar, but they took their beady eyes off the Euro Ball.

And now that ball may be about to crumble before their eyes, with the odd result that the dollar strengthens,

and for at least a little while, the Dollar looks like a worthy alternative to both the Euro, and to Gold.

 

And Sterling may soon find itself competing with the Euro, in a "race to the bottom."

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Nah, still the same old tune from Schiff:

"I still think you shouldn't sell Euros, Swiss Francs etc and buy dollars because the risk is you're in the dollar and it collapses."

The guy is so focused on the "fundamentals", he can't see what the dynamics right under his nose. :lol:

 

001lk.jpg

 

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Gold is at €782.75.

 

I exchanged euros for gold.

Fair enough. The thing is Schiff has so demonized dollars, that people might miss a good opportunity where they could purchase gold at a better price if they were to wait in dollars.

 

If the dollar continues to strengthen, the price of gold in other currencies is likely to stay or become more expensive... as we see in the Euro and the Aussie dollar here.

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An interesting article on the hoarding of gold by Central Banks... sending mixed signals.

 

Gold Buying by Central Banks May Send Signal to Sell

 

http://www.bloomberg.com/apps/news?pid=206...XwOc&pos=12

Dec. 16 (Bloomberg) -- Some of the biggest buyers of gold may be sending the strongest signal to sell it, if past performance is indicative of future results.

 

Central banks, holding about 18 percent of all gold ever mined, are expanding their reserves for the first time in a generation as a nine-year bull market drives prices to a record.

 

The banks will buy 13.8 million ounces (429 metric tons) this year, worth $15.5 billion, for the first net expansion in reserves since 1988, New York-based researcher CPM Group estimates. Gold fell 15 percent that year and took another 15 years to trade again at the same price as central banks from Switzerland to the U.K. cut their holdings.

India, China and Russia are now adding to reserves as gold nears its longest winning streak since at least 1948. They’re joining a rush as investors in exchange-traded funds amass holdings to rival the biggest central banks. Clive Capital LLC, manager of the biggest commodities hedge fund, had its best return since May last month, led by gains in precious metals.

 

“This is late in the game to be buying gold,” said Peter Morici, a professor of business at the University of Maryland in College Park and former economic adviser to the U.S. government. “Central banks are not known for their investment acumen. What it reflects is a lack of confidence in the U.S. economy and the long-term durability of the dollar as a store of value.”

 

Countries were also increasing their holdings in 1980 when gold peaked at $850 an ounce, data compiled by the London-based World Gold Council show. The record was exceeded 28 years later.

......

 

Central bank buying may support prices. The bull market of the 1970s, when gold rose from $35.17 at the end of 1969 to $512 by the end of 1979, was in part caused by central bank hoarding, according to Daniel Sacks, a money manager of the Investec Global Gold Fund at Investec Asset Management, which oversees about $47 billion.

 

“Central banks recognize the economic crisis could linger,” said William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, and former head of futures research for Merrill Lynch & Co. “Gold has assumed the front and center position as the alternative currency.”

 

 

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ROUBINI -On Gold

Roubini's gold bubble talk is totally retarded. The guy is an academic, but unfortunately he has not done any research on gold. I'd rather stick with people who have shown that they're able to make some money, like the three Jims (Rogers, Sinclair, Puplava) and Tudor Jones.

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a good opportunity where they could purchase gold at a better price if they were to wait in dollars.

They could also go to Las Vegas and gamble there.

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what does "intrinsic value" mean?

A rhetorical question I'm sure, but I'll hazard a reply anyway.

 

I guess the proponents of intrinsic value are thinking of something's utility value, having in mind here its industrial or material use. It is not too different from the way in which dialectical materialism valued things when you think about it, and like that outdated barbaric philosophy remains clueless as to how and why people actually do, in the real world, put an "idiosyncratic" [from a reductionist's perspective] value on things.

 

I value, therefore I am. Irreducible. :)

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They could also go to Las Vegas and gamble there.

:huh:

 

Hedging is not gambling. More like the exact opposite.

 

Don't let the fact that the word has been "bastardized" in "Hedge Fund" put you off the concept. :lol:

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A rhetorical question I'm sure, but I'll hazard a reply anyway.

 

I guess the proponents of intrinsic value are thinking of something's utility value, having in mind here its industrial or material use. It is not too different from the way in which dialectical materialism valued things when you think about it, and like that outdated philosophy remains clueless as to how and why people actually do, in the real world, put an "idiosyncratic" [from a reductionist's perspective] value on things.

 

I value, therefore I am. Irreducible. :)

 

I know there are equations used in finance to calculate the intrinsic value of an option but I do not know if this is what he is meaning.

Normally I do not find it a particularly useful adjective.

 

Maybe he means that gold doesn't increase productivity and cannot be used in machines that increase efficiency and productivity and so therefore does not contribute to GDP? But if he does mean this I am not sure it is true.

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I know there are equations used in finance to calculate the intrinsic value of an option but I do not know if this is what he is meaning.

Normally I do not find it a particularly useful adjective.

 

Maybe he means that gold doesn't increase productivity and cannot be used in machines that increase efficiency and productivity and so therefore does not contribute to GDP? But if he does mean this I am not sure it is true.

Though I generally like Roubini's macro views, where he understands the niceties of Anglosphere rational economics to be trumped by the crude reality of a debt deflation, I think his views on gold are a little dogmatic. I am not sure why this is, and just put it down to some idiosyncratic quirk of his own.

 

But yes, his is the narrow rationalist criticism of gold, that is has no "intrinsic value" [not productive, can't eat it etc], which surprises me given his excellent and more comprehensive approach to the wider economy. Perhaps being such a public figure there is [peer] pressure to be more "conventional" in some respects.

 

 

Of course the obvious response to all of this is that gold does have [utilitarian] value as a monetary asset, having historically enabled us to measure value economically... and then perhaps once again in the near future as modern currencies become increasingly problematized. It's value is not "real" or "objective", but ideal and subjective [the market being a collection of subjects... hammering out the worth of objects].

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Though I generally like Roubini's macro views, where he understands the niceties of Anglosphere rational economics to be trumped by the crude reality of a debt deflation, I think his views on gold are a little dogmatic. I am not sure why this is, and just put it down to some idiosyncratic quirk of his own.

 

But yes, his is the narrow rationalist criticism of gold, that is has no "intrinsic value" [not productive, can't eat it etc], which surprises me given his excellent and more comprehensive approach to the wider economy. Perhaps being such a public figure there is [peer] pressure to be more "conventional" in some respects.

 

 

Of course the obvious response to all of this is that gold does have [utilitarian] value as a monetary asset, having historically enabled us to measure value economically... and then perhaps once again in the near future as modern currencies become increasingly problematized. It's value is not "real" or "objective", but ideal and subjective [the market being a collection of subjects... hammering out the worth of objects].

 

Yes. It just seems to be a dogma that some people adopt without really thinking about it.

 

Aside from the fact that it does still have industrial and medical uses gold is also highly prized for its malleability and the fact that it does not tarnish making it the choice material for much jewellery. It is also used in painting, architecture and religious iconography. It never seems to have been disregarded in all of history.

 

Its use as money is also a sign of its value. It is a rare metal which can be standardised into coins and used as more permanent store of value than can the coins of a fiat currency. This is an incredibly useful function of the metal, particularly in unstable economic conditions.

 

Aside from this it seems to hold a symbolic value which is immune to the passing of the ages. This alone suggests that it is pointless to suggest it is valueless by some "intrinsic" measure. i.e. It supposedly has no intrinsic value but it is always valued by most people all of the time. No one in their right mind would throw away a gold coin because it had no intrinsic value.

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Wow, $1110 broken, but looks like $1100 has been defended.

 

It's a bit quiet on here today - everyone got a post Xmas party hangover or what?

 

USD 1105 now.

 

is this an early Christmas present from our banking overlords?

 

probably some sort of trick, but I bought some more today anyway.

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