GOLD

[Errol]

Get with the program, the gold program - Stewart Thomson's latest: http://www.321gold.com/editorials/thomson_s/thomson_s_070511.html

[LauraB]

Refreshing clarity & simplicity from Eric Sprott:

I think that the prices will continue higher. I mean the amount of money printing is unbelievable. I just think you have to take that initial stand in terms of buying it. I use the James Turk analogy: just keep dollar averaging. We have gone up eleven years in a row, this year it looks like it will be no exception; I would certainly think next year will be no exception. If we ever have QE3 announced, I think gold and silver will just go absolutely bonkers here. And so I just think you have got to step in there and own it; we’ve had these fears all the way along. You know, $400, and $500 and $700 and $800 dollar gold, everyone was afraid it was a one-time thing. I don’t think it is a one-time thing, I think it is a secular thing. It’s going to carry on for quite a while here until we find some resolution of these problems. And the resolution probably will be some form of default where people just have to expunge debts that cannot be repaid.

 

ZH's preamble contains the perfect typo: Eric sees the current "extend and pretend" intervention by world governments and central banks to prop of a fundamentally flawed baking system, particularly the vast money printing efforts of the past few years, as a ruse that is losing it's influence.

 

ZH link also has a transcript of CM with ES

http://www.zerohedge.com/article/eric-sprott-paper-markets-are-joke-prepare-bullion-prices-go-supernova

 

Full interview http://www.chrismartenson.com/page/transcript-eric-sprott-paper-markets-are-joke-prepare-bullion-prices-go-supernova

[lupercal]

Yes it shows the general public as clueless about gold as real money or gold as a hedge against the depreciation of fiat money. But still significant in my view as an indication of a changing tide that will see more and more people work out what governments and the central banks are trying to do. But by the time the majority work it out it will probably be too late for them and they will wish they bought that little gold bar instead of the perfume they chose at the time.

 

When houses went up people want to buy them with borrorowed money. When gold goes up people want to sell it. Why is this?

[Schaublin]

When houses went up people want to buy them with borrorowed money. When gold goes up people want to sell it. Why is this?

 

Using a fiat currency which is being debased at a frightening rate as a unit of accounting will lead to confusion. For every buyer there is a seller. For every fool that buys fiat currency with his gold there is a willing seller of fiat.

 

The ship is already sinking and people are saying; "The ship is unsinkable".

[DoctorSolar]

 

IKN

[jsr]

 

IKN

 

LOL!

 

Don't forget the 144dma.

 

You know funnilly enough, every last gold bottom, all the commentators, newsletter writers thought gold would make one last push lower. Right now, I can't find a single one who thinks gold will go any lower ... you know what means ...

 

The markets have been in sync with seasonality to a tee this year. Given this, I reckon we still got another 3 or 4 weeks until gold bottoms.

[Pixel8r]

LOL!

 

Don't forget the 144dma.

 

You know funnilly enough, every last gold bottom, all the commentators, newsletter writers thought gold would make one last push lower. Right now, I can't find a single one who thinks gold will go any lower ... you know what means ...

 

The markets have been in sync with seasonality to a tee this year. Given this, I reckon we still got another 3 or 4 weeks until gold bottoms.

Not sure which seasonal chart you are looking at, but this one for the last 40 years shows that have already bottomed seasonally.

 

[alexreeve]

I remember when a $20 move up in an hour elicited pictures of rockets, now not even a comment...

[jsr]

Not sure which seasonal chart you are looking at, but this one for the last 40 years shows that have already bottomed seasonally.

 

 

I'm using Zeal LLC's 10 year seasonal charts.

 

http://www.zealllc.com/2010/goldseas5.htm

[Manual labourer]

Was that a new GBP high in gold today?

 

Is that not worth a rocket ?

 

Regards

 

ML

[romans holiday]

I remember when a $20 move up in an hour elicited pictures of rockets, now not even a comment...

When gold was 800 an ounce a 20 dollar move was twice as significant as it is now. Gold would now have to move up 40/ 50 dollars in an hour to have the same effect.

[azazel]

Regarding gold, Martin Armstrong thinks "We are due for a correction – It’s Just Time. The months ahead are September and November in particular for turning points."

 

http://www.martinarmstrong.org/files/The%20Fate%20of%20Gold%20and%20Oil%20Front%20Runner%2007-04-2011.pdf

[Errol]

Swiss Parliament to discuss gold franc

 

http://www.marketwatch.com/story/swiss-parliament-to-discuss-gold-franc-2011-07-07

 

ZURICH (MarketWatch) — The Swiss Parliament is expected later this year to discuss the creation of a gold franc — a parallel currency to the official Swiss franc, with the fringe initiative likely triggering a broader debate about the role of the precious metal in the Alpine nation.

[romans holiday]

Regarding gold, Martin Armstrong thinks "We are due for a correction Its Just Time. The months ahead are September and November in particular for turning points."

 

http://www.martinarmstrong.org/files/The%20Fate%20of%20Gold%20and%20Oil%20Front%20Runner%2007-04-2011.pdf

The use of a linear chart over such a long time span invalidates the chart imo.

 

If there was a correction [below the long term trend on the log chart] it wouldn't take gold as low as the linear chart would suggest.

[aliveandkicking]

The use of a linear chart over such a long time span invalidates the chart imo.

 

If there was a correction [below the long term trend on the log chart] it wouldn't take gold as low as the linear chart would suggest.

 

On the other hand many gold buyers on dips must have built up a perception that Gold must always go up. A

correction coupled with fundamentals like reduced demand for copper steel and so forth would destroy

anybody exposed to leverage. For example the idea Gold would rise in deflation seems flawed, and for

evidence of that you only have to look at the prices for Gold and silver when Lehmans collapsed.

Given faith and belief in their trades, and faith in their intellectual ideas, people would be reluctant to stand back and cover losses until they were totally busted and would meanwhile be buying more on the dips. In a significant correction one by one they will fold and overwhelm those thinking they can hold on.

If bond yields for italian debt are up to 10% in the near future we are going to see more lehmans and who knows what else. The reason for holding gold is often to prepare for bad times where gold just becomes just another thing people have to sell to pay their bills. If the shit starts hitting the fan many of those CDS issuers who have gold will sell the gold. Who actually is going to be buying?

 

The other thing about Gold is that many people seem unable to comprehend the nature of a significant amount of the QE, where wealth has been removed from the economy and replaced with wealth for very little extra juice. Meanwhile most of us including me had seen this 'money printing' as likely to significantly increase prices and we have acted accordingly. All we might have is faith and intellectual constructions, where already i am seeing the whole QE thing very differently.

[Newbear]

Was that a new GBP high in gold today?

 

Is that not worth a rocket ?

 

Regards

 

ML

 

I don't think it was - though close it was £1 off the previous high.

 

Neither has gold in $ touched its 150 day ma, which has been a reliable place for a new leg up to start since the start of the gold bull.

[marceau]

On the other hand many gold buyers on dips must have built up a perception that Gold must always go up. A

correction coupled with fundamentals like reduced demand for copper steel and so forth would destroy

anybody exposed to leverage. For example the idea Gold would rise in deflation seems flawed, and for

evidence of that you only have to look at the prices for Gold and silver when Lehmans collapsed.

Given faith and belief in their trades, and faith in their intellectual ideas, people would be reluctant to stand back and cover losses until they were totally busted and would meanwhile be buying more on the dips. In a significant correction one by one they will fold and overwhelm those thinking they can hold on.

If bond yields for italian debt are up to 10% in the near future we are going to see more lehmans and who knows what else. The reason for holding gold is often to prepare for bad times where gold just becomes just another thing people have to sell to pay their bills. If the shit starts hitting the fan many of those CDS issuers who have gold will sell the gold. Who actually is going to be buying?

 

The other thing about Gold is that many people seem unable to comprehend the nature of a significant amount of the QE, where wealth has been removed from the economy and replaced with wealth for very little extra juice. Meanwhile most of us including me had seen this 'money printing' as likely to significantly increase prices and we have acted accordingly. All we might have is faith and intellectual constructions, where already i am seeing the whole QE thing very differently.

 

 

I'd agree with this, we simply haven't seen any sustained selling pressure in gold over the past couple of years - as with the S&P, all dips were quickly bought. For me, the key question is - where's the fear?

 

IMO the sooner we get a good multi-month wash out the better. As I said earlier this year I seriously doubt it will be caused by the current QE situation (if it's already known it can't move the market), but it will come eventually. This will be a good thing, hot money is fickle and needs wringing out from time to time, otherwise you can't see where the real price support is.

 

Besides, I need more gold in order to install a mono-rail in my hollowed out volcano home......

 

[Manual labourer]

On the other hand many gold buyers on dips must have built up a perception that Gold must always go up. A

correction coupled with fundamentals like reduced demand for copper steel and so forth would destroy

anybody exposed to leverage. For example the idea Gold would rise in deflation seems flawed, and for

evidence of that you only have to look at the prices for Gold and silver when Lehmans collapsed.

Given faith and belief in their trades, and faith in their intellectual ideas, people would be reluctant to stand back and cover losses until they were totally busted and would meanwhile be buying more on the dips. In a significant correction one by one they will fold and overwhelm those thinking they can hold on.

If bond yields for italian debt are up to 10% in the near future we are going to see more lehmans and who knows what else. The reason for holding gold is often to prepare for bad times where gold just becomes just another thing people have to sell to pay their bills. If the shit starts hitting the fan many of those CDS issuers who have gold will sell the gold. Who actually is going to be buying?

 

The other thing about Gold is that many people seem unable to comprehend the nature of a significant amount of the QE, where wealth has been removed from the economy and replaced with wealth for very little extra juice. Meanwhile most of us including me had seen this 'money printing' as likely to significantly increase prices and we have acted accordingly. All we might have is faith and intellectual constructions, where already i am seeing the whole QE thing very differently.

 

Hi ALK,

 

Could you explain in layman’s terms why anybody would swop the finite amount of gold for infinite amounts of printed QE 3 fiat money?

 

Why would people on mass sell their physical insurance Gold?

 

Re deflation Rees-Mogg in a piece in the times the other week stated Gold historically does very well in deflationary periods, so if QE3/4/5 failed to inflate, and remarkably deflation set in after numerous QE events what would you secure your investments in rather than Gold?

 

Regards

 

ML

Edited July 10, 2011 by Manual labourer

[Manual labourer]

I don't think it was - though close it was £1 off the previous high.

 

Neither has gold in $ touched its 150 day ma, which has been a reliable place for a new leg up to start since the start of the gold bull.

 

 

Sorry about that,

 

The spot prices I was looking at had a previous high of of GBP 963.50, with the high on Friday of GBP 964.74.

 

MA and TA, are something I am doing further research into at the Moment, so cheers for the tip!

 

 

Regards

 

ML

[electroweak]

Sorry about that,

 

The spot prices I was looking at had a previous high of of GBP 963.50, with the high on Friday of GBP 964.74.

 

MA and TA, are something I am doing further research into at the Moment, so cheers for the tip!

 

 

Regards

 

ML

I think it was an all-time EURO high though!

[aliveandkicking]

Hi ALK,

 

Could you explain in laymans terms why anybody would swop the finite amount of gold for infinite amounts of printed QE 3 fiat money?

 

Why would people on mass sell their physical insurance Gold?

 

Re deflation Rees-Mogg in a piece in the times the other week stated Gold historically does very well in deflationary periods, so if QE3/4/5 failed to inflate, and remarkably deflation set in after numerous QE events what would you secure your investments in rather than Gold?

 

Regards

 

ML

 

You need to grasp that if a very highly liquid easy to sell asset is removed from the economy it is deflationary. The fact you are talking about infinite amounts of QE3 fiat money says fairly loudly you do not understand the implications of removing financial assets from the economy and issuing another financial asset in its place.

 

Generally speaking most holders of gold are going to assume the world does not end and continues in some form that is not massively different to the way things have been in the last few hundred years. If steel is at rock bottom prices and Gold is still at todays prices people are going to feel gold is over valued.

 

I would assume deflation in the past was happening at a time of a gold standard. In deflation you have to pay down your debts or you are busted to hell by falling income. Under a gold standard and deflation, gold is the asset most sought after to pay down your debts. If the government was printing the claim notes for gold there would not be deflation so these claim notes and gold are rising in price relative to steel because both are equally sought

after. Today in deflation people would be seeking fiat money or

government bonds which are more or less the same thing.

 

To totally avoid deflation the government will have to buy steel to prevent the price falling or

forget about debt levels and just spend spend spend. Currently it is not working out that way. But it might eventually.

 

Anyway come the next lehmans, the banking system, which is levered to hell, will need to sell

something to survive.

[Manual labourer]

You need to grasp that if a very highly liquid easy to sell asset is removed from the economy it is deflationary. The fact you are talking about infinite amounts of QE3 fiat money says fairly loudly you do not understand the implications of removing financial assets from the economy and issuing another financial asset in its place.

 

Generally speaking most holders of gold are going to assume the world does not end and continues in some form that is not massively different to the way things have been in the last few hundred years. If steel is at rock bottom prices and Gold is still at todays prices people are going to feel gold is over valued.

 

I would assume deflation in the past was happening at a time of a gold standard. In deflation you have to pay down your debts or you are busted to hell by falling income. Under a gold standard and deflation, gold is the asset most sought after to pay down your debts. If the government was printing the claim notes for gold there would not be deflation so these claim notes and gold are rising in price relative to steel because both are equally sought

after. Today in deflation people would be seeking fiat money or

government bonds which are more or less the same thing.

 

To totally avoid deflation the government will have to buy steel to prevent the price falling or

forget about debt levels and just spend spend spend. Currently it is not working out that way. But it might eventually.

 

Anyway come the next lehmans, the banking system, which is levered to hell, will need to sell

something to survive.

 

Hi ALK,

 

Please don’t be offended by the way I have scripted the reply!

 

"You need to grasp that if a very highly liquid easy to sell asset is removed from the economy it is deflationary. The fact you are talking about infinite amounts of QE3 fiat money says fairly loudly you do not understand the implications of removing financial assets from the economy and issuing another financial asset in its place. "

 

Ok QE,

 

My understanding :- Quantitative easing (QE) is an unconventional monetary policy tool used by some central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new money that it creates electronically. This action increases the excess reserves of the banks, and also raises the prices of the financial assets bought, which lowers their yield. In Japan the Bank of Japan targeted the quantity of reserves held by the banks, while in the United States the Federal Reserve has emphasized that their quantitative easing policy is targeting a credit easing in the business and household sector, so that the increase in reserves is a by-product rather than an objective of monetary policy. Quantitative easing can be used to help ensure inflation does not fall below target.

 

Printy PRINTY ? Creates inflation? Best hedge for Inflation?PM?

 

 

"Generally speaking most holders of gold are going to assume the world does not end and continues in some form that is not massively different to the way things have been in the last few hundred years. If steel is at rock bottom prices and Gold is still at todays prices people are going to feel gold is over valued. "

 

G/F and many more on here have stated they are not Gold BUGS. They hold gold and various other PM,s to protect themselves from printy printy inflation geared in by Central Banks, and as you say when the time is right and the Gold IS OVER VALUED they will exchange it for something else which in their opinion is undervalued agreed?

 

 

 

"I would assume deflation in the past was happening at a time of a gold standard. In deflation you have to pay down your debts or you are busted to hell by falling income. Under a gold standard and deflation, gold is the asset most sought after to pay down your debts. If the government was printing the claim notes for gold there would not be deflation so these claim notes and gold are rising in price relative to steel because both are equally sought after. Today in deflation people would be seeking fiat money or government bonds which are more or less the same thing."

 

 

Why would people want Printy Printy Fiat cash for other than everyday needs or paper IOU'S from potentially bankrupt governments?

 

"To totally avoid deflation the government will have to buy steel to prevent the price falling or forget about debt levels and just spend spend spend. Currently it is not working out that way. But it might eventually.Anyway come the next lehmans, the banking system, which is levered to hell, will need to sell something to survive."

 

 

How much physical gold did Lehman’s hold when they went under? Come the next Lehman’s or bigger nobody repeat nobody will want to sell their physical gold until the dust from sequential crashes settles agreed?

 

Why exactly is now not a good time to accrue a holding of PM'S as a form of insurance against more and more QE, and the possible high inflation or hyper inflation leading to the collapse of the fiat paper system?

 

Regards

 

ML

[aliveandkicking]

Hi ALK,

 

Please don’t be offended by the way I have scripted the reply!

 

"You need to grasp that if a very highly liquid easy to sell asset is removed from the economy it is deflationary. The fact you are talking about infinite amounts of QE3 fiat money says fairly loudly you do not understand the implications of removing financial assets from the economy and issuing another financial asset in its place. "

 

Ok QE,

 

My understanding :- Quantitative easing (QE) is an unconventional monetary policy tool used by some central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new money that it creates electronically. This action increases the excess reserves of the banks, and also raises the prices of the financial assets bought, which lowers their yield. In Japan the Bank of Japan targeted the quantity of reserves held by the banks, while in the United States the Federal Reserve has emphasized that their quantitative easing policy is targeting a credit easing in the business and household sector, so that the increase in reserves is a by-product rather than an objective of monetary policy. Quantitative easing can be used to help ensure inflation does not fall below target.

 

Printy PRINTY ? Creates inflation? Best hedge for Inflation?PM?

 

 

"Generally speaking most holders of gold are going to assume the world does not end and continues in some form that is not massively different to the way things have been in the last few hundred years. If steel is at rock bottom prices and Gold is still at todays prices people are going to feel gold is over valued. "

 

G/F and many more on here have stated they are not Gold BUGS. They hold gold and various other PM,s to protect themselves from printy printy inflation geared in by Central Banks, and as you say when the time is right and the Gold IS OVER VALUED they will exchange it for something else which in their opinion is undervalued agreed?

 

 

 

"I would assume deflation in the past was happening at a time of a gold standard. In deflation you have to pay down your debts or you are busted to hell by falling income. Under a gold standard and deflation, gold is the asset most sought after to pay down your debts. If the government was printing the claim notes for gold there would not be deflation so these claim notes and gold are rising in price relative to steel because both are equally sought after. Today in deflation people would be seeking fiat money or government bonds which are more or less the same thing."

 

 

Why would people want Printy Printy Fiat cash for other than everyday needs or paper IOU'S from potentially bankrupt governments?

 

"To totally avoid deflation the government will have to buy steel to prevent the price falling or forget about debt levels and just spend spend spend. Currently it is not working out that way. But it might eventually.Anyway come the next lehmans, the banking system, which is levered to hell, will need to sell something to survive."

 

 

How much physical gold did Lehman’s hold when they went under? Come the next Lehman’s or bigger nobody repeat nobody will want to sell their physical gold until the dust from sequential crashes settles agreed?

 

Why exactly is now not a good time to accrue a holding of PM'S as a form of insurance against more and more QE, and the possible high inflation or hyper inflation leading to the collapse of the fiat paper system?

 

Regards

 

ML

 

You will be able to show me you can think for yourself when you dont copy out wiki QE and tell me it

is your understanding.

 

However i cant see a problem about you wanting to get insurance if you are forcasting inflation

providing you can survive massive sells off in Lehman type events. The point i was making was that

a huge correction in Gold is quite possible. Part of the reason for that huge correction is that

most people are not correctly understanding the nature of QE - including the amateur enthusiasts

who are determined to edit Wiki.

[OzInvestor]

Alive & Kicking, have you read James Turk's 'The Coming Collapse of the Dollar'?

 

It is also worth hearing Jim Ricards this week on KWN. He discusses a Swiss gold backed franc. That could be a game changer in the FOREX and broader markets.

 

Regards.

[Errol]

a huge correction in Gold is quite possible.

 

Hopefully, yes! Cheaper gold!