GOLD

[romans holiday]

I would add that I think the run up in the gold price we have seen is down to it 'commoditiness'. i.e. its perception as an inflation hedge, a protector of wealth - but no different to other commodities at this stage. However, I do believe this is a necessary first stage if it is to be followed by a repudiation (or partial repudiation) of the $ - indeed this will be a process where it will be difficult to discern when it is one thing or another - and will only become clear when it has happened i.e. people finally don't want to accept your dollars any more.

 

EDIT: but it also assumes that people will choose gold instead of other forms of exchange - such as the Euro say. Such a decision may be based on confidence, ease of use, availability etc.

 

In complete agreement. Your description reminds me of an article I read a while back [wish I could find it] outlining the three [upward] phases of a bull market. First we have the smart money enter, then the institutional money follows [we may be just about to enter this phase], with lastly the public entering [the dumb money ] at the manic phase.

 

As for the Euro, I imagine it will become less attractive as the European economies falter. But as you suggest, the timeline for all of this could possibly be a good few years. Though that said, some black swan could surprise us all any morning.

[Steve Netwriter]

Simply too paranoid for me. It's hard to manipulate a market in short bursts but of course it can be done. But over long periods it would require constant action, almost impossible to achieve.

 

Also you need to think about the options of the manipulators. Whatever they were trying to achieve could almost certainly also have been achieved by allowing gold to grow steadily over time, but keeping a lid on it, so why keep it hugely below its natural rate at a level that would require constant intervention? They would be idiots if they had chosen that option, yet we are asked to believe they are evil geniuses.

 

I'd suggest the free market set the rate for most of that period.

 

You refuse to believe it because you are worried about being paranoid ?

 

[G0ldfinger]

http://goldismoney.info/forums/showpost.ph...postcount=15732

Bill,

I just wrote to Hannes Tulving in California. His company is one of the largest precious metals dealers in the country. I asked him what his experience is over the last few weeks during this brutal downdraft in the precious metals, and he wrote me back and said that everyone is BUYING, not selling, and that's why Tulving is temporarily out of several popular gold or silver coins, bars, etc. It's just one piece of anecdotal evidence, of course, but it tells me that despite the paper games on the CRIMEX and among the metals shares, the public isn't buying into the "strong dollar" hype.

['Green'Investor]

Increasing numbers of "out of stock" coins over at Bairds&Co.

[marmite]

Increasing numbers of "out of stock" coins over at Bairds&Co.

 

Yes I noticed that. The 2007 Britinnias ran out on monday I think.

 

A lot of sellers got flushed out at the begining of the year with $1000 gold and the new investors just hoovered them up.

 

With all the bad news, if you have been sitting on coins for years why would you sell now before October

 

It amazes me that there are not more shortages, it just shows just how much gold is out there or how little interest the majority of the population takes in it

 

[bitbigt]

Gold versus M3. Not exactly expensive, that gold.

I wonder if it wouldn't be more informative to first divide M3 by the global population - on the basis that money will scale populations grow whereas gold does not.

[G0ldfinger]

I wonder if it wouldn't be more informative to first divide M3 by the global population - on the basis that money will scale a populations grow whereas gold does not.

Optimally, gold would as well. And isn't gold inflation in line with global growth in population (2%)?

[bitbigt]

Optimally, gold would as well. And isn't gold inflation in line with global growth in population (2%)?

Your chart is currently based on the logic that: if you double the number of people (and so double their GDP and M3) then they'd all go out and spend an equal amount of money on gold which has been mined at twice the rate.

 

An even more bullish case would be made if you assumed the logic that: if you double the number of people (and so double their GDP and M3) then they'd all go out and spend an equal amount of money on gold which has NOT been mined at twice the rate (since the planets resources are limited) OR they even spend more on gold than before, because demand starts to exceed supply.

 

I was suggesting a plot of the worst case scenario for golds bull case: if you double the number of people (and so double their GDP and M3) then they'd spend no more AS A GROUP on gold. [i agree this seems less believable logic]

 

For this last option: If the population figures per year aren't available, I guess we can just say an approximate doubling, which means the end of your chart would be twice its current height. ...still showing gold as not overpriced, and that's the worst case and hard-to-believe one of the three rationalities presented above

[Magpie]

No one wants to beleive in the bogey man

 

But www.gata.org would disagree that he doesn't exist and they have some very strong arguements

 

I believe in the bogey man up to a point, and don't dismiss all of GATA's arguments. But I think the interventions are more likely to be occasional and focussed and that any cartel with any sense would avoiding trying to hold gold at 50% of its natural market value for a period of decades. The alternative theory, that the gold price is completely manipulated and has been throughout the last two and half decades, I find implausible. Markets are pretty hard to buck indefinitely.

 

[Magpie]

You refuse to believe it because you are worried about being paranoid ?

 

No, because I believe it is a paranoid theory. And that the conspiracy it alleges is far too elaborate and unnecessary for the cartel to have undertaken it.

[bitbigt]

Some charts posted here yesterday showed how well gold has tracked EUR:USD - but only since the US started lowering interest rates this last year or so.

 

Money week has today written an article on how the EURO is about to tank...

 

*******************************************

We've been more than a little downbeat on the outlook for most 'developed' economies for a good while now. So it's been no great surprise to see that the rest of the financial pundits are finally coming round to the idea that the global economy is heading for trouble.

 

But while there seems to have been more or less a straight fight between the States and us as to who actually plunges into a recession first, within the last few weeks another strong contender for this dubious prize has emerged. The eurozone now looks like it could get a dose of recession before either the US or the UK.

 

That means the euro could well be about to fall off its perch and join the ever-lengthening list of the world's ill currencies. That'd be good news for the dollar - and maybe even the pound

 

Anyone who has been keeping an eye on Spain's troubled economy won't be too surprised to see that the eurozone is really struggling. The Hispanic housing market is collapsing - sales are down 34% from the peak, say the latest official figures - and the banking system is on the brink, according to Morgan Stanley.

 

"A momentous economic slowdown in Spain is now under way, though just in the beginning stages, with the bulk of the pain to be suffered in 2009", says the investment bank, going on to warn that "the probability of a crisis scenario similar to the early 1990s is increasing".

 

Meanwhile unemployment has already reached 10.4% and the country's finance minister recently admitted that: "the economic situation is worse than we all predicted" we thought it would happen slowly but it has hit fast".

 

It's not just Spain. In Ireland too, house prices are tumbling, with Dublin seeing double-digit falls. New housebuilding has hit a five-year low. And over in Italy, things aren't so hot on the economic front either. Last weekend Prime Minister Berlusconi said he would now be slashing government spending as tax revenues have slumped.

 

But let's be fair here. Trouble in these countries isn't exactly a surprise - Ireland was heading for trouble from the moment it joined the eurozone, as low interest rates poured petrol on an already blazing economy. Spain was the same. And as for Italy, it's rarely far from economic strife.

 

Surely the countries at the real core of the eurozone - France and Germany, in other words - are looking a bit more stable? Well, it seems not. After holding out pretty well during the first half, by mid-July, business confidence was declining abruptly, as the German ZEW economic sentiment indicator suddenly plunged, unexpectedly, to a record low. French business confidence has also dropped away.

 

Then last week, the overall eurozone activity survey plummeted much more sharply than the 'experts' had expected, to its lowest point since March 2003.

 

What's more, European companies are starting to default on their debts, says Dresdner Kleinwort, which believes that as many as 6-7% of corporate borrowers may fail to pay their debts on time within the next year. That's a tenfold increase in the estimate since June and, says Moody's Investors Service, the highest default rate since July 2003. Add in Tuesday's 0.6% drop in retail sales for the region, and the picture we're seeing emerge isn't at all pretty. Because things have got worse so fast that the eurozone now looks like a racing certainty to beat us Brits into recession.

 

It all points to a sell-off in the euro. Sure, the alternatives may not be great, with both the US and the UK apparently competing to see which can prove the bigger basket case, but to quote one of the oldest market truisms around, currencies are a 'zero sum' game.

 

If one falls, another has to rise. And while it's very hard to make a convincing case for the dollar, or indeed the pound, all the signs from the continent are that the euro faces even more problems.

 

Pimco bond fund manager Bill Gross recently said he sees no reason for "the euro's 25% to 30% overvaluation against the US dollar", while BNP Paribas also declared: "we're turning incredibly bearish on the euro." It's starting to feel like the dollar, currently trading at around $1.55 to the euro, might just be bottoming out against its continental European cousin. And maybe sterling, which over the last five years has tended to move more or less in line with the buck, could get a ride on its coat tails.

 

*******************************************

 

...I personally think the very different interest rates in Eurozone and US, and the different remit of the two CBs (US to promote growth, ECB to fight inflation) means that the Dollar and Euro are now in the ratio they should be. Yet BOTH will weaken further relative to an international basket of currencies.

[bitbigt]

I believe in the bogey man up to a point, and don't dismiss all of GATA's arguments. But I think the interventions are more likely to be occasional and focussed and that any cartel with any sense would avoiding trying to hold gold at 50% of its natural market value for a period of decades. The alternative theory, that the gold price is completely manipulated and has been throughout the last two and half decades, I find implausible. Markets are pretty hard to buck indefinitely.

I think it was me that posited the 50% figure yesteday.

 

But I did not say PoG had been artificially held so low for decades (and I agree it hasn't). I think that has all happend in the last two or three years, and especially the last 12 months. This is the period where a major inflation problem was on the horizon or (more recently in your face) and the powers that be wanted to suppress this. They do it by manipulating the inflation statistic itself, and by suppressing indicators of inflation - ie, gold price.

 

...and I think they plan to keep doing it until the inflation monster is back in its box, and golds 'natural' price has fallen to the acceptable levels where they can afford to let market forces take over again. This is a wise and believeable plan for the economy, IF you believe they have the resources to fight this absolutely massive inflation monster. If they do, then gold will still rise, but just no where near as much as it w/should have. If they do not, then a massive peak in golds price will occur as market forces swamp the PPT manipulations. ...and I predict this happenning in the next 6-12 months!

[Magpie]

I think it was me that posited the 50% figure yesteday.

 

But I did not say PoG had been artificially held so low for decades (and I agree it hasn't). I think that has all happend in the last two or three years, and especially the last 12 months. This is the period where a major inflation problem was on the horizon or (more recently in your face) and the powers that be wanted to suppress this. They do it by manipulating the inflation statistic itself, and by suppressing indicators of inflation - ie, gold price.

 

...and I think they plan to keep doing it until the inflation monster is back in its box, and golds 'natural' price has fallen to the acceptable levels where they can afford to let market forces take over again. This is a wise and believeable plan for the economy, IF you believe they have the resources to fight this absolutely massive inflation monster. If they do, then gold will still rise, but just no where near as much as it w/should have. If they do not, then a massive peak in golds price will occur as market forces swamp the PPT manipulations. ...and I predict this happenning in the next 6-12 months!

 

I was responding more to cgnao and those who seem to think the market has been manipulated consistently over many years. My original point, which was disputed, was that $35 gold in the late 1970s was a fairly extreme suppression of the price, by formal means, because the price was held at that level for the best part of 40 years, openly. No wonder it shot up through the 1970s once they allowed a more free market, but also that was what led to the hysteria of the 1980 peak.

 

What you say above seems far more plausible to me - I can credit them targeting gold as well as inflation figures to try to suppress the reality of how much our money is being devalued. Inflation figures are of course more of a long term issue as they probably consistently underplay the extent of real inflation, if only by a modest amount each year, but it all adds up.

 

[romans holiday]

I believe in the bogey man up to a point, and don't dismiss all of GATA's arguments. But I think the interventions are more likely to be occasional and focussed and that any cartel with any sense would avoiding trying to hold gold at 50% of its natural market value for a period of decades. The alternative theory, that the gold price is completely manipulated and has been throughout the last two and half decades, I find implausible. Markets are pretty hard to buck indefinitely.

 

Voltaire comes to mind; If the cartel did not exist, it would be necessary to invent it/them.

[G0ldfinger]

Dear Subscriber

 

The new Halifax numbers show a -8.8% house price crash year on year in July. This is seasonally adjusted. I read the real number is already in the double digits.

 

This is catastrophic (for houseowners, banks, the UK economy, but not necessarily for you). The average home owner oozes now £22,000 in equity every year. And, I can't stress this enough, this is only the very beginning. I am looking forward to houses losing 30%-50% of their value over the course of this meltdown. In some extreme cases it will be more.

 

Ceterum censeo, Hadrian's Wall won't stop this crash.

 

What does it mean? Northern Rock was only the beginning. I expect the nationalization (i.e. bankruptcy) of banks like Barclays, HBoS and RBS over the years. All amounts of money necessary to keep these turds afloat will be created. Our shiny yellow friend will be your lifeboat in this financial holocaust.

 

British Gas has raised prices by 35%. Talking of printing money to paper over this mess. If you don't get it now, when will you finally get it?

 

Meanwhile, the US is in complete meltdown mode, while the general populace funnily enough still seems to ignore the fact. IndyMac is history, Fannie and Freddie are bankrupt, the whole system is tipping over. Even Al(addin) Greenspan has admitted: this is a once in a century event.

 

Congrats! You have a frontrow seat.

 

It is our opinion that 75% of the population will be wiped out financially (in comparison to where they stood during the boom times). Gold and silver will be among the few things that will hold or increase in value, despite of all the volatility in the markets.

 

The Greater Depression has begun 09/08/07. We are only one year into it. While the global central banks run their printing presses like mad, the general populace (the Sheeple) and therefore the economy are having a Wile E. Coyote moment, hovering over the precipice.

 

Don't be fooled. There is possibly not much time left to protect yourself.

 

You read it here first.

 

Sincerely,

Doom & Gloom Update Team

 

DISCLAIMER: All of the above could be rubbish and should be seen as mere personal opinion anyway. Always seek advice by a qualified investment advisor before making investment decisions. Do your own due diligence.

[Magpie]

Voltaire comes to mind; If the cartel did not exist, it would be necessary to invent it/them.

 

 

Anyway, I should get on with some work. The cartel were in the office overnight making a right mess of my desk.

 

[Dispassion]

Some charts posted here yesterday showed how well gold has tracked EUR:USD - but only since the US started lowering interest rates this last year or so.

 

You asked for raw data in a previous post, I don't have it, but I'm sure it can be found.

The correlation goes back further than one year, but has become stronger since the credit crisis took effect, for the moment I'm of the opinion that gold is acting as a magnifier on EUR:USD. I think it could take time for this correlation to leave the markets as I expect that it's ingrained in trading strategies.

 

As major currencies weaken together, I'd naturally expect gold to trade more like commodites and out perform them in a recession. The question, for me at the moment, is how long gold will take detach from the the Euro dollar ratio if the Euro is to weaken further against the dollar.

[G0ldfinger]

You asked for raw data in a previous post, I don't have it, but I'm sure it can be found.

The correlation goes back further than one year, for the moment I'm of the opinion that gold is acting as a magnifier on EUR:USD. I think it could take time for this correlation to leave the markets as I expect that it's ingrained in trading strategies.

[romans holiday]

 

Is that the Vincent Van Gogh version?

[Dispassion]

 

Good chart!

Showing clearly that the correlation between Eur:Usd and gold began at the start of 2006 and as held very well since then.

[wrongmove]

Is that the Vincent Van Gogh version?

 

 

Pardon my ignorance, but what do the colours represent - I assume time?

 

 

 

[romans holiday]

 

Pardon my ignorance, but what do the colours represent - I assume time?

You're asking the wrong person. I am not a chartist... just an artist.

[bitbigt]

You asked for raw data in a previous post, I don't have it, but I'm sure it can be found.

The correlation goes back further than one year, for the moment I'm of the opinion that gold is acting as a magnifier on EUR:USD. I think it could take time for this correlation to leave the markets as I expect that it's ingrained in trading strategies.

I think we must be careful to distinguish causal from correlative associations (that's actually a large part of my day job). In the former, A causes B, and so they track each other. In the latter, A and B track each other by pure chance or because they are both being influenced by some other factor C.

 

When it comes to PoG ('A') and EUR:USD ('B'), I suspect we're looking at a correlative association, where factor C is a combination of influences such as USD strength (vs basket of currencies) and POO, and.... [fill in the blank]

 

Here's some graphical evidence of that, for the US Dollar Index (USDX)...

http://hgvbase.bioc.le.ac.uk/temp/GoldDriver.bmp

[sorry its tatty, I don't have access to other tols from this 'puta! - perhaps someone else could make a better version, going back further in time]

 

Bottom line - watch USDX, don't watch EUR:USD to better predict the price of gold

[marmite]

Testing that $875 Angel again this afternoon

 

Where the bad news coming from today, isnt oil up ??

[Gatesy]

Testing that $875 Angel again this afternoon

 

Where the bad news coming from today, isnt oil up ??

 

Inevitable I think regardless of other markets. Well, who'd have thunk it, silver pretty much hitting 52WMA

 

Edit: I so hope that;s the last of the falls.......