“I read one article this past week that stated that only 4 gold shorts made up the vast majority of all shorts. This compared to thousands making up the longs
Looks like my "masses are asses" theory holds true again.”
If anyone ever had any doubt about how powerful the manipulation machine in Washington and Wall Street are, today’s markets are an excellent example, and yes the” masses are asses” if they fall for this short term market manipulation to get the, “ economy in shape” for the up coming elections!
National elections are almost always about the, “economy stupid” , today’s American public is fixated on short-term memory. They care only about their little world. Regardless what the news media says, most Americans give little thought to the war in Iraq, the nuts in Iran, or the other hot media issues that blast across the airways day and night. What they care about is how much does gas cost, how their 401k’s are doing, how much is their monthly mortgage payment, and who’s coming to the bar-b-q on Saturday.
So just a few short weeks before the elections the powers that be are going to drive commodities down, lower the price of gasoline, run the stock market up, lower home mortgage rates, and strengthen the dollar.
What has really changed? NOTHING.
Will any of these manipulations last more than a few weeks? NO.
By Matthew Benjamin and Mark Drajem Sept. 13 (Bloomberg) Almost half of Americans described the economy as doing badly, including 21 percent of those who identify themselves as Republicans, according to a poll conducted July 28 to Aug. 1 by Bloomberg News and the Los Angeles Times.
Danielle DiMartino: Dallas: 10:42 PM CDT on Monday, September 11, 2006 For years, investors have shrugged off the swelling trade deficit as yet another sign of the strength of the U.S. consumer. "So what if we buy a ton of imports?" they say. "At least we can." The trade deficit – which will be reported for July this morning – should come in at about $800 billion this year.
By Joe Richter Sept. 12 (Bloomberg) -- The U.S. trade deficit widened more than forecast in July to a record $68 billion as imports reached an all-time high and exports declined for the first time in five months.
Let the good times roll:
Credit-card debt alone spiked from about $250 billion in 1992 to $804 billion in 2005.
To appreciate how much homes became “ATM machines” for Americans, one has to only recognize that Americans borrowed just $11 billion in home equity in 1995, but by 2005 borrowing had soared to $243 billion.
U.S. spending has reached 107 percent of GDP, requiring an $800 billion annual infusion of foreign money and even higher levels of debt to prevent a slowdown.
"To appreciate how much homes became “ATM machines” for Americans, one has to only recognize that Americans borrowed just $11 billion in home equity in 1995, but by 2005 borrowing had soared to $243 billion."
And we worry about being buried in coins?
While we are at it...gold is very quiet and cheap and in a trough. The Kitco site is quiet with no disclaimers on the slowness of transactions because of pressing activity. The usual threads about how high will it go, should I buy now, what's the upside, all gone. All's quiet...yummmy.
<< <i>Lets come up with a simple plan to get us out of the Middle East.
Here is mine,
We tell the Iraqis we want a ninety nine-year lease on several thousand acres in Iraq next to the Iran border.
We want a no fly zone within several hundred miles of the base for the term of the lease.
We are going to build a large base there. We also want a ten-year agreement on oil at $45 per barrel.
We are going to give the current government 6 more months to take control of their country, after that we move our troops to the base, and let them have a civil war. Naturally the right side will win or we will step back in for another 3 weeks.
We sell our bases in Germany back to the Germans for a few billion, and use that money to help the current Iraqi government, and build the new base.
We move all the men and equipment including the nukes out of Germany to the new base, and point everything at Iran.
We tell the Iranians to build whatever they want. but if they ever shoot off a single missile we are going to blow ALL their installations to hell.
We set up al-American TV. Stations on the base and broadcast propaganda day and night to Syria and Iran.
We cut all foreign aid to everyone except food supplies for the starving, and tell our enemies if they, or they people, attack us any where in the world we are going to take it out on their governments, and we are not rebuilding anything.
If this is a war on terror lets do like we did with the Soviets and park the planes and booms on their doorstep. >>
NEW YORK (CNNMoney.com) -- The number of homes entering into some stage of foreclosure is surging, according to a survey released Wednesday.
In August, 115,292 properties entered into foreclosure, according to RealtyTrac, an online marketplace for foreclosure sales. That was 24 percent above the level in July and 53 percent higher than a year earlier.
Where foreclosures are jumping Year over year gain in homes in foreclosure. Click for more stats on each state. Nevada: Up 255% California: Up 160% Florida: Up 62%
It was the second highest monthly foreclosure total of the year; in February, 117,151 properties entered foreclosure.
Are you saying that speculators in areas that previously had a high rate of price increases are now in trouble as the market flattens or decreases in those areas? That has been predicted for a while.
The trouble begins when people who have been in their homes 10 years begin to get into trouble.
The practice of interest only loans with a variable rate for 100 percent of the purchase price also contributes to the raised foreclosure rate.
Retired United States Mint guy, now working on an Everyman Type Set.
<< <i>Who are they? They must have super deep pockets and access to great credit. They too will be crushed. No one will stop gold until the deficit and balance of payments are rectified. >>
Goldman Sachs JP Morgan Sumitomo Corporation Mitsui & Co., Ltd.
This is just the Tokyo exchange. As you can see, 3 of these have over 130,000 contracts short at 100oz each. Thats 13 million ounces they have sold but don't own. You can find a similar one for COMEX somewhere.
Keep in mind that ex-Goldman Sachs now controls the US Treasury with both the Secretary (Paulson)and Undersecretary positions. Can you get an understanding why they just posted record profits yesterday. The fix is in. They know what will happen before it does. Don't expect them to get crushed too soon.
BTW
If the price gets too high and his exGS buds get in trouble then he will just sell more US reserves to bring the price down. There is no accountability and there has been no audit of the US gold reserves in years. The sales don't have to be disclosed either, they just dump in in Europe or somewhere.
MARK HULBERT Gold's stunning plunge Commentary: Price drop didn't surprise contrarians
Last Update: 12:01 AM ET Sep 13, 2006
ANNANDALE, Va. (Market Watch) -- Gold's plunge over the past week has been nothing sort of stunning. But contrarians were not surprised, seeing in bullion's drop a text book case of how sentiment can affect the markets. Contrarian analysis, for those of you who are not regular readers of this column, is based on the notion that the markets rarely accommodate the majority. Market tops are characterized by extreme optimism, while bottoms are marked by excessive pessimism and despair. A corollary is that bull markets like to climb walls of worry, while bear markets descend slopes of hope.
A week ago closed at $635.40 per ounce. Over the next five trading sessions it fell to $590.70, a decline of more than 7%. Even at the $635 level at which bullion was trading on Sept. 6, of course, bullion was still well below the $725 level that an ounce of gold fetched as recently as last May. Yet, even so, the editor of the average gold timing newsletter was significantly more bullish on September 6 than he was in mid May.
This contrast is what was so concerning to contrarians, since it suggested an undercurrent of optimism, if not exuberance, among the gold market timers. For specifics, I turn, as I usually do, to the latest readings of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which represents the average gold market exposure among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. On Sept. 6, the HGNSI closed at 62.5%. On May 12, in contrast, when gold bullion was trading at $725 per ounce, the HGNSI closed at 51.8%. This suggested to contrarians that the path of least resistance for the gold market would be down. This isn't to say that sentiment is the only factor in gold's recent plunge. Obviously, strength in the dollar and weakness in oil played a big role. But contrarians believe that if the sentiment picture had been more positive, then gold's price would not have reacted in such a big way to those other factors. By the way, the contrast between the early September and mid May sentiment levels was not the only reason that contrarians were concerned a week ago. Another was how gold market timers reacted last Thursday, the first day of gold's major break, when an ounce of bullion fell by $14. The HGNSI didn't budge, staying at 62.5%. This betrayed a lot of stubborn bullishness on the part of the gold timers, and provided even further confirmation that gold was on shaky ground.
But enough of this recap of the last week; where does the HGNSI stand today? It closed on Tuesday of this week at 10.7%, indicating that gold timers has now begun to throw in the towel, their stubbornness of last Thursday notwithstanding. Is their declining bullishness enough to persuade contrarians to step back up to the plate? Not yet, but the HGNSI's 51.8 percentage point decline in four trading sessions is definitely a big step in the right direction.
The reason that contrarians are not yet inclined to step up to the plate is that gold timers are still not as bearish as they were at correction lows set earlier this year. At gold's mid-March low, for example, the HGNSI stood at minus 19.6%, indicating that the average gold timer then was actually net short the gold market. Furthermore, in the wake of gold's correction in late May off its $725 rally high, the HGNSI quickly dropped to 1.8%. Indeed, the HGNSI got this low on May 22nd, when gold bullion was still trading for over $650 an ounce.
It bespeaks a still-too-high level of bullishness among gold timers that they are no more bearish today despite bullion between $60 per ounce cheaper now than then. According to contrarian analysis, a meaningful bottom will be formed when the average gold timer has thrown in the towel, having given up on gold. It would appear that we're no where close to that point yet.
“I read one article this past week that stated that only 4 gold shorts made up the vast majority of all shorts..."
If anyone ever had any doubt about how powerful the manipulation machine in Washington and Wall Street are, today’s markets are an excellent example
Hardly. Saint, whether or not there was a "manipulation machine" is irrelevant today, because volume completely dried up. On the other hand, if you want to argue that the gold price is artificially high due to manipulation, you might have an argument there. Because the number of open NYMEX contracts dropped by thousands today, but only hundreds yesterday, meaning what little buying volume there was today was to a great extent all short-covering, probably when the December contract spiked to $600.
Looks like a long way down to go.
Salute the automobile: The greatest anti-pollution device in human history! (Just think of city streets clogged with a hundred thousand horses each generating 15 lbs of manure every day...)
<< <i>Hardly. Saint, whether or not there was a "manipulation machine" is irrelevant today, because volume completely dried up >>
irrelevent???
Yesterday there were just a few major players who sold huge shorts to start a stampede of program trades by longs. The longs ran for cover and the shorts have slowly moved in to start some covering.
When the short side of the market is in the hands of less than 5 major players who act in tandem, how can you not call this a "manipulation."
“Keep in mind that ex-Goldman Sachs now controls the US Treasury with both the Secretary (Paulson)and Undersecretary positions.”
Market manipulation for the election? You decide.
Do you think that what started out as a way to keep markets from going into a panic has now become a group that shapes the economy to look like what it chooses?
Peter G. 9/13/06 “We all know what happened by October 19, 1987. Most people forget (or simply weren’t in the business or investing back then) that October 20th was looking even bleaker than the 19th. By early afternoon, many of the DJIA stocks were still not opened. The DJIA was off almost 200 points and blood was truly running through the streets. The regulators shut the S&P 500 futures pit in Chicago in part because it was the selling of futures related to program trading that was causing even more selling. However, the Kansas City Board of Trade and its S&P 500 Futures contract remained open. Its volume was normally peanuts compared to Chicago’s but an event would unfold in 20 minutes that I believe literally helped change our future.
For reasons no one has ever truly known or cared to find out, several of the largest financial institutions in the world decided virtually at the same time to buy massive amounts of S&P 500 futures contracts in Kansas City. In 20 minutes, that buying caused the S&P Futures contract to rise the equivalent of 1700 DJIA points. This caused the sell programs to become buy programs, which caused massive buying of the major stocks that made up the DJIA and S & P 500. All the major stocks began trading and the market finished up 170 points.
Since that time, there have been a growing number of people who believe the U.S. government created what has been dubbed, “The Plunge Protection Team” (PPT). Many of the same critics of gold manipulation were also pooh-poohing stock market manipulation.
Mr. John Crudele of the New York Post, has faithfully stayed on the PPT story. This past June 13th, he wrote an article entitled, “A Plan For A Plunge”. In it, Crudele discussed how a 1997 Washington Post article basically “explained the government’s secret role in the stock market.” He went on to note how the President “confers with members of his Working group on Financial Markets – the secretary of the Treasury and the chairman of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission.” He noted that the article pointed out that “an outline of the government’s plan emerges in interviews with more than a dozen current and former officials who have participated in meetings of the Working Group”, which it says was established after the market crash in 1987.
I find it most intriguing that Mr. Crudele goes on in his column to report that Treasury Secretary Hank Paulson was a member of the PPT.
Two weeks later, Mr. Crudele published another article entitled, “George Let Plunge Slip.” In it, he notes that former President Clinton senior advisor George Stephanopoulos made a bombshell statement on September 17, 2001, the day the stock market reopened after the 9/11 attacks. He quotes it verbatim:
“And perhaps the most important, there’s been – the Fed in 1989 created what is called the Plunge protection team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges, and there- they have been meeting informally so far, and they have kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem."
At the guidance of the Fed, all of the banks got together when that started to collapse and propped up the currency markets. And they have plans in place to consider that if the stock markets start to fall.”
Federal Reserve Chairman Ben Bernanke admits there’s a PPT in Congressional testimony!
FEDERAL Reserve Chairman Ben Bernanke revealed that the secretive Plunge Protection Team meets several times a year, but he dodged a congressman's inquiries about what the group does and whether minutes are kept of those meetings.
Here's some of the exchange that occurred between Bernanke and a Rep. last Thursday at the House Financial Committee hearings.
Rep. : Good afternoon, Chairman Bernanke. I have a question dealing with the Working Group on Financial Markets. I want to learn more about that group and exactly what authority they have and what they do. Could you tell me, as a member of the group, how often they meet and how often they have actions? And have they done something recently? And are there reports sent out by this particular group?
Bernanke: Yes, congressman. The president's working group was convened by the president, I believe, after the 1987 stock market crash. It meets irregularly. I would guess about four or five times a year. But I'm not exactly sure.
Rep.: The reason this came to my attention was just recently there was an article that actually made a charge that out of this group came a position that interfered with the price of General Motors stock. Have you read that? Or do you know anything about that? Bernanke: No sir. I don't.
And we'd also like to know who makes decision for the group, politicians or guys on Wall Street. Don't misunderstand, Mr. Bernanke. I'm not saying what the group is doing is wrong. But why should firms like Goldman Sachs - from which two of the last four Treasury secretaries have come - be in a better position than anyone else who gambles in the stock market?
<< <i>15 more months until millions of the Boomers each year begin to settle in retirement. It will be interesting to see how many second homes get unloaded, as time runs out on the boomers clock. What do you think we should be investing in now that Boomers will want later? Equities , both domestic and a good slug of int'l.
Mr. Gross' counter: "In financial terms alone, Laurence Kotlikoff, a Boston University economist, has estimated the unfunded liabilities associated with health care and retirement amount to $80 trillion, over seven times our annual GDP!" >>
A big problem I see more and more individual responsibility to meet. That means better planning on the part of most people.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
I’ll take that condo just put it on my credit card!
Ha Ha Ha Ha Ha
9/15/06 Banknet/360 AmEx Allows Customers to Charge Condo Down Payments –
American Express Co. will begin allowing select customers to use its credit cards to charge their condominium down payments. Currently, the service will be limited to buyers of luxury condos in Manhattan, but plans to expand the program, as American Express rolls out the program with New York real-estate firm Moinian Group for one its projects under construction.
I havent posted any charts or market analysis in a while so I thought now may be a good time.
The US dollar has broken down quite hard from its highs in 2001-2002 losing roughly 1/3 of its value. It has been in a relatively tight trading range over the last 21 months and while still in a downtrend it appears that a larger move is about to occur. The indicators point to a breakout to the upside, but I would caution that nothing is confirmed.
This chart is of the yield on 10 yr US Treasury. It is still in an uptrend from the lows in 2003 but still in a downtrend from the highs in 2000 and earlier. Overall rates are basically the same as they were in 2001. After a 50 basis point drop in rates overt the last months--resulting in an inverted yield curve-- rates may be trying to work their way slightly higher. However I would caution that this bounce may be short lived as I do not believe the FED will be raising rates anytime soon as shown in the next 2 charts.
After a doubling of commodity prices over the past 5 years, the uptrend has now been convincingly broken. While it may not mean that inflation is dead, I think the markets believe it to be dormant. At the very least a ceiling has been put in place. The index is now oversold, so a bounce would not be out of the question, but I doubt it will be a resumption of the uptrend.
Gold has a rather interesting chart. After a nice sustainable uptend from 2001 to late 2005 it went parabolic in 2006 and now appears to be reverting back to its uptrendline. The accelerated uptrend is still intact but just a little more selling pressure--or lack of buying pressure--would break this line and project a target of $500--maybe a bit lower.
Overall, it seems the market is not very concerned with inflation. Recently China has said they expect to import 23% less copper next year and today OPEC reduced their oil demand forcasts for next year. They look for less demand next year than this year. All indicators project a slowing worldwide economy.
This analysis should not be deemed a financial recommendation, but rather just the ramblings of a poor slob living in the woods.
Now is very early in the game for watching food commodities...grains and such, but a good time to start watching none the less. With the rush to expand our biofuels capacity, we are giving a nitro injection to the agriculture industry in the US. The small farmer to the conglomerates...everybody gets some of this and it is expanding like a mushroom cloud. This expansion will help reduce farming subsidies, get farming back into the good profit margin situation, maintain our land bank savings, and give us a huge hammer in the feeding the world situation, reduce the national deficit, and restore our rural population base. I maintain that you can't grow corn in the desert and that can translate into a changing of the guard. Eastern countries are selling oil for food commodities. That is how they are feeding their people right now.
All these mesopotamian types that are sticking that gas nozzel up our * and causing all this international strife are going to be needing some food. Those folks may like to go into the streets and burn things at a moments notice but wait till their food gets cut short...a lot! We will be burning their corn in our gas tanks and at the same time we won't need as much of their oil for refining We also won't be having much grain for export. At this point, their money is of no value because there just won't be any excess capacity to ship to them, we'll be busy burning it in our tanks. It's a beautiful plan and a necessary correction to our economic strategy. This will take a few years, but maybe only 3 or 4. I believe that we can get the jist of the situation by watching food commodities indexes, just skim the trends and we will understand the impacts/results of this shifting of the grain distribution. We are still the world's breadbasket. Maybe they could just eat oil sandwiches...without the bread.
The status of "inflation" cannot change overnight from "concerned" to "unconcerned." The liquidity behind the inflation is still there and still being created. Temporary swings in mood are just that, temporary. Once Paulsen's window dressing is in place for the fall elections, and the republicans keep their offices, the market action will resume with a bit less manipulation. The PPT has been toying with the markets since Reagan authorized the creation of such a team via a Federal statute. Their workings have become more public knowledge in the past few years. Wouldn't it be nice to be a corporation with the PPT in your back pocket!
McHugh describes a large triangle pattern coming to a head that should lead to a breakout in gold in the near term. Either way it's going to break one way or the other. Since this bull is not yet declared dead, I'm with Sinclair, Monty, McHugh, Schiff, and the others. "To the moon Alice!" Worthy coins will of course follow.
<< <i>The status of "inflation" cannot change overnight from "concerned" to "unconcerned." The liquidity behind the inflation is still there and still being created. Temporary swings in mood are just that, temporary. Once Paulsen's window dressing is in place for the fall elections, and the republicans keep their offices, the market action will resume with a bit less manipulation. The PPT has been toying with the markets since Reagan authorized the creation of such a team via a Federal statute. Their workings have become more public knowledge in the past few years. Wouldn't it be nice to be a corporation with the PPT in your back pocket!
McHugh describes a large triangle pattern coming to a head that should lead to a breakout in gold in the near term. Either way it's going to break one way or the other. Since this bull is not yet declared dead, I'm with Sinclair, Monty, McHugh, Schiff, and the others. "To the moon Alice!" Worthy coins will of course follow.
roadrunner >>
Depends on oil.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
May or not depend on oil. Not all commodities are linked. I've seen at least one reference that feels gold will move opposite to oil in the near future. While gold has been taking it on the chin from May to September, oil had been moving up. There are so many forces at work, not to mention manipulation, that linking one item off another is not always the way it works.
The Dawson Declaration - Gold Rush 21 Submitted by cpowell on Tue, 2005-08-09 07:00. Section: Essays Tuesday, August 9, 2005
The Gold Anti-Trust Action Committee's Gold Rush 21 conference concluded today in Dawson City, Yukon Territory, Canada, by adopting the Dawson Declaration, appended here:
THE DAWSON DECLARATION
Resolved by the Gold Anti-Trust Action Committee's Gold Rush 21 conference at Dawson City, Yukon Territory, Canada, on Tuesday, August 9, 2005:
Having come to the heart of gold country to inquire into the condition of the monetary metals and the industry that produces them, we conclude and declare:
While governments affect to have no use for them anymore, the monetary metals are of greater importance than ever because of their ability to hold value independent of arbitrary government power. So ownership of and free trade in the monetary metals are basic human rights against expropriation.
While the monetary metals are unique as assets of intrinsic value that cannot default because they are no one's liability, this also has become their crippling weakness. For in being no one's liability, the monetary metals have had -- unlike their competitors, government-issued currencies -- no sovereign defenders.
Indeed, for years now the monetary metals have had few defenders at all, the gold mining industry's trade organization having been dominated by short-selling corporations that have obtained metal at the sufferance of the issuers of government currencies, the central banks. This has left the monetary metals almost helpless against competing currencies.
Since they issue competing currencies, governments have a powerful interest in suppressing what is perceived as the value of the monetary metals. Governments have achieved this suppression through strategic and often surreptitious lending and dishoarding of their metal reserves. While it is seldom officially acknowledged as such, this is the manipulation of currency and commodity markets that should be free and transparent.
This manipulation of the currency and commodity markets has become the primary mechanism of imperialism, projecting and maintaining the power of the international reserve currency, the U.S. dollar, and its issuer, the U.S. government, and compelling other countries to sell their exports for less than fair value.
To assist in the suppression of the monetary metals and at the urging of the International Monetary Fund, IMF member governments engage in deceptive accounting of their gold, deliberately confusing gold in the vault with gold that has been leased or swapped or whose ownership otherwise has been impaired.
In the absence of a government currency's direct and fixed convertibility to the monetary metals, the only purposes for government reserves of the monetary metals are currency intervention and market manipulation. To preclude this manipulation, governments should sell their reserves openly by a date certain, except metal needed for coinage.
As defenders of the monetary metals, we do not necessarily maintain that they should be the only means of exchange. We do not worship the golden calf or the silver bull; we are not idolaters. To the contrary, we believe that individuals and nations alike have the right to decide what they will use as money, even as we acknowledge that freely traded gold and silver are simply the most convenient guarantors of economic liberty.
Accordingly, we will:
* Defend the crucial place and purpose of the monetary metals and the industries that put them into circulation.
* Encourage the use of the monetary metals as parallel official currencies and in commerce and savings.
* Investigate, expose, and oppose attempts to subvert the monetary metals.
* And support giving the monetary metals a sovereignty of their own, the sovereignty of humanity above the nations.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
This topic will gain legs soon and should shake the oil folk up a little. Maybe see a lot of petrodollars head into metals?
The short read:
"Lignocellulose is a clever, technical way of saying biomass - it means anything that comes out of the ground."
Mr Tompkinson says it will more than double yields: "Instead of just taking the grain from wheat and grinding that down to get starch and gluten, then just taking the starch, we are going to take the whole crop - absolutely everything."
Here is a chart of Oil. After topping out in July it has made a rather precipitous drop of about 21%. In 2003 it had a fall of 38% and in 2004 of 28%. A similiar drop this time would place oil in the $55-60 range, where is has both price and uptrendline support. The drop in gold and oil has indeed been similiar and I believe the two do have a measurable degree of corrolation.
While the "status" of inflation may not change overnight, the "expectation" can and often does. And since expectations are what drives markets and prices I think it wise to pay attention to them, rather than a biased newsletter writer opinions.
As an aside note....a very large hedge fund today announced that it was getting killed in the natural gas market. This is/was an $8 billion fund and I think this may be just the tip of the iceberg. Commodity prices do have the potential to collapse if this becomes a common occurance.
Interesting read but this is the sort of thing that makes governments cringe simply because it attacks the currency. Governments have been unwittingly playing into the hands of entities who are directing gold to their own uses. As the metals are manipu- lated it is largely government action that makes it possible. To a large extent this is to protect their currency. I believe that allowing this manipulation in silver is foolhardy because eventually these markets will simply get out of hand and important industry will be stopped cold in its track by lack of supply. The manipulation in gold, however, can continue so long as people have faith in the currency. If gold price is artificially sup- pressed too much then a day of reckoning may occur here as well but there would be no fundamental economic dislocations but more a currency crisis. There are more pala- table ways of dealing with such crises and so long as the central banks are deep in gold there is no chance that it will occur.
This is essentially what has caused this latest run-up. The central banks had to allow the price to come up to stop the run on the metal. Eventually, as inflation continues, so will the buying of gold and its price will have to be allowed to rise again. The next in- crease will probably be more orderly as the central banks recognize the inevitable.
There is always more gold in the world. It sits in large vaults and acts as ballast for cur- rency. Most leaders consider it an anachronism which absorbs wealth and provides no useful function. It really depends on how you look at it. Silver is very much different.
Core inflation numbers were released today that show inflation is under control. The bond market rallied and interest rates dropped.
The dollar initially fell on the news but rallied after news of a coup in Thailand. The dollar is STILL a safe haven.
Whether or not you trust govt numbers--I have some reservations-- they cannot be ignored as the markets react to what they see. No inflation equals a drop in commodities. Gold is down $10. Silver down 34c. Oil down $1.85. Gasoline down a whopping 8c or 5.5%!!
I have no chart's , but it is my opinion that Gold should be at $350. and Silver should be at $5.00 Business was good for me at those level's, and they also seem to be an average over the last 20+ year's....
my 2 cent's worth, keep the change.... :-)
Support your local Coin Shop LM-ANA3242-CSNS308-MSNS226-ICTA
<< <i>I have no chart's , but it is my opinion that Gold should be at $350. and Silver should be at $5.00 Business was good for me at those level's, and they also seem to be an average over the last 20+ year's....
my 2 cent's worth, keep the change.... :-) >>
Of course the problem was that the metal was getting scarce due to buying at those levels. If the buyers were to all sell then we'd be right back down there. ...it ain't gonna happen.
So the only 2 options expected from the Fed was to raise the rate or or keep it unchanged. The most inflationary choice of the two was to keep the rate unchanged which they did. As soon as the announcement is made, the stock market jumps up but gold and silver immediately starts falling. The only exception to stcoks we the mining issues.
Were investors disappointed that the Fed didn't lower it, like anyone truly expected that.
It was obvious that this inflationary move had to be countered immediately so the control investment house of the Federal Treasury, Goldman Sachs went to work. I wonder how many short sales they made this afternoon.
This manipulation is so obvious it shows they don't even care if it's known. Almost like they are saying, "Don't buy precious metals because we control them and we will make sure you lose."
<< <i>So the only 2 options expected from the Fed was to raise the rate or or keep it unchanged. The most inflationary choice of the two was to keep the rate unchanged which they did. As soon as the announcement is made, the stock market jumps up but gold and silver immediately starts falling. The only exception to stcoks we the mining issues.
Were investors disappointed that the Fed didn't lower it, like anyone truly expected that.
It was obvious that this inflationary move had to be countered immediately so the control investment house of the Federal Treasury, Goldman Sachs went to work. I wonder how many short sales they made this afternoon.
This manipulation is so obvious it shows they don't even care if it's known. Almost like they are saying, "Don't buy precious metals because we control them and we will make sure you lose." >>
Sounds about right, but I believe they are sticking their necks out far beyond what they think they are with silver. Even with gold they had to allow the price to move higher to decrease the drawdown of existing stocks. This will occur again in the future but in a more orderly fassion. They apparently believe that the dwindling amount of silver in the world is no threat because of the enormous amounts of silver still around (mostly in the form of pre-'65 US coin). There really is a large amount of this metal and this supply would last for years but there is a tipping point. Eventually all the available physical silver will be held by those who believe it is grossly underpriced. While this day could be far in the fu- ture due to the significant supply there is simply far more money in the world than silver. All it would take is a tiny change in market psychology for the available silver to disappear overnight. I think we'd also discover that there isn't as much of the coin silver available as is generally assumed. The estimates of loss and private melting are likely a little too low. More importantly vast amounts of this silver is held by collectors as 1804 dollars or nice attractive '46-S quarters. Higher prices won't be met with massive selling as happened in 1980 simply because most of this silver has already been consumed. Shorting silver at the right time has been a very lucrative play for many years but those with massive shorts can be wiped out without a moments notice and cause chaos. Should this occur it will be very difficult to ob- tain silver for making the products on which the modern world is dependent and virtually all "paper silver" will evaporate.
<< <i>More importantly vast amounts of this silver is held by collectors as 1804 dollars or nice attractive '46-S quarters. >>
I have no data to back this up, but I really find it difficult to believe that a significant amount of silver is in numismatically important coinage. Even going beyond the "key dates," just the amount of silver in slabs, I very much doubt has much of an impact on silver for industrial/commercial use.
I dumped the last of my (very limited) gold bullion today that I have held for 2 1/2 years. I had a nice ride, and an aggregate gain of 60% - and I am thrilled. If/when gold drops below $400 I'll start nibbling again.
I have no data to back this up, but I really find it difficult to believe that a significant amount of silver is in numismatically important coinage. Even going beyond the "key dates," just the amount of silver in slabs, I very much doubt has much of an impact on silver for industrial/commercial use.
I dumped the last of my (very limited) gold bullion today that I have held for 2 1/2 years. I had a nice ride, and an aggregate gain of 60% - and I am thrilled. If/when gold drops below $400 I'll start nibbling again. >>
There are some 15,000 slabbed '16-D dimes. This is a "rare" date that command a huge premium to its silver value. There are also counterfeits and altered dates of this coin made of silver. This is well over a thousand ounces just for a rare date.
If silver were $100 per ounce even a coin like a VF '36-D quarter would be safe from being melted. There would simply be thousands of EVERY date, mint mark, and variety safe from melting. This would include proofs, and all the special coins. All this silver isn't readily avail- able either. At any given time there will be vast amounts tied up in places like unclaimed safety deposit boxes, or forgotten in basements. There are large numbers of people who don't follow markets so wouldn't know it might be wise to sell.
The run-up in 1980 simply stripped most homes and individuals of most of their silver in this country. The same thing happened all over the world so today a large percentage of this silver is in the hands of people who are collectors or associated indirectly with the coin mar- ket. (perhaps they bought 100 oz bars from the local dealer. But when you look around you don't see all that much available silver. Where the average household might have had 15 or 20 ounces of silver in various forms back in 1979 it is far lower today and there is less total silver in the world than in 1979.
The coins destroyed in '79/ '80 were not a huge drain on the total number in existence but virtually every one of them was a common date or had problems. This selective destruction means that there is a far higher percentage of collector coins of silver than in the past. Then remember it's not only thousands of each US coin but also hundreds of each foreign coin go- ing back 2,500 years. There is also a lot of silver tied up in jewelry and keepsakes. Even film, mirrors and other less intense uses will simply not be available. Destruction of many silver coins and other such products are in many cases much more complete than the US coins. Coins like the Spanish 100P were melted by the issuer back in the early 1990's. Today probably fewer than 15% survive. ...And many of these are protected by premiums.
This probably involves more than a half billion ounces just in coins alone. Scrap silver, newly mined silver and available silver is kept in balance through price but even a small uptick in investor demand would throw the whole thing out of balance. Even if this increase never comes, the simple fact is that you can't forever destroy more of somethinfg than is produced. I think there will be a continuing de- crease in scrap silver and this is what has been driving the price higher. While this demand is specu- lative it is still speculating on some simple facts; primarily that there is continually less metal, little more silver than gold and a certainty these trends will become more pronounced over time whether there is more demand as speculation or not.
We are not on the brink of running out of the metal but $10,000,000,000 dollars would put a massive crimp in available physical supply. Now days this is nearly an inconsequential amount of money to the markets. Imagine the chaos though if some entity shorting millions of ounces is suddenly facing sharply rising prices. These positions are highly leveraged and are dependent on most buyers taking possession of paper.
Perhaps you're right that I'm overestimating the percentage of silver coin that is unavailable but it's certainly true that with only a few dollars per capita even minted that all this metal has a low enough value that investor demand could absorb it very quickly.
I wonder how many short sales they made this afternoon.
I shorted quite a few stocks today. FCX, SU, OIH and others. Why? The FED said inflation was in check. The metals and commodity stocks are clearly in downtrends. Whether or not you believe in GOVT stats, they have an effect on the market. Rather than bicker about their accuracy, use the (mis)?info and profit from it.
BTW---Watch for a break in copper under $3.25. All those calls to stop minting the penny will soon be halted.
A follow on to the above is a comment on the Sinclair site about the $4 Billion hedge fund bust from natural gas miscues. If they also had exposure to oil, or others did as well, it could explain a further part of the decrease in oil.
This calculator is fun. Shows that 4c in 1913 has the same buying power as $1.03 today! And this is using the BLS's canned stats. Imagine if the unfudged numbers were plugged in.
Dubai's AMEInfo: Buy gold to hold, not to trade Submitted by cpowell on Fri, 2006-09-22 02:17. Section: Daily Dispatches From AMEInfo, Dubai Thursday, September 21, 2006
Dr. Marc Faber this week told Bloomberg he is a buyer of gold at and below $580 an ounce. But traders in gold have recently suffered a mauling because central banks are manipulating the market.
The Federal Reserve wants to contain inflation to engineer an interest rate cut before the November US elections. It is as plain as the nose on your face that gold market interventions of the past couple of weeks have been organized to bleed gold traders dry.
One thing that gold traders could do to help themselves is to stop publishing their latest market "insight" on Websites. The demons of the gold cartel are clearly reading everything that they write and making absolutely sure that it goes wrong.
Indeed, a section of the gold-bug community has identified the existence of a cartel or cartel-like organization within the central banking system that conspires to keep gold prices down when economic forces would suggest they should go up. This is one way of trying to control inflation, albeit it not a very good one, as curing the symptoms never cures a sickness.
However, there is no point in trying to fight such a powerful cartel. It is a futile exercise, and traders will be quickly wiped out if they insist on trying. Those who do this on margin are doubly foolish, as the irrepressible volatility of precious metals is going to catch them out sooner or later.
For to succeed in this kind of market you need to recognize the reality of a fixed gold market and buy and hold until this whole artificial construction comes tumbling down. Then gold and silver prices will soar and the holders will make a huge profit.
So buy a little gold for your portfolio, or quite a lot if you have the cash available. For gold will protect your finances against inflation, deflation, devaluation, stock market crashes, and almost any other negative economic scenario.
It always pays to be ready for a rainy day. Are we not now hearing many siren voices warning of a US housing downturn and a coming US recession, which will surely be accompanied by further devaluation of an already weak US dollar and a downturn in US financial markets?
What is the safe haven asset that will perform in such a noxious investment environment? Precious metals are pretty much immune from everything, except the central banks in the short term. So take Faber's advice and do what he is doing himself and buy gold at these price levels while you can.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
In the stock market, there is often a negative correlation between investor sentiment and the prices of stocks. When most folks are bullish, stocks tend to not do too well. When most folks are bearish, stocks tend to outperform.
It sems that central banks are not taking advantage of the maximum amount of gold sales permitted this year. One possible explanation would be that central banks think they can sell at a higher price later. (I know they can't make up sales not sold this year; but nonetheless their reserves stay higher).
Is this apparent vote of confidence for future price appreciation of gold actually a contrary indicator that gold may be headed lower?
In the recent past, central banks sold a lot at lower prices. They seem to get it wrong most times...
There was a lot of confidence in the gold market from $330-$500 that it was going higher. So that bullish sentiment back in 2001-2004 has not been proven wrong yet.
I don't think there are any central bankers who want to follow in England's footsteps to be the next idiot who sells gold too early. Should gold go to $1000 at some point, those who sold at $500 will be villified as much as Gordon Brown was when he sold at around $260!
So just what will happen when this market goes, BOOM? So many paper assets have now been printed that we are starting to use the “Q” word, Quadrillion!
SOPHISTICATED INVESTOR Derivative danger Somebody should be worried as loosely regulated market soars By Thomas Kostigen, Market Watch Last Update: 4:20 PM ET Sep 26, 2006
(Market Watch) -- The derivatives market has soared, reaching nearly $300 trillion in value. Considering the total value of the stock and bond markets combined amounts to only $65 trillion, it's worth wondering how so much extra value can be squeezed out of instruments that are essentially fake.
The notional value of derivatives has almost tripled overt the last five years, growing from $98 trillion in 2000 to $270 trillion in 2005, according to Wall Street research firm TowerGroup. This year derivatives are on path to grow even more.
And I wouldn't expect that growth to stop anytime soon because what is driving it is Wall Street profits. "Wall Street has made record profits from derivatives and structured products in the first three quarters of 2006," according to a TowerGroup report. "U.S. brokerage firms will generate $33.2 billion from derivatives-related revenue in 2006 as the rapidly growing market catches up with the cash market."
With the global numbers and values already enormous, adding U.S. pension funds, more institutions and a retail investment audience to the hundreds of trillions of capital the derivatives market attracts could further shift the scale in favor of them more than any other financial instrument or asset class.
The Securities Investor Protection Corporation, which insures brokerage accounts in the event of a brokerage-firm failure, recently announced its reserves. It has about $1.38 billion. That may sound like a lot. Compared with half a quadrillion, it's a pittance. Scary but true."
The Securities Investor Protection Corporation, which insures brokerage accounts in the event of a brokerage-firm failure, recently announced its reserves. It has about $1.38 billion. That may sound like a lot. Compared with half a quadrillion, it's a pittance.
The SIPC does not cover derivatives, future contracts, annunities or limited partnerships. Their liability is not nearly as high as that article would lead you to believe. SIPC coverage is linited to cash, equities, and bonds.
Perhaps not this week, but in the near future the Dow will no doubt reach its closing high of 11,723. Is this a reason for those in the stock market to celebrate? Perhaps not.
Even with this occurrence the Dow adjusted for inflation over the last five years would have to exceed 13,000 in order for those invested in an across the board Dow to just break even, and this is using the governments inflation numbers.
Even that number would be low since as usual several of the Dow companies have been replaced over the last five years due to poor performance, and these have been replaced by better companies skewing the index.
So what has kept up with inflation the last five years?
C.D’s ? NO
Treasuries? NO
AAA Bonds? NO
Real-Estate? Perhaps depending on where you live.
Gold? Yes, from $300 to $600
Silver? Yes, from $4.00 to $11.50
Numismatics? Yes, the PCGS 3000 has moved from 54,000 to 67,400
And which of these will continue to keep you even with inflation? Who knows, but my guess is that Gold and Silver will not make the big gains promised by most of the bugs simply because these markets are to thin, and easily manipulated. This is not to say that an anomaly might occur like the Asians ceasing to buy treasuries. Certainly there will be a great deal of World Government pressure to stop these markets from making any significant moves in the next few years. In fact it is most unlikely that Gold will hit its all time inflation adjusted high of $2,150 at any time in the next several years without a near collapse of the dollar.
Capitalism is a great concept...if properly husbanded. But UNFETTERED capitalism is a rapacious and insatiable beast.
We pay homage to a call for "efficiency" in markets and industries in hope that the gains will transfer to our benefit from the enormous savings that capitalism without boundaries can generate.
But do we get any "participatory" benefit? Not a whit. We clap with glee at an IRA gain of $50,000 for our "golden years" without giving a single thought to the fact that the machinations of "outsourcing" and "downsizing" that gave us that 50 grand have also made it quite likely that our kids and grandkids will be sharing our abodes and helping spend the 50 grand and many multiples thereof.
Anyone arguing against protectionism of their national prosperity is the same as a rancher wondering why he should feed his herd oats when thistles are so abundant.
With the current FIAT unbacked system we LIVE in, it is just plain FOOLISH to think that there is any hazard to a runaway inflation. The simplest boob can deal with inflation. He/she simply spends any overage from a constantly escalating paper "income."
What McDonald franchisee would balk at a $50/hr wage if they were getting $15 for a bag of fries?
WHATEVER is purchased will be worth more tomorrow. Simple planning. No, the CEO will not take HIS 750 million to the Caymans to store for the coming "fire sale" but we would have new roads again and repairs to the existing ones.
Pay more and tax more. I don't GIVE a crap about income when it is so simple to buy a PERSONAL asset. If it gives me rental income, I'll buy it. If it just escalates in "value" I'll buy it.
A "side effect" would be the placement of those requiring legislation for their raises to be effectively placed behind the curve again where they obviously belong. And with their ubiquitous "risk aversion" they would ..naturally...hesitate to participate in the asset acquisitions (especially if they thought someone in the private sector might get a piece) and by their inaction, return to the base where they belong.
Pay me more. Tax me more. Pay EVERYONE more. It's only paper and ink.
Actually bonds did quite well over the past 5 years. I was buying 7-8% paper in 2000. I received about 20% price appreciation plus 7% yield.
The nasdaq has doubled from its 2002 lows and the dow and spx are also up in the 90% range.
The last 5 years have been great for ALL asset classes. Metals, equities, fixed income, real estate, foreign currency, ect. Unfortunately something will have to give.
Rob Kirby discusses the "convenient" change of the Goldman Sachs commodity index that reduced the weighting of unleaded gasoline by a factor of 3. Within 1-2 months, pension and hedge funds that had exposure to commodities and used the GS Index started bailing on their gasoline futures. He figures 75% of long positions were liquidated. Gee, could this have had an effect on the price of gasoline dropping? Good thing Hank Paulsen is in the Treasury's driver's seat and this came right before the elections.
Read Rob's article for more. If it ain't govt stats getting tweaked for our benefit, then it's private stats for our "benefit."
Another Kirby article worth reading that talks about GS and JPM getting some leverage in Iraq banking over other sources. Guess who got the better deal? Rob Kirby
My analysis is that gold and oil sort of move together - or at least they have been lately. The price of oil is locked in with gold for the time being because higher oil prices are inflationary and at the same time recessionary .
Gold is relatively cheap - as of 10/7/06 its at $569 a share... and its just gone through a price "adjustment". Remember volatility is normal for gold.. Most of it does not get used up in industrial processes unlike copper and up to recently silver.
Gold -adjusted for inflation- is selling way below what it did in 1981 - a US$600/oz price is the same as a US$280 price back in 1980 (conservatively using the government price deflators)
The common wisdom is that Gold will tend to spike upward on any news of economic or political instability - especially in the oil producing countries. Fear = Gold going up, Stability = Gold going down.
However, last week we saw that even North Korea's saber rattling didnt result in gold spiking up, due to the effects of the drop in crude oil prices.. Maybe thats because it is unlikely that they can reach the middle east with their missles... Or because North Korea contributes almost nothing to the world economy, and they arent percieved as a real threat with the US military clearly within spitting range. (Right as I'm writing this, there's a breaking news story about N. Korea crossing the DMZ and planning a Nuke test for Sunday- more provocation, which will probably also have no lasting effect on oil or gold),
Remember that the banks and governments of the world know that their currencies are Fiat currency. they have to sell gold (or pump more oil from the ground) to continue proping up the world economic system.
Adam Hamilton presents an interesting article on the change in the weighting of the CRB index in mid-2005. This was the 10th revision of the forumla since its inception. It had been several years since the last one. The current version changed the GEOMETRIC weighting of the 17 average weighted components (OJ, oil, etc.) to one of ARITHMETIC weighting with energy now given a much larger share of the pie. The net effect under geometric weighting is to smooth out the peaks. The steady rise in the CRB index did just that for several years. But with oil and gas getting hammered recently, the CRB's lack of geo-weighting now exacerbates the drop more than ever. Goldman Sachs controls this index so it is probably they made a nice chunk of change shorting gas futures knowing that many funds would have to reduce their holdings eventually.
Trying to compare the CRB index of today with that of mid-2005 is like comparing apples to oranges. Just one thing to consider as you compare what many think to still be equivalent stats. Geometric weighting is of course used in the CPI to help smooth out (ie "wipe out entirely") energy spikes for example. Wonder if the BLS will drop GEO weighting there like the CRB index did? You would think they should be consistent. Or was there a plan in 2005 to help turn the commodity index hard based on one item alone: oil? Makes sense to me. A geo weighting along with weighting energy equally was "helping" tame the CRB while energy was flying high. But if energy is on a down spiral let's make sure it's more obvious by increasing the energy weighting. If energy takes off again I would not be surprised to see the reappearance of geo-weighting.
An article deducing the ties of JPM, GS, and the govt in helping to bring oil and gas prices down. A good point noting that our military is probably the biggest oil consumer in the world and was building excesses for some period. Selling that excess over the past few months would have a nice effect on lowering gas prices. Federal Law also requires replenshing the strategic oil reserves within 60 days following a usage. Well Katrina is a year past and no effort has been made to replenish those gallons. Possibly after the election?
Comments
Looks like my "masses are asses" theory holds true again.”
If anyone ever had any doubt about how powerful the manipulation machine in Washington and Wall Street are, today’s markets are an excellent example, and yes the” masses are asses” if they fall for this short term market manipulation to get the, “ economy in shape” for the up coming elections!
National elections are almost always about the, “economy stupid” , today’s American public is fixated on short-term memory. They care only about their little world. Regardless what the news media says, most Americans give little thought to the war in Iraq, the nuts in Iran, or the other hot media issues that blast across the airways day and night. What they care about is how much does gas cost, how their 401k’s are doing, how much is their monthly mortgage payment, and who’s coming to the bar-b-q on Saturday.
So just a few short weeks before the elections the powers that be are going to drive commodities down, lower the price of gasoline, run the stock market up, lower home mortgage rates, and strengthen the dollar.
What has really changed? NOTHING.
Will any of these manipulations last more than a few weeks? NO.
By Matthew Benjamin and Mark Drajem
Sept. 13 (Bloomberg)
Almost half of Americans described the economy as doing badly, including 21 percent of those who identify themselves as Republicans, according to a poll conducted July 28 to Aug. 1 by Bloomberg News and the Los Angeles Times.
Danielle DiMartino:
Dallas:
10:42 PM CDT on Monday, September 11, 2006
For years, investors have shrugged off the swelling trade deficit as yet another sign of the strength of the U.S. consumer.
"So what if we buy a ton of imports?" they say. "At least we can."
The trade deficit – which will be reported for July this morning – should come in at about $800 billion this year.
By Joe Richter
Sept. 12 (Bloomberg) -- The U.S. trade deficit widened more than forecast in July to a record $68 billion as imports reached an all-time high and exports declined for the first time in five months.
Let the good times roll:
Credit-card debt alone spiked from about $250 billion in 1992 to $804 billion in 2005.
To appreciate how much homes became “ATM machines” for Americans, one has to only recognize that Americans borrowed just $11 billion in home equity in 1995, but by 2005 borrowing had soared to $243 billion.
U.S. spending has reached 107 percent of GDP, requiring an $800 billion annual infusion of foreign money and even higher levels of debt to prevent a slowdown.
And we worry about being buried in coins?
While we are at it...gold is very quiet and cheap and in a trough. The Kitco site is quiet with no disclaimers on the slowness of transactions because of pressing activity. The usual threads about how high will it go, should I buy now, what's the upside, all gone. All's quiet...yummmy.
<< <i>Lets come up with a simple plan to get us out of the Middle East.
Here is mine,
We tell the Iraqis we want a ninety nine-year lease on several thousand acres in Iraq next to the Iran border.
We want a no fly zone within several hundred miles of the base for the term of the lease.
We are going to build a large base there. We also want a ten-year agreement on oil at $45 per barrel.
We are going to give the current government 6 more months to take control of their country, after that we move our troops to the base, and let them have a civil war.
Naturally the right side will win or we will step back in for another 3 weeks.
We sell our bases in Germany back to the Germans for a few billion, and use that money to help the current Iraqi government, and build the new base.
We move all the men and equipment including the nukes out of Germany to the new base, and point everything at Iran.
We tell the Iranians to build whatever they want. but if they ever shoot off a single missile we are going to blow ALL their installations to hell.
We set up al-American TV. Stations on the base and broadcast propaganda day and night to Syria and Iran.
We cut all foreign aid to everyone except food supplies for the starving, and tell our enemies if they, or they people, attack us any where in the world we are going to take it out on their governments, and we are not rebuilding anything.
If this is a war on terror lets do like we did with the Soviets and park the planes and booms on their doorstep. >>
This sounds like a reasonable idea to me.
Knowledge is the enemy of fear
In August, 115,292 properties entered into foreclosure, according to RealtyTrac, an online marketplace for foreclosure sales. That was 24 percent above the level in July and 53 percent higher than a year earlier.
Where foreclosures are jumping
Year over year gain in homes in foreclosure. Click for more stats on each state.
Nevada: Up 255%
California: Up 160%
Florida: Up 62%
It was the second highest monthly foreclosure total of the year; in February, 117,151 properties entered foreclosure.
linky to article
The trouble begins when people who have been in their homes 10 years begin to get into trouble.
The practice of interest only loans with a variable rate for 100 percent of the purchase price also contributes to the raised foreclosure rate.
<< <i>Who are they? They must have super deep pockets and access to great credit. They too will be crushed. No one will stop gold until the deficit and balance of payments are rectified. >>
Goldman Sachs
JP Morgan
Sumitomo Corporation
Mitsui & Co., Ltd.
open interest
This is just the Tokyo exchange. As you can see, 3 of these have over 130,000 contracts short at 100oz each. Thats 13 million ounces they have sold but don't own. You can find a similar one for COMEX somewhere.
Keep in mind that ex-Goldman Sachs now controls the US Treasury with both the Secretary (Paulson)and Undersecretary positions. Can you get an understanding why they just posted record profits yesterday. The fix is in. They know what will happen before it does. Don't expect them to get crushed too soon.
BTW
If the price gets too high and his exGS buds get in trouble then he will just sell more US reserves to bring the price down. There is no accountability and there has been no audit of the US gold reserves in years. The sales don't have to be disclosed either, they just dump in in Europe or somewhere.
MARK HULBERT
Gold's stunning plunge
Commentary: Price drop didn't surprise contrarians
Last Update: 12:01 AM ET Sep 13, 2006
ANNANDALE, Va. (Market Watch) -- Gold's plunge over the past week has been nothing sort of stunning.
But contrarians were not surprised, seeing in bullion's drop a text book case of how sentiment can affect the markets.
Contrarian analysis, for those of you who are not regular readers of this column, is based on the notion that the markets rarely accommodate the majority. Market tops are characterized by extreme optimism, while bottoms are marked by excessive pessimism and despair. A corollary is that bull markets like to climb walls of worry, while bear markets descend slopes of hope.
A week ago closed at $635.40 per ounce. Over the next five trading sessions it fell to $590.70, a decline of more than 7%.
Even at the $635 level at which bullion was trading on Sept. 6, of course, bullion was still well below the $725 level that an ounce of gold fetched as recently as last May. Yet, even so, the editor of the average gold timing newsletter was significantly more bullish on September 6 than he was in mid May.
This contrast is what was so concerning to contrarians, since it suggested an undercurrent of optimism, if not exuberance, among the gold market timers.
For specifics, I turn, as I usually do, to the latest readings of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which represents the average gold market exposure among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. On Sept. 6, the HGNSI closed at 62.5%.
On May 12, in contrast, when gold bullion was trading at $725 per ounce, the HGNSI closed at 51.8%.
This suggested to contrarians that the path of least resistance for the gold market would be down.
This isn't to say that sentiment is the only factor in gold's recent plunge. Obviously, strength in the dollar and weakness in oil played a big role. But contrarians believe that if the sentiment picture had been more positive, then gold's price would not have reacted in such a big way to those other factors.
By the way, the contrast between the early September and mid May sentiment levels was not the only reason that contrarians were concerned a week ago.
Another was how gold market timers reacted last Thursday, the first day of gold's major break, when an ounce of bullion fell by $14. The HGNSI didn't budge, staying at 62.5%.
This betrayed a lot of stubborn bullishness on the part of the gold timers, and provided even further confirmation that gold was on shaky ground.
But enough of this recap of the last week; where does the HGNSI stand today?
It closed on Tuesday of this week at 10.7%, indicating that gold timers has now begun to throw in the towel, their stubbornness of last Thursday notwithstanding.
Is their declining bullishness enough to persuade contrarians to step back up to the plate?
Not yet, but the HGNSI's 51.8 percentage point decline in four trading sessions is definitely a big step in the right direction.
The reason that contrarians are not yet inclined to step up to the plate is that gold timers are still not as bearish as they were at correction lows set earlier this year. At gold's mid-March low, for example, the HGNSI stood at minus 19.6%, indicating that the average gold timer then was actually net short the gold market.
Furthermore, in the wake of gold's correction in late May off its $725 rally high, the HGNSI quickly dropped to 1.8%. Indeed, the HGNSI got this low on May 22nd, when gold bullion was still trading for over $650 an ounce.
It bespeaks a still-too-high level of bullishness among gold timers that they are no more bearish today despite bullion between $60 per ounce cheaper now than then.
According to contrarian analysis, a meaningful bottom will be formed when the average gold timer has thrown in the towel, having given up on gold.
It would appear that we're no where close to that point yet.
Knowledge is the enemy of fear
If anyone ever had any doubt about how powerful the manipulation machine in Washington and Wall Street are, today’s markets are an excellent example
Hardly. Saint, whether or not there was a "manipulation machine" is irrelevant today, because volume completely dried up. On the other hand, if you want to argue that the gold price is artificially high due to manipulation, you might have an argument there. Because the number of open NYMEX contracts dropped by thousands today, but only hundreds yesterday, meaning what little buying volume there was today was to a great extent all short-covering, probably when the December contract spiked to $600.
Looks like a long way down to go.
(Just think of city streets clogged with a hundred thousand horses each generating 15 lbs of manure every day...)
<< <i>Hardly. Saint, whether or not there was a "manipulation machine" is irrelevant today, because volume completely dried up >>
irrelevent???
Yesterday there were just a few major players who sold huge shorts to start a stampede of program trades by longs. The longs ran for cover and the shorts have slowly moved in to start some covering.
When the short side of the market is in the hands of less than 5 major players who act in tandem, how can you not call this a "manipulation."
Collusion is more like it.
It is hard to fight collusion when the watchdogs look the other way.
“Keep in mind that ex-Goldman Sachs now controls the US Treasury with both the Secretary (Paulson)and Undersecretary positions.”
Market manipulation for the election? You decide.
Do you think that what started out as a way to keep markets from going into a panic has now become a group that shapes the economy to look like what it chooses?
Peter G. 9/13/06
“We all know what happened by October 19, 1987. Most people forget (or simply weren’t in the business or investing back then) that October 20th was looking even bleaker than the 19th. By early afternoon, many of the DJIA stocks were still not opened. The DJIA was off almost 200 points and blood was truly running through the streets. The regulators shut the S&P 500 futures pit in Chicago in part because it was the selling of futures related to program trading that was causing even more selling. However, the Kansas City Board of Trade and its S&P 500 Futures contract remained open. Its volume was normally peanuts compared to Chicago’s but an event would unfold in 20 minutes that I believe literally helped change our future.
For reasons no one has ever truly known or cared to find out, several of the largest financial institutions in the world decided virtually at the same time to buy massive amounts of S&P 500 futures contracts in Kansas City. In 20 minutes, that buying caused the S&P Futures contract to rise the equivalent of 1700 DJIA points. This caused the sell programs to become buy programs, which caused massive buying of the major stocks that made up the DJIA and S & P 500. All the major stocks began trading and the market finished up 170 points.
Since that time, there have been a growing number of people who believe the U.S. government created what has been dubbed, “The Plunge Protection Team” (PPT). Many of the same critics of gold manipulation were also pooh-poohing stock market manipulation.
Mr. John Crudele of the New York Post, has faithfully stayed on the PPT story. This past June 13th, he wrote an article entitled, “A Plan For A Plunge”. In it, Crudele discussed how a 1997 Washington Post article basically “explained the government’s secret role in the stock market.” He went on to note how the President “confers with members of his Working group on Financial Markets – the secretary of the Treasury and the chairman of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission.” He noted that the article pointed out that “an outline of the government’s plan emerges in interviews with more than a dozen current and former officials who have participated in meetings of the Working Group”, which it says was established after the market crash in 1987.
I find it most intriguing that Mr. Crudele goes on in his column to report that Treasury Secretary Hank Paulson was a member of the PPT.
Two weeks later, Mr. Crudele published another article entitled, “George Let Plunge Slip.” In it, he notes that former President Clinton senior advisor George Stephanopoulos made a bombshell statement on September 17, 2001, the day the stock market reopened after the 9/11 attacks. He quotes it verbatim:
“And perhaps the most important, there’s been – the Fed in 1989 created what is called the Plunge protection team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges, and there- they have been meeting informally so far, and they have kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem."
At the guidance of the Fed, all of the banks got together when that started to collapse and propped up the currency markets. And they have plans in place to consider that if the stock markets start to fall.”
Federal Reserve Chairman Ben Bernanke admits there’s a PPT in Congressional testimony!
FEDERAL Reserve Chairman Ben Bernanke revealed that the secretive Plunge Protection Team meets several times a year, but he dodged a congressman's inquiries about what the group does and whether minutes are kept of those meetings.
Here's some of the exchange that occurred between Bernanke and a Rep. last Thursday at the House Financial Committee hearings.
Rep. : Good afternoon, Chairman Bernanke. I have a question dealing with the Working Group on Financial Markets. I want to learn more about that group and exactly what authority they have and what they do.
Could you tell me, as a member of the group, how often they meet and how often they have actions? And have they done something recently? And are there reports sent out by this particular group?
Bernanke: Yes, congressman. The president's working group was convened by the president, I believe, after the 1987 stock market crash. It meets irregularly. I would guess about four or five times a year. But I'm not exactly sure.
Rep.: The reason this came to my attention was just recently there was an article that actually made a charge that out of this group came a position that interfered with the price of General Motors stock.
Have you read that? Or do you know anything about that?
Bernanke: No sir. I don't.
And we'd also like to know who makes decision for the group, politicians or guys on Wall Street. Don't misunderstand, Mr. Bernanke. I'm not saying what the group is doing is wrong. But why should firms like Goldman Sachs - from which two of the last four Treasury secretaries have come - be in a better position than anyone else who gambles in the stock market?
<< <i>15 more months until millions of the Boomers each year begin to settle in retirement.
It will be interesting to see how many second homes get unloaded, as time runs out on the boomers clock. What do you think we should be investing in now that Boomers will want later? Equities , both domestic and a good slug of int'l.
Mr. Gross' counter: "In financial terms alone, Laurence Kotlikoff, a Boston University economist, has estimated the unfunded liabilities associated with health care and retirement amount to $80 trillion, over seven times our annual GDP!" >>
A big problem I see more and more individual responsibility to meet. That means better planning on the part of most people.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Three days after Clinton defeated Bush they announced the economy no longer was in recession.
I’ll take that condo just put it on my credit card!
Ha Ha Ha Ha Ha
9/15/06
Banknet/360
AmEx Allows Customers to Charge Condo Down Payments –
American Express Co. will begin allowing select customers to use its credit cards to charge their condominium down payments. Currently, the service will be limited to buyers of luxury condos in Manhattan, but plans to expand the program, as American Express rolls out the program with New York real-estate firm Moinian Group for one its projects under construction.
The US dollar has broken down quite hard from its highs in 2001-2002 losing roughly 1/3 of its value. It has been in a relatively tight trading range over the last 21 months and while still in a downtrend it appears that a larger move is about to occur. The indicators point to a breakout to the upside, but I would caution that nothing is confirmed.
This chart is of the yield on 10 yr US Treasury. It is still in an uptrend from the lows in 2003 but still in a downtrend from the highs in 2000 and earlier. Overall rates are basically the same as they were in 2001. After a 50 basis point drop in rates overt the last months--resulting in an inverted yield curve-- rates may be trying to work their way slightly higher. However I would caution that this bounce may be short lived as I do not believe the FED will be raising rates anytime soon as shown in the next 2 charts.
After a doubling of commodity prices over the past 5 years, the uptrend has now been convincingly broken. While it may not mean that inflation is dead, I think the markets believe it to be dormant. At the very least a ceiling has been put in place. The index is now oversold, so a bounce would not be out of the question, but I doubt it will be a resumption of the uptrend.
Gold has a rather interesting chart. After a nice sustainable uptend from 2001 to late 2005 it went parabolic in 2006 and now appears to be reverting back to its uptrendline. The accelerated uptrend is still intact but just a little more selling pressure--or lack of buying pressure--would break this line and project a target of $500--maybe a bit lower.
Overall, it seems the market is not very concerned with inflation. Recently China has said they expect to import 23% less copper next year and today OPEC reduced their oil demand forcasts for next year. They look for less demand next year than this year. All indicators project a slowing worldwide economy.
This analysis should not be deemed a financial recommendation, but rather just the ramblings of a poor slob living in the woods.
Knowledge is the enemy of fear
All these mesopotamian types that are sticking that gas nozzel up our * and causing all this international strife are going to be needing some food. Those folks may like to go into the streets and burn things at a moments notice but wait till their food gets cut short...a lot! We will be burning their corn in our gas tanks and at the same time we won't need as much of their oil for refining We also won't be having much grain for export. At this point, their money is of no value because there just won't be any excess capacity to ship to them, we'll be busy burning it in our tanks. It's a beautiful plan and a necessary correction to our economic strategy. This will take a few years, but maybe only 3 or 4. I believe that we can get the jist of the situation by watching food commodities indexes, just skim the trends and we will understand the impacts/results of this shifting of the grain distribution. We are still the world's breadbasket. Maybe they could just eat oil sandwiches...without the bread.
Robert McHugh
McHugh describes a large triangle pattern coming to a head that should lead to a breakout in gold in the near term. Either way it's going to break one way or the other. Since this bull is not yet declared dead, I'm with Sinclair, Monty, McHugh, Schiff, and the others. "To the moon Alice!" Worthy coins will of course follow.
roadrunner
<< <i>The status of "inflation" cannot change overnight from "concerned" to "unconcerned." The liquidity behind the inflation is still there and still being created. Temporary swings in mood are just that, temporary. Once Paulsen's window dressing is in place for the fall elections, and the republicans keep their offices, the market action will resume with a bit less manipulation. The PPT has been toying with the markets since Reagan authorized the creation of such a team via a Federal statute. Their workings have become more public knowledge in the past few years. Wouldn't it be nice to be a corporation with the PPT in your back pocket!
Robert McHugh
McHugh describes a large triangle pattern coming to a head that should lead to a breakout in gold in the near term. Either way it's going to break one way or the other. Since this bull is not yet declared dead, I'm with Sinclair, Monty, McHugh, Schiff, and the others. "To the moon Alice!" Worthy coins will of course follow.
roadrunner >>
Depends on oil.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
roadrunner
I got a gut feeling gold's price will revert down to the old, steady, trendline. At that point everyone that's gonna dump, will have.
Submitted by cpowell on Tue, 2005-08-09 07:00. Section: Essays
Tuesday, August 9, 2005
The Gold Anti-Trust Action Committee's Gold Rush 21 conference concluded today in Dawson City, Yukon Territory, Canada, by adopting the Dawson Declaration, appended here:
THE DAWSON DECLARATION
Resolved by the Gold Anti-Trust Action Committee's Gold Rush 21 conference at Dawson City, Yukon Territory, Canada, on Tuesday, August 9, 2005:
Having come to the heart of gold country to inquire into the condition of the monetary metals and the industry that produces them, we conclude and declare:
While governments affect to have no use for them anymore, the monetary metals are of greater importance than ever because of their ability to hold value independent of arbitrary government power. So ownership of and free trade in the monetary metals are basic human rights against expropriation.
While the monetary metals are unique as assets of intrinsic value that cannot default because they are no one's liability, this also has become their crippling weakness. For in being no one's liability, the monetary metals have had -- unlike their competitors, government-issued currencies -- no sovereign defenders.
Indeed, for years now the monetary metals have had few defenders at all, the gold mining industry's trade organization having been dominated by short-selling corporations that have obtained metal at the sufferance of the issuers of government currencies, the central banks. This has left the monetary metals almost helpless against competing currencies.
Since they issue competing currencies, governments have a powerful interest in suppressing what is perceived as the value of the monetary metals. Governments have achieved this suppression through strategic and often surreptitious lending and dishoarding of their metal reserves. While it is seldom officially acknowledged as such, this is the manipulation of currency and commodity markets that should be free and transparent.
This manipulation of the currency and commodity markets has become the primary mechanism of imperialism, projecting and maintaining the power of the international reserve currency, the U.S. dollar, and its issuer, the U.S. government, and compelling other countries to sell their exports for less than fair value.
To assist in the suppression of the monetary metals and at the urging of the International Monetary Fund, IMF member governments engage in deceptive accounting of their gold, deliberately confusing gold in the vault with gold that has been leased or swapped or whose ownership otherwise has been impaired.
In the absence of a government currency's direct and fixed convertibility to the monetary metals, the only purposes for government reserves of the monetary metals are currency intervention and market manipulation. To preclude this manipulation, governments should sell their reserves openly by a date certain, except metal needed for coinage.
As defenders of the monetary metals, we do not necessarily maintain that they should be the only means of exchange. We do not worship the golden calf or the silver bull; we are not idolaters. To the contrary, we believe that individuals and nations alike have the right to decide what they will use as money, even as we acknowledge that freely traded gold and silver are simply the most convenient guarantors of economic liberty.
Accordingly, we will:
* Defend the crucial place and purpose of the monetary metals and the industries that put them into circulation.
* Encourage the use of the monetary metals as parallel official currencies and in commerce and savings.
* Investigate, expose, and oppose attempts to subvert the monetary metals.
* And support giving the monetary metals a sovereignty of their own, the sovereignty of humanity above the nations.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
The short read:
"Lignocellulose is a clever, technical way of saying biomass - it means anything that comes out of the ground."
Mr Tompkinson says it will more than double yields: "Instead of just taking the grain from wheat and grinding that down to get starch and gluten, then just taking the starch, we are going to take the whole crop - absolutely everything."
The whole article:
biofuel article
While the "status" of inflation may not change overnight, the "expectation" can and often does. And since expectations are what drives markets and prices I think it wise to pay attention to them, rather than a biased newsletter writer opinions.
As an aside note....a very large hedge fund today announced that it was getting killed in the natural gas market. This is/was an $8 billion fund and I think this may be just the tip of the iceberg. Commodity prices do have the potential to collapse if this becomes a common occurance.
Knowledge is the enemy of fear
Interesting read but this is the sort of thing that makes governments cringe simply
because it attacks the currency. Governments have been unwittingly playing into the
hands of entities who are directing gold to their own uses. As the metals are manipu-
lated it is largely government action that makes it possible. To a large extent this is
to protect their currency. I believe that allowing this manipulation in silver is foolhardy
because eventually these markets will simply get out of hand and important industry
will be stopped cold in its track by lack of supply. The manipulation in gold, however,
can continue so long as people have faith in the currency. If gold price is artificially sup-
pressed too much then a day of reckoning may occur here as well but there would be
no fundamental economic dislocations but more a currency crisis. There are more pala-
table ways of dealing with such crises and so long as the central banks are deep in
gold there is no chance that it will occur.
This is essentially what has caused this latest run-up. The central banks had to allow
the price to come up to stop the run on the metal. Eventually, as inflation continues, so
will the buying of gold and its price will have to be allowed to rise again. The next in-
crease will probably be more orderly as the central banks recognize the inevitable.
There is always more gold in the world. It sits in large vaults and acts as ballast for cur-
rency. Most leaders consider it an anachronism which absorbs wealth and provides no
useful function. It really depends on how you look at it. Silver is very much different.
The dollar initially fell on the news but rallied after news of a coup in Thailand. The dollar is STILL a safe haven.
Whether or not you trust govt numbers--I have some reservations-- they cannot be ignored as the markets react to what they see. No inflation equals a drop in commodities. Gold is down $10. Silver down 34c. Oil down $1.85. Gasoline down a whopping 8c or 5.5%!!
Knowledge is the enemy of fear
Business was good for me at those level's, and they also seem to be an average over the last 20+ year's....
my 2 cent's worth, keep the change.... :-)
LM-ANA3242-CSNS308-MSNS226-ICTA
<< <i>I have no chart's , but it is my opinion that Gold should be at $350. and Silver should be at $5.00
Business was good for me at those level's, and they also seem to be an average over the last 20+ year's....
my 2 cent's worth, keep the change.... :-) >>
Of course the problem was that the metal was getting scarce due to buying at those levels. If the
buyers were to all sell then we'd be right back down there. ...it ain't gonna happen.
Were investors disappointed that the Fed didn't lower it, like anyone truly expected that.
It was obvious that this inflationary move had to be countered immediately so the control investment house of the Federal Treasury, Goldman Sachs went to work. I wonder how many short sales they made this afternoon.
This manipulation is so obvious it shows they don't even care if it's known. Almost like they are saying, "Don't buy precious metals because we control them and we will make sure you lose."
<< <i>So the only 2 options expected from the Fed was to raise the rate or or keep it unchanged. The most inflationary choice of the two was to keep the rate unchanged which they did. As soon as the announcement is made, the stock market jumps up but gold and silver immediately starts falling. The only exception to stcoks we the mining issues.
Were investors disappointed that the Fed didn't lower it, like anyone truly expected that.
It was obvious that this inflationary move had to be countered immediately so the control investment house of the Federal Treasury, Goldman Sachs went to work. I wonder how many short sales they made this afternoon.
This manipulation is so obvious it shows they don't even care if it's known. Almost like they are saying, "Don't buy precious metals because we control them and we will make sure you lose." >>
Sounds about right, but I believe they are sticking their necks out far beyond what they think they
are with silver. Even with gold they had to allow the price to move higher to decrease the drawdown
of existing stocks. This will occur again in the future but in a more orderly fassion. They apparently
believe that the dwindling amount of silver in the world is no threat because of the enormous amounts
of silver still around (mostly in the form of pre-'65 US coin). There really is a large amount of this metal
and this supply would last for years but there is a tipping point. Eventually all the available physical
silver will be held by those who believe it is grossly underpriced. While this day could be far in the fu-
ture due to the significant supply there is simply far more money in the world than silver. All it would
take is a tiny change in market psychology for the available silver to disappear overnight. I think we'd
also discover that there isn't as much of the coin silver available as is generally assumed. The estimates
of loss and private melting are likely a little too low. More importantly vast amounts of this silver is held
by collectors as 1804 dollars or nice attractive '46-S quarters. Higher prices won't be met with massive
selling as happened in 1980 simply because most of this silver has already been consumed. Shorting
silver at the right time has been a very lucrative play for many years but those with massive shorts can
be wiped out without a moments notice and cause chaos. Should this occur it will be very difficult to ob-
tain silver for making the products on which the modern world is dependent and virtually all "paper silver"
will evaporate.
<< <i>More importantly vast amounts of this silver is held by collectors as 1804 dollars or nice attractive '46-S quarters. >>
I have no data to back this up, but I really find it difficult to believe that a significant amount of silver is in numismatically important coinage. Even going beyond the "key dates," just the amount of silver in slabs, I very much doubt has much of an impact on silver for industrial/commercial use.
I dumped the last of my (very limited) gold bullion today that I have held for 2 1/2 years. I had a nice ride, and an aggregate gain of 60% - and I am thrilled. If/when gold drops below $400 I'll start nibbling again.
<< <i>
I have no data to back this up, but I really find it difficult to believe that a significant amount of silver is in numismatically important coinage. Even going beyond the "key dates," just the amount of silver in slabs, I very much doubt has much of an impact on silver for industrial/commercial use.
I dumped the last of my (very limited) gold bullion today that I have held for 2 1/2 years. I had a nice ride, and an aggregate gain of 60% - and I am thrilled. If/when gold drops below $400 I'll start nibbling again. >>
There are some 15,000 slabbed '16-D dimes. This is a "rare" date that command a huge
premium to its silver value. There are also counterfeits and altered dates of this coin made
of silver. This is well over a thousand ounces just for a rare date.
If silver were $100 per ounce even a coin like a VF '36-D quarter would be safe from being
melted. There would simply be thousands of EVERY date, mint mark, and variety safe from
melting. This would include proofs, and all the special coins. All this silver isn't readily avail-
able either. At any given time there will be vast amounts tied up in places like unclaimed
safety deposit boxes, or forgotten in basements. There are large numbers of people who
don't follow markets so wouldn't know it might be wise to sell.
The run-up in 1980 simply stripped most homes and individuals of most of their silver in this
country. The same thing happened all over the world so today a large percentage of this
silver is in the hands of people who are collectors or associated indirectly with the coin mar-
ket. (perhaps they bought 100 oz bars from the local dealer. But when you look around
you don't see all that much available silver. Where the average household might have had
15 or 20 ounces of silver in various forms back in 1979 it is far lower today and there is less
total silver in the world than in 1979.
The coins destroyed in '79/ '80 were not a huge drain on the total number in existence but
virtually every one of them was a common date or had problems. This selective destruction
means that there is a far higher percentage of collector coins of silver than in the past. Then
remember it's not only thousands of each US coin but also hundreds of each foreign coin go-
ing back 2,500 years. There is also a lot of silver tied up in jewelry and keepsakes. Even film,
mirrors and other less intense uses will simply not be available. Destruction of many silver
coins and other such products are in many cases much more complete than the US coins. Coins
like the Spanish 100P were melted by the issuer back in the early 1990's. Today probably fewer
than 15% survive. ...And many of these are protected by premiums.
This probably involves more than a half billion ounces just in coins alone. Scrap silver, newly mined
silver and available silver is kept in balance through price but even a small uptick in investor demand
would throw the whole thing out of balance. Even if this increase never comes, the simple fact is that
you can't forever destroy more of somethinfg than is produced. I think there will be a continuing de-
crease in scrap silver and this is what has been driving the price higher. While this demand is specu-
lative it is still speculating on some simple facts; primarily that there is continually less metal, little more
silver than gold and a certainty these trends will become more pronounced over time whether there
is more demand as speculation or not.
We are not on the brink of running out of the metal but $10,000,000,000 dollars would put
a massive crimp in available physical supply. Now days this is nearly an inconsequential
amount of money to the markets. Imagine the chaos though if some entity shorting millions
of ounces is suddenly facing sharply rising prices. These positions are highly leveraged and
are dependent on most buyers taking possession of paper.
Perhaps you're right that I'm overestimating the percentage of silver coin that is unavailable
but it's certainly true that with only a few dollars per capita even minted that all this metal has
a low enough value that investor demand could absorb it very quickly.
I shorted quite a few stocks today. FCX, SU, OIH and others. Why? The FED said inflation was in check. The metals and commodity stocks are clearly in downtrends. Whether or not you believe in GOVT stats, they have an effect on the market. Rather than bicker about their accuracy, use the (mis)?info and profit from it.
BTW---Watch for a break in copper under $3.25. All those calls to stop minting the penny will soon be halted.
Knowledge is the enemy of fear
A follow on to the above is a comment on the Sinclair site about the $4 Billion hedge fund bust from natural gas miscues. If they also had exposure to oil, or others did as well, it could explain a further part of the decrease in oil.
BLS inflation calculator 1913 to DATE - try it!
This calculator is fun. Shows that 4c in 1913 has the same buying power as $1.03 today! And this is using the BLS's canned stats.
Imagine if the unfudged numbers were plugged in.
roadrunner
Submitted by cpowell on Fri, 2006-09-22 02:17. Section: Daily Dispatches
From AMEInfo, Dubai
Thursday, September 21, 2006
http://www.ameinfo.com/96992.html
Dr. Marc Faber this week told Bloomberg he is a buyer of gold at and below $580 an ounce. But traders in gold have recently suffered a mauling because central banks are manipulating the market.
The Federal Reserve wants to contain inflation to engineer an interest rate cut before the November US elections. It is as plain as the nose on your face that gold market interventions of the past couple of weeks have been organized to bleed gold traders dry.
One thing that gold traders could do to help themselves is to stop publishing their latest market "insight" on Websites. The demons of the gold cartel are clearly reading everything that they write and making absolutely sure that it goes wrong.
Indeed, a section of the gold-bug community has identified the existence of a cartel or cartel-like organization within the central banking system that conspires to keep gold prices down when economic forces would suggest they should go up. This is one way of trying to control inflation, albeit it not a very good one, as curing the symptoms never cures a sickness.
However, there is no point in trying to fight such a powerful cartel. It is a futile exercise, and traders will be quickly wiped out if they insist on trying. Those who do this on margin are doubly foolish, as the irrepressible volatility of precious metals is going to catch them out sooner or later.
For to succeed in this kind of market you need to recognize the reality of a fixed gold market and buy and hold until this whole artificial construction comes tumbling down. Then gold and silver prices will soar and the holders will make a huge profit.
So buy a little gold for your portfolio, or quite a lot if you have the cash available. For gold will protect your finances against inflation, deflation, devaluation, stock market crashes, and almost any other negative economic scenario.
It always pays to be ready for a rainy day. Are we not now hearing many siren voices warning of a US housing downturn and a coming US recession, which will surely be accompanied by further devaluation of an already weak US dollar and a downturn in US financial markets?
What is the safe haven asset that will perform in such a noxious investment environment? Precious metals are pretty much immune from everything, except the central banks in the short term. So take Faber's advice and do what he is doing himself and buy gold at these price levels while you can.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
It sems that central banks are not taking advantage of the maximum amount of gold sales permitted this year. One possible explanation would be that central banks think they can sell at a higher price later. (I know they can't make up sales not sold this year; but nonetheless their reserves stay higher).
Is this apparent vote of confidence for future price appreciation of gold actually a contrary indicator that gold may be headed lower?
In the recent past, central banks sold a lot at lower prices. They seem to get it wrong most times...
I don't think there are any central bankers who want to follow in England's footsteps to be the next idiot who sells gold too early.
Should gold go to $1000 at some point, those who sold at $500 will be villified as much as Gordon Brown was when he sold at around
$260!
roadrunner
So many paper assets have now been printed that we are starting to use the “Q” word, Quadrillion!
SOPHISTICATED INVESTOR
Derivative danger
Somebody should be worried as loosely regulated market soars
By Thomas Kostigen, Market Watch
Last Update: 4:20 PM ET Sep 26, 2006
(Market Watch) -- The derivatives market has soared, reaching nearly $300 trillion in value. Considering the total value of the stock and bond markets combined amounts to only $65 trillion, it's worth wondering how so much extra value can be squeezed out of instruments that are essentially fake.
The notional value of derivatives has almost tripled overt the last five years, growing from $98 trillion in 2000 to $270 trillion in 2005, according to Wall Street research firm TowerGroup. This year derivatives are on path to grow even more.
And I wouldn't expect that growth to stop anytime soon because what is driving it is Wall Street profits. "Wall Street has made record profits from derivatives and structured products in the first three quarters of 2006," according to a TowerGroup report. "U.S. brokerage firms will generate $33.2 billion from derivatives-related revenue in 2006 as the rapidly growing market catches up with the cash market."
With the global numbers and values already enormous, adding U.S. pension funds, more institutions and a retail investment audience to the hundreds of trillions of capital the derivatives market attracts could further shift the scale in favor of them more than any other financial instrument or asset class.
The Securities Investor Protection Corporation, which insures brokerage accounts in the event of a brokerage-firm failure, recently announced its reserves. It has about $1.38 billion. That may sound like a lot. Compared with half a quadrillion, it's a pittance.
Scary but true."
The SIPC does not cover derivatives, future contracts, annunities or limited partnerships. Their liability is not nearly as high as that article would lead you to believe. SIPC coverage is linited to cash, equities, and bonds.
Knowledge is the enemy of fear
Perhaps not this week, but in the near future the Dow will no doubt reach its closing high of 11,723. Is this a reason for those in the stock market to celebrate? Perhaps not.
Even with this occurrence the Dow adjusted for inflation over the last five years would have to exceed 13,000 in order for those invested in an across the board Dow to just break even, and this is using the governments inflation numbers.
Even that number would be low since as usual several of the Dow companies have been replaced over the last five years due to poor performance, and these have been replaced by better companies skewing the index.
So what has kept up with inflation the last five years?
C.D’s ? NO
Treasuries? NO
AAA Bonds? NO
Real-Estate? Perhaps depending on where you live.
Gold? Yes, from $300 to $600
Silver? Yes, from $4.00 to $11.50
Numismatics? Yes, the PCGS 3000 has moved from 54,000 to 67,400
And which of these will continue to keep you even with inflation? Who knows, but my guess is that Gold and Silver will not make the big gains promised by most of the bugs simply because these markets are to thin, and easily manipulated. This is not to say that an anomaly might occur like the Asians ceasing to buy treasuries. Certainly there will be a great deal of World Government pressure to stop these markets from making any significant moves in the next few years. In fact it is most unlikely that Gold will hit its all time inflation adjusted high of $2,150 at any time in the next several years without a near collapse of the dollar.
roadrunner
the Dow adjusted for inflation over the last five years would have to exceed 13,000
Probably true.
in order for those invested in an across the board Dow to just break even, and this is using the governments inflation numbers.
Convenient that they left out how a real investor would have received dividends. (At a very favorable tax status, too.)
We pay homage to a call for "efficiency" in markets and industries in hope that the gains will transfer to our benefit from the enormous savings that capitalism without boundaries can generate.
But do we get any "participatory" benefit? Not a whit. We clap with glee at an IRA gain of $50,000 for our "golden years" without giving a single thought to the fact that the machinations of "outsourcing" and "downsizing" that gave us that 50 grand have also made it quite likely that our kids and grandkids will be sharing our abodes and helping spend the 50 grand and many multiples thereof.
Anyone arguing against protectionism of their national prosperity is the same as a rancher wondering why he should feed his herd oats when thistles are so abundant.
With the current FIAT unbacked system we LIVE in, it is just plain FOOLISH to think that there is any hazard to a runaway inflation. The simplest boob can deal with inflation. He/she simply spends any overage from a constantly escalating paper "income."
What McDonald franchisee would balk at a $50/hr wage if they were getting $15 for a bag of fries?
WHATEVER is purchased will be worth more tomorrow. Simple planning. No, the CEO will not take HIS 750 million to the Caymans to store for the coming "fire sale" but we would have new roads again and repairs to the existing ones.
Pay more and tax more. I don't GIVE a crap about income when it is so simple to buy a PERSONAL asset. If it gives me rental income, I'll buy it. If it just escalates in "value" I'll buy it.
A "side effect" would be the placement of those requiring legislation for their raises to be effectively placed behind the curve again where they obviously belong. And with their ubiquitous "risk aversion" they would ..naturally...hesitate to participate in the asset acquisitions (especially if they thought someone in the private sector might get a piece) and by their inaction, return to the base where they belong.
Pay me more. Tax me more. Pay EVERYONE more. It's only paper and ink.
The nasdaq has doubled from its 2002 lows and the dow and spx are also up in the 90% range.
The last 5 years have been great for ALL asset classes. Metals, equities, fixed income, real estate, foreign currency, ect. Unfortunately something will have to give.
Knowledge is the enemy of fear
Hey my friend I don’t think that the general markets we discuss here have anything to do with smart traders like yourself, Ha Ha
I am sure that there are some in the country that made millions trading these pathetic paper markets over the last 5 years.
Rob Kirby discusses the "convenient" change of the Goldman Sachs commodity index that reduced the weighting of unleaded gasoline by a factor of 3. Within 1-2 months, pension and hedge funds that had exposure to commodities and used the GS Index started bailing on their gasoline futures. He figures 75% of long positions were liquidated. Gee, could this have had an effect on the price of gasoline dropping? Good thing Hank Paulsen is in the Treasury's driver's seat and this came right before the elections.
Read Rob's article for more. If it ain't govt stats getting tweaked for our benefit, then it's private stats for our "benefit."
Another Kirby article worth reading that talks about GS and JPM getting some leverage in Iraq banking over other sources. Guess who got the better deal?
Rob Kirby
roadrunner
Gold is relatively cheap - as of 10/7/06 its at $569 a share... and its just gone through a price "adjustment". Remember volatility is normal for gold.. Most of it does not get used up in industrial processes unlike copper and up to recently silver.
Gold -adjusted for inflation- is selling way below what it did in 1981 - a US$600/oz price is the same as a US$280 price back in 1980 (conservatively using the government price deflators)
The Saudis are helping out the Bush family by pumping more oil which pushes down the price of oil.
increasing oil production right before the fall elections
Add to this the news about banks manipulating the price of gold.
The common wisdom is that Gold will tend to spike upward on any news of economic or political instability - especially in the oil producing countries. Fear = Gold going up, Stability = Gold going down.
However, last week we saw that even North Korea's saber rattling didnt result in gold spiking up, due to the effects of the drop in crude oil prices.. Maybe thats because it is unlikely that they can reach the middle east with their missles... Or because North Korea contributes almost nothing to the world economy, and they arent percieved as a real threat with the US military clearly within spitting range. (Right as I'm writing this, there's a breaking news story about N. Korea crossing the DMZ and planning a Nuke test for Sunday- more provocation, which will probably also have no lasting effect on oil or gold),
Remember that the banks and governments of the world know that their currencies are Fiat currency. they have to sell gold (or pump more oil from the ground) to continue proping up the world economic system.
Economist Article
Adam Hamilton presents an interesting article on the change in the weighting of the CRB index in mid-2005. This was the 10th revision of the forumla since its inception. It had been several years since the last one. The current version changed the GEOMETRIC weighting of the 17 average weighted components (OJ, oil, etc.) to one of ARITHMETIC weighting with energy now given a much larger share of the pie. The net effect under geometric weighting is to smooth out the peaks. The steady rise in the CRB index did just that for several years. But with oil and gas getting hammered recently, the CRB's lack of geo-weighting now exacerbates the drop more than ever. Goldman Sachs controls this index so it is probably they made a nice chunk of change shorting gas futures knowing that many funds would have to reduce their holdings eventually.
Trying to compare the CRB index of today with that of mid-2005 is like comparing apples to oranges. Just one thing to consider as you compare what many think to still be equivalent stats. Geometric weighting is of course used in the CPI to help smooth out (ie "wipe out entirely") energy spikes for example. Wonder if the BLS will drop GEO weighting there like the CRB index did? You would think they should be consistent. Or was there a plan in 2005 to help turn the commodity index hard based on one item alone: oil? Makes sense to me. A geo weighting along with weighting energy equally was "helping" tame the CRB while energy was flying high. But if energy is on a down spiral let's make sure it's more obvious by increasing the energy weighting. If energy takes off again I would not be surprised to see the reappearance of geo-weighting.
Jim Willie speaks
An article deducing the ties of JPM, GS, and the govt in helping to bring oil and gas prices down. A good point noting that our military is probably the biggest oil consumer in the world and was building excesses for some period. Selling that excess over the past few months would have a nice effect on lowering gas prices. Federal Law also requires replenshing the strategic oil reserves within 60 days following a usage. Well Katrina is a year past and no effort has been made to replenish those gallons. Possibly after the election?
roadrunner
roadrunner
I give away money. I collect money.
I don’t love money . I do love the Lord God.