Gold not so golden?
notwilight
Posts: 12,864 ✭✭✭
Huh?
I suppose he'd have rather been in stocks in 2008? Or perhaps he was and now is making a feeble attempt at sour grapes. --jerry
I suppose he'd have rather been in stocks in 2008? Or perhaps he was and now is making a feeble attempt at sour grapes. --jerry
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Even his own statements contradict the "Gold was not so Golden" comment.
Oh yeah, gold is up $22 today and could easily close yet again higher for the 7th straight year. Now wouldn't that pi$$ off Nadler and all his paper-toting gold minions? It would also probably pi$$ off a number of anti-gold bugs who were finally getting ready to bank on a down year in gold. I wonder how many people bought gold at $1033 in March and have held on through today? Not many I would guess. Probably as many who still hold their 1980 gold at $875 (lol). But such dribble seems to soothe the WS paper equity crowd. Gold holding it's own was certainly "capitalizing: during the worst market turmoil in nearly 80 years. In fact the gold ETF is holding more gold now (775 tons) than at any time since its inception 4 years ago. That would imply that people were not fleeing physical gold by any means. They did however flee paper gold. The trashing of paper gold futures by the JPM/GS/Fed and their henchmen is another story. Also not mentioned in the story is the recovery of gold from $675 to $850+ following an overzealous sell off of the paper metal. Gold has been a fine place to be the past couple of months, especially in strong producer gold stocks that have effectively doubled up in a few months.
As of Wednesday, gold closed at $847.10 per troy ounce, up 1.5% on the year. Compared with a 40% decline in the Standard & Poor’s 500-stock index and a 60% drop in crude oil, that’s just fine — it is, after all, a return of capital. But analysts say gold failed to capitalize during market turmoil because for much of the year, gold was as much a part of the craze as any other asset.
“We weren’t necessarily seeing the rush to safety of this safe-haven market that gold has been in the past,” says Darin Newsom, DTN senior commodities analyst. “We were seeing a get-me-out effect in all commodities, and there was no belief that the gold market was any more sustainable than any other commodity.”
The yellow metal settled at a record $1003.20 on March 18 and has lost nearly 16% since. The gains were fueled by much the same activity that boosted grain commodities such as wheat or corn, as well as energy-related commodities — an abundance of liquidity seeking undervalued investments.
With inflation anticipated to rise, gold was a beneficiary. This run, however, increased gold’s correlation with other assets such as oil and stocks, and when those assets started to falter later in the year, gold, by virtue of its already lofty position, failed to respond positively.
“This was the perfect storm for every prediction ever made for gold to come and vindicate its safe-haven attribute, but it’s largely falling victim to deflationary pressures,” says Jon Nadler, senior analyst at Kitco.
In the late summer, renewed strength in the dollar added to pressure on gold, and caused it to decline further as investors worried more about deflation. Only more recently, as the dollar has declined, has gold regained a bit of luster, rising 9.4% in December, to $774.60 to $847.10.
“It just keeps your buying ability intact as opposed to giving you much of an advance,” says Dennis Lamson, registered investment advisor at CobyLamson Capital Management in Medford, Ore. He says that the declining availability of coins suggest that demand for physical gold still exists as a hedge against various factors, including rising inflation.
Should the Federal Reserve and other central banks achieve success and re-inflate the economy, that could be a tailwind for gold. For now, investors will have to contend with the fact that it was one of the few assets that did not lose anyone money.
roadrunner
his point is that gold did not have the big run up that many expected, and gold failed to hold on to its highs set earlier in the year.
that's all he said. and it's true.
I guess he could have emphasized that gold did manage a gain while everything else (just about) went into the toilet. he didn't, and that was an error.
www.AlanBestBuys.com
www.VegasBestBuys.com
<< <i>sure, gold did better than stocks. but I think his point has been missed by most of you:
his point is that gold did not have the big run up that many expected, and gold failed to hold on to its highs set earlier in the year.
that's all he said. and it's true.
I guess he could have emphasized that gold did manage a gain while everything else (just about) went into the toilet. he didn't, and that was an error. >>
That's the way I read it .. No anti Gold ... but I also expected a rebuttal by our in house Sinclair Disciple, which we did.
<< <i>sure, gold did better than stocks. but I think his point has been missed by most of you:
his point is that gold did not have the big run up that many expected, and gold failed to hold on to its highs set earlier in the year.
that's all he said. and it's true.
I guess he could have emphasized that gold did manage a gain while everything else (just about) went into the toilet. he didn't, and that was an error. >>
I don't think anyone here has missed anything. Everybody who follows these markets know the true story. Gold is still being controlled by the paper contracts. When more and more people take delivery of their contracts and hold physical, the comex paper game will be over.....that's when people will experiece the true value of gold. Many great articles have been written expaining golds drop in detail. A very shallow article like the one in WSJ is an absolute joke.
Yeah, I read the article...what drivel and it's not like you have to look very far to find another one just like it. I'm suprised to keep hearing that crap broad cast on the air ways by some "financial advisor, investment broker, talking head full of BS" group of people. Man, (no offence to DH intended) talking about beating a dead horse, as in the paper market, those that would introduce these thinkers to the public as some kind of advisor whose opinion stands for an educated position are just as much a part of it as the yapping heads with mouths. The only thing they got right is that their enunciation and syntax are mostly passable and that stands for credibility in the talking head circuit...again, what drivel.
Maybe those people are so deep in the water with their paper portfolios that the only thing they can do is keep pumping that lost cause so they can drag more people down with them so they will all have something to talk about. Kind of reminds me of that guy earlier in the year that was publishing articles on how profoundly unpatriotic you are if you don't work till your're 70...beyond lame. I suspect all of those goobers are from the same place; the people that keep pitching failed paper markets and the people that want us to pay more taxes so their little priviledged world doesn't come apart at the seams and they have to give up that affluent talking head lifestyle they expect is due them. They are in the same group of guys that are now talking about paying as much tax as you can to help support the country...yeah, stay tuned on that one. Maybe I'll donate some buks, include an extra check with my tax statement this year...stay tuned on that one too.
It's kind of like those Madoff people that lost billions...didn't they even consider or check for SEC complaints? Are they really that foolish with their money that they think that just because someone says it's good that they should heap onto it? So, CNBC is saying you should stick with your stocks, that's your best chance to recover the 40% of your money that you lost listening to those fools in the first place. Geez, if people don't have any more consciousness over how they invest their money than that, then they deserve to get fleeced and they should enjoy it because they were way too lazy to bother to check things out and choose to listen to one of those fools that want you to retire at 70 or keep your paper for when it recovers...maybe we shouldn't tell them about the 7000 DOW...we would deprive all those financial advisors of something to wag their tongues over so they can keep getting a paycheck instead of doing a little research and providing some actual guidance to people. Heck, we were talking about exiting stocks in June and most of us did but those guys were pumping and pumping, representing national news networks. I mean, why not provide a service to listeners that has some value as opposed to spooning out the same effluent that everyone else is dishing when you can just be another parrot and hope your employer lets you put up with your lame game for a little while longer till stocks rebound...in a few years, good luck with that too.
Hey, if this is the age of the internet...why don't people bother to look at stuff and make a reasonable play with their money...maybe people have lost the understanding that it is their money and they feel they should just do something goofy with it like give it to a fund manager and wait for stocks to rebound. Hey, maybe those people should just buy DOW indexes and be done with it. Maybe they should work till they are 70 and buy DOW indexes...yeah, that's the ticket. Where do those people come from anyway? Kind of like the people that didn't get out of the way of the tech/dotcom crash or the people that missed the oil/commodities skyrocket and just held on...cohodk has it right, if you're gonna play then you need to get out when it's time to get out and not be in love with any of your investments, it's not about love, it's about the money. Heck, us hacks here make better calls than those guys and probably make a lot more roi than them too...it's easy to be a fool, just get in line, if you want to get some roi then you have to pay attention and talk about it with people that have something to contribute other than an opinion. I like this forum and I'm just getting wound up for a major diatribe coming soon, at the new year!
Why would anyone expect gold to "run up" in a massive deflationary crack down? This was not an inflationary boom where gold should skyrocket. In fact, gold held value just like it did during the early years of the great depression. "Mission Accomplished"....so far. Gold won't reach "stupidly" high levels until the inflationary crack-up boom does hit.
If one considers the possibility of massively manipulated gold markets at times, then the performance of gold from July 2008 and on is superb. While it's clear than 99% of the fiat bugs consider such a notion to be hogwash, they are entitled to their opinions. They probably also believe that the SEC adequately polices the Comex just as they do the stock markets. Considering that 2 major US banks held uncharacteristically and never before seen massive short gold and silver positions in July (before the commodities crash) is just another inconvenient fact. When did a bank's business shift from servicing loans and building the economy rather than shorting precious metals? I know my local bank is not in the PM shorting business....but they certainly would be (and me as well) if the Treasury let them in on their PPT plans each month.
Reading Nadsler's end of year column today is an inconvenient joke. He takes a number of potshots at the world while patting Kitco on the back. Yeah, the same Kitco that can't seem to keep it's computers running during upmoves in gold, and that constantly attacks PM's whenever they can....usually daily via Nadz posts. The fact is that Nads has now made a "living" getting one top call right in the last 6 years. This paragraph from today's article is a classic;
The "You Couldn't Have Been More Wrong, But You're Forgiven" award goes to all of those who guaranteed us gold prices at $1,200-$2,200-$5,000 etc. for 2008, to those who saw COMEX defaulting this very month, to those who cried "Foul!" when gold prices and (especially) silver fell in sympathy with other commodities in the deflationary storm, to those who saw shortages and high premia as the 'new paradigm' in bullion products, to those who saw a bottom being made in mining shares every week of the year, and to those who awarded the "Moron of the Year" award to our 12/31/07 projections for 2008 gold prices ("from $640 (off by $80) to $940 (off by $93) and a chart pattern which might see the highs being made well ahead of the lows" it was March to October).
Here Nadler takes credit for blowing all his 2007 calls by finally getting something right in 2008. He left his readers at the train station at $675 gold and didn't get them back in. And in fact they are still not back in since August 2007 (missign the entire move up) because he has been calling for $500-$575 gold since the March 2008 peak. Maybe he'll get his clients back in after gold hits $1200 but more than likely he'll undercall the bottom and still keep them out. I don't ever recall Nadz predicting any gold prices above $800 except when they had already passed those levels. He was constantly calling for an end to the runs at $700, $800, $900, and $1000. Eventually he had to get a call right...even if gold went to $5000. He didn't call the $640 low either as he was expecting gold to fall well under $600. He also has not called anything right since on the recoveries to $990, $950, $880, etc, etc. If he was selling his analytical opinions to investors they'd have all dumped him by now as being a one trick, down market pony. Since the bottoms in October he did not see the 80-100% recovery in gold stocks coming as well as the $200 or so recovery in the physical price. He has no clue what the reasoning behind taking delivery of nearly 50% of the Comex gold inventory means. Because a default did not occur (and never will since other sources of gold can shore up the Comex) he claims victory. From this vantage point, I'm not so sure what he is crowing about in 2008. He got one call right. I doubt we'll see another one from him until $1200+ gold. And on the way down, he won't let one of his forget that he called "it" right. Let's watch......
Those much higher gold prices JN mentions in the paragraph above will surely come back to haunt him. But by that point he will undoubtedly be a "cheerleader" who saw it all coming months earlier.......
roadrunner
But I thought you were bullish on gold? If you believe in a massive deflationary cycle, you can't possibly be bullish on gold.... can you?
www.AlanBestBuys.com
www.VegasBestBuys.com
<< <i>Roadrunner, you have me confused. Yes, I admit I am confused. You wrote: "Why would anyone expect gold to "run up" in a massive deflationary crack down?"
But I thought you were bullish on gold? If you believe in a massive deflationary cycle, you can't possibly be bullish on gold.... can you? >>
Oh come on MoneyLA we know you know the point. Let's see the dollar skyrocketed as they turn the printing presses up to create trillions of dollars, how's that? Deflation is controled by the printing of money causing inflation, it's just too bad it takes the goverment a year or two before they realize the trend, I believe late this year they announced an "Ression", image that who whould have thunk
<< <i>sure, gold did better than stocks. but I think his point has been missed by most of you:
his point is that gold did not have the big run up that many expected, and gold failed to hold on to its highs set earlier in the year.
that's all he said. and it's true.
I guess he could have emphasized that gold did manage a gain while everything else (just about) went into the toilet. he didn't, and that was an error. >>
I'm gonna give Nasaler some ( a wee bit of ) credit, too.
Show me a pro-Gold writer/know-it-all who stated gold would stay relatively flat in 2008 (Comex) from last year....Oil would go to $140 and then drop like a rock to under $40.
I'm a fan of Sinclair's to boot.
For someone who writes a financial advice column I'm surprised that you are not more conversant in the multi-benefits of gold. And this is a major reason why I like it. It just doesn't work well in a strong inflationary environment, but has worked well in stagflationary times as well as deflationary times and during geo-political stresses. Since we have the potential to be in and out of any number of these on short notice or without notice, gold answers many calls. In good times where stocks are climbing year after year w/o a care in the world gold does poorly. We haven't been in those times for nearly 8 years with who knows how many more years of stressfull times ahead. That's when gold does its job the best. It would be no surprise to me that the JPM's and GS's of the world purposely strive to help contract and expand money supplies every so often in order to cause booms and panics to get a tighter grip on the money levers. With only a couple of major banks left, they seem to be doing a good job for themselves. They make money on the boom and on the subsequent crash that they caused. The real prize being getting more control of the financial markets.
Eventually I'll be "singing the praises" of the generic stock and bond markets again, but not before gold and commodities have run their 15-20 year cycle to the end.
Gold Funamentals 2 - 2009 and beyond - Zeal
Adam Hamilton presents the hard to dismiss pros of the gold market. The strongest years in the current commodities cycle are yet to come. Is there a similar list someone can post for stocks, bonds, derivatives, or currencies?
roadrunner
you seem to have opened the door to "any mix" of circumstances and that is what has me confused.
let me give you an example of what I am looking for:
I would suggest that jelly beans would rally in price if President Obama reveals that he, like Ronald Reagan, also loves jelly beans and at the same time the biggest jelly bean factory in the world is shut down by a fire, and the sugar harvest is poor in Hawaii. there you have three factors that would drive jelly beans.
okay, what is the mix of factors that you need for gold to rally?
thanks.
www.AlanBestBuys.com
www.VegasBestBuys.com
MoneyLA, your confusion on the gold issue seems to be too large a handicap to resolve with our considerable efforts. It seems you will just have to remain as one of those seriously gold-challenged individuals. If at this point in time from reading the gold thread for over 4 years, you cannot list a number of gold-positive influences on your own, you'd have to question why you are a viable source of PM financial advice for your LA readers/listeners. And if you know what these factors are, feel free to list them here to further the discussion.
If you had indeed read what I wrote above you would have realized that gold hasn't done particularly well during times of extended growth (i.e. rising US dollar strength, expanding equities "paper" markets) (1982-2001). Gold can do well when almost any single event that upsets the dollar/equities apple cart goes astray. Gold protects in "uncertain" times, of which we seem to have an overabundance of at the present. One could also generally say that gold doesn't do well when commodities in general are out of favor (1982-2001). However that hasn't quite applied to the last few months since gold obviously has a strong currency link that can easily overpower any weakness in its commodity side. But one can safely say that an oversupply or undersupply of jelly beans would have no effect on the pog.
The mix needed for gold to rally? It's already here.
roadrunner
I have just 2 concerns about the article. The first is the commodities bull. I dont see ANY sustained demand coming back for industrial commodities for several years. By then the "secular" bull will be old and tired.
The second is the gold chart. The 200 dma is now trending down, something it hasnt done in 7 years. Might not signal the end, but it does signal consolidation, which is exactly as I said it would do back in August when gold was at this very same price.
I can make an arguement and agree with increased demand by investors. Time will show if it is enough to turn the charts higher.
Knowledge is the enemy of fear
Technically correct. But the rate of the down trend in the 100-200 MA's has slowed considerably, if not entirely. It appears to me that they are flat-lining right now. If one uses the 100-200 EMA's it would appear that the trend is just starting to turn up. Yes, we've been "consolidating" for a few months. In that time the producer gold stocks have doubled in price. That's just the way this gold bull got started in 2000-2001 following the washout leading up to that point. This is a positive/bullish sign for the physical side of gold.
The 200 day MA also trended sharply down during the major correction in gold following the 1975-1976 washout. After gold increased 6X from 1971-1974, it corrected 50% only to go up 8X from there. In that comparison the recent gold market increased 4X and then corrected slightly over 30%. Let's not forget that Fed chief Volcker did nothing to stop the advance of gold in the 1970's. Something he later regretted. The same certainly can't be said of the past 7 years. Even Greenspan has admitted to congress that the Treasury stands guard to lease/sell gold whenever needed to support the dollar. Volcker also did not have an ESF/PPT at his disposal to rig the markets since it didn't exist until 1987/88. And Volcker also did not have a fox in the hen house (ie Barrick gold) to help do his bidding in futures, hedging, and consolidation. Still, gold has done well enough in spite of the obvious regulatory changes.
roadrunner
gold rise in a deflationary economy?
gold rise in a recession?
these go against TRADITIONAL thinking.
I think the EXCEPTIONS that you and others have pointed to are simply that, EXCEPTIONS.
So again, humor me, and give me your SCENARIO for a rise in gold prices... a checklist, if you will.
By the way, as a "technician" I avoid fundamentals... I simply go by chart movements. I am interested in your "fundamentals," however.
thanks
www.AlanBestBuys.com
www.VegasBestBuys.com
.....and ditto for every CFP, analyst, and stock broker who pushed stocks since the later 1990's...and especially in 2007 and early 2008. What's the percentage of those? 99%? Had their investors just bought physical gold anytime from 1999 to 2007 they'd be fine today. The bottom line is knowing when to trade out of anything regardless of what the gold "gurus" (Schulz and Dines) as well as the stock gurus (Ramsey and his ilk) seem to say. The signs were there for both markets. It's up to the individual investor to conduct their own due diligence and know when it's the right time to step away from the feed trough.
And not to vilify Schulz and company, but I doubt they gave continued buy and hold signals from 2001-2008 with no thought of taking some profits along the way. Even Sinclair recommended as much as he continues to do....take 1/3 off the table when the frenzy reappears at the top of a defined trading trend channel. Schulz and Co's one bad call in 2008 apparently makes them poor analysts, while Nadler's one and only decent call in 7 years, makes him a "genius." A genius.....who made little to no money for his readers. And a genius who continues to keep them out of the market waiting for $500-$600 gold to return...which it still could.
roadrunner
Not in the least with the Austrian school of economics. Keynesian theories are flawed and maybe that's what your contradictions are.
gold rise in a deflationary economy?
It did just that in the 1930's. Not only did physical gold increase 70% following FDR's revaluation, but gold stocks, the only legal gold trading game available made some of the best gains of all stock classes in the 1930's. Imagine that. Expect some sort of devaluation of the dollar or revaluation of gold in the near future.
gold rise in a recession?
Yup. In the stagflationary recession of the 1970's. We've had very few purely recessionary/deflationary events of the past 90 years. They are 1921, 1930's, 1955-1958. At all other "so-called recessions" since, the money supply did not actually contract. And it won't in this one either.
these go against TRADITIONAL thinking.
Can't help it if they contradict your thinking. But for arguments sake, the entire Austrian school of economics goes against mainstream USA (ie Keynesian) thinking. Right now the Austrian theory is winning out.
I think the EXCEPTIONS that you and others have pointed to are simply that, EXCEPTIONS.
The entire 1930's and 1970's are many years of exception. Remember again that we've only had ONE single trial and tribulation since before 2001-2008 of gold vs. the fiat dollar (ie 1971-1980). Sounds as if this one lone fiat example to you must therefore be an "exception." Round two which is in process, will reverify it.
So again, humor me, and give me your SCENARIO for a rise in gold prices... a checklist, if you will.
Read the Zeal link above that I posted for you days ago. It has some of the major fundamentals listed.
roadrunner
But I have a hard time thinking that the fundamentals of the 1930s and even the 1970s will influence the fundamental developments of this decade.
If you wish to believe that "past is prologue," go ahead.
I would rather take "today's fundamentals" in the context of "today's economy."
But then, Im just a "technician," so what the heck do I know....
cheers.
www.AlanBestBuys.com
www.VegasBestBuys.com
Fundamentals always win out even against years of manipulation or unfair trading advantages. The following of "technicals" and "charts" is almost to the point of a self-fullfilling prophecy. Everyone does it....and does it the same way. Both the longs and shorts and all sides of the trade read the same charts, apply the same theory, and interpret them quite predictably. In fact I'm sure the FED/Treasury/PPT pick their market entry and exit points based on how they expect the majority to interpret the charts.....and then do the opposite. No doubt the major banks do the same thing to better out-time the masses.
It's getting to the point where only the fundamentals are real (with the exception of govt stats that purposely skew the "published" fundamentals). When every J6P has the "charts," the outcomes are rather predictable since they are all reacting the same way. The PPT and bankers zig just before J6P zags.
This tidbit from the "runtogold" website.
During a deflationary credit contraction the last layer to evaporate will be the currency through hyperinflation. This is a currency event and requires neither a functioning economy nor an increase in the velocity of the currency. Gold is a currency and like all commodities is produced because it adds value to society. The primary value gold adds to society is in performing mental calculations of value.
roadrunner
In fact, there are two forms of analysis in the markets.
there is "fundamental" analysis and there is "technical" analysis.
anything which follows news or events or circumstances is "fundamental."
anything which follows charts or pricing patterns is "technical."
any analysis which follows developments in the 1930s or 1970s such as with recession, depression, inflation, value of the dollar, government policy, international policy is "fundamental" analysis.
Now, what the heck do you mean by: "What happened in the 1930's or 1970's were not fundamentals per se, but outcomes based on underlying fundamentals." ??
thanks.
www.AlanBestBuys.com
www.VegasBestBuys.com
1. The charts are not always 100% correct or predictable. It's not that easy.
2. The US has never seen times quite like this so historical precedence is not reliable.
3. I still question the deflation argument as many of the items I buy regularly seem to be going up in price. Sure, many commodity prices have dropped significantly but they are now oversold and the effects of this are not really being seen in the overal economy. Some stores and manufacturers are liquidating excess inventory at the moment but that will end. Finally, I know you'll say that billions were wiped out in housing and the stock market losses, but this is a false argument because the stock and housing market is a zero sum game. What's not a zero-sum game is the fed's printing press, which is running at hyper speed right now, and DC is still talking about printing more. It takes time for the newly printed money to have its effect, and that should be start happening 2Q next year from what I figure.
go out and collect all the abalone you can and seshells by the seashore and if you are lucky a booty of treasure in a sunken ship now seing light for the for the first time in 150 years, just watch out, this has and end game and we haven't seen it, even on the horizon, yet.
....This idea, that money will simply disappear into a huge black hole in the ground, is discussed in the 12-26-08 issue of the One-handed Economist. It is called the theory of the liquidity trap. And there I explain why there never was a liquidity trap and never will be a liquidity trap.
The theory of the liquidity trap was invented by John Maynard Keynes as his explanation for what was called the Great Depression. (It was great, but it wasn’t a depression, and this also is explained in the 12-26-08 OHE.) Keynes was not much of an economist. He was too smart to have ever believed Keynesian economics. But he was one of the world’s greatest confidence men. He saw his path in life as kissing up to the rich and powerful and helping them to get richer by stealing from the poor. The idea was that they would throw him a few crumbs from their table, and this is how he would make his way in the world.
Subscribers to OHE know that the reduction in the money supply of 1930-32 was a deliberate policy of the U.S. Government, and it was open advocated by the Republicans of that day. In fact, believers in the Keynesian theory of the liquidity trap are so stupid that I challenge them as follows: Find even one case where there was a significant increase or decrease in prices in United States history which was not preceded by a corresponding increase or decrease in the money supply, caused by the Government. So if you think that all of the money now being created by Don Quixote Bernanke is going to disappear into a liquidity trap, then you are in for a painful surprise.
roadrunner
Knowledge is the enemy of fear
1. The charts are not always 100% correct or predictable. It's not that easy.
I agree. In fact there is no "common ground" for technical analysis. Different "technicians" interpret charts differently. You could say it is an "art" as much as it is a "science." This is why two technicians can look at the same chart and come up with different opiinions.
2. The US has never seen times quite like this so historical precedence is not reliable.
I agree again. How can we possibly make comparisons to the 1930s and the 1970s to explain today's markets?
I have some mixed comments about your #3:
3. I still question the deflation argument as many of the items I buy regularly seem to be going up in price. Sure, many commodity prices have dropped significantly but they are now oversold and the effects of this are not really being seen in the overal economy. Some stores and manufacturers are liquidating excess inventory at the moment but that will end.
I have to agree with you on this, because so far we have only had a short term trend of deflation, and this can quickly change.
You also wrote: Finally, I know you'll say that billions were wiped out in housing and the stock market losses, but this is a false argument because the stock and housing market is a zero sum game.
Well, I dont know if it is a zero sum game. What I do know is that a lot of wealth and security was wiped out in the housing and stock markets and that will affect consumer/investor decisions for a long time to come.
You also wrote: What's not a zero-sum game is the fed's printing press, which is running at hyper speed right now, and DC is still talking about printing more. It takes time for the newly printed money to have its effect, and that should be start happening 2Q next year from what I figure.
Yes, there can be inflation around the corner, but until I see it I can only be on guard. It might not come. And if inflation does start to heat up, there will be plenty of time to slow it or stop it. I dont think that hyperinflation is a certainty. I agree that it's a possibility. I even wrote about the threat a while ago in my web site. But it is, at this point, a "concern" and not a certainty.
thanks for the comments.
www.AlanBestBuys.com
www.VegasBestBuys.com
<< <i>Yes, there can be inflation around the corner, but until I see it I can only be on guard. It might not come. And if inflation does start to heat up, there will be plenty of time to slow it or stop it. I dont think that hyperinflation is a certainty. I agree that it's a possibility. I even wrote about the threat a while ago in my web site. But it is, at this point, a "concern" and not a certainty. >>
I somewhat disagree that there will be plenty of time to slow or stop it. While it will not be an overnight event, there will be little the fed can do. Yes, they can raise interest rates, but it would not be practical. They can try to take money out of the system (via increasing bank reserve requirements or other measures), but I see this as not being too practical either. On top of that, our politicians have no plans to meet a balanced budget and an infinite number of plans to exceed the budget. This leaves only printing more money or borrowing from foreign sources, and that appears to be drying up (if it isn't already). I'd like to know if you agree with this assessment or what tools you think the fed would realistically be able to deploy in the next year or so to calm down inflation once it is ignited.
In the past few months the fed has changed their stated policy with regard to the dollar. They have changed from "We support a strong dollar" to "we will do what it takes to get the economy going again, including devaluing the dollar."
right now we can only talk about the threat of hyperinflation. but what is that hyperinflation rate? what resources will the Fed have at that time to meet the challenge? and how do we know that hyperinflation rates will ever come? what if the Fed puts on the brakes EARLY and keeps inflation under four percent?
there are too many "what if's" in this discussion. we can guess all we want but until something concrete "happens" it's all a bunch of "party talk."
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In the past few months the fed has taken some extreme actions. I admit it may be premature to write off the fed at this point; however, the severity of their actions indidcates how severe the problem is and also indicates that the response may be difficult to control. If you've ever lost control of a vehicle you may know what I mean. Each drastic attempt to get the car under control only leads to a drastic turn in the opposite direction - the cycle being repeated until you hit something or the momentum dissipates. There are so many different problems with this economy that it's difficult to envision the fed being able to bring things under control in an orderly fashion. It is reasonable to expect the fed to sacrifice the dollar to save the economy rather than sacrificing the economy to save the dollar. You must admit, that in the situation we are in with massive debt, a declining economy, and ZIRP, the options are limited. Like I said, if I'm overlooking some options, please list some.
well, was TARP in any economic course you ever took?
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<< <i>proof collection wrote: " Is there anything I'm missing?"
well, was TARP in any economic course you ever took? >>
Yes. That's the same thing as printing money/increasing the money supply. Whether you lend it out or give it out, the effect is pretty much the same.
I'm not going to worry about it till I see smoke on the horizon.
Otherwise, I would be too busy worrying leaving no time to deal with today's issues and problems, namely, how to run my business, sell advertising, publish a web site, and get a TV program on the air.
As Ive said here before... Im concerned about the next six months, and I am more concerned about the next week.
the hyperinflation that might come two years from now is a worry that can wait.
and IF it comes, we can deal with it then.
in the meantime, I'd like to deal with today's recession.
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Thomson's latest thoughts. He is seeing a "potential" long term flag formation that many feel is impossible. We've discussed the same thing here before. I don't see the pattern no matter how I look at the 5 year chart. $1700 really is not that incredible of a price. We'll get there though climbing the wall of worry all the way.
What I'm seeing on the gold chart right now is going to shock you. I see a potential flag pattern. Not a big one. A MONSTER.
A flag on a longterm chart in a major market is an extremely rare occurrence. Some technicians say it is impossible. I don't believe in the word impossible in markets. Markets can do anything at any time. They can go to infinity. Or to zero. The question isn't where they are going. The question is: Regardless of what happens Are you prepared?
The target of the flag is an incredible $1700 an ounce. Basically a doubling of the gold price from current levels. Many gold stocks could rise by 500% or even 1000% if the flag plays out.
Ever watch Star Trek? The Enterprise Space Ship blasting through space. Like gold blasting to $1700. Was it a smooth ride across the universe for the Enterprise? No. It was a day to day battle with many horrible surprises. In the market, surprises are risks. Risks that need to be managed. Professionally. With the wrong approach to managing both the risks and rewards that come with the flag pattern, you may not only miss the ride, but find yourself at gold $1400 with a gold portfolio in the red!
roadrunner
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roadrunner
<< <i>And yes, eventually we'll break up out of that pattern. >>
It looks like we're on the verge of it... unless it turns around and goes the other way.
so, how do you make a prediction of gold shooting up to $1700 ???
please explain.
thanks
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A break to the downside tells me the gold fundamentals are falling apart and I see anything but that at the moment. This is a bull market where we've just had a 40% stock correction and a 32% physical gold correction, and a 75-85% gold shares correction. I just don't see a second spike along those lines occuring anytime soon. It's far more likely that all markets float up from here than a second hit of such magnitude occurs. Even during the spike downs in the 1930's, stocks rebounded inbetween.
The only large potential negative overhanging the market that scares me is the remaining $500 TRILL or so in OTC derivatives de-leveraging, or any part of them. While we seem to be in a deleveraging lull, I don't see why another $10-$50 TRILL of derivatives couldn't blow up and cause another round of paper deleveraging where everything gets tossed out again....gold stocks and physical gold included. TPTB don't have enough mojo left to hammer gold down that hard without it coinciding with a deleveraging meltdown where they can jump on the coattails.
Gold will make it's way to $1700 soon enough. As far as whether it "shoots" up or slowly meanders over years, I leave that to the technicians. I think even Thomson is thinking 1-3 years as well. Fwiw, most flag formations in a bull market tend to resolve themselves upwards. I'd lean towards a resolution up from this 9 month downward channel.
roadrunner
Knowledge is the enemy of fear
the flag started to form around Feb of 08. Look at the chart you posted. That up and down tight pattern from about February to the end of the chart you posted is called a "flag."
I noted that it is a declining flag, and declining flags tend to break out to the downside.
roadrunner sees it differently.
as Ive posted before, technical analysis is an "art" and not a "science," and two technicians can look at the same chart and come up with different conclusions.
roadrunner: I think your conclusion is biased by your hope that gold prices will move higher. you even have a target price of $1700 which if you ask me is like pulling a number out of thin air.
you also wrote: "most flag formations in a bull market tend to resolve themselves upwards." frankly, this is absolute BS because there is no way for you to say that gold is in a bull market now. gold lost its bull market status in the spring when it topped $1,000 and then had a rally failure and dropped by almost $200 an ounce. That ended your "bull market" for gold.
Gold will have to top $1,000 again to resume a "bull market."
Again... please separate your wishful thinking from technical analysis.
If you want to talk "technical analysis" I will do that. But I can't debate your hopes and prayers.
www.AlanBestBuys.com
www.VegasBestBuys.com
We are at a tipping point though. We're at the top of the declining channel and we're at the 9 month mark for the consolidation. One way or the other, we should be in for a big new trend, regardless of what direction it goes.
Knowledge is the enemy of fear
some early signs will be to what extent the WPA of the 21st Century will "cost" as well as the Fed's promise now to do whatever it takes to stave off a deepening recession. the Fed and goverment reassessing cost's upward or downward will tell much.
They (down channels, pennants, flags) during down trending period do tend to break to the downside....until time and fundamentals break them to the upside. I just happen to think that the fundamentals and time are there.
I think your conclusion is biased by your hope that gold prices will move higher. you even have a target price of $1700 which if you ask me is like pulling a number out of thin air.
$1700 gold (or effectively $1500-$1800) has a strong basis from where it came from. It has been discussed here often in years past. And if anything, the conservative estimates that gave rise to $1650 years ago are no longer in effect following the massive FED and Treasury interventions. We are now looking at a multiples of that number.
..."most flag formations in a bull market tend to resolve themselves upwards." frankly, this is absolute BS because there is no way for you to say that gold is in a bull market now. gold lost its bull market status in the spring when it topped $1,000 and then had a rally failure and dropped by almost $200 an ounce. That ended your "bull market" for gold.
In fact, most of the flags/pennants over the past 7 years have resolved to the upside. Did gold lose it's bull market status in 1975-1976? It would have if MoneyLA was the consulting technician at the time. A technician needs to understand how a commodities cycle trends, what the fundamentals are about, and not rely on charts for all the "answers." A technican who is "stuck" in a quagmire concerning a 30+% or $300 (not $200) initial correction in a secular bull market (and -15% to date) and ignores monetary policy (the main driver of bull/bear markets) is not someone I would want to rely on. Using that same rule MoneyLA would have called the stock market dead after it fell from 12,000 to 7500 by 2002. But he would have been waving the "bull" flag after and certainly not before the rise past 12,000 for the 2nd time. Either he would have been very late to the party or very wrong as it didn't last long.
It would seem inevitable that at $1700/oz gold, MoneyLA will be heard to say: Did we just have another bull market? . No doubt imo he will have several more opportunities to declare the gold bull dead beyond $1000 gold, using that same 20% rule tucked in his back pocket. And I'll welcome every one of them. The extreme volatility in the gold market has only started and only signals higher numbers to come. In fact I'd not be surprised to see a $200 up day or down day in the years to come.
roadrunner
It is better to Chart GLD than $GOLD because for the best pivot points to determine Buys and Sells, one must have a Volume component to do TA correctly.
Even though, the close is at the top of the wedges’ channel and it looks as if the RSI thinks it still has a lot of room to have some go-go here.
Buckle-up Boys, the indicators below are begining to turn up!
Today's nice move happened without a corresponding drop in the dollar index.
Fireworks in the middle east over the next few days might also send gold soaring.