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July gold and silver trading thread
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Time to move on to July.
The consolidation continues. The pattern continues to move between the 50% retracement level (~928) and the 38.2% retracement ($944) of the lat move to $991. Nothing uncommon really or to be concerned about. It would be more bullish for gold to hang near the highs, but Tuesday's move did nothing to derail any pattern in progress. A breakout over $944 will be a key event to watch for.
The chart is energized and ready for movement. Not sure if we'll see any movement before the holiday or not. Could be interesting if North Korea gets uppity with us as they keep threatening.
For Wednesday, support is at $932.2, R1 is at $919.10, and Resistance is at $941.80. As I type gold is setting new highs for the day jumping over $930.0 again to the comfortable $930-940 zone.
The consolidation continues. The pattern continues to move between the 50% retracement level (~928) and the 38.2% retracement ($944) of the lat move to $991. Nothing uncommon really or to be concerned about. It would be more bullish for gold to hang near the highs, but Tuesday's move did nothing to derail any pattern in progress. A breakout over $944 will be a key event to watch for.
The chart is energized and ready for movement. Not sure if we'll see any movement before the holiday or not. Could be interesting if North Korea gets uppity with us as they keep threatening.
For Wednesday, support is at $932.2, R1 is at $919.10, and Resistance is at $941.80. As I type gold is setting new highs for the day jumping over $930.0 again to the comfortable $930-940 zone.
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Comments
I agree that there is a floor not much lower. The Chinese are looking to buy $80B worth of gold, and they will step in big on any price weakness. They are too smart not to push the price up with frantic buying.
Ackerman has been hedging his bets from $1000 to $822 and been wrong on a lot of them, as we all have been. I don't have any more confidence in his short term calls than in my own. For now, I'll keep watch on the YuYang Goldsters as they have been calling the market pretty accurately for a few weeks. I just took a look at their one year chart and they have it rising into September, similar to what 2007 did. A contrarian view to almost everyone else who have taken the seasonal view.
Dollar made a lower interim low this morning <.794. Gold will probably rally through early Monday but falter the rest of the weak in more volatile trading. The G8 summit in Italy runs from Wed-Friday and 3 more bond auctions go off next week (3, 10, 30 yr). Hence the boyz will need to keep the markets ship shape to pull more money into the bonds and keep the dollar at least even. The week of 7/13 things should start perking up better for pog. But note that most of the cyclical timers figure gold will be topping out by that week to commence a summer takedown. But for now, I'll stick with the YY and Sinclair but with one eye open just in case the bottom starts to fall out.
roadrunner
Resistance for Thursday is at $947.9, pivot at $938.8, and support at $928.8.
The PCGS price guide for Libs and Saints was updated, with the middle grades for common dates increasing $20-40 or so.
If you are long term traders shouldn't you be more concerned with long term moves?
Now, if you are day trading then I fully understand your concerns for these daily moves, but the sense I am getting is that for the most part you are pretty much all into gold for the long term and you are long term investors.
Thanks.
www.AlanBestBuys.com
www.VegasBestBuys.com
The pattern evolves on an hourly and daily basis and all of the different time frames. This is of particular interest to me, and I enjoy reading about what others have to say about the evolving patterns, whether I'm involved or not. You never know when the chart will align and you can jump in for a quick $10 move with futures and make a few grand, or when to consider entering or leaving a longer term position. It sounds like RR likes to buy and hold for weeks at a time, so I'm sure he's always on the lookout for opps to enter or exit positions.
I find it valuable, but it isn't for everyone.
I've also got a core position of AUY that I started building in the past week as well. So you could say I do day trade but knowing how the market might react in the short term, might help one in the longer term as well, especially if the picture is not showing whether a definitive bottom has been carved out. While I think/hope $912 gold is our intermediate bottom, it might not be. The ever expanding Gold to Silver ratio (now up to 69.8) makes me wonder how long we can keep pushing this back. The one good thing is that the ratio is storing a lot of energy that can wind up the metals very quickly. I think GSR will stop expanding as soon as the dollar stops gaining or bond yields stop their descent for a while and reverse.
roadrunner
Here you go PC, something to keep you invigorated over the long weekend. Drink up at your own risk.
It will feel odd watching gold on Friday knowing one can't buy or sell regardless of what happens. I can't help but notice that the Dollar, Euro, 10/20 yr bond yields and Gold-Copper-etc. seem to be coming to a transition point. Bands are tight on the currencies and momentums either strengthening or fading begging for a near-term change. The 10/20 yr bond yields tracked gold pretty well from April 17th to June 3rd. Looks like these could use a rest.
Silver is still a bit away from bottoming out but getting closer with RSI now under 40. Silver has been in a very slow moving drop. Still, at today's number SLV is just now touching the bottom trend line formed from back in November.
roadrunner
In your link, the guy is looking at a high of $2100. It's hard to discuss price targets without specific timelines, so I'm not sure what timeline he's talking about. My expectations for the next 18 months is this:
A high of $1400-1600 by the end of the year. The high may not hold, as I would expect a re-test of $1000 from above somewhere on the journey to the $1500 area. Once we blow through $1000, $1000 will be strong support that probably will not be breached. I expect 2010 to carry gold to $2500 +/-500. I believe this peak may come at the end of 2010, and I allow for the possibility of the peak being far higher than $2500, depending how crazy it gets.
Once it hits this peak, we'll see a precipitous fall, just like the recent fall of crude from $150 to ~$30. With any luck, I plan to time the fall and play both sides... the parabolic up and the swift fall.
Long term I see PM's being a huge bubble just like .com stocks and real estate. We will reach the point where gold and silver will be the talk at parties just like real estate was a few years ago. Soon the janitor where you work will be talking about gold and silver. Gold will shoot up $10-100/day as suddenly everyone and their grandma will be PM "experts." I think we're at the equivalent of late 2003/early 2004 in the real estate markets. This time was probably the sweet spot for playing real estate. Any RE that you bought at this time fram easily doubled by the peak at the end of 2005. This kind of mania, combined with the lack of physical material available in the marketplace and I think the price could get much, but it's not worthwhile to speculate about how crazy it will get.
The dot.com bubble burst due to the world not ending on Jan 1, 2000 and the tremendous flood of new stock hitting the market. Thyere was a fear that no one else wanted their stock. Excess supply and no demand.
The RE bubble burst as everyone who wanted a home already had one yet the supply kept expanding. There was a fear that no one else wanted their home. Excess supply and no demand.
For what reason would people want to trade in their gold for some other asset--most likely FRNs? Sky high interest rates? Will there be a fear that no one wants gold? How can this possibly be? I thought the dollar and other fiat currencies were going to zero. Why would someone want to abandon all they believe? Can there ever be excess supply and no demand?
The above is asked in partially in jest, but I think you know where I am coming from? Is the psychology behind gold ownership different than owning any other asset?
Knowledge is the enemy of fear
<< <i>I hold positions for as short as several hours but do try to enter into a good position and hold for days/weeks. Ex. I bought 1000 shares of Yamana cheap on Wed. at $8.84 and sold them in the afternoon at $9.45. Then I bought them right back again Thursday morning at $9.06. I wish it always worked so well. Buy into weakness and sell into strength....at least I try to. But when the "big" move eventually comes, settling for a 7% move when 100% is staring at you, won't be a wise decision. Then you have to start deciding if you will chase the price up to get back on board. Personally, I don't like chasing price. With the amount that gold stocks gyrate, there are many more opportunities as price moves up or down to trade on weakness/strength than to just sit and hold. Imagine having bought in Feb/March of last year and having to wait another 6-12 months to break even? There's no shame in buying on a big down day when RSI, Momentum and Stochastics bottom...as long as it's not just after a top when many such days will follow in succession.
I've also got a core position of AUY that I started building in the past week as well. So you could say I do day trade but knowing how the market might react in the short term, might help one in the longer term as well, especially if the picture is not showing whether a definitive bottom has been carved out. While I think/hope $912 gold is our intermediate bottom, it might not be. The ever expanding Gold to Silver ratio (now up to 69.8) makes me wonder how long we can keep pushing this back. The one good thing is that the ratio is storing a lot of energy that can wind up the metals very quickly. I think GSR will stop expanding as soon as the dollar stops gaining or bond yields stop their descent for a while and reverse.
roadrunner >>
Interesting that you mention Yamana Gold as a core holding, I sold 400 shares at $11.60 a few weeks ago and in hindsight it looks like I should've cashed in the rest of my 2,500 shares and bought back around $9. I am in for the long haul with Yamana as they have exposure to not only Gold but also Silver and Copper and their hedge positions on Gold are open (not sure about Silver & copper)which I think is a very good thing going forward the next several years.
The mania just might not end, but only change its form. After a grossly failed 38 year fiat experiment the BRICs of the world are not going to settle for a new round of fiat going forward with a redesigned pure-fiat US reserve currency. Gold may be needed in some format to permanently shore up the currency systems. In the event of that occuring, there will be no precipitous fall back to $1000 or even a Prechteresque $200/oz. You're right, fiat money will never be ok and that word is starting to understand that, esp those who live in countries that don't own the world's res. currency. The "mania" (or should I call it sanity) will end when no one wants gold but prefers paper or plastic promises. Sky high interest rates are in our future as well, though not for some time. It won't be pretty. And it may not lost any longer than the time to snuff out the candle and commence the real great depression 2.
People could want to trade in some of their gold to buy enough paper to purchase the necessities of living. For a day, or a week, they will own some paper. Considering that gold ATM's have sprouted up in Germany, there soon may be a day when gold actually can be used day to day to buy things.
Is the psychology behind gold ownership different than owning any other asset?
Yes, because one cannot possibly load up enough oil, wheat, soy, copper, natural gas, sugar, coffee, beanie babies, wheat cents, or any other commodity and be able to store it without your neighbors wondering why you have a tanker truck, grain silo, or a 1 acre warehouse in your backyard. Gold, plat, pall, and some other pricey commodities are some of the limited choices if you want to be able to carry or easily hide what you got...once fiat decides to fall off the cliff by another 25%-50%.
roadrunner
I'm not sure I would have had the discipline to hold on all the way from the $7.50 or so bottom in April, to almost $12 in early June. I commend you for that. In fact I purchased a lot of AUY in the $8's in May, and got shook out in the $9's. What a dope. At least I've analyzed what chart indicators I misread and why those shouldn't happen again. I keep learning. There's always something to be said for hanging on for the big gain than trying to get cute for 5-10% whipsaws as MoneyLA calls them. Frankly, it was hard not selling my entire AUY position last week as I've seen nice profit positions smacked down the next day so many times the past few months. AUY was severely lagging all the other producers so it was just a matter of time for a bump. The chances of another shake out during G8 meetings and Bond sales next week (July 8-10) are very real. Do we think the FED/Treasury are going to let the dollar slide this week? There's also no guarantee we have another move up in gold before the summer bashing through early August typically occurs. But summer 2009 is already setting up much like summer 2007 did, rather than the manipulated smack down of July-Oct 2008. I agree with PC that gold's downside is probably limited to $880.
roadrunner
<< <i>Interesting that you mention Yamana Gold as a core holding, I sold 400 shares at $11.60 a few weeks ago and in hindsight it looks like I should've cashed in the rest of my 2,500 shares and bought back around $9. I am in for the long haul with Yamana as they have exposure to not only Gold but also Silver and Copper and their hedge positions on Gold are open (not sure about Silver & copper)which I think is a very good thing going forward the next several years.
I'm not sure I would have had the discipline to hold on all the way from the $7.50 or so bottom in April, to almost $12 in early June. I commend you for that. In fact I purchased a lot of AUY in the $8's in May, and got shook out in the $9's. What a dope. At least I've analyzed what chart indicators I misread and why those shouldn't happen again. I keep learning. There's always something to be said for hanging on for the big gain than trying to get cute for 5-10% whipsaws as MoneyLA calls them. Frankly, it was hard not selling my entire AUY position last week as I've seen nice profit positions smacked down the next day so many times the past few months. AUY was severely lagging all the other producers so it was just a matter of time for a bump. The chances of another shake out during G8 meetings and Bond sales next week (July 8-10) are very real. Do we think the FED/Treasury are going to let the dollar slide this week? There's also no guarantee we have another move up in gold before the summer bashing through early August typically occurs. But summer 2009 is already setting up much like summer 2007 did, rather than the manipulated smack down of July-Oct 2008. I agree with PC that gold's downside is probably limited to $880.
roadrunner >>
Roadrunner there's also been some talk about Yamana being a takeover target by someone like KGC or NEM, Yamana appears to be a low cost producer with a strong balance sheet so maybe where there's smoke there's fire??
<< <i>Good questions, but it was also hard for most to see the craziness while it was going on during the RE and .com stock bubbles. The mania always ends because it just has to. Things have to revert back to equilibrium. Hard to say what the trigger will be to end it all, but there will be one. I suppose it will be a point where large holders decide that gold is over-valued (by whatever measure) and they start dumping it on the market. >>
I agree, the only thing preventing a massive selloff after a parabolic spike is if there is an actual physical shortage and the end users desperately need the product to continue making their products. Let's say that Silver goes into supply defecit after a run to over $100 an ounce, since the amount of Silver used in electronic devices is relatively small it wouldn't really matter if Silver was $10 or $100 an ounce on the price of their products (although they would pass the price on to their consumers) so they would be willing to pay whatever they needed to until the price is high enough to make producing their product a losing proposition.
Another possible situation for a prolonged high price in precious metals would be rejection of fiat currency on a massive scale by the general public, although I deem this highly unlikely as there simply isn't enough Gold and Silver available to the masses to use in daily transactions especially at the current prices.
A $100 silver price would also result in a search for new alternatives, and it would be a great time to be a materials engineer.
Another possible situation for a prolonged high price in precious metals would be rejection of fiat currency on a massive scale by the general public, although I deem this highly unlikely as there simply isn't enough Gold and Silver available to the masses to use in daily transactions especially at the current prices.
Norseman, in your wildest dreams would you ever have thought of making that kind of statement a few years ago? Neither would I! I guess the question becomes - how reliable is our information?
Is our information on silver stocks any more reliable than what the CFTC and Comex might say? I mean, who do you believe? I read Doug Casey, and he has a pretty good team of mining analysts (including himself) who actually go to mines and visit directly with the managements. And as fc has observed, Jim Sinclair habitually calls for a massive dollar crash with pms coming to the fore. (Where is fc, anyway? It's spooky when it gets so quiet.
It's healthy to keep a pinch of skepticism in the mix, but I can't help thinking that between the manipulators vs. the truthseekers, the facts must win out. We know what the govt's gameplan is.
To make a statement such that there would not be enough silver and gold to use as circulating money indicates to me a sea change, even though I disagree with that statement.
An ounce of gold is an ounce of gold. Same for silver. Who says that the base hourly rate for unskilled labor couldn't be expressed in 1/1000ths of 1 ounce of gold or silver. It's only a question of relative and assigned value. It's identical to a declaration of value on a paper currency, only it can't be printed en masse, and therefore it limits the wiggle room of the government and restricts the amount of screwing that can take place by the government of the people.
I knew it would happen.
Me thinks you are putting way too much value to these impoverished countries. Their populations are dirt poor, their govts make ours look perfect, a highly unstable demographic profile and without the USA and Europe they have no customers. If we spent $trillion on an alternative source--ie natural gas--the BRICs would quickly find themselves
but it was also hard for most to see the craziness while it was going on during the RE and .com stock bubbles
I think it was painfully obvious to many, including most who have contributed to this thread in the past few years, that RE was gonna bust. And being in the securities industy during the 90's the nasdaq bubble was also quite obvious. I am seeing the same developments in PM's but we are not there yet.
Considering that gold ATM's have sprouted up in Germany, there soon may be a day when gold actually can be used day to day to buy things
One of the key ingredients to a bubble is making the asset accessible to the masses. Online trading made stocks accessible to J6P, easy no money down mortgages made RE accessible to J6P, ........see a trend?
There has been talk of an impending currency crises. I tend to agree. However I am becoming more and more convinced that it will not be the US dollar. I can not go into further detail--with this being a public website- and am beginning to make preparations to take advantage, but I think it will become more apparent over the next 6-9 months.
Knowledge is the enemy of fear
As far as the other discussion, you all are tying the coming hyperbolic move in PM's to a failure of the USD. These two events are not necessarily tied together or simultaneous. I think it might be possible for the US to keep the USD (as we know it) alive for several more years.
Me thinks you are putting way too much value to these impoverished countries. Their populations are dirt poor, their govts make ours look perfect, a highly unstable demographic profile and without the USA and Europe they have no customers.
I think you discount them way too much. They have learned how to make pretty much any and all products. The US makes hardly nothing any more. You cannot have a thriving economy without a manufacturing base. This will hamper any recovery for the US, and help and hasten the BRIC countries to prosperity (or at least to be increasingly prosperous). The US government has made it nearly impossible to open or keep open any kind of factory, and they making it even worse, sealing our fate. And beyond manufacturing, BRIC is increasingly capable of performing their own non-manufacturing services. They don't need us any more. It will be a while and they will struggle to get used to not having the US as their biggest consumers, but they will adjust.
I think it was painfully obvious to many, including most who have contributed to this thread in the past few years, that RE was gonna bust. And being in the securities industy during the 90's the nasdaq bubble was also quite obvious. I am seeing the same developments in PM's but we are not there yet.
Maybe I didn't qualify my statement enough. It may have been obvious to some; however, it was not obvious to enough people as the masses continued to propel the RE and tech stock markets to their peaks. And certainly none of the big investment banks (except perhaps GS) saw it coming or if they did were they concerned enough to actually do anything about it.
There has been talk of an impending currency crises. I tend to agree. However I am becoming more and more convinced that it will not be the US dollar. I can not go into further detail--with this being a public website- and am beginning to make preparations to take advantage, but I think it will become more apparent over the next 6-9 months.
I am always interested to hear more about this if you should decide to share any of it.
One thing that I think is certain is that China will get its way with its desire to start a new world reserve currency. If this currency is backed by PM's, or any other country's currency fails and is replaced by a non-fiat system, PM's would have to soar.
It would be interesting if we could go 200 years in the future and look back at 1920-2020 and see it as the century where the world abandoned gold and silver as money and then returned to it. Maybe there will be legends in PMs like the legends now around my city about people who bought acres of land dirt cheap only to sell to a developer 5-10 years later for millions in what becomes a big shopping center.
In reply to Norseman, there was an article not too long ago that spoke about industrial use of silver. You are right, the typical amount of silver per product or unit is so small that a spike in silver will not really affect the price of those products significantly. There's also plenty of articles recently that speak of the relative rarity of existing, in-use gold and silver and there were statements that basically said if you took all of the silver in the US and divided it among everyone, everyone would get an ounce or just a few ounces (I don't remember the exact numbers, but you get the idea).. When you start thinking about the amount of gold and silver in the world available on a per-person basis, you can start to see the potential value of PMs should the world come to regard gold and silver as money again.
<< <i>On Yamana, I am very impressed with that company. They could be a takeover target, but I think the management there wants to stay independent. We'll have to see what happens, but either way I think the stock is a great buy right now.
As far as the other discussion, you all are tying the coming hyperbolic move in PM's to a failure of the USD. These two events are not necessarily tied together or simultaneous. I think it might be possible for the US to keep the USD (as we know it) alive for several more years.
Me thinks you are putting way too much value to these impoverished countries. Their populations are dirt poor, their govts make ours look perfect, a highly unstable demographic profile and without the USA and Europe they have no customers.
I think you discount them way too much. They have learned how to make pretty much any and all products. The US makes hardly nothing any more. You cannot have a thriving economy without a manufacturing base. This will hamper any recovery for the US, and help and hasten the BRIC countries to prosperity (or at least to be increasingly prosperous). The US government has made it nearly impossible to open or keep open any kind of factory, and they making it even worse, sealing our fate. And beyond manufacturing, BRIC is increasingly capable of performing their own non-manufacturing services. They don't need us any more. It will be a while and they will struggle to get used to not having the US as their biggest consumers, but they will adjust.
I think it was painfully obvious to many, including most who have contributed to this thread in the past few years, that RE was gonna bust. And being in the securities industy during the 90's the nasdaq bubble was also quite obvious. I am seeing the same developments in PM's but we are not there yet.
Maybe I didn't qualify my statement enough. It may have been obvious to some; however, it was not obvious to enough people as the masses continued to propel the RE and tech stock markets to their peaks. And certainly none of the big investment banks (except perhaps GS) saw it coming or if they did were they concerned enough to actually do anything about it.
There has been talk of an impending currency crises. I tend to agree. However I am becoming more and more convinced that it will not be the US dollar. I can not go into further detail--with this being a public website- and am beginning to make preparations to take advantage, but I think it will become more apparent over the next 6-9 months.
I am always interested to hear more about this if you should decide to share any of it.
One thing that I think is certain is that China will get its way with its desire to start a new world reserve currency. If this currency is backed by PM's, or any other country's currency fails and is replaced by a non-fiat system, PM's would have to soar.
It would be interesting if we could go 200 years in the future and look back at 1920-2020 and see it as the century where the world abandoned gold and silver as money and then returned to it. Maybe there will be legends in PMs like the legends now around my city about people who bought acres of land dirt cheap only to sell to a developer 5-10 years later for millions in what becomes a big shopping center.
In reply to Norseman, there was an article not too long ago that spoke about industrial use of silver. You are right, the typical amount of silver per product or unit is so small that a spike in silver will not really affect the price of those products significantly. There's also plenty of articles recently that speak of the relative rarity of existing, in-use gold and silver and there were statements that basically said if you took all of the silver in the US and divided it among everyone, everyone would get an ounce or just a few ounces (I don't remember the exact numbers, but you get the idea).. When you start thinking about the amount of gold and silver in the world available on a per-person basis, you can start to see the potential value of PMs should the world come to regard gold and silver as money again. >>
I had to reply specifically to your last paragraph. I believe that in the not to distant future there will come a time when Gold and Silver will once again be used as a form of currency. It might be in a circulating form such as coins but I think the more likely use would be to back paper or electronic money with something tangible. If you think about it logically throughout history Gold and Silver have been used as money so rather than use oil, natural gas or soybeans which are very cumbersome if not nearly impossible to transport freely about precious metals would make the most sense as they are much easier to store. When you think about the trillions of dollars in fiat currency there is in the world and compare it to the amount of Gold and Silver available the price of these metals would have to rise exponentially to provide backing for all of it.
Also it's interesting that although adjusted for inflation Silver is probably at an all time low demand is at an all time high and above ground supplies are at an all time low, something doesn't make sense here.
I am a big fan of Gold but a much bigger fan of Silver as it truly is an industrial monetary metal. I suppose the same could be said about the PGM's but the high price of these metals makes investing in them a formidable task for the Joe six packs of the world and historically speaking PGM's have not been widely used as circulating coinage due to their rarity compared to Gold and Silver.
After giving more thought to the fact that the German economy was beat up prior to the Weimer experience and therefore was a major factor, one could also say that the American economy also has been beat down over the past 2 decades by short-sighted economic and financial policies. We have shifted from a sound mfg economy to a banking/financing/letigious economy built on cheap credit that really never existed, except on some piece of paper. The FED and large banks have supplied the motive force for this change by distorting interest rates and therefore the price of capital to the low side over the past 25 years of economic "warfare." This has effectively gutted the economy leaving but a shell.
Another possible situation for a prolonged high price in precious metals would be rejection of fiat currency on a massive scale by the general public, although I deem this highly unlikely as there simply isn't enough Gold and Silver available to the masses to use in daily transactions especially at the current prices
A nation doesn't need to back its currency 1-1 with gold/silver to have appropriate currency backing. Daily transactions can still occur without a 100% backing or even 10% or smaller backing. There are ways to get it done w/o resorting to 100% uncontrolled pure fiat. The brainiancs that designed the system of derivatives that has killed the banking system could have easily spent that a fraction of that energy in devising a financial system that would actually have merit and supported the average wage-earner. But then again, they wouldn't have been able to plunder such a system. Jason Hommel had an interesting article that I had not considered before. That is, there were times even when the nation had a silver currency, the amount of silver that one received per paper dollar carried a premium as high as 400% (that was during the great depression when 1 oz. of silver was worth 29 cents yet was then converted into US silver coinage "worth" $1.40. So even when we had a hard currency the public could have been greatly overpaying for the seignorage. The bill printers and coin minters still won. Today, you can buy 90% silver coin bullion for close to melt, a much fairer game. But, I may not agree with other points in this article.
Hommel on silver
Even during the "fully" goldbacked years of the 1800's and early 1900's there were numerous times where bankers/fed govt slipped away from gold backing either formally or imformally, thereby inflating the real money supply. They are too numerous to list. Even after the FED jumped into the fray in 1914 to ensure "price stabilization" we say both the FED and England slowly slip from gold backing during WW2 to essentially double prices (then later halving prices by contracting the money supply in 1920-1921 thereby causing a 1 yr depression....of course this is blamed on the "gold" standard when in fact it was the FED's management of money supply to begin with). Let's face it, the gold backed system was merely a convenient rallying point but private banks and the govt tended to do what they wanted/needed to do in order to meet their current crisis of the day. Ultimately, money tends to be what people make it to be. Weaker currencies push stronger forms of money out of circulation. Even with a full backed system, the bankers and govt will devise means to work around it and to publish the appropriate statistics to prove that their system works well.
I don't want to push Yamana or any other miner. AUY has been a good whipping boy in both directions for the powers that manipulate the gold scene. In that regards it's an interesting stock to play the swings on. I think they may be too large now for a takeover, and they themselves have been scouting around for worthy juniors to take over. They'd probably like to become the next major than just another acquistion target.
roadrunner
<< <i>A nation doesn't need to back its currency 1-1 with gold/silver to have appropriate currency backing. Daily transactions can still occur without a 100% backing or even 10% or smaller backing. >>
I had thought about this, but wouldn't a 10% backing just end up being 100% backing (i.e., the currency with worth 10% relative to other indexes)? I guess it would all be relative, but if you had a nation with a 100% gold-backed currency trading with a nation with a 10% gold-backed currencty, I find it hard to believe that a commodity such as a barrel of oil would be worth the same number of that country's dollars in both countries. I would expect the price difference to be a factor of 10, or close to it. I think it just depends on how many decimal places you want to use. If a dollar is 10% backed by gold, what is the other 90%? Faith? How do you trade units of "faith" with other countries?
The only advantage (if you want to call it that) of having a partically backed currency would be if the percent of gold-backing was variable. This month it's 10.0% gold, next month it's 9.9% gold. This would still allow the printing of money, but the government would have to be more transparent about it.
1. is there enuf gold and silver in the world to back all currency in circulation by 100% ?? If there isn't we're going to have a problem. If there is, then returning to a "gold standard" might be possible but think of the problems it will cause and disruptions in the market places of the world.
2. does the general public (not you guys, the general public -- the world) really care if currency is backed by gold? it could be "backed"
by peanuts, couldn't it. the reality is we think a paper dollar bill is worth a dollar because we BELIEVE that the paper dollar is worth a dollar. We all know that we can not exchange our paper dollar for a dollar of gold or silver.
3. so my third question: why would you want to change the current system of "faith backed currency" to a "gold backed currency" and risk the market disruptions?
You know-- it's a pretty good world out there, even with its problems. So why do you want to mess it up even more? (LOL)
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roadrunner
<< <i>A couple of questions:
1. is there enuf gold and silver in the world to back all currency in circulation by 100% ?? If there isn't we're going to have a problem. If there is, then returning to a "gold standard" might be possible but think of the problems it will cause and disruptions in the market places of the world. >>
I think there is, it just depends on how high you value it. I think I've seen where gold would need to be about $100,000/oz to match the US money supply with the gold with the gold held by the US government. But remember, using gold and silver as a currency doesn't mean it's the only available currency. It's just the "lowest common denominator currency" or "currency of first resort." If I have peanuts that I want and you have gold, I'll take your gold because I can trade your gold for the beef that I need. In the end, we're all just trading goods whether you consider the gold and silver (or even FRNs) a currency or not. Currency of any form is really just a transaction facilitation medium... Something that is universally accepted in exchange for goods or services. Copper and other materials or items could easily be used in addition to PMs.
<< <i>2. does the general public (not you guys, the general public -- the world) really care if currency is backed by gold? it could be "backed"
by peanuts, couldn't it. the reality is we think a paper dollar bill is worth a dollar because we BELIEVE that the paper dollar is worth a dollar. We all know that we can not exchange our paper dollar for a dollar of gold or silver. >>
I think the general public WILL start to care if/when there is lack of acceptance and/or the value of their money declines by a significant amount... perhaps 10% annually or more. When prices start to increase and places stop accepting USD, they will want answers, and they will learn quickly what it means to have currency backed by something, whether peanuts or gold.
<< <i>3. so my third question: why would you want to change the current system of "faith backed currency" to a "gold backed currency" and risk the market disruptions?
You know-- it's a pretty good world out there, even with its problems. So why do you want to mess it up even more? (LOL) >>
Risk of market disruptions? What do you mean?
If we had an asset backed currency, then the value of my savings would not deteriorate, and that's a good thing. It's a shame that it is impractical to stuff thousands of USD into my safe just for safe-keeping (impractical because its value deteriorates). My only practical choices are to turn the paper into (hopefully) appreciating assets (which is a risk) or to deposit my paper into a bank, which is also a risk, and may also cause my savings to deteriorate if the savings rate is not higher than inflation rate. I shouldn't have to purchase PMs as insurance against the USD becoming worthless, but I do. Since the USD is nothing but paper, I remain quite concerned and have significant sums invested in PMs as insurance.
The reality is that the current system is unsustainable. Do you think any country (especially ours) is ever going to realistically pay off its debts? The system is great as long as people will loan money to you (as many people found out during the RE bubble), but when that money supply gets shut off the results are painful and inevitable. What happened to the average RE bubble participant is happening to the US right now. Very soon (IMO), but it could be yeard down the road, lenders are going to tighten their lending standards and suddenly the US will have no choice but to default on its debt and/or go the Zimbabwe route.
"I think the general public WILL start to care if/when there is lack of acceptance and/or the value of their money declines by a significant amount... perhaps 10% annually or more. When prices start to increase and places stop accepting USD, they will want answers, and they will learn quickly what it means to have currency backed by something, whether peanuts or gold."
How much buying power have we lost to inflation since the 1950s when I was a kid? Have we returned to a gold standard since then? Heck no-- we took the gold standard away.
The public doesnt give a damn about gold. It could be moon dust for all the public cares or knows about.
You know about it, I know about it, and maybe one-tenth of one percent of the population knows about it.
And if you think the tip of the tail (gold) is going to wag the dog (the world economy) forget it. Oil might. Food might. but not gold.
Gold is a great side business, just as shares in WYNN or GE or GOOG can be a "side business." But WYNN won't move the world, and GE won't move the world and GOOG won't move the world, just like gold won't move the world.
gold never moved the world. never. and the way money and power are diversified today, gold will never move the world in the future. treat gold for what it is-- one of many investments and one of many speculations. It is not the king of the hill.
With that said, I hope you make huge profits!!!
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<< <i>"I think the general public WILL start to care if/when there is lack of acceptance and/or the value of their money declines by a significant amount... perhaps 10% annually or more. When prices start to increase and places stop accepting USD, they will want answers, and they will learn quickly what it means to have currency backed by something, whether peanuts or gold."
How much buying power have we lost to inflation since the 1950s when I was a kid? Have we returned to a gold standard since then? Heck no-- we took the gold standard away.
The public doesnt give a damn about gold. It could be moon dust for all the public cares or knows about. >>
I think you must have missed the key words in my response. "Significant amount" which I even specified as being greater than 10% annually. I don't think we've had that great of inflation, yet, and thus it hasn't riled the public's interest. So far, inflation has just slowly whittled away at our buying power... at a rate that most people are accustomed to and hardly notice. The key will be when the public really notices because the rate of inflation is affecting their lives to a very noticeable *AND* detrimental extent.
The rally for gold and silver that followed in 1979-80 came when inflation rates were easing, but the Hunts were driving up silver. It was, in fact, the rally in silver that pushed up gold prices.
Sorry, but you are going to have a hard time selling me on the concept that the general public will want a return to the gold standard. I think if you stopped ten people at the supermarket on your next visit and asked them "what is the gold standard?" they will think it has something to do with the supermarket's customer service.
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I tend to agree with this. I might even take it one step further and say that most of the worlds central bankers do not care about gold or a gold standard.
Even during the "fully" goldbacked years of the 1800's and early 1900's there were numerous times where bankers/fed govt slipped away from gold backing either formally or imformally, thereby inflating the real money supply
Indeed. This led to great bouts of deflation as well. The economic cycle of the 1800 was only boom or bust. Never the stability we've had over the past 70 years. Whether this is purely smoke and mirrors, one has to look at both sides of the arguement. Fortunes were made and lost much more frequently in the 1800's. So having a fully backed gold system did nothing to ensure economic growth, or stop inflation or deflation, and some may argue that the chaotic nature actually hurt growth.
Knowledge is the enemy of fear
The public will never care, much the same way they put up with feudal system for over 1000 yrs before finally making efforts to overthrow it. That system stunk but it was what they had. They suffered with it. And the fact that the public doesn't care about gold didn't change it's stellar performance in the 1930's, 1970's or currently. Gold will leave the public in the dust. We've all but said that 100 times here over the past 5 years. Where have you been? Gold has always made the currency honest in the end.....always.
I recall the rabid inflation of the mid to late 1970s when CDs at banks were in the range of 15 to 18% and inflation was in double digits. And 30 year mortgages were at 22% to 25% IF you could get one. No one was yelling for a gold standard then, except for the fringe element that would use any opportunity to sell their gold.
The sheeple asked the govt to fix the problem and they did, by contracting money, jacking interest rates and causing the worst recession in over 40 yrs. Thanks a lot gov! The sheeple are once again asking govt to fix the current problems, and they are, by printing more money to hand out. The gov is complying once again and the sheeple love it so far, at least the ones that don't pay any income and/or state and property taxes.
The rally for gold and silver that followed in 1979-80 came when inflation rates were easing, but the Hunts were driving up silver. It was, in fact, the rally in silver that pushed up gold prices.
That's revisionist history. The rates didn't peak until long after gold peaked. Might have been 1981 or later. The upward rates draw the pog along. Gold saw a 2nd price peak in the $800's in late 1980. It was the monetary easing from the 1960's that manifested itself into commodities 8-10 yrs. later that was responsible for both gold and silver rising. Silver driving up the pog via the Hunt's? The smaller market driving up the larger market? Hardly. Warren Buffet took a similar % position to the Hunt's in the mid-1990's with 120 MILL ounces of silver, essentially a 100% entire Comex physical inventory position. He managed to only drive up the price of silver by a few bucks an ounce. Silver's volatility is higher than gold's and its gyrations might give the appearance of being a driver, but it's not. At least not until the time that people realize that silver is not 70X more common than gold, but more like 5X. The entire silver market today is on the order of $1 BILL per year...very tiny. It's total miner market cap is around $6 BILL. Compare that to gold HUI at $145 BILL.
I might even take it one step further and say that most of the worlds central bankers do not care about gold or a gold standard.
The powers behind the CB's want nothing to do with a gold standard as they make far more by printing money and confiscating wealth via unseen inflation and the economic expansions and contractions that they cause. What better what to make money than to be on the right side of the booms and busts and to know when they are coming, because you start them. Smart money in 1928 and early 1929 knew the FED was starting to ease, and those bankers/investors got out months ahead of the crash. The bankers know that the power in the world is to create fiat money. It's a ball and chain financial system. The sheeple hold the ball while the banks yank on the chain. The bankers have consistently wandered away from gold backing whenever they ould without being held accountable. If it meant shaving down gold bars in the old days, that's what they did. If it meant loaning out too much of one's gold reserves or cash, they did that to. Human nature.
Again, don't blame any of the previous busts on gold, but at the feet of the moneychangers where it belongs. What you can attribute to gold is the fact that the wholesale price index was the same in 1793 and 1933. Fiat money could never have achieved that. Once FDR altered the gold standard in 1933 and started the fiat parade, it was the last straw for somewhat stable prices.
Indeed. This led to great bouts of deflation as well. The economic cycle of the 1800 was only boom or bust.
It remains to be seen of the busts of the 1800's can measure up to what the banks have just done through otc derivatives.
The busts were from the bankers pulling back the money supply and credit. Had nothing to do with gold in either direction. Without gold at all, those gyrations would have been worse imo. The business "cycle" is basically the result of bankers playing with the money supply for their own benefit, nothing to do with or without gold. I would be the first to agree that a gold backed money supply would not hold bankers in check. It never would have prevented otc derivatives and it doesn't prevent multiplying the money supply via a 10-1 Fed Ratio. The banks can create credit and money with or w/o gold as they have proven time and time again. Fiat money failed. Gold on its own would fail as well. But there is an answer out there, and it's not paper or plastic. Let's start with tanking power back from the banks, abolishing the FED and the 10-1 money multipiler which is just a scam, and ridding ourselves of pure uncontrolled fiat.
roadrunner
All I can say is this... don't try to reinvent the world. There is no gold standard, and there will not be a gold standard again. The gold standard went out with the dinosaurs, figuratively speaking.
If you want to promote gold, come up with a more modern reason such as a better economy increasing demand for jewelry and electronics, and increased speculation in the metal. But stop with this economic theory that is so much huff-and-puff.
www.AlanBestBuys.com
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<< <i>Look... those of you who are "gold proponents" will never be swayed. But roadrunner is correct that the 15% to 18% int rates on CDs was in 1980-81, not in the late 1970s as I wrote earlier.
All I can say is this... don't try to reinvent the world. There is no gold standard, and there will not be a gold standard again. The gold standard went out with the dinosaurs, figuratively speaking.
If you want to promote gold, come up with a more modern reason such as a better economy increasing demand for jewelry and electronics, and increased speculation in the metal. But stop with this economic theory that is so much huff-and-puff. >>
These kinds of statements are generally made by those types who also say that the Constitution and the Founders could have never planned for anything so "complex" as today
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>
Sorry, but you are going to have a hard time selling me on the concept that the general public will want a return to the gold standard. I think if you stopped ten people at the supermarket on your next visit and asked them "what is the gold standard?" they will think it has something to do with the supermarket's customer service. >>
Yes, the majority are among the most ignorant in world history. For sure.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
All I can say is this... don't try to reinvent the world. There is no gold standard, and there will not be a gold standard again. The gold standard went out with the dinosaurs, figuratively speaking.
Ever since the English went to paper bills in the late 1600's one could say there has been no more gold standard. Each step along the way it has been weakened. For modern economies over the last few hundred years, there has never really been a true gold standard but just the words and varying levels of personal ethics to make attempts to adhere to one. As long as there are banks/govt in control of the money supply, there will be abuse. I promote gold because it is the anti-fiat commodity. I could care less if it ever becomes a true currency again. All I know that in times of trouble it sure acts like a currency, that's all that matters. That's the modern reason since going pure fiat in 1971. Economic theory is the basis for how the markets play out. You can fudge with them for a while, but not forever. They eventually wipe out the chaff and restore the wheat. The kicker is that so few educated people can actually understand how the economy should/will react to varying changes.
Economics does matter, but Keynes had it dead wrong but had a scheme that fit the wishes of govt to a tee. The Austrians have gotten most of it right and it usually boils down to how money & credit affects economies. That's why bankers refuse to relinquish control. Rothschild didn't care about size or strength of armies because he knew that whoever controlled the money supply had control over those armies and in effect the world.
COT report from last week showed the banks actually increasing their gold shorts once again (+3,657 longs and +7,045 shorts). It would seem that they still see remaining signs of strength to try and counter. Normally at this stage of a pull back they would be continuing to drop the shorts. Open Interest increased nearly 9,000 contracts to 379,000 with a short to long ratio of 3.24. Silver continued to unload shorts as the commercials see they still have that metal on the run.
The current setup in gold looks very similar to what it did from April 6th to April 30th....a double bottom followed by a breakout of the upper down trend line only to be pulled back one more time on the next leg up. Only difference is that gold was only $7 away from retesting the bottom a 3rd time today. July's chart is +$49 higher than the same point in April which eventually peaked at $990 (see link below).
The dollar looks only a tiny bit stronger and still failed to top the .808 resistance point. GSR ratio continues on a tear with the 70 mark falling today. Still has a lot of momentum in its favor. It turned with the dollar back around June 1st. One would think that the dollar would have been much stronger during this past month. For those that think that gold cannot rise when the GSR is rising need only to look back to July-Sept of 2007 when gold started it's run from sub $700 to the all time high. The GSR increased for a few months early in the move, then leveled off through the fall, then started to quickly drop as silver started catching up in the last few months to the 3/17/08 peak.
http://www.kitco.com/ind/Radomski/jul062009.html">Radomski compares April to July
roadrunner
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<< <i>There is no gold standard, and there will not be a gold standard again. >>
To speak in such absolutes is just irresponsible. If there's anything you've learned over the years, it should be that anything can happen.
To disregard the masses in saying that they will never ask for a gold standard is also short-sighted. The masses can be taught and even brain-washed, just as they have been with global warming. I don't want to start a thread on the topic of global warming, but you have to admit that the powers-that-be have done a good job of selling this one world-wide. Why can't the same happen with a gold standard? I agree that it's unlikely, but it's not impossible. Ron Paul followers have all been educated on the fraud of the fed and the values of a gold standard (and it's even in the constitution), so who's to say that the Ron Paul movement (under Ron Paul or someone else) couldn't pick up steam and get somewhere? I wouldn't bet on it - but it's not far-fetched either. Heck, if China leads the way on this (which they are talking about), it could have a good chance. It may even be necessary in the future to have some kind of asset based international trade currency in order to do international buisness of finance debt. Once China gets screwed on the $1T+ in worthless USD it holds, do you think the world will be eager to do the same with a new pure-fiat currency? Even if the masses don't demand it, trade partners might.
Youre right, anything can happen. I'm not holding my breath for it, nor will I prepare for it. If it happens, it happens.
Ron Paul? How many votes did he get?
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Is this not also a form of an irresponsible absolute?
I believe we are far, far from having a worthless currency and the Chinese, being the most impacted, would be the strongest supporters, no?
What you can attribute to gold is the fact that the wholesale price index was the same in 1793 and 1933. Fiat money could never have achieved that
Is that really a good thing? What incentive would there be to grow? Would there ever been any investment or saving? Is not a consistant growth record spanning 3 generations better than the complete collapse of investment and savings for each generation time and time again? Talk about destroying the middle class, bring them right to the brink of success, then crush them. The little guy NEVER had a chance in 1850.
Gold on its own would fail as well. But there is an answer out there, and it's not paper or plastic. Let's start with tanking power back from the banks, abolishing the FED and the 10-1 money multipiler which is just a scam, and ridding ourselves of pure uncontrolled fiat.
All of this in itself is probably not necessarily a bad thing, but I'll agree the banks have gotten too large for their britches, overshadowed only by their henchmen---our elected officials.
At the end of the day the dollar was down slightly as was gold. We are at an inflection point. A dip down to $890 or so . Hey, that would make my $50 drop call from last week look pretty good.
Knowledge is the enemy of fear
You must be looking at a different world than me. Even Keynes, who was the godfather of our fiat system, proclaimed that paper money was an insidious system of confiscation of wealth from the masses to the elite, such that not 1 person in 1 million could diagnose the deed. The masses are unsophisticated and eventually succumb to bread and circus (coffee kulatas and reality TV). Those masses allowed California to spend out the a$$ such that they are now shilling scrip as a currency. How smart can the masses be? If not for the masses having a clue, Glass Steagel would not have been repealed and the fiat/credit/derivative/banker-hedge fund trading society would not have flourished. The masses kept on re-electing the same type of players year after year.
What you can attribute to gold is the fact that the wholesale price index was the same in 1793 and 1933. Fiat money could never have achieved that.
Is that really a good thing? What incentive would there be to grow? Would there ever been any investment or saving? Is not a consistant growth record spanning 3 generations better than the complete collapse of investment and savings for each generation time and time again? Talk about destroying the middle class, bring them right to the brink of success, then crush them. The little guy NEVER had a chance in 1850.
I'd say it was a good thing. The nation grew just fine through the 1800's during the industrial revolution. Stable prices doesn't mean zero growth. How can you say there was zero growth from 1793 to 1933? In fact there was plenty of incentive to grow, build rail roads, create farms, build cities, build waterways, etc. The bankers inflated the money supply in those days as needed even under a supposedly "inflexible" gold standard. The collapse of investment during each generation in the 1800's was because of the bankers expanding the money supply (ie growth) and then collapsing it. And some of those "collapses" were due to war-time economies where gold was tossed out the window. A consistent growth spanning 136 years was far better in my opinion than selling off the nation in just a few decades so that the middle class and upper classes could live well beyond their means. The little guy didn't have a chance in 2008 either. He swallowed the long time party line hook, line and sinker to his detriment only to kiss that age 65 retirement adios. The easy living lifestyle that you allude to had no business coming about. It was created through a reserve currency and the sweat of cheap foreign labor. And those fruits are not permanent. There is no shame in growing at a moderate pace equivalent to population growth.
roadrunner
I'm not seeing $890 yet...not that it couldn't get there over the next 4-5 weeks or even by Friday. By the last week in August the window for a strong gold correction is gone. Let's not forget that with barely over 1/2 of 2009 elapsed, gold has been over $900 for more than 90 trading days compared to about 100 for all of 2008. The progress is there. The barbarous relic is actually doing pretty well hanging above $920 with oil and ng taking a literal pounding. Copper is hanging in there with it. It could have done far worse imo especially considering how far silver has dropped in comparison. If this were previous years, there would have been no way it would be hanging around at these levels. That will take the dollar to strongly break through the 81.5 barrier on its way to 82. It still is having trouble getting past the 80.8 to 80.9 range with occasional drops to 79.5 to 80.3. The dollar is still acting bearish and the 30 year bond yields looks like they have completed 5 legs down. Neither indicate a quick turnaround in the dollar's fortunes. Today's bond auction was a slight let-down from the previous week's "boomers" as pricing was not as strong. I still feel that much of the buying is through the "back door" where the bond buyers are ultimately selling it right back to the FED (ie monetization). 2 more bond auctions to go this week with the 10 and 30 year along with the G8 meeting possibly spouting out some "dollar positive" news Thursday or Friday to help lift the dollar from its doldrums. We shall see.
The cessation of UNG (nat gas etf) after running out of authorized shares was very interesting....it took a beating today. It seems there are more people that like to trade paper than the real thing. This is not unlike what we are seeing in gold and silver. The CFTC is looking at this as if the trading of Nat Gas in an ETF could be manipulative to the physical market. Do Ya Think? Look at the PM's, they are even more played with when it comes to paper vs. actual product. But while UNG or oil futures might have new limits placed on positions, don't expect anything but the usual regulatory fluff when it comes to PM's.
roadrunner
FWIW, Ackerman is still expecting $899 which he is calling a "back up the truck" event. I would agree that if you're not in at $899, you probably should get in. Put a stop $20 lower, and look for either a huge gain up and over $1000 or a $20 loss. Good risk/reward ratio, especially if you believe like I do that the trip from $1000 to $1100 won't take long once we are over the magical $1000 mark.
Ackerman also points out that the fact that gold has fallen only 2.5% vs. oil's 14% is a good sign.
Or a day or 2. If the trendlines are broken on GDX or XAU--which could be very likely--it will be becasue gold dumped $30 in a hurry.
The bond auction went well. Yields were right in line with expectations--2 basis pts higher, demand(bid/cover) was above average and foreignors were strong participants. We need to get yields higher though.
$35 bln, 3-year Note Auction Results: High Yields 1.51% (1.49% expected), allotted at 76.31%; Bid/Cover 2.62x (4-auction avg 2.53x); Indirect Bidders 54% (avg 39.5%
I actually like the deal with the UNG. It is now possible that instead of trading at NAV--net asset value--it could really trade at a premium and perhaps a strong one if natty begins to perk up. Summer is historically low so no real surprise at the current weakness. A 3% move is nothing for this and I trade it all the time. In fact I am long today. Natural gas was down 2% today, UNG down 2.5%. UNG was down cuz natty was down. No other reasons needed for the drop.
FWIW---I do believe that the 2x and 3x equity ETFs have had some impact on the overall market. So what, trade it for what it is. Prices will find a home eventually. They ALWAYS do.
Ackerman also points out that the fact that gold has fallen only 2.5% vs. oil's 14% is a good sign.
Wouldnt it have been a better sign if gold had actually matched oil's 100% gain off the lows?
Knowledge is the enemy of fear
<< <i>Once China gets screwed on the $1T+ in worthless USD it holds
Is this not also a form of an irresponsible absolute?
You got me there... Although in my defense it does say Once China gets screwed... if China never gets screwed, then my statement is not valid. Semantics, I know.
<< <i>I believe we are far, far from having a worthless currency and the Chinese, being the most impacted, would be the strongest supporters, no? >>
I think the Chinese will figure a way out of it. They will insure their savings with positions in gold and other commodities (as they are well in the process of doing), and they may leverage their position for other gains. For example, they would LOVE to have Taiwan back, and the only thing stopping them is the US. If I were China, I'd call BO and make a deal... $1T of debt, and you don't get involved with our take-back of Taiwan. Speculative, I know, but not out of the realm of possibility.
<< <i>Is that really a good thing? What incentive would there be to grow? Would there ever been any investment or saving? Is not a consistant growth record spanning 3 generations better than the complete collapse of investment and savings for each generation time and time again? Talk about destroying the middle class, bring them right to the brink of success, then crush them. The little guy NEVER had a chance in 1850. >>
Are you saying that the only way for our economy to grow is through having a fiat currency? I think the reality is that *real* growth is much more difficult because it is honest growth as a result of hard work and sacrifice, rather than manipulation of the dollar. Honest growth is increasing farm and mine output (and overall productivity), and firing up factories and making goods that the world wants to buy. Basically keeping Americans employed and working. Perhaps a good parallel is that a lot of the DOW company's earnings growth over the past decade was due to lowering costs by moving production and operations offshore, rather than true organic growth through innovation and new products (in addition to increased consumption due to dollar minpulation). This kind of earnings growth is easy - any fool can send a factory overseas and anyone can make money when consumers are on spending sprees - those are one-time gains and tend to be temporary. A great CEO achieves growth through cutting waste, innovative products, and increasing market share.
<< <i>Ron Paul? How many votes did he get? >>
MLA, I'm going to assume your comment is facetious. The point was not about Ron Paul per se, it could be any Ron Paul-like figure. And my point was just that his movement is growing. How far and fast will it grow? Hard to say. Public sentiment *can* change, although I'm not expecting it to.
<< <i>$35 bln, 3-year Note Auction Results: High Yields 1.51% (1.49% expected), allotted at 76.31%; Bid/Cover 2.62x (4-auction avg 2.53x); Indirect Bidders 54% (avg 39.5% >>
Is your indirect bidder average based on the new calculation or the old one? Since they changed the composition of that number, I'm not sure you can compare it to any averages - at least until we have a few more auctions to establish a baseline using the new formula. 54% actually sounds low given the new method.
<< <i>Wouldnt it have been a better sign if gold had actually matched oil's 100% gain off the lows? >>
That would have been fantastic, but unrealistic. Oil had just experienced a precipitous drop after a parabolic run, and gold is still in the (early stages of) parabolic up-phase...
No, im not saying that. I do find it interesting that the only sustained growth this country has every really had has been since we went off the gold standard.
Imagine working a hard honest life and saving to be able to provide for your offspring only to see delflation take it all away. Remember 150 years ago, people didnt save by collecting $20 Libs, but rather through home and land, tools and materials.
We HAD to move production offshore as the UNIONS effectively priced America out of the manufacturing business. But would America be a better country if we made billions of plastic toys? Or perhaps polluted our environment to the point of no return? We'vre been there, done that. Good riddence. What does the real world want to buy? Farm and heavy equipment? A Caterpillar or John Deere are the best built and can be found in every corner of the globe. Does the real world want food? The is not another country even close to having the capabilities of the American farmer whether it be grains, beef, poulty or pork. The USA has them all beat by a mile. I could argue that American CEOs are great as they did everything you want. The cut waste--overpaid American employees, developed and marketed innovative products and made them available to the rest of the world. Colgate toothpaste is found in some countries where most people dont even have teeth. How innovative is that?
To keep on topic, another $5 drop in gold will lead to a $100 drop in gold. Look at the charts.
Knowledge is the enemy of fear
The indirect bidder average is actually a record high, surpassing the old high of 53.6 set in Nov 2004.
Knowledge is the enemy of fear
That would have been fantastic, but unrealistic. Oil had just experienced a precipitous drop after a parabolic run, and gold is still in the (early stages of) parabolic up-phase...well put. The oil to gold ratio has actually gotten way out of whack. The fact that it still grossly favors gold is a risk factor for pog, but speaks highly to the fact that gold is behaving far more as currency than commodity. Gold is at 89% of its all time high vs oil at 42%. Oil falling to $35 recently would have been equivalent to gold falling to $246. No, I don't think that would have been "better" for gold. The fact that oil was shredded to bits allowed it to gain 100% vs gold's meager 44%.
You don't think those bid to cover and indirect bidder stats are juiced? Means, motive and opportunity as always. Since every other stat put out is massaged and tweeked, why not those? I'd be ashamed if our opportunistic FED/Treasury threw such an easy fish to catch back into the pond. Our Treasury Secretary is smarter than that! I expect more of our appointed officials than that.
I don't think a $5 drop from here in gold sends it down $30. Charts aren't written in stone. Charts always tell 2 stories and not always which one has the higher probability of occuring. At some point in time (maybe today) fundamentals in gold will supercede the chart. It will just be time. The pog is based on highly leveraged paper gold and not physical. No one can say when that game goes pop like the leveraged RE SIV's did. It will just be time.
We can drop $10 from here and still be above the $912 support that has already held. We already fell below the line in the sand $925 and gold is still alive in a range of $919 to $932. Gold has been amazingly stubborn over the past 2-3 weeks....even the past few months. The paper pushers would have normally already put this one to bed and down into the mid $800's. So why not this time? Where's the mojo Ben? Every other rise in gold to the upper $900's or over $1000 was met with a quick snap back to the $800's usually within 15-30 days. The peak in 2006 was knocked down the hardest but that was when FED mojo was at its strongest. It seems that the successive highs have each been harder to push back. This last one has been the most stubborn lasting 5-1/2 weeks and not even a whiff of the $800's yet. Where's that FED/PPT mojo? This is very weak and uncharacteristic gold bashing behavior allowing gold to linger in the $900's for so long. Or is it just the plan that $1000 does have to come eventually along with a weaker dollar so therefore why not make the transistion orderly, where the banks can profit accordingly on their gold and dollar positions? Here they are getting the sheeple used to the idea of $900 gold. It will make gold at a $1000 floor easier to take. The all time high of $1033 came from gold in the $600's just 7 months earlier and was a tuff pill to swallow.
The 2007 chart of gold followed a path where no smackdown came during the summer months, just a meager $50 or less correction during a couple of occasions. It received its smackdown the year before after the spring 2006 peak. By summer of 2007 the optimism in gold was exorcised and banker woes were coming to the forefront....we still have those same problems don't we even with "record" 1st qtr bank profits?
If a 3rd party candidate like Ron Paul was given the same opportunity to present their case, they would have done far better than they did. Only 2 candidates were presented to the public. For the others: no means, no opportunity, only motive. Very sad. While my vote should have been cast for RP, it came down to hoping my vote might mean something this time. It didn't since I live in a state that has gone heavily democratic every election for many years. But one can dream.
roadrunner
<< <i>We HAD to move production offshore as the UNIONS effectively priced America out of the manufacturing business. But would America be a better country if we made billions of plastic toys? Or perhaps polluted our environment to the point of no return? We'vre been there, done that. Good riddence. What does the real world want to buy? Farm and heavy equipment? A Caterpillar or John Deere are the best built and can be found in every corner of the globe. Does the real world want food? The is not another country even close to having the capabilities of the American farmer whether it be grains, beef, poulty or pork. The USA has them all beat by a mile. I could argue that American CEOs are great as they did everything you want. The cut waste--overpaid American employees, developed and marketed innovative products and made them available to the rest of the world. Colgate toothpaste is found in some countries where most people dont even have teeth. How innovative is that?
I hope that you're just oversimplifying the situation and are not unaware of the bigger picture. It wasn't just unions, and it wasn't just factories making cheap plastic toys. Any job that can be offshored pretty much has... in particular I'm referring to engineering and (un-unionized) high tech manufacturing. But the low-tech stuff is important too. You have a strong country if EVERYONE is employed and productive, regardless of how menial the task is. The more people that are working, the more money that is being made and spent (money velocity).
A country has to export something. For the last decade it's consisted increasingly of paper and less of physical goods, and now that's winding down. Do you think a country can survive by producing only paper? How long do you think that's going to last?
I agree, between unions and our government, they've not made it easy to do business here. Our economy can grow without fiat, but not in the environment we have today. And an economy can grow without fiat, but not at the rates we're now used to. It's a lot easier to grow when there's extra money sloshing around to lend and invest into R&D and create jobs and products and consumers. No doubt about it, the ability to print money will light a fire under our economy.
<< <i>The indirect bidder average is actually a record high, surpassing the old high of 53.6 set in Nov 2004. >>
You didn't answer my question. Is this a record high using the NEW method of calculating indirect bidders compared to an average consisting of the OLD method of calculating indirect bidders? You are aware that they just changed the math for tallying the number of indirect bidders, aren't you?
Well, it has already led to an additional $16 drop. Charts are my business. People pay me money to read charts. I try to give some insight into my methods but of course I can not go into all the details. Some still say chart reading is a 50-50 proposition. I dont know how many more charts I need to post to prove otherwise. Maybe I should just stop?
I laugh when I read some of the crap that is posted in links to other "chartists". I really want to expose the errors in some of their analysis, but their errors are what I profit from. I would be a fool to set them straight. And in it probably would be in vain anyway as many chartists are so stcuk in their ways they would never see their error no matter how plainly I stated it.
Knowledge is the enemy of fear
PC, this is called communism.
Am I oversimplifying? Maybe, but I think Im proving a point. What does the "real" world want? China may produce the everyday junk we use in our daily lives, but the real stuff is still made in the USA. If we dont make anything, then why are we 90% employed? Thats 140 million people. And I would argue that a service economy may in fact be stronger than a manufacturing one as services are always in demand where as manufacturing is much more cyclically violent.
Yes I am aware of the "minor" tweaking of the indirect bid computation. I do not know how the number compares to the previous computation, nor do I really care. I have read the Treasury statement and the change seems to me to be very minor and has no real relavance to the indication of interest.
I think people are trying to find reason for why their expectations are not being met. I discussed this with Deadhorse last Spring when silver collapsed. People have a tendency to try to question everyone else, but they never question themselves.
Knowledge is the enemy of fear