Topic: Gold: I smell a trap - page 34. (Read 90828 times)

silver STILL hasn't gotten back up over the 61.8% retrace from bottom to top in May.

this gambit will be fascinating to watch.  the USD vs. Gold ala Bobby Fischer vs. Boris Spassky all over again.  mano a mano 2011!

LOL!

Wow, sure was nice to have ONE days break from this thread.  given my Type A personality though, i've decided i miss all you guys way too much to stay away.  actually forget the rest of you who don't contribute, i miss miscreanity:)

as i'm sure you guys have noticed there HAS been a MAJOR change in the markets the last coupla days and that is the USD.  its broken strongly up and out of the consolidation channel as i expected and have been calling for since the beginning of this thread and looks to be headed North at least to 79 and probably higher.

as i said before i believe the Fed in coordination with CB's worldwide are trying to save the USD world reserve currency financial system.  all other assets are getting slaughtered as a result EXCEPT (to date) our friends gold and silver.  i have moved to a net neutral stance (i guess mildly long if you consider my last 2 dozen Krands i sit here clinging to) but still remain VERY concerned about a strong reversal in the metals.

how long can they stand the pressure?  we're gonna find out real quick i'm sure.  the positives are that its at the very least consolidating up here and their strength has been impressive.-  if this was the top it should've reversed and crashed like silver did in May.  miscreanity looks like he'll be right in that they SHOULD move higher into an even steeper parabola but i remain wary.  this USD move is HUGE.  not to mention the USD/CHF cross and the move is relentless.  clearly there's coordination going on under the surface and i'm sure they've got the metals in their crosshairs.

i've moved over to shorting stocks b/c they'll die either way at this rate.  i'll reset the pm shorts if the double top proves correct.

i also have a short on the Euro since i'm sure their involved in this USD buying spree.  i think the union is toast.

Very interesting discussions. Went back and reread the OP, it seems this thread, especially the title of it, after 30 days and 26 pages, is now dated.

I'll offer another thank you to cypherdoc and miscreanity for the level of discussion in this thread. It's been quite interesting, and I've thoroughly enjoyed reading it as it's unfolded. And as Netrin said, I hope your last post, cypher, was not really your final one in this thread. I second miscreanity's suggestion that serious conversation be resumed once new developments occur.

I don't have an interest in getting the last word in: I only thought it'd be a shame to throw away a response that was mostly finished before going to sleep several hours ago. It may also offer additional guidance to others following the thread.


Yes, it does seem a little odd, but anyone can throw cash into a betting pool; this is a gentleman's wager, and as such it relies upon personal integrity and strength of character. Instead of money, the stakes involve a reassessment of thought processeses to adopt what's proven.

Even Keynes acknowledged empirical evidence conflicting with his hypotheses and was making changes prior to his passing. For that fact, I respect the fellow and suspect his real mistake was with placing undue trust in human nature without applying equivalent caution.

We seem to be spinning our wheels for now and kicking up mud while waiting for the next major event to occur.


Appropriate tactics are employed as resistance increases. If the pickings are slim, those moves take on a defensive nature instead of offensive: when the shock & awe drop of 30% or more cannot be repeated, a slow retreat works to keep the majority of investors wary and guessing while largely on the sidelines of a major move that benefits the perpetrators.

Consider two combatants encountering each other for the first time. There may be a display of force shown in an effort to intimidate the other side. Should that work, the mere existence of overwhelming force need not be exerted to gain ground. If it was a bluff that has been called, the tactics need to change in order to maintain the illusion that sufficient force still exists.

In other words, formerly dominant institutions (esp. pre-2008) such as the Fed are no longer being granted carte blanche deference. The isomorphisms abound with regard to ancient stratagems and financial or gold warfare today.


The assets listed are not reasonable for common exchange, unless you consider wheeling barrels of bio-toxic, consumable oil around as payment feasible. We discussed the fact that any asset may be used as money, depending upon circumstances.

When there is no alternative offering greater convenience (Bitcoin could serve this purpose if not for the high technical hurdles and currency exchange barriers), gold will act as a means of exchange. Otherwise, it remains a store of value to be held in reserves. The latter is just our typical understanding for the purpose of assets.


That comparison is invalid; no suggestion has been made regarding gold rising in value indefinitely, but rather that gold is heavily undervalued relative to outstanding debt and even the current base money supply (very rough calculation of only the existing base money supply of USD$2T against 280mm troy ounces of gold reserves puts gold over $7,000/oz).

Gold is fungible, divisible and portable while real estate is not (securitization is a whole 'nother ball of wax). Housing in many regions became highly overvalued and demand fatigue was readily apparent in later stages. Gold demand shows no sign of relenting.


The fundamentals are resting on policy decisions that have already been made. Gold's continuing upward revaluation is locked in no matter what path is chosen now, and has been for over a year. Rising interest rates will signal failure to continue the charade as natural market forces override economic management and manipulation.

Until rates have risen sufficiently, systemic instability will continue for some time because of the same reasons. Gold's stability remains attractive while most other assets are extremely volatile; we don't ride rollercoasters when we're only trying to get from point A to point B.

The Canadian Dollar, Norwegian Krone and other currencies will eventually follow the same path as the Swiss Franc in competitive devaluation. Meanwhile, gold is remaining with $100 of its all-time high.


If you're able to pick a major turning point based on one or two days' activity, why were your short positions in danger of a margin call?

Margin trading is bad, especially forex. Use options if you want leverage.


It's far more dangerous to ignore the signs and symptoms of a myocardial infarction while attempting to differentially diagnose whether it's happening due to arteriosclerosis or atherosclerosis.

A dollar closing over 76 then has to face the recent peak of ~76.7 while it is being over-extended against Europe. There is also an issue of quantity over quality - the relative value of the dollar might be rising, but relative to what? Other currencies are being devalued as well. Gold is rising as the USD does because it is part of another dynamic that the dollar is no longer strongly associated with.

I am obliged to refer you to my mention of numerous prior double-tops and a triple-top.


This is certain. The argument is not whether the Fed will act sacrificially; the actions being undertaken are like building a scaffolding to hold up a collapsing building. What isn't known is exactly when or where structural integrity will fail, or whether enough scaffolding will be put in place before it finally gives way.

From a technical perspective, a monthly closing in gold below $1,550 would be very damaging to the long-term trend, but would not compromise it. For that kind of secular trend reversal to occur, causing large-scale money flows to shift elsewhere, there would have to be consecutive monthly closings in gold below $1,080/oz.


You certainly aren't the only one out there. In fact, I think the majority share your opinion, just not with as powerfully deep an understanding as you've shown. That level of comprehension has been greatly appreciated. For the record, I do agree with the "great deflation", just not in the manner you propose.

I also agree that it would be best for now to be patient and wait for either $2,000 or $1,600 to be broken before resuming extensive discussion. In the event that I am proven wrong, I'll gladly give your explanations a strong revisit.

Hold onto your physical!


You never know...

This.  Ben's job is to keep the game going until the next thing can take over.  If that means gold must go down, then gold will go down.  At least to the extent that they can do it.  Some day, the game will be over.  That day is almost certainly not today, and it is probably not tomorrow.  Betting against the government and the Federal Reserve is usually not wise.  The question is how much push do they have left?

The gold charts certainly look parabolic right now.  See here.  But...  Sideways, then up.  Sideways, then up steeper.  Sideways, then up even steeper yet.

I'm no good at technical analysis, so I'd be very cautious about taking a large position on either side, at least in the short run.  In the long run though, I'm pretty sure gold isn't at a top yet.  For those that haven't read the whole thread, I use the Dow Jones / gold ratio for my long term view, and not the gold / dollar ratio.

Also from my side a big thanks!

You shed light onto the current situation and I also agree to your outlook.

Thanks Cypherdoc and Miscreanity, this discussion has opened my eyes to a larger fraction of what is happening and some of the motives in global finance. I believe you are correct that the deflationary pressure is greater than any central banking authority has power to handle and they will attempt to preserve their currencies. I also believe those central banks, in times of crises, answer to politicians and the people, and all of their random panicked whims. Finally, I think we as a planet have tangled ourselves up so tightly, that history provides only hints as to the future from where there is nowhere for us to flee. Krugman may be right, aliens may be our liberators.

I think the opinions have been well stated, but I greatly appreciated the resources that came out of this discussion, links to technical charts, blog posts, and videos. My opinion has been based on superficial understanding and I would therefor miss the depth brought out by contrasted discussion such as this. Thanks again, though I hope it's not really the last.

I'm sorry to see you leave, looks like my post was the trigger 
It is a good and interesting thread, thank you!

Thank you sir for your part in an unusually long run of civil and intelligent debate.

at this pt i feel that i have said all i can about this topic.  it is useless for me to continue this debate as so many of us here are set in such emotional positions that won't change no matter what is said.  the debate has gotten to the point where we are just recycling the same arguments over and over again and they have become heated enough where i risk becoming too hardened even to my own position to the point of being non-objective.

being a lone voice out in the wilderness is a difficult position to take.  this is the last thing i wanted to have happen.

so i am going to respectfully bow out here. i would like to thank everyone especially miscreanity for the spirited debate and very useful information he has provided.  i wish you all the best of luck.

thank you.

There are two options to the fed (central banks) and government (-s):
- try to save the dollar by doing nothing inflationary
- try to preserve the status quo as long as possible, by inflating as much as required

So you (cypher) think we're gonna see them doing "nothing"? Really? You said it yourself, the deleveraging would be absolutely brutal, my guess is, you take the great depression and multiply it by 2 or 3. The imbalances through ALL THE WORLD are just ENORMOUS, and doing "nothing" may be seen as suicidal by keynesians. Of course, inflating will be worse in the long run, but humans are mostly wired for short run, politicians even more so. There is a great quote in line with this, said by their "hero":
"The long run is a misleading guide to current affairs. In the long run we are all dead." - John Maynard Keynes

Being contrarian for the sake of being contrarian will bite you in the ass!

LOL.  i offered you a wager near the beginning of this thread and you turned it down on "principle".  fine, i'll take your wager but you have to offer me the symmetric wager that if gold drops below $1680 before it clears $2000 that you'll follow my guidelines.  not even sure how we would enforce this.


what happened to the whale theory of diving deeply and ascending rapidly scooping of gold futures ala herring?


then why do you tx gold as an asset which would equate it to any other asset like RE, oil, commods subject to the whims of the USD?


i remind everyone here that another asset was thought to only go up as well in all situations.  its name is real estate.



the fundamental argument for gold to go to the moon depends on the USD vaporizing.  its latest upward moves shouldn't be ignored and i certainly don't see any tanking.


ok how about "most investors starting yesterday".  i think this will be a new trend.


this is a dangerous assumption.  i caution all of you against this linear thinking.  THIS is what will cause Armageddon worldwide.  the central banks won't let it get this bad.

don't forget we appear to have had a double top.  until gold moves to new highs thats how i'm playing it.


to repeat; the Fed won't destroy itself.  it will act in self preservation mode and try to save the USD which is the worlds reserve currency for the financial system.  lest you forget, who owns Congress?  oh yeah, the banks.  do they really care about what happens to the avg Joe?  no.  or would they act to preserve the value of their bailout money which they've already received and stashed in offshore accts?  do you really think they'll allow The Greatest Transfer of Wealth in Human History to a bunch of gold bugs and foreign central banks who've been accumulating gold?  would Warren Buffett really invest in BAC if he thought all his precious USD's and stocks were to be vaporized in a hyperinflation?  or perhaps was he assured that the Fed will do what it takes to save the US financial system ala USD?  do you really think we're headed for a one world currency backed by gold when we have a clear example of why it won't work in Europe?  do you really think a one world currency will stop all international wars which are a longer part of human history than gold as money?  if not, how do you propose those warring nations fund themselves?  will we really have world peace forever?  do you really think the US military will allow the Saudi's to reprice oil in terms of gold vs USD's?  how do you think the US gov't will pay its military if they allow the USD to vaporize?  gold?  really?  do you really think we let the Chinese and Russians equal seats at the table of a one world currency backed by gold?  who will suffer most if we let deflation kick in?  i say emerging mkts would take the brunt of the hit compared to the US which would certainly be acceptable to the Fed.

the deleveraging cycle to come will be brutal. 2008 was a warmup. deflation is the money supply plus outstanding credit. that credit is contracting mightily as we speak.  credit makes up most of the USD's out there, i.e., virtual USD's by probably 27 times not even counting derivatives.  its vaporing right now leading to a decrease in the total money supply which is why you're seeing the scramble for USD's.  why are the foreign CB's begging for new swap lines in USD's?  how long can the Greeks keep paying 97% on 1yr bonds?  default is guaranteed which will vaporize credit of whatever denomination.  liquidity is non existent right now.  the Fed and banks are pushing on a string no matter ZIRP.  no one will borrow nor lend out of fear.  we are doing a Japan.  

ask yourself how are you going to pay for a loaf of bread if the USD vaporizes with your gold or silver.  are you gonna cut it up in small pieces or what?  how do countries move gold around to fund balance of pmts worldwide?

most ppl i know are out of stocks or commods.  a stock mkt crash won't effect us much.  retail investors are out.  most corporate insiders are out.  a cleansing of the system is what we need and will clear out the bad debt which will be deflationary.  the worst of it has already been unloaded to the Fed.  the collapse of 1921 lasted a mere 2 yrs b/c the Fed refused to get involved which was a good thing.  i myself have a large holding of cash just waiting for the selloff to complete itself so that i can buy at what i reasonably think is the bottom.  lots of us are in that situation.  i say bring it on and lets get this shit over with.  i'll be fine.  you'll be fine.  the good news about this is that the USD will be stronger and we'll all benefit from that.  the complexity of the world and its digital nature will never allow gold to become a standard again.

Another call for stimulus, this one from Charles Evans, president of the Chicago Federal Reserve Bank. The tone is firm and a stark contrast to Kocherlakota's weak statement of dissent yesterday. Prior actions from the Republican party suggest that its opposition will amount to nothing more than another debt ceiling argument.

Whether this is a build-up for later this month remains to be seen. The Fed meeting on the 20-21st is far enough away to stir up discussion and favor toward continued efforts at supporting the economy.

Reading tea leaves is an ephemeral practice and I still prefer real numbers to soothsaying.

The first was (clearly) a failed joke. The second and third was not intended to be offensive. The fourth is a fact.

One or two of those might have been in jest, ironic, sarcastic, maybe even funny. You added nothing constructive. You were clearly annoying at least one person, indeed you anticipated that yet you continued thrice.

FYI: there are quite a few here who are bullish on gold. We entertain the discussion to challenge our assertions. I for one appreciate and respect intelligent conversation.

Quote a "nasty" post.

No, your attitude was nasty, as I wrote in PM. As my mother once (or twice) told me: "It's not what you say, it's how you say it"

miscreanity gives good points.

I don't know why people think I'm being nasty. Being bullish on gold is nasty?