Topic: Gold: I smell a trap - page 50. (Read 90828 times)

What are you saying, they have his 200 ton ready to ship?

Noise.

Chavez wants his gold. The price needs to be driven down before buying up physical, to avoid sending price over $2000. 

i'm gonna give all you guys a huge tip here that i just spotted.  just for my fellow bitcoiners:

look at the VOLUME on DZZ, the double inverse short of gold today.  ENORMOUS.  someone knows something the fundamentals can't possibly fathom.

edit:  highest volume EVER by a factor of 2.

My mistake.

BTW what is the price of SPAM doing? Maybe it DID outperform gold.  

I can't find any charts.

*EDIT

Yeah, it did.

Balchem Corp stock price:

that wasn't my quote but i'll take credit for it.  nice post.

I hope so! I've been waiting for a downturn so I can buy.

Yup, its totally irrational that gold investors have grown their initial investment by 190% since 2009.

Total crazy, they should have invested in tons of spam instead.

so the fact that Gordon Brown sold the BofE's gold in 2000 and that the central banks of the world were selling for most of the noughts while i and the smart money were buying means now they're correct and we should follow their lead?

Do you disagree with the quantity theory of money? Does the trillions being poured into the money supply of dollars not matter? Dollars are a better investment than gold which has a stable supply? The US debt ponzi scheme, completely irrelevant? Forced low interest rates, really doesn't matter? Buy more dollars with borrowed gold? Dollars are really great?


He's good with understanding the fundamentals behind everything. It's not as if he can predict sudden events in advance like the exact changes in fiscal policies and the illogically of speculators so the timing can be wrong with predictions. Of-course he was warning about the housing bubble well in advance and was saying that there was too much credit and not enough savings.

Gold could "correct" in the short term because of speculators being stupid by buying loads and then "profit taking" which they do all the time and they don't realise it's a bit stupid. I should avoid trying to take advantage of short term price changes especially when there is so much uncertainty. I prefer to hold onto gold for the long trend upward.

capitulation buying.  the setup couldn't be better.

Peter Schiff was right in the end. Just took longer than he predicted.

He's going to be right again, regardless of what happens in the next 3-6 months.

Silver $100+, gold $3000+ within 2 years.

Leveraged? So far so good, good luck!
If it drops, I believe it won't go lower than 1600$. Lets watch and see!

Even the gold haters are coming in: http://www.economicpolicyjournal.com/2011/08/anti-gold-roubini-recommends-physical.html Whether this is another sign of a trap or not Ill leave to you.

$40 for SLV will not hold.

Magnitude 5.9/6.0 in Virginia.

On-topic: Kazakhstan Central Bank: To Buy All Locally Produced Gold

More fuel for the fire, further decreasing the supply of gold in the face of increasing demand. Physical value will rise even if paper value declines (because it is not and eventually will not acquire physical). The real issue now is what to do on a global basis to slow the rise of gold, not just in the US.

I should also clarify that the QE we'll see beginning this year will not be direct money printing, but more along the lines of the repo market contracts described by Alasdair Macleod.

I admit, some of my commentary has slid down the speculation path, which is why I provide the reasoning and sources for as much as possible instead of just claiming a number. If there are just going to be price targets posted, then maybe the thread should be moved to speculation.

That said, I do agree that another dip in price is due, especially leading up to Jackson Hole. Funny enough, it started while I was writing this. Seeing as the weekly CoT reporting period ends on Tuesdays, the bullion banks may have loaded up on short positions in an effort to stuff the numbers. Since so many commodity traders rely on those reports for a general indication, it'd be foolish to think the banks aren't aware of their impact or make use of such (mis)information to its greatest effect. The same occurs very often just prior to futures/options expiration.

The weak season for gold is coming to an end. We're now coming into gold's usual time of strength, and so far it hasn't disappointed. Why would this year be any different, especially with so many global crises?


None taken; it's the information provided that's intended for consideration, not just my opinion. It's also easier to quote than retype.


Not entirely - it's possible to observe the inflection point where the trend's angle of ascent increases. That acceleration has been fairly obvious from gold at around $1500 to now. A successful retest of the area around $1680 would provide confirmation.


That's fair enough. The question remaining is why do you think it will only be one or the other?


If this is all self-perpetuating speculation, would Venezuela's recent actions have any different impact? Isn't that still reducing the size of an asset pool already in high demand and wouldn't that lead to higher prices?

Gold can be categorized as a Giffen good; as the price rises, demand rises. Gold doesn't primarily act as an inflation hedge, but more as an instability or volatility hedge. It does well during both inflation and deflation.

The reason for GLD is to provide exposure to physical gold, correct? So the demand is for the metal, not shares of the ETF. Global demand is predominantly for physical in-hand. As physical shortages increase, GLD must still acquire additional metal to back the ETF. I assume you would agree that leads to price increases

Redemptions of the gold backing GLD can only be done with a sizable basket of shares, far out of reach for the vast majority of its investors. If GLD continues to be viewed as a legitimate means of gaining access to gold, but physical metal has been bought to extremes, how will the ETF be able to provide additional shares? What will that do to the price of gold? If additional shares are issued without commensurate increase in physical metal holdings, what will that do to the price of paper GLD shares? Would the same occur to physical gold?

If there is reduced physical remaining behind GLD (diluted shares) and investors start dumping them, isn't it reasonable to expect large buyers to pick up the backing metal by redeeming baskets of shares? So as the price of GLD plummets, big money interests are pulling the physical metal out at a discount, further reducing global physical supply availability. The paper price has certainly fallen, but the gold price would rise because it is experiencing additional shortage.

With paper gold being dumped and that money being parked in significant quantities of dollar-denominated debt, the initial surge would likely be impressive. What then? Gold is now in even shorter supply with a major influx of fiat currency. Trading on an open market, supply and demand suggest that more paper fiat will be offered to acquire gold and other precious metals as well as real assets.

Those who have the free cash to throw into real assets (like us, with similar motivations of profit and/or protection), including precious metals and oil, have now pushed the prices for everything up. With prices elevated and the average citizen struggling to stay afloat, will the leadership scoff at them and risk revolution as is taking place in Greece, London and the Middle East, or will they instead supply the demanded dollars to bail out the populace? There is a perfect historical record of bailing out the populace through inflation, so that's where my expectations run.

Gold is already viewed as money by larger interests. It won't become apparent to the man on the street until he's broken and bleeding in the gutter. Chaves recognizes this, as did Gaddafi and the rest of the world outside of Europe and the US. Even there, at least some segment of the population views gold as money or there wouldn't be lines to buy precious metals and Europe wouldn't be panicking.

• Gold is rising because of structural problems that have caused instability and uncertainty. That means a search for security is ramping up and gold, being the basis of wealth storage for millennia, is in demand.
  
• Because the issues are structural and already exist, QE is not necessary for further demand in gold.
• Again, because of the previous fact, what happens at Jackson Hole is just a formal announcement for what is going to take place regardless of any wild gesticulations the news releases offer. Even if the actions are delayed, the banks' and government's hands will be forced.

Real estate may be an investment, but it is not money. There is also a distinction between an asset rising forever and one not being done rising.


Sure it has. Also note the silver chart in that article and the similarity to the run from the mid-$20s to $50/oz. Past charts aren't predictions, but they do provide reasonable ranges. We wouldn't be in uncharted territory with the GSR unless it went below about 14:1 or over 150:1.



You've made excellent points. It might help if you can outline the processes by which gold might decline.

• Parabolic blowoffs end badly for whom?
• Absolutely, but how long can they go on for? I guarantee it's far longer than I'd be able to maintain a short position.
• Giffen good.
• If history doesn't echo, then you might be proven right. Let's see what happens after this year's Jackhole.
• See #2.
• Nah - just fear, uncertainty and doubt.

If it drops significantly before Jackhole, the gap by $1680 is the likely target. Of course, if gold drops equities will probably rise, so mining stocks will be bouyed. That would temper any drop in gold.

For precious metals related options trading, close out enough positions to cover expenses. With equities, lighten up on underperforming miners. Don't let go of any physical holdings. Prepare to start opening shorts in options and equities above $2100/oz gold, $70/oz silver.


As others here have pointed out, nothing can continue forever; that includes mining stock underperformance. For an indication that's coming to an end, there's this:



The gap at $40 could be filled. At that point, there's a significant amount of prior basing that will make it a difficult level to breach. Likewise, GLD could see gap-filling to $175, but again - where's the outflow after that? Why would chart patterns override fundamental strength?

BTW, how was fishing?


* I think there may have just been a noticable earthquake in the NYC area, or at least that's what it felt like...

i don't think so.


i love Aaron Krowne.  his site was the first i followed along with Calculated Risk for the housing debacle in 2007.  i just think he suffers from linear thinking as well.

SLV has made a downturn right at its 61.8% Fib retrace from the bottom.  i think it rolls here.  if it does, all hell breaks loose from the non confirmation with gold.

It is the opposite. Miners are leading indicators. The fact that I short PMs is also supported by the underperformance of mining stocks.