Gold Has Not Begun to Shine 18 comments
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"Gold bugs” are a remarkably consistent group – regularly extolling the same set of economic fundamentals which are certain to drive the price of gold to many multiples of its current value. On the other hand, “gold bears” and the anti-gold propagandists of the banking-cabal tend to “re-invent” themselves every few months.
For the last quarter of 2008 and the first quarter of 2009, the refrain from these doomed zealots was the same: gold was no longer a “safe haven”, and with inflation (temporarily) driven back by the bursting of asset bubbles, combined with a “credit crisis”, there was “no reason to own gold.” Inflation was the “only” market environment where gold would perform well, they lectured.
History showed they were wrong, of course. Gold held up better than any other asset class – and would have soared much higher, if not for some of the most extreme price-suppression tactics the Manipulators have used in all their decades of price-fixing. “Lease rates” for bullion were driven into negative numbers at a time when demand was unprecedented – which should have pushed lease-rates toward record highs.
Then, all the tons of gold which the bullion banks were paying traders to “borrow” was dumped onto the market. Short positions (for gold and silver) were ratcheted-up to concentrations many multiples higher than the legendary silver-holdings of the “Hunt Brothers” - at the time they were accused of illegally manipulating the silver market (on the “long” side).
Simultaneous with this, the massive forced-liquidation, triggered by the Wall Street banksters and their servants in the U.S. government coerced many people into selling their precious metals holdings – simply because they were the only assets which didn't have to be liquidated at huge discounts.
Today, the U.S. propaganda-machine is playing a loud chorus of “Happy Days are Here Again” - with the Plunge Protection Team doing its part by “pumping” U.S. equity markets to absurd levels. Surprise, surprise...the anti-gold propagandists have a new version of “reality”!
In the new world which they created...today, once again there is “no reason to own gold.” “The worst is over,” they crow, so people no longer need gold as a “safe haven”, forgetting that they had already said gold no longer fulfilled that function.
The U.S. economy is now reported as having “bottomed”, with the U.S. financial sector “healthy”, and with the U.S. jobs market and housing market both (supposedly) showing signs of “stabilization." Deflation has been conquered and the economy will resume growing in the 2nd half of this year (just ask Ben Bernanke!).
Let's assume for the moment that the propagandists are half-right (which would be 50% better than their recent performance). If deflation is beaten, then by mathematical necessity, that means that inflation is back.
As many astute, economic commentators have reminded people, “inflation” is the growth of the money-supply. “Price inflation”, which is typically simplified as being a proxy for (real) “inflation”, is merely a symptom of “inflation”. This phenomenon is very simple, and would be easily understood by the vast majority of citizens if governments didn't actively HIDE this truth.
We start with an existing supply of “goods” in the world, and then we increase the supply of money (i.e. “inflate” the money supply). We now have more money in peoples' pockets, but still the same amount of goods. At this point, it should be clear that with people having more money to “bid” on the same quantity of goods, prices must always rise (i.e. “price inflation”).
The supposedly enlightened leaders of Western governments are in the process of the largest, fastest increase in the global money-supply in history (with the possible exception of brief periods in times of war). Given what we all now know about “inflation”, what sort of “price inflation” should we expect – once all that newly-printed money floods the global economy?
Before you answer that question, let's not forget that these same “leaders” (who are all following the same example) have also “juiced” the global economy with the lowest, collective interest rates in world history.
Thus, what we can read in assorted propaganda outlets today is that the same propagandists who only six months ago stated that gold was the best asset in times of high inflation are urging people to sell their gold TODAY – just ahead of what could easily be an era of the most rampant inflation in history.
Precious metals should be the LAST asset which anyone sells under current economic conditions. End of story.
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<<Then, all the tons of gold which the bullion banks were paying traders to “borrow” was dumped onto the market. Short positions (for gold and silver) were ratcheted-up to concentrations many multiples higher than the legendary silver-holdings of the “Hunt Brothers” - at the time they were accused of illegally manipulating the silver market (on the “long” side).>>
www.mutualfundwealth.com/
I have been considering boycotting any financial entity that is participating in the PM price manipulation shenanigans. The obvious participants seem to be JPM and HSBC.
if the banksters and politicians succeed in driving the price down it will be a nice opportunity to buy more insurance. maybe it will present another easy opportunity on the explorers too.
the biggest pay-offs i ever recieved were not listed on any exchange. one was a ten-bagger exactly on a local business where i knew the men involved. the other was about a 40 to 1 again where i knew the men involved. perhaps this was venture investing but it did not seem risky because i knew that successful men were involved. my best pay-offs in the exchanges have been guesstimates and hunches. my ex-broker used to argue with me. he got burned bad in this mess.
On May 08 12:43 PM fireball wrote:
> bought gold and silver long ag as insurance. it has turned out to
> be a sound investment.
> if the banksters and politicians succeed in driving the price down
> it will be a nice opportunity to buy more insurance. maybe it will
> present another easy opportunity on the explorers too.
> the biggest pay-offs i ever recieved were not listed on any exchange.
> one was a ten-bagger exactly on a local business where i knew the
> men involved. the other was about a 40 to 1 again where i knew the
> men involved. perhaps this was venture investing but it did not seem
> risky because i knew that successful men were involved. my best pay-offs
> in the exchanges have been guesstimates and hunches. my ex-broker
> used to argue with me. he got burned bad in this mess.
Another clearly bullish signal for the gold market are all the "scrap" buyers who are now feverishly advertising on T.V. to try to get people to cash-in their jewelry and other gold (and silver) 'trinkets' (lol).
If the precious metals market was anywhere remotely close to a "top", these dealers would not be NEARLY as eager to buy "scrap" as they are today.
Personally, I prefer silver to gold today - given how grossly warped the gold/silver price ratio currently is (about 70:1).
"There is no place for gold on the global financial stage."
by Jamie Dlugosch
Reason #1: There Is No Inflation
Reason #2: Gold Prices Are Easily Manipulated
Reason #3: Gold Is in Limited Supply
Reason #4: Gold Was Dead for 20 Years
Reason #5: The Dollar Is the Global Currency
I'm neither for or against gold; just want to know what you Alpha Seekers think. Here's the link to his in-depth thesis:
www.investorplace.com/...
I also saw the market club video by Adam Hewison on gold technicals; how the reverse head & shoulders in clearly forming over a 6 month period, a sign that gold is poised to rise.
I'm torn on this issue & would like you guys to shed some light.
1) Inflation? - see above
2) If gold (and silver) prices were "so easy to manipulate", then why is gold still not at $300/oz, and silver at $4/oz? The fact is that it is taking increasing amounts of bullion and ever more extreme (and illegal) acts of manipulation just to stop PM's from rising even faster.
3) Gold being in "limited supply" is (by definition) one of the most "bullish" indicators for ANY commodity or good.
4) Gold was not "dead" for 20 years, it was victim of the largest, most extended commodity-manipulation in history - which is precisely why it will now go many multiples higher. The longer you artificially depress the price of a good, the higher it bounces when such manipulation inevitably fails.
5) The U.S. dollar? It is RAPIDLY losing its "reserve currency" status, it is guaranteed to 'crash' when the U.S. Treasuries "bubble" bursts - and it's essentially worthless already, since the U.S. is hopelessly insolvent.
In short, Jamie Dlugosch appears to know NOTHING about the gold market.
This is the time when the commom man (Joe Sixpack, if you will) CAN BECOME INCREDIBLY RICH because of the coming precious metals rocket to the stars. Become one of us. You will thank me!
I agree that there's been massive manipulation in the past & present, but if "they" are getting their ways, perhaps we shouldn't fight them with what little we have in our brokerage accounts, compared to the trillions that their magical press can churn out trillions on the snap of a finger (or magical IT system that crunches a few more zeros behind our current M1, M2 #s).
The risk reward is much better on other commodities, specifically DBA. You still get the inflation and weak dollar hedge, without having to worry about some of the issues mentioned above. Chart formation looks much better, as DBA is ready to attack the 200 day MA, and can move quickly to $28 area with any weather related concerns in the next few months. Seasonally, this is great time to load up on DBA (China / India demand is going to be strong too).
Personally, I also like TBT as a much simpler hedge on inflation and rising treasuries. With the risk aversion / fear trade over, I'm less concerned about another rush to treasuries for safely and liquidity. The only challenge is the 10 year treasury has already run up quite a bit after breaking 3.0% resistance; I would wait for some pull back closer to the 3.0% (now support area) before adding to more TBT.
> Having been bullish on gold for much of 2009, I'm now switching to
> neutral stance. The fear trade is over (VIX down, FXY down), so
> what's left is inflation and weak dollar trade.
I'm not so sure the fear trade is permanently "over."
If the market hits a major inflection point between now and July 4 and shifts from the 9-week rally pattern back to the broader 18-month decline pattern since October 2007, which I believe is likely, the fear trade will be back with a vengeance.
It is more heavily used in industrial applications and therefore demand should increase as production recovers.
Basically, there has been a four course "Lazy Susan" meal of mineral mining stocks that have been rotating in hot lately. First course was gold, from November to February (for instance, Jaguar Mining (JAG) was under $2.00 and now is over $6.00, but has remained mostly flat all April and into May), then in March it was copper (Teck Cominco was under $5.00 and is still on the upswing and now is threateneing $15.00), then it was uranium since middle March (Denison Minerals (DNN) was .79 and now is around $2.20. DNN already had a near 300% pop. But for the last week it pulled back and I believe is resting. But don't forget, there are some 250 nukes either in a state of proposal, or already being constructed world wide, that will eventually require uranium. DNN is going to go hot again, soon,
Next turn of the Lazy Susan? Palladium. The new platinum/paladium Russian and USA ETF's are coming. I suggest getting in ahead now with buying North American Palladium (PAL) and Stillwater Mines (SWC). PAL closed down Friday three cents. It was down around twenty cents intraday. I bought shares during its low and recieved a 9% pop before closing...on a day when the stock closed down!
My prediction is that the financials have a week or so of big time pop left in them, but palladium will be popping all summer long.
From mineweb.com
tinyurl.com/d2kwbt
The significance of Chinese gold holding clarification - CPM
Excerpts-
“…it is pointed out that the purchases over the past six years had been made by the Chinese State Administration of Foreign Exchange (SAFE) rather than by the Peoples Bank of China (PBOC), which is why the amount of gold had not appeared in China's official reserve figures. Now though, the holding has been transferred to the PBOC and hence the announcement.”
So the 454 tonnes of gold wasn’t “officially ” part of China’s gold reserves, it was just viewed as part of China’s Assets like its US Dollar reserve.
Officially part of China’s gold holdings or not it was still an asset to the government of China.
“CPM stresses that this is not surprising given that the total amount represents a relatively cautious buying programme spaced over six years, and that the gold was all bought from Chinese domestic refiners and thus will have had little direct impact on the international gold market.”
Relatively cautious? Buying 454 tonnes of gold over 6 years (Roughly 75.6 Tonnes a year) isn’t exactly cautious buying.
Question, does China produce 75.6 tonnes of gold a year? If it does, then total gold production would have gone to the Chinese State Administration of Foreign Exchange and none to other markets. If this were the case there would have been some mention of China’s gold being held off the market by gold producers, gold buyers or gold bugs worldwide. Yet there was no mention by anyone concerning this Could it be that CPM is only guessing that the 75.6 Tonnes of gold a year came from China itself?
Analysts have been blindsided before due to insufficient or faulty data.
This is the kicker-
“….the Chinese move to place the gold in its official reserve…”
I wonder how much gold is held in China’s Unofficial reserves. If banks can keep their toxic assets off their official books why can’t China keep some or all of its gold holdings off their official reserves?
The Chinese Government seems interested in adding to its gold reserves, not reducing them. They seem to be adding to their reserves quietly so as not to spook the gold market and cause a price hike.
I wonder what the gold bears are saying to downplay The Chinese Government's desitre to buy gold?