Gold: What Professional Futures Traders Think

A friend asked if anyone had seen short interest on gold. Not quite my specialty, but did a quick check.

Points to note from the Latest Commitments of Traders Report of Sept 11 on positions as of Sept 8 [see table below]:

• Non-commercial traders (i.e. speculators) are long gold almost 10:1. They are more indicative trading market sentiment than commercial traders. Their long positions of these speculators grew almost 10x as much as short positions in the latest report.
• Commercial trader positions moved in the opposite direction, though not by as great a magnitude. They were short gold about 4:1. Short positions grew over the most recently reported week by about 25x. Commercial traders trade more on the spot market.

I don’t know where to get historical data to see if these figures indicate extreme sentiment or not, no my conclusions are limited. They include:

• Speculators and commercial traders appear to have a rather opposite position on gold’s near term future based on the below table.
• The growth in long positions by speculators and short positions by commercial traders appears to reflect strong sentiment, though again, I don’t have historical data to confirm that.

Typically gold demand increases with increased optimism about inflation, which usually comes from increased belief in spending and growth. So this swing in sentiment is curious. Most central bankers believe growth over the coming year will be sluggish at best, and no one believes the employment (and thus consumer spending) picture will improve any time soon.

Why the move?




Source: http://www.cftc.gov/dea/futures/deacmxlf.htm

Comments or guidance welcome.

Disclosure: The author has no position in the above instruments.

Comments

[twitee:]

Gold is not going up because of inflation. Gold is a reserved currency that is inversely proportional to the value and stability of $US.

Gold will rise due to inflation or recession, so if you are a long term investor you will gain no matter what the manipulated markets are indicating.

Sep 18 03:57 PM

[Roger Knights:]

China's recent statements hint that it will be buying on dips.
Barrick's closing of its hedge positions is bullish.
China is now encouraging its citizens to buy gold.
Stocks are getting too high; Treasuries are yielding little.

Sep 18 04:26 PM

[Roger Knights:]

PS: Most obviously, the dollar is weakening.

Sep 18 04:27 PM

[ilc:]

I agree with twitee. Given USD fundamentals and an investment horizon of at least 3 years, $1000/oz. is still a wonderfully low price for gold.

The whole inflation vs. deflation debate is a lot of nonsense. In the Great Depression, which was a period of deep de-leveraging like today's period, prices deflated when measured in gold. They deflated in nominal terms also, but that is because the dollar *was* a specific quantity of gold, at that time. A dollar was approx. 1/20 of an ounce of gold. Then Roosevelt depreciated it to 1/35 oz., so that the same dollar price became a lower gold price, i.e., a smaller quantity of gold. To say it another way, gold gained in purchasing power. Dollar-price deflation was there, but it was less than gold-price deflation.

That is much like what we're living through today. When I first bought gold several years ago, the dollars I spent were the price of one nice car. Today, for the same quantity of gold, I could get enough dollars to buy two nice cars. The purchasing power of gold has gone up. We have been in a massive deflation for years - if you measure prices in gold.

The key DIFFERENCE between today and the 1930s is that today's dollar has no meaning. It is tied to nothing real. The Federal Reserve can double the number of dollars in monetary base (M0) any time they want. They did, in fact. So today's Federal Reserve will be able to prevent CPI deflation and even to create that 2% to 5% annual CPI inflation that some say is ideal for lightening people's debt burdens.

So the trend of the last several years has been:
(1) Deflation when prices are measured in gold,
(2) Inflation (or at least stability) when prices are measured in dollars.
And that will probably continue for several more years. And if you do the math, that means gold has to keep going up, in dollars. Not in a straight line, of course. There will be dips. But five years from now, $1000 gold will look cheap.

Sep 18 04:32 PM

[chap08:]

twitee (& ilc, partly)

A few points:

1. Gold IS going up because of inflation (or rather, the expectation of inflation). Note that inflation is the same thing as devaluation of the $.
2. There is nothing about recession that will make gold rise. There is no linkage between rising gold and recessions.
3. The inflation v. deflation debate is not "a lot of nonsense" (ilc). You seem to be basing this view on the 1930s. The situation now is completely different. Then we had a gold standard (gold and the $ were the same thing). Now we have fiat (gold and the $ are opposites). If we have deflation now, there would be no reason to expect gold to gain against the dollar. In deflation, the dollar would gain against food, consumer goods, oil, industrial metals etc. etc. Why should it not also gain against gold?

Don't worry though. We're not going to have deflation to any great degree. We'll have the Fed waging war on the dollar, inflation expectations rising and gold rising over time as a result.


On Sep 18 03:57 PM twitee wrote:

> Gold is not going up because of inflation. Gold is a reserved currency
> that is inversely proportional to the value and stability of $US.
>
>
> Gold will rise due to inflation or recession, so if you are a long
> term investor you will gain no matter what the manipulated markets
> are indicating.
>

Sep 18 04:55 PM

[chap08:]

As for the COT stuff, these are extreme ratios. My reading of the historical data is that short term traders had better take notice and get ready to follow the Commercials. But my position isn't short term.

Sep 18 05:01 PM

[ilc:]

"If we have deflation now, there would be no reason to expect gold to gain against the dollar. In deflation, the dollar would gain against food, consumer goods, oil, industrial metals etc. etc. Why should it not also gain against gold?"

But we *don't* have dollar deflation now. That was my point. The dollar's fundamentals are terrible. The dollar is not appreciating in its purchasing power, it is holding or even depreciating. Gold is appreciating in its purchasing power, just like it did in the Depression. Re-read my comment or think on it a bit more, and you will see how close my view is to yours.

Sep 18 05:18 PM

[ilc:]

P.S. And what's nonsense about the deflation vs. inflation debate is that people imagine there is a conflict. My point is, there isn't a conflict. We are in a deleveraging cycle, which tends to be deflationary. We are in a dollar-destruction cycle, which is inflationary. The deflation becomes obvious when you measure prices as quantities of gold. The inflation becomes obvious when you measure prices as quantities of dollars. Both are true. The point of reconciliation between the two, is that the dollar price of gold has been rising - as a long-term trend; not in a straight line - and must continue to.

Sep 18 05:24 PM

[ilc:]

("dollar-destruction" cycle meaning, the Fed is more or less destroying the dollar by over-printing it)

Sep 18 05:25 PM

[market ace:]

The only thing left that glitters is gold!

SInce 2001 Gold is up 297% and S&P down 7%. You chose which you want to bet on. The value of the dollar is down 95% since the FED took over in 1913 and down 15% since March 2009. See any problem here?

Gold is money and always has been. If you look at what an ounce of gold purchased 100 years ago and what it purchases today you will see a very consistent purchasing power pattern. That is the function of real money. The Zimbabwe dollar was on par with the US $ in 1980, but became a clear example of what an untamed printing press can do for a currency.

As the smoke from the over worked Bernanke printing presses starts to reach the nostrils of too many people they will all see the fallacy of fiat money and it will again collapse. The Chinese are seeing it clearly and will be a much bigger force in the gold market than the big US bank gold price manipulators. When the Chinese tell their people to buy gold and silver do you think they will let the price go down and look stupid?

On the other hand do not get overly excited by gold going to $10,000 an ounce or more as that just means prices of everything have also escalated 10 times. However, if you are holding gold or silver instead of $FR notes you may have a lot of reasons to celebrate.

Sep 18 05:33 PM

[bkdc:]

Funny how the author describes the private investors as 'speculators' and the commercial traders as 'commercial traders'.

Maybe it's because he's talking about paper gold. My gold is yellow and shines in my hand. And I'm not speculating. I'm holding.

Sep 18 06:38 PM

[BioBoy:]

I agree with bkdc. If it's "paper" gold (or more like "digital" gold) then that's fine for short-term trades, but NOT fine for long-term investment. If you want to own gold for the long haul, you need to actually possess the gold. And I'm not talking about physical gold supposedly off in a vault 5000 miles away with your name on it. I'm talking about under the mattress. There is less physical gold behind GLD than people think.

Sep 18 09:22 PM

[Mbuna:]

The dollar is toast. The dollar is now the primary vehicle for the currency carry trade. Zimbabwe is now issuing bonds in dollars as are some other european countries. It is only a matter of time before heavy dollar devaluation occurs in one form or another. Buying actual gold is a method of capital preservation. I'm advising that it's time to move your dollars into something else for the sake of preserving capital. You have been warned.

The IMF has just announced it will be selling 400 tons of gold a year for the next 5 years. The real reason behind this is to keep the price of gold down, and of course, they are doing this conspiracy with the usual central bank suspects. Their hand has been forced but it will not be enough. Take advantage while you can.

Sep 18 11:04 PM

[ManAboutDallas:]

Actually, in a perverse sort of way, this is mega-bearish, short-term, anyway.

Barrick has been, is, and probably always will be the idiot elephant in the room. That they're closing their hedge book now - actually again, didn't they supposedly do this two years ago ? - means gold has probably put in at least a short-term top.

Watch for Barrick to put the hedges back on at wherever gold makes the next bottom. These guys are better free entertainment than the Keystone Cops.


On Sep 18 04:26 PM Roger Knights wrote:

>Barrick's closing of its hedge positions is bullish.

Sep 18 11:06 PM

[Wisdom vs. ...:]

people sold the dollar to buy equities; equities are getting over-priced, soon people will be selling them-- and buying the dollar. yawn

Sep 19 12:41 AM

[coldcall:]

Twittee says all there is to say about gold - the dollar.

If you think the dollar will remain weak then gold will remain strong. They are inverse, its that simple. Trying to analyse speculators and traders, or the supply and demand factors for gold is just looking in the wrong place for answers.

Im bullish gold only because i cant see how the dollar will climb out of its hole - unless we had another market panic attack.

And hell trading gold mining stocks is fun because of their almost insane volatility!

Sep 19 04:30 AM

[USisCorrupt:]

And as long as we keep Al-Qaeda in power, "yes they won the war, just look around" this Country will continue to fall apart due to the financial thieves we have looking out for our interest.

Sep 19 08:47 AM

[highlarche:]

not dollars ,gold


On Sep 19 12:41 AM Wisdom vs. Information wrote:

> people sold the dollar to buy equities; equities are getting over-priced,
> soon people will be selling them-- and buying the dollar. yawn

Sep 19 10:57 AM

[notagoldbug:]

this is anything but typical
where have you been

gold is in a well defined bull amrket for years and coincidently the stock market is in abear since 2000

sp divided by gold now approaches old buy the stock market

but not sure its time to sell my gold and buy stocks

check out dmm.t and fvi.v

i own a truckload of both....

Sep 19 11:09 AM

[The Recusant:]

Its interesting to hear the stock analysts on television and the author of this article questioning why gold has risen as though it is some type of phenomenon. For some time now many have been writing about the weakening of the dollar and how the PMs are the traditional safe investments. Do these commentors have no clue as to what is happening to the overall economic landscape? Perhaps they rely upon their charts and day-to-day S&P and Dow results too much instead of researching outside the box that they've created for themselves. Somethings are obvious but only when you open your eyes.

Sep 19 11:11 AM

[comox:]

I agree that one can make money trading gold stocks. I was watching Goldcorp (TSX: G) closely as is fluctuated in the $30's this past year. You could regularly buy at $30-33 and then sell at $36-38 to make quick, tidy profits. However, I lost the chance to buy again when it took off recently (now $43.99). It still remains very volatile (rising and falling sharply on the slightest news or change in market sentiment) and if you can establish your lows and highs, you can proably still do some profitable trades in it.


On Sep 19 04:30 AM coldcall wrote:

> Twittee says all there is to say about gold - the dollar.
>
> If you think the dollar will remain weak then gold will remain strong.
> They are inverse, its that simple. Trying to analyse speculators
> and traders, or the supply and demand factors for gold is just looking
> in the wrong place for answers.
>
> Im bullish gold only because i cant see how the dollar will climb
> out of its hole - unless we had another market panic attack.
>
> And hell trading gold mining stocks is fun because of their almost
> insane volatility!

Sep 19 12:01 PM

[Michael Clark:]

Gold is in a historical UP cycle. Cycle runs through (about) 2019. See below:

seekingalpha.com/insta...

Sep 19 12:59 PM

[Michael Clark:]

I agree. Gold does very well in a deflationary environment because gold/silver is the only 'commodity' that is a currency. Global deflation will knock everything down, but gold. That is why gold will have an obscene rally, because it will be the only place to be.


On Sep 18 03:57 PM twitee wrote:

> Gold is not going up because of inflation. Gold is a reserved currency
> that is inversely proportional to the value and stability of $US.
>
>
> Gold will rise due to inflation or recession, so if you are a long
> term investor you will gain no matter what the manipulated markets
> are indicating.
>

Sep 19 03:41 PM

[Burticus:]

Compare the COT to the monthly Bank Participation Report and you will see that a couple Illuminist bullion banks control the vast majority of the short position in CRIMEX papergold. These are not "commercials" hedging gold production, but naked speculative shorts of a huge percentage of global annual gold production that are the pillars holding up the decades-long gold price suppression scheme.

Gold is the barking watchdog that warns the sheeple that they are being sheered of their savings by currency debasement. Papergold must be beaten into submission on the CRIMEX to maintain the central banksters' fiat currency racket. As the Chinese and other foreigners dump their FRN-based debt paper for real money, the scheme will unravel, the CRIMEX will default and the paper tail will no longer wag the golden dog.

As the world's paper currencies, led by the FRN, hasten their inevitable death march to join their ancestors in the fiat currency graveyard, then fiat currency Hell, nobody will be stupid enough to exchange real gold and silver for paper, even with big numbers printed on it. As Prof. Antal Fekete warns, when gold goes into hiding, the political, social and economic consequences will be devastating. The people's wrath will be unleashed on TPTB and their minions who are responsible for the widespread poverty and death.

Sep 19 09:36 PM

[rick12345:]

The US makes me laugh. Debt is growing exponentially toward a ridiculous level (and has been for the last 30 years), yet no political party has the balls to raise taxes for fear of retribution. Your tax levels are simply unsustainable, and while increasing them may seem like a bitter pill to swallow, sitting idly by while the country becomes a "banana republic" , will be a virtual suicide pill.
Anyways, the USD still needs to fall another 10% or more before it begins to hemorrhage.

Sep 20 04:22 AM

[coldcall:]

Chap08,

So people are buying gold at $1000+ an ounce because they think inflation will raise its ugly head in how long exactly? I'm not saying there wont be an inflation problem at some stage but i dont think the recent rise in gold has much to do with anything other than the weakness in the US dollar.

The US dollar, being the world's reserve currency, is losing its shine so its natural for people to look for a substitue reserve currency and there is nothing more suited to that role than Gold.

So there is no need for a strawman argument about inflation/deflation because atleast for now, the dollars weakness is enough to keep gold at the $1000 mark.


On Sep 18 04:55 PM chap08 wrote:

> twitee (& ilc, partly)
>
> A few points:
>
> 1. Gold IS going up because of inflation (or rather, the expectation
> of inflation). Note that inflation is the same thing as devaluation
> of the $.
> 2. There is nothing about recession that will make gold rise. There
> is no linkage between rising gold and recessions.
> 3. The inflation v. deflation debate is not "a lot of nonsense" (ilc).
> You seem to be basing this view on the 1930s. The situation now is
> completely different. Then we had a gold standard (gold and the $
> were the same thing). Now we have fiat (gold and the $ are opposites).
> If we have deflation now, there would be no reason to expect gold
> to gain against the dollar. In deflation, the dollar would gain against
> food, consumer goods, oil, industrial metals etc. etc. Why should
> it not also gain against gold?
>
> Don't worry though. We're not going to have deflation to any great
> degree. We'll have the Fed waging war on the dollar, inflation expectations
> rising and gold rising over time as a result.

Sep 20 05:20 AM

[coldcall:]

Here's a link to a blog with a very clear graph showing the almost perfect inverse correlation between dollar and gold.

bigpicture.typepad.com...

This is basic economics 101 folks, dont get confused by people over complicating the drivers for gold.

Sep 20 05:38 AM

[Angel Martin:]

Gold goes up no matter what...?

sounds like real estate in 2006.


On Sep 18 03:57 PM twitee wrote:

>
> Gold will rise due to inflation or recession, so if you are a long
> term investor you will gain no matter what the manipulated markets
> are indicating.
>

Sep 20 08:22 AM

[popey:]

Why the move? How about the fact that the USA is about to systemically implode due to profligate deficit spending. Unfunded liabilities going forward unsustainable. A complete impossibility of the USA growing or trading its way our of its deficit obligations. And the certainty that real interest rates in the USA are about to turn negative due to the Fed being behind the curve. Add in a dash of coming social catastrophe, the collapse of fiat "reserve" money, and you have a reason to buy gold.

Sep 20 08:43 AM

[Original Sc...:]

Inflation and recession are not opposites. You can have an inflationary or deflationary recession.

Recession implies risk in the financial environment causing a % of investors to seek out the safety of gold. In a recession, gold has value when it is inflationary as it grows against the currency. It has value in a deflationary recession because it is in fact the ultimate money when money is in short supply.

Gold is both a store of value and insurance. And you don't have to count on an insurance company to pay off.

Sep 20 09:18 AM

[LR European:]

While true that the main driver for gold at the moment is the US$, the price is currently rising in most currencies. A quick scan through the charts shows that although not hitting new short-term highs (yet?) in many of the stronger currencies gold's trend of more than a few months looks consistent in every mainstream currency.

Sep 20 09:45 AM

[chap08:]

Michael, please note that:

1. Recession is not the same as deflation.
2. There is no evidence that gold does well in a deflationary environment, when you have a fiat currency. Obviously it does (did) well under a gold standard because in that case gold and the currency are the same thing - and deflation means an increase in purchasing power of the currency.
2. Global deflation (were it to happen) would not "knock everything down". By definition, fiat currencies would do very well. They would increase in purchasing power - they would buy more goods and assets. That is the definition of deflation. Given that currencies would buy more food, consumer goods, oil, housing, stocks, metals etc. etc. then there is no reason to believe that they wouldn't buy more gold. If the dollar is gaining in value (i.e. we have deflation) then there is zero reason for an "obscene rally" in gold against the dollar.


On Sep 19 03:41 PM Michael Clark wrote:

> I agree. Gold does very well in a deflationary environment because
> gold/silver is the only 'commodity' that is a currency. Global deflation
> will knock everything down, but gold. That is why gold will have
> an obscene rally, because it will be the only place to be.

Sep 20 01:05 PM

[chap08:]

coldcall, as I said in the comment that you replied to, "Note that inflation is the same thing as devaluation of the $". If you have thought about that and don't understand or disagree then let me know.

See my comment above on why it is important to understand the difference between inflation and deflation and why that matters to the gold price in $.


On Sep 20 05:20 AM coldcall wrote:

> Chap08,
>
> So people are buying gold at $1000+ an ounce because they think inflation
> will raise its ugly head in how long exactly? I'm not saying there
> wont be an inflation problem at some stage but i dont think the recent
> rise in gold has much to do with anything other than the weakness
> in the US dollar.
>
> The US dollar, being the world's reserve currency, is losing its
> shine so its natural for people to look for a substitue reserve currency
> and there is nothing more suited to that role than Gold.
>
> So there is no need for a strawman argument about inflation/deflation
> because atleast for now, the dollars weakness is enough to keep gold
> at the $1000 mark.

Sep 20 01:13 PM

[Jade Bond:]

Funny. It seems the commercial traders are actually speculators themselves on short term patterns, they don't understand the ruinous nature of the fiat money manipulated system infecting the global economy, or they have a strong vested interest in discrediting sound money.

I've provided a detailed explanation in my blog: stocks-bonds-currencie...

Full Disclosure: Long GLD.

Sep 21 10:47 AM

[Kirkaiya:]

While I'd have to agree with you that having physical possession of gold (assuming you have it secured, and not literally "under your mattress", as you said), I would counter that, if the economy collapses to the point where shares in GLD, or having ownership of physical gold stored by another company mean nothing - then the gold in your vault at home is probably not going to be very helpful either.

I very much doubt that we're going to see that kind of financial Armageddon, but if we did, the most valuable commodities to possess will be guns, ammunition, gasoline, and coffee, in roughly that order. Short of that sort of scenario, owning gold either via ETF, or (preferable for some people) in a vault run by a company that aggregates your gold with the gold of many other people, and guards it with armed men, seems a safer bet than keeping large quantities of gold in your home (it's more expensive to take physical possession, it's at risk of theft, is harder to trade large quantities quickly - less "liquid" - and even in an end-of-the-world scenario where the ETF is worthless, people with more guns than you would simply part you from your gold.

And so, I use ETFs for my buying gold.


On Sep 18 09:22 PM BioBoy wrote:

> I agree with bkdc. If it's "paper" gold (or more like "digital"
> gold) then that's fine for short-term trades, but NOT fine for long-term
> investment. If you want to own gold for the long haul, you need
> to actually possess the gold. And I'm not talking about physical
> gold supposedly off in a vault 5000 miles away with your name on
> it. I'm talking about under the mattress. There is less physical
> gold behind GLD than people think.

Sep 21 01:29 PM

[casey00001:]

This is meant primarily in jest, but for those of you who are so bullish on Gold, why not buy Odyssey Marine Exploration (OMEX)? They are always searching for the real thing even it is at the bottom of the sea.

Sep 21 02:23 PM

[Boxed Merlot:]

Haven't looked at the fundamentals but given the the three values of intrinsic, numismatic and face, any findings and subsequent divies of the trove could actually round out an otherwise unbalanced portfolio, I suppose. Actually sounds kinda fun if you can trust the principles, (people), running the thing.


On Sep 21 02:23 PM casey00001 wrote:

> This is meant primarily in jest, but for those of you who are so
> bullish on Gold, why not buy Odyssey Marine Exploration (seekingalpha.com/symbo...)?
> They are always searching for the real thing even it is at the bottom
> of the sea.

Sep 21 08:44 PM

[twitee:]

A recession or deflation means the US economy and its stability is in danger. Some countires such as china and russia hold trillions of dollar they will either convert to other currencies or replace it with hard asset..........The real problem is that all other currencies peg off of dollar and financially interconnected.....This will leave Gold to be the only hard currency.

In a inflationary situation the value of the dollar will fall causing the price of gold or any other hard assets to rise.

Sep 24 02:15 PM

[tradingdayz:]

I must admit I am not a gold trader first! So my comments have limited value--but I read everyone's often insightful views so I can do a recap for everyone if you like:

The deflationary environment is perhaps short on all goods and services, except gold, IF currency destruction is ongoing by continued money printing. Destruction seems likely if the growth and trade in the US does not match the interest liablities to the new money creation. Inflation is the result eventually. Inflation and deflation are unrelated to recessionary forces in general, as is the historical price of gold. Inflation/deflation can be ignored as a metric if you look at buying power of gold to dollars for goods. Since dollars are at a recent low, the gold price has gone up to match. This dynamic is the central short term force and probably explains the "commercial" buyers bearishness but it does nothing to say the 10 to 1 bullishness among retailers is right or wrong since they are using longer time frames. But the caveat then is, when were the majority of retailer, or pros, ever right about anything? It seems that the laws of investing are linked to the right proportion of contrarianism to trend following. Hence the ratio cause great fear since it implies the bandwagon is fully loaded. Terrifying, was what one pro said about gold long positions. Now for my two bits:

The market is poised for a run to 1100 and it could run to 1200 by December--not to say a pullback or even harmonic correction to 850 isn't possible by December though more likely in the spring. If it runs, we are at a 'leg up' point on most charts (see banks, see reits, see tech. The weak dollar only strengthens the rally by inflating equities--to a point and then it weakens since it means trouble on the current account of the US. Dollar is set to rebound against the inflated Euro (see articles on SA for ratio and traditional ratio). So for now we have a tailwind. Gold rises with the market since it is also a commodity (see consumption tallies by country especially India). it is set to 'leg up' also. It could leg up to 1650 with a run to 2000 easily if the market runs with inherent weakness or a black swan occurs with oil, but if the market runs on strength then gold will slide down, being a reserve currency, it would no longer be needed since equities ARE goods and services and they will essentialy end-run the dollar (as long as the USD remains in the comfort zone of 1.40-.1.20 to the EURO (currently a bit high at 1.50 or so). SO is the market running on weakness? If you look at P/E ratios that would seem true, but if you look at PEG then it is still good for another 20% solid gain (about 1.4 over traditional 1.8) Since PEG is really about growth in the future, it needs to be balanced with the PE and this is high at 18 or 19 TTM. So the market might recover as a value play but we have a few remaining problems with the missing consummer, the employment numbers, and the CRE problem--so black swans abound, not to mention oil--how can we forget oil? So Gold will not lose its lustre anytime soon since the black swans are still a gaggle. But will it run? Sure it could. Will it on fundementals? No. The thing that ALL the commentators missed is the interelatedness of the EURO, USD, CDN, AUS, and especially, especially the Renimbi! Two trillion of USD in Chinese hands is not a 'favour' given by the Chinese in return for the opium wars ( I jest but also in all seriousness!). They need our buying power, we need their cheap products, or at least we need them so that one day we can sell super-high tech to them as pharma (US's chief export along with computer tech and aerospace) but also since the US is a consummer society based on abundant agri and mineral wealth, not to mention real estate. This is the natural order of globalization but the Chinese have begun hedging the dollar to gain some traction on the abundant alternate opportunities since it is a 'favour' to buy dollars. So there you have it, the victory of fiat dollars for this particular lehman/oil depression/recession. As an amatuer, I would say hedge with gold but don't buy it as a growth opportunity--not yet and maybe not this time at all. Look to copper, it is sliding since the Chinese stopped hoarding but they'll be back, since they are now trying to buy mines, they will whipsaw base metal prices--go long copper in about three or four weeks--but you are trying to outguess the Chinese so it had better be a 6 month hold if need be. JMHO

Sep 25 02:11 AM

[anarchist:]

I'm still waiting-waiting for that $3000 gold, still waiting to have my October GLD 101 call options called away-bet it won't happen.

Oct 04 08:25 PM