Dan Walker

Gold Strikes Record Levels in Most Currencies

Every time I see these type comments, the dow bounces back. No, I do not think this time it is anything more than a retrace, and I most certainly do not disagree with any of the gold fans; in fact, I have a bit more than a troy pound stashed. I simply think you guys are early to the party. This will be a long hard charge down the hill, and we are just coming up the second crest. You will be handsomely rewarded next year. If you do get rewarded before then we are much further up the big muddy than anyone wants to think. The central banks have the supply and the moneyed interests to insure that it does not happen this year. When the moneyed interests run out of cash next year is when you will see the fireworks as well as the attendant rewards.

Own Gold? Time to Fold

"We are simply replacing private capital with public capital, which isn't in and of itself inflationary."

Repeat that in a yoga position 5 times a day. Just repeat it, try not to step in it. I will continue to hold my gold position. We will meet up in December 2011 and compare notes.

Charts of the Day: Gold, and Baltic Dry Index

Any of you really look at that chart? (Or more importantly, compare it to a ten year chart?) You have a move down to the low from the first surge up, a nice initial push up off that low, and we are now in a protracted basing retracement. Unless you totally believe government statistics (in which case send me your bank account before the government takes it from you), this is the place to load the boat. As the e-wavers would put it, this is basing for the start of 3 of 3 which is the wet dream of futures traders everywhere. 3 of 3 is the rocket ride. I have been trying to buy the shiny yellow stuff and it cannot be had for anywhere near the price of futures. The central banks have shot their wad and can no longer BS delivery of metal; it is in short supply. The central banks have also practically discontinued the habit of lending gold which fed the physical demand when it was just limited to the 'gold bugs'. Now that it is not only the 'tinfoil hat crowd' who wants to hold shiny metal, there is not enough to go around. I wonder why they want to hold it with it dropping like a rock? i am being facetious. I really wonder what it is costing us taxpayers to make the futures LOOK like they are dropping like a rock.

The gold price cycle is quite long and we are maybe close the the first third of this bull market which started in the early part of this century. The only thing that will invalidate this view is if physical metal trades below futures and under the current environment I am more likely to marry the pope than that happening.

Law of Supply & Demand Is Dead for Gold & Silver

Typical BS commentary following an article describing the facts during a period of PPT manipulation. All a big smoke screen. Why the smoke screen? If you are going to seize Fannie and Freddie, you need to somehow defuse the gold market; particularly if you suspect Lehman and Merrill are soon to follow for the third act. Where does this argument will fall apart? It really doesn't but we will soon see gold falling as it is sold to raise cash to support trading in other markets (or redemptions) by the hedge funds, etc. The author is fundamentally correct (and the cheapest I bought any gold the months of July and August was $100 over spot) but we will probably take one more look down before it is over.

Why Gold Is the New Currency

The Fitzman: Bush was not elected or re-elected because he was the superior leader. He was elected in both cases because he was the lesser evil. Until our current party system can provide choices better than 'dumb and dumber' or 'bad and worse', nothing will change and that also applies to JM, BO, Pelosi, Reid, and the rest of the village idiots. You are part of the problem for blaming one person for what required the entire village. For my opinion on the chances of better choices under the current system, see the disclaimer.

There is a point most people seem to miss on this subject and that harkens back to basic finance class. When banks lend money, the proceeds are deposited in some bank and it is loaned again subject to the prevailing reserve requirement. Repeat as needed. This is money creation under the fractional reserve system. Money is destroyed when the loans are repaid and the money supply contracts. What you never hear in finance class is that loan default has the same effect on the money supply as repayment. By the time subprime, prime, HELOC, and credit card bubbles are all fully deflated, we are possibly looking at 2 trillion dollars missing from the money supply. Old Ben may seize the bearings on the presses trying to keep up with that kind of money destruction. Clearly (I hope) we will not bail out the foreign holders of these assets. That portion of the money supply will be destroyed for good. If Ben 'n Hank can hold their bailouts under the amount of dollar destruction caused by the default of dollar based mortgage assets owned by foreign holders, gold looks overpriced. I'm betting that they have already budgeted their estimates of that amount as the dollar amount they can spend on bailouts. For my guess on the accuracy of their estimates; Disclaimer: I am buying gold, already loaded on silver and seriously pondering these points. There will be spikes and dips as we discover the truth. Proceed at your own risk.

Is Gold an Effective Hedge Against the Dollar?

"French peasants have a long history of hoarding gold to ward off the vagaries of an elitist aristocracy. Yet they remain peasants. To me, that is where the argument breaks down."

I forgot where I read that, but it has stuck with me for 20 years.

That said, I have been accumulating silver for the last month, and now that gold has broken out, may include it in the scheme. With inflation rampaging across all continents, it certainly seems easier than staying on top of the currency crosses, and probably safer in the end.

Dollar and Oil Are Manipulated by ECB and Fed

I don't think you appreciate the degree of demand destruction going on in the states. I drove past a major lake on the 4th of July, and saw one powerboat. Oil rose $2 and fell back down after Iran launched 9 missiles. Watch oil prices today as they just fired 9 more. The futures traders are rolling their contacts forward a week before expiration and holding down deliveries as tankers build up in harbors. Sooner or later they will end up with their heads handed to them on plates. Couldn't happen to a nicer bunch of guys.

Tuesday Outlook: Commodities, Emerging Markets

Roo Rah for the PPT! If those guys would get out of the way, we could have a good flush and get this this crap over. If they had stayed out of it in 98, we would never have never gotten on this boat in the first place. Looks like we are in for crashus interuptus, a relief rally, and then the final plunge into Davey Jones locker. Oh well, I needed better point to set some shorts.