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Dollar gains, gold slides following jobs number

Comments (26)
  • Yorkville Trading
    , contributor
    Comments (175) | Send Message
     
    next stop 1200 for Dec gold.
    8 Nov 2013, 09:04 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    There will be no taper. And I have been calling for lower gold prices till year end (and I sell gold).

     

    Fed Tapering Coming to an End Sooner than Expected? Hardly! http://bit.ly/1hQLYcT

     

    But the best part about this article is my analysis on the Debt to GDP ratios of most of Europe, Japan, UK and U.S. and how the S&P projectins from just 2 years ago completly missed the mark for 2013 and 2016. In fact, only one country came in better than expected in both projections. Which one? The one that practiced austerity. Printing more money did help in Japan, but they lead the wild bunch in Debt to GDP ratio. Temporary fixes are just that; temporary. Till more is needed. At some point the cracks in all countries Humpty Dumpty economies will bring them down. But my conclusion is that the last bastion of safety will be "perceived" to be; the U.S. Dollar. Emphasis on "perceived." I see both the Dollar and gold going up together in the near future.

     

    It's all part of my next book, "Illusions of Wealth."
    8 Nov 2013, 09:06 AM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Doug,
    "I have been calling for lower gold prices till year end (and I sell gold)."
    and
    "I see both the Dollar and gold going up together in the near future."
    How does that rhyme ?
    Will gold go up or down till year's end according to you ? I take $1310/oz as the reference.
    8 Nov 2013, 09:22 AM Reply Like
  • Yorkville Trading
    , contributor
    Comments (175) | Send Message
     
    sold to you. lower.
    8 Nov 2013, 09:26 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    filipo, dollar up gold down short term, which coincides with my call back in August, only countered by a temporary debate on the debt ceiling. Gold was $1,420 then. Dollar right about where it is today. Gold I think will test the lows and Dollar Index the 88 range. Draghi made the first chess move. I don't think the Fed has a chess move at present.

     

    Gold up and dollar up beginning next year sometime.
    8 Nov 2013, 09:52 AM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Thanks Doug for replying.
    I'm excited how well that will play out.
    There's some logic in what you predict, but as often these days, logic and reality don't always coincide.
    As long as there's an oz left in those ETF's, there's room for the gold price to keep on plunging.
    I wish you all the best.
    8 Nov 2013, 10:20 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    Thanks filipo, appreciate your comments. Don't have a crystal ball, but I feel my daily research helps me see things more clearly than your typical gold bug.

     

    In the end, we'll all be right. But it doesn't mean one can't profit in other ways via what the market gives them either.

     

    Cheers!
    8 Nov 2013, 10:27 AM Reply Like
  • chcc
    , contributor
    Comments (156) | Send Message
     
    88? That's a bold prediction.
    8 Nov 2013, 10:51 AM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Doug,
    "more clearly than your typical gold bug."
    Well, my typical gold bug tells me only to buy the very dips.
    I bought early July, early October and mid October at prices (in euro) that were way lower than what I see today.

     

    "In the end, we'll all be right."
    That sounds gloomy in this dark month of November. I have no intention of dying soon, although I have this terrible flu that annoys me one whole week already.
    No kidding, I know what you mean, just teasing you. Mind you, that flu is a reality.
    There's a difference between our positions though.
    The USD will survive whatever happens. That enables you to trade gold as a marketeer. The euro however can perish overnight. That means I'm not in a position to trade PM's. I can only accumulate. That's what's making me a typical gold bug, not by choice, but by necessity.
    Try to understand that.
    8 Nov 2013, 10:55 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    Not really. The Dollar Index hit 88 in June of 2010. With the Yen and Euro showing their true colors via policy, what do those in Japan and Europe do if things deteriorate? The choices are few. The Fed is kind of stuck as to what they can do...for now. The GDP numbers and Unemployment numbers are oh so good! (wink)
    8 Nov 2013, 10:58 AM Reply Like
  • chcc
    , contributor
    Comments (156) | Send Message
     
    USD turns strong because ECB cut rate. I don't think it will take long for Fed to take some actions. In the end, it's a currency devaluation war.
    8 Nov 2013, 11:03 AM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Doug,
    Don't you see the € can disappear, vanish overnight ?
    You say the choices are few, well, suppose there is a paradigm shift in €-popularity, then there will simply be no choices. There isn't a week that goes by without parties in Germany, France, agitating against the € and their popularity grows. Right now Hollande is at all-time low and right wing Marine Le Pen of the FN would win the elections. Le Pen would pull France out of the €-system.
    8 Nov 2013, 11:21 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    filipo, I see the Fed doing all they can to help. They have done it in the past, so when the ECB needs something or possibly a country directly through some sort of a deal, the Fed can do pretty much anything they want for stability. The Euro isn't going to disappear overnight, but I do agree it has major issues. Germany is too interconnected to pull out.

     

    The parties in Germany that want to pull out don't have enough numbers yet. They will be listened too though and not sure how the coalition plays out.

     

    You'll see more trouble if the Euro gets to the 118/119 range.
    8 Nov 2013, 12:30 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    chcc, the USD has bounced since 2011. Gold has fallen since 2011. At least from a two year perspective.

     

    Agree about the end, but the "perception" is still dollar is king and will be the last one standing along with gold/silver. That's why I see them going up together. I don't discount for one minute though the problems here in the U.S. I'm kinda writing a book about them and have written one already.
    8 Nov 2013, 12:32 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3196) | Send Message
     
    The devil will have to put on a sweater if gold and the dollar both rise at the same time! I'm not saying it absolutely can't happen, but the two are locked in a reciprocal relationship that would make it the financial surprise of the century of it happened. Basically, the euro would have to be in turmoil at the exact same time that China was frantically buying up all the gold. Call me unimaginative, but I fail to see why that would be in China's best interest. At present, China wants to keep gold low so they can buy it, and the dollar high, so they can sell their goods to us. The Chinese will eventually want to attack the dollar, but only after they have acquired enough gold to do so, and we've stopped being such an enthusiastic customer. Until then, they hold too many dollars and dollar-denominated assets. They'd only be hurting themselves.

     

    People in most other countries would rather hold dollars than gold as their currency of last resort. Witness gold tanking along with the euro as the Europeans clamored for dollars and not gold last year. One would have thought that the Europeans would have been reluctant to jump from the frying pan into the fire and trade euros for dollars when our deficit is so out of control, but our domestic squabbles seemed to be of no concern to them.
    8 Nov 2013, 01:33 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    Hi David, I understand your thinking and don't discount it. But I have my reasons. So far, I have been pretty good in recommending dollar cost averaging into an allocation in gold as the price has come down, and still am (I sell gold) and have been bullish on the dollar for the reason you state (reciprocal) since Sept. 2011. But the dollar is priced in other currencies and two of those currencies (Yen/Euro) make up 70% of the dollar and I see more trouble for them than the U.S. dollar.

     

    China could be a game changer in some fashion at some point, but yeah, they won't bite the hand that feeds them until they straighten out their issues.
    8 Nov 2013, 01:43 PM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Doug,
    It's more France and Italy that I fear:
    http://bit.ly/1fpxQ8f
    and this is the left-wing The Guardian.
    Looking at right-wing papers, they're even more outspoken:
    http://bit.ly/1fpxQ8g
    and
    http://ind.pn/1fpxQ8h

     

    Apparently you have no clue what is happening in Europe. This week some 20,000 angry French Bretons came to the streets asking for.... money. They blame the French government and Europe.
    http://bit.ly/1fpxQ8m
    8 Nov 2013, 03:27 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    filipo, it's not that I "have no clue what is happening in Europe"...rather presumptuous of you as I have written about Europe for several years, but I don't see things unraveling as fast as you do. Perfect example is Greece. They went as far as riots and where are they today? Still asking for handouts, but the riots aren't there. Who cares if Greece left anyway? Would the Euro all of a sudden end or get a bit stronger?

     

    I have spoken in debt with Axel Merk from Merk Funds on this as to why he is so bullish on the Euro and I don't discount what he says and have written about our differences.

     

    People march on Washington all the time for their issues. D.C. marches on.

     

    Think what you want.
    8 Nov 2013, 03:52 PM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Doug,
    You are right that as long as there are no major elections coming up in Europe, things will go on as outlined by Brussels.
    However, look at the desastrous situation in France. I certainly don't pretend there is going to be a revolution any time soon, but the sheer fact that the nationalist and anti-european party National Front would win the elections if they would be held now, gives me the shivers. The anti-euro mentality change is slowly grinding its way but it is present.
    Maybe I'm too pessimistic, but beleive me, if one is daily confronted with horrifying situations, one isn't bound to become the cheerleader of the class. I recently was in Madrid and here is what I saw:
    http://bit.ly/1bgJSwy
    9 Nov 2013, 05:35 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    Thanks filipo....yeah, Spain is the worst of the bunch for sure. Ireland however practiced austerity and their Debt to GDP ratio is the only European country that has come in lower than S&P projections as my article states. http://bit.ly/1hQLYcT

     

    Good luck with things where you are.
    9 Nov 2013, 09:17 AM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Doug,
    Thanks for whishing me good. Can use that boost, I feel like a wreck with that flu. I hope the antibiotics will start to do their work. Thought I could do without but finally had to give in.
    I read your article. Congrats, it's impressive.
    Yeah, I always had a good feeling about Ireland. As you probably know, they'll get their next billions from the IMF as promised. They did their homework well. It's been a hard road for them with indeed lots of austerity as you point out, but the reward will be theirs in 3-4 years: they won't need the bond-markets anymore if they want to.
    One detail about your figures for Spanish debt/GDP: I'm sure they're higher. You should add the debts of all the comunidades autonomas to the federal debt:
    http://bit.ly/HF95ZR
    Deuda = debt and PIB = GDP
    Have a nice weekend
    9 Nov 2013, 10:54 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2725) | Send Message
     
    Hi filipo, get well! Yeah, I could use other Debt to GDP data, but went with a source that gave me those numbers. Technically, if you include unfunded liabilities, most countries will have higher ratios.

     

    Thanks for the link. Only had one year of Spanish, lol.

     

    Weekend was nice here in San Diego, but unfortunately my daughter, who lives in the Philippines didn't have so nice a weekend. She's ok and there is some damage to her home, but she is traumatized by what she witnessed.

     

    Time for her to come here.

     

    10 Nov 2013, 11:01 AM Reply Like
  • filipo
    , contributor
    Comments (2727) | Send Message
     
    Doug,
    I'm really sorry to hear your daughter is among those who suffered.
    It's inconceivable to see what damage these storms can cause. And of course, the more world population grows, the higher the chances are that the numbers of victims are high.
    I hope your daughter is all right and that you'll see her back soon.
    I could tell you stories of my kids who also live abroad: 1 son stays in London, 1 daughter used to work in Thailand for a year, but moved to London as well, thank God, and 1 other daughter who lives in Andalucia. They all have decent work now and seem to be settled and happy.
    BTW, I have the best of memories on S.D. and Ca. I used to stay there a week in 1990 when traveling the West Coast.

     

    "Technically, if you include unfunded liabilities, most countries will have higher ratios."
    Yes, but in the case of Spain, one has to bear in mind that those comunidades are semi-independent and that the federal government has pushed off a lot of its debt and liabilities onto them in return for higher independence. In the 90ties these comunidades accepted this because they thought they would do a good deal.
    That means that the majority of those debts are even not unfunded liabilities (pensions....), but sheer debt. That's why Valencia f.i. is on the brink of a default and had to close down its broadcasting:
    http://bit.ly/1ftXtEV
    10 Nov 2013, 11:27 AM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    I see the bears have awoken from their hibernation yesterday.
    8 Nov 2013, 10:29 AM Reply Like
  • user878
    , contributor
    Comments (95) | Send Message
     
    Gold is a dead till the stock market crashes!
    We might see $1000/oz if the LOVE of the stock stays at the same level.
    8 Nov 2013, 12:26 PM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    That's a big if. Everyone thinks they're an f'ing expert. How many of you are millionaires, billionaires, based on your own expert knowledge ?
    9 Nov 2013, 07:55 PM Reply Like
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