Gold collapsing. Bitcoin UP.

[cypherdoc]

very good sign IMO.

Edit : this thread is an extension of this original thread:

Gold: I Smell a Trap

i've been telling ppl for quite some time now that i've been selling my bullion for btc for several months now.  and its true, i've liquidated lots of the stuff since April that i first bought in 2005-2007.  i'm an ardent suporter of btc for the longest time.  i've also been warning ppl about divergences in the PM market i've been exploiting via shorts such as the divergence in silver, miners, and the gold price.  i understand what gold is all about and i love the stuff but when btc came along my allegiance switched.

the basis of my thinking has been and always will be that its all about the USD.  the Fed controls the issuance of the USD and its its only franchise.  i don't think they want to relinquish that control of the worlds reserve currency.  the USD is also how most billionaires wealth is stored in this country.  most of the debt in the world is denominated in USD (60%).  there was a great article someone posted about how the bankers have been complaining to Ben that they're being hurt by the weak USD.  Duh.

let me list the warnings i see:

1. silver has broken down badly from $50. it continues to this am.
2. silver stocks are in an obvious decline and got hit yesterday hard.
3. gold stocks are no better.  they usually lead.
4. we're at 11 yrs of the bull.  some ppl say theres an extended 9 yr cycle going on.
5. asset classes don't all break down simultaneously.  it took gold and miners several months to break down after the Dow in 2007 so i don't expect them to have followed the Dow down since May 2011.
6. gold is trying to or has, depending on how you look at it, entered a parabola.  do you really want to buy a parabola now if we're entering a major deflationary phase when cash is King?
7. its debatable how widespread the evangelism about gold has spread but everywhere i turn, on street corner stores, tv ads, and my secretary everyone's buying gold.

ok, now for the tinfoil hat stuff.  stop right here if you want to stick with the technical trading stuff above.  over many years of trading i've learned to think like a criminal and this is what i see happening.

1. GS and JPM have huge short positions in the metals.  do you think they will let them double, triple from here even if they represent hedges?  i think thats the last thing they want to see.
2. gold has acted very strange the last coupla weeks to me ramping in the face of a severe selloff in the Dow and the clear threat of deflation.
3. altho GS & JPM probably never saw the bull in PM's they aren't stupid and know how to handle them.  so how do you handle a losing situation?  Buy into it. Profit as well.  create a huge parabola. Build up an even greater short position. Get Ben to squelch liquidity. Then sell it off at the top when everyone's in and short the crap out of it. this is what happened in silver.
4. why is btc rallying all of a sudden?  could it be that its exerting itself in the economic scene based on the virtues of what we all know?  it also could be that Wall St is rotating out of stocks and soon pm's into btc.
5. when would the trap go off?  i think todays FOMC meeting with lack of any further QE would be the perfect timing for a gold selloff.

so guys, just give me a few hours to see if my theory proves correct.  if it doesn't work by all means buy the parabola.  personally i'm going to give it a few days from today to let it work but you can all call me a tinfoiler if gold doesn't start going down after the announcement.

Disclosure:  i do have a huge short position in bullion in place.

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[N12]

They better start investing in Gold 2.0

[Global BTC]

Gold collapsing? I don't follow the metal prices. Link?

[adamstgBit]

Gold collapsing? I don't follow the metal prices. Link?

ya i agree gold is due for a Major correction.

Gold Line keeps calling me telling me its not a bubble ...

[cypherdoc]

 

[cypherdoc]

this could be big.

[N12]

So will the gold bugs start fleeing the ship and buy some BTC?

[cypherdoc]

So will the gold bugs start fleeing the ship and buy some BTC?

thats the idea.

[byronbb]

So will the gold bugs start fleeing the ship and buy some BTC?

No way. Gold bugs are all about the physical. Their 40 year scenarios involve a global meltdown and general SYSTEM FAILURE, a "gold" that requires a functioning internet and power system would be laughable to them.

[Technomage]

I see little chance of a larger correction to gold price unless the economy starts a miraculous recovery, which I don't believe in. Peak oil is still the most relevant problem that probably won't go away easily, next decade the earliest. Energy is the backbone of the whole economy and the gradually and slowly rising energy prices are a major source of friction in the economy causing everyone to take on more debt. Players in the economy are desperately trying to sustain growth while fundamentally there can be no growth because the energy to support that growth is simply not there.

Thus the problem is much deeper than many realize, in the current situation every time the economy "recovers" oil demand spikes and then oil prices spike causing another major crash. In fact the crashes get bigger every time, with the world being still so dependent on oil. I expect that what we saw in 2008 will be small once we hit the next cycle.

I expect the economy to do a larger fake recovery soon, but then we will go much deeper than in 2008. Simply because not enough has been done to reduce dependency on scarce resources such as oil. Global oil production hasn't increased since 2005 most likely, yet demand keeps going up thanks to China and other growing economies.

Gold bugs know all of this and will certainly feel more safe with gold than USD. Even though I'm quite bullish on Bitcoin long term, I still hold significantly more value in gold than in bitcoins. This could change but slowly, over a period of many years. Once I feel more confident about the economy and the state of Bitcoin I might consider changing more gold into bitcoins.

[labestiol]

Do you have any target on gold/silver cypherdoc ?
I have to admit that i didn't believe you back in July, even if a correction clearly made sense.
Now the real question is where the bottom will be... We're not there yet, i do think PM will go down with stocks, and the correction in stocks should happen (soon ?).

[Technomage]

It's about time people start realizing that all the massive growth our civilization experienced in the 20th century is mainly thanks to cheap and abundant fossil fuels. Energy is still abundant, in fact it's more abundant thanks to renewable energies, but it's far from cheap. Energy is getting more expensive all the time because energy demand is growing higher and at the same time energy sources with high EROEI are becoming more and more scarce.

Coal is the only energy source that's truly competitive with oil and it happens to be the most polluting energy source available. Honestly I have to laugh at any arguments that support an overall growth scenario for this decade. The whole decade is a time of fundamental decline. Perhaps next decade things will truly look brighter, maybe slightly earlier if we start an accelerating change in our energy production and consumption patterns.

[evoorhees]

Gold collapsing? I don't follow the metal prices. Link?

ya i agree gold is due for a Major correction.

Gold Line keeps calling me telling me its not a bubble ...

Gold is not going up. It's the dollar that's losing value.

If anything in the marketplace should be the yardstick of value, it is gold, not USD. So you should price USD in terms of gold and you will see a very different picture. Don't let the "upward run" of gold deceive you. Gold isn't changing, the dollars are.

[evoorhees]

It's about time people start realizing that all the massive growth our civilization experienced in the 20th century is mainly thanks to cheap and abundant fossil fuels. Energy is still abundant, in fact it's more abundant thanks to renewable energies, but it's far from cheap. Energy is getting more expensive all the time because energy demand is growing higher and at the same time energy sources with high EROEI are becoming more and more scarce.

Actually, gasoline costs just as much as it did 30 years ago. Price energy in real money, like gold, and you'll come to different conclusions.

In the 70's, a silver dime bought a gallon of gas. Today, a silver dime still buys a gallon of gas. Ponder on that

[2weiX]

I see little chance of a larger correction to gold price unless the economy starts a miraculous recovery, which I don't believe in. Peak oil is still the most relevant problem that probably won't go away easily, next decade the earliest. Energy is the backbone of the whole economy and the gradually and slowly rising energy prices are a major source of friction in the economy causing everyone to take on more debt. Players in the economy are desperately trying to sustain growth while fundamentally there can be no growth because the energy to support that growth is simply not there.

Thus the problem is much deeper than many realize, in the current situation every time the economy "recovers" oil demand spikes and then oil prices spike causing another major crash. In fact the crashes get bigger every time, with the world being still so dependent on oil. I expect that what we saw in 2008 will be small once we hit the next cycle.

I expect the economy to do a larger fake recovery soon, but then we will go much deeper than in 2008. Simply because not enough has been done to reduce dependency on scarce resources such as oil. Global oil production hasn't increased since 2005 most likely, yet demand keeps going up thanks to China and other growing economies.

Gold bugs know all of this and will certainly feel more safe with gold than USD. Even though I'm quite bullish on Bitcoin long term, I still hold significantly more value in gold than in bitcoins. This could change but slowly, over a period of many years. Once I feel more confident about the economy and the state of Bitcoin I might consider changing more gold into bitcoins.

upvote!

[N12]

Gold is not going up. It's the dollar that's losing value.

If anything in the marketplace should be the yardstick of value, it is gold, not USD. So you should price USD in terms of gold and you will see a very different picture. Don't let the "upward run" of gold deceive you. Gold isn't changing, the dollars are.

Are you kidding me? The gains in Gold the last 10 yrs or so reflect much more than just the inflation, it’s a speculative bubble.

[benjamindees]

marketing, bitches.

[Technomage]

Excellent point by evoorhees about gold/USD, that is simply spot on. Just look at the inflation corrected USD price of gold and it looks very different. If there is a bubble with gold it's a small/medium one at best.

Regarding oil I have to say that a more relevant factor is how much oil can you get with the amount of money regular people and governments and companies have available. Oil isn't bought with silver, it's bought with USD, so that's really what matters. The fact is that compared to the amount of USD people have on average, oil prices have been increasing.

The issue is a slowly developing one and mostly hidden though. It's the friction that even a $5/barrel increase will cause to the global economy, that really matters. In fact most of the world's food production is entirely dependent on oil and thus food prices are very interlinked with oil. Peak oil only happened after 2005 so we've only just started with the peak oil era.

With the way things are now, China alone will use half of all available oil at the end of this decade. Production is not growing, it's slowly declining. Yet demand is growing at a high rate. There will most likely be a moment when not only the prices spike, but whole countries will stop exporting oil, just like Russia stopped exporting wheat for a while, while back. The reasoning being that the countries will want to make sure that they have enough oil left for themselves.

So the truth is that most of the oil spikes recently are actually due to troubles in the middle east, but hidden behind all of that is the accelerating increase in fundamental oil scarcity. Once oil demand growth starts to slow down significantly and even better, when the demand starts to decline, I'll start thinking positively about the current situation. Until then I'll say that things are about to get much worse before they get better.

I also think that all the major countries are well aware of this. USA, Russia and China are all increasing their military spending and increasing their efforts to sustain a power base and good relations with major oil producing countries. Hell, the main reason US has been focusing on the middle east and is now focusing all military efforts in Asia, is exactly this.

[N12]

If there is a bubble with gold it's a small/medium one at best.

You must be kidding me too.

Do you really think you can just about buy the same stuff with Gold as you could 10 years ago? All just inflation? And if there has been growth in purchasing power, that it is all natural and not at all speculative?

[cypherdoc]

Do you have any target on gold/silver cypherdoc ?
I have to admit that i didn't believe you back in July, even if a correction clearly made sense.
Now the real question is where the bottom will be... We're not there yet, i do think PM will go down with stocks, and the correction in stocks should happen (soon ?).

Gaud, the last thing i want to do is create another massive thread like the "Gold-I smell a trap" one over in Economics that went on for 5 months.  it was just too much work.  most ppl here into gold/silver won't like what i have to say so don't bother reading further.

my views haven't changed.  i think gold/silver is a relic of the past and Bitcoin will assume its place as a new standard.  i think gold drops to $400.  i think that we are about to embark on a massive debt deleveraging phase which will be deflationary and take stocks down with it to test the March 09 lows at least.  we may drift a few more days higher in the Dow before it rolls over.  i see divergences everywhere but especially with the Transports, Russell, and ALL commodities like oil, natural gas, wheat, corn, rice, soybeans, copper and gold/silver.  the silver chart especially is busted.  the general mining stocks are telegraphing hard times ahead like FCX, TCK, BHP.  the junior miners have been devastated as in GDXJ.  GDX is following it down.

there's a good chance Wall St and the Fed are desperately trying to manipulate the Dow higher to get retail investors back in but don't buy it.  once we roll they will sell/short you into oblivion.  the Vix did an underthrow today once again to try and create complacency.

i'm going to try and not say much more as i could be wrong and i know the gold bugs are going to start swarming with the hate.