And a nice midnight snack at $3. Refreshing after all the weekend declines.

Waiting for momentum to kick in...

There's no need to target garage sales, especially when that's a marginal impact. This is aimed at businesses that deal in cash transactions; relatively low-hanging fruit. Craigslist does not facilitate the actual transactions; it only provides a way of connecting two parties. Keeping that in mind, the contact information is valuable and could conceivably be used by law enforcement to then monitor for potentially large transactions (such as automobile trading... at first).

So no court battle is necessary because CL does not participate in the actual transaction, although US supreme courts cases have an overwhelming record of winning in favor of gov't against any opposition. Government can and will take more drastic action if it feels that revenue is escaping its purview. This has arisen during the decline of every empire for over 2,000 years and there is no reason to expect anything different this time. If the US gov't wants Craigslist data, it can exert pressure on the site operators in many ways.

This is exactly like the attempted, and nearly-attained, reporting requirement for any transaction over $600. Now that it's been pushed through at a state level, it won't be long before the floodgates open and this becomes a standard practice punishable by fines and/or jail time.

Denial won't stop these things from happening. Bitcoin-like systems provide a way to fly under the radar for both individuals and businesses. It doesn't matter how many times they're knocked down; the value they offer is immense, but currently unrecognized. It only takes time for this to change.


Indeed, aside from technical clarifications. Less talk, more work!

Glad the trade turned positive for you. Still, it's unnecessarily dangerous to use leverage for trading now, and rather foolish to leave a margin call be for any length of time. If this is just play money, great - keep going for long enough and you will get burned again.


Are you sure about that? Leveraged positions could easily be at risk (just like those at Bitcoinica); non-leveraged ones have nothing to worry about.

The amount hedged will vary based on the volume necessary to be drawn from Gox after internal matching has been done.

So x longs vs. y shorts are matched up through Bitcoinica's system and anything remaining that can't be directly correlated to cancel out is then covered by Bitcoinica tapping Gox.

If all of the shorts are liquidated in a squeeze, I assume the Bitcoinica system will then automatically become fully hedged using Gox.

This doesn't change the fact that over a 90% decline in USD/BTC valuation is extreme and the shorts are in dangerous waters. Bitcoin's value is not derived from other currencies. Short-term, there's just not much more downside. Longer-term, if Louisiana's effective ban on cash transactions is followed more widely, Bitcoin's utility will explode.

Is it a tragedy, or growing pains?

Bitcoin is self-regulating. It won't survive without participation, but the concepts behind it attract participants regardless of momentary value - they have vision enough to see the potential value. It's hard for many to see that potential. My miners have been running non-stop through the entire decline so far, yet many have thrown in the towel. Fine with me, I got a block from solo mining.

Patience comes into play when remembering this saying: you can lead a horse to water...


The problem has been fixed: a potential bubble grew and burst quickly. Self-correcting/regulating. It wasn't Bitcoin's doing, but a pattern of behavior that emerged from individuals participating in a functioning market.


Chicken & egg. The Bitcoin economy can still grow without increasing business activity. Its cash equivalency will be valued, particularly as situations such as Louisiana banning cash transactions develop. If there are paperwork barriers introduced to using paper cash, you can bet people will opt for a more convenient option that doesn't involve paperwork. Convenience trumps decree.

Imagine capital controls on money transported across borders being tightened. If I'm limited to $1,000 and I want to bring $25,000 with me, I can risk jail time and/or potentially significant fines - or I could use Bitcoin, which provides an ideal solution. Some of the funds that flow into Bitcoin for purposes of escaping totalitarian regimes will remain in the Bitcoin economy. There are a number of nations that have no restrictions on usage of whatever money an individual chooses.

Bitcoin's "killer app" may be one that is considered illegal by (absurd) official decree in some jurisdictions.


The same thing that happens in any other currency: the ebb and flow occurs within a range as market participants in aggregate reach points where they consider Bitcoin to be over- or undervalued. I think we've approached or entered the range in which long-time Bitcoin users feel comfortable - the rise was too high, too quick and the same applied to the decline. At the ~$2 range, BTC is now about in-line with where the gradual inflow would be had the spike never occurred.

Your fears are well-grounded. It is possible that Bitcoin could fall to $0.01 or even less, but does that really matter? Is the USD-denominated value of Bitcoin a representation of what Bitcoin provides? It is exceedingly difficult to place a value on an idea until the idea has spread widely enough for a consensus. This is why growth is the primary factor above all others, and that simply takes time.

Persistence and patience will prevail because:

• Bitcoin and crypto-currencies similar to it are based on a solid concept.
• The Bitcoin system has been proven to work and scale reasonably well.
• Fiat currencies controlled by increasingly restrictive governments are becoming less desirable.

There are other reasons, but those are at the top. One of the main barriers to growth right now is accessibility. Even with the proliferation of technology, how many people can run a command-line application or even download and start a graphical one, much less understand what it's about? A mobile app would be far superior, especially as NFC availability increases.

If a person so chose to, he would never need to carry physical cash ever again. That appeal is even greater than the switch from metal coins to paper bills - all that's needed is a smartphone or similarly-capable device. Adoption would easily explode, making Angry Birds seem quaint by comparison. This is a Facebook-level phenomenon.

Edit: forgot to add link for mobile app; corrected.

This is genuinely terrifying. The warning signs: they're screaming at us.

The proposal is the equivalent of a central bank that pegs Bitcoin to the USD, only in an automated fashion via third-party exchange. There is no need for this. While the idea of stability is nice, the suggestion highlights misconceptions about capital flows.

USD has fluctuated by about 11.2% over the past 90 days (~7.5% up, ~3.7% down). The Australian dollar has ranged approximately 20.8% during the same time period (~12.1% down, ~8.7% up). Both have central banks. Price stability does not exist anywhere right now. It won't exist for Bitcoin unless items are valued in Bitcoins. Attaching the price of Bitcoin to the USD in any form simply introduces USD volatility into the Bitcoin economy for all currencies other than USD/BTC.

Volatility in BTC valuation in relation to USD (and other currencies) is a result of the size of the market. It is not a deficiency in the Bitcoin system. USD is much larger than Bitcoin, so minute flows of USD into Bitcoin will cause major fluctuations in Bitcoin value with no discernible impact on USD. The same principle applies to gold and silver. There is no need for a central bank to manage precious metals, either.

In addition, present inflation of the Bitcoin unit base through block generation will cause individual BTCs to devalue by an amount relative to the increase until the asymptote is approached. If this were an experiment conducted in a completely closed and controlled economy of static size and using only Bitcoins for exchange, BTCs would still be depreciating in value in proportion to the block generation rate.

The currency with the best balance of convenience and functionality will win. Bitcoin is still in its infancy. If you want price stability, increase adoption by making Bitcoin accessibility and use easier. Everything else follows growth, as runeks suggested, including relative price stability. The Bitcoin system will live and die based on its structural merits and deficiencies, not its exchange rate compared to other currencies.

Speculation on open exchanges facilitates price discovery and stability. Central banks, which are essentially dark pools, introduce distortions that lead to pricing displacement and instability.


Fluctuations in relation to another currency are not Bitcoin's concern. How many more people are there who got started when the rate was <$1 per BTC? They haven't been burned. Did people who bought gold at $1,900/oz get "burned"? What about those buying USD three weeks ago?

Yes, runeks is right. Just be patient - these things move on scales much greater than people can easily perceive.

A distinct possibility; I think that's going to be a 2012 situation, after this year's continued turmoil has bled off.


The only point I question is investor influence in gold at this point. Entities that need real assets the most are major banks with excessive derivative exposure. Gold is the most effective of any asset, with a market that's always available and relatively liquid. Any central bank could start buying up gold (including contracts for future production) at current prices and before the general investment community realizes, none would be left.

Banks could be recapitalized, asset prices stabilized and the world's markets rescued. That would require a monstrous revaluation of gold, though - much more than a doubling from here and too disruptive for the global economy to survive without a lot of breakage. So typical investor sentiment is really supportive of financial institutions' efforts at self-preservation, including the Fed.


Since we agree on the end result of a deflationary crunch, it comes back again to the path taken. All of the listed factors are overwhelming, and you pointed out that most will interpret rising interest rates as bullish. That will amount to whistling past the graveyard and allow the illusion to persist. With an economy of such magnitude, that can last for many months, even years.

Yes, the private sector has been the recipient of all the crap while the banking and gov't sectors shuck off the dregs as they struggle to survive while still maintaining control. I'm assuming you're not in or associated directly with government. Private industry is subject to the rules imposed upon it by whatever jurisdiction it's under; government makes and enforces the rules (in collusion with banks). In a bad situation, government will be able to put on a show for much longer than the private sector.

But again, it's an illusion - just one that could last for a long time to come. The point is that gov't may pay lip service to austerity, but in reality will exempt itself from such measures while the private sector continues to be pummeled. There's the resumption of civil unrest.


I actually think the big powers that are playing the game can keep it going for some time to come; maybe another year or so. It'll require more drastic action at each stage, coming closer to complete failure each time. A lot of people will never fully grasp what's going on, which is part of what the banks & gov't rely on to maintain the illusion.


I don't think they ever stopped.


Agreed. Even then, it would only be perceived as a discrete acceleration - the "new normal" mentality. After a period marked by adjustment to the new normal, another crisis can hit and trigger further acceleration. Each individual inflexion point won't be significant enough to point at and claim "this is where hyperinflation starts".

It's a rough deal, that's for sure - I fully expect more false breakdowns/breakouts as we proceed, along with more exaggerated smoke & mirrors and insane legislation.


Agnico-Eagle closed one of their mines due to a safety issue, not something occurring in the market overall. The ~20% knee-jerk reaction is to be expected, especially considering sentiment. Personally, I think if management decided to close the mine, it means that the potential for loss of equipment/personnel/profit and subsequent bad press sufficiently outweighed whatever downtime may be necessary to assess what was compromised and in need of corrective action. A prudent business call.

On the flipside, AEM being down such a hefty amount is a mind-boggling buying opportunity, though I'd wait to see if it can dip lower on further news about the mine inspection. The company has numerous other production assets, even with the temporary shutdown of a major mine. Taking into account the fact that global production is around 125mm troy ounces per year and AEM production is nearly 1% of that, there will be further shortage of physical metal. When a crop of oranges is hit by frost damage, the price of orange juice rises. Basic supply & demand: decreased supply with increasing (or at least steady) demand leads to rising prices.

Where will the gold be sourced from to supply the COMEX when there are already procurement issues and a declining store of deliverable metal at all exchanges? This event will have short-term impact. The question is: how long will it take for most investors to take stock of the situation and realize that their panic is unwarranted? Probably too late to take advantage of it.

Hypothetically, would your analysis change if the USD were to break below 73?

Thanks for catching my mistake, yes overbought. It can definitely rise for some time, but you can't deny that 61.72 is significantly closer to overbought than 43.65 for gold. In addition, RSI for the Dow:Gold ratio has spent the majority of time under the 50 level (and has only been over 70 twice in the past year - for about two weeks in January and one day in July) whereas gold has mostly been over 50. Also, if funds are flowing into equities, it doesn't take much of that flow into gold to keep the ratio steady.

Extreme lows in daily RSI for gold are not the same as extreme lows elsewhere. There have only been three other periods where RSI was below the current level, and they were all short-lived. You're right, though - these indicators are minor next to the price. That looks like it's heavy, but there are an awful lot of long tails on those candlesticks - talk about tension.

Besides, how many times has the gold price looked heavy and sprang back up to new highs? I count at least three times just on that daily chart and those weren't even instances where other factors were as bullish as they are now.


Touche. Gold was my focus, but I admit silver is a more volatile animal and the price looks heavy. If we go to weekly or longer charts the uptrend is intact. Gold fell out of channel and is riding along the underside, but it's done that before and broken to the upside; it's set to do so again. The only class that's been defiant is treasuries, but we see the weakness there.

Consider this: if sentiment is such that the global economy is going to pick up, silver will benefit from its industrial use aspect. Equities will rise overall as well as mining operations - gold would have to fall off a cliff for that to change, not so much silver. Since silver will be buoyed by expectations of industrial demand, neither rising nor falling precipitously, silver miners will remain profitable as well.

Mining companies are well into the black as things are now. Many are raising dividends. Few things draw institutional investors like increasing dividend returns do.

Then there's oil. All that has to do is remain above ~$70 to maintain elevated input costs across the board. Production expenses will prevent most goods from falling in price, including precious metals. If precious metals aren't going to fall apart, miners won't crash and a worst case scenario is a range-bound price level.

Or any number of factors could trigger a panic, sending gold and silver to new highs. How about the most relevant: the threat of COMEX default? If that happens, the world's financial glue disintegrates. If standing open interest for the December gold contract isn't reduced well below ~30k, that will happen - started by a run on banks for the wealthy. I think (hope) that can be put off for at least one more year.

And the rest of the world: civil unrest and riots, food shortages, terrorism, Venezuela's gold repatriation, Skynet or... Justin Bieber. At least a few of these are already here and getting worse.


Nice. I don't agree on gold being a bubble yet, but I respect that assessment.

Ah ok, yes - each country has its own absurdities. Does VAT apply when exchanging between metals (e.g. gold->silver and vice versa)? And how does GM avoid VAT on silver? What about incorporation or a trust formed in an unassociated jurisdiction?

Don't F the gov, it F's you back harder. Just don't play by their rules...

Do not confuse tax avoidance (generally considered a crime) with tax deferral (legal incentive).

If you are a US citizen, you won't pay taxes while the metal is held in custodianship by GoldMoney. That much is true. However, when you repatriate either the metal or the funds, you will be taxed. There is also a reporting requirement to inform the US gov't when holding any asset valued over $10,000 anywhere outside of the nation's jurisdiction. Penalties apply for failure to report.

There are other methods of protecting your assets that do allow for an annual tax-free income of about $90,000 in the US, but the laws are always subject to change at the whim of a politician. Again, the assets and investments cannot be repatriated above the ~$90k limit without incurring tax liabilities.

GoldMoney is only a means of storing assets outside of your own country. The company does what it can to protect its clients, but there are limits to its abilities. Recently, metal holdings have been returned to Dutch GoldMoney clients after being informed that their government now considers GoldMoney to be classified as a financial investment service and subject to ridiculous regulations that would effectively negate the company's beneficial aspects. All GoldMoney does is store physical metal on a client's behalf.

When using any highly visible precious metals custodian service, it is my strong recommendation that you have a private, reputable and secure backup facility ready to accept your metals in the event that your own country targets GoldMoney or similar services such as Gold Bullion International.

Having a private storage facility picked out means your metal can be shipped there and stored just as any other physical item might be stored. This is the equivalent of a safe deposit box at a bank, only not part of the banking system. Think Brinks, but aim smaller - big companies are easy targets.

Hey cypherdoc: why do some governments seem keen on making precious metals hard or too costly to acquire/hold/use?

I almost forgot about silver...



Not to mention position limits finally being implemented by the CFTC. As good as that is, now is the worst time to enact such a ruling as it will put additional pressure on the financial system and further curtail both big banks' and governments' maneuverability.

Bitcoin is just doing its thing. Small buy orders at $1.01 and in $0.10 tranches on down, to be heaped on with any major sign of strength.

The same applies to gold, only none of the indicators are against the uptrend (volume, RSI, MACD). For the Dow:gold ratio, the RSI is approaching oversold. The MACD is already at extremes, and the ratio has retraced to about 50% of the decline. I won't even get into the weeklies other than to say that looks even heavier.



Note the MACD and RSI which are at extreme lows instead of highs. MACD has crossed over to the upside. The dollar is in a much weaker position with RSI in the middle and MACD having made a decisive crossover to the downside.

The only indication of merit here is the 50-DMA which has just turned up a bit. With gold, the 50-DMA has begun to roll over. The last time that happened, gold dipped about 3.5% in one week to touch the 144-DMA and then raged on to new highs just over a month later.

This time around, the 144-DMA has been hit already and the 50-DMA has taken an extra two weeks to turn down. That is not suggestive of a weak market. In fact, I think a brief 1-day dip is in store if today's wasn't the only one to be seen before the rally takes off. It would also be wise to remember the basics of higher highs and higher lows.

Alone, the price technicals are inconclusive with only the 50-DMA pointing to further decline. However, this analysis in conjunction with futures data (and taking into consideration global demand) points very strongly to a "surprising" explosive move in the precious metals within the next couple of weeks. While I'm impressed by how much additional time has been squeaked out by the monetary authorities, I am also even more concerned that the resulting push up could induce a retaliation that will break the system and shut out small investors.

I do have to revise my time projection for the major rally to begin from October to extend into the first half of November.

Tuesday is the cutoff for CoT reporting data. From observation, the bullion banks load up on shorts at the end of the reporting period (Tuesday) which distorts the data enough to induce some confusion. That leaves the rest of the week for deceptive maneuvering. I expect pressure to remain into options expiry, although short-covering may occur.

An animal is most dangerous when it is wounded and desperate. That's the circumstance many banks and governments are in - they're exsanguinating and panicked. They will fight tooth and nail to escape the debt crisis without being destroyed in the process. Gold is the way out, but vast amounts of it are needed to cover the losses that will be exposed during the systemic financial collapse.

I have one question for you, cypherdoc: do you think the markets are being intervened in by monetary authorities?

Based on the isolated and linear notion of price action? Is there a reason you do not share details for your method of analysis?


What you're seeing is a Hail Mary. Following the money provides a very different picture than price shows.

Participation in both gold and silver futures is minimal; there are very few that are willing to liquidate their long positions, not to mention overwhelming physical demand. As discussed previously, the open interest is not being reduced during price drops. Because of that, the exchanges risk default. This is plainly visible in both of the linked gold and silver charts.

Time-based events drive price manipulation efforts. Options expiration is this week and that is always a target to squeeze longs from the market. The same applies to futures options expiration and delivery notification day, generally the last trading day of the month. These blatant attempts at painting charts to force investors out are standard fare when desperation becomes a factor. There is no doubt that the world's major banks and governments are desperate.

Buying opportunities are present with gold below $1,650 and silver under $32. Silver in particular is accelerating and poised to present another slingshot move, reducing the gold-silver ratio to below 30. As the days have been dragging on, there are already very few participants. This is the psychological uncertainty that is exaggerated by price chart movement without examination of other factors.

Yes, and they do have value. Functionally, crypto-currencies are no different from central bank-managed money - transactions are a commonality between fiat and crypto-currencies. The distinction is in where and how the management occurs.



The fundamental value is intangible but necessary, as the network itself minimizes fallible human intervention and management. It's only a matter of time until crypto-currencies have matured and become widely adopted (probably a few years, at least). Banks are struggling to stay alive right now - soon they'll have to struggle to stay relevant. I can see them becoming transaction verification acceleration providers and/or returning to genuine investment services.

Gold. Real assets. The Swiss Franc is the closest fiat currency to gold, so it will continue to gain against the dollar, but lose against gold. Likewise, highly liquid currencies will be in demand for various reasons, but all forms of money are depreciating against gold.

Multiple dynamics are in play; only gold wins in this situation (and crypto-currencies such as Bitcoin, eventually).

This.

Similar to Martin Armstrong's suggestion of a secular shift from trusting public government to trusting private interests.

For the technical perspective, this chart is excellent:



The progressive extension for each iteration can be attributed to a rising monetary base from official efforts such as QE in conjunction with liquidation of dollar-denominated assets that return statistically significant amounts of currency to cash status. Need for liquidity in USD is what will reduce its relevance, as the dollar won't be tied up with real assets as much, leaving the door wide open for alternatives. It is becoming a shallow reserve.

A deep pool of water evaporates slowly because little of its area is exposed at the surface; a shallow pool of water has greater exposure by percentage and thus evaporates more rapidly. The latter stages accelerate to finality. Trust is what's evaporating from the dollar.

I have to say, bonds aren't my main focus. As financial asset class, government bonds especially didn't make the grade for me. With that said, here's my view:

It certainly seems to fit the OT purpose. With selling pressure on the short end, rates will rise there. Sure, the long end rates will be kept low, but is that worth the increasing outlay requirements that have simply been pushed ahead? The Fed holding long-term bonds reduces the institution's maneuverability if prices decline. What is the exit strategy, if there is one?

Keeping long end rates depressed is causing structural stress, not just distortions - how many more deals will be entered under the assumption of low rates which will blow up instantly if those rates ever rise? Instead of a manageable crisis when the rates can no longer be held down, the Fed is further restricting its ability to handle the situation - even with unlimited QE as an option. It's a lose-lose situation.


Any asset can function as money when better or more convenient options have been exhausted. Gold is a real/physical asset whose primary function serves as money.

When I call gold an asset, it can be assumed that I mean: a real, tangible, effectively indestructible, counterparty-less, turn it around in your hand and see it for yourself, value imbued throughout history, closest thing to abstract representation of money in the physical world, absolute best physical option for use as both store of wealth and metric of value, won't kill you or disappear in a puff of smoke, consistent asset.

Real estate requires maintenance, paper burns in flame, wheat can be eaten, oil is highly toxic, rocks are very common and manufactured tools don't have the same value for everyone. Maybe gold could be called a real derivative? Productivity and wealth created by the use of other assets and labor flow into it, yet it's still a physical object with decentralized control and ownership; the original Bitcoin.

I'm going to quote this next time.


Huh? More sophisticated than what was presented, but not more sophisticated? Either there's an apparent contradiction, or I'm reading all of that wrong. Not important. Here's what is:

Since September 26th, volume has been declining overall. The 144-day MA was breached on an intraday basis (not really important in regard to volume, just pointing it out as a landmark). It was retested on the 29th. The volume on the 29th was low compared to the two strong down days that week - the 26th and 28th. Volume remained low for the next two days as gold rose from about $1,600 to almost $1,680.

Then on October 4th, the volume was higher than during the past three up days, yet the close (the only price that matters for market players that matter) wasn't able to breach even the prior day's close. In other words: volume on the down days may have spiked higher than on the up days, but the price remained higher than the previous down day - the opposite of what increasing volume on a decline should do if the decline weren't exhausted; also indicative of strong buyers being active instead of momentum followers.

The price has continued to drift higher even as overall volume resumed its descent. With very little volume and price continuing to move higher, increasing volume will be necessary to reduce price the higher it rises.



For the week ending today, October 7th, looking only at the price gives a heavy picture. It's reasonable to expect further gold price drops in the immediate future. Combining price with volume, the direction is less certain, throwing almost a 50/50 chance. This is where open interest is critical, despite the fact that it's only the OI for the COMEX futures. For as long as it remains the dominant futures exchange, it is a basis for overall global market trading comparison.

As discussed yesterday, the open interest has been declining gradually - almost no forced or panic liquidation since the end of last month, and even that wasn't very significant in size. That measured decline is normal, whereas a sharp drop would be leveraged players being squeezed out or underwater longs cutting losses. What this means is that it's virtually a certainty the remaining contracts are what form a normal baseline for the market, like hitting bedrock while digging through topsoil. Further liquidation of size is therefore simply not in the cards.

From analysis above, it's easy to see that price is important, but it is only one metric. It's a representation of capital flow. Volume is necessary to determine the overall strength of capital movement. Open interest provides a measure of how much movement is left. It's entirely possible to use only the latter two as trading guides (V & OI), but then you wouldn't have any way to know how much you gained or lost when closing a trade.

In the middle of a move, it's possible to use the above three factors to gauge how far the shift can go in either direction. When at extremes, they show the buying and selling ranges. I prefer certainty over just getting the "feel" of a market. The way I see it, advanced price chart analysis in the form of Elliott waves and such (beyond trendlines and Fibonacci levels) are attempts at extrapolating the interplay of volume and open interest from the price itself. That makes sense for equities and other asset classes, but why bother with divination when those values are readily available for commodity markets?

SLV from the GGR:



The price was decimated, yes. The volume during the knock-down was much less than it was during the hit in May. If taking into consideration when the price drops occurred that caused the gaps, a bevy of questions arise. Looking from the opposite side, again there wasn't much buying at all needed to stop and partially reverse the selling pressure.

I haven't bothered looking into direct numbers or proxies to open interest for GLD or SLV. Again, it's a situation where the data is available for the actual asset so why complicate and confuse matters by calculating all manner of indicators from the ETF?


Overwhelming reliance upon price movement for explanation spoke loudly. It's good to see other elements of your analysis being clarified upon.

So does the relatively low recent volume suggest shorting the market? Personally, whether the markets go up or down doesn't matter - strong, dividend-paying (preferably international) companies being held for the long-term won't go belly up just because of a market rout.


I will if you can explain how gold itself is a Ponzi scheme when it promises nothing nor returns anything. What is the dollar, if not a Ponzi scheme - a promise that pieces of paper have exchangeable value even though the material itself has no unique physical properties?

Here's a rough estimate of Ponzi math:
(Artificially Decreasing Supply) + (Rising Incentivized Demand) == (Rising Prices)

The artificial aspect is an intentially forced restriction or flooding of supply (think diamonds). Incentive can be the promise of xyz% gains or that an item of greater value can be redeemed in its stead.

Gold is being produced, refined and distributed as fast as possible around the world. Its demand is being driven not by a desire for the metal itself, but exposure of the fraudulent nature in the existing monetary system.


Wait... are you advocating faith? Where are these lines of buyers for gold? You're right that the decision comes down to the individual. This entire thread has been an excellent opportunity to test theories, assess assumptions and reaffirm conclusions; not to mention it's been entertaining as well. Thanks!


Really? Does the archivist need to kick into gear and post several examples of US-centric perspective against numerous links showing global gold demand?

The latest information posted was good... and it was all US Fed and US-based exchange information. Where is the worldwide view? Wait, I think there was one chart on China.

I'd written this before getting down this far in your reply:

"... open interest is critical, despite the fact that it's only the OI for the COMEX futures. For as long as it remains the dominant futures exchange, it is a basis for overall global market trading comparison."

COMEX data is representative of 24-hour, global trading. It is a proxy, like SLV is a price proxy for silver - not perfect, but a good start; some of the information is also unavailable elsewhere, and is still largely transparent by comparison to other sources and methods. In the same manner, the US Fed data is a good start for getting a handle. It's important to look at the whole pie, of which the US holds a decreasing share. Thus its broad relevance, as well as that of its data (both US Fed and COMEX), are declining.

The rest of the world still needs to eat and have functioning economies. As everyone else catches up to a stagnating western world, the top 1% will have to expend much of their 75-80% of overall wealth in order to keep from falling all the way down. Socialism has nothing on wealth redistribution by capitalism in action on grand scales. Except for the pain, death and destruction parts - socialism (or centralized government by any other name) takes the cake on those, but I digress.

I welcome questions and efforts at finding holes in my arguments (which were built by learning from some of the greats, not entirely due to a miraculous lone exploration). At least offer a stronger assessment than "what does this look like". If you can trade the short-term using cycle analysis, keep doing that. Just don't get rid of your physical metal - accumulate more.


Yes. Where is he? Busy working, unemployed, going back to school instead of reading all about gold and finance?

You have to keep things in perspective: we are in the thick of things, on the front-lines of financial warfare. We're discussing topics that even a lot of traders might have difficulty grasping. How many people actually are where we are? Why are there so many who willingly pay for advice and explanations like ours? Where are all the other traders whom have made a tidy profit? We're part of a very small segment of the total population.

Step into another's shoes and it becomes easy to understand the rationale, if not the emotional resistance to comprehension. Joe Sixpack has probably heard the rumblings by now, but he still has barely an idea what's really wrong or why.

Imagine him at the beach, when the water suddenly starts rapidly receding way further than normal. Being tsunami experts instead of financial gurus in this scenario, we'd be speeding away from the shore while the average fellow remains, probably even after being warned of what's coming. Whether he stays because of curiosity, normalcy bias or any other reason, he will only recognize what's happening when it's too late. Even highly educated people are susceptible to this if they don't have the wherewithal to fathom these titanic shifts in such an abstract concept as finance (or blinding themselves based on erroneous assumptions as Bear Stearns and Lehman "geniuses" did).


LOL - well, that changes everything.

Enjoy the weekend!

You've already made the deflation case. That's more than enough evidence. As to the monetization, is USD$8 billion per day not a good enough start?


Why the rising incidence of advertisement for trading platforms, then? Ads are cut when they don't garner interest. That's a simple fact of supply and demand.

Many of the human traders may have been let go, but the algo systems have been growing.

From the link in my first rebuttal above, bonds are being purchased on the cheap and resold for a tidy profit. That squeezes the remaining wealth from the end buyers, allowing the banks to expand their investment activity.


My apologies, dictator. (As I monitor my own megalomaniacal tendencies...)


Those are charts of relative percentage changes, not absolute capital flows. If we chart the percentage deltas, this emerges:



It's now much easier to see that government expenditures have merely slowed, yet PCE is even higher than it was before 2008. Gov't expenditures are also above levels prior to the first QE. You are correct in pointing out that expenditure has been slowing.

For giggles, a comparison including S&P 500:



Both business investment and the S&P have crested and deflationary forces are threatening to drag them down. To recap, that deflationary force is the evidence necessary for the Fed to take action in order to prevent another wave of uncontrolled defaults.


Dictator just said not to speculate.


Operation Twist. A maneuver designed to keep debt payments low, but it locks in a longer range of debt, putting the problem off yet again (hopefully).


Your argument is a fallacy, and repeating it does not make it true.

Gold is money, not real estate. The participation rate in gold is still marginal as compared to its market size as a whole. This is the opposite of a saturated market as real estate was in the mid-2000s.

A penny stock (e.g. CYPW ~$0.30) rising by 50% is not the same as another that is orders of magnitude greater (e.g. AAPL ~$380.00) rising by 50%.


I'm sure you won't mind sharing the methodology for this "more sophisticated" analysis.

Perhaps there was a misunderstanding as to what I mean by declining volume. The following two charts are for gold and silver. Data is from Kitco for the PM London price fix; open interest and volume numbers are from CME Group's data. Percentage differences in movement were calculated from each day versus the prior day's numbers. It is evident that the volume for the selected duration peaked on 09/23 for silver and 09/26 for gold. Since then, daily volume has been falling with price remaining range-bound. The spike on 10/04 was the near-$100 and $2.50 hit gold and silver took.



The red lines for open interest are of particular interest. They should've declined sharply along with the prices, but didn't. Instead, they have only continued a gradual descent - in silver's case, it has even begun to rise again.



The arrow shows the declining volume with the price drop. Remember that all data points are relative to the origin, not absolutes.


Ok, gangsta dictator.

I'm pointing out that reliance on price charts and the patterns formed from them alone is folly. Bear trap setups in gold and silver are in place and their trigger is imminent. Refusal to incorporate data beyond the price is akin to judging a book by its cover.

The tenuous connections being applied to market sectors are misinterpreting the interplay between volume, open interest and price. This dynamic is critical to grasp, in combination with supply and demand in the precious metals industry itself. Things are not so complex as the financial wizards have made them seem, even though their deceit and trickery are.


It was addressed elsewhere and not worth a direct reply. See below.



Because name-calling is juvenile and avoids engaging in actual discussion; I assumed you to be a 40-year old virgin with a lot of financial knowledge and an inferiority complex.

You asked.


Deflation will trigger additional defaults. Assuming there will be nothing done, it is reasonable to expect increasing social turmoil and a self-reinforcing downward spiral of declining business activity. That outcome is bad for everyone. Government's entire purpose is to protect its constituents. If government does nothing, it receives the brunt of backlash.

The chances of inactivity are negligible. Reductio ad absurdum. Pain avoidance is the simplest path, except for masochists.


I'm pointing out that reliance on price charts and the patterns formed from them alone is folly. Bear trap setups in gold and silver are in place and their trigger is imminent. Refusal to incorporate data beyond the price is akin to claiming the dollar is a glittering jewel.

Deja vu?


I see the point was lost in the imagery. Alright, a written explanation:

By posting and examining only price charts among various industries, completely different conclusions might be drawn as to where the economy is headed. Looking at lumber, there is fear. With AT&T, stability. In Genesco, it would be easy to assume nothing is wrong and the world is doing fine.

This is the danger of looking only at the price charts. Assuming that all of the information is present in price movement is no different from presuming that all Asians know Karate or Kung-Fu just because they look like they fit a stereotype.


The first two are open to interpretation, so disagreement is fine. On the other hand, the CoT and especially the delivery reports suggest high demand. Since you agree that supply is tight, where will sufficient supply come from to alleviate the rising demand?

How does this equation not apply?
(Decreasing Supply) + (Rising Demand) == (Rising Prices)

What data other than price chart patterns implies a continued decline in the precious metals? Not to exclude the possibility of another sharp drop, but there hasn't been anything else offered which points to gold and silver going down for the count. Instead, there's ample evidence that the PMs are due to rise very powerfully.


In the short-term, you've got it right. I don't play the short game because of the fact that it's where you will get raped; your initial capital wiped out because of leverage. Buy-and-hold isn't dead: it's the best way to sustain and prosper through this crisis, so long as you either pick the right sector and/or diversify properly.

If you can make the short-game work, wonderful. The big issue is that most of the ideas put forth have been based on price charts and patterns without much solid explanation behind the analysis. My position is such that the remaining days of summer in the northern hemisphere are meant to be spent outside rather than running numbers.


And that precludes upward gold revaluation how?



Ok... why?