ah yes, credit cards.  why the hell aren't you bums buying gold with that free Visa card with $50K automatic credit in the mail?  oh, you mean they aren't mailing those out anymore?

here are those pesky banks again.  do they look like they've been lending out debt money to the public?  or is there something seriously wrong?  we've been inflating uninterrupted for 40 yrs.  does this graph tell you we're going to keep doing the same and drive gold and silver to the moon?

whereas the last graph showed a hook with a small gasp of a rebound, this chart has clearly rolled with no signs of coming back up.  ask yourself, what is your biggest personal asset?  if you're a home owner this one is easy.  therefore, if no one is taking out RE loans to buy more houses this means that house prices are going to continue down.  if we were threatening  hyperinflation, everyone and their mother would be rushing to the banks and borrowing to buy a house (a tangible asset whose loan would inflate away, ie, a free house).

what does this tell you about consumer credit?  ask yourself what you're personally doing.  are you going out and getting a loan to buy gold and silver?  i seriously doubt it altho this group is a biased sample.  that little hook at the top right of this graph is a sure sign of credit rolling over for the first time in 70 yrs.  with all the deflation occurring around us do you really think this graph continues its upward trend?  i don't.

Bank stocks have been cut roughly in half since the highs from 2/11.  this has contributed mightily to crimping their balance sheets in addition to the bad loans.  so if these guys are the ones responsible for pushing money out into the economy via loans and they're not lending how is everyone supposed to get access to enough money to drive gold and silver to the moon?

i think we need to take a different tack on this thread from now on.   i think we need to provide more data from the economy to figure out what is happening; inflation or deflation and then try to figure out how this applies to pm's.   i'm going to stop with the conspiracy theories and manipulation allegations.  i'll try and throw up more data charts to support the deflation theory; as if i don't already.

bottom line is there is deflation occurring all around us in financial assets, tangible asset (RE, cars, equipment) commodities (oil, softs, ags, copper, gold, silver), wages, and foreign currencies vs the USD.  do any of you honestly feel any real pressure to buy anything right now except for possibly gold and silver based on what you think the Fed is going to do?  the answer is no; its better to hold onto your cash since for most things you will be able to buy more with it later.

the only things that are still relatively high are goods and services which are already starting to come down.

http://www.nj.com/news/index.ssf/2011/09/seton_hall_will_lower_tuition.html

this lowering of prices across the board is happening b/c of the global slowdown that is now painfully becoming apparent.  PMI's worldwide are slowing dramatically and China can no longer provide growth.  Fedex announced slowing orders and banks are having to dump assets to shore up balance sheets (BAC sold their $8.3 billion holding in China Construction Bank).  loan issuance is almost non existent and the banks excess reserves are not budging.

miscreanities whole argument is that the Fed is going to monetize all this bad debt.  well when exactly is this going to happen?  theres about $54 trillion in private debt out there so he'd better get going.  he ignores that nothing has happened since QE2 ended and Op Twist is really net neutral.

in the meantime gold, silver, and the miners are dropping (brutally in the case of silver and stocks) but he keeps saying the monetization is coming. 

so lets just look at what IS and not what we think will happen.

@melbustus:  this is out of Gary Shillings last letter and shows how the private sector's debt and equity issuance has been contracting while offset by gov't.  perhaps a reasonable estimate would be a return to the trendline average.

i think we would have to get down to about the fractional reserve norm of 10:1 as the banks used to be.  with all the deregs like sweep accts that occurred since 2000 the primary dealers had gotten to 40:1 and i think FNM/FRE got up to 120:1.  effectively they had NO reserve ratios which is how things got so out of hand.  home buyers would need to put down the old usual 20% and the debt to income ratios would need to be restored to 1:3.

@miscreanity:

ok, let me say it,  USD down, everything else up.

still doesn't change my theory that the USD is acting like the dog.

my feeling is that if Ben is going to do anything he will try to stem a disorderly deflation and engineer it into a "controlled deflation".  you heard it here first.

slow rise in the USD with everything else including bonds slowly deflating much like a Japan over years time.

don't get the sense that i'm a USD fanboy.  i hate the Fed and our complicit gov't more than any of you guys.  they are robbing us all blind.  i'm just describing what i think has to happen and is happening as opposed to rooting for it.   i've always loved gold/silver but i don't see it being a solution to our problems.

we have entered the Age of Deleveraging and the debt has to be written off for the global economy to move forward.

i think if we do go to a new monetary standard of some sort it has to involve something digital like Bitcoin.

based on a rumor Dexia would be split into a good bank bad bank.  followed up by the supposed "realization that the Euro officials needed to do something".

don't buy into it.  these types of sharp straight up rallies occurred multiple times in 2008.  don't overleverage yourself so that your acct can handle these types of spikes out of nowhere.  looks like we're already turning back down.  look at the banks.

thanks for that.

i told you guys this would be the effect of derivatives of gold during a selloff...

more pics of the electric winding box:

Well i finally got it!  Absolutely Fantastic!  A Beautiful work of art.  Heavy, solid.

Thank You Steve!!!

http://www.ft.com/intl/cms/s/0/cb07c11c-edac-11e0-a9a9-00144feab49a.html#axzz1Zr6zi3bw

"The difference from the current gold bubble and the previous one is that investors are now armed with exchange traded funds (ETFs), derivatives that increase their ability to run from gold if necessary. Several hedge funds have become dominant holders of ETFs. Investors now are responding to uncertainty in the eurozone by selling gold and other commodities and buying less volatile US dollars. ETFs, the vehicles that helped push gold to stratospheric levels, are now pulling it down to earth."

i read a very funny post yesterday that keeps popping into my head.  it goes like this:

"short everything except anything with 3x Bear in it!"

USD up, everything else down.  yawn...

if i have to be the one with all the money then i guess thats ok!!!  LOL!!!

i hope someone has been listening to me:

PAAS:



SLW:



GDX:



GDXJ:



GG:

you gotta be concerned about high quality corporate bonds breaking down: