I don't have an interest in getting the last word in: I only thought it'd be a shame to throw away a response that was mostly finished before going to sleep several hours ago. It may also offer additional guidance to others following the thread.


Yes, it does seem a little odd, but anyone can throw cash into a betting pool; this is a gentleman's wager, and as such it relies upon personal integrity and strength of character. Instead of money, the stakes involve a reassessment of thought processeses to adopt what's proven.

Even Keynes acknowledged empirical evidence conflicting with his hypotheses and was making changes prior to his passing. For that fact, I respect the fellow and suspect his real mistake was with placing undue trust in human nature without applying equivalent caution.

We seem to be spinning our wheels for now and kicking up mud while waiting for the next major event to occur.


Appropriate tactics are employed as resistance increases. If the pickings are slim, those moves take on a defensive nature instead of offensive: when the shock & awe drop of 30% or more cannot be repeated, a slow retreat works to keep the majority of investors wary and guessing while largely on the sidelines of a major move that benefits the perpetrators.

Consider two combatants encountering each other for the first time. There may be a display of force shown in an effort to intimidate the other side. Should that work, the mere existence of overwhelming force need not be exerted to gain ground. If it was a bluff that has been called, the tactics need to change in order to maintain the illusion that sufficient force still exists.

In other words, formerly dominant institutions (esp. pre-2008) such as the Fed are no longer being granted carte blanche deference. The isomorphisms abound with regard to ancient stratagems and financial or gold warfare today.


The assets listed are not reasonable for common exchange, unless you consider wheeling barrels of bio-toxic, consumable oil around as payment feasible. We discussed the fact that any asset may be used as money, depending upon circumstances.

When there is no alternative offering greater convenience (Bitcoin could serve this purpose if not for the high technical hurdles and currency exchange barriers), gold will act as a means of exchange. Otherwise, it remains a store of value to be held in reserves. The latter is just our typical understanding for the purpose of assets.


That comparison is invalid; no suggestion has been made regarding gold rising in value indefinitely, but rather that gold is heavily undervalued relative to outstanding debt and even the current base money supply (very rough calculation of only the existing base money supply of USD$2T against 280mm troy ounces of gold reserves puts gold over $7,000/oz).

Gold is fungible, divisible and portable while real estate is not (securitization is a whole 'nother ball of wax). Housing in many regions became highly overvalued and demand fatigue was readily apparent in later stages. Gold demand shows no sign of relenting.


The fundamentals are resting on policy decisions that have already been made. Gold's continuing upward revaluation is locked in no matter what path is chosen now, and has been for over a year. Rising interest rates will signal failure to continue the charade as natural market forces override economic management and manipulation.

Until rates have risen sufficiently, systemic instability will continue for some time because of the same reasons. Gold's stability remains attractive while most other assets are extremely volatile; we don't ride rollercoasters when we're only trying to get from point A to point B.

The Canadian Dollar, Norwegian Krone and other currencies will eventually follow the same path as the Swiss Franc in competitive devaluation. Meanwhile, gold is remaining with $100 of its all-time high.


If you're able to pick a major turning point based on one or two days' activity, why were your short positions in danger of a margin call?

Margin trading is bad, especially forex. Use options if you want leverage.


It's far more dangerous to ignore the signs and symptoms of a myocardial infarction while attempting to differentially diagnose whether it's happening due to arteriosclerosis or atherosclerosis.

A dollar closing over 76 then has to face the recent peak of ~76.7 while it is being over-extended against Europe. There is also an issue of quantity over quality - the relative value of the dollar might be rising, but relative to what? Other currencies are being devalued as well. Gold is rising as the USD does because it is part of another dynamic that the dollar is no longer strongly associated with.

I am obliged to refer you to my mention of numerous prior double-tops and a triple-top.


This is certain. The argument is not whether the Fed will act sacrificially; the actions being undertaken are like building a scaffolding to hold up a collapsing building. What isn't known is exactly when or where structural integrity will fail, or whether enough scaffolding will be put in place before it finally gives way.

From a technical perspective, a monthly closing in gold below $1,550 would be very damaging to the long-term trend, but would not compromise it. For that kind of secular trend reversal to occur, causing large-scale money flows to shift elsewhere, there would have to be consecutive monthly closings in gold below $1,080/oz.


You certainly aren't the only one out there. In fact, I think the majority share your opinion, just not with as powerfully deep an understanding as you've shown. That level of comprehension has been greatly appreciated. For the record, I do agree with the "great deflation", just not in the manner you propose.

I also agree that it would be best for now to be patient and wait for either $2,000 or $1,600 to be broken before resuming extensive discussion. In the event that I am proven wrong, I'll gladly give your explanations a strong revisit.

Hold onto your physical!


You never know...

Another call for stimulus, this one from Charles Evans, president of the Chicago Federal Reserve Bank. The tone is firm and a stark contrast to Kocherlakota's weak statement of dissent yesterday. Prior actions from the Republican party suggest that its opposition will amount to nothing more than another debt ceiling argument.

Whether this is a build-up for later this month remains to be seen. The Fed meeting on the 20-21st is far enough away to stir up discussion and favor toward continued efforts at supporting the economy.

Reading tea leaves is an ephemeral practice and I still prefer real numbers to soothsaying.

Last point: Obama to propose $300 billion to jump-start jobs.

Where will that money come from? Tax cuts cost money when the inflow has already been counted before it arrives.

Almost missed this post... it was tempting, but I didn't pull the trigger this time. I did add a few Dec '11 XAU 250 and Jan '12 RGLD 100 calls late in the US trading session, even though they're getting expensive in my view.

Nice list. You left out the likes of Mises, Rothbard, Hayek and Friedman.

How many names are there? Now how many people have no clue who they are?

Trees < Forest. A contrarian stance based on subjective perception alone is dangerously unstable. Don't be misguided by immersion.


I'll remind you when $2,000 is breached, not to say "I told you so" but to keep you from losing your shirt. At least by holding onto some physical gold you'll be alright financially at the end of all this turmoil no matter what.

Better yet, an offer of a wager: if gold rises above $2,000/oz, you will abandon the notion that physical gold is in a bubble and will follow my guidelines.

My guidelines are developed from the best observations of those who came before me. To make things even simpler, here is the plan a priori: the strategy consists of buying physical gold at points which those in the name list above target as low ranges. The rest of the strategy is just to hold that gold until the same group generally agrees that it has stabilized in fiat prices.


The managed float/peg announcement caused the markets to move. Gold was simply under pressure or it would've shot higher - note that it retraced over 80% of it's initial drop within an hour after the SNB statement. Continued pressure in paper operations provided the tool for grinding the metal lower. The actual mechanism employed was gold futures being sold en masse, most likely by bullion banks and central banks.

Dan Norcini noted over 4,000 contracts being dumped in the initial attack. That number has since doubled. Again, it was a paper operation which had its intended effect of driving out weak longs and confusing investors who were expecting the SNB move to be positive for gold. Short covering will take place soon in order for the perpetrators to avoid taking substantial and unmanageable losses. I'd say one more day to shake out the remaining weak stragglers.

Pay attention to the $1810 level as I pointed out a couple of times. Below that is heavy buying all the way down to the low $1700s. Really big money patiently follows the 40-50 week moving averages and 144-200 day moving averages. That isn't to say it'd be a straight drop from $1700 to $1500, just that the lower number is where the absolute floor will be. I do not see a drop that low until seasonal demand has been satiated at a much higher price.

The mining stocks have been extremely strong lately, striking toward new highs as global equity indices flounder and the physical metals are pounced on. Paying attention to the metals alone will distract from subtle action going on elsewhere.


Then no bank of any kind would have gold reserves. The banks treat gold as money. Paper just acts as a claim ticket no matter how you look at it. Bitcoin and crypto-currency systems are obviously in a separate class that transcends contemporary digital-paper money.


Yes. The last two sentences are predicated on the assumption that the Fed will do nothing. That is as much reliance upon policy as blind inflation adherents.

Gold will go up regardless of either direction because both outcomes lead to instability in the structure of the financial system. The only stability is in gold.


What bad news? Did CERN suddenly discover how to vaporize metric tonnes of gold in a nanosecond?

The dollar needs to close over 76. It still won't be out of the woods then. There are numerous levels beyond that which have to be breached in order to sustain a rally, 79 being a major one. I seriously doubt triple-digits for the dollar index are coming in the near future.


That's like saying all of the body's ills can be determined by checking blood pressure: it's a fallacy.


If "most investors" have moved to the USD instead of gold, that's exactly the type of positioning that you would trade against, by your own contrarian reasoning.

For those preferring technical analysis, observe this chart from the Got Gold Report:



If anyone can find where there is a parabolic blow-off top, please let me know. On the time scale provided, a doubling would be expected from at least the mid-line of the midly elevated second uptrend channel. That doubling suggests about $3,000/oz at the present time before any resemblance to a bubble is evidenced on the charts.

Breakouts that could've resulted in a long-term bull-run-ending parabola were short-circuited in 2006 and 2008. Those events are plain to see on the long-term charts. There is probably another year or two to go before a real vertical rise begins to manifest. Only when prices hit limit up day after day will gold's bull market finally end, certainly not while it is still being called a bubble.


The short answer is that all of the factors mentioned will force monetary authorities to act no matter what they might wish for. If they don't, they'll be replaced with people who will act in accordance with the political sentiment of the region.

This is ancient warfare in modern times. I'm now wondering which major announcement will act as the spark to set off the next round of financial mayhem. It's blatantly apparent that something is brewing behind the scenes, but it's being much more closely guarded this time as compared to the Lehman failure.

Apparent contradiction between the behavior of gold in relation to the SNB announcement is pretty well explained by a comparison of ancient stratagems to gold manipulation today. In particular:


May of this year in silver and the latter half of August for gold was "stomping the grass to scare the snakes" while the SNB denying intervention plans a week ago, then doing exactly that intervention yesterday was an obvious use of "making a sound in the east, then striking in the west".

Speaking of which, Switzerland has been on a steady decline in regard to the sanctity of its banking sector. This week should remove all doubt about the Swiss banks having finally capitulated to US influence. Anyone thinking of banking there needs to be extremely careful.

It didn't budge during gold's drop two and a half hours ago, and the 5-day old USD move is running out of steam.


Again, oil didn't move during the most recent dip in gold.

Brent has been consolidating. WTI has been finding consistently stronger support at each decline. What will WTI do without administrative trickery and perpetual oversupply of one particular regional storage center that heavily influences the price?


That makes no sense. Selling into a decline will only fetch progressively worse prices for the seller. If profit is the motivation, this is the last thing that would be done. The seller would be selling as the price is rising, not falling, or else it'll be bleeding red ink and won't be around long - and you don't get to be a big fish by making those kind of moves.

You're right about this kind of move causing a panic, although I suspect that most weak longs will have already been knocked out of the game. Downside should be limited with heavy buying below $1810 as explained two days ago.

Serendipitously, Dan Norcini posted already. All we need now is another GLD Puke Indicator buy signal at the close of next trading session to make this frightfully reminiscent of late 2008. It triggered once in early Sept '08, then a week later on two consecutive days. After a brief rally, it triggered a fourth time and really took off.


Uh-huh... lol

The dollar index hasn't moved; pressure on gold began exactly on the hour mark and culminated in a vertical drop during a typically quiet period. Remember the triple-top in 2010 around the $1420 level? What about the double-top in March of this year, or later in June? Maybe all the other double tops during the past decade with the same behind-the-scenes developments as now?

Why hasn't oil fallen? Why didn't the dollar or any other currency experience volatility? Are only the precious metals involved? Where is the selling coming from with virtually no volume?

The only thing I see is forced liquidation of weak positions, a commensurate price decline and a large drop in futures open interest on vapor volume that screams of short covering. What's particularly intriguing is that this is an odd time for such an attack to take place. There's almost always a major event just around the corner. The London open ought to be interesting.

I'll teach you patience yet.


I wonder which master artist is painting the tape...

Ah, Windows. That's become the red-headed step-child platform for cgminer. Earlier ckolivas mentioned that the command in Linux is simple, but he isn't sure what to do to get the ADL SDK in Windows to pay attention to multiple cards.

I'd stick with existing tools in Windows for now.

I doubt it'd make any difference, but I removed the existing local repo and started with a fresh git clone. The rest was as normal according to the README with the APP and ADL SDKs.

Running ./configure is a breeze now, and clearly shows whether GPU or ADL support has been found prior to compiling.

As per the README: grab AMD's ADL, unzip and copy the header (*.h) files from the "include" directory to the "cgminer/ADL_SDK" directory. After that, configure should pick up card control support and it'll be available in the compiled binary.

The move itself, no. What of the timing? Less than a week ago, SNB intervention was dismissed. Quite the head fake, wasn't it? Perhaps we'll see a Eurobond next.

Three great quotes attributed to Otto von Bismarck.

• "Never believe anything in politics until it has been officially denied."
• "When a man says he approves of something in principle, it means he hasn't the slightest intention of putting it into practice."
• "When you want to fool the world, tell the truth."

As if on queue...


The JPY intervention was a globally-coordinated effort. Why not the CHF intervention? Do you think the public would be informed of efforts to guide the herd? Imagine how many have been forced or frightened out of CHF crosses?

It's arguable that this is less to save the USD than to save the existing world financial system of which the dollar happens to be the most fragile component.

The statistical concentration analysis by Eric De Groot. I now hold a minor short USD/CHF position and half that in a long EUR/CHF spot.




All the other currencies can be added to that roll now.

My mistake - I should've noted that First Majestic (AG) doesn't pay a dividend. The rationale was that it's the only purely silver mining operation on the list and it seemed excessive to stand it alone. Also, I don't see anything preventing the company from paying a dividend in the near future, especially with outfit being solid and the stock having gone from about $2 in 2009 to $23 today.

Freeport-McMoRan (FCX) was one of the companies that received investment from Soros after he sold his bullion. James Turk recommends selling FCX because of its large copper component.

For a long-term position, FCX has its major gold aspect. The copper side is interesting as well - the world isn't going to disappear just because there's a financial catastrophe occurring. Should war break out, copper will be in extreme demand for military purposes. If not, developing nations show no sign of ceasing their growth and will continue to require construction and manufacturing materials, including copper. The end result being ratchet-like growth in the stock as the gold side kicks higher, followed by the copper side.

The royalty-based companies were specifically separated, irrespective of dividend payout. Tanzanian Royalty (TRX) is working closely with Barrick (ABX), which closed its hedged positions and is now poised to benefit fully from further gold price appreciation; Barrick is also a solid dividend-payer, as is Newmont (NEM). Both Royal Gold (RGLD) and Silver Wheaton (SLW) have performed admirably as well.

It would also be good to note that Rogers, Soros and other investment giants have been buying farmland. Ag isn't my focus, but the trend is completely sensible and should complement precious metals in a solid long-term portfolio. I'd buy such land in rural South America for my own personal use more as an emergency location. If I never have to go there because of a crisis, so be it - at least the option is there.

Wow, that's possibly the most concise way I've seen of obliterating the absurd argument that savings is bad. Who does anyone know who sits around and prefers to count their money on a regular basis rather than go on vacation or work on their house or watch movies or anything else other than count their money?

This is also discussed by Alasdair Macleod and James Turk.

Steelhouse, just protect yourself and your assets. Leading by example is far more productive than trying to force an individual's perception to change. Knowing what you can influence over what you can't is critical to surviving the final stages of the ongoing catastrophe; channel your outrage.

You've outdone yourself!

Testing now and it's a beaut so far, especially the temperature display and virtually non-existent rejects since 1.6.x. Should have more on stats after several hours.

Yes, that's typically the next effort after a H&S pattern has failed to hold. When the double top fails to hold, the shorts retreat to the next level they can reasonably defend. I'd expect a push down by shorts early this week after a close today near $1900. Look for $1740 as a downside target again if the $1810-1840 range is breached. If selling, be extremely attentive.


I would hope that my ruminations on Bitcoin offer a better gauge of that than self-assessment. For brevity's sake, let's just say that I see forms of direct democracy and an emergent collective consciousness a la Gaia theory as strong potentials for crypto-currency systems beyond their intended purposes. I'd imagine that would be the difference between animal awareness and sentience, only on a planetary scale.

That could be considered a singularity. From my view, the last singularity event was the emergence of human sentience and before that, eukaryotes.


Apologies, I should've been more specific. At the moment, no - I don't chase the price; calls are too expensive now relative to when the price of gold dipped near $1700 on the 25th of last month. That was when I had closed my short-term puts and opened additional Jan 2012 calls. Most of the options are in GLD, GDX/GDXJ, SLV and SLW. I use very small short positions compared to my calls for profiting from minor corrections. It also helps to offset negative Theta.

This rise and the next decline might be the last time I make use of GLD/SLV on the way up because of concerns about physical movement of metal in the trusts behind the scenes. That depends on how much metal is drawn down during the next decline relative to how much is added from now until then. I'd rather be on the short side of those ETFs when the paper and physical prices diverge than caught with calls on a rapidly-declining paper "asset", not to mention the possibility of a bank holiday with markets closed.

Your December calls should be good. I expect the real plunge to take place by the middle of 4th quarter (prior to November options expiration), wiping out most new entrants from $1900-2000 on up. At the breach of $2000, I'll be closing enough of my calls to cover all expenses including commissions and will not be buying any additional calls. Above $2100 is when I'll start buying puts as close to $0.10 or under as possible. Over $2400 is when I'll start buying GLD puts in quantity between $160-200, again around $0.10 or under.

During that rise, I'll be scaling out of my long call positions as well, using about half of the profits to fund the put buying. Focus must be maintained on the fact that this is trading, not investing for the long-term. If that were the case, I'd be suggesting a simple buy-and-hold strategy with physical metal and quality dividend-paying miners such as AG, FCX, GFI and GG or the Tocqueville gold fund (TGLDX). Royalty companies would include RGLD, SLW and TRX. The best junior miner list is Gene Arensberg's at the Got Gold Report.

Remember to let the deals come to you. Options for $1 might seem good now, but focus on quantity of contracts within a defined range (GLD $160-200) rather than perceived value. High volatility will be what brings in the bacon. I'd prefer 1,000 puts bought at $0.10 than 100 for $1.00. Even a conservative estimate of the numbers from on high to a low should put the options in excess of $10 valuation. That would be the difference between $90,000 return and $990,000. You can see the tremendous impact should the options rise in value to $20, $30 or even more than $50.

This type of gold trading analysis should be available on Noble Nomads periodically. Another service I've found to be very effective, though less aggressive, is SK Options.

The math, for anyone not familiar with options:


Market liquidity is another factor in being able to obtain an asking price of $10 or more, but interest is increasing along with capital flow. That should provide sufficient influx to sell when emotions run hot and everyone is calling gold a bubble again.

As always, learn about options and preferably paper trade before investing actual money.


Today is a US holiday. Treasuries are up on virtually non-existant volume while the dollar is at about 1/3^rd of its normal. Both have been seeing declining volume during their rallies; not suggestive of continuation. There will have to be some devastating developments in Europe or elsewhere for the dollar to close over 76. Until then, it's an uphill battle.

The higher the dollar and treasuries close today, the better the chances of a boost tomorrow if gold is brought down to any significant degree. Not that such an effort would realistically provide any more than temporary support.

Thanks and yes, quite an impressive few days indeed. I'm thinking Bitcoin will start to see gains in the near future as well (~3-6 month range), though ironically that's much more difficult to call than gold.

I'm well aware how dependent modern society is on electrical power, yet it's still amazing how lack of it is so inconveniencing, to put it mildly.


Not in-the-money. Wait until they're out of the money. As GLD rises above 240, puts around 200 should be under $1. Puts around the current range of 160-180 will definitely be pennies by then. At that point, buy puts at those ranges for about 6 months out and simply hold until the shorts make their next grand effort. Theta has a negligible effect here since we're looking at enormous volatility.


I used to keep a spreadsheet. In it were names, predictions/projections and several fields to examine whether the individual was right or wrong on a claim at a certain time frame.

After about two years of that, it was very easy to narrow down who knew what was going on in the world. Even within six months, the greats were becoming obvious.

Prechter was at the bottom, along with Jon Nadler. I no longer need to use spreadsheets; that experiment honed my bullshit-detection skills.


There have been many H&S patterns during the gold bull, often far more convincing than this latest. A lot of technical patterns based primarily on price charts are giving false signals due to markets entering transition phases.


Politicians generally look backward, not forward. Their words simply provide reinforcement for existing trends, not the other way around. You don't change the world; the world changes you.

As inflation raises the cost of expenses, profit margins become squeezed. When that happens, employees demanding their raises further reduces margins. That isn't even including inane government regulations that heap on additional costs of running a business.

There is no incentive to hire new employees from a businesses perspective. Volume may be increasing, but it will be an uphill battle to add additional help because of orientation and training cost outlays when volume is uncertain to remain elevated with a looming return to recession.

By itself, I'd agree that the extent of the rise is concerning. Is it safe to assume the data is the net long position for all of GLD and not broken out into different classifications of traders?

With the safe havens offering greater incentive to park wealth in them instead of other asset classes amid continuing financial turmoil in Europe, it's unlikely that these longs will sell just yet. This week's correction has probably cleared out all of the newcomers and left only those who are in for the long haul, both in equities and futures.

If the current GLD holders are indeed the strong hands, the price will have to rise to meet demand/sentiment before the longs will even consider divesting in size. With such a massively sustained jump, that point could be very high. I don't know if there will be another push down when markets reopen, but it's extremely unlikely that we'll see new lows.

As soon as the peak is reached (I'm still thinking in the $2,500 to $3,000 range), there will be a hellfire of short-selling ammunition unleashed just as happened with silver in May. This week was probably a mid-point assault. Until the gap by $1,680 is filled, it will still be the target. The overshoot should approach the trend acceleration breakout point - approximately $1,600. That's simply the way players in this market have come to operate.

Buying a few hundred $200 GLD puts when they're pennies should have the potential to make millionaires, probably by year-end. Not bad for a few thousand dollar risk. Do so only if you understand options trading and have the discipline to mind your stops!

For anyone on the US east coast, best of luck and hope to see you sometime next week.


I plead the fifth! Oh, and there might not be many updates until later in the week, depending on circumstances beyond my control...