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Author Topic: Whose wrong: Gold or Treasuries?  (Read 1796 times)
cypherdoc
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August 08, 2011, 04:27:39 AM
 #1

one is the antithesis of the other.  both can't go up together for very long. which one cracks first?
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August 08, 2011, 05:11:47 AM
 #2

one is the antithesis of the other.  both can't go up together for very long. which one cracks first?

Treasuries, gold can easily touch 2000 if this "fear" goes on enough.

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August 08, 2011, 05:30:31 AM
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one is the antithesis of the other.  both can't go up together for very long. which one cracks first?

Treasuries, gold can easily touch 2000 if this "fear" goes on enough.

What we have seen during this crisis until now is that in moments of fear people goes to cash, specially because there is people that leverages a lot to go into gold and silver and when things go south they need to cash out of gold and silver.

Historically gold and the stock market are inversally correlated, but during this crisis they have started going (more or less) correlated. This is because during this crisis is not about risky investment/safe investment, its about if the dollar will survive or not. So gold and the stock market are acting as a way to get out of the dollar and they tank when people go back to cash.

This is how it has been during this crisis until now. It could change. But keep in mind that if at some point you see the stock market crashing and gold going up for a sustained period of time, it means the dollar is in great danger. When the stock market crashes and people prefers to go into gold than into dollars... that could be the final blow for the dollar.
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August 08, 2011, 05:43:19 AM
 #4

Gold is at 1700$ btw....

http://www.kitco.com/market/

Should be an interesting monday when the market opens in the US.

miscreanity
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August 08, 2011, 07:47:38 AM
 #5

... gold and the stock market are acting as a way to get out of the dollar and they tank when people go back to cash.

Precisely. The dollar and treasuries being the opposite position of gold & stocks.

Being denominated in dollars as the dollar is inflated, both will rise. When (not if) confidence collapses in the dollar, treasuries have only the support of the dollar while gold stands on its own. Value is not granted by fiat, only represented.
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August 08, 2011, 11:32:50 AM
 #6

keep waiting for somewhat things like "bancor" arrive, then things will burst

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August 08, 2011, 02:36:15 PM
 #7

I think gold is overpriced right now due to the share market and debt fear factor.  Platinum is much rarer and a more industrially useful metal.  It's also used as a financial instrument yet gold was at parity with platinum earlier today.  Either gold is overpriced or platinum is too cheap.  I wager on the former.

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cypherdoc
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August 08, 2011, 04:05:08 PM
 #8

one is the antithesis of the other.  both can't go up together for very long. which one cracks first?

Treasuries, gold can easily touch 2000 if this "fear" goes on enough.

What we have seen during this crisis until now is that in moments of fear people goes to cash, specially because there is people that leverages a lot to go into gold and silver and when things go south they need to cash out of gold and silver.

Historically gold and the stock market are inversally correlated, but during this crisis they have started going (more or less) correlated. This is because during this crisis is not about risky investment/safe investment, its about if the dollar will survive or not. So gold and the stock market are acting as a way to get out of the dollar and they tank when people go back to cash.

This is how it has been during this crisis until now. It could change. But keep in mind that if at some point you see the stock market crashing and gold going up for a sustained period of time, it means the dollar is in great danger. When the stock market crashes and people prefers to go into gold than into dollars... that could be the final blow for the dollar.

+1  clear thinking
cypherdoc
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August 08, 2011, 04:07:00 PM
 #9

I think gold is overpriced right now due to the share market and debt fear factor.  Platinum is much rarer and a more industrially useful metal.  It's also used as a financial instrument yet gold was at parity with platinum earlier today.  Either gold is overpriced or platinum is too cheap.  I wager on the former.

you platinum, me bitcoin.
cypherdoc
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August 08, 2011, 04:20:14 PM
 #10

one is the antithesis of the other.  both can't go up together for very long. which one cracks first?

Treasuries, gold can easily touch 2000 if this "fear" goes on enough.

What we have seen during this crisis until now is that in moments of fear people goes to cash, specially because there is people that leverages a lot to go into gold and silver and when things go south they need to cash out of gold and silver.

Historically gold and the stock market are inversally correlated, but during this crisis they have started going (more or less) correlated. This is because during this crisis is not about risky investment/safe investment, its about if the dollar will survive or not. So gold and the stock market are acting as a way to get out of the dollar and they tank when people go back to cash.

This is how it has been during this crisis until now. It could change. But keep in mind that if at some point you see the stock market crashing and gold going up for a sustained period of time, it means the dollar is in great danger. When the stock market crashes and people prefers to go into gold than into dollars... that could be the final blow for the dollar.

the only thing i'd add here is that relationships can change btwn asset classes in unpredicatable ways.  for instance, its possible for everything to decline incl. gold and bitcoin to rise from the ashes.  this is my bet.

in fact i think the relationships are hinting at a shift.  the USD should have rallied hard but is stuck in a consolidation pattern. 

for these reasons i also like to look at each individual asset and try to assess whether it over/undervalued, in a bubble or not, and also what part of the cycle we're in.  for instance, some think that gold has a 9 yr cycle which obviously has extended at this point. 

another factor is that even if the above relationships may hold, they may not all move at the same time. for instance gold topped 4-5 mo after the Dow back in 2008 as did the miners.    i think this is a phenomenon of short seller/sellers rotating in and out of sectors selling them off one by one.  this is my concern for gold right now.  we're about 3 mo post Dow rollover.  gold is going parabolic into a blowoff maybe.  then crash.
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August 08, 2011, 06:56:05 PM
 #11

the only thing i'd add here is that relationships can change btwn asset classes in unpredicatable ways.  for instance, its possible for everything to decline incl. gold and bitcoin to rise from the ashes.  this is my bet.

in fact i think the relationships are hinting at a shift.  the USD should have rallied hard but is stuck in a consolidation pattern. 

for these reasons i also like to look at each individual asset and try to assess whether it over/undervalued, in a bubble or not, and also what part of the cycle we're in.  for instance, some think that gold has a 9 yr cycle which obviously has extended at this point. 

another factor is that even if the above relationships may hold, they may not all move at the same time. for instance gold topped 4-5 mo after the Dow back in 2008 as did the miners.    i think this is a phenomenon of short seller/sellers rotating in and out of sectors selling them off one by one.  this is my concern for gold right now.  we're about 3 mo post Dow rollover.  gold is going parabolic into a blowoff maybe.  then crash.

Regarding the USD - inflationary efforts have caused it to become highly undesirable for major foreign holders of US debt. They are using the equity sell-off as an opportunity to supply dollars in exchange for valuable assets. This is why the dollar is in a range instead of having taken off due to increased liquidity from domestic fire sales in assets.

I think the 9-year cycle concept is too myopic. Gold moves based on influences with far greater scale than 9 years. Add to that the fact that it has been suppressed for so long that short-term cycles will be severely distorted and eventually snap back to the fundamental trend; reversion to mean.

Yes, there are many associations in asset classes that will shift rapidly. It's going to be difficult to keep up with them as they accelerate. Foreign exchange rates are already fluctuating by 100-200bps per day. Gold will entertain another mini-blowoff, most likely before November; a crash will follow, probably to the $1600/oz range after attaining $2000-3000/oz or better. Pundits will again claim that gold is in a bubble.

However, look at the 10-yr chart - gold has followed a very consistent upward trending channel which is developing the base of a very long-term parabolic rise. It will take several more years to play out. The precious metals are nowhere near bubble territory yet. The bubbles I see are in equities, treasuries and the US economy in general.

I am projecting about 3 more years for the next phase of gold's upward revaluation, followed by another phase for about 1 year, then a peak within 3-6 months after that. Each phase will at least double the price of gold as public awareness and intent to acquire the metal grows.

Around late 2015 to mid-2016 should be the final stage of US economic capitulation and gold's rise to dominance in the international financial arena. It will act as the foundation of a floating associative rate with all surviving currencies at that point, possibly including Bitcoin.
cypherdoc
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August 08, 2011, 07:37:15 PM
 #12

i think you misjudge the urgency for the Fed to get the gold price down.  in your scenario, the USD must tank to oblivion and i think thats the last thing they want or will let happen. 
miscreanity
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August 08, 2011, 07:45:04 PM
 #13

It isn't about getting the gold price down. We're in the midst of a highly-controlled asset revaluation. Dollars have become untenable, but nobody wants the system to collapse catastrophically. It's the dollar that's being managed down.
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August 08, 2011, 10:56:23 PM
 #14

i think you misjudge the urgency for the Fed to get the gold price down.  in your scenario, the USD must tank to oblivion and i think thats the last thing they want or will let happen. 

It is absolutely impossible to get the gold price down if they keep printing money! a-la "quantitative easing" or whatever they want to call it

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August 08, 2011, 11:31:50 PM
 #15

tomorrow will be a big day and tell about what the FOMC will do in terms of further QE.
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August 08, 2011, 11:32:38 PM
 #16

It isn't about getting the gold price down. We're in the midst of a highly-controlled asset revaluation. Dollars have become untenable, but nobody wants the system to collapse catastrophically. It's the dollar that's being managed down.

how do you know they're not trying to manage it back up?
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August 09, 2011, 01:22:36 AM
 #17

It isn't about getting the gold price down. We're in the midst of a highly-controlled asset revaluation. Dollars have become untenable, but nobody wants the system to collapse catastrophically. It's the dollar that's being managed down.

how do you know they're not trying to manage it back up?

If management (read: printing) of a currency were the key to prosperity instead of real effort (farming, engineering, manufacturing, etc), we could all print our own money and live like kings.

Bernanke and company are doing their best to prop it up, avoiding a very painful waterfall-style crash. The dollar's decline is being controlled as best it can.

I do admire and appreciate the goons for their skillful machinations and preventing complete social disorder, but still consider them fools for having allowed the situation to get as bad as it is.
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August 09, 2011, 01:39:33 AM
 #18

It isn't about getting the gold price down. We're in the midst of a highly-controlled asset revaluation. Dollars have become untenable, but nobody wants the system to collapse catastrophically. It's the dollar that's being managed down.

how do you know they're not trying to manage it back up?

If management (read: printing) of a currency were the key to prosperity instead of real effort (farming, engineering, manufacturing, etc), we could all print our own money and live like kings.

Bernanke and company are doing their best to prop it up, avoiding a very painful waterfall-style crash. The dollar's decline is being controlled as best it can.

I do admire and appreciate the goons for their skillful machinations and preventing complete social disorder, but still consider them fools for having allowed the situation to get as bad as it is.


the afterhours are showing Dow down another 175 and silver down 1.38% and oil down 5.47%.  the ferociousness of this selloff portends deflation to me and i still think it drags gold down with it very soon.

my bet is tomorrow the FOMC doesn't mention a thing about further QE and perhaps then gold will take a hit.

everyone expects a parabolic blowoff top to gold after another doubling or tripling of the price.  lotsa ppl thought the Dow would do the same thing.  no dice.
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August 09, 2011, 01:42:05 AM
 #19

It isn't about getting the gold price down. We're in the midst of a highly-controlled asset revaluation. Dollars have become untenable, but nobody wants the system to collapse catastrophically. It's the dollar that's being managed down.

how do you know they're not trying to manage it back up?

If management (read: printing) of a currency were the key to prosperity instead of real effort (farming, engineering, manufacturing, etc), we could all print our own money and live like kings.

Bernanke and company are doing their best to prop it up, avoiding a very painful waterfall-style crash. The dollar's decline is being controlled as best it can.

I do admire and appreciate the goons for their skillful machinations and preventing complete social disorder, but still consider them fools for having allowed the situation to get as bad as it is.


you being a professional in PM's, if you can tell me you bought metals btwn 2005-2007 as i did then i can have more faith in what you say.
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August 09, 2011, 03:57:17 AM
 #20

the afterhours are showing Dow down another 175 and silver down 1.38% and oil down 5.47%.  the ferociousness of this selloff portends deflation to me and i still think it drags gold down with it very soon.

my bet is tomorrow the FOMC doesn't mention a thing about further QE and perhaps then gold will take a hit.

everyone expects a parabolic blowoff top to gold after another doubling or tripling of the price.  lotsa ppl thought the Dow would do the same thing.  no dice.

Yes, it's definitely price deflation across equities and the entire commodity sector right now - brought on by panic selling with a rush to cash. So why is gold taking off alongside treasuries, the typical safe-haven?

With a mindset of deflation taking center stage, it's a perfect set up for highly inflationary measures to be taken by money-printing central banks under the guise of 'saving the system' or, as Goldman Sachs' Lloyd Blankfien suggests - doing 'God's work'.

I don't know what the Fed statement will be tomorrow, and it doesn't really matter but for short term hysteria. The simple matter points to deflation causing extreme hardship and a desire for valuable assets that won't depreciate, including gold (how many citizens are even aware of treasury bonds)... or inflation that debases the domestic currency, making other assets much more valuable, particularly gold. Win-win for precious metals, rock-and-a-hard-place for the US hegemony. Politicians can be relied on to take the easiest way out, like clockwork.

If everyone is being led to believe that a parabolic blowoff is due for gold, then that's what will be presented. All the suppressing banks have to do is let some pressure off and gold will bolt like a racehorse out of the gate until they have enough physical metal to return to holding the price in check. That will be the sharp selloff. Then the headlines will suggest yet again that the bubble has popped. I've seen too much chart painting at low-liquidity times over the past few years to rationalize any other explanation.

Keep in mind that a double top or gradual rollover pattern is not indicative of the final high. Instead, watch for gold to establish a new trading channel with a higher angle of ascent from the one formed over the past decade. The price will definitely be highly volatile, perhaps $100+ range per day, but the overall trend will still be ascending.

I am actually expecting gold to be driven down overnight or early tomorrow ($1760/oz now), prior to the FOMC meeting. Remember Bernanke's announcement of QE2 last year? There was a spike down in price during his broadcast, then prices took off and never looked back. Be quick if you trade it. Any hint of even slightly relaxing policy, whether it's announced now or later this month, and it's off to the races. What do you think the debt ceiling was raised for?

How are treasuries valued? How are equities valued? How is gold valued? Which can be exchanged on-the-spot with no intermediary, or accepted as collateral with no questions asked? Will the true reserve asset please stand up?
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