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Author Topic: Gold: I smell a trap  (Read 78386 times)
netrin
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September 07, 2011, 05:37:52 PM
 #481


Thank you. I had been trying to line that up myself. For simplicity, suppose the SNB tanked gold, what would have been the most direct method? (secured shorts denominated in EUR which they intended to buy with CHF; sold their gold positions in CHF)

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MatthewLM
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September 07, 2011, 05:46:06 PM
 #482

sure there's manipulation.

Then you need to understand what we are seeing now is a sell off triggered by manipulation. It's no signal that suggests gold's long term uptrend is dead.

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September 07, 2011, 05:55:48 PM
 #483

sure there's manipulation.

Then you need to understand what we are seeing now is a sell off triggered by manipulation. It's no signal that suggests gold's long term uptrend is dead.

i've said from the beginning that gold has topped no matter how you look at it; either via a manipulative takedown or from a sentiment driven parabolic blowoff.  it really doesn't matter which you believe, either way its down.
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September 07, 2011, 06:33:48 PM
 #484

This question will annoy you: What signals were there? I didn't catch that part.

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September 07, 2011, 06:40:33 PM
 #485

This question will annoy you: What signals were there? I didn't catch that part.

they're all in my posts.
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September 07, 2011, 07:19:06 PM
 #486

All I remember was some silly technical things and "oh there is deflation"...

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September 07, 2011, 07:23:22 PM
 #487

All I remember was some silly technical things and "oh there is deflation"...

you really are a jerk aren't you?
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September 07, 2011, 07:46:49 PM
 #488

I'll add "Oh, they didn't announce QE3".

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netrin
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September 07, 2011, 08:12:02 PM
 #489

After you boys kiss and make friends (or babies) can you please explain to me how a devaluation peg and gold drop can be simultaneously orchestrated. Can one be a logical function of the other (like selling/shorting gold priced in CHF) or are they two distinct and perhaps doubly costly operations?

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September 07, 2011, 08:34:34 PM
 #490

After you boys kiss and make friends (or babies) can you please explain to me how a devaluation peg and gold drop can be simultaneously orchestrated. Can one be a logical function of the other (like selling/shorting gold priced in CHF) or are they two distinct and perhaps doubly costly operations?

you can't blame me for his discourteous remarks.

what i think has become clear is that Ben is not gonna do another QE3 (yeah thats right Matthew).  and i think he and the banks are out to save the USD.  the other way to look at this is the banksters have just pushed this latest reflationary to its max and its time for markets to revert to the norm.  what this means is that all asset markets are going to turn down in a deflationary wave of unseen proportions.

the reason i think you're seeing non-sensical correlations, like miscreanity complains about above, is that at transition points in the economy various markets diverge from one another.  on the way up from 3/09, the USD and UST's fell and everything else went up.  this was the reflationary phase.  in 2/11 the TLT started to climb, the first sign of trouble.  then oil and stocks peaked out end of 4/11.  now pm's are peaking out.  remember my theory is that the USD is central as the worlds reserve currency, not gold.  miscreanity would call this the tail wagging the dog but until i see evidence otherwise this is what i believe.

part of this phenomenon i believe can be explained by the shorts and sellers "rotating" from one bull market to the next selling them off one by one.  this is how the Dow can explode today by short covering and pm's get wacked today.  thus, the normal relationships you'll see in the middle of long term climbs like 3/09 to now start diverging.  you have to step back and view the overall picture of the change from the reflation to a now prolonged deflation.  at some pt we'll crash and it could very well be later this year.  at that pt all markets will get into gear to the downside as one with the USD skyrocketing.

i think the waves of bad news for gold will keep coming.  tomorrow we'll probably see the $DXY break out over 76.25.  then 9/22 Fed meeting still won't announce any more QE.  the question will be how long will you deny whats happening?

whats an inflationists and gold bugs worst nightmare?  SOUND MONEY.

BTW, watch Bitcoin.

edit:  netrin, i hope i was clear that this is how the USD/CHF cross can skyrocket and gold can plummet.  no matter how well schooled the fundamentalists are, you never know whats going on beneath the surface.  this is why technical analysis is so important.  all info is embedded in the price.  i think the Fed has put out the word that no more QE is forthcoming.  gold does not like this.
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September 07, 2011, 08:48:54 PM
 #491

Why would deflation be positive for Bitcoin’s value though?

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netrin
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September 07, 2011, 09:16:28 PM
 #492

edit:  netrin, i hope i was clear that this is how the USD/CHF cross can skyrocket and gold can plummet.  no matter how well schooled the fundamentalists are, you never know whats going on beneath the surface.  this is why technical analysis is so important.  all info is embedded in the price.  i think the Fed has put out the word that no more QE is forthcoming.  gold does not like this.

I was asking more about specific methods by which manipulators could execute the simultaneous drops of CHF and gold. I think I understand your position that the Fed will preserve the dollar at all costs (I'm not sure that all other currencies must conspire), the banks have cleared their most toxic debts, thus the time is right for the inevitable deflation. I personally believe the governments of the world will continue monetizing debt and attempting futile stimuli for quite some time unless/until the United States deliberately f¥€£$ Europe while its economic pants are down.

After watching a series of Dent videos which I imagine you lead me to, I came across this 2009 radio interview with Schiff which made a lot of sense. He is saying much as you except disagrees about the price denominations (gold rather than USD). Essentially he believes all assets will contract in real prices. It comes down to the fundamental question of this thread: will central banks lead us toward hyperinflation and/or when will the total deflation occur? Have I summarized your opinion (in relation to Schiff)?

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September 07, 2011, 09:20:48 PM
 #493

Why would deflation be positive for Bitcoin’s value though?

you're right.  that could be an inconsistency that has me worried.  however, what gives me encouragement is that the BTC price has been so bombed out with such negative sentiment that now would be a logical time for a reversal.  perhaps the USD doesn't skyrocket but moves up just enough  to kill gold while allowing BTC to actually achieve what we have all dreamed.  Bitcoin fits so much more nicely into the world order as i see it that i think its future is extremely positive.
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September 07, 2011, 09:40:23 PM
 #494

Wishing something doesn't make it true.

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September 07, 2011, 09:47:51 PM
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edit:  netrin, i hope i was clear that this is how the USD/CHF cross can skyrocket and gold can plummet.  no matter how well schooled the fundamentalists are, you never know whats going on beneath the surface.  this is why technical analysis is so important.  all info is embedded in the price.  i think the Fed has put out the word that no more QE is forthcoming.  gold does not like this.

I was asking more about specific methods by which manipulators could execute the simultaneous drops of CHF and gold. I think I understand your position that the Fed will preserve the dollar at all costs (I'm not sure that all other currencies must conspire), the banks have cleared their most toxic debts, thus the time is right for the inevitable deflation. I personally believe the governments of the world will continue monetizing debt and attempting futile stimuli for quite some time unless/until the United States deliberately f¥€£$ Europe while its economic pants are down.

After watching a series of Dent videos which I imagine you lead me to, I came across this 2009 radio interview with Schiff which made a lot of sense. He is saying much as you except disagrees about the price denominations (gold rather than USD). Essentially he believes all assets will contract in real prices. It comes down to the fundamental question of this thread: will central banks lead us toward hyperinflation and/or when will the total deflation occur? Have I summarized your opinion (in relation to Schiff)?

conspiracy theory:  if Ben has told all banks that there will be no more QE (he's actually told all of us but most here refuse to believe it) and that they want to kill gold to save the USD and the world financial system what asset would you rotate into if you knew these facts beforehand?  USD's of course. as i said in my OP, i bet the banks were heavily into GLD, gold futures and CHF to create the parabola and suck everyone else in before selling it off.  look at the volume spikes in each of these on the selloff days.  much larger than on the days the price went up esp. the last 2 wks.  this is called a divergence and is a warning sign somethings up.

bubble theory:  forget the conspiracy theories, gold went into a parabola at the end of an 11 yr bull cycle and most investors concluded that their proceeds from selling off the CHF on the SNB anncmnt wouldn't go into a bubble but instead into the world's reserve currency, the USD, which currently is very UNDERvalued.  not to mention the huge short interest in the USD.  this really is the basis of most of my moves regarding selling off my bullion and putting on shorts.  i refuse to buy parabolas.  all the fundamentals stack up for a reversal of all markets as well.  markets love volatility.  you just need to make sure you get into position before everyone else.
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September 07, 2011, 09:53:23 PM
 #496

Wishing something doesn't make it true.

"Wishing" is not an investment strategy.
netrin
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September 07, 2011, 11:23:54 PM
 #497

Intrade tells me Obama has a better than not chance of winning the election and I have to assume any alternate would continue similar policies (stimulus projects, cutting taxes, budget deficit). Even the most constitutional libertarian couldn't cut US obligations significantly within years. This debt will need to be monetized or defaulted. Furthermore, I believe Ben Bernanke must fear for his job in the immediate future. While I agree the Fed will want to preserve the monopoly and strength of its reserve note franchise, grinding the government to a halt would not accomplish either.

How does this work? The markets will collapse, unemployment will rise, prices will fall, tax revenue will drop, the Treasury will issue about a trillion new USTB at high discount rates and yields, and the Fed is going to do nothing? And in Europe?

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September 07, 2011, 11:33:20 PM
 #498

you may think i'm nuts to go against miscreanity, FOFOA, Jim Rickards, Dan Norcini, Eric King, Jim Puplava, Jim Sinclair, Nouriel Roubini, Mish, Dave Rosenberg, James Turk, David Einhorn, Ben Davies, Eric Degroot, Pierre Lasonde, Gerald Celente, Peter Schiff, Ken Ivory, Eric Sprott, Antal Fekete, Bill Fleckenstein, Bill Murray, John Embry, Rick Rule, Doug Casey, Michael Pento, Mark Faber, John Embry, Felix Zulauf, John Hathaway, Rob Arnott, Jean Marie Eveillard, etc, etc, etc.  And perhaps i am.  after all, who the hell is cypherdoc anyway?  just an anonymous voice on the Internet.

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.

gold will not go to $35000.  i doubt it will ever reach $2000.  that was the perfect mirage to put in front of the bulls.  i think your outstretched hands will never reach it.

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.

... please explain to me how a devaluation peg and gold drop can be simultaneously orchestrated. Can one be a logical function of the other (like selling/shorting gold priced in CHF) or are they two distinct and perhaps doubly costly operations?

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.

remember my theory is that the USD is central as the worlds reserve currency, not gold.

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.

part of this phenomenon i believe can be explained by the shorts and sellers "rotating" from one bull market to the next selling them off one by one.  this is how the Dow can explode today by short covering and pm's get wacked today.  thus, the normal relationships you'll see in the middle of long term climbs like 3/09 to now start diverging.  you have to step back and view the overall picture of the change from the reflation to a now prolonged deflation.  at some pt we'll crash and it could very well be later this year.  at that pt all markets will get into gear to the downside as one with the USD skyrocketing.

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.

i think the waves of bad news for gold will keep coming.  tomorrow we'll probably see the $DXY break out over 76.25.  then 9/22 Fed meeting still won't announce any more QE.  the question will be how long will you deny whats happening?

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.

all info is embedded in the price.  i think the Fed has put out the word that no more QE is forthcoming.  gold does not like this.

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

bubble theory:  forget the conspiracy theories, gold went into a parabola at the end of an 11 yr bull cycle and most investors concluded that their proceeds from selling off the CHF on the SNB anncmnt wouldn't go into a bubble but instead into the world's reserve currency, the USD, which currently is very UNDERvalued.  not to mention the huge short interest in the USD.  this really is the basis of most of my moves regarding selling off my bullion and putting on shorts.  i refuse to buy parabolas.  all the fundamentals stack up for a reversal of all markets as well.  markets love volatility.  you just need to make sure you get into position before everyone else.

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.

How does this work? The markets will collapse, unemployment will rise, prices will fall, tax revenue will drop, the Treasury will issue about a trillion new USTB at high discount rates and yields, and the Fed is going to do nothing? And in Europe?

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.
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September 07, 2011, 11:45:59 PM
 #499

10:1 you've bought put protection this AM, haven't you?  be honest Smiley

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.
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September 08, 2011, 12:06:24 AM
 #500

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.
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