Gold: I smell a trap

[cypherdoc]

Yes.

While it seems gold will go down from here there are factors which could push it higher through the week. Interestingly the swiss central bank is now trying to devalue the swiss franc. Later today the US markets are set to fall. Obama will announce more deficit spending on Thursday for sure. Today there was a bounce back in European stocks but those stocks don't look good to me.

Is it wise to think gold will continue to rise further this week before another correction or has it reached the short term top already?

From what I see gold when down a lot earlier today but shot back up again around about when the news came about the Swiss franc but it's not gone back to it's earlier highs.

how does silver look to you?

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[MatthewLM]

The swiss franc news has been bad for gold. It hasn't gone up. This is counter intuitive and suggests the price will rise in the future in relation to this news.

I've already talked about backwardation in silver and the manipulations. I can only see it going up in the long run. In the short run it should roughly follow gold I think.

[cypherdoc]

The swiss franc news has been bad for gold. It hasn't gone up. This is counter intuitive and suggests the price will rise in the future in relation to this news.

I've already talked about backwardation in silver and the manipulations. I can only see it going up in the long run. In the short run it should roughly follow gold I think.

MatthewLM, how does the USD look to you?

[cypherdoc]

oops

[MatthewLM]

It looks like this:

[cypherdoc]

It looks like this:

Now, now, lets not be so harsh

[MatthewLM]

Seems people are deciding gold needs a correction now, never mind the many factors which you would think should delay such a correction. I'm still surprised the news about the swiss franc had such a counter intuitive effect.

[netrin]

I'm still surprised the news about the swiss franc had such a counter intuitive effect.

Counter intuitive? CHF value dropped 8% precisely to 1.2 EUR after the Swiss bank announced they will print unlimited numbers of CHF in order to peg 1.2 EUR. I'd say the market reacted symphonically.

But this has me convinced gold will continue higher and higher still. Even the strong currencies are devaluating. Unless the US defaults, I don't see any upper limit to gold and silver. Yes, I'm an inflationist.

[cypherdoc]

Seems people are deciding gold needs a correction now, never mind the many factors which you would think should delay such a correction. I'm still surprised the news about the swiss franc had such a counter intuitive effect.

think of it this way.  the CHF selloff is strengthening the USD.  if one were conspiratorial one would think they're trying to save the USD.

[cypherdoc]

massive USD/CHF move of 9.53%

[miscreanity]

Thanks for this suggestions, FCX in particular seems a very interesting stock.
But speaking of dividend-paying, why you suggest AG and TRX that never paid one?

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.

[netrin]

massive USD/CHF move of 9.53%

The move is no surprise. Zurich decreed (pdf) they would peg 1.2 EUR (minimum) with unlimited printing. For all we know, Zurich executed 100% of all CHF sells (EUR:CHF 5 days). Perhaps with all those EUR and USD, Switzerland can expand the Confederation.

[miscreanity]

The swiss franc news has been bad for gold.

think of it this way.  the CHF selloff is strengthening the USD.  if one were conspiratorial one would think they're trying to save the USD.

massive USD/CHF move of 9.53%

The move is no surprise.

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...

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 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.

It looks like this:

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

[cypherdoc]

for all the silver bulls from someone i actually respect:

http://www.professorfekete.com/articles%5CAEF140YearsOfSilverVolatility.pdf

[cypherdoc]

http://www.debtdeflation.com/blogs/

Steve Keen and Harry Dent.

[Melbustus]

for all the silver bulls from someone i actually respect:

http://www.professorfekete.com/articles%5CAEF140YearsOfSilverVolatility.pdf

Did that really say anything other than "silver is going to be extremely volatile"?

[cypherdoc]

for all the silver bulls from someone i actually respect:

http://www.professorfekete.com/articles%5CAEF140YearsOfSilverVolatility.pdf

Did that really say anything other than "silver is going to be extremely volatile"?

i'd suggest you read it again.

[kjj]

for all the silver bulls from someone i actually respect:

http://www.professorfekete.com/articles%5CAEF140YearsOfSilverVolatility.pdf

Fekete should know better.  Sprott didn't make anyone pay a premium, the market did.  Sprott has no control over how the shares are valued on the secondary market.  PSLV has unique features, and the market apparently valued those features at around $11.73.

[cypherdoc]

today was a major, major move in the USD which i've been warning about.  looks like that small declining wedge i saw was real.  you also see it in all the currency crosses as well.  if we break up and out of the consolidation triangle above 76.24, as i suspect we'll see, you'd better duck.

[cypherdoc]

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.

being the worlds reserve currency, the USD is the existing world financial system.  i think the stick save will be made.