yes but my opinion is that we are looking at primary trend changes in most of these markets, not linear extrapolations of the same. so these moves toward overbought for RSI DowGold can continue and persist in overbought for quite a while and the reverse for RSIGold.
A distinct possibility; I think that's going to be a 2012 situation, after this year's continued turmoil has bled off.
lets be clear. i am NOT short gold or the miners just now altho i'm considering it if gold continues its rollover. in fact, i have a nice long green position in FCX that i've been riding up since the bottom. you're absolutely right; my whole theory of markets moving inversely to the USD may reassert itself with bullion and the miners if the USD keeps dropping too low. inflation might reignite. i just don't think it does so with ZIRP (i view that as deflationary as opposed to most who view it as inflationary) and the deleveraging that is being forced upon everyone right now. the USD flowing out of UST's could start diverting toward pm's as well. i just don't think it does b/c sentiment is such that investors look at pm's as at the end of an 11 yr bubble more than as an oversold asset class with upside potential.
The only point I question is investor influence in gold at this point. Entities that need real assets the most are major banks with excessive derivative exposure. Gold is the most effective of any asset, with a market that's always available and relatively liquid. Any central bank could start buying up gold (including contracts for future production) at current prices and before the general investment community realizes, none would be left.
Banks could be recapitalized, asset prices stabilized and the world's markets rescued. That would require a monstrous revaluation of gold, though - much more than a doubling from here and too disruptive for the global economy to survive without a lot of breakage. So typical investor sentiment is really supportive of financial institutions' efforts at self-preservation, including the Fed.
there's 2 ways to look at this; either everything is going to go back to being hunky dory with controlled inflation picking back up w/o us miraculously not going into a hyperinflation then you'd be right OR that this stock rally is just a relief rally before the SHTF. unfortunately i lean toward the latter. the distortions are just too great, the debt just too big, the corruption just too deep, the anger just too rooted, the wages just too low, the [un]employment just too high and the wage disparity just too high. the rise in interest rates as UST's continue their selloff should not be viewed as a bullish sign as most will interpret. eventually it will crush all growth and the US gov't will be forced to dole out austerity. i'm in a profession that has been seeing this happening for quite a while already which has really focused my mind as to where my income has been diverted. answer: financials. and i am in what you'd consider to be the 1% and yet i'm pissed as hell.
Since we agree on the end result of a deflationary crunch, it comes back again to the path taken. All of the listed factors are overwhelming, and you pointed out that most will interpret rising interest rates as bullish. That will amount to
whistling past the graveyard and allow the illusion to persist. With an economy of such magnitude, that can last for many months, even years.
Yes, the private sector has been the recipient of all the crap while the banking and gov't sectors shuck off the dregs as they struggle to survive while still maintaining control. I'm assuming you're not in or associated directly with government. Private industry is subject to the rules imposed upon it by whatever jurisdiction it's under; government makes and enforces the rules (in collusion with banks). In a bad situation, government will be able to put on a show for much longer than the private sector.
But again, it's an illusion - just one that could last for a long time to come. The point is that gov't may pay lip service to austerity, but in reality will exempt itself from such measures while the private sector continues to be pummeled. There's the resumption of civil unrest.
again, this position requires that the PTB can thread the needle. my theory of markets is that we go thru boom busts, high volatility cycles. we're still at the upper end of the pendulum swing from the reflation off the 3/09 lows. the swing back will undermine the above.
I actually think the big powers that are playing the game
can keep it going for some time to come; maybe another year or so. It'll require more drastic action at each stage, coming closer to complete failure each time. A lot of people will
never fully grasp what's going on, which is part of what the banks & gov't rely on to maintain the illusion.
now this would be the Armageddon scenario which i don't think they can let happen. this is when they start intervening again with gold/silver.
I don't think they ever stopped.
i've been thinking about this myself. if it breaks below 73 you'd have to assume your HI scenario is near. but it will depend what the chart looks like when it does so. i'm always looking for false breakdowns and breakouts as you may have noticed with gold, UST's, and the miners. quite a lesson, huh?
Agreed. Even then, it would only be perceived as a discrete acceleration - the "new normal" mentality. After a period marked by adjustment to the new normal, another crisis can hit and trigger further acceleration. Each individual inflexion point won't be significant enough to point at and claim "this is where hyperinflation starts".
It's a rough deal, that's for sure - I fully expect more false breakdowns/breakouts as we proceed, along with more exaggerated smoke & mirrors and insane legislation.
i've been warning about this for a while now. pm's and the miners are getting smashed.
AEM down 18.27%. Wow.
Agnico-Eagle closed one of their mines due to a safety issue, not something occurring in the market overall. The ~20% knee-jerk reaction is to be expected, especially considering sentiment. Personally, I think if management decided to close the mine, it means that the potential for loss of equipment/personnel/profit and subsequent bad press sufficiently outweighed whatever downtime may be necessary to assess what was compromised and in need of corrective action. A prudent business call.
On the flipside, AEM being down such a hefty amount is a mind-boggling buying opportunity, though I'd wait to see if it can dip lower on further news about the mine inspection. The company has numerous other production assets, even with the temporary shutdown of a major mine. Taking into account the fact that global production is around 125mm troy ounces per year and AEM production is nearly 1% of that, there will be further shortage of
physical metal. When a crop of oranges is hit by frost damage, the price of orange juice rises. Basic supply & demand: decreased supply with increasing (or at least steady) demand leads to rising prices.
Where will the gold be sourced from to supply the COMEX when there are already procurement issues and a declining store of deliverable metal at
all exchanges? This event will have short-term impact. The question is: how long will it take for most investors to take stock of the situation and realize that their panic is unwarranted? Probably too late to take advantage of it.
