Gold: I smell a trap

[MatthewLM]

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/24_James_Turk_Report_-_Why_Gold_Will_Go_Above_$11,000.html

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[cypherdoc]

one can't be too negative on pm's and miners as long as the stock mkt keeps going up and UST's keep selling off.

[MatthewLM]

I want to stay shy from stocks as through the next few years I don't think they will do well at all. They were pumped up after the financial crisis settled.

[miscreanity]

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/24_James_Turk_Report_-_Why_Gold_Will_Go_Above_$11,000.html

... and this is assuming things remain static from here on out. I don't see that as possible; USD$10k/oz is the floor.

one can't be too negative on pm's and miners as long as the stock mkt keeps going up and UST's keep selling off.

Very true. Even if treasuries find a bid, the question becomes one of who's buying?

I want to stay shy from stocks as through the next few years I don't think they will do well at all. They were pumped up after the financial crisis settled.

Established, dividend-paying companies aren't going to disappear or reduce the dividend. A steady income will remain throughout any global situation. With a choice of a steady paycheck or a gamble on a jackpot that could turn out to be a complete loss with the current state of things, stability seems a much better bet whether the stock is $1 or $100.

[MatthewLM]

I'm certain that James Turk would say that $10,000 is the fair price at the moment at it will go up, so that it is just an indicator (Look for gold price to catch up).

Established, dividend-paying companies aren't going to disappear or reduce the dividend. A steady income will remain throughout any global situation. With a choice of a steady paycheck or a gamble on a jackpot that could turn out to be a complete loss with the current state of things, stability seems a much better bet whether the stock is $1 or $100.

If a reliable high dividend existed... If you look at the general stock market prospects, it seems a bit stormy looking ahead. So at he very least caution is needed.

[miscreanity]

If a reliable high dividend existed... If you look at the general stock market prospects, it seems a bit stormy looking ahead. So at he very least caution is needed.

Look for key concerns that are critical to infrastructure; highly inelastic consumables such as food and energy. Think oil producers, food transportation, grain production, commercial refrigeration, municipal sanitation, etc... those will remain in demand until the zombiepocalypse (and possibly even then). If their stock prices dip, they'll be among the earliest to recover. They'll also pay dividends the entire time, unless a real disaster happens.

Caterpillar boomed today, largely because of demand from the mining industry. Imagine that. It isn't surprising to see a picks & shovels company benefiting from turmoil.

Besides, if you're expecting inflation that means the stock prices will eventually rise nominally no matter what. Win-win!

[cypherdoc]

$DXY back down into the consolidation zone.  bad news (depending on how you look at it).  probably go all the way back down to bottom @73 and probably thru it.
this and the UST selloff are good reasons for stocks, commods to rally (i'm long and happy).  also gotta look out for pm's and miners (i'm flat).

[miscreanity]

$DXY back down into the consolidation zone.  bad news (depending on how you look at it).  probably go all the way back down to bottom @73 and probably thru it.
this and the UST selloff are good reasons for stocks, commods to rally (i'm long and happy).  also gotta look out for pm's and miners (i'm flat).

Very bad for the USD. There's a lot of anecdotal information implying the US will covertly backstop (or already is) the EFSF via the IMF. If proven true...

Let's just say I'm now deliciously long AUD, CAD, CHF (doubled up from earlier position @ USD$0.90) and SGD. Along with Bitcoin, those are my play positions (and the only investments that have any kind of leverage). Forex is for fun!

No worries on the PMs and miners, I'm all in. Also bought AEM just under $44 on the 24th - can't say no to a solid dividend at a discount. Same with FCX at a PE < 7 and another hefty dividend - madness!

The analysis on Bitcoin applies just as well to gold/silver for the foreseeable future. Let's all build our futures out of the ashes of fallen empires.

[cypherdoc]

$DXY back down into the consolidation zone.  bad news (depending on how you look at it).  probably go all the way back down to bottom @73 and probably thru it.
this and the UST selloff are good reasons for stocks, commods to rally (i'm long and happy).  also gotta look out for pm's and miners (i'm flat).

Very bad for the USD. There's a lot of anecdotal information implying the US will covertly backstop (or already is) the EFSF via the IMF. If proven true...

Let's just say I'm now deliciously long AUD, CAD, CHF (doubled up from earlier position @ USD$0.90) and SGD. Along with Bitcoin, those are my play positions (and the only investments that have any kind of leverage). Forex is for fun!

No worries on the PMs and miners, I'm all in. Also bought AEM just under $44 on the 24th - can't say no to a solid dividend at a discount. Same with FCX at a PE < 7 and another hefty dividend - madness!

The analysis on Bitcoin applies just as well to gold/silver for the foreseeable future. Let's all build our futures out of the ashes of fallen empires.

ah, a merging of the minds.  singularity?  

edit:  oh gaud, what the hell am i thinking?   

[cypherdoc]

https://bitcointalk.org/index.php?topic=48850.msg595768#msg595768

[cypherdoc]

actually i should clarify.  i will NOT be going long pm's or the miners.  neutral right now.

[molecular]

reminder to self: should you ever consider getting into trading, read this thread first. ^^

[cypherdoc]

i think we're going to get over the 5/11 high but the real question is do we get over the 10/07 high with what would be an all time new high in the Dow?

currently i'm playing it as if we'll get a failure after we clear the 5/11 high but i would like to open up a new discussion of whether we are witnessing a paradigm shift from what has historically been primarily a debt based funding of corporate entities with bonds vs. a new dawn of primarily equity stock financing?  

what makes me wonder this is the selloff in UST's that i identified a while back.  that is a real game changer that i didn't anticipate to occur so soon (as in years early).  as i've said many times i think we're entering the Age of Deleveraging with debt revulsion.  we're witnessing a pouring out of money from sovereign bonds into stock mkts right now.

also listen to this link i put up months ago from EconTalk with Anat Admati:

http://www.econtalk.org/archives/_featuring/anat_admati/

are the markets saying they agree with her?

edit:  geez, my TBT double short on UST's is up an astounding 6.45% today!

[MatthewLM]

actually i should clarify.  i will NOT be going long pm's or the miners.  neutral right now.

So you've lost confidence in your previous prediction? Quit the shorts?

[cypherdoc]

actually i should clarify.  i will NOT be going long pm's or the miners.  neutral right now.

So you've lost confidence in your previous prediction? Quit the shorts?

depends on what time frame you're talking about.  the shorts on pm's and miners served its purposes well until i made this call:

https://bitcointalk.org/index.php?topic=35956.msg560220#msg560220

i tried legging into one small short after that but took it down immediately when it became clearer the $DXY was going to fail.

investing is a process or evolution.  when the info changes you have to adapt.  i've proven i'm not a perma-anything.  my overall theories still hold true but nows not the time to short pm's and miners.

[miscreanity]

ah, a merging of the minds.  singularity?  

edit:  oh gaud, what the hell am i thinking?   

Maybe.

Because...

actually i should clarify.  i will NOT be going long pm's or the miners.  neutral right now.

I agree: if positions aren't already established below $1,680 for gold and $32 for silver, it'll be better to wait for the rally to run itself out from this point. Picking up some positions here won't be bad, just more harrowing to endure.

There's some ambiguity on that in regard to options - many can still be had on the cheap, but that will change over the next few trading sessions. XAU calls (ideally, Jan-Mar '12) are still tempting, even at relatively high strikes.

reminder to self: should you ever consider getting into trading, read this thread first. ^^

If it helps, great!

the shorts on pm's and miners served its purposes well...

investing is a process or evolution.  when the info changes you have to adapt.

They did; it is; well said. I still think you'll regret dumping most of your physical, though. The gold numbers are probably going to be completely cooked to mask the lack of physical backing the complicit ETFs and exchanges. When the popular scramble to acquire occurs, there won't be anything real to claim - only promisory certificates.

Thankfully, there are a few gold miners that either are or have plans to pay dividends in-kind. The two most prominent so far are: Evolving Gold Corp. (TSX:EVG) and Gold Resource Corporation (AMEX:GORO). Gold mined, gold paid. It's the closest most individuals can get to the Chinese style of accumulation by parterning with mining operations or buying them outright.

Critically low levels of warehouse stocks are present with the major western exchanges and the open interest has been rising rapidly in both gold and silver. The knockdowns in price have forced and/or scared out all the weak holders, yet there are still far more steadfast positions than there is available metal. If those strong holdings can't be enticed to sell for paper profits, there'll be a default. Therefore, the metals are most likely heading toward a doubling in gold (from the mid-$1,500 range) and as much as a tripling in silver (from ~$30).

This all has to happen before November 22^nd - the December COMEX options expiration. If hundreds of futures options holders decided to exercise for delivery, the exchanges could be looking at 100-1000x more precious metal demand than there is available supply; much worse than the situation with standard futures contracts alone. So both the spike high and subsequent decline need to be forced during the next couple of weeks for enough traders to either take profit or be shaken out. The past week's rise of ~$150 in gold wasn't exactly the jaw-dropping event I suggested: it's looking like there was some short-covering as a prelude to the real moves.

Would you sell for anything less than double your money in a raging bull market marked by severe shortages of the demanded product?

[miscreanity]

The JPY intervention has hit under the premise of Japan lending support to EU debt: ~75.5 to ~78.5 within a few minutes. This was confirmed by BOJ shortly after. JPY continued declining to nearly 79/USD, probably due to a massive number of margin calls. Reversal hitting rapidly.

Gold and silver have also been hit (obvious and counter-intuitive price action), but hardly moved by comparison. This effort is yet another hail Mary attempt to quell precious metals demand. The timing is not a coincidence; end-of-month delivery orders are to be made before close of the US trading session and monthly charts being painted as low as possible serves to moderate large buyer interest that could overwhelm seller positions before sufficient shorts can be covered.

All fiat currencies are in danger due to gold/silver rising. Failure on the part of shorts here will result in PM prices rising tremendously to entice selling of physical demand positions, then being slammed down again to prevent rapid re-emergence of buying. The next take-down should occur somewhere between $2,000 to $2,400 (potentially up to ~$3,000 but not as likely) and will result in prices near the current levels.

[cypherdoc]

yeah, i'm sitting here watching the ramp.  interestingly stocks have not budged one iota. good for the bullish case there.

any thoughts on any MF Global correlation?

[cypherdoc]

this is a great example of why central bankers need to be banished once and for all from the face of the earth.  this type of unilateral abuse of their citizens currency is appalling and only serve to make themselves money at the expense of everyone else.  i can't wait for Bitcoin to get up and moving.

[miscreanity]

yeah, i'm sitting here watching the ramp.  interestingly stocks have not budged one iota. good for the bullish case there.

any thoughts on any MF Global correlation?

Yeah, these movements are nothing but a shell game - no real ammunition left. I'd like to know where the trillions of Yen are coming from - newswires were screaming about multiple USD$500mm equivalent size JPY orders being dumped into the forex markets.

MF is run by ex-megabankers & associates, so they've probably had a hand in it. I suspect it's a bad-bank/scapegoat entity full of mega-bank waste that will be targeted to blow a crater a la Lehman, drawing attention away from GS/JPM, et al.

I'm patiently waiting for signs that the harsh reality in commercial loans is going to come crawling out of CIT Group. The retail layer hasn't evaporated enough just yet, but there's enough panic to consider it imminent.

this is a great example of why central bankers need to be banished once and for all from the face of the earth.  this type of unilateral abuse of their citizens currency is appalling and only serve to make themselves money at the expense of everyone else.  i can't wait for Bitcoin to get up and moving.

Hear, hear!