Posted on 04/15/2013 7:47:25 AM PDT by SeekAndFind
Gold and Silver Crash - Don’t Be An Idiot
http://market-ticker.org/akcs-www?post=219805
Don’t do it folks.
There’s no “reflation” trade. Nor is this “manipulation.”
There is one thing to watch, and that is if the physical commodity at real, no-BS volume sources de-couples from the futures price. This is a nightmare scenario as it posits the imminent destruction of the capital market structure, since futures are allegedly deliverables.
That is, if I own a gold mine and know I can dig gold out of the ground for $1,200 an ounce “all-in” I will short whatever I’m sure I can deliver over the next year or two into the market so long as the price is over that amount, as it guarantees my profit.
I’m not interested as a miner in speculating on the price. I make my money digging the stuff out of the ground — doing real work and getting paid in real money. I am singularly uninterested in the speculative fervor or the “gold bug hard money” mania; it means nothing to me at all.
If this relationship changes then — and only then — do you get panicky. But then you get panicky about everything, because as soon as you lose the fungible nature of financial products with their underlying assets the market is telling you that the electronic representation of all such assets are about to be marked down dramatically and quite possibly to zero.
The reason is simple — that fungible nature of cash and financial price means that as soon as one moves there is money to be made by arbitraging the two. If the price of “cash” gold is higher than that of “futures market” gold you can buy the cash hold and short the futures, locking in a guaranteed profit because you can deliver the actual gold. Likewise, if the other happens you buy the futures and immediately notice to take delivery, and you have acquired the gold at a below-market price. So long as this relationship holds all claims of “market failure” or any sort of conspiracy nonsense are crap.
Today, here and now, despite all the screaming from various people who are trying to fend off the margin clerk such claims are unsupported as there is no such spread of material consequence and thus are utter crap.
Instead, what you’re being told today (and have been for a while, if you have been watching the charts, particularly for copper) is that central bank “money printing” doesn’t work.
That is, all it that “QE”ing and “printing” has done is inflate financial asset prices in the expectation of actual economic growth. But now, five years into this garbage, we are seeing that exactly as I predicted it has factually done nothing for the broader economy, such as the jobs market, which means that the central banks have done is blown another bubble!
You just heard a “pop.”
Ignore it at your own peril.
If I was conspiratorial about this, I would say someone is attempting to manipulate the market lower so they can buy up more Gold cheaply. I think with all the QE going on by the Fed, that gold should be going up.
still dropping, down $40 just in past hour to $1366
decisions decisions (when to buy)
That says it all. It's not for me, either.
So the solution is physical gold/silver?
I imagine it probably has always been that way.
real conspiracy fans see this as a predicted event coming to pass, and the precursor to an imminent larger event
Good thing nobody was stupid enough to tie our currency to gold.
big town in minnesota not one ounce gold avail...!
silvers going for $36...about gone.
RE: Good thing nobody was stupid enough to tie our currency to gold.
Gold is a monetary metal whose price is determined by inflation, by fluctuations in the dollar and global equities, by currency-related crises, interest rate volatility and international tensions, and by increases or decreases in the prices of other commodities.
The price of gold reacts to supply and demand changes and can be influenced by consumer spending and overall levels of affluence.
We are experiencing one of the worst recessions ever, caused by a financial disaster a scale of which has been unprecedented, and which effected practically every economy in the world. In order to avoid a total monetary collapse which began this time three years ago, central banks around the world were compelled to provide monetary assistance. They provided bail out packages to some of the largest financial institutions as well as various stimulus packages in order to kick start their economies.
However, it appears that the economic stimulus has been a dismal failure, only stimulating government interference in the economy, while piling up massive debt. Most western countries still suffer from low GDP growth as well as high unemployment.
So, getting back to “stupid enough to tie our currency to gold.”....
One of the major driving forces behind the Gold bull market has been the declining value of the US dollar.
Gold is bought and sold in U.S. dollars, so any decline in the value of the dollar causes the price of gold to rise. The U.S. dollar is the world’s reserve currency - the primary medium for international transactions, the currency in which the worth of commodities are calculated, and the currency primarily held as reserves by the world’s central banks.
However, now that it has been stripped of its gold backing, the dollar is nothing more than a fancy piece of paper. The dollar has been in an overall downtrend since 2001, and this longer-term down trending pattern seems well established and likely to continue.
The Dollar Index which is a widely used index that measures the US dollar relative to a basket of foreign currencies has already dropped more than 30% since 2001 while gold has risen more than 400%.. (The currencies in the Index include the Euro, Yen, Sterling, Canadian Dollar, Swedish Kroner and Swiss Franc).
LONG TERM -— Gold has maintained its value in terms of real purchasing power in the long run and is thus particularly suited to form part of central banks’ reserves. In contrast, paper currencies always lose value in the long run and often in the short term as well.
The fundamentalist argues that in the short-term, gold is falling for 2 reasons:
1. The US$ is strengthening story (presumably relative to yen as it forms a component of the US$ index).
2. Stock markets go overdrive into risk-on mode, rallying on Bernanke’s confirmation on Tuesday, 26 Feb 2013 that despite committee members differing in opinions on QE, he makes the call, easy money flow is on tap till he turns it off.
In terms of fundamentals, I don’t see anything changing at all.
Obama is still President, Our debt is still going UP tremendously, Bernanke is still printing money to buy our debt, and I don’t see anything in the budget battles reversing that trend.
Extraction cost is about 1275 on average today. Anywhere close to that figure and you are “golden”.
In 2000 it was possible to buy gold below extraction price for several weeks.
Ignore at your own peril.
If you wait too long, a natural panic will set in.
Don’t forget speculation on gold price. That’s a big one.
That fancy piece of paper had less year to year fluctuation than did the dollar back by gold. Good job FED!
A central bank can control to an extent the amount of inflation or deflation a currency has. They err on the side of inflation because deflation causes depressions. So yes paper money does lose a small amount of value each year, but by intentional design. It’s better for business transactions than gold which is subject to wild speculative swings.
It’s entirely possible to devalue a currency based on gold.
It’s also entirely possible for congress to continue overspending with a currency based on gold. They’ll just promise your kids will repay the lenders in gold. Which would probably set your kids up on the wrong end of the biggest short squeeze of all time, when that bill comes due and there is not enough gold.
Don’t forget speculation on gold price. That’s a big one.
That fancy piece of paper had less year to year fluctuation than did the dollar back by gold. Good job FED!
A central bank can control to an extent the amount of inflation or deflation a currency has. They err on the side of inflation because deflation causes depressions. So yes paper money does lose a small amount of value each year, but by intentional design. It’s better for business transactions than gold which is subject to wild speculative swings.
It’s entirely possible to devalue a currency based on gold.
It’s also entirely possible for congress to continue overspending with a currency based on gold. They’ll just promise your kids will repay the lenders in gold. Which would probably set your kids up on the wrong end of the biggest short squeeze of all time, when that bill comes due and there is not enough gold.
I’m not in the gold market, so with that out front here’s my question.
Is this possibly the way that certain people who have been saying for some time that there is not enough “physical” gold to cover all of the Gold certificates and the demand to repatriate gold back to various countries, ie. Germany, China etc. to force things to a head?
If so, then what are the effects of there not being enough physical gold to cover all of these demands?
Dude, I am a part time college student but I also drive a truck so come on, English please?
http://www.canadafreepress.com/index.php/article/52005
from last December
see last paragraph
tinfoil hat stuff but interesting reading
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