Gold Turns Bullish

TMO ^ | 12-3-2014 | Clive_Maund

[agere_contra]

Dollar strength is predicated on the idea - I should say the myth - that interest rates are about to go up.

However: this cannot happen. US debt is enormous. There is simply no possibility of raising rates, any more than Japan can raise rates.

Despite the cheerleading from MSNBC the economy is in the tank (for instance: there was 11% less consumer spending over the Thanksgiving holiday than in the previous year. 11%!).

The middle class has been hollowed out - and the Fed has no way out. Yellen & friends will declare QE4 early in 2015, probably in Q1. The market may at last realise that the Fed are hopelessly locked into money printing.

[RC one]

and an infinite amount of imaginary pieces of paper backed by nothing more than pollyannish faith in a government are valuable?

[Former Proud Canadian]

Paper and electronic entries on a ledger.

[Rashputin]

I don’t know about bullish but it’s been really interesting to watch how the price resists going under $1200 and staying there very long.

[therapsida]

15x1....is the historical ratio silver to gold.

The chins are about to rectify that.

[Gaffer]

I’m wondering if all those people who bought it a $1300 are thinking this 6 month negative average slope is a “buy”......

[Scooter100]

I’ve never seen anyone capable of predicting the metals market. There are too many meddling and diddling with it who have large self-interested piles of the stuff. To worsen matters, there is a battle between the “gold standard” proponents and the Central Bank types who love printing money backed by nothing. If you invest, just make sure you have the frickin metal in your sweaty hands, not a bunch of paper that says you do.

[refermech]

What I wonder is: How does one back paper money with a shiny yellow metal? I’ve never understood why gold is held in such high esteem. Kind of like movie stars,politicians and sports figures. All a scam in my humble opinion. But stuff is worth what people will pay I suppose.

[grumpygresh]

I think that one thing to follow is the number of unforfilled contracts on COMEX. Instead of forfilling contracts with the physical metal when the contact has expired, most times the buyer will receive a check for dollars.

Now this isn’t a big deal if you don’t need the physical commodity, but many buyers do. Jewelers in India need gold, tech companies need silver, air bag makers need platinum. As the COMEX market becomes increasingly a paper only market, physical commodity buyers will move over to other markets (Shanghai) that have rules that force sellers to deliver the real stuff or face felonies. COMEX promotes a Ponzi scheme by allowing sellers to pay off in dollars.

What I see happening is sovereigns such as China and Russia (Russia not right now because of oil) using their excess dollars to buy PMs on the COMEX thus forcing the Fed and allied central banks to continue their naked shorts. This will have the effect of making the COMEX a paper only exchange and thus useless to any serious PM buyer.

[Scooter100]

How does one back paper money with a shiny yellow metal?

Good question. The 1/10 oz U.S. Gold Eagle is selling for around $140, but the coin says 5 Dollars on it, which I assume is its theoretical lowest value. Currently, our bills aren't backed by any tangible asset....all funny money.

Historically, obviously, rather than lug around a lot of metal, bills "represented" the equivalent amount of a certain metal, most often silver. I think Congress still has control over coinage, but not monetary policy.

That function rests with the Federal Reserve Bank, which is neither Federal, nor a bank, nor does it have any reserves...being owned by a cartel of a small group of bankers. The whole system stinks, in that it is all debt based with crippling interest, all to the benefit of international banks. We The People should own "The Fed", issue our own currency, and the government should be forced not to borrow. With the savings, we could probably eliminate income taxes.

[blam]

Thanks.

These sorts of inputs are my reward for posting these articles.

[Attention Surplus Disorder]

You’re welcome.

You know, you can get really technical about these things, but since nobody can predict the future, even though we all try and always will, all there is are probabilities.

Whatever you want to say about QE and “funny money” and all, what is incontrovertible is that the US plunged right into it, first, with a vengeance. Does that matter? Well, Japan went into it about 7 years after their bubble popped and 30 years later, they are still in the sh***er. Europe is kind of sort of getting into it now, 4-5 years after world markets crashed in 2009.

As technical as you or I may want to get, there are only two countries that have the capacity to really shake off economy wide doldrums. Germany and the US. Now without question, any old country you may choose will have bottom-bounces, and some of those will absolutely furnish favorable trading conditions, as long as you get in & out with decent timing and do not overstay.

If and when world economies take off, it will likely be as a result of technical innovation(s) developed in those two countries. ANd frankly, that is “period, end of subject”. It is the US which is going to glom onto those innovations, much quicker than other nations, and monetize them. It is that simple. I am not speaking as a flagwaver nor permabull.

Now if there is the kind of future that obtained after Reagan was elected and starting in 1980 (actually 1982) the market tripled and quadrupled over the next ten years....then we must add that to our probabilities. I am not saying it is going to happen, but there is without question a 7-10% chance of it happening.

With exceptional skill and canny timing, one can invest in overseas markets and catch those interim bottoms. Maybe. But I do not think real long term results will be found there UNLESS AND UNTIL they catch whatever the US throws off. Trades, yes.

Ultimately, optimism is among the most reliable survival mechanisms. (And it is not my nature, at all!)

[DoughtyOne]

Thanks for the comment Blam. I can understand why. Take care.