Posted on 09/15/2010 11:25:54 AM PDT by blam
Rosenberg: The Latest Gold Spike Was A Huge Tell Of What's Moving The Metal
Joe Weisenthal
Sep. 15, 2010, 1:58 PM
In his latest note, David Rosenberg draws a lesson from yesterday's gold surge to a record high:
Well, at least we know we can use yesterday’s action as a microcosm to what is actually driving the gold price higher (up $22.55/oz, +1.8%, yesterday to $1,268 an ounce) — and it isn’t inflation. How do we know that? Because 10-year TIPS breakeven levels — the market proxy for inflation expectations — fell seven basis points. The correlation would seem to be more with the U.S. dollar as the DXY sank 1.0% to 81.080 yesterday. And, what ailed the U.S. dollar were hints out of Goldman Sachs that the Fed was indeed planning another round of Quantitative Easing. So once again, gold has asserted itself as a monetary metal — a currency that is no government’s liability and a hedge against these recurring concerns over the integrity of the global monetary system.
You don’t even need to look at the TIPS market to see the disinflation momentum is at play. All you really have to do is read these two Wall Street Journal articles to see how the frugality theme is wreaking havoc on pricing power, even at the high end of the U.S. consumer space: Luxury-Goods Firms Turn Up Volume on Value on page B5, and Ritz Carlton Bows to Recession, Adds Rewards on page B4 (price per room is down 19% over the past three years!).
Meanwhile, Alan Greenspan is out calling the gold spike a canary in the global currency coalmine, not that anyone is looking to him right now for their gold trades.
(Excerpt) Read more at businessinsider.com ...
Having a little gold is probably good, some silver too.
“Lead and brass” are the better metals to invest in...
“Having a little gold is probably good, some silver too.
“Lead and brass” are the better metals to invest in...{”
Hehehehe. I have all four.
Lead and brass are poor investments. In a nuclear calamity they might have some value but short of total collapse, they are merely wasted shelf space.
And knowledge.
Guns and ammo are always a good thing to have around.
I think that one could also infer that because of the lack of
correlation of gold and tips that the demand is from outside of the US. China could be sending 0 a golden finger.
Well, no, here is why:
The cost of that commodity will increase, not decrease, for the forseeable future.
Add in if one hunts to supplement the freezer, and does so economically, they do recover some of the costs involved in acquisition.
If it hits the fan so strongly that gold is the only commodity with which to buy and sell, I KNOW guns and ammo will be worth a lot more than precious metals. Lead and brass ammo WILL be precious metal.
“If it hits the fan so strongly that gold is the only commodity with which to buy and sell, I KNOW guns and ammo will be worth a lot more than precious metals. Lead and brass ammo WILL be precious metal.”
Most of us have both precious metals and guns/ammo. The two go together nicely.
In a nuclear calamity they might have some value but short of total collapse
Read about Argentina’s collapse. Strictly economic, but Crime became rampant. Toss in fuel and food shortages and you’ve got a real problem. People kill each other now for a pair of Tennis Shoes. I think you underestimate the point at which lead, copper and blued steel will become much more popular/valuable.
Rosenberg can only see deflation, which from an academic standpoint, we are having. Of course, that is the precursor for the hyperinflation that is on the way and which I believe the gold market is indicating. Focusing on TIPS is not terribly credible because of how its underlying index is calculated (about 1/3 is based on what people feel they could rent their current house out for). The commodity markets are telling us the real story. Check out the big breakout in the equally weighted commodity (an ETF tracks this, ticker GCC). This blog post http://jsmineset.com/2010/09/14/hourly-action-in-gold-from-trader-dan-332/ yesterday on the gold market action was pretty good.
Gold, silver, lead and brass
I’m an all of the above kind of guy.
Lead and brass protect me and my investments. They are useful in total collapse or in case the government is taken over by hostiles like provided for in the Constitution.
I really think a single round of ammo may be worth more than an ounce of silver or gold if things get really bad.
It represents 3 things
A Meal
Self defense
A Store of wealth
You can’t eat gold or silver
You can’t protect yourself from bodily harm
And it is left as a store of wealth, but only if anyone wants it in trade for something.
Can we fix one problem at a time? Can get out the deflation cycle before we start fretting over hyperinflation?
I poured some milk on a few $1 bills and ate them for breakfast this morning. It didn’t go down well, so I added some $5’s. I have heard that the higher denomination of bill, the greater the nutrient content.
Your mom stores my wealth.
I heard that is wasn’t enough to even mention
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