Posted on 09/19/2011 11:16:36 AM PDT by blam
Gold Still Looking Really Sick...
Joe Weisenthal
Sep. 19, 2011, 1:42 PM
It just keeps getting worse today, not benefiting from the aggressive nervous selling in every market around the world.
(Excerpt) Read more at businessinsider.com ...
I’ve been scanning the news this morning trying to identify the reason for the drop, but haven’t found anything yet, have you?
As I’ve been saying, gold will crash when Obama withdraws from the 2012 race. Perhaps the market is already beginning to predict that.
And racist to boot! /s/
White liberal female, in attempt to assuage white guilt, votes for the FBP, then finds out she got RIPPED OFF.
Either then, or when Sarah Palin announces she’s in!
I’ve been investing in lead.
Gold is dropping because the US Dollar is soaring.
The U.S. Dollar is strong because the Euro is in serious trouble - about to collapse in the opinion of many. Over $1.2 trillion was converted from Euros into Dollars and flew across the Atlantic this weekend alone.
Could be a good buying opportunity.
Dollar fundamentals are terrible!
Try to amortize the U.S. debt using current tax receipts (can't be done). Try to figure out how much Congress would have to cut spending to bring deficit spending under control - about 65% at last count (can't be done). Look at increases in M2 and M3 (breathtaking to say the least). Look at U.S. financial ratios for debt to GDP, debt to tax receipts, etc. (worse than Latin American economies that collapsed into hyperinflation). Then pick up an economic history text and see what has happened to countries in our predicament (it's ugly ... real ugly).
Translating the inflation adjusted price of gold in much milder economic circumstances to today's dollars yields a price in the $3,000 to $5,000 range depending on index used. Calculating the value of gold based on its worth as a U.S. currency substitute for the U.S. Dollar yields a price in the range of $12,000 to $50,000 based on the extent to which it replaces fiat. The same applied to replacement as a world currency yields a price from $75,000 to $500,000 per ounce.
I suggest silver and platinum as slightly more attractive right now than gold.
Platinum, no. It's an industrial metal and the world economy is on the verge of collapse.
Silver, hell yes! It is both a precious and industrial metal and its fundamentals are even better than gold's.
Maybe sovereigns are selling off gold to pay off some fiat debt obligations?
Most are heavily buying at the present time in anticipation of the dollar and euro collapses.
Euro Down due to Greek Default pending
Investors flee to US Dollars
Gold as it relates to Dollar is down
Why is anyone surprised????????
I guess what is surprising me is why would investors flee from the euro into dollars, causing gold/silver price to tumble, when both euro and dollar holders should be fleeing into gold/silver. To call the dollar a safe haven at this point boggles my little peanut brain.
It’s a raid OB.
What makes everyday action in PMs so exciting is that the price of PMs are suppressed, and have been for years. If the fiat prices of Gold and Silver were not suppressed, their high prices would rapidly become a crushing indictment of fiat and the Free Market would rush to buy them as a flight to safety.
The suppression is caused in general by false abundance, and on days like today by creating spikes in that false abundance.
False abundance in the PMs is created by paper Gold and Silver - ETFs, Gold certificates, multiple leasing of the same bit of Gold, shorting of PMs: anything which inflates the apparent supply of Silver or Gold.
Steep raids like today are created to create false market signals at critical decision points e.g. whenever the DOW is expected to open very low, whenever Obama gives a speech etc - all to drum home the message that PMs are not a wise haven for investment.
Perhaps more importantly they also act to shake out weak hands and allow the Raiders to buy real physical- or buy back shorts - at lower prices.
All of which is great news for normal people. The extremely heavy and continuing suppression of PM prices means that they are still affordable. I could kiss JP Morgan, except that I’d catch some ghastly disease.
Today buyers just got given a discount window. The impressive analyst TFerguson (http://www.tfmetalsreport.com/blog/2441/shakeout) believes that 1740 and 38 will be the lowest plausible values (for this raid) for Gold and Silver - so if you’re looking to jump in with new money those levels would represent your best opportunities this time around.
Hope this was helpful.
It is more liquid and is easy to jump into.
You don’t immediately park money on Gold.
Just wait, this money may end up there in a matter of 3-4 weeks.
This is actually part of the gold pump cycle. People first turn their assets into dollars then they turn them into gold after they are done liquidating their assets.
Just to tie this with a pretty bow:
Raids often happen on days when the Euro is expected to crash: this acts to pre-emptively channel Euro-refugees toward the dollar, and away from pesky physical Gold and Silver.
Thanks, your post reminded me of something.
A lot of Precious Metal Virgins (/frisson) who are fleeing from a doomed fiat make the mistake of buying paper Gold and Silver in the form of ETFs: attracted by their liquidity and not realizing their essential lack of value.
If they buy paper Gold and Silver, they essentially don’t change the price - they’re just diluting the already fractional ETF.
Don’t know how big an effect this is though because I don’t know how many refugees make this mistake.
As always, your insight is helpful, a_c. Thanks.
—Of course, anyone who thinks they should have some precious metals should buy gradually over time—
Yep. I’ve been buying physical precious metal with cash here and there every week or two for the last few years. It’s amazing how it adds up. I started just after Obama was elected.
And except for a very small amount, it is all worth more today than what I paid for it.
Doh! I'm so use to thinking long term I forget the need for liquidity and convertability when jumping from one doomed currency to another.
LOL, way to make the world's financial system sound like a pathological side-scrolling platform game.
It's On Like Donkey Kong!
OK, off home now, goodnight all.
There was a financier during the depression, I don’t
remember his name but well known who said that
when his shoeshine boy started giving him stock tips
he knew it was time to get out of the market,
he did and didn’t lose it all.
FDR closed the gold mines in 1942 by executive order (miners could be better utilized to mine copper). Maybe someone in the administration has been talking out of school. Plus, the enviros would love it (no more open pits or cyanide leaching).
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