Friday, March 12, 2010

Rolling the Dollar and Smoking It - Gold Is the Legal Way to Ease the Pain

Weekly U.S. Dollar Index 2000 - Present
(click on chart to enlarge)


  1. Dave,the dollar as I write this is now down around $.50 ,and gold has dropped to around $1100,as I posted before this makes no sense. In the past with the dollar down, gold/silver would be flying high. Now its just the opposite ,weak dollar, weak gold .Seems this week when the dollar is up ,gold is up--Maybe you can explain this ,I sure can't

  2. rd, you know what's going on LOL. the past 2 weeks, and really ever since the Fed raised the discount rate, gold has been more blatantly manipulated than I have ever seen (9 years of trading/observing gold/silver futures).

    I'm wondering if the bullion banks, who are record short the USDX, long the euro, short gold/silver, are trying to force large specs to sell so the cartel can cover before the euro bolts higher and the dollar tanks.

  3. Dave.
    I think you could be correct ,something is definitely going on here,this whole week has been one of the most strange trading weeks ever. It sure seems the cartel is trying desperately to lower the price ,to cover their short positions, before gold really starts to fly, and the cartel will be powerless to do anything about it.
    But something for sure is brewing up !

  4. You have that one nailed. Even people who only casually watch the daily action in gold think the action means something bad is coming.

    Hell, putting Janet Yellen as Vice Chair of the Fed is bad enough. Feb budget deficit set a record. Housing is starting to implode again.

    State deficits may be the boogie man that spooks smart money into gold...

  5. DAve,
    While I am not a huge chart guy, that pattern is clear indeed! I posted a while ago that I thought gold would uncouple from the dollar and si we may see some non intuitive moves between the two, but I think one of them is going much higher. The heavy one.

  6. The whole system is in total lock-down mode. The imagery I am getting is akin to a pressure-cooker about ready to explode.

    The mass-public has no clue and will be the victim of a massive transfer of wealth that occurs when the USD goes Weimar.

    We are totally screwed and there is no doubt that American Revolutation II is at hand.

    Joe M.

  7. @gyc: yup. big banks increased their longs in the euro again vs. the large and small specs getting shorter PLUS Goldman was telling clients to short the Euro LOL

  8. i haven't heard much talk lately on lemetropolecafe about Sprott's Physical Gold fund.
    they are up to 349,000 oz and if i am not mistaken they are using the proceeds since the fund started and buying future contracts on the comex (april) so that would be 3490 contracts.

    anyone know anything more about this fund? did they even have any gold when they started?

    considering there are 1.66 million oz in the registered cateogry, that would take a nice hit just by sprott. sprott wont take a 25% premium like most of the wall street traders.

    also any opinions on the EMF talking about using Gold as a reserve?

  9. what would happen if about 20 major countries default?

  10. Mike: good questions. PHYS only buys 400 oz. LBMA-certified bars. That is the international standard for gold bars. The Comex uses 100 oz. bars. So, regrettably from our standpoint, PHYS won't terrorize the Comex inventory.

    The fund itself is not permitted to use futures. I have not been following its accumulation of bullion, but they raised $400mm less fees at issue, when they started accumulating bars.

    If you google "PHYS prospectus" you can pull up an abreviated prospectus that describes how the fund operates. Actually, my friend Jesse wrote a blog piece on PHYS. Here's the link and it contains a link the prospectus:

  11. @Anonymous: total pandemonium. I think we're entering an intervention phase of history such that the major central banks will print enough fiat currency to prevent major countries from defaulting.

  12. So, Dave, you don't think there will be defaults, you recon there will be high inflation instead, and then what, another new world currency? What is the actual aftermath of that scenario? Tiny middle class? Lots of crime? What is your view? It looks like Europe will not disintergrate and all PIIGSS will stay there and will be helped somehow. Most of Europeans will perhaps have to (reluctantly) accept much lower standard of living... I look forward to your thoughts.

  13. @Anonymous. Man, your guess is as good as mine how this thing unfolds. All I know is we're going to see brutal inflation, food shortages, civil unrest and other shit hitting the fan. Don't worry about Europe because the overall situation is worse in the U.S. than in Europe.

    Hell, no one even talks about the Mexican drug war thing that has started to proliferate in this country, but it's getting worse. I'm sure the media has been told instructed to stop reporting on it. It's Orwellian doctrine: if the media doesn't report it, it's not there.

    I think what's coming is going to be very bad. The middle/upper middle/lower upper will be mostly wiped out. I think the biggest danger is that some kind of totalitarian Govt will seize power here, probably in Europe too.

    If you want to see survive to see what the "other side" looks like, you'll want to accumulate as much gold/silver/food as possible and make sure you have some high quality weapons and plenty of ammo.

    The guys I know who are preparing to hunker down have now stored over 1 year's worth of non-perishable food, buy gold/silver all the time, are well armed, have back-up generators and store propane. I have not gone that far other than the precious metals accumulation. I probably should LOL.

    However this unfolds, I can guarantee you we are living in a period that will define history.