Monday, September 5, 2011

Labor Day Monday: Spot Gold Hits $1900

Foreign markets plunged, the S&P 500 futures are down over 2% and Obama has promised to spend a trillion dollars we don't have and can't afford "fixing" roads and bridges.

I expect the stock market to get really volatile this month, especially to the downside.  Gold/silver/mining stocks will be volatile too - mostly to the upside...

Brother, can you spare an ounce of gold?


  1. Brother, can you spare an ounce of gold?
    Just received another ounce in the mail, and I'm counting the days for my next one.

  2. Eric deGroot has some interesting charts up. See link at bottom.

    Expect More 'Shock and Awe' In Gold

    The money flows of "smart" and "dumb" money continues to reflect a positive and explosive backdrop for gold. Smart money is increasing their net long position as dumb money reduces them.

    Not only is smart money covering their shorts into strength (reflective of a market breaking its chains of control) but also they are beginning to increase their long positions during the short-term dips. This subtle accumulation implies a scramble to get long. The chart below illustrates their quiet accumulation since mid July (dark green arrow).

    When smart money aggressively covers and quietly accumulates, it tends to precede/coincide with upside price explosions.

  3. but, I thought the gold bubble just popped.

  4. Chico,

    No mention of the upmove happening in the mighty USD

  5. well, the news this morning should only help Gold. Central Bank meddling across the world has begotten more central bank meddling as the Swiss are forced to peg to the Euro. So the CHF party is over and Gold is the last man standing. should be interesting.

  6. I hope you're right about the miners! I'm due doggoneit.

  7. Goldman Sachs: More Than A Travesty Of A Mockery Of A Sham

    Of course, Goldman traders, sitting on the trading desks where order flow from customers, clients and countries around the world ends up, would never front-run those orders, nor would they ever use that order flow and all the other order flow from all the other trading venues they have their hands in and on to feed their arbitrage-eating, high frequency trading algorithms. Never.

    But, what they can do, legally, as market-makers, is take the other side of any of the trades that come their way. And for that matter, take any side of any trade, or take any side they want in anticipation of any trade they think might come their way in their duties as bona-fide market-makers.

    But the weight of Goldman’s heavy foot on its clients and America is being resisted. The bank faces untold litigation costs and potential damages from pending suits too numerous to list. And worse, regulators and the Justice Department are looking under Goldman’s shoe to determine if it has a soul.

    In my opinion, Goldman isn’t just a travesty of a mockery of a sham, it is a criminal enterprise and worthy of being stepped on itself.

  8. (Dave)

    re: Chico - LOL was just wondering this morning when you were going to show up again! Last time was when the dollar bounced from the low 80's to the high 80's.

    Most of this move is cuz of the ongoing swissy deval. Wont last long, especially after your President and Bernanke finish this month explaining to us how they are going to save the world!

  9. LBMA Shorts Will be Forced to Take Losses

    “As soon as these pension funds know that they can have their ten tons of gold physically backed, based on the fact that they get receipts detailing bar numbers and it costs them nothing to do this other than to move their account, many will make that move.

    In the previous example, they (LBMA bullion banks) would be forced to buy at today’s prices at around $1,900, forcing the banks to crystallize a $200 loss on the previous ten tons of gold, which was a ledger entry at $1,700. Simultaneously, the Pan Asia Exchange will actually be purchasing this ten tons of gold that the LBMA bank never did, forcing the price higher and creating more derivative stress on the LBMA system as this accelerates. This obviously has the effect of exposing the bullion banks to massive derivative losses and risk exposure.

    It’s going to force true price discovery for gold and no one knows what that is. When you actually crystallize all of this paper derivative gold into physical metal, no one knows what the price will be.

  10. An Imminent Downturn: Whom Will Our Leaders Defend?

    At the point our nation recognizes that the pattern of repeated bubbles, crashes, and misallocation of capital is not solved by the Fed but is instead caused by the Fed, it will become clearer that the best path to economic recovery is to shift attention toward debt restructuring, real investment, useful infrastructure, and the creativity and work ethic of real human beings. Until then, we will have an economy built on speculation and paper, stacked into a flimsy house of cards. As James Grant of Grant's Interest Rate Observer noted last week, the Federal Reserve is presently run by "policymakers that seem to have no first, or fixed principles. Current monetary arrangements are defective and are robbing us of the dynamism this country has been known for... Somehow, with QE everything, with a zero percent funds rate, with monetary 'mastery' from the people in Washington, I think the current system is leeching dynamism from this economy and from society, and I think we'll find something better."

    Grant accompanied those comments with an exceptional insight about the consequences of Fed actions - "Inflation is more than CPI - it is too much money chasing too few something or others. Inflation takes the form that we will know about later." Speaking of the housing bubble, he observed "so the Fed was targeting inflation, as measured, but neglected to notice that house prices were where they had never been before. So that was inflation as it came to be defined in retrospect."

    That is exactly right. The policies that the Fed is pursuing here distort market signals, create speculative incentives, and encourage the misallocation of capital. There should be no doubt that this will damage our economic future over time, but we will only discover exactly the form of that damage later.

  11. This could explain today's rally:

  12. I have a question, it may have been asked before and if so I am sorry I missed both the question and the answer to said question-

    Question, When Goldman's CEO said he was doing god's work, which god was he referring to? (I didn't know there were any worshippers of mammon still around in this day and age.)