Saturday 26th April 2008 5:06 pm: Dubai gold demand & US weekly closes.
If there is strong physical gold demand underpinning this market from savvy creditors of the United States who might be feeling a little reluctant to add to many US$ to their central bank reserves or retirement accounts, perhaps some serious buying will emerge to prop up this market!
However, Kitco links to an article that says Dubai gold demand moderate despite price slide, so maybe we are not out of the woods yet!
End of week close on gold: $886.00/886.80 Bid/Ask on Kitco. One year performance is still +$202.00 +29.53%, even though we are $140 off the high. That shows what a run-up we had at the turn of the year. Maybe that huge 2007-2008 up move was a bit overdone for the time being.
Saturday, 26 April 2008
Hyperinflationary depression? 2008-04-26
Saturday 26th April 2008 4:48 pm: Hyperinflationary depression?
Howard Ruff in his Kitco article linked to a fascinating article by Walter John Williams of www.shadowstats.com that predicts a hyperinflationary depression. Grab it while you can; it's a .pdf file so you will need Acrobat Reader to read it; left-click the above link to read it or right-click and select "Save Target As" and save it. I'm not sure that it was really meant to be available to non-subscribers, but there is an acknowledgement that people can read it if they get to that page. Here is the Howard Ruff Kitco article, called hyperinflationary depression and here is the link to the report download page - the link to this page has now disappeared from the Kitco Ruff article itself.
Friday, 25 April 2008
Ominous double head and shoulders in gold to $600?
Friday 25th April 2008 8:20 pm: Ominous double head and shoulders in gold Target $600?
Alan Bush (probably no relation) has an article with an interesting chart on Kitco at the moment. As soon as I saw the chart, I thought, "Oh-oh!" It looks like a 'nested' double head and shoulders is forming. Potential head and shoulders tops have appeared before but this one is bigger and more ominous. There is a hint of a double top with a neckline at $875 and peak over $1000 on his weekly plot. Target for this would then perhaps be 800 or so. This would bring a larger potential double top into play, since there was a failure at the first test of $850 resistance late last year and a pullback to $800. There is another useful weekly chart at http://www.stockcharts.com/h-sc/ui?c=$gold,uu[w,a]waclyyay[pb50!b200!f][vc60][iut!ub14!la12,26,9]. This chart shows that if gold were to bounce at the 50 week moving average at about $800 (or select their daily chart and look at the 200 day moving average around $825), it could form the right shoulder of the large Head & Shoulders pattern, which would be level with the left shoulder also at $800 or so. A breakdown from there would have a price target of $600.
So in the short term, if there is a drop below $875 and we see a breakdown to $800, watch out for a rally to $850-875 and another failure at that level followed by a return to $800 again. This would make that larger head and shoulders with a clear target around $600, back in the trading range of late 2005 to mid-2007, wiping out the entire spectacular upside move since.
On the other hand, there was a left shoulder in the big upmove from November 2005 to May 2006 that did not give rise to a H&S formation on the other side during the subsequent correction. The left shoulder in the late 2007 to early 2008 upmove is almost identical. Maybe now we could go into a 'triangle consolidation pattern' again as in late 2006, but this time some exogenous event(s) in the banking system could change things very quickly. There is a great difference between now and 2006. In 2008, the credit crunch cat is out of the bag and the housing market decline is well under way. What a fascinating market situation!
You can be sure that the enemies of gold will be trying to get it below $875 to break the first H&S on the downside and aiming for the second, much larger one whose neckline is at $800.
![[Most Recent Quotes from www.kitco.com]](http://members.aol.com/goldsite/gold10years1998-2008.bmp)
With oil at nearly $120 a barrel, it might be difficult for them to succeed, but they have a lot of aces, all our taxpayers money and the power to print as much fiat paper cash and create as many electronic credits for themselves as they want, at our expense of course!
"The credit crisis is already over and everyone has breathed a sign of relief, even the Financial Times in the UK. The scare has been overdone and the good times are going to roll again. Housing prices are not going to revert to the mean, presumably ever." Do you believe that?
Well, maybe they won't if we get a hyperinflationary depression!
;-)
See the posting four on from this one, written 3 May, entitled Fibonacci points to $600 gold re:1974. 2008-05-03! Meanwhile...
Added Saturday 26th April: Kitco links to an article that says Dubai gold demand moderate despite price slide, so maybe we are not out of the woods yet! End of week close on gold: $886.00/886.80 Bid/Ask on Kitco. one year performance is still +$202.00 +29.53%, even though we are $140 off the high. That shows what a run-up we had at the turn of the year. Maybe that up move was a bit overdone for the time being.
Alan Bush (probably no relation) has an article with an interesting chart on Kitco at the moment. As soon as I saw the chart, I thought, "Oh-oh!" It looks like a 'nested' double head and shoulders is forming. Potential head and shoulders tops have appeared before but this one is bigger and more ominous. There is a hint of a double top with a neckline at $875 and peak over $1000 on his weekly plot. Target for this would then perhaps be 800 or so. This would bring a larger potential double top into play, since there was a failure at the first test of $850 resistance late last year and a pullback to $800. There is another useful weekly chart at http://www.stockcharts.com/h-sc/ui?c=$gold,uu[w,a]waclyyay[pb50!b200!f][vc60][iut!ub14!la12,26,9]. This chart shows that if gold were to bounce at the 50 week moving average at about $800 (or select their daily chart and look at the 200 day moving average around $825), it could form the right shoulder of the large Head & Shoulders pattern, which would be level with the left shoulder also at $800 or so. A breakdown from there would have a price target of $600.
So in the short term, if there is a drop below $875 and we see a breakdown to $800, watch out for a rally to $850-875 and another failure at that level followed by a return to $800 again. This would make that larger head and shoulders with a clear target around $600, back in the trading range of late 2005 to mid-2007, wiping out the entire spectacular upside move since.
On the other hand, there was a left shoulder in the big upmove from November 2005 to May 2006 that did not give rise to a H&S formation on the other side during the subsequent correction. The left shoulder in the late 2007 to early 2008 upmove is almost identical. Maybe now we could go into a 'triangle consolidation pattern' again as in late 2006, but this time some exogenous event(s) in the banking system could change things very quickly. There is a great difference between now and 2006. In 2008, the credit crunch cat is out of the bag and the housing market decline is well under way. What a fascinating market situation!
You can be sure that the enemies of gold will be trying to get it below $875 to break the first H&S on the downside and aiming for the second, much larger one whose neckline is at $800.
With oil at nearly $120 a barrel, it might be difficult for them to succeed, but they have a lot of aces, all our taxpayers money and the power to print as much fiat paper cash and create as many electronic credits for themselves as they want, at our expense of course!
"The credit crisis is already over and everyone has breathed a sign of relief, even the Financial Times in the UK. The scare has been overdone and the good times are going to roll again. Housing prices are not going to revert to the mean, presumably ever." Do you believe that?
Well, maybe they won't if we get a hyperinflationary depression!
;-)
See the posting four on from this one, written 3 May, entitled Fibonacci points to $600 gold re:1974. 2008-05-03! Meanwhile...
Added Saturday 26th April: Kitco links to an article that says Dubai gold demand moderate despite price slide, so maybe we are not out of the woods yet! End of week close on gold: $886.00/886.80 Bid/Ask on Kitco. one year performance is still +$202.00 +29.53%, even though we are $140 off the high. That shows what a run-up we had at the turn of the year. Maybe that up move was a bit overdone for the time being.
Thursday, 24 April 2008
GOLD RECORD PRICES SUMMARY! 2008-04-24
Gold Records 2007-2008 during the era of this blog:
1. 21st January 1980: $825.50 NY Futures close (April 1980 contract): FALLEN! 7th November 2007
2. 18th January 1980: $835 London (PM) Fix: 2nd highest Fix ever: FALLEN!* 7 & 8th November 2007
3. 21st January 1980: $850 London (PM) Fix: Highest Fix ever: FALLEN! SMASHED! 3rd January 2008
4. 21st January 1980: $887.50 intraday high seen on 'the tape' by Jim Sinclair: FALLEN! 8th January 2008
5. 21st January 1980: $895 intraday high in Chart in 'Schwager on Futures' book: FALLEN! 10th January 2008
6. For British readers: Gold making new All-Time Highs again in Sterling, starting in December 2007!
7. First £500+ London fixes! The London AM Fix £508.45 & PM Fixe £503.69 on 17th March 2008.
*The London AM Fix on 7 November 2007 and then the PM Fix on 8th November beat this record.
All records are now swept away!
Never mind all that! Gold spot price and futures hit $1000 on 13th March 2008 for the first time ever!
Right now, on 24 April 2008, gold has been giving up these records one by one and heading back down into the 880s. :-(
1. 21st January 1980: $825.50 NY Futures close (April 1980 contract): FALLEN! 7th November 2007
2. 18th January 1980: $835 London (PM) Fix: 2nd highest Fix ever: FALLEN!* 7 & 8th November 2007
3. 21st January 1980: $850 London (PM) Fix: Highest Fix ever: FALLEN! SMASHED! 3rd January 2008
4. 21st January 1980: $887.50 intraday high seen on 'the tape' by Jim Sinclair: FALLEN! 8th January 2008
5. 21st January 1980: $895 intraday high in Chart in 'Schwager on Futures' book: FALLEN! 10th January 2008
6. For British readers: Gold making new All-Time Highs again in Sterling, starting in December 2007!
7. First £500+ London fixes! The London AM Fix £508.45 & PM Fixe £503.69 on 17th March 2008.
*The London AM Fix on 7 November 2007 and then the PM Fix on 8th November beat this record.
All records are now swept away!
Never mind all that! Gold spot price and futures hit $1000 on 13th March 2008 for the first time ever!
Right now, on 24 April 2008, gold has been giving up these records one by one and heading back down into the 880s. :-(
Imperial currency debasements v USA. 2008-04-21
Monday 21st April 2008 9:30 pm: Ex-empire currency debasements compared.
It's interesting to do a headcount of some ex-empire countries and what happened to their currencies. Greece - well their currency became tremendously debased. Turkey that was the heart of the Byzantine and Ottoman empires, both of which had nice gold coins - once the empire was gone, they had the most spectacular currency debasement much later. Germany after World War I had a currency that went effectively to zero value in the Hyperinflation of the 'Weimar Republic' in 1923.
Italy - now that's a great example. It look a huge time for Italy's currency really to collapse, although perhaps it was 'reset' at some point. There was debasement at the end of the Roman Empire but then there was a gigantic debasement in the 20th Century, perhaps due to Mussolini? Italy was part of the Latin Monetary Union in the late 1800s, with France, Belgium and some other European countries. The 20 Lire gold coin had 0.1867 ounces of fine gold, the same as the 20 French Francs, 20 Belgian Francs and 20 Swiss Francs. They were interchangeable and traded in any of these countries as being equivalent, which they were, because it was the gold content that mattered. There was no need for 'full faith and credit' of corrupt governments to be taken into consideration as there is now with junk paper and base metal money that is intrinsically worthless. The Latin Monetary Union was a true precursor to the present Euro, but better, because it was gold money. So the Francs were equal to the Lire at that time. Later, when the European countries' currencies were morphed into the Euro in 1999, the exchange rates for conversion were: 1 Euro = 6.56 French Francs, 40.33 Belgian Francs and 1936.27 Italian Lire! And 1 Euro = 1.6064 Swiss Francs today - the latest rate is shown here on Yahoo!
These individual countries' currencies had been equal before! The second highest number, on the list of the original Eurozone Eleven, i.e. the second most debased currency in the original Eurozone of 11 countries was the Greek Drachma at 1€ = 340.75 Drachma. Great empires seem to fall further than small ones! The bigger they are, the harder they fall, so there is a potential parallel with the UK and the USA coming up, perhaps?
It's interesting to do a headcount of some ex-empire countries and what happened to their currencies. Greece - well their currency became tremendously debased. Turkey that was the heart of the Byzantine and Ottoman empires, both of which had nice gold coins - once the empire was gone, they had the most spectacular currency debasement much later. Germany after World War I had a currency that went effectively to zero value in the Hyperinflation of the 'Weimar Republic' in 1923.
Italy - now that's a great example. It look a huge time for Italy's currency really to collapse, although perhaps it was 'reset' at some point. There was debasement at the end of the Roman Empire but then there was a gigantic debasement in the 20th Century, perhaps due to Mussolini? Italy was part of the Latin Monetary Union in the late 1800s, with France, Belgium and some other European countries. The 20 Lire gold coin had 0.1867 ounces of fine gold, the same as the 20 French Francs, 20 Belgian Francs and 20 Swiss Francs. They were interchangeable and traded in any of these countries as being equivalent, which they were, because it was the gold content that mattered. There was no need for 'full faith and credit' of corrupt governments to be taken into consideration as there is now with junk paper and base metal money that is intrinsically worthless. The Latin Monetary Union was a true precursor to the present Euro, but better, because it was gold money. So the Francs were equal to the Lire at that time. Later, when the European countries' currencies were morphed into the Euro in 1999, the exchange rates for conversion were: 1 Euro = 6.56 French Francs, 40.33 Belgian Francs and 1936.27 Italian Lire! And 1 Euro = 1.6064 Swiss Francs today - the latest rate is shown here on Yahoo!
These individual countries' currencies had been equal before! The second highest number, on the list of the original Eurozone Eleven, i.e. the second most debased currency in the original Eurozone of 11 countries was the Greek Drachma at 1€ = 340.75 Drachma. Great empires seem to fall further than small ones! The bigger they are, the harder they fall, so there is a potential parallel with the UK and the USA coming up, perhaps?
'Demise of the service economy' 2008-04-21
Monday 21st April 2008 8:30 pm: 'Demise of the service economy'
Peter Schiff has an article on GoldSeek.com called The Collapse of America’s Service Economy which agrees with my point of view expressed below that the service economy is merely a transitional phase, perhaps lasting a generation, between a wealthy industrial economy and a grinding poverty post-industrial Dark Age type economy. The service economy in my view represents the period of liquidation of the wealth created by the manufacturing industrial economy (and that of empires) until it's all gone. Of course, this can last for quite a time, depending on the wealth and size of the empire. However, I think that it's an inevitability that this phenomenon is well under way in the USA, the UK and most of Europe (except perhaps Germany and the lower income Eastern European states who might benefit from the decline of the others).
Having a highly leveraged economy at the time of the drying up of this savings cushion is especially dangerous. Many companies crashed (regardless of the quality of their products) as the dot-com investmant mania broke in 2000, because they were indebted i.e. leveraged to assumptions of continuing growth in that industry, when it suddenly stalled and left them high and dry with no money.
Besides, I like Peter Schiff's cheerful style as he doles out a litany of doom-laden predictons for the Western economies!
Peter Schiff has an article on GoldSeek.com called The Collapse of America’s Service Economy which agrees with my point of view expressed below that the service economy is merely a transitional phase, perhaps lasting a generation, between a wealthy industrial economy and a grinding poverty post-industrial Dark Age type economy. The service economy in my view represents the period of liquidation of the wealth created by the manufacturing industrial economy (and that of empires) until it's all gone. Of course, this can last for quite a time, depending on the wealth and size of the empire. However, I think that it's an inevitability that this phenomenon is well under way in the USA, the UK and most of Europe (except perhaps Germany and the lower income Eastern European states who might benefit from the decline of the others).
Having a highly leveraged economy at the time of the drying up of this savings cushion is especially dangerous. Many companies crashed (regardless of the quality of their products) as the dot-com investmant mania broke in 2000, because they were indebted i.e. leveraged to assumptions of continuing growth in that industry, when it suddenly stalled and left them high and dry with no money.
Besides, I like Peter Schiff's cheerful style as he doles out a litany of doom-laden predictons for the Western economies!
Post-industrial post-gold std economy doomed. 20Apr
Post-industrial post-gold std economies doomed. 2008-04-20:
I listened to Jim Puplava interviewing Louis Vincent Gave from Gave-Kal research a few weeks ago. He said that service economies are less volatile than industrial or agrarian economies. Sounds good but how can it be true? Especially, I don't think that the service economy will last as long as industrial economies did as mentioned in the last post. There is some repetition here of the last post but it needed a separate entry.
One important factor is that the 'original' Industrial Revolution took place in the period of a metallic monetary standard with highly stable currencies: either a bimetallic standard as in the USA before 1873 or under a gold standard as in the USA post 1873 and the UK post 1817 (well, much of Europe had gold and silver money in various forms from the time of the Greeks and Romans 2000+ years ago). This resulted in the lower economic volatility. If you then look at the time since the inception of the Federal Reserve in 1913, the first ending of the Gold Standard in England in 1914, the final endings of the Gold Standard in England in 1931 and the USA in 1933 and the final and complete depegging of the US dollar from gold for international transactions in 1971 (phew), we have faced ever-increasing volatility in the markets, except perhaps for 'stability' engineered by direct government intevention in the financial markets.
Please take a look at my earlier post about the Dow-Gold ratio and the accompanying chart. The ratio between the value of the stock market and gold has oscillated wildly since the early 1900s in a pattern resembling a positive feedback type loop with increasing amplitude; that is, increasing volatility, with a period of 30-40 years, perhaps reflecting the 60-70 year Kondratieff cycle, with half the period.
Therefore, the markets have less and less idea of the value of anything, it seems. The Dow:Gold ratio has been 1:1 (1980) and it has been 43:1 (2000). This is ridiculous! How can there be so much uncertainty? This is part of the reason we have had the Internet stock market bubble and the absurd housing bubble recently, together with interest rates set by central banks ranging from 0% to 20% in the time between 1980 and 2008. Evidently, in our fiat paper money system, real values are becoming incalculable. This creates tremendous malinvestments in the economy as there is overinvestment in one sector followed by a crash and then overinvestment in another sector. Who benefits? Of course, whoever is moving the money around and taking commissions benefits! Also, those who can read the trends could benefit by timing investments and switching between stock, bonds, housing and commodities at the right times. However, the benefit does not go to any productive citizens. This is probably the number one reason why the rich get richer all the time - and of course it is fuelled even more by monetary inflation, because they can benfit by investing their high disposable income, whereas the working class and middle class cannot (they don't have any)! It is insane. In the longer term view, we are therefore surely in a period of greatly increasing volatility, not decreasing volatility!
I listened to Jim Puplava interviewing Louis Vincent Gave from Gave-Kal research a few weeks ago. He said that service economies are less volatile than industrial or agrarian economies. Sounds good but how can it be true? Especially, I don't think that the service economy will last as long as industrial economies did as mentioned in the last post. There is some repetition here of the last post but it needed a separate entry.
One important factor is that the 'original' Industrial Revolution took place in the period of a metallic monetary standard with highly stable currencies: either a bimetallic standard as in the USA before 1873 or under a gold standard as in the USA post 1873 and the UK post 1817 (well, much of Europe had gold and silver money in various forms from the time of the Greeks and Romans 2000+ years ago). This resulted in the lower economic volatility. If you then look at the time since the inception of the Federal Reserve in 1913, the first ending of the Gold Standard in England in 1914, the final endings of the Gold Standard in England in 1931 and the USA in 1933 and the final and complete depegging of the US dollar from gold for international transactions in 1971 (phew), we have faced ever-increasing volatility in the markets, except perhaps for 'stability' engineered by direct government intevention in the financial markets.
Please take a look at my earlier post about the Dow-Gold ratio and the accompanying chart. The ratio between the value of the stock market and gold has oscillated wildly since the early 1900s in a pattern resembling a positive feedback type loop with increasing amplitude; that is, increasing volatility, with a period of 30-40 years, perhaps reflecting the 60-70 year Kondratieff cycle, with half the period.
Therefore, the markets have less and less idea of the value of anything, it seems. The Dow:Gold ratio has been 1:1 (1980) and it has been 43:1 (2000). This is ridiculous! How can there be so much uncertainty? This is part of the reason we have had the Internet stock market bubble and the absurd housing bubble recently, together with interest rates set by central banks ranging from 0% to 20% in the time between 1980 and 2008. Evidently, in our fiat paper money system, real values are becoming incalculable. This creates tremendous malinvestments in the economy as there is overinvestment in one sector followed by a crash and then overinvestment in another sector. Who benefits? Of course, whoever is moving the money around and taking commissions benefits! Also, those who can read the trends could benefit by timing investments and switching between stock, bonds, housing and commodities at the right times. However, the benefit does not go to any productive citizens. This is probably the number one reason why the rich get richer all the time - and of course it is fuelled even more by monetary inflation, because they can benfit by investing their high disposable income, whereas the working class and middle class cannot (they don't have any)! It is insane. In the longer term view, we are therefore surely in a period of greatly increasing volatility, not decreasing volatility!
China vs The West - who loses? 2008-04-19
Saturday 19th April 2008: Economic volatility is INCREASING, not decreasing!
Gold is still in consolidation mode, so instead, some thoughts on the state of the economy.
I listened to Jim Puplava interviewing Louis Vincent Gave from Gave-Kal research a few weeks ago. Last time I heard a Gave-Kal interview I didn't agree with much that the guy said. This time, I started off agreeing with him, but when I thought more about it, it didn't really make sense to me. I thought the guy had some good points and it seemed to be self-consistent but quite didn't ring true to me. Maybe I'm wrong! I kind of hope so. He seemed excessively optimistic on the current state of Western society. Of course, others may be excessively pessimistic, saying the world is going to end as we know it. There are others who will say that the world is going to end, period.
The Gave-Kal argument seemed to go along two main lines :-
1. Agricultural economices are volatile, i.e. subject to the whims of nature, weather, drought, floods, etc. So people have to save a lot of their income and they are poor to start with anyway. In an industrial manufacturing economy, volatility is less; the economy and day-to-day life are more stable. You can assume you get paid given amounts of wages at given intervals but in economic downturns you can lose your job, etc. The argument then went that post-industrial or 'service' economices are even less volatile, so people feel the predictability of income and cashflow is greater, and they can save less and even borrow money based on expectations of future income. He thinks this is where we are at now in the USA and possibly Europe, and the G7 type 'rich' nations generally. He thinks that since the Chinese are moving from agrarian to industrial economies, volatility is decreasing there too, although it is still more volatile than we have it in the West, i.e. they are one stage behind the West.
2. The argument came up in both Gave-Kal interviews that the West has an inherent advantage over China for example in that it is mostly Western companies that are industrialsing China by moving their factories over there and therefore most of the profits from China's industries find their way back to the West (for this, read the USA). LVG gave the example of a $500 computer that has $250 profit for the computer company (US owned) and $50 profit for the local Chinese industry. This was an argument that we are making most of the cash from the China growth story and they have the raw end of the deal. Possibly true, but what about the counter-agruments?
As Andy Looney would say on financialsense.com, "Do you buy these arguments? I don't." They sound rather like US-centric hubris to me. Who said that service economies are less volatile? Sounds good but how can it be true? Sure, healthcare is not so volatile, especially if we have lots of savings to draw down but what about when the savings run out and it cannot be funded by insurance, governments or individuals? We have fewer industrial workers so naturally we might get more jobs in healthcare, while the money lasts. Other service industries, tourism, air travel, retail stores, hairdressers, media. Aren't they saturated right now and have they not been subject to the advantages of ultra-cheap oil and other fuels throughout the 1990s?
With low costs of manufactured goods and low costs of transportation, the 'importing cheap from Asia game' has served Western retailing very well, with the opportunity for high margins. It has also served the Western consumer, increasing prosperity due to its deflationary weffect on retail prices - we are getting more for our money. However, there could be a tipping point where job losses to China depletes Western wealth and that effect could exceed the nice effect of the low consumer prices. This opportunity for high retail margins is being reduced today, when the oil price is surging and the consumer is getting squeezed by debt interest burden. Tourism, entertainment, fashion and such things are also seasonal and discretionary, so they are volatile. So is retailing to some extent. If you run out of money, are you going to buy some food or go to the hairdresser for a fancy styling? So who is subject to more volatility, the hairdresser or the farmer? The farmer can always make a futures or options trade on the commodity markets to hedge the volatility in harvests or grain prices - but you can't get a futures contract in haircuts! I see the possibility that the margins squeeze between raw material inflation, Western currency devaluation and lower consumer spending power could kill retail and all the other middleman industries.
The other thing the guy didn't mention was that a $50 profit in China probably buys as many goods and services as the $250 profit logged in the USA. And what about the other costs, the other $250 - the 'cost' of making the thing? Surely that goes in to the raw materials, the transport, the factory wages, etc. Much of that would be money going from the retail purchaser in the USA into the Chinese economy or to commodity producing countries (including OPEC oil producers) - and to pay the factory workers and for the building of the infrastructure in China.
Of course, this could work both ways - a ceasing of this abitrage of cheap manufacturing in China (which may be starting, as the allow their currency to rise against the US dollar, a process that started 3 years ago and is gradually accelerating) could lead to the $50 profit disappearing from China as the $250 profit disappear in the US, with equal damage to both countries, i.e. everybody loses and the Chinese don't escape the effects of a US recession or depression. The incredibly intelligent investor Paul van Eeden has pointed out that China may not escape the US downturn, probably partly for the abover reason but in his view mainly because the Chinese GDP is still a lot lower than the US GDP and a 1% fall in US GDP translated over to China might produce a 5-10% drop there.
Another surely important factor that is a disadvantage to the West is that that all this infrastructure has been created in the East and demolished over in the West. And on the transfer of technology and skills in that direction, too. Once occupied Japan had been making goods for the US market after World War II for a decade or so, there came the ascendancy of those manufacturing industries into designing and making their own invented and developed products - and gigantic Japanese industries and companies were born that still exist today and are world leaders. The same is possible for China in the future. The technology and infrastructure transfers are one-time events, to the advantage of whom? China put men in space recently, the first one was sent up while the USA was catching lifts on Russian Soyuz rockets to the International Space Station! What happens then, in a future war situation when manufacturing capability needs to be ramped up rapidly and adapted to produce large numbers of weapons and vehicles? Er, we lose! The Iraq and Afghanistan wars were not won in 21 days with US technological advantage - in fact, they were not won! They are still going on and need manpower, fuel and 'gear' in huge amounts. Technological leadership is no guarantee of victory; it's not enough. And who says that US technological leadership will last or has lasted?
I personally believe (and I don't have much to substantiate it) that the post-industrial service/financial economy is likely to be merely a transitional phase, not a lasting thing. It may mark the transition between wealth and poverty. From riches to bankruptcy. It coincides with the drawing down of the savings of Western nations to nothing. A great opportunity may come soon for the dollar-rich Arab oil exporters and Chinese/Japanese gadget exporters to buy up much of the West at knock down prices, to get rid of their depreciating dollar earnings and buy something real, perhaps to buy natural resources and that 'best' US technology for their own use!
Yet another factor is that the 'original' Industrial Revolution took place in the period of a metallic monetary standard with highly stable currencies: either a bimetallic standard as in the USA before 1873 or under a gold standard as in the USA post 1873 and the UK post 1817 (well, much of Europe had gold and silver money in various forms from the time of the Greeks and Romans 2000+ years ago). This resulted in the lower economic volatility. If you then look at the time since the inception of the Federal Reserve in 1913, the first ending of the Gold Standard in England in 1914, the final endings of the Gold Standard in England in 1931 and the USA in 1933 and the final and complete depegging of the US dollar from gold for international transactions in 1971 (phew), we have faced ever-increasing volatility in the markets, except perhaps for 'stability' engineered by direct government intevention in the financial markets. Please take a look at my earlier post about the Dow-Gold ratio and the accompanying chart. The ratio between the value of the stock market and gold has oscillated wildly since the early 1900s in a pattern resembling a positive feedback type loop with increasing amplitude; that is, increasing volatility, with a period of 30-40 years, perhaps reflecting the 60-70 year Kondratieff cycle, with half the period.
Therefore, the markets have less and less idea of the value of anything, it seems. The Dow:Gold ratio has been 1:1 (1980) and it has been 43:1 (2000). This is ridiculous! How can there be so much uncertainty? This is part of the reason we have had the Internet stock market bubble and the absurd housing bubble recently, together with interest rates set by central banks ranging from 0% to 20% in the time between 1980 and 2008. Evidently, in our fiat paper money system, real values are becoming incalculable. This creates tremendous malinvestments in the economy as there is overinvestment in one sector followed by a crash and then overinvestment in another sector. Who benefits? Of course, whoever is moving the money around and taking commissions benefits! Also, those who can read the trends could benefit by timing investments and switching between stock, bonds, housing and commodities at the right times. However, the benefit does not go to any productive citizens. This is probably the number one reason why the rich get richer all the time - and of course it is fuelled even more by monetary inflation, because they can benfit by investing their high disposable income, whereas the working class and middle class cannot (they don't have any)! It is insane. In the longer term view, we are therefore surely in a period of greatly increasing volatility, not decreasing volatility!
Gold is still in consolidation mode, so instead, some thoughts on the state of the economy.
I listened to Jim Puplava interviewing Louis Vincent Gave from Gave-Kal research a few weeks ago. Last time I heard a Gave-Kal interview I didn't agree with much that the guy said. This time, I started off agreeing with him, but when I thought more about it, it didn't really make sense to me. I thought the guy had some good points and it seemed to be self-consistent but quite didn't ring true to me. Maybe I'm wrong! I kind of hope so. He seemed excessively optimistic on the current state of Western society. Of course, others may be excessively pessimistic, saying the world is going to end as we know it. There are others who will say that the world is going to end, period.
The Gave-Kal argument seemed to go along two main lines :-
1. Agricultural economices are volatile, i.e. subject to the whims of nature, weather, drought, floods, etc. So people have to save a lot of their income and they are poor to start with anyway. In an industrial manufacturing economy, volatility is less; the economy and day-to-day life are more stable. You can assume you get paid given amounts of wages at given intervals but in economic downturns you can lose your job, etc. The argument then went that post-industrial or 'service' economices are even less volatile, so people feel the predictability of income and cashflow is greater, and they can save less and even borrow money based on expectations of future income. He thinks this is where we are at now in the USA and possibly Europe, and the G7 type 'rich' nations generally. He thinks that since the Chinese are moving from agrarian to industrial economies, volatility is decreasing there too, although it is still more volatile than we have it in the West, i.e. they are one stage behind the West.
2. The argument came up in both Gave-Kal interviews that the West has an inherent advantage over China for example in that it is mostly Western companies that are industrialsing China by moving their factories over there and therefore most of the profits from China's industries find their way back to the West (for this, read the USA). LVG gave the example of a $500 computer that has $250 profit for the computer company (US owned) and $50 profit for the local Chinese industry. This was an argument that we are making most of the cash from the China growth story and they have the raw end of the deal. Possibly true, but what about the counter-agruments?
As Andy Looney would say on financialsense.com, "Do you buy these arguments? I don't." They sound rather like US-centric hubris to me. Who said that service economies are less volatile? Sounds good but how can it be true? Sure, healthcare is not so volatile, especially if we have lots of savings to draw down but what about when the savings run out and it cannot be funded by insurance, governments or individuals? We have fewer industrial workers so naturally we might get more jobs in healthcare, while the money lasts. Other service industries, tourism, air travel, retail stores, hairdressers, media. Aren't they saturated right now and have they not been subject to the advantages of ultra-cheap oil and other fuels throughout the 1990s?
With low costs of manufactured goods and low costs of transportation, the 'importing cheap from Asia game' has served Western retailing very well, with the opportunity for high margins. It has also served the Western consumer, increasing prosperity due to its deflationary weffect on retail prices - we are getting more for our money. However, there could be a tipping point where job losses to China depletes Western wealth and that effect could exceed the nice effect of the low consumer prices. This opportunity for high retail margins is being reduced today, when the oil price is surging and the consumer is getting squeezed by debt interest burden. Tourism, entertainment, fashion and such things are also seasonal and discretionary, so they are volatile. So is retailing to some extent. If you run out of money, are you going to buy some food or go to the hairdresser for a fancy styling? So who is subject to more volatility, the hairdresser or the farmer? The farmer can always make a futures or options trade on the commodity markets to hedge the volatility in harvests or grain prices - but you can't get a futures contract in haircuts! I see the possibility that the margins squeeze between raw material inflation, Western currency devaluation and lower consumer spending power could kill retail and all the other middleman industries.
The other thing the guy didn't mention was that a $50 profit in China probably buys as many goods and services as the $250 profit logged in the USA. And what about the other costs, the other $250 - the 'cost' of making the thing? Surely that goes in to the raw materials, the transport, the factory wages, etc. Much of that would be money going from the retail purchaser in the USA into the Chinese economy or to commodity producing countries (including OPEC oil producers) - and to pay the factory workers and for the building of the infrastructure in China.
Of course, this could work both ways - a ceasing of this abitrage of cheap manufacturing in China (which may be starting, as the allow their currency to rise against the US dollar, a process that started 3 years ago and is gradually accelerating) could lead to the $50 profit disappearing from China as the $250 profit disappear in the US, with equal damage to both countries, i.e. everybody loses and the Chinese don't escape the effects of a US recession or depression. The incredibly intelligent investor Paul van Eeden has pointed out that China may not escape the US downturn, probably partly for the abover reason but in his view mainly because the Chinese GDP is still a lot lower than the US GDP and a 1% fall in US GDP translated over to China might produce a 5-10% drop there.
Another surely important factor that is a disadvantage to the West is that that all this infrastructure has been created in the East and demolished over in the West. And on the transfer of technology and skills in that direction, too. Once occupied Japan had been making goods for the US market after World War II for a decade or so, there came the ascendancy of those manufacturing industries into designing and making their own invented and developed products - and gigantic Japanese industries and companies were born that still exist today and are world leaders. The same is possible for China in the future. The technology and infrastructure transfers are one-time events, to the advantage of whom? China put men in space recently, the first one was sent up while the USA was catching lifts on Russian Soyuz rockets to the International Space Station! What happens then, in a future war situation when manufacturing capability needs to be ramped up rapidly and adapted to produce large numbers of weapons and vehicles? Er, we lose! The Iraq and Afghanistan wars were not won in 21 days with US technological advantage - in fact, they were not won! They are still going on and need manpower, fuel and 'gear' in huge amounts. Technological leadership is no guarantee of victory; it's not enough. And who says that US technological leadership will last or has lasted?
I personally believe (and I don't have much to substantiate it) that the post-industrial service/financial economy is likely to be merely a transitional phase, not a lasting thing. It may mark the transition between wealth and poverty. From riches to bankruptcy. It coincides with the drawing down of the savings of Western nations to nothing. A great opportunity may come soon for the dollar-rich Arab oil exporters and Chinese/Japanese gadget exporters to buy up much of the West at knock down prices, to get rid of their depreciating dollar earnings and buy something real, perhaps to buy natural resources and that 'best' US technology for their own use!
Yet another factor is that the 'original' Industrial Revolution took place in the period of a metallic monetary standard with highly stable currencies: either a bimetallic standard as in the USA before 1873 or under a gold standard as in the USA post 1873 and the UK post 1817 (well, much of Europe had gold and silver money in various forms from the time of the Greeks and Romans 2000+ years ago). This resulted in the lower economic volatility. If you then look at the time since the inception of the Federal Reserve in 1913, the first ending of the Gold Standard in England in 1914, the final endings of the Gold Standard in England in 1931 and the USA in 1933 and the final and complete depegging of the US dollar from gold for international transactions in 1971 (phew), we have faced ever-increasing volatility in the markets, except perhaps for 'stability' engineered by direct government intevention in the financial markets. Please take a look at my earlier post about the Dow-Gold ratio and the accompanying chart. The ratio between the value of the stock market and gold has oscillated wildly since the early 1900s in a pattern resembling a positive feedback type loop with increasing amplitude; that is, increasing volatility, with a period of 30-40 years, perhaps reflecting the 60-70 year Kondratieff cycle, with half the period.
Therefore, the markets have less and less idea of the value of anything, it seems. The Dow:Gold ratio has been 1:1 (1980) and it has been 43:1 (2000). This is ridiculous! How can there be so much uncertainty? This is part of the reason we have had the Internet stock market bubble and the absurd housing bubble recently, together with interest rates set by central banks ranging from 0% to 20% in the time between 1980 and 2008. Evidently, in our fiat paper money system, real values are becoming incalculable. This creates tremendous malinvestments in the economy as there is overinvestment in one sector followed by a crash and then overinvestment in another sector. Who benefits? Of course, whoever is moving the money around and taking commissions benefits! Also, those who can read the trends could benefit by timing investments and switching between stock, bonds, housing and commodities at the right times. However, the benefit does not go to any productive citizens. This is probably the number one reason why the rich get richer all the time - and of course it is fuelled even more by monetary inflation, because they can benfit by investing their high disposable income, whereas the working class and middle class cannot (they don't have any)! It is insane. In the longer term view, we are therefore surely in a period of greatly increasing volatility, not decreasing volatility!
Nothing much, except the housing crash! 2008-04-09
Wednesday 9th April 2008: What to report? Nothing much, except the housing crash?
Well, today I am reporting that there is nothing to report. The gold price appears to be in some sort of a consolidation in the $910-935 area in the last week or so and no large move has happened since the big selloff of late March. Goldbug rumours abound that the US Government and Fed engineered the selloff, perhaps closing off a large long position held by a leading investment bank that has to be rescued lately. However, this is only conjecture.
There were also big down moves in silver, platinum, palladium and some other commodities at the time, in tandem with gold, so what about the cause of those moves?
Anyway, we are early for the major seasonal correction in gold that usually takes place in May (see the charts for year 2006 and possibly 2004 as possible parallels). Maybe there is time for one more leg up before mid-May but the window is narrow and getting narrower. Instead, the price action may depend more upon the timing of events in the grand credit crunch. It is reported that housing prices in the UK took a 2.5% monthly dip in March, the biggest drop since 1992, reported here UK house prices tumble most since 1992 and here House prices plummet in U.K.
Aren't the news media splendid? First they sucked the public in to the largest investment speculative mania in history with a TV programme every day on some aspect of property, property, property, then as soon as it starts to crumble, they come up with titles like this! Tide turns on ludicrous boom in house prices.
The chart accompanying the article is interesting. House price to income ratio peaked at about 6.25 against a long term average of about 3.5. To revert to the mean would therefore need a price drop of 44%. However, previous swings always go past the mean to the other side. If the ratio drops to where it went in the last downturn (about 2.8 in the mid-1990s), that would imply a decline of 55% from the peak is coming.
This was a media fed boom if anything ever was! The sucker public have been left holding the baby, with monstrous debts and soon to be plummeting equity.
Meanwhile, the TV networks are busy covering the ongoing attempts to sabotage the 2008 Chinese Olympics to distract the masses from this enormous credit/debt disaster that is already at hand. What is the point of worrying about China's human rights record now? None whatsoever, of course. It was relevant only before China's bid was accepted, which was years ago. The bid should have been conditional upon changes being made by China to improve human rights before the decision was made, not after. All this 'concern' over Tibet is just establishment media mischief-making. They don't give a flying f*** about Tibet. China has been doing to well for their liking, as we enter a crisis in the Western world.
Well, today I am reporting that there is nothing to report. The gold price appears to be in some sort of a consolidation in the $910-935 area in the last week or so and no large move has happened since the big selloff of late March. Goldbug rumours abound that the US Government and Fed engineered the selloff, perhaps closing off a large long position held by a leading investment bank that has to be rescued lately. However, this is only conjecture.
There were also big down moves in silver, platinum, palladium and some other commodities at the time, in tandem with gold, so what about the cause of those moves?
Anyway, we are early for the major seasonal correction in gold that usually takes place in May (see the charts for year 2006 and possibly 2004 as possible parallels). Maybe there is time for one more leg up before mid-May but the window is narrow and getting narrower. Instead, the price action may depend more upon the timing of events in the grand credit crunch. It is reported that housing prices in the UK took a 2.5% monthly dip in March, the biggest drop since 1992, reported here UK house prices tumble most since 1992 and here House prices plummet in U.K.
Aren't the news media splendid? First they sucked the public in to the largest investment speculative mania in history with a TV programme every day on some aspect of property, property, property, then as soon as it starts to crumble, they come up with titles like this! Tide turns on ludicrous boom in house prices.
The chart accompanying the article is interesting. House price to income ratio peaked at about 6.25 against a long term average of about 3.5. To revert to the mean would therefore need a price drop of 44%. However, previous swings always go past the mean to the other side. If the ratio drops to where it went in the last downturn (about 2.8 in the mid-1990s), that would imply a decline of 55% from the peak is coming.
This was a media fed boom if anything ever was! The sucker public have been left holding the baby, with monstrous debts and soon to be plummeting equity.
Meanwhile, the TV networks are busy covering the ongoing attempts to sabotage the 2008 Chinese Olympics to distract the masses from this enormous credit/debt disaster that is already at hand. What is the point of worrying about China's human rights record now? None whatsoever, of course. It was relevant only before China's bid was accepted, which was years ago. The bid should have been conditional upon changes being made by China to improve human rights before the decision was made, not after. All this 'concern' over Tibet is just establishment media mischief-making. They don't give a flying f*** about Tibet. China has been doing to well for their liking, as we enter a crisis in the Western world.
Gold whacked - top in 'Fool's Gold?' 2008-04-01
Tuesday 1st April 2008: April Fool! Or Fool's Gold?
Maybe the guy who wrote 'Gold in Free Fall' was correct? Gold took a right pounding today and is now at Bid/Ask $881.20 - $882.00 at Apr 01, 2008 16:26 NY Time, 46 minutes before the Spot Market closes tonight.
We are told that gold has tumbled more than 3% ($30 today) because the dollar has rallied! As I write now, spot gold is quoted at $881.30, -$34.40, -3.76% on Kitco. Yesterday's London gold fixes were $937.25 and $933.50; todays were $897.00 and $887.75. Really, that's more like a $40 drop or 4%. Meanwhile the US dollar index has rallied all the way to ... 72.55, up 0.70, up 1%. That's quite a lot, but enough to empty the tank on gold buyers? gold has a relatively small market compared to currency markets, so maybe. Big rally in stocks as well. The Dow Jones Industrial Average is at 12,654.36, up +391.47. I wonder why? Perhaps they were oversold. Perhaps everyone thinks the credit crisis is over. Poor delusional people!
Possibly, even the amazing Jim Sinclair was also a bit premature on his website, fading out his $887.50 'Angel', indicting his confidence that a previous test of $887.50 had held many weeks ago and it was now out of play. Well, it's still in play, Jim! Especially if we get a real break below that. See his post on his site "Posted On: Friday, March 28, 2008, 12:25:00 PM EST, Do Not Fear, Author: Jim Sinclair" at the bottom of his homepage right now. The picture is also here.
Maybe the guy who wrote 'Gold in Free Fall' was correct? Gold took a right pounding today and is now at Bid/Ask $881.20 - $882.00 at Apr 01, 2008 16:26 NY Time, 46 minutes before the Spot Market closes tonight.
We are told that gold has tumbled more than 3% ($30 today) because the dollar has rallied! As I write now, spot gold is quoted at $881.30, -$34.40, -3.76% on Kitco. Yesterday's London gold fixes were $937.25 and $933.50; todays were $897.00 and $887.75. Really, that's more like a $40 drop or 4%. Meanwhile the US dollar index has rallied all the way to ... 72.55, up 0.70, up 1%. That's quite a lot, but enough to empty the tank on gold buyers? gold has a relatively small market compared to currency markets, so maybe. Big rally in stocks as well. The Dow Jones Industrial Average is at 12,654.36, up +391.47. I wonder why? Perhaps they were oversold. Perhaps everyone thinks the credit crisis is over. Poor delusional people!
Possibly, even the amazing Jim Sinclair was also a bit premature on his website, fading out his $887.50 'Angel', indicting his confidence that a previous test of $887.50 had held many weeks ago and it was now out of play. Well, it's still in play, Jim! Especially if we get a real break below that. See his post on his site "Posted On: Friday, March 28, 2008, 12:25:00 PM EST, Do Not Fear, Author: Jim Sinclair" at the bottom of his homepage right now. The picture is also here.
Major gold top predicted (link). 2008-03-26
Wednesday 26th March 2008. Back to $950.
The gold price is back up at $950 today, but David Nichols has an article on Kitco called 'Gold in Free Fall' asserting that the $1000+ top was a 'major, multi-month top' and there will be further falls, after a bounce to about $966. The next few days will test his prediction!
The gold price is back up at $950 today, but David Nichols has an article on Kitco called 'Gold in Free Fall' asserting that the $1000+ top was a 'major, multi-month top' and there will be further falls, after a bounce to about $966. The next few days will test his prediction!
After record drop! 2008-03-22.
Saturday 22nd March 2008. Record drop!
A strange thing happened on Friday. Good Friday, that is. On Kitco, the spot market was said to be open but the gold price was a flat line both on the Kitco daily charts and on www.bullionvault.com. Here is what the Kitco chart looked like:
![[Most Recent Quotes from www.kitco.com]](http://members.aol.com/goldsite/goldflatline2008-03-21.bmp)
I would like to know why this happened: if the spot market was actually closed or if the gold price was virtually exactly constant during this day. It's very strange and it comes after a sharp $100 fall in gold earlier in the work followed by a $20 bounce. Actually, the other precious metal charts for Ag, Pt and Pd were similar, with the silver chart flatlining a little later than gold, so maybe the markets were closed - but why did it say it was open? Maybe it was an error.
I received an e-mail explaining that the NY spot market was closed on that day due to Good Friday, which I might have expected. I now guess that the spot market was open on other parts of the day in Asia, etc., so the OPEN statement was on all day but for that few hours in the middle, the market didn't operate because NYC was closed, if you get my meaning. So we got a flat gold price!
A strange thing happened on Friday. Good Friday, that is. On Kitco, the spot market was said to be open but the gold price was a flat line both on the Kitco daily charts and on www.bullionvault.com. Here is what the Kitco chart looked like:
I would like to know why this happened: if the spot market was actually closed or if the gold price was virtually exactly constant during this day. It's very strange and it comes after a sharp $100 fall in gold earlier in the work followed by a $20 bounce. Actually, the other precious metal charts for Ag, Pt and Pd were similar, with the silver chart flatlining a little later than gold, so maybe the markets were closed - but why did it say it was open? Maybe it was an error.
I received an e-mail explaining that the NY spot market was closed on that day due to Good Friday, which I might have expected. I now guess that the spot market was open on other parts of the day in Asia, etc., so the OPEN statement was on all day but for that few hours in the middle, the market didn't operate because NYC was closed, if you get my meaning. So we got a flat gold price!
Record gold drop! 2008-03-19
Wednesday 19th March 2008. Record drop!
Today there was a record drop of about $59 in the gold price, along with falls in silver, platinum and plalladium. Obviously there is spin and sentiment that the Fed's rescue attempt of the financial system is going to work just fine and no-one will pay the price. Of course, everyone will pay the price, maybe not just now but soon enough. And probably soon enough for the investment bankers who will have time to get out of town with their money before the fertiliser hits the fan.
I think we are witnessing the biggest load of nonsense, cronyism and managed media and markets since the days of, oh, who knows, maybe the days of Hitler? Stalin? Make no mistake, the government and those for whom they act are confiscting your wealth and that of your children, which they will probably never see.
If one of America's biggest brokerages was going bust last Friday and got sold on a Sunday for $240 million when its headquarters building alone is reckoned to be worth $1.2 billion, then something is very wrong indeed with the financial system!
All markets look dangerously volatile. As for myself, I am withdrawing some cash from the bank on a daily basis, in case the bank decides it needs to close with my money still inside. Down $59 today but look at the 1 year gold chart on Kitco.
![[Most Recent Quotes from www.kitco.com]](http://www.kitco.com/images/live/au_go_0365_ny.gif)
Today there was a record drop of about $59 in the gold price, along with falls in silver, platinum and plalladium. Obviously there is spin and sentiment that the Fed's rescue attempt of the financial system is going to work just fine and no-one will pay the price. Of course, everyone will pay the price, maybe not just now but soon enough. And probably soon enough for the investment bankers who will have time to get out of town with their money before the fertiliser hits the fan.
I think we are witnessing the biggest load of nonsense, cronyism and managed media and markets since the days of, oh, who knows, maybe the days of Hitler? Stalin? Make no mistake, the government and those for whom they act are confiscting your wealth and that of your children, which they will probably never see.
If one of America's biggest brokerages was going bust last Friday and got sold on a Sunday for $240 million when its headquarters building alone is reckoned to be worth $1.2 billion, then something is very wrong indeed with the financial system!
All markets look dangerously volatile. As for myself, I am withdrawing some cash from the bank on a daily basis, in case the bank decides it needs to close with my money still inside. Down $59 today but look at the 1 year gold chart on Kitco.
Man bites Bear! 2008-03-17
Monday 17th March 2008 22.40 p.m.
One of the largest American brokerages and one of the 20 Primary Dealers of the US banking system, Bear Stearns was effectively swallowed up at the weekend at an extremely discounted price, covered in this article on Bloomberg: JPMorgan Chase to Buy Bear Stearns for $240 Million. Shareholders apparently will get $2 a share, compared to last Friday's close of about $30. The stock had already fallen from the mid-$50s range first thing on Friday, so the 93% discount mentioned here: Lehman Falls After Bear Stearns Sold for 93% Discount is a bit conservative! Actually, the 52-week high for the stock was 159.36$ last year, according to its Yahoo! Finance chart page. Apparently, Bear Stears' HQ building is worth $1.2 billion alone! JPMorgan Surges After Striking Deal for Bear Stearns. It looks like JPM got a good deal out of it by playing PacMan. Maybe a "consolidation" of the US banking system is at hand?
Bob Moriarty on the Korelin Economics Report last Saturday mused that if Bear Stears was allowed to fail, banks would shut all across the world.
Gold hit $1030+ earlier today on the Asian market and was strong until the New York market opened. Surprise, surprise! Stock markets all over the world were down quite a bit, but the Dow made a late recovery, surprise, surprise. Am I being cynical? Do I smell the scent of money being dropped out of helicopters in the morning? However, both the Nikkei 225 and the Dow 30 are under 12,000 at their respective closes of 11,787.51 and 11972.3 this evening.
Meanwhile, in Little Britain, gold reached and passed the historical landmark of £500 per ounce. The London AM and PM Fixes were £508.45 & £503.69 (that's $1023.50 & $1011.25 - or €649.51 & €641.58). There was a wide trading range today in the spot market from $993.30 to $1028.50. Volatility!
[Addendum 2008-04-24: This was the peak in gold at around $1030.]
One of the largest American brokerages and one of the 20 Primary Dealers of the US banking system, Bear Stearns was effectively swallowed up at the weekend at an extremely discounted price, covered in this article on Bloomberg: JPMorgan Chase to Buy Bear Stearns for $240 Million. Shareholders apparently will get $2 a share, compared to last Friday's close of about $30. The stock had already fallen from the mid-$50s range first thing on Friday, so the 93% discount mentioned here: Lehman Falls After Bear Stearns Sold for 93% Discount is a bit conservative! Actually, the 52-week high for the stock was 159.36$ last year, according to its Yahoo! Finance chart page. Apparently, Bear Stears' HQ building is worth $1.2 billion alone! JPMorgan Surges After Striking Deal for Bear Stearns. It looks like JPM got a good deal out of it by playing PacMan. Maybe a "consolidation" of the US banking system is at hand?
Bob Moriarty on the Korelin Economics Report last Saturday mused that if Bear Stears was allowed to fail, banks would shut all across the world.
Gold hit $1030+ earlier today on the Asian market and was strong until the New York market opened. Surprise, surprise! Stock markets all over the world were down quite a bit, but the Dow made a late recovery, surprise, surprise. Am I being cynical? Do I smell the scent of money being dropped out of helicopters in the morning? However, both the Nikkei 225 and the Dow 30 are under 12,000 at their respective closes of 11,787.51 and 11972.3 this evening.
Meanwhile, in Little Britain, gold reached and passed the historical landmark of £500 per ounce. The London AM and PM Fixes were £508.45 & £503.69 (that's $1023.50 & $1011.25 - or €649.51 & €641.58). There was a wide trading range today in the spot market from $993.30 to $1028.50. Volatility!
[Addendum 2008-04-24: This was the peak in gold at around $1030.]
Depression session :-( 2008-03-15
Saturday 15th March 2008. Depression :-(
On the first hour of the Financial Sense broadcast today, Frank Barbera says we are at the "fork in the road" that could lead to economic collapse in the USA and a much lower US Dollar. Not certain but possible. The Fed will likely cut interest rates next week by upto a full 1% point and that may actually aggravate the problem by causing the US$ to fall and commodity prices to rise even more, dampening consumer demand. He mentions what I have mentioned before: that we are seeing rising prices but not rising wages and this is a major and bad difference between now and the stagflationary 1970s. Surely this points to an imminent inflationary depression then? It's the ultimate inflationary-deflationary squeeze. Rising costs, falling revenues, falling "real terms" asset values. A credit crunch leading to less business investment, at the same time as collapsing "real terms" house prices, a distressed consumer, falling corporate profits, collapsing "real terms" stock market, higher unemployment, falling tax revenues, bankrupt municipalities, bankrupt social security and Medicare, feeding into the above. For that read poverty. That is the reverse of the "wealth effect" that was caused by the excessively low interest rates and rising housing prices over recent years that allowed excessive debt and cash out refinancing based on increasing perception of home values. It was only perception, a sick delusion and it is about to be undone, in my humble opinion. Gary Dorsch also mentions a similar aggravating confluence of factors in his interview straight afterwards.
On the other hand if I was really a contrarian, I might say that since the financial catastrophe is being exposed on the ordinary daily news headlines, maybe it's almost over and we will get a giant bounce in the markets. That is the kind of thing that Clif Droke might say as a fascinating to read contrarian market technician. However, just because the approaching 10km meteorite heading for earth is on the news constantly doesn't mean that is won't hit us. I think this is more the kind of situation that we face. At any rate, there is still also a heap of denial about the seriousness of the credit and derivative problems and people are not being told that it will wipe out the value of their homes, pension funds and other assets. They are not being warned that their bank could be closed one day and their life savings swallowed up into a big black hole of Wall Street corruption. The bank run on Northern Rock and now the run on Bear Stearns yesterday have been considered to be the exceptions. They are not yet the norm. So maybe it is not yet time for contrarians to rush back into the markets. Just a thought.
We also have the confluence of several 'round numbers' and long held forecasts. Steve Saville's wonderful US Dollar graph posted on the web years ago (in 2003) showed the US$ and the Swiss Franc reaching parity sometime around 2007 and at the same time the US Dollar Index bottoming at 70. I think that Jim Sinclair and others had US Dollar Index targets of 72, at least as a stop point on the way further down towards Jim's ultimate target of 52. Well, this weekend we have the Swiss Franc virtually at parity with the US Dollar (it's actually closed above it - it's $1.0020 to the CHF) and the US Dollar Index has been under 72 most of the week (now 71.65 on Kitco). Then we have US$1000+ gold, US$100+ oil, the US Dollar breaking below 100 Japanese Yen, 1000 Swiss Franc gold (1000.05 CHF!), AU$1000+ gold in Australia, almost 100,000 Yen gold (just come off its peak a little), almost CAD$1000 Canadian Dollar gold, almost £500 gold (496+) in Sterling and possibly some others that I have missed. What an excellent mine of information is to be found on the Kitco front page!
My call here is for a hyperinflationary/hyperdeflationary depression to emerge over the next few years in the USA and likely in most of the Western world or even further afield. New definitions for inflation and deflation will have to be sought because all existing definitions don't really help much with this strange situation. Just think of a massive and lasting fall in the standard of living and that's all that matters. The rest is just technical waffle.
Bonds: One facinating symptom of the credit crunch is that everyone and his dog is trying to raise cash and lots of money (billions and billions as the late great Carl Sagan would have said) is flowing into US Treasury bonds and notes. So much that there seems to be a revived bull market in US Treasuries at the moment. Jim Puplava mentions that the yield onthe 2 Year Note is a measly 1.45% while the yield on the 10 Year Note is a stingy 3.1% even as headline (probably grossly understated) CPI inflation is over 4%. That looks like a good way to have your money eaten away slowly but surely, although the assumption must be that your money is "safe" with the US Treasury and total loss is not possible.
Would it not then be grimly ironic if the USA was to default on its Sovereign debt at some time in the not too distant future?
On the first hour of the Financial Sense broadcast today, Frank Barbera says we are at the "fork in the road" that could lead to economic collapse in the USA and a much lower US Dollar. Not certain but possible. The Fed will likely cut interest rates next week by upto a full 1% point and that may actually aggravate the problem by causing the US$ to fall and commodity prices to rise even more, dampening consumer demand. He mentions what I have mentioned before: that we are seeing rising prices but not rising wages and this is a major and bad difference between now and the stagflationary 1970s. Surely this points to an imminent inflationary depression then? It's the ultimate inflationary-deflationary squeeze. Rising costs, falling revenues, falling "real terms" asset values. A credit crunch leading to less business investment, at the same time as collapsing "real terms" house prices, a distressed consumer, falling corporate profits, collapsing "real terms" stock market, higher unemployment, falling tax revenues, bankrupt municipalities, bankrupt social security and Medicare, feeding into the above. For that read poverty. That is the reverse of the "wealth effect" that was caused by the excessively low interest rates and rising housing prices over recent years that allowed excessive debt and cash out refinancing based on increasing perception of home values. It was only perception, a sick delusion and it is about to be undone, in my humble opinion. Gary Dorsch also mentions a similar aggravating confluence of factors in his interview straight afterwards.
On the other hand if I was really a contrarian, I might say that since the financial catastrophe is being exposed on the ordinary daily news headlines, maybe it's almost over and we will get a giant bounce in the markets. That is the kind of thing that Clif Droke might say as a fascinating to read contrarian market technician. However, just because the approaching 10km meteorite heading for earth is on the news constantly doesn't mean that is won't hit us. I think this is more the kind of situation that we face. At any rate, there is still also a heap of denial about the seriousness of the credit and derivative problems and people are not being told that it will wipe out the value of their homes, pension funds and other assets. They are not being warned that their bank could be closed one day and their life savings swallowed up into a big black hole of Wall Street corruption. The bank run on Northern Rock and now the run on Bear Stearns yesterday have been considered to be the exceptions. They are not yet the norm. So maybe it is not yet time for contrarians to rush back into the markets. Just a thought.
We also have the confluence of several 'round numbers' and long held forecasts. Steve Saville's wonderful US Dollar graph posted on the web years ago (in 2003) showed the US$ and the Swiss Franc reaching parity sometime around 2007 and at the same time the US Dollar Index bottoming at 70. I think that Jim Sinclair and others had US Dollar Index targets of 72, at least as a stop point on the way further down towards Jim's ultimate target of 52. Well, this weekend we have the Swiss Franc virtually at parity with the US Dollar (it's actually closed above it - it's $1.0020 to the CHF) and the US Dollar Index has been under 72 most of the week (now 71.65 on Kitco). Then we have US$1000+ gold, US$100+ oil, the US Dollar breaking below 100 Japanese Yen, 1000 Swiss Franc gold (1000.05 CHF!), AU$1000+ gold in Australia, almost 100,000 Yen gold (just come off its peak a little), almost CAD$1000 Canadian Dollar gold, almost £500 gold (496+) in Sterling and possibly some others that I have missed. What an excellent mine of information is to be found on the Kitco front page!
My call here is for a hyperinflationary/hyperdeflationary depression to emerge over the next few years in the USA and likely in most of the Western world or even further afield. New definitions for inflation and deflation will have to be sought because all existing definitions don't really help much with this strange situation. Just think of a massive and lasting fall in the standard of living and that's all that matters. The rest is just technical waffle.
Bonds: One facinating symptom of the credit crunch is that everyone and his dog is trying to raise cash and lots of money (billions and billions as the late great Carl Sagan would have said) is flowing into US Treasury bonds and notes. So much that there seems to be a revived bull market in US Treasuries at the moment. Jim Puplava mentions that the yield onthe 2 Year Note is a measly 1.45% while the yield on the 10 Year Note is a stingy 3.1% even as headline (probably grossly understated) CPI inflation is over 4%. That looks like a good way to have your money eaten away slowly but surely, although the assumption must be that your money is "safe" with the US Treasury and total loss is not possible.
Would it not then be grimly ironic if the USA was to default on its Sovereign debt at some time in the not too distant future?
$1000 gold closing price! 2008-03-14
Friday 14th March 2008. Today's the day for $1000 gold closing price!
While at work today, I popped into our Samples laboratory and the radio was on. The newsreader said that Bear Stears had gone to the Federal Reserve US Central bank for an emergency bailout. I thought they had done that already. Must be another one. Anyway, when I looked at the Kitco.com website, gold was over $1000, not so surprising given the unfolding financial disaster. The 'Powers That Be' seem to have put up a bit of a fight to hold gold below $1000 for a couple of weeks while sister oil blasted through $100 to over $110, but this holding operation wasn't sustained and gold made a daily and therefore also a weekly close over $1000 for the first time ever. Kitco's weekend display shows the spot market bid/ask prices at 1002.50/1003.30.
While at work today, I popped into our Samples laboratory and the radio was on. The newsreader said that Bear Stears had gone to the Federal Reserve US Central bank for an emergency bailout. I thought they had done that already. Must be another one. Anyway, when I looked at the Kitco.com website, gold was over $1000, not so surprising given the unfolding financial disaster. The 'Powers That Be' seem to have put up a bit of a fight to hold gold below $1000 for a couple of weeks while sister oil blasted through $100 to over $110, but this holding operation wasn't sustained and gold made a daily and therefore also a weekly close over $1000 for the first time ever. Kitco's weekend display shows the spot market bid/ask prices at 1002.50/1003.30.
$1000 gold today! 2008-03-13
Thursday 13th March 2008. Today's the day for $1000 gold!
This is it! Finally the day I hoped but perhaps never expected to see when I started taking an interest in the gold market in the year 2000. Gold finally reached $1000 per ounce, for a brief moment. No spectacular breakout, just a mere touch at that level in the spot market and the futures too. Kitco is displaying the high as $1000.60 in the spot market and a Marketwatch article mentions $1001.50 in the futures on the NYMEX exchange.
Presently the level is back at Bid/Ask $991.10/$991.90.
This is it! Finally the day I hoped but perhaps never expected to see when I started taking an interest in the gold market in the year 2000. Gold finally reached $1000 per ounce, for a brief moment. No spectacular breakout, just a mere touch at that level in the spot market and the futures too. Kitco is displaying the high as $1000.60 in the spot market and a Marketwatch article mentions $1001.50 in the futures on the NYMEX exchange.
Presently the level is back at Bid/Ask $991.10/$991.90.
A shocking bounce & new all-time high! 2008-03-05
Wednesday 5th March 2008. A shocking bounce and new all-time high!
Gold took a real hit yesterday. One might have expected a few weeks of consolidation after an instantaneous $30 hit to the price (3%) in any asset, including gold. Recent buyers would be likely to be selling on stop losses creating a cascade of selling pressure, taking the price down in gold's case typically $50 or more inthe short term or even $150-200 if the correction was going to be a major one like the one from May 2006 until mid-2007.
However, this didn't happen. Today, the trend completelty reversed and gold shot up over $30 to make a new all-time high. This is something I have never seen before in this bull market, not as glaringly obviously anyway, not even in the spike up in April-May 2006. See the excellent Dan Norcini chart on a pdf file here.
Maybe gold can reach $1000 before tonight's close or in the Asian market while the Americans are sleeping. I shouldn't think that short sellers will get much sleep tonight especially if they have no access to the overnight markets! Bid/Ask is $989.30/990.10 at 17:15 New York time and the spot market is closed. Missed a thousand by a whisker then! As an aside, I just noticed that on Kitco, the 1 year change in the gold price is given as +$351.70 i.e. +55.16% ! WOW!
On the NYMEX, gold futures had highs of 992.70 (March contract), $995.20 (April), $996.00 (May) and $1000.10 (June contract). So the near months' contracts hit virtually 1000, June's hit 1000+ over already but closed at $996.70. The August 2008 contract actually closed at $1001.20 andall later contracts are above that.
With the March, April and May contracts closing at 992.20, 991.10 and 990.00, does that mean we have a hint of 'backwardation' in the market? Is it time for Antal Fekete to remind us of his theory of what that would mean? This exceedingly bright man who often presents a challenging but rewarding read also wrote: GOLD, INTEREST, BASIS and GOLD - HOW HIGH IS HIGH? as well as many others. Try Googling him! I think it's fair to say that this guy believes in never selling gold: "Selling gold after a surge in the gold price is akin to canceling fire insurance after surviving unscathed a devastating fire destroying homes and property in the neighborhood. ... We do know that there were passengers aboard the sinking Titanic willing to sell their life-savers for cash."
i.e. "a low and falling basis and, in particular, backwardation, are always a warning signal indicating tightness in the cash market. ... In a nutshell, cash prices always appreciate relative to futures prices in case of a shortage, showing that delivery problems exist as the warehouseman is unable to replenish his dwindling supplies fast enough." He also connects it to hyperinflation and the cornering of the precious metals markets. The essay goes well beyond a single topic. For a good education, there it is on Jim Puplava's Financial Sense website, yet again!
Gold took a real hit yesterday. One might have expected a few weeks of consolidation after an instantaneous $30 hit to the price (3%) in any asset, including gold. Recent buyers would be likely to be selling on stop losses creating a cascade of selling pressure, taking the price down in gold's case typically $50 or more inthe short term or even $150-200 if the correction was going to be a major one like the one from May 2006 until mid-2007.
However, this didn't happen. Today, the trend completelty reversed and gold shot up over $30 to make a new all-time high. This is something I have never seen before in this bull market, not as glaringly obviously anyway, not even in the spike up in April-May 2006. See the excellent Dan Norcini chart on a pdf file here.
Maybe gold can reach $1000 before tonight's close or in the Asian market while the Americans are sleeping. I shouldn't think that short sellers will get much sleep tonight especially if they have no access to the overnight markets! Bid/Ask is $989.30/990.10 at 17:15 New York time and the spot market is closed. Missed a thousand by a whisker then! As an aside, I just noticed that on Kitco, the 1 year change in the gold price is given as +$351.70 i.e. +55.16% ! WOW!
On the NYMEX, gold futures had highs of 992.70 (March contract), $995.20 (April), $996.00 (May) and $1000.10 (June contract). So the near months' contracts hit virtually 1000, June's hit 1000+ over already but closed at $996.70. The August 2008 contract actually closed at $1001.20 andall later contracts are above that.
With the March, April and May contracts closing at 992.20, 991.10 and 990.00, does that mean we have a hint of 'backwardation' in the market? Is it time for Antal Fekete to remind us of his theory of what that would mean? This exceedingly bright man who often presents a challenging but rewarding read also wrote: GOLD, INTEREST, BASIS and GOLD - HOW HIGH IS HIGH? as well as many others. Try Googling him! I think it's fair to say that this guy believes in never selling gold: "Selling gold after a surge in the gold price is akin to canceling fire insurance after surviving unscathed a devastating fire destroying homes and property in the neighborhood. ... We do know that there were passengers aboard the sinking Titanic willing to sell their life-savers for cash."
i.e. "a low and falling basis and, in particular, backwardation, are always a warning signal indicating tightness in the cash market. ... In a nutshell, cash prices always appreciate relative to futures prices in case of a shortage, showing that delivery problems exist as the warehouseman is unable to replenish his dwindling supplies fast enough." He also connects it to hyperinflation and the cornering of the precious metals markets. The essay goes well beyond a single topic. For a good education, there it is on Jim Puplava's Financial Sense website, yet again!
Tumble time! 2008-03-04
Tuesday 4th March 2008. Tumble time!
Gold took a real hit today from massive selling (now who might havedone that)? John Nadler on Kitco called it profit taking presumably by long traders but if they were in at $990 and it went down to $965, then who made the profit? Answer: the guys on the other side of the trade; the short sellers. See tomorrow above.
Gold took a real hit today from massive selling (now who might havedone that)? John Nadler on Kitco called it profit taking presumably by long traders but if they were in at $990 and it went down to $965, then who made the profit? Answer: the guys on the other side of the trade; the short sellers. See tomorrow above.
Sister metals Pt & Pd soar! 2008-03-03
Monday 3rd March 2008 10.38 p.m. Sister metals soar!
Market prices: Gold $983.50, Silver $20.31, Platinum $2231, Palladium $578, Rhodium $8985. Platinum is still, as often the case, 100 times the price of silver! This has applied (generally, if not precisely) since silver was $5 and platinum $500 in the not so distant past.
Today, platinum and gold made new all-time highs yet again. There is little point in saying this every time it happens; it's just repetitive. So lets look at the trends and the market commentary.
Bloomberg quotes Ron Goodis, "a trader at Equidex Brokerage Group Inc. in Closter, New Jersey, who has been buying and selling gold since 1978," as predicting $750 palladium and $3000 platinum by year end. He's no fool; he saw the latter phase of the last big major market in metals and the whole time since. He also knows inflation when he sees it!
Meanwhile, David Davis, an analyst at Credit Suisse Standard Securities in Johannesburg sees silver at $25 this year. No kidding! Meanwhile, on the Mineweb site, HSBC forecasts significant palladium deficit.
This is the first time I have seen any comment about a possible palladium deficit (platinum yes but palladium no, until now). Always talk has been of large Russian stockpiles and that was the case while palladium was at $180, $200, $250, $300, etc., right up to $350+ but now we are at $578 the HSBC pops up with this comment! HSBC metals analyst Victor Flores suggested on Sunday that no clear evidence exists of a physical platinum shortage (perhaps this comment is alluding to the power shortages in South Africa not yet actually creating a Pt shortage - not yet). A metals analyst working on a Sunday, eh? The market is moving fast; no time for a weekend off! :-) He sees a platinum high of $2,625 per ounce in 2008.
I really wanted to by some plalladium in 2004-2005 and could never find much. Found a guy in the USA who offered to sell me four 1 ounce bars for $1000. I thought that was a bit of a risk with all these Russian surpluses but there you go. Now we have an announced deficit lurking. There are also Palladium Maples available from the Royal Canadian Mint. Who knows where you could get them in England for less than a huge premium? Basically, you can't. That is what put me off buying Platinum at $500 in 2002, the addition of 17.5% VAT and a massive premium on 1 ounce coins to start with - these costs would easily have been absorbed at $2000 selling price now! Palladium at $200 in 2004-2005 was nice and cheap, a $50 premium was do-able. I then watched as I owned a little palladium and no platinum and platinum soared. It makes me a little happier that now the sister metal Palladium is following - in fact it has risen more in % terms in the last 6 months than Platinum. So I don't think I shall be buying any platinum now. Too expensive (HA! I thought it was too expensive at $460 when I first looked at it)! It just shows.
Today's proverb?
It's not the price that matters, for shares or for commodities; it's the UPSIDE that counts!
Market prices: Gold $983.50, Silver $20.31, Platinum $2231, Palladium $578, Rhodium $8985. Platinum is still, as often the case, 100 times the price of silver! This has applied (generally, if not precisely) since silver was $5 and platinum $500 in the not so distant past.
Today, platinum and gold made new all-time highs yet again. There is little point in saying this every time it happens; it's just repetitive. So lets look at the trends and the market commentary.
Bloomberg quotes Ron Goodis, "a trader at Equidex Brokerage Group Inc. in Closter, New Jersey, who has been buying and selling gold since 1978," as predicting $750 palladium and $3000 platinum by year end. He's no fool; he saw the latter phase of the last big major market in metals and the whole time since. He also knows inflation when he sees it!
Meanwhile, David Davis, an analyst at Credit Suisse Standard Securities in Johannesburg sees silver at $25 this year. No kidding! Meanwhile, on the Mineweb site, HSBC forecasts significant palladium deficit.
This is the first time I have seen any comment about a possible palladium deficit (platinum yes but palladium no, until now). Always talk has been of large Russian stockpiles and that was the case while palladium was at $180, $200, $250, $300, etc., right up to $350+ but now we are at $578 the HSBC pops up with this comment! HSBC metals analyst Victor Flores suggested on Sunday that no clear evidence exists of a physical platinum shortage (perhaps this comment is alluding to the power shortages in South Africa not yet actually creating a Pt shortage - not yet). A metals analyst working on a Sunday, eh? The market is moving fast; no time for a weekend off! :-) He sees a platinum high of $2,625 per ounce in 2008.
I really wanted to by some plalladium in 2004-2005 and could never find much. Found a guy in the USA who offered to sell me four 1 ounce bars for $1000. I thought that was a bit of a risk with all these Russian surpluses but there you go. Now we have an announced deficit lurking. There are also Palladium Maples available from the Royal Canadian Mint. Who knows where you could get them in England for less than a huge premium? Basically, you can't. That is what put me off buying Platinum at $500 in 2002, the addition of 17.5% VAT and a massive premium on 1 ounce coins to start with - these costs would easily have been absorbed at $2000 selling price now! Palladium at $200 in 2004-2005 was nice and cheap, a $50 premium was do-able. I then watched as I owned a little palladium and no platinum and platinum soared. It makes me a little happier that now the sister metal Palladium is following - in fact it has risen more in % terms in the last 6 months than Platinum. So I don't think I shall be buying any platinum now. Too expensive (HA! I thought it was too expensive at $460 when I first looked at it)! It just shows.
Today's proverb?
It's not the price that matters, for shares or for commodities; it's the UPSIDE that counts!
Surviving to see $1000 gold? 2008-03-03.
Proverb for the day 2008-03-03:
I felt ill this morning. I want to survive to see $1000 gold and I want my 93-year-old Dad to survive too, so I can say "I told you it would, mate!" He's had to listen to my rattling on about gold for 7 years! There's almost nothing nicer than being "right" but it is annoying if you are right and you don't make any money! I have made a few quid on my predictions but not enough to give me any real sense of achievement.
"It's not the price that matters, for shares or for commodities; it's the UPSIDE that counts!"
I felt ill this morning. I want to survive to see $1000 gold and I want my 93-year-old Dad to survive too, so I can say "I told you it would, mate!" He's had to listen to my rattling on about gold for 7 years! There's almost nothing nicer than being "right" but it is annoying if you are right and you don't make any money! I have made a few quid on my predictions but not enough to give me any real sense of achievement.
"It's not the price that matters, for shares or for commodities; it's the UPSIDE that counts!"
Oil & gold records + inflation 4%/month. 2008-02-28
Friday 29th February 2008 10.07 p.m.
What a week! What a day. New records for oil and gold (all-time highs). West Texas Intermediate (Light Sweet Crude Oil) at $103.05 and gold at $976.90 on the spot market (right now at $971.50) and $978.50 on the NYMEX futures, closing at $975.
The $1000 label is now on all the gold charts, just waiting for the line to cross it. Silver futures hit $20; the spot price maxed at $19.98 and is now at $19.81. Platinum is holding on at $2161, Palladium at $567 (up 200% in just 3 years!) and Rhodium is hovering just under $9000 at $8940 (it had a high of $9040 on 20th February).
Gold has crossed some significant round figure sums recently as it approaches the key round figure of US$1000. For example, gold has broken above 1,000 Australian Dollars, 1,000 Swiss Francs, 10,000 Mexican Persos and 100,000 Japanese Yen only in the last week or so. It is not so far from £500 Sterling. These figures are shown near to the bottom of the Kitco front page but for more details, see this very useful page on their site. There you can see that the 1000 Indian Rupees per gram level in India has been left behind in the dust (since last October). It's now 1250.22 per gram! Hard luck if you didn't buy and instead waited for a chance to get it at below 1000! It hasnt't come. Of course, it might but it's looking a bit doubtful!
This is not just a dollar phenomenon. Here on Kitco you can see gold in various currencies. Try clicking on the "hard" currencies and select a period of 1 year. "Hard" currencies? Don't make me laugh! Gold up over 20% against all of them, +47.91% against the British pound, +51% against the US dollar. They are the worst performing currencies! Does this say something about the future for Anglo-American hegemony in the financial and military field? The "Other Currencies" tab has gains for gold between 24.90% in Aussie dollars to $54.89% in South African Rand (only just worse than the USD)! The Aussie $ fares the best, followed by the Canadian $ where gold is up 'only' 25.56% in the past year. AUD and CAD have both been slightly stronger than the Swiss Franc, in which unit gold has risen by 30.77%. The 'most stable currency in the world' has therefore lost 23.5% against gold 100x(1-1/1.3077) in the last 12 months. That's about 2% a month depreciation! Try pasting 100*(1-1/1.3077)= into Windows calculator.
Try looking at the 6 month charts and the figures are nearly the same. Nearly all of this move is in the last 6 months. So the best currencies in the world are actually right now depreciating at 4% a month against gold. That's some inflation!
What a week! What a day. New records for oil and gold (all-time highs). West Texas Intermediate (Light Sweet Crude Oil) at $103.05 and gold at $976.90 on the spot market (right now at $971.50) and $978.50 on the NYMEX futures, closing at $975.
The $1000 label is now on all the gold charts, just waiting for the line to cross it. Silver futures hit $20; the spot price maxed at $19.98 and is now at $19.81. Platinum is holding on at $2161, Palladium at $567 (up 200% in just 3 years!) and Rhodium is hovering just under $9000 at $8940 (it had a high of $9040 on 20th February).
Gold has crossed some significant round figure sums recently as it approaches the key round figure of US$1000. For example, gold has broken above 1,000 Australian Dollars, 1,000 Swiss Francs, 10,000 Mexican Persos and 100,000 Japanese Yen only in the last week or so. It is not so far from £500 Sterling. These figures are shown near to the bottom of the Kitco front page but for more details, see this very useful page on their site. There you can see that the 1000 Indian Rupees per gram level in India has been left behind in the dust (since last October). It's now 1250.22 per gram! Hard luck if you didn't buy and instead waited for a chance to get it at below 1000! It hasnt't come. Of course, it might but it's looking a bit doubtful!
This is not just a dollar phenomenon. Here on Kitco you can see gold in various currencies. Try clicking on the "hard" currencies and select a period of 1 year. "Hard" currencies? Don't make me laugh! Gold up over 20% against all of them, +47.91% against the British pound, +51% against the US dollar. They are the worst performing currencies! Does this say something about the future for Anglo-American hegemony in the financial and military field? The "Other Currencies" tab has gains for gold between 24.90% in Aussie dollars to $54.89% in South African Rand (only just worse than the USD)! The Aussie $ fares the best, followed by the Canadian $ where gold is up 'only' 25.56% in the past year. AUD and CAD have both been slightly stronger than the Swiss Franc, in which unit gold has risen by 30.77%. The 'most stable currency in the world' has therefore lost 23.5% against gold 100x(1-1/1.3077) in the last 12 months. That's about 2% a month depreciation! Try pasting 100*(1-1/1.3077)= into Windows calculator.
Try looking at the 6 month charts and the figures are nearly the same. Nearly all of this move is in the last 6 months. So the best currencies in the world are actually right now depreciating at 4% a month against gold. That's some inflation!
Earthquake + inflation is more than 3%. 2008-02-07
Wednesday 27th February 2008 9.27 p.m.
Well, we in Britain had an earth tremor that every news agency is calling an earthquake, 5.2 on the Richter scale. It's the only piece of exciting news today. ... Didn't they see that gold has made a new all-time high? And that we have galloping inflation?
To get an idea of inflation in Britain, take a look at these two headlines: British earthquake to cost in excess of £10m Last Updated: 1:54pm GMT today and ... a bit later ... British earthquake to cost £30 million Last Updated: 8:11pm today.
Good grief! That's a 200% increase in 7 hours! Annualised that would be, now let's see. Time interval = 6 hours 17 minutes, just over 1/4 of a day. Anyway, I calculate it as: 1.0184053130265910327933296258242e+669 %, which is in fact about
1018000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000% annual inflation.
I think our government tells us that inflation is about 3%, so they don't really have much credibility, do they?
To celebrate this realisation, gold made another all-time high today around $965 and silver is now over $19.
Well, we in Britain had an earth tremor that every news agency is calling an earthquake, 5.2 on the Richter scale. It's the only piece of exciting news today. ... Didn't they see that gold has made a new all-time high? And that we have galloping inflation?
To get an idea of inflation in Britain, take a look at these two headlines: British earthquake to cost in excess of £10m Last Updated: 1:54pm GMT today and ... a bit later ... British earthquake to cost £30 million Last Updated: 8:11pm today.
Good grief! That's a 200% increase in 7 hours! Annualised that would be, now let's see. Time interval = 6 hours 17 minutes, just over 1/4 of a day. Anyway, I calculate it as: 1.0184053130265910327933296258242e+669 %, which is in fact about
1018000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000000000000000000000000000000000000000% annual inflation.
I think our government tells us that inflation is about 3%, so they don't really have much credibility, do they?
To celebrate this realisation, gold made another all-time high today around $965 and silver is now over $19.
A vignette of modern life. 2008-02-24
Sunday 24th February 2008 6.04 p.m.
Re: "I was told by a friend recently that he is already buying petrol for his car using his credit card - and of course many modern gasoline pumps have the equipment to enable customers to do this! Grimly ironic isn't it, that it is getting difficult to afford to drive to work! The 1990s Britpop band Blur made an album, called 'Modern Life is Rubbish' - oh, how true is that?"
A vignette of modern life: Take the nearest job you can find but it's actually miles from home, buy a car so you can drive to work, earn crap money at work, watch fuel prices skyrocket, pay increasing taxes on your car because it emits CO2 you know and you are a sinful polluter, get up early to avoid the rush hour, see your unemployed neighbour and his girlfriend and six kids setting off on holiday, go to the petrol station, spend your last penny of disposable income on gasoline so that you can get to work, spend an hour in a traffic jam and, finally arrive at work and pick up your redundancy letter. Go back to the start...
Maybe a wage rise would be in order, but is unlikle to materialise. We are due for a fall of living standards owing to a price spiral in costs and liabilities but not in wages and assets. See my Wednesday 31st October 2007 8pm entry!
I am in the process of considering how to separate my blog page into articles that are individually linked, so all of my one readers can access them more easily! ;-) If this happens, I shall also include links to key articles that I have read on the Internet over the years, as well as useful books.
Re: "I was told by a friend recently that he is already buying petrol for his car using his credit card - and of course many modern gasoline pumps have the equipment to enable customers to do this! Grimly ironic isn't it, that it is getting difficult to afford to drive to work! The 1990s Britpop band Blur made an album, called 'Modern Life is Rubbish' - oh, how true is that?"
A vignette of modern life: Take the nearest job you can find but it's actually miles from home, buy a car so you can drive to work, earn crap money at work, watch fuel prices skyrocket, pay increasing taxes on your car because it emits CO2 you know and you are a sinful polluter, get up early to avoid the rush hour, see your unemployed neighbour and his girlfriend and six kids setting off on holiday, go to the petrol station, spend your last penny of disposable income on gasoline so that you can get to work, spend an hour in a traffic jam and, finally arrive at work and pick up your redundancy letter. Go back to the start...
Maybe a wage rise would be in order, but is unlikle to materialise. We are due for a fall of living standards owing to a price spiral in costs and liabilities but not in wages and assets. See my Wednesday 31st October 2007 8pm entry!
I am in the process of considering how to separate my blog page into articles that are individually linked, so all of my one readers can access them more easily! ;-) If this happens, I shall also include links to key articles that I have read on the Internet over the years, as well as useful books.
Peak Food & Famine? 2008-02-24 #2
Sunday 24th February 2008 6.04 p.m. #2
Peak Food and Famine? Are we heading for famines around the corner? These are already being discussed on Jim Puplava's FinancialSense Newshour website among others.
The discussion centres around several factors:
(1) Food demand is continuously rising, because of human population increases and increased prosperity in developing countries.
(2) Demand for grains is increasing due to increased need for animal feed as developing countries' populations move towards eating more meat and other proteins.
(3) Corn demand has increased due to the US government mandates that corn-based ethanol is to be used in gasoline.
(4) Increased planting of corn (for ethanol) has diminished other crops owing to less available land. This results in less supply and therefore higher prices for these agricultural commodities.
(5) Corn prices have increased due to demand for corn for fuel in additon to food.
(6) Therefore meat and milk prices have also increased because corn is used as feed for many farm animals.
(7) Net result: more food price inflation across the board. Rising at a far greater rate than the official CPI inflation figures of course (isn't everything?)
(8) Grain inventories are the lowest for many years, despite record harvests. It has been said that new record harvests will be needed every year to satisfy world demand for grains and other foodstuffs for human consumption and animal feed.
(9) Result: possible food shortages and famines in the not too distant future. With higher energy prices people will have to choose between driving their car, keeping their houses warm in Winter and eating sufficient food.
I was told by a friend recently that he is already buying petrol for his car using his credit card - and of course many modern gasoline pumps have the equipment to enable customers to do this! Grimly ironic isn't it, that it is getting difficult to afford to drive to work! The 1990s Britpop band Blur made an album, called 'Modern Life is Rubbish' - oh, how true is that?
Peak Food and Famine? Are we heading for famines around the corner? These are already being discussed on Jim Puplava's FinancialSense Newshour website among others.
The discussion centres around several factors:
(1) Food demand is continuously rising, because of human population increases and increased prosperity in developing countries.
(2) Demand for grains is increasing due to increased need for animal feed as developing countries' populations move towards eating more meat and other proteins.
(3) Corn demand has increased due to the US government mandates that corn-based ethanol is to be used in gasoline.
(4) Increased planting of corn (for ethanol) has diminished other crops owing to less available land. This results in less supply and therefore higher prices for these agricultural commodities.
(5) Corn prices have increased due to demand for corn for fuel in additon to food.
(6) Therefore meat and milk prices have also increased because corn is used as feed for many farm animals.
(7) Net result: more food price inflation across the board. Rising at a far greater rate than the official CPI inflation figures of course (isn't everything?)
(8) Grain inventories are the lowest for many years, despite record harvests. It has been said that new record harvests will be needed every year to satisfy world demand for grains and other foodstuffs for human consumption and animal feed.
(9) Result: possible food shortages and famines in the not too distant future. With higher energy prices people will have to choose between driving their car, keeping their houses warm in Winter and eating sufficient food.
I was told by a friend recently that he is already buying petrol for his car using his credit card - and of course many modern gasoline pumps have the equipment to enable customers to do this! Grimly ironic isn't it, that it is getting difficult to afford to drive to work! The 1990s Britpop band Blur made an album, called 'Modern Life is Rubbish' - oh, how true is that?
Asian currencies turn up 2005: Phils/HK$/Yuan. 2008-02-24
Short update on Asian currencies 2008-02-24:
The Philippines Peso has been climbing against the US Dollar and the British pound. From a low of about 56 to the $ and 107 to the GBP, the Phils Peso is now 40.575 to the US$ and 79.7 to the pound sterling. (These figures updated 2008-02-24 at 6.31 p.m.)
Look at those 5 year charts on those pages! This in my view is the start of the long march up in Asian currencies.
Taking a look at the Chinese Yuan (Renminbi), this currency started its march up against the US Dollar in about June 2005, shortly after the dollar peg was loosened to allow some wiggle room. Of course, the 'wiggle' has been all up for the Yuan and down for the dollar. This coincides exactly with the peak in the US$ against the Philippines Peso. Fascinatingly, the Phils Peso is rising vs the Chinese Yuan since Autumn 2005, maybe because the Chinese are still following a mercantilist policy of keeping their currency relatively weak to world currencies to bolster export earnings. China is still letting it fall vs the stronger world currencies but not quite as fast as the US dollar is falling!
Similarly, Sterling peaked vs the Yuan in at the turn of 2004/2005, just when it peaked agaist the Phils Peso. Coincidence? Hmmmmm. Could be a TREND!
Looking at other Asian currencies, the US$ has been in a downtrend against the Korean Won and the Thai Baht for at least 5 years, before the unpegging of the Chinese Yuan. ANother fascinating chart is the Chinese Yuan vs Hong Kong $ which shows that the Yuan rose above 1:1 parity at the turn of 2006/2007 and is now HK$1.09.
The Philippines Peso has been climbing against the US Dollar and the British pound. From a low of about 56 to the $ and 107 to the GBP, the Phils Peso is now 40.575 to the US$ and 79.7 to the pound sterling. (These figures updated 2008-02-24 at 6.31 p.m.)
Look at those 5 year charts on those pages! This in my view is the start of the long march up in Asian currencies.
Taking a look at the Chinese Yuan (Renminbi), this currency started its march up against the US Dollar in about June 2005, shortly after the dollar peg was loosened to allow some wiggle room. Of course, the 'wiggle' has been all up for the Yuan and down for the dollar. This coincides exactly with the peak in the US$ against the Philippines Peso. Fascinatingly, the Phils Peso is rising vs the Chinese Yuan since Autumn 2005, maybe because the Chinese are still following a mercantilist policy of keeping their currency relatively weak to world currencies to bolster export earnings. China is still letting it fall vs the stronger world currencies but not quite as fast as the US dollar is falling!
Similarly, Sterling peaked vs the Yuan in at the turn of 2004/2005, just when it peaked agaist the Phils Peso. Coincidence? Hmmmmm. Could be a TREND!
Looking at other Asian currencies, the US$ has been in a downtrend against the Korean Won and the Thai Baht for at least 5 years, before the unpegging of the Chinese Yuan. ANother fascinating chart is the Chinese Yuan vs Hong Kong $ which shows that the Yuan rose above 1:1 parity at the turn of 2006/2007 and is now HK$1.09.
S&P 500 'Miracle' rally? 2008-02-23
Saturday 23rd February 2008 9:12 p.m.
Did you ever believe in free markets? Well, take a look at this chart from Dan Norcini on Jim Sinclair's evergreen website - the performance of the S&P500 mini futures yesterday (Friday). Dan labels this as the plain and obvious work of the PPT, the Plunge Protection Team. Then just imagine how much money anybody 'in the know' could have made during this spike up and how much money any free market short seller would have lost to them! If this is true, then the US markets are a complete and utter farce, because this comes on top of all the naked short selling ('counterfeit shares') in other market areas such as small cap technology and mining companies and all of the ridiculous 'AAA' credit ratings of debt that has turned out to be utter junk in the mortgage arena. The US markets equal a bottomless pit of depravity into which your money can disappear! It also seems to be a command economy, not a free market. In that scenario, assets can never be properly valued in the marketplace and the market will be dangerous at all times, even if you are an ace at valuing companies by reading company reports.
Jim Sinclair's remarks about the "trade everything all the time" mentality being a losing bet are also prescient in this case. As an outsider, you can never know when trading by the insiders, the commanders of the economy, is going to happen and as such, you can get caught out very badly and lose all your money in an instant in this unfree market. He would say that it is better to stock with the major market trend, because the commanders of the command economy usually cannot defeat the major market trends, only slow them down and smooth them out on a day-to-day basis.
So, not so bad if you were 'long' the S&P500 on Friday - but despite all this it's still been in a downtrend lately.
Did you ever believe in free markets? Well, take a look at this chart from Dan Norcini on Jim Sinclair's evergreen website - the performance of the S&P500 mini futures yesterday (Friday). Dan labels this as the plain and obvious work of the PPT, the Plunge Protection Team. Then just imagine how much money anybody 'in the know' could have made during this spike up and how much money any free market short seller would have lost to them! If this is true, then the US markets are a complete and utter farce, because this comes on top of all the naked short selling ('counterfeit shares') in other market areas such as small cap technology and mining companies and all of the ridiculous 'AAA' credit ratings of debt that has turned out to be utter junk in the mortgage arena. The US markets equal a bottomless pit of depravity into which your money can disappear! It also seems to be a command economy, not a free market. In that scenario, assets can never be properly valued in the marketplace and the market will be dangerous at all times, even if you are an ace at valuing companies by reading company reports.
Jim Sinclair's remarks about the "trade everything all the time" mentality being a losing bet are also prescient in this case. As an outsider, you can never know when trading by the insiders, the commanders of the economy, is going to happen and as such, you can get caught out very badly and lose all your money in an instant in this unfree market. He would say that it is better to stock with the major market trend, because the commanders of the command economy usually cannot defeat the major market trends, only slow them down and smooth them out on a day-to-day basis.
So, not so bad if you were 'long' the S&P500 on Friday - but despite all this it's still been in a downtrend lately.
James Turk: 1980 Gold High was '$6000'! 2008-02-22
Friday 22nd February 2008 9:48 p.m.
Eagle-eyed Dan Norcini on the ever excellent www.jsmineset.com claims that he has some evidence of something suspicious with the gold ETF holdings. He also posts a chart on a .pdf file to support this thesis. A flatline on holdings for 2 weeks despite new all-time price highs? Hmmmmmmmmmmmmm. Fishy as Billingsgate Fish Market - or a Japanese Sushi bar, perhaps.
In addition, he also comments with charts on the massive vertical rise in platinum lately, showing it to be rapidly approaching the CPI inflation adjusted all time high (which is still the 1980 high), whereas the similar gold chart at $940 is still way below its all time inflation adjusted high, which is over $2000 when inflated by the dodgy (understated) US CPI numbers or possibly $6000+ according to James Turk, if realistic CPI numbers such as those calculated by Walter 'John' Williams at shadowstats.com using 1980 methodology are used. His series master inttroduction called "GOVERNMENT ECONOMIC REPORTS: THINGS YOU'VE SUSPECTED BUT WERE AFRAID TO ASK!" is nothing short of brilliant. I remember subscribing (rather cheaply) to the market commentaries of his late friend Doug Gillespie after reading one of his articles on the Prudent Bear website. They were excellent too - and Doug then worked with John Williams on a website for a while in the latter part of his life. He put me onto John Williams' work and I'm glad I heard of it.
There really is some excellent well-researched information and well-thought-out commentary out there on the Internet and no excuses for anyone to miss out on the truth.
PS. Prolific precious metals analyst and commentator James Moore of the comprehensive website www.thebulliondesk.com is based in my original hometown. Well, please give me a job with The Bullion Desk, James!
Eagle-eyed Dan Norcini on the ever excellent www.jsmineset.com claims that he has some evidence of something suspicious with the gold ETF holdings. He also posts a chart on a .pdf file to support this thesis. A flatline on holdings for 2 weeks despite new all-time price highs? Hmmmmmmmmmmmmm. Fishy as Billingsgate Fish Market - or a Japanese Sushi bar, perhaps.
In addition, he also comments with charts on the massive vertical rise in platinum lately, showing it to be rapidly approaching the CPI inflation adjusted all time high (which is still the 1980 high), whereas the similar gold chart at $940 is still way below its all time inflation adjusted high, which is over $2000 when inflated by the dodgy (understated) US CPI numbers or possibly $6000+ according to James Turk, if realistic CPI numbers such as those calculated by Walter 'John' Williams at shadowstats.com using 1980 methodology are used. His series master inttroduction called "GOVERNMENT ECONOMIC REPORTS: THINGS YOU'VE SUSPECTED BUT WERE AFRAID TO ASK!" is nothing short of brilliant. I remember subscribing (rather cheaply) to the market commentaries of his late friend Doug Gillespie after reading one of his articles on the Prudent Bear website. They were excellent too - and Doug then worked with John Williams on a website for a while in the latter part of his life. He put me onto John Williams' work and I'm glad I heard of it.
There really is some excellent well-researched information and well-thought-out commentary out there on the Internet and no excuses for anyone to miss out on the truth.
PS. Prolific precious metals analyst and commentator James Moore of the comprehensive website www.thebulliondesk.com is based in my original hometown. Well, please give me a job with The Bullion Desk, James!
Gold: more historic highs. 2008-02-21
Thursday 21st February 2008 9:39 p.m.
Today has been a historic high day, not in terms of controlled substances (unless you believe the GATA theory that gold is controlled ;-) ) but in terms of the price of just about everything in commodities. New all-time highs came in gold $948.59, West Texas oil $101.32 and platinum $2192 for a start. Even North Sea Brent Crude oil is shaving close to $100, hitting an all-time high yesterday at $99.22. Spot market gold is $944.60/945.40 Bid/Ask on Kitco as I write. Palladium is doing very well on the back of the rise in sister metal platinum. This other white metal, Pd, hit $525.50 today.
Palladium is quite leveraged to the power shortages in South Africa. About 70% of world platinum production is in South Africa, with around 30% of Palladium production also there (most of the rest, the vast majority in fact, is in Russia and they are not in the mood to give it away these days with Putin photographed holding bars of gold and saying Russia will increase its gold reserves - they like their precious metals to be precious over there and I think they like the idea of having a pop at the US dollar standard system, too). Palladium is interesting because it spiked to $1000+ in the 1999-2001 period with supply shortages, ironically right at the very bottom of the commodities and precious metals markets (when gold was about $260 per ounce and silver about $4) and then palladium collapsed to around $170 over the next few years. It's on its way up again, evidently, up 200% from its low. It looks like it was a steal back at $200 or so, where it spent a good couple of years.
An excellent article on today's action is on this link at Channel News Asia.
Today has been a historic high day, not in terms of controlled substances (unless you believe the GATA theory that gold is controlled ;-) ) but in terms of the price of just about everything in commodities. New all-time highs came in gold $948.59, West Texas oil $101.32 and platinum $2192 for a start. Even North Sea Brent Crude oil is shaving close to $100, hitting an all-time high yesterday at $99.22. Spot market gold is $944.60/945.40 Bid/Ask on Kitco as I write. Palladium is doing very well on the back of the rise in sister metal platinum. This other white metal, Pd, hit $525.50 today.
Palladium is quite leveraged to the power shortages in South Africa. About 70% of world platinum production is in South Africa, with around 30% of Palladium production also there (most of the rest, the vast majority in fact, is in Russia and they are not in the mood to give it away these days with Putin photographed holding bars of gold and saying Russia will increase its gold reserves - they like their precious metals to be precious over there and I think they like the idea of having a pop at the US dollar standard system, too). Palladium is interesting because it spiked to $1000+ in the 1999-2001 period with supply shortages, ironically right at the very bottom of the commodities and precious metals markets (when gold was about $260 per ounce and silver about $4) and then palladium collapsed to around $170 over the next few years. It's on its way up again, evidently, up 200% from its low. It looks like it was a steal back at $200 or so, where it spent a good couple of years.
An excellent article on today's action is on this link at Channel News Asia.
End of the Judeo-Christian age? 2008-02-16 #2
Saturday 16th February 2008 12:19 p.m. #2
Nick Barisheff on Jim Puplava's truly excellent and educational Financial Sense Newshour says that the US Gov't and Fed are getting rid of their economic indicator website on March 1st, in the same way that they got rid of the reported M3 money supply, most likely to prevent the public from getting any information on how abysmally the US economy is doing and to prevent them from having any warning of the upcoming hyperinflation of prices of essential goods (such as food and energy), that has in fact already begun. Puplava's 3rd hour guest today, Scot M. Faulkner, author of Naked Emperors: The Failure of the Republican Revolution states that while 20% of the politicans on Capitol Hill are honest, the other 80% are living in a world of utter corruption - i.e. in essence the entire US political system is corrupt! Of course, I know, I know, all political systems are corrupt these days, inevitable under a fiat money standard of unbacked unlimited central bank paper money. There will therefore be no solution to the problems of the USA. Ron Paul the, only candidate with any courage to address the truth in any way is ignored and stands no chance whatsoever. He is the last chance, not only for America but for the rest of us in the G7.
The disaster facing the US, the UK and Europe is going to be an Epochal event. This is not just a transfer of power between 'friends' such as the decline of the British Empire and the start of the US Empire, but is something far more earth shattering than anything ever in human history, far greater too than the end of the Greek and Roman Empires. Note that the aforementioned were all European centred. Even America is an extension of Europe, since the European and US bankers brought the USA under control of their cartel by forming the US Federal Reserve Bank in 1913 (see the fascinating 'The Creature from Jekyll Island' to read about this) and essentially ended the American free republic, bringing all the working people of the USA, like Europeans before them, politically, economically and financially under the control of banking interests, 'kings' and dynasties.
These events are at least as significant as the fall of Rome leading into the Dark Ages. In truth, it's more important because at present the G7 nations control virtually the entire world. If that power moves to Asia, it will be the end of the Western world as we know it and the end of the Judeo-Christian power structure of the past 2000 years. This present financial crisis with the pandemic of US centred monetary fraud under the dollar standard is the sure sign of the End of the Age and the complete reversal of fortunes of the entire Judeo-Christian world. Year 2000 with the Dot-Com crash is the banner date of its epochal peak and start of its palpable decline, cemented by 9/11 in 2001 which was a tremendously symbolic event, however caused. however, the formation of the Federal Reserve in 1913 and the three moves ending of the Gold Standard in 1914, 1933 and 1971 are perhaps truer dates, because they signalled the fact of the state of monetary and moral default in the Western world, which equals bankruptcy. A good date for the all time peak in the 'West' would be Neil Armstong stepping onto the Moon on July 20/21 1969. All downhill since then? Do you imagine that Americans will walk on the moon again? Dream on! And Mars is way out. Given present momentum, the next face on the Moon could well be Chinese, if we don't have a World War first that takes us back to the Stone Age.
Be warned, there was not so much attention paid in our complicit media when China put its first man into space, Yang Liwei, on 15/16 October 2003 or when the Iranians sent their first space rocket into earth orbit on 5 February 2008 (for the latter read Intercontinental Ballistic Missile with nuke on board, bound for Washington D.C. or anywhere they choose)! This achievement was glossed over on British news as if it didn't matter but these are potentially shattering blows to centuries of UK, EU and US hegemony. Add in the Assassination of Benazir Bhutto and so we have the echo of Archduke Ferdinand preceding World War I. However, Pakistan is also already a 'nuclear' power. Interesting commentary here.
Be warned again, if you live in the US, UK or EU - life might not be the same for your children as it was for you, your parents or grandparents, even going back 50 generations. Your descendants may have to fight for scraps of food to put in their mouths 50 years from now. Our only hope is while we live in 'free' nations and have a 'free' Internet, that we rebel against the corruption in our own system before our race loses its freedom and lives in poverty for a thousand years.
West Sabotaging Beijing Olympics? 2008-02-16 #1
Saturday 16th February 2008 12:19 p.m.
It's been an utterly tedious week in the gold market, so this is a weekend rant, not to be repeated. On Monday 11th, I wrote about the 2008 Beijing Olympics in China and how it might be perceived in the Western world. I am suggesting that 'the West' will be in a dangerous economic recession at the same time as all the recession-hit Americans, British and Europeans are watching the brand new cities and stadiums in China on their TV sets. This phenomenon will be a key in moving trillions of $ of investor money out of the Western world and into the new 'New World' of Asia, as the Western world itself sees inexorable hyperinflation in costs and deflation in assets. It will be a key mood change in the world, highly significant if you believe Bob Prechter at the Elliott Wave website and his theories of Socionomics.
Later this week, we have seen the inevitable Western propaganda response. Firstly, we saw Steven Spielberg having a fit of conscience (do these people have one?) over the Chinese involvement in the situation in Sudan-Darfur. He has now withdrawn from his 'creative input' into the Beijing Olympics. Now why might this be? I hope he has donated all fees received so far to a charity sending relief aid to Darfur. I wonder if he has? Meanwhile, the English Daily Express tabloid newspaper is highlighting the human rights abuses in China - as if they are something new - it's a big country; it's an old regime!
You can see that our politicians (including media personalities like Spielberg who are part of the same set) might now be making their move to try to sabotage the Beijing Olympics. Why were they generally so pro-China up until last week and now they have turned against it? Look no further for the answer than to the recent revelations of systemic fraud in the entire American and Western World's financial system. It is now necessary for the Western politicians / Wall Street / media establishment to make a hit against China because the situation is going out of their control. The momentum is moving towards Asia too quickly - before these people have had the opportunity to take their investment money out of the West and put it into Asia/China. They have to hit the Beijing Olympics hard now in order to slow down that momentum and allow more time for them to move their investment money more gradually from West to East - to try to initiate a retrenchment/recession in China and a takedown in their political and economic momentum to give some breathing space and keep the situation under their control. Their hand is being forced because the utter state of corruption of the Western financial markets and the paper US$ standard system is being revealed to the world in all its glory sooner than expected.
A similar takedown was achieved with the Asia crisis of 1997-1998, which was simply an act of economic warfare by America against South Korea, Taiwan and the other 'Asian Tigers' who were in rapid growth mode until some overleveraged financings there allowed the Western credit ratings agencies to downgrade their debt almost instantaneously from AAA grade towards 'junk' status, meaning that most investment money had to be moved out of there almost immediately to meet investment regulations that forbade many funds to hold junk debt.
Now, the Americans would love to do that to China but they can't. Instead the credit ratings agencies are well behind the curve in admitting that most AAA rated American debt may be junk and never to be repaid in real terms. Furthermore, China holds a trillion dollars (that's $1,000,000,000,000 folks!) in reserves, much of that in US Government bonds. They could sell a chunk of that and drive interest rates in the West through the roof, crashing the property markets instantly and strangling the consumer if it came to the point of playing hardball. They don't want to do that yet because they want to use Sovereign Wealth Funds to move into productive assets (companies, natural resources) and also buy up as much of the key assets of America as they can, whilst diversifying gradually away from the US$ paper junk that pays a dismal 2% to 4% yield (1.9% on 2 Year Treasury Notes!), while the US$ debt principal drops 20% a year on the foreign exchange markets. It's just a terrible investment so holding it must be a political move. The Chinese are chess payers, yes?
So, is the gradual diversification out of the paper US$ by China and the gradual movement of Western investment money from the moribund G7 countries towards industrial Asia going to be interrupted by a dose of economic warfare? Watch this space! You won't read this anywhere else because I might be wrong, but don't bank on it.
It's been an utterly tedious week in the gold market, so this is a weekend rant, not to be repeated. On Monday 11th, I wrote about the 2008 Beijing Olympics in China and how it might be perceived in the Western world. I am suggesting that 'the West' will be in a dangerous economic recession at the same time as all the recession-hit Americans, British and Europeans are watching the brand new cities and stadiums in China on their TV sets. This phenomenon will be a key in moving trillions of $ of investor money out of the Western world and into the new 'New World' of Asia, as the Western world itself sees inexorable hyperinflation in costs and deflation in assets. It will be a key mood change in the world, highly significant if you believe Bob Prechter at the Elliott Wave website and his theories of Socionomics.
Later this week, we have seen the inevitable Western propaganda response. Firstly, we saw Steven Spielberg having a fit of conscience (do these people have one?) over the Chinese involvement in the situation in Sudan-Darfur. He has now withdrawn from his 'creative input' into the Beijing Olympics. Now why might this be? I hope he has donated all fees received so far to a charity sending relief aid to Darfur. I wonder if he has? Meanwhile, the English Daily Express tabloid newspaper is highlighting the human rights abuses in China - as if they are something new - it's a big country; it's an old regime!
You can see that our politicians (including media personalities like Spielberg who are part of the same set) might now be making their move to try to sabotage the Beijing Olympics. Why were they generally so pro-China up until last week and now they have turned against it? Look no further for the answer than to the recent revelations of systemic fraud in the entire American and Western World's financial system. It is now necessary for the Western politicians / Wall Street / media establishment to make a hit against China because the situation is going out of their control. The momentum is moving towards Asia too quickly - before these people have had the opportunity to take their investment money out of the West and put it into Asia/China. They have to hit the Beijing Olympics hard now in order to slow down that momentum and allow more time for them to move their investment money more gradually from West to East - to try to initiate a retrenchment/recession in China and a takedown in their political and economic momentum to give some breathing space and keep the situation under their control. Their hand is being forced because the utter state of corruption of the Western financial markets and the paper US$ standard system is being revealed to the world in all its glory sooner than expected.
A similar takedown was achieved with the Asia crisis of 1997-1998, which was simply an act of economic warfare by America against South Korea, Taiwan and the other 'Asian Tigers' who were in rapid growth mode until some overleveraged financings there allowed the Western credit ratings agencies to downgrade their debt almost instantaneously from AAA grade towards 'junk' status, meaning that most investment money had to be moved out of there almost immediately to meet investment regulations that forbade many funds to hold junk debt.
Now, the Americans would love to do that to China but they can't. Instead the credit ratings agencies are well behind the curve in admitting that most AAA rated American debt may be junk and never to be repaid in real terms. Furthermore, China holds a trillion dollars (that's $1,000,000,000,000 folks!) in reserves, much of that in US Government bonds. They could sell a chunk of that and drive interest rates in the West through the roof, crashing the property markets instantly and strangling the consumer if it came to the point of playing hardball. They don't want to do that yet because they want to use Sovereign Wealth Funds to move into productive assets (companies, natural resources) and also buy up as much of the key assets of America as they can, whilst diversifying gradually away from the US$ paper junk that pays a dismal 2% to 4% yield (1.9% on 2 Year Treasury Notes!), while the US$ debt principal drops 20% a year on the foreign exchange markets. It's just a terrible investment so holding it must be a political move. The Chinese are chess payers, yes?
So, is the gradual diversification out of the paper US$ by China and the gradual movement of Western investment money from the moribund G7 countries towards industrial Asia going to be interrupted by a dose of economic warfare? Watch this space! You won't read this anywhere else because I might be wrong, but don't bank on it.
Thursday, 10 April 2008
Pt for St. Valentine's > $2000. 2008-01-15.
Friday 15th February 2008 7:52 p.m.
Well, after fighting my way past the front hallway yesterday trying to squeeze through the enormous pile of Valentines cards that the postman brought to my door in his specially modified 32 ton truck, I finally get to see that gold is basically flat to down a bit for the week.
However, if I was marriage-minded in the Western world these days, I would be looking at a very expensive Platinum wedding ring at the moment. Do you think she would settle for palladium? I have a few 1 ounce bars that I could have melted down in to a decent ring. A band of palladium, a band of platinum, neither really has the ring of a band of gold now does it? Fancy how daft it would be to spend all that money on platinum because gold "isn't good enough" for her, only to be divorced and stripped of the rest of your wealth by her perhaps a year later! Aren't men really stupid? The money spent on wedding paraphernalia only seems to be inversely proportional to the sticking power of the participants and the length of the marriage! (Have you seen the Heather Mills' settlement from Paul McCartney?)
By the way, what I meant to say was that Platinum made a new record of $2055 per ounce today, now clearly more than double the price of gold. At this rate a new Kitco platinum site may be coming out soon. Take a look at some of the industrial platinum crucibles that they sell. I remember we had one at work in the early 90s and I used one at Aberdeen University in 1989. The one at work cost about £7,000 Sterling. It would cost a lot more than that now. It would have probably been a better investment for the company just to buy 1,000 of those than to waste all that time manufacturing lightbulbs and the other stuff that we made.
Meanwhile at Kitco and on the Korelin Economic Report http://www.kereport.com/ last week John Nadler has been doing a bit of gold bashing, suggesting that $900 is a lofty price above the 650-700 'clearing price' for gold as he calls it may re-assert itself. This is the main reason for his lower gold forecasts for this year (lower than the spot price is right now, that is). He seems basically to be talking from the jewellers' and fabricators' points of view, thinking that it trumps investor demand, the state of the economy and geopolitical factors. On the other hand, he is good to remind us that jewellery demand is still a key factor and not to be ignored. So maybe a balance is needed and he is just pointing that out.
It's an interesting point of view though. Also he has seen the IMF announced gold sales as being a negative factor on the gold price, as well as the spectacular fall off in Indian gold imports last month (Jan '08).
However, we have seen this all before. The IMF has been pulling this rabbit out of the hat for years, as did the Bank of England in 1999, etc. This time it had no immediate effect - maybe there are plenty of US Dollar holders waiting eagerly to buy up all this gold. Once the IMF is stripped of its gold, it is a dead duck.
Then the Indian gold demand issue - well, we saw massive fall of in Indian gold demand as the gold price spiked up from $470 in late 2005 to $730 in May 2006. This was followed by a massive increase in demand as the price fell to $550-600 for a short while, follwed by a record high demand year in 2007 when the price averaged around $650. Demand for 2007 reached nearly 1,000 tonnes, only scuppered by the end of year rise in price to $900.
So we may see the same thing repeat itself in 2008, a spike in price, a fall in demand from India, followed by a price correction, followed by a rise in demand at a new but higher equilibrium than last time. Perhaps?
There is nothing new under the sun.
Well, after fighting my way past the front hallway yesterday trying to squeeze through the enormous pile of Valentines cards that the postman brought to my door in his specially modified 32 ton truck, I finally get to see that gold is basically flat to down a bit for the week.
However, if I was marriage-minded in the Western world these days, I would be looking at a very expensive Platinum wedding ring at the moment. Do you think she would settle for palladium? I have a few 1 ounce bars that I could have melted down in to a decent ring. A band of palladium, a band of platinum, neither really has the ring of a band of gold now does it? Fancy how daft it would be to spend all that money on platinum because gold "isn't good enough" for her, only to be divorced and stripped of the rest of your wealth by her perhaps a year later! Aren't men really stupid? The money spent on wedding paraphernalia only seems to be inversely proportional to the sticking power of the participants and the length of the marriage! (Have you seen the Heather Mills' settlement from Paul McCartney?)
By the way, what I meant to say was that Platinum made a new record of $2055 per ounce today, now clearly more than double the price of gold. At this rate a new Kitco platinum site may be coming out soon. Take a look at some of the industrial platinum crucibles that they sell. I remember we had one at work in the early 90s and I used one at Aberdeen University in 1989. The one at work cost about £7,000 Sterling. It would cost a lot more than that now. It would have probably been a better investment for the company just to buy 1,000 of those than to waste all that time manufacturing lightbulbs and the other stuff that we made.
Meanwhile at Kitco and on the Korelin Economic Report http://www.kereport.com/ last week John Nadler has been doing a bit of gold bashing, suggesting that $900 is a lofty price above the 650-700 'clearing price' for gold as he calls it may re-assert itself. This is the main reason for his lower gold forecasts for this year (lower than the spot price is right now, that is). He seems basically to be talking from the jewellers' and fabricators' points of view, thinking that it trumps investor demand, the state of the economy and geopolitical factors. On the other hand, he is good to remind us that jewellery demand is still a key factor and not to be ignored. So maybe a balance is needed and he is just pointing that out.
It's an interesting point of view though. Also he has seen the IMF announced gold sales as being a negative factor on the gold price, as well as the spectacular fall off in Indian gold imports last month (Jan '08).
However, we have seen this all before. The IMF has been pulling this rabbit out of the hat for years, as did the Bank of England in 1999, etc. This time it had no immediate effect - maybe there are plenty of US Dollar holders waiting eagerly to buy up all this gold. Once the IMF is stripped of its gold, it is a dead duck.
Then the Indian gold demand issue - well, we saw massive fall of in Indian gold demand as the gold price spiked up from $470 in late 2005 to $730 in May 2006. This was followed by a massive increase in demand as the price fell to $550-600 for a short while, follwed by a record high demand year in 2007 when the price averaged around $650. Demand for 2007 reached nearly 1,000 tonnes, only scuppered by the end of year rise in price to $900.
So we may see the same thing repeat itself in 2008, a spike in price, a fall in demand from India, followed by a price correction, followed by a rise in demand at a new but higher equilibrium than last time. Perhaps?
There is nothing new under the sun.
Depressed West jealous over China? 2008-02-11
Monday 11th February 2008 9:55 p.m.
Gold is up again today. It's in the $924 region as I write (923.70/924.50 bid/ask in the Spot market). The range has been $915.30 to $928.10 today. The IMF gold sales announcement really spooked the market then, hee hee! The market could not care less! This shows how irrelevant the Fed and the IMF have become to the rest of the world in the last 5 years. They've nearly shot all their ammo, except for dictatorship and another world war to be pulled out of the hat sometime soon.
Silver makes it over $17, currently at $17.48/17.53 bid/ask and Platinum is at $1933!
I had a sneaking interest in Palladium a few years ago. It never did much, except rise gradually from its low of about $170 in to the 200s then eventually into the 300s, but I saw 1 minute ago to my surprise that it is $441 right now! Maybe it is following platinum if demand rises for palladium as an alternative for catalytic converters, as platinum supply becomes tight and the Pt price skyrockets to $2000+.
Palladium is now roughly at the price that platinum was at the bottom of the metals markets in 2000-2001.
Rhodium is at, errrr, the less modest $8,490, looks set to zoom to $10,000. Is this inflation or what? Doesn't this make ridiculous mincemeat of Government statistics, that seem to get manipulated by politicians and their cronies for their own ends against the interests of the people? For credible answers to these questions, take a look over at Walter 'John' Williams' super website www.shadowstats.com.
And while our economy disintegrates into hyperinflation in costs and deflation in assets, our politicians and people get all hot under the collar about what? Answer: gays in the military.
Still, the gold standard / honest money / Constitutional Republican 'minority' 'left-field' candidate Ron Paul beat Giuliani in Iowa. Not saying much but still not bad. RP spent some campaign money but got no coverage in the media as usual, except on the Internet. Americans are going to be treated to Obama or Hillary in '08. ENJOY!
My prediction for 2008 ... As we British and you Americans see our respective economies slide seemingly ever deeper into depression with one asset writedown and financial mini-disaster after another, and the Europeans see their economy slow into stagnation as the French hold on for grim death to their delusion of a life of 35 hour working weeks while Chinese and Filipinos are 'content' to work 60+ hours to earn 'hard currency' and send it home to their families, everyone in the G7 will be watching their housing values and pension schemes drop through the floor, opening their bank statements and seeing less and less remaining after their huge mortgage payments are taken out, unable to re-mortgage anymore to keep the credit wolf from the door. They will go to work and be told that they are lucky to get a 1.5-2.0% pay increase. On the way home they will visit the shops and see bread up 30%, milk up 20%. Back at home the mail is on the doormat; the gas bill up 24% the electricty up 19%. Then they will turn on the Television and see in wide screen, 50" glory: ... CHINA CHINA CHINA CHINA CHINA BEIJING OLYMPICS!!! A 50 inch screen crammed full of drop-dead gorgeous Asian beauties with surgically rounded eyes, bathed in designer jewellery, all kinds of Asian guys strutting around in their Armani suits looking at their Rolex, Gucci or Omega watches, magnificent stadiums, brand new buildings everywhere. It's going to be a SHOCK to the system!
Yuan and Philippines Peso rising! 2008-02-16
Short update on 2008-02-16:
The Philippines Peso has been climbing against the US Dollar and the British pound. From a low of about 56 to the $ and 107 to the GBP, the Phils Peso is now 40.575 to the US$ and 79.7 to the pound sterling. (These figures updated 2008-02-24 at 6.31 p.m.)
[I am going to cheat now and update this post on 9th August 2013. The rates now are 43.53 PHP to the USD and 67.64 PHP to the GBP. The GBP s a lot weaker than in 2008 when this original article was written.]
Look at those 5 year charts on those pages! This in my view is the start of the long march up in Asian currencies.
Taking a look at the Chinese Yuan (Renminbi), this currency started its march up against the US Dollar in about June 2005, shortly after the dollar peg was loosened to allow some wiggle room. Of course, the 'wiggle' has been all up for the Yuan and down for the dollar.
This coincides exactly with the peak in the US$ against the Philippines Peso.
Similarly, Sterling peaked vs the Yuan in at the turn of 2004/2005, just when it peaked agaist the Phils Peso. Coincidence? Hmmmmm. Could be a TREND!
The Philippines Peso has been climbing against the US Dollar and the British pound. From a low of about 56 to the $ and 107 to the GBP, the Phils Peso is now 40.575 to the US$ and 79.7 to the pound sterling. (These figures updated 2008-02-24 at 6.31 p.m.)
[I am going to cheat now and update this post on 9th August 2013. The rates now are 43.53 PHP to the USD and 67.64 PHP to the GBP. The GBP s a lot weaker than in 2008 when this original article was written.]
Look at those 5 year charts on those pages! This in my view is the start of the long march up in Asian currencies.
Taking a look at the Chinese Yuan (Renminbi), this currency started its march up against the US Dollar in about June 2005, shortly after the dollar peg was loosened to allow some wiggle room. Of course, the 'wiggle' has been all up for the Yuan and down for the dollar.
This coincides exactly with the peak in the US$ against the Philippines Peso.
Similarly, Sterling peaked vs the Yuan in at the turn of 2004/2005, just when it peaked agaist the Phils Peso. Coincidence? Hmmmmm. Could be a TREND!
Au $900+ again, Ag $16, Pt $1800. 2008-02-09
Saturday 9th February 2008 10:00 p.m.
A steady and uneventful week in gold until Friday when there was quite a pop uphill in the price, with the London PM Fix at $916.25. Back over $900 pretty much since Wednesday afternoon but the mini surge on Friday took some by surprise. And then, just as everything seened to be going OK, the IMF announces that it's going to sell some gold! The GATA boys will have something to say about that!
Kitco's John Nadler has been writing about the clearing price of gold being about $650 and we should expect 650-960 in 2008 with an average of about $740 (down from here but the $740 average would be more than in 2007). Of course, he might be right but, since then, the price have moved over 900 again. There seems to be considerable doubt in the gold community about gold's ability to stay at these 900+ dollar levels - but surely this is bullish? I can never work it out. I think it's best to ignore them all and form my own opinion and then trade on that basis. Jim Sinclair never reads the opinions of other traders. Well, he probably knows more than they do anyway, but it seems like a great idea to me.
Meanwhile, back at the ranch of Sarkozy, Trichet and their chums, gold sneaks to a new all time high in Euros! Remember, not everybody sees things in US dollars!
Even so, the action in gold looks very tame indeed when compared to the platinum market, where the price of an ounce of the rare silver coloured metal worn by so many as wedding rings these days scaled $1800 on power supply interruptions and shortages in South Africa, which produces the vast majority of the world's platinum from its mines.
Oh and by the way, little cheap silver, monetary metal of the common people, is well over $16 an ounce. What a pitiful price for such a beautiful metal; it seems almost criminally undervalued. A hundredth the price of plainum - almost. Still, silver is up well over 300% from its lows around 2000 (quadruple the price and a bit more) - outperforming gold and doing about as well as platinum. I can remember Pt at $450 and silver at under $4.
Gold whacked down 1 Feb! Posted 2008-02-02
Saturday 2nd February 2008 10:00 p.m.
The gold price dropped like a stone on Friday 1st February, for no plainly apparent treason (I meant reason, Freudian typographical error perhaps).
The only explanation for this fall that would fit the bill would be from 'Wild Bill' Murphy and his colleagues at GATA who are convinced of the Government / Central Bank / Bullion Bank 'cartel' manipulation of the gold price. manipulation of the gold price.. Some others say this is a 'Grassy Knoll' style conspiracy theory, but if OPEC more or less controls the supply and price of oil, why not a cartel with gold? If the US Fed/Gov't Working Group on Financial Markets (PlungeProtectionTeam or PPT) can put a base under the stock market to help its mates in Wall Street, why not put a cap on the gold price, which is the one barometer that signals stormy weather in the paper money financial markets? It makes perfect sense, surely. Government and their allies can manipulate everything, especially the people.
Looking at the Historical London Fixings link on Kitco's home page, one can clearly see the price action over the few days from that Friday. Thursday 31 Jan PM: $923.25, Friday 1st Feb AM: 933.00 (up a bit), PM: $914.75 down nearly 20$ once the US COMEX futures market has opened, something that GATA would assert as a sure sign of US inspired gold price capping, Monday 4 Feb AM: $899.50, PM: 893.75 with a slow dip over the next day to $887.50 by Tue 5 Feb AM London Fix, before turning up again slowly. Jim Sinclair pointed out that the low was $887.50, exactly his long described high from 21st January 1980. Isn't that a coincidence or what?
Rates now 3% not 4.5% Stocks rally. 2008-01-31
Thursday 30th January 2008: 9.13 p.m.
The stock markets are rallying today generally, digesting this second Fed rate cut, bringing the Fed Funds Rate to 3% from 4.25% just over a week ago! Just how far will they drop it? Who's expecting zero this time around?
The market rally follows a wild ride earlier in the day: Markets in meltdown as both FTSE and Dow Jones plunge again amid recession fears.
Meanwhile, Gold futures closed with modest gains.
The stock markets are rallying today generally, digesting this second Fed rate cut, bringing the Fed Funds Rate to 3% from 4.25% just over a week ago! Just how far will they drop it? Who's expecting zero this time around?
The market rally follows a wild ride earlier in the day: Markets in meltdown as both FTSE and Dow Jones plunge again amid recession fears.
Meanwhile, Gold futures closed with modest gains.
Panic! Fed cuts another 0.5%. 2008-01-30
Wednesday 30th January 2008: 10.00 p.m.
We got another half point rate cut by the Federal Reserve today. Result? Gold soars to new record high after Fed cuts rates. Gold for April delivery went as high as $942.20 per ounce on the NYMEX exchange.
Related articles:
Fed cuts by half-point, hinting at more to come
Positive reaction to Fed rate cut short-lived"
Mortgage rates could rise, not fall, after Fed move
Bankers' and brokers' greed has undermined the economy: "Expect more than a typical recession"
Sleep well. Don't have nightmares! :-)
We got another half point rate cut by the Federal Reserve today. Result? Gold soars to new record high after Fed cuts rates. Gold for April delivery went as high as $942.20 per ounce on the NYMEX exchange.
Related articles:
Fed cuts by half-point, hinting at more to come
Positive reaction to Fed rate cut short-lived"
Mortgage rates could rise, not fall, after Fed move
Bankers' and brokers' greed has undermined the economy: "Expect more than a typical recession"
Sleep well. Don't have nightmares! :-)
Pt and Pd up on SA power shortages. 2008-01-26
Saturday 26th January 2008: 10.01 p.m.
Well, it's been a more interesting week in the markets this week. There were major downturns on the stock markets worldwide on Monday while the Americans were on a day's holiday for Martin Luther King Day, on Tuesday the Dow opened something like 400-500 points down or the Dow futures showed that this was going to happen. Bernanke and the Fed made a sudden announcement of a 3/4 point cut ininterest rates with more likely to come at their scheduled meeting next week, the markets rallied somewhat and some ended up for the week. So we came within a whisker of the stock market rout mentioned here last week, were it not for the 3/4 point rate cut from the Fed. The markwets generally rallied after the rate cut news and some ended up a little on the week after a wild volatile ride.
Gold had taken a bit of a hit over the last couple of weeks but ended the week with a spot market price run to $923.73 and settling at $910.50 by Friday's close. The new high beats the high of $916.10 of a few weeks ago on the spot market.
While chaos ruled in the stock markets, the yellow metal had risen convincingly past $900.
The runup in precious metals, particularly the spectacular rises in Platinum and Rhodium were helped by power problems at South Africa's mines. See this article.
Stocks plummet. Fed cuts rates. 2008-01-22
Tuesday 22nd January 2008: 10.00 pm
Another highly volatile day in the markets, much as predicted below. In the USA, the Dow Jones Industrial average fell 400 points at the opening and there was a sudden announcement from the Federal Reserve of a 75 basis point (i.e.a 3/4%) cut in the target interest rate that stunned the markets and probably saved them for a major crash. The Guardian newspaper has an article called: Federal Reserve slashes US rates on day when 'chaos reigned supreme'. That just about sums it up.
The fall in the Dow followed the Japanese markets, which were spectacularly down both on Monday and Tuesday. Japanese Stocks Plunge in Biggest Two-Day Rout in 17 Years 22 Jan 2008 Elsewher, circumstances were similar: Australian shares in Freefall, and India’s Sensex tumbles 11.5% in early minutes, trade halted. That's enough bad news!
Oh, by the way, gold was steady.
Another highly volatile day in the markets, much as predicted below. In the USA, the Dow Jones Industrial average fell 400 points at the opening and there was a sudden announcement from the Federal Reserve of a 75 basis point (i.e.a 3/4%) cut in the target interest rate that stunned the markets and probably saved them for a major crash. The Guardian newspaper has an article called: Federal Reserve slashes US rates on day when 'chaos reigned supreme'. That just about sums it up.
The fall in the Dow followed the Japanese markets, which were spectacularly down both on Monday and Tuesday. Japanese Stocks Plunge in Biggest Two-Day Rout in 17 Years 22 Jan 2008 Elsewher, circumstances were similar: Australian shares in Freefall, and India’s Sensex tumbles 11.5% in early minutes, trade halted. That's enough bad news!
Oh, by the way, gold was steady.
28th Anniversary. Stock panics. 2008-01-21
Monday 21st January 2008: 10.00 pm
Today is 28 years after the old all time high of gold, also on a Monday, now left behind it seems. Chaos in the financial markets while the Americans were off on holiday for Martin Luther King Day. Read all about it! FTSE plunges on US recession fears - 21 January 2008, also British shares in worst fall since Sept. 11 attacks, saying that the U.K. FTSE 100 index declined 5.5%, or 323.5 points, to 5,578.20, led by financials. Also, Stock Markets in Europe Plunged 7 Percent,
Oh, by the way, gold was steady.
$2.6 Trillion wiped off stocks! 2008-01-20
Sunday 20th January 2008: 4.28 p.m.
What a boring week for gold - but not if you are a stock investor. Take a look at this trio of charts on stockcharts.com to see why. There is a daily chart, a weekly chart and a Point and Figure (P&F) chart, the P&F showing a triple bottom breakdown. For discussion on this together with a prediction of a likely stock market crash if there isn't an immediate bounce from these highly oversold levels, take a listen to the first part of Financial Sense Newshour on 19/01/2008 with Robert McHugh and Gary Dorsch on this mp3. Robert McHugh point out that the wide measure of the US stock market, the Willshire 5000 has lost 2.6 Trillion dollars in the last 3 months.
What a boring week for gold - but not if you are a stock investor. Take a look at this trio of charts on stockcharts.com to see why. There is a daily chart, a weekly chart and a Point and Figure (P&F) chart, the P&F showing a triple bottom breakdown. For discussion on this together with a prediction of a likely stock market crash if there isn't an immediate bounce from these highly oversold levels, take a listen to the first part of Financial Sense Newshour on 19/01/2008 with Robert McHugh and Gary Dorsch on this mp3. Robert McHugh point out that the wide measure of the US stock market, the Willshire 5000 has lost 2.6 Trillion dollars in the last 3 months.
More all-time highs! $922.50. 2008-01-14
Monday 14th January 2008: 9.44 p.m.
Gold is buzzin' today! The London AM and PM Gold Fixes were $911.50 and $902.00, a new record in the morning again. Silver is clearly over $16.00, $16.36 as I write. In Sterling, spot market gold is at £461.94 (US$903.90) as I write, which means that a gold Sovereign is worth 461.94*.2354= £108.74 as melt value! Well over 100 quid. At the start of this gold bull market, they were worth less than 50 pounds each and even as late as 2004 could be obtained for £60 quite easily by astute buyers on eBay from reputable dealers.
Today's high in the April 2008 contract was $922.50 according to the NYMEX website data - compare that to the 1980 all-time intraday high of $895.00 on 21/1/1980 and you have a clear gap of $27.50 above that old record.
Gold is buzzin' today! The London AM and PM Gold Fixes were $911.50 and $902.00, a new record in the morning again. Silver is clearly over $16.00, $16.36 as I write. In Sterling, spot market gold is at £461.94 (US$903.90) as I write, which means that a gold Sovereign is worth 461.94*.2354= £108.74 as melt value! Well over 100 quid. At the start of this gold bull market, they were worth less than 50 pounds each and even as late as 2004 could be obtained for £60 quite easily by astute buyers on eBay from reputable dealers.
Today's high in the April 2008 contract was $922.50 according to the NYMEX website data - compare that to the 1980 all-time intraday high of $895.00 on 21/1/1980 and you have a clear gap of $27.50 above that old record.
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