Gold bull says: Gold down, USD Up !

[icm63]

Just like japan...

http://www.safehaven.com/article-14282.htm

No, I am not talking about the world coming to an end, eating Gold, or using Gold to buy groceries. Last I checked, stocks and bonds were not used to buy food or guns! I am talking about value as well as stabilization and enhancement of one's net worth in a scary investment environment. Those who plan to hold U.S. Dollars will profit from the Dollar's rise during the pending wave(s) of further deflationary panic. "Cash is king" during deflation. However, eventually the world will pull the plug on the U.S. Dollar as the reserve currency of the world. Though this could come about as an orderly process, history suggests otherwise. I don't know when this will happen and, at this point, Obama and Bernanke probably don't know either.

I think another buying opportunity in Gold is pending (still...). Once the US Dollar starts rising, Gold will take an initial hit precisely because so many are holding Gold for the wrong reasons right now. When the Dollar spikes higher, you can bet the Gold bulls and momentum traders will panic, shorts will press their advantage, and a brief price spike down will allow longer-term oriented investors to pick up more Gold on weakness.

[jiimbergin]

Re: Gold bull says: Gold down, USD Up !

Just like japan...

http://www.safehaven.com/article-14282.htm

I would love one more big pull back in gold. I only have a little more than 20% in pms and keep buying on the small dips, but sure could use a big one.

jim

[icm63]

Re: Gold bull says: Gold down, USD Up !

I am with you...its coming...LONG GOLD, SHORT $USD is soo crowded there is a shake out coming...

BUY GOLD UNDER $800...

[metalman]

Re: Gold bull says: Gold down, USD Up !

Just like japan...

http://www.safehaven.com/article-14282.htm

this is the 'first bounce' theory. now i've heard it out of 43,874 others since ej wrote about it in mar 2009... i'm worried. everyone wants one last chance to buy cheap oil, gold. etc... but... what if no more disinflations???

[icm63]

Re: Gold bull says: Gold down, USD Up !

Would be, could be, should be !

The Planet of the "OULDs"... has invaded !

It will in 14 days...

[MulaMan]

Re: Gold bull says: Gold down, USD Up !

I'm waiting to buy cheap real estate with my gold and oil stocks.

and I don't mean "cheap" real estate but I want cheap "real estate".

[jpatter666]

Re: Gold bull says: Gold down, USD Up !

this is the 'first bounce' theory. now i've heard it out of 43,874 others since ej wrote about it in mar 2009... i'm worried. everyone wants one last chance to buy cheap oil, gold. etc... but... what if no more disinflations???

Metalman, I agree that's worrying me as well that everyone is hoping to pile into commodities and gold on the next decline.

However, the funds involved are so large, that while we might not see declines on the level of last year, we still are likely to see something.

What I *do* think however, is that physical gold and silver are likely to dry up just as they did during the panic last year. So if you want physical, I'm thinking take the hit now or fairly soon. Doesn't matter if the spot price is low if there is none to be found....

[jiimbergin]

Re: Gold bull says: Gold down, USD Up !

Metalman, I agree that's worrying me as well that everyone is hoping to pile into commodities and gold on the next decline.

However, the funds involved are so large, that while we might not see declines on the level of last year, we still are likely to see something.

What I *do* think however, is that physical gold and silver are likely to dry up just as they did during the panic last year. So if you want physical, I'm thinking take the hit now or fairly soon. Doesn't matter if the spot price is low if there is none to be found....

That is why I keep buying physical. I try to wait to buy more of the GTU, CEF, etc., but on some days I can't stop my fingers from clicking on the BUY button

[big67]

Re: Gold bull says: Gold down, USD Up !

That is why I keep buying physical. I try to wait to buy more of the GTU, CEF, etc., but on some days I can't stop my fingers from clicking on the BUY button

I too think gold is in for a correction.
This is just a gut feeling, but think about these possible rationals:
1- gold tested 2 times the $1000 barrier over one year and always retrenched. Moreover it is hovering in the 920-970 range since some time now
2- at this point a further gold advance to break the $ 1000 barrier probably needs a shock of some kind, and I do not see this coming in the next 2-3 months: Ben has learned the lesson and we will not see a new Lehman Brothers for some time, at least not with the new bank accounting rules
3- India is the bigger physical gold market for traditional reasons, and this year demand from India is far lower than usual due to the high price of the metal
4- gold is not what I would define a rewarding speculative market and if you look at it in the last six months you easily see that you would have earned much more speculating on the stock market swings

[Master Shake]

Re: Gold bull says: Gold down, USD Up !

4- gold is not what I would define a rewarding speculative market and if you look at it in the last six months you easily see that you would have earned much more speculating on the stock market swings

I'm not buying gold (and silver) to speculate and make money. I'm buying it as wealth preservation insurance.

[big67]

Re: Gold bull says: Gold down, USD Up !

I'm not buying gold (and silver) to speculate and make money. I'm buying it as wealth preservation insurance.

I agree with your motivations: gold should be bought just for this wealth preservation reason.
Anyway, where there is a market for something, there you have speculation, and the fact that this something is gold makes little difference in my opinion.

I do not want to pretend to be a rugged investor, these are just gut feelings.

[idianov]

Re: Gold bull says: Gold down, USD Up !

this is the 'first bounce' theory. now i've heard it out of 43,874 others since ej wrote about it in mar 2009... i'm worried. everyone wants one last chance to buy cheap oil, gold. etc... but... what if no more disinflations???

Note the similarities in gold price and sentiment 2006-2007 and 2008-2009.

gold sentiment.PNG

gold sentiment2.PNG

Also, notice the GTU premium is 4% compared to 20% early in 2009 which indicates low speculative interest.

I have been slowly accumulating GTU since the beginning of August. I like low premium.

gtu premuim.PNG

And here is the US Gov deficit which needs to be directly monetized ASAP!

Deficit.jpg

I am watching Dow/Gold ratio for resistance around 10-11 similar to August 2008.

dow gold ration.PNG

[icm63]

Re: Gold bull says: Gold down, USD Up !

Another period of disinflation can not be ruled out. That saw gold fall from $1000 to $750. An event like this maybe second and last chance to enter the gold market at lower prices. ...HERES hoping !

[big67]

Re: Gold bull says: Gold down, USD Up !

Note the similarities in gold price and sentiment 2006-2007 and 2008-2009.

[ATTACH]2045[/ATTACH]

[ATTACH]2044[/ATTACH]

Also, notice the GTU premium is 4% compared to 20% early in 2009 which indicates low speculative interest.

I have been slowly accumulating GTU since the beginning of August. I like low premium.

[ATTACH]2047[/ATTACH]

And here is the US Gov deficit which needs to be directly monetized ASAP!

[ATTACH]2046[/ATTACH]

I am watching Dow/Gold ratio for resistance around 10-11 similar to August 2008.

[ATTACH]2048[/ATTACH]

Thank you for your analysis: I found some elements quite interesting. New to me the use of google, but this is very clever.
Take care

[ST]

Re: Gold bull says: Gold down, USD Up !

i'm worried. everyone wants one last chance to buy cheap oil, gold. etc... but... what if no more disinflations???

Noland (friend of Steven Keen):

The Depressed U.S. Consumer and Global Reflation:

The global reflation thesis has been somewhat under fire of late. Chinese stocks dropped about 25% from trading highs set earlier this month. An abrupt slowdown in bank lending – and even discussion of more stringent bank capital requirements - has many now questioning the underpinnings of Chinese recovery. Here at home, a bevy of data on household spending, confidence, and job losses point to stubborn consumer frugality. Can global reflation make headway without a recovery in U.S. consumption?

As the year has progressed, optimistic adherents to the global reflation/recovery thesis have multiplied. Of late, however, the reflation protagonists have been roused. Many hold the view that the Chinese situation is much more tenuous than advertised. Moreover, this camp views global recovery as impossible in the era of the stingy American consumer. Talk of deflation risk has turned more boisterous.

My view differs from both the bullish consensus reflation viewpoint and that of the protagonists/ “deflationists.” And, to cut to the chase, I do believe a period of global reflation can evolve in the face of weak U.S. consumption. And while a troubled bond market would likely halt reflation in it tracks, a downtrodden American consumer is an impediment to be hurdled with a powerful boost from ultra-easy global “money.” Indeed, deep underlying U.S. fragility – and resulting market assurance that the Fed is indefinitely wedded to ultra-loose policy – is a critical facet of my global reflation thesis.

Fundamentally, it is my view that the nexus of global reflation emanates from irreparable structural impairment to the international dollar reserve system. The global dollar monetary “regime” some time back stopped functioning as a disciplining or restraining force for Credit systems around the world. Today, even in this nervous post-crisis landscape, the prospect of an unending expansion of dollar reserves works to foment synchronized Credit and speculative excesses. And the deeply maladjusted U.S. “Bubble” economy ensures heavy ongoing non-productive U.S. debt issuance that manifests as enormous trade and speculative dollar financial flows - to further inundate the saturated world. The unfolding breakdown in this dollar “system” is the genesis of global inflationary forces.

I’ve read and listened to the view that an imminent dollar rally will rejuvenate global deflation. And while the dollar and currency markets will surely fluctuate, I view nothing on the horizon that will alter the fundamental issue of massive outgoing dollar flows. Policymaking is now trapped in a scheme of promoting excess in the name of system stabilization. The Fed is poised to again retain a loose policy stance for a far too extended period, and there will be no let up in the massive issuance of federal (Treasury, agency, and GSE MBS) debt.

A central aspect of my global reflation thesis holds that China, Asia and the “emerging” economies are this cycle’s “asset class” with the strongest inflationary biases – hence the areas most prone to immediate and spectacular inflationary manifestations. These “hot money” magnets then work to rejuvenate animal spirits throughout the global leveraged speculating community, with rapidly recovering Credit systems and economies spurring a more general rebound in global activity. The more commodity-oriented and manufacturing-driven economies are the first to benefit. The “services” and housing-centric U.S. economy badly lags in this reflationary scenario.

Many analysts that do recognize U.S. vulnerability also see troubling aspects to the Chinese economy and financial system. I see them also; they just don’t alter my fear that China has likely entered a precarious period where Credit, speculation, and spending excesses tend to really run amuck.

Expect increasing concern from China’s policymakers – and lots of tinkering (bank capital requirements, lending restraint pronouncements, warnings against speculation, interest-rate adjustments, etc.). And expect markets in China and around the world to grapple mightily with the course of Chinese policy responses. Keep in mind that the “terminal phase” of Credit Bubble excess is notorious for outflanking fainthearted policymaking. And it is indeed acute financial, economic and social vulnerabilities that I suspect will restrain Chinese policymakers from applying the type of tough measures necessary to rein in (traditionally unwieldy) late-cycle excesses.

It is the combination of deep structural issues/vulnerabilities in the U.S. and China that have the reflation antagonists and deflationists energized. They see confirmation in their view from recent U.S. economic data and Chinese developments. Yet it remains a preeminent challenge of Credit Bubble analysis to recognize that fundamental issues can inhibit, repress and check excess – but there are circumstances when system maladjustment and fragility instead tend to cultivate a backdrop of policymaking and market tolerance.

As I’ve written over the years, major Credit Bubbles invariably evolve from some underlying source of Monetary Disorder. Stable and sound Credit systems are simply not breeding grounds for Bubbles. And the greatest Bubbles are fashioned when profound money and Credit distortions meld with policymaker confusion and acquiescence. As we’ve witnessed – at home, in China and around the world – acute financial and economic fragility has engendered a backdrop of unprecedented global policymaking accommodation. And predictably accommodating policymakers have cultivated an environment of synchronized global marketplace reflation accommodation.

It is with this analysis in mind that I am analytically forced to give global reflation the strong benefit of the doubt. I will be dismissive of deflation chatter as long as the markets readily accommodate Trillions of U.S. debt issuance here at home and tolerate excesses within domestic Credit systems across the globe. Today, the dollar index traded below 78 and crude traded above $74. The bond market is understandably unsettled. Ten-year yields traded at 3.72% on July 27, dropped to 3.48% on July 31, jumped to 3.85% on August 7, sank to 3.43% yesterday and closed today at 3.57%.

I’ll posit that artificially low interest rates everywhere are global reflation’s greatest champion. It is the nature of Bubbles that the longer markets misprice risk the greater the pain when the Bubble eventually bursts. Credit and market analysis could not be more challenging or fascinating.