Thesis change time? Gold approaching $760

[c1ue]

Silver also not happy.

This is, of course, a very short term reaction to Fannie/Freddie, but if these prices hold up(down) for a couple of weeks...

SPOT MARKET IS OPEN closes in 4 hrs. 48 mins. Sep 10, 2008 12:27 NY Time Bid/Ask 761.60 - 762.60 Low/High 758.00 - 784.40 Change -14.40 -1.86% 30daychg -61.40 -7.46% 1yearchg +59.40 +8.46%

Sep 10, 2008 12:27 NY Time Change Silver 10.88 -0.36 Platinum 1169.00 -42.00 Palladium 225.00 -5.00 Rhodium 4,510.00 -190.00

[Tulpen]

Re: Thesis change time? Gold approaching $760

The day before yesterday I started a buildup in long gold and oil (currently 90% oil and 10% gold on about 10% of my investment allocation). I will work gradually to 70% gold and 30% oil on a maximum of 50% of my investment allocation.

[FRED]

Re: Thesis change time? Gold approaching $760

As gold falls below the $780 price forecast by the Dollar Ratchet theory, we are exploring three possibilities:

1. The theory of the Dollar Ratchet is incorrect: foreign central banks are not trying to manage the dollar down to prevent a disorderly collapse. The periods of dollar correction and recovery are cause by other factors.
2. The theory of the Dollar Ratchet is correct: foreign central banks are trying to manage the dollar down to prevent a disorderly collapse, but the result in the current instance is a longer and stronger dollar rally than we expected, and thus a deeper commodities correction.
3. The theory of the Dollar Ratchet is correct: foreign central banks are trying to manage the dollar down to prevent a disorderly collapse, but cooperation is failing.

If #3 then this is it, the Big "Ka" disinflation before the "Poom" inflation that collapses the dollar due to capital flight from the US and dollar repatriation by foreign entities. The Big "Ka" is caused by liquidation of assets in preparation for moving money outside the US.

[jtabeb]

Re: Thesis change time? Gold approaching $760

As gold falls below the $780 price forecast by the Dollar Ratchet theory, we are exploring three possibilities:

1. The theory of the Dollar Ratchet is incorrect: foreign central banks are not trying to manage the dollar down to prevent a disorderly collapse. The periods of dollar correction and recovery are cause by other factors.
2. The theory of the Dollar Ratchet is correct: foreign central banks are trying to manage the dollar down to prevent a disorderly collapse, but the result in the current instance is a longer and stronger dollar rally than we expected, and thus a deeper commodities correction.
3. The theory of the Dollar Ratchet is correct: foreign central banks are trying to manage the dollar down to prevent a disorderly collapse, but cooperation is failing.

If #3 then this is it, the Big "Ka" disinflation before the "Poom" inflation that collapses the dollar due to capital flight from the US and dollar repatriation by foreign entities. The Big "Ka" is caused by liquidation of assets in preparation for moving money outside the US.

Is anyone else scared yet? I am.

[Starving Steve]

Re: Thesis change time? Gold approaching $760

Who cares what this is? You use it as a buying opportunity. It is called, "the gift-horse".

You sit back, watch the carnage, and SLOOOOOWLY buy into silver, gold , platinum, and oil. And take delivery if possible.

On the stock markets, you buy the best stocks, i.e, the ones that pay the highest and safest dividends. Also, don't wander too far from oil, natural gas, and atomic energy.

[WDCRob]

Re: Thesis change time? Gold approaching $760

[*]The theory of the Dollar Ratchet is correct: foreign central banks are trying to manage the dollar down to prevent a disorderly collapse, but cooperation is failing.

Hmmm... apparently I've learned at least something in my two years here. Because I was wondering last night if what's happening is that the CBs were trying to bring the dollar down, but failing.

Specifically I was wondering what if "markets were remaining irrational longer than... " and people were simply refusing to give up on the dollar as a refuge in a crisis despite the wishes of Treasury and the Fed.

If that's the case, what do the CBs do? Keep trying harder until there's a really big, disorderly Poom? If it's really a political choice in the end... is uncontrolled, runaway inflation (as opposed to 'major' or controlled) still better than deflation?

[Tulpen]

Re: Thesis change time? Gold approaching $760

Also, don't wander too far from oil, natural gas, and atomic energy.

When peak oil becomes a general public term (it is not currently) I will watch uranium and funds like NLR. Now is still not the right moment for nuclear IMHO.

[ASH]

Re: Thesis change time? Gold approaching $760

Is anyone else scared yet? I am.

Let's see...

Behind door #1, my adopted investment thesis may be wrong, and I could lose a lot of money.

I'm young enough that losing a lot of money -- while undesireable -- is not disastrous. Moderately scared, but it is the fear of appearing foolish as opposed to the fear of retiring as a bum.

Behind door #2, my adopted investment thesis is essentially right, and I just have to ride this out.

Again, moderately scared -- I'm young enough, and don't have enough invested, to be terrified of losing it all. I can therefore hold on as long as I believe in my adopted investment thesis with only minor dyspepsia. (I'm afraid of heights, but I controlled it well enough to make it through jump school -- market fear I can handle.)

Behind door #3, my adopted investment thesis is essentially right, but I am about to be plunged into a dangerous and chaotic period -- for which I am better prepared than most, yet which is not to be preferred to order and stability.

This is scary, because I will not be facing the crisis on my own terms. The flip side of being young with little invested is that I have not had enough time to build up the wealth required to achieve what security there is to be had. Unlike my hero GRG55, there is no bunker. ;) I've made what preparations there are to be made with the resources I have, and that's better than most if TSHTF, but it probably won't be fun.

[bobola]

Re: Thesis change time? Gold approaching $760

The big question in my mind is when do the central banks start buying big after bringing prices down?

The following is from Wikipedia on how Nathan Rothschild made a killing in London by tricking the public into thinking the English lost to Napoleon at Waterloo;

To the Rothschilds, [England's] chief financial agents, Waterloo brought a many million pound scoop. ... a Rothschild agent ... jumped into a boat at Ostend ... Nathan Rothschild ... let his eye fly over the lead paragraphs. A moment later he was on his way to London (beating Wellington's envoy by many hours) to tell the government that Napoleon had been crushed: but his news was not believed, because the government had just heard of the English defeat at Quatre Bras. Then he proceeded to the Stock Exchange.
Another man in his position would have sunk his work into consols (securities issued by the UK government), already weak because of Quatre Bra. But this was Nathan Rothschild. He leaned against "his" pillar. He did not invest. He sold. He dumped consols. ...Consols dropped still more. "Rothschild knows," the whisper rippled through the 'Change. "Waterloo is lost." Nathan kept on selling ... consols plummeted—until, a split second before it was too late, Nathan suddenly bought a giant parcel for a song. Moments afterwards the great news broke, to send consols soaring. We cannot guess the number of hopes and savings wiped out by this engineered panic.

If the Fed & CB's are engineering the 'ka', when is the right time to buy...??

[orion]

Re: Thesis change time? Gold approaching $760

How about this scenario, oil breaks the $100 mark (we are almost there at about $103) so the Fed declares inflation dead and whacks another amount off the Fed Funds rate which should start the dollar to weaken again. Wash, rinse, repeat .... I think if the CB's are trying but failing then we must see the Fed do something to weaken dollar (guess taking over Frannie didn't work). If we see this we know dollar rachet is the plan but how long it will work is another question.

[Chris]

Re: Thesis change time? Gold approaching $760

When peak oil becomes a general public term (it is not currently) I will watch uranium and funds like NLR. Now is still not the right moment for nuclear IMHO.

Sir, isn't that the truth! Interestingly, the uranium spot price and contract price are both robust which suggests that this massive sell-off in the uranium sector is a case of forced-hands.

Personally, i'm 50% down on that sector but that pales in importance compared with the topic of this thread. Although I sometimes find Jim Sinclair's commentary quite obtuse, I gather he's also wondering if this is the big one:

Jim Sinclair’s Commentary
Here comes the third “Oops” concerning the Fannie/Freddie deal.
Nothing has changed. The dollar rally is without legs fundamentally.
There is no wonder that the stabilizers will throw a match on the barn to keep markets from going into panic mode as they threatened.
Recall the statement that before it was all over the government would burn down the barn? The barn is the US dollar trying to avoid consequences.
There is an arithmetic limit to intervention in terms of the other currency reserves you hold as swaps are public each month on the statement and would be a sign of major intervention weakness.

[nathanhulick]

Re: Thesis change time? Gold approaching $760

I changed my thesis from buying to buying with both hands.

[*T*]

Re: Thesis change time? Gold approaching $760

According to John Authers of the FT, there have been large inflows into US equities (9, 'Turbulent Times').

Also rumours of large inflows into 30-year treasuries.

Looks to me like folks are pricing in deflation followed by a US-first recovery...

You choose whether to fade Mr market...

[LargoWinch]

Re: Thesis change time? Gold approaching $760

I changed my thesis from buying to buying with both hands.

nathanhulick; you have my vote for "Quote Of The Day"

[Andreuccio]

Re: Thesis change time? Gold approaching $760

I changed my thesis from buying to buying with both hands.

I've been watching the price of bags of 90% silver coins for the last few hours. I had been considering a $1000 (face value) bag from Tulving, but they sold out, so I started looking at APMEX. They sold out of $1000 bags about an hour ago. Now they're out of all products in that category, including $500 and $100 bags and $10 rolls.

Yet the price keeps dropping.