Portfolio Log-inGold and Silver
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3/6/12
Stocks have fallen out of bed.Gold has fallen out of bed. At $1680, gold is about back to where we saw the February break out gain traction thanks to the moves of Fed led Ben Bernankster. Operation twist continues in perpetuity to keep rates low and the Fed has also provided multi trillion dollar swap lines to keep the Euro banks operating. What many seem to miss is that QE3 is actually underway though the Fed has figured out that it is better to go about its usual business of slathering the financial system with the grease of funny money without calling it QE3. I have called it QEx.This area for gold is a major area of support. If the gold market falls further, it will signify a sudden and major change in thinking – that the Fed has given up on QE for 2012, as crazy as that sounds.
In other words, I don’t believe the Fed Head and his cohorts are not packing their bags for a May through November trip to Cancun because it’s an election year and they are not supposed to do anything more in 2012, yet the markets seem to think this is the case.
So the Fed has the markets right where it wants them – in a bit of a snit that there will be little chance for officially announced QE part-whatever as the nation moves closer to the November election. Time and time again, Bernankster has been a bear killer in the stock market by eventually spiking the punch bowl even more.Again, with the Fed it is a proposition of watching what it and its central banking cousins do. The Fed ultimately has no choice but to continuously greasing the wheels of the economy through its ongoing accommodation. The European Central Bank and the Bank of England will be doing liquidity injections at the same time, on an as need basis. In the U.S. the economic data has been too noisy to negative. Between some of the major government goosed economic reports (I will be surprised if the labor department doesn’t come up with more spectacular employment numbers on Friday) and privately generated economic data that’s weak it’s hard to know what to believe. If I were a betting man, I would bet that the Fed has no intention of putting the monetary brakes on at this point in the economic suspense.
TopLet’s also remember, the Treasury Department’s quarterly refunding looms next week (http://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf). Hmm, how to spark a flight to quality to coax investors to participate in next week’s fun? Spook a variety of markets that benefit by QE by planting, or feigning a little monetary responsibility by lobbing some doubtful remarks about QE into the market place. Is it conspiracy theory talk? In the case of the Fed, I prefer to call it “connecting the dots”. Though it says it wants to be more transparent, the Fed only tells us what it wants you to hear, leaving it up to interested parties to figure out the rest.
Ben Bernankster is a liar and I don’t take at face value what he says….
I simply do not like Bernanke, what can I say? I am offended by intellectuals such as Bernanke who do not possess discipline – made worse by the tremendous power they possess to further their own goals at the detriment of society in general. What is Bernanke’s constructive purpose? You can answer that question in many ways, but ultimately his actions will lead to no good. Just my two cents there on Ben.
And to add insult to injury today, Obama holds a rare news conference on this Super Tuesday. That ought to be a market confidence builder like all of his other press conferences. Right? Hahaha!
Have a day!
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3/5/12
Zerohedge.com reports Citi is telling its clients that gold will reach $2400 dollars an ounce this year and “3,400 in future years”. The Citi report goes on to warn of short term weakness that could take gold back to $1,600 which Citi says would be an even better opportunity. This, of course, is picking numbers out of a hat, but it comes from the hat of a well known brand name in the financial industry, even if that brand name also qualifies to be in the ultra club of too-big-to-fail-Zombe banks.
The only bit of newsworthiness that I see in this is that a mainstream financial entity has something positive to say about gold, but then again, these analysts from the ‘street’ have for years missed the gold rally so since it’s Monday I view Citi’s gold dispatch in a curmudgeon like way.Thanks Citi, but you should have been pounding the gold table years ago.
So while we’re at the prediction game this morning, let’s go to video tape, as a famous sportscaster used to say. The first video from 2011, which actually popped up on the Lou Dobbs (of now Fox fame) FaceBook fan page features a fellow by the name of Lindsey Williams. Williams claims to have an inside track to two “elite” sources within the Iluminati. Williams is on record predicting $3,000 to $4,000 gold by the end of 2012. Williams proclaimed the dollar “will be deadm bot out of existance, but dead by the end of 2012 in order to bring in a new world currency.” Williams, through his unnamed sources said such a new world order currency will have to be backed by gold! Williams was interviewed by Alex Jones of Prisonplanet TV who took a moment to vent over how he and Williams were and still are always declared to be wrong. This s the same guy who strongly suggested that the gulf coast would slide into the gulf during the BP disaster.I’ve got news for both Williams and Jones, if there is a future one world currency and by extension the end of U.S. sovereignty and the individual sovereignty of every individual nation (puzzle over that for a few minutes) – then Williams was wrong in 2011.To rejigger the trillions in fiat paper debt that over hang the present world financial system ($109 trl in 2010 World Economic Forum) versus the fairly finite amount of available gold pegged at about $10 trillion worth (in 2012), the likely price of gold in Williams’ 2012 doom scenario should actually be many multiples of his $4,000 forecast for 2012. If they (the establishment) keep the ball rolling to 2020, to maintain some modicum of economic growth, world debt will have to grow to $200 trillion, according to the World Economic Forum!
Then there is well known CNBC and Fox Business guest Peter Schiff, who runs his own gold and metals bullion company. (I hope none of my readers have used his overseas storage “services”). This is from 4 years back…
$5,000 this year? Settle down there, Sparky! Last I checked gold was around the $1700 mark. The gold market still has yet to gallop up and over $2,000 as has been widely predicted this year. That’s a bandwagon that your writer has jumped on as well, though in my writings at the beginning of the year I cautioned that getting to $2000, while likely, is going to be a volatile ride (eg. the shenanigans of last week). Color me skeptical, but I am not seeing $3k, or $5k gold in 2012 unless there is some sort of huge and unanticipated rent (tear) in the fabric of society.
That gold remains below $2,000 is a testament to just how much the paper-bugs want their system to live and a testament to the power they possess: they jam the system with funny money; they steal if they have to ala MF Global when the need arises; they change the rules to ensure they don’t lose while they kick the proverbial can down the road ala the ISDA failing to declare a credit event in order for CDS to be exercised even after a 70% haircut on Greek debt. Rumors of the death of dollar hegemony are greatly exaggerated (for now) due to this sort of method of operation.This is also why I wrote at the beginning of the year that the longer the powers that be extend their game of limitless creation of liquidity and by extension their growing corruption, the greater the chance that we shall see some sort of systemic implosion that might end up creating a world where we wake up one morning to an overnight skyrocket in the price of gold, but who knows if it happens (though the odds of a collapse seem more and more likely, how such a disruption would transpire and the greatest mystery of all, which has made many eat their predictions: When?
Maybe it is a touch unfair that I use a few video examples from a few years back to demonstrate the folly of longer term price forecasting. Schiff even admits that he doesn’t have a crystal ball, but since he’s pandering to the tv interviewer. he ends up falling into the trap of being pinned down for a price prediction. Even the use of technical tools, imho, has largely gone awry both short and long term in the lithium like atmosphere of massive central bank printing. Massive liquidity pumps distort all sorts of asset values and render many once reliable technical indicators unreliable. While I agree with many of the reasons offered in the videos as to why the long term outlook for gold is bullish, scoping in on an exact price a year, or even three years from now is looking at gold from the wrong perspective.So take what Citi, or any of the others say with a grain of salt even if there may be some positive connotations for our industry. I am very much coming around to the notion that hyped up forecasts create the wrong motivation to buy gold and the metals in general. I speak of greed, especially of fantasies involving get rich quick price moves. the gold business would be better served by under predictions and then over delivery on an actual future price.
The fear purchase of gold is alive and well. That’s something that can’t be fought because there are legitimate reasons to be fearful, though there are those who embellish those fears and dupe people into paying too much for gold. We can look at it two ways. Doing things out of fear is the wrong way of doing things (you can become an easy mark). Or we can say doing things out of fear, like buying gold, relies on a bad gut feeling – in the case of gold the bad gut feeling is about the future prospects for the out of control financial system, along with all of the other geopolitical tensions. Choice number 2 brings me to…Prudence, or seeing gold as a form insurance against future problems. It makes no so sense why otherwise well educated people would concentrate wealth into paper.That is imprudent. Now, I am not saying that one should “diversify” in the tradition of the Wall Street paper bugs. Their idea of diversification is some money in government bonds (paper), corporate bonds (paper), stocks (paper), GLD (paper), Munis (paper), ETFs (paper), and if you have a rare financial advisor, he puts you into 10% gold. That is is not real diversification – that is concentrating wealth in paper with a smidgen of gold as if you are adding a little bit of pepper to your soup. Many investors need to put away the childish things that Wall Street has taught. Perhaps this is a time not diversify as Wall Street sees it, but to concentrate investing into in the direction of certain hard assets that have been working in inverse to what is going on with the financial system – like madmen who see no problem with undimited doses of money injections? And by concentrate, I mean holding the lion’s share of investment in an area that has real value. I’m not giving personal advice, but just making a suggestion.
Your best friend is to be aware of long term trends. The trend is your Friend. We know over the last decade gold has risen in lockstep with every upward adjustment to the national debt ceiling. If government inflation data were reliable we would see a correlation between higher prices and higher gold. Prices, as I posted on the http://financialbalderdash blog over the weekend, are way up over the last decade, but alas we get watered down government inflation numbers – can’t pay those Seniors too much social security (gotta keep demand for cat food high). We also know that over the last 40 to 60 years that our dollar, which remained fairly constant in its buying power from 1800 to the early 20 the century, has withered away and has lost about 98% of its buying power since the days of government issued silver and gold certificates (now long gone).Yes, the gold price forecasts will continue to come but that’s all noise to me in what will be an ongoing battle to keep the overall Western financial system afloat by the Central Bankers, while those same monetary authorities take the opportunity when they can (as they did last week in gold and the week before in a failed paper dump of silver futures at the CME) to sully the reputation of the metals and delinking the upward trend of metals from their irresponsible behavior of infinite money creation (and even as these same Central Banks buy gold).
Have a great Day!
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January 16, 2012
Wall Street Break; Euro Zone Mess; Gold Rising; A Packed Calendar
1/16/12
On Friday, Europe got the downgrades that had been for weeks warned of and largely built into the markets pricing mechanism. While there was some closing market turmoil and drama Friday, Major Euro markets like the Dax, FTSE and Cac, are each trading modestly higher with gains of less than 1%.S&P futures have been little changed today while Wall Street has a day off for Martin Luther King, Jr. day.
Gold bulls are back at it again, lifting it another $12 to the $1642 level.
If you’re thinking we get a respite from the Euro drama, think again. Greece drama continues on this long holiday weekend. The country is so hard up for money that 14-billion-euros in interest payments being made by March 20 appears to be in doubt. The key word in the last sentence is March. Yes, this is going to drag on for months more. This weekend’s drama is focused on a breakdown in talks between private Greek bondholders (the banks) and the Greek government. The banks remain fully aligned with protecting their own best interests and that does not include taking a 90% haircut on their holdings. The writing is on the wall, to satisfy the banks, at some point Europe will have to monetize this crippled Greek debt so that the banks can remain relatively whole while the overall European financial system and its people suffer. That’s the reality of the true game, and it is why gold has nowhere to go but higher over the long term (of course with the now required volatility just to make things fun).
Either the above scenario happens, or the EU is kaput at some point. Germany has maintained the stiff upper lip of wanting to avoid monetization because of its past glaring problem of hyperinflation in the 1920s. The German’s hold the magic keys and I just don’t get the feeling that they are sympathetic enough to the plight of the Greeks, or the Italians by throwing billions of euros into a so called stability mechanism. It makes me wonder what the Germans will demand in return for even tacit support of a plan that would rescue the inefficient economies of Europe that are now over the proverbial barrel. At least the days ahead won’t be dull.
Back in the US. The week ahead promises to be an interesting one. Bank of America will get the ball rolling when it reporters earnings Tuesday morning. Other zombie banks due to report in the coming days include Citi and Goldman Sachs (which is technically a bank in the eyes of the government, though I am still looking for a Goldman ATM lol).
Other earnings due this week include numbers from Intel, IBM and Google.
There are also the make believe inflation numbers by way of the government’s PPI and CPI on Wednesday and Thursday. Just recently I was at my CVS pharmacy (I visit their a lot in an effort to remain above the daisies) and noted the smallest cans of tuna fish ever – 4 ounce cans on special for 99-cents. Unit price wise that’s a ripoff. I’m surprised they didn’t label the cans as “fun sized” portions. But smaller packaging is nothing new over the last 5 years and does a great job of masking price increases.
Some of the pundits are saying watch the shares of Carnival Cruise (CCL) in the aftermath of the tragic grounding of a ship off the coast of Italy, owned by a unit of Carnival. Sure, their could be a knee jerk lower, but the CNBC article over the weekend questioning the viability of cruise industry was a bit over the top. CNBC? Does this sort of thing happen a regular basis? No. One of the things I disliked most about CNBC were the meetings where we would try to come up with some “clever” angle to a story. Most ideas were not “clever”.
Have a great day!
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January 10, 2012
Gold’s 11-year bull charges into 2012
TopBullion gains more than 10% in a record-setting 2011
Blanchard Economic
Research UnitEXPERT INSIGHTS FROM:
Donald W. Doyle, Jr.
Chairman and CEODavid Beahm
Vice President and Director of Marketing and Economic ResearchPoll sees $2,140 this year
Another year, another big annual gain for gold. Closing Dec. 30 at $1,566, bullion finished 2011 up more than 10% to keep its 11-year streak intact, despite falling about 20% since setting a new nominal high above $1,920 in September. The metal has climbed more than 17% a year, on average, since 2001. Could $2,000 be in the bull’s-eye this year? Yes, according to a median estimate in a Dec. 29 Bloomberg survey of 44 experts, which sees prices rallying more than 35% to $2,140. And gold was rising above $1,625 Thursday as U.S. troops were deploying to Israel for a major missile drill, raising geopolitical jitters over oil-rich Iran and boosting gold’s safe-haven stature.
Gold in 2011: Mission accomplished
“It’s done its job this year of protecting investors,” said Michael Cuggino of Permanent Portfolio Funds. “Some people will get out of gold, but the longer-term investors will remain.” And one of the grand old men of investing, Dow Theory Letter publisher Richard Russell, summed up the year thusly: “This is the longest bull market of any kind in history in which each year’s close was above the previous year. This fabulous bull market will not end with a whisper and a fizzle. I continue to believe that the upside gold crescendo of this bull market lies ahead.” To the doubters, Russell said: “I note the frustration and anger of the anti-gold crowd. To miss 12 years of rising prices is enough to make any investor furious with himself.”
Silver Eagle sales soar to annual high
In a topsy-turvy year for silver, which peaked in April near a record $50 before ending down almost 10%, the U.S. Mint sold its highest number of Silver American Eagle coins for the fourth straight year: almost 40 million ounces of “poor man’s gold.” [Note: Despite silver’s reversal, its average annual price of $35.12 set a new price record, a 74% gain over the 2010 average annual price. And according to the Silver Institute, silver’s average annual price has increased 703% since 2001.] The Mint’s other major bullion product, the Gold American Eagle, saw sales hit one million ounces, down from 1.2 million in 2010 but still a top-10 all-time finish. Investors can now place orders for the 2012 versions of these classic bullion coins, sales of which are starting off strongly in 2012. Read more
Citi stands by $2,400 gold call
With gold prices topping $1,620 this week, Citi analyst Tom Fitzpatrick called an end to the recent correction and also reaffirmed the bank’s $2,400 forecast for 2012. “A rally is now back on the cards,” he wrote. “Only a weekly close below $1,535 means corrections may be deeper.” Read more
Hedge-fund giant bullish on bullion
Bridgewater, the world’s largest hedge fund, also remains bullish on gold, according to The Wall Street Journal, citing its co-chief investment officer, Robert Prince, who characterized the U.S. and European economies as “zombies” that can be kept vertical only with prolonged zero interest rates. Therefore, the firm’s flagship fund, Pure Alpha Strategy, “is positioned for higher gold prices … amid continued printing of money by the Fed and other central banks.” Read more
“Go long gold” in 2012
One analyst who would agree with Prince that the European debt crisis is a “long ways from over” is TrimTabs Investment Research CEO Charles Biderman. “The facts are European economies are declining, and that, stealthily, the European Central Bank has been printing trillions of new euros,” he noted Dec. 29. “Therefore, to me, the best trade idea for 2012 is to go long gold and short the euro on a dollar-cost-averaging trade each and every month. Yes, gold is down 20% from its high and might be going lower, but what I most like about gold for the long term is that emerging-market central banks remain consistent buyers of gold. And it makes sense to me that emerging-market central bankers — given the euro, dollar, and yen printing — that they will be consistent buyers for the foreseeable future.” Watch video
Gold’s track record trumps the dollar
Just how bad off is the U.S. dollar relative to gold? “We don’t own any of what we consider the economic metals, but we do own gold, which does well in downturns,” Richard Howard of the Prospector Capital Appreciation Fund recently told Forbes. “I personally have a bias against paper money and I’m loathe to get too exposed to it. The dollar is down about 98% versus gold over the last 80 years and I assume it will be down 98% versus gold over the next 80 years.” Read more
“No safe haven in currencies”
“The fundamentals have never been better for gold and I think prices are going a lot higher,” Euro Pacific Capital chief Peter Schiff told CNBC on Dec. 30. “The U.S. is a bigger disaster than Europe, but all the central banks — the U.S., the ECB, the Bank of Japan, Bank of China — everybody is printing too much money. … There is no safe haven in currencies. If you want to protect your wealth, if you want to store purchasing power, you can’t do it in a currency. You need to own gold.” Watch video
China’s golden Year of the Dragon
China, the largest consumer of gold along with India, may boost consumption by 35% in 2012 to a record, according to consulting firm Frost & Sullivan. Its Lunar New Year holiday, which starts Jan. 23, could ignite explosive buying. “This year is the Year of the Dragon, and you’re going to see not just China is a big consumer, you’ll see Taiwan, Hong Kong, Vietnam, Thailand,” U.S. Global Investors chief Frank Holmes said. In other Chinese news:
Gold trade shifts to Shanghai: “China’s decision last month to channel all gold trading through Shanghai shouldn’t damp mainland investors’ appetite for bullion, even as unauthorized trading platforms are forced to close,” MarketWatch said. “The move is likely an attempt to bolster investor safeguards rather than to discourage investment.” Read more
Central banker urges bullion buying: “The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation,” said People’s Bank of China researcher Zhang Jianhua. “No asset is safe now. The only choice to hedge risks is to hold hard currency: gold.” Read more
Pact with Japan could eclipse dollar: In major news that got lost in the holiday bustle, “Japan has indeed entered into an agreement to drop the dollar in currency exchange with China,” Brandon Smith of Alt-Market.com noted. “This means that the two largest foreign holders of U.S. debt and greenbacks will soon be in a position to tap into an export market far more profitable than that of America, and that all of this trade will be facilitated by currencies other than the dollar. It means the end of the dollar as the world reserve and probably the end of the dollar as we know it.” Read more
“We are just going to kill the dollar”
Gold bull Kyle Bass of Hayman Capital Management confirmed the endgame for the dollar in a revelation at the AmeriCatalyst 2011 event in November (a video of which is now making waves around the Internet). “The government’s idea right now is we are going to export our way out of this” debt quagmire, Bass said. “And when I asked a senior Obama administration official last week how are we going to grow exports if we won’t allow nominal wage deflation, he said, ‘We are just going to kill the dollar.’” Read more
Gold won’t fall until rates rise
The key driver behind gold remains low interest rates, financial journalist Matthew Lynn recently reminded investors at MarketWatch. “The gold price is not going to fall in any sustained way until interest rates start to rise significantly. Perhaps they don’t need to go back to 1980s levels because they are starting from a lower base. But interest rates of 10% would be necessary to create a bear market in gold. Is there any sign of that? Not yet. If anything, central banks are going to make money even cheaper this year. The precious metal will turn into a bubble one day — every asset eventually does. But it is a long way off that point now.” Read more
Gold bull won’t back down on bet
Last month Grandich Letter publisher Peter Grandich issued a $1 million challenge to three prominent gold skeptics but got no takers. Grandich has now upped the ante: He raised the stakes to $2 million (with the winnings going to charity) and also lifted the target price by $100, predicting that gold will see $2,100 before $1,000. “My views on gold remain the same. The mother of all gold bull markets continues and, after the current correction, it shall once again bloody those bears who stand in its way as it rises to a new, all-time real high within the next 24 months.” Read more
Don’t fall into a “bear trap”
Beware of a “bear trap” with gold, Index Futures Group CEO Jack Bouroudjian warned in a CNBC interview. “It’s going to start sucking people in to getting short or thinking that that story is over. That story is not over. … The world of currency debasement — that environment is not ending. We know the endgame in Europe and here in the [United] States. It is force-fed free-money inflation, and with that comes the price of gold going up and commodities across the board. … We could see a $2,200-2,300 level in gold next year.” Watch video
Golden opportunities in numismatics
Gold’s nominal record high above $1,920 grabbed most of the headlines in 2011, but CoinWeek’s Louis Golino has detailed three opportunities in collectible coins that investors should heed going into 2012: “Premiums on generic, PCGS- and NGC-graded pre-1933 gold coins remain very low by historic standards … and continue to represent good value.” Golino also noted that “the same trend emerged for generic, common-date slabbed Morgan and Peace dollars in MS63-MS66.” Be on the lookout also for “decent-quality, good-eye-appeal 19th-century coins that have not been graded, especially those with original surfaces.” These have become “harder to find,” he said. Read more
New Year’s resolution: Golden insurance
The new year is often a time for self-assessment. We ask ourselves questions like “Do I need to lose weight?” and “Do I have enough insurance coverage?” According to Mad Money host Jim Cramer, gold is insurance that every truly diversified portfolio should have. “Think of the gold position as a kind of stock insurance. Now, would you want a home without homeowner’s insurance? No. You wouldn’t own a car without car insurance. You shouldn’t invest without some gold exposure because gold pays off when everything else fails.” Call Blanchard and Company today to protect your wealth with gold. Watch video
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January 2, 2012
I was Wrong About Silver in 2011
1/2/12TopIn March, 2011 I took the pro silver side of a gold/silver debate in CoinAge Magazine on which metal would outperform on a percentage basis in 2011. My positive silver ideas were empowered by the freight train momentum that developed early last year for silver that eventually shot silver to within a hair’s width of closing above $50 in late April. Obviously, my bullish outlook was destroyed thanks to the series of margin hikes that were implemented by the Chicago Merc. I’ll say it: When the real owners of the market (various giant banks), with their massive short positions in silver were about to be shellacked, the silver bulls had to be neutered (of course they and I forgot about the possibility of not one or two margin hikes, but of many margin hikes). Yes, you could argue that slower world economic growth, even good old profit taking chilled the price of silver, but those margin hikes in and of themselves are what led to the collapse of silver from its 2011 high.
In 2011, silver fell 7 percent, while gold rose 10%. While I am no longer going to take an official bullish, or bearish stance on silver, let’s say I am waiting for the opportunity to pick up MS state generic Morgan dollars (those beautiful silver coins from the late 1800′s to the early 20th century) in the $25 range. The coins should either be certified by PCGS, or NGC and encased in plastic holders. You can do the math, but I will do it for you. Since there is a slight premium for Morgans to the spot silver price, at the present $27.78 spot price, to get my $25 buy price on Morgans will require action that my bullish friends won’t enjoy. This bottoming process could take some time to play out, but who knows.
My thought is to have nothing to do with silver futures, or SLV and pick up the real thing on further dips as some very cheap insurance, not as a way to game a new silver bull market, but has a hedge. Forget about the silver to gold ratio for now. Yes, it’s out of whack historically, but then again this isn’t a late 19th century bi-metallist society that we’re living in. We are living in a deranged system where everything, including these metals, are priced in the ever vanishing power of the paper dollar (which is masked by what everyone focuses too much attention on – that dollar index). Forget about the kook internet reports of physical silver being priced well above the spot paper price. Little old me as a coin dealer can still get silver for about $1 over spot and lots of it, not just a few ounces. The rumors of a physical shortage of silver is a sales tactic aimed at getting ignorant people to pay a big premium to the hucksters. Forget about all of the claims that silver will become so rare soon that it will be rarer than gold. That one leaves me speechless. The tall tales are fun, but none, NONE have kept silver out of an ongoing downward trend. The best apologists for silver in the business have been largely ineffective. For now, the silver market is muddled and will remain so, so long as the CME and its margin hikes remain. Funny that they haven’t since removed the hikes, now that things have calmed down. But I digress.
Insurance to offset the collapsing paper ponzi system – now that’s not so crazy. We buy insurance for all sorts of potential negative events. I believe that one day silver will become far more valuable than it is now, but let’s not be so anxious for that to happen. When this dog called silver eventually has its day, there will be many other things to be worrying about (eg. securing supplies of food, etc). Silver, and gold for that matter, should be accumulated by people who have an understanding about the monumental shift that’s taking place. What would that be? The coming end to fiat paper, back to hard money. This has happened before in society. It is unlikely to be pleasant. There are many who have admitted to me that they want nothing to do with silver, or gold – that they have faith in the present system. I am fine with that, though they register in my mind as the sitting ducks class. Lol.
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December 29, 2011
Some Gold Thoughts
12/29/11Top
I have been asked a number of times recently where gold is going to trade over the course of 2012. I am not a seer, obviously. But I can make a few observations and guesses based on some emerging micro and macro trends.I’m in the camp that feels that gold will get to $2,000 an ounce in 2012. I see that as an easy no-brainer forecast. There is a caveat, or two. Given the chaos that will return to the markets once the New Year gets into full gear, the road to $2k is going to be tougher than most expect. For now, I will simply state that even some fairly strong hands in gold are likely to be tested at some point in 2012. This isn’t meant to downplay the significance of yet another winning year for gold (up 7% year to date), but to remind that the players who are desperately trying to keep the paper ponzi alive are going to stop at nothing to make paper superior to hard assets. Aside from Feeder Cattle beating all other futures, the 30 year bond is up 17% this year and 10 year notes are up over 8%. That’s no accident. As commodities trader Jim Rogers would ask, who in their right mind is lending money to Uncle Sam for 30 years? It’s the seemingly infinite deep pocketed folks who have a vested interest in keeping the financial gear box from seizing up and that includes, first and foremost, the Fed and that little group of broker dealers who control the financial world. As the Wikileak documents (released earlier in the year) show, our system is geared toward making paper appear as the financial fountain of youth. The Wikileak documents clearly show that gold is manipulated and controlled. The attacks on gold in 2011 were only the beginning.
How low can gold be pushed is anyone’s guess, but also remember there is this thing call the Asian-put. The cheaper gold gets the more advantageous it is for our competitor nations to build their stocks of gold. But having said that, I won’t be surprised if a lower low from the 2011 lows is set as part of warfare against real money.
IMHO gold is a long term hold and a buy on the dips. It is insurance against a future financial reset. The day is coming when the debt and notional derivatives ponzi (now 23x to 37x world GDP depending on which estimate is used) is going to collapse. So I do believe that at the minimum gold will be valued at some future point at what will be 10,000 near worthless dollars. However, I am no longer confident that this ascension will come over the course of a decade. In reading the tea leaves of late and looking at the utter ineffectiveness of the 3 yr lending facility in Europe (as just one example), where the ECB has literally taken 600 bln euros out of the right pocket, only to have the banks redeposit said funds into the left pocket, the ponzi reality is looking grim – it’s gangster counterfeiting on a hugely massive and incomprehensible scale. It can’t go on forever unless they’ve been putting something in the water to make us all delusional. Lol.
But here’s the rub, because these ponzi schemes are so large, with each passing day comes the greater chance that we will wake up one day to a completely broken financial system. Such a scenario would go along the lines of gold closing one day at $1900, or $2000, or whatever and awaking the next day to five figure gold trading perhaps only in Asia, or on a new black market because London and NY suffer a systemic seizure. That may sound crazy, but don’t count it out. Systemic seizure (the unthinkable) is becoming a larger possibility as this process drags on.
Oh, and don’t be fooled for a minute about some nice housing numbers aided by mild wealther, or an Italian 10 year auction coming in a hair below 7%. Housing is still broken in many key real estate markets and Europe? Nothing better in Europe that I can find.
