Update AM Friday, May 14:
Well, we woke up to gold bouncing over its highs and the market sinking, so we were ready to eat crow.
But now, gold’s retreated a bit and we’re willing to claim the mantle of Nostradamus once more. A see-saw is good for at least that. You get to read every move your way as a vindication of your clairvoyance and every swing the other way as fat fingers, dead cats, or black swans….and once the animal kingdom is exhausted, there’s always the stars we can blame it on….a Uranus or Mars transit somewhere is always good for at least a few technological glitches and nasty accidents.
Update 1:34 PM (Thursday, May 13):
As you can see below, my thinking on this is rather contrary to the mainstream. I freely admit my opinion is biased. I want gold prices to go lower so I can buy at a better price.
But as I watched the market today, I do see some slight signs of confirmation of the contrarian position. Both stocks and gold/silver are flat but the dollar is up. What does that mean? If gold is looking ahead to massive inflation, why would it not be up even more today? Instead it’s flat. Maybe it will fall later, just as it did after the fall of Lehman (although it took a month to do it then). In any case, today, it’s retreated just a bit, along with stocks.
[Note: I rewrote this paragraph to make more sense, because when I wrote it earlier, I was in the middle of something and didn’t reread it and check if it hung together].
Of course, this is only a very small price movement and I agree that gold’s fundamentals are extremely bullish. But, while I continue to think that it will probably make 1300 before long, it’s more than overdue for a big correction.
ORIGINAL POST
Whither?
Up, up and away, if you are a triumphalist gold bug who bought early….or even below $1000.
If you’re a much-too-early gold butterfly , who panicked out of gold in 2006 and never really got back in, then things are decidedly gloomy. Looks like you’re not going to see that dip below $900 you wanted to see. Actually, you’re still waiting to see the dip below $800. But these days it looks like $1400 before $800.
Every fiber of our being wants a spectacular gold bust that will let us buy cheaper. We bought at 440, at 525, at 660, and at 850 and made small amounts – living proof of the folly of thinking too hard…we were too afraid to do more than dip a toe in the stuff until we saw fireworks enough to justify it…..
But since we’d rather be riders than beggars, we have to move on from our wishes.
Where will gold go?
Aye, there’s the rub.
We’re still not convinced that the short to mid-term won’t be rocky.
Look at it like this. Gold’s gone up straight from 950 to 1200 and beyond. In our defense, we did say there was a good chance of that last year, it’s just that we thought there was a better chance it would fall and fall lower than most thought.
$300’s a big move, but look what’s happened in that time. The Goldman Sachs story blew up and landed on the front page of every paper everywhere. As far as the eye can see there are crooks crawling out of the woodwork..from hedge funds, from private equity…from banks, from rating agencies…from government offices….from ponzis here… and ponzis there.
The bill to the American tax-payer is mounting into the trillions…14 trillion in some estimates. Even higher in others. The people are taking to the street. Governments everywhere are sweating like sows in a slaughterhouse. Sedition is in the air. Secession is on the lips. The crimes of the elites grow larger and larger until now the entire system looks like a crazed Frankenstein monster staggering and thrashing wildly at anyone in its path.
Given all this turmoil, isn’t this move up in gold to be expected? And when the recent trillion- euro fix was in, didn’t everything, not just gold, finally go up? The dollar, gold, and the market? Which means that the flow into gold right now need not be – as nearly everyone says it is – a hedge against inflation.
Or, even if it is, then gold isn’t the only place the inflation-averse are running. They’re still running to the stock market.
As for the dollar, there too I’m not sure. The technicals seem to suggest that the rebound stops at 85. On the other hand, with the Euro uncertain now the dollar may have even more upside to it.
On the third hand, the risk currencies might look attractive again, now that QE-until-the-end-of-time is on the table.
The run up in the stock market should continue through summer…..maybe?
Let’s see what the yellow metal does when that buckles. That’ll be what counts.
This week, I’m still not convinced, even if I’m also sick to my stomach…
Yours, in serious pain…..
This Summer.
False rallies?
Your post reminded me of an article I read last night using the analogy of a burning house.
It seemed to make sense.
The gold room is really small compared to the other rooms, not everyone will fit, unlike with derivatives, real estate or stocks.
Here’s the article, it won’t make you feel any better, no graphs or charts:
http://financialsense.com/fsu/editorials/2010/0507b.html
I hope you’re right and there’s a drop, manipulated markets can do anything, can’t they?
Your post also made me think of Mises’s description of the crack-up boom. Kind of made me think when people who are deflationist leaning, when they buy gold, things are taking off, that is if they aren’t already.
Well…I vented. I called my ex and vented at him for not backing me up when I wanted gold. Then I called my mom and gave her a earful, poor thing.
She’s all rattled and doesn’t know what to do…being in her late 70s and not at the age when she can suddenly decide to buy gold or land (who the heck is going to take care of it there under a 48 degree celsius sun, five months of the year, and power cuts that last five hours, and inflation in food running at 10%…..
That’s who Goldman Sachs and co. stole from. People like my mom in the third world, who worked for about 100 dollars a month for most of her life and saved more than many people with 100,000 dollars by sheer hard work and discipline…and now to have all that shriveled and stolen away from them..and
I could do nothing finally to help, because I was always in the middle of something else or got stopped out, or didn’t expect the whole thing to go to ACT V so fast…
I was too busy trying to figure out all the pieces and put it out for the public hoping it could be stopped in time.
It makes you want to tear your hair out and cry. But that’s no use.
We’re ruled by pathocrats and the only people who will get on in this kind of world are people who are naturally callous, narcissistic and sociopathic…
i.e. most CEOs…most people in the media, government, senior academics and think tankers.. and financiers…the elites.
But you know, the game’s not over until you’re dead and I don’t give up so easily..
Off topic, but this is a nice little blurb about the Polish crash and Nato secrets falling into Russian hands. Enjoy.
http://www.washingtontimes.com/news/2010/may/13/inside-the-ring-86422687/
talking about the price of gold is like saying “curious green ideas sleep furiously” it is grammatically correct but nonsense….
gold, silver, etc IS money….nothing but commodities are money….
and the “gold standard” failed in the past because of “coin of the realm” and fractional reserve banking…take the latter 2 away, denominate in grams, and you have world peace
and the next time u want to call your ex, call me instead. i am in manhattan.
cheers
lol ….someone agrees with me !!!!
God bless abu dhabi
http://www.zerohedge.com/article/gold-atms-first-dubai-soon-everywhere-gold-now-one-step-closer-full-currency-status
So I rush out now and put all my savings into gold and silver..
yeah. and when I do that, then the long awaited crash will arrive…
Sure, this was another trillion billed to the world (via IMF).
But you know the banksters have stepped into the unbanked sector in Asia – that’s millions of people.
If they harness that work force to the global financial order, would the new influx of productivity make the hollowed out old world function better?
In other words, will the new entrants into the world economy grow us out of this mess?
Venting can be good.
It was interesting.
From what I understand, most times when a guy vents he’s looking for solutions and welcomes them, many times a woman just wants (or even needs) to vent, to release without getting suggestions or solutions. Most (many?) guys cannot listen to venting without responding with suggestions or solutions. An Ex often Has to listen without responding, I’d find that a bit painful, especially if I was wrong.
Video of Meg Ryan saying, “All men are bastards” goes here x.
“…will the new entrants into the world economy grow us out of this mess?”
Is that how England got out of it’s messes, utilizing the new entrants, the colonies, the influx of productivity? Until they couldn’t.
The global financial order appears to be regionalized, any productivity gains in Asia, stay in Asia?
Hasn’t the stereotype of a wealthy person in England for the last sixty or so years been of old money. As if new money wasn’t in England any longer, it was all off in America or the Bahamas, and….
That’ll be the U.S. now, all that will be left is old money, the new money will be in Asia and stay there?
Hard to imagine.
Some people say the Bank of Japan is the second branch of The Fed, what if it was the other way around? How would we know?
The Bottom Line is, if mb4 doesn’t rush out and get some gold and silver, that dip I was waiting for definitely isn’t going to come along.
You’re sure about that?
Maybe. Maybe I just saw the light and became an inflationist. I’ve always been kind of deflationist, (except I also thought there would be consumer inflation as well).
But now it looks like the inflationists were right.
I’m going to see how gold does tomorrow before I do anything.
There’s nothing, even apocalypse, that can’t wait two days
I thought there would be more whip-saw action, hardly a lick of it so far.
Never look back. Stay focused on the future and the big picture.
Remember we are on the verge of the greatest deflationary crash and depression in over 200 years. Over the next six years fortunes will be made and lost as the dow works its way from five digits to three. The recent orgy of monetary stimulus has inflated speculative markets like stocks and gold. The problem with stimulus is it requires more and more to keep the balloon inflating and the end is always the same. After trillions of dollars gold is only a couple hundred higher than in 2008. Not much of a return in my book.
Remember in 2008 when the dow went from 14000 to 6500, gold went from 1000 to 700. When deflation starts to take hold, people will sell gold holdings not because they want to, but because it will be the only source of liquid funds to cover other requirements like margin calls.
Remember money is made faster in a bear market than a bull market and that a good trader never dwells on pass trades, but knows the best trades are still to come.
I promise you the buying opportunity of a lifetime in both stocks and gold is coming.
Be patient
As far as being a gold butterfly, it’s not that bad. Some people are traders at heart. The skittishness that confounds dring a bull run saves when the bull turns into a bear. You could think of it as a hazing, or apprenticeship.
I’ve got my own regretful-butterfly story: in late 2008, I bought some Dollar Thrifty General stock at $1.10 and sold it around $1.40. The stock’s now trading at $49.65.
[Some apprenticeship that was…]
Got any more tips like that?
I’m researching stuff all the time
My sense, though, is that when the market crumbles, which I think is nigh at hand, you’re going to see gold go down too.
I see the dollar has moved to 86….mainly on Euro weakness I’d say.
But I don’t want to jump into commodity etfs because of the contango problem and because commodities are likely to take a hit too, at least initially.