Where Is Gold Going In This Market

[Naam]

'In October 2008 the global financial markets crashed. The story in the media is that it was a panic caused by the insolvency of Lehman Brothers. This is not the truth - or at least not all of it. The crash actually followed a $2 trillion margin call by these four global banks on their prime brokerage clients and OTC counterparties - effectively a 30 per cent increase in required margin. It was the margin call that forced liquidation of global portfolios of all asset classes - and particularly the high quality, most liquid asset classes.

it doesn't make sense to put the horse at the rear end of a buggy. the margin calls were the result of the Lehman insolvency. these margin calls developed into some sort of avalanche and the next lower levels got hit even harder. in a number of cases those at the end of the "food chain", namely private investors were forced to sell assets at rock bottom prices to balance loans even though the total net value of their portfolios covered the loans multiple times. some multinational banks went so far and considered any asset which was at 50% or lower of its par value as zero collateral.

[churchill]

Needed: Plain Talk About the Dollar

http://www.nytimes.c...omy/22view.html

Christina D. Romer is an economics professor at the University of California, Berkeley, and was the chairwoman of President Obama's Council of Economic Advisers.

'But in a depressed economy, it isn't so clear that a strong dollar is desirable. A weaker dollar means that our goods are cheaper relative to foreign goods. That stimulates our exports and reduces our imports. Higher net exports raise domestic production and employment. Foreign goods are more expensive, but more Americans are working. Given the desperate need for jobs, on net we are almost surely better off with a weaker dollar for a while.

Fed policy is determined by inflation and unemployment in the United States. But if Mr. Bernanke could discuss the exchange rate openly, he would probably tell you that one way any monetary expansion helps a distressed economy is by weakening the dollar. That is taught in every introductory economics course, yet the Fed is asked to pretend it isn't true.'

Hmm... well she is a professor and that sounds like something a professor would say...

But perhaps it would be wise to consider correlation vs. causation vs. unintended consequences vs.intended consequences?

and who is controlling - At this time Politicians thinking Short term - because of the next election .. it is easy to kick the can - and that is what is being done ... So how do we protect ourselves ? Some think buying gold - I would not recommend the USD or the Euro ? Energy , Ag etc ..

It seems like a slow motion car crash - but knowing in advance - what does one do ?

Look at this - Same Same

The best Speech - Severn Suzuki

[churchill]

Why is it irrational to think that people might want to withdraw money and their life savings from an insolvent bank?

not irrational at all but

1. until this very moment there are no insolvent greek banks (no matter how often you repeat it).

2. i keep daily close contact with three greek colleagues in a financial forum (two live in Athens, one lives in Saloniki) who would have definitely mentioned any obvious bank run that happened last week. take a wild guess what the most discussed topic in this forum is. i'll give you some hints: it's not the prevailing bride price a headhunter has to pay to his future father-in-law in Papua New Guinea and it's not the possible outcome of a soccer game between Manchester United and Dynamo Vladivostok.

I tend to disagree, Greek banks are insolvent, the extend and pretend game is in play. If those Greek bonds that the ECB has bought up were dumped onto the market, rather than artificially propped up by the ECB then they would be gone. On paper they are insolvent, technically. But if one lies, and uses accounting chicanery, that can be postponed, but it does not change the fact they the Greek banks liabilities far outweigh their assets. If Greek banks do not take the loss, then it will be the ECB who will take it,,,or print it away, either way it is default.

I don't know anymore which is better at this time the Euro or USD - and GBP is looking very weak after today's figures ! Nobody seems to be being honest - trichet wants support for the Euro so he is indicating higher rates - But the Euro Zone cannot afford higher rates / Ben needs a weaker USD and low interest rates but will not admit it /

and so Gold , the alternative , should be rising /

A good piece in today's FT The eurozone's intolerable choices

' A euro in a Greek bank is today no longer the same as a euro in a German bank. In this situation, there is not only the risk of a run on a bank but also the risk of a run on a national banking system. This is, of course, what the federal government has prevented in the US. '

'Debt restructuring looks inevitable. Yet it is also easy to see why it would be a nightmare, particularly if, as Bini Smaghi insists, the ECB would refuse to lend against the debt of defaulting states. In the absence of ECB support, banks would collapse. Governments would surely have to freeze bank accounts and redenominate debt in a new currency. A run from the public and private debts of every other fragile country would ensue. That would drive these countries towards a similar catastrophe. The eurozone would then unravel. The alternative would be a politically explosive operation to recycle fleeing outflows via public sector inflows. '

'The eurozone confronts a choice between two intolerable options: either default and partial dissolution or open-ended official support. The existence of this choice proves that an enduring union will at the very least need deeper financial integration and greater fiscal support than was originally envisaged. How will the politics of these choices now play out? I truly have no idea. I wonder whether anybody does. '

http://www.businessspectator.com.au/bs.nsf/Article/Eurozone-Germany-Greece-European-System-of-Central-pd20110601-HE89Y?OpenDocument&src=sph

[RedFxTrade]

Why is it irrational to think that people might want to withdraw money and their life savings from an insolvent bank?

not irrational at all but

1. until this very moment there are no insolvent greek banks (no matter how often you repeat it).

2. i keep daily close contact with three greek colleagues in a financial forum (two live in Athens, one lives in Saloniki) who would have definitely mentioned any obvious bank run that happened last week. take a wild guess what the most discussed topic in this forum is. i'll give you some hints: it's not the prevailing bride price a headhunter has to pay to his future father-in-law in Papua New Guinea and it's not the possible outcome of a soccer game between Manchester United and Dynamo Vladivostok.

I tend to disagree, Greek banks are insolvent, the extend and pretend game is in play. If those Greek bonds that the ECB has bought up were dumped onto the market, rather than artificially propped up by the ECB then they would be gone. On paper they are insolvent, technically. But if one lies, and uses accounting chicanery, that can be postponed, but it does not change the fact they the Greek banks liabilities far outweigh their assets. If Greek banks do not take the loss, then it will be the ECB who will take it,,,or print it away, either way it is default.

I don't know anymore which is better at this time the Euro or USD - and GBP is looking very weak after today's figures ! Nobody seems to be being honest - trichet wants support for the Euro so he is indicating higher rates - But the Euro Zone cannot afford higher rates / Ben needs a weaker USD and low interest rates but will not admit it /

and so Gold , the alternative , should be rising /

A good piece in today's FT The eurozone's intolerable choices

' A euro in a Greek bank is today no longer the same as a euro in a German bank. In this situation, there is not only the risk of a run on a bank but also the risk of a run on a national banking system. This is, of course, what the federal government has prevented in the US. '

'Debt restructuring looks inevitable. Yet it is also easy to see why it would be a nightmare, particularly if, as Bini Smaghi insists, the ECB would refuse to lend against the debt of defaulting states. In the absence of ECB support, banks would collapse. Governments would surely have to freeze bank accounts and redenominate debt in a new currency. A run from the public and private debts of every other fragile country would ensue. That would drive these countries towards a similar catastrophe. The eurozone would then unravel. The alternative would be a politically explosive operation to recycle fleeing outflows via public sector inflows. '

'The eurozone confronts a choice between two intolerable options: either default and partial dissolution or open-ended official support. The existence of this choice proves that an enduring union will at the very least need deeper financial integration and greater fiscal support than was originally envisaged. How will the politics of these choices now play out? I truly have no idea. I wonder whether anybody does. '

http://www.businesss...ocument&src=sph

Good Links, thanks.

GREECE: German official Frikke affirms that Germany cannot make their contribution to the next tranche of aid if the IMF doesnt do its part.

1 Jun 11:26:11

Things starting to heat up again...also Portugal bond auction shows weak demand this morning and covered at a much higher yield...You begin to get the feeling that just as the market might get over this Greece situation, that it has forgotten about Portugal and Ireland, Spain and Italy. All data from the Eurozone this morning missing expectations,retails sales plunge in Italy yesterday, PMI manufacturing in Italy and Spain contract....Seems to be a trend world wide. US data weak, Chinese PMI coming in weaker and Australian economy contracted in first quarter, lending coming in weaker, UK PMI contracted, mortgage lending fell and M4 came in below expectations...The USD has a lot of ugly sisters at the moment. Not to mention Japans credit outlook on negative.

[churchill]

and everyone wants their economies to grow out of this situation to reduce their debt - but Where is the growth coming from - S/E Asia/Africa and India etc can grow to some extent but to get the west out of this mess - I cannot see it /

The only solution at this stage is to print print and hope for the best ?

[RedFxTrade]

and everyone wants their economies to grow out of this situation to reduce their debt - but Where is the growth coming from - S/E Asia/Africa and India etc can grow to some extent but to get the west out of this mess - I cannot see it /

The only solution at this stage is to print print and hope for the best ?

Exactly the absolute best scenario for gold would be a global contraction, interest rates expectations to drop, G20 meetings discussing more stimulus, or printing as we like to call it, and a couple of wars thrown in for good measure,haha. I hope that does not happen by the way. But dealing past form from CB's and Governments and the illusion that the global economy is growing, when really its only excess liquidity and when they are faced with the other side of that illusion which we seeing I can only see more stimulus, extraordinary measures...

Might a good time to revisit bernankes paper from 2002...as Napier said in a recent interview the QE was only step one and mild compared to some of the "tools" he had devised in "Deflation: Making Sure It Does Not Happen Here"...

Have you heard the one that if people are not spending, they will invalidate 5% of the serial numbers on USD bills in circulation. A lottery when on average everyone will hold money that 5% of it will have a sell by date...so spend it before that sell by date...truly scary and nuts...I think there is also a suggestion about buying stocks with printed money...car loans etc etc...Lets hope that citizens will not allow that to happen.

[badge]

Among the Truthers: A Journey Through America’s Growing Conspiracist Underground. By Jonathan Kay. Harper; 368 pages; $27.99. Buy from Amazon.com

"The idea that some shadowy group or other is running things for their own benefit, not that of the ordinary working man, is, after all, the constant solace of the unsuccessful. And a national disaster such as Pearl Harbour, the assassination of President Kennedy or the September 11th attacks, he plausibly notes, is likely to call forth particularly wild conspiracy theories, since the alternative explanations, of incompetence or inherent vulnerability, are simply too painful to bear."

Edited June 1, 2011 by badge

[badge]

Zillow have always had a mildly bearish slant imvho?

http://wallstcheatsheet.com/economy/zillow-see-the-worst-home-prices-drop-since-2008.html/

[midas]

Zillow have always had a mildly bearish slant imvho?

http://wallstcheatsheet.com/economy/zillow-see-the-worst-home-prices-drop-since-2008.html/

" This new data reveals a bottom in home values is unlikely to appear in 2011. Thus, Zillow has revised its forecast and now predicts a bottom in 2012 at the earliest."

it is not going to improve until they sort out the fraudclosure mess and nothing is happening on that front

because it's stuck in the courts

[jcon]

Unfortunately there is no bottom in US property taxes grrrrrrrrrrrrrrrrrrrrrrrrr!!!!!!!!!!!!!!!!!!!!

RedFx, I don't know if I really agree with your ''best scenario for gold'' you mentioned in post 4378 - I know it was kind of tongue-in-cheek perhaps but I'm not sure if everything you mentioned there was bullish for gold.

For gold, I will pull out 3 numbers. 250, 1250 and 2500. That's just the difference if a brick is 100K USD, 500K USD, or 1 million USD - I think we'll stay within that range.... Yes, giant range duh but It's easy to calculate

100K USD/brick is probably a thing of the past now, so actually 500K for a brick sounds about right nowadays so call it 1250. That's a no-frills way to look at it That goes along with my view since more than a few years that 5 million USD is the new 1 million USD. We're not quite at the point where 10 million USD is the new 1 million USD IMO, that's a ways off and if it comes soon, then a lot of retirees are going to get hurt...... That's my no-b.s. easy-breezy assessment.

[badge]

Chinese Economic Slowdown May Lead to 75% Plunge in Commodities, S&P Says

http://www.bloomberg.com/news/2011-06-02/sudden-china-slowdown-may-mean-50-to-75-drop-in-commodities-s-p-says.html

[RedFxTrade]

Hugh Hendry's cycle of QE...pretty much running to script so far...and with Hendry pointing out we are at the EM growth slows stage with then the US and Germany, the last few days and indeed weeks have shown evidence that is happening.

[Naam]

A “sudden” slowdown in China may lead commodity prices to fall as much as 75 percent from current levels, Standard & Poor’s said.

Unexpected shifts in government policies or problems in the banking sector may trigger such a slowdown, S&P said in a report e-mailed today.

Mrs Naam may approve that her husband acquires two mia nois, informed circles said.

Unexpected shifts in Mrs Naam's mental capabilities or a sudden bout of delirium tremens may trigger such an approval, close friends of Naam said in a report e-mailed today.

[churchill]

sounds like a good idea for Thailand / Does it happen here ?

Farmers in India get cheap loans against gold

Indian farmers are queuing up to get farm loans from banks at interest rates as low as 4% using gold as security, as against the 30% interest rates offered by local money lenders.

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=128575&sn=Detail&pid=102055

Edited June 3, 2011 by churchill

[churchill]

Open Letter to Ron Paul

http://fofoa.blogspot.com/2011/06/open-letter-to-ron-paul.html

[churchill]

Gartman Sells 50% of Gold Holding After Decline, Says Further Drop Likely

'“There are rumors and there are rumors of rumors about IMF sales, or sales on the part of legacy central banks in Europe, or sales from the European Central Bank, the proceeds of which can be used to prop or bail out Greece and the others,” Gartman wrote. “Although these are merely rumors, where this is rumored smoke there can be actual fire.”

http://www.bloomberg.com/news/2011-06-03/gartman-sells-50-of-gold-holding-after-decline-says-further-drop-likely.html

[badge]

http://www.bloomberg.com/news/2011-06-03/gross-says-more-buying-by-fed-unlikely-even-as-job-growth-slows-tom-keene.html

The Federal Reserve is unlikely to conduct yet another round of quantitative easing, and policymakers are likely to retain for a longer time the "extended period" language in rate announcements, Pacific Investment Management Co. chief investment officer Bill Gross told Bloomberg radio Friday.

Gross's comments came following the release of U.S. employment data for May which showed a gain of 54,000 jobs, a figure below market expectations of a gain of 160,000.

[midas]

http://www.bloomberg.com/news/2011-06-03/gross-says-more-buying-by-fed-unlikely-even-as-job-growth-slows-tom-keene.html

The Federal Reserve is unlikely to conduct yet another round of quantitative easing, and policymakers are likely to retain for a longer time the "extended period" language in rate announcements, Pacific Investment Management Co. chief investment officer Bill Gross told Bloomberg radio Friday.

Gross's comments came following the release of U.S. employment data for May which showed a gain of 54,000 jobs, a figure below market expectations of a gain of 160,000.

ha ! I will believe that when I see it otherwise

we will see a whole lot of banksters spitting their dummies

Edited June 3, 2011 by midas

[RedFxTrade]

Gartman Sells 50% of Gold Holding After Decline, Says Further Drop Likely

'"There are rumors and there are rumors of rumors about IMF sales, or sales on the part of legacy central banks in Europe, or sales from the European Central Bank, the proceeds of which can be used to prop or bail out Greece and the others," Gartman wrote. "Although these are merely rumors, where this is rumored smoke there can be actual fire."

http://www.bloomberg...rop-likely.html

That rumor has been circulating for a few years now...and the consensus seems to be universal that the IMF selling gold will be bearish for Gold. I think it will be bullish, rising investment demand, and central bank buying into the IMF selling? Bearish? I think Gartman might be doing a Bill Gross. Gross sold all his T-Bonds,which appeared to be a bearish sign when the worlds biggest bond fund sells the most liquid bonds, yet from the day he announced it T-Bonds have rallied ever since. Also once the IMF have sold their Gold, well they will not have anymore to dump on the market. I m going with this being bullish rather than bearish...Thoughts?

[Naam]

sounds like a good idea for Thailand / Does it happen here ?

Farmers in India get cheap loans against gold

Indian farmers are queuing up to get farm loans from banks at interest rates as low as 4% using gold as security, as against the 30% interest rates offered by local money lenders.

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=128575&sn=Detail&pid=102055

this article beats any rubbish "mineweb" has ever published

[cloudhopper]

Gold in deflation

http://globaleconomicanalysis.blogspot.com/2011/06/why-i-continue-to-like-gold.html

[churchill]

Gartman Sells 50% of Gold Holding After Decline, Says Further Drop Likely

'"There are rumors and there are rumors of rumors about IMF sales, or sales on the part of legacy central banks in Europe, or sales from the European Central Bank, the proceeds of which can be used to prop or bail out Greece and the others," Gartman wrote. "Although these are merely rumors, where this is rumored smoke there can be actual fire."

http://www.bloomberg...rop-likely.html

That rumor has been circulating for a few years now...and the consensus seems to be universal that the IMF selling gold will be bearish for Gold. I think it will be bullish, rising investment demand, and central bank buying into the IMF selling? Bearish? I think Gartman might be doing a Bill Gross. Gross sold all his T-Bonds,which appeared to be a bearish sign when the worlds biggest bond fund sells the most liquid bonds, yet from the day he announced it T-Bonds have rallied ever since. Also once the IMF have sold their Gold, well they will not have anymore to dump on the market. I m going with this being bullish rather than bearish...Thoughts?

Just saw Gartman on CNBC saying that he has already reversed his position and bought back in - Also said that the rumors he was spreading about IMF Gold sales were untrue - What a **nker /

Many used to take note of his trades but he is becoming a joke - i suppose when your playing with other peoples money it is easy to mess around like this /

[churchill]

sounds like a good idea for Thailand / Does it happen here ?

Farmers in India get cheap loans against gold

Indian farmers are queuing up to get farm loans from banks at interest rates as low as 4% using gold as security, as against the 30% interest rates offered by local money lenders.

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=128575&sn=Detail&pid=102055

this article beats any rubbish "mineweb" has ever published

Can you please explain Naam -

Are you saying that Farmers in India cannot get loans using Gold - Seems like a good idea to me - and I wondered if it existed in Thailand ?

http://www.federalbank.co.in/Personal_Loans_AgriGoldLoan(ADLG).aspx

India gold loans market turns competitive, more banks, FIs in fray http://www.commodityonline.com/news/India-gold-loans-market-turns-competitive-more-banks-FIs-in-fray-39444-3-1.html

[churchill]

See also...

http://www.federalbank.co.in/Personal_Loans_GoldLoanScheme.aspx

see also http://www.federalbank.co.in/General_RateCharges_RateCharges.aspx

[churchill]

I don't think in Thailand yet - But seems like a very good idea , would cut out a lot of money lenders and certainly encourage gold investment - and why not /

Are gold loans better than personal loans?

http://asiancorrespondent.com/56310/are-gold-loans-better-than-personal-loans/

http://www.hdfcbank.com/personal/loans/gold_loan/term_loan/gold_loans.htm

[Naam]

sounds like a good idea for Thailand / Does it happen here ?

Farmers in India get cheap loans against gold

Indian farmers are queuing up to get farm loans from banks at interest rates as low as 4% using gold as security, as against the 30% interest rates offered by local money lenders.

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=128575&sn=Detail&pid=102055

this article beats any rubbish "mineweb" has ever published

Can you please explain Naam -

Are you saying that Farmers in India cannot get loans using Gold - Seems like a good idea to me - and I wondered if it existed in Thailand ?

http://www.federalbank.co.in/Personal_Loans_AgriGoldLoan(ADLG).aspx

India gold loans market turns competitive, more banks, FIs in fray http://www.commodityonline.com/news/India-gold-loans-market-turns-competitive-more-banks-FIs-in-fray-39444-3-1.html

i was referring to the diction of the "mineweb" contributor "Indian farmers are queuing up" which is ridiculous. the other two links you provided are rather rational and provide figures.

Edited June 4, 2011 by Naam

[churchill]

Gartman Sells 50% of Gold Holding After Decline, Says Further Drop Likely

'"There are rumors and there are rumors of rumors about IMF sales, or sales on the part of legacy central banks in Europe, or sales from the European Central Bank, the proceeds of which can be used to prop or bail out Greece and the others," Gartman wrote. "Although these are merely rumors, where this is rumored smoke there can be actual fire."

http://www.bloomberg...rop-likely.html

That rumor has been circulating for a few years now...and the consensus seems to be universal that the IMF selling gold will be bearish for Gold. I think it will be bullish, rising investment demand, and central bank buying into the IMF selling? Bearish? I think Gartman might be doing a Bill Gross. Gross sold all his T-Bonds,which appeared to be a bearish sign when the worlds biggest bond fund sells the most liquid bonds, yet from the day he announced it T-Bonds have rallied ever since. Also once the IMF have sold their Gold, well they will not have anymore to dump on the market. I m going with this being bullish rather than bearish...Thoughts?

Just saw Gartman on CNBC saying that he has already reversed his position and bought back in - Also said that the rumors he was spreading about IMF Gold sales were untrue - What a **nker /

Many used to take note of his trades but he is becoming a joke - i suppose when your playing with other peoples money it is easy to mess around like this /

Gartman seems VERY confused / He recommended buying Gold on Thursday / Then sold 50% Friday am

'Yesterday, gold slumped as much as 1.5 percent. Dennis Gartman, an economist and the editor of the Suffolk, Virginia- based Gartman Letter, reduced his holdings of the metal by half a day after recommending buying more and selling euros.' http://www.bloomberg.com/news/2011-06-03/gold-rises-most-in-a-week-as-u-s-jobs-data-signals-fed-may-keep-rates-low.html

and then Friday PM - Reversed his position and bought it all back ! http://video.cnbc.com/gallery/?video=3000025529

I suppose it shows how jittery and nervous the markets are right now - Which will fall 1st the Euro or the USD - Markets would prefer the USD - I think - but toss a coin .....

Edited June 5, 2011 by churchill

[midas]

http://www.bloomberg.com/news/2011-06-03/gross-says-more-buying-by-fed-unlikely-even-as-job-growth-slows-tom-keene.html

The Federal Reserve is unlikely to conduct yet another round of quantitative easing, and policymakers are likely to retain for a longer time the "extended period" language in rate announcements, Pacific Investment Management Co. chief investment officer Bill Gross told Bloomberg radio Friday.

Gross's comments came following the release of U.S. employment data for May which showed a gain of 54,000 jobs, a figure below market expectations of a gain of 160,000.

ha ! I will believe that when I see it otherwise

we will see a whole lot of banksters spitting their dummies

QE3 - Just A Matter Of Time

http://www.streettalkadvisors.com/financial-blog/qe3-just-matter-time

[Lost in LOS]

Gartman Sells 50% of Gold Holding After Decline, Says Further Drop Likely

'"There are rumors and there are rumors of rumors about IMF sales, or sales on the part of legacy central banks in Europe, or sales from the European Central Bank, the proceeds of which can be used to prop or bail out Greece and the others," Gartman wrote. "Although these are merely rumors, where this is rumored smoke there can be actual fire."

http://www.bloomberg...rop-likely.html

I saw the interview with him last night on cnbc [you can google it] and he said it dropped and he sold. He admitted to a mistake and said he is buying it all back and is long on gold. He said gold is just another currency to him. One of the ladies on cnbc at the same time said she is buying gold on the dips, me too.

the states and europe have nowhere to go but down, I may be an uneducated street kid but it seems fairly obvious to me

sorry I see churchill has already stated this, I posted after he said gartman sold I have made enough money on gold and silver in the last two years to retire in thailand

Edited June 7, 2011 by Lost in LOS

[cloudhopper]

QE3 - Just A Matter Of Time

http://www.streettal...ust-matter-time

Seemed more like an essay on why it probably won't happen to me.