Where Is Gold Going In This Market

[Jayman]

Paper gold & silver Ponzi exposed - Technical analysis

ORANGE COUNTY, CA (KSIR CAPITAL) -

There has been a constant debate over the years on what drives the price of gold and silver. Obviously we have the fundamentals that have put the metals in a bull market for the last 10 years. The powers that be have total control over money, as they set the price for capital via manipulating the interest rates. So it is not a stretch that they would be concerned with a rising gold price because gold is a threat to how the current fiat regime functions on a day-to-day basis.

Without Mr. Bernanke able to step in and buy US treasury bills, where would interest rates be? How would we fund our deficits?

These are just some of the reasons why it is important for the elites to pay attention to the price of gold and silver. Knowing this, the powers that be have instructed their banking arms JPMorgan, HSBC, Goldman Sachs and the like, to create paper derivatives to help manage the price.

But what happens when we get to a threshold point where the physical market breaks the back of the paper derivatives? We think that this time is near.

continued here http://www.mineweb.com/mineweb/view/mineweb/en/page103855?oid=151652&sn=Detail&pid=110649

[Jayman]

Embargoes push Iran into remonetizing gold

http://www.reuters.com/article/2012/05/17/gold-turkey-iran-idUSL5E8GGF3K20120517

What!?! They think they can actually buy stuff with that metal called gold? Get real! They need to spend more time at http://ww.naams-nonsense.org and learn the facts.

Maybe Lt can make a trip out there to educate the masses.

[12DrinkMore]

i guess all we need to do is refer back to bernanke's 2002 speech since he has definitely been following that game plan.

Unless the Fed abandon's it's mandate on how much of the UST it can own, I suppose it will be time for more creative measures? perhaps municipal or student debt? helicopter drop?

http://www.kingdomca...s-dollar-by-40/

I am not sure if the Bernank has a lever to devalue the USD by 40%. He has already stated that ZIRP will remain in place for the rest of eternity (ie in the financial markets something longer than about 3 milliseconds) and bought shed loads of Tim's debts.

The Roosevelt devaluation was against a gold standard.

But ever since we have been on the USD standard, so to speak, the USD is the reference currency. Clearly it cannot devalue against itself.

So what is it going to devalue against? And how could the Bernank arrange it?

[midas]

Hey BTW she's bullish on Facebook (whatever that is) so buyer beware!

and some are not so bullish

http://www.singledud...t/#.T7ZtkFJvC1I

Edited May 18, 2012 by midas

[farang000999]

So what is it going to devalue against? And how could the Bernank arrange it?

"As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.

The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

[12DrinkMore]

So what is it going to devalue against? And how could the Bernank arrange it?

"As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.

The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.

What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

That is the Bernank paper and is based on a "paper-money" system.

It is not relevant as we are in a credit based system.

The money that is in existence is 97% created as debt by the commercial banks. In order to increase the amount of money sloshing around, somebody, like you, me or a company, has to borrow it into existence. The money is "pulled" into existence, not "pushed" by the Central Bank.

The Bernank can, and has, created a humongous amount of USD's by buying up Tim's debts and other stuff, but NONE of those USD's are finding their way into your pockets. He is fighting massive DEFLATIONARY forces in asset prices, particularly treasuries and the housing market as debt now has a very bad name and is being repaid. The hyperinflation that everybody was talking about is nowhere to be seen.

I suppose that conceivably the US government could suddenly double all public sector wages, which would certainly have a few interesting effects, but they won't.

Or they could suddenly drop 200,000 into every bank account in the US. But they won't.

And the Bernank was not talking about suddenly devaluing the USD by 40%, a move he will certainly not attempt, and IMO, does not have the lever to do it anyway. He was stating that it would always be possible to maintain a positive rate of inflation. And he has managed to keep the UST's at a high price and, to some extent, prevented a massive collapse in the housing market.

I cannot see any mechanism for devaluing the USD against all currencies by 40%.

Edited May 18, 2012 by 12DrinkMore

[farang000999]

First off, the 40% number is not important, nor I do expect that to happen overnight. The point is that Bernanke looks back at history, and in his view, devaluing the dollar by 40% was a good idea.

I disagree that the money is not finding a way into our pockets. Government spending is estimated at 25% of GDP. The stock market would clearly be substantially lower, as would housing, if it were not for all of the Fed's QE programs. We have not yet had price inflation in the US because most of our dollars are exported and the dollar continues to be propped up, the inflation thus far as been exported. However, notice that China has decreased the rate of which it is purchasing UST and China is no longer running huge trade surpluses.

As for being unable to devalue the dollar by 40%, take a look at the DXY chart. Student loan debt, credit card debt, state and local debt. There are tons of places where Bernanke can wet his nose.

The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.

[Naam]

That is the Bernank paper and is based on a "paper-money" system.

It is not relevant as we are in a credit based system.

The money that is in existence is 97% created as debt by the commercial banks. In order to increase the amount of money sloshing around, somebody, like you, me or a company, has to borrow it into existence. The money is "pulled" into existence, not "pushed" by the Central Bank.

The Bernank can, and has, created a humongous amount of USD's by buying up Tim's debts and other stuff, but NONE of those USD's are finding their way into your pockets. He is fighting massive DEFLATIONARY forces in asset prices, particularly treasuries and the housing market as debt now has a very bad name and is being repaid. The hyperinflation that everybody was talking about is nowhere to be seen.

I suppose that conceivably the US government could suddenly double all public sector wages, which would certainly have a few interesting effects, but they won't.

Or they could suddenly drop 200,000 into every bank account in the US. But they won't.

And the Bernank was not talking about suddenly devaluing the USD by 40%, a move he will certainly not attempt, and IMO, does not have the lever to do it anyway. He was stating that it would always be possible to maintain a positive rate of inflation. And he has managed to keep the UST's at a high price and, to some extent, prevented a massive collapse in the housing market.

I cannot see any mechanism for devaluing the USD against all currencies by 40%.

it's because your limit is 12 and you are not a staunch believer in BS published by various gloom&doom sites. the fact that you respect gold but not kneeling every day praying "dear <insert deity> please let all fiat drop into the abyss and make my <insert precious metal> skyrocket" before going to bed does not help too much either.

[Misty]

Much to my surprise, the price of gold on the Yahoo Finance homepage has been replaced by the price of Facebook (quoted in fiat currency). I imagine that will be a short-lived change to Yahoo Finance. If not, will there be a new thread "Where is Facebook Going in this Market?" : )

[midas]

Sono senza parole!!!

Things are starting to heat up down in Italy

Italy deploys 20,000 to protect sensitive targets

Authorities will also increase intelligence to "neutralize" the risk of subversive actions "that can be nourished in moments of tension," the statement added.

A group calling itself the Informal Anarchist Federation last week claimed responsibility for the shooting of Ansaldo Nucleare CEO Roberto Adinolfi, and pledged in a letter to the daily Corriere della Sera to carry out further actions against Ansaldo's parent company, the state-controlled Finmeccanica.

ROME — Italy increased security Thursday at 14,000 sites, and assigned bodyguards to protect 550 individuals after a nuclear energy company official was shot and letter bombs directed to the tax collection agency.

http://www.ajc.com/n...=rss_news_82109

and Spain is blaming the British and Americans for their problems

Spain's intelligence services are investigating the role of British and American media in fomenting financial turmoil

http://www.guardian....spain-recession

Edited May 19, 2012 by midas

[12DrinkMore]

First off, the 40% number is not important, nor I do expect that to happen overnight. The point is that Bernanke looks back at history, and in his view, devaluing the dollar by 40% was a good idea.

I disagree that the money is not finding a way into our pockets. Government spending is estimated at 25% of GDP. The stock market would clearly be substantially lower, as would housing, if it were not for all of the Fed's QE programs. We have not yet had price inflation in the US because most of our dollars are exported and the dollar continues to be propped up, the inflation thus far as been exported. However, notice that China has decreased the rate of which it is purchasing UST and China is no longer running huge trade surpluses.

As for being unable to devalue the dollar by 40%, take a look at the DXY chart. Student loan debt, credit card debt, state and local debt. There are tons of places where Bernanke can wet his nose.

The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.

Roosevelt devalued against the gold standard by repricing it in USD. Bernanke does not have an option like that.

US government spending is now around 40% of the GDP

http://www.usgovernmentspending.com/spending_chart_1903_2010USp_13s1li011lcn_F0t_US_Government_Spending_As_Percent_Of_GDP

I agree that the stock market would be lower and the housing market lower if Bernanke had not interfered in the markets, reducing bond yields and interest rates to zero, and thereby forcing institutions to move into more risky assets. But this has not put money into the pockets of the people in general.

But now you a trying to put inflation into the equation, rather than a competitive devaluation against trading partners. To argue this angle you need to define what inflation is, and then we can consider how the Bernank can affect it. But yes, I agree, at the current rate of inflation the USD will have lost 40% in terms of the CPI basket of goods in 15 years or less. Quite dispiriting really, when the return on most investments is less than the CPI inflation rate. However, almost all currencies are going down at roughly the same rate, so that sort of evens out.

I am not sure where you are going with "Student loan debt, credit card debt, state and local debt. There are tons of places where Bernanke can wet his nose". The Bernank will only step in if there is a threat to the financial system or he can see a way to improve the employment figures. He will not be bailing out students.

Buying Tim's debts though open market operations does not inject money into the real economy, as we have been led to believe. It remains stuck in the banking system, where it either gets spent on buying more debt from Tim, or earns interest at the FED or earns interest on interbank loans. To some extent by driving interest rates down Bernanke has left a few coppers in the hands of the public due to lower interest rate repayments. But the overall effect is very small.

[Naam]

ROME — Italy increased security Thursday at 14,000 sites, and assigned bodyguards to protect 550 individuals after a nuclear energy company official was shot and letter bombs directed to the tax collection agency.

informed sources claim the Italian government's action is part of the global conspiracy to keep the gold price down

[Jayman]

Here is another interesting perspective on what is moving gold.

By

Greg Canavan • May 18th, 2012 • Related Articles • Filed Under

We left off yesterday wondering why the market had turned on goldrecently - the supposed "safe haven" metal. But we woke up this morning and saw things had turned again...gold surged 2% overnight as the US markets sank around 1.5%.

No doubt this type of price action will confound many investors...especially those who sold in a panic in the last few weeks. The recent sell-off amongst the gold stocks is up there with 2008 for severity.

In a clear example of how the emotional decisions of investors send price diverging from value, gold stocks have plummeted while theAussie dollar gold price, which, along with production, determines revenue, is only slightly lower.

The gold price certainly does move in mysterious ways. Today our task is to try and work out why. To do so, we need to look into the mysterious world of the London gold market.

This won't be easy reading. Sometimes you have to look under the hood to work out what the real problem is. If you're not a mechanic, looking under the hood can be daunting. But stick with us, because this could be one of the more important Daily Reckonings we've written for some time.

............ full article at http://www.dailyreckoning.com.au/the-physical-gold-market-from-the-weak-to-the-strong/2012/05/18/

[midas]

Here is another interesting perspective on what is moving gold.

By

Greg Canavan • May 18th, 2012 • Related Articles • Filed Under

We left off yesterday wondering why the market had turned on goldrecently - the supposed "safe haven" metal. But we woke up this morning and saw things had turned again...gold surged 2% overnight as the US markets sank around 1.5%.

No doubt this type of price action will confound many investors...especially those who sold in a panic in the last few weeks. The recent sell-off amongst the gold stocks is up there with 2008 for severity.

In a clear example of how the emotional decisions of investors send price diverging from value, gold stocks have plummeted while theAussie dollar gold price, which, along with production, determines revenue, is only slightly lower.

The gold price certainly does move in mysterious ways. Today our task is to try and work out why. To do so, we need to look into the mysterious world of the London gold market.

This won't be easy reading. Sometimes you have to look under the hood to work out what the real problem is. If you're not a mechanic, looking under the hood can be daunting. But stick with us, because this could be one of the more important Daily Reckonings we've written for some time.

............ full article at http://www.dailyreck...ong/2012/05/18/

interesting Jayman -thanks

And I am watching the PAGE website for any developments or announcements

because they are meant to be starting trading in under two weeks time

http://www.pagold.cn/List.asp?L-3462388652.Html

[Jayman]

interesting Jayman -thanks

And I am watching the PAGE website for any developments or announcements

because they are meant to be starting trading in under two weeks time

http://www.pagold.cn...3462388652.Html

Fingers crossed.. I have been waiting for PAGE to go live for months now. Many reports I've read blame China's bad news recently on part of the gold sell-off we just saw. The fact is there are many many factors for gold's movement and anyone that tries to put the cause on 1 single source/event is not really looking at the big picture.

Gold is very much part of the world financial system. As such it will be subject to quite a few forces.

[Naam]

Physical gold, the only asset without counterparty risk, increases in value at such a time... regardless of what the price tells you...

and the beauty of your mia noi increases every day regardless what the wrinkles on her behind tell you. of course only if your wife is not a counterparty risk.

[Jayman]

Physical gold, the only asset without counterparty risk, increases in value at such a time... regardless of what the price tells you...

and the beauty of your mia noi increases every day regardless what the wrinkles on her behind tell you. of course only if your wife is not a counterparty risk.

We are talking value and price. Take your garbage elsewhere to where you are more established.

[cdmtdm]

interesting read but my question is this.... never before have we seen the worlds major economies, work together in such a way to try and avoid total collapse of the financial system. They have and still do manipulate the currency markets and gold to a degree ... the question is ..

will they one day fix the price of gold ?

perhaps this is the bunny they will pull out of the hat to save the currency market

[Naam]

interesting read but my question is this.... never before have we seen the worlds major economies, work together in such a way to try and avoid total collapse of the financial system. They have and still do manipulate the currency markets and gold to a degree ... the question is ..

will they one day fix the price of gold ?

perhaps this is the bunny they will pull out of the hat to save the currency market

i don't think "they" can ever fix a price and even if they could i fail to see any relevance as far as the currency market is concerned. currencies are like gold, soy beans, iron ore, coal, or you name it a commodity driven by demand, no matter in what way that demand is generated and what "intrinsic" value the currency possesses.

the US-Dollar is an excellent example for my claim. every Bill, Buck, Hank and Joe talked and talks about the Dollar's demise but change their minds during a perceived or an actual crisis (like the present one) when the Dollar morphs into a "safe haven".

[Naam]

Physical gold, the only asset without counterparty risk, increases in value at such a time... regardless of what the price tells you...

and the beauty of your mia noi increases every day regardless what the wrinkles on her behind tell you. of course only if your wife is not a counterparty risk.

We are talking value and price. Take your garbage elsewhere to where you are more established.

your problem, little boy, is that you lack the intellectual capability to grasp the content of my "garbage". but don't worry, you are not the only one

[churchill]

'will they one day fix the price of gold ?'

or stop fixing the price of gold ...

Whales in the gold market .. http://therealasset.co.uk/whales-gold-bullion/

[Jayman]

'will they one day fix the price of gold ?'

or stop fixing the price of gold ...

Whales in the gold market .. http://therealasset....s-gold-bullion/

Nice article.

I saw the story when it broke about the texas fund and bookmarked it

http://www.bloomberg...-gold-bars.html

I thought at the time that this would create a reaction of more folks taking physical possession of their gold rather than paper certs. The only other big story about possession came out of Venezuela and that seemed to be from the recommendation of china and russia.

As long as the paper gold market is tied into the physical market then there will be a disparity between the price of paper gold and the value of physical. Of course supply and demand plays a role in all but with gold it's been common belief that the supply wasn't being falsely increased to meet the growing demand thus countering much of the price increase that the increased demand would normally have created.

Paper money has unlimited supply and we are not in control of it. We are not even given the numbers anymore to determine the paper supply of such major currencies as the USD. The FED stopped publishing the M3 data in March of 2006. How can figure out the true value of something whose supply is unknown and ever changing? Gold had been used by some as a barometer of the value of paper currency but now that correlation is not the least bit accurate.

The financial world is ever changing. We are living in somewhat unprecedented times. To keep trying to make comparisons to the past will only take your analysis so far. Some would really benefit to stop working on establishing their 20k post count on TV and look at what's really going on around the world. Yes, I'm talking to you old man.

Edited May 20, 2012 by Jayman

[farang000999]

gold is an insurance policy. long term insurance policies have a high negative expectation. short term they can have a very high expectation. up to you.

[churchill]

Van Rompooee....... ? resigns and names Boris Johnson his successor .....

https://twitter.com/...8218240/photo/1

Edited May 20, 2012 by churchill

[Naam]

To keep trying to make comparisons to the past will only take your analysis so far

people who have wet dreams about the future require rubber sheets to protect their mattresses from staining. those who look at a successful past sleep on dry sheets and clean mattresses.

and people who can predict the future have become quite rare since the last holy books were written. exceptions prove the rule:

[churchill]

To keep trying to make comparisons to the past will only take your analysis so far

people who have wet dreams about the future require rubber sheets to protect their mattresses from staining. those who look at a successful past sleep on dry sheets and clean mattresses.

and people who can predict the future have become quite rare since the last holy books were written. exceptions prove the rule:

same same ...

Edited May 20, 2012 by churchill

[Naam]

'will they one day fix the price of gold ?'

or stop fixing the price of gold ...

Whales in the gold market .. http://therealasset....s-gold-bullion/

it's these goddàmn Bilderbergs and Illuminati who are responsible. they invented and spread HIV, Bird Flu, Swine Flu, are fixing the price of Gold, appoint presidents, prime minister and chancellors to enslave the inhabitants of this planet who will be deported to work in Unobtainium mines located in the Gamma quadrant.

without alien assistance they wouldn't have a chance, but their alliances with the Romulans and the Ferengis provides all necessary knowledge.

[churchill]

WOW you must have been there !

'SOUTH AFRICA – At a worldwide Alien Summit taking place in Johannesburg, experts are speculating that the Gootans are here to plunder earth of its gold.

Several prominent extraterrestrial experts and strategic alien defense experts say that the alien attack under way by the Gootan Army has a specific mission: to plunder earth of its gold. ”This has happened repeatedly over the last one thousand years,” said UFO expert Professor Robert Rinderman of Oxford University. ”The Gootans come to earth, steal our gold and leave.”

http://weeklyworldnews.com/aliens/40937/aliens-here-to-take-our-gold/

[farang000999]

In The Lead - The Bear Facts

Friday May 18, 2012 09:30

The uber-critical $1,527 line of gold’s price defense came into play overnight as we had recently pondered here, and this time around, despite all the denials of the fact and protestations to the contrary, the gold market entered the cave of the bear. Granted that with RSI levels near 20 and with bullish Daily Sentiment indicators perhaps only in the single digits an overdue counter-trend rally might yet delude the bulls, but this is where the market highway junction that really matters is to be found.

A quick round-up of the midweek opening quotes showed gold prices being bid near $1,540 the ounce. The yellow metal has lost $255 per ounce since February the 28th and $385 since last September’s peak. Spot silver was quoted at $27.55 per ounce and platinum posting a small loss of $1 at $1,426 per ounce. Palladium lost $5 to reach $586 while rhodium was unchanged at $1,325 after having shed $25 recently. In the background, the US dollar hovered near 81.33 on the index but crude oil slipped $1.40 to $92.60 a barrel (a six-month low), copper was off 1.4%, while the euro continued to struggle near $1.27 against the greenback.

While the majority of recent gold market commentaries kept reaching in vain for any possible explanation for gold’s continuing melt-away, the simplest of all reasons evidently eluded most of their authors. We have now been treated to excuses that range from the silly to the preposterous, as to why gold is not acting in the manner that we had all been promised it would, when and if serious financial conditions such as we are witnessing these days would materialize.

Thus, we are being treated to gems such as: “Gold is down because the putative ‘bankster elite’ wants it to be down” and “gold is down because some ‘paper market’ is deluding people to the ‘reality’ that, in fact, gold is up and that the demand for coins and bars has never, ever been better” and “ advanced algorithms that control commodities and stocks make real price discovery impossible“ or “gold is down because we just had a “Super Full Moon” event.” We could go on…but it is not worth your time.

If anyone cared to dig just a tad deeper, they would have found the principal agent of change in gold prices staring them in the face; the US dollar. Yep, that debt-ridden, good-only-for-fireplace fodder, no-good, sickening green piece of paper, just recorded its 12th session of gains in value. That kind of streak has not been seen since –in the words of Marketwatch- “at least 1985.” Talk of the target level of 90 on the index has suddenly materialized, and such talk could be validated by a breach above the 82 mark on that scale.

If you think that is merely heavy lipstick on a terminally ill pig, the consider the virtual flood of dollar obituaries which have been coming our way for the past six years, and how they might appear to today’s readers in light of what has not happened. You get the point. In what may have sounded like trite remark at the time, this writer told Bloomberg’s Tom Keene (in an early January interview) that “gold will go where the dollar does not.”

That point is that, gold prices, aside from all the unpleasant happenings in Europe, closed at their lowest level of 2012 after having probed even lower (around $1,540) during the trading day on Tuesday. The point is that silver (also purported to be around $80 by now, for sure) tested price zones very close to $27.00 an ounce instead of vaulting three times higher. The point is that the dollar’s aforementioned streak has now been updated and that its 13-day long advance has now been classified as the longest winning one ever since the trade-weighted index has been created.

The point also is that, as was the case in 2008, this is the perfect environment for gold to show its mettle and to attract serious amounts of worried global money, and, yet, it is failing to do so. In fact, this May has been so cruel to bullion prices that analysts can now talk about the worst semi-monthly performance in the yellow metal in seven year, and not just since 2008.

If there is any “comfort” to be found by disillusioned gold and silver investors who had loaded up on the metals in anticipation of that which never came, it would be the fact the misery loves company. Commodities as a group fell for a tenth day on Tuesday, putting in their worst losing sequence since 1998. Oil, for example, traded near $92.50 per barrel early this morning.

Copper fell to the lowest level since January. Last week, according to Standard Chartered, investors pulled another quarter billion dollars or more out of this fast-sinking niche. A huge portion of recent gains in this space was attributed to the ear of “easy money” courtesy of the Fed. Now that questions have arisen about the continuation of that kind of largesse, well, you can see the (initial) results; pain and devastation.

Peter Major, an analyst at Cadiz Corporate Solutions, a unit of Cadiz Holdings Ltd., said by phone from Cape Town: “Commodity prices were unrealistically high as a direct result of a combination of easy and cheap money from quantitative easing and the threat of inflation. The market is efficient and it looks ahead. Mining houses have been weak for four or five months now; investors definitely saw weaker prices going forward.” Does that sound somewhat familiar? It should, to the regular readers of these columns.

As well, we cannot yet take comfort in the fact that the latest reports indicate that investors such as fund maven John Paulson have not yet lightened up on their GLD holdings. The first quarter may have initially been kind to such portfolios but the tide has swiftly turned against them and new questions are not swirling around as to the fate of at least a portion of such allocations. Shareholders do not take kindly to more than one “explanatory” message from fund managers. They want results, here and now.

Some market watchers expect Mr. Paulson to join the selling herd and cut some of his holdings in gold before the second quarter draws to a close. "There's absolutely no question in my mind that large institutions have been net sellers in gold over the past two weeks," said Adam Sarhan at New York's Sarhan Capital. "The fact that Paulson has been coming under a lot of pressure on his other holdings may force him to liquidate as well." The additional price pressure coming from such liquidations is as yet not fathomable, but is certainly did show its effects on the way up in the gold market. To be continued…

Something that we are continuing: our coverage of developments in China and how they relate to the commodities’ space. The recent shifts in that country’s economy have clearly been contributors to the decline in the price of “stuff” and that includes gold and silver. At the present time, the overriding perception is that China’s economic deceleration could increase and that its growth might reach a weak point not seen in circa 13 years. PMICO certainly feels that way, and it projects economic expansion in China to only come in at around the 7% mark this year.

Something else that underscores the deepening slowdown in the planet’s second-largest economy is the fact that foreign investment in China fell by 0.7% in April. So-called inbound investment amounted to only $84 billion after the country missed import/export estimates and recorded the slowest level of industrial output since 2009.

China’s currency reserves did however grow in the first quarter and that pattern reversed the first quarterly decline since 1998 that was witnessed earlier. However, once again starkly contradicting those who continue to see the mirage of “stealth” Chinese official sector gold buying, China bought…US Treasuries. In fact, China bought 1.6% more US government securities in Q1 while Japan bought 2.4% more of the same as well.

And now, to close things out, we go back to the US of A for more perspectives. A string of economic statistics has been making its way into the markets since the start of the week, and most of the data appears to reinforce the take that the Fed will not budge and that QE3 remains only a dream in the sleep of the commodity bulls who have become hooked on such generosity. In fact, the week’s most relevant metric- that of inflation falling (largely owing to gas prices caving in) - has not managed to bring about any higher levels of expectations for a new round of QE.

Other than that, we have seen retail sales in April bounce one-tenth of a percent higher in April, US homebuilder sentiment coming in at its best level since the Great Recession, The Empire State manufacturing Index rebounding to 17.1 this month, US industrial production climbing 1.1% and thus beyond expectations in April, housing starts rising by 2.6% in the same month, and capacity utilization – an important metric- increasing to 79.2 percent, i.e., the highest level since April of 2008. That little amalgam of positive economic numbers should be sufficient to silence those who see the “unfolding demise of America” and who only preach fear. Odds are stacked against such a silencing however, as it has become quite fashionable to scare folks into buying that which…one offers to sell; be it God, gold, or guns.

Until Friday,

By Jon Nadler

Senior Metals Analyst – Kitco Metals

[Naam]

i was told the Gootans are not stealing but pay for the Gold they take with "valuable fiat", i.e. post-dated cashier's cheques denominated in Gootanis drawn on the Gootan Central Bank.