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22 Sep 11 17:26
Date Joined: 03 Feb 05
| Topic/replies: 6,745 | Blogger: Menelaus's blog
Time to talk about something else than just salivate over Apple.

Those who are paper trading gold, if you weren't shorting since the SNB CHF/euro peg you haven't been paying attention.

Those who own physical, just sit back, make yourselves a nice cup of tea and enjoy the show.

Those who missed getting in owning physical, now it's your chance, the Chairman gave you a gift yesterday. Buy every dip under $1,680, double buy every dip under $1,600........and be patient.

Why? Two things.

First, FED/CBs will print because print they must. The Chairman knows this but he's sacrificing equities for now (he built a cushion anyways) to get OIL and Gold down before the inevitable next round of money printing. Bank balance sheets are imploding (deflating) right now and the FED/CBs will intervene the only way they know how.....PRINT FIAT. It's inflate assets or die for the FED/CBs and Bernanke knows it......(What? Oooooh, you thought it was about full employment and the economy?! Well, think again)

Second, take the time to plot the price of Gold vis-a-vis USG debt for the last 10 years. The correlation will jump right out of the page at you. If you want to know where the price of gold is going, just take the time to research where the USG deficit is heading over the next five years. With all the other issues now taking center stage, funding the USG deficits is the elephant in the room everyone seems to have forgotten about.

Silver is being exposed again for what it is, an industrial commodity, not a monetary one. Even at that, I'm a buyer at dips below $35.
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Report Menelaus September 22, 2011 9:07 PM BST
$1,750 looks resistance on the chart now. If gold bulls can't break through that the next couple of trading days, then $1,650 is quite possible next week.


The house of cards in the EZ is collapsing at such an accelerating pace interventions may appear a lot sooner than expected. And don't forget the IMF meeting in NY this weekend. Lagarde may announce an emergency fund that doesn't exist except in the Eccles building printing room, huge enough to save the whole world from itself......again. Laugh
Report Menelaus September 23, 2011 9:12 AM BST
Another attempt at $1,750 fails during Asia trading and I'm not sure London and NY will be kind to the metal today. Depending how the various "let's recapitalize the banks and save the world" scenarios being bandied about play out, there could be further downward pressure on gold before it reverses. We'll see how it plays out......
Report Menelaus September 23, 2011 3:54 PM BST
Both buy levels hit.....(I hope you were shorting on the paper trade).

A word of caution. If you're buying physical with leverage, DON'T BUY. If you need to liquify your purchase any time soon, DON'T BUY. If you need to pay obscene fees to get your hands on it (some outfits in London right now are charging exorbitant surcharges in my opinion), DON'T BUY. This is a BUY AND HOLD play (the only legit buy and hold play right now in fact) anticipating further fiat money debasement in the future.

I think we have a bit further down to go but I'm not going to time this thing. Ease into it now, increase size as we go down. I don't want to be surprised by a bank collapse or a new round of money printing and the price spikes.

DISCLAIMER: This in no way to be construed as financial advise. I'm simply sharing how I'm playing it, use your own judgment and do as YOU ONLY see fit.
Report Menelaus September 23, 2011 6:42 PM BST
This is what panic selling looks like.

$1,650 level broken today, never mind next week.

Next stop, resistance at $1,620 (not that it seems to matter at this point) and then $1,580. Then *I think* the carnage stops, it's way oversold at this point already.
Report wykhamist2 September 26, 2011 8:41 AM BST
Went below 1540 this morning. However, as far as I can see this is still consistent with the trend in place since the beginning of the year which would see it at about 1700 by the end of the year.

I am fairly hopeful that it won't go below 1500, but then I never expected it to drop below 1600 if I am honest. I think it was oversold as a result of forced selling to cover equity positions.

Just as I write it is shooting up-currently 1590. Apart from the physical I hold I stuck in a long spread bet at 1550. I will close it out if it breaches 1600 and then hope to find an entry point at a lower level later in the day.
Report Menelaus September 26, 2011 8:44 AM BST
Supports are taken out like they don't exist. We are witnessing massive deleveraging of margin buyers. With the current margin ratio, everyone who bought the top on margin lost ALL their money. Hedgies therefore with weak hands are running for the exits and the move down is magnified by bullion banks who are shorting, or who were short and need to get out with a profit. The way the charts look now, Gold in the $1,200-$1,300 range looks possible and Silver at sub $20 would not be out of the question.

Those holding physical, please remember, this looks like an orchestrated PAPER market collapse that caught weak hands trading paper by surprise. DO NOT PANIC. All global financial meltdown possible "solutions" have the word "easing" in them. And the EZs/ECBs hand looks like will be forced a lot sooner than the six weeks that they so naively and arrogantly thought they bought over the weekend. It's either the ECB prints, and prints NOW, or PIIGS start collapsing like a house of cards and the EZ falls apart. Bank balance sheets are imploding at an accelerated pace and at the moment they are taking everything else down with them - China finally showing weakness completes the panic. Enjoy the show.
Report Menelaus September 26, 2011 8:50 AM BST
In my opinion, for the free fall to stop, price must consolidate above the $1,580 support of 2-3 trading days, otherwise as I posted earlier we have a lot further to go...DOWN.

Monsieur Trichet, Frau Merkel, over to you.
Report Menelaus September 26, 2011 9:08 AM BST
Report wykhamist2 September 26, 2011 9:10 AM BST
I agree 100% that those holding physical should definitely not sell. I am lucky that I bought all mine around 2008 at $800 as a long term store of my ability to buy the necessities of life. All the chaos surrounding possible sovereign default and collapse of the eurozone, which means the price in imaginary paper money could be anything, is pretty irrelevant.

It just made my limit I set marginally below 1600 so I am out of the market now, only holding a short of the FTSE which is at the same level I took it out at.

I think probably the wisest strategy for this morning is just to go down the slug and lettuce for the half price fry up for £2.50 and stay out of the market. Gold is unlikely to soar while I am out, but as you say there is always a chance it could plummet again.
Report Menelaus September 26, 2011 9:25 AM BST
Well said. We are literally in uncharted waters right now. The EZ situation is a slow motion train wreck with comical (and often conflicting) statements by it's leadership who appear overwhelmed by the situation and seem to think grandiose statements will bring confidence back.

As a physical holder I'm not concerned at all. I know where this whole thing is headed and it bodes well for Gold. The obscene USG deficits are the big elephant in the room that everyone seems to have forgotten about at the moment. Rest assured that elephant will be heard from soon enough again.

Good luck with your trades.
Report Menelaus September 26, 2011 9:47 AM BST
Monsieur Trichet must be reading this thread. Bloomberg reports "unconfirmed reports" of imminent 50bps ECB rate cut. This may be enough to reverse the markets at the moment since everyone seems to be reacting to headlines, but they need something a lot bigger than this to stem the tide in my opinion.
Report Menelaus September 27, 2011 8:47 AM BST
50bps rate cut coming soon to a central bank near you. This "unconfirmed" report reversed the markets yesterday, the same now "confirmed" report moved/will move the markets today. From Bloomberg: "a euro-region central bank official said the European Central Bank is likely to debate restarting covered-bond purchases and may discuss interest-rate cuts to ease funding strains.". Gold obviously reacts to any announcement withe the word "ease" in it.

In other news, Greece is at a stand still as mass transit shuts down for 48 hrs due to strikes, and public transportation workers threaten to go on strike indefinitely if layoffs in that sector are announced. I hope those workers have access to the ECB lending window, at least that rate cut ought to make their lives easier. :)
Report alexmillwall September 27, 2011 11:00 AM BST
Thanks for your posts, really interesting, i have no view to add,, ears are open though.
Report wykhamist2 September 27, 2011 3:34 PM BST
Since this morning I have been long on gold and short on oil via a spreadbet. My theory is basically that gold was undervalued and oil is overvalued. I was looking great for a while with oil dropping and gold rising, but its gone against me a bit in the last couple of hours. As I write gold is +348 and oil +243.

I am tentatively hopeful that gold will not drop back again below 1600, but there are certainly some who think it could go as low as 1440. I quite like these paired trades in general since the danger of getting wiped out is considerably reduced in these volatile markets.
Report clouded leopard September 27, 2011 4:40 PM BST
with regards to buying physical silver , i'd like another dip into the 25-30 range , why do you have to pay 20 % VAT ?

can you avoid it ?
Report Menelaus September 27, 2011 4:41 PM BST
Some key resistance points held for Gold, when under selling pressure, so the chart looks a lot better now than it did just a couple of days ago. Gold is obviously getting a tail wind from all the talk about an imminent ECB rate cut (which I think it's coming as soon as Trichet's spin doctors find a way to phrase the press release without totally discrediting him) and the leveraging of the EFSF (which I also think it's coming despite the theater of political "outrage" in Germany and lack of support for Merkel - Beyond that point, I think downward pressure from the FED's surrogate's on the markets will return as soon as the dust settles on the EZ bailout plan.

Oil is very hard to play right now. Downward pressure on the price due to demand destruction, upward pressure with all the money printing going on. And then we have that nasty little thingy called "peak oil". The most incredible thing in my view is that in the midst of an evolving crisis, with deteriorating economic data globally and the banking system on the edge of the abyss, Brent NEVER dropped below $100. That should tell you something.
Report wykhamist2 September 27, 2011 8:23 PM BST
I was reckoning on the extra 2m extra bopd from Libya increasing the supply while recession reduced demand. Also, down to about $90 a barrel a lot of poorer quality reserves such as in the N Sea are still just about economic. Furthermore a flight to the dollar should reduce the price a bit in dollar terms. So I feel the correct price should be sub $100, but I cannot see it staying below $90 for very long.
Report Mrben December 29, 2011 12:50 AM GMT
Those who missed getting in owning physical, now it's your chance, the Chairman gave you a gift yesterday. Buy every dip under $1,680, double buy every dip under $1,600........and be patient.

Silver is being exposed again for what it is, an industrial commodity, not a monetary one. Even at that, I'm a buyer at dips below $35.

gold- 1554

silver 26.00

Report Stow_judge December 30, 2011 3:10 PM GMT
I'm sticking principally with retail bonds. Gold seems to be dragged down with the euro at the moment.
Report Menelaus January 3, 2012 1:18 PM GMT
I know of one mug who didn't buy the dip.
Report Mrben January 4, 2012 5:22 AM GMT
I know one mug who is sitting on a HUGE loss
Report Menelaus January 4, 2012 11:14 AM GMT
Surely you mean the mug who expected gold to be under $1,000 by 3rd Qtr 2011, 1st Qtr know, the mug who posted the stupidest call ever made on this forum, the same mug who didn't know how money gets created....THAT MUG.
Report Stow_judge January 5, 2012 5:25 PM GMT
If/when the markets collapse, will gold & silver not be dragged down with them? Wont people be selling their Gold and Silver when much of their other liquid assets go down the swanny and they have little else of value?
Report J2BLUE. January 5, 2012 5:39 PM GMT
Perhaps, but if everything else collapses then gold and silver will have a massive amount of money chasing a tiny amount of metal and the price will explode.
Report Menelaus January 5, 2012 8:45 PM GMT
If/when the markets collapse, will gold & silver not be dragged down with them?

The answer is NO (unless your definition of collapse is different than mine), in fact quite the opposite. At that point, there will be a mass exodus from paper assets into hard assets. The problem will be that at this point the PAPER price of gold will be rendered meaningless. Gold is trading 100/1 paper to physical on the metals exchanges. So unless you already have it in your possession, guess what, you are not getting any AT ANY PRICE.

Wont people be selling their Gold and Silver when much of their other liquid assets go down the swanny and they have little else of value?

All the stories floating about as to why gold dumped $300 during the last few weeks of the year are FICTION. Perception management at it's best. It's been "reasoned" it's because of deflation, it's because it was a bubble, it's because hedge funds were selling their best performing asset to make their year, etc. etc. Bollocks. It's because THERE IS AN UNLIMITED AMOUNT OF PAPER GOLD THAT GOLD CAN BE SHORTED WITH. END OF. And it will be this way until we see a complete dislocation of the metals markets paper price and physical. We're not there yet.
Report Mrben January 6, 2012 3:02 AM GMT
IMAHO x  2LaughLaugh

stow judge is  of course correct and the 2 stooges melly and J2 are about as deluded as one can get without being formally institutionalised.Crazy

gold and silver will be vaporized in the rush for liquidity.I cant be bothered to explain it.

but answer me this one you 2 dimwits. Gold goes to 3000$- what is it measured in? The same dollars you now claim are worthless.Confused doesnt that by definition [ your definition]make it also worthless.?

I know that will go straight over your two flatheads but do try to think about it first.

melly - in your furious reply be sure to mention the gold under 1000 quote- i feel naked without it.Tongue Out
Report Menelaus January 6, 2012 7:28 AM GMT
"gold and silver will be vaporized in the rush for liquidity.I cant be bothered to explain it."

No, please DO explain, I'm all ears.

(HINT: I thought you not knowing how money gets created truly exposed your massive ignorance. THIS POST TOPS IT)
Report Menelaus January 6, 2012 7:40 AM GMT
melly - in your furious reply be sure to mention the gold under 1000 quote- i feel naked without it

Surely, you kept at least one pair of trousers before shorting gold expecting it to go under $1,000 ?!?! Silly
Report J2BLUE. January 7, 2012 3:53 PM GMT
Mr Ben...PM me your email address and I shall send you a book which can explain it better than I ever can.
Report Menelaus January 7, 2012 5:12 PM GMT
Anything more complicated than a comic book would be a waste of time in my opinion.
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