Does the gold collapse on april 12 prove Bernanke was right?

[Toro]

Gold and silver look broken. There is no doubt about that.

However, silver fell 60% during the Financial Crisis and gold fell 25%. They then both went parabolic afterwards.

So we will see.

 

[Toro]

Bernanke's plan...you mean the one that leverages the future to prop up the current? The one that calls for indefinite money printing and bond/toxic asset buying with our money?
I wouldn't call that a plan....I would call it a ruse.

Maybe.

But the gold and stock markets are telling you otherwise.

Which is only reacting to the ruse and not what it would be without the $85 bn a month infusion. Sorry, but over $1 trillion a year in market propping is not good use of taxpayer funds. Just to maintain the illusion.

You might be right, I don't know. I believe the fundamental argument that what the Fed is doing is inflationary.

But I've been trading and investing for 20 years, and I've seen too many guys get taken out because they were dogmatic and thought they knew what was going on.

Price is truth. And the price of gold and silver are telling you that both are most likely going lower. If they start firming and going higher, I will change my mind. But most people have little understanding about how commodities markets work. Most people will lose money in gold and silver in the end.

 

[JimmieD]

One day people might figure out that the Fed isn't really expanding the money supply, but rather is simply changing the aggregate maturity structure of "riskless" assets. The Fed is swapping one type of financial asset for another - T-bills, T-bonds, and MBS' for bank reserves. The money the Fed is creating is bank reserves, not cash, and this is not necessarily inflationary.

 

[iamwhatiseem]

Maybe.

But the gold and stock markets are telling you otherwise.

Which is only reacting to the ruse and not what it would be without the $85 bn a month infusion. Sorry, but over $1 trillion a year in market propping is not good use of taxpayer funds. Just to maintain the illusion.

You might be right, I don't know. I believe the fundamental argument that what the Fed is doing is inflationary.

But I've been trading and investing for 20 years, and I've seen too many guys get taken out because they were dogmatic and thought they knew what was going on.

Price is truth. And the price of gold and silver are telling you that both are most likely going lower. If they start firming and going higher, I will change my mind. But most people have little understanding about how commodities markets work. Most people will lose money in gold and silver in the end.

...price is truth...
Yeah...just like the "price was truth" before the market collapse.

 

[editec]

We've been discussing this for a while. Gold has been in a very pronounced downtrend for many months now whereas stocks have been rising. This suggests that Bernanke's plan is working, because stocks rising and gold falling is what one would expect if people are less worried about inflation, less fearful and more confident about the economy.

It might be a headfake though. Only time will tell.

yes, by time Bernanke stops printing money the Balance Sheet will have 4-5 trillion on it. Thats almost half of GDP to pull out of economy to avoid severe inflation. It seems impossible.

FYI When Hamilton took over US finances, the national debt (including the state debts the central government took over) was about 400 times the government's revenue.

The US paid that back using TARIFFS as their primary revenue source.

 

[Toro]

Which is only reacting to the ruse and not what it would be without the $85 bn a month infusion. Sorry, but over $1 trillion a year in market propping is not good use of taxpayer funds. Just to maintain the illusion.

You might be right, I don't know. I believe the fundamental argument that what the Fed is doing is inflationary.

But I've been trading and investing for 20 years, and I've seen too many guys get taken out because they were dogmatic and thought they knew what was going on.

Price is truth. And the price of gold and silver are telling you that both are most likely going lower. If they start firming and going higher, I will change my mind. But most people have little understanding about how commodities markets work. Most people will lose money in gold and silver in the end.

...price is truth...
Yeah...just like the "price was truth" before the market collapse.

I agree. That's why I have to be open minded and intellectually flexible such that I can admit my thesis may be wrong. When the market is talking to me, I have to listen.

I made a lot of money trading gold on the long side over the past decade. I would like it to go higher because its easier to trade long. But this decline looks a lot like after the peak in gold in 1980. It looks like a classic top. Thus I am shorting the rallies.

 

[TakeAStepBack]

400 million ounces f gold dumped into the market and Cyprus is selling their gold reserves. Take into account the speculators adn ETF receipt traders and it becomes easier to understand why it fell. Gold is now manipulated like any other security. There is no point in watching it has a hedge to inflation.

 

[editec]

ALL currency is fiat.

Some is just way more FIAT than others.

I suspect that our government is expanding the amount of money in circulation way too fast given the REAL growth of this economy.

dear, Bernanke's expansion of money supply is not related to the real growth of the economy nor has anyone one on earth ever said it was, especially since the economy is not growing!!!!!!!
You may be the only person on earth not to know that!! Why not take econ 101 so you can be intelligent rather than pretending all the time to be intelligent!!

Keep trying.

Eventually you're bound to say something that makes sense, mate.

 

[editec]

Maybe.

But the gold and stock markets are telling you otherwise.

Which is only reacting to the ruse and not what it would be without the $85 bn a month infusion. Sorry, but over $1 trillion a year in market propping is not good use of taxpayer funds. Just to maintain the illusion.

You might be right, I don't know. I believe the fundamental argument that what the Fed is doing is inflationary.

But I've been trading and investing for 20 years, and I've seen too many guys get taken out because they were dogmatic and thought they knew what was going on.

The market can be WRONG longer than you can remain solvent.

Price is truth. And the price of gold and silver are telling you that both are most likely going lower. If they start firming and going higher, I will change my mind. But most people have little understanding about how commodities markets work. Most people will lose money in gold and silver in the end.

They're pumping $85,000,000,000 a month by buying back bonds.

One might reasonable assume that sooner or later that is inflationary.

But the consumer class has lost so much purchasing power (and net worth, too) that I suspect their efforts to revitalize the national economy (not the market economy) aren't going to work any time soon.

And now that the FED is promising not to increase the prime rate at least until 2014, the market's confidence seems to be higher (at last until 2014, eh?)

I thgink they proeblem they';re readlly having is that they cannot fix the economy without also FIXING the middle class's economy.

And nothing the government seems interested in doing suggests that they're prepared to do that.

 

[iamwhatiseem]

You might be right, I don't know. I believe the fundamental argument that what the Fed is doing is inflationary.

But I've been trading and investing for 20 years, and I've seen too many guys get taken out because they were dogmatic and thought they knew what was going on.

Price is truth. And the price of gold and silver are telling you that both are most likely going lower. If they start firming and going higher, I will change my mind. But most people have little understanding about how commodities markets work. Most people will lose money in gold and silver in the end.

...price is truth...
Yeah...just like the "price was truth" before the market collapse.

I agree. That's why I have to be open minded and intellectually flexible such that I can admit my thesis may be wrong. When the market is talking to me, I have to listen.

I made a lot of money trading gold on the long side over the past decade. I would like it to go higher because its easier to trade long. But this decline looks a lot like after the peak in gold in 1980. It looks like a classic top. Thus I am shorting the rallies.

I understand where you are coming from, but you have to understand where the rest of us are coming from as well. For all of us that have money to invest, but are not "investors" - we earn our living in another way and just want to park money in a safe place that at least outpaces inflation - we are screwed.
For us - the market is un-tradable. I think anyone would be an idiot to have retirement money sitting in stock market vehicles. The commodity market is bound to decline, IRA's etc. are a waste of time - you might as well bury it in the backyard.
So what Bernanke and crowd have done is uber-prop up the markets to the point of lunacy, and the day they stop the maddening bond/asset buying/money printing - it will all fall fantastically.

 

[editec]

For all of us that have money to invest, but are not "investors" - we earn our living in another way and just want to park money in a safe place that at least outpaces inflation - we are screwed.

YES!

And the question facing us is this?

What IS safe?

Somebody noted that the metals do not appear to be the "safe haven" it once was.

I concur.

There is a shitload of gold sitting in vaults that governments that are in SERIOUS trouble own.

When enough of them start dumping those reserves to deal with the red ink what does that do to the price of precious metals?

Obviously I have no crystal ball. So much depends on what governments decide to do, and the investors simply cannot KNOW how they'll jump.

(doubt that? Who among us would have predicted what the FED and Treasury did to Bear Stearns? Who would have predicted they'd save AIG? )

I do not see governments as RATIONAL players. So predicting their next moves is difficult since irrational fear makes fools of us all.

 

[Toro]

...price is truth...
Yeah...just like the "price was truth" before the market collapse.

I agree. That's why I have to be open minded and intellectually flexible such that I can admit my thesis may be wrong. When the market is talking to me, I have to listen.

I made a lot of money trading gold on the long side over the past decade. I would like it to go higher because its easier to trade long. But this decline looks a lot like after the peak in gold in 1980. It looks like a classic top. Thus I am shorting the rallies.

I understand where you are coming from, but you have to understand where the rest of us are coming from as well. For all of us that have money to invest, but are not "investors" - we earn our living in another way and just want to park money in a safe place that at least outpaces inflation - we are screwed.
For us - the market is un-tradable. I think anyone would be an idiot to have retirement money sitting in stock market vehicles. The commodity market is bound to decline, IRA's etc. are a waste of time - you might as well bury it in the backyard.
So what Bernanke and crowd have done is uber-prop up the markets to the point of lunacy, and the day they stop the maddening bond/asset buying/money printing - it will all fall fantastically.

You may be right. QE is propping up the markets, and when it ends, I think we could have a sharp fall.

As for retirement, it depends on how old you are. If you're at or near retirement, you shouldn't have much in stocks. If you are in your 40s or younger, and plan to work another 20+ years, then you should be systematically buying stocks and using declines as opportunities. Right now, stocks offer a better return than most other investments. An investor in stocks will most likely make at least 7% a year for 20 years, but with some sharp declines in between.

There's nothing wrong with holding a bit of gold in a well balanced portfolio, maybe 5%-10%. But don't treat it as a religion or an expression of ideology. Once people start doing that, they've lost.

 

[EdwardBaiamonte]

and the day they stop the maddening bond/asset buying/money printing - it will all fall fantastically.

1) they have no plan to stop in a day, of course

2) when they do slow down the effects will take months or years to be seen. Sorry!!

3) however, it does seem Bernanke has dug himself a hole in that he may now be propping up a socialist-like economy with too many socialist distortions to ever recover fully, particularly in the face of international competition

 

[EdwardBaiamonte]

I do not see governments as RATIONAL players. .

too stupid!!! and nevertheless you're a liberal for more and more irrational liberal government!!

See why we say slow??

 

[depotoo]

no, it proves the power and manipulative force of George Soros. I can't find the original column he wrote or article he was quoted in just a few days before its collapse, but this article does talk about it -
George Soros says gold no more safe haven, but sees central bank support: Report - Economic Times

There are so many reactionaries within our markets anymore that depend on others rather than themselves, this is what powerful people can cause.

 

[Crackerjaxon]

Dropping to 1395 an ounce is hardly a collapse. The simplest explanation is that the market was overbought and corrected itself.

Buyers snap up 'bargain' gold coins - Telegraph

 

[Toro]

Dropping to 1395 an ounce is hardly a collapse. The simplest explanation is that the market was overbought and corrected itself.

Buyers snap up 'bargain' gold coins - Telegraph

It's a collapse when it falls $150 in two days.

The simplest explanation is that gold has been under distribution for nearly two years, the charts looked horrible and it finally broke support at $1520. Now, the playbook is to short the rallies until the chart repairs itself.

 

[EdwardBaiamonte]

Dropping to 1395 an ounce is hardly a collapse. The simplest explanation is that the market was overbought and corrected itself.

Buyers snap up 'bargain' gold coins - Telegraph

It's a collapse when it falls $150 in two days.

The simplest explanation is that gold has been under distribution for nearly two years, the charts looked horrible and it finally broke support at $1520. Now, the playbook is to short the rallies until the chart repairs itself.

whatever happened to the story of Bernanke shorting gold to drive down price and make his currency look good in the process??

 

[JimmieD]

Dropping to 1395 an ounce is hardly a collapse. The simplest explanation is that the market was overbought and corrected itself.

Buyers snap up 'bargain' gold coins - Telegraph

It's a collapse when it falls $150 in two days.

It's a sign of volatility, not collapse.

The simplest explanation is that gold has been under distribution for nearly two years, the charts looked horrible and it finally broke support at $1520. Now, the playbook is to short the rallies until the chart repairs itself.

If everyone ran that playbook, the chart would never "repair itself."

 

[Toro]

Dropping to 1395 an ounce is hardly a collapse. The simplest explanation is that the market was overbought and corrected itself.

Buyers snap up 'bargain' gold coins - Telegraph

It's a collapse when it falls $150 in two days.

It's a sign of volatility, not collapse.

The simplest explanation is that gold has been under distribution for nearly two years, the charts looked horrible and it finally broke support at $1520. Now, the playbook is to short the rallies until the chart repairs itself.

If everyone ran that playbook, the chart would never "repair itself."

And the play book tells you to put stops in somewhere above $1520.

Typically, before the chart repairs itself, it has to go back to where it bounced, which then becomes support. Thus, the expected range is between $1380 and $1520, which can be traded until the ranges are violated.