Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold and Silver Bears Advance To Stalingrad - How Are the Mighty Fallen

Commodities / Gold and Silver 2013 May 05, 2013 - 11:49 AM GMT

By: Jesse

Commodities

“To understand reality is not the same as to know about outward events. It is to perceive the essential nature of things.

The best-informed man is not necessarily the wisest. Indeed there is a danger that precisely in the multiplicity of his knowledge he will lose sight of what is essential. But on the other hand, knowledge of an apparently trivial detail quite often makes it possible to see into the depths of things.


And so the wise man will seek to acquire the best possible knowledge about events, but always without becoming dependent upon this knowledge.

To recognize the significant in the factual is wisdom.”

Dietrich Bonhoeffer

The bullion supply lines for this recent market operation seem a bit overextended and ill equipped for the ferocious waves of physical buying that have been reported, especially in Asia.

This from UBS:

"On the physical front, strong appetite out of Asia continues. Our index of physical flows to India continues to indicate very strong demand coming in, at least five times the average over the last 12 months.

Premiums in India are now quite high, particularly for the 0.9995 purity kilo bar, the more popular product, amid extremely limited supplies at the moment."

The bullion bears are drawing a line in the sand for gold at 1480. The physical drawdowns are going to eat them alive if they try to hold the easy ground they gained by heavy selling in quiet market periods.

And so I think that level will fall, and they will fall back to the real test which will be in the area of 1580 when gold takes on the longer term downtrend. And they will continue to have their easy victories, while sowing the seeds of their own downfall.

And for our modern financial speculators, who think that price is the value, rather than the other way around, welcome to the winter of your discontent. There are going to be some very punishing lessons in the fundamentals of supply and demand given out, and of the limits of the will to power and fraud. And given time they will be haunted and hunted, and reviled beyond their ability to conceive it.

That is the underlying story of the last financial crisis, and sadly, little has changed. One thing I will give the financiers, they often persevere in their greed and folly until achieving, at last, their own shame and remarkable self-destruction. That is the heroic commitment of the mad to a foolish and unworthy end. It is a sickness unto death. We have seen such downfalls in our day, again and again and again. They would be as gods; and in their madness they never learn to avoid plunging into the abyss.

Think about those who have shown this tendency. Bernie Madoff, the Enron Boys, the London Whale. How can one explain such unaccountable madness, and yet account for it in their economic models?

And in truth, there are times when a sector that promises power becomes the playground of the psychopaths and the morally ambivalent. And there would be tragedy, except that they fall not from heights of greatness, but from monumental and foolish pride. And so they lie, scorned and unpitied.

How are the mighty fallen, stripped of the accoutrements of their war. And there are many more, and greater yet, to come. And they scorn the simple prescription that would save them: need little, want less, and love more.

But let's not get ahead of ourselves, and let the markets show us what is really happening. The biggest changes are not events but processes, with many twists, and the turning of the tide is only knowable in retrospect.

Here is a recent chart linked to below that purportedly compares housing and gold as a hedge against inflation.

Gold Versus Housing As An Inflation Hedge

The scales are utterly misleading. If you wish to compare two things over the same period of time a percentage increase is much more effective than splitting it across two unrelated nominal scales on opposite sides of the chart.

Housing on the left scale went up on the chart 2x, and gold on the right has gone up 6x at least.

The chartist *could* be trying to show that housing, as the major measure of inflation, was not closely followed by gold. But that does not come out in the commentary, and is a bit off the wall, since housing was not a major measure of general inflation. Housing was a secular phenomenon, a flat out bubble marked by significant fraud and highly leveraged mispricing of risks.

The central banks were net selling gold into the first part of the chart. As you may recall the period of 1999 to 2002 was the infamous "Brown's Bottom." They turned to net purchasing around 2006, and now there are shortages of bullion.

And I don't see the government subsidizing and promoting the purchase of gold as they had been doing with housing, at least not directly. However, the US financial system is doing a pretty good job of incenting the world to buy gold by creating negative real interest rates of return on the dollar, and allowing the bullion banks to game the metals markets. But I think that has hardly run its course.

As you may have heard today, JP Morgan and their derivatives diva Blythe Masters are under scrutiny for gaming the energy markets, among other things. I am convinced that the scandals that keep coming out are still just the tip of the iceberg. As Jeffery Sachs said, Wall Street has become a pathological environment, and it is so 'in your face' that is hard to miss. Unless your paycheck depends upon not seeing it.

The G20 has its conference on Reinventing Bretton Woods next week. I do not expect anything dramatic to come out of it. This process of change is going to move slowly.

See you Sunday evening.

This is what quite a bit of the non-English speaking world thinks is happening. And they are getting mad as hell about it.

There is change in the wind, and before it's over, it may be blowing a hurricane.

By Jesse

http://jessescrossroadscafe.blogspot.com

Welcome to Jesse's Café Américain - These are personal observations about the economy and the markets. In plewis

roviding information, we hope this allows you to make your own decisions in an informed manner, even if it is from learning by our mistakes, which are many.

© 2013 Copyright  Jesse's Café Américain - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jesse Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules