Gold Prices Bound To Fall Further

[Dover]

Look for gold at $1662 an ounce to continue its retreat tomorrow in the wake of last week’s rout and the coup de grace of another rise in margin on gold futures speculation at the commodity exchanges.

As gold began the year at $1400 an ounce and rose spectacularly to almost $1900 an ounce– a run-up of $500 or about 35%– there are evidently plenty of margin buyers who got in the game between $1400 and $1662 who are feeling edgy about getting margin calls just at the very moment Europe is in a swoon, and the stock markets everywhere are under great pressure. The next impact point is $1522- the 200 day moving average on gold prices. We’re in retreat for the time being.

Then, too, the dollar has rallied a bit, but is still below its high for 2011, suggesting that if the euro is under pressure, the offsetting trade will be to buy dollars. As I have written many times there is an inverse relationship between gold and the dollar. When the dollar is weak, gold as an alternative currency is strong. But, when the dollar is strong, gold appears to weaken– at least roughly 70% of the time. You should keep that in mind.

...cont'd

http://www.forbes.com/sites/robertlenzner/2011/09/25/gold-prices-bound-to-fall-further/

[Gman]

1. Lots of freepers about to lose their asses

Be assured Glen Beck is selling now but saying a word about it, which is probably the only responsible thing he's e ever done.

[Yavin4]

12. It's Truly Sad That You're Using Your Politics To Make Your Investment Decisions

Glenn Beck is a moron and charlatan, and Freepers are idiots. However, buying PMs as a hedge against the inevitable collapse of global debt has nothing whatsoever to do with Freepers or Beck.

[vets74]

19. THAT'S FUNNY !! "The inevitable collapse of global debt... etc....."

is the central message and it's titled with a complaint about using politics to drive investment strategy.

First, legally, the central banks can do whatever they need to adjust to local/national Balance Sheet Recession technical issues. Google < Richard Koo Nomura > for the macro- and microeconomics.

Greece is a clear example of a local inflation pool getting out of hand due to an influx of speculative investment money. Real estate and wages are sitting 30% higher than similar assets and job rates in the Northern European countries. So of course the Greeks are getting shafted. Doesn't help that situation that the usual wealth-concentration disfunction from a Big Bubble event has screwed up the Greek tax system.

Even this mess can be repaired. Not with additional debt, but with removal of Greece from the euro system. Greece needs to see devaluation -- a return to pricing that matches its European neighbors.

Eventually China will look like the Northern Europeans in the Greek situation. They will hold the money and have lower costs than everybody else. China will have to be revalued upward. That will be true whether they like it or not.

Second, buying gold was bad... because the oldsters who flock to the Glenn Beck show watched his commercials ???

No-no-no. That's sensible, but not quite pragmatic.

Tell me the rightie KKKwannabe Beck-heads are anything but way ahead. These folks are not bad off at all. Beck was flogging gold five years ago. Meanwhile other investment options, the usual savings account rates and T-Bill pay-outs are sitting under 1%.

Big news on gold in 2006 was a temporary spike from 500 up to over 700 and then back down most of the way to 560 or so. My guess is that the 2011 run-up is going to shape out like 2006 -- a big retreat back to the $1200 level or so. (My guesses are nothing but guesses.)

Beck presents with ZOO-100 radio craziness through and through. A petit fascist, a White Power racist or worse.

His advertiser list hit the jackpot. It's the only investment type for retirees in this period 2006-2011 that did well.

[Dover]

2. Deflation?..n/t

[riverbendviewgal]

3. I bought my gold at 250 and

500 dollars.....not worried. It is just a little pillow of precaution.
I took ALL my money out of stocks in 2007...I had been reading warnings of house and bank crashes....I can't figure out why many people said they didn't know..

I would rather gain a small interest for my investment money than be biting my nails every day watching my stocks go down. I watched my brother watch a NFL game when he bet a thousand bucks one time..He was not enjoying the game and he was biting his nails all through the game.

I don"t have a six figure salary or several houses and yachts.

I live within my means...When I go to the casinos, which is rare, I limit my bets to $20 for the night.

My last job (I am retired) I was a fraud analyst and found many con men and women out there. It made me very cautious. Glenn Beck is a great con man.

[bemildred]

5. Smart.

:thumbsup:

[AnneD]

7. I bought one oz...

at 1650 and one at 1570, but all the rest were purchased at 600 and 800. And silver was 15 per oz when I first started. My PM have always been just a precaution too.

I am patiently waiting for it to go low as I look upon it as a buying opportunity. I hope to add a bit more as I am looking to hold for a very long time.

I too got out of the market in 2007 and saved myself much grief. I am getting into the market for my daughter's account but then she is 21 and has a long time horizon.

You are so right about fraud. Since there is no prosecution for these criminals, there are no consequences. And that lone rogue trader nonsense is crap. Every one at the top knows and condones it-they just want some other dupe to get caught holding the bag.

[golfguru]

23. You are a long term investor in gold

so the fluctuations in gold prices do not mean much.
Short term traders sitting on gold are getting hurt, that is all.

[doc03]

4. Investors suckered in for the slaughter again.

Why would everyone and their uncle be begging for your dollars in exchange for gold if they thought gold was going to continue increasing in value and the dollar was going to decrease? Not logical to me.

[Po_d Mainiac]

8. $100 rebound already....

These are paper games which are actually working to the advantage of hard holders ...paper metal players should not to be confused with 'investors'

BTFD

[Art_from_Ark]

9. Do you know anything about how the gold markets work?

Do you not understand that there are many kinds of players in the (physical) gold market, that is, speculators, investors, collectors, and dealers?

Speculators seek to make a quick profit and rarely know much about the market.

Investors seek to increase the value of their holdings over a relatively long time frame.

Collectors often aren't particularly concerned about the day-to-day workings of the market and buy gold mostly for its historical significance and/or aesthetic beauty. They are happy if they can make some profit when/if they sell their collections.

Dealers are the middlemen-- they make their living by constantly buying and selling, selling and buying. They are the ones who ensure that there is an active physical gold market. They can't sit on their inventory, even if they think gold is going to increase 20% over the coming year, because they have to have a steady cash flow to pay their bills in the meantime.

[Po_d Mainiac]

10. Around heyuh, the number of ads for buying your PM's

are running about 20-1 vs sellers....hmmm

FWIW-One of my kids hit a couple shops in Miami yesterday (9/26) on the chance of getting a couple Bison's or Dbl Eagles on the dip...Both had a line at the bullion counters...All buyers, no sellers.....No US mint issues to be had, just a few Panda's without COA's....

[Art_from_Ark]

15. I've been hearing that on various coin sites

Dealers are hesitant to sell the popular gold bullion coins (Bisons, Eagles, Maple Leafs, Kangaroos, generic US old gold), while a lot of customers are looking to buy on the dip. I also don't get the impression that holders of *physical gold* are rushing to liquidate, since most of them seem to be investors, rather than speculators.

[GreatLaker]

6. Oil and gas will go too.

Heard last week that refineries are currently charging .90 a gallon to refine gas as an FU to the regulators.

Normally, they charge .20

With their effect and the effect of speculators screwing the economy, it won't be long until they bail.

Too much oil on the markets now - there is no shortage, just the cabals screwing the public.

[Yavin4]

11. As A PM Holder, I Hope That It Goes Much Lower

So that I can buy even more.

It does not matter what gold does on any given day. The overriding fundamental issue is that there's a ton of debt out there in the world that cannot and will not be repaid. Central Banks are doing every trick in the book to ward off inevitable defaults, but they're only making the final conclusion even worse and more painful.

The first decade of this century was the The Decade of Debt. The second decade of this century will be The Decade of Default.

After all of the defaults, it will be the PM holders who will still have their wealth in tact.

[Po_d Mainiac]

13. Multiple exchanges raised margin requirements starting at the open

in Asia Monday morning. And today was an options expiration day at the CRIMEX (aka COMEX)....Events like today did butt sex to Bunker Hunt with the working end of a hay fork. The market price appears to have pretty much shrugged it all off, after a 48hr roller coaster ride.

I believe your assumptions to be correct, and it wood appear the world of PM buyers are on the same page...We may want to consider the low has been tested.

Best Regards, YMMV

[westerebus]

14. It's not over.

The move downward, its just taking a break and stretching its legs.

The beatings will continue shortly.

Once it becomes clear the EU's main powerhouse is not going to support extraordinary measures the game is over for the PIIGs.

Oktoberfest will have a whole new meaning.

The Euro slides, PIIG bonds go belly up, the hedges sell everything in the squeeze, PM's dip hard and the buck goes wild.

Which is when the Chinese will dump their internal debt like it never existed and purge their malcontents.

Our GDP will go negative and unemployment will hit a new high.

This time inflation will be imported into the USA as dollar demand comes home.

Think about it. The dollar as the next bubble.

What's the counter? It's Volker time. Raise rates until every body bleeds?

We are compressing economic history. Recessions are quicker to start and sharper in their plunge.

Currency crisis, credit crisis, debt crisis, recession, recession, recession and we are only eleven years into this century.

We are a house divided.

I don't expect any leadership from the party. Either party if you wish to make that assumption.

Some where in this mess, there will be opportunity to buy your preferred asset class.

I strongly recommend lead and a means to deliver same, as one of those must haves.

BTFD

[Systematic Chaos]

16. You big, happy fucking ray of sunshine, you.

:scared:

And by the way, what is a BTFD?

[Yavin4]

17. BTFD = Buy The Fuckin Dip n/t

[westerebus]

18. Buy the F***ing Dip.

It refers to buying when the price of precious metals drops.

Or any asset class actually.

Gold and silver in particular.

[Systematic Chaos]

20. Thank you for the clarification.

I'm inclined to believe that what you said is very likely correct. We'll just have to see how it all unravels. :(

[westerebus]

24. No problem.

I'm actually optimistic, a ray of sun shine beneath a very dark cloud.

This is the normal course of events for corrupted financial political systems, it's just being accelerated.

I do think it has the possibility to get nasty for a lot of people.

I hope we can avoid that.

KYPD

that's keep your powder dry

[golfguru]

22. How do you support a PIIGS already in debt to their eyeballs?

Any form of rescue/bailout/support simply means loaning more money to the PIIGS to hold off them defaulting on existing loan obligations. How will adding more debt, AND be forced to implement severe austerity reforms help them in the medium/long run?

[westerebus]

26. What makes you think they want to?

The only parties the EU governments want to bail out are their banks.

The austerity plans are just petrol on the smoldering fire.

That's the circus part of the push to the edge. A lot of noise and distraction.

From what I read, the plan is to fire wall Greek debt and cut it in half.

That won't help Greece, it will lessen the impact on the counter party banks in an orderly default.

Why do you think the EU Financial Authority runs stress tests?

Besides the propaganda value, they keep looking for the least worse scenario.

The German bankers are purple and frothing at the mouth when they see the numbers.

Which is why they exclude their exposure to the Greek debt.

They don't care if French banks fail. The German's would cut a deal tomorrow if they could.

The French banks will pull the Germans into the hole with them given the chance.

That's what the German's are pissed about.

The Germans have already written Greece off.

If Commerz Bank goes bust, they will take it over and keep on selling VW's.

The French don't want to take the hit, but they don't want the Germans to drop the Euro either.

It's as if the French kidnapped the Greeks and want the Germans to pay the ransom.

The Greeks are willing to stay kidnapped because they are getting fed.

The Germans are willing to pay half the ransom and will keep feeding the Greeks just not as well.

To which the Greeks said they didn't mind being kidnapped as the food was great and the rent was paid.

The French would rather the Greeks starve as long as they get the ransom in full.

The German's are going why the f**k did you kidnap some one who can't pay their own ransom?

The French reply was it seemed like a good idea at the time.

So who's idea was it in the first place?

Golem Sacks.

[golfguru]

27. Yours is the best analysis I have seen! Congrats n/m

[westerebus]

29. Thanks.

[AnneD]

30. I agree......

best synopsis I have seen. I think, with your kind permission, I would like to post it Monday on the SWT, since it gets more eyeballs than the Economy threads.

[westerebus]

31. Sure. Post where ever you prefer.

And thank you for your kind endorsement.

[golfguru]

21. October is the cruelest month for gold

http://www.marketwatch.com/story/the-cruelest-month-for-gold-2011-09-28?dist=markets

[OllieLotte]

25. Good to know and a bit surprising to me.

I thought historically gold did well in the last quarter of the year. Maybe it still does, but that would be a heck of a headwind in October.

[Art_from_Ark]

28. What nonsense

First of all, anyone who claims that "it was only in the mid 1970s that it became legal for U.S. citizens to own gold" should immediately be taken with a grain of salt, because that statement is false. Americans could always own gold coins. While the number of gold coins an American citizen could own was limited in the beginning (1933-34), by the 1950s the law was largely ignored. Uncle Sam tried to make it difficult to own certain foreign gold coins in the early '60s, but by the latter part of the decade Americans could essentially own any amount of gold coins they wanted, with a very few exceptions.

As for October being the "cruelest month", take a look at monthly averages available at the Kitco web site going back to the 1970s. Gold sometimes ends October lower than it started, but sometimes it ends the month higher. For example, October 2008 was a bad month for gold, but October 2009 was a good month (ending higher than it started), as was October 2010.

http://www.kitco.com/charts/historicalgold.html