Friday, January 21, 2011

Gold goes parabolic, Now

A few weeks ago I wrote that gold was decoupling from paper gold.  What happened is that gold spun its wheels in the mud, and paper gold is the mud.  The oilgarchs know that once oil production peaks, oil can not trade for dollars.  Oil will trade for precious metal, backed by a currencie or otherwise.

As today is friday, any up move will be put on pause for the weekend.  How ironic.  We will see gold move up for the remainder of the day.  Next week the price explodes.  Get ready, and remember, get monie!


  1. (Note: I included this in my journal this week as I've come to a better understanding of what's happening. But discounting for what I don't know, I would like to hear if someone has a different perspective. Otherwise, I'm placing my bets based on this...and adding a Talking Heads reference for this site :-)

    Executive Summary / (Nothing But) Flowers

    A: People have been exchanging worthless pieces of paper/worthless electronic units for real, valuable, tangible things (food, oil, and, yes, Viginia, even iPads) for a while now.

    B: Peak oil means this little game needs to end soon - or at least, if we are gonna continue to live in a world with money - it means PM's are going to da' moon!

    What we living through today is the slow, rough transition from Point A to Point B. Everything presently going down as viewed through the prism of the current monetary system (inflation, austerity, etc.) is merely a distorted image of this transition. It's all inevitable b/c of peak oil.

  2. Hey Lennon! Love your comments on zerohedge. You and turd say pms to the moon. Grand supercycle says major correction on usd strength and equity weakness. No one gives a shit what I say, but I say be patient. Buying opportunity on equity collapse, ala 2008.

  3. OK...right on, dudes. Freak power!

  4. Grandsuper cycle does not say anything as far as I know....

    Thanks for the compliments! I do believe they will go to the moon. As far as dollar strength, well, I understand. The Euro is worthless too. But really when it comes down to it the comparison is a strawman. Any Fiat vs. fiat argument has little traction compared to fiat vs real monie. Equity collapse? If that happens, Ron Paul will be President. The chances of dollar devaluation continuing is greater. Also, the trade is running opposite. Look at my poll. I will take the light end of the trade even if by default. The dollar is so overweight it is ridiculous.

    I heard someone say that because it is overbought, this gives it strength, and is the reason hyperinflation will not happen. I do not register that well. I think that-what is overbought will be sold for what is not. Gold will run into the liquidity, like it has been, and steal the dollar's thunder. This is what Gordan Gekko has illustrated.

    And by the by, "no one gives a shit what you say"? That can not be true. No way. Even though fight club gets wicked, we are all brothers and sisters there. We care what you think.

    And if I said that to you, I apologize.

    Scooter, yes exactly. A to B to Freak Power.

  5. Grand supercycle speaks not on zerohedge, but on his website. I don't believe you have ever said anything rude to me on zerohedge. As to no one gives a shit what I say, I was just being a bit self deprecating, perhaps even cheesy. (clue) I value your opinion, though.

  6. I tried engaging Super Cycle, but he never responded.

    The best thing about the site is that we all add something. If you are who I think (cheesy bastard) then you have quick wit, and you are very astute.

    I will add to my thoughts above that I think the dow could fall to $1350 in a NY minute. But price valuations are so messed up that anything could happen. As I think that the metric for the price measurement is fiat, and I believe fiat is worth zero, corporations by their equity in number could go up. but any of it is false if it is based on fiat. Do I split hairs or what?


  7. I am Cheesy Bastard. I appreciate your compliment. Supercycle does not engage, but he has been posting more verbose (for him) comments on his web site. I only saw him once respond to a zerohedge comment on zerohedge. That is not important, however. He is a straight up chartist (although he recognizes manipulation, he sticks to the charts). I simply find it interesting to see what he says. Anyway, I enjoy your comments and will continue to read them closely. Not starting trouble, but I do disagree with you on peak oil. I believe the crisis is manufactured as we refuse to drill or refine. I would love to discuss this in the future. The reason I think an equity collapse would give us a pm buying opportunity is that people would see an equity collapse as deflationary for a short while. This would present a nice buying window, but it would close quickly. I am interested in your opinion. I did make the call on zerohedge 3 months or so ago, and still stick with $18 silver, but will probably get back in the bullion game at 20 or so. I would love your take on this. We all know it will skyrocket at some point, and I concede that point.

  8. Super cycle....I think if he would engage I would have checked him out. But I was more amused by the fact that he seemed mute. If he can chart, good for him.

    Your theory about peak oil-that we will have some more juice because "we refuse to drill or refine" is a fair argument. After credit seized up, it is true that refineries closed etc. So this may have (and appears to) have created a stall in oil production. This "dip" may mean that oil production maintains the bumpy plateau for longer than than if credit had not seized because their was that moment of spare production. However, I do not think that it will mean that production spikes to extremely high levels.

    We do know that the fourth qtr of '10 did produce more oil than ever, so the argument I laid out did in fact win in the short run-the credit seizure provided for spare production afterwards. The question is, where does it go from here?

    I can not pretend that oil production could not spike to the upside. Developing nations are coming online that were not previously. Iraq for example is producing more oil than ever. Technology is improving.

    With that said, no oil reserve is going to stop peak oil. We have not found a super reserve for a few decades at least, and I do not think we will ever find another. We could, but if we do, then what? Will a super reserve mitigate peak oil, or will it merely slow its arrival?

    The only way to continue along the bumpy plateau then is for credit to seize appropriately. If that is the oilgarchs plan, they better be ready for Ron Paul to be President. If Bernanke fails in his quest to monetize everything, and the dow drops to let us say Dow 5k then Keynesism is likely to have an actual time of death. Policy will be forced to adapt to the fact that Keynesism failed. Pensions will not be paid, austerity will crush the "working" or rather 'food stamp class' (I would say lower but I hate dividing the classes into upper and lower).

    ......I was adding a paragraph here and my internet froze up the computer.....if I remember it, I will add it..........

    In this scenario (to be honest in any scenario I make for myself) I see PMs rising. I say that because gold does well in deflation. If equities dropped dramatically, I think PMs would grind steadily up and meet the Dow around 5k. Miners will be the only industry to benefit from a drop in equities because II think demand will stay high. I think this because PMs are decreasing their supply. Platinum seems to have plateaued in '09 and gold peaked production in '01. Silver had not yet, which makes its price more elastic than the rest, as we are found more this year than last year. SO as long as demand does not change, price will continue to increase.

    Now there is always room for a pullback in equities. The farthest they can pull back and still pay pension is around Dow 10k. If pensions can not pay, the system is over. I think if we saw DJ 10k, Central Banks would monetize their socks and shorts. With that effort I think gold would probably start moving up in weird ways....$100 days over and over.

    But if equities dipped to DJ 10k, gold could pull back initially. Support for gold at DJ 10k...maybe $1250 an ounce. Silver would pullback to....$21.

    So if the SHTF in a big way, I would wait for those numbers. I do not see silver ever going lower than $29 again. So many people would come out of the woodwork it would crush supply. Industry would be competing with bullion monie for the first time ever. Silver could then bounce from whatever support level to huge numbers (for silver, $50 at first and gold, a move from $1250-$1500 in a NY minute).

    Anyway, those are my ramblings. I will leave you with my favorite chart of late. Oil production vs price. It paints an interesting picture.

    Oil production and price: