Gold has held support at $1775. In the face of market turmoil this shows how strong gold is. It is what makes the world of finance go 'round, literally.
Bernanke was forced to loan out a tremendous amount of gold to finance his operations, thus one reason why gold has appreciated so much over the course of his tenure. The dollar still spins it's wheels at DXY 77, as equities fall down to earth. The inorganic nature of bonds seems to be the only thing left from turning the system back over to a gold based one. That day will come soon.
The demand for US Treasuries has soared, which is why Bernanke is the only major buyer now. If he did not have 14k tonnes of gold to loan then his game would be up. He will loan gold until the wheels fall off.
Operation Twist II will buy at the long end of the curve, flattening it, and setting it up for a violent move north. The short term rates always move first, and now that he has focused on the back end he has left the most important part vulnerable. After all, how many more easing efforts can he do?
Gold has tested support three days at $1775, and three is the magic number. I would look for gold to move back up to the middle of its range by Friday. Then we will wait on news to figure out if we are moving higher and testing the recent highs, or if we find support again.
Wednesday, September 21, 2011
Thursday, September 15, 2011
European Explosion
The "M"arket "M"arkers did what I expected them to do and come together with a very incestuous bailout. First China pledged support of Europe, then Geithner demanded the status quo stay, and now Europe has offered up their sovereignty for pennies on the dollar.
Gold crashed because it was loaned out to finance the effort. I think its support is at $1775. As I write it is slipping past that but maybe support will catch around there. Oil was up today on the back of a weak dollar, which shows how oil still trades directly against the greenback; this is one trade that has not failed yet. Stocks capitulate, as they have no idea what to do in this sea of financial turmoil. They should go down but Geithner, Bernanke, and their Working Group will not let that happen.
On the horizon something ominous looms. It can't be made out, but we can see it's black cloud like shadow. What ever it is it will destroy the fiat ponzi. We will meet it soon, and find out accordingly.
Gold crashed because it was loaned out to finance the effort. I think its support is at $1775. As I write it is slipping past that but maybe support will catch around there. Oil was up today on the back of a weak dollar, which shows how oil still trades directly against the greenback; this is one trade that has not failed yet. Stocks capitulate, as they have no idea what to do in this sea of financial turmoil. They should go down but Geithner, Bernanke, and their Working Group will not let that happen.
On the horizon something ominous looms. It can't be made out, but we can see it's black cloud like shadow. What ever it is it will destroy the fiat ponzi. We will meet it soon, and find out accordingly.
Tuesday, September 13, 2011
Inflation: Resources vs. Debt
The more debt issued, the more inflation in the system. Inflation is when the debt is weighed against the resource base. When the resource base stays the same or decreases, while debt increases, this causes inflation.
The resource base includes goods, but only critical goods for survival. Food, water, oil, and precious metals are at the top of the list. Food and water are having a rough time because of man and mother nature. Man because we are using GMOs and this is destroyer the DNA of the crops, and killing honey bees. Nature because the world is always in flux, and with man hurting his chances, nature is leaving humanity in the dust in many parts of the world.
Oil production, and precious metals (for the most part) have peaked production. This is important because oil is what runs the economy, and precious metals back the debt (officially or not).
China is betting that they can afford higher precious metal and oil prices, which is why they continue to bailout the fiat ponzi. The are calling the West's bluff. They are confident with the oil they receive from Russia and the Middle East, and they are confident with their gold production.
This may be smart, or it may be as dumb as the West asking for more and more bailouts. Either way, the cake is baked: there is a lot of inflation in the pipeline.
The resource base includes goods, but only critical goods for survival. Food, water, oil, and precious metals are at the top of the list. Food and water are having a rough time because of man and mother nature. Man because we are using GMOs and this is destroyer the DNA of the crops, and killing honey bees. Nature because the world is always in flux, and with man hurting his chances, nature is leaving humanity in the dust in many parts of the world.
Oil production, and precious metals (for the most part) have peaked production. This is important because oil is what runs the economy, and precious metals back the debt (officially or not).
China is betting that they can afford higher precious metal and oil prices, which is why they continue to bailout the fiat ponzi. The are calling the West's bluff. They are confident with the oil they receive from Russia and the Middle East, and they are confident with their gold production.
This may be smart, or it may be as dumb as the West asking for more and more bailouts. Either way, the cake is baked: there is a lot of inflation in the pipeline.
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