Financial topics

[aedens]

http://www.zerohedge.com/news/marc-fabe ... g#comments

Careful out there guys.

Faber says that he's the "greatest bear on earth?"

I beg to differ.

John

http://www.zerohedge.com/news/bob-janju ... 0#comments

Just looking at another bear laying it out there. Are we turning a so called corner in a GD dynamic was my initial thought
I did not convey. In Michigan some districts are able and have a balanced revenue to local acountability.
No clue on what the two Senators from Michigan can plan to do on there mission upcoming.

http://www.frbsf.org/publications/econo ... 11-26.html

I do not plan on selling but thats my choice. Given the ration of people who do even have stocks
in the US economy I think the p/e ratio will decide IMO.

[Higgenbotham]

Finally, if there is no follow through down soon, I will get out.

In short term predictions I don't seem much better than random Monkeys, but I suspect Bernanke says something Friday that makes it clear he thinks printing more money is a good thing and silver jumps up. Like a 1923 German central banker, he thinks printing money solves problems. Last year Jackson Hole was good for silver.

I note someone has a list of things most likely to go up if there is a hint of QE3 and SLV is at the top:

http://seekingalpha.com/article/288536- ... le-miracle

I read the Chinese raised gold and silver margins today. I would suspect the Chinese have intercepted Fed communications and know a takedown of the metals is coming. However, New York can't confirm that yet by raising margins but they will follow.

This possible intrigue has nothing to do with my reason for staking out this position though. I was only reading market movement and will continue to do that. I might take myself out of this trade before Friday but it looks OK now.

[vincecate]

I would suspect the Chinese have intercepted Fed communications and know a takedown of the metals is coming.

I really don't think Bernanke cares about gold prices. Greenspan thought they were something to take notice of, but I don't think Bernanke has that view. Anything I can think of for Bernanke to lower gold and silver would crash the stock market. Bernanke really wants the stock market up. Can you see something that he could do to help stocks while hurting gold and silver?

My intent with my S&P puts and SLV calls is to be positioned so I can win no matter what Bernanke does, print or not print.

[Higgenbotham]

I would suspect the Chinese have intercepted Fed communications and know a takedown of the metals is coming.

I really don't think Bernanke cares about gold prices. Greenspan thought they were something to take notice of, but I don't think Bernanke has that view. Anything I can think of for Bernanke to lower gold and silver would crash the stock market. Bernanke really wants the stock market up. Can you see something that he could do to help stocks while hurting gold and silver?

My intent with my S&P puts and SLV calls is to be positioned so I can win no matter what Bernanke does, print or not print.

Just some random thoughts:

Once the Fed lost control of gold the game changed to one of pretending that high gold prices don't hurt. It's like when a management person who has lost control of their union says grievances don't hurt when in reality they hurt really bad. When a management has control they will openly talk about their great grievance record and grievance avoidance.

Once control is lost the best remedy is to use something akin to electroshock therapy. The specs are lulled into complacency, then administered a huge shock. Then the Central Banker can smirk and say you didn't really want to be long the metals, did you? And are you sure you want to be short stocks? Anybody left on this forum who was short in 2009? Didn't think so.

There are two things about printed money and paper markets that I keep foremost in my mind. One is that gold is a paper market and unlimited short gold positions can be printed up just like unlimited dollars can be printed up. The second part of that is printed money can be levered up and used to sell any exchange traded thing that can be bought with printed money. Knowing that, why would anybody suppose that the gold and silver futures markets were established just a few months after Bretton Woods was abandoned in August 1971?

Silver made its 2008 high with the March Bear Stearns blowout and that high was not recovered until after QE2 was announced. Stocks moved up against the silver downtrend for 2 months after silver's 2008 high was posted. So silver bulls had better be hoping for a QE3 because if they don't get one this could be the end of the bull market in silver.

I have a friend who has never been long silver before but tonight (yes, tonight!) he is insisting to me that the trend in silver is up and he wants to get long. Hated to inform him, but the trend in silver is no longer up and won't be unless this week's high is taken out. This is the same guy who bought beachfront property in 2005 while ignoring similar warnings. I would seriously consider that a sign of an impending bear market in silver.

[OLD1953]

Personally, I would suppose there cannot be a futures market in any item with a controlled and unchanging fixed cost set by fiat declaration of governments. If all nations agreed tomorrow that oil would sell at a fixed price of 75 USD per barrel, adjusted for inflation yearly, and no spot market allowed save at that price, would there be a futures market for oil?

The oft heard statement that gold money cannot be inflated is not true, gold money has been inflated many times in the past by adding base metal to the coinage or by simply stamping smaller coins of the same denomination. So many countries have done this that I'm not even thinking of making a list, it's a very common thing in history. Yes, people tried to hang onto the larger or purer coins and when caught they were jailed (or executed) and their property seized, a good thing for the government, not so good for the hoarders. A bonus was dispensation of seized lands to supporters of the local rulers, thereby replacing those inimical to the various changes, including debased coinage, with those who were not.

Just MHO, it usually takes from five to seven years for realization of an actual change in the world to settle into the minds of the general public, but when it does come, it comes along rapidly. This mess started in 2007 and that's when the attitudes of the public and the officials began to shift. Bernake loves the stock market, but even if he does announce some form of QE3 it will be small, short lived, and the market will just slide to it's normal value for this economy, probably in the DOW 3000-4000 range. The actual value of QE1 and QE2 is not that they were effective at moving the economy upwards, but they did buy time for US companies and banks to insulate themselves against the coming drop. Stock buybacks have been the major result of the program, as far as I can tell and these buybacks have considerably raised my estimate of the eventual market bottom. John's numbers have been creeping upwards as well, probably from the same cause. Personally, I do not think Bernake will announce anything save "we aren't raising rates", but he's surprised me before and could well do so again.

[aedens]

http://pedrolains.typepad.com/Bernanke1983.pdf

Guidance tragectory. He offered a timeline as we know.
Now if people need more training wheels that is unfortunate.
"chastened and conservative" was the net effect.

As for our buddy http://www.britannica.com/EBchecked/top ... eshams-law
as Old conveyed above.
The confidence model as metal as the true safety valve which we already all know
is another facet the market has already sent. Malinvestment clearing mechanisns
are in play albeit masked as indecision on the hill. The White House, as are we all
are is hostage to cooperation from policy and I think the Fed has already sent that
guidance message. Ugly as it is we have to wait for the conclusion since if they print
no will gain from financial repression issue we observe to Greshams certitude of gravity
of the currency's in questions future to exist. I guess the effect will be who will blink
on ceasing debasement efforts. Inflationary measure is theft to the workers and politic
solution to debt retirement.

http://mises.org/books/capital_in_diseq ... _lewin.pdf

[OLD1953]

http://www.littlewoodham.org.uk/research/mark.htm

Raw prices in 1625. According to this: http://www.measuringworth.com/calculato ... /index.php

In 2009, £1 0s 0d from 1625 is worth

£143.00 using the retail price index

£1,840.00 using average earnings

[aedens]

Chicken or egg
http://www.shadowstats.com/article/cpi-glossary

Annualized Inflation Rate US and UK
http://www.measuringworth.com/calculato ... /index.php
1971 - 2010 Annualized Inflation Rate
1971 - 2010 US 4.41% UK 6.35%
Im sure my wife would disagree

[richard5za]

I would suspect the Chinese have intercepted Fed communications and know a takedown of the metals is coming

Comex options expiration for metals is tomorrow 25 August. There has been a pattern for some time (on gold certainly) of bear raids around Comex expiration time. I am expecting more bear raids today or tomorrow or next day, or a combination of these.

Gold needs to consolidate at a support level and with the amazing run it has had I am not at all clear where that level is. Ten days ago I thought that it would consolidate around $ 1650 to 1700 and form a support level here, before making its next run, but now from a technical charting point of view, I really don't know. There is a support level at $ 1500 - its possible gold could fall back to here. On the other hand a support may form is the 1800's or even charge to $ 2000 or more before consolidating.

I haven't sold because I reckon there's a good chance of equities continuing their crash trajectory over the next few trading days and that there will be a flight back into gold. This of course is gambling which makes me uncomfortable.

[Higgenbotham]

Personally, I would suppose there cannot be a futures market in any item with a controlled and unchanging fixed cost set by fiat declaration of governments. If all nations agreed tomorrow that oil would sell at a fixed price of 75 USD per barrel, adjusted for inflation yearly, and no spot market allowed save at that price, would there be a futures market for oil?

I wasn't clear in what I was saying. There are futures markets and then there are futures markets that are a pile of paper. If a gold futures market had been created exclusively for those who had actual future gold to sell and an actual need to buy future gold that would be one thing. CPM Group's annual study included or maybe still does include a chart of the size of the gold and silver paper market versus the actual physical market. The world did fine without a US based futures market in gold until 1975 (my recollection was having read that the concept was piloted in Canada to see how successfully the gold market could be manipulated before bringing it online in the US). I don't know everything there is to know about this by a long shot but the GATA lawsuit should contain all the gory details.