GOLD

[ananda77]

-Backwardation in gold causes, and is caused by, the cascading contraction of world trade. It is preposterous to suggest that no special event triggered the backwardation in gold last November. The special event was the onset of Great Depression II, just as sabotaging the gold standard by Britain on September 1, 1931, heralded the onset of Great Depression I.

Backward Thinking on Backwardation

Posted Thursday, 18 December 2008 GoldSeek.com
Copyright © 2008
http://news.goldseek.com/GoldSeek/1229620000.php

by Antal E. Fekete

Kind Regards

[Aussie]

Great article ananda77. Keep posting 'em.

This is another . . . I think it was Henry Ford in the 1930's who once famously said "If the American people knew how their banking system really worked, there would be revolution before dawn . . . ".

Once you read this hard hitting article by Jim Willie you will see the old man's wisdom. Even back then he knew that Wall St., the Fed and the US Treasury were to become a criminal nexus that was all about serving themselves, not the people who's trust they have been given.

A must read . . .

http://www.financialsense.com/fsu/ed.../2008/1216.html

Also, if you want to know what's going to happen in 2009 . . . think about what happened in 2008 and multiply it. This US 60 Minutes story on the coming next stage of the mortgage meltdown will shock you.

http://www.youtube.com/watch?v=iUuROWEMjm0

[ananda77]

...after 'Backward Thinking On Backwardation', now this:

-What we are witnessing is a transition that deprives gold of its monetary qualities. Gold in hiding cannot and will not act as money. More to the point, absent gold, nothing else can or will. The disappearance of money, that can be trusted, fatally undermines the legal system, the sanctity of contracts, habeas corpus, any and all provisions of law and order that we take for granted. Under these conditions nobody can operate a gold mine, nobody can run a gold refinery, nobody can guarantee segregated gold deposits, and nobody can prevent the institutionalized theft of ETF holdings. Welcome to the Madoff economy! (See References below: Paul Krugman's column in The New York Times). Jail one Madoff, two others will jump into his shoes.

As a consequence of the permanent backwardation in gold, we shall have a world gone Madoff.-


FORWARD THINKING ON BACKWARDATION
Antal E. Fekete
Gold Standard University Live
http://www.gold-eagle.com/gold_diges...ete122008.html

...Aussie, you may have to re-think your bullishness on gold stocks...

Kind Regards

[Aussie]

...Aussie, you may have to re-think your bullishness on gold stocks...

We'll see . . . in my opinion there is no question that gold is clearly reasserting itself as money - rather than being "just a another commodity".

Gold is likely to be the ONLY asset class that has made ANY gains this year. Personally, I think it will EXPLODE across '09, '10 and '11. If it was just another commodity as many financial "advisors" seem to think, it would be down 40%-50% like copper, aluminum, zinc etc. In USD dollar terms it has held it's ground remarkably. In AUD and NZD terms it's gains have been spectacular . . . or more accurately, the devaluation of our paper currencies has been spectacular.

The way I see it, the investment world is just one step away from the tip of the inverted apex on the debt pyramid. Every other asset class has been compromised by counter party risk including US TREASURY BONDS and the USD because the US Government is broke and there is NOTHING standing behind it. The financial world will soon come to that collective understanding.

Attachment 1105

I'm trying to think of another share-market sector that could be making big profits and paying dividends hand over fist in the near future other than PM stocks . . . and I can't.

If it gets to a total breakdown of law and order, worrying about my share portfolio will take a back seat to survival. Physical gold and silver have been money for over 5,000 years, I don't see that changing anytime soon.

In the meantime here's a more likely scenario that is IMMEDIATELY ahead of us. Bill Holter writes for Le Metropole Cafe and I see that other main stream commentators such as Australia's - "The Privateer" aka: Bill Buckler concur.


Mission Impossible

The Fed and Treasury have now entered the zone of impossibility, by this I am saying that anyone with second grade math or enough sense to look both ways before crossing the street knows that what is, can't be. The Fed has lowered rates to zero while the Treasury is in the process of borrowing every last cent, peso, and crumb of capital left on earth. The global marketplace so far has gone along with this farce. Think about it, the Fed says rates are zero % so the Treasury can borrow for free.

Digging a little deeper it gets even more hilarious, you see, the Treasury has already announced plans to borrow $ trillions and they will pay you back with the same Dollars that you lent them, only they will be worth much less or probably even be worthless.. Well, actually not the same Dollars because between now and when the debt comes due the Fed will have created many $ trillions more of new Dollars so you'll surely get new Dollars with fresh ink. The point is this, if you run scared with the herd into Treasuries for their perceived safety, you are actually moving into the riskiest asset on the planet. I am amazed at how many "smart, veteran, Ivy League degreed" boneheads are all buying into this "safety trade" hook, line, and sinker. They have gotten hooked on a fallacy and are standing in line for Treasuries like they actually have a scarcity value, and SINK they will.

So the "safety trade" is this, you buy Treasuries because you are afraid, and 3 months, a year, or 30 years from now you just want to make sure you get your original Dollars back, you don't care about getting interest or more Dollars because they are so valuable to you today. What about tomorrow? The Fed is exploding their balance sheet and goosing money supply like never before, they have told us that they will use "quantitative easing" to get inflation bubbling again, and what, investors don't believe them? I for one have always been skeptical of government announcements but I think that this time they are surely telling the truth. If they say they are intent on creating inflation and destroying the Dollar, BELIEVE THEM because at this point no matter what anyone does, the Dollar is toast.

We are where we are now because 6 months ago it was decided by the Fed and the Treasury that they "needed more time for a miracle". They knew back in the second quarter where all this was going, they new that they would need to borrow unheard of quantities of capital, so they leaned on commodities, probably bought Dollar futures with freshly printed or newly borrowed Dollars and got the "deflation trade" started. Don't get me wrong, we absolutely have deflation because of the amount of imploding and disappearing debt, BUT with a fiat currency that has no backing whatsoever, NEVER in a bazillion years could that currency become more valuable under any circumstances. It was all an illusion, nothing more, nothing less. All they had to do was get the story started in the pits and by the media, use a small amount of capital and leverage it up through the futures market and PRESTO, commodity crash, Dollar rally, and guess what,..... ZERO PERCENT interest rates as declared by the Fed and unbelievably confirmed and highly sought after by institutions.

When history looks back at the current travesty, no one, and I mean NO ONE, will believe that this 0% interest rate scenario could have actually happened. There are probably less than 10 people on earth that could be convinced individually that the worlds' worst credit could be allowed to pay the worlds' lowest interest rates for virtually unlimited quantities, but, spread the lie and make the rounds and pretty soon almost everyone loses their mind. People will be shocked very shortly when this deflation trade blows up, they certainly shouldn't be, but they will. We are now exiting the biggest mania, biggest bubble, the biggest fraud the world has ever seen. It will end with the bankruptcy of the US Treasury!

The world is lending gobs and gobs of capital at 0% to "guarantee principal repayment" in a currency that has been in a confirmed bear market for 6-7 years now. This will not stand, very shortly you will begin to see hiccups in the Treasury market, it will start slowly at first and then gain speed as more and more foreigners begin to repatriate their capital. This will lead to weak and then weaker auctions until one day the Treasury has a failed auction.

They may not publish it as a failed auction and may even falsify "bids", it won't matter because the big money will know who was present and who wasn't. This is the when the moment of truth occurs, the Treasury will have only one buyer remaining for their debt, the Fed. The entire fiat experiment on a global basis will be over, they tried to accomplish "mission impossible" and took the global capital markets down with them.

When investors take 10 seconds to think this through they will all end up with the same conclusion. If they are so scared that they will accept 0 % interest for a year, or 5 years, or whatever, just to preserve their capital, they will now all strive for "the best currency".

This next event will be the biggest bubble in history, far bigger than the current US Treasury farce. The next bubble will be petrified global capital with nowhere to go and no place to hide, except into the Gold market. "There is not enough Gold in the world for people to buy" is the argument against Gold as a reserve currency. I say, yes you are right at today's current prices, imagine trying to fit Niagara Falls through a garden hose? It can't be done right? Well, it depends on the size of the hose. The only way this would be possible is to increase the size of the hose 1000's of times. The only way the Gold market will be able to accommodate the capital coming its way will be to "revalue", this revaluation will occur alongside the default of the US Treasury and Federal Reserve. In fact, the coming revaluation will be awe inspiring as the Dollar approaches "0", real assets will mathematically approach infinity.

Let me leave you with this thought, if investors are so scared that they "won't get their money back" and are willing to invest in Dollars at 0 %, why not invest in eating utensils, pencils, or even gravel? Spoons, knives, and forks have an actual use, they require more labor and capital to produce than Dollars, and they won't shrink. Dollars are guaranteed to shrink, the gov't has told us as much, and this time I for one am inclined to believe them.

Regards, Bill H….

[peat]

theres quite a perfect Gartley on the daily on Gold
X= 932 early Oct
D (Sell) = 873
Current price 850.
IPO (Target) = 777

[Aussie]

"I'm less concerned about the return ON my investment than the return OF my investment"

MARK TWAIN

Good advice in times like this . . .

Gold up $25 this morning to $870. . . that "barbarous relic" looks like it will likely finish the year with yet another positive another gain over 2007 - that's nine years in a row. And I'm pretty sure it will be the only asset class to show a $US gain and a big gain in AUD and NZD. People who are concerned about gold's lack of income really don't get it.

Anyone in the US who held gold this year will have protected their wealth and achieved a small gain.

Anyone in Australia or NZ who held gold would have protected their wealth against a big currency devaluation.

Attachment 1111

Note the USD nominal high back in Mar equated to about AU$1,080, yet as the AUD was crushed in Oct, the price in AUD hit about $1,370.00 - the gain would be similar in NZD.

In 2009, as the global financial crisis really deepens, I believe the authorities who are "governing" it's paper price on the COMEX will lose control and gold will begin rising in all currencies.

Anyone who doubts that the gold price is manipulated needs to open their eyes and do some research. The manipulation of the gold market by the US Fed and Treasury through their surrogate banks JP Morgan and Goldman Sachs is one of the principal reasons for the global mess. This long-term manipulation has allowed US interest rates to stay far lower and the dollar to stay far higher, far longer (decades) than they otherwise would have in a free market.

http://www.gata.org/node/wallstreetjournal

This has been good for an overspending US government and economy but has created an enormous surplus of dollars - aka as "hot money" which in turn creates economic bubbles and distortions throughout the global economy because the USD is universally held and traded as the world's "Reserve Currency". It will not be able to maintain this status for too much longer.

In addition, the price manipulation has intentionally broken the economic thermometer which has always been gold . . . so that investors now see gold as more risky than dead investments like US Treasuries.

Boy, is there a future shock coming for anyone who thinks that the debt of the US Government is a safe place to be.

[arco]

theres quite a perfect Gartley on the daily on Gold
X= 932 early Oct
D (Sell) = 873
Current price 850.
IPO (Target) = 777

Nicely spotted Peat and there is also a not so perfect mini Gartley shape on the 4 hour. All this is occurring at the resistance of the current downtrend line.

So if these patterns play out, (gold being unable break the DT line), the price could certainly ease back and possible form a bullish Gartley/bat/BF with X at 5/12 or 12/12.

[Aussie]

Marc Faber on CNBC . . . buy GOLD for 2009!

http://www.cnbc.com/id/28418476

[arco]

Heres the chart showing potential downside in the near term as mentioned recently

Weekly chart appears interesting with Kumo looking resistant, and Chikou
finding it hard to penetrate the prior PA.

Clearer chart here
http://www.aussiestockforums.com/for...0&d=1230849201

rgds - arco

[Aussie]

Interesting chart . . .

Attachment 1128