I hear you, but it is very hard to attribute reasons for rise in the gold price
there were several fundamental factors pushing gold
one biggee is near zero real rate on shorterm Trez Bills
two is heavy Fed monetary expansion (+40% since Jan2001)
I dont think eventual rising rates was major at all
but what you mention is a followup result from the "produced price inflation" expected to come from #1 and #2
so we are on same page, I see
I wouldnt be too confident about understanding gold's rise
it rose from #265 to #330 without serious correction
and it stopped just before its annual July low season
so why wouldnt that be even more important?
you never cite the #330 gold price as significant from technical reasons
it is the upper rail for the 15-year downtrend
it is also the target for a nearterm 2-year Cup & Handle
so the target was reached, and the longterm channel was hit
a selloff is only natural there
does that make sense also?
it is usually a combination of reasons
have you factored in Goldman Sax's 90,000 short gold futures contracts, sold over lunch on July 30th?
that raised the commercial short position from 130,000 to over 200,000 contracts
the day after JPMorgan was hauled before Congress?
the day after JPM shares went below critical capitalization reqmts?
as I said, it is usually a combination of reasons
expect the Fed Reserve to show desperation soon
unlike 1930, they are VERY VERY ACTIVE and act in STIMULATION
by desperate, I mean they will soon do things that seem odd
I find it almost tragically hilarious that this problem was created by excess credit, and unbacked currency
now so many expect the FIX to be more and more credit
the system cannot absorb or use or efficiently digest the new credit and produce healthy economic activity
and few seem to notice that the demanded cure is more of the cause
THAT IS WHY IT AINT WORKING, MY MAN !!!
I expect the Fed to be stripped clean and exposed as powerless
this will happen by foreigners selling Treasurys of all kinds
and rates will rise, showing a gap from FedFunds rate
we will see, but it will take time
lower rates would be even more stimulative here, right?
well not so fast, only if money is lent
it is not being lent
I think because the entire economic system is choking on credit
/ jim |
