Fun post, VP. Thanks for sharing.
My "talking points" are below in case you're interested in furthering the discussion with him and/or others of like mind.
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
"1) All the indicators are pointing to a short term pullback... Longer term gold and silver ought to be going much higher.
V.P., IT IS ALWAYS SAFE to call for a "short-term pullback" in the market. Sometimes one is talking TA. Or talking their own "missed the train." Or they want in @ lower PoG without ever saying what "lower price they'd actually pull the trigger is."
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
2) The LCs are way, way net short gold.
V.P. THE Large Commercials, aka Bullion Banks as ALWAYS short gold.
I'd faint dead away and run like the dickens LC are "way, way net long" any gold market over the L.T. period of a nano-second. They were even way way short at $290, 280, 270, 260, etc., back about 3 years ago.
It's called (euphemistically) HEDGING, aka using the futures markets GLOBALLY--and the OTC Derivs in London in particular--to protect the physical gold they've sold into the market until the physical is returned, or they eat their literally shorts. As Mr. Sinclair has always said, and I know is true true true as a former commodity broker, a derivative position is only as sound as the LOSER's Balance Sheet/ability to pay is sound and enforceable.
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
3) Money flow into the ETFs has slowed.
V.P., I'm curious as to the TIME FRAME for that comparison statement by your friend?
"Slowed" as compared to what?
Over what time frame?
At what price level the last time various TA indicators said LCs were way way short and the TA said PoG was "OB?" 9minute? 18 minute? 30 minute? 30 hours? 30 Days?
We are in a 37 year cycle POoG spike!!! That is no small feat.
Again, I believe this to be a CYA observation by someone who is most likely not in the market and if you make more money in gold that s/he does, may not be your friend much longer (grin)...
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
Technically just about everything is overbought.
V.P., Having the benefit of decades of paying in the gold market or other commodity markets for example, "everything" can stay OB longer than most people have money from unsuccessful shorting the established trend. Pls give him my best wishes as he navigates "OB shoals," K? Scalping Gold Trades is not the way to make personal bucks by the "little guy." S/He'll soon learn.
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
The dollar has broken down, but we (could see) CB intervention and rate cuts from the ECB and BOE. ...
Au Contraire, V.P. PULEEZE gently suggest your friend study our US Dollar history a tad more in depth. This is an economic cycle with a very VERY long way to go before completion in the next 4 years or thereabouts. Breaking the USDX 8020 level, inplace since the PlazaAccord, indicated a cooperative willingness by all important non-US CBs to allow the Dollar to weaken.
If Dollar Deval gets too disorderly, yes there will be CB intervention. However, empirical and statistical studies have repeatedly enforced the reality that all CB intervention does is throw a wrench TEMPORARILY into the works for whatever reason du jour is conjured up. It has no trend changing effect whatsoever.
The US MUST!!!!!!!! monetize its debt, as in get it back on the books of this nation's banks so the Fed can accept it as collateral, much like they did in the South American crisis, and the IMF debt forgiveness repatriations ad nauseum, and take it and cancel it for all practical purposes.
Why does your friend think this credit upheaval is so darned serious? I submit for yours and his recall, the words printed just last week about the "increase in loss reserves" being currently cooked into the nations banks, and not really visible until UPCOMING quarterly earnings on banks are released.
There was no Banking Index the last time this nation went through this "bank increasing loss reserves cycle" w/r/t the South American fiasco of a few decades back. If your friend wants to watch trends, I suggest s/he plot and triangulate and TA to death the Banking Index, and a few key ratios thereunto,
aka Citibank and the Banking Index, or any of the biggies vs the Banking Index for signs 4 years or more from now when the mop up is done and the dollar changes trend course once again.
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
So they'll have to intervene by selling their own currencies and buying dollars.
V.P., US$ Devaluation COMPLETION is the ONLY way we will ever survive as an economic entity and square the books with the rest of the world in which we've capriciously flooded with liquidity and the "only reserve currency" status we've abused.
But then Bretton-Woods Currency Accord creators anticipated this and pre-ordained this current slide. And we are right on schedule according to that timeline preordination.
The Asian Monetary Unit is next to be forged, and then the world will have 3 currencies in which to conduct their financial biz.
We'll have to see about MUCHO MUCHO lower USDX readings before the global books are anywhere CLOSE to being square with our profligate ways dollar printing and distribution.
Again, the declining dollar is a trend one should not be looking to get temp LONG anymore than one should be looking to temporarily SHORT gold. That's economic suicide. Write your ECON 101 Obituary now, if that is ones financial strategy for this pre-ordained trend firmly in place.
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
...the world's other paper currencies (probably can not) withstand a much cheaper dollar for very long. So they'll have to intervene by selling their own currencies and buying dollars.
V.P., well, my friend, the other CB's better figure it out, and in VERY SHORT ORDER!!!
In what world does another CB want to hold a depreciating currency on it's books, or even its "politically stable" debt paper as an asset on its books????
NONE that I can think of!!!!
They will regurg dollars and play currency crosses with a the other G-7 nations, WITH A VENGENCE in order to just TREAD WATER they are already drowing in with their copious US reserves on their National CB Books!
That's the challenge they face, VP. Not how to buy more of what is worth less by the day!!!!
Ask your friend a Q for me, please? Ask "Where is their starting point for their observation of the depreciating USDX?"
I submit ANY REPLY below US$ 160 is a sign as to how little USDollar valuation history your friend is handicapped by not being conversant on.
For your reference, the 160+ level is where the Plaza Accord was created and signed off on (Yes, by global CBs) in order to weaken the US$. They signed another "accord" and have for over 20 years, supported the US$ by agreement at .8020-ish level.
We are at .7770 and change, aka, a greater than 50% haircut already!!!! And we've got a ways to go, as evidence by our NON-RECEEDING triple deficits which have showed NO signs of moderating and won't until this deval is done.
VP posts:
FWIW, a contrary view from a discussion with a friend. His thoughts, not mine. I'm not so clear.
The global markets are convinced that the US is headed for a recession, but the Big Markets are not reflecting that, in fact they are pointing to the opposite."
V.P., I would like to remind your friend of this fact: the G-7 exists for one reason: to decide which global economic power takes it in the recession/shorts so that the rest of the world economies can flourish. And that is not an original thought with me. It came from a much wiser, and well-connected political economist some 2 dozen years ago.
Can you name the last G-7 nation which was designated "go get into the economic crapper as a 'recession nation.'" Want to refresh your memory as to how long they've been in the economic basement?
It is now the USA's turn, aka we deliberately were assigned the "short straw," and well we should have!!!
It will be a dozey of a recession. I suspect it will not be as pleasant as the 1970s recession, fwiw. And while I'm at it, I suspect the PPT will power the stock indices higher to help disguise its arrival and duration!!!! Mark my words!
The global economies will be lucky indeed if each doesn't catch pneumonia as they gag on our debt and currency as we once again, economically cough, hack and create voluminous, icky sputum as we pay the paper piper for our unceasing printing presses' throughput of Bretton-Woods Reserve Currency Toilet Paper rolls. Makes all Charmin TP production since the 70s look like a teeeeensy cotton ball by size comparisons!
Got Gold?
G_T |
