Why are gold and silver tanking so rapidly?

[Finster]

Re: Another question: Why is gold and silver tanking so rapidely?

Finster: Very true. However small correction, Sinclair is not one of them. He understands perfectly well what you say above, and you will recall that EJ credited Sinclair with introducing him to the concept that the Dollar is a "share" in USA, Inc.

I find some of Sinclair's writing difficult to comprehend, but he has been clear, and consistent with your views, on one thing - gold and the US $ are "joined at the hip" (his words), which I take as another way of stating your point that understanding price behaviour requires recognizing there are two commodities involved, one of which is the US $.

Got anything more specific? Saying that "the Dollar is a "share" in USA, Inc" is not quite the same thing as saying the dollar is backed by demand from debtors who are short it.

If anything, the ideas are almost polar opposites. The vague "share in USA, Inc" formulation presumably addresses why the dollar has been as weak as it is (and gold prices as high as they've been). In contrast, the much more concrete "debtor demand" notion explains why the dollar isn't weaker than it is (and gold prices higher than they are).

[skurla2000]

Re: Another question: Why is gold and silver tanking so rapidely?

I think the question here is whether gold is in a "bubble", by the definition of the term, and whether that "bubble" is over. Having lived through the last two bubbles in Tech and Housing, I have come to know that a "bubble" is a psychological event, and I think I have learned what it "feels like" to crest over the top of a bubble.

In both the tech and housing bubbles, the crest was accompanied by everybody - that's CNN, financial advisors, school teachers, busboys and shoeshines - talking about the market on a daily basis. It seemed that everyone either made millions or knew someone who made millions.

There were also media stories rationalizing and defending permanently high prices despite no good fundamental reasons it to be other than the exhuberance (sp?) of the participants.

There was near exhaustion of the forces that came to form the bubble, and desperate measures to continue it, such as creative forms of new leverage, products or packaging.

I do not believe that this is that time in gold. A small community forum does not equal "everyone", the news media is interested but not singing gold's praises in unison, and the fundamental forces have not changed nor are extraordinary means being proffered.

I believe the same forces that have been in effect for 5 years are still in effect, and until I "feel" a bubble, I will continue to be long gold and make bets against the dollar.

I agree that we should consider the coming weeks to be like gold on sale at Wal-Mart.

[Jay]

Re: Another question: Why is gold and silver tanking so rapidely?

I need a virtual drink with one of you guys, a little stiffener. Loss aversion is kicking in. I bought later than many of you guys, so I'm at zero gain now. And this could probably go a lot lower down. I could have sold at the top, and gotten in lower. But then I'm going to caught naked in fiat when the financial meltdown is ocurring. That is a suckers game. Repeat that: that is a suckers game. There is probably a lot of deleveraging, and some "pullbacks in time" by speculators. The fundamentals are there: a truly spectacular credit bubble bust-up. Now there are two ways out, according to the Austrian script. Deflation depression, or inflationary recession. I see absolutely no f****** way that they are not going to print their way out of this, especially when unemployment increases. Trichet can say whatever he wants, "one compass needle" blabla. This is a political system more than anything else. But the deflation part could be more severe than I originally thought. It is still early innings.

Sorry to wine. The last gold bubble pop had a fundamental effect on my life (I was a child). I hope to avoid being a sucker like happened to some in my family in 1980-81. Suckered in fiat, suckered in gold...

If it makes you feel better, I felt exactly this way in May 2006 went I went into gold with a good chunk of change. Gold was almost 700$ then and fell promptly. I basically couldn't have timed a worse place to enter if I tried. I squirmed for a year as it slowly crept back up and now am comfortable even if we drop back into the 700's. If I had bailed I would have missed the huge 1000$ rally. I know I don't have the trading skills to time PM trades right (really, does anyone?) but I do have faith in what I have read here and other places. As everyone has pointed out, the macro trend is still there it just takes patience initially if you get whipsawed a bit. I have compromised and continue to slowly increase my position every month in roughly 5% increments to smooth things out.

[GRG55]

Re: Another question: Why is gold and silver tanking so rapidely?

GRG55:

I am not familiar with Ultrashort basic material ETF -SMN- but I will research it. I did not find it on the Toronto or NYSE. Where is it traded ?

Trades on the AMEX as "SMN". Here's a Seeking Alpha article. Google "SMN ETF"
http://seekingalpha.com/article/6072...er-look-at-smn

[Nicolasd]

Re: Another question: Why is gold and silver tanking so rapidely?

GRG55:

I am not familiar with Ultrashort basic material ETF -SMN- but I will research it. I did not find it on the Toronto or NYSE. Where is it traded ?

Goldisliberty:

I checked with my wife, a specialist , ref. level 1 trauma centers. They follow complex but well defined algorythms. Luck is on the patient side only, not on the crew side. I suppose we can draw a parralel too with the FED ==>They are following their receipe but the luck will come from the patient (Economy) for a mitigated outcome.

Happy easter to all

[krakknisse]

Re: Another question: Why is gold and silver tanking so rapidely?

K: iTulip is primarily a macro-economic site. We are a community here, but I wonder if your search for reassurance on your personal investment will be adequately satisfied by a bunch of folks most of whom are trying to understand the macro-trends and anticipate the nature and timing of the major turns.

I realize that this site is about macro - and I came here precisely because it is not _only_ full of gold bugs. Goldisliberty wrote: "Please ask yourself: "What, in the context of macroecomic conditions, has changed?" And that says it all - for me. YMMV.

You need to know yourself, and you have to have your own internal conviction about your investments. Otherwise you will continually second-guess your positions and continue the tradition of buying and selling based on emotions, and usually at a loss.

That's just what the doctor ordered. Thank you. No more wining.

[GRG55]

Re: Another question: Why is gold and silver tanking so rapidely?

I need a virtual drink with one of you guys, a little stiffener. Loss aversion is kicking in. I bought later than many of you guys, so I'm at zero gain now. And this could probably go a lot lower down. I could have sold at the top, and gotten in lower. But then I'm going to caught naked in fiat when the financial meltdown is ocurring. That is a suckers game. Repeat that: that is a suckers game. There is probably a lot of deleveraging, and some "pullbacks in time" by speculators. The fundamentals are there: a truly spectacular credit bubble bust-up. Now there are two ways out, according to the Austrian script. Deflation depression, or inflationary recession. I see absolutely no f****** way that they are not going to print their way out of this, especially when unemployment increases. Trichet can say whatever he wants, "one compass needle" blabla. This is a political system more than anything else. But the deflation part could be more severe than I originally thought. It is still early innings.

Sorry to wine. The last gold bubble pop had a fundamental effect on my life (I was a child). I hope to avoid being a sucker like happened to some in my family in 1980-81. Suckered in fiat, suckered in gold...

K: iTulip is primarily a macro-economic site. We are a community here, but I wonder if your search for reassurance on your personal investment will be adequately satisfied by a bunch of folks most of whom are trying to understand the macro-trends and anticipate the nature and timing of the major turns.

Maybe this will help:

"People tend to react and not anticipate. What they react to is what they wish they had done a year or two years ago." [Does that sound like your family in 1980/81?]

"Great investors sell (to the market) patience, and the willingness to accept short-term discomfort by taking the opposite side of exactly those trades that speculative, impatient investors most desperately want to make."
(Both from Dr. John Hussman)

You need to know yourself, and you have to have your own internal conviction about your investments. Otherwise you will continually second-guess your positions and continue the tradition of buying and selling based on emotions, and usually at a loss.

[krakknisse]

Re: Another question: Why is gold and silver tanking so rapidely?

I need a virtual drink with one of you guys, a little stiffener. Loss aversion is kicking in. I bought later than many of you guys, so I'm at zero gain now. And this could probably go a lot lower down. I could have sold at the top, and gotten in lower. But then I'm going to caught naked in fiat when the financial meltdown is ocurring. That is a suckers game. Repeat that: that is a suckers game. There is probably a lot of deleveraging, and some "pullbacks in time" by speculators. The fundamentals are there: a truly spectacular credit bubble bust-up. Now there are two ways out, according to the Austrian script. Deflation depression, or inflationary recession. I see absolutely no f****** way that they are not going to print their way out of this, especially when unemployment increases. Trichet can say whatever he wants, "one compass needle" blabla. This is a political system more than anything else. But the deflation part could be more severe than I originally thought. It is still early innings.

Sorry to wine. The last gold bubble pop had a fundamental effect on my life (I was a child). I hope to avoid being a sucker like happened to some in my family in 1980-81. Suckered in fiat, suckered in gold...

[mercerbear]

Re: Another question: Why is gold and silver tanking so rapidely?

The PM markets have been like Wal-Mart for the last couple of day, watch for falling prices! Selling hasn't crossed my mind at all though. I'm in this for the long-term. The only question I have is should I buy more now or let this sell-off play out and see if I can get in a little more cheaply in a week or two. Thoughts on that?

[touchring]

Re: Another question: Why is gold and silver tanking so rapidely?

I was thinking whole day, are we at the "Ka" stage?

How about the deflation indicators, anyone knows how to check?

[krakknisse]

Re: Another question: Why is gold and silver tanking so rapidely?

i heard: sell! it's a bubble! you're a fool! you will lose all yer $$$ you friggin tool!
at $400. at $500. at $600. at $700. at $800. at $900. at $1000.
but what made gold go to $400, $500, $600, $700, $800, $900, $1000?
still in force? yes.... so i wait.
think fer yerself.

Thanks for that. I'm swallowing hard. I've been waiting for the pullback, but the timing of the down and up, and the magnitude, mean that it has not been tradable for me. Also, remember that extraction costs do put a certain floor on the price. But I do have a stop loss. I've got to have it. Being nearly wiped out is not something I'd like.

Re: Another question: Why is gold and silver tanking so rapidely?

Jayhawk - My best recomendation would be to lose your deflation buddy. IMHO he's all wet. Listen to the Metalguy. Make some money the next decade while the deflationistas get poorer.

My deflation buddy has me convinced ... .:eek:

[GRG55]

Re: Another question: Why is gold and silver tanking so rapidely?

Thank you all for the opinions and comments......

I was just checking to see if we were all singing the same tune after the hair cut we all "enjoyed" this week (some people's hair cuts probably shorter than other ! :eek::rolleyes

Rather than trying to trade any part of my core positions I use the Ultrashort basic materials ETF (SMN) to hedge part of the position when these parabolic run-ups occur. Assures I still have some hair left.

For those that are bearish on oil - short or long term- they could use ultrashort oil (DUG) - but I prefer the broader SMN to avoid getting trapped short oil only in a "political event".

My deflation buddy has me convinced gold is going to the mid 600's in the next few weeks...and to the 200's in the next 2 years. He called it last week, so now I'm believing him because of the big drop.:eek:

Hanging around with Rick Ackerman are we...;)

Question I would have of your buddy...Was he long gold right up until "he called it last week?". Or has he been yabbering about deflation and gold declining for months or years?

[GRG55]

Re: Another question: Why is gold and silver tanking so rapidely?

There are some very powerful factors pushing the value of currencies in general, and the USD in particular, lower, no question. They are notoriously well known. But there are also factors pushing in the other direction, that may not be so well appreciated.

People will point out, for example, that there is nothing backing the US dollar. Sinclair is one of them. They are wrong.

They assume that gold or other tangible backing is the only possible backing. But the USD is backed by something better than gold. It is backed by the fact that millions - even billions - of people owe the stuff. This means they are willing to trade their labor, accumulated assets, whatever, in order to get dollars. They have to because the owe them. The USD is backed not merely by gold, but by human time and effort.

It is of course possible - not to mention usual - for that backing to be overwhelmed by those factors militating in the opposing direction. USD can be created by its stewards practically at will from practically nothing. For this reason, USD tends to lose value.

But to give primacy to this latter force and completely forget about the former is grevious error. The reality is a tug of war, and each side gets its moments of advantage.

Finster: Very true. However small correction, Sinclair is not one of them. He understands perfectly well what you say above, and you will recall that EJ credited Sinclair with introducing him to the concept that the Dollar is a "share" in USA, Inc.

I find some of Sinclair's writing difficult to comprehend, but he has been clear, and consistent with your views, on one thing - gold and the US $ are "joined at the hip" (his words), which I take as another way of stating your point that understanding price behaviour requires recognizing there are two commodities involved, one of which is the US $.

[metalman]

Re: Another question: Why is gold and silver tanking so rapidely?

My deflation buddy has me convinced gold is going to the mid 600's in the next few weeks...and to the 200's in the next 2 years. He called it last week, so now I'm believing him because of the big drop.:eek:

and if gold doesn't go to $600 in the next few weeks will you still listen to your buddy? i bet you will.

one thing i've learned... no one cares who has a good track record. guys respond to the chatter, the blather, the rock and roll, the bs, the act.

i heard: sell! it's a bubble! you're a fool! you will lose all yer $$$ you friggin tool!

at $400. at $500. at $600. at $700. at $800. at $900. at $1000.

but what made gold go to $400, $500, $600, $700, $800, $900, $1000?

still in force?

yes.... so i wait.

anyone waiting for mommy to give them permission to get in will never get in and will probably stay in until it's too late.

think fer yerself.