On the recent “drop” in Gold……


Gold $1

A post from “Goldisliberty”


Please ask yourself: “What, in the context of macroecomic conditions, has changed?”

What has propelled the USD down the last eight years is, if anything, even more likely to achieve (basis the USDX) a level some 20% below where’s we are trading now. Sinclair’s target of .52 is most reasonable. Gold is essentially the anti-paper currency, the anti-dollar, if you will. It will take more and more depreciated dollars to buy an ounce of gold due to the principle of declining marginal utility.

Why? The NYFed and JPMChase BSC affair was not a rescue of the fifth-largest Primary Dealer on The Street. It was a desparate, midnight-oil-burning defense of the financial-system-entire.

Because BSC was a counterparty to trades with not just JPMChase, but all manner of other money center banking entities, its collapse would have triggered the long-dreaded “Cascading Counter-Party Default Debacle,” which may very well still occur this calendar year.

What is gold, ultimately, but a borderless currency? As GATA’s Chris Powell put it so eloquently several years ago, holding a British Sovereign in hand, “In all places, at all times, this is money.” He referenced why such .2354 ozt coins are in fighter pilot survival kits and not just banknotes of one nation; it time of true conflict, paper is poverty.

Ask yourself further, how can lower rates tease more, rather than less foreign money into dollars since those off-shore stores of value are zooming around the planet seeking the best return.

No. Take-downs occur all the time and we should look for increasing volatility, not less, going forward.

The bull’s job is too shake off those with weak hands.

1896, 1932, 1980: Approx. one ounce troy of AU buys the DJIA. It has happened three times before, it will, assuredly happen again in the next five years. 1999, 46-44 ozt buys the DJIA; today the DOW:GOLD ratio is down to 12.83; within the last week we’ve touched 11.9 and we will correct here and head down to under two ounces of the yellow metal buying the thirty industrial shares of the DJIA before 2012-3.

As the Oracle told Neo in Matrix (1st): “Somethings you know, balls to bones.”

Could I be wrong?

As much as I dislike answering questions with yet another question…please ask yourself, with just the federal budget debt level now over 9.4 Trillion dollars and Congress discussing raising the debt-ceiling to 10.2 T long before the 30 Sept 08 end of federal fiscal year…and the annual debt service on this debt over 400 billion dollars…and atleast 55 T dollars of off-balance Medicare and Soc Sec entitlements ahead…DO YOU REALLY BELIEVE THE USD will remain a unit of account, store of value, preserver of purchasing power?

If yes, sell gold and buy USD.

If not, consider days such as this a bargain.

Cause that’s what this is.

Look, the FED is now making markets…not just setting short-term rates. They are working nights and weekends.
They are, as they should be, scared.

They are talented. But ask JK, sometimes even in level 1 trauma centers, the bleeding is so bad from so many wounds the best can’t save the patient. (I’m not a doctor; he is.)

Algorithms are calculated (back to finance and gold) and stops are well known. If you’re short and you can trigger a stop-loss sell program, you can achieve carry-on selling and make more on the downside. Non-program traders take over, so to speak, and fear drives the short-timers from the game. Kinda like sight of blood for the neophytes and uninitiated.

Here’s the deal and Sinclair has turned it into a mantra: If you’re not leveraged, you own physical, the ounces don’t shrink if the dollar-denominated prices bounce around wildly.

I’ll end with a direct quote from Jim Sinclair:

“Gold is going to $1650 and no camouflage of conditions can stop it because the dollar is hopeless.”

JS has stressed we are approaching $100 swing days.

Get used to it.

Get long (un-leveraged) and Stay Strong. All the dollars created since 2000 are headed this way and no dam on earth will stop their having EJ’s Poom effect (as in Ka-Poom).

Prosper & be well.


3 Responses to “On the recent “drop” in Gold……”

  1. Monety euro Says:

    When they split dollar=gold realtion, USD started to loose invertment power 😦

  2. Mar Says:

    Look, the FED is now making markets…not just setting short-term rates. They are working nights and weekends.
    They are, as they should be, scared.

  3. buty adidas Says:

    When they split dollar=gold realtion, USD started to loose invertment powerLook, the FED is now making markets…not just setting short-term rates

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