On October 9th I wrote: Gold is the inverse bubble, the last bubble, and after many losses always the most cruel. Would I have SHORTED the gold market? No.
But lets look at what the Gold pimps are saying, I'm of course saying I told you so, but lets look at what they are saying:
The US Dollar gave back half of Wednesday's sharp gains on the currency markets, while the RJ/CRB Reuters Commodities Index sank almost 5% as platinum plunged towards fresh three-year lows.
The Gold Price in Euros rallied from €614 per ounce. US Treasury bond yields rose.
"Gold's fared relatively better than other assets in the financial crisis," said Wallace Ng, head of metals for Fortis Bank in Asia, to Bloomberg today. "But with these price swings, some investors may prefer cash now."
Fast-becoming the very worst one-month slump in history – and taking the Dow/Gold Ratio down to just 10 for the first time since Jan. 1995 – the Greater Crash today knocked a further 11% off the Tokyo Nikkei after the S&P on Wall Street ended Wednesday over 9% down.
"Depositors might move a significant portion of their deposits to state-owned commercial banks and other banks that they consider as safe," he adds.
China's gold jewelry consumers accounted for 10% of physical world demand last year. Now the vice-mayor of Shanghai says growth in the city's industrial output slowed to 6% in Sept. after averaging 11.5% annualized during the first nine months of the year.
"In the past, we would expect to see Gold Bullion move up when stock markets tumbled," one Hong Kong dealer told Reuters.
"But this is not the case anymore. Some of the financial institutions have to liquidate their long positions to cover losses."
Hedge funds in particular – a major source of leveraged Gold Price between 2002 and 2007 – are being forced to quit their positions as clients pull out. ( Read about Gold: No Credit, No Leverage here... )
"Some of the [big investment] funds are not doing very well," the Hong Kong gold dealer went on.
Gordon Brown, the discredited former UK chancellor and now prime minister, called it a "new Bretton Woods", referring to the post-WWII currency regime which collapsed thanks to excessive US credit and money creation two decades later.
New data from TrimTabs Investment Research showed wealthy investors pulling more than $43 billion out of US hedge funds during Sept.
"Every commodity is falling. I think it's much better to keep more cash on hand. The market is so uncertain," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, to Reuters earlier.
By Adrian Ash
You better believe I stated here that Cash was King, and that USA Cash was cash in spades! You hear the Bretton Woods thing bantered around, as if there was a currency besides the dollar? Well let me say it again: Go long the dollar, I can't tell you timing of the market but I can tell you with certainty the outcome. Let me reiterate, Gold was a bubble like Oil and when the bubble bursts, you can wait a long time for another bubble.
Here is an article, Banks Hoard Cash as Credit Card Defaults Rise. Hmmmm the article states they are hoarding what??? Cash. Because if they were hoarding gold they would lose money.
Bubbles create scenarios were assets (including loans and the collateral of loans) including stocks, commodities, debt swaps, and gold all lose money or VALUE. In these deflationary markets where too many debts chase too few dollars what does not loose value is DOLLARS,
This is what a picture looks like of a bubble.
Yes that is 30 years. It can take that long to reach dollar parity minus inflation to break even if you buy into a gold bubble. And keep in mind that the smart money is dumping gold as the gold pimps tell the rubes to take possesion of the bullion, as if.. as if... at half the price it was sold that more wouldn't be available.
Think your stocks look bad??
Well somebody who bought gold at $1000.00 US an ounce can now expect to wait 40 years to recoup that purchase.
Take the lost compound interest, subtract inflation, and then look at the lifetime gold chart.
Yeah Gold is the most cruel bubble of all. As I watched the Gold pimps slander the Stock market pimps, the cockroach defaming the slugs, I thought to myself why won't the government just tell people to put their money in banks? I mean if the government had asked the people to put their money in banks to "liquidate" the banks patriots would have done so.
Laughing, the truth is soooo damned simple, because after 911 when asked what Americans could do? the POTUS said "go shopping." And that is why Gold is so damn cruel, sold as a refuge it is a mirage. I mean to tell ya.. if you had read this blog and instead held gold, stocks, or the krona you could have found a USA bank and done better.
WHO IS THE GOVERNMENTS GLOBALLY VOWING TO SAVE? The gold market? Real Estate? Stock Market?? Nooooooooo... "BANKS!" That is why the government did not tell you to put your money there!
I blogged tonight for one reason to say that if you have not done so, GO FIND YOURSELF A GOOD USA BANK if you are not investing for a long-term horrizon say, twenty years, if you are in a deduction plan at work or 410K split 50/50 with stocks and stay long the market, else.. else... GO FIND YOURSELF A GOOD USA BANK
People will tell you, yes I'm arrogant but very seldom wrong.
But lets look at the bright side of things..
New Solar Energy Material Captures Every Color Of The Rainbow
But let me warn you again: Find a US BANK. Find a GOOD US BANK. And let me share this with you.
October 16, 2008
The Ice Storm
By GAUTI KRISTMANNSSON
ICELANDERS have woken up in a new novel by Franz Kafka, where everybody is guilty by default. One by one, the mighty banks have been seized by the government, and Icelanders, aghast, have been told that each and every one of us owes millions of dollars — to whom, we don’t know. The earnest faces of the politicians, of bankers and tycoons almost crying, give us the final touch of the surreal. The situation is comparable only with the fall of the Berlin Wall in 1989 and the 9/11 attacks — something final and yet beyond one’s individual grasp has happened.
This time, however, instead of looking on we are in the middle of it. The first 500 bankers have lost their jobs in one go; many others are waiting for the double blow of unemployment and losing their house as their mortgage payments soar. When the Reykjavik stock exchange reopened on Tuesday after three days of suspended trading, its index, dominated by bankrupt financial institutions, had lost 75 percent of its value.
Suddenly, there are lines in the bank for foreign currencies, and there is a limit on how much we can get — overseas banks are refusing to accept our freefalling currency, the krona. One of my students, studying in Spain, can’t get money from Iceland for her rent. Importers and exporters can’t get currency to conduct business. Icelandic tourists abroad have problems getting cash from A.T.M.’s. The British government has applied terrorist laws to freeze the assets of an Icelandic bank; the list goes on as if it were a script for the nightmare of globalization.
We thought we had friends, in Europe and in the United States. They were sought in the hour of need and found to be busy with their own problems; only the Scandinavians were prepared to extend a helping hand, and then, all of a sudden, Russia — somehow the world has changed. The disappointment with our old “friends” is great and people ask, did we really behave any worse than the others?
People joke about going back to the ’70s, when there were restrictions on how much currency one could take abroad and the government devalued the krona regularly to reduce spending on foreign luxuries. It wasn’t all that bad then, they say, apart from the bellbottoms and high-heeled shoes for men, perhaps.
But the jokes are not funny, for we did join the party in the 1990s, we did pour money into our apartments, houses, cars, gadgets, stocks; the money was borrowed, too. After an era of deprivation, we were eager to enjoy the newfound freedoms of capitalism and credit cards. We believed everything would add up; certainly the free-market enthusiasts told us so time and again. And most of us could pay our mortgages and credit cards, at least until last week.
Now that we don’t know if we can, the shock is so strong that neither anger nor sorrow have really taken hold. We thought Iceland was an independent country that could take care of itself without the help of Russia or the International Monetary Fund, that our currency amounted to something, that we could own companies and banks all over the world. We thought we could enjoy our beautiful country and clean air in the backyard of the aluminum smelter.
In many ways, we uncritically accepted the capitalist system, which now appears to have been a gigantic casino without an owner. We did in the end believe that we could get “money for nothing” and now we face the fact that we will get nothing for our money.
What to do, nobody knows, least of all the politicians, bankers, tycoons; but then again, I heard that a new edition of “The Communist Manifesto” will be published here this autumn. Coincidence, of course, but like everything else, unreal. Kafka’s Iceland probably has an ending different from anything that we can possibly imagine.
Gauti Kristmannsson is an associate professor of translation studies at the University of Iceland.