“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Wednesday, March 23, 2011

Gold knocking on the door of an upside breakout

One can clearly see the great effort being applied to thwart the metal from breaking higher. In a freely traded market, it would have already done so. The US monetary authorities are clearly terrified over the implications of a new all time high in gold as it would be the clearest signal yet that their QE policies are highly inflationary.

Goldman and Morgan are going all out to prevent the plethora of headlines that would accompany such a significant development.

 

14 comments:

  1. Dan I don't know how to gently break it to the goldman morgue bernake syndicate but that cat is already out of the bag.

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  2. Dan, that's the whole objective of QE - to create inflation. If anything, they should be happy to see gold rise.

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  3. Brian, yes they do want some inflation but they don't want you to know that they want inflation. Hence the skewed statistics regarding inflation numbers like CPI/PPI. If the gold price appears contained then inflation appears relatively flat. Also consider there is likely a significant amount of derivatives exposure to the price of gold.

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  4. I keep hearing derivative exposure to gold and silver. Please enlighten me. Exactly what are the derivatives? If you can not tell me exactly what the derivative is, then my friend, you should not make the statement.

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  5. @atlee This may open your eyes
    http://www.youtube.com/watch?v=4Inct95AFr0

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  6. @atlee this too
    https://marketforceanalysis.com/index_assets/Gold%20Silver%20Derivatives%20Grow%20More.pdf

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  7. Stephysat
    What language are you speaking on that you tube video? I suffered through it and that tells me nothing. And your second link tells me nothing either just makes statements without explanation as to what the derivative is. I understand the SLV scam. I understand fractional banking. I understand the futures mkt. None of those "derivatives" have anything to do with your statement. I wont waste anymore space on this but man you are so far out in right field, your not even in the stadium.

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  8. atlee:

    Kid Dynamite covered that story back in December.

    http://kiddynamitesworld.com/jp-morgan-and-the-massive-silver-short-the-greatest-story-ever-told/

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  9. Old news known by everyone. I am simply asking what is the derivative instrument tied to the price of 1440 gold? Just like I asked earler in the week on watchtower, "precisely what is the derivative that gets exercised if silver goes above 36?" I say it is nonsense. There is none. It is simply a price the banksters are trying to defend. It has nothing to do with some magical derivative. If you are going to use the word derivative you had better be prepared to describe just what instrument it is that is tied to that price. I give up. This is what give us PM traders a bad image.

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  10. Ah atlee for I am the grasshopper and you the master. I did not fully understand the level at which you you operate. over

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  11. Atlee, stay cool man I would be happy to tell you what I know/think. In the late 90's investment demand for gold was low so many central banks "leased" their gold or made it available as money to be used as collateral against currency conversions, investments whatever. It was cheap to "borrow" gold back then as the interest rate was very low . . similar to the USD and Yen now (carry trade). Many believe that the central banks got themselves into trouble by leasing more than they had, in effect treating their gold like fractional reserve creation of currency. The crux of the problem (very simplified) is that we now have a derivative on top of a derivative on top of a derivative where it has become exteemely difficult to figure out whom, what where, when and why (mortgage market). As gold moves up in price any derivative with "exposure" to the price of gold correspondingly goes down because the gold was borrowed and has to be paid back at some point. Has that exposure been unwound . . I don't know. Central banks don't report to the public. I'm not a conspiracy theorist would love to hear more info EITHER way on the subject.

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  12. atlee:

    it is nonsense in all places except fairy tale land (where the silver bugs reside). It was used to make people believe that if you could just push silver past $36, that would cause the bankruptcy of JPM, Comex would collapse, the global banking system would collapse and the only money available will be silver. As such, someone with 500 silver eagles would be able to use them to purchase the Rockefeller Center.

    I assume that announcement by JPM that it will file for bankruptcy is coming some time tonight.

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  13. Digg
    You have just described fractional banking to me which I quite clearly stated I understood. I am just going to put my tin foil hat on and go sit in the corner. By the way, I have been a commodities trader since 1979 and have been long AGQ from 90 (silver 18) and a hand full of miners. Thanks for your efforts.

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  14. Dan, what will it take for these bankers to retreat at 1440? How long can they keep this up? Very frustrating to see silver bugs doing the happy dance with their profits while gold bugs that bought at 1400 a few months ago expecting 1650 by now, are still standing in the rain waiting for the bus to arrive. Will the banks' efforts ultimately end in a recoil to the same degree and intensity to the pressure applied to it? For example, the lower you submerge a ball in the water the higher it will recoil upon release? Can this be safely assumed in this case?

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