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October 4, 2011 / Hal (GT)

Gold has nice Monday. Yet get’s zinged Today.

Soooo. What gives? That is the question. Yesterday the stock market here in the USA did horrible. Which was pretty much the same elsewhere in the world. But gold did fairly well gaining some strength up over 1670. But this morning I hit the bookmark on my cell phone for and it was heading south. Looking at the widget on the desktop right now gold is at 1615.00 and has been near 1610. So what gives? That is the question.

Well, other than looking like a not-for-profit-seller attacking while markets are weak, I’d have to hazard a guess that once again we are seeing hedge funds cashing out of gold to cover short falls in losses they are taking in the stock market which is looking like yet another down day.

I’ll see what I can find that might be influencing things today (likely will have to wait till 20/20 hindsight becomes useful). In the meantime here are some items worth considering as we move into a future sure to see gold higher.

David Stockman: Blame The Fed! <- HT to Peter Grandich. I said an amen to this quote:

I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the gold window and let the dollar float. Because out of that has evolved — or morphed — a central banking policy in the world that absorbs unlimited amounts of government debt. And so we went on what I call the “T-bill standard” or the “federal debt standard.”

James Turk – This Collapse is Bigger than Governments or CB’s <- From King World News.

Monstrous E-Bureaucracy Brewing? <- From Casey Daily Research. Couple of good points made here.

Hong Kong – Still The Cheapest Place To Buy Gold Coins <- HT to @JervisCapital

CME plans to more than double max gold collateral level <- How interesting.

Gold’s volatility makes a long term focus more important <- here’s a quote:

During this phase of volatility, it is important to keep focused on the bigger long-term picture and remind yourself why you own gold bullion. One of the main reasons we invest in precious metals, in particular gold and silver is that they are an alternative to fiat money.

John Embry – Silver is Completely Flushed out to the Downside:

My coin guy came over to see me yesterday and I asked him, ‘How’s your silver market these days?‘  He said, ‘I just got three boxes of maple leafs in or about 1,000 coins.‘  I asked him how they were selling and he said, ‘They are going out the window, all but 50 coins are gone.‘  I asked him what price he was selling them and he said, ‘$38 an ounce.‘  That’s with the paper price $30 to $31.  So the smart guys know this is a rig job and they are getting their hands on what silver is available as fast as they can.”

China loves gold < – And here’s some pics to prove it.

Stocks Enter Bear Market Territory <- From Expected Returns. Always a must read.

I fail to see how buying Treasuries right now at 1.8% is better than buying a blue chip like Coca Cola with a 2.8% dividend yield. I’m scratching my head on this one, and trust me, the smart money is too.

Oink Oink <- from Turd Ferguson.

October <- Also from Ferguson. Here’s a snippet:

both metals [silver and gold] are working themselves into technical corners. Obviously, anything can happen but, if I had to guess, silver looks like it is about to break lower in coordination with a global risk liquidation. $24 is still a possibility.

Barclays: Silver global mine supply may hit a new record this year

Market Snapshot: Dow Jones Soars 400 Points On European Rescue Plan #42 <- Because the first 41 worked so great! HT to @JervisCapital .

Moody’s downgrades Italy’s government bond rating, takes negative outlook <- HT to @fuTuRe_sHOcK.

US T-Bonds: The Monstor Spleen

That’s all I’ve got for you today.

The monster rally at the end on the DOW was amazing and frankly looked suspicious. The whispers are that it has to do with the EURO and yet another so called agreement. I think that’s either the sign of a sick group of stock buyers – mentally sick – are it’s all just hooey and the FED got in. But we will know more tomorrow no doubt.



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