FAUGH you have called this turn v well, I hope people here are paying attention, pls continue the info feed and comments.

fyi - my average cost on gold is low, real low. Same silver. I bought a little today and last few days only cos I'm worryingly low on physical PM exposure on a % allocation basis. I was selling physical gold (via Goldmoney) since mid-2009 and buying USD, which was too early in hindsight, so recent re-purchases just allow me to sleep better thats all. Gold could face-plant in 2010, I absolutely agree.

On the flip side I am sitting on 75-80% cash. Heavily weighted in USD. My equity position is net short. I'm using the ETFs SDS and SKF to short, sparingly and for brief periods only, but with decent success, particularly today

Right well yer not all mad then. I believe trends persist until something changes, and the current news is not so much a change as a punctuation of the situation thats been developing for some time now. With that in mind I can't see the recent trend in dollar versus gold changing. Sounds like your of a similar mind

And the last few days is why I don't trade in and out of yellow metal.

If and when the day comes when gold is no longer in a long-term uptrend, that will mean one of two things: there is a new stock market bull, or capitalism has been abolished.

So my totally unscientific view is hold onto gold until the Dow is at 16,000 and I can't go too far wrong.

When to sell gold? This is a worthy topic. A few indicators I have are as follows:

1. When central banks base rates exceed broad money measures (e.g. M3) by at least 1-2%. This is the key one IMO.

2. When Dow/Gold ratio is at least 1.0, perhaps 0.5-1.0 range. Another key one.

Less key, but of importance:

1. When commercial and residential property yields exceed the above money supply rates by a factor of at least 2

2. When the media is salivating: Irish Times has it’s bumper, 2 section precious metals supplement, massive golden bull on cover of Time magazine or contemporary equivalent etc.

The first two indicators will only register after the “blow-up” hyper-inflationary event has occurred. IMHO there is a looming and devastating hyper-inflationary event that will wipe out all existing fiat currencies and savings in those currences. It’s like an elastic band that is being stretched and stretched. I realise this is very alarming to many people. Of course there's going to be bouts of deflation in the short run (like now), through fear of and eventually actual defaults on huge amounts of corporate and individual and sovereign debt. But the worlds governments as they are currently comprised won't allow that; they've already shown complete willingness to buy, or guarantee, private debt. Current governments are simply incapable of forcing their electorates to take ANY meaningful pain, period. They have absolutely no incentive to preserve the purchasing power of their promises. So we delay and delay, creating ever more absurd amounts of paper money, but like the ever stretching elastic band it will eventually blow up into hyper-inflation and destruction of the underlying fiat paper. Read history.

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WTW appreciate the comments..

It has being coming a while this decline, didnt quite catch the top but have got I thought last night all of the move down on this one..

Well, it is what it is..

To be honest I am now sitting here with my thumb up my hole(no short term positions)

The only thing that bothers me this morning is Hong Kong CDS, Indonesia and New Zealand..

As I said,dont read media but indonesia CDS are at 212 for 5 year this morning..

That Italian bank is quiet.


CDS mkt and High Yield (HY)for me last week was the tell that this mkt was rolling over..
Gold (Silver) as well...
The PHD of metals as well was a tell i.e copper..

At the moment its all about the sovereign's...I expect the banks will start to kick up soon again as well..

Add I expect corporates to kick off as well soon..

Add From a $ GOLD chart point of view, to confirm bear thesis need a weekly close below the Bull trendline..Tick at the moment..

If this happens odds favour we go after the previous breakout zone on chart i.e circa crayon 1025..
Also that is previous high from 08 on a weekly basis..
Other note: We would want to have some very serious credit problems for this and the psychologically important 1000 to break down...

I think there is that kind of serious credit problems, remember China was a big buyer of Gold and they reigned in on loose policy there a few weeks back..Mentioned it somewhere..

Great post.

Gold Silver ratio still climbing hit intraday high of 71.50,, Its screaming credit problems..Corporates screaming credit problems..

CDS on ireland have come in circa 160..

Saudi Arabia, hong kong and indonesia spreads all widening,

Indonesia above critical 200,

maybe someone out there could fill me on whats the story there..

Saudi is the one to keep an eye out above 100, if we see follow through on this the next few days, then ding ding..

No follow through worth mentioning on the italian bank.

Oil dump to $70 screaming margin calls..

What you're seeing is consistent with an unwinding of USD carry trade, no?

USD Index almost at 80 now

Yes the corporate side of things is screaming $carry trade unwind..the proxies i use..

Gold Silver is screaming credit problems..

Spot the reversal in /yg from the lows..

still under the bull trendline but that reversal would have me nervous about going short gold at the moment..

Neutral in relation to gold..

Im finished for the day, dont like the action in usd/jpy for being bearish on gold..

now compare it with /yg...

at approx 18.45 onwards,

Correlated or what..

easy $ have being made on Gold...

Crude says carry trade unwind $ related

Easily noticed at approx 16.00 onwards for 1/2 hr in /dx and eur/usd and usd/jpy..

I suspect the move down in Godl and Equites yesterday and today caught a lot off side..

havent a clue about all the trades and spreads so i'll leave that to the experts

however i thought this faber video should act as a reality check for all those dancing on the goldbugs grave

http://www.youtube.com/watch?v=4QfDOe72vgU

There are 2 big things in 2010

WAR will the uS attack/invade iran, syria cuba pakistan, instigate coups in venezuela and bolivia and give israel a pass to destroy lebannon again. They already have toppled one democratically elected government in 2010 ( Honduras) and are bombing Yemen as part of this bullshit war on terror. Obama is far worse than Bush ever was

DEFAULTS by the piigs US and UK. I think the UK will go under first despite the protestations of AEP

All of the above points to gold going skywards

Whats "/yg"?

Your lordship,

Great video. I think faber is class. You can embed youtube clips using the utube button at the top of the screen when you post. Just paste the full link between the two sets of brackets when they appear like this [utube][/utube].

Appparently the current fall is attributed to the idea that Greece and Portugal will be liquidating their Au.

Between them, they have 494.9t which is about €12bn.

Portugal has a lot more than Greece, maybe a legacy of colonial times?

It just struck me that this drama might have a very powerful second act.

So, for whatever reason, gold fell heavily, hit a low of 1042, then people, for whatever reason, stopped selling and started buying contracts.

Things could get very, very interesting if the people who bought in the 1040s and 1050s demand physical delivery.

There are real physical constraints on gold delivery. Normally only people with a physical need for gold ever want it, like jewellers and dentists.

There is a deadline every month for physical delivery, does anyone know what it is?

As I understand it, there is an emergency procedure where, in the event of debtors being unable to deliver the gold, the market can legally force the creditors to accept cash.

I pity the guy trying to make an attractive brooch out of $20 bills, though.