Thursday, October 8, 2009

Gold --- Game On!

With the Gold Cartel in cardiac arrest, and the CRIMEX Goons on the run, it is time for the Gold and Silver Bulls to squeeze the life out of these Rat Bastids. There can be no mercy. There can be no respite. There can be no let down. NOW is the time to bury these SOBs. CRUSH, KILL, DESTROY!

Gold has now broken to new all-time highs having hurdled the previous high at 1033 as if it were merely a curb on the corner of Wall & Broad. 1033 now becomes near-term support with Bull defenses now set up at 1009 and 985.

Silver is right alongside Gold for the ride. Still hidden in it's shadow, Silver remains $3.50 below it's March 2008 highs and remarkably $32 below it's all-time high of $50 set in January 1980.

No market goes straight up. The Precious Metals are the poster children for that statement. There will be "bumps along the way" as these markets march higher, but it appears safe to say that the risk in both of these markets is now to the upside. If you remain short these markets, or are considering entering them short, we have only one simple question for you. Why? History is on the side of the Bulls when the COT short position is at "record highs".

Gold has risen swiftly to and through our 1053 projection if resistance at 1020 was taken out, having hit 1058 overnite in Asia. The CRIMEX goons have come to work as sellers this morning and are again trying to halt Gold's march higher. Gold would appear to have 1089 in it's sights before any significant reaction lower occurs. This would translate into a move to 18.77 in Silver.

Gold (Inflation Adjusted)[see CHART]
By Barry Ritholtz - October 7th, 2009, 11:30AM
While everyone seems to be all abuzz over Gold’s new highs, you should be aware that these are nominal, not real highs.

Adjusted for Inflation, Gold is nowhere near its all time peak — in real terms, its only about half its prior highs:

Faces of Death: The US Dollar in Crisis
By Ron Hera
The US economy has been in crisis since 2008 and despite optimistic statements by officials and commentators there are no fundamental signs that the crisis will end in the foreseeable future. Current economic data suggests a number of diverging and unsustainable trends. The US economy has suffered a real estate collapse, a stock market crash, a banking crisis, a near systemic collapse on a global scale, a credit crisis, the worst economic downturn in the US since the Great Depression, and an unprecedented global recession. Following two sequential economic bubbles, the dot-com bubble and the real estate bubble, no one has yet correctly called either the bottom for the US economy or the start of a US economic recovery. Nonetheless, each day, news reports, articles and statements by officials and commentators reveal new economic data and offer new analysis. Unfortunately, both the economic data and the interpretations offered by officials and commentators are contradictory.

It appears that both inflation and deflation are occurring at the same time; that the US gross domestic product and consumer spending are declining while stock prices are rising; that government spending is rising while tax revenues are falling; that consumers are deleveraging and that the flow of credit has slowed while the total of debts and liabilities in the US economy continues to rise; that the US dollar is falling while price inflation remains nominal; that interest rates are near zero for banks but rising for consumers. The seemingly contradictory facts indicate economic distortions and therefore developing systemic instabilities. What ties all of the economic data together is the US dollar. Rather than considering what impact unsustainable economic distortions might eventually have on the US dollar, could the developing systemic instabilities instead be the symptoms of a currency in crisis already in progress?

Autumn 09's Inflation Time-Bomb
By: Paul Tustain
THE PUBLISHED INFLATION DATA are surprisingly unsophisticated in so far as they compare current prices with a snapshot a year earlier.

Just over a year ago, oil was every hedge fund manager's favorite speculation. In summer 2008 a barrel got to well over $140, before falling sharply back.

That summer's high oil price had the effect of cancelling out the deflation which was occurring elsewhere in the economy, as the first phase of the credit crunch started to bite. It helped keep inflation up.

But by summer 2009, after hitting a trough of $30, the price was back down around $65 representing an annual fall in the oil price of over 50%. Now it was keeping the inflation figures down. Oil would continue to be below the price of 12 month previous throughout the period from January '09 to September '09.

Now – in the fall of 2009 – prices are more or less where they were a year ago, but 12 months ago they were falling fast, while now they are rising. So for the first time in over a year the effect of oil prices in the inflation figures, in October/November 2009, will be up again. And by January, even if prices don't continue to rise from here, the low prices of winter 2008/9 will form the base. Oil will again be at twice the price it was a year earlier. This will have a marked impact on inflation data.

Buy Gold!
By: Puru Saxena
Two days ago, the price of gold broke out to a new high and we are delighted with this result. As you will recall, we were expecting an upward breakout in gold and it looks as though its price will now surge over the following months. It is noteworthy that since the breakout occurred, gold has managed to stay above the previous high. The longer the price of gold stays above US$1,030, the greater the probability that the yellow metal will stage a spectacular rally until spring next year.

It is our contention that this breakout is the real deal and the pathetic action of the US Dollar Index supports our view. Rather than rally, the American currency has embarked on another southbound journey and this is extremely bullish for gold. Furthermore, the recent zoom in silver and the precious metals mining stocks is additional evidence that this breakout is not a head fake. Figure 1 highlights the recent breakout in gold. As you will observe, gold's bull-market has been punctuated by lengthy consolidations and this is the third time gold has broken out towards the end of the third calendar quarter.

Consumer credit dives for 7th month
NEW YORK ( -- Consumer credit pulled back for the seventh straight month in August, led by a steep decline in credit card usage, a government report said Wednesday, as unemployment soared and cash-strapped consumers continued to limit spending.

The total amount of credit outstanding fell by $12 billion, or a 5.8% annual rate, to $2.463 trillion in August, according to the Federal Reserve.

Economists predicted total borrowing would dwindle by $10 billion in August, according to a consensus survey from

"Credit is being squeezed on both sides," said economist Sean Maher of Moody's, adding that lending standards at banks remain tight and consumers are pulling back on their debt.

The last time consumer credit contracted for seven months in a row was in 1991. It has never dropped eight months in a row since the Federal Reserve started tracking it in 1943.

The last time consumer credit contract for seven months in a row was 1991, when it decreased by $9.8 billion, or 1.2%. This year, credit has plunged by more than $100 billion, or nearly 3.8%.

Revolving credit, which includes credit card debt, tumbled $9.9 billion to $899.4 billion. That's a 13.1% decrease from the previous year.

Nonrevolving credit, which includes auto and student loans, fell by $2.1 billion, or 1.6%, to $1.563 trillion.

As our little Depression continues to grow into a greater Depression, the evidence is abundant and as clear as the pug nose on Barney Frank's fat face. When people lose their jobs or get cut back to part-time, they stop spending friviously at retailers. The marginal retailers start falling by the wayside. Strip malls start losing rent paying tenants. Mall owners can't make their interest payments to the bank. And wallah, you have a commercial real estate crisis.

Marginal companies are falling by the wayside and good companies are firing people with abandon. With less companies and less employees, less office space is needed. Wallah!!! 16.5% vacancy rates, headed above the 18.2% peak in 1991. Guess who can't make their debt payments. There is $3.4 trillion of debt outstanding on commercial real estate. This debt rolls every few years. Mall owners, office owners, and apartment owners are in a heap of trouble. The value of their property has plummeted, rental income has dried up, and they have no cash flow to support their current debt, let alone refinance it at higher rates.

At least $1.5 trillion of that debt will be written off by banks and other financial entities. So, keep believing in that recovery being touted by the Fed and the talking heads on CNBC.

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