1. cornishman said...

3. drewster said...

Nice! But why did it take three days to react?

5. beartil2010 said...

Don't know - there must be a trigger from somewhere.

At a guess, until today the government hadn't guaranteed AIG's debt. Now they have, you can trade their ETCs again, and a lot of people are probably selling them and buying physical. That would be a couple of billion of extra instant demand just from the ETFS company - I don't know what other commodity instruments were frozen because of their plight.

Anyone else got any other ideas?

7. mountain goat said...

Trigger? The Fed are out of money so the Treasury invented some new Treasury Bills.

story.aspx?guid={4CE4C5D0-57A8-4EB0-85F7-E346035085AE}&dist=hplatest">MarketWatch
"Treasury to provide cash to Fed market liquidity operations
By Greg Robb
Last update: 10:09 a.m. EDT Sept. 17, 2008
WASHINGTON (MarketWatch) -- The Treasury Department announced Wednesday that it would provide cash to the Federal Reserve to fund the central bank's operations to provide liquidity to financial markets. In a statement, Treasury said that it would raise the cash in a program of Treasury bill auctions, known as a temporary Supplementary Financing Program. The auctions would be kept apart from Treasury's current borrowing program. Agency officials gave no details of the timing, size and maturity of any bills to be auctioned. The cash will help the Fed better manage its balance sheet, which has been shrinking. The Fed has been accepting lesser quality collateral from cash-strapped financial firms in the wake of the crisis. Immediately after this announcement, Treasury said it would auction $40 billion of 35-day cash management bills to fund the SFP."

9. mountain goat said...

Must work eventually! this

11. d'oh said...

I suspect there has been a lot of selling in the past few days for liquidity purposes which has constrained the rise from last week...but I think the US markets are waking up and the balance of sellers to buyers has shifted. The theoretical risk to paper gold now also probably appears to be a real risk to investors. Also treasury printing more bills etc reported today, probably sunk in to the US market that Fed taking equities (i.e. junk) as collateral and so forth....so after sleeping on the activities of the fed last night, the first thing they did this morning was buy gold. I suspect over the next few months gold will climb again to over $1000...but I also suspect this current burst might sink back to $800 or so after the morning panic has subsided...depending on further events through the day. Sadly, the extra money I sent to BV on Monday has yet to clear :-(

13. techieman said...

Hey Cornish! Looks like your call was right after all (by rights gold should be rallying strongly) perhaps its a delayed reaction. In any case it looks a bit too textbook (only in terms of the support). A fall should go in the range of the 3rd to 4th wave of one less degree. The high in 2006 May of weekly wave 3 was 730.5 the low last week 736 (i was expecting some more downside to be honest before a sharpish rally - but that was the trade i suppose +@ 740 say stop @ 729). The chart you have shown (is at pretty minute degree) but if you do 10min bars - at a stretch you can see a pattern. However you are right the move of this violence isnt really predictable and i for one didnt expect it or anything like it right now - expected another bank to be on the brink first. Still it looks as if the markets are testing each of the Inv. Banks - MS has fallen quite a bit because the realisation is that the contagation is probably more pronounced than first envisaged. I cant say that it was on my radar but i am still holding large lumps of the yellow stuff so am sitting back for the ride.

Good Luck!

15. japanese uncle said...

Sorry correction.

Playing gamble with gold is at least much less hazardous to the public, than playing in oil derivatives market.

17. guiriduro said...

What is this fascination with gold? Doesn't make sense to me. Sounds more like pump and dump to me - its fundamentals, i.e. demand for industrial uses, adornment for indian brides of rich families ... are all going negative with a global slowdown. It has panic value, granted, and there are many who advocate it as a store of wealth, vs. currency.

The point is, if the supply of currency is constrained - as it will be with massive deleveraging - then we are entering a deflationary cycle, where asset prices fall and fall, which means the power of money to buy increases, because there is less of it (unless countries really start to print it with abandon, but that possibility is receding.) So less money, more in demand vs same yellow metal, less in demand ... the price of gold is set to drop, folks. It has no intrinsic value, unless central banks really devalue currencies, and it seems to me we are entering a period where they don't have any incentive to do that, rather the reverse. Only last week the ECB was talking about closing the special liquidity fund. Short term blip folks.

19. iguana said...

Why not invest in power companies?

Sudden speculative rise in oil price = 30 or 40% rise in price of power to consumers.

Bursting of the speculative bubble in oil price = no change in the higher price of power to consumers, massive profit to power company.

ps I also think that gold and (in particular) silver are not safe havens.

21. planning4acrash said...

Sterling has plunged twice as fast as dollar against gold. Seems like much of the crisis in America has already been priced in. What we will see is a similar systemic crash in the UK over the next couple of days. I dread to think. People. This is time to make contingencies. ANYBODY with more than 30k in any one banking group must shift their money around.


Terminology Note: Gold, adjusted for immediate goods inflation, i.e. oil, is stable, so, gold doesn't go up or down, its currencies that go up and down. Gold is stable.

23. nooneo said...

Where the buggering market collapse is that Sold2Rent1 when you need him Batman ?

Changing bleedin' nappies I suspect !

25. cornishman said...

Graph at the top is the live price. One below is yesterday's - for posterity: