Al's Insights – Wed 9 May, 2012

Big Al and Trader Rog opine on the crazy gold market

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Featuring:
Al KorelinRoger Wiegand

Comments:
  1. On May 9, 2012 at 9:59 am,
    Clay says:

    Consider this Old Paradigm as a cooperation between big banks, the Fed, Governments, Politicians, Big corporations and Funds like Berkshire and the Big Media. We can also include the education system and courts if so.

    Of all the above links holding this old paradigm together, what is the weakest link? Politicians of course and it is the first to show both weakening and breaking going forward. The other links are giving assistance to these failing politicians as much as they can, but not to the extent they themselves begin to weaken. Take look at France, Greece, Spain, Italy and now even China and the US, in all these places the political links are weakening and some actually breaking. I think there is less cooperation between these links than they try and show, and when the politicians start to break, the whole chain will be searching for a new paradigm.

  2. On May 9, 2012 at 10:05 am,
    Clay says:

    The recent events in Europe show breaking political links, the other links react to shore up the weak ones by taking gold, silver, oil and other real wealth down, but at some point when these political controls like the EU, UK, US begin to break the Fed and central banks will be worried about saving themselves first by allowing the mob to toss the politicians out of their lifeboats hoping to sneak into a seat for themselves.

    • On May 9, 2012 at 12:57 pm,
      Big Al says:

      Really interesting points, Clay!

      Big Al

  3. On May 9, 2012 at 10:07 am,
    Irishtony says:

    HI AL & ROG….I cant get my head around what’s going on. Every thing is down, except the dollar, it just doesn’t make sense, especially when you look at what’s going on in Europe, & the US. After the fiasco in France & Greece over the weekend, one would have thought, that was good news for the PM’s. We will just have to play the patience game.

    • On May 9, 2012 at 12:59 pm,
      Big Al says:

      Yes we will Mr. Irish.

      But, know what, that’s okay.

      The tortoise will win this race!

      Big Al

  4. On May 9, 2012 at 10:11 am,
    Marc says:

    Big Al,
    I think you got this right. It is sad to say that there is A LOT of stupidity out there. I think that with all the attention on the European crisis – the “LEAST ugliest baby in the nursery” trade in ON! Thus, the dollar is “holding up” now. Therefore, the gold/silver market is reacting to that. It takes a while for the “US dollar paradigm” to shift and/or fade. Instead of saying the “whole world is falling apart”, lets run to gold. Now, the market is saying – hey, the EURO is falling apart – lets run to cash – the US dollar. An oversimplification or statement of the obvious – probably. But, that is my two cents worth. The only thing that is going to get this going again….is QE3, etc….and the Eastern stranglehold tightening of the global financial infrastructure.
    All the best,
    Marc

    • On May 9, 2012 at 1:00 pm,
      Big Al says:

      Aren’t you a little surprised, Marc, that the U.S.$ is only slightly up?

      Big Al

      • On May 9, 2012 at 2:46 pm,
        Marc says:

        Big Al,
        Yes, I am

        • On May 9, 2012 at 8:24 pm,
          Big Al says:

          Me too Marc!

          Big Al

  5. On May 9, 2012 at 10:14 am,
    Dai Uy says:

    Al;

    I believe that it take a while for reality to set in for most. Either that or you and I and most others on this blog will soon start howling at the moon. Keep the Faith………..

    • On May 9, 2012 at 1:01 pm,
      Big Al says:

      Only Cougars howl at the moon!

      Best,

      The Big Dawg

  6. On May 9, 2012 at 10:16 am,
    Dai Uy says:

    OOPS.. forgot an operative word….

  7. On May 9, 2012 at 10:35 am,
    Doug says:

    Some of my miners are up a little nem, paas, ngd, gdx could they have bottomed. I hope so this has been a hard ride.

    • On May 9, 2012 at 1:01 pm,
      Big Al says:

      May not be over yet, Doug. We’ll see!

      Big Al

  8. On May 9, 2012 at 10:37 am,
    naomal says:

    Could it be that govt’s & Central Banks are deliberately manipulating the price of PM’s SO THAT they can buy them with their fiat money at heavily discounted prices (while at the same time their pawns e.g. Buffet, Gates etc..) disparage Gold, thus putting Joe Public off the scent of what is going on?

    It can’t be coincidence that China & their pals are backing up the truck at this price. Perhaps they know that it ain’t going a whole lot lower & that they better get all they can at these prices. Al, I think you are right that these authorities know something we don’t.

    BTW, when are you going to get the kind of makeover that Trder Rog got on his pic? It makes him look 21..almost :)

    • On May 9, 2012 at 10:48 am,
      Marc says:

      Naomal,
      I wouldn’t DOUBT your scenario or “thesis” for a second!

    • On May 9, 2012 at 10:49 am,
      John W. Robertson says:

      Sure naomal, that’s exactly what they’re doing. Buy gold, dump your cheap dollars. What a win-win. And they’re not just backing up the truck….more like the Panamax (ship class).

    • On May 9, 2012 at 12:58 pm,
      Joseph says:

      HI Naomal,
      All they have to do is print the money and they get the gold for free. They just want the public to stay away for the obvious reasons they want and need your money
      Think about this China tells their population to buy gold. Now think about that they have 1 billion people and if they are wrong they will have 1 billion angry people. You think they know what they are doing . Do you think they know something we do not.
      Buffet has a short on gold he probably thinks he is smarter than the Chinese that racist cheat. His father would be ashamed
      Thank you Lord Bless Joe

    • On May 9, 2012 at 1:02 pm,
      Big Al says:

      Afternoon Naomal,

      Soon for the makeover, but, you know what, it may not make a lot of difference!

      The Old Guy

    • On May 9, 2012 at 4:33 pm,
      castanheiro says:

      naomal,
      I think you’re exactly correct. My thinking is aligned with yours.
      Best

  9. On May 9, 2012 at 11:17 am,
    naomal says:

    Isn’t that the ultimate insult? They rob us & then use us to get the benefit long after their theft. I am comforted by the knowledge that they will have to pay if not in this life then in eternity.

    • On May 9, 2012 at 1:04 pm,
      Big Al says:

      And, Naomal,

      Eternity is more than a long, long time!

      Big Al

  10. On May 9, 2012 at 11:39 am,
    Peter says:

    Yesterday gold really had me scratching my head.

    Some thoughts:

    Gold has a habit of acting counter-intuitively. Why is that? Is that simply in the nature of gold? Probably not.

    Gold acts most like a safe haven, when the situation is worrisome but not terrifying, when things are circling the drain but not in immediate danger of getting flushed. This is the time when we see an “orderly” rise in the price of gold. If left unattended, gold builds momentum and begins to climb faster. This makes THEM nervous and causes them to intervene when it is most effective. This pushes gold back into its very linear channel and keeps a lid on it. The uptrend for the last ten years is amazingly straight.

    Then there are times when things look like they are coming very close to getting flushed. We see it now in Europe. The likelihood of Greece leaving the Euro has never been greater than now. That, in and of itself would not be a huge problem, as Greece is relatively insignificant, economically. However, Greece’s departure would send a very powerful signal that things are unraveling and may very well lead to other piglets to quit the euro as well. At times like this gold (contracts, and that’s what we are really talking about) get sold for the “safety” of USD and US “treasuries.” The deleveraging puts downward pressure on gold. This downward pressure is taken advantage of and augmented by manipulative selling designed to trigger the sells, as we saw yesterday. 6000 contracts were dumped on the market within minutes. See below quote:

    “However, gold’s weakness yesterday was also contributed to by more unusual trading activity. As trading in New York got underway, there was an unusually large bout of selling with some 6,000 gold futures contracts sold in minutes and this led to gold’s initial $10 fall to the $1,615/oz level. Momentum driven algorithm trading may have then led to follow through selling and the initial sell off may have emboldened tech traders to sell more leading to the falls below $1,600/oz.”

    By the way, I very much doubt that Hollande will be able to execute his big spending plans. If he doesn’t understand the game of the “art of the possible” already, he will quickly get a crash course on it. He will be told to toe the line OR ELSE, and it’s not Merkel who will whip him into shape. She is little more than a prop herself. Hollande, being a career politician, not a revolutionary – we have a pretty good idea what he will do. The “danger” lies not in France, but Greece. The country is currently ungovernable and some wild cards may be on the verge of being played.

    So what we are seeing in gold appears to me to be an artificially amplified drop.

  11. On May 9, 2012 at 12:05 pm,
    Larry says:

    It is in all of our best interest to try and ignore the daily noise in the precious metals paper market. The physical gold market is alive and well with many large participants. The expansion in the physical markets is still what I use to measure its health.

    • On May 9, 2012 at 6:04 pm,
      Bron Suchecki says:

      Larry, the reason gold has been weak is because physical demand is not broad based. From my commentary yesterday:

      “In previous blog watches I have been reporting that the Perth Mint has seen weak demand from retail investors and India with some interest from Asia. This morning we suddenly had renewed interest from the bullion banks for large tonnage – destination China. No surprises there.

      However, there were no calls for metal for India and our Depository dealing desk is not seeing any rush by investors to buy (or sell, for that matter) gold this morning. On the retail front, bullion coin and bar sales are also quiet. The message – gold demand is not broad based from our viewpoint and hasn’t been for many weeks now.”

      • On May 9, 2012 at 8:26 pm,
        Big Al says:

        Evening Bron,

        When you get a moment drop me an e-mail with your telephone number. Send it to alkorelin@gmail.com

        All the best,

        Big Al

  12. On May 9, 2012 at 1:24 pm,
    going down fast says:

    Average investors do not seek out alternative news outlets for market info. The government is levitating the stock market and keeping a lid on on interest rates. The U.S. is facilitating liquidity in Euroland with the swapping of dollars for euros. To the casual observer there are no signs of an imminent crisis.
    At some point the government will run out of fingers to plug up the dam that is about to burst. A positive sign that the mainstream media is starting to gradually acknowledge that there is another side to the argument was on CNBC today when the Fast Money midday show had an extended interview with Eric Sprott. He held up well under cross-examination and even dismissed the opinions of Buffett, Munger and Gates relative to gold, stating that those three had missed the best investment class since 2001!

    • On May 9, 2012 at 8:29 pm,
      Big Al says:

      Evening going down fast,

      And, as a point of fact, they did miss the investment class since 2001!

      Big Al

  13. On May 9, 2012 at 7:16 pm,
    Jed Davis says:

    Investors are selling their Gold related holdings to cover their losses. They see Gold as a speculative investment – last hired, first fired. The sting of Gold’s fall in 1981 is still with us.
    Asian demand and economic dominance will change all of that in the long term.

    • On May 9, 2012 at 8:30 pm,
      Big Al says:

      Good to hear from you Jed,

      By the way, I agree with you completely about the Asian demand and the economic dominance.

      Best to my friend in Seward Park,

      Big Al

  14. On May 9, 2012 at 9:04 pm,
    Dr. Richard Van Blaricom says:

    Big Al:

    I am getting in on this late. However, my 2 bits worth, and I say this as an opinion not fact.

    If I were Chinese, I know what I would be doing. I would be buying commodities (mostly Gold, Silver, and Copper) with their US Dollars.

    This way they do a double tap on us. (1) they get rid of their US Dollars, (2) They protect themselves from the eventual fall of the US Dollar, as well as all other Fiat currencies.

    This sets themselves up for……..

    Dutch

    • On May 10, 2012 at 10:42 am,
      Marc says:

      Dear Dr. Richard,
      Hello. What you stated above….is EXACTLY why I am overweight in the metals right now! The reason(s) among A LOT of others, COULD NOT have been stated any simpler than what you said just now. Thank you.
      Marc