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Morning gold commentary from Peter Grandich

Big Al
December 20, 2013

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38 Comments
    Dec 20, 2013 20:43 AM

    One more gain. Its Friday covering shorts,take big profits, head to the hamptons.

      Dec 20, 2013 20:56 AM

      Very possible, Mr. Colella!

        Feb 02, 2014 02:51 AM

        wonderful points altegother, you simply won a new reader. What may you recommend in regards to your put up that you made a few days ago? Any positive?

        Feb 03, 2014 03:03 AM

        Okay I’m convencid. Let’s put it to action.

    Dec 20, 2013 20:48 AM

    Grandich is so right about how no one wants to fess up to who buys all the debt if the Fed doesn’t.

      Dec 20, 2013 20:56 AM

      The million (or should I say trillion) dollar question, Larry.

        Dec 20, 2013 20:06 AM

        Agree 100%.

        The Fed has said, “Oh, we can just the positions roll off, at maturity.”

        Great — Uncle Sam pays you off, at maturity. But given that they will not pay off one nickel of the principal debt balance, they must hold auctions to borrow money (with which to pay off the Fed’s positions). A never-ending roll-over of the debt — plus whatever new deficits you are accumulating. In other words, the biggest ponzi scheme known to man.

        We know that the Chinese no longer have an appetite for the US Treasuries. So who is supposed to be buying these treasuries and at what interest rate, in the free market, could you begin to entice others to roll over upwards of 20 Trillion dollars of debt (based on estimates for the levels reached at the end of Obama’s 2nd term)

    Dec 20, 2013 20:09 AM

    to conclude the thought…
    I don’t think there is anyone else out there to buy them. When that becomes generally recognized, the Fed is forced to pursue full monetization of the debt, whereby they are the only buyer.

    Goodbye Dollar, hello Gold.

      Dec 20, 2013 20:19 AM

      Again, I agree, “Goodbye Dollar, hello Gold”!

      Dec 20, 2013 20:48 AM

      Eric,
      Absolutely correct..spot on. I cant believe nobody has figured that out yet. Wait a minute – I am talking about people who flood malls to buy crap they dont need; then go home and watch the CRAP on network TV….ooopps,, my bad!…:)

      Dec 20, 2013 20:48 AM

      Eric,
      Absolutely correct..spot on. I cant believe nobody has figured that out yet. Wait a minute – I am talking about people who flood malls to buy crap they dont need; then go home and watch the CRAP on network TV…

    Dec 20, 2013 20:13 AM

    The taper is only $5 billion a month of Treasurys for now. If the taper continues to increase in amount, then I agree that it is a concern about who will buy our debt. But I cannot see how a $5 Billion reduction can be that big of a concern. That is my main issue with these dire predictions that the taper is a terrible thing. To me, it is not so certain that the markets cannot withstand such a taper.

      Dec 20, 2013 20:20 AM

      Rick,

      As I said earlier, I firmly believe that the tapering was no more than eyewash!

        Dec 20, 2013 20:49 AM

        Eric,
        Absolutely correct..spot on. I cant believe nobody has figured that out yet. Wait a minute – I am talking about people who flood malls to buy crap they dont need; then go home and watch the CRAP on network TV…

      Dec 20, 2013 20:25 AM

      Hi, Rick —
      remember that Bernanke, at his press conference, announced the intention to continue the taper, such that they would stop purchase all together before the end of calendar 2014.

      For what it is worth, I don’t think they’ll be able to, but that is the announced intention.

      My own opinion is that economy will roll over long before they stop all together and they will reverse course — launching the mother of all QE programs.

        Dec 20, 2013 20:25 AM

        Keep the propaganda rolling, Eric!

    Dec 20, 2013 20:26 AM

    This doesnt mean i an gold negative but I must respectfully disagree with everything stated here…see my comments under GS commentary for my take on why things might not seem so bad.

    But addressing these specifics comments…

    This is simply short covering, until we have fresh buying gold is going nowwhere
    if the ecomony improves this is not good for gold. gold competes with stocks, stocks will take all the money
    gold is not reversing itself this morning, simply bouncing a little, nothing goes straight down
    youve think weve seen the worst of it – no onen can make that claim

    all this sounds pretty negative, again im not, just calling it like i see it
    it is what it is

    where I am positive is what I mentioned under GS commentary…

    Dec 20, 2013 20:30 AM

    This doesn’t mean I am gold negative but I must respectfully disagree with everything stated here…see my comments under GS commentary for my take on why things might not seem so bad…

    But addressing these specifics comments…

    1) This is simply short covering, until we have fresh buying gold is going nowwhere.

    2) If the ecomony improves this is not good for gold. Gold competes with stocks, stocks will take all the money. I do not see this a gold positive.

    3) Gold is not reversing itself this morning, simply bouncing a little, nothing goes straight down. This is not the little engine that could, at least not yet.

    4) You think weve seen the worst of it – no one can make that claim.

    5) Who will buy our debt if we don’t? The Chinese.
    That is if they want to keep buying cheap gold they will.

    All this sounds pretty negative, again I’m not, just calling it like I see it.
    It is what it is!

    Where I am positive is what I mentioned under GS commentary…

      Dec 20, 2013 20:28 AM

      Regarding #5 — if you think the Chinese are the ones who are going to be left holding the bag on the Treasury debt, you give them too little credit. They are net sellers of US Treasuries, right now

      Dec 20, 2013 20:49 AM

      james (the lesserrr):
      The first thing to note is if you actually knew for sure you wouldn’t be here.
      You would be sitting on your yacht in the south of France.
      Don’t think you see the whole picture…there is no consistent rule to any market. If it were true wow everyone would be rich. You obliviously don’t know history of markets and people shouting in this forum that they KNOW is ridiculous. I find the more people spout the less they know. That just may be a trade-able constant.
      2) If the economy improves this is not good for gold. Gold competes with stocks, stocks will take all the money. I do not see this a gold positive. DEAD WRONG.
      REPRINT.

        Dec 20, 2013 20:41 AM

        For a host of reasons, Dillon, I don’t agree at this point.

        I do agree that the more vocal of the pundits are often simply selling their own book. (Not referring to the majority of our guests, by the way!)

          Dec 20, 2013 20:56 PM

          Well Al: As they say opinions are like A holes everyone has one and most stink. That why its a waist of time listening to any of them but the very best analyst with a track record that is at least a decade and supports a grey beard.

    Dec 20, 2013 20:58 AM

    This is a pretty small rally in gold to be getting excited… the little engine that could has been steamrolling down for a couple of years now. I personally would like to see the mining stocks lead to the upside. I think they will bottom first and they are weak today. I don’t expect this rally to last til the end of the week. JMHO.

      Dec 20, 2013 20:44 AM

      I know, I know Barkley.

      But it is kind of an engine that could so far today.

      Dec 20, 2013 20:48 AM

      Barkley now there’s some intelligence. Nothing solid yet but a lot of equities held well in the sell off in the POG. Let the market be you tell tail guide.

      Feb 01, 2014 01:30 PM

      That kind of thnnikig shows you’re on top of your game

    Dec 20, 2013 20:19 AM

    The Consumer Metrics Institute does a good job breaking down the GDP reports.
    Here is an excerpt of their report today:

    “For the past two months we have wondered how the BEA’s latest growth estimates might impact the Federal Reserve’s stance on monetary policy — and particularly the duration and size of QE. At face value the new headline growth rate of 4.12% qualifies as “healthy economic growth,” and places the US among the fastest growing developed countries. In fact, a growth rate above 4% would argue for far more than a modest $10 billion per month taper — if not a return to more historically normal interest rates.

    “Then why such a modest monetary response?

    “The Federal Reserve clearly understands that the headline 4.12% is neither real nor sustainable:

    — The vast majority of the economy (consumer spending — nearly 70% of GDP) was growing at a paltry 1.35%.

    — Over 40% of the headline number came from growing inventories. Conventional wisdom has this component reversing itself in future quarters — reverting to a long term net zero gain or loss. In fact, since 2006 the average annualized real contribution from inventories has been essentially zero (-0.02%). Bloated inventories have a tendency to normalize, and in coming quarters we can expect production cuts to accomplish just that.”
    —————————————————————————————————————–
    Here is a link to their homepage (then scroll down to read the full report. The except was taken from the summary, which is at the very bottom of the report):
    http://www.consumerindexes.com/

      Dec 20, 2013 20:04 AM

      Very valuable comment.

    Dec 20, 2013 20:45 AM

    james (the lesserrr):
    The first thing to note is if you actually knew for sure you wouldn’t be here.
    You would be sitting on your yacht in the south of France.
    Don’t think you see the whole picture….There is no consistent to any market. If it were true wow everyone would be rich. You obliviously don’t know history of markets and people shouting in this forum that they KNOW is ridiculous. I find the more people spout the less they know. That just may be a trade-able constant.
    2) If the ecomony improves this is not good for gold. Gold competes with stocks, stocks will take all the money. I do not see this a gold positive. DEAD WRONG.

    bj
    Dec 20, 2013 20:10 AM

    Cory, good point about the Fed unwinding their balance sheet, and that can’t happen until they end tapering which can’t happen as long as deficits rise and the Fed remains the shock absorbing in the market the ever increase issuance of Us treasuries. In short, the Fed is trapped itself in its own game. If they stop buying treasuries, our government implodes. And if they stop buying and try to shrink their balance sheet we might start to see base jumping out of high places on Wall Street..

      Dec 20, 2013 20:42 AM

      Yep, that could be the start of something big!

    Dec 20, 2013 20:51 PM

    I so want to needle Peter about him calling gold to NEVER go below 1200 again (which I disagreed with at the time) but I will bite my tongue and say nothing. Oh wait……..too damn late. I already said it………………by the way, what’s with this 10 billion is just a small symbolic amount nonsense. What does he think the word “Taper” means anyway? A taper is a gradual reduction in size. This is gradual. The terminology should be self evident. Sorry to say but I am not a fan of Peter.

    Dec 20, 2013 20:10 PM

    Not probably without a bear market rally first. Too many bears calling for it 1000 gold is stamped on everyones heads. IMVHO 1000 GOLD WHEN THE WHEELS FALL OFF DEFLATION IN EVERYTHING. Interest rates are moving right now so the treasuries can be sold. Goodbye housing ..car sales…2014 THE YEAR THE LIGHTS WENT OUT AND LATER 1000…OR 700 GOLD. …Americas huge fire sale everything goes

    Dec 20, 2013 20:11 PM

    PS ….DEBT IS THE POISON PILL

    Dec 21, 2013 21:53 AM

    That’s okay birdman I’m sure Peter doesn’t know who you are, doesn’t care who you are and wait, so doesn’t anyone else. Grandich has more knowledge in his thumb then you will ever have in your entire life. In 1989 I became a client of his and saw my account increase ten-fold over the next 12 years. And for all the monies I lost following his gold comments and client companies the last few years, I more than made up by being short the stock market when he said to be in 2007 and going long in 2009 and enjoying the greatest bull run ever by his constant advice of not going short – something most in the hard asset arena have loss their shirts doing so. But like him, I’m not perfect so let us know when you’re being recognized as an investment expert and what programs to listen to you on.

      Dec 21, 2013 21:34 AM

      So you are really telling me you can’t make investment decisions on your own? Let me know when you can cut it by yourself without somebody elses “professional” help and then maybe I will take you more seriously, Larry.

        Dec 21, 2013 21:54 AM

        Hopefully you appreciate Larry that some of us out here run our own show and follow NOBODY elses opinion. At the end of the day we are responsible for our own trades. Some of us do better than others. So no, I don’t give a rats ass if Peter knows me or not. That is not relevant to anything for me. He is certainly welcome to come here and criticize my point of view directly though without his girlfriend (you) standing in for him.

    Dec 21, 2013 21:01 AM

    Who will buy treasuries if the fed doesn’t ?US citizens. Look, the fed knew they would be in trouble with there balance sheet at some point, but first had to fix the us economy. When the stock market shows negative returns over an extended time, you watch how quick people flood the treasury mkt.