Armstrong believes that gold is NOT a hedge against inflation but rather a hedge against a loss of confidence in government. There is a difference, and Martin does a good job explaining it. He is reiterating his latest papers in stating that a loss of confidence in the government sector is coming soon if not here already.He gives a complete technical update for gold stating:
“I have provided the technical analysis on Gold based on a monthly chart. The first real resistance is formed by the Primary Channel that shows $1,350 – $1,750 between 2010 and 2012. this represents still a plain old normal technical move with nothing that would reflect a meltdown. It is breaking this overhead resistance where it becomes support that we enter in the “danger zone” of a true meltdown in PUBLIC CONFIDENCE.
Most of the projected resistance from the major low back in 1999, shows various targets from $1,700 to $2,750. However, if gold exceeds this level and it too forms the subsequent support, now we are looking at the $3,500 to $5,000 target zone. This is where we see the potential for Gold is a true economic meltdown of CONFIDENCE.”
You can read more from Martin here: http://economicedge.blogspot.com/2009/08/martin-armstrong-will-gold-reach-5000.html
Here is the problem though, kids. Most mature investors retain their life savings fully invested within the financial industry, denominated in dollars, and will not get off these tracks even when they see the train coming. They will stay there because it is impossible for them to believe they occupy the wrong position! Who can blame them or call them fools? They have been trained their whole life to believe in saving for the future inside of a monetary system that serves no purpose other than as a medium of exchange.
Worse, they perceive that all of their assets are correctly valued by this system that does not care about the value of a digit. How can they possibly be correctly valued in a system that only functions properly as a medium of exchange, not a store of value? How can assets meant to be stores of value be correctly valued when denominated in a unit whose value DOESN’T EVEN MATTER in the context of its primary function? They can’t. They shouldn’t. They aren’t. And soon this FACT will be known by everyone.
More information is here: http://fofoa.blogspot.com/2009/08/no-free-lunch.html
On Wednesday, two jobs related reports continued to show a labor market on the mend. The Christmas, Challenger and Grey report showed corporation layoff counts fell sizably in August, to 76,456 versus July’s 97,373.
The more closely watched ADP employment report also showed improvement on Wednesday. And Tuesday, the ISM manufacturing report also showed employment improvement for 4 months in a row.
More employment reports (including new jobless claims and overall unemployment) are on the way Thursday and Friday. Don’t be surprised if they also point to an improving jobs climate.
Trace Mayer writes some good stuff, but his recent Massive Institutional Gold Market Change
article hypes an midly interesting strategic development in the gold market. There are two statements he makes which are not correct.“gold demand that was previously satisfied with physical bullion through forward contracts between private parties can now be satisfied with unallocated gold accounts”
This is the key on which the whole article hangs. The problem is that a significant majority, if not all, of institutional forwards are already settled via unallocated. Accordingly, this move by CME is not “a massive change” in the market – OTC market transactions are primarily settled via London unallocated accounts, and will continue to be if they move to CME. No change here.
As a result this so-called “scheme” provides no support for his conclusions that it “will allow for gold demand to be shunted into gold substitute products and keep the price of gold in fiat currencies low” or “the reason for this move is that physical gold bullion is getting increasingly scarce”.
“Why the CFTC would allow supposedly gold-backed ETF shares to satisfy the physical commodity component in an exchange of futures for physical transaction” and “like settling either COMEX futures contracts or OTC forwards with GLD ETF shares”
That announcement is about Exchange of Futures for Physical (EFP) transactions, not physical settlement of a COMEX futures contract. I checked COMEX rule 113.02 and there is no mention of ETFs being allowed – only physical is allowed.
The issue with EFPs is explained better by Tom Szabo. His key point is that an EFP is an “exchange” and there is no change in the number of futures at the end of the transaction – therefore EFPs do not settle a COMEX futures contract as Trace claims. I would also refer to the comments of a retired precious metal wholesale dealer who comments on Seeking Alpha.