For about three years the Gold:BGEIX ratio has gone from about 90 to 210. In the 1927-29 period the Dow industrial climbed from 160 to 380.
210 BGEIX top 2015 380 industrial top 1929
90 BGEIX in 2013 160 industrials1927
2.333333333 Hello Ratios 2.375
Get your crash helmet ready--no need for a tinfoil hat no mo' :).
_And don’t worry about gold in Fed-rate-hike cycles. There have been 11 since 1971, and in the 6 that started with gold near major lows this metal enjoyed stellar average gains of +61.0% over those exact Fed-rate-hike cycle spans! During the last one between June 2004 and June 2006, the Fed hiked no fewer than 17 times to blast its federal-funds rate 425 basis points higher. Gold surged up 49.6% during that!
While gold lost ground in the other 5 Fed-rate-hike cycles since 1971 as futures speculators universally believe will happen today, its average loss was just 13.9%. Even more interesting though, all of these Fed-rate-hike cycles began with gold near major secular highs. That certainly isn’t the case now. Fed rate hikes are very damaging to lofty stocks and bonds, rekindling gold investment demand for portfolio diversification._
A significant change made last year to the Dodd-Frank financial overhaul law produced new risks to investors by allowing banks to keep nearly $10 trillion in certain derivatives trades on their books, according to a study released Tuesday by two Democratic lawmakers.
The results were released by Sen. Elizabeth Warren of Massachusetts, a leading proponent of tough regulations on Wall Street, and Rep. Elijah Cummings of Maryland, the top Democrat on the House Overnight and Government Reform Committee. The two had asked financial regulators earlier this year to assess the impact of the change and the risks it created for taxpayers. The change curtailed a requirement that banks push certain high-risk swaps trading activities out of bank holding companies that enjoy access to the government safety net...
Provisions in the 2010 Dodd-Frank law would have forced banks to shift trillions of dollars of certain types of swaps positions into subsidiaries to shield tax payers from their risks. But the requirements were repealed last December, approved by Congress as an add-on to a must-pass government spending bill, a victory for large Wall Street banks.
The lawmakers unveiled the study as financial services firms step up lobbying efforts to slip in more measures to roll back financial regulation in the budget appropriations process that will play out over the coming weeks.--Wall St Journal
Importantly, it is a casino-of-crime which is denominated in U.S. dollars. How much would this casino be worth, if the exchange value of the U.S. dollar was currently at its correct rate (zero)? It would also be valued at zero. This private casino would instantly become a near-infinite cesspool of Monopoly money.
In fact, most of the financial weapons of this crime syndicate are denominated in U.S. dollars. The continued (upward) manipulation of the U.S. dollar is literally an existential necessity. If (when) the U.S. dollar ceases to exist, the One Bank itself will cease to exist – in its present form.
Like a vampire forced into ethereal form, it would be powerless to harm us. This is why the Big Bank’s currency-manipulation “business” is so important. This is why even the token prosecution of these criminal tentacles for their serial currency manipulation was deemed intolerable. This is why the DOJ lackeys will not be allowed to prosecute this crime syndicate in the future, ever again.
We currently live in a “world of currency manipulation.” Literally.--Written by Jeff Nielson
"But there are some great companies out there that I am buying a bit more of. The valuations are already silly and every time they dip down I buy more. Some of the smartest money — private equity and the super-wealthy — that’s what they are also doing. They are picking the companies that have solid assets and great management, and as the public dumps the shares at ridiculous valuations, they say, ‘Great, give us more shares.’
A very wealthy African family just bought a 10 percent stake in a company, with more to come because the valuations are so absurd. So the super-wealthy are willing to put $20 million – $40 million into some of these high-quality companies (as they patiently anticipate a reemergence of the gold bull). That’s what is happening right now but people are not seeing this on the tape because these massive positions are being accumulated very quietly.” King World News note: Despite the mainstream media’s seemingly endless anti-gold propaganda, I wanted to thank my good friend, Pierre Lassonde, for letting KWN readers around the world know what is really happening behind the scenes in the gold sector. The bottom line is that big money is beginning to aggressively enter the gold market and that is how major bottoms are made.--KWN
So gold is currently in a bull box with its step sum collapsing by twelve in the past three weeks, and its 15 count saw a -11 this week. It’s not exactly clear what’s happening here, but it reeks of desperation by the bears for reasons that are not yet apparent to market watchers outside the system. However like me, my readers will just have to wait to see what comes of all this. I’m optimistic that ultimately we’ll see much higher prices in the months to come, but I’m expecting further declines in the price of gold and silver in the near term..."
Exactly what market predictions can be made using the data above? Quite a few, but none that I care to make as since August 2011 Washington and Wall Street have clamped down on the price of gold. I’m tired of making bullish predictions that are always overwhelmed by the reckless selling of unregulated phantom gold at the COMEX, a government “regulated market.” Let’s be honest; for decades and with the full cooperation of the Federal Government, the big NY banks have cheated the longs in the gold and silver markets and investors in mining shares. This is a huge market scandal that will never be properly reported in the main-stream media.
"Let’s peer a little deeper into gold’s step sum. Since October 15th gold’s step sum has collapsed by twelve steps, as you can see in gold’s step sum charts above and in the table below. A step sum can only go up or down by a single step a day, so we are witnessing a huge collapse in market sentiment in a short period of time, as I’m sure most of my readers can attest to.
Keep in mind that there are usually just as many up days as down in bull markets and bear. Seeing just two up days in the price of gold over a 17 day trading period is a rarely seen market anomaly. But note that since October 15th the price of gold has fallen less than a $100 after all this selling..
Good on you fiend--good article by Lundeen on the Gold-Eagle site about the state of the gold market now, and a bull box starting there. I'll post some of it here, but of course can't link to it as Yahoo killed these boards many years ago. For our friend who bemoans A Century--they got plenty of cash funds and you can transfer unlimited from cash to BGEIX or any other of their funds and can transfer 8 times from BGEIX and any none cash fund to Capital Pres. or a host of other money market funds, anually. As I've pointed out countless times, BGEIX is a LONG GOLD FUND--that is what it is for--read the prospectus.
"Holders of gold mining stocks are unfortunately in for yet more of the same under this scenario. Whilst we are without a position in gold stocks at present, we are looking for opportunities to establish short positions. Despite October being the best month since 2009 for equities, gold stocks barely outperformed the S&P 500, even though gold gained 2.25% over the month. We are concerned that a pullback in stocks, combined will a fall in gold prices in a December hike situation would see gold stocks fall to yet another low, even though the HUI index is already down 25% in 2015."
I don't know what will happen, but to pay $799 per year for advice to get short gold stocks at this point is suicidal.
From The Gartman Letter
Friday, October 30, 2015
As for the precious metals, the selling late Wednesday and all day yesterday was indeed severe, and even our positions in gold/euro and gold/yen have seen severe damage wrought upon them.
We find it hard to believe that the mere suggestion by the Federal Open Market Committee in its post-meeting communique on Friday that "liftoff" on the overnight Fed funds rate may take place at its December meeting can be responsible for this sort of egregious, serious, and now relentless selling, and we are almost of the mindset associated with the likes of the gold bugs and GATA that some malevolent "force" was behind the selling.
However, we are not going to travel down that road at the moment and sit tight with our positions, believing that the continued "experiments" with QE undertaken by the Bank of Japan and the European Central Bank shall work to the detriment of their currencies and to the support of gold. Nonetheless, the last 36 hours have been terribly dismaying. ...
...government “money” and the willingness to print unlimited quantities to buttress global securities markets now underpin securities markets on a global basis (“Moneyness of Risk Assets”). And unprecedented securities market wealth underpins the structurally impaired global economy...
Underpinned by faith that China’s policymakers will backstop system liabilities (i.e. deposits, intra-bank lending, etc.), Chinese banking assets (loans and such) have inflated to double the size of the U.S. banking system. China’s corporate debt market has ballooned to an incredible 160% of GDP (double the U.S.!), again on the view of central government backstops. Then there’s the multi-Trillion (and still growing) “shadow banking” sector, possible only because investors in so-called “wealth management” products and other high-yielding instruments believe the government will safeguard against loss.--Doug Noland
"Sir, if you have a milkshake and I have a milkshake and my straw reaches across the room, I'll end up drinking your milkshake."--Albert Fall, Sec. of Interior in the Harding Administration--explaining future FED policy :)
The FED's "best customers" happen to be the very banks which own the Fed, and their subsidiaries, incl. hedge funds.
No one else is getting "free" money.
The only Cabinet officer to do jail time did so for accepting a million dollar interest free loan*- so what would you call a series of multi-trillion-virtually-interest-free-loans? They should change the national motto to " E pluribus pecunium."
*Albert Fall, Interior Secretary in re the Teapot Dome Scandal
Ben Bernanke, then a Federal Reserve governor, likely spoke for many on the Federal Open Market Committee, when, in a landmark speech to the National Economists Club in Washington in 2002, he raised the possibility of governments raining money from helicopters on the economy.
While "helicopter money," was justifiably mocked, when Bernanke succeeded Greenspan as Fed chairman, he initiated the latest, and most innovative stage in the Krugman Con. To make up for the fact that people increasingly would not lend to governments, at the derisive interest rates they were paying, Bernanke suggested that governments finance their extra spending, by printing the extra money.
He didn't say it that way of course. Like all of the major steps in the Krugman Con, Bernanke's money printing is known by a technical sounding term that the public doesn't understand, in this case: "debt monetization."--By: Peter Diekmeyer
Stymied by populations that were taxed to the limit, governments, like any interest group, searched in vain for ways to continue to fatten their paychecks and raise funds to distribute to their backers. The answer came almost by accident during the early 1980s when the Reagan administration, in a failed bid to reduce the size of government, led a massive series of tax cuts, without cutting spending, in fact it ended up increasing it. Governments the world over quickly figured out that they could sell or maintain almost any spending program to the public - as long as they did not raise taxes, but rather borrowed the money instead.
During the 1990s, the Clinton administration, under the guidance of his Deputy Treasury Secretary (and later Treasury Secretary) Larry Summers, and goaded on by Krugman and other Keynesians, brought a new twist to "borrow and spend" policies, by, for the lack of a better term "fudging the books."
The Clinton administration, which began running into limits as to how much the US government could borrow, began simply not recording its liabilities, particularly with respect to public pensions, and healthcare benefits promised to future generations.
"But if traders come to realize the Fed has painted itself so deep into a corner that any meaningful normalization of rates is impossible without bankrupting the US government, investors are going to flock back to gold. It thrives in low-real-rate environments, the natural consequence of central-bank interest-rate manipulation. And as gold enjoys an investment renaissance, the dirt-cheap gold stocks are going to soar...
The bottom line is the Fed's radically-unprecedented easy-money policies since the stock panic have created a dangerous US government debt bomb. ZIRP and QE artificially forced interest rates down to record lows, enabling epic overspending by the Democratic government under Obama. The resulting debt load has grown so massive that merely normal interest rates will literally bankrupt the US government.
This Democratic-led Fed isn't going to embark on a meaningful rate-hike cycle if it forces its government master into serious jeopardy. The dire realty of this situation likely means lower rates for longer. While the Fed may make isolated token rate hikes here and there, a full normalization isn't going to happen with the US government in mortal peril. The asset most likely to thrive in a lower-rates-forever scenario is gold."
This ratio has been down to .04 from .38 in May 1996 (currently at .0469). That is almost 90% (.34/.38=..895)--no matter what happens we ain't going below 0 and this 20 year bear in gold stocks is equal to the depression era decline.
"By the time the crash was completed in 1932, following an unprecedentedly large economic depression, stocks had lost nearly 90 percent of their value."--EH.net
Who cares about the games the bankstas play?--still buying a little of this each day.
Read the documentation for the fund--its a long miner's fund. There are just so many miners shares available in the world. "Fore."
"The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable."
H. L. Mencken
I think the US dollar standard will end some day as it is based on fear of a nuclear superpower and complacency of a ESPN/food stamp/welfare fed public. No charts will tell you when. Miners produce traditional money as opposed to faith based money. Good luck.
Could there be an active Natgas, Wheat, and Crude oil suppression campaign going on too?
No. There is one last critical part: the aggregated total change column. If you sum the price changes for all events: chg down + chg up, you get to see the net price impact of all the events. So for silver, the total change over the period is $53 up - $71 down = -$18. Compare this with crude oil, which had $43 up - $41 down = +$2.
What does this mean? Even though silver had $53 in support from the 402 up events it received, it was also hit for $71 from the 467 down events it got: net effect -$18. That's significant for something with a current price of $15. In fact, when viewed as a percentage of silver's current price (the % change column), silver was far and away the hardest hit of all 9 contracts I investigated. Gold's price impact was #2, at $379. Crude actually had a positive effect, while Natgas was dead flat. Even though Natgas had a large number of volatility events, the net effect on price was a wash. The same is largely true for wheat, treasury bonds, and the e-mini futures. Some experienced a mild positive effect, others a mild negative effect, but the effects were quite small relative to the current price of the underlying item.
So goldbugs, take a victory lap! Even though the scoffers were right – there are a large number of up events – the down events dominate for PM contracts and especially for silver. You have been singled out for beatings! Of course you already knew that, didn't you? :-) --Fairtex