When everyone is thinking the same thing, it never happens, and what everyone is thinking right now is that when August is over, and we get down to business, this market's going to be in for some hurt.
Folks have been saying it all summer, as bulls make mincemeat of bears without mercy. And now traders are starting to place their bets on the wheels coming off soon.
Bloomberg: Options traders are increasing bets that the steepest rally in the Standard & Poor’s 500 Index since the 1930s won’t survive September, historically the worst month for U.S. equities.
Traders are betting the VIX, a gauge of expected stock swings, will increase 13 percent in the next five weeks, according to futures prices compiled by Bloomberg. That’s the biggest spread since August 2008, right before the S&P 500 suffered the steepest two-month plunge in 21 years. The indexes have moved in the opposite direction 81 percent of the time over the past five years, Bloomberg data show.
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I don't care at all about the Ponzi stock market. The stock market and the US econony are not the same thing. The stock market could be soaring while America goes down the tubes.
ReplyDeleteIf the price of gold futures has been manipulated by the US through Goldman Sachs and the like since the early 80's. Why would anyone consider it a safe haven. I just don't get gold bugs. The fact is gold was $850 in 1982 following a financial meltdown not as bad as the current one. Using government inflation numbers it would be the equivalent of $2,400 today. Yet today we sit in a $900-$1,000 range. It makes no sense. Not to mention that every industrialed countries gold reserves has gone down dramatically since 1980, yet in the U.S. it has stayed the same. Highly unlikely. There is so much manipulation in the financial industry from these "too big to fail" corporations (including the FED) that the lack of transparency makes you question all futures trading, indexes and bond trades. This blogger mentions an imminent collapse but as in Japan this can drag out for 20 years if the powers that be wish because it is all smoke and mirrors and not logical at this point. Or they can just pull the plug on this ponzi scheme just as easily. The invisible hand isn't as Adam Smith intended.
ReplyDeleteGold Bugs sincerely beleive that eventually the governments attempts to control the gold price will fail. When this happens gold will go to where it should be.
ReplyDeleteGold bugs look for a number of factors to precipitate this event :
* Comex default
* Black market price dislocation from SPot/Daily
* Rothschild has a brainfart and posts a London price fix with an extra digit by 'accident'
In response to Morpheas:
ReplyDeleteWell, we already know that it costs around $450 per oz to mine gold. We also know that with mass infusion of dollars into the economy will absolutely cause inflation, either now or later ... 20%, 30%, 200% annually, even higher?
Pretend inflation runs at 100% in one year; well, the cost to mine gold could also double. Even if the mines could sell the gold at cost, this turns the $450 per oz into $900 per oz over night. In reality, when the mine's profit and broker fees are included, not to mention increase demand when the dollar collapses, what do you think gold will be worth then?
In addition, gold as a commodity is like no other commodity. Gold is useful in manufacturing and jewelry, but it is also a Currency. Even the Bible states to use no other currency other than gold and silver, since all others WILL fail.
If the dollar collapses, then people would need to go back to the days of barter. The problem is, I want to trade a sack spuds for a sack of rice, but my trade partner has no rice ... now what do I do? Well, this is why currency was invented to begin with; to trade in exchange of goods using a common currency to allow a person to buy every thing else he needs. Gold is such a limited resource, and is so expensive to mine, it's price will always reflect reality even at the low end of value, especially when our fiat currency collapses.
~Rande