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Goldenfreude

April 15, 2013
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From Barry Ritholtz at The Big Picture:

Gold is not, and can never be, an investment. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Gold is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias.

I do not want to engage in Goldenfreude — the delight in gold bugs’ collective pain — but I am compelled to point out how basic flaws in their belief system has led them to this place where they are today.

From Phoenix Capital Research at Zero Hedge:

[T]he move in Gold looks to be several large institutions liquidating positions to meet margin calls or redemptions due to the plunge in Japanese bonds…

[W]e see China’s economy slowing, Japan’s bond bubble bursting, Gold crashing, and more.

From John Bougearel at Zero Hedge:

There have been three rounds of liquidations. The first round was the Asian liquidation that ended at 9 am. The second round was the European liquidation that ended at 5 am. They are spaced 8 hours apart. At this rate, the US liquidation phase won’t be complete until the London closing at 1230 pm CST, at least this is what that behavioral model suggests. You are witnessing an historical selling climax folks.

From Ross Norman of Sharps Pixley:

The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production – too much for the market to readily absorb, especially with sentiment weak following gold’s non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data. The assault to the short side was essentially saying “you are long… and wrong”.

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6 Comments leave one →
  1. Stephen permalink
    April 17, 2013 12:05 pm

    When the shit hits the fan, gold will have some value, as it will make a decent projectile to use when shooting rats for food.

    • April 17, 2013 12:33 pm

      When other commodities such as beer and cigs inflate or become unavailable, then I’ll get concerned.

      • Stephen permalink
        April 17, 2013 1:00 pm

        Beer and cigs will always be available. If you can’t live without a dividend check, then you may need to worry…

  2. Collards permalink
    April 18, 2013 8:38 pm

    Gold plated bullets?

    • Stephen permalink
      April 19, 2013 10:34 am

      Solid gold bullets. It’s really the only use for gold in a post apocalyptic society..

      • April 19, 2013 11:16 am

        I look forward to going down in a hail of golden bullets.

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