Thoughts On Gold
All markets went sideways today, except bonds. Bonds increased in value (lower interest rates) as the 10 Year Treasury bond moves into very, very low interest rate territory. I wonder what’s driving these rates down? It can’t be demand for bonds – so it must be government buying.
In the news today…..
Mortgage Applications – jumped last week as the 30 year fixed mortgage rate remained below 5% for the past 3 weeks. There was a 16% jump in first time mortgages and a 18% jump in refinances.
Banks slow to claim losses – this according to the FED. The losses are coming from Commercial Real Estate loans, and the banks, wanting to preserve their capital, are LYING about the real value of these loans. The worst loans (most toxic?) are the loans that are “interest only” loans. The FED believes there will be a meltdown of banks who’s major holdings are commercial real estate loans – just like the one that happened with the home mortgage meltdown.
Office Rents – are down 8.5% (annualized) for the 3rd Q, and 64 M Sq. Ft. of Commercial space has been returned to the owners the same quarter. The give back of rental space is the most given back since 1985. This is the catastrophe that commercial real estate owners face today.
GOLD…..
I thought I would spend some time talking about Gold today. There has been a run up of over $50/ounce in the past 3 days. I watch gold every day, and a lot of technical indicators, and I want to share these with you so you get a feel about what’s driving the gold price straight up. This is the big increase in gold that I’ve been talking about for the past 6 months. It has finally happened. But, what about the future???
Past history – back in the 80’s – when gold went over $800/ounce, and then crashed – is an interesting point to remember. I remember watching gold go up each day – higher and higher and higher. Wondering where it would stop going up. My lesson was that a fast rising market must correct, and a very fast rising market will correct severely. All markets are unique and even the same market is different the second time around. Oh, by the way, if you adjust for inflation that 80’s high for gold is twice as high as today’s price…..
First of all today, the central banks (anti-gold) have shorted gold, and their position is easily seen as open position shorts for gold futures contracts. They added to their position yesterday – trying to push gold down.
But, gold kept going up. Why?? Simple!!! There were more buyers than sellers. The buyers knew ahead of time that the Arab currency story (of yesterday) was coming out, and piled on to get into the market. They overwhelmed the short sellers.
So, what’s going to happen in the future. Wait and watch. One scenario that I would love to see is that gold continues to hold its own, and the central banks must cover their shorts. That would propel gold upward much faster. We will see.
Here are the last numbers for today:
Dow Jones 30 Industrial – 9726 (down 6 points)
10 Year Treasury Bond – 3.18% (down 0.07%)
Euro – $1.4688
Gold – $1044 (up $5)
Oil – $69.85 (down $1.03)
Gasoline – $1.72 (down $0.05)
