Ares
11th May 2010, 05:35 PM
First the fun stuff: gold hit an all time record today. To those who have had the foresight to realize that in the currency devaluation race to the bottom, the only winners will be non-dilutable precious metals (and not industrial gimmickry and bets on China's excess capacity like copper...well, maybe with the reverse alchemy exception of lead), we salute you. In fact, so does the market: the S&P is now down 8% year to date when expressed in ounces of gold. Because while central banks can monetize, sterilize (whatever that means), and dilutize that last remnant of the dying Keynesian religion, the FRN and its equivalents around the world, gold is untouchable, and increases in value with each desparate attempt to save a failed economic system.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/Gold%20S%26P.jpg"/>
Yet the bandwagon is once again getting heavy: the EUR is getting killed after hours, approaching $1.25 and is about to break the E-mini critical 117 yen support once again. Should central bank buyers not materialize, hello gravity. Which would also mean freefall for the ES. The bailout plan is now null and void, and in need of a bailout plan itself. The French banks won: we expect their FX traders to make a killing this year. We hope their contract demands bonus payment in gold.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/EURUSD%205.11.jpg"/>
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/EURJPY%205.11_1.jpg"/>
At least today's market farce where volume was non-existant and allowed the same algos that killed the market to ramp everything up for no reason, will likely not be repeated again tomorrow. We have now entered the next regime.
http://www.zerohedge.com/article/it-getting-ugly-quick-fiat-land-sp-now-down-8-ytd-non-dilutable-terms
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/Gold%20S%26P.jpg"/>
Yet the bandwagon is once again getting heavy: the EUR is getting killed after hours, approaching $1.25 and is about to break the E-mini critical 117 yen support once again. Should central bank buyers not materialize, hello gravity. Which would also mean freefall for the ES. The bailout plan is now null and void, and in need of a bailout plan itself. The French banks won: we expect their FX traders to make a killing this year. We hope their contract demands bonus payment in gold.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/EURUSD%205.11.jpg"/>
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/EURJPY%205.11_1.jpg"/>
At least today's market farce where volume was non-existant and allowed the same algos that killed the market to ramp everything up for no reason, will likely not be repeated again tomorrow. We have now entered the next regime.
http://www.zerohedge.com/article/it-getting-ugly-quick-fiat-land-sp-now-down-8-ytd-non-dilutable-terms