San Diego Housing Bubble News and Analysis

Many people, myself included, have suggested we will see some sharp sell-offs as hedge funds are forced to meet margin calls. I still think the trend is upwards.

The gold and silver markets are very subject to manipulation but in this case I think that it was the result of profit-taking. After the bailout of Bear Stearns the big institutional investors that had gotten into gold defensively last year took their profit and put it back into stocks, cash, etc... The thinking is probably that the fed will bail out anything that's big so that limits their investment risk. Just guessing.

Who knows what gold will do? I do know that when we see things in the news, the Maja Playaz know that we're reading them and that we will get scared/confident/etc... and they use this to fleece unsophisticated investors (like yours truly!) You can watch "Wall Street Warriors" to see this in action. One of the guys on that show is a 25-year-old who runs a hedge fund out of his apartment. His whole strategy is this:

* Look for bad news about a company in papers/on the web
* Assume that lots of people will short the stock
* Buy big quantities of the stock to drive up the price
* Squeeze those little shorters until they scream

He makes tons of money doing this and he can get away with it because he has an enormous amount of money to invest. There are probably thousands of guys like him, all of them making millions a year by moving the market in ways that are not expected. Gold and silver are manipulated in the same way, and with the addition of the ETFs for these the manipulation will probably get more extreme.

One thing to remember is that manipulation like this is generally short-term. If you truly believe that the price of something will go up in the long term and you have the stomach to handle the volatility, then the investment might be a good idea. Shorting and trading on margin are of course very dangerous here because time comes into play, but a conventional long position might still work out in your favor.

It's all so confusing. I miss the Beanie Baby market where all I had to do was buy 10 Larry the Lobsters, wait a couple of months and sell them for a big profit :-(

I see that there are billions of dollars of losses for investors in the MBS market. This may run into the trillions soon. Even though Uncle Ben has been printing $300B, this doesn't come close to America feeling a few trillion poorer. Spending will be reined in, and margin calls will continue, leading to sell offs in everything that holds value. This includes oil, gold, and other commodities which has been a "safe haven". But before a deflationary trend, commodities spike up, as people get out of cash and into "hard assets". But when firms and funds need cash because of scared investors wanting their cash back, they will tend to sell their biggest gainers. YTD, this is in commodities.

I expect gold to spike up again as the fed continues to cut, but as they run out of bullets, there will be a mad dash for cash, and I believe many firms and funds will be a bit afraid to borrow even at 1%. They will sell their assets before they "lose even more money".

This guy has a theory. Not sure how valid. But I'm willing to entertain anything these days...

http://elainemeinelsupkis.typepad.com/mo...

We have a weak US dollar made stronger by hyper-holding by not only the Bank of Japan but by all of Europe! Europe is now dropping interest rates to catch up with the US dropping rates. Both Japan and Europe need to flood the US with more 'savings' via 'cheap loans' except the US can't soak up this money caused by our roaring trade deficit. The ONLY cure left for us today is to decrease our trade deficit by ceasing consumer buying. And this is happening, willy-nilly via rising CONSUMER interest rates and fees. The US consumer can't tap into 2% loans. We are increasingly forced into 30% lending traps. And the decline in housing values means we can't increase our mortgages eternally to fund our purchases of foreign imports. And this is the rock bottom problem: US consumers, hammered by lay offs, falling wages, rising health, food and energy costs, are unable to sustain the global trade system which focuses mainly on exports to the US consumer!

The $600 per American scheme hatched by our government is a frantic attempt at restarting the US consumer's consumption of foreign goods. But this can't work unless the commodities market is strangled. And it has been shot in the head. I can't say how, just yet. But I suspect the Wall Street gangs are behind this Tupac Shakur-style drive-by shooting. All I can say today is, something dark and fishy is going on and the gold buyers are going to be forced into insolvency. I warned them a month ago that the people running all our banking systems are aiming to destroy the gold market and the signal was, India and China were beginning to see their gold markets' sales turn from buying to selling off. Too much leveraged money flowed into gold markets as well as oil, etc. Now, the little buyers will be hammered by the Big Guys. Life is unfair. And these people doing this are always unfair. They get to keep all their loot no matter if markets go up or down. After all, they control all the levers of power!

Adjusted for inflation, record highs for gold should be around $2200 per oz. This is still early in the gold run, and you are bound to have a few corrections, which I agree this probably is. I would be surprised if the fed didn't end up cutting to 1% again within the next 18 months. I can only imagine that when the stimulus checks arrive, we may see some inflations show up right away as well, as this is money that doesn't exist.

Yep, I'm thinking that its likely a momentary pause. Will be interesting to see where it goes in the upcoming week.

Gold smold.

Why is the 91 day T-Bill yield at 0.05%, and the 6 month at 0.01%?

Arraya it is really interesting. Chris S also issued similar warnings about gold a few weeks ago but of course was shouted down by many people here. The murder of commodities has indeed been swift and of course all of the people who love to talk about how much they have made off gold and such have been silent over the past week. Seems like they are slipping into the hold and hope mode. Other people I spoke to seemed to echo what you are insinuating which is, there is no chance that the Wall Street would let gold run and the 1000 point seemed to be the trigger for them to take action.

So the question is, do you really think they have enough power to continue to knock it down? Right now it is fascinating to see how much it has lost in just a few days. There is no logical reason for it to behave in such a manner. That is the problem though isn't it? Logic has little to do with much of anything these days.

SD Realtor

HereWeGo is on the right track. Short term T-Bill yields down to record levels as gold retreats... deflation monster?

Well, the TBill rates have recovered as of midnight. Wacky SocGen traders.

SDR-
There's a rumor that the Fed got a little perturbed at the IBs for the commodity runup, and basically said that if they wanted to take part in the TSLF, that new liquidity better not find its way to the commodity market.

Yes, all signs point to deflation, which is bad for gold prices. Although the knife catchers might come in and prop up the prices for a bit longer as they see inflation in the printing presses. They don't see that credit is being destroyed faster than the printing presses can replace. So the money supply is dwindling.

Jeeman