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I am somewhat amused by the lack of commentary on the latest advance in gold. Did people sell, waiting for a correction that did not come? I do not know the answer to that, but I can see that financials have been clobbered, led by Bank of America, while gold has soared. These events are not unrelated.
Bank of America Daily
click on any chart for sharper image
Bank of America Weekly
- Who would have believed in 2007 that a 44 cent drop in share price would amount to a 6.3% move?
- How long before Bank of America tests that spike low of $2.51?
- How much is CEO Brian Moynihan worth?
I suggest the answer to question number three is a negative number on the basis that Moynihan and former CEO Ken Lewis drove the company into the ground with excessive risk-taking and stupid-beyond-belief mergers.
The best I can report however, is that Moynihan has voluntarily reduced his bonus to $0, suffering the pain and agony of having to live on salary of a mere $950,000.
This of course brings up question number four. How can CEOs possibly scrape by on such meager sums of money?
Note: Bank of America closed down 55 cents (7.89%).
Gold Goes Parabolic
While pondering the brutal injustice of ridiculously low CEO wages, we now must turn our focus to gold.
Gold Daily Chart
This is no longer an orderly-looking move, but a weekly chart can help maintain perspective.
Gold Weekly Chart
If this is the start of gold-bugs long awaited extreme move, there is no telling where it stops.
Is it? I don't know (and they don't either).
What should be plain to see is that financial stocks, especially banks have been clobbered this year. Banks are under-capitalized, over-leveraged and realistically bankrupt. Mistrust of fiat currencies is high and rising.
Global Banking System Insolvent
For more on banks please see ...
- August 21, 2011: Is Germany's Commerzbank in Need of Another Bailout?
- August 20, 2011: Bank of England Regulator Argues "Banks Need to Take More Risks" to Underpin Economy; Revisionist Roosevelt History
- August 15, 2011: BNP Paribas leveraged 27:1; Société Générale Leveraged 50:1; Sorry State of Affairs of U.S. Banks; Global Financial System is Bankrupt
- August 10, 2011: European Banks Hammered; Societe Generale "Denies All Rumors"; French Bank Option Prices Soar; Credit Default Swaps on France Under Attack
- July 18, 2011: Bank of America Clobbered on $50 Billion Capital Shortfall Related to Mortgage Losses
The entire global financial system is balanced on a mountain of debt, and that debt cannot be paid back. That is the message of gold, not the popularly believed fallacy regarding massive inflation.
Is gold reflecting a chance it once again has a role in international trade? I believe so, and let's hope that happens.
Mike "Mish" Shedlock
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