MIDAS TOUCH?

Let's start with a Tweet from CanadianMarketWatch and this morning's Bloomberg filing, titled Gold Tumbles Most Since December 2008:

Gold plunged in New York, heading for the biggest drop in 18 months, on speculation that financial markets may be stabilizing, eroding the appeal of the precious metal a haven. [...] “This is just pure panic selling,” Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago, said in a telephone interview. Before today, gold’s 14-day relative strength had been above 70 since Aug. 8, a signal to technical traders that prices are poised to fall.

And that was before it started dipping again:

Twitter, if you know where to look, resembles something like a ringside aisle near a contender being speechlessly and mercilessly beaten to a pulp. There's far more bloodthirst to be found than a simple LOL. A moderate sampling:

Gold—especially by consumer/retail investing standards—has become bit of a pedestrian play over the last four years due in no small part to the proliferation of secondary and tertiary "markets" (CASH 4 GOLD, for example) and widespread stories of hedge fund managers getting rich off the stuff in big plays (David Einhorn, John Paulson). Because of this, talk about gold generally seems to be split into three parties:

• There's everyone who went in early, got paid, and will use any occasion to tell everyone else they were right.
• There's everyone who wants to get paid, recently bought in, and will use anything as a great reason to tell everyone else to buy.
• And then there's everyone else, who think gold investors are slightly unhinged, if not total idiots.

Of course, that arrogant first group is always an easy conductor of virtrol: the risk of unchecked ego being checked usually rises with its outgrowth.

As for the second group, it's made up of people so painfully lusty for what those who bought gold earlier earned that:

(A) They'll find any excuse to tell others why they're wrong by not taking a position favoring gold, which

(B) Has elicited the Twitter joke-as-hashtag "#BuyGold," wherein anything from a dog winning the Westminster show to the weather changing directions becomes a reason to buy gold.

Given the circumstances, gold's naysayers have plenty of ammunition: anybody with unilateral views hostile to having those views questioned is likely the exact kind of person who should have their views questioned. But gold bugs might be slightly easier to ignore if it hadn't taken on such a retail quality appealing to (or exploiting) willing Johnny-come-latelies, or the kind of press that screams at everyone from the sole vantage point of "you could've bought the Mets with gold money, too."

As such, it might be easy to see why gold falling would correlate with an inordinate amount of schaudenfreude—or goldenfreude—rising. A mathematical example? Even Nouriel Roubini—who used only one Tweet yesterday to extol the virtues of his own consistent (and consistently loud) opinion on Dominique Strauss-Kahn—has used not one, not two,  not three, but at least seven Tweets as of this writing expressing some form of glee at a three-day fall in gold, with no indication of slowing down at the moment. Granted, this is his shtick (see: being correct about something, and then screaming about it until he becomes The Mascot For Being Correct About Something), but in this glee he's far from alone.

Ben Davies of London-based Hinde Capital (which manages the bullion-buying Hinde Gold Fund) would agree: "Usually all the gold bears come out the woodwork crowing – on any correction," he noted over email, citing—of course—Nouriel Roubini. And this, today? "This is a much needed and healthy correction. Physical demand we are experiencing is high and this pull back will only fuel the surge above $2,000 over the Asian buying season."

It was slightly more humbled than an emailed discussion with Mr. Davies for a previous piece:

Gold, as our very own Chris Powell (GATA) never tires of telling me, is the centre of the universe, and truth be told I never tire of him saying it. The symbol for gold – is an eye in a circle – from the Egyptian for the Sun God - Ra. It means all seeing. The steady rise in the price of gold is that of knowledge. Gold is all knowing. Like our own visual cortex is gold predicting an outcome?

Maybe, when gold picks itself up from today's loss, gold bugs may bug anybody within earshot a little less, and truncate their gospel. Maybe then, in turn, the bloodsport of Goldenfreude would tone itself down as well.

Then again, if the comments on a recent Business Insider post—ever a decent temperature-taker of certain investors' sociopathic id—are any indication, the amusingly vicious cycle of gold bugs' buzzzing and being stepped on is going nowhere anytime soon.

fkamer@observer.com | @weareyourfek

Foreclosures are set to spike and predictions abound of plummeting home prices. Those predictions are becoming a reality as the S&P/Case-Shiller home price index slid for the fourth straight month in October, according to numbers released today.

To make matters worse, the Case-Shiller declined further than expected, according to Reuters, down 1 percent for the month as opposed to the expected 0.6. It is down 0.8 percent for the year. Making economic matters worse, the consumer confidence index also fell.

"The double-dip is almost here," David Blitzer, chairman of the Index Committee at Standard & Poor's, told CNN. "There is no good news in October's report. Home prices across the country continue to fall."

In the New York metro area, one of the 20 surveyed by Case-Shiller, prices dropped even further than the national average, down 1.6 percent.

Not surprisingly, "Dr. Doom" Nouriel Roubini continues to beat the drum of a disastrous double-dip--making his decision to buy a $5.5 million East Village apartment earlier this month look all the more foolish.

mchaban [at] observer.com | @mc_nyo

"Life is such a fucking disaster," a prominent New York hedge fund manager said recently. "We all live in some kind of world we create for ourselves. And I think that what happened is that built into that world were very enlarged expectations about what life was going to be. There's been this sensation of excessive expectation that, frankly, became unsustainable."

He had just returned from his ranch in the wilderness of central Idaho. "I just like it because it's massively low human density. It would be a place you could hole up in. But, gosh, I hope that doesn't happen."

Last week, not very far from the hedge fund manager's ranch, the billionaire John Malone gave a little-noticed interview to The Wall Street Journal from Allen & Co.'s annual Sun Valley conference. Asked about the biggest risks to Liberty, his media conglomerate, Mr. Malone said his concern was this country's survival. "We have a retreat that's right on the Quebec border. We own 18 miles on the border, so we can cross. Anytime we want to, we can get away."

His wife is more concerned: She's already moved her personal cash to Australia and Canada. "She wants to have a place to go," said Mr. Malone, No. 400 on this year's Forbes list of the richest people in the world, "if things blow up here."

Before the financial crisis, furious pessimism about the national economy started with a small and mostly scholarly group of doomsayers, like N.Y.U.'s Nouriel Roubini and Yale's Robert Shiller. But that pessimism has now gone mainstream, spreading from wonks in finance to the city's daily conversation as last year's rebound drifts further away. Growth is slow; unemployment is enormous; the world feels sludgy. It won't help if banks post withered profits later this week, as they're expected to.

Part of what makes this second wave of gloom different is the sense that the rot isn't going anywhere. You read through The Times and worry that the country will sink into a third depression-Paul Krugman said a few weeks ago that it already has-unless the U.S. government does something serious. But then you think about where money for another stimulus would come from, and what will happen if trillion-dollar deficits get worse.

"I think that a lot of people are becoming realistic over the outlook, because let's face facts," said David Rosenberg, the chief economist and strategist at the investment firm Gluskin Sheff. "It's going to leave some pretty deep emotional scars, don't you think?"

Still, optimism lives. After this month's Times profile of Robert Prechter, the forecaster who says we've begun the worst market decline in something like 300 years, Mr. Krugman's colleague Ross Douthat used his Independence Day column to complain about worrywarts. If Jimmy Carter was wrong about shortages, grim sacrifice and an energy emergency, he said, the new pessimists are, too.

HUMANS HAVE THIS poignant desire to feel that we're in control," the hedge fund manager said. "I know there will be abrupt change."

"We have Ben Bernanke, who has figured it all out; but you and I know he's just guessing," said Mr. Shiller, the Yale professor. The first edition of his book Irrational Exuberance warned in 2000 about a stock market bubble, and the second edition in 2005 predicted the real estate collapse. "When you see something like the BP oil spill, you know we're just plunging headlong into the future without knowing what we're doing."

"If you've got job security and wealth preservation under lethal pressure, then you're going to take the negativism into a place that it hasn't been before," Stephen Roach, Morgan Stanley's non-executive Asia chairman and the firm's former chief economist, said. "TARP, zero interest rates, trillion-dollar budget deficits, you name it, we've thrown anything we can at the system. And that has been successful to a limited extent at stopping the bleeding, but it has not really allowed the patient to get up off the table and resume a normal life again."

One problem is that there isn't a consensus about what our catastrophes are, or how they can be fixed. Mr. Roach and Mr. Krugman, for example, have feuded this year over China. (One said a baseball bat should be taken to the other.) This week, Lloyd's of London and the monolithic English think tank Chatham House warned about peak oil, the semi-apocalyptic moment when the world's oil production will max out and then decline. Not preparing for the new energy realty, they say, will have "potentially catastrophic consequences."

On Friday, just before that report was published, the blog Zero Hedge, a kind of global hub for catastrophists, posted a "wall of worry." The American government, said the first of 50 factoids about the economy, is projected to issue about the same debt this year as the other governments of the world combined.

"Few appreciated that the shift would be as deeply structural as it was demonstrated to be," the site's editor, who writes pseudonymously as Tyler Durden, said in an email. "With trillions of dollars spent to prevent an all-out economic collapse we have only managed to buy under two years of time and the economy is once again starting to roll over."

The hedge fund manager said he doesn't even trust gold. "It's worthless if the social fabric tears," he said. "We're going to have to do something different, before we get down to where it's really bad."

mabelson@observer.com