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lardoon

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Posts posted by lardoon

  1. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    A must read. Very information article, with very good charts:

     

     

    Trader Dan Comments On Antal Fekete’s Recent Article

    Posted: Dec 05 2008 By: Dan Norcini

    http://jsmineset.com/index.php/2008/12/05/...recent-article/

     

    On backwardation.

     

     

    Re this one posted above:

     

    RED ALERT: GOLD BACKWARDATION!!!

    by Antal E. Fekete,

    Gold Standard University Live

    December 5, 2008

    http://financialsense.com/editorials/fekete/2008/1205.html

     

     

    So now we have 3 definitions for gold backwardation:

     

    cg: LBMA GOFO rate is negative (as happened in late November) http://www.lbma.org.uk/?area=stats&page=gofo/2008gofo

    Antal Fekete: spot price > front month futures price

    Trader Dan (and most common definition as I understand it): front month futures price > farther month futures price

     

     

    I guess these all point towards the same things but that just makes thing a bit complicated to understand when gold actually IS in backwardation... :P

  3. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    gold-1129-candlestick.png

     

     

    The problem is that I really dont understand how you draw your channels...

    Its always a bit of guess work but the main descending channel you drew is violated both on the upper and lower bands and dont really seem to fit

     

    makes me a bit skeptical of basing one's analysis on this...

  4. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    You cannot compare wheat and Gold futures. Gold is a commodity/currency, as such is a political tool used by the state to control the perceived value of their script. Therefore, as in the late 60s, the paper contract price is manipulated for political purposes. This is fine until confidence in government script is questioned. At that point the priceof physical gold will start to exceed the price of paper gold and (as history tells us) the owners of the paper may default leaving you lolly-less.

     

    The state knows this, that is why physical gold is held in Central banks and not wheat or any other commodity.

     

     

    I agree with you - I was just trying to "cheekily" point out that there might be other factors to the retail shortage. ;)

    But I am only playing devil's advocate here as I am bullish on gold - just wary of the downside

  5. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    Why can you buy 1,000,000 and above in Gold (EFT:GLD) but you can't buy 10Ks worth of coins without hunting them down and paying a premium over spot.

     

    A similar situation happened in the late 60s which lead to Nixon closing the gold window in '71. Just like then, we have "unlimited" amounts of gold as long you don't want it in your possession.

     

     

    Why can you buy 1,000,000 and above tons of wheat on the futures market (and take delivery) but you cant buy 10ks worth of flour packets without hunting them down?

    I dont necessarily see the issue as being too different..

     

    Have you tried taking delivery of 1,000,000 on the LME or COMEX?

     

    James Turk has (I am assuming he deals with these numbers in GM) and he did not have to hunt them down...

  7. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    You didnt answer my question. If they have to pay spot price for the stock. And the next week the spot price drops $100. How can they make a profit. They make a loss. I am not interested in theories but hard facts.

     

    They can hedge their stock via the futures market.

    This is the PRIMARY purpose of any Futures market (which was invented by the Chinese or Japanese for Rice I believe - and I speculate there was not much market manipulation by PPT teams there :P ).

     

    Lets say I am a dealer, today I buy all my stock of 100,000oz in the Cash market at $12. At the same time I would sell the same amount in the Futures market (which should more or less track the spot price) so Short 100,000oz at ~$12

    Tomorrow the spot price is $11: my stock has lost $100,000 but my futures contract has gained $100,000 - I havent lost anything.

    I sell 10,000oz at a 5% premium and this is my profit - no profit or loss on the silver itself as it is hedged. As my stock is now 90,000oz I can reduce my short Futures position by 10,000oz

    and so on until the stock is finished...

     

    I recommend this article from Antal ekete which contains a part on the silver basis which also covers agricultural futures explained as a hedge:

    http://www.gold-eagle.com/gold_digest_04/fekete050404.html

  8. SILVER

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    do you know Jason Homel?

    well, he has some plans to bankrupt Comex, maybe you could follow his ideas , buy at spot price and save this 25%, I didn't read the article, but i think it will help you:

    http://silverstockreport.com/2008/premiums.html

     

    I dont know why but I get bad vibes from Jason Hommel. It makes me think of a lunatic!

     

    I think his plan his rubbish and his analysis stupid... ;)

     

    I believe it is just the plain old law of supply and demand applied to 100oz silver bars.

    Most retail investors do not have the funds and account to take delivery of a futures contract at COMEX or LBMA (which Hommel does not mention at all although I believe this is a very large trading place for Silver). Therefore they are mostly stuck with buying 100oz bars (or under).

    Because of the Credit crunch and resulting financial crisis, people (ie retail "investors") are panicking and taking their money out of banks and some are putting them into PM, including silver. Because this is done on a large scale, this creates a huge demand for this form of silver to which the supply side, being inelastic, can not reply, creating a shortage of 100oz bars. As for any supply/demand imbalance, price goes up. This translates in a much higher premium to spot because the spot market has a MUCH larger volume which makes it able to absorb increased demand in an easier way and its participants trade all year round (ie no tidal wave of new participants like I anticipate there is in the retail market). This means that the real Silver market (Spot) does not suffer from the same imbalance.

     

     

    Actually I think his plan is not so rubbish. He has just spotted a supply/demand imbalance and will set up a venture to address and profit from it. However how long is this extremely increased demand going to last? One can assume long enough with the USD crisis. But by "flooding" the market the imbalance will be reduced and the premium (and hence potential profit) would be reduced.

     

    Assuming there are large naked short positions in the futures market (and that is definitely not sure - see post http://www.greenenergyinvestors.com/index....st&p=64492) and that the retail demand represents a large enough proportion of the physical silver market this could create a short squeeze driving the price up. But then again there are limits on amounts of physical delivery you can take from COMEX (implemented post Hunter Bros cornering attempt)

     

     

  9. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    sure, as one of the reply's points out - "Seems like they would have a lot more than 28 long contracts if they thought gold was about to explode, though."

     

    Thanks

     

     

    Here is David Morgan's take on Futures position reports:

     

    How surprised are you that the COT report covering the

    vicious 8/15 sell-off shows that small traders went more

    net long than the big four? Would you interpret that to

    mean the big four are truly trapped or that there’s still

    more significant downside to come?

     

    Comment: Somewhat surprised, but I do not make as big

    a commotion about this as some others, because we DO

    NOT KNOW the real positions of these entities in the Over

    the Counter Derivatives (OTC) market. No one makes

    much noise about this simple fact. The OTC market dwarfs

    the transparent market—COMEX—and we could have a

    situation where the big four as you call them might be

    long without having to disclose that fact to anyone.

    Remember the LBMA market (London Bullion) trades tons

    of “paper” silver, so the simple truth is we really have a

    hard time forecasting who owns what, when, and where.

     

    I also recommend a read of Fekete's articles where he dismisses Ted Butler's claims of naked shorting by the "big 4". Not sure if true but that makes for a balanced view...

     

     

    Economist and monetary historian Antal E. Fekete contends that there is not a big concentrated naked short position in silver, as silver market analyst Ted Butler long has concluded from commodities exchange data.

    No, Fekete believes that the silver behind the enormous short positions is out there, somewhere, just not in commodities exchange warehouses, and that the major listed short sellers are actually agents of all sorts of silver holders who are profitably putting their metal to work in the trading pits.

     

    At least Fekete seems to agree with Butler that the silver market might benefit from greater transparency, since, apparently, Fekete’s innocent scenario and Butler’s sinister one would look the same on the books of the exchanges.

     

    http://oikonomikablog.wordpress.com/2008/0...naked-bogeyman/

    http://www.kitco.com/ind/fekete/sep252007.html

    http://www.financialsense.com/editorials/f.../2004/0503.html

  12. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    Did they work out if it was 700 Bn a month or total in the end?

     

    As contradictory as it may seem I think this bill will be beneficial to the dollar in the short-term as it makes the US financial system "appear" safer (ie more backing from the govt) on top of the deflationary bust which will make the senior world currency (dollar) appreciate. Not sure what the impact this will have on gold...

    I think this bill wil remove some short-term fear from the market

  15. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    Something is surely brewing here.

     

    au_go_0030_lsb.gif

     

     

     

    Does anybody think the 2 are related/correlated? ie is the high TED spread not translating itself "mechanically" in a higher gold lease rate - and in that instance high gold lease rates would not imply short covers activity? It just means lending anything (or any sort of money, USD or Gold) becomes more expensive).

  16. SILVER

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    well it went to 10.80! sorry! i guess i missed it because i was thinking in terms of covering my shorts, but as for buying i think you better wait what happens tomorrow. right now there is no indication on the charts on it, like it could go below 10 from here, or like it could go above 12 , no clue yet ....

     

    Yep it could go a lot lower... Remember that day of August 14 when silver went from 15 to 12 with 1 dollar drop during the day and 2 dollars during the night?

    I get the same bad feeling here... I shall be watching the open of Globex with interest...

  19. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    if there is now record physical buying, what was it that pushed the price to over $1000 earlier this year?

    paper trading?

     

    I was wondering similar question...

     

    I know that the PPT has probably managed to deflate a lot of the speculative pressure in commodities from the hedge funds and that has affected PoG.

     

    However, with the real fear (cpty risk) that is currently priced in the market (cf. Libor-OIS spread) I find it bizarre that we are still $150 (and even more in real terms ;)) below the high from March.

     

    On the other hand, there could well be a very strong interest and effort from the PPT to avoid price run and a rush to gold (and a run from the banks accentuating the problem...)

  21. SILVER

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    But is it not the small investors or the public that drive a bull market into a mania? We saw this with dotcoms and houses. This is just the beginning.

     

    This is 2003 of the housing market?

     

    Other clues: The junior miners - all pretty much in the dumps

     

    How many gold books are there in Waterstones? I count 1, Vs the numerous ones on property and even stocks

     

    I cant buy Britannias in Argos or H Samuel

     

     

    You make valid points and that is confusing me even more!! :(

    especially the volume of transactions reported by ATS - $200,000 starts to be serious money.. (well only when converted to metal obviously ;) )

     

  22. SILVER

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    It is interesting that you point this out lardoon.

     

    I have thought about this but most of my thoughts are disjointed and point to no outcome. The fact remains that small silver coinage / bullion is still hard to get and/or selling way over spot. Will the price of small coinage / bullion come down when refiners can handle this demand? Is there a lack of buyers of the 1000oz bars because most of the small coin / bullion buyers are priced out? Will we see an 'up the chain' demand reach the 1000oz bars , such that they will be the next silver item (the last!) to disappear from Kitco's inventory. I'm going to stick my neck out here and go for the latter (to the howls of derision from the ag bashers!).

     

    We shall see in the coming months, but note the 1000oz bars are the only silver bullion products kitco sells now and they are the largest, coincidence?

     

    Well, one of my possible theories for this is that the 1000oz bars is what the insiders (ie industrial users, professional investors etc.) use as this is the COMEX and LBMA delivery format.

    So insiders are selling (falling price) while small investors are buying (shortage of coins and increased premiums). And from a contrarian point of view that surely would not be the best time to buy...

     

    ...but that is discounting any potential PPT bashing of the Paper silver price... ;)

  25. GOLD

    in Gold, FX, Stocks / Diaries & Blogs

    Posted

    Why? You possess physical gold through BV. The disconnect of retail and wholesale market only means that the wholesale market will catch u.p at some stage because the short get blown out of the water when the manufacturers need to go shopping to satisfy retail demand.

     

    No need to worry.

     

    That is really something that has me intrigued. I remember Mish Shedlock saying that it could be a contrarian Sell indicator (ie sell when the small investors are buying in) on CWR interview not so long ago.. Now I know that sounds crazy in the current times but who knows...

     

    Does anybody know if this sort disconnect between physical coins and physical bars (ie it does not only apply to COMEX bars, even on bairds the premium was roughly 3% only for a 1 kilo bar) has existed before (in this bull market or more specifically in the 1970s) and if this was a good price indicator?

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