cgnao

I don't think the current price is as artificial as £35 was in 1971.

You are quite right. It's worse. Far worse. There were no gold derivatives then. Note also the amounts below are estimates from 2001.

http://www.gold-eagle.com/editorials_01/judge052101.html

Markets that have been artificially capped, catapult dramatically when market suppression ends. In the 12 years from 1968 to the peak of the bull market, the price of gold had rallied by 2300%. It has been said that "the greater and the longer the manipulation, the greater the eventual price is going be". Today, with far greater amounts of gold involved in the price suppression scheme (10,000 – 15,000 ton versus 3,000 ton in the gold pool era), over a longer period of time, and with far more at stake, it can only be concluded that the eventual price of gold may well run much higher than the 2300% of the late 60's and 70's. At today's prices, a similar move of just 2300% would price gold at a staggering $6,400 per oz.

What proportion are hedged? That would have them dragging their feet for now (in as much as they can).

 

Production is tailing off slightly, but it is at a very, very high level, relative to the truish GS days and before. It looks that gold stock inflation is currently running at 2% a year now. What would $5,000/oz do to that? And why should South Africe pretty well control the process?

Gold production is tailing off at nearly 5% / year in the last 4-5 years.

It's all to do with mine depletion. Exploration in the 1990s and until 2002 was comatose. It takes anywhere from 7-12 years to bring new mines into production. So there are very few new mines in the pipeline.

Add to it the recent dramatic rises in production costs due to energy and equipment and it's a perfect storm.

In addition to depleting mines and rising costs South Africa has a structural long term energy shortage which will hobble their gold production for decades to come.

The only reason the price has not gone to the stratosphere yet is central bank manipulation through surreptitious dishoarding (swaps/loans) and derivatives (options/futures/ETFs) which are used to divert demand from the real thing. When (not if) the market figures it out it will be a sight to behold.

Note how production is falling since its 2000 peak.

Regardless of what we think on GEI, the rest of the market simply doesn't see gold as currency - yet !

That's what the spinmeisters out there are trying to make you believe. You couldn't be more wrong.

The smoke and mirrors game will only last until they can feed the physical market with as much as required to keep the illusion up.

Commodity futures exchange rules are being changed to inflict maximum damage on longs.

This is just another dirty tactic. As all others, it can only delay the unavoidable hyperinflationary price explosions.

http://www.reuters.com/article/governmentF...535661120080805

Big CFTC data revision raises oil traders' eyebrows

Tue Aug 5, 2008 4:33pm EDT

NEW YORK, Aug 5 (Reuters) - A quiet data revision that has boosted by nearly 25 percent the number of oil futures contracts U.S. regulators think are held by speculators is raising eyebrows in the energy trading community.

The revision means that speculators controlled 48 percent of the open interest in NYMEX crude oil futures and options as of July 15, compared with just over 38 percent under the previous classification.

"That's huge when you look at the numbers," said Phil Flynn of Alaron Trading in Chicago.

"It changes the whole way you look at the recent moves in this market."

The U.S. Commodities Futures Trading Commission announced on July 18 that it was reclassifying some trading positions that it had reported as commercial hedging positions as noncommercial speculative positions.

....

The reclassification comes amid the collapse of energy trader SemGroup LP, which filed for bankruptcy on July 22 after suffering $3.2 billion in losses on oil futures and derivatives.

SemGroup has blamed its collapse on unauthorized speculative oil trading by its co-founder and former chief executive, according to a court filing by a SemGroup lender.

The SemGroup collapse coincided with a sharp fall in oil futures from their peak above $147 a barrel in mid-July. However, a person familiar with SemGroup's trading position said Monday the trader's position was not concentrated in any one month and was more focused on intermonth spread positions.

"This was no Amaranth or Motherrock," said the person familiar with SemGroup's futures trading book, referring to two energy hedge funds whose multibillion dollar failures roiled futures markets.

SemGroup began the process of transferring its NYMEX trading book to Barclays Plc on July 11 after drawing down a $54 million line of credit to place a deposit with the British bank, according to bankruptcy court testimony.

SemGroup completed the transfer of its trading book to Barclays on July 16.

The transfer of SemGroup's NYMEX trading position was instigated by the exchange itself, according to a source familiar with the NYMEX's activities.

This is what im wondering. A lot of people are trumpetting a seasonal rally in gold in September this year but its not always the case as seen in 2006. With the elections their is arguebly a bigger case in 2008 for a huge takedown.

 

And as Justin Thyme pointed out gold does appear to be tracking oil on the way down so where would the PTB want the price of oil to be in the run up to the election ?

 

Its just food for thought really but when adding to the stack I can be penny pinching

Gold is money and the only insurance against the unthinkable, which has sadly become quite possible lately.

The mountain of derivatives can implode any moment, bringing down with it the international monetary system.

The collapse will be so swift that you simply will not have the opportunity or time to react.

Are you willing to run the risk?

I started buying gold at the very bottom in 2001-2002 but I went all in during an afternoon raid (similar to yesterday) in the afternoon on 20 April 2006 at £344.5. On 12 May 2006 gold peaked at approx £382, when a takedown started. It bottomed on 14 June 2006 at approx £307. In September-October 2006 another huge takedown attempt bottomed at £305.

Had I waited for just eight weeks, I could have saved £30-40 per ounce on a very large amount. It wasn't pleasant, but not for a single moment did I contemplate selling. As I had no margin, nobody could force me to do so.

Today gold trades more than £100 higher.

Invest accordingly.

http://www.housepricecrash.co.uk/forum/ind...showtopic=28360

I am pleased to announce that at 15:32:37 GMT on 20 April 2006, I surrendered the last of my paper capital for gold, at a spot price of £344.5

 

My policy from now on is that any amount in my possession exceeding £1,000 or equivalent in any paper currency shall be converted into gold bullion as soon as practically possible and in any case within at most one business day, regardless of market conditions.

 

This will apply until either the market price of one ounce of gold can buy the DOW Jones, or nominal long term interest rates exceed the money supply growth by at least 3%.

P.P.S My hat certainlly comes off to all those that can trade this gold market as it has been brutal. Either get wiped out by your stops or just sit there watching the red screen. And as far as shorting goes that seems the same, $10 up this morning already

Trading the gold market is the best way to the poorhouse. Don't be a sucker.

Buy the real thing, own it clear and free of margin. Then sit on the river side and wait for the bodies to pass.

There is no other way.

Gold was bombed specifically to allow the FED to hold rates. It has bought some more time but many tonnes of precious physical gold left central bank vaults for good.

The losers are those on margin forced out of their longs and ruined by margin calls.

Don't be a sucker, hold the real thing, fully paid for, no margin, no ETFs.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Aug. 6 (Bloomberg) -- Federal Reserve policy makers indicated that interest rates won't budge until next year as they wait for the credit crisis to abate and inflation to ease.

The central bank, which left its benchmark rate at 2 percent yesterday, said ``downside risks to growth remain,'' dropping a reference in June's statement to ``diminished'' dangers. The Fed also said price increases are of ``significant concern.''

The tweaks to the Federal Open Market Committee's statement signal that Chairman Ben S. Bernanke and his team want to avoid an early rate increase that further weakens employment and fuels instability in financial markets, economists said.

``They don't want to rock boats,'' said former Fed governor Lyle Gramley, now senior economic adviser at Stanford Group Co. in Washington. ``They want to remind people that their concern for inflation is genuine, but they have no intention of doing anything about it right away.''

Suits my mood

http://www.youtube.com/watch?v=dy3zVU5XFLo

Don't worry. If you hold the real thing with no margin attached, I mean.

The ferocity of the takedown is an indication of central bank desperation.

They know they must raise rates but they can't do that without instantaneously imploding the system.

By immutable economic law, bad debt monetization is inflationary; the effects can be masked in the short term but in the end monetary inflation ALWAYS results in rising prices.

Repeat with me.

Gold is not a commodity.

Gold is not a commodity.

Gold is not a commodity.

Gold is not a commodity.

Gold is money.

http://www.chicagotribune.com/business/you...,5885930.column

Even the pros may be stuffing the mattresses

July 29, 2008

If you saw dark clouds drifting from St. Charles last week, they were probably coming from the dreary mood at the CFA Institute's annual investment seminar for professional investment managers.

....

Grantham said rather than buying stocks for the long run now, he would only "short" them, or bet that they will decline in price. He sees "nothing interesting in quality corporate bonds," and he has been shorting oil. "Commodities had a good run, but that's over," he said.

Although downtrodden mortgage-related bonds might be a good deal now because some are selling for 59 cents on the dollar, he said he wonders if the price will seem compelling if home prices fall another 20 percent or 25 percent.

He confessed to the group that "I bought my first gold last week, and I hate gold. It doesn't pay a dividend. I would only do it if I was desperate."

However its still finding it harder to recover than silver (bottomed at about 16.85, back to 17.40)

Silver always leads big rallies.

Commodity bull market 101

They push the commodity price down by shorting it with paper contracts on future exchanges. Artificially low prices spur demand, then the shorts can't deliver enough of the real stuff. Stockpiles drop, prices shoot back up, the shorts get squeezed and by covering they push prices up even more than before.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Oil Rises as Report Shows Unexpected Gasoline-Supply Decline

By Mark Shenk

July 30 (Bloomberg) -- Crude oil rose more than $1 a barrel after the U.S. Energy Department reported the first decline in gasoline inventories in five weeks.

Supplies fell 3.53 million barrels to 213.6 million barrels last week, the department said today. Stockpiles were forecast to rise 350,000 barrels, according to a Bloomberg News survey.

They want to push gold back below $900 but they can't.

1. Watching gold prices, in your opinion, how low would have gold to

go for gold buyers/holders to panick & start selling ?

 

870? 850? 820? 800? 790? 770? 760? 666?

 

2. where can one find quantity of gold held by IMF, World Bank?

who influence their decision to sell their gold?

They panicked in September 2006 when it dropped below 600.

The rest is history.

Then

Today

Thu Jul 24 17:12:25 UTC 2008

Most probably we just saw the bottom.

This is interesting:

 

US Government to Intervene to Prevent US Dollar Collapse

http://www.marketoracle.co.uk/Article5500.html

The thing that hath been, it is that which shall be; and that which is done is that which shall be done; and there is no new thing under the sun.

http://www.gold-eagle.com/editorials_01/judge052101.html.

Lessons from the London Gold Pool

The ill-fated London Gold Pool affords us many clear lessons today.

1. Manipulation of markets by governments, aided by central bankers and powerful financial institutions does exist, especially when nations' currencies, and particularly the world's reserve currency, are at risk. As stated at the outset, throughout all of history, governments have eventually become deeply involved in the free market process, for their own ends. It is not unreasonable to expect that, if governments became heavily involved in suppressing the price of gold in the 1960's, there is no reason why they would not today.

2. History has conclusively shown that manipulation of the free market process ultimately fails; no amount of government control, regulation or price manipulation can change the workings of the free market over the long term, the London Gold Pool being no exception. No amount of gold, air-shipped to market by the gold pool could satisfy demand when investors decided, on mass, to storm the market.

3. Those behind orchestrating market intervention suffer great loss when their efforts eventually end. By the time the gold pool was officially disbanded in early 1968, it had cost the member countries many billions of dollars (a lot of dollars in those days). The Bank of England never again regained its former position and prestige within the world gold market after the collapse of the London Gold Pool. As one London bullion dealer put it "the Bank of England are no longer the masters, they are just a post office or warehouse where gold is stored before it comes to the market".

4. Markets that have been artificially capped, catapult dramatically when market suppression ends. In the 12 years from 1968 to the peak of the bull market, the price of gold had rallied by 2300%. It has been said that "the greater and the longer the manipulation, the greater the eventual price is going be". Today, with far greater amounts of gold involved in the price suppression scheme (10,000 – 15,000 ton versus 3,000 ton in the gold pool era), over a longer period of time, and with far more at stake, it can only be concluded that the eventual price of gold may well run much higher than the 2300% of the late 60's and 70's. At today's prices, a similar move of just 2300% would price gold at a staggering $6,400 per oz.

http://www.futurecasts.com/Depression_desc...nning-%2730.htm

DESCENT INTO THE DEPTHS (1930)

Rebound from the Great Depression Crash of '29

There had been much talk about eliminating short selling. The NYSE now requested lists of all holders of borrowed stock (short sellers). The rush to cover to stay off the list and to realize profits assisted in ending the decline.

The discount rate was reduced again, to 4 1/2%. Congress rushed a tax cut. Rockefeller ordered 1 million shares of Standard Oil at 50. An order for 50,000 shares of U.S. Steel at 150 "pegged" that speculative leader. Its drop from 261 3/4 to 165 had been the bellwether of the crash. The gyrations quieted. The stock market rallied in quiet trading for the rest of November.

....

The November rally continued into December, recouped 1/3 of the stock market loss, only to be hit by renewed unloading of distress stocks by banks and brokers and a large volume of short selling which drove prices down yet again.

Free Market.

http://www.reuters.com/article/fundsFundsN...0080716?sp=true

Securities covered by SEC short sale order

Tue Jul 15, 2008 10:05pm EDT

(Reuters) - The U.S. Securities and Exchange Commission issued an emergency order on Tuesday placing restrictions on the short selling of shares of certain major financial firms.

The SEC's order will require that anyone effecting a short sale in these securities arrange beforehand to borrow the securities and deliver them at settlement.

The order takes effect Monday, July 21, and will terminate at the end of July 29. The SEC said the order may be extended, but for no more than 30 calendar days in total duration.

The agency identified the following securities affected by its order:

* BNP Paribas Securities Corp

* Bank of America Corp

* Barclays PLC

* Citigroup Inc

* Credit Suisse Group

* Daiwa Securities Group Inc

* Deutsche Bank Group AG

* Allianz SE

* Goldman Sachs Group Inc

* Royal Bank ADS

* HSBC Holdings Plc ADS

* JPMorgan Chase & Co

* Lehman Brothers Holdings Inc

* Merrill Lynch & Co Inc

* Mizuho Financial Group Inc

* Morgan Stanley

* UBS AG

* Freddie Mac

* Fannie Mae

And now they are calling for transparency for all the short sellers.

Not all of them. Only those shorting financials. Naked short selling of mining shares is not only allowed, it is encouraged.

Today is part of the Greatest Show on Earth with a sideshow of Believe it or Not. The answer is NOT.

Remember:

http://www.businessweek.com/bwdaily/dnflas...060523_2210.htm

Intelligence Czar Can Waive SEC Rules

MAY 23, 2006

Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirements

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.

I don't think it's COMEX opening. CGNAO said something about it being after the London pm fix which is at 3pm, looks like 3.30 on the nose to me for the last couple of weeks. And yes, I am gonna try (cautiously) playing it tomorrow.

London PM Fix

USD 977.50

GBP 488.799

EUR 615.515

Witness the "free market".

They are so desperate they are no longer bothering to cover their tracks.

Why after the fix, ceej?

Because the fix is the price at which large quantities of physical gold are traded in London.

After the fix it's mostly a paper game on the COMEX.

As an example:

http://support.goldmoney.com/article.php?id=098

Are there any limits to how much metal I can purchase, sell or exchange?

No, there is no minimum or maximum amount for metal purchases, sales or exchanges.

There is, however, a limit as to how much metal you can buy or sell at a 'locked rate', which is the prevailing rate of exchange between a currency and the metal you are purchasing at the time you place your order. Presently those limits are 2,000 goldgrams and 1,500 silver ounces per business day, for metal purchases and sales. For metal exchanges (e.g., converting goldgrams directly into silver ounces) the limit is 1,000 goldgrams and 1,000 silver ounces per business day.

Larger orders above these limits can of course be placed, but we cannot confirm the purchase or selling rate when you place your order. Instead, the exchange rate is based upon the first London 'Fixing Price' after the order is placed.

London PM fix

USD 986.00

GBP 490.718

EUR 616.250

The hit came right after the fix.

Very obvious on the minute charts, smacks of Exchange Stabilization Fund desperation.

They hit oil & gold and propped up WaMu, Lehman and the USD, all at once.

We are obviously seeing inflation taking hold across the globe in varying degrees, if it remains unchecked (which is almost guaranteed in the UK and USA in the short term) I presume it will manifest itself in a parabolic curve which by it's very nature would have an inflection point where it rockets upwards vertically. Is that correct?

100%, guaranteed.