CharlieSays

Not sure if this has been posted already.

Article detailing the Gold Leasing rates and how they apply to LIBOR, and the gold carry trade

http://seekingalpha.com/article/100677-mis...cle_lb_articles

Many have mistakenly suggested that these high lease rates are the first signs of a coming short squeeze in gold. The flaw in this line of thinking is that the lease rates reported in the press are a derived rate and actually represent the amount that can be earned from the gold carry trade.

In “normal” times gold would likely remain under pressure until GOFO breaks below 1% or breaks below the Fed Feds rate which currently stands at 1.5% The Fed funds rate and the OIS swap rate are both important to watch since they represent alternative financing sources. If the GOFO rate drops below either of these rates, banks have incentive to borrow gold and sell in the spot market in exchange for dollars. While this action will initially put pressure on gold it also increases demand for leased gold. This increase in demand for leased gold should result in a higher GOFO rate. As the GOFO rate increases the carry trade becomes less profitable and money can be borrowed more inexpensively elsewhere.

 

However, these are not “normal” times. The most likely explanation for the low GOFO rate is central bank’s desire to stimulate lending. While typically the profitability of the gold carry trade would be enough to cause the two rates to converge, the lack of confidence in the inter-bank lending market has most likely resulted in such a wide spread. As banks begin to lend to each other, they will look for sources of funding. The wide spread on the gold carry trade will be very enticing and should result in bullion bank shorts in gold. It is this action that has the potential to cause a short squeeze. Coupled with increasing investment demand, the move up could be significant.

We can all throw together charts and draw lines and suddenyl see clear trends on them

Its not following fundamentals either...

I always find ker's analysis a useful insight, personally im not day trading and until pay day not topping up.

might get me some oil come month end but thats for a different thread. Then again tinned chicken might be an option.

Husband eats 50-year-old chicken.

http://news.bbc.co.uk/1/hi/england/manchester/4693520.stm

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

Dont think this has been posted yet.

(and other smily faces)

John Authers on FT Short view talking about gold.

http://www.ft.com/cms/bfba2c48-5588-11dc-b...00779fd2ac.html

Then in his article http://www.ft.com/cms/s/0/2182ab42-85af-11...00779fd18c.html

The Short View: Money market funds

By John Authers, Investment Editor

Published: September 18 2008 19:52 | Last updated: September 18 2008 19:52

There are no one-way bets in markets – but occasionally the government can create some.

Thursday’s huge co-ordinated intervention by central banks only lifted global stocks for a few hours.

And rushing for safety itself involved big market-timing risks. Take gold. It provided a profit amid the panic of the past two days, but the timing had to be perfect: gold rose $112 in barely 12 hours, and during the following four hours it fell $38. It is not a one-way bet.

Another clear-cut bet was on money-market funds, which offer a slightly better version of a deposit account, for slightly higher risk, by investing in low-risk bonds. The news that holdings of Lehman Brothers had forced one fund into a loss, from $1 to 97 cents, triggered an exodus from the funds.

This is not rational. Money market funds are still, even after Lehman, much safer than most alternatives. Their downside is limited.

But one bet seems certain. Following Lehman and AIG, we know that creditors may be saved but shareholders will not. So the government, perversely, has turned short-selling the shares of an investment bank into a one-way bet.

Hence rules to force short-sellers to locate stock to borrow before they make a sale, which will drastically reduce the overall level of short-selling, are irrelevant. If a bet against the equity of Morgan Stanley (down 22 per cent in hours on Thursday) is safe, short-sellers will do the necessary paperwork.

Add the money fund panic to the clampdown on shorting, and you get Thursday’s sell-off in custodian banks led by State Street. They long ago ceased to take any great credit risk and instead make fees for administering funds.

But State Street’s nice earners include running money market funds and securities lending (to short-sellers). And so on Thursday, incredibly, at one point its shares fell as much as 55 per cent.

Hello again gold at $900,

Im sorry i ever doubted.

- Nigel is one of the few people that has been privaledged enough to actually see the silver that DOES EXIST and which backs their unleveraged silver ETF.

 

- That silver belongs to the investors, and so even if the banks that stores it should go bust, then its value will be returned to the investors

Thanks for that, explains a lot, i was always thinking that it the physical play might be a very small fraction of the real thing, and then filled up with air or something.

BTW just noticed one of Dr's markers being sailed through. Bye Bye 850, lets hope it holds now, once the presidents club or whatever they are called come back from turning on the printing press they will get back to their daily smackdown.

From total despair yesterday to today.

http://timesofindia.indiatimes.com/Busines...how/3418861.cms

MUMBAI: Gold is enjoying a modern-day renaissance in the country. From retail sales of 300-400 kgs of gold bar per day at the start of 2008, demand has surged to 3,000 to 4,000 kgs per day.

The demand for the metal has skyrocketed to such an extent that imports for the month of August alone are set to cross 100 tonne. Last August, the country imported 69 tonne of gold.

The country imported 750 tonne of the yellow metal in 2006. This dropped to 449 tonne in 2007, as a consequence of the rise in price. Traders who spoke to TOI said India imported 122 tonne between January to July 2008. The corresponding period of 2007 saw 269 tonne of the metal coming into the country.

From MISH'S Global Economic Trend Analysis

Jon Nadler, Senior Analyst Kitco, Chimes In On The Precious Metals Conspiracy

http://globaleconomicanalysis.blogspot.com...tco-chimes.html

Long but interesting article describing how a hedge fund unwinding in commodities have caused the recent drop in PM prices we have been seeing.

What you have here is the footprints of the hedge funds exiting the commodities' markets in a mass stampede. Nothing more than that.

I am a big fan of Occam's Razor which states "All other things being equal, the simplest solution is the best." In other words, when multiple competing theories are equal in other respects, the principle recommends selecting the theory that introduces the fewest assumptions and postulates the fewest entities.

 

Competing Theories

 

Theory 1: The US government, foreign governments, central banks, various broker-dealers, and a consortium of 10 large US banks are all acting together in some massive conspiracy to suppress the price of precious metals, for 15 years running, and during that period not a single person has stepped up to expose the fraud even though CIA and other intelligence leaks have been running rampant.

 

Theory 2: There was massive selling by over-leveraged hedge funds in response to fundamental changes in regards to the US dollar vs. the Euro.

Following up on the part of the thread discussing someone having massive short financial silver and gold futures positions,

I tried to get my head round a couple of points and so looked at the definitions on a gold and silver contract.

http://www.nymex.com/GC_spec.aspx

The last trading day is defined as the third to last trading business day,

So for Aug would mean today (Wednesday), so can we expect a lot of unwinding to happen before they end of trading.

Or do they make a separate trade for a future month that offsets their current position, and is this where EFPs come into it, but that must rely on both parties to agree to unwinding the trade.

Bradford & Bingley's Mortgage Bonds Cut by Moody's

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

Aug. 22 (Bloomberg) -- Bradford & Bingley Plc, the U.K.'s biggest lender to landlords, had its top-rated mortgage bonds downgraded by Moody's Investors Service.

Moody's cut the covered bonds one step to Aa1, the New York- based ratings company said in an e-mailed statement today. The bonds of the Bingley, England-based lender remain on review for ``possible further downgrades,'' according to the statement.

...

Late loan repayments have surged amid the worst U.K. housing slump since the 1990s, also harming Bradford & Bingley's business. The mortgage lender said late payments rose to 3.3 percent of all loans as of August. Its market value has tumbled more than 80 percent in the past year.

...

``This is not just a downgrade, it's a downgrade with a watch negative, which is a strong indication that the rating will go down further,'' said Florian Hillenbrand, a covered bond analyst in Munich at UniCredit SpA, Italy's largest bank. ``Nobody knows where it will end.''

Not sure if these extra couple have been posted yet.

The sprial, episodes 3,4

Edit: Added no 1 & 2 links

Two years for your first post, thats restrained.

Picked up my first gold coin today off ebay, couple of questions, when can i eat it?

But while trying to find reasons to make myself happier about the PPT 15% attack on gold recently i thought how the 20% Oil reduction would have on the margins on Gold Juniors. Say around a 600$ production cost (seem to remember that from one of CC interviews)

Previous 600$/ ounce production cost @980$/ounce market val => 380$/ounce margin

Now 480$/Ounce production cost @880$/ounce market val => 400$/ounce margin

So Im up, sort of, pity my juniors are mainly standing around a hole still.

Three Million in Gold Bullion Seized at Gold Dealers House

Authorities have seized $60,000 cash, some of it sealed in shrink wrap, and $3 million in gold bullion at the Moorpark, CA ranch house of James Fayed, whose wife, Pamela, was murdered last week. Twenty-five assault rifles and thousands of rounds of ammunition were also seized from the house, according to Assistant U.S. Atty. Mark R. Aveis

Fayed, who was seeking a divorce from his wife, both jointly owned Goldfinger Coin and Bullion Sales and an associated Internet firm, e-Bullion.

Could this be related to the surprise rise in supplies at the end of last month? Which started the downward leg for oil for the last few weeks?

Its a shame they cant just keep it all hidden in some big underground cavern, refuse to let anyone see it for 50 years, and just tell world that they have loads spare, meanwhile quietly sell any left hanging around.

If in doubt of where to post...

Shamelessly stolen from http://stockmania.com/

Thanks for that, Ive got my pension with Friendless and provident and meeting/talking to the pension advisor later today/tomorrow so i will ask him about this, having said taht the idiot still sent me an spreadsheet saying i should be exposed 20% to UK property, 40% UK Equities and others, just to be a bit mad and spread risk 5% Pacific/emerging markets.

Still that might just be the line he is told to peddle, i will update if he has anything interesting to say.

@Ziknit

re Friends Provident PM fund,

Spoke to pension advisor, yep Friends Provident do offer a PM fund, but its aimed at expats rather than UK based. Why this should make a difference i dont know.

The other thing i found was that there was a restriction on the initial investment $10k, so drip feeding makes this pretty difficult (at least for me, or until US$ tanks), also there is a 5% entry fee, or penalties for withdrawing before 5 years. If you find anything different let me know.

Additionally, I asked about any sort of commodity play and there was none. so we had a long discussion about commodity/equity cycles at this point,

I asked about their method of evauating risk profile (see above equities + property exposure) and he said it was based on a model, as if that explained it all, followed by a discussion about the parameters of said model, which he didnt know and when asked about timespan of model data, commodity dependence and demographics.

Think will use pension as a way to get exposure to emerging markets for the time being.

I’ve found the website

 

http://www.castlestonemanagement.com/fund-...n.php?fund_id=1

 

 

 

There is a factsheet

 

http://www.castlestonemanagement.com/pdfs/...s-Factsheet.pdf

 

And a presentation with some precious metal investment graphs

 

http://www.castlestonemanagement.com/pdfs/...esentations.pdf

Thanks for that, Ive got my pension with Friendless and provident and meeting/talking to the pension advisor later today/tomorrow so i will ask him about this, having said taht the idiot still sent me an spreadsheet saying i should be exposed 20% to UK property, 40% UK Equities and others, just to be a bit mad and spread risk 5% Pacific/emerging markets.

Still that might just be the line he is told to peddle, i will update if he has anything interesting to say.

I'll apologise now if this is "schoolboy thinking" but felt it worth asking.....

 

We know that central banks can, to a certain extent, print their way out of a situation. However, they do need to be slightly careful with that approach. So, if they had a need to obtain funds very quickly (e.g. as part of a bail-out plan) is there also a likelihood of them selling some gold to raise funds?

 

They need cash. They have gold. It's knocking on the door of $1000/oz and they really don't want it to rise... so why not offload some of it and use the $s to prop up the banking world?

 

I know there are agreements in place to prevent massive dumping of CB gold - but in a critical situation (such as we're in now) could this play out?

No one quite knows how much gold the Fed keeps at Fort Knox, they havnt had an audit for 50+ years, James Turk on one of CC interviews was saying that the latest gold being sold by the CB was of dubious quality, implicating that they are scraping the barrel.

Most of the CBs can still sell 50% or so of their yearly allowance with one month left to play, but again they could have sold already if they wanted to, so they want to keep their gold just at the moment, or dont have too much left, or its already shifted East.

doesnt dare look..... DOW - 237!!!

wtf.