giantbat

Heavy discount from spot on bullionvault, which is sort of a closed garden. I think the ferocity of this move on no real news has spooked a lot of joe public. gb http://ingots.eu

Yeah but you are preaching to the converted here i think In the late 70's gold retraced 50%, so anything is possible in the next few months.

What is unsettling is that manipulation or not serious technical damage has been wrought on the metals in the face of apparent high physical demand. Holding gold is fighting the fed. Things are getting serious now and volatility is probably going to worsen. Scary but exciting times! Here is hoping that equities dont roll over immediately or we know the whole sham is orchestrated. gb ps. i have created a goldbu.gs style (well far more basic) at: http://ingots.eu all welcome

Excellent point bubb. Again originally i thought that the BOE cannot leave the market without an uptick in yields and that such a situation would trigger selling from savvy bond holders who knew that prices could only go one way, and perhaps create a flight from sterling. The bank can patently never sell its holdings but what happens if it gradually reduces its buying of new issues. In my mind this must be a slow and poorly signalled non linear process actively managed by the bank. Foreign central banks and pensions may not sell. My assumption is that if the the bank know that qe must be temporary otherwise sterling is destroyed. Given this is a western coordinated approach is this actually true? QE has so far generated 375 billion new dosh. Last year 7.9% of gdp magicked into existence. A lot but what is 120billion compared to total narrow money. Especially in the context of much slower total credit market debt growth and lowest ever money velocity. My view is controlled inflation is exactly what they want to devalue western currencies and attempt to restart a credit boom. If the fed cant leave the market and is openly monetizing a one trillion dollar deficit why are you considering shorting treasuries? I would say the only reason banks have bought up 468 billion gilts is not for charity or yields. It is to sell those bonds for a profit. Why else hold bonds now?

Bubb, I have been thinking the last few days about this in relation to the UK gilt market. QE has led to a dislocation driving down yields and pushing up bond prices. My view is this will be maintained while the BOE is in the market. BOE currently owns 32.4% of gilts and following the UK predicted borrowing figures (similar to OBR figures) by 2016/17 the BOE will own more than half of all gilts issued by my estimation. Not a problem in itself. I have come to the view recently that QE is simply fiscal stimulation through printing, entirely to create inflation and keep rates down to prevent asset price declines to stop a deflationary doom spiral. At present it is working though it is gradually beggaring the population in my view which means it is a race between inflating the currency to catch up with overinflated asset (house) prices and not annihilating the common man to the point of rioting. My long term view through this remains: hold something other than sterling/US dollar/Euro/Yen. (Gold but looking at other options). In my view governments will do whatever is easy. Currently the BOE is simply giving the coupon payments back to the treasury and I suppose they will either cancel the bonds or let them expire far off in the future. I guess I like many people was wrongfooted by the move in bonds. Its almost a paradox really that the central bank buys gilts with freshly printed paper and the more it does it the higher existing bond prices rise and the lower yields become. That only works with the cooperation and existence of the market IMO. Thus are limits to how far this can be pushed. The way i see it is that the only thing that matters is when the BOE leaves the market and removes fake demand (voluntarily or not). From that moment on, either gradually or suddenly the dislocation will close as the market sets true value and risk for gilts. This means an inevitable increase in interest rates and a reduction in bond prices. Whether the BOE can leave the market as effortlessly as it entered I don't know. Shorting bonds has been tried many times in the past with no success, and timing is no doubt the crucial thing. Things I will be keeping an eye on are: yields for different issues (available from BOE), Long/Short data, breakdown of holders of gilts by type (BOE, Insurance/pensions, Banks!, foreign) The data from Q3 2008 onwards is very interesting from the BOE. There has been a more than doubling of the national debt over that time. Pensions and foreign holders increased there holdings a little. The BOE bought 375bn. Banks bought 468bn in the same time frame, with buying going from nil upwards 1Q before QE formally began. Watching what the commercial banks holdings and the yield rates may give an indication when the worm is turning (and an indication to perhaps rotate out of gold). GB

I agree supply is reducing, the lack of a full y axis paints a more extreme picture. Things could amble on for nearly two years and not run out. How did supply jump up last time?

Also positioned heavily for a bounce in gold here. Nowhere near as big a position as you DrB - 1000 0z wow Who do you trade your options with? GB

I came back from work to find my short with 10 gold cfds was in the money 18000 dollars . Shame its a demo account! Possibly a good buyin point for a long term hold with my BV account. giantbat

Interesting article Catflap. If I may be so cheeky to inquire, what gold junior mining stocks do the wise (catflap, drb etc!) currently hold? giantbat ps. just recently registered - though have been lurking away for a few months on here and HPC. Love the site DrB .