GOLD

[signofthetimes]

http://www.youtube.com/watch?v=PIUctQ8Wy4Q&feature=player_embedded

[drbubb]

"(2) That will require the elimination of all debt, deficits, unfunded social entitlements, the US Dollar as Reserve currency, and the big one, the $600 trillion of derivatives."

 

I suppose you guys know that Derivatives tend to be self-liquidating.

 

If banks stop doing new ones, the old ones run off. At the various maturities, the difference amounts (if any) are first netting against each other, and then the net amounts are paid. The Net amounts will be a tiny, tiny fraction of that scary headline figure of $600 Trillion. For mots banks, the net amounts will be measured in billions or even millions.

 

Some folks, who really do not understand how these instruments work, love to over-state the risks involved.

[stunlee]

Some more blatant manipulation at 12.00 GMT, the gold price falling 20 dollars in less than a minute. I have to say that I am growing increasingly fond of this manipulated market, it provides so many tasty buying opportunities!

[G0ldfinger]

Hey, wait!! Who let these guys into my basement!?!

 

[G0ldfinger]

I suppose you guys know that Derivatives tend to be self-liquidating.

Hmm, like Greek CDSs?

[drbubb]

Hmm, like Greek CDSs?

Somebody speeded those up.

 

One way to get rid of an insurance claim, is to simply refuse to pay it.

(And that works best if you can get courts to refuse the claim too.)

But you lose plenty of future customers that way

[G0ldfinger]

http://www.ft.com/cms/s/0/c0025500-10ef-11e1-a95c-00144feabdc0.html

Central bank gold buying at 40-year high

 

Third-quarter net bullion purchases reach 148.4 tonnes

Apparently most was bought in September at bargain basement prices of less than $1,600!

[drbubb]

Hey, wait!! Who let these guys into my basement!?!

What happened to that "over $1800 rally" I heard about last week.

Did it get delayed at the airport or something?

 

"Central bank gold buying at 40-year high"

Whoops! The dumb money is flooding in, now that Paulsen is selling.

[G0ldfinger]

What happened to that "over $1800 rally" I heard about last week.

Did it get delayed at the airport or something?

The plane wouldn't get off ground because the gold was so heavy.

 

Well, I like the general bearishness. It feels right to be in gold.

 

"Central bank gold buying at 40-year high"

Whoops! The dumb money is flooding in, now that Paulsen is selling.

We'll re-assess this statement in 5 years. I'd bet you'll be very embarrassed. In Germany almost everyone seems to have a great-great-grandfather who sold the house just before the hyper-inflation took off. Sad stories.

[drbubb]

The plane wouldn't get off ground because the gold was so heavy.

Well, I like the general bearishness. It feels right to be in gold.

Okay,

But I am more glad that I lightened up on Gold and Silver,

and also switched from SLV longs to SLV calls, raising plenty of cash.

Now as the slide is underway (as I expected it might be), I will be able to re-enter

at cheaper prices, using the Cash I raised from timely sales

 

I think SLV could be headed to $30 or lower...

 

(in edit):

SLV now is: Last $31.28

Change $-1.54

% Change -4.69%

 

hmm. Maybe it will hit $30.00 tomorrow afterall

 

GLD drop is less so far:

Last [Tick] $168.38

Change $-3.13

% Change -1.82%

 

Gold has some catching up to do on the downside.

[G0ldfinger]

Gold has some catching up to do on the downside.

Maybe we go back to the pre-Christmas pressie bargain basement price of $1,650.

 

Thinking back, only a while ago people where called "pipers" and stuff for predicting that the price would one day be higher than that value.

 

$1,650 today will look like an absolute no-brainer bargain price in a few years time. Retrospectively, the experts will all come out of the woodwork and claim that the impending hyper-inflation catastrophe was more than obvious back then. But I will say: show me your profits.

[drbubb]

Maybe we go back to the pre-Christmas pressie bargain basement price of $1,650.

 

Thinking back, only a while ago people where called "pipers" and stuff for predicting that the price would one day be higher than that value.

 

$1,650 today will look like an absolute no-brainer bargain price in a few years time. Retrospectively, the experts will all come out of the woodwork and claim that the impending hyper-inflation catastrophe was more than obvious back then. But I will say: show me your profits.

Meantime, we seem to have a Traders Paradise in the Gold market.

(THE Piper is now occupied with piping up his own co., and is less involved with metals themselves.)

[Perishabull]

Have you seen Jim Sinclair's Tanzanian Royalty Exploration?

 

Looks like a shady group might be out to spoil the party;

[G0ldfinger]

Have you seen Jim Sinclair's Tanzanian Royalty Exploration?

 

Looks like a shady group might be out to spoil the party;

Time to buy? Is there value in it? I haven't really read anything about them yet.

[romans holiday]

"Central bank gold buying at 40-year high"

Whoops! The dumb money is flooding in, now that Paulsen is selling.

You can not be serious!

 

Doesn't "dumb money" usually refer to the mass of investors in the stock market and all those "get rich quick" funds?

 

Central banks are nothing like this. When they "buy" gold, they are not investing, they are diversifying their reserves.... and buying gold as an alternative form of liquidity/ liquid capital.

 

In the case of central banks buying gold, it ought to be thought of as a currency exchange.

[Manual labourer]

Yes, I am still very heavily into silver. In terms of value, my gold and silver bullion positions are never too far from each other (but look at the G:S-ratio to see how much this changes over time). For me silver is a means of diversification. Because of the industrial consumption of the past, I do expect it to outperform gold, and there won't be screaming gold prices without screaming silver prices. If gold gets re-introduced as THE anchor of the monetary system, silver might trade more freely and will certainly not be in the focus of central bankster greed. I don't think Western central banks hold any relevant amounts of silver. Silver is the better day-to-day money. This is the role it has always had (until 40-something years ago). I think silver will always be lagging gold in its moves, but I am very patient.

 

Thanks GF, for the clear honest answer with background reasoning!

 

I think I need to start buying a little more silver as it dips !

 

I totally agree with your later posts of how these prices will look like a steal over the longer term.

 

Regards

 

ML

[drbubb]

"Whoops! The dumb money (from Central Banks) is flooding in, now that Paulsen is selling.

 

We'll re-assess this statement in 5 years. I'd bet you'll be very embarrassed. In Germany almost everyone seems to have a great-great-grandfather who sold the house just before the hyper-inflation took off. Sad stories.

Embarrassed by my riches, I suppose you mean.

/ From sidestepping the big drops in Gold and Silver prices, while the dumb money floods in before the drops.

 

That would make sense (that you would be worried about me being embarrassed in such a way) if you have been

reading the Beating B&H thread. The present price drop was signalled there first, before it happened.

(Why? Because the market was rising on light volume, and open interest was declining.)

 

I would suggests that the BAHAIs here would do well to take these factors into consideration when contemplating

adding more precious. And for traders like me, when I hear from the Gold Purists that "It is time to buy!"

My reaction is: "With what?" Since the BAHAIs may have told you to buy previously at a higher price, so where's

the money to buy now, when the price is lower.

[drbubb]

You can not be serious!

 

Doesn't "dumb money" usually refer to the mass of investors in the stock market and all those "get rich quick" funds?

 

Central banks are nothing like this. When they "buy" gold, they are not investing, they are diversifying their reserves.... and buying gold as an alternative form of liquidity/ liquid capital.

 

In the case of central banks buying gold, it ought to be thought of as a currency exchange.

The Central Banks were the big buyers around the time of the $850 top in Gold in about 1980.

The smart money was selling the gold to these guys.

 

Why do you think the Gold purists (with really huge holdings) want a gold-back currency?

So they can offload their gold holdings (to CB's) at a high price.

 

 

Take out the US, and the CB's dont look very clever. And Gold's long price decline was spurred

on by these guys offloading their "excess gold holdings." Now they want to buy them back at

much higher prices.

 

Remember Gordon Brown's classic sale of half of the UK's reserves at/near $250?

 

Perhaps they should take the loss out of his pension. (?)

[G0ldfinger]

The Central Banks were the big buyers around the time of the $850 top in Gold in about 1980.

The smart money was selling the gold to these guys.

I think this will happen again. But let's face it, 400 tonnes a quarter is nothing. I would expect, before it's all said and done, that the CBs will print gazillions just to buy 1000s and 1000s of tonnes of gold (before they Chinese do it out in the open) and be able to create some sense of "stability" in the currency.

 

Perhaps they should take the loss out of his pension. (?)

They actually do: by inflation. Unfortunately, they do the same to everyone else, even to those, who cringed at Gordo dumping the gold first place.

[G0ldfinger]

I would suggests that the BAHAIs here would do well to take these factors into consideration when contemplating

adding more precious. And for traders like me, when I hear from the Gold Purists that "It is time to buy!"

My reaction is: "With what?"

Monthly income from work, for example. On the other hand, if you bought gold sub-$1,000 then just don't worry anyway and just hold on to it if you can't buy any additional. No need to panic-trade all the time. It's going to go up on average.

[romans holiday]

Monthly income from work, for example. On the other hand, if you bought gold sub-$1,000 then just don't worry anyway and just hold on to it if you can't buy any additional. No need to panic-trade all the time. It's going to go up on average.

Don't get monthly income from work at the moment. And don't really need it..... as I replied to an Aunty who enquired about my work prospects; "My bullion investment have been acting as a well-paying job".

 

More to life than work right? Heavily investing long term in gold has allowed me to become a man of leisure. Any leisure worth the meaning of the word has to also involve being free of the monetary sphere altogether. Keeping an eye on markets 24/7 would no doubt be hard work, involve some stress and a "price" in terms of leisure, freedom and time..... which is fine I guess, for those that choose it.

[G0ldfinger]

Keeping an eye on markets 24/7 would no doubt be hard work, involve some stress and a "price" in terms of leisure, freedom and time.

But then, some people enjoy just this.

[romans holiday]

But then, some people enjoy just this.

The problem I think with money is it has an "addictive" element. To be free of it, you have to first have enough... and then realize you have enough. One is then freed up to pursue the more important ends in life. The probelm with today is means has become confused with ends.... so the bulk of people now pursue money as an end in itself.

[50sQuiff]

The Central Banks were the big buyers around the time of the $850 top in Gold in about 1980.

The smart money was selling the gold to these guys.

 

Why do you think the Gold purists (with really huge holdings) want a gold-back currency?

So they can offload their gold holdings (to CB's) at a high price.

 

 

Take out the US, and the CB's dont look very clever. And Gold's long price decline was spurred

on by these guys offloading their "excess gold holdings." Now they want to buy them back at

much higher prices.

 

Remember Gordon Brown's classic sale of half of the UK's reserves at/near $250?

 

Perhaps they should take the loss out of his pension. (?)

 

But central banks aren't speculators so you have to look at their motivations and psychology differently. Brown's gold sales were not only the end of a political war on gold, but a desperate act to bail out a major bullion bank. As the famous quote from GATA goes:

 

In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999: George said "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."

 

Moreover, I believe central banks were buying at the peak in 1980 because Europe truly thought that the dollar system was about to break down (well chronicled in Gold Wars by Ferdinand Lips). Volcker made a stick save and they looked foolish. Smart investors like Jim Sinclair saw it coming and moved into bonds. This time it isn't going to happen - we're at the end of the dollar reserve system's lifecycle and a top in bonds rather than the beginning of a new secular bull.

 

So I think the monetary stars are aligned very differently this time around. We're also in a global depression cycle now so no country has an incentive to accept a strengthening currency. This position has been vindicated by the Swiss going against their entire raison d'etre and devaluing.

[jsr]

The Central Banks were the big buyers around the time of the $850 top in Gold in about 1980.

The smart money was selling the gold to these guys.

 

Why do you think the Gold purists (with really huge holdings) want a gold-back currency?

So they can offload their gold holdings (to CB's) at a high price.

 

 

 

Your explanation makes sense to me. However, your chart shows CB bullion holdings remained largely flat from 75' to 80'?

 

Surely they could not have been that big of buyers?