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Gold Bulls Strengthen as Wagers Hit $131 Billion

Gold traders are the most bullish in four months after investors accumulated more metal than ever and hedge funds raised bets on gains to a five-month high.

http://www.bloomberg.com/news/2012-03-09/gold-bulls-strengthening-as-bullion-wagers-reach-131-billion-commodities.html

"Like a Nordstrom's Sale... People look at it as a Huge Opportunity." - Jim Puplava, Kathy Derbes

 

Back a few days ago when the Gold price fell $100 in a single day - on big volume.

This Podcast interview was recorded

 

MP3: http://www.netcastdaily.com/broadcast/fsn2012-0303-3.mp3

 

The level of complacency sounded alarm bells for me!

 

I think it is much healthier when prices "climb a wall of worry," rather than when all the die-hard bulls are patting themselves on the back saying how smart they are to buy the dip.

 

I know my comment will upset some here. But please put your emotion aside, and realise that I am trying to described a time in the price cycle when buyers are so complacent, that they happily shrug off any drop. The article quoted above talks about the heavy buying. Frankly, this buying on the back of such petulant complacency might actually be a WARNING SIGN, rather than something that should give Gold buys confidence.

 

I am Net Long Gold, not short Gold. And i do think there's a real chance it will go higher. But this type of complacency does make me uncomfortable. And for those who are trying to learn about how market sentiment relates to price moves, I suggest you make a note of this sentiment, and watch how iot plays out.

 

The funny thing is: Worry here might be healthier than the widespread complacency being communicated on FS.

 

David Morgan, whom I respect, talks about Silver hitting $60 before the year is over. He may be right, but Silver may need to visit levels below $30, before we see a sustainable rally. I am not promising that, but if Gold gets dragged back below $1600, then Silver will likely be below $30 with it.

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Unless it really is just another commodity :unsure:

At times it will be treated that way; when all the hedgies get on the inflation trade and then jump off again. But underlying this volatility is the monetary aspect, an alternative form of liquidity, which quietly moves gold up in the aggregate 20 odd % a year. It helps then to see the gold price in terms of an exchange rate. That way it doesn't look so 'expensive'.

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A good find Van:

Data collected by Simon Ward at Henderson Global Investors shows that M1 money supply growth in the big G7 economies and leading E7 emerging powers buckled over the winter. The gauge - known as six-month real narrow money - peaked at 5.1pc in November. It dropped to 3.6pc in January, and to 2.1pc in February. This is comparable to falls seen in mid-2008 in the months leading up to the Great Recession, and which caught central banks so badly off guard.

 

“The speed of the drop-off is worrying. This acts with a six months lag time so we can expect global growth to peak in May. There may be a sharp slowdown in the second half,” said Mr Ward.

 

stlouisfed_2164739c.jpg

 

It sounds Deflationary to me - Not good for Gold prices

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The lower it goes the better. I'd love to pay less than £1000 an ounce. Who wouldn't want cheaper gold?

 

True Story.

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I don't agree with that.

There are many people here who think "the purists" are unbalanced. Not just RH.

But few of them are interested enough, to join the fray on the Gold thread, but you can see them posting elsewhere.

 

In the end, it is my site, and I have to stand up for the balance and the free-discussion that I believe in.

 

Without mentioning names, I can think of two or three posters who were very aggressively Anti-Trader, and they have now left some time ago, do you really think the site has suffered as all from their absence?

 

I don't know GF's exact thoughts, but I think he got a bit miffed on being transferred from Mod to Member. I plan to do that one-by-one with all the Mods. He was just the second one to be transferred. I will then build a new Mod team, if I need to. If he wants to continue as Mod, then I would ask him what his goals are for the site. If we agree on that, I would be happy to have him return to that capacity. But I will probably slim down first and build up later.

Understand, Schäuble is no idiot. He knows that there is no way Greece would go for this. So his comment can only be seen as an attempt to incite a Greek backlash while also winning political points in Germany.

 

:lol: :lol: :lol:

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=== post moved to Old Gold thread ===

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... I am sad.

 

Ah well,

Vincent van Gogh's The Cafe Terrace on the Place du Forum stands as one of the painter's most remarkable works. It is also, without question, one of the most famous produced in Van Gogh's brief but prolific career.

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== moved to another thread ==

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=== moved to another thread ===

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I would be happy to continue this discussion on the Old thread - but not here, SVP

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(Another from Jake, moved here):

 

Does it matter.

 

Jake I am more than a little pissed off at you for talking about what you call my "little tantrum", when you ignore the Elephant in the room:

 

(see above)

 

What exactly do you call that post? I am now wondering: are you trying to stir up trouble here nor for some reason?

You know I am not a stirer.

 

'buggered' to coin a phrase. That's all. I am very sad.

- by Jake

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(Another from Jake, moved here):

You know I am not a stirer.

'buggered' to coin a phrase. That's all. I am very sad.

- by Jake

Jake,

What exactly are you "sad" about?

That GF is not posting here ??

If so, I suggest you take that up with him. There's very little I can do about that fact.

 

Indeed, all I did was transfer his membership from Mod to Member, along with others.

And he simply over-reacted IMHO. I find it is strange that you blame me for his over-reaction (?!?)

 

As a matter of fact, I have mixed feelings about it. And I think he and some other posters who follow him like friendly stalkers (or something) might do better with some sort of holiday from GEI.

 

After a break, they would be very welcome. That's how I see it now.

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why?

I am collecting those discussions in one place, and prefer it be somewhere for Members only,

so as not to distract others.

 

I hope you appreciate that this is a very different approach than on HPC where the Mods quickly bann anyone who complains or raises questions.

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I am collecting those discussions in one place, and prefer it be somewhere for Members only,

so as not to distract others.

 

I hope you appreciate that this is a very different approach than on HPC where the Mods quickly bann anyone who complains or raises questions.

Indeed. This is what made GEI so good. Free speech. Dont bury that like your home country has done/is doing.

 

'So as not to distract others' is a euphemism, is it not?

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A good find Van:

 

Data collected by Simon Ward at Henderson Global Investors shows that M1 money supply growth in the big G7 economies and leading E7 emerging powers buckled over the winter. The gauge - known as six-month real narrow money - peaked at 5.1pc in November. It dropped to 3.6pc in January, and to 2.1pc in February. This is comparable to falls seen in mid-2008 in the months leading up to the Great Recession, and which caught central banks so badly off guard.

 

“The speed of the drop-off is worrying. This acts with a six months lag time so we can expect global growth to peak in May. There may be a sharp slowdown in the second half,” said Mr Ward.

 

stlouisfed_2164739c.jpg

 

It sounds Deflationary to me - Not good for Gold prices

 

 

Why has M1 growth shrank so fast ? Well why at all ? What is M2 doing ? I think I understand M2 a bit better as its talked about more.

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Why has M1 growth shrank so fast ? Well why at all ? What is M2 doing ? I think I understand M2 a bit better as its talked about more.

That's "Money Velocity".

People, banks, and companies are not spending as fast as they once did.

 

That is partly because banks are not lending money as easily as before, I suppose.

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stlouisfed_2164739c.jpg

 

It sounds Deflationary to me - Not good for Gold prices

Disagree.

 

There are a few that have never stated the case for gold on [hyper] inflationary concerns. The gold buying deflationists are not only happy with that chart, but predicted it. They also predicted higher gold prices at the current annual rate of appreciation. ;)

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Disagree.

 

There are a few that have never stated the case for gold on [hyper] inflationary concerns. The gold buying deflationists are not only happy with that chart, but predicted it. They also predicted higher gold prices at the current annual rate of appreciation. ;)

Gold can attract buying, if Fiat currencies implode and credit contracts.

 

But it is not the only asset favored under such circumstances.

 

Example: Gold may attract safe haven buyers in the same way that T-Bonds have done.

 

What may be coming up is a battle between Gold and Bonds

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Gold can attract buying, if Fiat currencies implode and credit contracts.

 

But it is not the only asset favored under such circumstances.

Deflationists don't think 'fiat' currencies will implode. On the contrary, they think they will strengthen... relative to assets.

 

And deflationists think no assets are favored under deflationary conditions

 

Example: Gold may attract safe haven buyers in the same way that T-Bonds have done.

 

What may be coming up is a battle between Gold and Bonds

Getting closer to the mark here. Yes, gold and T-Bonds attract safe haven buyers as you would expect in a deflationary environment. The 'battle' between Gold and Bonds hasn't eventuated yet. In fact a few gold-buying deflationists have been predicting all along that gold, T-Bonds and the US dollar are all good holds. Why? Because they are all strong forms of liquidity against which asset prices are deflating.

 

Exter's liquidity triangle summarises it relatively well. Note, gold, dollar, bonds are not 'opposites' but all beneficiaries of monetary value as it erodes from assets down into the bottom tiers of liquidity. The driver is a debt deflation and a preference for liquidity:

 

Exetersinversepyramid.jpg

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Yes, gold and T-Bonds attract safe haven buyers as you would expect in a deflationary environment.

The 'battle' between Gold and Bonds hasn't eventuated yet.

So far, GLD/Gold have beat Bonds as a safe haven

 

tltvsgld.png

 

An obvious reason, oft-stated by Gold gurus like Jim Turk:

 

"Gold (& silver too!) is the only 'money' that is not someone else's liability."

 

Apart from a month or two in late 2008 and in 2011, it is hard to find any time period where TLT outperformed

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So far, GLD/Gold have beat Bonds as a safe haven

 

tltvsgld.png

Yes, as the reverse liquidity triangle predicts; Bonds will perform well, but gold even better.

 

When you think in terms of liquidity, they are conceptually on the 'same side', not on 'opposite sides in a battle'. It doesn't really mean much for the trend in the gold price if money velocity is low, the US dollar strengthening, and T-Bonds performing well [actually mis-leading if the past trend is anything to go by]. Gold will also perform and even better as a prime form of liquidity.

 

An obvious reason, oft-stated by Gold gurus like Jim Turk:

 

"Gold (& silver too!) is the only 'money' that is not someone else's liability."

When gold is thought of as just another form of liquidity [though perhaps the strongest] then a doctrinaire approach is unrequired.

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Maybe the Flip side of that Money Velocity chart would be...

 

The rise of Barter transactions

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Any chance of someone reporting from this event?

 

 

ScreenClip.png

 

Event link

Monday, March 19, 12:00pm

 

Gold and Commodities Panel

 

*Erik Wytenus

Executive Director and Head of Foreign Exchange and Commodities

J.P. Morgan Private Bank in Asia

* Owen Hegarty, Executive Vice Chairman, G-Resources Group Ltd. and Executive Vice Chairman, CST Mining Group Ltd

 

Hosted by the Financial Services Committee

 

The World Gold Council, the global voice of authority on gold, concluded in its latest annual report last month that global demand for gold in 2011 rose to 4,067.1 tonnes (t) worth an estimated US$205.5 billion - the first time that global demand has exceeded US$200billion and the highest tonnage level since 1997. The report highlighted that China and India remain heartlands for gold, generating 55% of global jewellery demand and 49% of global demand.

 

This informative luncheon discussion will also provide the latest views on global central banks’ unprecedented engagement of markets, historic liquidity provisions, impacts for the U.S. dollar, diversification, and other key market themes. Other topics discussed will be oil, Iran, and the geopolitical factors that abound in markets.

 

 

Erik Wytenus is an Executive Director and Head of Foreign Exchange and Commodities of J.P. Morgan Private Bank in Asia. He joined the Private Bank in 2007 and is now based in Hong Kong. While based in New York, Mr. Wytenus was responsible for developing and executing FX and commodity solutions for private clients. Prior to that, Mr. Wytenus worked at the Investment Bank's currency trading desk where he was responsible for managing client orders and risk, and trading currencies in both market making and proprietary strategies. Before joining J.P. Morgan, Erik worked in Profit and Loss and Risk Analysis for Hess Energy Trading Company in New York.

 

Mr. Wytenus holds a bachelor’s degree in philosophy from Ithaca College. Upon graduation, he also spent time playing and coaching lacrosse for a sporting club in Melbourne, Australia.

 

Owen Hegarty has some 40 years experience in the global mining industry. He had 25 years with the Rio Tinto group where he was Managing Director of Rio Tinto Asia and Managing Director of the Group’s Australian copper and gold business. He was the founder and CEO of the Oxiana Ltd Group which grew from a small exploration company to a multi-billion dollar Australia, Asia and Pacific focused base and precious metals producer, developer and explorer. Oxiana became OZ Minerals Ltd.

 

For his achievements and leadership in the mining industry, Mr. Hegarty was awarded the AusIMM Institute Medal in 2006 and the G.J. Stokes Memorial Award in 2008.

 

Mr. Hegarty is presently Executive Vice Chairman of Hong Kong listed G-Resources Group Ltd, a gold mining company; and Executive Vice Chairman of CST Mining Group Ltd, a Hong Kong listed copper mining company. He is also a Director of the AusIMM, and a member of a number of Government and Industry advisory groups.

 

Mr. Hegarty is Chairman of Tigers Realm Group, a private Melbourne based mining company. He is a Non-Executive Director of Australia listed Fortescue Metals Group Ltd, and a Non-Executive Director of Australia listed Tigers Realm Coal Ltd.

 

Date: Monday, March 19

 

Time: 12:00pm Registration/Networking

12:30pm Lunch

1:10pm Remarks

2:00pm Close

 

Fee(s): Member Fee: HK$420 [Login Now | Enjoy special member rates ]

Non Member Fee: HK$520

 

Venue: Club Lusitano, 27/F, 16 Ice House Street, Central, Hong Kong [MAP]

 

Inquiries: Ms. Katherine Lau - kalau@amcham.org.hk (please use the following subject line for your email:

"Date of event / Speaker name(s) or event title")

 

Media: CLOSED TO MEDIA

 

 

 

The American Chamber of Commerce in Hong Kong

1904 Bank of America Tower, 12 Harcourt Road, Central, Hong Kong

T: 852 2530 6900 | F: 852 2810 1289 | E: amcham@amcham.org.hk

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