GOLD

[G0ldfinger]

It looks a lot more 'unusual' on these :blink:

 

http://www.kitco.com/lease.chart.html

 

These charts seem out of line with the other short term ones. A mistake?

[Steve Netwriter]

My understanding is that gold lease rates are the actual 'interest' charged for the loan of the metal.

.....

The other question that still remains, even for case 1, is what scared off all the shorts in such a hurry?

 

Wow, great first post

 

I'm never a great fan of conspiracy theories

 

I don't view it as a conspiracy. Just plain old manipulation by those with the ability.

There is a lot of evidence.

 

--------------

 

These charts seem out of line with the other short term ones. A mistake?

 

I wish I knew !

I've been trying to find something on it. Nothing.

 

It sure looks VERY odd.

 

Still not sure I'd accept only 2.75% for storing their gold. I'd rather buy and have my own

 

[Steve Netwriter]

Now this is a conspiracy theory:

 

Is an International Financial Conspiracy Driving World Events?

http://www.sott.net/articles/show/152125-I...g-World-Events-

 

Was Alan Greenspan really as dumb as he looks in creating the late housing bubble that threatens to bring the entire Western debt-based economy crashing down?

 

Was something as easy to foresee as this really the trigger for a meltdown that could destroy the world's financial system? Or was it done, perhaps, "accidentally on purpose"?

...

The lengthy Wikipedia article on Rockefeller provides the following version of a celebrated statement he allegedly made in an opening speech at the Bilderberg conference in Baden-Baden, Germany, in June 1991:

 

"We are grateful to the Washington Post, the New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during these years. But the world is now more sophisticated and prepared to march towards a world government which will never again know war, but only peace and prosperity for the whole of humanity. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in the past centuries."

[ChumpusRex]

OK. I got completely the wrong end of the stick in my first post.

 

The 'gold lease rate' is a rather artificial measure. It is a measure of the difference between the 'forward' rate (which is the interest rate for borrowing gold) and the USD LIBOR rate. Large holders of gold, e.g. banks and hedgies, are keen to lend out their gold, so that they get some income from it. Because blocks of gold are less desirable to the market than USD, this generally requires interest rates lower than the USD.

 

So, let's take the hypothetical scenario where institutions are prepared to lend gold at 2%, with a USD LIBOR of 3% - the lease rate is 1%, indicating the 'income' that you would achieve if you shorted a gold bar.

 

This means that the lease rate is inherently connected to a) the supply/demand of gold for shorting and the USD LIBOR.

 

Anyway, the gold lease rate really is negative at present (although not quite as dramatic as the kitco charts make out - I think it's a data error, probably because the software hasn't correctly handled the fact that the lease rate really is negative). What a negative lease rate means is that the IR for borrowing gold exceeds the cost for borrowing USD. The reasons are polar opposites to what I suggested in my now defunct post.

 

1. There is a massive swing in gold/supply demand - where there is abnormally high demand for gold on loan, and/or abnormally low supply. In other words, there is very heavy shorting, and/or institutions are trying to recall their loaned gold (possibly to sell, possibly because of concerns over counterparty risk, etc.)

2. There has been a swing in USD supply/demand - with some modest drops in USD LIBOR recently - likely as a result of FED policy in providing 'liquidity'.

3. The gold futures market is in contango; i.e. the spot price for immediate delivery is lower than the price for future delivery. This encourages the building of stockpiles (not a problem with gold as it is easily stored) and may be related to a high level of available gold as a result of short positions.

 

What does this mean for the price? It's difficult to tease out, as this has both bearish and bullish signals (short term bear, longer term bull). Something has really whetted the shorts appetite recently, as this negative rate was a new thing on Thursday. Now, I'm not really a great believer in technical analysis, but you've got to admit the short term indicators are roaring rather than mooing.

 

P.S.

The moral of this little catharsis is that you shouldn't believe everything you read on google. There seemed to be quite a consensus opinion that the problem was panic short covering. The second moral, is to check your + & - signs when doing complicated sums - you may get the answer you want for the wrong reason.

 

P.P.S. I hope I'm right this time. I don't have to resort to conspiracies this time, which bodes well.

[Duchaf]

The 'gold lease rate' is a rather artificial measure. It is a measure of the difference between the 'forward' rate (which is the interest rate for borrowing gold) and the USD LIBOR rate. Large holders of gold, e.g. banks and hedgies, are keen to lend out their gold, so that they get some income from it. Because blocks of gold are less desirable to the market than USD, this generally requires interest rates lower than the USD.

Thanks for the explanation. I thought it might be this, but there seems to be a lot of people who read it as the actual loan rate (= forward rate).

 

1. There is a massive swing in gold/supply demand - where there is abnormally high demand for gold on loan, and/or abnormally low supply. In other words, there is very heavy shorting, and/or institutions are trying to recall their loaned gold (possibly to sell, possibly because of concerns over counterparty risk, etc.)

2. There has been a swing in USD supply/demand - with some modest drops in USD LIBOR recently - likely as a result of FED policy in providing 'liquidity'.

So the fundamentals of this move in lease-rate are bullish (recall, counter-party risk, inflation risk)

 

...

 

or possibly bearish (lots of investors think it is going down, so are shorting)

 

...

 

so, anything could happen on Monday...

 

[dietcolaaddict]

The 'gold lease rate' is a rather artificial measure. It is a measure of the difference between the 'forward' rate (which is the interest rate for borrowing gold)

........

 

Thanks for the good research and the clear explanation, ChumpusRex

 

And welcome !!!

[Steve Netwriter]

OK. I got completely the wrong end of the stick in my first post.

.....

What does this mean for the price? It's difficult to tease out, as this has both bearish and bullish signals (short term bear, longer term bull). Something has really whetted the shorts appetite recently, as this negative rate was a new thing on Thursday. Now, I'm not really a great believer in technical analysis, but you've got to admit the short term indicators are roaring rather than mooing.

 

P.S.

The moral of this little catharsis is that you shouldn't believe everything you read on google. There seemed to be quite a consensus opinion that the problem was panic short covering. The second moral, is to check your + & - signs when doing complicated sums - you may get the answer you want for the wrong reason.

 

P.P.S. I hope I'm right this time. I don't have to resort to conspiracies this time, which bodes well.

 

I want to know why you've only just started posting :D

 

Personally I don't care whether the conclusion of a post is right or wrong, because I don't rely on any one opinion.

But the little bits of information are very interesting, and add to the whole picture.

 

And to be honest, at the moment, anything is better than just sitting here wondering

 

Presumably what it does mean is that something is going on.

And IMO that's good. Either we get a great buying opportunity, or we see prices soar.

I'm not so keen on the boring times in between events

 

[ChumpusRex]

Actually, I've just thought of something else:

 

The LR really measures how easy gold is to borrow, and it's now getting hard. Wasn't there something recently about the Asia/Pacific/Oceania markets beginning to crack down on short selling - not quite outlaw it, but discourage it?

 

It may be that a lot of big institutions, in that part of the world, are recalling leased assets for these policy reasons.

 

 

 

[narco]

Here's an interview with John Williams from shadowstats.com after the Bear Stearns bail out / gold correction.

 

This guy is the authority to listen to regarding US money supply data.

 

http://stockshotz.neogentrading.com/2008/0...w-03212008.aspx

[Steve Netwriter]

ChumpusRex, I think this shows what you say makes sense:

 

Forward Rates, Libor Rates and Lease Rates:

 

http://www.kitco.com/market/LFrate.html

 

 

But note the negatives !!!

[Steve Netwriter]

I've just explained this to my wife.

Have I got this right

 

"This is how much it costs to borrow gold.

This is how much it costs to borrow US$.

And this is the difference.

 

It normally costs you less to borrow gold than US$.

But now it costs you more"

 

 

Doesn't that mean gold is 'worth more' to borrow than US$.

ie the market think gold will rise relative to the US$.

 

Right, off to listen to Narcos link

 

[Billy]

This is incorrect. Your gold is held in your name in an insured VIA MAT vault. I can not think off a place I'd like it more, cheap storage and you can sell at the spot price instantly. Better than burying it in your garden.

 

I agree that ETFs could be dodgy, but believe GoldMoney & BullionVault are different. You can even arrange to withdraw your gold in LBMA bars.

 

 

No, I am correct - the above gold you describe is not held by YOU, it is held by 1 or more intermediaries, any of which can go tits up in a force majeure situation.

 

Gold held by YOU would be in your own safe on your own property. You can easily insure it via a specialist broker.

 

Having held gold disastrously with the perth mint, and via etfs and monex accounts and various other outfits, i speak from experience and know the difference between HOLDING gold and having some bits of paper or pixels ona screen telling me what I own .... I hold all my bullion on my own property.

 

Alex at gim recently saw the light and has done exactly the same. Going with outfits like perth, kitco etc is a disaster waiting to happen - see te ted butler articles for the minutiae.

[Steve Netwriter]

I think you're right about it being a glitch.

 

http://www.lbma.org.uk/statistics_current.htm

 

There is no -2.75% !!!!

 

[ChumpusRex]

It normally costs you less to borrow gold than US$.

But now it costs you more"

 

 

Doesn't that mean gold is 'worth more' to borrow than US$.

ie the market think gold will rise relative to the US$.

But why would you borrow gold?

 

Platinum and palladium are used industrially as catalysts. They are shaped into the appropriate wires or pellets, used for a few months, then the surface is damaged or polluted, and they go back for recycling. Industrial users rarely buy the metals in that case, they borrow them, and then return them after re-refining. As a result, the lease rates for these metals are usually negative, because of strong industrial demand for borrowing them.

 

Borrowed gold is of limited value for jewellery, which is the major 'consumer' of it. So, the only reason to borrow gold, is if you believe it's overvalued, and it's going to fall in price.

[frizzers]

From J. Turk,

 

I question the accuracy of the latest entries. A negative interest rate means that central banks (the biggest lenders of gold) are willing to pay someone to borrow gold from them, which although possible in theory is not likely in practice. Short-term interest rates for gold though are near zero as few people are willing to borrow gold in a bull market and thereby incur a gold liability. Also, the near-zero interest rates to borrow gold are the result of falling demand for borrowed gold as US dollar interest rates have declined, as this event has considerably reduced the size of the margin on gold carry trades.

[narco]

I was under the impression that lease rates are on top of the base rate? Didn't we have a similar thing with silver last month?

[narco]

Interesting. Still not sure of the correlation

 

 

[narco]

Heres what gold lease rates did before gold went on it's acent in August.

 

 

[ConvertedGoldBug]

I was wondering what happens if there is a gold confiscation?

 

For those people who hold their own physical gold (i.e. not using ETFs or an intermediary like BullionVault etc.), what good is holding gold if it becomes illegal to do so?

 

Presumably you can't spend it?

 

And would the authorities find out that you owned gold, by trawling through the records of suppliers such as CoinInvestDirect, etc.?

 

So I'm thinking it becomes an inflation hedge, but one that you can't actually benefit from owning or spending.

 

Therefore, is the point of owning gold purely to protect your wealth, and you'd have to wait potentially many years for any confiscation ban to be dropped, and ownership to become legal again, before you can then convert your (hopefully) inflation-proof hedge back into useable currency to spend?

 

Just some random thoughts, as I've just received my first gold and silver coin delivery from CoinInvestDirect, and placed an order for some more, and am thinking what actual practical use owning gold has, apart from my above-mentioned ponderings.

 

And would silver ever be subject to any confiscations? Or is it just gold?

[azazel]

I was wondering what happens if there is a gold confiscation?

 

For those people who hold their own physical gold (i.e. not using ETFs or an intermediary like BullionVault etc.), what good is holding gold if it becomes illegal to do so?

 

Presumably you can't spend it?

 

And would the authorities find out that you owned gold, by trawling through the records of suppliers such as CoinInvestDirect, etc.?

 

So I'm thinking it becomes an inflation hedge, but one that you can't actually benefit from owning or spending.

 

Therefore, is the point of owning gold purely to protect your wealth, and you'd have to wait potentially many years for any confiscation ban to be dropped, and ownership to become legal again, before you can then convert your (hopefully) inflation-proof hedge back into useable currency to spend?

 

Just some random thoughts, as I've just received my first gold and silver coin delivery from CoinInvestDirect, and placed an order for some more, and am thinking what actual practical use owning gold has, apart from my above-mentioned ponderings.

 

And would silver ever be subject to any confiscations? Or is it just gold?

 

What happens to your wealth if the pound becomes obsolete? Just as likely as gold prohibition.

 

Will they be able to confiscate your gold if you don't tell them where you hid it?

 

You are not allowed to buy and sell drugs but people still do. (I'm not condoning drug use) Its called the black market. There will always be some who will exchange their rapidly devaluing ££ for precious metals to preserve their wealth.

 

[skinny]

GOLD DOWN $17 !!

 

Looks like another "Friday mugging" is being attempted.

The volume is light, and it could be reversed quickly.

 

If it is not, and gold is still down on Monday, this could provide the "lighter volume retest" (C-wave)

that I have been talking about. That's not my base case, since I think this may just be part of a B-wave.

 

But the price move and volume of the next several hours will be interesting

 

Bubb - is your ABC the same as an EW ABC corrective wave, or just your own notation for a 3 point move ?

 

Ask as wondering if u think pentration of 900 on big volume would imply an EW Wave 3 of 5 down - and hence your wanings to watch 900 and volume VERY closely [as Wave 5 might terminate sub-800]

[Pixel8r]

No, I am correct - the above gold you describe is not held by YOU, it is held by 1 or more intermediaries, any of which can go tits up in a force majeure situation.

 

Gold held by YOU would be in your own safe on your own property. You can easily insure it via a specialist broker.

 

Having held gold disastrously with the perth mint, and via etfs and monex accounts and various other outfits, i speak from experience and know the difference between HOLDING gold and having some bits of paper or pixels ona screen telling me what I own .... I hold all my bullion on my own property.

 

Alex at gim recently saw the light and has done exactly the same. Going with outfits like perth, kitco etc is a disaster waiting to happen - see te ted butler articles for the minutiae.

 

You are saying that VIA MAT vaults could go bust and keep my gold. Wow the whole world is going to come to the end, mad max here we come!

[Pluto]

The future of Wall Street, City of London, and Canary Wharf which is soon to be renamed Albatross Wharf.

 

http://www.youtube.com/watch?v=O2uErWWwQTo

[Billy]

I was wondering what happens if there is a gold confiscation?

 

For those people who hold their own physical gold (i.e. not using ETFs or an intermediary like BullionVault etc.), what good is holding gold if it becomes illegal to do so?

 

Presumably you can't spend it?

 

And would the authorities find out that you owned gold, by trawling through the records of suppliers such as CoinInvestDirect, etc.?

 

So I'm thinking it becomes an inflation hedge, but one that you can't actually benefit from owning or spending.

 

Therefore, is the point of owning gold purely to protect your wealth, and you'd have to wait potentially many years for any confiscation ban to be dropped, and ownership to become legal again, before you can then convert your (hopefully) inflation-proof hedge back into useable currency to spend?

 

Just some random thoughts, as I've just received my first gold and silver coin delivery from CoinInvestDirect, and placed an order for some more, and am thinking what actual practical use owning gold has, apart from my above-mentioned ponderings.

 

And would silver ever be subject to any confiscations? Or is it just gold?

 

 

very good questions

 

 

 

 

For those people who hold their own physical gold (i.e. not using ETFs or an intermediary like BullionVault etc.), what good is holding gold if it becomes illegal to do so?

 

 

 

some thoughts...

 

1. possession is 9/10ths of the law. These new SWAT teams are a precursor of things to come in the UK, whatever the usa does, the uk follows very swiftly - remember the 'law' is stacked against you, and can be changed at whim by the process of problem reaction solution.

 

There may come a time when owning gold is akin to owning heroin.

 

2. 'they' can make anything they like 'illegal' (i.e. marijuana, now legal, now not, now legal etc etc i.e coca cocaine, once the staple of coca cola type drinks in the 1900s, now replaced with the killer aspartame, i.e. booze, ref the prohibition in the 1920s) - you'll notice that all 3 items above are easy to get hold of and you'll notice that they sell at a premium far outweighing their cost price.

 

3. Do you want to be robbed by having your fiat frns (paper promises) inflated away to oblivion or do you want to make a stand and own the bullion - then deal with the consequences down the line?

 

I know what I'm doing and it is legal now.

 

I strongly suspect owning bullion down the line will become illegal. See below.

 

 

 

Presumably you can't spend it?

 

 

 

Wrong dude. Black market, use your head and take precautions, there will always be a market for 'illegal' (i.e. changed at a whim items that politicians wish to tax) items via bartering - as cgnao (LOL LOL LOL) keeps reminding the salacious, one sov = 1 month at the vice house of your choice ... many items are 'illegal' now and trade quite freely on the open market, drugs are the prime example and are run by tptb to fund black ops projects worldwide, research clinton/mena, and who pioneered the use of opium in china? the british crown. Think they've got out? think again. Current military policy in Afghanistan has opened the opium floodgates once again - coincidence? LOL

 

 

 

 

And would the authorities find out that you owned gold, by trawling through the records of suppliers such as CoinInvestDirect, etc.?

 

 

 

They would try. Spread your purchases around, use small coin dealers, ebay, buy abroad, import, don't leave a paper trail, use intermediaries, friends/family. The 'authorities' are by and large pretty incompetent and if you cover your tracks you should be in the clear. You can't say the same about kitco records, perth mint records, bullionvault and goldmoney - all subject to seizure by predatory govts - see the swat teams, sec etc - only recently lichtenstein banks have been doing the dirty on their clients and accounts have been seized by the irs, same is happening in switzerland, no longer the bastion it once was, so in the evn of force majeure i have no confidence in zurich/hazmat or whatever they are, neither do i in the biggest sharks on god's green earth, lloyds...

 

 

 

 

So I'm thinking it becomes an inflation hedge, but one that you can't actually benefit from owning or spending.

 

 

 

In 6,000 years no govt has ever prevented ownership or spending from those who hold strong, not those who buckle like the lilly-livered in 1933...no govt has been able to prevent private barter between like minded individuals, cut out the middle man, the taxman...

 

 

 

 

 

Therefore, is the point of owning gold purely to protect your wealth, and you'd have to wait potentially many years for any confiscation ban to be dropped, and ownership to become legal again, before you can then convert your (hopefully) inflation-proof hedge back into useable currency to spend?

 

 

 

All these threats are in place to STOP you buying, and it seems in yr case the propaganda has worked (it is scaring you) - remember, govts do NOT want gold in private hands, they want central bank control of gold - but that cannot be done any longer, the genie is out of the bottle. I think they have come up with very clever long cons, etfs, which are ripe for confiscation, with the etf individual owners being paid out at the deemed market rate - confiscation will also be very very difficult to implement imo, not without sending out troops with ground penetrating radar to houses and mansions and farms all over each land, no, there are many articles on confiscation, and it seems to me if that route is approached then a temting fiat offer will be made to entice the majority of loose weak hands, the push is towards 5 regional currencies then one world digital currency, so think along those line and how gold and silver will fit in with such plans...

 

 

 

Just some random thoughts, as I've just received my first gold and silver coin delivery from CoinInvestDirect, and placed an order for some more, and am thinking what actual practical use owning gold has, apart from my above-mentioned ponderings.

 

 

 

In future spread yr purchases around, use yr noggin, pay cash, trade locally, use intermediaries etc etc

 

 

 

And would silver ever be subject to any confiscations? Or is it just gold?

 

 

Silver etfs are ripe for confiscation, perth mint for govt seizure, kitco pool for the fed swat teams etc etc, i am suprised the money laundering ruse has not been played more yet, they have think tanks working out ways to rob you, but look at T5, the best laid plans etc

 

LOL

[Billy]

You are saying that VIA MAT vaults could go bust and keep my gold. Wow the whole world is going to come to the end, mad max here we come!

 

 

 

I am saying for the second time that you are totally incorrect. See my first post above and reread until it sinks in.

 

You have great faith in hazmat, as if an insurance company has never gone bust in the past, or as if confiscations have never happened in the past! :lol:

 

What you suggested/outlined is clearly NOT the same as owning your own gold in your own hands. If you wish to give your savings to people in foreign lands in exchange for some pixels on a screen go right ahead.