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@GF: thanks a lot, things are beginning to warm up again. It's been a long two years.

 

I had to dust off this knowledge too. :) Another thing: yes, we have backwardation in some maturities, but the GOFO values are not dramatic yet, and we were close to zero anyway. It's still in the microscopic stage. Let's watch that dynamics.

 

http://www.zerohedge...013/07/GOFO.jpg

GOFO.jpg

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Re: Backwardation/GOFO<0 one more time: Given it is only up to six months maturity and very small so far, some sort of short squeeze in upcoming deliveries, i.e. a high need for borrowing bullion to make deliveries fairly short term, is in my opinion the most likely reason. If this was the grand COMEX meltup, then all maturities should be in heavy backwardation - but they are not by a long stretch. However, it is a dynamic situation, so it might as well be the innocent looking start of the Big One. ;)

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do you plan to rotate out of metals at some point GF or just hold forever?

 

Of course I will sell most of my gold when the time comes, and in the past I have written a lot about when I think that this will possibly be the case. Right now, my fundamental indicators tell me that gold is a strong buy.

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Of course I will sell most of my gold when the time comes, and in the past I have written a lot about when I think that this will possibly be the case. Right now, my fundamental indicators tell me that gold is a strong buy.

 

Do you have a sell plan?

 

If not yet, what will you want to see before beginning to develop one?

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Do you have a sell plan?

 

If not yet, what will you want to see before beginning to develop one?

 

Contrary to a single stock someone may trade, gold - for me - is a long-term macro-"trade"(investment). Also, it is macro in a global sense. It is political. Because it is political, I can't come up with all the brilliant ways politicians may screw up over the next decade or so. I look at my quantitative fundamental indicators, but politics will have to be in line too. A "Volcker" at the Fed again? Unlikely, I suppose, but who knows. With Obama, Bernanke (and maybe Yellen), Draghi, Carney and Abe in place, given the fundamental quantitative indicators, I can only conclude: "very strong buy"!

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Yeah. I agree with that.

And more importantly, so does Kyle Bass - who remains a long term bull on Gold:

.

http://www.youtube.com/watch?v=rQdlifGg7eI

.

What I was really asking was:

Are you tracking closely the other indicators such as the Gold-to-Oil ratio (which I know you look at) - as a key indicator to tell you WHEN to sell Gold?

.207j.png

.

For me, something like a 25:1 Ratio, of Gold-to-WTI would get me thinking of switching out of Gold into Oil, or maybe out of Gold altogether.

.

Have you got a long term chart showing Gold-to CRB ?

.

If you like this "Ratio" approach to valuing Gold, what else would you look at?

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COMEX gold registered inventory below 1m ounces.

 

 

goldcomex11-7-13_zps84e87fcd.jpg

 

 

 

GOFO negative for three days in a row. Didn't even happen in 2008, 2001 or 1999.

 

Brinks' COMEX registered gold fell by more than 37% overnight - now at 134,524.79 ounces, or 4 tonnes..

(on Friday, Brinks had over 13 tonnes and now only 4 tonnes!)

 

Harvey Organ is asserting that JP Morgan has issued delivery notices for 500,000 ounces, still to be delivered from their roughly 500,000 ounces held in toto at the COMEX. If that's true, their vault is basically empty..?

 

Bring it on. Paper gold to zero.

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Here is some interesting, slightly dated Goldman Sachs research. On p. 9 it says:

 

http://www.nowandfut...mmodity(GS).pdf

The relationships in Exhibits 10 and 11 can be quantified through the use of a regression analysis. As seen in Exhibit 12, the gold lease rates are well-explained by the TED-spread and the level of COMEX registered gold inventories. Exhibit 13 reports the results of this regression analysis of the (log) one-year gold lease rate on COMEX registered gold inventories (in million troy oz) and the one-year TED-spread. The analysis was performed on the log of the gold lease rate in order to capture the non-linearity evident in Exhibit 10. As reported in Exhibit 13, a one million ounce increase in COMEX inventories decreases the gold lease rate by 0.68% while a 100 bp increase in the TED-spread increases the gold lease rate by 0.95%.

 

By "explained" they mean the goodness of fit of a multilinear regression (it seems). So, according to this, dwindling COMEX inventories >> rising lease rates >> falling GOFO.

 

COMEX gold registered inventory below 1m ounces.

...

Bring it on. Paper gold to zero.

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Over the past 11,000 or so posts, I have mentioned quite a few of those things.

Hi GF, I always enjoyed looking at those weird shapes in the scatter plots (e.g. for gold$ vs silver$ 2-D over time), but I saw a few weeks ago (over at Approximity) that they had not been updated for quite a long period. It would be lovely to see them again, in the context of the last few months' action, if you have time or inclination.

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Over the past 11,000 or so posts, I have mentioned quite a few of those things.

 

Actually, I know that.

But there are some new readers here, who might appreciate an overview on how you look at things

 

I have started a special thread for your charts in another section:

http://www.greenenergyinvestors.com/index.php?showtopic=17200

 

And have added a few of my own, and will repost some more material there,

unless you want to highlight some of your charts and post them there yourself

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Actually, I know that.

But there are some new readers here, who might appreciate an overview on how you look at things

 

I have started a special thread for your charts in another section:

http://www.greenener...showtopic=17200

 

And have added a few of my own, and will repost some more material there,

unless you want to highlight some of your charts and post them there yourself

 

All due respect, but I think it would be better if GF posted new charts here, as that link is only accessible to registered users.

No pressure GF!

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That is fine.

 

But people (including GF) who want to repost their favorites to the other thread are invited to do so.

 

And Lurkers can join GEI and sign in to view the Charts collected there :

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Very interesting.

 

Seen in http://www.mauldinec.../ttmygh/what-if

 

25769.png

Very good - I liked this part near the beginning:

The whole thing is as baffling as Kim Kardashian's fame.

But let's get back to that chart and those two lines — here it is and there they are.

25108.png

Source: Bloomberg

.

#1 : August 17, 2011:

The day that Hugo Chavez, then president of Venezuela, demanded the repatriation of the 99 tons of gold (worth $13 billion at the time) from the Bank of England

.

Line #2 : January 14, 2013:

The Bundesbank announced that it wanted its 300 tons of gold returned from the custody of the Federal Reserve Bank of New York

.

GOLD (and Gold receivables) as "One line items":

.

as their balance-sheet line items go, the world's major central banks differ to an extent:

 

The Federal Reserve lists its gold holdings as:

"Gold (including gold deposits and, if appropriate, gold swapped)"

 

The Bank of England has what's left of theirs as:

"Gold (including gold swapped or on loan)"

 

The ECB opts for:

"Gold (including gold deposits and gold swapped)"

 

And the SNB goes with:

"Gold holdings and claims from gold transactions"

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Interesting, and saved for posterity:

 

http://www.zerohedge...sh-all-time-low

 

JPM Eligible Gold Plummets By 66% In One Day To Just Over 1 Tonne, Total Gold At Fresh All Time Low

 

For over a month, JPMorgan managed to mysteriously avoid matching up the gold held in its (world's largest) vault with the Comex delivery notice update. However, as of today, that particular can will be kicked no more. Starting yesterday, JPM reported that just under 12,000 ounces of Eligible gold (the same Registered gold that two days earlier saw its warrants detached and convert to eligible) were withdrawn from its warehouse 100 feet below CMP 1. But it was today's move that was the kicker, as a whopping 90,311 ounces of eligible gold were withdrawn, accounting for a massive 66% of the firm's entire inventory of non-Registered gold, and leaving a token 46K ounces, or a little over 1 tonne in JPM's possession.

 

 

cme-stocks-19-Jul-2013_zpsa1e1e90a.jpg

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wow...

 

 

http://www.reuters.com/article/2013/07/19/derivatives-gold-idUSL1N0FP1CB20130719

 

 

The April 2013 futures contract went into backwardation 30 trading days before April 1, while the June contract went into backwardation 42 trading days before June 1. The August contract turned over 55 days before August 1, and the October contract flipped on July 8, 61 trading days before October 1.

Over the short term, some expect backwardation will spark a squeeze on paper investors in the gold market as the physical demand will force traders looking to cover short positions to bid up the spot price in an effort to shore up inventories.

"The bullion banks want to get gold back into contango and stop the movement of the remaining inventories by shaking the market lower, using paper leverage to do so," wrote Naylor-Leyland.

"It hasn't worked, indeed more and more investors are now seeking allocation, delivery and physical metal at the expense of synthetic products offered by the banks. The squeeze we have been waiting for is closing in, it is always darkest just before dawn."

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JPM Eligible Gold Plummets By 66% In One Day To Just Over 1 Tonne, Total Gold At Fresh All Time Low

 

For over a month, JPMorgan managed to mysteriously avoid matching up the gold held in its (world's largest) vault with the Comex delivery notice update. However, as of today, that particular can will be kicked no more. Starting yesterday, JPM reported that just under 12,000 ounces of Eligible gold (the same Registered gold that two days earlier saw its warrants detached and convert to eligible) were withdrawn from its warehouse 100 feet below CMP 1. But it was today's move that was the kicker, as a whopping 90,311 ounces of eligible gold were withdrawn...

 

I don't see how they will avoid the PHYSICAL DEFAULT BULLET headed at them.

Maybe they will, but the method they will use is not clear.

 

Perhaps they will have to SETTLE IN CASH, which would be a real shock for the market.

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