Jump to content

Recommended Posts

http://www.dailyreckoning.com.au/gold-bull...igh/2008/10/23/

Gold Bullion’s New 14-Year High

By Adrian Ash ...

 

"...It's always darkest before it's pitch black..."

 

YOU MIGHT LIKE to know, if you put store by such things, that the US stock market just sank to a 14-year low against gold.

...

So the Dow/Gold Ratio - which simply divides the one by the other, thus pricing the Dow Jones Industrial Average in ounces of gold - fell to a little above ten, making the 30 stocks of the DJIA cheaper in Gold Bullion terms than at any time since January 1995.

 

20081023.png

Link to comment
Share on other sites

  • Replies 30.9k
  • Created
  • Last Reply

Top Posters In This Topic

  • G0ldfinger

    2616

  • romans holiday

    2235

  • drbubb

    1478

  • Steve Netwriter

    1449

My previous posts on LBM volume:

 

According to data provided by the LBMA, approximately 103,000 metric tonnes gold have been exchanged from Oct 1996 to Sept 2008. That makes approximately 8,000 tonnes a year. This shows that price setting in London alone (not to mention the COMEX) by far dominates jewellery related transactions in terms of volume.

 

To make this an easy example: if activity in the LBM just increased by 50% up to 12,000 tonnes a year (+4,000), jewellery volume (for simplicity 2,000 tonnes) would be double made up for.

 

To extend my previous posts for an inclusion of the COMEX trading volume:

 

http://www.galmarley.com/framesets/fs_trad...utures_faqs.htm

The standard COMEX gold contract is 100 troy ounces – about 3.1kg. COMEX open interest data is more difficult to access. An estimate is about 1500 tonnes. COMEX traded volume exceeds 40,000 contracts daily - or 120 tonnes. This is about 17 times as much gold as is produced worldwide on a typical day.

COMEX: 120 tonnes times 250 trading days is 30,000 tonnes volume per year. In comparison, jewellery: 2,500 tonnes a year.

 

In a financial crisis where investors wake up to gold for good, lack of jewellery demand won't matter much.

Link to comment
Share on other sites

Watch the second one

 

 

 

Cheers :D

 

IMO you should be very worried.

 

QUOTE (SurgeonGeneral @ Nov 24 2007, 01:14 AM)

this is it.

 

100% ......

 

 

Consider also the structural accelerators amplifying at the individual level (british sub-prime, LTV ratios, BTL amateurs panicking,greedy retirees hanging on to property too long then panicking) and i think this will all crash VERY quickly and there will be chaos.....

 

I posted this over on HPC a while back. These are (only) some of the vortices in the turbulence. I've read Mandelbrot's book "The Fractal geometry of Nature", and got his original papers from the British Library, "On Deterministic Non-Periodic Flow" (Journal of the Atmospheric Sciences,1963 I think). Either way, James Gleick' s "Chaos" is an excellent place to start.

 

I thought Mandelbrot was dead. His work deserves a Nobel Prize. It is far more important than Relativity Theory, though little discussed and poorly understood.The implications are profound.

 

The International Monetary System is a non-linear dynamical system. Small perturbations can have massive unpredictable effects. This has been happening for some time and was documented early on by CG on HPC.

 

Those that dissed him, or put their faith in governments and CBs who "understand the system so can fix it" were gravely mistaken.

 

Hence it cannot "be contained"-it is a mathematical impossibility. If you can predict the weather a month from now, you can predict the state of the monetary system.

 

But it can't be done, because the rate of change of the rate of change in a non-linear system is always a variable- as Mandelbrot very elegantly proved.

 

100% gauranteed.

 

(100% in gold)

 

Nick

Link to comment
Share on other sites

Actually I am very worried after watching this:

http://www.pbs.org/newshour/bb/business/ju...lman_10-21.html

http://www.pbs.org/newshour/video/module.h...02008&seg=5

 

I do think we have more pain to come our way...

 

My plan for the moment is to stay out of GoldMoney for the short term...

Keep any eye out for any physical gold on sale from distressed sellers...

Pray...

 

The Newsnight video:

 

Newsnight 2008-10-10

http://video.yahoo.com/watch/3770304/10343679

 

Higher quality version at Veoh, if you have faster BB than me (206MB):

http://www.veoh.com/videos/v16329961HBQktzrJ

 

 

Did anyone watch it ?

 

OMG, no wonder we are in such a mess.

 

Nassim_Nicholas_TalebandProf_Kennet.jpg

 

They just don't get it do they !!!!

 

Link to comment
Share on other sites

To make this any easy example: if activity in the LBM just increased by 50% up to 12,000 tonnes a year (+4,000), jewellery volume (for simplicity 2,000 tonnes) would be double made up for.

 

In a financial crisis where investors wake up to gold for good, lack of jewellery demand won't matter much.

 

Why has gold dropped in price during a financial crisis then? Why did gold crash in 1980, the very day that recession hit the US?

 

I am just saying that by following the jewelry market, the price movements in gold can be easily explained. I believe the vast volumes traded in the West is largely a paper game, and does not consume much actual physical gold. The only explanation given by goldbugs for the falls we have seen during the biggest financial crisis in living memory are mysterious secret organisations. By Occam, I prefer the simpler explanation as it fits the facts just as well.

 

The only analogous market to gold I can think of is housing. Like gold, most housing already exists. Like miners, builders just add a few percent each year. Are you going to tell me that the housing market and builders are disconnected? That houses can boom while builders flounder? Or does a sharp drop in building shares generally give you a heads up that property will shortly be in trouble?

 

To me, Indians (and other Eastern jewelry buyers) are like the first time buyers in the housing market. Investors (BTL) need to outbid the usual "fresh blood", then bid up prices among themselves to create a boom. Tricky in a recession/depression. Worse still, unlike housing, no-one needs gold. Jewelry accounts for over half of the mined gold on the planet. This truly does swamp COMEX etc. Indians are not daft. They will not hang on the hope that the world will switch to gold and make them all millionaires. They will sell to buy basics as the recession hits, IMHO.

 

Unless investors start taking delivery of much, much more physical, rather than just placing paper bets on the existing stock, gold could tank quite badly after Diwali, IMHO.

 

I don't usually make predictions on the PoG, but just for fun, I predict that gold will rise to say $850 over the next few weeks on the back of increased Eastern demand for Diwali and weddings, coupled to low prices, but will return to about $700-$750 well before Christmas.

 

What's your call GF, based on your take of the fundamentals?

 

 

 

 

 

 

Link to comment
Share on other sites

The Newsnight video:

 

Newsnight 2008-10-10

http://video.yahoo.com/watch/3770304/10343679

 

Higher quality version at Veoh, if you have faster BB than me (206MB):

http://www.veoh.com/videos/v16329961HBQktzrJ

 

 

Did anyone watch it ?

 

OMG, no wonder we are in such a mess.

 

Nassim_Nicholas_TalebandProf_Kennet.jpg

 

They just don't get it do they !!!!

I saw it a while back. Poor Nassim looked just about ready to pull his hair out with the fact that they didn't get how potentially dire it all was.

Link to comment
Share on other sites

The gap between the physical gold market and paper gold market is widening. An example bears this out. In Toronto this week, a major off-market gold transaction took place. The price paid was $1075 per ounce on the physical transaction. Its volume was in the multi-million$. There was no US involvement in the transaction, and the settlement was in euros. Enormous repositioning is ongoing by the groups that will participate in the new, partially gold-backed currency.

 

Jim Willie CB, Oct 24, 2008 - http://www.321gold.com/editorials/willie/willie102408.html

Link to comment
Share on other sites

Why has gold dropped in price during a financial crisis then? Why did gold crash in 1980, the very day that recession hit the US?

 

I am just saying that by following the jewelry market, the price movements in gold can be easily explained. ...

I think it is factually completely wrong to claim that the spike in 1980 was coming from jewellery buying/selling. All reports I have ever read implied that the spike was solely caused by investors and central banks. Jewellery played no role as entirely expected and logical.

 

What's your call GF, based on your take of the fundamentals?

I think the DJIA:gold ratio will go below 2.5:1 over the next 5-10 years. I think an average UK house will be for sale below 100oz during periods over the same time interval. I think gold will reach nominal prices north of $2,000 over the same time period. Gold could do much better than these conservative estimates, I should say.

Link to comment
Share on other sites

I think it is factually completely wrong to claim that the spike in 1980 was coming from jewellery buying/selling. All reports I have ever read implied that the spike was solely caused by investors and central banks. Jewellery played no role as entirely expected and logical.

 

Agreed, nothing to do with jewelry buying. I think the gold spike was mostly a result of a natural gold bull becoming a bubble as people thought it would continue, and secondly fear of political instability because of the Iran hostage situation and other issues. The falls started after Reagan came in, the hostages were released, and the aura of international panic subsided enough for it to become apparent that gold had spiked beyond the fundamentals.

 

Link to comment
Share on other sites

The gap between the physical gold market and paper gold market is widening. An example bears this out. In Toronto this week, a major off-market gold transaction took place. The price paid was $1075 per ounce on the physical transaction. Its volume was in the multi-million$. There was no US involvement in the transaction, and the settlement was in euros. Enormous repositioning is ongoing by the groups that will participate in the new, partially gold-backed currency.

 

Jim Willie CB, Oct 24, 2008 - http://www.321gold.com/editorials/willie/willie102408.html

 

Forgive me, I'm going to repeat that:

 

The U.S. Dollar Death Dance

By : Jim Willie CB

http://www.24hgold.com/news-gold-silver-Th...0_Jim_Willie_CB

 

GOLD MARKET CLOSE TO BREAKING

 

The gap between the physical gold market and paper gold market is widening. An example bears this out. In Toronto this week, a major off-market gold transaction took place. The price paid was $1075 per ounce on the physical transaction. Its volume was in the multi-million$. There was no US involvement in the transaction, and the settlement was in euros. Enormous repositioning is ongoing by the groups that will participate in the new, partially gold-backed currency. My take is this movement is from a large financial entity with global activity, and ties to central banks. It might be tied to the upcoming split in the euro, into a Nordic Euro and trashed Latin Euro. The Nordic version might contain a gold component. This and other transactions are taking place with European settlement. They are being satisfied in the alternative market, far from the distortions of COMEX. This was a physical transaction with the real metal being moved. Big shifts occur behind the scenes. A couple of months ago, 400 metric tonnes were moved into storage with the Royal Canadian Mint by a sovereign entity.

 

The more massive the paper manipulation, the more violent the coming correction. The asylum managers are losing control of their paper-physical arbitrage. Watch the gold lease rates, and silver lease rates, which have each more than tripled in the last two months. Lease rates precede price movement. Bullion bankers, including central banks, are reluctant to lease their physical supply. This time is no different, an event to come after the COMEX criminality is swept aside, or simply overwhelmed in return. One well-informed source, with over two decades of gold market experience, actually expects arrests to take place among COMEX officials before long.

 

John Embry of Sprott Asset Mgmt has raised the possibility of a December gold futures contract default. He is not predicting it, or claiming it as certain, but rather mentions how talk centers on the December gold contract as having extreme stress for actual delivery. Pressure is building. The December contract not only is end of quarter, but end of year. He suggests a possible default. He said, “there is probably going to be such an event to change perceptions.” He cited a possible force majeure that could act as a “seminal event that defines the whole situation.” He explained that the physical gold price would then dictate the paper gold price, a return to normalcy, and with a gigantic move up in the gold price. Right now the paper gold market is overwhelming the physical side, but the physical side is constricted on supply. He explained that hedge funds are being unwound on a massive scale, slaughtered by margin calls. The long side must call for delivery on many contracts. He also expects there will be many questions on the Exchange Traded Funds soon as well, although those are surely not as important as the COMEX contract defaults. Watch and listen to his interview on the Canadian Business News Network (CLICK HERE ), and be sure to move to the 10 to 11 minute mark.

 

 

Commodities Report : Commodities: October 21, 2008 : Commodities [10-21-08 11:30 AM]

 

BNN chats with John Embry, chief investment strategist, Sprott Asset Management; and Michael Jones, president and CEO, Platinum Group Metals.

 

http://watch.bnn.ca/tuesday/#clip104603

 

I just need to work out how to download BNN videos. I hate not being able to download a re-watch when I want.

 

Link to comment
Share on other sites

Gold is holding up pretty well, the Dow and houses still look like awful turds in terms of gold.

 

I have always been interested in the fair nominal price of gold given current M3 levels. Most estimates are north of $10,000.

 

Regarding money, they produce arbitrary amounts of it at the moment. So, watch out.

 

I wish you good luck with US Treasuries and Federal Reserve Notes. ;)

 

I have always been interested in the fair nominal price of gold given current M3 levels. Most estimates are north of $10,000.

You can play that game with anything - it's meaningless. I have a 1981 Volvo 244dl sitting in the field. There's not many left in the world and they aren't making anymore. I could use your methodology to value it but it would be futile if I wanted to sell.

 

Regarding money, they produce arbitrary amounts of it at the moment. So, watch out.

"They" produce arbitrary amounts of everything, so watch out?

 

I wish you good luck with US Treasuries and Federal Reserve Notes. ;)

I have no interest in either, unless to short when the time comes. It some gold owners who appear more concerned.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...