Pixel8r Posted March 23, 2009 Report Share Posted March 23, 2009 About Seasonality I thought seasonality was due to Indian demand for jewellery varying through the year. When investment/safe haven demand becomes the dominant factor, seasonality becomes less important. I strongly suggest this article: Understanding Gold by Paul van Eeden http://www.usagold.com/gildedopinion/vaneedengold.html This was a very interesting bit from the above article, keep in mind this information was from 1997 before this gold bull started. The size of the gold derivatives market Late in 1997 the London Bullion Market, the most important market for gold in the world, announced the size of gold trading for the first time. Approximately 1,000 tonnes of gold traded through its facilities every day, which includes physical gold and gold derivatives. 1,000 tonnes of gold is just over 32 million ounces. Keep in mind that gold not only trades in London, it also trades in New York, Tokyo, Brussels, Hong Kong, Dubai, Turkey, Singapore, South Korea and other financial centers. But for the sake of simplicity, and to remain conservative, assume that total world trading of gold is not much more than London Bullion Market trading. So, let us assume that gold trades on average only 1,000 tonnes per day. Remember that these are very conservative estimates based on the available information. The actual size of the market is by definition larger than this. If gold trades five days a week, 52 weeks a year, it means that roughly 260,000 tonnes of gold changes ownership during the course of a year. 260,000 tonnes is almost 8.4 billion ounces of gold. To put this in perspective, the total amount of gold ever mined is only about 137,000 tonnes. All the central banks in the world together own only 31,400 tonnes. The amount of physical gold that trades every year is, by comparison, a minute 4,500 to 5,000 tonnes, and the annual trade deficit that everyone talks about is an infinitesimal 276 tonnes. The physical gold market is less than 2% of the size of the derivatives market. The annual supply deficit is only about 0.1% of the total market and central bank sales, which everyone is blaming for the demise of the gold price, are only 0.12% of the gold market. The price of gold The value of annual gold derivatives trading is twice as much as the total amount of gold that has ever been mined, and this figure is based on a conservative estimate of the size of the derivatives market. But only about 5,000 tonnes, or 4% of the total amount of physical gold, changes hands every year. It is obvious that the physical gold market is absolutely dwarfed by the size of the derivatives market for gold. It is logical and inevitable that the derivatives market, not the physical market, determines the price of gold. Link to comment Share on other sites More sharing options...
romans holiday Posted March 23, 2009 Report Share Posted March 23, 2009 This week will be telling for pog. The market seems indecisive here. Stocks could continue to rally which could see gold sold of a bit. On the other hand gold could move up a little and establish a higher range. Can not seeing gold rocketing anytime soon. I will be keeping some powder dry in US dollars for a while yet. Link to comment Share on other sites More sharing options...
Pixel8r Posted March 23, 2009 Report Share Posted March 23, 2009 This week will be telling for pog. The market seems indecisive here. Stocks could continue to rally which could see gold sold of a bit. On the other hand gold could move up a little and establish a higher range. Can not seeing gold rocketing anytime soon. I will be keeping some powder dry in US dollars for a while yet. I think you are wrong, we have just broken out of the down channel with the Fed's announcement of QE, which is dollar negative and gold positive. Target $1200 and 62 Gold/Silver ratio. Link to comment Share on other sites More sharing options...
romans holiday Posted March 23, 2009 Report Share Posted March 23, 2009 I think you are wrong, we have just broken out of the down channel with the Fed's announcement of QE, which is dollar negative and gold positive. Target $1200 and 62 Gold/Silver ratio. Well, firstly my opinion was hedged so how could I be wrong? [1200 could be the top of a higher range... hardly a rocket] As for the reaction to the QE news, do you not think that could have been a bit of a knee-jerk reaction by investors, an inflation scare, and that investors, a notoriously fickle lot with a short attention span [or maybe that's traders] may run after stocks if gold fails to meet their expectations. No doubt Bernanke will have to keep scaring them with more QE in order to fight deflation which could see the stock market rally strengthen. Also, if you are not trading at all and are a long term holder of gold where you believe it will do extremely well for fundamental reasons, why are you concerned whether gold goes up or down here? Do you need something as erratic as a short term rising pog to justify or verify your firmly held belief? In so far as he was concerned, wouldn't the buy and hold investor type prefer to see pog do down and stay down for a while in order to be able to acquire more? Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 23, 2009 Author Report Share Posted March 23, 2009 http://gold.approximity.com/gold-silver_watch.html Link to comment Share on other sites More sharing options...
Pixel8r Posted March 23, 2009 Report Share Posted March 23, 2009 Well, firstly my opinion was hedged so how could I be wrong? [1200 would be the higher range... hardly a rocket] As for the reaction to the QE news, do you not think that could have been a bit of a knee-jerk reaction by investors, an inflation scare, and that investors, a notoriously fickle lot with a short attention span [or maybe that's traders] may run after stocks if gold fails to meet their expectations. No doubt Bernanke will have to keep scaring them with more QE in order to fight deflation which could see the stock market rally strengthen. Also, if you are not trading at all and are a long term holder of gold where you believe it will do extremely well for fundamental reasons, why are you concerned whether gold goes up or down here? Do you need something as erratic as a short term rising pog to justify or verify your firmly held belief? In so far as he was concerned, wouldn't the buy and hold investor type prefer to see pog do down and stay down for a while in order to be able to acquire more? I am not concerned about if the price of gold goes up or down really. I just think that it will, due to the current state of affairs. I would prefer this currency crisis to be over and things to return to productivity and to sell my gold, but that doesn't look like it is going to happen any day soon. I was trying to say that I think you are wrong holding dollars when they have just announced QE is starting. It is unlikely now to end anytime soon, which can only lead to the dollar falling in value and gold increasing. They have put a floor under it, now it seeks the ceiling. From Jim Sinclair; The Federal Reserve moves to self financing by buying tons of US Treasury instruments in a clear message that: Inflation = Good Deflation = Bad Therefore: Higher price of Gold = Good Lower price of Gold = Bad Which also infers that: Higher dollar = Bad Lower dollar = Good. This simple formula seems to be too complex for the talking heads who seem to have a difficult time making simple adjustments to their broadcasts, such as no smiling when reporting the Dow is down 500 points or now looking incredulous when reporting gold isup $1. Fed quantitative easing via financing themselves put a floor under gold. When you have a floor under a market it will seek the ceiling. The first floor temporary ceiling is at $1224. After that look to $1650 followed b y Alf’s numbers. Link to comment Share on other sites More sharing options...
romans holiday Posted March 23, 2009 Report Share Posted March 23, 2009 I am not concerned about if the price of gold goes up or down really. I just think that it will, due to the current state of affairs. I would prefer this currency crisis to be over and things to return to productivity and to sell my gold, but that doesn't look like it is going to happen any day soon. I was trying to say that I think you are wrong holding dollars when they have just announced QE is starting. It is unlikely now to end anytime soon, which can only lead to the dollar falling in value and gold increasing. Yes, I see your point but if you think as I do that we could see a large dip in pog at some time you need to keep some powder dry in some currency. The dollar is perhaps the best in an ugly contest for this. It also gives you diversity in currencies and a hedge. Link to comment Share on other sites More sharing options...
Pixel8r Posted March 23, 2009 Report Share Posted March 23, 2009 Yes, I see your point but if you think as I do that we could see a large dip in pog at some time you need to keep some powder dry in some currency. The dollar is perhaps the best in an ugly contest for this. I don't think we will see a big drop soon. I actually believe that has already happened from $1030 to $698. I think when we go through £1000 next time (which will happen over the next month), we won't then come below it again. The pound might have been better over the last couple of weeks, heading back to $1.50 now I think. Link to comment Share on other sites More sharing options...
gwizzie Posted March 23, 2009 Report Share Posted March 23, 2009 I don't think we will see a big drop soon. I actually believe that has already happened from $1030 to $698. I think when we go through £1000 next time (which will happen over the next month), we won't then come below it again. The pound might have been better over the last couple of weeks, heading back to $1.50 now I think. What makes you think this PX. I dont agree with you but i am interested in your thinking behind it. Link to comment Share on other sites More sharing options...
Pixel8r Posted March 23, 2009 Report Share Posted March 23, 2009 What makes you think this PX. I dont agree with you but i am interested in your thinking behind it. Now that the US has started QE, people will come to realise that holding dollars is not the thing to do. China will stop buying their debt and start selling to buy commodities. Lots of US debt will now start returning to the US and they will have to ramp up the printing presses. How long till they announce the next $300 billion of QE? $1000 has been a big barrier to get through and when it happens convincingly I don't think we will go back below. I know that James Turk is of the same opinion, and I have also noted that Ker is now predicting the same in his latest analysis. I think he is now spot on after his daft talk of $200. This is just my opinion, not really based on anything in particular more a gut feeling than anything, so don't take my word for it This is taken from Money & Markets newsletter by Martin Weiss today; Why Banking Bailouts, Buyouts, and Nationalizations Can Only Prolong America's Second Great Depression And Weaken Any Subsequent Recovery (Edited Transcript of Press Conference Presentation) The Fed Chairman, the Treasury Secretary and Congress have now done more to bail out financial institutions and pump up financial markets than any of their counterparts in history. But it's not nearly enough — and, at the same time, it's already far too much. Two years ago, when major banks announced multibillion-dollar losses in subprime mortgages, the world's central banks injected unprecedented amounts of cash into the financial markets. But that was not enough. Six months later, when Lehman Brothers and AIG fell, the U.S. Congress rushed to pass the TARP, the greatest bank bailout legislation of all time. But as it turned out, that wasn't sufficient either. Subsequently, in addition to the original goal of TARP, the U.S. government has loaned, invested, or committed $400 billion to nationalize the world's two largest mortgage companies ... $42 billion for the Big Three auto manufacturers ... $29 billion for Bear Stearns, $185 billion for AIG, and $350 billion for Citigroup ... $300 billion for the Federal Housing Administration Rescue Bill ... $87 billion to pay back JPMorgan Chase for bad Lehman Brothers' trades ... $200 billion in loans to banks under the Federal Reserve's Term Auction Facility (TAF) ... $50 billion to support short-term corporate IOUs held by money market mutual funds ... $500 billion to rescue various credit markets ... $620 billion in currency swaps for industrial nations ... $120 billion in swaps for emerging markets ... trillions to cover the FDIC's new, expanded bank deposit insurance, plus trillions more for other sweeping guarantees. And it STILL wasn't enough. If it had been enough, the Fed would not have felt compelled this week to announce its plan to buy $300 billion in long-term Treasury bonds, an additional $750 billion in agency mortgage backed securities, plus $100 billion more in Fannie Mae and Freddie Mac paper. Total tally of government funds committed to date: Closing in on $13 trillion, or $1.15 trillion more than the tally just hours ago, when the body of this white paper was printed. Link to comment Share on other sites More sharing options...
Catflap Posted March 23, 2009 Report Share Posted March 23, 2009 I'm getting conerned that the inflation beast is already stiring with all this money printing. http://www.forbes.com/2009/03/18/consumer-...-recession.html CPI Rises Despite U.S. Recession Lisa LaMotta, 03.18.09 Higher-than-expected increase raises questions about future inflationary pressures. The U. S. economy continues to falter as companies cut back, countless Americans lose their jobs and the markets continue to be erratic, but somehow, consumer prices are rising. The Labor Department reported Wednesday morning that the Consumer Price Index, a key indicator of inflation, rose by 0.4% in February over the prior month. Increases in energy prices were only partially offset by a drop in food costs. Economists surveyed by Thomson Reuters had expected that consumer inflation would increase a bit more moderately, by 0.3% for February--matching the 0.3% rise in January. (See "CPI Inches Higher In January.") Some analysts would have you believe that the slight uptick in recent months of the CPI means that America has avoided the dreaded threat of deflation, but Peter Schiff of Euro Pacific Capital -- who has been bearish on U.S. economic prospects for years -- said he believes the increase is a sign that something worse is yet to come. Schiff points back to the time of the Great Depression and asked, "How much worse would it have been if prices had been rising?" We may just find out, as the U.S. crawls deeper into one of the worst recessions in more than half a century. Schiff said temporary factors like the rising dollar have been holding inflation down, but added that the counterbalance of the government stimulus programs means inflation is going to skyrocket once the dollar loses ground -- making things like food and gas unaffordable to the average American, especially those out of work. "This shows some massive inflationary pressures beneath the surface," said Schiff. "Prices should really be falling right now. That would actually be healthy. If you think about all the income people are losing -- what's happening to people's wealth, their home equity, their stock-market portfolio -- if at least this was being offset by a fall in the cost of living it wouldn't be as painful. Consumer prices are supposed to fall in correlations with a loss in income and assets. " The energy component of the CPI rose by 3.3% in February, following a 1.7% pickup in the month prior, while the gasoline index rose by 8.3% last month. In contrast, the indexes for fuel oil and natural gas both declined in February and are well off their highs from last July--the gasoline index is down by 44.0% from its peak. Meanwhile, the food and beverages index declined by 0.1% in February; and the food-at-home index, which includes prices for the major grocery store food groups such dairy and meat, fell by 0.4%. Link to comment Share on other sites More sharing options...
gwizzie Posted March 23, 2009 Report Share Posted March 23, 2009 Now that the US has started QE, people will come to realise that holding dollars is not the thing to do. China will stop buying their debt and start selling to buy commodities. Lots of US debt will now start returning to the US and they will have to ramp up the printing presses. How long till they announce the next $300 billion of QE? $1000 has been a big barrier to get through and when it happens convincingly I don't think we will go back below. I know that James Turk is of the same opinion, and I have also noted that Ker is now predicting the same in his latest analysis. I think he is now spot on after his daft talk of $200. This is just my opinion, not really based on anything in particular more a gut feeling than anything, so don't take my word for it This is taken from Money & Markets newsletter by Martin Weiss today; I dont think Bernanke had a choice in the QE. Perhaps thats the quantity of bonds which China wants to get rid of at the mo. China are raising cash, they seem willing to sell when gold gets towards 1000 Link to comment Share on other sites More sharing options...
Pixel8r Posted March 23, 2009 Report Share Posted March 23, 2009 I dont think Bernanke had a choice in the QE. Perhaps thats the quantity of bonds which China wants to get rid of at the mo. China are raising cash, they seem willing to sell when gold gets towards 1000 If you take a look at this link; http://www.greenenergyinvestors.com/index.php?showtopic=6242 You can see that in fact there was $148.9 billion inflow in January alone. I don't think this will be the end of it, it will escalate from here. So what do you think china will do as the gold price goes through $1000, I think they will step up their selling and the US will step up their buying of their own debt with newly created money. This is the start of the downward spiral which is going to carry on getting more extreme. Link to comment Share on other sites More sharing options...
FWIW Posted March 23, 2009 Report Share Posted March 23, 2009 Thought i'd share this link with you guys: http://www.sitkapacific.com/files/Sitka_Pa...ient_Letter.pdf I'm still trying to understand the key messages, but maybe you guys can help? Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 23, 2009 Report Share Posted March 23, 2009 I see someone's decided that gold is a relic again Times are great, sell sell sell Link to comment Share on other sites More sharing options...
lowrentyieldmakessense(honest!) Posted March 23, 2009 Report Share Posted March 23, 2009 I see someone's decided that gold is a relic again Times are great, sell sell sell Ron Paul giving investment advice in the FT link Financial Times March 22, 2009 Ron Paul: Believer in small government predicts 15-year depression By Phil Davis Pension trustees and insurance company portfolio managers look away now. Your increased commitment to government bond holdings in recent times is about to blow up spectacularly. At least, that is the view of Ron Paul, the US congressman who ran against John McCain in last year’s Republican Party presidential nomination. His is a minority view. Yields on government bonds worldwide have been falling fast over the past few months and in the UK, the commencement of “quantitative easing” this month sent bond prices soaring. But the credibility of both western governments and their currencies is waning, and has been ever since the gold standard was abandoned in 1971, says Mr Paul. And that means even “safe” investments are far from safe, he claims. “People will start to abandon the dollar as current and past economic policies create a steep rise in interest rates,” Mr Paul says. “If you are in Treasuries, you will need to be watchful and nimble to time your escape.” Unfortunately, cashing out will not protect the value of investments, he insists, because “fiat” currencies will all decline over the coming years as measures to try to haul the world economy out of recession fail. “The current stimulus measures are making things a lot worse,” says Mr Paul. “The US government just won’t allow the correction the economy needs.” He cites the mini-depression of 1921, which lasted just a year largely because insolvent companies were allowed to fail. “No one remembers that one. They’ll remember this one, because it will last 15 years.” At some stage – Mr Paul estimates it will be between one and four years – the dollar will implode. “The dollar as a reserve standard is done,” he says. He sees little hope for other currencies where central banks have also created too much liquidity dating right back to the early 1970s. “Europe and the US will both have to fundamentally change their money systems,” he adds. And don’t even mention shares to Mr Paul: “The last place you want to be is in the stock market,” he says. “It may not bottom out for 10 years – just look at Japan.” Of course, everyone has a view on the credit crisis, its causes and putative solutions. What differentiates Mr Paul is that he has been warning of the dangers to the world economy for nearly 40 years. “The breakdown of Bretton Woods was my motivation for running for Congress. I have been talking about the dangers ever since and warning that the control by central banks over the money supply would create an enormous bubble.” A deep recession had only been avoided up until now because of the efforts of successive governments to reflate the economy. But there are no more policy levers left, says Mr Paul. “This is the big one.” Unsurprisingly, Mr Paul has been viewed as a crank in Washington, dismissed as a doomsayer and a party-pooper. His bill early this year to abolish the Federal Reserve was largely ignored. And his adherence to the Austrian School of economics, which predicted that fiat currencies would destabilise the world economy, has won him few friends. “People don’t like the Austrians because they are against big government, against armies and against the welfare state. To accept Austrian economics, you have to accept limitations of credit expansion and that is what has kept the government and financial firms in business for so long.” However, his views are, for the first time, being taken seriously in Washington. Like another politician who recently aimed for high office, Al Gore, Mr Paul’s uncomfortable truths are starting to be deliberated at elevated political levels. “Before last summer, in meetings nobody really knew I was there. Now they often defer to me on economic matters. But you won’t catch any of them admitting that publicly – not yet at least.” He believes that markets will fall much further and inflation rise much higher before his fellow politicians recognise that the system has failed. “We are likely to see an inflation depression,” Mr Paul says. “In the 1970s, we had stagflation, but not depression. Inflation depression is what you see in Zimbabwe.” Even Nouriel Roubini, the renegade economist whose once “extreme” views are now mainstream, fights shy of this analysis. The investment options arising from the analysis are no more palatable. In fact, according to Mr Paul, there is only one: gold. Such an unproductive asset (unless you are a jeweller) appears unattractive even with the gold price having risen three-fold during the Bush administration. But Mr Paul argues that the current price of about $900/ounce could look cheap in a few years. “It is not so much that gold will go up but that fiat currencies will go down,” he says. He even advocates a return to the gold standard, which he says is not as difficult as it sounds to achieve. Mr Paul, it should be noted, first invested in gold nearly 40 years ago when it was worth $35/ounce and holds a part of his wealth in the metal. But he is not alone: gold exchange traded commodities have seen record inflows in the past six months, most wealth managers now recommend a core holding and central banks are loath to sell their quotas. Indeed, Russia has even announced it is buying gold. Nevertheless, most large institutions, including pension funds, have little or no gold holdings. Mr Paul argues this is a mistake and decries the widely held view that gold is an anachronism. “Gold is natural money and has been for 6,000 years,” he says. “You just can’t repeal those laws. A scrap of paper, which the government can just add a nought to, will not do.” He does not, though, expect the mainstream investment industry and its advisers to rush to the bullion vaults Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 24, 2009 Author Report Share Posted March 24, 2009 Jim Sinclair: http://jsmineset.com/index.php/2009/03/23/the-geithner-plan/ In gold I am sure that nothing will change as the average trader buys strength and then sells weakness, endlessly making fools of themselves. It will be this way to $1650 and beyond. Link to comment Share on other sites More sharing options...
jamesspeed Posted March 24, 2009 Report Share Posted March 24, 2009 China calls for new reserve currency - From today's FT http://www.ft.com/cms/s/0/7851925a-17a2-11...00779fd2ac.html Link to comment Share on other sites More sharing options...
warpig Posted March 24, 2009 Report Share Posted March 24, 2009 Interesting, but unfortunately still backed by fresh air... Things seem to be hotting up. China calls for new reserve currency - From today's FT http://www.ft.com/cms/s/0/7851925a-17a2-11...00779fd2ac.html Link to comment Share on other sites More sharing options...
drbubb Posted March 24, 2009 Report Share Posted March 24, 2009 ...it feels alot like that big news-driven move in Gold/GLD last week. Gold/GLD has now retraced some of those big gains ... update I would expect stocks to at least retrace into today's opening gap, and possibly lower. I did not buy any GLD or gold shares. My GLD-$92 target was hit at the end of the trading day, when I was sleeping. If GLD opens with a push down on Tuesday, it could retest GLD-90 or lower. But if it can hold the closing level, then I may step into the market. Larry Pesavento: "Gold's in trouble." "If it falls below $920, it could fall much further." "Too many people are loaded up with gold, expecting the end of the world." "The 'Buy level' could be (as lows as) $700." L. Pesavento's podcasts : http://www.tfnn.com/interview_archives.php Link to comment Share on other sites More sharing options...
warpig Posted March 24, 2009 Report Share Posted March 24, 2009 Not long term it isn't. I think Larry's in trouble. Larry Pesavento: "Gold's in trouble." "If it falls below $920, it could fall much further." "Too many people are loaded up with gold, expecting the end of the world." "The 'Buy level' could be (as lows as) $700." L. Pesavento's podcasts : http://www.tfnn.com/interview_archives.php Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 24, 2009 Report Share Posted March 24, 2009 Thought i'd share this link with you guys: http://www.sitkapacific.com/files/Sitka_Pa...ient_Letter.pdf I'm still trying to understand the key messages, but maybe you guys can help? The main point I get from that is that is almost useless looking at non-CPI adjusted stock market charts. Whether it is REALLY going up or down or staying the same depends on the prevailing price environment. Link to comment Share on other sites More sharing options...
Pixel8r Posted March 24, 2009 Report Share Posted March 24, 2009 Larry Pesavento: "Gold's in trouble." "If it falls below $920, it could fall much further." "Too many people are loaded up with gold, expecting the end of the world." "The 'Buy level' could be (as lows as) $700." L. Pesavento's podcasts : http://www.tfnn.com/interview_archives.php I expect gold to vault through £965 today, so that would mean his hedge pays off Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 24, 2009 Author Report Share Posted March 24, 2009 Not long term it isn't. I think Larry's in trouble. +1 Link to comment Share on other sites More sharing options...
HPCsoYESTERDAY Posted March 24, 2009 Report Share Posted March 24, 2009 I expect gold to vault through £965 today, so that would mean his hedge pays off You're in danger of becoming a bit of a contra-indicator on here pixel8r - especially now that you're in cahoots with ker! Link to comment Share on other sites More sharing options...
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