GOLD

[azazel]

Simple solution, scrap the monthly gold trading thread and pin Goldfingers GOLD thread. Easy.

 

[Pixel8r]

Simple solution, scrap the monthly gold trading thread and pin Goldfingers GOLD thread. Easy.

+1

 

 

[chazza]

+1. Too many people taking themselves too seriously.

 

+1

[bakachu]

First hand report of 'golden week' in China:

 

Kitco Thread

 

Some really interesting pictures and observations.

 

DrB, have you noticed an increase in gold fever in HK?

[enrieb]

- 1

 

Welcome to the forum.

[G0ldfinger]

- 1

 

I think this is a good thread.

I feel the need to say something:

 

I am not at all against the threads, after all, I was the founder of them as far as I can see! I only do not like the trading spin put on them by the titles/subtitles.

 

I also do not see the advantage of monthly threads. It makes searching for posts much more difficult.

 

That's all really!

[harvipark]

+ 1

 

Can i have a +1 too?

[Jake]

+ 1

 

That's a quick re-incarnation, unless i am mistaken, CD.

[romans holiday]

Simple solution, scrap the monthly gold trading thread and pin Goldfingers GOLD thread. Easy.

-1

 

The gold bugs took offence at times to the preceived trading [a perjorative term in their vocabulary] going on. Unfortunate but fair enough. The obvious solution is for the gold bugs to have a thread of their own, which caters to their sensibilites... each to their own... and then another thread which continues to deal with broader issues.

 

That does not stop bulls, bugs and bears, investors, traders and hedgers, from posting on all threads... just that they should be aware of which thread they are posting on.

 

imo the other thread should be titled "the gold bugs thread".

[grumpy-old-man]

-1

 

The gold bugs took offence at times to the preceived trading [a perjorative term in their vocabulary] going on. Fair enough. The obvious solution is for the gold bugs to have a thread of their own, which caters to their sensibilites... each to their own... and then another thread which continues to deal with broader issues.

 

That does not stop bulls, bugs and bears, investors, traders and hedgers, from posting on all threads... just that they should be aware of which thread they are posting on.

 

From: http://www.youtube.com/watch?v=gb_qHP7VaZE

[romans holiday]

From: http://www.youtube.com/watch?v=gb_qHP7VaZE

Enough to make you want to be a Roman.

[grumpy-old-man]

Enough to make you want to be a Roman.

 

sorry, in fairness I should have put GF's reply in also.

 

[Pixel8r]

Sometime a while back DrBubb raised some questions about the actions of the Gold Cartel which I couldn't answer.

 

I mentioned that I would pass the questions on to James Turk to see if he had time to answer them.

 

I have received his response to DrBubb's questions today. Please excuse my strange colour scheme, I thought It would make it easier to understand who was who.

 

Pixel8r:

 

So the US government intervenes in the gold market to make the dollar look worthy of being the world's reserve currency when of course it is not equal to the demands of that esteemed role. The US government does this by trying to keep the gold price low, but this aim is an impossible task. In the end, gold always wins, i.e., its price inevitably climbs higher as fiat currency is debased, which is a reality understood and recognized by government policymakers. So recognizing the futility of capping the gold price, they instead compromise by letting the gold price rise somewhat, say, 15% per annum. In fact, against the dollar, gold is actually up 16.3% p.a. on average for the last eight years. In battlefield terms, the US government is conducting a managed retreat for fiat currency in an attempt to control golds advance.

 

So how does the US government manage the gold price? They recruit Goldman Sachs, JP Morgan Chase and Deutsche Bank to do it, by executing trades to pursue the US governments aims. These banks are the gold cartel. I don't believe that there are any other members of the cartel, with the possible exception of Citibank as a junior member. The cartel acts with the implicit backing of the US government to absorb all losses that may be taken by the cartel members as they manage the gold price and further, to provide whatever physical metal is required to execute the cartel's trading strategy. How did the gold cartel come about?

 

DrBubb:

 

Okay.

So exactly how does it "recruit Goldman Sachs, JP Morgan Chase and Deutsche Bank to do it, by executing trades to pursue the US governments aims"?

 

And how do they SHORT gold?

 

James Turk:

 

To answer this question, you have to distinguish between "paper gold" and "physical gold". Most activity by the gold cartel takes place in the paper market, both OTC and futures. But because paper gold sometimes has to be delivered, the gold cartel dribbles out physical gold as well when needed every once in a while. This physical gold comes from central bank vaults in a few ways: outright sales, central banks delivering against option positions they write, and gold lending.

 

DrBubb:

 

Why do the Gata people rarely talk about the function of the banks in managing Gold price risk for their mining company clients?

 

James Turk:

 

GATA is not one person. It is a group of writers who share the common aim - to achieve a gold market unfettered by gov't intervention, or at least at a minimum, to get honest reporting by gov'ts about their gold intervention. Just look, for example, how central banks defy generally accepted accounting principles by reporting gold in the vault and their gold loans as one line item, which is as outrageous as saying cash and accounts receivable are the same thing.

 

Anyway, some GATA writers do write about company hedging, but this hedging is no longer the factor it once was. This hedging in the past provided central banks with a smoke-screen, so they could put physical metal into the market without being noticed by market participants who were not part of the gold cartel. But hedging has been totally discredited because the mining companies are fixing future revenue instead of what they should be fixing, which is their ongoing costs. Currency debasement and rising costs have destroyed the margins of mining companies who have hedged. The only ones left with big hedge books are Anglogold and Barrick, which explains in part why they have been underperforming the share prices of other gold miners. And hardly any company is putting on new hedges.

 

DrBubb:

 

And why do we never hear about how these banks would get around the various risk limits imposed by regulators.

 

James Turk:

 

What risk limits? The Basel accords which many of the big banks have now broken when their assets are accurately marked-to-market? Banks aren't regulated. If they were, the would not have made all those crazy and imprudent real estate loans. And in any case, much of the activity is off bank balance sheets, in bank holding companies or structured vehicles. And remember, we are talking here about only a few banks, basically Goldman Sachs, JP Morgan Chase, Deutsche Bank and perhaps Citibank.

 

 

DrBubb:

 

I think this is vague thinking, and I wont believe that there is a broad conspiracy until I get some solid answers to these questions.

 

James Turk:

 

There is no conspiracy. It is public policy. You obviously have not read the GATA material going back 10 years. If you do, you will see gov't intervention in the gold market was confirmed by Alan Greenspan in testimony before Congress (among others), but this policy is not new. For example, both GATA and zerohedge.com have recently disclosed now declassified papers going back to the 1960s confirming the anti-gold policy of the US gov't.

 

DrBubb:

 

Consider:

+ The cartel, if it exists. must be using the Gold futures market as a key arena in which to manipulate the gold price. Futures are really the only place where one can readily short the gold price, and hold the shorts for a long period of time.

James Turk:

 

The futures market is probably only 1/10th the size of the OTC market, but unfortunately, OTC data is not available - except for the BIS and US Controller of the Currency reports on derivatives (which I understand excludes forwards). And gold derivatives have surged even though mine hedging has dropped to zero. Some of this surge no doubt is speculators taking short positions, but most of it is gov't short positions. Obviously, for every buyer there has to be a seller.

 

Also, with "spot deferred" contracts, the shorts can be held essentially forever. For example, Barrick's shorts are evergreen "spot deferred" contracts and can be rolled and rolled and rolled. Barrick has been rolling their shorts for years. These shorts have an average price around $320. That's why Barrick has a $6 billion negative marked to market.

 

DrBubb:

 

And since the Comex releases weekly reports on trading activity, you ought to be able to see their maneuvers by tracking that data. You wont see everything, since there is a large OTC market, but you will get a good idea of what they are doing. It wouldnt make sense to ahve a huge position in OTC, and do the reverse in the futures market, because one would then be "trading against oneself", and leaving some easy profits to arbitragers.

 

James Turk:

 

Agreed, and the COT reports precisely mirror gold cartel activity. Look at the recent explosion in open interest for example. Or the surge is open interest every time gold approached $1010. Or the surge is open interest every time gold approached $910. These increases were largely the gold cartel selling paper.

 

DrBubb:

 

+ If the allow the price to rise at 15% per annum, then "the cartel" must be buying gold, as well as selling it. So they are also "manipulating" the price UPWARDS when it falls - we never hear about that from GATA

 

James Turk:

 

Yes and no. They sell paper gold at key levels and keep selling to cap the price. That's why open interest surges. Eventually this volume of selling in the paper market turns the gold price lower, and the gold cartel uses that opportunity to buy - namely, cover their shorts. This pattern has been repeated time and again for the past decade, and has repeated recently. Only once (from August 2005 to May 2006) did the cartel have to cover at higher prices. I expect they will have to cover again at higher prices as we move to the end of the year. Back in Aug 2005-May 2006, physical demand for metal overpowered the gold cartel. The same thing is happening again now. The tipping point this time is when Greenlight switched from GLD into physical metal.

 

The above highlights the important point to understand the gold market. The battle is between the gold cartel selling paper vs. the buyers of physical metal. The gold cartel keeps retreating when the buyers of physical start taking large amounts of physical. When the gold cartel retreats, the price of gold climbs. The gold cartel operates mainly in the paper gold market, and uses paper 'promises' to influence the gold price. But in the end, the demand for physical metal drives the gold price. That's one reason why I like to say that gold always wins.

 

DrBubb:

 

+ They cannot keep selling, else they would have run out of gold years ago, so it makes sense that they buy as well as sell

 

James Turk:

 

The gold cartel never runs out of paper gold. It can be created out of thin air like any national currency. But they only have a limited amount of physical gold, which they use sparingly. They also use a lot of anti-gold propaganda, making the market think that they control the gold price. They don't. The gold price is really in the end determined by the market. But the gold cartel does have a lot of influence because they probably have about 10% of the aboveground gold stock in their control. If you owned 10% of all the Picasso paintings in the world, you couldn't control the price of Picasso's because the price depends on how the market views those paintings. But you could heavily influence the price of Picasso's and occasionally cap the price by dribbling out a Picasso even now and then to make it appear that you had an unlimited supply of them.

 

DrBubb:

 

+ Have you looked at the COT report figures?? I have spent HOURS compiling that data, and reaching some conclusions about it, and they are consistent with the idea that "the commercial" (ie the big banks, the "cartel") are buyers of gold - at times - as well as being sellers.

 

James Turk:

 

You have to distinguish between the big commercials (the gold cartel) and all the other commercials. The big commercials buy to cover shorts only, and are not long buyers. The non-gold cartel commercials are buyers and sellers, which is the way the futures market is supposed to work. It is not supposed to be used for price manipulation, but the US gov't makes its own rules and does what it wants to further its aims.

 

Also, look at the concentrated short positions. Silver is more extreme than gold, but why have the concentrated shorts in silver been short for 15 years? Why have they never gone long?

DrBubb:

 

+ Once you accept that they both sell and buy, why not learn to read the behaviour of the commercials and buy when they are buying, and be prepared to take profits when they become aggressive sellers. Let them work FOR YOU rather than trying to beat them

James Turk:

 

I agree with that. The Black Box trend followers however do not understand that point. So the gold cartel has been feeding off of them. Just look at how much money the Black Box trend followers have lost in gold trading this decade (John Henry & Co is just one example). Together they have lost billions, which has gone into the gold cartel's pocket to cover the gold cartel's losses. Though it makes money from its trading as I describe above, as the gold price rises the gold cartel members are losing a bundle from their gold liabilities on their balance sheet.

 

But here's the important point going forward. Greenlight's decision to move out of GLD into physical was the tipping point. We have begun a scramble for physical metal that in the months ahead will send gold soaring and the gold cartel can't stop it. Make sure you own physical gold (not paper gold) and also make sure your physical gold is safe and secure.

 

Regards

James

[TrueNorth]

Thanks Pixel8r. Most informative.

[bitbigt]

I guess we all know this - but I want to put it on the table for comment

 

Gold is not rising significantly, the Dollar and Sterling are falling significantly. ...so far they have lost 30-40% compared to other currencies in the last year or so.

 

I note that the Icelandic Kronor has only lost 50% as a result of its country's economic collapse. So unless you believe we're due full blown destruction of the Dollar and Sterling then one has to wonder how much further these two currencies will fall before finding a base.

 

 

 

[LauraB]

Enough to make you want to be a Roman.

 

Once more the forgotten & maligned 'Campaign for Free Galilee' is being discriminated against.

 

Me? - FWIW I follow GF; without recourse (so far) to sacred sandals, gourds or juniper bushes.

 

This is one situation where I can't work it out for myself. Heavenly rewards guaranteed.

 

 

& if I ever come across anything informative that hasn't been posted .............

 

[romans holiday]

Once more the forgotten & maligned 'Campaign for Free Galilee' is being discriminated against.

 

Me? - FWIW I follow GF; without recourse (so far) to sacred sandals, gourds or juniper bushes.

 

This is one situation where I can't work it out for myself. Heavenly rewards guaranteed.

 

 

& if I ever come across anything informative that hasn't been posted .............

What I meant was the Romans didn't squabble amongst themselves like a bunch of over-zealous Judaeites.

 

Don't follow anyone is my advice... look at the whole spectrum then follow your own instincts.

[alexreeve]

I guess we all know this - but I want to put it on the table for comment

 

Gold is not rising significantly, the Dollar and Sterling are falling significantly. ...so far they have lost 30-40% compared to other currencies in the last year or so.

 

I note that the Icelandic Kronor has only lost 50% as a result of its country's economic collapse. So unless you believe we're due full blown destruction of the Dollar and Sterling then one has to wonder how much further these two currencies will fall before finding a base.

It's lost 50% and the option of swapping it for anything else. And an inflation rate of around 20%. Not a bad investment really.

http://en.wikipedia.org/wiki/2008%E2%80%93...inancial_crisis

On 28 November, the Central Bank of Iceland and the Minister for Business Affairs agreed a new set of currency regulations, replacing the central bank's restrictions imposed early on in the crisis. Movements of capital to and from Iceland were banned without a license from central bank. It is estimated that foreign investors hold some €2.9 billion in króna-denominated securities, popularly known as "glacier bonds".

 

The foreign exchange rules also oblige Icelandic residents to deposit any new foreign currency they receive with an Icelandic bank. There is anecdotal evidence that some Icelandic exporters had been operating an informal offshore foreign exchange market, trading pounds and euros for krónur outside the control of any regulator and starving the onshore market of foreign currency. Hence the central bank had to sell €124 million of currency reserves in November 2008 to make up the difference, compared with an estimated trade surplus of €13.9 million.

[Jake]

Thanks. I am a long time lurker. Gold is hotting up so I thought I'd contribute what little I know.

 

You have me in the same fits of laughter my old friend CDS did! Funny that! I wonder if you are not perhaps related

[sideshow]

I guess we all know this - but I want to put it on the table for comment

 

Gold is not rising significantly, the Dollar and Sterling are falling significantly. ...so far they have lost 30-40% compared to other currencies in the last year or so.

 

I note that the Icelandic Kronor has only lost 50% as a result of its country's economic collapse. So unless you believe we're due full blown destruction of the Dollar and Sterling then one has to wonder how much further these two currencies will fall before finding a base.

 

The last bout of GBP "strength" lasted all of one day

 

I think another 5% fall against USD is on the cards before the next quantitative easing announcement. So I suppose it depends on how much profit taking / correction you think there will be before gold's next leg up.

[ziknik]

sorry, but i have to register my frustration at now having about 3 'investment' gold threads and a separate trading thread. It's just not working for me

 

I think my main problemm is i just dislike having to look in >1 place; it has worked fine for the last 19 months, hasn't it?

It feels like 'divide and conquer' to me

 

EDIT: Why has 'investing' been removed from the thread tittle? Has anyone asked DrBubb / Steve NW?

[Pixel8r]

Still Waiting For Gold to Crash? Better Read Below...

 

Dow Theory Letters publisher Richard Russell has issued an uncharacteristically bullish statement on gold. Russell, who is perhaps that most famous and enduring market newsletter publisher, called the bottom of the 1972-1974 bear market. Russell uses some proprietary indicators to forecast market trends. He's probably been, over the last 50 years, the most consistently accurate market forecaster. Here's what he says about gold:

 

“Meanwhile, a great bull market starts, it's a bull market that mirrors the demise of the dollar. Gold is priced in dollars, and as the dollar weakens, it takes an increasing amount of fiat dollars to buy an ounce of gold…Beginning in 1999 gold started up in a primary bull market. In my personal opinion, this is fated to be one of the greatest bull markets in history. It will be a bull market built on not one, but two powerful human emotions -- both greed and fear. The speculative third phase lies ahead. Slowly but surely, the US public will finally realize that the US government is bankrupt both morally and monetarily. People will panic into gold…I believe that there will be a world panic to buy gold. This will set off one of the wildest and most explosive bull markets in history.”

 

There are a several fundamental variables to support Russell's comment. Let me just say that all these bubblevision "experts," who get on t.v., or pen commentary in the Wall St. Journal, and cite declining jewelry demand or industrial demand as reasons why the price of gold is at a top and going lower, have absolutely no clue what they are talking about - in fact, they look like absolute idiots to those who do (see the recent article by Dave Kansas of the Wall Street Journal. I am in shock the WSJ published such sloppy, incompetent reporting).

 

I will address all the reasons why gold is going much higher in future blog posts. But I would like to say that, based on evaluating a lot of evidence that has been brought to my attention from some people who are in a position to know the facts - plus my own recent experiences in dealing with gold and silver deliveries from the Comex - there is a rapidly growing problem with the ability of three or four big banks, who are short Comex and LMBA gold futures contracts in large quantities, to make good on the actual delivery of physical gold. I am now hearing accounts of some large investors being offered cash settlement of their futures contracts at spot plus substantial premiums over spot. In other words, there is a condition of "backwardation" in the gold market that is not evident to the casual participant. This alone, if I am correct, will drive the price of gold substantially higher (and of course, silver will go up even more in percentage terms).

 

[Pixel8r]

I found two very interesting long term shadow stats cpi adjusted PM charts tonight at;

 

http://www.sharelynx.com/chartstemp/FreeGoldSilverSSCPI.php

 

 

 

 

[warpig]

Nice graphs, a gold silver ratio of 20:1 looks quite likely IMO.

 

Thanks for the previous post, I'm always interested in hearing JT's take on things.

 

I found two very interesting long term shadow stats cpi adjusted PM charts tonight at;

 

http://www.sharelynx.com/chartstemp/FreeGoldSilverSSCPI.php

 

://http://www.sharelynx.com/chartstemp...lverSSCPI.php

 

[nicejim]

I found two very interesting long term shadow stats cpi adjusted PM charts tonight at;

2 stand-out dates are 1775 and 1785. The first could be because of the American Revolution and I wonder if this is significant...

 

 

July 6 1785 – The dollar is unanimously chosen as the money unit for the United States (the first time a nation has adopted a decimal coinage system).

 

 

 

Why is the trend downwards? I thought deflation (in prices!) would be the norm in gold if anything.