Gold Bubble goes POP?

Discussion in 'Business & Economics' started by Believe, Apr 15, 2013.

  1. Believe Happy medium Valued Senior Member

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    1,194
    Anyone else think the gold bubble has finally blown? I am excited about this since I should be able to get some coins now at somewhat decent prices. I however doubt it will go below around $1200 an ounce since that seems to be the current cost to recover and ounce. I believe I predicted this a while ago but I was unable to find my posts relating to it.
     
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  3. Carcano Valued Senior Member

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    Theres a big difference between the paper (futures contract/ETFs) price and the physical price.

    This is because its possible to use 'naked shorts'...and buy contracts without taking delivery of the actual metal.

    https://en.wikipedia.org/wiki/Naked_short_selling

    This is one of the worst aspects of our commodities market system.
     
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  5. Jack Reacher Registered Member

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    Currently, Gold is being traded at a much higher price than it's true value. I have a personal interest to hold and have been panning gold since I was a boy. Like Carcano stated, large corporations buy and sell rights to gold/silver etc. Which means you get a piece of paper stating you own the rights to however many grams or ounces. If you are looking to make money there will always be money in gold, although you will soon see the prices of silver vastly increase as well. If you care to indulge do some research on the J.P. Morgan Paper Silver Scandal. The federal reserve also stated they currently hold 0, yes zero, ounces of above ground silver. That information is months old now mind you, but it is important to remember. I now own over 300 ounces of silver(NO PAPER!), slowly adding to the hoard.

    May I welcome myself to the forum, I am Jack Reacher. (lol)
     
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  7. Bowser Life is Fatal. Valued Senior Member

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    What are the current prices on gold and silver? It seems that gold took a small dump recently.
     
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    at 15:30 Eastern time,* on 24 April13 Bloomberg is showing gold up at $1427/oz (troy of course) & silver at 23.03/ oz but I think that is from the futures market, not spot price. The widely held and followed GLD is at 139.08 per share. WTI Oil is at $91.55/brl, also up.

    * I think that is the daylight version.
     
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Gold price now so low that there is little profit for many producer so fact production in 2012 was less than in 2011 is not strange and will still be declining in 2013, but physical demand is soaring (China especially it has doubled YoY) Here is why GLD is a "screaming buy" now:

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    When 2013´s Q2 data is in expect the blue bar to be near 500! Read why here:
    Glad I´m long, not short and just went longer on GLD 300 sh for less than 40K. ($132.31/sh - I like numbers like that on my GTC buy orders so can remeber the price.)

    By edit monday 20 May eve: GLD closed at 135.12 for a one business day gain of $2.81/sh or on 300sh, $843, but one day gain don´t mean much as one year gains (or losses) do.
     
    Last edited by a moderator: May 21, 2013
  10. kmguru Staff Member

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    11,757
    Was about $1200 and now $1370...need to ask my local guy if I want to buy them...That is a good price for severe Quantitative Easing....
     
  11. Buddha12 Valued Senior Member

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    Seems that since the stock market has been climbing everyone's moving over to it and selling their gold.
     
  12. Carcano Valued Senior Member

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    Once the national debt reaches a certain level QE becomes a permanent compensation to keep interest rates from exploding upward.
     
  13. joepistole Deacon Blues Valued Senior Member

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    With the gold spot price at $1,369.09, I think gold will continue to slide. I just don’t see anything to drive the prices higher or to support current prices. Money is moving into equities. And with inflation low (1%) and the prospect of inflation way down the road and interest rates extraordinarily low, I just don’t see a lot of money moving into the gold markets at this time. When, if, gold gets to $1,000/ounce I would be interested. When and if silver gets to $18-$19 per ounce, I would be a buyer. But right now, I think gold and silver are overpriced. There are too many other investments out there that are much more attractive. It doesn’t matter what it costs to produce gold. If the demand for the product is not there, it really doesn’t matter what it cost to produce the metal. The price will always be determined by supply and demand and not the production cost.
     
  14. joepistole Deacon Blues Valued Senior Member

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    22,882
    That is pure nonsense.
     
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Your statement, now bold, is because you can´t see beyond US borders. The buying of gold, both by governments and people, is surging upwards to rates never before seen. In YoY terms, probably more than doubled in China and India*, the two largest buyers in the world. In many western world cases, due to need to raise funds in a tough economy, paper gold is being sold, which has fallen in price giving near-sighted people like you a very false understanding. Demand for paper gold in US has dramatically dropped. Asian want gold they can bury in the ground of have their women wear it to parties. Russia is an important "sink" for gold now too - as I recall, they bought >400 tonnes in 2012.

    * India has a 6% import duty, so to see the near doubing you need some estimate of how much is smuggled in. In india that is thought to be the dominate source for the people but there is a lot of smuggling into China also, as many Chinese don´t want the government to know they have gold burried in the back yard.

    BTW, The demand for kilogram bars has out stripped the supply, so to get one your premium over gold cost is at least 15% now. And the supply is dropping as some higher cost producers have shut down.
    * On first reading I thought they had reversed these two. I think now it is OK if understood as negative paper demand going to positive physical demand.

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    Scale is: tonnes / year
     
    Last edited by a moderator: May 23, 2013
  16. joepistole Deacon Blues Valued Senior Member

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    22,882

    Oh, I can see quite well beyond US boarders. The gold market is a global market. And the price of gold didn’t go from $1,800/ounce to $1,300/ounce because of strong demand. The price dropped $500/ounce because of weak demand. The problem is I am not married to preconceived and ill-conceived notions.

    If you guys want to buy gold, go for it. Buy to your hearts content.
     
  17. Syzygys As a mother, I am telling you Valued Senior Member

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    12,671
    When you are shorting you don't need to take delivery, actually, you have to deliver it when you buy it back...technically speaking...
     
  18. Chipz Banned Banned

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    838
    i think maybe da value of stock is not in line with common economic issue and muhc of current valu records in indicees is bye-product of inflated currency. buying power seems to be down.
     
  19. kmguru Staff Member

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    Yet we have an international currency and hence everyone will do the same tied to the Dollar...that would be interesting...
     
  20. Carcano Valued Senior Member

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    6,865
    This interview with Jim Rickards author of "Currency Wars' outlines the possibility that China is behind the recent paper market smack down in the gold price...as a way of acquiring more physical gold for their trade reserves.


    Interview starts at 12:00
    http://www.youtube.com/watch?v=h9KL7KJVj94
     
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Yes, as he notes, they have motivation now, to help Goldman Sucks, and others who may be short, hold prices of paper gold down, but not later as they have been world´s largest producer for more than 3 years and also at least equal to India in gold imports.

    Years ago, I speculated why: I.e. China, when US dollar collapse will help more than it hurts (long term*) will back their bonds for central banks only with gold. That will make the current trend to get dollars as an ever smaller part of central banks reserves rapidly accelerate. Many are buying gold at an increasing rate already, but gold pays no interests. They would prefer Chinese bonds, backed by gold, that does pay interest, certainly much more than dollar bonds do now. If the RMB were a reserve (or THE reserve) currency, China could pay for its imports with printed paper, as US has done for some decades. US & EU in deep depression would also reduce global demand for items, like oil, minerals, lumber & food stocks, China must imports so then China saves two ways (pays with paper & lower prices on goods)

    * China has been reducing the percent of its reserves held in dollar assets (US bonds) for 3 or 4 years now, but when the dollar crashes, will take a ONE TIME hit but EVERY YEAR THEREAFTER, pays with paper for it lower cost imports (as broke US and EU, no longer get loans from China with which to buy imports and no one wants to be paid in falling value paper printed by US Treasury.) Before it is to China´s net benefit to see US and EU collapse, they need to (1) grow their trade with others so it is at least greater than trade with US and (2) get the Chinese to spend more and save less. They are making rapid progess on (1) but only slow progress on (2). More see post 639 of the "BRIC news and thread" at: http://www.sciforums.com/showthread...amp-comments&p=2961102&viewfull=1#post2961102

    For the Chinese view of what is needed for the RMB to become a reserve currency, see: http://usa.chinadaily.com.cn/opinion/2012-07/20/content_15605603.htm
     
    Last edited by a moderator: May 26, 2013
  22. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Dead Cat about to fly as shorts cover? (on significat stock "correction" but how low before that soaring flight will paper gold, like GLD, go?)

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    Text about red arrow:
    From same source:
    "Physical demand for precious metals in Asia remains quite strong despite even more efforts in India to curb demand and there is some potential for a big short-covering rally if equity markets continue to falter, though most analysts seem to think that even lower metals prices are ahead."
    And I add there is about 15% premium on 1Kg bars for delivery now and waiting list at producers of those bars of rich Asians wanting to buy.
    If Ben gets cold feet, and some day he must, that cat´s gona fly.
     
    Last edited by a moderator: May 27, 2013
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    In post 6 of 12 days ago I said "GLD is a screaming buy" and told I bought 300 sh at $132.31/sh.

    Well Gold itself just crashed thru the $1400/oz ceiling to be now, still early in the trading day at $1415.50 and GLD is 137 so I´m up $4.69 per sh or $1,400+ and by CoB of today will not be surprices to see that be a gain of $1500. Hope some readers took my "buy GLD" advice.

    My "screaming buy" was based on fact buyers of physical gold, especially in China and India were buying at twice their normal rate and at $1350/oz or less some producers were losing money to produce. Gold production in 2013 at annualized rate was down ~10% with demand doubling! The dealers in paper gold can play all the games they like, but reality will come thru in the end, and seems to be doing so now. Even Goldman Sucks can´t change this strong physical demand! (I hope they are amoung the shorts.)

    The outflow of gold from GLD which was about 350 tons seem to be over - sight net inflow happened yesterday. This sudden crash of GLD´s holding was first due to minor drop in GLD price, which caused a few margin calls, some of which were met by selling. This selling drove GLD lower and it seemed to be that a deep crash was coming so many went short. (Highest number of short future contracts ever!)* but then there was slight bounce up with return to the low in a week or so. That made a classic double bottom - the strongest technical indicator of rising prices. Those shorts covering (eating their losses in some cases) is why the current rise will continue. A return to $1500/oz gold in less than a month is very plausible, IMHO.

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    Now the right side "up rise" of the W is more solid. Here text telling what I told then too:
    * Confirmed by first graph from another source in post 19.
     

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