Gold Bubble goes POP?

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

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I think it is to preserve the belief in the "full faith and credit" promisse the US treasury bonds will be paid when they mature.

    If the Treasure dose not pay each and every maturing bond, even those held by China, the dollar becomes worth the paper it is printed on.
     
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    There is no "glut of gold" there is a glut of "paper gold" as it can be created by issue of new delivery options. For at least a decade, the price of gold traded in the paper gold market was several hundred times larger in volume (of "paper gold") that set the price of gold with tiny "fudging" in their self interest by the five or so banks that "fixed" the POG in London twice daily.

    There has also been for a few years a physical gold DEFICIT, which was covered by drawing down the stock of physical gold in western vaults, and sending it to Asia, mainly. That source is now essentially exhausted. Why SHIF day is coming soon, as the physical demand is soaring.
     
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Well if that were cause of a strong dollar, and not the petro-dollar arrangement with Saudi Arabia, then why is the currency of the world's greatest trader (both inports and exports separatly) not stronger than the dollar?
     
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Here is quote I agree with {as most of the facts come from well repected sources I have directly read}:
    Supply and demand for physical gold, not paper gold, will soon be the market setting the POG. For some, it was a profitable "house of cards" while the game lasted.
     
  8. joepistole Deacon Blues Valued Senior Member

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    I don't understand the point you are trying to make BillyT. The very simple fact is, the value of the US Dollar and for that matter the value of any country's currency rests in its economy and what people are willing to pay for it. It isn't reliant upon petrodollars or debt. It's dependent upon the US economy and the faith people have in the US. It really is that simple.
     
  9. joepistole Deacon Blues Valued Senior Member

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    Well you can hope, and I know you will, but as previously and repeatedly pointed out to you, your premise is deeply flawed. I think you should cut your losses. But it's your money and yours to loose.
     
  10. joepistole Deacon Blues Valued Senior Member

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    Except there is:

    "The dramatic sell-off in gold came in a matter of minutes in Shanghai. More than 33 tonnes of gold, worth about $1.3 billion, traded in two minutes.

    "The exact reason for the selling was unclear. Recent strength in the U.S. currency and expectations for higher U.S. rates have undermined the case for holding gold and other precious metals, while analysts also note that China imported a record volume of gold in 2013 that has created an oversupply situation. Still, the swiftness of the decline surprised traders and resulted in two separate trade halts in U.S. gold futures" http://money.cnn.com/2015/07/21/investing/commodities-prices-gold-oil-copper-aluminum/

    I have suggested many times you not frequent the web sites of gold sellers. For them, it's always time to buy gold because they are always selling gold. An oversupply, is a glut. Gold doesn't go from 1,900 dollars per ounce to a little over 1,000 dollars an ounce if gold is as scarce as you believe it is.
     
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Did you give the wrong link for your quote? Where did your quote come from? I want to read it, in full. China and several others are importing gold (just counting the official channels, not the large smuggle in volumes) faster than ever before. - see graph of SGE imports, first at end of this post.

    I went to the link you gave and only thing releated to it I found there was:
    "Supply glut, dollar strength: The poor demand is being exacerbated by too much supply. The commodities boom, fueled by China's explosive growth in previous years, caused energy and metals companies to ramp up production to levels that today's market just can't support. Look at how North American oil producers pumped so much oil out of the ground that now there is a huge supply glut.

    Your link does NOT say there is a glut of physical gold. Your statement:
    ... the swiftness of the decline surprised traders and resulted in two separate trade halts in U.S. gold futures"
    Refers to "paper gold" / future trading markets, not physic gold markets or demand. Are you confussed or thinking they are the same?

    Yes there is a "supply gut" especially in petroleum and in iron ore, but not in gold. Gold is being removed from western vaults and sent to Asia, mainly as demand can not be met from current mine production and recycling melt.

    As you can see in graph below people (and firm?) are removing gold from the main importing channel, SGE, faster than ever before. Thus, to avoid having the SGE vaults become emptied as most in US and Europe have, both India and China are importing more gold than ever before - soaring demand. The second graph below shows that. Global demand for physical gold now exceeds mine production and not even adding the recycling gold (old watches, jewlery, etc) is the supply equal to the demand - exactly the opposite of a "glut in gold" Most still privatedly owned in ETFs, like GLD, the largest have strong-hand owners now. The weaker hands sold their physical gold - why those vaults now hold much less than they did a couple of years ago. - I.e. Western ETF vaults have little gold left to met the defict in supply as they did for a few recent years. No "glut" in physical, but a supply DEFFICIT that requires higher gold prices to be met.

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    Note that begining in 2013 the "Chindia" demand ALONE for physical gold exceeded production (the faint white line) and others, like Russia, Turkey etc. are net buyers of physical gold too. Only with POG increased can this growing demand be supplied - a deficit, not a glut.
     
    Last edited: Dec 7, 2015
  12. joepistole Deacon Blues Valued Senior Member

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    Reuters:

    "The exact reason for the selling was unclear. Recent strength in the U.S. currency and expectations for higher U.S. rates have undermined the case for holding gold and other precious metals, while analysts also note that China imported a record volume of gold in 2013 that has created an oversupply situation. Still, the swiftness of the decline surprised traders and resulted in two separate trade halts in U.S. gold futures" http://www.reuters.com/article/us-markets-global-idUSKCN0PU00H20150720


    The fact is BillyT, gold doesn't go from 1,900 per ounce to 1,000 per ounce because gold is in high demand. It does that because there is a supply glut. There isn't enough demand to sustain the price. That is why the price of gold has and continues to fall and fall dramatically.

    As I have told you repeatedly over the years BillyT, you shouldn't believe everything salepeople tell you. Much of the information you use comes from people and organizations who are selling something. Caveat emptor BillyT.
     
    Last edited: Dec 7, 2015
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Wide changes in price in short times are charactistic of future markets. In this case the paper gold market, which are easily manunipulated by big traders. Physical gold prices have been set by these much larger trade volumes in recent years, but the law of supply and demand is returning to set the price of physical gold.

    Thanks for giving the correct link for your quote - nothing new there as it is from: Mon Jul 20, 2015 4:25pm EDT What is new is that demand for physical gold continues to soar, as shown in both graphs of post 168.
     
    Last edited: Dec 7, 2015
  14. joepistole Deacon Blues Valued Senior Member

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    No that price delcine isn't related to "paper gold". "Paper gold" is an illusion, it's a red herring and it's sales puffery gold sellers use to sell gold. The decline in gold prices is a long multi-year decline. And as previously pointed out, gold futures are bearish. Futures are predicting another 10 to 15 percent decline next year.
     
  15. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    You might find this article interesting: http://www.zerohedge.com/news/2015-...sitioning-grows-hedge-funds-add-record-shorts
    It's many graphs are summarized by this quote from it:
    "...it appears hedge funds continue to ignore systemic risk and surging physical demand, following the trend lower in paper gold prices by adding to already record short positions in gold last week. With the speculative world near-record long the USDollar and record short gold, how much longer can the status quo boat can remain upright with so many on the same side. .."

    Their "sinking boat" analogy is same as my SHTF expecations.

    At least you, me and this source all agree: The paper gold market has rarely if ever been so unified in their expectations for lower paper (future) gold prices.

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    The artical concludes with:
    "When there is great unanimity among traders about a market’s direction, they are very often going to be proved wrong – at least in the short to medium term (i.e., over time periods lasting from weeks to months). The caveat is that even more pronounced positioning extremes have occurred in a few short time periods during the 1980s and the 1990s, and there is obviously no law that says this cannot happen again."
    And I agree. In an essentially zero sum game like future markets are, not all can be correct - be winners. That is simple math.
     
    Last edited: Dec 7, 2015
  16. joepistole Deacon Blues Valued Senior Member

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    Actually, I have no interest in conspiracy oriented web sites. The unfortunate fact is gold prices have been in a long-term decline. That means there are more sellers than buyers. The fact is the futures indicate, that decline will continue. The fact is there is no compelling reason to buy gold at this point in time, other than one likes to buy gold or fears some catastrophic event which will send us all back into the dark ages.
     
  17. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    What a difference half a year makes!
    Many seem to agree as in 2016 thru 29 April, GLD has had a net influx of gold worth $6,158.82 million dollars! (I. e. more than six BILLION dollars.)
    Data from: http://www.etf.com/etfanalytics/etf-fund-flows-tool after you enter GLD and start + end dates in the three boxes provided.
    Note 1296 demand tons > 1,135 supply tons, tends to indicate "You ain't seen nothing yet" in terms of POG rise.
    Note much of Indian gold buying it by farmers.
    They don't save in bank, but are badly hurt this year by the worst drought in several decades.
     
    Last edited: May 14, 2016
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Also reported by Reuters two more developments:
    *probably significantly more as both countries keep gold data secrete. Most experts think China, at least, has several times more than in admits.
    I suspect Reuters & Soros may know more of what seems to be in the works.
     
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    * ref to negative intestest rates and many central banks selling dollar to buy gold.
     
  20. sculptor Valued Senior Member

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    predict a high?
     

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