What is next for Gold & Silver? (obsolute prices now removed)

Discussion in 'Business & Economics' started by Billy T, Dec 5, 2009.

?

Where is Gold price going next? (give why in post)

Poll closed Nov 30, 2010.
  1. To $1100/oz and then to $1000/oz before back to $1200/oz

    4 vote(s)
    30.8%
  2. To $1100/oz and then back to $1200/oz before $1000/oz

    4 vote(s)
    30.8%
  3. To $1300/oz and then back to $1200/oz before $1400/oz

    0 vote(s)
    0.0%
  4. To $1300/oz and then to $1400/oz before back to $1300/oz

    5 vote(s)
    38.5%
  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Un. of Texas endowment fund takes physical delivery on 6,643 gold bars, worth $987 million on April 15. ... "The fund’s managers sought to take delivery of bullion to protect against demand for the metal overwhelming supply, according to {adviser} Bass {who made $500 million with 2006 bets on a U.S. subprime-mortgage market collapse}. ...

    "Open interest in gold futures and options* traded on the Comex typically exceeds supplies held in its warehouses. If the holders of just 5 percent of those contracts opted to take delivery of the metal, there wouldn’t be enough to cover the demand, Bass said...."

    From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=aE1pHNIIXm74&pos=6

    Billy T comment:I am nearly sure the leverage in these contracts for silver is much worse. I.e. if even 1% of paper silver contract owners tried to take physical delivery, the silver just does not exist to meet the demand. This is one huge house of cards, just waiting for a mild breeze to collapse in.

    ---------------------
    * Normally (now at least) the owner of a "call option" does not take delivery be it for gold, silver, or pig bellies, etc. Instead the person who sold the call buys it back if it is "in the money" (i.e. the call owner has a profit) and if the call's settlement prices is more than the market spot price, then the call expires worthless - Is not exercised by the owner.

    Because of the rapid rise in the price of silver, nearly 100% of the calls are "in the money" but usually settle for cash payment of the profit. To take delivery instead, you must pay the call's fixed price (which is less than the spot market price now) but few do that as to get your net profit, you would need to sell the silver you took physical delivery on, but you could demand your metal as the Un of Texas fund just did, fearing that others may do so too and being later just be told the holding firm went bankrupt - there is no metal to cover your contract.
     
    Last edited by a moderator: Apr 18, 2011
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  3. Pinwheel Banned Banned

    Messages:
    2,424
    Gold has breached $1500 per ounce today currently $1503.60, Silver up to $44.730. G/S ratio 33.6.
     
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  5. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

    Messages:
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    Nothing is in place to stop it from going higher. In the US, the current administration seems convinced that by avoiding the third rail, adjusting entitlements, increases chances of re-election in 2012. If that comes to pass, there will be no meaningful restraint to spending and the worst scenarios could come to pass. The markets are often based on perceptions and if my perception is common, gold will keep going higher as the US and major free market currencies inflate. Yikes.
     
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    "... Silver for immediate delivery climbed 2.1 percent to $47.25 an ounce, the highest price since 1980. The metal has climbed 11 percent this week, a fifth weekly advance and the biggest weekly gain since Feb. 18.

    Gold for immediate delivery rose 1.4 percent this week and was little changed at $1,506.85 an ounce at 6:48 p.m. in Paris after climbing to an all-time high of $1,512.47 earlier today...." From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=a8Qg2fmj44l8&pos=4

    1506.85 / 47.25 = 31.891 first time below 32 for many years. I think the rapid rise in silver probably indicates some shorts are badly squeezed now. Throwing in the towel - buying to cover their short and just eating their loses as they fear it could grow even worse.

    Of course, silver's rapid rise could be do to the sales lady shown in post 179. She has uncovered shorts too.
     
    Last edited by a moderator: Apr 23, 2011
  8. Michael 歌舞伎 Valued Senior Member

    Messages:
    20,285
    Wow silver shot up to nearly $48 .... shocking!

    It's days like today I thank Sciforums Business & Economics

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  9. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

    Messages:
    6,626
    I agree with the analysis that there is a short squeeze involved. I don't think the short covering will end the run; maybe we go flat after a blow out but the blow out is in progress and not over. To me, conditions for a pull back in gold and silver are not upon us yet. I will watch for signs like fiscal responsibility, lessening of unrest in the middle east, and the end of the union's attack on spending cuts, banking and free enterprise. Then gold and silver will pull back, lol.
     
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    To answer thread's question:
    China buying PMs as I predicted and explained why they would back in post 144 and earlier in 115:

    "BEIJING - The central bank is planning new investment funds to diversify holdings in the nation's $3 trillion foreign exchange reserves, to hedge against depreciation and inflation risks, according to a news report.

    The proposed funds will invest some of the foreign reserves in energy and precious metal markets, the New Century Weekly said on Monday, citing unnamed sources close to the People's Bank of China. ..."

    From: http://usa.chinadaily.com.cn/business/2011-04/26/content_12394441.htm

    SUMMARY: China buying PM is another way to get dollars out of its reserves, but only a small part without sending in gold to > $2000/ oz and silver to >$100 /oz. Come to think of it China, as world's largest producer of gold may not be unhappy if gold doubles to >$3000 / ounce and never goes below that again.
     
    Last edited by a moderator: Apr 26, 2011
  11. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Some facts:

    "Of all the silver ever mined (about 46 billion ounces), experts estimate that about 1 billion ounces are left above ground in bullion form. That's because the rest has been consumed, and is also because silver isn't something that is typically economically feasible to "recover." By comparison, of the 5 billion ounces of gold ever mined, about 2 billion are available above ground in bullion form.

    In 2009, worldwide silver production totaled some 700 million ounces. In that same year, however, about 75 million ounces of gold were produced. A wave of demand will influence more heavily the much smaller silver market when compared to gold. Small investors clamoring for a piece of the precious-metals pie could well push silver much higher, ..."

    From: http://moneymorning.com/2011/04/29/the-/

    -------------------------

    April 29 (Bloomberg): “Central banks that were net sellers of gold a decade ago are buying the precious metal to reduce their reliance on the dollar as a reserve currency … China is out to have more gold than America, and Russia is aspiring to the same,” McEwen {CEO of U.S. Gold Corp} said yesterday. “When you have debt, you don’t have a lot of flexibility. China wants to show its currency has more backing than the U.S.*

    In 2010, central banks became net buyers for the first time in two decades, adding 87 metric tons … China, with more than $3 trillion in foreign-currency reserves, plans to set up new funds to invest in precious metals, Century Weekly reported this week. Russia purchased 8 tons of gold in the first quarter. … China, which has just 1.6 percent of its reserves in gold, may invest more than $1 trillion in bullion, Pento {of Euro Pacific Capital} said. “China wants to be an international player*, and they need to own more gold than they currently have.” …” {BT comment: No one knows how much gold China has as for at least three years they have been world's largest producer and they don't tell the production.}
    From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=a3Pxj9OUMnsw&pos=6

    * I suggested more than two years ago that, WHEN READY, China could easily convert the world to using the Yuan, instead of dollars as the international reserve currency (but following is oldest post of this I could find):
    From Oct 2009 post here: http://www.sciforums.com/showpost.php?p=2394434&postcount=192
     
    Last edited by a moderator: Apr 29, 2011
  12. Pinwheel Banned Banned

    Messages:
    2,424
    Gold makes a break for it.

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  13. Pinwheel Banned Banned

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

    Messages:
    23,198
    "... Silver sank after CME Group Inc. raised the amount of cash traders need for speculative positions. ..."
    From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=aVSTLhIw1aqg&pos=1

    BT comment IMO is will lessen the volatility of silver but makes little reduction in the growing demand so the climb to and thru $50/oz will be a little slower but more steady. The simple fact is that just the industrial demand (jewelery included, but not including the investment demand) exceeds current production.
     
  15. Pinwheel Banned Banned

    Messages:
    2,424
    Its now crashed down to around $41....shocking!

    Silver is one volatile beast....

    Gold down to $1530, G/S ratio currently edging back up to 37.
     
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    Much less volatile now:

    "... Silver recently sold off by about 15% from the high, and it seems like the main culprit was the main U.S. metals exchange, the CME Group, who raised margin requirements three times in just over a week! Some brokerage firms even raised the margin requirement to twice as much as the CME requirement.
    The highly leveraged speculators are being forced to exit their positions that they can no longer maintain. Great! WASH 'EM OUT before it gets too out of hand! ..." From: The Tycoon Report <TheTycoonReport@tycoonpublishingllc.com> daily Email to me.

    BT comment: This is same POV I expressed two posts back. China and Jewlers don't buy on margins but to hold or meet production requirements. One should expect the G/S ratio to climb when only silver has the high leverage speculators forced to sell by higher margin requirements. I still expect it will go below 30 before end of year.
     
    Last edited by a moderator: May 3, 2011
  17. nietzschefan Thread Killer Valued Senior Member

    Messages:
    7,721
    Fuck Rockefeller up - BUY REAL SILVER. My bars are up 300%
     
  18. Pinwheel Banned Banned

    Messages:
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    The Gold/Silver ratio has bounced back up, how high it will go no one knows....
     
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198

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    post 190's peak was $49.5
    Currently (~8 AM NYT on 5May11 but graph is automatically updating) is $38/oz so (49.5- 38)/ 49.5 is 23.23% drop. The shorts must be happy now, as well as any miners with recent hedge at price above $38/oz. Here is why the sudden drop (but it does feed on its self too for a while):

    "A year ago, the minimum amount of cash required to trade a silver futures contract stood at $4,250.
    After the latest margin hike, of three in a week, it stands at $16,200."

    Later by edit: The silver futures contract is for 5,000 oz, which at $30/oz is $150,000 so $16,200 is a little more than 10% down on the contract, and was lower percentage when silver was $40/oz.

    ------------------------

    I never deal in the futures market and have never owned any silver or gold. I do own 7 to 9 miners listed in old post still. Only HL is a "pure silver" miner and PAAS is a "silver streamer" not a miner. (Pays up front for right to buy at fixed price production from several miners.)

    The miners have greatly lagged the rise in silver. In some cases because they hedged their production (sold it in advance of production at fixed prices, so did not get the benefit of the rapid rise in silver prices). It is sort of a turtle / hare situation. Generally the miners are plodding steadily higher and only fall back when some government or strike cuts into the production / profits, but diversification helps keep that under control.
     
    Last edited by a moderator: May 6, 2011
  20. Pinwheel Banned Banned

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    2,424
    Right, instead of wobbling downwards its dropping steadily like a rock lol.

    Comment by Billy T added: True. Here is graph of its "straight line" fall:

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    Last edited by a moderator: May 7, 2011
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    "... For silver investors, the best news is that few analysts believe the reversal that gripped the market in recent days is the start of a long-term trend. Strong fundamentals also mean exploration projects are unlikely to slow.

    Silver producers can still make a king's ransom, analysts say, even if prices languish or fall further. Major silver companies report production costs ranging from $4 to $8 an ounce, a mere fraction of the current spot price of around $35.

    "The silver companies are making very good money at $35 an ounce. They'd be making very good money at $30 and most of them would be making very good money at $25," said Charles Oliver, a senior portfolio manager at Sprott Asset Management, one of Canada's top mining industry investors. ..."

    From: http://www.reuters.com/article/2011/05/06/us-silver-idUSTRE7455OY20110506

    As of 28 Oct10 when posted, but worth more now even with the recent slide in silver and gold prices. I still own these positions and probably will when I die (to pass them on to heirs with marked up cost basis). I have larger positions in other stocks like SPHRY and SBS with more than ten fold gains that I am now strongly locked into holding until "death do us part" for tax reasons. Both I have mentioned holding years ago in posts.

    Neither will be hurt by collapse of the dollar. One is the water company of Sao Paulo's ADR and the other is Australian drug company's ADR. Company also owns the IP of very unique molecular nano technology ("dendrimers") with many fields of applications and some products already on the market. Their non-invasive drug, for AIDs and and other STDs, was so promising that NIH has paid for most of its early development costs. (Many poor women in third world have no way to refuse sex, but can protect them selves without the man knowing, hours earlier by vaginal application of this cream like drug. - Why NIH and World Health agencies have paid for its early development. Drug comes in small plastic tube with piston plunger - very simple to use and does not enter the blood or body so quite safe.)
     
    Last edited by a moderator: May 7, 2011
  22. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    "... Jim Rogers: "oil prices are projected to continue increasing, given the depletion of worldwide reserves. However, the expert maintains that silver is expected to drift downward, as its initial ascent was too much, too fast.

    Rogers, the chairman of Rogers Holdings and Belland Interests, Inc as well as the co-founder of Quantum Fund (along with George Soros), has boldly stated that crude oil prices will undeniably rise in the next ten years ... "because {fact that} known oil reserves around the world are in steady decline, does not diminish demand." ..."

    From: http://www.topstockportfolios.com/r.../1/0/df777df1e759461bf8499d7ae3b5d162e892b630

    BT comment: I think he is correct but silver will recover before end of year. If I had more guts I'd buy some longer term calls on oil and sell some longer term puts on silver, both slightly "out of the money" now, for approximately zero net cost but I am too old for risk taking.

    Edit three days later: A note on SLV, the most widely traded silver bullion ETF: last Thursday saw 88% of the stock's outstanding shares change hands, a simply incredible phenomenon. What does it mean? Quite simply that there's a brand new group of SLV shareholders now in place.
     
    Last edited by a moderator: May 10, 2011
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Messages:
    23,198
    The following post was made by Mrs. Lucysnow. (In another thread.)
    I only re-posted it here by copy and paste as could not move it with her as poster.

    Thursday, May 12, 2011 6:19 PM EDT
    US dollar’s reserve currency status challenged by gold, yuan: experts
    The US dollars’ reserve currency status is challenged by the Chinese yuan and gold, said experts in the financial industry.

    At the SkyBridge Alternatives Conference, Eric Sprot, an investment manager, said gold is already the world’s reserve currency.

    He said people would soon take money out of banks which are too leveraged and exposed to dangerous mortgage investments. They will then put money into precious metals.

    “If you have a fear of the banking system, you go to things like gold,” he said.

    Meanwhile, a Bloomberg survey showed that 50 percent of financial professionals see the Chinese yuan becoming a reserve currency within a decade (19 percent think it’ll take just five years). Many economists believe China’s economy will then overtake the US economy soon after that.

    After the financial crisis, the status of the US dollar as the world’s reserve currency has come under attack because of the expected decline in the US economy relative to several emerging market countries and the Federal Reserve’s policy of devaluing the dollar.

    http://www.ibtimes.com/articles/144947/20110512/dollar-reserve-currency-gold-yuan.htm


    Here is a more in-depth CNN article on the subject: http://money.cnn.com/2011/02/10/markets/dollar/index.htm
     

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