Why is GOLD NOT rocketed in value?

[Mega]

I would have thought it would?
Mega

[jk]

Re: Why is GOLD NOT rocketed in value?

I would have thought it would?
Mega

you're getting ahead of yourself. this is the beginning of a liquidity squeeze, aka ka. [hah!] cash goes up and pretty much everything else goes down. it will be the rescue, in the form of lowered rates, that will light gold's tail on fire.

[rabot10]

Re: Why is GOLD NOT rocketed in value?

I would have thought it would?
Mega

A very smart man asked me “why do thinks go up in price” I gave him a very educated and informed answer (I didn’t have a clue) he said no Grass Hopper it is because there are more buyers than sellers. I said OK. He then asked me “why do things go down in price” (Being the idiot I am I again gave him a very educated and informed answer). He said no Grass Hopper it is “because there are more sellers than buyers “I saw Jesus Oh my God it was so simple.
fficeffice" />
With Central Banks selling GOLD in an attempt to keep the Sellers higher than the buyers the price would not sky rocket. In my most humble opinion the fact that Central Banks are the biggest sellers tells me that Gold and Silver will go to the MOON.

[Guest]

Re: Why is GOLD NOT rocketed in value?

Is it my imagination or is everyone around here turning into some kind of paranoid gold-bug ? :cool:

I mean even formerly sober-minded "senior guys" like JK and former hedgie Rick Bishop - now going all mooney all about gold and silver? And Mega, getting all antsy and fidgety like that?

What's up with these guys? Some kind of AUREAN FLU bug going around here, mebbe ?

I gotta go get C1ue and drag him over here, so we can sort these nutcases out - he's the biggest agnostic around here on PM's - mebbe we can straighten these looney-tunes out?

I say - hit 'em over the head with a big rolled-up telephone book of a World Bank Gold Reserves audit report - that oughtta to learn 'em. Sheesh! I mean, get real you guys!

[jk]

Re: Why is GOLD NOT rocketed in value?

Is it my imagination or is everyone around here turning into some kind of paranoid gold-bug ? :cool:

I mean even formerly sober-minded "senior guys" like JK and former hedgie Rick Bishop - now going all mooney all about gold and silver?

what do you mean "turning into"? my pm position is the lowest it's been in years - it's about 22%. several years ago it was 30%. that's because i think there's a fair chance the price will drop enough that i'll want to buy more.

[Guest]

Re: Why is GOLD NOT rocketed in value?

"Mr. Monk" -

OK, OK - allright already. "Once **and** Future Gold Bugs", so be it. And of course it's all with an overlay of cool rationalism, because they all regularly read I-Tulip.

[rabot10]

Re: Why is GOLD NOT rocketed in value?

what do you mean "turning into"? my pm position is the lowest it's been in years - it's about 22%. several years ago it was 30%. that's because i think there's a fair chance the price will drop enough that i'll want to buy more.

Ok I admit it I am a reformed Gold an Silver junky just trying to make a buck, but the central bankers are coming what do I do? I’m still buying can someone please help me I can’t stop

[Guest]

Re: Why is GOLD NOT rocketed in value?

This material is from JIM SINCLAIR's "JSMINESET" website. Mr. Sinclair goes back a long way - and is of the most well connected participants in the bullion markets.

Posted On: Friday, July 27, 2007, 6:27:00 PM EST Gold and Dollar Market Summary Author: Dan Norcini

Dear CIGAs, I mentioned last week that the commercial shorts (aka the perma gold shorts or the bullion banks) would have to absorb a tremendous amount of buying to keep gold from surging to $700 since the fund net long position was comparatively small by recent historical standards. Well guess what? They did exactly that. As you all know by now, the COT data only includes the action from Wednesday of the previous week thru Tuesday of the current week. If you recall, on Friday of last week and Tuesday of this week, gold had strong upside price action in which it ran to $687.50 on Friday and $688.40 on Tuesday. In both cases it was pushed down by the close just shy of $4.00 from the intraday high by aggressive selling which literally ate through the huge influx of incoming bids. Friday alone witnessed a massive increase in open interest of nearly 17,000 contracts – an almost unheard of number for one day with Tuesday’s surge higher being met with an additional increase of nearly 7,000 contracts. Clearly, some powerful entity was opposing the price rise with a vehemence that has not been seen for some time. Those of us who have seen this drill for the last 6 years know exactly who that entity is and it was again confirmed today as the COT data was released. Once again, the INCREASE in the new shorts came from the commercial category, which by and large are dominated by the bullion banks. That group alone added a whopping 29,327 new short positions. Folks – this is the LARGEST WEEKLY INCREASE IN THE NUMBER OF NEW SHORTS IN ONE WEEK’S TIME since June 2005! In other words, this same group, which was determined to hold the gold price under $450 two years ago and threw everything but the kitchen sink at it back then, apparently felt the need to ensure that the gold price did not reach the magical $700 level this past week. Even last year’s surge in May which saw the price of gold blast through the $730 level did not engender the same amount of new selling by the bullion banks and their friends. Clearly someone is extremely concerned about a rising gold price given the current economic environment and the implications that such a price rise would raise. One thing that I might mention to provide some solace for the friends of gold – yesterday’s collapse in the gold price come on the heels of the largest volume traded for a single day on the Comex that my records going back 6 years indicate. Nymex reported a mind-numbing 257,914 contracts traded hands yesterday during the rout that hit the gold market from the fallout of the rush into liquidity. That is humungous! The good news for gold’s friends is that such huge volume days that occur either on the way up or the way down typically tend to portend exhaustion waves when it comes to the futures markets. During such times, blind panicked buying or selling is the order of the day. People want out at any and all costs and simply do not care about anything else except to “GET ME OUT!” In the case of yesterday, it was terrified longs bailing out in droves. The result was a SHARP DROP in the open interest of nearly 20,000 contracts. The previous day’s down leg was marked by a drop of 15,000 contracts. In just two day’s time, we have cleaned nearly TWO MONTH’s worth of buyers since that is the last time open interest was near the current levels. Again, while I hate to be prematurely optimistic given the current climate of fear and confusion, it is difficult for me to see how much more downside is left in the gold market especially seeing how well it held up today after yesterday’s exhaustion day. Even as stocks continued tanking later this afternoon, gold held rock steady. Just as what happened yesterday, its price descent down into the lower nether regions of the mid $650’s brought out strong buying which took the market back up into the plus column at one time during the day. Not too bad all in all considering how the currency crosses were getting whacked today and how the dollar was experiencing another dead cat bounce. While the gold shares did not fare as well being caught up in the general market downdraft, the bullion price appears to be making an attempt at stabilizing here. I repeat from yesterday – I am of the opinion that the metal will lead the shares out of the bear’s woodshed. Stay tuned as we all watch history unfold. What stories we will have to share with our children and grandchildren about these days! Dan Norcini for JS-MINESET

[FRED]

Re: Why is GOLD NOT rocketed in value?

This material is from JIM SINCLAIR's "JSMINESET" website. Mr. Sinclair goes back a long way - and is of the most well connected participants in the bullion markets.

Posted On: Friday, July 27, 2007, 6:27:00 PM EST Gold and Dollar Market Summary Author: Dan Norcini

Dear CIGAs, I mentioned last week that the commercial shorts (aka the perma gold shorts or the bullion banks) would have to absorb a tremendous amount of buying to keep gold from surging to $700 since the fund net long position was comparatively small by recent historical standards. Well guess what? They did exactly that. As you all know by now, the COT data only includes the action from Wednesday of the previous week thru Tuesday of the current week. If you recall, on Friday of last week and Tuesday of this week, gold had strong upside price action in which it ran to $687.50 on Friday and $688.40 on Tuesday. In both cases it was pushed down by the close just shy of $4.00 from the intraday high by aggressive selling which literally ate through the huge influx of incoming bids. Friday alone witnessed a massive increase in open interest of nearly 17,000 contracts – an almost unheard of number for one day with Tuesday’s surge higher being met with an additional increase of nearly 7,000 contracts. Clearly, some powerful entity was opposing the price rise with a vehemence that has not been seen for some time. Those of us who have seen this drill for the last 6 years know exactly who that entity is and it was again confirmed today as the COT data was released. Once again, the INCREASE in the new shorts came from the commercial category, which by and large are dominated by the bullion banks. That group alone added a whopping 29,327 new short positions. Folks – this is the LARGEST WEEKLY INCREASE IN THE NUMBER OF NEW SHORTS IN ONE WEEK’S TIME since June 2005! In other words, this same group, which was determined to hold the gold price under $450 two years ago and threw everything but the kitchen sink at it back then, apparently felt the need to ensure that the gold price did not reach the magical $700 level this past week. Even last year’s surge in May which saw the price of gold blast through the $730 level did not engender the same amount of new selling by the bullion banks and their friends. Clearly someone is extremely concerned about a rising gold price given the current economic environment and the implications that such a price rise would raise. One thing that I might mention to provide some solace for the friends of gold – yesterday’s collapse in the gold price come on the heels of the largest volume traded for a single day on the Comex that my records going back 6 years indicate. Nymex reported a mind-numbing 257,914 contracts traded hands yesterday during the rout that hit the gold market from the fallout of the rush into liquidity. That is humungous! The good news for gold’s friends is that such huge volume days that occur either on the way up or the way down typically tend to portend exhaustion waves when it comes to the futures markets. During such times, blind panicked buying or selling is the order of the day. People want out at any and all costs and simply do not care about anything else except to “GET ME OUT!” In the case of yesterday, it was terrified longs bailing out in droves. The result was a SHARP DROP in the open interest of nearly 20,000 contracts. The previous day’s down leg was marked by a drop of 15,000 contracts. In just two day’s time, we have cleaned nearly TWO MONTH’s worth of buyers since that is the last time open interest was near the current levels. Again, while I hate to be prematurely optimistic given the current climate of fear and confusion, it is difficult for me to see how much more downside is left in the gold market especially seeing how well it held up today after yesterday’s exhaustion day. Even as stocks continued tanking later this afternoon, gold held rock steady. Just as what happened yesterday, its price descent down into the lower nether regions of the mid $650’s brought out strong buying which took the market back up into the plus column at one time during the day. Not too bad all in all considering how the currency crosses were getting whacked today and how the dollar was experiencing another dead cat bounce. While the gold shares did not fare as well being caught up in the general market downdraft, the bullion price appears to be making an attempt at stabilizing here. I repeat from yesterday – I am of the opinion that the metal will lead the shares out of the bear’s woodshed. Stay tuned as we all watch history unfold. What stories we will have to share with our children and grandchildren about these days! Dan Norcini for JS-MINESET

Gold will rise when it is in the interest of central banks for the price to rise. No sooner.

When you hear central bankers whining about deflation, buy gold. When they are whining about inflation, sell. When you're not sure what they're whining about, or not sure if they know what the hell is going on, hold.

[Spartacus]

Re: Why is GOLD NOT rocketed in value?

I've been mulling whether to get the safest gov bonds, even though bond prices have been rising for 30 years, in an emergency I suppose they could rise even more - at the very least, their prices will fall less than all other prices - probably.

I have a lot of precious metals, and as I've written here ad nauseum, I'm nervous about it - I never felt safe & secure being in PMs. When Ag hit $15 I was extremely nervous I have no idea why I stuck with PMs after that huge selloff, but here I am.

I did NOT expect Au/Ag/Pt to skyrocket - and I've written some of the reasons before.

The single biggest reason - almost all assets have risen in the last 5 years. When the collapse comes will people really make much of a distinction between what to sell to pay off their debts?

There's a good chance that all asset classes will fall over the next couple of years - it's just a question which classes may fall less.

[grapejelly]

Re: Why is GOLD NOT rocketed in value?

hold the phone!

Gold will rocket in value when risk spreads are increasing and when bonds are falling.

Right now, there is a flight into cash, or as finster has so eloquently explained, a cash rally.

This has reversed the fall of "safe" US government bonds.

At some point 6 months to 1 year from now, I think, long rates will be increasing pretty noticably.

That will be the time where you should already be positioned in precious metals. That will be the time that gold and silver rockets.

I did NOT expect Au/Ag/Pt to skyrocket - and I've written some of the reasons before.

The single biggest reason - almost all assets have risen in the last 5 years. When the collapse comes will people really make much of a distinction between what to sell to pay off their debts?

There's a good chance that all asset classes will fall over the next couple of years - it's just a question which classes may fall less.

That is not what happens. When long bonds start falling, precious metals will start rallying like crazy.

Why? Because money has to go somewhere. Risk spreads increasing, treasurys falling, money will move to precious metals as a "safe haven". That old story will once again rule the day.

1. Real stock values will fall and fall. PE ratios will fall and
fall.

2. Real values of grains, softs and energy will rise.

3. Real wages will fall.

4. Real rents will increase.

5. Real estate real values will fall. The result is an INCREASE in
the returns on capital -- cap rates will skyrocket on real
estate.

6. The real value of fixed assets will fall.

It's the getting there that is good for precious metals. It's the "meantime" that is good for precious metals. Between here and there -- in the transition period we are entering now.

We have more of the mania to go. More. It isn't over yet. More years of increasing currency depreciation leading to a runup in precious metals.

Take real estate. If you own real estate now, and cap rates start going up, you have to get out of real estate because your asset is falling in value, if you are focused on capital gains. If you do sell, what do you buy? You don't buy stocks, you don't buy bonds, those are all falling in value as money requires a higher and higher return. So you buy precious metals.

Everyone remembers precious metals increasing parabolically in 1980.

But remember bonds plummeting to untold depths?

Both will happen. Until the bonds start falling, precious metals won't rocket. When they do, they will.

[Guest]

Re: Why is GOLD NOT rocketed in value?

"Gold bugs" - Perhaps more politely named "enthusiasts" - may be a lot more rational than you thought

Mr. Hugo Salinas Price puts up some macro data to display the limitations of Central Bank physical resources today, to perpetuate a price capping for much longer in the face of strengthening demand for gold from the private sector worldwide.

Salinas Price describes below, with a short piece of collected data, how the great majority of ounces are now irretrievably scattered all over the globe and central banks do not have a corner on bullion by any description.

The thesis of all the above, is that a manipulated asset (Gold) commonly thought to have always been a Central Bank trump card to club the naive investor over the head, is no longer that. The naive investor is about to turn the tables on them.

Say we are indeed heading into KA in 2007 (although nobody knows) - then precisely because the nexus of the upcoming problems will be centered on the currencies, and because the gold price has been systematically capped in the last few years by bank selling, and because the majority position of gold ownership has now largely shifted to private hands, weakening further CB capping efforts critically, investing in Gold is increasingly likely to be a very well timed opportunity to take the Central Banks to the cleaners.

The thesis is that whatever asset has had it's price manipulated to the downside for an extended period, presents an opportunity to exploit it's real value. If the means to cap are manifestly weakening, this maniplatively discounted asset has more downside protection than most others.

When the Hunt brothers cornering of the silver market failed in the 1980 as the COMEX changed the margin rules on them, the price dropped 50% in a day. Today the inverse is true, a small cartel has capped the price for years, an unwind of this manipulation would lead to a violent adjustment in the opposite direction.

Theodore Butler writes about silver: ( Rick Bishop will kick me here for posting this, as silver enthusiasts like to keep it to themselves! )

.... The central issue in the silver market, in my opinion, continues to be how this super concentrated position on the short side be allowed to exist. Let me keep this simple. We have never witnessed, in the history of the commodities markets, such an extremely concentrated position that we now see in COMEX silver. Not in the Hunt Bros. long side silver manipulation, not in the Sumitomo copper manipulation, not even in the Amaranth natural gas fiasco. ....

.... The concentrated short position in COMEX silver, as repugnant as it is to the concept of free markets, is not to be feared. It is the silver investor’s best friend. The four largest traders are net short 250 million ounces in COMEX silver futures. That sale has already occurred, as well as its negative impact on price. Since every short sale is an open transaction that must be resolved at some point, the positive impact on price lies ahead. By manipulating the price of silver much lower than it would be without this short position, the concentrated short sellers have done all silver investors a great favor. They have created the greatest investment bargain in history. ....

.... Twenty-seven years ago, the Hunt Brothers were found to have manipulated the silver market to the upside by virtue of a concentrated long position held by them and a few associates. The simple fact is that the current concentrated short position in COMEX silver futures is twice as large as what the Hunts held on the long side and more concentrated, since it is held by fewer entities (4 or less). ....

.... Long-term real silver investors should not fear the silver manipulation. When it is ultimately unwound, it will provide a bonanza of profits and real wealth beyond imagination. When the Hunt Bros.’ concentrated long position was liquidated in 1980, the price of silver quickly crashed from $50 to $10. When the current concentrated short position is liquidated, expect a reversal of what occurred in 1980. That’s merely a mechanical aspect to manipulations; when long manipulations end, the price crashes. When a short manipulation ends, the price soars. It’s no more complicated than that. ....

And Hugo Salinas Price, on why Central Bank gold dumping may not be as decisive a factor as previously imagined.

Where's the gold?
Hugo Salinas Price

IMF DATA ON WORLD GOLD

(Including IMF gold) :

Gold Reserves of all reporting Central Banks of the world in 1948, amounted to 970 million ounces, or 30,170 metric tonnes.

Gold Reserves peaked in 1966, at 1,230 million ounces, or 38,257 metric tones.

Gold Reserves declined to a minimum low of 889 million ounces, or 27,651 metric tonnes in 2003.

Gold Reserves increased once again, to 919 million ounces, or 28,583 metric tonnes, in January 2007.

USGS WORLD GOLD STOCK AND CB STOCK

www.goldsheetlinks.com and IMF DATA

Metric tonnes
World gold stock 1966: 76,000
CB and IMF gold stock 1966: 38,257
Gold in private hands 1966: 37,743
% of world gold in private hands 1966: 49.66%
World gold stock 2007: 157,000*
CB and IMF gold stock 2007: 28,583
Gold in private hands 2007: 128,417
% of world gold in private hands 2007: 81.8%

* 152,000 in 2005, plus approx. 2,500 yearly production.

From the tables we gather the following:

Since the Central Banks of the world began to sell off their gold reserves in 1966, when their stocks peaked at 38,257 tonnes, private individuals have added to their stocks, which were in 1966 estimated at 37,743 tonnes, as follows:

Private purchases of gold 1966-2007:

9,674 tonnes - net sale of gold by CBs 1966-2007

81,000 tonnes every single ounce mined since 1966 to date, except for 933 tonnes reacquired by the CBs 2003-2007. (The CBs were no longer unanimous with regard to selling off their gold, in the period 2003-2007; the CBs as a group made net repurchases of 933 tonnes of gold in that period.)

A grand total of 90,674 metric tonnes of gold have been bought up by private individuals since 1966!

... Will hammering the price make the world gold market change its mind about gold, or will it just make gold cheaper to acquire for the millions that want to own it? ...

World stocks of gold are increasing at a rate of about 1.6% a year. Fiat money is growing by leaps and bounds, all around the world. Can the Central Bankers of the world hope to contain the price of gold, while the world's creation of new money goes on at a frantic pace of about 12% a year perhaps more?

CB and IMF reported share of world gold stocks has fallen from 50.34% in 1966 to 18.2% today; however, careful studies estimate undisclosed Central Bank loans of gold of up to 15,000 tonnes, which the borrowers ("bullion banks") sold to private individuals. If CBs have actually lost 15,000 tonnes of gold in their useless effort to contain its price, then roughly speaking we would have:

Ownership of world gold:

CBs and IMF: 8.65 % of world gold stock

Private hands: 91.35% of world gold stock.

... Let's put it this way: who has been judging correctly with regard to the wisdom of owning gold - a few dozen Central Bankers and Treasury chiefs, or millions of human beings around the globe? ...

... The few dozen arrogant men who think that this collective wisdom can and should be wiped out, are fighting the wishes of humanity and will fail in their efforts, simply because IMF figures tell us that if they insist on being stubborn about not allowing the price of gold to rise and persisting in the sale of Central Bank gold, they will end up with no gold to sell.

Note 1: This article was inspired by Antal E. Fekete's draft of his paper "THE DOLLAR: AN AGONIZING REAPPRAISAL: GOLD VANISHING INTO PRIVATE HOARDS".

[medved]

Re: Why is GOLD NOT rocketed in value?

Gold will rise when it is in the interest of central banks for the price to rise. No sooner.

Short term - yes. Long term - no. Gold is up from ~$250 to ~$650 in six years, but volatility is heavily influenced by the CBs. Since they are relatively predictable, you can use this volatility to trade in and out. I sold about 10% of my gold/silver related positions between June 2006 and April 2007, and bought back about 3% since April. I keep some stops right now under some of my positions. I sleep well.

The PM market, just like any market today is affected by speculation. When easy money dries up, *everything* goes down, because speculators are selling. However, there were much less speculators in PM markets, than anywhere else. Gold was trading between $630 and $690 since January 2007. So, why is the change from ~$675 to ~$655 "a big drop"? That one did not even wake me up. I was waiting for a bigger drop earlier this year. It did arrive at the end of June ( down to ~$635). Unfortunately, I was on a trip to Europe and could not trade anything.

In short, I don't see any latest events in the PM market worth talking about.

m.

[rabot10]

Re: Why is GOLD NOT rocketed in value?

Gold will rise when it is in the interest of central banks for the price to rise. No sooner.

When you hear central bankers whining about deflation, buy gold. When they are whining about inflation, sell. When you're not sure what they're whining about, or not sure if they know what the hell is going on, hold.

Fred,
fficeffice" />
I am not a long time iTulip member, but have come to appreciate and respect your views. I don’t fully grock (understand) your post. Would U please expand on it as I still have much to learn?

Thanks Your Friend
Rick

[Mega]

Re: Why is GOLD NOT rocketed in value?

So................What we are saying is right now money is switched from flowing into CDO and other Wall St nonsence into stocks.......which are now also going to die.......thus flow moves into bonds/Bank rates.........at some near term point it will flow into Gold/Silver.

The CB have had a handle on their value, but like the end of the IMF and the $.............their power is failing.

Question, i still remember a Hedge funds taking the Bank of England for quite a ride.............could a number of them get together and do a "Black Swan" on the $?
Mega