gold getting killed!!!!!!!!!!!

[globaleconomicollaps]

Re: gold getting killed!!!!!!!!!!!

I love AEP's articles generally speaking, but I think he is missing the forest for the trees in this case. Read his article & then read this article:

http://victorthecleaner.wordpress.co...4/07/snippets/

Tell me which view of the world makes more sense based on everything we're seeing.

If the US dollar was losing reserve status, the futures price of commodities would collapse while the "basis" for physical spot delivery, however it is measured, would explode. There is way more paper than physical & big money knows this. They would rush for the exits. So let's look at "basis" of a few selected commodities: Gold? Very positive (good luck getting 100 oz in Manhattan anywhere under $1700.) Corn? Basis at record levels across much of the nation. Copper? WSJ had article that Trafigura & Glencore are hoarding it & premiums for prompt physical deliveries are at 6-mth HIGHS...

The futures markets were created with an economically-positive reason behind them. They have morphed into dollar-defense derivatives used by TPTB to keep the true amount of money printing hidden. Which works fine, until the price-fixing scheme (since at its core, that's what it is), does what 100% of price fixing schemes in history have done: Create shortages.

Guess what? Peak Cheap oil. Scarce physical gold. Scarce physical copper. Record corn basis for 2nd straight yr...we are seeing early stage hyperinflation...

What we are seeing is not what AEP thinks we are...we are seeing the early days of a USD currency crisis...IMO

I'm trying to read this thing and I have to say this is a fine fine example of American literature. I am about a quarter of the way through and I am about ready to give up.

As for AEP. I agree with you He seems to be saying that Japan is exporting Deflation by opening the monetary spigots. Lots of head scratchers there.

[globaleconomicollaps]

Re: gold getting killed!!!!!!!!!!!

I'm trying to read this thing and I have to say this is a fine fine example of American literature. I am about a quarter of the way through and I am about ready to give up.

I tried to render this into English. I did not entirely succeed:

Snippets on Euro, Gold, Dollar and International Trade

7 April 2013


Where do you think the term pound *sterling* comes from? But that was centuries ago. Won’t come back.
Rest of world has been preparing for the end of the dollar since the late 1970s. They have chosen gold. Is well documented and was clearly communicated. Euro zone, OPEC, China agree. Silverbugs won’t be asked. sorry

What matters is that savers (not debtors) will be in charge. The big savers (Europe, OPEC, Asia) have chosen gold. Who says CBs will be in charge? Some of the biggest savers have decided to introduce the Euro. The Euro is paper and has a CB with the mandate to target its purchasing power (just under 2% consumer price inflation). This CB also has gold as their major reserve at a *floating* price. This will one day cause a spontaneous change in the international monetary system. Euro will be purchasing power stable in the short run, and gold will be used to settle international balances and to store wealth for the very long run. With the introduction of the Euro this transformation of the int’l monetary system is the path of least resistance and thus almost inevitable. clever.

You see the Euro at $1.30 and must be scratching your head. How can a failing currency whose CB prints money not collapse? Answer: Because the savers in the rest of the world back it. They want gold for int’l settlement, take away the oil privilege of the dollar, and have a currency without intrinsic inflation (Euro). The old dollar system in contrast needs to suppress the balancing role of gold in international trade. Otherwise the dollar would die. This is only possible with structural inflation (reserve creation if debt is the reserve). The Rest of the World wants to get rid of this dollar system in which they overpay for oil whereas the US simply inflate. The savers have realized that you need two “currencies” is order to avoid the accumulation of int’l imbalances. One (gold) that settles international balances and whose real price fluctuations stabilize trade accounts. Another one (paper money, Euros) that is purchasing power stable for business. Need predictability. Hard money people often claim that you can use gold for both transactions(=business)and international settlement. To balance international trade accounts, the real price of gold must fluctuate. But if gold is your business currency (wages, prices, etc.) you get regular bouts of inflation and deflation on the scale of +/-10% per year. This was common before WW1. But modern business and modern society don’t like strong price fluctuations. The savers who designed the Euro knew this and solved the problem. Now wait for dollar system to self-destruct. What about politicians’ addictive spending habits? Watch Greece and watch Cyprus. How can they spend more money than they earn? Ooops. No longer currency issuers. Need to get used to living within their means. Other governments will have to learn the lesson, too. You see introduction of Euro has put the savers in charge. Why not decades earlier? They threatened it in 1978 (IMF Belgrade meeting). But world was not ready. International trade would have collapsed without the dollar. There was no other currency large enough. But they managed to pressure Volcker to stop inflating. In turn, they continued to support the dollar. It took 20 years to set up an alternative currency big enough for world trade: 1999 the Euro. Europe was ready to dump the dollar. Take a look at the Washington Agreement on Gold, September 1999. For some reason, then China decided to support the dollar for another decade. Perhaps wanted to gain time, prepare? Europe apparently on board, gave them time. Then end of 2012 price support for London gold stops (looks like it did) and Bundesbank releases all gold transactions. Interpretation? Time’s up? We will find out.


@michaelhunter81 What needs to fluctuate is the *real* price of gold, i.e. in terms of goods and services. If A has a trade surplus with B,
B pays A in B$. A then sells B$ for gold. Goods flow from A to B. Gold flows from B to A. (“Oil and gold never flow in the same direction” – Geek note: except into India) In A, there is now more gold per GDP. The price of A’s products in gold … increases. Internationally, because settlement is in gold, A will become less competitive, counteracting its trade surplus. Opposite happens in B. International gold settlement balances international trade *because* it creates in-/deflation if goods prices are in gold. The real price of gold fluctuates. The insight is that in my second tweet, it does not matter whether the B$ is paper money or ounces of gold. If it is ounces, B gets inflation and deflation depending on trade flows. If B$ is paper, the CB of B can manage the B$ to be purchasing power stable (=Euro).Still gold balances international trade. When I said the B$ is paper, I meant that B$ is a fiat currency that fluctuates against gold (not credit denominated in oz). Separation of B$ (purchasing power stable) from gold (international settlement) is Nash equilibrium. If A has trade surplus with B and A receives B$ as payment, A can enforce final settlement by selling B$ for gold. But can A also chose to … accumulate B$ in order to “manipulate” its currency and perpetuate its trade surplus? The answer is no.B’s CB can create B$ (=print) and use them to buy gold, thus mimicking what A’s companies should have done. The incentive for perpetuating international imbalances is removed on *both* sides. What matters for int’l settlement is that settlement is in physical gold, but not in any form of paper (=debt), neither bank notes or credit money of a gold standard currency nor a fiat currency that floats against gold.

@craig_slater No. If China export into Euro zone and European companies pay with Euros, someone in China ends up with more Euros. China can choose to sell Euros for gold (either their private sector or if they don’t, the PBoC). But what if the Chinese keep the Euros? In this case, the European imports would not cause the Euro to decline, and China would keep their competitive advantage in their trade with Europe. What can Europe do about it? Victim of a currency manipulator? Answer: No. The ECB can create Euro reserves for the Chinese to hold,but they must do it by purchasing gold in the market in order not to inhibit the adjustment. This is one of the reasons why the ECB accounts for their gold at market price. If foreigners want to keep holding Euros, they can buy gold and print Euros in order to create reserves without going into debt and without preventing the adjustment process in international trade that results from fluctuations of the gold price.


@darenpa72 But it could go the other way, too. China (its private sector) can choose to hold either (1) Euros or (2) gold. Both choices have different risk/return. (1) gets you stable purchasing power for Eurozone goods and services up to some small inflation target. (2) exposes you to gold price fluctuations. Euro price of gold may go up **or down**.It will go down, for example, if Eurozone has net trade surplus because they export even more somewhere else than they import from China. True even today. U.S. don’t have to accept China’s “currency manipulation”. US Treasury can create dollar reserves buy purchasing gold in the market. This sterilizes the Chinese action if China holds dollar reserves. Then Fed can sell bonds for dollars and sterilize the Chinese action if China holds bonds rather than dollar reserve (i.e. dollar central bank money). So why don’t they? The U.S. apparently like it when China buys their dollars and dollar assets. Question to the reader: Why is this?

— Victor The Cleaner (@VictorCleaner) April 7, 2013

Sources

The presentation focussing on the separation of gold (store of value) from the currency (medium of exchange) as a separation of the international reserve form the local currencies goes back to Blondie’s insistence that gold cannot have constant purchasing power if it is to function properly in international trade. The discussion took place in the comments section at FOFOA’s blog between costata, Blondie and myself between October 25, 2012 at 1:05 AM and November 10, 2012 at 9:10 PM. We returned to this topic on the Neuralnetwriter forum around 17 March 2013 where Blondie explained his point of view to MF. Blondie also reposted the relevant excerpts of the original discussion.

Further Discussion

In a private discussion, I wrote

Thinking that the real price of gold would be approximately stable is a hard money fantasy. Get rid of that baggage, gentlemen. No, I cannot predict exactly how much the real price of gold will fluctuate, but fluctuate it must.

The ECB will not use gold open market operations in order to target consumer prices. That would be unstable (and of course foolish as it would be pro-cyclic rather than counter-cyclic, precisely the same instability as that of the gold exchange standard). No, in order to target purchasing power, the ECB needs to target some money supply measures in the conventional way by influencing the credit creation in the banking system.

The only gold open market operations consistent with the framework of freegold are the sterilization of a capital inflow or its converse.

As DP and milamber remarked on twitter and on my page, it is the option of the ECB to act like this that enforces compliance of their trade partners (I called them ‘China’ in my examples). Just the threat that the ECB can do this is enough to create an incentive for ‘China’ (either the private sector or, if they for some reason don’t do it, the PBoC) to settle in gold whenever there is the threat that the Euro zone might end up a net importer of goods and services (ex gold), because this is precisely the situation in which the Euro would decline with respect to gold. This creates stability of capital flows in addition to the known stabilization of trade flows.

For some reason, no CB official uses the words ‘gold’, ‘oil’ or ‘exorbitant privilege’ any longer. The Europeans just speak of ‘international imbalances’. If you take this into account, Noyer’s announcement that the Euro would be purchasing power stable and his invitation to hold Euro central bank money as a safe store of value, given that you as an Asian central banker know that gold will be the international reserve, guides you to precisely one conclusion:

1. The ECB will target purchasing power of the Euro.
2. This means they will not target a specific real gold price (otherwise the Euro would be on a soft gold exchange standard)
3. Both 1 and 2 tell you that the ECB must sterilize any excessive inflow of capital by gold open market operations. Monetizing anything else would conflict with 1.
4. If Noyer invites you to hold Euro base money as a safe store of value, he must commit to 3. or be inconsistent.

Remember that I wrote above that in order to target consumer prices, the ECB needs to target a suitable measure of money supply.

In all of the European debt crisis, the ECB has demonstrated that they are doing precisely this. The Euro is effectively ‘hard’ money. Creditors and debtors are not bailed out at the expense of deviating from the mandate of price stability. The entire handling of the European debt crisis is a grand lesson on how the new financial system will look like.

You just need to listen to what the relevant ECB/BIS officials say (Noyer, Weidmann – see below) and watch what they are doing. They are pretty frank, aren’t they? Here is Jens Weidmann in a recent interview. Every other month they give you a clear statement that the Euro is not going to be devalued with respect to goods and services (not more than the announced 2%), but rather that they will enforce enough deleveraging to keep its purchasing power on target.

I cannot see that the ideas that

1. Gold will be purchasing power stable
2. The Euro will devalue with respect to goods and services (by more than the stated ECB mandate)

would have any sound foundation. The first is a hard money fallacy and the second is Anglo Saxon mainstream economics.

Finally some people seem to think that in view of the excessive debt it will not be possible to keep the purchasing power of the Euro stable. Well, there is a big difference between allowing the inevitable deleveraging and allowing consumer price deflation. With the Euro being paper money, not caring about the real price of gold, there is a new degree of freedom that allows the ECB to differentiate between the two, allow deleveraging but not deflation.

Another Snippet

In the new financial system, the CB basically has two options:

1) Manage the fiat currency in a way similar to the ECB, i.e. a sort of “hard paper money”. No inflation to expropriate savers, not preventing deleveraging, but they would print in order to fight deflation.

With such a CB, the currency becomes a store of value in Blondie’s sense. And yes, I still think the ECB can and will eventually target 0.5% inflation or even 0%. There is nothing bad about it.

It is reasonably safe for anyone to hold such a currency, at least if you can get hold of central bank money. If such a currency gets a capital inflow, their CB must buy gold.

2) Manage the currency with a higher or at least an unpredictable inflation rate. Savers will be reluctant to hold such a currency and go for gold more quickly. (Or perhaps buy Euros instead).

Following Blondie, I do think that once you take the oil privilege away from the dollar, and once you settle international balances in gold, not sterilizing the flow of gold, you will already have arrived in the new system. In this environment, it becomes possible to manage a fiat currency to have on average 0% consumer price inflation, and it would be safe to hold that currency.

In the earlier discussions about freegold, people used to claim that the savers would eventually (have to) withdraw all savings from all currencies, not hold curreny as savings at all and use gold as basically the only store of value. I now think that settling international balances in gold suffices. You can then still hold the Euro, it will be fine. You certainly want to avoid the dollar and all dollar anchored currencies because of what happens when it goes out of business as a reserve.

The only obstacle that prevents the world from transiting into this final Nash equilibrium of international gold settlement is a symbiosis between two parties that benefit from a different strategy: The U.S. keeping the dollar strong (where freegold says they ought to buy gold whenever they send currency abroad), and the oil producers demanding dollars for their oil, only exchanging a part of these dollars for gold. Once the oil producers accept an arbitrary currency and always convert all balances into gold, the new system has arrived.

On my claim that 0% inflation in fiat currency will be possible. Well, what happened before WW1? On time scales of 10-20 years, the currency was pretty exactly purchasing power stable. This worked because gold functioned internationally. But this caused wild price swings on a time scale of under 5-10 years. The real price of gold needs to fluctuate (wildly!) in order for gold to function.

What the modern economy doesn’t like is the wild fluctuations within 5 years. The fact that the currency was purchasing power stable over periods of 10-20 years and longer, wasn’t the issue. There is no reason why the economy would need structural inflation nor that anyone would benefit from it.

What went wrong starting with the Fed under the Harding administration around 1920 (see FOFOA’s “Once Upon A Time”) is that they didn’t like the strong price fluctuations due to the international function of gold. The Fed sterilized the inflow of gold in order to fight local price inflation. This was probably even well intended, but it contributed to the collapse of the international gold standard and thereby to the accumulation of imbalances.

Now if you have a fiat currency separate from gold, you can let gold fluctuate as is required by its international function while you can indeed fight inflation in your fiat currency locally (and deflation, too). Whether your fiat currency has a stable purchasing power over time frames of 10-20 years or whether it has 1.5%-2% inflation as per the Eurosystem’s current target, is a different question.

Since a 2% long term inflation target has no benefits, why not go for 0% and make your currency a proper store of value, too? As long as gold functions, there is no issue.

Speaking about gold’s function, remember Barsky-Summers. Gold will play that role again, too.

Of course, right now, the US dollar is running a high risk of hyperinflation, and in that case, the savers would indeed run away from the currency. But for the Euro zone, I don’t think it would be a problem for those who can hold base money (i.e. basically foreign CBs).

Yet Another Snippet

It is not the difference between a 2% inflation target and a potential 0.5% or even 0% inflation target what distinguishes soft money from hard money.

Under the old gold standard, a period of credit deleveraging always threatened the system by potentially triggering a chain reaction of credit collapse, falling consumer prices, recession, credit collapse, and so on. The inflation target of the ECB is going to prevent this from happening. It is just that the key is not the gradual difference between a 2% or a 0.5% target, but rather that they are committed to and also have the tools to avert a deflationary vicious circle.

The difference between the gold standard and a Euro with a 0% inflation target is qualitative. The difference between a Euro with a 2% target and a Euro with a 0.5% target is gradual. The former is a huge conceptual difference, the latter a technicality.

The following is one of the flaws in our thinking as of one or two years ago:

Q: Once the transition has happened and the new financial system is up and running, and the dust has settled, what will prevent savers from again saving the currency rather than gold. If the currency, say the Euro, is well managed for a few decades, people might again be tempted to accumulate currency savings. Will this destabilize the system?

A: The answer is not that obvious, isn’t it? If the Euro is well managed, why wouldn’t you hold it for the long run? Because you are still shocked by the transition? Alright, then let’s think about the generation of our grandchildren. They will know the transition only from our fireplace tales and hopefully from their Econ 101 textbooks. But they won’t be personally shocked. So will they keep in mind that they have to save in gold in order not to destabilize the system?

Isn’t it convenient for the missing answer that the ECB has a 2% inflation target, and so if our grandchildren are prudent, they would understand that this is not very nice for their savings in the very long run…. Does the ECB need to impose an inflation target strictly above zero just in order to keep the system stable? Yes or no?

The entire point is, of course, moot. The ECB can choose any reasonable inflation target, say, anything between perhaps -2% and +4%, as long as they act in a predictable fashion and don’t cause uncertainty and unnecessary friction in the economy. Freegold will work in any case, and this is because it separates two things:

1) International adjustments by market driven changes in the real price of gold

2) Domestic targeting of some reasonable value metric for your business currency. It is quite obvious that it is a good idea to manage your currency in such a way that there are only small changes to the general price level and to wages.

It is the separation of (1) from (2) that makes the new financial system viable. Conversely, both the gold exchange standard and the dollar system with a paper price of gold link (1) and (2) in a way that prevents you from accomplishing both international balance and purchasing power stability at the same time and in the long run.

Freegold already solves this because it sets gold free and allows it to function: (1). The precise inflation rate or “management style” that you choose for your fiat currency is a separate consideration.

Will the ECB cause some serious bloodshed by not letting the Euro inflate beyond 2% and thereby not relieving the pressure from debtors and savers? FOFOA (from memory) “If you think austerity riots are bad, wait until you see hyperinflation riots.”

I said the way the European debt crisis is being handled today is a grand lesson on how the future financial system will look like. Blondie said that if you want to understand how the ECB views the future financial system you need a point of view from which their actions are consistent. He is absolutely right. Just watch. They are demonstrating it to all of us.

Is the ECB causing a bloodshed in Greece, one that they would have avoided had they printed without limit? Answer: No. Greece enforced some 50% haircut on their bondholders in spring 2012. It is not that the debtors are treated like slaves. No, the creditors share the burden and take a haircut, too. Is this money really too hard? The past haircuts (Greek government debt, Cyprus’ bank deposits, some second tier Spanish bank debt) won’t be the only ones. More will follow. Eventually the investors will bear the majority of the losses. The losses won’t be socialized via inflation, but rather will the investors be “encouraged” to take responsibility and to think about what they are going to do with their savings.

This is as in the new financial system.

[BadJuju]

Re: gold getting killed!!!!!!!!!!!

Guess what? Peak Cheap oil. Scarce physical gold. Scarce physical copper. Record corn basis for 2nd straight yr...we are seeing early stage hyperinflation...

What we are seeing is not what AEP thinks we are...we are seeing the early days of a USD currency crisis...IMO

What scarcity? Copper isn't scarce. There is tons of it out there. People are sitting on it a little more because of the drop in price and in demand. We have a record corn basis because of PCO and drought for the second year in a row. And getting physical gold isn't hard either. People are just exaggerating it.

[Southernguy]

Re: gold getting killed!!!!!!!!!!!

I find this work pertinent to the discussion.

HOME > PRECIOUS METALS > GOLD ANALYSIS



GOLD ANALYSIS

Gold and silver price dive: physical sales surge, prices begin to rise again

Gold and silver are showing some resilience in the face of the recent big dives in prices, but can this continue or are we in for another fall?





Author: Lawrence Williams
Posted: Monday , 22 Apr 2013
LONDON (Mineweb) -

The huge dumping of paper gold and the subsequent sales out of the big GLD gold ETF of last week do seem to have generated remarkable buying momentum for both gold and silver, with prices recovering from their nadirs of around $1350 for gold and $22.70 for silver.

There had been some decent recovery by the end of last week, but markets surged again when they opened in Asia this morning and there has been some strength too as markets opened in Europe, with gold hitting $1425 and silver $23.50 – gains of 5.5% and 3.5% respectively meaning potentially quick gains for those who came in at the lowest prices – at least in theory, but premiums due to the apparently enormous demand for physical metal, will have mitigated gains.

Interestingly, on premiums, Ed Steer pointed out in a recent newsletter, with a supporting chart, that the wholesale premiums bid by U.S. dealers for 90% U.S. silver coinage have started to spike in a manner last seen in 2008, which preceded a bug boom in silver prices from a very low level.
There is a huge degree of anecdotal evidence that individual investor demand for gold and silver coins and bars has been huge, particularly in China and India and other eastern nations, but it has also been very strong in the U.S. and Europe too, and undoubtedly in that other hotbed of the physical precious metals trade in the Middle East as well. Reports have come in of very strong demand for the U.S. and Canadian Mints’ gold coins, while silver coin sales have been somewhat flat, but apparently primarily because of non-availability.
Consider some of the news which has come out on the internet: The China Gold Association is reported as saying that demand for physical metal has tripled at one stage last week; Indian gold dealers are reporting a huge buying surge; delivery times on silver bullion coins in particular in the U.S. and Canada are reported as being around 3 weeks or more, while there has been tremendous demand for gold coins – some report the kind of levels seen back in 2008 when there was a similar price plunge, although then it was at a time when markets in general crashed. This time, so far, the general stock market has remained resilient, but there is some fear that a 2008 style market crash could be on the cards. In 2008 gold fell with the markets as some funds had to sell more easily tradeable gold to meet their commitments. It looks now as though investors could be building up holdings of physical metal against such an eventuality re-occurring.
Respected commentators like Dr Paul Craig Roberts, a former Assistant Secretary of the Treasury have joined the usual suspects who say U.S. Fed, along with the bullion banks, orchestrated the latest crash through dumping huge volumes of paper gold on the market to force the price down to protect the dollar and convince the world that all is well with the global economy – when it patently is not. Others have suggested the bankers have been driving the price down so that they can buy back at lower prices and thus make a huge profit when prices recover – and to protect short positions, particularly in the silver market.
There is comment that all this has led to a backlash of demand for physical metal which will see the prices of gold and silver soar back to prior levels – and above – purely due to a shortage of physical metal. This could be the case, but …. If indeed those who have suggested that the Fed and/or the banks have been responsible for driving gold and silver prices down, they may not have exhausted all their ammunition yet. That is the real danger affecting those who have been purchasing bullion in such quantities over the past week.
Thus, if the proposition that the recent drops in the gold price have been so orchestrated – and one has to face it that the recent bullion sales and price patterns with huge dumps of paper metal have not been suggestive of any kind of normal activity in the markets – then the manipulators may still be in the driving seat. In an economy which sees releasing more and more unbacked money into the system as a means of warding off economic collapse, and convincing the general populace that all is well through stimulating a strong stock market, then the attack on precious metals may not be over yet. As some have said – all markets nowadays are manipulated in favour of those who have money and want more and more. Some day this will all come to a sticky end, but it may not be yet!
The other relatively new factor in the equation of course, is Central Bank buying. It will be interesting to see whether this will continue – perhaps at an even higher volume rate given prices have fallen. One suspects that if Cyprus is forced to sell its gold reserves to help pay off its debt, this may never come on the general market, but be absorbed by other Central Banks, but it’s by no means certain that this offloading of gold will actually occur. It is reported that the Cyprus Parliament is to vote again on the troika bail-in bail-out demand and if this is rejected, as is far from unlikely, it seems inevitable that the country will default – and leave the EC – creating even more uncertainty in the markets.
But back to other Central Banks – they can’t be happy with what seems to be an attempt to dent precious metals’ safe haven appeal and to destroy its status as an embarrassing alternative currency. If they soak up more and more physical gold as a result, this demand for metal, as opposed to paper, coupled with the burgeoning investment demand, will create huge shortages – and shortage inevitably leads to potentially dramatic price rises. The market manipulators, whoever they may be, will be well aware of this and may temper their market involvement accordingly.
The gold price is notoriously difficult to predict – particularly with so many diverse forces in play. A personal view is that it could well be forced down again, before it rises – but once a sustained rise begins this will accelerate–even testing the former high and beyond. But timing is the key. This sustained rise could even, as some commentators have suggested, have begun. The next few days, weeks and months may well prove to be very volatile for both gold and silver.
iPad Version - Picutre: Gold bars are pictured at the Ginza Tanaka store during a photo opportunity in Tokyo: REUTERS/Yuriko Nakao

[globaleconomicollaps]

Re: gold getting killed!!!!!!!!!!!

Dr. Kieth Weiner wrote a piece on this:
http://www.gold-eagle.com/editorials...ner042213.html

Basically he said that there is increased buying amongst small individual investors and that they only buy coins. Larger buyers are absent or in fact, selling. This is leading to shortages at coin mints who normally have very limited production. Bar sales are not changing much.

[ProdigyofZen]

Re: gold getting killed!!!!!!!!!!!

What scarcity? Copper isn't scarce. There is tons of it out there. People are sitting on it a little more because of the drop in price and in demand. We have a record corn basis because of PCO and drought for the second year in a row. And getting physical gold isn't hard either. People are just exaggerating it.

I am not in the "physical gold shortage" camp but I will say I went to the dealer yesterday. They told me when gold started to drop on Friday buyers rushed in to buy physical. This continued into Monday and all last week.

When I was there they had 1 gold coin left and everything else was on back order. I made an order and was told that they would call me in 3 or 4 weeks when they get it in. (not that they couldnt get the kruggerands just that it took that long to get them with other people back ordered in front of me).

The silver coins were plentiful.

They also stated that the people rushing in to buy physical were financial firms/advisors in the area and not just individual buyers. Obviously they were buying for their clients.

[verdo]

Re: gold getting killed!!!!!!!!!!!

well atm, gold is about $13 away from breaking into the 1300 level. Very interesting what's going on, but the real fireworks will come when stocks roll over significantly. I haven't seen that spike-up in the USD that I've been expecting, which is really what I'm waiting for before I really back up the truck on gold

[davidstvz]

Re: gold getting killed!!!!!!!!!!!

Looks to me like it bottomed out a week ago and has been slowly and surely recovering.

[coolhand]

Re: gold getting killed!!!!!!!!!!!

What scarcity? Copper isn't scarce. There is tons of it out there. People are sitting on it a little more because of the drop in price and in demand. We have a record corn basis because of PCO and drought for the second year in a row. And getting physical gold isn't hard either. People are just exaggerating it.

I'm not talking about buying 1 coin. Call someone and order 100 oz...see how long it takes to get it. Or try 1,000 oz. Shouldn't be that hard, someone sold 2,000 tons in the futures market last week, no?

[coolhand]

Re: gold getting killed!!!!!!!!!!!

I am not in the "physical gold shortage" camp but I will say I went to the dealer yesterday. They told me when gold started to drop on Friday buyers rushed in to buy physical. This continued into Monday and all last week.

When I was there they had 1 gold coin left and everything else was on back order. I made an order and was told that they would call me in 3 or 4 weeks when they get it in. (not that they couldnt get the kruggerands just that it took that long to get them with other people back ordered in front of me).

The silver coins were plentiful.

They also stated that the people rushing in to buy physical were financial firms/advisors in the area and not just individual buyers. Obviously they were buying for their clients.

PoZ: Hey bro-

No one is watching what is going on with GLD physical inventory. Down another 19 tons yesterday alone. GLD has lost 250 tons of physical YTD. The 1st 50 tons took 48 days or so. The next 100 tons took 48 days. The last 100 tons have taken 13 days.

Where is it going? If there is so much gold available, why have 250 tons been taken out of GLD & another 63 tons taken out of COMEX inventories YTD? WHO IS BUYING ALL THIS GOLD? There have been close to 500 tons sold out of ETFs YTD...and no, they don't manage inventory that way on sell-offs...the NAV calc is shares X gold price. Volume should stay constant. With GLD, every 100,000 shares, you can exchange for bullion.

When you have to wait 3-4 weeks to get what is, I am assuming, in the grand scheme of things a small order, that is a shortage, no?

99 out of 100 people don't get that if the US dollar was in serious trouble, the price of gold futures would CRASH, not rise. Physical shortages would start to emerge, followed by physical premiums, both of which is starting for size orders.

This is probably just a gold correction, but every day we keep seeing physical disappear, the greater the (admittedly currently small) odds that this is the big one. When the COMEX gold is forced to settle in cash, that is the end of the dollar as reserve currency. No one on Wall Street is talking about this, but I am getting a sneaking suspicion they will before this is said & done...

[radon]

Re: gold getting killed!!!!!!!!!!!

I'm not talking about buying 1 coin. Call someone and order 100 oz...see how long it takes to get it. Or try 1,000 oz. Shouldn't be that hard, someone sold 2,000 tons in the futures market last week, no?

It isn't if you're buying 1000oz silver bars. If you just have to have rounds from a mint somewhere then you should understand why they aren't excited about loosing 10 or 15 bucks a coin by selling them to you.

[charliebrown]

Re: gold getting killed!!!!!!!!!!!

Under what conditions does GLD actually sell its gold? This always confused me. If I sell GLD shares someone must buy them. so the shares just change hands. But when does the actual metal increase or decrease? Is it an arbitrage sort of play? Meaning some big financial institution says, I feel more comfortable holding bullion than GLD so I am going to destroy my shares and get the bullion? and vice versa?

Why if the dollar crashes, would gold futures crash? Is there not enough physical to back the futures contracts?

Apmex premiums have moved up to about $40 an oz. per one ounce bars.

[coolhand]

Re: gold getting killed!!!!!!!!!!!

It isn't if you're buying 1000oz silver bars. If you just have to have rounds from a mint somewhere then you should understand why they aren't excited about loosing 10 or 15 bucks a coin by selling them to you.

I don't think silver is going to participate like gold is in what is happening...i meant gold in the above comment. Central banks only have gold on their balance sheets, no silver. I think there is actually a chance that silver doesn't do much in a currency reset, b/c i think real economic infrastructure activity will tail off for a time as China no longer needs to build ridiculous amounts of infrastructure as a way to hedge against the dollar.

(Jim Chanos never talks about that - he notes how large a % of China's GDP is infrastructure, & how irrational that is...and he's right...but the only thing less irrational is reinvesting those savings into infrastructure is investing it into 0% yielding Treasuries.)

[verdo]

Re: gold getting killed!!!!!!!!!!!

Do central banks need to hold silver for it to do well though? In the 70's bull run, central banks were net sellers of gold and it didn't stop it from rising because people wanted it. This shows me that public perception is more important to pushing these prices in the end. I mean, I don't even remember the last time that silver and gold moved in a different direction. If gold goes to $5000 for example, its hard for me to see silver not going to $100

[coolhand]

Re: gold getting killed!!!!!!!!!!!

Under what conditions does GLD actually sell its gold? This always confused me. If I sell GLD shares someone must buy them. so the shares just change hands. But when does the actual metal increase or decrease? Is it an arbitrage sort of play? Meaning some big financial institution says, I feel more comfortable holding bullion than GLD so I am going to destroy my shares and get the bullion? and vice versa?

Why if the dollar crashes, would gold futures crash? Is there not enough physical to back the futures contracts?

Apmex premiums have moved up to about $40 an oz. per one ounce bars.

Not by a long shot...as much as 100-1 leverage...every day, the COMEX does 18-20m oz in volume; by way of comparison, the US the world's biggest holder of gold, owns 261m oz total.

The popular explanation is that GLD sells physical to arb a paper/physical trade to keep pricing in line with the COMEX. That is one explanation that is the official one. This one is the "unofficial" explanation...I'll let you decide which explanation holds more water: http://fofoa.blogspot.com/2011/01/wh...ining-gld.html

Keep in mind, this article was written when someone took 69 tons out...YTD we are nearly 4x that amount now