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C O M E X Data Points To Massive Falls In Gold Price

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http://uk.biz.yahoo.com/18092009/325/gold-...-rally-add.html

Most of the run higher has been led by major flows into the U.S. COMEX gold futures market, with trading investors and speculators vastly increasing long positions, leaving the price vulnerable to rapid and sharp falls.

The latest weekly Commitments of Traders report published by the Commodity Futures Trading Commission showed net long positions had widened to a massive 224,676 as of September 8 compared with 184,501 a week earlier.

Positioning looks set to extend more, but the longer it gets, the bigger the risk.

"Everybody is saying the market is too long, but no-one wants to sell," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

"There's too much money in the world as central banks take easy policy and as funds push up the market with the money. They see (the) gold market as easy to manipulate...like a casino."

But flows into exchange traded funds, the beneficiary of gold buying earlier in the year, have not kept pace with the latest price surge, and physical demand from the jewellery sector has gone cold.

Inflows into gold-backed ETFs have picked up a little after plateauing over the summer months, but remain well down on the first quarter's record levels.

On the currency front, the dollar has fallen to one-year lows against a basket of major currencies , while the euro looks set to hit $1.50.

As a function of dollar weakness with an inverse correlation, gold is pulsing higher as the dollar falls, but that does not equal optimum conditions for the metal, some say.

"This is not a bull market for gold, it's a bear market for paper currencies, led by the dollar," said Sean Corrigan, chief investment officer at Diapason Commodities Management in Switzerland.

A look at non-dollar denominated gold also shows an unfamiliar pattern as the current rally is not being replicated.

Sterling-priced gold, for instance, is only at its highest since April, while bullion in commodity currency the Australian dollar is struggling to revisit recent two-month highs.

FEAR FACTOR?

The other missing link to the current rally is fear, gold's usual cheerleader when prices are surging.

"There is no real fear, which would be supportive for gold in the medium term," said Eugen Weinberg, commodities strategist at Commerzbank.

"The market is not concerned any more about the economy or about the health of the financial system, and I think this will not be sustainable."

Gold last got through the psychological $1,000 barrier and hit a record high in March 2008 -- coinciding with the collapse of Bear Stearns and subsequent distressed sale to JPMorgan.

Mike Lenhoff, chief strategist at Brewin Dolphin, looking back at the financial crisis, notes how each time gold raced up in crisis mode, it quickly sold off again.

"I don't think gold bullion is going much beyond where it has got to already. It had its chance to fly with the mother of all financial upheavals, and it didn't."

_____________________________________

Um, I think I agree with all or most of that. Time to sell my soveriegn.

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Useless yellow metal or worthless paper?

Not muich of a choice is it.

How about some beer?

That's hitting the nail on the head.

Not much to trust other than a good veggie patch in t' back garden.

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Um, I think I agree with all or most of that. Time to sell my soveriegn.

Nope.

(If) you agree with it, it's time to sell paper gold and buy sovs.

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the $ is collapsing, inflation is not falling back as much as anticipated and will soon rise in US and UK, China encouraging there people to buy gold/silver

maybe it will pull back temporarily but 1200/1300 is where its going before year end

Edited by I Told You So

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in a nutshell Timm.

I wouldn't want to be holding any paper silver/gold right now.

What's the bet they can't deliver.....

Am I allowed to say backwardation?

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funny, but the same arguments could surely be used for the stock market rally. and look.

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in a nutshell Timm.

I wouldn't want to be holding any paper silver/gold right now.

What's the bet they can't deliver.....

The ratio between the amount of gold being mined and that which has been sold is 675:1 or thereabouts.* If too many people "called" for the physical there would be real trouble. There is a gold bubble but it is not being reflected in a commensurately high price as the article points to. Why--you might ask. Gold should be $10k or more given the amount sold if there was a real relationship with the amount of production.

It may well be just another PONZI scam. Hence long position jitters. The traders see it but don't want to be first to sell if the herd keep going.

_________________

*The exact figue in incaclulable (sp) given the myriad forms of gold sales in operation. Bit like the myriad forms of home loans--no controls, just a huge black hole being created.

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The ratio between the amount of gold being mined and that which has been sold is 675:1 or thereabouts.* If too many people "called" for the physical there would be real trouble. There is a gold bubble but it is not being reflected in a commensurately high price as the article points to. Why--you might ask. Gold should be $10k or more given the amount sold if there was a real relationship with the amount of production.

It may well be just another PONZI scam. Hence long position jitters. The traders see it but don't want to be first to sell if the herd keep going.

_________________

*The exact figue in incaclulable (sp) given the myriad forms of gold sales in operation. Bit like the myriad forms of home loans--no controls, just a huge black hole being created.

theres no bubble in my soveriegns....there is a small pile, same as last year, in size, weight and quantity.

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The ratio between the amount of gold being mined and that which has been sold is 675:1 or thereabouts.* If too many people "called" for the physical there would be real trouble. There is a gold bubble but it is not being reflected in a commensurately high price as the article points to. Why--you might ask. Gold should be $10k or more given the amount sold if there was a real relationship with the amount of production.

It may well be just another PONZI scam. Hence long position jitters. The traders see it but don't want to be first to sell if the herd keep going.

_________________

*The exact figue in incaclulable (sp) given the myriad forms of gold sales in operation. Bit like the myriad forms of home loans--no controls, just a huge black hole being created.

Fractional reserve mining !! Genius. Is this whole World just one big joke... :(

As for the idea of beer being the new currency of choice ? Not bad. I would go for it.

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Useless yellow metal or worthless paper?

Not muich of a choice is it.

How about some beer?

The problem with beer is that I would be unable to maintain a stash for any period of time, it just finds it's way into my gob..............

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Fractional reserve mining !! Genius. Is this whole World just one big joke... :(

As for the idea of beer being the new currency of choice ? Not bad. I would go for it.

Injin still owes me a beer....I trust he's good for it.

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Fractional reserve mining !! Genius. Is this whole World just one big joke... :(

As for the idea of beer being the new currency of choice ? Not bad. I would go for it.

It is fractional reserve selling but far worse if you consider that gold is limited but the printing presses are not. We may have a classic oversold situation where the vast majority have bought nothing more than a promise to deliver the physical. Thus gold and paper are identical in terms of "worth."

If the herd get wind of the possibility they may have bought an unfulfillable promise they might try to quietly unwind their positions and buy AAA rated government bonds. PIMCO are moving from corporates to treasuries and Bill Gross is rarely wrong in seeing the big trends.

Edited by Realistbear

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Fractional reserve mining !! Genius. Is this whole World just one big joke... :(

As for the idea of beer being the new currency of choice ? Not bad. I would go for it.

Now, if you could turn one beer into 9 more beers, that would be excellent.

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Injin still owes me a beer....I trust he's good for it.

What if he's going around promising to pay beer that he doesn't have, all the time counting on his good name? What is he getting for this beer promise? You could probably trade your promise of beer with others for stuff you know.

Injin the beer banker? :o

Edited by bogbrush

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As far as I can make out various hedge funds and others with access to vast sums of money can now manipulate virtually anything they want - shares, gold, oil, other commodities, property and even currencies.

The 'game' appears to be to buy something that is X price, create a frenzy about it and hope that all the mugs - fund managers, you and I - jump in allowing them to get out before it all collapses but leaving them with huge profits.

Why have certain Tech companies that, some would say, are on their knees and their share price went down as low as a single buck now be trading at 15 or 20 bucks not even a year later. Same for all things you can buy.

The markets are a giant ponzi scheme IMPO and we are all being made poorer so that a tiny elite can be wealthy beyond imagination.

In other times they would have chopped off the heads of them and their families not just to erase them from History but to serve as a warning to others. Not that I wish such brutal things on anyone but there surely has to be punishment for what these people do.

I firmly believe that France has been so little affected by the crash is because the bw ankers knew that the French, if they discovered what was going on, would have taken direct action rather than posting their whinges on a web forum :blink:

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As far as I can make out various hedge funds and others with access to vast sums of money can now manipulate virtually anything they want - shares, gold, oil, other commodities, property and even currencies.

The 'game' appears to be to buy something that is X price, create a frenzy about it and hope that all the mugs - fund managers, you and I - jump in allowing them to get out before it all collapses but leaving them with huge profits.

Why have certain Tech companies that, some would say, are on their knees and their share price went down as low as a single buck now be trading at 15 or 20 bucks not even a year later. Same for all things you can buy.

The markets are a giant ponzi scheme IMPO and we are all being made poorer so that a tiny elite can be wealthy beyond imagination.

In other times they would have chopped off the heads of them and their families not just to erase them from History but to serve as a warning to others. Not that I wish such brutal things on anyone but there surely has to be punishment for what these people do.

I firmly believe that France has been so little affected by the crash is because the bw ankers knew that the French, if they discovered what was going on, would have taken direct action rather than posting their whinges on a web forum :blink:

Would agree with that. The French can be assholes, but they do kick up a fuss when needs be. Can you imagine if their Politicians had been doing the same as ours ? You would literally have millions out on the streets.

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Am I allowed to say backwardation?

happened for the first time in 2008 iirc......

edited - I don't fully understand backwardation tbh (as in how to recongise it myself straight away). It was discussed on GEI a few weeks ago actually. I am still learning.

Edited by grumpy-old-man-returns

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"This is not a bull market for gold, it's a bear market for paper currencies, led by the dollar," said Sean Corrigan, chief investment officer at Diapason Commodities Management in Switzerland.

this doesnt really make sense

surely a decline in the dollar means gold (+ other commodities) will go up?

most experts want to see gold decline because they are keynesian goons like Gordon Brown

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Now, if you could turn one beer into 9 more beers, that would be excellent.

Like buying one ice Cold Cobra and suddenly another 8 appear.

Heaven. Fractional reserve beer - the way forward.

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Fractional reserve mining !! Genius. Is this whole World just one big joke... :(

If you read Goethe's Faust, you'll see Mephistopheles invented it, and used it to cause a bubble-and-bust.

As for the idea of beer being the new currency of choice ? Not bad. I would go for it.

Not me guv. Lacks shelf life, especially if you prefer it fresh and not doctored.

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If you read Goethe's Faust, you'll see Mephistopheles invented it, and used it to cause a bubble-and-bust.

Not me guv. Lacks shelf life, especially if you prefer it fresh and not doctored.

I will have a look for that. As for the beer - at least if it went off quickly people would have to just live a day to day existence. Rather than worrying about investing their beer or whatever.

until physical delivery day of course, then your nine beers are delivered in a teacup with a note saying......"IOU 8.5 beers" ;)

Now that would lead to revolution. :lol:

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