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


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HOLA441

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.

[/quote

Sean Corrigan is an idiot. A sell off in fiat currencies is a bull market in Gold.

Fill ya boots.

Nuff said.

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HOLA442
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."

You got a paper note on you? Read it!

I promise to pay the bearer on demand ...

Wonder if that could be the basis of a fraud case against them?

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.

Who is PIMCO?

(I won't lend my money to this government on principle, never mind the merits or otherwise of it as an investment).

Come to think of it, if there's a "long squeeze", couldn't it be good news for ETFs linked to physical gold? That is, so long as anyone busted by it gets the customary bailout.

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Time to sell my sovereign.

Curious. :angry:

Seeing as you were adamant it was going to $500 when it was roughly $800, I'm very surprised you have any.

(At that time I was saying 'buy gold and gold shares etc. Obviously I was deemed a crackpot - so wha's new?)

I'm not really surprised. You just like to make scary comments in an unbalanced (journalistically) way.

It is true that gold could quite as easily go to 850 as 1250 next stop (though if you look at $ it just keeps falling so commodities seem on a longer rally). But medium long term it is... going to the moon.

Readers should not listen to those who scaremonger.

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

I thought the government just brewed the beer up to replace what didn't previously exist, allowing it to be delivered? All funded by the taxpayer, of course! :P

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Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of paymentâ€.

Alan Greenspan

Sept 9, 2009

I luv you Alan, you have made me a very happy bunny.

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Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies...What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of paymentâ€.

Alan Greenspan

Sept 9, 2009

I luv you Alan, you have made me a very happy bunny.

You trust everything Greenspan says or just the bits you like?

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Am I allowed to say backwardation?

By coincidence, I was reading this today - I can't remember where I found the link, but it has been waiting to be read for a few days.

http://www.zerohedge.com/article/gold-and-systemic-crisis

The interesting bit is here...

What has characterized our international system since 1971, or "Bretton Woods II" as it is sometimes called, is this: 1) the gold futures clearing system, and related paper markets and 2) the ability to swap oil for gold via these markets using exclusively US Dollars. This has given implicit support to the U.S. dollar far beyond what could be reasonably imagined considering the U.S. fiscal situation -- in the sense that the dollar is supported as long as 1) oil is for sale in dollars and 2) gold is for sale in dollars. This does not always have to be the case, and this is the core of the issue. If gold goes into permanent backwardation it will no longer be for sale in dollars on COMEX. Period. This will implicitly cut off oil flows to a trickle until payment is re-linked to gold via the IMF SDR or another mechanism.

:ph34r:

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