Gold strategy in the current economy

[Hail the Tripod]

The World Gold Council report I linked to earlier, shows that demand for gold is 12% down overall from the same period a year ago.

With production from scrap and newly mined much of a sameness, that says there is more gold available now, than a year ago.

With supplies meeting a reduced demand, it seems that the reason for golds low price has an explanation that is a million miles from gatagoon stories.

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The gold market has a different stock vs flow dynamic to other markets. That kind of analysis, while useful in other commodities, is close to irrelevant in the short term, and only really significant over much longer periods than a year. Here's a good primer:

http://www.safehaven.com/article/14980/why-changes-in-gold-production-dont-matter

Most analyses of the gold market consider the annual change in the amount of gold produced by the mining industry to be an important determinant of the gold price, with bulls regularly supporting their case by citing the mining industry's inability to ramp up production and bears sometimes claiming that increasing mine production will eventually weigh the gold price down. Our contention, however, is that the annual supply of newly-mined gold is so small relative to the existing aboveground supply that changes in mine production should be ignored when assessing gold's prospects.

Edited August 16, 2013 by Hail the Tripod

[warpig]

If the underlying physical asset is a fraction of the total number of assets, then by definition it is fractional. This is irrefutable. By extension, would you suggest the banking system isn't fractional based? Cash is only a tiny proportion of their holdings. I was told at school if everyone withdrew their cash from the banks, banks would go bankrupt. If the bullion market runs out of bullion, as they will when the currency crisis picks up speed, we will get divergence between the paper and physical price of gold as price discovery on any exchange becomes meaningless. The depth of this financial crisis knows no bounds and at some point, no one will want a paper promise for bullion. The gravity of the current situation is obvious.

Gold with another custodian is still cash and again you've reaffirmed my point, they defaulted on the delivery of bullion.

Do you suffer from Amnesia? Germany has to wait 7 years to get their gold back and you're trying to tell me demand is down..? You present a slither of the facts that represent your view that everything is running smoothly, despite the endless supporting evidence to the contrary.

The more you push this view, the more you appear to have an agenda.

There is no such thing as a "fractional reserve bullion system" it's a bit of deeply meaningful, but nonsensical, management speak.....aka, gold bug rubbish. Just like the rubbish that came about from those who couldn't read between the lines of a crap google translated document, or be bothered to research further. This was soon established at the time (go check Kitco Forums from the time) Clients had a choice, gold with another custodian, or cash. Don't you think we would have heard by now if that is what hadn't happened?

The World Gold Council report I linked to earlier, shows that demand for gold is 12% down overall from the same period a year ago.

With production from scrap and newly mined much of a sameness, that says there is more gold available now, than a year ago.

With supplies meeting a reduced demand, it seems that the reason for golds low price has an explanation that is a million miles from gatagoon stories.

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[DiggerUK]

The gold market has a different stock vs flow dynamic to other markets. That kind of analysis, while useful in other commodities, is close to irrelevant in the short term, and only really significant over much longer periods than a year. Here's a good primer:http://www.safehaven.com/article/14980/why-changes-in-gold-production-dont-matter

A very interesting link. Couple of deficiencies .

First is the allegory with the prodction of dollars (para5), doesn't fit well in the overall argument.

Second is the complete lack of distinction between LBMA gold transfers, and gold traded in the LBMA. The amount of transfers do indeed show that the equivalent of annual mine production moves through the LBMA in less than a week, but as we have only sketchy estimates of the amount traded each day, (claims of x8 of transfers), then it is quite possible the annual mined production could have been traded before lunch!

One gem I found from reading your good link, is a further link to Steve Mathews. It is a little complex to follow, but at only three pages it soon falls in to place. It gives insight to a hedgies mind set. The flaw I see in his piece is again how he comes to 7019 days of gold supply.....from LBMA transfers, not trades. If the up to x8 trades to transfers is true then it is still the best part of three years gold supply. He thinks that gold is best traded "as a foreign currency, not a commodity"

So with world trade slow, gold as an fx in that process will be muted. A reason I have conjectured on for a lowered price.

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[DiggerUK]

....would you suggest the banking system isn't fractional based? .......

Fiat can be fractionalised because it can be created out of thin air, gold cannot be fractionalised because it can only be mined, smelted, and refined, not conjured up out of thin air.

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[warpig]

If that statement were true, then why is the volume of bullion dwarfed by the volume of futures contracts? Which is rumoured to be [45-100]:1. Even if it was just 2:1 it's still fractional based and you know it.

Fiat can be fractionalised because it can be created out of thin air, gold cannot be fractionalised because it can only be mined, smelted, and refined, not conjured up out of thin air.

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[shindigger]

Tapering... my ****.

[DiggerUK]

.....Take the current alleged long delays....somebody needs to get liquid assets to move on to the next trade, delivery delays prevent them.....they sell contracts to aquire liquid.....that buyer does the same....and on, and on, ad infinitem. You end up with many contacts ('paper gold') With derivatives coming in many forms, the last contract in the chain could look nothing like the first one. Once the first party gets delivery, it passes through all the contracts like some golden paper munching pac man, and all the contracts obligations are met.

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I know it's Friday, but if you can't keep up, then maybe you should go home early.

Gold cannot be fractionalised.

If that statement were true, then why is the volume of bullion dwarfed by the volume of futures contracts? Which is rumoured to be [45-100]:1. Even if it was just 2:1 it's still fractional based and you know it.

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[warpig]

You clearly don't understand what we're dealing with here. I just wish you'd said as much before I took the time to reply to you. Nevermind.

I know it's Friday, but if you can't keep up, then maybe you should go home early.

Gold cannot be fractionalised.

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[DiggerUK]

You clearly don't understand what we're dealing with here. I just wish you'd said as much before I took the time to reply to you. Nevermind.

What "we're" dealing with!.....I don't know about you, but I'm dealing with people who are 31 grammes short of an ounce.

Gold cannot be created, destroyed, or fractionalised. It's an elemental metal, not a fiat currency.

Sir Isaac Newton agrees with me on that one, and he was a master of The Mint....he is remembered for something else as well, but for the life of me, I can't think what it was.

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Edited August 16, 2013 by DiggerUK

[Belfast Boy]

Fractional reserve gold nicely explained... 2 mins in...

[Belfast Boy]

Jeff Christian CME...

[warpig]

• Why do you keep avoiding my questions?
  
• Why do you fail to concede your position when the evidence is overwhelmingly against you?
  
• Why do you create strawman arguments?
  
• Why do you falsify my claims?
  
• Why do you protect a failing unfair bullion system?
  
• Why do you vilify anyone who questions the current failing system?
  
• Why are you never bullish on the price of gold?
  
• Why are you always bearish on the price of gold?
  
• Why are you unable to have a contiguous discussion?
  
• Why do you duck and dive all the time?
  
• What have you got to gain from all of the above?
  

I don't believe you own a single ounce of investment grade physical gold. I think you're here to help keep a lid on the price, you're part of the propaganda IMO and I think virtually everyone here knows it.

Everyone on this thread knows the future contracts outnumber the number of physical ounces in the associated warehouses, to the point where it's ludicrous to even discuss it. Even the CME admit this. You're a waste of time.

What "we're" dealing with!.....I don't know about you, but I'm dealing with people who are 31 grammes short of an ounce.

Gold cannot be created, destroyed, or fractionalised. It's an elemental metal, not a fiat currency.

Sir Isaac Newton agrees with me on that one, and he was a master of The Mint....he is remembered for something else as well, but for the life of me, I can't think what it was.

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[DiggerUK]

Fractional reserve gold nicely explained... 2 mins in...

Jeff Christian CME...

The guy at 2 minutes in the first one clearly does not even recognise the difference between LBMA gold traded (unknown), and the reported LBMA transfered ounces (known). He's uninformed and does not know what he is talking about. I don't see a lot of evidence that people around here know the difference between ounces traded and ounces transfered either.

I never went with Goldline/Bairds allocated or unallocated gold. Especially the unallocated, because all I had 'was a general entitlement to gold' and would be an unsecured creditor, 'caveat emptor' comes to mind.

Pay attention to your own sources, not your prejudiced nonsense.

Gold cannot be fractionalised.

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[DiggerUK]

I think you're here to help keep a lid on the price.

Quite how I am supposed to do that is a puzzle. All Digger Mansions stack melted down would hardly make a good delivery bar.

I responded to all the whys'

Getting agitated at critcism to the level you do, is a pointless exercise on the net. Calm down.

Gold cannot be fractionalised.

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[warpig]

I'm not agitated, I'm irritated by your perpetual anti-gold stance and the lies you peddle as truth.

I stand by my assertion you don't own a physical 1oz gold coin or investment bar, not one.

Quite how I am supposed to do that is a puzzle. All Digger Mansions stack melted down would hardly make a good delivery bar.

I responded to all the whys'

Getting agitated at critcism to the level you do, is a pointless exercise on the net. Calm down.

Gold cannot be fractionalised.

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[Hail the Tripod]

A very interesting link. Couple of deficiencies .

First is the allegory with the prodction of dollars (para5), doesn't fit well in the overall argument.

It's not an allegory really it's simply pointing out that dollars and gold have some similar characteristics which distinguish them from other commodities.

Second is the complete lack of distinction between LBMA gold transfers, and gold traded in the LBMA. The amount of transfers do indeed show that the equivalent of annual mine production moves through the LBMA in less than a week, but as we have only sketchy estimates of the amount traded each day, (claims of x8 of transfers), then it is quite possible the annual mined production could have been traded before lunch!

Yes, but is that a deficiency, surely it reinforces the point. Better to understate than constantly trying to overstate things (like people talking about quadrillions in derivatives, like gross notional is relevant rather than net).

"Is gold money or a commodity?" is a bit like: "Is light a particle or wave form?" Neither, but under certain circumstances it can resemble either.

[DiggerUK]

.....I'm irritated by your perpetual anti-gold stance and the lies you peddle as truth.

I stand by my assertion you don't own a physical 1oz gold coin or investment bar, not one.

All I can do on the net is claim to have 90/95% of Digger Mansions retirement savings in physical, I have a long track record on forums which makes my claim more than plausible.

I am a long term hold 'n gold bull. It is undeniable that the price of gold (pog) has collapsed 30% since September 2011. I do not support the conspiracy theories as being responsible for this dive.

Stop moaning and throwing tantrums because you get criticised. In case you are interested, I have no plan to convert you to my point of view. It's just that many lurkers follow threads, and my content is for their benefit. I think you are too imbued with your evangelical support of malfeasance theories from the likes of GATA.

If you want to garner support for your arguments, do it in a disciplined and responsible manner for christs sake. There is nobody here shouting "order, order" when you misbehave, that's for you to be self disciplined about.

When such oxymoronic nosense as fractional gold gets mentioned, my jobs made easy.

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[warpig]

You have a track record for trolling, I've read your posts elsewhere, you wind everyone up wherever you go.

Stop being so dramatic... I haven't thrown a tantrum, I'm just holding your accountable for the tripe you post. It was you that was criticised, but trying to get you to see your own failures is like trying to nail jelly to a wall.

All I can do on the net is claim to have 90/95% of Digger Mansions retirement savings in physical, I have a long track record on forums which makes my claim more than plausible.

I am a long term hold 'n gold bull. It is undeniable that the price of gold (pog) has collapsed 30% since September 2011. I do not support the conspiracy theories as being responsible for this dive.

Stop moaning and throwing tantrums because you get criticised. In case you are interested, I have no plan to convert you to my point of view. It's just that many lurkers follow threads, and my content is for their benefit. I think you are too imbued with your evangelical support of malfeasance theories from the likes of GATA.

If you want to garner support for your arguments, do it in a disciplined and responsible manner for christs sake. There is nobody here shouting "order, order" when you misbehave, that's for you to be self disciplined about.

When such oxymoronic nosense as fractional gold gets mentioned, my jobs made easy.

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[DiggerUK]

...."Is gold money or a commodity?" is a bit like: "Is light a particle or wave form?" Neither, but under certain circumstances it can resemble either.

Undeniable that gold is both a commodity, and money. Money itself is bought and sold, so can be classed as a commodity.

Why his comment stood out for me, was that the hedgie said he traded gold mainly as an fx trade. It made me more sure of my theory as to golds price fall with relationship to reduced global trade. Not as the main, or only reason for gold tanking, but as a contibutory factor. How substantial is one question; how justified my theory is, being the other question....???

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[DiggerUK]

You have a track record for trolling, I've read your posts elsewhere, you wind everyone up wherever you go.....

These are just throw away insults.

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[warpig]

All you have to do is use google with the keywords of "DiggerUK" "gold" "troll" or "DiggerUK" "gold" "ban". Do tell us why you were banned from the Kitco forums...

"DiggerUK is offline

Banned"

Then there's this thread.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=166502

or this one.

https://www.kitcomm.com/showthread.php?t=87173

There are countless others if you want me to post the links I don't mind.

These are just throw away insults.

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[DiggerUK]

All you have to do is use google with the keywords of "DiggerUK" "gold" "troll" or "DiggerUK" "gold" "ban". Do tell us why you were banned from the Kitco forums...

"DiggerUK is offline, Banned"

There are countless others if you want me to post the links I don't mind.

I never got a response off Kitco as to why I was banned, none of my emails got a response. If you can find out for me I would be grateful.

I feel flattered that on a planet of 7 billion souls, you should do a search on me. Thankyou.

p.s., my silver thread on Kitco was a thread that I had my greatest reponse to. I would recomend it to all, it turned in to a very good debate.

Now in case you didn't realise, this isn't a thread about DiggerUK, so move along please to the discussion on a "Gold strategy in the current economy" started by Lepista.

p.p.s., Gold cannot be fractionalised.

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[warpig]

I can tell you without even asking them, it's because you're antagonistic and you belong under a bridge somewhere. You're a troll.

I never got a response off Kitco as to why I was banned, none of my emails got a response. If you can find out for me I would be grateful.

[DiggerUK]

I can tell you without even asking them, it's because you're antagonistic and you belong under a bridge somewhere. You're a troll.

I shall hang myself immediately, do you want to rape me first, or don't you make such threats anymore.

You have failed to intimidate me once again, your other sock puppets failed, your future ones will as well.

My discussions with you are at an end.

Gold cannot be fractionalised. JP Morgan cannot be crashed.

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[warpig]

You are a class A weirdo.

I shall hang myself immediately, do you want to rape me first, or don't you make such threats anymore.

You have failed to intimidate me once again, your other sock puppets failed, your future ones will as well.

My discussions with you are at an end.

Gold cannot be fractionalised. JP Morgan cannot be crashed.

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