Gold strategy in the current economy

[weaker]

Yi Gang, deputy governor of People's Bank of China:

Esteemed weader, I hear the Fedewal Wesewve has made some dewivewy commitments vey can no keep.

Germany Has Recovered A Paltry 5 Tons Of Gold From The NY Fed After One Year

http://www.zerohedge.com/news/2014-01-19/germany-has-recovered-paltry-5-tons-gold-ny-fed-after-one-year

Xi: Make vem PAY!

Edited January 20, 2014 by weaker

[DiggerUK]

..... JUST ONE limit long asking for delivery will now consume 80+% of the available deliverable gold in the CME warehouses. Now, if there were two entities asking for delivery.......

The missing word is 'if' delivery is demanded. Why subvert what he said.

He also clearly distanced himself from suggestions he was an adherent of conspiracy arguments......and he is not a serial car salesman either.

The maximum gold demanded for delivery in the last five years at the comex has never exceeded 5% in a month. Most months it is between 1% and 2%. Your imminent claims of a default based on hypothecation and re-hypothecation are groundless.

He was warning those with plans to buy physical that they to do it sooner, rather than later. Advising buyers to short the Yen, if they could, to finance the purchase.

All the shouting about defaults in deliveries from all sources have proved groundless when compared to the outflows from those sources. The demand from the east for gold has all been met in good time.

If there was wholesale deceit regards hypothecation of gold stocks, it should have become clearer by now.

The gold in the comex warehouses has to be comex standard, they won't take it if it isn't. A quick click of the mouse would transfer it to registered 'buy me now' availability.

..._

[Killer Bunny]

Don't know if you guys have seen this and related vids

[JPJPJP]

weaker

have you read and understood posts 7792 and 7793 on this thread?

particularly the outline of CME's rule 716...

Edited January 20, 2014 by JPJPJP

[DiggerUK]

Don't know if you guys have seen this and related vids

He went for physical because of long term cost benefits. He didn't say if it was converted from registered, back to non registered stocks, or even if it was left in comex.

If that was the case, I hope he would have it as segregated allocated, as opposed to simply allocated bars. It would make any future audits less troblesome than the last one they did.

In an interview on Bloomberg (related vids) he paid respect to Sorros who he claims was surprised when gold did not behave as he thought it would with such events as Cyprus.

I still hold that debasement of currencies does not harm gold, and that price and monetary inflation can be insured against with gold. But it now seems to me that the main adrenalin boost for gold, is a good old fashioned economic bust. My jury is still out on that, but close to a verdict.

For now, that bust has been put on hold with the stimulus, and rhymes with post 1980. Let's see what will rhyme with 2007, this time I have much more gold than then....and pastureland to boot!

..._

[weaker]

weaker

have you read and understood posts 7792 and 7793 on this thread?

particularly the outline of CME's rule 716...

Yes, I read them. If you don't think cash settlement is a default when you own deliverable contract, then you need to go to Oz.

[weaker]

..... JUST ONE limit long asking for delivery will now consume 80+% of the available deliverable gold in the CME warehouses. Now, if there were two entities asking for delivery.......

The missing word is 'if' delivery is demanded. Why subvert what he said.

He also clearly distanced himself from suggestions he was an adherent of conspiracy arguments......and he is not a serial car salesman either.

The maximum gold demanded for delivery in the last five years at the comex has never exceeded 5% in a month. Most months it is between 1% and 2%. Your imminent claims of a default based on hypothecation and re-hypothecation are groundless.

He was warning those with plans to buy physical that they to do it sooner, rather than later. Advising buyers to short the Yen, if they could, to finance the purchase.

All the shouting about defaults in deliveries from all sources have proved groundless when compared to the outflows from those sources. The demand from the east for gold has all been met in good time.

If there was wholesale deceit regards hypothecation of gold stocks, it should have become clearer by now.

The gold in the comex warehouses has to be comex standard, they won't take it if it isn't. A quick click of the mouse would transfer it to registered 'buy me now' availability.

..._

erm - no I said IF more than one limit long demands delivery.

I didn't mention any conspiracy either. Why twist what I said? It couldn't be clearer.

The claims are not groundless; the exchange could now have to step in to save its own integrity. We shall see.

If there was wholesale deceit regards hypothecation of gold stocks, it should have become clearer by now

Although at first glance this example appears to have nothing to do with COMEX, what do you think Germany is doing? 5 tonnes in a year? Their gold is re-hypothecated into China.

Germany Has Recovered A Paltry 5 Tons Of Gold From The NY Fed After One Year

http://www.zerohedge.com/news/2014-01-19/germany-has-recovered-paltry-5-tons-gold-ny-fed-after-one-year

Bafin are firing a warning shot across the bows.

There will be similar clients of JPM, HSBC, Scotia who discover their 'gold' held in allocated/unallocated is simply not available yet.

A quick click of the mouse would transfer it to registered 'buy me now' availability.

If there is only one owner of each eligible ounce (joke), and IF it is in 100 Oz / 3x1Kg format.. and not all of it is.

The maximum gold demanded for delivery in the last five years at the comex has never exceeded 5% in a month. Most months it is between 1% and 2%. Your imminent claims of a default based on hypothecation and re-hypothecation are groundless.

No, they are not groundless. The gold demanded last february for delivery was 40 tonnes iirc.

Now there is just 11 tonnes available?

Currently the Open Interest is about 150,000 contracts (15,000,000 ounces) and there are two weeks left for this to drop below the 370,000 ounces of Registered deliverable stock.

I expect it will drop, but it MUST drop below 4000 contracts OI before there is a problem.

To put this in context, the December OI two weeks out was about 170,000 contracts, and 7700 stood for delivery.

We're not gonna change anything that happens by talking here, but it IS going to be interesting.

Edited January 20, 2014 by weaker

[JPJPJP]

Yes, I read them. If you don't think cash settlement is a default when you own deliverable contract, then you need to go to Oz.

By saying that it is clear that you don't understand the rules of the exchange

trading gold contracts on CME is very different from buying physical

whilst some CME / broker Marketing & Sales people might gloss over the differences, the differences are massive and one could go as far as to say that a would be buyer of physical is barking up the wrong tree if she is using CME contracts as a tool to gain ownership of physical

the reality is that the holder of a contract simply doesn't have a deliverable contract until the contract vests / expires

moreover, the exchange rules (that everyone knows when entering a trade) are that the contract can only vest to deliverable status if all parties to it are in a position to fulfil: if the seller has no metal or the buyer has no poke, the contract is settled for cash without ever vesting to deliverable status

if you buy, for instance, a May contract today, there is no mechanism for you to convert that to a physical delivery before then

likewise, if you sell a May contract today, you can't be expected to deliver the physical until then and, if you don't have the gold, you can lose the obligation by buying the contract back before delivery is due. If you don't buy the contract back by the day before the contract would vest and you can't prove to your exchange member (broker) that you have the physical available for delivery, the contract will be settled for cash anyway

they are the rules

On the other hand if (like Germany it might seem), you had 'ownership' of physical gold but, when you went to collect your physical to move it / make it into a bath or whatever took your fancy, it wasn't there and the seller who took your money, or the custodian that was supposed to be looking after it couldn't put their hands on it for you immediately, that would be a default

If that is the case, I can't understand why Germany isn't kicking up more fuss. Clearly it wants to take control of its own, owned physical and, somewhere along the line, something is stopping that happening as quickly as it should. The only legitimate thing I can think of is if Germany entered into agreements to convert physical into paper holdings somewhere along the line and are now trying to covert them back under contracts that don't require the other party to do that immediately.

Do you know why Germany isn't kicking up a fuss?

[JPJPJP]

No, they are not groundless. The gold demanded last february for delivery was 40 tonnes iirc.

Now there is just 11 tonnes available?

Currently the Open Interest is about 150,000 contracts (15,000,000 ounces) and there are two weeks left for this to drop below the 370,000 ounces of Registered deliverable stock.

I expect it will drop, but it MUST drop below 4000 contracts OI before there is a problem.

To put this in context, the December OI two weeks out was about 170,000 contracts, and 7700 stood for delivery.

No, again you are showing that you haven't understood the rules of the exchange correctly.

If the parties to those contracts want them to vest to delivery, there must be a match of buyers with the money and sellers with the physical. If either party to a contract can't prove that it can fulfil delivery then, the day before expiry, their broker (CME member) is compelled to close the contracts and settle them for cash under rule 716.

There is no option for a seller to force a buyer that can't prove it can pay to go to deliverable status

There is no option for a buyer to force a seller that can't prove it has the gold to go to deliverable status

The rules of the exchange simply do not allow contracts that can't be fulfilled to vest to deliverable status

[weaker]

By saying that it is clear that you don't understand the rules of the exchange

trading gold contracts on CME is very different from buying physical

whilst some CME / broker Marketing & Sales people might gloss over the differences, the differences are massive and one could go as far as to say that a would be buyer of physical is barking up the wrong tree if she is using CME contracts as a tool to gain ownership of physical

the reality is that the holder of a contract simply doesn't have a deliverable contract until the contract vests / expires

moreover, the exchange rules (that everyone knows when entering a trade) are that the contract can only vest to deliverable status if all parties to it are in a position to fulfil: if the seller has no metal or the buyer has no poke, the contract is settled for cash without ever vesting to deliverable status

if you buy, for instance, a May contract today, there is no mechanism for you to convert that to a physical delivery before then

likewise, if you sell a May contract today, you can't be expected to deliver the physical until then and, if you don't have the gold, you can lose the obligation by buying the contract back before delivery is due. If you don't buy the contract back by the day before the contract would vest and you can't prove to your exchange member (broker) that you have the physical available for delivery, the contract will be settled for cash anyway

they are the rules

...

Yes, an option on a future is not a deliverable contract.

A future for february, however, is, if the buyer (limit long, anyone?) wishes it to be so.

the contract will be settled for cash anyway

There is the default.

What do you think happens to the price of real ounces in the event of cash-settlement at the COMEX? I'd imaging you're going to be pretty p****ed off with your dollars at that point.

I'm pretty much sick of this argument - the COMEX will either find they have a problem or they don't. Let's see.

Edited January 20, 2014 by weaker

[DiggerUK]

.....I said IF more than one limit long demands delivery.

I didn't mention any conspiracy either. Why twist what I said? It couldn't be clearer.

The claims are not groundless; the exchange could now have to step in to save its own integrity. We shall see...........

It makes not one jot of difference how many demand delivery, it only matters if they are capable of demanding delivery. As they are mainly speculators on margin, they don't have the readies to pay for delivery. That's why they are on margin.

Paying out contracts with cash is not a default, it's part of the contract. Anyhow they enter these contracts as unsecured creditors. The cash option is to ensure that the warehouse doesn't renege, or are you claiming that everybody involved in derivative gold trading is a complete div?

As to the nonsense surrounding german gold....the problem germany now has, is how to keep costs down when involved in forex with $US.

If the gold is not in the FED vaults it becomes more expensive to use as insurance in forex trades if it is germany. The whole thing smacks of some german Sir Humphries doing a yes minister, to delay the process for as long as possible, and then ensure it is quietly reversed or dropped.

The gold from france is being repatriated as we speak.....but then again both countries trade in euros, so less problems if repatriated. The gold at the BOE will still leave stocks in london, and it needs to be close to the biggest fx market in the world.

The 'problem' with repatriation is political, not physical.

No, the lack of speed on repatriation will have nothing to do with vanishing gold a la GATA. Heaven forbid I should call you a conspiracist.

..._

Edited January 20, 2014 by DiggerUK

[JPJPJP]

A future for february, however, is, if the buyer (limit long, anyone?) wishes it to be so.

Not so.

The buyer may wish to take delivery, but unless there is a seller with physical available - proven to the satisfaction of the exchange before the contract vests, the buyer is getting a cash settlement, whether she likes it or not.

We can muse that this, let's call it an 'implied default' would have some impact on the price - and on the trust placed in the exchange by traders - in the future, but it is the legitimate outcome of the trade that was entered into

the COMEX will either find they have a problem or they don't. Let's see.

indeed, let's see

Edited January 20, 2014 by JPJPJP

[weaker]

Edited January 20, 2014 by weaker

[DiggerUK]

..........

Very pretty graphs, but what do the x and y axis represent

..._

[weaker]

Very pretty graphs, but what do the x and y axis represent

..._

It's just the recent share price (and volume traded, plus some standard TA indicators) of CME group, which one might begin to think could be impacted if there were any material risk of a forced cash-settlement (I'd call it a default, but let's try to be constructive..)

Edited January 20, 2014 by weaker

[Killer Bunny]

RE CME chart: Negative divergences building on RSI and MACD

[DiggerUK]

RE CME chart: Negative divergences building on RSI and MACD

Oh come on, if I don't know what you are on about, then the lurkers won't either.

It's normal, when acronyms are first used, to have a bracketed explanation.

CME I know, and I can only guess that MA in MACD is moving average. Beyond that...

..._

[Killer Bunny]

Oh come on, if I don't know what you are on about, then the lurkers won't either.

It's normal, when acronyms are first used, to have a bracketed explanation.

CME I know, and I can only guess that MA in MACD is moving average. Beyond that...

..._

Your response is inappropriate. There are dozens of websites explaining those items.

[DiggerUK]

Your response is inappropriate. There are dozens of websites explaining those items.

No it isn't, though I did take your post as tongue in cheek.

Now it leads you open to the suspicicon that you don't know.

http://acronyms.thefreedictionary.com/rsi

..._

[Killer Bunny]

No it isn't, though I did take your post as tongue in cheek.

Now it leads you open to the suspicicon that you don't know.

http://acronyms.thefreedictionary.com/rsi

..._

Your opinion matey

Like I care

[weaker]

No it isn't, though I did take your post as tongue in cheek.

Now it leads you open to the suspicicon that you don't know.

http://acronyms.thefreedictionary.com/rsi

..._

For god's sake take your ignorance somewhere else.

STOP derailing the thread and filling it with guff.

http://www.investopedia.com/search/default.aspx?q=rsi

[DiggerUK]

....I'd call it a default, but let's try to be constructive....

But you clearly don't understand the difference between default as we have discussed today, and default as discussed previously.

Today it was the claims that gold derivative traders would find no gold at the termination of contracts, because the other side to the party had no gold.

This link shows it not to be a valid case. I think it can be accepted that the author is an insider, and not a car salesman.

http://www.perthmintbullion.com/blog/blog/14-01-08/Comex_Stocks_Claims_On_Bullion_Well_Below_Historical_Highs_At_5_1.aspx

What was discussed previously was that those who had deposited gold in the warehouses would find it gone when trying to collect, transfer, or sell on.

Which would mean that the warehouse itself had defrauded the depositors.

http://goldnews.bullionvault.com/comex-gold-stocks-072420136

Two entirely different discussions for which you have added nothing of worth, even failing to see the difference.

..._

[weaker]

But you clearly don't understand the difference between default as we have discussed today, and default as discussed previously.

Today it was the claims that gold derivative traders would find no gold at the termination of contracts, because the other side to the party had no gold.

This link shows it not to be a valid case. I think it can be accepted that the author is an insider, and not a car salesman.

http://www.perthmintbullion.com/blog/blog/14-01-08/Comex_Stocks_Claims_On_Bullion_Well_Below_Historical_Highs_At_5_1.aspx

What was discussed previously was that those who had deposited gold in the warehouses would find it gone when trying to collect, transfer, or sell on.

Which would mean that the warehouse itself had defrauded the depositors.

http://goldnews.bullionvault.com/comex-gold-stocks-072420136

Two entirely different discussions for which you have added nothing of worth, even failing to see the difference.

..._

If you think the PoG will be at $1,250 /Oz when the CME shows over 3,700 contracts standing in February, you are a moron.

That is a default, because the cash-settled muppets will get a fraction of the worth of their gold. That is a default in anyone's book.

I also believe the warehouse gold is held partly un-allocated and partly allocated, which means there are likely multiple owners.

So, in answer, both the "Dante-esque 8th-circle" frauds you describe are likely to occur and we shall see in good time.

[weaker]

Clearly, the Indian measures are not freeing up enough suupply for the Fed to drip-feed to Germany, as smuggling from Pakistan/Dubai ->India will have taken care of it.

Pakistan Enforces 30-Day Ban On Gold Imports To Stall "Steep Increase" In Smuggling To India

http://www.zerohedge.com/news/2014-01-20/pakistan-enforces-30-day-ban-gold-imports-stall-steep-increase-smuggling-india

Germany Has Recovered A Paltry 5 Tons Of Gold From The NY Fed After One Year

http://www.zerohedge.com/news/2014-01-19/germany-has-recovered-paltry-5-tons-gold-ny-fed-after-one-year

Metals, Currency Rigging Is Worse Than Libor, Bafin Says

http://www.bloomberg.com/news/2014-01-16/metals-currency-rigging-worse-than-libor-bafin-s-koenig-says.html

Edited January 20, 2014 by weaker

[JPJPJP]

If you think the PoG will be at $1,250 /Oz when the CME shows over 3,700 contracts standing in February, you are a moron.

That is a default, because the cash-settled muppets will get a fraction of the worth of their gold. That is a default in anyone's book.

I also believe the warehouse gold is held partly un-allocated and partly allocated, which means there are likely multiple owners.

So, in answer, both the "Dante-esque 8th-circle" frauds you describe are likely to occur and we shall see in good time.

How do you already know how many contracts will stand for delivery in February? The January contract hasn't done yet!

Are you seriously proposing that at the close of the February (2014) contract, there will be buyers wanting physical delivery that can't be matched to sellers?