Gold Price - Where is it heading?

[gfresh]

"A break in the linkage between interest rates and gold prices can also happen if and when the Gold Forward Offered rate exceeds LIBOR."

hmmm ..this is exactly what has happened 27th and 28th..

http://www.lbma.org.uk/2008gofo.htm

the first time this has happened in 10 years of data listed..

http://www.lbma.org.uk/statistics_historic.htm

 

[explod]

interesting.. yes possibly very bullish for gold.. but when exactly did these negative lease rates "happen" and didnt gold get hammered a fair bit in its last 24hrs of trading?

The lease rates went negative only in the last week, in other words the banks are throwing gold out at a bargain for the shorts to supress the price as did happen last week.

A part para. not covered properly in my preamble above from the Privateer Newsletter reads thus:

"..."leasing" Gold is actually "shorting" Gold. Gold is not "leased" to be hoarded, it is "leased" to be sold for something that pays a far higher rate of interest." end of quote

It would appear that those wanting to lease (to go short) are a dwindling crowd. the long side is becoming the popular place to be.

So it should be an interesting week or so ahead indeed.

 

[Kauri]

OK.. I am short Gold .. as per my posts earlier (before the latest slip) re..
a) fib levels..
b) coily..
c) rumours of a UK Hedge fund dumping...

so now.. on the fundementals being espoused, should I cover my short first thing Monday because of the lease rates?? or maybe wait until until something happens that can be skewed backwards to the lease rates with the help of the ultimate indicator... hindsight???
Really hoping to get a definative answer to trade by by Monday A.M... not just a "if it doesn't go up then it will probably go down" or "we don't predict short=term, only lay down multiple statements that can be filtered and pulled up when relevent after the next move"... it is the next move I am interested in.. before.. not after..
Cheers
............Kauri

 

[explod]

OK.. I am short Gold .. as per my posts earlier (before the latest slip) re..
a) fib levels..
b) coily..
c) rumours of a UK Hedge fund dumping...

so now.. on the fundementals being espoused, should I cover my short first thing Monday because of the lease rates?? or maybe wait until until something happens that can be skewed backwards to the lease rates with the help of the ultimate indicator... hindsight???
Really hoping to get a definative answer to trade by by Monday A.M... not just a "if it doesn't go up then it will probably go down" or "we don't predict short=term, only lay down multiple statements that can be filtered and pulled up when relevent after the next move"... it is the next move I am interested in.. before.. not after..
Cheers
............Kauri

Kauri, your answers can only be found by following your charts. And that has been good for you. My info., and that of most others here, only helps us understand the fundamentals of the long term bull.

It is going to be very volatile, what we have seen is nothing, check the "immenent and servere market correction" thread, crap is going to blow through the fans in the days ahead.

Reading the latest "Privateer" out tonight, more US banks will follow Bear Sterns" and will make what has happened so far look like chicken feed, (read budgie feed 4 u) The US dollar will continue to tank so at some stage soon, gold is going to rebound at a clip.

 

[Temjin]

Kauri, your answers can only be found by following your charts. And that has been good for you. My info., and that of most others here, only helps us understand the fundamentals of the long term bull.

I agree, follow your charts and be consistent with your trading strategies.

Most of us here are long term fundamentals. If I was trading mechanically, I would have totally ignored anything fundamentally related and stick to my system and money management. Regardless, I don't tend to "trade" gold/silver anyway. The "trading" part is for something else that I am currently working on.

Another interesting, but LONG article on the manipulation theory.

www.sprott.com/pdf/not_free_not_fair.pdf

It's 4 years old, but very relevant to what we are seeing today. Seeing leasing rate is now at the negative level, it seem the central banks are preventing the whole thing from going into "backwardation". Apparently, that is what killed Long Term Capital Management too.

Now I'm more even worried about holding long contract future positions. (That is, through ETFs such as GLD for gold and SLV for silver)

 

[barrett]

Hi Kauri,
I don't like to comment when I don't have any really firm signals, like now
But I'm not buying futures yet, because as on the 5-min below, the volume just continues to come in on the liquidation side and very little interest coming in on the rallies.

The negative lease rate is very interesting.. and consistent with the negative yielding TIPS. People are worried about inflation. Everyone except long-dated treasury bond holders, it seems..

If the lease rate is determined in a bidding process, it indicates the banks are no longer as interested in shorting gold as a source of funds. But on the short term.. I doubt it would cause any kind of rally lasting beyond silly hour. Gold leasing is a secretive activity that rarely comes up for discussion.
Did you get the cork out?

 

[Trembling Hand]

"..."leasing" Gold is actually "shorting" Gold. Gold is not "leased" to be hoarded, it is "leased" to be sold for something that pays a far higher rate of interest." end of quote

It would appear that those wanting to lease (to go short) are a dwindling crowd. the long side is becoming the popular place to be.

I pretty sure the above statement is WRONG! (with out reading the back ground)

If you own an asset and leases it out you are only trying to gain extra income BESIDES or on top of the capital appreciation.

Think of a house you own because you believe it will appreciate but you also lease it out to gain income. Your not shorting the asset you are a long term holder. Same as a stock lender. They lend out shares because they are long term bullish but also gain extra income lending (leasing) out the stock.

 

[explod]

I pretty sure the above statement is WRONG! (with out reading the back ground)

If you own an asset and leases it out you are only trying to gain extra income BESIDES or on top of the capital appreciation.

Think of a house you own because you believe it will appreciate but you also lease it out to gain income. Your not shorting the asset you are a long term holder. Same as a stock lender. They lend out shares because they are long term bullish but also gain extra income lending (leasing) out the stock.

The above statment by William Buckler is not wrong. You may have your understanding of how shorting works here but what Bill is talking about is the precise way that it works between the Bullion Banks and the Federal Reserve in the US and it is this dynamic that has given them control over the gold price since the Bretton Woods Agreement.

The punch line or crux is that no one wants to lease it anymore because no one wants to be caught on the short side anymore.

 

[Trembling Hand]

The punch line or crux is that no one wants to lease it anymore because no one wants to be caught on the short side anymore.

Thats doesn't make sense.

Are you saying the Lessor or lessee is short in this example?

 

[barrett]

Thats doesn't make sense.

Are you saying the Lessor or lessee is short in this example?

It does make sense - 'leasing' refers to either borrowing or lending, most correctly borrowing as in this context. The lessee is short. Through the 80s and 90s many investment banks borrowed gold, sold it, and used the money to invest in other things - it worked in those times because the gold price was going down... clearly in recent times it's been a disaster..

 

[Trembling Hand]

It does make sense - 'leasing' refers to either borrowing or lending, most correctly borrowing as in this context. The lessee is short. Through the 80s and 90s many investment banks borrowed gold, sold it, and used the money to invest in other things - it worked in those times because the gold price was going down... clearly in recent times it's been a disaster..

Yes the lessee is or can be short OK I agree on that. I thought that you where talking about those leasing out the gold.

But another thing about this. Surly if you wanted to short gold you would use the futures not the physical. Maybe 20 years ago you would use physical because the Futs volume was not crash hot but now you can get all the liquidity you need in the futures. And its a hell of a lot cheaper to do. And quicker.

Just because a market dries up doesn't mean the players haven't gone elsewhere with the same game.

 

[explod]

Yes the lessee is or can be short OK I agree on that. I thought that you where talking about those leasing out the gold.

But another thing about this. Surly if you wanted to short gold you would use the futures not the physical. Maybe 20 years ago you would use physical because the Futs volume was not crash hot but now you can get all the liquidity you need in the futures. And its a hell of a lot cheaper to do. And quicker.

Just because a market dries up doesn't mean the players haven't gone elsewhere with the same game.

Absolutely true, but the issue has been that the Fed have used these methods to suppress the price of gold so as to protect the concept of paper fiat currency. As they are no longer it seems, able to do so, gold will break loose of this shackle to the upside.

The significance of the sudden change to the lease rates will be the effect on gold and silver. If we digress back to the statement; ..."this descent of the short term rates into negative territory choked off Gold's rally this week and then, on March 28,sent it into sharp reverse as the spot future Gold price close dropped $US 18.20 on the day." [end quote from The Privateer]

The question is how long can it be lent out at a negative return?. They cant sustain for more than a few more days and when it goes back up so will gold.

I have found it all very hard to get my head around let alone try to explain it, so can appriciate how confusing it must be for mere observers. However I have picked up just enough to realise that we are at a very significant point in the demise of the $US as the world reserve currency and the important role gold will play to preserve wealth till the financial mess is worked out.

There must be others who have greater understanding/insight and who can put it into more comprehensionable terms.

 

[Trembling Hand]

I have found it all very hard to get my head around let alone try to explain it, so can appriciate how confusing it must be for mere observers.

:bowdown:

However I have picked up just enough to realise that we are at a very significant point in the demise of the $US as the world reserve currency and the important role gold will play to preserve wealth till the financial mess is worked out.

Well I look forward to following your prediction of the end of the financial world as we know over the next couple of days.

 

[explod]

:bowdown:



Well I look forward to following your prediction of the end of the financial world as we know over the next couple of days.

In fact it has already happened but they just dont' want to admit it yet. The US is absolutely broke. The debt service fee of the entire economy is now way over thier income. The other point to that is that 80% of thier GDP is internal consumption. But this now belongs to another thread.

 

[Kauri]

clear as mud..

http://www.gold-eagle.com/gold_digest_99/milhouse012699.html

Cheers
...........Kauri

P.S it is also the end of the month,quarter,and for the Japanese the end of the Financial year... does this potentially have an affect..??

 

[>Apocalypto<]

In fact it has already happened but they just dont' want to admit it yet. The US is absolutely broke. The debt service fee of the entire economy is now way over thier income. The other point to that is that 80% of thier GDP is internal consumption. But this now belongs to another thread.

I did not know you worked for the Fed Explod, that's handy. So you care to share anymore facts with us?

1-4 hour and daily chart tell me long on gold. so i am long.

Ent 933.55
SLO 907

 

[Kauri]

meanwhile... a bit early yet to say which direction, if any, that she will take, but a potential coily on the hourly..
Cheers
..........Kauri

 

[explod]

I did not know you worked for the Fed Explod, that's handy. So you care to share anymore facts with us?

1-4 hour and daily chart tell me long on gold. so i am long.

Ent 933.55
SLO 907

Not sure what you may mean by that. I am only trying to put a point of view across that I believe in an earnest manner. Unlike the Wall Street spin doctors feeding crap to the sheeple on which they unload.

That facts of US insolvency are readily available, no big deal, they have just been spending beyond their means for many years and the debt collector is finally screwing things down. And a hard look at out own ballance of payments and trade says we are in for some shocks too. Lucky to have our big resources pit to offset to some degree but the downturn in the US will impact on that for awhile too.

Yep, and I am long gold for the long term. But short term, who knows IMHO

 

[metric]

Unlike the Wall Street spin doctors feeding crap to the sheeple on which they unload.

i watched an alex jones video about 911, the elite etc. the term for people other than the elite is 'cattle' aparently. not sheep.

 

[explod]

i watched an alex jones video about 911, the elite etc. the term for people other than the elite is 'cattle' aparently. not sheep.

Yeh, I think sheeple used of late because it sounds like people. I remember the Grandparents many years ago speak of "cattle to the slaughter" when talking of first war battles.

To move back to core, "Gold" moving up as we speak.