Gold Price - Where is it heading?

[FlyingFox]

Or maybe spending too much time posting on here trying to explain some truths is a pointless exercise - thus the lack of detail. We all know what is on youtube and in the media cannot be questioned.

No doubt my above post will be passed over about the OI.

Actually your post on OI and previous posts have been very useful. Personally appreciate your content.

I think most post here are questioning the media, the mainstream media anyway. I don't see any media articles about the sky falling etc ... they all go along the lines, house prices will double, stock markets will go up, back to the good old days...

 

[Trembling Hand]

Even if we take your numbers, his point still stands! If you want to have the product at the end of the day and your contract is any where between a third to a fifth of all reserve, the only prudent thing to do is to take delivery.

You don't want to be these guys...

http://kingworldnews.com/kingworldn..._Just_Refused_To_Give_My_Friend_His_Gold.html

http://www.examiner.com/article/largest-dutch-bank-defaults-on-physical-gold-deliveries-to-customers

Not everyone wants to trade.....

I didn't say he was completely full of it . Just saying that as per usual people should actually understand what the situation actually is.

FFS! why do the real numbers not count??!!

 

[Mr Z]

He has taken the Open Interest of the Calls AND added the PUTS. LOL hope his maths is better with his clients money.

He who? I used outstanding futures OI as of today, no options.

I think you will find he was talking about the point in time that he made the call, like I said a while back, so really YOU HAVE NO VALID DATA POINT ON WHICH YOU CAN SPLIT YOUR HAIRS.

Yes, not all deliverable in any given month but the point was that should push come to shove not all futures holders could get metal from the Comex. Obvious really as the Comex is a hedging market that delivers around 1% of contracts and even then delivery usually constitutes a warehouse receipt. They are just not setup to nor does anyone really expect them to deliver bulk metal.

Again, regardless of the actual ratio, his point was valid, as a fiduciary he had to advise the most prudent path for his client.... which he did!

The other thing we all know is that most of the options have an exact but opposite position in the futures. Most of the volume is arbs. Some estimates are as high as 60%. Therefore to know the real position of the open interest you must remove all counter positions.

Clearly none of that matters.

No because it is likely BS! I doubt very much he included options! BUT still it is beside the point that he was making!

You do realize he was talking 2011 don't you?

 

[skyQuake]

Why not take delivery of say copper? Or soybeans?

These commodities actually have an industrial use.

Hunt and silver also comes to mind

 

[FlyingFox]

I didn't say he was completely full of it . Just saying that as per usual people should actually understand what the situation actually is.

Are you implying that Kyle Bass does not understand the situation? I would say he understands it pretty well considering he made his fortune from futures and derivatives trading.

FFS! why do the real numbers not count??!!

Never said they didn't. You only provided them after a page of comments asking you repeatedly to provide numbers ....

 

[Mr Z]

Or maybe spending too much time posting on here trying to explain some truths is a pointless exercise - thus the lack of detail. We all know what is on youtube and in the media cannot be questioned.

No doubt my above post will be passed over about the OI.

What truth? You are actually arguing beside the point he was making and totally out of context! He made the move in 2011, he'd be quoting numbers from then!

Seriously dude, you are like a guy arguing with the Captain of the Titanic about the rate at which the water is coming in, when his main point was we are sinking!

Jigger the numbers all you want, unless you want to argue every contract is backed it is very hard to argue with what he said!!!!!

 

[FlyingFox]

Why not take delivery of say copper? Or soybeans?

These commodities actually have an industrial use.

Hunt and silver also comes to mind

I would advise against storing soy beans for a long time....

 

[Trembling Hand]

You do realize he was talking 2011 don't you?

YES. I was saying this back when this was first posted years ago by Explod. And in fact challenged him only last week to AGAIN justify the position (see silver thread) about turn over OI and deliverables. :1zhelp:

 

[Mr Z]

Why not take delivery of say copper? Or soybeans?

These commodities actually have an industrial use.

Hunt and silver also comes to mind

People don't tend to make long term investments in soybeans or copper now do they?

 

[Trembling Hand]

What truth? You are actually arguing beside the point he was making and totally out of context! He made the move in 2011, he'd be quoting numbers from then!

Seriously dude, you are like a guy arguing with the Captain of the Titanic about the rate at which the water is coming in, when his main point was we are sinking!

Jigger the numbers all you want, unless you want to argue every contract is backed it is very hard to argue with what he said!!!!!

Ok Mr Z. you are right. I was arguing that everything is fine. Back to normal transmission on youtube.

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[Ann]

Ahem...'scuse me chaps, not wishing to interupt the banter but I feel another chart coming on with what may well be some very rubbery figures of my own! I did not take the candle tails into my calcs even though I have drawn a flag using tails as a level.

This is not a good look for those holding gold.

(Mr Z is that you J?)


Cheers Ann

 

[Mr Z]

Jeeez Louise....

You would have to be certifiable not to advise his client as he did given the number of issues with broker dealers etc in the recent past. He did the responsible thing! They are a Uni Foundation not a frickin trading house, they have no business in futures aside from maybe hedges at appropriate times. Certainly not as their main investment vehicle.

.... but yet we are to believe that all he says is BS cause TH doesn't think he got the ratio of deliverables to contracts correct! Damn what sin!

Man, any perceived slight of the precious futures market and the knickers come up over the ears!

I wonder if they where MF Global customers? :

 

[Mr Z]

Ahem...'scuse me chaps, not wishing to interupt the banter but I feel another chart coming on with what may well be some very rubbery figures of my own! I did not take the candle tails into my calcs even though I have drawn a flag using tails as a level.

This is not a good look for those holding gold.

(Mr Z is that you J?)


Cheers Ann

View attachment 51920

I am plumbing for 1250 to 1200 in May FWIW.



YES!

Just havin some fun, you know I like rubber!

 

[Ann]

I am plumbing for 1250 to 1200 in May FWIW.



YES!

Just havin some fun, you know I like rubber!

Yes Z I would agree...around that level looks like there was a bit of strength for a wee bit on the way up.

Damn good to see you here mate! I don't get onto forums very often...pretty much only pop up when my chart has something big to say. I will look out for you from now on when I am around. Much respect to you!

Now play nice Z

 

[Mr Z]

Yes Z I would agree...around that level looks like there was a bit of strength for a wee bit on the way up.

Damn good to see you here mate! I don't get onto forums very often...pretty much only pop up when my chart has something big to say. I will look out for you from now on when I am around. Much respect to you!

Now play nice Z

I pop in and out of here when I am bored! A bit bored now.... waiting for what I feel is a good setup!

I hope England was fun

P.S.> I spend equal time on bug boards, I must say they are about wrung out of spirit, the nay sayers are biting much harder.

 

[explod]

I pop in and out of here when I am bored! A bit bored now.... waiting for what I feel is a good setup!

If looking to the skies you may be bored for awhile yet.

On the 10 year chart have been ruminating about the move up which began about the end of 08 with gold at US700to touch $1900 about august 2011. On the chart we see the first major support left by this move at around $1400, then 1200 and very solid down at 750.

http://www.kitco.com/charts/techcharts_gold.html ...see bottom chart

On the action of the last few weeks we would guess that the support around $1400 has held and we are away.

However spoke to my dealer today and tapped into a few other sources and have concluded for that for this paper market to end it may well go all the way near to nought.

So before this closing of the paper market altogether which (when you consider now at 100 contracts to the ounce) it must; how low then can we go?

Going back to the 10 year we see the beginning near the US$300 and an overall head and shoulders suggesting its completion may see gold back below that level.

How many will fail to see this picture and give up their physical ? Unfortunately there mayt be many.

I no longer feel concerned at the paper price, hold your physical outside of the system in your own hands and like Z, sit about and be bored.

 

[sinner]

Why not take delivery of say copper? Or soybeans?

These commodities actually have an industrial use.

Hunt and silver also comes to mind

Part of golds value is precisely that you can hoard it without impacting the industrial economy. If I was the chief of the Saudi CB and I'm pulling in USD at a rate of ~9000 barrels multiplied by the marginal (daily price) of oil per day, we are talking significant trade inflows which have to go somewhere. If I start hoarding soybeans and copper, it is going to have a significant impact on the industrial economy in the form of supply shortages for the rest of the world.

That means for the marginal net producers of the world, the "store of value" has has to be in an asset which can be hoarded without industrial impact, we are pretty much only talking US Treasuries, Gold and Bunds. Silver used to sit somewhere on that ladder but increasing industrial application has removed it from the realm of monetary metals. I am personally skeptical of USD and EUR role as anything but the "medium of exchange" and "unit of account", on timeframes >12 months. So we are talking physically delivered gold, in return for production surplus, on any marginal producer which has surplus going out >1Y.

EDIT: addendum, the "medium of exchange" will always be a "store of value" to some extent, and vice versa. The "FOFOA" argument is mainly that almost all of the world economic imbalances for the last 30Y-50Y can be attributed to the world using its primary "medium of exchange" (USD) as the "store of value" for long duration saving.

 

[FlyingFox]

Part of golds value is precisely that you can hoard it without impacting the industrial economy. If I was the chief of the Saudi CB and I'm pulling in USD at a rate of ~9000 barrels multiplied by the marginal (daily price) of oil per day, we are talking significant trade inflows which have to go somewhere. If I start hoarding soybeans and copper, it is going to have a significant impact on the industrial economy in the form of supply shortages for the rest of the world.

That means for the marginal net producers of the world, the "store of value" has has to be in an asset which can be hoarded without industrial impact, we are pretty much only talking US Treasuries, Gold and Bunds. Silver used to sit somewhere on that ladder but increasing industrial application has removed it from the realm of monetary metals. I am personally skeptical of USD and EUR role as anything but the "medium of exchange" and "unit of account", on timeframes >12 months. So we are talking physically delivered gold, in return for production surplus, on any marginal producer which has surplus going out >1Y.

EDIT: addendum, the "medium of exchange" will always be a "store of value" to some extent, and vice versa. The "FOFOA" argument is mainly that almost all of the world economic imbalances for the last 30Y-50Y can be attributed to the world using its primary "medium of exchange" (USD) as the "store of value" for long duration saving.

Well put.

 

[sinner]

I’m a bit of a Turnover is vanity, Profit is Sanity, Cash flow is reality sort of guy so not really sure I should be anywhere near this thread at the moment , however there’s’ been a bit popping up about gold on some of my usual reads – this one I thought an interesting perspective.

http://aswathdamodaran.blogspot.com.au/2013/04/the-golden-rule-thoughts-on-gold-as.html

Thanks craft, wise worse from Aswath in the comments section of that article, recognising the reality of the situation:

Oil is just a commodity but gold definitely is not just a commodity.

My main issue with that article is twofold:
1. A lot of what he says applies equally to an ounce of gold as to money under the mattress. Which implies logically a definition of "saving", not "investing", after all the "real interest rate" is what you get for investing the money, not saving it in a shoebox. So why exactly is gold being held to the standard of investment, when it is (has and always will be) a "store of value" i.e. savings. Should it not be held up in comparison to other savings devices, such as holding a giant warehouse full of USD for 30Y?
2. All of the "valuation hypothesis" he chooses seem kind of fallacious to me since they are entirely US focused, yet obviously the number of USD that an ounce of gold can buy has been influenced more by global than local factors. Consider for example the USD was a promissory note to deliver a defined unit of gold to the holder, prior to the closing of the gold window. Holding USD in lieu of the physical did not protect from that event, yet he did not examine owning golds role as a hedge against such events (i.e. specifically hyperinflation and/or currency default).

 

[sinner]

Don't get me wrong. There is a strong argument to be made for "investing" whether it be into stocks or the so called "risk free rate", I don't have anything against it. But it's important to recognise that it is in fact investing (taking on some form of risk), and at at some level of economic activity (think Saudi CB), investing is really absolutely 0 concern to you. Your only concern is saving production surplus into an asset which can retain itself as a store of value for very long time periods. We are talking >30Y, which incidentally, is historically the average lifespan of a paper currency regime. Saving in paper currency is a new idea, and only made possible by the structural support over the last 30-50Y for the USD. I mean, would you buy a 100Y dated US Treasury Bond at 5% and expect a real return on redemption?

and yet, there are gold holdings that have stayed within the same institution or family for many hundreds of years.