Gold Price - Where is it heading?

[sptrawler]

It's London to a brick that there will be a *digital* reserve currency. I don't think it will be a crypto in the true sense though. Gold will simply tie to that, whatever is.

A Gold standard? Well it makes sense to the Austrians. But usefull to whatever central bank has control of the reins?

Dunno.

In that situation will gold be valuable to we schlepps?

Again, dunno. But I doubt that would be useful to the central bankers... So my best guess is probably less so than now.

I realise that's pretty pessimistic, but the reptiles in charge of things don't fill me with a great deal of confidence that they have our best interests at heart.

Yep, I'm just trying to stimulate thought and discussion.
The facts as I see them are, the U.S financial institutions trashed the U.S reserve currency status in the GFC, the CDO's left a lot of the rest of the World especially China, EU and U.K completely at their mercy.
The U.S devalued the currency to make their product cheaper, but left everyone else's currency high and dry, which made their exports less competitive.
Australia was lucky our banks were too small to play in the 'big pool'.
China from memory was caught with a lot of U.S bonds and well the EU ended up with the PIGS.
So it really did put the U.S as reserve currency in the spotlight, China started buying a lot of gold, possibly hoping to re ignite the gold standard.
Technology has moved along, China is completely pizzed with the U.S because of the power of their currency and everyone else is the meat in the sandwich.
So enter bitcoin a backyard shed crypto currency that can be traced to the enth degree, it isn't great, but the idea is.
Now we find China is developing its own crypto, the U.S reserve is developing its own crypto, Austrac has gone onto steroids chasing lax money tracking.
To me it makes perfect sense, joining the dots that they are trying to get the institutions up to speed with tracking ability, is it to follow money laundering or is it ticking a check list?
Just my musing, over a nice hot salami and cheese biscuit, with a Taylors red. ? You don't have to be rich to enjoy the finer things in life.

 

[rederob]

Yep, I'm just trying to stimulate thought and discussion.
The facts as I see them are, the U.S financial institutions trashed the U.S reserve currency status in the GFC, the CDO's left a lot of the rest of the World especially China, EU and U.K completely at their mercy.

Reserve currency standings are relatively unchanged over the past 25 years, although some shifts to and fro occurred during the period:

So it really did put the U.S as reserve currency in the spotlight, China started buying a lot of gold, possibly hoping to re ignite the gold standard.
Technology has moved along, China is completely pizzed with the U.S because of the power of their currency and everyone else is the meat in the sandwich.

China is the world's largest gold producer.
Major Gold Producing Nations

So enter bitcoin a backyard shed crypto currency that can be traced to the enth degree, it isn't great, but the idea is.
Now we find China is developing its own crypto, the U.S reserve is developing its own crypto,

Cryptocurrency and central bank digital currency are very different creatures in that crypto is unregulated.

Austrac has gone onto steroids chasing lax money tracking.
To me it makes perfect sense, joining the dots that they are trying to get the institutions up to speed with tracking ability, is it to follow money laundering or is it ticking a check list?

Crypto is secure because of its blockchain ledger system, which is also transparent, so law enforcement agencies need only the internet to track transactions. Unlike banking systems transactions which require permissions to access accounts, law enforcement tracking can be instantaneous.

As I read trends, gold prices are not affected by reserve currencies.
Nor are they affected by cryptocurrencies. The rise of gold prices in the current bull market preceded the parabolic rise of cryptos, while their present sharp decline sees gold prices relatively unchanged or rising.

Gold cannot be created, nor destroyed, so will remain an instrument that stores wealth and can be exchanged when other forms of money falter.

 

[sptrawler]

Interesting that China is the World's biggest producer of gold as well as the World's biggest buyer of gold.

Countries went on a gold-buying spree before coronavirus took hold – here’s why

Long before COVID-19, central banks were lining their stores for winter.

theconversation.com

From the article:
The global economy was flashing danger signs long before the pandemic. For one thing, many countries were clamouring to get hold of as much gold as possible. For the past decade, they have been buying new reserves and bringing it home from overseas storage to an extent never seen in modern times. Then just before the pandemic, there was a pause. What does all this mean?

Central banks added 650 tons to their reserves in 2019, the second highest shift in 50 years, after the 656 tons added in 2018. Before the 2007-09 financial crisis, central banks were net sellers of gold worldwide for decades. Leading the recent spree has been China, Russia, Turkey, Kazakhstan and Uzbekistan.
We have also seen a large effort by central banks to repatriate their gold from other countries, mostly from storage in New York and London.
Venezuela started repatriating its gold in 2011, shipping 160 tonnes from New York. A third of its holdings remain in London, but only because the Bank of England won’t repatriate them – declaring it doesn’t recognise the government in Caracas. Venezuela has now made this the subject of a legal claim.

Between 2012 and 2017, Germany repatriated most of its massive reserve from Paris and New York to Frankfurt. The Netherlands did likewise in 2014, followed by Austria.
This dash to gold is about geopolitics and economics. Gold serves as a patch mark of nationalist identity. To quote Adam Glapinski, governor of the National Bank of Poland, “gold symbolises the strength of [a] country”.

Stocking up has made sense to many countries in the populist climate. It is also a sign of countries diversifying from dollars. The likes of Russia, China and even countries in Western Europe want to break the US dominance of the financial system, having seen it used as leverage in everything from economic sanctions to trade threats.

The new dash for gold makes economists pause and wonder what is happening. It seems to show many countries looking for a safe haven in these years in which interest rates have been very low and central banks have been printing large amounts of money to stimulate the global economy. Gold continues to have intrinsic value, so it reassures countries – especially if they fear inflation and downturns.

And yet, just as economic uncertainty was about to move to a whole new level with the pandemic, this trend lost momentum. Additions to the gold holdings of central banks and other international institutions in the three months to January 2020 – the most recent figure available – were just 67 metric tons, the least since August 2018.

In truth, this was not entirely surprising. Purchasing bullion at close to a seven-year high, and after a month of prices fluctuating plus or minus about 13%, is no particularly prudent way to consolidate economic and geopolitical power.

 

[Sean K]

Been following Rick Rule for a little bit. Sounds like he knows what he's talking about.

 

[frugal.rock]

Just my musing, over a nice hot salami and cheese biscuit,

I went on a unwanted 12 hour journey because of a hot salami and cheese baguette and a woman.... don't get me started. ?

 

[qldfrog]

I went on a unwanted 12 hour journey because of a hot salami and cheese baguette and a woman.... don't get me started. ?

Please please tell us more ?

 

[Garpal Gumnut]

I went on a unwanted 12 hour journey because of a hot salami and cheese baguette and a woman.... don't get me started. ?

Do tell us more.

My good friend Quentin Tarantino is interested.

gg

 

[Garpal Gumnut]

I went on a unwanted 12 hour journey because of a hot salami and cheese baguette and a woman.... don't get me started. ?

Please please tell us more ?

If you are not going to tell us we will just have to come up with a plausible story.

"It was a dark and windy night and the POG had retraced to what @frugal.rock hoped would be the beginning of a minor 3 wave in a promising Elliot pattern. He noticed in the gloom a message on his iPhone 6s..... "

Could somebody help me here please.

gg

 

[rederob]

"It was a dark and windy night and the POG had retraced to what @frugal.rock hoped would be the beginning of a minor 3 wave in a promising Elliot pattern. He noticed in the gloom a message on his iPhone 6s..... 12 Pro Max"

Could somebody help me here please.

gg

Yes.

 

[Garpal Gumnut]

"It was a dark and windy night and the POG had retraced to what @frugal.rock hoped would be the beginning of a minor 3 wave in a promising Elliot pattern. He noticed in the gloom a message on an iPhone 12 Pro Max which had replaced his iPhone 6s by some means. A tingling ran up along his neck. Not unease, a sense of hunger, not a passion, yes, yes a passionate feeling, $1834.30. He took his eyes from the chart. Ignoring the magical replacement of his telephonic device he pressed to read the message......"

gg

 

[Garpal Gumnut]

I’m still bullish on gold. One of the main triggers for a rise in price could be a further crash in crypto.

Amongst others. Though I’m not predicting a complete crash in the latter.

gg

 

[againsthegrain]

I’m still bullish on gold. One of the main triggers for a rise in price could be a further crash in crypto.

Amongst others. Though I’m not predicting a complete crash in the latter.

gg

The way the world is going its not smooth sailing from here as the media would like to paint it, something will give sooner or later. Perfect environment for gold to shine. Just gives time to accumulate, us inflation at 5%, good times.

I am into 6 digits now as a long term hold on gold... back to sleep

 

[frugal.rock]

I am into 6 digits now as a long term hold on gold... back to sleep

Can I ask in what form are you holding?
Must be more interesting than a story about a salami & cheese baguette which spans 3 countries being Luxembourg, Belgium and France ?

 

[againsthegrain]

Can I ask in what form are you holding?
Must be more interesting than a story about a salami & cheese baguette which spans 3 countries being Luxembourg, Belgium and France ?

I already said too much ?
gold stackers don't stack, I mean reveal... I mean talk... admit... ? anything

 

[rederob]

Now I’ve heard there was a secret price
That frugally rocked to please the Lord
But you don’t really care for gold, do you?
It goes like this
The fourth, the fifth
Or a major fall, then a minor lift
That baffled chartists composing this
Hallelujah.

 

[rederob]

Way back in March 2008 POG peaked, then drifted for a a while as the GFC took hold, before taking off again in October 2009 and running to its next peak in late 2011.
If we context that to the covid period, then the decline from last August's peak could run for another 6 months before the bull run proper gets back underway.
Now:


Back in 2008/09:

 

[gartley]

I posted a long term chart of gold back in mid last year postulating that we are currently in a long term 4th wave triangle. Despite the fact that it pushed higher mid last year I think this might be still the case and we are now in wave C of that 4th wave triangle.
I for one would welcome this decline to continue as it would bring another great buying opportunity for us maybe next year

 

[rederob]

Gold is sitting nicely in its long term uptrend:

Since December 2015 a series of higher lows has been in place to maintain POG's upward trajectory.
With equity markets still proving to be rewarding at present there is no fundamental reason to rush to gold.

 

[Joules MM1]

that's interesting, how useful tho ?
ex Callum Thomas feed

 

[mullokintyre]

There have been many commentators who have derided the paltry level of oversight by the CFTC on the paper derivative bullion markets that allow the likes of JP Morgan and other big US banks to drive the price of gold up and down. The amount of shorts of silver for instance, currently standat around 173 days of silver production, that of goldThe Banks have always maintained that there are counterparties to all of these derivatives, so a re perfectly legitimate. Of course they never name who these counterparties are, but there have always been suspicions that it is the US fed itself in cahoots with treasury officials who want to control the USD Index and thwart Russian Chinese, Iranian and anybody else they care to mention who want a gold backed international currency.
There have been a few pushes by some parties to demand physical delivery on heaps of the these paper contracts, but because bullion storage is controlled tightly, its always difficult when the ownership changes but the bullion stays in exactly the same vault.
The introduction of the BASEL 3 international banking and financial regulations may go some small way towards winding down some of these paper derivatives.
From Gold Money

The draft PRA rules complying with Basel 3 regulations have now been issued six months ahead of their implementation to allow banks to adjust for them in time. From now, senior bankers, their lawyers and bank treasury managers will be planning amendments to their business strategies accordingly.

As a division of the Bank of England, the Prudential Regulation Authority recognises the importance of gold trading in London and has inserted a clause into the new rules (Article 428f) which will allow the LBMA’s centralised settlement system to continue to function. But in line with Basel 3’s apparent determination to get banking’s exposure to uneven derivative positions substantially reduced, net positions in precious metal derivatives in the form of forwards and swaps will be penalised through their inefficient use of balance sheet resources and will likely be replaced by transactions fully backed by physical gold.

The LBMA has been thrown a lifeline but will likely have to refocus from forward derivatives to physical bullion backed trading. By responding positively to these developments, the LBMA and its membership can retain and build on their pre-eminent position in global precious metals markets.

This article points out that the market value of forward derivatives in gold is currently the equivalent of 8,675 tonnes. While it would be incorrect to think it will all translate into new bullion demand, there is little doubt that if Basel 3 leads to the demise of the London forwards market, it will lead in turn to a significant replacement in the form of physical demand.
Investors are increasingly aware that in all international financial centres, banks are now being required to run their businesses differently under the new Basel 3 regulations. For the first time, regulators are now telling banks how they must fund their assets out of their liabilities. This is a major change, which from the beginning of this month is being applied in the US and the EU. It is scheduled to be introduced in the UK from 1 January 2022.

The introduction of Basel 3 bank regulations follows an agreement at G20 level for the Basel Committee on Banking Supervision to draw up new regulations to address the systemic risk issues exposed by the Lehman failure in 2008. The new regulations proved controversial, delaying their introduction, having been finalised as long ago as October 2014. But, unlike rules originating from national regulators Basel 3 was not easily spiked by lawyers representing the banking industry’s interests.

I would reccommend the complete article for anyone interested in International Gold trading.
Mick