Gold Price - Where is it heading?

[qldfrog]

Looks like i

Looks like its time to build a faraday cage and bunker down

Our tin roof actually are quite protective ..once you put eglass on your window, you even lose mobile reception
The more talk like that, the higher gold goes

 

[rcw1]

Looks like i

Looks like its time to build a faraday cage and bunker down

Gidday @Cook Monster

Congratulations on your first post and welcome to ASF. Good thread to become involved with, 100% true that one... Some really good, experienced practitioners in the art of trading involved here. Nice to learn from, anyways, please continue to post and all the best.

Gold is good.

Kind regards
rcw1

 

[Sean K]

Looks like i

Looks like its time to build a faraday cage and bunker down

How is that related to gold Cook Monster?

 

[greggles]

What's going on with the post-2022 divergence between the spot gold price and the 10 Year Treasury Real Rate?

 

[Sean K]

What's going on with the post-2022 divergence between the spot gold price and the 10 Year Treasury Real Rate?

View attachment 174798

And:

 

[Garpal Gumnut]

1. And WHY are CBs buying more gold? The answer is primarily energy. If you can purchase your energy (oil) in your home currency and settle in trade balances with any deficit settled in gold (gold being used as a reserve asset), then your currency is floating as to gold. Your currency then comes under your own control. No longer will your currency be inflated/deflated by the USD. No longer will you have to accumulate USD or UST. You simply accumulate gold. Your currency may inflate or deflate as against gold, but it is your choice, not the Federal Reserve or US Treasury making that choice for you.

Simply: Gold is now (or fast becoming) the oil currency. As the oil market is now some 14X larger than the gold market, that is the price differential that will close over time.

China is driving the break of oil being priced only in USD.

This week, lot's of action:

Yellen just returned from China: https://home.treasury.gov/news/press-releases/jy2232

View attachment 174777

Will China go along with this?

No chance: https://www.scmp.com/economy/china-...-avoid-cautionary-tale-japan-and-plaza-accord

View attachment 174778

So how can Yellen get a weaker USD if China will not revalue the CNY higher?


View attachment 174779

As already stated, China will not float the CNY against the USD. But China are already floating it against gold.

View attachment 174780

So if Yellen wants CNY up and USD down, all she needs to do is let the USD float FREELY against gold. This of course has not been the case:

So of course, the 'Paper Gold' market: https://reaction.life/dont-forget-the-golden-rule-whoever-has-the-gold-makes-the-rules/

View attachment 174781

The paper market was established in 1974:

View attachment 174783



However, you cannot (if you are an in-the-loop banker) let gold just run free when the banking system is short billions of USD paper gold. You have to close down unallocated paper positions.

The end of the LBMA is nigh - Research - Goldmoney

Basel 3 is on course to regulate the LBMA out of existence. And with it will go all the associated arbitrage business and position-taking on Comex, because most bullion bank trading desks will cease to exist. The only supply to buy-side speculators of gold and silver contracts will be...

www.goldmoney.com

View attachment 174782

What's behind China's gold-buying spree? – DW – 04/05/2024

For more than a year, China's central bank has been buying up large amounts of gold. The move, along with the wars in Ukraine and Gaza, have helped spike the price of the precious metal to new highs.

www.dw.com

Which is fine as far as it goes, but it really misses the point:

If the US cap the POG in USD terms and China lets the CNY float freely against gold, the CNY will weaken against gold, but, Chinese gold buys MORE OIL because China can settle net-net in gold for oil than does US gold, which is capped.

The above is actually China running a limited OPEN CAPITAL account.

Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks

The paper examines the usage of the Renminbi (RMB) as an international payment currency. Globally, the use of RMB remains small, accounting for 2 percent of total cross-border transactions. Using country-level transaction data from Swift** for 2010–21, we find significant regional variations in...

www.imf.org

View attachment 174784

Now these locations have CNY clearing facilities and major gold trading hubs.

View attachment 174785

Voila...you have a limited open capital account.


2. The smaller BRICs are doing EXACTLY the same thing. Buying oil in their home currency and settling net-net in gold. Their currencies then weaken as against gold. Their Central Banks are buying gold. All will eventually capitulate and buy gold to buy oil. Japan will likely be next. If/when they do, that's it, the US will have to capitulate also.


3. This really depends on whether retail adopt silver as a poor man's gold to exit their countries fiat currency. China and India will do so I think, they have that recent and current history. The West has forgotten. Possibly it wakes up. A higher silver price is actually far more dangerous than a high gold price. Silver has a far wider industrial use. A significantly higher silver price has economic consequences. Gold never lost its monetary use. Silver did. If silver rediscovers its monetary heritage, watch out.

So in a 4 sentence summary:

Gold is now an oil currency.

The world economy cannot handle $100 oil, millions would starve to death.

The world will not even blink at $10K gold, gold has no other uses.

With a higher POG the POO falls in fiat terms.

jog on
duc

Thanks @ducati916 and other geopolitical nerds such as I. Up until recently I have felt that we have been a lonely few in our warnings re the intention of China to attempt decouple from the $USD as being the main game of the BRICS and the main chance of a gigantic change in the POG by many many times its present value.

I am not however as positive as you that the Chinese will pull it off and decouple Gold, Oil and other Commodities from being traded in Bricsies rather than $USD. The US have a strangle hold not only on Commodities but also on Swift, US, European and Middle Eastern banks, and the ability to blackmail any bank anywhere in to toeing the line on the USD exchange rate for any and all currencies. This is done by legal and illegal means using sophisticated spycraft, diplomacy and espionage via eavesdropping similar to that exposed by Edward Snowden.

A good reference of this intriguing dealing can be found in :
Underground empire : How America weaponized the world economy by Farrell and Newman , a recently published engaging account of the history of America's use of choke points in the internet to spy on the BRICS and anyone else for that matter down to the little old lady next door.

This as well as the banning of semiconductor chips necessary for AI as exports to China will ensure that the US remains miles ahead of the BRICS in manipulating Markets and Banks to keep the $USD as the currency of exchange for another decade or two. This will see me out. Maybe longer. Who knows?

This is not to say that Gold will not multiply by some amount in the low teens to x20 times in value over the next 10 years but that it will not multiply by a factor of some hundreds.

gg

 

[ducati916]

1. Thanks @ducati916 and other geopolitical nerds such as I. Up until recently I have felt that we have been a lonely few in our warnings re the intention of China to attempt decouple from the $USD as being the main game of the BRICS and the main chance of a gigantic change in the POG by many many times its present value.

2. I am not however as positive as you that the Chinese will pull it off and decouple Gold, Oil and other Commodities from being traded in Bricsies rather than $USD. The US have a strangle hold not only on Commodities but also on Swift, US, European and Middle Eastern banks, and the ability to blackmail any bank anywhere in to toeing the line on the USD exchange rate for any and all currencies. This is done by legal and illegal means using sophisticated spycraft, diplomacy and espionage via eavesdropping similar to that exposed by Edward Snowden.

3. This is not to say that Gold will not multiply by some amount in the low teens to x20 times in value over the next 10 years but that it will not multiply by a factor of some hundreds.

gg

Mr GG,

1. While we are few in number, reality eventually trumps fiction.

2. While China and Russia have been the catalysts, this train once in motion will continue. Why?




So the Federal Reserve and Treasury (pretty much joined at the hip) have a catastrophe unfolding with the level of debt in the US economy from decades of mismanagement, bad decisions, moronic/criminal politicians/etc.

The US holds 8000 tonnes of gold (allegedly).

So:



The US debt:



Almost to $35T (by the time I finish typing it will be)

The US can manage a debt/GDP of 60%

That is +/- $19T

So you revalue gold to eliminate $16T of debt.

Gives you a gold per ounce price of +/- $60,000. Someone can check my calculation, the numbers are so off the chart.

Probably not any time soon, but it is not never either. The debt is now so unmanageable, the crisis so gargantuan, that some crazy shite is on the cards.

Now of course the above assumes that the US revalues gold, sells it and pays off their debt.

Far more likely is that the US revalues gold higher and the USD lower. Much lower. Currently trading at 105'ish, how about 50'ish? The inflation kick in the teeth would be massive, but, who cares right?

This would manage the problem over time.

Yellen is heading in this direction, not running, crawling, but I think she gets there. China are NOT going to revalue CNY higher like the Japanese did at the Plaza Accord. Nil chance.

I have no idea if it happens in one big jump or over a few smaller ones. FDR did it in one go. Nixon also in one go.

jog on
duc

 

[ducati916]

Risk-off mode in the markets:



Says it all.

jog on
duc

 

[rcw1]

Good evening

Gold is good ...

Interesting read this one. ha ha ha ha once upon a time...

​

Who is the ‘massive player with deep pockets’ behind gold’s surge?​

A powerful force is stalking the world’s gold market and it is operating in the shadows. Whoever it is – or they are – seems insensitive to cost.

Ambrose Evans-Pritchard
AFR Apr 17, 2024 – 8.53am

A powerful force is stalking the world’s gold market. It is operating in the shadows.

None of the normal footprints are visible on the London bullion market or the Chicago Mercantile. Retail gold bugs have not been buyers: ETF gold funds have been shrinking since December. The crowd is piling into the Bitcoin scam instead.
Yet gold has smashed through a four-year barrier around $US2000 an ounce, rising in parabolic fashion since mid-February, and hitting an all-time high of $US2431 on April 11. Is somebody preparing for an escalation of the shadow Third World War?

“It is not a Western institution behind this. It is a massive player with very deep pockets. I have never seen this kind of buying before,” said Ross Norman, a veteran gold trader and now chief executive of Metals Daily.
Gold has been ratcheting up fresh records against the headwinds of a strong dollar, a 70-point jump in 10-year US Treasury yields, and hawkish talk from the Federal Reserve. This mix would normally spell trouble for gold.

Whoever it is – or they are – seems insensitive to cost. Central banks do not behave like this.
“They buy on the London benchmark, and they don’t chase the price,” says Norman.
This rally is happening off books in the OTC market.

Yes, China’s central bank has been adding to its declared gold reserves for 17 consecutive months, part of the gradual portfolio shift away from US Treasuries and European bonds by the Global South.

Dollar weaponisation since the war in Ukraine has unnerved every country aligned with the authoritarian axis of China and Russia.

None can feel safe parking money in Western securities after Russia’s foreign reserves were frozen. Yet, the scale is modest. The World Gold Council said central banks bought a net 18 tonnes in February: 12 in China, six in Kazakhstan and India, four in Turkey, partly offset by Russian sales. This hardly moves the needle.

There is a strong suspicion among gold experts that China is behind the surge in buying, building up a war-fighting bullion chest.

The Chinese people certainly have been buying gold, creating traffic jams at the Shuibei jewellery hub. Precious metal is the only refuge from the property crash and the slump on the Shanghai bourse. Tightening capital controls make it hard to smuggle serious sums abroad.

But this alone cannot account for the price surge, either. Norman says the gold flow to Asia has been within normal bounds.

Solving the mystery​

So let me take two stabs at this mystery – one geopolitical and one financial.

It has been clear for three years that Russia, China and Iran are operating in collusion, each feeding opportunistically on each other. All three have fostered belligerent hyper-nationalism as a means of regime survival, and all aim to press their advantage against a fatally complacent West before the window of opportunity closes. This menace on three fronts has reached a dangerous juncture. None of the major democracies have put their economies on a war-time footing despite the obvious threat.

The West has dropped the ball on Ukraine – or worse, it is preventing Ukraine from hitting Russian oil facilities – and has therefore left the door wide open for a knock-out blow by the Kremlin this northern summer. Iran has been emboldened by Russian President Vladimir Putin’s military comeback. It is also flush with money.

US President Joe Biden is so worried about rising petrol prices that he has turned a blind eye to sanctions busting, letting Iran sell as much crude as it wants. This has enabled Tehran to advance its pawns in the Middle East, and now to risk a direct missile strike against Israel.

The third shoe has yet to drop, but China knows the West has run down its stock of military kit trying to contain these other two crises. Chinese President Xi Jinping may never have a better moment to tighten the noose on Taiwan with a naval and air blockade, gaining a stranglehold over the West’s supply of advanced semiconductors that can then be used as a bargaining chip.

How would the democracies respond to this?

A pandemic of spending​

There is a strong suspicion among gold experts that China is behind the surge in buying, building up a war-fighting bullion chest through state-controlled banks and proxies.

But others, too, can see that we are living through a fundamental convulsion of the global order, and that the dollarised financial system will not be the same at the end of it.

Gold is the hedge against dystopia.

However, there is a parallel explanation. COVID-19 finally broke our spendthrift governments. The talk in hedge fund land is that some big beasts are taking bets against “fiscal dominance” across the West.
It is a collective judgment that too many countries have pushed public debt beyond 100 per cent of GDP and beyond the point of no return under prevailing economic ideologies and political regimes.

Budget deficits have broken out of historical ranges and are running at structurally untenable levels for this stage of the cycle.

Central banks will bottle it – under this scenario – to mop up issuance of treasury bonds. They will let inflation run hot to help states whittle down debts by stealth default. You might argue this is what they already did by letting rip with extreme money creation during the pandemic.

The Bank of Japan is refusing to raise rates above zero or halt bond purchases, even though core inflation is 2.8 per cent and the Rengo wage round is running at 5.2 per cent.
This is what a debt trap looks like. With a debt-to-GDP ratio above 260 per cent, Japan cannot return to sound money without risking a fiscal crisis.

Olivier Blanchard, global debt guru and former IMF chief economist, once told me how this would unfold by the mid-2020s. “One day the BoJ may get a call from the finance ministry saying, ‘Please think about us – it is a life-or-death question – and keep rates at zero for a bit longer’,” he said.

The European Central Bank is also in a debt trap. It continued to buy buckets of Club Med bonds even when inflation was over 10 per cent.

This was patently a fiscal rescue for semi-solvent states.

The ECB has backed off for now but will be forced to shield Italy again with fiscal transfers disguised as QE in the next downturn.

The Fed has largely monetised the Trump-Biden jumbo deficits.

It now faces an invidious choice: either it stays the course against inflation, at the risk of a US funding crisis, a commercial property/banking crisis, and recession, all ending in a return to QE and fiscal dominance; or it cuts rates hard and fast before inflation is under control, also ending in fiscal dominance.

Is gold sniffing this out?

Of course, the gold spike may be nothing more than wolf-pack speculation by funds orchestrating a squeeze on bullion shorts through the options market, knowing this sets off a self-fuelling feedback loop. If so, the rally will short-circuit soon enough.

My bet is that a big animal with a Chinese accent is bracing for geopolitical or monetary disorder on a traumatic scale.

 

[greggles]

Interesting video by George Gammon, who suggests that the real reason for the recent surge in the gold price is that we are at the beginning of a new commodities supercycle that will peak after 2030.

He argues his case very well, and I think he may be on the right track. It does seem to make a lot of sense when put in context historically.

 

[Garpal Gumnut]

City prophetising $USD3000 for Gold in 2025. Ern Hoffman cryto and market reporter for Kitco has been following the POG closely and gives a good summary of Kitco' and Citi's outlook for Gold. It is pretty much in line with the posts over the past 12 mo. from the Gold bulls in this thread on ASF.

https://www.kitco.com/news/article/2024-04-17/citis-most-bullish-forecast-has-become-likely-bank-now-sees-3000-gold-play

gg

 

[Sean K]

City prophetising $USD3000 for Gold in 2025. Ern Hoffman cryto and market reporter for Kitco has been following the POG closely and gives a good summary of Kitco' and Citi's outlook for Gold. It is pretty much in line with the posts over the past 12 mo. from the Gold bulls in this thread on ASF.

https://www.kitco.com/news/article/2024-04-17/citis-most-bullish-forecast-has-become-likely-bank-now-sees-3000-gold-play

gg

Looks like the $2400 ish zone is a psychological level to get over on it's way to $3000. Some healthy short term consolidation but there might be a more sustained sideways chop until it springs out. Could be forming a flag between 3400-3900 ish. On the downside, decent support is a long way away.



I think I said I wish I had bought more Kangaroos when AUD Gold was below $3000 and didn't chase it after $3200. Someone was smart enough to say you will wish you bought more at $3200...

 

[ducati916]

Looks like the $2400 ish zone is a psychological level to get over on it's way to $3000. Some healthy short term consolidation but there might be a more sustained sideways chop until it springs out. Could be forming a flag between 3400-3900 ish. On the downside, decent support is a long way away.

Agreed...a correction through time rather than price: look how quickly that moving average is coming up. Give it another 3/4 days and you'll have support rising to push it higher.



jog on
duc

 

[Dona Ferentes]

Who is the ‘massive player with deep pockets’ behind gold’s surge?​

by Ambrose Evans-Pritchard

always like his stuff. thanks for posting

"Gold is the hedge against dystopia"

 

[Sean K]

Looks like the $2400 ish zone is a psychological level to get over on it's way to $3000. Some healthy short term consolidation but there might be a more sustained sideways chop until it springs out. Could be forming a flag between 3400-3900 ish. On the downside, decent support is a long way away.

View attachment 175116

I think I said I wish I had bought more Kangaroos when AUD Gold was below $3000 and didn't chase it after $3200. Someone was smart enough to say you will wish you bought more at $3200...

View attachment 175117

Woops, I meant potential 2340-2390 flag on US POG. I haven’t had a coffee yet.

 

[DaveTrade]

Woops, I meant potential 2340-2390 flag

That's exactly the type of verbal mistake I often make.

 

[rcw1]

always like his stuff. thanks for posting

"Gold is the hedge against dystopia"

Hi @Dona Ferentes

Most kind of you. Have actually been thinking about that quote for sometime. What the author was attempting to tell the reader. Had not heard that one before.

dystopia:
a very bad or unfair society in which there is a lot of suffering, especially an imaginary society in the future, after something terrible has happened; a description of such a society (Cambridge Dictionary).

Who is the ‘massive player with deep pockets’ behind gold’s surge?​

by Ambrose Evans-Pritchard

Yes, rcw1 would certainly agree that to be the case. The question to be asked now, for mine is, how long will this massive player with deep pockets, continue to hedge under current circumstances which prevail??

rcw1: long time yet!!

Have a very nice weekend Dona Ferentes.


Kind regards
rcw1

 

[Sean K]

That's exactly the type of verbal mistake I often make.

Should have put some lines on a chart so I didn't confuse myself.

 

[Sean K]

Gold might be breaking up from that flag on the back of reports Israel has responded.

 

[finicky]

Israel strikes inside Iran. Clips on our general chat forum.