A question for you stock market experts.

edmundfitzgerald

Ok, so no one is an expert, I know that, but here's my question.

When oil was trading at 144 a barrel, rumor came out that Goldman Sachs was dumping all its crude onto the market,
and thus the drastic drop in price all the way down to the 55/barrel range.

Let's say that's true for a second, and a commodity can really get hit if all the big boys starts unloading it.

However, with gold, I don't see "the big boys" owning the majority of the precious metal, and thus I can't see how
a "massive dump" could take place to drive its price down, the way oil can. I've read that countries/governments own
the most physical gold, and not the banks.

Where am I wrong on this ?

Justacommeman

Don't under estimate the paper market or leverage or a hedge fund liquidation etc etc etc........... Prepare yourself for a wild ride gold ride during the next few weeks. Shake, rattle and roll......

As for your oil statement----------The following were involved to create a perfect storm------------ speculation, a crowded trade, hedge fund liquidations, the financial meltdown, demand destruction, a reversal in the carry trade etc etc etc.......Pick your posion, the menu is broad

MJ

derryb

Your scenario is affected by two key elements: supply AND demand. What makes oil different than gold is gold's limited supply in relation to heavy demand. The current demand for gold would absorb any dump of a large supply. Central banks are waiting in the wings to buy up any large supply. Sprott Managment unsuccessfully tried to buy the IMF's recent offering. Most central banks and the IMF in the past have voiced "orderly" sales of their supply to not negatively affect the market. Any reduction in price due to a large sale order would only be temporary due to current economic conditions and their affect on demand for gold. Anyone that sold tons of gold now would be crazy and would most likely be qualified to someday be a prime minister (Goldie Gordon Brown, for example).

dbcoin

The thing you are missing that MJ alluded to is that they sell assets (gold/oil/whatever) that they don't have by shorting endless quantities. They have massive leverage and the gold/oil markets are small in comparison to other markets and they thus can control the price swings to an extent.

They don't have to have a physical warehouse loaded with gold to sell into the market to make it go down.

bidask

Computer run amok.

jmski52

This is not the time to have a hair-trigger response to market fluctuations. Additionally, don't over-extend and you'll be just fine.