gold poised for a big drop?
steveben
Posts: 4,612 ✭✭✭✭✭
i talked to my financial advisor at wells fargo today. he tells me that a mcclellan report (#400) came out that tracks gold vs. london's libor rate and the indices show that gold is poised for a huge drop based on historical comparison. i ask him if i can see the report because i don't really understand what those indices are all about. i know some mortgages are based on libor, but apparently they cannot share the report...but he tells me maybe i can search for it.
anyway, i found this:
mcclellan link
which says:
"We recently featured a chart in our Daily Edition on Dec. 1 (subscription available here) showing that gold lease rates are climbing in London in a way similar to what we saw in September 2011, just before the plunge. It appears that gold investors are getting bullish just as a squeeze is mounting in the gold lease market, which is a setup for a big drop like September's. It is not a sign that such a decline has to start right away, just that the conditions are ripe."
so, does anyone know any more about this? thoughts?
btw, when i first started investing with wells fargo in the late 90's, i used to listen to them and follow their advice. now i listen to them and usually do the opposite. ;-)
anyway, i found this:
mcclellan link
which says:
"We recently featured a chart in our Daily Edition on Dec. 1 (subscription available here) showing that gold lease rates are climbing in London in a way similar to what we saw in September 2011, just before the plunge. It appears that gold investors are getting bullish just as a squeeze is mounting in the gold lease market, which is a setup for a big drop like September's. It is not a sign that such a decline has to start right away, just that the conditions are ripe."
so, does anyone know any more about this? thoughts?
btw, when i first started investing with wells fargo in the late 90's, i used to listen to them and follow their advice. now i listen to them and usually do the opposite. ;-)
0
Comments
Knowledge is the enemy of fear
Seriously though, I have no idea on that kind of information. I just commented because I dumped WF as our banking establishment this year (after they took over Wachovia) and can't believe I how much happier we are.
<< <i>i talked to my financial advisor at wells fargo today. he tells me that a mcclellan report (#400) came out that tracks gold vs. london's libor rate and the indices show that gold is poised for a huge drop based on historical comparison. i ask him if i can see the report because i don't really understand what those indices are all about. i know some mortgages are based on libor, but apparently they cannot share the report...but he tells me maybe i can search for it.
anyway, i found this:
mcclellan link
which says:
"We recently featured a chart in our Daily Edition on Dec. 1 (subscription available here) showing that gold lease rates are climbing in London in a way similar to what we saw in September 2011, just before the plunge. It appears that gold investors are getting bullish just as a squeeze is mounting in the gold lease market, which is a setup for a big drop like September's. It is not a sign that such a decline has to start right away, just that the conditions are ripe."
so, does anyone know any more about this? thoughts?
btw, when i first started investing with wells fargo in the late 90's, i used to listen to them and follow their advice. now i listen to them and usually do the opposite. ;-) >>
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My position is and always will be:
If these "So called financial planners are so good,,,,, why do they need to be paid a comission to invest other people's money?
If they are that good I would think that they could invest their own money and not be troubled with dealing everyday with the "Common Man"
Seems they aren't making enough money investing on their own if they need to earn a salary by selling to oyhers?
OK, someone please explain to me my flawed logic?
GrandAm
thanks, i read that information and it helps me understand a little bit better. i would like to know exactly what the gold leases are...because that's new to me, but it did shed some more insight into what i was being told.
@grandam
i don't think your logic is that flawed. when i first went to get a financial adviser, i was naive. over time, i have learned that no body cares more about your savings than your own self. so, the reason i keep him is he's just one additional source of information for me to use to make decisions. a lot of times, like i said, i do exactly the opposite of what he advises me to do. there have been times where he practically begged me not to make certain investments, that ended up making me lots of money afterwards. there have also been times where i have listened to him and made money. i have lost both ways as well. but the important thing i have learned is that you have to do your own research. these advisers for mega banks just push whatever is on the company agenda. they don't give you any personal advice, they don't really care if you lose money. but sometimes they give good information...and in my case i am dealing with someone who is very knowledgeable about various investment instruments...and i have learned a lot from him, even though he sometimes gives bad investment advice. it's up to me to educate myself and know the difference.
<< <i>
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My position is and always will be:
If these "So called financial planners are so good,,,,, why do they need to be paid a comission to invest other people's money?
If they are that good I would think that they could invest their own money and not be troubled with dealing everyday with the "Common Man"
Seems they aren't making enough money investing on their own if they need to earn a salary by selling to oyhers?
OK, someone please explain to me my flawed logic?
GrandAm
When I was a broker the joke used to be that Wall Street (stock market) is the only place where people who ride limos to work take advice from people who ride the train.
But your analogy is no different than paying someone to cut your hair. And you give them a tip (commission). Just get this.
Knowledge is the enemy of fear
just remember that.
I've been on the road most of the week. I've begun to notice that the newer bank buildings have begun to look very much like glass churches. Has anyone else noticed this?
I knew it would happen.
Member ANA, SPMC, SCNA, FUN, CONECA
<< <i>Old Chinese proverb: "Never take financial advice from someone who has to work for a living". >>
Truer words have never been spoken.
<< <i>I always wondered why these whiz kids are not millionaires.... and I know several people who have lost fortunes because of their bad advice. Cheers, RickO >>
I know lots of people who have lost fortunes by not listening to their financial advisor.
Knowledge is the enemy of fear
<< <i>
<< <i>
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My position is and always will be:
If these "So called financial planners are so good,,,,, why do they need to be paid a comission to invest other people's money?
If they are that good I would think that they could invest their own money and not be troubled with dealing everyday with the "Common Man"
Seems they aren't making enough money investing on their own if they need to earn a salary by selling to oyhers?
OK, someone please explain to me my flawed logic?
GrandAm
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When I was a broker the joke used to be that Wall Street (stock market) is the only place where people who ride limos to work take advice from people who ride the train.
But your analogy is no different than paying someone to cut your hair. And you give them a tip (commission). Just get this. >>
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It costs $12 Bucks to get my hair cut at Great Clips,,,,, $9.99 when they run a special. I tip the girl $3.
That is about the most of my money that I am comfortable with having someone else handle.
I'll take care of the rest,,,,,,,,,,,,
Grandam
Gofo's = (Libor - lease rate). But don't day trade on it as it can be several days to a couple of weeks before the price of gold responds to a Gofo change.
Not much different than trying to trade gold based on TBond interest rates or TIPs. In 2008 the Libor-Gofo rates peaked in the positive direction at +2.9.
In 2011 we've seen negative rates now as high as -.82. I don't know how one compares the high "+" rates in 2008 to these "-" rates in 2011. Don't think you
can just toss an absolute value sign around them. 1 month Libor went to >4.5 in fall of 2008. Today it's only around 0.27. Not exactly in the "red" zone yet.
And if one tried to trade gold via lease rate trend from Sept to November you would have been all over the map with the tail wagging the dog. It's certainly
possible that the rising lease rates are predicting gold breaking upward from that triangle consolidation rather than the opposite. Who really knows?
London Bullion market Gofo rates 2011
With Gofo rates currently being on the high end all it's really telling me is that gold has rallied most of the year, which it has. The gofo rates can go a lot higher too if
interest rates start to rise. Gofo rates in early 2008 where >4. And before the end of 2008 they had bottomed at <0. Since 2009 all we've seen are fractional Gofo rates
from 0 to .8. Right now it's in the .8's which is technically the highest they've been in over 3 yrs. But at the same time we're in a pretty corrupt interest rate environment
where rates are largely pushed around by otc interest rate derivative contracts....not by true supply and demand.
Silver forwards are also around yearly highs, much higher than what was seen the March-April rush. It would seem that with the banks sitting on shaky ground, the holders
of gold and silver are not willing to give it up as readily. I don't really know if that means a "crash" is coming. And using GLD and other gold ETF inventories as a sign of
gold demand may not be as useful a tool as it was 1-3 years ago. I would think that a lot more gold investors have been spooked by the paper gold schemes and have probably
shifted their demands towards physical bullion. MFGlobal was the wake up call. If it's not in your hand, you may not end up owning it. David Einhorn of Greenlight Capital bailed
on GLD several years ago and moved his billions into more secure vaulted bullion.
roadrunner
Was it Will Rogers who said....."Forget about return ON my investment.....I want a return OF my investment."
<< <i>"Wells Fargo financial adviser", that's a good one.
>>
Which they come and go on a 6 month basis.
Was this adviser over 23 btw ??
Jim on CNBC
<< <i>Looks like gold is dumping tonight! >>
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
Churchill
<< <i>Looks like gold is dumping tonight! >>
might be time to buy...it's like it's on sale!
<< <i>
<< <i>"Wells Fargo financial adviser", that's a good one.
>>
Which they come and go on a 6 month basis.
Was this adviser over 23 btw ??
no, he's actually been the senior vice president of investments for about that long.
I knew it would happen.
Liberty: Parent of Science & Industry
<< <i>I hope all my assets go down in value so I can buy more of them! If I like it at $X, I should LOVE it at 90% of X! (and be absolutely delirious with joy as the decline continues) >>
And given this mindset, I dont understand the bad rap financial advisors get in the other thread. They seem to give people exactly what they want.
Knowledge is the enemy of fear
lol. My comment doesn't imply a drop to catastrophic levels such as a 60% drop. I can manage just about any scenario at this point, by offsetting any losses with gains whenever I want to cash-out.
And regarding PMs - on balance, I still prefer to be averaging-in. I can tap into the pool whenever I need it, and I have a real insurance policy against Washington DC malfeasance at all times.
I am speculating that if precious metals drop, everything else will drop as fast, or faster. And the kicker is that John Corzines of the world won't be dipping into my personal segregated funds at the most inconvenient time.
I knew it would happen.
Gold may enter a bubble, but when the bubble breaks and it falls from, say, $10,000 an ounce to $5000 an ounce, money spent today on it will still be ahead. I hope I'm exaggerating to illustrate a point.
Libor-Gofo rates even with today's drop are still at the same elevated negative levels (-.48). Considering the $50 dollar hit to gold, the Gofo
rate only dropped a tiny .02 (.81 to .79). Would have expected a bigger drop if sellers were falling over themselves to dump their gold.
Miner buying weakness on Friday was sort of predicting continued weakness this week. And this being an options expiration week for equities pretty much meant
that by Wednesday miners and the S&P (and probably PMs and commods) were going to get some type of hit. This is also a TBond auction week (M-W) which also
added headwinds to fight.. FOMC meeting Tuesday as well. Ironically, I saw an article on Sunday from one analyst who researched back a number of years and
concluded this would be an up week for equities based on DEC O/E being typically bullish, esp. with an FOMC meeting attached. So far, not working out so good.
Gold went back to an old favorite level of $1660-$1665, the exact same point the rapid August breakout occurred from. It's been an area of support and resistance several times
now. GLD has a gap left in the 158's equating to approx $1622 gold. It's just a potential target. Most of the gold miner gaps got filled today, but not all of them. With 2-3
days left during peak Options Expiration, I can't see how there won't be addtional hit(s) into Wed/Thursday. Maybe we' ll get a bounce here to $1682 but if so, it doesn't signal
all clear. The S&P has some large gaps sitting lower than if filled will drag the mining sector down with it. The USDollar has just touched the 79.6 level for the 3rd time in about
2 months. Is this finally going to be the run past 80? Just a couple tenths higher to fill the gap from Nov 25th.
roadrunner
Could do that in a week, easy. But as they say, the longer it takes, the harder it falls.
Like I wrote in the trading thread, these type of patterns have a tendency to become resolved with efficiency.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
of general market weakness and anxiety. I don't think gold was necessarily going to correct as quick as it did but it was given a strong push a couple of times since Sunday
night. If by "efficient" you mean "fast" and "well coordinated," indeed it was....and probably will continue to be when TPTB decide that they can't have gold hanging up in the clouds
any longer. For some reason they didn't crush silver as would usually be the case in "efficiency" mode. Probably just an oversight or some guy called out sick today that was supposed to naked short SLV all day.
Did the gofo or libor rates predict all this? I don't think so as far as gold is concerned. Today was the first day that the gofo rates really tanked hard. Silver Fowards actually moved
substantially down on Friday while price moved up. It wouldn't be very efficient if all major down moves were broadcasted via the gofo/sifo's.
roadrunner
<< <i>I agree with Jim Rogers. I hope it goes down so that I can buy more. And it is. So, I will. >>
haven't bought in a while, we had one day at 1500 not long ago. a couple of decembers in recent years have been good to me for purchasing, but then we also bing, mr rebates, ebay bucks to really help the powder along! I don't know what number exactly is where 'the whites of their eyes' are, but my gut usually tell me when. Dry powder awaitin', all Christmas presents bought.
won't be a big purchase, but it's a been a while... I'd definitely say at 1500, CNI is getting a call from me, maybe even just in the 1500s
I guess he showed up for work today.
Heavy volume on GLD and SLV, but nothing close to capitulatory. No need to be naked shorting in this market, as there just aint no buyers.
Roadrunner, check out my longer term stoch. Ugh.
Knowledge is the enemy of fear
<< <i>there just aint no buyers. >>
yes, make mine a double
This guy looks to be in his early thirties,,,,, why do people give their money to these smucks?????
Just wondering, GrandAm
<< <i>Probably just an oversight or some guy called out sick today that was supposed to naked short SLV all day
I guess he showed up for work today.
Heavy volume on GLD and SLV, but nothing close to capitulatory. No need to be naked shorting in this market, as there just aint no buyers.
Roadrunner, check out my longer term stoch. Ugh. >>
Yup, he showed up today. His bosses told him he had to double his silver shorts to make up for yesterday. He even came in early to get a head start.
The volume on GDX at 30,000,000 seemed in the capitulatory range. That kind of volume has only been hit 5 times in the past 3 yrs. And in this case
it was 9 days into a downturn.
roadrunner
<< <i>I interviewed to be a financial adviser at one of the nationwide outfits when I was coming out of college. The job had almost nothing to do with giving investment advice. The role of the adviser was to get people's money and investment style so they could ship it off to New Jersey to develop investment plans for the adviser to regurgitate back to the client. Was not really interested in the job after that or in ever using a financial adviser. >>
Hmmm...sounds like an outfit called MF Global?
GLD got close to the 3yr uptrendline. This is the line Gartman expects to be broken. Im afraid I have to agree, but it might not break this week. As violent as it may have seemed, I see the decline as very orderly. I think before gold stabilizes, it will have tested the Jan lows.
Knowledge is the enemy of fear
The rest on SGOL and SLV-- with a close eye on SLV; SGOL plan to hold medium term. Last sold in the summer ~180 iirc. Summer was all screwed on my purchasing plans cf. 2009, 2010. AGQ/ZSL aged me about 10 years this spring.
Now watch them PM prices really plummet; don't say I never helped anyone here
But that's ok 'my will is good.'
Shalom.