Falling gold inventories AND a falling price?
derryb
Posts: 36,779 ✭✭✭✭✭
Interesting chart from Bloomberg. I marked (in blue) the 8/17/11 announcement of Venezuela's demand for its gold. Note the peak in gold price at about the same time as Venezuela's demand.
Anyone else find it interesting that price and COMEX/ETF physical holdings have both been on the steady decline since since the 1/14/13 German announcement? In light of the fact that the US FED says it will take them seven years to honor Germany's request for 300 tons, is it likely the trees have been continuously shook (by price take downs) to free up this physical gold? As this was the second request for a foreign nation's holdings, is the FED preparing itself (through repurchasing) for further gold reparations?
I submit that gold price declines have been engineered to free up physical supply. It seems to have been working. How long will this be necessary? Maybe the FED gave us a hint with their seven year German repayment plan. I also submit that first Venzuela and then Germany are grabbing their chairs as the music comes to an end. Who's next? Could it also be that the seven year repayment plan was put into place to discourage further reparation?
Anyone else find it interesting that price and COMEX/ETF physical holdings have both been on the steady decline since since the 1/14/13 German announcement? In light of the fact that the US FED says it will take them seven years to honor Germany's request for 300 tons, is it likely the trees have been continuously shook (by price take downs) to free up this physical gold? As this was the second request for a foreign nation's holdings, is the FED preparing itself (through repurchasing) for further gold reparations?
I submit that gold price declines have been engineered to free up physical supply. It seems to have been working. How long will this be necessary? Maybe the FED gave us a hint with their seven year German repayment plan. I also submit that first Venzuela and then Germany are grabbing their chairs as the music comes to an end. Who's next? Could it also be that the seven year repayment plan was put into place to discourage further reparation?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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One way or another, gold was going to find a way to retrace a big chunk of the 11 year rally.
Gold won't escape the financial controls being instituted. In Europe and Asian they are already assigning controls as to how much gold one can purchase with cash. Those buying gold in
the near future will be easily identified and tracked by the PTB. New taxes and regulations will make a lot of people think twice about owning gold.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
Knowledge is the enemy of fear
Gold isnt being controlled by anyone. A dumb country hick like myself could see this happening. Gold is just another asset class. Accept it and prosper.
Knowledge is the enemy of fear
<< <i>Investors need to stop looking for reason why they lost 1/3 of their money, fact is fact, what will you do next? >>
Open up a Kool Aid stand on the corner.
<< <i>Gold won't escape the financial controls being instituted.
Gold isnt being controlled by anyone. A dumb country hick like myself could see this happening. Gold is just another asset class. Accept it and prosper. >>
All investment assets are under the influence. Some are being boosted at the expense of others being discouraged. Gold is not special, it is no different.
Make a good case that equities and real estate markets are not being manipulated. Zero percent interest rate (ZIRP) policy and gambling money for the investment banks (QE) are not natural market forces. Even country hicks should see this.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>Gold won't escape the financial controls being instituted.
Gold isnt being controlled by anyone. A dumb country hick like myself could see this happening. Gold is just another asset class. Accept it and prosper. >>
All investment assets are under the influence. Some are being boosted at the expense of others being discouraged. Gold is not special, it is no different. >>
derryb.....we do agree on some fundamentals.
The US tried to get a $600 transaction - 1099 rider attached to Obamacare in 2010 but failed. There will be further attempts. Value added taxes coming down the pike.
Dodd-Frank already put down a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver on July 15, 2011.
France - banned cash sales of greater than $600 on gold and silver / banned the shipment of gold and silver via the mail
India and North Korea - restrictions on gold imports
"we think that this decline was engineered by central and bullion banks to increase available supply and decrease demand."
"If our thesis is correct, the Central Banks are running out of gold. What would happen if the world found out? This can’t be allowed, so the only option left for central planners is to try to tame the demand for gold."
"This was all orchestrated to increase supply and tame demand. We believe that central planners are now running out of options to suppress the gold price. After taking a pause, the secular gold bull market is set to continue."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
inventory that is no longer held by Comex and ETFs has not been consumed, it just resides elsewhere.
To me, that is positive because the gold is probably in stronger hands.
When oil inventories decline, that is positive for the commodity because oil is consumed.
Sales of gold products were particularly popular, jumping 78% during the three-month period ending June 30. The buying spree occurred when the price of gold dropped 13% over a few days in April on the expectation that the U.S. Federal Reserve would wind down its program to buy back U.S. Treasury bonds. Such a move would put upward pressure on the value of the U.S. dollar, and the price of gold generally moves opposite that of the U.S. currency.
Those are 1 billion+ strong hands
"those who believe there is a connection between the ongoing run on JPM's vault gold, the suppressed price of the metal, the redemption of Bundesbank gold, and the fact that 3M GOFO has now been negative for 10 straight days or the longest period in history it has been below zero, and indicating an unprecedented gold collateral shortage, you are correct."
<< <i>The chart is very interesting but I can only add one thought. The gold inventory that is no longer held by Comex and ETFs has not been consumed, it just resides elsewhere. To me, that is positive because the gold is probably in stronger hands. >>
Not yet, but soon. It is working its way to the strong hands. Some of it will take seven years to get there.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I know no one who lost a "third", I still own every ounce I bought.
Well, if he still owns it then he wouldnt have lost anything because he still owns it, right?
Or if you had sold your gold now would you have lost 1/3?
I see no difference, and there is no difference, between a realized loss and a paper loss.
Not only will your gold money buy less dollars, it will also buy less real estate, less health insurance, less Subway sandwiches, less labor. Yes, Streeter, you have lost 1/3. Even if you bought at 900, held it to 1900 and still hold today, you have lost the difference between the high and todays price. This is indisputable.
Knowledge is the enemy of fear
<< <i>If you look at gold through the eyes of a paper trader, sure you could potentially have lost your ass if you bought ETF at 19 and Sold at 12.
I know no one who lost a "third", I still own every ounce I bought.
Well, if he still owns it then he wouldnt have lost anything because he still owns it, right?
Or if you had sold your gold now would you have lost 1/3?
I see no difference, and there is no difference, between a realized loss and a paper loss.
Not only will your gold money buy less dollars, it will also buy less real estate, less health insurance, less Subway sandwiches, less labor. Yes, Streeter, you have lost 1/3. Even if you bought at 900, held it to 1900 and still hold today, you have lost the difference between the high and todays price. This is indisputable. >>
Yes, you should have traded that gold for more risk while you had the chance.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"Gold surged over 3% yesterday due to what appears to be have been significant short covering due to concerns about gold backwardation and the continual haemorrhaging of gold inventories from the COMEX."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
10 oz example, catch the star at $1900 and sell. Rebuy at $1200, BUT, you'd have to actually buy at $1280 because of the premium.
My basis, $600(as an example). Gross profit, $13,000 BUT treated as ordinary income. My combined liability on that trade, around $8,000.
So now I have about $11,000 to go buy 8.5 oz and a new BASIS
of $1280 per ounce on a reduced holding of 8.5 oz.
I've had to waste my time selling, rebuying and seeing the accountant. My new unmanageable basis is
2x my old low basis. And I have 15% less phyzz
Make the "undisputed" smart trade, so I can buy subway sandwiches or just do nothing and be considerably better off.
Folks, now you see how people lose assets when they are led down the path to allow their assets to be churned. THAT is the undisputed outcome.
10 oz example, catch the star at $1900 and sell. Rebuy at $1200, BUT, you'd have to actually buy at $1280 because of the premium.
My basis, $600(as an example). Gross profit, $13,000 BUT treated as ordinary income. My combined liability on that trade, around $8,000.
So now I have about $11,000 to go buy 8.5 oz and a new BASIS
of $1280 per ounce on a reduced holding of 8.5 oz.
I've had to waste my time selling, rebuying and seeing the accountant. My new unmanageable basis is
2x my old low basis. And I have 15% less phyzz
Make the "undisputed" smart trade, so I can buy subway sandwiches or just do nothing and be considerably better off.
Folks, now you see how people lose assets when they are led down the path to allow their assets to be churned. THAT is the undisputed outcome.
This!
I knew it would happen.
<< <i>Let's recap the paper trade and "profit"
10 oz example, catch the star at $1900 and sell. Rebuy at $1200, BUT, you'd have to actually buy at $1280 because of the premium. >>
Your example applies to buying/selling physical, but there are no premiums on paper ETF trades just the peanuts I pay the online broker (<$10 per trade regardless of dollar amount).
Also, a new, higher basis is to your advantage. You're gonna pay taxes on gain no matter when you sell. All you did was cashed in (for now) at a lower tax rate and started a new higher basis (when you repurchased) that will be used to figure your next capital gains at probably a higher tax rate as time goes on.
Also, fire your accountant and do it yourself - it's not difficult.
Paper is good for short term trading of metal (buying the lows, selling the highs) - easy in, easy out, only expense is the broker fee. You're gonna pay capital gains on any asset/investment regardless of when you sell and by starting with a new higher basis you don't pay taxes twice on the same gain (it all comes out the same except most likely higher tax rates in the future. Physical is good for long term stacking of metal. Some of us do both.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey