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Falling gold inventories AND a falling price?

derrybderryb Posts: 36,825 ✭✭✭✭✭
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.

image

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

Comments

  • PokermandudePokermandude Posts: 2,713 ✭✭✭
    A very interesting chart. Thanks for posting.
    http://stores.ebay.ca/Mattscoin - Canadian coins, World Coins, Silver, Gold, Coin lots, Modern Mint Products & Collections
  • Timbuk3Timbuk3 Posts: 11,658 ✭✭✭✭✭
    Interesting, thanks for the info. !!! image
    Timbuk3
  • tneigtneig Posts: 1,505 ✭✭✭
    Mentally or logically I would think as more people realize third party gold holdings are over exaggerated, wouldn't the actual physical gold price/value go up?
    COA
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Even if the German gold issue never materialized, there would have been another theory offered up to explain the drop from $1900 to $1200.
    One way or another, gold was going to find a way to retrace a big chunk of the 11 year rally.
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • I would think if you wanted to free up physical supply all you would need to do is raise the price a couple hundred bucks an oz and many would bail out.
  • TwoSides2aCoinTwoSides2aCoin Posts: 44,294 ✭✭✭✭✭
    If I had the answers I'd charge a premium for the hard questions.
  • piecesofmepiecesofme Posts: 6,669 ✭✭✭
    You managed to say manipulation by showing a chart that suggests it and an analysis that very well could be what's going on, but I'm waiting to hear coho's reply before I decide to agree or not image sorry, too easy...
    To forgive is to free a prisoner, and to discover that prisoner was you.
  • streeterstreeter Posts: 4,312 ✭✭✭✭✭
    Have a nice day
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    In several short years, TPTB will record every financial transaction and gold MIGHT be one of the few ways to promote intergenerational wealth for the average person. Rocking back and forth by paying attention to the GSR will provide opportunities.

    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.

    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • cohodkcohodk Posts: 19,140 ✭✭✭✭✭
    Perfect case study for that fact that most PM stories are simply pump and dump. Stop falling for this nonsense. Think with your head, not your emotions.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 19,140 ✭✭✭✭✭
    The chart, if accurate, also shows an amazing negative divergence between ETF holding and price. Holdings increased (increased buying), yet price did not respond. A CLASSIC warning sign.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 19,140 ✭✭✭✭✭
    Investors need to stop looking for reason why they lost 1/3 of their money, fact is fact, what will you do next?
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • cohodkcohodk Posts: 19,140 ✭✭✭✭✭
    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.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • TwoSides2aCoinTwoSides2aCoin Posts: 44,294 ✭✭✭✭✭


    << <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.
  • streeterstreeter Posts: 4,312 ✭✭✭✭✭
    Have a nice day
  • derrybderryb Posts: 36,825 ✭✭✭✭✭


    << <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

  • OPAOPA Posts: 17,121 ✭✭✭✭✭


    << <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. >>




    image

    derryb.....we do agree on some fundamentals.image
    "Bongo drive 1984 Lincoln that looks like old coin dug from ground."
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Any country hick in India, France, and North Korea to name just a few countries realize that there have been recent controls added to their gold trades.
    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
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • derrybderryb Posts: 36,825 ✭✭✭✭✭
    Look's like Eric Sprott agrees

    "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

  • streeterstreeter Posts: 4,312 ✭✭✭✭✭
    Have a nice day
  • s4nys4ny Posts: 1,569 ✭✭✭
    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.

    When oil inventories decline, that is positive for the commodity because oil is consumed.
  • There is an interesting paragraph in this WSJ article


    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 image
  • derrybderryb Posts: 36,825 ✭✭✭✭✭
    and now ZH joins the chorus

    "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

  • cohodkcohodk Posts: 19,140 ✭✭✭✭✭
    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.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,825 ✭✭✭✭✭


    << <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. image

    "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

  • TwoSides2aCoinTwoSides2aCoin Posts: 44,294 ✭✭✭✭✭
    Am I the only one who thinks these threads are what shuts down the forums, lately ?

    image
  • derrybderryb Posts: 36,825 ✭✭✭✭✭
    The true market attempts to take control of prices

    "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

  • streeterstreeter Posts: 4,312 ✭✭✭✭✭
    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.

    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.
    Have a nice day
  • jmski52jmski52 Posts: 22,863 ✭✭✭✭✭
    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.

    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!
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • derrybderryb Posts: 36,825 ✭✭✭✭✭


    << <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

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