It's looking grim again. Is gold the would-be saviour?
Discussion
DonkeyApple said:
Chances are that this big sell off this afternoon is due to the market waking up to the probable scenario that Cyprus is sitting on painted lead after selling their gold years ago and hiding the USD in the Cayman.
I could understand gold falling in response to a sell-off, but surely if Cyprus actually has no gold (or less of it than stated), that would have the opposite effect?Digga said:
DonkeyApple said:
Chances are that this big sell off this afternoon is due to the market waking up to the probable scenario that Cyprus is sitting on painted lead after selling their gold years ago and hiding the USD in the Cayman.
I could understand gold falling in response to a sell-off, but surely if Cyprus actually has no gold (or less of it than stated), that would have the opposite effect?
But, if something like this did come to the fore instead of being the usual scenario from African post coup republics then its perceived impact would be to seriously undermine the market and its value as a store of wealth as fear of holding worthless assets gripped the market. There are probably already hundreds of thousands of retail investors who think they have gold in third party vaults where none ever existed and also who are sitting on plated tungsten and lead at home but a similar scam at State level really would do damage.
The uncertainty as to what you owned, were selling or were buying would hit the market value.
Personally, gold was heading down regardless and the ramping of a Cypriot sale is an irrelevance just a catalyst for the move. If Cyprus did do anything it would be a swap not a sale and each state is restricted since 1999 from selling more than 400 tons a year. Only sales in EU since 99 has been for the purposes of coin minting where you can sell gold well above real rate and then buy it back as bullion, this making a nice turn out of frightened old people.
No. BitCoin is a tiny market and just like a small mining stock once the fools began rushing in the liquidity squeeze slammed values up momentarily.
The other year I was talking on here about the true value and importance of a universal web currency being the next logical big step in www but the risks at this stage is that have a dozen State sponsored accounts could blow such a market apart.
It's weakness being that they have failed to realise that they are no different from some tin pot third world currency and so must peg it to something to create the security that permits the wider community to utilise it.
Gold is selling off because private buying stopped in 2012, State buying stopped in Q1 2013. At the same time paper gold began being sold out of portfolios and now the final straw is that it looks like States may be forced sellers.
The key question is who will supply the buy side demand to reverse what is now a technical bear market.
If this sell off were to actually gain traction then it could easily snowball as many holders do so on margin of one type or another and will be forced out. The paper side will be decimated as the retail AM herd move in panic. And the added impact of the retail physical market when they learn that most buyers have closed shop and those that remain carry massive discounts as no one logically pays market when it is falling. No one but retail that is and they will be trying to sell. And then the Ponzi schemes will appear.
A real sell off would trigger something quite dramatic.
The other year I was talking on here about the true value and importance of a universal web currency being the next logical big step in www but the risks at this stage is that have a dozen State sponsored accounts could blow such a market apart.
It's weakness being that they have failed to realise that they are no different from some tin pot third world currency and so must peg it to something to create the security that permits the wider community to utilise it.
Gold is selling off because private buying stopped in 2012, State buying stopped in Q1 2013. At the same time paper gold began being sold out of portfolios and now the final straw is that it looks like States may be forced sellers.
The key question is who will supply the buy side demand to reverse what is now a technical bear market.
If this sell off were to actually gain traction then it could easily snowball as many holders do so on margin of one type or another and will be forced out. The paper side will be decimated as the retail AM herd move in panic. And the added impact of the retail physical market when they learn that most buyers have closed shop and those that remain carry massive discounts as no one logically pays market when it is falling. No one but retail that is and they will be trying to sell. And then the Ponzi schemes will appear.
A real sell off would trigger something quite dramatic.
Edited by DonkeyApple on Saturday 13th April 10:07
LukeBird said:
DonkeyApple said:
If China did have a correction, growth stall etc then the question is what impact will this have on gold? Will it lead to an increase in supply as reserves are cashed in or in demand as local money does a runner?
Good point, that'll be an interesting one to watch. Personally I think their market is likely to liquidate Gold to keep the spenders feeling cash rich.
China’s economic growth unexpectedly decelerated to 7.7%yoy in the first quarter The Chinese economy grew 7.7% yoy in Q1, below market expectations.....http://www.zerohedge.com/news/2013-04-15/all-eyes-gold-rout-most-oversold-14-years
I have to admit that that article doesn't make much sense to me. Is it saying that gold's going up down or they don't know?
I'm still in the black, but this is heart-stopping stuff!
I still think the fundamentals remain good for gold. The equities market crumbled sometime ago and now look where it is. I guess that if you don't need the money at the moment, then there's no reason to panic quite yet.
I'm still in the black, but this is heart-stopping stuff!
I still think the fundamentals remain good for gold. The equities market crumbled sometime ago and now look where it is. I guess that if you don't need the money at the moment, then there's no reason to panic quite yet.
They don't know. The market doesn't actually know the reason for such an aggressive sell off but this has been building up for nearly 6 months. What will certainly be adding to the sell side is margin calls and close outs. I'm not yet convinced we've seen any proper bear selling. This is longs getting out or being closed out, not new shorts going on.
Any trader would have been out last week, investors just need to be looking at where their holdings fit with their portfolio as a whole and maybe rebasing weightings. Some will be buying.
Outside of Europe we have some negative news on the US but it's China and Aus which are really in the frame. If China is buying fewer goods from Germany then they will almost certainly be buying less raw material from Aus. Aus is an economy waiting to crash.
Any trader would have been out last week, investors just need to be looking at where their holdings fit with their portfolio as a whole and maybe rebasing weightings. Some will be buying.
Outside of Europe we have some negative news on the US but it's China and Aus which are really in the frame. If China is buying fewer goods from Germany then they will almost certainly be buying less raw material from Aus. Aus is an economy waiting to crash.
DonkeyApple said:
If China is buying fewer goods from Germany then they will almost certainly be buying less raw material from Aus. Aus is an economy waiting to crash.
If economies look like they are failing or fail, does that appear to support the thought of a rally for gold.Like when it jumped when Cyprus happened...?
DonkeyApple said:
The key question is who will supply the buy side demand to reverse what is now a technical bear market.
One might hope the UK will, on futures contracts with very favourable terms. It's a bursting bubble right now, but it's bound to over-correct before it finds some kind of level.davepoth said:
DonkeyApple said:
The key question is who will supply the buy side demand to reverse what is now a technical bear market.
One might hope the UK will, on futures contracts with very favourable terms. It's a bursting bubble right now, but it's bound to over-correct before it finds some kind of level.CME just hiked margins 18.5% so the chances are that Europe and then the US will wake to new margin calls on already squeezed positions. Another big sell off potentially before stabilisation.
AdvocatusD said:
DonkeyApple said:
If China is buying fewer goods from Germany then they will almost certainly be buying less raw material from Aus. Aus is an economy waiting to crash.
If economies look like they are failing or fail, does that appear to support the thought of a rally for gold.Like when it jumped when Cyprus happened...?
There is also the aspect that you need to be looking at a pretty big economy for the people to have the kind of firepower to shift a market.
DonkeyApple said:
..... Aus is an economy waiting to crash.
Not until 2017 when current resource driven projects start to expire, low cost regions and offshore projects come online and the big ones being cancelled now in Aus don't pick up the slack (woodside's).One things for sure is this place is becoming a joke for doing business. I won't go into details but the hoops you have to jump through while bending over and getting reamed by unions means investment is going to dry up big time.
Gold is also dropping hard I see, I ain't interested in it yet...
An interesting synopsis, even if several points are really only relevant to US citizens: http://www.bloomberg.com/consumer-spending/2013-04...
Separately, several bulls such as Blackstone, are arguing that with a modest % of m
Separately, several bulls such as Blackstone, are arguing that with a modest % of m
An interesting synopsis, even if several points are really only relevant to US citizens: http://www.bloomberg.com/consumer-spending/2013-04...
Separately, several bulls such as Blackstone, are arguing that with a modest % of mines running an extraction to market cost of $1100 then supply falls will act as a floor. What I don't see here is an understanding that the majority of demand is paper based so a modest decline in new supply is less than negligible.
The key in the mid term really has become Chinese growth. Just as it has been in reality for the last few years. Fear will only hold a market so far and when it has just blown some froth then real data becomes more prominent.
Separately, several bulls such as Blackstone, are arguing that with a modest % of mines running an extraction to market cost of $1100 then supply falls will act as a floor. What I don't see here is an understanding that the majority of demand is paper based so a modest decline in new supply is less than negligible.
The key in the mid term really has become Chinese growth. Just as it has been in reality for the last few years. Fear will only hold a market so far and when it has just blown some froth then real data becomes more prominent.
Gold is great scam.
- When gold is cheap some big investors pile in
- They engage in massive scare-mongering about the state of the economy and how gold is the only safe haven
- Suckers pile in, driving up the price
- The big investors take their profits and the market starts to fall
- Suckers are still frightened and hang on
- Suckers are still holding their gold as it hits the floor...
DonkeyApple said:
An interesting synopsis, even if several points are really only relevant to US citizens: http://www.bloomberg.com/consumer-spending/2013-04...
Separately, several bulls such as Blackstone, are arguing that with a modest % of mines running an extraction to market cost of $1100 then supply falls will act as a floor. What I don't see here is an understanding that the majority of demand is paper based so a modest decline in new supply is less than negligible.
I've read similar articles, Morningstar and a couple of others, they agree 1,100 is the floor.Separately, several bulls such as Blackstone, are arguing that with a modest % of mines running an extraction to market cost of $1100 then supply falls will act as a floor. What I don't see here is an understanding that the majority of demand is paper based so a modest decline in new supply is less than negligible.
They think Miners will keep mining as they have to maintain their dividends.
I think you may be underestimating demand by the jewellery trade a bit and the fact that paper expires.
Once the evangelists stop pushing Gold, it should settle and become rational.
Until it does it is useless as a safe haven.
If it's a gamble one is after then Pharmaceuticals with phase II or III testing or the tail end of the parasites holding the search engine patents is a better place to be.
Not that I recommend either
For me personally, I see the 'new supply' arguement as irrelevant. It may have value as a media issue but has no value in reality.
Annual new supply is typically about 2500 tonnes or so. The market farts that kind of tiny volume via a shot house broker any time of day. Physical new supply just isn't relevant to the price of gold. It could go to zero or increase 4 fold and change nothing.
Likewise, on the demand side, the arguement over industrial demand. That's an irrelevance as well. Volume is too small to have an actual impact.
The only two things that impact gold demand in absolute reality is bullion and jewellery. About 5 to 1 respectively. So, even the Indian wedding arguement is only going to be a modest % of just 20% of the market. Ergo mostly unimportant.
The real volumes and the real price action is determined by nation states and funds.
If nations start to reduce gold exposure the question is whether the corporate market is more powerful and even if it is whether it wants to fight this flow or follow it? We know that short term funds will follow and we know Buffet, Soros et al's view. Likewise, if funds push values down then central banks may be forced to reduce.
Alternatively, key central banks may see the current price action as a key opportunity to increase holdings.
But while it is hard to say where the gold price is going I think it is fair to argue that the sell off has been on the cards for nearly 12 months and the market has needed it and it may well have halted some of the retail and bad fund exuberance so going forward the market is probably going to be cleaner and more sensible than it has been of late. But for me the talk of supply contractions, Indian weddings, mobile phone sales etc are all tools of the spank shop to sell mud to muppets.
Annual new supply is typically about 2500 tonnes or so. The market farts that kind of tiny volume via a shot house broker any time of day. Physical new supply just isn't relevant to the price of gold. It could go to zero or increase 4 fold and change nothing.
Likewise, on the demand side, the arguement over industrial demand. That's an irrelevance as well. Volume is too small to have an actual impact.
The only two things that impact gold demand in absolute reality is bullion and jewellery. About 5 to 1 respectively. So, even the Indian wedding arguement is only going to be a modest % of just 20% of the market. Ergo mostly unimportant.
The real volumes and the real price action is determined by nation states and funds.
If nations start to reduce gold exposure the question is whether the corporate market is more powerful and even if it is whether it wants to fight this flow or follow it? We know that short term funds will follow and we know Buffet, Soros et al's view. Likewise, if funds push values down then central banks may be forced to reduce.
Alternatively, key central banks may see the current price action as a key opportunity to increase holdings.
But while it is hard to say where the gold price is going I think it is fair to argue that the sell off has been on the cards for nearly 12 months and the market has needed it and it may well have halted some of the retail and bad fund exuberance so going forward the market is probably going to be cleaner and more sensible than it has been of late. But for me the talk of supply contractions, Indian weddings, mobile phone sales etc are all tools of the spank shop to sell mud to muppets.
Ozzie Osmond said:
Gold is great scam.
So, not a kick in the arse away from the stock market then? It's almost the same thing.- When gold is cheap some big investors pile in
- They engage in massive scare-mongering about the state of the economy and how gold is the only safe haven
- Suckers pile in, driving up the price
- The big investors take their profits and the market starts to fall
- Suckers are still frightened and hang on
- Suckers are still holding their gold as it hits the floor...
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