Friday and The Doctor Is In
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You guys really need to read:
http://www.zerohedge.com/news/2014-12-04/inside-look-shocking-role-gold-new-normal
If zerohedge is correct, why could not the Fed do the same to the US market?
The US market may never go done.
Gold may never go up.
In the near future, if zerohedge is correct.
CFS,
After I posted this article from Zerohedge on kereport, I asked myself: “how can this stop?”. Because the article reaaaaallly got me thinking.
In simple terms, assuming the author(s) are correct, I was asking myself: “what can reverse or stop the trade ?”
I don’t have a definitive answer, but I can think of a few things that can “derail” this trade.
1) STRESS IN THE REPO MARKET – that is THE CORE of the trade. If the repo market comes under stress, there will be less leverage used. -> then we have a “Caveat Emperor” situation
2) elections/change in policy in Japan (we’ll soon find out)
3) a Central bank starting to buy gold.
And here, I want to draw the attention to the ECB.
Despite what Draghi said yesterday, he didn’t say there WOULDN’T be purchases of gold. He just said that purchases of gold had not been “discussed” (that’s slightly different than saying there won’t be purchases).
But I noticed (maybe you did as well) a few days back an ECB official mentioning gold in the range of assets which could be bought. –> personally, I believe there ain’t smoke without fire….
4) an entity asking for delivery of contracts on the COMEX (cost of 1MT of gold currently is about $40mn)…
5) a country asking for rapatriation of large quantities of its holding held abroad (ok, some will say: “keep dreaming LPG” -> I am just listing a possibility, I don’t put big hopes on this myself)
6) gold exchanges currently set-up in Asia, where the paper leverage is not as much as on the COMEX… Overtime, maybe the Comex pricing will become less relevant ?
7) A serious weakness/correction on the Japanese market – I don’t be on this given that the JCB is about to start to buy equities by the dozen… But let’s keep in mind, as Mohamed El Erian (ex Pimco) mentioned last week, that LARGE swings in currencies typically don’t end well, especially when there is leverage in the system -> 1987, 1997/98 anyone ???
Bottom line to me:
this macro trade, if put in place effectively by some players, has definitely been a rewarding one since the end of 2012…
BUT…
every trade becomes dangerous always at the same point: when everyone is on the same side, and this gets magnified when ample leverage is used.
Sounds familiar ?
My 2cts.
Best to all, and GL investing.
LPG
The trade will be limited by the availability of physical metal, in my opinion.
There is no doubt in my mind GLD has been raided for physical.
So far the big players have carefully monitored available physical and limited the trading, but if there is a delivery default on the COMEX a collapse in the process could result. (There have been rumors of strong arm action by the COMEX for people to accept dollars instead of physical, already at a premium for staying quiet.)
LPG.. good post… I’d just say we can rule out #2 as the poll so far suggest Abe will get re-elected with a landslide style. His opposition was caught off guard with this election and none of them seems to have any potential to even scratch Abe.
“Down” not “done”
Hello all,
On gold, I came across these data points this morning, which might surprise some of us.
YTD spot gold perf in various currencies:
in JPY: +14%
in Eur: +12%
in GBP: +6%
in USD terms, we’re broadly flat (<1% as of today).
As I mentioned in a post on Sunday evening/monday early morning, we have so much negative sentiment (still) around the metal, but YTD, in US$, spot gold is FLAT…!!!!
Despite all the bashing, it is FLAT. Not so bad…
Also, many foreigners who have bought gold in their own currencies are enjoying decent returns (please note that gold's return YTD in JPY terms are similar/in line with the Nikkei up 12% YTD as of today.
Just wanted to share this perspective.
Again, as I mentioned on posts on Sunday, if we lived in Asia (India/China), anyone bashing gold would be looked at in a funny way.
Best to all, GL investing
LPG
"When going through hell, keep walking"
This looks like it is in for another hundred point drop yet IMHO. Kevin O’Leary said miners are the worst run companies. I am still very glad I sold half my silver over a year ago and invested in my own small business.
Within 15 points of all time low of 684 (weekly) in 2008. More companies should be bankrupt by this time. They must be hanging by their fingernails.
SVL may be a sleeper here IMHO. Three lower lows with a higher RSI each time and a spike down on big volume. Wouldn’t buy it yet until the TLS idiots are done in two or three weeks.
Oils’ recent takedown has me bearish on uranium also although U has had a good day today. My basic investing philosophy is: The CBs and TBTFs are into every market they can get into to throw the scent off of PMs and it is working.
me best price local physical pm dealer has been consistently lowering the premium on US 90% Ag over the last few days
What you think off FAKE NEWS Richard ?
James, please explain further.
Are you referring to the parody, “Fake News”—-similar to the “Onion”?
Richard ! I go to a catholic church to pray for AL ! I hope al stop blockig ! the controlers block much thinks NO ?
james…..Have you been at the bottle ?
looooool Irishtony !
Big loooooolllll
Priceless…
LPG
No children left behind !
Anyone who still refuse to think central bank manipulating gold price, this news should convince them. Dragi said firmly they will consider buying any asset except gold. They definitely consider gold their enemy. If they hate gold, they will suppress the price since it is well within their power to do so. Central banks have demonstrated that they are immoral and do anything it take to rescue the system. If this still can not convince people, they have to wait till CB openly admit it. It might be too late.
http://www.zerohedge.com/news/2014-12-04/draghi-we-have-nothing-fear-gold-buying-itself
Just my opinion BUT anyone in the metals now that doesn’t have the attitude of hold, hold, hold, is in trouble. The daily and weekly movements cause undo concern and worry and influence the ultimate outcome for an investment in PM’s.
If you trade daily this site is fine…but if you are a fundamentalist buy and hold this site will influence your ultimate goal unless you read the posts for entertainment as I do.
No child left behind !
Big buying on GLD detected:
16:31 $114.43 119.600 shares
Gator, A+++
I feel like I am a judge at a tennis match, watching the golden ball go back and forth from one court to the other. Are the majority of people short term day traders? I don’t think so. Caution is always warranted but Japan is nuts, Euroland is in trouble, the USD is going higher but growth is low at best, and the debt continues to climb. Falling oil will be very bad for jobs if the shale drilling drops off which then may be bad for bonds and banks. Is the middle class going to spend more because their gas is cheaper? I don’t think so. The middle class is suffering and Black Friday sales were low. Most likely the extra money will go towards their credit cards.
With competitive QE and devaluation all over the world sooner or later you need to hold your nose and take a stand. If you can’t have conviction about gold now, when will you?
There has been a complete reversal in the gold lease rates the last few days…..the negative GOFO rate is now gone.
I’d really like to know what you think of ROYT, doc. Thanks
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