Gold: Heading for a Trainwreck Due to Oversupply? [View article]
Ah JP, see I don't write the headlines - please take that up with the Editors as this happens once in a while.
That link is for the St. Louis Fed, I don't think they hold gold themselves, I'm not sure if anyone but NY has actual gold but I just checked (you made me curious) and they do, in fact, have 9,000 tons of it in NY and there is even a tour so you can go see for yourself.
You sound smart so I'm sure you realize GATA has an agenda so all the information they gather is, of course, going to prove the point of the Gold Anti-Trust Action Committe...
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
Shad,
I am only short on gold in that I feel that we have gotten a bit ahead of ourselves. I will be taking profits off the table at $600 and probably all out at $550 and considering reentering long positions, especially on the miners, who tend to overreact to mild price fluctuations.
I never suggested the US Treasury was going to sell their gold (roughly 12% of all the gold that exists in CB storage). They only value their gold at $42 per ounce anyway!
The US, which I belive has about 8,200 tons of gold in storage (assuming there is no huge scandal covering up a shortfall), in just the Federal Reserve in NY and this is the only batch that is actively managed. No one knows how much the US has tucked away in other facilities like Fort Knox (I know, if any, according to gold bugs!).
I am more concerned about smaller foreign central banks, in countries where the GNP is perhaps $200Bn and they had 10% of their holdings in gold in 2004 and now find they have 20%. Should that central bank make a decision (even based on their faith in gold maintaining it's current value) that 15% reserve would be adequate, then suddenly 260 tons of gold may find its way to the market ($5B).
Since most countries of note have some kind of gold reserve, the real gamble is that none of those countries will do any significant gold selling if they percieve we have reached a market top. Last year we saw some wild swings in commodity pricing from Chinese hedging, do we really think gold will be immune?
I'm quite sure the Yen is a long way from being a trade up from the dollar (and you know I am no great fan of US monetary policy) and Europe is just too darn close to all the crazy people - hence the dollar's quick jumps every time a new nuclear terror is announced.
60% of the above groud gold in the world is held by people, not Central Banks. If your figures are correct and the CBs decide to move back to 86% gold reserves, even if it were physically possible, you would be talking about gold at $3,500 per ounce.
Since the US currently has $1.7T in gold anyway, this would neatly solve our national debt issue! Nice as that would be, I somehow doubt it is the mission of the other CBs to convert all 70% of their currency float to metal in order to further enrich the United States as well as randomly enrich billions of people who would suddenly find themselves with trinkets that are worth thousands of dollars.
The fantasy of paper money needs to be defended because the world has long outgrown the ability to back currency with hard assets.
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
I'm sorry if you take criticism of your position as "disdain." Were I going for a doctorate I would certainly bombard you with facts to support my position but I'm just a simple trader at heart.
So rather than get into an argument with you which I can never win, I simply, very publicly, took a short position on Newmont Mining yesterday, despite oil shocks, hurricanes, Iran, Lebanon, the criminal cover-up of the central banks and the massive Chinese buying so feel free to wish me into bankruptcy next week while I fantasize about taking a very nice vacation if gold drops back to $600!
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
I am not trying to insult you. Obviously you have a great passion for gold as is obvious from the shear volume of these messages you post to get your point across.
This is not a research paper so I am not going to attempt to refute your statements. I am a simple trader who is making a call on gold as beign overpriced at $640 (only its not $640 anymore is it?) an ounce.
I will not be short on gold at $400 nor am I likely to be short on gold at $500 but I do believe we are in for a correction at this level.
China may increase their reserves from the 1.2% they currently hold in gold but what you should be a lot more concerned about is the US reducing the 80% they now hold since gold has climbed to $600 www.financialsense.com...
Of the 140,000 tons of gold that have been mined in recorded history, the US has 8,139 (about $160Bn) in storage. This is an accepted fact but if they are engaged in a massive cover-up as you suggest then there really is no hope. www.galmarley.com/FAQs...
All the other central bankers combined hold just 52,000 tons. Perhaps you are confused because "the Treasury, pursuant to 31 United States Code 5117 (b), values its gold stock at $42.2222 per fine troy ounce and issues gold certificates to the Federal Reserve at the same rate against all gold held." www.fms.treas.gov/bull...
That may lead you to underestimate US holdings somewhat...
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
Jewlery demand is highest right now, wedding season in Asia through Decemeber but much more so for the wedding season than Christmas.
======================...
JP, there are sites that will "prove" anything you want but let's just look at the facts.
Production is exceeding demand.
Central Banks hedge currencies and commodities all the time, it would defy logic to think that they won't take a double off the table.
While small countries may up their gold holdings to legitimize their currencies, major countries like China have no intention of "legitimizing" the Yuan by exchanging it for shiny bits of metal, not when they can buy perfectly good oil companies (or make deals for Venezualan oil) with it. When they figure out how to get gold to give you 1,000 miles a gallon perhaps it will change but right now major countries are putting their money into oil and water rescources, not burying in vaults like it was the 1800s.
What is the logic to the US holding gold? In the event of a global collapse that wipes out the United States of Amercia and invalidates our currency at least we can open up Fort Knox and trade Canada for some food? Times have changed and, as Nixon said in 1972 - "Real men don't hoard gold!"
Mines haven't opened for 15 years because we are simply getting more gold out of existing mines. 15 years ago production was less than 1,700 tons, now it is 2,500. Had it not been for a 19% increase in investor demand for gold (mainly the 130 tons that went into the ETF this year) gold would have already fallen off the table.
The fact that scrap gold quantities are difficult to guage is the premise for VM throwing them out entirely. This is like pretending poverty doesn't exist because homeless people tend not to answer their mail.
Gold has had a pretty consistant value for 5,000 years and was $18 in 1833, moving up to $35 in 1964. From '64-74 gold flew up to $154 as the US went off standard and then, as you are well aware, spiked up in 1979-1980 during the first oil crisis.
Since then we have been in roughly the $350 range until last year.
So what is the real value of gold? Is it the 5,000 year chart reflecting unfettered international trade, or the current blip that is held together by commodity brokers and central bankers who have to make contracts with each other to "maintain price stability."
Also, if gold accouted for 9% of the central bank reserves in 2004 at $250 an ounce, www.gold.org/value/res...
is it your contention that it accounts for a lesser percentage at $600 an ounce?
If the central banks actually decide that they need to readjust their holdings (that September 26th date) to bring their gold reserves back down the the value percentage level they have held for 20 years, then we could see, conservatively, a 30% sell-off of the CB's combined 32,000 ton supply.
As total gloabl production is less than 2,000 tons, I'm sure you see how this would be bad!
You'd better hope that the CBs place have a lot less faith in gold holding its value than you do...
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
That link is for the St. Louis Fed, I don't think they hold gold themselves, I'm not sure if anyone but NY has actual gold but I just checked (you made me curious) and they do, in fact, have 9,000 tons of it in NY and there is even a tour so you can go see for yourself.
You sound smart so I'm sure you realize GATA has an agenda so all the information they gather is, of course, going to prove the point of the Gold Anti-Trust Action Committe...
I think their video says it all:
www.gata.org/node/20
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
I am only short on gold in that I feel that we have gotten a bit ahead of ourselves. I will be taking profits off the table at $600 and probably all out at $550 and considering reentering long positions, especially on the miners, who tend to overreact to mild price fluctuations.
I never suggested the US Treasury was going to sell their gold (roughly 12% of all the gold that exists in CB storage). They only value their gold at $42 per ounce anyway!
The US, which I belive has about 8,200 tons of gold in storage (assuming there is no huge scandal covering up a shortfall), in just the Federal Reserve in NY and this is the only batch that is actively managed. No one knows how much the US has tucked away in other facilities like Fort Knox (I know, if any, according to gold bugs!).
www.globalethics.org/n...
I am more concerned about smaller foreign central banks, in countries where the GNP is perhaps $200Bn and they had 10% of their holdings in gold in 2004 and now find they have 20%. Should that central bank make a decision (even based on their faith in gold maintaining it's current value) that 15% reserve would be adequate, then suddenly 260 tons of gold may find its way to the market ($5B).
Since most countries of note have some kind of gold reserve, the real gamble is that none of those countries will do any significant gold selling if they percieve we have reached a market top. Last year we saw some wild swings in commodity pricing from Chinese hedging, do we really think gold will be immune?
I'm quite sure the Yen is a long way from being a trade up from the dollar (and you know I am no great fan of US monetary policy) and Europe is just too darn close to all the crazy people - hence the dollar's quick jumps every time a new nuclear terror is announced.
60% of the above groud gold in the world is held by people, not Central Banks. If your figures are correct and the CBs decide to move back to 86% gold reserves, even if it were physically possible, you would be talking about gold at $3,500 per ounce.
Since the US currently has $1.7T in gold anyway, this would neatly solve our national debt issue! Nice as that would be, I somehow doubt it is the mission of the other CBs to convert all 70% of their currency float to metal in order to further enrich the United States as well as randomly enrich billions of people who would suddenly find themselves with trinkets that are worth thousands of dollars.
The fantasy of paper money needs to be defended because the world has long outgrown the ability to back currency with hard assets.
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
So rather than get into an argument with you which I can never win, I simply, very publicly, took a short position on Newmont Mining yesterday, despite oil shocks, hurricanes, Iran, Lebanon, the criminal cover-up of the central banks and the massive Chinese buying so feel free to wish me into bankruptcy next week while I fantasize about taking a very nice vacation if gold drops back to $600!
I hope your position goes well too.
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
This is not a research paper so I am not going to attempt to refute your statements. I am a simple trader who is making a call on gold as beign overpriced at $640 (only its not $640 anymore is it?) an ounce.
I will not be short on gold at $400 nor am I likely to be short on gold at $500 but I do believe we are in for a correction at this level.
China may increase their reserves from the 1.2% they currently hold in gold but what you should be a lot more concerned about is the US reducing the 80% they now hold since gold has climbed to $600
www.financialsense.com...
Of the 140,000 tons of gold that have been mined in recorded history, the US has 8,139 (about $160Bn) in storage. This is an accepted fact but if they are engaged in a massive cover-up as you suggest then there really is no hope.
www.galmarley.com/FAQs...
All the other central bankers combined hold just 52,000 tons. Perhaps you are confused because "the Treasury, pursuant to 31 United States Code 5117 (b), values its gold stock at $42.2222 per fine troy ounce and issues gold certificates to the Federal Reserve at the same rate against all gold held."
www.fms.treas.gov/bull...
That may lead you to underestimate US holdings somewhat...
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
======================...
JP, there are sites that will "prove" anything you want but let's just look at the facts.
Production is exceeding demand.
Central Banks hedge currencies and commodities all the time, it would defy logic to think that they won't take a double off the table.
While small countries may up their gold holdings to legitimize their currencies, major countries like China have no intention of "legitimizing" the Yuan by exchanging it for shiny bits of metal, not when they can buy perfectly good oil companies (or make deals for Venezualan oil) with it. When they figure out how to get gold to give you 1,000 miles a gallon perhaps it will change but right now major countries are putting their money into oil and water rescources, not burying in vaults like it was the 1800s.
What is the logic to the US holding gold? In the event of a global collapse that wipes out the United States of Amercia and invalidates our currency at least we can open up Fort Knox and trade Canada for some food? Times have changed and, as Nixon said in 1972 - "Real men don't hoard gold!"
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
See my latest gold report at philstocks.blogspot.co.../ if you want to see the research behind it.
Mines haven't opened for 15 years because we are simply getting more gold out of existing mines. 15 years ago production was less than 1,700 tons, now it is 2,500. Had it not been for a 19% increase in investor demand for gold (mainly the 130 tons that went into the ETF this year) gold would have already fallen off the table.
The fact that scrap gold quantities are difficult to guage is the premise for VM throwing them out entirely. This is like pretending poverty doesn't exist because homeless people tend not to answer their mail.
Gold has had a pretty consistant value for 5,000 years and was $18 in 1833, moving up to $35 in 1964. From '64-74 gold flew up to $154 as the US went off standard and then, as you are well aware, spiked up in 1979-1980 during the first oil crisis.
Since then we have been in roughly the $350 range until last year.
So what is the real value of gold? Is it the 5,000 year chart reflecting unfettered international trade, or the current blip that is held together by commodity brokers and central bankers who have to make contracts with each other to "maintain price stability."
Gold: Heading for a Trainwreck Due to Oversupply? [View article]
You can go here to verify the data: www.gold.org/value/sta...
Also, if gold accouted for 9% of the central bank reserves in 2004 at $250 an ounce,
www.gold.org/value/res...
is it your contention that it accounts for a lesser percentage at $600 an ounce?
If the central banks actually decide that they need to readjust their holdings (that September 26th date) to bring their gold reserves back down the the value percentage level they have held for 20 years, then we could see, conservatively, a 30% sell-off of the CB's combined 32,000 ton supply.
As total gloabl production is less than 2,000 tons, I'm sure you see how this would be bad!
You'd better hope that the CBs place have a lot less faith in gold holding its value than you do...