The Gold and Silver Thread

[FireFly]

BTW, in 401k accounts, Apple was the largest holding, the GLD was second.

It is hard to believe the GLD is that widely held. Where did you get that info?

GLD holders must be getting scared of paper because I have been hearing physical demand is through the roof.

As they should be. ETFs are absolutely manipulated.

Yup! - "just as we have seen unprecedented drops in COMEX inventories, we are now seeing this ratio reach levels that have not been seen before in recent COMEX history "

 

[Toro]

You're looking at peak, not annual close out. That's the difference. There are wild fluxuations in markets, as Im sure you are aware. But choosing the peak/bottoms over a ten year spread doesn't really tell us anything. Last/current year alone, looking at those indicators would say that gold is absolutely a "hands off" commodity. yet, it's not really giving the full story.

Bull and bear markets are annotated by price, not time. Time is end point sensitive, price is not.

Right. so going by that logic, there was also a ~500% increase over 20 years except in a selective price interpretation. From June. 1 1992 to June 1 2012.

You are correct. If you use those two endpoints, there was a rise from $343 to $1597. That's an argument for holding gold over a very long period of time as a diversifying asset in a portfolio. It's not an argument for why QE is going to destroy the value of the dollar, which is the argument of most gold bugs.

 

[Toro]

BTW, in 401k accounts, Apple was the largest holding, the GLD was second.

It is hard to believe the GLD is that widely held. Where did you get that info?

GLD holders must be getting scared of paper because I have been hearing physical demand is through the roof.

I was surprised by that as well.

Physical demand is through the roof. But I wouldn't necessarily view that as a positive. What matters is the total demand for gold, not just physical. If paper selling overwhelms physical demand, the price is going to go down regardless. Paper buying is what drove up the price in the first place. The GLD became one of the largest holders of gold in the world. Physical demand tends to come from retail clients, who are generally less sophisticated than institutional investors, and tend to be worse buyers and sellers than professionals.

 

[Toddsterpatriot]

A third of the federal stimulus went to plug holes in city & state debts. The fed buys these bad debts & holds them at zero interest. This is back door monetization (sterilizing debt) that has been filling Chicago's debt holes. When it stops, bankruptcies begin.

A third of the federal stimulus went to plug holes in city & state debts.

Yes. I remember the wasted Obama spending from 2009.
We're talking about a 2013 taper. Stay focused.

The fed buys these bad debts & holds them at zero interest.

The Fed doesn't buy Detroit or Chicago paper.

This is back door monetization

The Fed buys US Treasury and Fannie and Freddie securities, not munis.

that has been filling Chicago's debt holes.

Obama gave Chicago money recently? Link?

The Fed bought federal stimulus debt. Stimulus money filled holed in city & state budget debt. The current $85 billion monthly Fed QE3 is buying government bonds holding interest rates on munis way low. This dramatically cut debt payments for city & states, and Detroit failed & had to file bankruptcy. The federal government is also handing lots of healthcare money to the states. Through Federal roads, bridges, military, homeland security, TSA, etc. they are funneling money over to cities & states any way they can.

The Fed bought federal stimulus debt. Stimulus money filled holed in city & state budget debt.

Yes, the Fed bought Treasuries and Obama threw money at states and cities in 2009.
We're talking about the Fed tapering in 2013.

The current $85 billion monthly Fed QE3 is buying government bonds holding interest rates on munis way low.

You have any charts for this claim? Any for Chicago and Detroit?

they are funneling money over to cities & states any way they can

Yeah, they waste a lot of money. You think they'll spend less after the Fed tapers? I wish!!!

 

[KissMy]

You are correct. If you use those two endpoints, there was a rise from $343 to $1597. That's an argument for holding gold over a very long period of time as a diversifying asset in a portfolio. It's not an argument for why QE is going to destroy the value of the dollar, which is the argument of most gold bugs.

The value of the dollar was destroyed at an 8.5% annual rate from 2000 to 2008 when all the bad mortgages were made. The deflationary snap back did not occur because the Fed bought them up with minted money making that prior dollar erosion permanent. On top of that they are also trying to cause additional 2% annual inflation. If we ever truly recover, the velocity of money will tank the dollar.

Fed, state & local pensions, SS, Healthcare, Unemployment insurance, etc., were all baby boom government windfalls over the last 45 years. Now they have become government debts that must be repaid. The Fed can't stop printing for 20 years.

 

[TakeAStepBack]

Bull and bear markets are annotated by price, not time. Time is end point sensitive, price is not.

Right. so going by that logic, there was also a ~500% increase over 20 years except in a selective price interpretation. From June. 1 1992 to June 1 2012.

You are correct. If you use those two endpoints, there was a rise from $343 to $1597. That's an argument for holding gold over a very long period of time as a diversifying asset in a portfolio. It's not an argument for why QE is going to destroy the value of the dollar, which is the argument of most gold bugs.

Yeah. i thought it was common knowledge that gold and silver were hedges against inflation. Which is, of course, also an argument against QE. Which is simply a hidden inflation. The Fed has finally come out publicly that it acknowledges that "tapering" and other methods to "cool" will result in burst trends. This is iniflation, just not the mandated version of 2% against CPI.

 

[KissMy]

Yeah. i thought it was common knowledge that gold and silver were hedges against inflation. Which is, of course, also an argument against QE. Which is simply a hidden inflation. The Fed has finally come out publicly that it acknowledges that "tapering" and other methods to "cool" will result in burst trends. This is iniflation, just not the mandated version of 2% against CPI.

QE is not as hidden as governments implied backing of shadow banking mortgages. That caused massive panic inflation.

 

[Toddsterpatriot]

You are correct. If you use those two endpoints, there was a rise from $343 to $1597. That's an argument for holding gold over a very long period of time as a diversifying asset in a portfolio. It's not an argument for why QE is going to destroy the value of the dollar, which is the argument of most gold bugs.

The value of the dollar was destroyed at an 8.5% annual rate from 2000 to 2008 when all the bad mortgages were made. The deflationary snap back did not occur because the Fed bought them up with minted money making that prior dollar erosion permanent. On top of that they are also trying to cause additional 2% annual inflation. If we ever truly recover, the velocity of money will tank the dollar.

Fed, state & local pensions, SS, Healthcare, Unemployment insurance, etc., were all baby boom government windfalls over the last 45 years. Now they have become government debts that must be repaid. The Fed can't stop printing for 20 years.

when all the bad mortgages were made. The deflationary snap back did not occur because the Fed bought them up with minted money

The Fed didn't buy bad mortgages. Only guaranteed ones.

Fed, state & local pensions, SS, Healthcare, Unemployment insurance, etc., were all baby boom government windfalls over the last 45 years. Now they have become government debts that must be repaid.

Unfunded mandates are not debts.

 

[KissMy]

The jobs numbers are down. The economy has not achieved escape velocity. Fed Taper will be pushed off again.

 

[editec]

If you are counting on GOLD as a reserve for value?

You'd best have that gold in your possession.

Word to the wise, eh?

there's more gold promised out there than I think exists.

Not sure if silver is in the same boat.

But I certainly have my doubts about the veracity of companies that are storing GOLD for investors.

 

[Toro]

Someone asked me if gold was being repressed by central banks. I don't know, to be honest, but I doubt it. Central banks have been net buyers of gold over the past several years.

In the 1990s, it was in vogue for central banks to sell gold as it became viewed as an archaic relic that had a cost of carry, compared to bonds which earned interest. Central banks like those in Switzerland and Canada sold all or almost all of it and bought bonds. The Bank of England bottomed ticked the gold market by selling much of its gold at around $260. In some years, central banks were selling up to 1000 tons of gold a year. In a market where supply and demand is in balance somewhere around 3000 tons a year, that is immense supply. The selling was so intense that the gold industry rounded up the central banks and they signed The Washington Accord, which limited the amount of gold that could be sold by central banks to 500 tons a year.

Now, about 10 years ago, a gold trader on a Wall Street desk told me that the central banks were repressing the price of gold, so I don't want to dismiss it completely out of hand. But if gold is being systematically suppressed by central banks, selling at the bottom and buying at the top seems like an odd way to do it.

Rather, I see central banks as run by people who have the same human emotions we all have. And after seeing bonds earn a lot of money in the massive bull market in the 80s and 90s while gold fell by 75%, they sold their gold and bought bonds, moves that were supported by modern theories of monetary policy. Then, with gold rising by several hundred percent in the 00s, they bought gold. This is typical investor behavior. Central banks have other motives besides profits, but they are run by humans who are susceptible to human emotions just like the rest of us.

 

[Ropey]

Someone asked me if gold was being repressed by central banks. I don't know, to be honest, but I doubt it. Central banks have been net buyers of gold over the past several years.

In the 1990s, it was in vogue for central banks to sell gold as it became viewed as an archaic relic that had a cost of carry, compared to bonds which earned interest. Central banks like those in Switzerland and Canada sold all or almost all of it and bought bonds. The Bank of England bottomed ticked the gold market by selling much of its gold at around $260. In some years, central banks were selling up to 1000 tons of gold a year. In a market where supply and demand is in balance somewhere around 3000 tons a year, that is immense supply. The selling was so intense that the gold industry rounded up the central banks and they signed The Washington Accord, which limited the amount of gold that could be sold by central banks to 500 tons a year.

Now, about 10 years ago, a gold trader on a Wall Street desk told me that the central banks were repressing the price of gold, so I don't want to dismiss it completely out of hand. But if gold is being systematically suppressed by central banks, selling at the bottom and buying at the top seems like an odd way to do it.

Rather, I see central banks as run by people who have the same human emotions we all have. And after seeing bonds earn a lot of money in the massive bull market in the 80s and 90s while gold fell by 75%, they sold their gold and bought bonds, moves that were supported by modern theories of monetary policy. Then, with gold rising by several hundred percent in the 00s, they bought gold. This is typical investor behavior. Central banks have other motives besides profits, but they are run by humans who are susceptible to human emotions just like the rest of us.

Modern paper theories (futures and bonds) have the their own market weaknesses that sway to the beat of too many drums in the long term, imho.

I'm short on paper and long on metals.

 

[Toddsterpatriot]

Someone asked me if gold was being repressed by central banks. I don't know, to be honest, but I doubt it. Central banks have been net buyers of gold over the past several years.

In the 1990s, it was in vogue for central banks to sell gold as it became viewed as an archaic relic that had a cost of carry, compared to bonds which earned interest. Central banks like those in Switzerland and Canada sold all or almost all of it and bought bonds. The Bank of England bottomed ticked the gold market by selling much of its gold at around $260. In some years, central banks were selling up to 1000 tons of gold a year. In a market where supply and demand is in balance somewhere around 3000 tons a year, that is immense supply. The selling was so intense that the gold industry rounded up the central banks and they signed The Washington Accord, which limited the amount of gold that could be sold by central banks to 500 tons a year.

Now, about 10 years ago, a gold trader on a Wall Street desk told me that the central banks were repressing the price of gold, so I don't want to dismiss it completely out of hand. But if gold is being systematically suppressed by central banks, selling at the bottom and buying at the top seems like an odd way to do it.

Rather, I see central banks as run by people who have the same human emotions we all have. And after seeing bonds earn a lot of money in the massive bull market in the 80s and 90s while gold fell by 75%, they sold their gold and bought bonds, moves that were supported by modern theories of monetary policy. Then, with gold rising by several hundred percent in the 00s, they bought gold. This is typical investor behavior. Central banks have other motives besides profits, but they are run by humans who are susceptible to human emotions just like the rest of us.

Modern paper theories (futures and bonds) have the their own market weaknesses that sway to the beat of too many drums in the long term, imho.

I'm short on paper and long on metals.

That hasn't done too well over the last 2 years, has it?

 

[Ropey]

7

Someone asked me if gold was being repressed by central banks. I don't know, to be honest, but I doubt it. Central banks have been net buyers of gold over the past several years.

In the 1990s, it was in vogue for central banks to sell gold as it became viewed as an archaic relic that had a cost of carry, compared to bonds which earned interest. Central banks like those in Switzerland and Canada sold all or almost all of it and bought bonds. The Bank of England bottomed ticked the gold market by selling much of its gold at around $260. In some years, central banks were selling up to 1000 tons of gold a year. In a market where supply and demand is in balance somewhere around 3000 tons a year, that is immense supply. The selling was so intense that the gold industry rounded up the central banks and they signed The Washington Accord, which limited the amount of gold that could be sold by central banks to 500 tons a year.

Now, about 10 years ago, a gold trader on a Wall Street desk told me that the central banks were repressing the price of gold, so I don't want to dismiss it completely out of hand. But if gold is being systematically suppressed by central banks, selling at the bottom and buying at the top seems like an odd way to do it.

Rather, I see central banks as run by people who have the same human emotions we all have. And after seeing bonds earn a lot of money in the massive bull market in the 80s and 90s while gold fell by 75%, they sold their gold and bought bonds, moves that were supported by modern theories of monetary policy. Then, with gold rising by several hundred percent in the 00s, they bought gold. This is typical investor behavior. Central banks have other motives besides profits, but they are run by humans who are susceptible to human emotions just like the rest of us.

Modern paper theories (futures and bonds) have the their own market weaknesses that sway to the beat of too many drums in the long term, imho.

I'm short on paper and long on metals.

That hasn't done too well over the last 2 years, has it?

Long, baby. Go long.

My father started me on this path of going long back in 1973.

 

[Toro]

Gold topped at $880 in 1980. It then proceeded to fall 70% over 20 years.

Gold topped at $1921 in 2011. I don't know if it has put in a generational top but it looks like it has.

 

[KissMy]

Bloomberg: "The dollar weakened against all its major peers while Asian stocks climbed with U.S. index and Treasury futures as Lawrence Summers withdrew his bid to become Federal Reserve chairman."

 

[Toro]

The CFTC finds no evidence of price manipulation in the silver market.

U.S. commodity regulators closed a five-year-long investigation of silver-market manipulation claims without filing charges, the latest setback for authorities cracking down on alleged trading abuses.

The Commodities Futures Trading Commission said there is no "viable basis" for a case that had its roots in emails commissioners received from investors amid market volatility in 2008. The decision to close the case amounts to a victory for J.P. Morgan Chase & Co., a large silver trader that was the subject of manipulation allegations.

CFTC Closes Silver Price-Manipulation Probe - WSJ.com

 

[Toddsterpatriot]

The CFTC finds no evidence of price manipulation in the silver market.

U.S. commodity regulators closed a five-year-long investigation of silver-market manipulation claims without filing charges, the latest setback for authorities cracking down on alleged trading abuses.

The Commodities Futures Trading Commission said there is no "viable basis" for a case that had its roots in emails commissioners received from investors amid market volatility in 2008. The decision to close the case amounts to a victory for J.P. Morgan Chase & Co., a large silver trader that was the subject of manipulation allegations.

CFTC Closes Silver Price-Manipulation Probe - WSJ.com

So buying an ounce of silver won't drive JPM into bankruptcy?

 

[Toro]

Hard to believe, I know.

Back in the day when I ran an equity fund, I used to talk to the JPM gold analyst. He told me to buy gold. That was 10-11 years ago. A funny recommendation if you want to keep the price down.

 

[Valerie]

Toro



critical juncture right now... what do you think??