tag:blogger.com,1999:blog-6089228851855763774.post6378158466809378316..comments2024-03-29T07:10:06.022+08:00Comments on Gold Chat: Gresham’s Law, Suicidal Strategies and Pure Speculation on ChinaBron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-6089228851855763774.post-86159241792706985772013-12-09T14:44:19.923+08:002013-12-09T14:44:19.923+08:00and from a comment against the link above, http://...and from a comment against the link above, http://www.arabianmoney.net/gold-silver/2013/12/06/is-china-colluding-with-top-bullion-traders-to-suppress-the-gold-price-while-it-buys-up-global-gold-reserves/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-11471369278518672232013-12-09T14:28:02.748+08:002013-12-09T14:28:02.748+08:00http://www.ingoldwetrust.ch/alex-stanczyk-physical...http://www.ingoldwetrust.ch/alex-stanczyk-physical-supply-never-been-tighter ... thoughts?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-46861673778699416812013-12-05T09:07:44.099+08:002013-12-05T09:07:44.099+08:00Yet another "superfluous assumption" eh ...Yet another "superfluous assumption" eh Bron? Quite likely.<br /><br />Anonymous is good at overcomplicating.<br /><br />Justinnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-83990776112411087492013-12-05T08:29:36.156+08:002013-12-05T08:29:36.156+08:00"if that stock is locked up tight as it seems..."if that stock is locked up tight as it seems to be"<br /><br />Do you have any evidence of that. We don't know how much investor stocks are held in London nor how locked up it is. If you look at the LBMA survey (http://goldchat.blogspot.com.au/2012/07/on-imbalance-between-buy-and-sell.html) and turnover estimates (http://goldchat.blogspot.com.au/2009/10/king-of-currencies.html) there is a possibility that the metal is traded and flows quite a lot. We just don't know.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-21046849038709372802013-12-05T07:01:10.225+08:002013-12-05T07:01:10.225+08:00Everywhere. Endless reams of complete bullshit.
N...Everywhere. Endless reams of complete bullshit.<br /><br />Next time you go to the market, stop & think WHY you pay the ask. Hint, it's not because of quantity. Justinnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-85263920535267916952013-12-04T20:52:30.601+08:002013-12-04T20:52:30.601+08:00I wonder if Mr. Turk has been reading my blog... o...I wonder if Mr. Turk has been reading my blog... of course smashing prices to try to shake out product is a suicidal strategy - it's a fantasy of the goldbugs that doesn't jive with reality. I explained this years ago, here:<br /><br />http://kiddynamitesworld.com/price-smackdowns-do-not-deter-futures-longs-from-standing-for-physical-delivery/<br /><br />and I agree with Turk about the potential maturity mismatch of obligationsKid Dynamitehttps://www.blogger.com/profile/17475987512856310577noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-68795903286925528002013-12-04T20:30:11.299+08:002013-12-04T20:30:11.299+08:00Listening to Turk is a suicidal strategy. However,...Listening to Turk is a suicidal strategy. However, " the ETFs and COMEX are a minor part of the total investment stocks." seems irrelevant. If that stock is locked up tight as it seems to be, it cannot flow to meet demand. Rather, the high stock to flow ratio is evidence of demand overhang. Until Bron can explain how the stock becomes available his view seems incomplete.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-68977307265704808812013-12-04T20:28:55.864+08:002013-12-04T20:28:55.864+08:00Justin,
where do you think the overcomplicated or ...Justin,<br />where do you think the overcomplicated or superfluous assumptions are? <br />Simplifying should not mean superimposing any dogmatic hypothesis.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-48022381103668950262013-12-04T20:14:26.071+08:002013-12-04T20:14:26.071+08:00Many interesting aspects:
1. The USA gold stock ...Many interesting aspects:<br /><br />1. The USA gold stock is reported at about 8100 tons. It's gold stock has been unchanged since 1975 and see no change going forward. 95% of its gold is held at US Mint in denver, ft. knox and west point. Balance held at nyfed. Check out the sources of data - Fed, Treasury and US Mint - all consistent. The US Mint issues annual report. KPMG gives them a clean audit year after year. I believe their data. My guess is that any gold on loan has been done via a direct lease to a bullion bank followed simultaneously by swap back to Fed so there is no physical movement. Cash invested in Treasuries to increase demand and reduce interest expense. They split the "profits". <br /><br />2. The same however, I don't believe can be said of the Europeans. Their central banks own 12000 tons of gold. Much of it is kept at the NY Fed in "safekeeping". Current balance is around 6000 tons most of which is owned by the Europeans. Balance however, almost dropped in half prior to Washington agreements 1/2/3. This suggests that it's been leased out? Why has Germany made such a big deal of the 300 tons of gold kept at the NY Fed in "safekeeping" and not mentioned the balance of their gold - another 1200 tons of gold which is supposed to be vaulted in new york? My guess is the Europeans control 6000 tons and not 12000 tons. The rest is gone via direct leasing and is in the form of jewellery and bars.<br /><br />3. Gold forward rates are slightly positive. Why would anyone pass up gold when you can use it as collateral to borrow fiat at very low cost to invest in securities? Get the best of both worlds. Gold is the best currency and gofo is likely to go negative which is an additional bonus. <br /><br />4. USA only imports 20% of their oil from opec. What happens if opec wants payment in gold not dollars? Why are the Saudis reported to be recasting their gold stock into kilo bars? Are they going to trade it on the Asia exchanges which will be opening soon??<br /><br />5. 70% of global fx is US dollars. China and other countries will diversify out of dollars. China has already entered into 25 swap agreements to eliminate dollars as the medium of exchange. So dollar will go down and gold should go up.<br /><br />No idea what the strategy is of the central banks but they're gifting gold to the East and they're only making their long term situation worse. <br />Anonymoushttps://www.blogger.com/profile/16573424504834190743noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-28265533097154927592013-12-04T19:19:27.077+08:002013-12-04T19:19:27.077+08:00You are puzzled because your explanation does not ...You are puzzled because your explanation does not follow Ockham's Razor.Justinnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-9993431127131322892013-12-04T18:29:06.967+08:002013-12-04T18:29:06.967+08:00Leaving aside the discussion if naturally gold sho...Leaving aside the discussion if naturally gold should be in backwardation or not, it seems that we all agree that it is the lease rate that is the ultimate cause of the slope. <br />Makes sense, but it is here where I got puzzled, I feel to miss something.<br />Quite often, and more often than not just the 1-2 front, the futures curve is backwarded while lease rats positive.<br />Lease rate 0.06: http://www.lbma.org.uk/pages/index.cfm?page_id=55&show=2013<br />1m Libor 0.16: http://www.bankrate.com/rates/interest-rates/libor.aspx<br />(mid bid/ask)<br />DEC-1214.00<br />JAN- 13.5<br />FEB- 12.75lore927noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-72905524590555645662013-12-04T17:13:47.988+08:002013-12-04T17:13:47.988+08:00In your other post you mentioned that "Tom ma...In your other post you mentioned that "Tom makes the case that if anything, backwardation should be the normal state for gold".<br /><br />I agree. Why? Because "gold is not just another commodity". Gold is the highest quality, it is already the most valuable. Gold cannot be monetised through futures contracts like say sugar or pork bellies, because it IS money. The futures exchange monetises commodities, makes them more valuable, same as a bank monetises debt. As something becomes more 'money' its price will rise, just like the stockmarket right now. Stocks are 'money good' right now, a few years ago they were junk. For paper gold to trade at a premium to physical gold, smacks of Ponzi scheme.<br /><br />The natural state of paper gold, unlike lesser commodities, is bacwardation. If paper gold is moving into backwardation then it is moving towards a natural state, a discount to the real stuff. <br /><br />If backwardation ever increases then I can see that could be a issue for the COMEX, but doesn't automatically mean there is about to be a run on the Fed. There are other sources of physical gold. The Fed hasn't redeemed its obligations for decades anyhow, yet it still trades 'money good'.Justinnoreply@blogger.com