26 September 2014

Gold bottom update

Following up on my Sep 18 post gold has bounced a couple of times off sub $1210 level which is encouraging. I note there was another 5 tonnes of kilobars withdrawn out of Comex on the 23rd and by my calculation there is still another 10 tonne of kilobars in Comex still to come out.

SGE premiums have been moving up and currently at 1.05 yuan/gram and this matches the premiums Perth Mint has been getting on kilobars, which have increased since my last post. Part of that demand has been related to the SGE International Board launch but our dealers' feedback is the $1200 level is also drawing out renewed Asian interest.

What I didn't see on the 18th was any positive narrative around gold, but that has changed. First up we have this Reuters article which runs with the mine cost/closure narrative:

"$1,200 is a critical level. The industry has geared itself around $1,200," said Joseph Foster, portfolio manager at institutional investor Van Eck Global. "If it falls below that level, then there are a lot of mines around the world that are really going to struggle."

This is an important narrative for gold, and I've mentioned it before here. Then we had these two headlines:
Bloomberg: Gold Premiums in India Seen Doubling on Festival Demand
Gulf News: Weak gold prices has Dubai consumers clamouring for more

On the negative side re narrative Goldman are still downbeat on gold and stocking to their $1050 call and the strong dollar story is the biggest risk to gold breaking $1180.


  1. So in other words your guess is as good as anybody else's. Despite geopolitical tensions in Ukraine, Middle East etc. and the political tension in Europe, gold did not move an inch. It really makes me wonder what the gold-proponents have on their hidden agenda. Looking at the verdict from Scotland's recent referendum, it's obvious sheeple have immense faith in their governments so I do not see any reason whatsoever fiat losing its current status quo for a foreseeable future. May be when the governments fail, gold will have a chance but with well-established democratic governments worldwide that won't happen anytime soon.

    Gold moving up along with rest of the asset classes in not a bull run (you won't gain anything value-wise), -it's inflation which may eventually turn up. But if that takes another 10 years to materialize, haven't we missed an opportunity in the asset rallies while waiting for this gold prices to go to Da moon?

    For now Dollar is gold. $17 trillion US government debt against $30 trillion central bank reserves. SO you do the math. US government debt has been the canon fodder for these gold bugs where as the dollar has everything to gain from this situation. There isn't any alternative and precious metals won't replace it for a long time to come.

  2. I'm glad to see your focus on the kilobars coming out of the Comex, instead of on "the (USD) gold price".

    It is very significant that the distinction is more and more being made - increasingly widely made - between the remaining paper price setters and the actual directions of movement in the supply of real metal.

    The tail may not be able to wag the dog much longer, with any luck...

  3. Bron, i noticed an interesting thing when reading the shanghai futures exchange silver inventories. The definition of the data says Silver on warrant (i liken this to registered inventories at comex)

    Do you know if there is a non-warranted inventory?

    I have been reading ore and do understand the mechanics are a bit different in that the short gives notice to the long, and then the long must produce the warranted silver (comex is obviously the other way around)

    Just trying to figure out if this reduced inventory is really silver inventories going down (seemingly the common logic), or just fewer longs actually wanting to take delivery and thus less warranted silver.

    Thanks for any thoughts.

  4. Price at this level is irrelevant. What is relevant is the politics behind the SDR and whether the other nations can force their way into it and thus have a say so. If that happens charts and price will become worthless as the paper system west collapses.
    For my two cents, I see the west resisting this at all costs and net exporters and resource rich countries not in the SDR, push back by not accepting it.
    We then hit a Mexican standoff, can the west handle deflation more then the exporter/resource countries can? Who knows, roll the dice and take your chances. For me it boils down to the lies of the west. What is hidden will be made known and barbarians always defeat the TPTB when that happens.

  5. The problem with gold pricing is everyone is always looking at spot gold price. You also need to be looking at numismatic pricing based on volume and scarcity. it cycles but the returns are solid even when spot downgrades. I have talked to Kathem Martin at Private Gold Wealth numerous times and he is right on. The numbers don't lie. When this economy tanks Numi's will explode.

  6. I allowed quite a bit of time to pass in order to confirm that your BS predictions and ridiculous "analysis" would become obviously wrong and idiotic.

    When will gold bloggers and gold/silver hypesters realize that accumulating gold is not about paper price comparisons or the conversion to paper or its valuation in terms of paper?

    It's about saving it in order to purchase needed goods and services in the future. It's about its long-term ability to hold purchasing power in order to buy things into the future without the inflationary destruction created by paper printing banksters.

    Saving gold and silver is not about trading or your lying about your trading or your lies about paper price predictions and BS analysis.