18 September 2014

Gold bottoming?

This morning I recorded an interview with Al Korelin for his weekend show which should be up Saturday US time. Al talked about how bad the sentiment was in the gold market right now, the worst he has ever seen, and I'd have to agree.

Having said that, I talked about the recent return of demand for gold kilobars from Asia. Premiums have come up off the floor and are moving up nicely. This caused me to have a look at the kilobar movements in COMEX warehouses (see here for background on this indicator), which are shown in the chart below

What it shows is that deposits seem to line up with future price weakness, as bullion banks stockpile them when Asian demand is weak. The withdrawals of kilobars, certainly in January this year, foretold price strength but it is not as strong an indicator considering the late 2012/early 2013 ones. You can see that on the 2nd of September 5 tonnes came out of JP Morgan's warehouse and that doesn't surprise me considering the renewed interest we are seeing. Worth keeping an eye on the COMEX movements to see if more of the 26 tonnes that was deposited in August is pulled out.

On the chart you'll notice a buy and sell point marked. These were my previous calls, which I discussed here. In the Korelin interview I did call a bottom, so you might want to trade against that :P

The uptick in kilobar premiums and COMEX movements gives me a bit of confidence, but on the negative side I don't see any positive narrative developing around gold that would drive big fund money (as Dan Norcini notes, "the big leveraged macro trade buying indiscriminately across the entirety of the commodity sector is not in the cards for now"). Goldman is still out there pushing their $1050 call and they don't want to be proven wrong. All that chatter does impact on the professional market.

However I'm confident that gold won't go below $1180 as I think Asians see this bottom of the range we've been in since April 2013 as a good buying point and that will provide support.


  1. Here's hoping you go 3 for 3...


  2. I also hope yo are right........ but with the USD on a relentless march higher. Gold, silver and commodities have been hammered on Friday. Miners, however, have held up relatively to gold so far but they got smashed as well on Friday.

  3. What does Asia demand or supply have to do with Comex gold price movements.Zero,nada.Does anyone actually believe that China,India,the Middle East, Turkey,Russia etc base their buying and selling on Comex price and inventory movements?

  4. Interview available here http://www.kereport.com/2014/09/20/gold-silver-conventional-markets/

    Anon - arbitrage keeps all markets in alignment. In any case, I was not talking about Comex price movements but Comex inventory movements.

  5. Bron,
    didn't Goldman just call for gold at 1.050 USD as the lowpoint of the downside risk? In their report from july they wrote about 1.200 USD "being a good estimate of the floor price for gold" and that prices should be "generally short-lived".

  6. Goldman seem pretty downbeat on gold here http://www.bloomberg.com/news/2014-09-24/gold-downside-risk-seen-significant-to-goldman-sachs.html? and pretty firm on the $1050 call.

  7. Meant to say "...prices BELOW (1.200 USD) should be generally short-lived" in my comment before, but in this most recent article there's indeed no talk about a floor price of 1.200 USD anymore. Well let's see what Goldman was up to when they file their own 3rd quarter holdings with the SEC probably in november...

  8. Bron's BS "analysis" turns out to be garbage as usual. Oh well, what can anyone expect when an idiotic blogger tries to "predict" a manipulated market?

    But is this important? NO.

    So where's the update?

    Now that you've again proven yourself to be an idiot, what are you saying now? Is gold going to $1000?, $700?, $1500?, $400?, $2000?

    Is paper pricing of gold important? ---Is this blog important?

    Are they moving more kilobars? LOL!

    What a moron!