This is a reply to one of my protagonists on the gold boards. The bullish signals on this resource stocks had started some weeks ago and after a 20 year decline of values we may now see issues of supply and demand takeover.'Goldi I said that you should wait til' early next week. Herewith the first snippet that I was waiting for (I hate insider info)!At the moment December Comex gold is trading at $275.70 up $5.90 and has traded up to $277.Washington - Dow Jones - Sept 26Fifteen European central banks led by the European Central Bank Sunday pledged to not enter the market as a seller of gold with the exception of sales that have previously been decided.In a joint statement issued by the central banks, they said "gold will remain an important element of global monetary reserves."The gold sales already decided will be achieved through a concerted program of sales over the next five years, said the banks.Annual sales won't exceed about 400 metric tons and total sales over the period won't exceed 2,000 tonnes.THE SIGNATORIES TO THE AGREEMENT HAVE ALSO AGREED NOT TO EXPAND THE GOLD LEASINGS AND THE USE OF GOLD FUTURES AND OPTIONS OVER THIS PERIOD.Switzerland and England are included.European Central Bank President Wim Duisenberg also said the central banks agreed to the 400 metric ton annual ceiling because it was an amount that wouldn't disturb the market and that he thought the market could absorb such a sale."The current situation is characterized by uncertainty an that uncertainty by itself led to a lot of volatility and a downward trend in the gold price." Duisenberg said.He said central banks want to see stability in the market, but he also said they're "not trying to prop up the gold market."Nonetheless, Duisenberg indicated his expectations for a bullish reaction to the announcement: "I think the gold market will interpret the ceiling as being less than they feared...EndREAD AND WEEP!'
Intraday trading AU up 14.35USD.Now if I was short gold... like a fair few mutual funds in the US and the spike in this gold price was initiated in Oz/HK, as is the case here. The Europeans are waking up to go to work and read the previous speil (prior postings 'Gold to Shine') through their respective news channels and hear that gold has jumped to the heights that it has today... Uummm I think that I would be buying.... and that therefore means before the US comes back from their weekend sojourn.... so what will happen in the States tonight, with the current massive buying spree on the precious metals?Try a panic... and that panic will affect the bullion banks... and that may mean that we have a couple of problems on our hands in that these Banks are long shares and short precious metals...By all reasoning that means buy gold sell others..
Hi demiller1,The spike in gold prices today should make it interesting to observe the relative price performance of the hedged producers against those who've been long gold. You may remember the acrimonious discussion about Barrick on the Bear/Gold boards a couple of months ago; we now should have some evidence.Incidentally, Normandy (which I own), jumped substantially today, even though they put most of their hedges back in after realizing their profits earlier this year.badgley
I am still against Barrick as technically they are a hedge fund not a gold miner! If they could unwind their derivatives and get back into gold mining they would make a *heap* of money. Goldi has ended up supporting the precious metals now (also in his column) instead of being a bearish protaginist.What must be borne in mind though is that should anyone have borrowed gold at 3% in the last three months (Barrick - Newmont) now has a 43% gold loan on their hands. The price of gold has rallied 10% on the average overnight close over this period and is therefore average for those loans. That is 10% in 3 months. Annualized - that is 40% per year. If a gold loan is to be unwound, i.e. what he borrower will have effectively paid if he buys his gold back today. Add the 3% gold lease rate and it is a 43% loan.I can see certain funds and miners, that are short, attempting to short the market even more to reduce the current price so that the effect will not hurt them as much.Tudor Mutual Fund was the big buyer in the past week (Dec contracts at $265) so expect some profit taking from them in the ensuing month.I have heard comments from Lalor (Sons of Gwalia) who does not appear to concerned although he has hedged *big time*.We will see what transpires today on the markets...I actually put HFY up for sale last thursday, as I had heard rumours re the quarterly results. These were snapped up Monday morning and I had to get back in to the least performing (share price rise) producer to ensure that I was long, at minimal cost. The result was a boost as Resolute also climbed.I can see that certain people on this board will be shaking their heads in disbelief over the fact that they did not buy into resource stocks as a hedge. They should bear in mind that it is still a gamble.Normandy should do well ... tell *De' Creepknee* to in future keep his appointments in Canada! It helps if he is upfront and honest!
Mr Demiller1You have quite accurately picked the bottom of the gold market. The true test of picking the market is now to pick the top of the market.It is said that a bell doesn't ring at the top or the bottom of a market.Will look forward to your warning of when Gold will start to slide againKevin
Dream on.Read the announcement again!Now that you all have managed to get over the gold price fiasco. Reality must now strike home that the US dollar is no longer the currency that it once was. Effectively the announcement by the 15 European Banks has put an end to dollarization policies of the US.Now central banks will be bidding for gold and this will far exceed the sale limits just established by the Europeans. The historic actions by the European central banks and Japan over this past week are extremely bearish for the US dollar and the US financial markets. So far the markets have failed to understand this threat. Take into consideration the huge deficit that the US has and the fact that gold is now a haven for those with capital and no longer will these investors need to hold US dollars.The effect will be timely and without precedence as it was in 1987.Am I being apolyptic? No the effect will be a major correction which is well overdue and will allow future years of prosperity without the Fed's continual intervention. Policies may change (they have to) but these will be for the better!My estimation is that you will see gold shorts raiding the markets to cover their position which will see a roller coaster ride until an equilibrium is set. This is a 5 year policy - not an overnight sham! US $580 per ounce is a realistic *intrinsic* value. Others have quoted $1,000's as the traded value of derivatives exceed what actually exists by 100 times! By undoing these derivatives you create an unrealistic demand which may force a spike on the price, but only short term.Remember that the central banks have woken up after a fright (the fact that they do not own what they have leased out on the 'gold carry trade') so hedging against gold will now die a natural death. The rate has increased from 1% - to 4% and it is now 9%. This is only after 3 months.
i think you are a brave man Kevin.as you may know i am having a bet with John about the price of gold. I bet that it wouldn't reach $325 mark by June. It is already at $300, darn those European bankers. I'll rather trust US Treasuries.lancebeer beeing made in the stills as we speak
but lance...it spiked up to $330 earlier this week. time to cough up me thinks.
I am not saying a word!:o))
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