bizarre price action in gold ‘Things that make you go hmm’

[jeff of pa]

Whether you believe his point of view or not, Grant Williams’ ‘Things that make you go hmm’ newsletter is always a fascinating, and thought-provoking read and the latest one is no exception.What Williams sees as virtual proof of his viewpoint is that there are various triggers which should have had gold moving up heavily - notably the repatriation of some of Venezuela’s gold and the even bigger furore over the repatriation of 300 tonnes of Germany’s gold supposedly held by the New York Fed and that it is going to take 7 years to complete the transfer of its gold held in the U.S. Indeed on the announcement of these, gold did move up initially and briefly, but then dived – a pattern that has been followed since on a number of other announcements which would normally have led to gold moving upwards in price.

His basic conclusion is that the reason the German gold repatriation fiasco in particular was the most significant trigger is that the evidence would overwhelmingly seem to suggests that the 300 tonnes of German gold to be repatriated just isn’t available – with the assumption that, over the years, it has been leased out to the bullion banks, thereby earning revenue. The banks have then sold it on and currently have no means of repaying it in kind – at least not inside maybe 7 years! There has thus been a huge move to smash the price of gold so that the banks may be able to buy it back and return it to the U.S. Fed under the terms of the leasing agreements.

good article Read More : The bizarre price action in gold ? counter to logical assumptions - GOLD ANALYSIS - Mineweb.com Mineweb

 

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[TreasurePirate69]

More conspiracy theories. It never seems to end. What all of these theories seem to miss is the possibility that the price of gold should potentially be about $900 right now and it being so overvalued is what really accounts for what seems to be "bizarre price behavior". After all, when a commodity or product is not exhibiting normal price behavior to begin with then it stands to reason that normal Econ 101 simplifications aren't going to hold true.

You would think that eventually these people would start to question their own world views. After all, if it consistently takes believing in conspiracy theories to explain what you see happening in the world then the chances are very good that the way you perceive the world may not be correct. The simplest explanation is usually the most likely. In this case, the simplest explanation is that the price of gold and silver SHOULD be $900 and $16 respectively. If this is true then there is nothing at all bizarre about the fact that Germany's gold repatriation had little impact on the current falling prices.

 

[Jim in Idaho]

More conspiracy theories. It never seems to end. What all of these theories seem to miss is the possibility that the price of gold should potentially be about $900 right now and it being so overvalued is what really accounts for what seems to be "bizarre price behavior". After all, when a commodity or product is not exhibiting normal price behavior to begin with then it stands to reason that normal Econ 101 simplifications aren't going to hold true.

You would think that eventually these people would start to question their own world views. After all, if it consistently takes believing in conspiracy theories to explain what you see happening in the world then the chances are very good that the way you perceive the world may not be correct. The simplest explanation is usually the most likely. In this case, the simplest explanation is that the price of gold and silver SHOULD be $900 and $16 respectively. If this is true then there is nothing at all bizarre about the fact that Germany's gold repatriation had little impact on the current falling prices.

That's silly!...LOL Who gets to decide what they are worth? You?...or somebody else? The MARKET decides what anything is worth....unless the government, through it's machinations, makes a mockery of the markets. Right now gold is worth about $1,300, so what?
Jim

 

[jeff of pa]

I believe long time investors would disagree.

usually lower quantaties and greed cause higher prices.

lately the rarety & Want are there, put the only thing up is the premiums.

If I write "1 OZ of Gold" on a piece of paper, Can I get $1300.00 for it ?
The Thieves who are, are the real problem imo.

Paper Metals need to be outlawed.

You would then see Metals at prices so high you would have to pay for the gold Shaving under your Thumb nail if you scratch a bar.

 

[Jim in Idaho]

I believe long time investors would disagree.

usually lower quantaties and greed cause higher prices.

lately the rarety & Want are there, put the only thing up is the premiums.

If I write "1 OZ of Gold" on a piece of paper, Can I get $1300.00 for it ?
The Thieves who are, are the real problem imo.

Paper Metals need to be outlawed.

You would then see Metals at prices so high you would have to pay for the gold Shaving under your Thumb nail if you scratch a bar.

LOL...no, I'd say lower supply, and greater demand cause higher prices. And, the price has to include the premiums....that's the actual price you pay. Now, the price you pay may not have any tie to the prices quoted publically. But what difference does that make?...the price is determined by what it costs to buy it....that's the MARKET price. As for the price exploding if paper gold were outlawed...that's your opinion, and nothing more. Nobody knows exactly how much gold is out there...or exactly where it is. Your opinion about that paper gold could be correct...there may be MUCH more gold committed than is available, but nobody knows at this point. If the SHTF we may all find out how much is actually available.
Jim

 

[TreasurePirate69]

That's silly!...LOL Who gets to decide what they are worth? You?...or somebody else? The MARKET decides what anything is worth....unless the government, through it's machinations, makes a mockery of the markets. Right now gold is worth about $1,300, so what?
Jim

Ok..... if the markets decide what something is worth then there can be no such thing as price manipulation, just the current price (whatever it is). But the markets are more complex than that. I agree that the "price is the price". You can either pay the price or not. For example, we could look at the current ammo shortage and say that the price for a brick of .22 rounds USED to be about $15. The price is now close to $100 in some places. Yep, the price is the price so I guess that $100 is the new normal. Except.... that in 6 months when all of the speculators are sitting on mounds of .22 rounds that no one else is willing to pay more than $15-$20 for then the price will decline. Now you can say that the price is the price and the $100 is what the market demands. But we all know that eventually that temporary market is not going to hold up because no one wants to pay $100 for a brick of .22 rounds long term. And the very same thing appears to be happening to gold and silver....

Thus at any given moment the price is the price. The bigger question is: is the market price sustainable and what does the future hold?

 

[TreasurePirate69]

I believe long time investors would disagree.

usually lower quantaties and greed cause higher prices.

lately the rarety & Want are there, put the only thing up is the premiums.

If I write "1 OZ of Gold" on a piece of paper, Can I get $1300.00 for it ?
The Thieves who are, are the real problem imo.

Paper Metals need to be outlawed.

You would then see Metals at prices so high you would have to pay for the gold Shaving under your Thumb nail if you scratch a bar.

Well, I would respectfully disagree because I do not believe the massive demand often quoted by the PM bulls is really still there. When the price gets out of whack from speculation and fear (with the price going in either direction) the standard Econ 101 simplifications go out the window. Thus even though there appears to be a lot of investor demand right now which causes localized high premiums for small time investors, I think there are so many other investors sitting on large piles of gold and silver they bought at $1900 and $49 that they offset the Econ 101 theories.

Regardless of what anyone wants to believe, the trend for silver and gold prices for two full years now has been down. Will it change? I don't know. But if someone has been citing conspiracy theories for two full years to explain why their beliefs haven't held true then it may be time to question those beliefs. Or not, that's entirely up to each individual. I am only citing my personal opinion and I am more likely to be wrong than right.

 

[Jim in Idaho]

Well, I would respectfully disagree because I do not believe the massive demand often quoted by the PM bulls is really still there. When the price gets out of whack from speculation and fear (with the price going in either direction) the standard Econ 101 simplifications go out the window. Thus even though there appears to be a lot of investor demand right now which causes localized high premiums for small time investors, I think there are so many other investors sitting on large piles of gold and silver they bought at $1900 and $49 that they offset the Econ 101 theories.

Regardless of what anyone wants to believe, the trend for silver and gold prices for two full years now has been down. Will it change? I don't know. But if someone has been citing conspiracy theories for two full years to explain why their beliefs haven't held true then it may be time to question those beliefs. Or not, that's entirely up to each individual. I am only citing my personal opinion and I am more likely to be wrong than right.

Yeah...it'll change. What happened is that Europe and Japan have seriously weakened their currencies. That caused people holding those currencies to switch into dollars. That demand for dollars strengthened the dollar causing the price of gold, in dollars, to decline....in effect the stronger dollar could buy more gold. To make it worse, the strong dollar helped keep inflation down, so people saw less need to have gold in their portfolio. The result was the selloff in gold and silver. It got a little oversold, and has now come back a bit, but could still go lower yet again. To decide about having gold, you need to answer this question: When the whole thing blows up because of debt, will the blowup be inflationary, because the government kept printing dollars, or deflationary, because the government decided they couldn't print enough to stave off disaster, so they let things go into a massive depression. There are about equal numbers of "experts" on each side of this question.
Historically, it's inflationary...and has happened 15 or 20 times in the 20th century. No way to know which way it will go, so it's best to have at least "some" gold, or silver in your hands.
Jim

 

[Marchas45]

Off Topic and seeing it’s Saturday and I’m duty at the office and BORED.
But Have You had One Of Those Days When You Feel You Have A Monkey On Your Back? I Guess I Need To Stack Some More Today.

O! Bye The Way I Believe In Conspiracy Theories and The Monkey On My Back Is Part of The Problem. LMAO

 

[TreasurePirate69]

Off Topic and seeing it’s Saturday and I’m duty at the office and BORED.
But Have You had One Of Those Days When You Feel You Have A Monkey On Your Back? I Guess I Need To Stack Some More Today.

O! Bye The Way I Believe In Conspiracy Theories and The Monkey On My Back Is Part of The Problem. LMAO


<img src="http://www.treasurenet.com/forums/attachment.php?attachmentid=830882"/>

Yikes! If I had that kind of monkey on my back I'd be inclined to buy some silver too!

 

[jim4silver]

Yeah...it'll change. What happened is that Europe and Japan have seriously weakened their currencies. That caused people holding those currencies to switch into dollars. That demand for dollars strengthened the dollar causing the price of gold, in dollars, to decline....in effect the stronger dollar could buy more gold. To make it worse, the strong dollar helped keep inflation down, so people saw less need to have gold in their portfolio. The result was the selloff in gold and silver. It got a little oversold, and has now come back a bit, but could still go lower yet again. To decide about having gold, you need to answer this question: When the whole thing blows up because of debt, will the blowup be inflationary, because the government kept printing dollars, or deflationary, because the government decided they couldn't print enough to stave off disaster, so they let things go into a massive depression. There are about equal numbers of "experts" on each side of this question.
Historically, it's inflationary...and has happened 15 or 20 times in the 20th century. No way to know which way it will go, so it's best to have at least "some" gold, or silver in your hands.
Jim

The often discussed inverse relationship between the dollar and gold sometimes does not show itself. Such has been the case over the past several months. Don't believe me, look at the below weekly charts of the dollar and gold.


dollar chart

US Dollar Index Weekly Commodity Futures Price Chart : ICE Futures


gold chart

Gold Weekly Commodity Futures Price Chart : COMEX

This means one of two things, either there is no true inverse relationship between the dollar and gold, or over the past several months there has been some type of "intervention" in the gold market (some don't like the world manipulation so I won't call it that) that is causing price movements that are not "natural" based on past historical relationships, ie the dollar vs. gold, etc.

I believe there is another reason gold has been pushed down over the past several months. I am not going to say what my opinion is since my intent is to present facts and let people draw their own conclusions.

Jim

 

[TreasurePirate69]

The often discussed inverse relationship between the dollar and gold sometimes does not show itself. Such has been the case over the past several months. Don't believe me, look at the below weekly charts of the dollar and gold.


dollar chart

US Dollar Index Weekly Commodity Futures Price Chart : ICE Futures


gold chart

Gold Weekly Commodity Futures Price Chart : COMEX

This means one of two things, either there is no true inverse relationship between the dollar and gold, or over the past several months there has been some type of "intervention" in the gold market (some don't like the world manipulation so I won't call it that) that is causing price movements that are not "natural" based on past historical relationships, ie the dollar vs. gold, etc.

I believe there is another reason gold has been pushed down over the past several months. I am not going to say what my opinion is since my intent is to present facts and let people draw their own conclusions.

Jim

Jim, I agree that there is no true inverse relationship between the dollar and gold. Don't get me wrong, there is obviously always a relationship between the value of the dollar and everyting else. But the idea that the "value" of gold never changes and it is just the value of the dollar that changes is hogwash in my opinion.

For the record, the need to "present facts" has never stopped ME from posting my opinions. So go ahead and give us your opinion. That's all anyone can really do. I sincerely value your opinon and would love to hear it. I also promise not to be argumentative if your opinion does not match mine.

 

[jim4silver]

Jim, I agree that there is no true inverse relationship between the dollar and gold. Don't get me wrong, there is obviously always a relationship between the value of the dollar and everyting else. But the idea that the "value" of gold never changes and it is just the value of the dollar that changes is hogwash in my opinion.

For the record, the need to "present facts" has never stopped ME from posting my opinions. So go ahead and give us your opinion. That's all anyone can really do. I sincerely value your opinon and would love to hear it. I also promise not to be argumentative if your opinion does not match mine.

OK TreasurePirate since you asked, my opinion is that someone (meaning a person, company or maybe country?) wanted/needed a large amount of physical gold and wanted it at a discount to the prices that existed even 6 months ago.

This "person" used the various world paper markets to "manipulate" the price of gold lower so as to get a better price on the physical they were buying at the same time. Not only did they make money on the short paper plays, they were able to buy tons of gold at a good price relative to prices over the past couple of years.

By "manipulate" I mean using the rules as they exist to push a price in either direction by initiating huge positions in any desired direction due to having bottomless pockets and playing in a market that allows such trades. In this case, said "person" was basically naked short selling PMs in amounts that would equal years' worth of production via trades taking place over a relatively short time.

I don't have links, but I have seen charts and articles over the past weeks showing the amount of physical gold leaving warehouses here in the US (from Comex and GLD, etc) and the amount is very huge. That gold is going some place and I don't think it is to make one ounce coins for collectors (except maybe a fraction of it).

I don't believe that this gold is being bought up by a bunch of small investors or even hedge funds, but instead is going to very large and strong hands somewhere in the world where it is going to stay for a while. I don't know why they want all that gold (besides the reasons us PM bugs always have) or their possible motives.

I don't simply believe the recent stockpile decline as mentioned above is bargain hunters taking advantage of cheap prices, although there is no doubt that a lot of PMs have been purchased by average Joe PM bugs large and small since the recent price declines. But the tonnage being moved now in gold makes retail bullion sales numbers seem like a drop in the bucket from what I have read.

The one fact that appears indisputable is that huge amounts of physical gold are being bought up and shipped out in large amounts over the past 7 months or so. To where and to whom I don't know. But whomever they are they have lots of money and like to stack.

All just my opinion.

Here is a link or two I found

http://www.24hgold.com/english/inte...ode=COMEX WAREHOUSES ELIGIBLE&etfcodecom=GOLD


this one is a bit dated:

http://www.gotgoldreport.com/2013/06/chart-of-the-week-gld-metal-holdings.html


PS TreasurePirate or anyone feel free to make counter arguments all you want, just throw in a fact or two if possible.



Jim

 

[Marchas45]

OK TreasurePirate since you asked, my opinion is that someone (meaning a person, company or maybe country?) wanted/needed a large amount of physical gold and wanted it at a discount to the prices that existed even 6 months ago.

This "person" used the various world paper markets to "manipulate" the price of gold lower so as to get a better price on the physical they were buying at the same time. Not only did they make money on the short paper plays, they were able to buy tons of gold at a good price relative to prices over the past couple of years.

By "manipulate" I mean using the rules as they exist to push a price in either direction by initiating huge positions in any desired direction due to having bottomless pockets and playing in a market that allows such trades. In this case, said "person" was basically naked short selling PMs in amounts that would equal years' worth of production via trades taking place over a relatively short time.

I don't have links, but I have seen charts and articles over the past weeks showing the amount of physical gold leaving warehouses here in the US (from Comex and GLD, etc) and the amount is very huge. That gold is going some place and I don't think it is to make one ounce coins for collectors (except maybe a fraction of it).

I don't believe that this gold is being bought up by a bunch of small investors or even hedge funds, but instead is going to very large and strong hands somewhere in the world where it is going to stay for a while. I don't know why they want all that gold (besides the reasons us PM bugs always have) or their possible motives.

I don't simply believe the recent stockpile decline as mentioned above is bargain hunters taking advantage of cheap prices, although there is no doubt that a lot of PMs have been purchased by average Joe PM bugs large and small since the recent price declines. But the tonnage being moved now in gold makes retail bullion sales numbers seem like a drop in the bucket from what I have read.

The one fact that appears indisputable is that huge amounts of physical gold are being bought up and shipped out in large amounts over the past 7 months or so. To where and to whom I don't know. But whomever they are they have lots of money and like to stack.

All just my opinion.

Here is a link I found

Interactive Chart - COMEX WAREHOUSES ELIGIBLE - GOLD -

PS TreasurePirate or anyone feel free to make counter arguments all you want, just throw in a fact or two if possible.



Jim

I LOVE YOU JIM

 

[Jim in Idaho]

Jim, I agree that there is no true inverse relationship between the dollar and gold. Don't get me wrong, there is obviously always a relationship between the value of the dollar and everyting else. But the idea that the "value" of gold never changes and it is just the value of the dollar that changes is hogwash in my opinion.

For the record, the need to "present facts" has never stopped ME from posting my opinions. So go ahead and give us your opinion. That's all anyone can really do. I sincerely value your opinon and would love to hear it. I also promise not to be argumentative if your opinion does not match mine.

I think, over the long run, that the amount of things an ounce of gold will purchase stays pretty flat. of course, during that long run there are short periods when gold is outside the longrun limits. An example is gas. I laughed a couple of years ago when people were complaining about the "high" price of gas. Back in the early 70's I was stationed at San Bernardino, CA. At that time two silver dimes would buy a gallon of gas. Lately, when silver was up there at $30/oz., those same two dimes would buy 2 gallons of gas. Today those two dimes will again buy one gallon of gas. So, the true price of gas, relative to the PM's hasn't changed much, but relative to the dollar it has changed a LOT. If you go back in history and look at prices for basic necessities, gold is pretty level with what it will buy.
Jim

 

[thrillathahunt]

Did someone say opinions?

What's with the "jumpy" gold prices lately? I think it has a lot to do with Fed chairman Bernanke. His behavior lately has been as strange as the fluctuations in the gold spot price. One minute he is suggesting that his dangerous QE will be tapered off soon do to the "improving" economy. The next minute he is talking about how QE will continue if the economy isn't strong enough to stand on it's own.

And of course the stock market is rising because he continues to print so much money! Hell, now I'm confused!

 

[Marchas45]

Did someone say opinions?

What's with the "jumpy" gold prices lately? I think it has a lot to do with Fed chairman Bernanke. His behavior lately has been as strange as the fluctuations in the gold spot price. One minute he is suggesting that his dangerous QE will be tapered off soon do to the "improving" economy. The next minute he is talking about how QE will continue if the economy isn't strong enough to stand on it's own.

And of course the stock market is rising because he continues to print so much money! Hell, now I'm confused!

Ben Bernanke can kiss my Scottish Bum. Wait a Minute He Does That Every Morning. :Lol

 

[Peyton Manning]

I always thought it was inversely tied to the market. market up gold down, market down gold up.
granted the market works mostly based on fears and feelings, hence the senselessness of it

 

[TreasurePirate69]

OK TreasurePirate since you asked, my opinion is that someone (meaning a person, company or maybe country?) wanted/needed a large amount of physical gold and wanted it at a discount to the prices that existed even 6 months ago.

This "person" used the various world paper markets to "manipulate" the price of gold lower so as to get a better price on the physical they were buying at the same time. Not only did they make money on the short paper plays, they were able to buy tons of gold at a good price relative to prices over the past couple of years.

By "manipulate" I mean using the rules as they exist to push a price in either direction by initiating huge positions in any desired direction due to having bottomless pockets and playing in a market that allows such trades. In this case, said "person" was basically naked short selling PMs in amounts that would equal years' worth of production via trades taking place over a relatively short time.

I don't have links, but I have seen charts and articles over the past weeks showing the amount of physical gold leaving warehouses here in the US (from Comex and GLD, etc) and the amount is very huge. That gold is going some place and I don't think it is to make one ounce coins for collectors (except maybe a fraction of it).

I don't believe that this gold is being bought up by a bunch of small investors or even hedge funds, but instead is going to very large and strong hands somewhere in the world where it is going to stay for a while. I don't know why they want all that gold (besides the reasons us PM bugs always have) or their possible motives.

I don't simply believe the recent stockpile decline as mentioned above is bargain hunters taking advantage of cheap prices, although there is no doubt that a lot of PMs have been purchased by average Joe PM bugs large and small since the recent price declines. But the tonnage being moved now in gold makes retail bullion sales numbers seem like a drop in the bucket from what I have read.

The one fact that appears indisputable is that huge amounts of physical gold are being bought up and shipped out in large amounts over the past 7 months or so. To where and to whom I don't know. But whomever they are they have lots of money and like to stack.

All just my opinion.

Here is a link or two I found

Interactive Chart - COMEX WAREHOUSES ELIGIBLE - GOLD -


this one is a bit dated:

Chart of the Week ? GLD Metal Holdings - Got Gold Report


PS TreasurePirate or anyone feel free to make counter arguments all you want, just throw in a fact or two if possible.



Jim

Jim, very interesting stuff. I won't make a counterargument because all I have are opinions based on feelings rather than opinions based on real research like you seem to have. That's what makes your posts so informative. You've done the research and formed an opinion. Whether or not that opinion ends up being true is something we'll have to just wait and see how it plays out.

 

[TreasurePirate69]

I think, over the long run, that the amount of things an ounce of gold will purchase stays pretty flat. of course, during that long run there are short periods when gold is outside the longrun limits. An example is gas. I laughed a couple of years ago when people were complaining about the "high" price of gas. Back in the early 70's I was stationed at San Bernardino, CA. At that time two silver dimes would buy a gallon of gas. Lately, when silver was up there at $30/oz., those same two dimes would buy 2 gallons of gas. Today those two dimes will again buy one gallon of gas. So, the true price of gas, relative to the PM's hasn't changed much, but relative to the dollar it has changed a LOT. If you go back in history and look at prices for basic necessities, gold is pretty level with what it will buy.
Jim

I agree that overall the "value" of gold has and oftens seems to remain pretty flat. The issue however is that there are often shorter term fluctuations (over a couple of years) when this does not hold true. This has been the case for several years now. So because of this you can't really say that there is a true inverse relationship between the dollar and gold. You also can't truly say that the "value" of gold is constant. Sometimes, the value of gold does indeed change. Gold is no different than any other commodity or desirable item. Sometimes for whatever reason, people desire something more or less. Nothing is truly constant in this world. So I think saying that gold is inversely proportional to the dollar is one of those "Econ 101 simplifications" that is often true but not always. And in times like these, you have to throw a lot of those Econ 101 simplifications out the window.