Where Is Gold Going In This Market

[midas]

Well summer is over (for me, as I'm back in Bangkok, jet-lagged) and I was dead wrong on on silver and gold - actually I was already wrong before I left Thailand for the summer... which saved me some potentially large losses since I tend to never turn on a computer when I'm in the US). Congrats to those of you who made money this summer on those trades.

I will marry soon, though, so I'd call it a wash! Thus my time in this country will come to an end in a short few weeks and I wish everybody the best. Thailand has been good to me but it's time for me to move on... I've never been so happy to put 50% of my assets at risk

Live well, folks. It's been fun.

(I will still battle the zombies in 2050... and as I've promised before, I will report back with my results )

Yes congratulations jcon and is Alex Lah going to be your best man ? Anyway at least you admitted you were wrong.....

now we just wait for Naam to do the same and also admit he was wrong

about the forthcoming implosion of Europe and the Euro...

Edited September 13, 2011 by midas

[Naam]

the forthcoming implosion of europe and the €UR bothers me as much as the lukewarm farts i'm reading since years in the thread financial crisis. anybody who loses serious money because of Euro-Land troubles has not done his/her homework and deserves the losses.

having said so, i admit that the recent global markets development must have caused some book losses even if investors did their homework properly. the LORD giveth and the LORD taketh! the only thing that matters is how much more the LORD giveth than he taketh.

[Naam]

I will marry soon, though, so I'd call it a wash!

all the best JCon! but don't forget that once you are married one dollar is worth only 50 cents (wisdom which my father tried to convey to me half a century ago).

[midas]

I will marry soon, though, so I'd call it a wash!

all the best JCon! but don't forget that once you are married one dollar is worth only 50 cents (wisdom which my father tried to convey to me half a century ago).

and another one is that you will have an ever depreciating asset and at ever increasing cost

[Naam]

I will marry soon, though, so I'd call it a wash!

all the best JCon! but don't forget that once you are married one dollar is worth only 50 cents (wisdom which my father tried to convey to me half a century ago).

and another one is that you will have an ever depreciating asset and at ever increasing cost

but there's also the wisdom "behind every successful man is a woman". not necessarily pushing her man but keeping his back free thus enabling him to concentrate on whatever success he is trying to achieve.

moreover, one should not underestimate female intuition. sometimes we men can't see the forest because it's hidden by too many trees. then a woman's pragmatic approach might help.

[Naam]

gold soon $ 21,738.55 an ounce?

European banks are rushing to use their gold to access much-needed dollar funding, in the latest sign of the growing liquidity crunch

for the continent’s financial institutions.

Gold dealers and analysts said that there had been a strong move to lend gold in the market in exchange for dollars in the past week,

accelerating in recent days.

The rush has pushed gold leasing rates – the implied interest rate for lending gold in the market in exchange for dollars – to record

lows, according to Thomson Reuters data. The one-month gold leasing rate has plunged to a historic low of -0.48 per cent, suggesting

that a bank lending gold for one month would have to pay to do so, at an annualised rate of 0.48 per cent.

Traders cautioned that few, if any, banks were likely to receive those rates, however, saying that they had been skewed by a

widespread reluctance among bullion banks to take gold for dollars.

Large bullion-dealing banks take gold on deposit from a range of customers such as investors, central banks and other commercial

banks. Although they often lend out some of that gold around the end of quarterly reporting periods in order to reduce their

liabilities, the latest move is unusually dramatic and highlights the stresses in the dollar funding market, according to bankers. The

banks do not, however, lend all their gold and some of it is held in accounts that preclude them for using it for trading.

Edel Tully, precious metals strategist at UBS, wrote in a note to clients that the drop in lease rates suggested there was a lot of

interest in exchanging gold for dollars.

“Pressure on banks’ balance sheets in the last couple of months is exacerbating the usual end-quarter balance sheet-specific action,”

she added.

The cost for European banks to swap euros into dollars has jumped fivefold since June, hitting the highest levels since December

2008. The main reason for the spike is the demand for the US currency due to its growing status as a haven in the face of rising

worries of an imminent Greek default that could spark a deeper sovereign debt crisis. Traders said that the large volume of lending was one reason gold prices had struggled to achieve upward momentum, despite

growing concerns over the eurozone crisis.

Spot bullion was trading at $1,818 a troy ounce on Wednesday, down 0.8 per cent on the day. It has fallen 5.3 per cent from a

nominal record high of $1,920.30 last week, although traders say there has been strong demand from Asian buyers whenever prices

fall below $1,800.

“A sharp decline in lease rates over the past two days is theoretically bearish gold as holders seek to use bullion holdings to raise

cash,” said James Steel, precious metals analyst at HSBC, in a note to clients. “But it may also be a sign of distress which is

supportive of gold.”

Financial Times By Jack Farchy

[flying]

but there's also the wisdom "behind every successful man is a woman". not necessarily pushing her man but keeping his back free thus enabling him to concentrate on whatever success he is trying to achieve.

moreover, one should not underestimate female intuition. sometimes we men can't see the forest because it's hidden by too many trees. then a woman's pragmatic approach might help.

There is a lot of wisdom there & suggests the one speaking has been there & done that

[Naam]

but there's also the wisdom "behind every successful man is a woman". not necessarily pushing her man but keeping his back free thus enabling him to concentrate on whatever success he is trying to achieve.

moreover, one should not underestimate female intuition. sometimes we men can't see the forest because it's hidden by too many trees. then a woman's pragmatic approach might help.

There is a lot of wisdom there & suggests the one speaking has been there & done that

that is indeed the case! when you work 12-14 hours a day, 7 days a week in the shittiest environment you don't want to face problems when you come home such as

-no public power and i could not get anyone to fix the generator,

-my niece in that faraway land wants to marry somebody whom the family and i don't approve. DO SOMETHING ABOUT IT!

-i am fed up of buying meat of slaughtered century old cows and sorry looking vegetables. it's about time that you arrange for imported food stuff.

-the gardener wants 3 months salary advance because his third degree grandfostermotheraunt aunt has died and he has to pay for the funeral. you handle it!

-i fired the cook, but there is bread and a can of tuna in the fridge if you are hungry.

-couldn't you get another job in a civilised country where it's not that hot?

[farang000999]

gold soon $ 21,738.55 an ounce?

European banks are rushing to use their gold to access much-needed dollar funding, in the latest sign of the growing liquidity crunch

for the continent's financial institutions.

Gold dealers and analysts said that there had been a strong move to lend gold in the market in exchange for dollars in the past week,

accelerating in recent days.

The rush has pushed gold leasing rates – the implied interest rate for lending gold in the market in exchange for dollars – to record

lows, according to Thomson Reuters data. The one-month gold leasing rate has plunged to a historic low of -0.48 per cent, suggesting

that a bank lending gold for one month would have to pay to do so, at an annualised rate of 0.48 per cent.

Traders cautioned that few, if any, banks were likely to receive those rates, however, saying that they had been skewed by a

widespread reluctance among bullion banks to take gold for dollars.

Large bullion-dealing banks take gold on deposit from a range of customers such as investors, central banks and other commercial

banks. Although they often lend out some of that gold around the end of quarterly reporting periods in order to reduce their

liabilities, the latest move is unusually dramatic and highlights the stresses in the dollar funding market, according to bankers. The

banks do not, however, lend all their gold and some of it is held in accounts that preclude them for using it for trading.

Edel Tully, precious metals strategist at UBS, wrote in a note to clients that the drop in lease rates suggested there was a lot of

interest in exchanging gold for dollars.

"Pressure on banks' balance sheets in the last couple of months is exacerbating the usual end-quarter balance sheet-specific action,"

she added.

The cost for European banks to swap euros into dollars has jumped fivefold since June, hitting the highest levels since December

2008. The main reason for the spike is the demand for the US currency due to its growing status as a haven in the face of rising

worries of an imminent Greek default that could spark a deeper sovereign debt crisis. Traders said that the large volume of lending was one reason gold prices had struggled to achieve upward momentum, despite

growing concerns over the eurozone crisis.

Spot bullion was trading at $1,818 a troy ounce on Wednesday, down 0.8 per cent on the day. It has fallen 5.3 per cent from a

nominal record high of $1,920.30 last week, although traders say there has been strong demand from Asian buyers whenever prices

fall below $1,800.

"A sharp decline in lease rates over the past two days is theoretically bearish gold as holders seek to use bullion holdings to raise

cash," said James Steel, precious metals analyst at HSBC, in a note to clients. "But it may also be a sign of distress which is

supportive of gold."

Financial Times By Jack Farchy

The dollar is king again! If only those silly Europeans had modeled their system on the American system. It only takes one finger. Press Print! Yippeeeeeee!

[farang000999]

But more critically in terms of actions taken perhaps:

b. "The United States no longer sits still; it frequently uses evil tricks to force China to buy U.S. bonds"

The Shanghai-based Shanghai Media Group (SMG) publication, China Business News (Diyi Caijing)(02/08)(pg A7): "This time the quick change of the U.S. policy (toward China) has surprised quite a few people.

The U.S. has almost used all deterring means, besides military means, against China.

China must be clear on discovering what the U.S. goals are behind its tough stances against China.

In fact, a fierce competition between the currencies of big countries has just started. A crucial move for the U.S. is to shift its crisis to other countries - by coercing China to buy U.S. treasury bonds with foreign exchange reserves and doing everything possible to prevent China's foreign reserve from buying gold.

The nature of such behavior is a rogue lawyer's behavior of 'ripping off both sides': taking advantage of cross-strait divergences, blackmailing the Taiwan people's wealth by selling arms to Taiwan, and meanwhile

coercing China to buy U.S. treasury bonds with foreign exchange reserves and extorting wealth from the mainland's people

.

If we [China] use all of our foreign exchange reserves to buy U.S. Treasury bonds, then when someday the U.S. Federal Reserve suddenly announces that the original ten old U.S. dollars are now worth only one new U.S. dollar, and the new U.S. dollar is pegged to the gold - we will be dumbfounded

.

Today when the

United States is determined to beggar thy neighbor

, shifting its crisis to China, the

Chinese must be very clear what the key to victory is

.

It is by no means to use new foreign exchange reserves to buy U.S. Treasury bonds. The issues of Taiwan, Tibet, Xinjiang, trade and so on are all false tricks, while forcing China to buy U.S. bonds is the U.S.'s real intention

."

And since this memo, Gold has risen 105% and the USD (measured by DXY) is unchanged - that is all.

[churchill]

'precious metals strategist at UBS, wrote in a note to clients that the drop in lease rates suggested there was a lot of

interest in exchanging gold for dollars.'

Not surprised with this crxp on the market ...at least you can use it

100% gold bathroom http://blog.asiantown.net/tags.aspx?t=hong%20kong&p=8

[12DrinkMore]

'precious metals strategist at UBS, wrote in a note to clients that the drop in lease rates suggested there was a lot of

interest in exchanging gold for dollars.'

Not surprised with this crxp on the market ...at least you can use it

100% gold bathroom http://blog.asiantow...hong%20kong&p=8

UBS certainly needs a few Dollars to cover the USD 2,000,000,000 loss by a <deleted> trader making 'unauthorised trades'.

Wonder what he bet on?

One less bonus to pay, I suppose, looking on the bright side.

[churchill]

'Wonder what he bet on?'

short silver ....

[12DrinkMore]

gold soon $ 21,738.55 an ounce?

European banks are rushing to use their gold to access much-needed dollar funding, in the latest sign of the growing liquidity crunch

for the continent's financial institutions.

...

Blah blah blah

...

"A sharp decline in lease rates over the past two days is theoretically bearish gold as holders seek to use bullion holdings to raise

cash," said James Steel, precious metals analyst at HSBC, in a note to clients. "But it may also be a sign of distress which is

supportive of gold."

Financial Times By Jack Farchy

Note that they are not selling the gold, just wanting to lease it out.

I must admit that I do not really understand the gold lending/leasing market.

To me it only makes sense for a bank to borrow gold if it intends to speculate on a falling gold price by selling the gold into the market and buying it back later at a lower price. There is probably no physical delivery, as this costs a lot of money and may break the 'chain of integrity' of the metal lump. So for a central bank, which is looking to generate a bit of income but has no intention of selling the gold, it makes sense to lease it out. And I guess the same applies to those banks which lease out their customers' gold, as they have no right to sell it, but can generate a bit of income by leasing it out.

This action I find extremely cheeky as

1. The customer receives nothing from this transaction

2. It brings more gold onto the market than would otherwise be sold, depressing the price to the detriment of the owner.

So surely in the current uncertain markets, who is going to borrow gold? The price could easily go up or down by 10% or more, putting a very high risk on the gold borrower. So I am not surprised that the leasing market is dead, hence the negative/zero rates. So I think this is a bit of a non-article.

Or maybe I've got the wrong end of the stick?

[12DrinkMore]

'Wonder what he bet on?'

short silver ....

Interesting to try and guess, I would go for a massive unhedged position involving the CHF before the SNB hit the (EUR = 1.2 * CHF) button. But we'll probably never know.

[churchill]

'ECB Announcement:

15 September 2011 - ECB announces additional US dollar liquidity-providing operations over year-end

The Governing Council of the European Central Bank (ECB) has decided, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three US dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year. '

http://www.zerohedge.com/news/global-liquidity-bailout-arrives-ecb-announces-emergency-liquidity-providing-operations-conjunc

[flying]

'Wonder what he bet on?'

short silver ....

That would be a good guess.

[flying]

This action I find extremely cheeky as

1. The customer receives nothing from this transaction

2. It brings more gold onto the market than would otherwise be sold, depressing the price to the detriment of the owner.

This is not exclusive to gold & more noticeable in Silver in recent times.

This is the problem with the metals musical chairs game they play & how the phony paper representation

of metals that do not exist create havoc in the markets. It also keeps pushing the premium for physical metals/bullion higher.

[edgarfriendly]

except this morning we can see a 450 baht (15 usd?) drop...

unexpected?

certainly by me. and if naam just bought x ounces, presumably by him also?

ef

[farang000999]

Either you believe in the long term fundamentals or you are just at trader. plenty of traders make a killing i am sure looking at their chart and saying sell here and all the other traders look at the same chart and come to the same conclusion even though nothing new has occurred in said asset. so then some people jump back in and the chart turns green again so all the traders are back in.

The situation is rather simple. Too much debt. Default via deflation or inflation. The banks will not survive deflation. So it is like being locked in a room with another man and God has decided that one of you must die and he has given the other man a loaded gun. Hmm, maybe he (the banks) will decide to shoot themselves in the head (stop creating money) or maybe not.

Edited September 16, 2011 by farang000999

[Naam]

except this morning we can see a 450 baht (15 usd?) drop...

unexpected?

certainly by me. and if naam just bought x ounces, presumably by him also?

ef

not at all unexpected but very much expected after yesterday's announcement "five biggest central banks will provide liquidity to EU banks". a few more of these "good" news and we might see gold at 1500 or even much lower. the recent events clearly prove that beyond a certain amount of physical it is advisable to own easily tradeable "paper gold" in order to make a few bucks on otherwise dead capital.

to all goldbugs... please ....yawwnnn.... don't bore me to death with "i hope gold falls even more than i will buy a lot more!"

p.s. i have established a stop loss @ 1,750 which might be triggered today.

Edited September 16, 2011 by Naam

[flying]

not at all unexpected but very much expected after yesterday's announcement "five biggest central banks will provide liquidity to EU banks". a few more of these "good" news and we might see gold at 1500 or even much lower. the recent events clearly prove that beyond a certain amount of physical it is advisable to own easily tradeable "paper gold" in order to make a few bucks on otherwise dead capital.

to all goldbugs... please ....yawwnnn.... don't bore me to death with "i hope gold falls even more than i will buy a lot more!"

p.s. i have established a stop loss @ 1,750 which might be triggered today.

Yes I believe you have it Naam

With the Us Central Banks doing something to the tune of 500 billion in swaps/Global Liquidity Bailout it is not surprising at all.

Gold and silver is being dumped by those that never owned it to give the currency markets breathing room.

Markets are being supported by the CB's of the world.

For how long & at what cost & what reason is hard to imagine just yet.

But it is obvious something bad is brewing.

Markets acting very controlled on low volumes

We will see........but as I said before I expect daily swings to exceed $100/oz shortly.

Should be fun

I know you trade some paper but I am glad your physical is safely tucked away

Edited September 16, 2011 by flying

[Naam]

I know you trade some paper but I am glad your physical is safely tucked away

i wish i could share your opinion on "safely tucked away" Flying. if the shit really hits the fan in a BIG way then even physical gold, no matter where it is stored, can be considered "safe". and that applies especially to gold which is stored ~15 travelling hours away. moreover, restrictions apply when moving easily negotiable values from one country to another. the often spread fairy tales "legal tender = no restrictions" is nothing but

[flying]

i wish i could share your opinion on "safely tucked away" Flying. if the shit really hits the fan in a BIG way then even physical gold, no matter where it is stored, can be considered "safe". and that applies especially to gold which is stored ~15 travelling hours away. moreover, restrictions apply when moving easily negotiable values from one country to another. the often spread fairy tales "legal tender = no restrictions" is nothing but

Does this mean you did not go with my suggestion of a few 400/oz gold bricks with silver grout at the bottom of your LOS pool?

[flying]

Banks rush to lend gold to get dollar funding

European banks are rushing to use their gold to access much-needed dollar funding, in the latest sign of the growing liquidity crunch for the continent's financial institutions.

Gold dealers and analysts said that there had been a strong move to lend gold in the market in exchange for dollars in the past week, accelerating in recent days.

The rush has pushed gold leasing rates -- the implied interest rate for lending gold in the market in exchange for dollars -- to record lows, according to Thomson Reuters data. The one-month gold leasing rate has plunged to a historic low of -0.48 per cent, suggesting that a bank lending gold for one month would have to pay to do so, at an annualized rate of 0.48 per cent.

Edited September 16, 2011 by flying

[farang000999]

Central banks will supply infinite liquidity. Maybe they will even dump said liquidity out of helicopters.

Edited September 16, 2011 by farang000999

[churchill]

gold soon $ 21,738.55 an ounce?

European banks are rushing to use their gold to access much-needed dollar funding, in the latest sign of the growing liquidity crunch

for the continent's financial institutions.

Gold dealers and analysts said that there had been a strong move to lend gold in the market in exchange for dollars in the past week,

accelerating in recent days.

The rush has pushed gold leasing rates – the implied interest rate for lending gold in the market in exchange for dollars – to record

lows, according to Thomson Reuters data. The one-month gold leasing rate has plunged to a historic low of -0.48 per cent, suggesting

that a bank lending gold for one month would have to pay to do so, at an annualised rate of 0.48 per cent.

Traders cautioned that few, if any, banks were likely to receive those rates, however, saying that they had been skewed by a

widespread reluctance among bullion banks to take gold for dollars.

Large bullion-dealing banks take gold on deposit from a range of customers such as investors, central banks and other commercial

banks. Although they often lend out some of that gold around the end of quarterly reporting periods in order to reduce their

liabilities, the latest move is unusually dramatic and highlights the stresses in the dollar funding market, according to bankers. The

banks do not, however, lend all their gold and some of it is held in accounts that preclude them for using it for trading.

Edel Tully, precious metals strategist at UBS, wrote in a note to clients that the drop in lease rates suggested there was a lot of

interest in exchanging gold for dollars.

"Pressure on banks' balance sheets in the last couple of months is exacerbating the usual end-quarter balance sheet-specific action,"

she added.

The cost for European banks to swap euros into dollars has jumped fivefold since June, hitting the highest levels since December

2008. The main reason for the spike is the demand for the US currency due to its growing status as a haven in the face of rising

worries of an imminent Greek default that could spark a deeper sovereign debt crisis. Traders said that the large volume of lending was one reason gold prices had struggled to achieve upward momentum, despite

growing concerns over the eurozone crisis.

Spot bullion was trading at $1,818 a troy ounce on Wednesday, down 0.8 per cent on the day. It has fallen 5.3 per cent from a

nominal record high of $1,920.30 last week, although traders say there has been strong demand from Asian buyers whenever prices

fall below $1,800.

"A sharp decline in lease rates over the past two days is theoretically bearish gold as holders seek to use bullion holdings to raise

cash," said James Steel, precious metals analyst at HSBC, in a note to clients. "But it may also be a sign of distress which is

supportive of gold."

Financial Times By Jack Farchy

The dollar is king again! If only those silly Europeans had modeled their system on the American system. It only takes one finger. Press Print! Yippeeeeeee!

'That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.

- Paul Volcker, "Nikkei Weekly" 2004

And here's a famous quote from Alan Greenspan in 1998, when he was Chairman of the Fed: "Central banks stand ready to lease gold in increasing quantities should the price rise."

[flying]

And here's a famous quote from Alan Greenspan in 1998, when he was Chairman of the Fed: "Central banks stand ready to lease gold in increasing quantities should the price rise."

This is part of the game of musical chairs I have mentioned a few times.

While the banks can force/play the music chairs will appear to exist.

But it is has not gone unnoticed & we sill see more like Hugo Chavez Demanding Venezuelan Gold Returned

From the Bank of England/ JP Morgue.

Because they fear it is their gold being leased. Same reason those who buy GLD may or may not want to believe GLD holds any earmarked gold at all.

So yes as the music plays they may lease what they do not own. They may even lease what does not exist.

But if the owners continue to remove it to their own storage we will see how many actual chairs remain when the music stops.

Silly Rabbits

Also it appears the new leasing is in order to buy dollars...Now there is a crazy idea

But if so what has happened with the price of gold each time they expanded the dollars?

Edited September 17, 2011 by flying

[farang000999]

We all know the price of gold is manipulated. It has gone from $300 to $1800 over the last decade, so I guess they have not been doing a great job. Eventually there will come a point where the demand for ownership in the physical form will collapse the paper gold fraud.

[flying]

Finally the complaint spells out what we always saw.

Now lets see if they treat it as the crime it was.

Some have speculated that the whistle blower is actually HSBC who was

originally charged along with JP

Maybe they cut a deal

An updated complaint in the class-action lawsuit against JPMorganChase alleging manipulation of the silver futures market, filed this week in U.S. District Court for the Southern District of New York, details the mechanisms of the manipulation and some of the traders executing it.

According to the updated complaint:

-- MorganChase already had a large short position in silver when it acquired another large short position upon the investment house's acquisition of the failed New York brokerage Bear Stearns in 2008. This, the complaint says, gave MorganChase hugely disproportionate influence in the silver market.

-- MorganChase used "fake" and "spoof" trades to manipulate prices downward, particularly in advance of contract expiration dates, when MorganChase held put options, which became more valuable as the price of silver was driven down.

-- MorganChase reduced its short position following the May 25, 2010, hearing of the U.S. Commodity Futures Trading Commission, in which complaints of gold and silver market manipulation figured heavily. (GATA Chairman Bill Murphy and board member Adrian Douglas testified at that hearing and presented a statement by a London silver futures trader, Andrew Maguire, detailing market manipulation he had witnessed.)

-- MorganChase regularly engaged in uneconomic trading activity in silver whose only purpose was price manipulation.

-- The CFTC received a detailed complaint about silver market manipulation from a "whistleblower" (this is presumably Maguire).

--Market circumstances during the period of manipulation alleged by the lawsuit were much different from the circumstances previously investigated by the CFTC when it concluded that there had been no manipulation.

While these are all only allegations, the silver price manipulation case against MorganChase is now extensively detailed with names of participants, specific actions and their dates, and identities of participants. Market experts no doubt will find much more of signifance in the consolidated complaint.

http://www.gata.org/node/10447