Where Is Gold Going In This Market

[Naam]

Hey Naam maybe Beijing will send you buckets of it - you know the ones they dont want

normally i only accept Islamic Dirhams and Dinars. but if Beijing has fiat money that it doesn't want i will think about accepting it... assuming i can use it to buy organic goats and free roaming brown rice.

[gregb]

Can anyone put this in simple English .....

Naam .. ?

Make your own (collateralised) gold standard

http://ftalphaville....-gold-standard/

That is a very difficult read, and I would also appreciate the analysis of someone more skilled in the lexica of finance...without the snarkiness.

As I understand what is being said, basically it is that negative lease rates/rising repo rates imply that there is more demand to get cash from gold collateral than there is to get gold from cash (collateral). Basically, few people need gold to make things anymore, so few want to pay to borrow it. Instead, the dominant trend is that they want to deposit it an asset so that they can get needed cash. This is simple supply and demand. When banks have more people giving them gold than wanting to borrow gold, they have to lower rates on borrowing to get back into equilibrium.

It seems that the author is implying that rather than this being an organic trend, it is caused by central banks flooding the market with gold available to be leased, thereby depressing the lease rates, and giving constituent banks good collateral to deposit in other banks in order to get needed cash. It sounds like he is implying this is a way for central banks to create more money in the economy without actually printing money.

Bullish for gold in the long term, because it implies gold is now starting to be used in the banking industry in the same way that bonds have always been used in the banking industry. He is saying this trend means that gold is no longer an industrial commodity, but has now quite clearly turned the corner to a financial asset.

If anyone can make more sense of that article, I would be curious to know about it.

[mccw]

Regarding dirhams again. Does anyone know who is doing the minting? Surely the weigh and purity will be the mark of value more than name or religion of target market.

Like these?:

http://www.goldline.co.uk/bullionCoins.jsp?coinId=57

[mccw]

Or these

http://www.goldline.co.uk/bullionCoins.jsp?coinId=2

http://www.goldline.co.uk/bullionCoins.jsp?coinId=208

You'll notice the 1 oz Chinese coin is trading at a £20 odd mark up to the 1oz Britania - what does that say?

And strangely the one oz Chinese panda weighs 31.1..... Grams where as a one oz Britania is 34gs exactly.

[flying]

You'll notice the 1 oz Chinese coin is trading at a £20 odd mark up to the 1oz Britania - what does that say?

And strangely the one oz Chinese panda weighs 31.1..... Grams where as a one oz Britania is 34gs exactly.

Yes overall weight between the two may be different but both contain exactly the same amount of gold......31.1 gr of gold.

Reason being the Panda is 24K the Britannia 22K

*Usually* coins that were actually used as coins will be less than 24K because the extra hardness was desirable

So extra *metals* were added. But the one ounce gold coins all have 1 ounce of gold.

Total weight of coin is only reflecting the *other* metals added weight

[mccw]

You'll notice the 1 oz Chinese coin is trading at a £20 odd mark up to the 1oz Britania - what does that say?

And strangely the one oz Chinese panda weighs 31.1..... Grams where as a one oz Britania is 34gs exactly.

Yes overall weight between the two may be different but both contain exactly the same amount of gold......31.1 gr of gold.

Reason being the Panda is 24K the Britannia 22K

*Usually* coins that were actually used as coins will be less than 24K because the extra hardness was desirable

So extra *metals* were added. But the one ounce gold coins all have 1 ounce of gold.

Total weight of coin is only reflecting the *other* metals added weight

Thanks for the explanation.

So a same gold content of 1 oz in both coins, but a £20 price difference, is left with meaning must be more demand and or scarcity of pandas?

[flying]

You'll notice the 1 oz Chinese coin is trading at a £20 odd mark up to the 1oz Britania - what does that say?

And strangely the one oz Chinese panda weighs 31.1..... Grams where as a one oz Britania is 34gs exactly.

Yes overall weight between the two may be different but both contain exactly the same amount of gold......31.1 gr of gold.

Reason being the Panda is 24K the Britannia 22K

*Usually* coins that were actually used as coins will be less than 24K because the extra hardness was desirable

So extra *metals* were added. But the one ounce gold coins all have 1 ounce of gold.

Total weight of coin is only reflecting the *other* metals added weight

Thanks for the explanation.

So a same gold content of 1 oz in both coins, but a £20 price difference, is left with meaning must be more demand and or scarcity of pandas?

Yes demand,scarcity & misconception on the buyers part.

Then again coin collectors for instance are an odd lot.

They will also pay very high premiums for various grades.

Proof....First Strike, Early Release etc.

Which is for bullion/investor types why coins like Krugerrands are bought up.

The premiums are always low on those. Yet they hold 1 troy ounce of gold.

Or even plain old bullion like bars.

Investors are not concerned with ratings like MS-69 or 70 NGC etc.

70 being a perfect coin

They are only after gold content.

Makes sense really

Edited April 23, 2012 by flying

[Jayman]

Mexico, Russia and Central Banks Continue Diversifying into Gold

While gold demand from the western investors and store of wealth buyers has fallen in recent months, central bank demand continues to be very robust and this is providing strong support to gold above the $1,600/oz level.

IMF data released overnight shows that Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March.

Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tons according to a statement by its central bank on April 20.

[flying]

FED Decision after meeting tomorrow ( 4/25/12 Wednesday 2:15 US time )

Always has at least a short term effect on PM's....will be interested to see

Edited April 24, 2012 by flying

[udonguy]

You'll notice the 1 oz Chinese coin is trading at a £20 odd mark up to the 1oz Britania - what does that say?

And strangely the one oz Chinese panda weighs 31.1..... Grams where as a one oz Britania is 34gs exactly.

Yes overall weight between the two may be different but both contain exactly the same amount of gold......31.1 gr of gold.

Reason being the Panda is 24K the Britannia 22K

*Usually* coins that were actually used as coins will be less than 24K because the extra hardness was desirable

So extra *metals* were added. But the one ounce gold coins all have 1 ounce of gold.

Total weight of coin is only reflecting the *other* metals added weight

Thanks for the explanation.

So a same gold content of 1 oz in both coins, but a £20 price difference, is left with meaning must be more demand and or scarcity of pandas?

we have a TV station here in Chiang Mai devoted to a Panda - they are quite scarce and the Chinese are very protective

[Naam]

IMF data released overnight shows that Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March.

Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tons according to a statement by its central bank on April 20.

hmmm... let's hope Mexico and Russia stay put for a while because it looks that their purchases drove the gold price down

[fletchsmile]

Well, I have to say, gold has been a bit of a disappointment in terms of anything interesting happening over the last 2 quarters. All those predictions of hitting a modest 1800 by 2011 year end or Q1-2012 (I hold up my hands) made about 6 months ago that haven't materialised. As for those with wild numbers above 2000+, well they just seem to keep changing the forecast dates. Q4-2011 target date turned into Q1-2012, and now Q2-2012 or later.

I still think it will exceed 1800 at some point in 2012 myself, and that overall there'll be some gains this year. But I can't honestly see anything significant at this point. Trading wise has been pretty flat for me on gold in 2012 - small profit - nothing to write home about.

Silver has been much more interesting, volatile and profitable. Similar pattern with the analysts moving the dates back and back each quarter though

Gold related. I still currently prefer gold mining stocks over gold, but they haven't been faring well this year - polite way of saying making a loss. Seems people are still worried about either the gold price being maintained, rising costs, or the wider alternatives now to physical gold such as ETFs taking some demand from the equities. If nothing else though and gold remains this boring, then gold stocks will look attractive at the year end with another good year on prices having helped revenues and margins... For gold stocks I'd factored in a flat price for the year average in 2012, and had thought that would be reasonable or conservative compared to positioning myself for 1800 to be hit on ETFs for trading on the metal itself

Edited April 26, 2012 by fletchsmile

[flying]

I still think it will exceed 1800 at some point in 2012 myself, and that overall there'll be some gains this year. But I can't honestly see anything significant at this point. Trading wise has been pretty flat for me on gold in 2012 - small profit - nothing to write home about.

Silver has been much more interesting, volatile and profitable. Similar pattern with the analysts moving the dates back and back each quarter though

Yes for the longs that arrived early to gold this is not a problem. But as you say for trading very flat & uninspired indeed.

Trading would be tough.

Silver? Yes as always interesting. But I have a feeling it may be awhile before it shows any real strength.

2011 was exciting with its spike but at the end of the year it was pretty much right where it started 2011

So far 2012's silver spike has not matched 2011

2011 was April & we are getting pretty far into April 2012

Miners? If I were in paper I too would be there.

Do you do junior miners too?

Interesting as always to watch though

[Naam]

bank anals left and right see gold @ 1900 or even 2000 end of this year. when the anals get going, i get suspicious. let's see, time will tell. New Year's Eve is just around the corner.

[fletchsmile]

Yes for the longs that arrived early to gold this is not a problem. But as you say for trading very flat & uninspired indeed.

Trading would be tough.

Silver? Yes as always interesting. But I have a feeling it may be awhile before it shows any real strength.

2011 was exciting with its spike but at the end of the year it was pretty much right where it started 2011

So far 2012's silver spike has not matched 2011

2011 was April & we are getting pretty far into April 2012

Miners? If I were in paper I too would be there.

Do you do junior miners too?

Interesting as always to watch though

Yes I play in the junior miners space too. As a longer term investment, I hold a mutual fund called "Junior Gold Fund" which invests in a spread of junior miners with about 40 holdings. Also have BlackRock Gold and General Fund which has more of a focus on larger miners as it has a larger size. This is as I believe there is fundamental value in this sector longer term. They're also a good benchmark to compare my own individual stocks picks for trading. Junior Gold is down 16.5% this year

I also have a few individual junior gold mining stocks, as well as other metals mining stocks across ASX, LSE, US exchanges. Can be interesting, but not dissimilar to actually prospecting yourself with a sieve and basket

In terms of juniors I prefer junior oils. Again I hold a mutual fund called "Junior Oils Fund" similar to the gold one, and again because of the long term investment view, and for similar reasons as a core holding. That's up about 25% this year in contrast.

In addition I've a higher weighting in individual junior oil stocks than I do in individual gold stocks. The oil story makes much more sense to me than the gold story and I find the companies easier to evaluate and appraise, despite the uncertainties. As does the resource story compared to the gold story.

Best junior oil this year for me is Africa Oil (AOI:CN) on TSX up 240%, worst one ENG:CN down about 20%. The junior oils can still have a feeling of the wild west about them, particularly on the Canadian exchanges, but it feels a little bit less wild than junior gold speculating

Sounds like you played with juniors for a while too? Is it something you got jaded with?

Edited April 26, 2012 by fletchsmile

[flying]

Sounds like you played with juniors for a while too? Is it something you got jaded with?

No never have but enjoy looking & reading.

I have not been back in the markets since 2000-2001

Had a lot of fun with the crazy NASDAQ in those days & did ok but

ended up riding it down too.

I have often thought about re-entering but have not.

I do think your smart getting into the Oils

Oils look like as close to a sure thing as could be.

Edited April 26, 2012 by flying

[fletchsmile]

bank anals left and right see gold @ 1900 or even 2000 end of this year. when the anals get going, i get suspicious. let's see, time will tell. New Year's Eve is just around the corner.

Thought of you the other day Dr.Naam. There was a punter on CNBC talking about analysts.

Freudian slip on his part I believe but he actually pronounced it ANALysts in the way you like to write it. Some (including yourself) would no doubt argue that this pronunciation is actually a better reflection of what many of them do anyway

[Naam]

nearly two years ago, after reading repeatedly the same salivating recommendations by my bank's gold anals on two Chinese gold stocks i caved in and bought them spending substantial amounts and even increase my exposure. then cashed in real handsome profits after several months because nobody ever got poor realising profits.

another few months later trading of one of the shares stopped and it turned out that their balance sheet consisted mainly of creative accounting and estimated production/reserves in the ground were all taken from the Grimm's Brothers collection of fairy tales. don't even know what companies they were but i'm sure Flying remembers because we discussed the trades privately several times.

Edited April 26, 2012 by Naam

[fletchsmile]

nearly two years ago, after reading repeatedly the same salivating recommendations by my bank's gold anals on two Chinese gold stocks i caved in and bought them spending substantial amounts and even increase my exposure. then cashed in real handsome profits after several months because nobody ever got poor realising profits.

another few months later trading of one of the shares stopped and it turned out that their balance sheet consisted mainly of creative accounting and estimated production/reserves in the ground were all taken from the Grimm's Brothers collection of fairy tales. don't even know what companies they were but i'm sure Flying remembers because we discussed the trades privately several times.

By nature mining companies are full of estimates on proved/probable/possible reserves etc, particularly if at the exploration stage, but I can live with that.

Now China on the other hand is a bit too far for me in terms of individual stock picking. I feel you never know what you're getting (or not). So to combine China + a high risk and speculative industry is a step too far for me. My Chinese stock exposures are mainly thru mutual funds as I figure with a reputable fund management house on the ground there's a reasonable chance that they have the time and effort to fully cover it, and make sure it's not a complete fairy tale. Like India I attach a high premium for risk to anything to do with risk in the country. India in particular it's hard to trust the environment the government creates, even some of the UK stock with interests there (as well as globally), you continually see back tracking and uncertainty in government promises and policies

The only Chinese stock I own directly is CYOU - also traded on NASDAQ. Bought in mid twenties sold most of it for about 6% gain, and keep a small amount out of interest. I held it for about 6 months and it couldn't seem to attain the levels analysts think it should reach so given the time frame passed and the general lack of confidence decide to ditch most of it. There must be a fair bit of a risk premium in there. Goldman Sachs were touting $55 at one point. I targeted a more modest $40 based on all the numbers I read and trying to be more conservative, but I still can't help wondering how reliable all the numbers actually were, and if there's any real substance. Hence have kept a very small holding out of interest.

[Naam]

Now China on the other hand is a bit too far for me in terms of individual stock picking

for me there's nothing far and nothing near when it concerns stock picking. i'm sure our gardener is more familiar with quantum mechanics than i am with stock picking.

[hawthorne]

It amazes me how so much money flows to companies that I find difficult to believe they will be the market mover they are today. I am talking about the IT based companies but not the hardware suppliers. Facebook, Google, Yahoo, Bidu, Linkden, Groupon, AOL, Myspace these companies remind me of my youth. I use to bar hop with my buddies and over the years of even months the crowds would shift from the ¨IN" bat to the next. The lines were very long to get in these places and after two years the name and management have changed. It was too easy to change the mood of the minds of the consumer. I think AOL, yahoo and Myspace are some of these example but in 2002 there were so many of these that crashed and burned.

I am so amazed at how Apple has the world in grips over their products. I do have a company issued iphone that I am half blind trying to read the dam_n thing!!! I love the technology and I love owning Apple stock but I am amazed at how they keep their numbers. I own too many Tech stocks ( BIDU, Linkden, CRM, Fire, Apple, Microsoft, Infirna, Netapp, RVBD etc) All of which are short term ( less than 2 years).

I love my bluechipers that give the 3% dividend and I do not have to quickly analyze the latest Q report. The high PE stocks are so dam_n sensitive you have to determine what the real fundementals are regardless of the Trends. It is that darn adrenaline rush of a multi bagger that keeps me so crazy about the risk.

As an over view since Sept 2011 till now with some great movers and some losey losers I am under performing the market in my short term players. I am 5% up. All that dam_n effort and my stalwarts (funds and Blue chips) are slightly better. Oh well.

No real prediction except I am hoping for a pull back in the SET this year and some more pull back in Gold stocks. I am looking into picking up some mining stocks at what I hope is a discount. Love to see a base build at some point and then buy trying to avoid buying only on the way down farther.

Good luck

[midas]

bank anals left and right see gold @ 1900 or even 2000 end of this year. when the anals get going, i get suspicious. let's see, time will tell. New Year's Eve is just around the corner.

what about outrageously optimistic anals?

Gold to hit $7000/oz: Bank of America

http://www.commodityonline.com/news/gold-to-hit-$7000oz-bank-of-america-47690-3-47691.html

[Naam]

bank anals left and right see gold @ 1900 or even 2000 end of this year. when the anals get going, i get suspicious. let's see, time will tell. New Year's Eve is just around the corner.

what about outrageously optimistic anals?

Gold to hit $7000/oz: Bank of America

old news! gold has hit much higher prices a long time ago in Hong Kong, Taiwan and Zimbabwe.

[Naam]

"Until we see price action take some kind of massive speculative blow-off, where prices effectively double in a year or less, I have to maintain a long-term bullish bias. That says to me, we'll probably see a move in gold, before all is said and done, to between $3,000 to $5,000 (per ounce) and potentially $7,000 per ounce”

[flying]

Have to admit the last 10+ years does make a nice chart

[Naam]

Have to admit the last 10+ years does make a nice chart

as opposed to the earlier 22 years

[flying]

Have to admit the last 10+ years does make a nice chart

as opposed to the earlier 22 years

Like many things timing does matter

Edited April 29, 2012 by flying

[Naam]

Like many things timing does matter

only for those who have enough time and patience plus the ability for right timing.

[flying]

only for those who have enough time and patience plus the ability for right timing.

Ability or a bit of luck

[Naam]

only for those who have enough time and patience plus the ability for right timing.

Ability or a bit of luck

i think it takes only a little ability but a shitload of luck.