Alternatively, watching paint dry. That's how it has felt this week with gold's volatility slowing to a crawl ahead of Thanksgiving yesterday and the Swiss gold referendum on Monday.
France has also recently joined in on the trend, with the leader of the far-right National Front party Marine Le Pen calling on the central bank to repatriate the country’s gold reserves.
In an open letter to the governor of the Banque de France, Christian Noyer, Le Pen also demanded an audit of 2,435 tons of physical gold inventory.
Here are some reasons to be optimistic about gold’s prospects in 2015, according to analysts at RBC Capital Markets.
Exchange-traded-fund liquidations are a major culprit for the weakness in gold prices as an estimated 33 million ounces have been sold in the past two years. That brought gold ETF holdings to a level not seen since prices were near US$1,000 an ounce in 2009. However, the pace of sales has slowed recently.
Central bank buying
Central banks purchased 93 tonnes of gold in the third quarter, bringing the year-to-date total to 335 tonnes, versus 324 tonnes in 2013. At the same time, recycling supply has dipped to 807.2 tonnes, the lowest level since 2007 and 35% below the 2009-2012 average.
“Scrap sales of gold have waned and the physical market has tightened,” RBC said.
Demand linked to India’s wedding season and Diwali has produced two consecutive months of 100-tonne-plus consumption. That strong demand is expected to continue as the calendar year winds down and Chinese New Year approaches.
RBC noted that spot market premiums have risen to US$18 per ounce in India and US$2 per ounce in China after sitting in flat or negative territory in recent months.
The European Central Bank plans to expand its balance sheet by as much as €1-trillion. With executive board member Yves Mersch commenting that gold buying could be part of the asset-purchase program, expectations and, therefore, demand may rise due to potential ECB investment in the yellow metal.
The one- to six-month forward curve has been in backwardation since mid-September. In other words, gold futures contracts are lower than the spot price.
Lower interest rates are a factor, but RBC noted that gold lease rates are what really drives backwardation.
“The rising lease rates indicate tightness in the physical gold market and lending rates tend to rise as holders of bullion become more risk averse and in many cases higher lease rates lead gold price rallies,” the analysts said.
Russia has accumulated approximately 150 tonnes of gold so far in 2014, exceeding its 78 tonnes of consumption in 2013 and 75 tonnes in 2012. RBC believes attempts to diversify the country’s reserve base with gold could lead to more uptake of domestic supply, which could total as much as 250 tonnes this year.
Centralbanken i Schweiz har tryckt mycket pengar de senaste åren. Har dom möjligen tryckt klart efter helgens val.
Tror vi att Saudi är intresserad av att minska produktionen av olja eller tror vi att dom vill behålla sin marknadsandel.
This coming Friday is the 1st notice day for both Dec. COMEX gold and silver contracts. COMEX in my opinion has a potentially huge problem where a default in both contracts is a distinct possibility! As of this past Friday, 61,763 contracts still open, this represents 308 million ounces of silver. The COMEX claims a registered (deliverable) inventory of just under 65 million ounces. With only four days left there are roughly 5 silver ounces contracted for every one ounce available!
The situation in gold has quietly become much worse than silver, there were 162,509 Dec. gold contracts open which represent over 16 million ounces of gold. The “registered” (deliverable) category at the COMEX inventory shows only 868,910 available to deliver! Do you see the problem here? There are only 4 days left until this contract goes into the delivery process, yet there are 20 ounces contracted for each ounce available! I have one other amusing thought for you, remember the 80 tons sold in 15 minutes last Wednesday? This was almost 2.8 million ounces compared to a deliverable inventory of just 869,000 ounces, in my opinion, “FRAUDULENT” in capital letters!
Yes I understand, there are still four days left for the open interest to bleed down and roll out to the next contract month but we now stand in totally uncharted territory. Never in the past has this much open interest been still outstanding with deliverable inventory as low as it is. It is also astounding that total open interest could have risen to these levels while the price dropped. For open interest to increase and the price to drop, the “initiation” to the opening of contracts has obviously been done by sellers. This is exactly what I have been saying all along, the dropping price has been dictated by paper sales of COMEX contracts …but now there is a problem. So much paper has been sold to dictate the price that the contracts outstanding simply dwarf the available metal to deliver. Put another way, COMEX gold and silver look like they have been cornered! Let me rephrase this, COMEX gold and silver are now “very cornerable.” We will know shortly if this is true and “who” did the cornering. I suspect we will find out that this has been a Chinese/Russian hand holding consortium and one that was carefully planned and done within legal bounds. I think we will find out they in fact did play by the West’s rules and it was the “sellers” of nonexistent metal who fell into their own price fixing trap. It has been a financial war, one that was declared by the West and looks to have been possibly won by the East.
To tie all of this up, let me say that I believe the very long anticipated “market corner” of precious metals may possibly and finally be at hand. Contrary to what happened back in the late 1970′s with the Hunt brothers in silver, the current “corner” was actually facilitated by the sellers. The Hunt’s in fact did set out to corner silver, I don’t believe the Chinese/Russian/Indian alliance initially set out to do this …they were “forced to.”
You see, we have been in a “financial war” for years, the U.S. has trod heavily on the rest of the world financially. We settled our grotesque annual trade deficits by sending freely created dollars as payment. In order to support the dollar and keep interest rates low, we have suppressed the prices of gold and silver. Without low metals prices, none of the other markets could ever make any sense. PE ratios could never be at the current levels without low interest rates, interest rates could never be at these low levels if gold and silver were shooting upward …so the rest of the world has played the only card they could to prevent a World War, a financial card.
Det är 86 år sedan vi hade en liknande uppgångsfas som de senaste 27 dagarna för S&P 500. Dessvärre blev det toppen innan flera års nedgång på börsen. Upprepar sig historien just nu.
Graph #1: Gold Bubble 1980
Now let us look at the present picture of the gold market since 2000 (graph #2) and compare it both to the ’70s bubble and to the typical bubble model. If, and this is a big if, history repeats, then gold is now in the Awareness Phase and, more specifically, at the end of a Bear Trap. If the gold price is to follow like in the ’70s the same pattern, or something close to it, then it looks not only possible that the price of gold will reach US$5,000, but even exceed it and approach the $6,000 level. As for when, if the ’70s’pattern repeats, even if not exactly in the same way, we could expect the Mania Phase to start somewhere between 2015 and 2017 and last until 2022-23.
Graph #2: Gold – Future Potential Bubble
Remember also that gold is not an industrial metal but mostly a monetary metal. As such, if we compare it to the US monetary base as shown in the graph below (graph #3), at an assumed gold ratio of 40% of the monetary base, then the gold price should today be around US$5,000 while, at a ratio of 100%, it should be over US$10,000.
Ca 90% av företagens vinster i USA går tillbaka till aktieägarna. Var är investeringarna för framtiden?
Based on this shocking chart from the FT's John Authers, does it seem that America's corporations -who are returning over a record 90% of Net Income to shareholders - are seeing (m)any growth opportunities?
Det är knappast ekonomi som drar börserna runt om i världen utan det är centralbankerna och det blir svårare att hålla börsbubblan uppblåst.
As central bank fear/panic pushes higher, the banks have unleashed a torrent of PR and monetary programs that have dragged stocks higher with every phony pronouncement and every new free money for financiers chumming of the stock market.
No wonder the feeding frenzy never stops--the central banks are clearly terrified of what will happen should they stop dumping monetary chum in the waters.
What is equally extraordinary is the abject failure of all the central banks' free money for financiers to move the needle of the real economy. Virtually every bright spot in the economy results not from organic growth but from the expansion of a new credit bubble: for example, subprime auto loans.
After tens of trillions of dollars in stimulus and trillions squandered on asset purchases to suppress interest rates and prop up the stock market, the real economies are drifting into recession or stagnation.
The central bank response to this abject failure? More free money for financiers.
Anyone who looks at central bankers speak can sense the fear behind their absurd bravado, and the dishonesty of their public confidence. They're not just afraid--they're in a panic.Every press conference and every announcement is supposed to express confidence, but what they really express is terror: terror that doing more of what failed spectacularly will not just stop working--it will trigger the collapse of the entire rotten, corrupt system of central banks and free money for financiers.
Fick Holland sitt guld från guldfonden GLD istället från FED i USA där det officiellt skall vara lagrat.
Gold has had a volatile week, but rose from $1147 last Friday afternoon to a high of $1205 on Tuesday.
Råvarumarknaden signalerar helt klart en sämre ekonomisk utveckling och deflationen kommer att bli ett större problem än man tidigare anat.
Staying with the "market versus the economy" theme, the continuing decline in commodity prices is certainly worth noting. As shown in the chart below, the general trend of commodity prices has a fairly close relationship to overall economic growth.
This relationship is not surprising given that when an economy is growing, the demand for commodities to consume, manufacture or produce goods and services rises which cause prices to rise. However, the current decline in commodity prices suggests that the globally weak economic environment is a rising deflationary force.
För låga obligationsräntor i USA leder än en gång till att ekonomiska bubblor skapas. Vi har samma läge som innan förra finanskraschen 2007.
In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.
Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession — the slump began two months later.
The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.
If you look at corporate profits and especially corporate profit margins, they’re one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.
Right now stocks as a multiple of last year’s expected earnings may look only modestly over valued or modestly richly valued. Really if you look at the measures of valuation that are most correlated to the returns that stocks deliver over time say over seven years or over the next 10 years the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return.
Endast 4,4 % av japans befolkning tycker att det har blivit bättre medans 48,5 % tycker att det blivit sämre. Detta trots massiva stimulanser från BOJ.
Yenen försvagas i snabb takt och kommer att sätta press på andra asiatiska valutor att göra samma sak och därmed exportera deflation.
Det upptäcks knappast några nya guldfyndigheter samtidigt som det tar allt längre tid att komma igång med produktionen. Med dagens efterfrågan på guld är det en tidsfråga innan vi får se betydligt högre priser.
Hur mycket guld hadde olika länder i februari i år. Notera Ukrainas 42 ton som nu är borta efter att man avsatt den dåvarande presidenten och satt in en EU vänlig.
High Yield marknaden i USA handlas på ungefär samma risknivå som före kraschen 2000 och 2008. Energisektorn ligger riktigt illa till där det kan bli stora förluster.
This pretty much sums up today’s fixed income world. And if past is prologue, soon to come will be a brutally rude awakening. Most of the following charts are from a long, very well-done cautionary article by Nottingham Advisors’ Lawrence Whistler:
Junk yield premiums over US Treasuries are back down to housing bubble levels:
So are default rates:
The supply of junk bonds is way higher than before the previous two market crashes:
As for what might cause the junk market to crack, one prime candidate is the oil industry. The shale boom has led a lot of energy companies to ramp up production using other people’s money, much of which is coming from junk bonds. Now, with oil down from $100/bbl to around $80, the nice fat coverage ratios on these bonds are looking disturbingly skinny. This chart shows the divergence between overall junk spreads and energy-sector junk spreads.
Kina köpte 66% av Australiens guldproduktion under 2013. När får vi veta hur mycket guld Kina har i sin valutareserv?????
S&P 500 ligger långt före den ekonomiska utvecklingen. Vi har sett det förut och vet hur det slutar.
The problem with this activity, along with cost cutting, employment reductions and other measures to increase profitability, is that they are all finite in nature. Eventually, either revenue growth must accelerate or earnings are at risk of a significant disappointment.
As shown in the chart below, earnings have never attained the currently expected growth rate...ever.
Dramatic downturn in Chinese home sales threatens economic growth as prices fall in 69 out of 70 cities
China’s new-home prices fell in all but one city monitored by the government last month as developers offered discounts to cut inventories. Real estate is the main driver of Chinese economic growth and this slowdown is depressing business activity across the board apart from exports.
The dollar continued its upward path against the major currencies this week, and gold and silver prices suffered accordingly.
The bears have maintained the upper hand, as shown in the following charts of Comex prices and Open Interest.
In both cases Open Interest has been rising, indicating a substantial and growing short position, though silver's fell sharply in heavy volume on Wednesday on technical grounds: it appears that someone rolled 6,000 contracts out of the December future into an option position. The other side of the precious metals trade is a strong dollar, strong equities and robust bond markets, which taken all together indicate that portfolio managers are universally bullish and ignoring risk. Time will tell if this Panglossian view is justified.
Silver has been particularly vulnerable, and the gold/silver ratio now stands at almost 75 times. This is not unprecedented but can be regarded as extreme. The result is retail demand for silver coins and bars has escalated, in the former case leaving the US Mint sold out of silver eagles. Demand for gold coins and small bars has also taken off with dealers in Germany and Austria reporting brisk business. Demand in China and India has also increased noticeably in recent weeks, and the Shanghai Gold Exchange reported this morning deliveries of 47.45 tonnes in the week ending 7th November, almost double the rate in July.
If Chinese and Indian citizens are increasing their purchases it is a fair bet that other Asians are as well. The big ETF, GLD, has lost only 28 tonnes since mid-October, hardly enough to make much difference, so it is no surprise that based on GOFO rates gold is now in high backwardation.
Global economic news this week has not been encouraging with growing evidence of slump conditions in Japan and developing in the Eurozone. Eurozone difficulties are affecting the UK, and the slide in the JPY, EUR and GBP against the US dollar confirms this diagnosis. At some stage, these economic difficulties will have an impact on the US economy, and without aggressive monetary action from the Fed it is hard to remain bullish of equities. Furthermore bonds are likely to see a surge in supply as government deficits widen again and corporations seek liquidity.
Put another way, financial markets today reflect very little risk, a situation that seems likely to change radically in the coming months. That being the case, there is likely to be a positive reassessment of gold and silver prices.
To summarise, today the headline story is the continuing bear-trend in precious metals fuelled by a strong dollar. This ignores the fact that demand for physical bullion is increasing significantly at these levels, and it is not dollar strength that prevails, but weakening foreign currencies driven by credit contraction, real or anticipated. Risk-off looks like being replaced by risk-on in the coming months.
We have a clear megaphone pattern in the S&P 500. We could always stage a final blow off top, but we’re at or near the top already. The next leg down should take us to the low 1800s.
Jim Grant - Golds Low Are The Perfect Set Up For Investing
Rekordstor efterfrågan på silvermynt leder till att US Mint stoppar försäljningen då dom inte kan leverera
Fast forward to today, when as noted over the past week there has been a massive shortage of precious metals - most notably silver which as of this moment is indefinitelyunavailable at the US Mint - as a result of the tumble in the paper price, and following 8 days of sliding and negative 1 month GOFO rates, today the physical metal shortage surged, as can be seen by not only the first negative 6 month GOFO rate since last summer's much publicized gold shortage when China was gobbling up every piece of shiny yellow rock available for sale, but a 1 month GOFO of -0.1850%: the most negative it has been since 2001!
Någon är nu mycket intresserad av att få ned silver och guldpriset. Stora sälj volymer när marknaden är som tunnast.
Guld har nu varit i köpzonen ca 3 år medans Biotech aktierna har varit lika länge i säljzonen. Hur länge till kan detta fortgå.
Herbalife dyker på börsen. När återköpen slutar med lånade pengar så störtdyker aktierna, lika med IBM.
Saxat från Putin’s tal förra veckan under en konferens i Sochi. Man skall beakta att under det senaste året har börsen, rubeln och oljan fallit ca 30%. Vad det leder till kan man inte veta
In just one week, JP Morgan lost 41% of its total gold inventories. On October 22nd, JP Morgan held 983,694 oz of gold… and as of the last update on Thursday, October 30th, there were only 581.819 oz remaining. This was a drain of 401,875 oz in a tad bit more than a week.