GOLD

[arco]

Watch out for Butterflies blowing bubbles

Butterfly leg 'd' reversed right on the 127 Fib and daily hart presently printing an Evening Star

[Dr_Who]

Butterfly leg 'd' reversed right on the 127 Fib and daily hart presently printing an Evening Star

Please translate into English.

[Aussie]

Interesting that this carpet bombing of gold materializes immediately before options expiry, Mr. Bernanke's testimony on Capitol Hill and President Obama's first State Of The Union speech . . . NOT a normal looking trading pattern.

Attachment 1281

[arco]

Please translate into English.

Heres what a yellow Butterfly looks like. (They are based on Fib numbers)

If you read the Butterfly thread you will get the bigger picture. (Perhaps

.

[Aussie]

Butterflies, cup and saucer, inverted head and shoulders, hanging crosses and flag formations . . . who knew that TA could be so creative . . .

[peat]

3) As far as The SPDR Gold Trust is concerned, HSBC is it's custodian and investors of GLD have plenty to be worried about . . .

Email from the Van Tharp institute also raising this issue today Aussie...

The way GLD is set up, there is a series of legal barriers that prevent anyone from verifying if the gold is in the vault or leased out. Thus, GLD could have nothing to actually back up the 850 tons of gold it claims to have. Is GLD another financial Ponzi scheme, but with good intentions?

[Aussie]

The GLD ETF turned in a fourth business day in a row with alleged gold holdings unchanged at 1,028.98 tonnes. This means this idiosyncratic instrument has managed to weather today’s down $25.50 Comex day and Friday’s up $25.70 move without feeling the need to change its holdings even 0.01 tonnes (321.5 ounces).

Given the recent attention to the GLD holdings this will probably be interpreted as bearish. My own view is that the directness of the relationship between GLD’s alleged holdings of bullion and short term gold price action is dubious.

[trader10]

Memo to gold juniors: the times are on your side
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Thursday, 12 February 2009


JUST so long as you can get off your backsides and start mining. The Outcrop by Robin Bromby

Are you already tiring of all the talk about the 1930s happening again?

Fair enough. You’ll have plenty of time to relive it when this economic crisis gets into full gear.

The next sound you’ll hear is the bond market collapsing and that of Chinese and other doors being slammed in the faces of the supplicants from the US Treasury.

But there is one sector that can, actually, look forward to doing very nicely – provided companies can stay in business long enough to start mining, that is.

And directors can get off their backsides to get the metal out of the ground.

Of course, this is all about gold, the “barbarous relic” that seems like that when times are good, but suddenly comes back into favour when the world economy turns sour.

Sure, you know all about how gold is the only metal that is actually seeing good price increases.

That’s fine, but probably you should catch up on just how much of a safe haven the gold sector was during the depression that lasted, in effect, from 1932 until World War II.

You also probably know the Homestake Mining story.

If you bought Homestake Mining shares from your Wall Street broker in October 1929 they cost $US80, but by 1935 Homestake stock was worth $US495 per share.

Moreover, in those years, the miner paid out $US128 in dividends per share.

That year – 1935 – was also the year Emperor Gold Mines went into business in Fiji and did well for more than 60 years.

But there was also another big story of the time that should resonate and bring comfort to the gold sector – the formation in March, 1933, of Western Mining Corporation.

Remember this was possibly the worst year of the slump, the Dow Jones by the end of 1932 having lost 82% of its worth since the 1929 crash.

The month before Western Mining was formed, newspapers were reporting frenzied excitement on the London Stock Exchange focused on buying shares in South African gold miners.

By 1934, when Homestake stockholders were raking in the dividends, Western Mining had established its Gold Mines of Kalgoorlie operation. A year later, there would be its Central Norseman Gold.

The depression, and the increased value of gold, had an extraordinary effect on the industry here.

According to the 1935 Australian Year Book, the value of the gold yield in this country in 1929 was the lowest recorded since the discovery of the metal in 1851.

Well, that might be due to the boom times of the late 1920s.

There was a slight increase in production in 1930 as gold prospecting started to pick up and operators looked to start working over all mining areas.

But then the price of gold paid to miners started to get a move on.

Anyone born before 1960 will be able to follow the pounds/shillings/pence amounts (the quarter fractions refer to farthings) and, of course, know that a pound then was real money – you didn‘t break a pound note lightly.

For those born later, there are conversions in parentheses – the amounts bear no relation to today’s values, but you’ll get the picture.

Australian miners earned £5/19/9d ($11.98) an ounce in 1931.

In 1932 the gold was worth £7/5/11¾ (around $15.60).

In 1933 it rose slightly to £7/14/3¾.

Then in 1934, the price was £8/10./0¼ (around $17).

What you have to remember is that, in parallel, with this substantial increase in the gold price, was that the prices of almost everything – labour, fuel, food, etc – were actually falling (that is, deflation), which must have blown out the margins significantly for the mining companies.

It was part of a worldwide pattern.

In 1933 the American Bureau of Metal Statistics estimated that 1932 worldwide production of gold totalled at least 23.5 million ounces worth $US485.7 million, compared with 21.33Moz in 1931, 20.3Moz in 1930 and 19.86Moz in 1929.

The 1932 figure was probably higher as the Americans were working with old figures on Russian output but anecdotal evidence suggested those figures had been surpassed.

But what is significant is that the price kept rising during the slump in the face of not only increasing mine production but the sudden surge in scrap supplies.

Gold released from jewellery and other items soared as owners needed money.

In the year to September 1932, British India exported the equivalent of 11.5Moz salvaged from fabricated items. Germany was another big source of gold from scrap.

In other words, the world in the 1930s just couldn’t get enough gold.

As it won’t in 2010.

http://www.miningnewspremium.net

[Dr_Who]

Gold is falling.

Whats the news?

[Aussie]

Gold is falling.

Whats the news?

Three US banks 'own' gold futures at Comex!
009-02-11 16:30:00

The collapse of US banking gaint Lehman Brothers few months ago was the beginning of this decade's severest global eoncomic meltdown. Falling stocks markets, rising commodities prices and volatile currencies have made several nations to cut interest rates and people are these days running after gold saying that the yellow metal is the safest investment during recession times.

But do you know that some large American banks are dominating the gold market in the world? Or some of the same banks that helped spawn the current global financial crisis, have the largest positioning in gold and silver futures at Comex, a division of Nymex?

In an interesting report, noted gold market analyst Gene Arensberg, has reviewed the latest gold and silver market data from the U.S. Commodity Futures Trading Commission from a trading standpoint and observes that the largest traders are positioning themselves for a fall in gold but not so much for a fall in silver.

Here is an excerpt from Gene Arensberg's article:

"The very largest traders for gold and silver are, wouldn’t you know it, big U.S. banks. It looks like a few big banks, some of the same ones whose brilliant management helped spawn a global financial crisis, have the largest positioning in gold and silver futures. As of February 3, their positioning in gold and silver futures was big all right – big and short the market for gold, somewhat less short silver comparatively speaking.

A short position means the trader profits if prices fall.

According to the monthly CFTC Bank Participation in Futures and Options Market report released Friday, February 6, two large reporting U.S. banks held zero long and 27,189 short futures positions in COMEX silver futures as of February 3. All commercial traders as a group held a net short silver position of 33,173 contracts that same day; so just two banks held 81.96% of all the COMEX commercial net short positioning for silver.It should be obvious that these two very large banks could exert a disproportionate share of influence on the small silver futures market if they were so inclined. When just two traders are allowed by the Commodities Futures Trading Commission (CFTC) and the Securities and ExchangeCommission (SEC) to accumulate so massive a position that it constitutes an overwhelmingly large percentage of the action; when the authorities allow just two banks to literally dominate a market with the weight of their own trading, traders are left to speculate on what the largest traders are going to do instead of concentrating on the supply/demand fundamentals and legitimate price discovery.

Isn’t that the equivalent of subjects wondering what price the King will decree rather than citizens all haggling in their own self interest to determine a market price? Or, as one trader put it recently, is the COMEX silver market waiting on JP Morgan Chase to show its hand or make a move?

In fairness, it is quite possible that the positions taken by the banks are for the most part legitimate hedges, offsetting corresponding positions in markets outside the COMEX. However, the sheer size of the positions taken by just two banks raise questions as to the legitimacy of the price discovery process on the COMEX, division of NYMEX.

Intuitively, it should be plain to anyone that positions of overly large size could compel defensive, rather than passive, action on the part of the position holders regardless of whether or not they are hedges.

For gold, the bank positioning is similar. Although not quite as dominant as in silver, just three U.S. banks held a collective net short position of 111,190 contracts while all commercial traders as a group reported a net short positioning of 177,589 contracts. So, three U.S. banks represent a shockingly large 60.57% of all the commercial net short positioning on the COMEX for gold.
From January 6 to February 3, the three banks added 27,367 contracts or 34% to their net short positioning as gold rose $37.09 or 4.3% from $864.16 to $901.25. That is about an 8:1 ratio, meaning the banks strongly expect lower gold prices.

Again, the very large commercial net short positioning doesn’t necessarily mean that the commercials are “right.” It just signals clearly what they are positioning for.

Some analysts assume that the banks can actually drive prices lower temporarily if they don’t get what they expect. If true we have to wonder then why they haven’t done so before now? Or if, perhaps, “they” have been doing that all along. We’ll see, but back in October 2005, gold reached an obvious technical resistance zone in the $470s and the big commercial traders took a then staggeringly large net short position of 212,714 contracts, or a huge 57.36% of all open contracts.