Gold

[JBmurc]

Well some people can't agree with you skol as over the last 90 days without any announcement, stocks of gold held at Comex warehouses plunged by the largest figure ever on record during a single quarter since eligible record keeping began in 2001 some 2moz some 3 billion worth of gold was removed....

[Skol]

Yes, it's been sold, it been widely publicised.

[elZorro]

Skol, you're being choosy in your time periods again. Gold simply outperformed shares for many years on the trot.

Continuing this new research into the partial funding of the US debt by China, it looks like both parties are stuck with it in the meantime. China has dropped back its Treasury holdings by about 30%, but still has a lot of sway there. If they sold them off, they'd do damage to their own position, but they'd damage the US a lot more if everyone backed out of Treasuries.

Summary
Given its relatively low savings rate, the U.S. economy depends heavily on foreign capital
inflows from countries with high savings rates (such as China) to meet its domestic investment
needs and to fund the federal budget deficit. The willingness of foreigners to invest in the U.S.
economy and purchase U.S. public debt has helped keep U.S. real interest rates low. However,
many economists contend that U.S. dependency on foreign savings exposes the U.S. economy to
certain risks, and some argue that such dependency was a contributing factor to the U.S. housing
bubble and subsequent global financial crisis that began in 2008.
China’s policy of intervening in currency markets to limit the appreciation of its currency against
the dollar (and other currencies) has made it the world’s largest and fastest growing holder of
foreign exchange reserves, especially U.S. dollars. China has invested a large share of these
reserves in U.S. private and public securities, which include long-term (LT) Treasury debt, LT
U.S. agency debt, LT U.S. corporate debt, LT U.S. equities, and short-term debt. As of June 2011,
China was the largest holder of U.S. securities, which totaled $1.73 trillion. U.S. Treasury
securities constitute the largest category of China’s holdings of U.S. securities—these totaled
$1.16 trillion as of September 2012, but were down from their peak of $1.31 trillion in July 2011.
China’s large holdings of U.S. securities have raised a number of concerns in both China and the
United States. For example, in 2009, Chinese Premier Wen Jiabao stated that he was “a little
worried” about the “safety” of China’s holdings of U.S. debt. The sharp debate in Congress over
raising the public debt ceiling in the summer of 2011 and the subsequent downgrade of the U.S.
long-term sovereign credit from AAA to AA + by Standard and Poor’s in August 2011 appears to
have intensified Chinese concerns. In addition, Chinese officials have criticized U.S. fiscal
monetary policies, such as quantitative easing by the U.S. Federal Reserve, arguing that they
could lead to higher U.S. inflation and/or a significant weakening of the dollar, which could
reduce the value of China’s U.S. debt holdings in the future. Some Chinese analysts have urged
the government to diversify its reserves away from U.S. dollar assets, while others have called for
more rapid appreciation of China’s currency, which could lessen the need to hold U.S. assets.
Many U.S. policymakers have expressed concern over the size of China’s holdings of U.S.
government debt. For example, some contend that China might decide to sell a large share of its
U.S. securities holdings, which could induce other foreign investors to sell off their U.S. holdings
as well, which in turn could destabilize the U.S. economy. Others argue that China could use its
large holdings of U.S. debt as a bargaining chip in its dealing with the United States on economic
and non-economic issues. In the 112th Congress, H.R. 2166 and S. 1028 would seek to increase
the transparency of foreign ownership of U.S. debt instruments, especially China’s, in order to
assess if such holdings posed potential risks for the United States. The conference report
accompanying the National Defense Authorization Act of FY2012 (H.R. 1540, P.L. 112-81)
included a provision requiring the Secretary of Defense to conduct a national security risk
assessment of U.S. federal debt held by China. Many analysts argue that China’s holdings of U.S.
debt give it little leverage over the United States because as long as China continues to hold down
the value of its currency to the U.S. dollar, it will have few options other than to keep investing in
U.S. dollar assets. A Chinese attempt to sell a large portion of its dollar holdings could reduce the
value of its remaining dollar holdings, and any subsequent negative shocks to the U.S. (and
global) economy could dampen U.S. demand for Chinese exports. They contend that the main
issue for U.S. policymakers is not China’s large holdings of U.S. securities per se, but rather the
high U.S. reliance on foreign capital in general, and whether such borrowing is sustainable.

[Skol]

Goldman Sachs have cut their forecast for gold to $1270 in 2014.

http://www.bloomberg.com/news/2013-0...cle-turns.html

GS recommend their clients short gold.

Gold down $27 and still going, is the final cataclysm close at hand?

[elZorro]

Goldman Sachs have cut their forecast for gold to $1270 in 2014.

http://www.bloomberg.com/news/2013-0...cle-turns.html

GS recommend their clients short gold.

Gold down $27 and still going, is the final cataclysm close at hand?

No, just a pause perhaps. Here's a good article, although no mention about the effect of US Treasuries. http://www.stuff.co.nz/business/mone...the-golden-age

[Skol]

Right on cue the goldbugs, Peter Schiff and myriad others blame everyone else for the fall in gold.

Bernanke, the Fed, banksters, what a laugh.

If you're losing money on gold or silver it's YOUR fault, no one elses.

[Shaneoz]

I think its funny how all of you line up on one side or the other.... If you take the emotion out of it, it's just another commodity to trade.

It has been said that 106 tonnes of bullion were put up for sale in febuary. That in itself is quite a lot. Looking at the daily chart you can see the effect that that amount of gold had. Pushed it down to a major support/resistance level.

Since then gold has another 3 goes at breaking that level. It once had a false break and thats all.

Will it go through that level now? I dont know but it looks like it is receiving good support at the moment.

How much more gold in tonnes is there out there that needs a new home? I would doubt it would be that great an amount considering the yearly production levels and the fact that china and india are buying and not selling.(compared to the 106 tonnes in Feb.)

Would you believe anything that goldman sachs tells you? Lol keep a good hold on your wallet else it might be stolen while your not watching.

It always seems darkest just before dawn.

[BIRMANBOY]

If you think that's funny try this......amazing how many local experts and inside analysts post for this thread. Everyone is convinced they have the "real truth" and every other contrary poster is either totally mis-informed or suffering from delusional hysteria. Its more laughs than the comedy festival. Smoke and mirrors.

I think its funny how all of you line up on one side or the other.... If you take the emotion out of it, it's just another commodity to trade.

It has been said that 106 tonnes of bullion were put up for sale in febuary. That in itself is quite a lot. Looking at the daily chart you can see the effect that that amount of gold had. Pushed it down to a major support/resistance level.

Since then gold has another 3 goes at breaking that level. It once had a false break and thats all.

Will it go through that level now? I dont know but it looks like it is receiving good support at the moment.

How much more gold in tonnes is there out there that needs a new home? I would doubt it would be that great an amount considering the yearly production levels and the fact that china and india are buying and not selling.(compared to the 106 tonnes in Feb.)

Would you believe anything that goldman sachs tells you? Lol keep a good hold on your wallet else it might be stolen while your not watching.

It always seems darkest just before dawn.

[elZorro]

Here's an item on the evolving effect of exchange rates on economies around the world. It's loosely related to gold. This person thinks Skol is right - the US$ is not going to be removed as a reserve currency, well, not in the next decade.

http://www.economonitor.com/blog/201...s-re-thinking/

In the shorter term, I'd be looking for US$gold to ramp up a bit, as the US QE3 devalues its currency faster than others. It's on the way down already.

[skid]

Well skid, look at history, the last time gold spiked exponentially was about 1979 and it subsequently crashed. Did it recover, yes, temporarily followed by the major decline. Goldbugs will say "it's different this time" and there's always differences, but the final result is always the same in any vertical spike.

Goldbugs should be used as laboratory rats in a financial behavioural psychology experiment. It's well known that people persist with scams and huge losses even though there's overwhelming evidence that they should exit the trade or the scam. We all might learn something.

Goldbugs worldwide swear black & blue that they're right and everyone else is wrong even though it's coming up 2 years since gold peaked. It's an exercise based on hope more than anything else, but they argue it's not their fault, it's Bernanke's, the Fed, the ECB, the Rothschilds, the banksters. They are betting more than investing. They argue there's manipulation and gold suppression even though there isn't a shred of evidence to prove it and never has been, and just recently JP Morgan won a court case against losing silver investors that alleged JPM had been involved in manipulating the price.

Another flawed argument is that gold is somehow 'special', the '5000 year store of value' which is actually a fallacious assumption. Historically gold is a lousy long-term bet, it's a commodity, the price fluctuates just like pork bellies, lead or feeder cattle, but goldbugs seem to have attached a great deal of importance & emotion to the metal. I even read posts from goldbugs occasionally who admire and polish the stuff, vowing never to part with it, they're keeping it for their dotage or something, but their dotage might be poverty-stricken if they're not careful and overexpose themselves to gold which to me is nothing more than shiny metal.

They could have made a lot more money putting it in cash, term deposits, property or almost anywhere else.

Equities go through the roof but diehard goldbugs hang in there losing money hand over fist. Since gold peaked, it's down by 18%, the XJO is up 25% and the DJIA is up 33%.

In the meantime goldbugs bang on about the same recycled stuff, USD crash, euro crash, debt, we're running out of gold, Portugal, the now long dead Cyprus drama, Jim Sinclair's loony predictions, full moons, King World News, Fort Knox is empty, yadda, yadda, yadda.

A psychologists dream come true.

http://investing.money.msn.com/inves...INX&SZ=0&PT=10

Hows that for a exponential spike