Gold

[blackcap]

Something I came across. Excerpt from an interview between Jack Schwager and Colm O'Shea from "Market Wizards, how winning traders win". Might be interesting for some of you gold people. Enjoy:

Right now as we talk, gold is somewhere just north of $1,500 and not far from its all-time high. So what you are saying is that the gold
top could be now; it could be at $2,000; it could be at $2,500; it could be any number.

And that’s okay. The thing about gold is that if you told me gold has a price of $100, that’s fine. If you told me it’s $10,000, that’s fine as well. It
can be any price. Gold is worth exactly what people think it’s worth.
I am sure you know why that is true for gold.

What do you think?

This is one of those questions that can be answered unambiguously. Gold is the only commodity where the amount of supply is
literally about 100 times as much as the amount physically used in any year. That is not true of any other commodity, such as wheat
or copper, where total supply and annual consumption are much closer in balance, and true shortages can develop. There is never
any shortage of gold. So gold’s value is entirely dependent on psychology or those fundamentals that drive psychology. Many years
ago, when I was a commodity research director, I would totally ignore gold production and consumption in analyzing the market. I
would base any price expectation entirely on such factors as inflation and the value of the dollar because those are the factors that
drive psychology. I always found it ridiculous when other analysts would write lengthy reports on gold analyzing such things as
annual production prospects and jewelry usage. Annual production and consumption of gold are always a tiny fraction of supply,
maybe around 1 percent, so who cares how much they change. It has nothing to with the price.

[skid]

Thats certainly a possibility and seems to be the general sentiment ATM . Not slamming charts but lets not forget about things like the jobs report coming out this week--the last one was rather disappointing.

[Daytr]

Blackcap, that's why it is termed as precious. Do you say something that you use & consume every day is precious? It is something you can store & quite rightly it is valued at what people are prepared to pay for it due to sentiment. At the moment the West is generally saying its not worth what it was & Asia is saying the opposite.

[skid]

don't think that's going to do much there skid. the Fed has already said tapering will be delayed and that the economy is doing ok. that, in fact, made gold fall. if anything a jobs report is much less of a catalyst and may prove to be downward momentum as evetyone knows its a one off because of the gov shutdown. if it comes in less worse than everyone thinks, watch out below!

imho, I think were going to see a systemic continuation of the downtrend until tapering is made official. $1000 gold is much more likely than $1500; still a very hated commodity...

What makes that argument (tapering end) confusing is that no one seems to be thinking about the repercussions that will have on the sharemarket.
Alot of that QE money has gone into shares.
Im not betting the farm on it,but there is a chance that the Dow could tank when the easy money dries up.
If things start looking to wobbly,and fear rears its ugly head -people could start looking to gold again.

I think one of the biggest mistakes some make is that they look at gold as gold.....gold will do this..gold will do that.........I look at gold as a reflection of what is going on in that vast economic world.

Disc. Own a small % as insurance----I hope I never have to use it,but if I have to Ill be glad its there.

[Daytr]

Personally I think gold is suffering because its obvious tapering is some time off. Tapering imo will prove a good thing for gold as the money from QE is pouring into stocks not gold. We saw gold come off just before the rally last week as gold was being shorted against a long equity position. Going short gold gives you cash invest in equities. I wouldn't say this is a massive trade, but enough to push gold a b it lower as we have seen. I expect this position to be covered as it was a two weeks ago & we saw gold spike through $1350.

[skid]

I guess it all depends on whenever they take the plunge with tapering (its gotta happen some time?) whether the share market will be able to withstand it--we've been partying on borrowed money for quite a while now..

[Bobcat.]

They are great assets BC, I had quite a bit to do with them when Cooky (Peter Cook) owned Wafi & sold to Harmony etc & also Lihir before NCM swallowed it. Lihir has never performed although I have always thought there was great potential. I recommended to them 8 years ago to build a processing plant on the northern coast of Australia & ship their high grade tailings for processing, basically creating a 2nd mine. Lihir is technically challenging due to the geothermal activity. They have to vent the ore to cool about years before mining it. They are also always running out of space due to the mountains of tailings. Back then they were estimating a year mine life after main mine closure just to process the tailings which from memory are around 2gpt! NCM management have really under performed over the last 3-4 years imo. However at around $10 I agree you have to think its pretty good value especially if POG gets a hurry on.

Interesting comments, Daytr - thanks. Rather than stop-loss out this morning, I placed a bid at $9.76 to average down, which it did drop to and took out another bidder in front of me at that price, before it laughed in my face, moved higher and left my bid hanging. I have mixed feelings about that given I picked today's bottom but should really have taken out an offer on the climb rather than leave my bid where it was. My strategy of buy on the way up doesn't always get implemented!

This stock has recovered well today, given the market sentiment, to finish at $10 even. Tomorrow should see decent support given today's pattern. AISC of $1093 is not too bad, they have good resources, and I get the impression that much of their bad news is behind them...notwithstanding the quality of management and their need to prove they can now turn around this company's fortunes.

BC

Discl: Holding a small parcel from yesterday's trading.

[skid]

Id be interested to know if anyone thinks that China will ever get to the point where they say''thats it'' we want our money instead of turning over another loan.

[Bobcat.]

Id be interested to know if anyone thinks that China will ever get to the point where they say''thats it'' we want our money instead of turning over another loan.

There is a theory (I have no hard evidence that it's actually happening) that the price of gold is being kept low as a sweetner for the Chinese who are purchasing more each month as their middle class grows and wants more of it.

-----------------------------------------------------------------------------
ETF Securities: China On Pace For Record Gold Imports In 2013

Monday November 4, 2013 2:17 PM

China is on pace to import a record-high amount of gold this year, says ETF Securities. Data for September shows that since the beginning of the year, China already imported a net 856 metric tons of gold from Hong Kong. “If the pace continues, annual imports for 2013 are set to surpass 1,100 tons - a new record - and puts China on track to overtake India as the largest gold consumer,” says ETF Securities. “Total ex-China mine supply in 2013 is expected to be about 2,300 tons and when combined with the amount liquidated from gold ETPs this year -- approximately 700 tons -- shows that about one-third of total ex-China gold supply is likely to be absorbed by Chinese import demand.”

By Allen Sykora of Kitco News; asykora@kitco.com
----------------------------------------------------------

In thinking this, I do of course run the risk of being labelled a conspiracy theorist but stranger things than this have happened when very large nation impacting financial and economic ramifications (especially involving the USA) are involved. Given the growing market demand for Gold, there does look to be something interferring with normal market demand & supply mechanisms.

Equity markets have recently been very favourable and clearly that's reduced demand for precious metals (since the fear factor is reduced when all seems tickiboo with the DJIA etc) but I for one do not buy the theory that the price of gold is kept low merely because of that. The Chinese behind the scenes could well be building large gold reserves with America's blessing, in return for not bringing the US of A to her knees (yet).

[Daytr]

Sorry BC, re Lihir there was a typo, the mine life of the tailings alone so after main orebody is depleted was stated then at 20 years!