Gold

[BFG]

Always been keen on OGC. Good buy, should gap above $2 AUD easy on Monday

[Daytr]

Gold needs to break back above $1180 & hold to consolidate the bounce & then obviously move higher.
Personally I think its just a USD trade & that's not over yet & gold wont trade in isolation.
Aussie producers should do ok for the same reason i.e. AUD offset.

[BFG]

Daytr and Hoop, what you make of golds huge bounce then implosion? At a guess I'm thinking a large buyer built up a large position low down then bought upwards at key points to trigger buys, unloaded at the top and is now dhorting again. No doubt they'll have puts in place lower down as well. Pretty spectacular fail of $1180 resistance. Could also be someone strengthening that resistance? All I can see is volatility and blatant manipulationA

[Daytr]

Hey BFG, its played out pretty much as I expected, perhaps the sell down yesterday was a bit more aggressive than I anticipated, but happy as I was short from $1176. On Friday we had a one way trade (USD) that was overdone & none more so than in gold & the looming NFP, always a volatile night.
We saw a good whipsaw & some shorts got spooked & covered, others like me were waiting for such an opportunity to short again.
We are now again not far off where gold has bounce a couple off times so I am weary of the same action again & have now covered my short.
This USD trade I think has more in it, but not sure if its going to be one way traffic going forward & there will be impacts on the US economy & US corporate earnings & I don't think it will be long before we start hear chatter in the market in that respect.

I also saw China is opening up its access to stock markets to Western markets but will also allow Chinese to invest in foreign markets more easily. I'm wondering if this may impact demand from China for gold. Not sure on that one, but its a thought.

[Hoop]

Daytr and Hoop, what you make of golds huge bounce then implosion? At a guess I'm thinking a large buyer built up a large position low down then bought upwards at key points to trigger buys, unloaded at the top and is now dhorting again. No doubt they'll have puts in place lower down as well. Pretty spectacular fail of $1180 resistance. Could also be someone strengthening that resistance? All I can see is volatility and blatant manipulationA

I can't imagine manipulation is involved...just typical market behaviour at work
Technically speaking, the bounce up after the downward break is called a pullback, an event when buyers for the short term become dominate again ....Pullbacks occurs 40-70% of the time after a breakout of a chart pattern the % occurence depends on the pattern.. For a normal support break I assume a ~60% chance of a pullback...Pullbacks usually reach the old support/new resistance line (1188 for Gold or 1183 intraday) tests the line and fails...It gives the long sellers a second chance to get out and the shorters another opportunity to enter...thereby creating a bearish environment...causing a quick reversal back down resuming the downtrend...

[Skol]

Haven't been here for awhile so hope this hasn't already been posted.

http://www.zerohedge.com/news/2014-...r-decade-gofo-rate-tumbles-most-negative-2001
Physical Gold Shortage Worst In Over A Decade: GOFO Most Negative Since 2001

Submitted by Tyler Durden on 11/06/2014 - 09:37
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!

It's a lot of the usual crap from Zerohedge, the outflow from ETF's is going from a dribble to a torrent, 16 tonnes in the last week from SPDR GLD alone. There's gold to Africa, that's why the price is falling.

[JBmurc]

The quest for gold

Here’s a few facts from SNL Metals & Mining's 2014 edition of ‘Strategies for Gold Reserves Replacement.’

Over the past two dozen years mining companies have discovered 1.66 billion ounces of gold in 217 major gold discoveries. That’s a lot of gold!

But it wasn’t enough – there were 1.84 billion ounces produced over the same period. That’s a shortfall of 180 million ounces of gold for reserve replacement over the 24 year period or a shortfall of 7.5m ozs a year.

The amount of gold discovered and the number of major discoveries has been trending downward – from 1.1 billion ounces in 124 deposits discovered during the 1990s to 605 million ounces in 93 deposits discovered since 2000.

“The amount of potential production from these major discoveries is particularly concerning when looking at the discoveries made in the past 15 years. Assuming a 75% rate for converting resources to economic reserves and a 90% recovery rate during ore processing, the 674 million ounces of gold discovered since 1999 could eventually replace just 50% of the gold produced during the same period.

However, considering that only a third of the discovered gold has been upgraded to reserves or has already been produced, and that many of these deposits face significant political, environmental or economic hurdles, the amount of gold becoming available for production in the near term is certainly much less.

Between 1985 and 1995, 27 mines with confirmed discovery dates began production an average of eight years from the time of discovery. The time from discovery to production increased to 11 years for 57 new mines between 1996 and 2005, and to 18 years for 111 new mines between 2006 and 2013.

The length of time from discovery to production is expected to continue trending higher: 63 projects now in the pipeline and scheduled to begin production between 2014 and 2019 are expected to take a weighted-average 19.5 years from the date of discovery to first production.”Kevin Murphy, mining.com

[Skol]

When gold and silver tank, 'manipulation' is the favourite goldbug subject.

No.2 of the 12 golden rules of goldbuggery applies.

2. The price of gold cannot fall, it can only be manipulated lower: When gold’s price falls, it is an unnatural act. It can only occur as the result of an international cabal of Central Bankers and politicians. Its a conspiracy, and we know who the guilty parties are.

[JBmurc]

When gold and silver tank, 'manipulation' is the favourite goldbug subject.

No.2 of the 12 golden rules of goldbuggery applies.

2. The price of gold cannot fall, it can only be manipulated lower: When gold’s price falls, it is an unnatural act. It can only occur as the result of an international cabal of Central Bankers and politicians. Its a conspiracy, and we know who the guilty parties are.

The Financial Times is reporting that UBS has agreed to settle charges against it by the UK’s Financial Conduct Authority that it engaged in the manipulation of the gold and silver markets.

[Daytr]

Look there has definitely been manipulation in precious metal markets as well as interest rate & fx markets & probably far more in those bigger markets than precious metals. However goldbugs seem to always assume manipulation means that the gold price is being held back. Well it was banks that introduced ETFs in 2005 & beyond & that created demand which has since become supply. So yes there has been manipulation, the banks are settling billions in fines because of it, but the manipulation would have been for the benefit of the bank long or short. In regards the comparison above on the trading of oil & gold, all that displays is that most oil is produced to be consumed & the majority is not recyclable unlike gold where as the majority of gold produced isn't consumed, so it will continue to circulate. That also eats into a bit about the production that JB posted. Although delays in getting into production does contribute to the S&D equation its not so straight forward for the same reason that most gold isn't consumed.

Interesting night last night with the USD taking a breather & gold seemingly now finding support around that $1140-50 area.
Stock markets are looking a little overdone to me as well so in the very short term we may see a bounce & get back over that $1180 key area.
I wouldn't be surprised to see another test lower first though & if that is again rejected, we are likely to see some short covering & physical demand move back in.