On the Nature of Things | Forum

This time last year silver was over $44/oz. and gold was over $1,800/oz.

Silver is now below $20/oz., losing more than half its value over the course of the year, and gold is below $1,300/oz., losing over one-third its value.

Anyone have any insights as to why this is happening?

Anyone have any guesses as to the prognosis for gold and silver prices over the next few years?

Marcus wrote:.

This time last year silver was over $44/oz. and gold was over $1,800/oz.

Silver is now below $20/oz., losing more than half its value over the course of the year, and gold is below $1,300/oz., losing over one-third its value.

Anyone have any insights as to why this is happening?

Anyone have any guesses as to the prognosis for gold and silver prices over the next few years ?


.

A few years ago, everybody thought :

- with all that money printed, there will be inflation,

- banks were unsafe (it proved in Cyprus they were) and physical gold was safe

- China was buying Gold


Now


People have realized

- there will be no inflation, rather deflation is the issue

- banks are perceived much safer now, no danger of folding

- China tightening the money pipeline


In that sense

IMVHO

you seen Golds high for long long time

Gold could easily drop below $ 1,000 /Oz .. am astonished silver still holding $ 20, with digital photography, silver lost a lot of industrial use.




.

Good points, HP.

Gold and silver are just another tradeable [nonproductive] asset class whose price will fluctuate.

However, on the internet, one will find lots of sites promoting the magical monetary properties of these shiny metals.

Usually the same sites will also sell you overpriced shiny bits of metal

Prices you are quoting are futures/ETF prices. All evidence is that there is not nearly enough gold in the vaults to back up those contracts, and metals dealers have raised premiums and still sell out.

The current decrease in metals pricing appears to be due to the gold banks moving from a large naked short position to the long side. My opinion is that the price for metal contracts will continue to fall as people realize Comex/ETF's are simply paper bets to be settled in FRN's and the value of physical gold and silver will rise as the paper market collapses.

Google "Harvey Organ". He is a good one stop source for daily warehouse figures on metal inventories and deliveries. The amount of gold that has been removed from US vaults in the last month is astounding.

Nonc Hilaire wrote:Prices you are quoting are futures/ETF prices. All evidence is that there is not nearly enough gold in the vaults to back up those contracts, and metals dealers have raised premiums and still sell out.

The current decrease in metals pricing appears to be due to the gold banks moving from a large naked short position to the long side. My opinion is that the price for metal contracts will continue to fall as people realize Comex/ETF's are simply paper bets to be settled in FRN's and the value of physical gold and silver will rise as the paper market collapses.

Google "Harvey Organ". He is a good one stop source for daily warehouse figures on metal inventories and deliveries. The amount of gold that has been removed from US vaults in the last month is astounding.

Have to say that I don't buy into any of this.

Typhoon wrote:

Nonc Hilaire wrote:Prices you are quoting are futures/ETF prices. All evidence is that there is not nearly enough gold in the vaults to back up those contracts, and metals dealers have raised premiums and still sell out.

The current decrease in metals pricing appears to be due to the gold banks moving from a large naked short position to the long side. My opinion is that the price for metal contracts will continue to fall as people realize Comex/ETF's are simply paper bets to be settled in FRN's and the value of physical gold and silver will rise as the paper market collapses.

Google "Harvey Organ". He is a good one stop source for daily warehouse figures on metal inventories and deliveries. The amount of gold that has been removed from US vaults in the last month is astounding.

Have to say that I don't buy into any of this.

The data is released daily by the banks and exchanges. How do you interpret it? I assume your belief is based on the data and you are a clear thinker, so I am interested in your interpretation of the massive metals loss in the US over the last month or so.



http://harveyorgan.blogspot.com/ does have a lot of commentary, but he also collects and posts the raw data. You don't have to agree with Organ's conclusions, but his site is the easiest place to find all the data compiled in one spot.

Typhoon wrote:

Nonc Hilaire wrote:Prices you are quoting are futures/ETF prices. All evidence is that there is not nearly enough gold in the vaults to back up those contracts, and metals dealers have raised premiums and still sell out.

The current decrease in metals pricing appears to be due to the gold banks moving from a large naked short position to the long side. My opinion is that the price for metal contracts will continue to fall as people realize Comex/ETF's are simply paper bets to be settled in FRN's and the value of physical gold and silver will rise as the paper market collapses.

Google "Harvey Organ". He is a good one stop source for daily warehouse figures on metal inventories and deliveries. The amount of gold that has been removed from US vaults in the last month is astounding.

Have to say that I don't buy into any of this.

I'd be interested to hear why you don't.

There are also physical gold and physical silver ETFs and their price is plummeting, too.

So, I also don't buy the theory that prices haven't actually declined.

Azrael wrote:There are also physical gold and physical silver ETFs and their price is plummeting, too.

So, I also don't buy the theory that prices haven't actually declined.

I fully expect the prices of ETF's to drop to zero when it becomes clear that the metal they represent has been sold off or hypothecated. We are not there quite yet.

Prices have indeed declined in every asset class, but in futures markets price is not that important. What is important is basis, or the profit made by buying at present prices and simultaneously contracting to sell at a higher price at some point in the future. Right now, there are still paper profits to be made regardless of price.

When COMEX is unable to serve physical gold to those who have contracted for delivery the house of cards will collapse. Based on the slope of the chart I posted above, that will happen sooner rather than later. The amount of physical gold in the gold banks on which the ETF's are based has dropped an astounding amount recently. When ETF customers find they have been sold contracts on gold which is now owned by China or hypothected to others their value will drop to zero.

Those in closed end physical metal funds such as Sprott and Canada should do much better than those poor souls in the ETF's.

Federal Reserve is backing away from stimulus measures or at least is saying they are. In consequense, stock values plunged spurring market selloffs worldwide. Very simple and direct according to this source:

Federal Reserve Chairman, Ben Bernanke, relayed policy based statements this week which opened the door further for an early departure from federal stimulus measures. Given sustainable economic recovery in the U.S., the feds could move to reduce federal stimulus measures prior to this year’s end. Stock composites in the U.S. plunged lower after Bernanke’s remarks and global market sell-offs were broadly based. Gold futures fell over 6 percent to the lowest level since 2010. An end to the Federal Reserve’s stimulus measures would strengthen the dollar which would further pressure gold price. Gold and silver contract prices dropped by over 6 percent during the last full trading session.

Heracleum Persicum wrote:A few years ago, everybody thought :

- with all that money printed, there will be inflation,

- banks were unsafe (it proved in Cyprus they were) and physical gold was safe

- China was buying Gold

Now

People have realized

- there will be no inflation, rather deflation is the issue

- banks are perceived much safer now, no danger of folding

- China tightening the money pipeline


In that sense

IMVHO

you seen Golds high for long long time

Gold could easily drop below $ 1,000 /Oz .. am astonished silver still holding $ 20, with digital photography, silver lost a lot of industrial use.

Some questions then, ALI (or anyone):

1) Where did all that printed money go/disappear to? With all the printing/pumping that's been going on, how can there help but be inflation? All I see right now is rising prices.

2) What does "deflation" mean in the real world? How will it evidence itself?

3) When you opine that we have seen gold's high for a "long time," what do you reckon is a "long time"? A year? Five years? Ten?

In the for-what-its-worth department, I've heard that the historic ratio between gold and silver is seventy-to-one, and that's about where it is now.

Marcus wrote:.

Some questions then, ALI (or anyone):

1) Where did all that printed money go/disappear to? With all the printing/pumping that's been going on, how can there help but be inflation? All I see right now is rising prices.


.

Well,

Marcus


The crooks were speculating with your money, Wall Street were shuffling money from here to there and from there to here, always taking a cut (their cut was always cash), when things collapsed, there was a very big "HOLE" left .. that printing money by FED gushing into that "HOLE" filling the pockets of Wall Street crooks again .. non of that cash is for you, that's why you not feelin things getting better .. idea is, when the crooks fat again, it should trickle to Joe

Don't 4get, Marcus, America is a capitalist country, notion is, the rich the one who make things happen and create wealth, the ordinary people should be happy having a job, the rest just music

what will happen now, is, FED will stop printing money, and things will flare out .. again, Joe the one going to pay the price

Marcus wrote:.

2) What does "deflation" mean in the real world ? How will it evidence itself ?

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Theoretically, inflation is the price increase for a "basket" of goods .. food, gas, etc .. but, in reality, that "basket" does not represent the real world .. that is why that idi*ot Greesspan for 15 yrs was saying inflation is 1% when house prices were doubling every year or gas prices and health care prices were exploding .. that official iflation rate just to fool Joe

Inflation is an "expectation" .. people expecting something becoming more expensive next year so better buy it now although you might not need right now .. that leads to a herd mentality, a loop

biggest item in inflation is REAL ESTATE .. food prices have nothing to do with inflationary expectation, nobody buys more oranges fearing oranges will get more expensive next yr, perishable .. food prices depends on harvest metrics, whether etc

Marcus wrote:.

3) When you opine that we have seen gold's high for a "long time," what do you reckon is a "long time"? A year? Five years? Ten?

.

things can change, war, economic collapse, etc etc

but , I think, Gold will not recover for 5-10 yrs

Marcus wrote:.

In the for-what-its-worth department, I've heard that the historic ratio between gold and silver is seventy-to-one, and that's about where it is now.


.

don't count on historic ratios and trends .. market participants make profit only by surprises, that is where the devil is

Markets go up and down, but tangible assets always retain some value.

People do not buy gold and silver coinage as an investment. They buy it to pass wealth onto their progeny in a way that is out of the current, corrupt system.

Nonc Hilaire wrote:

Typhoon wrote:

Nonc Hilaire wrote:Prices you are quoting are futures/ETF prices. All evidence is that there is not nearly enough gold in the vaults to back up those contracts, and metals dealers have raised premiums and still sell out.

The current decrease in metals pricing appears to be due to the gold banks moving from a large naked short position to the long side. My opinion is that the price for metal contracts will continue to fall as people realize Comex/ETF's are simply paper bets to be settled in FRN's and the value of physical gold and silver will rise as the paper market collapses.

Google "Harvey Organ". He is a good one stop source for daily warehouse figures on metal inventories and deliveries. The amount of gold that has been removed from US vaults in the last month is astounding.

Have to say that I don't buy into any of this.

The data is released daily by the banks and exchanges. How do you interpret it? I assume your belief is based on the data and you are a clear thinker, so I am interested in your interpretation of the massive metals loss in the US over the last month or so.



http://harveyorgan.blogspot.com/ does have a lot of commentary, but he also collects and posts the raw data. You don't have to agree with Organ's conclusions, but his site is the easiest place to find all the data compiled in one spot.

Regarding the plot, the gold may have been transferred from "eligible" to "registered" holding at JPM, although I don't think it matters.

COMEX deals in futures contracts. Only hedgers would hold contracts until the contract expires with delivery taking place. Or they might roll over the contract. Speculators have no interest in delivery.

Apparently quite a few ETFs hold gold in the form of futures contracts as opposed to physical.

There is no price difference between what is quoted for a contract on a futures exchange and a local bullion dealer selling physical except the retail markup by the latter.

I have to wonder if, for example, the total amount of wheat is far less than the total futures contract amount.

The derivative markets held up fine during both the internet bubble and mortgage market collapse.

The gold market is tiny by comparison.

Nonc Hilaire wrote:Markets go up and down, but tangible assets always retain some value.

People do not buy gold and silver coinage as an investment. They buy it to pass wealth onto their progeny in a way that is out of the current, corrupt system.

Yes, and here is where I must agree with Nonc and disagree with you, ALI.

Inflation is nothing more than an increase in the supply of money, which results in a rise in prices (more dollars chasing goods). In 1965, I bought a new '65 full-size, Chevy pickup with a big 6-cylinder engine.

As of this moment, a silver dollar is worth $12.92, and 2000 of them will still buy a new, Chevy pickup ($12.92 X 2000 = $25,800).


*What are ETFs?

Nonc Hilaire wrote:Markets go up and down, but tangible assets always retain some value.

People do not buy gold and silver coinage as an investment. They buy it to pass wealth onto their progeny in a way that is out of the current, corrupt system.

I'd rather inherit a viable wealth generating company than a bar of gold.

Typhoon wrote:. . COMEX deals in futures contracts. . .

Apparently quite a few ETFs hold gold in the form of futures contracts as opposed to physical. . .

I have to wonder if, for example, the total amount of wheat is far less than the total futures contract amount. . .

If such is the case, and I suspect it is, isn't the commodities market nothing more than legalized gambling?

Marcus wrote:

Nonc Hilaire wrote:Markets go up and down, but tangible assets always retain some value.

People do not buy gold and silver coinage as an investment. They buy it to pass wealth onto their progeny in a way that is out of the current, corrupt system.

Yes, and here is where I must agree with Nonc and disagree with you, ALI.

Inflation is nothing more than an increase in the supply of money, which results in a rise in prices (more dollars chasing goods). In 1965, I bought a new '65 full-size, Chevy pickup with a big 6-cylinder engine.

As of this moment, a silver dollar is worth $12.92, and 2000 of them will still buy a new, Chevy pickup ($12.92 X 2000 = $25,800).

*What are ETFs?

In 1965, the nominal [in 1965 dollars before adjustment for inflation] median income in the US was less than US$ 6,000.

In 2011, the nominal [in 2011 dollars before adjustment for inflation] median income in the US was more than US$ 48,000.

Typhoon wrote:I'd rather inherit a viable wealth generating company than a bar of gold.

That goes without saying . . so would anyone, but that's not the issue.

The issue is, as Nonc said, "a store of value/wealth," not something that generates more value/wealth.

Marcus wrote:

Typhoon wrote:. . COMEX deals in futures contracts. . .

Apparently quite a few ETFs hold gold in the form of futures contracts as opposed to physical. . .

I have to wonder if, for example, the total amount of wheat is far less than the total futures contract amount. . .

If such is the case, and I suspect it is, isn't the commodities market nothing more than legalized gambling?

All financial market are a form of gambling as is life.

Some wag once opined, "Stock markets are the lottery tickets of the middle class."

However, unlike slot machines, one can do one's homework and increase the odds in one's favour.

Marcus wrote:

Typhoon wrote:I'd rather inherit a viable wealth generating company than a bar of gold.

That goes without saying . . so would anyone, but that's not the issue.

The issue is, as Nonc said, "a store of value/wealth," not something that generates more value/wealth.

In ~ 1980, gold peaked at ~ US$ 870. That's US$ 2386.62 in 2012 dollars.

Whoever bought at the 1980 peak and continued to hold has yet to break even on their investment.

Not exactly a store of value.

I suspect whoever bought gold at the recent peak may have a similar wait in store for them.

Gold is just another tradeable asset class.

Typhoon wrote:All financial market are a form of gambling.

Some wag once opined, "Stock markets are the lottery tickets of the middle class."

However, unlike slot machines, one can do one's homework and increase the odds in one's favour.

I understand that and agree. That said, the rules are increasingly obscure and have been known to change in the middle of the game . .

And at my age, one would like to know that some portion of one's assets are immune to inflation. Nor have I ever had an inclination to gamble.

In such a scenario, one's choices are limited.

Marcus wrote:

Typhoon wrote:All financial market are a form of gambling.

Some wag once opined, "Stock markets are the lottery tickets of the middle class."

However, unlike slot machines, one can do one's homework and increase the odds in one's favour.

I understand that and agree. That said, the rules are increasingly obscure and have been known to change in the middle of the game . .

And at my age, one would like to know that some portion of one's assets are immune to inflation. Nor have I ever had an inclination to gamble.

In such a scenario, one's choices are limited.

The abysmally low interest rates have screwed prudent savers in the US.

In Japan, this screwing has been going on for decades.

The whole world is desperately seeking yield.

Typhoon wrote:In ~ 1980, gold peaked at ~ US$ 870. That's US$ 2386.62 in 2012 dollars.

Whoever bought at the 1980 peak and continued to hold has yet to break even on their investment.

Not exactly a store of value.

I suspect whoever bought gold at the recent peak may have a similar wait in store for them.

Gold is just another tradeable asset class.

Agreed . . partially. Bought and sold, short term, you are assuredly correct. Long term, any physical asset is a better store of value than are our dollars.

Typhoon wrote:

Nonc Hilaire wrote:Markets go up and down, but tangible assets always retain some value.

People do not buy gold and silver coinage as an investment. They buy it to pass wealth onto their progeny in a way that is out of the current, corrupt system.

I'd rather inherit a viable wealth generating company than a bar of gold.

The problem is equities are in a bubble. Overvalued due to QE and HFT manipulation at low volume and unrelated to earnings.

PM's are at strong support levels. Now is the time to add PM's to your portfolio, and move your equities into direct registration so they are not Corazined or bailed-in.