OK, that headline was a bit giddy.. and I have no doubt gold will have some wild, and I mean stomach-churning wild days, and soon, but in the end, I think we'll all be shocked and amazed at how high the yellow stuff is going. Shocked and amazed.
Finding Comfort (and New Friends) in Gold
"Gold is a barometer of the common stock of a country, and right now gold is sniffing out weakness in the management of the United States as a business," said Mr. Sinclair, 65, a lifelong Republican who twice voted for President Bush. "Iran is becoming a nuclear power. The chairman of the Federal Reserve is on a puppet string controlled by the White House, and there is no such thing as a strong-dollar policy when the dollar is heading south."
With the price of gold surging, Mr. Murphy is convinced that Goldman Sachs, J. P. Morgan and others are frantically buying now to cover for the gold they sold short over the years. Goldman Sachs and J. P. Morgan declined to comment about their gold trading positions or strategies.
"What a day," Mr. Murphy said one day last week as gold broke through $670. Goldman Sachs and J. P. Morgan were big buyers that day on Comex, the division of the New York Mercantile Exchange where gold contracts trade. Sputtering at the joy of it all, Mr. Murphy could well have been a prospector hitting the Mother Lode. "These guys are short, and they are panicking to get out of their positions," he said. "They are sweating bullets, and it couldn't happen to a nicer bunch of guys."
May 08, 2006
GOLD GOLD GOLD GOLD GOLD
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11 comments:
gold is at it's high......sell now
mark my words......5/6/06 is the gold high point and will be lower next month and next year....
gold bubble
gold bubble
gold bubble
"sell in may and go away"
Hold on to your chickens.
Barrick is a gold *producer*, not a bank. They grind up rock, apply toxic chemicals, and get gold out of it, and sell it.
Selling short to them means selling forward production at a certain price to lock in a profit. Just as all commodity producers do. If they hedged forward all their production, it will appear on the books as a huge virtual mark-to-market loss on the derivatives.
But it isn't a real money loss as opposed to an opportunity lost. Unlike banks or speculators, they can fulfill a short position by delivering physical gold that they manufacture. Or, sell the gold they make at the spot price for a very high price and buy back the hedging derivatives.
They are just unhappy to see their less hedged competitors make gazillion of those supposedly out of style fiat dollars and loonies while they putz around.
Then what actual evidence (except for gold bug paranoia) is there that all sorts of investment banks (who have top tier commodities traders) have massive short positions they have yet to unwind and somehow have hidden from all legal reporting?
good question. anyone know of an answer?
And we're still a long way from the $50 up days.
And the $50 down days...??? Want to try selling your Krugerrands in such a market? Do you think that Kitco is going to play market maker and pony up $12,000,000,000 in cash to buy up all that $2000/oz gold that will be sold by the small investors? Especially when they know that a dramatic price drop may soon follow?
That said, I think that owning some gold is not a bad idea when you consider the financial perfect storm that appears to be configuring over the US economy.
Foobeca:
I agree. I'm more partial to precious metals that *also* have an industrial use than gold (although I have some of that too!).
I'm most interested in silver, because the trade group that represents major silver users filed a brief with the SEC against the silver ETF. They claimed that the ETF taking millions of ounces of silver off the commodities market would drive their costs up.
If they are *that* concerned that a little ETF is going to disrupt their supply, then silver looks to have *a lot* more potential than gold.
"It's just a shiny yellow metal with few practical uses. "
Au contrraire. 1/3rd goes to industrial uses. At least at $450/oz it did. As prices rise alternatives become desireable and existing applications get more efficient. Sound familar? Anyway that's going to have the effect of dumping more supply on the speculative markets while cutting the knees from the true demand.
autofx in Phx said...
I expect at least one more desperate and massive effort to drive metal prices back down so the shorts can cover some of their positions at better prices, then look out. We will see some huge upward moves.
If you bought a little gold'n'silver and are nervous about a bubble top being in place, please, go ahead, sell low on the next big dip, as you weak-nerved guys usually do.
I expect at least one more desperate and massive effort to drive NASDAQ prices back down so the shorts can cover some of their positions at better prices, then look out. We will see some huge upward moves.
If you bought Tech and are nervous about a bubble top being in place, please, go ahead, sell low on the next big dip, as you weak-nerved guys usually do.
LOL
Hello people, they were just talking about the falling dollar trend on CNBC. Did you see it? Can you say FALLING DOLLAR ten times for me? Maybe that will help. I bet it won’t though.
Tom
Selling short:
>But it isn't a real money loss as opposed to an opportunity lost.
There is. It's subject to margin calls. That needs "real" money to service.
The various governments are not going to allow the various bullion banks to default on their loans. This would mean that the loss would be "crystalized" and the Govs would need to mark down their reserves as now missing the appropiate amount of gold - with all the consequences of that.
The easiest way to avoid default is to just roll the loans over into perpetuity.
Miners who have sold short and who now need money to service margin calls will not be so lucky. They will be allowed/pushed into becoming bankrupt, and their gold reserves sold to the banks.
Governments will eventually get their gold back that way.
It might take decades, but barring leaks to the media about the true state of national gold reserves (and the missing gold), no one is bothered about how long it takes.
To the fellow who said gold has few uses... it's used in electrical equipment and in certain medicines.
Silver is much more widely used in electrical equipment -- in fact, the electronics industry uses more silver than anything, even the photographic industry. (Silver conducts electricity better than any other metal.)
I don't think it would hurt to have a reserve of both metals. That's what I'm doing. But something tells me that my silver ("poor man's gold") will give me a larger boost, fiatbux-wise.
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