Gold price dives through support to new low. Gold Bubble continues to deflate.; Gold price to drop another 15% this year say strategists at Societe Generale
Tweet Topic Started: 3 Apr 2013, 10:29 AM (37,681 Views)
A couple of years is neither here nor there - I don't expect prices to always track incomes/rents closely over the short term - there will be periods of 2-3 years when incomes rise faster or prices rise faster or rents rise faster. But over the long term I expect prices to continue tracking incomes/rents as has been the case for the past decade, and as was the case in the decades prior to the brief one-time adjustment of the late 90s / early 2000s.
If unemployment was very high for an extended time, then we might expect income/rent growth to be zero or negative, so house prices could still track incomes/rents.
I think the flaw in the argument is the fact that the market is so dominated by investors right now.
How strong that demand would remain the face of adverse macro e.g. high unemployment is highly questionable in my view.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Gold should be going up. The fact that it's not should be worrying those that hold it. You might want to think what the gold price was the last time a country decided to dump it's reserves. You can hope and hope and hope, but there comes a time when you have to face reality. Things are happening here that we are not privy to.
Gold was just over bought based on an inability to understand that QE was not creating a particularly inflationary increase in prices and was never likely to if deficit spending did not continue for ever in an out of control manner.
Sequestration must have had an impact on Gold. The US is indicating it takes the longer term threat of the debt it will hold seriously, whereas it was priced into Gold that the US would be unable to act or would chose not to act.
However I still think Gold will be rising thru USD2000 before around the year 2020
The smackdown was a 20 ton paper gold flood that cost a mere 1 billion (leverage) to exicute. The reason was in part due to the massive outflows from the comex vaults and british bullion houses. If you bought in early, relax. If you bought in late just hold on lol. I spoke to a small dealer today and he said there had been no buying or selling activity since Monday but when I called him later to confirm an order for some platinum I am buying he said the phone had been ringing hot.
I will post up the comex data and the big forced sale when I get home but am on the phone now. Interesting events to be sure, but the end of the gold bull? I think not.
Negative gearing is a form of leveraged speculation in which a speculator borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan
A negative gearing strategy can only make a profit if the asset rises so much in price that the capital gain is more than the sum of the ongoing losses over the life of the speculation. http://en.wikipedia.org/wiki/Negative_gearing
Gold should be going up. The fact that it's not should be worrying those that hold it. You might want to think what the gold price was the last time a country decided to dump it's reserves. You can hope and hope and hope, but there comes a time when you have to face reality. Things are happening here that we are not privy to.
Gold was just over bought based on an inability to understand that QE was not creating a particularly inflationary increase in prices and was never likely to if deficit spending did not continue for ever in an out of control manner.
Sequestration must have had an impact on Gold. The US is indicating it takes the longer term threat of the debt it will hold seriously, whereas it was priced into Gold that the US would be unable to act or would chose not to act.
However I still think Gold will be rising thru USD2000 before around the year 2020
The smackdown was a 20 ton paper gold flood that cost a mere 1 billion (leverage) to exicute. The reason was in part due to the massive outflows from the comex vaults and british bullion houses. If you bought in early, relax. If you bought in late just hold on lol. I spoke to a small dealer today and he said there had been no buying or selling activity since Monday but when I called him later to confirm an order for some platinum I am buying he said the phone had been ringing hot.
I will post up the comex data and the big forced sale when I get home but am on the phone now. Interesting events to be sure, but the end of the gold bull? I think not.
I admire your conviction Frank. And to be honest, you show more b@lls than most other Goldbugs in that you are at least here defending your views. A lot of other notable spruikers have gone MIA......
Interesting events to be sure, but the end of the gold bull? I think not.
So this is what a gold bull market looks like ... I expected bull markets to go in the other direction ....
b_b
16 Apr 2013, 02:49 PM
I admire your conviction Frank.
If people wisened up, frankrider will see his gold collection's value fall even further so he has to try his hardest to talk it up. On that note, I blame the gold market cash on Kris Sayce for failing to post a new spruiking article on Monday.
I'm no gold expert, but I expect a dramatic drop would be due to big players selling. The big players in gold holdings are central banks.
Central bank selling would look like a distribution. This looks like a capitulation. What we are seeing is margin calls taking their deadly toll. It also had its effect on the equity market as people sold off whatever looked weak to make their margin.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
When banks advise to sell, that is the time for your finger to be hovering over the buy button
Goldman also have a sell on gold.....
If there's an announcement, it will happen sooner rather than later. I'd buy into the recovery rather than catch the falling knife. Something's happening here.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
When banks advise to sell, that is the time for your finger to be hovering over the buy button
Goldman also have a sell on gold.....
Funny you should say that. My finger was hovering over the "sell" button on Friday until I saw that Goldman had said "sell". Usually it is a good idea to do exactly the opposite of what Goldman say.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
I admire your conviction Frank. And to be honest, you show more b@lls than most other Goldbugs in that you are at least here defending your views. A lot of other notable spruikers have gone MIA......
lol, probably because I been through it before.
This link is page 24 of a 200+ page thread, it's where the panic starts, I think? I was never on this forum but it gives you an idea of how I view the last weeks action. I was on other forums then, GIM etc. Have a read of at least the page here . http://www.thepropertypin.com/viewtopic.php?f=19&t=1110&start=345
A few months later the GFC was in full swing and anyone holding gold was counting their blessings as their pension accounts got smashed.
The reality is no one cares about gold in the street (aside from the house bulls here who are enjoying a brief payback, lol) People don't care because they have no stake in it. That more than anything else tells me the bull is not over. When have you ever heard of a big bull collapsing and the majority of the public not getting burnt?
Anyway, like I said, I have seen this before and I see nothing different now. It's just another smackdown by the paper players. here is what happened.
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Quote:
Those with concentrated short positions may also have been concerned about the significant decline in COMEX gold inventories.
The plunge in New York Comex’s gold inventories since February is a reflection of increased demand for the physical metal and concerns about counter party risk with some hedge funds and institutions choosing to own gold in less risky allocated accounts. Comex gold bullion inventories have slumped 17% already in 2013, falling to just 286.6 metric tons of actual metal on April 11, the lowest since September 2009.
This means that futures speculators on Friday sold a significant amount of more paper gold, in an hour or two, then the entire COMEX physical gold bullion inventories.
Interestingly, the drop in Comex inventories would be the biggest for a whole year since 2001, when bullion began its secular bull market. Absolutely nothing has changed regarding the fundamentals of the gold market and bullion owners are advised to again focus on the long term and the vital diversification benefits of owning gold over the long term.
ROSS NORMAN - Gold crushed by 400 tonnes or $20 billion of selling on COMEX Apr 15 2013
The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract (see below) in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level... the line in the sand.
Two hours later the initial selling, rumoured to have been routed through Merrill Lynch's floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market - it had the hallmarks of a concerted 'short sale', which by driving prices sharply lower in a display of 'shock & awe' - would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called 'stopped-out' in market parlance - probably hidden the unimpeachable (?) $1540 level.
The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production - too much for the market to readily absorb, especially with sentiment weak following gold's non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data. The assault to the short side was essentially saying "you are long... and wrong".
Gold’s ‘plunge’ is now headline news which is bullish from a contrarian perspective. Less informed money is again selling gold or proclaiming the end of gold’s bull market.
The smart money such as certain hedge fund managers, high net worth individuals, pension funds, family offices, institutions and creditor nation central banks and will see this vicious sell off as an absolute gift and will accumulate again on this dip.
A long term allocation to physical gold bullion to hedge systemic and monetary risk remains vital.
And that my forum friends is all that need be said as far as this paper sell off is concerned. Could it go lower? Of course, at least until they begin closing all the mines down, but I for one don't like trying to pick bottoms or tops. Australian Platinum coins at $1400/oz is a gift IMO.
What other people do with their hard earned money is their affair but I would not advise anyone either way because I like the physical PM market just the way it is. The fewer investors the better.
Negative gearing is a form of leveraged speculation in which a speculator borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan
A negative gearing strategy can only make a profit if the asset rises so much in price that the capital gain is more than the sum of the ongoing losses over the life of the speculation. http://en.wikipedia.org/wiki/Negative_gearing
Gold bulls need to ask why did gold reach such heights in the first place. It was the GFC which fuelled the price rises and fears the US economy and global economy as a whole might collapse further, gold was the safe bet.
The period known as the GFC has long since passed, yes w still deal with its after affects but the crisis has been and gone. The market now looks at the world and sees the US has not collapsed and won't collapse with many positive signs. Europe still fumbles along but the crisis has passed and does not look like being an EU breakup like long feared. China continues to grow strongly although not at the dizzy speeds prior to the GFC.
Inflation is not an issue as most economies are not operating at capacity, as long as spare capacity remains inflation will remain low. Until growth in the US is above 3% or higher for extended periods inflation will remain under control.
Why hold gold if the world outlook is changing from defensive wealth protection into other classes of wealth creation. Gold is a safe heaven or if you bought in the hope price gains then that is speculation and a risk.
It was my opinion 6 months ago on these forums that gold had peaked and would begin a long downward trend, this has happened end and will continue to decline. Recent day drops have been dramatic and perhaps it has over sold for the moment, over the longer period though gold will continue to fall in value. Until such time as a price is reach which reflects real world demand and supply which in my opinion is a price well below $1000.
Golds only hope is a world wide economic crash, or perhaps a major war but that would only be a short term reprieve. The Fundamentals under pinning the price of gold do not stack up any way you look at it.
To gold bulls you are now behaving in a way which would mimics property owners had they just witnessed 25% fall in house values. You would talk it up to save your own money, a normal human response.
Gold will keep falling in value, it may have a bounce as some buy in a lower and lower prices but the price is set to fall over the longer term for along time to come.
Perhaps pray that the inflation genie returns to global markets and that may put a floor under gold, but inflation is likely 2 or more years away from having any major effect on the global economy.
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