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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
Topic Started: 3 Apr 2013, 10:29 AM (37,680 Views)
frankrider
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Trojan
16 Apr 2013, 02:51 PM
frankrider
16 Apr 2013, 02:38 PM
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 .... :lol
You expected, but you don't know, do you? All bull markets go up up, and then down, and then up up. You would know that, if you knew anything, because it is the first lesson learnt of any bull market. How do sleep at night, not having a clue as to the dynamics of where your money is invested? Do you just blindly trust the government to protect you or something? Very odd, very odd.

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
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Mike
16 Apr 2013, 05:34 PM
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.
Mike- Nice revisionist history, Gold dropped 24% from March to October during the GFC.

This could be GFC II.
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The case for individual freedom rests chiefly on the recognition of the inevitable and universal ignorance of all of us concerning a great many of the factors on which the achievement of our ends and welfare depend. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it. Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen.”
― Friedrich A. von Hayek


"I, on the other hand, am a fully rounded human being with a degree from the university of life, a diploma from the school of hard knocks, and three gold stars from the kindergarten of getting the shit kicked out of me." Blackadder.


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Mike
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Enjoy The Ride
16 Apr 2013, 05:44 PM
Mike- Nice revisionist history, Gold dropped 24% from March to October during the GFC.

This could be GFC II.
And what happened over the remainder of that time period. Did gold continue to fall?
http://mike-globaleconomy.blogspot.com.au/
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Mike
16 Apr 2013, 05:48 PM
And what happened over the remainder of that time period. Did gold continue to fall?
No In the grips of impending deflation, CB's and Governments pledged to throw the kitchen sink at it. This caused Gold to rally.

I expect much the same response.
Enjoy The Ride!

The case for individual freedom rests chiefly on the recognition of the inevitable and universal ignorance of all of us concerning a great many of the factors on which the achievement of our ends and welfare depend. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it. Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen.”
― Friedrich A. von Hayek


"I, on the other hand, am a fully rounded human being with a degree from the university of life, a diploma from the school of hard knocks, and three gold stars from the kindergarten of getting the shit kicked out of me." Blackadder.


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Trojan
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Enjoy The Ride
16 Apr 2013, 05:50 PM
No In the grips of impending deflation, CB's and Governments pledged to throw the kitchen sink at it. This caused Gold to rally.

I expect much the same response.
Except this time we are no in the grips of impending deflation ...
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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miw
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Mike
16 Apr 2013, 05:34 PM
One of the wildcard factors we haven't dealt with before in a gold bear market is the GLD ETF. This ETF isn't your father's paper gold. It is backed by actual physical gold in a vault in London.

The vault has two parts. One part belonging to the ETF, and this amount is kept to be equal to 1/10oz per outstanding share of the ETF. The other part belongs to the custodian, HSBC.

At the end of the day, one share of GLD will be worth slightly more or less than the fix price of gold. If the share is worth more, the ETF manager buys in gold from the custodian and sells newly-minted shares on the open market to drive down the price.

If the price of a share is less than the price of 1/10oz of gold, it buys shares on the open market, extinguishes them, and funds the transaction by selling gold to the custodian. That is, you have redemptions.

Yesterday's GLD price close was $130.90 which was quite a bit less than 1/10 of the price of an ounce of gold at the time. There seems to have been a bit of buying since the close, driving up the price of GLD to $131.31 which is closer to, but still lower than 0.1*$1376 which is the current front-month futures price of Gold as of this minute. Any of these shares that were bought as redemptions resulted in gold being forklifted across the line of the floor of the vault to the HSBC side.

Some people estimate that well north of 1 million ounces (31 tonnes) has been shifted across the line to HSBC recently. Nobody knows exactly what HSBC does with this gold, but they probably are not just leaving it sit there. I'd say it is showing up for delivery somewhere, further depressing the price of gold.
The truth will set you free. But first, it will piss you off.
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frankrider
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Quote:
 

http://economictimes.indiatimes.com/goldman-sachs-gold-etf/mffactsheet/schemeid-4957.cms
Goldman Sachs Gold ETF
Fund Family: Goldman Sachs Mutual FundClass:

When one of the largest money centre banks is in control of it I would be steering clear myself.


Chart of the Day: Silver Shorts Surge
04/08/2013 12:45 AM

By Tiho, Short Side of Long

Today’s chart refocuses on the precious metal sector and in particular investor positioning towards Silver. Hedge funds and other speculators are now so negative on the metal, that the short positions have reached the highest level in the last 17 years (possibly even longer).

So what does this mean?
Judging by the historical price action over the last two decades, whenever speculators have held such enormous bearish positions, the price of Silver was either at or near a major low. Consider the following:
As short bets reached 44,790 in 1997, a huge short squeeze doubled the price in coming months
In 2000 and 2001 short bets reached over 44,000 triggering the start of a secular bull market
Finally, short bets reached 45,163 in 2005 as Silver broke out, rallying for almost three years.
http://pragcap.com/chart-of-the-day-silver-shorts-surge


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Trojan
16 Apr 2013, 05:55 PM
Except this time we are no in the grips of impending deflation ...
You really don't have a clue do you? You're going to raped in your financial arse in the years to come, nothing surer :pop:


Oil price falls near $93 a barrel in Asia on lower demand forecasts
http://www.foxnews.com/world/2013/04/12/oil-price-falls-near-3-barrel-in-asia-on-lower-demand-forecasts/

Deflation takes hold in Greece
Deflation is emerging in Greece for the first time in nearly half a century because of a decline in the price of services, according to figures published on Tuesday.

http://www.ft.com/cms/s/0/47f7c61e-a129-11e2-bae1-00144feabdc0.html

Bank of Japan set to launch war on deflation
April 9, 2013
http://money.cnn.com/2013/04/03/news/economy/bank-of-japan/index.html

Swiss Consumer Prices Slid for 18th Month in March

By Catherine Bosley - 2013-04-
Swiss consumer prices continued their longest slump in at least four decades in March.
http://www.bloomberg.com/news/2013-04-09/swiss-consumer-prices-slid-for-18th-month-in-march.html

And of course the list wouldn't be complete without

Australian House Prices down 10% from Peak :o
There are several providers of statistics on Australian house prices, but only one that doesn’t have a vested interest in the direction house prices actually move in: the Australian Bureau of Statistics. So despite the criticisms of this series—that it’s based on detached dwellings only

http://www.debtdeflation.com/blogs/2012/05/01/australian-house-prices-down-10-from-peak/

Edited by frankrider, 16 Apr 2013, 07:48 PM.

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
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Pig Iron
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Bogan scum

frankrider
16 Apr 2013, 07:08 PM


Australian House Prices down 10% from Peak :o
There are several providers of statistics on Australian house prices, but only one that doesn’t have a vested interest in the direction house prices actually move in: the Australian Bureau of Statistics. So despite the criticisms of this series—that it’s based on detached dwellings only

http://www.debtdeflation.com/blogs/2012/05/01/australian-house-prices-down-10-from-peak/
..... that's from may 2012. the bottom of the market, which has since risen according to ALL index's including the ABS.
I am the love child of Tony Abbott and Pauline Hanson
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Admin
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Quote:
 
Golden days may not be over yet

April 17, 2013
Malcolm Maiden

The number of analysts and investors prepared to believe that the bull market in gold had ended was growing late last week, but nobody expected the precious metal to fall 15 per cent in two trading days, and by 9.1 per cent on Monday in New York, the biggest one-day loss in percentage terms since February 1983.

Gold is, however, a three-tier market - real, strategic and speculative: the sudden plunge occurred in the speculative layer, and is capable of at least partly reversing.

The first tier of the gold market is the physical market for gold, which has been fairly stable. The World Gold Council estimated that gold supplies in 2012 fell 1.4 per cent to 4453 tonnes. Demand was down by 4 per cent in tonnage, to 4405 tonnes.

The mix changed. Central bank purchases were at 48-year high and demand from institutional investors was strong, but consumer demand weakened as buyers baulked at high gold prices. Overall demand in 2012 was 15 per cent higher than the average for the previous five years.

The strategic tier is currency-focused. Gold is priced in US dollars, and its price moves mechanically up when the US dollar falls, and down when the US dollar rises. The fact that gold supplies are relatively constant adds another dimension, however, because gold is a ''currency'' that is not debased by a sudden expansion of supply.

The strategic tier was the dominant one after the global crisis. Gold rose from about $US600 an ounce before the global crisis to a peak of $US1900 an ounce in September 2011, largely because the US dollar's value fell as the US Federal Reserve aggressively created cash to add quantitative easing stimulus to interest rate stimulus that was already fully deployed.

The third tier of the gold market is speculative trading, and New York's Comex futures market is its locus. On one estimate by a gold fund manager, trade in gold futures on Friday and Monday equalled 112 per cent of annual gold production. It was almost exclusively on the selling side, with hedge funds believed to be at the vanguard. It may in other words have been a similar pack attack to the ones mounted before and after the global crisis on vulnerable companies and, in Europe, vulnerable countries.

That gives you a clue to what gold could do in the near term. Traders who opened up short (sold) positions in the futures market on Friday and Monday pushed the metal down through two critical support levels, and locked in profits as the gold price gapped lower. The metal could recover some of the ground as that speculative selling activity eases and buying support re-emerges at lower levels. On Tuesday the first, tentative attempt to find a new base was under way as gold climbed from a 10.48am low of $US1321.95 (down from about $US1560 an ounce before the slump) to $US1373 at 4pm.

However, that is not to say that gold can bounce back from this selling attack and go on to eventually post new highs.

Pack attacks aim to magnify weaknesses that already exist, and before the price plunge calls that gold's bull run was over were proliferating.

Read more: http://www.smh.com.au/business/golden-days-may-not-be-over-yet-20130416-2hye5.html
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Shadow
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Evil Mouzealot Specufestor

frankrider
16 Apr 2013, 07:08 PM
Australian House Prices down 10% from Peak :o
There are several providers of statistics on Australian house prices, but only one that doesn’t have a vested interest in the direction house prices actually move in: the Australian Bureau of Statistics. So despite the criticisms of this series—that it’s based on detached dwellings only
10% real, 6-7% nominal in mid 2012.

Has since recovered most of that minor correction.
Edited by Shadow, 19 Apr 2013, 10:39 AM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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