Posted on 04/18/2013 1:45:33 AM PDT by dennisw
That's right, and 2,700 tons of gold mined per year is actual physical gold which gives us an increased inventory if we're only selling 96,500 oz. in two days.
thanks!!! :) changing it now
Wow, SUPER!
[bookmarking...]
added!
added!
--and anticipating the lag is what we get paid for.
Brings to mind the huge disconnect in 2003 when EVERYONE was doom'n'gloom while I was buying like crazy. Great fundamentals with overwhelming biased negative reporting. Now it's reversed. I'd buy shorts but I'm not good at it. That's ok, I'll hold cash for the next bounce.
I may be wrong, but I think the 2,700 tons of gold mined per year is total for the entire WORLD. While the 96,000 ounces(roughly 3 tons?) sold by the US Mint in two days was merely the amount sold by the US Mint to us plebes in the United States.
That doesn’t take into account the amount bought by citizens around the world(especially India/China) OR by the largest buyers of gold — the central banks of the world. I was reading an article not that long ago, that said the Chinese Central Bank alone was buying on the order of 100 tons of gold per MONTH.
My figures may not be perfectly accurate(as my memory is hardly EVER perfectly accurate lol), but I think the central bank buying angle is still relevant to your conversation.
I hadn’t even started learning about the markets yet in 2003. However, looking over a long-term chart shows me that you must’ve had a good year that year. Over a 40% increase on the S&P in less than a year. Nice.
I only really started making an effort to understand the markets in 2011(after I got caught up in the hype and lost money buying silver near the top).
I subsequently started reading multiple books about investing and short term trading(not day trading). (And subsequent to that, learned how even a BASIC level of chart reading skill would’ve been enough to dissuade me from purchasing silver when I did, but so it goes. I also realized that learning from your losses and adapting are absolutely crucial to succeeding in the markets. And all in all, at least I bought physical silver and not paper.)
One of the major indicators I’ve learned to keep an eye on is exactly what you are talking about, sentiment. I’m still green as it goes, and it seems technical indicators which help a great deal, only go so far. And there is a level of ‘feel’ to sentiment in any given market.
I hear what you are saying about not going short(I’m currently underwater on one), but it seems we both agree, in that we both aren’t going long at these levels.
China, Japan, India and Russia are big on the list and the amount of gold leaving the US mint is fascinating.
My belief is total gold supply can only grow marginally, while fiat money supply can grow exponentially- as fast as Bernake can type zeros. You know he is out of control when we are print a trillion+ in a year! Fiat money will eventually fail. This is why I think PMs are so important – it’s the only “currency” in play that is immune to government devaluation.
I do not think we have a gold surplus problem. It takes money to get it out of the ground and money to refine it. And of course if it's value ever drops to below that manufacturing cost, the process will come to a halt.
I also think 3 tons of gold sold by the US mint in 2 days means something. :)
But of course only God knows and He's not telling. So I guess we will wait and see what happens.
Thanks for the conversation!
I agree with the general argument that says Fed dollar devaluation leads to real asset inflation, at least in the long run.
However, I also think that since the market crash in 2008 and the multiple Quantitative Easings afterward, the upward price movement of precious metals has been caused as much(or more) by speculators as it has by true long term hedgers against inflation.
I think there was a huge amount of speculation going on in 2011 and those shorter term speculators are the reason we topped 2 years ago and are now trying to find a solid bottom.
After all, gold is STILL up about 100% since the 2008 lows, and silver is up even more than that.
Even if you recognize the fallacy of the ‘official’ CPI numbers, and say we’ve been having inflation of 6-10% per year since the start of QE. That level of inflation ALONE doesn’t justify these lofty price levels in gold and silver.
So it’s speculation on future inflation. And that brings us to the velocity of money, the real driver of inflation, and last I remember reading, the velocity of money was still significantly depressed(even 4 years after the crash). With much of the Feds money printing never making it into the actual economy and merely sitting in the reserves of the major banks balance sheets.
Ultimately it seems to me, in order to get into a real hyper-inflationary period(which seems to be the scenario envisioned by the long term currency hedgers), we would need to see actual economic growth and rising interest rates.
In the short term at least, I see just the opposite, potentially another deflationary spiral like 2007-2008. Which would mean further weakness in gold and silver, at least in the short term.
But that’s all just my opinion.
TABLE 3: US GOLD MARKET, CUMULATIVE SUPPLY DEMAND 1991-2012 (IN TONNES)
US Supply, Mine Production + Scrap Recycling = 7,532
US Demand, All Sources = 6,517
Surplus Available For Export = 1,014
Actual Gold Exports (1991-2012) = 11,223
Actual Gold Imports, same period = 5,719
Actual US Net Gold Exported = 5,504
US Gold Available For Export = 1,104 (Figures Above)
Unexplained Export Gap = (4,490)
If you get a chance (and you haven't already seen it) check out the whole article on zero hedge. Is fascinating!
http://www.zerohedge.com/news/2013-03-19/sprott-do-western-central-banks-have-any-gold-left-part-ii
No, no, not just your opinion! I totally agree. Well mostly totally agree. :p
It was a pm bubble. And we will see a period of real deflation... followed by a long painful period of hyperinflation!
Ding ding ding ding...we have a winner! Really, folks. Except when you are trading with an individual, not a licensed business the price of "paper gold" is what sets the price of "real gold". Except there is always the difference between bid and ask and handling fees or commissions, which can add up to almost 10% of the cost. So complain about price manipulation and evildoers and no one can really say you are wrong, but say that the price of physical gold and paper gold (or other PM's) have decoupled and you are kidding yourself.
That's how I work with things that don't matter much to me and like we said in post 27 it's also how most people vote and invest. Economics and investing's important to me so I don't decide things without first looking and studying. It's more work but the pay's better. The fact that most people don't care enough to look but they still act on firmly held opinions is what I'm seeing as the main cause of our ruinous public policies.
fwiw, the evidence seems to point to central bank purchases not affecting falling gold prices, and me & a few other freepers were chatting about it here. We can go over the nuts'n'bolts of it if you're interested..
Right, I already paid the tuition for that education.
I mean, it makes sense that if we can make a profit by picking good stocks, then we should be able to profit by shorting bad stocks. The glitch I hit is the fact that during down turns market volatility goes wild and even a bad stock and soar the day after it tanks --just no way of knowing beforehand.
OK, so I know that eventually I'd probably be able to figure out all the details, but that's a lot of work and I do so much better by just putting that effort into picking market leaders...
Here's one for production (using USGS stats)--
--from this site which also included info on consumption including this graphic:
I also think 3 tons of gold sold by the US mint in 2 days means something. :)
Gold's price is set worldwide and we can't expect much impact from 3 tons out of 177,000 tons (161,000 tonnes).
Here’s an article about the Chinese buying 100 tons per month. It’s from about 9 months ago, but just to prove my memory didn’t fail me(this time). ;)
Also from what I gather, the Chinese domestically mined gold, goes straight into their vaults and never sees the open market(at least as long as they are net buyers). So whatever they mine domestically isn’t included in these numbers.
I’d agree that the paper price and real price haven’t decoupled. But I wouldn’t say they can’t.
Part of the problem is short term speculators deal specifically in the paper market, while long term hedgers against currency implosion/inflation deal specifically in the physical market.
Meaning the market makers in the paper market never have to seriously worry about delivering physical(or haven’t so far). If they operate with say 40% physical reserve now(I don’t know the actual percentages), who’s to say they couldn’t drop their minimum physical reserve to 20%? or 10%? (or instead double or triple the number of shares they trade?) If they’ve never had to actually deliver more than say 2% of their physical holdings to customers?
Thanks. What I'm dealing with is this is gold China bought from Hong Kong (!?) in 2012. Whatever that means, it didn't offer much price support that year as the international price of gold continued its fall from 2011 highs. As for future Bank of China purchases (from here):
| Yi Gang, Vice Governor of the People's Bank of China (PBOC), recently made the headlines with his comments on Chinese gold reserves. On Wednesday, Mr. Yi stated that China's gold reserves remain static at 1,054 tonnes, and suggested that a sizeable increase in those reserves would be unlikely in the future. "We need to take into account both the stability of the market and gold prices," Mr. Yi stated, adding that as the world's largest gold producer and importer, China produces about 400 tonnes of gold annually, and imports an additional 500 to 600 tonnes of gold every year. "Compared with China's 3.3-trillion-U.S.-dollar foreign exchange reserves, the size of the gold market is too small," Yi said, rejecting speculation that China would further diversify its foreign reserve investments into the precious metal. "If the Chinese government were to buy too much gold, gold prices would surge, a scenario that will hurt Chinese consumers ... We can only invest about 1-2 percent of the foreign exchange reserves into gold because the market is too small," Yi stated. |
Yi should know.
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