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Gold at EUR1,000/oz - Strong Physical Demand Leading To Illiquid Conditions

Tyler Durden's picture


From GoldCore

Strong Physical Demand Leading to Illiquid Conditions

Gold’s fundamentals remain strong with robust demand internationally;
particularly in Asia where inflation is taking hold. Strong demand can
be seen in the premiums being paid for gold bars in various parts of
Asia, especially in India, Vietnam and China.

Indian ex-duty premiums for the London AM and PM fix were $6.81 and
$4.72 respectively yesterday, showing that Indian buyers are active at
these price levels.

Vietnam gold markets were open for the first time since last Tuesday.
Vietnamese gold stood at a premium of $40.49 to world gold of $1,351.15.

Reuters reports that Asian kilo bar premiums remain firm and near 7 year
highs with premiums of $1.50/90 $1.90/3.00 in Singapore and $3.00/$3.00
$3.00/4.00 in Hong Kong. Japanese demand has also picked up of late and
premiums in Tokyo were $1.50/2.00.

While Chinese demand is not expected to be at the record breaking levels
seen in late 2010 and January 2011, it is expected to remain robust due
to inflation and negative real interest rates in China (and most of the
rest of the world).

With the physical gold market remaining very small when compared to the
futures and paper gold market (futures, CFDs etc) there are increasing
concerns of illiquidity due to the scale of demand and lack of supply.
Pertinently, the size of the physical gold and silver bullion markets is
tiny compared to the size of international equity, bond and currency
markets. Not to mention the hard to fathom humongous international
derivatives market (see chart below).


The gold
market remains one of the most liquid markets in the world. The market
is more liquid than many government bond markets in Europe, with daily
trading volumes normally exceeding $100 billion.

Yet, it is important to make the distinction between the gold market
(speculators, hedgers etc. in the paper gold market) and the bullion
market (generally jewelers and passive investment and store of value

UBS wrote about “illiquid conditions” in the gold market this morning.
They did not clarify but they may have meant illiquidity in the physical
gold bullion market.

Gold trading volumes in the financial markets dwarf the size of actual
above ground refined investment grade product (coins and bars).
Investment demand for coins and bars, along with the gradual move to
allocated accounts on behalf of retail investors, hedge funds and
institutions, is leading to a lack of liquidity in the market.

This is a recipe for higher prices in the coming months of 2011.


Gold and silver are marginally lower against most currencies after yesterday’s 1% and 3% rise respectively. Gold rose above €1,000/oz again yesterday and remains just below the €1,000/oz level today despite the euro being stronger versus other currencies. Silver is back above the important $30/oz psychological level and €22/oz.


Despite the gains on Wall Street yesterday, Asian equities were weaker overnight (except for the ASX 200 and NZX 50) and European equities are mixed with small gains being seen in the BE 500 and the Stoxx 50. The sell off in Asia is being attributed to the Chinese interest rate rise but concerns about inflation and the robustness of the global economic recovery may be more pertinent.


European sovereign debt yields are flat after yesterday’s rises which were particularly noticeable in the US where Treasury yields rose sharply, extending their run of losses for seven straight sessions. The 10 year was up 6 bp to 3.69% and is currently trading at 3.72%.


Commodities were weaker yesterday but are slightly stronger today. NYMEX crude is up 0.84% to $87.67 and Brent up 0.78% to $100.70 a barrel.


(AP) -- Gold, Silver Rise on Inflation Worry
PRECIOUS METALS: Gold and silver prices rose after China increased interest rates to curb inflation and slow economic growth. The two precious metals are considered hedges against inflation and slow growth.

INFLATION FEARS: This is the third time China has raised interest rates since October. Government leaders fear a sharp rise in prices for things like food and fuel could trigger unrest. Investors are concerned about inflation rising globally.

MIXED BAG: Wheat and soybeans rose while corn fell. Energy contracts were mixed.

(Bloomberg) -- Gold May Gain as China Rate Increase Stokes Inflation Concerns
Gold may advance for a third day on speculation China’s interest-rate increase will fuel concerns about the pace of inflation, boosting demand for the metal as a store of value.

Gold for immediate delivery was little changed at $1,363.88 an ounce at 1:57 p.m. in Singapore. The People’s Bank of China yesterday raised the one-year lending rate by a quarter point to 6.06 percent and the one-year deposit rate an equivalent amount to 3 percent.

“The interest-rate hike does reflect a certain degree of fear over inflationary pressure, which is a key factor attracting investor interest in gold,” Yingxi Yu, Singapore- based commodity analyst with Barclays Capital, said by phone today. “We do believe that there’s further upside for gold in the next few months.”

China joined India, Indonesia, Thailand and South Korea in boosting interest rates this year as Asian policy makers sought to cool the economies leading a global rebound. A report in China is forecast to show inflation in the country expanded at the fastest pace in 30 months. World food prices rose to a record in January and probably will remain elevated, the United Nations said last week.

Bullion, which has dropped 4.7 percent since climbing to an all-time high of $1,431.25 on Dec. 7, will rebound on investor demand, Alan Heap, a commodity analyst with Citigroup Inc., said today in an interview with Bloomberg UTV.

(Bloomberg) -- Citigroup Is ‘Still Wary’ of Saying That Gold Rally Has Ended
Citigroup Inc. said it’s “still wary” of calling gold’s decade-long rally over, even after figures showed holdings of bullion in exchange-traded funds fell in January. “We think that there are enough problems out there (including with the U.S. fiscal/debt situation) to ensure that gold will remain well bid for some time yet,” the bank said in a report dated yesterday.

(PTI) -- Reliance MF launches Gold Savings Fund
Anil Ambani group firm Reliance Mutual Fund today launched a new Gold Savings Fund, a first-of -its-kind investment scheme focused on gold, to tap a market that it expects to become bigger than even equity mutual funds.

The new fund, which is different from gold ETFs (Exchange Traded Funds) that require subscribers to have a demat account, will also offer investors the option to invest as little as Rs 100 per month, the company said here.

The company said that its Reliance Gold Savings Fund will enable investments in gold without any locker or demat account -- a first in the country.

Announcing the launch of the New Fund Offer -- which will be open from February 14-28 -- Reliance Capital Asset Management CEO Sundeep Sikka said: "We expect this gold investment industry to surpass equity MFs in the next three years."

Sikka said the gold investment opportunity in India was not optimally tapped and the new product will offer a simple, affordable and investor-friendly solution for investing in gold to the masses.

"Indians are known for their love for gold. However, with low demat penetration in India, a lot of investors have not been able to participate in this safe mode of investment.

"This product will create a new avenue for pure gold investments for the retail investor without the need of having a demat account or a locker," he added.

The scheme's performance will be benchmarked against the price of physical gold.

The company said the new fund will enable investors to avail long-term taxation benefits from the first year itself, unlike physical gold, wherein long-term taxation can only be availed after three years.

The investors will not be charged any entry load on the fund, though there would be a 2 per cent exit load if redeemed before completion of the first year.

A part of Anil Ambani group's financial services arm Reliance Capital, Reliance Capital Asset Management is the country's largest fund house and manages assets worth USD 24 billion across mutual funds, pension funds, managed accounts and hedge funds.

(Wall Street Journal) -- Silver Streak: Poor Man’s Gold Keeps Surging
Hi-yo Silver, away!* Old Yeller’s less precious cousin is continuing its recent tear, with Silver for February delivery surging more than 3% on the Comex to close at $30.27/oz. Silver has gained about 13% since Jan. 25 and its close above $30 is considered technically promising. Silver has been up four straight sessions and seven of the last eight. Meanwhile, the barbarous relic has had a tougher time of late. Gold for February delivery did manage to gain 1.2% on the Comex to close at $1363.40, snapping a two-session win streak. As noted yesterday, silver continues to outperform gold. Over the past 52 weeks, gold is up an impressive 26.6%. Silver is up an eye-watering 96.2% over that same period. Precious metals are benefiting from rising inflation fears and increased concerns about weakening currencies. Gold has gotten too dear for some, leading to greater interest in so-called “poor man’s gold.” Silver does have more industrial uses than gold, but it still has a strong hold on those who are deeply concerned about the future and want to have a dependable store of value. The U.S. Mint’s silver coin selling program reflects the rising interest in silver. In January, the Mint said it sold 6.4 million American Eagle one-ounce silver bullion coins – about 50% higher than any prior month of sales, according to Mineweb.

*I always thought it was Hi-Ho Silver, Away, but the fan sites and other historical outlets insist that it is Hi-Yo.

(Financial Times) -- Long-term investors shun Treasuries sale
US Treasury yields rose sharply on Tuesday, extending their run of losses for seven straight sessions, after a substantial drop in demand from long-term investors for the sale of new three-year paper. Treasury dealers were left holding 62.3 per cent of the $32bn three-year sale, their highest stake since January 2009, as investors, including foreign central banks, backed away from buying. Long-term investors bought 27.6 per cent of the auction, their lowest take since May 2007 and down from the average share of 37 per cent for the past six sales. (as reported first on Zero Hedge yesterday)


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Wed, 02/09/2011 - 09:41 | 946002 Bigger Dickus
Bigger Dickus's picture

Tyler, you really gotta stop hyping gold. The gold bugs index chart is hurting for a squirtin. and by that I mean a big correction.

Wed, 02/09/2011 - 09:54 | 946028 anvILL
anvILL's picture

Why do you think it's due for a big correction? Near the 50DMA, there is a good chance for a correction.
However I don't see any good reason why we should be so concerned of a big correction. I am definitely not denying the possibility of a big correction, but I would like to know why you are so concerned by it.

Wed, 02/09/2011 - 09:56 | 946031 tmosley
tmosley's picture

You mean like the one that just ended three days ago?

Wed, 02/09/2011 - 10:40 | 946128 william the bastard
william the bastard's picture

Like the whopper that's coming when QE ends.

Wed, 02/09/2011 - 10:44 | 946152 EscapeKey
EscapeKey's picture

Well, given that you don't short Gold yourself, who the hell cares about your advice?

Wed, 02/09/2011 - 10:52 | 946182 william the bastard
william the bastard's picture

Alan Blinder just said on Bloomberg "odds are strongly against QE3".


Wed, 02/09/2011 - 10:58 | 946208 malikai
malikai's picture

Sounds like an excellent indicator of a looming squeeze in PMs.

Wed, 02/09/2011 - 11:02 | 946222 EscapeKey
EscapeKey's picture

Well, then you are a FOOL not to short, right?

And yet, you don't.

Wed, 02/09/2011 - 13:07 | 946724 Calmyourself
Calmyourself's picture


Wed, 02/09/2011 - 13:30 | 946808 DoChenRollingBearing
DoChenRollingBearing's picture

still hearing crickets at 12:31...

Wed, 02/09/2011 - 11:20 | 946305 Sean7k
Sean7k's picture

QE2 is open ended. The FED never put an upward limit. The US is still creating debt in excess of it's revenues and has zero plans to change this policy. Consequently, the US must continue to sell more debt. What part of that is hard to understand? Blinder is a moron.

Wed, 02/09/2011 - 11:51 | 946420 Just Observing
Just Observing's picture

The US will continue to TRY to sell it's debt, but as noted above, 62% of the 3 year notes didn't sell.  And how many of the 38% that did sell went to those mystry buyers in the Carribean banks ?  Yeah....wonder who THEY are ?


This shit gets funnier all the time.

Wed, 02/09/2011 - 12:04 | 946458 Sean7k
Sean7k's picture

Sure they sold. The PD's bought 'em, will sell back in POMO and then the FED will be nice enough to hold them on their balance sheet- until they dump them onto the Taxpayer. Sarc.

The history of Ponzi schemes is well known and yet, the sell and buy your own debt to pay off old debt still plays on. 

Wed, 02/09/2011 - 11:32 | 946339 tmosley
tmosley's picture

That's what they said about QE2.

Wed, 02/09/2011 - 12:09 | 946478 High Plains Drifter
High Plains Drifter's picture

QE will never end.  You don't get it do you?

Wed, 02/09/2011 - 13:06 | 946721 trav7777
trav7777's picture

Japan is still in QE/ZIRP after what, 20 years?

they may certainly give this tightening or austerity thing a try but the wheels will come right the fuck off overnight if they do.

QE was a response to the conditions of total financial collapse in 2008; none of the underlying problems (that of unsustainable debt) have been resolved.

Wed, 02/09/2011 - 13:30 | 946805 EscapeKey
EscapeKey's picture

Oh, I don't know about that. A lot of insiders managed to get out.

Wed, 02/09/2011 - 13:32 | 946819 Hephasteus
Hephasteus's picture

Yup. Seems to be what they want us to believe. Thanks for parroting the rumor.

Wed, 02/09/2011 - 10:46 | 946155 bankrupt JPM bu...
bankrupt JPM buy silver's picture

QE ending?  First I've heard of that...

Wed, 02/09/2011 - 10:47 | 946158 ColonelCooper
ColonelCooper's picture

Yeah, it worked so well the first time it ended.

Wed, 02/09/2011 - 10:52 | 946186 william the bastard
william the bastard's picture

When was that?

Wed, 02/09/2011 - 10:54 | 946192 jus_lite_reading
jus_lite_reading's picture

QE ended when the "recession ended in June 2009"... right?

Why is anyone even considering QE 3 when the recession is OVER 2 years ago!

Wed, 02/09/2011 - 10:56 | 946201 william the bastard
william the bastard's picture

There is a significant argument for ended QE2 ahead of schedule.

Wed, 02/09/2011 - 11:13 | 946268 ColonelCooper
ColonelCooper's picture

Whats the argument? That if we don't end it early, our computers won't be able to factor that many zeroes?

Wed, 02/09/2011 - 11:17 | 946291 william the bastard
william the bastard's picture

Isn't this the point in the thread where you call me a homo or is that your next post?

Wed, 02/09/2011 - 11:30 | 946331 ColonelCooper
ColonelCooper's picture

You're the one who's afraid of autism.  Moron.

Wed, 02/09/2011 - 12:07 | 946473 tickhound
tickhound's picture

"There is significant argument to end "ed" QE2 ahead of schedule"

So now Bernanke wants to crash the stock market? The Fed has the ability to cause inflation, but they can't direct it to a specific asset class. That works both ways. Junior, when I get home I'm gonna smack your momma.

Wed, 02/09/2011 - 12:10 | 946483 ColonelCooper
ColonelCooper's picture

You have a three toed sloth at home?

Wed, 02/09/2011 - 14:51 | 947103 gmrpeabody
gmrpeabody's picture

You mean when QE ends in 5 to 7 years, when the dollar reaches it's end. That whopper?

Wed, 02/09/2011 - 10:08 | 946054 gwar5
gwar5's picture

I was thinking the same thing about the Dow....

The cliffhanger with gold and silver right now is the decoupling of paper and physical.

That event may happen anytime and must not be missed by serious persons.

That would be truly world changing. It would be the stake in the heart to the USD WRC

Cracks are appearing.... stayed tuned to ZH at all times.

Wed, 02/09/2011 - 11:06 | 946244 malikai
malikai's picture

I wonder. Could a serious decoupling or a squeeze in any one PM lead to a cascade and eventual run on treasuries? My thoughts are yes, but how would it play out? CP risk would probably kill anyone who jumped in on the paper markets. In the physical markets, controls are assured to follow, especially if there's any semblance of a gold/silver/wheat/oil currency standard. I hold the metal in my hand but wonder how it would actually play out.

Wed, 02/09/2011 - 15:43 | 947302 hamurobby
hamurobby's picture

Well, there seems to be less and less gold for sale on ebay. Kruggerands and $50 Eagles are going for about $100 over spot on a per coin basis. Double eagles are $1400+, I saw a 2010 ungraded Eagle sell for $1586 last night, (item #160541441624). Wtf is so special about that coin?  

Wed, 02/09/2011 - 10:31 | 946100 Blindweb
Blindweb's picture

a big correction back to the several thousand year old trend line

Wed, 02/09/2011 - 10:40 | 946131 hampsterwheel
hampsterwheel's picture

People are going to need a massive mindset change soon - we left normal trading some time ago.

Historically in the early phases of massive inflation people sell when they achieved their normal expected returns - 10%, 15%, even 20% - not realizing that this was just the beginning. Even in Wiemar Germany those that sold at 300% return found several months later that they lost a great deal of stored wealth selling so cheaply.

You have to get out ahead of the trend - and that means getting out of your normalcy bias - based on the massive fiat debt, the Chinese tightening, the Fed's commitment to cheap dollars you'd have to be pretty dense to be selling physical gold... if you want to trade gold isnt the vehicle during the times we live in....



Wed, 02/09/2011 - 11:05 | 946242 bronzie
bronzie's picture

"based on the massive fiat debt, the Chinese tightening, the Fed's commitment to cheap dollars you'd have to be pretty dense to be selling physical gold"

the primary trend (up) in the precious metals will continue at least until the economy is fixed

'fixed' means: real interest rates are positive (Volker needed double-digit interest rates to accomplish this back in the late 70's), the multi-trillion dollar annual US deficit has been mostly eliminated (and not just by accounting hanky-panky), several hundred trillion dollars worth of derivative positions are unwound, the massive unfunded US liabilities are reduced or funded, etc

on top of all these issues that need to be fixed, the world is probably going to replace the US dollar as reserve currency

until the economy is fixed the precious metals bull market continues ...

Wed, 02/09/2011 - 13:34 | 946826 DoChenRollingBearing
DoChenRollingBearing's picture

And I see no sign that the economy will get fixed anytime soon.

Wed, 02/09/2011 - 10:44 | 946153 bankrupt JPM bu...
bankrupt JPM buy silver's picture

More like 'smaller DICKus' loser.

Wed, 02/09/2011 - 12:32 | 946568 Bigger Dickus
Bigger Dickus's picture

Can you spell I-N-E-P-T  L-O-S-E-R? Well, no need to anyway. Just look yourself in the mirror and take a good look at what PMs are doing.

Wed, 02/09/2011 - 13:04 | 946712 Bay of Pigs
Bay of Pigs's picture

Really? Obvious from your post above you didn't read the article.

Nice try chump.

Gold over $1360  +284.30  26% YOY

Silver over $30    +14.74    95% YOY 

Wed, 02/09/2011 - 13:26 | 946792 Bigger Dickus
Bigger Dickus's picture

Dude, look at recent performance.

Wed, 02/09/2011 - 13:36 | 946840 DoChenRollingBearing
DoChenRollingBearing's picture

Recent performance matters little unless you are a trader.

I am a holder.  I am very happy hanging on to my PMs to give them to my kid (or maybe grandchildren if/when that time comes).

Wed, 02/09/2011 - 16:03 | 947347 Bigger Dickus
Bigger Dickus's picture

Dude you gotta stop rationalising every loss you make otherwise you will never be uber rich. Deal with your losses and NEVER double down on non-revenue generating assets.

Wed, 02/09/2011 - 16:19 | 947385 trav7777
trav7777's picture

so unless something always goes up every single day, it should be sold?

Wed, 02/09/2011 - 17:15 | 947528 JonNadler
JonNadler's picture

sell your gold! Bernanke will raise rates soon, he will raise rates to 20% before May, I have it on good authority! Never mind that the interest on the debt will explode or that the economy will implode, he will raise rates, caus a dick told me......Bigger Dickus that is 

Wed, 02/09/2011 - 13:43 | 946867 Hephasteus
Hephasteus's picture

Recent performance is a paper lie. These markets will be put in massive backwardation.

The dollars dead. No exceptions.

Wed, 02/09/2011 - 17:18 | 947535 JonNadler
JonNadler's picture

Bigger Dickus is not me and am not Bigger Dickus, although I, JonAdler are a big d......

Wed, 02/09/2011 - 11:37 | 946355 lawrence1
lawrence1's picture

It's his site, he can and should do anything he likes, we're consenting adults, so fuck off.

Wed, 02/09/2011 - 09:43 | 946005 sudzee
sudzee's picture

Cental bank vaults are empty except for skids of paper. For the last 10-12 years the connected and the "little guy" have been buying the shiny stuff that the the paper ponzi was built upon.

Central banks and gov'ts running on thin air. The only possible supply of gold to keep kicking the can down the road is the PM etf's. Expect a massive selldown in these etf's as a grab for the last real wealth available.


Wed, 02/09/2011 - 09:56 | 946033 financeguru500
financeguru500's picture

Sudzee you are so far off. Yes people that come on zerohedge are most likely buying gold but the "little guys" are not the ones buying up all the gold. Non-Western Central banks are buying up gold and the rich are buying up gold. Both are doing so as hedges to the dollar. Don't count on the "little guys" having more than maybe a 5% share of the entire amount of gold that is out there.

Wed, 02/09/2011 - 10:36 | 946114 sudzee
sudzee's picture

So much hoopla has been raised about China's increase of 650 tonnes of gold added to reserves over a period of 3 years. India inports last year were 650 tonnes officially. Import taxes on gold has created a black market in gold for years. Possible importation of a few hundred tonnes to skirt the tax. Indian official central bank reserves of gold have barely increased over the last 10 years. The little guy has been stashing gold for a good many years.

Wed, 02/09/2011 - 10:48 | 946160 hampsterwheel
hampsterwheel's picture

@Sudzee, check your premise - where are you getting your information on the amount of Gold imported by India and China - are you on the pier counting it?  Have you seen the gold at Fort Knox? Has anyone you know? --- if we have learned anything in the recent years is that nothing coming from Government can be believed -


The Chinese are at odds with India, the Indians don't trust the chinese, America doesn't trust the Chinese - and the Chinese want to rule Asia (if not the world) and remove American influence - now under these harmonous circumstances do you really buy any official government figures....hardly -

Wed, 02/09/2011 - 11:02 | 946226 sudzee
sudzee's picture

My numbers were off by a bit but try this link:

Many Indians heading home take gold coin, to be made into jewellery, at lower prices in NA than are available in India. 22k is usually what they are looking for.

Wed, 02/09/2011 - 13:10 | 946736 trav7777
trav7777's picture

they seem to always be buying maple leafs or bars

Wed, 02/09/2011 - 15:31 | 947261 DosZap
DosZap's picture

Low Prems, and .9999 pure,Asians/Indians  do not like anything but 24K.

Wed, 02/09/2011 - 11:26 | 946318 malikai
malikai's picture

..and the Chinese want to rule Asia (if not the world) and remove American influence

"Western" propaganda will have you believe that. Whether they do or do not is irrelevant anyhow, since everyone wants to rule the world. Falling powers waste tremendous energy trying to retain their failing grasp, hastening their demise. If you believe the "Chinese" propaganda, you'd think that all you want is to be friendly and do business with everyone else.

I was in beijing for the last three weeks. I went to a PM shop and although it was just before the new year, as to be expected, there were tons of people there. An entire floor (2nd) was dedicated to bullion and collectibles which easily had about 500 people actively shopping. Their dealing desk was serious. Prices were fixed to shanghai (smart) and london (lol!). I was there during the bottom of this last correction and people were definitely BTFDing. What seems popular over there isn't the coin, but the bars. Premiums were about 1-2% on spot from my quick calculations from london. I couldn't check shanghai at the time though, since it's not on bloomberg mobile.

Also of interest was that the banks also offer bullion markets. It seems they serve as market makers and if you keep your metal with them, they give you a good spread. If you trade gold from an outside source, the bank charges a premium from your sale. They're obviously worried about fake metal, but I imagine that they may exploit the gold holdings like SLV,GLD as well should they decide to do so.

Wed, 02/09/2011 - 09:43 | 946007 SashaBelov
SashaBelov's picture

Sorry for being off-topic, I'd like to know what do you guys think:

Ia AIG still vulnerable for bankruptcy and so a good pick for shorting?

Wed, 02/09/2011 - 10:37 | 946116 Iam_Silverman
Iam_Silverman's picture

AIG is a ward of the state.  Too big to fail.  Go short only if you want to take a stand against the FED and Treasury.  COuld be a costly statement to make!

Wed, 02/09/2011 - 09:45 | 946011 eigenvalue
eigenvalue's picture

Methinks the investment with the biggest upside potential is not gold at the moment. IMHO, it's wheat. China is suffering from the worst drought in decades while the global wheat stock is already at the multi-year low. When China starts to import wheat in large quantities, the wheat price will easily triple.

Wed, 02/09/2011 - 13:41 | 946861 DoChenRollingBearing
DoChenRollingBearing's picture

DBA and JJG are "paper ETFs" that allow pikers like me to play rising food prices.

Wed, 02/09/2011 - 14:27 | 947020 oddjob
oddjob's picture

Look at Sprott Resource Corp. and their investment in OneEarth Farms.

Wed, 02/09/2011 - 09:48 | 946019 BearishFeijoadaSushi
BearishFeijoadaSushi's picture

brazilian spot gold stood at a premium as high as 20% back in december remaining there for weeks. despite the illiquidity I wonder why nobody talked about that.

Wed, 02/09/2011 - 12:34 | 946576 Bigger Dickus
Bigger Dickus's picture

Seriously, no-one in their right mind would buy gold in Brazil.

Wed, 02/09/2011 - 13:04 | 946713 pirea
pirea's picture

They are smart. They buy and store.

Very difficult to pass from speculative state of mind.

Wed, 02/09/2011 - 17:18 | 947542 JonNadler
JonNadler's picture

am NOT bigger dickus,  I AM NOT....bigger Dickus is me...Jon NAdler, I am a bigger d....

Wed, 02/09/2011 - 09:49 | 946020 jesusonline
jesusonline's picture

Hey yoyoyo! My bruddas in da Gulf of Aden jus got demselvz sum nais bootay! 

LONDON/ATHENS, Feb 9 (Reuters) - Armed pirates seized aU.S.-bound oil tanker off Oman carrying around $200 millionworth of crude on Wednesday in one of the biggest raids in thearea to date, escalating the threat to vital shipping lanes.
The 333-metre very large crude carrier, the Irene SL, wascarrying about 2 million barrels of crude oil, estimated to benearly 20 percent of daily U.S. crude imports, a day after anItalian tanker was snatched by Somali pirates.

Wed, 02/09/2011 - 10:37 | 946117 Canuckistan Al
Canuckistan Al's picture

Want to go on record as calling the long on Somali prirates a week ago ;-)

Wed, 02/09/2011 - 13:43 | 946868 DoChenRollingBearing
DoChenRollingBearing's picture

Sell that position!  US Special Forces are probably on the way...

Wed, 02/09/2011 - 15:23 | 947233 Calmyourself
Calmyourself's picture

Bamster is going to  want to look tough here.. I would bet my last dollar we hit that tanker well before it hits continental shelf off Somalia..  +100dcrb

Wed, 02/09/2011 - 09:50 | 946022 Xibalba
Xibalba's picture

We'll accept it as collateral now.  Thanks. 

Wed, 02/09/2011 - 09:51 | 946024 eigenvalue
eigenvalue's picture

I saw a couple of articles that mentioned JP morgue has a large amount of interest rate swap. A couple experts think JP Morgue is in trouble since the rates are going up. But how do they know JP Morgue is the receiver of the fixed leg? If JP Morgue is the payer of the fixed leg and receives the floating, it will make a lot of money when rates go up. 

Wed, 02/09/2011 - 11:14 | 946270 bronzie
bronzie's picture

"JP morgue has a large amount of interest rate swap"

there are hundreds of trillions of dollars worth of derivatives floating around the planet these days

they are based on interest rates, the price of gold, etc

all of these derivatives assume that the counter-party will be able to pay off the derivative bet when required - the only time that is a safe assumption is when the counter-party is the US taxpayer - we saw some of that with the AIG bailout and related game-playing

the US taxpayer will continue to take it in the shorts as these derivatives 'pay off' but the US taxayers aren't going to absorb several hundred trillion dollars worth - at some point there will have to be a massive writedown / writeoff of these worthless derivatives

Wed, 02/09/2011 - 16:51 | 947464 JLee2027
JLee2027's picture

Yes. A small quibble. No writedown / writeoff needed in a currency collapse. It's valued at zero.

Wed, 02/09/2011 - 11:16 | 946277 bronzie
bronzie's picture


Wed, 02/09/2011 - 11:22 | 946312 bronzie
bronzie's picture

"how do they know JP Morgue is the receiver of the fixed leg?"

Jim Sinclair repeatedly points out that it is over-the-counter derivatives causing the meltdown of the global economy - there is at least $600 trillion dollars worth of global derivatives in a global economy of $50 trillion or so

we don't know who the receiver of the fixed leg is because the market is unregulated

Wed, 02/09/2011 - 09:52 | 946029 Internet Tough Guy
Internet Tough Guy's picture

FOA (5/9/01; 07:20:23MT - msg#72)

Our modern gold market and the price illusion it creates, is little more than a fiat dollar system that denominates gold credits in contract form. Is it a free market? Why yes, very free. But only free in the sense that supply is unlimited. Investors and the industry in total, brought into paper based gold and yet they fully well knew 90% of it had only cash equity as the collateral on the other side. Then, somehow expected that those contracts were limited in creation by the fixed amount of gold in the world. Their mistake, not the markets.

Wed, 02/09/2011 - 12:47 | 946630 Snidley Whipsnae
Snidley Whipsnae's picture

Excellent point ITG and I will leave a link to FOFOA below... (where old posts from 'another' are available)...

I got a good laugh at this from above article...

"They did not clarify but they may have meant illiquidity in the physical gold bullion market."

How can there be illiquidity in the PAPER gold market? If the metals exchanges are truly markets (questionable), then for each seller there should be a buyer... at some clearing price...and, when the supply of paper gold runs low how difficult is it to imagine that some one will become available to supply some more... at some clearing price? lol... Of course, coming up with REAL PHYSICAL GOLD is an entirely different problem.

Wed, 02/09/2011 - 13:48 | 946892 DoChenRollingBearing
DoChenRollingBearing's picture

ITG, Snidley,

FOFOA gets more noticed every day.  If he were a stock, I would BUY, BUY, BUY!

Wed, 02/09/2011 - 15:35 | 947274 DosZap
DosZap's picture

How can there be illiquidity in the PAPER gold market?


Wed, 02/09/2011 - 09:54 | 946030 THE DORK OF CORK
THE DORK OF CORK's picture

I am tempted to get a Maple leaf but I have a suspicion that the "authorties" will instigate a bank run somewhere to make cash temporally more valuable.

Wed, 02/09/2011 - 13:50 | 946897 DoChenRollingBearing
DoChenRollingBearing's picture

TDOC, go to the bank first, then get the gold!  Everybody wins!

Wed, 02/09/2011 - 13:50 | 946900 RockyRacoon
RockyRacoon's picture

Something is awry in your logic or calculations.

Fear is keeping/has kept a lot of people from doing the sane thing.

Good luck to ya.

Wed, 02/09/2011 - 09:57 | 946034 hugovanderbubble
hugovanderbubble's picture

excellent post and chart display.thx

Wed, 02/09/2011 - 10:04 | 946038 Pegasus Muse
Pegasus Muse's picture

I like this update.  Captures key events.  Didn't know about the new Gold Savings Fund in India.  Good addition to ZH. 

Wed, 02/09/2011 - 10:03 | 946046 TSHTF
TSHTF's picture

Speaking of liquidity (the black kind)... The first Wikileak cable that should really be a headline:

Wed, 02/09/2011 - 10:13 | 946063 Tyler Durden
Tyler Durden's picture

It was posted here last night and was sticky all night long.

Wed, 02/09/2011 - 10:17 | 946071 SheepDog-One
SheepDog-One's picture

It was a headline, on Zerohedge anyway.

Wed, 02/09/2011 - 12:54 | 946669 Snidley Whipsnae
Snidley Whipsnae's picture

The 'muscle headed avatar' posted innumerable comments...

and right, OPEC reserves in all major oil exporters jumped immediatly when the exports based on reserves rule was put in place.

BTW, at the time of the ~$147 spike in crude, Iran had ~12 VLCs loaded with crude and sitting off the coast of Iran...with no buyers.

At the time of the oil spike no one on 'The Oil Drum' could explain why oil prices were spiking while several countries, including SA, said that there was no market for all the oil that they were making available to the world market.

So, stuff the 'oil shortage caused the price spike argument'...

Wed, 02/09/2011 - 13:45 | 946875 Hephasteus
Hephasteus's picture

Ya rodent freecorps and the trolls are puting up 30 and more posts per page.

Total desperation and repetition.

Wed, 02/09/2011 - 15:58 | 947328 Cathartes Aura
Cathartes Aura's picture

trolls increasingly conversing with themselves, as many jump ship for information gathering elsewhere. . .

with awareness of incoming storms, many want reports, not cartoons.

(above the line still informative, below could use some attention, imo)

Wed, 02/09/2011 - 11:33 | 946342 bronzie
bronzie's picture

"Speaking of liquidity (the black kind)"

the article didn't mention how all of the oil producers 'found' new reserves when OPEC instituted export caps based on reserves (ie, the more reserves you have the more you can produce)

if you look at the charts for the time period (1980's) the producing countries added as much as 50% to their stated reserves - the massive increases didn't coincide with discovery of new wells or new extraction technology - the countries were simply over-stating their reserves so they could export more oil

so it shouldn't be any surprise today to find that the saudis or any other oil exporting country has far less oil reserves than they have been claiming for the last 30 years

Google "OPEC quota wars",outlook.html

I didn't comment on this in the oil thread last night because the troll count was extremely high

Wed, 02/09/2011 - 15:38 | 947281 DosZap
DosZap's picture

Just IMAGINE, the rags out of oil to a large degree, become Camel hupmers once again, and resort to what they do best JIHAD.

Wed, 02/09/2011 - 10:14 | 946069 jus_lite_reading
jus_lite_reading's picture

This is too good...

US Treasury's Geithner says congressional leaders recognise that US default is unthinkable

Notice how unthinkable is simialr to unsinkable? History doesn't always repeat itself, it simply rhymes...



Wed, 02/09/2011 - 10:41 | 946074 SheepDog-One
SheepDog-One's picture

Geithner thinks US default is unthinkable? Like a little kid with his hands over his eyes...

Maybe he means debt default is unmentionable, as it would result in Geithner, Bernank, and most of the politicians suddenly becoming 'most wanted' by rioters.

US debt default is unthinkable, yet piling on debt to the taxpayer for continuation of billionaire bankster party is totaly thinkable! Just hang em all.

Wed, 02/09/2011 - 14:22 | 947007 Head for the Hills
Head for the Hills's picture

How can the US default.  Are we running low on toner?


For those who have access to unlimited credit, this is great.


Wed, 02/09/2011 - 10:39 | 946123 EscapeKey
EscapeKey's picture

Seriously, stop believing Bernanke, Geithner, etc are out there to protect the little guy. Every public statement they make, every decision they take, every law they break; it's all designed to do one thing - serve the bankers. If it serves or screws the public really doesn't concern those self-serving criminals.

Someone out there will buy into Geithner's horse shite, buy treasuries with his pension savings, and get wiped out. Geithner's statements did the job.

Wed, 02/09/2011 - 15:41 | 947292 DosZap
DosZap's picture

Every public statement they make, every decision they take, every law they break;


I'll be watchin YOU!

Wed, 02/09/2011 - 10:41 | 946132 Temporalist
Temporalist's picture

Yes unthinkable but not implausible or impossible or undeniable.  Basically play the ostrich and put your head in the sand and hope your ass is still there when you decide to check it.

Wed, 02/09/2011 - 13:41 | 946860 Hephasteus
Hephasteus's picture

I'm glad that congressional leaders recognise that US default is unthinkable.

They can enjoy paying it off.

Destroy the authority of the american government. Destroy the strawman illusion.

Expand produce the note for mortgates to produce the signed document for social security.

Produce the signed agreement document for taxes.

Learn the difference between your UPPER CASE self and Lower Case self. Cast off illusory slavery.

My name is kunta kintee bitch fuck your TOBY.

Wed, 02/09/2011 - 10:22 | 946082 Snake
Snake's picture

The fundamentals are all there: peak oil and/or anxiety about its availability and/or transport in a world oil dependent economy, furious geopolitical changes, never seen sovereign debt in the (so called) developed world cum slow growth.  Gold (I am sorry to say) has no other way but up.  I will not even go into the intrinsic true and symbolic physical and cultural value of gold in world history, we all know (or should know) it.  No charts need it, just plain common sense and good access to available history and information.

Wed, 02/09/2011 - 11:01 | 946221 jus_lite_reading
jus_lite_reading's picture

I've always liked to think the world had a near endless supply of oil to keep it turning but then I woke up. In 2008 I realized two things were about to happen- as oil ran out, the world would switch to another source of energy; that other source of energy is not ready yet and won't be for a long time. In short, the end of an era is upon us. Prepare accordingly. The utter bullshit these frauds on TV talk about how great everything is are just doing this to keep the calm of the masses JUST long enough for them to prepare a global wipeout. I think God will have to step in at that point.

Wed, 02/09/2011 - 15:44 | 947300 DosZap
DosZap's picture

I think God will have to step in at that point.

HE will, as it is so written.

Wed, 02/09/2011 - 16:07 | 947355 Cathartes Aura
Cathartes Aura's picture

I wonder whose "god" it will be. . . there are so many. . .

Wed, 02/09/2011 - 16:53 | 947475 JLee2027
JLee2027's picture

There is only one and his son died for our sins to be forgiven. It is the only religion allowing forgiveness of sin, did you know that?

Wed, 02/09/2011 - 10:23 | 946085 youngman
youngman's picture

I am sure all of the little folk that are investing in the gold and silver ETF´s have read the prospectus and had their lawyers advice them on it as a safe gold and silver writing of course...all is good in sheeple land....LOL

Wed, 02/09/2011 - 10:28 | 946093 Snake
Snake's picture

and, yes, add global warming (and its consequences in all of the above), even if it's no PC round these parts.

Wed, 02/09/2011 - 10:43 | 946146 SheepDog-One
SheepDog-One's picture

'Global warming'....RIGHT! As reflected by never before seen -30 temps here for the last 4 weeks! All those morons talking about global warming I want to stab in the eye with these 10 foot long ICICLES!

Wed, 02/09/2011 - 10:53 | 946185 ColonelCooper
ColonelCooper's picture

You and I must be neighbors.

We've been snowed and drifted in so bad for so long that my German Shepherd could step over the 6' cedar fence in the back yard if he tried.

We've given up on the bottom step in front of the house.  It's just snowpack now.  Spring's going to be a mess.

But remember: Global Warming causes all of this severe cold. 

Wed, 02/09/2011 - 11:33 | 946341 Sean7k
Sean7k's picture

Victor Schaumberger, "Living Energies" spells out what is happening in amazing clarity. Some of the material sounds bizarre, but accurate all the same in terms of the weather.

Wed, 02/09/2011 - 12:06 | 946455 tamboo
tamboo's picture

+ 1 quadrillion, one of the most important minds of the 20th century along with tesla. his repulsine implosion motor and windhexe machine unlocked the secrets of free energy. no wonder the goons destroyed his life. see chapter 21:

coats' sacred living geometry presentation is particularly mind blowing:

Wed, 02/09/2011 - 13:55 | 946913 DoChenRollingBearing
DoChenRollingBearing's picture

Colonel, it's all George Bush's fault...   LOL...

Wed, 02/09/2011 - 15:46 | 947306 DosZap
DosZap's picture

Gore the whore, said the Warming is causing the hard winter..........

Guess he never heard of "Cycles".

Wed, 02/09/2011 - 13:24 | 946783 Calmyourself
Calmyourself's picture

Ahh yes, the non-falsifiable science of GW..  You mean your religion right..  What set of facts could possibly disprove GW, nothing?  That makes it religion pal..

Wed, 02/09/2011 - 14:00 | 946932 RockyRacoon
RockyRacoon's picture

Global Varmints is a topic I know nothing about, and I'm just too lazy to look into the arguments fer/agin.   I see that similar lack of knowledge about precious metals and the associated markets (and the equivalent laziness) doesn't keep some folks from weighing in with their spurious gold/silver arguments, however.  Interesting isn't it?  I guess I know better than to show my ignorant ass on topics that befuddle me.

Wed, 02/09/2011 - 15:08 | 947168 destiny
destiny's picture

Global warming is a hoax just like the rest....the earth has cycles, there are cyclic changes...that 's all folks

Wed, 02/09/2011 - 16:14 | 947373 Cathartes Aura
Cathartes Aura's picture

just for fun, search "operation control weather 2025". . .


Wed, 02/09/2011 - 10:30 | 946099 Cash_is_Trash
Cash_is_Trash's picture

Monetization homies! Just wait til the velocity of money picks up and multiplies with the money supply.

Monetize away!

Wed, 02/09/2011 - 10:35 | 946112 Mr. Majestic
Mr. Majestic's picture

Peak energy makes coined PMs even more valuable as the cost to mine/refine goes up exponencialy.


Wed, 02/09/2011 - 13:55 | 946920 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1360

Wed, 02/09/2011 - 10:43 | 946140 Johnny Lawrence
Johnny Lawrence's picture

Gold & silver will be in a bubble when the masses all want to buy it, when your local bartender starts talking about it, when all the "expert" portfolio managers start to predict great things for it, when the commercials change to "we sell gold" instead of "we buy gold"

Until then, the PM haters can eat my bizalls.

Wed, 02/09/2011 - 12:51 | 946653 Bay of Pigs
Bay of Pigs's picture

Met a young man last night who works for a "cash for gold" biz. He mainly deals in cheap quality jewelry and trying to fool people about what .999 means. I blew his mind with my knowledge on the subject and how backassward it was from investing in gold. 

In short, he didn't know shit from Arbuckles coffee when it came to gold. 

Hardly a sign of a top. 

Wed, 02/09/2011 - 15:48 | 947312 DosZap
DosZap's picture

Cash for Gold cretins should all be shut down, they are worse than Pawn Shops.

Wed, 02/09/2011 - 10:42 | 946142 Temporalist
Temporalist's picture
Silver class-action suits against Morgan, HSBC consolidated in New York

Wed, 02/09/2011 - 13:57 | 946928 DoChenRollingBearing
DoChenRollingBearing's picture

Good link, thanks.

Wed, 02/09/2011 - 16:23 | 947400 Temporalist
Temporalist's picture

I check GATA daily I'm surprised more here don't (if they don't).  Here is more from today:

GATA credited for exposing gold, silver market manipulation

Wed, 02/09/2011 - 10:56 | 946198 Downtoolong
Downtoolong's picture

increasing concerns of illiquidity due to the scale of demand and lack of supply.

Funny,  that’s the definition of shortage in my dictionary.

Wed, 02/09/2011 - 11:03 | 946227 jus_lite_reading
jus_lite_reading's picture

Any question why JPM is "accepting" gold as collateral? LMAO! They need that shit now when the calls come a rolling in for the physical...

Wed, 02/09/2011 - 12:26 | 946230 Hephasteus
Hephasteus's picture

No no no. There's plenty of gold plenty of gold. We just have to continue on with our QE and raise prices drastically to force it out of peoples hands. Soon as this inflation from central bank stealing hits people, the liquidity will increase dramatically and continue till everyone is broke.

Wed, 02/09/2011 - 13:59 | 946931 DoChenRollingBearing
DoChenRollingBearing's picture

Heph is right, plenty of gold.  Even physical.

Just have to pay for it.

Wed, 02/09/2011 - 11:00 | 946218 william the bastard
william the bastard's picture

At least one fund manager was heard issuing a note of caution on certain bonds and gold at this juncture. Charles de Vaulx, whose International Value Advisers' mutual funds are showing a quite sizeable cash position at this time (ranging from 16 to 21 percent), is not very fond of holding T-bonds, corporate bonds, emerging market equities, and...commodities (oil and natgas excepted).

Mr. Valux -while still holding 4.5% of his funds' monies in the yellow metal (down from 6.1% recently) - cautions that gold is not behaving like...well, gold, anymore, as "it is rising along with everything else." The fund manger notes that "the classic reason to own gold is because it isn't correlated to your other investments. Gold may face headwinds if real interest rates - in other words, interest rates minus inflation - rise." Correct, on both counts.

Read more:

Wed, 02/09/2011 - 11:36 | 946352 Sean7k
Sean7k's picture

Then please sell your holdings and go short. Hopefully, his fund will do the same. However, the big buyers are going allocated at the bullion banks and they know a lot more about what is happening than you or Charles de Vauix.

Wed, 02/09/2011 - 11:38 | 946359 bronzie
bronzie's picture

"cautions that gold is not behaving like...well, gold, anymore"

IMO he is basing this comment on the last 40 years when gold was primarily a commodity

gold IS behaving differently now - it is re-taking its position as real money and the ONLY real money on this planet

Wed, 02/09/2011 - 11:45 | 946395 bronzie
bronzie's picture

"Gold may face headwinds if real interest rates - in other words, interest rates minus inflation - rise."

this statement is very true

POSITIVE real interest rates will be one of the signals that it might be time to swap out of the precious metals

Paul Volker needed double-digit interest rates to break the precious metals bull market in 1981

current inflation is about 5% according to so a positive real interest rate would require the Fed to raise rates from 0% to 5%+

Fed rates at 5% would mean 30 year mortgages of 10%+ which would collapse the real estate markets (just for starters)

Fed rates at 5% would also increase the cost to carry the US national debt above 100% of all available revenue

in other words, the chances of us getting positive real interest rates anytime soon is zero

Wed, 02/09/2011 - 12:29 | 946553 Hephasteus
Hephasteus's picture

Nah bernanke will raise interest rates in an attempt to drive everyone out of gold and back into the good money for bad scam and then immediately plumit them back to zirp. This is the sticky point in the negotiation that cuased the double dip. People drove back into gold and held on with vice grips. He's studied this histroy extensively and will probably try some kind of force rules tactic.

Wed, 02/09/2011 - 13:01 | 946700 Snidley Whipsnae
Snidley Whipsnae's picture

If Bernabanker raises rates to quell inflation he will also derail the Dow to 36,000,000 goal and strengthen the dollar. Two things that he definitely does not want to do.

Rock meet hard place.

Wed, 02/09/2011 - 14:27 | 947023 Hephasteus
Hephasteus's picture

Jung said that a paradoxical mind is a superior mind. Bernanke believes he can create a sufficiently big lie as to create a paradox and make a choice of anyway you go your fucked into a win.

Simple minds that can rip through paradoxes and lies will teach him differently.

Wed, 02/09/2011 - 16:27 | 947406 Temporalist
Temporalist's picture

I'm sharing this chart again of the Fed Funds rate but look at it since Volker.  Draw your own conclusions but it is obvious to see why Bernanke wishes why he could create negative interest:

Wed, 02/09/2011 - 11:53 | 946430 tmosley
tmosley's picture

Couldn't be because the dollar is going down.  No wai!

Wed, 02/09/2011 - 13:26 | 946791 trav7777
trav7777's picture

These people still aren't seeing the forest.

They are not seeing the seachange in the entire landscape.  They're still focused on this traditional analysis.

WTF is going to go "up" if all these rates rise?  Gov't debt?  LOL.  Paper?

We're in a discontinuity period, very clearly...yet these guys are still holding to formulas which only worked in a different part of the function.

Real interest rates have no room to rise due to the debt overhang of sovereigns and the total LACK of demand for credit even at these rates. 

Wed, 02/09/2011 - 21:15 | 948074 Hephasteus
Hephasteus's picture

What are you talking about. Bank discount window has low rates. Savings account has low rates, commercial paper has low rates. Anything the consumer wants has rediculously high rates except for STILL overvalued houses with mega options arms resets hitting right about now.... Ok. Maybe it's next month.

Wed, 02/09/2011 - 15:58 | 947333 DosZap
DosZap's picture

No, its behaving as money,Douche.

Its acting exactly as it should, the fkrs playing the paper game are the ones not acting like they used to.

Thu, 02/10/2011 - 01:46 | 948608 lawrence1
lawrence1's picture

So short gold and shut up. You aint got the balls.

Wed, 02/09/2011 - 11:19 | 946266 topshelfstuff
topshelfstuff's picture

Point of interest: during the China/Lunar New Year the price of Gold in China hit the 8888 Yuan mark ---currently 8988 as I type. Those of you who understand the importance of the number 8 for China, Chinese and much of Asia, know why I thought this worth a note. Fair to say that a POG of 8888 in Yuan is the floor now  , I believe, since any opportunity to purchase Gold again at that price in China..well, you'd have to get in line, a big one

Wed, 02/09/2011 - 14:03 | 946941 DoChenRollingBearing
DoChenRollingBearing's picture

top, an interesting observation.  We'll be watching.

Wed, 02/09/2011 - 11:27 | 946323 RobotTrader
RobotTrader's picture

Both GLD and GDX are now well over the 21-day.

Wed, 02/09/2011 - 12:06 | 946465 lieutenantjohnchard
lieutenantjohnchard's picture

wow! thanks for the tip robottrader. btw, is today wednesday?

brief question: is gentleman jim sinclair as you call him a gold fool today, or a wise investor?

Wed, 02/09/2011 - 16:29 | 947413 Temporalist
Temporalist's picture

Robo doesn't answer questions he only posts charts and proclaims his 20/20 hindsight trading genius.

Wed, 02/09/2011 - 12:16 | 946480 FranSix
FranSix's picture

Difficult to assess the reasons why gold should be rising when other asset classes are falling, or why you have concomittant rises in commodities and gold.

Seems to me in the last major correction that gold prices suffered, but rebound nicely at a time when commodities were in a deep slump.

Very likely a whole slew of commodities will have another blow off phase, as they have risen faster than inflation only to catch up with gold in the process.  The downside will be just as fast in terms of inflation, that commodities will return to their historical averages adjusted for inflation.  Gold's longterm inflation adjusted average price according to shadowstats is ~$1673/oz U.S.  Most other commodities measured against gold have not retaken their highs against gold and are trading within their inflation adjusted averages, despite the spectacular headline numbers.

Right after the nasdaq crash in 2000, and in the bull market from 2002 - 2008, and perhaps now again copper outperformed gold in the rebounds.  Once copper turns down, gold will probably outpeform.

Illiquid conditions in the gold market would mean that you could not borrow money to lease gold, as the gold lease rate has risen above zero, while the discount rate remains chronically low.  Therefore price arbitrageurs with an interest in dumping their contracts on the LBMA and then filling up on the COMEX may be out of luck, but saddled with a strongly biased trade.

Wed, 02/09/2011 - 12:17 | 946509 lieutenantjohnchard
lieutenantjohnchard's picture

noticing nice(r) premiums on junk silver coins coupled with fewer bulk offerings.

Wed, 02/09/2011 - 14:09 | 946955 DoChenRollingBearing
DoChenRollingBearing's picture

lieutenant, the very imperfect (but worth a look from time to time) is's / eBay's current spot price vs. 1 oz Gold Eagle price.  Right now it's about 8.6% premium for the Eagle.  Look at the bottom of's home page.

It is imperfect because I see that premium bounce around a lot (5% - 15%).  But, it is the only tool I have handy to look at the price of physical vs. paper.


Are you under the command of Colonel Cooper?  You know, the Troll Terminator Battalion?

Wed, 02/09/2011 - 12:30 | 946549 lawrence1
lawrence1's picture

The 30 yr US treasury has moved to 4.78 yield, the dollar is falling even as Bernake asserts that there is no sign of inflation in the markets. This blatant Fed lying is yet another indication that PMs are essential to our individual survival, just as every anti PM article has been. Corrections? There are no corrections in PM values, only fluctations in the fiat whore numbers and the overall increase in these paper numbers for PMs reflects the gradual recognition of the value of PMS. I thank Sinclaire, fofoa, GATA and many others for their efforts to alert us to this reality and I thank Tyler for this site and, while Im at it, for Julian Assange.. Tyler and Assange are media heroes in my book.

Do NOT follow this link or you will be banned from the site!