• BullionStar
    05/30/2016 - 21:24
    The US Gold Market is best known as the home of gold futures trading on the COMEX in New York. The COMEX has a literal monopoly on gold futures trading volumes worldwide, but very little physical...

The Latest Move in Bullion: Something's Gotta Give

Anonymous's picture




 
0
Your rating: None
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 09/06/2009 - 11:30 | 60836 chindit13
chindit13's picture

At the risk of being pedantic (as well as wrong), here are a few figures re gold:

There are somewhere between 125K and 130K metric tonnes of gold above ground, which equates to slightly more than 4 billion troy ounces of gold which @$991 is worth a shade under $4 trillion.  At a weight of 19,300 kg. per cubic meter, one could fit all the known gold on the face of the Earth into a cube measuring about 61 feet per side, or a touch longer than the distance from pitcher's mound to home plate in American baseball.

Or something like that.

Sun, 09/06/2009 - 11:56 | 60864 ED
ED's picture

I was going to say, the shwedagon pagoda is bigger than that, but it's only gold plated. No wonder the Myanmar junta is perpetually hard up for fed reserve notes.

Great megalomaniacs think alike

Mon, 09/07/2009 - 03:13 | 61427 chindit13
chindit13's picture

I'll add to the info collection here:

An ounce of gold can be pounded into a sheet of 300 square feet, so perhaps as big as Shwedagon Pagoda may be, not a whole lot of gold is necessary to cover it.

All the mined gold in the world could be pounded into a sheet that could cover the state of Virginia.

As one who enjoys keeping track of out-of-the-way economies, here's an odd one:  what minor world currency has soared against all the majors this year?  The Myanmar kyat, which has moved from about 1350 to the dollar to 1080.  Now go figure....an economy the size of a GS AIG "Unit" ($12.7 billion), who prime money earner is natural gas (look at this year's NG chart) has seen its currency soar.

 

Sun, 09/06/2009 - 11:33 | 60838 RobotTrader
RobotTrader's picture

All I can say is that huge volume breakouts like this are generally the start of a big move, not the end...

 

Sun, 09/06/2009 - 11:39 | 60846 RobotTrader
RobotTrader's picture

Sun Microsystems breakout in 1998:

 

Pretty much ran non-stop into the March 2000 top:

Sun, 09/06/2009 - 11:49 | 60856 waterdog
waterdog's picture

The Fed has 13,452,783 troy onuces that the Treasury declares is worth $ 42 an ounce.

Chairman Bernanke's position on gold is that it is useless.

I believe that President Obama, during the October bank holiday, will notify the American people that the Mint will begin to sell gold coins at $ 400.00 per ounce, as a part of, his plan to redistribute the wealth. (But we goldbugs know the real reason why)

I own physial gold, too much physical gold at too high of a price. J.S. Kim says to hold on for 36 months it will sky-rocket in price. I may be dead in 36 months.

The only thing that shines in my book is the right-side of Ben Franklin's forehead.

Sun, 09/06/2009 - 17:19 | 61123 SWRichmond
SWRichmond's picture

I'm a buyer at 400.  Me and the rest of the planet.

Sun, 09/06/2009 - 11:51 | 60860 RobotTrader
RobotTrader's picture

Probably a better example is "Quack"com.

Huge volume breakout here in 1999:

Runs all the way to the Dec. 1999 top:

A 1300% gain in less than a year...

Sun, 09/06/2009 - 12:35 | 60891 SWRichmond
SWRichmond's picture

skank; what, no tramp stamp?

Sun, 09/06/2009 - 14:07 | 60970 ZerOhead
ZerOhead's picture

Meeeow...

Sun, 09/06/2009 - 20:23 | 61215 SWRichmond
SWRichmond's picture

Look at Natalie Wood here: http://www.zerohedge.com/article/crfb-sees-locusts-plagues-and-lots-and-...

Then look at the skank, and tell me which one is more attractive.

Mon, 09/07/2009 - 09:54 | 61483 SWRichmond
SWRichmond's picture

Nothing personal...I have a teenage daughter who is not skanky, and I demean skankiness everywhere I see it, it's a mindset thing.  I guess I am over-sensitive to it.

Edit: I actually feel sorry for women who mistreat themselves in the manner portrayed.  It's a waste.

Mon, 09/07/2009 - 11:53 | 61537 MinnesotaNice
MinnesotaNice's picture

Oh... you're going to be in trouble if he makes it over to your 'open thread'... you better start praying right now :-) 

Mon, 09/07/2009 - 13:40 | 61606 SWRichmond
SWRichmond's picture

I will try to contain my....OMG!!!

:)

Mon, 09/07/2009 - 13:42 | 61607 MinnesotaNice
MinnesotaNice's picture

I knew your reaction wouldn't be good... I tried to tell him... but he just wouldn't listen  :-)

Sun, 09/06/2009 - 12:09 | 60870 spanish inquisition
spanish inquisition's picture

Nice post. Can I change a term? I believe the FED was injecting SQUIDITY.

Sun, 09/06/2009 - 12:17 | 60878 I need more cowbell
I need more cowbell's picture

Jumped up jesus christ, andy, that picture is so hot on so many levels.

Sun, 09/06/2009 - 12:23 | 60882 Anonymous
Anonymous's picture

until he turns around...

Sun, 09/06/2009 - 17:13 | 61121 Problem Is
Problem Is's picture

OOOHhhhh... a Crying Game moment... ralph...

Sun, 09/06/2009 - 16:09 | 61060 ZerOhead
ZerOhead's picture

Squidity is good... but lisquidity rolls off the tongue easier...

We should really engage in some free PR work for the hard-working boys at Goldman Sachs here at Zero Hedge... after all they are in large part responsible for our existance and success.

And since even Erik Prince had to change Blackwaters name to Xe after the assasination allegations and forthcoming criminal indictments... we  at Zero Hedge should assist Lloyd in choosing a new name for his much maligned investment bank.

In light of the fact that his recent oil play will result in the further impoverishment of the citizens of this planet or horrendous losses to Goldman itself... he may need this new name sooner rather than later.

Giant Squid  is good since they don't have to change the GS on the stationary... however I think that the name that truly captures the essence of  Goldman is SquidCo.

Let the competion begin...

Mon, 09/07/2009 - 18:41 | 61756 ZerOhead
ZerOhead's picture

Or not...

Mon, 09/07/2009 - 19:51 | 61766 MinnesotaNice
MinnesotaNice's picture

OK... I usually never enter contests... but since I will likely win by default then I have decided to submit a request...you didn't mention the prize I would win however... so I guess I get to select what I want.  Now this name will mean that GS will have to change its stationary... but I think they can afford it with the money that I lost on my short positions in the last 5 months in which they were likely the benefactor as they repeatedly squeezed the shorts... and remember there were no rules that prohibited me playing on the name that you threw out above... but I have sound reasoning for my name choice... I will explain as follows:

The name I am submitting is ColossalSquidCo because I think Goldman Sachs has grown in the time since Giant Squid was selected for them. 

So you may ask what is the difference between a Colossal Squid and a Giant Squid... well let me tell you... a lot.

  • The Colossal Squid's limbs are equipped with sharp hooks... some swiveling, others three-pointed ('getting your hooks into and screwing the retail customer' will have whole new meaning now).  Whereas, the poor Giant Squid's arms and tentacles only have suckers lined with small teeth.
  • The beak of Colossal Squid is the largest known of any squid, exceeding that of Giant Squid in size and robustness. (What better way to eat the growing number of prey that you are consuming)
  • A Colossal Squid actually has a penis to directly implant sperm into females (which is very handy on Wall Street I hear)... as opposed to the Giant Squids who only have a tentacle to do the job.
  • The beak of Colossal Squid is the largest known of any squid, exceeding that of Giant Squid in size and robustness. (You don't want to be killing all that prey and realize you don't have the best equipment available to eat them)
  • Colossal Squid also has the largest eyes documented in the animal kingdom.  (How handy that will be to guard your kingdom... and allowing an extra early warning if Mary Shapiro actually manages to find her way out of the paper bag she crawled into years ago)

OK... so when can I get my prize... I want a big squid dinner in the finest restaurant in New York City  :-)

Mon, 09/07/2009 - 20:05 | 61798 ZerOhead
ZerOhead's picture

Clearly you've done some fantastic reseach here MinnesortaNice...

Let's see... 

Hooks are good... very good...

Huge beak (or blood funnel) is great for jamming...

Largest known squid? ... very appropriate... you're doing well so far...

Largest eyes in the animal kingdom? ... beats a blue whale? unfreaking believable... I'm thinking of that giant eye on top of that pyramid do-hickey thing...

Penis? are you kidding me? Penis is really good Minnesota... but does it have GIGANTIC BALLS? What we are looking for is all of the above but it must have enormous balls.

Please confirm the balls.

The Golden Squid Award can only be awarded once all contestants have had a chance to submit their entries... then the entries must be voted on by Zero Hedge members...

Later Alligator

Mon, 09/07/2009 - 20:17 | 61803 ZerOhead
ZerOhead's picture

We call it kalamari over here... sounds better than squid... kinda like the escargo vs. snail deal.

Hey... ColossalKalimariCo ? ... Kalamerica ? ... my brain hurts...

It ain't over yet.

Goldman Rapes. Goldman Pillages. Goldman Sachs.

 

Mon, 09/07/2009 - 20:36 | 61816 MinnesotaNice
MinnesotaNice's picture

Oh, I really like the ColossalCalamariCo idea... but I still will win unless there is a late entry because you can't be a participant... and if GS can convince Calgon Carbon Corp to give up CCC on the NYSE then they are all set.

I will be waiting outside for the awards van to take me for my squid... errr calamari dinner.

Mon, 09/07/2009 - 21:01 | 61848 ZerOhead
ZerOhead's picture

Damn... kalimari is with a C not a K... shit!

I'm such an idiot!

P.S. You may require a passport...

 

Mon, 09/07/2009 - 21:04 | 61853 ZerOhead
ZerOhead's picture

Double Damn... kalimari is with a C and an A, not a K and an I...

I need a CatScan...

Mon, 09/07/2009 - 21:25 | 61876 MinnesotaNice
MinnesotaNice's picture

What country do you live in... I might need to pack a larger suitcase... and are you listening to ZH radio?

Mon, 09/07/2009 - 20:19 | 61804 ZerOhead
ZerOhead's picture

Oops

Sun, 09/06/2009 - 12:15 | 60876 I need more cowbell
I need more cowbell's picture

Here is the one thing I truly do not understand about gold. If it is such a no-brainer, why are so many gold businesses spending so much money advertising it? We have Glenn Beck ad nauseum  with bucu radio spots; printed media; some TV ( not the ones wanting you to sell them your gold fillings, etc.- the ones saying its never been a better time to buy), etc.

Why would anyone sell any gold?

Sun, 09/06/2009 - 12:16 | 60877 AN0NYM0US
AN0NYM0US's picture

"And Sun does look like the chart of silver back from 1980, courtesy of the Hunt brothers (how is the squid different from them, it escapes me)."

 

The squid has the full and unconditional backing of the US government or is that the other way around.

Sun, 09/06/2009 - 13:00 | 60912 long-shorty
long-shorty's picture

That's not correct. There were plenty of tech bears through '99. From Julian Robertson to small managers. "Bubble" was being used widely by those who found themselves on the wrong side of the rally.

Sun, 09/06/2009 - 12:27 | 60885 SWRichmond
SWRichmond's picture

The move in bullion last week is not driven by the currency markets

Only if you consider currencies in relation to each other, which means you must consider fiat currencies to be absolute.  Fiat currencies are only viable wrt each other.  A competitive debasement of all fiat currencies is incredibly bullish for gold.

The risk pooling and credit insurance processes that were central to money creation at the top of the pyramid have proven vulnerable to a breakdown of confidence (and as the systems have started to break down this risk aversion has been justified in a classic self fulfilling prophecy). 2008 was characterised by a massive destruction of money and we expect this to dominate in 2009 also.

For the purposes of understanding currency and price movements it is sufficient to observe that the securitisation of debt and creation of credit and financial derivatives amounted to a huge virtual printing press

Conflating money and credit.  Credit is not money; why do people keep thinking that it is?  Credit differs from money in that it does not fulfill the "store of value" function, and no wonder: it is born of nothing in the magical fictional reserve system.  I strongly suggest readers brush up on exactly what credit is, so that they can more clearly understand what it most emphatically is not.

This is what has been dictating the magnitude of the printing, and this is why printing so far has been rather benign in inflationary outcomes.

IMO the reason is this: most Western economists, market participants, bankers etc have been trained in monetarism and the belief system that it requires, that is, the conflating of money and credit.  This too shall pass.

What I do know: when the time comes for the gold bugs to sell at $2K, $3K of $4K, they won't.

Except for those of us with an exit plan, but you are right to point out that an exit plan is needed.

 

Sun, 09/06/2009 - 12:28 | 60887 AnonymousMonetarist
AnonymousMonetarist's picture

Gann, Elliott, & Demark  are converging on short equities, long dollar & short gold (in the near term).

Be careful out there.

 

Sun, 09/06/2009 - 12:49 | 60901 . . .
. . .'s picture

Yup.  A lot of money is doing a barbell strategy of credit with a hedge in gold or commodities.  If you get fundamental types thinking the positions are over-valued, they could easily rotate into relative value trades of long-short equity trades, or something else.  And if that happens, you could easily get a bandwagon effect due to momo traders following, and then dumb money.  The coast is never clear.  The CIC chairman talking about how "we can't lose" with the barbell strategy is one of the people who could accidentally walk off a cliff.

Sun, 09/06/2009 - 12:31 | 60890 Lionhead
Lionhead's picture

"What I do know: when the time comes for the gold bugs to sell at $2K, $3K of $4K, they won't."

Speaking for myself, you are wrong. I have devoted much time & attention to the study of parabolas, their formation & growth rates of expansion. If gold should run that far, I'll be happy to unload even if I don't come close to top tick. Human behaviours never change, and the same will apply here someday. That you can take to the bank...

Sun, 09/06/2009 - 12:42 | 60895 MinnesotaNice
MinnesotaNice's picture

For the purposes of understanding currency and price movements it is sufficient to observe that the securitisation of debt and creation of credit and financial derivatives amounted to a huge virtual printing press, fuelled by the pro-cyclical increase in risk appetite which, outside of the conventional system of monetary policy and control, allowed a massive expansion of the value of claims on financial assets and goods and services.

Interesting... money creation outside of the Fed... we may have a way bigger hole to fill than I thought...

Sun, 09/06/2009 - 12:49 | 60904 MinnesotaNice
MinnesotaNice's picture

I think this concept was floating in fringes of my mind... but with that statement the enormity of the situation was brought front and center... the Fed is really like a little tug boat trying to push the Titantic one minute before the iceberg tears a hole in its hull.  The scope of this problem is so complex and massive... that it boggles the mind.

Sun, 09/06/2009 - 17:24 | 61128 SWRichmond
SWRichmond's picture

Yes, but only because they were rated as more creditworthy than they actually were.  KD, for all the bad things I say about him, posted a good article that explained how the ratings puff enabled this.

Sun, 09/06/2009 - 12:44 | 60897 Anonymous
Anonymous's picture

Nice article, Andy. Your theories are very similar to Robert Prechter's. It makes perfect sense that we are in the early stages of massive deflation. Your inverted triangle is a good visual explanation supporting this idea.

I believe the recent run up of gold/silver (despite no movement in the USD) is due to a last minute flight to "perceived" safety. The rats are leaving the ship and looking for somewhere else to stay dry.

At the end of the day though, gold is priced in dollars. There are now less dollars to buy gold but yet there is no change in the quantity of gold. Therefore the price of gold will go down.

Finally, for the gold bugs. I have never seen anyone feed gold to their kids when the get hungry or use it to power their car or heat their home. The only value of gold is the notional value that people assign to it. Except for a few industrial applications and jewelry it is worthless.

If the shit hits the fan I would rather have land and guns. Not a pile of gold to hoard.

Sun, 09/06/2009 - 17:28 | 61130 SWRichmond
SWRichmond's picture

Finally, for the gold bugs. I have never seen anyone feed gold to their kids when the get hungry or use it to power their car or heat their home.

 

You can't eat fiat either, your argument is ridiculous, except the heating your home part:

http://washingtonindependent.com/2345/us-economy-looks-like-weimar-on-th...

Precious metals:

  1. Will never be worth zero
  2. Have no counterparty risk
  3. Are a store of value
  4. Do not require the support of legal-tender laws to maintain their value
  5. Cannot be debased by governments
  6. Have been recognized as money for over 6,000 years, much to the chagrin of monetarists, central bankers and endless-war-loving governments
  7. Will always be convertible into whatever the fiat-de-jour happens to be

To anyone who says gold's value is irrational, I say this: given the above facts, which is more rational, accepting gold as valuable or accepting fiat as valuable?

Sun, 09/06/2009 - 21:41 | 61255 Project Mayhem
Project Mayhem's picture

+1 krugerrand

Mon, 09/07/2009 - 08:11 | 61456 Anonymous
Anonymous's picture

I'm having trouble with these arguments, please bear with me and tell me what you think of these counter aguments:

1. Why not? How do you back that up? Would that apply to sea shells (see below)?
2. So? If proposed means of exchange is not used by anyone it has no such counterparty risk; how does it make it valuable?
3. How? Again, do sea shells have inherent value?
4. The same applies to any tangible thing in the world such as stones or mud. That does not give gold meaningful value
5. As above
6. Sea shells were used as currency in prehistoric Europe and many other parts of the world for thousands of years. They then lost their currency status as gold did in the 70s. You wouldn't propose a return to a 'sea shell standard'; why should gold be any different?
7. There is a market for gold as there is for most things tangible in the world. That does not make gold a necessary candidate for money.

Even though gold was money in the past by convention I don't think it is the case now. Anyone got answers to these questions?

TIA

W

Sun, 09/06/2009 - 12:44 | 60898 Anonymous
Anonymous's picture

Andy, "I am not sure we have seen the ultimate high in bond prices/lows in yields."

Agree to your statement. The deflation force is so great currently. The yield of 5 yr notes could go down well below 1% as the gold price goes higher. Would like to have your thought. Thank you for your post.

Sun, 09/06/2009 - 12:49 | 60903 quaker93
quaker93's picture

Nice article, Andy.  Your theories are very similar to Robert Prechter's.  It makes perfect sense that we are in the early stages of massive deflation. Your inverted triangle is a good visual explanation supporting this idea.

I believe the recent run up of gold/silver (despite no movement in the USD) is due to a last minute flight to "perceived" safety. The rats are leaving the ship and looking for somewhere else to stay dry.

At the end of the day though, gold is priced in dollars.  There are now less dollars to buy gold but yet there is no change in the quantity of gold.  Therefore the price of gold will go down.

Finally, for the gold bugs.  I have never seen anyone feed gold to their kids when the get hungry or use it to power their car or heat their home.  The only value of gold is the notional value that people assign to it. Except for a few industrial applications and jewelry it is worthless.

If the shit hits the fan I would rather have land and guns. Not a pile of gold to hoard.

Sun, 09/06/2009 - 13:14 | 60922 I need more cowbell
I need more cowbell's picture

I did for the first time today, Andy. I mentioned to my wife, " Wow, Pottery Barn is having a 75% off Labor Day sale".

Her reponse was, "So?" That ,muchacas, is deflation. 

Sun, 09/06/2009 - 13:46 | 60947 . . .
. . .'s picture

You want more evidence, I've seen projections that 401(k) contribution caps would drop by $500 if CPI deflation continues at the pace it has YTD.

Sun, 09/06/2009 - 14:02 | 60962 . . .
. . .'s picture

The 401(k) contribution cap for 2009 was $16,500.  For 2010, if deflation continues at the pace of YTD, it's been reported the cap could be cut to $16,000.  USA Today and less high brow papers have reported this. http://www.usatoday.com/money/perfi/retirement/2009-08-26-401k-contribution-limits-irs_N.htm

The cut in contributin caps would undercut Obama's proposals to allow an increase in contributions by letting folks contribution tax refunds, sick pay, and vacation pay to their 401(k).  Or not, Obama probably just intended these proposals to help folks who were contributing way less than the cap.

http://money.cnn.com/2009/09/05/news/economy/Obama_retiremetn/index.htm

 

Sun, 09/06/2009 - 14:16 | 60981 . . .
. . .'s picture

Andy, you ain't seen nothing yet in terms of using 401(k)'s to bilk the beneficiaries.  Congress' plan to boost revenue by letting upper-middle class people convert their traditional IRA and 401(k) plans into Roth plans is pure genius.  Congress gets a revenue boost by taxing as income the full value of the amount contributed, on the theory that down the road withdrawals will be tax-free.  Then down the road, when revenue gets tight, surprise, surprise, Congress has a card up its sleave, they can change the law to make withdrawals taxable, but give beneficiaries basis in their plan equal to value of the plan at the time of conversion.

Uncle Sham at his finest.  This has to be in the top 10 list of bad investments Uncle Sham has sold the public.  Right up there with war bonds, designed to destroy investment value with inflation.

And of course they always have the ace up their sleeve of seizing 401(k) and IRA assets, in exchange for 10 or 30 year treasuries.  Like was done in Latin America.

Sun, 09/06/2009 - 21:44 | 61256 Project Mayhem
Project Mayhem's picture

Uncle Sham hahhaha

 

Yeah absolutely I think the government will eventually raid pensions / 401ks.  Argentina did it. Long live our banana republic

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