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Morning Gold Fix: June 25, 2010
Commentary courtesy of www.fmxconnect.com
Gold rallied on Thursday, reaching as high as $1249.5 per 100 troy ounces before closing at 1245.9, up $8.30 for the day. Overnight activity was largely uneventful. Traders will be screening the G20 summit starting this weekend and the G8 precursor meeting today for market-moving headlines.
Pin Risk Autopsy
Yesterday, the open interest at the 1250 strike acted as a magnet in a market looking for an excuse to do something. However “they” could not quite get the pin. Historically, this means the next day has a higher probability of a wash out. But thus far today that is not the case. Could this mean that we are in a market where secular interest and macro hedge fund buying power is finally overwhelming the small but deep liquidity pool of Bullion Dealers? We certainly think so. This is an evolutionary process, and will take time. But know this:
Technological, Economic, and Regulatory forces are all conspiring against closed architecture markets. Metals and other commodities have been inefficient for too long. As the public’s awareness of Gold as an investment choice grows, so will the price. It is the leverage of marketing. ETFs, ECN style platforms that open up otherwise closed venues to the public and a 24 hour news cycle with a desperate need to show content has finally given gold funds their due, albeit begrudgingly.
Once the Investment Banks realize they cannot stem the tide anymore, they will reverse and become buyers, looking to make vig on their clients, but first they will get someone to sell to them, like a mine that needs to hedge. Witness Goldman Sachs and other banks beginning to openly discuss gold in its own category, and not as a footnote to other commodities. If you can’t beat’em , join ‘em.
Gold has to go up. As I’ve said before, governments are reactionary. Gold is a buy until a sovereign wealth fund starts selling its paper assets for gold. Once that happens watch out. Until then, we continue to buy dips.
August gold was up 1.1 to $1247 per 100 troy ounces as of 7:50 AM EST, this morning. The September U.S. dollar index was up .073 to 86.09. July platinum was up 2.5 to $1564 per 50 troy ounces. Silver was down 4.6 cents to 18.69.
-Elizabeth Thawne
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thing is, elizabeth, the peasantry can not really be allowed into gold until jamie dimon's personal stash is secured, and verified to be actual gold not tungsten.
this might take some time.
This is also where I disagree with Elizabeth. JPM et al will continue to short gold because they are doing at the behest of their main benefactor, The Fed. As long as the Fed wishes gold suppressed (until the 2nd Coming), the Evil Empire will continue to do the dirty work.
Oh, and don't tell me about how much the short is "costing" them. How many billions of $ has the Fed given to JPM thru the discount window over the past 18 months? Trust me, a hundred mil lost rolling shorts is nothing.
At least, you're not underestimating your enemies. Still, I hesitate to give JPM that much credit. They are a bankrupted pretend bank that somehow managed to become insolvent in the easiest money making business in the world as a primary dealer. So, they're not exactly brilliant. They have been losing and will continue to be big losers. They just don't know it yet, but that problem will continue to take care of itself.
I like money....
http://www.youtube.com/watch?v=sZHCVyllnck
A new era and importance is emerging for gold.
If "they" can hold 1254, "they" can paint a short-term head-and-shoulders onto the tape and use it as justification for a run down toward the 50-day MA.
Gold last 1256.90 1:11 edt
The Empire will do everything possible to close it under last week's close at 1258.30.
Let's see what happens...
The Empire wins on the pit close. Now, can they hold it back through the Globex close?
If that chart looks too hot then take a quick read of this:
For the Last Time, Is Gold in a Bubble?For the chart that says it all see the article:
http://www.caseyresearch.com/editorial/3479?ppref=CRX178ED0610D
But the chart compares apples to oranges. You can't compare the inflation scenario at the end of the 70s to anything even remotely close to now.
And the Nasdaq is an index, so the cumulative weight of 100 stocks is going to have more of an increase than one commodity.
Like I said, apples to oranges. The thing about the gold run up now is that it is happening in a period with no inflation. That's why the scenarios are totally different. The gold price is up way more than inflation, just like it was at the end of the 70s.
As you can see, the end scenario will probably be similar, but the run up will not be the same because of the lack of inflation as compared to that time period.
As for gold, 1300 is the top! I've been saying it for a long time, even when I said it was in a downtrend before (and it was in a downtrend before.)
It's trading in a narrower and narrower range, in an ascending wedge pattern!
Hey, Johnny! BTW: No junking from me
Is your conclusion that gold is in a bubble, or it is not? You describe it as a "run up", but not specifically as a bubble. If it is bubblicious, what other bubble market could it be compared to? I am educable.
Johnny Bravo said:
Seems you are being a little picky yourself, Johnny, with your technical analysis. An ascending wedge is hardly the only way to analyze the gold chart.
Jesse has a slightly different take here: Gold Daily Chart: The Form of the Cup and Handle Is Now Complete Targeting 1375 Then 1455
But I'm sure your TA skills are impeccable, with a long and illustrious record, so we'd best dismiss Jesse as uninformed, eh?
Rocky,
Yep, when a dude like Faber said what else is there to buy.....you know the bottom is in.
JPM, the Fed, WHOEVER, cannot stop this.....when the DEMAND exceeds supply, party's over.
They lose control.
IF the BIG banks are ordered to dump...........then they lose their ass,and their Gold.
When you have soverign nations snagging every ton they can find, if the price were to drop back under a $1k, it would be like a kid in a candy store......RCB set the floor IMHO @ $1045.00..........
We won't see that again, unless the entire globe goes into Hyper- Deflation.............again, just IMHO.
This thing about tungsten filled cores has me thinking: what about tungsten filled little bullion ingots, or even counterfeit coins purchased from the various bullion dealers? When buying this and taking physical possession, we can't assay it ourselves. How do we know WE'RE getting the real stuff?
This is not a philosophical question for me. Liquidated all my paper assets, looking to drop about 400K into physical gold the next couple weeks and want to get it right. Anybody wanna weigh in?
Mr. Anonymous: balance the coin on your finger, and tap it with something metal like a screwdriver. It should have a nice clean ring to it. If it does not, then it is likely to be a gold-plated something-or-other.
I buy small denominations, both to avoid this possibility, and to have something that can easily be traded for everyday items if the SHTF. The premium on buying small denominations will not matter when gold's price shoots through the roof. Also, small denominations will likely still hold a premium in the future, for the same reasons they do today.
I'm with you on the small denominations...one, because I'm a small-timer
two, because I'm leary of the taxes that look to be in the pipeline for those trying to preserve their wealth with gold/silver. Easier to sell privately if one has something somewhat affordable.
With you on this, but tungsten has nearly the same atomic weight as gold (183 v 196), so that ringing test might be kinda hard. Is anybody hearing reports of counterfeiting small lots with tungsten?
If you want Gold coins, buy only certified stuff from PCGS and NGC...they verify the coins are not counterfeits and guarantee them.
Links: www.pcgs.com - Message Board here - http://forums.collectors.com/categories.cfm?catid=26
www.ngccoin.com
I doubt you'll find tungsen in coins, but avoid the ring test - that could damage a valuable coin.
I'm also a dealer so if you want, add @yahoo.com to my user name for my direct email.
Mr. Anonymous: the weight does not matter. If you tap it, and it does not have a nice clear ring, then it is not a pure metal through and through. It is something plated with something else.
A nice clear ring means that the sound waves are able to travel unobstructed throughout the entire coin. If there is not a nice clear ring, then the sound waves are being impeded by the imperfect barrier between the two different metals. Sound waves do not travel well when they have to jump from one metal to another.
You can test this yourself by comparing the sound of dropping a pre-1982 penny on a concrete floor, to the sound of dropping a post-1982 penny on the same floor. The first will have a higher pitch and a ring to it, the second will be much duller.
As for the ring test "damaging coins" - I assume you are using bullion, which has little or no numismatic value. I will also note that the tapping can be very light, and can be done on the edge of the coin. People who think you will damage the coin, or even scratch it noticeably, have not tried it themselves.
I do agree that the chance of there being a fake gold-plated tungsten bullion coin is highly unlikely, but as the price of gold goes up, it will become more and more likely. So it's better to learn how to spot one ahead of time, rather than after you are screwed by a bad sale. For rare gold coins that have high numismatic value, it is already likely that there are fakes out there, and that the technology either exists or has been in development to make a gold fake that will pass for real... until you assay it, or put it up to the ring test.
The ring test is one method among many. And it's not the first choice. I've been into coins, collecting and dealing since the 1970's. The look, denticles, feel, and on Gold coins the infamous Omega mark can tell if it's counterfeit or not. There are entire books on this subject. A pro can tell at a glance if the coin is bad, the ring test is a confirmation only.
Counterfeits, like the Omega, are made of Gold too. It sounds the same in a ring test but the value is far less because it's fake.
Find a dealer you trust. Hell the Chinese are even counterfeiting slabs now. I don't want to push this, but contact me if you need me - I've been in this business for many years. I'll give you references or whatever you need. Thanks
You have only confirmed the ring test as the test of choice for any layman, e.g. Mr. Anonymous. Obviously it is not the first choice for an expert handling a coin with a high numismatic value, which bullion is not. Take it to a pro and pay a fee for appraisal, or pull out a screwdriver and test it yourself? Hmmm... ;)
No reputable dealer would charge for a mere Genuine US Mint product test for a couple coins. Now a bucket, different story.
Yes, a few months back, China & NK, said they had the ability to make 1oz tungsten coins.
That's why you stick with Soverign Gvt coins, purchased at REPUTABLE DEALERS.
No bars, of any size, IMHO............if the SHTF, folks are going to want to assay them regardless..........
I would NOT buy 400k of Bullion at one time, and I would buy from several REPUTABLE dealers............there will be pullbacks, IF, & UNLESS we have a Global event, that sends it parabolic.
I find the best prices are late at night( after 9:00p.m./1-2-3a.m.), and early (before 9:00a.m)a.m. CST...............
You need to mix your investment also...........Slvr is a must.
As for the RING test, silver will ring audibly, Gold not so much.......density.(esp if 24k).
This has worked well for me
http://www.fisch.co.za/faq.htm
I am amazed at the number of gold buyers who don't own it or have not heard of it. In regard to tungsten i dont see how it makes economic sense to counterfeit the coins. Thats just an opinion not based on any research.
Agreed. Counterfeit 1oz coins from a reputable dealer or coin shop is a non-issue.
look at it this way. You can buy physical Gold in coin form for a 3 % mark up over spot. that mark up and the certification letter is your insurance the gold is real, legal battles not withstanding if fraud is perpetrated on you. as for Bars. always check serial numbers withthe fabricator, or better yet, buy from a reputable fabricator directly. there si other stuff, but that is a start. anything can be counterfeited. and Gold is susceptable to debasing as well.
better to buy tungsten bars
fm,
I have asked this here before.....HOW do you buy Bullion coins (Gld @3% over spot?), unless your a Dealer?.
Have yet for an answer.................I am sure a lot of folks would like this info..........
Just stick to 1oz AGEs , Maples, Phils from a reputable dealer and you have absolutely nothing to worry about. (Apmex/Tulving/etc) If you're really, really, really, paranoid, get the Fisch device. Also, don't forget to spread a chunk of that 400K into silver too. If your worried about the provenance issue there as well, go with bags of pre-65 junk silver. Even the people who have never seen a gold coin in their entire lives know what a quarter/dime looks like and can read the date.
Whenever someone says "and you have absolutely nothing to worry about," I get worried real quick.
+1000
Stay paranoid on this one.
Unlike other posters here, I'm less trusting of even "reputable" sources because they're just middlemen taking some off the top and are less likely to be checking every order since they're not planning on holding. I'm a little concerned because of the amount of trust involved.
If a bank can get tungsten, I'm pretty sure a private buyer can also get some form of fool's gold. I seem to remember hearing about fake minted pandas from China last year...
thesapien,
Reputable sources buy direct from the MINTS............
That's why I do not buy, any metals except a few occasional Slvr Rds............except from BIG playa's.
Everything from China is poion,cheap or fake, that a no brainer..LOL
The only thing that I can see going wrong for you would be a asteroid(or large meteor) of pure gold hitting earth.
Talk about dying rich...
patience is our best ally , we will see gold reaching new high even in swiss franc but it might take few month before more political madness helps the price of gold and silver go postal
I just decided today that silver is now my main economic indicator just because it is always the rate I check first to see where the world is @.
Hi,
I bought my first ever metal yesterday and got a nice price thanks to reading up on what you guys have been talking about. Thanks!
I read something about price manipulation around the time of non-farm payroll. Can anyone point give some info on that? Are there any other manipulation dates?
for those predicting 5000 dollar an ounce gold, please answer me this...
for 50,000 paper dollar bills you can buy a new mercedes benz e class coupe or 40 gold coins.
if the price of gold goes to 5000 dollars an ounce your 50,000 paper dollar bills can buy a new mercedes benz e class coupe or 10 gold coins.
Does it seem logical that the benz should be worth 10 coins? Or 40?
Help me out here; I know something is worth whatever someone is willing to pay but if you had to choose between ten coins or a new benz coupe, which would you choose? If the answer is the benz then isnt the price of gold overvalued?
Here's a hint: How many ounces of gold did the equivalent car cost 10 years ago?
that is totally irrelevant. My question is what woudl you value more today?
It is very relevant. Ten years ago the car would cost the same number of coins as today. The car would still cost 40 coins if gold went to 5000/once, but it would then cost 200,000 dollars. It is not the price of gold that is going up, it is the value of the dollar going down.
i dont think so. if the price of the car goes to 200000 then the price of everything goes up by the same factor. But we dont see that happening; we see the opposite. Gold is going up while the price of other things, like the car, are not. therefor either gold is a bubble or...?
Isn't it fair to assume that if gold is 5,000, the price of the car will have gone up to 200,000?
No
J Lee is right. And the reason why is because inflation has no bearing on the price of gold. The only thing that is keeping the price high is speculation for future inflation that isn't going to come. (which is debatable, which is why I'm on the different side of the argument than you.)
I guarantee that we're not going to see hyperinflation. We could monetize all of our debts and liabilities, and it'd still be only 600% inflation.
That's slightly more than the gold price has risen. The thing is, that isn't the scenario we'll see... that's the worst case scenario.
the price of gold has gone up 300 dollars an ounce in the last few years but the price of the car is about the same.
my question is simple, which would you trade your 50000 pieces of dollars for right now, 40 coins or the benz?
there's your answer, doc.
yes, you are correct. take the coins and sell them in a few years for a car and pocket the appreciation. but when you lay the coins on the ground next to the car it sure starts to look like tulip frenzy time to me.
Tulip frenzy time is at gold $5000 or so. Until then, there's a lot of room to run.
Frenzy for the car or for the gold?
For the tulips!
Obviously people are buying 10 ounces of gold versus your mercedes these days. Are you implying that somehow gold is overvalued compared to a mercedes?
Where does a mercedes get you these days? Cars break down, they lose value, and they are a dime a dozen. Perhaps 10 years ago, a mercedes was overvalued, as the majority of these cars were purchased via debt financing. Debt financing inflates values - resulting in the overpayment of "things". Well, that psychology of it all is changing, and money is flowing to those "things" that were undervalued, and finite in supply.
Your overvalued mercedes is now coming down in price, as debt financing provided an illusory value compared to gold.
I am not implying I am asking the question. when I look at the car and the 40 coins I start to ask myself which I value more, which of the two choices feels like greater value and it is not the coins. Bars, maybe. but coins, no.
By the way, I have 30% of my savings in gold so I am not a gold bear. I am just wondering if the price of gold is not getting out of hand in qualitative terms.
Duh !!!
The Benz depreciates 30% in 12 months ... Gold appreciates 30% in 12 months.
Use the 40 gold coins to get yourself a trophy wife ...
Actually the benz resale values are pretty good over time, for a car. Sometimes better than the front end loads of gold funds.
Anyway, I hear some chinese girls will marry for 40 gold coins. So maybe we are in a bubble, after all.
Maybe you didn't notice GM going bankrupt because they couldn't turn a profit? The entire premise of your argument is ridiculous. Just because the Fed gave trillions to the banks and you didn't get any does not mean the money supply was not inflated. Gold, as an alternate money, is reacting to the flood of new money that was added to the system. Keep the gold. The next QE is going into the public, and it will unlock the trillions the banks got last year as bankers realize they need that money out working and not sitting in a vault depreciating 10% a day.
This is exactly what I mean when I say that many of us gold bugs fall for the money trap.
If gold were money, and that somehow meant something real and translated into the real world, then your question would be perplexing.
A method based on reality would be to examine the work that goes into producing a Benz and the work that goes into producing a gold Maple. You'll also need to compare how each product holds up over time (a few years vs lifetime), how each benefits you in producing more (cars are useful), and check things such as how much gold is used to produce a Benz, if any.
If paper and digital paper equivalents are shunned as a wealth reserve and gold takes over as the wealth reserve par excellence.. How many automobiles will you be able to buy from a single ounce?
approx 3/4 an ounce of gold per person on earth vs a whole lot of stuff. Those 40 coins you'd trade for a Mercedes today may make you a multi-millionaire once the $ Matrix is turned off
if gold replaces money and there are only 3/4 ounces of gold on earth per person that will make for some mighty small coins.
How many ounces of mercedes benz are there per person on earth?
Anyway, if you want a few ounces of metal instead of a benz I will make the trade.
I'd choose GOLD as the best investment. You can't eat a Mercedes-Benz.
lauo,
Easy one, because your 50k paper will be worth nothing.........if Gold hit's 5k.
They will be inflated to hell..............besides, anyone who isn't a MULTI millionaire, should never buy a NEW Mercedes Benz, with a 25% loss as soon as you sign the contract.
Folks buying Beemers/Benz, are either very wealthy,and pay cash, or are leasing, or are going to never wind up a millionaire..........
Because they are THE PROBLEM.
buy tungsten bars
lawsuwan = master bates = godfader = JW = jory = "I ain't got no gold, bitches!"
now who can argue with that?
Gold has been '"slowly" rising about 15-20% a year,that's called a bull market!!
Mania fase still to come when gold will be tripling in price in just a year.Even then
I will not be selling my gold(exchange it for paper),I will be buying things(nice house?) with it.
Some people still don't seem to get it;read Gordon Gekko and get yourself some education please!
Pace is quickening. Up 30% in the past 12 months.
This man(Jim Willie) is a genius.
http://www.marketoracle.co.uk/Article20560.html