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Gold Drops Below Its Average Cash Cost
As shown two months ago, the marginal cost of production of gold (90% percentile) in 2013 was estimated at $1300 including capex. Which means that as of a few days ago, gold is now trading well below not only the cash cost, but is rapidly approaching the marginal cash cost of $1104...
Which means that of the following mines (as we showed here) which make up the gold cost curve, one by one, starting on the right and going left, production is going to go dark, even without the recent demand by South African gold miner labor unions to have their wages doubled. Until eventually virtually no gold will be produced.
It is at that point where one must apply the New Normal supply and demand curve, when one can predict a $0 per ounce price for gold, as physical demand continues unabated, while actual physical, not paper, production has now started going offline.
Joking aside, not even Bernanke and all the paper Gold ETFs in the world will be able to do much to suppress gold prices from reaching their fair value when gold production hits a standstill, and when demands, especially by China, is still in the hundreds of tons each year.
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I'll need an address and the approximate date. I'll be dropping by... to share my admiration, of course!
What time do you typically leave the house?
When do we start dropping the word hedge, when talking about holding gold....
When fiat collapses and there is no inflation is a good start. You are no longer hedging against currency collapse and inflation.
soon it will not worth anymore to be called "Precious" metal.
bah
You ever seen the scrap bins outside of some shops? People treat remnants like they're fucking candy wrappers. If they have pretty tessellated patterns maybe they get lucky enough to be someones artsy decorative fence.
You can wear gold and silver without skin discoloration, i hope independent jewelers are happy that their base material isn't at rape me levels right now.
No matter how much i like the ductility and coloration of copper, people just don't often seem to like to wear it.
This move in gold looks more and more as a panic selling reaction. So either something broke or something is about to break, and it will be huge and ugly. So what is is and where is it?
There were over 40,000 contracts traded last night at 11:30EST. 100 oz per contract. Is this retailers selling and buying, I don't think so.
You think there's some manipulation going on, Meat? I'm incredulous. /s
I'm sure Gensler is busy instructing Renteria on how these trades represent "The New Normal."
Miner couldn't make margin...
They aren't allowed to write in potential. That's what BreX did and it took a decade to figure out the nonsense coming from the Bozo's in borneo.
This move in gold looks more and more as a panic selling reaction. So either something broke or something is about to break, and it will be huge and ugly. So what is is and where is it?
SHORTS, and it is unreal considering what SUPPOSEDLY has sold off, exceeds the yearly supply of mined Au in the world,no way.Total disconnect papaer and AU pricing.Headed fpr FREEGOLD.
Meanwhile, Adjustable Rate Mortgages are being pushed again, and on the rise.
How did that work out last time? And...what did that do to the price of Gold?
Like feeding Alka-Seltzers to the seagulls. One blows up, but that just makes room for the next one who isn't smart enough to know anything but "Mine!"
Ot, but, in tales from someone who listens to top 40 radio all day because job:
My favorites are the ads advertising for-profit college degrees for jobs in homeland security, top notch recruitment right there! Or scam, either way it's both hilarious and depressing.
I honestly feel twilight zoned with that one, like, this is real?
I don't know if this is national or if my region is just prone to higher unemployment and dumb.
Gold will not stay at these low price levels for a very long time. Why? Because it appears JPMorgan is now long.
Commercials in aggregate are now apparently long, and maybe JPM is net long, but they still have this month's delivery issue to contend with. 3 more days to scare up 80,000 more oz (which will still leave the vault empty), come up with 'alternate arrangements', or generate some kind of a distraction, so nobody notices the default (maybe an exciting new reality TV show, or major media event like Snowden - the sequel).
No big deal, they can just buy 800 contracts and they'll be offset. Paper answers to a paper problem.
They can buy 800 contracts, but not the contracts they want. Not all contracts are held by the same kind of person. Some of them intend to stand for delivery and therefore refuse to sell.
In Friday's episode we find that Seal Team Six are not actually all dead. Their deaths were faked and they were infiltrated into the Moscow International Airport Food Court as dishwashers, janitors, and soda jerkers.
After receiving their go order the team captures Snowden and Putin, disables the entire Russian Rocket Command using NUXNET, sacks the Bank of Russia, and escapes in the AN-225. With minutes to spare they airdrop a pallet of gold and silver bars to JPM/FRBNY HQ just before landing at JFK.
Jamie spikes the ball.
Don't worry, they'll offer them a fistful of dollars.
Nobody can refuse those! No really, you can't!
3 more days? COMEX site says options were trading until yesterday, and settled the same day:
http://www.cmegroup.com/trading/metals/precious/gold_product_calendar_op...
Am I missing something?
i think we need to let these miners go bankrupt so the gubbamint can let capitalism play out. No more bailouts. Shareholders and bondholders take the loss.
Maybe, just maybe if they are lucky, the banks will give them a lifeline in bankruptcy. But if they do that they deserve whatever comes out of the ground, as they took a major risk with their hard earned money.
"We need to let these miners go bankrupt"
What the hell are you talking about, "we need to . . ." they will go bankrupt or not. It's not as if they are in the TBTF cartel (except ABX, of course).
Banks will give them nothing, they will attempt to get the producers to sell forward at low prices so they can deliver into their shorts ie. get back some of the soverteign "leased" gold they sold.
"Capitalism play out" as if these heavily rigged PM markets have anything to do with capitalism.
I threw away my sarc tag a while ago. I just don't give a shit if anyone gets it or not.
Hehheh. Sorry.
Bastiat,
Was laughing with a buddy about an hour ago. ABX will be forced to hedge again a scant few years after spending billions to close their hedge book.. They are not the worst management in the mining sector, they are the worst in the world.
I wrote some about them below. They aren't really a mining company so much as delivery system for he bullion bank shorts. Fekete used to ream them, saying they were primarily a hedge fund. I think GHW Bush as been on the board as well as Mulroney.
Yeah, Fekete actually owned their stock at one time, falsely believing they were a miner. Right up until he got wise to the scam.
Sad thing is, I expect them to be one of the last three miners left on the planet, being deemed TBTF. All of the rest are meat.
I disagree with the last statement.
This is forced liquidation from people trying to meet margin calls on leveraged bets for bonds.
Check oil price how it dropped and bounced almost instantly.
Margins calls have started
good read on majority of component vector
How in the world could it not be a margin call?
The dow is up 130 points because a fake shitty GDP was needed to keep bonds from selling off moar. So that puts the fed back in QE mode. Yet gold just gets barfed up unabated...and these cnbctards are trying to stomp on it's face in between promoting apple.
If anyone ever wanted an in depth look at a margin call...
http://www.youtube.com/watch?v=4eYSpIz2FjU
There is no QE mode any longer. It's been off since March
QE is dead and won't be resurrected
If it was dead since march the S&P would be at 400 today.
It takes time for the big margin calls, you know the Lehman margin call
Small fish goes first
Check this what a margin call does
http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
I don't see the kind of instability in the US markets that would suggest QE is dead. MAYBE starting to see cracks in the bond market, but overall, there's still a ton of complacency. I think QE's alive and will (Bernanke's 'puzzlement' notwithstanding).
with all the respect in the world to ekm QE is alive and well, in god knows how many forms. As a matter of fact we have gone from QE to skynet. This market is completely and totally fabricated, even the bond market. They are just plugging in whatever numbers they want.
o They are just plugging in whatever numbers they want.
Bada Bing!
Central Planning for us all after it worked out so well for those Soviets.
ekm,
I really wish you would post a bit more of your overall thesis. You and CrashIsOptimistic are my two favorite posters here, but you are both slightly cryptic.
You are clearly in the "QE is over" camp, which seems to be the contrarian take on things. I'd just like to know more of your reasoning. I'm not placing any bets one way or the other; I'm just trying to reason it all out for myself. Thanks!
People listen to the Fed, I watch reality. Fed is like the KGB of Finance, it's there to do propaganda.
What is the reality?
Bond yields up drastically since May=QE ended in May
Stocks?
Primary dealers are the sole owner. Somebody has to call margin on them. Only white house can do that via the Fed.
It all comes down to one question: What is money?
Fiat Money can exist only if there is acceptable interest rate, otherwise nobody will use that money.
UST interest rates have been zero for too long and the world is avoiding the dollar by use of currency swaps.
Hence, interest rate decision ultimately is a white house/congress decision to maintain dollar as world currency.
10yr should be at least 5% and it will get there soon, otherwise bye bye dollar
How in the world does the U.S finance it's debt at those rates.
If the price of oil goes to $40 to revive the economy what happens when housing, which supposedly makes up 20% of gdp gets thrown in the dumpster again?
It does not compute
There was no issue paying the debt interest until.....2008.
USA will pay foreign debt and default on US owned debt, default like Detroit. Quite simple.
GDP as high housing prices is propaganda.
Low prices create demand, not artificial high prices.
So we end as Detroit with a budding real estate market?
That's a good thing, not a bad thing
The U.S wiill default on foreign debt first. Blame the rest of the world for the hyperinflation that ensues. They will never default on their own debt.
It is already happening. It's a process, not a bang.
Obamacare is one attempt
It reduces medical care coverage
fonz,
I agree that the US will default on foreign debt before it defaults on the FSA, but I don't think it would cause hyperinflation. I think it would be the opposite...a massive depression with a side of war. Any real growth would start at that point, although I can debate myself on that point depending on peak oil.
ekm,
I love your posts and agree with many of your observations. I just don't think our politicians would default on the country first. Otherwise, what is the point of them propping everything up all this time?
Love the discussion.
PS--Why is there very little discussion about China's lending market freezing? Nothing on MSM. Maybe we did default on them. LOL.
the Swiss "Dr. Doom" Marc Faber sees this as an option
Give proof please. FED bought 60 billion MBS and treasury last week.
You call data coming from Fed as proof on your side?
I have no proof as nobody has any. I am reading the reality the way I see it
I find your thesis interesting, but there is no way they can end QE until QE ends them. My reality says that your market no longer exists, and thus price signals in the bond market are more noise than signals (as is any other market metric at this point).
Government will destroy everything to protect their monopoly (including the world's financial system). Given that they have no choice but to force ZIRP onto everyone, well, that's what they'll do.
All they're trying to do along the way is to manage expectations in order to maintain a controlled collapse.
If they continue with zero rates, USD is going to perdition
ekm,
I think the US knows that, but they don't care about the USD, at least in its current form, actually surviving. They are gong to use the collapse of it to try to consolidate even more power with another currency scheme. I'm sure they are making the plans for that scheme right now. Time will tell if they are successful.
Currency collapses, or
government collapse.
And btw, the government (or Fed, and TPTB more accurately) gets to decide. I think they will blow up the currency.
Aren't rates ultimately about risk? Aren't we still the least risky, which is how rates were driven down to begin with? I'm not following your zero rate / reserve currency connection. (I read your reply above, and I still don't get it.)
I'm also having a hard time figuring out if the Fed sets rates or if the bond market sets them. Everybody is all over the place on that. Chicken and egg.
I consider the following two points as indisputable starters for discussion for the US to remain top of the world:
1) Cheap and abundant crude oil
2) USD as reserve currency.
1) Both are totally merged in one thing. Main demand of USD comes because Saudis sell oil only in USD in exchange for protection. However, not every oil producer has this deal with US, actually many are anti US
2) By the very definition of fiat money sanctioned by gov, the only way to maintain demand for that money is for the gov to guarantee an acceptable yield otherwise people have no interest to convert their output into that money that is currently in real negative rate, hence currency swaps occurring.
Hence, my conclusion:
It is inevitable that US gov will increase the rate to an acceptable level so people keep using USD as reserve.
Its short term, is what it is. Stage 1 of the Ka-Poom.
Rates go up, banks have to start paying interest on deposits (and on their debt). As a result, they have to start lending out their reserves. And then BAM. Prices start rising. Reserve currency holders of USD start to catch on, and look to spend their USD. BAMBAMBAMBAMBAM
If interest rates go up, the money supply goes down, which means prices go down.
That is DEFLATION. I just don't see the .gov making a move like that on purpose.
Is the Ka-Poom a theory of yours that I missed? I like the term even though I might disagree with the premise!
ekm, I agree with your premise. Not so sure about paragraph (2) unless some other country becomes less risky than the US. Creditor nations may have to be content with a return OF their money rather than a return ON their money. That's not bad advice for anyone in a deflationary spiral.
Anyway, you have well-thought out theories, even if I don't agree with them 100%. Appreciate your posts and replies to me.
I am talking about the new wealth to be created that is refusing to be converted to dollars by use of currency swaps.
The wealth already converted to dollars has no other choice, I agree.
Thx a lot for the debate
Dang, I don't mean to be a pest, but new wealth to be created out of what? This is where you lose me. My simplistic theory is that the money lent to the US is our money (i.e., Walmart spending) in the first place. Our credit markets dried up, consumer spending dries up, the Walmart dollars go less to China and more to domestic food, then China dries up. Who is going to step in and fill that void? I don't see it.
You may be talking about something way over my head, and I'm certainly not debating you! Just trying to figure things out. Appreciate your replies today.
All my conversations usually lead to one issue:
What is money? Why do we need money?
How is it created?
Why do gov bonds exist?
Very shortly:
1) Money (or better 'moneyfication') is monetization of real goods and services into currency measured by unit of account called 'money'
2) Gov bonds exist first and foremost to create a demand for the fiat money, hence it must always have positive acceptable interest rate.
Let's say an iphone is assembled in China. This iphone has to be moneyfied.
Banks have licence to moneyfy goods by issuing credit. Hence money is always credit/debt
I go to apple store, I use my debit card, I get the phone, my account is charged.
This is the moment that the iphone was moneyfied.
For me to accept to convert my output into money two things must occur:
1) Obligated to pay taxes (ok I'll convert 30% of my output into tax)
2) Convert my remaining output into SAVINGS. The basic and starting source for that is the gov bond which must have acceptable interest, otherwise I ain't converting but ..will spend it on the spot, otherwise loses value=chaos.
You forgot the /sarc
You just said two days ago that you think oil will be $15/barrel in 6 mo. If this was the foreced liquidation you were refering to shouldn't oil be plunging instead of bouncing? Or maybe the margin calls just are not that big yet?
I said it has the potential for $15
I do strongly think that $40 will be materialized in 6 months due to margin calls and gov releasing SPR which is full
Why do they need to release the SPR. They have made it clear day after day that there is a massive over supply of oil. People may think they are lying.
How long could a spr release keep prices low?
Looking back at 2009 after the release, I'd say about 4-6 months
I don't see the point of it.
"They have made it clear day after day that there is a massive over supply of oil."
The MSM has made this clear, therefore it isn't true. The US still imports 1/3 of its oil, this is hardly over supply.
SPR is tiny
Ghedafi and OPEC thought the same way in 1988 when Reagan pulled the trick and it worked
Too heavy, too drastic, i think you are externalising one of the key components of your overall thesis, forcing the negativity onto a price point. There is no way for such a drastic move without the entire complex/system folding, which i believe is outside of your general premise.
Oil available even ten lower from here would be absurd and counter productive.
If energy costs rocket that low it would only be because of severe deflation which would place the entire worker base at a point of immense instability.
I can't debate that i find your perspective interesting and beneficial, but i don't think that anything that drastic will be allowed when it comes to energy.
I would assume complete blackout had already occurred if those were the kinds of choices being made, and that the reality was not allowed to shine through.
Western Resource Recovery Sector: Destroyed By DESIGN
Landslidz, bitchez!
This move in gold would certainly eplain why the miners have been shorted into oblivion over the last couple of years. It would tend to indicate this gold ass thrashin' has been in the works for some time.
Did you know that if you short a stock and it goes to zero, you pay NO taxes on the gain? Lovely eh? Especially when you can naked short and get a pass on your FTD.
Beats workin'.
Or contributing anything to society at all.
BOOM! Dropping the fucking hammer. Comment of the day actually.
LOL.
wait...
so i can trade slave coupons for metal?
And after that you can give the metal to women so they like you, because you promise to give them more.
So go long physical and short paper and give no fucks about it?
This is indeed the smart play. Win if physical explodes higher; and win if paper prices decline. A double victory in the case that FOFOA's predictions are realized.
Paper's only good for the liquidity, being able to take advantage of short term. Lock all profits in with physical though and just ignore the price. Watch that stack grow.
Why in the fuck do you think rappers wore gold chains?
Molon labe
Business expense tax deduction
AAPL continues to sink lower also:
Among Analysts, Price-Target Cuts Are the Latest Apple Fadhttp://finance.yahoo.com/news/among-analysts-price-target-cuts-140049242...
Useless fucks - where were those downgrades and price target cuts when it was 700+? These fucks get away with the equivalent of predicting yesterday's weather.
Luckily for them, that's all most facades require.
"Give me plausibility, or give me... umm... marginal plausibility! "
Give me plausibility or give me dearth.
COMEX default is end of this summer. When that happens, GLD vault will be empty of physical gold. Now where would China then get their gold?
I think the Rothschilds, Rockefellers, and other lesser-known old money families are selling the stuff they bought over the past couple of hundred years to lock in the profits while they still can. But you know those old money families - shitty traders, always chasing price, and then being forced to sell big at the worst fucking time - so anyway, that's where China, Russia, India, etc. are going to get their gold, usually late at night North American time when the markets are thin. You'd think people with so much money would be able to hire some help so they could get a better price (you know, so they could buy even MORE 'productive assets' and 'farmland') but I guess at this point they're just panicking and trying to get rid of as much as possible as quickly as possible, regardless of price.
What's a first rate mercenary squad run in the us right now in real? what about yuan, yen, dinar, or rubles even?
All kidding aside, gold is going to zero.
Love thy neighbor.
This is going to put many junior gold miners out of business.
Yep, explorers too. But those with cash and slow burn rates will make it.
Two words: WEALTH TRANSFER
Two more words: PANIC-INDUCED
Interesting analysis regarding gold here:
http://ftalphaville.ft.com/2013/06/26/1547342/gold-the-china-connection/
Retail jewelry buyers in China and India won 't be able to stem the tide of the big boys (elite) driving down paper PM's. Get some GLL while ya can...
'While I can' - good one, because there's only so many shares of the ulta short ETF to go around? Ha ha ha. Sorry, anyway, I don't have any money for that, it's all tied up in DUST - 15%/day, every day - I'm planning on buying Cyprus in a couple of weeks.
Are you serious? I can't think of something more bullish than miners right now. If they're forced to sell at a loss, they won't sell. Causing price of gold to go up regardless of what paper does. I don't care if they decouple or not, miners produce the real thing. Sooner or later they will set the price.
I'm waiting for the epic short squeeze that follows.
Dust is a three times inverse etf on miners, meaning the pain for gold at negative production costs causes profit. A hedge if you will.
The play was telegraphed after the last heavy beating, even an article here warned of production nearing cost.
Keep in mind, this is all hindsight for me, as always i made no advance.
Or maybe my visions just too blurred to read right.
http://www.direxionfunds.com/products/direxion-daily-gold-miners-bear-3x...
The Wall Street pigs with their leader Bull Shit Ben will not stop till you are ruined. I have never seems such an all-out effort by such couupt group of trashin my life hell bent on destroying pure wealth and pushing people into paper trash. What a disgrace!
It's called deflation.
That deflation argument has long since been debunked. We didn't even have deflation in 2008. We have a shitty economy and a theiving banking system. It isn't deflation. Hyperinflation is and always has been the only outcome. The gold price is just some entity trying to make a not for profit point at any expendature or cost to the economy. And when they are done making their point about how much wealth they are willing to blow to maintain the status quo, gold is going to go straight up and over 2k.
http://research.stlouisfed.org/fred2/series/BASE
This is just a Vietnam quagmire for bankers. Speaking of Vietnam quagmires for gold bankers:
http://www.bullionstreet.com/news/gold-panic-may-grip-vietnam-as-deadline-approaches/5069
There is no gold in the banking system anywhere.
Quin, look at this fucktard HSigma down below telling us that the "inflation rate is dropping".
Yeah, tell that to anyone producing commodities. All their costs are going UP.
I'll begin to worry when the fundamentals change, and not a moment earlier.
http://www.ftense.com/2013/06/precious-metals-panic-liquidation.html
Posting......on....behalf.....of..kito....my...deflationary idol.......while he is on sabatical............all....the ZH goldbugs....dreamt....were in an underground pirate ship...."all in" the captains quarters................ the rest of the ZH goldbugs gathered around a table holding stacks of gold and silver....coins.....skeletonized......with strong hands.... who poisoned them all?...... some cat walked in named one-eyed jamie......no not Willy............
one-eyed dimon then said,....."baby.... baby fuckin' ruth"!!
Kito and I are happy to announce our engagement for marriage now that DOMA was lifted. Our colors will be blue, purple and cream. Pirate wear is encouraged....
You made my day. I got love for Kito.
No humor in the gold bear, only for the bond dip? But there is no joy in Mudville - mighty Casey has struck out.
The Dow is UP! Fuck yeah! Stawks is cheap, Yo! I just bought AAPL after selling my phyz for a 38% loss! I'm a pro!
The time to buy gold will be when all the irrational/highly emotional die-hard gold-bugs capitulate and about 30% of gold miners close up shop or retool for different material extraction. It has proven purely a sentiment trade. When will people wake up and realize this bubble of a market was bought up with speculative levered paper, and will delever through that same paper? Wall St pimped out the commodity complex to an investing segment that could care less about gold standard/hyper-inflation/Fed printing. They did not apply idealism to their investment criteria. They just wanted a different yield environment than bonds/equities to "hedge" their VAR/exposure.
Rate of inflation is dropping, it doesn't matter what metric you use (shadowstat/Fed...it is the rate of change that is doing damage). Job market/wage growth is beyond pathetic. Everyone screaming and yelling about inflation are yelling at the wrong tree... deflation from excess debt leverage is what will do us in. The Fed did a beautiful job of masking this problem, but when they loose control of the treasury complex, you'll wake up to some serious oct 2008 morning type headlines. Bond markets hold strings of the financial universe, gold market size (paper & physical) is a pimple on it's ass. If and when the Fed tapers (they will, and FF rate will eventually rise) as they will lose even more credibility if they inflate other unintended asset bubbles, yields will revert to mid-2000 curve... gold is going to $300-400 and will stay there for another considerable period of time. The jr mining industry will be decimated beyond repair. All the hedge funds knew this well, and were selling into the frothe enmasse. I guess a 70% correction is just another opportunity to buy the dip...sigh.
Those that run the goldbug media enterprises are nothing short of one-sided charlatans. There was never any even handed/objective discussion, warning of cracks in the market that should be carefully watched. They've been telling you to buy the dips, when in reality many of them dumped their jr miners on the way up. Their brokers know their rotations, and the whispers throughout trade desks were not sporadic. Doug Casey and respective clan, the Goldseek's...spend the $, and attend one of the upcoming PM conferences. Entice one to a dinner meeting, get them drunk, ask them what their portfolio looks like. You will be shocked. You probably have seen them say "time to load the boat" about 5-6x on the way down from 1900, those creeps never do, only for bounce trades. They seem to have an endless amount of "dry powder." This will go down as one of the great Pump and Dump operations of modern commodity market era...right up there with 2008 oil. Mark my words.
History does repeat itself. This time is never different. High finance is indeed a crock of sh*t. Idealism has no place in this dark, corrupt, apathetic world.
Fuck off troll/sock puppet. He's been here 2 years 7 weeks and this is his 2nd post.
Come on ZHers, don't fall for these assclowns.
Just stack till the house is full and the value is zero, who cares what the price is.
"Idealism has no place in this dark, corrupt, apathetic world."
Zyklon-B does, however...
Keynes is smiling right now. "Take that you barbarous relic."
Though I may be incorrect, I believe that the reference to barbarous relic was made in relation to the gold standard, not gold itself. As I lean toward a "two money system" (gold functioning as store of wealth, and fiat currency as a medium of exchange) I won't quible with that point.
If this keepsup: ie. rising rates, all the banks and all the governments will be go down. I have no idea what this has already done in the 100s of $trillions interest rate swap market.
Bastiat,
YEs, when the FED commits to more easing, credit, and buy more bonds and MBS and RATES RISe on the news; then it is over. Not a dip; over. Kotlikoff estimates $220T in unfunded liabilities.
YEs, when the FED commits to more easing, credit, and buy more bonds and MBS and RATES RISe on the news; then it is over. Not a dip; over. Kotlikoff estimates $220T in unfunded liabilities.
There is no way they can NOT do it.Fundies are getting worse day by day overall.
Aren't the miners just riding the wave? As in, when the price goes up all those low grade deposits become economically viable, which would drive up cost averages to mine them. Then when the gold price drops only mine higher grade deposits.
I guess either way it means a bunch of smaller mines will likely go under till the price rises again.
It depends, the short term incentive is to take the low hanging fruit (low recovery cost resources) always--bigger margins, better payouts to management. What you describe is the wise, long-term perspective.
Smaller operators with high costs will live or die depending on their burn rate and cash position. Big miners are not very good at making new finds--what they do is grab up the successful exploeres. If they have money they can hold out, if not they get gobbled cheap.
As I recall, there was a lawsuit, I think by Blanchard, which found that ABX conspired with bullion banks in the suppression of gold prices so that ABX could gobble up smaller producers. ABX then had massive forward sales, allowing the bullion banks to cover. Of course in the gold ran up, ABX god hammered. The wrote off their purely speculative shorts (of which there were many) and kept the ones they thought they could deliver into. Of course as production costs went up, due to inflation, they had to deliver at lower than the cost of production.
Somewhere where the animal spirits go after they departed from their physical bodies, Keynes is smiling that the barbarous relic is getting it's ass kicked right now.
Dear G-D:
Please give me enough money to BUY!! BUY!! BUY!! the PM.
And also please give me the wisdom to stash it where the international banking cartel can't find it when they come to steal it from me.
PS: Thank You for all the criminals running the banking cartel who need to push down the price of paper gold because they know their fiat is going to turn to toilet paper. I know they are manipulating the price of gold in order to buy physical for themselves – just look at the buying by central banks if some fool thinks they don't see it as a store of value.
And thank You for obvious "writing on the wall" such as the FED telling Germany to wait 7 years to get their gold - which means the FED doesn't have it - it's gone - and Hell will be an ice cream freezer before the Germans see their gold again.
And so because of these things, I also know that their public data is a fraud – it isn’t where they say it is or in the amount they say they have on inventory. Germany’s gold isn’t the only gold that has, a la Corzine, “vaporized.”
And thank you for the people who are going to get a tap on the shoulder as the whole Ponzi collapses, driving the price in the short-term even lower.
And Thank You especially for ZH - and its many brilliant and realistic posters and contributors - for educating me to the realities of the criminal banking cartel and its imminent demise.
-30-
Nothing cures low prices like low prices
Just a month ago everyone here was mocking JPM for eliminating its gold reserves. Well, who's laughing now? JPM knew ahead of time what was coming. It dumped when goldbugs were still pumping. It'll get its chance to buy back the reserves and then some, when the time is right.
JPM was eliminating it's gold reserves beacuse they were tipped off that the slamdown was coming.....(?)
Quite possibly. Banks don't hate gold. In fact, international banks trust gold more than any fiat. They're always trying to trick eachother into surrendering gold instead of cash. IMF's so-called rescue of the EU was all about getting the debtors to flush their gold and infrastructure assets instead of giving back cash or defaulting on it. Banks trade real currency. IOU is just an IOU. They know it and do not pretend otherwise. They want their IOU's to be money to you, much like a casino wants its clients to value the chips as if they had actual buying power.
Max Keiser's message for much of the time was to get people to drive prices of silver and gold up to force JPM to cover its shorts. Well, how about it now. How about JPM's actually profiting off the shorts and then turning right around to buy everything back and keeping the profit?
No bank or banker has anything against precious metals. They're just a thing among countless other things money can buy. Fiat is not gold? Woopty-doo! How do you buy gold? By spending cash that is earned. Banks spend cash that is printed. If they want more gold, then can just print more cash and buy some more. They are the modern day alchemists that figured it was easier to turn paper into someone elses' metal than to spend time and energy pointlessly trying to transmute one into the other.
Banks have power. They have tools accessible to every other private member of society only in greater quantity. The only threat to a bank that exists is a rival bank, trying to loot other looters. The only reason small banks fail is because a central bank somewhere is yanking the carpet: "Thank you very much. Now we take over."
Look at the FDIC failed bank list following 2008. All those banks that are gone aren't actually gone, but absorbed into bigger banks sitting closer to the prime issuer.
JPM is just a step away from the FED. If it is to go down it'll be the last in line and not the first. It'll go after every single lemon has been squeezed dry.
Of course banks hate gold. Gold competes with their paper in the open market. If they issue depreciating paper, people flock to gold instead. So they manipulate the gold price, out of necessity. They take advantage of the fact that most people still think of value in fiat terms to bring the fiat price of gold up and down, driving the savers away.
They know they can never ultimately defeat gold. All they can do is postpone the demise of the fiat regime. And this requires eternal watch, because gold is their enemy.
Banks can print cash and use it to buy gold. Since they can print any amount of cash they want, they can buy any amount of gold they want. Fed spend 86B a month on dead mortgages, it could've been buying 86B gold just as easily if it wanted. It grants itself permission to do whatever the hell it wants, unlike the common folk that has to earn money by doing actual work... which is to wait for someone to borrow fiat into existence from the Fed, so they could then receive it as salary and then buy something with it.
Banks can do anything you can and then some. They don't hate gold because they can print themselves permission slips for gold. They can issue themselves permission to buy anything - something no one except the banks can do.
The market price of gold is, for e.g. $1250.
You can only buy the amount of gold that is on offer at $1250 at $1250!!!!!!
If some people demand $1,000,000 fiatscos for their gold then the banks are going to pay that? No, of course not. SO they can't buy all the gold with their fiatscos.
"they can buy any amount of gold they want"
You must be referring to paper gold. The gold I buy has a limited suply.
Banks can print cash and use it to buy gold. Since they can print any amount of cash they want, they can buy any amount of gold they want.
Hahahaha. I'm sorry to break it to you, but my gold is not for sale at any price in toilet paper.
How are they going to buy it from me just by printing more of the same junk?
The price of silver has come back to pre-QE level. Gold price is near its 2008 high as well. So, more than quadrupling the money supply has nearly zero impact. It is truly puzzling and defies logic. All the goods and service are getting more and more expensive, some by double digit. It cannot happen without an invisible hand manipulating the markets.
Everyone is going broke if this continues.
I'll let others wax lyrically on how things ought to be, but being the pragmatic sort, I'll stay focused on what we can do with the abundant harvest of 'golden lemons'.
The only observation I'll make is that damn few saw it coming, and this site's erudite authors did not. Anyhoo...
1. I may no 'like' GS (in fact I can't stand them), but I 'respect' their data a lot more than 95% of data out there. Which is probably no less self-serving.
2. The data tells me that prices WILL keep dropping and bullion supplies will keep getting squeezed*.
3. "While competition is good, too much competition is bad, as almost no one makes money". TPTB know and believe this axiom. Therefore... there will be more consolidation in the miners. Shills promoting mining stock are NOT to be trusted, and even less then normally. If you buy mining stock, wait for after the consolidation, and then p/u some deals.
4. The laws of Asset Diversification reign supreme, and have stood the test of time. One-asset promoters and its 'poor' holders, are now paying the price.
* The only retail supply I see now is in 10 oz and 100 oz bars, with 3 week wait periods, that allow the dealer to re-sell whatever bullion people are selling. Case in point: When I picked up my bullion yesterday, it was because some guy sold a bunch of Eagles to -- get this! -- "make payroll".
Right now, CASH/USD IS KING. And again... I don't care "why", but only "what" and "for how long". Ideology does not make money or pay bills. Facts and pragmatism does. At least in my universe it does.
He should have printed up his own IOUs instead of selling his silver.
1. I may no 'like' GS (in fact I can't stand them), but I 'respect' their data a lot more than 95% of data out there. Which is probably no less self-serving.
GS openly announced that they closed their shorts after the April smackdown.
Silver as a weapon? Which countries have what little money it would take to corner the monetary physical silver market. Which country will use this nuclear monetary weapon first? The gold price would follow the expanding silver bubble. The dollar bubble would pop.
Silver Update 6/25/13 Silver Squeeze
I would like to respectfully point out a little tid-bit...... the prices quoted in this article is for paper gold (& silver). NOT PHYSICAL..... and today there is a big difference in availability. As of 1 minute ago APMEX.com was out of silver eagles, i.e. not available at any price..... A month ago when silver was in the 20-22 dollar range, the APMEX price was still about $30 per 1 oz coin. The paper and physical markets diverged a while ago. Today there is plenty of paper gold and paper silver available, but this is not true for the physical.....
A silver Maple was 25 CDN yesterday at Scotiabank.
NWTM has them for less for quantity - if you don't mind waiting a few months for the Candians to mine and mint your purchase that is.
I can get you 6 tonnes for under 15 as long as you pay me in advance.
I am sure there is a Nigerian prince somewhere who will take you up on your offer.
they're out of any year eagles, but they have lots of 2013, at 4 bucks over spot (yes, I am debating ordering even more).
Gold and silver are free by-products of copper mining. As such they cost around tree fitty an ounce. Just ask the Loch-
Ness monster.
seriously, with all the drooling , infantile, hysteric, gold fondlers here, didn't you know it would come to this?
You shouldn't talk about the central banks that way.
Dear Zeus,
If you watch the trailer of "Wolf in Wallstreet" you will see a worthless whore strapped in wads of cash, just like Zimbabwe & Weimar Republic, it won't be long from now, they will teach history to kids about a banana republic called the USSA, and then you will realize that the real god transfers powers between nations and nothing lasts forever, even if the power that be who claim that they run the world will be hanged one day or die a miserable death, patience is the key, and the day will come.. in this world time changes, nothing remains the same, the poor becomes rich, the rich becomes poor, the victorious becomes defeated and the judges will be indicted..this is the state of the world, if jesus believed that gold was money (beside barter) then it's money, and nature sholud run it's course and cleanse it's self from scumbags like you who claims that gold is bad trade. The MSM sway you like a bitch, left and right, they say gold in bear market then you go sell your ETF's, they say gold in bull market you go buy , i don't even think you are big time trader, a small low life scalper who thinks he can predict the market! Of course youd knew, you have telepathic microwave connections that bypass PRISM and the NSA proxies to communicate with your faggot god's.
It just continues to amaze me how the sheeple run in hordes, you will see them dumping all their money if gold reaches $2,000, or 3,000 but they are scared to go and buy it when it reaches levels as low as this. One day the people of America will be sick of bread and circus, and god will put a generation who will exchange their lives for their land.