Gold "Speculation" Drops To Record Low

Tyler Durden's picture

While the last two days of relative excitement in the precious metals are noteworthy in their bucking-the-trend of recent months, there is perhaps a much more critical 'trend' that may finally allow the demand for physical gold to peer through the veneer of synthetic paper pricing. As JPMorgan notes, speculative positions (defined CFTC net longs minus shorts) have dropped to record lows in the last few weeks. With ETF gold holdings back below 'Lehman' levels and gold coin sales elevated, perhaps the Indian government's (and most of the Western world's Feds) hope for the death of the precious metals market is greatly exaggerated...

 

Gold Spec positions at record lows...

 

"Paper" Gold ETF Holdings at pre-Lehman crisis levels...

 

As "physical" Gold coin sales are on the rise again...

 

Charts: JPMorgan

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Motorhead's picture

Gold, bitchez!  (But don't confuse me with the wankers over on King World News.)

Motorhead's picture

I hope so...long-term charts look really bad, and I'm not totally convinced that we've seen the lows just yet.  We shall see.

Thomas's picture

I don't mind the correction--I think it is temporary. I do, however, find the wankers who don't even know what gold is made of cranking on our sorry asses for being complete idiots. Those spiteful mothers are gonna eat it, IMO.

Don't forget: the markets can stay solvent longer than you can stay irrational (or somethin' like that).

Soul Glow's picture

Investors think short term; year to year, month to month.  Gold bulls think over periods of decades.  And patience is the ultimate virtue.

greatbeard's picture

>> Gold bulls think over periods of decades.

That really depends on the age of the bull.

Soul Glow's picture

I had an opportunity to sit down with my old next door neighbor a month ago.  Many of you know his name, but I didn't ask for an interview and so I am not going to name him.  He was one of the major mining news letter writers in the industry for over a few decades, he has traveled and shared hotel rooms with Sinclair, Pierre Lassonde, and other famous bulls.

He hadn't known that I too have been in his industry for the last five years, and the conversation was kept basic as he searched to see how much I knew.  When he realized I was up to speed he instead began telling behind the scene stories of these guys and what they were doing with their money; from the man who owned $75m worth of gold who was asked repeatedly to loan it to the Fed, to his friends who are shutting down their mines due to rising operation costs.

The conversation concluded with us both admitting we have no idea when the pop stand will blow, but that we know the day is approaching.

Here's to the gold bulls who stay in the rodeo!  May we never lose track of the truth!

Babaloo's picture

"The conversation concluded with us both admitting we have no idea when the pop stand will blow, but that we know the day is approaching."

Yeah, did you ask him how long he has thought "the pop stand will blow?"

I'm pretty sure it's been a hell of a long time and he's been wrong for a hell of a long time. So why would you believe him now?

Soul Glow's picture

Like I said, he wrote a mining journal.  No where in those journals did he predict any global events or such, he was focused on extraction, margin, etc.

As for his personal views, well, we are all entitled, but he is no alarmist.  He has been putting his money into biotech lately, not gold.

Bay of Pigs's picture

Charts above by JPM?

 

FUCK OFF. Embarrasingly stupid and ridiculous.

N2OJoe's picture

In the late 1400's some people believed the world was round. The scientiest of the day told them they were wrong for so long, why would anyone believe them now?

CallTheBluff's picture

Is anyone else noticing that the first chart could go negative?  It's captured for just long enough to never show any time period in which there were more shorts than longs, because what like, that can't happen?

greatbeard's picture

>> Those spiteful mothers are gonna eat it,

Good lord I hope so.  #1 rule, keep your mouth shut.  Unfortunately I am (was) close to my brother, who's close to his bitch wife.  Fucking gloating cunt.  If the bastards ever get off the price I swear I'll not make so much as a peep about AU again.  I might not be able to fully conceal the smug grin, but I'll never make so much as a peep about AU to anyone, ever again. 

GetZeeGold's picture

 

 

Cat dropped out and tuned out.....but he seems to be really interested in gold.

 

No.....I don't know why.

Greenskeeper_Carl's picture

i dont mind either. I am less than 30, and i plan on accumulating gold and silver for a long time, and i do not care what the price does day to day. they can keep it this low for years for all i care. I feel like I am getting a once in a life time opportunity to buy physical at these prices, as this is how i save money. losing 40% on miners is depressing, but on a long timeline, i know i will come out ahead.

MeelionDollerBogus's picture

honestly, you can save a bundle long-term dumping the miners & getting the metal in hand.
I know I will be able to barter silver maples (already have), not mining shares, for needed physical resources.

Considering what miners do vs ETF's if you still feel like chasing paper, might I suggest a low share price of 2x ETF HZU (tsx) or AGQ (decently low, American) or AGQ options.

Even the 2016 strike 30.00 contract on AGQ (no options for hzu) will probably pay off in the area of x100 within this time frame. If not it's a loss but it's a small one. No margin, 1 contract. Just a thought. Even to pay off at x10 as the "10 bagger" empty promise of miners, it would still be a cost of around $250 to get in, and a target of say, 66=AGQ which lines up with silver=agq0.5 x 171/35 = 39.69 USD/troy oz.

Ask yourself what silver miner will return that with a silver price at 39.69 from today's prices. None.

samcontrol's picture

does silver need to be at $200 for that X100 in 2016 ???

I see more your $40 silver scenario,, I am hoping for$50 by 2016.

I have a few miners I might trade in for your thought. Maybe i,ll start with PZG.
Other candidates would be EXK and AG ,tax involvement in Mexico and all.

MeelionDollerBogus's picture

back in 2010 I missed pzg on its big pop up. Question is, why would this miner get another such pop...? Unless everyone gets their boat floating instead of accidentally dumping all their gold, why pzg?
Missed it once, won't come again, is how I normally look at it.

samcontrol's picture

pzg is not really mining...but sitting on some...

Non Passaran's picture

Right, but also very few will go to zero.

MeelionDollerBogus's picture

why not? Countless miners go to zero (very small time) and quite a lot screw up too. You only get so many tries digging at dirt with no gold in it before you're bust. Similarly if you find gold of a poor grade it's only economical until the re-sale price drops and even then if it doesn't but energy prices spike, suddenly there's a related problem.

I'm pretty sure if you bagged a basket of 40 mining shares you'd see 10 go bust, 4 do very well for a while & the rest may languish. Picking the right amount of each so you don't lose it all is not easy. Dare if you want but I wouldn't understate the risk.

Soul Glow's picture

The long term chart looks bad?  You mean the one that starts at $35?  Or the one that starts at $250?

akak's picture

LOL!  But quite on point.

The idiots who are supposedly 'sophisticated' investors but who still use nominally denominated multi-decade (or even multi-year) charts never fail to crack me up.  Such as those moronic and/or disingenuous cretins who point to a chart of the DOW over a 30 or 50 or 100 year timeframe --- as if the US dollar upon which the DOW is based has not been depreciating over the given period, moreover ignoring the fact that there is no single "the DOW" in any case, as the DOW has been and continues to be redefined as older, sagging stocks are yanked out of it to be replaced by vigorous up-and-comers.  It would be analogous to taking one's academic record and dropping out half or three-quarters of all one's lower grades, then averageing the rest and filling in the voids thereby created to fallaciously boost one's GPA.

TheFourthStooge-ing's picture

But hey, the inflation rate is zero when adjusted for inflation. Somehow this is very something.

akak's picture

That is vigorously that and also upping the progrational nib of the crust of it to the limit and more than.

But hey, when the US 'american' monolizing of the inflationary offuscation means is the game, might as well jump in with both feet in mouth.  The mettle of the parangongs of blobbing-up is the mattering thing.

Alas, alas, three roadside squats alas, just have to bear with narrower TP. 

Oh wait, not even.

SAT 800's picture

Exactly. A typical modern idea of "long term". Ludicrous.

GrinandBearit's picture

Your own contrary signal = BUY

philipat's picture

Agreed, BUT, what makes me believe that this MAY be a double bottom is that they have no more physical Gold to play with. The sustainability of the naked paper short game does require that some physical Gold is available to back it. And there is none. Even the ETF's (GLD etc) have been stripped down to the remaining strong hands who are not going to be conned.

The real danger, IMHO, is that JPM, which has built up a long corner in Gold, will use that position NOT to make another $3 Billion on the way back up but to start selling again into another down leg. With the Fed/BIS behind them, they don't have to worry about "paper losses" because Bennie's printer will produce the requisite offset to the "directional trading losses by clients".

Squid-puppets a-go-go's picture

but there's only so long western powers are gonna let the flow go east. Sooner, rather than later, they have to slam the gate shut with a reset, or they will lose the option to resolve their own (western) debt with a gold reset

philipat's picture

The vaults are already empty. Ask Germany.

unwashedmass's picture

 

they may have a corner on the NY Comex market, but.....

given the demand for physical, they got enough to play games for one more or so......not much more....

if they are stupid and arrogant enough to try it.....

cause the Chinese will call their bluff......and the Indians and Russians will be right behind them.....

sell us that long paper gold, Jamie....sell it to us.....and then we all will get to watch you go all aquiver when everyone shows up .....

and demands delivery, and you really don't have it.....

and there's nothing left to steal from GLD......

just try it. 

 

 

PontifexMaximus's picture

That paper gold hldg has to be halfed down to 2008 levels, "wrong" holders to be squeezed out of the playground, then gold will be clean and holding phys gold wil be the name of the gsme. But this crucial process has to happen, per aspera ad adstra!

TheFourthStooge-ing's picture

Made me laugh. Technical analysis in a rigged market does not correspond with reality. So FRN citizenish...

A double bottom at 1180 looks in place. Expecting a big move higher. 10 year is getting turned up too.

Paper peddling pariahs and their poltroonian purchasers are looking to get a double bottom penetration. Holders of vaporous "registered" claims on "vaulted gold" can expect two in the tailpipe as they learn of their ownership of a gold time-share (which may have been shanghai'd off to ... Shanghai). Those whose investment is in "allocated" can look forward to a crowd both in front and in back as they learn about rehypothecation via DVDA (the very hard way).

The only thing the Gold Spec chart tells us (and it's important info to know) is that it's a grand opportunity for Blythe and the boys to go on another spree of ass raping the paper faithful. They know they can't continue this pattern forever, so if they think it's the last time they'll be able to get away with it, expect a rampage.

MeelionDollerBogus's picture

"double bottom"
isn't technical analysis, it's balderdash.
Technical analysis requires equations with solutions. Graphs showing how the equations apply are important too http://flic.kr/p/f17z1s .

It's the mathering thing for blobbing up 'predictions' in chartizenism.

currently ln silver = gold x 3/2635 + 1297/810 on trend for past 12 months and agq = 8/191 x silver2 on trend though it's fairly close to use 24: USD 20.122 /24 = 16.87 though actual AGQ price closed at 16.93.

Silveramada's picture

I said that back in June/July and I think & hope we are right, interesting will be the actions of physical market in January when sales should skyrocket...

http://zysites.com/silververitas/

 

 

SRSrocco's picture

The paper price of gold can be manipulated for quite a while. However the fundamentals always kick in. 

 

http://srsroccoreport.com/the-gold-oil-ratio-forecasts-a-much-higher-pri...

jomama's picture

^best article on gold i've read in quite some time.  i love me some stacking inspiration.

found this vid in the comments.  very good as well. 

The Gold Must Flow!

 

matrix2012's picture

Thanks SRSrocco for the down-to-earth article!

Time has evolved that it seems some part of mankind already abandoned the physical metrics and instead being blinded with all the intangible and paper-based ones... some day they'll all be severely penalized for their utmost ignorances.

Non Passaran's picture

Silver/oil: you could say silver is being slammed while oil isn't because of QE there is artificial demand for oil, but less so for silver.
That explains the divergence, I guess.

Nice work!

I'm long the both metals.

Leonardo Fibonacci2's picture

31-12-2014  spot gold will be at $1400

Soul Glow's picture

31-12-2014 spot gold will be at $14000.

Two can play that game.

MUAHAHAHA!!!

JimS's picture

I'll put my "money" on $3625.00, now we got 3.

Non Passaran's picture

That'd be fine, but what's important is to keep stacking.
The price in fiat is not real.

Serfs Up's picture

Dudes...wheres my chart of physical sales in kilo bars?

Coins are nice and everything, but they are misleading chump change in the global scheme of things, if you catch my drift.

AUD's picture

True. The real sign that the 'evil day' is approaching is when bullion banks, bidding for themselves & their clients, are desperately bidding up the price of kilo bars past the price where suppliers, such as mints, will accept their credit.

That is, there will be a increasing spread between bullion bank credit & physical gold, since the way it works now is that gold is supplied to the bullion banks & the suppliers get credit to their accounts with the bullion bank.

midtowng's picture

It looks like the ETFs can unload a bit more, but not much more. Otherwise they will lose control over the gold market and let physical holders take over.

Squid-puppets a-go-go's picture

@ motorhead -Gold, bitchez!  (But don't confuse me with the wankers over on King World News.)

 

"the important thing, Eric, is that your name, Eric, is inserted liberally throughout any, you know, Eric, opinion peice about the Eric Gold Eric Industry Eric"