By Steve Saville
Selling of “paper gold” does not force the gold price downward
There’s a lot right with John Hathaway’s recent article titled “An ‘Acute Shortage’ in Gold Can Boost Prices“. There’s also a lot wrong with it, beginning with the title. There is not now, there has never been and there never will be a shortage of gold*, the reason being that gold is not ‘consumed’ like other commodities. However, my main bone of contention isn’t with the fatally-flawed argument that a gold shortage is looming.
The main problem I have with Hathaway’s article is that it repeats the nonsensical story that the gold price has been forced downward over the past few years to an artificially-low price by the relentless selling of “paper gold”. Like many gold bulls, Hathaway apparently hasn’t noticed that a major commodity bear market has unfolded and that the gold price has held up incredibly well. So well, in fact, that relative to the Goldman Sachs Spot Commodity Index (GNX) the gold price is at an all-time high and about 30% higher than it was at its 2011 peak.
Continue reading Some Gold Bulls Need a Dose of Realism
By Monetary Metals
Keith Weiner looks at gold and silver prices in his unique way
There is a great lyric in Won’t Get Fooled Again by The Who:
Then I’ll get on my knees and pray
We don’t get fooled again
Remember last week, when the price of silver spiked? On Thursday that week, the price was moving sideways around $14. Then around 5am (Arizona time), the price began to rise. Before 11am, it had hit $14.38. And then it was all over. The price went downhill from there, the rest of the day and all day Friday. It closed at $13.93.
The same thing happened this Thursday, with the move beginning at $13.81 at 6am. Before 10, it hit $14.17. As we did the previous week, we tweeted near the top. “Silver run up… fundamental or speculative?” The price slowly slipped the rest of the day, and at 5am on Friday began to drop sharply.
Continue reading Won’t Get Fooled Again
 Errr… the market is bearish. We (NFTRH) have been bearish and have now gotten confirmation of that stance. But we just had an NFTRH update on the major US indexes and today has not broken the headline indexes (outliers like the RUT are a different story). Long story short, I just added more SPY long. It will be a temporary thing.
Amid pervasive (media fed) fears of a stock market crash, a few positives and negatives…
- I have a large percentage of cash, as has been usual during the gold bear and the last 2 years of stock market bull.
- I have short positions against the bearish looking GS and GILD, and the Emerging Markets. [edit: though having 2nd thoughts on GILD, a company I actually like]
- I hold TLT (along with SHY) as a risk ‘off’ liquidity hedge and income payer, per NFTRH+ update.
- After some wrangling (in the midst of a 3 day stretch of extreme distraction from the market) I took the profit on JDST, which was hedging my light gold miner exposure.
- Today, while probably still getting pulled in a couple different directions, I am able to watch the market more consistently. I enjoy this immensely.
- I failed to take the profit on the SPY position bought yesterday in pre-market. It is my only long position, aside from my few quality gold stocks that I have resisted selling despite the broader sector’s array of lousy charts.
So at 5 to 1, considering that I’ve had a tough week away from the market, I can’t complain. I think that despite this, I was also able to update NFTRH subscribers at an at least acceptable level.
As for being a market report writer? It doesn’t get any better than this. Data points and probabilities are flying in all over the place.
By Monetary Metals
The fundamental price of the gold-silver ratio went up again
No doubt, many people were excited on Thursday to see a spike in the silver price. The big news almost seemed like it would be a spike in the silver price. We were not quite so exuberant, tweeting (follow us on Twitter @Monetary_Metals):
“What happened to silver supply and demand fundamentals this morning?!”
We expected it to be a teaser for today’s Report. However, the silver market took back the entire price move, and more, in about 13 hours. Here is a close-up, showing Thursday morning (Arizona time) through Friday around noon.
The Silver Price Spike
Continue reading Silver Flash in the Pan
By Steve Saville
[biiwii comment: the 3 cases on interest rates Steve notes are part of the Macrocosm (macro fundamentals) that need to be in place for a sustained gold-bullish environment]
The relationship between gold and interest rates is not that simple
I’ve seen articles explaining that rising interest rates are bearish for gold and I’ve seen articles explaining that rising interest rates are bullish for gold, so which is it? Are rising interest rates bullish or bearish for gold? The short answer is no — rising interest rates are neither bullish nor bearish for gold. Read on for the much longer answer.
I’ll begin by noting what happened to nominal interest rates during the long-term gold bull markets of the past 100 years. Interest rates generally trended downward during the gold bull market of the 1930s, upward during the gold bull market of the 1960s and 1970s, and downward during the gold bull market of 2001-2011. Therefore, history’s message is that the trend in the nominal interest rate does not determine gold’s long-term price trend.
Continue reading Are Rising Rates Bullish or Bearish for Gold?
By Monetary Metals
Fundamental gold and silver analysis…
Perhaps it may be lesser known than his other Laws, but Murphy wrote one for the basis analysis. It goes like this. If we observe that the fundamental price of a metal is far removed from the market price, the two won’t likely converge the next week. On the other hand, suppose we say this (as we did last week):
“The Monetary Metals fundamental price is measuring just that, the fundamentals. As with stocks or any other asset, our centrally banked, government-distorted markets can experience price volatility and even prices that deviate from the fundamentals for a long period of time. Just because we have been calculating a fundamental price for gold that is well over a hundred bucks above the market price, does not mean that the market price has to spike up $100 tomorrow morning. It might—and we certainly would not short gold when the market is in such a state. But as the market has proven since August, it might remain depressed for quite a while.”
Then something is bound to happen the next week.
Continue reading Murphy’s Law of Gold Analysis
As posted at NFTRH.com…
Precious Metals: A Positive Big Picture View of Risk vs. Reward
While routinely following the precious metals as one of many sectors in NFTRH, we have mostly left it alone with respect to public writing over the last few years. That is because it is in a bear market and since I am not a slick short-term trader, I have felt it is best to mostly just let it play out to the bear’s will without overly active involvement.
But several indicators have us on alert that 2016 is going to be the year that the bear ends in gold and gold stocks. So why not publicly discuss the shiny rock a bit more in anticipation? I am still 100% in line with the value aspect of a monetary metal that is historically sought after in times of doubt about
the Monetary Politburo’s (Central Bankers’) ability to manipulate the global macro backdrop as desired and to positive effect over the long-term.
A bear market exists to clean out the excess from a previous bull market and though some gold bugs have a hard time admitting it to this day, the sector needed to be cleaned out. It was readily obvious in 2011 when first silver and commodities blew off and blew out, and then gold got driven too high, too fast on Euro Crisis fears and masses of monetary refugees did the “Knee Jerk” into the metal that was supposedly going to save them from the evils of Central Banking gone wrong. Ref our warning: To the Newly Minted Gold Bugs…
“This article will not discuss the obvious contrarian signals that are implied by the public’s entry into the realm of gold, as the barbarous relic is now ‘channel busting’ up, but shows no signs of waning momentum. We will just warn that at some point, momentum always slows and the market in question, always corrects; at some point. For reference, see silver earlier this year.”
Continue reading Precious Metals: Positive Risk vs. Reward
By Monetary Metals
Read on for the only true look at the fundamentals of gold and silver
“That [half a dollar of buying] frenzy was not stackers lining up to buy phyz. It was speculators buying paper.
Why does that matter? Speculators, who typically use leverage, can’t hold the market price against the tide of the hoarders. They can push for a while, but they have to close their positions sooner or later, either to take profits (as they reckon them, in dollars) or to stop losses.”
This is what we wrote last week. It turned out to be prescient. This week, the price of silver gave up all of that and more, ending at $13.91. That’s down 63 cents.
Continue reading What Silver Rocket?
By Steve Saville
biiwii comment: in this article, Steve links to a post by blogger Kid Dynamite that takes the gloves off with respect to gold’s promotional sales “community”. If you are a gold aficionado and have had your heart strings tugged at by the various promotions in the past (everything from COMEX inventory to the “Chindian Love Trade”), you should read this. It lists a cavalcade of promoters, charlatans and just plain Wrong Way Corrigans…
The Worst Precious Metals Meme of 2015
FWIW, my most recent brush with the “community” is documented here: Gold and Silver: Back to Our Regularly Scheduled (de) Programming
The ridiculous and relentless fuss over the COMEX gold inventory
I’ve often been impressed by the ability of gold-focused bloggers, newsletter writers and journalists to turn a blind eye to the gold market’s genuine fundamentals and to fixate on factors that either have no bearing on the gold price or amount to unadulterated hogwash. Depending on how they are presented, the stories that are regularly told about the COMEX gold inventory and its relationship to the gold price can fall into either the irrelevant category or the hogwash category.
Continue reading The Ridiculous Fuss Over COMEX Gold Inventory