SiliconInvestor
     Advanced Search   [ sign in ]

register
Register

 Gold/Mining/Energy : Gold & Gold Stock Analysis

 Public Reply | Prvt Reply | Mark as Last Read | FilePrevious 10 | Next 10 | Previous | Next  
To: ecrire who wrote (26426)10/17/2011 1:27:14 PM
From: GST8 Recommendations  Read Replies (1) of 29397
 
<consensus price> The strong (the financially strong) are buying from the weak (the financially weak). The miners are another story -- but there is nowhere near enough gold being mined to satisfy global demand.

When the price of gold dropped $300 it was not on the basis of gold being sold, it was on the basis of side bets on the price of gold being closed out. What you call the 'market' is largely side bets. Side bets dwarf the actual buying and selling of gold in volume but are of little importance in the long run. When Chavez actually demanded that gold be delivered, the price spiked to $1,900 because the gold 'market' cannot easily adjust to owners of gold taking delivery of gold in quantity -- even though he already own the gold and was not buying it -- just taking delivery of what he owned.

The same is true when the IMF 'sells' gold -- when actual gold becomes available to actual buyers, prices spike on IMF sales announcements because actual gold is going to change hands -- what a concept! When sellers show up, buyers jump at it -- real buyers like central banks.

China produces more gold than any other country in the world -- and is a net importer. Sales of gold are booming -- not side bets, but sales of actual gold. Central banks are buying and this is a trend that grows stronger by the day -- not pretend gold but gold in hand. The hand wringing over the side bet market is pure manure. The price will wobble as side bets are put on and taken off, but the price trend for gold is not set by the side bets. The price of gold -- the durable trend as distinct from the noise -- the price of gold is set by those who actually buy gold.

You make the mistake of listening to the noise and drawing meaning from it -- like playing an old LP backwards and trying to decipher hidden meanings. If you want to now the direction of the price of gold, look at the buyers of gold and the sellers. I doubt that in your mind you can even imagine what that looks like. When you have a clear idea of who 'owns' gold -- real gold -- then you can start to understand the 'market' for gold. Until then, you are peeing into the wind.
Report TOU ViolationShare This Post
 Public Reply | Prvt Reply | Mark as Last Read | FilePrevious 10 | Next 10 | Previous | Next  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQ
Copyright © 1995-2013 Knight Sac Media. All rights reserved.