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Spot Gold Price Is Now Meaningless
Alex Stanczyk
i stock Analyst
Thursday, Oct 16, 2008
I just read a letter from Dan Norcini that really nails whats going on with the Comex spot price.
I have always found it interesting to watch the price get hammered down, each morning, at exactly the same time, every single day.
It is the most bizarre thing to watch.
More and more often, experienced traders are coming to the same conclusion “that just isnt normal market behavior”.
If its not normal market behavior, what else could it be? I will let you come to your own conclusions on that one.
(Article continues below)
Dans Letter:
Comex is NOT the gold market. It is a paper market which has been the recipient of large speculative buys by commodity index funds. These funds take large positions in an entire gamut of commodities based on the weightings of those particular commodities in the various commodity indices that they use as a benchmark.
It some cases it might be the Goldman Sachs commodity index. In others it is the Reuters/Jefferies CRB index; it still others it is the Dow Jones Commodity Index. That means they buy gold, silver, crude oil, corn, wheat, nat gas, sugar… etc… in the same percentage terms as they are weighted in those indices. For example, if the weighting in one of these indices for gold happens to be 5%, then for every million dollars of client money invested, they are required to buy $50,000 worth of gold futures contracts at the Comex.
When these funds get redemption requests from clients, who now want out of the commodity sector, they are forced to sell FUTURES across the board to generate the cash needed to send back to their clients. That is why, for the most part, the entire commodity complex is sinking whether it is corn or soybeans or wheat or platinum, etc. If $20 million of cash is required to meet client redemption requests, then $20 million of commodity futures must be sold REGARDLESS OF THE FUNDAMENTALS IN THAT PARTICULAR MARKET. In other words, it is FORCED liquidation on account of redemption requests. That has NOTHING TO DO with the real physical gold market where demand remains at unprecedented levels, levels so high that it is producing serious shortages of bullion for would-be buyers.
This is what is producing the increasing dichotomy between the Comex and the real gold market. I would go as far as saying that we are for all practical purposes seeing a BLACK MARKET in gold beginning to develop.
Having said all that, it should still be noted however that while every single commodity futures market is in the red today on account of this forced selling, GOLD IS STILL RELATIVELY STABLE! Hey, you dimwitted pundits who keep pooh-poohing the yellow metal?s safe haven status because it is not trading at $1000, take note.
Even in spite of the forced liquidation, gold is hanging in there precisely because there are enough buyers to offset a great deal of this continued forced liquidation.
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24 Responses to “Spot Gold Price Is Now Meaningless”
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October 16th, 2008 at 12:33 pm
This sounds right. Even though I can’t afford the Gold, I did buy some Silver.
October 16th, 2008 at 1:17 pm
‘SILVER AND SILVER AND MORE SILVER…MAYBE $100 AN OZ.?’
‘GOLD MAYBE $3500. AN OZ.?’
…i would say at this point: it is anyones guess!
October 16th, 2008 at 1:45 pm
Gold and silver first obtained their intrinsic values as precious religious ornamentations, mainly because they represented the colors of the sun and moon which were worshipped by early humans. They were thought to be the food of the god and goddess in the sky which gave them their colors. Today, primitives like Ron Paul and others still worship these two metals, even though they have no other intrinsic value other than shiny metals to make jewelry from. Even as industrial metals they have very limited value, and have been replaced largely by platinum and titanium. The only thing that holds up the value of gold are those who worship it.
As early rural economies gave way to turbo-charged urban economies, the value of gold as vehicle of trade diminished for one simple reason: there was never enough gold or silver to accurately or adequately represent the amount of commerce and wealth in a city. Today, the world GDP is so enormous, that all the gold and silver in the world and in the ground would, at current prices, represent only a fraction of a percent of real worth.
With the decline of metals as religious and financial objects, reserve currency became a “virtual” commodity, by simple default and torturous calculation. Because there is no absolute value to anything, the market is the only indicator, and so we have market valued currencies. There is nothing curious about this, nor anything sinister. It just simply is, because absent a better way, it’s all we have. Is it an exact science? No. Is it vulnerable to manipulation? To a point but not to the point that many would have you believe. It is tied to the exigencies of the market: supply, demand, and credit.
So the price of gold is probably 10% market value and 90% speculation bubble. Yes, you can make money with any bubble. But bubbles eventually burst, so if you’re thinking that you’ll buy gold as a hedge against going broke, don’t count on it. Let’s put it this way, if the economy collapses and I’m out on the street and thirsty? And a shoeless guy comes up and asks me for my shoes in exchange for gold? No deal. I’ll only trade my shoes for his canteen full of water.
October 16th, 2008 at 1:50 pm
by the time they have stopped manipulated the gold most currencies will be quite worthless at the sametime with the exception of the Swiss franc
October 16th, 2008 at 2:51 pm
the more poeple invest into gold index, the lower the return for everyone. dummies.
October 16th, 2008 at 3:30 pm
Interesting theory. HOWEVER you can buy all of the Gold and Silver that you want at SPOT PRICES from services like GoldMoney.com for example. This FACT seriously CONTRADICTS the theory expressed in this article.
October 16th, 2008 at 4:34 pm
One day we shall all look back longingly at the days of sub-$1000 gold and sub-$20 silver. Many of us will wish we didn’t buy a little more at this time. In all likelihood, many of us will also wish we stocked up more food, weapons and ammo.
But I doubt there will be a single one of us that wishes we didn’t do the obvious sooner: stop using the filthy Federal Reserve Notes! Once we stop using their money, the Federal Reserve will dissolve and their pet politicians will be out of a job. This is what we need to do to change this demented system. And make no mistake: if we don’t change it future generations will be doomed to poverty.
If you’re fed up with being treated like a subhuman herd animal, stop acting like one. Stop running out to vote in elections like a brainwashed primate, stop listening to the grinning idiots on TV, stop using their money and stop supporting their system.
Don’t fight the system:
Replace it
http://www.youtube.com/watch?v=73×8uOXQjag
October 16th, 2008 at 4:42 pm
and what exactly is the intrinsic value of paper with dead presidents and ink?
there are now virtually thousands and thousands of electrical products that use/need silver as well as all the new solar panels
..where do you get this info that silver has largely been replaced by titanium and platinum?
if that is so,I for one have not seen it and in fact researched silver quite extensively..
if there was no silver?..
there would be in fact NO HIGH TECH ELECTRICAL PRODUCTS..no i-phones..no i-pods..no computers..no cell phones…no laptops..no window A.C.s’ no heat pumps..no central A.C.’s etc etc etc..on & on & on
.all high tech electrical products on the planet use/need silver to operate.. the amounts are minute in most, but nonetheless they must have/need silver in them..
because silver IS the best conductor of electricity on the planet..
but most important of all..
SILVER AND GOLD ARE GODS MONEY..real money
as soon as you hold a gold or silver bullion coin in your hand you immediately feel it..and know it.. REAL MONEY since the beginning of time..the value of neither has never gone to zero in the history of the planet, while the value of every single fiat currency in the history of the world HAS GONE TO ZERO..EVERY ONE HAS FAILED.. KAPUT..VAMOOSH..GONE
silver and gold have been real money that have NEVER lost their intrinsic value since the beginning of time and both will be money and have value till the end of time..
October 16th, 2008 at 4:58 pm
gold now sits at EXACTLY $800 an ounce on comex paper fraud market
silver now sits at EXACTLY $9.50 on the comex paper fraud market
a 1 oz. american gold eagle coin now costs exactly $1,000, $200 over spot..
an american silver eagle now costs $22 -$25 on e bay.. $12-$15 over spot
the comex spot price is now irrelevant
the comex spot price is now meaningless
the comex WILL default as soon as investers begin to demand delivery
something has to give..and that something will be the comex defaulting
October 16th, 2008 at 5:05 pm
does anyone realize how many old fuckers in this country just horde gold and expect it to go up like it always does? gold has always been a surefire investment. can someone please remind me what we use it for? scary thought.
October 16th, 2008 at 5:58 pm
Can anyone give some info on the future of silver? I have heard that if we experience a depressoin silver will not be worth much, but if we experience hyper-inflation silver will do quite well.
October 16th, 2008 at 6:26 pm
I’m sure the bankers would rather have real Gold than funny money anyday!
October 16th, 2008 at 7:34 pm
1/10th of an oz of gold is better than the dollar.
October 16th, 2008 at 8:29 pm
My 2 cents…. Gold is as valuable as paper as long as there is a demand. However, lets think for a second. What demands does gold meet? If people dont have jobs, they are not infusing debt into the markets with establish the gold precedent/need.
The thing here is they dont want you to realize that none of is worth anything, and is completely reliant on you believing it is worth something. Fear is the driving force behind everything that exist in this world today.
You want freedom, unplug. See things for what they really are instead of what you have been indoctrinated into believing/understanding.
My opinion. DON’T BUY ANYTHING that you can make, grow, or build for yourself, and when your neighbor comes looking for a handout, dont be so quick to give it, be quicker to teach them how to do it for themselves. “If I catch fish for you, you will eat today, If I teach you how to fish, you will eat everyday”
Problem with this idea is ego… Most people feel the need to in someway feel special and in some weird way do when they are taking advantage of others. We don’t live in a cruel world, we live in a deranged world. Some of us are just saner than others.
When everyone becomes self reliant again, those who have the power today, will once again understand they need us to survive, because they couldn’t survive on their own.
October 16th, 2008 at 8:29 pm
My 2 cents…. Gold is as valuable as paper as long as there is a demand. However, lets think for a second. What demands does gold meet? If people dont have jobs, they are not infusing debt into the markets with establish the gold precedent/need.
The thing here is they dont want you to realize that none of is worth anything, and is completely reliant on you believing it is worth something. Fear is the driving force behind everything that exist in this world today.
You want freedom, unplug. See things for what they really are instead of what you have been indoctrinated into believing/understanding.
My opinion. DON’T BUY ANYTHING that you can make, grow, or build for yourself, and when your neighbor comes looking for a handout, dont be so quick to give it, be quicker to teach them how to do it for themselves. “If I catch fish for you, you will eat today, If I teach you how to fish, you will eat everyday”
Problem with this idea is ego… Most people feel the need to in someway feel special and in some weird way do when they are taking advantage of others. We don’t live in a cruel world, we live in a deranged world. Some of us are just saner than others.
When everyone becomes self reliant again, those who have the power today, will once again understand they need us to survive, because they couldn’t survive on their own.
October 16th, 2008 at 10:34 pm
The bankers already have most of the gold from fort naux being withheld for all debts owed to the federal reserve. They still will not allow it to be audited. I have in vested my money into precious metals. I figured as the dollar drops in value the price of gold and silver will increase not in value but in dollars . As long as they are not surpressing the price of it.
October 16th, 2008 at 11:07 pm
I am going to heed past history when it comes to gold and silver.
Generations of my family have been here on this farm since they landed off the Mayflower. This farm has seen a heaping load of hard times and some happy ones.
Through research and reading through accounts written down by my ancestors I know when the hard times hit, the homeplace here was sustained by gold and silver.
Property was taken away from those folks who did NOT have gold to pay their property taxes.
Since we know the evil greed that runs rampant from our rulers hearts, and the knowing that history always repeats itself, why would one think gold would be worthless to the homeowner when a system fell? These rulers are heartless. Enough to evict a family to the streets out of sheer greed.
If you take care of your land, the land will take care of you.
I am ready for the next generation of carpetbaggers. This is my advice such as it is, someone out there will heed it.
October 16th, 2008 at 11:30 pm
No matter what happens precious metals will be tradeable and worth holding (Physically).
if the markets or monetary system collapes they will buy what you need, the reason is gold is a limited resource it will always have value as a stable international currency
October 17th, 2008 at 7:02 am
Gold IS trading at 1000+/oz. Just take a look on eBay. Even crap 1oz coins are going for about 1000.
October 17th, 2008 at 11:04 am
Good Words #18 ! ComEx is fiat paper. Wait until the investors want to take physical posession of the bullion. Then we’ll see how the Fed bails out ComEx for their bullshit greed. The entire sysem is so corrupt, I cannot see how persons with a bit of intellagence even get involved in such pyramid schemes.
October 17th, 2008 at 11:15 am
Gold is no better a currency than old baseball cards or ornamental glass. It’s a collector’s currency. Those of you who rail against the Federal Reserve have to come up with something better to base a massive national economy on other than gold. Gold has no intrinsic value other than what people believe it to be, and there just isn’t enough gold in all the world to represent the size of our economy let alone the world’s. Stop thinking like a bunch of village provincials and conspirators. Gold is NEVER coming back, no more than cassette tapes and buggy whips are going to be valuable again. It just doesn’t fit in a modern world. If you don’t like the modern world, come up with something more modern that solves whatever you don’t like about the current world, but don’t advocate going back to a world that will never ever ever exist again. It’s pointless.
October 17th, 2008 at 11:19 am
I agree with Dee Dee. The Stone Age didn’t end because we ran out of stones.
October 17th, 2008 at 4:52 pm
The properties required of money were first described by Aristotle in the fourth century BCE.
1.
It is durable. It won’t evaporate, mildew, rust, crumble, break, or rot. Gold, more than any other solid element, is chemically inert. This is why foodstuffs, oil or artwork can’t be used as money.
2.
It is divisible. One ounce of gold—whether bullion, coin, or dust—is worth exactly 1/100th of one hundred ounces. When a diamond is split, its value may be destroyed. You can’t make change for a piece of land.
3.
It is convenient. Gold allows its owner physically to carry the wealth of a lifetime with him. Real estate stays where it is. An equivalent value of copper, lead, zinc, silver, and most other metals would be too heavy.
4.
It is consistent. Only one grade exists for 24-carat gold, so there is no danger of owning 24-carat gold varying in quality. Twenty-four-carat gold (pure gold) is the same in every time and place since gold is a natural element, unlike gems, artwork, land, grain, or other commodities.
5.
It has intrinsic value. Gold finds new industrial uses each year. Of all the metals, it is the most malleable (able to be hammered into sheets less than 5-millionths of an inch thick), most ductile (a single ounce can be drawn into a wire 35 miles long), and the least reactive (it can stand indefinite immersion in seawater, does not tarnish in air, and can withstand almost any acid). Next to silver, it’s the most conductive of heat and electricity and the most reflective of light.
These superlatives make gold uniquely well suited as a medium of exchange and a store of value. Arguments that gold’s value is “mystical” are silly; it is simply one of the 92 natural elements.
One important last point was not listed by Aristotle, probably only because he lived before the creation of paper and banking.
6.
Gold cannot be created by government. Gold can, of course, be debased with impurities or falsified in weight, and governments strapped for revenue have tried those tricks. But a trader can protect himself with a pair of scales or a vial of acid, although a familiar and trustworthy hallmark of a coin saves him that trouble. Unlike currency, gold cannot lose value because of government mismanagement. On the contrary, it tends to gain value because of government mismanagement.
From “What most people don’t know about gold”
http://www.financialsense.com/...../1123.html
February 3rd, 2009 at 9:09 pm
I’m not sure what Planet DEE DEE Pontiac hails from…. She stated gold is no more better currency than baseball cards or Christmas ornaments and thinks we need to not regress to the nostalgia of silver /gold… Then she has Doby Gillis agreeing with her. DEE DEE Pontiac, maybe it’s time you pick up a book, ( History Book) and you will find every great empire has fallen from debased MONEY, CURRENCY? BASEBALL CARDS, CHRISTMAS ORNAMENTS AND /OR ANY OTHER MODERN DAY CURRENCY YOU THINK IS INTRINSICLY MORE VALUABLE THAN Ag. / Au. READ AND LEARN FROM PAST MISTAKES !!!! BASEBALL CARDS, MAYBE YOU SHOULD TAKE BERNANKES SPOT>>> YOU BOTH THINK ALIKE……….