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spoon

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Everything posted by spoon

  1. Increasing numbers asking questions about gold lease rates. Allow me to shed some light. The biggest source of gold liquidity in recent times has been the central banks. Central banks have been very keen to pick up yield, any yield, on their large gold holdings. The traditional counter to this lending pressure is the borrowing by gold producers - price hedging by another name. Of course the producers stopped hedging a while ago given the bull run in gold. In fact they're all unwinding hedges. This meant all the traffic has been one way. The central banks have been lending to the bullion banks like Barclays, Deutsche, Goldmans, UBS at silly low rates like 0.05%. Forward to credit crunch. Guess what...they don't want to lend to insolvent investment banks anymore. Not at 0.05%, not at 2%, not at 10%, not at any rate. They have turned the taps off. Meanwhile physical gold uptake by the Indians continues unabated year in year out. Now you have the demand for coins. There is a REAL liquidity issue out there now. The market benchmark for gold lease rates is LIBOR-GOFO. This has been setting at 0.30% approx for most of the year. On Friday this fixed at 1.66%. It's going higher. And remember the actual lease rate is even higher, more like 2.75% because as we all know LIBOR is ridiculously low. Lease rate curve is now inverted. Price backwardation is coming.
  2. spoon

    GOLD

    we are in the midst of massive wealth distruction the likes of which most here haven't seen gold has a lot further to fall. i don't see any reason to bounce before $690.
  3. spoon

    SILVER

    typically, a backwardated market is accompanied by a rising spot price but not always. but the mere perception that something is afoot should see silver outperform gold in the short term. the commodity complex on the whole is due something of a bounce with credit concerns abating and silver ought to benefit more from this. but i wouldn't bet against the greater trend of silver underperformance reasserting itself soon.
  4. spoon

    SILVER

    silver has gone into backwardation today. Dec Comex silver is trading 5 cents UNDER spot physical London delivery.
  5. http://www.greenenergyinvestors.com/index.php?showtopic=4481
  6. http://www.greenenergyinvestors.com/index.php?showtopic=4481
  7. With world interest rates set to climb, gold interest rates still languishing below 1%, surely the time to hedge is approaching? You can sell Gold at 10yr forward projected price of $1100 approx.
  8. I suspect a decent portion of the silver accumulation is switching of existing longs into the allocated ETF. As as aside Silver seems to have turned a corner today, more than holding it's own amidst the Gold carnage. I'd be surprised if we didn't have at least one more look at today's lows in gold and silver...most probably in Tokyo time. Question - are collapsing equities good or bad for metal prices?
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