narco Posted September 20, 2008 Report Share Posted September 20, 2008 Hmmmm Where's cgnao on this thread. Link to comment Share on other sites More sharing options...
hotairmail Posted September 20, 2008 Report Share Posted September 20, 2008 Surely, we had 10-15 years of massive money supply, which was bound to cause inflationary pressures. Then came the credit crunch... Things that had been inflated before the credit crunch started to deflate (e.g., houses, and commodities to a degree), but these will now deflate less or maybe no further due to the latest injection of new money. And things that were still only part way through their necessary inflation (e.g., cost of living items, wages) will now have their ongoing inflation dramatically accelerated. This is the key cgnao, goldfinger point I believe. "It's baked in the cake". The massive lending that went into housing is about to be visited on us. Ordinarily that credit creation would be destroyed by default as house prices go down. But by bailing the banks, they effectively 'monetise' that past inflation and rather than flowing back into housing where it fails to get measured - it flows into other assets driving inflation. And if the government can't afford the bailout from its resources, well, printing merely adds to the problem. Link to comment Share on other sites More sharing options...
Steve Netwriter Posted September 20, 2008 Report Share Posted September 20, 2008 Wow, just compare the lease rate I posted yesterday: with the one narco just posted: Still rising. Link to comment Share on other sites More sharing options...
narco Posted September 20, 2008 Report Share Posted September 20, 2008 Link to comment Share on other sites More sharing options...
Steve Netwriter Posted September 20, 2008 Report Share Posted September 20, 2008 $2,500.00 Gold and $250.00 Silver -- Posted Thursday, 18 September 2008 http://news.goldseek.com/GoldSeek/1221764400.php The action in gold and silver during the past few days is an indication of how rapid the price rise can be. In a previous article I used the metaphor of a beach ball held under water. The deeper you push the ball the faster it rises once released. The commercial gold traders who were ‘net short’ 247,000 contracts as reported on July 18th, have reduced this position to being ‘net short’ 94,000 contracts as of last week. The commercial traders could tell that the ‘beach ball was about to pop up.’ Lease rates for gold have doubled during the past 30 days. This is going to have the effect of having less Central Bank gold released into the marketplace via leasing. Meanwhile more and more money is being created worldwide to pay for government promises and various bailouts, as government officials and politicians almost always use monetary inflation instead of taxation to pay the bills. Do you remember the "formula" for gold from Dan Norcini ? Link to comment Share on other sites More sharing options...
goldenbee Posted September 20, 2008 Report Share Posted September 20, 2008 This is the key cgnao, goldfinger point I believe. "It's baked in the cake". The massive lending that went into housing is about to be visited on us. Ordinarily that credit creation would be destroyed by default as house prices go down. But by bailing the banks, they effectively 'monetise' that past inflation and rather than flowing back into housing where it fails to get measured - it flows into other assets driving inflation. And if the government can't afford the bailout from its resources, well, printing merely adds to the problem. Ah! Thanks for that, I've always believed the bail-outs were inflationary without quite grasping how it manifests itself. Link to comment Share on other sites More sharing options...
seekingclarity Posted September 20, 2008 Report Share Posted September 20, 2008 Well, for what it is worth, I think it is going to the moon. I am hoping to put my next chunk of change into silver... only got gold at the moment. Edit: What persuades me on silver, is that there will be a scarcity of real money after the dollar falls over. In the last depression, the dollar was backed by gold.... so it was as good as gold... which is why the dolar survived as money. This time round the dollar is backed by........ a debt riddled economy. so the monetary qualities of silver are likely to perform well. Thing with silver is you need a bigger safety deposit box....... Link to comment Share on other sites More sharing options...
signofthetimes Posted September 21, 2008 Report Share Posted September 21, 2008 Thing with silver is you need a bigger safety deposit box....... You think your stash would be safe in a bank ? Think Again Link to comment Share on other sites More sharing options...
bakachu Posted September 21, 2008 Report Share Posted September 21, 2008 What do all these lease rate spikes mean? If I have a look at the 10year detailed view on Kitco, the lease rate seems much more turbulant 10 years ago, and then calmed right down until the start of the credit crisis. The lease rate now seems like its just waking up from a long slumber, but the spikes are still quite small compared to the previous two spikes. What would be the implications if lease rates hit 9 like they did in 99/2000? And why does the POG seem to be largely inert to massive spikes in lease rates? It all looks very interesting, but I dont see how it fits together.. Thanks! Link to comment Share on other sites More sharing options...
ologhai Posted September 21, 2008 Report Share Posted September 21, 2008 What do all these lease rate spikes mean? You're way head of me -- I was going to ask what a 'lease rate' is? But your question's interesting, too... Link to comment Share on other sites More sharing options...
Wanderer Posted September 21, 2008 Report Share Posted September 21, 2008 Bakachu, Good question. Thats an interesting line of questioning that might cast light on future movements of the gold price. The 2001 spike seemed to occur early in the year, i.e. not after 9-11 (when one might have expected a dash into gold). Curious. Hmm, although I remember one poster here pointing out that one of the reasons for leasing gold would be to short it. Grateful for any insights... Wanderer Link to comment Share on other sites More sharing options...
Wanderer Posted September 21, 2008 Report Share Posted September 21, 2008 Seems lease spikes were happening around the time of the BoE auctions. Not yet worked out cause and effect yet.... http://www.gold-eagle.com/editorials_00/peters012500.html Also lease rates affected people trying to carry on the gold 'carry' trade... http://www.telegraph.co.uk/htmlContent.jht...3/cngold13.html And also to do with the 'Washington agreement' and Japan and so on.... http://www.fame.org/HTM/Howe_War_Against_Gold.htm Link to comment Share on other sites More sharing options...
Dispassion Posted September 21, 2008 Report Share Posted September 21, 2008 Bakachu, Good question. Thats an interesting line of questioning that might cast light on future movements of the gold price. The 2001 spike seemed to occur early in the year, i.e. not after 9-11 (when one might have expected a dash into gold). Curious. Hmm, although I remember one poster here pointing out that one of the reasons for leasing gold would be to short it. Grateful for any insights... Wanderer It was me who posted about borrowing to short, though I'm no expert on gold leasing. This gives as much information as I have: http://www.anglofareast.com/0138.html I think Dr Bubb may understand this in more depth and is of the opinion that the current rise in lease rates is very bullish for gold, but I've not understood his logic. I think the subject can get very complicated and that you may want to try to understand the objectives of GATA, www.gata.org before drawing any conclusions. Link to comment Share on other sites More sharing options...
azazel Posted September 21, 2008 Report Share Posted September 21, 2008 Financial planner has posted his view on gold. He has often made some accurate calls. It rose from $735 to $922 (I said $100 up) and fell back to $850 (nothing goes up or down in a straight line). Its a now c $870 and ended Friday on a strong upward move. It'll be strongly positive on Monday and next week. At $950/975 I'll watch it carefully. There is a chance it could fall right back down to $600. More likely rise to $1250/1400 next spring. But being careful, just in case. Silver too. Link to comment Share on other sites More sharing options...
bakachu Posted September 21, 2008 Report Share Posted September 21, 2008 Right, I've been DMOR and have found the following article quite helpful : Gold and Silver “Leasing” Examined I've read it quickly once, and a second time more thoroughly, but I think I still need a couple more reads to fully get it.. Here are some interesting tid bits so far : * Lease rates are used for 'Bank A to Bank B' lending where by Bank A wants to make profits from gold that is normally costing them money in storage and insurance * Special IMF rules means that when Bank A 'leases' its gold, it does not have to write it off of it books while it is not in possesion of it. This is a good benefit for book keeping that selling/swapping does not have * The 'Lease Rate' published by LBMA and used by Kitco etc is the difference between the 'Gold Forward Offered rate' (GOFO) and LIBOR * The GOFO is the official rate (again published by LBMA) used to calculate the future cost of gold in buy back agreements, eg gold at $500 with a 5% GOFO will have the value of $525 in 1 years time. Some interesting quotes.. (5) Gradually rising gold "lease rates" are therefore typically a sign that gold is in, or approaching, bear market conditions. (7) A spike higher in the gold "lease rate" could result from the gold market moving from contango toward backwardation, but it could just as well result from a jump in market interest rates (LIBOR). The former case is usually bullish for gold while the latter may be bearish. Thus, a move in the gold "lease rate" is meaningless without an understanding of the underling moves in both the Gold Forward Offered rate and LIBOR. (13) The most important and ultimate point about gold "lease rates" is that people should perhaps be first looking for a zig ("lease rates" shrinking and then going negative) instead of a zag (spiking "lease rates") as they assess the health of the gold market. Looks like much more research is needed! Would be interested in seeing some of these GOFO charts Link to comment Share on other sites More sharing options...
narco Posted September 21, 2008 Report Share Posted September 21, 2008 Looks like much more research is needed! Would be interested in seeing some of these GOFO charts Interesting to hear the LIBOR thoughts. I checked the current rates and although there was a large spike, rates were down on friday where gold lease rates were up sharply. http://markets.ft.com/ft/markets/reports/F...ckey=MNY-190908 Link to comment Share on other sites More sharing options...
Dispassion Posted September 21, 2008 Report Share Posted September 21, 2008 Gold and Silver “Leasing” Examined That's a very useful link, thanks! Link to comment Share on other sites More sharing options...
Bobsta Posted September 21, 2008 Report Share Posted September 21, 2008 Financial planner has posted his view on gold. He has often made some accurate calls. ... It'll be strongly positive on Monday and next week. So, Monday will be "FP vs Ker" ... Ker's predicting a pullback. See post 1383 earlier in this thread Personally I think FP made a lucky call t'other week. I haven't been hugely impressed with his forecasts (and attitude, TBH) in the past. Much prefer the input from folks over here. Link to comment Share on other sites More sharing options...
narco Posted September 21, 2008 Report Share Posted September 21, 2008 I'm not liking this rising wedge on the EUR / USD chart. We need to break out of this. A break above 1.46 here would be nicely bullish for gold. Link to comment Share on other sites More sharing options...
azazel Posted September 21, 2008 Report Share Posted September 21, 2008 I'm not liking this rising wedge on the EUR / USD chart. We need to break out of this. A break above 1.46 here would be nicely bullish for gold. ah you got the right forum this time? Link to comment Share on other sites More sharing options...
narco Posted September 21, 2008 Report Share Posted September 21, 2008 ah you got the right forum this time? Yeah too many cans and can't be arsed posting this kind of stuff on HPC. Link to comment Share on other sites More sharing options...
Bobsta Posted September 21, 2008 Report Share Posted September 21, 2008 I'm not liking this rising wedge on the EUR / USD chart. We need to break out of this. A break above 1.46 here would be nicely bullish for gold. I was reading (or at least looking at the pictures) some Tom Bulkowski last week. I must say, that's a fine example of a rising wedge.. will be interesting to see if it breaks out and confirms the pattern. Fundamentals and technicals combining - could be powerful. Link to comment Share on other sites More sharing options...
Bobsta Posted September 21, 2008 Report Share Posted September 21, 2008 So, Monday will be "FP vs Ker" ... Ker's predicting a pullback. See post 1383 earlier in this thread Nice little up-tick so far... Link to comment Share on other sites More sharing options...
UpTheKhyber Posted September 21, 2008 Report Share Posted September 21, 2008 Maybe Jim Sinclair's idea of a Gold Certificate Ratio might not be so out-of-wack! I'm struggling to see how this differs from the old Bretton Woods system. Am I missing something? Though I have great respect for John Williams, I thought he went a bit hyperbolic today and sounded shrill at times. Though I agree there will most probably be a hyperflationary scenario.... I think they do not do justice to to the reality of the deflationary forces at work today. Everything else, I am in complete agreement with them. I was impressed to hear both guests on that podcast make the same excellent point; the current lending crisis is just an omen of our societies' unwillingness to face up to the fact that we are living way beyond our means. For any candidate to tell the electorate the truth about the true state of private and especially public finances would be political suicide. Instead our governments will just take the easy route and rely on the progessive heat of inflation to boil our pipe-dreams of an over increasing standard of living to death. Not only is inflation 'baked into the cake' but, unable to control our own gluttony, we've already eaten it. Link to comment Share on other sites More sharing options...
jinbal Posted September 21, 2008 Report Share Posted September 21, 2008 Hmm DOW futures tanking a bit -223 lets see if this continues into tomorrow Smart money using the bounce to unload? Link to comment Share on other sites More sharing options...
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