Gold Driver Debate

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GoldInvestments
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Gold Driver Debate

Postby GoldInvestments » 25 August 2016

What drives gold? Does one believe the news or the interblogs about their take on a day's trading event or intermediate move? Conspiracies? Mining supply and demand? Geopolitics? Or is it even an obfuscation action by central banks. I'd love to hear others too.

Gold Silver.jpg


But. The reality can't be any one driver from the brief but ample list given. The reality has to involve all the interested parties at any one time. One must see the trading data as a minimum to gauge the market sentiment of gold. But. The trading entities are not always identifiable. That's the first frosting hampered view of the gold and silver market, even while attempting to include empirical evidence as a trumping attempt at understanding this beast.

The U.S. government not allowing public audit of it's gold reserves is an ethics based what's going on here emotion. This gets the conspiracy and price manipulation crowd scratching heads and pounding the table. The inaccurately referenced last public audit of Fort Knox in 1974 is the last emotionally appeased event which satisfied that empirically charged interest of the public. We haven't event mentioned he gold economic theory yet, which modern finance seems to have disregarded for now. Most reading this are well aware of the story of gold, so I won't insult you lot.

Geopolitics and conspiracy stories appear to be related and appear to attract the same type of interest and crowd. Such matched attraction to the gold and silver price action has a behavioural element of correlation dissatisfaction and disbelief. Historical price action is certainly not correlated to modern price driving dynamics. Some of the reasons for this is technological. Identities, the scope and magnitude of trading instruments such as ETFs and OTC derivatives have added complexity into their interest space. This may also be a good avenue for new price driving efficacy to flourish.

A new normal or chaos in the observable universe for gold and silver may be in progress. The older Comex barometer and price driver in the precious metals is now joined by ETF influences. But I don't think any one trading vehicle can shape the gold market as perhaps what I'm writing may be heading towards. In a selloff or moon shot all the trading vehicles are being zigzagged which relate to gold and silver. So I suggest that the new trading dynamics still perhaps don't have ultimate price driving power.

One area which attempts to isolate the nature and composition of gold and silver trading is the Commitment of Traders (COT) report. At least there is a composition breakdown of big and small traders, and commercials hedging and speculators. But identity is still vague. The same identity can participate in all segments of the market. In the past, some of the big investment banks have been busted with participation everywhere in the gold space. There are means to gain this info but this is still a privilege of the few via a level 3 Bloomberg screen.

Comex not delivering perhaps? Basically the Comex doesn't have to deliver the physical metal. He Comex only actual obligation is to pay you the price of your amount of metal ordered for delivery. Before the specified closing date of a given contract. Yes the speculator buys rights to the metal, but the Comex also provides a service which is valuable to a trading market. The ability to only use 10% capital of your chosen metal amount is a priceless tool to traders. One has 90% more funds to work in market for them. This a form of fractional reserve.

This principle is learned from more ancient attempts to store gold and silver for the wealthy which where predatory targets. But these first form of banks also couldn't resist using surplus gold and silver client holdings for other opportunistic purposes. And when caught out these early bank type service providers where lynched. Recently government gives license to massive fractional reserve practice. The major investment banks are levered between 100 to 400:1. All supported by the regulators. A progression which started holding 60% of their full client holding. Meaning they loaned out 40% of client gold in roman times.

So all this leverage could be used to shape the the price of gold. But that same leverage ability could be used to compete with those positions. But the leverage creating banks set up new entities to enable more leverage (400:1)!!! This escalation in leverage causes a vacuum when offloading positions is required. Imagine at 400:1 leverage, you hold 100 ounces of client gold, you hold only .25 of an ounce of his gold. Now imagine he demands 5 ounces. You are stuffed. Run from the lynchers. But now the ultimate lynchers, government, let the banks run away. But we still need to function in this environment.

But. Why then isn't gold at $500 or $100? Because it still has value! The entities of the long and short holders are vague but at least we know the the composition of the market. We also know the array of trading instruments which make up this matrix. Technicals, obviously require consideration. Fundamentals, the ultimate price force still needs an eye glued to it. Economics, must be understood to forecast human action and behaviour. So If one understands possible trader behaviour, one has a chance to profit if engaging in the precious metals.

Summary: who knows what drivers are the granddaddy drivers. But at least we are aware of what to consider. This is not a scientific exercise. No trading is, and one must not ever think it is. Gold's long history should be kept in mind but should not be thought of as a modern day go to. Government nowadays has bigger muscles than brought it history, because all government have the same playbook and interest/consensus in mind. Philosophy put another way. So make sure you know about all the ideas known in precious metals, as only then one should be more comfortable to play/protect.

by Steve Andelkovic
Funds Manager
Gold and Energy Investments
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Freddy
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Re: Gold Driver Debate

Postby Freddy » 25 August 2016

Printing money to pay debt simply means creating debt to pay a debt. Paper money used to be backed by gold meaning you were given paper to represent your gold - a lot easier to carry around. The fed removed the backing of gold in the 20s which allowed them to print money whenever they felt like it. Doing this has dropped the value of the U.S. dollar to 5% of it's original value. What we use today as money isn't worth the paper it's printed on. The dollar will burst. Gold won't. Ever.

1971 Nixon ends the Gold Window $35/oz. You just have to wonder what the "rest" of the world leaders allowing the US dollar to be world reserve and didn't come up with an agreed upon "World Reserve" currency.Fiat money is currency based on money, the "Fed Note" doesn't meet the definition of money.

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Silver Rocket
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Re: Gold Driver Debate

Postby Silver Rocket » 26 August 2016

Freddy wrote:Printing money to pay debt simply means creating debt to pay a debt. Paper money used to be backed by gold meaning you were given paper to represent your gold - a lot easier to carry around. The fed removed the backing of gold in the 20s which allowed them to print money whenever they felt like it. Doing this has dropped the value of the U.S. dollar to 5% of it's original value. What we use today as money isn't worth the paper it's printed on. The dollar will burst. Gold won't. Ever.

1971 Nixon ends the Gold Window $35/oz. You just have to wonder what the "rest" of the world leaders allowing the US dollar to be world reserve and didn't come up with an agreed upon "World Reserve" currency.Fiat money is currency based on money, the "Fed Note" doesn't meet the definition of money.


So because the dollar is a scam, one day it will all come crashing down and the people with "real money" will rule? Seems unlikely - they will just replace the US fiat with an international fiat - backed up by the force of law.

Forgive me for not understanding the part where if the dollar completely collapses and say you are holding silver. What do you sell the silver for!? Assume that stores start accepting silver? How do you get change when you spend an ounce at a time? Also sounds like a good way for people to start getting robbed! Especially if other people don't have any, and can't get them!

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TonyJ
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Re: Gold Driver Debate

Postby TonyJ » 28 August 2016

The central banks are in control of money trends and PM's. I you read enough financial books you come to learn that there are no markets, only interventions.......no exceptions. The PM market is totally rigged and has been for many years.

The future for PM's is murky and you can be rest assured no CB will stand by and let an alternate money system get root in the financial system, a debt based system and so, that paper you hold in your hand is all debt money inherently worthless as like an addiction the bastards cannot stop printing more of it.

TJ

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Max Metals
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Re: Gold Driver Debate

Postby Max Metals » 02 October 2016

This whole fiat ponzi scheme is an experiment and we're the labrats. They have started this fiat ponzi scheme, knowing all along that they would return to a gold standard eventually because they knew the system wouldn't last forever. And the only way to return to a gold standard is by making the system implode and how do you do that? By manipulating and rigging the markets, printing and spending the currencies like crazy. So that's exactly what they're doing.

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Gold Jodie
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Re: Gold Driver Debate

Postby Gold Jodie » 04 December 2016

Couldn't agree more, all just smokes and mirrors. Hopefully Trump can improve Precious Metal's prices. All looking good for oil and gas sector under his leadership if you like those stocks. IMO

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Freddy
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Re: Gold Driver Debate

Postby Freddy » 26 January 2017

China is sourcing gold through: "the 'Sovereign Wealth Fund,' that doesn't report their transactions, to anyone..." It appears to me that not only does China already have between 10- 30 tonnes of gold (if it's even techinically, 'China's gold?') but this is nothing short of a Crown 'transfer of (visible) wealth' from the West, to the East? And my question then is, how do the PTB plan to 'pull this off...' when so many of us are already 'onto' their game?' (Like say intentionally 'building up' CHINA and the East at the expense of the West, for the next round of 'globalized consolidation' of wealth and power into the SAME HANDS, for example. This 'East vs. West' monetary dichotomy seems moreover, a 'Trojan horse' RUSE?

Truth be known... GOLD isn't that scarce... (Unless/until used, industrially, etc.) SILVER, however, is the 'most undervalued commodity,' in world history... and at some point this will become quite OBVIOUS when the Fiat Ponzi 'Fractional Reserve Lending' scheme, implodes. Until then... people should stay out of 'paper' assets, buy precious metals... and remember the 'historic ratio' (vs. the 'fixed spot' futures price, set and artificially controlled, by the Crown) is 15:1, Silver to Gold... and 'above and below ground' silver is now quite SCARCE, unlike gold... GOLD is only RARE in the 'phony money, wealth and debt' ARTIFICIAL sense! Or if we start using it for physical 'exchanges' again? (i.e. As coinage...)


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