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Red Alert: Gold Backwardation!!!

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posted on Dec, 7 2008 @ 12:52 AM
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Originally posted by Chaos3003
I do understand that once the people that have gold paper notes find out there is no physical gold to be rendered that they will all freak and chaos will once again have control of our future instead of the mechanical monetary system that we have created today.


If only it were that exciting Chaos.

In the event of a default...nobody loses their money. In the interest of maintaining the "legitimacy" of the exchange
the Comex would declare Force Majeure on the outstanding contracts, and dictate cash settlement in lieu of physical delivery. Longs would receive the cash-price-of-Gold, but go home without their 100oz ingots. If they have forward obligations to meet...tuff...they're left to scramble for inventory in a tight physical market.

The counter-parties to these failed contracts ie..the commercial shorts (bullion banks like JP Morgan), well, they get a pass on their contractual agreements


Edit add: With regard to the claim that everybody's buyng Gold futures, open interest has been making record-breaking lows...majority of longs began flushing-out of their positions after second quarter 08. As for folks being surprised that "gold is going down", the market has reached the juncture where one must differentiate between Comex Gold derivatives, and real Gold. While there are lower premiums available...scrolling this link provides a quick, updated reference to what people are really paying...for real Gold...in the real world.

There may be some minor technical holes in the Fekete piece, however imo, his point being; a sustained period of backwardation will spur Gold appreciation in all major currencies....and most importantly, reflect diminishing confidence in the integrity of an already tarnished the US dollar.


[edit on 7-12-2008 by OBE1]



posted on Dec, 7 2008 @ 01:04 AM
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Good thread and very important reading. I can't imagine anyone not investing in gold, silver these days....unless of course they are unaware of it's 'true' value. This topic was covered pretty well here so no need to rehash though I have put a few informative links on my profile informing those 'how' to invest in gold and get a fair price.

Good luck with the fair price. I had a difficult time finding physical gold/silver bullion for an investor who asked me to find her a deal. I found 4 gold coins at a pawn shop. That's it. All bullion dealers have run out though claim to be taking 'orders' with a multi-month 'wait' for delivery.

Now what never gets discussed is just how much gold these countries truly have in reserves. This is a very good question. Many governments are secretly buying as much gold as they can without being too obvious about their intention/strategy. It will be interesting once gold is 'revalued' to reflect historical inflation of the paper fiat currencies of the world. Gold, Silver will have to play a role in the future monetary racket with the most probable solution being a unit of paper currency to a fractional unit of an ounce of gold.

I'm looking forward to the revelation of the true stocks of the worlds gold. These countries often have majority shareholdership and govt. control over many mines in the world. Who's to say they are not storing the gold in secret 'underground' vaults off the official record. The international bankster crowd, of whom I've mentioned frequently in the past will be found to be the true manipulators and majority shareholders of the worlds gold and largest mines. These same folks are the one's who have control or oligopoly over the world's diamond mines and oil exploration companies as well. The whole stock market is rigged, with extreme ups and downs to shake out the traders and dry up capital. This is a long topic though this is nothing other than a consolidations of the worlds assets for pennies on the dollar while preventing countries indebted to the banksters and their methods of mass destruction (Fed. Reserve, IMF, The World Bank, Bank for International Settlements, Central Bank depositories, FEMA, FDIC, SPC etc. etc.) to create a competing currency. Once these bankers indebt a country, they basically own them and make the laws and get 'their' people in the most important positions of finance within the respective govts.

The IRS, ATF and the NSA are their personal sherriffs keeping the financial 'subjects' in order. It's all about CONTROL and the consolidation of power and assets by a select few. I don't believe this is what the 'people' had in mind when they thought they had established their own democracies. Order is an illusion; most walk and talk as instructed.

On the other hand, the People are becoming alot more aware these days and the fiat currency game is up. Anxiously awaiting the aftermath. It's long overdue.

Recent article on financial crisis



[edit on 7-12-2008 by Perseus Apex]



posted on Dec, 7 2008 @ 03:01 AM
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Originally posted by disgustedbyhumanity
Why is everyone surprised at the fall of Gold? It is used as an industrial metal, tooth fillings and jewelry. We are in a recession/depression and there is going to be less and less demand for gold. Somehow people have it locked into their heads that it is going to be used as the basis for some future currency. It isn't going to happen as there is simply not enough to back the amount of currency we need, and if by some far fetched scenario where it is used for that purpose, it will become immediately illegal for anyone to hold it and you will be forced to turn it in to the goverment and the goverment will not pay top price.

Charts withstanding, anyone with half a brain can see that Gold is going to keep dropping over both the near and long term.



You obviously don't know much about gold. Gold is MONEY. In fact, gold is more money than any fiat currency in history. All fiat currencies eventually end up worthless. That is historical fact. Fiat currency is backed by nothing except a governmental promise. In other words, it's worthless paper. Right now the American Fed printing presses are running at full tilt, grinding the value of the American dollar down to... you guessed it. Zero.

If you came upon a sunken ship and found a treasure chest filled with gold and silver coins, you'd be rich. If you found currency, you'd have... you guessed it. NOTHING.

The governments of the world rely on gold as a store of value. Gold is kept in vaults as a reserve. Gold is money, real money, unlike paper currency.

If you don't know that gold is money, you know nothing about the subject.



posted on Dec, 7 2008 @ 05:32 AM
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Back in September or early October, I was watching CNN and they were talking about the price of diamonds goin down supposedly due to less and less demand. They reported that "Blue Nile" speculated that its value might even further depreciate after the December holidays are over.. De Beers would not comment on it though. I have always considered diamonds as good alternative long-term investments along with gold... sort of a safe haven to put your hard-earned cash instead of leaving it in a bank that might not even exist tomorrow. Now I'm just plain confused... if the value of gold and diamonds can fall so much... what will stop platinum from suffering the same fate? Is it a much safer alternative?

Perhaps I'll end up designing a backyard bunker and spend all my cash on that as well as basic supplies!



posted on Dec, 7 2008 @ 06:00 AM
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This past Friday, Nov. 28, 2008, was first notice day for delivery of the December COMEX [a division of NYMEX] gold and silver futures contracts which trade on the New York Mercantile Exchange. The chart appended below shows that on Friday, 8,600 gold futures contracts @ 100 ounces per contract [and 3,040 silver futures contracts @ 5,000 ounces per contract] were delivered. To try to give some perspective to these numbers the previous delivery month for gold futures was October, 2008 when there were 11,554 deliveries for the entire month – a “big” number by historical standards.


It is important for casual market observers to understand that normally, investors who are speculating on the price of gold DO NOT take delivery of the underlying commodity. Instead, whether they are “long” or “short” the future, they usually “roll” their positions into the next contract month as the current or “spot” month approaches its delivery cycle, which begins with first notice day [Friday was the 1st notice day for delivery of the Dec. Gold and Silver Futures Contracts].

So, looking at the COMEX gold table appended below , readers can see that the Dec. contract was still registering Open Interest of 16,053 contracts as of the close of business on Friday. One can also see that “the bulk” of trading has migrated [rolled] into the next delivery month for gold futures – which is Feb., 2009 with 158,895 contracts of Open Interest .


There is a chart also listing the future orders for Dec.

Please see this link: www.marketoracle.co.uk...

One thing I have read over and over - is the ONLY reason the dollar is strong right now, is because other countries are keeping it strong.

Why? Because they have TOO MUCH of it, so they want to get rid of their dollars, before they let the dollars fall on it's face. What are they doing? They are buying as much gold as they can get their hands on.

There are numerous articles about what is actually happening.

The other thing, is banks are allowed to sell a certain amount of gold every year, well this last year, the banks have not been letting the gold loose.

Yet, another thing - I heard a radio program with a "gold/metals" person.

What they said, was right now there was "melt" on the market.

What is "melt"? it is melted coins and other items.

Well, in the 1930's with the reconfiscation of gold by the U.S. govt - (taking gold from the U.S. citizens) to save the country.

The U.S. melted coins etc. they took from the people.

Why is that important? The U.S. is the ONLY country to ever do that, so then the U.S. is the ONLY country that has "melt".

Where am I going with this?

It seems there is "melt" on the market elsewhere in the world - those who are in the know - KNOW it is the U.S's gold.

Now - this then goes to the fact, the U.S. "supposively" has about 261 million ounces of the gold in 'Fort Knox'.

see link: (written in Oct. 07) news.goldseek.com...


Note the additional description of gold provided in the new reporting format. It says the US Gold Reserve is 261.499 million ounces and importantly, that the gold is now reported “including gold deposits and, if appropriate, gold swapped” [emphasis added].

This description provides clear evidence that the US Gold Reserve is in play. Gold has been removed from US Treasury vaults and placed on deposit, presumably in the couple of bullion banks the Treasury has selected to assist with its gold price capping efforts.

Gold placed on deposit gets loaned out by these bullion banks, and then sold into the spot market to try capping the gold price. The same thing happens with swaps, but the vague language in the note to the Treasury reports makes it uncertain whether they are in fact being used at the moment.

It is noteworthy that this change of accounting occurred in May. Could it be that the gold cartel had to dip into the US Gold Reserve to accommodate the big gold buybacks of hedge books that Lihir and others completed at that time?

The timing is also conspicuous because it occurred about the time GLD, the exchange-traded fund, showed a reduction of 23 tonnes of metal. Did GLD need to borrow gold from the US Treasury to replenish its stock? This was also a period when large deliveries and exchange-for-physicals were taking place on the Comex.



Okay, back to the fact there is "melt" on the market now,
and the fact there is dispute - (and has been for a long time now) if 'Fort Knox' is really full of Gold.

How those who are in the gold and metal business view the fact there is "melt" on the market....... to them it means: "someone" or "some country" is getting to the bottom of their barrel, otherwise "melt" would not be on the market.

People and organizations have asked over and over - for the U.S to PROVE - 'Fort Knox' actually has gold in it.

Well, they have released various things - that seem a little "funny" to those who are familiar with the paperwork. That boils down to the fact the U.S. has NOT PROVED and verified with ANYONE that the U.S "still" has gold - and now with "melt" on the market - ..........make up your own mind.

Has the U.S. run out of gold? and if so - when the SHTF and all the countries have to do some kind of "gold or metal" standard - where is the U.S going to stand?

Just some food for thought.




[edit on 7-12-2008 by questioningall]



posted on Dec, 7 2008 @ 06:27 AM
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reply to post by questioningall
 


That's some serious research, qa. Well-sourced and well explained. Hats off.

Perhaps the erratic movements in gold over recent months suggest fundamental questions are being asked by some 'in the know'. Downward pressure in the face of economic crisis has certainly left a number of people scratching their heads.

(Charts of movements over past months/years are available here.)

The plot thickens...




[edit on 7/12/08 by pause4thought]



posted on Dec, 7 2008 @ 08:50 AM
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there are some that believe the fed paying interest on banks excess reserves is repeating the policy mistake the fed made in 1936-37 (doubling reserve requirements) which caused a recession and prolonged the great depression. This causes banks to hoard cash ( be payed to do so) stopping any inflationary pressures that would normally result from an increase in the money supply. This is Bearish for Gold.

This also grows the fed's balance sheet so they can buy toxic assets- but it is at the expense of the amount of money in the publics/corporations hands. Such deliberate policy to severly restrict inflation is not favorable to gold as an inflation hedge and puts increased pressure on unemployment rates. I'm not sure if this was a misquided policy decision or one designed to limit gold's attractiveness in favor of the paper money game. One other random thought i had was how worse unemployement is in today's enviornment because in the past those that were unemployed had a bit more savings to sustain them thru some tough times, these days lots of people are living paycheck to paycheck. I am afraid unemployment is going to fall of a cliff in 2009, especially with the fed currently creating added incentives for the banks to sit on excess reserves. Gee if i lived in a state where some gold could be found prospecting i think i would take a few hours a week prospecting, especially after a major storm looking at bottom of some "potholes" in the river.

p.s based on the way unemployment was measured for the majority of the 20'th centrury (up into the late 80's and then again tinkered with in the 90's) the official unemployment would be well over 10%.

[edit on 7-12-2008 by cpdaman]



posted on Dec, 7 2008 @ 10:09 AM
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gold should be $1600 this time next year.



posted on Dec, 7 2008 @ 10:35 AM
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CHINA... do not forget China !!

federalism.typepad.com...

www.breakthematrix.com...

"And so it begins. The SPDR Gold Trust (GLD), the world's largest gold-backed exchange traded fund, reported that it sold more than 10 tons of bullion this past Tuesday. That corresponds to 1.7 percent of its total holdings."

And remember: GLD still has all the gold in China to liquidate...

seekingalpha.com...



posted on Dec, 7 2008 @ 10:49 AM
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posted on Dec, 7 2008 @ 11:37 AM
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Originally posted by JRCrowley

Originally posted by disgustedbyhumanity
Why is everyone surprised at the fall of Gold? It is used as an industrial metal, tooth fillings and jewelry. We are in a recession/depression and there is going to be less and less demand for gold. Somehow people have it locked into their heads that it is going to be used as the basis for some future currency. It isn't going to happen as there is simply not enough to back the amount of currency we need, and if by some far fetched scenario where it is used for that purpose, it will become immediately illegal for anyone to hold it and you will be forced to turn it in to the goverment and the goverment will not pay top price.

Charts withstanding, anyone with half a brain can see that Gold is going to keep dropping over both the near and long term.



Gold is MONEY. In fact, gold is more money than any fiat currency in history. All fiat currencies eventually end up worthless. That is historical fact. Fiat currency is backed by nothing except a governmental promise. In other words, it's worthless paper. Right now the American Fed printing presses are running at full tilt, grinding the value of the American dollar down to... you guessed it. Zero.

If you came upon a sunken ship and found a treasure chest filled with gold and silver coins, you'd be rich. If you found currency, you'd have... you guessed it. NOTHING.

The governments of the world rely on gold as a store of value. Gold is kept in vaults as a reserve. Gold is money, real money, unlike paper currency.

If you don't know that gold is money, you know nothing about the subject.


My question here is, gold is valued relative to what?

The same fiat currency you say is worthless.

When the OP talks about the price of gold, they are talking about the amount of paper money a certain amount of physical gold can be exchanged for.

Or maybe you think there is some other way by which precious metals are ascribed value?



posted on Dec, 7 2008 @ 12:00 PM
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reply to post by undermind
 


Hi under.

I hope JRC won't mind if I act as an intermediary. I think there is a little talking at cross-purposes.

At the end of the day people would almost always be prepared to exchange a significant amount of goods for a small amount of gold, as it doesn't take that much work for it to be fashioned into something that will retain its value (sometimes sentimental/relationship-related) or its pure artistic beauty for a lifetime. Industrial uses also abound. Obviously paper is, relatively speaking, intrinsically trash. Electronic money is also nothing but data on a computer disk imbued with people's trust.

Precious metals as a whole have intrinsic lasting usefulness to people, you might say.

The root of the issue here is that certificates were supposed to be safe as opposed to a fiat currency, as they were ownership-related documents.

Safe in principle. A scam in reality.



posted on Dec, 7 2008 @ 12:06 PM
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reply to post by CaptGizmo
 


People who are writing this utter nonsense have absolutely no understanding of the futures market. The COMEX is an exchange. A FUTURES contract is a CONTRACT between a BUYER, who has not the right, but the OBLIGATION to TAKE delivery on GOLD and a SELLER, who has not the right, but the OBLIGATION to DELIVER gold at a SET price. While it is true that most of the time, delivery does not take place, this is still a CONTRACT. All contracts, ALL contracts WILL be settled by either a) delivering said gold or b) rolling over the contract into the next month at a higher price. There is no available gold. REALLY? I can buy gold tomorrow at a little over spot. All I want.

If an impending shortage does occur....all GOLD will be delivered or cash settled....albeit at a higher price (perhaps much higher) but it WILL be settled. NOONE I repeat NOONE had their money basically stolen...and it is NOT worthless pieces of paper.

The world is in trouble. We are going into a depression. But please...talk facts, know what you are talking about, and stop with all the nonsense.

Someone here stated "who will care about Gold when no one can eat."
Indeed this also makes more sense than what I am reading here.



posted on Dec, 7 2008 @ 12:10 PM
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Originally posted by OBE1

Originally posted by Chaos3003
I do understand that once the people that have gold paper notes find out there is no physical gold to be rendered that they will all freak and chaos will once again have control of our future instead of the mechanical monetary system that we have created today.


If only it were that exciting Chaos.

In the event of a default...nobody loses their money. In the interest of maintaining the "legitimacy" of the exchange
the Comex would declare Force Majeure on the outstanding contracts, and dictate cash settlement in lieu of physical delivery. Longs would receive the cash-price-of-Gold, but go home without their 100oz ingots. If they have forward obligations to meet...tuff...they're left to scramble for inventory in a tight physical market.

The counter-parties to these failed contracts ie..the commercial shorts (bullion banks like JP Morgan), well, they get a pass on their contractual agreements


Edit add: With regard to the claim that everybody's buyng Gold futures, open interest has been making record-breaking lows...majority of longs began flushing-out of their positions after second quarter 08. As for folks being surprised that "gold is going down", the market has reached the juncture where one must differentiate between Comex Gold derivatives, and real Gold. While there are lower premiums available...scrolling this link provides a quick, updated reference to what people are really paying...for real Gold...in the real world.

There may be some minor technical holes in the Fekete piece, however imo, his point being; a sustained period of backwardation will spur Gold appreciation in all major currencies....and most importantly, reflect diminishing confidence in the integrity of an already tarnished the US dollar.


[edit on 7-12-2008 by OBE1]


EXCELLENT post. This is the thrust of the post I posted just minutes ago.
These gloom and doom people here don't know what they are talking about.



posted on Dec, 7 2008 @ 12:24 PM
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Originally posted by questioningall
The chart appended below shows that on Friday, 8,600 gold futures contracts @ 100 ounces per contract [and 3,040 silver futures contracts @ 5,000 ounces per contract] were delivered. To try to give some perspective to these numbers the previous delivery month for gold futures was October, 2008 when there were 11,554 deliveries for the entire month – a “big” number by historical standards.


As of Friday's close, contracts for Dec delivery now stand at 12,164, promising, but total open interest has been hammered to historical lows. Ranging 400,000 - 460,00 contracts last summer...currently 264,796. See Dec commitment of traders report here. My guess...large spec liquidation, coupled with the strong movement away from paper to physical.


One thing I have read over and over - is the ONLY reason the dollar is strong right now, is because other countries are keeping it strong.


Demand factor: With the freeze in inter-bank lending, foreign banks are hard-pressed for dollars to clean-up short-term dollar-denominated debts.

Fed Expands Swap Lines Further

S.Korea taps Fed swap line


The other thing, is banks are allowed to sell a certain amount of gold every year, well this last year, the banks have not been letting the gold loose.


True, formally known as the Washington Agreement, CB's have been reluctant to dis-hoard the 400 tonne annual allotment recently.


Yet, another thing - I heard a radio program with a "gold/metals" person. What they said, was right now there was "melt" on the market. What is "melt"? it is melted coins and other items.


Includes beat-up coins, all manner of gold jewelry, cell-phone contacts, mother-boards etc. There is always "melt on the market" sold to coin shops>>scrap dealers>>ultimately to refiners & mints>>>recycled into the market in the form of new bars, coins etc.



Note the additional description of gold provided in the new reporting format. It says the US Gold Reserve is 261.499 million ounces and importantly, that the gold is now reported “including gold deposits and, if appropriate, gold swapped” [emphasis added].



People and organizations have asked over and over - for the U.S to PROVE - 'Fort Knox' actually has gold in it.


The US gubmn't, and it's allied bullion bank collaborators have been taken to task over the leasing/suppression issue by the likes of Gata, and Blanchard & Co Gold Dealers. Unfortunately, with the exception of pressuring the large producer Barrick Gold, to begin closing it's hedge book...these efforts have borne little fruit.

The lawsuits: GATA'S Reg Howe Sues BIS, FED, Treasury, and 5 Investment Houses To Stop Gold Price Suppression

and counter-suits: GOLDMAN SACHS FILES MASSIVE DEFAMATION LAWSUIT against GATA

....have been raging the better part of a decade now...and the Gold manipulation debate well publicized.



posted on Dec, 7 2008 @ 12:30 PM
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i support the idea of gold as a global currency however
this goes completely against expansionary plans of
our ruling elite...the only way to support them is via fiat currency
and that means that gold will be killed.

perhaps the drop in metals and oil is only the beginning.
i hope not
but wouldn't rising gold be too obvious
and thus unlikely?



posted on Dec, 7 2008 @ 12:53 PM
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Someone had mentioned Fort Knox earlier and if the Government had ever disclosed about if Gold was really there. The Treasury has not audited the actual bars of gold in Fort Knox since the Eisenhower administration.


Here is what happened when someone asked the U.S. Treasury Department about an audit on the Gold at Fort Knox...pretty damn interesting.This happened in 2000.
www.mail-archive.com/ctrl@listserv.aol.com/msg36492.html

[edit on 12/7/2008 by CaptGizmo]

[edit on 12/7/2008 by CaptGizmo]

[edit on 12/7/2008 by CaptGizmo]



posted on Dec, 7 2008 @ 01:43 PM
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reply to post by Anonymous ATS
 


It's not necessary to be an 'expert' to follow a debate. Some of us are interested purely because it's just another element of the overall picture of the economic crisis, which is what the average Joe is actually following. We're interested observers listening to the arguments on both sides.


If an impending shortage does occur....all GOLD will be delivered or cash settled....albeit at a higher price (perhaps much higher) but it WILL be settled. NOONE I repeat NOONE had their money basically stolen...and it is NOT worthless pieces of paper.

If what you say is true, all well and good. You're following the official line, though, and this is a conspiracy-related discussion: we're aware of reports of a system that some say is corrupt. Therefore other commentators argue a different outcome is possible to the one you set forth. Here's an example:



Source

It seems there are a lot of people angry about the way COMEX has been operating:

meltdown2011.wordpress.com...

Nobody in here would be pleased to see anyone lose their investments. We're just interested to find out if it might happen, and if on a large scale, what the repercussions might be.



posted on Dec, 7 2008 @ 02:54 PM
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reply to post by questioningall
 


But can't you still buy gold from the US Mint? I was on their website the other day and they seem to still be selling American Eagles - a little expensive - but one would expect to pay a premium since you are buying directly from them. Just a thought.



posted on Dec, 7 2008 @ 04:11 PM
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It is not just paper gold that is the problem. They are also running a scam on 'naked shorts', meaning that the stock you buy, may not really be yours! So, get possession of the stock certs. And I recently read that Ft. Knox is not full of gold, it is full of IOUs for that gold, the Fed having 'leased' it out, and we no longer have possession. Anyways, it is a sound financial investment to buy COLLECTIBLE gold coins right now. They are selling for only a small premium over the gold price, and collecting gold coins is an upper class hobby. When the price takes off, the premium will also take off. Usually when our government confiscates gold, they make an exception for collectible gold coins. In the past, one ounce of gold could usually buy one good mens suit, no matter the price of gold. Now, seems like 14k is a lot for a tailored suit...




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