This week Thursday I listened to an interview on Alan Butlers Show Butler on Business and he interviewed Larry Edelson who is in Thailand. http://www.butleronbusiness.com/show-archives.html Butler on Business 04.25.13 http://host1.cyberears.com//19137.mp3 I first heard about Edelson in a letter from David Schectman (Miles Franklin) in March this year where he compared Larry's predictions of a gold and silver crash with that well known prediction of Jim Sinclair. If you Google Edelson - he has predicted a crash since last year. Subsequent to the fall we had last week Larry was interviewed by Alan Butler. I like Alan who tends to talk his mind but was interested in Larry who to me seemed very sure of himself as he predicted this fall and here it is. Now look out for $1000 maybe $900? Admittedly he says gold is going much higher but in the short term there is deflation (heard that before) and economies are slowing so gold will fall. Alan tried to ask about three things 1. Manipulation of the PM market - Larry's reply BS does not exist, 2. The recent fall was in the paper markets driven by Goldman and the big banks - Larry's reply BS the banks have always held short position to hedge their bullion holding customers, 3. If the price discovery is real then why the massive demand for physical in this falling market - Larry's reply - rumours he never saw a physical shortage. I cannot claim to be an expert on the first two point although I strongly believe both are true. For point three I can testify that I and several close friends geographically spread out from Vancouver to Perth to London all saw serious supply problems and huge premiums especially on Ag. Then in he middle of the interview this guy Larry Edelstein says I have an important call so I have to go. Goodbye ...... Like opinions on $900 gold in the face of what we saw this week will shortages and miners going to the wall.
Thanks VRS - so you agree $900 in the next 10 days. ??? If that happens who is going to sell me their gold ??? Anyone who will sell at $900 gold and silver ??? $15
If we see $900 in the next 14 days you can buy the paper crap for $900 but if you want gold bars or coins there is going to be a $400 premium.
if that happens pemium will be over 50%, so what's the point? these guys tends to forget that there's a cost to mine that stuff, in real life. This is not the stock market....
Indeed I do not think anyone would be selling the physical stuff at that price. Unless it stays there for long enough.
Hmm. Maybe premiums will increase from the dealers, but I think it's still possible to get PMs from the stackers who wish to offload some.
Can't think where to find a link, but I seem to remember Roger Montgomery discussing his dour view on the future iron ore price and warning that iron ore spent quite some time below the cost of production of most mines. Something to do with some governments subsidising domestic production. Probably surplus user inventories and producer stockpiles too/ Sorry to be vague, but the takeaway for me was the novel idea that a 'commodity' can spend a lot of time below the median cost of production. Relevant interview comes in at 26m if you want to skip the other crap
I think $900's wildly pessimistic tbh - but I did say over a month ago before the first smack that we'd probably see $1200 gold soon... We actually saw $1300-ish, so if that's any measure I think I did pretty well - and I got that cue from bond markets - it was screamingly obvious that a drop in commodities, particularly Ag & Au was about to happen. These are targeted by central banks purely because of their influence or ability to influence primary reserve currency strength - they don't bother with iron ore, orange juice or wheat do they lol!? Don't forget the agenda now for the commercial banks, US Fed, ECB et al is to restock phyzz at the lowest possible price, contracts settled in fiat (of course, what else - they print as much of it as they like, so given the media projection that 'well inflation actually hasn't happened despite unlimited QE') the wider public - a suggestible population not questioning the drop in metals prices couldn't really give a stuff about gold or silver - because they swallow what they're being told. The caveat to that lot of course is that millions of retail buyers esp in India & China have actually gone out & taken up the slack by buying phyzz - which I think the Bilderbergers didn't completely figure on happening... but again - they can print unlimited amounts of fiat to mitigate the debt they create. No inflation figures issued by Western governments are accurate thesedays - the true numbers are kept quiet, as you very well know. Nope, I'm sticking to my guns - that first weekend in May is when I'm expecting another smackdown - but over the long term for me it'll only be another opportunity to accumulate, so not worried at all by the short term picture. Volatility is healthy - and we'd be all wise to embrace that aspect of stacking, investing or dealing in pm's. Bon chance mes amis, VRS
I would also agree with those above that have said we will not be able to buy physical at those lows. I still only see $1251 as a very outside chance Otherwise $1628 and $5554 wtf, would seem to be A couple of significant numbers for gold. Time will tell
Give the devil his due .. http://blog.milesfranklin.com/whom-do-you-believe-larry-edelson-or-jim-sinclair "And now, here is Larry Edelson: The Next Inflation Surge: When Will It Come? Monday, March 18, 2013 at 7:30 am "Right now, I remain bearish most commodity markets. The reason being, they simply have not fulfilled a short-term cyclical test of support. So, more downside is possible in gold, silver, oil, and an assortment of other commodities. In fact, I expect we'll soon see gold break down and plunge well below the $1,500 level and head even lower silver crater through $26 and drop to below $20 and crude oil plunge to below $70. We'll see food prices also get creamed. Sugar, coffee, cocoa, corn, wheat, and soybeans. Just about every commodity under the sun is soon going to sink further. That's because we're not in the next phase of inflation yet. Rather, we're in temporary deflation. Deflation brought about largely because the only money that is moving these days is coming out of sovereign bonds and going into equities and because taxes all over the world are headed up, threatening to send the rest of the capital that's out there into hiding, rather than into business formation or investment." He also says this too shall pass and inflation will come roaring back and gold will rocket higher. The final chapter in Edelson's book will mirror Sinclair's but what about now? Where are we headed in March 2013?"
I know the above is selective quoting, I did so simply for brevity and to highlight this line. Like you, I agree that the US, and potentially other countries want to restock physical. Personally, I believe that most, if not all of the gold on the US books has been leased out, and will not be returned - and they need to find metal to repatriate to Germany etc. I have been thinking today of why "they" crashed the price of gold. I do NOT believe it is because they want to restock physical at the lowest possible price - as you correctly say above, they can print as much fiat as they like, so why the hell do they care if they have to print a few extra $100 notes to obtain what they want? It strikes me that the intention behind the price smack down was to shake out physical supply from nervous investors and ETF's so they could lay their hands on it. Considering that physical supply went almost exactly opposite of what they potentially wanted to achieve makes me wonder what their next move(s) are... there certainly were plenty of buyers, and I strongly suspect that TPTB did not expect this type of reaction from the public. In consideration of this - if there is indeed a "grand plan" they're working on, could it be that they now realise that a few more people than they expected are at least somewhat aware of what's going on?
yeah well what are you supposed to do, even if you think it might happen ? Sell your stack and wait for the price to drop further and buy back again ? What if it doesn't drop that far but only drops to $1100 - at what point will you know to buy back in ? And every time you sell and buy again you lose a percentage in premiums as well. I'm sure all the futures guys will say 'short it' but you need to know what you are doing. Not sure how futures work but options and warrants have an expiry date, so you need to keep buying new ones every month or two - those costs can add up. Not even sure if you can buy puts over the gold price. So even if I think it might fall in the next 6 months, paying for a hedge every 2 months might cost more than I gain.
^^^ This Yes, you can buy puts over gold and silver. It will cost more if price is stagnent. If price moves, you will laugh all the way to the bullion dealer.
I realise there is no easy answer and any sudden move is almost certainly the wrong one. Sit tight and wait. For me, I dont get into the paper market. These events are not something that keeps me up at night, as I have bought the dips and will continue to do so if funds are available. Some of my PM were bought at much higher prices some at much lower and I dont really care at this point in time. As long as the funds are mine, not borrowed or leveraged and you do not need them urgently within 12-18 months, there is no problem. Wait them out, time is on our side. My expectation is that central banks, and governments as well as the average indebted Joe six-pack will be up to their eyeballs in the proverbial stuff long before I need to sell. They can manipulate up or down - I sit and watch with interest not fear. They are the ones who need to be fearful and as we all know this will be a very bad ending, not a happy one. You cannot manipulate and distort markets to this degree without recourse. I dont know if gold will drop to $1200 or $900 or reach $2000 this year, the honest answer is no one knows and it may achieve all those values.
Some people tend to forget miners are hedged? I don't see why you wouldn't still be able to buy from the Perth Mint at spot + $100 for a 1oz coin or an 1kg bar close to $29K( that is until of course they sell out and then need to catch up on orders)
Whether the miners are hedged or not they don't have to sell product. I don't know if you have checked the PM website recently but there are no 100 oz, 1kg or 10 oz Ag bars for sale. What do you think will happen if the silver price dips below $20. The miners will hang on and you will be hard pressed to find any metal. Gold will be no different if it fell to $900.
What I'm trying to understand is if its possible for miners to cease their mining activities. Cos in my head, wouldn't it be more unprofitable if they stopped mining operations entirely? Maybe some cost-cutting measures but the show must go on?
