Good read: http://www.zerohedge.com/news/2017-03-29/what-sets-gold-price--it-paper-market-or-physical-market and
I quite like looking at this website for the differential between the physical and paper gold and silver markets. http://didthesystemcollapse.com/
Isn't paper gold just like any like paper trade in wheat, sugar, oil, canola, steel, rice, corn, gas or cabbage. Just like a farmer selling wheat they haven't even planted into the futures market, a trader who has no intention of taking delivery buying grain not yet planted and inbetween that time, a farmer or trader hedging or on selling risk for reward. Wouldn't want to be QLD sugar farmers who have forward sold sugar when prices was good to be delivered soon after the cyclone that have lost their crop especially if they haven't hedged. But how lucky are those that haven't sold who are not effected in upper north QLD and in Brazil who will be harvesting soon in areas above cairns.
I find Zhou flip flopping or import and export control very disingenuous because china is the largest exporter of finished gold jewellery in the world. Also doesnt the official mint and the big dealers in china sell gold pandas openly into the international market or are all pandas in dealers around the world like apmex Traders in smuggled goods?
And yet, even though this is true regarding paper metal contracts, most who buy the metals gladly accept these paper derived prices. .
It seems to me that it's always better to go with physical instead of paper. If you've got the physical, you absolutely know what your value is because it's in-hand.
Not always better to go with physical - can be very illiquid at times. Value is always the paper price (spot-derived), and have seen some phys below-spot recently, so not always true that that you know the value of phys in hand.
"The Chinese gold market is still a closed gold market with market frictions and distortions. Gold can be imported into China but cannot in general be exported out of China. There is therefore no freedom of movement of gold out of China. Gold imports into China are strictly controlled via import licenses and these licenses are only issued to a small number of Chinese and foreign banks." I see a lot of conflicting information about this, and blame a lot of it on a guy named Koos Jansen. The SGE is in a international free trade zone, so gold traded there has NOT entered China officially. If you look at the website of the SGE, which is available in English, it describes itself as an "International Exchange". Obviously, it is not an international exchange if foreigners can only sell. In fact, I believe the Russians, Saudis and Iranians are all selling oil to China in offshore RMB and redeeming some of that money for gold on the SGE. Yes, it is my understanding that CHINESE PRODUCED GOLD can not be exported in bullion form, but as noted in other comments, gold does get exported in retail forms such as jewelry and coins.
True, but if the price doubles, the value of your stack only doubles. Many people are attached to their stacks and won't sell them, so the price doubling does not get them much benefit other than a mild "good feeling". My wife and I stack and play the paper futures. The futures give us 20 to 1 leverage, so if the price doubles, we get back 20 times the investment. Further, the profit made during the ramp-up is also available to reinvest in more contracts, so the total gain can be much more than 20 fold. For example, after the price moves up 5%, the amount invested has generated an equal increase in spare equity, and the number of contracts can be doubled. Then, the increase when the price has doubled is 40 fold, etc. The sword cuts on both sides of the blade, so this is not a game for those that don't think they have a firm grasp on what moves the market, and should also only be played with money you can afford to lose. However, paper is to be traded, not stacked and worshiped, so it gets converted to money that the wife can use for stacking, a new SUV, more real estate, or take care of me -).
"Manipulation..... If you want to continually subscribe to this idea then get out of precious metals. Only a fool would play a game that is completely rigged. As you still are in the game, I would say that you are not completely convinced of the manipulation ... " Sorry, but I strongly disagree!!!!! I trade gold specifically BECAUSE it is manipulated!!!!!! And for the last 4 plus years, it has been the ONLY thing I trade. If you understand the who and how of the manipulation, and the government publishes a report every Friday afternoon telling you exactly what the bad boys have been doing in the past week, then it is a hell of a lot EASIER than trading an honest market. I have no sympathy, however, for those that stay in the game, do not understand the manipulation, and then blame their loses on it. If you can't run with the big dogs in the pack, stay on the front porch. They say that a fool and his money are soon parted. I like Jay Leno's comment better: "I have never understood how a fool and their money ever came together in the first place."
"They disregard the fact that the gold price is anchored to contracts by arbitrage, but also disregard the other side of the "fantasy theory", where it may be long contracts that are creating a huge synthetic artificial gold demand which acts to pump and support the gold price." The London market is very opaque. However, I refer you to the CFTC dis-aggregated long form COT report released yesterday. 8 "traders", and they are all big banks or investment firms, own 49.1% of the ENTIRE short silver volume of the COMEX. The entire rest of the world owns the other 50.9%!!!!!!!! 4 "traders" own 35.8%. In gold, 8 "traders" own 41.7% of the entire short volume. 4 "traders" own 27.7%. Further, the largest part of this is JUST TWO BANKS, JPM and Scotia Bank, very little of it is in JPM's client accounts, and I don't believe that Scotia Bank has any client accounts. So, I have to suggest that the net long positions held by 99% of the traders in aggregate on the COMEX represent a more real demand than the HUGE net short positions held by a few large banks represent real supply. Literally, two traders could decide to cover their short positions, and we would be looking at an entirely new world.
Yes, except that if 40 - 50% of the entire short side of any of those markets were held by 8 traders, as is the case in the PMs, the authorities would be all over them like stink on shit. Another example: CFTC has a limit of 1500 silver contracts for delivery to any one trader in a month. JPM took delivery of almost twice that last month, and we don't hear a peep about it. Hmmm. Why do you think that is????
Thanks Paul. Your posts are really enlightening and I like them (and agree with them). Could you post the link to JPM taking physical delivery as I'd be interested to read it. Cheers!!
What you want is the CME Daily Delivery Report, specifically the Issuers and Stoppers Summary, for example: http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsReport.pdf I do not compile a running log of them. I subscribe to Ed Steer's daily in which he gives some MTD stats, usually on JPM.
Paper are traded on the exchanges, if your volume is big, you can try forward contracts Physical usually traded with the bullion dealers, if your volume is big, you can transact with people like Perth Mint, or go to the miners to buy them. As for the prices, you need to test them out eg 1oz gold price you can get them 20 ozs prices you can get them 500 ozs what is the price you can get them 1000 ozs what price you can get them 100,000 ozs what are the prices you can get them, what is the waiting time 1,000,000 ozs wow... not sure how many people are going for that one, the value can be as usual for the investment world who managed billions and billions. well demand is demand, and there is a price to pay to get their gold. warehouse like 400 tonnes is consider big eg for paper contracts, very soon you hit the volume limit for an individual
I call total BS. I'd like to know where you garnered this false info .... links? If the links are to some permabull article written by the likes of seekingbrains or zero truth, then I refer you back to the total BS reference. I would guess you have wildly mis-interpreted the COT report and it's definition of "trader". I would also suggest you have little knowledge of the workings of COMEX. My final assumption is that my request for links will be met with ..... {crickets}.
http://www.cftc.gov/dea/futures/other_lf.htm will get you the current one, which is where the numbers I quoted came from. If you want to look at archived historical reports, start by Googling the CFTC website and take it from there. Our family has 7 dogs, all temple throw-aways. Six of them could Google this report and read it (maybe not interpret it as I do), as it comes from a US Government agency, is published every Friday, and is well known by nearly anybody and everybody, even casual observers of the PM markets. The seventh dog is dumber than a rock. I have an adequate understanding of it, and how it represents the mechanics of the PM market manipulation, to have traded totally un-hedged gold futures (20 to 1 leverage) on the Thai futures exchange very profitably for the last 5 years. Until recently, we shorted as often as we went long. The current account balance (in my Thai wife's name) is 5 times what we started with about four and a half years ago, and that is after several withdrawals to buy more physical to stack, a new SUV, and several parcels of real estate. Had that money not been withdrawn, the current balance would be some 16 times the initial capital. While I do read widely, our futures trading is based almost exclusively on my personal analysis of the CFTC reports, with some consideration given to the events calendar such as FED meetings, contract/options expiry, etc. How have your investments been doing lately?? .......crickets??? Yes, I hear them.
Yeah, anyone can find the COT reports.... but that's not what I was asking for. Just as I suggested.... a gross misinterpretation of the term "trader". Maybe unconscious confirmation bias of the manipulation theory? I'm sure at least one of your dogs would interpret the report as you do. As for the request on info or links confirming statements such as: "8 "traders", all big investment firms, OWN 49% of the ENTIRE short silver volume of COMEX".... the crickets are still chirping. My investments have been doing quite well lately.
