Discussion in 'Silver' started by CLZ, Aug 6, 2013.
Is it ever going to end ?
Because the paper/electronic/unallocated position sits on a > decade low, their part in the gold price has thus vanished, the gold price sits thus on a multiyear low, and the allocated/delivered buyers just continue, at abit higher rates due to the lower price.
So at the moment there is a record low amount paper/electronic/unallocated gold in, yes the whole market.
The Comex futures (and also indirectly in case ETFs that work throughout futures positions) are the only unallocated gold derivatives.
They can't 'convert to gold' shares/positions that they don't have.
Hell, they never wanted to do that when they did have those papers, as proved by the lower price since they dumped the paper, if they really had 'converted paper to gold' then the price wouldn't have changed at all.
In order to make the price rise, it needs more (expressed in ounces ofcourse) new/returning people to buy gold, in any way. It doesn't matter whether that way is futures positions, ETF shares, remote allocated or delivered gold.
That is, not 'converting paper silver', but swapping fiatcurrency or whatever else products to gold, better known as 'buying gold'.
We start to be pretty close to phase 4 at the moment.
02-Aug-13 -0.06000 -0.05167 -0.01833 0.05833 0.18333
05-Aug-13 -0.07167 -0.05667 -0.04000 0.05000 0.17000
06-Aug-13 -0.08833 -0.08000 -0.06333 0.02000 0.15667
07-Aug-13 -0.11000 -0.09667 -0.08500 0.00167 0.13833
As said in the post you quoted: those that dumped their futures positions / ETF shares / whatever unallocated metal, didn't buy allocated / delivered metal with the proceeds of their positions. Otherwise the price wouldnt have dropped at all. Instead of 'converting paper' to gold/silver, they converted it back to fiatcurrency or whatever else out there. Not gold/silver.
Aside of that, its not like that the price was sold down by paper alone. A month ago I bought silver that dealer bought back from customers when spot was sub $20. In the months after the feb 2013 price drop I saw nearly no silver for sale on auction sites. Well, since a couple weeks seems to have changed. Most still want way too high (relative to spot then, probably not relative to their purchasing price) prices for it. And I see enough reduced prices at dealers, for coins with older dates. What does this say: that at spot $20, delivered gold owners ALSO sell.
That's why I keep monitoring the futures position even at a staying / stable price. Because that's the trick that the money for nothing club along (speculators) and reflected by (hedgers) the futures market use: they try to insert as many positions they can without driving the price up and inflicting them thus a higher price. Instead, they wait for people to sell, and everytime people do, they take the corresponding amount positions, thus preventing the price from having dropped. So we see a stable price, may assume hura people stopped selling, but in reality, they DID sell, and the money for nothing club, ie the temporary buyers, replaced them. And this is also smarter on the longer term, this way a price appears to 'hold' some level, a 'resistence line', while in reality it was already breached. People then think next time that that price level will hold, and shoot their ammo prematurely, rendering them unable to buy in the lower price level and the money for nothing club having little competition so that they can insert more positions in a price dollar.
But you should all know this, you said yourself that you played the futures market, so why jesting not?
Silver tarnishes gold never corrodes
Take only a neophyte to make silver wheras gold is the final stage of the evolution of metal ask the alchemist gaia
That RBI quote is about the traded volume ratio between the the markets, not about the fractional reserve ratio or the leverage ratio (and note fractional reserve ratio does not mean leverage ratio). It is not saying there are 90 paper claims on each ounce.
See http://goldchat.blogspot.com.au/2011/07/turnover-and-fractional-memes.html or http://goldchat.blogspot.com.au/2009/01/london-bullion-clearing.html or http://goldchat.blogspot.com/2010/04/london-unallocated-fractional-fubar-or.html
TELL ME WHY 8)
lol :lol: :lol: :lol:
From your blog.
Many banks use factor loadings of 5 to 10 for their gold and silver, meaning that they will loan or sell 5 to 10 times as much metal as they have either purchased or committed to buy
Adrian Douglas has estimated that there is a 40 (or as high as 100) to one ratio of paper to physical gold. This is the crux of the matter. If and when a physical gold run occurs we could see gold jump to 40x the current price in a few days. For this reason, every prudent value investor should invest in some physical gold and avoid all paper gold derivatives like the plague. The same is true of silver, but according to analysts such as Eric Sprott and the National Inflation Association, the paper to physical silver ratio is much higher than it is for gold.
What ever the real ratio is, if enough (maybe 2-3 % of) investors change from paper to physical, there is not enough physical to all investors, and seems that China, Russia and India understand this.
Bron, am I roughly right or wrong?
Adrian Douglas' work doesn't have much credibility with me. I think the fractional ratio is more likely around 10% and Comex currently has 17% cover so we need a significant increase in people switching from belief in paper and banks before we have a real run and stress on the system.
Jim Sinclair has called for Comex to go cash by mid-October and many others on KWN are saying it is unravelling, so unless this gold bank run inivolves retirees shuffling their way to the bullion banks for their gold, we should have a blow up by Oct. I don't think that will happen.
I will be in Sydney mid-Oct for the Gold Symposium and then on to Melbourne for the coin show, so perfect timing to bail me up and tell me how wrong I am as all the banks will have blown up by then
And if we go back to subject this means that Ryan is right about this (I increased enough word):
This is an important point: the silver market does not need any new "investors" for the price to go higher- it simply requires enough people holding paper silver (which is plentiful) to try to convert it into physical (which is scarce)
Hmmm, but is about every tenth changing paper to physical significant in the world where GLD and COMEX are drowning and GOFO still negative for over month? Well, lets see how this plays out...
Aside remark: the Comex depositories hold metal that is owned by anyone that wishes to store it there. It doesn't have to be related to futures positions or any specific 'kind' of person / company.
The only correlation I found so far, was a very long term, over a decade, being that during the years that silvers price rose from $5 > $20 (ignoring ups and downs $50 $30 here), the total silver in the Comex depositories very roughly followed that pattern. Which is expectable, in the end, if more silver is bought for speculation reasons, then more people want to hold their silver close to the market, as to be able to easily sell it. So that '17% cover' is actually just a blind guess, a total nothingsayer.
Take for ex the lowest net total Comex silver position we saw recently, a mere 4000 contracts of 5000 ounces which is just 20 Moz silver. The Comex depositories now hold now 164 Moz. In other words: on that moment, the owners of the silver stored in the Comex, IF they would be willing to sell it, could deliver 8 times the amount that the futures positions represent and 'could' (very rarely happens, a couple %) end in a physical delivery of 1000 ouncers.
So how on Earth can you guess any 'fractional ratio'? There just isn't one. In recent year, the net total Comex position roughly speaking varied from 10K to 60K (50 Moz to 300 Moz). I saw the Comex depositories fluctuating between 110 and 165 Moz. So there just isn't any fractional reserve alike for banking (required reserves).
All those fractional reserve stories for silver, are just scams to make people believe that there is some permanently pending shortage, that's my opinion about it. Feel free to tell me any story that suggests there is.
Analysts such as Eric Sprott and the National Inflation Association, the paper to physical silver ratio is much higher than it is for gold.
And all those analyst share the same common characteristic: they make they daily money along selling gold/silver, at any price and the higher the better. For them. Not for us.
If I look at the figures, then all the 'papers' are backed by allocated / delivered silver, with the exception of futures contracts, for the reasons I explained earlier.
In a comparison between gold and silver:
- the gold futures position typically moves 100K (10% of an annual supply) on the months/year term and 250K (20% of an annual supply) on the multiyears term.
- the silver futures position typically moves 30K (15% of an annual supply) on the months/year term and 60K (30% of an annual supply) on the multiyears term.
So it's not like that silvers paper to physical ratio is much higher than golds.
And just some weeks ago, the amount paper was just a fraction of the amount physical. For ex, the Comex silver position hit 4000, which is 2% of an annual supply. Paper unbacked? Lol.
So, those 'eternal' stories about permanent high paper / physical ratios, are just scams to suggest that price will explode 'once the alleged paper scheme collapses', and make you a rich man thanks to the good 'ol silver dealers. Come on, it's ridiculous, for aswell gold as silver. All they analyze, is their vested interest.
So what? The ratio may not have a thing in the world to do with the value of the two metals. My shoes is still just as valuable to me if there are a billion of them or if there are a million, see what im saying.
Excellent point! But would they really tell us if they were ?
Besides I've never seen their stacks of gold ... have you ?
I come in peace, Stacker Trew.
It do matter if people start to be interested only physical form of PM, because there is only 1/3 of silver around compared to gold in the form of bullion/coins. So that means that there is not going to be enough shoes for everyone.
1:3 = is the physical ratio of gold and silver coins/bullion (more gold than silver)
Separate names with a comma.