Hi everyone, I'm new here and I would like to share what I found, hmmm I don't know if agree with this but what do you guys think? https://www.marketslant.com/article/who-really-controls-gold-prices-answer-quite-surprise
Definitely interesting. Welcome to the forum. I think he starts out quite reasonable and rational. Using fundamental analytics to make his case.... ....then he wraps up (quite quickly) with the assertion that the US global oil industry is going to collapse and break the link with the gold price. But he doesn't really back that up. It's almost like he had a bit of a psychotic break 3/4 of the way thru writing the article. LOL
A few cautionary comments: First, the miners will adjust their minimum metal content for ore to be refined based on the current metal price to maintain a certain level of profitability. As the price of metal goes up, they will refine lower metal content ore to extend the life of the mine. As the metal price goes down, they high-grade, wasting lower content ore, depleting the mine faster, but staying slightly profitable. Thus, the relationship between cost and price is in part by design. Second, a temporal correlation does not establish a causal link (i.e. the smell of fish does not CAUSE flies). Lots of graphs look like the price of oil and the cost of gold for that period of time. To start, try the money supply (M2), the federal debt, the price of a house in Florida, the price of a gallon of milk, the population of pythons in the Florida Everglades, etc.,,,,, The suggested correlation also seems to have fallen apart during the 2008-2009 period, but you need a graph of gold by itself to see it as it is obliterated in the graph in the article. Ok, mining is energy intensive, but kindly note the first point, that mining costs are also within the control of the miners by determining the minimum metal content of ore they will process. I will add that Mr. Rocco's articles appear regularly on Silver Doctor's website, and he is on my list of "Total Waste of Time, Don't Bother Reading" authors, as are most, but not all of them there.
Gold and silver are a metals which miners dig out of the ground, it is not require special knowledge to "make" like an iPhone. Price moves up when it is in demand and it goes down when when in we have excess supply No one controls the price of either metal and if someone or an entity did, it have been a total failure. To control something one must have control of supply... silver is a byproduct so it's not dependant on silver demand but for gold when prices go up new mines are built and old mothballed mines reopen, that is not the way to control prices. To control prices you have to limit supply. Ie shut them down, do you read about many gold mines shutting down, currently? Just consider de beers and OPEC, with lose of "control" of supply, as hard as they try they no lol ne'er can control the prices.
You might want to spend some time investigating such things as the COMEX, naked shorting, fractional banking (which the LBM does with gold and silver), re-hypothecation, etc. And until you understand much more than you do now, I seriously suggest you do NOT trade PM futures.
I suggest you don't, if you think someone control prices lol? All these you mentioned are financial instruments designed to make money on transactions. In no instance does any of them control the price.
I live in Thailand and my wife has accounts trading totally un-hedged gold futures contracts with 20 to 1 leverage. That means that being on the wrong side of a 5% move loses the whole bet. We have been doing it for about four and a half years now, starting after gold fell from its peak and started a clear pattern of dynamic manipulation on the COMEX. I might add that gold futures is the ONLY thing we have traded during that time. Silver futures would be better now, but they are no longer available here due to lack of interest/volume. (Prior to that, demand was satiated with lots of synthetic supply, shorts supplied by a small number of banks/investment houses, but it was static, just ever increasing shorts. That was not suitable for trading.) Current account balance is 5 times what we started with, but adding back in what has been withdrawn to buy physical, her new SUV last year, and a couple pieces of real estate, it would be 16 times. If we had not withdrawn money and scaled up the trading instead, it would be even more. We trade almost entirely based on the manipulation of the price by less than 8 institutional traders who are always short in varying amounts. Other minor factors affecting trade timing are Fed meetings, contract and options expiry, holidays in China (a thin stack is easier to whack), etc. I studied economics at Sloan when Ben Bernanke was there working on his PhD., and been at this a long time. The Hunt Brothers manipulated the price, and now others are doing it on even a grander scale, but down instead of up. You are correct that it will eventually fail, but for now, trading it is profitable, and fun! That said, the pattern has been changing some the past 6 months, and the behavior of gold and silver are diverging, but it is still trade-able. How about you?
How do you have a totally unhedged gold position, the gold you have a position on are hedged multiple times I look at Gold as a hedge ie a passive position, all unallocated and it is hedged ie insurance, I dont see a need to hold physical gold. But I do have few ounces of gold bars but that is just as a display in my office. You talk about shorting and manipulations, does your calculations look into hedged gold? Every Single ounce of gold that are to be sold is hedged (by virtue multiple times) Miners - Hedges Gold Transporters - Hedge Gold Refiners - Hedges Gold Jewelers - Hedge Gold Mints - Hedges gold Industrial users - Hedge gold Dealers - Hedge Gold Traders - Hedge Gold Investors - Hedge Gold Insurers - Hedge Gold Only collectors that dont.
It is not exactly clear to me what your comments mean. Part of that might be the fact that English is clearly not your native language, and part might be our very different perspectives on things. The trading we do is directional, not hedged. Further, the local exchange only trades derivatives, delivery of physical is not an option. It is an example of instruments supplying demand for "exposure" to gold without requiring any metal. It is FAKE SUPPLY, and as such reduces prices. OVER 95% of gold traded on the COMEX and LBM is FAKE SUPPLY. Hedging a gold position is a totally different subject than using exposure to gold as a hedge against other things, and that is part of why I don't understand the point you are trying to make. A short gold futures position can only truly be hedged by an offsetting long position of different maturity (spreading), or holding the physical or some other contract for physical. Neither has the profit potential, leverage, or the huge risk, of trading naked futures. Many refer to gold as a hedge against FX positions, etc., but as such, it is only a hedge based on observations of past price correlations that have no assurance of being observed in the future, so they are not true hedges. And some refer to exposure to PM as a hedge against other things, like the stock market tanking. 2008 was a liquidity crisis, and EVERYTHING except cash and near cash (T-bills for example) went down, including PM, as people scrambled to make margin calls. I expect the next crash to be of the same type. So much for "diversification" providing safety. So, care to explain your comments better???
No matter how many times you repeat the "I studied economics when Bernake was doing his thing", or the "trading stories plus free SUV", it doesn't make your assumption regarding 8 traders and dynamic manipulation any closer to the truth.
And what other explanation is there for the trading to be so consistently profitable? I will not go into detail, but I assure you that my life has not seen an abundance of "good luck"? Likewise, the fact that you have not figured it out does not mean that it is not true.
Because market price patterns are so consistently repeatable. The fact that you have not realised this does not mean that it is manipulation.
Just speaking from my own observations from what I read online, mostly via the BS PM pumper sites whose pundits are wrong 90%+ of the time (I read those sites like I'd read a supermarket tabloid). From what I've seen there is no correlation between Comex COT positions and current prices. I have followed the price vs. COT positions for over the past 2 years since the huckster pundits always mention when commercial positions (short) are large price drops. I figured it would be a good sign of dropping prices when commercial COT is high and could wait to buy in based on such data. What I have seen seems to show more of the opposite if anything (prices moving in direction of large specs' position). But in reality no correlation either way. You can also look at a chart that overlays gold's price and COT positions (I can't find one at this moment). Price did not correlate with COT positions on the chart when I saw one in the past which matched what I was seeing. Wonder what the gold COT showed in 2011 at gold's peak?
Leading up to the peak, the commercials were simply accumulating shorts and managed money longs. It was a Mexican standoff. The game I have played started shortly after the peak. Find a chart showing net COT positions of the commercials and managed money with the price superimposed for the last 5 years. Peak prices are when commercials are peak short and managed money is peak long. Price minimums are when commercials are peak long and managed money is peak short. Also, kindly note that "peak long" for commercials is still usually net short, just less short than normal. If you can't find it, or construct it using one of the many chart services available, send me an e-mail at [email protected] and I will send it to you. I am editing to add that the correlation is not with price. The correlation is with the next change in direction of price.
Interesting article, interesting point! But the end looks a bit naive. Suppose oil crashes (depletes or alternative energy sources replace it... whatsoever), then I'm not so sure that gold will be able to keep a "decent level". After the author explains how oil actually helps gold "float" above production costs (because oil is so much needed in the production of gold), he should put himself the question whether the price crash of oil or its overall (industrial demise) will leave gold with the same strength. It is highly likely that gold is being kept in place by the "pillar" of energy sources holding it above. Pull that out and production costs could go lower. If anyone finds cheaper ways to extract it (e.g.: with the use of cheaper energy), then production costs will most likely go down.
Quote from the OP link: Unfortunately, today the gold price is being based on the energy in oil. However, when the oil industry collapses, there is nothing to replace it. Thus, the value of most paper assets will plummet. Gold and silver will become stores of economic energy because the world was brainwashed into believing Paper Assets will always retain their value…. not so. https://www.marketslant.com/article/who-really-controls-gold-prices-answer-quite-surprise
For the record, we shorted a small amount Thu. AM at $1242 and covered it 8 hours later at about $1230, increasing the total account value by 3%, not a big deal, but fun. I was getting tired of just watching. Other than that momentary lapse, we stopped shorting 6 months ago and I do not recommend it to anybody now. More importantly, we resumed half our normal long position in gold last night (morning hours in NY COMEX trading) and a good friend bought her first long silver contract on the SFE during afternoon NY trading as well. You might recall that I live in Thailand and we can't trade silver on the local futures exchange. Looking at the price action before and after that, until market close, and much more importantly, the CFTC-COT report that I have with coffee every Saturday morning (Thailand time), I feel reasonably content The plan, both for my wife and friend in China, will be to double those positions as soon as it is clear that the price has turned. We wanted to get half the desired position before the turn as a matter of strategy, as the bounce when it does turn might be hard. Who knows, maybe even the "big one"?????
Your timing is curious. I decided just this afternoon to sell our longs on the expectation of a drop when the jobs report is released. Sold about a third of them, try again when the evening market opens in another half-hour. If it drops significantly, $15 or more, will buy again. Probably have more to comment after seeing the latest CFTC-COT n the morning (Thai time).
