Gold to drop to $1000 or Maybe $900

[Ronnie 666]

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?

Yes they will produce some product but they will cut production to a minimum and it will not take long for that to disappear with increased demand. Look at Pt mining in South Africa since Pt prices have fallen and mines are less profitable. Production down 400,000 oz.

 

[aleks]

Whether the miners are hedged or not they don't have to sell product.

Well if they are hedged then yes they do, if they aren't no they don't.

Please enlighten me...

 

[VRS]

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?

Maybe that's why Eric Sprott's buying goldies in Mali where cost of production's $250/Oz as opposed to the Aussie average of $1150-1200/Oz

 

[Ronnie 666]

Whether the miners are hedged or not they don't have to sell product.

Well if they are hedged then yes they do, if they aren't no they don't.

Please enlighten me...

The miners like any other organisation can take a short position in the market. That can protect their business as an insurance policy and has no baring on production.

 

[Ronnie 666]

By the way if you want to talk to someone who knows Edelson well and has had several discussions with him join our Webinar on June 8. There are still places available. Just send me a PM with your email and I will forward you the registration link.

http://forums.silverstackers.com/to...-june-2013-register-this-saturday-page-1.html

 

[TheEnd]

4th-7th May Ronnie.

Mark it in your diary.

VRS - please state your reasons for this prediction....why is it so?

 

[bubbleboy]

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.

I agree, there will be two gold markets, the physical gold only market with prices continuing up above $1500 and the 'paper only' gold market with prices continuing down below $900.

The following Zerohedge article starts to get the point of two markets but then assumes they will re-join again, I believe it will not be possible to re-join paper and physical because the market will revalue physical gold only leaving the newly separate paper market to be cashed out into oblivion.

"Previously, there was little difference between the physical and paper markets for gold. Yes, there were premiums and delivery charges, but everybody regarded the futures market as the base quote. I believe this is changing; people don't trust the paper market as they used to."
http://www.zerohedge.com/news/2013-04-23/guest-post-physical-gold-vs-paper-gold-ultimate-disconnect

 

[VRS]

4th-7th May Ronnie.

Mark it in your diary.

VRS - please state your reasons for this prediction....why is it so?

It isn't a prediction - it's just what I think is going to happen - like I thought pm prices would fall sharply prior to mid-April.

Bond markets are on the verge of imploding - moreso than they ever were in 2007-8 - and who wants US or JPN 10yr notes anyway? Umm... not me...

The only way to shore-up the US$ is to try to marginalise precious metals... which is why imho the hatchet job done recently is only half over...

 

[Ronnie 666]

4th-7th May Ronnie.

Mark it in your diary.

VRS - please state your reasons for this prediction....why is it so?

It isn't a prediction - it's just what I think is going to happen - like I thought pm prices would fall sharply prior to mid-April.

Bond markets are on the verge of imploding - moreso than they ever were in 2007-8 - and who wants US or JPN 10yr notes anyway? Umm... not me...

The only way to shore-up the US$ is to try to marginalise precious metals... which is why imho the hatchet job done recently is only half over...

I agree with VRS that many people are predicting a double bottom and over the next 7-10 days we may see that bottom. If this happens and I agree with VRS it is likely, then it will be very short lived. Then by June - July prices will be up significantly. What concerns me is that if (or when) this double bottom happens will you be able to buy metal ????? I am not sure - but I will try !!?

 

[Holdfast]

Technical analysis vs the crystal ball.

Buy now or buy later doesn't really matter for the Long-term, but...imo, you won't be able to buy the particular bar or coin of your choice if you leave your run too late.

Just for interest sake - another Tech chart. (An old update 21 April 2013 but...good to see how things turned out)

There's some interesting arguments for higher and lower prices if you click on the link.
http://aheadoftheherd.com/2013Articles/Other/GOLD-SILVER- Update-21th-april-2013.html

http://gallery.mailchimp.com/782363159fbc9257a5256cdde/images/Gold_daily_190413.jpg

 

[VRS]

Buy now or buy later doesn't really matter for the Long-term

Spot-on - like I said, volatility is our friend, if you have the right mindset and don't panic - use such opps to average out your costs

 

[VRS]

Franklin Sanders on why he shares my sentiment, I think:

http://silver-and-gold-prices.goldprice.org/2013/04/one-more-plunge-in-gold-prices-just-to.html

 

[Court Jester]

4th-7th May Ronnie.

Mark it in your diary.

VRS - please state your reasons for this prediction....why is it so?

It isn't a prediction - it's just what I think is going to happen -.

By any definition of the word that IS a prediction

 

[Makro]

I don't care what happens! I pulled the trigger. If it goes up, ill buy more. If it goes down, ill buy more, if it goes side ways, Ill buy more,
there seams to be a bit of wondering minds( im being nice about the whiners). SERIOUSLY its gold and silver..uhh duh!

 

[VRS]

VRS - please state your reasons for this prediction....why is it so?

It isn't a prediction - it's just what I think is going to happen -.

By any definition of the word that IS a prediction

If you don't see what I see in bond markets, commodities (notably gold & oil)... I wouldn't presume to post 'predictions' here. Suffice to say I flagged the problem first time in early April... and you know what happened second week of last month... It's probably not going to happen. I hope I'm wrong. Actually I don't mind - either way I'll turn a profit - and as a long term holder of pm's short term volatility's no worry at all.

 

[Pirocco]

Whether the miners are hedged or not they don't have to sell product.

Well if they are hedged then yes they do, if they aren't no they don't.

Please enlighten me...

The miners like any other organisation can take a short position in the market. That can protect their business as an insurance policy and has no baring on production.

But a short position in a market undoes profits made in it.
So are you saying that miners like to see profits go?
A short position is not an insurance where a small fee is paid based on a big amount other payers that eventually gonna pay your bill.
All a short position is, is lowering possible losses, at the expense of lowering possible gains, at a way lower ratio than an insurance.
If a miner has 50000 ounces silver, and he 'insures' them all with 10 short positions, then his business delivers no profit at all, and gets killed on business costs.
But you claim short positions have no baring on production?

 

[Pirocco]

I don't care what happens! I pulled the trigger. If it goes up, ill buy more. If it goes down, ill buy more, if it goes side ways, Ill buy more,
there seams to be a bit of wondering minds( im being nice about the whiners). SERIOUSLY its gold and silver..uhh duh!

You just blew up that technical analysis.
Technical analysis, it only works when people believe it will, haha.
And the smarter ones do the opposite, and cause the trend reversals from which they will later on 'reconstruct' the new technical analysis, haha.

 

[Ronnie 666]

Well if they are hedged then yes they do, if they aren't no they don't.

Please enlighten me...

The miners like any other organisation can take a short position in the market. That can protect their business as an insurance policy and has no baring on production.

But a short position in a market undoes profits made in it.
So are you saying that miners like to see profits go?
A short position is not an insurance where a small fee is paid based on a big amount other payers that eventually gonna pay your bill.
All a short position is, is lowering possible losses, at the expense of lowering possible gains, at a way lower ratio than an insurance.
If a miner has 50000 ounces silver, and he 'insures' them all with 10 short positions, then his business delivers no profit at all, and gets killed on business costs.
But you claim short positions have no baring on production?

Why do you think the share prices are in the toilet. If these guys were simply in the production business they would be out of business. As they hedge with shorts they protect their losses but they destroy their profits and become zombies. They keep going by borrowing cheap cash and cutting costs like R & D. Easy all about short term !!
There is also the issue of leverage so they can spend 10% to cover 100%. When the trade reverses they die.
That is why you don't buy mining shares. As Andy Hoffman puts it "play in their game and you will be killed".

 

[wrcmad]

Well if they are hedged then yes they do, if they aren't no they don't.

Please enlighten me...

The miners like any other organisation can take a short position in the market. That can protect their business as an insurance policy and has no baring on production.

But a short position in a market undoes profits made in it.
So are you saying that miners like to see profits go?
.....
If a miner has 50000 ounces silver, and he 'insures' them all with 10 short positions, then his business delivers no profit at all, and gets killed on business costs.
But you claim short positions have no baring on production?

Not true.
This may be the case if demand was always steady and consistent, but market fluctuations in demand/supply ensure this is not the case.
Short positions do not undo profits made in that market - it is simply forward selling the oz's that would otherwise be sold into that market at a later time. Either way, the oz's will be sold into that market.
If not, then the contract has to be bought back - balancing each other.
I have seen forward selling using shorts deliver much more profit than would otherwise have been made had the physical been sold at spot at a later date.
I agree (actually, I know), commodity producing companies, this short position insurance policy has no baring on production.

 

[bordsilver]

Not true.
This may be the case if demand was always steady and consistent, but market fluctuations in demand/supply ensure this is not the case.
Short positions do not undo profits made in that market - it is simply forward selling the oz's that would otherwise be sold into that market at a later time. Either way, the oz's will be sold into that market.
If not, then the contract has to be bought back - balancing each other.
I have seen forward selling using shorts deliver much more profit than would otherwise have been made had the physical been sold at spot at a later date.
I agree (actually, I know), commodity producing companies, this short position insurance policy has no baring on production.

Grain traders are good examples of people using the futures market to smooth the natural price volatility that happens due to harvests happening in sync. Requires storage capacity though, so not costless.