Congress & South Africa
Those are subjective. If the POG doesn't decline any further, can we as statisticians then suggest that I going long had an effect on the POG? Does the sum of the parts create a whole, or does the belief in the parts cause the whole to respond. This is the problem with conspiracies: "They have no basis in analysis"
To suggest that Goldman is long, could be a fallacy to suck in the XAU stocks higher, or it could be that they are very bullish. But consider the first. If I were a conspirator type of person, and I wanted to milk the investor of millions. Would I not recommend the Gold stocks, after I accumalated them myself? Imagine investing say 124 Million in ABX/PDG/NEM/HM. Then your recommendations hits the street. Others then buy the same equities. Next you add support to the XAU buy causing a slight increase in the POG to $261 over the coming weeks. This causes the XAU index to climb from 58 to 72 {24%) while gold climbed from $250-$261... (4.4%) Now I have 124 Mill in Gold futures {but around 150M in Gold stock equity} But the real increase in marginal GOLD was < $10 M. So effectively I made (124M/58*72-10M-124M) := 20 M on going long with the XAU.
Kinda cool the way you can buy a little gold, and force the XAU up? This is why the XAU almost always moves before gold. But does it matter? Well what if they short the same gold stocks, and run it down too?
The gold is still in Comex warehouses
can't that also be looked at as a positive?
As long as the gold is in the warehouse, NO.
The investors in GOLD stocks may be used once again. But this time on the short side. If you believe in conspiracies about massive short positions, then you partake in the artificial manipulation of the gold markets by default. You may not know, but analysis of the same is beyond your scope. Supply and demand must ALWAYS equal at the spot price.
So why did the Goldman Sach do it NOW?
They seem an opportunity when the US Dollar index started to dive.
decisionpoint.com
And no doubt in the coming weeks as the same US dollar index climbs, they'll be the first to flip bearish again, unload their positions, and claim that the strength of the US dollar caused the POG to diminish.
Hutch.
PS: Gold may not be over valued,
but the XAU is grossly over valued. |
