I don't know if you guys have seen this but well worth the read; Also this chart is intriguing in that the Gap In September was never backfilled ( a bullish sign) , Fridays spike in Gold did not happen by chance. The announcement by PDG was not enough to cause this spike, I believe we will get the real reason soon enough. Fridays activity may in fact have started the Short Squeeze of the century, but My gut says we will have to wait a little bit longer as we may get another Surprise CB gold sell announcement this week to quell the rally. These breakouts seem to be happening more often these days and are a sign that this will explode very soon and that nothing will stop it.
securitytrader.com
Message 12790757
Trading around $280 in April 1999, gold is below the total cost of production for many mines and not far above the
cash costs of quite a few. What is more, annual gold demand is now almost 4000 tonnes, exceeding annual new
mine production of 2500 tonnes by almost 1500 tonnes. This deficit, building over several years, is largely filled by
sales of gold leased from central banks by the bullion banks. Analysts trying to calculate the net short gold position
of the bullion banks in early 1999 are coming up with some astonishing figures, some as high as 10,000 tonnes,
equivalent to four full years of production.
More from the article
Given a sharp spike to $370/oz. or thereabouts, many believe the gold banking crisis would spiral out of control.
Each periodic British auction is for 25 tonnes (803,750 ounces). At $370/oz., an entire auction could be had for
less than $300 million, a trifling sum in modern finance. That may seem like a large premium to current prices of
around $280-$290, but many gold analysts peg the true equilibrium price of gold today at between $500 and $600.
Add in rumors of difficulty finding physical gold in size, and 25 tonnes of deliverable physical gold at $370 could
almost look like a bargain.
In any event, anyone -- friend or foe -- with a spare $300 million who cares to bid $370/oz. for the full amount of
the next British auction could more than likely crash the gold banking system with consequences far more serious
than those threatened by the failure of LTCM. Not long ago Marc Faber publicly suggested to Bill Gates the
investment merits of switching his almost $100 billion of Microsoft shares into gold. M. Faber, "An Investment Tip
for Bill G.," Forbes, Nov. 29, 1999, p. 248, also www.forbes.com/forbesglobal/99/1115/0223099a.htm. My advice
to Bill G. would be a little different: Start buying gold, leak that you are doing so, watch the price rise and
governments sweat, bid early and high at the next British auction, and wait for a settlement offer you really like. No
reason not to have both Microsoft shares and gold. Since the government likes free, unfettered markets, give them
one -- in gold.
The next auction is March 21, 2000, a date perhaps uncomfortably close to the ides of March for bullion bankers
and would be Caesars.
Vitalsigns |
