Gold Price Monitor Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor

GDXJ 98.59

-2.8%

Nov 13 4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Ken Benes who wrote (70430)	5/26/2001 2:07:26 PM
From: russwinter	Read Replies (3) of 116759

Couple points about your post: Using the 16,000 tonnes as a data point, a large portion of the unleased remainder in CB vaults is likely to NEVER be leased or sold. Selling or leasing gold is not a universal policy or sentiment among all CB's. It's a rather old shop worn practice now. Is somebody new going to graduate from the "rocket scientist" school of finance at this late date? I doubt it, and if anything some CB's may be worried about losing loaned out gold FOREVER. After all, much of it is on people's ears or has been sold by miners (how about Centaur?: siliconinvestor.com who may never mine what they've sold forward. Some CB's who engage in this practice, may now realize that a 1% lease rate doesn't properly compensate them for the risk of loaning to financial institutions. In fact doing so kind of defeats the whole purpose of having a currency reserve. I would argue that 2% doesn't either, and once you get in this new territory the incentive to borrow at 2% (or higher right now), to buy treasuries at 4%, and risk gold rallies to boot is simply no longer a promising carry trade. In fact it's an outright dangerous one. On the other hand you can now buy a forward contract at only a 1.6% contango or interest rate. That looks like a great bet for speculators. The specs may have lost this round, but watch for them to try it again (and again). At some point the commercials (and the bulls on this thread will be watching for that one)will jump on board too. The evidence is that the demand- supply gap is widening, so ever increasing amounts of accelerated supply are required to quell the price. See last paragraph: Message 15856243 As a gold bull I don't even need decelerating supply to win my bet, although I think it's likely (from short (of gold)covering and production decline). One could possibly argue that CB sources may be maintained (I doubt it) but increased? There simply isn't the demand for borrowing gold anymore.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next