donderdag 18 april 2013

Large drop in COMEX gold, what does it mean?

Tekoa Da Silva notices, just like me here, that COMEX gold stock is declining rapidly lately.

We don't know what it means, but one of the theories is the COMEX default. Which is what happens when the downtrend keeps going on like this.
Chart 1: Comex Gold

3 opmerkingen:

  1. The idea that COMEX could default is a baseless fringe theory, and you are simply trading on fear. Gold stocks go up and down all the time (as your chart shows), but that has no impact on COMEX.

    Warren Buffett said that “What motivates most gold purchasers is their belief that the ranks of the fearful will grow" according to this Bloomberg article.

    It seems to me that you are trying to create an atmosphere of fear in the hope that more investors will join the gold investment bandwagon.

    1. I don't know if it's a fringe theory or not and I don't know much about it. But I'm very interested in those theories on the internet, that's why I follow it.

  2. The idea that COMEX could default is a baseless fringe theory because there is no information published in reliable third party sources (such as newspapers or academic papers) to support this idea.

    All of the sources you cite in your articles are self-published websites with an interest in the physical ownership of gold. The content of these websites is based on hearsay and unsupported speculation.

    If you are personally worried about the risk of default, you should first examine the reliability of the sources for this idea. As far as I can see, only fanatical supporters of holding physical gold believe in a COMEX default, but none of them discuss the safeguards that are in place to prevent such a default. Also, they never discuss the costs (or the risks) of holding physical gold for individual investors that invalidates their arguments for holding gold in the first place.

    The publication to get a full understanding as to why a COMEX default is not credible is "CME Clearing Financial Safeguards", which shows that their contracts are covered by cash margin, deposited by the market participants, so there is no risk of default.