vrijdag 10 mei 2013

Red Alert in Gold Lease Rates

I have become very bullish lately on silver and was already bullish on gold.

But the following chart makes me ultimately bullish. We see the biggest increase in gold lease rates as of yesterday and we have seen this before. In 2008, the gold lease rates started to spike upwards, which meant gold was in short supply. It also meant that the "interest" to hold gold was going up, just like the "interest" on your cash is going up.

This ultimately means that the world is valuing gold at a higher interest rate and the central banks are demanding their gold back from the bullion banks.

We are in for a huge upside move if you ask me.

8 opmerkingen:

  1. There is no upside for Gold while inflation remains low.

    1. Just for you, I'll create a page to monitor the gold price: http://katchum.blogspot.be/2013/05/gold-price-target.html

  2. If demand outstrips supply gold will go up whether inflation is high or low.

    Gold is money and a store of value. It is also a hedge against government mismanagement which seems to be everywhere you look. Inflation is only one part of the equation. Real interest rates are more important and remaining negative so gold still has value. If you start valuing stocks in gold instead of the USD you see that the recent run up in stocks is just a blip. http://pricedingold.com/sp-500/ The gold bull remains.

  3. Gold is no longer used as money nor is it a store of wealth if you take holding costs into account.

    Gold ceased to be money after WW2 when central banks stopped issuing gold coins as legal tender. If you buy and sell gold coins, there is a margin between the buying and selling price to be paid.

    Now its just a commodity like any other, and its value is always being eaten away by the cost of holding it in storage, insurance and shipping.

  4. If it isn't money or a store of value then why are central banks buying it?

    Nothing goes in a straight line but I would rather have owned gold for the last 10,20, or 30 years and paid all the fees than owned any other fiat currency. I am sure you would too.

    I define money as a means of exchange. I don't need to pay for anything directly with gold so it doesn't need to be legal tender to be money. I just hold gold and flip some of it to a fiat currency when needed. I can do it online in a few minutes.

  5. Gold isn't money or a store of value. Since the breakdown of the Bretton Wood system in 1971, the price of gold is no longer fixed. Its value fluctuates, because like any other commodity that is traded, its value can go up or down, depending on investor sentiment.

    So now you understand there is a risk that you may suffer losses by holding it - its not a store of wealth as you suggest. At the moment, gold officially entered a bear market in October 2012, so its not a good investment at the moment.

  6. We will have to agree to disagree. Good luck to you.

  7. Gold could also be in short supply because everyone and their brother is borrowing it to sell short.

    To me, a spike in lease rates while gold moves towards $1320 suggests someone wants to run stops to see how low they can drive gold, knowing that the ETFs are still selling, Indian and Chinese demand might be exhausted, the Indian trade deficit means the Indian government needs to jack up tax on gold again, and Soros was about to release his fund holdings data.

    Frankly the gold sitrep is negative enough for someone to want to short it, and that's what you'd borrow gold for.

    Then again maybe someone's just doing a gold carry - selling gold to buy, e.g., the Nikkei? Long Nikkei short gold - or even long NYSE short gold - seems to make sense right now.