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Speculative gold longs lowest since 2007; time to look elsewhere?

  • Net speculative longs in gold (GLD +0.6%) last week fell 16% to 26,774 contracts, according to the CFTC, the lowest amount since June 2007. Shorts rose 6.2% to 79,631, about matching a high set in July. The exit continues in gold ETPs, with assets now off 31% YTD to the lowest level since February 2010.
  • "There's probably another wave of panic selling ahead," says Sage Capital's Bob Smith, one of those who's exited gold, putting the money in stocks instead. "In the absence of calamity, there's not much to go on."
  • The last 12 years (prior to 2013) were an aberration, says Morningstar's Samuel Lee. True believers should instead look to deep-value assets linked to gold, namely the miners (GDX +1.3%) - they over-expanded and failed to hedge against falling prices, but a play now is a bet executives have learned their lessons.
  • An even better idea, says Lee? Admit the worst-case scenarios about global crises and currency debasement never panned out and move onto another asset - nonagency MBS. The cheap, illiquid sector creates opportunities for a good fund manager, he says. Lee's pick is the Pimco Dynamic Income Fund (PDI +0.7%) - an "implicit bet on housing prices."
  • Gold ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, DGZ, AGOL, GLDI, DGLD, TBAR, UBG
  • Gold miner ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST
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Comments (39)
  • Uncle Pie
    , contributor
    Comments (3010) | Send Message
     
    Really? Selling gold after it's dropped by a third, and buying private label mortgage backed securities during a time when the government is holding the interest rates down to zero??
    What could possibly go wrong with that?

     

    We are told that gold fell because "investors" (read: hedge funds) sold their gold ETFs in an amount equivalent to about 800 tonnes of gold. What we are not told is that the total amount of mined gold is something like 174,100 tonnes, so the amount they hedge funds sold is less than one half of one percent of the total supply of gold.
    Does it seem odd that such a small sale could drop the world price by one third?
    9 Dec 2013, 11:20 AM Reply Like
  • Interesting Times
    , contributor
    Comments (11032) | Send Message
     
    Can anyone say diversification?

     

    People comment about gold like they would turn it down if handed to them.. Geez.. Even Yellen said gold is an asset class. Call it insurance and trust me if you need food or water as some have suggested silver and gold will come in handy.

     

    We discuss all of these thoughts on my top 20 blog. Always looking for new posters. Take a peek.

     

    http://seekingalpha.co...

     

    Nothing isn't discussed or dissected. We have some very smart people on this blog. Trust me !
    9 Dec 2013, 10:30 PM Reply Like
  • Interesting Times
    , contributor
    Comments (11032) | Send Message
     
    Doesn't look like any panic selling of gold happening right now!

     

    Maybe just the opposite?
    10 Dec 2013, 03:59 PM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    "There's probably another wave of panic selling ahead,"

     

    Just what we are being led to believe. When the dust settles it'll be made of gold. Let's ask Smith to disclose his holdings after another month or so.
    9 Dec 2013, 11:20 AM Reply Like
  • eh
    , contributor
    Comments (24) | Send Message
     
    Basic facts: gold has little commercial value. Its price rise was largely driven by fear (and also later speculation). There is little fear in the market now, and no sign of it re-emerging on a scale large enough to significantly boost the price of gold any time soon (absent some extraneous event - but only crazy people 'invest' on such a contingency). The whole 'fiat currency' meme is largely a red herring and has had its day. Most speculation now is that gold will continue to decline. This is what the poor price action indicates.
    9 Dec 2013, 11:33 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8602) | Send Message
     
    What fear was in the market in 2005 when gold prices went up?
    9 Dec 2013, 12:21 PM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    What planet are you living on ? Or from ?
    9 Dec 2013, 03:54 PM Reply Like
  • filipo
    , contributor
    Comments (3475) | Send Message
     
    ""In the absence of calamity, there's not much to go on.""

     

    Well, the calamity speaks Greek these days:
    http://bit.ly/1dhNzoi

     

    and US corporate debt at record high doesn't forbade well either:
    http://nws.mx/1dhNBMQ

     

    Last time that happened, the world got a nasty shock of a lack of solvency and the Fed had to intervene by lowering the rates and impelementing QE.
    So suppose it happens again, what will the Fed do then ?
    Oh yes, increase QE to let's say $200bn/month.
    That will sure do the trick.
    9 Dec 2013, 12:02 PM Reply Like
  • Michael S Harris
    , contributor
    Comments (14) | Send Message
     
    Almost everywhere the contingency plan is put in place for calalmity.
    Its called a bail-in AKA (steal) depositor funds.
    So what kind of "idiot" does not have plan B, physical assets that can
    be used as currency?
    9 Dec 2013, 12:15 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8602) | Send Message
     
    Can someone else name any other asset class that went up in price for a
    DOZEN years and then was claimed an "aberration" by rear view mirror observing "experts"?
    9 Dec 2013, 12:20 PM Reply Like
  • fiwiki
    , contributor
    Comments (359) | Send Message
     
    Can you name me any other asset class that languished for 20 years and then went parabolic for 12 years….. The question when will it return to it's previous state of slumber.
    9 Dec 2013, 12:34 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8602) | Send Message
     
    Answering a question with a question is another way of saying, "No, I can't name any other asset class that went up in price for a
    DOZEN years and then was claimed an "aberration" by rear view mirror observing experts."
    9 Dec 2013, 05:00 PM Reply Like
  • fiwiki
    , contributor
    Comments (359) | Send Message
     
    No it's another way to demonstrate to you that gold as a long term investment is an " aberration" .
    9 Dec 2013, 05:45 PM Reply Like
  • filipo
    , contributor
    Comments (3475) | Send Message
     
    fiw,
    "gold as a long term investment is an " aberration" . "

     

    Is it ?

     

    http://bit.ly/wYunOO
    10 Dec 2013, 02:52 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8602) | Send Message
     
    So why do central banks hold tens of thousands of ounces of this "aberration"?

     

    ...and have done so for decades.
    10 Dec 2013, 08:15 AM Reply Like
  • fiwiki
    , contributor
    Comments (359) | Send Message
     
    How do you know what they actually hold ?
    10 Dec 2013, 08:46 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8602) | Send Message
     
    http://bit.ly/Zw2VxK
    10 Dec 2013, 11:49 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8602) | Send Message
     
    Sorry...I meant "hundreds of thousands of ounces".
    10 Dec 2013, 11:50 AM Reply Like
  • Interesting Times
    , contributor
    Comments (11032) | Send Message
     
    You think Germany wants their gold back just to decorate their vaults.?.

     

    Please folks, gold is here to stay as an asset class..
    10 Dec 2013, 04:01 PM Reply Like
  • Smarty_Pants
    , contributor
    Comments (2826) | Send Message
     
    "name me any other asset class that languished for 20 years and then went parabolic for 12 years" - fiwiki

     

    Sounds like the Dow Jones Industrials between 1929 and 1958, except the Dow's parabolic phase ran up to 1966, dropped nearly 50%, and in 1982 and began another 30+ year parabolic rise.

     

    Long term investing in Blue Chip stocks must be an 'aberration' too, I guess.

     

    Or not. I suppose it all hinges on where you start looking at the data and how you define your terms. It's awful convenient to start your negative evaluation of gold at 1979's $850 peak. (Can you tell me when you expect the Nasdaq Composite to regain it's January 2000 high point?)

     

    Then again, since 2008 the monetary base has gone from $900 Billion to $3,711 Billion (up 300+%) and during the same time frame the price of gold has risen from $750 to a high of $1,900 (up 153%).

     

    One could rationally argue that gold should be priced around $3,800 to match the growth in the monetary base, but again it depends on how you frame your argument and where you start measuring.

     

    So given that other "normal" markets have seen the same sort of price behavior in the past, it's not like the gold market is unique in its recent price action. Indeed, if it parallels the Dow's past, gold should be hitting around $30,000 per ounce sometime in the next 30 years.

     

    Better get some gold now, while it's cheap.
    10 Dec 2013, 04:37 PM Reply Like
  • fiwiki
    , contributor
    Comments (359) | Send Message
     
    http://cnb.cx/1goUz7Q
    11 Dec 2013, 09:09 AM Reply Like
  • Smarty_Pants
    , contributor
    Comments (2826) | Send Message
     
    Old news (October 2012).

     

    What's curious is why the FED requires 7 years to return Germany's paltry 300 tonnes of gold when it only took China 2 months to import the same amount, during the same time frame, via the open market. Why is the FED so slow? The Germans were also able to have 940 tonnes returned from France in 2000 (in less than two months).

     

    Could it be that the FED actually doesn't have physical possession of Germany's gold at the moment? So much for "safe keeping".

     

    http://bit.ly/JfvTAP
    11 Dec 2013, 05:16 PM Reply Like
  • Alphahog
    , contributor
    Comments (41) | Send Message
     
    The Fed is not known for allowing outside auditors to come in anytime they please. Maybe they don't have the gold, as you suggest. Maybe other country's gold is gone, too. Maybe we got a lot of gold plated tungsten ingots and the solid bars have vanished. Everything in this country is crooked and rigged.
    12 Dec 2013, 10:28 AM Reply Like
  • Michael S Harris
    , contributor
    Comments (14) | Send Message
     
    Having gold in the family is a good thing. Plan for the generations
    ahead with some gold and some BitCoin.
    9 Dec 2013, 12:20 PM Reply Like
  • ttrails
    , contributor
    Comments (11) | Send Message
     
    really, i'm reading elsewhere that INFLOWS into GDX very high.
    so much BS we don't know who to believe...seems everyone has a motive.
    me, i'll stick with gold, physical and the miners.
    if common sense no longer sways we are all up the creek anyway;
    i'd rather have gold in my canoe.
    9 Dec 2013, 12:22 PM Reply Like
  • Yorkville Trading
    , contributor
    Comments (175) | Send Message
     
    If the financial world does really collapse and all mayhem breaks loose, I think I'd rather have lots of food and water than gold if things really do get that bad.
    9 Dec 2013, 12:46 PM Reply Like
  • fiwiki
    , contributor
    Comments (359) | Send Message
     
    Better have plenty of fuel guns and ammo too.
    9 Dec 2013, 01:04 PM Reply Like
  • ystock15
    , contributor
    Comments (169) | Send Message
     
    Hope it won't go that far, if that comes, it doesn't matter whether you own gold or stocks, EVERYTHING will go down.

     

    Any portfolio should have some gold exposure
    9 Dec 2013, 01:14 PM Reply Like
  • filipo
    , contributor
    Comments (3475) | Send Message
     
    York,
    I disagree unless you refer to the Day of Last Judgment.
    But a collapse of the financial world without the world in itself being completely destroyed like in "destroyed by a comet", is always followed by a tomorrow.
    If the financial world collapses there will be mayhem for a while, 2 years, 5 years, 10 years, I don't know, but sure there will be recovery. I think never has the world been so close to economic armaggeddon than during WW II and look how fast it recovered. Those who invested in gold then were better off than those who invested in food and water, gold being concentrated value.
    9 Dec 2013, 02:08 PM Reply Like
  • jimlewin
    , contributor
    Comments (155) | Send Message
     
    The gold deniers are an amazing bunch. So, using their logic it means that anyone who buys insurance against a possible calamity is "crazy", as EH puts it, or just not very bright. Similairly, I guess the large drop in equities in 2008-9(similair to the current gold drop) was ample proof that smart people should have abandened the stock market at the time.
    9 Dec 2013, 01:37 PM Reply Like
  • fiwiki
    , contributor
    Comments (359) | Send Message
     
    Gold IS money. It's just a p*ss poor form of money. It's tough to carry large amounts. It's value is erratic……….. and …….. wait for it,……wait……………..you never make the correct change ! perrrrumpump!
    9 Dec 2013, 03:39 PM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    That's why you go to a gold exchange, duh.
    9 Dec 2013, 05:18 PM Reply Like
  • Alphahog
    , contributor
    Comments (41) | Send Message
     
    Gold miners are way down. You can buy now and wait or wait until the opportunity has passed. I've heard that the price of gold is being kept down by naked shorting by big players, but Asian demand for physical gold is strong. So the market is rigged, apparently. How much longer can this racket go on? Gold miners are a reasonable bet in an inflated market. But it could take a long time for the bet to pay off.
    9 Dec 2013, 01:41 PM Reply Like
  • ddearborn
    , contributor
    Comments (128) | Send Message
     
    Hmmm

     

    Well regardless of which way gold prices go in the future one thing is clear. This website and specifically the articles it publishes that cover precious metals in general and gold in particular will continue to make a valiant effort to drive investors away from the metals. In fact looking back since the phony rigged "crash" this website has been a cheer leading gold basher at every turn. No matter what happened or when, you can always count on this website to have articles ad nauseam bashing both the metals and the miners. Without a doubt this website has clear agenda with regard to gold.

     

    Quick recap. In 2012 and 2013 between China, Russia, and India they have purchased/withheld nearly the entire yearly production of gold worldwide. And yet that fact is never publicized. In fact bogus consumption numbers proliferate all over the net. After all how would it look to Joe six pack if he realized that gold and silver were crashing in the face of overwhelming demand and dwindling supply. They might get the idea that gold prices are rigged. And even the most over worked bumpkin would not take long to realize that the reason he is seeing run away prices on everything but his paycheck is because the entire system is rigged. At which point he might do something crazy like.....refuse to work until he is paid a living wage..................... I lost my head for a minute there............
    9 Dec 2013, 02:23 PM Reply Like
  • sinedo
    , contributor
    Comments (316) | Send Message
     
    ddbearborn says: "...Without a doubt this website has clear agenda with regard to gold..." So what? Can't live without hypers? You know, at least, that you are hearing the worst they can come up with, and it's no big deal. The negativity is laughable, but it is the best they have. The Gold market is not reflective of economic activity and daily industrial demand, like Oil, Copper, Aluminum, and Nat. Gas, and there are not a lot of bidders in the market, bidding against each other. I'd bet that 95% of the gold demand is emotional, personal, and not related to industry, so the current price never reflects total demand. People decide to buy Gold, and they buy it, no matter the price. They either get more or less for their money, depending on when they decide they need some.
    Gold is the money or last resort, and it will always have some demand because it is portable, a compact store of value in an emergency, and currently it is not "reportable", although Government is always trying to tax it.
    Regards,
    9 Dec 2013, 07:20 PM Reply Like
  • th3decider
    , contributor
    Comments (325) | Send Message
     
    Yes I suggest we all listen to his advice, sell our gold and and move into mortgage backed securities. I mean what could go wrong?
    9 Dec 2013, 02:30 PM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    I'd like to know why I've been censored so many damn times for similar derogatory opinions ans statements by the f'in' SA police. But when it appears in a gold bashing column everyone gets their opinion entered, seemingly that is.
    9 Dec 2013, 03:31 PM Reply Like
  • Alphahog
    , contributor
    Comments (41) | Send Message
     
    The time to buy is when there is blood in the streets. I smell blood.
    9 Dec 2013, 04:33 PM Reply Like
  • Patrick J.
    , contributor
    Comments (4) | Send Message
     
    "GOLD IS MONEY...

     

    everything else is credit"

     

    - J.P. Morgan
    9 Dec 2013, 05:03 PM Reply Like
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