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The Vet

The Vet
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  • GLD Continues To Lose Its Shine [View article]
    Supply of freshly mined gold is only significant because it provides a relatively constant supply of willing sellers. Gold Miners as a rule are heavily indebted and cannot afford to hold gold in order to maximise their return. They need regular cash flow. Central banks on the other hand hold a lot of gold but very little of it is for sale. They may do leases and swaps, but few outright sales. Trading of gold in quantity occurs both on the LBMA and COMEX but this trading is almost all derivative trades; while it is used to set the price, it does not involve actual buying or selling of metal.
    GLD on the other hand is a wonderful construct to provide back-up liquidity in metal for the short sellers. GLD vaults hold gold bought and paid for by the stock holders but only available to be delivered to a few favoured "authorised participants". This backstops their short selling activity on other markets. In effect GLD provides working inventory for the bullion banks where the gold was bought, paid for, and stored, by others.
    Nov 24, 2015. 09:26 PM | Likes Like |Link to Comment
  • Friday Is A Big Day For Gold And Investors Better Be Prepared [View article]
    Great analysis as usual, but to what extent is the widely anticipated interest rate rise already priced into the price of gold? COMEX traders set the price and if the COTs are to be believed then their bearish bets have already been placed. Anyone who was around in the early 1980's knows full well that high official interest rates (approaching 20% at the peak) did not correlate with a low price of gold. Quite the opposite in fact.
    Nov 4, 2015. 04:40 PM | 3 Likes Like |Link to Comment
  • Goldcorp: Avoid This Stock [View article]
    One of my pet hates is when someone makes an uncorrelated statement of "fact" like "as interest rates and gold prices are negatively correlated" and then builds an argument based an that completely unsubstantiated "fact".
    Gold prices and interest rates may be correlated at times, but anyone who was around in the early 1980's when gold hit an all time high at the same time that interest rates ran up to 20% knows it isn't a truism under all conditions.
    Nov 3, 2015. 05:19 PM | 4 Likes Like |Link to Comment
  • How Will The Fed Impact GLD This Time? [View article]
    Using the US dollar as a measure of anything real is as useful as using a length of over-cooked spaghetti as a straight edge....
    Oct 26, 2015. 11:35 PM | 4 Likes Like |Link to Comment
  • How Will The Fed Impact GLD This Time? [View article]
    The dollar index is a ratio of the relative values of fiat currencies which does not include gold. Clearly changes to the Euro or Yen affects that ratio even though there may be no intrinsic change to the real US dollar value in the terms of gold or any other measure of value. Yet like Pavlov's dogs, traders sell down gold the moment that the DX dollar index flutters slightly up. The countries that use the US dollar as their sole currency are not major buyers of actual gold yet they dictate the price. Every fiat currency has a CB to oversee its value; gold has nobody except the market and the manipulators.
    Oct 26, 2015. 07:31 PM | 2 Likes Like |Link to Comment
  • Goldman on gold: Sell the rip [View news story]
    The dollar index may have strengthened but that is because the Euro and Yen weakened, not because the US dollar is stronger. The index is a ratio, not an absolute value and gold is not a component.
    The brain dead traders in the US (and their computer programmers) still cling to the belief that gold must track the inverse of the US dollar index.
    If gold is a currency not represented in the index then there is nothing logical about such a relationship, except, that because it is so oft repeated, it has become self fulfilling.
    Oct 22, 2015. 12:47 PM | 1 Like Like |Link to Comment
  • Dovish Fed, Rising Oil And Falling USD Set Stage For GLD Rally [View article]
    Imagine an alien arrived here and you had to explain how the changes in the US dollar index affects the price of gold in US dollars.

    You place before him in neat piles 1 ounce of gold, $1176 US dollars, 1035 Euro and 140919 Yen and explain to him that each of these piles of fiat notes and the gold were worth exactly the same value at this point of time. He then takes out his alien perfect fiat duplicator and he prints and adds another 1000 Yen note to the pile and he asks what change has been effected. You have to tell him that now the ounce of physical gold is no longer worth $1176 US dollars because the dollar Yen ratio has changed even though absolutely nothing changed with the pile of US dollars or the ounce of gold..

    My guess is that he would return to where ever he came from muttering that the earth's economic system is crazy.....
    Oct 20, 2015. 06:14 PM | 3 Likes Like |Link to Comment
  • Gold And Silver Weekly: From An Extreme Low To An Extreme High [View article]
    COTS bullish/bearish.. The big traders in silver "adjust" the COTS simply by directing buy or sell trades through different accounts.. They then become self fulfilling prophesies reinforced by newsletter writers. By the time we see the numbers they are history, not news, in any event. The trades have been completed, settled, and absorbed by the market in the greater part more than a week earlier.
    Oct 20, 2015. 01:48 PM | 5 Likes Like |Link to Comment
  • Gold flies higher for a fifth day [View news story]
    The gold price is reported in US dollars, but the vast majority of buyers buy it in their local currency. Like all fiat currencies the US dollar's value is maintained by confidence; nothing else. The rest of the world is looking at the US both as an economic power and a geopolitical power and wondering if that confidence in the paper currency the US prints is misplaced. If they decide that the old US dominance of the world is weakening, confidence will evaporate and the dollar will fall regardless of interest rates or any other action the FED may take; then gold will rise in US dollar terms.
    Oct 15, 2015. 03:38 PM | 3 Likes Like |Link to Comment
  • Silver Wheaton Is Rising As Silver Rallies - But Not As Much As Expected [View article]
    Higher interest rates (if they ever arrive) actually gives Silver Wheaton more leverage in their streaming deals. The reason that streaming deals are so lucrative is because traditional lenders won't lend to many miners (even producing miners) at anything close to normal commercial rates. SLW provides finance in return for future production, and higher interest rates reduces the competition and allows them to do better deals.
    Oct 15, 2015. 01:11 PM | 3 Likes Like |Link to Comment
  • Gold soars to seven-week high [View news story]
    There are two sets of figures to consider when you speak about supply and demand for gold. The first is for paper gold, the kind of gold that COMEX, the LBMA and GLD and similar ETF's trade. These trade paper which can be generated at will for no cost within the market place perhaps backed by a fractional reserve component, perhaps not. This kind of gold can be moved all over the world with a few keystrokes and is very liquid but it cannot be easily converted to real metal. Short sellers can sell this "gold" with impunity even though it has never been mined. This is alchemy in every way, but it doesn't add a single ounce of real metal to the world supply and it never will.

    The other supply comes from miners working deep underground moving thousands of tons of rock just to produce a few ounces of pure metal and this supply is inelastic. The demand for this real gold is for jewellery, investors as a store of value, and central banks as reserves. Compared to trading of paper gold only a relatively minuscule proportion of this real metal is ever moved or traded.

    It is almost impossible to relate paper gold and real gold prices because the financial entities who control the paper gold production are the financial heavyweights and they manage the price of the paper gold for their own profit and by their own rules. These rules prevent anyone from challenging the price setting mechanism or attempting to expose their ponzi scheme which prevents true price discovery, but they are dependant on the trust of the public in their paper and their institutions. Recently that trust is being challenged by the public even while the governments, who are bought and paid for by the financial institutions, do all in their power to keep these "legal" ponzi schemes expanding.

    To big to fail is a myth; too big to bail is the catch cry now. Confidence is a delicate flower and once it wilts, it dies...
    Oct 12, 2015. 08:25 PM | 3 Likes Like |Link to Comment
  • Franco-Nevada Buys A Silver Stream From Teck Resources - Why I Like The Move [View article]
    This deal is a long term play on the silver price. At current silver prices it stinks but once silver goes over $25 an ounce it hits the ball out off the park for a very long time... Apparently Franco management are confident that silver is going up significantly over the medium to long term.
    Oct 9, 2015. 06:23 PM | 2 Likes Like |Link to Comment
  • Anything Higher Than 0% Is Now High Yield; Retirees Thrown Under The Bus Today [View article]
    Possibly, but have they simply "kicked the can down the road" and not really cleaned up the excesses in the banking system especially in regards to OTC derivatives, swaps and counter party risk?
    If the FED had simply let the markets set the interest rates, I wonder what really would have happened.
    Let's watch Glencore and see how that can of worms is unwound.
    Oct 7, 2015. 12:29 PM | 3 Likes Like |Link to Comment
  • Anything Higher Than 0% Is Now High Yield; Retirees Thrown Under The Bus Today [View article]
    The FED keeps interest rates low by printing money at no cost to them. That "free" money directly competes in the investment market with savings which the prudent members of society have accumulated through years of hard work, and it forces down interest rates to below the inflation rate. If the FED was a corporation it would be indited for abusing its monopoly, anti-competitive trading practices and RICO violations.
    Oct 7, 2015. 11:30 AM | 6 Likes Like |Link to Comment
  • As September Ends, COMEX Registered Gold Inventories Drop To A New Low [View article]
    Gold is described by the general market as a commodity, but is treated by the banks and traders as a currency without the rules which apply to fiat currencies regarding fractional reserves and CB dictated reserve ratios. Banks are forced to maintain specific levels of reserves of fiat currency (no greater than 10:1 as a general rule) but there are no rules on fractional reserves required for gold transactions. For other commodities COMEX does have specific rules and limits governing trading which in general terms should be applied to gold and silver as well, but they have conveniently and increasingly turned a blind eye to their own rules.
    Oct 4, 2015. 01:59 PM | 1 Like Like |Link to Comment