As soon as you worry about a dip in gold, it swings to the upside $30-$40... as usual. Trying to apply FX strategies to gold trades, it doesn't work. China is raising rates in an attempt to quell inflation that has exceeded 5% for long enough to question whether or not China is overheating... fortunately they are also buying truckloads of gold.

Even the above is too simple to base a notion of price movement on. It was a non-issue.

Mrmusicrecorder,

Looks good, seems your sources are pretty much in complete agreement with what you posted. The ETF number seems to match the silver holdings graph, which also include stuff like Comex and coins. But where did you get this?

Thanks

The CPM Group

You are most welcome sir.

Also sharelynx.com for data compilations.

***

Currency intervention is only a short-term solution

J.R., Peter Schiff mentioned this in a recent Vlog; that when emerging markets attempt to cool their economies with interest rate increases, money in the ZIRP developed world will only fly in faster, thus leading to increased speculative bets (and imo malinvestments) in these markets. Essentially the only option is to let these currencies appreciate (or God forbid impose capital controls). Rapid currency appreciation has its own drawbacks, of course, especially with export-dependent industries often operating on razor-thin margins, and thus being unable to repay loans with stronger currency.

In any event, it's nice to see that the Swiss Central Bank finally understands that the market >>>>>>>>>> central banks. We'll see when The Bernank figures this lesson out.

there is no as usual. at most you can say i've done this twice but im jsut granting you that because i dont remember the last time i was negative on gold or even warning about it. and you have to put this in context. im clearly a secular gold bull, and everyone knows that and i have been deeply invested since 2003. my target for gold is in the five digits. the vast majority of my money is in gold. when i get worried i only reduce my leveraged holdings, never my physical and my reduction is always temporary. also, in this case, had you questioned my thoughts further, i'd have advocated not a gold dip in general, but perhaps one versus funding currencies like the yen, franc and dollar IF risk were to unwind as a result here. friends that have asked me about gold recently i've told they'd be better off being long gold versus the euro, which is what i have done and by doing so have done better than being long gold versus the USD fwiw.

that is not true. the fx side of this has worked in perfect tandem. look at AUD and NZD. there clearly is a risk-trade correlation between commodities currencies and equities. they are all lavishly buoyed right now. Should one collapse you can likely expect the other two to follow. Clearly this move from china was not the nail to do so, because the move was weak. I was simply saying watch out, because what was more important was how the market interpreted it and that is clearly in the "who knows" category. i still think it was worth "watching out" for. clearly other forces are dominating market optimists and they are not so influenced by this or PBOC officials/advisors threatening more action. i think zero hedge guys have been saying the same thing too, as has fx concepts and many other major analysts that are generally worth listening to, from warning about technicals in gold and the over optimism in markets. so at least im not alone, though i really like being alone when trading.

right now growth expectation across the globe have gone haywire. it wont take much bad news to greatly disappoint this. optimism for europe, EMs, and the US are out to lunch if you ask me. if things unwind for whatever reason, and there many things that can trigger it, gold may very well take a sour turn for a short period. A 10-20% correction would do nothing to its long term trend, but those who are highly leveraged in the short run could be crushed. Its worth looking out for warning signs and thats all i was signaling and providing information for. I never said sell gold. I never said pop goes the gold "bubble". i just said watch out, and gave some information i thought those who were unaware about could find valuable. in bfi i've elaborated more on this stuff, like being long gold verus euro and that i'm not certain gold will even fall if risk unwinds as gold might be anomalous amongst commodities for a variety of reasons. you shouldnt be so quick to judge and attack.

*thanks for the silver post btw, i'll address it later.

what else besides this gets one to 1,250 Moz?

Take your pick.

This silver is not static, SLV's highest volume broke 350 million at one point this year, SLV adds silver and removes it and adds more, COMEX demands silver, delivers a portion of contracts, and adds more to inventories... this is demand. In addition to 2009's demand based on CPM's data I have added around 100,000,000 (which is in all likelihood very, very conservative) for silver OTC demand (which is, of course not reported), and new allocated and unallocated silver investment.

I imagine production is up in 2010 and I know demand is up. All the investors who want silver... simply won't be able to do it. The obligations are too great. The COMEX open interest is 825 million in addition to the investment demand discussed above stated holdings of over 500 million ounces. Also you must take in consideration the OTC positions worldwide.

All the silver in the world is currently worth about $33 billion according to the CPM data.

The entire supply of silver is equivalent to gold rising in price $11.00. Think on it.

Just take the punch man. You are a good poster, lumps or not. Good timing on the USD/CAD btw, I read the OP and a couple follow ups.

Just in case you didn't buy gold the day Boro started this thread.

FOAFOFOFOA?

i would post a funny pic of high relevance but im not resourceful like fofoa's friend JR

Your total yearly consumption of 1,250 Moz appears to be adding yearly demand to total silver claims to be held by the ETFs and COMEX, which may be double counting.

=============

We agree:

Yes, there are way more paper promises than actual silver. All Agreed.

========

But the point is how much silver is consumed each year. You have added a calculation of investment silver held and added it to yearly silver consumption, like this:

http://www.silverinstitute.org/supply_demand.php

Total silver investment holding are accumulated over many years, and as indicated above, are included in total yearly consumption numbers. In 2009, implied net silver investment increased by @ 140 Moz.

=============

It started here with your post here:

I responded in this post, explaining that total silver held in ETFs was reported to be somewhere around 450-490 Moz.
I also pointed out the obvious:

You next posted this graph, which while including Silver ETFS, also includes the COMEX and coins. Ignoring the issue alluded to above, that many are pretty sure the COMEX doesn't hold anywhere near the silver it claims to, and the JPM and HSBC intermingle the SLV and Comex silver in a fractional reserve juggling game, this graph shows total silver held in these various investments at about 600 Moz (which we will accept as true):



As the graph makes clear, the silver was added over a period of years. For example, it looks like @140 Moz were added from 2009 - 2010.

Just like the above form the silver institute, where 2009 new silver investment was @ 140 Moz:

http://www.silverinstitute.org/supply_demand.php

============

You can't add yearly consumption to a sum of investment silver, because the sum of investment silver is accumulated over time, and the amount added to investment for each year is included in that year's consumption total.

Thanks for posting this- makes me feel all warm and tingly inside- like when we climbed the rope in gym class.


Forgive me if I am wrong- but I don't see a link there back to 2+2. Bad etiquite, no?

Love me some FOFOA.

just read the first fallacy quickly on the way out so hope im not going out on too much of a limb responding hastily but your example seems misleading. even if there is 1 dollar bill, you can subdivide it. you issue more paper or digital accounts or whatever that represent portions of that bill. you can subdivide this bill infinitely. money supply can always grow internally, infinitely, so is never restricting to growth should the money retain value. am i missing something?

Other than some technical nits (counter fitting another $1 bill would be worth 1/2 the world's economy and hence you could never trust a bill like that as the incentive to fake even tiny portions would be huge)- you have hit the nail on the head. As long as the money supply is unrestricted it can adjust to the needs of the economy. As long as it can increase or decrease in velocity, or in volume, or in terms of substitutes the economy can get along just fine.

yeah, credit inflation/leverage/repeated collateralization can only go so far. It then either collapses or the base on which the leverage is built expands.
This breaks the fixed exchange rate and destroys the currency:
like we discuessed here - (http://forumserver.twoplustwo.com/sh...58&postcount=7).

but what if the currency is not built on fixed convertibility - there is nothing to abandon, as the currency's strength depends on the market's demand for it.

==============

What is being talking about is not increasing credit inflation, but monetary flexibility.

the price of money changes in terms of demand in a fixed monetary system. But that's not good for the functioning of an artificially impose legal tender system. so the managers fuddle with the supply.

http://fofoa.blogspot.com/2010/12/wi...w-men-and.html

or as tolbiny says:
but in a fixed legal tender system, there isn't a substitute, unless the currency breaks. And those in charge of the fixed legal tender system don't want its price to change dramatically, they aren't to keen on the velocity swings.

You must include a representation of real investment demand not just implied demand.

From Eric Sprott and David Frankiln
I simply want a more clear picture of our silver supply deficit.

Proof of consumption was already provided. Since man walked earth around 45 billion ounces of silver were mined and brought above ground... in 1999-2000 we had roughly 10 billion ounces... today we have just over 1 billion ounces.


Implied investment demand data in this case from the silver institute is not believable.

Supply:
2000: 919.1 2001: 870.9 2002: 853.1 2003: 869.3 2004: 868.2 2005: 916.3 2006: 907.2 2007: 888.7 2008: 888.3 2009: 889.0

Demand:
2000: 919.1 2001: 870.9 2002: 853.1 2003: 869.3 2004: 868.2 2005: 916.3 2006: 907.2 2007: 888.7 2008: 888.3 2009: 889.0

You believe this silver institute data posted above? The market is perfectly in balance.

Net implied silver investment:
2000: -87.1 2001: 11.4 2002: -12.6 2003: 6.0 2004: 37.4 2005: 67.6 2006: 64.0 2007: 22.0 2008: 48.2 2009: 136.9

It does not come close to the real figures that are easily identifiable.




COMEX has a bit over 100 million ounces, but would need over 300 million to make good on the contracts. "Many being pretty sure", doesn't do much for me, but rest assured we aren't far off on that notion.

When 1 billion shares of SLV are bought and sold throughout the year by many different parties, even if at equal levels of SLV stockpiles year over year (which is not the case), does this imply any demand?

To be honest that is the only year that looks close to an accurate figure of what they are trying to convey (NII).


Not in the data I provided, the silver institute supposedly does that, but they do not take any accurate measure of gains in implied demand or otherwise.
The total amount even of net implied investment was not added to the silver institutes data. The implied demand in that case is whipped up to create a visual semblance of market balance. That silver is not static. Take the transparent silver holdings listed and match the gains with the NII, it is not an accurate picture.

Investment silver is eating into industrial silver's future stockpiles.

So it is not ignored... Since man walked earth around 45 billion ounces of silver were mined and brought above ground... in 1999-2000 we had roughly 10 billion ounces... today we have just over 1 billion ounces.

But I want proof we can't make that 1 billion ounces last forever while we ramp up production to make up for the mining industry's 90's capital funding gap...lol.

Lumped you in with tolbiny, sorry Zygote. My point is the same regarding your comment of course.

awesome thread, thanks jr, just made first bullion purchase, carry on bernank...

Hai guise, I'm trying to remember if any of us made any year end predictions on the gold price that we can look back on and lol about. Does anybody recall such a thing and can a link be dug up?

I'm thinking of starting a gold pool thread for price predictions. It would really include any prices, silver, t bills, oil, whatever. Any thoughts?

PM's from 2+2
MrMusic 1/29/2010
We are in the $16's right now, I would mind holding out for $15, should happen in a week or two. But I do think $17 is a good entry, so obviously $15.25 or so is a gift.

Silver IS set to explode, just sit and wait, I am not sure if we need 18 months or 36, but things are looking good.

Poster Y 5/2010 - Hey, how are you?
MrMusic 5/27/2010

Greetings Poster Y, there are large finds waiting to be made all over the globe. Most junior miners haven't got an ounce out of the ground yet. From discovery to production you could be twiddling your thumbs for 4-8 years. There was a lack of capital going into exploration in the late 1990's and the recent storm of exploration should lead to a large increase in the supply side over the next 5-10 years. Recycling will most likely rise in the short term and central bank sales should ween (CB sales account for over 10% of gold supply currently).

Aside from these basic issues, gold's price moves more when it changes hands. These supply side issues will act more traditionally after the wave is over, the world is effectively bailed out by a super central bank a new non-SDR currency is issued.

Long story short, no that would not destroy the value of gold. Next time it is proposed and you want to keep it simple, just say all these hidden deposits are the only reason we have gold today, and it would not destroy the value of gold, but it would certainly give the miners' owners a tidy profit. If a 1,000,000,000oz supply of silver were easily minable... I would be worried.

We just need to analyze the junior miners who have a good chance at turning a $0.30 stock price into $15.00; as well as the majors with good exploration funding.