Goldman Sachs says it is time to buy gold — the ‘currency of last resort’
The Goldman analysts, with a 12-month price target of $1800 an ounce, said that is about to change,*thanks to the Federal Reserve’s aggressive bond purchase plan*unveiled on Monday, in which the U.S. central bank said it would buy as many Treasurys and mortgage-backed securities as needed to keep financial markets running smoothly.
The Goldman analysts said gold has been weighed down by a world in need of dollars, requiring forced sales of liquid assets like gold. The downturn in oil*CL**as Saudi Arabia and Russia fail to agree on production cuts has also created dollar shortages for emerging market economies, which may have made Russia a net seller of gold, according to Goldman.
In 2008, the Goldman analysts noted, the November announcement of quantitative easing was a turning point.
Ooohh, this should be good. Thanks for starting it.
In my gameplan the liquidation is not over, there is more downside.
With the next leg down in the market gold futures will be liquidated further, possibly down to $1000, then the big rally to 1800 and beyond will start.
I will be playing this with NUGT weekly options spreads, very small size.
"Persistence is very important. You should not give up unless you are forced to give up." -- Elon Musk
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I agree with the pro-gold thesis, but I'm a bit hesitant to long until we get a break of these 1700 highs (and I will long for certain then). It's possible the shakeout of the weak longs has just concluded, but in my opinion, this is the last technical spot that GC could crush them. My hesitation is largely due to the fact that "buy gold" is mostly what I see on Fintwit, even though it's the fundamentally logical conclusion.
Interesting note - physical gold has outperformed futures for some time. Now that the majority of people picking up on this fact, gold alternatives may start closing the spread.
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I love gold and silver and own the physical metal, but I am very disappointed with the performance of Silver over the last decade. I honestly expected a test of the 2011 highs, but it hasn't happened and maybe it never will.
If only the physical market existed for trading, the price would be much, much higher IMO. The paper market does allow for price suppression, one of the reasons why I believe Bitcoin was opened up the masses. Again IMO.
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Comex Gold Futures are currently trading at a significant premium (almost $100/oz) to the spot Gold Market. Rumor is there's a supply squeeze going on with all the (especially Swiss) Gold refiners shut down. Appears that the crux of the problem is that delivery to Comex is 100oz Bars but delivery to LME and the standard in Europe is 400oz bars. Understand there is now a petition to CME to allow delivery of 400oz bars.
I think the key component to this is that delivery is 100oz or 400oz bars. Wonder whether it will actively trade, or even trade at all, or whether it will just be used as EFRP to the main contract so that people can deliver 400oz bars.
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1/.
We went through this once before nobody has any interest in watching an old guy stare at spreadsheets! No sexy charts and random line theory going on here! Just massive boring spreadsheets!
2/. As the Gold Futures main discussion, maybe you should sticky this
3/. Interesting blog post from Craig Hemke of Sprott Money about the ongoing CME delivery rumors. I don't know much about Sprott but they are obviously a physical bullion dealer themselves. Also another Sprott company has several Physical Bullion Trusts. So they definitely have a vested interest. I've heard several interviews with their CEO Rick Rule and always been impressed. Anyway....
I'm not sure I understand his argument. He acts like this is going to cause the Comex contract to fail. Surely if everybody sees this as a way to get their hands on physical gold, but there isn't that much available, instead of the contract failing the price will just scream. It will be like a corner?
4/. That was yesterday and then today this arrived in my inbox...
CME :- Gold market update: healthy gold stocks in New York and London
Gold market update
LBMA and CME Group comment on healthy gold stocks in New York and London
CME Group and LBMA are reaching out to global market participants to ensure they have the latest information and resources, and will continue to coordinate efforts as market circumstances evolve.
Together, both CME Group and LBMA are actively taking measures to ensure the continued efficient operation of global gold markets during this unprecedented time.
LBMA reports record gold stocks
Gold stocks in London remain healthy with the latest published numbers showing record stocks of 8,326 tonnes of gold, which is equivalent to 666,045 standard 400-ounce gold bars. Visit the LBMA website for more information.
Visit LBMA website
CME Group depositories open and gold stocks near record high
CME Group’s New York depositories are operating normally as they have been deemed essential businesses and deliveries are occurring as planned.
As of March 30, 2020, our depositories currently hold 9.2 million ounces of gold (with 5.6 million ounces eligible), nearing a record high in terms of stock levels.
Stock information is updated daily around 3:30 p.m. EST and can be found on our website.
View stocks
New Gold (Enhanced Delivery) futures launching April 6
CME Group is introducing a physically-delivered gold contract with additional delivery and trading functionalities. This contract will enable delivery of 100-ounce, 400-ounce or kilo bar sizes for maximum flexibility.
The contract will also be enabled for inter-commodity spread trading against the GC benchmark gold futures contract, thereby giving existing GC traders efficient access to this new market.
The Gold (Enhanced Delivery) futures FAQ can be viewed below and the Special Executive Report (SER) can be found here.
View FAQ
Nothing to see here. Please move on!
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I'll only just say, those spreadsheets are exactly what the webinar should be about. I firmly believe in that type of analytical process for trading. Your webinar could focus on WHY you are just a boring spreadsheet trader. You don't have to disclose your formulas, but you could lean into the discussion on why spreadsheets are so critically important.
So, I just want to ask you once more to reconsider, and look at it from the above approach -- and how to show people there is certainly another way to be a good trader, without a bunch of charts -- and the awesome power of research and analytics in your trading (without a bunch of lines on a chart).
1) I think many of us would like to hear about your thoughts and experience.
2) almost posted that same article here until i saw you beat me to it. Pretty interesting and shows what little I know right now about how
the gold market really works.
From a technical perspective I could see gold remaining range bound, between 1450 and 1700, for a little while.
Fundamentally I sometimes think of gold as a sentiment indicator for MMT. Not that this informs any of my trades... . Howard Marks recently released one of his memo's, and as always, provides thoughtful analysis of some recent themes in finance. I haven't read the whole thing yet, I usually pour over his memos over a couple of nights, but among the interesting points were:
The balancing act between restoring economic activity and stopping the spread of COVID-19.
The longer the economy is suppressed, the more difficult it will be to resuscitate. On the other hand, the longer the economy is inactive, the more likely we are to minimize the devastation to human health.
Critics of MMT will use the "D" word...debasement, or the dollar losing its reserve currency status. In this memo, HM makes the point that the dollar may not be debased in relation to other currencies. Because everyone (the world) is doing it, which is an interesting point I haven't heard before. In sum, these are uncharted waters and I feel like this could cause some hesitation with gold...if in fact gold is correlated to MMT sentiment in anyway. Which may be a little nutty, but I don't know... .
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IMO what he brings to the table is seasoned trader wisdom.
When I first came to this board he was the only one that gave me the kick in the ass that I needed. Which started a learning process that continues to this day. So I am always all ears as to what he has to say.
"Persistence is very important. You should not give up unless you are forced to give up." -- Elon Musk
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You were heading in the wrong direction. All I did was point that out. You were a strong enough person to realize that and to change your ways. All the work was done by you.
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Let me second what @Big Mike (and your wife) have said: I will watch your webinar, and so will others. People who read your stuff here will want to know more of what you think. Who cares what form it's in?
OK, that's out of the way, now get on the schedule.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
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"Cash maybe Trash" (especially in an inflationary period) but "Liquidity is King". Difficult balancing the two. Right now I have a lot of cash hoping that there will be more bargains for those that have liquidity,
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And after last months 'Gold Delivery Rumors' we now have this...
Gold Market Update
Spot Month Position Limits to Increase for Gold Futures
Effective at the close of trading May 28, 2020 for the June 2020 contract month and beyond, spot month position limits will be increased for five gold futures and options contracts, going up from 3,000 to 6,000 futures contract equivalents.
In addition, the single and all-month accountability levels will be raised from 6,000 to 8,000 futures contract equivalents. Spot month limits and accountability levels in the April 2020 and May 2020 contract months will be unchanged. For the full text of this notice, please consult https://www.cmegroup.com/.
I couldn't easily find the full notice on the website though
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Pretty bullish leg up to near the high of the two-month trading range. It seems pretty tough to remain a gold bull after today's weak close. Seems likely there are sellers below the low of today, but it will be interesting if we get a rally over today's bar. The globexers made a brief go of it, but bears took over. Not sure why I'm posting, other than to dust off this ol' gold thread. ()
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I've heard rumours of gold hitting $3000 in the next year. Apparently several nations banks do not have enough on hand to back requests for people wanting to take physical possession of their gold.
Be interesting to see what happens.
In the short-term I'm bullish. Thinking $1900 in the next 4 months.
Mark
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More than a dozen Chinese financial institutions, mainly trust companies, loaned 20 billion yuan ($2.8 billion) over the past five years to Wuhan Kingold Jewelry Inc. with pure gold as collateral and insurance policies to cover any losses.
...
What could go wrong?
Well, plenty, as at least some of 83 tons of gold bars used as collateral turned out to be nothing but gilded copper.
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let's have a look at the gold market.. The analysis is based on the the weekly market profile in combination with the candle stick chart.
The past one and a half week, the gold market was moving in range with its border at levels around 1796.50 USD respectively 1817 USD. As a result, the market created an inside week illustrating uncertainty about the further price direction.
Candle Stick Chart Range
The market performed a strong long push on Friday and also the market profile shows larger participation and, consequently, interest in the upper range which may be an indicator for preferred trades on the long side.
Market Profile View
Nevertheless, both trade directions must be considered. Taking the long perspective (1), the price may break the upper range border with a first target at the previous’ weeks high. In contrast taking a short perspective (2), the market could illustrate weakness targeting the range low or even the previous’ week low. In both cases, the range borders illustrate interesting levels since large market participants are looking for liquidity which they find at those significant levels.
Let's see where it goes..
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Gold certainly has support in the 1675-1700 zone which so far has held. IMO new historical highs lie ahead with the first step up to 1923 and the second to 2150. For Silver, it looks like the 12.50 downside target ended the long silver bear market. Next upside target is 25.00.
Just my musings.
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Yesterday, the gold price moved back into its Thursday range during the Asia session. A buyer defended the range and pushed the market in the long direction reaching the first target at the weekly range (1) top. The market got very volatile with the US opening but maintained buyer strength where the range top now functioned as a support level confirming the preferred long direction.
Candle Stick Chart Range
Similarly, the market profile illustrates the situation in a broader perspective. The price reached the week’s top (3) and broke it but could not yet reach the second target level at previous’ week high (4)
Today, the gold market continued to illustrate buyer strength pushing to the upper range border (2) while reaching the target level during the EU session. Subsequently, the market showed further buyer dominance and sellers got kicked out of the market resulting in a strong long breakout.
I did start a journal earlier but got blocked because I stated being a vendor when I signed up for this community and posting trades is apparently prohibited for vendors.
I have never really completely understood the fundamentals that move gold. Earlier this year GC seemed inversely correlated with DX, at other times there was direct correlation. Sometimes there seems to be inverse correlation to equities (the 'haven bid'), other times it has moved with equities. Rising national deficits, perma-low interest rates, and/or banking system concerns...those kind of concerns generally move gold. So there seems to be a special kind of fear that moves GC. At any rate (accidental pun ), I was interested in reading other's thoughts on this.
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I've always subscribed to the "haven bid" concept you mentioned,
"aggressive monetary policy financing of fiscal spending,
which limits the ability of bond yields to rise,
that in-turn is sending inflation-adjusted, or real, yields lower,
which tends to boost the bid for precious metals"
Here's a link to a Point/Counterpoint article discussing the "Case for Silver" during this recent price run up in precious metals.
It's not a "be all" answer to your question, but it does outline some interesting differences between the "Precious Metals" that hadn't occurred to me.
Trade well,
John B.
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I have blogged about the fundamentals of gold as I have been buying and selling gold and silver coins for over a decade. I have never lost money doing this. I have lost money on futures, but mainly because of margin call. So, I have since reduced my exposure and have remained profitable.
I'll share some insights that many ignore, but really shouldn't. First, gold is to hold. Silver is for trading. This is extremely important. Second, gold and silver take their orders from the spot markets. Know the spot markets to know gold and silver.
Third, when investors are the top buyers, know that we're in a bubble. As of April, investors became the top buyers. This tells me that this cannot last. I don't know how long it will last, but it will fall. Also know that the largest buyers of gold are in China and India. Their demand has plummeted since COVID-19. I am riding this bull market, but realize that a peak will occur and it will precede a spectacular fall.
Finally and probably most importantly, do not fall for the inflation myth. Gold does not protect against inflation unless it is hyper/mass inflation on the verge of a currency crisis like Turkey/Venezuela. If gold protected against inflation, why did the price plummet after 1980 for 20 years? Based on the 1980 high, gold still has at least another $1000 to go before it reaches inflation adjusted all time highs. Hence, gold is insurance against a poorly managed economy with an out of control central bank.
Conclusion: Gold fever is here. The smart money bought $300 after it already moved. Paul Tudor Jones was recommending in 2019 when it was $1300 an ounce. In March, everybody had one last shot at getting the $1400 price. Personally, I think gold will drop once the supply picks up. With the gold coin mints not producing in the US until at least September, the shortage may prolong the bull run. However, long term the ETFs have to keep buying enough to make up for the jewelry buyers. I just don't see how that is possible in the long run.
There is also a very real chance that a central bank could unload a large chunk of gold ala the English central bank in the 1990s that could very well be the trigger to pop this bubble.
Long term, I'm bullish on gold, but short term, I'm ready for a significant dip.
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Delta seems unhelpful due to the low volume/DOM depth. It seems to me that there may be something in looking at the volume profiles but i have found it to be a bit hit and miss so far (but maybe I am not doing it right).
So far I have been fading large/fast moves in price and also range edges but again, it doesn't seem overly consistent.
Someone mentioned pivot points but I have not managed to get anything useful out of the daily pivot point SierraChart study. Someone else mentioned Floor Pivots but I haven't found any SC study for that.
Does anyone have any pointers, tips, suggestions, etc.?
yes, it seems to behave sort of like NQ, but not as erratic (I guess it is due to the higher DOM depth), which is advantageous if you think you made a mistake as it does revisit prices quite often.
in any case I take it that what you are trying to tell me is that GC is best played on a slightly longer time scale than a few seconds/minutes?
Everyone trade differently. If it suits your style and it works, you could get quick profit. Just understand that when it goes against you, it could be fast, and it hurts as much if not more.
Sleep well, Eat Healthy, Breathe...
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Been trading Silver about 95% of the time and the rest GC this past summer because ES was a slow mover. I been basically using GC and Equities to correlate the SI moves. Also watching USDX. Metals kind of being in a funk back to balance and look for the catalyst move to take advantage of. There's seems to be alot of anticipation for both SI and GC so I've been keeping it up on my radar. Posting my chart from last week. Note the larger moves.
Thanks. I am a gold bug, but I also am a reality bug.
It seems that ETF inflows picked up in September and gold has showed bullish signs after a big decline. However, in the past few weeks there has been what appears to be a dead cat bounce after the double top at the beginning of September. I trade silver, but use gold to get an idea of direction.
Given that silver has not reached all time highs, this is clearly a fear based bull market. China and India have picked up demand, but weddings in India are still banned due to COVID-19. I believe the ban was set to end sometime in September, but I think they have been extended (I don't know for sure).
In short, gold may go up due to a panic, but until there is a re-opening of the economy it is doubtful that the metals will take off. I think once the economy opens up, the metals will soar. That's exactly what happened to silver in May. At least, that's how it appeared when I started tracking it. What I remember most is that silver took off as soon as the exchange lowered margin requirements so I am also looking for that to happen although it may not.
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The more money central banks print, the more attractive gold becomes. IMO if gold is going to see the prices many are now talking about it won't be because retail demand it will be because institutional portfolios increase their gold weightings. Even a small shift in their portfolio's equates to large change in gold demand.
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Hello, does anyone know what the next active contract will be for /GC in ThinkOrSwim? I'm hoping not to call in to TD to find out or wait... maybe someone knows what the process is?
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Not sure about TD specifically but when people stop trading Dec20, the most liquid contract will be Feb21. Today Dec has already traded 300k contracts, and Feb has traded 100K. No other month has traded more than 6k contracts.
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Hi, thanks for your response! Yes, I was assuming it was going to be Feb based off of the volumes but didn't know for certain as yet.
I got the following email and am figuring out whether to roll earlier or not...so decided to check w some experts on the forum. If you have any experiences in rollover, I'd very much appreciate an advice.
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The Dec contract doesn't expire until 29-Dec but first delivery day is 27-Nov. So if you have a Dec position after 27-Nov you could be required to make or take delivery. Hence why anybody who doesn't have gold in the warehouse gets out before first delivery date.
As for rolling....
Dec/Feb is 6.25c which is 3.125c/month
Dec/Apr is 10.35c which is 2.5875c/month
Dec/Jun is 13.35c which is 2.225c/month
Dec/Dec is 21.95c which is 1.83c/month
So if your buying and holding the further you roll back the cheaper it is 'per month'. If your trading then maybe Feb is best as it will have the most liquidity but saying that Dec21 is a 1 tick wide market most of the time as well. It just doesn't trade much.
I rolled my heavily underwater length back to Dec21 as I think this is a position I will have for a while.
Gold rolls each 2 month (except Oct contract, I could never find out why nobody or less traders trade the Oct contract, but the Aug contract rolls to Dec instead to Oct) between there some other contracts (I guess for commercials, but not for retail traders, so for retail-trader the following month are available: 2, 4, 6, 8, 12
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Being an energy trader where they list every month I've always found the listed/active months strange in some commodities. Silver is different again. HKNUZ.
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Financials (HMUZ) I get. No need for more granularity than that.
Grains I understand that its obviously seasonal and lines up with production. Need grain in June well its just May plus Storage. In fact I believe the grains contracts actually have storage rates built into them.
But what about Meats? Slaughter houses are operational 24 hrs a day, 365 days a year. How do you hedge months that don't have listed contracts?
Gold and Silver (and Currencies), while only listing some months on a forward basis, do list contracts for the first three months. So while Z and G have been listed for a long time F has only been listed for a few months, and when Z expires they will add H. Then we will have FGHJ and all the standard months. This adds the granularity you need if your in the wholesale market and need to hedge off cycle months. (Eurodollars is similar, 10 years of HMUZ plus prompt 4 months. Crude used to be like this as well. 7 years of M and Z only and then 3 years of every month but a couple of years ago they went to 10 years of every single month!)
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let's have a look at the gold market again.. The analysis is based on the the weekly market profile.
The week before last week, the gold market’s initial balance (1) was left to the downside via a strong short move. The market created a single print area which, simultaneously, represents are low interest area (2). Last week, the broke the low interest area (2) and tried to find acceptance above the former single print area. However, the market profile indicates rejection of higher prices (3) resulting in a short move below the low interest area (2) while maintaining the low interest area the current week as well (2) and creating a new weekly low (4).
14022021 1
Interesting price levels for the coming week are the low interest area (2) and the weekly low (4). Considering a buyer perspective, the market could test the weekly low moving into a long move from there with a first target at the low interest area (2). Should the market illustrate buyer pressure immediately, it could also try to overcome the low interest area (2) continuing to move further long with a first target at the last week’s VPOC level. Considering a seller perspective, the market might test the low interest area (2) and gets rejected from there with a first target at a weekly low (4). Should the market illustrate seller pressure immediately, it could also try to overcome the weekly low continuing to move further short with a first target at the week before last week’s low. Should there be no initiative buyers or sellers, the market can be expected to move in a range. Due to the rejection at the last week's high (3) preferred trades are on the short side.
14022021 2
Please note an analysis is always a view of the current situation and needs to be adapted in the course of a trading day.
As suggested in the previous analysis, the market remained undecided on Monday due to Presidents’ day in the US and, consequently, lower volume and less initiative buying / selling. Tuesday, the market gained power and followed the preferred short direction while reaching a previous high interest level (1).
. Howard Marks recently released one of his memo's, and as always, provides thoughtful analysis of some recent themes in finance. I haven't read the whole thing yet, I usually pour over his memos over a couple of nights, but among the interesting 
)
