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Balzac89

Balzac89

Undercover Mod
Johnny Retro said:
You are referring to the futures market which settles in physicals which totally debunks your statement. Supply and demand for futures play a huge role in price determination. If futures play no role then the argument can be made that this huge bull market in gold and silver has also been manipulation. It goes both ways. http://www.cmegroup.com/trading/metals/precious/gold_contract_specifications.html http://www.cmegroup.com/trading/metals/precious/silver_contract_specifications.html
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The price has gone down because the demand for these contracts are drying up.

The futures market plays the biggest role in determining price. (It is just that these contacts outweigh real demand, but are not delivered until settled.)

People who want Gold to invest aren't buying contracts. They are buying the real metal.


Companies are settling these contracts in huge amounts like JPM. The pace is picking up also.


I keep hearing no inflation but the cost of producing a oz of Gold is rapidly out pacing the cost to recover it from the ground.
 
Balzac89

Balzac89

Undercover Mod
These is huge demand for Gold and Silver. The Futures allow the market to adsorb the higher demand without raising physical cost.
 
Balzac89

Balzac89

Undercover Mod
The problem is that because of rising demand of the public outside of the real investment realm. They are starting to realize that mines cannot keep pace with demands.

Atleast 40 percent of the Gold market is filled by scrap. That is Gold sucked out of our communities by cash 4 gold scams. What happens when that dries up and demand has 40 percent less supply.

How do you settle contacts when you cannot find any supply.

The Chinese and Indians get it. The central banks get it. Gold is not a renewable resource. Grades of ore are lowering. Costs are rising.
 
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tokeprep

Well-Known Member
Balzac89 said:
The price of Gold and Silver are determined more by contracts that do not involve physical metals.

The Contracts can be settled in real metal or the opposite in cash. (Cash is easier and cheaper)

Supply and Demand for real investment play a very small role in price determination.

Mainly because the contracts account for 100x the amount of physical Gold and Silver that can be bought and sold.
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If I have a huge paper gain on my gold, I might sell the contract to someone else for cash. My buyer does the physical settlement. This doesn't mean the underlying contract doesn't involve physical metals; I merely cashed out my profit by transferring the contract to another person. There is no shell game; there are no contracts for fictitious gold. The fact that the same gold contract might change 1,000 times in a single day is meaningless. It's just people trading the instrument for piles of money, taking profits and losses each time, just like with stocks. The fact that

If you're meaning derivatives, they have no impact on the prices of precious metals. Derivatives that merely represent movement in the price of gold respond to that movement--the contract might say you'll pay $2,000 an ounce for gold in 2015, so the value of the contract will change based on how the price of gold changes before 2015. Price action in the derivatives doesn't define price movement in gold.
 
Balzac89

Balzac89

Undercover Mod
tokeprep said:
If I have a huge paper gain on my gold, I might sell the contract to someone else for cash. My buyer does the physical settlement. This doesn't mean the underlying contract doesn't involve physical metals; I merely cashed out my profit by transferring the contract to another person. There is no shell game; there are no contracts for fictitious gold. The fact that the same gold contract might change 1,000 times in a single day is meaningless. It's just people trading the instrument for piles of money, taking profits and losses each time, just like with stocks. The fact that

If you're meaning derivatives, they have no impact on the prices of precious metals. Derivatives that merely represent movement in the price of gold respond to that movement--the contract might say you'll pay $2,000 an ounce for gold in 2015, so the value of the contract will change based on how the price of gold changes before 2015. Price action in the derivatives doesn't define price movement in gold.
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The point is that the contact does not affect supply and demand until it is settled.

I mean real supply not what the market prices it at.

Demand is far higher than the price dictates.
 
OGEvilgenius

OGEvilgenius

Well-Known Member
Balzac89 said:
The point is that the contact does not affect supply and demand until it is settled.

I mean real supply not what the market prices it at.

Demand is far higher than the price dictates.
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As the recent Fraudex scandal indicated, most will never be settled.
 
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tokeprep

Well-Known Member
Balzac89 said:
The price has gone down because the demand for these contracts are drying up.

The futures market plays the biggest role in determining price. (It is just that these contacts outweigh real demand, but are not delivered until settled.)

People who want Gold to invest aren't buying contracts. They are buying the real metal.

Companies are settling these contracts in huge amounts like JPM. The pace is picking up also.
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What's funny is that you could argue exactly the opposite: demand for investment in gold is what drove the price up so high over the last few years, as billionaires piled huge stacks of their and client money into gold. But the QE inflation never came and gold fundamentals never justified the price; now demand is slack even in India and China, the world's largest markets. With people watching stocks go up 50% at the same time that gold went down 20%, a lot of people redeemed their investments and a lot of those billionaires who pumped the price up changed strategies. Now gold isn't a cool investment anymore, with huge positions still being liquidated to meet redemption requests.

Every trade of a gold contract in a futures market is just another input on what the price should be based on present supply and demand.

I keep hearing no inflation but the cost of producing a oz of Gold is rapidly out pacing the cost to recover it from the ground.
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That's not because of inflation but because the easy supplies have been exhausted, just like with oil. You can't recover shale oil for $15 a barrel (don't hold me to that over the next 5-10 years--I expect the technology to advance with so much money to be made). Alas, there aren't huge deposits of gold sitting around that suddenly became economical to extract with the price at $1,500 or $2,000 an ounce, whereas there's more shale oil out there now than proved reserves previously on the books.
 
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tokeprep

Well-Known Member
Balzac89 said:
The problem is that because of rising demand of the public outside of the real investment realm. They are starting to realize that mines cannot keep pace with demands.

Atleast 40 percent of the Gold market is filled by scrap. That is Gold sucked out of our communities by cash 4 gold scams. What happens when that dries up and demand has 40 percent less supply.

How do you settle contacts when you cannot find any supply.

The Chinese and Indians get it. The central banks get it. Gold is not a renewable resource. Grades of ore are lowering. Costs are rising.
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What's your justification for saying there are more futures contracts than physical gold available to settle in the first place? If you share it, I can probably show you where you're going wrong.
 
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tokeprep

Well-Known Member
Balzac89 said:
The point is that the contact does not affect supply and demand until it is settled.

I mean real supply not what the market prices it at.

Demand is far higher than the price dictates.
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The contract is for the price and is constantly fluctuating--of course it affects supply and demand before settlement. Why should anyone pay $1,600 an ounce if the present price on the futures market is $1,500 an ounce? It would make no sense.

Demand is far higher than the price dictates? What does that mean? Increased demand for gold would drive the price up. The buyers of gold, buying those futures contracts, would necessarily have to bid the prices up if they were all fighting for the same small pool. That would happen in the present market today, not at the time the contracts are settled.
 
Balzac89

Balzac89

Undercover Mod
Hong Kong Mercantile Exchange (Chinese: 香港商品交易所; abbreviated as HKMEx) was an electronic commodities exchange established in Hong Kong for the trading of commodity futures, options and other financial derivatives. The exchange was originally pitched as a platform to trade oil futures.[SUP][1][/SUP] In fact, it ended up trading mainly silver and gold futures.[SUP][2]

lol Wiki

I would use their site http://hkmerc.com/

It does not exist anymore
[/SUP]
 
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tokeprep

Well-Known Member
Balzac89 said:
Hong Kong Mercantile Exchange (Chinese: 香港商品交易所; abbreviated as HKMEx) was an electronic commodities exchange established in Hong Kong for the trading of commodity futures, options and other financial derivatives. The exchange was originally pitched as a platform to trade oil futures.[SUP][1][/SUP] In fact, it ended up trading mainly silver and gold futures.[SUP][2]

lol Wiki

I would use their site http://hkmerc.com/

It does not exist anymore
[/SUP]
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I already looked up what they did and read about them, but this failed business doesn't support your narrative at all. It sounds like the owners/managers were stealing money from the company; the article you just quoted says that Chinese police have arrested several people.

Basically, you're saying that MF Global went bankrupt because there was something wrong with the futures contracts, not because they made horrible business decisions (betting client money on European bonds). There's no allegation in what you quoted that there was anything wrong with this Chinese company's futures contracts--it just sounds like their corporate bank account ran out of money, leaving them no choice but to shut down.
 
Balzac89

Balzac89

Undercover Mod
It was just an example of a failed exchange.

Just showing that the contracts can and will be paid out in cash and not real gold.


The stock market is a joke. It doesn't create wealth. It is a means to steal wealth. Same as credit and every other instrument invented by a banker.
 
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tokeprep

Well-Known Member
Balzac89 said:
It was just an example of a failed exchange.

Just showing that the contracts can and will be paid out in cash and not real gold.

The stock market is a joke. It doesn't create wealth. It is a means to steal wealth. Same as credit and every other instrument invented by a banker.
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The fact that they're financially settling open positions doesn't mean that there was anything wrong with the contracts, which is what you seem to be reading into it. Does the holder of a contract necessarily want physical delivery before the time specified in their contract?

The stock market doesn't create wealth. Companies listed on stock markets create wealth--trillions of dollars of wealth. You don't have to be Warren Buffett to win.
 
N

NoDrama

Well-Known Member
tokeprep said:
The fact that they're financially settling open positions doesn't mean that there was anything wrong with the contracts, which is what you seem to be reading into it. Does the holder of a contract necessarily want physical delivery before the time specified in their contract?

The stock market doesn't create wealth. Companies listed on stock markets create wealth--trillions of dollars of wealth. You don't have to be Warren Buffett to win.
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I think you are missing the point. Gold Futures contracts are predicated on the fact that you should be able to get settled with Physical. After all selling something you don't actually own is the definition of FRAUD. SO if they are selling you the futures, there is the expectation that you can demand delivery, that's 1/2 how futures markets work. The real facts are that you cannot demand delivery, the custodian doesn't have what he is selling and no one can demand physical, check the prospectus.
 
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