Major Banks Buy Gold and Silver
By Patrick A. Heller, Market Update, orignially posted on Numismaster
May 04, 2009
Three times since late 2005, commodity analyst Adrian Douglas predicted major rises in the price of gold. In November 2005, when gold was about $450, he forecast gold reaching $720 after noticing a large increase in the number of call options in shares of gold mining companies. In August 2007, when gold was $660, he noticed a significant increase in call options for the COMEX December 2007 gold contracts, where gold surpassed $1,000 seven months later.
In July 2008, Douglas noted a huge build-up of COMEX December 2008 call options. Shortly after his prediction of higher gold prices by year end, two large banks (probably JPMorgan Chase and HSBC) sold short gold futures equal to 10 percent of annual worldwide gold production. Douglas's prediction of a major rise in the price of gold by the end of December 2008 did not occur, but he still expects a major blow up of the price.
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Wednesday, May 6, 2009
Tuesday, May 5, 2009
June and December COMEX Options turn Bullish
The COMEX December 2009 gold option call contracts outnumber puts by 130 percent.
In the silver market, the COMEX June 2009 call options exceed puts by 80 percent. December 2009 call options exceed puts by 68 percent.
Activity in options for both metals is especially concentrated in the June and December contracts.
This data to mean that smart money is being positioned in anticipation of a massive rise in the price of gold within 30 days and in silver's price within the next 60 days. Then he looks for another jump in prices by December. There could be a price pullback in between the two major rises.
The bulk of activity in precious metals options tends to be from sophisticated investors. Both the gold and silver futures markets are now bordering on backwardation, which signals a near-term major physical supply shortage.
In the silver market, the COMEX June 2009 call options exceed puts by 80 percent. December 2009 call options exceed puts by 68 percent.
Activity in options for both metals is especially concentrated in the June and December contracts.
This data to mean that smart money is being positioned in anticipation of a massive rise in the price of gold within 30 days and in silver's price within the next 60 days. Then he looks for another jump in prices by December. There could be a price pullback in between the two major rises.
The bulk of activity in precious metals options tends to be from sophisticated investors. Both the gold and silver futures markets are now bordering on backwardation, which signals a near-term major physical supply shortage.
Friday, May 1, 2009
Aristotle and Good Money
"Aristotle defined a good money as; 1.) Durable, 2.) Portable, 3.) Divisible, 4.) Store of value. What Aristotle described as good money 2,000 years ago has not changed, sound money must be a good medium of exchange as well as a store of value. Fiat money carries a hefty premium for being a good currency but bad store of value,"
National Inflation Assocaition & GOLD
The National Inflation Association (NIA) has issued advice on how Americans can protect their assets in the face of inevitable inflation.
It said the actions of president Obama, Congress and the Federal Reserve are sowing the seeds for hyperinflation, and it is important to invest today because it will be too late when the calamity arrives.
According to the association, investment in gold is the surest way to protect one’s assets against depreciation.
"There is no such thing as having too much gold," it says, adding, "Although you should never put all your eggs in one basket, it is much better to have all of your money in gold than to have it all in U.S. dollars."
The organization says the present price volatility is a temporary phenomenon stemming from the fact that many short-term traders buy gold as a safe haven from stocks.
Regarding the ways to buy gold, NIA suggests physical ownership as one option that will preserve the buyer’s purchasing power.
The way to get rich during hyperinflation is to buy the right gold mining stocks, NIA concludes.
"Gold exploration companies have the greatest upside potential, but also the most risk," it suggests, adding, "What you need to look for are gold exploration companies that have joint ventures with top-tier miners."
It said the actions of president Obama, Congress and the Federal Reserve are sowing the seeds for hyperinflation, and it is important to invest today because it will be too late when the calamity arrives.
According to the association, investment in gold is the surest way to protect one’s assets against depreciation.
"There is no such thing as having too much gold," it says, adding, "Although you should never put all your eggs in one basket, it is much better to have all of your money in gold than to have it all in U.S. dollars."
The organization says the present price volatility is a temporary phenomenon stemming from the fact that many short-term traders buy gold as a safe haven from stocks.
Regarding the ways to buy gold, NIA suggests physical ownership as one option that will preserve the buyer’s purchasing power.
The way to get rich during hyperinflation is to buy the right gold mining stocks, NIA concludes.
"Gold exploration companies have the greatest upside potential, but also the most risk," it suggests, adding, "What you need to look for are gold exploration companies that have joint ventures with top-tier miners."
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