Saturday, 22 October 2011

Why is the gold price down?

'- The '70's: Gold rose 2300% in the nine years from 1971 to 1980. Sure it is "up" 500% since 2000, but as the song lyrics go "you ain't seen nuthin' yet."
In 1972 it rose 49.7%, in 1973 +73.5%, 1974 +60.1%, and 1979 +140%.

- COT [*1]: The LARGE Commercial "shorts" are violently cutting their positions, absolutely slashing them in Gold & Silver. The 'futures market' data is reading it's most bullish since 2003. (Eight years ago Silver was $4.40/oz., it's over $30 at present). The big boys see what's ahead and are trying to shake the leaves from the tree (flush the weak hands and the retail investors) so they can scoop up more Gold & Silver while covering their 'shorts' at a lower cost.

- PHYSICAL: If you want to get 'physical' precious metals instead of 'paper' you'll have to pay a premium. The paper ETF's GLD and SLV hold no physical, and their trading at 'discounts' should be a clue to investors that they don't have much or any physical to back the paper they have sold. In contrast, Eric Sprott's ETV's (Silver) PSLV and (Gold) PHYS trade for premiums of 20.81% to NAV [*2] for Silver PSLV, and 3.15% to NAV for PHYS (close 19 Oct 11) because they are fully backed by physical inventory. If you can find some physical to hold yourself the premiums get even higher, but it might be a good time to think of yourself as your own Central Bank while the Bureaurats in Europe and at the FED talk themselvs to death while doing nothing tangible to solve the problem.'
More at Theo Spark from Rico.

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