Gold $6400, Silver $80 – Why would they be at
Ref: 09-035A of 1st December, 2009
Are you reading it correctly? Yes, you are. Am I out of my mind? No, I am not.
Gold prices are on upswing. They are going up at the moment slowly due to rising loss of confidence of the Investors in paper currencies and also people at large. Gold is going up not because of hedge against inflation – no one consciously buy this metal with inflation in mind. Have you ever gone to a jeweler’s or gold shop to buy the gold as hedge against inflation? Definitely not.
The analysts and media who have been touting rise in gold as investor’s intention to hedge against inflation must get their head and speech examined. They have been spreading LIE at the instance of the officials of respective governments. With the loss of confidence resulting in steep decline of US dollar, the US administration has been reiterating its oft repeated stance of strong dollar policy; and when the world is not listening to buy the bankrupt dollar, they have been using media and analysts to tell the world NOT to buy gold, adding that gold market is in bubble which is going to burst one day.
Anything will burst one day. Everyone will die one day. Does it mean that we should leave our desire to live and enjoy our life? It is nature’s cycle that what is borne today will die one day; and what is falling or rising one day will rise and fall one day. It is the eternal truth. We do not have to go to the Harvard or Wharton to learn that. This is the parental heritage.
Yes, Gold and Silver have been rising due to investor’s preference to get away from paper assets to something real. They no longer treat Real Estate as really a Real wealth! This is why they are turning to Gold. Gold is GOD, Gold is Truth, and in India there is official state Sanskrit symbol “Satya Mev Jayte” that means “Truth Alone Wins”.
This is the reason that even an illiterate Indian is buying gold all the time. He is not illiterate, today’s Bankers, Investment Bankers, Insurers, Central Bankers, Finance Ministers, Governors are. How do you measure the actions of all Central Bankers, including that of George Brown, the Prime Minister of UK who was the Chancellor of HM Treasury, sold Gold at the bottom of the cycle – $ 260 to $320? Almost all Central Banks sold over 3000 tons of gold at the rock bottom prices during last 15 years.
Is there any demand –supply imbalance that pushes up the gold? No. The demand-supply rule operates in normal times, not in emergency or 911 call. And why should Gold go to US$ 6400 and Silver to $ 80 as projected by this Author? Why?
What the World Doesn’t Know
..Is the hidden the fact that “United States has lost almost all of its Gold during its covert practice for over 20 years”. YES, the gold may be there physically at Fort Knox or HSBC Bullion Vault in USA. But that is NOT enough. Who owns the gold is more important than who keeps the gold. It is like your goods are in a warehouse or bank locker. The warehouse-keeper or banker can not claim Title to or Ownership of those goods. These goods are kept with him in Trust.
The FED and Treasury appear to have been concealing lending of gold to hedge funds by camouflaging transactions through various central banks. When those Central Banks lend to these hedge funds to short the gold, they appear to claim the gold from Fed and Treasury who earmark the gold in its balance sheets. In other words, the earmarked gold shown in Fed / Treasury balance sheets is in fact owned by foreign Central Bankers and is no longer owned by the United States. If the shorted gold does not return to Fed/Treasury, they will be obliged to show it as “sale” one day. That day of reckoning will come when the Foreign Central Banks start demanding the gold physically.
According to my own research almost 6100 tons of gold earmarked in the Fed/Treasury balance sheets are non-returnable. The hedge funds who shorted it at prices $260 to $360 can not buy back at today’s prices. If they can not return, their deposits will be at the most forfeited. In other words, the Fed/Treasury will be forced to recognize the forced sale of gold @ $260 to $360 or more, but not more than $430 at the most. That is, Americans have lost their most valuable and prized asset – Gold – due to fraud perpetrated by the Fed/Treasury officials. It happened without their knowledge because the Fed/Treasury balance sheets were never audited. The office of OCC (Office of Controller of Currency) conducts only physical verification of the gold, not the true ownership. This is why Ron Paul, Senator, introduced a bill to audit the books of Fed. That is not enough. The gold is handled mainly by US treasury – Fed merely manages the operational part.
You must read my book “Sub Prime Resolved” Chapter 14 titled “Where is MacKenna’s Gold” which deals with this issue comprehensively in 30 pages and proves beyond doubt that “United States has lost almost 78% of its gold through covert lending practices to certain banks, investment banks and hedge funds to depress the gold prices with intent to control the inflation numbers to help them justify lower interest rates”. The book uses same official figures churned out by the Fed/Treasury.
There is further possibility of more selling after the writing of this book. Total loss could be 90%
It is a Great EXPOSE since the Watergate Scandal.
The book goes to the bottom of the statistics and its couched language (with double meaning) to conceal the truth. Most of the gold must be belonging to European countries, Switzerland, IMF, World Bank and some other major gold owners such as Australia and Canada, who live in the dream world that their gold is safe in the vaults of the Fed.
When the Truth will come out?
If there is a massive call from the States and Local Governments like California to launch a campaign against the Fed/Treasury to give them enough funds by selling part of existing gold reserve of 8134 tons, will meet with the denials from US Administration (Fed /Treasury) on evasive grounds.
Both Fed/Treasury know pretty well that there is no real gold ownership left with them, and that selling of gold belonging to other nations would tantamount to committing breach of trust. Even the President of United States, be it were President Clinton, George Bush or Barack Obama, may not be aware of the constructive loss of US Gold through the hedgers who acted solely at the behest of same Fed/Treasury officials having ulterior motive.
The gold borrowers are obviously who is who in the field of banking, investment banking and hedge funds. If they are sought to be prosecuted, with the threat of perjury, they will come out in the open with the truth. Some may even commit suicides rather than facing self – incriminatory charges and face imprisonment for life.
When the market realizes that the US no longer has as much gold as claimed, in fact having lost almost 77% as above, hell will break lose in the media, town hall meetings, White House, IMF Head Quarters, World Bank, European Union, Great Britain, China, India and Switzerland. Many of them are the real owners of the gold who presumed that it is lying in safe place in United States. They will realize first time that “United States is no longer safe place to keep gold” owned by them. What they own is the piece of paper from United States promising them to deliver the gold on demand.
This is why I always mention in many articles and reply to readers that “Physical is Physical, and Paper is Paper” Asset. One would be downright stupid if he entrusts tons of gold to some one other than him. It is like entrusting one’s wife in the care of another man. Gold is the kind of assets that must be held by the owner physically.
Turning to recent rise in gold prices, please look at the Open Interest for December 2009 and February 2010. The shorter have been rolling over the contract every two months in the hope that the prices may drop so that they can cover their short position. However, the gold has been rising for over 5 years, denying them comfort so badly required by them. Look at the following “Open Interest” positions (our comments follow thereafter):
At the time of writing, the Open Interest position relating to gold for two key months – December 2009 and February 2010 were as under:
2009.12.01 GOLD Dec 2009 (NYMEX:GC.Z09) OI 12,041 contracts (= 1.204 Million Troy Ounces)
Or 37.45 tons valued at US$ 1.442 Billions
2009.12.01 GOLD Feb 2010 (NYMEX:GC.G10.E) OI 364,298 contracts (= 36.429 Millions Troy Ounces)
Or massive 1,133 tons of Gold- 50% of world annual production deliverable in One month
Now, look at the following chart of 27th November, 2009 when the gold dropped over 4.5% in matter of minutes:
In matter of minutes, massive volume of over 111,000 contracts equivalent to 11,100,000 Troy Ounces or 345 tons were recorded.
Some operators manipulated to crash gold prices in matter of minutes so that they could buy back or cover the short position for Dec 2009 period.
The contracts were rolled over into Feb 2010 contracts where the Open Interest swelled to 364,298 contracts or 36.249 millions of troy ounces or massive 1,133 tons of gold. It represents 50% of world annual gold output to be delivered in one month only.
It is possible, the shorter may try to roll over the Feb 2010 contracts into longer dated months, provided the music does not stop here. If roll over facility is stopped, the short sellers would be obliged to default or doom to their failure.
- Just imagine. The gold prices have risen to US$ 1195 due to normal investment demand. If those buyers or large investment funds/hedge funds get the wind that there is no real gold with US, a massive rally may ensue due to heavy rush to buy back the contracts under Open Interest. The gold could propel into uncharted territory. It is just wild guess where the gold could possibly go to $1800, 2400, 3200 or 6400?
- The gold could go to$ 2400 due to normal Investment demand. The gold reached the height of $ 850 in 1980s. If you use today’s inflation adjusted dollar, the price could go to $2400 presuming other factors remain constant.
- The US$ index now at about 74 could drop to psychological 71 level (intermediate) or 4%. It could drop further to 65 and finally solid support at 61. This means that the dollar could drop by 4% in very short term to 20% in 9 months. In other words, the rise in gold prices due to weaker dollar could rise by another $480 (20% of $2400)
- The recent financial crisis has thrown Central Banks (Fed, HM Treasury UK, European Central Bank, China, India, Australia, some smaller Asian nations, to print over $ 6.6 trillions of dollars equivalent. Considering the global Gold Stock of about 80,000 tons in the hands of Central Banks and Private individuals (like Indian/Chinese citizens). If you divide $ 6.6 trillions/80,000 tons of gold, the Equivalent price of excess money will be $ 2,566/ounce.
- Thus, the notional price of gold should be $2400 + $ 480 + $ 2566 = $5,446 ounce
- ADD to it if the short sellers have to rush to the market to cover their shorts which could be any number $ 1000 to $ 8000. I am counting only $ 1000 as short covering effect, which would raise the price of gold to $ 6446 or say $6400 as the caption shows.
- In reality, the price could rise much higher because the $ will weaken much further, by another 40% ($ index to 40 or about). It will potentially add another $ 2000 per ounce.
- The price in non-dollar countries may not rise to that extent, because the effects will be muted to the extent of local currency appreciation.
- Gold and silver has outperformed every other Asset class in last 5 years. See the following table.
SILVER
Historically ratio of gold to silver in 80s was just 16 to 20 (When the gold reached $ 800 the silver peaked at $ 50 giving Gold/Silver ratio of only 16. In that case, why our projections give Gold a target of 6400 and only $ 80 to Silver? It should have been $400. But not so, because Silver is no substitute of gold anywhere. It is available plenty and also, an industrial metal. Every copper producer has a bye-product of Silver. Gold is never a significant bye-product of any mining operation. Further, the industrial demand of Silver may gain if new cell battery known as “Ag-Zn” (Silver Zinc battery) replaces the Ni-Cd or Lithium battery. The new Ag-Zn battery is reported to be super conductor of electricity and heat, far superior to any other battery in the market place. It also implies that Ni and Cadmium prices will turn softer due to lesser industrial demand.
TARGET QUALIFIER
- I have a Gold Target of $ 1500 (by March, 2010), $ 1800 (June, 2010), $ 2100 (Sep 2010), $2400 (Mar 2011), $2800 (Dec 2011) and $3200 (June 2012) in normal circumstances due to investor’s demand and weakness in currency WITHOUT taking into account the short covering related rise or additional Central Bank purchase (such as India)
- The target could be higher by 50% and time shorter by 25%. If the short covering takes place, Add 50% to the above target price.
- Dollar weakness will add more. The dollar has more credential to go lower.
- However, if the Obama Administration adopts the measures suggested in my book, the fall of dollar would be arrested or reversed.
- However, the gold prices of other countries will rise due to weakening of local currency. In U$ terms they would be corrected.
- If dollar is demonetized or reverse split (cancelling current dollars and replacing them 5 to 1), then the price of Gold will decline to reflect the reconstituted currency.
- In less than 30 months, if the present liberal monetary policy is pursued, and short covering does take place, the gold price could rise to $ 6400 in 30 months. Some major banks in the world could be busted. (2 from USA, 2 from UK, One from Europe) and One from Switzerland)
- Once the gold therefore rises to $ 3200 or about, the investors may adopt the trading strategy. Until then, they can afford to buy and hold for a period between 12 months to 18 months.
- There could be predominant selling from India, including Central Bank to book profit. Many may be tempted to sell gold and buy home which is the average dream of any young person. You have to allow reduction of prices on account of this factor.
- The current prices of $1200 are therefore screaming bargain. They are still at 50% discount to inflation adjusted dollars.
- The investor must read my book “Sub Prime Resolved” that cost only $ 59.95. It is advisable to spend $ 60 before committing large resources for investment into Gold or Silver.
- If he disagrees wit the finding on Gold chapter, he may not adhere to above targets, but may scale down by 30% to 50%.
- He may ignore the effect of short covering.
- The investor may use the following table as guide. The figures input are dummy. See Excel spreadsheet for Download. The investors may use it to input their own variables.
Anil Selarka, Author (Kalidas)
Hong Kong, Ref: 09-035A of 2009.12.02
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Disclaimer:
Please note that this is the considered opinion of the author. The author is not liable or responsible for any loss or damage the investor may suffer if the situation does not develop as intended or forecast. This article is meant for only experienced investor or professionals who understand the vagaries of trade.
Link to this page
Dear Kalidasji,
Sir I have invested in Gold ( 300 gms ) at average rate of Rs.17661 , I would like to have your advise is this current correction in Gold is advisable to add more or shall wait for further correction. I am planning to add more 300 gms.Kindly please advise as I would be highly obliged for your valuable suggestion.
Regards,
Raj V,
Ghatkopar , Mumbai,
India
Kalidas Says ….Saturday, January 30, 2010 at 9:24 AM HKST
Wait for a couple of days. If the price remains above $ 1085, buy more in two lots – 150 gms each
Raj V
30 Jan 10 at 12:20 AM
Dear Anilji,
Gold is looking weak in paper trading & USD is climbing new high which is not reflecting our views as well as facts. Since both are paper trades we can not 100% rely on this due to heavy manipulation.
Searching through web for real situation on physical Gold market I came across few blogs where they are echo your views about difficulties in settlement of Physical Gold.
We all know your border view on Gold going forward but I request you to share your view/information on current physical Gold market. Since We trust you the most your view is most important.
Parag
Surat
India
Kalidas Says ….Friday, January 29, 2010 at 2:47 PM HKST
Do not bother about short term manipulation. 10% movement is okay for any investment product. Gold is gold, not trash paper. Stay with it. I have given my target and reasons earlier. There is no change in my views.
Parag, Surat
29 Jan 10 at 12:54 PM
This note is to follow up on your advice to me, so that you and other fellow-readers know that I have invested as per your advice.
I have purchased American Gold Eagle bullion Gold Coins ( 1 oz) using 20% of cash available @ the rate of $1190 per troy Ounce (reflects markup and spread) on Jan 18. I compared prices on MONEX and they offered a good buying eperience. Most of them have a minimum purchase order of 10 troy ounces (or approx 310 grams). I understand Gold today is at $1157, which is a $33 per ounce drop. Regardless, I plan to hold as per your prediction and see how this investment turns out. I have not purchased the 5% of Silver that you adviced me to buy as I do not have storage capacity/facility. Next, I do plan to try and follow your stock market observatory. With regards to that,
1. If you have any documentation for NRI’s on best practices to adopt for trading in indian stocks, please advice or point me to the right direction.
P.S. While I do want to convey my appreciation for your time and advice, I have not done that here explicity in order to follow your norms of message-posts.
Andy Aiyer, Chicago, USA (January 21st, 2010)
Andy Aiyer
22 Jan 10 at 5:27 AM
Dear Anilji,
Both Gold & Silver hammered in last 2 days. (3rd time in last one and a half month)
Do you see any immediate rebound from USD 1085 level or this time it will take more time to recover or may go below this level? I am not asking this for trading as I am very much appose to idea of trading.
I am invested in Gold (225 gms) at the Average Rate of Rs. 17,400 & plan to hold the same.
I know your views about this but I am confused due to rapid changing scenario in currency market & many contradictory report & news flow. It is very difficult for me to judge the implication of all this on Gold price. I am very much convinced about your view about Gold & Silver. But I was not expecting such a huge Volatility at the time of investment.
Thanks.
Parag, Surat, INDIA
Kalidas Says ….Friday, January 22, 2010 at 10:51 AM HKST
No need to worry. it is quite obvious that the crisis is worsening. Current fall in gold prices is US attempt to jack up dollar index to depress almost all commodities, gold, oil etc so as to control inflation numbers. It is not going to work. Do not be worried. If you have invested upto 20% of your money into gold, it is fine. No need to increase more. Let more money remain in bank deposits, especially in savings account so that you can use them when outstanding opportunity emerges.
Parag, Surat
22 Jan 10 at 12:33 AM
Kalidasji,
“Forensic Examination of the Gold Carry Trade” by Rob Kirby
The link below says exactly what you say-
http://www.financialsense.com/fsu/editorials/kirby/2009/0513.html
Jamuna(Rang-Jama), Bangalore, India.
Jamuna(Rang-Jama),Bangalore, India
17 Jan 10 at 12:57 AM
Dear Sir,
An interesting article ‘The Nine Chinese Men Who Control the Fate of America’
http://www.dailywealth.com/index.asp?subscribed=yes
Some pointers:
- China has been increasing its holding in US treasury bonds ($ 99 billion in year 2000 to $ 941 billion in year 2009). Reason? They want to keep their currency artificially low to earn from exports.
- India has bought $22 billion worth treasury bonds (more than the amount it spent in buying 200 tonnes gold worth $ 6.7 billion).
Though the author says that US dollar would crash, but his opinion is that it won’t happen soon, not at least in the year 2010.
I have been reading your articles and read your book as well and convinced that dollar will crash and gold will soar to unprecedented levels. However, after reading this article I tend to agree with the author that the dollar fall, though imminent would take some more time.
I would appreciate your comments on the following:
- What would be the implications on the stock markets? Will they crash heavily and suddenly if dollar does not fall in near future?
- What would be the impact on the gold prices if dollar does not fall heavily this year?
Regards,
Hitesh
Mumbai, India
Hitesh
6 Jan 10 at 8:48 AM
Respected Kalidasji,
This year you took us in to international issues with your golden logic and strong conviction. Dollar dominance, Dollar Index, Gold role and articles on Citi, GS etc., are all eye openers to international issues. Our investments are influenced by your logic. Our outlook is getting a sea change thanks to your out of box thinking and explanation. Sometimes your radical solution is suspicious but events are happening. Nobody visualized that Reliance lost money in derivatives. I never come across from any magazine. The reported lower profit and merger with RPL attributed to derivative loss only.
The coming decade will be a diamond decade for all of us with your presence. In this respect, kindly accept our wishes for you and your family “A HAPPY, HEALTHY AND PROSPEROUS NEW YEAR”
Regards,
V.S.Kumar, Jorhat
Kalidas Says ….Friday, January 01, 2010
Thanks, I will strive to do better in 2010. It is the best way to wish you Happy New Year
V.S.KUMAR
30 Dec 09 at 11:47 PM
Dear Sir,
For Gold point no. 2) Quote “The US$ index now at about 74 could drop to psychological 71 level (intermediate) or 4%. It could drop further to 65 and finally solid support at 61. This means that the dollar could drop by 4% in very short term to 20% in 9 months. In other words, the rise in gold prices due to weaker dollar could rise by another $480 (20% of $2400)” Unquote … i didn’t understand why you choose 20% of 2400 instead of 20% of Current market price of gold for further rise in gold prices due to dollar weakness.
I want to understand the logic behind such correlation.
Regards,
Vivek, Gurgaon, India
Kalidas Says ….Wednesday, December 30, 2009
Gold price can rise due to the following two reasons:
1. Demand for gold itself due to loss of confidence in paper currency.
2. Due to weakness of dollar
Due to natural rise in demand in gold, the price could rise to $ 2400. If the dollar drops in the meantime, the gold price could rise by another 20%. These two factors contribute Net Rise in gold prices.
Also visit website http://www.kitco.com where daily movement in price of gold is defined in two ways – dollar weakness + real buy/sell of gold.
Vivek
30 Dec 09 at 3:49 AM
Golden words – “Many investors are not afraid of losing money; they are afraid of making money. ”
May be you wanted to letter the above words in Gold before the metal shoots up. Of course, these words are applicable not only to Gold but also to your specific buy/sell calls.
Kalidas Says ….Thursday, December 31, 2009 Reminder: Please append City and Country name to your signature invariably.
Yes, you are right, It is everywhere. Look at the recent questions – the people were not afraid of buying gold at $ 1150 to $1200 and are asking 1o times questions when it is below $ 1100. The people were afraid of buying IFCI at Rs 120 and when it dropped to less than Rs 20 everyone ran away and did not even average down by buying huge quantity.
The investors have bad habit of worshipping rising Sun.
vc sekar, Delhi, India
28 Dec 09 at 9:23 AM
Respected Sir,
Colorful evidence of suppression of gold can be found in the following URL http://www.marketskeptics.com/2009/12/excellent-opportunity-to-buy-gold.html
Other important articles for gold investors are:http://www.stockhouse.com/Columnists/2009/Dec/22/Got-Gold-Report–ICE-commercial-traders-hugely-sho
http://tinyurl.com/y9hcxv4
These evidences will reinforce what Sh. Kalidasji has been espousing for the last few months for the purchase of gold as a good investment. Thanks You Sir,
Regards,
V.S.Kumar, Jorhat
Kalidas Says ….Sunday, December 27, 2009
Thanks again for bringing out colorful chart. There is lot of truth in it. The author has correctly pointed out the trading pattern. He has clearly distinguished the physical trading and paper trading in gold.
This is the reason that I was firm believer of buying physical gold. We do not know yet whether India bought the gold through electronic credit or got the physical gold transferred to India. In all probability, the gold is still on paper.
V.S.KUMAR
23 Dec 09 at 9:51 PM
Dear Kalidas
I am regular silent reader of your articles. Recently I have invested around $10,500 (at $1150/Oz) in Gold. I have moved to US on short term visit and am presently at New Jersey. I have one question ? Considering the high stake US , Japan and China is having in maintaining the dollar value and the clout they have, will they allow dollar value to come down so fast (With in next 7-8 months). If the dollar value does not come down, will the gold raise to the level expected (Unless something dramatic happens and truth about gold in Fort Knox comes out). Here is an interesting article which matches exactly with what you have been saying.
http://www.onlygold.com/articles/ayr_2001/So_Whose_Gold_is_it_at_Fort_Knox(September_1_2001).asp
Regards
Jay
New Jersey
Kalidas Says ….Sunday, December 27, 2009
Stay with your gold holding. It will save you and also make good money after few months.
No country howsoever large can manipulate markets too long. If US goes down, both China and Japan will go down also. This is why I am more bullish on India than even China.
Stay with India. Gold, Silver and Palladium. Japan has been buying dollar since 142 and has lost 35% or $ 350 billions (142-91 = loss of 50 yen/$ = 35% = $ 350 billions on $ 1 trillion $ reserve)
So also China. They are long $ 800 billions in US treasury and $ 700 billions (my estimate) on Euro dollars. They have been buying dollar from 8,28 Yuan/$ to 6.83 Yuan/$ or 18% or $270 billions. The biggest creditors become biggest losers when the biggest borrower fails – this is the reality. I would not buy US/China/Japan – they are all losers.
$ is destined to fall – the question is how much and when instead of whether. There is no gold at Fort Knox for sure (my book Chapter 14 of may book SUB PRIME RESOLVED shows that with full evidence.
Wait for my latest article Falling from the Cliff to complete and then another article Who is buying dollar anyway?
Jay
23 Dec 09 at 9:47 AM
Respected Sir,
US third qtr GDP revised downwards third time from an initial estimate of 3.5% – 2.8% -2.2%. Is this final or real? Economy is limping with Govt. subsidies in vehicle/house purchases but people in US have not realised their plight.The Gold price is still in a ‘correction phase’. The reason for the lower price attributed to unprecedented rise in dollar index and unwinding of dollar carry trade and hedge fund selling. It appears that Gold as a bull (and its logic) is known to very few persons in West and general public are reluctant due to their poor fundamentals. About 40 states of US are heading to bankruptcy. Similarly, $100B is under funded in pension funds of top UK firms that include firms like Shell, BP etc. These are the many pins trying to attack the dollar, dollar index bubbles. Hedge fund hero John Paulson who minted $15B for the firm in the year 2007 is now hedging against dollar by supporting Gold. How much take he will have in tens/hundred of billion of dollars by bursting above bubbles only time will tell. If he does definitely he will be a hero but world economic order will be in shambles. These are my observations if possible kindly elaborate with your brilliance.
Regards,
V.S.Kumar, Jorhat
Kalidas Says ….Sunday, December 27, 2009
I must say you know a lot sitting in Jorhat, relatively lesser known town or city.
Reg: GDP – I agree with your analysis. The Administration always bluff its way out. The people react and then forget. The Dow gained 1000 points on the back of strong GDP and then forgot to correct on reality. The GDP is still lower because its component “Stock Market” is lending its weight due to higher stock prices. In fact, the stock market should not figure into GDP component at all. Stock market is the result, not cause.
The strength in dollar index was temporary. it will start unwinding after 28/12 as originally anticipated by this author.
Gold can not have fundamental. Gold is alternative form of money, and it has strong fundamentals, if you want to maintain the stance. The trillions of dollars printed without asset base lends lot of weight to gold. The people buy gold for safety, not for return. It applies to even Copper, Nickel, Aluminum and all other metals. No metal gives any yield.
Yes, the bubble has been formed in 2007 and getting bigger and bigger. Still, we have to find situation where we can benefit from such bubble burst. That is where the Investor’s smartness lies.
Many investors are not afraid of losing money; they are afraid of making money. Watch for the opportunities and stay alert. Right now gold and silver will be very big winner, so also some solid stocks like Petronet.
V.S. Kumar
23 Dec 09 at 8:40 AM
Dear Sir-
What you told was again repeated by Jim rogers on Gold @ $6000, kindly refer the following link for the same http://www.commodityonline.com/news/Farmers-not-bankers-will-drive-Ferraris-Jim-Rogers-24066-3-1.html, keep you good work continuing.
Thanks,
Siva, Chennai
Siva
21 Dec 09 at 11:48 PM
Sir, THis is to thank Balaji (16th Dec. 2009) for posting the link making startling relevation, confirming your oft-repeated stance that the biggies in US shorted gold without having physically.
vc sekar
19 Dec 09 at 8:34 AM
Respected Sir,
Gold corrected more than what it was corrected on Dec 12th. US Govt has waived 38$ billion dollars from Citi in Taxes. Unemployment has risen, dollar index has risen and Ben Bernanke has been re-nominated as Fed Chairman for second term. Warren Buffett has not invested in Gold/silver. Marc Faber has opined that investors will invest in US securities rather than EM securities. These are the developments for the last 24 hours. Apparently, it appears failure is rewarded in case of Bernanke and Dollar. US Fed actions have become a market law for the world. What is your opinion sir?
Regards,
V.S.Kumar, Jorhat
Kalidas Says ….Monday, December 21, 2009
Very succinctly put. I would add more as under:
1. Citi has sold of most of its assets. Its only remaining icon no one wants to buy has a hole of $ 660 billions. Considering its worthless debt guaranteed by the US government, the total loss mounts to US$ 1 trillions! Its rating is still investment grade.
2. Fannie and Freddie Mae may need another US$ 800 Billions to keep them afloat.
3. Bloomberg reports that 7 IPO of good companies failed and were withdrawn from the market. The companies wanted to raise about few millions to $ 144 millions – stlll there were no takers for profitable companies.
However, they reported that Bank of America raised $ 45 billions, Citigroup would raise $ 20.5 billion and Wells Fargo would raise $ 25 billions – total US$ 90.5 billions. No details disclosed about the buyers. further, when the good profitable companies can not raise even $ 100 millions who is buying $90.5 billions worth of equities into bankrupt companies? Who are those mega buyers? Did they really raise the money or just press release issued to prop up the market?
PC quote reports Citigroup was having trading volume of Volume:2,813,697,158 shares in cash segment on Friday, that is, 18Dec09. That is whopping $ 9.56 billions turnover or Rs 45,000 crores, almost 10 times entire turnover of BSE in cash segment. Further, NYSE volume for entire market was 2,147,333,000 shares whereas Citigroup alone had volume of 2,813,697,158 shares as per PC Quote.
4. FDIC reported that they have run out of money and wants its budget increased by 34% due to greater number of banks lining up for bankruptcy. Already 554 banks were said to be in queue.
5. Bloomberg reported that banks revenue in last quarter rose by 11% due to rise in derivative volume. There is not much turnover in cash segment. it means that the current rise in prices in Dow segment and US$ index is mainly due to derivatives which caused the collapse at first place. There is no more money – just paper trading.
Now, if you want to ask how long will this last? My answer is when the patient is in ICI with massive shocks to keep it alive, does not come out of ICU room soon, he will die of major heart attack. When that happens, do not think how much the market will go down and gold go up – just watch everyone getting poorer and poorer.
V.S.KUMAR
17 Dec 09 at 10:26 PM
Hello Kalidas Sir,
I have been your silent admirer for the last 2 years. I salute you, for your knowledge and also your noble deed of sharing this knowledge with all of us.
With regard to gold, there is some more revelations in the below link –
http://news.goldseek.com/GoldSeek/1258049769.php
This again adds more weight to your excellent judgement on gold.
Thanks,
Balaji
Bangalore, India
Balaji
16 Dec 09 at 10:05 PM
Respected Sir,
The Gold issue has entered a critical stage. The war between Dollar and Gold, derivatives vs physical demand, suppression of Gold vs natural free pricing of Gold and the role of currencies, countries and their relations with Fed have become a serious but exciting one. In this context, I request you to share your observations and feelings regularly in a thoughtful way so that your followers will read the world economic situation better. You should not feel that it will open a discussion but it will be very helpful to us when we made a serious bet for Gold and unfolding of new global economic order, your observations will be very enjoyable and profitable.
Regards,
V.S.Kumar, Jorhat
Kalidas Says ….Thursday, December 17, 2009
I would do that in the form of a small post. It is difficult for me to answer all readers often for repeated questions. Since the QA under this column has not been databased, it is also diffucult for the readers to search the issue and then post their enquiries.
I wlll issue small post whenever needed.
V.S.KUMAR
16 Dec 09 at 2:33 AM
Dear kalidasji,
I have come across this article on commodityonline.
URL: http://www.commodityonline.com/news/Without-India-Gold-could-be-600$-or-less-23898-3-1.html
The writer explains that without India the price of the Gold would have been $600.
Quite frankly, without you sharing your wisdom (This Blog and the Book), a lay man might have believed this fellow.
Regards,
Girish, Pune (INDIA)
Kalidas Says ….Wednesday, December 16, 2009
People often make mistake in judging demand quality. There are two demands –
Physical demand (or supply) which determine the price based on physical demand.
Investment demand which arises when the investors interest is rekindled. They do not necessarily buy physical gold but they buy paper assets such as Passbook gold, futures, options, ETF, Gold stocks etc. This demand often exceeds 10 times that of physical deman.
Central Bank demand where the Central bank develops urge to diversify from one currency to other or gold. This is a physical demand generally met by the trade or IMF or other central bank. Example: India, Sri Lanka and Mauritius purchase of 213 tons collectively.
It is investment demand from speculators, short term opeators, hedge funds, commodity funds, gold mining companies wanting to buy back hedge positions that drive up the prices much beyond physical demand from consumers.
In such Investment demand, India counts nothing.
Girish
15 Dec 09 at 9:38 AM
Dear Sir,
I have seen the below news in commodity online.
http://www.commodityonline.com/news/Federal-Reserve-manipulating-gold-prices-Ron-Paul-23803-3-1.html
Above, asserts your view of gold being manipulated by Fed.
Warm Regards,
Jay,London
Kalidas Says ….Monday, December 14, 2009
Mere allegation does not help. You have to prove it prima-facie, as I did in my book with fully documented proof. Then, it will be recognized. Otherwise, GATA (Gold Anti Trust Action) committee has been waging war with US administration without any luck. Weilding arms in darkness does not help. The wisdom is to stay quiet, accumulate the evidence and then strike.
Otherwise, the allegations are like Iraq having WMD – when none could be found.
Jay
14 Dec 09 at 2:26 AM
Sir,
Just came across this interview,supporting almost all your points.
http://www.moneycontrol.com/news/fii-view/goldgreat-investment-over-next-decade-jim-rogers_430500-0.html
joy
Madurai,Tamilnadu
Kalidas Says ….Sunday, December 13, 2009
Thanks. I have seen the interview. He was still withholding harsh comments. That is where I differ.
joy joseph
12 Dec 09 at 8:38 AM
Dear Anilji,
Downfall in recent Gold price is a very good opportunity for those who want to add to their Gold position. But from media point of view I am not hearing any news regarding any Gold bought by any Central Bank around the world during recent fall.
On the contrary Central Bank of South Korea & China were reluctant to buy at USD 1200 level as per few media report. Gold rally last month was propelled by India’s buying of IMF Gold. Do you think that next rally will only start when one of the major Central Bank come forward to buy Gold from IMF or Open market which may irrespective to level of US Dollar Index?
Thanks.
Parag, Surat
Kalidas Says ….Thursday, December 10, 2009
Central banks are dumbest sellers of gold for over 25 years. They sold at prices between $260 to $410 and look at them today. if you want to invest, do not look through the window into someone’s bedroom. Just bother what you should do. Most of my bought gold is from $ 287 to $ 330.Even if the gold has fallen by $100, I look at it as having risen by $ 800.
Yes, psychologically it may seem that recent spurt in gold prices is due to India’s buying but the people are buying gold not because India is buying it -but due to people’s loss of confidence from paper currencies. And who is India? Who follows India’s lead anyway?
In personal opinion, the tomorrow is the last trading day for Gold for December contract. You will see the gold rising from Monday onwards. The USD index will come to expiry on 31/12 and last trading day will be 28/12. Watch almost all 6 index currencies rising majestically against $ in less than one or two days. Watch.
Parag, Surat
10 Dec 09 at 2:13 AM
Dear Sir,
We are waiting for the announcement of Asian crisis e-book release.
Thank you
Regards,
Rajmohan babu
Pointe-noire
congo
Rajmohanbabu
9 Dec 09 at 11:31 PM
Sir
Sorry for my ignorance but can you please educate us on “currency convertibility” and how it work and affects the economy and stock market.
Thank you in advance
Vikram
NJ US
Vikram
9 Dec 09 at 12:24 PM
Respected Sir,
Your logic and discovery on Gold issue is totally convincing and baffling. It appears that US is fighting not only with Iraq, Afghanistan but also with Gold, various currencies, countries etc. Its only aim is to promote brand $ and promote its interests with world savings at cheaper (cost) interest rates, besides killing free trade. My question is how the hedge funds or George Soros who smell these anomalies miss considering huge opportunity available to them. Secondly, investment banks who suppressed Gold could have purchased monitoring its raise from$250 -$1225/ounce. Finally, since this derivative activity is continuing since long, how you could judge its breakdown and expect may yield 100% return within a year.
Regards,
V.S.Kumar, Jorhat
Kalidas Says ….Thursday, December 10, 2009
No big investor makes a killing unless he has fully confidential inside info. Even hedge fund managers like George Soros and Julian Robertson were rumored to have been used by US authorities to keep the Asian countries away from buying Euro against Dollar. Even Saddam Hussein was attacked not because of WMD, but his practice of starting to quote price in Euro, and not in $ because his 1.4 billions or more was frozen by the United States. I bet even George Soro will make 20% of what he made without inside information of parent country’s intention.
This is the reason that banks like JP Morgan, HSBC etc were selling gold and silver short. I remember having seen at least one entry of JP Morgan having contingent liability of gold of 1000 tons valued at $ 42/pto (per troy ounce) whereas current prices are $ 1125/pto, nearly 26 times.
Yes, US wants to promote use of dollar. Before Euro was floated, an importer in Germany had to buy dollar and then sell it to buy say, French Franc to import french goods. After floating of euro, the intermediary step is not necessary. It is now like one is buying from Gujarat and selling in Tamilnadu in single currency – Indian rupee. The trillions of dollars therefore because useless with the advent of Euro. This is why US wanted to kill Euro before it was borne by causing Asian Crisis.
They started with corrupt country and politicians – Thailand. By causing Thailand lose over $ 26 billions, it was asked to take the help from IMF who asked China, Singapore, Taiwan, Hong Kong and Malaysia to give that amount. The idea was those Asian countries would ask the US to transfer the money from their account to Thailand account, but the physical dollar would not be withdrawn by them for selling and buying euro. In the books of Fed, the accounts of Singapore, China, HK, Malaysia, Taiwan and Hong Kong were debited with $ 26 billions and credited to Thailand which will be repaid after 5 or 10 years. Thus, the dollar did not leave the Fed, and it was protected.
This is what is being adopted now. US can not persuade other countries to buy Dollars due to weak fundamentals. So it has started causing trouble in Greece and Spain (both highly corrupt countries, similar to modus operandi in Asian crisis) and also UK. The rating agencies like S&P and Moody, who always act at the behest of US authorities have started downgrading those 3 countries, which means that do not buy their currency, but in fact sell them – but against whom – of course US$. So this is why US$ was prompted higher. This is how it protects its turf.
V.S. Kumar
9 Dec 09 at 7:03 AM
Respected Sir,
I have a question based on my little knowledge about contracts rolling over. Please forgive me if it is found stupid.
You have been mentioning about a huge number of Gold contracts being rolled over to Feb 10. In normal cource, if someone has to roll over a loss making contract, he has to pay the lost amount at the time of roll over. Then, how does these people are managing the roll overs since last 8-10 years? If they have already paid the lost amount, then there may not be any issue even if the scam is surfaced.
Thank you for your guidance.
Milind,
Pune, India.
Kalidas Says ….Wednesday, December 09, 2009
The settlement system is different in each country. Further, there is only one customer who is playing havoc – US government, FED and Treasury. For them, the losses do not matter – look at last 12 months record – they printed over 1.4 trillions dollars. The customers are not private individuals. Further, their brokers are also recipients State aid. They would not insist on tough margin calls. They being banks and leading brokers now converted into banks, have access to funding in the form of Fed window.
What you say is that over the years the losses have been rolled over, so there should not be any issue. Now, look at last 12 months result – all CDO and CDS which were rolled over cumulatively (because they are banks) suddenly stopped, and trillions of dollars of built in losses came to the forefront.
You have to differentiate between the private individuals and state sponsored agencies. Otherwise you were right in your arguments.
Never think that what you are asking is or could be stupid. Never hesitate in asking any questions that is baffling you. I never laugh at any one. On the contrary, I appreciate if someone has courage to ask someone.
SafeMil
9 Dec 09 at 12:17 AM
Please guide us to find dollar index expiry date
Ketan,Hongkong
The expiry dates for Dec is 14/12. The last trading days is 2 days prior or 12/12
Following is the settlement procedure:(Mark the bold letters)
In other words, the last trading day being 12/12, the contract owners of US$ index will have to deliver the Forex currencies on 16/12 physically by accepting US$. It means that they will need to buy Forex currencies from the spot market to deliver them under the contract.
Alternatively, they will need to sell the Dec contract on or before 12/12, to avoid delivery. That is 3 days from now.
As of today, there were 31,529 contracts were outstanding. Each contract is for $1000 x Index value = US$ 76000. The total value comes to $2.4 Billion. This may be reduced by the selling by the holders or they have to be prepared for physical deliver on 16/12.
Next settlement is only in March
Also note the rising volume on $ index. This means that someone (at behest of authorities) are buying $ index to prop it up.
You may see volatile movement in currencies – esp Euro, GBP, Can $, Yen. They will probably go higher and US$ may take a dip. that may increase the prices of gold.
ketan
8 Dec 09 at 9:07 PM
Readers,
Vicious attempts were made during critical December contracts to defer the physical delivery. The fall was successfully engineered by buying back most of the open contracts. Only 4833 out of 100,000 + are left uncovered which equals to just 484,000 ounces. It is also possible some of the contracts may have been transferred to other exchanges such as ICE, London to avoid physical delivery.
Most of the contracts have been rolled over to February. They can do the same thing in February to defer it to March and then June. However, the position is just postponed but not reduced. Open interest for February is over 340,000 contracts. What is happening now is the attempts by US government to push up $ Index up (which means lowering of other currencies – when the $ Index comes to maturity, it will have to deliver the Forex currency (by physically buying it because there is physical delivery) and sell the dollars. At that time, gold will begin to rise again with the rise in other $ Index currencies.
Once roll over stops like it happened in case of CDO, there is nothing to prevent the gold from scaling new heights. My targets and even time frame remain same. To push up the dollars, rumors are spread that Bank of America will repay TARP funds of $ 45 billions and $ 20 billions by Citigroup. From where do they bring such huge sum is not mentioned. It is possible that Fed will give them new loans to retire the old ones, making the situation better. Such temporary strength is not likely to last.
I suggest accumulate Gold slowly and surely. Following are the comments on Ino.com but they are meant for the readers. I do not subscribe to the views expressed therein. This is just trading view on gold – not fundamentals.
QUOTE
February gold closed sharply lower on Tuesday and below the 20-day moving average crossing at 1156.80 to confirm that a short-term top has been posted. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are bearish signaling that additional weakness is possible near-term. If February extends this week’s decline, the reaction low crossing at 1102.60 is the next downside target. Closes above the 10-day moving average crossing at 1180.90 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 1180.90. Second resistance is last Thursday’s high crossing at 1227.50. First support is today’s low crossing at 1125.30. Second support is the reaction low crossing at 1102.60.
March silver closed sharply lower on Tuesday and below the previous reaction low crossing at 17.720 confirming that a short- term top has been posted. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If March extends today’s decline, the reaction low crossing at 17.070 is the next downside target. Closes above the 10-day moving average crossing at 18.633 would temper the near-term bearish outlook. First resistance is the 10-day moving average crossing at 18.633. Second resistance is last Thursday’s high crossing at 19.500. First support is today’s low crossing at 17.560 Second support is the reaction low crossing at 17.070.
UNQUOTE
Anil Selarka (Kalidas) Author
Anil Selarka
8 Dec 09 at 7:47 PM
Sir,
In your analysis, are you assuming that gold would eventually become the standard for printing currency ?
As you have earlier mentioned that majority of the gold is privately held by people in India, and many of the western central banks are short on gold, who would be lobbying for increase in gold prices ? Conversely, why would it not be possible for US to short the remaining 10% of the gold that they own and then kill the market for gold itself ? The above question might be basic, but is such a thing possible ?
Thanks
Bobby, Singapore
Kalidas Says ….Wednesday, December 09, 2009
No, the paper currencies have been printed in trillions and the derivatives in excess of $ 600 trillions. It is impossible to cancel all such paper and electronic currencies.
Just as the patient is on last stage, and he has to die, we have to let him die, so that new life is borne in replcement.
The mighty collapse is inevitable. Right now, gold will be the only savior- Attempts are being made by almost all governments to depress the gold so that the people continue to buy the papers. It is not going to happen.
Yes, gold will be used in one form or other to back up the paper currencies. A new standard may emerge after several world conference dealing with the crisis in the past such as “Bretton Wood Conference” of IMF
As I foresee it, there will be least agreements between the nations. The days of free convertible currencies will be gone. Each government will be forced to withdraw the currency convertibility and manage it within the country. This is of course a tall claim – and I also find it difficult to accept it – but my intuition says it will happen with almost 100% certainty. It is just intuition – remember – and it has stood by me for more than 2 decades.
US is short on gold, other Western banks are not short on gold. According to my own investigation into the Fed/Treasury balance sheet items. Western Banks have acted as Agent to lend the gold to banks/brokers/hedge funds to short the gold on behalf of US government. You have to read Chapter 14 of my book “Sub Prime Resolved” to understand this. I can not write 30 pages here – that is my best research work.
To you statement, that US might short remaining 10% of gold to depress the gold prices, I may mention that it may not have effect at all. It may have already sold it using same methods. Offficially, US government is prevented by its law to hedge or short the gold, so they used the Western Bankers. Most of the Earmarked gold now belong to Western Bankers.
Bobby
8 Dec 09 at 11:25 AM
Hi Kalidasji,
I hope you remember me. Its been so long since I had put any comment on your site, due to my busy schedule. But I keep reading your articles regularly.
Also, I had no money to invest, so didn’t find anything to discuss with you. I bought a car and thus now am in phase of accumulating money.
I read this article related to GOLD and am very lucky to have hands-on information from you. I have some quantity of Quantum GOLD ETF, so this will help me. After reading this I plan to buy more units in stages.
At present am in Dubai. I had plans to buy GOLD jewellery for my wife while coming back, but after reading this I went yesterday to GOLD SOUK and bought 13.25 grams of 22K GOLD necklace @ 128.25 AED/gm(plus 6 AED/gm making charges and 5 AED I paid for Bus fare). I love the brand of DAMAS, so I bought only from them, I reviewed the designs and prices of other brands but it did not convinced me to buy. The international rate yesterday was USD 1157.60/Toz, so I believe I have not given huge extra charges to DAMAS?
And being in Dubai, if I don’t talk of Dubai World restructuring then it would be incomplete comment. Since the news came in of 26 billion USD restructuring the markets here are collapsing. But I regularly read GULF NEWS and it says the banks outside UAE will benefit from this in GCC.
I believe this is start of double dip recession. Coz after Dubai there will be more banks and countries collapsing, as mentioned by you. There are so many real-estate projects in Dubai which have been post-poned or halted. The life is normal. Unless you read news, you don’t know what is happening in financial world. But there is a big car story too where the people are believed to be leaving their cars (purchased on cheap credit) at airport and flying back to their countries, because defaulting on debt (EMI) is a punishable crime here. Plus there is 1 million AED fine if anyone tries to say something bad and spoil the reutaion and the name of Dubai or UAE.
So this is the start of “2012″ of Financial World. As per your words, being with GOLD is the ultimate way we can be saved.
Regards,
Antony,
Hyderabad (presently Dubai)
Antony
8 Dec 09 at 7:27 AM
Why the side bars vanished?
Kalidas Says ….Tuesday, December 08, 2009
It is there.
Rang-Jama
8 Dec 09 at 3:54 AM
Excellent Article. In the past you could buy Physical Gold from the banks, but no longer can you buy it. Where would one go to buy physical gold?
Finally, the Unemployment numbers came out few days ago, but I suspect that its only temporary. This is the 4th quarter and this is the busiest season in the US, many retailers are hiring part-time staff to fulfill their short-term staff needs. Once the Christmas season finishes, that will be a real indicator on how well the economy is really doing.
Keep up the great work.
Ashish
San Diego, USA
Ashish
5 Dec 09 at 5:50 PM
Hi Kalidasji
Could you indicate the sudden downturn in Gold yesterday. I could see the Dollar index move up and the Yen and Euro move down. Could you kindly explain how suddenly this could happen.
Xavier
UAE
Kalidas Says …. Saturday, December 05, 2009
See the reply to other reader as under:
Xavier
4 Dec 09 at 10:47 PM
Dear Kalidasji,
As per the link
http://en.wikipedia.org/wiki/Official_gold_reserves
the estimated gold mined upto 2006 is at 158,000 tonnes. If we add up for three years production @ appx of 2400 tonnes per year, which will be Appx 7200 tonnes, with this total holdings as at 2009 will be Appx 165,200 tonnes. But in your given calculation, you had estimated total gold holdings @ 80,000 tonnes. Can you advice the reason behind your 80,000 tonnes calculation or if I am wrong in any of my understanding on the above matter.
Balaji,Hong Kong.
Kalidas Says …. Thursday, December 03, 2009
Not reliable. There is lot of duplication and also no one was propery recording productions 100 years ago.
The gold reserve held by all countries taken together in 1948 was 28,878 tons. After 60 years, in 2008 it fell to 26,384 tons (-2500T). Cental Banks are the largest holder of gold in the world. If I were to believe your numbers, then private individuals may be holding 152,000 tons of gold. Where are they keeping it. Who is keeping it? Asians keep gold most. 1 ton = 32150 ounce, 152,000 tons = 4,886,800,000 troy ounce or 156,996,583,800,000 gramsor simply 156 Billion grams. If we take India’s share of 33%, then India alone will have 52 billion grams of gold or 52 grams of gold per person (including beggar, child in every family). So each family of 6 person will have 300 grams of gold! Do you believe it?
Gold is also lost every year. When the gold is melted or even washed or cleaned in jeweler’s shop, it is lost in chemicals, abrasion etc. When a jeweler makes ornaments, he also loses some gold in the form of gold dust. Even if you are wearing a ring or chain for 10 years or more, it will weigh less by 1% to 7% than it was bought.
from 1845 to 1945 (100 years) only 45000 tons of gold were produced. Many of the recycled gold is also known as “gold produced” so this is a duplication. During World War 1 and 2 many countries robbed the gold of one country and taken to another country where it was melted and shown as their own production.
Gold is a secret asset everywhere. No one shows or tells others how much he or she really has (gold). Even your own mother will not tell you how much gold your family has because otherwise betiyan or bahu will stake claim.
In 1845, the gold produced in the world was only 84 tons. Do you believe it? There was no communication at that time.
I wanted to use only 50,000 tons as the realistic figure but used on the side of caution to make it 80,000 tons. That too does not hold good. If Central Banks hold 30,000 tons, how could individuals hold massive 50,000 tones, especially when the gold saving habit is predominant in Asia only.
When my daughter married in USA and we gave her the gold, she screamed at us and exhorted us not to give her even 1 gram of gold because no one wears it there. We gave her a lot which is now valued 4 times.
By honest estimates, the world gold holding including Central bank and Individuals may not exceed 50,000 tons. Individuals do not have secured storage facility to store gold, you and I know that.
Balaji
3 Dec 09 at 12:34 AM
Sir,
I have an Idea? I do not know whether it is right. If US has lost tons of gold then they can buy back by printing Dollars.Print trillion dollars to buy tons of gold? Does this really works?
Regards
Badrinath
Bengaluru, India
Kalidas Says …. Thursday, December 03, 2009
If US has tons of gold, why should they print the money and buy it. They already have it.
The fact is that the US government does not have gold. if they have to print more money, they have to go to the congress for approval, and the congress will ask both Fed (Bernanke) and Treasury (Geitner) why do they want to buy the gold when they already have 8134 tons of gold? On the contrary, the congress will ask Fed/Treasury to sell the gold to increase the liquidity in the market. And they know that there is no gold. They will be caught red-handed.
Badrinath
2 Dec 09 at 11:25 PM
Dear Sir,
If US can print trillions of dollars of money to save banks like Citi etc., why cannot it print money to save Fed, which has sold all the Gold. By that way nobody will even know that US has shorted the gold right? This is just my thinking and wanted your opinion about it.
Regards
Prashanth
Sydney
Kalidas Says …. Thursday, December 03, 2009
Yes, they have been doing it for over 20 years, and no body could prove it. Even GATA (Gold Anti Trust Associaton) has been campaigning against Gold manipulation for over years and filed law suits in federal courts, but they could not prove it.
It is only this Author who found it and proved it in his book “Sub Prime Resolved” – Chapter 14 (30 pages) titled “Where is Mackenna’s Gold?. This expose of mine goes well above the Watergate Scandal, because in present case billions of dollars worth dirty game is disclosed for the first time.
Once American people know from my book how did they (Fed/Treasury) do it, it will lead to congressional enquiry and even judicial enquiry.The Fed/Treasury will not be able to follow 20 years old practice any more.
No body knew it until this Author has disclosed it. The game will be over soon.
Prashanth
2 Dec 09 at 2:46 PM
Dear Sir,
Where do you see the dust settling on Gold Prices once the blow off occurs or the crisis settles. Will it be able to sustain 40000 Rs / 10 Grams in years ahead. It will destroy the jewelery demand of India which constituted almost a third of Gold Demand in pre-crisis period.
What are your views on China and how china will grow its gold reserves in future. How Central Bank demand will affect the gold price.
We have seen changes in major gold producing countries. China becoming no. 1 country gold producing country and Russia becoming 2nd or 3rd number in gold production. Do you see gold mined in these countries coming into international markets till the dust settles or even after if the western world economics shift to gold based monetary system. How that can impact the markets. Yes, we will have a dark horse in India which will be the major seller of Gold in coming years.
In short, please let us know your views on post crisis world and gold. Is so confusing, please share some light on how eventually it will settle.
Warm Regards,
Vivek, Gurgaon, India.
p.s. I respect you more than i respect anyone in this world along with my mother, father and grandfather. You are commanding respect of people like me who are following you from more 2 years now. Just ask this to anyone who has followed you in earnest, they will answer the same. Please don’t get bothered about someone coming & putting anything rubbish on your blog. We just cannot repay you in form known to us apart from best wishes from our heart. This is no thankless service, this is the highest service a fellow man (YOU) can do to others (LIKE ME) which cannot be repaid in any form known to me apart from Best Wishes from our heart.
Vivek
2 Dec 09 at 12:17 PM
Dear Kalidasji,
Once a again a great article “Gold $6400, Silver $80 ….” & very easy to understand even by a zero finance guy like me.
I need a small clarification from above Article:
In the open interest trading table, what does “Contract High & Contract Low signify (with ~1year difference between their dates)” ?
With Best Regards
BV.
PS:
One small suggestion:
If numbers are given to Tables/Images, it might be easier to refer to them in Discussions.
Kalidas Says …. Friday, December 04, 2009
It is year high and low. I do not use much tables, so did not feel urge to number the tables.
BV
2 Dec 09 at 9:26 AM
Hello Sir
The above article is really an icebreaker exploring major scam by FED/US Treasury and leading Bankers. Thanks for sharing with us the true genuineness.
I am having Rs 2 Lac in bank as fixed deposit at 8.5% for one year. Would it be wise to break the FD and invest the same amount in GOLD? I would appreciate if you can guide us. Thanks for your valuable time and efforts.
Greatly appreciated…
Regards
Parag, Dehradun
Kalidas Says …. Wednesday, December 02, 2009
Do not break the deposit. Instead raise a loan against FD for Rs 80% (Rs 160,000) which may be given to you @ 2% above FD Rate or 10.5%. The interest you pay Rs 16,800 will be tax deductible. If your taxation income is good, or even moderate. you will save Income Tax @ 10% or Rs 2000 or about. You end up paying 2% extra interest on loan amount or Rs 3,200. Your Net cost is just Rs 1,200per year only.
Now you have one FD for Rs2 Lakhs @ 8.5% + Loan of Rs 160,000 @ 10.5% + Gold 90 grams or Rs 162,000 or about. You may then trade the gold if you want to, or just keep it with a set target (do not keep moving target).
What you are doing essentially is “monetizing” the FD. Gold is more liquid that FD and you can always sell gold against cash and liquidate the loan. or you can trade – sell into rally and buying back into correction. You can easily monitor one item with perfect knowledge.
Parag
2 Dec 09 at 7:25 AM
Sir,
You said “Local Governments like California to launch a campaign against the Fed/Treasury to give them enough funds by selling part of existing gold reserve”.
My question here is
Why are they urging Fed/Treasury to sell the gold? US Fed/Treasury can print $ again like stimulus and fund them.
I don’t understand the statement here.
-Jana
Bangalore
02/12/2009
Kalidas Says …. Friday, December 04, 2009
California is in deep debt and Republican state. When it needs money, it can not raise from the market. When it approaches the FED to help them out, Bernanke would say No, quoting “No Money” Then, the California could argue.Why not you sell the gold and save us.
Jana
2 Dec 09 at 4:11 AM