Gold

[petergriffin]

i've not bothered looking at the charts in nearly a year, but for a couple of years previously, every single morning, without fail, they spot price would be X, and a few hours later when the market opened in the states the price would tank spectacularly - only to repeat the same nose-dive the very next day. Every day.

What you saw was probably not the spot price but the gold fixing price, that is the price for gold futures.

Up until last August physical gold price in India had gone from strength to strength, then the Indian government placed a stranglehold on gold imports into the country by requiring that 20% of all gold imported be exported as jewellery.

 

[ASB]

So, as pg said you would be looking at the futures. Probably the daily contract in this case. The london fix is at 3 which in theory sets the physical price. Not in practice of course.

as pg says if it aint physical its an iou. There is certainly a movement towards a 2 tier market.

 

[SpontaneousOrder]

There is certainly a movement towards a 2 tier market.

thats why I'm not too concerned about the spot being low - the lower the spot goes the higher the physical premium goes. So far at least.

 

[d000hg]

Always believe in your soul

You're indestructuble.

 

[milanbenes]

‘I invested in gold three years ago and lost 70pc – should I sell?’ - Telegraph

I wonder how Milan is doing with his gold investments?

I'm up, if you remember I started buying in 2005 when it was 400usd an ounce

The most I have paid is 600quid an ounce

What's new ?

I might have to liquidate though, because plan b's latest loaf of bread is taking the war chest down to the bone

Milan.

 

[BlasterBates]

So, as pg said you would be looking at the futures. Probably the daily contract in this case. The london fix is at 3 which in theory sets the physical price. Not in practice of course.

as pg says if it aint physical its an iou. There is certainly a movement towards a 2 tier market.

The futures contract is settled via the delivery of the physical commodity.

If you let your oils future expire you will have to handle delivery of the thousands of barrels of oils you ordered.

The commodities futures are used by companies who trade in the commodities ....physically. That's what they're there for. There are instruments called cash settled forwards, where the contract is settled via a cash transaction. That is a secondary instrument.

eg.

http://www.cmegroup.com/trading/metals/files/final-settlement-procedure-gold-futures.pdf

I used to program futures trading, and we didn't do oil because we didn't have any space for it in the office The bank however did have a vault and traded in precious metals.

There is a direct relationship between the spot and futures price of Gold, but you don't need to look at the futures price you can just look at the spot price.

 

[Zero Liability]

I expect to see gold sub 1000 this year. Poss 850. Not short just at the moment.

I dont personally get the apocalypse hedge idea in general. If it gets to the point i t might be useful I think it is morr likely to be a liability instead of an asset.

in terms of selling on physical provenance will be an issue.

But at least ypu know it exists and isnt just a rehypothecated piece of paper. Removes the counter party risk which could be substantial I troubled times.

I can't see how owning a small portion of your assets in physical gold, e.g. British Sovereigns (which sell at a 5% premium over gold bars), is that bad an idea. You could have the bulk of the gold and silver (as a subset of that subset of your portfolio devoted to commodities) stored through firms like GoldMoney, and keep a small proportion of it in physical.

If some people don't want any exposure to it, it's their choice, but I'm not going to join in with them.

 

[BlasterBates]

I think a Gold fund is a good idea. I'm invested in a Gold mining company. The way I see it is if Gold continues to go down then management will use the mining skills of the company to mine other things and make profits in other ways. So I don't have to bomb out when gold goes down, I can simply go down to the shareholders meeting and shout at the board of directors to do something about it.

 

[ASB]

I can't see how owning a small portion of your assets in physical gold, e.g. British Sovereigns (which sell at a 5% premium over gold bars), is that bad an idea. You could have the bulk of the gold and silver (as a subset of that subset of your portfolio devoted to commodities) stored through firms like GoldMoney, and keep a small proportion of it in physical.

If some people don't want any exposure to it, it's their choice, but I'm not going to join in with them.

I didn't say it was a bad idea, there are reasons for it being quite a good idea depending upon your personal view of inflation and distortion caused by paper gold.

What I did say is that one of the reasons put forward for owning physical is societal breakdown. If it gets to the point that the monetary system has completely broken down then happening to own physical gold may not be any help at all. And in terms of real carnage could be a hindrance.

 

[ASB]

The futures contract is settled via the delivery of the physical commodity.

If you let your oils future expire you will have to handle delivery of the thousands of barrels of oils you ordered.

The commodities futures are used by companies who trade in the commodities ....physically. That's what they're there for. There are instruments called cash settled forwards, where the contract is settled via a cash transaction. That is a secondary instrument.

eg.

http://www.cmegroup.com/trading/metals/files/final-settlement-procedure-gold-futures.pdf

I used to program futures trading, and we didn't do oil because we didn't have any space for it in the office The bank however did have a vault and traded in precious metals.

There is a direct relationship between the spot and futures price of Gold, but you don't need to look at the futures price you can just look at the spot price.

Agree.

I was just (badly) trying to point out that a lot of trading is done with all sorts of secondary instruments; generally which cannot confer ownership of the physical commodity.

Most ETF's etc are synthetic, though I expect there is probably a physical backed one out there somewhere.

When I trade any commodities they are always derivatives of some description and cash settled, as such they should reflect the underlying but it won't be perfect.