with the US markets closed for the balance of the week, there have been two big developments that simply don't add up ...
The first is the 'smackdown' in the prices of gold, silver, and certain other commodities
But the second is the fact that online precious metals dealers are having an awful time getting their hands on enough gold and silver to fill orders from eager buyers ...
... and there is an (uncomfirmed) report that the US mint has run out of new Eagle coins with which to fill certified dealer orders.
Can anybody explain to me how the official price of precious metals can be smacked down by 10%, while willing buyers with cash in hand from coast to coast are simply unable to get their hands on gold and silver to purchase ? The only pertinent news I could find comes out of Reuters Singapore ...
(snip)"SINGAPORE (Reuters) - Gold dropped more than 2 percent to its lowest level in a month on Thursday amid a broad-based sell off in commodities and as funds cashed in after pushing the metal to a record above $1,000 an ounce this week.(snip)
(snip)""We have to see whether the funds will continue selling. If they do, of course there is a possibility that it will go down and test $900," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.(snip)
(snip)""It is most probably liquidation on margin calls. It looks like players are exiting the market after gold hit the $1,030 level and there's no reason for physical buyers to buy at high levels," said a dealer in Singapore."(snip)
this of course leads to another question ... what is driving the margin calls that is now forcing hedge funds to sell off their commodity holdings ? The only commentary I could find is as follows from ...
(snip)"But what's this? "Gold falls to 1-month lows as funds cash in". Friend, I think we have us a winner, and maybe even some insight into what could be ahead next week or so for the PM's. Remember what happens to 10,000 hedge funds worldwide at the end of the month? They have to mark to market on a lot of securities (liar's paper) and if they don't have sufficient liquid assets, they have to sell off whatever they can that's liquid (commodities like gold, wheat, silver, etc.) in order to raise cash. They could be in an almost "sell-at-any-price" mode because it seems so many are on the verge of margin calls, that there's nowhere else to go."(snip)
but this still doesn't entirely explain the reason for the price smackdown, because there are apparently a whole lot of willing buyers for physical gold, silver etc. who are now being prevented from buying and thus booking transactions counteracting the drop in price because of a shortage of physical gold and silver inventory. The only real theory that addresses this question comes from a professional investor's BBS ...
(snip)"Record short interest in gold futures-expiration of futures is next week, four days prior to last business day, etc., gold had been up over a hundred dollars since last expiration. Makes sense to me that someone BIG was short a few million ozs and was expected to deliver/rollover, I think a few hundred million dollars at this point in time-no liquidity for the weak- would be enough to sink almost any wounded hedge fund or inv bank. "(snip)
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