Tuesday, August 9, 2011

Spot Gold Climbs to $1766 Following Fed Statement...

Up $48.80 on the day and $221.30 over the last 30 days.

Near $50 price moves per ounce  in gold on a daily basis is the new normal.

It will eventually get to $100 per day, even more. Most of the action being on the upside.


  1. Any thoughts why Silver went down yesterday and today, contra to the movement in Gold?

  2. None here, but sure looks like a buy opportunity, or else BofA, Citi,/Paulson nightmare scenario is true.

  3. Silver has a substantial industrial component that drives demand beyond the investment potential as an inflation hedge.

    The fear of another global slowdown/recession would reduce the demand for the metal and move prices downward. Gold on the otherhand has a much larger investment/hedge component. Outside of jewelry and super high-end electrical circuits in satellites it has few industrial uses.

    Also consider the recent margin hikes on the comex regarding silver futures contracts. Silver still hasn't made up the grown from its $48 high a couple months ago when the margin requirements were raised.

    Or you could blame the world wide silver shorting conspiracy. Enter: JP Morgan, Rothschild's etc.

  4. In some ways, I think the "silver manipulation conspiracy" has some merit since most of the price discovery is paper related (as is gold) but the new HK PM market will help with true price discovery. We may see a huge upside move in both.

    But, as RW/0hedge pointed out, the massive jump in gold price might foreshadow a massive gold dump by banks that need cash to meet margin calls.

    That said, as more and more money is printed even buying gold at the top is a long term safe move since the CBs are going to print trillions over the next few years. JMHO

  5. actually, gold is used in virtually all consumer and industrial electronic devices (mostly for electroplating connectors and within chips), though in sub-milligram quantities.

  6. What does Wenzel think?


  7. @averros @anon 3:24


    Industrial uses account for only 11% of Gold use annually. The remainder being 57% jewelry, 31% investment bullion.

    Regarding Silver Uses, from


    Demand for silver is built on three main pillars: industrial and decorative uses, photography, and jewelry & silverware. Together, these three categories represent more than 95 percent of annual silver consumption. In 2010, 487.4 million ounces of silver were used for industrial applications, 167.0 million ounces were consumed in the jewelry market, 50.3 million ounces were used in the silverware market and over 101.0 million ounces were used in coins and medals.

    That would break down percentage wise to:

    62.8% industrial
    21.5% jewelry
    13% coins and medals
    6.5% silverware and dining.

    Different mix of uses, different outcomes during different markets.

    I agree with you Rich that more markets will help establish more accurate prices. I further agree that there is going to be a lot of price inflation as well.

    I expect a correction in the gold market but I dont think we're going to be back at 14xx/oz even with all the panic that may ensue. Regardless I plan to buy some more when the correction happens as I expect many here to do as well.