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Gold Snaps Back to Bull Market as Prices Surge on Haven Demand

Scorpio

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Gold Snaps Back to Bull Market as Prices Surge on Haven Demand

Kevin Crowley CrowleyKev

March 3, 2016 — 4:15 PM CST Updated on March 4, 2016 — 5:00 AM CST

Gold cruised to a bull market, heedless of rebounding stock markets, as traders expect central banks to curb yields on other investments in an effort to spur economic growth.

The metal is up more than 20 percent since a December low, the common definition of a bull market, outpacing all major assets. Gold rose 0.7 percent to $1,272.95 an ounce by 10:55 a.m. in London, touching a monthly high, according to Bloomberg generic pricing.

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“The rally has mainly been on the repricing and changing expectations regarding central bank policy,” Jens Pedersen, a Danske Bank A/S analyst in Copenhagen, said by phone. The European Central Bank and Bank of Japan may ease policy further, while the U.S. Federal Reserve could postpone any further interest rate increases, he said.

Looser policy and the lower rates on securities that tend to follow add to the appeal of gold, which yields nothing. The metal is also a haven in times of crisis and slow growth. Investors are awaiting data on U.S. non-farm payrolls that will offer further insight into the health of the world’s biggest economy and the trajectory of interest rates.

“Although gold is very much driven by Fed policy, the impact of ECB policy decisions may become increasingly relevant for gold price action, as concerns about negative interest rates gain traction,” Joni Teves, a strategist at UBS Group AG, said in a note on Friday. “We think negative interest rates should be positive for gold.”

ETF Buying
Bullish sentiment in gold is reflected in exchange-traded funds. Investors raised holdings in gold-backed ETFs by 259 metric tons so far this quarter, set for the biggest quarterly gain since June 2010. Holdings are rising after three straight years of withdrawals.

Gold rallied Thursday as weaker-than-expected U.S. factory orders and slower growth in service industries boosted demand for a haven. Growth in U.S. service industries slowed for a fourth month in February, prompting the first job cuts in two years, according to a report by the Institute for Supply Management. The group’s employment measure dipped below the expansion threshold for the first time since February 2014. Applications for jobless claims unexpectedly climbed last week, a Labor Department report showed.

“There’s definitely a fear factor out there,” said John Meyer, an analyst at SP Angel Corporate Finance LLP in London. “Investors are getting back into gold.”

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Open interest, a tally of outstanding contracts in Comex futures, rose to the highest since October. That suggests investors increased bullish positions and prices may rise, said Tai Wong, director of commodity products trading at BMO Capital Markets Corp. in New York.

http://www.bloomberg.com/news/artic...o-bull-market-as-prices-surge-on-haven-demand
 
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how different will the world look when AU is $5000/ounce?

I will make an attempt--

not much different than it is today

the dollar will have lost value, that is the biggest reason for the gain, due to the printing press and QE ad infinitum...it is the best of the worst and the worst of the best, the euro will crash before us as will the yuan, thus leading the Chinese to back their money with gold, even at 10% backing, Au would be $5K.

the world will not be bat shit crazy, look at the 70's, inflation and interest rate were through the roof, but manageable--Au went on to nearly a 2000% bull run, we are looking at less than 500% getting to 5K

i dont think milk is going to be 20 dollars per gallon and eggs 10 dollars a dozen, i don't think it will be that much different than it is today



$5K is minimum---the world might be a shit show when it hits 25K/ounce
 

southfork

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I still don't trust the up trend.
 

Unca Walt

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how different will the world look when AU is $5000/ounce?

I will make an attempt--

not much different than it is today

the dollar will have lost value, that is the biggest reason for the gain, due to the printing press and QE ad infinitum...it is the best of the worst and the worst of the best, the euro will crash before us as will the yuan, thus leading the Chinese to back their money with gold, even at 10% backing, Au would be $5K.

the world will not be bat shit crazy, look at the 70's, inflation and interest rate were through the roof, but manageable--Au went on to nearly a 2000% bull run, we are looking at less than 500% getting to 5K

i dont think milk is going to be 20 dollars per gallon and eggs 10 dollars a dozen, i don't think it will be that much different than it is today



$5K is minimum---the world might be a shit show when it hits 25K/ounce

Bro, I respectfully gotta say you left out a crucial, critical piece of the picture:

For every ounce of that gold you mentioned... there are 454 or so guys claiming it. They won't get it. THAT will cause everything to totally bust.

Here's how it would go down, if ya thinks onnit: The current margin for gold contracts is 4%. Remember: They are ALREADY leveraged way, way out there...

As soon as gold jumps even 25%, that jump will result in massive defaults. As soon as there are even a tiny few defaults, there will be a run on physical "stored" at COMEX.

So what I am pointing out is that you are thinking like a simple switch to a PM economy... no big thing. And it would go as you said, providing the banksters had not done to gold what they did to dollars: PRINT MORE GOLD. But they did print gold, d'ysee. And that changes the entire result.

UPDATE -- Those bigwigs and financial giants who had their money in paper gold... why, they are now applying for a job at Karl's Ultramarket

But how can this be? Because Karl, and the folks here... have physical. And Karl picked up the entire shebang from the totally broke owner(s). For a fraction of a penny on the dollar. In gold.
 

the_shootist

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Bro, I respectfully gotta say you left out a crucial, critical piece of the picture:

For every ounce of that gold you mentioned... there are 454 or so guys claiming it. They won't get it. THAT will cause everything to totally bust.

Here's how it would go down, if ya thinks onnit: The current margin for gold contracts is 4%. Remember: They are ALREADY leveraged way, way out there...

As soon as gold jumps even 25%, that jump will result in massive defaults. As soon as there are even a tiny few defaults, there will be a run on physical "stored" at COMEX.

So what I am pointing out is that you are thinking like a simple switch to a PM economy... no big thing. And it would go as you said, providing the banksters had not done to gold what they did to dollars: PRINT MORE GOLD. But they did print gold, d'ysee. And that changes the entire result.

UPDATE -- Those bigwigs and financial giants who had their money in paper gold... why, they are now applying for a job at Karl's Ultramarket

But how can this be? Because Karl, and the folks here... have physical. And Karl picked up the entire shebang from the totally broke owner(s). For a fraction of a penny on the dollar. In gold.
Well put....sounds like a recipe for a very severe shitstorm on the horizon. Glad I'm not in the paper gold business right now