Gold Price Expected To Rise Significantly Soon

[GhostMiner]

The Fed has just hiked rates by 3/4% and will do another most likely in November. We can expect gold to slide a bit lower for now but by early next yr I would think it starts to rise again. I'm thinking $1500 an oz or so is a new bottom. 

[oneguy]

1 hour ago, GhostMiner said:

The Fed has just hiked rates by 3/4% and will do another most likely in November. We can expect gold to slide a bit lower for now but by early next yr I would think it starts to rise again. I'm thinking $1500 an oz or so is a new bottom. 

JMO ....  I look at physical gold as a long term thing to hedge and preserve wealth.  Really don't pay much attention to manipulated short term price fluctuations, etc.  I do watch the "price" as it generally shows me how worthless my "backed by faith" paper dollars really are.  But like Steve said, in a real pinch you can't eat the stuff...lol   just my thoughts....

[GB_Amateur]

On 7/21/2022 at 10:58 AM, Clay Diggins said:

The physical price of gold is not connected to the paper COMEX futures market.

I guess it depends on what "not connected" means, and what "physical gold price" means.  You can take delivery on a current month gold contract from the COMEX.  A single contract is 100 ozt of 99.5% minimum purity -- a single gold bar.  Thus if you have ~$167,000 you can get gold at the more/less spot price.  (There is a transaction cost that goes to the exchange and a commission that goes to the dealer, but those are small, relatively speaking.)

The small buyer/seller/investor is in a different market where the gold unit size is smaller.  S/he is likewise competing with a different group of individuals whose goals are often different (though possibly related in some cases) to the 'deep pockets'.

There is a loose analogy in many other markets -- food, lumber, etc.  If you want a small amount you almost always pay more per unit than someone buying in bulk.

In all markets the spread in buy vs. sell prices is something to be aware of.  Again, for bulk that difference tends to be smaller per unit compared to more modest quantities.  This spread is basically the profit the 'middle man' extracts.  This often (apparently currently the case for small lot vs. large lot gold) is more relevant than comparing the intermarket raw price difference.  When there's competition and a lot of trading, even the 'little man' can (or at least in the past one could) take advantage of a smaller buy/sell spread.

[oneguy]

If anybody is interested....  Just got off Provident Metals site and also Golden State Mint site.  Appears provident now has plenty 1ozt. coins but Golden State is still only filling previous orders on the 1ozt. coins...didn't check anything other than the 1ozt. coins.....

[Clay Diggins]

12 hours ago, GB_Amateur said:

I guess it depends on what "not connected" means, and what "physical gold price" means.  You can take delivery on a current month gold contract from the COMEX.  A single contract is 100 ozt of 99.5% minimum purity -- a single gold bar.  Thus if you have ~$167,000 you can get gold at the more/less spot price.  (There is a transaction cost that goes to the exchange and a commission that goes to the dealer, but those are small, relatively speaking.)

I know a little about COMEX. I was hedging metals there for several years after they opened their gold futures exchange in 1974. It has changed since then but it's only become more expensive and restrictive for small manufacturers and investors since that time.

No one can buy gold on COMEX. Gold is not for sale but futures contracts can be had. COMEX is a place to exchange futures contracts - not gold. The individual futures contract seller is responsible for delivery - not COMEX and not your Broker. The person taking delivery is responsible for transportation, warehousing, insurance and security.  A futures contract for gold can sometimes be taken to physical delivery but the conversion losses are so large that it's almost always less expensive to buy physical gold from one of the big metals dealers even with their higher prices.

Neither you nor I can buy or take delivery on a COMEX contract unless we are pre qualified as an Executing Trading Firm. (Usually that's your broker if they are one of the big boys.) The vast majority of gold futures contracts on COMEX are "rolled over" at the end of contract with an EFRP (Exchange for Related Position) - no gold exchanges hands. That is exactly what your selected Executing Trading Firm will strongly encourage you to do.

Many are tempted by the COMEX gold mini contracts of 50 oz. Unfortunately those are cash settlement only contracts - no gold is delivered or promised in the contract.

Physical delivery means gold in hand and is obviously distinct from someone else promising you they have your gold.

One important thing I learned hedging metal on the COMEX was if the metal isn't in your hands you don't own it. COMEX futures contracts are not gold in hand.  I don't see a logical or price connection between gold you might pay for in the future and might take delivery of even further in the future to local dealer prices for immediately available recognized gold coins in hand.

The market clearly doesn't see a connection between COMEX and physical gold anymore. It's been a few years since physical gold dealers have been paying more than COMEX spot for physical gold and selling at a 20 - 50% markup over COMEX spot. . For anyone who has traded in gold for nearly 50 years that is an obvious, historically unique, and big disconnect in COMEX futures vs physical pricing.

[GB_Amateur]

5 hours ago, Clay Diggins said:

No one can buy gold on COMEX. Gold is not for sale but futures contracts can be had. COMEX is a place to exchange futures contracts - not gold. The individual futures contract seller is responsible for delivery - not COMEX and not your Broker. The person taking delivery is responsible for transportation, warehousing, insurance and security.  A futures contract for gold can sometimes be taken to physical delivery but the conversion losses are so large that it's almost always less expensive to buy physical gold from one of the big metals dealers even with their higher prices.

Here is where I looked before I posted.  On rereading that, it does appear that "physical delivery" and "ensure that there is a convergence in pricing between the physical market and the futures market at expiry" is fancy wording with the devil in the details.  Thanks for going into the weeds with your explanation.  Another example of "a little knowledge is a dangerous thing?" ?

 

 

[klunker]

 

But wouldn't it be a little less risky to just go out with my detector and pick up a few bits here and there?

[dig4gold]

5 hours ago, klunker said:

 

But wouldn't it be a little less risky to just go out with my detector and pick up a few bits here and there?

Absolutely.

D4G

[mn90403]

When interest rates rise ....

 

The curious case of falling gold prices (msn.com)