Why the big move in gold?

[yankees60]

https://money.com/best-online-gold-deal ... aily_money

5 Best Online Gold Dealers of 2024
By: Susan Doktor
Editor: Alison Tobin and Jordan Chussler
Published: Apr 15, 202416 min read

[ppnewbie]

I have tried many times but no gold bars available at costco

[pmbug]

[dualstow]

I’d forgotten about that commercial

[yankees60]

I have tried many times but no gold bars available at costco

That's how popular a sales item that they are there!

[yankees60]

https://www.businessinsider.com/gold-pr ... ion-2024-4


ECONOMY
People in China are so spooked about the economy that even the weak yuan isn't stopping them from buying more gold
Huileng Tan Apr 22, 2024, 2:33 AM EDT

[boglerdude]

This seems not good. Is Buffett wrong about how much better owning businesses is, vs an asset that does nothing?

[barrett]

https://www.businessinsider.com/gold-pr ... ion-2024-4


ECONOMY
People in China are so spooked about the economy that even the weak yuan isn't stopping them from buying more gold
Huileng Tan Apr 22, 2024, 2:33 AM EDT

Didn't want to create an account to read the link but the headline seems off to me. Buying gold makes sense especially if the currency is getting weaker, not in spite of that fact.

Also, what have been the alternatives for Chinese investors? The stock market has been bad and real estate has gotten killed. Cash under the mattress or hidden in walls has been a thing in China forever but, from what I have heard, it's even more of a cashless society than ours now.

We complain here in the US about the official inflation numbers being too low, but in China virtually all economic data is made up by the CCP. Here is a chart (not made up) of the gold to Renminbi exchange rate:

https://ycharts.com/indicators/gold_pri ... se_renmibi

[dualstow]

Didn't want to create an account to read the link

It loaded for me. Maybe we get a few free reads per month?
So, for a limited time, you can read this copy, a .txt file.
https://drive.proton.me/urls/5Z1VMM81T8#z5pI5XYkUUvN
Use password: yuan
Will expire May 3rd.

[pmbug]

... the headline seems off to me. Buying gold makes sense especially if the currency is getting weaker, not in spite of that fact.
...

Weaker Yuan/RMB (relative to other currencies) = Cheaper exports, and more expensive imports

It means that the price of internationally sourced (COMEX/LBMA) gold, priced in dollars, euros or whatever they use in Dubai, is going up more for the folks in China than it is for the rest of the world (but they are still buying it aggressively).

[seajay]

Seajay, are you saying that the ETFs are not backed by physical gold as they claim to be?

When there's 123 times more paper gold than physical gold then unless its in your own hands there is a risk that a gold-rush could see claims by others that all of their physical gold had been deployed/disappeared. Audited as being there one day, but then in a gold-rush perhaps a conflicting deal/swap that resulted in settlement that had little/none left being produced as the reason for bankruptcy.

[seajay]

While "paper gold" is often a term used to describe gold ETFs, from the context of Seajay's comments I instead understood him to be using "paper gold" to refer to gold options. In which case, yes the outstanding gold options could far exceed the physical gold available. Most traders close out the option position prior to expiry and collect the cash. What if they don't and instead say "I'll take it, deliver my gold". Seajay, am I interpreting your comments correctly?

Yes. If there was a gold-rush where delivery was being commonly demanded instead of cash settlement that would require gold having to be sourced, potentially in part via swaps with those that held physical for a very attractive rate. If that pans out to fill the demand then fine, but if a trickle turns into a torrent and simply there just isn't enough gold to meet the demand for physical delivery! Likely amplified by the introduction of export restrictions. Under such conditions it could be more a case of first come first served and where typically institutes will be ahead of the crowd. Those that write/sell the contracts are pressured into securing actual physical gold or otherwise potentially be bankrupt. How well or not the likes the managers of physical backed gold funds respond to very attractive offers at the time is a unknown until after the event.

[barrett]

I am curious if any on here have updated their personal narrative about what drives gold prices. Seems like the price of gold is responding to economic data more or less in lockstep with stocks. For example, a weaker jobs report gives people the hope that Fed rate cuts may happen sooner rather than later and both stocks and gold go up.

The negative real interest rates narrative has not held true unless we take it as a given that the official CPI data is vastly under calculated (as probably most of us feel). Of course if one believes that, then maybe gold really is responding to inflation. Just searching for a reason that gold is going up but most likely it's just taking its usual random walk.

Actually, I am searching for an explanation to give to my wife when she tells me that the price of gold is either up or down.

"Well, of course, Honey. That's because of _________ "

[dualstow]

I freely admit that I don’t understand how gold works and that I am perfectly happy to make an exception for gold with regard to the rule about not buying what you don’t understand. If it weren’t for the Permanent Portfolio, I probably never would have gone beyond a few collectibles.

It does bother me that gold moves in lockstep with stocks too often, but I think about gold vs U.S. dollars when I buy it.

[ArthurPooh]

I am curious if any on here have updated their personal narrative about what drives gold prices. Seems like the price of gold is responding to economic data more or less in lockstep with stocks. For example, a weaker jobs report gives people the hope that Fed rate cuts may happen sooner rather than later and both stocks and gold go up.

My personal narrative is that everything is an inflation hedge now. The economic praxis now is simply: when the new money arrives, throw it at anything that might go up. The only economic data point that matters (even though it is not expressed with candor anywhere) is the amount of new money coming in. The most important question is: how much are they going to print this time? Thus, everything rises and falls in lockstep: stocks, gold, real estate, not to mention the entire cryptocurrency market that likely could only happen in this hyperinflationary economy.

[pmbug]

... what drives gold prices. ...

Western investors appear to be finally having a positive impact on the gold market, or at the least, they are not getting in the way of higher prices, according to one market analyst.

In his latest comments on the gold market, Carsten Fritsch, precious metals analyst at Commerzbank, said that current market conditions, while supportive for gold, do not fully explain the precious metal’s rally to a new record high above $2,450 an ounce.
...
Fritsch said that a short-term shift in investor demand in gold-backed exchange-traded funds (ETFs) is the only significant factor explaining gold’s recent price action.

Trading data from SPDR Gold Shares (NYSE: GLD) shows that its gold holdings have seen a modest increase, rising by eight tonnes in the last 11 days.

Fritsch added that Friday saw GLD’s biggest one-day increase in holdings in two months.
......

https://www.kitco.com/news/article/2024 ... cord-highs

^ Investment demand (selling actually) in the West was a headwind for gold, that appears to finally have abated.

China's central bank has been buying gold for 18 straight months now. India bought 6 tons in April:



Consumer demand from both China and India is also massive right now. The demand in China got so extreme that the government apparently has asked (about a month ago) people there to buy silver instead (leading into silver's recent drive above $30):

[dualstow]

…
Consumer demand from both China and India is also massive right now. The demand in China got so extreme that the government apparently has asked (about a month ago) people there to buy silver instead (leading into silver's recent drive above $30):
…

As beautiful as silver is, I think I would rather buy fractional gold.

[I Shrugged]

I am curious if any on here have updated their personal narrative about what drives gold prices. Seems like the price of gold is responding to economic data more or less in lockstep with stocks. For example, a weaker jobs report gives people the hope that Fed rate cuts may happen sooner rather than later and both stocks and gold go up.

My personal narrative is that everything is an inflation hedge now. The economic praxis now is simply: when the new money arrives, throw it at anything that might go up. The only economic data point that matters (even though it is not expressed with candor anywhere) is the amount of new money coming in. The most important question is: how much are they going to print this time? Thus, everything rises and falls in lockstep: stocks, gold, real estate, not to mention the entire cryptocurrency market that likely could only happen in this hyperinflationary economy.

That seems more or less correct.

[barrett]

I am curious if any on here have updated their personal narrative about what drives gold prices. Seems like the price of gold is responding to economic data more or less in lockstep with stocks. For example, a weaker jobs report gives people the hope that Fed rate cuts may happen sooner rather than later and both stocks and gold go up.

My personal narrative is that everything is an inflation hedge now. The economic praxis now is simply: when the new money arrives, throw it at anything that might go up. The only economic data point that matters (even though it is not expressed with candor anywhere) is the amount of new money coming in. The most important question is: how much are they going to print this time? Thus, everything rises and falls in lockstep: stocks, gold, real estate, not to mention the entire cryptocurrency market that likely could only happen in this hyperinflationary economy.

That seems more or less correct.

And yet the price of gold got battered yesterday, apparently due to the strong jobs report which further pushes back potential Fed rate cuts. Wage growth was also "disappointingly" strong. It seems to me that gold is currently a disinflationary hedge.

[mathjak107]

it was more then the report .
China was loading up on gold for 18 months and it was learned they paused.

it was really both that sent gold tumbling

[pmbug]

... China was loading up on gold for 18 months and it was learned they paused. ...

Rumor i saw on X is that Chinese buyers wanted to buy (more) gold, but there are/were supply chain issues limiting available supply: