THERE IS SOMETHING GOING ON WITH THE GOLD MARKET. YOU CAN'T BUY THE COINS FROM THE GOV'T NOW. NO SUPPLY OF THE PHYSICAL METAL. WHY WOULD THE PRICE OF GLD BE GOING DOWN?? HAVE WE REPEALED THE LAW OF SUPPLY AND DEMAND?? I THINK THE PHYSICAL GOLD MARKET IS RIGGED AND MANIPULATED BY BIG CENTRAL BANKS AROUND THE WORLD. ALSO, HOW ABOUT SILVER?? HOW CAN THE SHORT POSITIONS EXCEED THE WORLD PHYSICAL SUPPLY?? ISN'T THIS ILLEGAL?? WHAT THE IS THE COMMODITY EXCHANGE DOING??

 
About coins, repeat after me: "Coins are not bullion." The bullion specified for delivery against COMEX gold contracts, though highly refined (.995 fine), can be obtained with much less rigamorol than coins which require intense manufacture.

You can't obtain coins because supplies have been depleted. To make new gold coins, the U.S. Mint must first contract with a vendor to make highly specific alloy blanks, dies must be cut and a tightly-controlled production run slotted into an existing schedule.

Taking delivery of bullion through COMEX essentially means moving existing bars from one shelf to another at an approved warehouse.

You're not comparing apples to apples.

Think of it this way: table sugar prices can be high even if there's an abundance of sugar cane and sugar beets if the refineries are shut down.

About the size of short positions: no, it's not illegal for open interest to exceed visible supply. As futures contracts represent only promises to deliver, they can be created pretty much at will.

Historically, only 2%-3% of futures contracts result in delivery; the balance--including most commercial hedges--are offset with closing sales or purchases. Deliveries of physical commodities usually take place in the local cash market.

 
So where are we with the gold price? Is it heading back down to 2001 prices? Was the April 2008 price where gold topped out and what about gold stocks? is this a washed out sector?

 
Don't have a crystal ball but the near-term prospects for gold still seem bearish. An object of $700-$720, basis spot, is on traders' screens now. Still, gold can test $500-$550 and before violating the uptend that begain in 2001.

The economic rescue measures recently instituted can be viewed as stage-setting for re-inflation. If that's the case, this is a correction with a secular bull trend.

A lesson to be learned: be careful of overweights.

 
Yes thank you. it is difficult to forecast the bottom of the gold price and how this will reflect on various gold stocks, but maybe you have the method for determining the proportion of hedge fund liquidations that have already occured? looking at some of the price changes in gold stocks, it suggests hedge funds bought these names at incredibly cheap prices, way before gold stocks began gaining favour. Wouldn't that have to have been at or before 2002-2003?
The reflationary drive that is being undertaken by central banks must surely have an impact on the price of gold at some point? But can you explain why in fact we are seeing the opposite effect occuring? a reduction in inflation rather than an increase? thanks.

 
If you look at the chart accompanying "Explaining Inflation ... Again" you'll see the U.S. Dollar's been in a deflationary slide since early spring. The reflation hasn't really started yet.

Until the credit markets thaw, gold stocks will continue to be under pressure.