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Old 03-18-2020, 10:41   #1
Penn
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Economic impact of COVID-19

The market is crashing and contrary to other times of economic stress, so is gold. Can anyone here speak to this counter intuitive situation?
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Old 03-18-2020, 11:07   #2
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The market is crashing and contrary to other times of economic stress, so is gold. Can anyone here speak to this counter intuitive situation?
Penn,

People are selling gold to cover their margin calls. Remember that some of the gold was acquired at <$1,000, so some sales are still profitable. There are others that MUST come up with “margin call money”, even if the gold sale results in a net loss
.
Also, remember that there are two (2) gold investment streams (paper and bullion), that are measured in the volume of gold movement, and the sale thus far has been almost entirely of paper.

This is why there is almost a counter intuitive movement in gold prices

SnT.
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Old 03-18-2020, 11:55   #3
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SnT, thank you for the explanation. Always on the lookout for opportunity. it will be interesting to see how far it will pressure gold, soon a point will be reach that it will reverse this current slide. Looking at 3/6mo of destabilization in the markets, unemployment, increased debt, and losses in the current downturn could push gold to unforeseen levels. Not for the risk adverse.
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Old 03-18-2020, 14:15   #4
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Penn,

KITCO Says “Out of Stock” for physical silver. They probably have Eagles and Maple Leafs, etc., they just don’t want to “give away” at these prices, and would go bankrupt in doing so..

Kitco is also “out of stock” on every bit of physical gold from the Perth Mint to the US Mint and the Canadian Mints.

They are BUYING physical silver at <$12, and I would bet they will buy as much as they can, and wait for the turn-around.

SnT

QUOTE.....Silver's future is bleak as a recession could wipe out any industrial demand left for the metal, this according to Peter Hug, global trading director of Kitco Metals.

Monetary policy was not enough to calm investors, Hug noted, as markets reacted negatively to the last Federal Reserve rate cut made last Sunday

That episode really scared the market. It indicated that the Fed pushing on a string here is not going to solve the issue. It's going to require some significant fiscal policy," he said.

Hug said that a recession may now be underway.
"Ignoring the economics of a significant recession - it may be short lived, if we're not already in it – if we ignore the economics of it, silver [is] an industrial metal and there would be virtually no demand for it," he said.

Hug said that the recent price decline in metals is due to traders and investors liquidating their metals to meet margin calls, putting even more pressure on the physical market.

"Because there is no physical metal in the market right now, both the U.S. Mint and the Canadian Mint are on allocation with some products anywhere from four to six weeks out, at a minimu, we're looking at a situation where there isn't enough physical offtake to offset the selling of the ETFs and the futures, because there's no physical product left to buy," he said QUOTE

https://www.kitco.com/news/2020-03-1...-Responds.html
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Old 03-18-2020, 15:03   #5
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Quote:
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The market is crashing and contrary to other times of economic stress, so is gold. Can anyone here speak to this counter intuitive situation?
Strong dollar, gold dips. Dollar is at records highs...there’s a massive multi trillion dollar short squeeze going on and it’s all coming due in dollars.

Gold is at or near record highs for most currencies.
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Old 03-18-2020, 15:14   #6
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Gold was doing well, reaches nearly $1700/oz then right after the stock market bail out it’s gone down. Interesting to watch it over time as ST implies it has it’s own dynamics. Looks like those who regularly ply that market try to work things their way ie often value increases at the margins, weekends, later in the day, etc... Lear has a couple of charts for example, recently it started flat lining the hours they are not open. I’m no expert but trying to learn more about it.

https://www.learcapital.com/news/gold-price-charts/
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Old 03-18-2020, 15:23   #7
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NYSE to CLOSE on MONDAY, supposedly for the COVID-19, but my thinking is to stop the carnage.
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Old 03-18-2020, 16:06   #8
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NYSE to CLOSE on MONDAY, supposedly for the COVID-19, but my thinking is to stop the carnage.
Electronic trading will still be open, they are just closing the trading floor.


As far as the gold market, that's my playground. /GC (gold futures) are not for the faint of heart or gamblers. It's a cold-hearted, take no prisoners day trading/short term place without the requirement for the $25k account. I've made both my biggest wins and biggest losses in there. It's also incredibly risky if you don't understand futures inside and out. Oil is similar, but lower volume and more prone to random seeming swings. Often the actual value of gold has no real effect on either market. It's about buying and trading the paper, not the gold or oil for most of the participants. Very rarely will a futures contract get exercised.

I also like some of the leveraged ETF's in the same spaces. NUGT/DUST is my favorite pair.
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Old 03-18-2020, 19:25   #9
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Electronic trading will still be open, they are just closing the trading floor.

As far as the gold market, that's my playground. /GC (gold futures) are not for the faint of heart or gamblers. It's a cold-hearted, take no prisoners day trading/short term place without the requirement for the $25k account. I've made both my biggest wins and biggest losses in there. It's also incredibly risky if you don't understand futures inside and out. Oil is similar, but lower volume and more prone to random seeming swings. Often the actual value of gold has no real effect on either market. It's about buying and trading the paper, not the gold or oil for most of the participants. Very rarely will a futures contract get exercised.
I also like some of the leveraged ETF's in the same spaces.
NUGT/DUST is my favorite pair.


(1VB) compforce
I have been a “GOLD BUG” and a “SILVER BUG” for most of my adult life, but I guess (based on your skillset) I am just a collector, who occasionally sells his collection. I have loaded up on gold / silver and have been successful several times in selling higher than I purchased. In Silver, I still say thank god for the HUNT BOYS, That put 2 kids thru school.thanks to them (BTW I still have some memorial $3.00 Silver that I kept as souvenirs).

You play in a market that would give me a heart attack if the below is common: I have never experienced a 49% loss in anything.

SnT

Direxion Daily Gold Miners Index Bull 3X Shares (NUGT)

7.28-7.09
(-49.34%)
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Old 03-19-2020, 03:34   #10
(1VB)compforce
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Originally Posted by Surf n Turf View Post
(1VB) compforce
I have been a “GOLD BUG” and a “SILVER BUG” for most of my adult life, but I guess (based on your skillset) I am just a collector, who occasionally sells his collection. I have loaded up on gold / silver and have been successful several times in selling higher than I purchased. In Silver, I still say thank god for the HUNT BOYS, That put 2 kids thru school.thanks to them (BTW I still have some memorial $3.00 Silver that I kept as souvenirs).

You play in a market that would give me a heart attack if the below is common: I have never experienced a 49% loss in anything.

SnT

Direxion Daily Gold Miners Index Bull 3X Shares (NUGT)

7.28-7.09
(-49.34%)
SnT,
It's not quite that common, but it was worse than that in overnight trading, getting down to -57%. It works the other way too though. The swings are pretty fast and furious. That said, under normal conditions it might move for as much as a 5% swing. See the charts below.

I play in it literally. I'm not risking large sums. I might get in for 1000 shares, that's about the most I'll trade at a time. Futures, maybe two or three contracts at one time. I don't want to give the impression that I am trading big positions, I'm not.

The first chart shows last 12 you can see how it typically stays pretty stable.
The second chart shows two days ago. That was me buying at 6.68, I closed that position at 14.57. more than a 100% gain
The third chart shows yesterday's drop (yes, that's me buying back in at 8.50 to open the position and I'll buy more this morning when it drops further)
Attached Images
File Type: jpg yearday chart.jpg (27.6 KB, 12 views)
File Type: jpg current.jpg (22.4 KB, 9 views)
File Type: jpg NUGT.jpg (24.3 KB, 10 views)
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Old 03-19-2020, 06:26   #11
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Compforce what indicators are you looking at anticipating a rise in value?
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Old 03-19-2020, 06:45   #12
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Compforce what indicators are you looking at anticipating a rise in value?
In which name and for what time period? I have a pretty large set of conditions for all of them under normal circumstances. The specifics depend on how long I am planning to wait. My criteria for a trade that I will hold for less than a day are much higher than the criteria if I plan to wait up to a week, which are higher than ones I will hold for up to two weeks, etc. My futures criteria are higher than my etf criteria due to the risk factors.

NUGT is easy right now. It's never been below 4.20 so my risk at say an $8 position is a max of $6 ($4 minimum plus an additional 50% loss) and cost averaging (DCA) becomes very cheap at that level. The upside to NUGT is that it tends to stay in the $25-$30 range under normal conditions. As long as I am willing to park the money during the crisis, I should have major profits when the etf is rebalanced post panic.
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Old 03-20-2020, 01:46   #13
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I’m not one for offering many recommendations or often.

The only one I am currently encouraging folks with capitals to deploy in the year ahead to observe and consider is Exxon Mobil (XOM).

They are the biggest multi-national energy outfit based in the free world, with an outstanding income statement(which will decline in the short term) and an even better balance sheet.

If you have a long-term time horizon(10 plus years), it’s looking solid.

But perform your own due diligence, and if you consider it, also consider drip feeding in as it may mean dollar cost averaging lower over time if things go from bad to worse.

I also suspect the major tech companies will benefit, due to the fact they have entrenched and defensible franchises and massive piles of cash to buy everything of value for pennies on the dollar.

But they are also all aggressively valued by most measures.
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Old 03-21-2020, 10:03   #14
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This should have some effect on the precious metals markets, at least in the short term.

If there is NO movement then someone is again rigging gold and silver prices.

SnT

Quote:
Physical gold squeezed further; Royal Canadian Mint shuts down production for two weeks

(Kitco News) - The physical gold and silver market just became a little tighter in the near-term as one major mint is shutting down operations for the next two weeks.

In a note to clients, the Royal Canadian Mint (RCM) said that because of the spreading coronavirus, starting Friday it is closing its doors for the next two weeks. That means the mint will not be producing its Gold and Silver Maple Leaf bullion coins.

“While the supply of bullion coins is currently limited, we are fulfilling all the orders we can. We are also continuing to fully secure our facilities, operate the refinery and allow for the receipt and withdrawal of available products,” said Alex Reeves, senior manager, public affairs at the Canadian mint in an email to Kitco News.
We are still providing liquidity to refinery and pool customers in the way of large cast bar products,” he added.

After the two week period the RCM said that it plans to resume modified production using a divided workforce approach.

“This will allow us to reduce the risk to our staff and maintain critical services,” the mint said.

The shutdown comes as firms are reporting growing demand for physical metal as investors continue to worry about the impact the global pandemic will have on the world’s economy.

Last week, the U.S. Mint announced that it sold out of American Eagle Silver Eagle bullion coins. It said that demand for silver coins has jumped 300% compared to sales in February.

The Royal Canadian Mint’s Gold Maple Leaf, with a purity of 99.999%, is one of the most popular investment coins in the world. Earlier this month, the RCM announced the production of a 10-kilogram Gold Maple Leaf coin. Only 10 coins were created, and five have been sold already.
https://www.kitco.com/news/2020-03-2...two-weeks.html
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Old 03-21-2020, 11:31   #15
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Originally Posted by Flagg View Post
I’m not one for offering many recommendations or often.

The only one I am currently encouraging folks with capitals to deploy in the year ahead to observe and consider is Exxon Mobil (XOM).

They are the biggest multi-national energy outfit based in the free world, with an outstanding income statement(which will decline in the short term) and an even better balance sheet.

If you have a long-term time horizon(10 plus years), it’s looking solid.

But perform your own due diligence, and if you consider it, also consider drip feeding in as it may mean dollar cost averaging lower over time if things go from bad to worse.

I also suspect the major tech companies will benefit, due to the fact they have entrenched and defensible franchises and massive piles of cash to buy everything of value for pennies on the dollar.

But they are also all aggressively valued by most measures.
Thanks to Saudi and Ruskie, Xom rds bp oxy have tanked to lowest since the 90’s!!!
I thought putting buy trigger at ‘08 level was a smart move...

Even pharmacy (w drug shortage) got hammered. The market has gone total irrational

W 10 ye horizon, REIT seems solid
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