So, the 1 mo rates turned positive around September 13 and have stayed positive since. Of course that means that the lease rates (LIBOR - GOFO) has been dropping. With dropping lease rates, it's less attractive to lease gold into the market.
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So what do we think happened ?
There was a lot of interest in the negative GOFO and many commentators were confident that we were seeing a separation of the phys and paper markets.
And the drawdown of phys from Comex ..........
Once again a lot of excitement and anticipation and now its just looking like more BAU.
There was a lot of interest in the negative GOFO and many commentators were confident that we were seeing a separation of the phys and paper markets.
And the drawdown of phys from Comex ..........
Once again a lot of excitement and anticipation and now its just looking like more BAU.
GOFO still negative, but not as bad as on the 16th.
16-Oct-13 -0.06000 -0.04833 -0.04000 0.02500 0.13167
17-Oct-13 -0.04333 -0.03500 -0.01833 0.02667 0.12800
18-Oct-13 -0.04400 -0.03167 -0.01500 0.02667 0.12833
16-Oct-13 -0.06000 -0.04833 -0.04000 0.02500 0.13167
17-Oct-13 -0.04333 -0.03500 -0.01833 0.02667 0.12800
18-Oct-13 -0.04400 -0.03167 -0.01500 0.02667 0.12833
swissaustrian
Yellow Jacket
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The trend is down again: 24-Oct-13 -0.03500 -0.02000 -0.00400 0.04000 0.12500
25-Oct-13 -0.04167 -0.03000 -0.01333 0.04000 0.12500
28-Oct-13 -0.04000 -0.02800 -0.01333 0.03833 0.12500
29-Oct-13 -0.04800 -0.03600 -0.02000 0.03200 0.11800
30-Oct-13 -0.04200 -0.03600 -0.02200 0.03600 0.12000
31-Oct-13 -0.04750 -0.03500 -0.02000 0.03500 0.12000
01-Nov-13 -0.06000 -0.04750 -0.03000 0.03250 0.11750
Any price close to 1300 seems to dry the physical market up
25-Oct-13 -0.04167 -0.03000 -0.01333 0.04000 0.12500
28-Oct-13 -0.04000 -0.02800 -0.01333 0.03833 0.12500
29-Oct-13 -0.04800 -0.03600 -0.02000 0.03200 0.11800
30-Oct-13 -0.04200 -0.03600 -0.02200 0.03600 0.12000
31-Oct-13 -0.04750 -0.03500 -0.02000 0.03500 0.12000
01-Nov-13 -0.06000 -0.04750 -0.03000 0.03250 0.11750
Any price close to 1300 seems to dry the physical market up
DoChenRollingBearing
Yellow Jacket
...
Now that I am back in the good ol' USSA, a patriotic Bearing Guy will soon do his part to soak up all that gold liquidity. Hey! I am just trying to help here!
Negative GOFO? Can't have that, can we. See ya in line at the LCS, ASAP!
:wave:
Now that I am back in the good ol' USSA, a patriotic Bearing Guy will soon do his part to soak up all that gold liquidity. Hey! I am just trying to help here!
Negative GOFO? Can't have that, can we. See ya in line at the LCS, ASAP!
:wave:
1 month GOFO went positive for most of November and has been bouncing slightly negative on and off through December. It's currently negative out to 2 months.
02-Jan-14 -0.02000 -0.00500 0.00667 0.06167 0.15833
03-Jan-14 -0.01667 -0.00333 0.01000 0.06000 0.15667
02-Jan-14 -0.02000 -0.00500 0.00667 0.06167 0.15833
03-Jan-14 -0.01667 -0.00333 0.01000 0.06000 0.15667
Today (April 3, 2014) the one month Gold Forward Offered Rate (GOFO) turned negative again. This is the seventh time since July 8, 2013 this has happened. I would like to share a few thoughts on this.
...
The Consequences Of Negative GOFO
From looking at the equations we can conclude GOFO is the difference in interest rates between US dolars (USD) and gold (XAU). When the three months GOFO is negative, it means the interest rate to borrow XAU for three months is higher than the interest rate to borrow USD for three months; there is more demand for XAU than USD. This suggests the value of gold expressed in dollars will rise.
Bear in mind we live in a ZIRP bubble bath, there is such USD supply (out of thin air) that LIBOR is exorbitant low.
Nevertheless in the following chart we can see that when GOFO is trending down the price of gold (XAUUSD) is pushed up.
In the above chart I made the negative GOFO periods grey. The gold price (right axis) tends to go up in these periods. If GOFO persist to trend lower it’s very likely the price of gold will rise. When we look back a couple of years, we can see that every time GOFO dipped in negative territory a strong bull market in gold followed. I expect to see the same in coming years.
...
More: http://www.ingoldwetrust.ch/gofo-turned-negative-again-the-consequences
ancona
Praying Mantis
Looks like the Brotherhood of Darkness has their work cut out for themselves. Time to smash G&S to smithereens again!
Well, it held for one day. GOFO has been negative since the 9th and it's been getting worse. It's negative out to 6 months now.
14-Apr-14 -0.05600 -0.04400 -0.02400 0.03000 0.09000
15-Apr-14 -0.07800 -0.05600 -0.03600 0.01600 0.08800
16-Apr-14 -0.10800 -0.08400 -0.05800 0.00400 0.08200
17-Apr-14 -0.11800 -0.08800 -0.05800 -0.00600 0.07600
14-Apr-14 -0.05600 -0.04400 -0.02400 0.03000 0.09000
15-Apr-14 -0.07800 -0.05600 -0.03600 0.01600 0.08800
16-Apr-14 -0.10800 -0.08400 -0.05800 0.00400 0.08200
17-Apr-14 -0.11800 -0.08800 -0.05800 -0.00600 0.07600
Checked this morning and GOFO has remained negative out to 3 months since last report. At 6 months, it keeps bouncing around (from negative to positive). It looks like the numbers are trending back up for the moment.
ancona
Praying Mantis
Gold has been pushed out negative for so long it's become the "new normal". I suspect we are being set up for some more fireworks, and I for one, am going to wait this mother out.
I have a good buddy that started to stack back at 14, kept up his DCA through 25, then went dormant. After buying a lot more between 19 and 23.50 he is now considering getting completely out. It turns out that he was not in it to preserve wealth but to make a profit. I told him he needs to immediately change his outlook. His T-Bills are getting him 3% and the money is locked up. I can't seem to make him understand that the investment is net negative and that his silver will protect his cash from any and all inflation if he just sits back and have a little patience. The volatility drives him insane.
That said, he only has a [relative;y] small proportion of his dough in silver, with the rest in T-Bills, a college account for his kid and a traditional after-tax IRA. We'll see.
I have a good buddy that started to stack back at 14, kept up his DCA through 25, then went dormant. After buying a lot more between 19 and 23.50 he is now considering getting completely out. It turns out that he was not in it to preserve wealth but to make a profit. I told him he needs to immediately change his outlook. His T-Bills are getting him 3% and the money is locked up. I can't seem to make him understand that the investment is net negative and that his silver will protect his cash from any and all inflation if he just sits back and have a little patience. The volatility drives him insane.
That said, he only has a [relative;y] small proportion of his dough in silver, with the rest in T-Bills, a college account for his kid and a traditional after-tax IRA. We'll see.
mmerlinn
Ground Beetle
When everything finally hits the fan, he will be a pauper. The ONLY wealth he will have left is the silver. All of the rest will VANISH like a puff of smoke and just as fast. IOUs are NEVER worth more than the paper they are printed on. That is ALL that he has - IOUs from a government that CANNOT be trusted.
GOFO was negative out to 3 months on May 16. Two trading days later, it was all positive and has remained so through today. Checking a gold price chart for the last 60 days, it appears that the latest period of negative GOFO did not correlate with escalating gold price - gold traded mostly sideways/flat.
Gold price fell when GOFO turned positive, but has now rallied while GOFO has strengthened. What does it mean? I don't know. Charts aren't the whole story, I guess.
Gold price fell when GOFO turned positive, but has now rallied while GOFO has strengthened. What does it mean? I don't know. Charts aren't the whole story, I guess.
GOFO has been positive for a good while now and I haven't really be diligently watching it, but I saw this comment on KWN and thought it worth sharing:
More: http://kingworldnews.com/kingworldn...atest_LBMA_Injustice_&_Chart_Of_The_Year.html
More: http://kingworldnews.com/kingworldn...atest_LBMA_Injustice_&_Chart_Of_The_Year.html
swissaustrian
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GOFO publications will be stopped as of January 30th 2015.
http://www.lbma.org.uk/_blog/lbma_media_centre/post/discontinuation-of-GOFO/
It might explain the unusual trading in GOFO rates during the last few weeks. It seems some trades had to be unwound in a rush...
"Gold IRS market participants looking to wind down existing trades, are encouraged to contact TriOptima’s triReduce Team (details below) to sign up to the forthcoming compression cycle to terminate outstanding contracts."
They did the same thing for SIFO rates in 2012, but gave another explanation:
http://www.lbma.org.uk/silver-forwards
"The reason for the withdrawal of the dataset was that unlike GOFO these rates were indicative rates only and therefore not dealable rates between forward Market Makers. In addition, since January 2011, the LBMA forward Market Makers have jointly contributed essentially the same data :doodoo: (but covering an extended range of maturities; from spot to 3 years) to the LBMA's end of day daily forward curve for silver."
http://www.lbma.org.uk/_blog/lbma_media_centre/post/discontinuation-of-GOFO/
It might explain the unusual trading in GOFO rates during the last few weeks. It seems some trades had to be unwound in a rush...
"Gold IRS market participants looking to wind down existing trades, are encouraged to contact TriOptima’s triReduce Team (details below) to sign up to the forthcoming compression cycle to terminate outstanding contracts."
They did the same thing for SIFO rates in 2012, but gave another explanation:
http://www.lbma.org.uk/silver-forwards
"The reason for the withdrawal of the dataset was that unlike GOFO these rates were indicative rates only and therefore not dealable rates between forward Market Makers. In addition, since January 2011, the LBMA forward Market Makers have jointly contributed essentially the same data :doodoo: (but covering an extended range of maturities; from spot to 3 years) to the LBMA's end of day daily forward curve for silver."