Negative lease rates for gold (and silver)

Welcome to the Precious Metals Bug Forums

Welcome to the PMBug forums - a watering hole for folks interested in gold, silver, precious metals, sound money, investing, market and economic news, central bank monetary policies, politics and more.

Why not register an account and join the discussions? When you register an account and log in, you may enjoy additional benefits including no Google ads, market data/charts, access to trade/barter with the community and much more. Registering an account is free - you have nothing to lose!

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.
 
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.
 
Clearly, all the economic problems have been fixed. Hooray!
 
... and we're back to negative GOFO (out to 3 months) again.
 
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
 
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
 
...

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:
 
Buy around 1260, sell around 1340, we seem to be range bound for now.
 
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
 

More: http://www.ingoldwetrust.ch/gofo-turned-negative-again-the-consequences
 
Looks like the Brotherhood of Darkness has their work cut out for themselves. Time to smash G&S to smithereens again!
 
GOFO turned back to (slightly) positive yesterday. We'll see if it holds.
 
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
 
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.
 
Haha.. Negative out to 6 months on the May 2 report.
 
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.
 
ancona said:
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.
Click to expand...

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.
 
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
 
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."
 
You must log in or register to reply here.
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more…