I have one fool-proof indicator I pay attention to for the price of gold. To me, all the rest is idle speculation. To reward people for reading this site, I am going to explain it below.
Gold is a barometer of many things. Now the election is over, so you’ll see some larger moves in commodities. I don’t think it’s a stretch to believe the powers that be keep a lid on things like gold at crunch times like elections. The fear is the appearance of things being out of control might get people to vote for non-controlled candidates.
American elections have to look good for the rest of the world so we can justify butting into the affairs of other nations. Jesse Ventura is saying put a “None of the Above” option on the ballots. Jesse is a genius, or whoever gave him the idea is.
To the point, gold lease rates are akin to rent. You rent gold, sell it forward, and then take the hit if the price rises and you have to buy it back. If the price goes down, you make the difference when you pay back the gold you rented.
Since selling forward lowers the price of gold (macroscopically), in the heyday of gold leasing back in the late 1990’s, it was a pretty good bet. It’s crooked, and the biggest payers were involved (Robert Rubin types), but since the government (aka the Federal Reserve Bank) hates gold, nobody ever got popped for it, or ever will. You’ve heard of too big to fail? Some people are too big to get arrested, though they do have a tendency to be found hanging from the ceiling of their basement.
Once you get off Sugar Mountain, it’s all gangster at the highest levels.
Although nothing can be changed, we can still watch and observe, waiting for a crack in the firmament. Remember in THE GOOD EARTH, when Wang Lung seized the moment to loot the rich guy’s house during the riots? Well, that moment has arrived for the readers of this blog and the serious empirical student of gold lease rates.
I have been watching gold lease rates for a few weeks, waiting to see if the 1 month lease rate will begin to exceed the 1 year lease rate, and it looks like they waited for the holiday when nobody but the obsessed will notice. The charts below tell the story, the one month lease rate has exceeded the 1 year.
Historically, this always precedes a spike. I can’t find the 20 year charts for this, but I just know from the days when Kitco had them. If Kitco has them still, I didn’t see them.
When I say empirical student, I say mere observation proves the chart below will produce a gold spike up. It always has. This requires no analysis, just looking at charts.
Think about it though. You rent gold, you pay for certainty. You can certainly predict one month better than one year. So, you pay extra to rent for a year, and less for a month, because the person renting to you is taking a bigger risk by letting you have it for a year.. There is less risk in renting to you for a month. So why should the one month ever exceed the one year rate?
My answer? The gold market is in chaos for some reason. People (large gold players) are scrambling to rent gold to cover their gold bets in the commodity market, because they know gold is going to spike.
So, you can’t beat them, you can’t join them, but you can observe them, and it’s probably some obscure stat nobody pays attention to that will tip you off.
Note-this only applies to gold. I have never been able to see a pattern in other commodity lease rates, though there probably are patterns. However, if gold goes up, platinum and silver will naturally follow suit.