Gold bottom and what to do when we get there

I think you brought it up in a completely appropriate way. You didn't involve politics and you didn't pretend to be an expert.

 

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Was at LCS today to pick up a tube of silver Eagles. The place was packed and some guy bought $10K worth of gold. Several others were coming to buy one ounce gold. So many think the bottom is here and $1213 is a bargain now. I only have a couple of ounces of gold but I like to track it to see if I can get a bargain. I'm think $1,100 is where I would buy immediately. Question. Does physical gold buying and selling affect the spot price?

 

Very tiny generalized comments about world politics are allowed due to effects on bullion prices, but personalized comments that wander away from a direct bullion relationship will not be allowed. During large financial ups/downs , the Bullion Investing subforum has the largest number of members 'leaving' us. We may be heading to another world financial crisis so try to follow the rules.

For instance you can refer to the "Korean crisis", but no discussing the politics or participants. Anyone who can read their 'News' know their view of reasons and further possibilities, but keep those internal to the member. Thanks Jim

 

If they get working nukes they could potentially provide enough uncertainty to get some people back into bullion. Beyond that they're irrelevant to the markets and cannot recall anything in the last couple years where they were able to influence either stocks or PMs anymore than a minor blip that corrected itself quickly. If anything their biggest influence was probably the redesign of the $100

 

Generally not, especially for large dealers and the exchanges. Many have contracts that extend far into the future so they can make long term decisions based on the price when they bought the contracts not on current. They don't want to run out of metal to sell if the price jumps $100/day. If they end up buying to much, they inventory it and reduce future contracts or lower their buy rate. They know that a large portion of their apocalypse customers will buy all the way up until its headed down. They are not looking at their first rodeo, watch the email ads. Spot price is suppose to be like like stocks, buy orders vs. sell orders~ more people want to possess, spot moves up...more want to sell, spot moves down. So large gold or cash movement can affect the spot price. Yes spot can thus be legally manipulated. Try to follow their real ( not newsletter) intentions and you will be better off. IMO

 

That wouldn't impact spot, unless it triggered the seller to call his broker to contract more futures orders. Otherwise, it's just rotation of inventory. Generally, the bid/ask spread for gold is based upon Mercantile Exchange trades, not day to day stores.

 

Not one bit. Every day the sales of gold are 100 times the amount available to sell. It is all done with funny money and does not bother itself with the physical price. The percentage of people who actually take delivery of their options if minimal. If everyone chose to take delivery at the next cycle the price of gold would go to $10,000 and ounce overnight - but it's not going to happen.

 

And what if everyone wanted to make delivery at the next cycle instead? A contract has to have a buyer and a seller, right?

 

No, it wouldn't. If everyone chose to take delivery, they'd have so many overlapping contracts to unwind that the market would just freeze. It wouldn't get to anywhere near $10k. Maybe $1800, but definitely not $10k.

Don't forget. Taking delivery requires the holder to have the cash IN THEIR ACCOUNT to execute.

 

With options, the exchange as well as the broker, must maintain offsetting amount of calls and puts options to cancel each other out at any duration of option expiration or buy/sell transaction, plus vigor , transaction fee or margin. You can not take delivery with options, for that you need future contracts. and here is a decent article explaining contracts, again they offset. Changes in the system occurred after the Hunts figured it out a long time ago. One can not take delivery of physical gold at the last time period unless they have paid the full price, or deposited the full amount of gold ( Some large users of gold, deposit excess with the exchange , and later withdraw it for use, or sell if gold has gone up sustanctially...after all it is protected by the exchange.
https://www.bullionvault.com/gold-news/comex-gold-stocks-072420136

This premise is often used when financial stability may seem rocky, but only exchanges, brokers that 'double sold' contracts or options and couldn't pay out when crashes occur got zapped. IMO

And they can only declare for physical delivery before the last cut off date in the last month ( I think the first week, but one should check), so its not a one-day or one week action.

 

Right, future contracts. I misspoke because I was typing too quickly and its been a long day. I do understand the difference. I was thinking option more in the normal English usage as in the have the option to take physical delivery instead of cash. And yes, they do have to give advanced notice so that if enough people take delivery the sellers of the contracts would have to go out onto the open market and buy the gold and such a rush would force it way up.