Gold Tops $1080 Today

[jtmo3]

Wow, just noticed this. I looked earlier and gold was down slightly. I just clicked to check again and it was up over $18. WTF. Something happened. I wish I knew what it was, cause the dollars still positive. There is just too much weird shit going on right now.

[jtmo3]

Wonder if this has anything to do with it?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUg7KA8PqBSQ&pos=5

RBS, Lloyds Get $51 Billion in Second Bank Bailout

[Rival]

Its pretty simple really.

Everyone knows that China was negotiating with the IMF, trying to get the 400 tons at below market value. Then out of nowhere, we learn India buys half of it AT MARKET PRICE! And to top it off, what do they use ti buy it? Rupees? Nope, they burn through BILLIONS of their dollar reserves, dumping these dollar reserves on the currency market. And guess what? China still wants to buy gold but came away empty handed... So that means that in order to obtain gold they will likely have to pay market value as well. The chances of the other 200 tons of IMF gold being dumped on the market is now just about zilch.

This news is HUGE bullish for gold, and very ugly for the dollar. The only real surprise is that the dollar did not tank immediately. I imagine the fed heads and the other central bankers are maneuvering hard to stabalise it.

[ninakat]

Gold Jumps on India's 200-Tonne IMF Purchase, London Sees "Sea Change" in Market
By: Adrian Ash, BullionVault
Posted Tuesday, 3 November 2009
 
London Gold Market Report

THE PRICE OF GOLD rose sharply to 7-session highs against the Dollar and new 8-month highs vs. the Euro early Tuesday after the Reserve Bank of India said it bought 200 tonnes of gold from the International Monetary Fund late last month.

Slated to sell 403 tonnes of gold in total, the IMF raised $6.7 billion from India's purchase, helping "put the fund's finances on a sound long-term footing," according to managing director Dominique Strauss-Kahn today.

India's purchase – which takes its total gold hoard to 557 tonnes, the 10th largest central-bank holdings – was done at an average price near $1045 per ounce during the second half of October.

The gold price in Dollars today rose above $1065 before easing back in early London dealing.

(...)

[jtmo3]

But if that's the case, aren't they going to create bigger problems for the dollar by holding it up and gold rises significantly? It's not often that you see gold go up (especially this much) while the dollar is moving positive. Like I've been saying for a couple days, there's just too much weird shit going on right now. Something has to give soon.

[ninakat]

Rival, thanks for that -- great analysis.

[Ganesh Baba]

Rival, are you sure buying gold means dumping dollars on the currency markets? Don't those dollars simply go to the IMF to "help provide credit for low-income countries"?

[ninakat]

And what about silver -- why it's jump as well, since the dollar's still positive? Hmmm....

[Rival]

Rival, are you sure buying gold means dumping dollars on the currency markets? Don't those dollars simply go to the IMF to "help provide credit for low-income countries"?

You are correct, technically they are not "dumped" on the market. But keep in mind, when the IMF loans those $$$ out, they demand all interest payments be given back in GOLD, not $$$. We have India turning a rather large pile of $$$ into gold, and then the IMF pushing those $$$ into emerging markets, while at the same time draining them of gold. These counrties do not have much gold, they will have to go on the market to buy it, with some of those very same dollars. This pushes up the price and sets up the IMF for more profitable gold sales in the future. It is all part of a very large circulation cycle of gold and dollars, where gold is being hoarded and $$$ spent. There is only one way this can end.

[Bill Hicks]

Dang, I've been hoping for a dip.  With the dollar also rising, only fear in the markets can explain this.   

[Arraya]

Panic buying?

[gin]

You are correct, technically they are not "dumped" on the market. But keep in mind, when the IMF loans those $$$ out, they demand all interest payments be given back in GOLD, not $$$. We have India turning a rather large pile of $$$ into gold, and then the IMF pushing those $$$ into emerging markets, while at the same time draining them of gold. These counrties do not have much gold, they will have to go on the market to buy it, with some of those very same dollars. This pushes up the price and sets up the IMF for more profitable gold sales in the future. It is all part of a very large circulation cycle of gold and dollars, where gold is being hoarded and $$$ spent. There is only one way this can end.

maybe merging markets could you include the US there.. could we see the IMF parking money in US debt..
in efforts to supporting the dollar.. may explain that temp spike early today in US$dx dec futures at 4:55am today..
these aren't normal times.. now BAU at the IMF may include supporting the US$ at all costs.. this could get messy
question..
when India bought that gold did they have to first buy US$ to pay for the gold ?
if yes when did they do that or did they pay for the gold with good old rupees..   

[Rival]

Gin, I think you might be onto something there.

As to your last question, it was reported that they bought the gold with a portion of their US dollar reserves, in dollars.

[Abhaha]

Silver too...almost up to $17.00...what the hell is going on?

Silver has been on a wild ride for the past couple of months;

[Bill Hicks]

And what about silver -- why it's jump as well, since the dollar's still positive? Hmmm....

Same reasons, flight to safety.  Not everyone has thousands of dollars lying around to throw at gold, but a four hundred or so will buy you a roll of 20 Silver Eagles.  And if TSHTF, the silver will be much easier to use as a medium of exchange.