Gold Price Is Suspected Of Being Sold Naked In The Investment Bank, And The Two Tier Market Is Buying Up And Saving Itself.

In the view of many hedge fund managers, this round of gold prices fell early in 6 and July foreshadowed. At that time, a short gold force began to rage in the COMEX gold futures market. In just two months, it increased nearly 295 tons of gold net bearish position. Under the suppression of huge gold short positions, gold prices have shifted to a downward trend in the first half of the year, and hedge funds have been betting on the decline in arbitrage of gold prices.

"If it is not for the gold miners to save themselves, the price of gold will probably go deeper." An American commodity hedge fund manager said frankly.

However, their rescue efforts may not succeed. The labor department's latest unemployment rate in September dropped to 5.9%, a record low since July 2008. The expectation that the Federal Reserve will raise interest rates in the middle of next year has been heating up, and it has become a new driving force for the bearish forces to keep lowering the price of gold.

Premeditated sniping?

The hedge fund managers of the above commodities believe that this round of gold plummeted and once fell to the lowest level in 56 months, which is quite like a premeditated sniping.

In the first half of the year, gold prices rose more than 10% over the first half of the year, due to the double impact of the Ukraine situation and the weak dollar.

However, the COMEX gold futures market in June changed suddenly.

"Market rumors, in the 6-7 week of 5 weeks, the New York mercantile exchange investment bank has increased 7 million 900 thousand ounces of gold bearish positions (about 246 tons), reversing the first half of this year's upward momentum." The hedge fund manager said.

This market rumor is reflected in the gold trading data of CFTC. According to CFTC data, gold trading dealers based on investment banking held 4907900 ounces of gold net bearish positions in the week of June 3rd. By July 15th, this figure suddenly increased to 10177900 ounces. This data shows that investment banks have increased more than 5 million ounces of gold net bearish positions in the past 5 weeks.

A gold analyst bluntly pointed out that investment banks were buying gold in big hands. The reason is, on the one hand, investment banks generally believe that the tightening of the Fed's QE, the rise in US Treasury yields, the continued strength of the US dollar and the lower inflation risk in Europe and America will push gold prices to near $1100 / ounce. On the other hand, the demand for gold in China slowed down in 2014, leaving the gold price losing the most important support.

The latest report of the world gold association shows that due to the sharp decline in international gold prices in 2013, Chinese consumers have bought gold in large quantities and overdrawn the demand for gold in advance. The demand for gold in China in 2014 will probably be consolidated and maintained at a consumption level of 1187 tons last year.

"Without the continuous growth of gold purchases in China, gold prices continue to rise and become precarious." The gold analyst said. In his view, behind the big buying and selling of gold in investment banks, it is necessary to cash in the forecast of gold at the beginning of the year.

In the three quarter, there was a strange phenomenon in the COMEX gold futures market, that is, the gold price in Asian trading hours benefited from the rise in Asian buying, but in Europe and the United States, the trading hours tended to fall. Over the years, most Asian investors did not dare to buy gold again. Especially in the three quarter, the US dollar continued to strengthen, which led investors to completely reverse the idea of bullish gold and instead bet on the arbitrage of gold prices.

"Actually, investment bank Maybe selling gold naked. " The hedge fund manager is blunt. Investment banks may not own nearly 250 tonnes of gold in stock for short contract deliveries unless they can borrow enough gold reserves from gold miners and central banks in Europe and the United States. However, the huge gold bullion formed by naked short selling is enough to reverse the trend of gold prices.

Reporters learned from many hedge fund managers that the investment banking sector may set up a large number of gold call options near the US $1100 / ounce. Once the gold price is close to US $1100 / ounce, they will be able to buy enough gold positions to hedge large short contracts and earn substantial price differentials.

　　 Gold merchant Forced to save oneself

Gold prices continue to fall, and gold miners are beginning to sit still.

　　 CFTC data In the past two months, gold miners' gold headroom dropped from 5557900 ounces to 3180300 ounces, which reduced more than 2 million ounces at a time.

"Once gold falls below 1200 US dollars / ounce, it will push the cost of gold mining, forcing the producers to save themselves." The gold analyst explained. At present, the cost of gold mining of the world's large gold mining companies is hovering around 1100-1200 US dollars / ounce. In addition to the expected 10%-20% return on investment required by the gold mine investors, the producers must maintain the gold price near the US $1200-1300 / ounce to ensure the breakeven of the parties.

Buying gold directly in the two tier market is actually a helpless move for gold miners. Previously, their common practice was large-scale hedging, that is, the producers first "sold" gold spot, and then established a long-term gold price repurchase agreement, expecting to earn the price difference from the gold price decline process. However, this approach has little effect, mainly because the gold reserves used by various gold miners for hedging account for a low proportion of their annual production, and the profits earned by hedging are difficult to cover the mining losses caused by the continued decline in gold prices.

"Based on the 1990s gold mining collectives hedging losses (due to the rapid rise in gold prices in 2000), most gold mining companies are very cautious about hedging, preferring to reduce the amount of gold production through the business difficulties." The analysts said bluntly. This approach is intended to stimulate gold supply and demand to drive up the price of gold, but it will take some time to get the result. In the face of this sudden sharp drop in gold prices, the only way for the miners to save themselves is to buy gold directly in the gold futures market.

But gold miners are facing big market risks if they buy gold. With the US Federal Reserve speeding up the pace of raising interest rates and the continued rise in the US dollar, the continued decline in gold may cause more losses to gold miners.

Citibank's recent research report suggests that the global gold market should hedge 5% gold production in 2014, and the hedge ratio will be 10% in 2015 and increase by 5% annually until 25% in 2018.