Re-reading that it sounds like the equivocation you can find most anywhere on the web but truth be told we are actually at an important point in gold prices. Overnight action chart below the jump.
$1314.90 last.
From Alhmbra Partners:
The sudden upturn in GOFO led me to believe that there were changes in the gold dynamics from the relatively favorable period through mid-August. Given the repo action around the UST auctions this week and last, there can be little doubt the collateral shortage has been renewed.
Starting August 27, several tenors of UST bonds went special in repo markets, with the 5-year as deep as -0.30%. The 10-year benchmark was special at -0.01%.
Since then, the 5-year and 7-year traded in and out of special, but had largely been back at “normal” levels by the beginning of this week. The 10-year, the issue with the greatest shortage problems, traded further special all this week. On Monday, the 10-year repo rate was -0.30%, continuing to trade special through the new issuance after Wednesday’s auction. At the close of trading today, the 10-year repo rate on the new issue was -0.04%, down from -0.16% on Thursday. The newly off-the-run 7-year, however, has gone back special trading at -0.35%.
The bottom line here is that there is again stress in the repo markets where it really should not exist. Even accounting for an increase in short positions (that compete with repo demand for specific issues) due to taper expectations, this continual special trading in repo is significant in signaling untamed collateral problems.
We know how this works in terms of gold as collateral, having seen it now three times in the past seven months or so.
An increase in gold as collateral pushes gold forward rates upward, unleashing a tide of selling that depresses gold prices. It goes like clockwork. The effects on GLD gold movements also fit and confirm these trends....MORE
See also last week's "Marginal Revolution's Tyler Cowen: '...Kaminska Wins/" on collateral and an FT Alphaville post I didn't get to, "Woodford and the QE tradeoffs, revisited".
From FinViz:
