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Ben Davies continues:
“You’ve had the CEO of Barrick saying, effectively, ‘gold extraction isn’t really economically feasible at these levels. New supply isn’t going to come on until at least $3,000 (gold).’ So there really isn’t the supply. China is a great example of where they’ve got desperate mining.
In 2011 they had 360 tons of supply....
Continue reading the Ben Davies interview below...
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“The Ministry of Information & Technology in China just recently said they want to try to get supply up to 450 tons.
Why do they want to do that? Because they have come out and actually given guidelines to the demand in China. They think it’s going to be over 1,000 tons. In 2011 that (demand) was around 750 tons. If you increase supply by 90 tons and you increase demand by 240 tons, you are looking at a 150 to 200 ton deficit going forward. So, again, there is this huge appetite and demand for gold.
So never mind the fact that you can’t extract it economically at these levels. This, to my mind, puts a floor in the price in and around these levels. We talked about (high production costs) down at around $1,400, and it’s just ratcheting up all the time.
Volatility is extremely low (in the gold market). I would say it’s almost at decade lows. One month volatility is down around 9%. Three month volatility is at 12.5%. On average, for the past five years, that’s been around 20%.
So implied volatility means the future volatility priced in by market makers. So when that’s considerably below the historical volatility over certain time regimes, that’s normally very conducive to a reaction in the market one way or the other.
Based on this bull market that exponential reaction, (we’ve talked about price control suppression) would be to the upside. Higher prices are coming into next year. The volatility premium is so low, it means the longs have taken all of the pain now, and the shorts are more exposed to upside prices.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
This was a tremendous interview with Davies. In this segment Davies gives specific price projections in both the short and intermediate-term for gold. He also discusses Goldman’s call for the end of the gold bull market and much more. The interview with Ben Davies is available now and you can listen to it by CLICKING HERE.
The interviews with Ben Davies, Dr. Stephen Leeb, Eric Sprott, Gerald Celente, James Turk and Egon von Greyerz are available now. Also, be sure to listen to the other recent KWN interviews which included Michael Pento, Wilbur Ross, Don Coxe (BMO $538 billion) and Art Cashin (UBS $612 billion) by CLICKING HERE.
Eric King
Ben Davies - Gold Shorts Are Now Exposed To a Price Spike
Today Ben Davies spoke with King World News about the shorts now being vulnerable to a price spike in gold. He also discussed surging Chinese demand and supply troubles. But first, here is what the rising star had to say about the action in gold: “I actually think we are in and around the lows now, and the market will continue to stabilize here. The other point would be that the fundamentals behind gold, in terms of mining supply, the cost of extraction, the grade degradation, this is a real issue.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
December 6, 2012
