@jmski52 said: Who determines the number of dollars or ounces to trade?
Makes no difference. Nobody is left holding the bag, waiting for the other party to make good.
Counterparty risk in a physical metals transaction
The value of the item cannot ever be agreed on and sale never takes place.
Other party shows up with gun and takes said gold.
That's not a counterparty. Nobody agreed on a transaction.
Some other party determines value at some relationship to spot. What happens if gold is determined by governments and paper investors to be a useless rock.
There's no counterparty in this scenario either. There's some market risk, being determined by things out of one's control. But, there's no counterparty and no transaction.
The other scenarios likewise suffer from the same lack of a counterparty or a transaction.
Counterparty risk in a physical metals transaction
The value of the item cannot ever be agreed on and sale never takes place.
I want $10,000,000 for my ounce of gold. Who's the counterparty? Oh, that's right - there is none.
this risk of not finding a buyer increases exponentially if you are investing in modern dreck.
Easier for me to move my rolls of 90% for instance than you to move a puck. The counterparty is time
Counterparty risk is taking the chance that no matter what you post here there is someone who will argue that earth is not round.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
jmski said: "That's not a counterparty. Nobody agreed on a transaction."
And there is your risk. Congrats. You finally see it. The risk is there is no counterparty.
When you wanted to sell your gold, you couldnt. At that time and place it was worthless. Now what are you going to do?
At $10,000,000/oz. that's pretty understandable.
Seriously, do you really believe what you are saying?
One last time. If there's no transaction, there is no counterparty. Gold has no counterparty. A paper contract has many counterparties.
Hypothetically - if the risk was that there is no counterparty, that might apply to a paper contract when there's no physical to back it up...………...…..but you can always work a transaction for physical gold if the price is right.
Q: Are You Printing Money? Bernanke: Not Literally
@MsMorrisine said:
and relate this all back to slow delivery on pre-sale orders?
Doesnt...and as I first stated it was a topic for another thread, but was kept active by other forum members.
One should attempt to recognize all risks. Failure to do so can result in unsatisfactory results. Practice due diligence.
BTW----This is counterparty risk. Ignore it at your own peril. --------- but you can always work a transaction for physical gold if the price is right.
@92vette said:
Did anyone notice in the midst of all this that as of a few days ago Apmex has caught up on their orders?
As of Sunday morning their inventory was still missing:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
If you cant strike a deal with that counterparty then find another.
It appears that the risk of finding a trade at high premiums is pretty low. I still don't consider that a "counterparty risk" since no trade has taken place.
Q: Are You Printing Money? Bernanke: Not Literally
Well the good news is: We haven't reached the point where gold and silver will not be available at ANY price.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@cohodk said:
Well at least you post a comment rather than just a LOL to every one of my posts. I do appreciate the attention though.
LOL
But you bring up a good point. You see, i am not unwilling to accept your definition, rather, i am offering another, which "everyone else" does not, or refuses, to see.
Why do you still refuse to accept the economic definition of counterparty risk? This simple definition is taught to undergraduates in one 50 minute lecture with more ease.
Counterparty risk is the probability that one of those involved in a transaction might default on its contractual obligation.
While we're getting to make up our own definitions. . .
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@cohodk said:
Well at least you post a comment rather than just a LOL to every one of my posts. I do appreciate the attention though.
LOL
But you bring up a good point. You see, i am not unwilling to accept your definition, rather, i am offering another, which "everyone else" does not, or refuses, to see.
Why do you still refuse to accept the economic definition of counterparty risk? This simple definition is taught to undergraduates in one 50 minute lecture with more ease.
Counterparty risk is the probability that one of those involved in a transaction might default on its contractual obligation.
economics is not a science , its accepted definitions are not automatically facts
@cohodk said:
Well at least you post a comment rather than just a LOL to every one of my posts. I do appreciate the attention though.
LOL
But you bring up a good point. You see, i am not unwilling to accept your definition, rather, i am offering another, which "everyone else" does not, or refuses, to see.
Why do you still refuse to accept the economic definition of counterparty risk? This simple definition is taught to undergraduates in one 50 minute lecture with more ease.
Counterparty risk is the probability that one of those involved in a transaction might default on its contractual obligation.
economics is not a science , its accepted definitions are not automatically facts
The definition of a word, or group of words, is indeed a fact. In any field.
If you wish to argue that, please explain how the definition of the word interfenestration is not a fact.
@jmski52 said: If you cant strike a deal with that counterparty then find another.
It appears that the risk of finding a trade at high premiums is pretty low. I still don't consider that a "counterparty risk" since no trade has taken place.
You dont see that the risk is you cant find a counterparty?
@cohodk said:
Well at least you post a comment rather than just a LOL to every one of my posts. I do appreciate the attention though.
LOL
But you bring up a good point. You see, i am not unwilling to accept your definition, rather, i am offering another, which "everyone else" does not, or refuses, to see.
Why do you still refuse to accept the economic definition of counterparty risk? This simple definition is taught to undergraduates in one 50 minute lecture with more ease.
Counterparty risk is the probability that one of those involved in a transaction might default on its contractual obligation.
economics is not a science , its accepted definitions are not automatically facts
The definition of a word, or group of words, is indeed a fact. In any field.
If you wish to argue that, please explain how the definition of the word interfenestration is not a fact.
Many word have multiple definitions. You can either accept those facts or not. Generally one who limits their facts, limits themselves.
I once worked for a PhD who claimed that possession of such degree allowed him to create his own words and definitions. Maybe that's what we have going on here? Somehow I doubt it.
Made two orders two days apart during the dip to 11 -12 dollars. (Silver) Got a notice that the first order wouldn't ship untill the same day the second was slated to ship. I emailed them back asking if they could just ship them together and refund one of my shipping costs. No response. Just got an email saying my second order shipped. Hopefully the other will ship tomorrow.
It appears some (at least one) here believe they are above the laws of definition. They also like to create their own reality. Not uncommon on a forum where one can pretend to be whomever they want to be.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@jmski52 said: You are conflating market and counterparty risk.
Who is?
If I trade physical gold for physical dollars, there's no counterparty risk because nobody's holding the bag, waiting for performance on the other side of the trade.
If I buy or sell a paper contract, there's counterparties and counterparty risk all over the place.
It's hen you say, "physical dollars", do you mean FRNs? If so, there is a counterparty risk. The Federal Reserve is telling you that the United States will tax its citizens to make good on a bond they exchanged with the Treasury to make good on the fiat currency it issued. Counterparty risk. If the people overthrow the government, the note is no good.
Nothing backs the dollar except your confidence that the next guy will accept it. The counter party risk is its value (what the other party will give you for it) when you spend it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
It's hen you say, "physical dollars", do you mean FRNs? If so, there is a counterparty risk. The Federal Reserve is telling you that the United States will tax its citizens to make good on a bond they exchanged with the Treasury to make good on the fiat currency it issued. Counterparty risk. If the people overthrow the government, the note is no good.
I can accept FRNs or "physical dollars" when I sell my gold and there is no counterparty risk at that time of the transaction because I've accepted the terms. There's no other party holding an escrow payment or a contract that needs to be executed. The deal is at its face, completed. No counterparties either way.
If the Treasury defaults or gov.com is overthrown it devalues my proceeds, but those are extraneous risks not connected to the transaction and those risks were present both before and after the transaction takes place.
Q: Are You Printing Money? Bernanke: Not Literally
@derryb said:
Nothing backs the dollar except your confidence that the next guy will accept it. The counter party risk is its value (what the other party will give you for it) when you spend it
Yes, derryb, you get it now. Whoohoo!!!
Just substitute the word "gold" for "dollar".
I really am at a loss as to why this was so difficult for some to see. Now that derryb gets it, hopefully others will have open eyes and ears as well.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
cohodk---for someone who wants to exude optimism such as you do, you seem almost overly concerned about the risk to the dollar. Do you have such a concern?
Q: Are You Printing Money? Bernanke: Not Literally
cohodk---for someone who wants to exude optimism such as you do, you seem almost overly concerned about the risk to the dollar. Do you have such a concern?
I dont believe I have made any comment expressing concern to the dollar. Please explain.
@derryb said:
Nothing backs the dollar except your confidence that the next guy will accept it. The counter party risk is its value (what the other party will give you for it) when you spend it
Yes, derryb, you get it now. Whoohoo!!!
Just substitute the word "gold" for "dollar".
I really am at a loss as to why this was so difficult for some to see. Now that derryb gets it, hopefully others will have open eyes and ears as well.
Jmski---you get your beasties yet?
Cohodk, my first thought was that I agree with you, and it is the same situation as with gold. However... as I think about it more, I believe that is not really the way it is.
With dollars... there is an 'agreement' or 'implied contract'.... the U.S. government says it will back or accept that paper dollar that you hold for use in settling debts. Thus... with an 'agreement'... there is counter party risk.... that the other party will default and no longer follow through or accept that paper dollar any longer. Both with the government... or with private parties. On that, we both agree.
But with gold..,. that you are holding in your hand... there is no 'agreement' or 'contract' with anyone else. Just a lump of metal in your hand... nothing more and nothing less. There is no counter party risk, as there is no other party involved. (There is RISK of coarse if you want to try to convert that metal to something else in the future, but it is not a counter party risk by 'standard' definition... ).
With dollars... there is an 'agreement' or 'implied contract'.... the U.S. government says it will back or accept that paper dollar that you hold for use in settling debts. Thus... with an 'agreement'... there is counter party risk.... that the other party will default and no longer follow through or accept that paper dollar any longer. Both with the government... or with private parties. On that, we both agree.
Gov does not say it will back the paper dollar. Gov does say the dollar is "legal tender for all debts, public and private." This means Gov will accept the dollar for payments to the Gov (primarily done for tax payments). Gov cannot force a third party to accept the dollar for private debt. That remains totally up to the third party and his confidence that the dollar he accepts will be accepted by the next party.
As I said earlier the only thing backing the dollar is the holder's belief that the next party will accept it as payment.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
cohodk---for someone who wants to exude optimism such as you do, you seem almost overly concerned about the risk to the dollar. Do you have such a concern?
I dont believe I have made any comment expressing concern to the dollar. Please explain.
Haven't you identified the US Govt as a "counterparty" in transactions involving the US dollar in which accepting the dollar is a "counterparty risk"? That would seem to indicate that you have a concern over the value of the dollar.
Q: Are You Printing Money? Bernanke: Not Literally
The US Govt's acceptance of paper fiat dollars includes devaluing them at any time they choose. That worked in January 1934 when gold was revalued from $20.67 to $35/oz long after the US Govt called for the public to turn in their gold......instantly devaluing all US dollars held by 40%......the outcome of counter-party risk (CPR....lol). The value of gold increased by 69% over-night.
@roadrunner said:
The value of gold increased by 69% over-night.
But coho says gold has no value unless there is a buyer?
Please, don't tell me he's wrong, again.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
BTW---I do accept y'alls definition (never said I didnt) of counterparty risk in relation to "the Govt saying the dollar is worth a dollar", and potential for another party to not hold up their end of the deal. Im simply expanding on those definitions to illustrate possible risks that may not be seen by some.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@jmski52 said: cohodk---for someone who wants to exude optimism such as you do, you seem almost overly concerned about the risk to the dollar. Do you have such a concern?
I dont believe I have made any comment expressing concern to the dollar. Please explain.
Haven't you identified the US Govt as a "counterparty" in transactions involving the US dollar in which accepting the dollar is a "counterparty risk"? That would seem to indicate that you have a concern over the value of the dollar.
Nope. Never said or expressed that.
What ive been trying to discuss is the price discovery between two counterparties. I expressed this risk as the 2 parties not agreeing to price or value (the risk that your counterparty may not see things the way you do), rather than of price discovery risk.
You decide on how you want to view it, but it is a real risk and one that needs to be understood.
They don't become "counterparties" until they make an agreement.
It safe to say most holders of PMs (or any asset) understand that while they know the value of their holdings, price has to be agreed upon by both parties. There is very little to no risk that there is always a buyer of gold at spot price. The risk lies in what spot will be when it is time to sell.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@derryb said:
There is very little to no risk that there is always a buyer of gold at spot price.
You mean that price thats determined by paper? Or by manipulators? Or ...?
I think it is easy to envision scenarios in which a buyer and seller will have very different ideas of value. I see that as substantial risk.
yet gold is sold every minute.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Comments
this risk of not finding a buyer increases exponentially if you are investing in modern dreck.
Easier for me to move my rolls of 90% for instance than you to move a puck. The counterparty is time
Counterparty risk is taking the chance that no matter what you post here there is someone who will argue that earth is not round.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
jmski said: "That's not a counterparty. Nobody agreed on a transaction."
And there is your risk. Congrats. You finally see it. The risk is there is no counterparty.
When you wanted to sell your gold, you couldnt. At that time and place it was worthless. Now what are you going to do?
At $10,000,000/oz. that's pretty understandable.
Seriously, do you really believe what you are saying?
One last time. If there's no transaction, there is no counterparty. Gold has no counterparty. A paper contract has many counterparties.
Hypothetically - if the risk was that there is no counterparty, that might apply to a paper contract when there's no physical to back it up...………...…..but you can always work a transaction for physical gold if the price is right.
I knew it would happen.
Easier for me to move my rolls of 90% for instance than you to move a puck.
prolly so.
I knew it would happen.
Doesnt...and as I first stated it was a topic for another thread, but was kept active by other forum members.
One should attempt to recognize all risks. Failure to do so can result in unsatisfactory results. Practice due diligence.
BTW----This is counterparty risk. Ignore it at your own peril. --------- but you can always work a transaction for physical gold if the price is right.
Knowledge is the enemy of fear
Well, the Earth is actually an ellipsoid. HAHA
https://oceanservice.noaa.gov/facts/earth-round.html
Knowledge is the enemy of fear
Counter party?
Did anyone notice in the midst of all this that as of a few days ago Apmex has caught up on their orders?
As of Sunday morning their inventory was still missing:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
If you cant strike a deal with that counterparty then find another.
Knowledge is the enemy of fear
If you cant strike a deal with that counterparty then find another.
It appears that the risk of finding a trade at high premiums is pretty low. I still don't consider that a "counterparty risk" since no trade has taken place.
I knew it would happen.
Well the good news is: We haven't reached the point where gold and silver will not be available at ANY price.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Why do you still refuse to accept the economic definition of counterparty risk? This simple definition is taught to undergraduates in one 50 minute lecture with more ease.
Counterparty risk is the probability that one of those involved in a transaction might default on its contractual obligation.
Choice Numismatics www.ChoiceCoin.com
CN eBay
All of my collection is in a safe deposit box!
While we're getting to make up our own definitions. . .
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
It's impossible to argue against a well thought out "HA HA."
economics is not a science , its accepted definitions are not automatically facts
Well, the Earth is actually an ellipsoid. HAHA
It's impossible to argue against a well thought out "HA HA."
Technically, it's an oblate spherical geoid, ha, ha.
I knew it would happen.
My mother and aunt used to write letters liberally sprinkled with "ha ha"s.
Neither of them could define counterparty risk.
The definition of a word, or group of words, is indeed a fact. In any field.
If you wish to argue that, please explain how the definition of the word interfenestration is not a fact.
Choice Numismatics www.ChoiceCoin.com
CN eBay
All of my collection is in a safe deposit box!
Or.....define "definition."
Woops......HA HA
You dont see that the risk is you cant find a counterparty?
Im trying to avoid the "LOL" as it seems to be in vogue by some and dreaded by others.
Giggle giggle.
Knowledge is the enemy of fear
Many word have multiple definitions. You can either accept those facts or not. Generally one who limits their facts, limits themselves.
Knowledge is the enemy of fear
Whate’re I say are facts.
Your definitions lapse,
Unless they may
By chance do say
That which I meant, perhaps.
Burma Shave
Here's a warning parable for coin collectors...
channeling glickstartled
I once worked for a PhD who claimed that possession of such degree allowed him to create his own words and definitions. Maybe that's what we have going on here? Somehow I doubt it.
All this b.s. reminds me of: "To be sure of hitting the target, shoot first and call whatever you hit the target."
Made two orders two days apart during the dip to 11 -12 dollars. (Silver) Got a notice that the first order wouldn't ship untill the same day the second was slated to ship. I emailed them back asking if they could just ship them together and refund one of my shipping costs. No response. Just got an email saying my second order shipped. Hopefully the other will ship tomorrow.
It's all about what the people want...
It appears some (at least one) here believe they are above the laws of definition. They also like to create their own reality. Not uncommon on a forum where one can pretend to be whomever they want to be.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
It's hen you say, "physical dollars", do you mean FRNs? If so, there is a counterparty risk. The Federal Reserve is telling you that the United States will tax its citizens to make good on a bond they exchanged with the Treasury to make good on the fiat currency it issued. Counterparty risk. If the people overthrow the government, the note is no good.
Nothing backs the dollar except your confidence that the next guy will accept it. The counter party risk is its value (what the other party will give you for it) when you spend it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
It's hen you say, "physical dollars", do you mean FRNs? If so, there is a counterparty risk. The Federal Reserve is telling you that the United States will tax its citizens to make good on a bond they exchanged with the Treasury to make good on the fiat currency it issued. Counterparty risk. If the people overthrow the government, the note is no good.
I can accept FRNs or "physical dollars" when I sell my gold and there is no counterparty risk at that time of the transaction because I've accepted the terms. There's no other party holding an escrow payment or a contract that needs to be executed. The deal is at its face, completed. No counterparties either way.
If the Treasury defaults or gov.com is overthrown it devalues my proceeds, but those are extraneous risks not connected to the transaction and those risks were present both before and after the transaction takes place.
I knew it would happen.
Yes, derryb, you get it now. Whoohoo!!!
Just substitute the word "gold" for "dollar".
I really am at a loss as to why this was so difficult for some to see. Now that derryb gets it, hopefully others will have open eyes and ears as well.
Jmski---you get your beasties yet?
Knowledge is the enemy of fear
Note "the other party."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Jmski---you get your beasties yet?
Yes, I got them about a week ago.
cohodk---for someone who wants to exude optimism such as you do, you seem almost overly concerned about the risk to the dollar. Do you have such a concern?
I knew it would happen.
I dont believe I have made any comment expressing concern to the dollar. Please explain.
Knowledge is the enemy of fear
Yup..You said it.
Knowledge is the enemy of fear
at some point most people realize trying to be the smartest person in an empty room isn't a worthy goal...
Cohodk, my first thought was that I agree with you, and it is the same situation as with gold. However... as I think about it more, I believe that is not really the way it is.
With dollars... there is an 'agreement' or 'implied contract'.... the U.S. government says it will back or accept that paper dollar that you hold for use in settling debts. Thus... with an 'agreement'... there is counter party risk.... that the other party will default and no longer follow through or accept that paper dollar any longer. Both with the government... or with private parties. On that, we both agree.
But with gold..,. that you are holding in your hand... there is no 'agreement' or 'contract' with anyone else. Just a lump of metal in your hand... nothing more and nothing less. There is no counter party risk, as there is no other party involved. (There is RISK of coarse if you want to try to convert that metal to something else in the future, but it is not a counter party risk by 'standard' definition... ).
Gov does not say it will back the paper dollar. Gov does say the dollar is "legal tender for all debts, public and private." This means Gov will accept the dollar for payments to the Gov (primarily done for tax payments). Gov cannot force a third party to accept the dollar for private debt. That remains totally up to the third party and his confidence that the dollar he accepts will be accepted by the next party.
As I said earlier the only thing backing the dollar is the holder's belief that the next party will accept it as payment.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
cohodk---for someone who wants to exude optimism such as you do, you seem almost overly concerned about the risk to the dollar. Do you have such a concern?
I dont believe I have made any comment expressing concern to the dollar. Please explain.
Haven't you identified the US Govt as a "counterparty" in transactions involving the US dollar in which accepting the dollar is a "counterparty risk"? That would seem to indicate that you have a concern over the value of the dollar.
I knew it would happen.
The US Govt's acceptance of paper fiat dollars includes devaluing them at any time they choose. That worked in January 1934 when gold was revalued from $20.67 to $35/oz long after the US Govt called for the public to turn in their gold......instantly devaluing all US dollars held by 40%......the outcome of counter-party risk (CPR....lol). The value of gold increased by 69% over-night.
But coho says gold has no value unless there is a buyer?
Please, don't tell me he's wrong, again.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
What is it worth without a buyer?
Knowledge is the enemy of fear
BTW---I do accept y'alls definition (never said I didnt) of counterparty risk in relation to "the Govt saying the dollar is worth a dollar", and potential for another party to not hold up their end of the deal. Im simply expanding on those definitions to illustrate possible risks that may not be seen by some.
Knowledge is the enemy of fear
everything has risk, even your assumptions.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Nope. Never said or expressed that.
What ive been trying to discuss is the price discovery between two counterparties. I expressed this risk as the 2 parties not agreeing to price or value (the risk that your counterparty may not see things the way you do), rather than of price discovery risk.
You decide on how you want to view it, but it is a real risk and one that needs to be understood.
Knowledge is the enemy of fear
They don't become "counterparties" until they make an agreement.
It safe to say most holders of PMs (or any asset) understand that while they know the value of their holdings, price has to be agreed upon by both parties. There is very little to no risk that there is always a buyer of gold at spot price. The risk lies in what spot will be when it is time to sell.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
You mean that price thats determined by paper? Or by manipulators? Or ...?
I think it is easy to envision scenarios in which a buyer and seller will have very different ideas of value. I see that as substantial risk.
Knowledge is the enemy of fear
yet gold is sold every minute.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I think it is easy to envision scenarios in which a buyer and seller will have very different ideas of value. I see that as substantial risk.
That's not counterparty risk. Nobody's agreed to anything. Market risk, yes. Counterparty risk, no.
I knew it would happen.