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Are PM bulls worried/concerned/afraid that higher interest rates will squash demand for PMs?

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  • derrybderryb Posts: 36,821 ✭✭✭✭✭

    @GoldFinger1969 said:

    @jmski52 said:
    No need to start a hedge fund based on Mises “stuff”. 100% of my investment assets are in precious metals - zero debt and zero stocks since 2007.

    That's a highly speculative portfolio. You're basically speculating on PMs.

    I suspect he's preserving his wealth.

    "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

  • blitzdudeblitzdude Posts: 5,894 ✭✭✭✭✭

    @derryb said:

    @GoldFinger1969 said:

    @jmski52 said:
    No need to start a hedge fund based on Mises “stuff”. 100% of my investment assets are in precious metals - zero debt and zero stocks since 2007.

    That's a highly speculative portfolio. You're basically speculating on PMs.

    I suspect he's preserving his wealth.

    Not if he's hoarding the gutter metal. THKS!

    The whole worlds off its rocker, buy Gold™.

  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭

    @derryb said:
    That's a highly speculative portfolio. You're basically speculating on PMs.
    I suspect he's preserving his wealth.

    Is he ? PM's are more volatile than stocks and bonds....do not pay dividends or income....have lagged on virtually all time frames over time.

    I'm not averse to a small portion of one's assets going into gold or PM's. But the bulk ? All ?

    :o:o:o

  • percybpercyb Posts: 3,324 ✭✭✭✭

    My first institutional firm used our clearing through Morgan Stanley as a way to assuage clients in other states who never heard of our tiny firm (hell, people in NY State never heard of us !!). MS guaranteed all positions up to $5 MM in cash and $25 MM in total. For a nomial sum, you could increase those amounts by 10X.

    I don't self-clear for the F&F accounts I manage. I use Fidelity. My clients get statements direct from Fidelity. If I sent them the Excel Spreadsheets I use to manage the accounts, I could make up anything.

    That's what Madoff did.

    I still think we are talking about two different things in our discussion of Clearing House.

    Buy and sell orders are paired up on exchange floors. Those transactions are recorded and cleared not thru a brokerage house but a national clearing house. Each brokerage house like Fidelity or Madoff gets a record of those trades each firm did and which trades cleared or didn’t clear (because of price or quantity differences) Each firm meets the next morning before the opening to rectify the differences the have with other firms. Then they are resubmitted to the clearing house and posted with an as of date to clear.

    "Poets are the unacknowledged legislators of the world." PBShelley
  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭

    @percyb said:
    I still think we are talking about two different things in our discussion of Clearing House.

    We could be. :)

    To put this to bed...I'm talking about the actual statements that clients received from Madoff. Those were fraudulent.
    The custodian was Madoff. The audit was rigged.

    If a single auditor or client had called -- let's say, Morgan Stanley or Bank of NY or even DTC -- and asked about a $25 MM or $2 BB position, they would have said "we don't have those assets here." The whole thing would have unravled DECADES earlier.

    That's why Madoff was surprised he got away with this as long as he did.

    Buy and sell orders are paired up on exchange floors. Those transactions are recorded and cleared not thru a brokerage house but a national clearing house. Each brokerage house like Fidelity or Madoff gets a record of those trades each firm did and which trades cleared or didn’t clear (because of price or quantity differences) Each firm meets the next morning before the opening to rectify the differences the have with other firms. Then they are resubmitted to the clearing house and posted with an as of date to clear.

    Yes....we were talking different things. I'm talking about custodianship of the securities and verification that the STATEMENTS were accurate. Again, my clients get statements direct from Fidelity which guarantees that what I say they have is in fact in their accounts.

  • jmski52jmski52 Posts: 22,849 ✭✭✭✭✭
    edited December 3, 2023 4:06PM

    15% silver, 70% gold, 15% platinum has worked very well over time. Very well. There is actually some diversification benefit in this mix.

    When the stock market went down hard in 2008, my portfolio didn’t go down nearly as much as the Fortune 500, and it recovered about 2 years faster.

    Speculative? Hardly.

    Cash? Yeah, you need cash for contingencies - enough to keep you out of a bind for a year or so, just in case.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭
    edited December 3, 2023 4:18PM

    It doesn't generate income or dividends and is NOT a balanced portfolio. Higher drawdowns, higher volatility, lower returns in most time periods.

    If YOU like it, that's all that matters. But 98% of investors or the public will not.

  • psuman08psuman08 Posts: 329 ✭✭✭✭

    True wealth is made in the stock market. High quality tech stocks work for me, but certainly not everyone. We each have our own risk tolerance, so to each their own.

  • @cohodk said:
    Higher interest rates have proven to smack down PM prices in the past

    I wish you could back up that statement with some data :)

    Here are two charts about this subject

    ... with some comments thereon

    But there have been fully twelve real Fed-rate-hike cycles comprised of three-or-more uninterrupted FFR increases over that long span.  That encompassed all possible gold environments, bulls and bears, rampant herd greed and fear, and the whole gamut of inflation.
     
    So if gold-futures speculators are right that Fed rate hikes are a dire bearish threat to gold, the past dozen Fed-rate-hike cycles would prove that out.  But these traders are dead-wrong, blinded by myopia from the super-short time horizons their extreme leverage requires for survival.  Despite being derided as a sterile asset because of its lack of yield, the FOMC raising its federal-funds rate has proven very bullish for gold!

    ...

    Unlike those guys repeatedly freaking out about nothing, prudent contrarian speculators and investors do have history books.  Instead of relying on conventional wisdom about markets which often proves wrong, we can consider 51.2 years of historical precedent to see how gold really fares during Fed-rate-hike cycles.  That answer is really damned well!  Consider this dataset, a dozen Fed-rate-hike cycles over a half-century.
     
    During them the FOMC hiked a whopping 123 times, for an astounding total 5,588 basis points!  They each averaged 10 hikes for 466bp, with average durations of 13.7 months.  If Fed-rate-hike cycles were really bearish for gold, it would have been pummeled through most of these tightenings.  Yet the yellow metal averaged truly-outstanding 29.2% absolute gains across all dozen modern hiking cycles’ exact spans!

    Gold Thrives in Rate-Hike Cycles

  • cohodkcohodk Posts: 19,122 ✭✭✭✭✭

    @Peter89 said:

    @cohodk said:
    Higher interest rates have proven to smack down PM prices in the past

    I wish you could back up that statement with some data :)

    In mid-July 2023 the 10 year treasury was yielding 3.8% and silver was over 25. By early Oct the 10 year was yielding 4.8% and silver had dropped to 20.85. Peak to trough drop was about 18% in 3 months. Sounds like a smack down to me.

    Anything else?

    Perhaps one should question the prescience of the timing of this tread. That would seem to be a much more enlightening discussion.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • percybpercyb Posts: 3,324 ✭✭✭✭

    @GoldFinger1969 said:

    @percyb said:
    I still think we are talking about two different things in our discussion of Clearing House.

    We could be. :)

    To put this to bed...I'm talking about the actual statements that clients received from Madoff. Those were fraudulent.
    The custodian was Madoff. The audit was rigged.

    If a single auditor or client had called -- let's say, Morgan Stanley or Bank of NY or even DTC -- and asked about a $25 MM or $2 BB position, they would have said "we don't have those assets here." The whole thing would have unravled DECADES earlier.

    That's why Madoff was surprised he got away with this as long as he did.

    Buy and sell orders are paired up on exchange floors. Those transactions are recorded and cleared not thru a brokerage house but a national clearing house. Each brokerage house like Fidelity or Madoff gets a record of those trades each firm did and which trades cleared or didn’t clear (because of price or quantity differences) Each firm meets the next morning before the opening to rectify the differences the have with other firms. Then they are resubmitted to the clearing house and posted with an as of date to clear.

    Yes....we were talking different things. I'm talking about custodianship of the securities and verification that the STATEMENTS were accurate. Again, my clients get statements direct from Fidelity which guarantees that what I say they have is in fact in their accounts.

    Now we are indeed in accord. Good cheers, Goldfinger!!

    "Poets are the unacknowledged legislators of the world." PBShelley
  • @cohodk said:

    In mid-July 2023 the 10 year treasury was yielding 3.8% and silver was over 25. By early Oct the 10 year was yielding 4.8% and silver had dropped to 20.85. Peak to trough drop was about 18% in 3 months. Sounds like a smack down to me.

    Anything else?

    Perhaps one should question the prescience of the timing of this tread. That would seem to be a much more enlightening discussion.

    cohodk, there is this widely shared assumption that Central Banks interest rates hikes lead to lower PM prices.

    I understood your Higher interest rates have proven to smack down PM prices in the past as another version of that assumption.

    Sorry for the misunderstanding

  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭

    @Peter89 said:
    cohodk, there is this widely shared assumption that Central Banks interest rates hikes lead to lower PM prices.
    I understood your Higher interest rates have proven to smack down PM prices in the past as another version of >that assumption.

    As a general rule, and looking back over MOST time periods, that statement is probably true.

    But it depends on lots of other variables: inflation...is the Fed and other Central Banks ahead of the curve or behind....prospects for GDP growth....geopolitical turmoil...normalizing rates (i.e., if the recent peak is the high, then gold need not worry about competition from 6% money market funds and 8% Treasury yields).

    Right now, gold is moving up on reduced supply and higher demand. Interest rate moves of 50-150 bp won't change things. A 250-300 bp move might.

  • derrybderryb Posts: 36,821 ✭✭✭✭✭

    does anyone believe all this central bank buying is being done with borrowed money and that interest rates really have an affect on CB buying? When the market is being driven by central bank buying (it is), interest rates are irrelevant.

    "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

  • derrybderryb Posts: 36,821 ✭✭✭✭✭

    @psuman08 said:
    True big wealth is made in the stock market. High quality tech stocks work for me, but certainly not everyone. We each have our own risk tolerance, so to each their own.

    Fixed it for ya. True wealth is any size, anywhere you can find it. Dollars earned in crypto, pm's, etc. are just as real as Wall St. dollars.

    "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

  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭
    edited October 19, 2024 9:21PM

    @derryb said:
    does anyone believe all this central bank buying is being done with borrowed money and that interest rates really have an affect on CB buying? When the market is being driven by central bank buying (it is), interest rates are irrelevant.

    Central Banks bought gold like no tomorrow from 1974-1983....and interest rates soared.....but gold peaked in early-1980.

    This is SUSTAINABLE long-term accumulation. Gold is in STRONG hands, IMO.

    Both of my former employers have UHNW and HNW clients wanting some gold. I'm actually doing a presentation on gold for some of them which will discuss coins, bars, ETFs, etc.

  • jmski52jmski52 Posts: 22,849 ✭✭✭✭✭

    Central Banks bought gold like no tomorrow from 1974-1983

    Compared to now? Really? Where are you getting your data?

    Both of my former employers have UHNW and HNW clients wanting some gold. I'm actually doing a presentation on gold for some of them which will discuss coins, bars, ETFs, etc.

    They're a little bit behind the curve, aren't they?

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭
    edited October 20, 2024 7:59AM

    @jmski52 said:
    Central Banks bought gold like no tomorrow from 1974-1983
    Compared to now? Really? Where are you getting your data?

    They chased the price higher. Read the actual accounts of gold trading in The WSJ and The NYT. Traders and dealers saying central banks and reps for foreign governments were buying. The NY Times Time Machine is excellent for checking on daily articles.

    Both of my former employers have UHNW and HNW clients wanting some gold. I'm actually doing a presentation on >gold for some of them which will discuss coins, bars, ETFs, etc._
    They're a little bit behind the curve, aren't they?

    I suspect many/most already HAVE some gold exposure, not really sure.I guess I'll find out (I do a hands-up survey before I start on gold ownership).

    However, my talk will discuss HOW to own gold now and in the future: ETFs...bars....modern coins.....classic coins. I am just bringing up to speed individuals who never heard of the name, Augustus Saint-Gaudens.

  • jmski52jmski52 Posts: 22,849 ✭✭✭✭✭

    Read the actual accounts of gold trading in The WSJ and The NYT. Traders and dealers saying central banks and reps for foreign governments were buying. The NY Times Time Machine is excellent for checking on daily articles.

    I lived through it and don't recall any reports of central bank gold-buying although I may be wrong. What I do recall is the reports of Saudi buying and rising Mideast tensions after the oil embargos and the takeover of Iran.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • Clackamas1Clackamas1 Posts: 960 ✭✭✭✭✭
    edited October 20, 2024 10:42AM

    @psuman08 said:
    True wealth is made in the stock market. High quality tech stocks work for me, but certainly not everyone. We each have our own risk tolerance, so to each their own.

    This. NVDA paid for some land a new truck and college for my kids and I have not hardly touched it. When my son could not get a GFX card becasue of miners and they were selling at a premium over retail I did a Peter Lynch and bought up a boat ton at the today price of $6 and that was just in the last 5 years.

    I use PM's as a store and preservation of wealth, the same for land. Now my rare coin addiction is something else, that is just for fun.

  • derrybderryb Posts: 36,821 ✭✭✭✭✭

    @GoldFinger1969 said:

    However, my talk will discuss HOW to own gold now and in the future: ETFs...bars....modern coins.....classic coins. I am just bringing up to speed individuals who never heard of the name, Augustus Saint-Gaudens.

    Make sure they know to keep premiums to a minimum. For example stack uncircs rather than proofs.
    Make sure they also know the difference between quality products and generic products. Affects resale.
    Make sure they know bullionexchanges.com is one of the cheapest, yet reliable dealers.

    "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

  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭

    @jmski52 said:
    I lived through it and don't recall any reports of central bank gold-buying although I may be wrong. What I do recall >is the reports of Saudi buying and rising Mideast tensions after the oil embargos and the takeover of Iran

    There was lots of buying when G. William Miller was appointed Fed Chairman. He was seen as week and ineffectual. Gold took off under his lack of leadership.

    On the day he was replaced by Paul Volcker, the gold bull market ended within months.

  • jmski52jmski52 Posts: 22,849 ✭✭✭✭✭

    Central banks have bought more gold in the past 4 years than they bought in the previous 60 years. You are incorrect.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭

    "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 just noticed this. :)

    I had clients in the 1990's who SWORE by that guy. I don't know what his claim to fame was -- I don't recall him from the 1970's like Howard Ruff, Jim Dines, Richard Russell, Peter Eliades, etc. -- but I remember he was a perma-bear I always had to overcome while getting my clients into stocks and bonds.

  • GoldFinger1969GoldFinger1969 Posts: 1,773 ✭✭✭✭✭

    @jmski52 said:
    Central banks have bought more gold in the past 4 years than they bought in the previous 60 years. You are incorrect.

    Given larger balance sheets and the higher price of gold...that's not a shock.

    Again, some of us here have been bullish on gold for YEARS and the reasons we cited are still continuing. If this is an historic lift-off like the 1970's or 2000's....it's 1974 or 2004 with YEARS of runway ahead of us. :)

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