<< <i>I haven't seen any news of the cancellation of the FAS 157/159 rules on any metals website. If it were postponed you'd think it would be a hot topic. I have seen some requests or suggestions to delay the deadline. Frankly the rule has been out there long enough such that no one should have had a problem complying. If the big banks who have the most at risk have already tabulated their numbers, then why not the smaller banks/companies?
It's probably dangerous to be completely out of the stock market
I guess if you wait long enough, anything will make its way into print.
Note that being completely out of the stock market over the past 6 years would have been a good thing for many people.....esp if they were in PM's or other tangible assets. Being completely out of the market will be a great thing sooner than we think.
roadrunner >>
Indeed! I've been completely out of the market since early 2002, haven't missed it one bit. I have been completely into PMs since that time and it's been berry, berry good to me. The only other thing I own of any real value other than my home and cars is a rent house I bought as a fixer upper back then and it's been a positive cash flow, not great, but good enough. It will soon be paid off free and clear and even in this poor to crashing housing market, people have to live somewhere. It's only sat vacant 1 month in the last 5 years.
I can see the market crashing harder than anyone expects. How about a 6000 DOW? It's quite possible. In fact, I'm expecting it.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Looks like the Yen Carry trade is unwinding, and the “BIG GUYS” are dumping gold and oil companies, what a great buying opportunity!!!!!
MH
How very interesting!
Wouldn’t this be a kick in the pants for mortgage investors, if they can’t even prove they own title to the properties.
“A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools. The pooling of home loans into securities has been practiced for decades and helped propel real estate prices in recent years as investors sought the higher yields that such mortgage trusts could provide. Some $6.5 trillion of securitized mortgage debt was outstanding at the end of 2006. But as foreclosures have surged, the complex structure and disparate ownership of mortgage securities have made it harder for borrowers to work out troubled loans, in part because they cannot identify who holds the mortgage notes.”
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
DH, good article. Somehow, the cartel/fed/GA TA thinks we are mushrooms. Those of us that study the situation realize that we are indeed not mushrooms but the worst enemy of the manipulators...we buy the metal when they let it go and we aren't going to sell it back very cheaply and we are going to hoard and accumulate until a time comes to sell that suits us. We arent doing a speculation play, we are buy and hold. We don't care about their paper or who screws who and who gets left with the bag. Maybe we are only buying a couple of oz a month or maybe even more or less than that but you spread that oz or so across the globe to BRIC and US and EU and the OPEC states and you can see how the mushroom growers and paper pushers have a losing hand. They can keep playing with the metal/USD but we buy at every dip and hold as it rises...it's all good for PM people. The best part about it is the manipulators don't know who has metal and they don't know how much we have. We may be small time buyers that could seemingly be completely discounted as a factor but there are easily hundreds of millions of us out here and we buy what we can when we can and we aren't buying paper. Global PM demand is high and rising; production, refining, sales, and distribution is high and rising, so the price keeps rising.
Hold your fire till you can see the whites of their eyes.
We hear a lot about the growth in the "paper" money supply, but at what rate is the supply of GOLD increasing relative to the gold that has already been mined? It seems to me that "inflation" is not only a paper money phenomenon.
Edited to answer my own question (roughly): One source says that "Total [historical] world production of gold is estimated to be about 3.4 billion troy ounces, of which more than two-thirds was mined in the past 50 years." LINK Annual gold production appears to be on the scale of 80 million ounces per year. LINK So the total gold supply appears to be increasing by about 2.35% per year. That assumes that the whole 3.4 billion ounces ever mined still is accounted for in current physical stocks.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>We hear a lot about the growth in the "paper" money supply, but at what rate is the supply of GOLD increasing relative to the gold that has already been mined? It seems to me that "inflation" is not only a paper money phenomenon.
Edited to answer my own question (roughly): One source says that "Total world production of gold is estimated to be about 3.4 billion troy ounces, of which more than two-thirds was mined in the past 50 years." LINK I don't know how much of that is accounted for. Annual gold production appears to be on the scale of 80 million ounces per year. LINK So the total gold supply appears to be increasing by about 2.35% per year (assuming the whole 3.4 billion ounces ever mined still is accounted for). >>
Money supply - be it gold or fiat - should never increase in excess of economic growth or increases in productivity. All economies naturally expand based on value added to reources through labor and innovation.
When money supply outstrips growth, inflation is caused - more money chasing less or the same resources. This does not only refer to fiat currency - think of Spain in the time of conquest, with massive influes of gold from the "New World". This massive influx of cheap money destroyed their economy.
Well finally we are now talking in the Trillions, as the big institutions have to eat all those derivatives.
“Nov. 16 (Bloomberg) -- The slump in global credit markets may force banks, brokerages and hedge funds to cut lending by $2 trillion and trigger a ``substantial recession'' in the U.S., according to Goldman Sachs Group Inc.”
“Ya gotta love this indicator.”
Yes, thanks for the link Norm,
Actually I love these guys always pushing down the price, its just great buying opportunities once you figure out how they work.
<< <i>That assumes that the whole 3.4 billion ounces ever mined still is accounted for in current physical stocks. >>
Some is consumed, one can only speculate how much. Jewelry demand (especially India) still accounts for the majority of gold demand, much of the jewelry gold is lost through wear. Minor industrial gold usage also consumes mined gold.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
O.K. lets see if my calculator can figure this right. Today’s on the books national debt is 9,110,326,439,651.28 lets just call it 9 trillion. Now if we rounded up all the gold ever mined, that 3.4 billion ounces and just back our on the books national debt. How much would gold be worth an ounce?
My calculator says $2,647. That cannot be right can it?
<< <i>This does not only refer to fiat currency - think of Spain in the time of conquest, with massive influes of gold from the "New World". This massive influx of cheap money destroyed their economy. >>
My point exactly. Gold is itself subject to inflation. If the actual existing supply of gold is below 3.4 billion ounces (because of "wear" on jewelry, physically lost gold, etc.), then the real rate of gold inflation is higher than the figure I quoted.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>Annual gold production appears to be on the scale of 80 million ounces per year. LINK >>
Barrick is the world's largest gold mining company that produces over 8 million ounces per year Barrick. The 80 million estimate has got to be low, I would bet the top 100 gold mines actual output would exceed 80 million, and that does not include government owned mines, small private mines, and prospectors who don't release their output.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
<< <i>This does not only refer to fiat currency - think of Spain in the time of conquest, with massive influes of gold from the "New World". This massive influx of cheap money destroyed their economy. >>
My point exactly. Gold is itself subject to inflation. If the actual existing supply of gold is below 3.4 billion ounces (because of "wear" on jewelry, physically lost gold, etc.), then the real rate of gold inflation is higher than the figure I quoted. >>
Remember that Spain's issue was a relative historical singularity - it is unlikely, short of asteroid mining or a spaceship of aliens landing with vaults of gold, that such a similar occurrance would happen in this day and age.
With a 2-3% annual "inflation" of gold supplies (based upon your citation), economic inflation due to increases in total gold stocks seems doubtful.
here's 156 tons of it and at 32150 oz. (t) = 1 metric ton that would account for 5,015,400 of those 80,000,000 oz being mined/yr. And, that's only the I in BRIC, we still have UAE EU US and others. Sure, 156 tons is small time but, it's not like it's piling up in the ware houses or anything.
Annual production is on the order of 2500 tons per year. That's about 2-2.5% of the total world supply, assuming it all still exists. Figure 150,000 tons of world wide production throughout history. In any case the 2500 tons is falling short of demand and has been for a couple of years.
One can look at the 2.5% of gold production as inflation of sorts (assuming none is lost). Even so, this pales in comparision to the average rate of 10% per year for currency increase since 1996 (and currently at 18% annualized the past month or so!). I'll stick with the gold as currency printing outstrips it by > 4 to 1. And when factoring net inflation adjustments, the 2.5% gold production should be removed from the equation.
OK gold gurus, why the decline in gold over the past week (down almost $60/oz) while the financial sectors continues to report growing write-downs? Oil's still rising too and doesn't look to be falling anytime soon. What gives?
OK gold gurus, why the decline in gold over the past week (down almost $60/oz) while the financial sectors continues to report growing write-downs? Oil's still rising too and doesn't look to be falling anytime soon. What gives?
I'm certainly no 'guru' but I can say with most certainty that you can not make sense of any market movement, be it gold, stocks or other in the very SHORT term. Why does something go down 4% one day and three days later goes up 3%?? I'm not even going to try to figure it out.
What is overall important is the LONG trend. And as stated before, there is more historical and current evidence to say that we are in a precious metals BULL market today (and for the next 5 years at least) than a BEAR market. I could argue this point all day long.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
<< <i>OK gold gurus, why the decline in gold over the past week (down almost $60/oz) while the financial sectors continues to report growing write-downs? Oil's still rising too and doesn't look to be falling anytime soon. What gives?
<< <i>OK gold gurus, why the decline in gold over the past week (down almost $60/oz) while the financial sectors continues to report growing write-downs? Oil's still rising too and doesn't look to be falling anytime soon. What gives?
RJ >>
Profit taking. >>
That's one reason. We've had a fair amount of sales as well. Shorts getting caught and having to sell. Whether those sales were actual metal or just paper, and I suspect the latter. Either way, large sales tend to drive the price downward temporarily.
If you watch the moves as long as many of us have it's virtually meaningless. 2 steps forward, 1 step back, 2 steps forward, 1 step back. 1 step forward and 2 steps back and then 2 steps forward, 1 step back. The overall picture hasn't changed, we're still in the first half of this bull run and $1200 gold isn't as far away as many think.
When I hear talk of gold not meeting demand and total wold volume, all I can think of is silver. My guess is that there is about the same amount of refined gold on the planet as there was in 1980, while there's only about 10% of the refined silver compared to that same time period. Silver tends to be a surface metal whereas gold is found much deeper. The easy pickings for silver are all gone and it isn't being found in any quantities by going deeper. Gold, OTOH, is still being mined at deeper levels. The silver bull is still in it's infancy, IMO. I'm betting the ROI on silver will outstrip gold and gold will be a very good investment for several more years.
The financial world is on thin ice and it's beginning to crack, the evidence is everywhere. Gold and silver are real money. Always have been, always will be, plus silver has so many more uses and more are being discovered and when industrial or medical silver is used up, it's just that, used up, as in gone forever.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>O.K. lets see if my calculator can figure this right. Today’s on the books national debt is 9,110,326,439,651.28 lets just call it 9 trillion. Now if we rounded up all the gold ever mined, that 3.4 billion ounces and just back our on the books national debt. How much would gold be worth an ounce?
My calculator says $2,647. That cannot be right can it? >>
Looks all good to me.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
It doesn't take a gold guru to note that a run by gold from $650 to over $800 was destined to run out of steam at some point....or be beat back down. It did crest at $845. If gold continued at that rate of rise for say another year, there'd probably be no US dollar or US Financial market left to talk about. A pause does allow the markets to regroup and then carry on.
FAS157 did go into effect on Thursday for Financial Companies (banks, brokerages, etc). Other types of companies have a reprieve before they need to report. FAS157 is going to bring the junk to the surface for everyone to see.
The run has almost been as much fun as the dotcom boom for me , I have now taken half off the table to go on vacation , and will see how things shake out over the next 2 weeks before climbing back in or going back to looking for classic coins.
Nobody can deny that this is still a bull market , no fundamental news that will strengthen the dollar.....just a healthy rest /pullback phase.
“In my lifetime, 4 billion people have been ADDED to the world population.”
This tells the whole story dpoole!
During most of the time those 4 billion folks were being added to the planet all of the worldwide monetary systems have been free to print all the paper currencies they wanted.
In addition other systems have been put into place that allow trillions of dollars of buying power to be created out of thin air.
Someone here all ready pointed out the use of credit cards worldwide, but what about brokerage accounts?
A few months ago when I opened my gambling account at Scottrade, I immediately noticed that for every dollar I sent into the account I got credit of an equal amount to that. So put in ten thousand and they give you ten thousand more to gamble with in the market. How many trillions of dollars of credit do you think is created each day just in the world markets?
If everyone with a trading account were sent an email tomorrow saying please pay for all your credit purchase in GOLD, all the gold ever mined would not cover just this debt.
I saw a really interesting interview this week with John Bogle, the 80-year-old sage of Wall Street that started the Vanguard Funds.
A couple of his comments went like this, Never since 1928 and 29 has there been so much speculation in the markets. For forty years in his career if the markets moved more than 2% in one day, more than twice in one year, that was very unusual. In the last couple of months the markets have moved more than 2% 14 times. The Asian markets could crash at any time simply due to the huge amount of money that has been created out of thin air, and pumped into those economies.
One floor trader on the NYSE said last week that it drove him crazy trying to keep his trading account stable. His competition was not other professional traders, but the public around the world all buying and selling from emotion.
All of the worldwide markets in commodities, major stocks, bonds, currencies, etc. are open to individuals 24/7 through out most of the year. With a few thousand dollars, and some computer skills, you can open accounts in various countries and Gamble, or “Trade” day and night. If you missed your chance to buy gold, or Nokia stock, today just go on line and buy it in London or Hong Kong.
Millions of new game players are coming on line each year, and not necessarily from here, but out of parts of China, India, S. America.
So when alfalfa asked why did the gold market drop $60 this week, who really will ever know? This downward push was started in Hong Kong while we were all asleep. Perhaps a couple of billionaires got together and sold the market short, so they could buy it all back cheaper next week?
The fact to pay attention to here, is that out of all these new billions of folks that have been added to the planet, millions more of them are getting computer savvy, and playing these markets each and every year. All of this volatility we are now seeing in all of these markets is just the beginning. This will all continue as the minds of the world work the paper markets 24/7.
We can see each day how many billions of shares and contracts are traded in the U.S. each day and we can also guess that two or three times that are being traded while we are sleeping.
As many fine minds have already pointed out in this tread the only safety in investing in today’s markets Is to take position of your goods.
If you want to gamble in the world markets and match your brain with those guys and gals from around the world that is your choice, but please do not do it with a good chunk of your families wealth.
At some point over the next few years all of these markets will be so over bought/sold that there will be no way to deliver the goods. Just like a huge game of musical chairs millions of traders, and soon billions of traders, will someday be looking for their chairs!
Nothing will be safe when all this comes apart, but those things you have in your possession. Do you think your mutual fund has your stock certificates for your 401K in their safe? They do not! What they have is a computer entry for a chair when the game stops!
It is easy to imagine that you could go to sleep on a Saturday night and when the markets opened in the U.S. Monday morning you might find your trading accounts, or retirement accounts, were already down by half.
Jim Sinclair is in the advice business, but I am not, he says forget the tax consequences and take delivery of your retirement money and shares, and just pay the taxes.
Personally I do not have a 401K or any of those other retirement plans. These were cashed in years ago to pay off my house and buy coins etc.
<< <i>As many fine minds have already pointed out in this tread the only safety in investing in today’s markets Is to take position of your goods. >>
Well, as it pertains to PMs, that might make sense. That too can be a gamble and I would caution assuming 100% allocation in PMs as the best route. (Might end up being, but not without tremendous risk.) You can invest in stock markets with less risk than many, many others, largely inadvertantly, assume. Yeah, there are the high debt, stratospheric ratio stocks out there that can be the latest fads. But in the end, when you buy stock you are buying a piece of a productive company. There are many great companies worth buying parts of and participating in their successes. However, you really never know if there are hidden land mines even in public disclosures of SEC filings. Exposure to derivatives, shell corps, and other potentially shaky financial instrumentsisn't what a lot of investors would choose if they knew. But in this deceptive world, you do what you can. Diversify the risk, stick with companies with both strong insider ownership commitment and demonstrated competence as it relates to real earnings balanced by prudent reinvestment, business growth and sane debt leveraging. Looking occasionally at some companies makes one wonder how many bullets are acceptable in that revolver for the buyers' game of Russian Roulette. Anyway, the point is that avoiding stock in complete distrust might not serve one's personal fanancial goals very well. If every one of those companies goes under, and they won't, discussions of any wealth building short of having lots of guns and ammo and no conscience problems stealing from neighbors is moot.
Coxe, From my personal stand point; I do not think people should gamble with money they cannot afford to lose!
What does that mean? If all your debt is paid, if your home is paid for, your cars are paid for, and you have some other investments in PM’S, C.D’S, cash, properties etc. and you want to go gamble in the markets, hey that’s fine, but one should not deceive themselves that any of these paper markets are a safe place to INVEST.
More and more these markets are run by the MOB! They operate now more on emotion than anything else. For most wealthy “investors” in the market a month is a very long time to be in something.
Even the central banks have lost control of how they used to move these markets. When our Fed moves rates they may only effect the trading in the markets for a few days now.
And the talking heads on the financial shows are even calling these markets casinos now.
I never said that all the companies will go broke, but that does not mean that you might not wake up one morning and find your investments cut in half. Watch what happens to companies that miss their guidance by just a few pennies per share. They can be punished by the mob with a twenty percent drop in market price in just a few minutes, and this drop may take a year or more to recover, and this is just the beginning of the volatility.
This mentality of the mob will continue to play havoc with all of these markets, and this is my problem with some of Peter Schiffs advice. He thinks he is immune to this just because he is in overseas markets, he is not! All of this is coming his way.
What do we think will happen in a few years when China unleashes a hundred million new players into the world markets?
Here is something interesting to watch that can only be seen on some of the ETF’S. If you pull up GLD or SLV you can see each day exactly, within a few days, how much the real assets are worth compared to how oversold/overbought the funds are in comparison to the assets. Today GLD has about 15.2 billion in assets and claims on those assets of 14.9 billion, so there are plenty of “chairs” to go around if the music stops. Can you guess what this might look like if a hundred million new Chinese players were turned lose on this ETF? What happens to ones long term investment strategy when this ETF moves up and down by 20% to 50% one hundred times per year?
If you look at the Shanghai market you can see what is coming.
As you have already pointed out it is impossible to see this as clearly in 99.9% of all the rest of the paper assets trading in the market.
I agree with a bit of what you are saying. However, real investors have better time horizons than a month. That nonsense is for the hopelessly chic daytrading types (brokers' suckers). Buy and hold a reasonably diversified portfolio of good companies. Not hitting the street's whisper number does indeed penalize a stock with a good sacking. So do what any old sage would tell you, buy on that dip and cost dollar average to your advantage if it is otherwise still a good company. And if the market dives and P/Es aren't acceptable above 5, everybody gets sliced and diced. Eventually we get back to around PEG=1 for FMV (idealized, since many stocks are structured with dividends and other means of periodic returns). You cannot suppress earnings growth indefinitely. As one person pointed out recently enough, a lot of people invest exactly backwards. Buy low and sell high. You should always be in good companies. If there is blood in the streets, drum up the cash to take advantage of the clearance sale. Selling off in fear is playing into stronger hands who know precisely what they are doing when they don't mind one bit, thank you very much, being on the receiving end of your trades.
"Here is something interesting to watch that can only be seen on some of the ETF’S. If you pull up GLD or SLV you can see each day exactly, within a few days, how much the real assets are worth compared to how oversold/overbought the funds are in comparison to the assets. Today GLD has about 15.2 billion in assets and claims on those assets of 14.9 billion, so there are plenty of “chairs” to go around if the music stops. Can you guess what this might look like if a hundred million new Chinese players were turned lose on this ETF? What happens to ones long term investment strategy when this ETF moves up and down by 20% to 50% one hundred times per year?"
Although the gold and silver funds probably have more safety than many other investments...... I have to say that I have some uneasiness concerning them. I started reading the fine print at one time, in the prospectus..... and quit after wading through a bit of it. I decided that I was not going to invest in the fund, because they left too many loopholes for game playing...... If I recall, they can lend the physical silver out, and participate in other manipulations, etc., as they see fit. So how much of the physical silver do they actually hold? That's where I am skeptical. Although they show it on the books as an asset, IMO that does not mean much. If they lent out a boatload of silver to some other entity, that would probably still show as an asset?
After all, we all know how Morgan Stanley (and others) were selling clients precious metals, and then charging them to store their metals for them......
Possession! Even though it is a hassle..... it is the only way to go IMHO.
“Although the gold and silver funds probably have more safety than many other investments...... I have to say that I have some uneasiness concerning them. I started reading the fine print at one time, in the prospectus..... and quit after wading through a bit of it. I decided that I was not going to invest in the fund, because they left too many loopholes for game playing......”
Tincup
You did what? You read the prospectus, you have got to be kidding, no one reads the prospectus, Ha Ha
Now if everyone read all the fine print in all the “investments” they buy, nobody would buy any of this paper and then where would we be?
Anyway this is gambling, and gamblers play by their emotions, Ha Ha
a CD ,which after taxes and inflation , loses another 5%
after 6 months. Ain't life grand? >>
Bear, you definitely have a knack for stating the truth in a direct, easily understood way. Definitely the way it is.... and many of us do this with a smile on our face thinking we are doing good......
There are sooooo many reasons to keep a balanced portfolio, particularly in these times. There are good stocks in good companies, cash is always king, gold is good, they aren't making any more real estate...balance. A chair with four legs can still work effectively with only three legs. We may be entering a chaos phase where normal activities produce results that are difficult to understand.
Food for thought or drivel, depending on your take...
Chaos theroy (Its long an complicated but you can get the general idea by skimming) Best explained as for example, a leaf drops from a tree in your back yard and it causes an 7.2 earthquake in Jakarta. Difficult to understand but explainable in hindsight and nearly impossible to predict. Remember that everything is connected to everything else, throughout the entire solar system and sometimes it seems like chaos reigns.
A few international triggers have been tripped; particularly, US housing, carry trade, siv's and other paper be it forward selling or just BS bonds and these situations are just beginning to affect the markets in a significant way, just as there are probably still a number of problems yet to be exposed. Confidence in investing seems to be in a challenging phase, challenging investors to be balanced or be prudent and leave voluntarily or persist in gambling and be removed by economic forces. When the big boys bleed, you can be confident that there are boatloads of smaller guys that are bleeding right along with them, all over the world.
Toxins (be they paper or chemicals) have to be diluted to be below the LD 50 threshold level before people will survive at a 50% rate. As these little pockets of toxins are exposed, they have to be diluted or in this case, they have to lose enough of their toxic effects to be viable in the general market place. It will happen, someone will buy the paper, someone will pick up the real estate, someone will cover the bonds, the dollar will find a comfortable level in the world economic structure, and while this is going on, some folk will go to the safety of PM. The irrational exhuberancers and the Gordon Gecko's will evolve as will the awareness of the prudent investor. These are new times and like Dr. Hunter S. Thompson is quoted: "When the goin' gets weird, the weird turn pro."
You could have put your money into dollars backed by gold/silver but the government didn't like the competition. Some day they will come for our gold and silver too.
Here is a great article on GLD and other ETF’S Perhaps one of our stock guys can explain this to me?
When you buy stock in Exxon in the market you are not buying shares from the company but from other individuals that are selling. In the case of these ETF’S it appears they are covering both buyers and sellers, or how can they continue to buy more assets as the price of the shares increases?
By Adam Hamilton Nov 16 2007 4:17PM
Three years ago on November 18th a landmark event polarized the gold world. The first gold exchange-traded fund to trade in the United States, the StreetTracks Gold Shares, was launched. Although born in controversy, even GLD’s original detractors cannot argue with this ETF’s stunning success since.
Nearing its third birthday, GLD just reported massive holdings of 19.3m ounces of gold held in trust for its investors. When your gold holdings get this large though, you don’t even measure them in ounces anymore. Instead you switch to metric tonnes. This week, GLD reported nearly 600 tonnes of physical gold bullion under management for American investors. This is a staggering amount of gold.
If GLD was a central bank, it would nearly make the top 10 in the world for gold holdings. This single American gold ETF has more gold than 100 individual central banks. GLD is just a hair away from overtaking China too, which would give it the 10th spot. This ETF has more gold than the individual (not collective) central banks of Spain, Russia, India, Venezuela, the UK, Saudi Arabia, and South Africa!
According to the IMF, total global official gold holdings in late 2006 ran at 30,435 tonnes. It took central banks decades, and in many cases centuries, to accumulate so much gold. Yet after three short years, the blink of an eye compared to millennia of gold accumulation, GLD’s holdings are nearly 2% of those of all the world’s central banks combined! And if central banks are radically over-reporting their holdings as some suspect, GLD may very well hold a substantially higher fraction of above-ground gold.
I strongly believe every investor should have a foundation of physical gold coins in his own immediate physical possession before he ever buys a single paper investment. Real physical gold is the ultimate insurance policy to protect your hard-earned wealth from devastating low-probability events that periodically ravage paper markets. It is the one timeless asset that will thrive through all financial storms.
GLD enables institutional investors that can only trade in the stock markets per their charters to get gold exposure. But of course feeding stock-market capital into the gold market is a double-edged sword. If selling pressure on GLD is greater than that in gold, the ETF’s custodians have to sell gold bullion to vent this imbalance into the physical gold world. If they did not do this, GLD would decouple from gold to the downside. So GLD and the other gold ETFs will increasingly contribute to gold volatility as their holdings grow.
The only way any ETF, including this one, can consistently and precisely track its underlying asset is if the ETF’s custodians rapidly equalize supply/demand differentials that arise between the ETF and the asset it tracks.
And despite GLD’s massive gold holdings, it is still vanishingly small compared to stock-market capital. With $16b worth of gold under management, GLD is still only 1/13th the market capitalization of Google alone!
That's one reason. We've had a fair amount of sales as well. Shorts getting caught and having to sell. Whether those sales were actual metal or just paper, and I suspect the latter. Either way, large sales tend to drive the price downward temporarily
If one is short, wouldnt they have to BUY to cover their position?
<< <i>That's one reason. We've had a fair amount of sales as well. Shorts getting caught and having to sell. Whether those sales were actual metal or just paper, and I suspect the latter. Either way, large sales tend to drive the price downward temporarily
If one is short, wouldnt they have to BUY to cover their position? >>
Buying wouldn't help if you needed to generate funds to cover your shorts.
By selling real assets, ie; gold, they could accumulate the needed $$ to cover what was needed.
As I understand it, this happens frequently with the hope of buying back on later dips. Buying it back later is becoming more difficult these days though.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
One of our posters suggested just posting a reply and the page would update. It does seem to work. I guess this post is so long that it takes a while for the servers to get their wires around it.
<< <i>One of our posters suggested just posting a reply and the page would update. It does seem to work. I guess this post is so long that it takes a while for the servers to get their wires around it. >>
Apparently the post numbering gets out of sequence if two posts are enterred simultaneously similar to the way they get out of sequence. As a thread gets longer it becomes more likely that there are some num- bered wrong and then new posts aren't displayed on a new page.
When posts are lost you can just add "1" to the last number in your browser and enter it. A new page will appear with the missing posts. Or you can add posts until a new page is created. I believe this thread is off by three posts now.
<< <i>That's one reason. We've had a fair amount of sales as well. Shorts getting caught and having to sell. Whether those sales were actual metal or just paper, and I suspect the latter. Either way, large sales tend to drive the price downward temporarily
If one is short, wouldnt they have to BUY to cover their position? >>
Buying wouldn't help if you needed to generate funds to cover your shorts.
By selling real assets, ie; gold, they could accumulate the needed $$ to cover what was needed.
As I understand it, this happens frequently with the hope of buying back on later dips. Buying it back later is becoming more difficult these days though. >>
So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls?
<< <i>So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls? >>
Yes, That was what I was trying to say anyway. It used to be more common when the price was easier to manipulate. I'm no guru, but I do read a lot and that's the impression that I've gotten from various sources. This recent sharp climb caught many with their shorts down, so to speak.
I see that once again gold has crossed the $800 level, I suspect a bit more selling off to meet calls in the near future. That translates into a buying opportunity for us little folks. I expect another fight hold down the price and selling off will do that. I'm looking at a price around $775-$780 by mid December. I'd say buy then if you intend to because by mid January I could easily see a challenge to $900. May fall a bit short of that but it will establish another higher floor.
Silver continues it's slow and steady pace. I wouldn't be at all surprised to see a sharp spike coming shortly. We've recently had a great buying opportunity there, again, I can see that gone by mid January as well.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls? >>
Yes, That was what I was trying to say anyway. It used to be more common when the price was easier to manipulate. I'm no guru, but I do read a lot and that's the impression that I've gotten from various sources. This recent sharp climb caught many with their shorts down, so to speak.
I see that once again gold has crossed the $800 level, I suspect a bit more selling off to meet calls in the near future. That translates into a buying opportunity for us little folks. I expect another fight hold down the price and selling off will do that. I'm looking at a price around $775-$780 by mid December. I'd say buy then if you intend to because by mid January I could easily see a challenge to $900. May fall a bit short of that but it will establish another higher floor.
Silver continues it's slow and steady pace. I wouldn't be at all surprised to see a sharp spike coming shortly. We've recently had a great buying opportunity there, again, I can see that gone by mid January as well. >>
The question I have about this is that someone who is facing a margin call cannot take on additional positions. Shorting requires a margin account and if someone needs to meet a margin call they cannot borrow/short anymore. They need to add capital to their account, they cannot borrow more.
<< <i>So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls? >>
Yes, That was what I was trying to say anyway. It used to be more common when the price was easier to manipulate. I'm no guru, but I do read a lot and that's the impression that I've gotten from various sources. This recent sharp climb caught many with their shorts down, so to speak.
I see that once again gold has crossed the $800 level, I suspect a bit more selling off to meet calls in the near future. That translates into a buying opportunity for us little folks. I expect another fight hold down the price and selling off will do that. I'm looking at a price around $775-$780 by mid December. I'd say buy then if you intend to because by mid January I could easily see a challenge to $900. May fall a bit short of that but it will establish another higher floor.
Silver continues it's slow and steady pace. I wouldn't be at all surprised to see a sharp spike coming shortly. We've recently had a great buying opportunity there, again, I can see that gone by mid January as well. >>
The question I have about this is that someone who is facing a margin call cannot take on additional positions. Shorting requires a margin account and if someone needs to meet a margin call they cannot borrow/short anymore. They need to add capital to their account, they cannot borrow more. >>
No, but they can sell their existing holdings, be it paper or physical. It's my understanding that that is exactly what happened.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>The question I have about this is that someone who is facing a margin call cannot take on additional positions. Shorting requires a margin account and if someone needs to meet a margin call they cannot borrow/short anymore. They need to add capital to their account, they cannot borrow more. >>
If your name is Goldman/Sachs you just sell off more contracts that you can't cover and the price falls bringing your massive short position less underwater. It costs less to sell more and manipulate the price down than it would to close out some short positions, In fact if you close out short positions it puts your other short position even more underwater.
It doesn't matter how much short you are or that you could never deliver on the positions, what will happen is that eventually you get one of the many well placed former GS executives, now in official position to either provide you with some well timed info or to instigate an event that shakes out the longs and allows you to cover.
Comments
ok, I admit I am not that savvy on the markets .... what does that mean? I have a MMA with Fidelity --- it is not FDIC insured?
oohhh that is scary.
<< <i>I haven't seen any news of the cancellation of the FAS 157/159 rules on any metals website. If it were postponed you'd think it would be a hot topic. I have seen some requests or suggestions to delay the deadline. Frankly the rule has been out there long enough such that no one should have had a problem complying. If the big banks who have the most at risk have already tabulated their numbers, then why not the smaller banks/companies?
It's probably dangerous to be completely out of the stock market
I guess if you wait long enough, anything will make its way into print.
Note that being completely out of the stock market over the past 6 years would have been a good thing for many people.....esp if they were in PM's or other tangible assets. Being completely out of the market will be a great thing sooner than we think.
roadrunner >>
Indeed! I've been completely out of the market since early 2002, haven't missed it one bit. I have been completely into PMs since that time and it's been berry, berry good to me. The only other thing I own of any real value other than my home and cars is a rent house I bought as a fixer upper back then and it's been a positive cash flow, not great, but good enough. It will soon be paid off free and clear and even in this poor to crashing housing market, people have to live somewhere. It's only sat vacant 1 month in the last 5 years.
I can see the market crashing harder than anyone expects. How about a 6000 DOW? It's quite possible. In fact, I'm expecting it.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Maybe we should join the EU?
MH
How very interesting!
Wouldn’t this be a kick in the pants for mortgage investors, if they can’t even prove they own title to the properties.
“A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools.
The pooling of home loans into securities has been practiced for decades and helped propel real estate prices in recent years as investors sought the higher yields that such mortgage trusts could provide. Some $6.5 trillion of securitized mortgage debt was outstanding at the end of 2006.
But as foreclosures have surged, the complex structure and disparate ownership of mortgage securities have made it harder for borrowers to work out troubled loans, in part because they cannot identify who holds the mortgage notes.”
Interesting approach.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Hold your fire till you can see the whites of their eyes.
Edited to answer my own question (roughly): One source says that "Total [historical] world production of gold is estimated to be about 3.4 billion troy ounces, of which more than two-thirds was mined in the past 50 years." LINK Annual gold production appears to be on the scale of 80 million ounces per year. LINK So the total gold supply appears to be increasing by about 2.35% per year. That assumes that the whole 3.4 billion ounces ever mined still is accounted for in current physical stocks.
<< <i>We hear a lot about the growth in the "paper" money supply, but at what rate is the supply of GOLD increasing relative to the gold that has already been mined? It seems to me that "inflation" is not only a paper money phenomenon.
Edited to answer my own question (roughly): One source says that "Total world production of gold is estimated to be about 3.4 billion troy ounces, of which more than two-thirds was mined in the past 50 years." LINK I don't know how much of that is accounted for. Annual gold production appears to be on the scale of 80 million ounces per year. LINK So the total gold supply appears to be increasing by about 2.35% per year (assuming the whole 3.4 billion ounces ever mined still is accounted for). >>
Money supply - be it gold or fiat - should never increase in excess of economic growth or increases in productivity. All economies naturally expand based on value added to reources through labor and innovation.
When money supply outstrips growth, inflation is caused - more money chasing less or the same resources. This does not only refer to fiat currency - think of Spain in the time of conquest, with massive influes of gold from the "New World". This massive influx of cheap money destroyed their economy.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
Well finally we are now talking in the Trillions, as the big institutions have to eat all those derivatives.
“Nov. 16 (Bloomberg) -- The slump in global credit markets may force banks, brokerages and hedge funds to cut lending by $2 trillion and trigger a ``substantial recession'' in the U.S., according to Goldman Sachs Group Inc.”
“Ya gotta love this indicator.”
Yes, thanks for the link Norm,
Actually I love these guys always pushing down the price, its just great buying opportunities once you figure out how they work.
<< <i>That assumes that the whole 3.4 billion ounces ever mined still is accounted for in current physical stocks. >>
Some is consumed, one can only speculate how much. Jewelry demand (especially India) still accounts for the majority of gold demand, much of the jewelry gold is lost through wear. Minor industrial gold usage also consumes mined gold.
9,110,326,439,651.28 lets just call it 9 trillion.
Now if we rounded up all the gold ever mined, that 3.4 billion ounces and just back our on the books national debt. How much would gold be worth an ounce?
My calculator says $2,647. That cannot be right can it?
<< <i>This does not only refer to fiat currency - think of Spain in the time of conquest, with massive influes of gold from the "New World". This massive influx of cheap money destroyed their economy. >>
My point exactly. Gold is itself subject to inflation. If the actual existing supply of gold is below 3.4 billion ounces (because of "wear" on jewelry, physically lost gold, etc.), then the real rate of gold inflation is higher than the figure I quoted.
<< <i>Annual gold production appears to be on the scale of 80 million ounces per year. LINK >>
Barrick is the world's largest gold mining company that produces over 8 million ounces per year Barrick. The 80 million estimate has got to be low, I would bet the top 100 gold mines actual output would exceed 80 million, and that does not include government owned mines, small private mines, and prospectors who don't release their output.
<< <i>
<< <i>This does not only refer to fiat currency - think of Spain in the time of conquest, with massive influes of gold from the "New World". This massive influx of cheap money destroyed their economy. >>
My point exactly. Gold is itself subject to inflation. If the actual existing supply of gold is below 3.4 billion ounces (because of "wear" on jewelry, physically lost gold, etc.), then the real rate of gold inflation is higher than the figure I quoted. >>
Remember that Spain's issue was a relative historical singularity - it is unlikely, short of asteroid mining or a spaceship of aliens landing with vaults of gold, that such a similar occurrance would happen in this day and age.
With a 2-3% annual "inflation" of gold supplies (based upon your citation), economic inflation due to increases in total gold stocks seems doubtful.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
here's 156 tons of it and at 32150 oz. (t) = 1 metric ton that would account for 5,015,400 of those 80,000,000 oz being mined/yr. And, that's only the I in BRIC, we still have UAE EU US and others. Sure, 156 tons is small time but, it's not like it's piling up in the ware houses or anything.
For all of you that are having a hard time understaning these markets here is a great explanation.
LINK
Figure 150,000 tons of world wide production throughout history. In any case the 2500 tons is falling short of demand and has been for
a couple of years.
One can look at the 2.5% of gold production as inflation of sorts (assuming none is lost). Even so, this pales in comparision to the average
rate of 10% per year for currency increase since 1996 (and currently at 18% annualized the past month or so!). I'll stick with the gold as
currency printing outstrips it by > 4 to 1. And when factoring net inflation adjustments, the 2.5% gold production should be removed from the equation.
roadrunner
We are seeing a dramatically historic increase in wealth and interest in wealth preservation across the globe, esp in China and India.
They ain't making no more of the stuff.
It all adds up to much more than demand than supply for gold. Even major economic downturns would only delay the trend.
Here's a warning parable for coin collectors...
RJ
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
I'm certainly no 'guru' but I can say with most certainty that you can not make sense of any market movement, be it gold, stocks or other in the very SHORT term. Why does something go down 4% one day and three days later goes up 3%?? I'm not even going to try to figure it out.
What is overall important is the LONG trend. And as stated before, there is more historical and current evidence to say that we are in a precious metals BULL market today (and for the next 5 years at least) than a BEAR market. I could argue this point all day long.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>OK gold gurus, why the decline in gold over the past week (down almost $60/oz) while the financial sectors continues to report growing write-downs? Oil's still rising too and doesn't look to be falling anytime soon. What gives?
RJ >>
Profit taking.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
<< <i>
<< <i>OK gold gurus, why the decline in gold over the past week (down almost $60/oz) while the financial sectors continues to report growing write-downs? Oil's still rising too and doesn't look to be falling anytime soon. What gives?
RJ >>
Profit taking. >>
That's one reason. We've had a fair amount of sales as well. Shorts getting caught and having to sell. Whether those sales were actual metal or just paper, and I suspect the latter. Either way, large sales tend to drive the price downward temporarily.
If you watch the moves as long as many of us have it's virtually meaningless. 2 steps forward, 1 step back, 2 steps forward, 1 step back. 1 step forward and 2 steps back and then 2 steps forward, 1 step back. The overall picture hasn't changed, we're still in the first half of this bull run and $1200 gold isn't as far away as many think.
When I hear talk of gold not meeting demand and total wold volume, all I can think of is silver. My guess is that there is about the same amount of refined gold on the planet as there was in 1980, while there's only about 10% of the refined silver compared to that same time period. Silver tends to be a surface metal whereas gold is found much deeper. The easy pickings for silver are all gone and it isn't being found in any quantities by going deeper. Gold, OTOH, is still being mined at deeper levels. The silver bull is still in it's infancy, IMO. I'm betting the ROI on silver will outstrip gold and gold will be a very good investment for several more years.
The financial world is on thin ice and it's beginning to crack, the evidence is everywhere. Gold and silver are real money. Always have been, always will be, plus silver has so many more uses and more are being discovered and when industrial or medical silver is used up, it's just that, used up, as in gone forever.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>O.K. lets see if my calculator can figure this right. Today’s on the books national debt is
9,110,326,439,651.28 lets just call it 9 trillion.
Now if we rounded up all the gold ever mined, that 3.4 billion ounces and just back our on the books national debt. How much would gold be worth an ounce?
My calculator says $2,647. That cannot be right can it? >>
Looks all good to me.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
FAS157 did go into effect on Thursday for Financial Companies (banks, brokerages, etc). Other types of companies have a reprieve before they need to report. FAS157 is going to bring the junk to the surface for everyone to see.
roadrunner
Nobody can deny that this is still a bull market , no fundamental news that will strengthen the dollar.....just a healthy rest /pullback phase.
“In my lifetime, 4 billion people have been ADDED to the world population.”
This tells the whole story dpoole!
During most of the time those 4 billion folks were being added to the planet all of the worldwide monetary systems have been free to print all the paper currencies they wanted.
In addition other systems have been put into place that allow trillions of dollars of buying power to be created out of thin air.
Someone here all ready pointed out the use of credit cards worldwide, but what about brokerage accounts?
A few months ago when I opened my gambling account at Scottrade, I immediately noticed that for every dollar I sent into the account I got credit of an equal amount to that. So put in ten thousand and they give you ten thousand more to gamble with in the market. How many trillions of dollars of credit do you think is created each day just in the world markets?
If everyone with a trading account were sent an email tomorrow saying please pay for all your credit purchase in GOLD, all the gold ever mined would not cover just this debt.
I saw a really interesting interview this week with John Bogle, the 80-year-old sage of Wall Street that started the Vanguard Funds.
A couple of his comments went like this,
Never since 1928 and 29 has there been so much speculation in the markets. For forty years in his career if the markets moved more than 2% in one day, more than twice in one year, that was very unusual. In the last couple of months the markets have moved more than 2% 14 times.
The Asian markets could crash at any time simply due to the huge amount of money that has been created out of thin air, and pumped into those economies.
One floor trader on the NYSE said last week that it drove him crazy trying to keep his trading account stable.
His competition was not other professional traders, but the public around the world all buying and selling from emotion.
All of the worldwide markets in commodities, major stocks, bonds, currencies, etc. are open to individuals 24/7 through out most of the year. With a few thousand dollars, and some computer skills, you can open accounts in various countries and Gamble, or “Trade” day and night. If you missed your chance to buy gold, or Nokia stock, today just go on line and buy it in London or Hong Kong.
Millions of new game players are coming on line each year, and not necessarily from here, but out of parts of China, India, S. America.
So when alfalfa asked why did the gold market drop $60 this week, who really will ever know? This downward push was started in Hong Kong while we were all asleep. Perhaps a couple of billionaires got together and sold the market short, so they could buy it all back cheaper next week?
The fact to pay attention to here, is that out of all these new billions of folks that have been added to the planet, millions more of them are getting computer savvy, and playing these markets each and every year. All of this volatility we are now seeing in all of these markets is just the beginning. This will all continue as the minds of the world work the paper markets 24/7.
We can see each day how many billions of shares and contracts are traded in the U.S. each day and we can also guess that two or three times that are being traded while we are sleeping.
As many fine minds have already pointed out in this tread the only safety in investing in today’s markets
Is to take position of your goods.
If you want to gamble in the world markets and match your brain with those guys and gals from around the world that is your choice, but please do not do it with a good chunk of your families wealth.
At some point over the next few years all of these markets will be so over bought/sold that there will be no way to deliver the goods. Just like a huge game of musical chairs millions of traders, and soon billions of traders, will someday be looking for their chairs!
Nothing will be safe when all this comes apart, but those things you have in your possession. Do you think your mutual fund has your stock certificates for your 401K in their safe? They do not! What they have is a computer entry for a chair when the game stops!
It is easy to imagine that you could go to sleep on a Saturday night and when the markets opened in the U.S. Monday morning you might find your trading accounts, or retirement accounts, were already down by half.
Jim Sinclair is in the advice business, but I am not, he says forget the tax consequences and take delivery of your retirement money and shares, and just pay the taxes.
Personally I do not have a 401K or any of those other retirement plans. These were cashed in years ago to pay off my house and buy coins etc.
<< <i>As many fine minds have already pointed out in this tread the only safety in investing in today’s markets
Is to take position of your goods. >>
Well, as it pertains to PMs, that might make sense. That too can be a gamble and I would caution assuming 100% allocation in PMs as the best route. (Might end up being, but not without tremendous risk.) You can invest in stock markets with less risk than many, many others, largely inadvertantly, assume. Yeah, there are the high debt, stratospheric ratio stocks out there that can be the latest fads. But in the end, when you buy stock you are buying a piece of a productive company. There are many great companies worth buying parts of and participating in their successes. However, you really never know if there are hidden land mines even in public disclosures of SEC filings. Exposure to derivatives, shell corps, and other potentially shaky financial instrumentsisn't what a lot of investors would choose if they knew. But in this deceptive world, you do what you can. Diversify the risk, stick with companies with both strong insider ownership commitment and demonstrated competence as it relates to real earnings balanced by prudent reinvestment, business growth and sane debt leveraging. Looking occasionally at some companies makes one wonder how many bullets are acceptable in that revolver for the buyers' game of Russian Roulette. Anyway, the point is that avoiding stock in complete distrust might not serve one's personal fanancial goals very well. If every one of those companies goes under, and they won't, discussions of any wealth building short of having lots of guns and ammo and no conscience problems stealing from neighbors is moot.
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
Coxe,
From my personal stand point; I do not think people should gamble with money they cannot afford to lose!
What does that mean? If all your debt is paid, if your home is paid for, your cars are paid for, and you have some other investments in PM’S, C.D’S, cash, properties etc. and you want to go gamble in the markets, hey that’s fine, but one should not deceive themselves that any of these paper markets are a safe place to INVEST.
More and more these markets are run by the MOB! They operate now more on emotion than anything else. For most wealthy “investors” in the market a month is a very long time to be in something.
Even the central banks have lost control of how they used to move these markets.
When our Fed moves rates they may only effect the trading in the markets for a few days now.
And the talking heads on the financial shows are even calling these markets casinos now.
I never said that all the companies will go broke, but that does not mean that you might not wake up one morning and find your investments cut in half. Watch what happens to companies that miss their guidance by just a few pennies per share. They can be punished by the mob with a twenty percent drop in market price in just a few minutes, and this drop may take a year or more to recover, and this is just the beginning of the volatility.
This mentality of the mob will continue to play havoc with all of these markets, and this is my problem with some of Peter Schiffs advice. He thinks he is immune to this just because he is in overseas markets, he is not! All of this is coming his way.
What do we think will happen in a few years when China unleashes a hundred million new players into the world markets?
Here is something interesting to watch that can only be seen on some of the ETF’S.
If you pull up GLD or SLV you can see each day exactly, within a few days, how much the real assets are worth compared to how oversold/overbought the funds are in comparison to the assets. Today GLD has about 15.2 billion in assets and claims on those assets of 14.9 billion, so there are plenty of “chairs” to go around if the music stops. Can you guess what this might look like if a hundred million new Chinese players were turned lose on this ETF? What happens to ones long term investment strategy when this ETF moves up and down by 20% to 50% one hundred times per year?
If you look at the Shanghai market you can see what is coming.
As you have already pointed out it is impossible to see this as clearly in 99.9% of all the rest of the paper assets trading in the market.
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
If you pull up GLD or SLV you can see each day exactly, within a few days, how much the real assets are worth compared to how oversold/overbought the funds are in comparison to the assets. Today GLD has about 15.2 billion in assets and claims on those assets of 14.9 billion, so there are plenty of “chairs” to go around if the music stops. Can you guess what this might look like if a hundred million new Chinese players were turned lose on this ETF? What happens to ones long term investment strategy when this ETF moves up and down by 20% to 50% one hundred times per year?"
Although the gold and silver funds probably have more safety than many other investments...... I have to say that I have some uneasiness concerning them. I started reading the fine print at one time, in the prospectus..... and quit after wading through a bit of it. I decided that I was not going to invest in the fund, because they left too many loopholes for game playing...... If I recall, they can lend the physical silver out, and participate in other manipulations, etc., as they see fit. So how much of the physical silver do they actually hold? That's where I am skeptical. Although they show it on the books as an asset, IMO that does not mean much. If they lent out a boatload of silver to some other entity, that would probably still show as an asset?
After all, we all know how Morgan Stanley (and others) were selling clients precious metals, and then charging them to store their metals for them......
Possession! Even though it is a hassle..... it is the only way to go IMHO.
Tincup
You did what? You read the prospectus, you have got to be kidding, no one reads the prospectus, Ha Ha
Now if everyone read all the fine print in all the “investments” they buy, nobody would buy any of this paper and then where would we be?
Anyway this is gambling, and gamblers play by their emotions, Ha Ha
that really doesn't exist, for money that has
no actual value. You then put that money in
a CD ,which after taxes and inflation , loses another 5%
after 6 months. Ain't life grand?
Camelot
Now if everyone read all the fine print in all the “investments” they buy, nobody would buy any of this paper and then where would we be?
Anyway this is gambling, and gamblers play by their emotions, Ha Ha"
LOL..... yeh, what was I thinking!! thankfully that urge to read the prospectus did not last very long....
GOLDSAINT, you are absolutely right about the gambling angle. We all step up and place our bet where we think is best. Then good luck....!
<< <i>It all makes sense now. You sell paper gold
that really doesn't exist, for money that has
no actual value. You then put that money in
a CD ,which after taxes and inflation , loses another 5%
after 6 months. Ain't life grand? >>
Bear, you definitely have a knack for stating the truth in a direct, easily understood way. Definitely the way it is.... and many of us do this with a smile on our face thinking we are doing good......
Food for thought or drivel, depending on your take...
Chaos theroy (Its long an complicated but you can get the general idea by skimming) Best explained as for example, a leaf drops from a tree in your back yard and it causes an 7.2 earthquake in Jakarta. Difficult to understand but explainable in hindsight and nearly impossible to predict. Remember that everything is connected to everything else, throughout the entire solar system and sometimes it seems like chaos reigns.
A few international triggers have been tripped; particularly, US housing, carry trade, siv's and other paper be it forward selling or just BS bonds and these situations are just beginning to affect the markets in a significant way, just as there are probably still a number of problems yet to be exposed. Confidence in investing seems to be in a challenging phase, challenging investors to be balanced or be prudent and leave voluntarily or persist in gambling and be removed by economic forces. When the big boys bleed, you can be confident that there are boatloads of smaller guys that are bleeding right along with them, all over the world.
Toxins (be they paper or chemicals) have to be diluted to be below the LD 50 threshold level before people will survive at a 50% rate. As these little pockets of toxins are exposed, they have to be diluted or in this case, they have to lose enough of their toxic effects to be viable in the general market place. It will happen, someone will buy the paper, someone will pick up the real estate, someone will cover the bonds, the dollar will find a comfortable level in the world economic structure, and while this is going on, some folk will go to the safety of PM. The irrational exhuberancers and the Gordon Gecko's will evolve as will the awareness of the prudent investor. These are new times and like Dr. Hunter S. Thompson is quoted: "When the goin' gets weird, the weird turn pro."
JMHO, for entertainment purposes only.
FBI Raids Liberty Doller
Here is a great article on GLD and other ETF’S
Perhaps one of our stock guys can explain this to me?
When you buy stock in Exxon in the market you are not buying shares from the company but from other individuals that are selling. In the case of these ETF’S it appears they are covering both buyers and sellers, or how can they continue to buy more assets as the price of the shares increases?
By Adam Hamilton
Nov 16 2007 4:17PM
Three years ago on November 18th a landmark event polarized the gold world. The first gold exchange-traded fund to trade in the United States, the StreetTracks Gold Shares, was launched. Although born in controversy, even GLD’s original detractors cannot argue with this ETF’s stunning success since.
Nearing its third birthday, GLD just reported massive holdings of 19.3m ounces of gold held in trust for its investors. When your gold holdings get this large though, you don’t even measure them in ounces anymore. Instead you switch to metric tonnes. This week, GLD reported nearly 600 tonnes of physical gold bullion under management for American investors. This is a staggering amount of gold.
If GLD was a central bank, it would nearly make the top 10 in the world for gold holdings. This single American gold ETF has more gold than 100 individual central banks. GLD is just a hair away from overtaking China too, which would give it the 10th spot. This ETF has more gold than the individual (not collective) central banks of Spain, Russia, India, Venezuela, the UK, Saudi Arabia, and South Africa!
According to the IMF, total global official gold holdings in late 2006 ran at 30,435 tonnes. It took central banks decades, and in many cases centuries, to accumulate so much gold. Yet after three short years, the blink of an eye compared to millennia of gold accumulation, GLD’s holdings are nearly 2% of those of all the world’s central banks combined! And if central banks are radically over-reporting their holdings as some suspect, GLD may very well hold a substantially higher fraction of above-ground gold.
I strongly believe every investor should have a foundation of physical gold coins in his own immediate physical possession before he ever buys a single paper investment. Real physical gold is the ultimate insurance policy to protect your hard-earned wealth from devastating low-probability events that periodically ravage paper markets. It is the one timeless asset that will thrive through all financial storms.
GLD enables institutional investors that can only trade in the stock markets per their charters to get gold exposure.
But of course feeding stock-market capital into the gold market is a double-edged sword. If selling pressure on GLD is greater than that in gold, the ETF’s custodians have to sell gold bullion to vent this imbalance into the physical gold world. If they did not do this, GLD would decouple from gold to the downside. So GLD and the other gold ETFs will increasingly contribute to gold volatility as their holdings grow.
The only way any ETF, including this one, can consistently and precisely track its underlying asset is if the ETF’s custodians rapidly equalize supply/demand differentials that arise between the ETF and the asset it tracks.
And despite GLD’s massive gold holdings, it is still vanishingly small compared to stock-market capital. With $16b worth of gold under management, GLD is still only 1/13th the market capitalization of Google alone!
If one is short, wouldnt they have to BUY to cover their position?
Knowledge is the enemy of fear
Freddie Mac
<< <i>That's one reason. We've had a fair amount of sales as well. Shorts getting caught and having to sell. Whether those sales were actual metal or just paper, and I suspect the latter. Either way, large sales tend to drive the price downward temporarily
If one is short, wouldnt they have to BUY to cover their position? >>
Buying wouldn't help if you needed to generate funds to cover your shorts.
By selling real assets, ie; gold, they could accumulate the needed $$ to cover what was needed.
As I understand it, this happens frequently with the hope of buying back on later dips. Buying it back later is becoming more difficult these days though.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>One of our posters suggested just posting a reply and the page would update. It does seem to work. I guess this post is so long that it takes a while for the servers to get their wires around it. >>
Apparently the post numbering gets out of sequence if two posts are
enterred simultaneously similar to the way they get out of sequence.
As a thread gets longer it becomes more likely that there are some num-
bered wrong and then new posts aren't displayed on a new page.
When posts are lost you can just add "1" to the last number in your
browser and enter it. A new page will appear with the missing posts.
Or you can add posts until a new page is created. I believe this thread
is off by three posts now.
<< <i>
<< <i>That's one reason. We've had a fair amount of sales as well. Shorts getting caught and having to sell. Whether those sales were actual metal or just paper, and I suspect the latter. Either way, large sales tend to drive the price downward temporarily
If one is short, wouldnt they have to BUY to cover their position? >>
Buying wouldn't help if you needed to generate funds to cover your shorts.
By selling real assets, ie; gold, they could accumulate the needed $$ to cover what was needed.
As I understand it, this happens frequently with the hope of buying back on later dips. Buying it back later is becoming more difficult these days though. >>
So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls?
Knowledge is the enemy of fear
<< <i>So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls? >>
Yes, That was what I was trying to say anyway. It used to be more common when the price was easier to manipulate. I'm no guru, but I do read a lot and that's the impression that I've gotten from various sources. This recent sharp climb caught many with their shorts down, so to speak.
I see that once again gold has crossed the $800 level, I suspect a bit more selling off to meet calls in the near future. That translates into a buying opportunity for us little folks. I expect another fight hold down the price and selling off will do that. I'm looking at a price around $775-$780 by mid December. I'd say buy then if you intend to because by mid January I could easily see a challenge to $900. May fall a bit short of that but it will establish another higher floor.
Silver continues it's slow and steady pace. I wouldn't be at all surprised to see a sharp spike coming shortly. We've recently had a great buying opportunity there, again, I can see that gone by mid January as well.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>
<< <i>So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls? >>
Yes, That was what I was trying to say anyway. It used to be more common when the price was easier to manipulate. I'm no guru, but I do read a lot and that's the impression that I've gotten from various sources. This recent sharp climb caught many with their shorts down, so to speak.
I see that once again gold has crossed the $800 level, I suspect a bit more selling off to meet calls in the near future. That translates into a buying opportunity for us little folks. I expect another fight hold down the price and selling off will do that. I'm looking at a price around $775-$780 by mid December. I'd say buy then if you intend to because by mid January I could easily see a challenge to $900. May fall a bit short of that but it will establish another higher floor.
Silver continues it's slow and steady pace. I wouldn't be at all surprised to see a sharp spike coming shortly. We've recently had a great buying opportunity there, again, I can see that gone by mid January as well. >>
The question I have about this is that someone who is facing a margin call cannot take on additional positions. Shorting requires a margin account and if someone needs to meet a margin call they cannot borrow/short anymore. They need to add capital to their account, they cannot borrow more.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>So what are saying is that in order to cover their shorts, they shorted more? Am I understanding that right?
Or are you saying that those who held futures contracts sold the physical to meet margin calls? >>
Yes, That was what I was trying to say anyway. It used to be more common when the price was easier to manipulate. I'm no guru, but I do read a lot and that's the impression that I've gotten from various sources. This recent sharp climb caught many with their shorts down, so to speak.
I see that once again gold has crossed the $800 level, I suspect a bit more selling off to meet calls in the near future. That translates into a buying opportunity for us little folks. I expect another fight hold down the price and selling off will do that. I'm looking at a price around $775-$780 by mid December. I'd say buy then if you intend to because by mid January I could easily see a challenge to $900. May fall a bit short of that but it will establish another higher floor.
Silver continues it's slow and steady pace. I wouldn't be at all surprised to see a sharp spike coming shortly. We've recently had a great buying opportunity there, again, I can see that gone by mid January as well. >>
The question I have about this is that someone who is facing a margin call cannot take on additional positions. Shorting requires a margin account and if someone needs to meet a margin call they cannot borrow/short anymore. They need to add capital to their account, they cannot borrow more. >>
No, but they can sell their existing holdings, be it paper or physical. It's my understanding that that is exactly what happened.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>The question I have about this is that someone who is facing a margin call cannot take on additional positions. Shorting requires a margin account and if someone needs to meet a margin call they cannot borrow/short anymore. They need to add capital to their account, they cannot borrow more. >>
If your name is Goldman/Sachs you just sell off more contracts that you can't cover and the price falls bringing your massive short position less underwater. It costs less to sell more and manipulate the price down than it would to close out some short positions, In fact if you close out short positions it puts your other short position even more underwater.
It doesn't matter how much short you are or that you could never deliver on the positions, what will happen is that eventually you get one of the many well placed former GS executives, now in official position to either provide you with some well timed info or to instigate an event that shakes out the longs and allows you to cover.