<< <i>Does anyone, perchance, foresee silver moving DOWN in the near term? I unfortunately had no money to invest when it was so low for so long.
I am not looking for quick profits, btw, but to hold long term. The 21st century will be the century of scarcity, so it is against the eventual depletion of above ground silver reserves and the permanent future imbalance between demand and limited production that I am looking at, but I still want to acquire as cheaply as possible.
Twelve dollars an ounce, historically low or no, pinches my small pocketbook, especially if a move lower is in the cards before the long ascent. It seems this run up is gaining momentum from psychological effects rather than scarcity. >>
There's no question that silver will move down sharply at some point, the question is when and to what level. The current move is probably the result of the psychological change caused by the continual imbalance between consumption and usage and with gold. It is triggered by buying to support the ETF and the self fullfilling prophesy that this buying will create higher prices.
While caution is advised it is also advisable to beware being out of this market. The gold/ silver ratio could collapse far further with relatively little change in investor habit. While marked deter- ioration in the world economy is unlikely to push silver higher an improvement in the economy could push it to levels barely imaginable in the past.
Both metals are benefiting from a decrease in world currency values. It's difficult to get a good handle on the magnitude of this loss but it could accelerate somewhat. Neither metal would do well in a severe economic correction simply because there is no "intrinsic" value as there is in more needful things. Gold would do better than silver is a garden variety recession and far bet- ter in an inflationary recession.
I'm betting that the economy will continue expanding, inflation will increase, the dollar will fall rel- ative other currencies and silver will outperform gold for at least a few more months.
<< <i>I'd like to have a few thousand ounces physically in my possesion without a paper trail (thanks eBay), by the time the real trouble starts. >>
First, you're paying too much if you are buying on eBay.
Second, what makes you think there is no paper trail?
Third, when you sell, there certainly will be and you're going to be held accountable for capital gains.
Fourth, take your chances if you want, but both the IRS and Homeland Security are looking closer and closer at all precious metals trades.
"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>First, you're paying too much if you are buying on eBay. >>
Please enlighten me then. I looked around and found nowhere to buy small lots ($10-$20 face) for less.
<< <i>Second, what makes you think there is no paper trail? >>
Not in any absolute sense. Only cash purchases from someone who doesn't know you leaves no trail. But I count on there being much bigger fish to fry, when it's time for frying. The guy buying little $10 face lots is going to get less or even no attention compared to the guy buying $1000 bags and filing an IRS form.
I shouldn't have said "no paper trail." More like low profile.
<< <i>Third, when you sell, there certainly will be and you're going to be held accountable for capital gains. >>
If conversion back to dollars is necessary, that would be true. Really these purchases are more of an insurance policy than an investment, for the case in which precious metals with known content might be used as currency.
But that's all hypotethical.
More importantly, please, if I've overlooked a way to buy cheap bullion, enlighten me. Until the last couple weeks, I have been able to pick up small lots on eBay, including shipping fees, for less than spot, sometimes a good bit less. Since the move past $11 though, the idiots have been bidding everything up over spot.
Also, what is the cheapest way for a poor guy like me to pick up some gold? Tenth ounce gold eagles? My investments for at least the next few months are going to have to be in hundreds, not thousands, and I already missed the real lows.
<< <i>Let's put it another way - I need a new car. I can wait another year, or get it this summer. I have 30 ounces of bullion. Would I be better off spending those 30 ounces now, or next year? >>
Nobody needs a NEW car. You do need transportation.
Sell now and you'll regret it for a long time, a very long time.
Five years from now, I wouldn't be at all surprised to see gold at $5,000.00 an ounce.
There simply isn't enough gold or silver to satisfy the world's needs and there isn't any way to produce enough for a long, long time. If ever.
What happened in '79-'80 was limited to 1st world countries and it was somewhat artificial, it was a smart play that actually worked. The Fed moved in and changed the rules after the fact. Illegally, I might add, or the Hunt brothers would have owned a large chunk of Wall Street and several major financial institutions.
This time it's world-wide and it's real.
"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>First, you're paying too much if you are buying on eBay. >>
Please enlighten me then. I looked around and found nowhere to buy small lots ($10-$20 face) for less.
<< <i>Second, what makes you think there is no paper trail? >>
Not in any absolute sense. Only cash purchases from someone who doesn't know you leaves no trail. But I count on there being much bigger fish to fry, when it's time for frying. The guy buying little $10 face lots is going to get less or even no attention compared to the guy buying $1000 bags and filing an IRS form.
I shouldn't have said "no paper trail." More like low profile.
<< <i>Third, when you sell, there certainly will be and you're going to be held accountable for capital gains. >>
If conversion back to dollars is necessary, that would be true. Really these purchases are more of an insurance policy than an investment, for the case in which precious metals with known content might be used as currency.
But that's all hypotethical.
More importantly, please, if I've overlooked a way to buy cheap bullion, enlighten me. Until the last couple weeks, I have been able to pick up small lots on eBay, including shipping fees, for less than spot, sometimes a good bit less. Since the move past $11 though, the idiots have been bidding everything up over spot.
Also, what is the cheapest way for a poor guy like me to pick up some gold? Tenth ounce gold eagles? My investments for at least the next few months are going to have to be in hundreds, not thousands, and I already missed the real lows. >>
It's been my experience that eBay tends to be quite high on silver bullion because there seem to be a lot of people with a)more money than brains, b)people with no other source, c)people who have gotten caught up in the hype.
There was a time when fairly good deals on the Bay could be had and I used to buy a few 100 ounce bars, but that was back when we were at $4 and $5 spot prices.
The smaller the amount of metal, the higher the mark up. I won't buy anything smaller than 100 ounce bars for that reason. Now, I will buy other sizes, provided that I can purchase it at the 100 ounce rate. Dealers will do that for you when they've got an oversupply.
Find a local dealer and create a relationship, save up to make larger purchases. People get ripped off on eBay all too often and then what does that do to your cost average?
When it comes to melt silver, I'll pay the going rate, but the higher silver goes, the greater the % back of spot it will bring. Something to keep in mind.
I still buy and trade melt silver for bullion on a regular basis.
It's still possible to pick off fractional gold on the Bay, best bet there is either Eagles or modern commems. Gotta search. I grabbed a 1/2 ounce proof gold Eagle in an NGC PR70 slab for around 10% under spot a few weeks ago. Of course the auction ended at 3AM pacific on a Wednesday. The seller shipped it, but he hasn't given me feedback after my positive. I suppose he wasn't too happy with the hammer price.
There's still time to get on the Silver Bullet, but like anythig else, it does take a few dollars to make a few dollars. I altered my lifestyle when I began putting away bullion. If I didn't absolutely need it, I didn't buy it. ALL extra monies went into bullion or numismatics that I knew I could flip for a profit.
"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>When it comes to melt silver, I'll pay the going rate, but the higher silver goes, the greater the % back of spot it will bring. Something to keep in mind. >>
This was certainly true in the past but may be much less true in the future. In '79/ '80 there was a lot of im- mediacy to the demand for silver. Much of this demand was from jobbers and investors who owed it to the Hunt cartel and they would accept only bars and US coin. There was a huge amount of silver flooding into the market from stocks and public selling and the refineries were backed up for months. Most people considered it highly risky to sit on large amounts of unsaleable silver bought at high prices. This was the primary cause of the discount in all probability. The entire move lasted only about 7 months from $7 to $50.
It's unlikely any move to date will be brief. Even if the price collapse tomorrow it will most probably be back to these levels in the near future barring a structural change in the supply. This should assure that future premiums (at least at sustainable silver prices) are determined by refining costs rather than speculation.
<< <i>I altered my lifestyle when I began putting away bullion. If I didn't absolutely need it, I didn't buy it. ALL extra monies went into bullion or numismatics that I knew I could flip for a profit. >>
Sooner or later the realization comes that all consumer goods are worthless, un-resellable, just a way to take your money and give you something with no lasting value, that's just going to break or wear out in a year or two.
If things were made to last, it might be different, but that would mean less money for the people who decide whether or not thigss are made to last, wouldn't it?
I forget where I read it, but I couldn't put it better: our whole civilization is just a highly efficient system of turning wealth and natural resources into garbage.
Let me phrase my question about what to pay for bullion differently. Relative to spot price by percentage, what constitutes a good deal for, say, a ten ounce purchase compared to a 100 ounce purchase?
Perhaps I was just had a lucky run, but for a few weeks there I was picking off small lots on eBay for 10% under spot, so I thought I was doing quite well. Those deals have dried up, and now every auction seems to go higher. Too many idiots with too much money on eBay, although I don't mind when I'm selling!
<< <i>Let me phrase my question about what to pay for bullion differently. Relative to spot price by percentage, what constitutes a good deal for, say, a ten ounce purchase compared to a 100 ounce purchase? >>
I'm a bit removed from the retail pricing structure these days. If it weren't evening, I could make a call or two and find out exactly the going rate with a few different dealers.
My experience is that 50 cents over spot on 10 ounce bars is about retail. 100 ounce bars all depends on your connections.
I'd never pay that, but it seems a lot of people do.
"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 hope so. If silver drops back down I will start buying as much as I can lay my greedy hands on.
$0.50 per ounce over is retail? OUCH. I think then that eBay is not necessarily a bad deal, if one has time to watch many, many auctions. I have yet to pay over spot for anything, even factoring in shipping. Sample size is small--I've got a whopping 48 ounces in the safe at this point, but that's about six aucitons over two months.
Bars seems to be going for really high premiums on eBay last I checked, but then again, someone just paid me $400 for my old Legos. Hmmm....bucket of plastic, or 40 ounces of silver. I think I made the right choice.
I will have to look around for a dealer, but I am out pretty far from anything like a city.
<< <i><< Let's put it another way - I need a new car. I can wait another year, or get it this summer. I have 30 ounces of bullion. Would I be better off spending those 30 ounces now, or next year? >>
Nobody needs a NEW car. You do need transportation.
Sell now and you'll regret it for a long time, a very long time.
Five years from now, I wouldn't be at all surprised to see gold at $5,000.00 an ounce. >>
This is getting closer to my real question. No, I do not need a new car. I can keep putting money in this honda of mine - and it will last quite a while, I'm sure.
My questions is, is there a point when you would look to sell. With hindsight, selling at $800 25 years ago was the right move. What will be the peak in this cycle? I know it is only a estimate - but what is the feeling? I am not counting on armageddon and the end of the US Dollar. I do believe we are headed lower - perhaps to a real depression point - but the dollar will bottom and gold will peak for this cycle in dollar terms. Any guesses on what level will be?
Guru "JS" has listed $1650 as the high (and for what it's worth he called the top in 1980, and has hit most every call dead on since the market took off in 2002). I'd put my money on him. A number of others are stating $2000+. I don't know of too many that think this will stop short of the previous high........though I did run into a collector at last Sunday's show that said silver will never make $15 and gold will never get close to $875. I wonder if he's willing to put up $500 on that wager? Must be a disciple of fiat money.
An interesting article by Chris Laird today on one of the links below. He states that at some point gold will no longer continue to go up in price. The reason is that it will get so scarce that it will cease to trade at all as no one would be willing to give up what they have, at any price. Interesting concept. At that point it's down to guns and butter.
Who knows for sure? We might see that $625 gold by late spring. Certainly cashing out of silver now at $12 when you may have entered it at $6-9 would be rather inviting...then buy back on the next hard dip. Many were fooled by the last "drop" in silver to $9...and it came right back.
Many analysts seem to think Gold to hit $800 in the next couple years, and I do too. I would also think that if gold continues to climb, silver will go along with it. I am also hearing $15 dollar ounce silver is right around the corner. I am waiting for a good dip on both and continue to buy. I will say I have been waiting quite some time for this dip and been buying here and there. All the while I have been collecting copper at face value (pre '82 cents) as it comes in. This is another PM that will continue new highs down the road IMO.
I think $15 silver is a given. It's after the ETF is set up and we settle down for a bit that we see where this is all headed. It's also possible that we won't settle down and just keep right on going up to $22.00 which is a figure I've heard bantered about from a few different directions.
World politics is going to dictate things for us in the fairly near future.
I see a steady climb with few large dips for a few years at the least. World production is going to begin to fall due to the fact that there simply isn't anymore without extreme mining techniques. How far are we away from that? Combine that and the realization that paper is plentiful and five years from now could become a whole new world in metals/real value.
Read something a while back on the Daily Reckoning, can't remember the author or the article, but $5,000.00 gold was mentioned as a serious possiblity.
Even with today's world economy, I see Gold at $2200.00 in three years. Silver??? Now that's the wild card. Always has been, it seems. I hesitate to guess anymore, but I think we've just begun the Bull run. The last few years were just a warm up.
"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
Either way it doesn't matter to me, because I invest both Long or Short.
But I suggest there will be a political change in Washington in late 2006 and for certain in 2008. Will the new American politicians be friendly towards the outsiders? Will world tensions be reduced as America's new policy is to get along with everyone?
Reduced tensions might affect the prices of metals.
<< <i>An interesting article by Chris Laird today on one of the links below. He states that at some point gold will no longer continue to go up in price. The reason is that it will get so scarce that it will cease to trade at all as no one would be willing to give up what they have, at any price. Interesting concept. At that point it's down to guns and butter. >>
This is a similar argument to what my old economics professors told my class when I was in college. The question was when would we run out of oil? The answer was "never" since as supply dwindled, prices would increase to the point that people would stop using it.
The point in that article is more doomsday - pointing to a complete economic collapse worldwide. Someday that will certainly happen, but who knows when. I have a friend of mine who is 81, and has been waiting for the collapse of the dollar for 40 years. He has quite a stockpile of gold and silver, and lives a rather austere life. Even if the economy does completely collapse in his lifetime (I doubt it, given his age), he saved an awful lot for his heirs - and did not enjoy much of anything of the fruits of his work.
Thanks for the price target roadrunner. That was what I was looking for - some idea of where this cycle would go. I wonder with all these metal/hard medal bugs here - do you ever intend on selling?
<< <i> I wonder with all these metal/hard medal bugs here - do you ever intend on selling?
Greg >>
Of course, I sell all the time. I buy on the dips and sell on the jumps. In the process I add to my income and I add to the hoard. I do it all the time. There are cycles that are somewhat predictable and there are quick drops as well as quick viagra moments that aren't as predictable but can still be taken advantage of.
After awhile, you sometimes just get a gut feeling and you learn when to trust it and when to stay on the sidelines and observe.
If you mean intend on selling everything...........absolutely. I imagine that I will still keep my very first 100 ounce bar, it's been a paperweight and a motivator on my desk for a long time and I'll probably keep a few ounces of gold, just a rainy day fund. I could sell now and reap a huge profit as I've done in the past, but for now I'm going to ride this bull. You can't take it with you and I intend on retiring early. Very early by some people's standards. The accumulation of the hoard will make that possible much sooner than I would otherwise be able to do.
There is still a lot of profit to be made in precious metals, to think otherwise is to ignore a great opportunity.
"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'm getting more and more convinced that we will have a currency devaluation (with compensating "adjustments") just to modify the size of the debt. Iran should provide the last straw.
"My fellow pet goats....I mean Americans.....9/11 is bad....real bad.....awful bad....and we stand against badness as bad as it gets and to get all of the badness gone, I am gonna attack bad Iran. Thank you and good night or is it still light out?"
Like Deadhorse, I sell all the time. But it's getting very hard to time any of the moves since we broke over $475. I shy away from bullion though and mainly play with generic gold since it closely mirrors the gold price only with leverage, and less downside on the smaller denominations. If one just holds on, there's a good chance you will miss the entire move and sell on the way down from the final peak. I've taken the stance to keep at least a 60-70% core holding and trade on the rest. It is very easy to mistime a move and be out of the market way too long if you are a "sell everything type." Imagine making 10% on a move and then watching it go up another 30% before you could buy back in from the dip.
Mining stocks and the XAU have failed to hit new highs with this latest run in the metals. You will be waiting quite a while for $15.
While that's true, physical gold is in your hand and real. Even paper gold stocks are nothing but paper. You're betting on what's really in the ground and hoping others buy into the speculation. Many if not most gold miners are leveraged with derivatives....a holdover from the gold carry trade of the 1990's. Hence they bet against their own production. Barrick is a classic example. This no doubt has many buyers sort of shying away. The right gold companies will suceed while the wrong ones will be swallowed up or left to die. I'm not surprised that physical gold is often leading the charge considering all the paper manipulation going on. The ETF's are sort of nutty imo. There may not be enough gold or silver to cover their paper contracts when it comes time to cash you out. No thanks. Make mine physical.
Roadrunner, whassa matta? You no think China an India want gold STOCKS? You saying they maybe primitive and want spend money on gold in their hand? Ah so.
I'm not surprised that physical gold is often leading the charge considering all the paper manipulation going on. The ETF's are sort of nutty imo. There may not be enough gold or silver to cover their paper contracts when it comes time to cash you out. No thanks
Interesting. This is exactly the opposite of what I am saying. My take is that gold stocks lead the metal. The gold stocks topped out about 2-3 months ago, which I believe is the usual lead time. The mining co's telegraphed that the metal would hit highs, IMO they are now saying the metal have probably hit a top, perhaps a short term one, perhaps not. Only time knows for sure.
The right gold companies will suceed while the wrong ones will be swallowed up or left to die.
If they didnt whither away when gold was 250 and silver was 4, I doubt they will fail now.
Roadrunner, while I believe we are not on the same page regarding the metals, we are on the same chapter. We each choose to take advantage of the situation differently. I have learned long ago, as I believe you have, that investments are not to fall in love with. They are just for dating.
How in the world can anyone buy these paper investments when the lies and deceit are built right into the accounting formulas? Our stock markets are in for a major hit when all these rules are finally changed. Finally at least one is being changed.
When the SEC and accounting guys finally make companies add their pension, medical, stock options, etc. liabilities. to the balance sheet as they should, look out!
The attached article below is just the tip of this very large liability iceberg.
Pension Rule May Wipe Out Equity Accounting Change Moves Costs Onto Balance Sheets
By Albert B. Crenshaw Washington Post Staff Writer Thursday, April 13, 2006; Page D01
Pending changes in the way corporations are required to account for the costs of their pension plans would have wiped out more than $220 billion in shareholder equity at the nation's largest companies and reduced the "net worth" of some them, including General Motors Corp., to less than zero had they been in effect last December, according to a study released yesterday.
The rules, promulgated recently by the Financial Accounting Standards Board, a private group that sets the standards for financial statements by public companies, are designed to provide more clarity about a company's true assets and liabilities. The goal is to make "basic financial statements more complete, useful, and transparent," George Batavick, a FASB member, said last month.
Until this year, most pension figures were carried in footnotes to financial statements and brought onto the actual statement only over time. The new rules will require companies to compute their plans' net funded status -- assets minus liabilities -- at year-end and include that figure on the balance sheet.
This will cause "a significant hit" to shareholder equity of many companies, Milliman's John W. Ehrhardt said. It will hit not only companies with underfunded pension plans but will also reduce shareholder equity at a number of companies whose plans are in surplus. This is because it will require companies to move certain costs that have been reported in footnotes onto the balance sheet.
For example, GM, whose pensions showed a $4.6 billion deficit under current rules, would see its equity reduced by $31.6 billion, the study found. General Electric Co., despite a $2.9 billion pension surplus, would see a $10.3 billion reduction in equity.
There are some who lose their pensions, and there are some who don’t!
ABC NEWS April 14, 2006— Soaring gas prices are squeezing most Americans at the pump, but at least one man isn't complaining.
Last year, Exxon made the biggest profit of any company ever, $36 billion, and its retiring chairman appears to be reaping the benefits.
Exxon is giving Lee Raymond one of the most generous retirement packages in history, nearly $400 million. Last November, when he was still chairman of Exxon, Raymond told Congress that gas prices were high because of global supply and demand.
"We're all in this together, everywhere in the world," he testified.
Raymond, however, was confronted with caustic complaints about his compensation. "In 2004, Mr. Raymond’s bonus was over $3.6 million."
As China approaches a Trillion dollars in U.S. reserves, how much money is that really? Gee I wonder how many American companies China could buy for that? They should hit a Trillion by the end of the summer, unless they decide to by Gold instead?
BEIJING (AFX) - China's foreign exchange reserves at the end of March rose to 875.1 bln usd from 853.7 bln at the end of February, consolidating on the country's position as the world's largest reserves holder.
GS <<As China approaches a Trillion dollars in U.S. reserves, how much money is that really? Gee I wonder how many American companies China could buy for that? They should hit a Trillion by the end of the summer, unless they decide to by Gold instead?>>
They couldn't buy Union Oil. But you can be sure they have their eye on U.S. assets. The Japanese tried this with U.S. Golf Courses and Office Bldgs. about 20 years ago. Started with the highest quality assets. Cashed out a lot of U.S. ownership interests at TOP DOLLAR. About 10 years later with the Japanese economy in the toilet....the assets were resold back to U.S. buyers for dimes on the dollar. Sort of like an involuntary repatriation of those off shore dollars.
There are a number of gold miners out there that are leveraged deep enough that as gold continues to move upwards, they will be owned by whomever owns their derivatives note.
$15 silver is within sight (<1 yr.). A slam-dunk if you ask me.
There have been so many gold cycles who can keep it straight as to who came first (stocks before physical or the chicken and the egg?). Gold just went back up and the stocks rebounded with it. Chicken or egg? Why have the hedged gold stocks (much riskier) run in front of the unhedged funds for a number of cycles?? They shouldn't but (I have no clue either). I'm just in it for the long ride.
A lot of people are in for a big surprise...when they find there retirement is worth a fraction of what they thought it was...very sad for the people who built this Nation! Only day of Reckoning will be when the people find they have lost what they have spent their lives working for...only to gain pennies on a dollar in a court of law...Laws built for a few to screw the majority.
WASHINGTON (MarkewTatch) - Petrodollars have returned to the world stage, and could play a potentially destabilizing role in the U.S. and global trade imbalances, according to a new report from the International Monetary Fund released Thursday. Petrodollars, just as much a part of the 1970s as bell bottoms and platform shoes, are dollars paid to oil-producing countries and then re-invested in major financial markets. In the 1970s, these funds were deposited in big Western banks. This time around, it is more complicated. Petrodollars are being recycled through international capital markets and offshore accounts, partially because of the post 9/11 Patriot Act reporting requirements, the IMF said. But these investments have kept U.S. interest rates low, allowing the U.S. trade imbalance to persist, because there has been no pain from running large trade deficits. This only adding to the risk of an eventual sharp drop in the dollar, a spike in U.S. interest rates, and a recession, according to the IMF report. The report was one of the chapters of the IMF's World Economic Outlook released Thursday. See full story. "Global current account imbalances are likely to remain at elevated levels for longer than would otherwise have been the case, heightening the risk of a sudden disorderly adjustment," the IMF said in the report, the World Economic Outlook. And the U.S. has not had to adjust as much as it did in the past because inflation has remained subdued in face of high oil prices and petrodollars have kept interest rates low. The IMF estimates that capital inflows have depressed yields on government bonds by perhaps 3/4 of a percentage point. The IMF said that much of the $30 per barrel increase in oil prices since 2002 is likely to be permanent. The value of oil exports has more than doubles to nearly $800 billion in 2005. The higher fuel bill has accounted for one-half of the deterioration in the U.S. current account deficit over the last two years, the agency estimated. Another reason that current account imbalances will persist longer than in the 1970s because oil producers are not spending their money quickly. As a result, their current account surpluses will take more time to revert. The IMF said that oil-exporting countries should boost spending in education and infrastructure projects to have a permanent positive effect on their living standards. This would lower the surpluses. Oil consuming countries should not shield their citizens from paying the world oil prices, which would reduce oil consumption.
Is Bin Laden getting what he wished for! Is Sept. 11 really over! Seems like others around the world keep tabs better than we do on our Financial Business...wonder how they know it all...I think they are so heavily embedded inside our government at all strategic points...double agents you betcha....from the White House on down....then of course our financial business is pasted everywhere....they know our every move....wonder why our Government can't seem to put their fingers on it!
You take a poor government employee and wiggle a Million dollars in front of them...give them a so called off shore account and anything is possible....Oil rich nations...this could go on forever until they wise up and find the leaks. Lets say break the camels back!
Will these new bookkeeping rules rile the savage beast inside the American People...time will tell.
Metals are due for a correction...Yes. Mining stocks are sideways....yes. And just like 2000 these aren't normal times and chart readers are your biggest losers if someone take out the nukes in Iran in the next 3 weeks and spins everyone scrambling. I wouldn't bet the farm one way or another best hedge your bets here IMO.
The establishment financial writers may be as dumb as a bucket of hair, but they are finally beginning to see the light. Perhaps they should have been reading our posts on the PCGS forum over the last two years?
What U.S. Government Won't Reveal About Inflation: John Wasik April 17 (Bloomberg) --
If the full impact of consumer-price increases were accounted for, investors would have a lot more to worry about, and you should prepare for a threat that's much greater than Labor Department reports indicate.
The government has a vested interest in keeping official inflation measures low. Everything from Social Security cost-of- living increases to marginal tax rates is adjusted annually to this all-important gauge.
The total cost of what we are paying for big-ticket items is much higher than what's reflected in the CPI. Take housing costs, for example. The Bureau of Labor Statistics, or BLS, the U.S. Labor Department's agency that calculates the price index, estimates housing costs by figuring ``owners' equivalent rent,'' or a proxy of what homeowners would pay in average rent increases.
The CPI Lies
As the largest component of the CPI at 23 percent, housing represents a huge portion of the overall cost of living. Yet the Labor Department's indirect measure vastly underestimates actual housing costs since it doesn't reflect home-purchase prices, financing, maintenance or property taxes. Done any roofing, remodeling or painting lately? Have you noticed how much your property-tax bill has climbed to match higher home values?
Last year, health-insurance premiums alone climbed 9 percent, according to the Kaiser Family Foundation, a research organization based in Menlo Park, California. The 2005 increase ``is still more than three times the growth in workers' earnings and 2 1/2 times the rate of inflation,'' the foundation states. U.S. consumer prices rose 3.4 percent in 2005.
Paying for college? You would have seen an almost 6 percent increase in four-year private-college costs just for the 2005- 2006 year or a 7 percent climb in a public-school bill, according to the College Board, a research and testing firm in New York.
Then there's the continued wildcard of rising energy prices.
Crude oil is up about 12 percent this year. Reports this month that the U.S. is preparing an attack on Iran have helped push prices near $70 a barrel at a time when supplies are running short and world pumping capacity is peaking.
Traditional inflation bulwarks such as metals-mining stocks, bullion and rare coins offer some protection. The U.S. Treasury and most brokers sell TIPS, which are Treasury bonds that pay a premium based on the consumer inflation rate. You can also buy TIPS through Treasury auctions. I-Bonds are based on the same idea, only you can buy them at any bank in denominations from $50 to $10,000. The bonds accrue interest, which is paid when you redeem them.
Sure you can buy TIPs, but that premium is based on the bogus CPI to begin with.
The housing portion to the CPI was changed to imputed rent back in 1983. That was following the largest CPI we had seen on record. It's one of the reasons why we won't see (and the govt doesn't want to put out) a number that big again. But it won't mean that inflation is not just as big a problem. In the northeast, housing makes more like 40% of the CPI-urban consumer's index. Toss in durable goods (that don't change or go down in price), adjust for quality factors that massage the price of goods downwards based on questionable improvements, and you have about 50% of the CPI that is very resistant to any change. That's why some call it the constant price index. It only took the media 23 years to figure out that all home owners technically "rent" their homes as an input to the CPI?
Google "John Williams and CPI" for some very interesting reading.
Since TIPS are under discussion, let me take this opportunity to gripe about the tax code before heading out to mail my filing.
TIPS highlight what I feel is one of the most unfair aspects of the income tax code -- a wealth tax.
When you own a tip, there is a coupon payment (eg - 2 %), which is supposed to represent the real return on the investment. In addition, the principal increases each year to reflect inflation. (suppose, for example, this is 10 %). However, the annual taxes paid are based on the sum (2 + 10 %). Therefore, in a period of severe inflation, you could have negative cash flow due to taxes paid.
This is essentially consistent with the taxation of other fixed income obligations. (eg - a 5 year CD where interest accumulates, but is taxed based on the interest credited). However, it provides graphic illustration of the fact that we are being taxed on the part of our investment "return" that is merely keeping up wiith inflation. This is a wealth tax, not an income tax.
Wealth tax indeed. The average 3% inflation we have seen for decades is essentially a wealth conveyance program. While you may have assets that have gone up 6X-10X since 1980 for example, you get to pay taxes on the 4X portion that is due solely to inflation. Taxation and inflation - what a combo.
Even though the Dow saw a big move yesterday, I don’t see this as an upward trend. All the financial TV personalities had big smiles yesterdays, but will they be smiling by this time next week. Most analysts claimed this run up had to do with the Fed ready to ease, or some other nonsense.
My take is this; the current U.S. stock market is driven nearly completely by funds. Many U.S. companies changed their pensions funds to 401K’s etc. last year. Monday was the final day to unload money for their employees into those funds, and why put millions into funds until you have to? Tuesday the funds had to invest the money, so a nearly 200 point jump in the Dow.
Nothing really changed yesterday to make the market move except these inflow of retirement funds, oil is at all time highs, the dollar is weak, Gold and Silver are making new highs nearly every day and the Iran leaders are still off their meds, etc.
UT OOH, The public is getting in, at least in Canada! Here we go!
It's a gold rush TAVIA GRANT From Wednesday's Globe and Mail Don Carlson has worked at Albern Coins & Foreign Exchange Ltd. in Calgary for more than a decade and, with the small exception of some pre-millennium panic buying, he's never seen so many customers carting off silver bars and gold coins. “I've been in the business since 1991 and these are new highs for me, for both metals,” the general manager says.
He's not the only one surprised by the growing appetite. In Ottawa, silver demand at the Royal Canadian Mint tripled in the first quarter. Kitco.com, a global gold dealer based in Montreal, has hired 10 new salespeople to take calls, while another distributor, based in B.C., is busy shipping coins across the country.
It's not just exchange-traded funds or mining company shares that are popular. Canadians — and investors around the world — want the real, physical stuff.
In Calgary, Mr. Carlson is seeing huge interest from middle-aged and older people who have cash on hand and want to park it in gold and silver.
“We're seeing a lot of new faces,” he said. “It's basically cash-and-carry. People like to have it in their hands.” Like other dealers, Mr. Carlson says silver demand is particularly strong. Sales of 100-ounce silver bars are surging and, at $1,692 a pop, many customers are buying several bars at a time. Clearly, silver prices that have already surged 58 per cent this year aren't deterring clients. Coins are also selling at a steady clip, he said.
"UT OOH, The public is getting in, at least in Canada! Here we go!"
Yes, the rush is definitely on and it's like a boiling teapot, screaming louder and louder as the heat rises. Up $624 on kitco...wow. It should be like a stampede when this thing finally blasts off...ah, 1979 again. See, history does cycle. I think I will wait to sell till I see the boomers lined up in front of the pawn and coin stores again...with their silver services that their meemaw left them. This could really shake up the morgan market...melt away all those circs!
Well, we've been getting ready for this on this thread for about a year now so the believers are in good shape.
Comments
<< <i>Does anyone, perchance, foresee silver moving DOWN in the near term? I unfortunately had no money to invest when it was so low for so long.
I am not looking for quick profits, btw, but to hold long term. The 21st century will be the century of scarcity, so it is against the eventual depletion of above ground silver reserves and the permanent future imbalance between demand and limited production that I am looking at, but I still want to acquire as cheaply as possible.
Twelve dollars an ounce, historically low or no, pinches my small pocketbook, especially if a move lower is in the cards before the long ascent. It seems this run up is gaining momentum from psychological effects rather than scarcity. >>
There's no question that silver will move down sharply at some point, the question is when
and to what level. The current move is probably the result of the psychological change caused
by the continual imbalance between consumption and usage and with gold. It is triggered by
buying to support the ETF and the self fullfilling prophesy that this buying will create higher
prices.
While caution is advised it is also advisable to beware being out of this market. The gold/ silver
ratio could collapse far further with relatively little change in investor habit. While marked deter-
ioration in the world economy is unlikely to push silver higher an improvement in the economy
could push it to levels barely imaginable in the past.
Both metals are benefiting from a decrease in world currency values. It's difficult to get a good
handle on the magnitude of this loss but it could accelerate somewhat. Neither metal would do
well in a severe economic correction simply because there is no "intrinsic" value as there is in
more needful things. Gold would do better than silver is a garden variety recession and far bet-
ter in an inflationary recession.
I'm betting that the economy will continue expanding, inflation will increase, the dollar will fall rel-
ative other currencies and silver will outperform gold for at least a few more months.
<< <i>I'd like to have a few thousand ounces physically in my possesion without a paper trail (thanks eBay), by the time the real trouble starts. >>
First, you're paying too much if you are buying on eBay.
Second, what makes you think there is no paper trail?
Third, when you sell, there certainly will be and you're going to be held accountable for capital gains.
Fourth, take your chances if you want, but both the IRS and Homeland Security are looking closer and closer at all precious metals trades.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Your reference to 'no paper trail' is not valid.
EVERY piece of DATA from day 1 on ebay is retrievable. Just not by you or me unless you know the back door of DB2.
RJ
<< <i>First, you're paying too much if you are buying on eBay. >>
Please enlighten me then. I looked around and found nowhere to buy small lots ($10-$20 face) for less.
<< <i>Second, what makes you think there is no paper trail? >>
Not in any absolute sense. Only cash purchases from someone who doesn't know you leaves no trail. But I count on there being much bigger fish to fry, when it's time for frying. The guy buying little $10 face lots is going to get less or even no attention compared to the guy buying $1000 bags and filing an IRS form.
I shouldn't have said "no paper trail." More like low profile.
<< <i>Third, when you sell, there certainly will be and you're going to be held accountable for capital gains. >>
If conversion back to dollars is necessary, that would be true. Really these purchases are more of an insurance policy than an investment, for the case in which precious metals with known content might be used as currency.
But that's all hypotethical.
More importantly, please, if I've overlooked a way to buy cheap bullion, enlighten me. Until the last couple weeks, I have been able to pick up small lots on eBay, including shipping fees, for less than spot, sometimes a good bit less. Since the move past $11 though, the idiots have been bidding everything up over spot.
Also, what is the cheapest way for a poor guy like me to pick up some gold? Tenth ounce gold eagles? My investments for at least the next few months are going to have to be in hundreds, not thousands, and I already missed the real lows.
<< <i>Let's put it another way - I need a new car. I can wait another year, or get it this summer. I have 30 ounces of bullion. Would I be better off spending those 30 ounces now, or next year? >>
Nobody needs a NEW car. You do need transportation.
Sell now and you'll regret it for a long time, a very long time.
Five years from now, I wouldn't be at all surprised to see gold at $5,000.00 an ounce.
There simply isn't enough gold or silver to satisfy the world's needs and there isn't any way to produce enough for a long, long time. If ever.
What happened in '79-'80 was limited to 1st world countries and it was somewhat artificial, it was a smart play that actually worked. The Fed moved in and changed the rules after the fact. Illegally, I might add, or the Hunt brothers would have owned a large chunk of Wall Street and several major financial institutions.
This time it's world-wide and it's real.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Nobody needs a NEW car. You do need transportation. >>
Indeed.
A new car will lose what percentage of it's value the second you drive it off the lot?
How much will it be worth in five year?
Even if gold TANKS, 30 ounces would be worth more in five years than a 2006 Suburban that gets 8 miles a gallon.
Get a nice, used Toyota and put the savings in bullion.
<< <i>
<< <i>First, you're paying too much if you are buying on eBay. >>
Please enlighten me then. I looked around and found nowhere to buy small lots ($10-$20 face) for less.
<< <i>Second, what makes you think there is no paper trail? >>
Not in any absolute sense. Only cash purchases from someone who doesn't know you leaves no trail. But I count on there being much bigger fish to fry, when it's time for frying. The guy buying little $10 face lots is going to get less or even no attention compared to the guy buying $1000 bags and filing an IRS form.
I shouldn't have said "no paper trail." More like low profile.
<< <i>Third, when you sell, there certainly will be and you're going to be held accountable for capital gains. >>
If conversion back to dollars is necessary, that would be true. Really these purchases are more of an insurance policy than an investment, for the case in which precious metals with known content might be used as currency.
But that's all hypotethical.
More importantly, please, if I've overlooked a way to buy cheap bullion, enlighten me. Until the last couple weeks, I have been able to pick up small lots on eBay, including shipping fees, for less than spot, sometimes a good bit less. Since the move past $11 though, the idiots have been bidding everything up over spot.
Also, what is the cheapest way for a poor guy like me to pick up some gold? Tenth ounce gold eagles? My investments for at least the next few months are going to have to be in hundreds, not thousands, and I already missed the real lows. >>
It's been my experience that eBay tends to be quite high on silver bullion because there seem to be a lot of people with a)more money than brains, b)people with no other source, c)people who have gotten caught up in the hype.
There was a time when fairly good deals on the Bay could be had and I used to buy a few 100 ounce bars, but that was back when we were at $4 and $5 spot prices.
The smaller the amount of metal, the higher the mark up. I won't buy anything smaller than 100 ounce bars for that reason. Now, I will buy other sizes, provided that I can purchase it at the 100 ounce rate. Dealers will do that for you when they've got an oversupply.
Find a local dealer and create a relationship, save up to make larger purchases. People get ripped off on eBay all too often and then what does that do to your cost average?
When it comes to melt silver, I'll pay the going rate, but the higher silver goes, the greater the % back of spot it will bring. Something to keep in mind.
I still buy and trade melt silver for bullion on a regular basis.
It's still possible to pick off fractional gold on the Bay, best bet there is either Eagles or modern commems. Gotta search. I grabbed a 1/2 ounce proof gold Eagle in an NGC PR70 slab for around 10% under spot a few weeks ago. Of course the auction ended at 3AM pacific on a Wednesday. The seller shipped it, but he hasn't given me feedback after my positive. I suppose he wasn't too happy with the hammer price.
There's still time to get on the Silver Bullet, but like anythig else, it does take a few dollars to make a few dollars. I altered my lifestyle when I began putting away bullion. If I didn't absolutely need it, I didn't buy it. ALL extra monies went into bullion or numismatics that I knew I could flip for a profit.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>When it comes to melt silver, I'll pay the going rate, but the higher silver goes, the greater the % back of spot it will bring. Something to keep in mind. >>
This was certainly true in the past but may be much less true in the future. In '79/ '80 there was a lot of im-
mediacy to the demand for silver. Much of this demand was from jobbers and investors who owed it to
the Hunt cartel and they would accept only bars and US coin. There was a huge amount of silver flooding
into the market from stocks and public selling and the refineries were backed up for months. Most people
considered it highly risky to sit on large amounts of unsaleable silver bought at high prices. This was the
primary cause of the discount in all probability. The entire move lasted only about 7 months from $7 to $50.
It's unlikely any move to date will be brief. Even if the price collapse tomorrow it will most probably be back
to these levels in the near future barring a structural change in the supply. This should assure that future
premiums (at least at sustainable silver prices) are determined by refining costs rather than speculation.
<< <i>I altered my lifestyle when I began putting away bullion. If I didn't absolutely need it, I didn't buy it. ALL extra monies went into bullion or numismatics that I knew I could flip for a profit. >>
Sooner or later the realization comes that all consumer goods are worthless, un-resellable, just a way to take your money and give you something with no lasting value, that's just going to break or wear out in a year or two.
If things were made to last, it might be different, but that would mean less money for the people who decide whether or not thigss are made to last, wouldn't it?
I forget where I read it, but I couldn't put it better: our whole civilization is just a highly efficient system of turning wealth and natural resources into garbage.
Let me phrase my question about what to pay for bullion differently. Relative to spot price by percentage, what constitutes a good deal for, say, a ten ounce purchase compared to a 100 ounce purchase?
Perhaps I was just had a lucky run, but for a few weeks there I was picking off small lots on eBay for 10% under spot, so I thought I was doing quite well. Those deals have dried up, and now every auction seems to go higher. Too many idiots with too much money on eBay, although I don't mind when I'm selling!
<< <i>Let me phrase my question about what to pay for bullion differently. Relative to spot price by percentage, what constitutes a good deal for, say, a ten ounce purchase compared to a 100 ounce purchase? >>
I'm a bit removed from the retail pricing structure these days. If it weren't evening, I could make a call or two and find out exactly the going rate with a few different dealers.
My experience is that 50 cents over spot on 10 ounce bars is about retail. 100 ounce bars all depends on your connections.
I'd never pay that, but it seems a lot of people do.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
There are either a few lads who are going to make a nice piece of change or there is a bloodbath in the offing. Too far, too quick.
I'm on the sidelines at these levels.
<< <i>Too far, too quick. >>
I hope so. If silver drops back down I will start buying as much as I can lay my greedy hands on.
$0.50 per ounce over is retail? OUCH. I think then that eBay is not necessarily a bad deal, if one has time to watch many, many auctions. I have yet to pay over spot for anything, even factoring in shipping. Sample size is small--I've got a whopping 48 ounces in the safe at this point, but that's about six aucitons over two months.
Bars seems to be going for really high premiums on eBay last I checked, but then again, someone just paid me $400 for my old Legos. Hmmm....bucket of plastic, or 40 ounces of silver. I think I made the right choice.
I will have to look around for a dealer, but I am out pretty far from anything like a city.
<< <i><< Let's put it another way - I need a new car. I can wait another year, or get it this summer. I have 30 ounces of bullion. Would I be better off spending those 30 ounces now, or next year? >>
Nobody needs a NEW car. You do need transportation.
Sell now and you'll regret it for a long time, a very long time.
Five years from now, I wouldn't be at all surprised to see gold at $5,000.00 an ounce.
>>
This is getting closer to my real question. No, I do not need a new car. I can keep putting money in this honda of mine - and it will last quite a while, I'm sure.
My questions is, is there a point when you would look to sell. With hindsight, selling at $800 25 years ago was the right move. What will be the peak in this cycle? I know it is only a estimate - but what is the feeling?
I am not counting on armageddon and the end of the US Dollar. I do believe we are headed lower - perhaps to a real depression point - but the dollar will bottom and gold will peak for this cycle in dollar terms. Any guesses on what level will be?
An interesting article by Chris Laird today on one of the links below.
He states that at some point gold will no longer continue to go up in price. The reason is that it will get so scarce that it will cease to trade at all as no one would be willing to give up what they have, at any price. Interesting concept. At that point it's down to guns and butter.
roadrunner
Laird article
<< <i>any silver predictions from anyone willing to voice them?
Me thinks that since all of a sudden this thread is constantly on page 1 that the bulk of this run is over.
Knowledge is the enemy of fear
Certainly cashing out of silver now at $12 when you may have entered it at $6-9 would be rather inviting...then buy back on the next hard dip. Many were fooled by the last "drop" in silver to $9...and it came right back.
roadrunner
Freak
World politics is going to dictate things for us in the fairly near future.
I see a steady climb with few large dips for a few years at the least. World production is going to begin to fall due to the fact that there simply isn't anymore without extreme mining techniques. How far are we away from that? Combine that and the realization that paper is plentiful and five years from now could become a whole new world in metals/real value.
Read something a while back on the Daily Reckoning, can't remember the author or the article, but $5,000.00 gold was mentioned as a serious possiblity.
Even with today's world economy, I see Gold at $2200.00 in three years. Silver??? Now that's the wild card. Always has been, it seems. I hesitate to guess anymore, but I think we've just begun the Bull run. The last few years were just a warm up.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
RJ
Knowledge is the enemy of fear
Either way it doesn't matter to me, because I invest both Long or Short.
But I suggest there will be a political change in Washington in late 2006 and for certain in 2008. Will the new American politicians be friendly towards the outsiders? Will world tensions be reduced as America's new policy is to get along with everyone?
Reduced tensions might affect the prices of metals.
Maybe.
<< <i>An interesting article by Chris Laird today on one of the links below.
He states that at some point gold will no longer continue to go up in price. The reason is that it will get so scarce that it will cease to trade at all as no one would be willing to give up what they have, at any price. Interesting concept. At that point it's down to guns and butter. >>
This is a similar argument to what my old economics professors told my class when I was in college. The question was when would we run out of oil? The answer was "never" since as supply dwindled, prices would increase to the point that people would stop using it.
The point in that article is more doomsday - pointing to a complete economic collapse worldwide. Someday that will certainly happen, but who knows when. I have a friend of mine who is 81, and has been waiting for the collapse of the dollar for 40 years. He has quite a stockpile of gold and silver, and lives a rather austere life. Even if the economy does completely collapse in his lifetime (I doubt it, given his age), he saved an awful lot for his heirs - and did not enjoy much of anything of the fruits of his work.
Thanks for the price target roadrunner. That was what I was looking for - some idea of where this cycle would go.
I wonder with all these metal/hard medal bugs here - do you ever intend on selling?
Greg
<< <i> I wonder with all these metal/hard medal bugs here - do you ever intend on selling?
Greg >>
Of course, I sell all the time. I buy on the dips and sell on the jumps. In the process I add to my income and I add to the hoard. I do it all the time. There are cycles that are somewhat predictable and there are quick drops as well as quick viagra moments that aren't as predictable but can still be taken advantage of.
After awhile, you sometimes just get a gut feeling and you learn when to trust it and when to stay on the sidelines and observe.
If you mean intend on selling everything...........absolutely. I imagine that I will still keep my very first 100 ounce bar, it's been a paperweight and a motivator on my desk for a long time and I'll probably keep a few ounces of gold, just a rainy day fund. I could sell now and reap a huge profit as I've done in the past, but for now I'm going to ride this bull. You can't take it with you and I intend on retiring early. Very early by some people's standards. The accumulation of the hoard will make that possible much sooner than I would otherwise be able to do.
There is still a lot of profit to be made in precious metals, to think otherwise is to ignore a great opportunity.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Iran should provide the last straw.
"My fellow pet goats....I mean Americans.....9/11 is bad....real bad.....awful bad....and we stand against badness as bad as it gets and to get all of the badness gone, I am gonna attack bad Iran. Thank you and good night or is it still light out?"
Bushy wushy's new war story
Imagine making 10% on a move and then watching it go up another 30% before you could buy back in from the dip.
Mining stocks and the XAU have failed to hit new highs with this latest run in the metals. You will be waiting quite a while for $15.
While that's true, physical gold is in your hand and real. Even paper gold stocks are nothing but paper. You're betting on what's really in the ground and hoping others buy into the speculation. Many if not most gold miners are leveraged with derivatives....a holdover from the gold carry trade of the 1990's. Hence they bet against their own production. Barrick is a classic example. This no doubt has many buyers sort of shying away. The right gold companies will suceed while the wrong ones will be swallowed up or left to die.
I'm not surprised that physical gold is often leading the charge considering all the paper manipulation going on. The ETF's are sort of nutty imo. There may not be enough gold or silver to cover their paper contracts when it comes time to cash you out. No thanks.
Make mine physical.
roadrunner
Interesting. This is exactly the opposite of what I am saying. My take is that gold stocks lead the metal. The gold stocks topped out about 2-3 months ago, which I believe is the usual lead time. The mining co's telegraphed that the metal would hit highs, IMO they are now saying the metal have probably hit a top, perhaps a short term one, perhaps not. Only time knows for sure.
The right gold companies will suceed while the wrong ones will be swallowed up or left to die.
If they didnt whither away when gold was 250 and silver was 4, I doubt they will fail now.
Roadrunner, while I believe we are not on the same page regarding the metals, we are on the same chapter. We each choose to take advantage of the situation differently. I have learned long ago, as I believe you have, that investments are not to fall in love with. They are just for dating.
Knowledge is the enemy of fear
How in the world can anyone buy these paper investments when the lies and deceit are built right into the accounting formulas? Our stock markets are in for a major hit when all these rules are finally changed. Finally at least one is being changed.
When the SEC and accounting guys finally make companies add their pension, medical, stock options, etc. liabilities. to the balance sheet as they should, look out!
The attached article below is just the tip of this very large liability iceberg.
Pension Rule May Wipe Out Equity
Accounting Change Moves Costs Onto Balance Sheets
By Albert B. Crenshaw
Washington Post Staff Writer
Thursday, April 13, 2006; Page D01
Pending changes in the way corporations are required to account for the costs of their pension plans would have wiped out more than $220 billion in shareholder equity at the nation's largest companies and reduced the "net worth" of some them, including General Motors Corp., to less than zero had they been in effect last December, according to a study released yesterday.
The rules, promulgated recently by the Financial Accounting Standards Board, a private group that sets the standards for financial statements by public companies, are designed to provide more clarity about a company's true assets and liabilities. The goal is to make "basic financial statements more complete, useful, and transparent," George Batavick, a FASB member, said last month.
Until this year, most pension figures were carried in footnotes to financial statements and brought onto the actual statement only over time. The new rules will require companies to compute their plans' net funded status -- assets minus liabilities -- at year-end and include that figure on the balance sheet.
This will cause "a significant hit" to shareholder equity of many companies, Milliman's John W. Ehrhardt said. It will hit not only companies with underfunded pension plans but will also reduce shareholder equity at a number of companies whose plans are in surplus. This is because it will require companies to move certain costs that have been reported in footnotes onto the balance sheet.
For example, GM, whose pensions showed a $4.6 billion deficit under current rules, would see its equity reduced by $31.6 billion, the study found. General Electric Co., despite a $2.9 billion pension surplus, would see a $10.3 billion reduction in equity.
There are some who lose their pensions, and there are some who don’t!
ABC NEWS April 14, 2006— Soaring gas prices are squeezing most Americans at the pump, but at least one man isn't complaining.
Last year, Exxon made the biggest profit of any company ever, $36 billion, and its retiring chairman appears to be reaping the benefits.
Exxon is giving Lee Raymond one of the most generous retirement packages in history, nearly $400 million.
Last November, when he was still chairman of Exxon, Raymond told Congress that gas prices were high because of global supply and demand.
"We're all in this together, everywhere in the world," he testified.
Raymond, however, was confronted with caustic complaints about his compensation.
"In 2004, Mr. Raymond’s bonus was over $3.6 million."
Gee I wonder how many American companies China could buy for that? They should hit a Trillion by the end of the summer, unless they decide to by Gold instead?
Friday, April 14, 2006 6:28:43 AM
http://www.afxpress.com
BEIJING (AFX) - China's foreign exchange reserves at the end of March rose to 875.1 bln usd from 853.7 bln at the end of February, consolidating on the country's position as the world's largest reserves holder.
Knowledge is the enemy of fear
<<As China approaches a Trillion dollars in U.S. reserves, how much money is that really?
Gee I wonder how many American companies China could buy for that? They should hit a Trillion by the end of the summer, unless they decide to by Gold instead?>>
They couldn't buy Union Oil.
But you can be sure they have their eye on U.S. assets. The Japanese tried this with U.S. Golf Courses and Office Bldgs. about 20 years ago. Started with the highest quality assets. Cashed out a lot of U.S. ownership interests at TOP DOLLAR. About 10 years later with the Japanese economy in the toilet....the assets were resold back to U.S. buyers for dimes on the dollar. Sort of like an involuntary repatriation of those off shore dollars.
Sounds like a plan to me.
There are a number of gold miners out there that are leveraged deep enough that as gold continues to move upwards, they will be owned by whomever owns their derivatives note.
$15 silver is within sight (<1 yr.). A slam-dunk if you ask me.
There have been so many gold cycles who can keep it straight as to who came first (stocks before physical or the chicken and the egg?).
Gold just went back up and the stocks rebounded with it. Chicken or egg? Why have the hedged gold stocks (much riskier) run in front of the unhedged funds for a number of cycles?? They shouldn't but (I have no clue either). I'm just in it for the long ride.
roadrunner
Petrodollars, just as much a part of the 1970s as bell bottoms and platform shoes, are dollars paid to oil-producing countries and then re-invested in major financial markets.
In the 1970s, these funds were deposited in big Western banks. This time around, it is more complicated. Petrodollars are being recycled through international capital markets and offshore accounts, partially because of the post 9/11 Patriot Act reporting requirements, the IMF said.
But these investments have kept U.S. interest rates low, allowing the U.S. trade imbalance to persist, because there has been no pain from running large trade deficits.
This only adding to the risk of an eventual sharp drop in the dollar, a spike in U.S. interest rates, and a recession, according to the IMF report. The report was one of the chapters of the IMF's World Economic Outlook released Thursday. See full story.
"Global current account imbalances are likely to remain at elevated levels for longer than would otherwise have been the case, heightening the risk of a sudden disorderly adjustment," the IMF said in the report, the World Economic Outlook.
And the U.S. has not had to adjust as much as it did in the past because inflation has remained subdued in face of high oil prices and petrodollars have kept interest rates low.
The IMF estimates that capital inflows have depressed yields on government bonds by perhaps 3/4 of a percentage point.
The IMF said that much of the $30 per barrel increase in oil prices since 2002 is likely to be permanent. The value of oil exports has more than doubles to nearly $800 billion in 2005.
The higher fuel bill has accounted for one-half of the deterioration in the U.S. current account deficit over the last two years, the agency estimated.
Another reason that current account imbalances will persist longer than in the 1970s because oil producers are not spending their money quickly. As a result, their current account surpluses will take more time to revert.
The IMF said that oil-exporting countries should boost spending in education and infrastructure projects to have a permanent positive effect on their living standards. This would lower the surpluses.
Oil consuming countries should not shield their citizens from paying the world oil prices, which would reduce oil consumption.
Knowledge is the enemy of fear
You take a poor government employee and wiggle a Million dollars in front of them...give them a so called off shore account and anything is possible....Oil rich nations...this could go on forever until they wise up and find the leaks. Lets say break the camels back!
Will these new bookkeeping rules rile the savage beast inside the American People...time will tell.
The establishment financial writers may be as dumb as a bucket of hair, but they are finally beginning to see the light. Perhaps they should have been reading our posts on the PCGS forum over the last two years?
What U.S. Government Won't Reveal About Inflation: John Wasik
April 17 (Bloomberg) --
If the full impact of consumer-price increases were accounted for, investors would have a lot more to worry about, and you should prepare for a threat that's much greater than Labor Department reports indicate.
The government has a vested interest in keeping official inflation measures low. Everything from Social Security cost-of- living increases to marginal tax rates is adjusted annually to this all-important gauge.
The total cost of what we are paying for big-ticket items is much higher than what's reflected in the CPI.
Take housing costs, for example. The Bureau of Labor Statistics, or BLS, the U.S. Labor Department's agency that calculates the price index, estimates housing costs by figuring ``owners' equivalent rent,'' or a proxy of what homeowners would pay in average rent increases.
The CPI Lies
As the largest component of the CPI at 23 percent, housing represents a huge portion of the overall cost of living. Yet the Labor Department's indirect measure vastly underestimates actual housing costs since it doesn't reflect home-purchase prices, financing, maintenance or property taxes. Done any roofing, remodeling or painting lately? Have you noticed how much your property-tax bill has climbed to match higher home values?
Last year, health-insurance premiums alone climbed 9 percent, according to the Kaiser Family Foundation, a research organization based in Menlo Park, California. The 2005 increase ``is still more than three times the growth in workers' earnings and 2 1/2 times the rate of inflation,'' the foundation states. U.S. consumer prices rose 3.4 percent in 2005.
Paying for college? You would have seen an almost 6 percent increase in four-year private-college costs just for the 2005- 2006 year or a 7 percent climb in a public-school bill, according to the College Board, a research and testing firm in New York.
Then there's the continued wildcard of rising energy prices.
Crude oil is up about 12 percent this year. Reports this month that the U.S. is preparing an attack on Iran have helped push prices near $70 a barrel at a time when supplies are running short and world pumping capacity is peaking.
Traditional inflation bulwarks such as metals-mining stocks, bullion and rare coins offer some protection. The U.S. Treasury and most brokers sell TIPS, which are Treasury bonds that pay a premium based on the consumer inflation rate. You can also buy TIPS through Treasury auctions. I-Bonds are based on the same idea, only you can buy them at any bank in denominations from $50 to $10,000. The bonds accrue interest, which is paid when you redeem them.
Gold 605.70
Silver 13.24
<< <i>Anyone have access to a PDF of the IMF report? I'm curious to read, but it's not up on their web page. >>
I think it is this page...
IMF report
The housing portion to the CPI was changed to imputed rent back in 1983. That was following the largest CPI we had seen on record.
It's one of the reasons why we won't see (and the govt doesn't want to put out) a number that big again. But it won't mean that inflation is not just as big a problem. In the northeast, housing makes more like 40% of the CPI-urban consumer's index. Toss in durable goods (that don't change or go down in price), adjust for quality factors that massage the price of goods downwards based on questionable improvements, and you have about 50% of the CPI that is very resistant to any change. That's why some call it the constant price index. It only took the media 23 years to figure out that all home owners technically "rent" their homes as an input to the CPI?
Google "John Williams and CPI" for some very interesting reading.
previous post on CPI
TIPS highlight what I feel is one of the most unfair aspects of the income tax code -- a wealth tax.
When you own a tip, there is a coupon payment (eg - 2 %), which is supposed to represent the real return on the investment. In addition, the principal increases each year to reflect inflation. (suppose, for example, this is 10 %). However, the annual taxes paid are based on the sum (2 + 10 %). Therefore, in a period of severe inflation, you could have negative cash flow due to taxes paid.
This is essentially consistent with the taxation of other fixed income obligations. (eg - a 5 year CD where interest accumulates, but is taxed based on the interest credited). However, it provides graphic illustration of the fact that we are being taxed on the part of our investment "return" that is merely keeping up wiith inflation. This is a wealth tax, not an income tax.
Taxation and inflation - what a combo.
roadrunner
I didn't think it could happen this fast.
Even though the Dow saw a big move yesterday, I don’t see this as an upward trend. All the financial TV personalities had big smiles yesterdays, but will they be smiling by this time next week. Most analysts claimed this run up had to do with the Fed ready to ease, or some other nonsense.
My take is this; the current U.S. stock market is driven nearly completely by funds. Many U.S. companies changed their pensions funds to 401K’s etc. last year. Monday was the final day to unload money for their employees into those funds, and why put millions into funds until you have to? Tuesday the funds had to invest the money, so a nearly 200 point jump in the Dow.
Nothing really changed yesterday to make the market move except these inflow of retirement funds, oil is at all time highs, the dollar is weak, Gold and Silver are making new highs nearly every day and the Iran leaders are still off their meds, etc.
UT OOH, The public is getting in, at least in Canada! Here we go!
It's a gold rush
TAVIA GRANT
From Wednesday's Globe and Mail
Don Carlson has worked at Albern Coins & Foreign Exchange Ltd. in Calgary for more than a decade and, with the small exception of some pre-millennium panic buying, he's never seen so many customers carting off silver bars and gold coins.
“I've been in the business since 1991 and these are new highs for me, for both metals,” the general manager says.
He's not the only one surprised by the growing appetite. In Ottawa, silver demand at the Royal Canadian Mint tripled in the first quarter. Kitco.com, a global gold dealer based in Montreal, has hired 10 new salespeople to take calls, while another distributor, based in B.C., is busy shipping coins across the country.
It's not just exchange-traded funds or mining company shares that are popular. Canadians — and investors around the world — want the real, physical stuff.
In Calgary, Mr. Carlson is seeing huge interest from middle-aged and older people who have cash on hand and want to park it in gold and silver.
“We're seeing a lot of new faces,” he said. “It's basically cash-and-carry. People like to have it in their hands.”
Like other dealers, Mr. Carlson says silver demand is particularly strong. Sales of 100-ounce silver bars are surging and, at $1,692 a pop, many customers are buying several bars at a time. Clearly, silver prices that have already surged 58 per cent this year aren't deterring clients. Coins are also selling at a steady clip, he said.
Yes, the rush is definitely on and it's like a boiling teapot, screaming louder and louder as the heat rises. Up $624 on kitco...wow. It should be like a stampede when this thing finally blasts off...ah, 1979 again. See, history does cycle. I think I will wait to sell till I see the boomers lined up in front of the pawn and coin stores again...with their silver services that their meemaw left them. This could really shake up the morgan market...melt away all those circs!
Well, we've been getting ready for this on this thread for about a year now so the believers are in good shape.
Saul Goode