Comment on PM prices I herd from a customer today

jdimmick

Thought I post this for commentary, some of the customers who come in are really strange, but one guy today had this thought:

He said that I should not open on dec 22 and for several days after due to market pricing of PM's after 12-21-12. He said that there have been a lot of people that have been buying up PM's especially silver in anticipation of problems arising from 12-21-12. Knowing that I buy PM's and more importantly scrap gold tight, i would get hung after a sizeable drop in price from the countless number of people unloading silver and gold on the 22 and after, once they realize the 12-21-12 things is mearly a thing of the past with no changes in our daily lives after a non event.

Actually , it was quite intresting to listen to him, although he seemed a little far fetched.
IMO, I could see a sizeable price adjustment in PM's either up or down from the tax rate changes from the cliff and "subsuquent sell off or buy into" of the stock market more than this thing causing any issues.

jmski52

I agree with you that it's very hard to call the market right now. It's possible that the higher tax burden will put enough of an additional drag on the economy that PMs will be less affordable in the US next year. It's also possible that the US bond market could convulse and a gold buying panic could ensue as more free money is created for the banks and the debt load continues to accelerate.

derryb

I suspect there will be a lot of cash on the sidelines between now and Dec. 31 from locking in capital gains profits on a multitude of investments at the 2012 tax rate. It will be interesting to see if sellers of non-PM assets use the opportunity to reinvest their money in PMs. There are definite capital gains tax advantages to selling this year even if one were to turn around and put the money right back into what was sold - one could lock in a lower tax rate on current profits and at the same time set a higher cost basis for future profits.

jmski52

There are definite capital gains tax advantages to selling this year even if one were to turn around and put the money right back into what was sold - one could lock in a lower tax rate on current profits and at the same time set a higher cost basis for future profits.

There is a point of diminishing returns in doing that type of trading. Basically, in return for a lower capital gains tax in 2012 you end up with a higher basis but less of the real stuff (should that ever become relevant.)

derryb

<< <i>There are definite capital gains tax advantages to selling this year even if one were to turn around and put the money right back into what was sold - one could lock in a lower tax rate on current profits and at the same time set a higher cost basis for future profits.

There is a point of diminishing returns in doing that type of trading. Basically, in return for a lower capital gains tax in 2012 you end up with a higher basis but less of the real stuff (should that ever become relevant.) >>



unless prices climb between selling and re-buying, you end up with the same dollar amount invested. The advantage being you paid less taxes by selling this year. When it comes time to pay taxes again you are working with a higher cost basis which, on paper, reduces your next amount of profit. In the long run you see the same profit on the overall investment, but paid less taxes on what you cashed in before 2013. Many investors will be doing this between now and 2013 which will drive prices down in a lot of asset classes. If using this stratagy there is no rush to re-purchase, just catch the bottom. The Dec. 31 deadline only affects taxes on sales, not purchases. This could cause the bottom to extend into 2013. Those that sell earlier at higher prices before the rush to exit by Dec. 31, should actually be able to purchase more of the real stuff at lower prices.

This is more about tax planning (taking advantage of lower tax rates before they disappear) than it is a trading stratagy.

jmski52

This is more about tax planning (taking advantage of lower tax rates before they disappear) than it is a trading stratagy.

True enough. Tax planning is about to become more and more important. Excel is your friend.

CaptHenway

There was some very slight reason to buy metals for Y2K, in case civilization collapsed after all the computers exploded.

The Mayan nonsense says that the world is going to end. What possible use would metals be after that?

cladking

The Mayans probably didn't believe the world would end on the solstice; only the calender. It appears
it might not have been only the Mayans but numerous more ancient cultures. It's the age of Aquarius that
begins on the 22nd and it might not be so wise to assume nothing will happen.

My guess though, is that it will be some time before people realize that there was a change if there is one.

He might have a point about metals dropping but i wouldn't expect a large movement.

Coins101

Very true cladking. Only their calendar is ending,not the world. It is similar to our calendar ending on December 31. It has ended before and the new calendar will end again. It just covers a longer period than ours because it is based on the galaxy rather than our solar system (Earth revolving around the sun). Anyway, that is how several Mayans explained it to me when I was down in the Yucatan last February. In fact, they found a lot of humor in the people thinking the world was coming to an end.

derryb

Maybe the Myans were planning on their own demise.

PerryHall

How can any sane person think that some group of people can predict the exact date the world ends when they weren't smart enough to even invent the wheel? unbelievable.

Coins101

<< <i>Maybe the Myans were planning on their own demise. >>



Their civilization crashed the same way our will. Their population grew to a point that a natural disaster destroyed most of it due to a food shortage. Then the Spanish showed up thinking their temples were made of gold when in reality it just appears that way from sea due to the gold color cast by black obsidian used on their temples when view at a certain angle. The Spanish slaughter the majority of the remaining Mayans trying to get them to tell them where they hid the gold!

It is interesting that in the past, when their calendar ended, they destroyed all their possessions and started over. Well, the lower class did anyway. Not sure about the warrior or ruling class.

streeter

Prediction is very difficult, especially if it's about the future.

Coins101

Apparently they predicated or calculated the following:

"The fourth important astronomical event is a galactic alignment (sun-galaxy); on 21 December 2012 we will witness the conjunction, of the solsticial sun with the center of the Dark Rift of the Milky Way Galaxy . This is also a long term event. It takes the solsticial sun over 100 years to transist the Dark Rift of the Milky Way. "

Either that or it was just a stab in the dark!!!!!

miklia

well, Y2K was a much, much bigger freakout than dec 21. the financial sector took it pretty seriously. here's what happened then:



and then:



If there is a play, maybe buy some weekly calls on thurs the 20th, switch to puts at close on the 21st...otherwise, not that much action will probably happen...

roadrunner

The Mayan calendar end day fits nicely between a pair of options expiration weeks for December. So the next two weeks is already predisposed towards metal weakness.
So if that occurs, it certainly isn't Mayan related....imo. The Fiscal Cliff last day to make a deal day is also 12/21. Factor that in as well as it's a bigger player than a calendar.

agentjim007

If the deal is large enough to cause you a problem if there is a significant drop call your buyer and lock in a deal before your seller walks away from the counter. In other words have it sold before you buy.

fishcooker

The diseases brought by the Europeans killed probably 98% of those who died.

PerryHall

<< <i>The diseases brought by the Europeans killed probably 98% of those who died. >>



Can you provide a source for this number?