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jmski52

Aw, it's probably nothing...

Leverage is a good thing, right? As long as nobody wants delivery, it's all cool.

OPA

ok.. so what? How many transactions involve actual delivery? Inquiring minds want to know.

cohodk

<< <i>ok.. so what? How many transactions involve actual delivery? Inquiring minds want to know. >>




Right from the blog....But in fact there is so little actual physical delivery activity taking place there anymore,

jmski52

I could drive a truck through the opening you guys gave me. Let me clarify - it's no biggie until some of their clients actually **want delivery**.

It's been documented recently that Comex inventories have dropped and that JPM's vault is almost empty. It's going somewhere. There was a court case not too long ago, I believe it was either JPM or Morgan Stanley, in which they were charging storage fees on silver that wasn't there and had been leased out, multiple times over. They lost the litigation, btw.

IMF has put gold in the top tier of collateral assets for a reason. At some point, the banks will run into the same problem as in 2008, only bigger and deeper. Libor spikes when they decide not to trust each other, and the big banks all know the real numbers so when another liquidity crunch happens they know not to take on more bets. It's only a matter of "when".

If you're happy with stock market returns paid for with $85 Billion a month in QE, my hat's off to ya, but it's not because you are picking viable businesses. It's because you're willing to trust the government to keep kiting the market. Fair enough, but I see no reason to play. It seems that 2008 taught few very people anything. Just remember, there are no accounting standards anymore and what's on the books can be fabricated without consequence - at least for now. At some point, they will hit a too-complicated glitch that can't be fixed, just like obamacare. Same phenomenon.

The system is not getting better. What we have now is mostly a shell. Believe what you want.

ricko

Hold hard gold..... Cheers, RickO

Baley

If you're happy with stock market returns paid for with $85 Billion a month in QE, my hat's off to ya, but it's not because you are picking viable businesses. It's because you're willing to trust the government to keep kiting the market. Fair enough, but I see no reason to play. It seems that 2008 taught few very people anything. Just remember, there are no accounting standards anymore and what's on the books can be fabricated without consequence

I'm happy with stock market returns that exceed returns on other assets. As far as the QE juicing the market, no argument, the liquidity has increased both ownership and confidence in stocks, and this has helped the averages go up. However I do [strongly] dispute the notion that the rising tide lifts all boats equally, since every single day, and every week and every month, all year long, many many stocks go down in value and some of them make new 52 week and all-time lows. How is this explained by those who think "there are no accounting standards anymore and what's on the books can be fabricated without consequence"? Obviously, someone who writes that has no concept of accounting, auditing, or SarbOx compliance.

Baley

And as far as "taking delivery" of metals, there is no real money to be made in owning and storing metals, only in the buying and selling of metals, either physical or paper.

Metals being held produce no earnings or income, except for those who receive fees for storage, security, shipping, insurance, etc. etc. The profit is in the selling for more than purchase price

On the contrary, holding physical introduces certain risks: market value risk (the only value metals have is "market" value", risk of loss to theft or disaster, and opportunity cost risk.

jmski52

I do [strongly] dispute the notion that the rising tide lifts all boats equally, since every single day, and every week and every month, all year long

I never said anything to that effect. In fact, all assets vary in their returns all the time.

"there are no accounting standards anymore and what's on the books can be fabricated without consequence"?

Explain why Sarbanes-Oxley doesn't apply to the banking industry with respect to valuations of the financial derivatives on their books at full valuations instead of market valuations, and why FASB decided to trash their standards in order to run interference for the banks. There are no longer any meaningful financial accounting standards for the big banks, simple as that. Yeah, if you're in the private sector, Sarbanes-Oxley requires that you watch your backside, that much is true. Different standards, depending on who you are.

Obviously, someone who writes that has no concept of accounting, auditing, or SarbOx compliance.

More experience than I'd care to have, only about 40 years in business and an MBA in finance, lol. I was around when they were just getting started with programmed trading based on the Black-Scholes option pricing model, and there's no doubt that it's been perfected. You don't have to be too smart to know what's going on, Baley. If you feel comfortable in the market, have at it.

as far as "taking delivery" of metals, there is no real money to be made in owning and storing metals, only in the buying and selling of metals, either physical or paper.

Metals being held produce no earnings or income, except for those who receive fees for storage, security, shipping, insurance, etc. etc. The profit is in the selling for more than purchase price

On the contrary, holding physical introduces certain risks: market value risk (the only value metals have is "market" value", risk of loss to theft or disaster, and opportunity cost risk.

A couple of quick points - there's plenty of money to be made if your timing is good and you don't get too greedy; most people buying physical metals aren't buying them for earnings or income - and every investment has its own risks. Nothing new there.

Now, let's talk about the currency. Subject to manipulation and abuse by politicians and bankers. Subject to sovereign default risk. Subject to fraud and electronic theft. Ignore the high frequency trading games and the fact that most trading isn't done by individuals or even humans anymore. You can beat the market. No problem, right?

Baley

Right!

jmski52

You're a better man than I am, Gunga Din.

johnny9434

<< <i>Hold hard gold..... Cheers, RickO >>

yes, let few know.

mhammerman

"Hold hard gold..... Cheers, RickO
yes, let few know"

Me thinks that gold ownership is nearly the very last thing that J6P or anyone else is thinking about so not to worry about a lot of competition in the market. I have noticed that the hotel gold buying full page ads are in the paper again, after being absent for a few months. The reality of half of the country dependent on gov checks severely limits the opportunity for that half to invest...I just don't see folk trading ebt bennies and snap cards for gold.

We on this forum live in a rarified atmosphere where we still have the ability to invest, to save, and to stack (yeah) but most (more than 1/2 the pop) do not have that as an option. Maybe there are the 20% above the bottom half that have a little discretionary funds but it is very unlikely that that money is going into ASE's or 1/10 oz AGE's. Point being, be glad that we have this privilege, most don't and won't have investing in metal as an option.

Reminds me of the strategy of folk letting the metal heat up and get in the headlines before folk run out and stand in line and plunk down the cash to be an owner. The time to get metal is when it's quiet and no one is looking or paying attention, like now, like China.

Now for the OP...yeah, as long as no body wants delivery, it doesn't matter if it's leveraged at 1000:1. This is all good until some gov or investment house realizes that there is insufficient physical metal around for dealing and settling accounts, just paper metal. Once that happens then the fecal matter will impact upon the oscillating wind generator. It should be very interesting from a stacker point of view.

Oops, forgot to add this...

Hey buddy, can you spare an ASE?

Baley

If somebody stands for physical delivery in a large way, for the big bars, or many people together want to take possession of the physical metal in the smaller "collector" bar format, prices will indeed spike in a very exciting way.

And then thousands of ounces will be offerred by folks saying, "here, buy mine!" and the price of physical will crash again once all that gets melted up and made into new bars and coins.

please please let that happen, I'd be thrilled with $2000 an ounce for all my junk gold, and when the numismatic component starts to be overcome, at $3000 or more an ounce, the "nice gold" goes too..

It's exactly what we gold bugs have been waiting for all these years, and many of them are too old to see one more giant gold mania before they cash in their chips, literally and figuratively,
they won't miss the opportunity next time the market goes nuts

jmski52

Baley, I suspect that you'll never sell all of your "nice" gold, just like I keep thinking that I should sell my Large Cents and buy farmland. Yeah, right.