When I'm working, or just chilling this forum gives me some mental stimulation.

jmski52

I tend to drop in here when I'm taking a break from project work, and sometimes when I just need to unwind.

I know that I hold pretty concrete views about money, economics, Fed policy and how to invest in precious metals.

I just want to say that I do appreciate the various points of view here, even when I strongly disagree with someone who is obviously misguided.

Y'all make me think sometimes.

I'm just sayin. Thanks.

renman95

Iz all goood comrade.

Julio

Take care. jws

ricko

While one may or may not take action due to information posted here, it is always interesting and thought provoking - given the divergent views which are often substantiated. Cheers, RickO

cohodk

I dont see much of differing views, but rather of fervency of belief and intensity of emotions.

While we all like PMs, we place different values on the assets class. Some of us even change that view depending on relative valuation measures.

derryb

<< <i>I dont see much of differing views, but rather of fervency of belief and intensity of emotions.

While we all like PMs, we place different values on the assets class. Some of us even change that view depending on relative valuation measures. >>


Asset class values are in a mode of constant change. The ability/inability of each of us to adapt to this change is what sets us apart.

There are two different forum camps on the "manipulation" of metal futures prices which seems to usually involve "tin foil" accusations. I personally believe there has been substantiated evidence of this manipulation. Even without evidence, common sense (considering the admitted manipulation in other markets) should prevail. I don't have a problem with others disagreeing - I do have a problem with using the "conspiracy nut" defense to promote their view. Sorta reminds me of how politicians try to discredit those they disagree with.

cohodk

To me, when people start using the manipulation or conspiracy argument, it is to vindicate ones reasons on why their analysis didnt quite pan out. Kinda like, "I know im right goddmm it, there obviously is something nefarious at play because I am right!!!!" Its a very arrogant stance to take. Acceptance of humility creates clarity.

MGLICKER

<< <i>To me, when people start using the manipulation or conspiracy argument, it is to vindicate ones reasons on why their analysis didnt quite pan out. Kinda like, "I know im right goddmm it, there obviously is something nefarious at play because I am right!!!!" Its a very arrogant stance to take. Acceptance of humility creates clarity. >>



How are you defining manipulation/conspiracy Cohodk? Bernanke clearly stated that his strategy in keeping short rates at zero was to drive investors to riskier assets. Does that count or not?

cohodk

Bernanke clearly stated that his strategy in keeping short rates at zero was to drive investors to riskier assets.

Care to site a source where is was quoted? Regardless, im not sure what "riskier assets" means. Real estate dropped 30-50%, equities dropped 30-50% and PMs have dropped 30-50%. What is "riskier"? Plot a chart of real estate, equities and PMs over the last 100 years...you will see that all move from the lower left to upper right.


For a forum that despises Bernanke, ya'll give him a lot of credit. The markets control rates, not Bernanke. If the markets wanted higher rates it would have them. Blaming Bernanke for PMs collapse (drive investors to riskier assets) is exactly what the mindset that I am talking about.

MGLICKER

<< <i>For a forum that despises Bernanke, ya'll give him a lot of credit. The markets control rates, not Bernanke. >>



Ok, that is a good start.

What about influence from Bernanke and now Yellen with their bosses, the banking system.

Remember the private meeting that the President had with 19 bankers a bit over a year ago, they weren't discussing their collective golf games I do not believe.

jmski52

To me, when people start using the manipulation or conspiracy argument, it is to vindicate ones reasons on why their analysis didnt quite pan out. Kinda like, "I know im right goddmm it, there obviously is something nefarious at play because I am right!!!!" Its a very arrogant stance to take. Acceptance of humility creates clarity.

If anything, common sense dictates that large amounts of QE should support rising metals prices as much as it supports higher stock prices. Clearly that hasn't happened thus far. It did at first, but then something in the market psychology changed. The only conclusion I can draw from this result is that the metals and stocks aren't reacting to the same economic variables, and that QE somehow isn't seen as being inflationary to precious metals like it has in the past.

I don't think that manipulation is "holding down" the price of metals, but I do think it is being used to divert attention away from monetary policy by attacking the metals markets selectively and it is being done anonymously without having any need for the main players to hold any ownership positions that have counterparty risk. You can subscribe to these opinions or not, but either way they are just opinions.

I hold metals as a way of accumulating savings that have no counterparty risk. I consider the amount of debt and leverage that exist in bonds and in the banking system to be a major threat to my finances, and in my estimation there is no reason for me to be a part of it, to the extent that I can step aside. I don't pretend to know what's really going on, and if I did perhaps I'd be investing differently.

Humbly, jmski.

derryb

Markets are manipulated in only one of two ways: manipulation of the supply of the product (such as more paper than physical) or manipulation of the demand for the product (such as contolling the supply of money available to purchase the product). Supply and demand can be manipulated by many different, creative ways including false information and bogus data. When two or more people conspire to do anything prohibited by law or regulation, you have a conspiracy - this is the definition of conspiracy. A savy manufacturer can manipulate the ultimate price of its products by controlling the supply that hits the market or by increasing demand through advertising and promotion. Note that manipulation of price is not a conspiracy unless prohibited by law or regulation such as false advertising. For example, fderal price fixing law prohibits two or more bullion dealers from agreeing to set a minimum price on the bullion they sell.

Of course the futures market is being used to keep PM prices down just as QE and ZIRP are being used to keep stock prices up. Market control is the purpose of all economic policy set by the Federal Reserve System's Federal Open Market Committee. The Federal Reserve Bank creates and enforces the tools deemed necessary to carry out FOMC guidance.

cohodk

It did at first, but then something in the market psychology changed

This is where I disagree. Psychology did not change, but price did. PMs got ahead of themselves, thats all. No manipulation, no conspiracy. Just high prices being cured. As much as we like to think the stock market is way too high, remember it is only up 25% over the last 15 years. The stock market had gotten very cheap compared to gold, just as gold had gotten very cheap compared to stocks in the late 90's.




Of course the futures market is being used to keep PM prices down just as QE and ZIRP are being used to keep stock prices up.

I do not subscribe to this line of thinking. Why say "of course"? Because you have no other explanation for why silver is less than 50% of where it was 3 years ago? Because you know you are right and the market is wrong? You (and I) will never be smarter than the markets. Dont even try. You can however separate your emotion from the markets' emotion. And this advantage you can utilize to become a better investor. PMs are not being "kept down". ZIRP helped companies to refinance debt allowing them to bolster their balance sheets and becoming more valuable. American companies are worth more today than 10 years ago and are not being "kept up".

Asset prices can change without a change in "fundamentals" if those prices are no longer a relative value to other assets. The only psychology change would be that of investors realizing this change in relative valuation.

derryb

Market physcology determines demand and ultimately price. A constantly changing market physcology is demonstrated by constant changes in price.

Silver is 50% less than it was three years ago because demand for silver futures contracts became less. Why that demand lessened is the area of debate. While American companies may be worth more than they were 10 years ago, does their P/E justify their current stock price? ZIRP is allowing many companies to buy back much of their own stock. This in itself creates equity demand.

While the purpose of the futures market is to maintain commodity (whether it be gold, sugar or coffee) price stability, the ability to do so provides an easy avenue for controlling prices of the final products produced from these commodities. Given the demand for silver or gold products over the last five years do you not believe prices would be much higher if there was no gold or silver futures exchange market that sets the base (spot) price? My point is that the price of PM products is being determined by big players (a lot of big banks and investment houses) who never even touch the metal. And since PMs compete with their much bigger ticket items, why not keep PM prices down if you have the ability to do so? While PMs are just a very small asset class, how big would they become if the bigger and currently more desireable classes offered less growth? I believe the last runup to new highs in gold and silver scared the jeebies out of those in a position to control PM price and they did what they had to to protect their bread and butter. The stacker's big hope should be that PMs one day become the bread and butter of these big players. If that happens then sky is the limit.

Justacommeman

The only thing missing from these discussions are rocking chairs a cool pitcher of lemonade with a transistor radio blaring in the background


MJ

erickso1

The PM forum is one of the few that I've seen where even a non pm post can evolve into a pm post.

piecesofme

I liken this forum to....I haven't quite figured it out yet. This place is unlike anywhere I've ever been irl or virtual.

I guess I visualize it as a coin show. Mostly crusty old farts with trucker/veteran caps on with narrow minded opinions that are fully and entirely convinced they have it all figured out and the rest of the world is in the dark. If not that, a guy that's spent 80% of the past week in that chair in the basement on the computer attempting to decipher some meaning out the most trivial comment...kind of like what I'm saying now. How far off am I? I joke, I kid. Take a breath if you've managed to read this far before breaking your wrist to fire back a hate-ridden (I hate POM) reply, and read the next sentence.

I say that with a joking and sincere respectful heart. I value the chat here and have actually acted on some of the advice given here. Like the OP said, if nothing else, it is thought provoking.

MGLICKER

<< <i>Mostly crusty old farts with trucker/veteran caps on with narrow minded opinions that are fully and entirely convinced they have it all figured out and the rest of the world is in the dark. >>



The beauty of the markets, particularly the pump and dump markets of the last generation, is that the brash young investors and the cagey old timers can both look stupid and brilliant, just at different times.

cohodk

the purpose of the futures market is to maintain commodity (whether it be gold, sugar or coffee) price stability

It is?

Silver is 50% less than it was three years ago because demand for silver futures contracts became less. Why that demand lessened is the area of debate. While American companies may be worth more than they were 10 years ago, does their P/E justify their current stock price? ZIRP is allowing many companies to buy back much of their own stock. This in itself creates equity demand.


Yes, demand for silver futures did decrease. Why? Because it no longer offered value. There is no debate.

P/E ratios are backward looking and really are not out of line historically.

I HATE corporate stock buybacks. I feel it is a colossal waste of corporate assets and their effectiveness in stock price appreciation is highly debatable. Companies have been buying back stock long before ZIRP.


Given the demand for silver or gold products over the last five years do you not believe prices would be much higher if there was no gold or silver futures exchange market that sets the base (spot) price?

No I do not. Silver and gold are 400% higher than 12 years ago and reflect a loss of confidence and higher debt levels and increased demand. Just because they were higher 3 years ago does not mean thats where they should be. Prices ALWAYS overshoot equilibrium levels due to investor emotions. This is why we have bubbles and crashes.


I believe the last runup to new highs in gold and silver scared the jeebies out of those in a position to control PM price

This is where our fundamental differences lie. The only people I think who were scared were the J6Ps that listened to the radio, youtube, and internet chatrooms. I dont believe anyone is trying to control PM prices. For what reason? Because a tiny pocket of population believes the rest of the population holds them (PMs) in such high regard?

Gold and silver have historically proven to be relatively good protectors of wealth--as have other assets--however if one places too much value on that protection, they will most likely fail, as was the case over the last few years. I think about a year ago I posted that I was now a buyer of PMs, so I obviously am not bashing them or their relative importance. I was very cautious of them on the run up. My ability to remove emotion and all that is connected to emotion--manipulation, conspiracy theory, ect--has enabled me to stay focused, think logically and rationally and profit. I, like you, think PMs will be higher in 10 years. Silver may double, or even triple from here, but where does that put those that bought into the rhetoric several years ago? PMs will always increase in value if that value is based on a fiat currency, however those increases will not be linear and other asset classes may offer much better opportunities for one to increase or protect his wealth.