These words lead one to place and hold "losers bets" in the investment arena. Forget that crap and listen to your account balance. Everyone who listened to their account balance is not sorry today.
PS: Have you noticed yet that Ted Butler is not a silver investor?
All I know is that no silver bear has ever been able to provide me with a cogent refutation of Ted Butler's points. I don't know the man, nor do I have all my money (or even a large part of it) invested in silver. All that I DO know is he makes some points that make sense, and I've always been taught to accept evidence, not assertions, when making decisions. The only evidence I see is pro-silver.
As far as I'm aware, the "LAWS of economics" aren't something that one commodity can escape. But like I said, I'm not economist.
P.S. What makes you think Ted Butler doesn't own silver?
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
I suspect Ted Butler owns quite a bit of silver, but he is far, far, from an investor. Investors don't buy and hold into declines "at all costs." Look closely at how the guy's psyche responded to the decline.
The guy's mind is on the same track as those people who put their lives into winning the Lottery. "Buy tickets at all costs." "I know I'm going to win." "Losing this time means nothing."
In the end, some day, he *may* win his lottery. Or not. Do you bet on the gambler or the house?
Like Irishmike, I bought my first big slugs of Gold and Silver in the late 70’s. Most of the U.S. $20’s I still have and many where just slabbed by NGC. I bought some of these at $600 to $900 as bullion. They were “BU” coins so I have kept even and made a little, but he is right as a long term investment these and the silver I bought have been a terrible investment. The silver I have managed to average down through the years to about $5 per ounce. Still not that good, but here is the thing. As a baby-boomer I cannot afford to get caught in some type of an inflation whipsaw. Anyone that thinks that the government and the big money Wall Street boys do not manipulate this market, as well as the bond market and many others, just is not up to speed on their research. You really must ask the questions that one writer for Kitco ask last week, WHAT HAS CHANGED? • Has the world become a safer place than it was six months ago? • Have the numerous American government deficits gotten better? • Have Americans stopped robbing Peter to pay Paul? • Did the dwindling supply of metals reverse course? • Has Allen Greenspan ever not been bullish? There are 76 million of us baby boomers headed for some type of fixed income retirement. The debt is not 7 trillion dollars plus as these silly debt clocks are telling people it is over 40 trillion. The 7 trillion is just the debt the government has sold off into T-Bills, bonds, notes etc.The other is owed to the S.C. trust fund, Federal employees retirement fund, fdic,fslic,etc.etc.etc. As many of us retire and go on fixed incomes inflation is the most devastating thing that could happen to us. In very short order you’re real-estate taxes, and insurance on your home, your cost of food; your gasoline cost etc. will outstrip your FIXED income. If our government prints the money to get out of its debt trap, which is really the only thing it can do, we are going to have Hyper-Inflation some time in the next few years, and the only thing that will accelerate in value enough to keep you part way even is Gold and Silver. Anyone that is over the age of 55 should be investing in these metals in the dips until 25% of their investment portfolios are in Gold and Silver or some other hard assets that can be sold in an inflationary period to stabilize their retirement situation. This is not as important to the kids and younger people that are members here, but it must be considered by the older members as an absolute.
Perhaps many people are missing the forest for the trees. Silver's volatility may well be a function of how little it costs in comparison to the total wealth in the world. This makes it easily manipulated and subject to wide swings as sentiment changes. A relatively few market participants can push it much higher or much lower with relative ease. It appears though that there are people who are slowly accumulating the metal which is causing a gradual drawdown in available supply. This coupled with a mining deficit will eventually show the thinness and importance of this metal. While many of its applications can be substituted with other substan- ces there are many applications where there is no substitute. It should also be re- membered that many uses require very small amounts of the metal so even dram- atic price increases will not disrupt usage.
There is a lot of silver disappearing each year from mining deficits and a seemingly steady investor demand. The price perturbations seem not to involve the sale of much physical metal. Eventually there should be a shortage of the actual metal and it will be a different ballgame.
<< <i>This makes it easily manipulated and subject to wide swings >>
Well-stated Cladking. Silver is a VERY thinly capitalized market. If a person with 100 million dollars takes an enormous short position on Coca Cola stock, who cares? But if the same person uses his capital to short sell silver, it can make a huge difference.
<< <i>The debt is not 7 trillion dollars plus as these silly debt clocks are telling people it is over 40 trillion. >>
I believe you are mistaken; what gave you the impression that our debt was 40 trillion? The seven trillion INCLUDES all national debt, DOMESTIC as well as foreign-owned.
<< <i>You really must ask the questions that one writer for Kitco ask last week, WHAT HAS CHANGED? >>
I keep telling people what has changed, but nobody cares. The incredible short position is not an opinion like most of my posts. Read the COT report and see for yourself.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
ddink, could you explain what the COT report is and give a brief explanation about the short position issue? I know that you have already explained it, but I am looking for a short, concise explanation. How does one execute a "short position" in silver? How much silver is traded on paper only on a weekly basis? THANKS!
<< The debt is not 7 trillion dollars plus as these silly debt clocks are telling people it is over 40 trillion. >>
ddink, I wish I was mistaken . When I first started seeing these numbers over a year ago from the underground gold bugs I thought they were just in a panic, and the numbers had to be wrong, but in the last few months I have been getting the same numbers from legitimate sources as well as reports on Fox News, and MSNBC. Here is how I think this works. If the congress and the President agree to spend more money than we take in a year the U.S. Treasury and the Federal Reserve must go into the open market and sell debt products to cover the short falls. However over the last 30 years to pay for certain shortfalls without incurring new interest debt burdens the Treasury, congress, the President etc. decided it was much cheaper to just borrow the money from ourselves and deposit and I.O.U. with little or no interest. So to pay for part of Vietnam, or to cover shortfalls when interest rates were very high, or when some government made demands for large payments etc. The guys in Washington just dipped into the Federal Employee pension funds, the S.C. trust fund etc. The last numbers I saw was 13 Trillion from the Federal Employee program and 23 Trillion form S.C. and more from other funds. This debt is off the regular debt books because it is only considered an obligation by the guys in Washington when it has to be borrowed from outside the system. Right now all the money coming in, covers all the money going out, so no worry. However in the next 7 to 10 years a large majority of the baby boomers are going to need to get paid and then the printing presses will be running full tilt. Irishmike is right, this is like the fool me once fool me twice story, but the World is much different than it was in the late 70’s. The largest single retirement group and the largest tax payer group the World has ever known is getting ready to kick back on the porch waiting for mail box money. You also have this boomer group all over the World in the countries involved in WWll. In addition you did not have countries like China and India with these huge populations hungry for their piece of the Worlds economic pie. Those two countries alone have nearly a third of the Worlds population and they have been deprived for a long time.
In addition you did not have countries like China and India with these huge populations hungry for their piece of the Worlds economic pie. Those two countries alone have half of the Worlds population and they have been deprived for a long time. >>
yes and what's really going to be interesting is when the chinese rmb is convertible worldwide. Imagine having the ability to buy individual stocks in chinese companies ( which they are working on right now)
Further, the change in the chinese constitution, away from marxism which is going to allow property ownership is going to divert huge sums of assets away from US debt/etc and back into the chinese economy.
I thought that today you could buy Chinese stocks. They have 2 classes of shares, one low priced one for Chinese and another high priced one for the darned Foreigners.
" Imagine having the ability to buy individual stocks in chinese companies ( which they are working on right now)
Further, the change in the chinese constitution, away from marxism which is going to allow property ownership is going to divert huge sums of assets away from US debt/etc and back into the chinese economy."
These are excellent points. Just as we did in this counrty 100 years ago, the Chinese are going to suck up every thing on the planet to bring their country into the modern age. There is one really BIG difference, and that is population. In 1900 America our population was 25 million, China is 1. 3 billion. How much of the Wolds commodities will it take to satisify that population and givee them a life style comparable to the U.S., Canada, Europe or Japan? Back on the subject of Gold and Silver, how many onces of Gold and Silver does an average middle class American family own? Gold and Silver jewelry, watches, silver ware, a few old coins? Don't most of the Europeans, Japanese, Canadains have the same. How many ounces will it take to satisfy the Chinese? Are there that many ounces on the planet?
First a little background. If I think Coca Cola stock is going to tank tomorrow, I can short their stock. What that means is that I sell Coca Cola stock today and the revenue that I make from the sale goes into an escrow account. Then tomorrow when the stock tanks, I buy the same number of shares that I sold short the day before, using money from that escrow account, and whatever is left is profit. The same thing is done in the silver markets. If you don't own any physical silver but think the price will go down, you can sell it today and buy it back at some indefinite point in the future.
COT stands for "Commitments of Traders" report, which is issued by COMEX (commodities exchange) to show how much silver has been sold short but not yet covered, as well as how much silver has been bought (as futures). The last COT report that I read stated that there was a net short position of 550 million ounces of silver. That means that some people with deep pockets have sold 550 million ounces of silver but have not yet bought it back. Remember, when a lot of silver is sold, the price goes down. When a lot of silver is bought, the price goes up. Consequently, when you sell an ounce of silver short, you drive the price down just a little bit. When you sell a few million ounces of silver short, you drive the price down a lot.
Why is this a problem? Well, annual silver production is 500 million ounces. COMEX has 100 million ounces of silver bullion in their inventory. If you wanted to buy 200 million ounces of silver, you could (in theory), but you could only take delivery on 100 million ounces. The short position in silver is greater than annual silver production, and five times greater than outstanding reserves of silver bullion (yes, there is a lot of silver in terms of coins, small bars, grandma's silver, etc., but it isn't very liquid).
One of these days the short sellers will have to cover their positions, meaning they will have to BUY 550 million ounces of silver on the open market. When that happens, the price of silver will skyrocket. However, right now the regulators are allowing them to sell MORE silver short than they buy. So when the price of silver falls, the short sellers can choose how much silver they want to buy to cover their positions partially; they aren't required to cover all their positions at once, or even within a given period of time. As it stands now, the regulators continue to allow the short sellers to push back their commitments, essentially saying "Well, I'll cover my short position tomorrow." But tomorrow hasn't come, and won't come, until the regulators stop turning a blind eye to the manipulation.
I'm sorry if that wasn't very short, but I hope it helps
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
<< <i>In 1900 America our population was 25 million, China is 3 billion. How much of the Wolds commodities will it take to satisify that population and givee them a life style comparable to the U.S., Canada, Europe or Japan? >>
China's population is 1.3 billion, but you make an interesting point. BUT, what makes you think that China will ever have the same standard of living as the US, or even be able to have the same standard of living? The FIRST thing they have to do is go to a free market system, since Communism just doesn't work on a large scale. History proves that people will not be content to live forever under a totalitarian regime, and that's a factor too.
Honestly, I'd be more concerned about Japan than China. They have a strong economy and a population with a strong work ethic, and buy up lots of US companies and real estate while denying US citizens the ability to buy any Japanese businesses and such. Even at that I wouldn't worry too much, but at the very least it is something we should keep an eye on.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
“China's population is 1.3 billion, but you make an interesting point. BUT, what makes you think that China will ever have the same standard of living as the US, or even be able to have the same standard of living? The FIRST thing they have to do is go to a free market system, since Communism just doesn't work on a large scale. History proves that people will not be content to live forever under a totalitarian regime, and that's a factor too.”
Sorry my mistake on the pop. Number. And your post on the Comex was great!
I don’t think this change in China will happen over night but the pop. Numbers are so large just small changes will make huge worldwide differences. If 100 million people in China get to the place to own a car, how much new steel, gasoline, concrete, asphalt, plastic, will be needed? Who would have thought that Japan 50 years ago would look like it does today, A nobelmans society where most of the population were no more than slaves. China changes every day toward a socialistic capitol driven economy.
The state bird of China is the "Construction Crane".
They are bulding the equivalent of the city of Houston EVERY MONTH !
Their economy has been growing very fast. But they have some severe propblems. Many of the banks are in a precarious position due to non-performing loans. They have shortages of all types of materials, electricity, etc.
I wouldn't be surprised to see a recessionary bust in China at some point.
<< <i>In 1900 America our population was 25 million, China is 3 billion. How much of the Wolds commodities will it take to satisify that population and givee them a life style comparable to the U.S., Canada, Europe or Japan? >>
China's population is 1.3 billion, but you make an interesting point. BUT, what makes you think that China will ever have the same standard of living as the US, or even be able to have the same standard of living? The FIRST thing they have to do is go to a free market system, since Communism just doesn't work on a large scale. History proves that people will not be content to live forever under a totalitarian regime, and that's a factor too.
Honestly, I'd be more concerned about Japan than China. They have a strong economy and a population with a strong work ethic, and buy up lots of US companies and real estate while denying US citizens the ability to buy any Japanese businesses and such. Even at that I wouldn't worry too much, but at the very least it is something we should keep an eye on. >>
China is eating Japan as though it were dim sum.
Far as the communism goes, it's not quite what you're told, nor is it what it used to be. The highest tax rates in China ( as well as Vietnam) at this point is 48% BEFORE deductions. That's the highest. There's numerous opportunities for tax free status for entrepreneurs, investors and companies popping up all over the place and so it's quickly becoming the center of business for all of Asia.
The standard of living for the masses in China as well as SE Asia but notably Vietnam is comparable to lower income people in the US. However there is a huge upswing in the creation of a middle to upper middle class and when you see a new mercedes or bmw on the streets of Saigon as a case in point, it's not a "lease". It's bought and paid for.
There will be many hundreds of millions of middle class in the next few years to the point where one of the largest Lowes home improvement stores you will ever see is in Hong Kong which of course is the gateway.
I lived full time in Vietnam for almost 2 years and just less than a year in south Thailand ( 2000-2003 mostly) while traveling extensively thruout the region. It's quite an exciting place.
This country is going in the opposite direction and that's not good.
dcarr, I am sure you are right, just as we had our Great Depression from our over expansion, China is sure to have there own. Here is an interesting question, there was an old saying that when America catches a cold the rest of the world catches pneumonia, if China continues its growth for another ten years and then collapses under the weight of its problems where will that leave us?
<< <i>Far as the communism goes, it's not quite what you're told, nor is it what it used to be. >>
They have made a great deal of progress, but I don't think they'll come anywhere close to their full potential under a totalitarian regime. I think the sucess of Hong Kong has helped teach them the need to liberalize their economy, so they are learning. Overcrowding will also prove to be a major problem on the road to fully reaching their economic potential.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
<< <i>dcarr, I am sure you are right, just as we had our Great Depression from our over expansion, China is sure to have there own. Here is an interesting question, there was an old saying that when America catches a cold the rest of the world catches pneumonia, if China continues its growth for another ten years and then collapses under the weight of its problems where will that leave us? >>
I don't know, but the world will probably be a very different place by then. China's boom will probably contine as long as they have an underutilized (cheap compared to the rest of the world) work force. When that work force reaches full utilitation (and appropriate living standards), the "hot" economic region will move to where labor is still relatively cheap and underutilized. Other possible cheap-labor future boom zones might include:
Cuba (once Castro dies off) Central & South America (but not until they are successful in combatting corruption) Middle East (but not until after the inevitable shake out when the oil runs dry) Central Africa (when they can prevent the spread of AIDS and improve education)
But China will progress with it's all-out effort until at least the 2008 Summer Olympics in Bejing.
While supply always equals demand, in our thinly capitalized collector and hobby markets (coins, stamps, cards, paper money, ) and silver as well, the system is ripe with manipulation. You can also say that too about stocks, bonds, currencies, and commodities in general. Lots of manipulation. It's that temporary manipulation that creates temporary demand changes. So I get a chuckle when someone says supply always equals demand. It does, for a moment, but in 10 minutes from now, sellers could easily outnumber buyers or vice versa.
I remember wondering why I couldn't $3200 for a MS65 Columbian half in 1991 when the CDN said it was worth $3500. I was offered $2800. 6 months later the bid had dropped to $1200. It turns out there was only one buyer of these coins who was promoting them to the public. Once he dropped out, the price crashed. Yup, supply equaled demand at $2800-$3200. And 10 seconds later, it did, but only at $1200.
So when you say Supply = Demand....don't forget to add "Manipulation" to the left side of equation. That has always been a big part of the coin and silver bullion markets.
<< <i>So they are short one year' worth of silver production. That's not nearly as bad as expected after reading the hype. >>
Yeah, no big deal there. Kinda weird though how every commodity except gold and silver are short less than 3% of a year's production. Gold is short 20% and silver short 100%.
It's also clearly no big deal that there are only 100 million ounces available for them to buy. I wonder what will happen when they have to cover the other 400,000,000 ounces. Maybe they can convince 100 million people to sell them four silver eagles or part of grandma's silver tea set or something. Oh well, as long as it's not a problem...
How can it NOT be a problem when you are a year behind on ANYTHING. Your boss hasn't paid you for a year--ah, no big deal. Your company makes cameras, and they've already sold an extra year's production worth of cameras. No big deal. So what? When time comes for the silver shorters to cover their positions, we'll just kindly request that all silver demand cease for one year so that every ounce of silver that's mined that year can be bought by the short sellers and used to cover their positions.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
What's funny is that everyone says silver is "historically" a bad investment, or silver has a bad "track record." If you take an apple and put it on a scale to weigh it, but you also press down on the scale with your finger, and you take 1,000 weight readings like this, every time skewing the reading by leaving your finger on the scale, does that make the weight of the apple any more accurate? Just because you've taken 1,000 readings where the measurements were manipulated, is that a legitimate measure of that apple's weight?
Remember the difference between precision and *accuracy.*
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
I concur. And when you extend the time period long enough, nearly 100% of "investments" become BAD investments, especially with equities and currencies. What paper currencies have held their value over the centuries?.....NONE. Has gold and silver held value over the centuries?....YES.
The real kicker with silver is all those people holding paper contracts. Do you think those 80% of paper holders will get their silver if push comes to shove? No way. Only 20% will. The rest is shorted on paper. And if anyone should dare challenge the COT in silver, the rules get changed to unhinge the challengers.
<< <i>ddink, I concur. And when you extend the time period long enough, nearly 100% of "investments" become BAD investments, especially with equities and currencies roadrunner >>
Very true.
I'm always "amused" at how the stockbugs always roll out some chart that shows that the DOW has always gone up, year after year. They use it to support the "buy and hold" mantra. Funny how these charts always start in 1934, and they are not adjusted for inflation.
But here is what they don't like to talk about: Over the years, weak/bankrupt companies are dropped from the DOW and new strong ones are added. How "convenient". It certainly makes the average look better when you throw out all the loosers !
Carr's theorm: In the long term, the general stock market can never rise in value faster than prevailing mortgage rates.
Silver and gold are poor long term investments also. When compared to an inflation adjusted dollar or imaginary currency, they have been dropping for several hundred years. They are worth well under half what they were even 200 years ago. True this is better than most any other investment but it's still down. While the long term trend is down, they do tend to move sharply higher when economies or currencies are under some kinds of stress. Largely it is inflation which forces them higher. Those who don't believe we are about to experience some inflation should not be in the metals long un- less it is as insurance.
“It's also clearly no big deal that there are only 100 million ounces available for them to buy. I wonder what will happen when they have to cover the other 400,000,000 ounces.”
ddink, what do you think would happen if Bill Gates decided to go short 4 times as many shares as one of his competitors total outstanding stock? Lets face it , our government hates metals investments. Except for commodity purchases they lose track of who’s got the gold and silver and how are they going to get taxes? Multi- millions of dollars of physical metals change hands each year with many sales under the $10,000 paper reporting limit and they hate that. Gold and silver purchases just set there waiting to be sold, drawing no profit, or interest they can tax, and they hate that. They allow trades and leverage on the COMEX that they would never allow in any other investment area, in fact behind the scenes they are most likely promoting short positions at certain levels. All of that being said how, and when, will all this stop?
dcarr, This is a very interesting comment
I'm always "amused" at how the stockbugs always roll out some chart that shows that the DOW has always gone up, year after year. They use it to support the "buy and hold" mantra. Funny how these charts always start in 1934, and they are not adjusted for inflation.
Comments
"wrong"
"shouldn't"
"can't go down"
"economic textbook"
These words lead one to place and hold "losers bets" in the investment arena. Forget that crap and listen to your account balance. Everyone who listened to their account balance is not sorry today.
PS: Have you noticed yet that Ted Butler is not a silver investor?
As far as I'm aware, the "LAWS of economics" aren't something that one commodity can escape. But like I said, I'm not economist.
P.S. What makes you think Ted Butler doesn't own silver?
I suspect Ted Butler owns quite a bit of silver, but he is far, far, from an investor. Investors don't buy and hold into declines "at all costs." Look closely at how the guy's psyche responded to the decline.
The guy's mind is on the same track as those people who put their lives into winning the Lottery.
"Buy tickets at all costs."
"I know I'm going to win."
"Losing this time means nothing."
In the end, some day, he *may* win his lottery. Or not. Do you bet on the gambler or the house?
Most of the U.S. $20’s I still have and many where just slabbed by NGC. I bought some of these at $600 to $900 as bullion. They were “BU” coins so I have kept even and made a little, but he is right as a long term investment these and the silver I bought have been a terrible investment. The silver I have managed to average down through the years to about $5 per ounce. Still not that good, but here is the thing. As a baby-boomer I cannot afford to get caught in some type of an inflation whipsaw. Anyone that thinks that the government and the big money Wall Street boys do not manipulate this market, as well as the bond market and many others, just is not up to speed on their research. You really must ask the questions that one writer for Kitco ask last week, WHAT HAS CHANGED?
• Has the world become a safer place than it was six months ago?
• Have the numerous American government deficits gotten better?
• Have Americans stopped robbing Peter to pay Paul?
• Did the dwindling supply of metals reverse course?
• Has Allen Greenspan ever not been bullish?
There are 76 million of us baby boomers headed for some type of fixed income retirement. The debt is not 7 trillion dollars plus as these silly debt clocks are telling people it is over 40 trillion. The 7 trillion is just the debt the government has sold off into T-Bills, bonds, notes etc.The other is owed to the S.C. trust fund, Federal employees retirement fund, fdic,fslic,etc.etc.etc. As many of us retire and go on fixed incomes inflation is the most devastating thing that could happen to us. In very short order you’re real-estate taxes, and insurance on your home, your cost of food; your gasoline cost etc. will outstrip your FIXED income.
If our government prints the money to get out of its debt trap, which is really the only thing it can do, we are going to have Hyper-Inflation some time in the next few years, and the only thing that will accelerate in value enough to keep you part way even is Gold and Silver. Anyone that is over the age of 55 should be investing in these metals in the dips until 25% of their investment portfolios are in Gold and Silver or some other hard assets that can be sold in an inflationary period to stabilize their retirement situation. This is not as important to the kids and younger people that are members here, but it must be considered by the older members as an absolute.
well be a function of how little it costs in comparison to the total wealth in the
world. This makes it easily manipulated and subject to wide swings as sentiment
changes. A relatively few market participants can push it much higher or much
lower with relative ease. It appears though that there are people who are slowly
accumulating the metal which is causing a gradual drawdown in available supply.
This coupled with a mining deficit will eventually show the thinness and importance
of this metal. While many of its applications can be substituted with other substan-
ces there are many applications where there is no substitute. It should also be re-
membered that many uses require very small amounts of the metal so even dram-
atic price increases will not disrupt usage.
There is a lot of silver disappearing each year from mining deficits and a seemingly
steady investor demand. The price perturbations seem not to involve the sale of
much physical metal. Eventually there should be a shortage of the actual metal and
it will be a different ballgame.
<< <i>This makes it easily manipulated and subject to wide swings >>
Well-stated Cladking. Silver is a VERY thinly capitalized market. If a person with 100 million dollars takes an enormous short position on Coca Cola stock, who cares? But if the same person uses his capital to short sell silver, it can make a huge difference.
<< <i>The debt is not 7 trillion dollars plus as these silly debt clocks are telling people it is over 40 trillion. >>
I believe you are mistaken; what gave you the impression that our debt was 40 trillion? The seven trillion INCLUDES all national debt, DOMESTIC as well as foreign-owned.
<< <i>You really must ask the questions that one writer for Kitco ask last week, WHAT HAS CHANGED? >>
I keep telling people what has changed, but nobody cares. The incredible short position is not an opinion like most of my posts. Read the COT report and see for yourself.
Our eBay auctions - TRUE auctions: start at $0.01, no reserve, 30 day unconditional return privilege & free shipping!
ddink, I wish I was mistaken . When I first started seeing these numbers over a year ago from the underground gold bugs I thought they were just in a panic, and the numbers had to be wrong, but in the last few months I have been getting the same numbers from legitimate sources as well as reports on Fox News, and MSNBC. Here is how I think this works. If the congress and the President agree to spend more money than we take in a year the U.S. Treasury and the Federal Reserve must go into the open market and sell debt products to cover the short falls. However over the last 30 years to pay for certain shortfalls without incurring new interest debt burdens the Treasury, congress, the President etc. decided it was much cheaper to just borrow the money from ourselves and deposit and I.O.U. with little or no interest. So to pay for part of Vietnam, or to cover shortfalls when interest rates were very high, or when some government made demands for large payments etc. The guys in Washington just dipped into the Federal Employee pension funds, the S.C. trust fund etc. The last numbers I saw was 13 Trillion from the Federal Employee program and 23 Trillion form S.C. and more from other funds. This debt is off the regular debt books because it is only considered an obligation by the guys in Washington when it has to be borrowed from outside the system. Right now all the money coming in, covers all the money going out, so no worry. However in the next 7 to 10 years a large majority of the baby boomers are going to need to get paid and then the printing presses will be running full tilt.
Irishmike is right, this is like the fool me once fool me twice story, but the World is much different than it was in the late 70’s. The largest single retirement group and the largest tax payer group the World has ever known is getting ready to kick back on the porch waiting for mail box money. You also have this boomer group all over the World in the countries involved in WWll.
In addition you did not have countries like China and India with these huge populations hungry for their piece of the Worlds economic pie. Those two countries alone have nearly a third of the Worlds population and they have been deprived for a long time.
In addition you did not have countries like China and India with these huge populations hungry for their piece of the Worlds economic pie. Those two countries alone have half of the Worlds population and they have been deprived for a long time. >>
yes and what's really going to be interesting is when the chinese rmb is convertible worldwide. Imagine having the ability to buy individual stocks in chinese companies ( which they are working on right now)
Further, the change in the chinese constitution, away from marxism which is going to allow property ownership is going to divert huge sums of assets away from US debt/etc and back into the chinese economy.
TP
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I thought that today you could buy Chinese stocks. They have 2 classes of shares, one low priced one for Chinese and another high priced one for the darned Foreigners.
Further, the change in the chinese constitution, away from marxism which is going to allow property ownership is going to divert huge sums of assets away from US debt/etc and back into the chinese economy."
These are excellent points. Just as we did in this counrty 100 years ago, the Chinese are going to suck up every thing on the planet to bring their country into the modern age. There is one really BIG difference, and that is population. In 1900 America our population was 25 million, China is 1. 3 billion. How much of the Wolds commodities will it take to satisify that population and givee them a life style comparable to the U.S., Canada, Europe or Japan?
Back on the subject of Gold and Silver, how many onces of Gold and Silver does an average middle class American family own? Gold and Silver jewelry, watches, silver ware, a few old coins? Don't most of the Europeans, Japanese, Canadains have the same. How many ounces will it take to satisfy the Chinese? Are there that many ounces on the planet?
First a little background. If I think Coca Cola stock is going to tank tomorrow, I can short their stock. What that means is that I sell Coca Cola stock today and the revenue that I make from the sale goes into an escrow account. Then tomorrow when the stock tanks, I buy the same number of shares that I sold short the day before, using money from that escrow account, and whatever is left is profit. The same thing is done in the silver markets. If you don't own any physical silver but think the price will go down, you can sell it today and buy it back at some indefinite point in the future.
COT stands for "Commitments of Traders" report, which is issued by COMEX (commodities exchange) to show how much silver has been sold short but not yet covered, as well as how much silver has been bought (as futures). The last COT report that I read stated that there was a net short position of 550 million ounces of silver. That means that some people with deep pockets have sold 550 million ounces of silver but have not yet bought it back. Remember, when a lot of silver is sold, the price goes down. When a lot of silver is bought, the price goes up. Consequently, when you sell an ounce of silver short, you drive the price down just a little bit. When you sell a few million ounces of silver short, you drive the price down a lot.
Why is this a problem? Well, annual silver production is 500 million ounces. COMEX has 100 million ounces of silver bullion in their inventory. If you wanted to buy 200 million ounces of silver, you could (in theory), but you could only take delivery on 100 million ounces. The short position in silver is greater than annual silver production, and five times greater than outstanding reserves of silver bullion (yes, there is a lot of silver in terms of coins, small bars, grandma's silver, etc., but it isn't very liquid).
One of these days the short sellers will have to cover their positions, meaning they will have to BUY 550 million ounces of silver on the open market. When that happens, the price of silver will skyrocket. However, right now the regulators are allowing them to sell MORE silver short than they buy. So when the price of silver falls, the short sellers can choose how much silver they want to buy to cover their positions partially; they aren't required to cover all their positions at once, or even within a given period of time. As it stands now, the regulators continue to allow the short sellers to push back their commitments, essentially saying "Well, I'll cover my short position tomorrow." But tomorrow hasn't come, and won't come, until the regulators stop turning a blind eye to the manipulation.
I'm sorry if that wasn't very short, but I hope it helps
<< <i>In 1900 America our population was 25 million, China is 3 billion. How much of the Wolds commodities will it take to satisify that population and givee them a life style comparable to the U.S., Canada, Europe or Japan? >>
China's population is 1.3 billion, but you make an interesting point. BUT, what makes you think that China will ever have the same standard of living as the US, or even be able to have the same standard of living? The FIRST thing they have to do is go to a free market system, since Communism just doesn't work on a large scale. History proves that people will not be content to live forever under a totalitarian regime, and that's a factor too.
Honestly, I'd be more concerned about Japan than China. They have a strong economy and a population with a strong work ethic, and buy up lots of US companies and real estate while denying US citizens the ability to buy any Japanese businesses and such. Even at that I wouldn't worry too much, but at the very least it is something we should keep an eye on.
Sorry my mistake on the pop. Number.
And your post on the Comex was great!
I don’t think this change in China will happen over night but the pop. Numbers are so large just small changes will make huge worldwide differences. If 100 million people in China get to the place to own a car, how much new steel, gasoline, concrete, asphalt, plastic, will be needed?
Who would have thought that Japan 50 years ago would look like it does today, A nobelmans society where most of the population were no more than slaves.
China changes every day toward a socialistic capitol driven economy.
They are bulding the equivalent of the city of Houston EVERY MONTH !
Their economy has been growing very fast. But they have some severe propblems.
Many of the banks are in a precarious position due to non-performing loans.
They have shortages of all types of materials, electricity, etc.
I wouldn't be surprised to see a recessionary bust in China at some point.
<< <i>
<< <i>In 1900 America our population was 25 million, China is 3 billion. How much of the Wolds commodities will it take to satisify that population and givee them a life style comparable to the U.S., Canada, Europe or Japan? >>
China's population is 1.3 billion, but you make an interesting point. BUT, what makes you think that China will ever have the same standard of living as the US, or even be able to have the same standard of living? The FIRST thing they have to do is go to a free market system, since Communism just doesn't work on a large scale. History proves that people will not be content to live forever under a totalitarian regime, and that's a factor too.
Honestly, I'd be more concerned about Japan than China. They have a strong economy and a population with a strong work ethic, and buy up lots of US companies and real estate while denying US citizens the ability to buy any Japanese businesses and such. Even at that I wouldn't worry too much, but at the very least it is something we should keep an eye on. >>
China is eating Japan as though it were dim sum.
Far as the communism goes, it's not quite what you're told, nor is it what it used to be. The highest tax rates in China ( as well as Vietnam) at this point is 48% BEFORE deductions. That's the highest. There's numerous opportunities for tax free status for entrepreneurs, investors and companies popping up all over the place and so it's quickly becoming the center of business for all of Asia.
The standard of living for the masses in China as well as SE Asia but notably Vietnam is comparable to lower income people in the US. However there is a huge upswing in the creation of a middle to upper middle class and when you see a new mercedes or bmw on the streets of Saigon as a case in point, it's not a "lease". It's bought and paid for.
There will be many hundreds of millions of middle class in the next few years to the point where one of the largest Lowes home improvement stores you will ever see is in Hong Kong which of course is the gateway.
I lived full time in Vietnam for almost 2 years and just less than a year in south Thailand ( 2000-2003 mostly) while traveling extensively thruout the region. It's quite an exciting place.
This country is going in the opposite direction and that's not good.
TP
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Far as the communism goes, it's not quite what you're told, nor is it what it used to be. >>
They have made a great deal of progress, but I don't think they'll come anywhere close to their full potential under a totalitarian regime. I think the sucess of Hong Kong has helped teach them the need to liberalize their economy, so they are learning. Overcrowding will also prove to be a major problem on the road to fully reaching their economic potential.
<< <i>dcarr, I am sure you are right, just as we had our Great Depression from our over expansion, China is sure to have there own. Here is an interesting question, there was an old saying that when America catches a cold the rest of the world catches pneumonia, if China continues its growth for another ten years and then collapses under the weight of its problems where will that leave us? >>
I don't know, but the world will probably be a very different place by then. China's boom will probably contine as long as they have an underutilized (cheap compared to the rest of the world) work force. When that work force reaches full utilitation (and appropriate living standards), the "hot" economic region will move to where labor is still relatively cheap and underutilized. Other possible cheap-labor future boom zones might include:
Cuba (once Castro dies off)
Central & South America (but not until they are successful in combatting corruption)
Middle East (but not until after the inevitable shake out when the oil runs dry)
Central Africa (when they can prevent the spread of AIDS and improve education)
But China will progress with it's all-out effort until at least the 2008 Summer Olympics in Bejing.
So they are short one year' worth of silver production. That's not nearly as bad as expected after reading the hype.
) and silver as well, the system is ripe with manipulation. You can also say that too about stocks, bonds, currencies, and commodities in general. Lots of manipulation. It's that temporary manipulation that creates temporary demand changes. So I get a chuckle when someone says supply always equals demand. It does, for a moment, but in 10 minutes from now, sellers could easily outnumber buyers or vice versa.
I remember wondering why I couldn't $3200 for a MS65 Columbian half in 1991 when the CDN said it was worth $3500. I was offered $2800. 6 months later the bid had dropped to $1200. It turns out there was only one buyer of these coins who was promoting them to the public. Once he dropped out, the price crashed. Yup, supply equaled demand at $2800-$3200. And 10 seconds later, it did, but only at $1200.
So when you say Supply = Demand....don't forget to add
"Manipulation" to the left side of equation. That has always been a big part of the coin and silver bullion markets.
roadrunner
<< <i>So they are short one year' worth of silver production. That's not nearly as bad as expected after reading the hype. >>
Yeah, no big deal there. Kinda weird though how every commodity except gold and silver are short less than 3% of a year's production. Gold is short 20% and silver short 100%.
It's also clearly no big deal that there are only 100 million ounces available for them to buy. I wonder what will happen when they have to cover the other 400,000,000 ounces. Maybe they can convince 100 million people to sell them four silver eagles or part of grandma's silver tea set or something. Oh well, as long as it's not a problem...
How can it NOT be a problem when you are a year behind on ANYTHING. Your boss hasn't paid you for a year--ah, no big deal. Your company makes cameras, and they've already sold an extra year's production worth of cameras. No big deal. So what? When time comes for the silver shorters to cover their positions, we'll just kindly request that all silver demand cease for one year so that every ounce of silver that's mined that year can be bought by the short sellers and used to cover their positions.
Remember the difference between precision and *accuracy.*
Liberty: Parent of Science & Industry
I concur. And when you extend the time period long enough, nearly 100% of "investments" become BAD investments, especially with equities and currencies. What paper currencies have held their value over the centuries?.....NONE. Has gold and silver held value over the centuries?....YES.
The real kicker with silver is all those people holding paper contracts.
Do you think those 80% of paper holders will get their silver if push comes to shove? No way. Only 20% will. The rest is shorted on paper. And if anyone should dare challenge the COT in silver, the rules get changed to unhinge the challengers.
roadrunner
<< <i>ddink,
I concur. And when you extend the time period long enough, nearly 100% of "investments" become BAD investments, especially with equities and currencies
roadrunner >>
Very true.
I'm always "amused" at how the stockbugs always roll out some chart that shows that the DOW has always gone up, year after year. They use it to support the "buy and hold" mantra. Funny how these charts always start in 1934, and they are not adjusted for inflation.
But here is what they don't like to talk about: Over the years, weak/bankrupt companies are dropped from the DOW and new strong ones are added. How "convenient". It certainly makes the average look better when you throw out all the loosers !
Carr's theorm: In the long term, the general stock market can never rise in value faster than prevailing mortgage rates.
adjusted dollar or imaginary currency, they have been dropping for several hundred
years. They are worth well under half what they were even 200 years ago. True this
is better than most any other investment but it's still down. While the long term trend
is down, they do tend to move sharply higher when economies or currencies are under
some kinds of stress. Largely it is inflation which forces them higher. Those who don't
believe we are about to experience some inflation should not be in the metals long un-
less it is as insurance.
ddink, what do you think would happen if Bill Gates decided to go short 4 times as many shares as one of his competitors total outstanding stock?
Lets face it , our government hates metals investments. Except for commodity purchases they lose track of who’s got the gold and silver and how are they going to get taxes? Multi- millions of dollars of physical metals change hands each year with many sales under the $10,000 paper reporting limit and they hate that. Gold and silver purchases just set there waiting to be sold, drawing no profit, or interest they can tax, and they hate that. They allow trades and leverage on the COMEX that they would never allow in any other investment area, in fact behind the scenes they are most likely promoting short positions at certain levels. All of that being said how, and when, will all this stop?
dcarr,
This is a very interesting comment
I'm always "amused" at how the stockbugs always roll out some chart that shows that the DOW has always gone up, year after year. They use it to support the "buy and hold" mantra. Funny how these charts always start in 1934, and they are not adjusted for inflation.