Preserving U.S. Economy Over Free Markets (Short Sellers) 69 comments
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U.S. policymakers are obviously willing to go to any length to avert a financial Armageddon, including changing the rules of the game in midstream. The latest, of course, was banning short selling in some 800 U.S. stocks, which effectively engineered a massive squeeze on the short sellers and produced a dramatic rebound.
The short sellers are right of course about the rot in the U.S. financial system but they are underestimating policymakers’ ability to pull rabbits out of the hat. And policymakers will keep on ignoring the rulebook and reaching for rabbits as long as it takes, because the alternative is worse. Short selling is a hard way to make money anyway in the stock market — if only because of the long run tendency of stocks to rise by some 7% to 9% annually on average.
Yet, the abolishment of short selling does not necessarily mean stocks can now only go up. Take China. Its stock market has had one of the steepest declines (over 50%) during the past year even though short selling was banned throughout. There was a recent rally in Chinese stocks but it was linked to announcements that the Chinese government is now going to prop up the stock market by buying stocks. How’s that for breaking the rules?
Many stock-market bloggers were outraged by the U.S. decision to ban short selling. But the preservation of free markets seems a lesser virtue compared to preserving the U.S. financial system, economy, and indeed, status as a world power.
Let’s acknowledge it: the U.S. is in a desperate competition with upstart emerging economies. The latter have made major inroads by pegging their currencies, suppressing domestic oil prices, banning short selling, currency controls, prohibitions on derivatives/options, and a host of other market manipulations. They aren’t playing by the free-market rulebook either. The U.S. may need to untie the hand behind its back with some interventionist measures of its own — until stability returns.
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This article has 69 comments:
btw I have never short sold anything.
ewebsmith.com/bus/taxp...
In nearly every case in which emerging markets attempted to impeded the free market, it cost them and cost them plenty in lack of interest and shunning of those markets by foreign investors. US politicians and regulators who wish to have their cake and eat it too are deluding themselves.
History tells us such interventions rarely work and the ultimate price is far higher than if they had let the markets work out the excesses in their own time.
By banning one part of the market, short selling, it will create greater market inefficiencies over time. However, the very politicians that are pushing for such changes have very little interest in fixing markets and are solely concerned with getting re-elected.
So far the bailouts and drastic measures have failed to work. Chances are this will backfire as well.
You could limit any short selling in financials to licensed market makers to retain market liquidity. That being for the amount of time it took to quiet the market.
Taking the uninhibited short (puts are not quite the same power) away from hedge funds and whoever is causing this panicked, PRICE INSENSITIVE selling would be a smart move.
Shorts are not NATURAL sellers.
As the author of the article indicates, markets can go down even without short selling, so banning it may be a short term prop., however if people who hold equities are spooked, they will sell fast and sometimes at any price just to get out of their position, which drives the price down anyway.
We have to remember that it's a market and there is a supply / demand for every stock. Should the supply increase and demand decrease, the price goes down regardless of whether there are market manipulation attempts by the US government as such. The government is desperate to do something and they are reaching for straws.
It would be more prudent to place more strict regulation on the lending of money to prevent the situation as it exists today from ever occuring again, rather than picking and choosing who they are going to bail out and how. In my opinion, the strong survive and the weak perish. It should be left to the market to decide who dies and who lives, and the government should go onto improving regulations rather than trying to save the aged financial whales.
We all take risks in life and sometimes it doesn't work out no matter how hard we try. I'm sure Lehman Brothers knew they were having problems long ago (months / years perhaps), and they did not do what they needed to do to get out of their mess. So be it. That's life. Let's all get on with it. This is a typical example of a business failure. I'm sure Lehman tried very hard to turn things around, but sometimes it's just not to be. So what. I don't feel sorry for them. They made bad decisions and it cost them. If we make bad decisions, nobody gives a rats crap about us. The free market exists for just that - freedom to do what we want. It should stay that way without the government putting it's nose in between, because then it's not a freedom of choice, it's a manipulation which doesn't really help anyone.
It seems ironic that the power elite does not focus where the bail out would benefit the country as a whole more than the Bankers on Wall Street. Why not give money to the people who are struggling to pay their toxic mortgages and are just barely
surviving instead of the Hampton upper class and their BMW's and waterfront mansions who received multi billion dollar Christmas bonus'
the past number of years creating these toxic derivatives.
If the money was given to the common folk to use to pay down or eliminate the toxic mortgages I believe not only would the bankers benefit by cash from prepaid mortgages but, the Middle class would again feel comfortable
having less debt and start buying cars, furniture and real estate again.
Then the elected politicians would be looked upon as real representatives of the people instead of bought and paid pawns for the banking elite.
We live in a time when political and business leaders are able to avoid being held accountable for their acts of gross negligence and wilful misconduct. Sounds like lawyer talk. Well lawyers are intricately involved in this sorry state of affairs. Lets take the Bush administration. What did all the Republican cronies like Cheney learn from the Nixon saga? Don't put yourself in weak position legally. Don't testify under oath, better yet don't testify. Don't provide information under threat of perjury and obstruction of justice, better yet don't provide information. They have artfully avoided political accountability for a litany of constitutional abuses, executive misconduct and malfeasance. They are also getting AAA legal advice.
OK, now lets consider what has happened in the financial services industry. Until recently, our securities laws forced Wall Street to worry about the way it conducts business. Don't play by regulatory rules with origins in Roosevelt's New Deal and sooner or later the SEC or Elliot Spitzer will hunt you down. You had to worry about adequate disclosure and a battery of rules designed to protect average public investors. If you misbehaved, you also had to worry about a ravinous plaintiff's bar charged with the duty of prosecuting claims on behalf of investors unable to fend for themselves (for a generous fee, of course). More AAA lawyers.
Those New Deal rules are still there. However, Wall Street has managed to water everything down to the point where a manmade Katrina hits the financial markets and there is little or no means to hold the perpetrators accountable. Don't hold your breath waiting for the SEC to chase the bankers that designed, peddled and later lied about their exposure to toxic jackass backed securities. What about Credit Default Swaps? Oh, those so called financial weapons of mass destruction are not securities within the meaning of the securities laws. Those are cutting edge risk management tools. How about investors like poor old AIG banding together to sue those who set them up with these improvised financial explosive devices. Never mind, those were sold to "sophisticated" and "accredited" investors able to fend for themselves. Sales to these financial sophisticates are not subject to the same legal regime. We now see that "sophisticated investor" means one who expects to be bailed out by Uncle Sam. Finally, you won't be seeing any widows and orphans starting class action suits, because no one sold them any securities. Instead, they are accused of being financially culpable in this mess because they fell prey to the army of mortgage/real estate brokers who aggressively peddled shadow bank loans. Mortgage brokers in some instances owned by who else? Wall Street investment banks like Lehman and Bear Stearns. Shadow bank loans? Yep, more AAA legal advice.
Let the markets regulate themselves! That is the fundamentalist mantra of the lords of the Street. Well, that is what the market was actually doing until this past Friday. Self regulation came in the surprising form of punishment by the shorts. After all, it was the unregulated hedge fund industry, Messrs Einhorn et al, and not the SEC that called Lehman and AIG to the carpet. Not to worry, Mr. Cox, a Wall Street lawyer who runs the SEC, has fixed the short problem for his former clients/masters. Trading bets against financial institutions are now banned. In a comic twist, the SEC is apparently planning to force hedge fund managers to testify under oath. Something more than you can expect from the likes of Harriet Myers, Esq. and Alberto Gonzalez, Esq. Ultimately, the reckless bets that the investment banks made with shareholder capital will go unpunished. Still more AAA legal advice.
Well you begin to see how what seems like one big scam is actually a legally airtight apparatus for screwing Grandma, Grandpa and Joe public in an indirect manner without being held legally accountable. Time to throw out all of the New Deal regulatory assumptions and start all over again. Wall Street, like the Bush administration, has managed to innovate its way out of corporate accountability-- the old fashioned way: hire innovative AAA lawyers.
One hundred years ago a man named Franklin Keyes, Esq. (you guessed it, a Wall Street lawyer) published a tract titled: "Wall Street Speculation, Its Tricks and Its Tragedies". In it he says: "Wall Street is dominated by some of the brainiest and shrewdest men in the country, natural born sharpers and schemers, and before the average man can get the better of them, except through the merest chance, he will have to eat brain food for a long time." Well said Mr. Keyes. Nothing seems to have changed, particularly the need to hire AAA lawyers.
WilliamBanzai7
September 2008
Who is the one who go and make the market fall so drastically, in the mean while grabbing the global market share, later on pull up the ^DJI and declare the banning of short-selling?
Old-fashioned strategy to speculate the market. Don't they have a better or more creative way of doing things? And the most funniest thing is that most of guy dun even know what is happening.
I won't agree on this kind of movement. Simply because it is unfair. Well, if those big boy has a bundle of money and stock that they can manipulate, i must respect them because they can control the market with their own ability.
But this kind of speculator dun even have much money in hand, grab the bottom chips, change the rule of the game and force all the shortist to support the price. Is that a gentlemen move? For me that is really a kind of barbarian rules.
Anyway, this is American style. When losing, will use "external force" with a "superman rescuing the world" reason. We'll see what will happen in the next 20 to 30 years time
The shorts overplayed their hand, it used to be that the shorts beat a company down to the point that it was a value for the strong hands to buy and wait for a reversal of fortune. Institutions lent shares for a fee, then got to buy cheaply in a panic. It worked well for both the shorts and the strong hands.
There is no value in bankruptcy, and that mutual benefit trade was broken. Bill Miller and others like him were masters of that trade, and now they're beaten to a pulp.
Shorts especially naked shorts with concentrated capital can now beat ( admittedly weak ) companies into bankruptcy. We'll never know if Lehman might have found a solution to their problems, because the shorts ended prematurely any possibility of a recovery. It's sort of their way to manipulate markets totally to their advantage.
Strong anti-naked shorting rules if stringently enforced will give tremendous power to the strong hands to manipulate markets,
institutions can (and will) place shares lent into a cash account turning legitimate shorts who have borrowed shares in advance into naked shorts ( and naked shorting is against the law ).
Manipulation will be "fun" on both sides, and risk is a 4 letter word for both shorts and longs.
There used to be a ditty on Wall Street.
I think it went something like this:
"He who sells what isn’t his’n, buys it back or goes to prison"
.
The SEC had no choice given the levels of instability in the system. It is unfortunate but sometimes regulators screw up and create a set of circumstances that is unstable. When that happens institutions act to protect themselves regardless of who else is in the way. If you are in the market when this goes down oh well. It's not like this was the first time this week the government dropped the hammer.
Yes market efficiency will be slightly impaired. But this is only 7% of the equity issues, and there are other mechanisms for price adjustments. The distortions will be fleeting.
No thanks, I will stand with principle and take my lumps.
Even money market funds are exposed to risk, and protection of principal is not guaranteed (I assume you've read the prospectuses). I hope you won't be caught with your pants down. You shouldn't assume more risk than you can handle. Liquidations are normal (and healthy). They create new opportunities while removing rot. Trying to prevent them will only delay the day of reckoning, not prevent it.
I am a 30yr plus stock trader ,and a former registered rep,with a lot of experience....what I have seen in the markets for the last few months is downright scary...individual investors beware...
There is nothing inherently wrong with going short. If the fundamental of the stock is strong, the short seller would be penalized anyway just as they would be rewarded if their judgments are right and the same goes to those who go long. They all are rewarded and punished according to their beliefs in the future of the stock's performance.
does it really matter what service or product i sell? it is just a symbol in a table.
My solution is to create a new and separate stock exchange where a US company could have its stock simply bought or simply sold. No shorts, naked or otherwise, no puts etc. allowed. Nothing! If you like the stock you buy it. If you don't like it you sell. Simple as that! If companies want to have their stock shorted or whatever, stay with the NYSE.
It should be noted that at this time they are downgradting the companies faster than you can say "Amen",instead of allowing for some moratorium in order to allow the Treasury and the FED to implement "stabilization" package which appears to be very effective and persuasive.After providing false security to the investors,now the rating agencies are causing volatility and complicating the stabilization effort.
For the record (one more time)I have warned about the subprime and other risks in June of 2005 in an interview with Mark Gilbert(Bloomberg -London).I have reiterated my position about systemic risks on Bloomberg TV on September18,2007 (Brian Sullivan).
What were the rating agencies looking at?
Now the rating agencies should sit back and evaluate the stabilization effort versus individual financial institution's risk exposure ,then let's hear from them.
As far as competition with the emerging market economies?Not an intentional effort.As the speculative "forces" had driven the dollar to the new low ,the J -curve has made American economy a very competitive economic power.The rapid deceleration has enhanced corporate decisions which have turned the U.S into a mean ,lean economic machine.The trade data shows it.
Finally ,by addressing the financial issues and resolving them,the Treasury and the FED are preserving the " free market" as we know it,for without the financial system ,economies can not function.
All of the criticism clearly eminates from the mega shorts whose actions were about to derail U.S and the global economies.
Broad stock market rally should continue as will volatility and the "whining " from the shorts.
Rating agencies? Give the Treasury a temporary break .
prosecuting those naked short sellers. no one should be selling short in the
nude, that's just gross
prosecuting those naked short sellers. no one should be selling short in the
nude, that's just gross
And BTW, this is happening elsewhere too. This financial system is full of rot starting with rating agencies. Don't blame short sellers just because they can draw a straight line with a pencil. The mortgage crises is a Sunday school compared to credit derivatives disater that looms. Creit derivatives currently stand at 45- 62 TRILLION. Think the government can hide the worthless paper behind it forever ?..LMAO...we'll see.
What Christopher " I Like" Cox has done is strictly temporary and a diversion to your collective attentions. The market will flush losers and there is no need to ban short sales. Thus, Mr Cox's orders will have temporary effects.
Sounds as though some don't like the short restrictions . Neither do i like what some were doing with shorts.
The ones whining the loudest now about what it is doing to their company were probably some of the most heavily involved in it. Save us,save us they scream.
From my view as just a flunkie paying taxes ,all i can say is; suffer you bastards .
Just remember there are more of us flunkies out here that have been butt f@$#@ by you assholes than you assholes on wall streets big money. The tables will turn some day . I hope i am around to see it.
Tell me, how does "driving the stock price down" cause an otherwise well run company into bankruptcy? It can't.
If I run a publicly traded company profitably and with good cash flow, what difference does the stock price make to survival of the business? The stock can go to ZERO and the company would still continue operations. The shares would be a screaming bargin.
To some extent stock prices reflect the aggregate perceptions of millions of 'investors' in the market for the shares. The reason these large so-called financial institutions face bankruptcy is that they ran their businesses poorly or worse.
Widespread fear of bankruptcy is what brought down the share prices. Not the other way around.
And as firebird pointed out, there haven't been truly free markets since the 1930s. The more restrictions the government forces on the market, the larger the odds of 'problems' arising because the restrictions hamper the market from properly pricing stocks.
The more the SEC changes 'the rules', the less investors will trust in market mechanisms. Now that you know the gov't will save the banker's bacon, are you sure YOUUR investments are safe?
Check with the holders of Fannie Mae or Freddie Mac preferred shares (now worthless via weekend gov't takeover) for insight on that point. Shareholders in those issues lost EVERYTHING without a chance to sell for even a low price.
I'm sure they find that's not really preferable to suffering the supposed slumps caused by short sellers where at least they could salvage something.
Is having your investment TAKEN from you really better than having the price go down and still being able to sell?
The collapse of the banking system is due to the collapse in US savings. This is caused by the Fed Reserve keeping interest rates stubbornly below the rate of real inflation for so many years.
When the government unilaterally decided to change how inflation is calculated, especially leaving out food and fuel from the statistics as well as the 'hedonistic' business that overstates value-added price hikes, we now have a malfunctioning system that encourages debt.
This, in turn, as turned the US into a debtor nation that goes about the planet, begging for capital. In turn, our industries are being decimated or sold to foreign powers. Our infrastructure is rotting or being sold to foreign powers. Our jobs are moving overseas while the US economy is pitched to paying interest on a growing Mt. Everest of loans.
Our government has finally thrown in the towel and handed fiscal authority to the bankers who are now attempting to unload all their debt instruments onto the US government. So they can lend us even more money we can't afford to pay back.
The system is profoundly bankrupt. Next: our government will go bankrupt.
Government excuses for rigging the market are as endless as the excuses for restricting individual freedom. In the end, they never work and only lead to bloodletting, whether financial or biological. If any country's history stands as a testimony to that point, it is this country's. Too bad the schools don't teach history anymore. This article (and many of the comments made to it) testify to that sad fact.
China, seeing how Japan ran a huge trade surplus with the US playing this monetary game, copied this exactly. With the desired results. China's trade shot up vis a vis the US. Both nations now hold nearly three trillion in FOREX reserve dollars!
The US Federal Reserve has NO reserves now. They had to resort to using their gold swaps this week. The US refused to do what China and Japan did: buy up yen and yuan and hold them. Now we are holding a bag of bad debts and will go bankrupt.
The US demanded and got the Floating Currency system back in 1974. It was a total disaster back then and is still a disaster. The refusal to return to the gold standard means we go into debt, instead. We can't go into infinite debt. The government bail out of Wall Street and the banks is making debt worse, not better.
It is NOT capitalizing the system since the government itself has no capital. We can sell our military as mercenaries again like Bush Sr. did in Gulf War I. Maybe the Chinese can hire us to do dirty work for them? Or Japan! Guess who won WWII?
Not the US.
And they will manipulate, and lie, and intervene, and fail to disclose the truth, and do all the things that totalitarian governments do to "protect" their citizens.
They spy on us "to keep us safe", they lie about the reasons to go to a monstrous, costly war to save us and our children from what they knew to be a fiction (costly in lives and grievous injuries, in so many sad tragic ways besides the obvious huge financial cost) and now they want to save the American people, the taxpayers, from the financial armageddon that they themselves let get out of control through denial, and lack of transparency, and greed, but now the administration spin machine says it is "to save the American people, to save the taxpayer".
From who? Ourselves?
I'd rather be saved from THEM.
If they had cared a good goddamn for the American people, for the taxpayer, we would never be in this position in the first place.
This is in fact the latest step in the enslavement of the American people by big government and big business, the latest piece of the American myth to be stolen from its citizens, and make no mistake, when they take something, its gone for good.
We the People and our US Constitution are on a long, slippery slope here, and our government is not our ally.
I do not think we can survive much longer if they continue to save us from ourselves.
Keep your eyes and ears open citizens, its a long way to the election. If they can't succeed in saving us from ourselves, they may just decide there's no reason to have an election.
We are on the brink of a police state, and these are evil, terrifying people we are up against.
What are they smoking?
Now, this week their tune has changed... What they did is lie, lie, lie just long enough to bail out most of their friends before the rest of America was screwed.
Are you going to continue to listen to the garbage they spew about "this is not the time to panic"..."this is not the time to sell"... "the dollar is strong"...."gold and silver is not a good investment for these times"....
Yeah, right.... Let's see where this market is in another couple of weeks.
I would like to short the Congress's plan to save the country.. Good luck to the president and the financial "experts" who failed to see this mess as early as last week! You are all incompetent!!
Don't give them the chance to rob you blind. Take back your money - what you have left of it - and buy gold and silver. The government will hate you for it and that means it is exactly what you need to do to save yourself.
I agree that Gold and Silver are absolutely manipulated. In the last few months it has been criminal!
I hold mostly physical gold and silver. Although harder to find everyday, I can usually find some in the antique stores.. You don't have to buy coins - jewelry or silverware work as well...
For those of you considering moving to treasuries:
"The government gets money in one of two ways: they tax the people or they issue (sell) debt (T-bonds). Federal Reserve Notes are the currency of the realm. United State’s T-bonds “secure” FRN’s. T-bonds are paid for with FRN’s. Do you see the conflict of interest here – the moral hazard? Debt is being used to secure debt. Credit is used to create more money and more debt: promises back promises."
The United States government is betting that the United States financial system will have a meltdown and is trying to profit from this bet.
Is it just a matter of time before governments from all over the world sell the United States government short?
The "rules" were written by the same guys that have been running the banks and commercial brokerages, and the government through campaign contributions and lobbyists, for the last several decades.
The "rules" let commercial traders trade 24/7 worldwide; we can't. Market-makers get to see all our pending buy/sell orders and trade their own book ahead of the open; we can't. Hedge funds can trade the same money several times a day; we can't.
They have the "rules" set up so they control the spreads, the access, the information, and the price. It's all done with very little visibility until they get caught doing something clearly illegal - frontrunning, late trading, insider trading, etc. Then their pals in govt step up, slap them on the hands, and say "No No." A thousand aggregious violators get off with a fine and no admission of guilt for every one that goes to jail.
Operating a stock market should be very simple. If you think a company is undervalued, buy its stock. If you think its overvalued, don't buy its stock. Anything else is just gambling. Betting its stock price will go down by the 3rd week in October is no different than betting the Dodgers will lose their game next weekend.
Yes, I'm in favor of throwing out the existing rule book, because it was written by interested parties to ensure they win out over the rest of us. Let's put control back in the hands of neutral parties who will actually enforce them - then maybe we can have a truly "free market." So far, it seems the vaunted free market just means the fat cats have been free to screw you and me.
To: Kelly Lieberman: First time I didn't TOTALLY agree with something you said--when you said buy jewellery to accumulate gold and silver. NO WAY! Bullion first and foremost. ZERO paper gold and silver, and the baubles are really NOT worth it since you don't know what it is (most of the time). Stay away!
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
and you better be very afraid because if this passes whats next the amero? martial law? which by the way Bush signed into law 2 years ago to give himself and future presidents the power to declare martial law at any time. America as you have known it is gone comrades welcome to the new world order.
I still haunt the antique malls because I along with my domain business I also buy and sell Chinese antiques. Interestingly, not an area at all affected by this financial fiasco... Anyway, while I am there I take a look at the jewelry, coins, and silver for sale. Many of this stuff was priced years ago by dealers who never bother to change prices! Amazing deals can be found! You can always buy and resell at your local coin shop who will buy according to weight.. There are resources on the net for anyone interested.. Here is a bit of info:
The composition of alloys used in jewelry in most countries is denoted in the 'carat system' (spelt Karat in the USA and on the Continent). Also for hallmarking purposes gold is expressed in parts per thousand. Hence 999 and 990 parts per thousand (the other parts being another metal such as silver or copper for example).
Here is a list of the carats and proportions of gold to alloys:
24 carat is pure gold with nothing added. This is the purest gold available. Also has a fineness of 1000. Sometimes this is expressed as 999 being 999 parts per 1000. This is because it is very difficult to get pure gold with absolutely no impurities and possibly is for legal reasons also. This applies to gold coins a lot. Canadian Maples, for example, are listed as 99.999% pure gold.
22 carat is 916.6 fine
18 carat is 750 fine
14 carat is 585 fine
9 carat is 375 fine
There are other hallmark standards available as well as the above but these are the most common. This tells you how much gold there is in a gold piece. 14 carat, for example, is 585 parts gold to 415 parts other metal.
The alloys used vary with the purpose to which the gold is put. For jewellery and dental work usually the combination is gold, silver and copper. Sometimes with the addition of zinc or nickel. For dental alloys, palladium and platinum are usually added as they are particularly stronger and hard wearing.
18 carat gold is more popular for gold jewelry with a 75 percent gold and 25 percent other metals ratio, usually silver or copper or a mixture of both.
The 14 carat standard is used more extensively in industry and for such things as pen nibs, circuit boards etc. It is also used in such jewelry as bracelets where more durability is required, due to more use.
There is also a 10 carat, containing 41.7 percent gold and known therefore as 417. this is really just a cheaper version of the 14 carat and used for cheaper jewelry. One should check the carat of the piece one is buying as it may actually be 10 carat or even 9 carat and not 14.
Just resume the uptick rule & ENFORCE the naked short selling trade, & mark my words, most of this garbage would never have occurred. (If longs have to accept delivery of stocks in 3 days, why in hell shouldn't shorts deliver the stocks they short in the same 3 days required?)
President Clinton & the Greenspan influence signed away the public's banking protection so that savings & checking accts became the monopoly $$ that Wall St. couldn't get 'nuff of!
Barney Frank & his kind fanned the flames to get anyone with a pulse a home whether they could afford the mrtg payments or not, how you reporters can completely ignore the facts is reprehensible!
In short selling there is no good available to sell in the first place!!!! It is a medium to speculate. In fact it is a tool that has been used to smash a stock or even currencies. It is causing this boom and bust economy.
The governments have also been part of silver conspirators, selling certificates with no real physical silver to back the certificates
Kelly's info is a good start, but I would suggest avoiding anything less than 14 karat as the 'cheaper' end of the scale is known to be somewhat loose in their marking. 18 karat or higher is usually safe. All jewelry should be stamped with the karat. If not, don't buy.
Link necklaces/bracelets are good as you can cut off individual links to trade smaller amounts if necessary.
Once you get to know the local pawn shop owners you may find they will let you trade your junk jewelry for any bullion coins they come across on an equal weight basis. They will only send the stuff off to the smelter anyway, so they might keep the coins if they know you're looking for them and you're a "regular".
It doesn't hurt to ask. If they say no, try another pawn shop.
It's worked great for me. I have several ounces of various coins, US and foreign, in different weights, all purchased "first" by picking up bits of jewelry at a local store and later trading it for coins that come through.
Added benefit, when times are hard pawn shop owners are good people to count as friends. They have a chance to buy almost everything at bargain basement prices. If they know you're looking for something they can 'shop' on your behalf and you might get a great deal as a result.
Pawn shops love being able to buy and sell stuff for a quick profit if possible.
All of you complaining about the ban of short selling and naked shorts, don't have a leg to stand on, since Put Options are do the same thing, though in a more professional and ethical manner that doesn't allow nearly the same amount of market manipulation.
Permanently ban short selling- and across the board! In this day and age of instant communication, this is the only sensible way to prevent a complete market collapse.
(after all, shorts only go one way- yes, it presents a buying opportunity, but in this climate of fear, there is not ENOUGH buyers to make a difference, downward creep prevails with the bears outweighing the bulls)
Think about it, short selling causes stock plunges and market fear; this market fear causes the lemmings to follow over the cliff, by then selling low. The pro's then re-buy options of a devalued stock and make money going the other way. The problem is, that a large percentage of the population now owns stock, if there is no confidence, they will take their money out permanently, and you will never see market gains that we used to. We NEED the individual mom/pop investors. All of you are fools, if you think we can kill their retirement funds through naked shorts, and at the same time expect long term gains.
The media is also culpable, I have never heard so much mania panic in my life from the media! The sky is falling! Worse then 1929! What a joke. If it were not an election year, with their darling candidate in the balance, we would see a different picture painted. They are deliberately talking down the economy. It is to their advantage for it to fail. Short sellers are piggy backing off of this to make a quick buck.
Who was it that set up this obscene pyramid scheme of lending in the first place? Thanks to our democratic congress. (Just follow the money) A ban on short selling, may just be the first step in needed sensible reforms... however, if they nationalize the banking institutions, that too will be a disaster. The challenge will be to react, but not over react.
One thing the gov can do, is to use and learn from the media. Talk DOES work. Talk up the economy- every day, come out with some true or positive news. Make a news cycle of debate around it that questions the doom and gloom.
Being able to sell short has nothing to do with free markets. That is a canard floated by market manipulators who don't want their gravy train removed. If you want to bet on the price of stocks, do it in a side market, one without influence on the stock price.
Maybe it is time exchanges went away, buggy whips of our time. Replaced with electronic exchanges, 24/7, no market makers.