Which Platinum ETF Is Right For You? PPLT Vs. PTM Vs. PGM [View article]
There is a key difference between PPLT and PTM/PGM. The latter are Exchange Traded Notes (ETN) rather than ETFs. ETNs are subject to credit quality counter party risk, whereas ETFs are subject to counter-party risk only if criminal activity causes the warehouse not to have the metal it claims to have.
ETNs hold no physical metal and make no claim to hold any real metal. They are nothing more than theoretical platinum on paper. An ETF, in contrast, assuming that there is no fraud involved, stores physical metal in vaults. If a sponsor or warehouse goes bankrupt, ETF investors still own a proportional share of the stored metal.
If the sponsor of an ETN goes bankrupt, the investor owns nothing but an unsecured claim in a bankruptcy court. Unsecured claims are rarely, if ever, paid, let alone paid in full. Yet, the ETNs you mention have maintenance fees that are higher than PPLT. They do not represent a wise value even if used solely as a trading vehicle.
We should never forget the huge sums of money that were lost by investors in the Lehman Brothers' ETNs, back in 2008.
Gold, Silver And Platinum May Move Up Strongly After Today''s ECB Meeting [View article]
The ECB ended up cutting the lending rate to .75%, but reduced the deposit rate to 0%. That is more than I expected.
Patience is a virtue. It takes time to schedule a board meeting. Decisions must be made, at the highest level, before banks can remove "safe haven" money from the ECB, and do something else with it.
Once heavy physical buying pressure begins, neither bullion bankers nor central bank enablers will be stupid enough to willingly part with thousands of tons of physical gold, silver and platinum at deeply discounted prices. The price suppression game is all about inducing volatility, not destroying the metals market. They just want ultra-conservative investors to continue to buy mostly bonds, rather than shifting tens of trillions of dollars, euros, yen, etc. into precious metals.
If bullion bankers were as stupid as people seem to think they are, gold would have continued to sell at $250-300 per ounce for 5 or 6 years longer than it did. The US and UK central banks would have run out of gold long ago. The bullion banks would all be bankrupt. History tells us that they will eventually bow to the market, and relax the price suppression game once they've achieved their goals.
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
Mr. Kramer,
Neither I nor my clients are big bank shareholders anymore. But, shareholders are beginning to recognize that breaking up these big banks would add value to their portfolios.
For example, Neil Dwane, CIO Europe, Allianz Global Investors, which owns 13.4 million Barclays shares via its RCM unit, had this to say about Barclays. That mega-bank is a "High Street" equivalent of JP Morgan and the other "big 5" Wall Street banks:
"The board should now proactively break the bank up into its constituent parts after putting in place a coherent bonus and remuneration clawback of all misdemeanors of the last decade, from Libor to mis-selling of mortgage protection and interest rates swaps...Break it up because it trades at half book value."
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
It is bad because it is a not merely a "deposit guarantee". It is a real guarantee against default of certain players, but not others. It is the choosing of winners and losers by political power, and it involves putting taxpayers on the hook for the losses of some players, but not others. In a free market, all banks would compete on equal terms under the law.
The oligopoly banks do not compete on equal terms with other banks, and that is why they control the banking industry. Their irresponsible behavior now, and in the past, has the very real potential to either bring down the sovereign that stands behind them (the US government), or to vastly devalue the currency that is supporting them. If banking is a "national utility", or a government service, as you imply, bank executives should be paid civil servant salaries.
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
Your quote comes from Shakespeare's "Henry VI". Dick is a butcher who comes up with an idea to satisfy the needs of the traitor, Jack Cade. Mr. Cade wants to create a communist social revolution, with himself as dictator. So, Dick utters, "The first thing we do, let's kill all the lawyers" as he thinks this will help Cade achieve his goal. That having been clarified, the intent of your comment is still clear.
How Germany Can 'Save' The Euro While Limiting Its Liability On Legacy Debt [View article]
The downward manipulation of gold prices end when the amount of physical gold leaving western vaults exceeds the pain threshhold of central bankers. We saw 113 tons imported into Hong Kong last month, for example. The Exchange Stabilization Fund and the Bank of England don't want to lose physical gold because, once it all moves east, it's "game over". They just want to bolster the viability of their fiat money excretions by slowing down the rise in price of precious metals, especially gold. Generally speaking, I think they're willing to do only so much as is absolutely necessary to accomplish that goal. Commercial banks, like JP Morgan Chase or HSBC, or whoever is actually carrying out the manipulations, may profit by front-running, but they cannot afford to take the risk of loss without a government backstop.
How Germany Can 'Save' The Euro While Limiting Its Liability On Legacy Debt [View article]
Few Euro banks have much unencumbered physical gold to sell. Mostly, they own paper claims to non-allocated accounts. My understanding is that a 1% stock of that gold is actually kept, in vault, to cover requested redemption. The rest is loaned or sold to third parties, or never purchased in the first place.
The bullion banks are massive gold debtors, NOT creditors with gold to sell. Their physical gold is encumbered, even though they are contractually allowed to use it in any manner of their choosing, right now. The unallocated accounts, which comprise a vast majority of the world's alleged gold "reserves", will be their undoing.
European sovereigns, caught in the downward spiral of a crisis of confidence, are not likely to be willing to part with their gold, as before, and will not be able to bail out the bullion bankers. Without that emergency backstop, the bankers will fail to meet their gold obligations, Cash settlement is usually an option under LBMA unallocated account agreements. But, refusing physical redemption requests, in the wake of massive requests for the physical gold, will destroy their credibility.
The collapse of the Euro, when and if it happens, will also spur demands for delivery of the baskets of gold many large institutional buyers own inside ETFs like GLD. We will learn, at that time, whether or not the critics of such schemes were right, or whether the bankers are actually keeping the proper amount of gold in them.
The most important point is that physical gold, and not paper, will be demanded in midst of the collapse.of a major reserve fiat currency like the Euro. When and if even one Euro bullion bank collapses for failure to honor redemption requests, the whole paper gold trade will come tumbling down. Gold prices will, at that time, go vertical.
All this said, the scenario I've just outlined probably lies far in the future. For the moment, it is more likely that Germany will agree to grant a bank charter to ESM, as doing so limits its liability on joint Euro debt to a fixed sum, while allowing the rest of Europe to "put up or shut up" with respect to economic reform practices.
FDIC Rule Will Return Gold To The Center Of The Banking Universe [View article]
If gold were removed from the futures markets, it would immediately return to being very stable in terms of being a permanent store of purchasing power.
FDIC Rule Will Return Gold To The Center Of The Banking Universe [View article]
My understanding is that current FDIC rules allow banks to assign zero percent risk weight to gold bullion held in its own vaults, or held in another depository institution’s vaults on an allocated basis, only to the extent that they are offset by gold bullion liabilities. An example would be a bank keeping gold bars in the vault, while being short an equal amount of gold futures contracts. The same is true in Australia and, probably, in most other countries. See, http://bit.ly/Mv9ys8 The proposed FDIC rule does not require an offsetting liability for gold to get a zero risk rating.
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
I should qualify what I just wrote, because we probably would have had a small housing "bubblelet", even if the Fed had been limited to setting interest rates only for New York. The Federal Reserve Politburo (a/k/a FOMC), probably erroneously set a rate too low even for highly developed regions of the northeastern USA.
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
No. We are well served by fiscal union. We need the United word in the name "United States" as much as the Europeans need the Union word in European Union. But, Central Bank planning, and issuance of irredeemable currencies were not contemplated by the Founding Fathers of the EU or America. Europe might also be well-served by fiscal union in many ways. But, fiscal union will not solve the problem it now faces.
The problem is the same in Europe as in the USA. The ECB and the Federal Reserve are central banks that use a Politburo-like mechanism to enforce uniform, but often inappropriate, interest rates throughout dissimilar regions. In Europe, a rate appropriate to Germany was applied to Spain. In America, a rate appropriate to New York was applied to Arizona, Florida, Nevada and other states. In both cases, an enormous bubble was blown. Spain, like Arizona, Florida and Nevada needed much higher interest rates. If they had them, from 2000 to 2007, there would have been no housing bubble or collapsing world financial system.
I am certain that, once the dysfunctional Euro is dealt with, attention will turn to the dysfunctional Federal Reserve Note. The resolution method will be different. The USA will not break up. It is not divided by a long history of political squabbling like Europe. The problem will be resolved, here, by the return of gold into the banking system, to one extent or another, and transformation of the Federal Reserve (if it is continues operating) into a much different institution.
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
Politics, unfortunately, drive the price of all assets, including precious metals, commodities, and stocks. Political decisions that create public debt, or allow banks to create credit money and create private debt, as well as the choice as to whether or not to print more fiat currency to pay that debt, drives precious metals prices. The price of the product has a more direct and fundamental effect on PM company balance sheets, and stock prices, than anything else.
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
The death of the Euro does not equal the death of the former member nations of the Euro zone. It simply means a large (perhaps huge) setback. But, all the current Euro nations had people living, working and buying things before the Euro, and will have the same situation afterward.
The BRIC nations do want the biggest markets for their goods, services and commodities possible. It is very useful to export goods to markets that are ready and willing to pay for them. But, to spend your own money to subsidize a market in order to have a place to sell something? That is not a very smart thing to do. They are better served, if spending hundreds of billions of reals, rubles, yuan etc. to spend it on their own economies, internally stimulating demand, and they know it.
The Euro zone is dysfunctional and must end at some point. European governments and politicians certainly will engage. The Euro will go the same way as its 19th century predecessor, "Latin Monetary Union". As I remember, it was the tiny Vatican state that started that collapse. So, the experiment will end, one way or the other, after the politicians exhaust all their energies.
If the ECB start printing more heavily, and it will require about 3x as much printing as America requires, the end will be delayed by many months, if not years. That delay will come at the cost of heavy inflation. When the people object to this situation vehemently enough, the experiment will end, for if it does not, this entire situation will repeat itself, not too far in the future.
Kvatchik, we will see a "reset" button effectively pushed. It will be a situation analogous to the former Soviet Union, after the fall of "communism". Those who don't prepare now, will become poor for a while. Others will become richer as a result of the changes. The vast majority of good people, however, who do their jobs and pay little attention to economics are likely to get walloped by the long term effect of the poor policy choices that have already been made by the leadership.
It did not have to be this way, but, now, not even a shift to a free gold standard would stop it. Such a shift would only prevent future huge booms and subsequent catastrophic busts. But, all is not negative There are some big positives.
New shale fracking technology has brought down the price of natural gas tremendously and made energy cheap in America. Once we adjust to using more of it, this will result in dramatic reduction in the importation and price of both oil and gas, at least after inflation is accounted for. The previous very high cost of energy has been a huge drag on western economies.
The interconnectedness of the internet is another big plus. Yes, it may allow some high value US jobs to filter overseas. But, the web also allows ideas to spread and be utilized at a very fast rate. Americans are somewhat good at developing technical theories, but exceedingly good at taking the theories developed elsewhere, and putting them into practice in the form of useful products.
Labor costs for the "impoverished" masses will probably be considerably lower, after inflation, than now, but still higher than other nations. Nevertheless, cheaper labor, combined with the spread of concepts by the web, and the ultra-cheap energy available in the USA and Canada, are likely to result in a lot of the manufacturing of the new products in North America, especially the USA.
Which Platinum ETF Is Right For You? PPLT Vs. PTM Vs. PGM [View article]
ETNs hold no physical metal and make no claim to hold any real metal. They are nothing more than theoretical platinum on paper. An ETF, in contrast, assuming that there is no fraud involved, stores physical metal in vaults. If a sponsor or warehouse goes bankrupt, ETF investors still own a proportional share of the stored metal.
If the sponsor of an ETN goes bankrupt, the investor owns nothing but an unsecured claim in a bankruptcy court. Unsecured claims are rarely, if ever, paid, let alone paid in full. Yet, the ETNs you mention have maintenance fees that are higher than PPLT. They do not represent a wise value even if used solely as a trading vehicle.
We should never forget the huge sums of money that were lost by investors in the Lehman Brothers' ETNs, back in 2008.
Gold, Silver And Platinum May Move Up Strongly After Today''s ECB Meeting [View article]
Patience is a virtue. It takes time to schedule a board meeting. Decisions must be made, at the highest level, before banks can remove "safe haven" money from the ECB, and do something else with it.
Once heavy physical buying pressure begins, neither bullion bankers nor central bank enablers will be stupid enough to willingly part with thousands of tons of physical gold, silver and platinum at deeply discounted prices. The price suppression game is all about inducing volatility, not destroying the metals market. They just want ultra-conservative investors to continue to buy mostly bonds, rather than shifting tens of trillions of dollars, euros, yen, etc. into precious metals.
If bullion bankers were as stupid as people seem to think they are, gold would have continued to sell at $250-300 per ounce for 5 or 6 years longer than it did. The US and UK central banks would have run out of gold long ago. The bullion banks would all be bankrupt. History tells us that they will eventually bow to the market, and relax the price suppression game once they've achieved their goals.
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
Neither I nor my clients are big bank shareholders anymore. But, shareholders are beginning to recognize that breaking up these big banks would add value to their portfolios.
For example, Neil Dwane, CIO Europe, Allianz Global Investors, which owns 13.4 million Barclays shares via its RCM unit, had this to say about Barclays. That mega-bank is a "High Street" equivalent of JP Morgan and the other "big 5" Wall Street banks:
"The board should now proactively break the bank up into its constituent parts after putting in place a coherent bonus and remuneration clawback of all misdemeanors of the last decade, from Libor to mis-selling of mortgage protection and interest rates swaps...Break it up because it trades at half book value."
http://reut.rs/Na3A4d
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
The oligopoly banks do not compete on equal terms with other banks, and that is why they control the banking industry. Their irresponsible behavior now, and in the past, has the very real potential to either bring down the sovereign that stands behind them (the US government), or to vastly devalue the currency that is supporting them. If banking is a "national utility", or a government service, as you imply, bank executives should be paid civil servant salaries.
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
How Germany Can 'Save' The Euro While Limiting Its Liability On Legacy Debt [View article]
How Germany Can 'Save' The Euro While Limiting Its Liability On Legacy Debt [View article]
The bullion banks are massive gold debtors, NOT creditors with gold to sell. Their physical gold is encumbered, even though they are contractually allowed to use it in any manner of their choosing, right now. The unallocated accounts, which comprise a vast majority of the world's alleged gold "reserves", will be their undoing.
European sovereigns, caught in the downward spiral of a crisis of confidence, are not likely to be willing to part with their gold, as before, and will not be able to bail out the bullion bankers. Without that emergency backstop, the bankers will fail to meet their gold obligations, Cash settlement is usually an option under LBMA unallocated account agreements. But, refusing physical redemption requests, in the wake of massive requests for the physical gold, will destroy their credibility.
The collapse of the Euro, when and if it happens, will also spur demands for delivery of the baskets of gold many large institutional buyers own inside ETFs like GLD. We will learn, at that time, whether or not the critics of such schemes were right, or whether the bankers are actually keeping the proper amount of gold in them.
The most important point is that physical gold, and not paper, will be demanded in midst of the collapse.of a major reserve fiat currency like the Euro. When and if even one Euro bullion bank collapses for failure to honor redemption requests, the whole paper gold trade will come tumbling down. Gold prices will, at that time, go vertical.
All this said, the scenario I've just outlined probably lies far in the future. For the moment, it is more likely that Germany will agree to grant a bank charter to ESM, as doing so limits its liability on joint Euro debt to a fixed sum, while allowing the rest of Europe to "put up or shut up" with respect to economic reform practices.
FDIC Rule Will Return Gold To The Center Of The Banking Universe [View article]
FDIC Rule Will Return Gold To The Center Of The Banking Universe [View article]
FDIC Rule Will Return Gold To The Center Of The Banking Universe [View article]
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
Central Bank planning, and issuance of irredeemable currencies were not contemplated by the Founding Fathers of the EU or America. Europe might also be well-served by fiscal union in many ways. But, fiscal union will not solve the problem it now faces.
The problem is the same in Europe as in the USA. The ECB and the Federal Reserve are central banks that use a Politburo-like mechanism to enforce uniform, but often inappropriate, interest rates throughout dissimilar regions. In Europe, a rate appropriate to Germany was applied to Spain. In America, a rate appropriate to New York was applied to Arizona, Florida, Nevada and other states. In both cases, an enormous bubble was blown. Spain, like Arizona, Florida and Nevada needed much higher interest rates. If they had them, from 2000 to 2007, there would have been no housing bubble or collapsing world financial system.
I am certain that, once the dysfunctional Euro is dealt with, attention will turn to the dysfunctional Federal Reserve Note. The resolution method will be different. The USA will not break up. It is not divided by a long history of political squabbling like Europe. The problem will be resolved, here, by the return of gold into the banking system, to one extent or another, and transformation of the Federal Reserve (if it is continues operating) into a much different institution.
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
What Happens To Precious Metals And Bank Stocks In A Post-Euro World? [View article]
The BRIC nations do want the biggest markets for their goods, services and commodities possible. It is very useful to export goods to markets that are ready and willing to pay for them. But, to spend your own money to subsidize a market in order to have a place to sell something? That is not a very smart thing to do. They are better served, if spending hundreds of billions of reals, rubles, yuan etc. to spend it on their own economies, internally stimulating demand, and they know it.
The Euro zone is dysfunctional and must end at some point. European governments and politicians certainly will engage. The Euro will go the same way as its 19th century predecessor, "Latin Monetary Union". As I remember, it was the tiny Vatican state that started that collapse. So, the experiment will end, one way or the other, after the politicians exhaust all their energies.
If the ECB start printing more heavily, and it will require about 3x as much printing as America requires, the end will be delayed by many months, if not years. That delay will come at the cost of heavy inflation. When the people object to this situation vehemently enough, the experiment will end, for if it does not, this entire situation will repeat itself, not too far in the future.
Will Spain Leave The Eurozone? [View article]
It did not have to be this way, but, now, not even a shift to a free gold standard would stop it. Such a shift would only prevent future huge booms and subsequent catastrophic busts. But, all is not negative There are some big positives.
New shale fracking technology has brought down the price of natural gas tremendously and made energy cheap in America. Once we adjust to using more of it, this will result in dramatic reduction in the importation and price of both oil and gas, at least after inflation is accounted for. The previous very high cost of energy has been a huge drag on western economies.
The interconnectedness of the internet is another big plus. Yes, it may allow some high value US jobs to filter overseas. But, the web also allows ideas to spread and be utilized at a very fast rate. Americans are somewhat good at developing technical theories, but exceedingly good at taking the theories developed elsewhere, and putting them into practice in the form of useful products.
Labor costs for the "impoverished" masses will probably be considerably lower, after inflation, than now, but still higher than other nations. Nevertheless, cheaper labor, combined with the spread of concepts by the web, and the ultra-cheap energy available in the USA and Canada, are likely to result in a lot of the manufacturing of the new products in North America, especially the USA.