Seeking Alpha

Avery Goodman

 
View as an RSS Feed
View Avery Goodman's Comments BY TICKER:
Latest  |  Highest rated
  • Capitalizing on the Rise in Silver Prices [View article]
    If you choose to store your silver in an allocated account at an exchange licensed storage warehouse, like Brinks, Delaware Depository, Scotia Mocatta, etc., you can reverse your long position by selling a covered "short", at the time of your choosing, holding the short position to maturity, giving notice to the long buyer of delivery, and having your broker deliver the bars pursuant to the futures contract. If you physically remove the silver (because you intend to keep it yourself, for example, for a very long time), and you want to deliver it on the COMEX or NYSE-Liffe, you will need to have it reassayed when it is returned to a licensed storage facility, which costs some money to do. You can also sell the silver on the "spot" market by contacting a major precious metals retailer, such as "Kitco" or a bank that deals with precious metals. Some dealers and banks may also demand reassay if it has been in your possession, so that the purity of the bars are verified. You may also be able to sell it to a jeweler or jewelry manufacturer, or even a Mint (like the Royal Canadian Mint) that is having trouble sourcing silver from traditional sources, but that would involve a lot of legwork, and is a new idea I've just come up with as I am writing this reply.
    Feb 28 11:55 PM | 2 Likes Like |Link to Comment
  • Capitalizing on the Rise in Silver Prices [View article]
    The difference, I think, between then and now, is the fact that, today, prices are being driven by true worldwide demand, both from industry and investors. Back in 1980, demand was centered around the futures markets in America, with the Hunt family taking on incredible leverage in order to pressure short sellers. Once the exchange declared that there would be "liquidation only" allowed, the market collapsed. The Hunts were one family without sufficient cash assets to continue their manipulation without the help of leverage. A sudden return to reality collapsed silver prices. The key is that, back then, the fantasy casino was being played long. This time, the fantasy is on the short side, and reality is on the long side. Millions of real world silver buyers cannot be stopped from buying silver by any action of the COMEX or LBMA.

    We have evidence that short-side manipulation has gone on for several years. Because the scheme was revealed at the March 25, 2010 CFTC hearing, this short side manipulation is now in the process of unwinding. If the futures exchanges were to declare "liquidation only", under these circumstances, the spot price for silver will go nuclear rather than collapse. That is because the primary demand is in the real world, not the futures markets.

    In addition, back then, although the long side manipulation profoundly affected silver prices worldwide, its genesis was at the U.S. futures markets. Now, according to the testimony, the nexus appears to be the LBMA member banks. COMEX appears to be a important sideshow, but little more. LBMA is a much larger market and the unwinding upward will be much larger in scope and effect than the unwinding downward was, back in 1980.
    Feb 27 11:53 AM | 24 Likes Like |Link to Comment
  • Will Silver Prices Explode - Again? [View article]
    Any seller of anything can refuse to honor a contract. That is called breach of contract, and, in the case of the futures market, it is called "default". COMEX is a clearing house that guarantees performance, and is on the hook to provide the necessary cash to buy the silver if short-sellers default.

    You might argue, of course, that the short-sellers are in control of COMEX. In a situation where absolutely no silver is available worldwide, it is remotely possible that they could try to legitimize a default by using the administrative machinery of the exchange, as you suggest. However, the person damaged by the breach could also sue them, and the exchange, for breach of contract, as well as fraud, and win back damages as well as triple damages for the fraud.

    If there is any silver available, anywhere, at any price, I am certain that the short-selling banks will buy it to make delivery. There is, in fact, plenty of silver. It is just a matter of how high the price needs to be in order to get the current owners to part with it. But, given that these banks are supposedly "too big to fail", they will be provided with whatever funds they need, by the Fed, to buy that silver, even if the money needs to be printed for that purpose.

    Even at the height of the Hunt Brother's manipulation, in 1980, the exchange did not refuse to back deliveries to persons who held fully paid-for positions in silver. They simply prevented new positions from being opened. That refusal collapsed prices because prices were going up as a result of long-side manipulation by a small group of speculators, led by Hunt.

    Such a gambit to collapse silver prices won't work, this time, because silver prices are being driven now, not by one small group of long side manipulators, but, rather, by strong world-wide physical demand. If the short-sellers delay delivery by a year or so, and litigate, instead, they would drive prices up to as-of-now heights that we cannot now even dream of. Aside from triple and/or punitive damages, they would face paying sums of money that equal 10x (or more) the price they would have paid if they had borrowed money from the Fed and bought it during the delivery period. So, they won't default, no matter what it takes.
    Feb 11 08:25 AM | 2 Likes Like |Link to Comment
  • Will Platinum Prices Continue to Soar? [View article]
    Just to be clear...one of the more interesting things about hydrogen is its low energy density per unit volume, and high energy density per unit weight. It is generally sold by volume, however, like gasoline and diesel fuel, and not by weight.
    Jan 29 10:17 AM | Likes Like |Link to Comment
  • Will Platinum Prices Continue to Soar? [View article]
    Hydrogen, in its densest form, exists in the form of a pure liquid. Even in that form, it contains only about 1/3rd of the energy per gallon as gasoline or diesel fuel. At the cost meed in the article, of about 80 cents per liter, it would be considerably more expensive than the current price of gasoline.

    However, the polymer-bound hydrogen contemplated by the article would have an energy density much lower than that of pure liquid hydrogen. It would surprise me if the energy density exceeds 1/10th that of gasoline, if that. Hydrogen-polymer fuel would be both extremely expensive, low in energy (requiring huge "gas" tanks on vehicles", and impractical. Cars powered in that way, cannot compete with other fuel technologies. They are a pipe dream.
    Jan 29 08:14 AM | 1 Like Like |Link to Comment
  • Will Platinum Prices Continue to Soar? [View article]
    That sentence was not meant to be unbalanced. It simply points out that platinum can be used in almost all cases, whereas palladium is a substitute for platinum that cannot be used in many applications for which platinum is the only choice.

    Currently, there is also elevated demand for palladium because of its increasing substitution for platinum, in some uses, as well as because it is subject to many of the same demand factors. However, supplies of palladium are more connected to the base metals. As nickel demand increases the nickel ming supply, for example, palladium supply increases because most palladium is mined as a byproduct of nickel mining in northern Russia.

    Another issue with palladium is the uncertainty caused by the Russian government supply that amounts to tens of millions of ounces. About 9 months ago, Norilsk JSC told everyone that, in their opinion, the Russian government stockpile was almost gone. This has led investors to think that the market will never again be flooded with Russian palladium which, in turn, is part of the reason the price has gone wildly upward.

    However, shortly after making its proclamation, Norislk immediately put its stake in Stillwater Mining (one of the very few pure-play palladium miners) up for sale. If the tens of millions of ounces of Russian government palladium is really all used up, as Norilsk claims, that insures ever increasing prices for palladium. However, if that is true...why did Norilsk work so hard to get rid of its stake in Stillwater, which would then have the prospect of incredible profitability in coming years?

    I think that Russia's stockpile of palladium is still very large, and will be released, as it was in year 2000 when and if oil prices fall significantly, and the Russian government needs money. That has the prospect of collapsing palladium prices, again, just as it did back then. This prospective instability issue is why I would not invest in palladium at the current price. If I had confidence that the Russian stockpile is really exhausted, palladium might be as good or a better investment than platinum. However, I don't. That doesn't mean, though, that palladium won't continue to soar for some time to come, and it probably will.
    Jan 23 09:15 AM | 3 Likes Like |Link to Comment
  • Gold Bullion Holdings Information Is Dubious [View article]
    However, strong well reasoned arguments are one thing, and hard evidence is another. There is no solid evidence that GLD is not exactly what its promoters say it is. The idea that it is a fractional banking scheme is speculation based upon the rather gaping holes, written into the prospectus, through which its trustees, promoters and custodians might try to escape from liability if significant problems were proven.
    Jan 7 09:33 AM | 4 Likes Like |Link to Comment
  • Gold Bullion Holdings Information Is Dubious [View article]
    Jeff, it depends on the investor's horizon. If you are a long term investor, the current exuberance over a few positive numbers is not going to shake you out of gold and into stocks. Given that the Fed has added $2.35 trillion funny-money dollars to a pre-existing base of less than $900 billion pre-existing dollars, almost quadrupling the monetary base in just 3 years, you are going to see some short-term results.

    However, quantitative easing is a self-defeating process. In my last article, I described how Bernanke has managed to impose a QE-tax on the economy which, in 2011, between the skyrocketing price of oil and food, will amount to a drain of $1 trillion annually from American pockets. That assumes but that oil stays at $92 per barrel and food doesn't go up more, both of which are unlikely. We may end up with an inflation tax of $1.4 trillion in 2011, by the end of the year. To keep an illusory "recovery" going, Bernanke must print more money, and then the inflation tax will rise even more, and he will be forced to print yet more, in an endless cycle of printing that can only end in hyperinflation if he goes that route. If he stops printing money, then the manufactured recovery ends, and the bubble collapses.

    In either scenario, gold is a better investment than stocks. Gold may or may not decline in the next week to a few months, but, looking at the outlook for several years ahead, it can only rise both nominally and in real value. In contrast, a majority of stocks are likely to fall from current levels, one way or another, through a nominal decline, if the funny-money printing press stops, or through a deep collapse in real buying power value if Bernanke keeps printing.
    Jan 7 09:25 AM | 7 Likes Like |Link to Comment
  • Gold Bullion Holdings Information Is Dubious [View article]
    I concede, having read the GLD prospectus, that the arguments of the allegedly "paranoid" people seem to be quite strong.
    Jan 7 09:00 AM | 3 Likes Like |Link to Comment
  • Bubble-Trouble Grows [View article]
    It is true that an investor who sees what is happening can take steps to protect himself, like going long on oil, gold, silver, platinum and so on and so forth. However, he must also know exactly when to sell them, and, unless he is closely connected to the central bank that is blowing the bubble, he will not have that knowledge to any degree of accuracy. Those who compete with him, in the marketplace, however, and do have such connections to the central bank do have that knowledge because it is corruptly transferred to them. An example of this is NY Fed President William Dudley's appointment book, which was recently obtained pursuant to various information requests. It shows several meetings with Larry Meyer, a person who was formerly associated with the Fed but no longer is, and now acts as a so-called "expert" helping firms who can afford to pay him big fees like PIMCO understand the Fed's next moves. Similarly, Dudley had repeated private meetings with the executives at the major Wall Street banks. To think that material non-pubic information was not passed to those players is to be naive.

    The Federal Reserve is an unelected structurally corrupt organization that is designed to meet the needs of banks, and, now, given that so many of the bigger banks have become casino operators, designed to meet the needs of speculators. It is not designed to meet the needs of a modern economy, and has increased the number and extent of economic bubbles, as well as their frequency, in order to please its masters.

    Beyond that, an economy that is being handled properly does not force productive citizens in other fields of endeavor to become speculators, forcing them to buy and sell commodities. Yet, that is exactly what the Federal Reserve is forcing us to do.

    An engineer who designs bridges should be able to do that, receive his compensation in dollars, for example, and know that the amount he has been paid will be a store of value that he can use when he needs the services of someone else, even if he expects to wait thirty years before he does so. Similarly, a medical doctor needs to concentrate his energies on treating his patients, not on engaging in forced speculations just to prevent himself and his family from having their assets stolen from them by an out of control central bank that has too many ties to speculators who benefit from that environment.

    Forcing productive citizens, in all walks of life, to become speculators, when many are not suited for that activity by temperament or understanding, creates a highly unstable and unproductive society.
    Jan 4 05:20 AM | 4 Likes Like |Link to Comment
  • Bubble-Trouble Grows [View article]
    I should also note that the policies of the Federal Reserve will not result in any recovery because they are inherently self-defeating. They will have printed $2.35 trillion dollars in a space of 2.5 years, essentially tripling the monetary base. However, as noted in my article, this has caused a massive rise in commodity prices that are essentially new stealth taxes imposed on the American people (and the rest of the world). The stealth "QE-taxes" on oil and foodstuffs together amount to just shy of $1 trillion per year of money leaving consumer pockets. After two and a half additional years, more than $2.35 trillion will be consumed by the stealthy inflation "tax". "Rent seekers" (commodities speculators on Wall Street) are enriched by a bubble that drains money from the pockets of prudent hard-working productive people, even while the real economy is severely damaged. This is why printing lots of money has never resulted in prosperity for any nation. Only fools and/or very corrupt people would do it.
    Jan 3 05:02 PM | 4 Likes Like |Link to Comment
  • Bubble-Trouble Grows [View article]
    Yes. I do believe that the U.S. could pay its bills. It would need to suffer austerity, and many of the social programs you mention, as well as non-essential military expenditures must be dramatically cut. However, the nation would be better off for it.

    There would be little need to raid the FDIC fund if the government changes accounting standards back to honest practices, which would show that some of the largest banks in America are insolvent. That would justify nationalization of the major insolvent banking institutions, and, once owned by the government, few people would demand deposits immediately.

    There would be no run on the bank, and, if there was, a limited number of dollars could be printed. The nationalized banks would have shareholders and bondholders wiped out, all top executives responsible for the 2008 crash and the preceding bubble fired. They would then be resold into private hands of a more prudent nature. Ahead of the sales, regulations would be enacted to insure that no bank became large enough to be "too big to fail" ever again.

    There are no nice choices. The policy choice that the Federal Reserve (an unelected group) has made is to steal from the prudent part of the population in order to give to speculators who work in the trading departments of the banks that caused the 2008 implosion. The long term end result of such policies will be much worse than the austerity that I am proposing.
    Jan 3 04:37 PM | 4 Likes Like |Link to Comment
  • Bubble-Trouble Grows [View article]
    Correction: Third paragraph of comment should read:

    "I DO believe that the American government could easily resolve all its problems..."
    Jan 3 03:33 PM | 2 Likes Like |Link to Comment
  • Bubble-Trouble Grows [View article]
    If you are in such trouble that you must work to steal from one segment of the population to give to another, as Bernanke is doing with his quantitative easing and his Orwellian style defense of it, then default is the proper and more honest course of action.

    If the government is bankrupt, then ONLY those debts that were overtly guaranteed by the government...which are treasury bonds and FDIC insured bank accounts should be paid. That minimizes the need to steal using the printing press.

    People who bought muni-bonds from government units who cannot make the payments should suffer any losses, if those government units fail. Innocent non-connected financial institutions and individual investors who did not buy those bonds should not be subjected to a raft of Newspeak lies coming from government and quasi-government officials who seek to steal their money to pay off favored groups who bought bonds from failing banks and/or municipalities.

    Indeed, the damage that the creation of a Newspeak society creates is far greater than any possible depression could ever be. A depression merely strips the population of money, whereas an Orwellian Newspeak society, in which government officials conspire with financial interests to lie to non-connected persons and con them into allowing their money to be stolen, strips the people of dignity and their status as free people who can trust their government.

    I do not, however, believe that the United States could easily resolve all its problems if 1) the Federal Reserve were closed so that it could blow no more bubble and 2) the government cut back on spending to the point where it paid its own way through taxes. That might mean a lot of temporary suffering among those who depend on government handouts, but the end result of what the Federal Reserve and the U.S. Treasury are now doing is going to be much worse.
    Jan 3 03:28 PM | 6 Likes Like |Link to Comment
  • Hoping the Fed Will 'Disappoint' the Market and Say No to QE2 [View article]
    Sleek, I disagree that the currency, itself, is merely an "asset class." It may, at time, seem that way to people who are trading in and out of the markets. However, the currency is MUCH more than that.

    It is the foundation pillar upon which all financial confidence is built in the skyscraper that is the world economy. This is especially true of the U.S. dollar, which holds a special place as the reserve currency. If you can't trust the value of money, you cannot trust anything. That is why, during the early part of the history of the United States, the death penalty was imposed for debasing the currency..

    You can destroy an entire wall of a skyscraper and it will remain standing. However, if you break a foundation pillar, the entire skyscraper will collapse within minutes. The same is true of the U.S. economy. The primary dealers want the Fed to deeply debase the U.S. currency at a time when the world is already flooded with U.S. currency.

    Those who believe in a command economy of the type that is represented by the former Soviet Union will endorse the action of the Federal Reserve in forcibly confiscating the value of property from one group of citizens and giving it to another. Micromanagement of the economy was a Soviet Poltitburo specialty, just llike it is now a Fed specialty.

    If, however, you do not believe in socialism for billionaires (or anyone else for that matter), you will be shocked and dismayed by the actions of the unelected members of the Federal Reserve Open Market Committee which impose an unconstitutional taxation without representation, stealing money from fixed income investors and giving it to speculators who happen to have more clout at the Federal Reserve. Both QE-1 and the upcoming QE-2 are examples of open, obvious and brazen corruption.
    Oct 28 04:50 PM | Likes Like |Link to Comment
COMMENTS STATS
314 Comments
1,240 Likes