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Keith Weiner

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  • Use SLV To Trade The Growing Silver Surplus [View article]
    For those interested, I wrote about the German gold repatriation:
    Jan 30, 2013. 01:05 PM | 2 Likes Like |Link to Comment
  • Use SLV To Trade The Growing Silver Surplus [View article]
    A few comments:

    1) The dollar is going to zero eventually. However, knowing this is not tradable in itself.

    2) Buying gold or silver and waiting for the price to rise does not produce "profits". Sure, you have more dollars but each dollar is worth less.

    3) I wrote this article to propose an easy way for most traders to be able to act on my thesis that silver is not in the shortage rumored by the iMac shipments, the Mint suspension, etc. GLD and SLV have tight bid-ask spreads and are accessible to every SA reader.

    4) There is a limit as to how much one can cover in one article, but anyone who has a means of trading physical metal can trade my thesis if they wish. Most people do not have a practical means of trading physical metal, though.

    5) In my article, I said only that US Mint sales are a "weak proxy". To clarify, I am not saying that silver Eagles are abundant. I am saying that the US Mint shortage does not necessarily mean that the global silver market is in shortage.

    6) I am an advocate of the gold standard (at least one commenter read my profile). I am no defender of the Fed. This piece was focused on a single, specific trade idea. A contrarian idea.

    Time will tell if my thesis is right.
    Jan 29, 2013. 08:30 PM | 5 Likes Like |Link to Comment
  • The Arbitrageur: Gold Sea Change [View article]
    I have written many times about the conspiracy theories. If one looks at the data, it does not fit the allegations.

    Here is a recent piece:

    Here is one I did a while back:
    Aug 11, 2012. 10:37 AM | 1 Like Like |Link to Comment
  • Ben Bernanke Couldn't Be More Wrong About This [View article]
    I agree Shaun. I would add that interest rates are the reward for savings, and savings must necessarily precede investment. Savers are today given a negative incentive.

    And it's even worse than that. Falling interest rates (as opposed to low rates) destroy capital.
    Jul 18, 2012. 12:00 PM | 3 Likes Like |Link to Comment
  • In A Gold Standard, How Are Interest Rates Set? [View article]
    Alf: We have different concepts of "gold standard" and "free market". You propose government-insured accounts. That is not at all what I propose as a gold standard.

    You assert by "definition" that the purchasing power of gold is falling. You don't offer any evidence of this, and instead build on top of this assertion.

    By the way, I don't accept the definition of "inflation" as rising prices. It confuses one possible effect of monetary debasement with the root issue: counterfeit credit. By my definition, gold mining is not inflation.
    Jun 14, 2012. 09:20 AM | 1 Like Like |Link to Comment
  • In A Gold Standard, How Are Interest Rates Set? [View article]
    Alf: there are at least two arbitrages that one cannot take for granted.

    First, the cost of mining an ounce of gold can be measured of course in gold ounces. If the cost is more than one ounce to mine one ounce, then mining stops. If the cost is less than one ounce, then mining resumes. By this elegant arbitrage, the market signals whether it needs more gold.

    Second, assuming the spreads on gold are narrow (which they are in a free market, unlike today) there is arbitrage between non-monetary gold and monetary gold. People can both melt down coins to make bars, jewelry, and other objects. And they can bring non-monetary gold into the mint to make coins. By these arbitrages, the market signals whether it needs more money.

    Then, as I point out in my paper, there is the arbitrage of the marginal saver. At some point, the interest rate is too low to compensate the saver for the lack of use of his gold for a period of time plus the risk of loss. He withdraws his gold coin from the bank, forcing the bank to sell a bond, forcing the rate of interest to tick up.

    Also, as I point out in my paper, the lower the rate of interest the more entrepreneurs there are selling bonds to finance projects.

    It is not true that one can simply assume that more gold = lower interest rates.

    Ironically, that is the situation we face under paper today. The more they print "money" (credit, really), the more it fuels bond buying.
    Jun 13, 2012. 08:58 AM | Likes Like |Link to Comment
  • In A Gold Standard, How Are Interest Rates Set? [View article]
    Thanks your comments. Here are a few brief thoughts.

    1. Gold has a "stocks to flows" (i.e. inventories divided by annual mine production) of 80 years, according to official estimates. I think the number in reality is far higher, but even so... This means that changes to either supply or demand at the margin will impact gold far less than changes in any other commodity. As to interest rates, I don't see any connection to wedding season or mine discoveries.

    2. David, if you are referring to a gold bullion standard or gold exchange standard, I agree. I propose a gold coin standard, which means a free market in money, credit, and banking. It must be the right of any citizen to sell the bond and take his gold coin out of the banking system.

    3. Stable interest rates does not cause unstable prices, quite the contrary. Kondratieff and other noted a strong correlation between changing rates and changing prices; I plan to write a paper on this topic showing what causes what and why.
    Jun 10, 2012. 02:59 PM | 1 Like Like |Link to Comment
  • The Case For 'Dollar Backwardation' [View article]
    Hi all,

    I just heard from Pater that my piece was published here. While I cannot respond to everyone, I would like to share a few thoughts.

    First, this is not about the price of gold nor the claim that gold is "going up". This is about the terminal monetary system disease--a cancer--that is the inevitable outcome of an irredeemable paper money. Debt builds up, interest rates first rise (causing bankruptcies all over industry) and then fall (causing more bankruptcies), and fall, and fall, and ... we are now well within the event horizon of the black hole of zero interest. Gold will remain standing when the paper currencies (all of them) perish.

    This is about systemic bankruptcy and government bankruptcy. It's not over when an entity cannot amortize its debts. No, the system continues until an entity cannot attract bidders to its bond auctions.

    I study spreads. I have written a lot about gold backwardation, which should never ever occur. Gold has a stocks to flows (inventories divided by annual mine production) of about 80 years, which is totally out of the ballpark compared to any other commodity (except silver). With gold, there is no such thing as a "glut" or a "shortage", and yet backwardation implies a shortage. This is a very serious thing. It is the harbinger of the end of the regime of irredeemable paper money.
    May 25, 2012. 12:33 PM | 1 Like Like |Link to Comment