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  • Why Isn't My Gold Shining? [View article]
    Hi Maniad1,

    Also enjoying the dialogue.

    YOU ARE RIGHT, the current manifestation of the SDR is as you described and no longer backed by gold.

    However, at the time of the creation, SDRs were supposedly backed by the British pound and U.S. dollar which were in turn backed by gold but as Russell said were used as "...credit against gold..."(source: Robertson, Angus. Lackluster Kaffirs: At the Current Price of Gold, South African Production Has Peaked. Barron's. September 11, 1967. page 5.).

    Ultimately, SDRs could not have gained any traction if it wasn't for the fact that there was gold backing, implied or otherwise. Naturally, over-issuance, was the reason it was claimed to be a credit against gold instead of being backed by gold.

    It is no coincidence that SDRs were created in 1969 and the window on gold convertibility was closed shortly afterwards. As pointed out many times before (http://seekingalpha.co...), gold is pimped out by governments to gain acceptability for the introduction of paper currency with the intent of doing away with gold backing. Why the public falls for the ruse every time says much about not learning from the past.

    Again, asserting that the Fed is omnipotent and is therefore able to skew the markets takes a considerable amount of faith in the Fed, I confess I don't have such faith. My insolent perspective is that the period of American history without a Fed shows us the opposite is true or at the very least disputes the powers of the Fed.

    Regarding zero interest rates, well that actually makes holding gold not as expensive as when rates are at or near 4% or 5%. The fact that everyone is chasing yield does not justify the action. A steep price will be paid, and is being paid, to those who chase yield with abandon.

    Why invest in a CD? Folks aren't investing when they participate in a CD. They are simply saving money of a specific purpose at a later date. Why buy a bond at 2%? Because you're risk averse but you can't stand getting hosed in a savings account.

    "Under normal rates and no QE to remove the garbage that would hold the markets down, people would be much more diversified. They would buy gold as part of a balanced portfolio, but they are not."

    Do you know how hard it was, and is, to getting the public interested in buying gold and silver? The price has to rise to unsustainable levels before it starts garnering the interest necessary. The old tymie notion that gold is part of a diversified portfolio only kicks in after the peak in price, a la 1980 (the exact opening to this article we wrote: http://seekingalpha.co...). You, me and a select number of diehards might think we know diversification but for most folks it only kicks in after the fact.

    Regards.
    Jul 14, 2015. 01:11 PM | Likes Like |Link to Comment
  • The Chinese Government Just Rigged The Market In Your Favor [View article]
    Hi Tae,

    This is interesting. Suggesting that the Chinese government "...just rigged the market..." based on recent action ordinarily means that it wasn't rigged before.

    However, if the market was rigged on the rise as we're getting confirmation about in the decline then the fall is inevitable in spite of the recent Chinese government action. This suggests that, though the government is talking a lot of game, the market will fall as needed but only if necessary.

    This faith in governments to rig the markets successfully is like those who claimed that the Fed wouldn't let markets crash before 2007 but then from 2007 to 2009 the market declined -45%. All along, there was a belief that, they wouldn't let it happen. The same logic went into the Fannie and Freddie implicit government guarantee. Yeah, they were backed by the government but investors were wiped out, not bailed out.

    While it might have been intended to say that all markets are all rigged all of the time, the recent government announcement seems to make this point for us. Final analysis, government involvement won't save investors as it hasn't in the past.

    BTW, TRADERS should enjoy buying and selling SPY as it is a product and not an asset. INVESTORS should prefer claims on individual companies if they aren't traders. However, to each his own which is what makes a market.
    Jul 14, 2015. 11:54 AM | 3 Likes Like |Link to Comment
  • The Chinese Government Just Rigged The Market In Your Favor [View article]
    What the government gives they can (and usually do) easily take away. Why wait for the inevitable?
    Jul 14, 2015. 10:32 AM | 2 Likes Like |Link to Comment
  • Why Isn't My Gold Shining? [View article]
    Hi Maniad1,

    Just to repeat, to make the claim that "the paper gold is a big problem for physical buyers" you have to know what happened the last time the same claim against "paper" gold was made and what ultimately happened.

    First, I will quote Richard Russell from the Dow Theory Letters at the introduction of the topic on Special Drawing Rights or SDRs label as "paper gold" from 1971.

    "One of the more pathetic recent innovations was the creation of S.D.R.'s, the much touted 'paper gold.' These Special Drawing Rights are nothing more than additional quantities of international credit, but the credit is against gold, The S.D.R.'s are not 'paper gold, ' as they have been hopefully termed, they are additional paper credits against gold. The issuance of S.D.R.'s merely means that the world stock of gold is being asked to do more in the way of credit. And of course, that’s been one of the main problems all along, the problem being that at the current 1934 price for gold, the dollar is overvalued. A dollar is defined in value as worth l/35 of an ounce of gold. But with the huge inflated mass of dollars outstanding today, the dollar is actually worth far less than 1/35 or an ounce of gold. Or to put it in reverse, an ounce of gold is worth far more than $35 dollars (Russell, Richard. Dow Theory Letters. February 6, 1970. page 5)."

    Just to be clear, Richard Russell definitely had a strong opinion about SDRs (paper gold) which is cited below:

    "Thus a decade ago the dollar was thought to be 'as good as gold'. The towering deficits of the late 1960s and early 1970’s showed this to be a lie. Now, an attempt is being made to pass SDRs off as 'paper gold'. But the phrase 'paper gold' is a self-contained lie as much as the phrase 'angel devil' or 'liquid-solid'. Gold is gold, it cannot be substituted regardless of the intentions or promises of politicians, and the proof is always the same. when the crisis hits, the dollars, the SDR’s, the fiat paper, they all go under as men and nations stampede towards the one immutable reservoir of value-gold (Russell, Richard. Dow Theory Letters. December 15, 1971. page 5)."

    Russell is no lightweight on the topic of gold investing as he advocated 30%-40% of the portfolio in gold in the 1970's. However, If you check the premise it would seem that the analysis may not be correct, that premise being that "paper" gold is the cause of the price decline. In fact, if you check the history on this, you'll find that OPEC switched from dollars to SDR's (paper gold) in 1975 (OPEC will Sever Link with Dollar for Pricing Oil. New York Times. June 10, 1975. page 1).

    Again, the question is, if SDRs ("paper" gold) were issued in massive volume/quantities and the price of gold went from $35 to a bloated level of $850, what's to stop gold from achieving the same level of appreciation from $252 to $5,868? After all, in the 1974 to 1976 period, the price of gold fell -50% and ultimately catapulted higher.

    We're currently in the midst of a similar -50% decline experienced from 1974-1976. That decline was a blemish compared to the big picture rise from 1968 to 1980.

    Now, regarding the impact of QE and ZIRP, whoever makes this claim never checks the history to disprove it. If they did check the claim, they'd never bother using it as we have proven, in real time (found here: http://seekingalpha.co...) and after the fact (found here: http://bit.ly/1sqiIx4), that the Fed's impact is marginal at best. You'd have to be a died-in-the-wool cheerleader of the Fed to believe it is in control of the markets to the extent of the claims made.
    Jul 13, 2015. 02:12 PM | Likes Like |Link to Comment
  • This REIT Is Backed By The Full Faith And Credit Of The U.S. Government [View article]
    This claim "backed by the full faith and credit of the U.S. government" is misleading and borders on the claims made by ill-informed investors in Fannie Mae and Freddie Mac.

    Of the last eight quarters, DEA has seen GAAP earnings in the negative 75% of the time. In fact, Q1 losses were the largest yet. While 2014 was a substantial improvement over 2012 and 2013, the payout has yet to be matched by earnings, forcing DEA to borrow to pay their dividend.
    Jul 13, 2015. 01:09 PM | 1 Like Like |Link to Comment
  • Why Isn't My Gold Shining? [View article]
    It would take an understanding of the last period of "paper" gold to know that the current "paper" gold is having little effect on the decline in the price of gold.
    Jul 13, 2015. 12:46 PM | Likes Like |Link to Comment
  • Prospect Capital Management And The Brilliant Spin-Off [View article]
    The very fact that the stock was issued dilutes the real value of the shares, the opposite effect of a share buyback.

    Consistent issuance of shares combined with the inability to earn an amount equal to the distribution are significant warning signs.

    Just to correct the prior error in the last comment I made it should read:

    "falling volume and falling price is positive."
    Jul 12, 2015. 11:33 PM | Likes Like |Link to Comment
  • Prospect Capital Management And The Brilliant Spin-Off [View article]
    It is challenging to ignore the fact that at the 2007 peak in the price, average 6-month trading volume was 400,000. Since the peak in the price, average volume has increased to 12 million.

    Alternatively, taking the 2010 peak in price, the average trading volume was 4 million compared to the current 12 million.

    Although this trend can be reversed, for now, the price cannot rise in the face of such overwhelming selling pressure as volume increases.

    Rising volume and falling price is a negative. Falling volume and rising price is positive.
    Jul 12, 2015. 12:15 PM | 2 Likes Like |Link to Comment
  • Gold's Unsafe Haven And Yen's Comeback [View article]
    Thanks Recusant,

    Just wondering if the message ever deviates from "fiat is not money" and "5000 years of history" and "safe haven" references to gold. Apparently, it takes a level of naïveté to never adjust to changing market conditions.

    I'll stop playing fast and loose with "interpreting" what is said. For your enjoyment from September 3, 2011:

    "If you want to be safe, invest in the Sprott gold fund or CEF or GTU or some other proven gold trust. (http://seekingalpha.co...)"

    The performance of "safe" funds relative to GLD since 2011:

    CEF: -55.14%
    PHYS: -41.51%
    GTU: -44.10%
    GLD: -38.52%

    Data covers the period from September 5, 2011 to July 6, 2015.

    Best regards.
    Jul 9, 2015. 01:44 PM | Likes Like |Link to Comment
  • Qualcomm: Dividend Stock Analysis [View article]
    Greetings Roadmap2Retire,

    I'm familiar with Mr. Fish's work, however, the contender, challenger and champions are from Moody's Handbook of Dividend Achievers and S&P references to the "champions." Although they are not acknowledge as such very often it is worth attributing the sources.

    This is not in any way a challenge to Mr. Fish's contribution on the lists just a hat tip to the original sources. No harm no foul.
    Jul 9, 2015. 01:04 PM | 1 Like Like |Link to Comment
  • Qualcomm: Dividend Stock Analysis [View article]
    "The company is a dividend contender having raised dividends for 13 consecutive years..."

    IMO, any company that can raise dividends for the last 13 years in a row (through the 2007 to 2009 recession period) is more than a contender, unless they are using funny math to achieve these goals.
    Jul 9, 2015. 10:36 AM | Likes Like |Link to Comment
  • Gold's Unsafe Haven And Yen's Comeback [View article]
    "GLD is not the sole determinate of the price of gold."

    It seemed that the opening to the first remark that "Until the manipulated paper gold investments (think GLD here) lose investors' confidence, the true demand and value of gold will be obscured" suggested that GLD was a significant determinant in the obscuring of the "true" price of gold.

    But now it seems that the remark "If increasing the PM value is to their advantage, up it goes..." clarifies that it is "the banks" that are the "true" obscuring determinants to the "true" price of gold.

    Which brings us back to the question of the periods in history when the price of gold increased +300% from 1971 to 1974 and then the subsequent decline of -50% from 1974 to 1976. Was the rise and fall all due to "the banks" whims or a reflection of "true" price?

    Also, the rise from the 1976 low to the 1981 high and the subsequent low of 2000 and then the 2011 high and now the 2015 low. Is it simply a matter of "the banks" or manipulation of GLD that caused the movements?

    On a relative basis, talk of manipulation skyrockets when the price of gold falls or is threatening to fall while the opposite is true when the price of gold rises. This suggests that the "TRUE VALUE" of gold is only a rising price AND NEVER a falling price.

    Finally, why have any interest in precious metals at all if the view is that it is easily manipulated? In fact, why have any involvement at all in anything that is thought to be easily manipulated?

    When, other than as the price rises, can you be certain that the "true value" is correct if it is all manipulated?
    Jul 9, 2015. 10:29 AM | Likes Like |Link to Comment
  • Gold's Unsafe Haven And Yen's Comeback [View article]
    "Until the manipulated paper gold investments (think GLD here) lose investors' confidence, the true demand and value of gold will be obscured."

    In the period from 1980 to 2000, there was no (GLD) fund and gold managed to decline in price. In the period from 2000 to 2011, the price of gold managed to increase in value. So far, GLD has not brought the price of gold below the previous low.

    So the question becomes, where is the proof that GLD has manipulated or "obscured" the price of gold? After all, when there was no GLD the price of gold peaked in 1980 and fell nearly -80%. Since GLD's inception in 2004 gold has seen the price increase +146%.
    Jul 8, 2015. 06:27 PM | Likes Like |Link to Comment
  • Chinese stock plunge leads Asia lower [View news story]
    Only two downside targets left 2,867 and 1,722. With all the rules killing liquidity, the greater the chance for falling to these levels.
    Jul 8, 2015. 12:17 PM | 1 Like Like |Link to Comment
  • The Parody Of Errors That Led To Grexit [View article]
    Step one of the parodies was when Greece hid their debts in order to meet the criteria for consideration in the EU.

    "Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules."

    source: Blazli, Beat. "Greek Debt Crisis: How Goldman Sachs Helped Greece to Mask its True Debt". Spiegel Online. February 8, 2010. http://bit.ly/1r5ehZ8
    Jul 8, 2015. 11:45 AM | 3 Likes Like |Link to Comment
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