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Robert Kientz

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  • Lessons Learned From The Gold Crash [View article]
    Gold phyiscal market does not = gold paper market. You are analyzing the paper market which has no relevance to the historical physical market in gold. Therefore, your pronouncements have little value for those that invest in physical metals.
    Jul 25 02:48 PM | 1 Like Like |Link to Comment
  • My Quick Take On Gold As An Investment, A Currency And Money [View article]
    "That might sound reasonable, but deflation tends to be catastrophic if prolonged. If you see what's going on in Spain and Greece today you get the gist. They're locked in a single currency, trade doesn't rebalance through FX because they all use the same currency, the governments can't print money and so they're suffering through a depressionary deflation. It's a disaster. So I dislike the gold standard because I think it's like putting ourselves in a straight jacket."

    When gold was straight up money (and not backing paper fiat during the gold standard in which governments printed too much and broke their own peg to gold, thereby breaking the 'gold standard' with excess fiat printing without changing the peg), deflation was never an issue for gold holders. In fact, it supported users getting more for their money over time as deflation increased the value of their savings. This was a slow, steady and orderly decline in prices along the lines of a few percent per year. I have provided tables proving this in my book (amazon or free digital copy if you email me).

    I think your fears of deflation when using gold as money is unfounded based upon historical precedent. However, fears of deflation of fiat-induced money printing bubbles during times of paper currency regimes are indeed a serious consideration.

    The flaw in your argument using the Euro is there is once central bank creating monetary policy for multiple countries with different trade characteristics. When gold is used as money (and in no way pegged or attached to fiat which can be destablized by excess printing), gold prices simply reflect trade market conditions and in no way will destablize a country unless the country made bad choices to begin with. Gold acts as a measure of account, but is not the cause of financial instabilities.
    Jul 25 12:48 PM | 3 Likes Like |Link to Comment
  • Why Using Gold And Silver As Legal Tender Is An Awful Idea [View article]
    The article fails to understand the whole point of gold and silver as tender. It would replace fiat money which is constantly debased by the state. The price in fiat dollars wouldn't matter.

    Even if fiat was allowed to compete with gold and silver, the price of gold and silver would continue to rise regardless of actions by the Federal Reserve. Once gold and silver are free market money, the price of ETFs and COMEX speculative trading would decouple from precious metals as money. Most people wouldn't care what the speculators value gold and silver at.. the people using it to trade would be focused on PHYSICAL gold holding it's value over time, when compared to all of the fiat currencies worldwide have crashed to zero.

    No honest analyst who understands the relationship of gold and dollars believed the recent gold crash had anything to do with the real world. The crash caused gold and silver physical demand to skyrocket to the point they are very hard to find in any quantity, and current premiums are up substantially from normal precious metals market conditions. This would only be amplified in the event more states chose to support gold and silver as money (or just gold).

    Fundamentals of the US dollar are extremely weak, so any fluctuations in the price of gold and silver in fiat money are irrelevantto those who would use gold and silver as money, to trade for their services and goods and to hold as a store of value.

    As I have said 100 times on this site, the price you see for gold and silver has NOTHING to do with real demand, IE: money demand. It has only to do with speculative positions in paper (worthless by themselves) gold and silver positions. The only market that shows gold and silver's true worth as money (store of value and fungible currency) is the PHYSICAL MARKET, which is raging right now.

    Every price drop in the ponzi paper gold and silver markets only serves to increase demand for the precious metals. Gold is in permanent backwardation right now, and this will continue until the US dollar loses its reserve currency status and goes up in flames like 100% of fiat currencies in the history of the ball of dirt we live on called Earth.
    May 13 03:42 PM | 2 Likes Like |Link to Comment
  • Gold: A Bright Shining Lie? [View article]
    John,

    Yes.The paper market now has very little bearing on the actual physical commodities (anymore). The current physical market demand is very high, shortages are occuring, and premiums over physical spot (determined by paper trades) are rising, leading to a severe divergence in the price of fiat gold (gold paper such as futures) and real physical gold.

    In addition:

    You used periods of data in which 1) the price of gold was mandated static, not free market and 2) gold and dollar were fixed in ratio by government decree during a time in which many more dollars were printed than gold was mined, leading to a breakdown of the ratio, liquidation of US physical stocks by the French and Russians, and subsequent failure of the gold exchange standard in 1971.

    In short, your charting analysis lacks historical understanding of the relationship between gold and dollars.
    Apr 23 11:41 AM | 2 Likes Like |Link to Comment
  • Gold: A Bright Shining Lie? [View article]
    Take out all trading in the futures market not related to legitimate producer hedges. Then re-run your analysis, and I will read it again. Most of the price history you use in gold is for the speculative market, especially the last two decades.

    People hold PHYSICAL gold for a reason. They don't much care what price the speculators assign to it in their fantasy trading of massive amounts of futures that have no basis on the real production markets, or physical demand for that production.

    Chart analysis is fun, I do it myself. But the assumptions made in charting often lead to incorrect analysis.

    If the physical market followed the recent gold correction, you'd see people dumping physical gold all over the market. Not just current production, but centuries of past production. Instead, you see physical hoarding every time the price drops. That should tell you something about the physical versus the fantasy paper markets in gold.
    Apr 18 11:28 PM | 2 Likes Like |Link to Comment
  • Gold - What We Like And What We Don't Like [View article]
    Nice article, as usual.
    Apr 18 05:35 PM | Likes Like |Link to Comment
  • Is Gold Useless - Part III [View article]
    As filipo illustrated, gold would have value beacuse you need to trade even after a market crash. In the short term, food inventories and supplies would be bartered. But after that sorts itself out, when you need to resupply, what do you use?

    Are you going to be able to trade your skills for the food or gas you need? What if the other guy doesn't need your skills but something else? At a point in time, gold will not be tradeable, but then it will be again. It is a safe store of value. After a big crash, nobody will trust paper money.

    If we go Mad Max and never have society again, then gold won't have value. But as soon as a big crash happens, history shows people go about rebuilding pretty quickly.
    Apr 18 07:07 AM | 1 Like Like |Link to Comment
  • Is Gold Useless - Part III [View article]
    "If you want gold/commodities delivered all you have to do is buy futures and they will deliver gold, corn, pork bellies, soy beans............ "

    For any given contract, yes. But try to redeem all the contracts at once and see what happens. COMEX inventories of physical, for example, at are at very low positions compared to the trades placed. If a few large longs stood for delivery, the exchange would be bankrupted. The easy way to confirm this is compare the physical inventories versus the daily trade volumes.

    By the way, on April 17th, the US mint sold a record amount of US gold eagles. Like I said, physical demand is exceptionally strong.
    http://bit.ly/11gjqRn
    Apr 18 07:02 AM | 1 Like Like |Link to Comment
  • Don't Get Caught Up In Panic Selling And Capitulation In Precious Metals [View article]
    I think I touched a nerve with DT.

    US sells a record 63,500 ounces of gold in one day.
    http://bit.ly/11gjqRn
    Apr 18 06:51 AM | Likes Like |Link to Comment
  • Don't Get Caught Up In Panic Selling And Capitulation In Precious Metals [View article]
    Jeb shows the ancient wisdom of the Chinese in looking past a five month window. He is smart and I suggest you consider the same.

    The overwhelmingly biggest factor in creating wealth long term in markets is joining a long term bull market and holding through corrections to the bubble phase. We are nowhere near a bubble phase in gold and silver. Nobody in the western world owns it, outside of central banks, for example.

    Every correction brings out the gold boo birds. But in reality, this correction is no worse than has already been seen in this latest gold bull market. In addition, it has not eclipsed the worst correction seen during the last gold bull market.

    All those calling for an end to the gold and silver bull are premature. Until economic fundamentals change substantially, the lure of gold and silver as an inflation hedge and save haven will not change substantially.

    For those that disagree, please post your thoughts and data points on which economic fundamentals have significantly changed with enough time and value to reverse the problems of the past decade? What makes you believe we will not have inflation at some point, or that the economy has a strong foundation and is growing substantially enough to warrant removing gold and silver from the conversation?

    I am not talking a quarter's worth of data points. I want people to show me where we have recovered from 2008 and are rocketing to new highs. Don't tell me stocks, which are overvalued. Tell me employment, legitimate GDP growth not tied to fiat printing, etc..

    Sorry Jeb, I took over your comments. I'll step down now, lol.
    Apr 16 11:38 AM | 1 Like Like |Link to Comment
  • Don't Get Caught Up In Panic Selling And Capitulation In Precious Metals [View article]
    In addition to Jeb's comment, look at the paper market for ETFs and futures. The ounces traded in these markets dwarf the actual physical ounces being produced every year. What that means is speculators are placing bets on the prices of commodities, such as gold and silver, without ever intending to trade or own the actual metals.

    Because these markets dwarf the actual markets upon which they are based, they tend to have an inordinate effect on the prices of the underlying commodities. If we could separate entirely the physical market (including the relatively small amount of legitimate producer hedges) from the paper market, you would have two very different gold and silver prices.

    In the physical markets, central banks, retirement funds, and sovereign nations are buying much more gold and silver than is currently available in the market, which in the past decade drove up prices. But as the paper betting, right now heavily favored in the 'short' side of the camp, began to grow almost exponentially and expanded way past actual physical ounces produced and traded, this created a 'divergence' in the price you see quoted in markets and the actual buying and selling of the real metals.

    The overwhelming short position in short paper positions in gold and silver have created more buying in the physical markets from those big players mentioned earlier. Every dip in price causes a surge in demand. Understandably, this recent price correction has caused a flurry of buying of the physical metals, and correlating shortages of the actual physical metal in many places around the globe.

    The fact that physical shortages have hit American shores is astounding. Gold and silver are not owned much by Americans, and our production of gold and silver in domestic and neighboring markets made acquiring physical very easy in the past. The fact that we cannot get physical now means that the large players may have finally dried up the worldwide markets, as writers such as myself and Jeb (along with most of the precious metals industry experts) have been saying would happen for quite some time.

    We will see if physical stocks recover enough to meet demand. But it is widely thought that western central banks have run out of metal to sell to eastern central banks that were buyers. This is largely because central banks, as a whole, became net buyers for the last couple of years and severely dried up available stocks in the market. Then we say Brazil and Germany call for repatriation of their gold held overseas, the University of Texas retirement system change their paper gold holdings for real physical, and now the State of Texas wants to repatriate its physical from the Fed.

    Governor Rick Perry has stated in the past he does not support the Federal Reserve policy and has asked that Texas make sure it has their physical gold in its possession instead of sitting in the New York Fed facility.

    Is this is the beginning of the short squeeze in silver and gold we thought was coming, or just a temporary bump in the road of gold and silver supplies to meet temporary demand?

    Based upon my research, this is long term demand outpacing supply and will continue to cause a surge in physical demand of gold and silver.

    Man, I just wrote an article in the comments!
    Apr 16 11:31 AM | 2 Likes Like |Link to Comment
  • Is Gold Useless - Part III [View article]
    Except, Alex, that fewer than 1/2 of 1% of American's investment funds were in gold and silver in any capacity (physical, jewelry, ETF's, etc..). So by definition gold is not in a bubble and could not be in a bubble.
    Apr 15 04:50 PM | 1 Like Like |Link to Comment
  • Is Gold Useless - Part III [View article]
    financemc,

    Come over to Jeb's thread in which he and I are discussing the shortage of physical silver both locally, nationally, and internationally in Asia.

    http://bit.ly/137d62r

    Yes the paper price dropped, but try finding large lots of gold and silver that simultaneously 1) don't have much larger than normal premiums and 2) are not backlogged (IE you can get it today, not 4 weeks from now).

    I don't know if you participate in the physical markets, financemc, but I can tell you they are exceptionally tight right now.

    In addition, many of the large, experienced gold and silver traders are saying that large contracts for the physical metals (as opposed to COMEX contracts settled in cash) are backlogged several months in many cases.

    There is a difference between getting the metal in your hands now, and speculating on paper derivatives that are not backed by 100% immediate physical inventories. Yes, I understand the difference in those markets quite well!

    I can pick any commodity and show you very wide price swings over short periods of time. There have been entire books written by people admitting that speculative paper buying was only for taking short term profits, and had nothing to do with long term market fundamentals (or even short term influences on those fundamentals). The underlying physical commodity was only a vehicle used to get someone else to take the bad side of the larger paper bet.

    Again, there is the physical market and the hedges that legitimate producers use to soften their price risk. Everything else is a casino betting game. The paper bets on precious metals, in particular, dwarf the physical market ounces and the legitimate hedgers by many, many multiples.
    Apr 15 04:40 PM | Likes Like |Link to Comment
  • Don't Get Caught Up In Panic Selling And Capitulation In Precious Metals [View article]
    There is a local outfit that is selling them for $4 over spot to local dealers, so I am getting them for the same $30 (which I am fine with given the market constraints). They are backlogged because there are several times more buyers than sellers on their list, so every time they get a lot sold in, it is already accounted for. That allows them to charge the higher premiums than what the mint charges (I think that the mint charges $2.50 now ?)

    I think the silver shortages that people like myself have been writing for the last several years is actually happening. It's kind of shocking because it happened so quickly, particularly since the market was pretty liquid up to February this year, from what I can remember.

    But since silver is also used industrially quite a bit, the physical short squeeze may be coming faster than in gold due to lack of long term inventories.

    You can get from APMEX in limited quantities, but again at the same high premium. Locally I cannot find any in stock, even on Craigslist. Last year I could have gotten Eagles for $2-$3 over spot on CL, but not now.
    Apr 15 04:26 PM | 2 Likes Like |Link to Comment
  • Is Gold Useless - Part III [View article]
    No, the psychology of an experienced investor that knows the difference between speculation and actual markets.

    You illustrate my point exactly.

    Those that understand hedging and why paper markets exist in the first place understand what I am saying.

    By the way I am not stressed at all about the paper price. I am giddy. I just put $5000 into an overseas gold account holding phyiscal coins. It's like Christmas in April.
    Apr 15 02:58 PM | 1 Like Like |Link to Comment
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