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Robert Kientz  

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  • 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, 2013. 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, 2013. 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, 2013. 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, 2013. 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, 2013. 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, 2013. 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, 2013. 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, 2013. 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, 2013. 02:58 PM | 1 Like Like |Link to Comment
  • Don't Get Caught Up In Panic Selling And Capitulation In Precious Metals [View article]
    Good article as usual, Jeb.

    By the way, I went to several local gold shops today to pick up some physical at a discount. Every single one of them was sold out of all gold and silver. They weren't holding it on the back shelf either. They have been sold out for weeks. They can only order from larger depositories and have it delivered with a several week window. Silver Eagles have a 4 week backlog. The US mint keeps running out of silver stock and has to stop production every couple of months.

    I also have an account with a gold dealer in Singapore. Prices for one ounce American or Canadian coins are over $1800 each. That was a 41% markup over spot. And they are also back ordered.

    There is very little physical metal to be had in the market. The Asians and Russians by any dip in price, much more so than any selling the Americans are doing because most Americans don't have gold or silver.

    After years of a liquid market in precious metals, I am afraid the actual physical market is dried up. People are holding onto their stocks, regardless of the recent price.

    From here on out, I expect that getting physical will get harder and my only option will be to purchase the miners.
    Apr 15, 2013. 02:54 PM | 1 Like Like |Link to Comment
  • Is Gold Useless - Part III [View article]
    Gold and silver are money and meets Aritstotle's 5 tests for money better than fiat or other commodities. That is its value. Those who do not understand the 5 requirements for money can search for Artistotle's analysis online.

    Gold was never meant to be an asset, and has some limited uses as an industrial metal. That's not why, and never had been why, gold has historically had value.

    By the way, it is easy to tell by basic technical analysis that the price crash in gold is in the fantasy paper market, and not the real physical market. That would be akin to me telling everyone wheat has no value in the marketplace because of millions of speculative bets that the price would fall, regardless of the actual physical market for wheat and the real hedges used by producers.

    Paper speculative markets never have, and never will serve as sustainable valuations for the underlying commodity. They cannot predict the long term price for any actual real thing; it's only a game that investors play with each other for short term profits.

    Why people cannot understand this is beyond me. I have a Series 3 license, and this is explained quite clearly to anyone applying for a license. But you won't see financial analysts on this site, or many others, that have a basic knowlege of commodities, hedge contracts, and paper contract bets and how they relate to the underlying physical markets.
    Apr 15, 2013. 02:41 PM | Likes Like |Link to Comment
  • In Gold, Not Cyprus, We Trust [View article]
    Hence the value of Austrian Economics.
    Mar 28, 2013. 04:55 AM | 1 Like Like |Link to Comment
  • The True Cost To Mine Silver - Complete 2012 Figures [View article]
    This was a fantastic article. Thank you.
    Mar 28, 2013. 04:25 AM | 1 Like Like |Link to Comment
  • The 8% Solution [View article]
    Fun article. Thanks.
    Feb 14, 2013. 04:59 PM | 1 Like Like |Link to Comment
  • How Congress Could Fix Its Budget Woes, Permanently [View article]
    For an alternative view on the article author's theories, please visit:

    http://bit.ly/14V8qKo

    History is clear that the path EB is suggesting we take is riddled with war and totalitarianism.
    Feb 14, 2013. 03:48 PM | 1 Like Like |Link to Comment
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