Tim Iacono

Marc Faber Is Conflicted About the Price of Gold

Just to be clear...

I've been a big, big Marc Faber fan for many years and my "Faber is conflicted" angle here was more "tongue in cheek" than anything else after seeing these two reports in the news on the same morning.

It seems clear that, in the first report, the headline is not representative of what Faber actually said, similar headlines appearing elsewhere, and the comments about hearing Faber's accent when reading between the quotes (while very true) should have been a tip off that this was not an attempt at investigative journalism on my part.

Mortgage Finance: From the GSEs to Wall St. and Back Again

The phrase "almost bit players" refers to the quantity and type of loans they were making - by comparison to Wall St., they were choir boys in 2005-2006 when the housing bubble peaked.

The systemic risk that Greenie saw in 2002-2003 was that the mortgage market was too heavily concentrated in the GSEs which had an implied guarantee. So, he was instrumental in cutting back their mortgage holdings and Wall St. took up the slack.

Housing Starts Flatline

That's funny. The author of this article (that would be me) also lives in Bend. We've only been here a few months though and we still don't know quite what to make of the place and now it's getting cold...

On Oct 20 07:11 PM OldSusanna wrote:

> Unfortunately; in my area (Bend, Oregon)--a multitude of nasties
> came together to create what is now our mess, which is: an over-abundance
> of empty commercial and residential properties; bankrupt construction
> companies (developers, general contractors and sub-contractors);
> defunct real estate companies; and, massive business closures in
> allied industries such as hardware stores, truss manufacturers, cabinet
> shops, furniture stores, etc... Not to mention that we have the highest
> foreclosure rate in the state, and well above average unemployment
> rate. Our now "broke" city and county (where did all those fees go?)
> together with developers, large construction companies and realtors,
> in a gluttonous frenzy, raped and pillaged Central Oregon. So; sensibility,
> responsibility and accountability must be somehow re-founded in those
> outside the financial world as well...

Why Would 3 Consecutive Months of Rising Home Sales Be Special?

The numbers are seasonally adjusted - there is no "summer" in the chart where sales are typically about 50 percent higher than in the middle of winter.

U.S. Deficit Tops $1 Trillion. What's the Big Deal?

I'm being very sarcastic in that last comment.
Didn't know this until someone asked me but, according to The Economist (see www.economist.com/mark...), the deficit as a percent of GDP is now 13.7 percent, just behind the U.K., in first place at 13.9 percent.

Existing Home Sales Disappoint

Sounds about right to me - unless they start bulldozing whole neighborhoods into the ground.

Punishing the Savers in a Savings Poor Country

Countrywide, Wachovia to name two. I have an account at ING Direct and their rates are quite low - 12 month CD at 1.5%.


On Apr 02 08:11 AM elcopone wrote:

> The one part that falls apart for me is when you say "banks paying
> the highest interest rates seem to go belly-up." Could you site
> some examples besides GMAC, which had other problems that did them
> in?
>
> I can name 4 banks off the top of my head that have been offering
> high-yields saving accounts for many years already...HSBC, ETrade,
> Emigrant Direct, ING. None of these banks have gone "belly-up."

Where Does the Gold ETF Get Its Gold?

According to the bar list on the GLD website, 99.8 percent of the 36 million ounces is held in allocated bar form.

Where Does the Gold ETF Get Its Gold?

A simple search on the internet reveals that Natalie Dempster is a widely quoted spokeswoman for the World Gold Council.

Where Does the Gold ETF Get Its Gold?

There's a good description of "unallocated" and "allocated" accounts at the GLD FAQ:

www.spdrgoldshares.com.../

You should probably read it as I don't think you understand the difference.


On Mar 27 05:35 AM Philman wrote:

> If the folks at GLD say that they are transferring gold from unallocated
> accounts to the allocated account of the ETF, they ARE ADMITTING
> TO FRAUD!
>
> Kitco, for example, runs an unallocated gold sales scheme, and uses
> the ostensible HSBC warehouses to store the alleged unallocated gold.
> It sells shares in what is, apparently, another Ponzi scheme (according
> to the results of your phone call) to innocent investors who believe
> they are investing in gold bars which, although not assigned specifically
> to them, at least exist. When, however, HSBC transfers the gold
> from Kitco's unallocated account into the ETF, it and Kitco (if the
> latter is aware of the transfer) defraud the investors in the unallocated
> accounts, and, potentially, to the investors in GLD.
>
> A bankruptcy judge would certainly order a return of this gold to
> the Kitco account for the benefit of creditors, if Kitco went bankrupt,
> and could impose a constructive trust upon it, requiring a return
> of the fraudulent transfer, in the event an investor sued Kitco or
> HSBC or both.
>
> In short, if the information that Tim Iaconno is reporting is correct,
> then the Kitco gold "pool" as well as the HSBC stored GLD ETF are
> both Ponzi schemes in which one investor is being paid off by using
> the investment in gold that belongs to other investors now or in
> the future. This should be immediately reported to state prosecutors
> in both New York and Canada, so further investigation can be pursued,
> and the culprits who are behind the scheme are brought to justice.

The Myth About Financial Myths

>Why do gold fans always seem to dis the dollar and
> most securities in the same breath?

Good question - the non-collapse of the dollar (so far) has surprised many, many people. I had a major foreign currency position up until early last year and exited the entire thing before the dollar stormed higher - all fiat money is proving to be rather bad at the moment and the greenback is the least bad of them all, something that a lot of people still don't seem to grasp.

I think it's fair to say that there are a lot of gold bugs who dislike almost everything about the U.S. financial system these days and that includes broad equity markets.

> If you think gold is something respectable enough to hold onto for
> a long time and get some appreciation, how is that different from
> what investors want from real estate or growth stocks or land or
> any other appreciating asset?

I view gold and other commodities as just another asset class - no different in that respect to stocks or real estate where it is a place that you can put your money to grow. The resistance to this notion in the mainstream financial media (and in the U.S. government, as witnessed in last year's Senate hearings on oil prices) says a lot more about the lack of understanding regarding the currency that these items are priced in than it says about the commodities themselves.

On Mar 18 04:43 PM jkosnett wrote:

> Hi, Tim--- I wrote this piece, and I respect the opinions of people
> who believe that gold is something special, but why do gold fans
> always seem to dis the dollar and most securities in the same breath?
> If you think gold is something respectable enough to hold onto for
> a long time and get some appreciation, how is that different from
> what investors want from real estate or growth stocks or land or
> any other appreciating asset? At least you aren't tearing me up
> because I don't think the euro and the yen are made of granite.

There Is Always the Second Derivative

This is a test, this is only a test.

Friday's Consumer Price Data Could Touch Off Deflation Tsunami

Very nice article.

Gold ETF Reaches New Inventory High

Before the fund was launched in 2004, there were compalints that the prospectus was too loose on accounting for the trust's gold. This is just one more instance of never knowing for sure how much gold is really there, GLD's 800 tonnes paling in comparison to the amount of central bank gold that also might not be there.

Deflation Dementia

Please don't criticize the author when you completely fail to grasp the point of the article. The point is not about politics or hand gestures, it is about the absurdity of talking seriously about 1930s style deflation in today's system of pure fiat money where there are obviously no lengths to which governments will go to try to clean up after the bursting of the most recent asset bubble. I can see how some might take this out of context - instead of just spouting off, why not look for context next time.