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Trace Mayer  

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  • Some Bank Behemoths Now Sub-Single Digit Midgets [View article]
    Big K, of course AIG is and it goes very deep.

    Mar 3, 2009. 12:47 AM | 1 Like Like |Link to Comment
  • China's Latest Hunting Trip [View article]
    paultaut, backwardation is not a theory but an objectively verifiable fact and my articles cite credible and verifiable sources to prove that fact. I did not make the assertions you claim. I did make some assertions in the various articles. I continue to stand by my assertions and do not 'ignore what they previously have pushed'. Here are the verifiable facts which you appear to misrepresent or ignore:

    9 Dec 2008 - Discussed gold backwardation and made assertions that extended and prolonged backwardation may precipitate a currency crisis, that the FRN$ store of capital expense will increase and that gold's purchasing power would increase. At the time of the article gold was $771 and is currently $969. Purchasing power was discussed later in the 11 Feb 2009 article.

    4 Feb 2009 - Discussed silver backwardation and the declining gold/silver ratio. At the time of the article the ratio was 72.56 and is currently 68.86.

    11 Feb 2009 - Discussed the continued DOW decline. Made the assertion that gold's purchasing power would continue to increase and focused on the DOW/Gold, DOW/Silver and S&P 500/Gold, S&P 500/Silver ratios. Asserted that the DOW when priced in the metals would continue to get cheaper because of declining potential earnings in those metals. At the time of the article the DOW/Gold was 8.7 ounces and is currently 7.5 and was 7.2 yesterday (23 Feb 2009).

    On Feb 24 01:06 PM paultaut wrote:

    > Two weeks ago both Trace and MyWealth were pushing a Theory called
    > Backwardation.
    > According to this theory, Gold would move up because Spot Gold was
    > higher than Gold Futures. Gold went into contango and went up.<br/>
    > Both Parties now ignore what they previously pushed. Mind you, this
    > was just two weeks ago.
    > What I would like to know is: "Is the Theory Dead or waiting to be
    > reborn?"
    Feb 24, 2009. 02:38 PM | 1 Like Like |Link to Comment
  • Gearing Up for $1000 Gold [View article]
    Mr. Faber, FYI, GLD is not necessarily gold so in your writings and disclosures it may be good to distinguish between GLD and physical gold.
    Feb 19, 2009. 12:59 PM | 1 Like Like |Link to Comment
  • Is the GLD ETF Really Worth Its Metal? [View article]
    Consider_this, exactly. Given some of the unethical behavior of the players involved in the ETF which I discussed in the first article even more cause for prudence and caution may be required.

    The due diligence does not matter until it is the only thing that matters.

    On Feb 19 09:39 AM Consider_this wrote:

    > In that spirit, I applaud the author for bringing up issues to be
    > examined. With Wall street integrity the way it is, We need more
    > inquisitive minds like these.
    Feb 19, 2009. 10:02 AM | 7 Likes Like |Link to Comment
  • Railroads Are Getting Cheaper (vs. Gold and Silver, at Any Rate) [View article]
    123, I simply disagree with you on this issue so long as we define the spot price as the price for immediate delivery of a commodity. The reason I disagree is because there can be and are multiple markets of varying sizes throughout the world. Markets include the 1/10th ounce coin sold by dealers and the 400oz LBMA bars. The settlement price in a transaction is the gold price. A market price is usually computed and accepted by current market participants based on an aggregation of settlement prices. Because there are so many settlements and because the standard deviation of those settlement prices is widening therefore macro 'gold prices', such as either COMEX or London Fix, are losing their correlation with micro settlement prices. But even the macro prices have variations; this is how markets function. Therefore, there is no single gold price and what functions as 'the gold price', COMEX or London Fix, etc., is really a fuzzy number. In other words, the spot is the spot but the spot changes in every transaction and there are numerous transactions at once.

    I also disagree with the Efficient Market Hypothesis. Because of inefficiencies arbitrage is possible. Dealers like Apmex are profiting from these inefficiencies to fulfill market demand. The spreads can actually make it much more difficult on dealers to remain profitable though; if you know anything about the coin business. The commission, bid/ask spread and shipping are only additional 'spot costs' when viewed as getting the commodity immediately delivered. When the COMEX fails then 'the gold price' determinant will shift. I wonder where?

    On Feb 15 10:20 PM 123 wrote:

    > I disagree with one aspect of your comment (copied and pasted below).
    > The spot is the spot, anywhere in the world, for anyone.
    Feb 17, 2009. 01:23 PM | Likes Like |Link to Comment
  • Major Investors Piling into Gold [View article]
    Right John. I referenced Mr. Brochstein's article in an article on 3 Feb 2009. I also quoted Mr. Brochstein, which is rather funny if it were not so sad, where he had made an earlier comment on one of my articles, “Trace, sorry, but this makes absolutely no sense…”

    Hopefully, Mr. Brochstein and others who are infected with the financial insanity virus will do some reading of quality articles. People who followed the free advice in my article(s) should be sitting pretty and I have received several comments from various readers to that effect. I suppose the contrast is good though. That is what As and Fs were for, right?

    On Feb 15 11:36 AM John Polomny wrote:

    > Poor Alan wrote an article on folding on gold back on 8 Dec 08 here
    > on Seeking Alpha. In the meantime the gold price has continued to
    > advance. I am now adding Mr. Brochstein to my list of reverse barometers.
    > When he turns bullish on gold then I will think of selling.
    > On Feb 15 08:18 AM Alan Brochstein wrote:
    Feb 17, 2009. 12:56 PM | Likes Like |Link to Comment
  • Can We Go Back to the Old Wall Street? [View article]
    Exactly. There are five easy steps to get everything back on track and setup the system so this mess will not happen again.

    What we need is (1) a commodity currency as legal tender in harmony with Article 1 Section 8 Clause 5 and Article 1 Section 10 Clause 1 of the US Constitution. Then (2) outlaw fractional reserve banking and (3) repeal the Federal Reserve Act. All bankers who continue to practice fractional reserve banking should be (4) tried for fraud, embezzlement and theft under State criminal statutes and also be liable under tort for trespass to chattel or conversion. If that is not enough deterrence for their sociopathic behavior then (5) bringing back Section 19 of the 1792 Coinage Act will also be helpful as it provides the death penalty for the current actions some of the investment bankers have been engaged in.

    Those few steps will stop this abominable privatizing of gains and socializing of losses that Wall Street has been engaged in and cause so much damage with because of the moral hazard.

    On Feb 09 01:05 PM Dana H. wrote:

    > We screwed up by creating the 4 F's: the Fed, Fannie, Freddie,
    > and FDIC.
    Feb 9, 2009. 06:29 PM | 3 Likes Like |Link to Comment
  • Railroads Are Getting Cheaper (vs. Gold and Silver, at Any Rate) [View article]
    @123, I think the tulips is a perfectly legitimate example because they are a tangible asset. Under the Austrian school value is an individual decision based on human action and determined by personal utility preferences and with in aggregate the market determines price.

    Tangible assets, like gold, silver or tulips, are subject only to exchange-rate risk whereas fiat currency illusions or money substitutes are subject to both counter-party and exchange-rate risk.

    Therefore, in essence and hopefully without being too circular, when performing the pricing mechanism it can be stated that the intrinsic value of 1oz of gold is 1oz of gold or 1 tulip is 1 tulip. Exchange-rate risk is then present when 1 tulip costs 1oz of gold versus .5 oz gold. Bubbles do develop and currently I think fiat currency illusions, with US Treasuries, are the biggest bubble of all. Gold will get expensive one of these days.

    These questions get at the point I think you are attempting to make: Do I think it merely possible that our fiat dollar illusion will someday collapse? If yes, then I should own gold as the safest and most liquid asset; as cash. How much? As much as I can comfortably rationalize, perhaps using some sort of calculation of the gravity of the harm -- i.e., financial wipeout -- discounted by my sense of the probability of its occurrence. Do I think it inevitable that our fiat dollar will suffer the fate of all paper currencies throughout history? If yes, then it is one’s dollar exposure, not gold “investment,” that must rationalized.

    But to reiterate my statement at the beginning of the post “The primary purpose of these posts is to educate on monetary science and basic economic law and not to provide valuation opinions”. In other words, I have no idea whether one derives the utility and value from owning gold to rationalize to themselves the price. Whether one should buy gold is a *completely separate issue* from whether one should use gold to perform mental calculations of value. The use of gold as a mental calculation of value allows one to determine whether gold is expensive or cheap.

    On Feb 04 10:13 AM 123 wrote:

    > To Trace:
    > I've been thinking about this and would appreciate your opinion:
    > How does one know what the intrinsic value of an ounce (or whatever
    > mass) of gold is? Isn't gold just as prone to a bubble as any other
    > asset?
    > For example, say gold goes to $2,000 an ounce. How does one know
    > whether that is the proper price for the metal, or whether it is
    > the result of lots of money pushing up the price? If asset inflation
    > that pushes prices past reality (i.e. real estate, stocks), why can't
    > this happen to gold or metals as well?
    > I mean, two hundred years ago, or whatever, tulips were considered
    > a good store of value for a short period of time. That's an extreme
    > example, but still.
    Feb 4, 2009. 02:41 PM | Likes Like |Link to Comment
  • Railroads Are Getting Cheaper (vs. Gold and Silver, at Any Rate) [View article]
    @GeminiAtlas, no, one thousand ounces of silver is the correct forecast. Given the degree of amplified misallocation of capital due to the Federal Reserve I would not be surprised if it were less than five hundred ounces.

    For comparison and based on the Case-Shiller the price of homes in silver:
    1915 – appx 9,000 ounces
    1922 – appx 4,000 ounces
    1933 – appx 22,000 ounces
    1935 - appx 8,000 ounces
    1971 – appx 15,000 ounces
    1980 – appx 800 ounces
    2002 – appx 38,000 ounces

    Please note these are approximations as I do not have the spreadsheet handy so please mind the immaterial differences as I think it gets the point across for a comment. Perhaps I should write an article with the appropriate research on this topic?

    On Feb 04 09:15 AM GeminiAtlas wrote:

    > If I did my math right, you say to buy real estate when it is worth
    > $12,000 (~at current silver price). Did I miss a zero somewhere,
    > or is it at 10,000oz. silver? Or is it in value/area? If it is
    > 1000oz per house, that is a ridiculously cheap house, or silver is
    > ridiculously undervalued.
    Feb 4, 2009. 02:39 PM | Likes Like |Link to Comment
  • Railroads Are Getting Cheaper (vs. Gold and Silver, at Any Rate) [View article]
    Yes, that is a correction for the typo. Hope the typo did not confuse unnecessarily. Thanks makou.

    On Feb 03 11:01 PM makou wrote:

    > The statement earlier above "For comparison purposes on 8 Dec 2008
    > gold closed at $767.25 and is trading around $900 on 2 Feb 2008"
    > I believe the author wants to say
    > 2 Feb 2009 instead of 2 Feb 2008.
    Feb 4, 2009. 02:38 PM | Likes Like |Link to Comment
  • Gold ETF Reaches New Inventory High [View article]
    Too bad there is no guarantee that the gold held by the ETFs is actual gold or that there is even any in inventory. Of course, it does not matter until it is the only thing that matters.

    Seems a lot of Merrill Lynch's customers are getting skittish about the ETFs.

    Jan 9, 2009. 01:42 AM | 3 Likes Like |Link to Comment
  • What Is Going On With Gold? [View article]
    Mr. Robert Landis, a graduate of Princeton University, Harvard Law School and member of the New York Bar, has asserted that “Any rational person who continues to dispute the existence of the rig [gold price suppression scheme by central banks] after exposure to the evidence is either in denial or is complicit.”

    Therefore, it appears the Pragmatic Capitalist is either ignorant of or in denial towards key material information or is complicit in the rig.

    At all times and in all circumstances gold remains money. It has always proven to be the most powerful currency in the history of the world. Why should it be any different this time? Sure, the FRN$ is putting up a rather strong 38 year fight but gold is undefeated over the past 5,000 years. The FRN$ is on its way to fiat currency graveyard like all of its predecessors and when viewed in proper historical context the FRN$ will be yet another immaterial challenger to gold's dominance as a currency.
    Jan 9, 2009. 01:34 AM | 4 Likes Like |Link to Comment
  • U.S. Treasuries Are the Biggest Bubble of All [View article]
    R JENSEN, silver and platinum are not but could and probably will be currencies. Instead they are industrial metals. As they begin to function as currencies and increase in velocity their value and purchasing power will grow relative to other commodities and services. If gold disappeared then one of them would probably replace it as the 'monetary commodity'.

    On Jan 05 12:50 AM R JENSEN wrote:

    > Trace, what about silver? Platinum?

    Champak, That makes absolutely no sense. I did on the relationship between them all in The Gold to Oil Ratio Does Matter:

    On Jan 05 05:33 AM Champak wrote:

    > Stop using Oil, Gold, Treasury Bonds, currency. Use Energy instead,
    > the true solution of our future!
    Jan 6, 2009. 02:35 PM | Likes Like |Link to Comment
  • U.S. Treasuries Are the Biggest Bubble of All [View article]
    Gold is below but abuts treasuries in the liquidity pyramid. The DOW is about average priced in terms of gold. It will be cheap when the DOW is .25-2oz of gold.

    On Jan 04 04:46 PM Commodity bubble proponent wrote:

    > Gold and treasuries are linked b/c investors are scared. When treasuries
    > decline once the market starts to right itself, Gold will follow
    > suit.
    > The fact that the Dow to gold ratio is so out of whack should tell
    > you that Gold is overpriced
    Jan 4, 2009. 05:06 PM | 1 Like Like |Link to Comment
  • U.S. Treasuries Are the Biggest Bubble of All [View article]
    I am talking about the failure of the Ponzi scam of fiat currency and fractional reserve banking. The current system has evolved into its present state over centuries going back past even the Medici, Banco Rosso and even the Third Lateran Council in 1179. We are here at the turn of the tides.

    On Jan 04 03:12 PM iThinkBig wrote:

    > 1) 600 years? Stop it. Call US currency dominance really a 50 year
    > crest and soon, recede. 1913 probabably marks the beginning of a
    > repeated failed experiment or Ponzi as it is called.
    > 2) Just an opinion of analogies, this is a five course meal of horse
    > dung, not a nine course. We have already eaten the first two of five.
    > Think of the courses as corrective years to the next sustainable
    > Bull market.
    > Otherwise, liked the article.
    Jan 4, 2009. 05:04 PM | 1 Like Like |Link to Comment