Buffett: I Was Wrong on Anheuser-Busch [View article]
Buffett doesn't believe in hostile takeovers. Capable, cooperative existing management is worth a large premium, as far as he is concerned. When faced with a hostile suitor, otherwise well-run companies often take rash, unexpected actions. We've seen this before. If, in an attempt to thwart InBev, BUD leveraged itself to buy, say, Sapporo Breweries, the result for shareholders could have been disastrous. Ego is a large liability, and when management uses it in lieu of rational business logic, the right place for investors to be is nowhere near.
At $63 a share, Buffett got most of the takeover premium, without taking any of the proxy battle risk. Being humble, he calls it a mistake, but faced with the same situation again, he would do exactly the same, and rightly so.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
Thank you, Sophisse.
Actually, Mr. Ordinary Joe with a Schwab account can also redeem GLD or any other ETF. Charles Schwab & Co. will gladly arrange for this transaction (for a fee, of course), as would most major borkerages.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
Tom deSabla, do yourself a favour and check the prospectus of the GLD ETF before making a fool of yourself. Every ETF can be exchanged for the underlying asset, usually in blocks of 50,000 or 100,000 shares; these are called Creation Units. GLD is no different; anyone with 100,000 shares of GLD, $2,000 and a brain can redeem the shares for physical gold, as per the SEC filing for the ETF. You - or someone who is actually interested in the facts - can easily verify this through the SEC filing or the prospectus.
"How stupid can you get?" - I guess you've answered that for us.
The Disconnect Between Supply and Demand in Gold and Silver Markets, Part II [View article]
"Americans no longer trust their institutions." - That's right; no one owns stocks anymore, or treasuries, or corporate bonds. No one takes out life insurance, joins a pension plan or buys an annuity. Everything we think happened since 1492 has been one elaborate dream; we're lucky to have Mr. Conrad to wake us up!
It is amazing what a journalist on a respected web site such as Seeking Alpha can get away with. Very little in this article is backup up by any kind of fact, but in the current atmosphere of doom and gloom I'm sure his words will echo with many panicking readers, and we'll soon see a barrage of comments along the lines of, "Exactly! I'll stay here in my cold-war era bunker with my gold coins until the Dow Jones hits 3,000. Disclosure: short everything."
Market bottoms are often marked by this type of end-of-the-world predictions. The situation is certainly bad, but a temporary shortage of gold coins at the US Mint is not necessarily an indication of the imminent collapse of Western civilization.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
HeliBen,
"Nearly all the gold ever mined is still out there, it has not been consumed as bagels are." - Fair point, my analogy was deficient. However, we both agree that there is no real shortage in gold, contrary to what the original author suggests.
A move in price from $400 to $800 an ounce, be it for the spot, the futures, or the ETF, is much more meaningful than a temporary local shortage at jewelers or even at the US Mint. Gold is indeed a monetary commodity, and a price doubling in three years should get our attention as much as a similar movement in the exchange rate between two major currencies.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
If your local bakery runs out of bagels one morning, it doesn't mean there's a world shortage in wheat. With gold, there is a long lag between the time it is mined and the time it is minted. Supply chain hiccups can cause temporary shortages at each of the process stages.
It costs less than $200 per once to mine and smelt the metal, and producers can supply as much as the world can buy and then some, but not by tomorrow, hence the price fluctuations.
There is no discrepancy between gold and the GLD ETF. Any investor can buy 100,000 shares of GLD, take them plus a $2000 fee to the offices of World Gold Trust Services, LLC, and redeem them for 10,000 oz of gold bullion, delivered to a registered facility of your choice (there are a few of those in New York). Check the prospectus to see the procedure. This is why GLD always trades within 2% from the price of the spot price of the metal.
Olympics Ending Should Boost Commodity Driven Stocks [View article]
Is the end of the Olympics a surprise? Wasn't it scheduled years in advance? And if so, wouldn't it already be discounted by the market? Are industrial purchasing managers and commodity traders obliged to sit on their hands until after the closing ceremony?
Tying commodity prices to sports events makes as much sense as tying them to moon phases.
Time to Avoid the Stock Markets Altogether [View article]
"This [is] not the time to be clever." -- what does that mean? Only idiots will do well in this market? I guess only idiots will follow this type of advice anyway. The rest of us will insist on using their head for investing, despite von Pfeil's recommendation to the contrary.
The Disconnect Between Supply and Demand in Gold & Silver Markets [View article]
According to the COEMX rulebook, physical delivery of precious metals can only be made to a registered facility. Some of the larger NY banks have such a facility. If you have an account with J.P.Morgan or Bank of New York Mellon, they'll be happy to arrange for such physical delivery. How you would benefit from that I don't know, since you wouldn't have access to the metal unless you are a licensed jeweler or precious metals dealer.
All these regulations were put in place to prevent tampering with gold and silver, a problem that was common before the 20th century and practically eliminated when the certificate system was put in place.
The Disconnect Between Supply and Demand in Gold & Silver Markets [View article]
Mr. Conrad,
"That tends to indicate that they were guilty, as charged." - no one is charged in a civil lawsuit, and no one is "guilty" or "innocent". You've been watching too much TV. There is a plaintiff, a defendant, and the result is a judgment in favour of one, both, or neither side.
The $1.5M cash settlement Morgan Stanley agreed to was chump change compared to what it would have cost them in legal fees to take the case to court and win. And have no doubt about it, they would have won this case. Every bank and broker charges not just for storing gold and silver, but even for storing cash or bonds. No bond certificate has been printed in decades; they are all in "book entry" form, like the cash in your chequing and savings accounts, for which you also pay monthly fees.
Other than small transitional amounts, banks and brokers don't hold anything in vaults any more. You can still rent a safety deposit box, but that has nothing to do with banking services. Cash, stocks, bonds, and precious metals have all been in book-entry form, or as you might call it, "fake", for many decades, and the system seems to work just fine, thank you.
According to your definitions, any fiat money--currency not backed up by gold--is "fake". The Gold Standard was abolished in 1971. I'm not sure why all the excitement now.
"...finally opening those stacked up monthly brokerage statements"--ignoring statements in the hope the bad news will go away is more of an American thing. Chinese investors check the stock market daily, if not more often.
The only thing I learned from this article/blurb is that there is little or no correlation between Chinese consumer confidence and stock prices. Whether or not Chinese consumers will experience a hangover or lose confidence has zero impact on the Shanghai stock market.
Warren Buffett Accumulates NRG Energy, Ingersoll-Rand and Union Pacific [View article]
Rong,
The price of Berkshire stock carries a substantial premium over the price of the stock portfolio it holds. This premium may or may not be justified; Buffett himself prefers buying shares of IR and NRG to buying back shares of BRK, and for a good reason too: he doesn't consider the price of BRK shares to be a bargain, unlike that of IR and NRG.
Berkshire is not a mutual fund or an ETF. If the primary insurance and reinsurance businesses of Berkshire falter, an investor may do much better by holding KO, PG, WFC, AXP and the other stocks in the portfolio than by owning shares of BRK.
Interrelation of Asset Classes: A Few Market Themes [View article]
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Buffett: I Was Wrong on Anheuser-Busch [View article]
At $63 a share, Buffett got most of the takeover premium, without taking any of the proxy battle risk. Being humble, he calls it a mistake, but faced with the same situation again, he would do exactly the same, and rightly so.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
Actually, Mr. Ordinary Joe with a Schwab account can also redeem GLD or any other ETF. Charles Schwab & Co. will gladly arrange for this transaction (for a fee, of course), as would most major borkerages.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
"How stupid can you get?" - I guess you've answered that for us.
The Disconnect Between Supply and Demand in Gold and Silver Markets, Part II [View article]
It is amazing what a journalist on a respected web site such as Seeking Alpha can get away with. Very little in this article is backup up by any kind of fact, but in the current atmosphere of doom and gloom I'm sure his words will echo with many panicking readers, and we'll soon see a barrage of comments along the lines of, "Exactly! I'll stay here in my cold-war era bunker with my gold coins until the Dow Jones hits 3,000. Disclosure: short everything."
Market bottoms are often marked by this type of end-of-the-world predictions. The situation is certainly bad, but a temporary shortage of gold coins at the US Mint is not necessarily an indication of the imminent collapse of Western civilization.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
"Nearly all the gold ever mined is still out there, it has not been consumed as bagels are." - Fair point, my analogy was deficient. However, we both agree that there is no real shortage in gold, contrary to what the original author suggests.
A move in price from $400 to $800 an ounce, be it for the spot, the futures, or the ETF, is much more meaningful than a temporary local shortage at jewelers or even at the US Mint. Gold is indeed a monetary commodity, and a price doubling in three years should get our attention as much as a similar movement in the exchange rate between two major currencies.
The Strange Case of Dr. GLD & Mr. Bullion [View article]
It costs less than $200 per once to mine and smelt the metal, and producers can supply as much as the world can buy and then some, but not by tomorrow, hence the price fluctuations.
There is no discrepancy between gold and the GLD ETF. Any investor can buy 100,000 shares of GLD, take them plus a $2000 fee to the offices of World Gold Trust Services, LLC, and redeem them for 10,000 oz of gold bullion, delivered to a registered facility of your choice (there are a few of those in New York). Check the prospectus to see the procedure. This is why GLD always trades within 2% from the price of the spot price of the metal.
Olympics Ending Should Boost Commodity Driven Stocks [View article]
Tying commodity prices to sports events makes as much sense as tying them to moon phases.
Time to Avoid the Stock Markets Altogether [View article]
The Disconnect Between Supply and Demand in Gold & Silver Markets [View article]
All these regulations were put in place to prevent tampering with gold and silver, a problem that was common before the 20th century and practically eliminated when the certificate system was put in place.
The Disconnect Between Supply and Demand in Gold & Silver Markets [View article]
"That tends to indicate that they were guilty, as charged." - no one is charged in a civil lawsuit, and no one is "guilty" or "innocent". You've been watching too much TV. There is a plaintiff, a defendant, and the result is a judgment in favour of one, both, or neither side.
The $1.5M cash settlement Morgan Stanley agreed to was chump change compared to what it would have cost them in legal fees to take the case to court and win. And have no doubt about it, they would have won this case. Every bank and broker charges not just for storing gold and silver, but even for storing cash or bonds. No bond certificate has been printed in decades; they are all in "book entry" form, like the cash in your chequing and savings accounts, for which you also pay monthly fees.
Other than small transitional amounts, banks and brokers don't hold anything in vaults any more. You can still rent a safety deposit box, but that has nothing to do with banking services. Cash, stocks, bonds, and precious metals have all been in book-entry form, or as you might call it, "fake", for many decades, and the system seems to work just fine, thank you.
According to your definitions, any fiat money--currency not backed up by gold--is "fake". The Gold Standard was abolished in 1971. I'm not sure why all the excitement now.
China's Looming Hangover? [View article]
China's Looming Hangover? [View article]
The only thing I learned from this article/blurb is that there is little or no correlation between Chinese consumer confidence and stock prices. Whether or not Chinese consumers will experience a hangover or lose confidence has zero impact on the Shanghai stock market.
Supermodels Are Outperforming the Dow [View article]
Warren Buffett Accumulates NRG Energy, Ingersoll-Rand and Union Pacific [View article]
The price of Berkshire stock carries a substantial premium over the price of the stock portfolio it holds. This premium may or may not be justified; Buffett himself prefers buying shares of IR and NRG to buying back shares of BRK, and for a good reason too: he doesn't consider the price of BRK shares to be a bargain, unlike that of IR and NRG.
Berkshire is not a mutual fund or an ETF. If the primary insurance and reinsurance businesses of Berkshire falter, an investor may do much better by holding KO, PG, WFC, AXP and the other stocks in the portfolio than by owning shares of BRK.