Overlooking the blatant illegalities of the government's 'bailout', the net result will be the long term movement of the dollar toward its true value of zero.
Any comtemplated positions should bear this in mind and limit exposure to risk levels where large moves against you are tolerable as follow-on interventions seek to forestall the inevitable.
1) Long precious metals 2) Short T-Bonds 3) Short dollar vs. 'stable' currencies like Swiss Franc 4) Short US stock markets
Once again, low risk positions as there will likely be WILD swings with news of each additional intervention. Add a bit on dips, sell some on rallies and build your positions conservatively. Eventually the wheels will come off and you will be well paid for your trouble.
My two cents, for what it's worth. Use at your own risk. I am currently long gold, gdx, and in cash otherwise.
Preserving U.S. Economy Over Free Markets (Short Sellers) [View article]
If you can't find bullion or coins, try pawn shops. They will likely be very happy to sell you gold at spot for weight.
Kelly's info is a good start, but I would suggest avoiding anything less than 14 karat as the 'cheaper' end of the scale is known to be somewhat loose in their marking. 18 karat or higher is usually safe. All jewelry should be stamped with the karat. If not, don't buy.
Link necklaces/bracelets are good as you can cut off individual links to trade smaller amounts if necessary.
Once you get to know the local pawn shop owners you may find they will let you trade your junk jewelry for any bullion coins they come across on an equal weight basis. They will only send the stuff off to the smelter anyway, so they might keep the coins if they know you're looking for them and you're a "regular".
It doesn't hurt to ask. If they say no, try another pawn shop.
It's worked great for me. I have several ounces of various coins, US and foreign, in different weights, all purchased "first" by picking up bits of jewelry at a local store and later trading it for coins that come through.
Added benefit, when times are hard pawn shop owners are good people to count as friends. They have a chance to buy almost everything at bargain basement prices. If they know you're looking for something they can 'shop' on your behalf and you might get a great deal as a result.
Pawn shops love being able to buy and sell stuff for a quick profit if possible.
We've Crossed the Line from Capitalism to Socialism [View article]
Takeover of AIG is actually a fascist act in ecomonic terms.
The implications are that the government can, at any time, unilaterally take over a privately owned company without just compensation to the current owners ("for the good of the country" naturally).
AIG was a public corporation, owned by the shareholders. Have the shareholders ever voted to authorize the board to agree to the "deal" made with the FED/Treasury? If not, how can any such "deal" be valid? Do the company bylaws hold or not? Does the law matter or not?
What legal footing does the FED/Treasury/Congress have to "take" 80% of the shares in a company by means of loaning money to the business without shareholder approval?
Does the Fifth Amendment's guarantee ''that private property shall not be taken for a public use without just compensation" hold or not? If not, does that mean that 80% of AIG is worth only $85 Billion and all the remaining shares are worth only $21 Billion? Can we get a second opinion on that?
A defining characteristic of economic fascism is that private property and business ownership are permitted, but are in reality controlled by government through an unstated business-government "partnership", however, in such a partnership government is always the senior or dominating "partner" and can at the government's whim, dispossess the private owners.
I don't know what others are thinking, but that last paragraph seems to identify exactly what happened to AIG.
The short selling ban is small potatoes. Blatant violation of the Constitution by government actors is the threat to worry about. If the government won't obey the Constitution in this case why should they bother to obey it at all?
This week AIG, next week who? Are the stocks you own safe from government takeover? If not, are you prepared to have the value of your shares re-stated based on a weekend deal cut with the FED behind your back?
GM? Ford? United? Morgan Stanley? Goldman Sachs? ETC?
The government has just struck a match and lit the Constitution on fire.
Preserving U.S. Economy Over Free Markets (Short Sellers) [View article]
It would seem some people have the cart before the horse.
Tell me, how does "driving the stock price down" cause an otherwise well run company into bankruptcy? It can't.
If I run a publicly traded company profitably and with good cash flow, what difference does the stock price make to survival of the business? The stock can go to ZERO and the company would still continue operations. The shares would be a screaming bargin.
To some extent stock prices reflect the aggregate perceptions of millions of 'investors' in the market for the shares. The reason these large so-called financial institutions face bankruptcy is that they ran their businesses poorly or worse.
Widespread fear of bankruptcy is what brought down the share prices. Not the other way around.
And as firebird pointed out, there haven't been truly free markets since the 1930s. The more restrictions the government forces on the market, the larger the odds of 'problems' arising because the restrictions hamper the market from properly pricing stocks.
The more the SEC changes 'the rules', the less investors will trust in market mechanisms. Now that you know the gov't will save the banker's bacon, are you sure YOUUR investments are safe?
Check with the holders of Fannie Mae or Freddie Mac preferred shares (now worthless via weekend gov't takeover) for insight on that point. Shareholders in those issues lost EVERYTHING without a chance to sell for even a low price.
I'm sure they find that's not really preferable to suffering the supposed slumps caused by short sellers where at least they could salvage something.
Is having your investment TAKEN from you really better than having the price go down and still being able to sell?
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
Sorry guys, didn't mean to rain on anyone's parade in particular. My Apologies.
My basic point is that either a) it's nearly impossible for shorts alone to drive the price down unless the current shareholders are selling too or b) even if someone did manage to generate enough volume to drive a large cap stock down they would probably lose a bunch of money trying to cover unless the price was truly "too high" to begin with and others were selling too.
The entire ban on shorting is just a smoke screen/witch hunt to mis-direct the discussion away from poor business practices or poor regulatory oversight.
Same goes for government/media claims that futures speculators are 'driving' prices up/down. Every futures trade needs a buyer and a seller. Price moves only when one group overwhelms the other. Same for stocks.
No way that 1% of volume can push a price down 35% over a two week period unless there's a reason for others to sell too.
$8.965 TRILLION March 2006 $9.815 TRILLION May 2007 $10.6 TRILLION July 2008 $11.3 TRILLION Sept 2008
$13.0+ TRILLION Jan 2009? (estimated) If so, that would be roughly a 50% increase in the public debt in just over a year, and with things likely to get much worse.
That's over $45,000 per man/woman/child in the US.
Eventually the Chinese and Japanese will either a) panic, or b) get angry. Neither bodes well for the dollar.
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
Then again, lots of people spread positive rumors or tips which results in the price rising sharply. Isn't that just rumor-mongering stood on its head? Why is that OK? Just because it drives the price up instead of down?
With that tip-driven high price people like User225084 wind up paying too much for their margin-purchased shares. Then when earnings disappoint and the price drops User84 loses money that he borrowed to buy.
Gosh, I suppose everyone has to figure out what's fact and what's fiction FOR THEMSELVES. Imagine that. Make your own decision and live with the consequences instead of blaming short sellers or tipsters for your lack of diligence or disregard of risk.
Caveat Emptor! (and when that doesn't work, beg the FED to bail you out)
Precious Metals: Scapegoats to Skyrockets [View article]
Paulson and Bernanke write death certificate for the dollar. Now all we need is for Congress to approve and the President to sign and it will be official.
Our country has taken the fork in the road labelled "This way to hyperinflation".
Buy gold, short T-bonds. When the Chinese, Japanese, and arabs decide to salvage something from their massive reserves the dollar will plunge, interest rates will climb, and gold will soar.
Dollar Falls as Stock Rally Tempts the Carry Trade [View article]
1) Cost of bailout to the taxpayers will be measured in the Trillions.
2) Companies will be forced to take part of the level 3 losses currently being ignored as the FED will be buying at a steep discount to original value. Many survivors will be lucky to emerge from the transaction with a net shareholder book value of ZERO.
3) The dollar is doomed. FED must put the printing presses into overdrive to create enough money to save everyone's bacon.
Buy gold now, while your money is still worth something.
If you think rising prices have been bad so far, you ain't seen nothing yet.
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
And to continue...
From mid April to end of April, the short interest increased by an average of 1.2 million shares per day on an average volume of 13 million shares per day. That's over 9% of trading volume in short sales..... Yet the price went from $27/share to $30/share.
Share price went UP when 10% of all volume was short sales!!
Hmmm.... short sales 1% of volume = price goes down. short sales 10% of volume = price goes up.
Short sales must be a contrary indicator I guess.
Facts prove that the government is blowing smoke trying to pin blame on a scapegoat.
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
user225084 wrote: "Of course I get money when I short a stock."
To which I would reply that it's obvious you have never shorted a stock before.
The only time money is added to your account when you short a stock is when you buy it back at a profit. Any 'paper' gains you get before that point are subtracted from the margin loan you owe your broker.
As for short sellers 'driving' the market down, look at the numbers.
Fannie Mae bottomed in mid July at $8/share, down from $20 two weeks earlier. During that time FNM had an addition of 16 million shares short interest over 15 calendar days (11 market days). That's an addition of roughly 1.7 million short shares per day.
Yet the average volume for FNM during that period was almost 124 million shares per day.
So...did the price go down because 1.7 million shares were shorted or because the owners of a majority of the other 122 million shares sold out every day for two weeks?
If a majority of those owners had switched from selling to buying they would have swallowed the short shares without dropping the price by more than 50 cents.
Judge for yourself, but claiming that less than 1% of the trading volume is what 'drove' prices from $20 to $8 seems a little far fetched to me. Selling pressure by prior shareholders seems more likely the reason behind the big drop.
I can only assume that discovering FNM was losing money hand over fist might be one reason why so many prior owners sold. I'm pretty sure they didn't do it because they found out less than 1% of the average daily volume was short interest.
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
@User 225084
You don't get money when you short a stock.
You have to post margin (ie set aside some of your own money) before you are allowed to short. If the price of the stock then goes up, you have to add more money to cover your paper losses to at least 50% of the current value of the stock.
Any remaining value not so covered is borrowed from your broker and you pay interest on that amount until you buy your short back.
And yes, I've shorted stock before and made money at it. I'm "evil" and profit seeking.
And one other point. In order to short a stock there must be a willing buyer. The shorter has no way to force anyone to take the other side of a trade. It's all voluntary.
The party that buys the shorter's shares will lose money if the share price goes down, regardless of who is on the other side of the trade.
Where Will Markets Go from Here? [View article]
Any comtemplated positions should bear this in mind and limit exposure to risk levels where large moves against you are tolerable as follow-on interventions seek to forestall the inevitable.
1) Long precious metals
2) Short T-Bonds
3) Short dollar vs. 'stable' currencies like Swiss Franc
4) Short US stock markets
Once again, low risk positions as there will likely be WILD swings with news of each additional intervention. Add a bit on dips, sell some on rallies and build your positions conservatively. Eventually the wheels will come off and you will be well paid for your trouble.
My two cents, for what it's worth. Use at your own risk. I am currently long gold, gdx, and in cash otherwise.
Preserving U.S. Economy Over Free Markets (Short Sellers) [View article]
Kelly's info is a good start, but I would suggest avoiding anything less than 14 karat as the 'cheaper' end of the scale is known to be somewhat loose in their marking. 18 karat or higher is usually safe. All jewelry should be stamped with the karat. If not, don't buy.
Link necklaces/bracelets are good as you can cut off individual links to trade smaller amounts if necessary.
Once you get to know the local pawn shop owners you may find they will let you trade your junk jewelry for any bullion coins they come across on an equal weight basis. They will only send the stuff off to the smelter anyway, so they might keep the coins if they know you're looking for them and you're a "regular".
It doesn't hurt to ask. If they say no, try another pawn shop.
It's worked great for me. I have several ounces of various coins, US and foreign, in different weights, all purchased "first" by picking up bits of jewelry at a local store and later trading it for coins that come through.
Added benefit, when times are hard pawn shop owners are good people to count as friends. They have a chance to buy almost everything at bargain basement prices. If they know you're looking for something they can 'shop' on your behalf and you might get a great deal as a result.
Pawn shops love being able to buy and sell stuff for a quick profit if possible.
We've Crossed the Line from Capitalism to Socialism [View article]
The implications are that the government can, at any time, unilaterally take over a privately owned company without just compensation to the current owners ("for the good of the country" naturally).
AIG was a public corporation, owned by the shareholders. Have the shareholders ever voted to authorize the board to agree to the "deal" made with the FED/Treasury? If not, how can any such "deal" be valid? Do the company bylaws hold or not? Does the law matter or not?
What legal footing does the FED/Treasury/Congress have to "take" 80% of the shares in a company by means of loaning money to the business without shareholder approval?
Does the Fifth Amendment's guarantee ''that private property shall not be taken for a public use without just compensation" hold or not? If not, does that mean that 80% of AIG is worth only $85 Billion and all the remaining shares are worth only $21 Billion? Can we get a second opinion on that?
A defining characteristic of economic fascism is that private property and business ownership are permitted, but are in reality controlled by government through an unstated business-government "partnership", however, in such a partnership government is always the senior or dominating "partner" and can at the government's whim, dispossess the private owners.
I don't know what others are thinking, but that last paragraph seems to identify exactly what happened to AIG.
The short selling ban is small potatoes. Blatant violation of the Constitution by government actors is the threat to worry about.
If the government won't obey the Constitution in this case why should they bother to obey it at all?
This week AIG, next week who? Are the stocks you own safe from government takeover? If not, are you prepared to have the value of your shares re-stated based on a weekend deal cut with the FED behind your back?
GM? Ford? United? Morgan Stanley? Goldman Sachs? ETC?
The government has just struck a match and lit the Constitution on fire.
Seig Heil!! (Sorry, I couldn't resist)
Preserving U.S. Economy Over Free Markets (Short Sellers) [View article]
Tell me, how does "driving the stock price down" cause an otherwise well run company into bankruptcy? It can't.
If I run a publicly traded company profitably and with good cash flow, what difference does the stock price make to survival of the business? The stock can go to ZERO and the company would still continue operations. The shares would be a screaming bargin.
To some extent stock prices reflect the aggregate perceptions of millions of 'investors' in the market for the shares. The reason these large so-called financial institutions face bankruptcy is that they ran their businesses poorly or worse.
Widespread fear of bankruptcy is what brought down the share prices. Not the other way around.
And as firebird pointed out, there haven't been truly free markets since the 1930s. The more restrictions the government forces on the market, the larger the odds of 'problems' arising because the restrictions hamper the market from properly pricing stocks.
The more the SEC changes 'the rules', the less investors will trust in market mechanisms. Now that you know the gov't will save the banker's bacon, are you sure YOUUR investments are safe?
Check with the holders of Fannie Mae or Freddie Mac preferred shares (now worthless via weekend gov't takeover) for insight on that point. Shareholders in those issues lost EVERYTHING without a chance to sell for even a low price.
I'm sure they find that's not really preferable to suffering the supposed slumps caused by short sellers where at least they could salvage something.
Is having your investment TAKEN from you really better than having the price go down and still being able to sell?
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
My basic point is that either a) it's nearly impossible for shorts alone to drive the price down unless the current shareholders are selling too or b) even if someone did manage to generate enough volume to drive a large cap stock down they would probably lose a bunch of money trying to cover unless the price was truly "too high" to begin with and others were selling too.
The entire ban on shorting is just a smoke screen/witch hunt to mis-direct the discussion away from poor business practices or poor regulatory oversight.
Same goes for government/media claims that futures speculators are 'driving' prices up/down. Every futures trade needs a buyer and a seller. Price moves only when one group overwhelms the other. Same for stocks.
No way that 1% of volume can push a price down 35% over a two week period unless there's a reason for others to sell too.
Gold Bull Sees Huge Run for Gold [View article]
$8.965 TRILLION March 2006
$9.815 TRILLION May 2007
$10.6 TRILLION July 2008
$11.3 TRILLION Sept 2008
$13.0+ TRILLION Jan 2009? (estimated)
If so, that would be roughly a 50% increase in the public debt in just over a year, and with things likely to get much worse.
That's over $45,000 per man/woman/child in the US.
Eventually the Chinese and Japanese will either a) panic, or b) get angry. Neither bodes well for the dollar.
Got gold?
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
With that tip-driven high price people like User225084 wind up paying too much for their margin-purchased shares. Then when earnings disappoint and the price drops User84 loses money that he borrowed to buy.
Gosh, I suppose everyone has to figure out what's fact and what's fiction FOR THEMSELVES. Imagine that. Make your own decision and live with the consequences instead of blaming short sellers or tipsters for your lack of diligence or disregard of risk.
Caveat Emptor!
(and when that doesn't work, beg the FED to bail you out)
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
Why couldn't User225084 spread negative rumors to drive down the price before buying his shares on margin? Shouldn't that be disallowed too?
BAN RUMOR_MONGERS!! It's all their fault.
(note: just being facetious to make a point)
Gold Bull Sees Huge Run for Gold [View article]
Gold Prices Finally Catch Fire [View article]
I'm thinking that there may be some good profits to be made buying the $Z/$US cross.
OK. Seriously.....
Mr. Hill thinks gold might get all the way up to $950 in 2009 and maybe even as high as $1000 by 2010?
Gosh, all the way back up to the July highs in only another 15 months?
That's really sticking his neck out there. I wish I could be that sure.
@GMiki. LOL. Good one.
Precious Metals: Scapegoats to Skyrockets [View article]
Our country has taken the fork in the road labelled "This way to hyperinflation".
Buy gold, short T-bonds. When the Chinese, Japanese, and arabs decide to salvage something from their massive reserves the dollar will plunge, interest rates will climb, and gold will soar.
Dollar Falls as Stock Rally Tempts the Carry Trade [View article]
2) Companies will be forced to take part of the level 3 losses currently being ignored as the FED will be buying at a steep discount to original value. Many survivors will be lucky to emerge from the transaction with a net shareholder book value of ZERO.
3) The dollar is doomed. FED must put the printing presses into overdrive to create enough money to save everyone's bacon.
Buy gold now, while your money is still worth something.
If you think rising prices have been bad so far, you ain't seen nothing yet.
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
From mid April to end of April, the short interest increased by an average of 1.2 million shares per day on an average volume of 13 million shares per day. That's over 9% of trading volume in short sales..... Yet the price went from $27/share to $30/share.
Share price went UP when 10% of all volume was short sales!!
Hmmm.... short sales 1% of volume = price goes down.
short sales 10% of volume = price goes up.
Short sales must be a contrary indicator I guess.
Facts prove that the government is blowing smoke trying to pin blame on a scapegoat.
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
To which I would reply that it's obvious you have never shorted a stock before.
The only time money is added to your account when you short a stock is when you buy it back at a profit. Any 'paper' gains you get before that point are subtracted from the margin loan you owe your broker.
As for short sellers 'driving' the market down, look at the numbers.
Fannie Mae bottomed in mid July at $8/share, down from $20 two weeks earlier. During that time FNM had an addition of 16 million shares short interest over 15 calendar days (11 market days). That's an addition of roughly 1.7 million short shares per day.
Yet the average volume for FNM during that period was almost 124 million shares per day.
So...did the price go down because 1.7 million shares were shorted or because the owners of a majority of the other 122 million shares sold out every day for two weeks?
If a majority of those owners had switched from selling to buying they would have swallowed the short shares without dropping the price by more than 50 cents.
Judge for yourself, but claiming that less than 1% of the trading volume is what 'drove' prices from $20 to $8 seems a little far fetched to me. Selling pressure by prior shareholders seems more likely the reason behind the big drop.
I can only assume that discovering FNM was losing money hand over fist might be one reason why so many prior owners sold. I'm pretty sure they didn't do it because they found out less than 1% of the average daily volume was short interest.
The Blame Game, Part I: The Short-Seller Witch Hunt [View article]
You don't get money when you short a stock.
You have to post margin (ie set aside some of your own money) before you are allowed to short. If the price of the stock then goes up, you have to add more money to cover your paper losses to at least 50% of the current value of the stock.
Any remaining value not so covered is borrowed from your broker and you pay interest on that amount until you buy your short back.
And yes, I've shorted stock before and made money at it. I'm "evil" and profit seeking.
And one other point. In order to short a stock there must be a willing buyer. The shorter has no way to force anyone to take the other side of a trade. It's all voluntary.
The party that buys the shorter's shares will lose money if the share price goes down, regardless of who is on the other side of the trade.