Malkiel

Program Trading, Dark Pools and Gold

I like your orientation, but tell me, as a practical matter, how do you propose to banish "program" trading?

"Dark Pools" are the real abomination here and should be easy to stamp out by SEC dictate--if shares are trading hands at anything other than their purchased value, then the deal should be done on an open exchange, period. I'm not sympathetic to endowment funds and other institutions that say they want to protect themselves from price manipulation; I'm entitled to be protected from price manipulation, too...

Buying Bullion: The Smart Metals Investment

Needing the sensual experience of the shiny feel or being an actual coin collecting hobbyist are the only valid reasons in the ETF era for attempting to own the metal as opposed to an interest in some abstracted metal investment. When a financial panic such as the once-a-decade big market plunge happens it's too difficult to liquidate your position before the situation stabilizes; the transaction costs of storage, transport, commissions, and insurance bite deeply; and in the event of a true social breakdown the gold is absolutely worthless (as Robert Lichello pointed out from his experiences in occupied Japan, when the social order and economy are broken only soap, cigarettes, food and alcohol have any value--there are no buyers for gold).

In the modern world any crisis that will raise the price of gold will be short-lived and must be anticipated quickly enough to sell ETF or stock shares on electronic markets and transfer the profit to traditional banks through electronic transfer to lock them into the bricks and mortar economy. Modern crises (at least manageable ones that don't reduce us to the soap and cigarette phase) pass far too quickly to mess around with exchanging bullion if you hope to capture maximal profits...