nobby73

The gold market disconnect: Where futures prices are soaring, but demand for physical gold is 34% below a year ago - and where one mint (Austria's) is cutting production of the metal coins on lower expected demand, while the U.S. Mint plans to resume making coins under an ounce in weight on Dec. 3.

I agree, the article blatantly skews data to give the impression gold demand is falling, which is clearly not the case, with even central banks on course to be net buyers for 2009. The comments of Nadler are linked to his gold investment vehicle, it is important to understand he is very far from being impartial.


On Nov 21 10:52 AM Jeff Nielson wrote:

> More, hilarious anti-gold propaganda.

Place your bets: Which of the biggest economies will default on debt first?

True sovereign defaults occur when countries are unable to service their debt. With the majority of these countries, they only issue debt in domestic currency and in essence can print as required. The type of sovereign default experienced in emerging economies comes from the inability to come up with the hard currency their debt was issued in.

The closest thing we will see from most of the countries listed is the soft default of currency depreciation/ devaluation and monetization of debt, except for those in the single currency. Therefore, although the UK problems are probably the most severe in many ways, they do control their currency, the debt maturity is longer than the other countries you are arguing against 1,000 years of history to write off the City of London. The US has a unique problem owing to the reserve currency status and can devalue the currency in a macro game of chicken which they will win in the short term.

However, if things do take a nasty turn down from here, I think Italy is the one most likely to have a true default.

There are reasons here linked to the potential for political impasse between those in the Eurozone who want a strong and stable currency (i.e. Germany) and those who would like a bit of loose money to bring inflation and reduce those debts (i.e. the PIGS). The political system is extremely unstable and there is no real alternative to Berlusconi, which is astonishing. Further, the elite in the country are past masters in moving assets to safety and may see a default as being net positive for the nation. It would likely be a two step process, via exiting of the single currency and then restructuring sovereign debt in a new Lira currency, which would trigger the CDS contracts.

Is the U.S. Headed Down the Same Path as Japan?

The similarity between the US today and Japan at the start of the Nineties are limited to the collapse of the real estate market and toxic assets on the bank balance sheets. Even though everyone talks of the lost decade in Japan, the country still benefited from very strong export sector and to this day is the largest net creditor nation. I am still not sure what the term "lost decade" means - that the Nikkei did not recapture the pre-bubble heights? Pretty hard to do that without a good dose of inflation, which you will never get without higher rates and a falling currency. Was it that property prices never reached the previous levels? Well, the Japanese realized the madness of that period was not sustainable.

All I know is whatever path had been taken by the Japanese economy post 1990, it could have been a lot worse. Unemployment never reached 20% like the US faces, the JGB market never faced exploding yields. Japan may have experienced sluggish growth, but there was growth, there was no depression and there was no collapse in living standards.

Many pundits take the view that the US must avoid the Japanese experience of the "Lost Decade" at all costs, but we would be wise to remember that there are many possible futures that are far worse than that.

The greatest concern for the US should be that, as indicated by the latest trade data, any "recovery" fueled by rate cuts, tax cuts or other form of stimulus will merely exacerbate the external deficit (which Japan does not have) and the level of indebtness, which is already at a comparable level to Japan nearly 20 years into their "lost decade".

Is the US headed down the same path as Japan? Probably not, but in 10 years time, they may wish that they had been....

Market Destruction: Mass Media Finally Catching On?

I think the thumbs down were for the bizarrely arrogant tone of your comment rather than the views on trading on margin.

Frankly, anybody who buys equities while having any debt can be said to be trading on margin, because they are leveraging their own personal balance sheet. There may be fewer trading on margin, but it is pretty widespread.

However, you do make a valuable point, which is linked the goldbugs thinking that buy holding gold will make them rich, even though gold is merely rising owing to the decline in currencies. If stocks rise merely as a function of the weakening of the currency, you are basically flat, so to increase wealth, you need to take leverage. However, equities themselves are by their nature a leverage position (assets - liabilities) so it is wise to be cautious.

Congratulations on being 600% up on the year, but remember the dangers of hubris.


On Nov 13 03:28 PM Mark Anthony wrote:

> On Nov 13 03:04 PM Wildebeest wrote:

Lunatic Bubble Warning for U.S. Treasuries

The Treasury market may show all the signs of being a bubble, but it will be Bernanke's Last Stand. Given the assistance of the banks and all the various monetization programs, we first need to see a collapse in the Muni market, the CRE market and the Dollar. If the Treasury market starts to go, it's pretty much all over and all you will hear is the sound of the goldbugs laughing....

Investors' Thinking: Time to Hedge Gold Stocks

Shorting gold against a long equity position in a gold miner is not a hedge. If you think gold prices are going to run out of steam, far better to reduce your position, or consider tight stops.

History has shown the theoretical leverage ratio between gold miners share prices and gold is very volatile and very assymmetric, so frankly, this strategy would be highly likely to go horribly wrong.

Global Markets in Review: Is the Risk Trade Back On?

Remember, people have to have actively sought work, as an architect, in the previous four weeks to qualify as an unemployed architect. If people are aware there is simply no work in this field, they will either have not looked or will have sought other work.

As the U6 measure has underemployment at 17%+, it stand to reason architects are either not seeking work or engaged in other part time jobs.


On Nov 08 12:56 PM chris coonan wrote:

> if I could only believe BLS statistics to start with...
>
> here is an example:
>
> Field of Architecture (people that design buildings)
> 1. BLS reports a 9 percent rate of unemployment in Q3 2009....really?
>
> 2. Architecture and Development have just about stopped in the US,
> the only firms busy are those doing work in China and Dubai
> 3. There have been massive layoffs, some over 50 percent of firms
> all across the nation. Just last week Gensler had another layoff.
>
> 4. How could Architecture, a field tied to Development and Construction
> be LOWER than average in unemployment...just not possible.
>
> I suspect the BLS statistics, as reported elsewhere on SA are seriously
> flawed, and that perhaps we were over 10 percent some time ago.<br/>
>
> This understatement of statistics may be showing us a pattern in
> government acknowledgement, or lack thereof.

Incurious Gold Manipulation Theorists

On Nov 03 02:28 PM DiggerUK wrote:

"Best not be cruel to the Gatagoons, they can't understand why the IMF selling half it's 400 tonnes to India hasn't manipulated the price of gold down."

On the contrary, because the gold has been sold as a biparty exchange (at a price of c. $1040 an ounce), there is no reason this would depress prices. Prices rose strongly today for a number of reasons, but mainly because of this news.

"What they can't do is sell quantitatively eased gold, it doesn't exist, nor can it be created."

Wrong - paper gold does not exist, you can sell as many futures as you desire, and then pray the counterparty does not demand physical delivery. So if you are a bullion bank "selling" gold to a money manager who doesn't want to actually hold the stuff, you can sell away to your heart's content.

As for the article itself, it's a bit stupid. Obviously, money managers tend to be more often long assets than short, cos like they get given money and, er, buy stuff with it. But the MMs should understand that by only going long via futures, they facilitate a system whereby they probably distort the supply side of the supply demand dynamic and most likely get a lower return as a consequence.

This CTFC data shows the incredible size and concentration of short PM positions in US banks.

cftc.gov/dea/bank/...

U.K.: Individual Liability for Government Debt

This is an excellent piece of work - kudos

The terrifying fact is the following - "Unfunded public sector pension liabilities, which the Government will need to pay, are also omitted and add a further £1,104 billion."

Approx 50% of the countries public debt is unfunded pension costs for public sector workers and this is INDEX LINKED, so it cannot be inflated away. People love to talk about how Thatcherite policies transformed the country, but in reality, they sold the family silver to pay for tax cuts that were spent on consumer durables, foreign holidays and triggered a massive housing bubble, the same housing bubble that means today the main asset of the middle class is their home. The government sold all the assets that were profitable and kept all the costs.

As for the Conservatives no longer excluding PFI from the national debt figures, I will believe it when I see it...

U.K. Gilts Could Be World's Best Short

Whilst I see most risks to the downside and a short Gilts position makes more sense than a long, I am not sure it's the best short out there. This comment provides one good reason.

blogs.telegraph.co.uk/.../

Gold: Is Now the Time to Buy?

If I were platinum, I would be feeling distinctly unloved at the moment. All the arguments about silver of a PM and an industrial hold true. I bought gold and silver a while back, but if I were looking at investing in PMs right now, I would probably go for a bit of all three.

Policymakers are happy the dollar is falling, Irwin Kellner says, though they won't admit it. But with the Fed already rumbling about sopping up some of those greenbacks swimming around in the global seas, it's not likely to stay down for long.

"Does this suggest that the beleaguered buck is more likely to be stronger rather than weaker a year from now? You betcha."

Irwin Kellner is chief economist for MarketWatch, and is Distinguished Scholar of Economics at Dowling College in Oakdale, N.Y.


That's real scholarship for you.. sounds like someone pressured him to write something bullish about the Dollar and he acquiesced somewhat reluctantly....

On average, Citigroup (C) traded 1.1B shares a day in August, 813.1M a day in September, and 428M a day so far in October. So what happened to Citi's volume?

Pref share conversion closed the arbitrage trade..

TIPS Are No Longer a Steal

You can have price inflation with high unemployment, as any country that has experienced a currency crisis can attest. The inflationary effect of rising input prices destroys profit margins and puts many workers, out of work. Sure, you do not have monetary inflation (as in velocity of money), so this may be more correctly called stagflation, but simply put, it costs more money for the same standard of living.

It may initially appear that things are getting cheaper, as there are more distressed sellers, but businesses need to make a profit to survive in the longer term.

Too many people seem to thing that the US is an economically independent entity but the country has had a hugely negative balance of trade for as long as I can remember.

Clearly, the biggest factor is the cost of oil.


On Oct 08 01:20 AM JAMES CARLINI wrote:

> I think the first commenter notsosmart has a good observation -
> <you can't have inflation with so many unemployed>
>
> I would take his comment a little further and say that there are
> many people underemployed. You can't spend at the rate when you
> were making $80K-$120K if now you have a job paying $35K-$45K.<br/>
>
> Somehow those that are underemployed are not getting picked up on
> the radar of those who comment on the effects of the 10% or so unemployment.
> If we could track underemployment, it is at a much higher percentage
> and the impact on spending is even greater because these people spent
> money (they were at a much higher salary). Now, they are not spending
> anything.

Gold Surges to New Record Highs: Media Is Apathetic

Thin volume? Are you talking about physical, futures or ETFs.


As for the ECB raising rates, dream on. Not with low inflation, sticky unemployment, worsening loan losses and a weakening Dollar.


On Oct 07 03:04 PM Arthur Hau wrote:

> Suppose gold rises at a rate of $10 a day. By the time it reaches
> $1500, it will take at least 45 days.
>
> But look at the trade volume today. At this kind of thin volume,
> it is already a miracle to have a $5 rise at this record high price.
> At this rate, it will take 90 days to reach the big-mouth-claim of
> $1500 by Barclay!
>
> Wait, it is very likely that there is an interest rate raise by the
> European Central Bank at the beginning of next year. That is, there
> is only about 2.5 months (75 days) left.
>
> Time is running out for the bulls to paint their rosy picture and
> to tell their happily-ever-after story!