Precious Metals Update: Germany's Gold Hoard And The Mark-Up Epiphany [View article]
You have echoed what I wrote a few months back - restoring Gold Standard is the only way to restore confidence in paper currencies: http://seekingalpha.co...
There are a few things I would like to mention with regard to the data you have presented:
1) Volume data: You have used the chart of a Gold ETF for this purpose. The price of Gold does not depend on the price of an ETF, but the price (i.e. NAV) of the ETF depends on the price of Gold. Hence I would like to know whether volume data on Gold trading on Comex supports the thesis on price action. What have been the volumes on the way up and on the way down?
2) Parabolic move: If the second chart is converted into a logarithmic one, which is the right way to look at charts, the move would appear much less parabolic.
3) Time period: The parabolic move of gold has been for too short a duration to suggest it to be a bubble. Till end-June 2011, Gold was moving steadily up, so the parabolic move is not even two months old. The parabolic moves in all the previous bubbles, such as the tech bubble or the tulip bulbs went on for much longer periods of time and involved much higher price appreciations.
Hence, Gold does not appear to be a bubble. At least, not yet.
The NYT reports Europe is considering a ban on short selling, according to 2 people familiar with the situation. The ESMA may propose a ban on shorting all stocks or just financial shares. Stoxx 50 -3.5%. [View news story]
"Batter up," writes Matt Busigin, who says equities - when measured by earnings yield minus the risk free yield - are as cheap now as they were in 1975 (when Warren Buffet said looking at share prices made him feel "like an oversexed guy in a harem"). In that year, stocks rose 32% even as earnings fell 18%. [View news story]
But is Warren Buffet saying the same thing now? That is the million dollar question.
Excellent article. By this logic, is it correct to assume that the "fair" value of Gold is $ 2668.067 at a 1:1 ratio if the US restores the Gold standard?
Treasury Should Sell Gold Reserves to Pay Down Deficit [View article]
The size of the Gold reserve seems too small to make any meaningful impact on the liabilities of the Government by selling it. Any the very fact that the Government is selling will bring down the price of Gold, making such a strategy a non-starter. There is no way this will help the Government bring down its debt burden in any meaningful way, though Gold prices may come down in the short run.
Perhaps a better way out is to restore the Gold Standard, which will cause the Gold prices to appreciate significantly in the short run but also increase confidence in the value of the US Dollar as a genuine currency. Can you imagine what will happen if foreign Governments stop investing their forex reserves in the US Dollar?
While Congress Bickers, the Gold ETF Will Remain a Profitable Trade [View article]
If the US Government defaults, Gold will gain as an alternate currency. If the debt ceiling is raised, Gold will continue its steady ascent as in the last ten years. Can't see how Gold investors will lose in this environment. Will somebody help me?
Felix Salmon's take on "the most important chart in the world right now": It wasn’t greed and speculation that sparked the financial crisis, but "an excess of overcaution" marked by a surge in demand for AAA-rated bonds - dangerous "precisely because they’re considered risk-free. They breed complacency and regulatory arbitrage" which lead to excessive leverage, "the cause of all big crises." [View news story]
Clearly, a failure of the rating agencies, and their rating model where Sovereign debt was considered risk free, just because it was sovereign, nothing more. Capital Adequacy norms fed onto this myth and took everyone for a ride. Three years back, the financial system was bailed out by the Governments, but who will bail out the Governments?
Soros: Euro Crisis Will Result in Defections [View article]
Is any of Europe's problems because of something which couldn't have been forseen when the Euro was first conceived? Then why the problems now? Was it a flawed model to begin with, or what went wrong and when?
Precious Metals Wars - Attack of the Trading Bots - Again [View article]
Good article.
In a normal market, demand - supply determines price of a thing. But in the futures markets, the price (as set by speculators) determines the demand - supply (in the physical market). This is the defect of the present system. Regulators need to introduce compulsory physical settlement for every trade.
Precious Metals Continue to Lead Asset Markets [View article]
After saying "....I continue to believe precious metals constitute the most sound form of money...", you then say "...neither (gold and silver) meets stringent standards prudent investors require for a buy and hold investment...".
Not clear. I see a contradiction here. Could you please clarify.
Precious Metals Update: Germany's Gold Hoard And The Mark-Up Epiphany [View article]
What Determines The Price Of Gold [View article]
Gold Is Done ... For Now [View article]
1) Volume data: You have used the chart of a Gold ETF for this purpose. The price of Gold does not depend on the price of an ETF, but the price (i.e. NAV) of the ETF depends on the price of Gold. Hence I would like to know whether volume data on Gold trading on Comex supports the thesis on price action. What have been the volumes on the way up and on the way down?
2) Parabolic move: If the second chart is converted into a logarithmic one, which is the right way to look at charts, the move would appear much less parabolic.
3) Time period: The parabolic move of gold has been for too short a duration to suggest it to be a bubble. Till end-June 2011, Gold was moving steadily up, so the parabolic move is not even two months old. The parabolic moves in all the previous bubbles, such as the tech bubble or the tulip bulbs went on for much longer periods of time and involved much higher price appreciations.
Hence, Gold does not appear to be a bubble. At least, not yet.
The NYT reports Europe is considering a ban on short selling, according to 2 people familiar with the situation. The ESMA may propose a ban on shorting all stocks or just financial shares. Stoxx 50 -3.5%. [View news story]
"Batter up," writes Matt Busigin, who says equities - when measured by earnings yield minus the risk free yield - are as cheap now as they were in 1975 (when Warren Buffet said looking at share prices made him feel "like an oversexed guy in a harem"). In that year, stocks rose 32% even as earnings fell 18%. [View news story]
Physical Gold Hoarding, Global Demand to Produce Undeliverable Futures [View article]
Gold vs. Fed Balance Sheet [View article]
Greece Defaults [View article]
Gold vs. Fed Balance Sheet [View article]
Treasury Should Sell Gold Reserves to Pay Down Deficit [View article]
Perhaps a better way out is to restore the Gold Standard, which will cause the Gold prices to appreciate significantly in the short run but also increase confidence in the value of the US Dollar as a genuine currency. Can you imagine what will happen if foreign Governments stop investing their forex reserves in the US Dollar?
While Congress Bickers, the Gold ETF Will Remain a Profitable Trade [View article]
Felix Salmon's take on "the most important chart in the world right now": It wasn’t greed and speculation that sparked the financial crisis, but "an excess of overcaution" marked by a surge in demand for AAA-rated bonds - dangerous "precisely because they’re considered risk-free. They breed complacency and regulatory arbitrage" which lead to excessive leverage, "the cause of all big crises." [View news story]
Soros: Euro Crisis Will Result in Defections [View article]
Precious Metals Wars - Attack of the Trading Bots - Again [View article]
In a normal market, demand - supply determines price of a thing. But in the futures markets, the price (as set by speculators) determines the demand - supply (in the physical market). This is the defect of the present system. Regulators need to introduce compulsory physical settlement for every trade.
Precious Metals Continue to Lead Asset Markets [View article]
Not clear. I see a contradiction here. Could you please clarify.