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  • Precious Metals: Massive Paper Selling Begets Unprecedented Physical Buying  [View article]
    "Following the confiscation of depositor savings in Cyprus . . . "

    Banks failed and non-insured deposits were lost.

    Not sure how this constitutes "confiscation".
    Apr 22, 2013. 06:35 PM | 2 Likes Like |Link to Comment
  • Precious Metals: Massive Paper Selling Begets Unprecedented Physical Buying  [View article]
    It's a fundamental mistake to attempt to apply a Gaussian statistical analysis to data that don't exhibit Guassian ("bell shaped curve") distribution.

    While there are many natural as well as man made phenomena that do exhibit true Gaussian distribution, price changes in investments isn't one of them. As demonstrated by the price activity over a 2 day span last week.

    When data and don't agree with you underlying assumptions, you can either question the data or question your assumptions.
    Apr 22, 2013. 05:36 PM | Likes Like |Link to Comment
  • Gold: The Fear Bubble Bursts  [View article]
    No, just in his own house. Which is worse.
    Apr 19, 2013. 10:09 AM | 2 Likes Like |Link to Comment
  • What China Should Do About The Gold Crash  [View article]
    Ooops, I'm surprised that nobody pointed out that the standard contract size for COMEX gold is 100oz. 5000 oz is the size of a standard silver contract.

    There's also a miny contract, 50 oz. That'll set you back about $70K right now. Lot's of open interest, get your broker to place your order.

    Once you have your bar, you should be able to contract with one of the mints to turn it into coin, or trade your bar in for coin at an appropriate discount rate. Which highlights the problem of trying to use gold as money - it's hard to make change, even with very small coins.

    The reason why there's such tight supply for physical and such high premiums right now for 1oz coins, etc. is, DUH, FALLING PRICES. It takes time to turn that gold ingot in to coins, get them throught the suppy chain, etc. So a 1oz coin today was likely made from gold obtained through the commodities markets, at a much higher price from a few weeks back.

    Question: Who in their right mind would sell 1oz coins for less than they paid for the gold thats in them?

    Better question: We're now 2 years past the peak and about $500 off in price, gold seems to be in a clear downward channel, what mint would even consider buying ingots now to make coins from, when prices are likely to continue to fall.

    Best question: What PM dealer would even consider carrying significant inventory in this price environment?
    Apr 18, 2013. 03:25 PM | 1 Like Like |Link to Comment
  • The Bursting Gold 'Fear Bubble' Vs. The 'Confidence Bubble' In Policy Makers, Economists, And Markets  [View article]
    > "The fact that, to some extent, gold is in competition with current day money gets little attention from the yellow metal's detractors."

    A fact asserted by the yellow metal's proponents, but not accepted by much of anyone else.

    Seriously, gold is in competition with currency? The list of those who accept payment in gold DIRECTLY is miniscule and the terms and conditions are complex. My mortgage servicer doesn't accept payments in gold, nor do any of my utilities, none of the stores I shop at or even, interestingly, the United States Treasury. Gold isn't money, if you need money you can sell gold to get it - which makes gold a COMMODITY.

    On the other hand, those greenbacks in my wallet (when there are any) are emblazened with "Legal tender for all debts, public and private."
    Apr 17, 2013. 11:51 AM | 1 Like Like |Link to Comment
  • What China Should Do About The Gold Crash  [View article]
    Have your broker buy a contract and stand for delivery.

    Voila! 5000 troy oz at spot, plus whatever the broker's commission is.
    Apr 16, 2013. 01:44 PM | 1 Like Like |Link to Comment
  • Gold: The Fear Bubble Bursts  [View article]
    Anything that can be traded on margin will trade at an inflated price, speculators using leverage create the illusion of a larger market than actually exists.

    Wanna see real price discovery in gold? Raise margin requirement to 100% and don't allow people to roll contracts forward. If you're long, you gotta take delivery. If you're short, you gotta close it out before expiry.

    Price would fall by half at least.
    Apr 16, 2013. 09:39 AM | 2 Likes Like |Link to Comment
  • Gold Takes Out Major Support: Next Stop $1,350  [View article]
    I think April 15 is still "near term". Down another 15% since your comment.
    Apr 16, 2013. 08:49 AM | Likes Like |Link to Comment
  • Gold Takes Out Major Support: Next Stop $1,350  [View article]
    Maybe we need to define "intrinsic" and "extrinsic"

    Intrinsic: 2: of itself: by or in itself, rather than because of its associations or consequences

    Extrinsic: 2: 2.from outside: coming or operating from outside something

    Gold has little INTRINSIC value; its value is mostly because of its perceived utility as money; the cost of gold has long ago diminished its utility for things like dental work (now replaced by ceramics, etc, except in the hip-hop community, where a "grill" is a status symbol and mark of welath) or jewelry (the vast majority of which is low; it does have utility as an electrical conductor but the amount of gold above ground now would suffice for that use for centuries; and the incredible slow pace at which gold can be extracted compared to growth of the overall economy long ago rendered it useless as money.

    Gold has far less INTRINSIC value than its price, which mostly reflects its EXTRINSIC value to people who want, but don't NEED, it.
    Apr 16, 2013. 08:31 AM | Likes Like |Link to Comment
  • Gold Takes Out Major Support: Next Stop $1,350  [View article]
    Native American tribes used feathers, beads, animal skins, arrowheads, and tools as money.

    Ancient Japan and China first used rare seashells, then paper representations of seashells - the Chinese character for money is a pictogram representing a seashell.

    Roman emperors paid their armies in SALT, the origins of the word 'salary' and the expression "worth his salt."

    Egypt used standard measures of grain, as did the Mesopotamians and ancient Babylon.

    Gold is far, far from the "universally recognized monetary form" the gold bugs believe it to be.
    Apr 15, 2013. 05:57 PM | Likes Like |Link to Comment
  • Gold Takes Out Major Support: Next Stop $1,350  [View article]
    If gold is money, how can a fund that holds only physical gold be illiquid?

    Just hand the customers the gold, it's money, right?

    But if the customers want FRN and the fund's owners can't redeem the fund in FRN, and the Fed steps in and gives them FRN and takes the counter position, isn't the Fed doing these investors a service? One would assume that the Fed will liquidate the acquired assets in a less hurried manner than the forced selling, thus the markets are also protected, right?

    The alternative would be to let investors in the funds watch their positions get wiped out, the fund collapse, and severe market disruption. But that's what you want, right?
    Apr 15, 2013. 05:48 PM | 1 Like Like |Link to Comment
  • Gold Takes Out Major Support: Next Stop $1,350  [View article]
    No, I wasn't holding my breath.

    But now we're within spitting distance of $1350, and only 11 days after your comment.

    Where do you think we'll be in another 11 days?

    11 weeks?

    Gold is a very small market, relative to the investment community. The size of the plays institutional trades can make, leveraged, complex trading positions, can inflate the price of a particular commodity to an incredible level. The world consumes about 100M bbl of oil A DAY and in 2008, traders created at about 2X what most feel the 'natural' price of oil would be - generating about $7B in additional energy costs PER DAY. What are a few hundred or thousand 100oz contracts compared to that?

    There is absolutely no way that retail investors, gold horders, both here and in China and India, can support gold at $1300/oz of the support of major traders / speculators is removed. These kind folks developed massive long positions when gold was below $500/oz. They waited, patiently, until an economic crisis occured and created a market in which they could drive the price well above $1500 and keep it there for 2+ years. All these last 2 years they've gradually rotated out of their longs and into deep short positions. And now the price of gold will fall and the shorts will get covered, and the cycle will start all over again.
    Apr 15, 2013. 04:30 PM | 1 Like Like |Link to Comment
  • Commodities Have (Almost) No Place In Your Portfolio  [View article]
    Materials cost is a negligible part of the cost of almost any finished good.

    Autos have one of the highest ratios of material cost to selling price; but a $30,000 car (weighing about 3000#) might have a material content worth a couple thousand $ - steel, rubber, aluminum, glass, and plastic.

    How much does the cotton in that $30 gap T-shirt cost? How about the commodities in that $2 coke? How much did the raw materials in your smart phone cost?
    Apr 15, 2013. 01:28 PM | Likes Like |Link to Comment
  • Is Gold Useless - Part III  [View article]
    you might want to look out the window once in a while.

    Off $250, nearly 20%, in about a day and a half.

    Crashing now.
    Apr 15, 2013. 11:44 AM | 3 Likes Like |Link to Comment
  • Gold Market: Is That A Light At The End Of The Tunnel Or An Oncoming Train?  [View article]
    Gee, Tim, where's your "double bottom", your "inverted head and shoulders pattern", your "consolidation before advancing", your "cup and handle", your "trend line support," your yada, yada, yada.

    I don't think this market works the way you think it does.
    Apr 15, 2013. 08:10 AM | 1 Like Like |Link to Comment