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mikeyaffe

mikeyaffe
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  • The Gold Floor Fallacy [View article]
    I find it curious that you didn't discuss the effect of mine depletion on the supply of Gold. Mines deplete the same ways oil wells deplete. They must be continually replaced.

    I do not believe that is happening. Gold mining is now bad business. Capital is scarce. Production will fall even if the miners keep producing at a loss. That is a physical reality of the geology.
    Dec 9 10:34 AM | Likes Like |Link to Comment
  • U.S. Non-Farm Payrolls Report: Terrific Opportunity To Buy Gold From Momentum Traders [View article]
    The truth of the matter is predicting the future is beyond anyone's ability. There are too many variables. The only people who have shown any ability to consistently predict the future are the Vegas odds makers.

    The rest of are just a bunch of WAG's.

    The best I can figure in this the time of excess liquidity the momentum traders rule the market. Think of it like a pendulum swinging back and forth. For Gold, the pendulum has been swinging to the left for a long time. At some time the momentum guys will sense a deceleration and pile on for the ride to the right. Maybe that happened this morning. We shall see.

    I can say with certainty that once it starts swinging to the right, there will be no shortage of experts who will provide explanations and theories as to why that is happening.

    One more point. The Fed is actually removing $155 B / month of paper from the market.
    $85 billion of new asset purchases.
    ($4 Trillion / 5 yr ave am) / 12 = $70 billion of rollovers

    That is a lot of paper.
    Dec 6 11:50 AM | 1 Like Like |Link to Comment
  • Is Gold Resource Corp.'s Dividend Unsustainable? [View article]
    You wrote "The company hasn't announced an official production and cost guidance for 2014 yet, but as GORO is expanding its mill capacity, investors could be hoping for a much higher production rate at a (hopefully) reduced cash cost. However, I don't think the mill capacity might be the problem and I expect some production bottlenecks in the mining process. "

    I am fairly sure you didn't listen to the 3rd qtr conf. call. Hoyt15 is correct in his observation and the effect of them still being an exploration stage company was explained very clearly in the call.

    The part I find most troubling about your post was the 2nd part of the quote above. Could you please tell us what you are basing your expectation of bottlenecks in the mining process. They have a new fleet of trucks, a greatly expanded capacity to de-water the mine, a new mill and a new 10 megawatt generator. Where do you see these bottlenecks? Have you visited the mine?
    Nov 25 04:14 PM | 3 Likes Like |Link to Comment
  • Gold - Bullish Scenario After FOMC Meeting [View article]
    The Fed ha been buying $85 billion of new securities / month. They have also been rolling over their previous purchases. With an average term of 5 years and a $3.5 Trillion balance sheet, that means they are rolling over $700 billion / yr or about $60 billion / mo.

    The $64,000 question is as the Fed reduces their meddling in the market ($145 Bil/mo) where will the replacement money come from. Sources are;
    1. Stock market
    2. Municipal bonds
    3. Corporate bonds
    4. Junk Bonds
    5. Emerging markets

    It should be interesting.
    Sep 14 12:20 PM | 1 Like Like |Link to Comment
  • Tesla's Crushing Battery Supply Constraints [View article]
    "Henry Ford would be proud"

    http://bit.ly/17BSwW2
    Sep 11 04:51 PM | Likes Like |Link to Comment
  • Tesla's Crushing Battery Supply Constraints [View article]
    Before anyone is allowed to invest in the stock market they should be required to read Charles Mackay's brilliant book "Extraordinary Popular Delusions and the Madness of Crowds".

    The basic premise here is that Tesla can continue to sell a lot of electric vehicles, while the rest of the EV manufacturers have had no success. Toyota can now be added to list of manufacturers that have had to offer sweetheart financing deals or big price cuts in order to move their EV's (RAV4). They did this yesterday.

    There are a limited number of rich people that can afford an electric car as well as a second car for long trips and carting around stuff. I wonder what else the average Tesla owner has in their driveway.

    At the peak of Tulipmania a single bulb sold for 4000 Florins. A suit of clothes sold for 80 Florins.
    Aug 27 10:18 AM | 1 Like Like |Link to Comment
  • Economath: Economics - IS/LM + Krugman Cross = Win [View article]
    This was way to complicated for me to understand. There is only one solution to the current economic malaise that grips the US.

    The economy would be way better off if ten families could afford to go out for dinner at the Lone Star Steakhouse than if one family could afford to dine at Barbarians.

    The concentration of wealth at the top 1% of the population has become extreme. These folks know how to avoid paying taxes. The current concentration of wealth will render any solution ineffective.

    I am not a socialist. But I do remember what happened to Marie Antoinette. That is the real end game. Better stock up on cake.

    http://bit.ly/16ZPdvv
    Aug 24 11:45 AM | 3 Likes Like |Link to Comment
  • Ron Paul Has It Totally Backwards, Gold Isn't Going To Explode Higher [View article]
    The Fed is currently taking about $1.5 trillion of bonds ($85 T/M and rollovers). If they stop buying, that will increase the supply of bonds. The laws of Supply and Demand imply that the value of those bonds will have to fall to find new demand. This creates 3 problems

    1. When bond prices fall, rates rise
    2. When rates rise the US Deficit becomes more expensive to finance.
    3. $1.5 T must come from somewhere. Maybe junk bonds, municipal bonds, Mafia, the Ferengi. Your guess is as good as mine.

    The Fed has allowed the politicians to spend without consequence. There is no way out.
    Aug 17 11:11 AM | 4 Likes Like |Link to Comment
  • The Economy Is Improving - Isn't It? [View article]
    "What this number demonstrates is that QE is simply not getting the job done."

    It all comes down to your definition of what the real "JOB" of the Fed is. I believe the Fed's primary role is to finance the U.S. Deficit. Counting rollovers from their current balance sheet and new monthly purchases, they are taking $1.5 trillion out of supply thereby greatly reducing rates. It is allowing the politicians to spend without consequence.

    Now that the Chinese and the Japanese aren't buying treasury bills, where will the new buyers come from and what will they stop buying as a result of these treasury bill purchases.

    That is a question Ben cannot answer and is why he can't wait to get out of town.
    Aug 6 09:04 AM | 1 Like Like |Link to Comment
  • Precious metals see a bout of major buying, with gold (GLD +1.5%) jumping about $25/ounce in the past few minutes, and silver (SLV +4.8%) soaring nearly a $1. Bearish for some time, Mark Dow reminds gold has been going down for 2 years, but the decline has only recently made the headlines. Gold's post-QE run was built on a number of misconceptions which have all cracked. The longs (silver too) are trapped and the bear market isn't close to over.
      [View news story]
    I wonder if the author could explain why the US with one of the largest gold reserves doesn't sell it and put it to productive use repairing roads and bridges. Everyone knows it's nothing but a barbaric relic.
    Jun 28 11:03 AM | 7 Likes Like |Link to Comment
  • Ignore The Fed's DoubleSpeak And Get To Gold [View article]
    Rates cannot continue to rise. Ben's ZIRP folly has allowed politicians to spend without penalty.

    In 2001 interest on the the national debt was $359 billion. In 2012 it was $359 billion even though the debt had increased from 5.6 trillion to 16.5 trillion.

    You cannot turn back the clock and the politicians cannot unspend the money.

    Every 1% rise in rates adds about $170 billion to the deficit and reduces the value of Ben's portfolio by 5%.

    It is a problem without a good solution.

    People think the US government spends too much on Social Security and Medicare. But the reality is they don't. The US is in eight place on income replacement for seniors and all of it's competitors in the G8 provide national healthcare to 100% of their citizens.

    The US has a deficit because -
    1. Too much is spent on national defense
    2. Health care and drug providers charge too much. Do a little research on hip replacements around the world.
    3. Wealth is concentrated in the hands of too few. The economy would be way better off if 10 families could spend $50 for a meal at the Applebee's than if one family spends $500 for a meal at Delmonico's

    Ramble over, time to walk the dog.
    Jun 22 11:20 AM | 3 Likes Like |Link to Comment
  • Ignore The Fed's DoubleSpeak And Get To Gold [View article]
    Ben retires in December. In his mind, to secure his legacy he had to define an exit plan from his counterfeiting operation. It is a rather simple plan, start reducing purchase in November, retire in December and let the poor sucker who follows him deal with the fallout.

    When rates rise and home and car sales fall and the US deficit financing costs becomes material, his successor will be forced to abandon his plan.

    Ben will be back in his academic job secure in the knowledge that his plan would have worked if he was still in charge. The man is clearly delusional.
    Jun 21 10:47 AM | 16 Likes Like |Link to Comment
  • To Taper, Or Not To Taper [View article]
    The #1 reason the fed will not taper their QE/ZIRP program is the US Federal Deficit. With $17+ billion accumulated debt, rising rates will devastate the deficit far more than it will affect the stock market and the economy. That is why QE won't end.

    The economy has performed well in the past when rates were well above current rates. If you actually do a cost benefit analysis on the impact of low rates-

    - Individuals - they can get low rates on mortgages and cars but that is offset by the the pain inflicted on individual savers
    - Corporations - they are flush with cash so low rates are not going to get them to invest in more plant and equipment
    - Government - Low rates are saving their asses!!!!!!!!
    Jun 16 08:52 AM | Likes Like |Link to Comment
  • Gold: Time To Short [View article]
    Everyone has an opinion on Gold. Whenever I see one of these articles I have a simple methodology.

    1. I press ctrl - F
    2. I search for the word deficit
    3. If I find the word I read the article because I know the author is looking at the whole economic spectrum
    4. If don't find it, then I know the author has completely missed the super bubble of deficit government financing and that the article has little value.

    When a deficit is too large to pay back then you must inflate your way out or you must default. Counterfeiting will only work for so long.

    Japan will be the preview, the US will be the main event.
    Jun 12 11:11 AM | 7 Likes Like |Link to Comment
  • Bill Gross's Dreadful Analysis Of The U.S. Economy's 'Wounded Heart' [View article]
    Normally when someone spends more than they have and also has a larger accumulated deficit, the market penalizes them by making it more difficult to borrow and by charging them more for what they can get. It has always been that way. A simple self stabilizing negative feedback loop.

    The Fed has given the politicians a free pass by financing their profligate spending ways at virtually zero cost. Now that this new level of spending has been established, what happens when interest becomes a significant line item on the federal budget.

    Will they cut Social Security or Medicare while the population ages. Not if they want to be re-elected.

    Pay me now or pay me later has never been more true.
    Jun 11 10:38 AM | 5 Likes Like |Link to Comment
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