Sprott Money: The Price of Silver Could Explode [View article]
Maybe so, but this interview was nothing more than a series of slowball pitches to someone who has a clear financial interest in promoting a certain point of view.
Sprott Money: The Price of Silver Could Explode [View article]
According to the Sprott Money website, "Sprott Money Ltd. is a leading precious metals dealer selling Gold Coins, Silver Coins and Bullion Bars Online."
Maybe next week we can have an interview with the CEO of Pardee Homes, explaining why everyone should put their nest egg into residential real estate.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
"The problem with climate scientists is that they make things up as they go along"
And you know this because after a lifetime of study of atmospheric science, they reached a conclusion different than the one that you arrived at after reading a book and a couple of news articles?
One difficulty with plotting the price of gold and the federal debt the way you have in your figure is that any two exponentially growing quantities will appear to be highly correlated when plotted in this way. It gives a much stronger impression of a relationship than actually exists.
Plotted on a logrithmic scale, the lack of any simple causual relationship between these two becomes obvious very quickly. The most rapid growth in the federal debt came under Reagan beween 1982 and 1986, when it grew 14%, 21%, 14%, 16%, and 17% respectively. The price of gold in those years changed by -18%, 12%, -15%, -12%, and 16%, ending up the period pretty much where it started, even though the debt had increased by a factor of more than twofold. Gold rose by the largest amount year over year in 1980 (by 99%), when the federal debt increased by only 10%. The runner ups were 1973 (68%), when the federal debt rose by 7%, and 1974 (63%), when the federal debt rose 4%. In fact a regression of the annual percentage increase in the price of gold vs the annual percentage increase in the federal debt gives r = -0.09.
None of this is to say that I'm a fan of deficit spending, but the relationship between growth in the price of gold and growth of the the debt is not as direct or clearcut as implied here.
Sprott Money: The Price of Silver Could Explode [View article]
Doug, I have no problem with Sprout promoting his business. But that's not the purpose of this website, at least in my opinion.
I don't really even have a problem with Mr. Sprout being interviewed here. But when an interviewee has clear financial interests in promoting a certain POV, the interviewer's job is to bring some balance and ask some tough questions. Thats what differentiates journalism from infomercials. In this case this presumably did not happen because the interviewer also has a financial interest in pumping up the interest of retail investors in gold.
The Empire Strikes Back Against the Silver Price Rebellion [View article]
I'll provide a more detailed summary of this issue in an article later, but for now I'll summarize the incontrovertable evidence of a nutmeg conspiracy, and an inevitable move into the $5 per oz range.
1) McCormick and Schmidtt have never provided a detailed accounting or the results of a detailed audit of their nutmeg holdings.
2) Evidence that a conspiracy to inflate market perceptions of worldwide nutmeg stocks has been ongoing for years is available in the average kitchen. Just this morning I weighed the contents of a four year old "1 oz" cannister of nutmeg from our kitchen. It contained less than one quarter that amount!
3) Even the most casual survey of cooking magazines and websites reveals that hundreds of new applications for nutmeg are being created weekly.
4) Fewer than 1% of Chinese eat nutmeg containing foods on a regular basis. Assuming that just 10% of Chinese families makes one batch of nutmeg-flavored cookies per week would drive up demand 10-fold!
5) Up to 35% of all silver is recycled, so a substantial fraction of all the silver ever mined is still available. In contrast, nutmeg is not recycled. The ratio of above ground silver to nutmeg is about 100.
6) Silver production is increasing at an annual rate of 2%. In contrast, traditional nutmeg growing areas are rapidly being converted to biofuels production, or becoming unusable due to global warming.
7) Nutmeg is a very small part of the overall cost of preparing a nutmeg flavored dish, so buyers are not price sensitive.
8) Unrest in the middle east has the potential to disrupt international shipping, forcing nutmeg shipments to revert to the traditional camel drives across the Sahara Desert. One way to play this is to invest in commercial real estate in Timbuktu.
The Empire Strikes Back Against the Silver Price Rebellion [View article]
The silver/nutmeg ratio will inevitably return to its natural and long term historical ratio of 10, established over thousands of years in the East India Spice trade. Nothing any manipulator can do will stop it.
Using History to Determine Gold's Intrinsic Value [View article]
I thought this was one of the best articles on this subject I've seen on SA in quite some time. The author goes straight to the core of what makes any medium of exhange "worth anything at all": The willingness of others to exchange it for food, shelter, energy, and other essentials. The approach of using historical rates of exchange of gold for the "basket of goods" needed by the average consumer is intrinsically reasonable, and he keeps his conclusions modest, suggesting that the value he derives is a reasonable baseline for investors to adjust with their own expectations for the future.
Many of the commenters here criticized the conclusions of the article by attacking the validity of the CPI index. For those concerned about this, I suggest comparing the current and historical ratios of the price of gold to the prices of other commodities, which are simple values that are a matter of public record and not readily manipulated. Gold is still expensive when compared to these. Looking back over the last 30 years, the ratio of the price of gold to that of housing (Case-Shiller index) is the highest its ever been. The percentage of months since 1981 in which the ratio of the price of gold to that of wheat, beef, coffee, crude oil and steel was higher than it is today is 5%, 6%, 33%, 62%, and 3% respectively. Priced not in dollars but in units of these basic commodities, gold is still expensive by historical standards.
A Simple Formula For The Fair Price Of Gold [View article]
This seems like a reasonable approach to setting a benchmark price to which one would add factors to account for varying economic circumstances. I'm sure it would have won the warm praise of the many critics here if the calculation had ended up predicting a "fair" price of $3000/oz.
Gold is not just expensive relative to the Dow, it is at its all time high relative to housing as well. The gold/steel, gold/hardwood, gold/cotton, gold/crude oil, and gold/sugar ratios are higher than they've been in 99%, 91%, 99%, 52%, and 85% of months elapsed since 1980. If the price of gold is calculated from the current price of each of these commodities and it's average historical price ratio, one comes up with a "fair" value of about $1100.
None of these calculations, of course address the issue of whether the currency will collapse, whether we are entering a period of hyperinflation, etc. What they do suggest is that in the absence of these types of events, gold is likely to drop substantially.
Does iShares SLV ETF Really Hold Silver? [View article]
" A banker from BlackRock took the time to officially deny these rumors. That's suspicious."
What exactly do you expect Blackrock to do in this situation? If they remained silent, this article would have almost certainly contained the accusatory statement that "No one from Blackrock has denied these rumors".
Welcome to 1984. Denial is evidence of guilt. As is failure to deny.
Silver: Is This The 'Last' Decline? [View article]
Avi, I have to take issue with your claims of remarkable predictive power.
April 7 2013: "So, for now, it is still quite possible that we can see one more drop of approximately a dollar in silver before we see the next rally." The actual drop is considerably greater, and if you disregard the quantitative aspect, it becomes a prediction that almost any actual outcome would fulfill.
2) For your longer term prediction in the same article "While the 29 region can represent another topping region for silver before we drop to the 22/24 region to complete this two-year correction, we can also see silver extend beyond the 29 region to as high as the 33/34 region on this next rally, which will only then set up the decline to the 22/24 region. While there is still the possibility that we can simply begin our parabolic rally from this region in which we currently find ourselves...." This prediction seems to have left you with the right to claim to having correctly predicted the market no matter what the outcome.
3) On March 29, "I find it hard to believe that we will drop below the 26.87 level I have cited as strong support for quite some time."
On March 10, "So, for now, I am still quite skeptical, but not at all willing to short it [silver] with any confidence,"
On March 2, "I want to warn those that are attempting to short silver here, as we approach the target zone, the possibility exists that once we hit it we can see a VERY strong reversal"
On April 29, 2012 " in my opinion, investors should be looking for an entry into the silver market shortly if they do not already have a position."
So there are certainly a fair number of bad calls out there, a number that encompass any possible outcome, and others that were correct because they were so non-specific regarding the timing and level of tops and bottoms that they were bound to be correct on some time scale.
I'm certainly not claiming to be able to do better, but your track record certainly doesn't support the sort of condescending lectures you hand out so freely to Wagner and others who disagree with you.
Does iShares SLV ETF Really Hold Silver? [View article]
I was thinking of fictitious bars (serial numbers) rather than claiming to own real bars owned by others, but I address your point below.
Your point is a good one, but it only increases the size of the list of necessary co-conspirators. iShares would not be able to track where these bars went either. Every owner of physical silver in the world can look at the iShares inventory list, and could drop a dime to the WSJ if they found any matches between the iShares claimed inventory and bars in their own possession.
I would urge all the skeptics on this board to do just that. Get out your list of bar serial numbers and check them against the iShares list.
Sprott Money: The Price of Silver Could Explode [View article]
What type of article would I expect? One of higher journalistic quality than I see on 3 am television shows about Health-O-Matic Adjustable Beds.
The interviewee sells precious metals to retail investors for a living. He spends the entire article promoting the idea that the price of the commodity he is in the business of selling can only go up. He endorses a 70-80% of portfolio investment in precious metals, an undiversified position that is wildly inappropriate for the average investor, but which suits his own financial interests quite well. The interviewer does not question any of this.
I see it a lot like this:
Ford Salesman No. 1: So Bob, tell me what you think of the new Ford Escort compared to the Honda Civic and other subcompacts.
Ford Salesman No. 2: Jim, I don't see how anyone can question the idea that the Ford is at least twice, and probably three times the value for the money.
Ford Salesman No. 1: Why is that Bob? Is it the revolutionary design of the new Ford engine, or just the longstanding history of superior quality that Ford offers?
Ford Salesman No. 2: Jim, I think you have to take both of these into account, as well as the superior styling offered by the Escort...
Sprott Money: The Price of Silver Could Explode [View article]
As such, it is little more than an infomercial.
Sprott Money: The Price of Silver Could Explode [View article]
Maybe next week we can have an interview with the CEO of Pardee Homes, explaining why everyone should put their nest egg into residential real estate.
Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
And you know this because after a lifetime of study of atmospheric science, they reached a conclusion different than the one that you arrived at after reading a book and a couple of news articles?
The First Stage of Inflation Has Already Hit, Next Up Is the Currency Collapse [View article]
Many thanks from both of us!
The Bedrock of the Gold Bull Rally [View article]
Plotted on a logrithmic scale, the lack of any simple causual relationship between these two becomes obvious very quickly. The most rapid growth in the federal debt came under Reagan beween 1982 and 1986, when it grew 14%, 21%, 14%, 16%, and 17% respectively. The price of gold in those years changed by -18%, 12%, -15%, -12%, and 16%, ending up the period pretty much where it started, even though the debt had increased by a factor of more than twofold. Gold rose by the largest amount year over year in 1980 (by 99%), when the federal debt increased by only 10%. The runner ups were 1973 (68%), when the federal debt rose by 7%, and 1974 (63%), when the federal debt rose 4%. In fact a regression of the annual percentage increase in the price of gold vs the annual percentage increase in the federal debt gives r = -0.09.
None of this is to say that I'm a fan of deficit spending, but the relationship between growth in the price of gold and growth of the the debt is not as direct or clearcut as implied here.
Sprott Money: The Price of Silver Could Explode [View article]
I don't really even have a problem with Mr. Sprout being interviewed here. But when an interviewee has clear financial interests in promoting a certain POV, the interviewer's job is to bring some balance and ask some tough questions. Thats what differentiates journalism from infomercials. In this case this presumably did not happen because the interviewer also has a financial interest in pumping up the interest of retail investors in gold.
Sad for Seeking Alpha that they published this.
The Empire Strikes Back Against the Silver Price Rebellion [View article]
1) McCormick and Schmidtt have never provided a detailed accounting or the results of a detailed audit of their nutmeg holdings.
2) Evidence that a conspiracy to inflate market perceptions of worldwide nutmeg stocks has been ongoing for years is available in the average kitchen. Just this morning I weighed the contents of a four year old "1 oz" cannister of nutmeg from our kitchen. It contained less than one quarter that amount!
3) Even the most casual survey of cooking magazines and websites reveals that hundreds of new applications for nutmeg are being created weekly.
4) Fewer than 1% of Chinese eat nutmeg containing foods on a regular basis. Assuming that just 10% of Chinese families makes one batch of nutmeg-flavored cookies per week would drive up demand 10-fold!
5) Up to 35% of all silver is recycled, so a substantial fraction of all the silver ever mined is still available. In contrast, nutmeg is not recycled. The ratio of above ground silver to nutmeg is about 100.
6) Silver production is increasing at an annual rate of 2%. In contrast, traditional nutmeg growing areas are rapidly being converted to biofuels production, or becoming unusable due to global warming.
7) Nutmeg is a very small part of the overall cost of preparing a nutmeg flavored dish, so buyers are not price sensitive.
8) Unrest in the middle east has the potential to disrupt international shipping, forcing nutmeg shipments to revert to the traditional camel drives across the Sahara Desert. One way to play this is to invest in commercial real estate in Timbuktu.
The Empire Strikes Back Against the Silver Price Rebellion [View article]
Using History to Determine Gold's Intrinsic Value [View article]
Many of the commenters here criticized the conclusions of the article by attacking the validity of the CPI index. For those concerned about this, I suggest comparing the current and historical ratios of the price of gold to the prices of other commodities, which are simple values that are a matter of public record and not readily manipulated. Gold is still expensive when compared to these. Looking back over the last 30 years, the ratio of the price of gold to that of housing (Case-Shiller index) is the highest its ever been. The percentage of months since 1981 in which the ratio of the price of gold to that of wheat, beef, coffee, crude oil and steel was higher than it is today is 5%, 6%, 33%, 62%, and 3% respectively. Priced not in dollars but in units of these basic commodities, gold is still expensive by historical standards.
A Simple Formula For The Fair Price Of Gold [View article]
Gold is not just expensive relative to the Dow, it is at its all time high relative to housing as well. The gold/steel, gold/hardwood, gold/cotton, gold/crude oil, and gold/sugar ratios are higher than they've been in 99%, 91%, 99%, 52%, and 85% of months elapsed since 1980. If the price of gold is calculated from the current price of each of these commodities and it's average historical price ratio, one comes up with a "fair" value of about $1100.
None of these calculations, of course address the issue of whether the currency will collapse, whether we are entering a period of hyperinflation, etc. What they do suggest is that in the absence of these types of events, gold is likely to drop substantially.
Does iShares SLV ETF Really Hold Silver? [View article]
What exactly do you expect Blackrock to do in this situation? If they remained silent, this article would have almost certainly contained the accusatory statement that "No one from Blackrock has denied these rumors".
Welcome to 1984. Denial is evidence of guilt. As is failure to deny.
Silver: Is This The 'Last' Decline? [View article]
April 7 2013: "So, for now, it is still quite possible that we can see one more drop of approximately a dollar in silver before we see the next rally." The actual drop is considerably greater, and if you disregard the quantitative aspect, it becomes a prediction that almost any actual outcome would fulfill.
2) For your longer term prediction in the same article "While the 29 region can represent another topping region for silver before we drop to the 22/24 region to complete this two-year correction, we can also see silver extend beyond the 29 region to as high as the 33/34 region on this next rally, which will only then set up the decline to the 22/24 region. While there is still the possibility that we can simply begin our parabolic rally from this region in which we currently find ourselves...." This prediction seems to have left you with the right to claim to having correctly predicted the market no matter what the outcome.
3) On March 29, "I find it hard to believe that we will drop below the 26.87 level I have cited as strong support for quite some time."
On March 10, "So, for now, I am still quite skeptical, but not at all willing to short it [silver] with any confidence,"
On March 2, "I want to warn those that are attempting to short silver here, as we approach the target zone, the possibility exists that once we hit it we can see a VERY strong reversal"
On April 29, 2012 " in my opinion, investors should be looking for an entry into the silver market shortly if they do not already have a position."
So there are certainly a fair number of bad calls out there, a number that encompass any possible outcome, and others that were correct because they were so non-specific regarding the timing and level of tops and bottoms that they were bound to be correct on some time scale.
I'm certainly not claiming to be able to do better, but your track record certainly doesn't support the sort of condescending lectures you hand out so freely to Wagner and others who disagree with you.
Does iShares SLV ETF Really Hold Silver? [View article]
Your point is a good one, but it only increases the size of the list of necessary co-conspirators. iShares would not be able to track where these bars went either. Every owner of physical silver in the world can look at the iShares inventory list, and could drop a dime to the WSJ if they found any matches between the iShares claimed inventory and bars in their own possession.
I would urge all the skeptics on this board to do just that. Get out your list of bar serial numbers and check them against the iShares list.
Sprott Money: The Price of Silver Could Explode [View article]
The interviewee sells precious metals to retail investors for a living. He spends the entire article promoting the idea that the price of the commodity he is in the business of selling can only go up. He endorses a 70-80% of portfolio investment in precious metals, an undiversified position that is wildly inappropriate for the average investor, but which suits his own financial interests quite well. The interviewer does not question any of this.
I see it a lot like this:
Ford Salesman No. 1: So Bob, tell me what you think of the new Ford Escort compared to the Honda Civic and other subcompacts.
Ford Salesman No. 2: Jim, I don't see how anyone can question the idea that the Ford is at least twice, and probably three times the value for the money.
Ford Salesman No. 1: Why is that Bob? Is it the revolutionary design of the new Ford engine, or just the longstanding history of superior quality that Ford offers?
Ford Salesman No. 2: Jim, I think you have to take both of these into account, as well as the superior styling offered by the Escort...
And so on.
How The U.S. Is Quickly Becoming A Third World Country (Part 2) [View article]
The problems you cite are real, but hyperbole undercuts rather than dramatizes your point.