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  • Geithner’s comments that there is “absolutely” no chance that another U.S. financial institution would fail is music to Bank of America (BAC +6%), Morgan Stanley (MS +3.8%) and other bank stocks (XLF +1.4%). “The direct exposure of the U.S. financial system to the countries under the most pressure in Europe is very modest," the Secretary says.  [View news story]
    If he is "absoultely" sure that no US financial instituion will fail, then I am "absolutely" sure that the Obumer-Bernank-Geithner trifecta will print unlimited quantities of fiat currency to any financial institution that wants it, once the sh&t hits the fan. Thats why the dollar is toast.
    Oct 7, 2011. 10:32 AM | Likes Like |Link to Comment
  • TVIX: Look For This Bearish Hedge To Keep Outperforming [View article]
    This has been a fantastic hedge in a terrible time for the stock market. TVIX is up close to 600%! in the past few months since we hit a top in stocks. Great call. It is a perfect storm for TVIX, high and rising volatility and extreme backwardization. I still think it goes to zero over time, but this is about the best bear market product out there.
    Sep 23, 2011. 02:56 PM | Likes Like |Link to Comment
  • Latest Developments in the Pharmathene-SIGA Case Point to a Strong Buy for PIP [View article]
    James was right about the outcome and he made a great call. But the stock is down (at the moment) about 40% from the day the article was written. It was great analysis and logic, but I didnt buy PIP for one reason only - PIP is completely dependent on the US government (and perhaps other governments in the future), for its revenues/profits. With the precarious fiscal position of our government (and other governments who would be likely buyers), I think the market is taking into account the risk of SIGA/PIP not ever seeing the money for this contract. If there is a crisis and "austerity measures" to prevent a collapse, SIGA/PIP are not exactly going to be the first in line to get paid, even though there are national security issues with the product. Just my two cents.
    Sep 23, 2011. 12:44 PM | Likes Like |Link to Comment
  • 6 Reasons I Am in TBT and Cash Now [View article]
    The US bond market is completely rigged. Fundamentals do not matter anymore, at least not in the Short or Intermediate term. Inflation is rising and now up to 3.8%, yet the 10 year is at 1.87% because of the Bernank. I dont see how rational buyer would be be buying a 10 Treasury bond at negative 2% interest rates here if not for their ability to flip to the Fed for a profit. It so reminds me of the real estate market 6 years ago. This is all going to end very very badly for long bondholders eventually, but TBT may be toast for a while as the market is being 100% the fraudsters in Washington. I say keep all of your money in real estate, gold and silver and food until this whole fraudulent monetary system comes crashing down.
    Sep 21, 2011. 07:12 PM | 1 Like Like |Link to Comment
  • 6 Reasons I Am in TBT and Cash Now [View article]
    TBT continutes to get pummelled into new lows. Time to throw in the towel?
    Sep 2, 2011. 03:30 PM | Likes Like |Link to Comment
  • Gold Is Worth $700, But A Correction Is Unlikely In The Short-Term [View article]
    Adreno, By looking at your picture I would imagine you were born after 1971 when Nixon took us off the gold standard. You (and I) have only known a world based on a US debt backed fiat currency system, which is a different system than in 99% of modern human history, where gold and silver were "money" (i.e either the physical was money or currencies were tied to gold/silver).

    So, you have to have some longer term perspetive on your point #1. You make a big assumption, and that is that the world will not go back to this system that we have used throughout most of human history. In fact, I think it is likely, as a potential debt induced fiat currency collapse will lead to demands to go back to this system in the Western world. I think the rise in Gold prices is, among other things, a reflection of this possiblity. Central banks are accumulating gold in huge numbers for reserves for a reason, and I think they would answer the question of whether gold is money quite differently than you.
    Sep 2, 2011. 11:51 AM | 6 Likes Like |Link to Comment
  • TVIX: Look For This Bearish Hedge To Keep Outperforming [View article]
    Cant agree more that in a bear market, TVIX and VXX are great products. But I think both were actually DESINGED to go to zero over time. I believe a price of $0 is where the issuer of the ETN maximizes their profit on both of these products. The prospectus even says they are likely to go to zero over time, largely because of management fees and because contango is the "normal state" of the volatilty curve which provides steady decay in TVIX and VXX over the long term (TVIX has even more decay since it is leveraged). The long term graph of VXX I think shows clearly where VXX is headed. TVIX too.

    Which is why XIV fascinates me. In theory and in practice so far over the course of its short life, XIV is close to an inverse mirror of VXX. So, if VXX trends towards zero over its lifetime, why wouldnt XIV trend towards infinity over its lifetime? Yes, XIV may have monumental declines (like from $19 to $7 in the past 6 weeks or so), but if contango is the "normal state" of markets going forward, why wouldnt XIV not always reach higher highs over time, eventually?
    Sep 2, 2011. 01:28 AM | Likes Like |Link to Comment
  • Is Silver's Price Vs. Gold Warranted? [View article]
    I always enjoy reading your comments because they are always logical and well thought out, and your negative bias towards Silver makes logical sense on many levels. (And your negative bias towards slick self interested silver/gold salesman is refreshing to see on SA)
    But I, and I think many other investors, look at Silver and Gold differently than I believe you do. I personally have been buying physical silver and physical gold (not SLV/PSLV/GLD/PHYS!) every month for the last few years, and will continue to do so. The purchase of Silver and Gold to me, and I think to many others, is simply a way to preserve wealth, and an insurance policy against the failure of the US debt backed fiat currency system, which may result in a return to a long tradition of silver and gold being “money” (i.e. all currencies being tied to gold and/or silver).
    A $100 US dollar bill costs only a few pennies to manufacture, yet it can command several thousand times that in claims on another man’s labor. So I am not overly concerned that Silver only costs a small fraction of the current market price of $40/oz to produce, if in the future it will considered money. (there is a historical relationship between gold and silver, so if only gold is tied to currency in the future, I believe that implies that Silver will also be considered money) Even if you think that there will always be a strong correlation between silver production costs and silver prices, the failure of this US debt backed fiat currency system, implies debasement of the dollar and hyper inflation, so this small fraction of $40 to produce silver today, will be a much higher amount in US dollars in the future, implying a much higher market value for silver.
    A one ounce silver eagle worth 40 US Dollars can fill up my cars gas tank now, and I think in 5 or 10 years it will be able to do the same-approximately. But my 40 US Dollars sitting in a bank earning negative real interest rates, well, Im not sure what that will buy me in 5 or 10 years. Perhaps it will fill up my gas tank, but it may only buy me a candy bar. Until we stop debasing the dollar, and have a transforming event (similar to the appointment of Paul Volker in the late 70’s) to normalize interest rates (i.e to non artificially low rates) I will continue to buy physical silver. Are there alternative investments (like international stocks and real estate) available to protect yourself against dollar debasement? Perhaps. But in the worst case scenario (a significant probability in my opinion) a US debt/fiat currency collapse could lead to worldwide depression AND hyperinflation (Im thinking Zimababwe) which would be bad for stocks and real estate too (stock prices and real estate in terms of gold or silver or “money” that is). Im hoping this worst case scenario NEVER plays out, but if it does, there are very few places other than gold and silver to hide to preserve wealth.
    Sep 2, 2011. 12:47 AM | Likes Like |Link to Comment
  • TVIX: Look For This Bearish Hedge To Keep Outperforming [View article]
    Good article. As long as the volatility curve is in backwardization, TVIX (and VXX) are great hedges. I think TVIX eventually goes to zero (effecitvely zero) by the end of its lifespan, as much lower volatility (than now) and contango are more "normal" market conditions, but during these volatility spikes and downward sloping volatity curves during Bear Markets, there are not many better products than TVIX.
    Aug 31, 2011. 07:41 PM | Likes Like |Link to Comment
  • Superstitions, Myths, Folklore and Gold [View article]

    Let me ask you this. How many ounces of gold did it take to buy a barrell of oil 40 years ago (at the point we got off the gold standard) and how many ounces of gold does it cost to buy a barrel of oil today?

    Then let me ask you this: How many dollars did it take to buy a barrell of oil 40 years ago, and how many dollars does it take today to buy a barrel of oil?

    Then ask yourself whether gold is the benchmark, or the US dollar is the benchmark.
    Aug 17, 2011. 07:12 PM | 1 Like Like |Link to Comment
  • Superstitions, Myths, Folklore and Gold [View article]
    netbluesky, Im assuming you are joking?

    Well, if not, let me answer you with a question. Where did the Fed find the dollars to pay for the $1.6 trillion+ in Treasury debt the Fed currently has in its portfolio? The Fed's total portfolio has increased from under $1 trillion to just under $3 trillion in the last 3 years. Where are they getting the dollars to buy these assets?
    Aug 17, 2011. 06:58 PM | 1 Like Like |Link to Comment
  • Superstitions, Myths, Folklore and Gold [View article]
    In other words, you are just making it to try to prove a point.
    Aug 17, 2011. 06:47 PM | Likes Like |Link to Comment
  • Superstitions, Myths, Folklore and Gold [View article]
    Here is a good article for the author to read to educate himself on Gold and Money. I hope that he learns that Gold is more than that hypnotic shiny little rock thingy that is smooth to hold, and that he learns some history.


    Lots of great info in here, but one thing for me stood out:

    "In 1970 an ounce of gold ($35) would buy 15 barrels of OPEC oil ($2.30/bbl). In May 1981 an ounce of gold ($480) still bought 15 barrels of Saudi oil ($32/bbl)." Fast forward to the present, and an ounce of gold ($1750) buys roughly 20 barrels of oil ($85).

    Golds purchasing power remains relatively steady, but the US dollar's purchasing power does not.
    Aug 16, 2011. 11:35 PM | 1 Like Like |Link to Comment
  • Superstitions, Myths, Folklore and Gold [View article]
    Once again Michael, I think you have missed the point. Why has gold fluctuated so much over time? The reason has little to do with Gold! Gold has been the same thing it has always been for all of human history. Gold fluctuates because our currencies have flucuated so much - it had gone up (in US dollars) in times of currency depreciation and down (in US dollars) during times of currency appreciation . The value of gold stays roughly the same over time (over the long term) in terms of its purchasing power, but it is the purchasing power of the US DOLLAR that changes, due to monetary policy.

    It is true that Gold as of today has had a huge and historic run, and at the moment has more purchasing power than it historically has had over history. Gold is due for a historic fall if monetary policy changes. But central banks/investors/specul... are bidding up Gold in anticipation of this policy not changing, continuned dollar destruction, and I think it is a logical thing to do with Ben Bernanke in office.
    Aug 16, 2011. 08:23 PM | 2 Likes Like |Link to Comment
  • Superstitions, Myths, Folklore and Gold [View article]
    I think you are missing the point completely. When currencies fail, money does not disappear, humans just pick a new form of money to trade with. Rice was used in medival China, and Im sure cigarettes are used in prison. Money will never disappear, as humans will always need a way to transact business without using the barter system. Currencies will fail though, and people in those societies will then demand more stability in their currency afterwards. Gold (or currencies tied to gold) is something people have always come back to after their currencies fail because their is a limited amount of it, and it is hard to mine (create), and it is impossible to destroy, unlike fiat paper.

    Gold is NOT in a bubble. Nothing has changed with Gold, it is the same thing it was 10 years ago. But the value of Gold IN US DOLLARS has changed, since dollars are worth so much less, and are anticipated to be worth even less in the future. Central banks have created much of the rise in gold prices, and if we can return to a sound, responsible fiat money system as we had in the 80's and 90's, they will dump gold once again, but I am not counting on it.
    Aug 16, 2011. 07:55 PM | 2 Likes Like |Link to Comment