Seeking Alpha


Send Message
View as an RSS Feed
View winningtrader's Comments BY TICKER:
Latest  |  Highest rated
  • The anti-QE rhetoric is building just in time for next week's FOMC meeting, as Guggenheim's Scott Minerd channels his inner Bill Gross, calling the Treasury market (TLT, TBT) a "ponzi scheme." "The only reason investors would buy Treasurys today is that they expect the Federal Reserve will buy them at higher prices in the future," Minerd tells clients. The longer the Fed's bond buying continues, "the more volatility-inducing pressure will build." [View news story]
    Ponzi scheme is an investment vehicle where investors get paid their promised return and principal from new investor funds. This is indeed the state of the Treasury market as the government cannot pay even interest on its obligation but borrows more to pay that. So, from that perspective it is indeed a Ponzi. In fact, it is a Ponzi scheme in a state of a bubble.
    Jun 14, 2013. 04:31 PM | 1 Like Like |Link to Comment
  • Scott Minerd's "ponzi scheme" still has quite a few supporters out there. The IMF believes the Fed should continue to purchase Treasurys and says the deficit reduction process in the U.S. "has been excessively rapid and ill-designed." Rather than cuts to education, science, and infrastructure, the IMF says "a back-loaded mix of entitlement savings and new revenues" should be implemented. (Earlier: IMF cuts U.S. GDP growth outlook) [View news story]
    The IMF is just as insane as the rest. The so called huge cuts amount to $85 billion per year. The FED prints $85 billion per MONTH. So, the budget cuts are too big and the money printing too small ... me thinks they got that the wrong way.
    Jun 14, 2013. 04:26 PM | Likes Like |Link to Comment
  • China Becoming The Most Important Factor In Global Gold Markets [View article]
    China is the biggest producer and not a single ounce of what they mine leaves the country. The FED is trying to suppress gold price (currently fighting for dear life to defend $1400) and that allows the Chinese and Indians to buy more Western gold at a discount. Great job Ben ... you are the man.
    Jun 14, 2013. 04:24 PM | 2 Likes Like |Link to Comment
  • Why Is Gold Draining Out Of COMEX Warehouses? [View article]
    Too much detail. The falling inventories on the COMEX are not an indication of gold shortage as the gold is somewhere anyway. Rather it is an indication of the credit quality of the futures contracts. The amount of futures traded on the exchange is huge and on some days it has been bigger than the amount of gold mined in the entire world in one year. So, if the amount of registered gold (available for delivery) is tiny, those futures contracts are like Detroit bonds - as soon as you ask for payment they will not be able to pay. Of course, they may go out and buy physical gold to satisfy such potential demand but at what price.
    What the so called traders and investors need to understand is that most of the gold in the world is sold to Asians (governments and individuals) and something like 80% of all gold goes there. So, they will decide the price over time. New York and London gold trading will become totally irrelevant over the next few years. The Chinese already set up a futures exchange and they started their own gold ETF and my best guess is that all the gold drained from GLD will end up in the Chinese ETF.
    Jun 14, 2013. 04:07 PM | 8 Likes Like |Link to Comment
  • First Quarter 2013 True All-In Cost Silver Industry Figures: Unsustainable Silver Prices [View article]
    I agree with you that taxes are not obvious ... there are all sorts of taxes and some depend on profits and some not.
    Are you able to calculate the true costs of specific mines .... I did it for some gold companies. Would be very interesting to see costs at that level as that would indicate to what extent companies may have some flex to just close some expensive mines temporarily to stay profitable.
    By the way, the gold industry in Australia has been really hit (similar problems and probably indicates what will happen in silver). Australia is the second biggest gold producer in the world after China but their costs are generally speaking very high. Miners are firing and some companies are planning to close / sell mines ... selling to the Chinese of course. If the Chinese buy a mine, all its production is shipped off to China, never to be seen again by the so called developed world.
    Jun 13, 2013. 06:07 PM | 1 Like Like |Link to Comment
  • Apple (AAPL +0.4%) roundup: 1) Suppliers are shipping a "large number" of parts for a cheaper iPhone, says Taiwan's Commercial Times. A 28nm app processor made by TSMC (TSM) is said to be among them. 2) iBookstore chief Keith Moerer says Apple's e-book sales doubled last year, and thinks its e-book share is at ~20%. John Paczkowski notes Amazon (AMZN) and Barnes & Noble (BKS) have been assigned shares of 65% and 25% in the past. 3) The minimum purchase needed for an iAd campaign is now only $50. It once stood at $1M. 4) Reuters' report about Apple mulling a $99 price for its low-cost iPhone is raising eyebrows, given the cheapest iPhone now goes for $450 unsubsidized. Was a subsidized price being discussed? [View news story]
    What would be the profit margin on that? Where are the profits going to come from?
    Jun 13, 2013. 05:21 PM | 1 Like Like |Link to Comment
  • Markets get another boost as a soothing Jon Hilsenrath piece hits reminding the Fed wants us to know a taper of asset purchases doesn't mean an end to asset purchases, and a hike in short-term interest rates isn't anywhere close to being on the radar at this point. S&P 500 (SPY +1.6%), Nasdaq 100 (QQQ +1.4%). [View news story]
    I think that they have a plan to blame Europe, Japan and everybody else but themselves for the problems. There is no doubt about it. Also, I think that they are moving in the direction of making QE the same as FED Funds Rate was before. With rates at 0, they will say that QE can be moved up and down to strengthen or cool off the economy, as is needed. I bet you that they are going to come up with some theoretical nonsense justifying that. It would be a total scam of course but they would go to great lengths in their attempt to preserve the status quo.
    Jun 13, 2013. 05:19 PM | 1 Like Like |Link to Comment
  • First Quarter 2013 True All-In Cost Silver Industry Figures: Unsustainable Silver Prices [View article]
    And also Fresnillo ... this is an important producer. It is also in Mexico (Mexico is the largest silver producer in the world) and would be great to understand how they are doing and what are their costs. The other things is that some companies provide costs at the level of their mines. This means that the company may face true costs of 25 but have two mines one at 20 and the other at 30. If this is the case, the company can stop producing at the expensive mine and cut its production to stay profitable. I am not sure to what extent some firms will do that but I know it is happening in the gold industry.
    On the tax issue, I get the feeling (but don't really know) that companies have another $1 to $1.50 per ounce of potential cost savings meaning that a miner will face lower costs by that amount if profits drop to zero ... this is a guess but can't be that far off. If you compare 2011 to 2012 you see that the tax bill dropped a lot but still costs were much higher. This means that the underlying cost pressure on the industry is even more acute.
    On the 3 sources of silver supply I would say that I just wanted to add some of my thoughts for the readers and for myself as well. Hebba is the only author on seekingalpha that I follow and read carefully and I think that his work is top notch. I do believe that the most difficult call is what is going to happen with the supply of silver as a by-product of zinc and lead. Supply from other sources will come down, of that I am quite convinced.
    Jun 13, 2013. 05:09 PM | 2 Likes Like |Link to Comment
  • The Most Bullish Case For Gold [View article]
    I think that the global central banks, especially the FED, are trying to keep the price of gold down. Now they seem to keep their eyes on $1400 price and hit gold on the Comex as soon as it gets close. These kinds of price controls never work medium term. I think that in the case of gold it is going to work even less given the demand from EM countries, especially India and China and the stagnant supply (I think this year supply will be lower than last). So, those guys will beat up the Comex until the exchange loses all importance. Indeed, at least 80% of the gold in the world is bought in Asia. Why is the price set on the Comex and not there and more importantly, how long can something so ridiculous last?
    Jun 13, 2013. 09:53 AM | Likes Like |Link to Comment
  • Peter Schiff Has It Totally Backwards - Gold Is Not Going 'To The Moon' [View article]
    He predicted the housing crash of 2007/08. What have you predicted?
    Jun 13, 2013. 08:22 AM | 57 Likes Like |Link to Comment
  • Feeling the pressure from Samsung, Apple (AAPL) is mulling the launch over the next year of so-called phablets - iPhones with 4.7" and 5.7" screens - reports Reuters, whose sources include those in the Asian supply chain. Also on the agenda are cheaper iPhone models, perhaps in the $99 range. "They constantly change product specifications almost to the final moment," cautions one of the sources. [View news story]
    Apple's new innovation technology is to see what other did 18 months ago and try to do it now.
    Jun 13, 2013. 08:09 AM | 6 Likes Like |Link to Comment
  • "It's not just talk," says Morgan Stanley's Stephen Jen of the Fed's recent chatter. "My understanding is the Fed is determined to start tapering early ... Markets are not ready for this ... If the Fed does indeed move toward tapering, I fear this may be a long and dangerous summer." [View news story]
    Maybe his understanding is incorrect. Of course, we may see something tiny but it will mostly be just cosmetic.
    Jun 13, 2013. 08:07 AM | 1 Like Like |Link to Comment
  • Federal Finances Continue To Improve [View article]
    I guess you haven't seen yet that the budget deficit for May was $139 billion .... just one month.
    Jun 13, 2013. 07:40 AM | Likes Like |Link to Comment
  • First Quarter 2013 True All-In Cost Silver Industry Figures: Unsustainable Silver Prices [View article]
    The world supply of silver of ~ 1 billion ounces per year is roughly: 25% from scrap, 25% from primary miners and 50% as a by-product from zinc, lead, copper and gold mines. I think that primary miners will be forced to cut supply by more than 10% if prices stay low. Many of them are not big companies and don't have the financial muscle to take losses for a long time. Even more importantly, they will cut (this is happening already) their exploration and investment budgets and this will hit silver supply from that source really hard over the next 1 to 2 years (provided prices stay low). I believe that the cost of mining silver is going to go up further given the lower quality ore that the primary miners have to deal with (less silver per ton of ore) and also political problems that the companies will face in various jurisdiction (this is clearly a trend). The obvious things that companies will have to do is cut production at expensive mines (or even close some of them temporarily), avoid some riskier projects and even abandon some that have already been started and look further to slash the already lower exploration budgets. All that is already going on and is likely to accelerate.
    I have a question for the author. Do you think that the current low silver prices will lower the tax bills of the companies? If that comes down (say by 50%), this would cut the cost of production somewhat as taxes are a portion of the cost. I am not sure what portion of their taxes is fixed (like royalties) and what portion is variable (% of profits).
    This is my view on the remaining 75% of the global silver supply. Scrap supply is going to come down hard. Fewer people will part with their old jewelry at the current low prices - this is just economics 101. Given scrap levels in 2009 and 2010, I expect scrap supply to come down by 10% to 20%.
    The big question is the supply of silver as a by-product of other metals. I think that gold supplies will also be hit for the same reason due to lower gold prices and miners cutting production. So, the amount of silver mined as a by-product of gold should come down a bit too. The other metals are all base metals and very much linked to the health and growth of the global economy, especially China. The profits of the companies mining those metals have been hit and many CEO's fired. The CEO's fired were all ''growth at any cost and profits don't matter'' guys. The new ones are mostly focused on profits and many have said things like ''better less production and more profits''. We'll see what happens but I think that base metals production is going to slow down too and the production of silver from such sources will come down or at least not grow much at all.
    My conclusion is that the amount of sliver produced is going to come down, if prices stay low. Last time when prices came down a lot (end of 2008 and first half of 2009), production didn't come down but prices stayed low for only ~ 9 months and really low for only 4 months. So, we either see higher silver prices in the next 6 to 9 months or the world will have to use less silvrer. Given the strong silver demand from industry and investors, I suspect we see higher prices.
    Jun 13, 2013. 07:24 AM | 4 Likes Like |Link to Comment
  • St. Louis Fed chief James Bullard says labor market conditions "have improved," potentially giving the Fed scope to taper its asset purchases. No one need be too alarmed though, as inflation "has surprised to the downside" which means the FOMC could decide to "maintain its aggressive program over a longer time frame." Can you say mixed messages? [View news story]
    It used to be that 2 fed guys would give speeches and one was good cop and the other bad cop.
    Now one only talks and he is at the same time bad cop and good cop! This is what call efficiency/
    Jun 10, 2013. 12:05 PM | Likes Like |Link to Comment