Podcast

The Spot Price of Precious Metals Is Becoming Irrelevant

It's different this time
Thursday, April 25, 2013, 9:38 PM

In light of the recent violent down-and-up action in the precious metals, we invited the executives behind the Hard Assets Alliance (HAA) on to discuss the impacts they're seeing recent developments have on the balance of buying and selling for gold and silver.

The HAA is a large precious metals bullion dealer that gives the retail investor access to an institutional-grade platform for purchasing, storage, and delivery. The platform itself is operated by Global Bullion International (GBI), which counts a number of the country's largest banks and funds among its clients. So today's guests have an exceptionally good finger on the "pulse" of bullion transactions in today's market.

(Full disclosure: The HAA is endorsed by PeakProsperity.com. Details on why and the business relationship between our firms can be found here)

In this podcast discussion, Chris asks Ed D'Agostino (General Manager, HAA) and Savneet Singh (President & Co-Founder, GBI) what's remarkable about the recent action in the precious metals.

For starters, demand is off the charts:

Savneet:  It’s tremendous. On Friday and Monday we had the two largest days of selling. We at GBI had some of the biggest days of all time. We had four to five times as many buy orders and sell orders, both in number of trades and in volume. Far more significant buying than selling, and it’s continued throughout the week. Buying has been just tremendous on the gold side. It’s been robust across markets – both in the United States and also in our overseas locations. It’s been consistent across the board.

It’s also representative across all of our dealers. When we surveyed our dealers to get their feelings on what’s happening, it’s been off the charts. Our refiners had two times as many orders as they usually do. Our bullion dealers had, on average, three to five times as many orders as they normally do. Our bullion banks had the same type of positive inflows verses outflows.

Ed:  That’s the same with the Hard Assets Alliance. We’ve seen record inflows of cash deposits over the last two weeks, and purchases have far outnumbered – basically nine-to-one at the Hard Assets Alliance for purchases verses sales of positions. 

Second, the demand we're seeing is from existing customers who are returning to buy in bigger volume as they see the precious metals as being "on sale" right now. This is creating supply strains across the system. If we get to a stage where another 1% or 2% of the population decides to become first-time bullion buyers, supply could become exhausted quickly:

Ed:  I think there’s going to be some serious supply constraints. I agree, we're nowhere near mainstream yet. Once more conventional retail investors wake up to the fact that they need some sort of protection in their portfolio against debasement of currency and inflation the demand is going to surge. 

Savneet:  At this moment, particularly on gold, I just don’t see there being a shortage. Even ETF and closed-end funds are looking for a better way to buy. We’ve never had a problem being able to coordinate extremely large purchases for them. We’ve already hit the capacity on the silver coin side where there’s just not enough out there to satisfy demand. Because that demand is centralized around coins, people will have to wait for what mints want to do – whether it’s the Royal Mint, the U.S. Mint. You are kind of tied to the supply of one producer. Silver bars are a little bit better, but silver is just a much smaller market than gold is. I think you're absolutely being exposed to shortages there.

On the gold side, I think if gold ever became truly mainstream, as Ed was talking about gold's total market value is $5-6 trillion dollars. If 1-2% of the population wanted to buy some at current prices, there’s just not enough of it. So, two things happen: Either you have a gigantic price re-rating, or you don’t have supply. 

Third, the surge in physical buying combined with tightening supply is resulting in the premium paid over spot price for physical bullion to march upwards quickly. For all of recent memory, the price of precious metals has been determined in the paper marketplace (e.g., COMEX; LBMA). That may now be changing. Should the availability of physical bullion start setting the price action, the spot price quoted in the paper market for gold or silver will become an anachronistic irrelevance:

Savneet:  Internationally you traditionally see huge buying after a price selloff. But since the recent huge selloff, you've had more buying than people ever imagined internationally. What was unique about this selloff is that the buying surge occurred in the United States as well.

In the U.S., when we’ve had huge price run-ups, we have lots of buying. It’s not often that within the same day of a huge price decline, we have significant buying. So it was different than other very large days in our company’s history in that you've just had such counterintuitive buying.

Ed:  And such a big disconnect between the spot price and the actual price that you're going to pay for physical, particularly on the silver side. You could make the argument that spot price is becoming irrelevant relative to the physical market because silver is well north of the 20% premium over spot right now. 

Click the play button below to listen to Chris' interview with Ed D’Agostino and Savneet Singh (31m:12s):

Transcript: 

Chris Martenson:  Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson. Today we welcome Ed D'Agostino and Savneet Singh to the program. As you may be aware, Peak Prosperity endorses the Hard Assets Alliance (HAA) as our preferred platform for purchasing gold and silver. Given all the recent volatility and the price of the precious metals as well as rising premiums and tightening supply for physical bullion, we thought it would be timely to talk with the folks operating HAA and to get their take on this situation. Ed is the general manager of the Hard Assets Alliance, and Savneet is president and co-founder of Gold Bullion International (GBI) – the institutional trading platform that powers the Hard Assets Alliance. Gentlemen, thank you so much for joining me today.

Ed D’Agostino:  Great to be here Chris.

Savneet Singh:  Thanks for having us.

Chris Martenson:  Great. So Ed, before we dive into the recent market action, which I know everybody wants to hear about, perhaps you can give us a quick summary of the mission behind the Hard Assets Alliance and why it was created just about a year ago.

Ed D’Agostino:  Sure; I’d be happy to. Basically, the principals around the Hard Assets Alliance are also in the financial newsletter-publishing business and specialize in precious metal miners in gold and silver. We’ve always been interested in the space and invested in the space. We wanted to get into the precious metal market directly, but for years we hadn’t really found the right vehicle. We’d gone pretty far down the road in developing our own private depository outside of the U.S. We ultimately decided that just wasn’t the right fit for us. We were struggling a little bit with the right model to go to market for our readers. That’s when we met Savneet.

Savneet had a need as well. He was interested in expanding the reach of his company beyond institutions and large funds to the individual investor, but he didn’t really have the reach or the infrastructure to do that. So it really was a great fit for us. We love their platform, the ability to store overseas or domestically. And we love the trading platform that they have set up because it offers great price transparency and competitiveness.

We took it one step further. Instead of just doing this platform on our own, we invited essentially all of our friends to join us. We invited any and all information providers, websites, newsletter publishers to come and join us and get behind one best-of-breed platform. That really was the genesis of the Hard Assets Alliance. That’s where we are today.

Chris Martenson:  So there was meeting a need that wasn’t really filled out there. Peak  Prosperity.com users can find out a lot of the actual benefits that exist in the HAA platform, which we think are quite numerous and really quite good. And a lot of what stitches all of that together is the magic of the trading platform. So, Savneet, what is the Gold Bullion International platform, and what advantages does it really bring to the market?

Savneet Singh:  Sure, thanks Chris. I guess I’ll step back and talk a little bit of the genesis of the platform. Around 2009, myself and a couple of partners were trying to acquire gold. When we went out to try to execute it, we found it extremely cumbersome and difficult. You were either forced to call up a Swiss bank and if you didn’t have $20 million it wasn’t available to you or you had to go to an online website or a store where you might not be completely comfortable with the quality of the gold, the service, the ability to sell it back. It just wasn’t really a robust service. We found it very odd that when we’re buying stocks and bonds, the ability to trade online had become so robust, but it hadn’t really happened in precious metals.

What we did was we, over a long period of time, convinced the large precious metal dealers around the world to tie into a technology platform where they would be able to bid on orders from our client and we would be able to then take client orders, bid out to this market of dealers, get our clients the best price, and then provide a really robust back end for storage, insurance, and audit.

Essentially what we think we’ve done is create the first truly ubiquitous platform or exchange for people to buy and trade the physical asset. We don’t do any futures, any derivatives. It’s all pure, physical precious metals. It’s been fantastic. We’ve been able to really collapse pricing for our clients. We’ve been able to store metals in seven or eight locations all around the world. The Hard Assets Alliance is a key part of our growth strategy.

Chris Martenson:  Great; so this platform is really matching buyers and sellers, but you're tapping into a very deep, very liquid market. There’s a wide variety of metal sources that exist out there. What are those sources that you're tapping into right now, just generally speaking?

Savneet Singh:  That’s a good question. Everything we do is what’s called on an “agency basis.” So, we take an order, we bid it out to our market of dealers, and whatever dealer bids the best price gets the transaction. So we’re not even matching buyers and sellers and taking a spread ourselves. We’re literally finding the dealer who has the best price at that moment in time.

If you came in and said I want to buy $10,000 of silver, that order would hit our system, we would execute with the dealer who has the best price, and then we’d literally take those coins to the location where you've asked us to store it and feed all that data back into whatever system you ordered from. So, if it was the Hard Assets Alliance, in your Hard Assets Alliance account you’ll have the record date, the trade date, the settlement date, and the positions all on your statement all available to be sold also online. So it’s complete. The retail investor has access to institutional pricing and institutional service.

Chris Martenson:  So, how many dealers are in that network right now?

Savneet Singh:  We have about 15 dealers. These vary from large refiners to what we call bullion dealers – people who specialize in trading bullion but aren’t banks or stores – and then we have the actual bullion banks who participate in our network as well.

Chris Martenson:  So, a pretty wide market structure there?

Savneet Singh:  Yes. If one day, for example, the banks go out of business, we have dealers we can go to. If the dealers go out of business, we have the refiners, and so on and so forth. The goal is to have extreme diversity and supply so that we always have availability in all the locations that we’re selling in now.

Chris Martenson:  Excellent. Let’s get right to what happened recently. In the wake of this very historic price decline that we saw in gold and silver that happened on Friday and Monday of the week prior to the recording of this podcast, what are you seeing now in your marketplace experience in terms of the balance of buying and selling? I’m interested in what’s happening to premiums, delivery times, and inventories. Let’s start with gold.

Savneet Singh:  Okay. To keep it short, it’s tremendous. On Friday and Monday we had the two largest days of selling. We at GBI had some of the biggest days of all time. We had four to five times as many buy-orders and sell-orders, both in number of trades and in volume traded. So, far more significant buying than selling, and it’s continued throughout the week. Buying has been just tremendous on the gold side. It’s been robust across markets – both in the United States and also in our overseas locations. It’s been consistent across the board. It’s actually representative across all of our dealers.

When we surveyed our dealers to get their feelings on what’s happening, it’s been off the charts. Our refiners had two times as many orders as they usually do. Our bullion dealers had three to five times as many orders on average as they normally do. Our bullion banks had the same type of positive inflows verses outflows.

Ed D’Agostino:  That’s the same with the Hard Assets Alliance. We’ve seen record inflows of cash deposits over the last two weeks, and purchases have far outnumbered – basically nine-to-one at the Hard Assets Alliance for purchases verses sales of positions.

Chris Martenson:  Ed, what about silver verses gold? Any differences there, or are you seeing strong demand in both?

Ed D’Agostino:  Right now we offer silver in the U.S. About a month ago we started offering silver in Melbourne. Last week we started offering it in Singapore. If I look just at the U.S., I would say it’s still about 50/50. Hard Assets Alliance customers tend to like silver just as much as gold. That has been pretty consistent over time, including the last two weeks.

Chris Martenson:  You're recording very strong demand, and it’s pretty evenly spread between gold and silver, at least among the Hard Assets client base at this point.

Ed D’Agostino:  That’s correct.

Chris Martenson:  All right. Savneet, in silver, does that hold true from what you're seeing across the larger platform experience?

Savneet Singh:  Absolutely. I do think the clients of Hard Assets Alliance have definitely taken advantage of silver’s depressed price more than our other clients, but it has been across all our platforms. Silver is clearly fascinating to us right now, because for most dealers who are trying to get access to silver coins, they’re waiting five to eight weeks for delivery because the production is so delayed, and delayed because of large demand. Silver is where you're seeing production delay, settlement delays, and access being tighter and tighter.

Chris Martenson:  Are you experiencing that same tightness within your network as well? Are any silver products in your inventory in short supply right now?

Savneet Singh:  I would say because we have such a wide network of dealers, we’re able to generally get supply. But you know, if this continues in the coins, we might have to slow down. But broadly, I would think if you called any dealer right now, they would have a very hard time getting you the very popular silver coins. The demand was so much bigger than anyone had expected. The supply exists, but it takes time to get it back into the system.

Chris Martenson:  Having been in the gold and silver markets for about 13 years now, I’ve never seen a price decline have this counter-intuitive response on the part of the buying public. In times past, I’ve noticed that sales sometimes spike during down periods as weak hands get shaken out. I don't know how to interpret this besides there aren’t that many weak hands in the business at this point or people recognized a buying opportunity when they see it. But, for whatever reason, this price decline resulted across the board in a pretty large explosion in buying interest, and it was across many different cultures. So, this isn’t just a U.S. perspective. I don't have firsthand knowledge, but I read the newspapers and see what’s happening with buying in China, buying across Asia, in India, in Europe, and even today the Royal Mint out of the UK is reporting that they’ve seen an explosion in demand there, too. It looks pretty worldwide at this point. Would you concur, or are there any wrinkles in that story?

Ed D’Agostino:  Just adding that on our side we have newsletter editors in Singapore and Thailand and they’re all saying the same thing. Whenever they walk by physical dealers, the line is literally out the door and around the corner.

Savneet Singh:  Internationally, you traditionally see huge buying after a price selloff. And then, since you have such a huge selloff, I think you had more buying than people ever imagined internationally. What was unique about this selloff is that it was in the United States as well. Ed can comment on the Hard Assets Alliance, but I think we saw it there as well – which traditionally happens abroad. I think it’s the education – the newsletter partners of HAA have done a great job of educating their customers and their clients about taking advantage of dips like this.

What’s even more unique is that historically, in our business, when we’ve had a price decline, we’ve had sales. When we’ve had huge price runs, we have lots of buying. It’s not often that within the same day of a huge price decline we have significant buying. So it was different than other very large days in our company’s history; in that intra-day, you just had such counterintuitive buying.

Ed D’Agostino:  And such a big disconnect between the spot price and the actual price that you're going to pay for physical, particularly on the silver side. You could make the argument that spot price is becoming irrelevant relative to the physical market because silver is well north of the 20% premium over spot right now.

Chris Martenson:  Twenty percent, wow. That just erupted. I remember I was shocked when it went to 7% then 8% then 10% in the days, Friday and then Monday and into Tuesday. Now, it seems to have spiked even higher. I found a couple of online dealers where the average now for silver eagles is $8 or $8.50 over spot. So, that’s pretty high. It just speaks to real tightness in the market.

I’m wondering, do you expect this demand to continue? I know this is a bit of a speculation game here, but let me ask this question more directly: How long can this demand continue before there might be a danger of physical supply simply being overwhelmed – that there’s just no chance to meet the demand? How big is the pipeline relative to what demand is right now? How big does demand have to be before that pipeline essentially breaks?

Savneet Singh:  Obviously it’s very hard to predict. I don't think anyone has ever predicted a price selloff like we saw. So it’s hard to predict the future. What I would say is that the fundamentals of owning gold haven’t changed one bit. I think the price has changed, but the fundamentals haven't changed. If you have that value-investing mentality built in you, I think you will continue so see some solid buying. Secondly, people don’t often talk about this but I think it is important; the education on gold has increased dramatically in the last two years – the amount of articles, the amount of research – demand has led to education. Education is the best way to create long-term demand.

When we had this price decline, I was surprised that our institutional clients were buying just like our retail clients were. Historically, our institutional clients will dump during a selloff and buy during an uptrend. I think the more people who are aware about gold and have access to it, the more it puts a stepping stone into a nice long-term demand trend. In the short term, it’s very, very hard to predict, because clearly there are other forces at work beside the physical markets.

Ed D’Agostino:  I think the other thing that you'll see in the short term, Chris, is – for example, the U.S. Mint is pulling back on manufacturing tenth of an ounce Eagle coins. You're not going to be able to get those for quite a while, I would say. Once they run out, they’re going to be gone for a while.

Chris Martenson:  The U.S. Mint confuses me. They’ve done this before where they say demand is so high we’ve decided to stop. Is this because they’re just going to concentrate on minting other things? I would have thought that the production runs where you produce one-tenth ounce would have been slightly different presses and dyes from the ones where you're producing the one-ounce coins. Maybe I have that wrong. But is there something odd in that they’re doing that, or are they just overwhelmed and concentrating on larger coins at this point?

Ed D’Agostino:  I think it is the latter. I think they are overwhelmed with the demand, so they are just focusing on the one-ounce coins.

Chris Martenson:  Here’s what I was trying to get at with the prior question. I can still walk into a party with 100 people and find maybe one other person who has invested in gold or silver, and maybe I’d have to go to 200 people to find somebody who actually did it in the physical form – not through GLD or SLF or any other ETF at this point. So physical ownership is still a relatively small percentage. I’m going to guess that when the price got knocked down that the people who stepped up to the plate to buy more were probably that same crowd – maybe the crowd expanded a tiny bit. My perception is that even with that sort of surge of demand, as tiny as it was relative to the overall percentage, that we found the dealer inventories for popular retail products just got swamped and eliminated.

The question is: Is the system ready for really large public participation that might be measured in whole percentages, like when I can walk into a party and find five people out of a hundred? How do you think the system will fare?

Ed D’Agostino:  From my perspective, I think there’s going to be some serious supply constraint. I agree, we're nowhere near mainstream yet. We frequently tell people that everyone should have some sort of allocation to precious metal, whether it’s 5%, 10%, or whatever is comfortable for you in your personal situation. But I agree, I get the same reaction when people ask me what I do for a living. When I say I’m in the precious-metal business, most of them don’t even know what that means.

Once more conventional retail investors wake up to the fact that they need some sort of protection in their portfolio against debasement of currency and inflation, the demand is going to surge. Even if everyone decides well, I’d like to have 3% or 4% or 5%, there is strength in numbers.

Chris Martenson:  Absolutely. Savneet, from our end, before we started the recording of this podcast, you and I were talking about how the precious metal market is very large. It’s very liquid. The precious metals move around rather freely. Do you see a point where it could get physically tight, or do you think that’s really still pretty far from where we are at this moment?

Savneet Singh:  First answer: Yes. Second answer: At this moment, particularly on gold, I just don’t see there being a shortage. Even ETFs and closed-end funds are looking for a better way to buy. We’ve never had a problem being able to coordinate extremely large purchases for them. We’ve already hit the capacity on the silver coin side, where there’s just not enough out there to satisfy demand. Because that demand is centralized around coins, people will have to wait for what mints want to do – whether it’s the world mint, the U.S. mint, the Canadian mint. You are kind of tied to the supply of one producer. The silver bar is a little bit better, but silver is just a much smaller market than gold is. I think you're absolutely exposed to shortages there.

On the gold side, there’s two things in play. I think if gold ever became truly mainstream, as Ed was saying, absolutely there’s not – clearly, gold total market value is five or six trillion dollars. If one or two percent of that world asset was there, clearly there’s just not enough of it. So, two things happen: Either you have a gigantic price re-rating, or you don’t have supply. So, I figure you get into that standpoint if and when you get to the point that demand is that large.

Chris Martenson:  Excellent. Speaking of demand, let’s talk about something that has really been on my mind, and I’ve been writing about it – the flow of gold from West to East. There have been a lot of stories about that. We’ve seen India’s demand somewhere between 800-900 tons for the past three years running, which is really quite high. You have China being the number two producer in the world, exporting zero but importing I think 885 tons in 2012. You add those two numbers together and you discover that India and China alone, out of all new mine production, coming in at 2700 tons. They’re yanking down anywhere from 40-60%, depending on how you like to count. That’s quite a lot, all things considered. I’m wondering, do you have any insights into that flow from West to East? Does that show up anywhere in your platform data?

Savneet Singh:  We’re clearly seeing more demand and premium changes abroad for smaller products. I think the demand is robust. I think a lot of the data that has come out Casey Research and others is showing just how dramatic the demand in China is for physical gold and silver. There was a video last week, actually, showing that the gold exchange, they’re importing gold from London and Zurich now. It’s clear there is a trend now.

I would argue that in India, the demand has been consistent for many, many, many years. They’ll look at supply that’s used to serving that market. In China, you have the fact that China is the world’s biggest gold producer and also its biggest importer. I think that area has the biggest potential to change the gold market. From our data, we do see a demand. As Ed mentioned earlier, we even see demand from U.S. clients to purchase gold and have it stored abroad.

Chris Martenson:  Interesting. Are there any favorite destinations right now for having gold stored abroad?

Ed D’Agostino:  Singapore is actually the number one destination for all of our purchases right now at the Alliance. As far as client assets in storage, Salt Lake City is the number one destination and number two is Singapore, which is pretty remarkable because Singapore has only been online for about three months. It’s already overtaken all the other non-U.S. locations, so very quick growth there. I would say 80% of Hard Assets Alliance customers, of their purchases for non-U.S. storage, 80% is going to Singapore at this point.

Chris Martenson:  Well, that’s interesting. Let me follow-up on that first, Savneet. Ed, that’s very interesting because I would have just intuitively thought maybe Switzerland – that bashing of freedom and safe haven, and a place where people might feel they can have some of their assets safely stored out of country in a really secure location. But somehow Singapore has risen above that. How is that, do you think?

Ed D’Agostino:  You know, this is just my personal opinion, but I think that when you look at the will of the U.S. government and its ability to impose its will on foreign nations, I think the perception is that maybe Zurich is not quite as strong as it used to be. Singapore, on the other hand, has a very independent reputation. It’s a strong political entity that’s very pro-business, very easy to do business in, and they protect individual rights. I think Singapore, in many ways, is the new Switzerland.

Chris Martenson:  That’s fascinating. How things change. Savneet, what did you have to say around that?

Savneet Singh:  I was going to say the same thing. Ed hit the nail on the head. People are looking for a new area to protect their wealth, and Singapore has shown for a long time now a high respect of private property. When you're buying gold, I think that matters quite a bit. I had mentioned Salt Lake City being popular. I think that’s popular because Utah as a state has always had great respect of private property, going back to its original founding history. So I think we as humans look for an area that seems to respect private property. Obviously, Switzerland, and particular Zurich and Geneva, have changed a little bit in the last few years in their ability to disclose. I think people have decided to look more abroad.

Chris Martenson:  I certainly would agree with the idea that to the extent to which the United States Treasury can reach out and touch companies over in Switzerland, which they certainly have done in the past years. But more importantly, what happened after Cyprus – the general imposition of the idea across the entire EU is that assets are now imparable [sic] even if they are not related to or in any way responsible for said losses that might be existing within that system. I mean, they’ve just really started to encroach in a very worrisome way, at least in principal – in Cyprus’ case – and more broadly, conceptually, in words that have been spoken since then. So I can certainly understand why Europe is no longer a favored destination. That makes a lot of sense. 

I was wondering, is there anything in your experience, besides the rising of Singapore to the number two destination, that’s showing that – are you seeing flows of gold out of Europe? Is that showing up yet?

Savneet Singh:  We’re not seeing that yet. What we are seeing is European clients choose not to store in Europe. Maybe that is the answer. The other thing we’ve seen is the demand to store in different locations. Through the Hard Assets Alliance we have a location in Melbourne, Australia. That was a result of client interest and client demand. We are seeing things out there. But the ability to track flows leaving Europe is a little bit harder to find.

Chris Martenson:  All right, so let’s turn our attention to perhaps somebody who is listening to this who has not yet bought precious metals but has been thinking about it. For all those who’ve yet to buy, what would your advice be at this moment?

Ed D’Agostino:  Again, from my perspective, my advice would be, if you've been looking at precious metals, hopefully the events of the last two weeks have eliminated the fact that unless you are buying it purely to trade and you want the ultimate in liquidity and you're truly just short-term speculating, you really need to own physical metal. I would suggest that you store it somewhere other than your house, which is I think a mistake that a lot of people make. They pile it up in their house, and there are several risks. There’s the obvious; there’s the threat of theft, and 90% of the time that theft involves someone that you know. Also, the fact that precious metal can melt. So if you have a fire and you have a chunk of your assets in your basement or in a sleeve of a lamp, they might be gone. My advice, in short, would be own physical and store it somewhere safe.

Chris Martenson:  All right.

Savneet Singh:  I’ll look at it as more from the investment side. If you talk to great investors around the world, or people who never turned out to be great investors, I think they’ll always say they’d wish they bought when there was lots of fear in the street. They wish they’d bought when markets were down. I work with a partner, and he and I always talk about, you know, I should have put my entire portfolio into equities at the bottom of 2008 or 2009. Or, I should have had my portfolio in homebuilders a year ago. Historically, when there are times of great drops, you always look back and wish you had actually acted on that dip.

I think now we’re getting to a point where that might be happening in precious metals. So if you've been on the sidelines, if you're fully convinced, then you should absolutely get into the market. If you're not convinced, maybe you go in with a portion of what you had originally planned. But getting in the market is very important in keeping you tied somewhere and getting active in what’s going on. I think it’s very important to partake in it.

Towards Ed’s point, the platform of Hard Assets Alliance, if you are buying, is that here’s nothing that’s safer, more secure, and more transparent. It’s very important, whether you use Hard Assets Alliance or anybody else, to work with a high-quality vendor, because this is your wealth. This is your money at risk. You just don’t want to take a risk with it. It’s really important to do your diligence and find a vendor who can provide you all the services that you really need.

Chris Martenson:  Indeed. As we learned with MF Global and other things like that, you really have to understand the fine print really well in some cases. Understand that the custodial arrangements vary, and some of them are really good and some of them aren’t. I will point out that Adam and I did a lot of due diligence on HAA and the whole system, and came to the conclusion that it satisfied all the things we needed to see. I’ll really take off and say that this is as confident as we can be with independent third party audits and a system of custodial trust networks that looked really good and solid, as solid as they can be.

Really, the key message that I’m getting out of what happened in this past week and a half is that –Here’s my point-of-view: We’re still in the early stages of this bull market of precious metals. There will be a time when it will make a lot of sense to transition out of these substances into other things. But we are really far from that moment. I know that because so many people are not yet invested in gold and silver. So, we haven’t really hit the public participation phase of this market. But when we do, this past week taught me that your access to metals is going to be as important as anything else out there.

What I really like about the Hard Assets Alliance and the trading platform you've stitched together is that there are 15 dealers and some of them are very large. That’s about as liquid of a market as I can imagine being able to tap into. I just think that’s a real plus. We’ll get into the real frenzy moment of this market. It’ll be interesting. We won’t note it necessarily in lines that are queuing up around the block in Hong Kong; we’ll see that pretty much everywhere, and a similar sort of virtual lines will be queuing up all across the Internet.

So, having access to the ability to trade both in and out of, but particularly to obtain, metals in this next stage is just going to be critical. So, what I like about your platform is that it’s got about as much depth as I could imagine personally having access to, as a guy sitting at a computer screen with a mouse in my right hand.

Ed D’Agostino:  Chris, I couldn’t have said it better myself. That’s exactly why we got behind this platform and partnered with GBI, because of those exact reasons – access to liquidity, being able to own physical metal and yet still have ETF like liquidity, and being able to do it online in a transparent manner.

Savneet Singh:  When you look at a physical platform, you need to look at three things. One is it’s institutional nature. You don’t just want to go anywhere. You want somewhere where your money is safe. That means everything from the buying to the vaulting to the audit to the insurance. Then, I think you want to make sure you're getting a great price, and Hard Assets Alliance does a fantastic job of making sure your price is bid out to an active network in the best-price way. Then third is the liquidity and sell side. You don’t just want to buy gold and store it somewhere. You want to be able to sell it when you need to sell it or if you want to sell it. Or, if you need to find a way to transfer your metals, then you need to do that as well. Those are the three elements that if I was an investor I’d look at. The Hard Assets Alliance was absolutely built for those needs.

Chris Martenson:  Absolutely. I’d really like to thank you both so much for your time today and what you're doing. It’s just been a fantastic conversation. I’d like to invite listeners who want to find out more about Hard Assets Alliance to go to Peak Prosperity.com, scroll down to the bottom of the main page to the Resources section, then click on the link that says where to buy gold and silver. That will get you to a page where the HAA benefits are described in detail. Or you can go to the website, HardAssetsAlliance.com – note that assets is plural in that. You can find out more there.

We heard it here. The fundamentals for gold and silver haven’t changed. Education is up. Institutional buying has been strong, as has individual buying. It’s just been a record week and a half here. We’re going to watch that carefully and learn more as we go along. So, Ed and Savneet, thank you so much for your time.

Ed D’Agostino:  Thanks Chris, great talking to you.

Savneet Singh:  Thank you.

About the guest

Ed D’Agostino

Ed D’Agostino is the GM of the Hard Assets Alliance and Publisher of Mauldin Economics. He began his career in finance at a boutique investment house and later joined his largest client as Vice President of Business Development. In this capacity Ed directed strategic growth initiatives while providing investment analysis and advisory services to the company’s principals. Prior to joining Mauldin Economics, Ed was Managing Director at a consultancy focused on business development in the financial sector. He has been instrumental in the start-up and expansion of several businesses. Ed’s clients, including hedge funds, lenders, and investment publishers, relied on him to recruit and mentor analysts, develop controls and systems, and implement growth strategies.

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61 Comments

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
Self Directed IRA

Chris,

Can HAA be used for a self directed IRA?

Grover

davefairtex's picture
davefairtex
Status: Platinum Member (Offline)
Joined: Sep 3 2008
Posts: 888
Irrelevant Spot prices for PM - Channeling the Mythbusters

The title of the article is very exciting for precious metals bulls, and its a sweeping claim, so I have this (clearly) irresistable urge to clarify - to try and winnow out just what became irrelevant, for how long it will be irrelevant, and what it means to me going forward.

[Full props btw for not putting the article/podcast behind the paywall so I can contribute]

So, the title is: "The Spot Market Price of Precious Metals has Become Irrelevant".

PM consists of gold, silver, and platinum.

Is the claim then, that the spot market price of all these metals is now irrelevant?  As always I have to do my own homework, so I will check my local coin shop http://www.golddealer.com (I'm not affiliated with them, they're just close by) and see what the premiums are:

Gold [Eagles]: 1.014% bid / 1.048% ask

Gold [100 gm]: 0.980% bid / 1.023% ask

Spread 3-4%, premium 2-5%, seems normal - a tad pricey for eagles, but only slightly.  conclusion: spot price still matters for gold

90% silver bag: 1.13% bid / 1.21% ask

maple leaf [25]: 1.08% bid / 1.21% ask

Spread 7-13%, premium 21%, def abnormal.  conclusion: spot price currently doesn't matter for silver, especially in bar form - they were all sold out.

Platinum Maple Leaf: 1.02% bid / 1.06% ask

Spread: 4%, premium 6%,  premiums higher than normal, but conclusion: spot price still matters for platinum

So for 2 of the 3 precious metals at my coin shop, it appears that the spot price still matters.  For the one, silver, there is a clear dislocation.  Since I'm channeling the Mythbusters today, I'm going to say - "Claim: 2/3 Busted."  (Or if you're a glass half full sort of person: Claim 1/3 Proven!)

Ok, since we're clear now that the spot price is irrelevant only for silver, the next question is: has the spot market price become irrelevant for all time and all silver products, or just some products, and just for a limited amount of time?

If we're striving for clarity and true understanding, these are important distinctions.

Certainly my local PM shop doesn't have any COMEX bars - normally they sell for 50 cents over spot, and they're all gone.  But knowing I can go to Eric Sprott's PSLV fund (currently trading at a premium of +0.38% to NAV) drop $240,000 on him (+ $5000 for delivery), and I can have 10 1000 oz bars (83 pounds each!) appear next month at my house, one would assume these bars will return to stock within one month's time and perhaps they'd be less than a buck above spot - perhaps a 2-3% premium.

That being the case, could we conclude that for good delivery bars​ the spot price for silver is still quite  relevant?  I think so.  All I have to do is wait a month, and I'm guaranteed to receive them.  Assuming you can trust Eric Sprott.  So it turns out, if you're patient, and you have a spare quarter-million bucks, you can get one form of silver for about 60 cents over spot.  Ok, you need to buy 10 of them, and each of them weighs 83 pounds, but its silver - its the real thing.  Its just not in the form you prefer - or likely the quantity!  And you have to wait.

So really, what we're talking about is form and quantity and timeframe for which spot price has become irrelevant, not the precious metal itself.  So perhaps we should change the title again.  "Spot prices for silver in coin and small bar form available for purchase today have become irrelevant!"  (*asterisk* but if you are patient, and don't mind getting a mega-costco-sized batch of big heavy bars, its no worries)

So do we imagine someone out there will buy some of these big heavy bars and turn them into little coins and smaller bars that people seemingly must have for 20% over spot?

Last question.  What will the future hold?  Is it possible the demand for small silver bars & coins could result in all that silver being sucked from PSLV (and other sources) in the future?  Of course its possible.  So being responsible people, we need to track this.  I would recommend tracking the...spot price of silver, along with the premium to NAV of the PSLV fund, as well as the premium for the industrial-sized 1000 oz bars at your local (or not-so-local) PM shop.  The free market being what it is, prices on coins and small bars and those industrial-sized bars priced at spot will eventually end up converging.  Either spot price will rise, PSLV premium will rise, or the premium for coins and small bars will drop.

I don't have any special lock on knowing the outcome.  I'm not a PM bear - I'd be simply delighted if there were a COMEX default.  My only suggestion is - watch prices and let the market tell you.  People love stories, but in the end, the price tells the truth.  These days its just a bit more difficult to get the truth, but if you really want it, it's out there.

FD: I am considering buying PSLV, I already own CEF, and mining shares as well.

SingleSpeak's picture
SingleSpeak
Status: Gold Member (Offline)
Joined: Dec 1 2008
Posts: 417
Dave - Great analysis of the .....

disconnect between the spot price and the actual buy price of PMs, although the title as I read it is "The Spot Price of Precious Metals Is Becoming Irrelevant", not "...Has Become..." as you restated it. 

Now your "2/3 Busted" claim has itself been busted, for the same reason that - 

If I claim my lawn "is becoming" brown, and only 1/3 of my lawn is brown, it doesn't disprove my claim. I never claimed that my lawn "has become brown", or that my lawn "will become brown this week" (or ever for that matter).

Still, I appreciate the time and effort you spent trying to keep everything clear.

SS

davefairtex's picture
davefairtex
Status: Platinum Member (Offline)
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Posts: 888
restating titles

Single Speak -

Ah, a funny thing happened on the way to school.  The dog ate my homework!

It turns out I didn't actually restate the title - the title was itself restated upon me!  When I wrote my comment, that's exactly how the title read.  After I posted, the title was changed.  Alas, while they can change their title, I cannot change my comment.  The time for editing my comment has long since passed, so there it stands.

Still and all, I stand by what it says.  Its really only silver whose premiums have blown out, not "precious metals."  But I must admit, the title change did undercut my case.  If I'd done something as careless as mis-quoting the title of the piece, why would you want to read past the first few lines?

Here's a link to the article with the original title, picked up by a different place:

http://beforeitsnews.com/economy/2013/04/the-spot-price-of-precious-metals-has-become-irrelevant-2514332.html

You can either google it for yourself, or believe the output I found when I googled it just now:

Google: "The Spot Price of Precious Metals Has Become Irrelevant."

www.peakprosperity.com/.../spot-price-precious-metals-has-become-irrelev...

9 hours ago – In light of the recent violent down-and-up action in the precious metals, we invited the executives behind the Hard Assets Alliance (HAA) on to ...

beforeitsnews.com/.../the-spot-price-of-precious-metals-has-become-irrelev...

The Spot Price of Precious Metals Has Become Irrelevant. Thursday, April 25, 2013 19:56. % of readers think this story is Fact. Add your two cents. 0. (Before It's ...

www.youtube.com/watch?v=omQsFr_V_AQ

10 hours ago – For full description and discussions, visit: http://www.peakprosperity.com/podcast/81653/spot-price-precious-metals-has-become-irrelevant In ...

Alliance's picture
Alliance
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Posts: 3
IRA

In response to Grover, yes, the Hard Assets Alliance offers traditional as well as Roth, SEP, and SIMPLE IRAs.  There is a tab on the upper right corner of our website, "Precious Metal IRA" where you can get more info. 

Thanks for your interest.

-Ed D'Agostino

Hard Assets Alliance

Jim H's picture
Jim H
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Posts: 1363
Price tells the truth... really?

Many times when I read a Davefairtex post.... it reads like this to me;

Blah, Blah, Blah... yeah.. well written... good point... hmmmm.. I hadn't thought of that but, yeah.. good point... yeah.. PSLV arb.. .yeah.. good point.. and then... BANG.  The non-sequitur comes.  The psy-ops insert comes.  Here it is from above;

People love stories, but in the end, the price tells the truth.

Really Dave?  So you are telling me that;

*  The (ultralow) price of bonds today is telling me the true level of (especially in the case of 10 - 30 yr debt) risk in buying sovereign debt?

*  The Libor rate was telling the truth all those years about the price of money between banks? 

*  When Trulia told me my house was worth a price of $799K in 2006 (vs. $499K today), that was the truth? 

*  When all this printed money is going into the stock market, the stock market is telling us the truth about the forward arc of organic Corp. profit growth via stock prices?

*  And finally... and the subject of this piece... you are telling me that a price set in a futures market originally designed for use by legitimate hedgers, but now populated by heavily margined speculators, HFT robots, and of course the wolves themselves (The bullion bankers) watching their "chicken coops" and raiding them at will via levels of shorting that would, in any other market, be deemed manipulative, is telling the truth?.  You are telling me that a market that can trade an entire years worth of mine output via futures in one day, while actually delivering only a tiny, tiny fraction of that in physical, is telling the truth about price... or, more to the point, supply vs. demand.  You are telling me that, even though we have Greenspan on record stating, " Central banks stand ready to lease gold in increasing quantities should the price rise."  that the price of Gold is telling us the truth about supply vs demand?  

Really Dave?              

goldrunner1's picture
goldrunner1
Status: Member (Offline)
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Posts: 24
Excellent points Jim H

Wish I could give you more than 1 thumbs up.....!

cmartenson's picture
cmartenson
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Posts: 3193
Price and Value

Jim....I think you're differentiating between price and value.  In these times, we know the price of everything, but the value of nothing.

The world in which we currently live is massively distorted by artificially determined quantities and prices of currency, as well as constant and overt manipulations by the price setters in lots and lots of markets.

My operating position is that anything that can be manipulated for gain, is being manipulated for gain.  Honestly, how anyone can have any sort of faith in the "markets" after everything that the banks have been revealed to have done is beyond me.

The "markets" are failing because our regulators failed and there's really no hope for any sort of a fix at this point.  Someday the markets are going to have to crash, and crash hard, and then we'll have a shot at picking ourselves up after the reset.

But until then, the QE efforts are nothing more than a wide open, in your face, transfer of wealth from everybody and into the hands of very few.  Printing money creates instant purchasing power and that has to go to someone.  Just check the wealth inequality charts for guidance as to the recipients.  As it has always been, so it shall be again.

Someday, though, the way this all ends is with that reset button being pushed.  Either it is such a punishing deflation that institutions, countries and political careers are destroyed in astonishing quantities, or the general populace finally wakes up and decides to opt out of the failing currency while they still have time and we get punishing 'inflation' (but which is really something different, which is a self-reinforcing loss of preference for paper currency and its electronic representations).

Wish I could see a different set of outcomes, but history is rather clear on the matter, and every recent decision and act of non-enforcement only confirms my view that this time won't be different.

robie robinson's picture
robie robinson
Status: Platinum Member (Offline)
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Posts: 583
Maybe the wrong thread but

Matt seems to agree with Chris

http://www.rollingstone.com/politics/news/everything-is-rigged-the-bigge...

robie

Jim H's picture
Jim H
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Posts: 1363
Agreed Chris...

I am saying that price is no longer a valid indicator of the value of PM's today.  I am certainly not saying that you can't get a 1 oz.Gold coin at todays spot price + a fairly normal premium.. as Davefairtex states.. the fact is you can.  

But is price today telling the same "truth" that it might if you had a more efficient, transparent, well and lawfully regulated market?  Is price telling the same "truth" that it would were not central banks leasing Gold and bullion banks not potentially stripping "supply" from various unallocated sources, ETF's, and even allocated sources (i.e. ABN Amro default).     

cmartenson's picture
cmartenson
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Posts: 3193
Blatant Fraud and Theft

robie robinson wrote:

Matt seems to agree with Chris

http://www.rollingstone.com/politics/news/everything-is-rigged-the-bigge...

robie

Full confession- Matt Taibbi articles on the blatant fraud and theft and government complicity always get my blood warmed up.  I read that article this morning before writing my comment...so that 'colorizing' is in my writing.

Everybody should read that article and then we should have a full blown conversation about the implications of living in such a world.  How should one invest given this knowledge?  What sorts of outcomes are more or less likely given the way the system currently operates?  Etc.

h davis's picture
h davis
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Posts: 6
HAA dosent satify me

[h davis - Weclome to the site. Since your account was just created today, I'll assume you're not familiar yet with our posting rules, which demand a certain level of specificity and civility. You can familiarize yourself with them here.

If you do not follow these rules in the future, you will find your posts edited swiftly by our moderators as I have edited yours here. My edits are in italics. -- Adam]

Chris, HAA satifies all your questions?

I still have some I would like answers to:

1) I'd like to know why a 1099 is  issued by HAA .  Id like an answer why ss#'s and 1099's are being used,  what purpose does that serve?

2) What's the best way to talk with a knowledgable, live person at the HAA? 

3) Where are HAA's vaults located? 

[I will ask the HAA to respond to these questions here -- Adam]

thc0655's picture
thc0655
Status: Gold Member (Offline)
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Posts: 473
We're doomed

Matt Taibbi continues to be <the only> journalist who covers financial corruption in depth, at least that I hear about regularly.  Regardless if there are a handful of others (Chris Hedges, for instance), this is not done in the MSM (by orders from on high, undoubtedly).  In the future, historians and archaelogists will scratch their heads trying to figure out why a sports reporter in a pop music magazine was the only one who published in depth articles on the issues that brought down modern society. We're doomed.

davefairtex's picture
davefairtex
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Posts: 888
price is truth? say again?

Hmm, I can see I wasn't clear enough.  Price isn't Universal Truth, nor is it Metaphysical Truth, nor is it even Value.

And Jim.  I'd like to make a request.  Could you please make an effort to be kinder to me going forward?  It will help greatly in my efforts to remain a civil participant in dialog with you.  Currently your responses seem to me to be more of a "bashing" nature which brings a disagreeable tone to the dialog.  In my opinion.

So in answer to your question, which I'll boil down: whatever did I mean when I said "price tells the truth."

This concept is a phrase that some traders use to clear their minds from the stories they read every day in the media, from the stories told by the sell-side people in every industry.  I meant it in the context in which I used it, namely, that we will be able to determine the truth of whether or not the PAPER price of silver is becoming more, or less disconnected from the PHYSICAL price by looking at the PRICE ITSELF rather than through stories.  Look at evidence, I'm trying to say, instead of simply listening to a story.

In this case, the price we care about is actually the premium, in this case premiums on PSLV, and physical silver.

The truth really is out there, and price is your best clue - especially the changes in price.  That's why I love discussions about premiums like this.  Its fascinating new detailed information about price, which I know, doesn't lie - at least not in the way I think of things.  Again, context.  Not Universal Truth.  In the case of the futures markets, price tells the truth - there's a crapload of money dropped on the short side, and not as much on the long side.  Wanna get in front of that train?  I sure don't.  Now let's watch prices and see how the next stage unfolds.  So far, my charts say it looks promising - gold more so than silver.   And believe me, I keep an eye on premiums of PSLV and CEF every day, because I believe them a lot more than some guy on King World News talking his book.

I believe that the Fed is a sell-side group selling their products - debt and paper money.  A coin shop is also selling their products - silver and gold coins.  They both employ storytelling.  And what's more, both sides believe their own stories!  So to keep yourself safe from storytellers, trust price (in this case, premiums) to tell you if the spot price of precious metals is becoming more or less relevent.

Sometimes price trends change, because the underlying situations change.  When that happens, don't follow the old story, follow the new price.  It says "something is up."  For instance, there was a story once: "housing prices never drop nationwide in the US."  And then they started to.  Most of us (me!) were following story at that point, not price.  Those following price had a chance to save their asses.  Those following stories are still expecting property values to bounce back soon "because they always do."  Thats what I mean by "price doesn't lie."

Examples:

Story: "gold is money."  Price: "gold trades like a commodity most of the time."

Story: "America is rapidly becoming self-sufficient with oil."  Price: "Oil trading at $93/barrel would suggest there's no danger of that anytime soon."

Story: "food prices are going up all the time."  Price: "Food prices have tracked sideways for a year now."

I don't have an opinion as to where premiums are going.  If the price premium widens over the next two months, I'll take one set of actions.  If the price narrows, I'll take another.  I'm just curious to see how the experiment works out.  I'd place higher odds on narrowing rather than widening based on price movements I've observed - but I'm definitely keeping an open mind.  I expect at one point in time for things to snap, and I don't want to be caught napping.

Last point.  If you think I'm engaging in psy-ops, or I'm a shill for the Fed, or I'm trying to trick you, or anything - well, I gotta say, I'm a guy on a sofa with a laptop.  It's a macbook pro.  You're just wrong, but of course, if I *were* working for the Fed, that's *exactly* what I'd say to convince you so...sigh.  Dialog leads nowhere.  How can one prove one's innocence?  One can't.  Try proving your cell phone (really!) wasn't working when you got that "using a cell phone while driving" ticket.

davefairtex's picture
davefairtex
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Posts: 888
another case: price doesn't lie

I just recently got a truckload of data on gold dating back to 1999 - one minute ticks.  I was curious to see if any particular time of day had outsized movements in the price over that time.

Turns out, the 15 minute bars immediately prior to London AM and PM fix were quite noticeably "down".  In other words, during that massive bull market from 2000-2013 if you'd bought gold immediately prior to either fix, and sold it at the fix, you'd have lost money over time.  The total per bar was around $-300 to $-400.

Most of the other time bars were up over that same period average +/- $50.

What is price telling us this time?  The dealers collude in some way to hammer the price of gold immediately prior to the fix.  How?  Why?  I have no idea.  No doubt they get some advantage from it.  But that pattern absolutely doesn't lie, at least not to me.

Alliance's picture
Alliance
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Posts: 3
Answers

1) I'd like to know why a 1099 is  issued by HAA .  Id like an answer why ss#'s and 1099's are being used,  what purpose does that serve?  

We are an online trading platform.  As such, customers fund their accounts and make purchases through our network of dealers and refiners.  Because customers have funded accounts, we are required to follow "know your customer" regulations.  Just like an online brokerage account, we require certain information in order to open an account and verify your identity.  

2) What's the best way to talk with a knowledgable, live person at the HAA?

1-877-727-7387

3) Where are HAA's vaults located? 

New York, Salt Lake City, London, Zurich, Melbourne, and Singapore

 
Jbarney's picture
Jbarney
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Posts: 74
Just Read the Article

Yah, it is difficult to know how to proceed in such a world.   Especially considering the debt levels we exist in.  The system is so rigged.

I think I am going to go pay off a little more debt.

Jim H's picture
Jim H
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Posts: 1363
Davefairtex

I will take one of your latest statements and go down the rabbit hole ... because in your latest post you are still essentially making the same, in my view subversive, attempt to defend the fidelity and meaningfulness of price data and action.  My point is simple;  price data and action is the matrix - it is a painted picture of a reality that does not for the most part exist were we subject to free, well regulated markets without the crack cocaine of endless printed money.  I am in fact bashing an idea.. the idea that Gold is not money.    

For instance, you said;

Story: "gold is money."  Price: "gold trades like a commodity most of the time."

So... you use the term, "Story", with it's somewhat negative connotation in this context, to represent the idea that Gold is money.  Then you go over to the matrix, i.e. the market correlation between Gold and other commodities (which by the way I don't dispute.. if you were running the matrix, you would not want Gold viewed as a risk-off asset, hence you would not want to let its trading correlate to other risk off assets) to make your determination of what you propose is the truth.. because price is truth, right?.  

So I see it like this;

  Story: "gold is money."  Price: "gold trades like a commodity most of the time."

Truth (best I can tell):  Gold has been trading like a commodity in order to fool the investing community into thinking that it is a commodity.  Meanwhile, central banks around the world have been net buyers for several years now.. and even those Western banks that are not buying, i.e. Germany, are making some interesting moves in order to "secure" their Gold.  Why do central banks buy only Gold, and not Copper, or Tantalum?  If Gold were a commodity?  I assert that the chart below proves that those who should know money best, central bankers, are telling us that Gold is in fact money - a reserve asset that sits next to dollars, yen, and Euro's on the central bank balance sheet.   

Link for chart:  http://www.247bull.com/chart-of-the-week-central-banks-continue-to-accum...

I am not saying your view is wrong from the standpoint of a person trying to trade successfully in the matrix, right now.  I am though saying that I expect your view to produce very, very bad results as the endgame plays out, and the matrix falls.  But then again, you own lots of Gold and Silver even though you don't think they are money, right?

h davis's picture
h davis
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Posts: 6
Thankyou for your response. I

Thankyou for your response.

I am being civil. 

Im looking  to place six figures offshore somewhere so theres gonna be some HARD  questions, sorry.

I  can read on HAA website which countries are available for storage ,  I want to know  the name of the vault , its address and who runs it?  I was told by HAA that information is not givin to clients.  Why no disclosure ?

So Im using a brokerage account to store my gold offshore? --   (dare you to address that one HAA)

On the HAA website it says  ;  "Like an online brokerage account"   .

So HAA is a brokerage or is  " like one "? 

If HAA goes bancrupt   will my  gold stored be encumbered?

Assuming I had offshore storage is it true that I cant get my  gold back unless I go through HAA?

I did find out HAA uses Wells Fargo. 

And I want to know  Gold Bullion International's part it plays ? 

I worked my azz off  for my hard earned money.  Confiscation , devaluation, taxation , capital controls are all coming  in one degree or another  . This is not a game .

Thanks for the phone number HAA,  Ill call soon, who do I ask for?  I want to talk to management.

Maybe HAA is  best  to be used along with other storage programs   in order to diversify, trade, take delivery etc.  .

I wonder why HAA became a brokerage ? 

RoseHip's picture
RoseHip
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Joined: Feb 5 2013
Posts: 74
My normal human response to

The world based on these examples from this article and many of the other recent articles about investing in today's world and pretty much money as it exsist today, leaves me feeling these as my natural responses, unfiltered.

1) Meaninglessness is the meaning

2) Withdrawl is the normal reaction to an empty exisistence

3) Not having a job or the equivalent is better than having a job not worth having.

There is a time to admire the grace and persuasive power of an influential idea, and there is a time to fear its hold over us. The time to worry is when the idea is so widely shared that we no longer even notice it, when it is so deeply rooted that it feels to us like plain common sense. At the point when objections are not answered anymore because they are no longer even raised, we are not in control: we do not have the idea; it has us.

Alphie Kohn wrote these words in response to his ideas about providing rewards to people when they act the way we want them to. I think this applies in a much deeper psychological monitized world view. Social contagion can be the best of times or the worst of times.

Rose

cmartenson's picture
cmartenson
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Posts: 3193
Running the gold data for clues

davefairtex wrote:

I just recently got a truckload of data on gold dating back to 1999 - one minute ticks.  I was curious to see if any particular time of day had outsized movements in the price over that time.

Turns out, the 15 minute bars immediately prior to London AM and PM fix were quite noticeably "down".  In other words, during that massive bull market from 2000-2013 if you'd bought gold immediately prior to either fix, and sold it at the fix, you'd have lost money over time.  The total per bar was around $-300 to $-400.

Most of the other time bars were up over that same period average +/- $50.

What is price telling us this time?  The dealers collude in some way to hammer the price of gold immediately prior to the fix.  How?  Why?  I have no idea.  No doubt they get some advantage from it.  But that pattern absolutely doesn't lie, at least not to me.

Dave,

that's interesting...I have seen the fix data run before to the same comclusion.  Here's a different theory I would love to see tested in the data.

Observation:  Between the hours of 12:00 pm EST and 1:00 pm EST gold tends to sell off, especially on Fridays.

Hypothesis:  You could make money by shorting and covering during this window.

What does the data say?

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Grover--yes. Find out more

Grover--yes. Find out more about the HAA IRA here: http://www.hardassetsalliance.com/precious-metal-ira

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davefairtex
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gold 1200 - 1300 ET

For the 15 minute bars starting at the time indicated, for every tick in that bar, from 1999-2013, Fridays.  Mildly positive.  Looks like you'd do better going long.  Although - spreads & costs will likely eat that up.

12:00 33.20

12:15 -24.40

12:30 26.80

12:45 -11.30

This tallies with my memory that gold does well on Fridays.  To check, I ran a day-based study with another program of mine, using GLD as the proxy for GC.  It only gets data back as far as 2005 (GLD's inception) and uses daily ticks from google; it showed that Friday was the single best day for gold of the week.  Total period move for GLD was 98.89 (2005-present).  72.13 of that came on Friday.  Of course since there were 407 Fridays, it ends up being about $1.80 per Friday (18 cents for GLD).  244 up days, 163 down days.   But that's US trading hours only, so...might be different if we used GC.

Mon -9.44

Tue +23.51

Wed +23.36

Thu -13.74

Friday 73.45

SPY, on the other had, had a terrible time Fridays.  -52 on Fridays, worst day for SPY.  Tuesday +50.  Sell your equities Thursday night.  (Friday's average SPY move: -0.09 = SPX 0.9, 2001-today)

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No response HAA?   Ill try a

No response HAA? [Harold, the HAA has a business to run and will address your questions here as and if they have time. They have already been quite kind in their responsiveness throughout the day so far. ]  

Ill try a phone call next week and get an answer.  I still may  dather in $30,000 in HAA just for the liquidity.

[removed by Adam. Harold, it doesn't seem to me that you read the posting guidelines I highlighted for you. Having a "blue collar" job, in no way exempts you from our rules for civil discussion, nor allows you to make unsupported accusation or taunts. Your profession makes you no different from everyone else with questions here.]

Please excuse my bluntness as Im an oil rig worker  that works 6 -12's , take an ass woopin everyday and not at  Cambridge House affairs  in silk shirts selling newsletters.  Lotta money in oil and gas .

Alliance?   whats that mean?

Trading platform?  please explain?

Apmex is a trading platform.  Not?   They dont ask for ss#.

If someone wanted TRUE OFFSHORE STORAGE why would they use HAA exclusively?  I see no reason!

[removed by Adam]

Dont get your panties in a twist,  but the blue collar is getting into precious metals  so be prepared to be asked blunt questions ,  sorry  .

[Hard questions are fine. Rudeness is not. Please keep that in mind as you craft future posts. -- Adam]

Im out   ,  Harold

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davefairtex wrote: For the 15

davefairtex wrote:

For the 15 minute bars starting at the time indicated, for every tick in that bar, from 1999-2013, Fridays.  Mildly positive.  Looks like you'd do better going long.  Although - spreads & costs will likely eat that up.

12:00 33.20

12:15 -24.40

12:30 26.80

12:45 -11.30

Thanks.  

Observations inaccurate and hypothesis rejected!

On to the next one...

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I have no malice.  Im a

I have no malice.  Im a private party.   

Arent we, isnt your , extensive analysis of offshore storage , mission  to help us, we , the people to examine the best avenues  toward  the best offshore storage option?

I have no agenda except as a private person to secure   an   'OPTIMAL'  offshore storage.

Wheres the dialogue?  wheres Chris M. ?

Why will HAA not  tell me what vaults my gold will be stored in? , and I mean names and addresses.

Why do I need a brokerage  for secure offshore storage?

When i have time I will call them  on the phone and maybe get an answer they dont want to address online.

Im asking HARD QUESTIONS apparently.  

I work for a living , blood and sweat . 

I dont want to keep qualifying,  I want HAA to address my questions for myself and the public in the open  online.

Wheres Agostino?  

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Peak Prosperity is a system

[removed by Adam]  

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h davis
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Im going to remove my

Im going to remove my membership.

Mr d agostino wont respond.

We get Adam to edit my requests.

Reminds me of b chilton   the sec regulator shaking his responsibility.

See ya at a Conference Chris.

Im done  Harold Davis

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H Davis

Chill out friend.  You are right to be cautious and question everything... I certainly do, as you will see from the thread above.  I want you to know though that there is no place in my experience more sincerely dedicated to helping people.. ALL people.. plot a path to a more sustainable future for themselves than this community.  Chris and Adam are honorable and above boards... the last thing I would ever think of this place as is a marketing tool.  You are new here.. don't jump to conclusions based on this one post, and the so far unsatisfying response to your (potentially legitimate) questions about where the Gold vaulting is done.  If you really want to know about worldwide Gold vaulting options, my honest opinion is that Simon Black of the Sovereign Man (subscription) website covers this issue more throroughly than anyone here.  

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Blue collar to blue collar

h davis wrote:
 

My first impression of your bluntness was different from others who've been offensive in the past, in that most others seemed arguementative over issues where they had no stake in the matter other than ego. I cut you some slack because you indicated that you intended to invest a huge (for me, anyway) sum of money. Most would consider  'due diligence' a commendable attribute, and a place where bluntness is justified even required in this crooked, screwed-up economic climate.

However, any such consideration soon evaporated with your next two posts. You seem to feel that an answer to your "hard questions" should be answered immediatly, and by Chris himself, even though your posts were only an hour and a half apart.

You claim to be civil but the above post is anything but civil.

I've been member of this site for about four years, and I've consumed all of Chris' writings and talks in that time. Your charges of impropriety are waaay off base. You would know that if you took the time to do your due diligence in this regard as well. But apparently you feel that everyone should immediatly halt their lives to accommodate your requests, becoming peevish when your satisfaction isn't immediatly forthcoming. Even my four year old son doesn't exhibit such petulence.

So therefore at this point I feel compelled to say, as one blue collar guy to another, you're being an @$$h()!#

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Yes, you are done

Yes, you are done, Harold.

I've given you several attempts to adjust to our posting rules here. Clearly you have no interest in doing so.

And your expectation that everyone should instantly repond to your demands will be an ongoing source of frustration for you here as long as you hold it.

I see you have plans to leave the site, but in case you decide to revisit, I am placing your posts on 'moderator review', which means they will not appear on the site until one of our moderators has read and approved them. If you demonstrate the ability to be appropriately civil, this restriction will be lifted.

I'm disappointed to take such a step so early in your engagement with the site. And for those reading this, this decision has nothing to do with the questions Harold raised, and everything to do with the way he raised them. PeakProsperity.com is a place where respectful debate and conscientious challenging are welcome.

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and furthermore...

@ H Davis,

Not only are you being an @$$h()!#, you have just given more credibility to the erroneous stereotype that all blue collar workers are classless morons. As a former tradesperson, I can tell you that it irked me to no end to see people such as yourself using their blue coller status as an excuse for poor manners, language and behaviour. And then complaining that they get no respect from white collar workers on top of that. I resented being painted with that brush, as I am sure that many other tradespeople who have read your posts do as well. Just because one works with their hands does not mean that they are not intelligent or cultured.

There is a saying - you can catch more flies with honey than with shit. You will have far greater success in getting the info you require if can you manage to embrace such a philosophy. Although based on what I have seen here, I personally cannot fathom who would want you for a customer. So good luck with that...

Jan

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Why did you analyze 14 years of one minute ticks worth of data?

davefairtex wrote:

I just recently got a truckload of data on gold dating back to 1999 - one minute ticks.  I was curious to see if any particular time of day had outsized movements in the price over that time.

Turns out, the 15 minute bars immediately prior to London AM and PM fix were quite noticeably "down".  In other words, during that massive bull market from 2000-2013 if you'd bought gold immediately prior to either fix, and sold it at the fix, you'd have lost money over time.  The total per bar was around $-300 to $-400.

Most of the other time bars were up over that same period average +/- $50.

Why did you do all that analysis?  This has already been a well published gold analysis story for the past few years.

I'm quite a skeptic at this point in regards to discovering any useful information from the timing of gold price fluctuations.  The big players moving these markets today (as opposed to the past) are going to do so with one primary tactic, and that tactic is to keep as many smaller players off balance as possible.  It's hard to believe that "markets" are anything close to true markets any more.  I believe the PM market is more "managed" (as opposed to saying manipulated, "managed' is more of a real term) than ever. I personally don't think anyone should be buying precious metals unless they are in it for the long haul.  It's going to be a very bumpy ride.  As long as the current destablizing forces persist in the financial system, gold is a buy.

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The Dark side of all of this......

Bylthe and bouyant you may be Chris, the truly sinister truth of the matter is vast, unfathomable, beggars the imagination and will likely end tragically. Think worst-case scenrio which is entirely possible if not inevitable.

http://www.rollingstone.com/politics/news/everything-is-rigged-the-bigge...

Gangsters in business suits and we...really...are merely vehicles for profit nothing more and nothing less.

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Its NOT different this time......its the same

However it may be pivoting for the benefit of the ususal parties

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I am not optimistic

Chris, I just read the article, and even though some of the more technical financial stuff flies over my head, I get the gist only too well. A couple of parts of the article struck me as being particularly hard to swallow:

The idea that prices in a $379 trillion market could be dependent on a desk of about 20 guys in New Jersey should tell you a lot about the absurdity of our financial infrastructure.

The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it's only just coming into view

My optimism is fading due to consistently seeing such a tremendous level of obliviousness in my community. More often than not I feel that with my level of awareness I am on a different planet than so many around me. Even people who I really have great respect for intellectally speaking seem to be unaware of most of the things we talk about here on a regular basis.

When I see articles like this, and with the knowledge that few people are actually paying attention, I think to myself that this is so big, and so futile, that I should forget about trying to enlighten others and just focus on my own life and personal resilience.

In a way it is like Treebeard says, things will happen as they are meant to, some things will die off and other things will survive and move on. There is not a damn thing I can do about the macro economic things and all the greedy liars and cheaters, so I will focus less on them and more on the "Jan micro economy". I think that is the only way I will retain my sanity and be able to enjoy life in the face of all of this blatant fraud and theft as CM calls it.

I have signed up for fly fishing  lessons! I hope it will be my new, simple and wholesome diversion from a world that is truly screwed up. Surely still waters and tight lines will bring some peace and contentment from a world gone insane (not to mention a fresh trout for the fry pan!) wink

Jan

 
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davefairtex
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why do i analyze data myself?

When someone comes up with a claim, I like to see if its true or not.  Perhaps its just me, I'm naturally curious.  It sounded like easy money when the claim was made.  After doing the math for myself, I saw that while the pattern was there, making money from it was actually quite difficult.  I wrote an entire simulation that bought futures at a certain point, sold them at another, to try and see just how much I'd make if I executed the strategy.  Sometimes it worked well, other times it didn't.

Some people believe everything they read.  Me, I like proving it for myself.  And since I can write code and it only takes me a few hours, why not?  Some people grow vegetables, some people race cars, I write code and play with data.  Sometimes people pay me to do it, sometimes I just do it for myself.

We all have our world views.  We may or may not share the same view.  I believe that even managed markets must continue to operate with certain rules.  If you can learn to read the footprints of big money in the charts, you can get out of the way of the train when it decides to rumble down the tracks.

Here's the thing.  In order to affect the markets, Big Money must buy and sell.  This leaves footprints - price and volume data.  These prints may not "make sense" from a story point of view (i.e. "money printing is going nuts, therefore gold MUST go up - but why is the chart dropping?  The chart must be wrong!") but if you just look at the prints and take them for what they are, you can either decide to hedge your position or remove your hedges as big money decides to move from place to place.

To do this effectively, you must disengage your story brain and just watch the prints.  When the story and the prints diverge - pay attention to price & volume, and ignore the story.

Any trader would understand what I'm talking about.  Non-traders will think I'm nuts, the market must be managed or crazy or manipulated.  But if I can read the prints and see the future, seems like I'm better off than if I can't.

And I'm getting there.  I'm currently working on a - you would probably call it a "manipulation detector."  Not per se but that's the idea.

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What to do

in a situation like this? (situation being a society s described by Matt) Firstly i'll milk my cow and goat. secondly water horses and sheep with portable solar powered "simple pump". Plant second planting of corn, this will be sh2 hybred not my OP. Hill 150" of asparagus. wonder if the i r s will audit me for a decrease in family income of over 200K in 4yrs. the robinsons "went Galt" 5 yrs ago

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Does anyone think jewellery,

Does anyone think jewellery, containing gold, platinum and/or diamonds could also be a good investment for maintaining purchasing power in the coming decades? It might be easier to obtain in the pm-plaques scarce conditions we face now at dealers. But I have no idea how these things would hold up.

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davefairtex
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gold jewelry

CHM -

I'm not an expert in diamonds, but my understanding is, resale value is far below initial cost.  In other words, its a wide spread, and they're difficult to sell.  I heard numbers like 50% haircuts for diamond sales, but have no actual experience.

In asia, gold jewelry (96% pure) is a very common way to store wealth.  You can get 97% of spot price by selling your gold chain back to the original shop.  I'd guess this would be true in US Chinatowns as well.  Many years ago I bought an almost-pure chain in SF chinatown by negotiating spot x weight x purity + $50.  I've never tried selling anything back, but I would guess you'd have better luck there than at some American chain store that just isn't set up for it.  Important to find a very reputable store before buying, and if its a concern, ask them what the exchange value is for your chain.  And bring cash.

One thing I like about gold jewelry is that it skates around a possible future prohibition on bullion ownership and/or confiscation.  You might get questioned about your gold bullion bar, but likely not about your gold necklace, or belt buckle, or whatever.

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LogansRun
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I'm so glad that I don't...

live in your paradigm any longer.  

You can't change the system by playing within.  In order the change the system, you must leave it, and never look back.

As I said, I'm glad I no longer live in the paradigm that you seem to enjoy.  And sadly, it's that paradigm that's slowely (but intensifying quickly) enslaving 99.9% of the citizens of the world.

davefairtex wrote:

When someone comes up with a claim, I like to see if its true or not.  Perhaps its just me, I'm naturally curious.  It sounded like easy money when the claim was made.  After doing the math for myself, I saw that while the pattern was there, making money from it was actually quite difficult.  I wrote an entire simulation that bought futures at a certain point, sold them at another, to try and see just how much I'd make if I executed the strategy.  Sometimes it worked well, other times it didn't.

Some people believe everything they read.  Me, I like proving it for myself.  And since I can write code and it only takes me a few hours, why not?  Some people grow vegetables, some people race cars, I write code and play with data.  Sometimes people pay me to do it, sometimes I just do it for myself.

We all have our world views.  We may or may not share the same view.  I believe that even managed markets must continue to operate with certain rules.  If you can learn to read the footprints of big money in the charts, you can get out of the way of the train when it decides to rumble down the tracks.

Here's the thing.  In order to affect the markets, Big Money must buy and sell.  This leaves footprints - price and volume data.  These prints may not "make sense" from a story point of view (i.e. "money printing is going nuts, therefore gold MUST go up - but why is the chart dropping?  The chart must be wrong!") but if you just look at the prints and take them for what they are, you can either decide to hedge your position or remove your hedges as big money decides to move from place to place.

To do this effectively, you must disengage your story brain and just watch the prints.  When the story and the prints diverge - pay attention to price & volume, and ignore the story.

Any trader would understand what I'm talking about.  Non-traders will think I'm nuts, the market must be managed or crazy or manipulated.  But if I can read the prints and see the future, seems like I'm better off than if I can't.

And I'm getting there.  I'm currently working on a - you would probably call it a "manipulation detector."  Not per se but that's the idea.

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LogansRun
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Baht Jewelry

Very good way to invest in Au (Gold).  The asians/indians have been using this style of jewelry for centuries as investment.  

Here's an example:  Baht Investment Jewelry

I used to buy from a local jeweler a similar form, that you could twist off pieces (each piece was 3g of 23k) in order to purchase items.  The Baht Jewelry has some of the same characteristics.

chm wrote:

Does anyone think jewellery, containing gold, platinum and/or diamonds could also be a good investment for maintaining purchasing power in the coming decades? It might be easier to obtain in the pm-plaques scarce conditions we face now at dealers. But I have no idea how these things would hold up.

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Okay, thanks a lot everyone!

Okay, thanks a lot everyone!

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ao
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thoughts

A very interesting thread.

I have the exact same reaction to davefairtex's posts as JimH noted above.  Thanks for expressing my exact sentiments Jim.

I do appreciate davefairtex's analyses and him taking the time to explain them in detail but I'm just of a different mindset.  As LogansRun stated, I'm just not interested in being part of that paradigm anymore.

I like reading robie's posts.  He's become a hero of sorts to me.  The quintessential American who, by his actions, tells TPTB to go **** themselves, builds his resilience, and forges onward.  I love it.  I'm moving more there myself but just cannot find the right piece of land yet.  I know though that when the buyer is ready, the land will appear, lol.  I just feel it.

I often feel like Jan, like I'm from a different planet, because most folks just don't fully comprehend what is going on and find all sorts of ways to deny what their eyes, their brain, and their heart are telling them.  I've given up trying to convince them.  I've worked with people for many years and have learned that the majority will keep on doing what they have been doing, no matter how dysfunctional, until reality smacks them hard between the eyes and wakes them up ... and even then, sometimes they still sleep. Enjoy that flyfishing Jan.  Returning to nature is one way of effectively dealing with all this craziness.  Do things you love to renew and restore your soul.  We're doing something together as a family that is going to cost more money than I know I should spend but it will build lifelong memories that nothing and no one can take away.  We should work hard but never forget to enjoy the precious gift of life.

In so far as Chris's comments on Matt Taibbi's article, if I may make a recommendation, it would be for everyone to read or buy Sharp's Dictionary of Power and Struggle: Language of Civil Resistance in Conflicts by Gene Sharp.

http://www.amazon.com/Sharps-Dictionary-Power-Struggle-Resistance/dp/019...

If we're going to make a difference, at some point, more organized, wide scale, and effective political action will need to be taken.  This reference provides perspective, context, and content for such actions.  

More so than any prepping or political action though, I'm increasingly finding the most important thing for me and my family is to build ourselves and others spiritually.  Things that are eternal are more important than things that are temporal.  I'm in this thing for the long term ... the longest term in fact ... and that requires keeping the highest standards and goals in mind ... which are generally at odds with what TPTB want us to have in mind.  If they're promoting it, I'm generally heading in the opposite direction.

VeganD's picture
VeganD
Status: Platinum Member (Online)
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Posts: 572
Baht conversion

LR I am citing a weight conversion for Baht to grams and ounces, apologies if incorrect just trying to help

interesting option as it can be broken down into small pieces easily and looks very nice.

"The baht is still used as a unit of measurement in gold trading. However, one baht of 96.5% gold bullion is defined as 15.16 grams rather than the generic standard of 15 grams."

http://en.wikipedia.org/wiki/Thai_units_of_measurement

so 1 baht is .53 ounces roughly. there is some premium for getting the jewelry but interesting option

http://www.metric-conversions.org/weight/grams-to-ounces.htm

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Posts: 3193
Baht to Troy ounces

VeganD wrote:

LR I am citing a weight conversion for Baht to grams and ounces, apologies if incorrect just trying to help

interesting option as it can be broken down into small pieces easily and looks very nice.

"The baht is still used as a unit of measurement in gold trading. However, one baht of 96.5% gold bullion is defined as 15.16 grams rather than the generic standard of 15 grams."

http://en.wikipedia.org/wiki/Thai_units_of_measurement

so 1 baht is .53 ounces roughly. there is some premium for getting the jewelry but interesting option

http://www.metric-conversions.org/weight/grams-to-ounces.htm

Thanks for the conversion help.  One refinement, however, is that we need to convert Baht to Troy ounces, so the conversion is slightly different.

When I convert one Baht, or 15.16 grams, I come up with 0.4874 Troy ounces ... so.... the premium is even higher than you first suspected.

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KugsCheese
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Posts: 564
What Are All the Costs of Using HMA?

I see a storage fee of 0.5%- to 0.7% of holdings per year.   Is there an explicit sales fee too or is that assumed in the storage fee?

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VeganD
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Posts: 572
Thank you!

Chris

I think I got the ratios reversed-much appreciated

Denise

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LogansRun
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Baht Jewelry/Diversification

There is a premium for sure on Baht!  No doubt.  The nice thing about it is, it can be worn and is quite beautiful.  My wife wears a couple of her favorite pieces on a weekly basis so....that's worth the premium to me;-)

Diversification is key.  And everyone should look at Baht Jewelry as just another form of such.  

BTW:  A couple of my wife and daughters favorite pieces are their rings.  Here's an example of one.  Theirs are more elaborate than the example.  But I bought them in Istanbul a few years back so I had a huge selection.  But depending upon how elaborate they are, the premium online can be little.

cmartenson wrote:

VeganD wrote:

LR I am citing a weight conversion for Baht to grams and ounces, apologies if incorrect just trying to help

interesting option as it can be broken down into small pieces easily and looks very nice.

"The baht is still used as a unit of measurement in gold trading. However, one baht of 96.5% gold bullion is defined as 15.16 grams rather than the generic standard of 15 grams."

http://en.wikipedia.org/wiki/Thai_units_of_measurement

so 1 baht is .53 ounces roughly. there is some premium for getting the jewelry but interesting option

http://www.metric-conversions.org/weight/grams-to-ounces.htm

Thanks for the conversion help.  One refinement, however, is that we need to convert Baht to Troy ounces, so the conversion is slightly different.

When I convert one Baht, or 15.16 grams, I come up with 0.4874 Troy ounces ... so.... the premium is even higher than you first suspected.

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smb12321
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Posts: 10
Thanks for addressing this

Chris,

Thanks for addressing the issue of manipulation and value determination.  The whole purpose of an economic system is determining value. Central planning inevitably fails because values is assigned rather than market-determined,  Our policies are making it increasingly more difficult to determine value.  

I don't worry so much about the inequality issue per se since I attribute that to human nature.  However, I am concerned that all this printing, easing, lending and redistributing have fundamentally changed the nature of our society.  We've gone from an aspirational society to one in which the best you can hope for is keeping ahead of the bill collector.  

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