PM End of Week Market Commentary - 9/26/2014

davefairtex
By davefairtex on Sat, Sep 27, 2014 - 2:36am

On Friday gold dropped -2.50 to 1220.00 on heavy volume.  Silver rallied, moving up +0.16 to 17.65 on moderate volume.  PM tried to rally in Asia and London, but then sold off as the dollar broke out to new highs a few hours before the US market opened.  However in the last 30 minutes of trading in NY, both gold and silver staged a decent end of day rally, bringing gold almost back to even, and moving silver clearly into positive territory.  Traders did not want to be short PM going into the weekend, which I interpret as positive.

What's more, PM's relatively good performance on a day where there was a big [+0.48%] dollar rally was a hopeful sign as well.

On Friday mining shares fell, with GDX off -1.66% on moderate volume, and GDXJ dropped -2.77% on moderately heavy volume.  On the charts, GDX closed down right at support, while GDXJ remained comfortably inside its recent trading range.  Longer term, GDXJ looks stronger than its cousin GDX.

For the week, gold was up +3.10 [+0.25%], silver down -0.14 [-0.79%], GDX off -3.00% and GDXJ down -4.27%.  Miners in general are underperforming metals right now, giving a strong "risk off" signal.

The USD

Once again, a strong week for the dollar, which broke above 85 closing up +0.89 [+1.05%] to 85.79.  After this breakout, my weekly charts no longer show enough relevant price history - the buck hasn't been above 85 since July 2010.

What caused the buck to rise this week?  Euro was off -0.96%, dropping through major support.  Canadian Dollar was down -1.73%, and Australian Dollar fell -1.81%.  AUD has been in free fall for 3 weeks, down about 5%, correlated to some degree with a falling copper price and a more gently falling Chinese stock market.

One possible reason for the steady decline in the Euro: anticipation of the first cut of those long-awaited bank stress test results.  The ECB is starting "supervisory dialogues" with eurozone banks starting Monday, giving each bank preliminary findings of the health assessment.

http://www.rte.ie/news/business/2014/0925/648055-ecb-stress-tests/

National supervisors and the ECB must tread a fine line between giving the banks enough time to review their results and prepare responses while avoiding early revelations that would force a bank to disclose the outcome to markets.

Sources told Reuters last week that the ECB will announce the results of its assessment on 26 October.

I'd sure love to be a fly on the wall at those meetings on Monday.  Is all that Big Money fleeing Europe already aware of what will be said?  Perhaps they are thinking, "I'd rather have a US bank deposit paying me nothing rather than risk a bail-in here in Europe..."

Bottom line is, bankers get a wink and a nod on Monday from their regulator, giving them four weeks to sort out their official response before the great unwashed (you and me) receive the information.  Do you think that very valuable market-moving information might manage to find its way to Big Money players between "hint release day" on Monday and 26 October?

Can you imagine a University having such a policy with grades?  "Students!  We are going to give you a hint as to your final grade on Monday, but we'll do it in such a way so that you don't need to actually tell your parents.  Lets see, um, you didn't exactly excel this quarter, but neither did you fail.  But since we didn't explicitly tell you, we feel it would be irresponsible of you to disclose this until the formal notification comes out in four weeks.  This way you will have some time to get your excuses ready as to why you only got a C...doh!"

One thought.  This might end up being a "sell the news" event.  Simply avoiding widespread horrible bank results may be enough to cause a rally in the euro.  It is dreadfully oversold.  Sometimes dramatic news will trump charts, momentum indicators, normal support & resistance lines, and so on.

Miners

Mining shares continued falling, with the GDX drop of -3.00% less than that of GDXJ at -4.27%.  Still, GDXJ remains 5% above its lows made in late May, while GDX is camped right at its May lows, right at support.  Both the price and the volume picture appear better for GDXJ than for GDX.

As we saw a month ago, support breaks can lead to a whole lot of subsequent selling by disciplined traders looking to limit their losses.  Let's hope GDX can remain above that 22 (ish) price level, otherwise things could get ugly again.

US Equities/SPX

On Friday, SPX rallied back +17 from its Thursday loss, enough to move SPX back above its 50 MA but not enough to make up for Thursday's losses.  On the week SPX was down -28 [-1.37%] closing at 1982.85.   VIX was up +2.74 to 14.85, rising because of the see-saw back and forth price action in SPX.  Current momentum appears to be driving prices lower in SPX.

Rates & Commodities

Bonds rose, with TLT up +1.22%, most likely rising off the equity market's weakness.  TLT managed to regain its 50 MA, but its current chart does not look quite as strong as it did over the past six months.  Perhaps there are some worries about tapering that are finally being felt.

Commodities dropped Monday, and then largely tracked sideways for the next four days, down -0.49% for the week.  Still, the chart looks at least somewhat hopeful, especially given the dollar's strength during that same timeframe.

Oil was mixed this week; WTIC was up +1.59 to 93.36 looking like it might in the process of double-bottoming at 90.50.  Brent dropped -1.39 to 97.00, Brent clearly struggling to avoid another breakdown.  It looks like the two oil contracts are resolving supply/demand issues between them; perhaps thats a just reflection of stronger US oil demand vs weaker demand in Europe.

Physical Supply Indicators

* Premiums in Shanghai vs COMEX were up +2.41 this week, closing at +5.26.  While premiums remain relatively modest, spot gold delivery volumes have risen dramatically - equaling the levels last seen after the 2013 gold crash.  The relatively modest premium suggests to me that Shanghai is well supplied, but the volumes suggest that the Chinese are buying here en masse.

* The GLD ETF lost -4.19 tons, with 772.25 tons remaining.

* Registered gold at COMEX dropped -0.82 tons, with 30.63 tons remaining.

* ETF Premium/Discount to NAV; gold closing (15:59 close price on September 26) of 1218.00 and silver 17.61:

  OUNZ 12.16 -0.02% to NAV [up]
  PSLV 7.07 +3.37% to NAV [down]
  PHYS 10.06 -0.63% to NAV [up]
  CEF 12.58 -7.01% to NAV [up]
  GTU 41.76 -7.31% to NAV [up]

ETF premiums were mixed but mostly up modestly, with only PSLV falling substantially from its 4+% premium of last week.

Futures Positioning

The COT report is as of September 23rd, when gold was trading around 1223 and silver around 17.77.

In gold, Managed Money added 6.9k shorts, and dropped -3.2k longs, an increase in the net short position but somewhat less than I would have thought.  Producers did not change much at all, with a net long increase of about 2.1k contracts.

In silver, Managed Money activity was mixed; they both reduced shorts by -1.6k and longs by -1.0k, likely because of Monday's big drop followed by a short-covering rebound.  Still, Managed Money has its second highest short position ever, which sets up a good environment for a short-covering rally if the rest of the market can only cooperate.  Producers closed out -800 shorts, pushing to the most bullish "net" position in history.

Of the actors in this drama, Producers are most often right about direction, and their positioning suggests a silver turning point should not be too far in the future.

Moving Average Trends [20 EMA, 50 MA, 200 MA]

Gold: short term DOWN, medium term DOWN, long term DOWN.

Silver: short term DOWN, medium term DOWN, long term DOWN

Down.  Moving averages are all pointing down.

Summary

This week gold tracked sideways, while silver continued falling, and the miners sold off as well.  Gold momentum indicators suggest Gold may have hit bottom, while silver's momentum is still lower.

From the moving average perspective, gold and silver are bearish in all timeframes.  The gold:silver ratio moved up +0.72 to 69.12, another new cycle high.  GDX:$GOLD continued falling and is bearish, and GDXJ:GDX dropped too and is now looking neutral.  SIL:$SILVER fell further and looks bearish.  The picture continues to be almost entirely bearish - more so this week than last.  Miners are giving off a strong risk off signal for PM.

The COT reports this week saw Managed Money continuing to go short in gold, but ending up more or less neutral in silver.  Producers are at an all time high net long position for silver.  Overall, the COT reports suggest a turning point in the market should be coming up soon.

Shanghai premiums are up this week and remain modestly positive, deliveries of spot gold in China have been very strong, GLD tonnage dropped, and the ETF premiums in general are up.  Physical demand looks strong.

Gold's positive performance this week in the face of a strong dollar breakout is a hopeful sign that perhaps we are approaching the end of this particular move lower in PM.  While the miners haven't received the message just yet, I feel it is likely they will move higher if and when the buck stops rising, based on price movements I've seen intraday.

Once again, we await moves in the currency market.  Those international capital flows are driving everything right now.  Perhaps Monday's wink-and-nod ECB regulator/bank meetings will provide some hints (that will of course leak out into the market) as to where we go from here.  As always, a continuing drop in the euro would probably be bad news for PM.

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34 Comments

Arthur Robey's picture
Arthur Robey
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This hour's Opinion.

Do I detect a change in the behaviour of silver? Is it just me or has it's plunge been especially steep just recently?

Take the inverse of the chart. If you saw such a steep curve upward you might consider that it was in a bubble. Or was going critical.

So take a negative mirrored image again. If the spike upward was anything to go by we could expect a violent spike downward and then an equally astonishing spike upward. It all looks like volatility to me. I am going to take Harvey Organ at his word and buy around the middle of November.

Well, that is my opinion for this hour.

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Arthur Robey
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Harvey

davefairtex's picture
davefairtex
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gold market: two schools of thought

Arthur-

There are two schools of thought here.

My school of thought is that gold is a "monetary commodity" where gold and silver are affected by commodity prices as well as currency prices, with a "lottery ticket" possibility if there is a monetary reset after some big deflationary crash.  But until this "reset" which will only happen after some Really Big Disaster, correlations matter, trends matter, and so these are the things I watch for clues as to price direction for PM.  Currently, my momentum indicators say that PM right now is oversold, and silver more oversold than gold.  Its not just your imagination.  But my guess is, until the buck stops driving higher, PM remains at risk.  But at this moment, the buck is ridiculously overbought.  It could top at any moment, and the rebound should be impressive.  "Right around now" might be a decent time to pick up some more for your "reset" stash hedge.

The other school of thought is that gold is the center of the monetary universe, and the corollary to this is that central bankers must therefore control its price.  To control the price, they must sell their gold onto the market, and for the control to be effective, these sales must be kept secret.  However after enough years of secret gold sales, the central banks must eventually run out of gold to sell.    Predicting this "out of gold event" is the main focus for people who have this worldview.  Trend analysis doesn't matter, momentum doesn't matter, correlations of prices to commodities or the dollar don't matter, the only question is - how close are the central banks to running out of gold.  In the effort to predict this monumental, world-changing event, every potential hint or rumor is tirelessly run down and expounded on at length.  Almost as obsessively as I watch my charts!

People in this second school also believe in the "monetary reset" scenario.  That's where we have overlap.

But short of "the reset", for Harvey it doesn't matter that silver is oversold, or that the dollar is rising and might top out leading to a rebound in PM.  He doesn't care.  He is waiting for is the "out of gold" event.  Or in this case, the analogous "out-of-silver" event.

You can't really mix the two world views.  They don't play well together.

Here's why: if you believe the out-of-gold event is nigh, whether the price is in an uptrend or a downtrend simply doesn't matter, gold should be bought immediately.  And if the out-of-gold event is NOT nigh, then its probably not the right time to buy gold regardless of what the trend says or where the price happens to be.  Those Central Bankers will continue hammering the gold price for as long as they can - no price is too low for them.

The problem for normal people is, this second school of thought generates yearly or twice-yearly buy signals.  It was generating buy signals at gold 1900 and silver 50, and it is generating buy signals here around gold 1220 and silver 17.50.

Since I have a hedge in place, I feel covered for either a "reset" or an out-of-gold scenario.  I see no need to load up and make a killing from my gold holdings.  It is insurance, not a get-rich-because-I'm-right scheme.

But if I were to advise people as to the timing of purchases, I'd generally favor the trend analysis approach, since I would prefer to avoid suggesting that people buy high, buy low, and buy at all points in between...

Jim H's picture
Jim H
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Two views...

Dave,  I think it is helpful to discuss the two views... and I think if we were to run a poll here at PP.com, a large majority would be generally aligned with the second view, hence I appreciate your speaking from this perspective as much as you can.  I would define the second view a little differently.. you said;

  The other school of thought is that gold is the center of the monetary universe, and the corollary to this is that central bankers must therefore control its price.

Some may think it nit picking, but I would rather call Gold the standard in the monetary universe.. using the term of, "standard" in the same way we consider any scientific or engineering standard used for the purposes of keeping weights and measures calibrated.  Gold is the calibration standard for the monetary universe - YES.  

In science and engineering we use standards all the time to keep us on a level playing field for all nature of things being measured... and this is the purpose in life for NIST.  Now do you know that your thermometer is reading true?  There's an app. for that;

 http://www.nist.gov/pml/div685/grp01/thermometry.cfm

How do you know that your particle size measurement instrument is calibrated correctly for the size of the Gold nanoparticles you are functionalizing for biochemical reactivity?  (note that Jim H has a very small investment in NSPH).  There's an app. for that;

http://www.nist.gov/pml/div683/gold_010808.cfm

Similar to the way we need to find our footing in science and engineering through the use of standards, we need some kind of fixed, non-printable monetary standard.  Gold, and Silver to a lesser extent, are those.  Because the flow (newly mined Gold) is so small relative to the stock (existing stored Gold) the amount of Gold is relatively fixed vs. the much more dramatic changes that can and do occur in the world of infinitely printable fiat monetary units.  

For those of us who have been convinced based on the evidence that the second view reflects reality, it is obvious why the monetary powers that be would want to subvert the reference.... they don't want it to tell the tale of their monetary excesses.  We all know that TPTB are attempting to subvert reality on many fronts... is it hard to imagine that the propaganda extends to the price of Gold and Silver?  

Dave makes the case, as part of his argument for the first view, that the FED does not in fact think much about Gold.  I have tried to show that other central bankers DO think about Gold, because they are buying it on a regular basis.  In terms of Gold's function as a reference, the head of the world bank wrote an interesting Op-Ed a few years ago;

         http://www.forbes.com/sites/afontevecchia/2010/11/08/world-bank-chief-ri...

  In an op-ed piece in the Financial Times, the World Bank’s president suggested that the dollar, the euro, the yen, the pound, and the Chinese renminbi be included in a “plan to build a co-operative monetary system that reflects emerging economic conditions.”  Gold could be used to assess market expectations for inflation, deflation, and future currency values.  But then, Zoellick said that “although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today,” adding ambiguity over the meaning of his words.

Yes, it would be nice to have a functioning reference standard against which to gauge, "future currency values".  View #2 boils down to a very simple observation:  You can suppress the price of Silver and Gold in the paper markets, but you can't print them.  When a critical mass of market participants wake up and pull the last available Gold and Silver out of circulation, the gig will be up and a reset will occur.  If you want to know why Silver appears to be getting pounded even more than Gold, it is easy to understand in the context of view #2, because central banks don't hold Silver.. they lack as much ability to obfuscate in this market by selling real physical into it, hence the efforts to kill speculative interest must be even more energetic.

I don't know whether Harvey is correct in his speculations about China holding the big Comex long Silver position.. but one way or another the (paper) markets will eventually break.  I think the recent Andrew Maguire interview on KWN talks in less speculative terms about how the system is going to break.. with  (true) price discovery moving Eastward with the internationalization of the exchanges in China and Singapore happening now.  The website is not working.. here is a general link;

        http://kingworldnews.com/kingworldnews/King_World_News.html      

DisappearingCulture's picture
DisappearingCulture
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PM's priced in dollars or other fiat currencies

I'm new to this column but not new to PM's and PM price manipulation. I've read thousands of articles/interviews and communicated by email with several of the authors or writers. Until manipulation ends [default? some other trigger?] the real fact is the spot prices are completely under control of the manipulators. In my opinion Ed Steer's column with his source information from friend Ted Butler will give the most warning of when the manipulation scheme may break. Here is an excerpt from a column last week:

"It's obvious that the bear raids in the precious metals, copper and oil, by JPMorgan et al have reached a new level of ferocity the likes of which I, nor anyone else reading these words, has ever seen since I began tracking these markets back in 1999.  The powers-that-be are pulling out all the stops on this one.  When it all ends is now impossible to tell.  One thing is for sure, is that the engineered price declines we've been witnessing for the past couple of months have nothing whatsoever to do with supply and demand.  It's all paper games between 'da boyz' and the technical funds in the managed money category."

All predictions rather than observation of the facts & mechanics of PM manipulation is a mental exercise, and can not predict when or where PM's priced in fiat will move up substantially.

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Jim H
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Nice to have more posters here DC...

I am a fellow student of the dual markets, i.e. the paper, and the physical.  Here is something new that will be effecting the paper futures markets, and would, to my mind, further drive out the small speculators, leaving the casino to be overrun further by the whales;

  http://www.coinweek.com/bullion-report/precious-metals-prices-will-volat...

Precious Metals Prices are going to get more volatile starting October 1. The CME Group (NASDAQ: CME), which owns the COMEX, NYMEX, GLOBEX, and other commodity exchanges, has announced new margin rules on leveraged accounts to take effect that date in order to comply with the Dodd-Frank law.

Leveraged investments are those where the investor borrows funds, usually from the broker, in order to purchase or sell short a larger quantity of an asset than would be possible with just the funds the investor had available. The attraction of a leveraged investment is that it magnifies your profits should the market move in the investor’s favor. For instance, an investor might have $20,000 to purchase 1,000 ounces of physical silver. Instead, by the use of leverage, the investor borrows $180,000 to add to his own funds in order to purchase 10,000 ounces. If the price of silver rises by $1.00 per ounce, the investor is ahead 50% on the funds personally provided, minus the interest cost of the borrowed funds. In a leveraged short sale, the investor magnifies profits if the asset’s value drops below the purchase price.

The negative side of leveraged accounts is that when the market moves in the opposite direction of what the investor expects, losses are also magnified. Taking the example in the previous paragraph, an investor who borrowed $180,000 to add to his own $20,000 to purchase 10,000 ounces of silver would be in a loss position of $10,000 if the price of silver fell by $1.00 per ounce. Since the silver would then be only worth $190,000, a 90% leveraged position would require that the investor’s maximum loan for the investment to be $171,000. In such an instance, the investor would have to come up with another $9,000 to pay down the loan. This causes a 45% loss of original capital on just a 5% drop in the price of the asset. If the investor could not deliver funds against this margin call in the allowed time frame, the broker would close the position, returning only $11,000 to the investor minus the interest costs.

gold coin bar Precious Metals Prices Will Be More Volatile Beginning October 1Up until October 1, CME Group has allowed investors 3-5 days to scrounge up funds to cover margin calls on leveraged holdings that are underwater. Beginning October 1, investors will only have one day to get funds to their broker.

Every time there is any kind of move in prices of investments, margin calls are triggered for some leveraged parties. Even under current rules, some investors are simply unable to come up with the funds within 3-5 days. If margin calls are not meant, the broker sells off their position. Closing the position puts even more pressure for prices to continue in the direction they were already headed.

Under the coming rule, fewer investors will be able to come up with funds in only one day. What this means is that a greater percentage of leveraged precious metals investors will be closed out of their long positions if prices fall, and that more leveraged investors will be closed out of their short positions should prices rise. Obviously, the more the price moves, the greater will be the number of margin calls hitting investors.

Don’t blame the brokers for this change that will make prices more volatile—which generally will increase the risk of loss. It was Congress and the President who enacted the Dodd-Frank Law.

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DisappearingCulture
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Article above

In the article posted above, which is clearly referring to paper "shares" of a PM [Comex trading] it is interesting to note this from the article:

"The attraction of a leveraged investment is that it magnifies your profits should the market move in the investor’s favor. For instance, an investor might have $20,000 to purchase 1,000 ounces of physical silver. Instead, by the use of leverage..."

Note the mention of physical silver.  Yes some large eligible traders may take physical delivery, but the Comex is not primarily a market for physical anything other than paper contracts.

The article starts out with:

"Precious Metals Prices are going to get more volatile starting October 1. The CME Group (NASDAQ: CME), which owns the COMEX, NYMEX, GLOBEX, and other commodity exchanges, has announced new margin rules on leveraged accounts to take effect that date in order to comply with the Dodd-Frank law."

And goes on to say:

"Don’t blame the brokers for this change that will make prices more volatile—which generally will increase the risk of loss. It was Congress and the President who enacted the Dodd-Frank Law."

I don't think it will make trading significantly more volatile. And neither Congress nor the president controls the financial sector, like the JPM et al manipulators. Congress is owned by and gets their marching orders from the financial sector. The Fed Reserve + TBTF banks + Wall Street oligarchs are far more powerful than Congress. The U.S. is an oligarchy.

The Dodd-Frank law is a gesture that will have minimal effect on anything. We also have an attorney general who has not and will not prosecute anyone in these financial institutions, even when caught laundering drug money or breaking numerous laws.

I don't know this author but someone who follows these markets every day for years and writes a daily column was unimpressed by the content of this article...and the likelihood of anything changing due to new margin rules or Dodd-Frank or anything until, for whatever reason[s], the manipulation stops.

That reason would be a default and the only entity who would insist on delivery that would break the system is a country [Russia or China] that is ready to face the full wrath of the Fed and it's long punitive reach.

 

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davefairtex
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almost out of gold

JimH-

Dave,  I think it is helpful to discuss the two views... and I think if we were to run a poll here at PP.com, a large majority would be generally aligned with the second view, hence I appreciate your speaking from this perspective as much as you can.

Hmm, well polls never struck me as a particularly compelling way to get at truth.

Here's my core issue:

The almost-out-of-gold people have been issuing buy signals steadily for the past 14 years.  "The manipulation" is always just about to end in tears, and the resulting advice is always to buy gold now.  As a result, the advice from this group appears independent of price movements.  Regardless of low prices, or high prices, the conclusion is always "buy gold."  This consistent advice works great at the lows, and it works terribly at the highs.

And so I prefer not to be a part of such a constant drumbeat to buy gold regardless of price.  Those poor people who were egged on by the almost-out-of-gold group in 2011 to buy silver at 50 (metals were "breaking free" of the manipulation, you see), do you imagine they are happy now with silver at 17?  They probably feel conned.

Unless of course they still believe - "it was all about manipulation...it is just about to end in tears...gold will hit $5000 next year for sure...silver will be at $200!"

I prefer to use the "buy low sell high" approach.  Now, for instance, the price of silver seems to be getting pretty low...and if the dollar would just cooperate and reverse, right around now would seem to be a good time to buy.  This is not because I'm expecting us to run out of silver in November like Harvey suggests, but because silver is a decent value at this price.  Right now, we are buying now below its cost of production, which over the long term will put a floor on the price.  Simply because of peak resources and peak cheap oil this will probably end up being a wise purchase even if we never, ever have a COMEX default and the central banks have every ounce they claim to have.

Could price drop more?  In a deflationary accident, it sure could.  So going "all in" seems like a bad idea.  Still, this buy-point seems to be a good one for the longer term.

Ultimately, buying because of trends (rather than on imminent default rumors) will end up with people avoiding buying the hype at the tops and then seeing price decline for years at a time.  Commodities have price cycles as we have seen.  We can claim its all about manipulation and thus avoid feeling guilty by advising people to load up and buy at $50 - the point of maximum hype - or we can understand that commodity price cycles happen, and choose to avoid buying near the peaks of the cycle: oil at $147 in 2008, silver at $50 in 2011, McMansions in 2006, dotcom stocks in 1999, equities and junk bonds here in 2014, etc.

I could totally be wrong, and the COMEX could have its default in November.  Its impossible to prove that something won't happen.  But I'm going with the odds.  My advice: don't buy because you feel "the manipulation is about to end for sure this time", buy because its a good price, hopefully near the lows of the latest commodity price cycle, below the cost of mining.  And the next time the commodity cycle goes nuts possibly years from now, you might actually have the courage to sell a portion of your holdings closer to the peaks, near the point of maximum hype.  Wouldn't that be cool?

Jim, I delegate to you the task of reporting the very latest report from the almost-out-of-gold group.  We all benefit from having a wide variety of information.  For my part, I'll definitely look more closely at the evidence if it is backed up by a measurable and consistent premium expansion in bulk gold and silver, but otherwise I prefer to stick to my boring price & volume discipline with the goal being "buy low, and sell high."

 

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Jim H
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Out of Gold?

Thank you for the response Dave,

We are not going to run out of Gold... there is 80 years of mined Gold sitting around in the world.  The questions are as follows;

1)  Where is that Gold?  Quite a bit of it seems to be shifting geographic location.. not clear at what price, if any, it will be induced to move back toward the West.  

2)  At what price do supply vs. demand balance?  With China right now, today, back to sucking up almost the entirety of world mine supply on a weekly basis (https://www.bullionstar.com/article/chinese%20gold%20demand%20explosive) and India and many central banks back to buying... it's not hard to see that today's dropping price is somehow disconnected from the reality of physical demand. 

We all know how this works... price is "discovered" in the paper futures market, not the physical markets.  Unlike the stock markets, where sales of naked shorts are illegal, this is NOT illegal in the metals market (as long as the activity can be loosely couched in the service of valid hedging).  The question we must ask ourselves is this;  How big is the gap between the present price, and a free market price that represents a balance of supply vs. demand? 

I think this is where my view and Dave's differ.  I think the gap is large.. it's hard to put a number on it, but let's just say, 50 - 100%, in today dollars, with today known/knowns.  Where do you think a free market price, balanced by only supply vs. demand, and valid (those holding phys) hedgers, would fall Dave?

Finally, It needs to be stated that Silver is a completely different animal as compared to Gold, from a stock to flow standpoint.  My prediction is that if TPTB continue pushing down the price of the paper Silver, then the stocks of available physical investment Silver will run out.  The LCS shelves will be empty.  The world will be hand-to-mouth for Silver supply.  

One scenario I see unfolding is this - I will call this the Ricard's scenario ( I will find a link later);  The current deflation head fake continues... Taper completes and the underlying US economy continues to weaken and limp along.  Gold and Silver sentiment in the West remains poor as the physical stocks available such as the SGE Silver stockpile, continue to get drained.  Then at the point of maximum wrong footedness on the part of Western investors, the Rickard's scenario unfolds... The new batch of money printers (FED committee members) gets voted into place in January, giving Janet Yellin free rein to recommence the money printing.  New QE comes into the face of depleted phys stocks... the singularity arrives.. investors clamoring for physical can't get any.                   

   

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Commentary thread

"1)  Where is that Gold?  Quite a bit of it seems to be shifting geographic location.. not clear at what price, if any, it will be induced to move back toward the West."

Why would they sell it back for unbacked fiat currency that has an upcoming expiration date? 

"I think this is where my view and Dave's differ.  I think the gap is large.. it's hard to put a number on it, but let's just say, 50 - 100%, in today dollars, with today known/knowns.  Where do you think a free market price, balanced by only supply vs. demand, and valid (those holding phys) hedgers, would fall Dave?"

In the "for what it's worth" department my study makes me think closer to 100% than 50% higher in two months. Silver at least 400% higher. I could explain that but I think most on this forum would already understand. Suffice it to say there is very little investor demand compared to industrial, but if investor money came in [like it started to do in 2011 before that was squashed], the price discovery would be fueled by the investor versus industrial demand. I think that level of increase [400%+] would happen within two months of real free market price discovery.

In 2011 when silver almost hit $50 there was price manipulation going on...just not as serious as when TPTB realized if that continued [gold and silver] it would expose or crash the entire fiat system.

 

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Currency

DC said,

Why would they sell it back for unbacked fiat currency that has an upcoming expiration date?

For whatever reason, we don't talk about the obvious here.  We talk about the strong dollar.. and how it could get much, much stronger from here.  But we don't talk about this;

http://www.zerohedge.com/news/2014-09-29/europe-china-start-direct-tradi...

De-dollarization has been an ongoing theme hidden just below the surface of the mainstream media for more than a year as Russia and China slowly but surely attempt to "isolate" the US Dollar. Until very recently, direct trade agreements with China (in other words, bypassing the US Dollar exchange in bilateral trade) had been with smaller trade partners. On the heels of Western pressure, Russia and China were forced closer together and de-dollarization accelerated from Turkey to Argentina as an increasing number of countries around the world realize the importance of this chart. However, things are about to get even more dramatic. As Bloomberg reports, China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency in a "fresh step forward in China’s yuan internationalization." With civil unrest growing on every continent and wars (proxy or other) at tipping points, perhaps, just perhaps, the US really does want rid of the weight of the USD as a reserve currency after all (as championed here by Obama's former right hand economist)... now that would be an intriguing 'strategy'.

As Bloomberg reports, China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency...

The euro will become the sixth major currency to be exchangeable directly for yuan in Shanghai, joining the U.S., Australian and New Zealand dollars, the British pound and the Japanese yen. The yuan ranked seventh for global payments in August and more than one-third of the world’s financial institutions have used it for transfers to China and Hong Kong, the Society for Worldwide International Financial Telecommunications said last week.

Once the loss of reserve currency status becomes more clear to all market participants.. and the dollars that are now abroad start coming back to their maker (printer)... who is going to want them anyway?  Who in their right mind will be willing to take them in trade for Gold once the dollar decline sets in?

For now what we are seeing is the continuation of the game of opposites.  Swiss decide to peg to the Euro and print Francs?  Kill Gold!  Dollar is ever more threatened through Yuan swap agreements which will ice it out of it's role as the currency of international transactions, and therefore reduce WW demand for it?  Kill Gold and run up the dollar vs. other currencies!  Who you gonna believe, what the writing on the wall says, or what the painted FX markets are telling you?  But hey.. the dollar is really gaining strength because of the taper, right?  And it's clear that the US is in a self-sustaining recovery.. so there will be no need to print again.  In fact, we will be raising rates in 2015.. right?  If you believe all that.. well... you are sheeple.        

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de-dollarization again???

Jim-

Once the loss of reserve currency status becomes more clear to all market participants.. and the dollars that are now abroad start coming back to their maker (printer)... who is going to want them anyway?

I'm surprised you dragged out this old chestnut, after CHS wrote an entire piece describing for everyone the difference between a reserve currency and a trading currency.

Let me paint you a picture which will make it obvious to you what the difference is.

Your monthly salary is equivalent to your "trading currency."

Your wealth storage choice is equivalent to your "reserve currency."

Upon receiving your monthly USD paycheck, you can then decide to cash the check and receive dollar bills, or you can buy gold bars, silver coins, cans of tuna, or even Rubles - you can do whatever strikes your fancy once the check clears.  Whatever you decide to do with your paycheck is your own reserve currency choice.

Now let's say you wanted to de-dollarize your paycheck.  Instead of USD, you wanted to receive your monthly pay in Rubles.  So at the end of each month, you would take your Ruble paycheck and - you could buy gold bars, silver coins, cans of tuna, or even Federal Reserve Notes with those Rubles.  Or you could even keep them as Rubles.  Or you could buy Russian Sovereign Bonds.  Note the choices are exactly the same as when you got your USD paycheck.

As you can see, changing your paycheck currency has no effect on the choices open to you for your wealth storage choice.

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Dave Many thanks for your excellent insights and

comments/interpretations.  That TWO SCHOOLS of thought about this silver debate NOW CONVERGE,

I feel better about buying a lot of silver today.  Also, the reserve vs. trading currency distinction is quite 

helpful and VERY clear!!  As for buying other TRADING currencies, would you recommend the renminbi (yuan) or what? And why?  No advice, just your thoughts.

I must say that the ongoing conversation of this group is exceedingly profitable, in many ways.  Much thanks to all.

Ken

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Comment

"I feel better about buying a lot of silver today."

You should. Anyone buying silver remotely close to spot is buying silver at a price below average mining costs, not including refining and making coins or bars.

At some time in the future [I'd be surprised if we hit 2020] it will cost a lot more dollars to buy an ounce of silver. How or when we get to that I'll leave for others to postulate on.

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Premiums increasing...

Premium for US Silver Eagles at Gainesville Coins was $2.55 end of last week, in roll quantities.  Now $2.75.  This is how it happens.  Even if the (paper) price were to dip down further from here... you are not going to be able to benefit from it as supplies are tightening and premiums will continue to escalate.  Personally, I hope that the pigmen (H/T Jesse for this moniker) do throw more paper as I would like to see them dig their own grave by running the phys dry.  I also bought more yesterday.  Silver is ridiculous cheap here.   

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premiums

Premium for US Silver Eagles at Gainesville Coins was $2.55 end of last week, in roll quantities.  Now $2.75.  This is how it happens.

You can always buy paper now, and sell the paper and buy physical once the premiums calm down.  I made that suggestion during the 2013 crash, when premiums reached $5 per coin (if I recall correctly).  Only issue is taxes.  Still probably beats the premium though, after all is said and done.

You can also buy OUNZ, which offers a delivery option if you have enough shares.  It is currently trading at no premium at all.  PSLV has a current premium of (about) 3.2%.  CEF is selling at a massive discount: -7.9% to NAV.  CEF should snap back if the gold bull market returns for real, although it likely won't do as well as Sprott's funds.  PHYS is trading at a -1.2% discount to NAV.  Note: premiums will change during the trading day.

I am unsure if today is the low; that outcome seems to depend on what the buck will do, and I have had no luck at all in predicting that.  But I agree, if in 2020 you think back to your 2014 purchase at silver $17.10, you'll probably conclude it was a good deal.  Assuming you have enough cash remaining to pay your bills and make it through whatever comes next.

My enthusiasm is helped a bit by this morning's bounce.  If we were down another 50 cents this AM...I'd still advocate waiting.  I want to see buyers at COMEX show up - and hold through the close - before jumping in there myself.  A few buyers have shown up this morning, which is a hopeful sign but so far not conclusive.

As for buying currencies - they are very useful for paying your monthly bills.  I'd only choose to hold currency in whatever nation I also happened to have obligations.  I'd minimize the currency for perennially weak currencies like VND or Rupee.  I'd only buy RMB if I lived in China, Rubles if I lived in Russia.  I'm not so much into doing a carry trade at this point.

And as for my desire to hold dollars - that's because I have bills in USD.

 

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Silver premiums

Or just buy generic or 90% silver with lower premiums. ASE's are not all that's out there.

 

Generic .999 can still be bought for $1.00 per ounce or less over spot.

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Production Cost of Gold

Excellent discussion thus far as I always enjoy various insights. Another point that has been highlighted but not developed as much - the production cost of gold.

Various articles state that if the production price drops below $1200 then certain mining companies will be forced to abandon, or at least scale back, production as the cost of production is somewhere around $1100 - $1200 per ounce

Here and here for starters

Normally i would tend to think of this as a natural floor but with a little deflation on the way i see it falling lower. How low is anybody's guess... perhaps $1100 or $1050. This should, theoretically, shut down some of the smaller players who cannot absorb the shocks and have not hedged accordingly.

If the price dips this low and miners are forced to scale back production then i feel the pressure cooker is firing up. Price below production plus lower output might just be what gets the ball rolling in terms of price discovery.

To be honest I'm surprised mining companies have gone down without a fight. I know anti-competition laws prohibit collusion but if the Federal Reserve are desperate to fix prices then what message does that send to everyone else? "Cheat the system or get screwed" is the moral lesson i take from them (probably just as well I don't look to them for either moral guidance or forward guidance).

On a personal note I'm gonna put my money where my mouth is and wait for a lower price. My priority now is land. However, i am prone to 'anger purchases' when i perceive that the price of either gold or silver has been deliberately smashed with a few hours... but i'm getting better :)

Please note I'm not an investor or trader, just offering my 10 pence

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On Silver

Just as an addendum; i do like how silver looks right now but here in the UK it comes with a +20% VAT (Sales Tax) which doesn't make it as competitive as gold in my eyes. Shame really, i thought an economy worked when people bought stuff...

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Yes its not such

a great investment when you take in the added government extortion. But at least currently you can cash in any profits CGT free if you have initially purchased silver Britannia £2 coins. 

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VAT on Ag also in Switzerland
Luke Moffat wrote:

Just as an addendum; i do like how silver looks right now but here in the UK it comes with a +20% VAT (Sales Tax) which doesn't make it as competitive as gold in my eyes. Shame really, i thought an economy worked when people bought stuff...

In Switzerland there is no VAT or capital gains tax on Au, but an 8% VAT (but no cap. gains tax) on Ag

This law seems to consider Au to be money, although recently it has not been as treated as such by the Swiss National Bank to the extent that it was further back, before UBS aspired to multinational status, and the banking philosophy here was still governed by the insular gnomes of Zurich who knew the value of PMs as collateral.  

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Returning to "RESET" issues

Did you all see this one by Greenspan?

Greenspan: Gold is the ultimate money and China well might want more

 
Submitted by cpowell on Tue, 2014-09-30 16:59. Section: Daily Dispatches

Golden Rule: Why Beijing Is Buying

By Alan Greenspan
Foreign Affairs
Council on Foreign Relations, New York
Monday, September 29, 2014

http://www.foreignaffairs.com/articles/142114/alan-greenspan/golden-rule

If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country's currency could take on unexpected strength in today's international financial system.

It would be a gamble, of course, for China to use part of its reserves to buy enough gold bullion to displace the United States from its position as the world's largest holder of monetary gold. (As of spring 2014, U.S. holdings amounted to $328 billion.) But the penalty for being wrong, in terms of lost interest and the cost of storage, would be modest. For the rest of the world, gold prices would certainly rise, but only during the period of accumulation. They would likely fall back once China reached its goal.

... Dispatch continues below ...

 


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The broader issue -- a return to the gold standard in any form -- is nowhere on anybody's horizon. It has few supporters in today's virtually universal embrace of fiat currencies and floating exchange rates.

 

Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close.

Today the acceptance of fiat money -- currency not backed by an asset of intrinsic value -- rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.

If the dollar or any other fiat currency were universally acceptable at all times, central banks would see no need to hold any gold. The fact that they do indicates that such currencies are not a universal substitute. Of the 30 advanced countries that report to the International Monetary Fund, only four hold no gold as part of their reserve balances. Indeed, at market prices, the gold held by the central banks of developed economies was worth $762 billion as of December 31, 2013, comprising 10.3 percent of their overall reserve balances. (The IMF held an additional $117 billion.) If, in the words of the British economist John Maynard Keynes, gold were a "barbarous relic," central banks around the world would not have so much of an asset whose rate of return, including storage costs, is negative.

There have been several cases where policymakers have contemplated selling off gold bullion.

In 1976, for example, I participated, as chair of the Council of Economic Advisers, in a conversation in which then U.S. Treasury Secretary William Simon and then Federal Reserve Board Chair Arthur Burns met with President Gerald Ford to discuss Simon's recommendation that the United States sell its 275 million ounces of gold and invest the proceeds in interest-earning assets.

Whereas Simon, following the economist Milton Friedman's view at that time, argued that gold no longer served any useful monetary purpose, Burns argued that gold was the ultimate crisis backstop to the dollar. The two advocates were unable to find common ground. In the end, Ford chose to do nothing. And to this day, the U.S. gold hoard has changed little, amounting to 261 million ounces.

I confronted the issue again as Fed chair in the 1990s, following a decline in the price of gold to under $300 an ounce. One of the periodic meetings of the G-10 governors was dedicated to the issue of the European members' desire to pare their gold holdings. But they were aware that in competing with each other to sell, they could drive the price of gold down still further. They all agreed to an allocation arrangement of who would sell how much and when. Washington abstained. The arrangement was renewed in 2014. In a statement accompanying the announcement, the European Central Bank simply stated, "Gold remains an important element of global monetary reserves."

Beijing, meanwhile, clearly has no ideological aversion to keeping gold. From 1980 to the end of 2002, Chinese authorities held on to nearly 13 million ounces. They boosted their holdings to 19 million ounces in December 2002, and to 34 million ounces in April 2009. At the end of 2013, China was the world's fifth-largest sovereign holder of gold, behind only the United States (261 million ounces), Germany (109 million ounces), Italy (79 million ounces), and France (78 million ounces). The IMF had 90 million ounces.

However much gold China accumulates, though, a larger issue remains unresolved: whether free, unregulated capital markets can coexist with an authoritarian state. China has progressed a long way from the early initiatives of Chinese leader Deng Xiaoping. It is approaching the unthinkable goal of matching the United States in total GDP, even if only in terms of purchasing-power parity. But going forward, the large gains of recent years are going to become ever more difficult to sustain.

It thus seems unlikely that, in the years immediately ahead, China is going to be successful in vaulting over the United States technologically, more for political than economic reasons. A culture that is politically highly conformist leaves little room for unorthodox thinking. By definition, innovation requires stepping outside the bounds of conventional wisdom, which is always difficult in a society that inhibits freedom of speech and action.

To date, Beijing has been able to maintain a viable and largely politically stable society mainly because the political restraints of a one-party state have been offset by the degree to which the state is seen to provide economic growth and material wellbeing. But in the years ahead, that is less likely to be the case, as China's growth rates slow and its competitive advantage narrows.

-----

Alan Greenspan was chairman of the Board of Governors of the Federal Reserve System from 1987 to 2006.

 

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Greenspan speak

Maybe we get more honest commentary from Greenspan now that he doesn't have to prostitute himself for Wall Street, TBTF banks, and financial oligarchs. Besides he's an old man; time to clean his sins & clear his conscience before he passes.

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gold remains the "go to hell plan"

This article from Greenspan supports my thesis that gold is the (western) Central Banker's "go to hell plan" - the plan that you swing into place when the primary plan goes sideways in a big way.

They'd really rather the whole fiat thing continue working, and that's where they put their energy - buying bonds with printed money, jawboning equity markets higher, and completely failing to regulate their friends in the banking industry.  (You all should listen to the Secret Fed Tapes).  Its all fiat money all the time.

But if and when the fiat thing goes sideways, they have gold as a backstop.

It is amusing that he's returning to his "goldbug" roots, now that he's no longer part of the machine.

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My interpretation of Greenspan's Op-Ed is different

Disappearing said,

Maybe we get more honest commentary from Greenspan now that he doesn't have to prostitute himself for Wall Street, TBTF banks, and financial oligarchs. Besides he's an old man; time to clean his sins & clear his conscience before he passes.

No... I don't think so.  I think the piece was actually written in service to TPTB, and in service to the dollar.  You are all falling for the ruse here... that the piece was about Gold.  It was not... it was only stating the obvious with regard to Gold... the piece was really a China hit piece.

My thoughts are here;

http://www.peakprosperity.com/discussion/87831/new-china-meme-emerges-no...

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china and the low hanging fruit

So back in the day, the Soviet Union did a really good job of catching up to the US as the "low hanging fruit" of missing pieces of their economy were built on orders of the central committee.  The CIA estimated that Russia would surpass the US in economic activity 10-15 years in the future, and everyone got worried.

That of course never happened.  There are limits to what a centrally planned economy can accomplish; the larger projects are easy, but once accomplished, the whole effort runs into a brick wall.

China has this very issue.  All of the state owned enterprises, the very control they have over their economy ("forcing banks to lend", etc) end up creating a whole bunch of mal-investment when top-down decisions are made for reasons other than meeting actual organic need on the ground.  All the super-rich people there who have skimmed money while executing central committee's orders are a case in point.  That's why they all want to leave - they know very well its all built on a house of cards, and can't last.

Its my firm belief China has run into this brick wall right now, and its only a matter of time before this shows up in the numbers.  A billion-dollar train station used by 10 people is mal-investment.  But we won't know this for quite some time.

For China to sidestep the brick wall, they have to allow failure.  Until they do, they just won't advance.  But they're in a tough spot.  Failure means economic dislocation and unrest, possible riots from fired workers, or riots from savers who lost their money, etc.  Freedom to fail is the necessary component to long term economic success once the low-hanging fruit is picked, and the Chinese companies don't have it.

I think its less about democracy and more about crony capitalism.

We face the same danger here through the system's apparent need to rescue every failing crony capitalist.

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Differing viewpoints.

Dave said,

  All the super-rich people there who have skimmed money while executing central committee's orders are a case in point.  That's why they all want to leave - they know very well its all built on a house of cards, and can't last.

Actually, I don't think they are as much motivated by worrying that China is any more a house of cards than the West is.. I agree with you totally that many elite/wealthy are fleeing China, with their money, often in dollar form... but I think this is the reason;

http://www.businessinsider.com/chinese-white-collar-criminals-death-sent...

Imagine that... justice.. and brutal justice.   

You are welcome to buy in to the meme that China is a house of cards... and the West is not?  I am merely pointing out that this is a theme you will see a lot in the mass media right now, and that each of us has to decide what is real and what is propaganda.  Of course China has made bad investments... but the truth is some of our most prominent economists actually advocate for more of the same here, and I would not be at all surprised to see the next QE program centered on the FED buying, "Infrastructure bonds" to get America back to work and support our own crumbling infrastructure;

   http://noahpinionblog.blogspot.com/2014/07/can-infrastructure-stimulus-u...

Finally, I simply renew my call for us to be more open to nuance here.  As you say Dave, we have our own Crony Capitalism problem, which surely makes for mal-investment.  US Corporations are borrowing money at near zero interest in order to buy back their own shares, boost their EPS, and in retiring those shares reduce their div. payouts.  Investment in this scheme far outpaces investment in R&D and Cap Ex, at least in my little corner of the Fortune 50.

Speaking of my little corner... Guess where the next expansion of the world's most advanced Silicon substrate manufacturing is occurring?  These would be the substrates of choice for manufacturing the ever proliferating family of cell phone Rf switch chips that allow phones to be compatible (and backward compatible) across the broad range of network types... you guessed it, mainland China.  

      http://www.simgui.com.cn/en/

Things are not black and white.  China is not just building train stations and empty apartment buildings.. they are building semiconductor fabs (see SMIC) AND associated supply chain infrastructure to compete at the leading edge.  Meanwhile, the degree of ineptness and dysfunction we are showing in the West, with our gargantuan, overly complex, tripping over itself Government, is shocking if you care to look at it through non-Rose colored glasses;

  http://www.zerohedge.com/news/2014-10-02/workers-spray-ebola-patients%E2...

Overall, the response to Ebola in Dallas by Government entities local and federal has been so inept it makes you wonder what is actually going on here. 

      

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Rickard's Latest Contributions
 
I recall reading Currency Wars and then The Death of Money and his interview with Chris.  I liked his comments at the end about % of what in your portfolio. However I found those comments/suggestions to be rather general and vague.
Chris recommended creating TARGETS somewhere, so that when the time is ripe, with cash, you can jump in and add to your reserves.
 
Well, Rickards now has offered some more detailed and concrete suggestions.
I will attempt to summarize them for our virtual community below.  All I ask, in return, is feedback.
 
A Crash Plan
 
1. Shelter from Dollar's Fall:
      It's literally impossible for the US to ever pay its debt off.
     Therefore, the only solution is to INFLATE the currency to reduce the real
        value of the debt.
     If you have any kind of fixed income, you LOSE.
 
    a) Therefore SHORT the US Dollar (as a pure hedge against the decline in the 
           dollar).  HOW: UDN, PowerShares DB U.S. Dollar Index Bearish Fund
    b) BUY the Euro (more speculative).  Eurozone has 10,000 tons of gold=
           a backing of their currency. Not the Yuan, China has major problems.
                        HOW: URR, Market Vectors Double Long Euro ETN
 
2. Insurance Plan for Market Collapse (Rickards predicts a 70% drop)
     a) SHORT the S&P500
                        HOW: SH, ProShares Short S&P 500 ETF
    b) Financial Sector Crash (major banks have more than $700 TRILLION in
          risky derivatives exposure, on and off the books) Sell BAC,C, MS. WFC,                   DB, GS HBSC (We are less prepared for the coming crash than ever 
            before)
                          HOW: FAZ, Direxion Daily Financial Bear 3x Shares
            (Risky and require regular diligence)
    
3. Invest in Things Folks cannot live without (food, water, energy, medical
      supplies, essential goods and services)
     a) Food Investment (the most basic)  Agricultural sector is important
                             HOW: CNHI, CNH Industrial N.V.
     b) Water Investment drinking water and water management)
                              HOW: AWK, American Water Works Co. Inc.
     c) Medical Supplies Investment
                               HOW: BDX, Becton, Dickinson & Co
     d) Electricity Investment
                                HOW: ABB Ltd. (ADR)
 
4. HARD ASSETS Companies
     a) Rail Industry    HOW: UNP, Union Pacific Corp
     b) US Coal (fastest growing major fuel)
                                 How: BTU: Peabody Energy Corp
    c) Energy Development  HOW: AEP, American Electric Power Co
                                               and XOM, Exxon Mobil Corp (it has 25.2 billion barrels worth of oil and gas                                                                         in current reserves on the books)
    d) Even Gun Manfacturers (ultimate security)
                                      HOW: RGR, Sturm, Ruger and Co; and SWHC,
                                                                               SMITH & Wesson Holding Corp
 
 
He has much, much more to say but this is a good beginning shot.
However, here are two Portfolio Allocations:
 
A) Initial                                        B) "The Day After"
20% land                                       30%land
20%cash                                       30%PMs
15%bonds                                     30%fine art                                                                                                                                                      10%cash
15%stocks
10% PMs
10% hedge funds
10% fine art
 
However, fine art appears to be out of reach for most of us--requires large sums of money, even for art funds.  As for PMS, he recommends two:
PHYS: Sprott Physical Gold Trust ETV
OUNZ: The Merk Gold Trust (ETF)
 
So, feedback, please.    Ken

 

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frederikbaleare...
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Joined: Feb 26 2012
Posts: 7
Rickards Crash Plan

Thank You KP for Rickards-"Latest" !

Me thinks that as long the US is independent of oil-imports, the USD will stay strong.

Some kind of devaluation of the USD ? By supplying the ECB with cheap USD to get going ?

Frederik. 

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1428
Re: Rickard's Latest Contributions

China is speculated to have over 8K tons of gold now.  Regarding art investment, I think there are art funds to buy into so more feasible. 

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1428
Bankers Slave wrote: a great
Bankers Slave wrote:

a great investment when you take in the added government extortion. But at least currently you can cash in any profits CGT free if you have initially purchased silver Britannia £2 coins. 

TPTB can always retroactively impose a new PM tax.  Because of this one must diversify holdings across legal geographies.  

Bankers Slave's picture
Bankers Slave
Status: Platinum Member (Offline)
Joined: Jul 26 2012
Posts: 519
How do you

manage to benefit from PMs vaulted in other countries, when you need to import the gains in fiat when the time comes. There is no escape other than secondary citizenship as far as I am aware!

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 653
Please name art funds and costs

KungsCheese, thanks.  But specifics always help, I think.  I generally find a lot of vague comments on this site, except for Dave, Jim H, and a few others--Chris and Adam, especially. That's why I added Rickards's  (should have been this way before throughout, sorry: Rickards's, that is).

I also wonder if THE community will add other companies or even why some of the above ones should be dropped.  We hopefully could come up with A GREAT, detailed list that would be very helpful to all of us.

kp

 

 

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alexanderhamilton
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Joined: Oct 9 2015
Posts: 1
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