PM Daily Market Commentary - 12/01/2014

davefairtex
By davefairtex on Tue, Dec 2, 2014 - 1:41am

By now we all know - gold had a massive day, rising +45.50 [+3.90%] to close at 1211.30 on the highest volume in months; silver was up by a full +1.00 [+6.50%] to close at 16.46 also on the highest volume in months.  Both metals were pounded early in Japan trading, only to rally sharply forcing shorts to run for cover.  Gold managed to score a new closing high for this cycle and close above its 50 MA, while silver's rally stopped at its 50 MA and retreated somewhat.

I was concerned after the move Friday that gold looked weak after failing to cross its 50 - now gold tested the 1130 lows which held, and the rebound pushed gold clean through that 50 MA.  I really couldn't have asked for anything more dramatic.   The big bullish engulfing candle has to have rattled more than one short at this point.

Silver had a particularly exciting adventure today - its trading range was vast, hitting 14.15 on the overnight pounding in Japan (it was down almost $1.25 at that low, an incredible move), but rebounding and then rising to +1.35 at 16.81 at its peak in the afternoon in NY.  That's a 19% range - I haven't seen a range like this in a very long time.  Volume was massive too; lots of money changed hands today.

Sometimes when the shorts get too successful and the price drops too low, its like pulling way back on a big elastic band.  When something changes, there is a whole lot of potential energy built up and the snap-back is all the more violent as a result.  I love days like this.  The deeper the low and the stronger the snap-back, the more likely it marks a low: that's because the market has clearly shown the shorts there is a lot of buying pressure down at that level.

The gold/silver ratio dropped -1.84 to 73.59 on the moves today.

The USD tested its high at 88.51 and then sold off, closing down a big -0.40 to 88.01.  The falling dollar definitely helped PM, although the dollar remains in an uptrend.  In spite of the big headline that Japan was downgraded today, the Yen rallied modestly against the dollar. You wouldn't know that to read the headlines, but the downgrade of Japan was treated like a non-event by the market.  Well that's not entirely true - there was a momentary spike lower for literally 5 minutes but then the Yen started rising and closed the day up +0.28%.  Think the market had already anticipated this downgrade?  Sure seems like it.

Miners regained much of their Friday losses today, with GDX up +7.38% on heavy volume and GDXJ up +9.84% also on heavy volume.  However, the miners did not seem to be as enthusiastic as one might hope - both GDX:$GOLD and GDXJ:GDX ratios remain in somewhat of a bearish mode.   I expected more given that gold closed above that 50 MA on such high volume.  Its a bit of a cautionary note on what would otherwise be an exceptional day for PM.

SPX sold off today, losing -14.12 to 2053.44, closing below its EMA-9 for the first time in six weeks.  This is a warning sign.  SPX has just put in a swing high too - look for shorts to start selling rallies.  The VIX rose +0.96 to 14.29.

TLT also sold off today, down -0.58% and printing a bearish engulfing candle, marking a swing high for bonds.  This is curious, both bonds and stocks selling off at the same time.  With the falling dollar, it suggests money is leaving US markets.  JNK sold off relatively hard for the past few days, today it was off -0.77%.  Is JNK signaling issues with highly leveraged shale drillers?  Quite possibly.

The commodity index rebounded +1.63% today, recovering about 2/3 its losses from Friday.  That's a hopeful sign, but we are not out of the woods just yet.

WTIC (+3.32 +5.03% to 69.31, on massive volume) appears to have marked a low - no really, this time its for real!  Here are the signs: first, WTIC made a new low continuing the capitulation from Friday, but then rebounded off that low, rallied, and ended up closing much higher than the open, all on really heavy volume.  The shorts who got excited by the capitulation have to be nervous now, if they haven't covered yet.  The high volume provides a higher level of emphasis to the price action: lots of money changed hands today.

This low does require a confirmation (a close above today's high - means the oil bulls are chasing the market higher, not wanting to miss out on the low low prices, and the shorts are running scared) but combined with the complete capitulation on Friday and a deeply oversold oil market, I'd say this is a "more likely than not" low - if so, this would be good news for silver.

As we know, lots of people out there use oil.  Why not top off your tanks with oil prices this cheap?  Sovereigns can refill their strategic reserves, hedge funds can rent tankers, and so on.  Once the fundamental buyers start backing up the supertanker, those shorts won't stand a chance.  All we can do is watch price & volume for clues.  Great price action + heavy volume = a good chance today is a low.

Brent looks good but not as good as WTIC, up +2.39 to 72.54.  Copper too looks to have put in a low, hitting $2.80 at one point then rebounding strongly to close at 2.93 up +0.07 [+2.34%].  If the commodities can confirm today's price action by a higher close tomorrow, that will be great support for gold and especially for silver.

What fireworks today.  Its not often you see a lower high and a higher high in gold made on the same day.  The only fly in the ointment is the relatively poor performance of the mining shares.  Let's hope the dollar has put in a top and that commodities confirm their rebounds - that should convince mining-share traders its safe to come back into the water.

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17 Comments

Michael_Rudmin's picture
Michael_Rudmin
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elastic bounces bounce

When I look at the 5-year graph, I don't see this as a 'bottom'. I see it as an elastic bounce in a /eneral fall.

Gold bugs are saying 'bottom', and I understand, because they are SO SO tired of watching the price of gold fall, contrary to reason.

But we haven't gotten to the 'throw in the towel' moment. That is probably going to happen AFTER a number of fracking companies and a number of gold miners go bankrupt, because of irrationally low prices for an irrationally long time.

I don't know if you remember 'Calvin and Hobbes', and the game Calvin Ball, but the basic rule was that the rules change. Under such a situation, only politics matters in valuation; and the politics goes with the stupid money more often than not.

Regardless of that, yes, there eventually will be a crash; but-- think on this -- how long did it take the nazi officers of Germany to lose their assets, despite the fact that their game had to crash? And weren't Hitler's last orders to the troops that they should retreat, slaughtering the German people as they went?

Admittedly, that's the mst extreme form of Calvin Ball in most peoples' minds; but don't forget that it isn't the most extreme possible. Rules change.

And you might say, 'well then gold can go up', if rules change. But part of Calvin Ball is that the rules change, but typically speaking the winner doesn't. So if the winner isn't into gold, gold doesn't win.

Point being, that I don't see this as a bottom. The best economic theory of polxtics and Calvin Ball I've seen so far is Elliott, and Elliott seems to indicate on the slide of the last 4 years, that we're headed farther down. I'd not be terribly surprised to see 750.

bwh1214's picture
bwh1214
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7-8 dollar silver?

I am looking at you analysis through the lens of relatively new investors, particularly in silver.  I started buying in '09 and convinced several others to start buying in '10.  We are all fairly affluent, yet far from rich, generally with incomes well in the 6 figures. The bear market has not wavered the resolve of one person in this group, and if anything they are excited about buying at these levels and hopefully lower.  I have seen several of these same people buy high and sell low with equities, but they seem to have their heads on strait when it comes to precious metals. I'm guessing on average the 10-12 guys in our group are buying about 1000 ounces of silver a year at these levels.  A few hundred thousand (relatively small number worldwide) buying these amounts easily soak up any new supply.  I am getting more aggressive as the price drops so if you are right in your theory and silver drops to 7 or 8 bucks our humble little group will be buying nearly 50,000 ounces a year.  

My point being that based on my experience the recent monetary recklessness has brought online new silver investors over the past few years.  Do you think the physical market will allow prices to fall to where you are expecting? I certainly hope your right though, these 100 ounce bars are very economical when it comes to space in my safe. 

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HughK
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Far from rich
bwh1214 wrote:

We are all fairly affluent, yet far from rich, generally with incomes well in the 6 figures.... I'm guessing on average the 10-12 guys in our group are buying about 1000 ounces of silver a year at these levels.  ... I certainly hope your right though, these 100 ounce bars are very economical when it comes to space in my safe. 

Far from rich

Penny551's picture
Penny551
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Great Analysis

Great write-up. Thx Dave!

bwh1214's picture
bwh1214
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HughK

Yes it is fun to play with the rich list and see how lucky we really are.  I am 34 years old so I have plenty of time to build assets but based on the assets I currently own there are still about 150 million people richer that I am.  In addition there are Hundreds of millions of others not far below that that could put similar pressure on the PM market that I do.  Also the cost of living is much more for I then many of those lower on the list.  I only say that I am not rich because I need to be very conscious of my income and out flow. 

Don't get me wrong I am very lucky to make the living I do, I was just indicating that there are many like me and much much more well off that could put immense pressure on the silver market. 

Oh something that was pretty interesting, if you are making an annual income of more then 32k you are in the top 1%.  I thought that was pretty amazing.  It would be interesting to go to a police station or teachers union meeting and complain about the 1%.

davefairtex's picture
davefairtex
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dollar breakout

Strong dollar breakout today, USD +0.62 [+0.71%] to a new high of 88.62.  It will be tough sledding for gold and commodities if the dollar keeps rising.

Jim H's picture
Jim H
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Gold

Michael Rudmin said,

I don't know if you remember 'Calvin and Hobbes', and the game Calvin Ball, but the basic rule was that the rules change. Under such a situation, only politics matters in valuation; and the politics goes with the stupid money more often than not.

You can't print Gold.. it's as simple as that.  You can't make up any set of rules that will quell China's and India's (they just dropped the tariff in India) desire to convert fiat money into Gold.  They just have a deeper understanding of the dangers of paper money than we do in the West.   Politics, and our corrupt paper markets, will ultimately have to bow to the physical reality of Gold's scarcity.  You can throw all the TA and Elliot wave BS (my opinion) you want at the situation.. but the facts on the ground speak a different story.

One of the things we continue to not talk about here is GOFO.. because Dave, and some other market analysts (Bron Suchecki) deny that it has meaning.  I believe that GOFO does have meaning..  and it's really simple to understand.  I am going to introduce a new reference for those interested in learning - a guy named Steve Ellis who thankfully has started blogging on the Gold leasing market.  Here are Steve's bona fides;

Steve Ellis is an expert on gold bullion investment strategies, with experience from a lengthy career as a gold analyst and fund manager. In particular Steve’s expertise covers the physical gold market and his research is focused on gold lease rates, physical gold premiums and the phenomenon of backwardation in gold.

Based in Perth, Australia, Steve works as a fund manager for Baker Steel Capital Managers, a specialist precious metals and natural resources investment manager. Earlier, from 1996 to 1998 Steve worked for the Reserve Bank of Australia (RBA) as a senior Bank Analyst and studied the sale and leasing of RBA’s gold reserves. He has investigated the global gold-leasing market ever since. By 2006 Steve had worked in the derivatives markets at international banks in both Sydney and London for over 10 years and since October 2006 has managed his own gold funds.

Here are some comments regarding GOFO from one's of Steve's posts earlier this year;

https://goldmarketmacro.wordpress.com/2014/08/07/the-importance-of-backw...

(*GOFO is the rate borrowers pay for USD loans if they post gold collateral. Otherwise they would pay Libor and not post gold collateral. Therefore GOFO is secured as far as the lender is concerned so GOFO should be LESS than Libor (ceteris paribus). In this normal situation lease rates (Libor – GOFO) should be positive by the premium lenders are placing on demanding gold collateral.   When GOFO is negative (ie true backwardation) this implies participants are lending USD for a negative return; just to receive gold as collateral.)

But why is backwardation in gold so important?

“The answer to this relies on the fact that a permanent and steep backwardation in gold prices would shake the core of everything we implicitly believe about gold prices. When I bid or offer gold in the course of managing my fund, I assume that gold is unperishable and that every ounce of gold ever mined since the beginning of time (around 150,000 tonnes or 60 times current annual production) still exists somewhere and in some form. Importantly I deduce that higher and higher spot gold prices would eventually entice that gold onto the market. But a permanent and steep backwardation in gold prices would challenge all that.”

I highlighted the last sentence because it is what allowed me to grasp the importance of backwardation.  If we truly have an un-manipulated market, where price lies at or near the balancing point between supply vs. demand, backwardation would not happen.  Especially, and this is key, in a market with the largest stock to flow of any market.  Price went up yesterday, but so did the degree of backwardation... what is that saying?

It is saying something I mentioned when I saw the story about Danish repatriation of Gold - central banks don't trust each other anymore.  Here is what Steve Ellis has to say today, and I think it warrants posting in it's entirety;

     

A Golden Bank Run

Bank runs are terrifying events that have been part of every fractional reserve system in history.  One moment your capital is simply on-demand, one simple withdrawal request away, and the next moment you’re facing either a hair-cut or the full force of a complete default.  Negative GOFO prints are accelerating (1 month GOFO fell to -0.6% yesterday), and I think these are the best evidence that a “golden bank run” is underway.

From here, like every bank run, it’s all about confidence.  1.  Confidence from the gold depositor (think European wealthy family offices, Arabic oil states, Russian Oligarchs, etc) that the bullion bank custodian can return the gold on demand. 2. Confidence from the bullion bank that the gold they on-lent to the mining companies or short side speculators, will be mined and returned. 3. And Confidence from the generalists that if they ever decide to buy gold that it will be available on-demand.

I’ve been studying lease rates and GOFO for years, and I think real panic is brewing within certain gold depositors.  Whether it’s been all the talk about gold repatriation, high and rising physical premiums in China and India, falling registered COMEX gold levels, technical default by several European banks who elected to close gold accounts and pay-out in cash only, retail rationing at global mints or more likely first hand experience of a bullion bank pushing back on requests to return their gold deposit.

This is one reason why I can’t understand why wealthy investors would turn themselves into bank depositors – why would they trust bullion banks to store and manage their gold for them when the whole case for gold holdings is to completely eradicate any form of third party credit risk.  It’s always the depositors that fare worst and have the most to lose.

From the bullion banks perspective (remember they are the ones setting the GOFO rate) negative GOFO means instead of accepting gold deposits, posting $ in return and charging the depositor the GOFO “yield” they are now so desperate for gold deposits that they are advertising to accept gold, post $ in return PLUS pay for the privilege (0.6% annualised for rolling 1 month agreements).

Think about it again.  The bullion bank is accepting an asset that has no intrinsic return, has expenses to insure and store, and in return is posting $ that it could otherwise invest in the markets, $ that it otherwise has to raise via it’s individual cost of capital.  For this exchange, they themselves are coming up with a negative charge!

Now the question to ask is why?  Like any fractional bank, the bullion bank is mismatched between deposits and loans.  What is happening is that they are being hit from both sides.  Depositors are lining up demanding return of their bullion and at the same time their borrowers (mining companies) are struggling with their own default probabilities (see CDS on gold miners – its on the rise as gold prices near the cost of production).

Also bullion banks do not simply keep the gold on account.  They mobilise it in their own investment books, they rehypothecate it, they register it on exchanges for futures contracts delivery, in summary they can’t always get it back.

Being hit from both sides like this makes a default progressively likely.  The most aggressive gold depositors will be best placed, as in any bank run.  First in, best dressed.  As the panic spreads gold’s physical premium (convenience yield) will shoot higher, and overnight gold will go bid only.  I would recommend you get your physical requirements in order well before that moment.

https://goldmarketmacro.wordpress.com/2014/12/02/a-golden-bank-run/

So, this is not a crazy "Gold Bug" saying you better get your phys in order before the music stops... it's guy from the banking side who has been involved specifically in the Gold lease markets since the late 1990's.  You are welcome to deny the meaningfulness of the increasingly negative GOFO... for me, I am making sure my allocation of Sprott PHYS is where I want it to be now.  We are not going to $900 Gold... not for real Gold at least.   

 

 

 

      

davefairtex's picture
davefairtex
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context

JimH-

You and Steve Ellis might be right.  GOFO looks like it is doing something quite interesting, viewed in the context of the past five years.  (Recent break lower is swallowed by the right margin - its at -0.49% now).  Definitely, something in the marketplace is changing right now, and it could be meaningful.

But then I look at the past 20 years, and I see this.  I'm not trying to be difficult here - I want Mr Ellis to explain why GOFO bounced around like a wild thing in the 90s (trading at a 3-5% discount to LIBOR for long periods of time) and yet the gold world didn't end.  No doubt there's some flaw in my understanding of how this stuff works, but just looking at the long term relationship of GOFO and LIBOR, it really doesn't look like the end of the world is nigh.  In its history, GOFO has traded to a dramatic discount to LIBOR for many years at a time.

Again, as far as I understand it, it's not whether GOFO is negative, its the spread between LIBOR and GOFO that is significant.  That's the "money-making opportunity" here for the gold holder.

Jim H's picture
Jim H
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GOFO should never be negative, i.e. < zero

Dave, your chart shows how rare it is for GOFO to be negative.  Your are confusing things with the Libor overlay.  From Dave Kranzler;

A negative GOFO rate means that gold in hand today is worth more than U.S. dollars in hand.  Think about that the next time someone tries to explain to you why gold has no value.  This is a sophisticated transaction being executed by sophisticated banks.  They are not in the business of leaving money on the table for others.  If they are willing to pay money to get their hands on gold, it means they are placing a higher value on gold than on dollars.  That's just the law of the time value of money in action.

http://truthingold.blogspot.com/2013/07/gofo-explained-and-why-its-now-v...

And this

http://www.kitco.com/news/2014-11-13/Analysts-GOFO-Lease-Rates-Hinting-A...

Gold Demand In 3Q – WGC

In its report, Natixis raised this question – when will the withdrawal of gold from Western vaults result in physical scarcity of the metal?

“So far, rises in lease rates have in large part been a reflection of the difficulty of transforming physical gold from Western-held bullion bars to kilo bars,” Natixis said. “At some point, however, this may become more a question of the absolute volumes of gold still held in Western vaults.

“The fact that lease rates rose by 30bps (basis points) in response to a switch of just 100 tons of gold over the past three months, versus a 40bp move in response to a switch of over 600 tons of gold in 2013H1, suggests that the physical availability of gold in Western vaults may soon become a more significant problem. As the amount of gold that is available for leasing dwindles, we should therefore expect greater volatility in gold lease rates.”

And this;

http://seekingalpha.com/article/2725205-gold-forward-rates-plunge?page=2

One month LIBOR is currently at 15.4 basis points (0.154%). The one month gold lease rate stands at 73.59 basis points (0.7359%). In short, the gold lease rate is now roughly 4.77 times the level of LIBOR, which is quite remarkable in a ZIRP environment.

Finally, as far as I am concerned... the whole concept that Gold can be leased is absurd... and a large part of why the Gold market is so confusing.  That central banks and other Gold holding entities lease it out... for income... means that the system as a whole is fractionally reserved.  We know that this to be the case.  With such an opaque system, that (I believe) shows pricing that is highly manipulated, we have to look closely for the signs of stress.  I believe we are seeing these signs now, and after years of increasing Chinese demand, we must be nearing the end game as it relates to using up the available "float" in the system.  TPTB will make Gold seem plentiful until they can't.     

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Time2help
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RE: GOFO should never be negative, i.e. < zero

Neither should real interest rates - but who gives a crap, right?

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Michael_Rudmin
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Printing gold as we speak

Jim, if gold can be leased, then gold can be printed. Simply lease the gold at an ever-increasing rate, and use new leases to pay back old leases. It's a ponzi scheme, to be sure, but if you control the rules and audits and money (and the banks DO control their audits through regulatory capture), then you can run the ponzi scheme for as long as you want.

It isn't that you're printing gold; it's that you're printing titles to gold, which for the markets appears the same.

Which leads me back to my statement that politics matters.

Michael_Rudmin's picture
Michael_Rudmin
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Printing gold as we speak

something else: 2 esdras 6:

20 when the seal is placed on the age that begins to pass away, I will perform these signs: Scrolls will be opened in view of the firmament, and all will see together.
21 Infants a year old will speak with their voices, and pregnant women will give birth to premature babies of three and four months, but they will live and dance.
22 Fields that were not sown will suddenly appear sown, and full warehouses will suddenly be found empty.
23 A trumpet will sound with a blast; when all hear it they will suddenly be terrified.

The pregnant women giving birth to fetuses 3- and 4- months premature, and they live.

Do you doubt that warehouses may be found to be empty, that were thought full?

Yes, gold -- as far as the markets are concerned -- can be printed for quite some time. And that can drive the price down, even for holders of real gold.

But that makes me wonder: could one buy real gold with money, take posession, and then get loans with the gold as collateral, and use that to buy more gold? Especially as gold got cheaper, you would end up with a gold surplus. if it got more expensive, you sell it at a profit and repay your loans...

davefairtex's picture
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negative GOFO

Hmm, a broad cross-section of articles Jim.  I think my favorite is the Tanenbaum article; he sees something significant in the most recent move, while suggesting the previous very modest dips into negative territory probably weren't significant.  Certainly, they didn't lead to any dramatic moves in the market.  That aligns with my sense as well, just based on the charts.

Now that 1M GOFO is at -0.58%, I'm starting to think there might be a pony in here somewhere.  I'm not sure it represents a shortage of gold to buy, but it does seem to suggest there is a lot less gold out there available to lease.

Perhaps, organizations (and central banks?) have just stopped leasing their gold, maybe after the Netherlands repatriation?

This does suggest demand for physical gold should increase.  Presumably people interested in leasing gold will now have to run out and actually buy it.

GOFO sure is dropping fast.  I think its something I'll watch more closely now.

Nate's picture
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let's run the numbers.....
HughK wrote:

Far from rich

Hi Hugh,

I went to FRED to see what the median US salary was. In 2013, the median was $51,939. (http://research.stlouisfed.org/fred2/series/MEHOINUSA672N)

The "Rich" site says there are only 16,839,173 people in the world with salaries higher than $51939. Really?!? Half the families in the US make more and there are less than 17 million in the whole world (including the US) who do. Granted, it may take more than 1 salary to make that household number, but the higher the wage, the less chance it takes 2 (or more) to tango. Nonetheless, does this pass the sniff test? Not in my book.

You scroll down a little and you see this is only a ploy to get you to donate to some cause. After all, if you are rich, you can afford to help the needy. They are lying to guilt people into donating. What else are they lying about?

At the bottom of the page, there is a link to get more information. I followed it to see where they get their information. Turns out it is from 2008 data from the World Bank. US household median wages actually have fallen since 2008, ($54,423 in 2008.) With that amount, there are 14,851,855 richer.

Charity given to hucksters isn't charitable. This country used to be the richest. Now, we're simply deep in debt.

Nate

 

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KennethPollinger
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To Nate, a humble little research

It really gets me that we talk about the MIDDLE CLASS all the time, when, IT APPEARS that 72% of the US population is in the LOWER CLASS (at least according to my income analysis):

Comments by Ken:

My chart is very interesting, if studied carefully,  BUT the CONSEQUENCES are outrageous!!  See EXCELLENT article below Chart
 
Here is my construct again for your review. Following this, you will find some observations by me concerning the US Census Bureau's culture of presenting income statistics--quite DECEPTIVE if you ask me.
 

Screen_shot_2014_01_20_at_10.52.32_PM.png

 

Concerning the Income-Wealth Class Structure

 
 Inspecting the US Census Income data, we find the following:
 
1. The chart starts with the lowest income range at the top (Under $2,500)
     and proceeds all the way to the LAST category at the bottom ($100,000 or more).
 
     Is this deceptive?  Why not present the ranges with the more income at the TOP and descend to the bottom one. I believe this would be a truer picture of the income structure; otherwise, one needs to INVERT the info to see the picture that is worth a thousand words (or ranges).
 
2. From the lowest range to the next to last range ($97,500 to $99,999), all the brackets have a range of $2,500).  BUT THEN, we have the last income range of $100,000 or more!!!!!  How incredible!! How deceptive!!
 
    Why are there not many more income ranges, all the way to highest incomes where data is available, for example, Forbes 400 or highest Hedge Fund Manager: Ray Dalio with 3 BILLION?  Is this done ON PURPOSE by the Census Bureau??
 
3.  Also, where is the income information of the very rich who can purchase TAX-FREE municipal bonds (frequently free of Fed, state, and city taxes)? For example, their wealth makes more income without any work whatsoever, thus money making money.  For example, if Ray invested just 1 BILLION of his "earnings" (income),  he could generate 60 million of additional income, TAX-FREE.  Not bad, for not working.

 

 

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Nate
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stay on topic

Ken,

The point of my post was that the numbers generated by the link Hugh provided are inconsistent with the numbers in the FRED link I provided.  The 'far from rich' link does not pass the sniff test. 

This statistically incorrect link next tries to guilt individuals into donating.  I haven't found anyone on this site that likes being lied to.

Your post focused on US wealth - not worldwide wealth.  According to the information you provided, the poverty level of a family of 4 in the US is $23,492.  According to the link Hugh provided, this is in the top 2.37% (by income) in the world. 

The poverty level in the US is 2 standard deviations above world wealth by income.

Anyone living in a third world country knows this.

Nate

 

 

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HughK
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Two G's for Nate
Nate wrote:

Ken,

The point of my post was that the numbers generated by the link Hugh provided are inconsistent with the numbers in the FRED link I provided.  The 'far from rich' link does not pass the sniff test. 

This statistically incorrect link next tries to guilt individuals into donating.  I haven't found anyone on this site that likes being lied to.

Your post focused on US wealth - not worldwide wealth.  According to the information you provided, the poverty level of a family of 4 in the US is $23,492.  According to the link Hugh provided, this is in the top 2.37% (by income) in the world. 

The poverty level in the US is 2 standard deviations above world wealth by income.

Anyone living in a third world country knows this.

Nate

Hi Nate,

You are right that figuring out how to measure what it means to be rich (or poor) is not easy.  For example, in your handling of how a family of four with a household income of $23,500 would be treated on the global rich list, you forgot to divide the household income by four, as the per capita income for that family is under $6K.

So, I doubt that the people who collaborated on the Global Rich List (the advertising firm Poke and Care International) are lying.  I think that it's just hard to measure these things.  I doubt the metric is perfectly accurate; as you yourself have demonstrated, it's complicated when comparing income and wealth for a number of reasons.  The main point of the rich list is to give a little perspective as to how fortunate we are, I think.

I don't feel much guilt about being relatively rich compared to the rest of the world's population.  My dominant feeling is one of Gratitude.  Now that's a good motivation for Giving.  :)

Cheers,

Hugh

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