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Everything posted by cbs7

  1. Great interview Frizzers, maybe it is a reflection of how socialist the UK has become in all quarters that even those looking for reform of the monetary system still can't understand that inevitably all governments in the long run abuse and stretch any rules that they might set out. Anne seemed to quickly skip over your point that it was harder (not impossible) to inflate a gold-backed currency which IMO makes it at least the least worst option at this stage. Expecting politicians not to eventually inflate a fiat-based currency is naive. She also lacked a basic understanding of why asset prices fluctuaute - yes gold prices are volatile but that is related to the changes in the money supply over a long-period of time. Also the idea that if you had a lot of cash you should just buy land is ridiculous. Currently land prices are over-inflated (it's the land value not the house prices which are too high) so sinking huge amounts of cash if you are very wealthy into over-priced land doesn't make much sense.
  2. Indeed and just the other night George Osborne the Tory Shadow Chancellor was on Newsnight (or the News I forget) saying how the Tories would bring in even bigger bailouts and state interventions in the market. There is a small glimmer of hope from the Liberals who amazingly are starting to talk about tax cuts, whereas the Tories seem to prefer to compete with Labour with how much more public money they can spend. I have a very pessimitic outlook for the UK's political future. We seem unwilling at the moment at least to really grasp what is happenning.
  3. cbs7

    Short Selling on our sound banking institutions is banned

    According to Mish Shedlock on Gold Radio short-selling was last banned (I assume he is referring to the US) in 1929....
  4. cbs7

    Real Money

    It's a very good point and is a comparable to the physical/paper gold/silver argument. A financial collapse is unlikely to happen overnight, as you say but there will be visible and measurable changes evident for those on the lookout. Electronic cash could indeed lose value if people continue to mistrust the banks. After all if someone pays you with electronic money you still have to go to the bank to withdraw the physical cash which the bank may not have available to give you. So physical cash and coins could acquire a premium. Also as you point out actual printing of money in the quantities required for hyperinflation would be very significant, would take time, and I reckon details would leak out quite easily. Electronic hyperflation would be easier but could cause a run on the banks if people realise what is happenning and all rush to their bank to withdraw the notes. So yes, I would recommend having a good amount of physical cash and coins as well as physical silver and gold as a hedge against extreme financial collapse. I personally have some pounds, euros and USD.
  5. Thought this guy's ideas on how to deal with junior resource volatility was interesting. Have copied the ideas below from the documents you can download from his website Mercenary Geologist
  6. cbs7

    Gold Comments - 2nd Half

    Hi walden I hope you are right, it certainly felt emotionally something like a low last week. I wouldn't like to see many more sharp around this low but carving out a low while any remaining bullish optimism is wrung out of the market. I like biwwii's commentary on the HUI http://biiwii.blogspot.com/2008/09/hui-wee...e-road-map.html and I did like the volume on the HUI which suggested a strong powerful reversal.
  7. I picked up this idea from an article by Antale Fekete, don't have the link to hand but will post when I can find it, but the idea seems good Say I have 1000 shares of GLD which I want to hold long-term as wealth-protection, but gold doesn't pay any interest or dividends, so I'd like to try and get something to offset the annual ETF charge. GLD is currently trading around $75, and Sep 08 $80 call options currently have a bid-ask of $0.20-0.25. I could theoretically sell 10 of these out of money options which expire in a week's time on 19 Sep for a total of $200 ($0.20 x 10 x 100). If GLD doesn't go above $80 the options expire worthless and I get to pocket the premium. If GLD does move through $80, I could have an automatic order to buy another 1000 shares of GLD for $80 to offset my liability which the call option imposes on me to sell 1000 shares of GLD at $80, in which case I have lost nothing. If the option is exercised then I receive $80,000 which offsets the $80,000 I paid to acquire the 1000 shares of GLD, but I still get to keep the $200 paid for the call options I sold. The only risk I can see is that the price of GLD gaps through $80 so I'm unable to offset my liability near that price. In theory you could do this on a regular basis, each month selling out-of-money call options against GLD that you already own and want to hold long term, thus generating some income for yourself. Are there any other pitfalls to this other than the problem of gapping through the strike price? You could also do this with options on futures if you own physical gold or silver, although you need to bear in mind the margin requirements that it imposes on a margin account According to Antal Fekete in the article I read he suspects that the Chinese own huge amounts of physcial silver which existed in China prior to the Revolution, and they don't care all that much at present what happens to the price in dollar terms because they can earn income from their silver in a similar method. If eventually the dollar does collapse then of course they have their silver hoard anyway...
  8. I don't like complex consipiracy theories either, conspiracies have to be limited to a small number of people otherwise someone eventually leaks details out.. That's not to say I don't believe there isn't manipulation in the stock market or futures market. There clearly is, but not all of it is necessarily illegal, rather some well-informed players with enough funds at their disposal can push prices around enough to clean out plenty of the smaller players.
  9. Yes good point, GLD also only trades in US hours, but you could have alternative offsetting orders on other gold ETFs on other exchanges, I think there is one in Australia for Asian hours and there are the ones on the LSE for European morning hours. It would be tricky but ignoring the danger of gaps the idea is to have a limit order at the exact strike price so there is only the commission loss, of course again with the danger that the order doesn't get filled at the price, although depending on what size player you are, I think there is good liquidity in GLD at least if you aren't trading in huge volumes. It's not guaranteed of course, but worth noting that when the market is more bullish the premium on the call options would be higher. Also higher premiums would be possible when volatility is high. That's very true, is it Fekete's Putting Loin-Cloth on the Naked Bogeyman? Also I found the original idea for the options trade which is from a very good website Silveraxis by Tom Szabo where he looks at The Silver Basis another interesting trading tool for the precious metals.
  10. I nearly fell off my chair when I did my weekly perusal of Singing Pig to see how sentiment was coming along. There appears to be no limits to the delusion of some posters, please see the quote below You gotta love the idea that falling prices in housing are the BUBBLE! Absolutely priceless, I wonder what planet Landplanningassociates who wrote this is now sitting on! Taking from http://www.singingpig.co.uk/forums/thread/565115.aspx if anyone wants to post a comment. It takes too much of my precious energy and time for me to provoke the bulls any longer and seems a waste of time given that we are now in the final stage of how "all truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident"
  11. Thanks for this Frizzers, really look forward to this as I have great respect for both Turk and Mish
  12. cbs7

    JHK Reviews Batman

    I saw it and liked it very much though found it very disturbing too. My other half has a professional interest in cinema and we watched the first Batman movie the next day, which was considered dark ay the time but nowhere near as dark as this one... I think it explores the depths of the human soul in an interesting way and although the end is still dark there was a subtle feeling that good could win over evil. It's an interesting movie, especially as it is so high profile, and I can understand good and bad reactions to it. My feeling is it's a sign of the times. From a socionomic point of view doesn't it point to a very strong bear market?
  13. I was having a read of Clive Maund's latest Gold and Silver Market updates http://www.clivemaund.com/article.php?art_id=68 http://www.clivemaund.com/article.php?art_id=67 and it got me to thinking about technical breakouts and breakdowns through resistance or support levels, and how reliable are these signals. Sometimes the signals seem to work and other times they seem to be fakes. In the case of the current USD or gold I suspect they are fakes, but I am biased, and also I don't know what will happen but I feel it would be good to have a better idea. In fundamental terms the moves to me are fakes, washouts, capitulations, bull traps whatever you want to call them, but on a technical level are there any signs which can point out the likelihood of a breakout or breakdown being a fake? For example is the fact that the dollar is breaking out from an already overbought level mean the breakout is more likely to fail, and vice-versa for Gold? Any other ideas?
  14. cbs7

    Aurelian taken out by Kinross

    Came across a very good LatAm blog Inka Kola and seems there is a lot of discontent surrounding the Kinross offer and I can only credit the author with this link It's gotta make you laugh on a day like today
  15. I think you have to be careful as you can become a target - at some point people will be looking around for people/groups/companies to blame. I only make general comments around colleagues and only give more detail if they actively seek my opinion. The only exception I make is with my family as although this is just as hard, I have a personal interest here to try and help them protect themselves. Let those who want to be helped come to you. It's better that way
  16. Looking at the current environment and seeing that there seem to be discrepancies developing in the spot/physical markets for commodities versus the futures, I am thinking of ditching all my precious metal ETFs and converting them to a physical from - e.g. coins, bars or Goldmoney. I've found the ETFs such as GLD, GBS and SLV convenient for making regular investments into precious metals over the last few years but the more closely I examine their ownership it seems very unlikely that the gold or silver they own is unencumbered. My eyes glaze over when faced with reams of pages in the prospectuses, but for example here are some bits of concern I've noticed while scanning the Lyxor Gold Bullion Securities (GBS) prospectus: 1. Under "Redemption and Payment in gold" "Should the Security Holder demand payment in gold he must provide the Company with a redemption notice specifying an unallocated gold account with an LBMA member clearing bank in London to which the gold shall be transferred and must pay the Redemption Fee." If I wanted delivery of gold I would certainly not want unallocated gold. I don't understand why I couldn't receive allocated gold or delivery of a gold bar 2. GBS says its gold is not insured against loss or theft. "The Custodian has no obligation to insure such gold against loss, theft or damage and the Company does not intend to insure against such risks. Accordingly, there is a risk that the Secured Gold could be lost, stolen or damaged and the Company would not be able to satisfy its obligations in respect of the Lyxor Gold Bullion Securities Why would no insurance be taken out? I don't regard myself as overly paranoid, but might it be because you wouldn't be able to get insurance for gold which is leased to other parties? 3. Under "Custody Services" "Unless otherwise agreed between the Trustee and the Custodian Secured Gold will be held at the Custodian’s London vault premises or, when gold has been allocated in a value other than the Custodian’s London vault premises, by or for any sub-custodian permitted as described in paragraph 6 below." What the hell does "when gold has been allocated in a value other than the Custodian’s London vault premises" mean? 4. The prospectus says the gold is allocated and seems to imply it is held in the company's name: "All such gold will be held in the Secured Gold Accounts. An amount of such Secured Gold not less than the Combined Entitlement to Gold of all outstanding Lyxor Gold Bullion Securities will be held in the Secured Allocated Account, where it will be held in "allocated" form (that is, as uniquely identifiable London Good Delivery bars) other than to the extent that any such gold is required to be transferred to the Secured Unallocated Account to effect a redemption." The word 'allocated' is defined as "uniquely identifiable London Good Delivery bar", but it isn't defined in the formal list of definitions at the end of the document whereas 'unallocated' is. To be honest for a layman like myself I find a prospectus like this extremely confusing, and I just get to feel uneasy that something is going on that I can't put my finger on. If ownership of the gold bullion was clear and straightforward surely it wouldn't be so difficult to describe it in the prospectus? I would like to think the ETFs were fine as they are an easier and cheaper to acquire, but I also feel they would be an easy target for governments to hit in an extreme crisis. The main use I can see for the ETFs might be for hedging by going short at interim tops when you might still want to hold on to physical and for short-term trading PMs.
  17. That quote is brilliant - at least he is acknowledging that the paper is completely useless. Not like Bernanke, King or Trichet who just waffle on for hours "talking tough" on inflation using gobblegook just to look clever.
  18. This article got me thinking... http://globaleconomicanalysis.blogspot.com...hit-us-and.html I don't buy into all of Mish's deflationary arguments but one particular section of his made me ponder Accepting Mish's words at face value, does this mean the real driver of monetary inflation is the Asian economies? Their currencies are pegged to the dollar so they have been issuing more of them to lend to the West. Is there going to be deflation in Asia if/when they completely depeg their currencies and stop lending to the West? At the same time will this induce a huge currency depreciation in the West as the dollar, the euro and the pound are dumped, and will it also contract the money supply at the same time in the West? Am I making any sense? I think this is what I mean: Currently Asia is the driver of global monetary inflation and economic growth as it prints currency to allow it to buy dollars, euros and pounds which it lends to the West. This is causing inflation both in Asia and the West. If/When Asia decides to deflate their money supply this will strengthen their currencies and lower their inflation rate for goods and services. The western currencies will depreciate against the asian currencies and so the price of imported goods will rise in the West (so there will be higher price inflation). But this will also cause further credit contraction in the West and exacerbate asset deflation. So there will be price inflation right alongside money supply deflation in the West. Does this make any sense? If so what does it mean practically? Buy more gold and silver!? Buy Chinese renminbi?
  19. cbs7


    it depends on how speculative you want to be with your PM investments. I have roughly 45% gold, 45% silver, 5% platinum, 5% palladium. I figure that the gold-silver ratio will decline so I have bought equal amounts of gold and silver. The ratio may not decline but the likelihood suggests it will. You need to bear in mind that the moves in silver will be even more volatile than gold, so a perfect exit strategy may be difficult.
  20. Good chart at biiwii.com showing the CDNX index still working within its triangle. http://biiwii.blogspot.com/2008/07/tsx-ven...hange-pain.html
  21. cbs7

    Inflating the debt away

    I try not to bang on too much as people just don't want to believe the extent of the problems. The only people I am frank with is my family as I am hoping that some of what I say will rub off. Most people know I am bearish on property and bullish on commodities, so I let people bring the subject up themselves if they want to talk about it and I try and keep my points clear and to the main point. If people ask more questions, I'm happy to help them, but in 95% of cases most people just don't seem that interested. There's no point in marking yourself out as a target as that is eventually what will happen people who profit from the ongoing crisis. Sometimes I get the urge to take all my investments 100% and shove them in physical bullion outside the country so there is nothing that can be taken from me, but I try to relax a bit as I don't think this would actually be very helpful. I would recommend diversifying outside of of the country you live in, and spread your assets around.
  22. cbs7

    The Good and the Bad of the media

    For telling it straight and in a way that ANYBODY can understand and appreciate the Mogambo Guru is wonderful. Peter Schiff is also superb and has a clarity about the way he speaks that is commonly missing in the financial media http://www.europac.net/radioshow_archives.asp
  23. cbs7

    Inflating the debt away

    I asked the same question to myself with regard to my family and whether to encourage them to pay down more of their mortgage debt asap or ride out the storm. I still don't know the answer, but I think you need to think that there is a chance that very high inflation will mean interest rates will soar, thus negating the benefit of the debt being devalued through inflation. Whatsmore the danger is if repayments aren't kept up on a house for example the house will be taken back and sold at a distressed price. Watch the bond markets, if these fall, it means bond yields will rise and so it will become more and more expensive to take out new mortgages. I think this is already happening, but whether it continues, we will have to see.
  24. cbs7

    Mining Dictionary

    This mining glossary is also quite useful as a quick reference http://www.insidemetals.com/index.php?view=mining_glossary