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Sledgehead

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Everything posted by Sledgehead

  1. So when Putin says this move is "dangerous", does he mean in a bank-run-kinda way for member state depositors, or a Litvinenko-kinda way for those voting it through?
  2. Sledgehead

    GOLD

    All I'm saying is that when most people look at a house like this: ... it looks right. That's because its window heights decrease as you go up the building according to golden mean proportions - the kind or ratios we are used to in nature. Similary, we identify certain stock charts as looking right, because they have a natural cadence. Most people would probably be happier with a chart that has certain swings that fall outside linear trendlines; they will not associate such dips as negatives. Projecting a chart that behaves this way onto a log scale or a log-log scale might therefore produce a plot that falls bewteen linear trendlines but that will not necessarily make it look more positive to the average human, any more than making all the windows of the above building the same height would make it appear more appealing. Indeed to many, windows of the same height would look completely wrong, and it may well be the case that a chart that went up in a straight line for 5 years might ingender large amounts of nervouseness, simply because, as humans, we are not used to linear behaviour.
  3. Sledgehead

    GOLD

    Hi Van, Thanks for replying. Always happy to get my back slapped by you (right back at ya, right there ). Always liked the S500 as a yardstick. I see RH pointing out elsewhere that Dow/Gold only looks near completion in non-log terms (so I'm very supportive of log use in that regard). The RSI on either that or GOLD:SPX may well be one of the better tools out there for timing portfolio weightings and thus relative performance, given that diversification seems the only sensible approach in times of markets driven by political whimsy.
  4. Sledgehead

    GOLD

    I take your point that log charts have a certain logical legitimacy : try bottom fishing immediately after a share price collapse and you'll both understand and more importantly "feel" that ( a share collapsed 99% will still do one immense psychological damage by moving the tiniest amount if you'd gambled a meaningful amount on a retracement ). But all the "theory" and practice I've ever come across in charting seems based, at its root, on one simple "truth" : a chart should supposedly "look" right. Looking right means conforming to the appearance of things in nature. Usually that means having proportions that adhere to Golden Mean proportions. And they certainly are not linear. So linearising a chart by looking at its log plot might turn a golden-mean looking chart into a linear one, but for most of us, that won't make it look "even better" and it certainly won't make it look right. And that's the problem with all these indicators, whether they be bollinger bands, rsi, macd or whatever new flavour some bod might have concocted from historical plot studies: they simply distract, obfuscate and add an air of specious mathematical legitimacy to what is essentially an emotive, intuitive phenomenon : natural appearance. Charts either talk to you or they don't. Bands and lines and oscillators won't help, because charts will always break the mathematical rules we try to impose on them. The bands and other constructs may appear to offer insight, but the nature of trading, even with the best money management techniques, will ensure they take as much as they give, whether we stick to them rigidly or take them only as guides. At best, they are a neat way of commenting on positions w/o being too wide of the mark. At worst they can lose you everything. Sadly, given the uselessness / corruption of administrations, regulators, auditors and management, they are as good as anything else we have. So does anyone else think gold in 2011-12 looks very much like gold in 2006? (and yes, that non-equivalence in time-frames is an acknowledgement of golden mean / log behaviour ) It put in a low of ~600 just after xmas - a rather "intuitive" fib retrace of 50% of the oct06->sep06 rise from ~550->~650. Anybody else wondering whether the low is nearly in and a decent run up could be due some way through 2013? Just wondering what might inspire that. German elections perchance? Any home grown euro threat in deutschland might be just what a savings savy electorate might need to get them flocking to the gold vending machines ... Personally, I'd be happier to see a completion of the leg down in the leg-down-consolidation-leg-down that's been running since october: Haven't looked in detail but I make that a target of ~1625. Would very much value the boards views. Oh, and before I forget : Merry Christmas.
  5. Sledgehead

    GOLD

    But the policy response can only be one thing, no? An therein lies my cause for concern: Gold for collapse! Gold for bailout! Gold for all seasons! So why are we off the highs? Why has gold started to mirror equity market moves on a short to medium term basis? Recoveries must mean higher rates; hardly bullish for gold, unless inflation outpaces nominal rates in recovery: Gold for recovery! Maybe it is all margin call related? But in the back of my head all I keep hearing is that old chestnut : "When a market fails to rise on good news, it's time to sell." In recent times much of the financial blogoshpere has been given over to the inflation / deflation (and biflation) debate. But now, for gold, it seems to me an new debate is emerging: that of risk-on, risk-off. Gold, the ultimate safe haven, should be part of the risk-off long trade. However, for the past ~3 months, thanks to its inverse dollar relationship, gold has been copying the path of risk-on long assets. So what can make a risk-off asset a risk-on asset? My feeling: price. And that brings me back to that old chestnut. Anybody else worried about these aspects?
  6. Sledgehead

    GOLD

    I don't speak much these days. In the past I've traded and faded a few bubbles and busts. Most went well, but some of the VIX extremes / money put/call open interest ratios we've seen in recent years defied taming even under my ultra-flexible stance. Ultimately, as a small investor, in those circumstances, commission eats you alive. So the allure of buy and hold is something I can understand. But I realise also that getting used to "what works" is the ultimate trap. For frequently reminding us of our potential complacency, we should be thankful of the Dr's input, and be grateful he can't be banned from this or any other thread on his site.
  7. Sledgehead

    The case for $20,000 Gold

    This is just me thinking aloud after a very frustrating day grappling with european chemicals regulations. It occurs to me that huge swathes of the world are employed in nothing more than vast paper chases. Moreover, as a sector of society, these people represent a disproportionate amount of fiat gdp. I'm refering to patent agents, solicitors, analysts, management accountants, bankers, auditors, loss adjustors, actuaries, public relations agents, civil servants, marketeers, quango agents etc, etc. Somehow it just seems entirely appropriate that they should be paid in what they produce : paper. Whether they should be entitled to buy an ever expanding proportion of what is real with this paper is very much up for debate.
  8. I'm sure we've all noticed the rise in buy-backs of late. Companies of all sizes seem very keen to get out of cash and into stock. Some blue chips are even taking on extra debt to buy back thei own stock. Taken to the logical limit, companies will make tender offers to buy out shareholders before delisting. And it's happening to a sharehlding I have. The first thing that occurs is the tender offer premium. The next thing is the realisation that you will soon have all control taken from you should you opt to retain your shares. But after a few days of chewing it over, you start thinking more deeply and realise that the bigger money taking the company private aren't doing it for the benefit of the shareholders that choose to leave the share register. I note this week that counter to the shares leaving ordinary investors pockets via buy-backs, is the possibility of stock moving in the opposite direction from a company that did its own buying back 5 years ago : Toys 'R' Us. At the time the ~$6bn paid by private equity to mop up the ordinary shares seemed fairly generous, tho nowhere near the highs of its glory days. I wonder what KKR will want per share now the company is turning over $13bn. Walmart trades at less than half its sales (http://ycharts.com/companies/WMT/ps_ratio), tho doubtless the private equity consortium will be looking for a premium. My guess is they will be hoping to make a fat wad. Either way, one has to imagine they have bust a gut to make the investment work: not something which can be said of a good deal of management nowadays, who seem more than happy to cream off bonuses (another aspect of the buy-back culture - see Terry Smith's views). If we are to make "investments", rather than just look for trading opportunities, perhaps these privatising companies should not be dismissed. And maybe we might even think, subject to protection by City Code etc), of running the other way, into the arms of a de-listing? Any experience of such endeavours would be greatly appreciated.
  9. Sledgehead

    GOLD

    Okay, I've heard all the agruments, studied the charts, examined the fundamentals, but the clincher came on my post prandial perambulation (not my picture, but the scene was the same): What more evidence could anyone desire?
  10. Sledgehead

    SILVER

    If all this short termism is getting you down, try viewing tonight's installment of "A History of Celtic Britain" from 17 minutes in. You'll see Neil Oliver handling a Roman silver denarius from the second century AD. He says at the time it would have been worth £100 in today's money. Before it became debased by addition of base metal, it contained just 4.5 grams of silver. You'd need about 7.3 of these to make a troy ounce of silver. That means the Romans would have valued an ounce of silver at about £730. At the time there were about 3 million people in Britain. Today there are 61 million. Doubtless there is more silver above ground today, but then again, there are many, many more people. Another way to look at this. That coin is a little larger than a gold half sovereign (3.7g). Today a gold half sovereign sells for about £112 - roughly the value the romans would have ascribed to the same weight of silver. Yet gold is today valued at 30 times silver. If Romans attributed a similar multiple, half sovereigns would be worth £3000 a piece to a Roman form the second century.
  11. Sledgehead

    GOLD

    yep, 1625 looks like the consolidation move - if you like TA - Maloney certainly does, though his ideas of H&S are a step or two removed from anything I've read / witnessed. More on the paper / physical issue that the Texas Endowment Fund produced much publicity for: [FSB chairman] Mario Draghi also used the IMF meeting to restate concerns about exchange traded funds (ETFs) - stand-alone investment vehicles that typically track the performance of a single asset class such as gold or copper. Retail investors as well as institutions have used ETFs as a proxy for the commodities they back and have invested $1.4 trillion in them, according to BlackRock. However, many are highly leveraged. In some of his strongest words yet about ETFs, Mr Draghi likened them to the derivatives that triggered the financial crisis. He said: "It is reminiscent of what happened in the securitisation market before the crisis." - Telegraph ... drawing more parallels with sub-prime / CDOs etc: Many ETFs have “physical” traits meaning they buy the securities underlying the index. The FSB said this type was prevalent in the US and in offerings by large independent asset managers. But almost half the ETFs in Europe are ”synthetic,” meaning they use derivatives and swaps instead of actually buying the constituents of the index for which it is a proxy. According to the FSB, they are generally provided by asset management arms of banks, and one reason they may be growing is that they create synergies by serving as a counterparty to derivatives trading desks at the parent banks. Remember securitised subprime mortgages? Those AAA bonds were available in thousands of types, unlike the mini-menu of similarly-rated US Treasuries, which varied only by maturity duration. As later became evident, the sheer diversity boosted their opacity, as did complicated collateral schemes that ultimately depended on cheap short-term liquidity for support. Could the proliferation of ETFs—the FSB noted you can now buy “leveraged ETFs, inverse ETFs, and leveraged-inverse ETFs”—be a sign of something similarly untoward? Investors in ETFs may like the asset their fund proxies, but if what they really own are a set of swaps with a bank and that bank defaults, their savvy will be for naught. The FSB even notes that synthetic ETFs may belie incentives that are not properly aligned, and that “conflicts of interest can arise from the dual role of some banks as ETF provider and derivative counterparty.” Now that would be shocking… - WSJ
  12. Sledgehead

    GOLD

    Well, I'm not sure about not trusting deflationists per se, but you'd be wise to wonder about these Automatic Earth guys judging by the quote: Ilargi: ... Markets, according to him [Maloney], and it's a great metaphor, are a voting machine in the short term (the whole crowd rushes in to one side, they all want paper assets), but they're a weighing machine in the long term If these guys really do think they are "clued up", as you put it, they ought to be able to spot a Benjamin Graham metaphor, especially on ethat famous, when the see it. I'm also amazed at the idea of a guy lecturing bankers on such widely understood concepts as Fed open market operations, fractional resrve banking, money supply figures and (gawd help us) PE ratios and head and shoulders formations. The Maloney acolytes who lap that stuff up must be thinking Rocky is this season's block-buster movie. That's fine by me, but bear in mind this is a discussion forum, not a poll.
  13. Sledgehead

    GOLD

    And just to counter that, in a worldwide fiat system collapse, I see no hurry in off-loading. In that scenario I see no shortage of buyers. I'm also curious how this queue jumping might work. If you phone up, don't they just quote you a sell price like any broker? I can't imagine them phoning prefered clients up asking them whether they would care to deal ahead of a "stranger". How long would the list be they'd have to phone every time a stranger called to sell? Aren't people selling currently anyhow? Do you get calls asking whether you'd like to put in a sell before these strangers do?
  14. Sledgehead

    GOLD

    Well, that cuts both ways. If I take physical delivery of a couple of kilos from one dealer, that dealer knows I have something worth turning up for at 4am. If I buy small quantities from separate dealers, they might be wondering whether it's worth it. Besides, we weren't talking about quantity of dealers, we were talking about price. Given the propensity of big city banks to expose their clients to total wipeout, can you hand on heart say that big commissions mean big integrity? So why trust a dealer that charges you a bigger spread?
  15. Sledgehead

    GOLD

    with respect Errol, that is clearly rubbish. If you were big on trusting a man's word, you wouldn't feel the need to take physical delivery. You know as well as I do: gold is not about fiduciary obligations. It's about gold. As for the customer service, well, they can call me a dumbass as long as they deliver the stuff for the right price.
  16. Sledgehead

    GOLD

    Even so, I fail to comprehend why one would want to put money in the pockets of brokers. If you consider the knowledge deployed by a bullion dealer, one would be hard pressed to say a 3% spread represents value for money. They make a big deal about their expertise, yet the chemistry they deploy is sub o-level. It's gold for heaven's sake. We aren't asking them to identify the steric hindrances in RNA!
  17. Sledgehead

    GOLD

    None, if the insurance pays out. Same as if my house burns down, it doesn't matter how much I paid for the insurance, BUT until that fateful day, I will carry on using home insurance price comparison websites, because until that uncertain day, it all just seems like a cost to be minimized.
  18. Sledgehead

    GOLD

    If you were that bullish you'd be a heavy buyer. Surely you'd want to pay as little as possible?
  19. Sledgehead

    GOLD

    Academic question : Coininvest seem to be offering £919 an oz. chards kitco links are showing NY closed @ ~910 How can they afford to pay a premium?
  20. Sledgehead

    GOLD

    Hatton Garden Metals for Krugs : £928.5 (gold4ex ~ £940 @ €1.12975407) .... having said this, both sites are quoting 3% above spot as their sell premium, so maybe my fx rates are doolally? Elm Investments are usually pretty good for Sovs (cheapest QE2 £219), but your suggestion trumps them (£218), so thanks for the heads up. Have to say that Coininvest are almost looking arbitrageable.
  21. Sledgehead

    GOLD

    2nd Vid, last guy's Parrot : "Squak-sqer-squak" [rough translation : "Why didn't my stupid owner teach me how to say pieces of eight!"
  22. Sledgehead

    GOLD

    Be careful with your definitions. Gold IS indeed a mineral, but only by virtue of what chemists call its 'nobility' - it's resistance to oxidation or indeed reaction with other elements. Because of this gold is one of a very small select number of metals, namely rhenium, ruthenium, rhodium, palladium, silver, osmium, iridium, platinum, and gold; i.e., the metals of groups VIIb, VIII, and Ib of the second and third transition series of the periodic table, that can be called 'minerals'. By contrast, iron, aluminium etc would not be considered minerals because they do not occur in isolation in the earts crust, but rather combined with various other elements. So iron, Fe, is not a mineral, but Pyrites (FeS2) and Fe2O3 are. Why make this point? Because the overwhelming majority of minerals found on earth are NOT (as you suggested) created in super nova, but right here, on earth, in volcanoes etc. Why is that important? Because if it can be made in magma, it can be made by us. So ruby is a mineral (Al2O3:Cr - aluminium oxide with chromium), which is seen as so rare, we not only call it a gemstone but sub-term it a "precious stone", YET, because it is made here on earth it can be synthesized in the lab and has been - since 1837! Indeed they are now routinely synthesised for industrial bearing usage - see here for an example of donught shaped rubies. Indeed we now synthesise all the four "precious stones" (ruby, sapphire, emerald, diamond). If you haven't ever seen the possibilities browse this site for a while - and look at the prices. You can by a sample kit : "For only $40 USD you may have this perfectly cut 27Pieces Synthetic Gems". Or for a real eye-opener, look at the fancy shapes page. These are chemically indistinguishable for the naturally occuring 'minerals'. The main thing that lets them down is their perfection, but it doesn't take a genius to realise how one might even blur that distinction. So what of gold? Could it not be similarly synthesised? The key to answering that is to understand the difference between chemical and nuclear reactions. Gems, like most minerals, are compounds of other elements. Synthesisng them involves chemical reactions amounting to the combination of elements. But while gold is a mineral, it is also an element itself. It cannot be made by combining other elements. It is what it is: chemically indivisible. To make gold, chemical reactions are insufficient. We need NUCLEAR reactions. If you remember your elementary chemistry, you'll recall chemical reactions are determined by the outer electrons of atoms. To produce a chemical reaction you need to excite (some way loosen / detach) the outer most (loosely held) electrons. This takes energy. So to burn gas, you need a spark (energy). Th eheat you get out of burning the gas at the alomic level is of the order of that sparks energy. Put energy in, get something similar back. Nuclear reaction, by contrast involve the protons and neutrons of the nucleus. Again, to produce a reactive state, you need to excite these nucleus particles (loosen them). The thing is, as with chemical reactions, the energy needed to loosen the particles that are party to the reaction is of the order of the energy given out during reactions (at the atomic level). One only has to compare the explosive power of a nuclear bomb to conventional chemical explosives to know we are talking about entirely different quantities of enery needed to stimulate such reactions. And even if you have access to this energy, you need to be able to control it and contain it. And given we have yet to produce a decent nuclear fusion reactor, one can see the problems. To summarise, anything is possible. Indeed even aliens could arrive tomorrow with all sorts of new technology. But my guess is, if they do, they'll be wearing synthetic gemstone studded clothes that they pay for with tiny grains of gold.
  23. Sledgehead

    GOLD

    Here you go, just for starters : Pensioners £80bn 'out of pocket' from underestimated inflation rate
  24. Sledgehead

    GOLD

    Cheers WP, thanks for that.
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