I've had to pull out of The Gold Symposium as the Mint's Board meeting (which I have to attend) has been moved to a day of the event. Was looking forward to meeting the speakers and attendees so not too happy. In that case the Board better approve my business case for redeveloping our exhibition area :) or I will have missed the event for no good reason.
02 October 2010
29 September 2010
Free Sharelynx Trial
Nick from Sharelynx has opened up his website www.sharelynx.com to all viewers for one week from 27th Sept to 4th Oct. I strongly recommend his site. I've listed some of my favourite links below which should give you a sense of the massive amount of information available.
http://www.sharelynx.com/chartstemp/BubbleComparisonsHistory.php
http://www.sharelynx.com/gold/CMXAUStockpiles.php
http://www.sharelynx.com/gold/cots/ddfcotgc.php
http://www.sharelynx.com/gold/TransETFs01.php
http://www.sharelynx.com/gold/ratiochartgcsi.php
http://www.sharelynx.com/gold/200yearcpiauaggraphic.php
http://www.sharelynx.com/gold/CoinPremiums.php
http://www.sharelynx.com/gold/chartmtwk/LivePMusdauo.php
http://www.sharelynx.com/papers/GoldFuturesMarkets.php
http://www.sharelynx.com/chartstemp/IntradayGCManipulation.php
http://www.sharelynx.com/gold/chartslt/globalreservesaut.php
http://www.sharelynx.com/gold/charts4/hedgetotal01.php
http://www.sharelynx.com/gold/RealRates.php
BTW, I haven't posted for a while because I've been tied up with the final stages of our retail renovation. A feature will be the classiest bullion trading room in Australia and hopefully I'll get a video of it up on the Mint's youtube page.
http://www.sharelynx.com/chartstemp/BubbleComparisonsHistory.php
http://www.sharelynx.com/gold/CMXAUStockpiles.php
http://www.sharelynx.com/gold/cots/ddfcotgc.php
http://www.sharelynx.com/gold/TransETFs01.php
http://www.sharelynx.com/gold/ratiochartgcsi.php
http://www.sharelynx.com/gold/200yearcpiauaggraphic.php
http://www.sharelynx.com/gold/CoinPremiums.php
http://www.sharelynx.com/gold/chartmtwk/LivePMusdauo.php
http://www.sharelynx.com/papers/GoldFuturesMarkets.php
http://www.sharelynx.com/chartstemp/IntradayGCManipulation.php
http://www.sharelynx.com/gold/chartslt/globalreservesaut.php
http://www.sharelynx.com/gold/charts4/hedgetotal01.php
http://www.sharelynx.com/gold/RealRates.php
BTW, I haven't posted for a while because I've been tied up with the final stages of our retail renovation. A feature will be the classiest bullion trading room in Australia and hopefully I'll get a video of it up on the Mint's youtube page.
05 September 2010
China desperate for gold & The Mind Conspirators
1) Reported by imarketnews.com:
Sales by overseas central banks could see a sharp fall in gold prices, the Financial News reported Wednesday, citing Zou Pingzuo, a central bank researcher.
"Investors should be careful about investing in gold. Gold prices could fall sharply because of intensive gold sales by the U.S. and other overseas central banks," Zou said.
To me this a sign of desperation by the Chinese. There has been no indication by the US to sell and all recent talk is about central banks buying. They are trying the old scare tactic of central bank selling to try and push the gold price down. They want to buy as much gold as they can but don’t like the current high price.
I think they are hoping this "bubble" will deflate and they can continue with their sneaky "get out of dollars and buy gold". What happens when the Chinese realise the price isn't going to drop? Will they be forced to go all out and start buying whatever physical they can?
2) Worthwhile read for libertarians - The Mind Conspirators by Nelson Hultberg. A quote:
Philosophical fallacies and socialist falsifications of economics and history have gained sway in the school system to poison our citizens' minds against the American concept of freedom. Such fallacies have created a grossly distorted image for the man in the street about the way the world works. Freedom is now seen as inimical to human dignity. Creative entrepreneurship is portrayed as exploitation of the poor instead of their only hope. Gold is termed a "barbarous relic" instead of history's proven store of value. ...
We are being conditioned to accept sloth as normalcy, servility as dignity, weakness of will as compassion, and government conveyed privilege as justice. The world of sanity and rationality gives way to regimental nightmares of Orwellian "newspeak" and "political correctness" in order for legions of middle-class sluggards to feel good about themselves while they live out their spiritually squalid lives queuing up to the entitlement troughs of the mega-state.
My response to the article agrees very much with the comments of MetaCynic:
Accepting Hultberg's argument that ideas are the engine of not only entire civilizations but of every individual, begs the question why do some ideas gain traction and not others. Why did the ultimately unworkable collectivist ideologies of the big picture intellectuals, Rousseau, Hegel, Comte and Marx, find acceptance in the midst of the wondrous prosperity produced by the Enlightenment's Industrial Revolution? Why does the siren call of unaccountable collectivism to this day continue to outsell individual liberty with all its attendant responsibilities?
Despite its clashes with reality, do collectivist intellectuals really have to work very hard to find widespread acceptance for their ideas? Maybe there has always been a ready market for their disabling poison. In politicians and bureaucrats they have, of course, an enthusiastic audience eager to legitimize their own drive for wealth and power. In the envious masses they have deluded voters proudly participating in the process to redistribute the wealth of others into their own pockets. And in the captains of industry they have "capitalists" in need of protected markets and guaranteed profits. The great majority of humans are conformists and clock watchers interested only in comfort and entertainment.
03 September 2010
Australia’s only hard money conference
From http://www.symposium.net.au/the-gold-symposium.htm
The Gold Symposium, Tuesday 9th and Wednesday 10th November 2010
Symposium announces the launch of The Gold Symposium being hosted at the Amora Jamison Hotel in Sydney, Australia on Tuesday 9th and Wednesday 10th November 2010.
Featuring highly respected speakers from Canada, Australia and the USA, this event will approach topics such as the current state of the global markets; why gold is important as an investment; and, gold versus paper as currency.
Amongst many renowned speakers, hear from the internationally respected gold analyst and author, Mr James Dines. Even now many do not believe Mr. Dines’ longstanding prediction of “The Coming Great Deflation” internationally, but what’s next? Boom or Bust, inflation or deflation, or even a hyperinflation?
Other speakers are:
Mr Dan Denning, Editor, The Daily Reckoning
Mr Louis Boulanger, CFA, Founder and Director, LB Now Ltd
Dr David Evans, mathematician and founder of GoldNerds
Mr Robert Lambourne, Chairman, Penox SA
Mr Rudy Fritsch, President, Allsteel
Mr Richard Karn, Managing Editor, The Emerging Trends Report
Mr Gavin Thomas, Managing Director and CEO, Kingsgate Consolidated
Mr Barry Dawes, Managing Director, Martin Place Securities
Prof Steve Keen, Associate Professor of Economics and Finance at the Uni of Western Sydney
And ME!
My presentation is: Paper gold – will it “crack-up”?
• You only protect your wealth by knowing when (or when not) to sell your gold
• To do this you need a real understanding of the risks inherent in the operation and interaction of the physical and paper gold markets, not the hyped-up commentary designed to increase the commentator’s Google ranking rather than your wealth
• Otherwise you may find yourself holding worthless cash after what you thought was a bubble in gold was really a collapse of paper assets
The Gold Symposium, Tuesday 9th and Wednesday 10th November 2010
Symposium announces the launch of The Gold Symposium being hosted at the Amora Jamison Hotel in Sydney, Australia on Tuesday 9th and Wednesday 10th November 2010.
Featuring highly respected speakers from Canada, Australia and the USA, this event will approach topics such as the current state of the global markets; why gold is important as an investment; and, gold versus paper as currency.
Amongst many renowned speakers, hear from the internationally respected gold analyst and author, Mr James Dines. Even now many do not believe Mr. Dines’ longstanding prediction of “The Coming Great Deflation” internationally, but what’s next? Boom or Bust, inflation or deflation, or even a hyperinflation?
Other speakers are:
Mr Dan Denning, Editor, The Daily Reckoning
Mr Louis Boulanger, CFA, Founder and Director, LB Now Ltd
Dr David Evans, mathematician and founder of GoldNerds
Mr Robert Lambourne, Chairman, Penox SA
Mr Rudy Fritsch, President, Allsteel
Mr Richard Karn, Managing Editor, The Emerging Trends Report
Mr Gavin Thomas, Managing Director and CEO, Kingsgate Consolidated
Mr Barry Dawes, Managing Director, Martin Place Securities
Prof Steve Keen, Associate Professor of Economics and Finance at the Uni of Western Sydney
And ME!
My presentation is: Paper gold – will it “crack-up”?
• You only protect your wealth by knowing when (or when not) to sell your gold
• To do this you need a real understanding of the risks inherent in the operation and interaction of the physical and paper gold markets, not the hyped-up commentary designed to increase the commentator’s Google ranking rather than your wealth
• Otherwise you may find yourself holding worthless cash after what you thought was a bubble in gold was really a collapse of paper assets
27 August 2010
Gold and silver versus market index bubbles
Below is a chart Nick of Sharelynx has been working on to show how much of a bubble gold and silver are in (or not).
Note that the x-axis does not have time on it because each bubble had a different timelength (some of the bubbles are 20 years, others 5 years). This does skew/stretch the time, but Nick's emphasis with this chart is more on the percentage growth factor rather than how long it took to get to those bubbles.
Note that the x-axis does not have time on it because each bubble had a different timelength (some of the bubbles are 20 years, others 5 years). This does skew/stretch the time, but Nick's emphasis with this chart is more on the percentage growth factor rather than how long it took to get to those bubbles.
24 August 2010
GLD, leasing and encumbrances
In an otherwise good analysis of GLD (Precious Metals ETF Alchemy
GLD – the new CDO in disguise?) and building on Catherine Fitts’ Precious Metals Puzzle Palace Hinde Capital (as does Ms Fitts) gets it wrong on leasing (see slide 18). A bit of a problem considering that "GLD has encumbered gold in it" is one of his key points.
In my experience most lease transactions are done in terms of unallocated account credits. In this case the lender has lent unallocated and if the Authorized Participant subsequently allocates this unallocated metal there is no direct link between the loan and the physical. The lender has an unsecured exposure to the Authorized Participant under the terms of the original lease. There is simply no legal link to what the Authorized Participant did with that leased unallocated gold.
In the case of lenders supplying actual physical bars (usually only be Central Banks) because it is understood that leased metal will be "used" (be that in a physical operation like a jeweller or mint, or for sale to create a short position), the contract cannot practically require the return of the same physical bars that were lent (ie the same bar numbers). If the lease contract was worded on a secured basis (most likely where the borrower is a jeweller or mint) the security would have to be against the general gold stocks of the borrower rather than the bars originally supplied as it is understood that the original bars are melted or sold.
Where lease contracts specify the return of physical at the end of the lease, it is acceptable to settle with any LBMA bar at maturity, with any ounce difference (due to the variability of 400oz bars) settled via cash.
As a result, there is no legal claim by the lender on the original physical bars supplied to the borrower. Therefore if an Authorised Participant borrowed physical and delivered that to GLD, there would be no claim or encumbrance by the lender to the Authorised Participant on those bars held by GLD.
I note that Hinde Capital avoids the “they don’t have the gold” claim. That is an issue I will post on another time.
GLD – the new CDO in disguise?) and building on Catherine Fitts’ Precious Metals Puzzle Palace Hinde Capital (as does Ms Fitts) gets it wrong on leasing (see slide 18). A bit of a problem considering that "GLD has encumbered gold in it" is one of his key points.
In my experience most lease transactions are done in terms of unallocated account credits. In this case the lender has lent unallocated and if the Authorized Participant subsequently allocates this unallocated metal there is no direct link between the loan and the physical. The lender has an unsecured exposure to the Authorized Participant under the terms of the original lease. There is simply no legal link to what the Authorized Participant did with that leased unallocated gold.
In the case of lenders supplying actual physical bars (usually only be Central Banks) because it is understood that leased metal will be "used" (be that in a physical operation like a jeweller or mint, or for sale to create a short position), the contract cannot practically require the return of the same physical bars that were lent (ie the same bar numbers). If the lease contract was worded on a secured basis (most likely where the borrower is a jeweller or mint) the security would have to be against the general gold stocks of the borrower rather than the bars originally supplied as it is understood that the original bars are melted or sold.
Where lease contracts specify the return of physical at the end of the lease, it is acceptable to settle with any LBMA bar at maturity, with any ounce difference (due to the variability of 400oz bars) settled via cash.
As a result, there is no legal claim by the lender on the original physical bars supplied to the borrower. Therefore if an Authorised Participant borrowed physical and delivered that to GLD, there would be no claim or encumbrance by the lender to the Authorised Participant on those bars held by GLD.
I note that Hinde Capital avoids the “they don’t have the gold” claim. That is an issue I will post on another time.
12 August 2010
Silver Leader Board July 2010
See the document below for a list of all the silver ETFs and online products.
Silver Leader Board July 2010
Silver Leader Board July 2010
06 August 2010
03 August 2010
SMSF coin ban update
Further to my blog on the Cooper Review into Super and the recommendations on Self Managed Super Funds, see the 4 August 2010 press release below from ANDA:
Announcement of Government guidelines for SMSF numismatic investments ‘a relief’ says ANDA
The Australasian Numismatic Dealer’s Association (ANDA) says the announcement by the Federal Government that Self Managed Super Funds can continue investing in numismatics, as long as certain guidelines are followed, comes as a relief to many thousands of SMSF Trustees nationwide.
Mr Robert Jackman, Vice President of ANDA says: ‘I’ve been inundated with phone calls since the announcement was made last Friday. The reality is that many thousands of people would have been adversely affected if the Cooper recommendations on numismatics had been implemented. The vast majority of SMSF Trustees only invest in numismatics because they deliver reliable and attractive investment returns.
‘What’s more, the majority of investors already abide by most of the guidelines which ANDA has formally developed with the assistance of the Self-Managed Super Fund Professionals’ Assocation (SPAA). Those who don’t will be forced to adopt better prudential practices, which can only be to the benefit of the industry as a whole.’
ANDA has worked closely with SPAA during recent months, and expects to continue a consultation process on SMSF guidelines which ever party is elected to Federal Government. All three main parties have rejected the Cooper Review recommendations on collectibles for SMSFs.
Announcement of Government guidelines for SMSF numismatic investments ‘a relief’ says ANDA
The Australasian Numismatic Dealer’s Association (ANDA) says the announcement by the Federal Government that Self Managed Super Funds can continue investing in numismatics, as long as certain guidelines are followed, comes as a relief to many thousands of SMSF Trustees nationwide.
Mr Robert Jackman, Vice President of ANDA says: ‘I’ve been inundated with phone calls since the announcement was made last Friday. The reality is that many thousands of people would have been adversely affected if the Cooper recommendations on numismatics had been implemented. The vast majority of SMSF Trustees only invest in numismatics because they deliver reliable and attractive investment returns.
‘What’s more, the majority of investors already abide by most of the guidelines which ANDA has formally developed with the assistance of the Self-Managed Super Fund Professionals’ Assocation (SPAA). Those who don’t will be forced to adopt better prudential practices, which can only be to the benefit of the industry as a whole.’
ANDA has worked closely with SPAA during recent months, and expects to continue a consultation process on SMSF guidelines which ever party is elected to Federal Government. All three main parties have rejected the Cooper Review recommendations on collectibles for SMSFs.
01 August 2010
The Social Construction of (Gold) Reality
I have a book in my library called The Social Construction of Reality. Its basic thesis is that reality is socially constructed, or to put it another way, reality is what people believe it is. For example, if you moved to a new town and a rumor was circulated that you were an axe murderer, then you can imagine that people would avoid you, police would monitor you and if there was a murder, you would be an immediate suspect. Even though it was not true, you would in effect be experiencing the life of an axe murderer, at least in how people related to you. For you it would become reality because the social group believed it to be true.
You said “But if "smart" dollars of size (or let's just say all dollars of size) are not getting a bid from real physical gold of size... and only "idiot" dollars are getting a bid from "paper gold"... can we really say the gold basis is reflecting reality?”
My contention is that if the social belief is that paper gold is as good as physical gold then for all intents and purposes it is. As a result the basis reflects that and does not go into backwardation because people are accepting paper gold bids for their dollars. Saying this does not mean I condone it, but while the social belief continues, what the real “level of physical gold's bid for dollars” is does not matter regarding price.
There is little proof I have for my claim that we are still in phase two of the Degrees of Distrust as the gold market is opaque by nature. One fact I do have is the recent revelation by the Financial Times that the 346t of gold for the BIS swap “came mainly from investors' deposit accounts at the European commercial banks”. That is 346t of trust by those investors and indicates there are a lot of people who still believe in the system.
I can't 100% sure where we are at, but would caution against too much optimism. If we are still in phase two then a lot of education is still called for. I think the mass market is still not into gold in any major way and when it does it needs to be directed into products that take real physical off the market. We have to ensure investors are properly informed, that they understand the true "gold reality". That the Chimps turn into Champs, not Chumps.
You said “But if "smart" dollars of size (or let's just say all dollars of size) are not getting a bid from real physical gold of size... and only "idiot" dollars are getting a bid from "paper gold"... can we really say the gold basis is reflecting reality?”
My contention is that if the social belief is that paper gold is as good as physical gold then for all intents and purposes it is. As a result the basis reflects that and does not go into backwardation because people are accepting paper gold bids for their dollars. Saying this does not mean I condone it, but while the social belief continues, what the real “level of physical gold's bid for dollars” is does not matter regarding price.
There is little proof I have for my claim that we are still in phase two of the Degrees of Distrust as the gold market is opaque by nature. One fact I do have is the recent revelation by the Financial Times that the 346t of gold for the BIS swap “came mainly from investors' deposit accounts at the European commercial banks”. That is 346t of trust by those investors and indicates there are a lot of people who still believe in the system.
I can't 100% sure where we are at, but would caution against too much optimism. If we are still in phase two then a lot of education is still called for. I think the mass market is still not into gold in any major way and when it does it needs to be directed into products that take real physical off the market. We have to ensure investors are properly informed, that they understand the true "gold reality". That the Chimps turn into Champs, not Chumps.
Subscribe to:
Posts (Atom)