Still time to buy gold imo. - Page 81 - Economics -- Two Plus Two Poker Forums

Also, I think tomorrow is gonna be brutal across the market as no one in their right mind will want to be long heading into this weekend. Metals may drop too so that'll be a buying opportunity (sucks being broke ldo)

05-20-2010 , 10:10 PM

#2002

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

MM: Strange rumblings in Dollarstan

Quote:

Remonetization is pretty simple: you have two neighboring countries, Goldenstein and Dollarstan. If Dollarstan systematically dilutes its currency, its savers will move their savings to Goldenstein, whose currency will therefore deflate. If Dollarstan is relatively large relative to Goldenstein, Goldenstein's currency will deflate relatively a lot.

There is no Goldenstein today, but that doesn't mean people can't use gold as money - ie, buy it now for the purpose of selling it later. (If there was a Goldenstein, and capital flight to gold meant capital flight to Goldenstein, all Goldenstein's industries would disappear and its citizens would just be rich for a living, like Kuwaitis. But fortunately, there is no Goldenstein.)

So people move their savings to Goldenstein because gold is going up. And gold goes up because people are moving their savings to Goldenstein. At the end of this cycle, gold is the standard medium of saving and dollars are a kind of soft, hot-potato currency - a North American Peso.

But while this effect - perhaps best simply described as capital flight to gold, or CFG - now appears to be occurring to some extent, it is occurring much less than my evil theory would predict! And it has not yet devoured the entire financial universe. Although that's certainly one of the things that could happen on Monday. But all this talk of gotterdammerungs does leave one a bit blase - does it not, Maurice?

Quote:

In fact it turns out that whatever JPM was alleged to be doing, it has a considerable resemblance to one good candidate for the missing variable. That is: the gold price is (or was) being managed by the production of artificial gold.

Since the price of all goods is set by supply and demand, the price of any good can be managed down by the creation of arbitrary supply. Who would buy artificial gold? Simple - someone who wanted to make a dollar when the price of gold went up a dollar. Who would sell it? Simple - anyone willing to lose a dollar when the price of gold went up a dollar.

In other words: to a gold investor, ie, someone betting on the gold market, artificial gold is just as good as regular gold. Actually, this is not quite true. But at a crude level, it is true. And to all conventional financial analyses, it is true. Thus, you can expect there to be a fair amount of artificial gold ("paper gold") around.

Even (perhaps especially) among the goldbugs, there is a considerable confusion between two kinds of artificial gold. Let's call them virtual gold and synthetic gold. Moreover, the (now highly suspect) London gold market itself does not distinguish between these types of claim, considering both unallocated.

Virtual gold (VG) is artificial gold that's backed, on the balance sheet of the issuer, by some kind of future gold receivable - eg, a gold forward. This is typically maturity-transformed, a stupid and dangerous practice, but one that is conventional in both bullion and regular banking. So, for instance, Buns & Buns of London might have written a promise to deliver gold in 3 months, backed by a Barrick promise to deliver gold in 36 months.

Again, if this seems dangerous, that's because it is dangerous. In a gold maturity crisis, as all holders of artificial gold demand allocated gold, gold interest rates spike - gold now is much more desirable than gold later.

But gold interest rates are tied by arbitrage to dollar interest rates. So what happens when this irresistible force meets that immovable object? Come on. In nature, what happens when an irresistible force meets an immovable object? What happens is a giant sucking financial death-vortex singularity, that's what. Don't ask these kind of things if you don't want the answer.

Quote:

Now we turn to synthetic gold. This is also described as a speculative or naked short. A writer of synthetic gold is willing to lose a dollar for every dollar that gold goes down, and has collateral to back it up. Unlike the writer of virtual gold, who gets that dollar back when future gold rises (assuming gold interest rates do not decouple from dollar interest rates), the synthetic alchemist by definition has no gold to back his Mephistophelean paper.

The creation of synthetic commodities and/or securities is a normal aspect of a modern financial market. There is nothing inherently unhealthy about it. However, derivatives are not as safe as conventional theory would make them.

First, it is a fallacy to assume that collateralization can render any loan, however short-term, risk-free. There is no such thing as a risk-free loan. The possibility that the price of the collateral will fall faster than it can be sold, resulting in negative equity, always exists. This is especially the case when the collateral protects, or purports to protect, the lender against systemic risk. Collateral cures systemic risk like a good hot shower cures AIDS.

(The same is true of "clearinghouses." The modern term "clearinghouse" is actually derived from the Old German klarenhaus, a bit of Hamburg wharf argot meaning "too big to fail.")

Suppose you buy a CDS that pays you 1 euro if Greece defaults. Greece defaults. What do you have? A euro? No - a piece of paper, saying someone is supposed to pay you a euro. Who wrote this piece of paper? Who does it obligate? Do they even still exist? You didn't used to have to worry about this stuff. You didn't used to have to worry about Greece! Idiot. Or at least: if you mark this piece of paper at 1 euro on your balance sheet, you're fooling either yourself or someone else. Its expected value may not be much less than 1 euro; it is certainly less.

The government, of course, could pay off on private credit-default swaps. Typically this is the implicit solution - better mathematical finance, through fiat currency! And it has been done before. But not so much again, I think. What saved the world, or purportedly saved the world, in 2008 was a lot of one-off tricks - emergency authorities that could not possibly become routine. This time, things will have to get worse. The old emergency powers are dissipating rapidly, as emergency powers do.

And more practically, if you are one of the people who bet on the collapse of Greece, the people who are going to pay off on that bet are under the thumbs of the people you bet against! No one in Brussels wants to print a bunch of euros, just to pay off speculators and Jews like you.

But this is a minor quibble, compared to the real problem with synthetic gold.

The real problem with synthetic gold is: gold is not wheat. Demand for gold is monetary demand, ie, reservation demand. It is not consumption demand, as in wheat. Therefore, the creation of synthetic wheat by wheat traders should not have a substantial and predictable effect on wheat prices. This is not the case for gold.

Assuming for simplicity that all gold is held as monetary gold, the gold-dollar exchange ratio is set by the size of the gold stockpile and the marginal desire of gold and dollar holders to exchange their loot. If you expand the gold stockpile, you dilute the demand for gold. If you create synthetic gold, you lower the price for gold - just as if you were minting it in a nuclear reactor in your basement. Since your synthetic gold is (almost) just as good as physical gold, it passes perfectly well for the stuff.

05-20-2010 , 10:11 PM

#2003

shane88888

Carpal \'Tunnel

Join Date: Jan 2007 Posts: 8,984

Quote:

Originally Posted by Bigdaddydvo

Gold down to $1173 right now. Looks like everything's selling off hard. The drop in Platinum has been sick; $1750 a bit over a week ago and is now trading around $1469.

How much is this in handles?

05-20-2010 , 10:20 PM

#2004

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by shane88888

How much is this in handles?

who drops by rarely to give up a choice one liner^^ that guy

fu**ing Gary Oldman from the Professional.

EDIT: MMR is currently looking into dual citizenship with The United States and Goldenstein.

05-20-2010 , 11:32 PM

#2005

TimM

Carpal \'Tunnel

Join Date: Jan 2004 Posts: 9,768

Quote:

Originally Posted by Borodog

By point do you mean percent?

"Handle" is pit trader slang that depends on what instrument is being traded.

But I do know that if the Emini S+P 500 (ES) falls from 1073.75 to 1070.50, I could say it's down "more than 3 handles".

Just to confuse you further, I could also say that it's down 13 ticks.

http://www.cmegroup.com/trading/equi.../eminifaq.html

Probably traders used the word handle because of confusion with other uses of point, dollar, and tick. Someone long 1 ES would be down $50 if it fell one handle.

05-20-2010 , 11:35 PM

#2006

TimM

Carpal \'Tunnel

Join Date: Jan 2004 Posts: 9,768

Quote:

Originally Posted by Bigdaddydvo

(sucks being broke ldo)

I know... I'm sending what could have been 1/2 ounce of gold to my credit cards every month.

05-21-2010 , 06:10 AM

#2007

clowntable

Carpal \'Tunnel

Join Date: Jun 2006 Posts: 45,557

Quote:

Originally Posted by ctj

Someone who was 20 durinng the Weimar hyperinflation (early 1920s) would be 107 now, so you must have talked to them many years ago?

Gold may not have much utility in a "Mad Max' scenario, but I'm hoping for more of a soft landing, where we (the US) end up like Argentina (they've lurched from one fiscal crsis to another for ~100 years). In that case, an ounce of gold will buy a lot of tango lessons.

She was 7 in 1920 so I guess the memory may be somewhat tainted but I think this is something you don't forget and that will be talked about in the family for years after.

Also the main reason why I only hold gold and not say silver or palladium is that I don't understand the commercial use of silver+palladium (pretty much can only think of cars) well enough and since they are used a lot commercially it would kind of feel like buying stocks without knowing much about the company.
Second reason is that gold is tax free here and silver/palladium have like 19% VAT (or 7% for silver coins)

Last edited by clowntable; 05-21-2010 at 06:16 AM.

05-21-2010 , 09:09 AM

#2008

Bigdaddydvo

King of the Politics Forum

Join Date: Aug 2004 Posts: 21,314

Gold down to $1176, but Dow futures are way down 90 points under 10,000. As I said earlier, freakin' no one wants to be long heading into this weekend. And the U.S. 30YR just touched 4 percent.

05-21-2010 , 10:21 AM

#2009

clowntable

Carpal \'Tunnel

Join Date: Jun 2006 Posts: 45,557

I wouldn't mind gold dropping <900 Euro

05-21-2010 , 12:42 PM

#2010

Nitrub

Pooh-Bah

Join Date: Mar 2008 Posts: 4,386

Quote:

Originally Posted by Bigdaddydvo

Gold down to $1176, but Dow futures are way down 90 points under 10,000. As I said earlier, freakin' no one wants to be long heading into this weekend. And the U.S. 30YR just touched 4 percent.

what happens this weekend?

05-21-2010 , 12:55 PM

#2011

chuckbomb

adept

Join Date: Oct 2003 Posts: 773

Quote:

Originally Posted by TimM

This is correct, and generally when people (or at least traders) say "down X handles" without quoting an instrument, they mean "down X points (NOT percent) on the S&P futures."

05-21-2010 , 01:20 PM

#2012

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

Coincident with the sharp drop in bond yields and commodity prices over the past few weeks, the implied inflation rate over the next 10 years as measured by the TIPS has fallen to 1.95%, the lowest since Oct ‘09 and is down 25 bps just over the past 3 days. This action obviously feeds the disinflation/deflation argument but the inflation side of the debate is predicated on the belief that this short term behavior leads to more money printing and cheap money for longer to combat it. This encapsulates the inflation camp, the continued threat of deflation for now leading to the ever increasing fight on the part of central banks to combat it.

Peter Boockvar

Quote:

...Amid all the recent euro-related turbulence, the markets have not focused enough attention on the rapidly vanishing core CPI inflation rates in the US and eurozone. With both moving below 1%, we are now only one cyclical mishap from joining Japan in outright deflation. Given our view that this cyclical recovery will end surprisingly early, slipping into the deflationary mire will trigger further, more extreme rounds of Central Bank monetisation, inevitably drivingus towards our ultimate destination – 1970’s style 20-30% inflation will surely return. ...

Soc Gen's Albert Edwards: The US and eurozone now stand on the edge of a deflationary precipice.

And interwoven is the risk of currency collapse/hyperinflation, or a loss of confidence in a currency. Many suggest confidence in a currency is primarily undermined by unsound monetary policy, such as the continued monetary inflation some expect as the ravages of asset/credit deflation continue.

05-21-2010 , 02:46 PM

#2013

TomCollins

Carpal \'Tunnel

Join Date: Jul 2003 Posts: 43,058

Quote:

Originally Posted by clowntable

That reminds me when I was in school and we had to interview someone about the Great Depression. I think my grandparents were too young to count (born in 28/29), so we went to some old folks home and I ended up with some old lady who had to be near 100 years old. This was back in the late 90s, so she was in her 30s and 40s during the depression. She kept talking about when she was a little girl during the depression and was just generally confused. I had to keep reminding her she already had kids when the depression happened and wanted to know about that time period. She was pretty much completely out of it and I got very little useful information.

05-21-2010 , 05:20 PM

#2014

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by Nitrub

what happens this weekend?

The Congress here in the US is deciding whether a provision regarding swap limits will be removed from the recent financial overhaul.

But let's not forget what else is shakin'

Oil Gushes From BP Well as Scientists Study Leak Size
http://www.bloomberg.com/apps/news?p...3Bawky24&pos=9

North Korea defied condemnation from the rest of the world over the unprovoked sinking of a South Korean warship, and pledged "all-out war" if any retaliation was taken.
http://www.telegraph.co.uk/news/worl...ng-report.html

Goldman Sachs Group Inc. and the Securities and Exchange Commission aren't close to reaching a settlement that would end the fraud lawsuit against the company and trader Fabrice Tourre, according to people familiar with the situation.
http://online.wsj.com/article/SB1000...NewsCollection

Once again, we get to see just how broken our stock market is, one which takes no prisoners, and will trample over everyone and everything as the Primary Dealers use your own money against you to shake every single person out. A 130 point move in the Dow in the matter of minutes on no volume is about all you need to know to lose all confidence in stocks, and call up TD Ameritrade and close your account (you won't be allowed to trade when the market is crashing anyway).
http://www.zerohedge.com/article/sto...utes-no-volume

Germany said restoring confidence in the euro was its "top priority," demanding tougher regulation and oversight on Thursday to protect the single currency, and joint EU action on withdrawing support for its economies.
http://www.cnbc.com/id/37249074

05-22-2010 , 08:03 AM

#2015

Borodog

Enemy of the State

Join Date: Jan 2004 Posts: 25,491

don't forget thailand coming unglued, Obama to send 4-5 carriers to Iranian waters, Venezuela teetering, the pound about to get pounded, 2nd and much larger Icelandic volcano about to blow, Feds silently bailing out 32 states and counting, 17000 Okinawans encircle and shut down a US military base, housing market deteriorating with much more to come, CRE crisis, fedgov debt to GDP nearing 150% ( you didn't forget the gses did you? they're on the books now), pm markets totally manipulated and ready to explode/implode. and on and on and on.

05-22-2010 , 08:40 AM

#2016

Bigdaddydvo

King of the Politics Forum

Join Date: Aug 2004 Posts: 21,314

Quote:

Originally Posted by Borodog

My reaction is somewhere between "100% Standard" and "deep, hopeless resignaton"

05-22-2010 , 10:57 AM

#2017

Bremen

Carpal \'Tunnel

Join Date: Aug 2004 Posts: 15,799

Quote:

Originally Posted by Bigdaddydvo

My reaction is somewhere between "100% Standard" and "deep, hopeless resignaton"

just as long as deep, hopeless resignation is not 100% standard

05-24-2010 , 07:39 AM

#2018

ZeroPointMachine

old hand

Join Date: Jul 2005 Posts: 1,816

I have an idea on how to make a modern gold currency that I would like to run by you guys. I came across some plastic Aussie dollars the other day that got me thinking. Why can't a thin layer of gold be placed between two layers of the plastic that is used to make the Aussie dollar?

I did little research and some quick calculations. One ounce of gold hammered to it's minimum thickness would be enough to completely cover ~1000 Aussie size notes. Of course you don't have to cover the whole note.

These notes would not have any $ face value. They would simply have a weight. By varying the size of the gold insert, the thickness of the gold, or incorporating gold wire/ribbon you could create designs with different weights/values. I don't know what the upper limit on the amount of gold you could feasibly incorporate before you ran into durability issues would be.

The gold would be easily recoverable. Just light the 'money' on fire.

05-24-2010 , 08:24 AM

#2019

galmost

adept

Join Date: Sep 2006 Posts: 1,036

Quote:

Originally Posted by ZeroPointMachine

hi boro,

hows that idea coming along?

http://forumserver.twoplustwo.com/11...you-do-608938/

05-24-2010 , 08:31 AM

#2020

ZeroPointMachine

old hand

Join Date: Jul 2005 Posts: 1,816

Quote:

Originally Posted by galmost

hi boro,

hows that idea coming along?

http://forumserver.twoplustwo.com/11...you-do-608938/

LOL, thanks for the links.

05-24-2010 , 11:16 AM

#2021

Nitrub

Pooh-Bah

Join Date: Mar 2008 Posts: 4,386

goddamnit gold up again missed buying opportunity.

05-24-2010 , 12:00 PM

#2022

Borodog

Enemy of the State

Join Date: Jan 2004 Posts: 25,491

Yes, I had this exact idea and I think it will work. I think production costs could be brought down to of order ~$0.20 per bill. You could easily have denominations worth from a few dollars up to ~$100, where coinage becomes feasible.

In fact I think that this idea would work so well that it could potentially cause the collapse of all fiat currency as we know it, if it were not attacked by governments (although the legal justification for doing so would be pretty lol; it's just small denomination bullion) and the main reason I haven't made more progress, frankly, is fear of assassination.

I'm probably joking.

05-24-2010 , 12:08 PM

#2023

Bremen

Carpal \'Tunnel

Join Date: Aug 2004 Posts: 15,799

Quote:

Originally Posted by Nitrub

goddamnit gold up again missed buying opportunity.

+1

You know it just occured to me that we all sound pretty ******ed to those talking heads on CNBC. We want things we're bullish on to crash in price

And it won't stop going up

05-24-2010 , 12:46 PM

#2024

entertainme

The Poker Mom

Join Date: May 2006 Posts: 8,444

Quote:

Originally Posted by J.R.

Harvey Organ - Tuesday, May 18

Quote:

In case you hadn't checked yet, the June Options Expiration is coming up next Tuesday, May 25:

price calls
1100 7,105
1150 4,976
1200 18,103 - W-O-W !
1250 4,781
1300 5,306
1400 6,227
1800 5,814 - W-o-w again: at +1800+ !

PLUS +another+ 18,000 (or so, aggregated) from 1155 to 1195.

That sets up a task for the Cartel to take gold down to 1150 if they want to neutralize some 41,000 potential calls for delivery.

Shouldn't we be dropping by tomorrow based on above?

05-24-2010 , 01:36 PM

#2025

ErikTheDread

Carpal \'Tunnel

Join Date: Nov 2006 Posts: 9,124

Incidental Great Depression anecdotes, FWIW:

My mom (born in 1930) tells of her parents scrimping to save two pennies each day of the work week so that she and her brother could each have a 5-cent ice cream on Saturday.

My dad (1926) lived through the GD in Norway. His father who was a bookkeeper for a publishing company was sometimes paid in books rather than cash.

Page 81 of 206

First

31 61 71 76 77 78 79 80 81 82 83 84 85 86 91 101 131 181

Last

...

Page 81 of 206

First

31 61 71 76 77 78 79 80 81 82 83 84 85 86 91 101 131 181

Last