Financial topics

[Higgenbotham]

On Goldman Sachs et al ruling the world. I wouldn't say in all cases but in some cases the best explanation for a large price swing is simply, "Because they can." The large swings in silver this year may well fall into that category.

On hyperinflation protection. Interesting that the mention Vince and I made of hyperinflation immediately brought up mention of "gold" and no other asset. I have no plans to buy gold at this time for hyperinflation protection because it is priced too high relative to other forms of insurance. Gold would need to drop to about $1100 before I'd be interested. At this time, I would buy silver, certain kinds of real estate (not all by any means), or British Petroleum stock for hyperinflation protection. As mentioned, I would have bought silver at $26 Monday if it hadn't hit that price overnight while I was sleeping. The allocation would have been only 2-4%.

Interesting how everyone in the US seems to think health insurance is essential. In my view, hyperinflation insurance is much more essential than health insurance (though I've been uninsured from hyperinflation for 5 months).

[Higgenbotham]

What I implicity mean is the truth does not matter to control individual view of group dynamics. For a empirical look in a secular view of context the Whitehall Study followed the consequences.

http://www.ucl.ac.uk/whitehallII/pdf/Wh ... let_1_.pdf

As you will see ongoing is the true Value of stress reduction since they do not above him to keep order. Some management teams are aware of this and distill it to depression effects. There will be some who will consider him discredited if he defends himself. And discredited now if he does not. Political calculation is what it will distill to maintain a position of those above him and opinion of those below.

Control methods now vary little from those of Hitler or Lenin/Stalin except in sophistication. As the hierarchy comes under threat of collapse the screws are tightened a notch or two as needed. Examples:

Team Concept. Failure of underlings to "sacrifice for the team" will result in name calling and bullying. "Team concept" is about transferring responsibility down the hierarchy and authority/control up the hierarchy (reference Whitehall). "Not a team player." "Racist."

Terrorism/Workplace Violence. While it's OK for the top of the hierarchy to threaten the bottom on a routine basis, the reverse has been encoded as "terrorism" and "workplace violence". "Offenders" will be subject to increased threats and bullying from "homeland security" thugs or gangs of upper management. This has the effect of keeping the rest of the sheep in a constant state of fear.

Monitoring. While tapping employee telephones was illegal, the preferred comunications systems are now e-mail and that is routinely "tapped" by the top of the hierarchy. But can anyone look at their electronic communications? No, that is "privileged communications" and its secrecy is "necessary for honest discourse". Freedom of information requests are frequently denied.

Blame the victim. If jobs are real hard to find, for example, the predators that moved them offshore are not to blame. The real reason you're unemployed or underemployed, after all, is because you didn't go $100,000 into debt to get another worthless degree. And if you're in poor health, it's because you didn't get off your lazy ass and exercise more. It has nothing to do with factory farmed food or GMO or high fructose corn syrup or workplace stress or any of that other stuff that's being done to you. You are the sole source of your problems and don't forget it. "Who moved my cheese."
http://www.amazon.com/Who-Moved-My-Chee ... addOneStar

ETC., ETC., ETC.

Wikileaks and Anonymous - not a surprise.

[RDRUNR]

So the fools with gold feaver, buy gold as it drops, $300 oz in a week, recovers $60, then drops again another $150 and repeat;

This hasn't happened yet. Is this your forecast for the future?

Gold's long term upward trend is still intact as the following chart illustrates. There have been temporary correction periods in the past. This is normal in the long term trends of most asset classes and is to be expected.

Take another $50+oz off gold today. It's gone below $1600 (that's a $400oz drop in a month thus far).

How long will you hold on to it? This might just be the 80's all over again when it went from $1650 to $350oz in 1 year. Couldn't give it away at that time.

Again, the best gold chart out there to warn those in PMs, that yes, maam, gold drops like... a stone. Gold is now lower in value than it was in 1980. Anyone who bought gold in 1980 has lost money. Might be another 30 years before they get it back again, will they even be ALIVE?

[OLD1953]

A funny thing happens with PGM's in general. People buy them for a disaster hedge, and drive the price up. Then the price drops a little, and they buy more, and drive it up again. Repeat this several times, till you get them all invested at a high price, and all the people selling metal have sold all they want to sell. Then the price drops. As the price drops, they tell each other, it's a buying opportunity. So they put every penny into metal. Then it drops more. They tell each other, "hold and it will go up when the inflation hits". The FED raises interest rates. They hold some more. Finally, with values down to about 1/2 to 1/3 of the peak, they start to sell, driving the price still lower. This continues for several years, then the people afraid of disaster are all out of gold, the gold sellers have all the gold back at bargain rates, and the price mysteriously starts going up again, while the disaster drumbeat gets slowly louder and louder. Happened in 75 thru 1980. Happened in 97 thru 2000. Happening now.

Do you know why you do not hear ANYTHING about investing in "precious natural perfect diamonds" any more? Because people in the 80's got burned for about 95% on what they dumped into cubic carbon crystals. And De Beers laughed all the way to the bank. But they hit it so hard and fast nobody will do it again, they killed that goose. Look, fact here, there are 50 TONS of gem grade diamonds or more mined each year, and about 1/2 to 1 ton of gem quality emeralds worldwide. Yet diamonds sell for as much or more than an emerald. And opals, much prettier than a diamond or an emerald, languish at relatively low prices for large top quality stones. http://www.anoraanna.com/bo_gallery3.htm (look at the carat weights) Gems are a terrible investment if you don't understand gems - and even then, you'd better buy from the source, not fifth hand.

[vincecate]

This might just be the 80's all over again when it went from $1650 to $350oz in 1 year.

This is a generational crisis period and America has really issued too much fiat money during or leading up to the previous 3 generation crisis periods and this seems no different. In 2 of these the paper money became nearly worthless (hyperinflation) and in the 3rd case they only saved the paper money by making ownership of gold illegal.

So it is a generational thing. Time for hyperinflation.

http://howfiatdies.blogspot.com/2010/11 ... ndard.html

[shoshin]

with respect to diamonds, I never understood the premium, since you can make diamonds that are indistinguishable from the "natural" ones...I guess because you have to label them "synthetic" the price drops, but....

and I agree about opals....I visited Australia twice on business, and almost every street corner had a jewelry store with gorgeous opals...plus, they are fragile, so you'd think they'd have a high value, but don't seem to...

[Higgenbotham]

The flush in silver from $50 to $26 or a bit lower is for me the most predictable chunk of price movement (I was a seller of all my silver in late April at an average price of $45 documented in real time in this forum - the last chunk sold on the day of the high). Real time price movement indicates to me that $20 is likely by about October 5. I can also see all the markets turning higher right here tonight, including silver, and moving up into the first half of October. Still 100% in cash. I'm definitely a buyer of silver at around $16 if it hits there in the next 2 weeks regardless of price pattern and will stay up all night as it nears that level in order to lock in a price in the futures market. It's not like 1980 yet because Ben Bernanke is no Paul Volcker and it could still be like the 1974 flush in silver before the big bull market really took off. A shout out to Arthur Burns - the second worst Federal Reserve Chairman in history (1970-1978)! "Born in Stanislawow, Galicia, province of the Austrian-Hungarian Empire, Arthur Burns soon immigrated with his Austro-Hungarian Jewish parents to New Jersey. He earned his B.A. and Ph.D (1934) from Columbia University, studying under Wesley Clair Mitchell. His career alternated between academia and government. He taught at Columbia and studied business cycles while president of the National Bureau of Economic Research. At Columbia, he blocked the acceptance of Murray Rothbard's thesis on the Panic of 1819, despite having known Rothbard since the latter was a child." Sounds about right.

[OLD1953]

There can be two reasons to raise interest rates, political or economic. Currently, the pressure is on from the political side. Given that, even a tiny impulse towards inflation would be enough for a fast rate increase, and damn the notion of business expansion.

When I was a kid, people who went through the depression and WWII did talk about investing money. They only talked about three things that I can remember, large tracts of land, bonds, mostly municipal bonds and local ones at that, and utilities. We may be returning to a time when utilities look attractive.

[vincecate]

I'm definitely a buyer of silver at around $16 if it hits there in the next 2 weeks

If it heads in that direction I will be buying. If it makes it all the way to $16 I will scrape together any cash I can to buy.

[richard5za]

Real time price movement indicates to me that $20 is likely by about October 5.

I am hoping to learn something new, here. As a chartist I would have said "not possible to be at $ 20 by October 5". Here are both daily and weekly silver Comex charts. I agree with your interpretation to sell out in April - it was a very overbought market waiting for a correction e.g. the RSI was much too high, etc. But if you look at the fall from $ 40 to $ 30 on the daily chart (dots are the closing prices and the lines the daily price range) this looks more like there is a considerable element of panic / forced selling to me probably a result of the correction in gold. Its now an oversold market. The question is "what is the long term trend?" Its only since June last year that the silver price "took off" having seriously lagged gold, so its early days to put a long term trend to silver, but its looks like its upward.
I shall be watching silver with great interest. If you are right, Higgie, then you have an amazing forecasting tool.

Silver weekly to 23Sep.jpg (97.92 KiB) Viewed 337 times

Silver daily to 28Sep.jpg (106.71 KiB) Viewed 337 times