rgleeson

I’ve enjoyed the many debates on here and HPC on deflation/inflation, especially when they have been heated. The ancients Greeks and Victorians understood the value of a good debate in advancement of human knowledge and understanding. There are many inflationary and deflationary pressures and how they affect the price of any given asset is not obvious, and ultimately the wider impact depends upon how our politicians act daily in their attempts to contain the crisis. Before I invested in gold 16 months ago, I read articles by economists who predicted gold would rise with commodities, fall with them, and then rise again as its monetary properties reasserted itself. I've found this thinking persuasive and it’s why I didn’t sell out in the last 2 months. But what makes this really interesting, is the underlying causes which drive that prediction, which is happening all around us, which is really making the end deflation/inflation result irrelevant to the price of gold.

It's all relative right, as long as gold goes down much less than everything else, the net result will be the same

GS are long gold now no?, they'll be laughing all the way to the bank

If the silver belongs to the investor, what security is used to obtain the leverage?

Sorry for your loss. That's another feather in cgnao's cap though and another example of how I haven't understood the extent of the derivatives meltdom. Who would have thought this investment would turn bad when it should be turning good?

beware hubris Anything can happen after london closes, gold price does not rise in NY 90% of the time

Steve Netwriter posted this presentation before (i think), it goes into detail explaining the quo. They describe it as being illegal to naked short trade unless you had already been doing it.... seriously the mind spins just imagining that this situation is even slightly true. http://www.businessjive.com/ Much more comfortable to assume this has been created by internet nutjobs and the casino is really not rigged against you.

All commodities are up at the mo, so we are still not seeing Gold decouple yet... bbc news is showing no trade on crude, what's up with that?

"new rule" - eh?

Is my clock correct, is it really NY open?

And another thing, on-margin hedge funds selling off are one common answer for the sharp drop. Now that is plausable statement for the $1000 to $800 drop, but what fund would still be invested after that 20% haircut, that would then be able to sell off at $800 to $750. They are all on 10-1+ leverage and should all be out right? If they had bought back, in order to sell off once more, shouldn't a price rise be evident?

http://seekingalpha.com/article/95496-the-...gold-and-silver While I think the article has some flaws regarding reasoning of the difference between gold spot and coins (we can all buy close to spot through BV or GM and other such vehicles, or we can all take delivery of bars in the futures market), it does at least ask questions of the New York sell off that happened repeatedly through August and the concentrated short positions. Does anyone have another plausable (non-manipulation) theory for the over-the-cliff daily New York sell-offs that happened repeatedly through the last few months? Im no trader, but to me they dont look like patterns from which maximum capital is being sought. I have a question though. If am an all powerfull U.S goverment agency looking to control price for whateve motivation, through market makers, bullion banks or other, why not just frig the price electronically? Why not just expand on the well known'down tick' trick? Perhaps the smoking gun is not in the futures market.

Well, if the pm market is indeed manipulated any gains today will be wiped out quicker than even the U.S. jobless data.

What the hell does the BOE base their interest rate decision on? You would think this stuff would need to be modelled in some super-computer hosted simulation, rather than a committee of old duffers...

Well I thought we were using inflation/deflation in the traditional and not modern sense, i.e. to refer to the money supply, not prices...

Ah I see... Edit: OK I see in principle the theory here. But I doubt any goverment or central bank would allow receivers to act in this way due to the spread of systematic risk. They didnt wrap up Northern Rock this way after all.

But the bank can only clear the debt from its own reserves if it’s an uncorrelated default. The situation today, is that the banks don’t have enough reserves to cover correlated defaults.

You may well be right that defaulting destroys money, but I don’t understand how, mind elaborating?

And if through weight of default they collapse or obtain capital from a central bank?

Perhaps it does in the case of hedge funds unwinding and paying back their loans...

Bank lending is inflationary. Debt payment is deflationary. Default = no change (i assume) When we talk about people hunkering down and paying back debts, that sure sounds deflationary... and if populations were able to pay back debts tomorrow through some miracle, then I would feel more confident siding with this arguement. However, the banks are in problems because such a large proportion of people, companies and other banks have v. large & long term debt which cannot be paid back quickly, or perhaps at all. So does the deflationary actions of the people paying back long term debt in tiny increments outwiegh the inflationary support of defaults????

I'm find it tough to rationalize opposing thoughts on this subject. Is the price of coins high because there is a physical shortage, or because there is sufficient sucker market who are willing to pay a premium. Is there a physical shortage? Well not for investment bars. BullionVault seems able to exectue purchases without delay at spot price, but in that case you are buying portion of an investment bar. But many PM fluffers want to hold physical in their hand, and full bullion bars are out of the question, so they/we turn to coins So it is quite possible without hard evidence of a physical shortage, that the range between investment grade and coins has increased representing the divergent opinion of the customer base that has access to coins vs. bars. The price of something is what the market will sustain. If this is true the winners here are the mints, since they have increased their margin from spot to resale. My advice is purchase from BV and stay close to spot.

Physical disconnect: http://silverstockreport.com/2008/disconnect.html

If the bullion vendors take payment but promise delivery in the future (and they arent taking a short position), then they must have a "paper" contract for delivery to secure thier future supply. This is the event that could cause the unwind. But I wouldnt trust that supply to come through...

I have to say, I'm as excited aboout PM now as i've been in 12 months. The physical shortage hints to me that natural cornering of the market that some predicted could be at hand. The alternative explantation, that the physical vendors have all gone Short doesn't ring true. If I was investing in Silver (which I wish I had some money for) I sure as hell wouldnt be placing advance order for silver with vendors that promise delivery in 90 days, that sounds like a promise to pay bearer to me!! and introduces counter part risk!!!!!