GOLD

[HPCsoYESTERDAY]

 

I am selling gold.

 

 

 

 

 

 

 

 

 

 

 

 

.............to buy silver. This is the leverage buying that Goldfinger referred to a while back. Silver is too cheap in relation to gold at the moment IMHO.

 

However, a key element of this is getting silver at the right price. A lot of people have commented on the CID (an other bullion sites) spreads. I posted early Fri AM that CID was not reflecting the big Asian market falls. Admittedly, later that day the 1kg bars touched £290, but they were up to £300+ again soon enough. Similarly, at one point on Friday, Eagles were showing at just over £10 (UK del.), within an hour they were back to £10.50ish.

 

So, watch them spreads, if there is no significant change in pos on Monday, I would expect a mark-down around noon (this happened on Friday) but the window of opportunity lasted about 90 mins until there was a mark up again.

 

Here's a thought. Traditionally, you would buy and sell to/from bullion dealers, but now that ebay is on the scene, is the route of selling to dealers evaporating?

[wrongmove]

Here's a thought. Traditionally, you would buy and sell to/from bullion dealers, but now that ebay is on the scene, is the route of selling to dealers evaporating?

 

If you do sell to a dealer at the moment, are they also paying over the spot price, or are they just charging extra?

 

i.e. has the physical price diverged, or have the spreads just increased?

 

 

 

[HPCsoYESTERDAY]

If you do sell to a dealer at the moment, are they also paying over the spot price, or are they just charging extra?

 

i.e. has the physical price diverged, or have the spreads just increased?

 

Sorry, no idea because I never sell to dealers (nothing personal - there are none near me).

 

But, I remember Steve (NZ) posting a while back that he could get spot price where he was. Which would figure, because given the spreads on spot and buying physical at the moment, the dealers are in for a nice little earner.

[wrongmove]

Sorry, no idea because I never sell to dealers (nothing personal - there are none near me).

 

But, I remember Steve (NZ) posting a while back that he could get spot price where he was. Which would figure, because given the spreads on spot and buying physical at the moment, the dealers are in for a nice little earner.

 

It will be interesting to see how this physical/paper divergence pans out. I can thing of a few boring, practical reasons why physical would be hard to get hold of now, but only time will tell.

 

e.g. these dealers must have paid a lot more for these coins than they can now sell them for. If they think this is just a dip, they would logically be buying themselves now, and holding tight to what they have. Or just maintaining very low stocks in a falling market.

 

Can coin dealers hedge in any way to avoid the above? I cannot see an obvious mechanism for this, but one may exist.

 

 

 

 

 

 

 

 

[Steve Netwriter]

Maybe this will answer the question:

 

http://www.thesilverxchange.com/silver_maple_leafs.asp

 

(100) Silver Maple Leafs

 

Sell = US$1718.52 Buy=US$1581.03

 

Spot = 12.69

 

Sell = 17.1852/12.69 = 35.4% above spot :blink:

 

Buy = 15.8103/12.69 = 24.6% above spot

 

Spread = 35.4 - 24.6 = 10.8%

 

Wow, did I get that right !!!!!

If so that's.....SHOCKING !

 

http://www.thesilverxchange.com/silver_bars.asp

 

(100) mixed 1 oz bar

Sell = $1547.7 Buy = $1408.41

 

Sell = 15.477/12.69 = 21.96% above spot

Buy = 14.0841/12.69 = 10.98% above spot

 

Spread = 21.96 - 10.98 = 10.98%

 

[safebetter]

Has anyone lost their belief in the gold bull and planning to sell out, or are you confident that this is just a temporary drop in price with much higher prices to come?

 

No way.

 

I'm not leveraged - so a bit like a house, you only lose IF & WHEN you sell.

 

Has the recent drop been unnerving, you bet, more than I could have possibly imagined - stomach renchingly sick in fact. I tend to agree with Jim Sinclair that if you read & watch too much on this ride you'll send yourself mad! This is a long game, not a short game. I really admire those folk who have the time and skill to making money out of trading the PM's, but the latter is not for me - I surely would be washed out in a short time.

 

The recent drop actually prompted me to buy more @ $810 just before the last drop.

 

Am I worried - no not really - I have faith. I had faith when I got out of BTL Q1 2004 (only small time - 2 x properties) - but I did ok. At the time people said I was mad to sell at that point in time. I was doing my research - they were watching Location, Location, Location. I was happy with the profit I had made and was happy to sit tight until I found something else. Properties near me did not really move much after the end of 2004, so yes perhaps I lost a bit, but I'm happy with my timing. As I've said on here before my only regret is not getting into gold early enough, 2004 would have been ideal, but with hindsight investment we'd all be kickin back in the caribbean

 

I've taken all my financial investment/management into my own hands. Most of the IFA's out there don't have a clue - they just have a standard bag of low/medium and high risk portfolios for you - and they cream off an easy % for doing nothing. If I lose any money now - the buck (or Turdling as GF puts it) stops with me.

 

If ultimately I had to take a loss - then so be it - will just have to work harder to make up the deficit - nobody ever got anywhere without a calculated risk. In fact I think gold is helping me become less risk averse - will have to change my name!!!

 

SafeBetter

[wrongmove]

Maybe this will answer the question:

 

http://www.thesilverxchange.com/silver_maple_leafs.asp

 

(100) Silver Maple Leafs

 

Sell = US$1718.52 Buy=US$1581.03

 

Spot = 12.69

 

Sell = 17.1852/12.69 = 35.4% above spot :blink:

 

Buy = 15.8103/12.69 = 24.6% above spot

 

Spread = 35.4 - 24.6 = 10.8%

 

Wow, did I get that right !!!!!

If so that's.....SHOCKING !

 

http://www.thesilverxchange.com/silver_bars.asp

 

(100) mixed 1 oz bar

Sell = $1547.7 Buy = $1408.41

 

Sell = 15.477/12.69 = 21.96% above spot

Buy = 14.0841/12.69 = 10.98% above spot

 

Spread = 21.96 - 10.98 = 10.98%

 

 

So that would indicate a clear divergence. I'm guessing that usually they (dealers) would buy at around spot (for coins, maybe a bit under for bars) and sell at around spot+10%?

 

Cheers SN. Very interesting.

 

 

 

 

 

[Steve Netwriter]

I suggest you listen to this week's Financial Sense Big Picture (Part 2). I have never heard such absolutely clear, decisive and convinced advice to load up now while the stuff is on the table. Physical bullion is vanishing. This is not a gold collapse, it is an irrational dollar surge that is weird and unaccountable.

 

Also read this paper at FS to get a better feel for what is actually going on:

 

http://www.financialsense.com/fsu/editoria.../2008/0814.html

 

Then relax....

 

Agreed, he's pretty clear

 

Starting at 29:00

http://www.netcastdaily.com/broadcast/fsn2008-0816-3b.mp3

 

Eric King:

 

Long-term. YEARS. You've got to be in this for years.

This.... is.... a.... long..... term.... secular..... bull..... market.

 

IMF, Debt, Inflation....

They have got to take gold down. They have got to take silver down.

And that's what they are doing.

The professional investors know that.

Do not get scared out of this secular bull market.

 

$110 TRILLION dollars debt.

 

A list of the reasons for gold to have gone up.....

 

When you are in an intervention, fundamentals are out of the window.

 

Do not listen to statements made from this government.

Ignore statements made by Paulson.

They have been consistently wrong.......

 

Stick with the fundamentals.

Do not watch CNBC.

Do not panic.

It is rare in your lives that you will see such extreme fear and panic.

 

I am telling you now, we are going to have professional buyers now.

There is going to be professional buyers of GLD and SLV

 

Start purchasing right now, and continue to buy declines.

Buy 12, 11, 10, 9, and you would have an average of 10,

 

Start buying physical gold & silver right now.

 

They are bullish at the top, and bearish near the bottom.

 

ETFs dwarfs the physical market.

 

Disconnect between paper and physical price.

They thought there would be panic selling. Instead I bought a tonne of silver.

[Bobsta]

It will be interesting to see how this physical/paper divergence pans out. I can thing of a few boring, practical reasons why physical would be hard to get hold of now, but only time will tell.

 

e.g. these dealers must have paid a lot more for these coins than they can now sell them for. If they think this is just a dip, they would logically be buying themselves now, and holding tight to what they have. Or just maintaining very low stocks in a falling market.

 

This makes perfect sense to me. Coin dealers serve the domestic market. And the domestic market anecdotally seems to want to buy MORE when the price falls.

But equally dealers will not want to sell their stocks at a loss, and if they can sell products at hefty levels above spot price, why wouldn't they?

 

You could call it a divergence of physical vs paper ... or you could just argue this is simple supply/demand economics. Just as some people are happy to pay £2.50 for an ice cream at a cinema - regardless of the internationally set commodities price for milk; In the current situation people want this stuff and are happy to pay the true market price - not some ficticious price set on COMEX.

[Andrew McP]

Eric King:

 

I swear that guy could sell me London Bridge. Not that I'm implying he's a shyster, quite the opposite. I find him *totally* and genuinely persuasive whenever I hear him on FS. In fact after listening on a Saturday night at work I usually come back in full-on gold & silver buying mode, especially when he's been on.

 

But by Monday I've gone back to dithering about whether I think peak energy is far more important than precious metal insurance against inflation. As a consequence my cash ISA is still deflating gently, rather than turned into energy shares or ETFs, and my 'spare' 10k is still in premium bonds (there's nothing premium about the ones I own ;-) & a weedy savings account rather than solid metal.

 

I'm destined to be eternally poor (and poorer by the inflationary minute), but I will at least know why I'm poor! That will no doubt be some comfort to me in my old age when I'm huddled around a candle made of worthless £20 notes, trying to stay warm. ;-)

 

Andrew McP

[Andrew McP]

Did you notice how silver 1kg bars went from about £301 to £316 on coininvestdirect tonight?

 

More importantly, why would anyone buy a product which has 17.5% VAT slapped on it? That seems like quite a dent in the investment.

 

Andrew McP

 

[wrongmove]

More importantly, why would anyone buy a product which has 17.5% VAT slapped on it? That seems like quite a dent in the investment.

 

Andrew McP

 

Is that on top of the 10% spread? That's an instant crash in value the second you purchase!

 

 

I guess the motivation for holding physical is more as an extreme insurance policy than as a way to make money.

[Andrew McP]

I guess the motivation for holding physical is more as an extreme insurance policy than as a way to make money.

 

Oh, I agree. My increasing goldbuggery is driven by pessimism rather than a desire to eventually buy a Ferrari with my small change. The worst case scenario is that I sink my savings into precious metals, the world economy breezes through the next decade thanks to sterling efforts by the economic tooth fairy, and I'm left with a fraction of my original stake. On the plus side, life goes on pretty much as normal.

 

I can think of worse fates. :-)

 

At the moment though I feel like someone without contents insurance. Maybe I won't get burgled by the inflationary thieves, but when I look out of the window all I see are governments in stripy shirts with bags marked 'swag' lining up to have a go once it gets dark enough.

 

Andrew McP

[wrongmove]

Oh, I agree. My increasing goldbuggery is driven by pessimism rather than a desire to eventually buy a Ferrari with my small change. The worst case scenario is that I sink my savings into precious metals, the world economy breezes through the next decade thanks to sterling efforts by the economic tooth fairy, and I'm left with a fraction of my original stake. On the plus side, life goes on pretty much as normal.

 

I can think of worse fates. :-)

 

At the moment though I feel like someone without contents insurance. Maybe I won't get burgled by the inflationary thieves, but when I look out of the window all I see are governments in stripy shirts with bags marked 'swag' lining up to have a go once it gets dark enough.

 

Andrew McP

 

Why not just sink a percentage of your savings into PMs? (I don't think PM stands for Peace of Mind at the moment). If an insurance policy actually costs your entire net worth, it is not a very good one........ What's left to insure?

 

 

 

 

 

 

[Steve Netwriter]

Franklin Sanders: Paper prices no longer rule the precious metals markets

Submitted by cpowell on Sat, 2008-08-16

http://www.gata.org/node/6492

 

Bottom line: Silver and gold remain in a powerful bull market with another seven or more years to run. The bull market is handing you a gift: Buy. The bottom was probably seen today, but recovery will take a while. The dollar rally may carry to 82 but will peter out in three months at most, probably sooner. Stocks may reach 12,500 but will come down hard thereafter.

 

On this day in 1971 President Nixon announced a 90-day freeze on wages, prices, and rents, and formally reneged, welshed, and repudiated any promise to pay gold for U.S. dollars, even to foreigners. Nixon broke the dollar's -- and the world's -- last link with monetary morality and set the whole world afloat on a sea of paper money and floating exchange rates. Tricky Dick did some bad things, but of all he did, this did the most damage.

 

[wrongmove]

From the link posted by Steve:

 

"Either This Is the Greatest Silver- and Gold-Buying Opportunity of All Time, or the End of a Bull Market

 

By Franklin Sanders

Goldprice.org

Friday, August 15, 2008

 

http://goldprice.org/silver-and-gold-prices/

 

Twenty-eight years of brokering silver and gold have not prepared me for what I met this morning.

 

One of my wholesalers said he was not selling anything, only buying, until further notice.

 

Another refused to give any prices until he adjusted his spreads.

 

Another was spreading one-ounce gold coins, normally at $7-$8, at $25.

 

Another said he was making no sales for immediate delivery or deferred payment, only sales for 30 days' delivery paid at once. ......"

 

 

 

The first bit seems to backup my post earlier about why physical seems to have diverged:

 

So another interpretation is that the dealers are simply not letting you buy this dip (if that is what it is). Heads they win, tails you lose. But they are dealers, not charities, of course.

 

The next few days or weeks should reveal what is really going on.

 

 

 

 

 

 

[wren]

Has anyone lost their belief in the gold bull and planning to sell out, or are you confident that this is just a temporary drop in price with much higher prices to come?

I haven't sold a single gramme, and I have no plans to.

 

This quote from me back in about late Feb at hpc, reminds me of the saying "be careful what you wish for: you might get it".

 

I'd like a nice big bear trap this year. One where the baby bears whimper and look, aghast and with horror in their eyes, down into the pit where the all the mummy and daddy bears have fallen.

Luckily I delayed spending my cash allocation for silver. Soon it will be spent though.

[Bobsta]

More importantly, why would anyone buy a product which has 17.5% VAT slapped on it? That seems like quite a dent in the investment.

 

I have thought this in the past. But since the re-sale value of the coin also contains VAT, is it really much of an issue?

 

I remember as a child being at Southampton Boat Show and hearing an adult say "I'm not going to buy that new boat. I'll buy it second-hand and save the VAT" ... so as a kid I somehow thought that new things all cost 15% more (now 17.5%) than second-hand things.

 

However, clearly that's not the case. Most items depreciate, all by varying amounts. A handful of items appreciate - usuaully those in short supply or those in which the new price keeps rising. But VAT pays no part in resale values.

 

So, yep, it's slightly annoying to know that because you live in the UK you pay VAT on something that others don't. But if you sell it to someone else in the UK, does it really matter?

 

[Pixel8r]

I am selling gold.

 

.............to buy silver. This is the leverage buying that Goldfinger referred to a while back. Silver is too cheap in relation to gold at the moment IMHO.

 

Ditto have done the same and agree completely. Silver is way too cheap at the moment, 62:1.

[wren]

I have thought this in the past. But since the re-sale value of the coin also contains VAT, is it really much of an issue?

But the VAT you payed is money lost to you (and gone to the tax man). The dealer when buying back does not pay you back the VAT.

[Pixel8r]

Wag the Dog

 

How To Conceal Massive Economic Collapse

 

By Ellen Brown

 

“I’m in show business, why come to me?”

“War is show business, that’s why we’re here.”

– “Wag the Dog” (1997 film)

 

16/08/08 "ICH" --- Last week, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?

 

It hardly took psychic powers to see that the Plunge Protection Team had come to the rescue. Formally known as the President’s Working Group on Financial Markets, the PPT was once concealed and its very existence denied as if it were a matter of strict national security. But the PPT has now come out of the closet. What was once a legally questionable “manipulator” of markets has become a sanctioned stabilizer and protector of markets. The new tone was set in January 2008, when global markets took their worst tumble since September 11, 2001. Senator Hillary Clinton said in a statement reported by the State News Service:

 

“I think it’s imperative that the following step be taken. The President should have already and should do so very quickly, convene the President’s Working Group on Financial Markets. That’s something that he can ask the Secretary of the Treasury to do. . . . This has to be coordinated across markets with the regulators here and obviously with regulators and central banks around the world.” 1

 

The mystery over what was going on with the dollar the first week in August was solved by James Turk, founder of GoldMoney, who wrote on August 7:

 

“[T]he banking problems in the United States continue to mount, while the federal government’s deficit continues to soar out of control. . . . So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. Central banks have propped up the dollar, and here’s the proof.

 

“When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly.

 

“On July 16, 2008 . . . , the Federal Reserve reported holding $2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. . . . So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others.”

[electroweak]

Very much time for an update..

 

BV stats:

Jan 1st:

London New York Zurich

1,119.309 100.759 3,686.673

 

Update, Jan 17th:

London New York Zurich Dollars Euros Pounds

1,193.979 100.759 3,841.605 9,259,658.19 3,326,113.76 8,296,953.72

 

Jan 19th:

1,193.979 100.759 3,953.144 6,114,258.22 3,483,138.65 8,242,350.35

 

Jan 23rd:

1,231.226 100.759 4,025.662 13,800,959.78 3,853,177.40 7,832,031.98

 

Jan 25th:

1,231.226 100.759 4,329.463 7,327,180.47 3,924,654.15 7,009,863.09

 

Feb 8th:

1,305.945 100.759 4,501.463 6,951,230.00 3,892,929.64 6,811,793.14

 

March 31st:

1,492.919 125.763 5,208.692 8,172,452.99 4,130,662.05 7,980,284.95

 

April 11th:

London New York Zurich Dollars Euros Pounds

1,517.845 125.763 5,109.531 9,425,495.90 4,748,511.67 8,012,199.89

 

April 28th:

London New York Zurich Dollars Euros Pounds

1,604.920 125.763 5,309.789 7,701,088.23 2,913,938.08 7,941,712.42

 

May 9th:

London New York Zurich Dollars Euros Pounds

1,604.920 138.264 5,372.568 7,220,343.22 3,329,552.85 7,776,096.24

 

June 18th:

London New York Zurich Dollars Euros Pounds

1,754.442 138.263 5,647.962 7,951,632.60 3,126,505.00 5,920,794.81

 

 

And now:

August 15th:

London New York Zurich Dollars Euros Pounds

1,916.722 163.207 6,321.627 7,415,656.64 3,837,764.87 6,780,169.82

so ~10% more gold in London, +20% in NY, and +15% in Zurich.

USD and GBP stocks up, EURO halved.

[HPCsoYESTERDAY]

But the VAT you payed is money lost to you (and gone to the tax man). The dealer when buying back does not pay you back the VAT.

 

This issue about VAT on silver is a red-herring imo. OK, if you can save a bit by getting the coins delivered to a non-uk address, then there is definitely a saving. But, this is why I think it's a red hering:

 

Both examples apply to today

 

PURCHASE - 20 x 2008 eagles @ 10.36 = 207.20

http://www.coininvestdirect.com/main.php?a=11&id=229

 

SELL - 20 x 2002 eagles @ £230.02

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?Vie...6795%26_fvi%3D1

 

OK not exactly like for like (diff. years) but you get the picture (p&p costs cancel each other out)

 

update - knock off 5% SALE VALUE for ebay fees + another 5% for paypal, but this is not mandatory of course.

[HPCsoYESTERDAY]

More importantly, why would anyone buy a product which has 17.5% VAT slapped on it? That seems like quite a dent in the investment.

 

Andrew McP

 

Is that on top of the 10% spread? That's an instant crash in value the second you purchase!

 

 

I guess the motivation for holding physical is more as an extreme insurance policy than as a way to make money.

 

please see above example

[wren]

This issue about VAT on silver is a red-herring imo. OK, if you can save a bit by getting the coins delivered to a non-uk address, then there is definitely a saving. But, this is why I think it's a red hering:

 

Both examples apply to today

 

PURCHASE - 20 x 2008 eagles @ 10.36 = 207.20

http://www.coininvestdirect.com/main.php?a=11&id=229

 

SELL - 20 x 2002 eagles @ £230.02

http://cgi.ebay.co.uk/ws/eBayISAPI.dll?Vie...6795%26_fvi%3D1

 

OK not exactly like for like (diff. years) but you get the picture (p&p costs cancel each other out)

 

update - knock off 5% SALE VALUE for ebay fees + another 5% for paypal, but this is not mandatory of course.

I wouldn't let VAT put people off investing in silver, so long as they (like me) believe that it has great gains to come in future years. But I just wanted to clarify that the VAT is indeed money gone to the tax man.

 

But having said that, your buy and sell examples aren't very comparable.

 

How much does CoinInvestDirect buy for? That would give us a direct comparison.

 

VAT is one reason why I favour VAT-free allocated silver. But convenience and security are other bigger reasons for me.