Silver Lease Rates are Negative again.

You're really asking where is the evidence herein that indicates some thought silver would be dropping? Okay, I'll admit I'm often not the sharpest tool in the shed, but in post #9, it was said silver would "most likely" drop and before February 29th. Call me crazy, but that would seem to indicate some were claiming silver was going to drop.

I'm not sure of the reason for your blatantly condescending remarks in the second paragraph, but suffice it to say I'd be willing to wager you probably don't have any Dale Carnegie books in your den. I would have 2 suggestions for you: first, get away from your computer for a while and second, take a nice vacation to clear your head.

 

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Where on the first page? In the context of what was asked, this was not stated. Banks don't lease gold & silver at below cost, this doesn't make sense. What banks do you know about, holds gold & silver as an asset? I'd like to see how it's listed on their balance sheets. I'd like to see how they list losses related to gold & silver leasing.

Why so serious? You don't consider investing money serious business? I do. I assume however that it really doesn't matter since it seems that you don't really have any interest in discussing the subject anyway.

 

You said... However, some were claiming silver was going to begin a decline at that time, due to various theories and their perception of reality...." The party you are quoting offered up an opinion they thought it would drop. We get opinions like this all the time. You said that you thought it was humorous and implied they were delusional. (reality comments)

This is your right I guess, but if you are now saying it was just a harmless observation, then so be it. I can accept that. I too laugh all the time at the predictions of $50 silver, $100 silver, so forth and so on. Predictions that are nothing but opinion since there isn't a logical discussion behind it. I don't mind. However it would seem to have nothing to do with this topic as this wasn't the question asked.

If you consider my remarks condescending in that previous post, I will remind you that it was you who created the post simply to discredit people that you disagree with as you are attempting to do now by asking what books I read and telling me that I need a vacation. This is the tactic that people take who don't have a logical argument for the point the hold. Sorry son, no cigar on that one. You should try to actually address the topic at hand instead of this nonsense.

 

Post #3: "Yes. It's a sign that another bankster hit is coming."

Post #4: "I guess lowering margin requirements wasn't good enough to sucker more speculative longs into the silver market before they smack it down again"
Post #9: "[So the price of silver is going to drop?] Most likely. And before February 29th"
Post #18: "There were two very significant spikes (more negative) which the banksters used to knock down the price of gold in December. IMO the central banks should not be allowed to lease the people's gold for negative interest rates as the only reason for doing it is to suppress the gold prices. It appears they are going to try the same tactics on Silver now"
​

"Below cost"? You're not understanding the basics and you think gold & silver is not an asset. Are you really suggesting that some banks do not hold gold & silver as an asset? I explained it as simply as possible, but here's a description: Banks make money from money, lending it, investing it, and so on. If the bank is running low on cash reserves for their needs, they can lease out gold/silver to boost their cash reserves. The negative rate is because demand for borrowing is low, so if they can make 5% lending money out and pay 1.3% to get that cash by leasing gold/silver, it's still a win if they don't expect to make money otherwise from the gold/silver. Simple.

Even kitco talks about it:
"The degree to which lease rates may be displayed as negative would suggest the degree to which there is a lack of demand to borrow the metal." (http://www.kitco.com/market/LFrate.html)

It was a response to you making a snide comment to someone saying "it's funny that..." Nothing to do with money being "sireoz biznaz".

Immediately rejecting a response that might possibly contradict your position is exactly what you referred to as a "defense mechanism" you said. "You may wish to investigate this".

 

Just because the assets are paper/electronic doens't mean somebody can't buy them all up. Now if you contend that there are naked contracts that will continue to be created to vacuously modify the existing supply then I would agree with you that the market can avoid being cornered, but that doesn't mean it can't be cornered, only that it has the ability to sidestep being cornered through subversion. I agree with you that cornering a market is a bad thing, but it's not as bad as exerting control over another individual telling them what they can and can't do with their own free will. If it can be built into the market to avoid being cornered somehow without infringing on that then I'm all for it, but not at the expense of pseudo assets.

I can't answer your other questions, I'm not a producer, but some of them are indeed holding their profits in silver. Since silver is 10+ times more rare than gold above ground, and only 7 times more abundant beneath the ground, and the most useful metal in the world that cannot be substituted without loss of quality, there's no logical reason it should be 50 times less valuable than gold. I would be willing to entertain any reasoning to the contrary if any exists. I can only guess that the producers who aren't holding silver inventory as part of their profits are unaware of the market machinations and the dwindling supply. If everybody who was being robbed knew it they'd probably do something about it, but obviously not everybody does, and a lot of the major players hedge through the futures market anyway to profit solely from their buy/sell spread and don't care what the spot price is since it cancels out.

 

I'll gladly sell you all my silver for just half of your estimate of actual worth - you'll double your profit.

 

I would guess its 50 times less valuable since far fewer people want it. Most human beings have no desire at all to own silver, contrary to what most of this board believes. They simply do not want it, care for it, or give a rip. Gold is bolstered both by its reputation for jewelry, (try giving your fiance a silver ring), store of value demand, as well as some cultural traditions.

As for not being substitutible, EVERY product on earth is substitutable at a certain price. Its how economics works. Silver is not immune. Look at all of the products that were coming out on the market a few years ago with traces of silver. Where are they now? Silver is an excellent metal, yes, but in almost no application is it not substitutable at some price point. If you have sustained $100 an ounce silver you will see dramatic changes in industrial demand, even more if its higher. We have not seen sustained prices like that, but I am sure that if we see a sustained price you will see industrial demand tank.

As far as producers being stupid, I have met some of the managers of sales at these firms, and they are as bright as they come and very aware of evey aspect of their market. I seriously doubt they are being dumb on how they market their production.

 

Dear Heart. If you are going to quote something that you seem to know nothing about, then you should at least try and do the reasearch. This is direct from the Kitco Glossary

Kitco Glossary: Lease Rates

The lease rate is the cost of borrowing gold. In much the same way that individuals borrow dollars, pay an interest charge, and then return dollars to the lendor, gold bullion participants will borrow ozs of gold, pay a borrowing cost, and return the ozs of gold to the lendor. The debt is measured in terms of ozs as opposed to dollars. The value of the metal when it is being borrowed or returned is not a factor. The central banks are the main lendors of gold and the borrowers are the larger industry participants. The lending and borrowing of gold is pretty much reserved for bullion bankers, mining companies, and jewelry manufacturers. You can ask your bank manager to lend you 10 ozs of gold, but you would almost certainly draw a confused look on his face.

There are two factors that determine the going lease rate which is determined by market forces alone. One is the difference in demand between gold for immediate physical delivery ( spot ) and gold contracts for later delivery ( futures ) . The other being the current interest rates for borrowing $US dollars...... ​

:too-funny:

Obviously you had no idea what you were talking about. I don't usually cite other web sites to argue for me, but since you have established that Kitco is a definitive source, then so be it. It proves you wrong. Gold and Silver are not leased for dollars, they are leased for ounces. There is absolutely no vehicle for banks to raise cash reserves. Second, as stated in this definition it's affected by the price of gold in the futures market. i.e the Comex which is what we are discussing here.

My comments which you cherry picked of context, ignored that a bank hit did come, as stated, and that it wasn't successful at this time. I also said that usually this will go on for a while until one side gives up. If you are going to quote me, then make sure you get all of it. I won't persist that you prove this very common practice, as you state, that banks use gold & silver reserves to boost cash reserves by leasing. The kitco definition proves this absolutely wrong.

No where in this topic did I state that negative lease rates result in lower silver prices. What I did state was that it is an indication that attempt(s) will be made. I'm not foolish enough to predict success at it.

 

http://seekingalpha.com/article/314367-busting-the-myths-behind-the-gold-lease-rates

Don't be so quick. That definition isn't exhaustive anyway, proclaiming that "there is absolutely no vehicle for banks to raise cash reserves" is wrong.

 

Supply and demand is the bottom line, sure. However, we've already discussed why supply and demand is not accurate for the physical market. And yes, silver can be substituted, but not without loss of quality. It is unparalelled in that regard. I didn't say producers were stupid or dumb either. Everybody is ignorant to the things they are unaware of. It doesn't reflect on intelligence at all. Even the smartest person in the world can only process the information made available to them.

 

Not quick at all, bud. I used the source that you cited as proof that you knew what you were talking about. You can't have this both ways. If not, then you simply demonstrate that you have no credibility on the subject.

As I stated, I don't normally quote web sites to make my arguments for me but I'm glad to use ones that others carelessly bring in as an example. If you are now saying "never mind" on the Kitco site, and now have googled up something else for me to consider, sorry, I don't do the battle of the web links.

 

I stand by what I posted. Cheers.

 

I never said that you didn't. But since you can't prove any of it, and the proof you did supply directly contradicts that you posted, then one can only assume you were either arguing some opinion as fact, or you were posting simply to perform a hit job. (and you showed up with no bullets in the gun)

If you want to prove it, then show me a balance sheet. If you are correct, then this should be very easy to do.

 

I about fell out of my seat cracking up on that 1st part...then I fell out on the ribs part there after...

 

I posted what I did, with support, ignoring it does not mean it doesn't exist. You did not post anything to alter that, certainly nothing that contradicts. I stand by what I posted. You continue at this and you're just raving. Cheers.

 

On the earlier discussion on gold vs silver as industrial metals, I will point out that gold is used in electronics primarily as a plating for connectors. The reason for this is that it does not tarnish or corrode in air and there are no acceptable substitutes in the places where it's needed. Corrosion on a connector can cause high frequency low voltage circuits to fail because it increases resistance on the circuit. There is no acceptable substitute. Engineers have responding to the high cost of gold by designing out the need for connectors and/or using extremely small amounts of plating in critical places. Otherwise they use tin/lead, tin/silver where the environmental Nazi force it, or tin/something else alloys. For example, power circuits won't use any PMs at all.

 

Show me a balance sheet. That's all you need to do.

 

Again, are you suggesting banks don't have gold/silver reserves? Or that they just don't show them on their "balance sheet"?



http://www.marketwatch.com/story/ecb-balance-sheet-grows-gold-reserves-increase-2012-01-04
http://matrixsentry.wordpress.com/2...t-far-greater-than-the-feds-less-transparent/

I said, good day, sir!

 

Nope.

I asked you to show me a balance sheet at a bank where they indicate a loss due to leasing gold or silver at a negative rate in order to raise cash reserves. And since the subject is about lease rates as shown at Kitco, then also point out the correlation. You claim this is a common practice, so it should be easy to find at most any bank.

You continue to ignore this with nonsense as posted above.

 

Well I see silver being sold every day at a market clearing price close to the CME, so it does not appear to be out of balance. If it were, why is silver not $200 an ounce or more in a coin shop? Why do you say its not accurate?

Regarding substitutability, of course there would be a loss of quality. I experience a "loss of quality" every day I drive home in my Escalade and not a Ferrari F40. Technically silver is the best conductor, but how many silver wires do you have wiring your home? Technically a copper roof is superior to others, do you have a copper roof as well? Point is most things silver is in are applications that another metal can function, yes at a slight quality loss. Make up for using copper instead by making it a little larger. Copper has many similar functions to silver at 1/100th the cost.

I know you love silver, I do to. Silver and platinum have always been my favorite metals even as a kid. I just don't "kid" myself about the fact it could very well price itself out of many industrial applications if it goes much higher than today. Not much in life is irreplacable except for a good steak.

Chris