Wow. PM prices decreasing dramatically.

Don't get mad Peace, get even. Get in the fight, if you disagree with any of my points, pick one and show me how I am wrong. Just don't pick what I said about there only being a few stackers left, that was obviously a joke.

 

Log in or Sign up to hide this ad.

The price of silver won't make it over $29 lately, but there is still more demand out there for physical silver then there is supply.
http://numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=26617

 

No shortage, apparently

I don't distrust Kitco
http://silverinvestingnews.com/1600...coeur-dalene-fresnillo-kghm-polska-miedz.html

"Li confirmed that the silver market is still in surplus. Investors have been absorbing the surplus metal, but, she added, there is no real shortage of metal in this market.
As miners report their fourth-quarter and 2012 year-end results, many are also issuing 2013 forecasts. A review of these announcements reveals that many companies not only experienced growth last year, but also expect further production increases this year; they plan to do their part to keep the silver market well supplied in 2013."

 

Short term this ALWAYS happens. What is happening is dealers and sellers expect it to go back up. So they are holding supply. This has happened on every pm decrease i have ever seen for the last 35 years. Either pm will go back up and dealers and sellers will again sell, or it stays down and after a while cash flow forces dealers and sellers to sell at the new lower price. Same storied repeated over and over. If anything, i would been shocked if this hadn't happened this time.

Therefor, i find nothing really noteworthy about it. Its expected. Heck, i wrote here about it over a year ago.

If 8 months to a year from now there is still such a physical shortage that would be more telling, but not short term. Short term is basically dealers not wishing to sell at what they view as a short term low.

 

From the Numismaster article: "I anticipate that delivery delays will continue to stretch out into the future and that premiums in the coming weeks will continue rising."

I do too. Because as Ag price declines, coin dealers will "charge more." Silver has already fallen ~-17% over the last 17 months. More? We shall see.
Retail premiums must rise in a falling PM market, I suppose. Dealers need a cushion, and they'll push it.

 

I agree sir. They will push it and try to prevent "taking a loss" as long as they can. Before the internet dealers could get away with this longer. Today with internet competition i could see the breaking of this mentality sooner than previously. The dealers cannot stop new pm from hitting the market at normal premiums forever.

Btw, this action by physical dealers is a huge reason paper markets were invented. Purely physical markets are very inefficient.

 

One method of measuring debt. Expressing it as a function in relation to other variables can be purposeful and it can also be misleading.

In this case, for example, when GDP plummets (as in 2008-09) the debt/GDP ratio skyrockets even if no additional debt is undertaken. A cursory glance at such a chart could be very misleading.

 

Evidently not enough to make the price go up.
​

 

Doesn't the stronger dollar have a lot to do with it ?

 

The stronger dollar is what is driving prices down I think. The dollar is stronger lately, and that makes precious metal prices go down.

 

Look at it this way. 90% of market volume is not representative of an actual market participant's sentiment.

 

I was referring to equities. Do you really believe these markets can survive without QE and ZIRP? The Fed's primary dealers are the subsequent investors, and the Fed money they receive via SOMA or whatever mechanism is not earned from profit. And would you look at that, all time highs in those markets. It can't be a ponzi scheme though.

This doesn't even touch on derivatives which are nothing more than bets in the casino that take wealth from the heart of the economy.

 

Which is because the price is determined by paper contracts that are only 2% backed by physical. 98% of the traded supply is artificial. I think you know this as you have educated me before. I'm not sure why the selective memory.

 

Ok, i do not disagree. However, this is true of basically every financial market, and has been for a long time. They may not represent their sentiment, but its their money, and does change the prices.

 

Again, paper contracts are generally on margin ( the reason there are so many and produces distorted numbers such as the 98% )because they are NOT backed by physical gold UNLESS they are switched to a physical delivery within the time allowance by paying the full price of a contract. These fully paid 'paper contracts' are backed by basically 100% gold if held until the contract date.

The margined non-delivery contracts, are paper contracts based on paper. They do not have any gold backing other than they will increase or decrease in 'paper' money payout when traded. On those ( the vast majority of contracts) are paper bets on paper assets , and not physical gold except as the movement.

Physical delivery contracts can also be traded, but the contract value will reflect the current ( spot or exchange basis) value of gold and transaction is in paper money. If carried to the end of the period, the owner will get the gold. These contracts are usually industrial or for ETFs that may need to adjust their assets. Paper contracts do not influence the spot price of gold, the spot price of gold influences the buy/sell/trade of the paper contracts, unless people see a big change ( such as a sell off in ETF shares) as a predictor of spot pricing, spot should be unchanged, because if the holder of ETF shares is Mr. General public, the transaction results in 'paper' dollars exchange and NOT physical gold exchange ( only for the partners or basket eligible holder. So if the physical price of PM changes due to ratio of ETF shares, it is because the general PUBLIC thinks that the price is going down, and sells their physical or stackers count their spare change and get ready to buy more. There is a paper game and a physical game. The paper game can only influence the perceptions held by physical holders ( up or down), it can not change the physical game, only the buy or sell of physical should change it.

So to stand by my point, If no one buys or sell physical gold outside of a small range, the price should be stable. Demand by buying and selling physical is what moves gold ( whether or not is is influenced by paper transactions or bullion blogs).

There could be thousands or millions of paper contracts each day, and in the end , they all cancel out as each is a paper buy/sell transaction resulting in paper money transfers. If some entity sells 3 tons of gold at decreasing levels until done, it will greatly move the days level.

Imo.
Jim

 

Look at it this way, I have heard you mention the flash crash of proof of HFT skewing the market. I submit that it is actually proof of the opposite. Of course it can lead to short term blips, but the flash crash was the most dramatic of these blips. Now do you think the flash crash has any effect what so ever of the current market prices. Of course not, all those blips get evened out.

 

Yes, I really believe these markets can survive without QE or ZIRP. Removing these would certainly put downward pressure on the market, but their survival is not even a question. Equities are now trading at historically below average multiples and there are records amount of cash on the books. They will survive

Face the facts, equities are on sale and PM's are trading at a premium.

As far as the Ponzi scheme, believe what you wish.

And finally, you last statement about derivatives, it is just not based on logic.

 

So because we had a flash crash but markets are still functioning that is proof that HFT leads to accurate price discovery? Nonsense.

 

My fault. I assumed you knew what derivatives were, which is a bet that the price of something will go up or down based on an unknowable number of degrees of separation from that something, each with compounding counter party risk, and all backed by the same underlying asset. It's known as rehypothecation, and it happens in London infinitely.

 

That is not what I said, Yes or No question. Do you believe the flash crash had any effect at all on on current day equity prices?