From a wall street perspective

100% agree!

 

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Bring problem is if there is such a sell off even gold or silver will also plunge due to weak consumer (jewelry) or industrial demand as people stock up on essentials.

 

The BIG money, and there's plenty of big money in Europe, will frantically try to preserve their buying power as the Euro and other currencies plunge against the dollar. I agree, Mom and Pop won't be buying any PM. Also, sovereigns like China, Russia, Turkey, etc., will smell opportunity and add to their stacks too.

Jewelry and industrial demand have nothing to do with it. The folks who should REALLY worry are shareholders in GLD and SLV - they can't deliver.

 

That's not true, they can deliver a fraction of what they say they have, and you need to be a custodian to take delivery.

 

It's always good to take in all kinds of info from all over. I don't agee with some of what's been posted but it pays to think about every outlook. in the end you have to be your own bank.

 

"...they can deliver a fraction of what they say they have..."

So would you settle for a fraction??

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Incredibly, even Paulson and Soros have bought into the Big Lie:

"Paulson & Co. upped its stake in the SPDR Gold Trust GLD +0.10% by 26% for the quarter ended in June, while Soros Fund Management LLC more than doubled its stake in the ETF, according to quarterly Securities and Exchange Commission (SEC) filings released late Tuesday." Look out below!

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This suggests the Big Money thinks gold is ready to surge. But what a risky way to play the trend!

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First of all "a fraction" is correct, but not in the way you intended. If anyone takes the time to read the prospectus of either the GLD or SLV Trust ( my emphasis) you would find that for a non-principle to take delivery of physical metal requires a huge amount of shares ( basket) to be tendered at one time and delivery fees are large and the process is not instantaneous, but requires forms, blah,blah, ~ so no one could get out fast. The principles ( large banks and hedge funds) can do so, as they financially back the trust with their cash/silver. The silver that back each share of SLV or gold that backs each share of GLD is not in any way attached to the shareholder's personal ownership except as collateral.
Anyone who thinks they are holding the rights to PM are mistaken because they did not read the prospectus.
To the retail shareholder ( you or me) that owns either SLV , GLD, or the options, the settlement is in cash ( unless you own enough to make a basket worth. If you want delivery of PM, get a contract for delivery and pay the full price, and you will get it at the specified expiration.

Then what is SLV or GLD good for? To be in the market on the commodity, and willing to take cash from any increase or lose on any downward movement. Many IRAs may not allow investments in silver or gold, but will in SLV or GLD or their options. Also for the high risk takers, options can leverage any increase or decrease in PM price for a certain period of time. Options can bet on an increase, a decrease, remaining within a channel , or predicting outside of a channel, etc. So they can accommodate any "flash" one gets in their head as to what the price will be 3 months from now. These funds have their places, but also their limits.

The risk would be the same as buying bullion at wholesale from a middleman. I suspect the 2 funds of Paulsen and Soros may be associated with a principle and thus at a different level than retail. They are balancing their risk/reward outlooks in a positive way for PM. I seriously doubt that if I can read the prospectus and know what is going on , that they haven't also, with much more knowledge to look for fault.

I currently hold no SLV or GLD.

Jim

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Does not every single share of SLV or GLD represent a bona-fide claim on a certain amount (however small) of silver or gold? If you say yes, then I would respond that these two ETFs operate on the same fractional-reserve system as a bank, and that any shareholder "run" of more than the reserve coverage would cause the ETF to become insolvent. If you say no, then I contend the ETFs are an exceedingly high-risk proposition. In either case, under sudden and unfavorable market conditions, you lose.

 

Not directly unless you have more than 45,000-50,000 shares of SLV to exchange or are an approved participant such as JPMorgan, etc. which I doubt you are , and neither am I . Less than that, you indirectly have the silver backing giving the trust the ability to pay you cash. It is all spelled out in the prospectus, and ignorance of such for an investor in the trust gives no protection.

If you have physical in your hand , you Lose also ( on Paper). If you say , I will hold until it comes back, the same is true on paper for SLV, it is a share, hold as long as you want. It is a trust, not a holding fund. If things do go to -0- for silver, then the supporting banks will be very happy to pay -0- for the shares, as they still have the physical. All there has to be is enough USD in the capital holders to pay off the shares if people turn them in, and the Trust requires there is more than sufficient, according to the SEC reports. The risk isn't with the Trusts, it is with the action of the commodity. It is a cash play for retail investors, who want the cash from increased price sells.

With physical in hand, it can be stolen, expensive to store, slow to exchanged when necessary, and also carries a buy/sell/transport premium.

With SLV, it is recorded in many places, almost no expense to store, except trust fees, can be sold in seconds.

IMO.

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Certainly few of our members have the favorable confluence of "physical" factors that I do; consider:

1. My two $33/year safety deposit boxes will hold all the PM I am ever likely to own.

2. The bank is directly across the street from a whopping-big coin shop who is the PM market-maker in this area, open 6 days a week.

3. For purchases over $5K, they will send a go-fer over with check in hand to pick up the PM, and two minutes later, the check's in my account.

So my outlook on the "physical" is a little different.

 

Glad you have an arrangement you like and trust.

Jim

 

For peacepeople and desertgem and a few other good-natured skeptics, here is an excerpt from Friday's commentary by Bill Holter of Miles-Franklin bullion brokers:

"...All that is needed is just one billionaire to place an order on the COMEX for Silver and POOF...it's all over! Seriously, this is true, just a single $1 billion order would basically wipe out ALL deliverable silver held at the COMEX. Not only that, I suspect that if a huge order came through (which is discouraged by position limits on the long side), much of the supposed "deliverable" silver would change categories or even evaporate prior to being delivered. Think about how small $1 billion is. It is equal to roughly a mere 8 hours time of which our government borrows 24/7. It is like going to bed and getting a good 8 hours of sleep...wake up and we borrowed another $1 billion. Only in this case, once this market gets broken and trust me, $1 billion will do it, we will go to sleep, wake up, and no silver will be available.

Putting the gold market aside, what really will happen when the COMEX silver pit gets broken and cannot make delivery? Obviously, the price of silver will rise. It will rise because the shorts will get scared and buy, the specs will get greedy and buy BUT, the real catalyst will be sellers, or lack of! When sellers, whether they be paper or physical, get a whiff of this, they will pull their offers and create an upside air pocket where anyone who wants in...will have to do so at much higher prices. The physical sellers will probably go into TOTAL hibernation for a spell where they will not accept any amount of fiat paper until they can "trust" what it is that they are getting in return of sale. A busted silver market will spill over into everything. This one "little white lie" will expose many and far larger lies up to and including the fact that the entire system is a Ponzi scheme. It is really this simple, Silver CANNOT be allowed to be "outed" because it will expose everything else, so don't hold your breath for a miraculous CFTC ruling, failure to deliver WILL be the catalyst..."

GLD, SLV, and COMEX are fragile, manipulated, regulators-be-damned entities.

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Hmm, So silver is a relatively small market that a few Billionaire's could control?
Does this sound familiar to anyone? It's hazy, but something reminds me of some Good Ol' boys from Texas I think.

I do remember some high prices in silver, but the other stuff, you speak of, not so much. I do not remember any Ponzi schemes being exposed. Nope, just high silver prices. I do remember plenty of Physical Sellers though. I remember waiting in long lines, because they were giving away a lot of money for some shiny stuff I had no use for. They were give away something like $180 an oz when converted to 2012 dollars. WOW I am sure glad I sold everything.

It has been a long time since then, I wonder why no one else has tried that? oh yeah, now I remember, they went broke.

 

I am sure a well meaning simplistic idea of how markets operate. The silver market is similar to the the stock market in that orders are bid/ask operations, just as the bullion brokers are. The price one sees on bullion boards are often just the ask price ( what you would pay to get it), but they usually don't show the interests ( how many contracts are offered at that price). It may be 10 or may be 500, but it isn't infinite. You put in a billion dollar order, you will get the number of contracts available ( open interest) at that price, and that is it, unless more decide to open up to take your bid. If one is foolish enough to put in a 1B$ order at market ( at anyones offered price !!!) , they may get their first level at their opening bid, but then the market will pop up the next level and they will pay more, and so on, Computers are fast to catch this and the bidder will be paying outrageous prices for the contracts within a few minutes. That is why when large buyers want a large amount, they arrange private deals , where a set price is indicated and agreed upon. No way his scenario would work~ just a scare tactic.

I am sure if the CME read the article mentioned they blew coffee through their noses

Jim

 

For mikem2000, there is ABSOLUTELY no connection between the Hunt Brothers and the points cussed and discussed in the Miles-Franklin article. None.

Nor is SLV the "silver market." It's merely one place to trade silver, PAPER silver that is, and if you charted SLV prices against the spot market, you would find a lot of divergences difficult to explain. Numerous times since 2007, the number of open [long] contracts has exceeded the entire worldwide annual production of silver...

We'll see.

You are whistling past the graveyard if you think GLD and SLV are safe investment vehicles.

 

I think you are over applying the skeptic thing, since you originally said they can't deliver and some folks are just saying that yes they can deliver some of the metal, just not all of it. Absolutes make all the difference, but yeah things like MF Global happen when the squeeze is on. While I do agree with your post I do not feel that any of this is unique to the COMEX or paper metals. This is just how things are done in today's marketplace, and metals happen to be one of the few things you can't grow more of.

Here is an article you may find interesting about primary vs. non-primary silver mines, and how for silver to be mined as a byproduct indicates that it is undervalued otherwise it would be the primary product. I will defer to the article for quantification of this statement. It's all there.

http://www.gold-eagle.com/editorials_08/nielson021411.html

/eoThreadDrift

 

From a wall street perspective q silver august 20th

since the original post last week a few things have changed:

Gold: Not much price wise, it has been and will contiue to be in its own world as it is still the currency of choice
option vol still not getting off the mat with short dated 10 day stuff at 11-12 vol
one month stuff around 13 vol still way cheap historically

silver: Today we fianlly broke thru the 28.33 level, vol may have bottomed at 19 on friday as it looks like many option players were in slv options not the futures, we do every type know to man in many different countries, at the eruopenan close silver was knocking on that ceiling level of 28.33, finallypunched it thru (it only took 110.00 up move in platinum to get somebody to buy). 27.76 will now become key support and the "higher powere will try to push it back down.

As stated last week platinum was way too low at 230 discount to gold ie 1390. I like it still but in a market run by machines 100.00 in three days one must take. The silver gold ratio is slowly continuing to bottom at 58:1.

Those who watch every tick may have noticed that over the past 3 days platinum is up 100 plus dollars vols have spike from 17 to 26 surprise surprise
machines (algos) got smoked!!!!!! One for the good guys (the thinkers, the qualitative traders, the coin investors, the physiscal guys)

algos had large long gold short silver and paltinum positions which they are covering out of now

nerves: You have to have a decent bank roll and large kahones to be long the stock market up here

much talk as we hear about silver and gold being bubbles i hate to sound like a broken record, but they have thousand of years of time on there side

if.......i'll say when the stock market has a severe nose dive very soon, that will be the true test for gold silver and platinum, will they be able to have steady dasy with the sp down 30-40 points, its coming withing the next ten days, there are simply too many longs in the stock market and vol (the vix is too low) europe is not fixed, the us is not fixed, now that people are aware of the ongoing problems in za, those are not going away either, the unions down there are literally fighting and killing each other to work

with plat at this low of a price production is being cut, we will look back on these dasy in a year and say remeber when pl was 1390, remember when silver was 27

i never thought id say this but the lastthing that needs to push up to complete the pm up move si gold need to close above or in the 1633 to 1641 area and hold, silver needs to hold lets just say 28.40 and platinum need to keep within 150 of gold

the wildcard is copper.............with brent at 113 and all the pm's pushing upper bounds of there rranges copper at 3.38 is absurdly low............i know the economy sucks balah blah blah but if apple can be an all time best stock market cap ever 3.38 copper is a steal.................

The intriguing thing is you have had this push comes to metals last, when they have been the leaders for years...........
Silver closed 2011 at 27.91..............its only up 2% after todays move.......................the sp 500 is up 13 %

i dont talk about things unless i am doing them

pl worked if you did it too take your 100 bucks and wait

silver i have to say i wstill own calls as they are rediculously cheap slightly upside 7 week calls cost you 75 cents, we all know when silver get going 75 can happen in minuted much less seven weeks

as for the comex stocks and slv and gld

yes if a multi billion dollar fund or individual wanted to challenge the comex they could do it in theory, i dont think the comex would let there stocks go to zero
they would think of some crafty way to limit position exercises

also i have exercised before and had the bar delivered to chicago its cost about 200.00 plus about 12-24 hours of bs paperwork
but the 200.00 is a tiny premium to pay ofr 5000 oz

the majority, 96% of futures to be excact are not exercised, id love to see somebody challenge the comex and buy 2 bill os silver and have the stocks sheet say zero one day..........may happen...............likelyhood ...................very small.........

You want something with low stocks....................check the comex for paltinum stocks....................... Only need about 75 million to clear that out, now that is doable by many individuals

kinda rambling anyway there is my monday report

synopsis:
Pm's are pushing up, but they need to hold most of these gains to get more peopl involved

if you know about options, i cant stress this enough vol is rediuculously cheap, buying calls gives you a lot more power than buying american silver eagles at 8.00 over no offensive to the ase

also slv and gld are fully backed by physical metal....................if you read the fine print this portfolio may include items that replicate the performance of physical metal................... Ie they buy futures...........................if the comex has what they say tey do and slv has what they say they do in white metal then there is a major shortage.............they will never admit it because it the same guys playing the same game

fyi only
happy trade go pm's

and for disclosure for those who wonder about my physical holdings i just bought 1000 panama 1/2 balboas, and 30 1960's canadian proof sets, and my wife got me a 10 oz lunar dragon from down unda

best wishes.
Sincerely
qsilver007

 

Question, why panama 1/2 balboas silver .3617 ASW coins? They do look cool. Where can one buy that many at one time?

 

You can find them in ebay or even few dealr like Apmex ocassionaly sell them, Panama even has a Platinum issue (150 Balboas 1976) you can typically grab at or below spot price.

 

Thank you for the Monday news qsilver007. I'm wondering what caused the little uptick today? Or maybe it's just been overdue.