Posted on 11/05/2014 3:05:13 PM PST by blam
Tyler Durden
11/05/2014
When it comes to buyers of physical assets as opposed to traders of paper representations of such assets, there is one key difference: the latter, more than anything, enjoy looking at "heatmaps", chasing trends and jumping on momentum, the result being the most recent massive selloff in such "paper" representations of precious metals as the GLD and SLV ETFs, and various gold futures.
On the other hand, those who prefer to hold the metal in their hands, as well as others such as China whose ravenous apetite for gold over the past 4 years has been extensively covered here in the past, take every advantage of selloffs, and - inconceivably - demonstrate how Econ 101, namely supply and demand, really works, leading to ever greater demand the lower the price. Demand so high, in fact, that the underlying commodity that is being sold through paper conduits, sells out.
This is precisely what happened at the U.S. Mint, which just sold out of all silver American Eagle silver bullion coins, following "tremendous" demand in the past several weeks, according to Reuters reports.
This should hardly come as a surprise: over the weekend we reported that "Silver Coin Sales At US Mint Soar To Highest In Two Years."
Sales surged to 5.79 million ounces, the most since January 2013, the month that set an all-time high at 7.5 million, Bloomberg reports. "Today, sales jumped 33 percent in one of the busiest times this year", Tom Jurkowsky, a spokesman at the Washington-based mint, said in an interview. Last month’s total was 4.14 million.
(snip)
(Excerpt) Read more at zerohedge.com ...
Paper gold is only worth the paper it is written on. What would happen if everyone demanded physical delivery?
Goldbug ping.
What does BFL mean?
BFL means Bump For Later.
A reminder to read the post or the replies at a later time.
The only factor you left out is that every other currency is a piece of crap!
The owning of gold has its merits but at the same time, you are only one gun up your nose away from possibly losing it all.
I realize that GLD paper is just the “promise” of the gold. It is used by me to hedge against a loss of capital when inflation kicks up.
I grew up among relatives from Germany who told me about the 1923 hyperinflation. One gave me a 50.000 mark note which I still have along with German postage overstamped `250 Tausend’ & `3 Millionen’, etc.
I’ve read a lot about 1923 since then & I wonder if that could ever happen here, or were the circumstances post-1918 unique to the German economy with reparations & forfeiture of gold reserves?
Meanwhile the Reichsbank printed money like no tomorrow until rational minds created the Rentenmark & the currency mostly stabilized by 1925 or so.
The only American counterpart has to have been the devaluation & ultimate worthlessness of Confederate currency & bond issues.
Actually worse on a pct basis than the hyperinflation of Weimar was the hyperinflation in Yugoslavia in 1993. If “recency” counts for anything.
A person can choose a collection of facts and further choose to align them in a way that tells a story of sorts. I am not confident that anyone can depict the nature of events that would obtain were the US to enter a phase of total chaos like 1921-1923 Germany.
Under the topic of “nobody can predict the future”, there is no doubt that the Fed has created a lot of money over the past half dozen years, but it is in large part accounted for. One school of thought says gold’s runup to $1900 anticipated what the Fed/Tsy has/have done.
Other than the “gun” thing, forget not that if gold really did what the bugs say it might, then an ounce of gold goes to...$50,000? You paid $1200 for it. The government will very likely want their ~~~50% of your gain, state and Fed. So you would owe 1/2*$48,800. still a great deal if you own it for $1200, I guess. They could impose a massively punitive tax on such sales, say 80%. Then what? A black market would emerge, and sellers of gold would get 15-35% of value. My point is that just because you hold something in your hand doesn’t mean that you own it. Just because you hold something in your hand does not mean you can transact it at a price resembling market value...especially if the market goes away. It may well have been that a chunk of gold in 1923 Germany accelerated in value 10,000%. it could equally be that your formerly friendly neighbors would pound your head in and take it away from you if they were starving to death and had the slightest inkling you had it.
Yes. Sounds right to me.
ASD, I am enjoying and learning from your posts.
I believe it was you who was saying a few months ago to watch silver go to $ 16.00/oz and I was saying to myself that was a radical assertion.
Well, here we are in the low $15’s/oz., so I am all ears to what you have to say.
You’re welcome.
Silver has a number of characteristics that IMO make it problematical “going forward” as the pundits like to say. When I first starting trading silver it went from 4.50 to 5.50. That took over a year. Then, 6.50. Over a year. 7.50, over a year. 8.50, over a year. It LOVES round numbers. Once it gloms onto $15, IMHO, it could be one hell of a long time before it does *anything*...though it won’t mind going to $12. And then, four years from now, when everybody is completely bored to death, doesn’t care, hates it that they bought $43 silver, it will move to $18 in 2 days, and every stupid conspiracy theory that I have had to listen to over the past decade will get trotted out again.
I am only halfway serious, I think these metals will do absolutely nothing interesting for a sickeningly long time.
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