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Bumble

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  1. According to this Bloomberg report, it applies to silver as well. https://www.bloomberg.com/news/articles/2016-12-05/gold-standard-approved-for-islamic-finance-opening-new-market-iwbytkoj Bear in mind that muslims have always been able to buy gold jewelry and coins, so the new standard may not be as big a deal as some commentators suggest.
  2. I saw a chart I like in an article on SeekingAlpha (http://seekingalpha.com/article/4036568-gold-rally-sustainable). Most charts of the gold price are shown in USD and everyone repeats the mantra that "gold is priced in dollars". Well, gold is actually priced in any currency you want it to be priced in. By multiplying the price of gold by the dollar index (DXY) you can separate movements in the price of gold itself from movements in the value of the dollar. The striking difference between this chart and the usual gold/USD chart is that from mid 2013 to end 2015 gold trended downwards in USD but gold.DXY trended upwards. The result is a plausible looking secular bull trend, although of course any extrapolation is speculative.
  3. Amusing and informative. This page shows the prices of gold and silver on the London exchange together with their prices on the Shanghai, so you can see the paper/physical spread. http://didthesystemcollapse.com/
  4. This links to a well-written report on the prospects for gold as of December 2016. http://seabridgegold.net/pdf/fn_12DEC16.pdf
  5. Alasdair McLeod interview. Precious metals, interest rates, economic outlook for 2017.
  6. It's the start of a new year. The gold miners did well in 2016, but finished well off the peak. Still, HUI gained 60% on the year, which makes gold and the gold miners the best asset class for the year. Sprott continue to hold Randgold, Agnico-Eagle and Royal Gold as their biggest three components of SGDM. Taylor Dart on Seeking Alpha likes B2Gold, Torex, Guyana Goldfields, Osisko and Teranga Gold. My guess is that once Trump is in office some realism will set in about what he is able to achieve. Although the Republicans hold the House and the Senate, many Republicans are opposed to budget deficits, and many just dislike Trump, so getting budget approval for his infrastructure spending may not happen. He will probably get approval for his tax cuts though. Where the US president has free reign is in foreign policy. Trump will be free to make friends with Putin. This could be good for Russian stocks, which are very cheap. We may see the Fed follow through with some 0.25% rate increases, but the rates are still very low, and likely to be below inflation, so this should not provide any headwind for gold. Elections in France and the Netherlands could provide some shock results that would be bad for the EUR. Italian banks are also teetering on the brink of insolvency. Money might well move from EUR into USD and maybe gold. If a full scale recession sets in, stocks will fall across the board, including gold miners. On the whole, there are more positives than negatives for gold, particularly in the first part of the year. Looks like a good time to start cost averaging back into the miners.
  7. I think you overstate it when saying that it is certain that we will see hyperinflation and will need wheelbarrows of cash to buy bread. A sustained but more modest level of inflation is possible. Another possibility is a debt default and a sudden revaluation. All are good for gold, so it doesn't hurt to hedge your predictions a little. Under investment demand, you might like to note that several countries, especially China and Russia are accumulating gold. Also, wealthy individuals are stockpiling it. On the supply side, gold and silver production is peaking and may decline unless the price picks up quickly. Under testing methods, you should mention ultrasound scanners. These can detect internal defects within bars, such as holes or tungsten inserts. Also, it might be worth mentioning that there are smartphone apps, such as Bullion Test, that you can use to perform a ping test and will tell you very reliably if a coin is fake. Your discussion of pricing doesn't mention the London Fix. You say: "Gold bars are typically pure (.9999 fineness)" - this is typically true of smaller bars of 1 kg or less. London Good Delivery bars are usually between 99.5 and 99.9%. Admittedly, most people will not be buying large bars like that. Under the strategy and plan section, it is worth pointing out that because gold and silver prices are highly volatile, they are not suitable for savings that you might need in an emergency, because you might be forced to sell them at a poor price. When mentioning naked shorting you might like to include a chart similar to the one attached, from Zero Hedge. It shows the huge increase in recent years in the ratio of open contracts for gold against the amount of registered gold available for delivery. You may need to put in some explanatory text to say what that means, but the chart speaks volumes. The book as a whole is very US-centric. You might like to adjust the wording in various places to make it more inclusive.
  8. There is a nice write-up of the current state of affairs by Alasdair Macleod here: http://www.gold-eagle.com/article/credit-cycles-and-gold-price
  9. I don't see how India can ban gold imports. India is one of the biggest manufacturers of jewelry in the world. A lot of this jewelry is exported, so it creates jobs and earns foreign currency. At the very least, India would have to permit gold to be purchased by jewelry makers who export, and once the gold is in country, it will be difficult to track. Also, the last time India tried to restrict imports of gold it just created a booming business for smugglers.
  10. In the run-up to the US elections, gold rose when Trump was doing well and fell when Hillary was doing well. People were expecting gold to rise if Trump was elected, but apart from a brief spike, it fell. We're now left trying to understand whether it will fall further or recover. Bond prices have also fallen recently (i.e. yields have risen) and some commentators are predicting the end of the 30 year bull run in bonds and a further sell off. I'm struggling to make sense of it all, but I'm holding fast to the following considerations: 1. Interest rates cannot rise very much. The level of indebtedness, whether national, corporate, municipal, or household, is so great that every debtor in the developed world would be bankrupted by higher rates. Rates could rise one per cent or so in the next few years, but not much more. If investors continue to sell bonds, governments and central banks will have to step in and resume purchasing them to keep the rates low. 2. Trump's promised huge increase in infrastructure spending is positive for industrial metals and the shares of construction companies. Because it requires more debt it would normally cause higher interest rates, but as per point 1, this won't happen. Deficit spending would normally tend to weaken the dollar and cause price inflation. 3. The US dollar is the least dirty shirt in the currency laundry. Some commentators are predicting a fall in USD, but it will not fall against EUR, GBP, CAD or JPY, because these are even weaker. It can only fall in its purchasing power, which is to say we are likely to see rising price inflation. 4. Investors seeking yield have been chased out of bonds and into stocks. Stocks are expensive by most measures, such as CAPE, but they are a source of dividends and they are one of the main beneficiaries of QE. Loose monetary and fiscal policy means that CAPE values may never again be as low as they have been historically. 5. Gold is an asset class that competes for investment with the other classes: bonds, stocks, cash, real estate, collectables. No matter how good the fundamentals for gold look, if some other asset class is looking more attractive, investors will rotate into it. 6. Price inflation will not force interest rates to rise. Governments and other debtors need negative real interest rates in order to inflate away their debt. 7. From 2 and 4 it seems that stocks may continue to do well. Especially ones connected to infrastructure. Manufacturers who import from China may get hit by tariffs. 8. From 5, 6 and 7, gold will be pulled in two directions. As long as stocks do well, this will be negative for gold. But rising inflation and negative real rates will be positive.
  11. Video summary of Jim Rickards' latest book, the Road to Ruin. If you've heard interviews with Rickards, there's nothing new. The government is going to take your money; buy tangible assets.
  12. I saw my first £50 note in about ten years a few months ago when someone in the supermarket queue ahead of me produced one and offered it to the young woman on the checkout. She looked like she'd never seen one before. She called over the supervisor, both of them examined it and decided it was OK. I suppose most British people won't miss them. I don't like the precedent though.
  13. You might enjoy this humorous piece from 1993. It's interesting how people then thought this stuff was just around the corner, when it's actually taken over 20 years to get here. I suppose it's like the people who thought we would have permanent bases on the moon by the end of the 1980s. http://articles.latimes.com/1993-11-25/business/fi-60788_1_house-networks
  14. I'm not convinced by this dead man's curve chart. It has no x-axis, so I don't see what is the significance of the points lying on the curve: the countries could simply have been listed in a table. Also, it makes a big difference whether a country's debt is denominated in their own currency or another. A lot of Brazil's debt is in USD, and Greece's is in EUR. But the USA, UK and Japan have the benefit of issuing debt in their own currency.
  15. The time to take profits was in July/August. If anything now is the time to start adding to PM holdings, because the fundamentals for gold are likely to get even stronger. Maybe the market is pricing in a significant chance of a Trump win, so a Hillary win could see gold fall a little in the short term. But the debt problem has not been solved and is only getting bigger; eurozone banks are insolvent; inflation is starting to rise; the Fed is struggling to justify a 0.25% rate increase and other central banks are a long way from raising rates; there is no sign of genuine economic recovery, only markets propped up by loose monetary and fiscal policy. While the case for buying gold is still as strong as ever, the case for gold stocks is maddenlingly difficult to assess. Over the last five years, gold stocks have provided a leverage of about 5 to 1 against the price of gold, so on the positive side they could do extremely well if gold continues with another leg up. Also, the HUI to gold ratio is much lower now than it was during the bull run from 2001-2011. On the other hand, stocks generally could crash if there is another recession, a rate rise, or a major geopolitical event. When stocks crash, the gold mining sector gets dragged down too - this can clearly be seen in the tech stock crash of 2001-2 and the subprime mortgage crash of 2008. But then again, the US government, and possibly others, might intervene to prop up the stock markets by buying stocks.