Merged Silver Over 40.00 / Real and fake prices

[mhaze]

I'm not a gold bug or hard currency buff, but do have a stash of silver coins from the Carter 1 era. This might match your $5 number, I don't recall the purchase price. Most of mine was bought when the signals of the current boom were obvious, about 2 years ago.

Well...obvious to those who had their eyes open...

 

[Francesca R]

Oh dear, are you importing your invented trading history here too? Tsk tsk . . .



http://www.internationalskeptics.com/forums/showthread.php?p=7093390#post7093390

 

[ConspicuousCarl]

It is easy to say that silver is an awesome investment with a few years of hindsight, but historically it has not been special:

Those spikes are really nice, but like any investment you would have to know when they are going to happen. Of course, if you can see 5 years into the future, there are all kinds of ways to make money. If we are going to assume that we know exactly when to buy something, why not compare the 1981-2011 price of silver to the 1981-2011 price of Microsoft stock?

Without psychic powers, a person could "invest" in silver at the wrong time, and either lose tons of money or go for several decades with a completely flat return.

 

[mhaze]

Oh dear, are you importing your invented trading history here too? Tsk tsk . . .



http://www.internationalskeptics.com/forums/showthread.php?p=7093390#post7093390

I get the distinct feeling that you are mad about something, so why not just out with it?

A diversified portfolio would include some commodies, and in the metals basket there would likely be some silver. Silver has long been considered a reasonable part of such a basket. So there is no invented trading history, except in your imagination. And I'll forgive the implied assertion that I have lied, because I understand you are very upset at my question:

How yer T bills from 2 years ago doing compared to my gold from 2 years ago?

I was just answering the question about silver, and in asking the question that obviously ticked you off, I was only trying to bring historical results into the conversation. Some people care about, you know, darn it, that, darn it again, REALITY?

 

[Checkmite]

I might be able to feed myself for a few days with a single pre-1946 dime.

Yeah, good luck handing any dime to a supermarket cashier and attempting to walk out with several weeks of food. Bonus points if you make a video of yourself trying to convince her that your dime is anything more than ten cents.

 

[Aepervius]

Yeah, good luck handing any dime to a supermarket cashier and attempting to walk out with several weeks of food. Bonus points if you make a video of yourself trying to convince her that your dime is anything more than ten cents.

He might even make some money. I would pay to watch that, as the "silly home video" type of stuff, like "dad get football in crotch".

 

[Francesca R]

[ . . . ]

Response

 

[timhau]

It is easy to say that silver is an awesome investment with a few years of hindsight, but historically it has not been special:

But can't you see what a great hedge against inflation it has been?!?

 

[zooterkin]

This caught my eye today, I think it's relevant (Francesca R can tell me if it's not), about derivative trading in commodities.

The products have enticed investors into the soaring commodities markets, allowing them to enjoy huge returns from the rising cost of oil, gold and silver in recent years.

The Financial Stability Board, which was created in the aftermath of the financial crisis to monitor financial transactions, said the rapid growth of exchange traded funds (ETFs) into a $1,200bn (£735bn) business was unnervingly like the derivatives market in sub-prime mortgages before the credit crunch in 2007.

Mario Draghi, the chairman of the FSB, said ETFs had all the hallmarks of a bubble waiting to burst and needed close monitoring by international regulators.
...
The recent rise in the gold price has been underpinned by investors buying ETFs.

I guess that the same applies to silver to some extent, too.

 

[Francesca R]

ETFs are pretty much derivatives in the sense that they allow investors to create net short positions. That means total long positions in any ETF (such as GLD and SLV which are the best known precious metal ones) can be larger than the underlying supply, and that if you have a long in one of these ETFs, you don't actually own any underlying gold or silver--but rather--you own the liability of someone else who is short, and who has essentially borrowed the commodity and sold it.

Total synthetic longs plus total synthetic shorts plus underlying holdings must match off to zero though. It is not the case that you can have more long positions than short positions at any time.

However that is the reality with every derivatives market where there are net shorts and is not peculiar to ETFs. It is a problem that some less sophisticated investors probably think that an ETF is a physical asset. It isn't, and it is rarely accepted as security/margin/collateral for any liability itself.

Scary story from last year. Response 1. Response 2.

No anti-fractional banking, anti-central-bank-monetary-policymaking, gold standard enthusiast--of course--could ever invest in GLD or SLV and keep a straight face, since they would be indulging in the "synthetic" creation of gold or silver, which is exactly what they are calling for to be criminalised in the case of money.

Moreover, beyond the extreme hypocrisy of that, they would be revealing quite aptly why a gold standard (or any commodity standard) would not change the behaviour of financial agents one iota, by itself.

(Assuming they thought about it )

 

[mhaze]

ETFs are pretty much derivatives in the sense that they allow investors to create net short positions. That means total long positions in any ETF (such as GLD and SLV which are the best known precious metal ones) can be larger than the underlying supply, and that if you have a long in one of these ETFs, you don't actually own any underlying gold or silver--but rather--you own the liability of someone else who is short, and who has essentially borrowed the commodity and sold it. ....

I pretty much agree with this and my comment would be not that these ETFs have not done well in recently...they have done well... but now is a good time to move out of them.

 

[balrog666]

Yeah, good luck handing any dime to a supermarket cashier and attempting to walk out with several weeks of food. Bonus points if you make a video of yourself trying to convince her that your dime is anything more than ten cents.

Gee, is that what they did in Brazil or Argentina (or Germany or Zimbabwe or others for that matter)?

No, they had middlemen who traded such commodities with both hard and soft currencies as people needed them.

 

[NewtonTrino]

There's nothing wrong with ETF's per se it's just that if you buy GLD you aren't buying the exact same thing as physical gold and that needs to be understand.

I own all kinds of ETF's and some CEF's as well. I don't see a problem, just make sure you know what you're actually investing in.

 

[michaelsuede]

43.38 yesterday

still over 43 today.

 

[mhaze]

There's nothing wrong with ETF's per se it's just that if you buy GLD you aren't buying the exact same thing as physical gold and that needs to be understand.

I own all kinds of ETF's and some CEF's as well. I don't see a problem, just make sure you know what you're actually investing in.

Ah....wrong.....

Look at the capitalization of GLD. Where did the money go?

 

[michaelsuede]

Ah....wrong.....

Look at the capitalization of GLD. Where did the money go?

I trust the ETFs about as far as I can throw them.

Since my building throwing skills are poor, I can't throw them very far.

 

[Francesca R]

GLD doesn't have a large amount of short positions. According to indexuniverse the short interest was -4.8% of the shares outstanding in Feb 2011. It could be larger, if more ETF investors wanted to short it, but it isn't because they haven't. (Compare Spider's S&P Retail Select ETF, Ticker XRT, for an example where the net asset value is a very small fraction of the total longs and shorts)

Nonetheless, it is the case that any ETF that allows shorting (which is not naked shorting since the stock has to be borrowed first and collateral has to be posted) can have long positions and short positions that are greater than the underlying assets in the trust. (The same is true for individual stocks and bonds.)

To repeat, nobody who is opposed to fractional reserve banking or central bank management of the money supply should trade ETFs, because their position would be internally inconsistent with their ideology.

They should also be petrified of serial runs on ETFs destroying their market value, as Andrew Bogan was in the article that produced a swathe of rebuttals last year (Another rebuttal here)

 

[michaelsuede]

GLD doesn't have a large amount of short positions. According to indexuniverse the short interest was -4.8% of the shares outstanding in Feb 2011. It could be larger, if more ETF investors wanted to short it, but it isn't because they haven't. (Compare Spider's S&P Retail Select ETF, Ticker XRT, for an example where the net asset value is a very small fraction of the total longs and shorts)

Nonetheless, it is the case that any ETF that allows shorting (which is not naked shorting since the stock has to be borrowed first and collateral has to be posted) can have long positions and short positions that are greater than the underlying assets in the trust. (The same is true for individual stocks and bonds.)

To repeat, nobody who is opposed to fractional reserve banking or central bank management of the money supply should trade ETFs, because their position would be internally inconsistent with their ideology.

They should also be petrified of serial runs on ETFs destroying their market value, as Andrew Bogan was in the article that produced a swathe of rebuttals last year (Another rebuttal here)

Good lord, you made a post I agree with.

Indeed, everyone who actually wants to hedge against the Fed's insanity should take physical delivery and keep the metal themselves on their own property.

Preferably in a hidden bunker out in the desert.

As we saw once before in our nation's history, when gold gets high enough, the federal government will send its armed goons out to steal it from the citizenry.

 

[Francesca R]

You seem to be getting a decent wi-fi signal in that bunker

 

[NewtonTrino]

Ah....wrong.....

Look at the capitalization of GLD. Where did the money go?

Again, there is no issue there. You just have to understand that you are actually buying. Also there are plenty of index ETF's and other types of ETF's that aren't setup the same way that GLD is. ETF's in general are very useful.