Cara's Commentary & Community Chat, Fri, Feb. 13, 2009

Bill, I was under the impression that GLD owned huge amounts of physical gold. I have (uh) quite of bit of GLD because this was my understanding that it was real gold, rather than a bunch of futures contracts, backing my shares. Can you help clarify this for me?

Two better choices are CEF and GTU. CEF is basically 50% gold bullion and
50% silver bullion. GTU is basically 100% gold bullion.

http://www.centralfund.com/

Take a look.

Now that you have reached this conclusion... the next question is "why are they doing this?"

Certainly some believe that it is in their own best interests out of sheer, unmitigated stupidity... but I will not credit the elemental forces beneath the surface and behind the scenes that have been driving these changes with such lack of foresight.

IMHO.

Good morning.

RIMM - Downgraded to Underperform @ Credit Suisse

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Other Stocks of Possible Interest:

SIGM - Upgraded to Outperform @ Robert W. Baird. Price Target Raised from $9 to $16.

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Have a great weekend everyone.

Don't you think it is about time GLD and all the other popular international gold ETFs told its owners exactly what kind of gold they claim to own?

Can you imagine a situation where a person buys a gold ETF to own "non-gold" but finds out that they in reality own OTC derivatives on gold? That would be an investment in the same type of financial instrument (not gold) that one owns gold bullion to protect against.

The failure to unearth the Madoff scandal becomes incredible when one understands that the returns from the market claimed on the size of the hedge fund were logically impossible.

The exact same reasoning screams bloody murder when applied to the many Gold EFTs in terms of what it is they really own.

This begs one major question: From where did all the gold claimed to be owned by all the gold ETFs come from?

Where did funds such as GLD get their additional 45 tons in the last month?

We certainly can forget about that gold coming from the Comex. 12 deliveries would stand out like a sore thumb.

This concept and record keeping eliminates all exchanges around the globe as the source of bullion delivery in any size to all Gold ETFs.

The physical market is so tight that coin minting has all but closed down compared to what it was one year ago. It is hard to accept that the Gold EFTs can buy what the mints can't.

A read of the original prospectus removes any thought that the gold is leased, but leaves one to invite probability.

That probability is that the claimed gold can only be OTC derivative long positions. If that is so then the financial reliability of the paper stands on the foundation of the balance sheet of the granting counter party to the OTC derivative. This is true regardless of whether it is a mine or naked speculator.

Don't you think it is about time the gold ETFs told their owners exactly what kind of gold it is that they claim to own?

Can you imagine a situation where a person buys a gold ETF to own "non-gold" but finds out that they in reality own OTC derivatives on gold? That would be an investment in the same type of financial instrument (not gold) that one owns gold bullion to protect against.

I think you own an ETF of derivatives, not of gold!

If I am correct then there is no clearinghouse guarantee for the OTC derivative to function.

Like so many other surprises of the last two years the Gold ETF shareholder may actually have no gold at all.

A perfect Ponzi scheme would allow you to surrender shares for bullion. You need only think about it.

Source Jim Sinclair

Posted on the GLD website is a list of the gold bars that GLD claims to own. Not sure that will be enough to satisfy some people. LIke I said, things exist on a risk spectrum and as Bill points out, with each successive fraud or scheme uncovered, the amount of trust people will place in auditors and companies that allege to be storing gold in vaults shrinks.

Gold market manipulation by central banks, stock market interventions by plunge protection teams, fraud in economic number reporting (optimistic unemployment statistics, GDP calculations, inflation rates, etc), bailouts of wall street, various outright ponzi schemes - it all adds up.

So do we trust GLD ETF to have the gold they say they have? Maybe they are lying to us. Could be.

>"So do we trust GLD ETF to have the gold they say they have? Maybe they are lying to us. Could be."

Scary, isn't it! Take trust out of the transaction and the world turns to sh(/!

I firmly believe that Obama has the best interests of the working class people on his mind.
As far as having Obama wake up, as you put it, he is very much awake, he just is in a financial mess that no one person can get his/her mind completely around.
Obama surely has a reason why he is away from that stench of the White House on a continuing bases. I'm sure he is finally figuring out there is to much corruption/greed all over the USSA, and the blame of whats to come will be put directly on him.
Now Obama has to figure out how he is going to keep the people from being completely divided when HB&B systematically destroys the middle class society.
United we stand....divided we fall.

MFC - Downgraded to Neutral @ Credit Suisse

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Caris & Co. Initiates Coverage on two Cara 100 Techs:

DELL - Average
IBM - Above Average. Price Target = $120

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AET - Price Target Raised from $29 to $35 @ Credit Suisse

No need for possession...

* Most people who buy gold don't stop to consider how important bullion integrity is going to be when they come to sell, but it will be critical to the price they get. Too much money is lost by gold investors who find out that lower integrity bullion has a higher premium and simply does not fetch the spot price when it is handed back over the counter. The round-trip dealing costs (i.e. buying and selling) for bullion coins and small bars is usually about 7% to 10%, and it stretched to 20% in late 2008.

* Your trading costs on BullionVault are much lower. When you buy or sell you pay a commission whose maximum rate is 0.8%, falling progressively when you invest above $30,000 to just 0.02%. The round-trip costs you 1.6% on small amounts, falling to an incredible 0.04% for larger customers.

...unless you're really concerned about security.

Bill,

I can't tell you just how many reassuring articles I have read at supposedly reliable sources about the wonders of ETF investing. The one I have often tried to understand, but couldn't is TBT.

Now, with your commentary today I can see those "wonders" are more like "I wonder if this is for real?"

It sounds as if this whole subset of investing is largely another scheme similar to the mortgage one.

I am still in DBA. Have owned SKF, SRS, TBT, TLT, GLD, SLV at one time or another.

I think it's time for some heads to roll. I want to see accountability from congress, government agencies, and if Obama was sincere in his "Change We Can Believe In" this is the place to start. This is the issue to rush to resolve, or his prediction of a crisis turned into a catastrophe will definitely come to be.

I no longer trust any level of the U.S. government, any of the data and absolutely not the IRS.

Thinking about sending a post card to Geithner in lieu of my Form 1040 this year :-(

Thanks for the heads up.

We probably won't see $950 again today, it seems this PM is taking a breather (whatever that means).

Bill - "Crude Oil ($WTIC) futures contracts retain the large gap between the March and April for West Texas Intermediate and with the same month European Brent, proving once again that these are no longer commodity markets, but financial prices controlled by speculators and bankers. Regulatory investigation and intervention is required."

Are you referring to a proactive real-time regulatory investigation? From my observations, the only regulatory investigations conducted by the SEC are several years after the fact, about the point when the magnitude of damage has already been absorbed into the economy and the criminals have covered their tracks and disposed of the wealth.

Please forgive me if I seem naive. If a person is truly concerned about insurance against financial Armageddon then they should keep physical gold on hand. In the event of a market crash that would cause a super-spike in gold prices, no one will care if your fund is backed by physical or not.

The commodity-based ETFs and ETNs, in my opinion, are for speculation and hedging of day-to-day market actions. Caveat emptor.

In all my time that I have been reading Bill's website, I have never read anything that he has written that has sounded so dire.

I look forward to reading any comments that would guide a middle class person in protecting their families wealth.

Vin,

All this interest in gold bespeakes a potential top.

JimG - "I look forward to reading any comments that would guide a middle class person in protecting their families wealth."

Hard assets fully paid for such as fertile farmland (or even housing), and gold should be somewhere on the list IMO. I wouldn't be too concerned with Bill's rant this morning. I've noticed this before, when he's got his free-thinking cap on.

shark- Life is about more than trading, that's for sure. Music is one thing I can't live without. I'm listening at work to Lou Reed from his early (1968) Velvet Underground days right now ("Stephanie Says"). Fast forward to 1973-> Lou comes out with Berlin, renames the song "Caroline Says", and the lyrics get so dark I don't feel I can even post them here. Things change. But here's the original version:

Stephanie says that she wants to know
Why she's given half her life, to people she hates now
Stephanie says when answering the phone
What country shall I say is calling from across the world

But she's not afraid to die, the people all call her Alaska
Between worlds so the people ask her 'cause it's all in her mind
It's all in her mind

Stephanie says that she wants to know
Why it is though she's the door She can't be the room

Stephanie says but doesn't hang up the phone
What sea shell she is calling from across the world

But she's not afraid to die, the people all call her Alaska
Between worlds so the people ask her 'cause it's all in her mind
It's all in her mind

She asks you is it good or bad
It's such an icy feeling it's so cold in Alaska,
it's so cold in Alaska, it's so cold in Alaska

2nd avenue,

A few months ago you mentioned a place in SF to buy gold, bullion, coins. Can you share that information again?

Thanks

vb

Canadians take a look at BMG bullion, an open end mutual fund that purchases equal dollar value of gold silver and platinum and stores it in Scotiabank's vaults. The serial numbers of the gold bars are published on website.

Chickenpookie
One year GLD is up about 3%. While WGW down 50%. GSS down 58% and AUY down 42%.People would have done better buying us treasury.

that was a good one shark.

I rely on Bill and the community for perspective. Analysis abounds and is utterly useless unless somehow the dots are connected...like now. Anecdotal evidence is crucial for understanding current, fluid conditions. Bill may be at his best when free-thinking and I for one will always take his insights with the utmost seriouness. Evidence mounts, HB&B are consolidating, and concentrating using all leverage that can be mustered. Fireworks on Monday laid out the evidence and FranSix in an immediate reply fleshed out the why. The deleveraging squeeze continues with a vengenance. How do we respond?

Shark, switch to decaf. Seriously.

n2s- drinking decaf is like using a latex sheath...dilutes the meaning of the exchange...;)

Watch 107.95 on the FXY. The Yen correlates well with the US T Bond price. The government wants and needs a weaker yen. If the FXY closes under that level on large volume, a short Yen, long Gold trade made be a good intermediate trade.

Traditionally a weaker yen also means more risk appetite, but in this case it just may mean the central bank like the American one will get its way in weakening its currency.

Me too, Foz, me too.

I can see railing against the slings and arrows of an outrageous fortune, but to ascribe them to a human agency - well, there is an anti-conspiracy theory part of me that says "hey, wait a minute, guys..."

To be, or not to be: that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them? To die: to sleep;
No more; and by a sleep to say we end
The heart-ache and the thousand natural shocks
That flesh is heir to, 'tis a consummation
Devoutly to be wish'd. To die, to sleep;
To sleep: perchance to dream: ay, there's the rub;
For in that sleep of death what dreams may come
When we have shuffled off this mortal coil,
Must give us pause: there's the respect
That makes calamity of so long life;
For who would bear the whips and scorns of time,
The oppressor's wrong, the proud man's contumely,
The pangs of despised love, the law's delay,
The insolence of office and the spurns
That patient merit of the unworthy takes,
When he himself might his quietus make
With a bare bodkin? who would fardels bear,
To grunt and sweat under a weary life,
But that the dread of something after death,
The undiscover'd country from whose bourn
No traveller returns, puzzles the will
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all;
And thus the native hue of resolution
Is sicklied o'er with the pale cast of thought,
And enterprises of great pith and moment
With this regard their currents turn awry,
And lose the name of action.

I believe most Americans are "pro-business", regardless of party. How many are self-employed AND have no stake in America's success.

However, many are disgusted at some business practices that reward relatively few employees (upper management) at the expense of many, and are disturbed about the consequences of poor business practices that have resulted in job losses, job migration, debt deflation, and so on.

Having worked in Washington (and cared for a number of politicians as a physician), I trust NONE of them.

Barney Frank is a very big part of the reason for the financial mess. Add in Chris Dodd getting sweetheart loans from Countrywide for Lord only knows what favors and this is only the tip of the iceberg which the United States ran into. Are you still in favor of social engineering?

News report:
Critics are crying “conflict of interest” over Democratic Rep. Barney Frank’s live-in relationship with Fannie Mae executive Herb Moses while Frank was on the House Banking Committee.

Moses was Fannie Mae’s assistant director for product initiatives from 1991 to 1998.

He was also openly gay Frank’s live-in boyfriend during that time, while the Massachusetts lawmaker was on the committee that had jurisdiction over government-sponsored Fannie Mae, Fox News’ Bill Sammon reported.

Now that Fannie Mae is at the center of the recent financial meltdown, the relationship is coming under increased scrutiny.
“It’s absolutely a conflict,” said Dan Gainor, vice president of the Business & Media Institute.

“He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?

“But everyone wants to avoid it because he’s gay. It’s the quintessential double standard.”

A top Republican House aide told Fox News: “He writes housing and banking laws and his boyfriend is a top exec at a firm that stands to gain from those laws? No media ever take note?”

Frank and Moses met in 1987 and lived together in Washington, D.C., until they split up in 1998.

National Mortgage News disclosed that Moses “helped develop many of Fannie Mae’s affordable housing and home improvement lending programs.”
Critics charge that such programs led to the mortgage meltdown and the recent government takeover of Fannie Mae, according to Fox News, which noted that Fannie Mae and its financial cousin Freddie Mac “are blamed for spreading bad mortgages throughout the private financial sector.”

In 1994, Frank thwarted efforts by President Clinton’s Department of Housing and Urban Development to impose new regulations on Fannie Mae.

Funny thing is that the HOU.TO is still in negative territory on the pop.

vinod

"All solar are dead until oil goes higher. Same thing for ethanol or alternative energy stock"

Same thing as in the post 1970s OPEC- induced energy crisis.
My, what a coincidence :>(

http://www.ritholtz.com/blog/2009/02/heloc-hard-ball/

Agree Bill - the practices will and must stop!!!

EDIT: They are out of control.

Thanks, Dr. Strangelove. I will read more about GATA. Having just read their WSJ ad, I've got a new pit in my stomach. Seems that nearly every day I'm waking up to a new reason to be discouraged by the behavior of those in power, be it governmental or monetary power. This at a time when there is great hope in the air. I'm feeling terribly conflicted between focusing my mind and heart on hope and opportunity vs outrage and bunker mentality.

Gold getting toppy?

If there is any shred of truth to the following rumour (anyone heard anything about this?) would I be naive to expect some speculation in the lead up to such a currency creation?

>"Then there is the planned launch of the new Persian Gulf gold-backed currency in early 2010, which should act as a nuclear bomb against the US Dollar in less than one year".

http://www.kitco.com/ind/willie/feb052009.html

Purchased TISI at 14....As BSI87 likes to say...this was a capitulation stock with an RSI(7) of less than 5 yesterday...Hourly MACD has turned positive and the on balance volume has turned up strongly. Stock has 13 consecutive down/even trading days....Will see about getting a bounce. DYODD

I will try to match up trades using www.tickerspy.com

http://tinyurl.com/dc58pp

swissrobinson - gold - Trade the price. It doesn't have quite the same advantages as equities because it won't go bankrupt, pay or cut dividends.

Reserve currencies: USD will stay on top and willing to do anything such as lie and/or wage war on any front.

So much potential, as much or more than dna... Can think of 2 major pharma's that could really benefit longterm.... $ 75.00 would be nice oppening bid...

SteveB & CP,
I have been watching UCO/SCO, $WTI and NYMEX all week and today is particularly perplexing. With WTI/NYMEX front month ~$36, UCO/SCO seem to be going in the wrong directions. I believe UCO was higher when oil fell into the $33 range yesterday, now WTI is +3 and UCO is heading lower. It appears a "measuring-bar" has been reset overnight and the new number is unfathonible to me.

UUP has been dropping and is almost back to it's 25.85-25.9 range, what effect? Demand is reported still falling.
Don't know what to think.

Agreed, Grym. It's time to stop repeating the mistakes of the past.

"The general trend will hold, there are many factors affecting oil stock aside just oil prices, as you know:

1) Currency markets
2) Alternative interests and buying sprees(China, France)"

But a gap up of 23% and no change to any oil stock?? What is wrong here?

Bill's comments today "Crude Oil ($WTIC) futures contracts retain the large gap between the March and April for West Texas Intermediate and with the same month European Brent, proving once again that these are no longer commodity markets, but financial prices controlled by speculators and bankers. Regulatory investigation and intervention is required."

Here is a paper on US reserve oil swaps of WTI for Brent on the same site as the gold swaps info listed above. Thanks guys.

http://news.goldseek.com/GoldSeek/1234386901.php

"By Rob Kirby:
I’ve been trying to resolve what’s behind the recent inversion of the historic premium that West Texas Intermediate [WTI] Crude Oil has enjoyed versus Brent Crude.
.....As evidenced above, crude oil has also been swapped – likely sweet crude, WTI - for less expensive sour crude. Under such a scenario – physical sweet crude left the SPR – creating a market glut of “premium sweet oil”. This set off an engineered over-supply chain reaction in the crude complex which depressed WTI’s price relative to Brent Crude. Because supply chain storage facilities are finite and were completely filled in the Texas / Cushing region – this also contributed to further price declines in the crude complex.

This would also explain the phenomena of the world’s VLCC [very large crude carrier] Fleet being fully booked for storage purposes while the Baltic Dry Index is at or near record lows."

How will all this end??
Any suggestions or speculations when?

Johnny - It seems UCO/SCO aren't tracking March, or are rolling over as we speak?

http://finance.yahoo.com/q/fc?s=CLH09.NYM

I don't know, as I'm just watching for DXO to dip under $2 as a possible bottom indicator.

Oxbridge Capital, Inc, Vadim Polyak, phone# 415.409.6086. He's a member of
ANA , PC6S, and NGC. I bought in Aug. 08, 30 Canadian Maples and they reside in a bank security vault.

I don't blog very often, but always read Cara. After losing around 40% in my IRA
account in 08, I sold most of the dud stocks and started day/swing trading. I'm
making good progress with the short/long etf's of the financials, S&P, and oil. Also, I made some $ on AUY, SLW, WGW. Only in etf financials and LVS today. I am at my computer from 5am to 1pm every day. That's the only reason why I am comfortable day/swing trading.

I'd blog more but it hurts to type and I'm new to day trading.

Sarah Hadassah

Oh, sweet vs sour has been an issue since before last year if I recall. I'm guessing the sweet has fallen due to the fact that's what the US refines mostly.

Oil transport is at best indirectly related to the BDI (but are related in terms of improving economic activity), I don't understand why these indexes seem to be compared so often in terms of oil prices. Just because the BDI shoots up doesn't mean anything for POO necessarily, BDI isn't the rate for tankers, it's the rate for dry cargoes... 80Mbll of oil in storage at sea is 1 day supply for world, and 1 week supply for US. The big whoopy-do about oil sea storage is just sour rancid peanuts IMO.

Prez's Day Monday - 3 day weekend for u.s. markets - FWIW

If holding physical for the purpose of preparing for financial Armageddon, I wouldn't store it in a bank security vault... That's right under the noses of the corruption that's cause of the currency collapse to begin with.

Buying (and holding) UCO was one of the dumbest things I've done in the past year. Can't believe I was that stupid. Hoping for at least a small pop to exit the trade all together. Live and learn.

Jim willie has been so wrong for so long other than being a long term gold bull.

there is no basis that this currency will actually come to fruition,
even if it does, theres nothing to suggest it would explode the gold price.

this is the same as the "iranian oil-bourse" that was supposedly imminent for years that was to explode the price of oil, trading in euros.

its a bunch of nonsense. these gulf states have precious little stability in power, there is almost no cooperation among these states other than OPEC and we all have seen how much they cheat, and the current mess in oil prices thanks to their leadership.

most of these gulf states have nothing more than oil revenues, a gold backed currency would only hinder their ability to use deficit spending and the like to stimulate their falling economies.

Jim willie is yet another of the newsletter writers who consistantly rely on the allegation of imminent and explosive moves in gold prices. be it from chineese dumping of US treasuries which have been alleged for years and never has materialized, to the default of the november, then december, then january comex (notice that story died in the water), oil bourses, currency collapse and hyper inflationary scenarios.

junk. he like most others was wrong all along 2008 but refused to admit it,

No, you have $55,000 as the Original wuithdrawal of $50k + $5k new room for the new year.

Hi Kaimu,

I 100% agree with the Gold ETFS. Just the next scam to trick the sheep

Back to the Perth Mint, assuming that gold holds its value or rises, down the road if the USD falls, could you sell the gold for the stronger currency (swiss dollars) then convert to US dollars and then buy foreclosed raw land for cash in the US? (I say the US since I won't be able to leave - I do have the option of relocating to Nevada which I am strongly considering due to the state of condition with the CA Government).

I would love to hear your thoughts on this. thanks so much.

vb

"If holding physical for the purpose of preparing for financial Armageddon, I wouldn't store it in a bank security vault... That's right under the noses of the corruption that's cause of the currency collapse to begin with."

A statement of good common sense. And while the story is often repeated today that citizens turned in all of their gold during the FDR confiscation in the 1930s the reality was something quite different. While there were some "show confiscations" from some big city bank deposit boxes the overwhelming majority of people simply quietly kept their gold in their own possession. There was quite a renewed interest in backyard gardening during that period.

Knifecatcher,

You are not alone.

worst decision so far for me. I even bought more this morning in hopes of a bounce back. I feel like I have been scalped

are you going to sell at a loss or hang in there longer?

vb

Yes. This why I would be surprised to see the Canadian Government let them continue in it's current form, CCRA will be chomping at the bit to 'recover' the tax that will no longer be payable.

ALOHA !!

Dave ... when it comes to the government confiscating gold where better to go than the US ETF GLD? If I was a corrupt government and I needed to get my hands on a big pile of gold I would definitely be looking at GLD, at least at their NYC vault! And when the time comes and the US government does confiscate gold and we do not hear they have confiscated the GLD gold, perhaps they already knew there was nothing there in the first place! HA!!

Remember those here who are holding GLD and are skeptical of what I post about GLD only need to prove that their gold is in the GLD vault with their serial numbers that identify their gold they bought by owning GLD shares. THAT IS AN IMPOSSIBILITY TO PROVE!! You have no serial numbers so therefore you have no gold! PERIOD!! What gold there is belongs to the BANK not you! Call GLD and ask for your serial numbers ... Ask for any serial numbers for that matter!! GLD does not disclose serial numbers! They cannot say the bars do not have them because they do ... it is a requirement for fabrication on all gold bars of 400 ounces. Where are the serial numbers?

Officially you own nothing at GLD, but a piece of paper ...

"What the bankers really hope to do, of course, is to give the rest of us a "courtesy" card, so they can treat us like a PIN number in their computer system. How do you complain to a computer? The answer is you can't."

Actuall, you're close. They want to implant a chip in each of us and if we cause problems they can just disable the chip and wipe us clean-everything gone! Talk about carrying a big stick.

Thanks papadynamite, I was going to do the same.
I've gone thru the CEF material and the audit references only ever refer to the financials not the physical, so question may need to be re-asked depending on what if any answer you get.
perhaps Kaimu can comment further here.

teamonfuego - "where do you get your 11% number from?"

I heard this on the radio, seems similar numbers are flying around out there...

http://www.iht.com/articles/ap/2009/02/13/business...

You can conribute $5000 this year. If you make 50,000 and remove it you can only put back in the $5ooo.

Regards

Kaimu - Yes, you are 100% right on, they'd definitely confiscate all the gold in the GLD ETF vaults first thing. Assuming it's there. :)

It is curious, why GLD does not publish their serial numbers on the bar list. Not that I could run off and verify those numbers or anything, but it would be interesting if they did publish them and someone were to come up with a bar with that same serial number. Not publishing the list solves that potential issue. It does get one to thinking. I'm glad you're around to help us see through some of the smokescreens.

I want to avoid being paranoid, but at the same time, during this time of seeming widespread fraud and misrepresentation, it is wise to perhaps pay a little extra for a higher degree of verifiability.

I still think GLD is as good as the futures markets in playing the moves in the POG, and possibly better. But - that lack of serial numbers does nag at me a little. :) Perhaps more than a little. If the Madoff ponzi scheme hadn't been exposed, I might more easily dismiss these concerns. Trust, how easily you are lost...and not so easily regained.

ALOHA !!

This is the GOLDMONEY bar list and note there are serial numbers ... This is what the GLD bar list should look like to avoid some mistrust and make auditing very easy!

This list is for their vault in Zurich and they also have a London vault. Notice AGR Matthey bars are Perth Mint ... Also notice that GoldMoney even tells you what "pallet" your gold is on along with a serial number. Where is that info at GLD?

GM Link: http://tinyurl.com/cc33rj

Now that given GOLDMONEY has all their gold stored in a third party vault owned by VIA MAT, a Swiss company of great repute, however, there is a counterparty risk if something happened to VIA MAT. GOLDMONEY does not publish its own financials or that of VIA MAT. I have tried in the past to secure VIA MAT financial but could not.

So the issue of TRUST and accountability can go on into infinity. With the PERTH MINT their vaults are on their own property and there is no third party vault like VIA MAT, which is another layer of security and trust. But there are those who say you should not trust the PERTH MINT and so it goes on and on into infinity. I have to base my decisions on the lesser of the evils. Right now the US government is at the top of my list of "Evils" along with all the US BANKS in the Peer Group #1 category.

Even your sock drawer is not 100% safe and in fact may be the least safe place in the World depending on your neighbors!!! Who knows???

There is always liabilities to consider, even within your own family ... HA!! That may be an understatement for the Madoffs!! No honor among thieves is how it goes!

In the end we each have ourselves to blame, even in the USSA ... just nobody in the USSA accepts any blame!!

Pz- nice trade...and an exciting counterpoint to selling drugs...;)

While shorting FAZ is a high-risk, high-reward play (FAZ declines the fastest among the ultra-shorts because of the high volatility, but occasionally can have large rallies so as to double or triple), shorting ERY is a low-risk, not-so-high reward play in the near future (I doubt ERY will ever double), but ultimately, when the oil price picks up and the energy sector begins to move, ERY will obviously go to 0.

My trades for the past couple of months were small ($2K to $4K), so as to make sure I don't run out of free cash when the market takes a real plunge. But this time, I figured that the strategy of shorting ultra-shorts is so good, that I can "up the ante" on it, and so I have shorted 400 shares or ERY at $34.65.

Contango rollover is eating this thing up and I am sick off it. Should have taken the one big run we had a broke even...shoulda woulda coulda no doubt.

RE: Response from State Street Global Investors for GLD:
"Agreements among the Trustee, Bank of America and the Custodian,HSBC
USA, NA allow for the trustees to visit and inspect the Trust's holdings of gold held by the custodian twice a year. I addition the Trust's independent auditors may audit the Gold holdings in the vault as part of their audit of the Financial Statements of the Trust."

um, what did you expect them to say? you think they will come out and tell you its a fraud? i dont mean to be rude, but that is quite possibly the worst due diligence i have ever seen. do you ask a house burgular if he is there to rob you and then go back to sleep after he tells you he is not?

This will be really exciting if it it can be traded like an ETF. If it is an actively (CTAB-)managed ETF even better. For example, one that invests in CARA100 companies,or CARA100 miners, etc. and shifts it weighting according to market conditions. The way ETFs are popular now this could become quite big (just don't do 2x ETFs!).

BTW, there was an article this week here about how mutual funds are becoming less popular. You have to wonder how many people in the financial industry will be losing their jobs as people no longer buy mutual funds, and thus, there is no money for high management fees to pay those salaries.

papadynamite

Interesting to note the wording:

GTU, "yes, our auditors perform an annual physical bullion inspection".
Seems pretty straight forward.

GLD,"Agreements...allow for the trustees to visit and inspect..."
and, "...auditors may audit the Gold holdings in the vault ..."
A lot like a "whatever IS, is" statement.

Thanks to you, Kaimu and all who have taken time to clarify this issue.

8.17

The discussions on gold are numerous today....Vinod says perhaps a sign of a top. Kaimu says buy and store in Perth. Telestar likes Canadian CEF and GTU. SwissRob points out the advantages of Bullion Vault. For others GLD is acceptable for the moment. Some like physical gold in their bank vault or the backyard or back 40. The choices are many.

Why do we own gold? Gold is insurance against a devaluation of fiat currency. It is the only thing that is pure wealth. Everything else has debt attached to it.

How to own gold? The issues involve , composition of the gold holding instrument, cost/premium, storage and liquidity and tax consequences.

Cost/ premium: GLD tracks spot price closely. CEF and GTU trade at premiums to net asset value currently at 15% . Bullion Vault also sound like they have low transaction costs. Perth Mint charges 3.8% for a kilo bar and 9.1% for a 1 oz coin. Allocated storage fees can run 3%. Your local coin dealers premium is usually negotiable- currently 5-10%

Storage/liquidity: All storage methods have risks. GLD may not have all the gold it says it has, although you can sell it with a couple of clicks of your computer provided your brokerage account and the electronic markets are functioning with a low cost. Same with CEF or GTU. Perth Mint gold can be sold at any time with a choice of redeemable currencies Coins in your lock box at the bank can be viewed by government authorities without a warrant or your knowledge at any time. Gold in the home is subject to possible loss due to crime,fire or perhaps dementia if you forget where you stored it LOL. Selling your physical gold may be difficult due to the vagaries of
a crisis environment which would dictate the need to liquidate gold or coin dealers.

Tax consequences: The ETF's probably have less tax liability at the moment however rules are likely to change in the
future. I doubt there will be gold confiscation except by taxation. Physical gold could be bartered or sold in small amounts in behind the door transactions. If we are in this type of environment food, energy and ammo may be more valuable than gold... but gold should be exchangeable for the things you need to survive,

Gold mining shares may be currently undervalued. Near term future earnings should be strong as energy costs have declined significantly, supply is contracting and demand may be on the verge of a rapid increase due to central bank actions and possible insolvency of the current financial system. Also the Comex market is also suspect. Three of the US largest banks hold huge short gold contracts.... what happens if they get squeezed considering their current financial condition? Why aren't the regulators all over this massive market manipulation? Probably because it serves the government's interest in addition to the HBB. The Comex situation could be the spark that invokes the 3rd bull wave of the gold market, one driven by extreme fear and chaos.

as far as a persian gulf currency or any other shorter-term reserve currency, i would GUESS that such a thing is unlikely. simply due to the fact that the reserve currency requires at least some degree of political stability and economic foundation. at this point in time, no country in the world has a better standing in that regard even with all the exorbitant negatives that are here on the board for all to see, than the usa. maybe some day, china will take the mantle, but it is clearly not prepared yet. any other nominee is easily dismissed on the basis of those 2 factors alone. additionally, and this goes back to the yelling i suppose, as crooked as the usa gov, et al may or may not be, i imagine they are smart enough to understand the concept of sheering a sheep many times while only being able to kill it once. there will be hardships, but your preparations need not exceed prudent and rational precautions that you should ALWAYS be making.

all posts are imho...

This is my opinion as well.....its just that the talk of USO hitting the teens etc...allows emotion to enter the trade and I despise that. This reminds me of the calls for WITC to hit 200 not that long ago (the top), except its the opposite direction of course(the bottom I hope).

Seeing how this administration seems to be doing much of the same as the last administration I'll bet plenty of people are wishing they would have voted for Ron Paul.

Especially the way we see the big banks with the blessing of Congress trying to destroy everything in their paths before they inevitably go down. Just like a toddler having a temper tantrum.

Hopefully, if we still have a country by 2012, we'll all be ready to vote for him then.

Rob.

Naomi Klein: Citizens are demanding government reforms around the globe
By Naomi Klein

(Just read this in Georgia Straight)

Article excerpt:
Watching the crowds in Iceland banging pots and pans until their government fell reminded me of a chant popular in anti-capitalist circles back in 2002: “You are Enron. We are Argentina.”

Its message was simple enough. You—politicians and CEOs huddled at some trade summit—are like the reckless scamming execs at Enron (of course, we didn’t know the half of it). We—the rabble outside—are like the people of Argentina, who, in the midst of an economic crisis eerily similar to our own, took to the street banging pots and pans. They shouted, “¡Que se vayan todos!” (“All of them must go!”) and forced out a procession of four presidents in less than three weeks.

What made Argentina’s 2001–02 uprising unique was that it wasn’t directed at a particular political party or even at corruption in the abstract. The target was the dominant economic model—this was the first national revolt against contemporary deregulated capitalism.

Full article: http://www.straight.com/article-200447/naomi-klein...

This column was first published in The Nation. Read more by Naomi Klein at www.naomiklein.org.

I've always thought that prominent Democrats were far richer than prominent Republicans.

Look at Pelosi, Reid, Henry Paulson, Kerry, The Clintons, George Soros, Warren Buffett, Bill Gates, and the rest of Hollywood.

For the Republican rich people we have the Bushes, Rush, Romney, and who else?

Rob.

Jmo of coarse, but Pillzilla usually when I get the emotions you are talking about SELL SELL SELL!. I have found that the best thing to do is the opposite of what you feel.When I really want to sell. It is usually the time to buy. That being said (and you probably know this), when you are messing with 2x and 3x you should have a stop. Are you using stops on your FAS scalps? Risk reward on these insturments is quite high like 2x and 3x normal etfs. As far as UCO is concerned i am planning on putting a 1/2 position in it at the end of the day. So I think it is oversold.JMO. Good luck on your trade.
Bob

but if it passes, turn on the printing presses full blast.

I typically use a mental stop based on chart breaks. Hard stops are very poor from my experience with the 2 and 3x.....example I stopped out of sds last week while on vacation at 71.89 low was 71.85. Still torques me off. I usually only use hard stops to ensure profits (remove emotion) and when I cant baby sit. I too picked up some UCO today that is fastly approaching my Stop.

I usually set 8%-10% as my hard stop on medium to long stock entries...i let my emotion get hte better of me with USO and never set this stop. Hence, my predicament now. Thanks for your comments.

The congressman speaking now mentioned it. I vote for you sir!

today. prob not in time for market close.

Too bad they're filing Chap. 7, I was hoping someone might arrange a lucrative catering contract for future low-budget Congressional lunch-in's.

Just passed the house. Mc Cain won't support this bill and said he wouldn't support pork just before he voted Bush's pork rescue/bailout.

Wanda puts it well.
Good for a laugh we all need today.
http://www.youtube.com/watch?v=MXznKV7rw7k

1100 shares at $1.82, to complement the 900 shares I purchased at this price 2 days ago and bring it up to the total of 2000 shares -- my standard trade size for WGW. Placed a sell limit order on these shares at $1.99 (while still keeping another sell limit order at $1.95 for the 2000 shares I purchased at $1.75 on Monday.

sastocks wrote: "I am worried is sometimes the broker forces us to cover it up when the price is not in our favor. It happened to me when I was shorting OIL."

What broker made you do it? Scottrade has forced me to cover shorts several times...

David-I use Schwab and have never had an issue with shorting. My guess would be margin issues. This is from Schawb:
"Since the stock you sell is borrowed, the lender reserves the right to call back loaned stock at any time. Proceeds from the short sale, in addition to the applicable margin requirements, must remain in your margin account to ensure that the stock can be repurchased."

Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely:

If you spend that money at Wal-Mart, all the money will go to China.
If you spend it on gasoline it will go to Hugo Chavez, the Arabs and Al Queda
If you purchase a computer it will go to Taiwan.
If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic).
If you buy a car it will go to Japan and Korea.
If you purchase prescription drugs it will go to India
If you purchase heroin it will go to the Taliban in Afghanistan
If you give it to a charitable cause, it will go to Nigeria.

And none of it will help the American economy. We need to keep that money here in America. You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer (domestic only), or tattoos, since those are the only businesses still in the US.
By Barry Ritholtz

vinod- That's hilarious, man. Maybe we should devalue the USD to the point where we lure Chinese/Taiwanese/South Americans/Japanese/Koreans/Indians/Nigerians tourists to the US to spend their money on prostitutes, beer, and tattoos. In which case I would advocate spending all of our TARP dollars on legalizing prostitution and developing domestic breweries and tattoo parlors.

vinod,

That is a truly frightening attitude and, IMHO, utter nonsense. I barely know where to begin. Perhaps I'll just leave it to you to think about how many of the largest US corporations - whose shareholders are predominantly American - benefit from the expansion and development of their interests in foreign markets. Or maybe, I could point out how it is that this global recession has been accelerated (precipitated?) by just this kind of histrionic fear by US investors, pulling their investments back into US dollars, Japanese Yen, Swiss Francs, Gold, and other stale, stodgy havens. Except for the last two items on your list, I have no problem with my discretionary expenditures benefiting globally diverse markets, raising their standards of living and wealth, which have for so long been suppressed by Colonial and exploitive capital enterprises. Their emergence, like yours, when you and your family emigrated into freedom and prosperity, will only benefit everyone on this planet.

Good evening 2nd- I noticed from one of your previous posts today that you have a moderate position in USO. I want to increase my exposure to oil. Am I safe to assume you believe this ETF accurately tracks the cost of crude over a 3 or 4 day time frame? If so, is it NYMEX?
No luck on the ski trip this weekend. With 3 young kids any delay in travel time is deadly!

Mackinaw- I know what you are saying. I'm starting to hear more and more of that garbage very day. One would like to think that after the USA elected it's first African American President, we had turned a major corner....Perhaps not yet.

I watched a speech, yesterday, by Obama, in which he made numerous references to Lincoln. Not sure what the venue or occasion was but I didn't read much about it today on the blog - all you Gold Bugs were commiserating. Wow; you've all got a tiger there - impressive! Now that the stimulus package is passed, if he stops the "gloom and doom" talk, and turns instead to the potential of America and the Globe, we are going to be in good shape.

[if he stops the "gloom and doom" talk, and turns instead to the potential of America and the Globe, we are going to be in good shape.]

Mackinaw- I'm with you on that point of view. Reading comments from the media sometimes leaves me with the impression that Americans in the 21st century are a pathetic band of losers hell-bent on self-destruction via the worship of corrupt gods. From whence the harsh judgment?

A kid in trouble will sometimes envision the worst. Caught joyriding in a stolen vehicle by the Highway Patrol, he's detained in a holding cell overnight, where he spends a sleepless night conjuring images of 5 years behind bars with predatory inmates. In the morning, the judge looks at him, assess damages of a few hundred dollars, and lets him off with a stern rebuke.

Why does the market seem to want to assume the worst? I don't know.

Mackinaw, you have some very good points. This protectionist attitude is tremendously dangerous. The problem is that although it may have started in the US (what were they thinking?!), it is spreading to other areas of the globe. The Canadian Auto Workers president made similar comments this week, about how the stimulus money from Canada should be used only to create jobs in Canada. This is truly dangerous, as the masses will buy into that. Now they are talking about shutting immigration. If this spreads, it's every country on its own and borders are shut and, well, the rest is deja vu. Imagine if this protectionist attitude is allowed to happen. It's just too frightening. We can only hope for true leadership to arise from the elected ones. Let's see if there are real leaders out there.

posted by 2nd_ave: "I have about 4% of my portfolio right now in USO. I take a look at the 3-year chart for USO from time to time, and just think opening a position in the last couple of weeks will probably pay off at some point."

The USO position might pay off at some point -- that is, USO will probably rise above $40. But in the meantime, contango will eat so much of USO away, that when USO rises to $40, WTI oil will probably be at $60, and so investing in XLE, for example, may provide a much better return than investing in USO. Didn't you say yourself that among several similar alternatives (e.g., inside the energy sector) the money should always be invested into a position with the highest reward/risk ratio?

Right now the April futures are 24% higher than the March futures. If the spot price stays constant and the same relationship remains between futures two months out vs. front month futures, then USO will be losing 24% each month. After a year, USO will be down 96% just because of contango. Even if we assume that the present contango is extreme, and as the spot oil will be moving up gradually during the year the average contango will be 10% per month, then USO will be down 72% after a year just because of contango. In order for you to come out even, the oil spot price will need to rise 10% each month, which is equivalent of being up by a factor of 3 for the year. Is this the kind of a bet you want to undertake for the next year?

david, how do you get at "...the average contango will be 10% per month"?

If the price of oil remains constant and it remains in contango your analysis is correct, which makes USO another good candidate for shorting (like the 2X ETFs). However, what if it goes again into backwardation? Then USO will just suffer the opposite effect and will thus rise.

Someone please remind me, when oil was rising like crazy last year, wasn't it in backwardation? If so, wasn't this a clear indication that it was going to come down? If now we have contango... draw your conclusions. You have to have the timing right to play this. However, I am finishing another study and the higher probabilities are that oil will indeed not rise this year.

Rather than playing this guessing, that is why I prefer straddles. It's all about managing the risks.

Dave:

It is scottrade which forced me to cover my short on ETF OIL. lost 5 points, within few days, if i was not forced, I would have made at least 10 points... I guess even our broker is working against us. :)

in my case, it was not due to Margin, I believe lender called back, they gave me like a day to cover, which may be another way to bump up price by forcing short sqeeze. Naked Shorting is risky and definetly better reward than going long.

was fought with the idea that Taxation Without Representation was the path to freedom for our forefathers.
All these taxes listed below will get raised yearly to help pay for the TARP hand outs for the rich bankers, plus the Pelosi Stimulus money headed directly to the pockets of the huge insurance companies.

Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax (Fed)
Federal Unemployment Tax (FU TA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Service charge taxes
Social Security Tax
Road Usage Tax (Truckers)
Sales Taxes
Recreational Vehicle Tax
School Taxes
Sewer Taxes
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Wine and Spirits Tax
Workers Compensation Tax

Not sure how markets will go next week with so much news flow.

But attached is an Excel sheet with two columns.

Cara 100 stocks over 50 DMA

Cara 100 stocks under stochastics oversold line

I am watching the stoch-oversold group.

SLW is my only position right now. But my connecting flight to something else is coming up soon.

"david, how do you get at "...the average contango will be 10% per month"?"

SiO2, that was a random assumption I made for demonstrative purposes, and I indicated it was such by starting the sentence with "Even if we assume ..." On the other hand, in the past few months, I think the contango between front month and the next month futures was always greater than 10%...

"However, what if it goes again into backwardation? Then USO will just suffer the opposite effect and will thus rise."

Don Coxe said that oil was in contango for all of 1970's, and the current market feels "eerily similar" to him to 1970's. Contango is the normal state for oil, since it incurs storage costs. It goes into backwardation only when it goes into an unsustainable parabolic rise. So if backwardation does set in, then I would stay away from oil, since another July-08 type collapse will be in the cards soon.

CP - thanks from me as well on that article on USL. Now that I'm not sleepy, I think I finally get it. Short USO long USL, as long as front month contango remains steep.

"Oils aint Oils" - To quote a Castrol advertisement from my youth.

http://tinyurl.com/c2d24b

It seems that following the producers/infrastructure/refinery crowd in XLE and VDE is a more stable oil trade than following crude. And seems to offer better opportunities to trade in and out.

Recalling remarks elsewhere that producers may be overproducing in order to maintain historically untenable levels of cashflow, with subsequent bottlenecks at the refineries, it may be that the refineries have stronger pricing power when oil recovers.

Elsewhere, I received a TMF PRO intention to buy (any TMF subscribers here to rat me out?) to buy VDE (I hold PRO membership until Oct). I'm interested to understand why they've chosen the lower volume VDE against the XLE suggested here.

Thanks to all for these chats in gold and oil.

From McClatchy:

WASHINGTON — The $787 billion economic stimulus legislation includes $19 billion to modernize health care information technology systems, a move that's intended to lead to the computerization of all Americans' medical records by 2014.

A continued upswing in QSII (A 3X TMF pick) might be possible Monday:

http://stockcharts.com/h-sc/ui

ALOHA !!

Y-E-S!!!

ALOHA !!

I use three gold strategies.

- GOLD IN HAND
- GOLD OUTSIDE THE USA
- GOLD IN STOCKS

Only "GOLD IN HAND" can accurately be audited so long as you trust your own ability to count and decipher .999!!

Any time you must hold assets outside your daily grasp then you assume some amount of RISK! I go on the "accountability principal". If you cannot account for it then do not own it! The criteria for bullion vaults is simple. If you have a bar list with serial numbers and pallet numbers then chances are that vault is legit. Without that evidence I would not own it!

I did a brief visit at the CEF website(I own no CEF)and I could not find any bar list at all. Make your own assumptions then ...

You can never audit anything in terms of gold vaults without serial numbers. I can buy gold bars from the movie DIE HARD on EBay for a couple hundred dollars. The Chinese are notorious for counterfeiting coins ... Lots of BUYER BEWARE stuff!

GLD has flaws tied to HB&B ... Make your own assumptions! Whoever is responsible for the GLD bar list obviously has never run a gold vault! Do you really think that was an oversight like Geitner's $35,000 tax mistake? Ooops!!! Is that really a good excuse for managers of 31 million gold ounces? Only in America is failure and incompetence rewarded so handsomely! Its the moral fabric of our money!

You DO NOT know where your money is with GLD and that is the NUMBER ONE trading "NO-NO" on Warren Buffet's list of "NO-NOs"!

GLD = NO-NO

What worries me is that an ex-Acorn Lawyer and community organizer is now taking over control the US Census. We have what we call an "Acorn resurrection" down here in Bear Creek NC and surrounding towns every 2 years on election day, I bet it will be coming to your town soon.

Good point my Kaimuster,

Makes me wonder if Madison and Jefferson ever bothered to read the Declaration of Independence.

jock - Don't you mean to say Brent looks like it might begin to rise while WTIC still appears to be flat or falling?

Mark Barry- There you go. I'll sell the USO next week and find something else.

Thanks, David.

You sound positively envious.

2nd
NYMEX Crude Oil futures surged in the last trading day of the week, rallying more than 10%. Short squeeze went through as people bought the front month contract with 5 consecutive down days. Oil is at a 2 month low. Means the rally is not going to last.So USO is down and USO will have another negative day. USO has zero exposure to the front month contract which is up right now. While the April contract is down. . Look like this and other ETF like UNG/USO/UCO/OIL/DUG... BUY HIGH SELL LOW EVERY MONTH
Now on will buy only ETF that has holding listed under it. No more 2x/3x
Long or short. Went through all my trade for last 4 month and found that since introduction of these 3X it been hell. Will stick to what was working. they are always finding a way to start a new ponzi scheme

David, you say "On the other hand, e-Trade told me that when I short a stock, they actually buy it in the open market in hold it for me, so they will not make me cover it because of the actions of some other e-Trade users."
To me this implies that e-Trade is your counterparty i.e. they have exactly the opposite position from you. Why would they assume that risk? Doesn't make sense to me. Then again, not much chance of my DENSA membership expiring any time soon.

SCO has a nice chart... much better gains than say, UCO, for example.

2nd

You’re describing a similar view I use to enjoy.

My passion was to bike over to the Hillcrest entrance of Sawyer Camp Trail, make my way down Canada to Woodside road and back. An occasional trek up Kings Mountain to Skyline, across and down 92.

2nd_ave,

Sounds like an ideal way to start the day. Here in Illinois this morning I looked out on a fresh new couple inches of snow. We had just lost all the old dirty stuff in a super warm few days last week and this will likely be one of our last of the season. I love snow and was both a cross country and downhill skier twenty years ago, but I'll welcome spring as well.

Re: Obama

My experience with him both in the state legislature and the short time as our Senator was that he was always working full time at gaining the next level.

Now that he is in the Oval Office (well he was once or twice) I think his lack of legislative experience leaves him — and us — at the mercy of those old pros in congress and possibly the bureaucrats as well.

I'd like to see him leading the attempts to deal with the economy rather than going to the folks with his never ending personal campaign — they/we have no say in this issue as is obvious by the total disregard for public opinion by Washington.

Do you have anything specific in mind with your hopeful view of his future performance? Is it simply your more optimistic nature?

Believe it or not, there was a time (in my youth) when I believed in writing to my representatives and that those I voted for really cared.

>"I did a brief visit at the CEF website(I own no CEF)and I could not find any bar list at all. Make your own assumptions then ..."

Thanks Kaimu, I was under the impression that CEF was the honest Canadian cousin to GLD.

Sorta leaves gold miners the only game in town for a quick trade.

Swiss- I can only offer anecdotal evidence from trading TBT for about 4 months now. Over that time frame I can only think of one time it didn't preform exactly as promised. Many here have pointed out the dangers of long term holding, and I'm sure they are correct. But if you catch it moving in the right direction preforms beautifully.

While it's true that GLD does own real gold bars in a real vault they belong to the ETF Trust, not to shareholders who are creditors. Considering the management fee for owning GLD shares is 0.4% per year, this is not a cost effective way to own gold.

I have abandoned GLD for http://www.bullionvault.com/#rxlist which allows you to own real allocated gold in a professional bullion vault with daily 3rd party audits for less than it costs to own GLD. They maintain a 24/7 marketplace where you can buy and sell online any time you want. Another company, goldmoney.com, stores their clients' gold in the exact same vault at bullionvault but charges higher storage/insurance fees, higher costs to buy and sell, and only provides quarterly 3rd party audits. They do, however, offer silver for sale and have an online commerce system that can be used with other goldmoney clients.

Bullionvault's market system is instantaneous. As soon as you buy (a gram, an ounce, a kilogram, etc.) title is transferred to you. When you sell, your $$ are instantly available to wire transfer back to your bank account or to repurchase more gold at a lower price. I maintain a percentage of my gold for trading. By using available internet sources I have been able to sell high and buy low and, therefore, grow my investment. For instance, the gold experts I follow on the Internet are predicting a peak of 990 in the near future (1-2 weeks). I have placed a limit order on bullionvault's market order system to sell a portion of my gold at 985. Once sold, I plan to repurchase somewhere at the 950 level which has been one of those benchmark prices that gold has struggled to break through.

I highly recommend www.bullionvault.com/#rxlist over GLD because being an owner is much better than being a creditor, particularly when the price is better. Don't even get me started about the Perth Mint. If you live in the US you will have to use Peter Schiff's Euro Pacific Capital as an agent and you will pay a fortune for the privilege of owning unallocated gold. Once I discovered just how expensive it was to invest in the Perth Mint, I saw Peter Schiff in a completely different light. He was right about the mortgage bust but his Perth Mint investment advice is simply a sales pitch for an inferior product that puts your money in his pocket.

Check out bullionvault's site by clicking the link above and then clicking the help button. It is the most transparent operation of its kind I have ever seen. Even if you decide not to use them you will learn things about owning gold that will help you make better decisions.

Grym- I probably didn't make my point well..."One would like to think that after the USA elected it's first African American President, we had turned a major corner...." What I had hoped was that wouldn't ever need to be said. No, of course none of this has any barrings on ANY individuals qualifications. I was hoping America was at the point were we understood our position in the global economy.
BTW, I thought it was of extremely pour taste and poorer judgment when Githner poked his finger at China.

Thanks, David, 2nd. I'm on the hunt now too. PXP is still my largest position in this sector, and want to take some off and re-balance for a larger overall sector position.

I compared investing $1 million in the Perth Mint's (unallocated) certificated program as pushed by Peter Schiff.

If I were to buy, hold, and sell in 1 year my fees would have been $35,000

For the same investment at www.bullionvault.com/#rxlist it would cost me $3000 and that's for allocated gold with daily 3rd party audits.

So you've gone the extra step and gone with Perth's allocated program? How much more is that than the unallocated certificate program?

BTW, when I sell my gold at bullionvault, I am selling to bullionvault or to other clients who compete with bullionvault to provide a better 'market' price.

Bullionvault is the best kept secret in gold investing IMHO They've added a couple of metric tons of gold to their vault-space over the past few months but that's nothing compared to the multi-tons/day with the GLD ETF.

It's interesting that everybody thinks there's a shortage because they can't get the gold coins or bars from the mints. I'm not sure what's up with the mints but there's certainly no shortage of gold in the wholesale bullion market. I could buy 25 kg (or more) from Bullionvault in the next ten minutes if only I had the funds....

www.bullionvault.com/#rxlist

"To me this implies that e-Trade is your counterparty i.e. they have exactly the opposite position from you. Why would they assume that risk? Doesn't make sense to me. Then again, not much chance of my DENSA membership expiring any time soon."

That's a good point, ChrisM. I'll call them again and find out...

One can also become a BullionVault commissioned affiliate......not that there’s a problem with that.

Is a possible solution to USO.....maybe thats how i will play future medium to long term plays on the space. Basically, we are saying there is no good investment to track WTIC that doesnt suffer from contango erosion?

Chicken the biggest problem I have seen with USL is that bid ask is very wide and it doesn't have near the liquidity of USO. I will probably set a hard stop on USO at 25 and if we get any bounce I will be selling into that strength.

I own both the GDX ETF and Yamana Gold.
Occassionally, I look at insitutional buying and selling.
Click here, http://www.mffais.com/auy.html
and Look at the heavy insitutional buying of Yamana during this last week on 2-12-09.
Barclays Global Investors bought 700,000 shares
Apg All Pensions Group bought 781,000 shares
Credit Agricole S.A. bought 186,670 shares
Barclays PLC bought 230,000 shares
Is this useful information for an investor? I'm a novice.
What are these big guys thinking to make such large purchases?
Thanks,
Chaz

Chris,

it actually makes a very good sense. Here is the clue. You noticed that they told David they would call his short back in case a stock "dropping too fast"? Why would they object against that - client makes money, his account increases, right? What in this scenario can broker be unhappy about - UNLESS client's gain is broker's loss, which is exactly the case where they buy shares against his short, thus losing when client profits? Instead of being an agent, they become principal, creating a conflict of interest.

Why would they take this bet (providing this is indeed what they do)? Simple: they know most traders lose money, so it is statistically a good bet. Limiting their loss (client's gain) by reserving the right to call in shares any time while leaving their gain (client's loss) unlimited they further their odds. If that is what is happening, that's disgusting. True broker would provide shares to short from true borrowing and force a client to cover only if shares really get called in by a lender. Sure, timing can be unfortunate and can eliminate your position before your stop is hit. It's still much better than having your broker trading against you. At least that third party lender has no access to your account and can't monitor directly this particular trade. Third party will operate based on their own calculations and circumstances - which is actually what market is. Trading against you, having full access to your information AND being in power to break the trade any time they want - that's something completely different. IMO, direct access broker must remain an agency, not having any interest conflicting with that of their trader.

I had quite an experience with a broker employing strategy of taking positions against traders. It's a bit long with all the turns and twists, so maybe some day.

Mark Barry,

Thanks for the clarification. We seem to be stuck in the mode that the world economy still revolves around us. We may be about to get a dose of reality.

"I thought it was of extremely pour taste and poorer judgment when Githner poked his finger at China."

Yes. Not sure what his point was other than a diversionary ploy perhaps.

I would not be surprised to see congress adopt a tough protectionist stance in order to look like they care about American job losses. The time for that was before the passage of NAFTA — not with the idea of total prevention, but only to slow the process so companies and individuals could begin to adapt to the massive changes this has brought.

Imagination and congress are like oil and water.

My congressman, Don Manzullo, reversed his opinion (had been extremely pro-globalization) in 2001. All of sudden he expressed concerns of losses of good manufacturing jobs here. By then I had been writing him for eight years and my city had lost 10,000 of those "good" jobs.

We not only forced a lot of people with valuable experience into early retirement, but allowed the imports to grow so rapidly that we could not protect our ports or assure the safety of our food, toys, medicine etc.

In spite of Geithner's comments, there was a bit of potentially good news from China this week in the Financial Times — China to stick with U.S. bonds.
http://tiny.cc/uzuW5

If true, it will finance at least some of the huge debt we've been adding. I suspect China has so much U.S. debt they can't afford to allow the dollar to crash without jeopardizing what they own and own too much to exit quick enough not to lose a bundle.

Sort of like a drug addict, they are hooked and they know it.

You cannot take delivery of your bullion at Bullionvault unless there is a "special" circumstance like, according to its example, "your" bank fails. Also, it's based in UK (London), a country with a severe banking crisis. Too similar to a gold/silver ETF for me. May as well just day trade the EFTs/miners and skip the hassle of wiring Buillionvault your money because you cannot take delivery regardless of serial numbers.

That's not quite correct. While their published FAQ states that special circumstances are required their published Terms and Conditions states otherwise. On Thursday two BV clients took delivery of 6 bars between them. See the public declaration at www.bullionvault.com/audit/withdrawal_note.html Also, while Bullionvault is based in London, as is the bank which holds the cash (Lloyds TSB) most BV clients choose to store their gold in the Zurich ViaMat vault. Even if Bullionvault, Lloyds, and ViaMat go under, the gold in the vaults remain the property of the Bullionvault clients. Unlike the poor saps who bought unallocated gold from the Perth Mint who are merely creditors if something happens to their business.

If taking physical possession is important to you then BV is probably not your best choice. The gold is held in 4000 oz. good delivery bars. Once the bar is removed from the chain of integrity it loses value as the burden of proof of its purity becomes yours as would be the burden of security. Plus, there is significant expense involved in the withdrawal process. In that case it might cost as much as it would have cost to buy unallocated gold from the Perth Mint.

I'm perfectly happy to leave my gold in the custody of professionals who are certified to transport and store good delivery bars. ViaMat International stores the gold for Bullionvault clients as they do for the members of the London Bullion Market Association and the Zurich gold dealers who have a lot more to lose than you or I.

www.bullionvault.com/#rxlist

I was labouring under the assumption that a well indexed company would pursue the TSX Global Gold Index, many companies on the exploration/development scale are still awaiting investment in their respective area and have lagged, trading on average about ~$29/oz. in the ground. Just the same many boast a strong potential with a high internal rate of return.

At the moment declining costs are benefitting producers, but companies exploring and developing their properties can only rely on feasibility studies without knowing what the potential problems and the real cost to mine their deposits will look like. Another aspect going forward that rarely gets mention in the press is the effect of major fluctuations in currency, we are likely to see more as various currencies rebound against the $USD.

Note that on a weekly basis, the TSX Global Gold Index has now caught up with the gold price, but that a typically well indexed company in development does not reflect the technical recovery in gold prices and equity prices.

I had always assumed that a healthy company would index well, though this has not been borne out in practise. A very large chart of the same posted below is available here: stockcharts.com. If you have a membership, you can test whatever company you have (use a gold explorer/developer, not for instance, a copper, coal or uranium company as you would be comparing apples to oranges.) Its possible to test weekly/monthly/daily charts over any period.

The CDNX may also be compared to the TSX Global Gold index, which I have chosen because its less exposed to silver. Notable is the silver/gold ratio, which seems the determinant on the speculative side of stocks. It says something if the silver/gold ratio lags far behind the gold index, since all other exploration companies will find themselves indexed to speculative money, rather than investment capital. Any deviation of a gold company from the silver/gold index is a very positive sign. The silver/gold index also shows that this first stage of speculative investment is now over, and that investment demand is taking over. A close indexing with the silver/gold ratio means the company is dependant on speculators rather than investors. stockcharts.com silver/gold

Thanks Vad for your ever useful info.
This sounds very similar to CFD providers around the world, e.g. IG Markets and CMC Markets. If you don't use DMA (direct market access) and many traders don't then the broker is basically taking the other side. One of the benefits of non-DMA is that these brokers will underwrite guaranteed stops (at a cost), useful when prices gap. Has anyone here had experience with spread betting in UK/Europe (don't know if this is available in US or Canada) and if so is it the case where the bookie (oops broker) takes the other side and maybe 'lays it off' with other bookies?

Keynesian Theory: Obama Gives Keynes His First Real-World Test.

http://tinyurl.com/c99y4y

Thanks Vad, I now understand what happened to me a number of years ago.
I'm generally a buy/hold/sell "investor", however a number of years ago I concluded a certain canadian oil and gas growth stock was about to implode because it wasn't going to make its numbers and its premium was about to vaporize. I put on a sizable short position and as soon as it was going in my direction I received a call "one evening" from the brokage telling me they were closing the position, no discussion and no explanation. I could have understood "some" of the shares being called back but "all" of them? I think not. The shares went from about $48 to $17 over the next few months.

A decorated British soldier about to retire kills himself after revealing his life's savings were lost.

http://tinyurl.com/atjwa8

The things we judge men by in this life are often the most transitory ones.

Fox1- I would say 280 from San Francisco to Los Altos is one of the most beautiful stretches of freeway in the country. I remember driving it back in the late sixties after first getting my license, basking in the beauty of speeding through the night air. I still pull onto the freeway at night occasionally to be alone with my thoughts.

You'll find the Hillcrest on-ramp hasn't changed much, lined with parked cars in the afternoons. I walk rather than bike, but I know the twists and turns of the Sawyer Camp Trail well, having put in maybe 5000 miles on it over the last 7-8 years.

Hi Mark,

the charts are telling my novice eyes nke may be oversold and hanging onto $43 support. but at the same time moving avg is still sloping down.

I would be cautious here if i were thinking of opening a new position.

But please take my post as just an opinion.

This article pretty much talks about the same things that are being discussed here. It also cited USO's loss (due to contango) in January 09 -- 12.35%.

http://biz.yahoo.com/indexuniverse/090209/5362_id....

Returns during Great Depression. Timber was in...

http://tinyurl.com/cmuqsm

Plumb Creek Lumber (PCL). Good dividend, inflation hedge.

http://tinyurl.com/ce4s8a

SLE RSI 7d/7w/7m - 29.99/32.67/23.81

http://tinyurl.com/d5xpp8

SLE hasn't seen this price since 1994.

MFI is rising while MACD is negative. If anyone with the knowledge to tell me how I should be reading this would like to comment, I'd appreciate it.

Sara Lee had a restructuring in 2008 which might pay off as the poo really hits the fan later this year. Strange, too many recurring non-recurring charges while sales dropping.

It appears to have a lot of non-discretionary brands under its umbrella. If these guys are getting creamed for lowered earnings...?

Mark Barry,

Thanks for the link. I am holding 40% in a Treasuries-only mutual fund and may just stay. I've been assured by the manager that he would go to cash or other measures if necessary. I think my wife could get by on the interest along with her Soc. Sec. if I'm not around. I will of course warn her to dump if inflation runs wild, but I have doubts it will be so, at least for some time.

We have been debating on a web site the best way to hold gold that is not in one's possession and the veracity of GLD's gold holdings. One of the debaters questioned the veracity of your holdings stating that on your web site he could not find your bar list.

So, I have a request. Please provide me with your gold and silver bar list with serial numbers and pallet numbers.

I would also like to see copies of the auditors report.

Thank you in advance for this information. A CEF shareholder.

Just how can the GLD etf acquire 35 tonnes of physical gold in one day? You can't even go to your local Walmart and find a physical product that was made in America.
Color me skeptical......

I agree bigwad1. The same point was brought up in the comments section under the article. It was only posted as food for thought.

I sold GLD over 1 or 2 years ago and have reconsidered the use of ETF's entirely, but do still use them on occasion. The one’s I would use though are the plain vanilla type not the leveraged 3x’s mania.

http://www.thestar.com/Business/article/587543

"I'd like to see him leading the attempts to deal with the economy rather than going to the folks with his never ending personal campaign — they/we have no say in this issue as is obvious by the total disregard for public opinion by Washington.

Do you have anything specific in mind with your hopeful view of his future performance? Is it simply your more optimistic nature?"

Grym-

Leaders get things done. It's not always obvious how they get it done, and IMO, it's not always obvious to THEM how things will get done. Sometimes they just intuitively grasp the fact that things get done when people are inspired to make changes, that change tends to occur slowly, that change becomes obvious only after a certain threshold is breached.

I like the Biblical definition of faith: "Now faith is the assurance of things hoped for, the conviction of things not seen." My faith is not so much in Obama, but in the response of the American people to Obama. Each one of our lives is an endless stream of small (yet ultimately important) decisions, and each of those decisions impact other people lives as well. Take the corny bumper sticker quote about random acts of kindness- it's not that corny. If an act of violence can destroy many more lives than just those directly affected (and some have affected the entire country, as in the assassinations of Kennedy or King or 911), then acts of kindness or optimism can collectively cause positive changes in the economy, even if all Obama does is light the fuse.

As for the "total disregard for public opinion by Washington," well you know, we all believe in some form of ultimate judgment (what goes around comes around). As long as I'm making Biblical references (and regardless of one's beliefs, as a source of general wisdom it's difficult to think of a better one): "For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more." When judgment time comes, would I want to be a former Treasury Secretary or Fed Chairman? Hell no. (And of course, they are entitled to the option of saying No to Hell at anytime). We all instinctively know the right thing to do. Not doing it does you in. Humility talks. Pride walks. Respect (for others) talks. Disrespect walks. I can say I understand the ambitions of people in Washington, but I can also say I don't understand them. Stripped of our titles and our assets, we are down to we who see in the mirror. I don't how some of them can look in the mirror, but I don't think Obama has a problem with it. From reading your posts, I don't think you do either.

2nd- " A decorated British soldier about to retire kills himself after revealing his life's savings were lost."

"And the third angel poured out his vial upon the rivers and fountains of waters; and they became blood"
Revelation 16:4

>"Also watching construction - FLR, IR - no positions. In that vein, CAT may eventually be worth a try, since it's sitting at around $30."

Picked up an analyst's argument the other day. With Nokia selling less phones & closing factories in China, China can't/doesn't/has less resources to buy heavy machinery (unless, one assumes, chinese banks provide the money as part of their stimulus).

I understand the implications of the guy's argument - we are a globalised economy of course - and am hesitant to think about infrastructure companies for a quarter or two. I've not seen (nor apparently have the majority of senators for that matter) what direct impact TARP 2 has on implementing large infrastructure works in the immediate future.

Can we begin talking about the stimulus package? I've had my fill of gold, oil and treasury talk. What's TARP 2 got to offer us? Anyone read up on it?

Mark sent me this link to the Treasuries auction results.

http://tinyurl.com/cndaag

The TIPS pay better, but are not for me. I have stayed away from TIPS since they are based on the CPI which is a very distorted index. Something like 40% of the CPI is based on housing, but not on actual house prices. They use their own measure — "owners' equivalent rent" . When actual real estate prices were rising , it understated inflation and now it is understating deflation. (Rent is a lagging indicator.)

There is an ETF (TIP) which at least can be protected by stops, but I am expecting the current deflation to last a while yet. We have over produced houses, cars and many other items. We have too many workers and the layoffs which have devastated the rust belt for over a decade have just started to be felt nationally.

The psychological effect of job loss has only started, IMO, and people are slowing their spending as a result. When people won't spend deflation will not be a problem. I will consider the ETF if/when I see the job market reverse.

I like the Treasuries only MMKT, and I guess a lot of people do, since Vanguard has closed theirs to new investors. I had been going to go there, but then they raised all MMKTs and CDs to $250,000 FDIC coverage.

SwisBut, sRobinson -

Thanks for linking to that intriguing WSJ article on which stocks performed well in the 30s.

However, I don't think performance of lumber stocks in the 30's gives indication that PCL will perform well now. Zweig's article said that of the 2 lumber stocks in the 30s, one produced matchsticks (Diamond) and the other made paper packaging for basic consumer goods.

I'll bet PCL is mostly about supplying the home builders, who won't be building much for a good long while.

You did inspire me to write Jason Zweig and ask why he didn't mention gold which went up in the Great Depression, and is up since the start of what I'll term the current "Great Unhappiness" ...

I can't see how any stock group has the reward/risk ratio of gold, although I'd love to hear other perspectives.

Thanks Fransix,

this helps me answer the question of where my swiss francs go when the US dollar tanks, IF the powers that be choose this course of action (i.e., currency devaluation). Nowhere to run, nowhere to hide if all our currencies are devalued and pegged.

I've put it in the 'what if' scenario basket. Seems like another reason to go for Bill's TOG.

Question: What effect does devaluation have on inflation and treasuries? I assume little, because we're still left with possible hyperinflation and T-bills that must lower in price/increase yields to attract buyers accordingly. Correct? Since only 20% of the debt is monetized, as per the analyst's possible scenario.

"How anybody can make a long-term trade in this environment is beyond me, though."

I suppose they'd have to keep their position relatively small and be willing to hold onto it for a period of several years.

BTW - Realistically speaking and aside from the remote possibility of a miraculous event, I don't believe we'll witness a Congress, Treasury secretary, or administration rising to the occasion of protecting the taxpayer from HB&B, as they themselves are generally isolated. The evidence to date coincides with this theory and draws the conclusion for those who can accept reality. Sad but true IMO, almost all, and certainly a majority of the characters in this week's dog and pony show were essentially appointed by HB&B in one form or another.

The probability of our economic future has been distilled to the emotion of hope, and we should ban together concerning ourselves primarily with preparation for the task at hand, as hope deferred makes the heart sick.

Missed that one, thanks rosevillebill....I wish I was Mr.Yings son!