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Sprott And Biderman On Paper Vs. Physical Gold

Tyler Durden's picture


With gold prices dropping (notably divergent from the ever expanding global central bank balance sheets) but record-breaking levels of physical gold being purchased, we continue to reflect on the other 'Great Rotation' that we suspect is occurring as the New Year begins - that from paper gold to physical gold. Who better to discuss the nuances of this dilemma than Eric Sprott as he outlines to TrimTabs' Charles Biderman the relative strengths and weaknesses of ETFs like GLD and SLV, physical-based ETFs such as PHYS and PSLV, and physical holdings themselves. While the new meme is that the Fed may be considering pulling back (on its 'flow') sooner than expected, reality is far different (as Bill Gross recently agreed with us) and that fact makes the following brief clip even more compelling.



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Sat, 01/05/2013 - 17:42 | 3125809 Seasmoke
Seasmoke's picture

i will admit, i do not understand why gold and silver are dropping these past few weeks ?????

Sat, 01/05/2013 - 17:51 | 3125831 Ghordius
Ghordius's picture

how much do you value gold and silver? act accordingly

Sat, 01/05/2013 - 18:37 | 3125908 I think I need ...
I think I need to buy a gun's picture

heres my favorite cnbc quote of the week

we've had a trickle out of the bond market, just a trickle, NOT a FLOOD    Bob Pisani

Sat, 01/05/2013 - 20:42 | 3126156 TeMpTeK
TeMpTeK's picture

Here's a few Schiffmeister quotes...

Sun, 01/06/2013 - 08:05 | 3126771 GetZeeGold
GetZeeGold's picture



i will admit, i do not understand why gold and silver are dropping these past few weeks ?????


Mine isn''s still in my sock drawer. So how much cheap physical gold were you able to buy these past few weeks ?????


Be honest......did you even try?

Sun, 01/06/2013 - 15:02 | 3127339 HedgeHammer
HedgeHammer's picture

Can someone explain to me why we are not talking about the real issue of today. I admire many of you ZH'rs for your knowledge and relativley good understanding when it comes to trading.

However when it comes to understanding the truth and reality of where our money problems stem from most all of you fall short. I hear and read it all the time. END THE FED END THE FED, but that is only half of the solution. Until the American people take back control of printing and issuing their own [DEBT FREE] currency ending the FED will do nothing but cause chaos and another chance for the usurpurs aka banskters to weasel their way back into control of our money.

Many O POTUS' have been assagnited or a failed attempt on several ocassions in our history.

Until everyone understands what a fraud we have been sucked into and understands that every problem we have had up to this very point is all due to the fact that we as Americans let congress give the power to mint money to the FED. HFT is nothing more then a product of what I  have just spoke to. Including the so call business cycle which is nothing more then the 'Money Changers' who increase and then contract the money supply. Know your history and learn from it and then educate others and only after we have clarity can we even begin to fix this problem.

Sat, 01/05/2013 - 18:50 | 3125926 Top_Kill
Top_Kill's picture

Give these guys "squawk on the street" and roll those other bums to the dumpster. That would be some "fair and balance rising above" news.

Sat, 01/05/2013 - 19:08 | 3125956 kliguy38
kliguy38's picture

There were multiple CNBS quotes this week piling on the gold pullback as though it were a "collapse" ... these descriptions of the gold manipulation are NO accident and are coordinated, scripted attacks, designed for maximum effect. It should be a signal just what a threat PMs are to the "game"... enjoy the drama......nature has here own timeline and consequences......IF we survive

Sat, 01/05/2013 - 22:33 | 3126329 Raymond Reason
Raymond Reason's picture

There seem to be two schools of thought.  a) That debasement is all part of the grand plan for world domination by banker demigods, who always win and always will win.  Or b) that the current situation has been in the making since medieval times, when the Catholic Church changed its definition of usury, ushering in fraction reserve and central banking to the Western world.  Sure there have been lots of regional collapses since then, always well-played by the bankers.  Today IS different.  This is the end of power wielded by the old banking family dynasties....and they are not sleeping well. 

Sun, 01/06/2013 - 11:56 | 3126981 ITrustMyGut
ITrustMyGut's picture

we Hope that is whats going on.. there is some evidence.. but it's hard to not know.. the overwhelming history.. is the Oligarchs always win...

Sun, 01/06/2013 - 03:30 | 3126678 El Oregonian
El Oregonian's picture

"Snag 'em and Bag 'em"

Every time the price is right. Very soon they'll be much harder to secure...

Sat, 01/05/2013 - 19:20 | 3125989 SILVERGEDDON

Go try buying Morgans or Liberty's for melt. Good fucking luck.

Try finding Eagles or Maple Leaves without the dealer premium of three bucks or so. 

Shelves at your coin store aren't quite as bare as your local gun store's ammo shelves, but it is getting awfully close. 

Copper, brass and lead.

The new bubble in semi precious metals.

Who knew ? 

Sat, 01/05/2013 - 20:10 | 3126079 philipat
philipat's picture


Sun, 01/06/2013 - 05:56 | 3126724 steveo77
steveo77's picture

I buy gold and silver any time I want at reasonable over melt

Sat, 01/05/2013 - 18:15 | 3125875 SoundMoney45
SoundMoney45's picture

I believe the information here would provide you some answers to your question:

Sat, 01/05/2013 - 18:19 | 3125882 Xibalba
Xibalba's picture

'Strong USD policy' = naked short precious metals to defend the fiat paper in your wallet.    

Sun, 01/06/2013 - 05:55 | 3126723 steveo77
steveo77's picture

Oh effen give me a break............

Sat, 01/05/2013 - 18:45 | 3125918 hampsterwheel
hampsterwheel's picture

Biderman -- when he apologizes publicallly for being wrong and Schiff being right in talking about the $9 trillion dollar debt and the pending house bubble 2006 on CNBC .....History has shown he got pawned by Schiff  - and I have a hard time listening to him now - just listen to him -- come on Biderman just admit you were WRONG and cost a lot of people alot of real money who listen to you ---- and now with GLD - even worse - that internet's a bitch huh Biderman -

Sat, 01/05/2013 - 19:16 | 3125948 Bokkenrijder
Bokkenrijder's picture

Completely agree hampsterwheel! Why on EARTH does anyone (incl. ZH!) take Biderman serious now that he has 'suddenly' seen the light and, of all metal investment possebilities, he manages to choose two of the worst ones: GLD and SLV?!? Hello Charles, wakey wakey, where were you 5-10 years ago regarding physical metals?!

Sat, 01/05/2013 - 19:49 | 3126040 BurningFuld
BurningFuld's picture

Anyone recommending GLD or SLV is a Bankster shill.

Sun, 01/06/2013 - 01:27 | 3126582 Bay of Pigs
Bay of Pigs's picture

Biderman has been beaten to a pulp on ZH, and deservedly so.

He's a fucking stooge.

Sun, 01/06/2013 - 11:45 | 3126959 fuu
fuu's picture

A fucking stooge who sold out to Goldman Sachs when the going got rough.


Sat, 01/05/2013 - 19:41 | 3126026 Haole
Haole's picture

"I see Facebook as a $1000 stock someday" as he dumps the ~3% of his total holdings it comprised after the IPO into the bidding of fools...

I'll keep saying it at every opportunity.

Biderman is a perfect example of what is wrong, not only with the markets but with the U.S. itself.

Sat, 01/05/2013 - 19:45 | 3126032 fonzannoon
fonzannoon's picture

agreed about Biderman. so why is sprott kissing his ass?

Sat, 01/05/2013 - 20:05 | 3126069 Haole
Haole's picture


Not his turn on KWN again yet?



Sun, 01/06/2013 - 08:58 | 3126793 Zaydac
Zaydac's picture

Listen to the interview - the whole thing was set up as a selling platform for Mr. Sprott's trusts. I have a lot of respect for Sprott and some of his published research a couple of years ago was worth studying, but this was a sham interview if ever I heard one. I admit I turned it off about half way through but I don't spend my precious time listening to a sell-side talk his own book.

The correct answer to Biderman's question is given by Mauldin:

Good analysis of the current POG here:

Sun, 01/06/2013 - 11:13 | 3126914 CuriousPasserby
CuriousPasserby's picture

Any time any of these financial guys say anything it is to make a profit, either to get customers, or raise the value of their holdings. None of them care if you make the right investments or lose everytning. Keep that in mind when listening to them, all of them.

Sat, 01/05/2013 - 18:50 | 3125931 MassDecep
MassDecep's picture

Price of Gold down because of HFT, brought on by your Government.

This is their only option at this juncture.

Sat, 01/05/2013 - 19:13 | 3125971 JLee2027
JLee2027's picture

i will admit, i do not understand why gold and silver are dropping these past few weeks ?????

The price is controlled by software, not by the free market. To discourage demand for physical and in the vain hope enough people will sell metal to bring more supply into the market because "they" need it. 

Bottom line: We aere near, I think, "the moment" the physical market takes permanent control away from the software.

Sat, 01/05/2013 - 20:44 | 3126160 boogerbently
boogerbently's picture

I'm wondering,

Is JPM (and friends) shorting and BUYING, or JUST making money shorting?


Sat, 01/05/2013 - 22:06 | 3126291 Poor Grogman
Poor Grogman's picture

What would you do?

Sun, 01/06/2013 - 02:55 | 3126662 Jreb
Jreb's picture

One of the most important questions ever asked regarding metals here on these pages followed by one of the best ever answers. +1000 for you.

Indeed what would any of us do?

Sat, 01/05/2013 - 22:05 | 3126287 Poor Grogman
Poor Grogman's picture

I love the smell of market turmoil in the morning.

Sat, 01/05/2013 - 20:25 | 3126113 Stuck on Zero
Stuck on Zero's picture

Seasmoke, let me answer your question.  If you want to buy an iPad and the local Best Buy puts them on sale for 30% off you just buy it and congratulate yourself for getting a good deal.  You don't ask why it was on sale. Don't ask why gold is on sale.  Just buy it.


Sat, 01/05/2013 - 20:59 | 3126186 ball-and-chain
ball-and-chain's picture

Gold is dropping because the dollar is still considered a safe haven.

Don't yell at me.

I know that sounds crazy.

But the truth is the truth.

Whenever the market sniffs risk, investors run to bonds.

Sat, 01/05/2013 - 23:55 | 3126448 HD
HD's picture

I've heard it referred to as "shaking the equity tree"...

At least back when the market was ALLOWED to sell off.

Sun, 01/06/2013 - 15:28 | 3127406 monogratis
monogratis's picture

That's a good point.  Asset liquidation is occuring in gold and silver because it is the two markets that are allowed to be shorted.  Investors have to cover their dollar shorts somehow, and gold and silver are the ideal place to do that when the stock market is rigged.  The gold and silver markets are not "rigged" in the same way as stocks are.


However, we know that gold and silver prices will rise again because the spread between futures contract prices and spot prices is rather large and it is unlikely that futures prices will fall significantly unless some major central bank liquidates their gold which is unlikely since it has already been leased out and the rest of their assets are just paper certificates from bankrupt governments.

Sun, 01/06/2013 - 03:52 | 3126683 dogbreath
dogbreath's picture



happens every december january.  weird combination of year end tax loss selling, traders gone for the holidays therefore thin markets, new year uncertainty and volatility due to december weakness, and heavy hand understanding of weak hand psycology.  BTFD

Sun, 01/06/2013 - 09:55 | 3126837 lunaticfringe
lunaticfringe's picture

You are talking about the paper, oui? AS for me- my gold and silver is not for sale.

Sun, 01/06/2013 - 11:05 | 3126905 Pseudo Anonym
Pseudo Anonym's picture

re this:

i will admit, i do not understand why gold and silver are dropping these past few weeks...

easy.  if you owned paper gold, would you not want to sell it, even at a loss, and use the proceeds to get the real phyz from your local dealer?  that's why premiums on bullion are rising.  paper gold could technically go to zero (i.e. comex default) or be settled w/ fiat; but not w/ phyz delivery

Sat, 01/05/2013 - 17:44 | 3125819 Dr.
Dr.'s picture

Year-End sell-off and personal buying by TBTB. Go along with it.

Sat, 01/05/2013 - 17:44 | 3125821 Dr.
Dr.'s picture

Aka: BTFD.

Sat, 01/05/2013 - 17:58 | 3125842 jbvtme
jbvtme's picture

check out the physical market.  lot of product sold out.  particularly junk silver

Sat, 01/05/2013 - 18:36 | 3125906 azzhatter
azzhatter's picture

I take delivery weekly of silver and a lot of product is harder to find. I switched to gold this week and bought a couple of coins. I always play the Burl Ives song Silver and Gold while stacking

Sun, 01/06/2013 - 02:17 | 3126626 Godisanhftbot
Godisanhftbot's picture

I sell silver  weekly  and a lot of product is is hard to unload. I switched to gold this week and sold a couple of coins. I always play the Burl Ives song Silver and Gold while rolling the cash over into Bitcoins.

Sun, 01/06/2013 - 02:28 | 3126638 francis_sawyer
francis_sawyer's picture

You should be singing this to yourself...


Sat, 01/05/2013 - 18:00 | 3125844 magnetic
magnetic's picture

The metals were short term overbought and due for a correction, which retraced a bit more than 62% of the preceding up wave.  That is all. You do not need to have a "reason" for every up and down move, that is just not how the world works.  Learn to like it, because you cannot change it.

Sat, 01/05/2013 - 18:08 | 3125861 fonzannoon
fonzannoon's picture

Yes yes short term fibonacci dow theory spx is on my radar follow the green line head and shoulders vomit garbage rabble rabble rabble.

(cracking open a beer)

Sun, 01/06/2013 - 02:31 | 3126643 francis_sawyer
francis_sawyer's picture

He learned everything he needed to know from the "" guy... See ~ what you have to do is to BUY LOW ~ & SELL HIGH... The same paper joobux (masquerading as gold) over & over...

Sun, 01/06/2013 - 09:07 | 3126798 Zaydac
Zaydac's picture

@fonzannoon - I am so pleased there are still people like you around. I hope you are in the market and not just a drunk fool with no money and a computer. I really do like the thought that there are some dumb fools around who don't have the slightest idea how to analyse price movements. It makes things so much easier and more profitable for traders.

Sun, 01/06/2013 - 10:31 | 3126874 Tango in the Blight
Tango in the Blight's picture

If he is in the market he'll soon be a sober fool with no money, no beer and no computer.

Sat, 01/05/2013 - 18:11 | 3125865 Cognitive Dissonance
Cognitive Dissonance's picture

"...that is just not how the world works.  Learn to like it, because you cannot change it."

That thinking reminds me of the litany of excuses proffered by the wife beater as he once again blames the wife for her own abuse.

Sat, 01/05/2013 - 18:15 | 3125874 fonzannoon
fonzannoon's picture

"...that is just not how the world works. Learn to like it, because you cannot change it."

Translated: I am saying this in a very non negotiable way because deep down I am scared shitless at the thought that it will absolutely change.

Sun, 01/06/2013 - 01:12 | 3126562 fockewulf190
fockewulf190's picture


Sat, 01/05/2013 - 18:18 | 3125881 Ghordius
Ghordius's picture

An even simpler observation. In every important market, strong hands shake weak hands - and profit from it

Sat, 01/05/2013 - 18:28 | 3125892 Bokkenrijder
Bokkenrijder's picture

"The metals were short term overbought and due for a correction, which retraced a bit more than 62% of the preceding up wave."

Overbought? The metals have been in the dolldrums for > 1 year now...

Sat, 01/05/2013 - 19:16 | 3125901 Bokkenrijder
Bokkenrijder's picture

p.s. Am I the only one who thinks it's a bit odd that Biderman would do such a stupid thing and recommend his followers to buy GLD and SLV?!? What kind of shitty 'advice' is that?!

Sat, 01/05/2013 - 21:18 | 3126214 scatterbrains
scatterbrains's picture

HAHA ZH I luv you man!!

Sat, 01/05/2013 - 18:08 | 3125857 Jam Akin
Jam Akin's picture

The divergence between paper and physical metal is coming along nicely.

Sat, 01/05/2013 - 18:12 | 3125869 q99x2
q99x2's picture

China manipulating prices lower and purchasing on the back end.

Sat, 01/05/2013 - 18:28 | 3125893 The Beam
The Beam's picture

China didn't try to kill a manipulation whistle-blower. China, and ASEAN nations, are just smart. They see how things are playing out. Should watch the HBO movie "Too Big To Fail". While they grand stand our financial leaders as "saviors", they could not argue one point....very public in China....When they let us know they, with Russia (another ASEAN nation) have the ability to crush our government debt).....

This is why I think the Fed increasingly wants to compete against itself for our own debt......


Last part is my theory.

Sat, 01/05/2013 - 18:36 | 3125905 devo
devo's picture

Anecdotal: I had a relative ask how to get physical on Friday. He had a GLD position up until now. This guy is an equity perma-bull, fwiw.

Sat, 01/05/2013 - 18:46 | 3125920 CH1
CH1's picture

Positive change is always welcome.

Sun, 01/06/2013 - 02:33 | 3126644 francis_sawyer
francis_sawyer's picture

You rightfully informed him to buy some scuba gear...

Sat, 01/05/2013 - 18:52 | 3125934 DavidPierre
DavidPierre's picture

Gold Price Suppression

I started buying gold over 10 years ago and whilst it has been a terrific investment I have been consistently wrong is in estimating how long official efforts to suppress the price can go on for and I thought I would take a look at how the efforts to suppress gold have evolved in recent years.

In addition to the general programme of misinformation, efforts to suppress the price fall into two phases:-

Phase 1 (up to 2008)
* Ridicule gold to try and keep it off the investment radar.
* High profile gold sales under the Washington Agreement.
* Repeated threat of IMF gold sales.
* Use of leases and swaps to provide official gold to the market, enabled by the IMF’s opaque reporting regime.
* Modest use of the sale of unbacked paper gold.

Phase 2 (post 2008)
* Continued use of leases and swaps to provide official gold to the market.
* Much more aggressive use of the sale of unbacked paper gold, now with direct regulatory involvement.
* The rehypothecation of remaining physical gold inventories.
* The likely adoption of fractional reserve practices at major central banks in respect of the gold stored on behalf of other central banks. This may have been done with the implicit consent of the client central banks themselves but almost certainly without the knowledge of the relevant political legislatures.

What distinguishes phase 2 from phase 1 is that the measures being adopted have gone from being merely deceitful to being something which is much closer to outright illegality and fraud, and the stakes are now much higher for the perpetrators. When the criminals write the rules illegality might be an academic concept but actions nonetheless have consequences and when the whole rig eventually falls apart then heads will roll as the public will be in a vengeful mood.

The reason I was wrong in my estimate of how long this price suppression could continue was because 10 years ago I still believed that those in power would observe the law and maintain a minimum standard of public decency.

Unfortunately for all of us I was wrong.

Sat, 01/05/2013 - 19:44 | 3126029 BurningFuld
BurningFuld's picture

They are justifying breaking all of those laws now as a matter of National Security. Do not be surprised how far they will go with that "belief".

Sat, 01/05/2013 - 20:50 | 3126094 devo
devo's picture

Plus the ETFs.

Sat, 01/05/2013 - 23:13 | 3126377 laboratorymike
laboratorymike's picture

When the criminals write the rules illegality might be an academic concept

Legality can rup up against morality. That is, you write the laws, but there is a law that transcends human laws, and it is the one everyone here has an innate understanding of when living in an "up is down" world.

Sat, 01/05/2013 - 19:04 | 3125937 Banksters
Banksters's picture

Dear Fuckers at at the unFederal Reserve,


Go ahead and cease QE 4eva.   Let's see if there is demand for the shit that you have on your levered to the hilt balance sheet.   Will the market continue to buy the 1.7 percent 10 year? Or 20 year? Or 30 year?  If not, what happens to all of your assets?




Sat, 01/05/2013 - 20:45 | 3126166 negative rates
negative rates's picture

Execpt bitches drop dead in the end too, so who really wins here?

Sat, 01/05/2013 - 21:47 | 3126263 newengland
newengland's picture

Holders of real money: physical gold, silver, (maybe platinum if Timmay gets his coin),  land, food, water.

Next question.

Sat, 01/05/2013 - 19:05 | 3125952 Jason T
Jason T's picture

Armstrong says gold up 13 years in row.. not ready to break out and may see a correction of some sort this year .. Fed tone bearish for gold.

I personally see Corn and Soybeans falling and that's a big relief to inflation so.. deflation is a risk this year plus fed does not want to see bond yields rise so a little deflation a good thing..for now.  fed will eventually lose, rates will rise and "game over insert coin" will be displayed on your computer screen.

Sat, 01/05/2013 - 19:53 | 3126044 Haole
Haole's picture

Armstrong is one interesting character with quite the history but I think he's just an ounce short of being a disinfo agent.

Sat, 01/05/2013 - 22:40 | 3126343 HungryPorkChop
HungryPorkChop's picture

Some believe that was part of the deal for his prison release.  Rumors, but who knows these days?

Sat, 01/05/2013 - 19:13 | 3125969 debtor of last ...
debtor of last resort's picture

Physical gold and silver is like a paid off student loan. Bitchez.

Sat, 01/05/2013 - 19:14 | 3125970 The Aviator
The Aviator's picture

Paper gold or tungsten gold...anything but the real thing!!

0 0   


gotta love chris duane!











didnt realize that the PSLV is in the capital gains tax rate unlike the GLD and SLV.  one more reason to avoid GLD and SLV!

Sat, 01/05/2013 - 20:44 | 3126162 knukles
knukles's picture

It's only in reg cap gains if when in the tax year purchased, the holder fills in a specific IRS form.  Sorry, but I don't remember the number.  The Sprott prospecti have reference to it.  Also, starting in tax year 2011, I believe it was, there's additional reporting necessary for any investments held offshore, which include deals such as PHYS, PSLV.

Sat, 01/05/2013 - 19:15 | 3125974 SILVERGEDDON


All credit to Million dollar bonus for his insight during his Facebook IPO frenzy of long calls.

Payback is a bitch, bitchez.

Keep loading up your leaky boats.

Paper burns when the music stops, and the big boys gots all the chairs. 

Sat, 01/05/2013 - 19:28 | 3126003 apberusdisvet
apberusdisvet's picture

The games will end when China has at least 4000 metric tonnes (maybe already there) and play "doctor" with the NYFED and USG; "I'll show you mine if you show me yours".

Sat, 01/05/2013 - 19:38 | 3126021 Dr. Sandi
Dr. Sandi's picture

NYFED and USG will try to show theirs to each other. That's when they discover that serial numbers of the few bars left all appear in both inventory lists.


Plus, it will all smell of elderberries and tungsten.

Sun, 01/06/2013 - 02:38 | 3126648 francis_sawyer
francis_sawyer's picture

& gefilte fish

Sat, 01/05/2013 - 19:40 | 3126024 BurningFuld
BurningFuld's picture

Anyone that thinks the fed will (or can) quit printing money before the USD collapses is smoking crack.


Sat, 01/05/2013 - 20:25 | 3126110 devo
devo's picture

It's not that binary. There could be a technological innovation (e.g. in energy) that generates real growth. Or, the rules can change to force people into certain assets. etc. People like Peter Schiff calling for a dollar cllapse are on the right track, but they never consider how or why they might be wrong.

Sat, 01/05/2013 - 22:29 | 3126317 unrulian
unrulian's picture

What choice do they have? with all being relative they are right...i don't think they should footnote their beliefs pending a discovery of free cold fusion for all or ferengi invasion.

Sat, 01/05/2013 - 21:43 | 3126258 newengland
newengland's picture

Buzz Bernanke...QE to infinity and beyond.

Sat, 01/05/2013 - 20:19 | 3126101 XtraBullish
XtraBullish's picture

Sprottie is now shit-scared that his enormous gamble is going to result in MASSIVE redemptions. Sprott (like the Hunts in 1979) has a finite margin account - the G20 Central Banks/Cartel/Treasuries have an infinite margin account and will never be beaten in the end because they have the corner on the law-makers so they can LEGISLATE silver and gold into submission. You all gonna bet against the Supreme Court if their precious banksters get into a pickle?


The day Sprottie wins is when the USS Nimitz pulls into Gibraltar for supplies and they refuse the credit card (i.e. U.S. dollar).

Sat, 01/05/2013 - 20:36 | 3126132 fonzannoon
fonzannoon's picture

Sprott is buying on margin? I refuse to believe that.

Sat, 01/05/2013 - 21:42 | 3126254 newengland
newengland's picture

Physical bullion beats paper every time. History proves it, and this time will be no different.

Sat, 01/05/2013 - 20:40 | 3126142 knukles
knukles's picture

Who cares.
(note it's a statement, not a question)

Nothing has changed.

Sat, 01/05/2013 - 22:26 | 3126270 Yen Cross
Yen Cross's picture

Status fucking Quo! I can't wait for the next round of "Whorse Shit" to come out of Europe.

 worse yet, an American "aircraft carrier" gets "Sun Bursted" in the Arabian Gulf <>

Sat, 01/05/2013 - 20:52 | 3126179 TwoHoot
TwoHoot's picture

There is no reason NOT to own gold/silver in a ZIRP environment. There is no carry cost.

BUT ...

The bid/ask spread is about 5% on physical silver so it isn't practical for short term trading. That makes physical a sure loser for holding periods of less than two years with 2% annual inflation.

What broke the back of the last big move up in PMs was 12% US treasury bonds that made PMs expensive to own. Inflation, if accompanied by significantly higher interest rates, will be a drag on PM prices.

That said, some modest amount of physical gold/silver seems prudent. A 10% hickey isn't much if the SHTF for real and money in the bank is not there or won't buy the necessities of lfe.

I figure an ounce of silver is worth about ten gallons of gas or 20 loaves of bread and an ounce of gold will cover very basic living expenses for a month. It is high deductible disaster insurance. The question is how much (if any) do you need?





Sat, 01/05/2013 - 21:04 | 3126199 xtop23
xtop23's picture

2% inflation lol 

Sun, 01/06/2013 - 02:50 | 3126659 francis_sawyer
francis_sawyer's picture

 "I figure an ounce of silver is worth about ten gallons of gas or 20 loaves of bread and an ounce of gold will cover very basic living expenses for a month"


Dumb ass comment... More than half the world's population lives on less than $2.50 a day (& you might as well apply the 98% LOSS OF VALUE of the USD, since inception), to the equation)...

Bottom line: It's a BRAVE NEW WORLD when the paper ponzi goes poof... Gold, Silver, Land, Water will all have value, but to try and come up with a figure on how many oz of gold you need to "cover very basic living expenses" (HAHAHAHA), is an exercise in futility... You may wind up finding that a box of salt (which, in ancient times, was traded like gold) is worth more than all your gold ounces...

Sat, 01/05/2013 - 23:22 | 3126389 Real Estate Geek
Real Estate Geek's picture

 You've almost got it.  But actually it's increasing REAL interest rates that would negatively affect PM prices.

Sat, 01/05/2013 - 23:54 | 3126445 Wave-Tech
Wave-Tech's picture

Some level of tangible asset assurance is always prudent regardless of the economic environment.  A regularly rebalanced 15% of net worth is the most common wisdom.  Here is a handy spreadsheet to assist those so inclined to construct their personal (TAAP) Tangible Asset Assurance Portfolio.

Sun, 01/06/2013 - 09:16 | 3126800 Zaydac
Zaydac's picture

"The bid/ask spread is about 5% on physical silver" 

Much less than that at BullionVault

Sun, 01/06/2013 - 11:47 | 3126962 WmMcK
WmMcK's picture

One of my LCS's will buy Au at spot and pay $3 over for ASE.
I'll trade back and forth anonymously with no records
-- Fuck you Bernanke.

Sun, 01/06/2013 - 10:29 | 3126873 Gold Dog
Gold Dog's picture

+1 Hooter

Sun, 01/06/2013 - 11:42 | 3126954 WmMcK
WmMcK's picture

The bid/ask spread is about 5% on physical silver so it isn't practical for short term trading. That makes physical a sure loser for holding periods of less than two years with 2% annual inflation.

If you trade the GSR between, say,
51 (go to Au) and 57 (back to Ag),
you can trade just physical and be a sure winner.

Maybe not short-term, but not a buy and hold strategy either
(more of a swing trade)

Look at a 2 year chart for the limits - YMMMV.
Disclosure, I am talking (part of ) my book.

Sat, 01/05/2013 - 21:40 | 3126248 newengland
newengland's picture

Good gold man Mr James Sinclair has been proven to be ahead of the crowd and correct for many years.

If you can't stand the heat, get out of the kitchen.

All the more profit for those who stood their ground.

Parlay. Physical, not paper.

Sat, 01/05/2013 - 21:43 | 3126255 Yen Cross
Yen Cross's picture

 Biderman, might look like a dried pork rind, but I did watch the video, and the man does make some sense.

  He's a cocky ( Son of David), on the Sausalito.  I like the way the guy dissects tax codes, and liabilities...

  Peter Schiff is BTFD big time!

Sat, 01/05/2013 - 21:54 | 3126266 newengland
newengland's picture

Good evening, Yen Cross.

Yes. BTFD.

This is particularly important for widows and orphans. The 12-year gold run has mirrored dollar decline, and it has beat all other 'investments', as it will continue to do without counterparty risk, as all central banks seek 'beggar thy neighbor' policies of debasing their own currencies and bailing out their own banks and sovereign governments with QEternity...the ruin of widows and orphans who will lose their purchasing power, while the fancy men in fancy shoes run off with any money.

Sat, 01/05/2013 - 21:55 | 3126274 Yen Cross
Yen Cross's picture

 Good "late evening" to you, my well versed friend.

Sat, 01/05/2013 - 22:05 | 3126290 newengland
newengland's picture

:-D, my friend.

Sat, 01/05/2013 - 22:28 | 3126311 Yen Cross
Yen Cross's picture

 Am I correct when the $5m per person Estate tax clause, is still in place? It's obvious you are in the financial services industry.

Sun, 01/06/2013 - 00:56 | 3126540 newengland
newengland's picture

Sorry for the delay in the reply, Yen. Yes, it is my understanding that the $5M estate tax clause still applies, although it would be best to get advice from someone who deals with that issue in particular.

Don't get me started on the tax principles...or lack of principle!

No need to rush on anything at the moment. Let the venal types blow themselves up. Then make estate decisions.


I'm not in the financial services industry. I'm all in with the family estate ways :-) You too.

Sat, 01/05/2013 - 21:47 | 3126264 Moe Howard
Moe Howard's picture

I can't stand these interviews with that "underwater" sound from the guy calling in. Can't they get to a copper line?


Not all progress is high quailty, that is for sure.

Sat, 01/05/2013 - 23:26 | 3126394 Real Estate Geek
Real Estate Geek's picture

+1.  Forty years ago, it was expected that long distance phone calls would have almost flawless sound quality. 

Sun, 01/06/2013 - 01:14 | 3126571 Supernova Born
Supernova Born's picture

Laughably shitty audio from Sprott. You'd think he could afford better than a "Magic Jack" phone connection.

Charlie Brown's teacher is easier to understand.

Sun, 01/06/2013 - 07:54 | 3126765 Wile-E-Coyote
Wile-E-Coyote's picture

Yeah Sprott sounds like he is being water boarded. The fucking Fed will do anything to save their own ass.

Hold out Sprott just keep telling yourself you are not drowning really.

Sun, 01/06/2013 - 00:51 | 3126547 terryfuckwit
terryfuckwit's picture

the thing i respect most about zh is the absence of people trying to sell to you. yes in the main we all promote physical pm but we can buy our own in a million differant ways. yes we are a big heap of psycho balloons and a belated happy new year  from blighty.....

Sun, 01/06/2013 - 03:12 | 3126674 TotalCarp
TotalCarp's picture

Can i interest you in some fresh tungsteen coins? Nice and cheap, have a cute picture of a panda on 'em. Good value i am told!

Sun, 01/06/2013 - 03:05 | 3126671 Obadiah
Obadiah's picture

I am wondering if there are any tax consequeses on placing excess cash in the company's bank account in phys gold and silver coins.  Will it be treated like a money market fund or what?

Sun, 01/06/2013 - 22:44 | 3128538 kwality
kwality's picture

Taxed as collectibles.  28% long term whatever yr rate is for short term..

Mon, 01/07/2013 - 06:33 | 3129001 Obadiah
Obadiah's picture



however if I placed it into an investment fund it would be treated the same as a mm fund?


thx kwality

Tue, 01/08/2013 - 15:23 | 3133739 kwality
kwality's picture

You're very welcome.  I'm not sure what you mean by place in an investment fund.  Depending on the scale, if you are purchasing physical, the fund in which it would be placed would consist of a safe or other proprietary security arrangement.  In this case, you would just keep a ledger/receipts of how much you buy and keep track of how much you pay for it. 

If you are planning on keeping long-term, I am not sure of how you can get around the 28% increase LT. If you are willing to put the time in, you could limit yourself to your short term ordinary rate by selling the coins when you've made a decent short term gain and then looking for a lower re-purchasing point.  Or you could use the coins for compensation/purchases within a year of your acquisition of them. 

As long as you have possession less than a year, if you sell or trade X or Y coin out of your "fund", any gain will be taxed as ordinary income.  Once ownership is passed, the basis steps up (or down but more likely up). Take from that what you will! 

Then there are those who would say that a phys purchase should be concurrent with a boat purchase...





Sun, 01/06/2013 - 07:51 | 3126764 Wile-E-Coyote
Wile-E-Coyote's picture

Why do you think Gold ETF's were created in the first place, forward planning, they are designed to be used to supress the price of PM's to protect the Dollar. PM's are a barometer of the disfunction and the falling value value of FIAT currencies. The goons at the Fed know their history, Gold has always been the Canary in the coal mine they won't let this bird fall off its perch even if they have to nail it in place.

Sun, 01/06/2013 - 11:34 | 3126945 WmMcK
Sun, 01/06/2013 - 11:14 | 3126916 CuriousPasserby
CuriousPasserby's picture

This drop in price is just in time for the 2013 gold and silver eagles coming out this week! I love it.

Sun, 01/06/2013 - 12:27 | 3127030 moneybots
moneybots's picture

"There were multiple CNBS quotes this week piling on the gold pullback as though it were a "collapse" ... these descriptions of the gold manipulation are NO accident and are coordinated, scripted attacks, designed for maximum effect. It should be a signal just what a threat PMs are to the "game""


Or are they trying to get people to sell, becasuse they are looking to buy?

Sun, 01/06/2013 - 19:51 | 3128087 Jam Akin
Jam Akin's picture


Sun, 01/06/2013 - 19:28 | 3128004 Herdee
Herdee's picture

The biggest reason why the United States has a debt time-bomb is because it's an economic structural issue that's the fabric of the economy.The structural issue being the economic reliance and the dependance on the defence industry.It's primarily a jobs issue,but also a tax paycheck collection issue,research jobs,materials sector and supply issues,pensions,stock market activity in Companies,hundreds(some say over 900 depending on definition)of military bases worldwide,arms sales to foreign countries,State and local taxes.I'll stop there on "the fabric",but you get the economic structural point.History always repeats itself,the United States has done the same thing as the Roman Empire.It's overextended worldwide,it's the world's policeman and the cost of running the military is bankrupting the Republic.It survives because the United States itself has created a world of enemies.Guess who knows it and uses this knowledge to continue the run-up in debt?All the so-called barbarians that are the so-called enemies of freedom and lady liberty and blah,blah,blah...Say this while your crying,like the Republican Speaker of Congess, "WE'RE BROKE!!!" Son of a bitch,ain't it.Don't get me wrong,Russia,the British Empire and countless others thoughout history have all made the same mistakes.And ya know what?It's economic warfare being used against the type of culture that exists in the U.S.and the politicians are too blind to see it.

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