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Gold vs Gold Stocks - Goldman Releases "2012: A Gold Odyssey? The Year Ahead..."

Tyler Durden's picture




 

(Yes, this is arguably the most gratuitous use of the word "gold" in a headline ever).

As one can glean from the title, in this comprehensive report by Goldman's Paul Hissey, the appropriately named firm deconstructs the divergence between gold stocks and spot gold in recent years, a topic covered previously yet one which still generates much confusion among investor ranks. As Goldman, which continues to be bullish on gold, says, "There is little doubt that gold stocks in general have suffered a derating; initially with the introduction of gold ETFs (free from operational risk), and more recently with the onset of global market insecurity through the second half of 2011. However, gold remains high in the top tier of our preferred commodities for 2012, simply because of the extremely uncertain macroeconomic outlook currently faced in many parts of the world. The official sector also turned net buyer of gold in 2010 for the first time since 1988, and has expanded its net purchases in 2011." And so on. Yet the irony is, as pointed out before, that synthetic paper CDO, continue to be the target of significant capital flows, despite repeated warnings that when push comes to shove, investors would be left with nothing to show for their capital (aside from interim price moves of course), as opposed to holding actual physical (which however has additional implied costs making it prohibitive for most to invest). Naturally, this is also harming gold stocks. Goldman explains. And for all those who have been requesting the global gold cash cost curve, here it is...

  • We feel there are some obvious solutions to the flight to physical gold ETFs. In order to entice investors away from the gold ETFs, producers
    must
    • Reduce perceived operational risk
    • Deliver to market expectations (which includes managing those expectations)
    • Demonstrate volume- (not just price-) driven EPS growth
    • Return cash to shareholders
    • Continue to replenish resources and reserves
  • It is also likely that some of the derating we have seen recently has been as a result of changing sentiment towards sovereign risk. With a skittish view toward equities in general, and a decreasing willingness to pay for future earnings, it appears as though the market is less inclined to favour exposure to companies in locations where the perceived risk is higher - rightly or wrongly (West Africa, Philippines, etc.).

Investment View:

  • However, we would continue to favour exposure to gold companies in the current global financial climate.
  • In particular, we would look for those companies which are trading at a discount to valuation AND which we believe to be operationally sound
    (thereby minimising the risk of further derating).
  • Those companies with little/no debt would also be favourable, given the reduction in financial risk and good cash margins (at least currently…).
  • Alternatively, we would be comfortable pursuing those stocks that are trading around NPV, but are well managed, have low execution risk and a growth profile that we believe is not at risk of being deferred.

And the chart that lays it all out:

In summary, here is what needs to happen, according to Goldman, to end the flow into ETFs and redirect it back into stocks.

We feel there are some obvious solutions to the flight to physical gold ETFs. In order to entice investors away from these funds, producers must reduce perceived operational risk and provide something that a fund cannot (in this instance growth and capital return).

1. Consistent operational delivery

First and foremost, companies need to deliver on quarterly operational production and cost performance. Companies which fail to meet market expectations (or appropriately manage expectations...) provide investors with an easy excuse to deploy capital elsewhere. We provide further exploration below for specific companies, however in general many of the producers in our universe have released consecutive downgrades in either costs or production volumes in the last 3-4 quarters.

2. Volume-driven EPS growth

In our view, one of the key drivers of outperformance is EPS growth, driven by an increase in volume (hopefully with stable unit costs). Whilst price-driven growth is also beneficial, clearly pricing outcomes are not certain, particularly given the recent volatility of the gold price. Several gold companies in our coverage are building or commissioning expansion projects which should deliver volume growth - however, execution risks are also present.

3. Yield/capital management

The current gold price should be yielding excellent cash margins (see chart below) for many of the gold stocks in our coverage universe. Some of the companies have significant capital projects which will require cash, however there are also others which should be able to consider meaningful returns to shareholders in lieu of expansion opportunities. This chart clearly highlights the various margins by comparing C1 (direct) and total operating costs along with the gold price over the same period.

4. Continual resource/reserve replacement

Although less important for large companies with >20 years or resources and reserves (such as NCM), in our view it is important that companies continue to replace ore through resource and reserve additions. The two tables below highlight the significance of resource growth on gold majors, with Barrick (top) replacing reserves through both acquisition and exploration.

Much more in the complete report:

 

 

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Mon, 01/09/2012 - 10:04 | 2046308 dick cheneys ghost
dick cheneys ghost's picture

Golman Sacks? ...............Those bastards

Mon, 01/09/2012 - 10:27 | 2046362 trav7777
trav7777's picture

one of the things about peak supply is that it makes it impossible for everyone to replace reserves, much less grow them.

As for "investing" in miners...they suck.  A few here and there, if you pick stocks well, can work, but the class as a whole has been schizo.

For physical, most people simply don't have the disposible income to seriously afford one ounce on any recurring basis.  There are also a lot of opportunistic silver pumpers around selling get rich quick schemes.  After the recent silver bubble popped and many bagholders were created, justifying scraping together savings across several months to go buy a coin seems very risky.

Many bagholders who were convinced to chase the silver price spike have lost 25-40% of their real wealth as measured against other physical commodities.

Mon, 01/09/2012 - 10:36 | 2046384 tmosley
tmosley's picture

Therefore, don't buy silver now when the price is down either.  Ignore the fact you can afford to buy some each month and not worry about short term fluctuations in price.

Yes, yes, let's all listen to Trav and do NOTHING.  Just sit and wait to die, and scream bloody murder at anyone who dares to suggest any path forward in ANY realm of reality, using doublethink to simultaneously claim that there will and won't be any sort of "SHTF" situation/"Mad Max".  You know, just say whatever it takes to justify complacency.  And for the love of God don't oppose the government!  They are doing a fine job, if it just weren't for those damned minorities mucking everything up with their low IQs.

Mon, 01/09/2012 - 10:38 | 2046387 fuu
fuu's picture

Could the two of you just get a room this time?

Mon, 01/09/2012 - 10:43 | 2046400 tmosley
tmosley's picture

I'd rather he just lock himself in a padded room, actually.  Or maybe a nice jail cell.

Mon, 01/09/2012 - 11:24 | 2046485 strannick
strannick's picture

"However, we would continue to favour exposure to gold companies in the current global financial climate. In particular, we would look for those companies which are trading at a discount to valuation AND which we believe to be operationally sound"

So Goldman wants miners that are 1. cheap and 2. in safe countries.

Wow, thanks for that bit of investing genius Goldman, thats why they pay you the big analyst bucks. Next these investment wizards will be relating to us the revelation that 'gold is a hedge against inflation in uncertain economic times'. Wait, they said that too....

Mon, 01/09/2012 - 11:26 | 2046516 GiantVampireSqu...
GiantVampireSquid vs OWS UFC 2012's picture

No Goldman is selling miners.

Mon, 01/09/2012 - 14:25 | 2047162 Random_Robert
Random_Robert's picture

Goldman is not selling miners. If they were, then they would be publishing that they are BUYING miners...

What Goldman is doing is PRESCRIBING the circumstances whereby they would buy miners- they are feigning position neutrality.

Since the sector is in the shitter price-wise; what this position neutral analysis means is that Goldman is accumulating miners. They are looking to vacuum up any sector liquidation they can trigger on the cheap.

Mon, 01/09/2012 - 14:02 | 2047067 trav7777
trav7777's picture

yeah, lol.

When you get a chance, take a look at the pie charts on world gold production over the past 50 years.  See how the production base fragments after RSA hit peak.

There AREN'T ANY significant reserves in fucking stable countries; those reserves WENT FIRST for that very reason!  Nobody would rather drill for oil in Nigeria either or some other revolving kleptocracy backwaters.

Mon, 01/09/2012 - 10:38 | 2046390 Badabing
Badabing's picture

“as opposed to holding actual physical (which however has additional implied costs making it prohibitive for most to invest).”

 

Not the heavy physical.

 

“We feel there are some obvious solutions to the flight to physical gold ETFs.”

 

Is this a oxymoron or what?

 

They must think we be dicks.

Mon, 01/09/2012 - 13:03 | 2046854 akak
akak's picture

Yeah, I had to instantly call BS on that line too:

as opposed to holding actual physical (which however has additional implied costs making it prohibitive for most to invest)

What the fuck was this supposed to mean?

Just what are all these "implied costs" of owning physical gold over ETFs that supposedly make doing so "prohibitive for most"?  Is a <1% annual storage cost "prohibitive"?  (And that is not even balancing that cost against the risk of losing ALL of one's 'investment' in an obvious Ponzi scheme like GLD or SLV.)

Mon, 01/09/2012 - 14:26 | 2047155 Badabing
Badabing's picture

Thats because their talking about physical gold ETFs.

Mon, 01/09/2012 - 15:19 | 2047372 ZeroPower
ZeroPower's picture

We're talking about financiers here who've been in the business for years and have literal millions to spend on gold. You think they hold a single shitty gold bar? They have stacks and stacks lined in up in a safe somewhere - something that ends up costing, in the long run. I assure you the storage cost of 1% is not prohibitive to them, but it does add up when talking about semi-rich people who invest maybe a few hundred thousand here and there and then say 'wtf' when they realize holding gold bars in their homes is fucking stupid.

 

Mon, 01/09/2012 - 15:32 | 2047414 akak
akak's picture

I assure you the storage cost of 1% is not prohibitive to them, but it does add up when talking about semi-rich people who invest maybe a few hundred thousand here and there and then say 'wtf' when they realize holding gold bars in their homes is fucking stupid.

Non sequitur. 

How is a 1% storage cost for gold not prohibitive for the rich, but prohibitive for the merely semi-rich?

Also, what is so "stupid" about holding gold at home?  Doing so carries its own risks, of course, but so does trusting somebody else to hold it for you.  It is manifestly NOT stupid if one takes suitable precautions, and spreads the risk around ---- yes, even to the point of burying (some of) it on one's own property.

Mon, 01/09/2012 - 15:58 | 2047494 ZeroPower
ZeroPower's picture

Wealth is relative.

Let's look at it progressively. The middle-class/well-off/upper class all the way up to rich might have some ideas of diversification in their heads, and so lets assume they buy a small amount of bullion, say 100oz. Lets round off to $160k. $160k is a lot to the lower end of that spectrum, not that much to the rich. Now, merely acquiring the bullion is the least of their worries. 100oz is still easy to store in your home, but it gets to be troublesome if one doesn't have a safe or an excellent hiding spot for it. Burglaries aside, does one want to declare this to the government? Likely no..so good luck getting insured for it. 

One's best bet is a safety deposit box somewhere anonymous and overseas - but again the more 'extras' you keep throwing at a small amount of bullion, the more expensive it gets. 

Im talking about the people that can spend a ridiculous amount on this, and not care if they see a return on it in their lifetime, just because they want something safe and secure where no corp can fail or no gov can decide to take this worth away from them. The chauffeur-driving, Patek-wearing, in-the-office one day out of 5 type of person. Well, they sure as hell do not find any gold purchase prohibitive assuming theyre on the same side of the gold thesis as everyone here.

Again, one can hold a few oz here and there at home. But start putting real wealth into bullion and youll find only the foolish keep it at home. Burying in the ground is not an option imo.

Mon, 01/09/2012 - 16:43 | 2047522 akak
akak's picture

100oz is still easy to store in your home, but it gets to be troublesome if one doesn't have a safe or an excellent hiding spot for it.

So what is stopping you from buying a safe?  Or putting it in a (nearby and quickly accessible) safe deposit box?

Tight lips are still the best security when it comes to owning precious metals.

PS: Why is burying gold in the ground "not an option"?  It has worked eminently well around world for thousands of years.  Granted, it might not be ideal for those who live in an arctic climate, with the ground frozen for half of the year or more, but the vast majority of potential gold investors probably do not find themselves in that situation.

Tue, 01/10/2012 - 11:16 | 2050146 Badabing
Badabing's picture

hey Zero did you forget the tax on gains?

Mon, 01/09/2012 - 13:57 | 2047046 trav7777
trav7777's picture

huh?  You have been cheerleading people to catch falling knives since the damned $50 broke, you dipshit!

You said we'd be "back to $49 by the end of the week."

How many bagholders do you need to create to try to make other people as miserable as you are?  I've heard misery loves company but this is sick, just sick man.  You need help.

And to all the people uparrowing mosely-claven...haven't you morons LOST ENOUGH MONEY YET?  How much is it going to take to "get it"?

Mon, 01/09/2012 - 14:11 | 2047109 Crisismode
Crisismode's picture

Many of us have been accumulating physical for 10+ years now, and when your average price for all silver holdings is in the single digits, one does not pay much attention to daily/weekly/monthly price fluctuations.

Mon, 01/09/2012 - 16:15 | 2047544 trav7777
trav7777's picture

good for you.  Most people chased into the bubble and were cheered on by shameless pumpers like we have here at ZH.

If you're such a savvy fucking silver investor, where the hell WERE YOU to be telling people NOT to stampede into the bubble?

NONE OF YOU silverbugz said SHIT during the runup.  The only talk we heard here was pumper shill cheerleaders encouraging people to "buy with both fists" and "back up the truck" at $45 for "$60 by next week."

A few of us were brave enough to suffer the slings and red arrows of outrageous fortune and tell people NOT to chase this bubble as it was soon to crash and crash IT DID.

Mon, 01/09/2012 - 16:21 | 2047559 tmosley
tmosley's picture

Shut up you worthless spittle flecked moron.  We said "cost average".  We said "don't buy on margin".  We said "don't buy paper".  

You could claim credit for saying "don't buy", but that doesn't get you far, considering that our position has been "buy in incrementally" for YEARS, and that our time horizon is AT LEAST five years, and as such, we are far ahead of your "amazing" call.  Notice that you CONTINUE to tell people not to buy silver.  Clearly, you have only one position, and as such, you were and are a broken clock.  

Mon, 01/09/2012 - 16:26 | 2047568 trav7777
trav7777's picture

I don't tell people not to buy silver, you idiot.  I tell people NOT TO LISTEN TO YOU.

The reason for that is twofold:  one, you are an idiot.  Two, you are almost always WRONG.

You have called for the evacuation of Tokyo, silver to $60, silver back to $49, hyperinflation IMMINENT, and now silver at 100x price of gold.  Nobody should listen to a thing that you say.

As for silver, buy it on paper...buy gold for physical or platinum.  I've explained why, if you want physical metals, these TWO and these two ALONE should be 90% of the value of your purchases.

If you want to hold some silver, sure, hold 1-200 oz and no more because if you have to RUN in the middle of the night for whatever reason, you cannot carry life's savings in silver with you!  Yes, YOU can, but only because you are fucking broke.

100oz gold >> 5500 oz silver for this very reason alone.  The former can set you up for a good period of time in a bugout situation.  The latter CANNOT BE CARRIED.

Mon, 01/09/2012 - 16:34 | 2047595 tmosley
tmosley's picture

Let's address these one at a time, to show you for the continuous LIAR that you are:

"You have called for the evacuation of Tokyo"

In regards to the fact that there was a bottled water shortage, and the municiple water was turned off, NOT due to radiation.

"silver to $60"

A one time comment, showing exasperation with the apparent breakdown of my investment thesis in silver, which REQUIRED paper silver to collapse.  Rising prices delay the collapse of paper exchanges, and greatly reduce the likelihood of the industrial panic which I wanted to dump my silver into for gold.

"silver back to $49"

Silver did, in fact, almost rise back to $49.  It was then hit with unprecedented numbers of margin hikes, and event which has turned my investment thesis into an inevitability.

"hyperinflation IMMINENT"

Uhh, it is, idiot.  It is an imminent threat, like the Sword of Damocles.  It might not fall today or tomorrow, but you damn well better be ready for it when it does.  Feel free to sit on your ass and die, though.

"and now silver at 100x price of gold."

Outright lie.  I said 10x gold, and that that would be the level seen in a BLOW OFF TOP that wouldn't stick around for more than a day or two.

Lie some more to continue ruining your credibility, and alienating what little support you have left around here.

Mon, 01/09/2012 - 16:46 | 2047624 trav7777
trav7777's picture

dude, it's futile at this point to try to rehabilitate your credibility.

Even if you could lie, dissemble, and weasel your way out of these ones, you will simply proceed undeterred into making a complete fool out of yourself on a daily basis going forward.

Anyone need simply WAIT for you to make some absurd, stupid prediction, and it's a short wait.

You claimed Tokyo would be "dead or evacuated within 2 weeks."  I called you on it.  It failed to happen.

You predicted $60 by next week as the lead cheerleader of an OBVIOUS bubble.  It failed to happen.

You predicted $49 by the end of the week; "almost" is coulda shoulda woulda...what matters is DIDN'T.  It failed to happen.

hyperinflation imminent?  Something isn't imminent if it's NOT GOING TO HAPPEN SOON.  You simply lack english skills and education.  It failed to happen.

10x, 100x, wtf is the difference?  It's just another absurd prediction from you that will not come true.  It too will FAIL to happen.

You FAIL a lot because you are a FAILURE.

Mon, 01/09/2012 - 16:53 | 2047646 akak
akak's picture

LOL

It is so eminently HYSTERICALLY AMUSING to watch you writhe and twitch and twist in the winds of your own pathetic obfuscations, contradictions, exaggerations, disingenuous misinterpretations and outright lies.

I would LOVE to be able to record you speaking one of your absurd little rants, devoid of facts or reason, like the one above, and dub it into a clip of Hitler foaming at the mouth and pounding on his podium!  They would fit like a glove.

Please, continue!  This is fun!

Mon, 01/09/2012 - 17:06 | 2047699 tmosley
tmosley's picture

lol, the incredible mental contortions he is going through to make it appear that he is right and I am wrong are pretty amusing.

World's greatest mental contortionist.

Tue, 01/10/2012 - 02:08 | 2049299 trav7777
trav7777's picture

yes, I go through contortions by....QUOTING YOU.

Nobody has to go through any gymnastics to show you as wrong, cliff; you do it yourself.  A chimp could prove you wrong simply by being trained to record your predictions.  That's because your error rate is ONE HUNDRED PERCENT.

You fucking lying weasel.

Tue, 01/10/2012 - 07:35 | 2049611 jekyll island
jekyll island's picture

You do not get credit for saying the price of silver was going to correct, that is like saying the sun will rise in the morning.  Predicting a doomsday scenario is just as troublesome as you only can be correct once.  Looking back at silver chart over the last 7 years there have been several hard corrections through the overall bullish upward trend.  No reason to doubt that this will not continue, ZH readers know the underlying problems have not been addressed, and probably never will.  This means that MoMo chasers will continue to be hurt by the volatility, I consider that to be investing in their own education.  

Mon, 01/09/2012 - 15:00 | 2047118 akak
akak's picture

So, our nigger-hating friend, I guess you are predicting silver to fall to, what, $10 per ounce?

Or will it be "only $5 (to dig from the ground)?

 

Trav, your utterly rabid, raging, spittle-flecked HATE of tmosley completely and totally blinds you to the idiocy and senselessness of your anti-silver posts against him.  For one thing, he NEVER screamed for ANYBODY to be loading up on silver at its price peak, but advised caution and holding instead. I remember well the many threads and posts earlier last year regarding silver, and in NONE of them did he ever scream, Cramer-style, "BUY BUY BUY!"  What he ACTUALLY advocated, more than anything, was sitting pat on one's silver in case we were witnessing the collapse of the paper silver market.  NEVER did he "pump" silver at or near its price peak, as you so dishonestly claim. 

And how disingenuously convenient it is for you to constantly use that peak price of $48 --- a ONE DAY peak ---- or even the 40+ range that existed for less than a month, to try to discredit him, and silver in general. 

Trav is just as bad as all the anti-gold trolls who used to LOVE to poormouth gold by starting out with "If you bought gold at its peak of $850 in 1980 ....", never acknowledging that that WAS a VERY brief peak, and that gold was only within even 50% of that peak for about 6 weeks beforehand.  What about all the VASTLY GREATER number of people who were buying gold long before $850 back then, or silver at less than half of last year's $48 even seven months before that peak?  No recognition of their foresight or good fortune from Trav the negative troll, no, never ---- just keep disingenuously harping on one-time, hypothetical, worst-case scenarios that could never, by definition, have affected more than a tiny fraction of silver buyers. 

So tell us, Trav, were all those who bought silver at its price peaks of $20 in early 2008, or $14 in 2006, or $8 in 2004, all "bagholders" as well, merely because the price subsequently (and temporarily) fell?  Your argument is just as valid relative to all those cases as well, even assuming that one DID buy silver at $48 on that one single day that it reached that price last year.  Why are you not screaming about all the "bagholders" who bought silver at its VERY PEAK 2004 price of $8.29, or its VERY PEAK 2006 price of $14.94?  Or are you trying to claim that not only is the risk of oncoming accelerated inflation or outright dollar collapse nil, but that the constant fiat currency depreciation of the last 80+ years is now over, AND oil prices (the single largest input cost to mining and refining precious metals, or any metals) are now and will be stable or declining for the foreseeable future, guaranteeing flat to falling silver prices (even ignoring "peak silver")?

You are really a fucking piece of disingenuous, lying filth, I hope you know that.

Mon, 01/09/2012 - 15:22 | 2047380 ZeroPower
ZeroPower's picture

Wtf... I always though more of your posts. Ad hominem much?

Mon, 01/09/2012 - 15:28 | 2047393 akak
akak's picture

What are you talking about, ZeroPower?  I used logic and facts to demolish this troll Trav's feeble hate-filled, anti-silver arguments --- and you try to claim that it was all just ad hominem attacks?  Sure, maybe my last line was --- but it was also true, and to judge from the many double-digit down arrows which Trav's vile, racist, hateful, irrational posts routinely receive here, I am apparently far from alone in that opinion.

Mon, 01/09/2012 - 16:11 | 2047536 trav7777
trav7777's picture

no you didn't do anything of the kind, akock.  You gave cliff another happy ending and punked yourself doing it.

And YOU used hate speech...I don't know wtf you are smoking that you think it's ok for you to use that type of language.  I hope you wander down into blacktopia and start popping off with that right now.

Mon, 01/09/2012 - 16:24 | 2047564 tmosley
tmosley's picture

Yes, it is obviously a thousand times more hateful to use a word than to scream out for the sterilization of an entire race.

You are an intellectual cripple.

Mon, 01/09/2012 - 16:28 | 2047578 trav7777
trav7777's picture

stop excusing your racism.

I have called for sterilization WITHOUT REGARD to race.  I have used IQ as a criterion.  That means a lot of white people JUST LIKE YOU don't have kids either.

Mon, 01/09/2012 - 16:38 | 2047603 tmosley
tmosley's picture

You sure have a weak assed argument there.  You demand humanity's suicide as it JUST HAPPENS to get rid of the groups of people you hate the most.  You never answered the demographic question.  You think "one child" was bad, wait until you get a load of Trav's "brilliant" plan!

Mon, 01/09/2012 - 16:47 | 2047630 trav7777
trav7777's picture

sterilizing a bunch of cretins would not be the suicide of humanity; it would be the opposite.

Without the elimination of genes such as yours, how can humanity EVER survive?  You are so stupid as to endanger those around you.

WHAT demographic question?  Demographics don't matter; energy does.

Mon, 01/09/2012 - 17:14 | 2047722 tmosley
tmosley's picture

What demographic question?  How about 6 billion aging people with only the progeny of 180 million to support them?  How about the fact that these chosen few are spread out across the face of the globe, leaving vast infrastructure costs in place without enough semi-skilled labor to maintain it?  How about the fact that you will have selected strongly in favor of the genes causing Tay-Sachs, and other diseases associated with over-expression of genes which are associated with higher IQ populations?  How about reversion to the mean?  How about the fact that IQ is more closely correlated with levels of childhood disease than any other factor?  How about the fact that the correlation between IQ and race is not causative, but only a result of differing rates of childhood disease among different populations?

And FYI, my IQ is 161.  I'm a lot smarter than you Trav.  Smart enough to know that IQ doesn't matter to adults, but only to children.

Tue, 01/10/2012 - 02:09 | 2049302 trav7777
trav7777's picture

bwahahahahahaha...161.  Dude, if you're going to lie, lie credibly, ok?

HAHAHAHAHAHAHAHAHA

Mon, 01/09/2012 - 16:38 | 2047580 akak
akak's picture

You are the hate-filled racist, not I. 

I only use the word "nigger" to mock your own vile, collectivist group-hate.

I also can't help noting that you failed to address the points I raised in my long post above --- because you logically cannot.  So you slink away like the Nadlerite coward that you are.

Mon, 01/09/2012 - 16:17 | 2047546 ZeroPower
ZeroPower's picture

Im not here to pick sides, which is why i stay out of arguments but ill at least chime in here since its an early off evening for me. Shit here always evolve from the following:

"My investment thesis is x"

"Really? thats retarded! mine is y. fuck you for thinking x"

I see enough of this shit at work, at least there someone makes money out of it, i feel like here one just keeps to their original thesis no matter what. And that thesis being, LONG SILVAH!!111.

Seriously, people can be so myopic. Its ok to admit an investment decision (i assure you, people were literally giddy at silver $40++ because the next stop was $100) didnt go as planned, just do something about and have other ideas in mind. You still see the same trolls spewing their nonsense over and over. The worst part, people read these boards and actually invest based on people's comments. Im sure its not big sums of money, but to the retail folk its probably a good part of their savings. Noone will admit to it, but most people browse 'investing websites' to try and catch an early glimpse of what the next hot thing will be. And thats fine, its human nature to want to be part of something BEFORE everyone else, but people get tripped up in px action so hard that they fail to realize THEY are the last suckers on the ride off the cliff.

Again, all it takes is to look back at posts around mid May, and there were quite a few comments i remember that had newly registered users (any old-timer here would never admit to losing money of course, they are all master fx/equity/commodity gurus!!) come on here and ask what's next for silver, since the $48 level was literally a once in a lifetime opportunity to BUY..or at least that was the consensus view here.

And we laugh about groupthink among CNBC shills (fuck them btw, they were also just as much part of the idiots cheering on the silver bubble and seeing $100 on the horizon) and the few people (person?) on here who always is long equities. And then they go on to completely ignore aspects of a bubble when it comes to their "investment" of choice, silver.

The reality is, ZH itself had quite a different thesis (the whole inf/def debate which was all the rage after QE2) and was expecting QE3 to come immediately after QE2. That didn't happen, and the team's outlook then adjusted to take into account Op Twist and other occurences. That is what a wise individual does - you adjust.

None of the posters admitted to selling at the peak and nobody comes here with adjusted views on Ag after silver peaked and is now, presumabely, bottoming. The most vocal of the bunch now post considerably less (yes, we've noticed) when it comes to SILVAH TO $100!!1.

Mon, 01/09/2012 - 16:22 | 2047560 trav7777
trav7777's picture

no, I have it on "can't miss" authority that silver is going to 100x parity with gold.  Yep.  100x.

Despite its 15x abundance in the crust and aggregate collapsing industrial demand.  100x parity.

 

Mon, 01/09/2012 - 16:27 | 2047566 tmosley
tmosley's picture

Oh look, Trav exaggerating a comment about levels that might be reached in a blow off top, and pretending that that was a goal for a stable price.  Imagine that, Trav lying again.

Mon, 01/09/2012 - 16:36 | 2047584 trav7777
trav7777's picture

lying?  LYING?

You shameless, dissembling, weaseling motherfucker...you JUST SAID IT.  You said TEN TIMES PARITY. 

Do you REALLY want me to go get the post you said it in, you lying weasel?

NOBODY EVER SAID you claimed that was a stable price, JACKASS.  You said silver would hit 10x price of gold.  No sooner is it out of your mouth and the sheer absurdity of it being shoved in your face than you are trying to weasel your way out of having ever said it.

You are a pathetic LIAR, cliff.

This is the post ZH gives me

http://www.zerohedge.com/news/physical-silver-surges-record-30-premium-over-spot-backwardation#comment-2040601

It's right on that thread at that post # and you cannot hide it now, cliff.

Mon, 01/09/2012 - 16:40 | 2047607 tmosley
tmosley's picture

Wowee, I didn't realize that 10=100.  AMAZING!  I guess that means your IQ is actually 14.  Which makes sense.

10x parity makes perfect sense, as a BLOW OFF TOP.  But you don't like facts, so whatever.

Mon, 01/09/2012 - 16:53 | 2047652 trav7777
trav7777's picture

10x makes NO SENSE WHATSOEVER because of the production abundance of silver and this thing called laws of supply and demand.

A silver price that high would render most of the industrial activity of silver UNECONOMICAL and would crush it.  Do you HONESTLY believe that they will still be putting silver ions in SOCKS and fucking UNDERWEAR if silver climbed even to $100/oz??  They would simply LIVE WITHOUT as we did for 1000s of years prior.

Using silver for all these industrial applications ONLY MAKES SENSE if silver is relatively cheap.  This is why GOLD isn't used for conductors (and copper and silver too) in favor of things like aluminum. 

Look, dipshit, you are NOT going to "get rich" off this, ok?  Stop it with the daydreaming.

10, 100, 1000...wtf is the difference?  Your predictions are laughably ABSURD.  Try making REASONABLE predictions, idiot...maybe you'll get ONE right someday.

Mon, 01/09/2012 - 17:02 | 2047679 akak
akak's picture

Yes, and the price of palladium could NEVER spike higher than the price of platinum, palladium being (slightly) more abundant and, more importantly, the inferior catalyst.

Oops, wait, that happened back in 2001, didn't it?

And oil could NEVER reach $150 a barrel, as it would cause a recession that would reduce demand and, therefore, the price of oil.

Oops, wait, that happened back in 2008, didn't it?

And (wholesale) rice could NEVER reach a $1000 per tonne, as that would cause riots around the world, especially in Asia, and the supply situation could NEVER justify it.

Oops, that happened back in 2008 as well, didn't it?

 

Any more "impossibilities" you would like to discuss, Trav the nigger-hater?

 

Mon, 01/09/2012 - 17:18 | 2047732 tmosley
tmosley's picture

The nano-silver in socks costs $10000 a kilo to process.  They could hardly give a FUCK about the price of silver.  That is the point.  Most uses of silver are low impact.  That is why the demand is so inelastic.

Silver is a better conductor than gold, you fucking moron.  For currently available materials, you have to go to a superconductor to get less resistance.

Nice weaseling there.  I love how you accuse me of the shit that you do yourself.  You are fucking worthless.

Tue, 01/10/2012 - 07:43 | 2049623 jekyll island
jekyll island's picture

Actually higher prices would not cripple production, silver is a small amount in nearly all industrial uses.  Silver at $150/oz would increase the price of a computer about $200, hardly a death knell.  Silver cannot be replaced in these applications, so industry would continue to buy and use it until it becomes uneconomical.

Tue, 01/10/2012 - 07:55 | 2049635 akak
akak's picture

Silver is also increasingly important in miniaturized and micro electronics, as the lesser electrical conductivity of any other known metal or material radically increases the electrical resistance and hence the heat load within the device, frequently rendering other possible substitutes, even copper or gold, impractical in many of those applications.

Mon, 01/09/2012 - 16:41 | 2047613 akak
akak's picture

Trav666, the official "Jon Nadler of silver".

Keep posting your hysterical, hate-filled rants --- there might be some newbies here who have not yet seen you completely discredit yourself.

Mon, 01/09/2012 - 15:36 | 2047422 fuu
Mon, 01/09/2012 - 16:17 | 2047550 trav7777
trav7777's picture

huh?  Real silver is NOT 30% premium to spot, dude.

Mon, 01/09/2012 - 16:31 | 2047585 fuu
fuu's picture

The headline never mentioned "real" silver. You failed at reading comprehension and called the headline a lie. You should be man enough to go admit that for posterity.

Mon, 01/09/2012 - 16:38 | 2047606 trav7777
trav7777's picture

so by "physical" silver you think that equates to the fuckin shares of an ETF that ostensibly owns silver?

Do they come dumber than you?

The SHARES of PSLV are trading at a 30% premium to NAV.  MAGICALLY that "real silver to paper" premium is going to burn right off when Sprott fucks his shareholders with a massive offering to cash in on their lunacy.  Aka, Eric Sprott now controls the price of silver?

Mon, 01/09/2012 - 16:43 | 2047620 fuu
fuu's picture

That was what the article was about, PSLV trading at a 30% premium. But you were off running from comment #1 about how the article was full of shit, the headline was a lie, etc.

 

Mon, 01/09/2012 - 16:54 | 2047655 trav7777
trav7777's picture

the headline WAS A LIE.

It did NOT SAY "PSLV trading 30% premium to NAV" did it?

It claimed, "Physical Silver Surges To Record 30% Premium Over Spot"

Mon, 01/09/2012 - 17:13 | 2047721 fuu
fuu's picture

What was "spot" in the title refering to? Retail spot? Spot value per share of PSLV?

You got trolled by a headline and freaked out so badly you still can't admit it.

Mon, 01/09/2012 - 10:38 | 2046389 spiral_eyes
spiral_eyes's picture

you try storing a tonne of copper or a bushel of wheat in your lounge.

gold and silver are different. they're fungible, they're storeable, they're transportable. they're money, and a money that is independent of government. they hedge counter-party risk, and counter-party risk is everywhere today. 

people who want to hedge counter-party risk, who don't trust the system will buy gold and silver. others will yap about silver having been in a "bubble" because the fiat price is lower. yeah, getting in at $45 was a bad idea. you buy the dip, not the spike. but even if i had bought at $45, i would be happy i had protection against the derivatives and fiat ponzi.

Mon, 01/09/2012 - 13:58 | 2047050 trav7777
trav7777's picture

silver is transportable?  Yeah if you have gasoline and a truck.

Silver is immobile in any quantity that will be significantly valuable.  It's just NOT value dense enough to warrant stockpiling.

Mon, 01/09/2012 - 14:15 | 2047127 Crisismode
Crisismode's picture

Physical gold is for stockpiling wealth protection when fiat collapses.

Physical silver is for stockpiling a currency for local barter when fiat collapses.

If you have to get out of Dodge quickly, you take your gold with you, not your silver.

Mon, 01/09/2012 - 14:34 | 2047201 rockraider3
rockraider3's picture

Please email me your address when you leave, that way I can go pick up your silver for you.

It would fit nicely next to mine in the cargo area my truck, right next to my fuel cans that will get me to where I need to go without having to pay to refuel.

Mon, 01/09/2012 - 16:55 | 2047660 trav7777
trav7777's picture

and all the zombies will just ignore you and all your gasoline and let you fuckin drive around and pick up silver.

Idiot.

Mon, 01/09/2012 - 17:33 | 2047772 akak
akak's picture

So Trav, have zombies officially joined your list of groups to hate?

Really?  You're worried about ZOMBIES?

I guess it takes one to fear one.

Mon, 01/09/2012 - 14:22 | 2047150 ParkAveFlasher
ParkAveFlasher's picture

@ $25/oz, you fit $250,000 in less than 10 cubic feet, just about the volume of a garage freezer.  (Checked Kitco for the dimensions of a 100oz minted bar).  Better yet, that's the volume of 10 small gym lockers scattered about the country completely off anyone's radar.  Or a stop-n-stor that the IRS will never know.  But God Bless You and your fantastic fungible fiat wealth.  

Mon, 01/09/2012 - 14:25 | 2047161 rockraider3
rockraider3's picture

What are you, a nomad?  If you have means to stockpile PM's of "significant value" in the first, place then you probably also have access to a vehicle and fuel.

But the reality is that the vast majority of people are not going to leave their homes to set out on foot and go all Davy Crockett in a national forest.  Most people will hunker down in their homes/towns, as long as there is reasonable access to basic essentials.

Also, Silver may not be "value dense" now, but in a situation where one needs to worry about transporting it, the value is almost certainly higher.

Mon, 01/09/2012 - 16:10 | 2047176 akak
akak's picture

What are you, a nomad?

LOL!  Good point!

But no, Trav is probably not a nomad (although possibly a vagrant), but just another anti-precious metals troll filled with hate and loathing of those who have the temerity to take their financial well-being into their OWN hands.  As a typical statist --- no, not typical, in fact a highly committed one --- he despises and rages against all those who refuse to play the fiat game and tell their masters in DC "Fuck you!".

Mon, 01/09/2012 - 16:59 | 2047673 trav7777
trav7777's picture

you're an interesting case study on psychopathy.  When you're faced with an argument you can neither comprehend nor defeat, you just make shit up to smear other people.

I'm a fucking STATIST?  That is the biggest mfing laugh I've ever had.  I'm a fiat fan?  Good god, you're fucked in the head.  Dude, get help.  Now.

Mon, 01/09/2012 - 17:28 | 2047736 akak
akak's picture

YOU are the one constantly filled with racial hate and collectivist policy proscriptions such as mass sterilization and eugenics, so yes, from all the evidence you are in fact a statist --- an individualist, by definition, NEVER obsesses over, much less rages in favor of, such topics.  And calling me a "psychopath" when YOU repeatedly demonstrate both such behavior, and such thinking, is again amusing indeed.

Trav the silver-hating clown.  The Jon Nadler of silver.

Dance, clown, dance.

Mon, 01/09/2012 - 16:58 | 2047671 trav7777
trav7777's picture

what are you, an idiot?

Where the hell did you get this nomad bullshit?

I'm talking about the "SHTF" crap that all you zombiehead idiots are constantly drumming on as imminent.

If they "come for you" and all of this crap because you post too much on ZH, you may desire to just drop and leave quickly.  Think about it.  Silver anchors you to where you are.  That is stupid.

If the Bosnia situation or Argentina or the proverbial Hitler comes, pack up and leave now.  You idjits try to cross the border with a truckfull of silver...hahahahahahahaha.

Mon, 01/09/2012 - 17:21 | 2047741 tmosley
tmosley's picture

More doublethink from Trav.  INCONCEIVABLE! 

Industrial panics are not Mad Max.  Currency collapses are not Mad Max.  Even government collapses are not Mad Max.  Only pervasive, long term societal breakdown is Mad Max, and that has happened only two times in recorded history.

Mon, 01/09/2012 - 17:36 | 2047785 akak
akak's picture

Yes, Trav, there is obviously only ONE possible outcome here, and of COURSE it is going to be the very worst case scenario, so we might as well all blow our heads off now and be done with it.

You know, I think that is, when it comes right down to it, the very essence of your every post: resignation and death-wish.  (And I am not talking about the Charles Bronson movie).

Mon, 01/09/2012 - 10:49 | 2046414 oddjob
oddjob's picture

Trav you may have to scrape your funds together, but most Silver buyers have a constant/endless supply of paper and are willing to divest a small percentage of it for some PM's. Very frustrating for you it would seem.

Mon, 01/09/2012 - 10:51 | 2046419 tmosley
tmosley's picture

He spent all his money sterilizing his children because they didn't have 140+ IQs.

Mon, 01/09/2012 - 12:56 | 2046831 GoinFawr
GoinFawr's picture

They must have been black. Uh Oh, Trav, one way or another I've got some bad news for ya...

Mon, 01/09/2012 - 13:10 | 2046872 tmosley
tmosley's picture

lol, didn't realize old Dave was a documentarian.

http://www.youtube.com/watch?v=PpwLSHEmtm0

Mon, 01/09/2012 - 14:04 | 2047074 trav7777
trav7777's picture

well, for a black to have an IQ of greater than 140 would require being roughly 6 sigmas to the right of mean (american black).  That is statistically improbable.

140+ is statistically improbable in any population, racist.

Mon, 01/09/2012 - 14:20 | 2047141 GoinFawr
GoinFawr's picture

yeah yeah. Don't worry about the whooshing sound Trav, eventually you'll get used to it.

Mon, 01/09/2012 - 14:00 | 2047059 trav7777
trav7777's picture

LOL...suuuure you do.

People with money buy gold.  They don't waste their time on the POOR MAN'S gold, dude.

Silverbugs are get rich quick gamblers who got taken to the cleaners in the past year.

Silver isn't a PM; it's a SPM.  Silver has more industrial usage than anything else.

Mon, 01/09/2012 - 14:52 | 2047281 tmosley
tmosley's picture

Positive added to a positive equals a negative.  Got it, lol.

Mon, 01/09/2012 - 10:06 | 2046310 SeverinSlade
SeverinSlade's picture

Got physical?

Tue, 01/10/2012 - 11:11 | 2046513 Xue
Xue's picture

yes, but only 110 ounces... 

Mon, 01/09/2012 - 10:10 | 2046318 GeneMarchbanks
GeneMarchbanks's picture

Nothing about naked shorting them shares? OK then...

Mon, 01/09/2012 - 10:12 | 2046321 brunoaa
brunoaa's picture

Strange how Sprott silver fund trades at a premium of around 30% when the swiss equivalent physical fund (ZKB silver) trades at a slight discount 

Mon, 01/09/2012 - 10:14 | 2046329 tmosley
tmosley's picture

Who do ya trust?

Mon, 01/09/2012 - 10:18 | 2046334 EL INDIO
EL INDIO's picture

I trust neither.

Short the sprott bitchez (before he does)

Mon, 01/09/2012 - 10:45 | 2046402 JohnG
JohnG's picture

I've looked at that and I'm not sure if that's possible.

I don't now own it, but I did get 104% return after November 2010 (bought at 10.19 right at the IPO) and sold it as silver ran up near $50.  (I smelled a fall and got very lucky, damn near top ticked it.)

I do own PHYS.....

Mon, 01/09/2012 - 10:58 | 2046438 e2thex
e2thex's picture

My garbage can. It's never wrong. It always knows what's coming and even has a mate that shares the bounty.

Mon, 01/09/2012 - 10:15 | 2046333 Pladizow
Pladizow's picture

In 2000 it was not Sprott who sold half his gold to become a member of the IMF!

Mon, 01/09/2012 - 11:06 | 2046464 JohnG
JohnG's picture

In 2010 I think he tried to buy I think it was 200 tons from the IMF and they turned him down.

Mon, 01/09/2012 - 10:12 | 2046324 spiral_eyes
spiral_eyes's picture

gold in sacks.

Mon, 01/09/2012 - 10:15 | 2046328 yabyum
yabyum's picture

Me, I prefer gold in stacks.

Mon, 01/09/2012 - 10:13 | 2046325 Saxxon
Saxxon's picture

Mines stand helplessly ready for expropriation by their host governments.  I'll take the physical and trade the paper on the physical.

Mon, 01/09/2012 - 10:19 | 2046340 LawsofPhysics
LawsofPhysics's picture

Bingo, and when confiscation comes, all will be lost during a fishing trip.

Mon, 01/09/2012 - 10:30 | 2046374 trav7777
trav7777's picture

yes, this geopol risk is significant these days for any resource producer.

The nations of the world are filled will cretins who expect somebody else to come to their nation and extract resources that they are incapable of extracting and to gift the proceeds to them.

It's oppression if the resources are left in the ground and oppression if they are extracted.

Mon, 01/09/2012 - 10:14 | 2046327 Odin
Odin's picture

Ok Goldman just endorsed gold stocks, look for a massive take down in 1, 2, 3, ...

Mon, 01/09/2012 - 10:17 | 2046335 Pladizow
Pladizow's picture

Your ascending countdown implies an infinite event horizon?

Perhaps descending would be more appropriate!

Mon, 01/09/2012 - 10:34 | 2046380 mick_richfield
mick_richfield's picture

A simple mistake like that could have cost us the whole Apollo program.

Imagine poor Walter Cronkite, slumped over his microphone, a rusting Saturn V rocket visible in the background, the numbers on the digital clock ticking relentlessly upward...

 

 

Mon, 01/09/2012 - 10:46 | 2046407 Badabing
Badabing's picture

Its all the rage “new accounting methods”!

Mon, 01/09/2012 - 10:47 | 2046410 Al Huxley
Al Huxley's picture

Good one!

Mon, 01/09/2012 - 14:06 | 2047083 GoinFawr
GoinFawr's picture

ok, descending it is: 3/1, 3/2, 3/3, 3/4, 3/5, 3/6...

Mon, 01/09/2012 - 10:18 | 2046339 LawsofPhysics
LawsofPhysics's picture

If it isn't physically in your possession, you don't "own" it and most likely it has already been stolen or devalued.  This will apply to all "investments" moving forward.  Hedge accordingly.

Mon, 01/09/2012 - 10:23 | 2046347 mtomato2
mtomato2's picture

WAAAYYYYY off topic, and if enough people are annoyed by this post, I am sure to be punished...  But:

Are we, then, completely through with the most recent Constitutional crisis of last week, where Barry Sotero (sp.?) appointed some Union Thugs without congressional approval?

Has the news cycle run its course?

Are we, like, all bored with all that complicated shit and all?

Is ANYBODY in CONgress gonna keep this in the news?  Hello, calling Dr. PAUL!!!!!!!!!!!

 

CHEEZ-N-RICE!!!  Is there ANY POINT in fighting for ANYTHING any more?

 

Seriously.  I'm fixing to have an aneurism.  Y'all pray.

Mon, 01/09/2012 - 10:38 | 2046388 LetThemEatRand
LetThemEatRand's picture

Fox News is keeping that in the headlines for you.  I would rather be outraged about the Red Team and Blue Team embrace of legislation that allows indefinite detention of American citizens.   The recess appointment stuff is child's play in comparison.  

Mon, 01/09/2012 - 10:48 | 2046413 Al Huxley
Al Huxley's picture

Well, too late for that. Now if you get incensed about it, you'll be shipped off to indefinite detention.

Mon, 01/09/2012 - 12:06 | 2046623 mtomato2
mtomato2's picture

Good points from both of you.  But the problem persists, right on schedule:  The shit hits the fan with such regularity that we are literally baffled into silence!

I mean, what the hell am I supposed to do!?! go marching with me, myself, and I?  THEN get incarcerated, or, at the absolute minimum, put permanently on the radar?

This is astounding!  The Constitution is in ashes, and absolutely NO-ONE cares a whit!  Jus' as long as the i-phone works, and there's plenty of choices at the Kroger.

Robo, Pierre, (and that other dipshit who hates libertarians so damn much... what's his name...) and all you others who imagine in your deluded idiocy that things can and will be just fine, please, then, define for the rest of us what "Just Fine" looks like.

Microdata and fundamental minutia notwithstanding, this is the trainwreck from hell we are staring at!

If not financially, fiscally, or monitarily, then most certainly culturally!

 

Constitution?  We don' need no stinking Constitution!

Mon, 01/09/2012 - 13:09 | 2046866 akak
akak's picture

Robo, Pierre, (and that other dipshit who hates libertarians so damn much... what's his name...) and all you others who imagine in your deluded idiocy that things can and will be just fine

His name(s) is/are Legion.

Mon, 01/09/2012 - 20:13 | 2048192 Uchtdorf
Uchtdorf's picture

Exactly how I feel. Tired of people telling me the reason they couldn't vote for Ron Paul...like they've got a better alternative. I am seriously at the point where I just don't even bother to engage. Just smile and say 'yep' to whatever they say.

18 And it came to pass that they formed a secret acombination, even as they of old; which combination is most abominable and wicked above all, in the sight of God;

19 For the Lord worketh not in secret combinations, neither doth he will that man should shed blood, but in all things hath forbidden it, from the beginning of man.

20 And now I, Moroni, do not write the manner of their oaths and combinations, for it hath been made known unto me that they are had aamong all people, and they are had among the Lamanites.

21 And they have caused the adestruction of this people of whom I am now speaking, and also the destruction of the people of Nephi.

22 And whatsoever anation shall uphold such secret combinations, to get power and gain, until they shall spread over the nation, behold, they shall be destroyed; for the Lord will not suffer that the bblood of his saints, which shall be shed by them, shall always cry unto him from the ground for cvengeance upon them and yet he avenge them not.

23 Wherefore, O ye Gentiles, it is wisdom in God that these things should be shown unto you, that thereby ye may repent of your sins, and suffer not that these murderous combinations shall get above you, which are built up to get apower and gain—and the work, yea, even the work of bdestruction come upon you, yea, even the sword of the justice of the Eternal God shall fall upon you, to your overthrow and destruction if ye shall suffer these things to be.

24 Wherefore, the Lord commandeth you, when ye shall see these things come among you that ye shall awake to a sense of your awful situation, because of this asecret combination which shall be among you; or wo be unto it, because of the blood of them who have been slain; for they cry from the dust for vengeance upon it, and also upon those who built it up.

25 For it cometh to pass that whoso buildeth it up seeketh to overthrow the afreedom of all lands, nations, and countries; and it bringeth to pass the destruction of all people, for it is built up by the devil, who is the father of all lies; even that same liar who bbeguiled our first parents, yea, even that same liar who hath caused man to commit murder from the beginning; who hath chardened the hearts of men that they have dmurdered the prophets, and stoned them, and cast them out from the beginning.

 

Mon, 01/09/2012 - 10:24 | 2046354 UTICA CLUB XX PURE
UTICA CLUB XX PURE's picture

Goldman: Are they someone we should listen to?

Mon, 01/09/2012 - 10:30 | 2046373 bigdumbnugly
bigdumbnugly's picture

absolutely.  then do the opposite.

utica club does distribute a fine beer with that brooklyn brown.  i'd listen to them.

Mon, 01/09/2012 - 11:15 | 2046488 caconhma
caconhma's picture

Even a dead/broken clock shows the right time twice daily.

Consequently, sometimes GS and retail investors interests coincide.

 

 

Mon, 01/09/2012 - 10:25 | 2046356 Hulk
Hulk's picture

Last call: If it ain't in your hot little hands, you ain't got any...

Mon, 01/09/2012 - 10:57 | 2046433 snowbaall
snowbaall's picture

The key to gold is recognizing the bottom.

These banks are loaded with crap.  So deflation is right around the corner.

Currently smelling a black girl's cornhole.

The key?

Understanding when it all explodes and deflation rules the day.

Good luck with that.

Mon, 01/09/2012 - 10:26 | 2046358 atlee
atlee's picture

Crash a couple ETFs and the mining shares heal quickly. Is that part of the big picture? Drive retail out of mining shares, drive the price down, crash slv or gld after accumulating the miners at bargain prcing?

Mon, 01/09/2012 - 11:07 | 2046466 s2man
s2man's picture

You must be one of those people who see a conspiracy behind every rock.  +1 to you :-)

Mon, 01/09/2012 - 10:28 | 2046365 Oh regional Indian
Oh regional Indian's picture

Oldman, Hissy old man. What's he saying about preciousssss.....

Ah yes, the gem, Gold ETF's were launched to take out operational risks. Of course. Huuuhhhhh.....

I wish I could join the Gold/RP echo chamber, but I cannot.

Junk me!

ori

http://www.youtube.com/watch?v=Xs2V5cRS5Bw

Mon, 01/09/2012 - 13:26 | 2046874 akak
akak's picture

I thought almost all Indians traditionally like gold?

You must be one of those modern, "progressive" exceptions.

I will say, though, that your colloquial English is quite excellent --- you seem to be able to refrain from constantly engaging in that "I am wanting to be telling you that you are being wrongs in your bad namings of me" kind of thing that so many other Indians seem to prefer.  Just what IS it about the present progressive tense ("to be" + gerund [---ing]) that so many Indians are obsessed with?

Mon, 01/09/2012 - 15:04 | 2047320 smiler03
smiler03's picture

All of your idioms are belong to us.

Mon, 01/09/2012 - 15:14 | 2047353 akak
akak's picture

I am being sensing sarcasms in your postings.

Mon, 01/09/2012 - 10:30 | 2046371 monopoly
monopoly's picture

At some point the miners will catch up and move ahead. Gotta have patience.

Mon, 01/09/2012 - 10:45 | 2046403 tmosley
tmosley's picture

Don't bet on it.  Miners are paper.  Paper is easily manipulated.  They only way the miners become a good deal is if they start paying dividends in metal.

Mon, 01/09/2012 - 11:57 | 2046597 mick_richfield
mick_richfield's picture

A gold coin is a gold coin.

A gold mine is a hole in the ground with a liar standing in front of it. 

A gold ETF is a fraudulent investment vehicle nominally designed to track the price of gold in the criminally manipulated COMEX market, while in fact holding physical metal only for the purpose of aiding the criminal manipulation of the market which it purportedly tracks.

As the wise man says: "Whee!  This investment stuff is easy!"

Mon, 01/09/2012 - 10:34 | 2046378 Quinvarius
Quinvarius's picture

The main problem with gold companies is that they ARE the shorts that will get burned in the futures market in the end.  They are untouchable as long as they are stupid enough to hedge.  Yet, gold has been held down so long, they must hedge to operate.  Some don't hedge, and those can be examined further.  But anything with a hedgebook is part of the establishment failure that is coming.

Mon, 01/09/2012 - 10:37 | 2046385 vegas
vegas's picture

Obviously the Prop desk has just bought a ton of gold stocks. Now time to let the squirrels eat from the nut pile at marked up prices. Rinse, repeat endlessly with another nut pile, pay bonuses. Who says business is tough?

 

http://vegasxau.blogspot.com

Mon, 01/09/2012 - 10:40 | 2046394 chistletoe
chistletoe's picture

I realize that most investors have no patience for "fundamentals" any more

and that there are many other factors affecting prices.

I also realize that I am not gonna do anyone else's homework for them

so I'm not going to go into great detail with hard numbers in this silly comment.

but you have to understand what is happening to the miners.... I have been following Harmony for many years, kept up with their acquisitions and their divestments .... and there's

still a horrifying trend that's unmistakable over the long term ....

it is the nature of their business that their costs are mainly in labor and in energy.

As the price of gold rises their laborers tend to demand higher and higher wages.

And as peak oil happens, despite the multitude of unbelievers, the price of their energy also climbs rapidly.

Meanwhile, their reserves, their gold seams, their mines, have a way of diminishing over time.  The best seams are gone, the ones that are left are pporer quality and harder to get to.  Like almost everything else these days.

Thus the miners are all pretty much experiencing the same thing:  higher and higher costs and steadily decreasing production.

 

A purchase of physical is like, spot purchase.  A purchase of a share of a miner is like a future contract.  And the future of gold mining is getting dimmer and dimmer and dimmer.

That just might....might...have something to do with the way the shares are priced these days .....

Mon, 01/09/2012 - 14:00 | 2047015 Boxed Merlot
Boxed Merlot's picture

it is the nature of their business that their costs are mainly in labor and in energy.

As the price of gold rises their laborers tend to demand higher and higher wages.

And as peak oil happens, despite the multitude of unbelievers, the price of their energy also climbs rapidly....

 

The difference between (4) 1962 US quarters worth of gasoline vs. what a 1962 paper dollar will buy is 5.5 gallons vs. a quart.  That's the equivalent of what, 18 cents a gallon? Pretty much what George Lucas paid for it Modesto back in '62.

I'm not a believer in peak oil for this reason.  As for the main expense of mining being due to labor and energy, I beilive the greater cost to factor in is political uncertainty.  The rule of law generally and the right of personal property specifically are far greater risks than factoring labor and energy expenses.  Historically, highgrading is a fact of life and the deceit associated with mining ventures runs both ways.  Where do you think central bankers learned their craft?

Mon, 01/09/2012 - 11:26 | 2046396 Griffin
Griffin's picture

How did bankers, like Goldman Sachs get  so powerful ?, they seem to have influence everywhere.

Destroying and attacking people, companies and countries all over the world it seems.

I wonder when the turning point was where they managed to take USA over and started attacking other economies.

Probably WW2, when the spoils of victory passed trough the hands of politicians. The assets and power that fell into the hands of a few politicians post war is probably the corner stone of this horror we are submitted to today.

 

Mon, 01/09/2012 - 10:42 | 2046399 Hephasteus
Hephasteus's picture

So months and months and months back when people were saying 1560 and 1620 gold breaks their gold derivaties they weren't kidding.

Mon, 01/09/2012 - 11:01 | 2046448 Al Huxley
Al Huxley's picture

I took some time recently to plot out the trend in commercial short:long position ratio from weekly COT reports, and it's been declining fairly steadily for a couple of years now. Either
- commercials are less comfortable being excessively short the market
- speculative longs are less enthusiastic about being long the market as the price rises
- those taking significant long positions are moving away from paper markets

In any case, you can make of it what you want, but the commercials are gradually, and consistently reducing their short exposure to the market. But it pre-dates gold being over 1500.

Mon, 01/09/2012 - 12:58 | 2046835 Hephasteus
Hephasteus's picture

Thank you.

The way I see it they need it down around 1420 1440 so they can tack on their "premium" to reach equality with the miners. At 1900 the miners are totally making them their bitch.

And I wonder if the gradual reduction in spec longs and commercial shorts is being flown through the new asian exchanges?

Mon, 01/09/2012 - 11:08 | 2046469 apberusdisvet
apberusdisvet's picture

No one has mentioned the possibility of a  planned fiat devaluation which is , IMO, baked in the global Ponzi scheme.  After a rational analysis of the options available to the master criminals, the odds are rising that it will occur via a domino effect worldwide.

Under this scenario, PMs go ballistic.

 

Mon, 01/09/2012 - 11:41 | 2046557 FutureShock
FutureShock's picture

Miners don't really mine anymore they filter...tons of dirt to get scraps that add up in volume. Tremendous energy and oil usage and that has to be considered for investors and powers that may re-price or consider it standard. In the short and long term gold prices have to crank up to be sustainable. Mining is as risky as equity financials. Physical Gold is cheap as a currency and way overpriced as a metal. Anything could happen from $300.00 oz no gold standard and government re-evaluation  to $20,000.00 plus to a gold standard. They both make sense in a way and that is scary.

Mon, 01/09/2012 - 13:28 | 2046895 akak
akak's picture

Your "possible" $300 is in fact impossible (except in the gold-hating wet dreams of Jon Nadler), as it represents only a small fraction of even the current average extraction cost of one ounce of gold, which is roughly on the order of $800-$900, and can only be expected to go higher as the cost of the single greatest determining factor of that average cost, the price of petroleum, continues to move higher as Peak Oil increasingly makes itself felt.  To even hypothesize about such a radically low gold price would be to simultaneously assume a simlar and indefinite decline in the price of oil --- is ANYBODY (besides Robert Prechter and Karl "Lucid Douche" Denninger) willing to make such a bet?

Mon, 01/09/2012 - 13:44 | 2046999 JimBowie1958
JimBowie1958's picture

With new forms of energy generation coming to market soon, I wouldnt be surprised if the price of a barrel of oil went down to $30 by 2022.

Thorium lazer fusion, muon fusion and LENR are looking promising and will utterly change our world from what we today know it. Petroleum will be used mostly to make fertilizer, plastics and specialty high performance fuels.

Mon, 01/09/2012 - 14:16 | 2047129 GoinFawr
GoinFawr's picture

and in 2022 we'll all be driving Buicks to the moon!

Seriously though, optimism is a rare bird on ZH; beautiful plumage. 

For my part I'll add that advances in the last decade in drilling techniques are getting closer to making geothermal energy use a viable option, even for places that aren't Iceland.

Mon, 01/09/2012 - 14:33 | 2047194 akak
akak's picture

I don't know why anybody would down-arrow you for that post, JimBowie.  I sincerely hope that some new form of energy is introduced soon.  In fact, if that does not happen, and happen quite soon, then civilization as we know it could very well come to an end within the next decade or two, so we better pray that you end up being correct.

Mon, 01/09/2012 - 15:17 | 2047364 Crisismode
Crisismode's picture

"then civilization as we know it could very well come to an end within the next decade or two"

 

Civilization as we know it has not treated the planet on which it lives very well, and maybe the planet is now thinking that the sooner this pestilence on its surface is drastically reduced, the better.

Tue, 01/10/2012 - 09:43 | 2049804 JimBowie1958
JimBowie1958's picture

So why dont you lead by example and go live some stone age lifestyle?

Civilization has been GREAT to this planet. The ecology of most places we inhabit have evolved to accompany the presence of human beings.

For God's Sake, how did ZH get taken over by all these Malthusian sociopaths?

Mon, 01/09/2012 - 14:59 | 2047303 FutureShock
FutureShock's picture

Yes of course not $300.00 but that was not the main point as even $1200.00 - $20K is a huge gamut.

Mon, 01/09/2012 - 11:46 | 2046572 augmister
augmister's picture

Buy miners???  LOLOLOLOL   They will all become nationalized when the SHTF and the shiney EFTs will be toast.   At the end of the day, all that will be left are the shiny coins you hold in your hand.   And the planned fiat devaluation is real.  Though you are an ANT, think like a GIANT and do what they do, NOT what they say.   

Mon, 01/09/2012 - 11:47 | 2046576 Missiondweller
Missiondweller's picture

I think folks may be overlooking something.

 

If you expect physical gold prices to diverge from"paper" prices because investors nolonger believe the COMEX has any inventory, then you'd short paper and go long the miners. Other blogs have noted that buyers of substantial PHYSICAL PM's are buying directly from MINERS and bypassing the COMEX.

Mon, 01/09/2012 - 13:27 | 2046932 cocoablini
cocoablini's picture

Yes, a self funded clearing agency that's not the Comex is a clear win for miners. Comex is fake and unreliable

Mon, 01/09/2012 - 12:09 | 2046635 Crispy
Crispy's picture

From a relative strength point of view the metal will always outperform the stocks. And if they dont it just creates a trading opp. In and out. other than that give me metal, and you can keep the paper which doesnt even pay me a dividend for hanging around with my ass in the wind waiting for an individual name event which cuts me in half...

Mon, 01/09/2012 - 12:10 | 2046639 slewie the pi-rat
slewie the pi-rat's picture

personally, i prefer Robo to g/Sachs on this particular subject

Mon, 01/09/2012 - 12:49 | 2046781 GoinFawr
GoinFawr's picture

It sure was nice of them to outline their MO for us though. I will add to their list of 'things to do' for the Miners: Buy back your own company, and Sprott your production. Nothing says 'I love you' to the prospective PM investor like a shrinking pool of shares and a weighty stack of old school cash on hand.

Mon, 01/09/2012 - 13:51 | 2047025 slewie the pi-rat
slewie the pi-rat's picture

a new verb!

Mon, 01/09/2012 - 12:32 | 2046725 proLiberty
proLiberty's picture

Nothing beats 40 acres and a shovel.

 

Mon, 01/09/2012 - 12:42 | 2046780 mjk0259
mjk0259's picture

A mine is a hole in the ground with a liar next to it.

Mark Twain

Mon, 01/09/2012 - 12:45 | 2046794 GoinFawr
GoinFawr's picture

And that would have been valid... a century plus ago.

Mon, 01/09/2012 - 12:59 | 2046837 mjk0259
mjk0259's picture

Bre-X?

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