Thursday, October 16, 2008

An Oldie But Goodie

Hello out there! I am so sorry for the lack of posting this week. Things have been hectic as I have been finishing the living room. With work, dinner, and projects it is hard to put something together, especially with how wild things have been. Tonight I am pointing you towards and old post of mine (from October 25th, 2007 almost a year ago today) as I think it holds some useful forward thinking. Also I asking for ideas on a perplexing situation that I have no idea about.

Spot Price of Metals vs. Delivery Price
There is something strange going on with the price of many precious metals based on lease rates and other metrics. The spot prices are depressed, but try and get physical delivery anywhere near that price and there is a serious disconnect. Tim Iacono over at The Mess That Greenspan Made, a far, far smarter voice on these matters than I, seems confused as well. Here is his take on the weird action in Silver:
Anyone have any ideas? I have seen plenty of thoughts out there saying that the paper market is on the verge of collapse. I am not so well schooled on futures and delivery contracts to know what that means exactly. Perhaps someone that reads here can shed some light? Have at it!

An Oldie But Goodie
Last year at about this time I had penned an article about what would have to happen to have a consumer led recession. Here is the link:
It was my argument that credit would have to be absolutely kept away from the consumer before any spending cuts would be seen. I figured that a credit crunch fueled by massive bank losses may do just that as easy credit for poor borrowers may come to an end. I must be Nostradamus!

Seriously, what I mean by bringing up this old piece is that even I could see the storm clouds coming. Hank Pauslon could not. Ben Bernanke could not. Bill Gross could not. There are many other experts that could not. I could. If you are reading this blog, you probably did as well. What does that mean for the proposed solutions by people that never saw any of this coming? I leave that to you the reader to figure out.

I can guarantee a rock blog tomorrow night and I have bought insurance from AIG to make sure I am covered. Wait, uh oh......

No, I will be posting tomorrow no matter what. Leave film, book, or music ideas in the comments.

Have a good night.


Edward said...

My elderly Mom sold her northern CA home in mid-2005 saying that "the bubble will pop". With no formal training in economics, she did much better than professionals like Paulson, Bernanke, the CEOs of the not-very-well-hedged funds and the investment bankers who peddled expensive advice to others - but who were so clueless they could not see their own future demise.

getyourselfconnected said...

Thanks for the note. I staked my Mom in a northern california home in 2002. The town was Marysville, near Yuba City, which is close to Sacramento. In 2005 she sold for a 100% profit as things got crazy. Your Mom was smart!

Thanks again for stopping by. I checked your profile, and I do not know how you keep up with so many blog posts!

don said...

Thanks for stopping by the other night on my site. coming soon, college conversations with the new meme.

Frankly, I never did see the desire for paper ownership of PM. Just old-fashioned, but if things really do go to hell, I can't wave ownership papers in the face of the local grocer.

"talk" to you later.

Edward said...

Ha ha - well, the only blogs I still maintain are blogs for a middle school band and one for a high school band. The rest I delegate to others and I am the tech guy who maintains/upgrades as required - or the particular blog is no longer active. So its not quite as bad as it looks! But I was once a prolific blogger until I requisitioned a life :-)

Good luck with your DIY remodeling. Been there, done that, several times :-)

watchtower said...

Here you go GYSC, I thought I remembered something to that effect:

by Antal E. Fekete

"When the silver corpse stirs, money doctors run"

"People from around the world keep asking me what advance warning for the collapse of our international monetary system, based as it is on irredeemable promises to pay, they should be looking for. My answer invariably is: “watch for the last contango in silver”.

"It takes a little bit of explaining what this cryptic message means. Contango is that condition whereby more distant futures prices are at a premium over the nearby. The opposite is called backwardation which obtains when the nearby futures sell at a premium and the more distant futures are at a discount. When contango gives way to backwardation in all contract spreads, never again to return, it is a foolproof indication that no deliverable monetary silver exists. People with inside information have snapped it up in anticipation of an imminent monetary crisis."

Keep in mind GYSC that Antal is one of those "goldbugs" and you know about those people...the sky is falling, the sky is falling, but he did write that on June 4, 2006 and look what is happening to silver now...

I'd like to resubmit my request for Filter's "Hey Man, Nice Shot".

Anonymous said...

I think after the election is over we may be surprised at how some of the paper prices in the commodites market reverse course. Just saying.


watchtower said...

I checked with the people I buy my PM's from and they were out of silver on their website.
Out of curiosity I called and asked if they "took" them off the market(just a hunch but I was wrong) or were they sold out, they said that they were sold out but did expect to get some more shortly.

What does this mean?
I don't know other than the obvious, which is people are buying a lot of silver.
Does this mean that all that silver is going to come rushing back into the marketplace soon?
I don't know.
Does it mean that the're people out there besides myself that think that a currency collapse is possible in the future?
I don't know that either.

Here is my question, has this happened before in the silver market?
Did this happen when the Hunt brothers tried to corner the market in the 70's and 1980?
Is it another "tulip" bubble?

I try to look at it from Jim Puplava's perspective, is there warehouses full of this stuff that they can't get rid of in a manner of speaking, thereby crashing the price?
I don't know.


...or is CONTANGO! :)

Anonymous said...

Your starting to see.... Warning your not going to like what's behind the curtain.


PS: VOTE #2 for Filters hey man nice shot!