Gold and silver prices are down

[richc]

This makes my head hurt...

Buying a financial instrument that is guaranteed to pay you less than you paid at maturity...

We've entered the Twilight Zone


Investing in the strange negative yield world — 'It's very hard to wrap your arms around'

//www.cnbc.com/2019/08/20/investing-in-the-strange-negative-yield-world-its-very-hard-to-wrap-your-arms-around.html

 

[Varmint]

This makes my head hurt...

Buying a financial instrument that is guaranteed to pay you less than you paid at maturity...

We've entered the Twilight Zone


Investing in the strange negative yield world — 'It's very hard to wrap your arms around'

//www.cnbc.com/2019/08/20/investing-in-the-strange-negative-yield-world-its-very-hard-to-wrap-your-arms-around.html

The value of that bond will keep going up as rates go more negative. It's a sure bet.

 

[richc]

Agreed.

But hear me out. For the sake of argument let's say I buy a one year $100 bond with a negative 1% interest rate. That means they'll give me $99 back in a year. HUH? The money will lose buying power over that year, along with 1% of the value.

Other than an extremely high risk situation like 2008 where people are completely risk averse, where does this make sense?

What happens when the bonds offer a negative 5% yield? At what point do people just keep money under their mattresses?

This is like one of those divide by zero errors. It does not compute...

I'm but a mere mortal. Please help me understand the nature of this alternate universe.

The value of that bond will keep going up as rates go more negative. It's a sure bet.

 

[yogi]

On a staycation this week. Finally tallied up all my silver and gold (been singing the Burl Ives song all day and driving wife crazy). I had more than I thought. Better start keeping up to date records . Might head to the local dealer and add to the hoard (picture a small plastic bag with nothing in it) .

 

[NH_Realtor]

Anyone find any deals with the 10% eBay bucks right now?

 

[richc]

Over the past few weeks there's been a bunch of selling pressure on gold in the morning. And just like clockwork it recovers. The pattern is repeated over and over.

 

[richc]

Spot gold spiked up to just shy of $1550 at the open before backing down a few bucks. Silver up to $17.64, up $.24, at the open.

There's lots of worried people out there, me thinks. Me too...

ETA: And we've broken through $1550!

 

[Varmint]

S&P futures tanking too. With gold it's only partly fear, I think the world is losing confidence in the central banks, and preparing for a world of massive money printing. I'm surprised gold hasn't pulled back, even a little. Maybe at $1585 we'll finally get a correction.

 

[Varmint]

Silver is a few cents from $18, wow.

I wonder how the silver naysayers will try to explain that one.

 

[richc]

Gold backed down from $1550 to about $1530, but has pushed back up to $1545.

Silver has pushed above $18 to $18.13.

 

[Win]

At least one person thinks platinum has hit bottom

 

[Varmint]

Silver is going vertical, up 32% in one month. You'd think a correction or at least consolidation would be imminent.

 

[Win]

More on platinum

 

[Rob Boudrie]

Agreed.

But hear me out. For the sake of argument let's say I buy a one year $100 bond with a negative 1% interest rate. That means they'll give me $99 back in a year. HUH?

You won't be buying that bond at $100 unless its original issue. Once you have the bond, it's price fluctuates and you may sell at a profit or loss prior to maturity. Buyers of negative yield bonds are betting the price of the bond will go up in the short term - but the buyer they has to unload it on another uptick until the price starts to gravitate towards par as maturity approaches. Throw in callabilility and you have a slightly more complex scenario.

Precious Metals storage facilities offer negative yield on face as they charge for the storage, but that does not mean those holding assets in such places are investing with the intent of a net loss.

 

[richc]

Sounds like a "greater fool than I" scenario developing...

What I see as a consumer is rising prices. What I pay for hamburger and green beans is a lot more than 5 years ago.

Historically people invest to keep up with or do better than the rate of inflation. Under the scenario of negative interest rates investments in bonds will lose buying power over time. Go figure!

There's a disturbance in the force...

You won't be buying that bond at $100 unless its original issue. Once you have the bond, it's price fluctuates and you may sell at a profit or loss prior to maturity. Buyers of negative yield bonds are betting the price of the bond will go up in the short term - but the buyer they has to unload it on another uptick until the price starts to gravitate towards par as maturity approaches. Throw in callabilility and you have a slightly more complex scenario.

Precious Metals storage facilities offer negative yield on face as they charge for the storage, but that does not mean those holding assets in such places are investing with the intent of a net loss.

 

[Varmint]

More on platinum

Oops, he missed the 20% move in silver with that trade. Stay away from industrial metals imo. Silver is a monetary metal, that's why it's doing well.

 

[richc]

https://www.kitco.com/news/2019-08-28/Fake-branded-bars-slip-dirty-gold-into-world-markets.html

"In the last three years, bars worth at least $50 million stamped with Swiss refinery logos, but not actually produced by those facilities, have been identified by all four of Switzerland's leading gold refiners and found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion, said senior executives at gold refineries, banks and other industry sources.

Four of the executives said at least 1,000 of the bars, of a standard size known as a kilobar for their weight, have been found. That is a small share of output from the gold industry, which produces roughly 2 million to 2.5 million such bars each year. But the forgeries are sophisticated, so thousands more may have gone undetected, according to the head of Switzerland's biggest refinery."

 

[55_grain]

At least those are real gold, just with a fake stamping, as opposed to a a base metal plated with gold...
"An analysis of three counterfeit-branded bars by one Swiss refinery showed that two of them were 99.98% pure, and the third 99.90%."

 

[Varmint]

Fake-branded bars slip dirty gold into world markets

"In the last three years, bars worth at least $50 million stamped with Swiss refinery logos, but not actually produced by those facilities, have been identified by all four of Switzerland's leading gold refiners and found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion, said senior executives at gold refineries, banks and other industry sources.

Four of the executives said at least 1,000 of the bars, of a standard size known as a kilobar for their weight, have been found. That is a small share of output from the gold industry, which produces roughly 2 million to 2.5 million such bars each year. But the forgeries are sophisticated, so thousands more may have gone undetected, according to the head of Switzerland's biggest refinery."

JP Morgan doesn't care, they make their money on illegal trading and market manipulation.

 

[Varmint]

At least those are real gold, just with a fake stamping, as opposed to a a base metal plated with gold...
"An analysis of three counterfeit-branded bars by one Swiss refinery showed that two of them were 99.98% pure, and the third 99.90%."

That's weird why would you use real gold to fake a Swiss bar?

 

[richc]

Probably the precious metals version of money laundering. Covering the tracks of the actual source of the gold.

That's weird why would you use real gold to fake a Swiss bar?

 

[richc]

On Tuesday gold pushed above $18/ounce. Today it pushed above $18.50.

Silver is outpacing gold prices at the moment.

 

[Win]

I think this is what caused people to take a position in platinum. I know at least this guy exited today with a nice gain.

I don't know much about these charts and reading the charts. Seems like previous patterns foretell future patterns predictably enough to make money if you can see the right patterns quickly enough?

 

[enbloc]

On Tuesday gold pushed above $18/ounce. Today it pushed above $18.50.

Silver is outpacing gold prices at the moment.

Rich, you mean Silver "pushed above $18/ounce today" right?

 

[HappyHarry]

That's weird why would you use real gold to fake a Swiss bar?

Partly money laundering, but mostly to hide the source of the gold. Some countries don't allow import of gold from certain other countries, kind of the precious metal version of blood diamonds. So, for example, China will make real gold bars and forge the trademark in order to sell into the restrictive countries. It is very unlikely that these big buyers would be taken in by non-gold bars, given their sophisticated test equipment.

Interesting article on the subject: Exclusive: Fake-branded bars slip dirty gold into world markets - Reuters

 

[DJBrad]

Shoot boys, I’m long for gold ......

Bought at muuuuuch cheaper than when it got to $1900+ a few years back. Nope, I will not sell!

 

[Varmint]

Shoot boys, I’m long for gold ......

Bought at muuuuuch cheaper than when it got to $1900+ a few years back. Nope, I will not sell!

Sell when the global governments stop borrowing and spending like drunken sailors.

 

[DJBrad]

Sell when the global governments stop borrowing and spending like drunken sailors.

Exactamundo Varmint. Their appetite for inflation is off the charts since “deficits don’t matter”. Wait til China drops the yuan like a ton of bricks and then dumps our treasuries on the open market.

Maple leafs and Buffaloes were a good purchase years back.

 

[DJBrad]

Hunted almost to extinction but they did make a comeback in two ways.

 

[Varmint]

Exactamundo Varmint. Their appetite for inflation is off the charts since “deficits don’t matter”. Wait til China drops the yuan like a ton of bricks and then dumps our treasuries on the open market.

Maple leafs and Buffaloes were a good purchase years back.

The amazing thing is there's no inflation in the traditional sense yet gold is taking off. It means it's fear not of inflation but of global financial implosion that is driving gold and silver. We've turned a corner and there's really no turning back. It's a one way train to financial collapse.