The Finance Thread

[Zag zig]

3 hours ago, Shang said:

What I gathered from that video, their recommendation is to buy physical gold, and when the market collapses, people will flock back to it, increasing the price for it where we cash it in for more money to help us out. Is that right?

The first 40 minutes or so essentially map out the debt and currency issues in a nutshell, the kicking the can down the road I often like to refer to. Then you get the habitual Gold plug, in simple terms as a tried and tested last man standing against currency devaluation and inflationary hedges.

2 hours ago, Shang said:

From everything I've read and watched, my natural instinct is that this can't last and I don't think the combined efforts of every country in the world can fix this system.

Oddly though there is a saying about markets remaining irrational longer than many participants remain solvent. You might be surprised how long this stretches out. The harbingers of doom will have been predicting the end of the financial world for almost a decade soon. It all becomes a bit stopped clock, eventually they will be right, meantime life goes on!

All you can try and do is try and position yourself financially to weather any storms should they happen. Suppose it goes along the lines of a diversified portfolio of investments (or rather asset diversification if you take property, stocks, precious metals, other collectibles eg art, stamps, cars etc as a wider concept).

Perhaps it will be messy and nobody will be ultimately safe, each to their own strategy as S.B says, personally I expect it will muddle along for sometime yet, but that doesn't stop an individual being as best prepared as you can. It's a bit like looking at insurance options incase the S.H.T.F

[Chris Mills]

7 hours ago, SillyBilly said:

Gold is a hedge against government (IMO). Basically the ponzi debt which they have created and can't pay back. Some people will say gold is actually money or gold is a hedge against inflation. The debate can get interesting at that point and it's another thread on its own really.

Personally, I have been buying since early to mid 2015 and will continue to do so all through 2016. I buy silver through Estonia so it's VAT exempt (would not buy otherwise) but buy gold in the U.K which is VAT exempt across EU. I expect the price to continue to fall with a deflationary outlook for all metals so I would not buy for short term gains. Most of what I intend to buy will be gold and silver stocks though, I have a relatively small amount of physical. So not what the likes of Maloney would advise. It fits me though. 

His analysis is very good in that video, you should make your own mind up about what action to take though. If you believe the economy will continue to expand and that the system is sustainable then you should steer clear of precious metals. I personally have made my mind up which way this is going so I am perhaps not the most impartial of observers which you may have gathered! I don't post with any other interest than to share my own thoughts though.

Is the gold you own through something like BullionVault or physical gold in your house (if in your house, where do you live and where is it stored? ) 

what are the advantages and disadvantages of owning gold through BullionVault for example vs physical gold and vs a gold tracking ETF?

[SillyBilly]

2 hours ago, Chris Mills said:

Is the gold you own through something like BullionVault or physical gold in your house (if in your house, where do you live and where is it stored? ) 

what are the advantages and disadvantages of owning gold through BullionVault for example vs physical gold and vs a gold tracking ETF?

I only own physical as a hedge in the most extreme of circumstances (as I say, never bothered up until recently). Otherwise it doesn't make much sense as you're paying significant premiums over spot price (and VAT if you buy silver in the U.K). I mean if we are being honest, where is the liquidity in physical metal? Liquidity is the most important thing for an investor, no point having a $20,000 lump of gold if you can't sell it is there?

FWIW in normal times, one can expect to sell at or around 98% of spot price, with this in mind (with the premium paid) you already need a decent uptick on today's spot price to even break even. So, the negatives are significant in my view but I feel it prudent to have an insurance policy against having a portfolio of 100% paper promises.

On stocks, if you pick a basket of gold or silver stocks and take a look at their share charts over a 5 year period, reference the gold/silver price during the same time period and how the share price performed relative. You should find the share price will move disproportionately to the underlying spot price, stocks tend to over react in both directions. I am personally invested for capital gains that I can quickly realise (although I have pinpointed good dividend stocks for the duration that I may hold) - I have then hedged with a bit of security (physical) for a worst-case scenario where the paper stocks could, in theory, become worthless. If that were to be the case, I'd imagine the actual metal price would sky rocket.

The risk level (IMO) is: Physical in your possession < Physical stored with a third party < Gold/Silver stocks < ETF

Personally my overall gold/silver allocation will be something in the order of (relative to above): 20%:0%:80%:0%.

Actual split gold to silver will be 30:70% in favour of silver.

I would not touch an ETF as I believe that whole market is a joke. Something like 300 paper "claims" on every 1 ounce of physical held in reserve. I'll stick to owning a stock which has proven and probable reserves of the metal, an inventory/stock holding and other assets. I have far more of a claim to gold and silver metal being a part owner of a mine than I do a paper shuffling service with a few tonnes of gold in a vault somewhere.

I should point out that gold/silver is only a portion of overall portfolio, although increasing. I can post another time on what stocks I like in silver and gold.

[Chris Mills]

7 hours ago, SillyBilly said:

I only own physical as a hedge in the most extreme of circumstances (as I say, never bothered up until recently). Otherwise it doesn't make much sense as you're paying significant premiums over spot price (and VAT if you buy silver in the U.K). I mean if we are being honest, where is the liquidity in physical metal? Liquidity is the most important thing for an investor, no point having a $20,000 lump of gold if you can't sell it is there?

FWIW in normal times, one can expect to sell at or around 98% of spot price, with this in mind (with the premium paid) you already need a decent uptick on today's spot price to even break even. So, the negatives are significant in my view but I feel it prudent to have an insurance policy against having a portfolio of 100% paper promises.

On stocks, if you pick a basket of gold or silver stocks and take a look at their share charts over a 5 year period, reference the gold/silver price during the same time period and how the share price performed relative. You should find the share price will move disproportionately to the underlying spot price, stocks tend to over react in both directions. I am personally invested for capital gains that I can quickly realise (although I have pinpointed good dividend stocks for the duration that I may hold) - I have then hedged with a bit of security (physical) for a worst-case scenario where the paper stocks could, in theory, become worthless. If that were to be the case, I'd imagine the actual metal price would sky rocket.

The risk level (IMO) is: Physical in your possession < Physical stored with a third party < Gold/Silver stocks < ETF

Personally my overall gold/silver allocation will be something in the order of (relative to above): 20%:0%:80%:0%.

Actual split gold to silver will be 30:70% in favour of silver.

I would not touch an ETF as I believe that whole market is a joke. Something like 300 paper "claims" on every 1 ounce of physical held in reserve. I'll stick to owning a stock which has proven and probable reserves of the metal, an inventory/stock holding and other assets. I have far more of a claim to gold and silver metal being a part owner of a mine than I do a paper shuffling service with a few tonnes of gold in a vault somewhere.

I should point out that gold/silver is only a portion of overall portfolio, although increasing. I can post another time on what stocks I like in silver and gold.

Interesting - is it possible to buy physical gold/silver at the spot price or are you always going to be over paying slightly? As far as I understand as an individual it's very difficult to get the gold at spot price and you're always going to be paying a small % more from a dealer. 

[SillyBilly]

4 hours ago, Chris Mills said:

Interesting - is it possible to buy physical gold/silver at the spot price or are you always going to be over paying slightly? As far as I understand as an individual it's very difficult to get the gold at spot price and you're always going to be paying a small % more from a dealer. 

Could you buy a car at cost price? Unlikely. There has to be a margin for a dealer. He has to sell for more than he bought for. You would presumably be an investor and not a collector. As such you will notice the premium on bars is significantly lower and a lot closer to spot. They are not collectors items and obviously the cost of say 1000 detailed 1oz coins is much less than pouring 1000 oz into a bar and stamping. Disadvantage is again liquidity if the SHTF. Easy to see how coins could be exchanged and sold rather than a huge lump which has massive value but can't be broken down. Fungibility. Also you may not want to buy in relatively big quantities as such coins will be only option. In that case go for cheapest by weight IMO. I am not interested in whether a Silver Eagle is more collectable than a Silver Maple or vice versa. I will go for the cheapest providing content of metal is the same. More you buy in 1 hit the closer to spot you get. I would be buying the coin for its melt value and not the artwork on the coin, that is just me though.

I have a preference towards bars personally. You will do well to buy coins at less than a 20% premium of spot. A dollar within spot on bars.

[Zag zig]

16 hours ago, Chris Mills said:

Is the gold you own through something like BullionVault or physical gold in your house (if in your house, where do you live and where is it stored? ) 

what are the advantages and disadvantages of owning gold through BullionVault for example vs physical gold and vs a gold tracking ETF?

As S.B says in his first reply, you could devote an entire thread to a debate on advantages/disadvantages. I've read many of them on gold bug sites over the years. Keeping it simple, if you can't touch it, it's therefore not in your possession and some would say therefore it's not yours. 

Then you have the debate about whether it's legal tender and what is? A contract promising a quantity of gold may be settled in legal tender - 'Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender.'

http://www.royalmint...guidelines.aspx

So, if you buy 'paper gold' you might find that the etf does not have any real gold at all. They may just give you the market value of the gold in paper, within a specified time period. In which case you could be left holding a pile of paper. In a currency crisis this would not be a good outcome. 

Exchanging actual metal with currency can be done easily at retail outlets on the high-street. In times of hyperinflation or deflation you can use gold to put food in your mouth. But try taking 'paper gold' into a pawn shop and see what they give you for it.

Principally the trouble with ETF's is how gold is rehypothocated. Some forms of gold ownership (read ETF's) are sold on several hundred times over the claimed storage and the devil is in the detail, there is no simple explanation, nor one cap fits all.

Then you had sites like BullionVault and GoldMoney(James Turk) come along with their versions of storage. For a comparison here's a lazy linker, it's a pretty good summary though http://www.goldinmind.com/how-to-buy-gold/reviews-ratings/bullionvault-vs-goldmoney-review.html

Besides all the above you have to consider how safe is your investment, even if you hold it where can you safely store it, next problem is are you buying bonafide physical. There are plenty of stories about fake tungsten bars, Chineese fake coins etc, etc so it all gets very complex and you have to consider what's right for your circumstances.

7 hours ago, Chris Mills said:

Interesting - is it possible to buy physical gold/silver at the spot price or are you always going to be over paying slightly? As far as I understand as an individual it's very difficult to get the gold at spot price and you're always going to be paying a small % more from a dealer. 

Dealers like C.I.D seem to have lower spreads and as S.B says the more you buy the closer to spot you will get. Sovereigns if U.K based offer good value, particularly the older ones. There are a few dealers that sell close to spot, but you have to look at what they will give you back to get a proper take. Just adding my thoughts to what S.B has said already.

[Shang]

Doesn't the Royal Mint offer a gold Vault service? Basically means your gold is protected by the government and Ministry of Defence?

[Chris Mills]

49 minutes ago, Shang said:

Doesn't the Royal Mint offer a gold Vault service? Basically means your gold is protected by the government and Ministry of Defence?

You can, but they charge an annual 1% of the value of your gold per year + VAT. If you were going to do so you would probably be better using BullionVault, which charge less than a 1% premium over spot price and you still "own" the gold despite never having it in your hands. 

Even if the company goes bust the gold is legally in your name so it can't be liquidated as it is not a company asset (according to the sources I have read anyway). 

[SillyBilly]

58 minutes ago, Chris Mills said:

You can, but they charge an annual 1% of the value of your gold per year + VAT. If you were going to do so you would probably be better using BullionVault, which charge less than a 1% premium over spot price and you still "own" the gold despite never having it in your hands. 

Even if the company goes bust the gold is legally in your name so it can't be liquidated as it is not a company asset (according to the sources I have read anyway). 

You are correct. The point stands though IMO if you are buying physical (wherever it is stored) that you are undertaking an extreme hedge for extreme circumstances. In that case, if everything goes to ****, again you have a piece of paper which "legally" entitles you to the gold. If the international monetary system collapsed I suspect it would be absolute chaos, it is easy to imagine an orderly queue to pick up your gold but what if it doesn't work like that? You'd be relying on the fact that law & order, contracts and goodwill still stand. Look up Executive Order 6102, last time there was a major crisis they were confiscating gold off private citizens so they could hoard it themselves before reappraising its value. Is anybody 100% confident they won't do the same another time round?

I know it sounds ridiculous (and I am a sane person who thinks the above is pretty far-fetched!) but I don't see the point in owning physical if you don't have access to it when or if a financial doomsday scenario played out.

[SaintRam]

25 minutes ago, SillyBilly said:

You are correct. The point stands though IMO if you are buying physical (wherever it is stored) that you are undertaking an extreme hedge for extreme circumstances. In that case, if everything goes to ****, again you have a piece of paper which "legally" entitles you to the gold. If the international monetary system collapsed I suspect it would be absolute chaos, it is easy to imagine an orderly queue to pick up your gold but what if it doesn't work like that? You'd be relying on the fact that law & order, contracts and goodwill still stand. Look up Executive Order 6102, last time there was a major crisis they were confiscating gold off private citizens so they could hoard it themselves before reappraising its value. Is anybody 100% confident they won't do the same another time round?

I know it sounds ridiculous (and I am a sane person who thinks the above is pretty far-fetched!) but I don't see the point in owning physical if you don't have access to it when or if a financial doomsday scenario played out.

I've been lurking and reading this thread with great interest, and I've nothing to add but to say I gave you a like for the smile this line gave me when I imagined someone saying it without referring explicitly to the system regarding people who own bullion. 

[Ramarena]

3 hours ago, Shang said:

Doesn't the Royal Mint offer a gold Vault service? Basically means your gold is protected by the government and Ministry of Defence?

Maybe not for much longer as the Royal Mint is could well be sold off by the Government.

http://www.ft.com/cms/s/0/3bafb06a-8ee8-11e5-a549-b89a1dfede9b.html#axzz3wHoKrHuk

[Zag zig]

3 hours ago, Chris Mills said:

You can, but they charge an annual 1% of the value of your gold per year + VAT. If you were going to do so you would probably be better using BullionVault, which charge less than a 1% premium over spot price and you still "own" the gold despite never having it in your hands. 

Even if the company goes bust the gold is legally in your name so it can't be liquidated as it is not a company asset (according to the sources I have read anyway). 

The other point to mention is that if you buy such as coins direct from the Mint, you usually pay a considerable premium to what Bullion dealers will offer; particularly as highlighted if you buy in bulk.

[SillyBilly]

7 hours ago, Shang said:

Doesn't the Royal Mint offer a gold Vault service? Basically means your gold is protected by the government and Ministry of Defence?

That defeats the whole object of buying it IMO, might as well buy an ETF and cut costs. You are buying it as a hedge against these people, they shouldn't be anywhere near it?

Gold can be viewed as a bet against the current monetary system. It was made illegal to own it in America in 1933 (during the height of the Great Depression), people were forced to sell at pre-determined $20 on the ounce price before the Fed re-set the value at $35 an ounce (nice little earner for government when they're skint eh?). That is equivalent to someone being told by the government to sell their house at £100k to the government....and then the government selling it back to the market a year later at £175k.

[SillyBilly]

Big day in China today.

Halted trading due to a wall of selling pressure. Shanghai Composite down 7%, Shenzhen Composite down more than 8%. First time China ever used circuit breakers today on main exchanges. I wonder what would actually happen if we had a free market anywhere in the world? Suspect the PPT are buying heavily in the States tonight.

[Chris Mills]

8 minutes ago, SillyBilly said:

Big day in China today.

Halted trading due to a wall of selling pressure. Shanghai Composite down 7%, Shenzhen Composite down more than 8%. First time China ever used circuit breakers today on main exchanges. I wonder what would actually happen if we had a free market anywhere in the world? Suspect the PPT are buying heavily in the States tonight.

Whats PPT?

Is the fall in China stock perhaps just caused by herd mentality after a knee jerk reaction to the falling Yuan this morning or is the Yuan falling a by-product of the market dive? 

[Zag zig]

25 minutes ago, Chris Mills said:

Whats PPT?

Is the fall in China stock perhaps just caused by herd mentality after a knee jerk reaction to the falling Yuan this morning or is the Yuan falling a by-product of the market dive? 

 the famous Plunge Protection Team, u know bruv, dem that pulls all the strings a.k.a the Fed 

[SillyBilly]

43 minutes ago, Chris Mills said:

Whats PPT?

Is the fall in China stock perhaps just caused by herd mentality after a knee jerk reaction to the falling Yuan this morning or is the Yuan falling a by-product of the market dive? 

Sorry, shouldn't use the abbreviations. Plunge Protection Team (real name is Working Group on Financial Markets). There isn't a market which isn't rigged or influenced by Central Banks now. Unfortunately due to the financialization of the economy, the stock market has to be propped up exactly like the housing or bond market does. Those who say this is free market capitalism are not with it IMO (the free market would destroy this entire ponzi scheme overnight), that went a decade ago, this is the definition of crony capitalism. Just look how money is created and you can see how the collusion between the central banks, government and the commercial banking industry has come to be. At the expense of everyone else.

Basically, FYI, its the Fed buying index futures contracts to either reduce a sell-off or prevent one, facilitated through commercial investment divisions. That isn't a free market. Just like Help-to-Buy/Discount Stater Homes (housing market), or Quantitative Easing (bonds) isn't a free market. It is all props to stop a crumbling edifice.

On China's drop today, I am not too sure. China is weakening the Yuan and dropping interest rates to boost flagging export demand. Have a read of Jim Rickards Currency Wars book to see what is playing out, he has been spot on from when he wrote it in 13.

 

[Zag zig]

49 minutes ago, SillyBilly said:

Sorry, shouldn't use the abbreviations. Plunge Protection Team (real name is Working Group on Financial Markets). There isn't a market which isn't rigged or influenced by Central Banks now. Unfortunately due to the financialization of the economy, the stock market has to be propped up exactly like the housing or bond market does. Those who say this is free market capitalism are not with it IMO (the free market would destroy this entire ponzi scheme overnight), that went a decade ago, this is the definition of crony capitalism. Just look how money is created and you can see how the collusion between the central banks, government and the commercial banking industry has come to be. At the expense of everyone else.

Basically, FYI, its the Fed buying index futures contracts to either reduce a sell-off or prevent one, facilitated through commercial investment divisions. That isn't a free market. Just like Help-to-Buy/Discount Stater Homes (housing market), or Quantitative Easing (bonds) isn't a free market. It is all props to stop a crumbling edifice.

On China's drop today, I am not too sure. China is weakening the Yuan and dropping interest rates to boost flagging export demand. Have a read of Jim Rickards Currency Wars book to see what is playing out, he has been spot on from when he wrote it in 13.

 

Knew you would explain it in so much finer(better) detail Next you'll be wheeling out GATA and Andrew Maguire gold suppression articles ha I jest.

Mind if I add my bit. For years the P.P.T have injected false liquidity into the stocks and bond markets by way of billions of dollars going through New York Financial Housess. It's all on public record by the so called Primary Dealers in federal Government bonds. Thus they become the Feds agents in controlling the markets in simple terms.

This slight of hand is done by what are called repurchase agreements and the Feds Primary Dealer Credit Facillity. Rather bizarrely it's all part of preserving the dollar against everything else as S.B alludes, except guess what, other countries and currency are fighting back with nefarious ploys of their own. Like increasing Gold reserves, coming out of the oil petro dollar exchange with their own forms of settlement.

All good fun till the music stops.....pop!

[Ramarena]

Going back to gold, maybe time to look at your options on it, when I checked earlier it was rising, investors are clearly getting very twitchy about China and rightly so. 

Fathom Consulting reckon that Chinese growth could really be running as low as 2%, like any sane person, they certainly don't believe the official 7% figure. 

Just noticed Brent is down at $34.30…Crikey dropping like a stone!

[SillyBilly]

1 hour ago, Ramarena said:

Going back to gold, maybe time to look at your options on it, when I checked earlier it was rising, investors are clearly getting very twitchy about China and rightly so. 

Fathom Consulting reckon that Chinese growth could really be running as low as 2%, like any sane person, they certainly don't believe the official 7% figure. 

Just noticed Brent is down at $34.30…Crikey dropping like a stone!

Yes, fancy oil going lower but it is obviously dependent on the Middle East not imploding, every day the political situation seems to deteriorate. With Iran and Saudi squaring up in proxy wars, you have to wonder where its going?