Merged: Silver Over 40.00 / Real and fake prices

[Kid Eager]

Originally Posted by michaelsuede

10 year return on silver:
april 14 2001: 4.38
april 14 2011: 42.20

Berkshire Hathaway Inc. (BRK-A)
Apr 16, 2001 64,200.00
Apr 13, 2011 121,227.00

Which would you rather own?

did you include the dividends etc from Berkshire Hathaway?

[michaelsuede]

Originally Posted by Kid Eager

did you include the dividends etc from Berkshire Hathaway?

I don't believe they pay dividends.

I could be mistaken on that though.

[NewtonTrino]

Originally Posted by michaelsuede

I predict just a few months from now, I will dredge up this post and LOL @ 40.00 silver.

It will be a thing of a by-gone era.

Like nickel gum-ball machines.

So I assume that you believe this so much that you've completely leveraged your entire portfolio into silver?

[roger]

Originally Posted by Kid Eager

did you include the dividends etc from Berkshire Hathaway?

No dividends, but of course he
1) cherry picked data (hint: the returns for BRK over decades have been extraordinary)
2) ignored risk (hint: bubbles are risky, volatility can be risky)
3) missed or ignored the point that BRK was chosen as an example - any blue chip stock would have sufficed to make the point that metal prices are based on supply and demand, speculation, and the volatility induced by the competing industrial vs store of value uses.

[michaelsuede]

Originally Posted by NewtonTrino

So I assume that you believe this so much that you've completely leveraged your entire portfolio into silver?

yes

I believe silver is going to rocket nearly exponentially in price given a few factors:

1. JPM is out of silver.

2. JPM is under pressure to stop fraudulently naked shorting the market.

3. The Fed is printing epic ass tons of money.

4. Silver’s naturally occurring ratio to gold in the earth is 16 to 1, which is well below current market prices.

[michaelsuede]

Originally Posted by roger

No dividends, but of course he
1) cherry picked data (hint: the returns for BRK over decades have been extraordinary)
2) ignored risk (hint: bubbles are risky, volatility can be risky)
3) missed or ignored the point that BRK was chosen as an example - any blue chip stock would have sufficed to make the point that metal prices are based on supply and demand, speculation, and the volatility induced by the competing industrial vs store of value uses.

The downfall of fiat money is occurring now, as the Fed is basically buying USTs from the treasury directly.

The PDs are flipping bonds that were issued a week from the time they flip them back to the Fed (while taking a nice cut for themselves of course).

This was not the case until just recently.

Again, we are not dealing with normal any longer.

We are dealing with an out of control Fed and a criminal illegitimate government.

The dollar collapse will accelerate from here on out.

[roger]

Originally Posted by michaelsuede

The downfall of fiat money is occurring now, as the Fed is basically buying USTs from the treasury directly.

The PDs are flipping bonds that were issued a week from the time they flip them back to the Fed (while taking a nice cut for themselves of course).

This was not the case until just recently.

Again, we are not dealing with normal any longer.

We are dealing with an out of control Fed and a criminal illegitimate government.

The dollar collapse will accelerate from here on out.

Not a single word of that addresses any of my points.

If you make an argument, follow through on it, don't change the subject.

[michaelsuede]

Originally Posted by roger

Not a single word of that addresses any of my points.

If you make an argument, follow through on it, don't change the subject.

If you had asked me 40 years ago (if I was alive back then) if you should buy silver or BRK.A, I would have said keep a small part of your portfolio in silver/gold as a hedge and buy BRK.A.

This is not, and was not, bad advice.

If you had asked me in 2009 that same question, I would have said go all-in on silver, because by then the handwriting was clearly on the wall for everyone to see.

The dollar is going away.

Soon.

So to your point, 40 years ago, sure, BRK.A was certainly a better investment.

Today, given that we have an insane criminal government and Fed, that is no longer the case.

[NewtonTrino]

Mike, can you explain why owning silver protects you any better against the collapse of the dollar than say owning equities? As long as you don't have actual cash why shouldn't one commodity or equity both hold their value equally?

[michaelsuede]

Originally Posted by NewtonTrino

Mike, can you explain why owning silver protects you any better against the collapse of the dollar than say owning equities? As long as you don't have actual cash why shouldn't one commodity or equity both hold their value equally?

Marc Faber does it far better than I can in this lecture.

He demonstrates with charts why equities never keep up with inflation under hyper-inflation.

http://fascistsoup.com/Forums/viewtopic.php?f=14&t=307

[roger]

Does he have any charts on what happens to people that buy at historically high levels?

[michaelsuede]

Originally Posted by roger

Does he have any charts on what happens to people that buy at historically high levels?

They are only at historical highs in nominal, not real, terms.

That aside, even if they were at real all time highs, silver is still undervalued given its in-ground ratio to gold.

Both silver and gold have been heavily manipulated with fraudulent shorts and fraudulent ETFs that don't have the silver on-hand to back all their paper.

The ETFs and the shorts are going to blow up soon.

[michaelsuede]

In fact, I would not be surprised to see yet another Fed bailout of JPM to deal with JPMs fraud in the silver/gold markets.

The Fed will not let JPM implode.

JPM is more important than US citizens.

[roger]

Originally Posted by michaelsuede

In fact, I would not be surprised to see yet another Fed bailout of JPM to deal with JPMs fraud in the silver/gold markets.

The Fed will not let JPM implode.

JPM is more important than US citizens.

This, and the other stuff you have posted is indeed possible.

But what you have is an interesting story. JPM's short position is well known. It is hypothesized that they are attempting to manipulate the market. They may be. Or, they may be making a very reasonable bet that silver will fall. Or, they may know something you don't and have a near lock. Or the desk might just be insane and out of control. How do you know?

Which was the point of my point #2 - risk. You have bet your future that your story is correct. Look at what happened back in the 80s during the Hunt debacle. Sure, there was a huge bubble, but then there was a huge crash. And right at that peak, people were talking about how silver was still going to go up, and buying it up. Opps.

So, your position is that you know more than JPM about the silver market. That seems like a position based on hubris, based on the rather elementary arguments you have made in this thread.

Furthermore, your speculation about silver rising is speculation in all meanings of the word. If silver rises exponentially, the industrial value of silver will drop, leaving only the store of value. But store of value, in and of itself, is nearly useless, your stories about hyperinflation nonwithstanding.

Furthermore, you are discussing only the US economy, but the last time I checked silver trades in an international market. Not that I deny that the US market and dollar influences other markets, but over time prices will normalize, and with only store of value supporting the silver market, eventually the speculation will turn and you will have a massive crash. Much pain ensues.

In short, I would not at all be surprised to find that your silver investment works out extremely well for you, if you don't hold out for $1000. OTOH, I would not at all be surprised to find that you end up losing your little all (or big all, I'm not trying to make assumptions about your current wealth).

Contrast that to buying a large international company that actually produces value through labor. You are betting on a lot of things working out just so, that there is no behind the scenes price manipulation going on in solver, that you know more than JPM's trading desk, that people will continue to place a premium on silver's store of value, etc. Comparing that to the future cash flow of a company like Berkshire Hathaway is, well, optimistic.

I wish you well in your investment, but there is nothing that you have written here that would remotely convince me to follow you into such a scheme. Assertions < cash flow from productive companies doing useful things.

[michaelsuede]

I probably know a few more things about JPM than you do, considering I'm in silver myself.

for example:
http://www.zerohedge.com/article/gue...ost-out-silver

or things like:
http://www.chase-sucks.com/?p=63

I also know the physical ratio of gold to silver in the earth.

That is something that can not be manipulated by the banks, and markets will always move to reflect at least that ratio. However it should actually be less disparity between the two because silver is lost in commercial uses while gold is not.

Of course factors of production come into play, but I'm not concerned about those in the slightest. This is pure market manipulation on the part of the banks. It will eventually come to an end.

[Almo]

Originally Posted by michaelsuede

10 year return on silver:
april 14 2001: 4.38
april 14 2011: 42.20

Berkshire Hathaway Inc. (BRK-A)
Apr 16, 2001 64,200.00
Apr 13, 2011 121,227.00

Which would you rather own?

Berkshire Hathaway

[michaelsuede]

Originally Posted by Almo

Berkshire Hathaway

I know roger was joking given the time frame.

You on the other hand, I'm not so sure about.

[ngc6205]

Originally Posted by michaelsuede

The PDs are flipping bonds that were issued a week from the time they flip them back to the Fed

Gotta call BS on that one. Care to provide a source? Out of the hundreds of different securities issues purchased in permanent open market operations by the Fed since Jan. 3, 2011, I would bet that you cannot find more than 20 purchases of securities that were issued 7 days or less before the transaction.

[Francesca R]

Originally Posted by roger

Does he have any charts on what happens to people that buy at historically high levels?

Originally Posted by michaelsuede

They are only at historical highs in nominal, not real, terms.

Man, when's this trade going to work? I've been waiting ages . . . .

[lomiller]

It looks like the bears are getting hungry...

http://finance.yahoo.com/blogs/break...&asset=&ccode=

[roger]

Originally Posted by michaelsuede

I know roger was joking given the time frame.

You on the other hand, I'm not so sure about.

Of course I was not joking.

Hindsight is 20/20. You cannot make investing decisions based on them.

There are tons of stocks right now outperforming my portfolio. Am I kicking myself, buying into them, or otherwise upset? Of course not. Because I have no way to predict which ones are going to outperform in the future, and I am happy owning a business that I know will continue to thrive for a decade at a minimum.

Silver is very volatile, and is very risky (those two can be the same thing, or different things, depending). No way I would own it. If I miss out on the upside, so what? It's MUCH more important to me that i never participate on the downside.

[roger]

Originally Posted by michaelsuede

I probably know a few more things about JPM than you do, considering I'm in silver myself.

for example:
http://www.zerohedge.com/article/gue...ost-out-silver

or things like:
http://www.chase-sucks.com/?p=63

Wow, you can google and link to posts on the internet.

This.
Does.
Not.
Make.
You.
A.
Financier.
Or.
An.
Expert.
In.
Silver.

Sorry.

[roger]

Originally Posted by Francesca R

Man, when's this trade going to work? I've been waiting ages . . . .

http://forums.randi.org/imagehosting...880ed4a0c1.jpg

Soon. Real Soon Now. Don't forget to add in the "insane, criminal government" adjustment.

[michaelsuede]

43 oz today

http://www.zerohedge.com/article/429913-sticksave

[michaelsuede]

Originally Posted by ngc6205

Gotta call BS on that one. Care to provide a source? Out of the hundreds of different securities issues purchased in permanent open market operations by the Fed since Jan. 3, 2011, I would bet that you cannot find more than 20 purchases of securities that were issued 7 days or less before the transaction.

http://www.zerohedge.com/article/fli...7-year-auction
http://www.zerohedge.com/article/tod...s-continue-chu
http://www.zerohedge.com/article/fri...-dollar-plunge
http://www.zerohedge.com/article/bla...unches-flip-bo
http://www.zerohedge.com/article/fli...ction-back-fed
http://www.zerohedge.com/article/tod...line-taxpayers
http://www.zerohedge.com/article/fli...ed-7-year-bond
http://www.zerohedge.com/article/pri...s-ago-back-fed
http://www.zerohedge.com/article/pri...nder-two-weeks

etc.. etc.. etc..

I bet I could find nearly every POMO loaded with the prior week's issues.

[ngc6205]

Originally Posted by michaelsuede

http://www.zerohedge.com/article/fli...7-year-auction
http://www.zerohedge.com/article/tod...s-continue-chu
http://www.zerohedge.com/article/fri...-dollar-plunge
http://www.zerohedge.com/article/bla...unches-flip-bo
http://www.zerohedge.com/article/fli...ction-back-fed
http://www.zerohedge.com/article/tod...line-taxpayers
http://www.zerohedge.com/article/fli...ed-7-year-bond
http://www.zerohedge.com/article/pri...s-ago-back-fed
http://www.zerohedge.com/article/pri...nder-two-weeks

etc.. etc.. etc..

I bet I could find nearly every POMO loaded with the prior week's issues.

And I bet you cannot.

First, you claimed that the Fed was buying bonds that were issued from one week prior. One of your (ETA:first four) links complains about a trade that is outside of that time frame.

Second, your (ETA:first four)links only provide three securities that PDs supposedly flipped to the Fed. The Federal Reserve purchased approximately 860 different securities in 63 operations between 1/3/2011 and 4/14/2011. Out of approximately 860 securities in those 64 transactions, only 11 were performed at 7 days or less. Those 11 transactions totaled $42.4 billion in securities and the U.S. Treasury auctioned more than $2 trillion in the same time frame.

Third, the Fed also purchased 596 different securities that had been on the market for 365 days or more. The total of those transactions was $149.3 billion.

Fourth, to the best of my knowledge, nothing within the Federal Reserve Act requires the Federal Reserve to wait a particular amount of time after an auction to purchase securities on the open market.

[ngc6205]

Originally Posted by michaelsuede

I bet I could find nearly every POMO loaded with the prior week's issues.

The following are 39 dates for POMO operations where I did not find a purchase of Treasury securities that had been issued within the prior two weeks.

4/14/2011
4/13/2011
4/11/2011
4/6/2011
4/5/2011
3/31/2011
3/30/2011
3/29/2011
3/28/2011
3/23/2011
3/23/2011
3/22/2011
3/18/2011
3/16/2011
3/14/2011
3/7/2011
3/3/2011
2/25/2011
2/24/2011
2/22/2011
2/17/2011
2/16/2011
2/15/2011
2/8/2011
2/7/2011
2/4/2011
2/2/2011
1/28/2011
1/27/2011
1/25/2011
1/24/2011
1/21/2011
1/20/2011
1/18/2011
1/10/2011
1/7/2011

Feel free to look, I might have missed something, but I don't believe I did.

[michaelsuede]

One week, one year, what's the difference?

The Fed obviously does not have to wait any time frame before repurchasing them since obviously they DID repurchase some bonds that were issued just the prior week.

Out of 860 you're saying 596 were older than a year, well good for them.

That means 264 weren't.

The PDs are making millions in ill gotten gains by flipping bonds and the Fed is destroying the currency by hoarding treasury bonds.

I'm not sure what your point is.

[ngc6205]

Originally Posted by michaelsuede

One week, one year, what's the difference?

It seemed to make a difference to you earlier. It seems to make a difference to your source at zerohedge.

Originally Posted by michaelsuede

The Fed obviously does not have to wait any time frame before repurchasing them since obviously they DID repurchase some bonds that were issued just the prior week.

And, as I said, there is nothing in the law that says that they have to wait any particular time frame. The only restriction is that the securities have to be purchased on the open market, which is what they did.

Originally Posted by michaelsuede

Out of 860 you're saying 596 were older than a year, well good for them.

That means 264 weren't.

Of those 264, only 11 were within the one week time frame you were claiming.

Originally Posted by michaelsuede

The PDs are making millions in ill gotten gains by flipping bonds and the Fed is destroying the currency by hoarding treasury bonds.

So says you. Regardless, making wild unsubstantiated claims does not help your position. If you want to complain about the Fed, use real data and use true statements.

Originally Posted by michaelsuede

I'm not sure what your point is.

I'm not sure why you keep using false data or making false claims.

Originally Posted by michaelsuede

I bet I could find nearly every POMO loaded with the prior week's issues.

I suppose that less than half is equal to "nearly every" to you.

[michaelsuede]

LOL - yeah, it's a false claim to state that the PD's are racking in millions by flipping those bonds.

They do it for free out of the kindness of their hearts.

Just like the Fed monetizes the debt because they love people who save their money.

The PD's take a commission on each sale, which has amounted to billions by now given the volume/size of transactions. No risk, no value added transactions, while making millions upon millions. It is a brokers wet dream.

[Almo]

Originally Posted by roger

Of course I was not joking.
<a bunch of intelligent points deleted for brevity>

I agree, roger. (I'm assuming you are lowercase for a reason.)

[Tippit]

Originally Posted by michaelsuede

One week, one year, what's the difference?

The Fed obviously does not have to wait any time frame before repurchasing them since obviously they DID repurchase some bonds that were issued just the prior week.

Out of 860 you're saying 596 were older than a year, well good for them.

That means 264 weren't.

The PDs are making millions in ill gotten gains by flipping bonds and the Fed is destroying the currency by hoarding treasury bonds.

I'm not sure what your point is.

He doesn't have a point, because when the Fed isn't monetizing new Treasury debt, it's mopping up pre-existing private supply (through the PDs), which is effectively a subsidy to private bondholders using what is essentially counterfeit money (which doesn't show up in the CPI, it shows up in higher bond prices and artificially low yields). It's the biggest problem with the Fed, redistribution of wealth via asset price inflation.

[Aepervius]

Originally Posted by michaelsuede

The dollar is going away.

Soon.

Define soon. 1 Month ? 1 Year ? 1 decade ? 1 century ?

[GnaGnaMan]

Sorry for my naivety but what does that mean: The dollar goes away?

[zooterkin]

Originally Posted by michaelsuede

People are trading 40.00 dollars of fiat money for shiny objects right now.

Originally Posted by Tippit

If that time ever occurs, it will in all likelihood be preceded by a longer duration where people will refuse to trade food for pieces of paper or plastic. The value of gold and silver depend on the existence of civilization as much as fiat and electronic money do, but they insure against the loss (and sometimes dramatic loss) of purchasing power that has occured and will occur within the context of a civilized, if financially unstable, society.

Maybe it's just me, but it seems that use of the term "fiat money" is a signal, much like homoeopaths using "allopathy". Does anyone reputable use the term?

[ngc6205]

Originally Posted by michaelsuede

LOL - yeah, it's a false claim to state that the PD's are racking in millions by flipping those bonds.

The false claim I was referring to was the one about the Fed essentially buying securities from the Treasury directly or PDs flipping Treasuries to the Fed. Sorry that I was unclear.

Originally Posted by michaelsuede

They do it for free out of the kindness of their hearts.

Of course they don't do it for free. However, for even a primary dealer, transactions with the Federal Reserve is just a small portion of their business. Primary dealers have a DAILY transaction volume of $612 BILLION in U.S. Treasury securities alone. That doesn't count all of the other securities that primary dealers handle. Regardless, since the Fed pays its net income to the U.S. Treasury every year, the transactions do not "cost" the taxpayer anything.

Originally Posted by michaelsuede

Just like the Fed monetizes the debt because they love people who save their money.

The PD's take a commission on each sale, which has amounted to billions by now given the volume/size of transactions. No risk, no value added transactions, while making millions upon millions. It is a brokers wet dream.

Sure, it might be nice to be associated with the term "primary dealer", but the transactions with the Federal Reserve are only a small portion of the business of a primary dealer.

[ngc6205]

Originally Posted by zooterkin

Maybe it's just me, but it seems that use of the term "fiat money" is a signal, much like homoeopaths using "allopathy". Does anyone reputable use the term?

Yes, it is used by economists, but typically not as derogatory term. Gold and silver bugs and "the sky is falling" inflationists have been declaring the end of the dollar for 40 years or more. They weren't right then and they are not right now.

[mhaze]

Originally Posted by michaelsuede

I predict just a few months from now, I will dredge up this post and LOL @ 40.00 silver.

It will be a thing of a by-gone era.

Like nickel gum-ball machines.

I'll take my LOLing NOW based on my investments of the past over your speculation of LOLing in the future.



And there might just be a reason why the gumball machine is now 25 cents instead of 5 cents.

[timhau]

Originally Posted by michaelsuede

This is true under normal circumstances.

However, we are no longer dealing with normal circumstances.

I believe the phrase is "this time it's different".

[Tippit]

Originally Posted by mhaze

I'll take my LOLing NOW based on my investments of the past over your speculation of LOLing in the future.



And there might just be a reason why the gumball machine is now 25 cents instead of 5 cents.

My basis in Ag is a little north of $5. I'm curious to know if anyone on this forum has one that's lower, what's yours?