Reverse Psychology

[beauanderos]

Ok, so if we start out expecting that precious metals today will be FUBAR... then the markets will disappoint us to the upside??? Does it work that way?

[Market Harmony]

Here I was expecting to get all excited this December that gold and silver were going to take off to the upside. It's all my fault. Damn this positivity!

These market swings are unnerving, but sometimes end up being good. Anyone care to elaborate why PM's are seeing their prices being pushed downward?

[Copper Catcher]

Please help correct me if I’m getting this wrong:

There was a huge story about MF Global and the re-hypothecation of gold and I am also guessing silver accounts and you can help but feel an inference that other brokerage firms might be doing the same.

We all know of the admission a long time ago that paper sales of gold trade in multiple of the actual physical market on the London Gold Bullion Exchange i.e. 10 times or maybe 100 times. Is this not re-hypothecation as well? Is this not just as criminal as what MF Global has done?

Eric Sprott buys a dump truck load of silver within the last few weeks to add to his pile recently.

The central banks around the world have been adding to their gold reserves a lot lately, huge buying spree regardless that the price of gold is moving higher.

And we see the prices of precious metals continues to go down and the stock market move up and down like a yoyo.

Pass the smelling salts please….Without logic what do we have? I am continuing to feel sick!

[beauanderos]

Usually in about three minutes the metals trading desks enter the fray and start mucking up the markets. Let's see if they decide to cover today, or wreak further damage, attempting to destroy ostensible support at various "price floors," all the while triggering ever more stop-loss limit sell orders.

[68Camaro]

Guess we'll have to see what information comes in over the day, but the big traders clearly get direction and/or information well in advance of any news stories we see. But Euro is dropping, markets are nervous again about Europe - note that the FTSE is down only slightly, but the DAX and CAC40 are down big. The Brits are generally happy they are staying out of the mess as best they can - they are indirectly affected rather than directly. PMs are selling either because someone needs to raise cash, or someone is shorting the market. Why that? That's a good question.

Folks, as long as the dollar is still the intermediate "last resort", and while we're waiting for the shoe to drop in Europe, none of the markets, including PMs, are going to be stable.

[Copper Catcher]

At the moment gold is down $47.50 and silver $1.20

Get out the paddles and charge them up and stand clear.....

[Rosco]

The above makes me happy but no local stocks of PM are available here so no joy on lower price for small timer

[68Camaro]

The above makes me happy but no local stocks of PM are available here so no joy on lower price for small timer

And that is a key point. In order for the price to be real, the item has to be obtainable at that price. Paper prices are of somewhat questionable value, especially in times of great volatility. Only certain traders can make (or lose) money off of them.

[Market Harmony]

The above makes me happy but no local stocks of PM are available here so no joy on lower price for small timer

And that is a key point. In order for the price to be real, the item has to be obtainable at that price. Paper prices are of somewhat questionable value, especially in times of great volatility. Only certain traders can make (or lose) money off of them.

As a dealer, I often wonder how people can think that because the paper market says silver is valued at X, then I am somehow mandated to sell at X (or close to it). I often have to explain it in terms that they can understand. Usually, I ask them what is their profession, and then use an example that corresponds to a wholesale and retail market. This usually hits home. When it doesn't, I happily push them onto another dealer and let that poor soul deal with their lack of reason.

Just this weekend, I had to ask a guy what he did, and he was in the steel industry. So, I then related the retail market of selling steel grating in Home Depot to the wholesale market of steel grating to a bridge builder. Then I let him answer the question, "Who do you think gets the better deal?" He got it then and was much more understanding of the market for precious metals. Also, he was considering a 1/10th oz gold Eagle. I then additionally explained to him that the price of gold is based on the wholesale price of a pure ingot weighing more than 20 pounds. And the piece he was looking at was just a small fraction of the ingot.

To me, there is very little connection between retail selling price of bullion and the wholesale paper market. But if I am buying scrap, then it makes a difference.

[barrytrot]

Good commentary Market Harmony!

I always find it quite lame that people expect DEALERS of bullion to have limitations that DEALERS of every other product on the planet don't have.

You (Market Harmony and others like him) have a store front. That costs money to run. You have other costs. And, surprise: you need to make a profit to make it worth your time.

NOTE: this is Market Harmony's "job" not "hobby". How would you like it if someone came to your job and told you how to run your business? You wouldn't.


Anyway, that was a good way of putting it Market Harmony and for the, I'm guessing, 25% of people that works on you have a winner. For the other 75% that think the best way to prosper is to bring others down I feel for you and conversations that are undoubtedly not very fun.