So, after the Crash what would you buy?

[Tulpen]

Re: So, after the Crash what would you buy?

Johnson & Johnson?
At&t?
Coke?

Mike

I am already long.

U.TO, DNN, NLR and a small long position in crude oil.

[phirang]

Re: So, after the Crash what would you buy?

I am already long.

U.TO, DNN, NLR and a small long position in crude oil.

If you got a pair, you'd get some QEC and TLM.;)

I big a NG hog.

[jtabeb]

Re: So, after the Crash what would you buy?

Yes, it seems there is the short squeeze of a generation of physical gold, but do you think it will last through the end of the crisis?



Are you ready to lease your physical gold??? Because if you don't, lease rates are irrelevant for you. Probably you know what happens to your physical gold after you lease it ...

If you mean do I think the flight to quality will continue then yes, the best performing asset class will be the one with the lowest counterparty risk. That is what gold provides that no other asset class can. The descent in risk aversion must stop for gold to stop rising and even with that inflationary pressures must abate in order for gold to loose its appeal.

I said "short squeeze" not "I'm leasing". I think you missed the point and this is it:

When the gold lease rate exceeds the yield of the carry trade instrument that the gold lease was used to fund, de-leveraging is going to increase mightily. This will put further downward pressure on investment yields which will then put pressure to further de-leverage out of the gold carry trade which causes a self-reinforcing cycle. Gold lease rates go up (gold yield) and gold carry trade funded asset yields go down. This is not going to stop until something breaks or a fundamental change is made in what constitutes money.

The 1980 Volker trick would work to kill this process, but the entire world economy would be a smoking hole and the french revolution would seem like a good political system vs the chaos that would ensue.

So it is not going to stop in my estimation because governments will do what they always do, and I think we have a good model of their plan from what EJ and FRED et-al have laid out here.

IMHO.

And that is why a Multi-Metallic currency system is in our very near future. How far away you ask? I think we will be very close when gold lease rates exceed the 10 yr Treasury yield. (But I learned not to try to cherry-pick.) I'll take the trend that I see developing and run with it until fruition. If you want to know when you will be able to exit the safety that gold provides, it will be when our monetary system changes, but not before.

[GRG55]

Re: So, after the Crash what would you buy?

One of my pick would be Cameco, the world's largest uranium producer.

It is trading at $16.45 and is down from its 52 week high of $52.33.

Just watch out for that little problem they have at Cigar Lake. A reserve write down is more than a remote possibility for Cameco.

[metalman]

Re: So, after the Crash what would you buy?

Just watch out for that little problem they have at Cigar Lake. A reserve write down is more than a remote possibility for Cameco.

big believer in the nukes future but not a share of uranium co.s do i own.

waiting for you to give the 'all clear' sir.

[Guest]

Re: So, after the Crash what would you buy?

Cameco is "not so hot".

Just watch out for that little problem they have at Cigar Lake. A reserve write down is more than a remote possibility for Cameco.

[oddlots]

Re: So, after the Crash what would you buy?

If its Uranium your after... keep an eye on Hathor:

http://www.hathor.ca/s/NewsReleases....hEast-Property

http://www.hathor.ca/s/NewsReleases....t-NE-Summer-Dr...

[Supercilious]

Re: So, after the Crash what would you buy?

If you mean do I think the flight to quality will continue then yes, the best performing asset class will be the one with the lowest counterparty risk. That is what gold provides that no other asset class can. The descent in risk aversion must stop for gold to stop rising and even with that inflationary pressures must abate in order for gold to loose its appeal.

Look, I hope you are talking here about physical gold (shiny stuff you keep in your safe, or is kept by you in by a trustworthy trust in a separate area of a bank vault) which the government can force you to sell as FDR did. If that is the case, I agree we have now the perfect storm for a physical gold bubble and collapse of the paper gold. You know a bubble creates self reinforcing exuberance and after that ... well .. it pops.;)

When the gold lease rate exceeds the yield of the carry trade instrument that the gold lease was used to fund, de-leveraging is going to increase mightily. This will put further downward pressure on investment yields which will then put pressure to further de-leverage out of the gold carry trade which causes a self-reinforcing cycle. Gold lease rates go up (gold yield) and gold carry trade funded asset yields go down. This is not going to stop until something breaks or a fundamental change is made in what constitutes money.

Wow,wow !... wait a moment. I'm not sure that is a valid set of assumptions. I know very little about gold so please correct me if I'm wrong and and make a fool of myself as metalman does.

This leasing rate, most probably is some sort of derived rate for which your gold is used as collateral for interbank lending. So you have your lease rate (LR), the interbank rate (such as LIBOR or EURIBOR or the "dark market" equivalent ... let's call it DARKIBOR ) and some sort of forward offering rate for gold (let's call it GFOR).

Your great lease rate is nothing else than the forward rate subtracted from the interbank loan rate (let's say it's LIBOR):
LR= LIBOR - GFOR

As a result, by leasing your physical gold you get shafted anyway, bear all the risks of the loan made with your gold in case of systemic failure and the derived lease rate has very little to do with creating a stable reinforcing cycle. Let me explain why...

When you lease your physical gold, the lesee (big guy renting your gold) sells it and converts it to cash. At the end of the lease he buys back the gold from the market. Of course, a big operator (such as probably Kitco or their bank friends are) operates like a fractional reserve bank with physical gold (your gold is used to return the gold to another guy who is just ending his lease contract), but the essence is similar: the lesee (gold renter) is short selling your physical gold.

Of course nobody (and especially a big guy) likes to loose money, therefore, if the big guy, who rents/short-sells your gold. expects the price of gold to go up, then the GFOR will be high. If he expects the price of gold to go down for the duration of the contract well the GFOR can be 0 or even slightly negative ( you may not be able to see the real GFOR).



LIBOR is .. Libor... get a Libor chart and compare it to the the lease rates on Kitco ;)

So, a high leasing rate (LR) can tell you that LIBOR went bananas (like it happens now) or the price of gold is expected to fall (low GFOR)... or both.

If the big guy shortselling your gold expects the gold price will skyrocket (the GFOR goes up) and if LIBOR is constant ( or grows slower than the price of gold) the lease rate LR shrinks.

Hell,.. if LIBOR is low (lots of fiat liquidity around->inflationary trend) and there are high expectation for the gold price to go through the roof (GFOR goes up) then I wouldn't be surprised to see null leasing rates (I'm sure they would have negative leasing rates :eek: If they could, but I don't think they have the guts to push the scheme so far ).

Therefore, I believe that a gold bug should feel optimistic only when he sees very small leasing rates (or even negative if possible ) because that means there a lot of liquidity on the market (inflationary trend) AND high expectations from "market makers" the price of gold is going up.

High leasing rates, actually, could mean only that the big guy renting your physical gold is making a truckload of money due to a deflationary trend (high Libor) which creates the condition for a fall in gold prices (low GFOR) and after getting a few percents form the lease you are left with much lower value physical gold.

Am I talking nonsense, as usual?

And that is why a Multi-Metallic currency system is in our very near future.

Can you give me a link to a page that explains in detail this particular Multi-Metallic currency system you are referring to ? I hope it has nothing to do with the adventures of the Yokohama Specie Bank and the financial crises of the Meiji era

[Tulpen]

Re: So, after the Crash what would you buy?

If its Uranium your after... keep an eye on Hathor:

http://www.hathor.ca/s/NewsReleases....hEast-Property

http://www.hathor.ca/s/NewsReleases....E-Summer-Dr...

Yes, it seems they are a potential buyout candidate.

[Chris]

Re: So, after the Crash what would you buy?

what about the new companies that will sprout out of the alt-e energy boom?

[ltullos]

Re: So, after the Crash what would you buy?

Johnson & Johnson?
At&t?
Coke?

Mike

I'm buying all I can of Berkshire-Hathaway now because I doubt I can do better than Buffett in finding value and extracting guaranteed returns from their cash.

[Tulpen]

Re: So, after the Crash what would you buy?

what about the new companies that will sprout out of the alt-e energy boom?

Consider what real assets do they have? Is their value in ideas or imported manufactured technology? The danger is that their stock could quickly go to zero if case of a major crash.

But buy an active mine and you know that there are some real assets, buy a pile of Uranium on a severily depressed price (below $50 this week) and you know that there is at least something of value there. I think owning a mine or stockpiles of real materials are safer than cash right now.

[Chris]

Re: So, after the Crash what would you buy?

You know I agree with you Tulpen but I think some of the mine owners might go lower in the short-term. I'm still cash for now except for some of the positions we discussed.

[*T*]

Re: So, after the Crash what would you buy?

After the crash, I will sell my (95%) physical gold, buy a smallholding, and grow algae for fuel. (Which, by the way, if anyone has any expertise in, do share).

Actually I am looking forward to getting rid of the gold as I would rather see my capital employed in productive use, but each to their own.

[jtabeb]

Re: So, after the Crash what would you buy?

Look, I hope you are talking here about physical gold (shiny stuff you keep in your safe, or is kept by you in by a trustworthy trust in a separate area of a bank vault) which the government can force you to sell as FDR did. If that is the case, I agree we have now the perfect storm for a physical gold bubble and collapse of the paper gold. You know a bubble creates self reinforcing exuberance and after that ... well .. it pops.;)



Wow,wow !... wait a moment. I'm not sure that is a valid set of assumptions. I know very little about gold so please correct me if I'm wrong and and make a fool of myself as metalman does.

This leasing rate, most probably is some sort of derived rate for which your gold is used as collateral for interbank lending. So you have your lease rate (LR), the interbank rate (such as LIBOR or EURIBOR or the "dark market" equivalent ... let's call it DARKIBOR ) and some sort of forward offering rate for gold (let's call it GFOR).

Your great lease rate is nothing else than the forward rate subtracted from the interbank loan rate (let's say it's LIBOR):
LR= LIBOR - GFOR

As a result, by leasing your physical gold you get shafted anyway, bear all the risks of the loan made with your gold in case of systemic failure and the derived lease rate has very little to do with creating a stable reinforcing cycle. Let me explain why...

When you lease your physical gold, the lesee (big guy renting your gold) sells it and converts it to cash. At the end of the lease he buys back the gold from the market. Of course, a big operator (such as probably Kitco or their bank friends are) operates like a fractional reserve bank with physical gold (your gold is used to return the gold to another guy who is just ending his lease contract), but the essence is similar: the lesee (gold renter) is short selling your physical gold.

Of course nobody (and especially a big guy) likes to loose money, therefore, if the big guy, who rents/short-sells your gold. expects the price of gold to go up, then the GFOR will be high. If he expects the price of gold to go down for the duration of the contract well the GFOR can be 0 or even slightly negative ( you may not be able to see the real GFOR).



LIBOR is .. Libor... get a Libor chart and compare it to the the lease rates on Kitco ;)

So, a high leasing rate (LR) can tell you that LIBOR went bananas (like it happens now) or the price of gold is expected to fall (low GFOR)... or both.

If the big guy shortselling your gold expects the gold price will skyrocket (the GFOR goes up) and if LIBOR is constant ( or grows slower than the price of gold) the lease rate LR shrinks.

Hell,.. if LIBOR is low (lots of fiat liquidity around->inflationary trend) and there are high expectation for the gold price to go through the roof (GFOR goes up) then I wouldn't be surprised to see null leasing rates (I'm sure they would have negative leasing rates :eek: If they could, but I don't think they have the guts to push the scheme so far ).

Therefore, I believe that a gold bug should feel optimistic only when he sees very small leasing rates (or even negative if possible ) because that means there a lot of liquidity on the market (inflationary trend) AND high expectations from "market makers" the price of gold is going up.

High leasing rates, actually, could mean only that the big guy renting your physical gold is making a truckload of money due to a deflationary trend (high Libor) which creates the condition for a fall in gold prices (low GFOR) and after getting a few percents form the lease you are left with much lower value physical gold.

Am I talking nonsense, as usual?


Can you give me a link to a page that explains in detail this particular Multi-Metallic currency system you are referring to ? I hope it has nothing to do with the adventures of the Yokohama Specie Bank and the financial crises of the Meiji era

Post is clear as written as are points. Ignore them at your peril. IMHO

(I'm not sure your assumption is valid, GOLD is much better in a deflationary enviornement than an (dis-)infaltionary environment, just look at the the disinflationary period from 1982-2000ish, gold was in the toilet. You have it backwards. Gold does better when confidence in paper is LOW not HIGH, hence HIGH gold lease rates are GOOD, LOW GOLD lease rates are BAD.

To again quote Mike Meyers of SNL "If it ain't PHYSICAL, IT'S CRAP!!!!!!!!!!!!"

The currency system is my own construct, PM me if you need more details than I outlined in my other post on the subject. Google "the road to roota" for a similar idea.