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Discussion in 'Silver' started by silversearcher, Sep 28, 2015.

  1. Golden ChipMunk

    Golden ChipMunk Active Member

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    Both Outta Quarantine :)
     
  2. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Mate, you are incredible. You made a call, were asked to back it up and you failed to do so. I asked the initial question about SD, you responded with a condescending post that gave no insight at all into how you calculated the standard deviation - and you still have not done so.

    [​IMG]

    Edited because an image is worth a thousand words.
     
  3. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    G'day all! :)
    Admin released me from the sin bin. So I've had a bit of time to reflect upon what a naughty boy I was.
    Apologies if I offended any of the nice ladies here with my potty mouth - I will be sure to try and dish out any words of retaliation in a much more affable manner next time. :)
    Now that I'm back, I would like to reply to Mr Milo:

    Inflammatory? Yes, and I make no apologies for this. This is a discussion forum, and I like to stir up discussion that brings out others' perspectives and makes me think, because when I think, I learn. I like to challenge and investigate the status-quo, rather than just accept it like a zombie of the permabull brigade. I'm not going to sit here and read the same old rubbish day after day without questioning it. There are plenty of other charlatan forums where one can do that.

    Ill-mannered? Sometimes, but mostly when provoked, or faced with obvious fabrications or misleading information that I believe borders on negligent and needs correcting for the good of others, so I make no apologies for that either. If you misinterpret my disagreeance with your point of view as ill-mannered, then it is not me with the issue.

    Abusive? Well, I am struggling with this one? I can't remember being abusive to you? My abusiveness to Ronnie got me put in the bin for 3 days, but that was a brief moment of weakness where I forgot that half the population is less than average, so I should have been more accommodating. However, I briefly reviewed recent posts with dialog I have shared with you, looking for abusiveness, and came up with this:
    So I am stumped? :/
    But, hey, as a gesture of good will, I will apologise for any abusive dialog I posted against you, if you can show me where it is?... In fact, in my willingness to make amends, if you can show me where I abused you, I will send you 1 oz of silver free post. :D
     
  4. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Regarding the SD post....
    I am willing to forget that it wasn't initially me who challenged you on this claim, but I seem to have missed where you have gone to great lengths to justify your position.
    However, your invitation to teach me statistics is too good to refuse, and I appreciate the offer. :)
    So, as another gesture of good will, if you could kindly correct my "silly", falsely "believed" logic, I'd like to send you a 2nd free ounce of silver to show my appreciation.
    In an attempt to earn back your respect, I have shown my logic to the best of my ability, here: http://forums.silverstackers.com/message-855135.html#p855135
    I eagerly wait for your review and corrections. ;)

    Lastly, there is a third ounce in it for you if you can show me where I "walked away with the attitude of "I was just testing you". " I am truly dismayed that you may find me "incredulous".

    Kind regards
    wrcmad
     
  5. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    This is the last I'm going to say about last week's events.
    I still have 3 oz's sitting here unclaimed.
    IMHO, that speaks volumes enough, so I stand by my statements.

    Anyhow, anyone up for a discussion on gold backwardation? :)
     
  6. clear

    clear Well-Known Member

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    what's the point you dont accept the definition of backwardation.
     
  7. Miloman

    Miloman Active Member Silver Stacker

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    That guy is still trolling.

    I could not be bothered. I have asked people to learn and provided people with enough ammunition to realise the truth.

    The guy is deceptive and deliberately misrepresents so much.

    He decided to use Bollinger Bands incorrectly to deliberately deceive. He also clearly says 2 standard deviations were just 1. Uses 100 mean in a declining market. I provided a chart showing 1 standard deviation from the accepted use of BB with a 20 day mean. Now I wasn't talking about BB in the first place either. But you'll clearly see that the entire move on the day in question crossed from both the lower and upper band with each representing 1 standard deviation from the mean.

    Ok here's a little Maths that everyone can use simply, to find the sd of an acceptable 20 day BB with 1 SD, simple subtract the upper band number from the mean or the lower number from the mean. Bring up a chart and enter a 20 day moving average and 1 standard deviation then bring up a chart, you'll find on the top left 20,1,0 next to that you'll see 3 prices, one for the lower sd (lowest price), the middle price is the mean of the last 20 day and the highest number is the upper sd.

    Even a novice could see that. Also the novice can quickly find out what 100,2 BB represents. Read what the troll wrote, the 2 means there are 2 standard deviations from the mean not 1 as he WRONGLY states.

    Clearly no one has chimed in and therefore I can conclude that either no one with stats knowledge wants to get involved or no one else knows.

    Remember I spoke about the % of the move.

    Now I am not interested in his silver, he can do some charity work if he wishes.

    Its not my job to teach people nor to police the forum for trolls.

    Everything Ive said what I have to and have been honest throughout. This guy is a bad egg.

    Anyone who wishes to believe this guy, best of luck to you.

    He thought that by me saying "it's Maths" that I didn't know what I was talking about.
     
  8. Miloman

    Miloman Active Member Silver Stacker

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    Oh I wrote this whilst on the train back from the Leura festival markets. It was alright but not my cup of tea. Nearly home now.

    EDIT:
    I also screenshot his post after he wrote it, it has a time stamp on the screenshot of his post and chart, just in case he tries to go back and edit it.

    SECOND EDIT:
    I gave him a chance by grace and posted so he could figure out my position and know what he'd done. I gave the guy and chance to save face. But he just went and tried his luck!

    Yeah my opinion of him is concrete but i thought everyone deserves a chance. I should know better a zebra never changes their stripes.
     
  9. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Wrong thread bud.
    Any advance on 3 oz's. :p
     
  10. Miloman

    Miloman Active Member Silver Stacker

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    Haha, first time im addressing you. Mate I have only negative things to say about you. I've never liked deceitful people.

    Ill repost this in the other thread when I get the chance.

    Concrete bud, concrete.
     
  11. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Thanks mate, your a champ. ;)
    This is the last time I'm addressing you.
    I know you only have negative things to say about me.... pity for you it's all BS.
    If you want to rant a bit more here, why not address all the shyte you wrote when you thought I wasn't coming back?
    There's a few a few oz's in it for you to show my appreciation.. :)
     
  12. Miloman

    Miloman Active Member Silver Stacker

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    wrcmad,

    Don't mind me trying... I'm going for more blind people to become sighted ;). I super appreciate you following through. :)


    Firstly yes I am sorry myself for using bad language. You are right, it was also hypocritical and unbecoming of me.

    However the point of saying what I did was that you did use really foul language, that was my point, was it not correct? Does it matter to whom it was directed towards?

    If you agree, we can both donate another $25 to Fred Hollows each.

    Next...

    Could you using BB 100,2 and describing it as 1 standard deviation above and below the mean be considered as faulty or wrong?

    If you agree, I request to donate another $25 to the Fred Hollows Foundation.

    Lastly...
    I can't honestly say you walked away with that attitude.
     
  13. Miloman

    Miloman Active Member Silver Stacker

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    Figured I'll take the next step first...
    [​IMG]
     
  14. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    My response was retaliatory, something I consider defensive. What provoked my response was more abusive IMHO.
    While my choice of words may have been considered "foul" by some (and I have already apologised for that), it was, and still is the most appropriate descriptor of the recipient.

    This was an oversight, and I have acknowledged that.
    But your focus on it is diversionary to the initial debate that SD can be defined by %spot.
    My point was to demonstrate that a timeframe needs to be defined to calculate SD - something you omitted to do for days until after I posted my example.
    Your accusation of my silly and false logic was not directed at BB, but instead the issue of using %price to define SD - something have subsequently shown to be flawed, whether you accept it or not.

    However, in the interests of goodwill and a reprieve from the bickering (it is mentally draining at times :p) I will throw another $25 at this worthwhile foundation.
    It puts our "first-world problems", such as SD of the price of our stack, into real perspective. :rolleyes:

    Now, onto another first-world problem.... gold backwardation. ;)
     
  15. Porcello

    Porcello New Member

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    Yes, please, I'm eager to learn about it.
     
  16. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Well, finally found some time to get my thoughts on backwardation together in some sort of concise, readable format.
    While I suspect this question was posed as a diversionary tactic to focus attention away from the deafening silence emanating from the realisation of the COMEX inventory lie, I will play none-the-less.

    Ok, let's for a moment look at the term backwardation, in its raw conceptual context:

    "Backwardation is a structure or condition of the futures market that occurs when the price of the nearby contract is trading above the more distant month contracts. It is a signal of a tightness in supply at current demand levels."

    For all intents and purposes, this definition works well for it's intended application to some more traditional commodities, especially seasonal or perishable commodities, such as grain just before harvest season, where supply might be tight now, but a known glut is on its way. The backwardation of prices entices sellers to part with their stored grain now, instead of holding and hoping for better prices in the future, which if all indications are true, is not coming. In any other commodity backwardation, you could sell now, and buy back at a future date for a guaranteed arbitrage profit.

    So, to use this definition of backwardation, you must first:
    1. Consider gold a pure commodity, and secondly;
    2. Consider the backwardation spread arbitrageable (profitable to decarry).

    The zerohedgers, seekingalphas, Ronnietards, and the like, all like to continually proclaim gold is NOT a commodity, but MONEY, and during times of a lower forward bids ignore these points and blindly latch onto the single idea that a physical shortage has unquestionably been signalled. However, calling backwardation based on the COMEX bid/ask is a pure commodity concept, not a monetary one. So, if this is where you are at, and believe gold to be commodity only, then don't bother reading on. But you can't have your cake and eat it too.

    Anyway, let's keep going. While gold may be considered pure commodity by some, it has some unique qualities which separate it from the traditional meaning of commodities. If one is to consider gold not a normal commodity, but one with monetary-like qualities... in fact, currency-like characteristics, then the true story becomes clearer. If you want to proclaim that gold is money (or currency), then you have to include in it's pricing other financial parameters that are used to price most other financial instruments, and that is exactly what happens in reality.

    In the case of gold, the term price, as referenced in the initial definition of backwardation, involves a few more fundamental factors than just the COMEX quoted number. For any Wiki-lovers who like to use the site as their main source of gospel, it is interesting that the following line was conveniently not included in the recent cut'n'pastes from the definition of Normal Backwardation:
    Yes... less than the cost of carry... or in other words, profitable to decarry (arbitrage).

    I know the permabulls are waiting to pounce on the mention above of the possibility that gold is not currently available for purchase, but I will deal with that further down the page.

    If we really want to be precise, we need to consider fundamentals like storage cost, financing cost (cost to carry), lease rates, spreads and convenience yield to factor a true price. So, given the true forward pricing of gold (a financial instrument of some description) is NOT based solely on the raw COMEX quotes, but also incorporates a host of other factors, then where does the decarry trade become profitable (backwardation)?

    Supply meets demand where market participants are willing to agree about the expected future spot price, and for most, this future price includes all the above mentioned factors, over a given timeframe, conveniently wrapped up in the GOFO (Gold Forward Offered Rates).
    GOFO is the interest rate at which participants are prepared to lend gold on a swap against US dollars (difference). GOFO is therefore dependent on, and reflective of, interest rates (like the pricing of any asset or financial instrument), and can be defined as:

    GOFO = LIBOR GLR

    You can see from the equation that as USD interest rates fall, so does GOFO. Once the Gold Lease Rate exceeds LIBOR, we have ve GOFO and backwardation. Under these circumstances it becomes profitable to decarry gold (sell gold in the spot market (on the bid) and buy it forward (at the ask). If the GOFO rate goes negative, it indicates that participants are willing to pay the GLR in order to borrow gold, using dollars as collateral, and short it into the market. Negative GOFO reflects heavy speculating on the short side, and more shorting means more demand to lease gold, and more demand for leasing drives up the lease rate, driving GOFO down.

    Now, the chicken-little-permabulls will start to wail and nash their teeth that the sky is falling, because it is a certainty that a physical supply shortage means the end is nigh. They will also claim this is caused by erosion in faith of the fiat dollar. However, they fail to consider a few pertinent points:
    1. There has been no squeeze on physical gold supply for purchase the squeeze is on gold available to lease. Yes, people are scrambling for the stuff to sell it. They can't sell enough of it!
    2. Rather than a collapse in the trust of the USD, The USD has been rising, sky high!
    3. If faith had been lost in the dollar, then interest rates would be soaring, but this ve GOFO is caused by interest rates collapsing!
    4. The gold futures curve has never been inverted. While prices up to 3 months out have been ask lower than the spot bid, the normal futures curve has continued thereafter. Now, if gold were so hard to get due to physical shortages now, wouldn't it be logical to assume physical shortages would be even tighter further out?
    5. It is also a fact that a market with a true supply shortage will REMAIN IN SHORTAGE right up to the current month closing bell and will maintain that structure for as long as is necessary for the current shortage to be alleviated. Based on this fact - gold is not in backwardation and has not been at any time whatsoever on the Comex during the entire time this backwardation talk commenced and picked up some gullible followers.

    So, I stand by my statement that backwardation is when GOFO is negative, or GLR is higher than LIBOR.

    Hope this explanation is sufficient.

    Now, you can answer one of my questions:
    Why do you ask?
     
  17. Porcello

    Porcello New Member

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    Thanks for the explanation. If the question is directed at me, the answer is as stated earlier: eager to learn; since the Comex stockpile and backwardation are often mentioned by many, it's only natural that I'm curious about it.

    Now I guess that we'll have to wait for someone to come forward and confute your explanation and get the debate started... Otherwise I'll have to assume that everyone is happy with what you say.
     
  18. Porcello

    Porcello New Member

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    Now, since I'm personally quite interested in the meaning and history of money, I've been hit by the two points above.

    It's obvious that the USD is sky high... But rather than because of trust in the USD I think it's because of loss of faith in fiat currencies in general. Clearly the status of reserve currency benefits the USD compared to the others.

    I also thought that interest rates were set by central banks, instead of being freely determined by the market. Are you referring to the inter-bank rates here?
     
  19. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    The two points here go hand-in-hand.
    Regarding faith in the USD - it may be that it is the best of a bad bunch ATM, but in financial terms, trust is relative. Even if it is only the reserve status that maintains some faith in the currency, it is still there, and the numbers show it.
    Regarding interest rates, yes they are set by the central bank. However, in a currency crisis capital flight will put downward pressure on the exchange rate causing devaluation, along with falling bond prices, and rising yields. It can only be staved off as far as the central bank is willing to eat into foreign reserves, then they must start raising interest rates.
     
  20. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    No, not directed at you. :)
     

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