Primarily it's the size of a mortgage compared to many other loans. The rate rises mean there's $100s and $100s in extra repayments per month, multiples of other types of loan repayments in most cases.
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Precious metals demand
- Thread starter mmm....shiney!
- Start date
With such a small market it's wise to take advantage of low demand while you have the chance.
Once the buying explodes you can sit back with the popcorn and watch it unfold with no worries or sell a little to the late bloomers.
Once the buying explodes you can sit back with the popcorn and watch it unfold with no worries or sell a little to the late bloomers.
LOL From such lofty hights, the fall will indeed be hard, harder for some more than others I expect.
RonPaul'sMate
New Member
Hey folks, thought I'd dive into this discussion if I may. Like most of you I like PMs for the fact that they hold their value, but my view of the 'insurance' aspect of them in case of high inflation and economic meltdown was seriously dented by what I read in Curt Dall's excellent book about his father-in-law, FDR. He noted that during the depression, FDR simply stole all Americans' private gold. He ordered them to surrender it to the government, at around $20/oz, where it had been for over 10 years. Once FDR had all the gold, he raised the gold price to about $35/oz. So Americans' hard-won savings advantage was simply stolen from them by government fiat. Or at least a big chunk of it was.
DJE
Well-Known Member
So if your loving caring government asked you to hand over any Gold you hold, would you conform or would you explain how you recently traded it all?
Times have changed, trust in these compromised corrupt governments has declined, or at least I'd like to think so if anyone still has any commonsense, which I'm not totally convinced of.
RonPaul'sMate
New Member
As soon as the government starts asking for civilian gold expect the ‘black market’ price to moon from whatever moon it would already have reached..
Due to online networks and communication platforms that didn’t exist back then, it would bankrupt the government very quickly to resource efforts to recover my lost gold, even if they had some email and bank history. I would ask them to excavate the entire WA and VIC states, because I can’t remember where it was buried anyway. Don’t get me started the silver boating accident.
If they want to deem us terrorists then they’ve lost a productive working class tax payer and (possibly) one that can hold a gun for them in a war when needed. If it gets to that point a few ounces of gold is the least of anyone’s worries.
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pmbug
Well-Known Member
A lot of sailors had boating accidents that day.
Back then everyone had gold since it was money.
Nowadays mostly no one has it.
Even in 1933 with higher government trust only an estimated 25% actually turned it in.
Most kept their gold.
They could try a gold confiscation again but they still hold the gold from the last time. It's never been returned to the people so there's really not much to confiscate.
On the other hand a black market would really boost prices and that's great.
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So here's my thesis for the strategy you have outlined based upon current market conditions as they apply in advanced economies outside of the US and the consequent impact on consumer demand.
A holder of PMs in the current environment would be waiting for liquidity to be injected into the broader economy in order for new buyers to be in a position where they are cashed up enough to spend on gold etc. In other words, the greatest upside potential would come during the good times rather than the bad.
The reason they did it then is not applicable any more. Gold confiscation would be a pointless and unnecessary exercise in advanced Western economies. Therefore my position is that it doesn't feature when making investment decisions in regards to a portfolio and simply remains a point of historical discussion.
My view is the opposite. The towering heights advanced economies have reached have largely been built upon sound economic and financial institutions and the rule of law. As opposed to developing nations which are at greater risk of an economic meltdown. That's one reason they hold more gold reserves.
I hope they don't change a thing. Just keep on current course it's perfect.
That's why I was talking about economies outside of the US. From my understanding the US economy is in a better position than ours and you guys have largely exported your economic problems, to our disadvantage.
It will be coming back home eventually.
It might already be starting with the world dumping it.
It might already be starting with the world dumping it.
pmbug
Well-Known Member
Like Lehman Bros., Bear Sterns, MF Global, and Enron? I think the veneer of soundness is much thinner than most people think. If it weren't, the banking system in the USA wouldn't be crying so hard about the pending Basel III capital requirements/standards.
I got a notification the other day from Nationwide coins.
I just ordered a $1900 deal from them a few weeks ago and now it's $2150 for the same coins.
Their deals are normally limited to one-per-customer but with the new price it should be a new deal. In theory I should be eligible for this one too.
I'm going to call them as soon as I get back to work fk it. It was for a one oz gold Eagle and a signed and graded MS70 silver Eagle for free.
It still sounds like a killer buy even for another $250.
I just ordered a $1900 deal from them a few weeks ago and now it's $2150 for the same coins.
Their deals are normally limited to one-per-customer but with the new price it should be a new deal. In theory I should be eligible for this one too.
I'm going to call them as soon as I get back to work fk it. It was for a one oz gold Eagle and a signed and graded MS70 silver Eagle for free.
It still sounds like a killer buy even for another $250.
Companies and economies have been failing for millennia. The failure of those institutions didn't bring down any of the advanced Western economies, therefore they are indicators of robustness as opposed to fragility. And if you're looking for evidence in more recent markets that operate under more extensive legislative controls then you don't have to look much further back than the crypto and banking "crisis" of 2022 - 2023. Yet we still survive.
The banking system is not crying about Basel III requirements. Certain Directors of individual banks that are going to be impacted by capital threshold requirements have been pressuring politicians eg the former head of SVB. More recently the price of NYCB shares crashed yet the world didn't end. But on the whole the US banking system (which is not as far down the path as most other advanced nations) has had plenty of time to prepare for it and is in a sound position generally.
Michael Kay
Well-Known Member
I'm not sure that it is all over. NYCB could theoretically go to zero.
FT (today)
"US regional banks are not out of the woods yet. Having ridden out a deposit flight that led to the collapse of Silicon Valley Bank and First Republic last year, the challenge for many will be finding a way to increase profits again in 2024.
Chief among the obstacles are funding costs and exposure to the troubled commercial real estate sector. The 44 per cent collapse in New York Community Bancorp’s share price this week is a reminder of how tough navigating these two roadblocks will be.
The New York-based lender this week set off a fresh wave of selling in regional banking stocks after it swung to a surprise fourth-quarter loss, slashed its dividend and set aside hundreds of millions of dollars in provisions for potential bad loans in its CRE portfolio. At first glance, NYCB’s woes appear unique to its balance sheet. Executives said the acquisition of Signature Bank, one of the regional banks that collapsed last year, pushed NYCB’s assets above a $100bn regulatory threshold. That requires it to hold more capital and liquidity.
NYCB’s decision to cut its quarterly dividend by 70 per cent helps meet these regulatory requirements. But that is only part of the story. High funding costs is the other. NYCB paid an average rate of 3.62 per cent on its interest-bearing deposits in the fourth quarter, up from 1.93 per cent a year ago. That compares with the 2.78 per cent its far larger peer JPMorgan paid that period. At the same time, NYCB’s loan growth has stalled, with the average loan balance down quarter on quarter. That is squeezing profitability. Its net interest margin fell 45 basis points to 2.82 per cent quarter on quarter.
That is expected to fall further in 2024. Net interest income could fall by as much as $300mn this year. Then there is the commercial real estate dilemma. Most banks want to reduce their exposure to this $5.8tn market. A record amount of loans are maturing and need refinancing this year and next. Yet they need interest from the high-yield loans to finance the generous deposit rates required to attract savers. Among regional banks, Bank OZK and Valley National Bancorp stand out, with high exposure to CRE loans but low CRE reserve ratios, according to Morgan Stanley research.
At OZK, CRE loans make up some 63 per cent of the bank’s earning assets. Repercussions from last year’s regional bank crisis continue to roil the sector. More CRE write-downs will mean smaller regional banks have more firefighting to do."
No doubt there'll be companies teetering on the edge of collapse or actually going over the precipice in the future. The Fed will backstop banks and if a non-bank company goes under it won't mean the end of the world or even another GFC because economic and financial stability in the US is not a thin veneer as argued by @pmbug, in fact it's markedly more solid since the GFC.
A common trait amongst some precious metals investors and especially amongst many online experts is to promote or cling on to any hint of economic upheaval in order to justify their narrative. Goldbugs always cheer on a good disaster.
It's mostly misplaced though which can have negative implications when it comes to designing and managing a portfolio.
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