Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Premiums on Ebay Rise Again Despite Record Prices

Commodities / Gold & Silver 2009 Feb 24, 2009 - 07:51 AM GMT

By: Stefan_Pernar

Commodities Best Financial Markets Analysis ArticleAre you surprised? Once again one can not help but feel a certain unease about the latest and greatest in global economic news. What has once been unthinkable in terms of collapse first became a fringe perspective , then an analyst's opinion , and has now evolved into prime time entertainment . What a difference a year makes…


Today I once again found the time to update the charts comparing spot prices of gold as well as silver with investment grade American gold eagles , gold buffaloes and silver eagles as sold on eBay . . In a nutshell: premiums remain high. However, there are perceivable differences between gold and silver premiums. While silver premiums continue to recede and investors are now ‘only' willing to pay as much as 33.8% over spot, gold premiums have actually seen an increase of 50% from 10% over spot on February 8th to 15% over spot today.

(yellow = percent premium paid on eBay, blue = COMEX spot price weekly average, red = eBay price weekly average)

These premiums can be understood as thermometers of trust as well as manipulation. On the one hand, investors, eager to posses physical gold or silver, are flocking to eBay in order to convert untrusted cash into trusted ‘can-bury-in-the-yard-and-trade-for-bag-of-potatoes'-physical bullion. This represents the perceived danger posed by counter party risk when owning paper gold/silver - meaning future contracts - known as ‘ GLD ‘ and ‘ SLV ‘ respectively in combination with an expected rise of inflation.

Gold as well as silver prices again rose sharply in the past 30 days. Silver however shot up 20% while gold saw a respectable yet comparatively moderate 10% rise in prices. Add to that, that silver manipulation appears to now be concentrated in a single bank and a drop in premiums for silver bullion becomes understandable. Silver prices are moving where they should be faster than do gold prices.

There are however two additional bits of information that are of particular interest to me. For one, the price of gold has recently decoupled from EUR/USD and has since then been rising independently from currency fluctuations. Additionally, gold is honing in on the long term Gold/Dow ratio of 1/1 or 1/2 which according to Mark O'Byrne means that:

Given the degree of money printing and credit creation we believe that soon deflation will abate and will be superceded by virulent inflationary pressures. This could lead to a Dow/Gold ratio of 1:1 or 2:1 at higher levels ( the DJIA at 5000 and gold at $5000/oz or the DJIA at 6000 and gold at $3,000/oz).

Hear hear. A major concern this week continues to be eastern European banks who apparently require a mega bailout . In light of this situation and if Der Spiegel is correct, the German finance ministry is drafting rescue plans to prevent default on the edges of the eurozone that is feared to lead to a full-blown collapse of Europe's monetary system in a chain reaction of debt defaults .

All of this is of course dwarfed by the US situation, considering that depending on how you slice it, US obligations of $US65 Trillion exceed the entire world GDP and that recently four banks have gone bust in a single day .

What is one to do? Not having had the experience of a Weimar Republic style hyperinflation the US may very well proceed to become a nation of dirt poor Trillionairs . The EU on the other hand with an inflation shocked Germay may very well opt for a series of defaults and takeovers. The former would thereby socialize the effects and wipe out all savings, pensions and debt thus creating a blank slate. The latter would see a severe cash squeeze with selected individuals being left with nothing while a few lucky winners will have hit the jackpot of having chosen the right bank or insurance company.

Time for some best practice sharing:

By Stefan Pernar

http://blog.cyrrion.com/

© 2009 Copyright Stefan Pernar - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in