Sprott on Gold & Silver
In an interview late last week Eric Sprott said that “no rational person could (I suspect he may have intended to say ‘should’) believe it had anything to do with the real market for silver”.
Sprott was referring to the large percentage drops in the Silver price on Wednesday, February 29 in the few trading hours that followed Fed Chairman Ben Bernanke’s address to Congress that day. As you may know if you have read other commentaries I have made in the past few days I believe Sprott has to be correct in this, and I further believe that the gold and silver prices on that day may well have been radically affected that day by algorithmic trading. Sprott also is quoted as saying:
“It was a smack down and unfortunately anybody who is running a precious metals fund (or invested in one) had basically all of their performance stolen in literally a one hour downtrend. It keeps investors uneasy and it’s unfortunate for a market that’s gone up for twelve years and has been the best performing asset over that time period.”
While Mr. Sprott arguably has a strong vested interest in saying such a thing, given the involvement of Toronto based Sprott Asset Management in both the physical gold and physical silver markets, I also agree with him with respect to that last statement. That said, I have to believe that ‘strong hands’ readily see through the type of price movements witnessed on Wednesday, and do not lose any sleep over them. I say this in particular if holders of physical gold and physical silver share my belief that gold, and to a lesser degree silver, are ‘safe haven’ protectors of purchasing power over time, where that for me is their more important attribute than are their day/day prices.
See ‘Eric Sprott – What Happened in Gold & Silver is Stunning’, King World News Blog, March 3, 2012 – reading time 4 minutes, accompanying audio listening time 13 minutes.
You might also want to read ‘Billionaire Hugo Salinas Price – Central Banks Smashed Gold’, King World News Blog, March 1, 2012 – reading time 4 minutes. Mr. Salinas Price attributes Wednesday’s drop in the physical gold price to World Central Banks. This is for me nothing a ‘best guess’, but then again who knows who Mr. Salinas Price knows and communicates with on such things. As a result, it seems to me his comments ought not to be dismissed ‘out of hand’, but rather should be assigned at least some weight.
Greece – Credit Default Swaps and Moody’s Downgrade!
The International Swaps and Derivatives Association, Inc. (‘ISDA’) is a trade organization of participants in the market for over-the-counter derivatives. It is reported as having more than 820 members in 57 countries (these membership numbers according to Wikipedia).
In what I think is a decision worth carefully thinking about the ISDA – which apparently has the power to decide such things …..continue reading.
Commentary reading time 5 minutes. Referenced article(s) reading time 14 minutes.
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I have previously commented on Algorithmic High Volume Trading and the percentage of current trades it accounts for – by some estimates up to 80% in some market segments. I suggest that if you participate in the financial markets you owe it to yourself to read and think about a March 2 article that comments on Artificial Intelligence – read …..continue reading.
Commentary reading time 2 minutes. Referenced article(s) reading time 5 minutes.
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