Financial fuckery thread

[Mesozoic Mister Nigel]

Jewelers are fucking thrilled, at least the ones I know. Gold, silver, and copper have skyrocketed at an alarming rate over the last few years, at the same time the economy has been depressed and the market for luxury goods like jewelry has declined... making their work more expensive to produce and more difficult to sell.

[Mesozoic Mister Nigel]

It's good news for glassworkers, too, as we rely on gold for pinks and purple, silver for blues, and copper for greens.

[Jenne]

THAT is something that I hadn't thought of, Nigel, but it makes total sense.  I'm sure there's many many industries that have had to cut back on production because of rising copper and gold prices.

[Disco Pickle]

Brb posting this on every Survivalist, Teabagger, Libretarian and Ron Paul forum I can find.

Won't matter.   The smart ones (lol, right?  I mean, right?) got into it years ago and are still way up.  It's not so good news for jewelers, especially the ones who got into the gold party business like a friend of mine did, but they'll likely weather it.  If you got into gold more than 3 years ago, the plunge it took still wouldn't have you down, yet.

The biggest story is really the copper price plunge.  That's huge and very, very good news.

Both gold and copper will rapidly recover though won't they, out of sheer demand? Would a few weeks time be a good time to aim for a bottom and buy a bit?

That's hard to say with certainty, but there's been a lot of talk about gold being a bubble for some time due to a run from inflation, and Central Banks making moves to buy large amounts of gold this year:

http://www.bloomberg.com/news/2011-04-29/gold-buying-central-banks-may-signal-bullion-extending-record-price-rally.html

That has legs, considering the amount of cash in the system right now.  But since stocks have taken a hell of a beating the last month and a half, big movers may be predicting a top out on metals and oil and selling to recapitalize and buy low priced but strong and very well positioned blue chips, which is a damn good idea.  The fact that copper and silver were trending downward before this gold dump should have been a big red sign to anyone watching. 

As to demand being an upward driver and gold regaining it's biggest loss in 30 years, my personal view is that gold and copper as well as oil have been artificially overpriced for the last two years at least.  Oil in particular, and it's push on gasoline prices have, in my estimation, been entirely artificial.  With unemployment still hovering at around 9% (as it's reported) I can't see any reason the price of gasoline should be any higher than it was this time last year, much less dancing close to what it was in 2008, before the crash. 

And if you'll look, gas prices are also correcting for real demand vs what I think is a flood of money looking for somewhere to go other than the dollar.

Copper prices, despite it's recent dump, are still around the same price they were at this time last year, but they haven't dumped this far, this fast since the 08 recession really set in.

http://www.kitcometals.com/charts/copper_historical_large.html

see about half way down on the 5 year copper spot chart.

I think the biggest thing to know is that Bernanke came out and actually announced when the Fed was going to raise interest rates.  Telegraphing a move like that is possibly the stupidest decision in a long history of stupid decision by central bankers.  I would say that if you are holding metals right now, consider it a top and sell.

Ever since that meeting, the trend has really been down.  I don't see that changing in the long view and I would say if you're looking for a bottom, look for it in 2013, and have the cash on hand then to get back in.

At least, that's what I'm doing. 

[Disco Pickle]

Jewelers are fucking thrilled, at least the ones I know. Gold, silver, and copper have skyrocketed at an alarming rate over the last few years, at the same time the economy has been depressed and the market for luxury goods like jewelry has declined... making their work more expensive to produce and more difficult to sell.

Jewelers that only buy as they need and try and sell quickly.  For them it's great that prices are down.  My friend's family business has been buying since 08 and melting down and sitting on a lot of it, so the good news will hopefully be, as you say, that people will begin buying luxury's once prices are down, but hopefully not down below what they've paid the last few years.

[Mesozoic Mister Nigel]

Jewelers are fucking thrilled, at least the ones I know. Gold, silver, and copper have skyrocketed at an alarming rate over the last few years, at the same time the economy has been depressed and the market for luxury goods like jewelry has declined... making their work more expensive to produce and more difficult to sell.

Jewelers that only buy as they need and try and sell quickly.  For them it's great that prices are down.  My friend's family business has been buying since 08 and melting down and sitting on a lot of it, so the good news will hopefully be, as you say, that people will begin buying luxury's once prices are down, but hopefully not down below what they've paid the last few years.

Yep... people who USE it are thrilled, people who have INVESTED in it are shitting themselves.

But the very first law of manufacturing that I learned is that sitting on raw materials is a liability even if the values increase. The reason for this is that you are tying up manufacturing capital that could be turning a profit. I learned that you should buy no more than you can reasonably use in a calendar year. It's a similar principle in retail; stores strive to have as little unturned inventory as possible each year. Stockpiling can be a very good idea for some reasons; if, for instance, you are stockpiling in case of a future shortage. In that case, it isn't as relevant whether the value increases or decreases, as the stock is on hand not for profit, but as a buffer against losing the ability to manufacture.

For example, nations used to stockpile grain. It wasn't to turn a future profit when grain prices were high, but to be able to continue to feed their citizens in case there was a drought or a blight or other unforeseen (yet reasonably foreseeable) disaster.

[Mesozoic Mister Nigel]

Also, for the love of common sense, it's a terrible idea to speculate in the same raw materials your business relies on for manufacturing. WTF?

[hirley0]

Gold, silver, and copper

Jears.

Yep... disaster.

26th_NAVYyeah DP People Do believe G.S.C price when UP since
08 never mind
listen in order for those ( i mean THese 3 to work} U must rethink
how much does it take to keep the Earth in Orbit
i hear 13T comming out {per year i guess) thats US
Glow ball may be 7x that oR more say 100T (ok)
thus devide 100 into three piles Rich (AU) Midies(Ag) & Pour(CU) QT
say 80 20 .1 so 80T in gold say 8e8 total sitt'n thus AU /-/p=8e13/8e8
8e5/Oz got it not 2,000 (what a joke} Same song for Au & CU too
get over this Would U

[Disco Pickle]

Also, for the love of common sense, it's a terrible idea to speculate in the same raw materials your business relies on for manufacturing. WTF?

I was talking to him last night about it and it's exactly as you said in the post previous to this.  They weren't/aren't speculating so much as buying on the expectation that the price was going up, which it was, because when they need gold on hand for new jewelery or to repair, they don't have to buy it at the inflated price.  They've already got it in stock.  They've also been considering moving into doing their own custom design and manufacturing.  He did say they're probably still sitting on more than they would move in several years, but they're not worried about it because it will move eventually.  This business is 3 generations old and they're well capitalized enough to take a correction in the price.

26th_NAVYyeah DP People Do believe G.S.C price when UP since
08 never mind
listen in order for those ( i mean THese 3 to work} U must rethink
how much does it take to keep the Earth in Orbit
i hear 13T comming out {per year i guess) thats US
Glow ball may be 7x that oR more say 100T (ok)
thus devide 100 into three piles Rich (AU) Midies(Ag) & Pour(CU) QT
say 80 20 .1 so 80T in gold say 8e8 total sitt'n thus AU /-/p=8e13/8e8
8e5/Oz got it not 2,000 (what a joke} Same song for Au & CU too
get over this Would U

hirley0, I understood that entire post.  Which makes me want to go back and reread some of your others.

[hirley0]

4:44:44.444

[Mesozoic Mister Nigel]

Also, for the love of common sense, it's a terrible idea to speculate in the same raw materials your business relies on for manufacturing. WTF?

I was talking to him last night about it and it's exactly as you said in the post previous to this.  They weren't/aren't speculating so much as buying on the expectation that the price was going up, which it was, because when they need gold on hand for new jewelery or to repair, they don't have to buy it at the inflated price.  They've already got it in stock.  They've also been considering moving into doing their own custom design and manufacturing.  He did say they're probably still sitting on more than they would move in several years, but they're not worried about it because it will move eventually.  This business is 3 generations old and they're well capitalized enough to take a correction in the price.

Then the price drop isn't hurting them, is it? Like I said, it's a boon for jewelers.

[Disco Pickle]

Also, for the love of common sense, it's a terrible idea to speculate in the same raw materials your business relies on for manufacturing. WTF?

I was talking to him last night about it and it's exactly as you said in the post previous to this.  They weren't/aren't speculating so much as buying on the expectation that the price was going up, which it was, because when they need gold on hand for new jewelery or to repair, they don't have to buy it at the inflated price.  They've already got it in stock.  They've also been considering moving into doing their own custom design and manufacturing.  He did say they're probably still sitting on more than they would move in several years, but they're not worried about it because it will move eventually.  This business is 3 generations old and they're well capitalized enough to take a correction in the price.

Then the price drop isn't hurting them, is it? Like I said, it's a boon for jewelers.

Nope, at least not unless it goes back to 2008 prices.  He explained their reasoning for getting into the gold party craze over the last few years and that was it, to have stock in house for melting down.  Clarified it for me and changed my mind to your view on jewelers being on the winning end. 

[Mesozoic Mister Nigel]

Righteous. 

It's funny, because there are quite a few people spazzing on the glass/jewelry forum I'm on, and they're ALL amateurs who've been stockpiling as an investment. The pros are all "OMG THIS IS AWESOME" with the exception of a few who are like "darn, I should have sent my scrap in last week, oh well".

There was actually a thread with people watching and reporting on the spot prices dropping last night. I haven't checked today, but last night when I went to bed silver was at $27.51, which is still RICOCKULOUSLY FUCKING HIGH considering where it was just five years ago, but is quite a nice drop from $36.

And, of course, the vague intentions I was entertaining of selling my couple of ounces of spare gold are now less motivated.

[Elder Iptuous]

DP, do you have a buy level set for Ag/Au?  i hadn't considered buying in a couple years, but this is tempting...
(if there is any to be had without premiums covering the drop in spot!  have to see what the local stores are selling at.)

[Disco Pickle]

DP, do you have a buy level set for Ag/Au?  i hadn't considered buying in a couple years, but this is tempting...
(if there is any to be had without premiums covering the drop in spot!  have to see what the local stores are selling at.)

Nope, I'm out of them for the foreseeable future.  I've made a good bit since 08, but half of the Fed board has voted against the "0% interest rates until 2013" pledge, which signals to me that the hawks are turning against monetizing our way out of this thing.  I don't want to be left holding the bag of nuggets when they do.