freefall51

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  • Bullion Shortage and Spot Prices Tell Two Different Gold Stories
    A point to the specific risk on paper gold and why people may think it is manipulated.

    Reference was made to GLD, SPDR Gold Trust that sells paper gold. The price of the share is supposed to track the price of a 1/10 oz bullion, ~ $84 a piece today. What do you get for your money if you buy GLD?

    I am reading from GLD’s 10 Q report ending June 30, 08:

    Gold investment and receivables is all there is on the asset side of the GLD balance sheet.

    Gold Assets/ Number of shares = $ 13.8 B/ 0.21 B Shares = $ 65.7/ Share. But you pay today ~ $82.50 /Share. Are you not shortchanged by 25 % + buying the paper instead of physical gold.

    Plus this trust has negative equity due to excessive redemption share liabilities, strongly deteriorating yoy and the buyer takes on all the credit and counter party risk of this trust.

    This all looks like a terrible deal to me. Looking at the price volume action of GLD today I sense there is a high volume shorting of GLD going on since Friday.

    The GLD price curve looks awful since it broke in Mar 08.

    I think alajac is right, when the hoi polloi believes it is common sense to buy gold, the smart money has already left the place.
    Oct 15 07:34 am |Rating: 0 0 |Link to Comment |View article
  • Is Gold A Sucker's Bet?
    Reference was made to GLD, SPDR Gold Trust that sells paper gold. The price of the share is supposed to track the price of a 1/10 oz bullion, ~ $84 a piece today. What do you get for your money if you buy GLD?

    I am taking from the 10 Q report ending June 30, 08:

    Gold investment and receivables is all there is on the asset side of the GLD balance sheet.

    Gold Assets/ Number of shares = $ 13.8 B/ 0.21 B Shares = $ 65.7/ Share. But you pay today ~ $82.50 /Share. Are you not shortchanged by 25 % + buying the paper instead of physical gold.

    Plus this trust has negative equity, strongly deteriorating yoy and the buyer takes on all the credit and counter party risk of this trust. Who would want that now?

    Is there not a strong case to short GLD? Looking at the price volume action of GLD today I sense there is a high volume shorting of GLD going on since last Friday.

    The GLD price curve looks horrible since it broke in Mar 08.

    What am I missing here?
    Oct 15 00:39 am |Rating: 0 0 |Link to Comment |View article
  • The Next Bubble?
    Something does not add up here. The price of gold seems to have topped out Jan 08 and it appears to gradually break down. There is still commodity unwinding going on which elevates the $ for another year or so, ie deflation. The customers are tapped out, credit cards are at the limits, the house prices down, the 401ks destroyed. Nobody is feeling rich. Lending practices will tighten no matter how much money supply there is. The christmas business is already in the tank, and jewelry is part of it. What else can you do with gold? Oh you can bury it in your backyard. In a situation like this the consumer will keep his hands on his wallet and not be willing to spend for discretionary stuff. There is no intrinsic value for gold. It is all supply and demand. There demand destruction now. Sounds familiar? If we are really in a recession/ depression gold will go all the way back to where it was in 2002, when we came out of the last recession.
    Oct 13 09:08 am |Rating: 0 0 |Link to Comment |View article
  • Monday Outlook: Ascendant Fear
    The credit crisis has arrived at the insurance industry. Time to check if the default swaps really work. I am betting that the cardhouse is crashing in a couple of days. The only way to avert this is to have the countries all over the world riding for rescue. But they are not conditioned for that, as Germany has demonstrated over the weekend. This is not a normal bear. I am out but that was brutal.
    Oct 06 10:33 am |Rating: 0 0 |Link to Comment |View article
  • Calling an Intermediate Bottom
    I cautiously tend to agree here. The sentiment could not be more awful at this time. Hard to find any positive comment today anywhere, like the end is near. Still, the feds are throwing al ton of money at the credit problems; the Europeans contemplate the same; the Brits are already more affirmative not to let banks fail; China still growing at a 10 % clip; noted also that oil was no longer leading the fall on Friday, some oil service cos ended positive;
    Great time to be a contrarian, when everything looks bleak and abysmal. Its got to be gut wrenching or it just does not work.
    Oct 04 16:43 pm |Rating: 0 0 |Link to Comment |View article
  • Oil: The Inconvenient Truth
    Did I not say global warming by CO2 is a hoax? Anybody with the foggiest idea about statistical concepts would agree. The idea of statistical relevance is to compare a body of data (such as temperatures) subject to random fluctuations with another body of data of the same sort subject to random fluctuations, where just one parameter such as the CO2 concentration has changed. The conclusion the climatologists should be after is to say the one pile of data is different from the other one because of the increase of CO2 traces in the atmosphere. Take Salt Lake as an example where the temperature swing is -20 F/ 110 F in the extremes. Given those swings, how can anyone possibly prove a creeping average temperature increase of a minute fraction of a degree F year over year and relate it to an increase of a couple of ppm CO2 in the atmosphere with a reasonable confidence? Aint gonna happen, buddy. I challenge everybody to try that from a daily temperature histogram. If there was a case it could be statistically proven, but it cant. So the experts are taking refuge to complex models that sound important to impress the public. This is childish at best, self serving at worst.
    Sep 03 22:18 pm |Rating: 0 0 |Link to Comment |View article
  • Ominous for the Globe but Good News for Oil Bulls
    Well a $5 burn is not completely out of the woods. The Europeans are there already. Gas tops $ 8 - 9/gal or ~ Euro 1.50/liter. Only they still drive their cars on gas that is made from oil and not form windpower or switchgrass in this tax paradise. How come?

    No honestly, I think conservation by using more smaller, more efficient effcient cars and behavioural changes have the biggest potential way before any sizeable alternative to oil is developed. This is stuff is available almost to everybody. Who says that I have to go to office every day if there is just a desk, a computer and a phone waiting for me? I could as well work at home with the technology available today. Why are 3 seats in a 4 seater commuter car unoccupied? Why do I have to fly across the country to attend a meeting? Why do I have to go to Home depot to buy a hammer? Why do shrimps from the Northsea have to be flown to Tunesia in order to get peeled? There is a lot of waste that can be avoided for sake of conservation with some out of the box thinking and better organization. Think about value stream mapping for all issues in daily life, a lean 6 Sigma tool. Transportation is considered a non value adding item in a production process. The situation is not desperate but we have to give up on convenience.
    Sep 01 00:40 am |Rating: 0 0 |Link to Comment |View article
  • The New Energy Cold War: The Warsaw-Tehran Connection
    To EnergyDiversification
    "Europe is the real mystery here. For a continent supposedly scarred by World War II, it seems oblivious to the Russian situation."

    My answer, this is not a mystery to me. I am German and I saw it coming in my home country over many years. This is in my opinion the outflow of the fact that at least one generation of left wing journalists from the ‘68 generation all with glowing agendas got into in the leading editorial positions of most newspapers and media outlets. Slowly but surely they brainwashed a decent part of the population into believing that America is a larger threat that the former Soviet Union. Finally it was cool among young people to condemn the US for whatever they did or not did. It did not mean a darn thing that the US helped Germany develop a democracy and prosper in a big way after WWII.

    There is an overlay of political opinion caused by the fact that West Germany integrated East Germany. The West as you may know supported the East from falling off the cliff. But the support generated among the recipients a sense of entitlement. And no matter what was offered it was largely perceived as being not enough. There was enough hardship left that the old ideals of a socialist society never died. Remnants of the SED, former socialist unity party of East Germany are still existing and they have numerous followers, that seek political power. Obviously the SED was an affiliate of the Soviet Union franchise. Germany of today is a halfway socialist country where the government has a larger stake in everybody’s life than in the US.

    I see analogous developments in the US elite media, which worry me a lot. Being brainwashed is subtle and steady. It comes in small doses, does not hurt it goes often unnoticed until it is perceived common sense. My best recommendation to the Americans is to stay on the outlook and don’t let anybody take away your (and now my) freedoms.
    Aug 31 22:31 pm |Rating: 0 0 |Link to Comment |View article
  • Speculation and the Price of Oil: An Unfriendly Note
    Dear Mr. Banks,

    you are smart like hell. But you are suffering from logorrhoea. Your message gets lost in the self indulgence of your verbiage. Be concise and stay on message in your next post.
    Aug 27 08:46 am |Rating: 0 0 |Link to Comment |View article
  • Geologist: In Terms of Supply and Demand, the Oil Peak Is Past
    JS Gordon, $ 38.00 / bbl for syncrude?

    Here is my prediction. Just as the build up of LNG terminals is not designed to lower the NG prices but instead take advantage of NG prices that makes terminals feasible, just as the Canadian tar sand projects are not designed to bring the crude oil price down but instead take advantage of them, you will find at your surprise that syncrude plants will produce syncrude juuuust below the world market price of crude oil. If there is a positive difference between sales price and cost it will be pocketed by the owners of the process. And if not, we are lucky if this technology and the infrastructure that goes with it does not have to be subsidized with tax money.


    Aug 23 10:40 am |Rating: 0 0 |Link to Comment |View article
  • Geologist: In Terms of Supply and Demand, the Oil Peak Is Past
    I grew up riding with my grandparents on a wagon, that was pulled by two cows. I can do it again. Time to re-learn some basic skills.
    Aug 22 21:33 pm |Rating: 0 0 |Link to Comment |View article
  • Transocean: An Opportunity in Falling Oil
    Jim,

    You raise an interesting question that is not obviously not easy to answer for an outsider. My thinking goes like this (solely based on my background with long term supply contracts in the industrial gas industry):

    RIG issues as list of their contracts for their 130 something rigs. Some of them are short term like 1 year, others are 3 - 5 years, the new rigs often with an option to extend for another 5 years to be exercised by the client. The contracted service rates should be escalated with some inflationary indices or alternatively go up or down with oil. I estimate that 15 - 20% of the service contracts are up for renewal every year. On average the profits that we see today have been contracted 2-3 years ago. For those contracts you should reasonably assume that the breakpoints where the rates are negatively impacted have been defined according to the oil prices 2 -3 years ago. I would not expect a big impact for the current service contracts if oil drops below $100 or even $80/ bbl. I snapped up somewhere (unfortunately I cant remember the source) that the latest contracts with PBR had a breakpoint of $ 100/ bbl. I remember that I thought that is conservative, when oil was above $ 130 at that time. Now the latest contracts are going to be effective in 2 years. What will the oil price be then?
    Aug 19 23:21 pm |Rating: 0 0 |Link to Comment |View article
  • Transocean: An Opportunity in Falling Oil
    Pipo,

    thanks for that link to Jim Rogers. What a smart dude that is.

    It is not easy to be an oil bull these days. But I strongly believe that investment decisions with a volume of $ 1 B like for a deep water rig must be based on strongest fundamentals and cannot be based on the vagaries of momentum traders. That would be completely ridiculous. Jim Rogers makes a compelling bull case.
    Aug 18 22:50 pm |Rating: 0 0 |Link to Comment |View article
  • Events in Russia Could Push U.S. Toward a Clearer Energy Policy
    Quick estimate what kind of sunroof it takes to power my 180 hp Explorer:

    Assume 0.76 kW/hp
    Sun is shining 60 deg on suncollector, efficiency following cosinus function cos (90-60) deg = cos (30 deg) = 0.866
    1200 KW /m2
    Sun/Power Conversion Efficiency 27 %
    Inverter efficiency 75 %
    Electro Motor efficiency 90 %.


    Here we go

    180 hp * 0.76 kW/ hp
    ----------------------... = 722 m2
    (1.2 kW/ m2 * 0.27 * 0.75 * 0.90 * 0.866)

    The sunroof is then 722 m2 * 11 ft2/ m2 ~ 7.945 ft2, just about the area of my lot at home. So, I am sitting in the dark, while my car is being fueled. This assumes the sun is shining of course.

    Can we stop this please.
    Aug 18 19:53 pm |Rating: 0 0 |Link to Comment |View article
  • Events in Russia Could Push U.S. Toward a Clearer Energy Policy
    I like the Chevy Volt car concept better that a pure plug-in car PHEV because it gets you mileage and independence of finding a socket (try to find a socket for your lap top on an airport). Reloading is associated with long reloading and waiting times. The plug in cable is not long and the battery is not large enough to let you drive a 300 mile radius. Flexibility, ease of operation and mileage are prime conditions for wide acceptance. I understand the Volt has a primary electro motor for driving, feeding off a battery. The battery is backed up by a combustion motor with a generator to reload the battery, if you have to. You can reload while you are driving and get at least the mileage of a Prius.
    I heard rumours of 100 mpg. No, that can't be true, doesn't it? Downside again two drives necessary, a small tank for fuel and a small trunk?
    Aug 18 18:54 pm |Rating: 0 0 |Link to Comment |View article

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