Best of the Week
Most Popular
1.China Crash, Greece Collapse, Harbingers of Stock Market Apocalypse Forecast 2015? - Nadeem_Walayat
2.Gold Price Awaiting Outcome of Greece Crisis - Clive_Maund
3.Gold Price Peculiar 6 Month Cycles - Rambus_Chartology
4.Gold Price Just a Little Bit More - Bob_Loukas
5.8 Unprecedented Extremes Indicate a Stock Market Bubble in Trouble - EWI
6.Gold And Silver – Without Either, You Will Be Greeced - Michael_Noonan
7.Lies, Damned Lies and Statistics - James_Quinn
8.China Crash, Greece Crisis Harbingers of Stocks Bear Market? Video - Nadeem_Walayat
9.Gold and Silver Record Shorting - Zeal_LLC
10.Markets Big Deflationary Downwave Quick Reference Guide... - Clive_Maund
Last 5 days
Will Chinese Stock Market Crash Affect the US? - 27th July 15
Crude Oil Price Under $48! - 27th July 15
Are We Seeing a Trend Reversal with U.S. Interest Rates? - 27th July 15
How to Know When the Gold Bear Market is Over - 27th July 15
Gold Bear Market Phase III - 27th July 15
Silver Bull Hammer Buy Signal - 27th July 15
Gold Cracks Support and Plunges to New Lows - How Low Will Price Go? - 27th July 15
Commodity Markets Breakdown Of 2015 Is Now A Fact - 26th July 15
Gold Price at a Five-Year Low: Here’s What to Do - 26th July 15
Stock Market Primary III Inflection Point - 26th July 15
Central Banks and Our Dysfunctional Gold Markets - 25th July 15
Gold And Silver - The US Dollar Does Not Exist, Part II - 25th July 15
How Wall Street Put Apple Stock in Animal House - 25th July 15
How to Trade Markets Using the Stochastic Oscillator - Video - 24th July 15
A Bond Market Crisis Is Coming... Here's What to Do - 24th July 15
Why There's Resistance to the Iran Nuclear Deal - 24th July 15
Absurd Gold Stock Levels - 24th July 15
Gold Mining Stocks Nearing Rebound - 24th July 15
Misperceptions Create Significant Bond Market Value - 24th July 15
Commodities Distressed Investing - 24th July 15
OPEC Shorts Are Driving Down the Crude Oil Price - 24th July 15
USD Index Rebounds - 24th July 15
If You’re Worried About a Tech Bubble, You’re Focusing on the Wrong Thing - 24th July 15
Gold Stocks Bear Market Bottom Buying Opportunity? - Video
The Stealth War on the United States - 23rd July 15
Commodity Prices, Gold and Silver Stocks Next Leg Down - 23rd July 15
The ‘Real’ Reason the Fed Wants to Raise Interest Rates - 23rd July 15
Crude Oil Price Slump is a Once in a Decade Opportunity to Make Money, Guaranteed - 23rd July 15
Gold Price Hits a 5-Year Low: How to Time the Next MAJOR Bottom - 22nd July 15
Silver and the Deflation Thesis - 22nd July 15
Gold Price Crash - Trend Forecast 2015, Gold Stocks Buying Opportunity? - 22nd July 15
The Three Reasons Behind Iran’s Resistance to the Nuclear Deal - 22nd July 15
Winning the Hunger Games - How to Choose Successful Agriculture Investments - 22nd July 15
Are Free Markets The Solution? - 22nd July 15
Gold Hammered “Unprecedented Attack” - 21st July 15
The Turkish Enigma - 21st July 15
Gold and Silver: The Final Capitulation Commences - 21st July 15
Greater Israel Setback from Iranian Nuclear Agreement - 21st July 15
U.S. Housing Market: Is the Roof About to Cave In (Again)? - 21st July 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stock Market Bubble in Trouble

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.


© 2005-2015 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

Biggest Debt Bomb in History