Best of the Week
Most Popular
1.The Greatest Stock Market Crash Of Your Life Is Just Ahead… – Warns Harry Dent - GoldCore
2.Budget 2016: Borrowing, Lifetime ISA, House Prices, Economy, Syria, Brexit and Stocks - Nadeem_Walayat
3.Gold Price Intermediate Top - Clive_Maund
4.Brussels Terror Attacks, Death of the European Union, BrExit Wake up Call - Nadeem_Walayat
5.Stock Market Maybe This Time is Different? - Tony_Caldaro
6.UK House Asking Prices Break Above £300k! Housing Market Paralysis - Nadeem_Walayat
7.A Big Reason Why Silver Price Is Set To Soar - Hubert_Moolman
8.The Financial Crisis Has Just Begun; Is The American Dream Is Over? - Chris_Vermeulen
9.Gold Stocks Spring Rally - Zeal_LLC
10.GLX, GLDX, Baby Gold Bull Market Stillborn? - Rambus_Chartology
Last 7 days
Consensus Forming: China Heading Back Into Financial Crisis - 30th Apr 16
The Next Technical Price Targets for Gold & Silver - 30th Apr 16
Stock Market Downtrend Should be Underway - 30th Apr 16
Gold And Silver – A Clarion Alarm Call For All Paper Assets - 30th Apr 16
US Economic Statistics LIES, LIES AND OMG, MORE LIES - 30th Apr 16
Stock Market Strong Elliott Wave Relationship is Developing - 29th Apr 16
Fed's Kaplan: Brexit to Factor in US June Interest Rate Decision - 29th Apr 16
Silver Miners Strong in Grim Q4 - 29th Apr 16
Is Silver a better bet than Gold in the Near Future? - 29th Apr 16
How to Use the CoT Report in Gold Investing? - 29th Apr 16
Sri Lanka is Intriguing: Areas to Consider for Value Investing - 29th Apr 16
Gold “Chart of The Decade” – Maths Suggest $10,000 Per Ounce Says Rickards - 29th Apr 16
Are We or Are We Not in a New Gold Bull Market? - 29th Apr 16
Silver: The “Five Year Plan” and the Great Leap Forward - 28th Apr 16
Michael Hudson: The Wall Street Economy Has Taken Over The Economy and Is Draining It! - 28th Apr 16
AUD/USD - Trend Reversal or Just a Bigger Pullback? - 28th Apr 16
A Gold Revaluation Could Transform Your Financial Status - Overnight - 28th Apr 16
Monetary Policies Misunderstood - 28th Apr 16
Gold Bullion vs Gold Miners - 28th Apr 16
OECD Suggests BrExit Would Cut Net Migration by 1.2 Million by 2030 - 28th Apr 16
MP Naz Shah Punished for Tweets Made During Israel's Genocide of Gaza Palestinian People - 28th Apr 16
Global Recession in 2016 and Beyond - The Obvious Evidence - 27th Apr 16
Why Gold Bugs Need to Stop Listening to The Fear Mongers and Start Thinking for a Change - 27th Apr 16
BlackRock’s Fink: Fed to Raise Interest Rates by Quarter Point ‘at Best’ - 27th Apr 16
Gold More Productive Than Cash?! - 27th Apr 16
Donald Trump Will Fire Janet Yellen and Be Trapped - 27th Apr 16
Money Saving Gardening by Propagating Roses From Cuttings - Propagating Rose Plants Over 2.5 Years - 27th Apr 16
Facebook Censors Pro Trump and Negative Hillary News - 27th Apr 16
This is the Era of the Democrats and Your Taxes are Going Up - 27th Apr 16
Long Awaited Gold Price Breakout - 26th Apr 16
Crude Oil Price Double Top or Further Rally? - 26th Apr 16
Madness in the Crimex Gold and Silver Trading Pits - 26th Apr 16
Britain's Prospects: GBP and BREXIT - MAP Wave Analysis - 26th Apr 16
CRB, Gold, Oil, Cotton, Coffee - 7 Must See Commodities Charts - 26th Apr 16
Gold Price Target is $3,000 and Silver is $75 per Ounce - 25th Apr 16
Parameters for a Stock Market Sell Signal-in-the-making - 25th Apr 16
Stock Market Dangerous Divergence - 25th Apr 16
Gold Miners Nub is the Sweat of the Sun - 24th Apr 16
US Dollar Price Forecast - 24th Apr 16
Stock Market Upside Objective Reached - 24th Apr 16
Why Leftist Greeks have more reasons than Liberals to favour Entrepreneurship and Support Entrepreneurs - 24th Apr 16
The Dow Jones is a Catalyst for Misplaced Stock Market Optimism - 24th Apr 16
Why Russia Harasses U.S. Aircraft and Ships - 24th Apr 16
Stocks Bull or Bear Market Rally? - 23rd Apr 16
A Bright Future for Solar Power in the Middle East - 23rd Apr 16
Silver Commitments of Traders – Halloween is Arriving Early This Year - 23rd Apr 16
Good News, Bad News, Both Favor Gold And Silver - 23rd Apr 16
Mish's Sure Fire Proposal to End Japanese Deflation - 23rd Apr 16
Mish Shedlock: “EXCUSE ME MR. PRESIDENT, IS THAT A JOKE?” - 23rd Apr 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Catching a Falling Financial Knife

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.


© 2005-2016 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

Catching a Falling Financial Knife