Over the weekend I did listen to a few podcasts and did read some articles on silver price development. Recently, silver dropped a lot in very short time periods. Biggest down day was the 29th of February, 2012.
My take-aways are:
- silver short-positions are held by only a few hands, biggest holding 15 to 25 % of overall short positions (thus representing a huge agglomeration on one side)
- silver long-positions are held by many hands, and here limitations on the maximum size of your holdings apply
- biggest shorties are huge investment banks, who trigger price drops using the high-frequency trading
- and those hands overall end up as net buyers on days silver drops rapidly.
To see what happened to silver on Feb, 29th check this link: The Great Silver Manipulation.
It is a strange chart with little explanation I can provide. Even if you would think some news came out that day and in this hour - would you sell such large positions if you want to get out of the market with as little loss as possible? No huge position would sell in a rush normally. They do know they would drive the price down. So why this fast and furious sell?
3/19/2012
3/11/2012
Concrete Investment
Three years ago my precious (the beautiful lady who stands next to me) convinced me to buy a flat we now own. We have been living here for a little more than 2 and a half years. For a few weeks the same developer has been advertising condominiums just 200 meters from our place. The houses do not only look pretty much the same, they more or less used the same construction plan.
Today I checked the little sales office they put up near the street and talked to the guy selling the condos. You must know this is just south of Munich, Germany. As it is only 200 m from our place, I really consider it the same neighborhood. At the moment its just an empty slot near the road - just recently a very old barn under monument protection collapsed on the space. So it is now open for new development.
What interested me most was the price development. As I mentioned - the new buildings really look the same. Energy standards are higher somewhat, as this is a legal requirement here. This will add a little to construction costs, but our condo is quite the same energy standard and has geothermic heating too. The condos on the new place have been designed smaller, so where our place has two flats on a floor, there are three at the new place. This also means downsides on the floor plans of the new condos - even smaller kitchens, bathrooms without window, ...
In general I would say the old and the new place are the same standard: higher energy efficiency vs. smaller condos (both of them maybe tiny to US standards ...). But the price difference really did surprise me. The condos in our house sold for 3.200 to 3.900 EUR a square meter - depending on size, floor, etc. This calculation is done without parking slots (inside or outside) and without taking rooms in the basement into account. The new condos (on comparable calculation) sell for 4.000 to 4.500 EUR a square meter. With construction not even started and condos ready to move in at the end of 2012 earliest, already 50 % of the 28 condos are reserved (which requires a fee to be paid). So the prices are not unrealistic.
So the market changed a lot. We bought our flat after we walked through the rooms, talked to the construction manger, brought in the family, got a list of questions from my cousin - an architect - answered. The new project will most likely be sold before the first wall is even constructed.
That's the time to send a kiss to my precious - maybe she is wiser than I ever will be.
This also shows how weird the market got by now in Munich. On Saturday - visiting the Munich Börsentag - Dr. Jens Erhardt stated that returns by renting out condos in Munich might now be rather 2 % than 5 %. Historic price levels of 13 times yearly rental income to buy a house or a condo are totally out of reach - today its more like 20 to 30 times. I am afraid this market distortion by cheap money, uncertain outlooks and flight to concrete is not a Munich only phenomenon.
Today I checked the little sales office they put up near the street and talked to the guy selling the condos. You must know this is just south of Munich, Germany. As it is only 200 m from our place, I really consider it the same neighborhood. At the moment its just an empty slot near the road - just recently a very old barn under monument protection collapsed on the space. So it is now open for new development.
What interested me most was the price development. As I mentioned - the new buildings really look the same. Energy standards are higher somewhat, as this is a legal requirement here. This will add a little to construction costs, but our condo is quite the same energy standard and has geothermic heating too. The condos on the new place have been designed smaller, so where our place has two flats on a floor, there are three at the new place. This also means downsides on the floor plans of the new condos - even smaller kitchens, bathrooms without window, ...
In general I would say the old and the new place are the same standard: higher energy efficiency vs. smaller condos (both of them maybe tiny to US standards ...). But the price difference really did surprise me. The condos in our house sold for 3.200 to 3.900 EUR a square meter - depending on size, floor, etc. This calculation is done without parking slots (inside or outside) and without taking rooms in the basement into account. The new condos (on comparable calculation) sell for 4.000 to 4.500 EUR a square meter. With construction not even started and condos ready to move in at the end of 2012 earliest, already 50 % of the 28 condos are reserved (which requires a fee to be paid). So the prices are not unrealistic.
So the market changed a lot. We bought our flat after we walked through the rooms, talked to the construction manger, brought in the family, got a list of questions from my cousin - an architect - answered. The new project will most likely be sold before the first wall is even constructed.
That's the time to send a kiss to my precious - maybe she is wiser than I ever will be.
This also shows how weird the market got by now in Munich. On Saturday - visiting the Munich Börsentag - Dr. Jens Erhardt stated that returns by renting out condos in Munich might now be rather 2 % than 5 %. Historic price levels of 13 times yearly rental income to buy a house or a condo are totally out of reach - today its more like 20 to 30 times. I am afraid this market distortion by cheap money, uncertain outlooks and flight to concrete is not a Munich only phenomenon.
3/05/2012
Ebay and precious metalls
During the last weeks I took a look on the trades for precious metalls on ebay.de. Compared to proaurum.de you can see no price advantage at single coin level. Actually all the auctions end at spot price level; and than you have to add transport costs and a little more risk, as you deal with a private person.
Picture changes when you trade lots of 50 or 100 silver coins. There you can get a discount - not huge but maybe 5 per cent.
What you really should look at is: trade only known coins like Eagles, Marple Leafs or Philharmoniker. There is lot of stuff on ebay, that is not really silver or gold, but only with a shiny topping. Its not a scam, because when you carefully read the fine print the precious metal content is stated. But its cumbersome to figure out what is real silver or gold, and what is only a shiny mint with little value. Stay with what you know - it's hard enough to get a good price on those.
Picture changes when you trade lots of 50 or 100 silver coins. There you can get a discount - not huge but maybe 5 per cent.
What you really should look at is: trade only known coins like Eagles, Marple Leafs or Philharmoniker. There is lot of stuff on ebay, that is not really silver or gold, but only with a shiny topping. Its not a scam, because when you carefully read the fine print the precious metal content is stated. But its cumbersome to figure out what is real silver or gold, and what is only a shiny mint with little value. Stay with what you know - it's hard enough to get a good price on those.
2/29/2012
Buy gold when the daily looks uply, but weekly is solid
Gold dropped 5 % today, as Ben Bernanke's remarks to Congress damped speculation of more quantitative easing. Gold trades somewhat under 1.700 USD now, close to the 200 day average at 1.675.
Sit back a moment. This means no more inflation? Rising interest rates? Solid financial polity? Solid monetary policy in the US and Europe? So paper money will gain in value in future?
Count the 'NO'-answers you gave mentally to these questions. 3 'NO' or more? Maybe you should watch the GLD closely during the next few days. Also watch the physical demand, and not the value of paper gold only.
If GLD stays above the 200 day average or recovers from a drop below, I would say this would be a good time to initiate a position or add to a position.
Sit back a moment. This means no more inflation? Rising interest rates? Solid financial polity? Solid monetary policy in the US and Europe? So paper money will gain in value in future?
Count the 'NO'-answers you gave mentally to these questions. 3 'NO' or more? Maybe you should watch the GLD closely during the next few days. Also watch the physical demand, and not the value of paper gold only.
If GLD stays above the 200 day average or recovers from a drop below, I would say this would be a good time to initiate a position or add to a position.
2/12/2012
Antifragility
If you liked Fooled By Randomness and The Black Swan by Nassim Taleb then I got good news for you: he currently writes a new book on Antifragility.
What is Antifragility? Well, I guess you know what fragile means. Think about a glass to drink water. You can put stress on it, put it on a table a 100 times. Drop it once from 4 feets - it breaks. Thats fragile: things that break under a certain level of stress but do not change on less stress.
What Nassim Taleb calls antifragility is a little different. It means that put under stress, a thing would improve. So the glass would have to become stronger each time you put it on the table in order to be antifragile. And if you put it on the table often enough, finally it might be able to withstand a larger drop.
Now you think: this concept is irrelevant. No glass becomes stronger by putting it on a table. But think about your muscles. How do you train them? You stress them, they got hurt, even injured at a micro-level, but they get stronger by exactly this stress and next time you can run faster, lift more weights, push harder. Antifragile.
And the economy? Wasn't the original concept that each failure of a company makes the whole system gets stronger? That the survival of the fittest would lead to a stronger species?
Nassim Talebs book will not be out for sale till summer 2012. But you can get a 60 min interview with him on this topic at Econtalk.
What is Antifragility? Well, I guess you know what fragile means. Think about a glass to drink water. You can put stress on it, put it on a table a 100 times. Drop it once from 4 feets - it breaks. Thats fragile: things that break under a certain level of stress but do not change on less stress.
What Nassim Taleb calls antifragility is a little different. It means that put under stress, a thing would improve. So the glass would have to become stronger each time you put it on the table in order to be antifragile. And if you put it on the table often enough, finally it might be able to withstand a larger drop.
Now you think: this concept is irrelevant. No glass becomes stronger by putting it on a table. But think about your muscles. How do you train them? You stress them, they got hurt, even injured at a micro-level, but they get stronger by exactly this stress and next time you can run faster, lift more weights, push harder. Antifragile.
And the economy? Wasn't the original concept that each failure of a company makes the whole system gets stronger? That the survival of the fittest would lead to a stronger species?
Nassim Talebs book will not be out for sale till summer 2012. But you can get a 60 min interview with him on this topic at Econtalk.
2/04/2012
Regulation and taxation creeping up
Last week I had 3 issues indicating more regulation and taxation. For one week, that's not a small number!
1) Taxation on US dividends is 25 % now, up from 15 % last year. With monthly dividends of GoldCorp this is not really fun. German taxation compensates for 15 % withholding tax only - the remaining 10 % you would have to get back from the US state or accept double taxation. Guess discussing with US tax authorities would be a hazzle and maybe costs more in time and money, than you get back.
2) Logging into a Swiss online account from Germany / with a German IP troubles the head of Swiss bankers. This week I had to go through a lot of disclaimers for the first time ever. Looks like Swiss banks are really frightened by now - Schäubles Kavalerie at the front door, US claims at the back door, and whistle-blowers inside the house is not very comforting.
3) Austrian state seems to be worried about folks registered but not paying taxes. Not only me but also my girlfriend got an inquiry regarding this situation - that's no coincidence. I was always registered at the house of my parents, but not paying taxes for several years government starts to worry. Well, at least the systems seems to work better than in Greece.
Those are just 3 personal observations. Guess you could share some, too. Feel free to make a comment.
1) Taxation on US dividends is 25 % now, up from 15 % last year. With monthly dividends of GoldCorp this is not really fun. German taxation compensates for 15 % withholding tax only - the remaining 10 % you would have to get back from the US state or accept double taxation. Guess discussing with US tax authorities would be a hazzle and maybe costs more in time and money, than you get back.
2) Logging into a Swiss online account from Germany / with a German IP troubles the head of Swiss bankers. This week I had to go through a lot of disclaimers for the first time ever. Looks like Swiss banks are really frightened by now - Schäubles Kavalerie at the front door, US claims at the back door, and whistle-blowers inside the house is not very comforting.
3) Austrian state seems to be worried about folks registered but not paying taxes. Not only me but also my girlfriend got an inquiry regarding this situation - that's no coincidence. I was always registered at the house of my parents, but not paying taxes for several years government starts to worry. Well, at least the systems seems to work better than in Greece.
Those are just 3 personal observations. Guess you could share some, too. Feel free to make a comment.
1/31/2012
Amazon (AMZN) down almost 10 % after hours
Amazon announced mixed numbers in Q4 - revenue below consensus, but earnings above (38 US-cents vs. consensus of 17 US-cents).
I think this is a great company, the one I shop most with. Even if the whole Kindle-Fire project will be a total failure, i love to get their shares at a 10 % discount vs. some hours ago. I will take this as an entry opportunity. Conference call will follow in 30 minutes, but I will open a position now.
I think this is a great company, the one I shop most with. Even if the whole Kindle-Fire project will be a total failure, i love to get their shares at a 10 % discount vs. some hours ago. I will take this as an entry opportunity. Conference call will follow in 30 minutes, but I will open a position now.
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