THE ESSENCE OF CHUTZPAH
Chutzpah is a Yiddish word meaning gall, brazen nerve, effrontery, sheer guts plus arrogance. As Leo Rosten writes, no other word, and no other language, can do it justice.
This example is better than 1,000 words …
A little old lady sold pretzels on a street corner for 25 cents each. Every day, a young man would leave his office building at lunchtime, and as he passed the pretzel stand, he would leave her a quarter, but never take a pretzel.
And this went on for more than 3 years. The two of them never spoke. One day, as the young man passed the old lady’s stand and left his quarter as usual, the pretzel lady spoke to him.
Without blinking an eye she said: “They’re 35 cents now.
(David says: Chutzpah? Nah, it’s only inflation)
This morning I got an Email from Andy Hoffman. Andy pointed out that the “premium,” or the price being charged above the firm’s Net Asset Value for PSLV (Eric Sprott’s Silver ETF) closed at 28.9%, blowing away the previous record of 26%.
What this means is that when you buy PSLV, you pay the equivalent of $29 x 1.285, which equals nearly $38 an oz. for silver
Below is a distribution of its premium since inception of the fund in 10/2010, and below that since 1/1/12.
Fast forward – later, I received an Email from Bill Holter, discussing this interesting phenomenon. Bill wrote –
Premiums. I would like to discuss a couple of them and what I think they mean. First, Gold is trading at a $220 premium to platinum. This is roughly 15%. Some 3+ years ago, platinum traded as high as nearly a 100% premium over Gold. Those were the days when “commodities” were hot. Now, commodities are less “hot” and it looks to me like the hot spot is “money”. That’s right, I believe Gold is simply acting as a premier currency as it has been stronger than everything except the Dollar recently. Going back 10 years, it is clear that Gold has been the #1 currency on the planet. The fact that platinum, grains, softs and even oil have lagged Gold says to me that we are in the heart of “currency crisis”, not a commodity boom. We will see if I am correct, I will be shocked if we don’t get an answer before midyear in the form of a currency crack up.
The other premium I’d like to talk about is “PSLV”, this is the Sprott physical Silver ETF. Its previous high premium over Silver was 26% a few months back, it is now at over a 30% premium to COMEX quoted Silver. But why? Why would anyone pay such a premium? I think the answer is very, very simple! I think that big players who would have a hard time sourcing big volumes of Silver, TRUST Eric Sprott and the way he does business. The market place believes Mr. Sprott because his ETF is audited and not cloaked in prospectus bullshit surrounded with smoke and mirrors. He says that they buy Silver, the audits attest to it and investors can actually see what they have! This “premium” in my opinion is closer to the “true market clearing price” than is the COMEX but probably still too low. Once the COMEX finally does default and it surely and mathematically will in my opinion, Silver prices will massively leapfrog the current PSLV premium. The market place is not stupid, have you ever wondered why an ETF like Mr. Sprott’s could trade at such a premium while other ETF’s like GLD could trade at a discount? The market place is making a judgment and they are voting with their money. The market believes one is real and on the up and up while the other is…well,…not. Have a nice weekend,
Finally, in case you haven’t noticed, foreign central bank holdings of US Treasuries have hit record lows, and in spite of this massive central bank selling, the (unlikely) demand for these US Treasuries is so great that their prices are near record highs.
This isn’t such a mystery – not when all we get from published official sources is continuing disinformation.
The most logical conclusion is that the Fed and certain of its closely allied central banks, and allied mega-banks (in the US, certain Primary Dealers) are covertly buying up US Treasury (and other sovereign) bonds in massive amounts.
This is nothing more than massive debt monetization and it is accomplished via largely covert QE, (a.k.a. money printing).
In addition, the ECB is also engaged in massive money printing, via the recently announced LTRO.
This massive, monetary Inflation will eventually be reflected in massive price inflation, at least in certain sectors. Another reason why I am so bullish on gold!
Check out the following chart, courtesy of Ed Steer. It will open a few eyes – wide, I hope. It tells you all you need to know about what would happen if any or all of the PIIGS defaulted on their debt…or even a portion of it. I suggest you study this chart carefully.
During the 12 year history of this bull market in gold, only about 5% of the time did we see gold trading below its 200DMA, and each time it turned out to be a prime buying opportunity.
The last time gold traded below its 200DMA was during the autumn of 2008. As soon as the price climbed back above the 200DMA, it rose from $900 to $1,900. The fundamentals for gold are bullish enough for a repeat performance. Just make sure you are buying gold and not a ‘paper or digital substitute’ for gold.
This excellent T.A. article was written by Peter Degraff and was posted at the safehaven.com website yesterday.