29 August 2013

NAV Premiums of Certain Precious Metal Trusts and Funds - Wall Street Glitter Gulch

"Life is a school of probabilities."

Walter Bagehot

The post-option-expiration hit on the metals arrived yesterday and today as gold was pushed back towards 1400 and silver was slammed back to 23.80, a decline of 1.20 from the recent high.

They were treading a bit lighter on gold because available for delivery is in short supply.

Inventory available for delivery took a sizable hit yesterday as there was a large transfer within the shrinking JPM vaults from delivery offered to storage.

The premiums on the Sprott funds are holding up remarkably well. The action in the miners has been fairly obvious with a price hit on that related sector preceding the bear raid on the metals.

That some analysts cannot refrain from drawing broad conclusions from such a small short term price fluctuation shows the desperation and poverty of thought in much of what passes for analysis today. Say and do anything for a raucous headline and some attention.

I almost fell out of my chair when I saw some fellow call the ten dollar decline in gold yesterday a sign that there would not be any military action in Syria. Ten dollars out of Fourteen Hundred. And they make fun of people for reading the fall of bones or chicken entrails. Freedom of speech does not demand freedom from thought.

This could be a deeper correction. Anything can happen. But typically not everything does happen, and that is why life is a school of probabilities. People fool themselves, and others, by making wild guesses, and then writing the hits in marble, and the many more misses in the sand. Well, that may work for coffee talk, but as actionable trading information it is a snare, and a death trap.

Don't get me wrong. I don't mind such chatter talk on chat boards by amateurs. Much of life is taken up in idle and largely harmless diversion and unstructured speculation. And all gamblers lie, and often shamelessly. The problem is when they lie to themselves.

I used to hang out with some of the older fellows at the Stardust's sports book, which was a marvel for the day.  We would watch basketball games and horse races, while they bet the over/under and mostly talked stuff about the old days, and who and what they know and knew.  Fun talk, but it never filtered into any of my wagers. I made some of the best returns betting against the skew of weekend tourist betting on their favorite California teams, against the odds. Gotta love those Lakers and the tourist spread.  And don't even talk about the poker tables.

Don't get me wrong. I am no god of gamblers.  No one beats the house in the long run if their bosses are doing the job right and the gamers are not cheating.   No one can beat true odds all the time. 

I knew a guy who had been the comptroller at Caesar's, who grew up in our old neighborhood back east. And he gave me a copy of Friedman on Casino Management, and set me straight.  I have won big, and lost big.  But the only truly winning bet I ever made there was thirty five years ago when I got married in a little church outside of town, in what was then the desert, but now is just another crowded suburb.

Wall Street reminds me of Las Vegas sometimes.  Pretty women, flashy callers, lousy odds, but no free drinks or cheap buffets. 

The pros and insiders in the US markets have shills and occasional enablers who go around and talk trash for them, but not on the little chatboards. That would be a waste of time and money, and there is no need for it.  There are plenty of parrots who can be taught to repeat lines in the hope of sounding wise.

I have previously mentioned the mostly unremembered testimony of A. Newton Plummer, a Wall Street 'publicist' who testified to the corruption of journalism and analysis by Wall Street money. And what made him credible was that he had a suitcase full of canceled checks to prove it.  They don't take checks or credit cards these days.   Information and high paying positions are the new coin of the realm for these sophisticates.  Journalism is approaching economics as a disgraced profession.

So let's see how the week progresses. September is not a delivery month so babies must play. But there is the problem of physical offtake of real bullion on the world markets that continues despite the antics on the paper exchange.