Post: #176

(12-19-2014 05:56 PM)Easy E Wrote:  -The gold is there, it has just been leased out to some extent to major banks, and those banks in turn rehypothicate the leased gold contracts on the market.

So are you suggesting the physical bars are there but are leased and re-leased elsewhere?

Does this entitle the leasee some rights to that bar leased?

Post: #177

Forget Fort Knox - NY FED has most of the gold in their vaults, which they "hold" for foreign nations for their safety, bcos a sovereign nation like Germany obviously cannot protect it's own gold

Post: #178

(12-17-2014 08:06 PM)Engineer Wrote:  Major announcement tomorrow by Putin.

I'm calling it now: he's putting Russia on the gold standard.

It didn't happen - mostly because there are too few opportunities for grsft.

Post: #179

(12-19-2014 09:54 PM)Bazzwaldo Wrote:  

(12-19-2014 05:56 PM)Easy E Wrote:  -The gold is there, it has just been leased out to some extent to major banks, and those banks in turn rehypothicate the leased gold contracts on the market.

So are you suggesting the physical bars are there but are leased and re-leased elsewhere?

Does this entitle the leasee some rights to that bar leased?

Here is good article that explains gold leasing by central banks:

http://www.silvermonthly.com/central-ban...ce-sheets/

Quote:Libertarian economist Milton Friedman once commented that the principal defect of gold and silver as monetary bases is that society spends resources extracting them out of the ground in order to store them—back in the ground—in central-bank vaults. But another libertarian-gone-mainstream, Alan Greenspan, saw another problem with precious metals—metals don’t generate interest income.

On July 24, 1998, Alan Greenspan—a former advocate of the gold dollar and opponent the Federal Reserve he now chaired—uttered one sentence that drew the ire of every goldbug on the face of the Earth: “Central banks stand ready to lease gold in increasing quantities should the price rise.” What made the goldbugs so mad? And what did Greenspan mean by “leasing” gold?

As far as Greenspan was concerned, Friedman’s issue with gold—it was expensive to mine—was somebody else’s problem. All Greenspan cared about as chairman of the Federal Reserve, was he had a lot of gold and silver in his vaults that wasn’t generating interest income. So under his watch, the Fed began increasing the amount of gold and silver leased to mining companies, as well as to other central banks and foreign governments.

Direct Leasing

The most basic form of precious-metal leasing involves central banks such as the Fed taking their gold or silver to an intermediary institution known as a “bullion bank.” Major firms such as Bank of America, Barclays, Citigroup, Goldman Sachs, JP Morgan Chase, and UBS all operate as bullion banks.

Typically, the bullion banks might pay a 1% interest rate on the gold or silver, with the promise to return it at a specified date. The bullion bank then takes the precious metal and sells it on the open market, using the proceeds to buy Treasury bonds for a 3-4% net return.

But what if the precious metal rises in price and the bullion bank has to pay more for the gold or silver it returns than it received for the gold or silver that it borrowed? To address this concern, bullion banks use the futures market to lock in a price and delivery date of the necessary gold or silver. This cuts into their profit margins but takes all of the risk out. A 1-2% net return with zero risk is a great deal for them. As for the metal lender, a 1% return is better than the 0% return gold and silver earn in underground bank vaults. It’s a win-win for the central bank and the bullion bank—but some argue individual investors lose.

Critics of metal leasing say, because gold and silver leasing artificially increases the supply of the precious metals for industrial, commercial, and investment uses, thus holding down the prices of the commodities. Central banks and the bullion banks are insensitive to the price of gold or silver—profits are locked in and guaranteed—so this distorts the real supply and demand relationship between buyers and sellers.

But could it be that holding down the price of precious metals is not just a side effect, but the intended effect of leasing? After all, just reconsider Greenspan’s words: “Central banks stand ready to lease gold in increasing quantities should the price rise.” It’s quite possible that, in the absence of gold leasing, government fiat currencies would appear virtually worthless as they rapidly depreciate against gold.

Gold and Silver Swaps

Even more insidious is the action of “swapping,” which is most commonly performed with gold. Essentially, two central banks literally swap hordes of gold—with the objective of doing nothing more than muddying the accounting waters.

A second type of gold swap involves only one central bank’s gold reserves, which are lent for currency to another central bank. The real problem with this tactic is the banks consider these swaps to be “collateralized loans,” and thus they don’t appear on their balance sheets. No one knows for sure just how much gold and silver the Fed and other central banks have lent to each other this way.

In fact, the situation is getting so bad that the International Monetary Fund (IMF) is actually beginning to take gold swapping seriously. The IMF has recommended that these types of swaps be recorded on the balance sheets of central banks, and the rule could become mandatory by 2009.

Mining Companies

But central banks and the bullion banks aren’t the only bad guys in the precious-metal leasing story: Mining companies deserve a share of the blame, as well. Despite the near-sightedness of it, many of these companies participate in the leasing themselves by borrowing gold from the Fed or other central banks, selling it, and then later replacing it with new gold fresh from the mine.

Of course, considering gold leasing suppresses the price of gold, and generally, gold-mining companies benefit from higher gold prices, borrowing gold isn’t really in a mining company’s long-term interest—but since when has that stopped someone from making a short-term buck?

Is the End in Sight?

For all intents and purposes, silver leasing has come to an end. This happened because, finally, central banks were essentially out of silver. Most silver analysts expected this would result in a major bull market in silver, and while it did impact the market in a positive fashion, the price of silver has still been suppressed by a concentrated short position held four traders whom many analysts consider to be market manipulators.

Gold leasing, on the other hand, is still alive and well. But like silver leasing, it too must come to an end. The difference is when gold leasing is unwound, there won’t be a concentrated short position holding gold back. Many goldbug analysts predict gold could see $2,000 an ounce when central banks stop leasing gold.

The question is not if central banks will stop leasing gold—the question is merely when. But the real question is: Will you profit from it?

Post: #180

Confirmation Saudi Arabia wasn't serious and bluffed last month about cutting supply if others did, too. Just more talking down of oil. So oil and the ruble should go down on Monday.

http://www.zerohedge.com/news/2014-12-21...members-do

Post: #181

(12-21-2014 04:29 PM)Big Nilla Wrote:  Confirmation Saudi Arabia wasn't serious and bluffed last month about cutting supply if others did, too. Just more talking down of oil. So oil and the ruble should go down on Monday.

http://www.zerohedge.com/news/2014-12-21...members-do

SA are just doing the bidding of their masters in DC. Last Tuesday US/EU thought they could checkmate Putin with their all out attack on the Ruble, but Russia fought back. This game is not over by a long shot.

Post: #182

(12-21-2014 05:47 PM)Chengiz88 Wrote:  Last Tuesday US/EU thought they could checkmate Putin with their all out attack on the Ruble, but Russia fought back. This game is not over by a long shot.

Tuesday's drop was due to Rosneft's bond issue, it was all internal in Russia, nothing to do with the US.

Post: #183

For the guys in Russian now, how big of an advantage is this drop in terms of price. For example, if coming for the US and exchanging Dollars for Rubles, is it a bargain? Or has inflation offset the drop? I am wondering if rent, food and going out costs are significantly lower.

Post: #184

(12-21-2014 05:55 PM)BigDave Wrote:  

(12-21-2014 05:47 PM)Chengiz88 Wrote:  Last Tuesday US/EU thought they could checkmate Putin with their all out attack on the Ruble, but Russia fought back. This game is not over by a long shot.

Tuesday's drop was due to Rosneft's bond issue, it was all internal in Russia, nothing to do with the US.

Nabiullina raised rates to 17% the night before and yet most desks were seeing huge USD buying. Rosneft bond issue does not explain the move that day from 60 to 85 USDRUB.

Post: #185

(12-21-2014 05:58 PM)Dantes Wrote:  For the guys in Russian now, how big of an advantage is this drop in terms of price. For example, if coming for the US and exchanging Dollars for Rubles, is it a bargain? Or has inflation offset the drop? I am wondering if rent, food and going out costs are significantly lower.

There was a ~1 month window where some deals could be had (durables like cars, electronics, etc. as well as perishables and rent). Inflation on a lot of food items is already 100+% and electronics/cars and other durable goods have been adjusted and now include a wider than usual margin to cover currency risk.

So in other words, it is not cheaper and many items will actually become more expensive than before in Dollar/Euro terms.

Post: #186

Any forum members currently in Moscow. Suposedly Ed Snowden works in IT there and has a decent social circle of friends. Wonder if anyone has bumped into him

Post: #187

(12-22-2014 02:48 PM)Chengiz88 Wrote:  Any forum members currently in Moscow. Suposedly Ed Snowden works in IT there and has a decent social circle of friends. Wonder if anyone has bumped into him

not tremendous chance for something like that - 1 out of 10 million (one person in a city of ten million).

but yeah it will be kinda cool i guess, to meet him of mikey rourk or steven seagal...or the other russian expatorers...

Post: #188

(12-22-2014 01:55 PM)DaveR Wrote:  

(12-21-2014 05:58 PM)Dantes Wrote:  For the guys in Russian now, how big of an advantage is this drop in terms of price. For example, if coming for the US and exchanging Dollars for Rubles, is it a bargain? Or has inflation offset the drop? I am wondering if rent, food and going out costs are significantly lower.

There was a ~1 month window where some deals could be had (durables like cars, electronics, etc. as well as perishables and rent). Inflation on a lot of food items is already 100+% and electronics/cars and other durable goods have been adjusted and now include a wider than usual margin to cover currency risk.

So in other words, it is not cheaper and many items will actually become more expensive than before in Dollar/Euro terms.

How are locals dealing with this then?

Could fake sugar baby game work now?

Post: #189

The ruble seems to recovered a lot of ground, and it is currently around $55.

This is probably because the central bank of Russia made it really expensive to borrow rubles, and all of the sudden speculators were no longer able to easily short the ruble.

Plus, China recently offered to help Russia by offering a currency swap deal:

http://finance.yahoo.com/news/china-offe...41394.html

It seems, for now at least, the worst has passed.

Post: #190

There are no BMW's and Mercedes' left in Moscow dealerships.

Post: #191

A Ruble meltdown report from politico (Dec 21st, and already dated) - but has this nugget about how different it is this time, and how the consummer buying window breaks down by class:

Quote:According to Marina Krasilnikova, head of quality of life research at the independent pollster Levada Center, while affluent areas like Moscow saw a buying spree on expensive products, most Russians are in fact hunkering down to weather the crisis with what little they have.

“In 2008, we only saw frenzied buying from the top third of population in terms of income,” Krasilnikova said. “Poorer people weren’t trying to leave all their money in the store, and despite the reports of frenzy during the current crisis, I think it’s being shown only by the top layers of society, not middle and poorer classes.”

Read more: http://www.politico.com/magazine/story/2...z3MgiF2Hju

Post: #192

Informal capital controls arrest Russian ruble's slide

http://www.reuters.com/article/2014/12/2...KD20141223

Post: #193

(12-21-2014 05:58 PM)Dantes Wrote:  For the guys in Russian now, how big of an advantage is this drop in terms of price. For example, if coming for the US and exchanging Dollars for Rubles, is it a bargain? Or has inflation offset the drop? I am wondering if rent, food and going out costs are significantly lower.

Things definitely feel cheaper now. I bought a round of drinks at a decent bar downtown last night with a girl for 600 rubles total. That's now about 11 dollars. Back when the ruble was at 35 last summer this would have been roughly $18. Prices at this bar haven't changed, and my rent hasn't changed either since I have a one year contract. I'd say Moscow is "more affordable" now for sure, but cheap is probably an overstatement.

I actually think the ruble is a solid financial bet. Ask yourself, is there a chance that oil will go back up to $100 sometime in the next three years? I think there is... Now, in the next few months anything could happen, but it's hard to believe oil will always be this cheap.

Post: #194

(12-24-2014 06:32 AM)_Cicero Wrote:  [quote='Dantes' pid='911752' dateline='1419202721']

I actually think the ruble is a solid financial bet. Ask yourself, is there a chance that oil will go back up to $100 sometime in the next three years? I think there is... Now, in the next few months anything could happen, but it's hard to believe oil will always be this cheap.

Yep totally agree with this statement here. In fact Im so sure of it I would love to buy some rubles when the next attack is launched on the ruble. Would love to pick rubles up above 90 to GBP. Failing that some long dated OTM calls in Crude.

I looked into opening a bank acct in Russia but it seems kinda tricky for UK residents.

Post: #195

Russia forcing corporates to sell foreign FX, seems to be helping the ruble stabilise

Post: #196

Happy that I was wrong in thinking Russia needed to go to a gold standard and/or cut oil to save the ruble. The West isn't done trying to shock Russia in various ways economically, but they'll have a harder time messing with the ruble after blowing their load here, some simple Russian directives, and China helping Russia out with yuan swaps. But Russia did pay a big price to stabilize things.

Though, Russia should still go to a gold standard at some point and also temporarily cut a limited amount of oil supplies to the market asap to put a bottom on oil and stabilize or reverse it's direction... trying to moving it up to the $70-75 for a while before it naturally goes higher.

Post: #197

Here is a pretty good episode of Venture Capital:

Post: #198

Huge Oil refinery fire in Libya yesterday. What does Crude oil do...ignore it totally and actually puked 2 handles in 20mins at one point...funny that!! Needless to say Ruble got pounded like a slut.

Post: #199

Russian 5 year CDS jumped over 50 bps to about 610 bps, the widest since March 2009 as increasingly more are worried about Russia's default risk. CDS is a derivative insurance instrument against default.

Post: #200

http://www.reuters.com/article/2015/01/0...6V20150106

"Brent crude LCOc1 fell as low as $51.23 a barrel on Tuesday, its lowest level since May 2009"

Oil still dropping too. It seems most airlines are planning to re-invest any fuel savings in operational upgrades (for the time being at least) but hopefully if the price stays down for long enough we may see some cheaper airfare in the medium term.