silver speculation
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Binary options traded outside the U. They offer a viable alternative when speculating or hedging, but only if the trader fully understands the two potential and opposing outcomes. These types of options are typically found on internet-based trading platforms, not all of which comply with U.

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Silver speculation

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It implies that there is plenty of the commodity available, or at least that there is no scarcity. Counterfeit Credit. See Inflation: an Expansion of Counterfeit Credit for a more detailed explanation. Currency is the most marketable credit instrument. Marketability refers to the bid-ask spread, and most marketable means the spread of this good is narrower than all others. Like money , currency is used as a medium of exchange. But while money is a commodity, currency is a promise to pay.

Currency can be redeemable for gold, as in the classical gold standard. Currency can be irredeemable, as in the dollar after Currency can be backed, as the dollar today, by assets such as bonds. Or it can be unbacked, as bitcoin. Decarry involves selling at the bid a commodity and buying at the offer a futures contract against it.

For the trade to be profitable, the spot price needs to be higher than the future price i. Deflation is a forcible contraction of counterfeit credit. Duration Mismatch. Duration Mismatch is when a bank borrows using short term loans or bonds, but lends for a longer term. Extinguisher of Debt. That which, when tendered to a creditor, makes the debt go out of existence. It must be a commodity, because as any financial asset is the liability of a counterparty.

Paying with a piece of paper merely shifts the debt to another party, but does not extinguish it. Gold is the most marketable commodity, and hence is the extinguisher of debt in a free market monetary system. Financial Repression. Financial Repression is the use of political measures to gain control over the finances of individuals.

The purpose of such measures is to direct funds to the government that would otherwise flow elsewhere. Such measures often include, but are not limited to:. Capital churn and capital consumption both add to GDP, but really ought to subtract. A proper measure should account for the capital stock, not just income the balance sheet, not just cash flow. GOFO is short for gold forward offer rate, the rate at which gold is lent on a swap basis against US dollars, or the interest rate differential between dollars i.

Gold Interest. In a gold investment, interest is paid in gold rather than dollars. Gold Investment. Gold Investment is the productive deployment of gold capital in to earn more gold. See the lexicon entry on investment and Gold Fixed Income. Gold Investment is the opposite of Gold Speculation which is the act of buying or selling gold based on price movement for more dollars.

Gold-Silver Ratio. Gold-Silver Ratio is the gold price measured in silver. The bid ratio is the amount of silver you would receive if you sold gold on its bid and bought silver on its offer. The offer ratio is the amount of silver you would need to pay if you bought gold on its offer and sold silver on its bid. Gold Speculation. Gold Speculation is the act of buying or selling shorting gold based solely on the expectation of price movement.

In gold speculation, gold is preferred to stocks, bonds, currencies, real estate etc. For more information, see this article and the lexicon entry on speculation. Gold speculation is the opposite of gold investment. Gold Standard. A working Gold Standard is when anyone who wants to, can deposit gold and earn gold interest on it. Gold Yield. Illicit Arbitrage. When one makes a wrongful, though perfectly legal, rake over part of the economy. Examples would be municipalities issuing advanced refunding bonds as well as selling bonds for the sole purpose of buying Treasuries so as to profit from the tax arbitrage.

Those that commit illicit arbitrage are profiteers on a government-created problem: falling interest rates. Inflation is an expansion of counterfeit credit. Interest on Gold. Investment is the act of deploying capital to finance a productive enterprise in exchange for more capital in return. The investor, entrepreneur, and ultimately all of society end up benefitting as a result. See this post for a more detailed explanation. Legitimate Credit. Four criteria are necessary—two of which apply to the lender and two to the borrower.

The lender must know that he is lending, and consent to it. The borrower must have the means to repay, and the intent. All four are missing when the central bank borrows from the people, who think they hold money. Marginal Productivity of Debt. See the article Marginal Productivity of Debt for a more detailed explanation. Marginal Utility. Marginal Utility is the value one places on the next unit of the good compared to the previous. Maturity Transformation. Maturity Transformation is when a bank borrows using short term loans or bonds, but lends for a longer term.

See Duration Mismatch for more information. Money is the most marketable commodity. A corollary to its marketability is that money is the extinguisher of debt. Permanent Backwardation. Permanent Backwardation is the withdrawal of bids denominated in gold for irredeemable government debt paper e. Perverse Incentive. A perverse incentive is often called the unintended consequences of a bad law. The focus should not be on the alleged intentions of the politicians, but of the economic cause and effect.

A bad law—including all monetary policies—offers a perverse incentive. People respond to the incentive offered, and the effect is a perverse outcome. SIFO is short for silver forward offer rate, the rate at which silver is lent on a swap basis against US dollars, or the interest rate differential between dollars i. Silver Investment. Silver Investment is the productive deployment of silver capital to earn more silver capital. Silver Investment is the opposite of Silver Speculation which is the act of buying or selling silver based on price movement for more dollars.

Silver Speculation. Silver Speculation is the act of buying or selling silver based solely on the expectation of price movement. In silver speculation, silver is preferred to stocks, bonds, currencies, real estate etc. Silver speculation is the opposite of silver investment. Speculation is the act of buying or selling shorting an asset solely based upon the expected price movement of that asset.

Capital gains from speculation convert the wealth of one party into the income of another. This is a hidden type of capital consumption. For more information, see this article , this article or this article. Stock to Flow Ratio. Stock to Flow Ratio is the amount of a commodity held in inventories divided by the amount produced annually. It is a measure of abundance. Gold has the highest stock to flow ratio of all commodities and as a result it should never normally remain in backwardation as there is no shortage of gold.

Temporary Backwardation. Temporary Backwardation is when the expiring gold or silver future contract flirts with or even slips into backwardation for a period before expiry. It is distinguished from Permanent Backwardation , which is when all contract months are in backwardation. Unadulterated Gold Standard. Unadulterated Gold Standard is a free market in money, credit, interest, and discount based on the right of the people to hold and use gold coins, and which includes Real Bills and bonds.

See The Unadulterated Gold Standard for a more detailed explanation. Wealth Effect. The wealth effect is when the central bank makes people feel better by pushing down interest rates. This is far more attractive than gold, and probably more attractive than other opportunities in our zero-interest world.

Therefore, the silver carry trade has created many silver contracts. What drives the basis spread? Speculators, when they buy a future, drive up its price just a little bit. This is the inducement to the arbitrager to buy a bar of metal and sell the future to the speculator.

The arbitrager carries metal, to provide a service to the speculator. However, in silver buyers are running at a much more torrid pace. They bid up the price of the futures, which makes it attractive for arbitragers to carry silver and sell them the contracts they desire.

Market participants are trying to front-run a big price move. Due to rumors or gut feel or for whatever reason, they are expecting not only that silver will outperform gold,but that the silver price will rocket to a much higher price. Their frenetic buying of futures has pulled a lot of silver into carry trades.

Maybe hoarders will all of a sudden increase their appetite for silver metal that they will take off the market and bury. If so, the silver futures speculators will be proven right, and they will make a lot of dollars money is a different story entirely. I would not recommend that anyone bet his hard-earned money on a maybe. The data—both open interest and basis—show that the buying in the silver market is primarily speculators.

They cannot sustain a higher price forever. They are merely trying to front run a higher price driven by hoarders. When that happens, watch out below. If the price overshoots as far to the downside as it is now stretched to the upside, we could see silver with a 12 handle. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics.

He lives with his wife near Phoenix, Arizona. You may have noticed that our header carries ab black flag. This is due to the recent passing of the main author of the Acting Man blog, Heinz Blasnik, under his nom de plume 'Pater Tenebrarum'. We want to thank you for following his blog for meanwhile 11 years and refer you to the 'Acting Man Classics' on the sidebar to get an introduction to his way of seeing economics.

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Deduction minus the technical analysis. I will keep some fire-power available for this one. I just have a simple question: where did you get 16 USD price from? Thank you. You must be logged in to post a comment. Reviewed by Lew Rockwell. Now Available at Amazon. We use cookies to ensure that we give you the best experience on acting-man. By continuing to browse this site you give consent for cookies to be used. Big Surprise: The Fed is Dovish ».

Gold and Silver Speculation. April 10, Author Keith Weiner.