investment tips

Fear a normal US dollar correction

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The US dollar is correcting against gold this morning

Stockhouse has a great piece this morning, Don’t fear a normal gold correction, except that is exactly wrong. Gold doesn’t “correct”. Gold is real money with intrinsic value that has been of great worth for thousands of years. The dollar is a fiat currency with only symbolic value and it is constantly going down in value against real goods like precious metals, oil and food. So if anything, the United States dollar, like all fiat currencies, to the degree that anyone accepts them in exchange for real goods and services, is technically in bubble territory. Here, we see in the inverse Kitco chart, that this morning, the dollar is correcting against gold. This correction will continue with a high degree of volatility (meaning that it won’t be a straight line down), until the US dollar is worth nothing and people will stop attempting to determine the value of gold and other real things in dollar terms.

David Morgan on the value of silver

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This video is over a year old, but I don’t think any of the fundamentals have changed.  There is a funny point in the video when he talks about how he became an adviser to Eric Sprott before formation of Sprott Physical Silver Trust (PSLV).  He says it took them a year to obtain the $1 billion worth of the physical silver which the basis of the PSLV.  On the other hand, he said it took no time at all for SLV to obtain 30 million oz of silver.  He stresses, then, that SLV is great for increasing awareness in silver as an investment and it is fine for trading a silver position, but no one should see it as their basic silver position.

Questrade orders not going to market

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Well, this helps me make a decision about what broker to use:  anybody but Questrade.  I’m on hold with trade desk now 34 minutes.

NOTE to self:  Now that you have the CLN, take all your accounts back to Waterhouse.

The following explanation is from Questrade:

Please be aware due to a technical issue, accounts that traded, deposited, or withdrew funds on Monday may now display incorrect positions and balances. Accounts affected by this issue will have any new or replacement orders reviewed by Questrade’s trade desk; this process will delay the orders from being sent to the market. This issue is expected to be fully corrected by Wednesday morning. If you have any questions please contact Questrade at 1.888.783.7866.

Call the number and be prepared to be on hold.  The orders were not “delayed”; they were not going to market at all.  This is absolutely unacceptable.  I can’t afford to stay at Questrade.  I’ve decided to leave Questrade over the recent breakdown of their web trader platform.  I waited patiently for weeks as the market has plummeted, and today I finally go to market to make a trade and the dumbass platform won’t even take my orders to market.

I read the following at a forum:

 

Jaanu Teene wrote:

Hi sparxtrading,

I’d like to clarify – this issue has not suspended our clients’ ability to close or open positions.

Here’s the full details: due to a technical issue, accounts that traded, deposited, or withdrew funds on Monday may now display incorrect positions and balances. Accounts affected by this issue will have any new or replacement orders reviewed by Questrade’s trade desk. This will not impact your ability to trade. In some cases, it may delay an order being sent to market. This issue is expected to be fully corrected by Wednesday morning.

I’d like to add a few more details:
• If you can see the position, you can place the trade yourself and it will go to broker review
• If you cannot see the position and you want to close it, contact our trade desk.

Our client services are at 1.888.783.7866. The trade desk is at 1.866.980.9590

Regards
Jaanu Teene
Questrade Inc.

Clearly this Jaanu Teene has no idea what she is talking about.  I placed orders that didn’t go to market for over a 45 minutes.  Jaanu Teene:  it’s your job to troll the internet to see what bad things people are saying about Questrade.  Here I am.  Come do damage control here.

“Price is a function of liquidity”: Charles Biderman speaks with Chris Martenson

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“Price is a function of liquidity, having nothing to do with value.”

Charles Biderman recounts how he went bankrupt in 1987 even though he had a positive net value in his real estate investments.  Why, because his banks went bankrupt and his loans were called.  If he had had time to sell his properties, he says, he wouldn’t have had to declare bankruptcy.  This taught him the following:

Price is a function of liquidity, having nothing to do with value.

What does this mean for the investor?  Ultimately, in the real world, fundamentals should eventually win, but the market depends not on that value but on the ability of investors to maintain their liquidity.  Thus, the most liquid players during severe downturns will be able to add value to their portfolios.  The real trick of investing is twofold:  (1) Determining what stocks have a real value; (2) being liquid when the vast majority of other market participants are illiquid–only then can the investor be assured of getting the bargain basement price for an asset.  This means keeping a tight lid on one’s use of leverage.  My policy is to keep leverage below 1:1 debt to equity; and to use only a fraction of the bank loan permitted to me.

Another lesson is perhaps less obvious:  Never invest in the company in which you carry your loans.  If that financial institution goes bankrupt, so will your investment.  So you will be hit with a double whammy.  Say you invest in ABC bank where you have your line of credit which is your funding of last resort for your margin account.  When ABC bank goes bankrupt, then your loan gets called.  At the same time, your portfolio takes a hit because your ABC bank investment has also gone down to zero.  This could result in the margin call to which one is unable to respond, except by liquidating the remaining portfolio at severe losses.

How to deflect attention from Jon Corzine and MF Global: Charge a Canadian bank

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My motto is this:  Get the United States out of Canadian banks and get the Canadian banks out of the United States.

The Commodity Futures Trading Commission (CFTC) has figured out how to deflect attention from Jon Corzine’s stealing client’s segregated money to cover MF Global’s proprietary trading:  Charge a Canadian bank with a mischief called “a wash trading scheme”.  Such a scheme, whatever it is, is apparently illegal; but see if anyone can explain to you why it is wrong in less than five minutes.  But stealing your clients’ segregated funds, which is a very clearly wrong, is something to which the CFTC turns a turn a blind eye. In my view, this is similar to the situation with US expats becoming the target of tax collection efforts, all while buying votes with tax credits from Americans still in the homeland.  It stinks of corruption.  So CFTC attacks a Canadian bank, and that makes it look like it’s really doing something–meanwhile it lets its friends steal billions from their clients.  It stinks with a great malodorous corruption and decay of a once great nation that has now died.  It is the straining of a gnat and the swallowing of the camel.

Now that the Chicago Way has become the American way, I say it is time to pull all our investments out of the United States; Canada’s banks did not heed my repeated warnings (e.g., here) and now RBC will pay the price. Gerald Celente told the Daily Bell:

Daily Bell: How about the CFTC? Are they doing their job of protection and prosecution?

Gerald Celente: Well who’s the head of the CFTC, Gary Gensler? He was one of the lieutenants for Jon ‘the Don’ Corzine when Corzine was head of the Goldman Sachs gang, before he became senator of New Jersey. You get it?

Who’s Obama’s Chief of Staff? Bill Daley, from that wonderful Daley machine in Chicago. Where did he come from? Oh, vice chairman of Morgan Chase. Who was Bush’s treasury secretary? Oh, Henry ‘Frankenstein’ Paulson. Where was he from? He began as the CEO of Goldman Sachs after Jon ‘the Don’ Corzine left. This is the guy who created TAARP and came up with the BS line of ‘too big to fail.’ Him? Yeah, that’s right.

[snip] …

The moneychangers are taking over the temple; you don’t have to go very far to look. It’s right there in front of everybody’s eyes and no one will call a spade a spade. The Rothschilds would be jealous to see what the Goldman Sachs gang, the JP Morgan Chase criminal operation, the Citigroup crooks, the Deutsche Bank bandits and the rest have pulled off.

When the system is corrupt, the regulatory commission will search far and wide for “criminals”.  This US financial regulatory system has allowed the banksters to go free, but takes down little guys like Jonathan Lebed and Charlie Engle.  See the following Chris Martenson’s interview with Gretchen Morgenson, in which they ponder the question why no major banker has gone to jail for the 2008 subprime mortgage fraud that caused the collapse of the world’s economy: