Correlation Economics Backup

As Bitcoin crashes another 10% (edit: now 50%) below $1000/Bitcoin again, maybe it's time to prepare a "Peter Schiff Was Right" video for Bitcoin. Bitcoin crash

The ETF outflows keep progressing, but this time at a slower pace. Half the pace we saw begin 2013. This should at least support gold prices going forward. Chart 1 The most obvious reason is because of the low premiums in China (Chart 2). There is no arbitrage opportunity anymore today, while in May 2013 we had a higher premium in China. So at that time they could take delivery on GLD and sell it to the Chinese. Today it's more difficult. Chart 2 So why do we still see these ETF outflows in GLD? We have these bears in the gold market that are responsible for this. Most ETF's are loss-making due to the declining gold price and fuel the ETF outflows.  But now that the gold price kind of stabilized at $1200/ounce, we should see a stable ETF stock going forward. We also see that shorts are covering, which is also stabilizing the ETF outflows. The key is China buying increasing amounts of physical gold and that should support prices. There is no way that the ETF outflows can continu...

Today, China announced a war on Bitcoin . Chinese bank deposits shouldn't be allowed to be transferred to Bitcoin as Bitcoin isn't a real currency. I shouldn't tell you how important this is. This means China is viewing Bitcoin as its enemy and encouraging its citizens not to believe in it. Instead they probably want every Chinese to have gold in its possession. We saw a 20% drop instantly when the news came out and rightly so. Because, when China does this, America and the whole world will follow in its footsteps. They basically made Bitcoin illegal. The normal people like me, who don't want to do all this downloading of programs and all, want "comfort". Which means, I want to just transfer my money from the bank to a provider like Mt. Gox. But if this is not possible anymore, I lose this "comfort" in trading. Do you really think that people will still want Bitcoins if the government and their banks turn against you? And we're not even talking a...

If you're planning on buying a Bitcoin, please choose a big site as most of these small "dark" sites will vanish from one day to another. $44 million in Bitcoins just vanished. This is a lot of money, it's as big as the entire market cap of Namecoin. Dark net market Sheep Marketplace has shut down after $5.3m (£3.3m) in bitcoins was stolen from the site. The site shut down over the weekend and visitors today see a notice blaming the theft for the closure. It said the theft was carried out by a vendor on Sheep who exploited a bug in the site's software to steal the virtual cash. Sheep Marketplace rose to prominence after the FBI shut down the illegal Silk Road marketplace in October.

We have a new record in silver premiums at Shanghai and a near record at APMEX silver dealer. How is it possible that this can go on this long?

Sometimes, if I don't have any ideas anymore what to buy, I use the stock screener . What you want to do is filter on 4 attributes: market cap, P/E, dividend yield and percentage change. 1) Market Cap: do not choose small companies as they are mostly fraudulent or don't have sustainable earnings. Don't choose big companies because these are not volatile enough to get fast profits from. I'd filter between 200 million and 4 billion. 2) P/E ratio: choose the companies with the lowest P/E ratio, these companies are dirt cheap while still having earnings. Cheap is below P/E of 5. But do not choose below P/E of 2 because those are mostly companies that are going bankrupt or have bad growth. 3) Dividend yield: always choose companies that have dividends, because these companies have real earnings and can prove they have sustainable earnings to reward investors. The higher the better of course, but don't push it above 7% as those companies probably don't have the money ...

In another blog post I said the leverage of paper gold to physical gold at the COMEX was at record highs, but now we get another new record high. Open interest was 397590 or 39759000 ounces in total. Registered stock is 590816 ounces (which is an all time low). That's a leverage of 39759000/590816 = 67. This is up from the last time when it was 56. I wonder when it will break. COMEX gold stock Leverage in Gold Increasingly more people try to short gold down, but it seems they are not really succeeding lately. If people really start buying it, they won't find it as everything went to Asia.