Research

How we think about gold and silver

Gold Supply and Demand

When it comes to analyzing precious metals, the right methodology isn’t immediately obvious. Fundamental analysis in stocks and bonds is well understood. One can discount cash flows, examine the balance sheet, review the income statement, look at growth prospects and arrive at a fundamental value for the company. And there is a sophisticated ratings system […]

Interest on Gold Is the New Tempest in a Teapot

Zero Hedge published an article on Canadian Bullion Services (CBS) last week. Other sites ran similar articles. The common thread through these articles, and in the user comments section, is that CBS is committing criminal fraud. Or, if not, then it’s a conspiracy by the Canadian government to confiscate gold. Terms like fractional reserve and […]

Selling Low and Buying High: Hedging by the Gold Miners Part II

Gold Miners Buying High and Selling Low

In Part I, I made several points. First, that in the last gold bear market, miners capitulated after prices were low and falling for a long time. Then they sold massive amounts of their future production forward. Years into the subsequent bull market, they capitulated again, this time buying back the rights to their own […]

Gold, Redeemability, Bitcoin, and Backwardation

Gold, Redeemability, Bitcoin, and Backwardation

I recently released a video about the Internet-based currency, Bitcoin. I asked the question: is Bitcoin money? In brief, I said no it’s an irredeemable currency. This generated some controversy in the Bitcoin community. I took it for granted that everyone would agree that money had to be a tangible good, but it turns out […]

Fractional Reserve Banking

Fractional Reserve Banking

There is an old erroneous view of fractional reserve banking. “Naturally, all fractionally reserved banks are de facto insolvent at all times…” The Acting Man blog is usually very good, but it published an article by Pater Tenebrarum containing this comment (http://www.acting-man.com/?p=6781).  If there is a weakness in Austrian School thinking surely fractional reserve banking […]