Moon Man Posted November 26, 2004 Report Share Posted November 26, 2004 ABOUT PREMIUMS If you realise that the gold we- as goldbugs- buy is not consumed, then one can conclude that the gold game is one of premiums. Simply, because the gold we buy will hit the market again in the future. Therefore, when we say gold is going up, we bascially argue that it's time to build a bubble, or premium into gold issues. Furthermore, when people argue that it makes no sense to pay a premiums, why pay a premium for the ounces of Wheaton, compared to let's say Kinross's. Some miners, when measured in terms of optional value, trade at discounts to peers. Why? Nobody knows for sure. In fact, in a more broader sense, speculation is all about premiums and discounts. How many companies trade at their precise book value? Why do some companies trade at higher p/e ratios than others? Why do so many ETF's trade with premiums or discounts? To understand the world of premiums is as complex as understanding the very nature of humans, and how they perceive the future. It is fairly easy to calculate how stockmarkets should trade based on intrinsic values. However, when future expectations are included, intrinsic value becomes less prevalent in favor for future expectations. Premiums or discounts therefore represent an inclusion of a future expectation, measured against, and added to an intrinsic value. Link to comment Share on other sites More sharing options...
aureleus Posted November 26, 2004 Report Share Posted November 26, 2004 5-min Chart. Found some support here, lets see what the reaction will be like. Link to comment Share on other sites More sharing options...
aureleus Posted November 26, 2004 Report Share Posted November 26, 2004 ABOUT PREMIUMS If you realise that the gold we- as goldbugs- buy is not consumed, then one can conclude that the gold game is one of premiums. Simply, because the gold we buy will hit the market again in the future. Therefore, when we say gold is going up, we bascially argue that it's time to build a bubble, or premium into gold issues. Furthermore, when people argue that it makes no sense to pay a premiums, why pay a premium for the ounces of Wheaton, compared to let's say Kinross's. Some miners, when measured in terms of optional value, trade at discounts to peers. Why? Nobody knows for sure.? In fact, in a more broader sense, speculation is all about premiums and discounts. How many companies trade at their precise book value? Why do some companies trade at higher p/e ratios than others? Why do so many ETF's trade with premiums or discounts? To understand the world of premiums is as complex as understanding the very nature of humans, and how they perceive the future. It is fairly easy to calculate how stockmarkets should trade based on intrinsic values. However, when future expectations are included, intrinsic value becomes less prevalent in favor for future expectations. Premiums or discounts therefore represent an inclusion of a future expectation, measured against, and added to an intrinsic value. <{POST_SNAPBACK}> There is no such thing as intrinsic value. As such, your second paragraph should be scrapped. Considering that you define money in terms of premiums, your first paragraph should be scrapped as well. Prices are an expression of the valuations of the trading partners at the time of transaction. Sometimes, certain traded objects are related to other tradable objects (based on certain physical/objective characterics). Nota Bene: "related" does not mean "equal". In comparing the prices of related objects, traders speak of premiums or discounts. These terms arise by defining an object as the standard and relating the other objects and their respective prices to this standard. Some traders dislike buying these "related objects" if the price differential to the defined standard is too great. This is based on the truism that a second layer of correct anticipation is necessary: anticipating future price development of standard, and anticipating development of price differential. Under no circumstances should this talk of premiums or discounts be misconstrued as being some value added or substracted from some "intrinsic value". As to the talk of money in terms of premiums, I must ask: premium to what? Money is the generally used medium of exchange, secondary media of exchange are those objects used in indirect transactions. Their price in terms of other goods is based on valuations, i.e. its relative capacity to be used as means to achieve ends. No need to speak of premiums or consumption. regards Link to comment Share on other sites More sharing options...
Moon Man Posted November 26, 2004 Report Share Posted November 26, 2004 There is no such thing as intrinsic value. As such, your second paragraph should be scrapped. Considering that you define money in terms of premiums, your first paragraph should be scrapped as well. Maybe, but why did we invent the word in the first place...why do economists use this around the world.... Prices are an expression of the valuations of the trading partners at the time of transaction. Sometimes, certain traded objects are related to other tradable objects (based on certain physical/objective characterics). Nota Bene: "related" does not mean "equal". In comparing the prices of related objects, traders speak of premiums or discounts. These terms arise by defining an object as the standard and relating the other objects and their respective prices to this standard. You are specifying the term intrinsic value according your own intrepratation. I can't and wish not to argue with that...... Some traders dislike buying these "related objects" if the price differential to the defined standard is too great. This is based on the truism that a second layer of correct anticipation is necessary: anticipating future price development of standard, and anticipating development of price differential. Some traders like it some don't. But premiums and discounts are simply reality... Under no circumstances should this talk of premiums or discounts be misconstrued as being some value added or substracted from some "intrinsic value". Against what do you measure it then? If you don't wish to define it as such, what do call the current premium of CEF relative to the gold price? The argument is not about the definiton of intrinsic, but rather whether premiums/discounts are a reality in the world of speculation. Link to comment Share on other sites More sharing options...
aureleus Posted November 26, 2004 Report Share Posted November 26, 2004 Maybe, but why did we invent the word in the first place...why do economists use this around the world.... You are specifying the term intrinsic value according your own intrepratation. I can't and wish not to argue with that...... Some traders like it some don't. But premiums and discounts are simply reality... Against what do you measure it then? If you don't wish to define it as such, what do call the current premium of CEF relative to the gold price? The argument is not about the definiton of intrinsic, but rather whether premiums/discounts are a reality in the world of speculation. <{POST_SNAPBACK}> I am stressing the difference between valuations, prices and physical characteristics. Prices and physical characterics can be measured and objectified and as such are cardinal and open to comparison. Valuations are subjective, are ordinal and only open to comparison on intra-individual basis. I am not disputing that certain objects are comparable based on physical standards and that their price differentials can be called "premiums". But these terms are only indirectly related to valuations and the term "intrinsic valuation" is wrong and misleading at best. By using the term "intrinsic value" you are mixing valuations and prices and ascribing an objective value to objects. I do not know why most economists are doing the same. Supposedly this flaw was overcome in the "marginal revolution" of 1870, but apparantly not. A better term would have been "subjective valuation revolution", which would have applied to Menger alone, and not to the founders of neoclassical economics, i.e. Jevons and Walras. The relevance of this discussion for goldbugs concerns the often heard of "intrinsic value" of gold, which is non-existant. Basing investment decisions on false theory is dangerous to your financial health. Gold cannot be printed, fiat money can be printed, and currently government will probably increase the print rate, thereby reducing the price of fiat money in terms of gold (all other things being equal). This and similar theorems should be the basis of gold investment decision, not false application of any objective value to gold. regards Link to comment Share on other sites More sharing options...
Moon Man Posted November 26, 2004 Report Share Posted November 26, 2004 I am stressing the difference between valuations, prices and physical characteristics. Prices and physical characterics can be measured and objectified and as such are cardinal and open to comparison. Valuations are subjective, are ordinal and only open to comparison on intra-individual basis. The only thing I was suggesting is that the markets do not obey enitrely to intrinisic measures of value. (book value, cash flow, etc) You are mixing valuations and prices and ascribing an objective value to objects. I do not know why most economists are doing the same. Supposedly this flaw was overcome in the "marginal revolution" of 1870, but apparantly not. A better term would have been "subjective valuation revolution", which would have applied to Menger alone, and not to the founders of neoclassical economics, i.e. Jevons and Walras. Tell me where, I mix it up? The relevance of this discussion for goldbugs concerns the often heard of "intrinsic value" of gold, which is non-existant. Basing investment decisions on false theory is dangerous to your financial health. Gold cannot be printed, fiat money can be printed, and currently government will probably increase the print rate, thereby reducing the price of fiat money in terms of gold (all other things being equal). This and similar theorems should be the basis of gold investment decision, not false application of any objective value to gold. <{POST_SNAPBACK}> I never argued for an intrinisic value of gold. I said that the premium of CEF relative to the underlying commodity value (something I defined as intrinsic value) might not be a reason not to trade it. Link to comment Share on other sites More sharing options...
aureleus Posted November 26, 2004 Report Share Posted November 26, 2004 The only thing I was suggesting is that the markets do not obey enitrely to intrinisic measures of value. (book value, cash flow, etc) Tell me where, I mix it up? I never argued for an intrinisic value of gold. I said that the premium of CEF relative to the underlying commodity value (something I defined as intrinsic value) might not be a reason not to trade it. <{POST_SNAPBACK}> You use e.g. the term "precise book value". Here again, there is no such thing. Book value is the valuation of an anal cyst or company management. Using this as basis and taking stock prices and issuance you arrive at a difference to "intrinsic value". But the term "intrinsic" implies that the value lies within the company, whilst in actual fact you are comparing the valuation of the anal cyst/management to prices and physical characteristics. But this is problematic, as I have already explained (valuations are only open to intra-individual analysis). Re intrinsic value of gold, that is correct, you never said that. Yet I always speak out when the term pops up, as it is commonly used by others in connection with gold. As I said, at best misleading. Link to comment Share on other sites More sharing options...
Moon Man Posted November 26, 2004 Report Share Posted November 26, 2004 Book value is a meassure all accredited anal cysts use, and intrinsic value too. If you have deeper thoughts as to why these would be elusive measures, I'd be interested to hear them, but not in the form of criticism. Having said that, I must say you certainly appear as someone knowledgeable in the field of economics. Link to comment Share on other sites More sharing options...
aureleus Posted November 26, 2004 Report Share Posted November 26, 2004 Book value is a meassure all accredited anal cysts use, and intrinsic value too. If you have deeper thoughts as to why these would be elusive measures, I'd be interested to hear them, but not in the form of criticism. Having said that, I must say you certainly appear as someone knowledgeable in the field of economics. <{POST_SNAPBACK}> I critize accredited anal cysts in the same way, for using incorrect / misleading / sloppy terms. These anal cysts speak of intrinsic value, investors start thinking that the value is in the company and suddenly "poof", they become enron'd, because they did not understand that this "intrinsic value" was simply the valuation of an anal cyst. Same applies to the sloppy use of book value, although here at least the construct / the term is valid - if one is aware of the restrictions. This may all seem like too fine a distinction, but a lot of evil occurs by washing over the distinctions between valuations, prices and physical characteristics. Criticize I shall, if I think that errors in reasoning are made. If you feel attacked personally, then I apologize - that is never my intention. regards Link to comment Share on other sites More sharing options...
Moon Man Posted November 26, 2004 Report Share Posted November 26, 2004 Aureleus, I was making a point, and you started to argue the definitions I used. You never replied to the real issue. In fact, I argued that valuations are relative and never absolute. The argument was whether premiums on top of intrinsic measures, in the tradional sense of the word, are a reason to avoid certain investments. You can criticise, and I can see that as a passion to convey your views. However, people tend to be a lot more willing listen to you when you approach them less passionetly. Communicating your ideas, something I'm not terribly good at either, makes them often more perceptive to others. Is my impression at least. Take care. Link to comment Share on other sites More sharing options...
Goldilocks Posted November 26, 2004 Report Share Posted November 26, 2004 Does CZN have an American counterpart that we Hegemonic bastards can trade? Link to comment Share on other sites More sharing options...
Guest Posted November 26, 2004 Report Share Posted November 26, 2004 Canadian Zinc = CZICF on the BBs Link to comment Share on other sites More sharing options...
orvack Posted November 26, 2004 Report Share Posted November 26, 2004 Does CZN have an American counterpart that we Hegemonic bastards can trade? <{POST_SNAPBACK}> I didn't know about the BB one. Why wouldn't you buy on the TSX? http://www.canadianzinc.com Link to comment Share on other sites More sharing options...
Charmin Posted November 26, 2004 Author Report Share Posted November 26, 2004 did that little spring hold on the Euro in the 1.319 area? Link to comment Share on other sites More sharing options...
Guest Posted November 26, 2004 Report Share Posted November 26, 2004 I'm not able to trade Canadians directly... so the BBs simply represent the actual Canadian shares that my broker buys for my account Link to comment Share on other sites More sharing options...
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