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Question: Will you support Gavin's new block size limit hard fork of 8MB by January 1, 2016 then doubling every 2 years?
1.  yes
2.  no

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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2009961 times)
sidhujag
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September 30, 2014, 12:37:15 AM
 #13001

Although they can be physically delivered most of the time they are not... infact I tried to deal with Soft Lumber before and even got on a call with a trader in CBE and he explained that if you want physical delivery you have to flag it as such prior taking the trade.. kinda stupid if you ask me.. that you have to explicitely tell the world hey this order is for physical delivery!.. shows how far we let ourselves get with bots/arbs and quant traders. Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

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rocks
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September 30, 2014, 12:50:25 AM
 #13002

OK, I'll bite. I thought I remembered reading a long time ago that a good portion of GLD's holdings were paper products and not bars. But after a quick search it seems that is incorrect and most of GLD's holdings is allocated gold with HSBC.

Still "allocated gold at HSBC" isn't going to buy you the protection associated with physical gold in a crisis, which is the whole reason to hold some gold. For example, in the MF Global blowup customers with allocated gold with specific physical bars and serial numbers in their name, lost around 28%. The "allocated gold" distinction meant nothing in the end. I have less trust in HSBC than MF Global frankly. Also, MF Global was a small fish and they did this, what do you think is going to happen to "allocated gold" in a real crisis?

http://online.barrons.com/news/articles/SB50001424052748703856804577098740322633760?mod=googlenews_wsj?mod=googlenews_barrons

I'm now trying to remember why PHYS was differentiated, or was it just a open ended vs close ended difference?
smooth
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September 30, 2014, 12:53:37 AM
 #13003

Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

This is true and it is hard to imagine how any trading market could be different. Not allowed to close out a position?

The important point is though, if you feel physical is worth more than the offered price for whatever reason, you have the option to take it.

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September 30, 2014, 01:20:56 AM
 #13004

this is about the most bullish Bitcoin sign we could have; David Birch bullish on Ethereum:

https://twitter.com/dgwbirch/status/516717611141574656
sidhujag
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September 30, 2014, 01:22:52 AM
 #13005

Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

This is true and it is hard to imagine how any trading market could be different. Not allowed to close out a position?

The important point is though, if you feel physical is worth more than the offered price for whatever reason, you have the option to take it.



I dont think you can like i said unless you tell the exchange before.. They want to know your intentions beforehand although by law you can always request delivery

★☆★Syscoin - Decentralized Marketplace and Multisig Platform
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majamalu
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September 30, 2014, 01:38:16 AM
 #13006

this is about the most bullish Bitcoin sign we could have; David Birch bullish on Ethereum:

https://twitter.com/dgwbirch/status/516717611141574656

 Grin   I'm waiting for the first "Bitcoin is dead" title to go all in.

http://elbitcoin.org - Bitcoin en español
http://mercadobitcoin.com - MercadoBitcoin
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September 30, 2014, 01:40:38 AM
 #13007

Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

This is true and it is hard to imagine how any trading market could be different. Not allowed to close out a position?

The important point is though, if you feel physical is worth more than the offered price for whatever reason, you have the option to take it.



I dont think you can like i said unless you tell the exchange before.. They want to know your intentions beforehand although by law you can always request delivery

The option being there ensures that prices are kept in line (by professionals if nothing else).

Since it is 100 ounces and roughly 120K USD per contract, a little paperwork is not out of line. The exchange mostly wants to know is that you can actually pay for and physically take delivery, to avoid broken settlements.


adamstgBit
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September 30, 2014, 01:56:37 AM
 #13008

this is about the most bullish Bitcoin sign we could have; David Birch bullish on Ethereum:

https://twitter.com/dgwbirch/status/516717611141574656

 Ethereum Grin

Trader Steve
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September 30, 2014, 02:36:43 AM
 #13009

Circle is great news for those who don't value privacy, don't care about middlemen, and don't worry about counterparty risk.
https://www.reddit.com/r/Bitcoin/comments/2hujcf/circle_is_great_news_for_those_who_dont_value/
NewLiberty
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September 30, 2014, 02:43:58 AM
 #13010

Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

This is true and it is hard to imagine how any trading market could be different. Not allowed to close out a position?

The important point is though, if you feel physical is worth more than the offered price for whatever reason, you have the option to take it.



I dont think you can like i said unless you tell the exchange before.. They want to know your intentions beforehand although by law you can always request delivery

The option being there ensures that prices are kept in line (by professionals if nothing else).

Since it is 100 ounces and roughly 120K USD per contract, a little paperwork is not out of line. The exchange mostly wants to know is that you can actually pay for and physically take delivery, to avoid broken settlements.

Legal Tender law allows the settlement of any debt in fiat.  Most of the ETF filings also make that explicit.  Make no mistake, they never have to give you gold.

Quote from: Language from GLD powershares ETF annual report
In the normal course of its business, the Fund is party to financial instruments with off-balance sheet risk. The term “off-balance sheet risk” refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in a future obligation or loss. The financial instruments used by the Fund are commodity futures, whose values are based upon an underlying asset and generally represent future commitments which have a reasonable possibility to be settled in cash or through physical delivery. The financial instruments are traded on an exchange and are standardized contracts.

They can opt deliver cash instead, at their choice.

Another example:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/12/7_Jim_Rickards_-_Swiss_Bank_Client_Denied_His_$40_Million_in_Gold.html

FREE MONEY1 Bitcoin for Silver and Gold NewLibertyDollar.com and now BITCOIN SPECIE (silver 1 ozt) shows value by QR
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cypherdoc
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September 30, 2014, 02:51:47 AM
 #13011

Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

This is true and it is hard to imagine how any trading market could be different. Not allowed to close out a position?

The important point is though, if you feel physical is worth more than the offered price for whatever reason, you have the option to take it.



I dont think you can like i said unless you tell the exchange before.. They want to know your intentions beforehand although by law you can always request delivery

The option being there ensures that prices are kept in line (by professionals if nothing else).

Since it is 100 ounces and roughly 120K USD per contract, a little paperwork is not out of line. The exchange mostly wants to know is that you can actually pay for and physically take delivery, to avoid broken settlements.

Legal Tender law allows the settlement of any debt in fiat.  Most of the ETF filings also make that explicit.  Make no mistake, they never have to give you gold.

there's no way any of the ETF's will allow settlement for retail investors with the underlying, be it gold or BTC.
BlindMayorBitcorn
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September 30, 2014, 03:06:18 AM
 #13012

What do you think will change following the ETF? Less crazy price swings?

Forgive my petulance and oft-times, I fear, ill-founded criticisms, and forgive me that I have, by this time, made your eyes and head ache with my long letter. But I cannot forgo hastily the pleasure and pride of thus conversing with you.
cbeast
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Let's talk governance, lipstick, and pigs.


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September 30, 2014, 03:10:08 AM
 #13013

What do you think will change following the ETF? Less crazy price swings?
Crazy price swings are what Wall Street is all about. If they want stability, they should invest in gravity.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
smooth
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September 30, 2014, 03:12:01 AM
 #13014


"I Obviously can’t mention the names of the individuals or the banks involved"

Seriously?

The ETF may also be trading cash-settled futures (or god knows what else), but that doesn't apply to the CME/COMEX gold futures mentioned above. You can read the rules above, I linked to it. You have to click through a few pages.

Also, the language you quoted might be standardized across different commodity ETFs. Some futures definitely settle in cash, just not the gold futures.

But as correctly noted above, they are normally closed out through trading. And yes in a crisis all bets are off.
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September 30, 2014, 03:17:11 AM
 #13015

What do you think will change following the ETF? Less crazy price swings?

here's the daily first year chart of GLD inception 11/29/04:

BlindMayorBitcorn
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September 30, 2014, 03:27:01 AM
 #13016

What do you think will change following the ETF? Less crazy price swings?
Crazy price swings are what Wall Street is all about. If they want stability, they should invest in gravity.

 Cheesy

Forgive my petulance and oft-times, I fear, ill-founded criticisms, and forgive me that I have, by this time, made your eyes and head ache with my long letter. But I cannot forgo hastily the pleasure and pride of thus conversing with you.
rocks
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September 30, 2014, 04:10:50 AM
 #13017

Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

This is true and it is hard to imagine how any trading market could be different. Not allowed to close out a position?

The important point is though, if you feel physical is worth more than the offered price for whatever reason, you have the option to take it.



I dont think you can like i said unless you tell the exchange before.. They want to know your intentions beforehand although by law you can always request delivery

The option being there ensures that prices are kept in line (by professionals if nothing else).

Since it is 100 ounces and roughly 120K USD per contract, a little paperwork is not out of line. The exchange mostly wants to know is that you can actually pay for and physically take delivery, to avoid broken settlements.

Legal Tender law allows the settlement of any debt in fiat.  Most of the ETF filings also make that explicit.  Make no mistake, they never have to give you gold.

Quote from: Language from GLD powershares ETF annual report
In the normal course of its business, the Fund is party to financial instruments with off-balance sheet risk. The term “off-balance sheet risk” refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in a future obligation or loss. The financial instruments used by the Fund are commodity futures, whose values are based upon an underlying asset and generally represent future commitments which have a reasonable possibility to be settled in cash or through physical delivery. The financial instruments are traded on an exchange and are standardized contracts.

They can opt deliver cash instead, at their choice.

Another example:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/12/7_Jim_Rickards_-_Swiss_Bank_Client_Denied_His_$40_Million_in_Gold.html

COMEX Futures have something called a "Force Majeure" clause. It essentially means that if there are events outside of their control, then alternative delivery or settlement is possible. Here is one example where they had to deny delivery in one location and move delivery to another. Yes, this was a reasonable situation and very reasonable resolution.
http://www.goldcore.com/goldcore_blog/cme-declares-force-majeure-due-%E2%80%9Coperational-limitations%E2%80%9D-nyc-gold-depository

The problem is what is "reasonable" seems to have a changing definition, especially in times of crisis. Just look at the last financial blowup when the capital structure and legal contract was blatantly thrown out in the GM bailout to screw secured creditors in favor of unsecured unions. Those actions were completely illegal, but that is OK "because crisis" "because evil rich people" (never mind that the creditors screwed were pension funds for middle class workers).

I don't subscribe to some gold bug imaginations that there will be a physical run anytime soon that breaks COMEX, at the same time it is very likely if COMEX does run into issues that settlement in dollars will be decreed as satisfactory "because crisis". Again just go to any MF Global allocated gold holder ask them what they received, the answer will be a) not their gold, b) not any gold, c) something other than gold and d) something less than the value of their allocated gold. The precedents are already set.
smooth
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September 30, 2014, 04:27:03 AM
 #13018

The problem is what is "reasonable" seems to have a changing definition, especially in times of crisis.

Yes I said in crisis all bets are off. That should really be quite obvious. Imagine the exchange itself (or its IT operation) gets blown up and records either can't be found or need to be retrieved from some sort of disaster recovery procedure. Things might very well not go according to plan.

As far as ETFs (gold, bitcoin, whatever) they really aren't intended to be a direct and perfect substitute for physical ownership, they are a trading vehicle that tracks some NAV. The same can be said for futures, though they are somewhat less removed from the physical asset, but still not 100% equivalent.

My original gripe with your statement (without qualification) was that COMEX gold contracts are settled in dollars, which is generally false outside of a crisis. They might settle in dollars under some unusual circumstances, but normally not. Other futures certainly are, so I take this to be a simple error. 



sidhujag
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September 30, 2014, 04:27:28 AM
 #13019

Most contracts are closed out without delivery because both sides agree, unless the guy wants physical.. then the exchange has "extra" paper work to do to sort you out.

This is true and it is hard to imagine how any trading market could be different. Not allowed to close out a position?

The important point is though, if you feel physical is worth more than the offered price for whatever reason, you have the option to take it.



I dont think you can like i said unless you tell the exchange before.. They want to know your intentions beforehand although by law you can always request delivery

The option being there ensures that prices are kept in line (by professionals if nothing else).

Since it is 100 ounces and roughly 120K USD per contract, a little paperwork is not out of line. The exchange mostly wants to know is that you can actually pay for and physically take delivery, to avoid broken settlements.

Legal Tender law allows the settlement of any debt in fiat.  Most of the ETF filings also make that explicit.  Make no mistake, they never have to give you gold.

Quote from: Language from GLD powershares ETF annual report
In the normal course of its business, the Fund is party to financial instruments with off-balance sheet risk. The term “off-balance sheet risk” refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in a future obligation or loss. The financial instruments used by the Fund are commodity futures, whose values are based upon an underlying asset and generally represent future commitments which have a reasonable possibility to be settled in cash or through physical delivery. The financial instruments are traded on an exchange and are standardized contracts.

They can opt deliver cash instead, at their choice.

Another example:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/12/7_Jim_Rickards_-_Swiss_Bank_Client_Denied_His_$40_Million_in_Gold.html

COMEX Futures have something called a "Force Majeure" clause. It essentially means that if there are events outside of their control, then alternative delivery or settlement is possible. Here is one example where they had to deny delivery in one location and move delivery to another. Yes, this was a reasonable situation and very reasonable resolution.
http://www.goldcore.com/goldcore_blog/cme-declares-force-majeure-due-%E2%80%9Coperational-limitations%E2%80%9D-nyc-gold-depository

The problem is what is "reasonable" seems to have a changing definition, especially in times of crisis. Just look at the last financial blowup when the capital structure and legal contract was blatantly thrown out in the GM bailout to screw secured creditors in favor of unsecured unions. Those actions were completely illegal, but that is OK "because crisis" "because evil rich people" (never mind that the creditors screwed were pension funds for middle class workers).

I don't subscribe to some gold bug imaginations that there will be a physical run anytime soon that breaks COMEX, at the same time it is very likely if COMEX does run into issues that settlement in dollars will be decreed as satisfactory "because crisis". Again just go to any MF Global allocated gold holder ask them what they received, the answer will be a) not their gold, b) not any gold, c) something other than gold and d) something less than the value of their allocated gold. The precedents are already set.

This is why im excited by decentralized exchanges... Will be interesting to see what patrick byrne announces at inside bitcoin

★☆★Syscoin - Decentralized Marketplace and Multisig Platform
Pay with Bitcoin, ZCash and many more
For more visit Syscoin.org  ★☆★
rocks
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September 30, 2014, 04:45:41 AM
 #13020

The problem is what is "reasonable" seems to have a changing definition, especially in times of crisis.

Yes I said in crisis all bets are off. That should really be quite obvious. Imagine the exchange itself (or its IT operation) gets blown up and records either can't be found or need to be retrieved from some sort of disaster recovery procedure. Things might very well not go according to plan.

As far as ETFs (gold, bitcoin, whatever) they really aren't intended to be a direct and perfect substitute for physical ownership, they are a trading vehicle that tracks some NAV. The same can be said for futures, though they are somewhat less removed from the physical asset, but still not 100% equivalent.

My original gripe with your statement (without qualification) was that COMEX gold contracts are settled in dollars, which is generally false outside of a crisis. They might settle in dollars under some unusual circumstances, but normally not. Other futures certainly are, so I take this to be a simple error. 

If there is one thing we can all hopefully agree on, it is the understanding that during the next crisis (whenever it happens) the rules will be changed/re-interpreted to protect the bankers and politicians at the expense of everyone else.
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