Risk of EU introducing capital controls?

Discussion in 'Economics' started by Ghost of Cutten, May 18, 2010.

  1. It's clear that the main EU players (Merkel, Sarkozy etc) are anti-capital and have no concern at all for individual liberties, and have various paranoid beliefs about the roles of markets and speculators. With the Euro at 1.21, still above its initial launch price from the late 90s, and still above its average price since inception, and not in any way undervalued on PPP measures, they are panicking and banning short sales etc.

    How will they react if the Euro falls to parity, or back to the all-time low of 0.83? I suspect there is a chance they might panic and look to introduce capital controls, a bit like Venezuela and other anti-capitalist countries of that ilk. What do you think the chances are?
  2. A big bank here just limited the purchases of gold to 25 ounces per family (not even per person!) to avoid 'speculation' so they say.

    Sad state of affairs really.
  3. By the Way, if I may, GoC...

    You are bullish on precious metals right...

    Yet you disagree with the diabolisation of naked shorting...

    Does that mean you have no problem at all with Wall Street giants shorting the metals with gold and silver they probably don't have?

    You don't feel they are in a way stealing from you?

    Does this equals capitalism in your view or do you think there is more to it?

  4. I'm bullish metals also, so allow me to retort. ;)

    I have no problem with anybody naked shorting gold. I have not purchased all I plan to, so I would actually love it if the price is artificially kept low for as long as possible.

    Now if metal prices are in fact artifically low, and banks / gov't / whoever keeps prices artifically low forever, well then that's not really artificial. That's the price. I purchased an asset that just moves sideways in price, no big deal.

    But let's say catastrophe strikes and the Shadowy Forces that are keeping gold prices down suddenly go belly up or are overthrown or voted out or whatever. Artificial constraints are suddenly removed and the prices explodes to the upside. Suddenly I'm rich, and that will help cover the losses and ease the pain of strife elsewhere in my portfolio as markets go topsy turvy.
  5. Not only do I have no problem with it, I encourage it, because if gold goes much higher then naked shorts will get margin calls and will have to cover at higher prices, creating additional demand which will create even more profits for me.

    "Stealing" implies they are taking something I own. But if I buy gold and take delivery, then I have it there - no bank is taking it from me. And I don't have any "right" to a price - if two people want to sell 1 oz of gold for $1, that's their right to do so. OFC I would buy as much as I could if it was offered down there, but I have no grounds to complain if that's where people want to trade it. You seem to think that somehow you have a right to expect an asset to trade at a price you want - I'm not sure where you get that idea from. A free market means one where the price is whatever two people agree to exchange it at.

    Note that naked shorting of gold was at its heaviest around $250-300, right at the bottom of the bear market. It wasn't a problem then and it isn't one now. If naked shorting allowed manipulation of prices, then JP Morgan etc would make infinite profits because they would just naked short infinite quantities of commodities they don't own until the price went to $1. They can't do that, therefore naked shorting can't be done in infinite size and can't manipulate the price over the longer-term.
  6. Your gold will be either confiscated or forcibly-repriced before you'll be able to do anything particularly splendid with it.
  7. How is it possible to "naked short" a futures contract?

    The outstanding volume of any one futures contract represents something like 20 TIMES the total physical underlying in existence. That's why the vast majority of futures are cash-settled.

    Thus, most futures are "naked shorted" with no intent to deliver.
  8. Hit the nail on the head. Actually, they have no paranoid beliefs, it is their advisors that have them, both are puppets controlled by a few oligarchs in Europe who are opposed to printing money and instead are thinking of how they will control the masses when they get hungry.
  9. No it won't, because my gold is not in the EU.
  10. Some of us are just begging for them to try to reprice gold. I would mortgage my house to the hilt, sell all my assets and use all the money to just buy that new cheaply priced gold.
    #10     May 19, 2010