Precious Metals Volatility Achille’s Heel of Mines, Bullion Distributors & Retailers?
Whilst I pondered the dynamics of the bullion market as I have come to understand it, as an avid purchaser of mainly silver, I cannot come to any other conclusion regarding price volatility and business operations than this: the volatility experienced by the precious metals markets over the last two months about could not have been good for hedging a business.
There is no way a company that slings precious metals’ 24 hours a day can properly hedge themselves against the volatility. Even if you are perfectly hedged at one moment, future price movement to the downside could spell diminished fiat income to your business. You can buy-and-sell and buy-and-sell all day, but if the asset which you are slinging consistently trends down, then your inventory at any given time is falling in price. The silver you buy on a Friday, for example, could be down 5% on Monday. Can this be perfectly hedged against? Sure, if you’ve got six figure capital – at least- to spend on the proper order management and point of sale system.
I mean, let’s face it – the point of sales system market might as well be considered responsible for the continued downing of the rainforests, as these programs are not priced for medium sized businesses. IT fleeces its clients.
Basically this volatility serves as a technique by the ruling class to undermine the soundness of a business slinging gold and silver, alternative currencies. I think it must be a very effective tool that serves many purposes. The chartism does not serve an effective purpose other than noticing points in which manipulation by the keystone demise-of-the-state transnational banks could be most effective. That’s the value in chartism.
The volatility continues into today for the mines, retailers and distributors who are doing what they can to hedge against market volatility. The before-and-after of today’s Bernanke talk demonstrates perfectly this volatility. The waterfall means for gold a $40 down-day on the heels of bullishness.
This is bullish not only for the physical metals, but also for any business tied into the precious metals industry which have automatic long positions.