Below for your convenience is a simple calculator to convert grams to Troy ounces
What is the standard weight measure for Gold & Silver?
| author: nz_andyBelow for your convenience is a simple calculator to convert grams to Troy ounces
Math of a credit bubble!
| author: nz_andyI was thinking why do people use the terms credit “bubble” or the housing bubble, why don’t people say there is a “credit suitcase” or a “housing wood stack” instead?
A bubble by definition can only grow so big then it will pop, not just open up and vent some excess baggage like a suitcase or topple over top over like an over stacked wood pile but still leaving a base. A bubble shows no signs of stress it just grows and looks fine until one small point in the bubbles wall gives way and bang it pops with a rush of air that has momentum, intern leaving a vacuum resulting in implosion. Then the bubble is gone like it never existed. People think in linier terms but nature operates logarithmically.
It is interesting that to maintain a visually linearly expanding sphere or bubble (Growing in diameter at a constant rate) it actually takes an exponential increase of volume.
For example when you blow up a party balloon your first breath of air makes a impressive different to the size of the balloon, If party goers are looking-on you may feel quite impressed with your own lung capacity but then every breath after that seems to make less and less difference, what’s going on! People may now look away in disgusted at your feeble lung capacity so you blow faster but the balloon grows even slower in-fact it hardly seemed to grow at all just before it popped in your face!
Of course the balloon appears to grow slower over time as the amount of air you blow in with each breath becomes less as a percentage of the growing volume in the balloon. I have actually plotted this out in a graph below:
It is clearly shown below with a logarithmic scale for volume and a linier for bubble diameter:
Using this balloon analogy, if you were to think of the balloon or bubble size as “useful credit” and the substance that fills its volume as money or M3 then two interesting things emerge. One is as already stated: to maintain a linier expansion of useful credit one must exponentially increase the money supply, and the second the larger the credit use or bubble is the less notable each addition will be. Just like with the party balloon, at the end before the balloon pops, a big breath is hardly noticeable.
Of course this works in two ways, for one its harder to maintain a linear expansion of useful credit, but also it allows CB’s to get away with blue murder as 100 billion dollars to pay some bills makes little noticeable difference were as at the start of the credit expansion 100 billion would have been noticed by everyone and would have coursed a big commotion.
In-fact in the end it seems that you can just add as must M3 as you want and it does not seem to make any difference……pop!
But what does actually make it pop? Not shown on the graph above is the anti-bubble, the anti-bubbles volume is also growing at an exponential rate, and it tracks every move of the credit bubble and it can’t be shaken. The anti-bubble is the interest payments on debt.
The Credit bubble must stay ahead of the anti-bubble as if they meet they will pop (If the marginal utility of the credit expansion becomes less than the interest payments it does not work anymore) But it’s getting harder to stay ahead of the anti-bubble and the only way to slow down its gain on the credit bubble is to lower interest rates. But that discredits fiat currencies even more. Increasing the size of credit only brings temporary relief and the anti bubble grows even faster after a short delay.
So what are the different ways the anti-bubble can meet the credit bubble?
If for example a country is in trade deficit, then that expanding bubbles interest payments become a massive burden to the population as they don't have income from a foreign currency bubble to off set it. Thus saturation is eventually reached, that is the population simply can't afford to borrow more., POP! That is because as soon as borrowing stops the assets that were being pushed up backing the borrowing, deflate and it is a very sudden change. Suddenly those assets need to be sold.
What is Sterling Silver?
| author: nz_andyOften people think that sterling silver is very pure silver, this comes about from the term “sterling” being associated with a quality item. However Sterling silver is not bullion grade (99.9% pure) it is only 92.5%. The other 7.5% is nomally copper but can also have germanium, zinc and platinum. These metals are added to give strength & durability to the items made, while pure silver is soft but found in bars / coins for investment. Bullion grade is 99.9% pure, this way it is practical as a form of money as the value is always the same by weight.
Sterling Silver can often be identified by the lion symbol below there are others but this is the most common symbol:
And here are some other examples note the lion symbol in all but one:
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Company analysis
| author: nz_andyMining / Resource Companies:
This section is currently under construction....
>Mining company picks and more form the Silver bull report. Leonard Wall is a great guy who gets out on mine locations to let you know what’s really going on.
Company Financial Analysis / Terminology:
Understanding PE ratios
(I wrote this article for those people wishing to gain understanding of commonly used terms found in Stock broker analysis, but also to understand the nature of these numbers!)
Understanding PE ratios
| author: nz_andyUnderstanding PE ratios
By Andrew Palmer
3rd May 2007
P/E - "Price earnings ratio" is a funny number for humans because it is not linear so can be misleading if not understood, and future PE can be even more confusing.
Lets start with the basics, "P" is share price and "E" is the earnings per share.
P is easy to understand, but with "E" we need to ensure it is net income of the company for a 12 month period.
An example:
Company XYZ has a share price of $1 and earnings of $0.20
so we divide 1 by 0.2 and get a PE of 5, Put another way for every 5 dollars we invested the company should net 1$ in earnings
Take the same example with a share price of $1:
Earnings are $0.05 = PE = 20
Earnings are $0.1 = PE = 10
Earnings are $1 = PE = 1
Earnings are $2 = PE = 0.5 (Very Good company!)
A picture is a thousand words so below I have plotted a chart showing PE vs. percentage earnings per share. As can be seen they are related but not linear and as can be seen PE's in the low range like 1-4 are a very rough measure unless you go into a few decimal places as going from a PE of 2 to 1 is all the difference in the world:
Then when you bring future PE into the picture and try to work out a future share price one must consider the fair value of this type of share. In the general share market a fair value PE of 14 is normal (7.14% earnings per share)
So if you think the future PE of a company is good and the future PE you worked out is 3, and you put on a fair value PE of 14 then by definition the company will never actually have a PE of 3 but the share price will increase to a point where the PE is 14 and thus you have made your money from capital gain.
So again I have plotted this relationship using a fair value PE of 8 in this example, versus various possible future PE's:
Hypothetical example:
If we are assessing different silver mining companies in one area, and in this area silver companies normally traded at PE's of about 8, we may expect that the company being assessed should also trade for a PE of about 8. If we worked out or found data showing an expected future PE of 4 in 1 year then we would expect the share price to double within the next year. We can compare this to other companies and also to physical silver. If we thought silver would double to bring about the future PE of 4 then maybe we would just buy silver as the outcome would be the same. If the future PE was less than 4 then buying the stock may be the better option.
Now to take the next step I have potted below various fair value PE's against future PE's and % earnings per share. To read this as an example: A company we are looking at normally trades at a PE of 12 and we worked out a future PE of 1 then we might expect a share price increase of 1100% all going well, Nice!
So to calculate the future share price the inputs required are future PE and fair value PE.
So expected share price increase/decrease is:
Fair value PE
---------------- .. = Multiple of SP increase/ decrease
Future PE
For example:
Fair value of 8
--------------- .. = 2x SP gain or 100%
Future Value of 4
We can simply compare this to our expectations, or to another type of investment as a comparison.
Of course coming up with the future PE in the first place is an art in itself, but just understanding what it means is important as it is often referred to in stock assessment reports.
Country analysis
| author: nz_andy
New Zealand:
For New Zeeland I have created a range of graphs based on the officially available data from the Reserve Bank of New Zealand & Statistics NZ. I produced these as I could not find information in these combinations available elsewhere.
-GDP as a % of M3 (1960-2012)
-Current account as % of GDP (1966-2012)
-Cumulative total NZ bal of payments 1965-2012
-NZ M3 vs.Total housing stock value
-M3 vs. Population growth
-Balance of trade - goods and services
-NZ total credit card debt
-NZ total available credit (credit cards)
Global by country comparison data:
Below are some very useful sites I have come across that are easy to use with user selected graphed data:
Index mundi
Nation Master
USA:
(No longer updating this data)
As the US no longer reports M3 (A subject in itself) it needs to be calculated independently, I lookup John Williams' shadowstats.com A great site to find out what’s really happing, also importantly here is found the real CPI, which is used to produce many other numbers like GDP, So if the CPI is underreported then of course this has important implications including making the economy look better than it really is. (The USA is not alone here, most "Western counties" pull this trick, its a not on my shift mentality - (Recession).
Also here are some of my own charts made using official US stats:
1959-2006 FED funds rate vs. M3 yearly % change
1959-2006 1year T bill vs. % yearly change in M3
1959-2006 M3 vs. Compounded 1959 M3