muhaha wrote:...let me see now SGX, LGL , DIO , AND. Now left with AVO and NCM

benthonic wrote:ah... GOLD: poor investment; great insurance

.....The recent volatility in the precious metals markets demonstrates, once again, that financial assets are volatile assets. And many financial assets — like gold and silver — have become increasingly volatile, thanks to the manic, short-term trading activity of large hedge funds and other institutional traders.

Unfortunately, in a market as small as the gold and silver markets, the trading activities of a few big players can produce extremely volatile effects.

“The amount of paper gold and silver contracts that trade on the futures and equities exchanges still dwarf the amount of actual physical trading that takes place,” gold market experts, Eric Sprott and David Baker recently observed. “Paper markets continue to set price discovery — thereby allowing for dramatic volatility with little or no influence from actual physical fundamentals. In the London Bullion Market, for example, market participants traded an average 19.6 million ounces of gold per day in July 2011. Keep in mind that the total gold mine production in 2010, globally, was approximately 86.5 million ounces.

“Global gold mine production is not expected to increase significantly year-over-year,” Sprott and Baker continue, “so the London Bullion Market is essentially trading a year’s worth of production in less than a week. And this is just one market. When you add the COMEX futures and gold ETFs, the paper trading volume becomes absurdly high. When price discovery is dictated by levered paper contracts with no physical backing, it’s extremely easy and relatively inexpensive to jostle the spot price around. The result for gold has been many days of extreme downside volatility, despite a strong and consistent overall upward trend.”

In other words, when very large investors (with very short-term investment horizons) become the dominant price setters in the market, the process of price discovery can feel a lot like a price lobotomy...