Due to sanctions and trade restrictions, a two-tiered gold market has emerged, with gold priced significantly higher in New York than in London or Shanghai. This price difference reflects the increased difficulty and risk associated with moving gold between these markets. While previously small price discrepancies were quickly arbitraged away, the current geopolitical climate has created persistent price differentials, highlighting the fragmentation of the global gold market and diminished fungibility of the precious metal.
The blog post argues that Nvidia's current high valuation is unjustified due to increasing competition and the potential disruption posed by open-source models like DeepSeek. While acknowledging Nvidia's strong position and impressive growth, the author contends that competitors are rapidly developing comparable hardware, and that the open-source movement, exemplified by DeepSeek, is making advanced AI models more accessible, reducing reliance on proprietary solutions. This combination of factors is predicted to erode Nvidia's dominance and consequently its stock price, making the current valuation unsustainable in the long term.
Hacker News users discuss the potential impact of competition and open-source models like DeepSeek on Nvidia's dominance. Some argue that while open source is gaining traction, Nvidia's hardware/software ecosystem and established developer network provide a significant moat. Others point to the rapid pace of AI development, suggesting that Nvidia's current advantage might not be sustainable in the long term, particularly if open-source models achieve comparable performance. The high cost of Nvidia's hardware is also a recurring theme, with commenters speculating that cheaper alternatives could disrupt the market. Finally, several users express skepticism about DeepSeek's ability to pose a serious threat to Nvidia in the near future.
Summary of Comments ( 96 )
https://news.ycombinator.com/item?id=43040129
HN commenters discuss potential explanations for the gold price differential between London and New York, focusing on logistical challenges and costs associated with physically moving gold. Several suggest that increased demand in New York, perhaps driven by perceived risks in the financial system or changing geopolitical landscapes, is the primary driver. The conversation also touches on the possibility of differing assaying standards, insurance costs, and the practicality of transporting large quantities of gold, questioning whether the price difference truly reflects an arbitrage opportunity or rather represents the real cost of moving physical gold. Some express skepticism about the Bloomberg article's claims, suggesting the price difference could be ephemeral or due to temporary market fluctuations. A few comments also mention the historical context of gold prices and transportation challenges.
The Hacker News post "Gold Is Worth More in New York" (linking to a Bloomberg opinion piece) generated a moderate amount of discussion, with a focus on the logistics and economics of gold transportation and pricing. Several commenters pointed out that the price differential mentioned in the article (gold being more expensive in New York than London) isn't a new phenomenon and is directly related to the costs associated with moving physical gold between these two locations. These costs include insurance, transportation, and security.
One commenter highlighted the importance of considering the "all-in" cost, which encompasses not just the spot price of gold but also the expenses involved in acquiring and transporting it. They emphasized that this overall cost is the crucial factor for anyone physically moving gold.
Another commenter offered a practical anecdote, recalling their experience working for a precious metals refinery. They explained that moving gold isn't as simple as putting it in a suitcase. It requires specialized, secure transportation, which naturally adds to the cost. This commenter also mentioned the role of insurance in driving up the price differential between locations.
Expanding on the logistical challenges, another user mentioned the specific difficulty and expense of transporting large quantities of gold by air due to weight restrictions and security concerns. This necessitates alternative methods like sea freight, which, while potentially cheaper, introduces longer transit times and potentially higher insurance premiums due to the extended exposure to risks.
A few commenters questioned the premise of the article, arguing that small price differences between locations are normal in any commodity market and are simply a reflection of local supply and demand dynamics, transportation costs, and storage expenses. They also noted that gold's fungibility means these price differences are generally arbitraged away quickly unless there are significant logistical hurdles or other market inefficiencies.
While the overall sentiment was that the article's observation wasn't particularly groundbreaking, the comments provided valuable context and insights into the complexities and costs involved in the physical gold market. They highlighted that the seemingly simple act of moving gold between locations has significant financial implications, impacting price differentials and ultimately influencing market behavior.