The Sarcasm Report v.62

Gold and Silver Market Suppression Failures Flash Buy Signal, Part 2

The first example comes from the Bank of England. The BoE, in June 1999, auctioned off gold reserves to the lowest bidder.

That is not true. There's a huge difference between "lowest bidder" and "lowest accepted bidder".

The BoE used dutch auctions. The dutch auction is actually a very efficient, rational, and fair way to auction off a large quantity of identical things all at once. Google even used a dutch auction for their IPO.

In hindsight, the BoE should not have sold its gold when it did. However, it has nothing to do with the auction process itself. It most certainly did not just hand over all of its gold to the lowest bidder as he claims. If that was truly the case, then all the bids would have been $0.00. Why would anyone bid more? Free gold! Woohoo!

So, um.. I give you the lowest price for your gold and I win?

Um, no. If you offer the lowest price in a dutch auction then more than likely you will get nothing. Why? You were outbid by every other bidder.

Man, if only people on Ebay (EBAY) would follow this logic.

Some people on eBay actually did follow that logic! Unfortunately, eBay had to stop because the logic tended to confuse people. Oh the irony!

***Dutch auction format to be discontinued***

Both buyers and sellers have told us the format is too confusing...

Treasuries are still auctioned off using a dutch auction system though. Apparently investors in Treasuries are not so easily confused.

Investopedia: Dutch auction

However, the price that each bidder pays is based on the lowest price of all the allotted bidders, or essentially the last successful bid.

...

The U.S. Treasury (and other countries) uses a Dutch auction to sell securities.

The government only accepts the lowest price for its Treasury bonds? OMG! Conspiracy! The government is getting ripped off every time it holds a Treasury auction! Somebody needs to step in there and do something! Contact the press! Write your Representative! Call your Congressman! Tell them you want a formal inquiry! And most importantly, someone inform Jeremy Siegel!

My hands are waving all over the place right now in a most conspiratorial, alarmist, and utterly sarcastic manner!