Doug Kass Calls For Gold $250 Lower: Puts Pop Before the News

Tyler Durden's picture

An FMX Connect Exclusive

Gold Options activity took a turn towards the bizarre late Friday. Between the hours of 2pm and 4pm Eastern, put buyers came out of the woodwork. We are almost certain that Doug Kass's interview on Fast Money was the sole cause of this activity. He was interviewed at 5pm. The put buying frenzy came in a full 2 hours beforehand on a Friday.

Mr. Kass runs Seabreeze Partners Mgt.  and is known for timely accurate market calls in the past. Here is what he said about Gold for 2011. "Gold will drop $250.00 in a span of four weeks" The reasons for his bear stance are simply that rising interest rates will cause money to flow out of the metal as a hedge and into higher returning assets. His reasons are logical and represent a growing contingency of managers that think many economies are doing better. China, Brazil and others are raising rates to battle inflation. This would reduce demand form these countries for Gold as a hedge. We don't necessarily agree, thinking that the U.S. cannot follow their lead, the result of which just means a weaker dollar. Hence gold remains firm in dollar terms. But his track record speaks for itself. 

He closed by stating "Gold will briefly touch $1050.00/ OZ. and should finish the year $150 lower than where it is today.

What we are focusing on is the option activity that occurred before his interview.

Pre Interview Put Party

The Comex floor day ends at 1:30. Friday's activity was largely uneventful during floor hours. There were some put buyers scattered in the back months and some call sellers in the mid months. Other than that trading was dominated by dealers and market makers squaring up their February positions as we head towards expiration this week.

But post floor close activity became pointed and focused on one thing, mid month put buying. Between 3,000 and 6,000 puts traded between 1:30 and 4:15 (that is GLD equiv of 30 to 60k volume). It started at the April 1000 strike, a 4 tick option. but the buying spread virally from there to June, then Dec, back to August and finally to April and March strikes. Back month put premiums  expanded by 2 to 5 percent, while shorter dated options like the April 1250 strike went  from a 10.50 offer to an 11.90 bid, a premium change of 10%.  Yet the market was $2.00 higher when the bids came in.

Normally post Comex close, Globex order flow is driven by GLD ETF business. Retail and equity side business usually dictates volatility for this part of the day. But that wasn't the case Friday. The business came in on the commodity side first this time, and it  most definitely was not retail in size or sophistication. Fast Money Fans were not the buyers.

We decided to model the market's pre to post activity to get a handle on just how big the changes in put values were.

  • March 1200           From 1.40 offer to 2.00 bid
  • April 1000              From .40 offer to .60 bid
  • April 1100              From 1.40 offer to 2.10 bid
  • April 1250              From 10.40 offer to 1190 bid
  • June 1100             From 5.00 offer to 6.20 bid
  • June 1200             From 22.50 offer to 24.50 bid
  • Oct 1150               From 16.00 offer to 18.00 bid
  • August 1280         From 46 offer to 48 bid
  • Dec 1000              From 10.50 offer to 12.70 bid

Calls Were Not Invited

This only tells one side of the story. It's obvious puts were bid. What isn't is that calls were offered, because so few traded. What we really had was a large skew change with no market movement.  Vix followers take note: ViX predicts nothing. ViX  changes are reactionary to market movement, not predictive. But changes in skew, while not predictors of direction do tell you what will happen to the ViX if the market moves. In summary: A move lower will cause a pop in the Gold ViX. while a move higher, will almost certainly result in a sell off in volatility.  Take a look at this smile, pre to post activity. it tells a simple tale: People are hedging long positions or are outright bearish. Any move lower  from here will be emotional. Fear if you are long the market, and greed if you are short. Take your pick, but it won't be pretty if you are short options and Kass is right.

April Options Smile

Key: Orange represents closing market values, Blue represents post market values


Who Bought?

So where did this buying come from?  We don't know. Fund managers have been talking their positions for generations. If a guy is on the cover of Barron's is telling you to buy IBM, it ain't because he's short it. Maybe he Kass was buying pre his interview. Maybe it was some friends who share his view. He twittered his opinion at 2:00 PM. Maybe it was a coincidence. Regardless, people are saying Gold will go down, and are putting money on it. 

Gold Bull Despair

Most of our readers are bullish Gold. Here is our advice to those people. If you are bullish on Gold and trade options, ( Disclaimer: and have money you can afford to lose) buy hedged puts or hedged put spreads. In a rally, the hedge will offset any decrease in volatility, while naked long calls will be offered every step of the way by trapped longs. And if you buy hedged puts and we do sell off, you wont be sorry. Options exhibit Giffen Good qualities at times, and that is beginning to happen now.  If the market has a strong day higher, do not expect put bids to go away, expect call offers to trickle in. That would potentially change if we breached and stayed above the 100 Day Moving Average which comes in around 1351.

Final note, keep an eye on silver spreads. They continue to come in, indicating a squeeze may be on the table despite the paper sell-off.

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Sudden Debt's picture

I was planning on buying some gold coins because I only have a few so a drop to 1000 would be welcome :)


BlackSea's picture

Go with .999 products. Easier to sell (no sales tax) over the border in Canada if US market has hickups.

66Sexy's picture

I can imagine if there is a sudden drop to 1050, there will be a physical depletion.

Pladizow's picture

Dont worry about the price, the weight remains the same!

66Sexy's picture

This guy could just be another poison breeding Robert Prechter. We know how HIS calls have done (pfft)

Pladizow's picture

Kass 2009 Prediction:

Gold never reaches $1,000 an ounce and trades at $500 an ounce at some point during the year.

Kass 2010 prediction:

The price of gold topples. Gold’s price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.

Kass 2011 prediction:

"Gold will briefly touch $1050.00/ OZ. and should finish the year $150 lower than where it is today.

See a patern - What anus would listen to this shill?


JonNadler's picture

I listen to him. See that's the great thing abount CNBS they don'd post your past predictions, that's why i like going there and Bloomberg. Now don't post my past predictions please!

downrodeo's picture

It's like weather forecasting. You can be wrong almost all the time and somehow keep your job and all of the esteem you've gained for being right some of the time.

Pladizow's picture

Why did God make economists?

To make weather men look good!

A Nanny Moose's picture

We eliminated weathermen in favor of weather bimbos. Economists are no longer required. Washington didn't get the memo

Thomas's picture

"Since 2004, annual returns averaged around 8 percent"

This number was printed in late 2008 but certainly does not include the collapse that occurred at the time it was penned. Thus, Doug is mediocre.

Gaston's picture
"Doug Kass is such a fukking tool,...

Here is this dumb fukk's record since September:

Sept 17th "Staring to short the market" (SP is 1125)

Oct 1st "We're about to hit a wall" (SP is 1146)

Nov 8th "The market has hit the TOP" (SP is 1223)

Dec 27th "I am moving to a NET SHORT position" (SP is 1257)

Jan 6th "In cash, waiting to make the big short trade"

Oh really Doug? You stupid lying fukk. That one was a real laugh after seeing every call for the previous three months including your NET SHORT article not a week prior, but here it is...

Jan 13, 2011 "Commodities look attractive".....

I guess after missing the entire short since you're "In cash and waiting to make the big short" the last I heard....

Fukking retard."

caconhma's picture

Remember Elane Gazzerely (if spelling is correct). She too had a perfect record for a 6-12 months interval prior to 1987 crash. Her call for the crash was the best! Then, it was all wrong and she never recovered.

Yes, China and Brazil have inflation. They are raising interest rates. So what?

China, Brazil, FED, EU, etc., are still printing fiat money like there is no tomorrow.  


TheJudge2012's picture

China prints more RMB when it raises interest rates in order to keep the dollar peg. Then we get cheaper Chinese import prices.

caconhma's picture

Doug Kass's 20 Surprises for 2010: Goldman Private, Gold Tumbles, etc.

By Paul Kedrosky · Monday, December 21, 2009 

My friend Doug Kass of Seabreeze Partners has out his list of 20 market/political/economic surprises for 2010. These are always fun reading, and he did surprisingly well with his list of 2009 surprises, so let's have a look at the latest list. The only one I think is completely outrageous is the Tiger Woods prediction -- what the hell are you thinking, man?

  1. There is a glaring upside to first-quarter 2010 corporate profits (up 100% year over year) and first-quarter 2010 GDP (up 4.5%). It grows clear that, owing to continued draconian cost cuts, coupled with a series of positive economic releases and a long list of company profit guidance increases in mid to late January and early February, there is a very large upside to first-quarter GDP (up 4.5%) and, even more important, to S&P profit growth (which doubles!). The upside on both counts is in sharp contrast to more muted growth expectations. While corporate managers, economists and strategists raise earnings per share, full-year growth and S&P target estimates, surprisingly, the U.S. equity market fails to respond positively to the much better growth dynamic, and the S&P 500 remains tightly range-bound (between 1,050 and 1,150) into spring 2010.    
  2. Housing and jobs fail to revive. An outsized first-quarter 2010 GDP (up 4.5.%) print is achieved despite a still moribund housing market and without any meaningful improvement in the labor market (excluding the increase in census workers) as corporations continue to cut costs and show little commitment to adding permanent employees.
  3. The U.S. dollar explodes higher. After dropping by over 40% from 2001 to 2008, the U.S. dollar continued to spiral lower in the last nine months of 2009. Our currency's recent strength will persist, however, surprising most market participants by continuing to rally into first quarter 2010. In fact, the U.S. dollar will be the strongest major world currency during the first three or four months of the new year.
  4. The price of gold topples. Gold's price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.
  5. Central banks tighten earlier than expected. China, facing reported inflation approaching 5%, tightens monetary and fiscal policy in March, a month ahead of a Fed tightening of 50 basis points, which, with the benefit of hindsight, is a policy mistake.
  6. A Middle East peace is upended due to an attack by Israel on Iran. Israel attacks Iran's nuclear facilities before midyear. An already comatose U.S. consumer falls back on its heels, retail spending plummets, and the personal savings rate approaches 10%. The first-quarter spike in domestic growth is short-lived as GDP abruptly stalls.
  7. Stocks drop by 10% in the first half of next year. In the face of renewed geopolitical tensions and reduced worldwide growth expectations, stocks drop as the threat of an economic double-dip grows. Surprisingly, though, the drop in the major indices is contained, and the U.S. stock market retreats by less than 10% from year-end 2009 levels.
  8. Goldman Sachs goes private. Goldman Sachs (GS) stock drops back to $125 to $130 a share, within $15 of the warrant exercise price that Warren Buffett received in Berkshire Hathaway's (BRK.A) late 2008 investment in Goldman Sachs. Sick of the unrelenting compensation outcry, government jawboning and associated populist pressures, Warren Buffett teams up with Goldman Sachs to take the investment firm private. The deal is completed by year-end.
  9. Second-half 2010 GDP growth turns flat. The Goldman Sachs transaction stabilizes the markets, which are stunned by an extended Mideast conflict that continues throughout the summer and into the early fall. While a diplomatic initiative led by the U.S. serves to calm Mideast tensions, flat second-half U.S. GDP growth and a still high 9.5% to 10.0% unemployment rate caps the U.S. stock market's upside and leads to a very dull second half, during which share prices have virtually flatlined (with surprisingly limited rallies and corrections throughout the entire six-month period). For the full year, the S&P 500 exhibits a 10% decline vs. the general consensus of leading strategists for about a 10% rise in the major indices.
  10. Rate-sensitive stocks outperform; metals underperform. Utilities are the best performing sector in the U.S. stock market in 2010; gold stocks are the worst performing group, with consumer discretionary coming in as a close second.
  11. Treasury yields fall. The yield of the 10-year U.S. note drops from 4% at the end of the first quarter to under 3% by the summer and ends the year at approximately the same level (3%). Despite the current consensus that higher inflation and interest rates will weigh on the fixed-income markets, bonds surprisingly outperform stocks in 2010. A plethora of specialized domestic and non-U.S. fixed-income exchange-traded funds are introduced throughout the year, setting the stage for a vast speculative top in bond prices, but that is a late 2011 issue.
  12. Warren Buffett steps down. Warren Buffett announces that he is handing over the investment reins to a Berkshire outsider and that he plans to also announce his in-house successor as chief operating officer by Berkshire Hathaway annual meeting in 2011.
  13. Insider trading charges expand. The SEC alleges, in a broad-ranging sting, the existence of extensive exchange of information that goes well beyond Galleon's Silicon Valley executive connections. Several well-known long-only mutual funds are implicated in the sting, which reveals that they have consistently received privileged information from some of the largest public companies over the past decade.
  14. The SEC launches an assault on mutual fund expenses. The SEC restricts 12b-1 mutual fund fees. In response to the proposal, asset management stocks crater.
  15. The SEC restricts short-selling. The SEC announces major short-selling bans after stocks sag in the second quarter.
  16. More hedge fund tumult emerges. Two of the most successful hedge fund managers extant announce their retirement and fund closures. One exits based on performance problems, the other based on legal problems.
  17. Pandit is out and Cohen is in at Citigroup. Citigroup's Vikram Pandit is replaced by former Shearson Lehman Brothers Chairman Peter Cohen. Cohen replaces a number of senior Citigroup executives with Ramius Partners colleagues. Sandy Weill rejoins Citigroup as a senior consultant.
  18. A weakened Republican party is in disarray. Sarah Palin announces that she has separated from her husband, leaving the Republican party firmly in the hands of former Massachusetts Governor Mitt Romney. An improving economy in early 2010 elevates President Obama's popularity back to pre-inauguration levels, and, despite the market's second-quarter decline, the country comes together after the Middle East conflict, producing a tidal wave of populism that moves ever more dramatically in legislation and spirit. With the Democratic tsunami (part deux) revived, the party wins November midterm elections by a landslide.
  19. Tiger Woods makes a comeback. Tiger Woods and his wife reconcile in early 2010, and he returns earlier than expected to the PGA Tour. After announcing that his wife is pregnant with their third child, both the PGA Tour's and Tiger Woods' popularity rise to record levels, and the golfer signs a series of new commercial contracts that insure him a record $150 million of endorsement income in 2011.
  20. The New York Yankees are sold to a Jack Welch-led investor group. The Steinbrenner family decides, for estate purposes, to sell the New York Yankees to a group headed by former General Electric (GE) Chairman Jack Welch.




The man is a fkig clown and a shill.


caconhma's picture

Doug Kass's 20 Surprises Of 2009

As Doug explains, these predictions are outliers, not events that have a high likelihood of occuring (if they did, they wouldn't be surprises).

  1. The Russian mafia and Russian oligarchs are found to be large investors with Madoff. During the next few weeks, a well-known CNBC investigative reporter documents that the Russian oligarchs, certain members of the Russian mafia and several Colombian drug cartel families have invested and laundered more than $2 billion in Madoff's strategy through offshore master feeders and through several fund of funds. There are several unsuccessful attempts made on Madoff and/or his family's lives. With the large Russian investments in Madoff having gone sour and in light of the subsequent acts of violence against his family, U.S./Russian relations, which already were at a low point, are threatened. Madoff's lawyers disclose that he has cancer, and his trial is delayed indefinitely as he undergoes chemotherapy.
  2. Housing stabilizes sooner than expected. President Obama, under the aegis of Larry Summers, initiates a massive and unprecedented Marshall Plan to turn the housing market around. His plan includes several unconventional measures: Among other items is a $25,000 tax credit on all home purchases as well as a large tax credit and other subsidies to the financial intermediaries that provide the mortgage loans and commitments. This, combined with a lowering in mortgage rates (and a boom in refinancing), the bankruptcy/financial restructuring of three public homebuilders (which serves to lessen new home supply) and a flip-flop in the benefits of ownership vs. the merits of renting trigger a second-quarter 2009 improvement in national housing activity, but the rebound is uneven. While the middle market rebounds, the high-end coastal housing markets remain moribund, impacted adversely by the Wall Street layoffs and the carnage in the hedge fund industry.
  3. The nation's commercial real estate markets experience only a shallow pricing downturn in the first half of 2009. President Obama's broad-ranging housing legislation incorporates tax credits and other unconventional remedies directed toward nonresidential lending and borrowing. Banks become more active in office lending (as they do in residential real estate lending), and the commercial mortgage-backed securities market never experiences anything like the weakness exhibited in the 2007 to 2008 market. Office REIT shares, similar to housing-related equities, rebound dramatically, with several doubling in the new year's first six months.
  4. The U.S. economy stabilizes sooner than expected. After a decidedly weak January-to-February period (and a negative first-quarter 2009 GDP reading, which is similar to fourth-quarter 2008's black hole), the massive and creative stimulus instituted by the newly elected President begins to work. Banks begin to lend more aggressively, and lower interest rates coupled with aggressive policy serve to contribute to an unexpected refinancing boom. By March, personal consumption expenditures begin to rebound slowly from an abysmal holiday and post-holiday season as energy prices remain subdued, and a shallow recovery occurs far sooner than many expect. Second-quarter corporate profits growth comfortably beats the downbeat and consensus forecasts as inflation remains tame, commodity prices are subdued, productivity rebounds and labor costs are well under control.
  5. The U.S. stock market rises by close to 20% in the year's first half. Housing-related stocks (title insurance, home remodeling, mortgage servicers and REITs) exhibit outsized and market-leading gains during the January-to-June interval. Heavily shorted retail and financial stocks also advance smartly. The year's first-half market rise of about 20% is surprisingly orderly throughout the six-month period, as volatility moves back down to pre-2008 levels, but rising domestic interest rates, still weak European economies and a halt to China's economic growth limit the stock market's progress in the back half of the year.
  6. A second quarter "growth scare" bursts the bubble in the government bond market. The yield on the 10-year U.S. Treasury note moves steadily higher from 2.10% at year-end to over 3.50% by early fall, putting a ceiling on the first-half recovery in the U.S. stock market, which is range-bound for the remainder of the year, settling up by approximately 20% for the 12-month period ending Dec. 31, 2009. Foreign central banks, faced with worsening domestic economies, begin to shy away from U.S. Treasury auctions and continue to diversify their reserve assets. By year-end, the U.S. dollar represents less than 60% of worldwide reserve assets, down from 2008's year-end at 62% and down from 70% only five years ago. China's 2008 economic growth proves to be greatly exaggerated as unemployment surprisingly rises in early 2009 and the rate of growth in China's real GDP moves towards zero by the second quarter. Unlike more developed countries, the absence of a social safety net turns China's fiscal economic policy inward and aggressively so. Importantly, China not only is no longer a natural buyer of U.S. Treasuries but it is forced to dip into it's piggy bank of foreign reserves, adding significant upside pressure to U.S. note and bond yields.
  7. Commodities markets remain subdued. Despite an improving domestic economy, a further erosion in the Western European and Chinese economies weighs on the world's commodities markets. Gold never reaches $1,000 an ounce and trades at $500 an ounce at some point during the year. (Gold-related shares are among 2009's worst stock market performers.) The price of crude oil briefly rallies early in the year after a step up in the violence in the Middle East but trades in a broad $25 to $65 range for all of 2009 as President Obama successfully introduces aggressive and meaningful legislation aimed at reducing our reliance on imported oil. The price of gasoline briefly breaches $1.00 a gallon sometime in the year. The U.S. dollar outperforms most of the world's currencies as the U.S. regains its place as an economic and political powerhouse.
  8. Capital spending disappoints further. Despite an improving economy, large-scale capital spending projects continue to be delayed in favor of maintenance spending. Technology shares continue to lag badly and Advanced Micro Devices (AMD) files bankruptcy.
  9. The hedge fund and fund of funds industries do not recover in 2009. The Madoff fraud, poor hedge fund performance and renewed controversy regarding private equity marks (particularly among a number of high-profile colleges like Harvard and Yale) prove to be a short-term death knell to the alternative investments industry. As well, the gating of redemption requests disaffects high net worth, pension plan, endowment and University investors to both traditional hedge funds and to private equity (which suffers from a series of questionable and subjective marking of private equity deal pricings at several leading funds). Three of the 10 largest hedge funds close their doors as numerous hedge funds reduce their fee structures in order to retain investors. Faced with an increasingly uncertain investor base, several big hedge funds merge with like-sized competitors in a quickening hedge fund industry consolidation. By year-end, the number of hedge funds is down by well over 50%.
  10. Mutual fund redemptions from 2008 reverse into inflows in 2009. The mutual fund industry does not suffer the same fate as the hedge fund industry. In fact, a renaissance of interest in mutual funds (especially of a passive/indexed kind) develops. Fidelity is the largest employer of the graduating classes (May 2009) at the Wharton and Harvard Business Schools; it goes public in late 2009 in the year's largest IPO. Shares of T. Rowe Price (TROW) and AllianceBernstein (AB) enjoy sharp price gains in the new year. Bill Miller retires from active fund management at Legg Mason (LM).
  11. State and municipal imbalances and deficits mushroom. The municipal bond market seizes up in the face of poor fiscal management, revenue shortfalls and rising budgets at state and local levels. Municipal bond yields spike higher. A new Municipal TARP totaling $2 trillion is introduced in the year's second half.
  12. The automakers and the UAW come to an agreement over wages. Under the pressure of late first-quarter bankruptcies, the UAW agrees to bring compensation in line with non-U.S. competitors and exchanges a reduction in retiree health care benefits for equity in the major automobile manufacturers.
  13. The new administration replaces SEC Commissioner Cox. Upon his inauguration, President Obama immediately replaces SEC Commissioner Christopher Cox with Yale Professor Dr. Jeffrey Sonnenfeld. The new SEC commissioner recommends that the uptick rule be reinstated and undertakes a yearlong investigation/analysis into the impact of Ultra Bear ETFs on the market. Later in the year, the administration recommends that the SEC be abolished and folded into the Treasury Department. Dr. Sonnenfeld returns to Yale University.
  14. Large merger of equals deals multiply. Economies of scale and mergers of equals become the M&A mantras in 2009, and niche investment banking boutiques such as Evercore (EVR), Lazard (LAZ) and Greenhill (GHL) flourish. Goldman Sachs and Citigroup announce a merger of equals, but Goldman maintains management control of the combined entity. Morgan Stanley (MS) acquires Blackstone. Disney (DIS) purchases Carnival (CCL). Microsoft (MSFT) acquires Yahoo! (YHOO) at $5 a share.
  15. Focus shifts for several media darlings. Though continuing on CNBC, Jim "El Capitan" Cramer announces his own reality show that will air on NBC in the fall. At the time his reality show premieres, he also writes a new book, Stay Mad for Life: How to Prosper from a Buy/Hold Investment Strategy. Dr. Nouriel Roubini continues to talk depression, but the price of his speaking engagements are cut in half. He writes a new book, The New Depression: How Leverage's Long Tail Will Result In Bread Lines. "Kudlow & Company's" Larry Kudlow proclaims that it's time to harvest the "mustard seeds" of growth and, in an admission of the Democrat's growing economic successes, officially leaves the ranks of the Republican party and returns to his Democratic roots. Yale's Dr. Robert Shiller adopts a variant and positive view on housing and the economy, joining the bullish ranks and writes a new book, The New Financial Order: Economic Opportunity in the 21st Century.
  16. The Internet becomes the tactical nuke of the digital age. The Web is invaded on many levels as governments, consumers and investors freak out. First, an act of cyberterrorism occurs that compromises the security of a major government (similar to the attacks this year emanating from the Chinese military aimed at the German Chancellery) or uses DoS against media and e-commerce sites. Second, a major data center will fail and will be far worse than the 1988 Cornell student incident that infected about 5% of the Unix boxes on the early Internet. Third, cybercrime explodes exponentially in 2008. Financial markets will be exposed to hackers using elaborate fraud schemes (such as liquidating and sweeping online brokerage accounts and shorting stocks, then employing a denial-of-service attack against the company). Fourth, Storm Trojan reappears. (Same as last year.)
  17. A handful of sports franchises file bankruptcy. Three Major League Baseball teams fail in the middle of the season and seek government bailouts in order to complete the season. The Wilpon family, victimized by Madoff, sells the New York Mets to SAC's Steve Cohen. The New York Yankees are undefeated in the 2009 season, and Madonna and A-Rod have a child together (out of wedlock).
  18. The Fox Business Network closes. Racked by large losses, Rupert Murdoch abandons the Fox Business Network. CNBC rehires several prior employees and expands its programming into complete weekend coverage. Two popular CNBC commentators "go mainstream" and become regulars on NBC news programs.
  19. Old, leveraged media implode. The worlds of leverage and old media collide in a massive flameout of previous leveraged deals. Univision and Clear Channel go bankrupt. The New York Times (NYT) teeters financially.
  20. The Middle East's infrastructure build-out is abruptly halted owing to "market conditions." Lower oil prices, weakening European economies and a broad overexpansion wreck havoc with the Middle East's markets and economies.


High Plains Drifter's picture

Does it really matter?  They have been trading  a lot more paper gold and silver for a long time now, a lot more on paper that they have physical and the regulatory authorities have given then a wink and a nod. If it wasn't for those bogus ETF's they created as another vehicle to screw around with the metals market, the COMEX would have already blown up. They simply do not have the product to cover the paper shares and options. It is simply criminal what is happnening and nobody will do a damn thing about it. Meanwhile the FED continues on playing their games with QE and purchasing of our own damn treasuries. The whole thing makes me sick. It is quite obvious to me, they are postering now for the next take down.

6 String's picture

I agree High Plains. The silver manipulation can go on for at least another 3 years under current production/sales/inventory trajectory. So, don't expect any meaningful change in the spot price manipulation for at least that time frame....because, other than Sprott, I don't see any large money coming in and asking for delivery. That's the only thing that can put an end to the charades sooner rather than later. But it seems like it's all hands off....

Meanwhile, in three years, the marginal buyers--the odd lotters, could very well throw in the towel one after the other--punishing the price to nadirs not seen for awhile.

Why not? You've got a total take-down happening in silver, no one gives a crap, you've got major accumulation taking place at the Mint and in China, Sprott can't get physical in a timely manner.....all of this taking place THIS MONTH, and what has the spot price done?

You're indeed right: the whole thing is sick. Everything.

Math Man's picture

The March 120 puts on GLD look pretty good at 67 cents.

21 implied vol.

If gold hits 1050 ($102.48 in GLD), they'll be worth over 17 bucks.

JW n FL's picture

All Hail King Tyler!

Thanks Bro!

Turd Ferguson's picture

Yes, this is very good info. Thanks, TD.

aint no fortunate son's picture

It ain't "Fast Money."

Its "Frontrunning Money."


Cdad's picture

Every day that gold is cooler than banker products, bankers will attack gold.  Ergo, to win the war from the gold side, bankers need to be put down in their constant attempts to force misallocation of capital.

As well, it is a KNOWN that The Blow Horn [CNBC] is a propaganda tool and a frontrunning tool for big market bullies. 

You combine these two facts, along with the fact that no one at the SEC or the FCC or the CFTC [and any other agency you might mention] gives a rip about rules, laws, or the integrity of the market...and you get a gold sell off.


SheepDog-One's picture

Last thing the world banksters want now is the peasants owning gold. CNBC red light district for Wall St will help their glorified used car salesmen in any way they can. 

BTW I'd stay far away from gold puts as the article suggests doing, already big ramp in gold puts mean a pool of money bankrupt banksters can snatch away fast. Options on gold....forget it just buy and hold, dont momo trade gold thats not what its for.

umop episdn's picture

The 'peasants with gold' scenario is probably the second to last thing the banksters want. The absolute worst thing for banksters is when the commoners own productive assets or scarce commodities instead of the fiat 'notes.' As the prices on all things rise, the confidence in the paper vanishes and the fun begins. Disclosure- I'm long torches and pitchforks with a garden backstop. 

Cdad's picture

I'm long torches and pitchforks with a garden backstop. 

Sweet call, man!  I am jealous.

Dr. Porkchop's picture

LED hand-crank flashlights, much more efficient and long lasting. Not as effective psychologically in a lynch mob, granted.

SheepDog-One's picture

Cool thing about this Cdad is it doesnt make me want to sell my gold plated Desert Eagle at all! Buy n hold.

JW n FL's picture

if gold see's 1050.. I will go long in a way that will make the earth move from under any fucking paper traders feet inculding jp. fucking quote me.

Sabibaby's picture

You aren't the only one!

Sudden Debt's picture

Did you head just got bigger?

DoChenRollingBearing's picture

+ $1350 JW n FL

+ a whole lot more oz if gold goes down that much.

NONE of our financial problems have been solved.


Enjoyed all the firearms commentary w/ you and the Colonel last night.

JW n FL's picture

happy to share with the other fight club members... what ever is palatable enough to go down.

Sudden Debt's picture

I'm pretty sure gold will go up very soon.

Banks are in deeper shit then everybody expected so there will be a lot of money running out of those this week.

Just look at BAC that has current annual dividend yield of 0.28%!

They run at a mega loss and still they give a div.! HA!



TeMpTeK's picture a Hack!

DoctoRx's picture

Some close friends lost a ton of $$ w him in the '90s.

TheJudge2012's picture

Not such a great track record after all.

JonNadler's picture

he can kass his a** goodbye

Snidley Whipsnae's picture

Gold is often weak in first quarters of years...So, now gold's enemies are saying that gold is going into a major price decline because it is performing as it has in many years past?

I call bs on this gold decline prediction.

Nothing has changed. Fiat monies continue to be printed to the Nth degree. The banks sitting on rediculously bad assets are still afloat. The Fed is still acting as a prop for many economies...etc.

Gold is still the best money on earth. PMs in general are far superior than any fiat currency. Time will show what is sound money, regardless of how it is priced in various fiats.

Sean7k's picture

One, China, India and Russia don't listen to Kass or CNBC. Every evening, I watch gold and silver go east. Two, I will be first in line at a significant correction. 

I don't know about you, but I will take as much time as the elites are willing to give to transfer assets out of FRN's and into real assets. Retirement funds are tricky. That is where you need a real strategy for getting your 401k money out without paying huge fees and taxes. 

Hey Tyler, do you know any advisors with some grey strategies concerning the protection of retirement funds from government gropnicrats?

eigenvalue's picture

Maybe a bit off the topic. I saw you mentioned the other day the agricultural products in the US are highly subsidized. However, I checked on the USDA website and found that the Commodity Program (the subsidies) in the USDA budget is only around 9 billion USD annually. That's in fact not a lot of money in my opinion. Care to explain? Many thanks.

Sean7k's picture

Even wikipedia places the number of direct subsidies at 20 billion. This does not include other subsidies which include : CRP, Forestry, Soil Conservation, Marketing and farm energy grants. The list is endless- if you caught the latest Republican salvo to cut costs, it targeted the 1 million dollar angora goat subsidy. 

Farmers do not just grow corn, soy and wheat. There are subsidies for organic, fruit growers and livestock as well.

The U.S. government heavily subsidizes grains, oilseeds, cotton, sugar, and dairy products. Most other agriculture—including beef, pork, poultry, hay, fruits, tree nuts, and vegetables (accounting for about half of the total value of production)—receives only minimal government support. U.S. farm programs have cost about $20 billion per year in government budget outlays in recent years. But budget costs are not a particularly useful measure of the degree of support or subsidy. Some subsidy programs, such as import tariffs, actually generate tax revenue for the government but also impose costs on consumers that exceed the government’s revenue gain. According to Organization for Economic Cooperation and Development (OECD) figures, the average rate of “producer support estimate” for the heavily supported commodities in the United States ranges from about 55 percent of the value of production for sugar to about 22 percent for oilseeds. For the less-supported commodities the rate is typically below 5 percent."


The problem, in my mind (and I am a Farmer), is that these are your tax dollars. They are forcibly taken from your wallet and then dispersed-more often than not, to large corporate farming operations.

traderjoe's picture

Sean7k - I always enjoy your posts. Didn't know you were a farmer. Full-time? What crop? What region? Not trying to get specifics. In the back of my mind, I want to be in farming over the next few years, likely starting by leasing the land. So, I'm just curious about these things. If you choose to respond, thanks...

Math Man's picture

Actually, Russia is planning to buy half as much Gold in 2011 as they did in 2010.