This page has been archived and commenting is disabled.
Exclusive: Second Whistleblower Emerges - A Deep Insider's Walkthru To Silver Market Manipulation
A second whistleblower speaks. As the topic of physical delivery has gained prominent attention recently, it is crucial to complete the circle and show how this weakest link in the PM market is (ab)used by the big boys: Phibro and Warren Buffet. Pay particular attention to the analogues between the methods employed in the 90's commodity market and how the PM (and equity) market is being gamed currently. And to think that each new generation of traders believes it has discovered something new... (All emphasis below is ours)
Background
- As a market maker in silver options from 1989 to 2000 I was present during both the 1994 and 1997 silver events. They were seminal in my education of gamesmanship in trading and how probabilities can come up short.
- Prior to going out on my own, I traded at a small market making firm. When a trader finished training there, he had top-tier options knowledge but was not educated in whom the players were, the fundamentals of the markets, and how probabilities were useless when information was asymmetric. That wasn’t their business, they taught option’s theory. Since I had drunk the kool-aid, I thought fundamentals and gamesmanship were useless in the face of the almighty Standard Deviation model. That was a mistake.
Phibro Early Exercise
- In April 1994, the Thursday before Easter, the trading day ended with a rather unusual run up of 15 cents near the close to finish at 435ish around noon. Options expired that day at 4pm but we weren’t anywhere near the closest strikes (425 and 450) so most of us left. It was a 4 day weekend in the U.S. but silver traded globally, albeit il-liquidly in Asia. Comex wouldn’t open until next Tuesday. My education in gamesmanship started that afternoon at JFK airport as I was waiting for a flight, my first vacation in 5 years.
- My backer paged me at the airport to inform me that someone was exercising the K 450 calls. I scoffed thinking it was a retail sap that was talked into exercising some 5 lot piece by an overzealous broker. “Great I said, let them, the options are out of the money.” And I hung up
- 10 minutes later he had me paged again. “You don’t understand, it’s Phibro exercising.” Again I naively said, “So what, they are energy guys.” But I was curious, “How many? “ I asked. “All of them, five thousand, he replied. Now I was really curious, but still woefully ignorant that it was I who was the sap at the table. “Why would they do that?” and he explained it to me. I nearly shit myself and bent over in the cab vomiting on the ride back.
- Cancelling my trip, I headed back to the office to assess the reality of what would happen, probabilities were no longer important. Survival was important. I had no money and was trading on a $25k note lent to me by my backer.
- We covered by buying futures on my entire short open Interest equivalent of EXPIRED OUT OF THE MONEY OPTIONS in Singapore with a dealing firm. We did this prior to even actually knowing if I was exercised, probabilities be damned. How did I know they exercised? The price covered at was $462; that is how. The 450s were already in the money by 12 cents.
- Phibro exercised all 5k lots. I had a fraction of that but big enough to be carried out on a stretcher had the rest of my position not bailed me out/ performed on Tuesday next week.
- The weird part was, the market stabilized that Tuesday and did not run to “infinity” as it could easily have. We found out later it was because Phibro’s exercise was a no-no and Warren Buffet ordered them to shut the trade down as it was too big of a potential scandal. Especially in light of his coming to Solly’s rescue and lending his good name to fix their most recent Treasury scandal. A couple head’s rolled there if I remember correctly.
- My guess was that the client was a Buffet or Soros type. Someone that would only go to Phibro, as these guys were the best at preventing information leakage, and always aligned themselves with client interests, where as if IB had an order and acted in dual capacity as a dealer, he would potentially front-run the order or stop it out poorly on an exit. Phibro didn’t take other side of their client’s orders. They ran with them, and took care of the clients first.
- Phibro got a big order for a client to buy silver, one that had to be handled expertly, and filled over time, no information leakage would be tolerated. These guys were a prop desk that took orders as brokers once in a while.
- They accumulated options for their own account (K 450C) to piggyback but not front-run the client.
- They must have bought futures for themselves as well as the client with his permission.
- They beat the VWAP by gunning the market on light volumes 1 hour before a 4 day US holiday. [TD: compare and contrast with the daily patterns seen every single day in the endless move up in the S&P]
- They exercised the 450 Calls that day and then lifted the offers of the 1 or 2 OTC metals dealers left open during Singapore hours, running them over during illiquid markets.
Never Again!
- I became infatuated with Phibro gamesmanship and made it a point to understand that particular type of player.
- Libertarian Darwinist that I was I did not blame them. At the time It was a buyer-beware market for big businesses and they did nothing wrong. They took risk and they aren’t bigger than the market. I wanted to play with the big boys, and that was the price.
- For me it was about learning how to read the signs and not be on the wrong side of one of those events again, even if I was not privy to their meetings.
Here is some of what I learned:
- In metals (and energy and anything else with an OTC market) the IB firms have dealing desks along GS, MS, Republic, JPMorgan, Scotia Mocatta, all were essentially broker dealers in precious metals. All had clients: miners who hedged production and hedge funds who speculated OTC. They provided liquidity by taking the other side of their client’s trade and “back-to-backing” them in the futures markets or held onto them in their prop books as counterparty because of something else they saw.
- Their client left resting orders with them in the IB’s Central Limit Order Book (CLOB) which served as good information to trade around for the IB. Sometimes they front-ran the client, other times they go for stops to force the client to puke. Sometimes they’d just make markets, depending on many things. It was poker to them.
- Phibro was different. These were smart guys but they weren’t a dealing bank. They exploited imbalances in markets and took positions. They had ideas. They also took orders for heavyweights who needed absolute discretion. They did not make it their business to fleece their own clients and instead aligned their interests. And they made the banks look like pikers when a client came to them with an order.
- For the next 4 Years I paid attention to how those dealing banks and phibro played the markets. It was all about gamesmanship, Bayesian probability, and knowing your counterparty’s motivation with these guys. Information and misinformation.
Some methods:
- How I.B firms would use a thinly traded floor to print the price that would trigger a massive stop loss in the OTC markets and bury their own clients. Or how they would buy for their own accounts in front of resting limit orders for clients and simply use their clients to stop themselves out if the market printed thru their buy levels. Or how they would use dual representation to show loudly they were buyers on one side of the ring, while they were selling quietly upstairs to other OTC dealers. Trading with themselves in multiple entities, etc.
- An IB with a Commodity Index was in heaven. Prop trading, captive client flow from IB deals and OTC dealing and Brokerage. The good ones knew how to integrate and hedge macro risks, whether to front run their own index clients or get out off their way. “Chinese walls” did not exist in Commods.
- Commods were mostly self regulated and that lead to predatory yet mostly legal behaviour.
- Some of these were necessary to protect their interests with such a small number of players. Some were possibly unethical, but most were legal. Their clients were all big boys who left resting orders with the IBs at their own risk. Clients themselves had to resort to some of the same tricks to keep the IB desks honest, like Coming in backwards, “spoofing”, leaving buy stops to get sell orders filled. The alternative for these clients was to put massive orders in the floor where liquidity was subjective, non continuous and information leakage was massive.
1997- Warren Buffet.
- I got my chance to not get run over in 1997, when Warren Buffet gave an order to Phibro to buy silver.
- Short version. Here is what went down.
- Buffet gives Phibro the order- fact
- Phibro begins filling it as a broker using various OTC dealers as counterparties, and letting the I.B dealers sweat getting out of the risk. - fact
- Phibro buys options for their own account (no exercise game this time tho)- fact
- Phibro buys futures for their own account. – not confirmed.
- One by one the IB dealers start to catch on that this is no ordinary order Phibro is handling. They back away and liquidity gets harder to find.- fact
- Other bigger hedge funds in the small circle of professionals, and other smart firms start getting long.- fact
- Silver starts getting delivered from the Comex vaults. Some of it actually removed. Some of it just “covered with a sheet” for removal. But ounces begin to be removed from the warehouse. Phibro was rumored to be taking delivery and beginning to telegraph fear in the markets to start spoofing the VWAP. Rumor was they had a warehouse in Red Hook where they stored it. Never confirmed.
- Point here is, the saps for the last part of this play were the producers and refiners who were complacently net short and dependent on above ground silver to satisfy delivery requests.
- Producers had been over-hedging for years in this market, as silver was cheap and they had business cash flow issues. It was their habit to sell forward production not yet available to them. And if forced to, they would lease already above ground silver and make delivery, collateralizing it with silver yet to be mined. Their positions were habitually synthetically long the contango as they rolled their deliverable production further and further out the curve in an attempt to squeeze much needed cash (cost of carry)for their businesses. The net effect was that sometimes they had to borrow silver for prompt delivery while they rolled their production hedge back further. – my interpretation of what I learned. May not be accurate to the “T”, am not a physical guy.
- Example: in 1995 a miner has silver due above ground in 1997. He hedges it in Z-1997 contract. Z 1997 comes and if he doesn’t have that silver available for some other reason; he covers the short and rolls it back. How much he needs to do this is a function of his obligations, cash flows, and his greed for carry. If leases are cheap, he will seek to capture all the contango and lease it until he gets the silver available.
- If lease rates go up, it is not unlike a miner strike. Silver is needed for delivery now, and term risk becomes the issue. Contango collapses and market goes backwardated. He will be forced to sell the contango to get that prompt silver short back if he cannot make delivery. He has to defer delivery.
- These guys were dependent on the specs NOT taking delivery for years. Specs didn’t have balance sheets to take and store physical metal. Specs usually were the weak hands at futures expiry.
- But then…..Entities that stored silver in bank vaults (like the Republic vault) begin to remove silver from the available pool for leasing. This made the “easy money” portion of production financing no longer easy. Think: smart money getting the word that a squeeze was on and playing along with it.
- Phibro (and others) start selling the contango in the futures market to prepare to take delivery of even more contracts. Or at least put pressure on the producers who had front month shorts they would have to make a decision on delivering. Phibro KNEW that the producers had to sell the spreads to get their shorts back. But they couldn’t lift their shorts altogether as part of their financing deals with their bankers. Their own positions were now breaking down in every way except flat price. The market really didn’t move much. This let them stay in denial.
- Buffet announces he is long and intends to take delivery of silver. Contango collapses. Market spikes to 7.40.
- Rumor is gov’t intercedes and asks Buffet to not do this, it would break the industry. (Kind of like how the exchange begged the gov’t to help it shut down the Hunt Bros.) He says ok, and agrees to lend then their silver back to them. Essentially charging them 40% interest to delay delivery for a year.
What to look for:
- Find the overleveraged/ extended party- and you will find the weak hand at the table. (Producers in 1997)
- Tail wags dog: if the pricing venue trades smaller volume than the OTC, then manipulate price with small volumes to execute trades with big volumes favorably. (OTC vs Comex floor)
- Divide and conquer- if counterparties are undercapitalized and/ or fragmented, then it will be easier to get them to move like a herd. (happens in options ALL THE TIME at expiration)
- Manipulate data- take delivery of metal, take risk off books, manipulate MTM data.
- Create an exit strategy- a good catalyst like Easter weekend, an announcement by an investor etc. or develop a market and grow your own bigger fool. ie – retail.
Comments - So many points to make here:
- How derivative markets can create a problem thru too much liquidity that cannot easily be reconciled by bringing physical production on line fast enough.
- How this works both ways, and that dealing banks have been playing the gold/silver carry game for easy funding of other trades for years.
- How, even though I personally think that what the OTC does is their own business, but the increasing securitization of commodities leaves regulatory arbitrage and OTC games to affect a new generation of ETF buyers, either thru incremental banking or thru contango cancer. That Wall Street salesmen and players with access to both markets retail and professional can exploit the captive audience created with ETFs and other fund type instruments to shear and in some cases skin the sheep.
- That much of this happens because the gov’t is too stupid to see the inherent conflict of interest in what a broker-dealer does. Regulation will not stop gaming the law. Ethics do, and not everybody has ethics. So best you can do is prevent situations of conflict of interest, like the existence of Broker-dealer type entities. Either you trade for yourself, or you trade for others. Period.
- Fact is, if there were retail public in this game back then, the IB firms would have somehow sold them on the idea to BUY contango, or short silver. But the financialization of commodities wasn’t there yet. And the “bigger fool” game stopped at the producers. If it happened again, with ETFs, cross regulatory semi fungible products, asymmetric access to venues and other factors in a global market, the public would be killed, short squeeze or long puke (like in UNG now) take your pick.
- You can never know intentions, and no one is bigger than the market, but the consequences of a lack of transparency and the free reign in which banks can tell half-truths to investors is a big factor in enabling strong hands to fleece weak hands with little market risk. It’s all a con game. And when the IBs figured out how to change the rules, then they were free to use their killer techniques to exploit a million little fish instead of the 10 big fish they usually competed with.
- Phibro was a ballsy cowboy trading firm. The banks at the employee level are as well, but corporately, they first seek to make money and secondly provide a service. When they should be providing a service that makes money.
- Everything that was done I’ve seen done the other way, keeping prices low, shaking out weaker players. Rarely does it happen in such a dramatic way. It is usually a series of “short cons” as opposed to Phibro’s home run. It’s all Darwinism. But when civilians are involved as they are now, then it is no longer caveat emptor.
- Instead of taking a million dollars from a hedge fund, these guys take a dollar from a million people now.
»
- 60305 reads
- Printer-friendly version
- Send to friend
- advertisements -
ya no crap???
Excersising out-of-the-money options... Time to get irrational on these mothers?
Samoan, please. What is there in this market that IS rational?
I am shocked, shocked to find that gambling is going on here...Captain Renault
"These guys take a dollar from a million people" is exactly right. The introduction of SLV in 2006 helped funnel huge demand for the physical metal into paper.
"funnel huge demand for the physical metal into paper"
I think that is an open question. Maybe retail only came in because it was easy to buy silver via their stockbroker - how many would still buy if they had to go to the limited number of coin shops and take a bar home?
The real question is, without ETF's, how many couldn't buy simply because the physical silver isn't there?
The average Joe can't even get the info to play this game. All we can do is buy dips and take delivery. In time we'll force their hand.
thats right, keep on chipping away and soon it will rebalance.
he makes a great point with the ETF involved now. The street is soon going to find a way to skin those and their retail holders. Look for some serious volatility - both ways.
Thoughts from a passive observer:
- Despite the daily/weekly manipulations described, markets for commodities still seem to follow general trends up or down that eventually appear to override the supposed manipulations.
- Darwinian may be a great description. It always seems to be the weak and over-extended that get taken, whether in the markets, on the highways, or in the schoolyards. It could be (human) nature at its best!
- If the true "fraud" in commodities is the derivatives side of things (100:1 leverage), and this has been building for 10-15 years, wouldn't that be an indication of a "weakness" in the market as a whole?
- We got a taste of what happens when leverage collapses two years ago. All of the "predator banks" would have been bust, had it not been for the tremendous generosity of the American people!
- Now that there appears to be a greater concentration of predators, and even more leverage than ever before, what would be the best way to position yourself for the next big market event?
- And if you happen to position yourself correctly to take advantage of the next panic, how do you know when to jump out, and into what?
Hmmmm.... lots to think about.
Next time wont be just a panic...it will be a collapse when the 1 QUATRILLION+ Interest swap derivatives blow up
With all the shit coming down in this country, which really gives a flying f*** about manipulation in the silver market!!
A good depression might be just what we all need! It sweeps away all the crap. It purges the whole system. Government becomes impotent so it can't do much and the entitlement mentality goes away. People need to take care of themselves and their neighbours. They actually get to know their neighbours again for the first time in two generations because they need to depend on each other. True communities develop and rise again.
Through it all, we have a tremendous boom in music, art, entertainment, architecture, innovation, etc., all driven by the people!
Then the government tries to get back into the driver's seat and starts a war. But if we could stop that part, depression might not be so bad!
* by snowdude on Tue, 04/13/2010 - 19:15 #299226 A good depression might be just what we all need!
*******************************
I'm afraid your right-all those points you made-do happen in depressions-for society-they are a good thing-but-- couldn't the sob wait until after i croak--
this is what my girlfriend keeps saying... it will be a good thing for society. maybe this is also the opinion of TPTB. creates adversity in what was becoming a lazy populace... life was too easy for too long. time for us to grow stronger and figure shit out on our own instead of being given cheap life-changing technology that we don't even make ourselves. depressions make (mark?) generations. maybe people will start reading sites like zero-hedge and figuring our just what the hell MONEY really is.
Have you considered the concept of Peak Oil? I'm more inclined to the view that a "good depression" would be the start of resource wars, followed by Mad Max, followed by Road Warrior.
Lost confidence in dollar would send us straight to Road Warrior in weeks. Bartertown in a few lucky, unmolested pockets in the West.
Gulag Archipelago for everyone else when the music stops.
because exposing the manipulation in the silver market will have a 'snowball effect' in all of the other markets. this manipulation when exposed and corrected will re-price everything.
umm you new here???
An I would care, as I would like to be on the right side of the trade...
Chinese savers will inevitably force their hand if we can't muster enough physical demand here, although that may take a little longer.
Quite a few have commented that they didn't understand some of the article. Best way out of that is to look up some of the nomenclature and abbreviations. Google really does work well. I had to do that at several points. Funny how I got lost in the search and had to scratch my way back to the article -- tired but smarter. This information will be cumulative, and the next one on the screwing of the little guy in the metals markets will be more readable. This was a great article, whether fully true or not, because it gives a good overview of how the market works. CFTC, where are you?
Raccoon I think I can understand the core of the article particularly the gentleman's agreement with W Buffet. ( I thought this was widely known)
What comes to my mind most from this information is that these guys can play with the peoples paper and manipulate its capital for decades if they so wish.
The only thing that will stop these games suddenly is if a hostile power such as China or Russia calls a end to these games and demand physical delivery but that will seem a act of war to the bank/political class.
The slower brake on these activities of course involves a breakdown of the western culture and economy caused by a continuous interference in the most important symbolic feature of the capital markets.
Unfortunetly I am betting on the latter.
Gold is making a pilgrimage around the world. The Germans wanted their gold back from the U. S., Dubai wanted its gold back from London, the Russians have been adding to their gold stores like crazy, the Chinese are mining and storing their own gold. An amazing migration of gold, the Brits sold at the bottom of the market to cover somebody's ass. Think of it like musical chairs -- somebody is gonna lose!
Everyone should subscribe (free) to Ed Steer's daily email. Everything that's fit to know about the daily doings in the precious metals, and some humor thrown in for fun.
http://www.caseyresearch.com/displayGsd.php
won't matter a damn.
...until it does
That is the money quote.
And one of the commenters asks, why should we care?
Its the malinvestment and moral hazard, stupid. The markets do serve a function, besides being your personal toy. And when you pervert that function, and cripple the markets over time, you rip the heart out of the real economy, and distort it, create bubbles and shortages, and gut the public welfare and trust.
I won't appeal your to your humanity, compassion, or civic conscience. I'll appeal to your self interest. When they get pissed off enough, they will come after you, and hurt you and a lot of other people, really badly. Oh yeah, it hasn't happened yet. And with your limited understanding of history or anything else that doesn't dwell in your wank-o-sphere, you don't see it coming ever. But when that ball starts rolling, it won't easily be stopped, and you are going to be living on hurt street. That's why you should care.
Once upon a time a man told a small village, “I will buy monkeys for $10 each.”
Since there were many monkeys in the forest, the villagers caught them and sold them to the man.
As the supply of monkeys diminished, the villagers’ efforts slowed, so the man offered them $20 each.
They renewed their efforts but the supply of monkeys diminished further, so he increased his price to $25.
Soon no one could even find a monkey in the forest.
The man increased his price to $50, but announced, “Since I must go to the city on business, I authorize my assistant to buy monkeys on my behalf.”
As soon as his boss was gone, the assistant told the villagers, “My boss has collected lots of monkeys. I’ll sell them to you for $35 and then, when he returns, you can sell them to him for $50.”
The villagers rounded up all the money they could and bought as many monkeys as possible. Then they had monkeys everywhere…
… but they never saw the man or his assistant again.
And now you understand the workings of the stock market!
That was the best thing I ever read.
Just a long, drawn out way of saying, "A fool and his money/monkeys are soon parted".
Obviously, your's was immensely more entertaining.
Don't let them make a monkey out of you ... you are worth more than $35
Rockin' avatar.
+1
even the monkey agrees.. ;)
+35
Great fable.
I've been around enough that this stuff should not surprise me, but being fundamentally honest, I just can't fathom the way some people think.
I was brought up that front-running and manipulation is a mortal sin. I am shocked (and not in a Casablanca way) every time I learn how many people do not.
I suppose I should learn better, but I hate to be a cynic. You lose some of your humanity when you do that.
[/naivite]
The dollar and long bonds are weak this evening. Must be be front-running the next equity spike tomorrow. web dizajn
That's a great story. Probably where the term "monkey business" came from.
..... but another schill came there and bought the monkeys for $5 each, bred them, and proclaimed them and endangered species worth $70 each.
...later on another guy came in and said, for a fee, he would bundle all of the villagers claims for $50 (that the villagers knew were worthless) and sell them to the villagers in the next village over.
I've never had the pleasure of being a client of one of the big investment banks. I don't think I will ever have that much money to interest them. So if they do have all these "big" clients that they regularly fleece, why do those customers stay there? Do they give them periodic teaser wins like a slot machine?
After I got my first fleecing by a broker, I bailed on him right away and went into cash temporarily. I should thank him because it was just before the big market collapse a couple of years back.
A monkey suit and a big office can do wonders...
"Half-truths"? Anyone who watched the WaMu hearings today knows that that is being way too generous!
Jesse,
well said.
+ matthew 19:24
Awesome stuff
Coincidentally, the dollar and long bonds are weak this evening. Must be be frontrunning the next equity burst tomorrow.
I hardly understood a word he said, but i'm in agreement, the cons are winning, tread softly or with a big stick! Either way, cya and have an exit strategy. And don't puke in the car! (1 comment down and counting, thanks lothar for contributing with my no knowledge of post contributions)
It's annoying when people ask "what can you buy with gold or silver". It doesn't matter if you are talking about money they you don't plan on spending.
Well, Silver miners, (and gold miners) to get financed for mining, must hedge their "future" digging of silver results, to pay back the loans from banks (gold would be to the bank of Saud, (think oil and $20 a barrel oil to $80 and $300 gold to $1200)). So they sell their silver now at a price they feel will allow them to stay solvent, (before they dig it) and deliver later, at what ever price the market is at when they bring it to the market. This is why the "futures" markets exist! Just like a farmer planting his crops, and hedging the market to ensure he gets paid to deliver: or not, if his crops fail.(he sells it first , then delivers it later)
The shorts of GS and company, (which are the unnatual amount of shorts in the market, added to the already shorted market by the producers) ensure that there is no profit from mining (gold for the bank of Saud) and ALSO there is no depreciation of currencies (for the FED). Now do you see the protection the manipulators have?
Warren Buffet was simply out to make margins and saw an opportunity (which he is very good at I might add) to make more currency, he has no (on the table) interest in real money.
I hope this helps.
Sounds parallel to the ploy used by FDR. His confiscation was blatant, his intention hidden (as he was captured by JP Morgan) . The banks don't need that blunt tool any more, but the govt does and that's why they keep it in their arsenal.
I kind of left out the important part of all of this. Gold is money, and the Saudis dont take dollars (per se) for oil. They (we) want cheap gold, so we have cheap oil. This is just as important in the price suppression of gold. If silver were allowed to move higher, the rational would be gold should be higher, as silver is still linked to currency in our minds. So, when you (or I ) scream we want gold and silver to go to the moon, we are asking oil to go to the moon. Will high gold and silver prices change your life? You bet it will, and even if you own it, your lifestyle probably wont improve very much, just everyone else's who dont will get worse. Prices for everything will skyrocket and drop us into a depression or worse, its a high price for being right. It will happen, the mistakes with currency have guaranteed it, but just remember what you are really asking for. All I can hope for, is one more summer of bliss.
What it boils down to is; they get to see your account balance, your primary trade position (long or short) and your stops (risk limit). Having a new, fragmented group of players to fleece, self-assured with their large pools of money and slack regulators, they only need to move the market in a small way, using less risk, to make the small player jump ship. These are amoral trades (boo hoo, I know) that are not about price discovery. This is about fleecing through manipulative transfer.
Imagine the thievery in the Forex markets. The advert. at the top of the ZH page, on how to avoid losses betting in the money markets, using "Only one simple trick" sounds pretty Tricky to me, having just read the number of simple little tricks they use to surreptitiously (what an apt word from GATA) disadvantage the small trader in the PM markets.
Boy, constantly reading how I was fucked over, pitting the fundamentals against these deceitful vipers, keeps me permanently out of their pit. ( Once again.... boo hoo, I know already).
The short answer, everyone get physical, it will kill their game.
Lastly, avoid the ETF's like the plague. Heed his warning. It's just another plan, devised to attract the small player's funds into a concentrated central pool, so as to be controlled and scammed by the big boys. Why do you think that the likes of Soros is in there, probably hedging his bet in the OTC markets? His bets against yours. Once they convince you to use your money to centrally pool gold, using attractants such as; no margin requirements, , physical purchased so tracks the price of gold, leverage in your favor (that sounds all too-good-to-be-true, just like the real estate scams), it's all AAA, (trust us,........ you know the story) they have you where they want you. Your money is exposed.
Next act, the gov't will then get in for their cut, by using some National Interest or Security claim, to confiscate the lot. No need for them to look in roof cavities, septic tanks, buried under metal pipes, in the garden, in the well, overseas, in a buried vault, in a wall cavity, in a safety deposit box, in an IRA, in the vicious dog's kennel, the fireplace, the dung heap on the farm, the cookie jar, the spare wheel, the fuel tank, the rain water tank, under fence , the foundations, the linings of you clothes, they know them all.
You have been warned.
Just one thing, being "long" an etf, and IF what we believe to be true, that they "borrow" metal for the most part, rather than taking physical delivery. That does NOT put upward presure on price (unless they go long the futures market or actually buy physical for YOU), but if not, simply removes the pressure on physical, allowing for timely delivery of the market. No physical, no pressure, you bought it, sort of, maybe.
NOW, I believe that etf's are at least covering their bets by going long in the futures market, or are borrowing metal by leasing it from an entity like a bullion bank, but what do I know, nothing, if I did, I would be rich.
Dont hide your metal on your property.
what if i hide it inside a print out of the health care bill?
rotf
He who HAS the gold makes the rules, can I?
Hamurobby
Perfect place. No on has, or will, pick up that stinking pile of shit.
What a hoot!
SMSL! (Shit myself Laughing) Excuse me, must go.
++
"What it boils down to is; they get to see your account balance..."
yup. and when the average banker sees that pallet of gold in the basement, they ... just ... can't ... let ... it ... sit ... there ... MUST ... lease ... MUST ... leverage ... even ... though ... prospectus ... says ... can't ... do ... that ... uuuuuhnnnn.
just imagine if you (market maker) could see the groupings of stops and limit orders waiting to be triggered in the queue. imagine trying not to use that information for profit...
MUST ... sell ... now ... MUST ... trigger ... cascading ... stop-losses ... MUST ... buy ... back ... low...
just imagine...
No author's name attached to the article? At least Andrew McGuire was a name. But given McGuire's purported automobile 'accident', maybe that shouldn't be a surprise.
Holy Sheep-dip Batman! Debasement of the conspriracy theories!
It started with gold... then the shlock market... now silver.... pretty soon it will be finblogs...
...just don't tell me twinkies are fake, then i will be suicidal.
Peak Oil!
or in other words, BOO!
i hope everyone here that owns PM's has physical in their possesion. the only way this scam may breakdown is if everyone continues to demand physical delivery of the metal and does not participate in derivatives.
ok - why is there this whole 'demand physical' when you can sell your paper gold now and then just go buy some gold???
why try to get blood from a rock?
Please elaborate.
he means "demand physical" from the COMEX.
not only from the comex - everything that has anything to do with paper metals...get the physical metal off the market. the less thats in the market - well you do the math.
i am referring to individuals that own pool accounts or unallocated accounts or certificates or even some that may have serious personal futures contracts. those people should demand the physical metal and not let the ponzi continue to game you....and yes those that participate in ETFs should sell their positions and buy physical. get out of anything that deals with paper.
I don't get what DPOS is saying.
That silver bar glued to the homepage is sexy.
I lost it very early on.Way outta my league. Suffice to say that when I read th eames of JPM, GS et al, I sensed this piece relates to some nefarious activites!! Given all that has transpired, so what?
http://www.youtube.com/watch?v=4ADh8Fs3YdU
I do not think owning the metal is enough. If there is a way to screw the little guy buying 10 silver philharmonics at a time the TBTF's will find a way to do it. My little purchases will not make a difference. What wouls make a difference? Scaring the trust fund crowd into taking delivery. How to accomplish this? How does the little guy get the trust fund crowd, that no doubt is buying paper gold from the very banks that don't have gold to cover? Well I do not have an answer to the catalyst but I do have an idea on deterrents to storing gold. Maybe these are more useful now. Remove the deterrents and then use the catalyst...
So you own 10 bars of gold where are you going to keep it? A business needs to get into the business of storing gold/anything of value. http://www.missilebases.com/properties . Just an idea. Goldmoney's vault in Jersey could be a solution. If they start marketing their facility for owners of gold that want to see what they have bought.
Hi world - they used to call those safe places to store your PMs banks...
I wouldn't have known that if I hadn't started lurking here.
Letting someone else hold your gold is insane at this point.
And safe deposit boxes? You might as well hand your Philharmonics directly to the bank teller making $20K a year and eliminate the middleman.
I do not think owning the metal is enough. If there is a way to screw the little guy buying 10 silver philharmonics at a time the TBTF's will find a way to do it. My little purchases will not make a difference. What wouls make a difference? Scaring the trust fund crowd into taking delivery. How to accomplish this? How does the little guy get the trust fund crowd, that no doubt is buying paper gold from the very banks that don't have gold to cover? Well I do not have an answer to the catalyst but I do have an idea on deterrents to storing gold. Maybe these are more useful now. Remove the deterrents and then use the catalyst...
So you own 10 bars of gold where are you going to keep it? A business needs to get into the business of storing gold/anything of value. http://www.missilebases.com/properties . Just an idea. Goldmoney's vault in Jersey could be a solution. If they start marketing their facility for owners of gold that want to see what they have bought.
never really post here, but this is easily one of the best pieces yet. I'm a trader and I can't believe how unaware I've been to these games. I usually just stayed out of the market around OPEX as the trading was illogical...more like criminal
I'd like to think I'm doing my part. I took physical delivery of another 200oz of silver today - an order that I placed within half an hour after the Andrew Maguire story broke on ZH. Reading the body language of the Northwest Territorial Mint agent, I got the impression that she was scrambling to fill orders - it sounds like a lot of people are getting antsy about taking delivery of orders ahead of time, instead of the "normal" 6-8 weeks.
I dunno, business has been quite brisk every time I have been in NWTM
just sayin
Most importantly, understand, the banks have held most of the world's gold and silver. This has made it easy to manipulate. America is buying more gold and silver. We are taking control of our money. We must continue.
If you think your gold and silver is in a bank, ask for it, and keep a hold of it. If you are worried about losing it, buy a safe, and do not tell anyone outside of your family. If you NEED to talk about it, and do not have people you trust with your life, let Zerohedge be your family.
The more you find out about humans, the better you like your dog.
I don't know about more regulation as much as I think we need more people trading in the markets, more liquidity.
I long for a world where prices for everything are discovered in a liquid market, like even for pants, toothpaste, kidneys, and stuff.
As a a energy risk manager this is the kinda shit that gets me pissed off. We trade for our clients and with the exception of a few floating storage trades never for ourselves. These banks come in promise liquidity and proceed to fuck their clients every chance they get.
Thanks. Appreciate the post TD.
Still unclear to me what real people can do to survive and prosper.
Thanks. Appreciate the post TD.
Still unclear to me what real people can do to survive and prosper.
on Tue, 04/13/2010 - 23:59
#299531
Thanks. Appreciate the post TD.
Still unclear to me what real people can do to survive and prosper
*******************************
The most important thing people can do-is-accept that it's different now--
stop spending-stay away from credit-shed debt and start trying to save--
Jobs-look to nuclear and green technology-that will be our future--
Gold mining--makes sense to be digging money out of the ground-in a climate of low money supply--jmo
Anybody still stupid enough to "invest" their money in these "markets"?
What's even more amazing on option exp, day is when they need a close AT a price. In corn they peg the market right at the "middle strike"--the price between the hi open interest put and call strikes. I see in the Corn market on those fridays do exactly this. You can figure out the close on the open! Huge open interest in the 360 calls and 340 puts? We'll set the close at 350.....happens all the time...pretty amazing I guess. Like I said before...all markets are rigged--just to what degree!
Johnny - are you on the floor?
good stuff dude.
Anybody who thinks any of this nonsense is new should Google "Hunt" "Silver Rule 7" Same old game, new batch of suckers.
IS there a way to make these pages shorter? Is a real killer, especially on my cell phone.
silver bullets kill vampire squids.
I'm not sure this meets the definition of whistleblowing, as the author wasn't an insider who witnessed illegal activity. It does describe manipulation, though.
At this point it seems that any futures market can, and probably is, being manipulated. Consider that coal is the best performing commodity recently and it doesn't trade in the futures market. Does this mean that many other commodities are being manipulated lower, perhaps with implicit government acceptance?
some random foolish thoughts for your morning amusement:
2) speaking of funny, funny how that old republic (now HSBC) vault in bryant park keeps popping up in these stories. you know republic, the bank that squealed on martin A and whose ceo died in a mysterious fire right after he sold the bank to HSBC? like i said, funny.
5) whoever you are sir silver surfer whistling a dirty tune, thanks for the edumacation. you are a true warrior in the quest for the elusive holy efficient market grail by allowing the rest of us to share your sword of information symmetry.
3) in the "save the silly sheep shorn secretly by suckas" dept., per the cafe americain, be warned that proshares (aka jpm in a tricky dick mask) ETFs are reverse splitting this week. since jesse's last summer warning on the direxion (aka squid in a hopey mcchange mask) reverse splits, FAZ is down ~70%.
4) in the 'she sells short silver slippers' dept., if the OZ metaphor is correct, is this who's playing the wicked witch of the west?
http://www.businessinsider.com/ladies-of-the-financial-crisis-2009-7#the...
1) speaking of phibro, anyone else wondering what bubba's good buddy marc rich is up to these days? funny how he manages to stay out of the headlines, given all the brouhaha over tax evasion of those 'high net worth american citizens'.
6) who needs to read robert ludlum novels when you got zero hedge? reality is indeed stranger than fiction, but maybe fiction has made reality predictable.
Don Delillo? Thomas Pynchon? Gore Vidal (OK, just 'Messiah')? Then for comic relief Carl Hiasson....
Paper is dead. The market is dead. When bonds die.......oh me oh my
.
herman melville? henry miller?
time to go thoreau on their dead ass?
Death by 1,000 cuts.
1) Go long.
2) Take delivery.
3) Put it in a vault in Switzerland.
4) Hang out on lake Geneva.
At the end of the day the underlying commodity has created a securities market much bigger than itself. Therefore, the marginal traders DO control the market. (See step 2).
Or DIY in Jackson Hole.
soundbite? that is a chapter of a book with bullets instead of indents.
> silver quarters (pre-1965) will always be money <
Yeah, and dimes are better yet, as even a quarter will be worth a LOT when 'the day' comes, and you don't want to have to take anymore fiat 'change' than necessary.
I agree with the whole 'demand physical and hold it yourself' POV, but most of us need to make a little money to live on, and we can't afford to bury ALL our assets. I think trading silver futures is a legitimate PART of the optimal strategy. I buy at or below the 200 dma and let trailing stops sell me out on corrections from highs. No trading strategy can save you from what JPM was allowed to do in '08, when they dumped 35K contracts of naked shorts on the silver market, but buying low and selling high has generated more than simple buy-and-hold.
RAF
For the truly impoverished, save your pre-1982 pennies. Two hundred pennies is worth $5.00 melt. Two hundred pennies weigh a little over a pound. Pre-1982 cents are 95% copper; 5% zinc.
http://www.coinflation.com/coins/1909-1982-Lincoln-Cent-Penny-Value.html
$0.0237813 is the melt value for the 1909-1982 copper cent on April 14, 2010
If you have a coffee can full, chances are that half of them are pre-1982.
Of course it is, and I hope you get very rich going long very soon. No one is demonizing traders, just the massive short positions GS (and others) take to hold down the price of p metals.
The problem I see is, they (gs) will just change strategies by mobilizing other banks to join in and spread the load of shorting, so nothing (position wise) will change, it will just be a cascade of shorts from different sources. It will just make it more difficult for manipulators and then it will be, "see nothing has changed, the market is fair" and it will be business as usual.
As far as GS dumping 35k of shorts on the market in 08, that was currency support. It made silver (and gold) look like just another stock instead of real money, Iwonder if they made any money on that trade? LOL
what are you talking about with the 35k shorts in 08? the august sell off from 14 to 12 in silver? little help here. tx
thankfully you can win the game simply by buying the physical silver from a local dealer and wait for it to hit $40
but wouldnt keeping the price of silver down be a benefit to manufactures & comsumers in terms of lower production and purchasing costs?
Its one of the good platform for awareness of people. Keep sharing such stuff in the future too. xbox 360 s
I found
lots of interesting information here. The post was professionally written and
I feel like the author has extensive knowledge in the subject. Keep it that
way
sportsmanagement degrees