Oil, Gold Rise And Silver Surges To Record On MENA Contagion And Greenspan’s “Faulty” Fiat Currency Concerns

Tyler Durden's picture

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slow_roast's picture

At what point does a billionaire step in, buy 10,000 contracts at COMEX, deposit the fucking $1.75B up front, and stand for delivery?  That's not a lot of money; David Einhorn would be my choice.  He'd have a movie made about him. 



sudzee's picture

Or 10,000 little guys each buying one contract.

equity_momo's picture

Someone should start a whip-round and a facebook page. Group discount?

EscapeKey's picture

contract sz: 5,000

current price: $36.40

contract cost: $182,000

And that's not counting actual cost of delivery (van rental, etc). I doubt that's within reach of the average "small investor".

equity_momo's picture

Lets pool it in 10s. so we need 100k people.  Someone call Charlie Sheen and tell him to hook up with Max Kesier. Thats a winning formula.

Bob's picture

LOL.  But, beyond the humor, Sheen has, what, 2M facebook/twitter friends?  I think he might be very up for this idea--he's got a very big ax to grind . . .

Anybody know how to get in touch with his buddy Alex Jones??

Hmmm, I bet Kaiser does.

equity_momo's picture

Im sure he would. He could also be the anchor order to get things kick started.

Bob's picture

Sounds like a plan.  Anbody who can get the ball rolling??  My surboard is short on mercury . . .

Abitdodgie's picture

The only problem with that is IF the comex did default ,well we loose big time , all that money gone

Upswaller's picture

It's 8:25 am.  Do YOU know what Blythe is up to?

chopper read's picture

the 'average investor' is driving demand from the dealers and private mints.  the private mints are buying in the futures market.

slewie the pi-rat's picture

well, equity momo, i thought the greenspan one-liners were fantabulous!!!  plus, since i don't hafta look at the pathetic little monkey, i can imagine him wielding a Geo. Burns Panatella and just shrugging off the launches...

rosie and the earl of morningwood want to have a little chat this morning, then, i believe i shall breakfast alone, on lucky charms & whipping cream.  again.

BigJim's picture

The most sensible argument I have heard against this is that it would kill the goose that's laying the silver eggs.

The 'Buyers of Size' wish to acquire as much physical silver as they can at these artificially low prices; a COMEX default would put a stop to that.

As long as our governments (via their proxies, JPM et al) are willing to keep prices low by naked shorting, made possible by diluting our money via limitless creation of fiat currency, it's in no one's interest to bring the music to a stop until all the physical stockpiles has been acquired.

Then the COMEX will default, and we'll see true price discovery commence. Along with the crushing of the USD, $250 oil, etc, etc.

It'll be exciting, yes, but very dangerous for those of us living in urbes. As a parent I'm not looking forward to it, to be honest.

trav7777's picture

real size buyers do not procure physical commodities from futures exchanges.

Those are intended primarily to be cash settlement mechanisms.

BigJim's picture

Thanks for making me think about this more deeply.

If rumours are true, and it is hard to acquire large quantities of physical silver at its current price, then my understanding is that the BoS can decide to take delivery from futures exchanges (and SLV), where the supply is supposedly much greater - much greater because the quantity has been inflated by naked shorting.

As long as the amount demanded for delivery when the contracts expire is less than the quantity the sellers physically can deliver, the fact that the price has been manipulated downward is largely irrelevant. But if more silver is demanded, there will be a default, and the buyers will be rewarded with a cash settlement considerable in excess of the contract's face value. This of course will push up the demand, and the price, of long contracts on the exchange, meaning that any longs that stand for delivery in the future will be paying a lot more for their silver.

My argument is that it makes sense for them not to do this, if they value acquiring physical silver (at its current price) more than they value their fiat.

Comments, please.

A_MacLaren's picture

If the desire was for true price discovery, there would be no unbacked contracts.  No naked shorted paper silver, buyers and sellers would both be on a delivery mandate.  A contract could not be settled in cash.

The contract might change hands many times between it being opened for delivery X many months into the future, but when settlement time comes around, it settles and someone takes deliver of 5000 oz, and someone is relieved of 5000 oz.

BigJim's picture

If the desire was for true price discovery, there would be no unbacked contracts.  No naked shorted paper silver, buyers and sellers would both be on a delivery mandate.  A contract could not be settled in cash.

That's my point - there is no such desire, at least, not by i) central banks, and ii) anyone who wants to acquire a lot more physical at its current price.

The contract might change hands many times between it being opened for delivery X many months into the future, but when settlement time comes around, it settles and someone takes deliver of 5000 oz, and someone is relieved of 5000 oz.

Not always. If the seller floods the market with naked shorts just before close date, they will force the price down, and acquire the long positions at a cheaper price, thus i) not have to deliver, and ii) make a profit.

tmosley's picture

You keep saying that, but it isn't true.

Sure, maybe 99% of transactions settle in cash, but any short that can't or won't cover must deliver real commodities to any long who stands for delivery.  

If these were intended to be cash settlement only, they would be called ETNs, not futures contracts.  Further, speculation in such products would have NO IMPACT on the price of the actual commodity, since no actual supply is withheld from the market by speculators.

Stop repeating this disinformation.

Careless Whisper's picture

We are so fucked.

Yes, what cost $1 in 1913 now costs $20. But so what? Money neutrality states that if you were earning $1 per hour in 1913, you are now earning $20 per hour (and even more, if labor productivity is higher).

So there you go, the Fed is responsible for increasing your nominal wage by a factor of 20. How do all you workers out there like them apples? Ron Paul wants to rob you of these wage increases!

(David Andolfatto, Chief Economist Federal Reserve Bank Of St. Louis)



Hubbs's picture

Problem is not even so much the wage increases set in motion by inflation, it is the take up the ass penalty watching your savings decrease in value.

BigJim's picture

What an asshole the man is. So, if the dollar has declined by a factor of 20, and a hundred years later, wages have increased by a factor of 20, everything is fine? What about the enormous increases in productivity over the last century? What happened to all that increased wealth?

Essentially, inflation has enabled the parasitic financial elites to siphon off all the productivity gains made in the last 100 years that would otherwise have accrued to the common man.

Thanks, Woodrow.

Buckaroo Banzai's picture

Well, at least he knew what he did was wrong.


    "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."
    - Woodrow Wilson, after signing the Federal Reserve into existence.
"Since I entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it." -- Woodrow Wilson, The New Freedom


savagegoose's picture

... and thats the president speaking!

land of the free bitchez.

New_Meat's picture

WW had his eminence grise, the so-called "Colonel" House.

' "Almost from the first," House later recalled of Wilson, "our minds vibrated in unison."  Prior to meeting Wilson, "I was like a disembodied spirit seeking corporeal form," House reflected.  "I found my opportunity in Woodrow Wilson." {Thomas J. Nock, "To End All Wars: ..." pp. 20-21}

' Perhaps the most important area of compatibility between House and Wilson was their shared enthusiasm for socialism.'

Above from foreword by William Norman Grigg, pp. ii from "Philip Dru: Administrator" e.g.:


Then House "helped" FDR to extend the Great Depression, .. er .. New Deal.

- Ned


BigJim's picture

What's cheering about the article is that the vast majority of the commenters see right through his sophomoric monetary sophisms and call him out for the shill he clearly is.

A Texan's picture

This guy is such an obvious liar that it is laughable - or it would be, if the matter at hand wasn't so serious.


First, let's assume that $20 now is equal to $1 in 1913.  His conclusion that $20 of wages = $1 of 1913 wages is dead wrong - and he knows it.  Why?

1)  Taxes are far higher now, even on someone who is lower-middle to middle class like someone who pulls in $40K right now.  Social Security didn't even exist then.  Income tax then was only for the "rich" (those making over $20,000 THEN - equivalent to $400,000 now) and had a top rate of 7% when you got over $500,000 of income ($10 million now).  http://www.taxfoundation.org/publications/show/151.html 

2)  The relative cost of housing and schooling is far higher now, as is the relative cost of health care.  That all comes from wages.

3)  As you pointed out, what about productivity gains?  Do we just forget about them?

4)  I'll bet that transportation costs a lot more now than in 1913 - where does the money come from to pay for that?

5)  What didn't we have then that is considered a necessity now - telephones, electricity, various electrical appliances including TV, electricity to run all of that, cellphones, etc.  Again, where does the money come from to pay for all of those things?


Inflation is the most manipulated figure, followed closely by unemployment statistics.  You want a guide to inflation?  A silver quarter from 1964 is now worth $$6.57 - call it $6.50, which is 26 times face value in only 47 years.  Yet, according to the official CPI, $0.25 in 1964 would buy $1.78 of goods.  I'd say that it is understated by quite a bit.  Yes, I know, silver is only one commodity, and not a terribly important one in most people's lives in terms of a percentage of their expenditures (well, except for ZH'ers, but we're not exactly typical), but that is only one example.  Cars, for example, cost on the order of 10x what they cost in the mid-'60s.  Granted, cars have more standard equipment (much of it EPA-mandated) and arguable have better handling and crashworthiness, but this is normal technological development brought about by competition - IOW, the price per unit of performance (however you measure it) should be going DOWN, due to competition.  I'm sure that all of you can come up with others. 


This guy isn't serious, he's a stooge and a very bad liar.  However the CNBS people and other financial reporters won't even challenge him or his figures, and the average person has not a clue that this moron is advising the Fed.

BigJim's picture

Furthermore, we get taxed on any putative interest we earn on our savings, irrespective of the level of inflation.

AND - on creation, the new money does not get doled out equally to everyone. The first recipients get the advantage of being able to spend it before price levels have risen commensurately. The money trickles through the economy raising prices, and it's the poorest, those on fixed incomes, and savers  who lose purchasing power.

Bicycle Repairman's picture

You underestimate Sir Alan.  He mixes truth with lies quite cleverly.  Some of his current "truth" is newly (re)discovered, and designed to salvage his reputation.  It is now up to some future historian to cherry pick Sir Alan's comments and actions and buff up his image.  The chapter in your grandchildren's history book will be entitled "Sir Alan and Sir Ben: The Men Who Saved the World".

silvertrain's picture

 He would get a pair of concrete Nike's...

That action would be considered terrorism...

SilverRhino's picture

>>Barnes Tells CNBC Sees Silver Prices Extremely High Over 3-5 Yrs
And thus begins John Q public's move into the metals.  $36.70 ... criminy this is ridiculous.


TeMpTeK's picture

If all we did is sell 5 min before the NY open and buy the NY close.. we could get rich in our sleep..

Snidley Whipsnae's picture

China can do it and China is doing it.

Math Man's picture

Guys.  Pssst.  I just heard a rumor that JP Morgan is short wampum. 

The Indians used up most of it 400 years ago, so there is a shortage.  If we buy all the physical Wampum,  JP Morgan will default and we will ruin Blythe and the Evil banksters. 

Buy Wampum and bankrupt JP Morgan.  If we all take delivery of the useless wampum, COMEX and JP Morgan will default!!!!

Harmonious_Dissonance's picture

Hows that stock pick doing??  GEN is sucking it up again today...

clickjaw's picture

Math Man is RNR. He's a Soros paid troll.

Bicycle Repairman's picture

Math girl, you do not know how to troll.  Wait until PMs are down and the market is up, then twist the knife.  If you do not understand what I am telling you, ask the guy in the cubicle next to you.

Quinvarius's picture

Of course the world is going to end up with a gold backed reserve currency.  Nothing else works.  There are no barriers to it.  It is as easy to go to a gold exchange standard as it is to come off one.  The US alone has done it repeatedly.  You don't need any extra infrastructure.

Azannoth's picture

The problem is once gold becomes money again the governments will do everything to control and regulate it

overmedicatedundersexed's picture

"The problem is once gold becomes money again the governments will do everything to control and regulate it"

good enough, but I got silver so it's all good.

I'll worry when the regulate silver american dimes othewise it's all good.

savagegoose's picture

problem also, is when a recession hits, all the gold disappears and theres no money to stimulate growth.  sure these guys fucked up keynes ideas. but in essence fiat wqorks better than gold.

as long as you dont have corrupt assholes bleeding the system.

oh and you cant fight modern war on gold , everyones broke too quickly.

not that thats a bad thing.,just saying TPTB need fiat to run wars way past broke, if they want to win .

in essence  gold holds value, fiat loses value as soon as you print it and pay the guy his wages. as soon as joe sixpack gets his pay, its losing value. pay him in gold it keeps its value.

if you where emperor what system would you want to keep the minions poor and productive?

Quinvarius's picture

The first line of your post is so full of bad assumptions and nutbag economics that it boggles the mind.

Growth comes from savings.  People save money or gold in banks when the banks are solvent.  The banks lend the money and create growth.  People don't save money in banks when the banks are not safe.  They do not save money in banks when they get no return.  When the money that is saved is depreciated, savers become poor.  If a saver's money is depreciated, they cannot save enough money to start their own business.  If they borrow money to start a business, the business is saddled with an effective tax from the bank in the form of loan interest that may kill it.  If money is depreciated, a bank will not have enough purchasing power to make a loan that will do anything anyway.

If you don't have sound money, you don't have anything.  Increasing the money supply does not help the economy over the long term.  It kills it. 

savagegoose's picture

people dont save to earn interest on a gold standard. how does it actually earn interest? prob with gold is growth will eventually  outgrow the money supply. especially if you are paying every schmuch with money in the bank intererst.

faustian bargain's picture

growth will eventually  outgrow the money supply

lol, that's as silly as saying you can't eat gold.

Look, for the infinityeth time, fiat control of money (i.e. legal tender law) is bad for economics, period. Doesn't matter if it's paper backed by nothing, or solid gold coins. If there's no freedom to use whatever currency one wishes, the people who control the money are always going to be abusing the system for their gain and everyone else's loss.

So if the world somehow "runs out" of gold (ha ha), people just start using silver, or copper, or whatever else works.

pacu44's picture

Can we not afford the DHS too?

gwar5's picture

I think you're right. Rickards says all the Fed has to do is announce they are buyers of gold on the open market. Gold would skyrocket and come to market discovery prices, $5-10K. With the (supposed) gold reserves, this would create a de facto USD gold-backed currency.

TPTB just don't want to get their cold bony fingers off of the fiat.

John Law Lives's picture

<<<  "These are judgments that you have to make, I know Bernanke very well, we worked together, Ben and I went over a number of crisises together, I know how he functions, I have considerable trust in his judgment." >>>

Amazing how Bernake so grossly underestimated the subprime crisis... and how Bernanke was under the delusion that home prices would not drop on a year-over-year basis.

Gee, I feel better already...

Alcoholic Native American's picture

50 year mortgages are the answer.  Let's do it!  Oh wait, not too many people are finding 30 years of steady income let a lone 50.  Scrap that idea.

I'm at around the age I should be thinking of buying a starter house, but 1, they are still too expensive, 2, these 30 year contract things sound fucken retarded, and 3, I still have student loan debt.

A whole generation not buying houses, at a time with unprecedented empty houses.


I'll just stick to paying my 225$ rent.



Azannoth's picture

Me doing the same, screw the system!