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One picture explains so much. One is the Comex Gold contract, the other is the Hong Kong traded one. One bid is above the other's ask.
h/t LKL
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good luck with that
Um, am I missing something here?
Could it be that if they are taking delivery on any of those contracts locally, that the real spot is being discovered?
You could only arb this if you can deliver and accept in two places, right?
Interesting take down in Gold and Silver this morn by the banksters and Benocide.
So why the need to monkey hammer precious metals if no QE3 is coming?
I questioned in another thread if an Ag smack down might be a pre-emptive effort to discourage PM types prior to an expected general stock pull back.
Great risk-free trade/arbitrage indeed but i wonder how many ZH readers can trade on Comex AND on the HK exchange? I guess not many unfortunately
Yen C, you on it?
As for the PM attacks: need to maintain the 'USD up/PM's down' illusion for as long as possible?
Without QE3 precious metals are going to monkey hammer themselves.
Indeud, no QE3 means the US has dealt with every single one of its problems, financial and social, and so the dollar is the safiest of havens as it basks in the glory hole glow of its issuing utopian model society. Certainly no one would dream of using any hocus pocus'd dollar strength as an opportunity to pick up hard assets...I mean there are 600 trillion in derivatives out there in the ether (or inhaling it), so technically no one has any 'dollars' anyway. In fact, using my handy Tandy PC, I calculate that every dollar should be priced at 1532 oz's of gold, and it's only a matter of time before the market catches up with that reality.
Exactly. So the question is: Is this natural selling? Are drops right at the open of 2% in 3 minutes natural?
I agree with you, but my point was that the metals are still being manipulated down by the crooked banksters. With no QE3, there would be no need to manipulate them downward, as they will monkey hammer themselves.
What this does is reveal to me that more QE is coming in one form or another. Otherwise, there is no need to produce these decisive short duration drops.
Bullshit. Try to explain golds 11 year bull run when QE was not part of that process for 7 or 8 years?
Nothing has been fixed. In fact, the currency wars (competitive devaluations) are getting worse.
+ $1530
NONE of our financial prblems have been fixed.
NO ONE of significance has gone to jail.
I'll just keep on buying gold "poco a poco", just as I have done sice the 1980s.
Anyone who wants a link to my blog, please gmail at my name above and reassure you will behave.
Because price increases of non-discretionary items (note I did not say inflation because total cash + credit is contracting) due to QE1 and QE2 are baked in and will eventually be expressed.
There is nothing interesting in the take down as this has been happening for many months now (the so-called "waterfall declines").
After accidentally letting silver get "out of control" (i.e. start reflecting the underlying investment fundamentals), JPM et al. have been keeping silver under $37.50. Not sure what is so magic about that number, but I'm sure theories abound.
And yes, you're spot on. Commodities must be kept in check so that there is "no inflation" so that we can start QE3.
I fully expect when the market tanks, due to lack of QE-heroin, that the commodity complex will be monkey hammered in spectacular fashion. Not that it would need the help as the riskier assets will move down more quickly.
However, gold and silver seem to be behaving, more and more, like the "currencies" of choice. I don't have actual numbers to back this up, but at current prices, and sharp spike down pops right back up rather quickly.
If you're speculating you're going to get your stops hit (but it seems like most of the specs on ZH know the score). If you own physical gold and silver I don't think you'll care much. The price will go right back up due to demand. Even if there is some confusion at first, do you really think people are going to pile back into stocks once they tank (and people wake up to the QE-induced stock bubble)?
I think that will be a one-time transfer of confidence from paper to the metals.
Anyone heard those rumours about Hong Kong harbouring terrorists?
They hate our freedoms.
let export some more DemoCrazy
Nothing a few hundred TOMAHAWK$ can't fix, fire at will!
LMAO.. very good, Escape key.
I thought Bernanke, Geithner, Dimon - et all, were still in the US of A ?
i heard jets, tanks, and large ships are attracted to hong kong.
Also pretty girls, also young trader studs, hooked on coke and fast bonuses, who love the chicks...It's the place to be...
transaction cost too high for arbitrage
The difference seems too small unless it's a massive carry, which of course holds its own risk, no? I keep forgetting it's all electronic though. Certainly if it involved real delivery it seems unlikely that you could take advantage.
It works for the WE BUY GOLD types.
Gotta love inefficient markets.
What's up with the spread in HK?
Yes, the spread in HK seems to be saying that the contracts are somewhat illiquid. Don't know if you can infer to much from this.
CRIMEX default risk premium...
Can someone explain this for the lemmings (self included)?
pay the offer on the Comex contract and hit the bid on the HK contract. make 5 points
why dont they do it? supposedly these people are the "smartest in the planet"
but then to close the HK contract, you'll have to pay 15 points over (or deliver a kilo bar to HK).
A buyer in HK is willing to pay more then what a seller on the comex is asking for.
Buy on comex and sell on HK.
But will transaction costs eat up the arbitrage?
Depends on the depths of your pockets, to some degree; I'd look closely at what the HK contract's expiration settlement is denominated in though...could be FX fuzziness alone.
Not if you are a gulfstream equipped New Yorker with a penchant for weekends of gambling and hookers in Macau - you don't even have to leave the airport facility in HK on the layover.
But I suspect there has been some shrinkage in the industry as risk arb has morphed into riskless arb.
In every COMEX exchange, there is a price that you can buy a commodity for "the ask" and a price that you can sell the commodity for "the call." There is a small gap in between the prices of the two in order to keep the comex running. Currently, what the data provided shows is that you can buy gold in the US for less than the price to sell gold in China.
1535 is larger than 1530.
is that in guns or food?? what site is this??
No worries, it's transitory...
Is it because one exchange is less fraudulent than the other ?
In the electronic transaction age that is like taking candy from a baby. I don't think there is any hidden extra cost in there that can nullify a 5 dollar free margin!
Wow, that is non arbitrage of an unbelievable kind. Whose says markets are instantly interconnected all day long? This defies logic. Where is the invisible hand that we can't see?
Just a normal movement to a legitimate market from a fraudulent and corrupt one as PMs search for true price discovery
I would not overrate this... Simply higher Asian demand and spread reflect transaction costs.
Who cares? No gold trades hands, and they caan't get any, anyway...the longer these games go on, the surer their demise.
And WHY are futures contracts in which delivery never takes place allowed to influence the price of the real metal anyway???
because it can.. kinda like painting something pink makes girls buy it.. in fact we should market pink gold to start a sound bubble
You know, you might be on to something there, seriously.
you'd have to be really big, too big to fail, to take advantage of that....ie NM Rothschild & Sons for example...hey wait havent they done that before?
Funny as hell!
Is this QE3?
Can you imagine how many shots that guy can pay for with the local hookers if he is a trader on his own with a pecker singing "lonesome cowboy in yin-yang territory". Let's see I place 153 000 USD with a 20/1 Forex ratio, that means 7500 $ from my pocket and I pocket...
500 $ instantly! ...Not bad...I can hit town now!
London Coffee and Cocoa constantly differs from their NY counterparts. Supply and demand.
We can expect the exodus of trading on the COMEX futures to soon begin.
This shows the difference between a relatively free market and a totally rigged one. I personally think that the Chinese powers are going to forget about just buying the dips and go whole hog for PMs as they deleverage USTs. A big gold dildo up Bernanke's and Geithner's ass.
Our man in Hong Kong, WilliamBanzai7, must somehow be responsible for this. It's the only answer since all markets worldwide operate out in the open and completely free of manipulation.
Banzai7.....show your face your dirty bastard. :>)
My bet was on, "One country, two (PM quote) systems."
Good luck in getting physical delivery from Comex. I guess they will either tempt you with more fiat. Or push come to shove, they will just have the contracts defaulted. Without position limits, on top of the manipulative margin requirement, PM contracts in Comex is just a big con trap. I hope Hong Kong and anywhere else succeed in their exchanges. If I were PM producer, I would no doubt put my contracts up in the HK exchange. At least I know the price won't be artificially slammed down for nothing.
HKE explicitely advertizes its HFT features. And they outsource margin management to outside of china.
The inventories may perhaps not be messed around with, but i do not see how it protects against market manipulation.
This makes the COMEX exchange useless for hedgers. Why would they hedge physical buys with paper shorts at the COMEX only to take an instant $5 loss?
Strong form efficient market hypothesis says your screen shot doesn't exist.
Nice.
CD +10
I mentioned such a possibility a few weeks ago, and for lack of a better word called the opportunity "distributors". If one exchange manipulates prices more, than another exchange, then it can become profitable to transport goods from one exchange to the other.
I am not sure if i think that china has an interest in doing this for PMs, but i wouldn't exclude such a scenario happening.
My "Formula" is 100% correct.
Dow 9,000 = Gold $1,000
Gold $1,650 = Dow 15,000
Your formula failed miserably last Friday so you can throw it away and start working on one that works...
hey robo, can you at lest provide next time a function - we are a sophisticated forum
the funny part is that he says his formula is 100% accurate yet it hasn't happened.
He just doesn't know how to spell "incorrect".
Notice there are quotes around "formula" beacuse it is really another word for "delusion."
here's the real reason for the serial posts by the poster known as robottrader who actually is a part time contract 1099 processor for a small commerical bank.
vz at low of day: check
hd at low of day: check
mo at low of day: check
etrade account balances all red: check
doing anything to distract himself from reality of failure: check
shorted market once 1300 broke as said he would: no
deer in headlights: check
Your LULU pick was garbage.
But, I do think an equity collapse is going to be deflationary to commodities too, and possibly the PMs included in that.
Notice nearly all equity down days are accompanied by gains in the US dollar and bonds.
Where is this 'gaining USD' you speak of? Or by 'gains' did you mean 'parade of dead cat bounces'?
If only the arb was the other way around. Get short Crimex and long physical.
Arb with bells on...
I see the invisible hand of the market stepped in and provided support at exactly 12,000.
Hong Kong contract is for 32 ounces. COMEX contract is for 100 ounces. My guess is the HK contract trades at a premium because it's a smaller quantity.
Nobody cares about the HK price.
99% of all the hedge funds that are trading are watching the COMEX spot price.
And they place their "Risk On" and "Risk Off" bets accordingly.
Period, end of story.
Smart people don't worry about what hedge funds are doing. Period, end of story.
Just keep holding those widows & orphans stocks Momo. lulz. Down again...
for the new and unvarnished at zh the serial posts by the commenter known as robottrader will continue to mount in numbers as his losses accumulate in his ever decreasing etrade account.
his most recent tout is down 45%, that being tzoo, which has fallen from $103 to $59.
Absolute best headline title today:
"viatnamese dong softens further".
Yep, guttermind here.
So the short Vietnamese dong rumor turns out to be true?
In Vietnam, you can tip the strippers with Dong.
Sorry about your short dong. Maybe don't announce that on public forums...
In this day and age of blatant comical absurdity can we rename QE3 'TITANIC II'.
The contract price difference is only the "Tungsten Premium" no more no less.
I stopped playing economic games, all excess money is going into physical PM for my pension in 35 years.
5k cash rest in PM, I don't really care what it will be worth by then since it will still be worth something.
Market maker leaning
Someone posted months ago maybe a year about most down moves in metals are during US hours while they get manipulated, and then metals generally rally in overseas hours. Anyone have an update on this? Would be interesting to see the data/trends.
I've been watching kitco graphs on G&S everyday for about 12 months. While I don't have hard data, I can tell you that these "waterfall declines," where it looks like things are in freefall, always happen around 8:30 NYT. Remember that's during London hours.
And yes, there is generally a rally which starts around 21:00 NYT, the start of HK trading (although sometimes it starts around 2:00 NYT, the middle of HK trading).
EDIT - these takedowns happen so regularly now. I used to get irritated, but now just completely accept the obvious manipulation.
I did a little search...this isn't exactly what I was looking for but it is as complete as is needed (and TD will like it because it's from ZH).
http://www.zerohedge.com/article/guest-post-gold-market-not-%E2%80%9Cfix...
Edit: This may be the one I was thinking of
https://marketforceanalysis.com/article/latest_article092110.html
or this:
https://marketforceanalysis.com/articles/latest_article_081810.html
Are they fungible?
The HK contract is brand new and deserves to be followed. A few people are likely to pay a premium to have their gold kept outside the US. Hence a small premium over Comex might be a structural factor.