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Silver Plunges On China Slowdown Concerns, Dollar Short Covering
In early trading, silver is down nearly 20% from Friday highs, and just under 15% from its Friday closing fixing, hitting just over $42 in a slide of $6 commencing just after 18:25 pm. The reason for the collapse is not immediately clear, although concerns of a Chinese slowdown and overtightening are rumored to have been among the culrpits. The circumstantial evidence is in the OZ pairs, with the AUDUSD which has long been a high beta proxy for China plunging in early trading as well. Oddly enough, gold has been spared most of the carnage in silver, and was down about 1% in early trading. Overall, this appears to be nothing more than a short covering episode in the USd provoked by nothing factual. We will keep an ear open for any incremental data to determine if there is any actual reason for the plunge, such as for example that the BOJ has suddenly decided not to pick up the baton in trillions of monetizations over the next few months, instead of just another bout of technical selling.
Silver:
And China-Dollar:
Here is Goldman providing some more color on the Chinese slowdown
April PMI readings suggest weaker growth...
Although the official NBS/CFLP and HSBC/Markit PMIs are supposed to be seasonally adjusted already, they both showed seasonality in their historical April readings (the seasonality in the HSBC/Markit PMI is a lot less consistent and significant than the official one). Considering the seasonal bias, the lower reading in the official PMI and unchanged reading in the HSBC/Markit PMI suggest manufacturing activity growth weakened in April.
...and lower upstream inflationary pressures
The latest reading of the Input Price sub-index (note this is a reference index which does not enter the calculation of the headline PMI), which is highly correlated with the sequential reading of PPI inflation (see Exhibit 4), suggests the latter is likely to show further moderation in April as well. At the same time, with the softening of food (especially vegetable) prices, we are likely to see a meaningfully lower CPI inflation reading as well, perhaps to around 5.0% yoy, down from 5.4% yoy in March.
We believe the underling growth momentum indeed has been trending down despite some data issues...
There have been some controversies regarding the relative reliability of the PMIs versus official “hard” data such as industrial production (IP) as a gauge of manufacturing activities. In March, the PMIs apparently were not strong considering seasonality (headline official PMI went up but much less than the rise in March data historically), but hard data almost across the board showed stronger growth than in January-February. We believe the difference might be the result of unstable seasonal factors in the PMIs and other data complications such as the Lunar New Year effects which often distorts monthly data within the first quarter of the year and changes to statistical standards in terms of official IP/fixed asset investment data (see China: March PMIs suggest activity growth continued to moderate, Asia Economics Data Flash, April 1, 2011 for further details) . Besides, the equal weighting methodology of the PMIs meant when small enterprises move differently from large companies, the PMIs would tend to reflect their changes more than hard data such as IP. Having said that, we believe the trend of the two PMI series is generally reliable and they have both been on a downward trend since reaching a peak in 4Q2010 and there is no clear sign of an imminent change to that trend yet. Within 1Q2011, growth in March probably had a rebound but it appears to be a temporary one.
...driven by continued policy tightening and increasingly prevalent power shortages and possibly a slowdown in exports growth
Our channel checks with commercial banks suggest their lending activities have been under continued pressure from regulators in April. At the same time, there have been increasing anecdotal information on the rise in the actual lending rate (commercial banks are free to charge interest rates above the official benchmark lending rate without a ceiling) as a result of the various quantitative controls. Apart from these conventional monetary tightening tools, the government also seems to be broadening the width of tightening by imposing additional administrative controls on investments in aluminum smelting and production in energy-intensive sectors as a result of the increasingly prevalent power shortage in the country which tends to slow domestic demand growth. Besides, the Export Order sub-index of the PMI has been falling rather quickly since the start of the year which deserves a high level of attention though so far it is somewhat at odds with other information such as our Global Leading Indicator which has been a reasonably good leading indicator of exports growth and it has not shown any meaningful softening.
There are no signs of an over-tightening as yet
Despite the softening of the PMIs, they both stayed clear of the 50% threshold and there has been no dramatic fall in other major economic indicators either. While the 50% threshold may mean something different in China than in many other countries as China’s trend level of PMIs appears to be higher, a slightly below trend level growth is what we would regard as appropriate given there is still a clear need for the Chinese economy to lower its level of inflation.
We expect this policy stance to be kept largely unchanged in 2Q2011 compared with 1Q2011 and the downward trend in activity growth and underlying inflation is likely to continue
We believe given the level of CPI and PPI inflation is still above the government’s comfort zone and activity growth appears to be holding up at a healthy level (yoy activity growth may actually rise further because of a low base in 2Q2010), the growth-inflation combination will mean policy makers are likely to continue to keep the policy stance comparable to 1Q2011 (not March, as the policy stance in January-February was much tighter than it was in March). More meaningful changes to the policy stance will likely come in 2H2011 as yoy CPI inflation is likely to start trending down as a result of a change in base and the expected sequential slowdown.
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Math Boy is not retarded.
He's a prostitute for a dying pimp, turning a trick on a Sunday night.
You sure? "$5 to dig out of the ground"? Sounds pretty retarded to me!
Retarded is recommending people buy this pig at $49.
No no no. 'Retarded' is you gloating long before you've broken even.
The key words: "a drop".
My physical showed no emotion to the news.
Got out last week: time to lever up again on silver in fairy-tale derivatives land.
I didn't hear a peep from my physical metals either.
MM
This is not a trading site though a few here may trade so what the fuck are you talking about. Nobody here lost their entire margin and tomorrow morning the bugs will come out to BTFD in the spot for delivery market. Futures will follow.
Slow market, Chinese Holiday on Monday and sudden huge naked sell orders that cannot be countered. What's not to like?
Indeed: https://secure.wikimedia.org/wikipedia/en/wiki/Public_holidays_in_the_Pe...
Don't you guys have Labour Day? What kind of socialists are you? tsk tsk
Nice dip.
Thx for the heads up on the holiday,Hong Kong too, I shal suppose.Back to dinner and a movie.
is it bad that i want it to go down to like 12 bucks? (where I bought most of mine originally)
we all know the dollar's days are numbered. don't sweat the small shit.
You are exactly right. Just another chance to buy cheaper. Everyone knows what the end game is. Speculators will sell and get back in at $55.
Here's hoping for 25 ya moron! The phyiscal market will evaporate tonight and tomorrow
Please don't take the bait. Ignore obvious troll, or simply downvote.
that dude is more attention starved than an insecure teenager.
25? it's hard to get it at 50, think 25
Let's see, spot plus premium = ????
Damn, the premium doesn't change or keeps going up. WTF? I think I'll keep mine.
If you are a complete fucking tool with no life and social skills, you're also fucked.
Every time I see your pic, you almost turn me. Must be the lippy.
well , he comes to life, just like clockwork. never fails...
Hope you booked that $40K. Oh, it's evaporating even as I type......
Meth, Post your put's, let see what your holding so we can cheer for you sunshine.
All July's Puts at this point.
40s, 35s, 32s, 26s and some 20s for good measure.
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... must ..... eat .... silver .... owners' ..... brains ......
Ever tried to hold a beach ball under water? Simple supply and demand dynamics, and we have yet to see the real demand here. Overbought indicators are used now to aid and extend the manipulation. Something this big will not follow the normal template once the control is gone. As well, I cannot figure out the "exit" plan here. What do they intend to do when the ball flies out of the water?
If this is partially down to Dollar short covering, then why is the DXY static?
DXY does not include the AUD which TD mentioned in the post.
It has nothing to do with DXY.
It has to do with something which we have not yet seen, but which the COMEX animals, from their privileged position, know about.
Something wicked this way comes.
+++
Something wicked this way comes.
How do you say that in Latin? I've learned more useful Latin here at ZH than in 2 years in HS...
Aliquid mali sic venit.
Aliquid mali sic venit.
Thanks! <--- How do I say that in Latin?
The Bearing's ZH Latin List:
-- FED delenda est. (mick_richfield, far as I can tell)
-- In pace requiescat.
-- Quis custodiet ipsos custodes?
-- Res publica mortuus est. Vivat imperium.
-- Corruptissima republica, plurimae leges.
-- Aliquid mali sic venit.
Who says a 55 year old dog can't learn new tricks?
...
Maybe we ought to give out a Gold Medal to the one who translate this into Ancient Greek:
Wealth never abides for long in a single place.
Herodotus, The Histories
EDIT: Writing Ancient Greek might be hard on a US keyboard...
Don't forget:
De gustibus non disputandum
Argentum solo constare $5 effodio
Methman asinus est
Akak, you stole my avatar. How awful.
Perhaps this one might suit your better:
http://www.timewarp-toys.com/troll.jpg
Aliquid mali sic venit.
Dam*! Triple Post...
Um, um ... wait.
I would say ... Malum venendo.
No wait .. veniendo?
Romanes eunt domus?
"Now write it 100 times!"
Veni, vidi, Vecro!
The chinese are not here to trade against JPM's shorts
They'll be baaaaaack!
what nonsense. Has bernanke suddenly found religion? technical garbage - will be buying this dip with both hands. Thanks doofus sellers.
Just a glitch, this wil be forgotten in a week.
Stockholm Syndrome?
Yea just a glitch, and glitchs only happen in PM's, never in stocks or bonds though, no 'glitches' allowed.
Flash Crash!
...diving in...both feet.
Silver Bitchez!
Buy with both hands! It will have recovered by morning and we will all be pissed that we didn't get a chance to buy!
I for one, am happy with this silver plunge.
It means that I will be able to, how you say, dip the buying fuck or some such
Yes as Russia we saying goes.
Can anybody explain to me in plain english what the f**k just happened? I thought the precious metal market was driven up by inflationnary pressure? What could/have produced such a drop?
So you're saying this is a return to the status quo ante? No more silver apreciation? How come? There isn't enough silver to go around, why would the price drop?
take a breath rook.
Trader games. Don't trade it, buy some ozs.
Did a new silver mine with 1 trillion ounces just appear? Did the Bernank find a way to turn paper into Silver?
Fuck no. 100000% manipulation. Buy physical from APEX while you can at these prices.
As a matter of fact I can see the chairman trying out alchemy, after all, even without a funny hat he is still the only man I know who can make gold price shoot through the roof with sheer words. Harry potter can suck up his magic wand.
don't get shook...ain't no such things as half-way crooks
http://www.youtube.com/watch?v=aO0wYzFiaYY
Hubba Bubba? Fucknut.
Silver and Gold unfortunately are still priced in the paper markets, where shenanigans are commonplace.
Try finding any dealer willing to sell you at spot today.
Speculate in paper, save in physical.
So you're saying that the drop is a move by big players to buy the dip? Am I getting that right? How can you enginere such a thing? (clueless frenchman trying to get it, sorry).
Cant make a judgment about anyone wanting to buy a dip.
This monster move comes on the heels of a massive margin hike from MF global after markets closed on friday, I wouldnt in the least bit be surprised if ALOT of levered longs got taken out today.
Furthermore this week is one where a number of asian markets will be closed as well as the LBMA on monday if i recall, thin markets on the back of huge margin hikes equal a perfect opportunity for paper games.
As others have noted, unless there is corroborating news out of the EU about massive restructuring or a Chinese faceplant, BTFD.
But as you have witnessed, keep leverage in check, silver is a tiny market which is begining to attract HUGE interest, it will be volatile.
This may just be a portent of things to come both on the up and downside.
Lucius,
to bring the market down a big player sells paper-silver up to the point where there a no more buyers. Then the price drops a lot to a level where some big buying is.
During a thinly traded market this does not take too much money.
Everybody trading on margin gets a margin call and has to sell (or put more money in the account.)
If the plot works out, the seller can buy back the paper-silver at a lower price then he sold and pocket a profit.
To call the bluff of the paper seller someone else could buy real silver bullion at spot and take delivery.
Those games are nothing new in the silver market; if anything is remarkable the that that the games did not happen for a while.
To read about the action at the Paper-Silver-Market Harvey Organ gives a daily overview on his blog.
http://harveyorgan.blogspot.com/
I hope that explains what is going on.
Also, Lucius, silver isn't for the light-hearted, unless you're the light-hearted who doesn't look everyday at spot prices. Don't try to time this market. If you dig silver for the long-term, then an 8% dip is a chance to get 8% more silver. As far as dumping orders to try to "engineer" a lower price at which to buy the orders back: it works with naked moves better than actual moves, but either way it really only works if you're buying it back at a level lower than where you got it in the first place. If you bought silver at $41 and tried this stunt, resulting in a drop to $42, then you are SOL. This is not the kind of thing someone/inc who got it under $42 would be profitable executing, which limits the culprits (if that is indeed what happen, which I don't think it is) to traders who bought last week. I think it is unlikely, personally. I like the forex cover idea much better.
unintended "503 unavailable" related double post
The drop is valued in fiat...they took a paper fiat market from a 32.65 ratio up to a 35.35 as I type...they are desperate for physical silver in the paper market.
If you have someone, as I do, who has agreed to, as he said..."not nick you both ways" and trade straight up, holding physical of either is not a problem...its correcting faster in fiat than I can type this out to you at any rate...LOL.
Take physical delivery and sleep well.
Regards.
Seems like it's probably related to a(nother!) pending CME margin hike. (article on CNBC.com?). Everytime there is a margin hike it flushes out some of the speculators who have no intention of taking delivery. I saw someone comment that by the time silver is 75$ margin may have been hiked all the way to 100% making it a cash only market... interesting idea. Whatever is happening, it's not a change in the fundamentals.
If I'm a large dealer in physical silver and the paper criminals decide to play games and push the paper price down 20% I'd just shut the sell window down for a bit, especialy if I know how hard it is to stay stocked. I'm hoping that silver breaks free of it's paper chains at some point because of these antics.
A fat finger is way more rational than a bubble at this time. The drop was the result of a concerted efforts of gubberments trying to once again suppress the prices. Hold on - physical can't be papered over for any extended period of time.
its been a wierd morning, i was trying to figure out what you were saying and then i realized i read undergarments where you said gubberments
.
.
I don't get this . thing as a reply. Can someone please expand?
Obviously someone had some silver to sell and didn't want a profit on it. That is how the paper silver market works.
Time to make a shitload on some AGQ put writing
Friday would have been the day to do that don't you think.
DaddyO
Selling puts, not buying. Should be some nice premiums in the morning.
Exactly, but be careful.
I am tempted to lay in a put spread at some point.
Smackdown bitchez.....
No problem. When is Bernanke's next speech?
Lmao
haha - you wish. for those of us buying since the $12-$13 levels it's not too upsetting. Good thing there's not much manipulation in this market though.
Fundamentals: Try taking a wee peek at them.
ThunderDumbass, repeat after me:
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... only $5 to dig from the ground ....
.... must .....eat ..... silver ..... owners' ..... brains .......
Same same market that almost pushed silver to $50 last sunday is now down $5 in a heartbeat? Hmmm... looks like a fat finger found the access market.
They call these gifts. Equity investors should be so lucky.
I know what I will be buying tomorrow morning....if this holds out that is.
Somebody made a mistake that they'll regret tomorrow. BTFD, if you can find any.
que the trolls.....they seem to always be lurking, ready to pounce at any moment...if trolls can pounce....
I'm cannon-balling back into this pool tomorrow morning. A gift re-entry point like this should not be wasted.
I dont care who you are, its always hard to man up and buy into a kick in the balls like that. MF global is fucked beyond repair all trading screens blank.
yea, well, i'm an old woman & i'll be at the coin guy's door when he opens tomorrow !! thank god, i've been praying for a smashdown . & if it's lower on Tuesday I'll be back there buying a few more silver eagle bulloin rounds ........... i learned a whole lot on this ZEROHEDGE website !
you seem like a nice lady. I'm trying to buy a new car with a one lot in 10 minutes.
You might not get that chance, it's already coming back up.
A coin dealer wont mark down his product unless this is sustained.
Golddealer.com or CNI is your best bet because they run a hedge book and try to stay exposed just to the spread.
They can't stop the squeeze coming from the physical side but they can make sure very few will get to ride the physical market's coattails, levered through futures contracts. Anybody with a stop, got hit on that one. And they'll keep raising margins. But I don't think they will shake much physiical loose.
If the large buyers were watching silver from the sidelines, you can bet tomorrow a lot of them will be jumping in the pool. Bubble my ass.
This is going to get uglier real fast
BTFD!!!!!!!!!!!!!!!!!!!!!!!!
It's the number of ounces you have that counts, and I'm buying more now.
Race you to the coin guy !!! he's my new best friend !
Lets get physical, physical,
back the truck up....
Beeeeeeep. Beeeeeeep. Beeeeeeep. Beeeeeeep. Beeeeeeep. Beeeeeeep.
There you go.
but if you bought it when it was wayyyy cheaper than even $42... you're still not really doing that bad... if you think that just because it's "silver" you're safe and it will never fluctuate, you're wrong.
it could hit another massive dip too due to Q2 earnings as i think i and others have said. that being said, the fundamentals are still good still and opportunities to buy are always welcome in a long term position.
well said
I am still expecting one final deflationary sag, leading to a scare, leading to a orchestrated public outcry for "someone to do something." Leading, of course, to "QE until it really really works." The political left is already very actively positioning themselves to demand this. Think "Wisconsin" times whatever. Everyone, even that fatass Michael Moore, knows there really isn't enough productivity left in the U.S. to pay for all this free stuff. The left is now in a "win-win" situation, or at least they think they are: If Ben prints, they get what they want, and if Ben doesn't print, the U.S. collapses and they get their shot at implementing what is already being called "New Deal 2.0."
Meet the "Braintrusters" here: http://www.newdeal20.org/
good point.
I've been buying physical starting around $15. Lots of "mental" profits. Still hurts seeing a huge flash crash.
Europe and Asian markets closed.....so who is doing this....me thinks a country who wants to accumulate quite a bit and has the computers and cash to do so....the world has not changed for the better this weekend...in fact it has become worse...now Kadaffi is pissed...I wish I could buy some ....but my accounts are closed..as are most of the others...Hey..maybe this is that new Singapore Exchange ....???
Yeah, so, what will be silver open in the US?
Good call Bastiat!
Tyler are you getting nervous USd should be USD>
USd- reflecting shrinkage?!
the raids look increasingly desperate to me. that was a %/minute for quarter of an hour. after the 21 to 9 crash, and as a simple stacker anyway, this stuff doesn't phase me any more (2 or 3 days until 50, perhaps?), but that's the fastest, biggest move i've seen in silver since i've been paying attention.
and funny how the absent-for-weeks trolls immediately turn up on cue. i kinda miss johnny bravo, but it seems the PPT can really on take on one metal at a time these days (gold moved a couple of % during that), so i'm guessing he's permanently MIA.
spot on, that shizznit was intense. like das boot wait to stop diving before the pressure blows us up. Incredible move, I'm trying to buy and couldn't get in before 42 handle. Certainly the action was not optimizing sale price, if it was a fiduciary they should be in jail.
This is why PRO's shudder trading Ag.
And don't, or do and lose sleep.
And the reason it's called The Devils Metal.
But, as we ALL know, This time it is different.
And for once, it IS.
Moved from $43 to $45 so fast, I could not even place an order.
Good entry points ahead, but it can still go lower. Shakeout.
Or a false flag blow off top. The morgue isn't beyond that trick to shake out week hands.
Let's see... Nah, I'll BTFD.
Cant buy physical anywhere near these 'prices'...this is just JPM's paper silver BS.
Down six dollars in fifteen minutes... that has to be the most volatile move in Silver's history. Possibly one of the most violent moves ever in commodities.
Fear is obviously a much stronger trading emotion than greed.
Now for a 12% spike up in 15 minutes, but that'll never happen.
Maybe if we could get the bernake to speak for 15.....
Just a paper tail wagging a silver dog. We just witnessed the true purpose of the PM ETFs. Doesn't change a thing. Thank TPTB for the buying opportunity.
Yes. Just plan to finish your buying by the time margin requirements hit 100%.
+1, EXACTLY - this is going to be a cash only game here soon, which is just fine by this SOB. If you Banksters want to throw your C*cks on the table and take on the global community in a cash only game, lets stop talking about it and do it! Mano y Mano time, B!tches
Yup..
Keep those Buy Ops coming...
Thank you, TPTB...
I was thinking the same thing. And yes of course a move like this would be to the down side. That's the way they like it.
Should we even bother writing the CFTC about this one? Will their THIRD 2 1/2 year ongoing investigation into the manipulation of the Silver market just continue into infinity? Do these cocksuckers think to themselves 'if we just keep investigating we dont ever have to make a judgment?'
filled at 44...say a prayer for me.
Done, brother.
Already pulling back from the lows...now down less than $4.00 - ($3.81 )
This shit will most likely be over and back to $48.00 by noon tomorrow...if not sooner.
it may be above $49 by tomorrow a.m. with these kinds of moves....WFT?? i need a xanax!!
And the meantime it will be BTFD as usual in US junk stuff
Turd Ferguson recently commented on the disconnect between gold and silver. It really is something to behold.
Bring it on New World Order! These manipulated shenanigans can't last. This is so obvious, it's funny. You seem to like it on Friday nights after hours or even better some Sunday night Asian pre market fun! You're such a dirty slut!
Like Ted Butler said—"If you think this is volatile, you ain't seen nothing yet"
Everything that glitters is not gold, I am planning trip to coin dealer tomorrow - down, down more please!
One rule of markets that will never be repealed is that parabolic up moves are followed by parabolic down moves.
Tech stocks in 2000, housing prices in 2008, and now precious metals in 2011. Never fails.
Rules don't count in markets full of fraud.
Bought the fucking dip! More physical for me coming via UPS. What's not to like if you are in for the long haul?
Buying every day for the past eighteen months. It was starting to remind me of 30 years ago, glad it pulled back. Won't last long, I fear. $62 will be here before long.
Hey.
Both of ya.
Probably about the most beautiful coin ever minted.
I think mine looks a little shinier than his.
+ 1 I raise my cup to ye
This is one hell of a gift . I thought silver was going to power through $50 without giving me the oppurtunity to load up on physical . Hoping this correction will move to $40 and beyond so I can give the local bullion dealer a few calls .
A nice gift indeed, i think. I ordered some shiny bars myself right as it went over 43 again.
If it goes through $43 again tomorrow I'll be putting in some orders .
Who exactly is selling physical at 43/oz? As I seem to find only 50/oz. everywhere. Ya know I can sell you the paper title to my neighbors escalade for only...15K... if you'd like.
Hurry...only 500 titles left.
I bought when spot was just over 43 but of course I paid the premium too. Bulliondirect has decent premiums though, it was almost exactly $45/ozt.
My dealer won't have any silver for me until tomorrow, and the stop-triggering short attack will be nothing but a memory by then. Anybody serious who has access right now is buying like crazy.
Watch the inventory #s on APMEX drop.... they're getting hammered with large orders right now.