On Silver's Exponential Price Feedback Loop

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Fri, 04/08/2011 - 15:45 | 1151071 CitizenPete
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Fri, 04/08/2011 - 15:50 | 1151098 unwashedmass
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eat it Jamie. eat. it.

Fri, 04/08/2011 - 16:15 | 1151210 MaxVernon
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Visit the Silver Liberation Army and spread the word!



Fri, 04/08/2011 - 16:46 | 1151356 Thomas
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Blythe has a firm grip...on her ankles.

Fri, 04/08/2011 - 17:24 | 1151615 SWRichmond
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nice visual

Fri, 04/08/2011 - 17:36 | 1151661 narapoiddyslexia
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Not sure the data bears this story out. The Au/Ag ratio has been linear downward since last Septmber. If this story were true it would be parabolic downwar, but of a lesser order, than its absolute price is upward. In other words, its been moving consistently faster than gold since last September. If this story were true, it would be accelerating vis-a-vis gold and it is not. I think this story may be intended to give investors the wimwams, and hence, come from Blythe herself. Opinions, anyone? Is this crazy, or what?

Fri, 04/08/2011 - 18:23 | 1151789 The Limerick King
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The Elites can tell nothing but lies

As there fiat based thievery dies

Believe not a word

And soon will be heard

Their pain-filled and mourningful cries.

Fri, 04/08/2011 - 23:36 | 1152687 jeff montanye
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it's mourning in america.

Sat, 04/09/2011 - 12:33 | 1153309 hangemhigh
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TO: jeff montanye
on Fri, 04/08/2011 - 23:36

"it's mourning in america."

great line JM....i know you won't mind if i steal it and use it.............

Fri, 04/08/2011 - 16:19 | 1151223 Ahmeexnal
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Silver has entered self induced resonance stage.

It can't be stopped now.

Fri, 04/08/2011 - 17:23 | 1151621 falak pema
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its like that bridge...that shook itself to death. Resounding self feeding resonance.

Fri, 04/08/2011 - 18:09 | 1151762 mynhair
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Tacoma Narrows Bridge, aka Galloping Gerdie.

My granddad failed the plans for it, and was replaced.

Fri, 04/08/2011 - 21:32 | 1152373 gaoptimize
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Amazing!  This morning, a colleague and I were just discussing "control the debt growth for our children and grandchildren"-type congressional debating points, as if this was some linear system that will decline steadilly through the time of our children and grandchildren.  And I pointed to the Tacoma Narrows bridge as an example of a non-linear response to an extreme stimulation.   We agreed the financial system is likely begining to have non-linear responses.

Sat, 04/09/2011 - 05:07 | 1152984 Michael
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This Tacoma Narrows bridge subject you speak of is very special to me. For the past few days I've been thinking our current economy is like that crazy bridge. It's reached it's maximum chaotic resonance frequency with one boom/bust cycle after the next being greater than the previous, and the life cycle of our monetary system is about to self destruct in a Tacoma Narrows bridge type accident where it blows itself apart. Strange we were thinking the same thing at about the the same period in time. Just more anecdotal evidence people are all mind connected in a sort of esoteric way.

Fri, 04/08/2011 - 19:30 | 1152000 jballz
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Minor correction- The call sellers would need to SELL puts to offset risk, not buy them.

Also there's no reason to assume call sllers are not already hedged with long positions already held.

Also there is no reason to assume long positions and short call positions are not being entered at the same time.

Also if the BUYER of the silver calls wants to be delta neutral (gamma...really guys?) they would be shorting some amount of silver as well, adding to shorts on a rising price.

That said, the world is buying the fuck out of the silver markets so... enjoy the ride.



Fri, 04/08/2011 - 20:13 | 1152124 XPolemic
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Minor correction- The call sellers would need to SELL puts to offset risk, not buy them.

Correct, but in a rising (or falling) market, the moneyness changes, so while they sold ATM calls, they would need to sell OTM puts, and who wants to buy OTM options in a fast rising market? So there may be a liquidity issue selling puts of the same moneyness.

Of course, they could sell the puts ATM, and take a haircut. These options are may expiry, so if the trend of 1% a day continues, anyone with a naked position is F*CKED, so you would expect the long interest to increase substantially over the next 40 days. If the short interest also increases while the underlying is rising at this rate, then you absolutely KNOW something funny is going on. Regardless, the 1M implied vol is gunna get very funky.

In the case of The Morgue taking short positions, if the positions can be cash settled, then The Morgue can keep taking short positions and paying out with the free FIAT they get from the Fed. As mentioned on a previous post, that could go on indefinitely,or at least until the Chinese have got all their silver back.

Fri, 04/08/2011 - 15:44 | 1151075 DoChenRollingBearing
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Silver spiked to day's high about 1 minute ago...

Fri, 04/08/2011 - 15:50 | 1151092 LowProfile
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Translation: ever-accelerating feedback loop (both higher and lower). Vol is about to go off the charts.

At the risk of repeating myself..  I can't help but think they will pull the deflation valve out to get control of this one...

Too bad there isn't a silver VIX to go long!

Fri, 04/08/2011 - 15:58 | 1151141 nope-1004
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Wars are historically inflationary events.  I highly doubt deflation can return.  Civil unrest is growing, and TPTB need to stay in power, therefore using force under the guise of "humanitarian efforts" will expand and only add volatility.

Fri, 04/08/2011 - 16:34 | 1151301 LowProfile
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Mostly agree (wars are actually historically financed by debasing currency), but I think they will try to keep the metals in line, if at least to give JPM a chance to cover that short.

Fri, 04/08/2011 - 17:24 | 1151623 SWRichmond
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I am also a little surprised by the lack of a liquidity withdrawal-induced market crash.  I know it wouldn't work, but do they?

Fri, 04/08/2011 - 18:37 | 1151848 impending doom
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Excellent discussion. Please continue.

Fri, 04/08/2011 - 23:43 | 1152697 jeff montanye
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well, an equity slide might have some (for tptb) good results:  cowed tea party linked congresspersons, stronger dollar and lower long treasury yields.  but judging from 2008 (and the key is changed when one least expects it), it takes a pretty scary slide

Sat, 04/09/2011 - 09:34 | 1153121 SWRichmond
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That's basically it.  But the effect would be so temporary this time, if it even worked at all.  I think the markets are finally perceiving the reality that the U.S. will never pay its debt, at least not in constant dollars, and I think the markets are finally perceiving the effect that collapsing revenues has on that.  The deficit would get bigger, not smaller, and now that Congress is bravely quibbling over cutting the $1,600 Billion deficit by either $30 or $40 Billion, it's obvious there is no political will in the U.S. to deal with it.  In the face of a looming total catastrophe, an "exceptionalism" of the wrong kind is being displayed by the Rs and Ds: business as usual.  The third year of deficits this size, and since we've gotten away with it for this long, I guess we can continue to get away with it forever.

We're freaking doomed.

On a lighter note, through my investments that anticipated this condition, the Bernank continues to hand me free FRN currency-thingies which I am using to prepare my home and lifestyle for skyrocketing energy costs (HVAC, vehicles, etc).

Fri, 04/08/2011 - 15:52 | 1151115 DoChenRollingBearing
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3:53 PM



Fri, 04/08/2011 - 15:57 | 1151134 insatiablegenius
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40.88 at 3:59 I want to buy my moms house with this.

Fri, 04/08/2011 - 16:45 | 1151365 Rusty_Shackleford
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Fri, 04/08/2011 - 16:54 | 1151425 Hot Cumontitties
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3:54 PM



Fri, 04/08/2011 - 19:36 | 1152024 yabyum
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Do Chen! Went to the coin guy to buy some 40+ product, there was a very old lady cashing in a 2lb coffee can full of 1964 Kennedy halves: She was very happy:)

Sat, 04/09/2011 - 02:48 | 1152927 natty light
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I wonder how happy she will be in one year.

Fri, 04/08/2011 - 16:01 | 1151146 chet
chet's picture

Man, did I ever sell my SLV too early.  I thought TPTB would try to hammer it down a few days ago.

Now I'm waiting for a dip, not seeing.

But I've got my physical to console me.

Fri, 04/08/2011 - 16:12 | 1151198 NotApplicable
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This is the dip.

Fri, 04/08/2011 - 23:54 | 1152721 jeff montanye
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damn i sure hope so.  scary chart to be buying but the size of the precious metals market (bullion plus miners less paper) versus the global financial assets gives me some hope.

oh and the world government and corporate elite are apparently irredeemably corrupt and will not redirect the surging fire hoses of money they shoot into their own mouths.

Fri, 04/08/2011 - 20:31 | 1152186 John_Coltrane
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The key is to roll your contracts up in strike price and forward in time, taking profits off the table but still staying in the game while reducing risk.  I've been doing this regularly with SLW since October and will do so again next week, rolling forward to June or July expiry.

Fri, 04/08/2011 - 15:44 | 1151078 Hugh G Rection
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And this is the reason for my perma-boner.


What was it my friends said a few years back when I chose to put all my savings in PMs and NOT buy a house?



Fri, 04/08/2011 - 15:57 | 1151131 Gold 36000
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good call, you freakazoid

Fri, 04/08/2011 - 16:26 | 1151263 riphowardkatz
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You should see a doctor if it lasts for more than 4 hours

Fri, 04/08/2011 - 17:27 | 1151630 SWRichmond
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...or hold hands and get in a bathtub full of water while watching a sunset...

Fri, 04/08/2011 - 17:48 | 1151707 SonnySkyy
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Or a nurse.

Fri, 04/08/2011 - 19:39 | 1152036 yabyum
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If you have that much AG and a woody, it's time for hookers and blow!

Fri, 04/08/2011 - 15:45 | 1151080 tarsubil
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Is anyone else's spidey sense going crazy today?

Fri, 04/08/2011 - 15:51 | 1151108 LowProfile
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Hell yeah.  The Borg-nank might just pull the punchbowl over this.

Fri, 04/08/2011 - 16:04 | 1151132 roymunnson
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Buy Physical


and bottled water

Fri, 04/08/2011 - 16:27 | 1151275 long juan silver
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AGQ silver 2X ETF.

Plot the power of exponential.

August 2010

silver $18.50 // AGQ $60

April 2011

silver $40.00 // AGQ $260


Water? Here, have mine. It don't mix well with Champagne

Sat, 04/09/2011 - 13:24 | 1152988 Bay of Pigs
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Now you're long silver? LOL...

Fri, 04/08/2011 - 15:49 | 1151109 unwashedmass
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you mean, like now would be  a perfect time for a very distracting terrorist incident? yeah.

my spidey sense is telling me watch out.....the boyz don't like it when the peasantry takes control.

Fri, 04/08/2011 - 16:24 | 1151250 Ricky Bobby
Ricky Bobby's picture

As I always said, buying PMs is an act of REBELLION!

From the 7 Samurai: "What do you think of peasants? You think they're saints? Hah! They're foxy beasts! They say, "We've got no rice, we've no wheat. We've got nothing!" But they have! They have everything! Dig under the floors! Or search the barns! You'll find plenty! Beans, salt, rice, sake! Look in the valleys, they've got hidden warehouses! They pose as saints but are full of lies! If they smell a battle, they hunt the defeated! They're nothing but stingy, greedy, blubbering, foxy, and mean! God damn it all! But then . . . who made them such beasts? You did! You samurai did it! You burn their villages! Destroy their farms! Steal their food! Force them to labour! Take their women! And kill them if they resist! So what should peasants do?"

Fri, 04/08/2011 - 16:39 | 1151337 Bicycle Repairman
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Upon seeing the peasant village, Mifune:

"I'd hate to die in a dung heap like this."

#1 film of all time.

Fri, 04/08/2011 - 23:58 | 1152736 jeff montanye
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yojimbo ain't bad either.

Fri, 04/08/2011 - 16:44 | 1151347 Rinzler
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Damn, I need to see that movie again.

Thanks for the reminder Bobby-san.


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