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On Silver's Exponential Price Feedback Loop
And as if silver bulls needed some more good news, here is a report from the Morgan Stanley metals desk...
I was told on Wednesday that big buying went thru on Tuesday in may atm silver calls which should make the market short gamma.
A short gamma position will become shorter as the price of the underlying asset increases. As the market rallies, you are effectively selling more and more of the underlying asset as the delta becomes more negative.
So what that means is that the SELLER of the calls, probably bought Physical to delta hedge themselves neutral. As this market jumps just about 1-2% daily (this week alone +6.5%) they would need to now re hedge to bring themselves back to neutral by BUYING more Physical as SILVER goes higher, essentially driving the market Higher still and so the chase goes theoretically moving the market higher causing them to buy more to hedge and moving the market higher, thus buying into rallies.
Now they could BUY puts also to create positive Gamma as well to offset some of that pain they are not bound to the Physical for their hedge. Lots of what if's but that’s the idea.
On the other side if Silver were to gap lower, this would not help either as they would need to SELL Physical into a falling market to re-hedge themselves.
Great in a slow steady market, nightmare in a volatile
Translation: ever-accelerating feedback loop (both higher and lower). Vol is about to go off the charts.
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wow
eat it Jamie. eat. it.
Visit the Silver Liberation Army and spread the word!
http://j.mp/f2lkxu
Blythe has a firm grip...on her ankles.
nice visual
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?
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.
it's mourning in america.
on Fri, 04/08/2011 - 23:36
#1152687
"it's mourning in america."
great line JM....i know you won't mind if i steal it and use it.............
Silver has entered self induced resonance stage.
It can't be stopped now.
its like that bridge...that shook itself to death. Resounding self feeding resonance.
Tacoma Narrows Bridge, aka Galloping Gerdie.
My granddad failed the plans for it, and was replaced.
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.
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.
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.
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.
Silver spiked to day's high about 1 minute ago...
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!
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.
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.
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?
Excellent discussion. Please continue.
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
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).
3:53 PM
$40.79
$1474.33
40.88 at 3:59 I want to buy my moms house with this.
$40.93
3:54 PM
$40.93
$1474.90
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:)
I wonder how happy she will be in one year.
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.
This is the dip.
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.
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.
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?
MuuuuuuHahahahahaha.
good call, you freakazoid
You should see a doctor if it lasts for more than 4 hours
...or hold hands and get in a bathtub full of water while watching a sunset...
Or a nurse.
If you have that much AG and a woody, it's time for hookers and blow!
Is anyone else's spidey sense going crazy today?
Hell yeah. The Borg-nank might just pull the punchbowl over this.
Buy Physical
and bottled water
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
Now you're long silver? LOL...
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.
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?"
Upon seeing the peasant village, Mifune:
"I'd hate to die in a dung heap like this."
#1 film of all time.
yojimbo ain't bad either.
Damn, I need to see that movie again.
Thanks for the reminder Bobby-san.
General: Honorable kamikaze pilots of Rising of qua Japan,
today you embark-e on a most dangerous mission.
Today you take-a you kamikaze planes high up in the sky,
over the Yankee aircraft carrier.
Bring-a you kamikazes planes down fast,
crashing on the deck,
killing yourself and everyone aboard.
Now, before we have ceremonial sake toast,
are there any questions?
Yes, you in the back, Sakimoto.
Sakimoto: Honorable General-son
General: Ah so.
Sakimoto: You out of your f*****g mind!?!
This:
http://modernsurvivalblog.com/current-events-economics-politics/governme...
This is not a kooky survivalist blog, imho.
If you guys need the latest update on the radiation...check this out. NOT BEING REPORTED!!
http://enenews.com/
40.91 bitchez
we want more good news
I am reading some blogs predicting a 40% pullback....really?
Links, please.
Wait for the usual suspects/trolls to post.
now that you mention it where are they?
For about 10 minutes at most, likely.
Question is, can I get the truck backed up and loaded in that short of a time span?
Stop teasing.. It would be nice though.
I believe that is Math Man's fantasy blog...
Yes, Math Man - he was the douche who said silver could never reach $40.
http://www.zerohedge.com/article/bears-are-back-presenting-part-5-silver-thesis#comment-1102279
Where is that blow-hard? You' know he will be back the second this movement makes even the slightest correction. Too late sukka... TIME TO DO THE $40+ DANCE!!!! Weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!!!!!!!!!!!!!!!!!!!
You took a bath man math man. Now exit stage right before I get this cane 'round yer neck.
++1 Top Notch Gloating - GO Silver GO!
From your lips to the lever pullers' ears...
I'm sitting heavily in metals, but eyeing a too-large portion of fiat whose purchasing power is evaporating as quickly as water in F'shima.
I can't, in good conscience, chase, so I wait for the dip. and wait.
james turk said the same thing a while back, advising that as silver gets close to $40 and beyond expect greatly increased volatility.
Yeah, the spike down earlier didn't look like a raid--it wasn't sharp like raids normally are. This whole rally feels different.
Wrong, absolutely unquestionably a raid. 3 legs down heavy volume 10 minutes 30 cent drop. That is all she has left. The jig is up and everyone waits for it to buy. You should not speak on that which you do not know grasshopper.
Yes, HEAVY volume. They don't have the ability to raid on heavy volume, only light volume. The drop was over a time frame 10x greater than a regular raid as well. This was simply a bit of profit taking.
I know quite a bit about this particular market, friend.
tmosley a "grasshopper" on silver?
LMAO.
surely valid but how big are those delta hedge trades?
http://alphahow.com
as the $DXY collapses below 75...fast on it's way to the abyss.
All hail the Chairsatan!
Yeah. Wonder if it was just a blip though...
no blip...merely the continuation of a trend that established itself on Dec 23, 1913...the only real question is : What does the end look like? Mad Max or Brazil? (Brazil the movie not the country:-))
Good call that parenthetical, cuz we already look like the movie.
But my querry is not the historical but the all important carry's. That 75 line is important...
Yup, I'm already wearing a big boot on my head. Fasion Forward, Bitchez!
Pre-1913 USA.
Huh? Whuzzat? Blythe is getting a Brazilian??
That's the one that is also known as the Landing Strip right?
If it is, it's probably rated 900,000 lbs. Dual Double Tandem to accommodate heavies.
$40.91 @ 12:47 PM Pacific time, per APMEX.
Was afraid to walk the dog before buying some dimes this morning. Looks like I was right. Thought I'd be happier.
And as it turns out you can eat silver http://www.nano-silver.com/
The real trick is to eat enough so that you shit bullion.
I don't know why, but that was really funny :)
You cant eat it but you can drink it. Colloidal silver is a very good antibiotic.
Ive been making and drinking it for 10 years and Im not grey or blue.
Fuk the doctors, starve the beasts. I dont need any obumer care.
Use an old Afrin or saline nasal spray bottle to sniff a little. No more sinus infections!
It only turns you grey or blue if you make it wrong, and get silver oxide. That's just one of the stories the pharma-sluts use to scare people away from safe and effective medicine.
I have an a/c adapter and a silver eagle. So what just attached wires and place in bottled water? how long should I 'ccok' this brew? also how much should I drink ?
It's a little more complicated that that :) but not much.
Bob Beck has some simple plans for a colloidal silver generator, and instructions. You'll need to be able to read a circuit diagram and do a bit of electrical work, and you'll need two silver eagles (one for each electrode).
http://www.stoptherobbery.com/BobBeckPaper.pdf
If you don't want to build one yourself you can google around and find one for sale.
THERE ARE MORE BLACK THAN WHITE SWANS TODAY
Looks like Fiat money is starting to go the way of the DINOSAUR. When the US GOVT finally brings us some lousy budget full of holes and packed with garbage, we might get a selloff in commodities and precious metals.
Then....on the other hand, that just might mean more money printing...and that's good for SILVER and GOLD.
GOLD-SILVER ratio 36.12...knocking on the 35-1 level.
methinks full shutdown may run for months. skip pomo, head straight to emergency powers (alex jones, bitchez) and printing money so govt can operate.
Almost time to start buying gold again.
this is sooooo c o_o l , for school. this will also accelerate crashing JPmorgan. JPM, needs to die a very bad and evil death. max's campaign is global and viral. i have so much hope placed on silver ownership for my fellow man and woman. do you all think this will last?
It will last until Bernanke tightens. JPM might get out of this if he tightens enough to crash metals. There are a lot of people who might dive out of metals if they have other positions to cover. I strongly suspect the next fomc meeting might be a game changer. If they turn hawkish and signal rate hikes the whole commodities complex might dive for a while. They can't stop buying trashuries for long because congress needs it's cheap money but long enough to shake the weak hands out of commodities for sure. Does anyone know if JPM has reduced their copper holdings? That would be a signal they expect a commoditycrash. They would have a pretty good idea if copper was going to crash April 24'th isn't it?
The FED can't raise rates, they are trapped. A one percent rise in interest rates equates to $142 billion in interest payments on top of the debt to fund. Of course they could, cause it is all funny money now
Besides imploding whatever is left of the housing market.
agreed, the government is the economy and it is addicted the Feds easy money.
Wrong ! Think of it like this image.......... The Bernank is at the steering wheel of a nice new Toyota. QE is the stuck accelerator. There is no stopping it now. Bennie at the wheel is the only nice thing about this image.
It wiDouble post
Did I read that the JPM instant death number is $47 ?
I'm getting giddy - must must remain logical
www.youtube.com/watch?v=lbg6xoS3K3U
Don't be giddy!
This is a new era!
This time it really is different!
Gold 36000
Dork exchange
I troy ounce = 12000 Pints of Beamish......................
I will not last the decade but
Cheers!
as the livermorester said: be right and sit tight.
Jesse Livermore also died penniless.
No one can make good calls all the time.
Bears make money, bulls make money, but pigs get slaughtered.
I think you need to take your profits at gold 36000
i know. you're exactly correct about jesse, and the bull/bear/pig analogy.
Point taken Gold 36,000. Btw Livermore didn't die penniless. His second wife removed grocery bags full of cash from their NYC penthouse the day he ate the bullet in the cloakroom of the Sherry Netherland.
Pardon me, but I am dying to ask: you still long ZSL?
Ya and by the way, Sears called. Your suit is ready.
Jesse Livermore killed himself but I don't think he was broke at the time. He did go broke, several times in his career so losing his bank roll was not a big deal to him.He always knew he could make it back. He was a plunger, and considered anyone who played safe a "mercantile mollusc".
HAHAHA!
All the crazy fools that put all their money in PM's are having their day in the sun.
This really is a new era.
This time it really is different.
Gold 36000
Sorry, what's different? You do know that no fiat currency has ever lasted for more than 90 years, right? And that was in Mongolian China?
Those who ignore history are doomed to repeat it. Enjoy your starvation in the wake of hegemonic breakdown, peasant.
'Day'? Try 'decade'.
OK, I've seen enough. I'm going to call it.
Gold 36000 = Math Man = Jonny Bravo's new handle.
Don't feed the trolls.
I was really expecting a beatdown by the cartel this morning, but it didn't come. What are they planning? More margin hikes? Something even more underhanded... ?
Yeah, if I had margin in gold/silver market I'd be sweating.
Getting used to it, more likely, and prepared; 'once bitten' and all that cal.
Perhaps they had bigger fish to fry. Silver is a piddly market.
More than likely, a tsunami of FRNs dampened their plans.
basic stuff
great interview with peter grandich in silver, gold also: http://www.youtube.com/watch?v=4XtH28M3Bbc
It seems to me that if someone were to create this feedback loop they are in effect trying to corner the market or at the very least turn their attempts from failed short manipulation to amplifying gains/losses in an attempt to ride vol neutral while shaking out weak specs. In the end, I don't believe anything is bubble territory until the reset button is hit. If silver is near bubble, then so is the SPX and so when the reset is hit look for everything to pop in this .99 correlated manipulated market.
only last night I commented "silver a dime away from $40"...less than 24 hours later...Silver a dime away from $41.
Anybody notice a trend here? LOL!!!
Nice one!
Nice, I remember reading your post last night.
Yes this is correct. That is why I do not believe there will be such a thing as a proper silver bubble. It is one of the few commodities that should, given it's relative scarcity combined with industrial uses, remain ascendant even in the face of QE or lack thereof and most other econ events.
Russell 1000Â is FINALLY softening up -- for f's sake it's about time!
A successful delta hedger once told me, shorting calls without holding the underlying is like trying to pick up pennies in front of a bulldozer. ie recipe for disaster.
It's got to be exciting for you who got in below $15
Getting in myself @ $22to38 at this point I couldn't be happier
Trying to explain these purchaces to my wife? a whole other story
:D
But not exciting, because the reason for my getting in was systemic failure fears. So...um...
She will understand when she sees you hand over a bar of silver and receive the deed to a house in exchange.
Women are funny like that.
My wife used to give me grief over my buying what she called junk ( silver). That is untill we divorced about a year and a half ago. I kept the junk.
So you kept the wife?
DXY 74.99
is that a hundred oz bar of silver
in your pants..
or are you just glad not to be JP morgan now...
74.91 and falling hard.
it's bottomless.
I see no support until 74.26...then...Cue Jim Morrison (The End)
hey spaulding. whatcha goin to do when silver is at 50?
Junk all my comments. Possibly all the comments.
lol
+ $40.81
LOL...
Ya, where are all your buddies, meth-man, spaulding, smaller dickus etc - it's hard to keep track of them all. At least they're predictable - their arguments only have a fraction of a shred of semi-logic when silver is correcting. But they must really like you tm, they took the time to stalk your posts all over the net, how does it feel to have your own little netvocate internet stalkers? You know you've made it online when............
Yeah, I'm sure I'll wake up one day to find one of them hacked into some account of mine in a fit of passive-aggressive rage.
They don't like me because I can see what is wrong not only with their arguments, but with their whole thought process. People HATE being caught straight up lying, too.
They'll all be back pissing and moaning when silver gives up any gains...LOL.
I'm kind of wondering where the floor on silver is now? 38? 36?
This market sure seems different to me right now. It looks relentless in its power and scope as it charges ahead.
Who knows? I can't see any floors, ceilings, walls, windows, or doors. All I see is a starry sky in all directions, and a blue marble below, and a white one slowly getting larger ahead.
Set the controls for the heart of the sun.
Actually, the paid anti-PM trolls being absent here today is just a coincidence --- it happens to be "Casual Friday" for all federal employees, so they all ran over to the SEC to watch internet porn on their large-screen monitors.
"The opposition, however, is just as passionate. "There's no vested interest on anybody's parts to suppress prices here," says Jon Nadler, senior analyst at Kitco.com. "The allegations remain at that level, simply allegations."
Nadler argues that despite the rumored manipulation, prices have still climbed. "If this is suppression, I think it's completely ineffectual, and let me have more of it," Nadler says."
http://finance.yahoo.com/news/Whats-Moving-Silvers-Price-to-tsmf-955305172.html
LOL!
Non-credibility, thy name is Jon Nadler!
sorry guys, a call has a positive delta, even as being short a call means being short delta.
So this should read "As the market rallies, you are effectively selling more and more of the underlying asset as the delta becomes more negative." ..as the delta converges to positive 1 (equals 1 call behaves like one unit of the underlying, which is also the cap). Buying puts in order to offset negative gamma with a positive one does not make any sense, as you increase your delta short position, which you already have being short calls.
buy puts buy futures to get gamma and delta neutral
means you are short a synthetic (or a risk reversal) against your long futures
I think thats what they were trying to say
options trading pretty much always assumes the delta is hedged simultaneously,
ie if I go to lunch and someone asked what happened that morning I say I got long some puts.
It is a given that you did the delta hedge without saying it, delta positions are always assumed to be flat, you aren't trading the underlying after all
true but they're talking about trading/buying the underlying here.
In any event the original note looks like it was written by some sales monkey on a desk who has no clue what is going on but wants to look really smart. Spent many years on a trading desk myself until I couldn't take it any longer, the sales guys were a menace.
I spent years as a market maker at the CBOE and it still takes me a little while to figure out what these articles mean. The short version is something like "the pit is short vol going into this spike so let's have some fun watching everyone try to leg the gamma or puke the position"