Morgan Stanley Redeems Paulson Investments: Explanation For Recent Gold Liquidation?

Tyler Durden's picture

In key news that may well be the missing puzzle piece to explain some of the very odd market moves in the past week, we just learned courtesy of CNBC, that Morgan Stanley's Wealth platform unit has finally, after months and months of considerations, pulled the plug on the fund that for the second year in a row is one of the three worst performing in the weekly HSBC report and is now redeeming. That in itself is not unexpected. What however is notable is that MS withdrawing hundreds of millions in feeder capital may well explain why gold has seen such a dramatic dislocation in the past week. Recall that at Paulson & Co, gold is not simply an investment - the bulk of direct gold investments at the once legendary investor are in the form of (largely underperforming) gold mining stocks - but an actual investment class. In other words, instead of being denominated in USD, investors are actually denominated in (paper) gold, with a fixed conversion into GLD at inception. This means that upon liquidation of gold-denominated shares, any gold-denominated shares, he has no choice but to sell GLD, and by virtue of this being the most liquid paper instrument in the PM space, gold. Does the massive gold dislocation in the chart below now make more sense especially since Paulson was aware of MS' intentions days in advance and traded, or in this case liquidated, appropriately)?

Spot the moment on the chart below where Paulson may have gotten the redemption fax:

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NotApplicable's picture

While the paper gold game may go on for a long, long time (thank Corzine), at some point, physical will completely disconnect from it, never being available anywhere near the spot price (at least not without a massive premium).

You'll know it's getting close when the US gov suspends minting of all silver and gold eagles in order to "combat money laundering by terrorists."

tickhound's picture

Interesting... My MS bud told me Monday he was on conference call regarding a new Sprott IPO?? Prospectus or some shit?/ involving client investment into precious metals... includes platinum and palladium. 

Said stressing "physical delivery" was the theme... and apparently not related to phys or pslv.

Just got off the phone with him.  He's gonna print it up for me.  He was unaware of this Paulson shit.

I dunno.  Throwing it in here.

What I DO know is that MS keeps its own plebes duuuumb.

Update:  Confirmation that SPrott is to expand "opertions" to include platinum and palladium.  That is all.

 

Bastiat009's picture

So when Paulson sells GLD, SLV falls ... mostly at the close of the NYMEX, two days in a row ... and that hurts the US$ too. Living is learning they say.

fuu's picture

Dude you don't even know what day it is.

Piranhanoia's picture

How much gold in the gld?    Selling gld will only have an affect on gold prices as long as the curtain can be kept closed to your little dog toto.

unirealist's picture

Look back at last year's chart.  Gold fell all through December, so that instead of a stellar year (2011) it barely eked out a small percentage increase.

Same will be true this month, barring some black swan.  TPTB just can't afford to have gold and silver outperform all other investments by a large margin.

I expect both gold and silver to fall a lot more.  Look at silver today!  What the hell?  Let's face it: the manipulators have almost total control over PM prices.

For now. 

AgShaman's picture

December is the big delivery month....

all the players at the casino know this

and all of us pikers at the LCS appreciate it

MeelionDollerBogus's picture

the year-by-year pattern is actually like this:

http://flic.kr/p/dvDHfM , bigger picture http://flic.kr/p/bNoznc , even bigger http://flic.kr/p/dvKxxw

Gold could drop to 1556, maybe 1560. Then gold will rise to 2100, maybe unstable in March but stable by June.

The manipulators have gained & lost control. They gained the ability to repeat entire segments of price-charts spanning years to retain a long-term dollar control factor. They lost the ability to hide it by depending on this precise pattern which can't be hidden, and so it is NOT hidden anymore. By that nature we can jump ahead of it.

No longer is this chasing nickels in front of stream-rollers. Not when you know weeks, months or years in advance what price is coming next & the date to go with that price.

debtor of last resort's picture

Where's the gold? Burned together with the rest of the paper you fool.

youngman's picture

Gld  is down..mybe because of the fund liquidation...but why would CEF and PHYS be down too???? The seem to be all riiding the same horse...

NotApplicable's picture

Because when one goes, it opens up the opportunity to take down the others. That "same horse?" It's called fear of the Fed (Benron's magic checkbook).

This is the age of the mo-mo chasers. Trying anything otherwise is to expose yourself to seemingly infinite risk.

Remember, these people are all dangerously leveraged, else they'd never have made it this far in ZIRP World.

devo's picture

If they really want people out of gold/silver, higher prices, not lower. Lower just brings in more buyers. Price out joe sixpack and he won't even look at PMs. He'll be forced to hold dollars.

The Joker's picture

SSSHHHHHHHHHH!  Damn it.

Bansters-in-my- feces's picture

I don't buy this excuse either.

 

Learn what the USA Exchange Stabilization Fund (ESF) CAN DO AND DOES DO.... with this sleaze fund and who is in charge and acting agent.

Enjoy the read.

Go to USA Treasury site and learn up the ESF.

The FED has a site they brag it up on too....

Wipewithpaper's picture

GREAT, I can buy more now and get rid of my fiat toilet paper

Wanton1's picture

Calling Mr. Corzine.

Venerability's picture

Tyler,

Thank you.

This qualifies as what Zero Hedge was designed to do. Hard-hitting breaking news before everyone else gets it.

Note, though, that Idiotic and Banal as I acknowledge it is, there has also been an undue effect on the thinly-traded Gold and Silver stocks, especially, from another one of those ridiculous and truly harmful "Market Game" contests college kids and teeny-boppers gravitate to.

They cannot generally make real trades with real money.

But they can propagandize for or against their favorite stocks, currencies, and ETFs pretty much day and night on every single Internet site that allows them to do so, skewing Markets shamelessly in the process.

Seeking Alpha is now so badly edited, especially in the materials sectors, that it has allowed LEGIONS of Gamers without real skin in the game to post there and now - often, in fact! - post as "Contributors."

This is a horrible state of affairs.

Anonymity is fine up to a point. I use an Alias, but it connects easily to my real bio, and everyone knows who I am. (As with many of the frequent posters at ZH and SA.)

But if Gamers not "betting" with real money are to be allowed on financial sites, they must at least be somehow forced to flesh out bios to the point where readers can easily gauge their truthfulness and importance or lack of importance to Markets.

Make Barracuda223 confess in an easily accessed bio that he is a sophomore at the University of West Virginia majoring in computer science, so readers can gauge as they will his Seeking Alpha "Editor's Pick" story, "Gold is Dead and Buried, Facebook Forever." 

Michelle's picture

Where there's Paulson there's a broken "investment".

 

DowTheorist's picture

Hopefully, Paulson accounts for GLD weakness because the charts are flashing danger, at least for paper gold. Gold violated its November 2 lows a couple of days ago. Silver, until now, refused to do so. By not confirming, silver has averted a primary bear market signal for both gold and silver. However, if Silver violates its November 2 lows, then a primary bear market for both precious metals will be flashed. This wouldn't be a good omen for those traders with a short and medium term horizon invested in paper gold.

 

http://www.dowtheoryinvestment.com/2012/11/dow-theory-update-for-nov-12-...

 

 

 

 

New World Chaos's picture

OK, here’s my LONG 2012 manifesto now on the record but not hogging an active thread.

 

 This is a major convergence and fork in the timelines of the World Tree.  The unseen struggle for the soul of this planet has come to a breaking point.  More than any other time, this is the time when we collectively choose between freedom or slavery, love or hate, knowledge or ignorance.  Freedom, love, and knowledge are really the only victory conditions.  There are many tortured paths to this goal, and the Universe will choose which path to take.  But we are not helpless- perhaps just one individual can increase the probability of the desired outcome IF it is realistic in the first place.  Then we cast the Ring of Power into the lava.  How about this:

 

 VICTORY CONDITIONS, PART I:  GLOBAL AWAKENING THE NEXT FEW YEARS

-There will be no nuclear or biological apocalypse.  America and Russia will pull back from the brink like they did during the Cuban missile crisis.  The elites' plan to kill most of humanity and enslave the rest will blow up in their face.  Rothschilds will be hunted like Nazis.

-Major false flag(s) are inevitable.  At least one must be stopped and exposed.  This will eventually lead to a new, vigorous 9/11 commission. Heads will roll.

-The next Zionist-inspired war looks inevitable.  When it happens, I hope Iran closes the straits of Hormuz, Russia and Venezuela re-enact the "who run Bartertown" scene, and China dumps Treasuries. Simultaneously.  $25 gas would get this party started.

-No more than 200 million dead from starvation, gulags, plagues, etc.  Probably unrealistic to push it lower than this but we need to avoid their 80% apocalypse at all costs.  Bankers, politicians, cops, Zionists, bureaucrats, and their assorted thugs, toadies and paid shills all do not count towards the 200 million.

-Due to unpredictable long-term health and environmental effects, nukes must be kept to a minimum.  It is unlikely we will have none.  Let's say no more than three nukes is a victory.

-A collapse is inevitable.  It is better to have a short, sharp collapse in which many corrupt institutions burn, rather than the drawn-out collapse which would allow the elites to consolidate power.

-Bernake will secretly bail into a European bank run, causing a derivatives blowup, massive worldwide bank runs, and government bankruptcies.  People must realize that the developed world's financial system is a giant pyramid scheme.  People who are productive and self-sufficient withdraw from the system rather than feed the Beast.  Worldwide bond markets will crash.  Bondholders must learn that getting wiped out is their punishment for supporting tyranny.

-America will most definitely attempt widespread use of all the fascist laws they recently passed.  Can’t be stopped.  Our victory condition is that it will lead to revolution.  Let the puppetmasters make the first move and lose their legitimacy with the sheeple.  Let hyperinflation hit first.  It will make it harder to pay goons and harder to rewrite history afterwards.

-In the long run there are few paths to freedom in which the sheeple do not suffer.  This is the fault of the sheeple.  The Universe itself has already selected a glorious win condition without the Illuminati and since the sheeple fight against this, they are expendable.  They never wanted freedom anyway.  Fuck 'em.  Their venal stupidity must be punished.  Karma, bitchez.

-Sheeple must see their entire life and ideology as a carefully manufactured web of highly profitable lies.  Hardship is the only way the sheeple will take a long hard look in the mirror and realize that THEY have been their own worst enemies.  Conservative sheeple must see the war on terror as a fraud used to justify turning their beloved police state turn against them.  Liberal sheeple must see their beloved Messiah wielding the billy club and using socialism to enrich the oligarchs.

-The low-ranking bulk of the military will defect from the Pentagon, sack the Federal Reserve, fight cops, Blackwater and other Rothschild-funded psychopaths specifically pre-selected for killing Americans.  America will avoid a loss of life and infrastructure on the scale of the first civil war.

-When it all comes apart, the Illuminati must start finking on each other.

-Mind-boggling documents must come out during the revolution.  Lucifer’s guts will be hanging out all over the place.  It will become widely accepted that most conspiracy theories were true and that pre-2013 consensus reality was thoroughly fake.  People everywhere will wake up screaming in their Matrix pods.

-It must be generations before the elites get the Matrix back up and running- that will be enough time to get some of us off this rock and secure our transhuman destiny among the stars.  The Universe's purpose for us is that we help to build its emerging mind.

-I am pretty sure the whole Fulford/Cobra/David Wilcock/Drake/Galactic Federation crew is misinformed and/or running a psyops.  Maybe the puppetmasters want us to turn the other cheek rather than stage a global French Revolution.  I will embrace alien hippies/mass arrests/Divine Intervention as a victory if it comes true, though I suspect we will only have freedom over the puppetmasters’ dead bodies.  If there are no universes in which the pig-men let up, then there will be no universes in which they live.  If they get slaughtered en masse, I will shed no tears for them.

-Alien hippies are still an essential, if not the most important part of the victory condition (for reasons which I will explain some other time).

-End the Fed.  End debt money.  Global debt jubilee.  End the EU.  End the war on drugs.  End the war on terror.  Get our cosmic consciousness back, which is the great secret that Lucifer wants us to forget.  We individuals are One.

-China, Russia, and a reborn America must ultimately reject SDRs as a new currency, setting back the Beast's plans for a world financial dictatorship.  Europeans will probably be stupid enough to take the bait- nothing stopping this.

-The Illuminati will take a Ninja star to the balls on Dec 21, 2012.  History will show the prophetic date to be a critical turning point where the puppetmasters lose their ability to define our reality.  After the cusp, the global awakening will be as inevitable as gravity.  This is really what the prophecy is about.  (There will be other universes where Earth is doomed to eternal slavery and ignorance, but they will not be MY universes!)

 

BONUS CONDITIONS, NEXT FEW YEARS:

-No nukes.

-The next president is a liberty candidate like Ron Paul or Judge Napolitano.

-The next president throws Israel under the bus.  Once Israel loses its giant robot (America), it faces a stark choice:  Give up the crimminals or face another Holocaust at the hands of the Muslim hordes.  Would be nice if they try to hold everyone off with nukes but aliens shoot them down.  "Where is your God now, bitches?"

-Back to the Articles of Confederation.

-Senator Alex Jones heads up a new 9/11 Commission. Dick Cheney’s mechanical heart keeps him alive during his enhanced interrogation.

-Bush escapes to his bunker in Paraguay and attempts to drink away the last scrap of his soul.  He goes on the mother of all benders and triggers epigenetic changes in his diseased, shriveled-up brain.  Half of his remaining neurons go on permanent strike. He suffers an eternal case of The Horrors. Though he effectively dies and goes to hell, his body lives on- a zombie without the stench.  In the pit of despair, he desperately grasps at his last chance of redemption and revenge, and tells where the bodies are buried.  He destroys the Sith, and brings balance to the Force.

-Patriots kidnap some other members of the neocon cabal and give them to Iraq, where they are more likely to get the justice they deserve.

-Hippies have teach-ins about how socialism leads to great wealth for the oligarchs and poverty for everyone else.  Baptist ministers give sermons about how the desire for a police state plays right into Satan's claws.  Activists of all persuasions will be united in a simple belief:  Control is Satanic.  Monetary theory and techniques of mass mind control will be required courses in the high school curriculum.  There will be public television-smashing festivals. 

 

VICTORY CONDITIONS, THIS CENTURY:  A NEW RENAISSANCE OF FREEDOM, LOVE AND SCIENCE

-Radical life extension.

-Consciousness transferral to machines.

-Cheap space travel.

-A space race between China and a reborn America results in America building a self-sufficient offworld colony.

-A revolution of abundant, decentralized energy (solar?  fusor?)

-Digital gold or something like bitcoin becomes a major currency.

-Love and decentralization in many aspects of life lead to a rediscovery of community power.

-Rediscovery that we are One.

-Living worlds everywhere, incl. Titan (2 separate geneses), Venus, Neptune, Mars, watery moons and KBOs.

If you think reality is surreal now, wait until you see what is coming.  The rabbit hole goes very deep.  The long, strange trip is just getting started.