Another Day, Another 8amET Gold And Silver Slam Down

Tyler Durden's picture

As the G-20 continues to craft the most egregiously hypocritical words to describe what is declaring currency war and what is merely commenting on the need for a weaker currency, JPY has plunged back towards the week's lows and Gold and Silver have been slammed lower in another instantaneous 1% gap-down (as we have seen at 8amET every day this week). Silver now below $30 is back near the lows of the year. Treasuries are leaking higher in yield as the precious metals are sold.

 

 

and JPY has had a week at the hands of the 'G's...

 

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Cognitive Dissonance's picture

You know you've crossed over into the Twilight Zone when they don't even try to hide it anymore.

Lost Wages's picture

I think I saw 72,000 contracts trade in 5 minutes on the NetDania chart.

GetZeeGold's picture

 

 

Until we have a better plan....we're gonna print money and slam PMs.

Short Memories's picture

Interesting to see the yen fall exactly along side it

 

knukles's picture

We have seen 8 am horseshit just about every day for a year now
Somebody is behaving a bit worried going through a lot of effort to do this
Something getting.soft and ripe behind the scenes?

Kaiser Sousa's picture

HEY YA'LL..JUST FORGET ABOUT THAT PHONY PAPER PRICE AND KEEP ADDING TO UR "SILVER SAVINGS PLAN"...

http://www.youtube.com/watch?v=hh-xQbfOoFI

 

im off to the links to get drunk while hittin that little white ball...keep the faith in sound "REAL "money and repeat this all day long....

FUCK YOU BERNANKE YOU BITCH ASS BANKER FUCKING MOTHER FUCKER............

scatterbrains's picture

No doubt good advice but I can't help wanting to see 1400ish to double up on my phyzz could happen by the end of Feb too. Maybe we need 80% of the ZH population to hand it over before we can begin the next phase... just saying

http://fiatflaws.blogspot.com/

Bicycle Repairman's picture

Why don't you buy some nice platinum instead?

Mugatu's picture

Get smart.  Weeks ago I bought DUST which is a 3x bear gold miner fund.  Not only is it completely hedging my physical gold position, but it is making me money above my phys gold losses.  The miners are even weaker than spot gold and the 3x leverage gives you an awesome hedge for little investment.  

I will patiently watch this bloodbath until gold bottoms at 1525 or $1400 or $1300, then I will take all my DUST profits and buy even more gold at firesale prices.  Quit fighting TPTB and use their little game to make even more.

Fuck Bernanke, Fuck Washington!

fuu's picture

So now we are back to pimping 3x ETFs?

ZH wtf has happened here?

LawsofPhysics's picture

short term, I thought we were all here to increase our wealth.  Am I wrong?

fuu's picture

I thought we were not our khaki's, our furniture, our jobs, our farms, or our stacks.

Maybe I've just overstayed my welcome.

Mugatu's picture

Here's a hint - when you have something to say, have a point.  It makes it so much more interesting for everyone who is listening!

Steve Martin (Planes, Trains, and Automobiles) 

Midas's picture

I even let you pay for the hotel so you wouldn't feel like you were imposing!

--John Candy RIP

malikai's picture

Wealth and intelligence.

Anyway, Gold is breaking some levered backs right now. Reminds me of Feb 2011. We all know what happened after that.

http://blog.quantsig.net/2013/02/15/goldsilver-4/

Al Huxley's picture

Normally I'm not an advocate of 3x funds, but DUST is an exception.  The concerted effort to destroy the mining industry makes this the only 3x fund that has to be a fucking lock.  Financials are everybody's baby, they can't get fucked over or allowed to be killed long term, but nobody's going to save the miners, so the 3x bear fund in this case seems like the best way to get the supposed leverage the miners provide on gold.

glenlloyd's picture

A 3x etf that's an exception? Surely you jest.

Al Huxley's picture

I know, they must have made a mistake.  Two devices implemented in the market to remove naive retail investors/speculators of their money, but difficult for both to lose big at the same time - seems like they didn't think it all the way through.  Nevertheless, I think TPTB have more to gain by destroying the mining sector than by sodomizing DUST shareholders.  They'll probably just get rid of DUST.

Theosebes Goodfellow's picture

They have to keep PMs hammered, knucks. The moment those "get away" from them it's game over. The time to sit up and pay attention is when they don't (but most likely can't), play "Whack-a-Mole" with them. That will mean the shift is on its way. Until then one simply has to view this as another sale on PMs. Buy 'em while their cheap, that's all I can say.

ITrustMyGut's picture

so true CD... IN YOUR FACE

 

but we're seeing increasing levels of that... Cheney and his "Secret" energy policy groups, 9/11, MF Global... the list of blatant 3rd world corruption and in your face , inelegible potus, you name.. lies lies lies and in your face lies

Bananamerican's picture

serious douche.....

you defending Dick?

101 years and counting's picture

has anyone even bothered to look at a gold chart?  about as ugly as it gets.  its not as if the CB's are going to rig the gold market higher...like they do the worthless paper markets that "create wealth".

Catflappo's picture

"hide" what?  All looks totally above board to me.   [clutches chest]

Lost Wages's picture

The cheapest ounce of gold I see around is the OPM bars at Provident and the cheapest silver I see is the "donkey bars" at SilverTowne.

earnulf's picture

And yet ebay yields on silver are between 35 and 40 dollars, humph, go figure

LawsofPhysics's picture

Manipulation of PM's while losing control of the treasury market, or the next planned "crisis".  When your political puppets won't get in line, apply preasure via capital costs.  Why do we pay the gov taxes when the consitution says that they can coin all the money they need, oh yeah, we have to keep paying that private bank called the Federal Reserve. Hang in there ZHers!!!

 

Central banks know what is coming, chinese on holiday so they are taking advantage as they need to aquire more PMs on the cheap while their paper is still accepted.

WhiteNight123129's picture

Law of Physics here is the psychology of the markets.

On one hand there are teh hyperinflationits. They might be right but it would take a cash flow deficit from teh central bank to get there. I.e. interest on assets lower than what the CB has to pay on excess reserves. We migth get there but it will take years.

 

Second, there are the mass which confuse money and credit. You can have a boom on credit which creates a bit of inflation but this self defeating under a fixed money system and follwoed by deflation.

However there is another form of inflation coming from money (Potosi mines, assignats, or expansion of base money).

 

The hyperinflationists are disappointed and the masses think we are back to ~normal~ that is new expansion of credit with benign inflation.

The inflation coming from money is a completely different animal than the one coming from credit. It is not self defeating.

Mark my words, when the inflation starts to creep up above 4% you will see the ~back to normal~ cringe. The Fed will stop printing because in order for inflation expectations not to rise further, but that is it, the genie is out of hte bottle slowly but surely and you have a bear market for treasuries for Years.

When the 10 years cross 5%, the masses wake-up. In between Gold will fall and fall, except if you see a spike on treasuries. Patience and watch inflation go above the the typical infaltion top during expansion of credit driven inflation. Buy more close to that point. Then inflation breaches the inflation tops of the credit cycle expansion and Gold rallies like nuts.

 

fonzannoon's picture

whitenight mark my words you will never see 5% on the ten year, maybe ever. You may see 2.5%....3%...3.5%....but that's where it stops.

Ben will freeze the ten year in it's tracks there, should it ever get there. He will buy up every treasury along the way. He will personally deliver shit sandwiches to every buffalo wild wings and tell you it is hamburger, so wash it down with your .000007% makers mark which still costs $14 a glass because there is no inflation.

WhiteNight123129's picture

CEntral bank manipulation actually always fails in history 1793, 1825, 1839, you name it, plenty of central bank failures in history.

If inflation expectation rise to 3.5% Bernanke announcing more printing will make inflation expectations rise even further.

Keynes is right psychology makes everything look upside-down....

IF YOU DO NOT UNDERSTAND PSYCHOLOGY, DO NOT TRADE.

if inflation rises, through money (not credit), that means your salary rise, (until now we had money units pushed into foreign assets foreign currency, acting as devaluation). If that happens Gov taxes rise.

AGAIN Debt to GDP in Argentina in 2002 161% Today 2012 40%. Beautiful deleveraging. Why would the US not be able to have the good stuff too? Ok, it migth be a mild Argentina. But inflation always work to inflate up tax revenues. (not in real terms just more confettis collected to repay taxes). I mean please all governemnt have used that trick for centuries to inflate away their debt, why do you think America is different?

IF inflation is at 6% long bond at 4.5%, the governement wins.

If inflation comes at 12%, short term interest rates at 8%, the companies with pension liabilities can get rid of their fixed return obligation easily. Look Argentina stock market rallied 750% in pesos.

You put a lot of equities in the portoflio of the companies with pension liabilities, you flood the market with money (not credit) and voila, done. Move on. Problem solved.

PLEASE DO NOT CONFUSE OVER-EXCITEMENT INDUCED INFLATION WITH MONEY INDUCED INFLATION. IF YOU CONFUSE THE TWO YOU CAN NOT CONCEIVE HOW A SHITTY ECONOMY WITH TONS OF DEBT MANAGES TO HAVE INFLATION. OF COURSE THIS INFLATION DOES NOT COME FROM CREDIT.

LawsofPhysics's picture

If you don't understand how supply chains work, don't trade, and you sure as hell don't know how to truly hedge. In the real world supply chains are all that matters. currency wars> trade wars> real wars>, this is the only thing that 6000+ years of human history/phychology has been consistently clear on.

fonzannoon's picture

You will have price inflation continue with no wage inflation. People will get crushed under it one by one.  It will go on for a long long time.

When Lawsofphysics decides he has had enough and actually asks for compensation in something other than dollars, and everyone around him does as well, then things may happen very quickly. Until then please disburse, nothing to see here.

LawsofPhysics's picture

Correct, already happening.  Give me something fucking real for the fruit of my labor and that of my employees so that we can i) stay in business (buy diesel for the tractors, maintain our seed stocks, maintain the soil, etc. all requires real fucking inputs, never mind actually delivering our produce), ii) afford college for our children, ii) afford to retire.  Our lying eyes can already see that the paper promises are not buying shit.

WhiteNight123129's picture

Worker productivity is declining. It is good news.

http://www.bloomberg.com/news/2013-02-07/worker-productivity-in-u-s-declines-pushing-up-labor-costs-1-.html

Worker productivity declining is corporate propaganda. A unionist might say ~end of wages repression~ to describe the same phenomenon. One has to think upside down. What it tells is that corporations are forced to pay more. Why? Can get more employed people in unemployment to repress wages. Rise in unemployment is good for repressing wage because supply of labor increase in relation to demand. Next tons of money (not credit) floating around, if the Governement temporarily spends more, they might lit the inflation fire from money (a self-consuming fire as opposed to over-excitement of trade and credit type inflation). Once inflation is kick started they can retrench.

 

http://tv.msnbc.com/2013/02/12/obama-calls-for-9-federal-minimum-wage-pegged-to-cost-of-living/

That is pushing up wages costs further, but they were already starting to go up in nominal terms (not real evidently).


As for Britain, they are tolerating flatflation, no growth just nominal increase in GDP (if debt is fixed it is good too). Even a decrease of 2% in real output with 6% inflation is good because that is nominal GDP increase, and relative to debt that is sweet.


LawsofPhysics's picture

Wages are not going up, where the fuck are you getting your information? even the Fed's website show a decline in average wages over the last tens years.  Priced in any commodity, the purchasing power of the dollar looks even worse. Clearly another unemployed MBA.

WhiteNight123129's picture

LawOfPhysics, I do not care if the wages go down in real terms, as long as they go up in nominal terms that is all that matters for analysis purposes.

Ok it sucks, people feel bad and so forth. But if the nominal wages rise 4.3% annualy, that is sweet to repay some mortgage debt and credit card.

Look at Argentina, they had many more pesos in salary yet they are poorer and yet the government has delevered. So I proved my point is correct. I am not saying my point is fair or is what should be done, or is even moral. I am just telling you how it is possible for inflation to actually delever the economy while empoverishing the economy at the same time.

Forget ~real value~ that does not exist in fiat. It is all a play of nominal numbers. Just an abstraction. I am not saying that some day this game will NOT end, but it will require the Fed to have to pay more money on excess reserves than they receive on assets. That would be your final epilogue. Years away.

 

LawsofPhysics's picture

You are contradicting yourself.  So is Argentina a good or bad place to be rellocating you and your family to right now?  

If you don't think "real value" exists, you don't understand what real "wealth" is either.

"Years away" - Based on what crystal ball? I see an exponential increase in direct monetization and debt since 2001. Go ahead, make that bet, I will not.

WhiteNight123129's picture

No, I am not contradicting myself. I think it stinks, but yet it works to delever.

Again throw the moral aspect out of the window for second. Argentina flood the market with new currency units.

What happens? People get poorer, but debt levels are undeniably lower. that is all I am saying. I never said that because the delevaring is happening it is good. I am just saying it is the least bad outcome. And I think US might have a mild Argentina outcome. That is all.

Now on real value. Value is a concept which is only dependent on human existence. Gold and hydrocarbons are worthless if located 4 billlion years away from teh earth.

Now if you kill 1/3 of the populatikon with the black plague. Farmland prices plunge. 

So the population element is key. And next there are value items which are independent from pyschology (food, tobacco, things that people can not control or influence only with difficulty through psychology).

And then there is the rest which is 100% collective psychology or herd behavior. Gold has a 6,000 old brand and same with Silver.

Coca-Cola brand in comparison looks like shit. But for some reason people like their fiat delusion until they reject it. The rejection point is not the logical understanding, the rejection point is the realization of the inflationary consequence. It will come but we are not there yet, for now people think we are back to ~normal~...

 

 

 

agent default's picture

For one thing, 3.5% is enough to blow the Fed balance sheet and the US out of the water.  Hell, even 2.5 will be enough to start a chain reaction.  As far as freezing the yields, yeah sure.  But then again the dollar will be dumped, foreign bond holders will dump, and the US will become a sort of closed economy with a currency that will buy you nothing abroad.  Either way the end game is on.

fonzannoon's picture

I'd agree that 3.5% could be as high as they go. I just think it is easier to throw a few crisis events in here and there along the way to keep the sheep runng back to treasuries on their own.

WhiteNight123129's picture

US will be double digit rates before the bond bear market ends.

LawsofPhysics's picture

Interest rates cannot rise.  The U.S. government would shut down as the Fed is directly monetizing all their operations right now. Okay, your ignorance is very clear now.

WhiteNight123129's picture

The Government shuts down, and so what? Of course they are monetizing, but look at history, monetization always ends with very high inflation, very high rates. I mean please, open history books where did monetization end with low inflation and low interest rates?

I see contradiction here. If you expect low inflation and low interest rates as a result of the Fed program, I think you should sell your Precious metalos immediately, before it gets slammed further.

LawsofPhysics's picture

If the government shuts down, so does the SNAP program and all the other subsidies to food and fuel.  At that point, interest rates will be the least of your worries.  

WhiteNight123129's picture

I sense a good person in you LawOfPhysics. THe Fed is powerless, teh power is just in the eye of those who watch the one they believe is powerfull. Look at the Duce Massimo in Italy. One day he is the strong man, hte next the crowd hangs him upside down like a pig. Puff... gone... the power has vanished like a snap of fingers.

Look at French revolution, one day the King has is ~power from God~, the next they chop his head. Same thing, the power does not exist outside of those who look at the other.

Think of humans as highly intelligent chimps. The highly intelligent chimps put a crown on the head of one of them one day and take it offf the other. Same with bull markets, bubbles ,  Fed power, what have you.

 

LawsofPhysics's picture

A productive agricultural business.  Keep working on that MBA.

WhiteNight123129's picture

+ 1

LawOfPhysics, you are in teh right business because psychology can not influence food demand, only population size. And let me tell you, I have been in the business of money management for 13 years, No down years. My grand-father was a farmer. He had not much money (but today I think it is the right place and he would make quite a bundle if he was alive). He had a great farm, and I think it is most beautiful activity in the world, and I am not bullshiting, you wake up with the fresh air, no pollution, no sound pollution, ok the tractor stinks sometimes. If you raise pigs no good, but cows shit is not at all smelling bad in my opinion on a farm in my opinion. I actually envy you. If I knew farming I would probably quit why I do which is just fucked up. I have fond memories from being on the farm. And keep working on your farm, while I will keep shuffling money pushing air back and forth. Just because you make money at doing something does not mean you like it.

The only good thing in this business is reading old banking stories, it is like traveling. The rest is shit.

 

 

WhiteNight123129's picture

So what if the Fed blows up? It would not be the first or hte last time that a central bank blows up.

I mean people do not consider the scenario and say it is impossible just because the Fed would blow up as a result? I am not sure it will lead to blow up, but I thought the people on this crowd were willing to see the FEd blowing up.

I sense some kindness behind all the appereance of brutes and tough guys in this blog. WHich I am not criticizing, I think you guys would want the right thing to be done and avoid a blow up.

But just because an outcome is psychological unpalatable does not mean that it is impossible or even improbable. If you already have died once you can not die twice so you do not care.

What do I mean? I you wanted to be all your childhood say an violionist and you lose your fingers. The result is you are dead inside. The benefit of that is that you do not reject a logical outcome just because it is unpalatable, since the most unpalatable outcome already happened to you.

So instead of having a psychological process like this which is.

The rates rising about 3.5% would blow up the Fed, &&#@$@#$@# psychological block @#(&$%@(#$&(#@& and continue with the FEd will not let that happen.

Restate the logical path in teh following way.

The rates rise. Ok, if the Fed rises above a certain threshold it that sure that it would blow up immediately?

ok look at precedents. UK post world war II, Argentina post 2002 etc... It can happen but it takes time. And so what if that happens. Life is a bitch anyway.

Then continue your thought process.. ok what can the Fed do to prevent interest rates to rise? Print more money while inflation and interst rates rise? What would be the psychological impact of that?Horrendous.

The only thing the Fed can do is actually STOP PRINTING AND INVERT FLATTEN THE YIELD CURVE FROM THE OTHER SIDE A BIT and TRY TO KEEP INFLATION ABOVE LONG BOND RATES, BUT LET LONG BOND RATES RISE AS LONG AS THEY ARE BELOW INFLATION, ALL GOOD.

 

WhiteNight123129's picture

I will, and remember that something which is not sustainable has to stop. Do you think that printing is sustainable?

If you think it is not sustainable and agree that something that is not sustainable has to stop, why in your opinion printing would go for ever.

That is a contradiction.

I think that when the base money kicks in the circulation (similar to new massive cargo of Gold under Netherlands pure mettalic currency if you will), the price will rise. Not because new credit is created.

Example of transmission. Big Banks gamble with excess reserves (base money) in stock market. Retail investors sells his stock. To me the retail stock holder got a higher balance with his bank but I see only the intervention of base money here. Liesman is denying it because he knows that is exactly what the Fed is looking for. No new credit creation.Yet higher nominal bank balance for the retail shareholder. Cheating is beautiful!!!

Next the retail shareholders buys a book at AMAZON. Where is the intervention of anything outside of base money expansion? Did the bank lever up? No, they sold their Mortgage back securities and treasuries, got some reserves and collateralized other assets to disguise their reserves being used into stock market. But effectively they are using base money to push up stock. Retail shareholder sells and voila. Done.