Gold, Silver In Asian Liquidation Mode As China Growth Slows More

Tyler Durden's picture


UPDATE: Spot Gold $1426 (from $1564 highs Friday)

As Asia opens to the bloodbath that occurred in precious metals on Friday in the US, it would appear that more than a few traders got the 'tap on the shoulder'. Shanghai futures are limit-down and spot gold and silver prices are plunging once again as we suspect forced margin-calls and the raising of cash (to cover extreme variation margin - or capital reserves) needed in JGB positions, as we explained here. Liquidation is certainly the theme of the evening - investors are selling JGBs (6th day in a row of multiple-sigma moves in long-dated Japanese bonds 30Y +56bps off its post-BoJ lows at 1.60%!), selling Japanese stocks (Nikkei -128 pts, second biggest down day post-BoJ), selling US Treasuries (futures down), selling gold and silver (gold spot down over $100 from Friday's highs), and despite selling JPY early (retracing 30% of the weakness post-BoJ), JPY is practically unchanged (jerking lower only on the US futures open and Asian equity open) - it seems Mrs.Watanabe is struggling and unwinding some her excessively short JPY and long NKY positions.


Gold down over $100 from Friday's highs...


Which takes spot gold back to the 38.2% Fib retracement of the most recent low to high swing...


Tokyo COMEX Gold -9.2% (limit down) - looks like a giant post-BoJ roundtrip...


Silver ugly too...


Another day, another 4-sigma move in JGBs...

and post the China data...

  • GDP Miss
  • Retail Sales Miss
  • Industrial Production Miss
  • Fixed Asset Investment Miss

which stands in the face of the 'survey-driven' PMI data...

... everything is red - JGBs down, Japanese stocks down, US Stocks down, US Treasuries down, Gold and Silver down, Copper down, Oil down, Rubber futures limit down



Charts: Bloomberg

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Sun, 04/14/2013 - 22:03 | 3448128 TahoeBilly2012
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Holy crap!

Sun, 04/14/2013 - 22:05 | 3448143 wee-weed up
wee-weed up's picture

Very ugly! WTF!

Sun, 04/14/2013 - 22:08 | 3448158 Spider
Spider's picture

Yawn - long liquidations are completing the bottom.  This smacks of the $690 bottom in gold in 2008.  Silver price in mid $24's is right around cost of production - time to buy as much aspossible for me


Silver production costs (72 million oucnes of production included)

Sun, 04/14/2013 - 22:12 | 3448184 Thomas
Thomas's picture

Still groping to understand the JGB-gold connection.

Sun, 04/14/2013 - 22:16 | 3448209 Pinto Currency
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There is a crisis underway - appears to have started with Cyprus and assets being pulled out of the banks / financial system.

Physical old purchasing is on fire; price action is masking market demand.

Sun, 04/14/2013 - 22:17 | 3448222 Spider
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Sun, 04/14/2013 - 22:19 | 3448231 Pinto Currency
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Correction: Physical GOLD purchasing is on fire; price action is masking market demand.

Sun, 04/14/2013 - 22:23 | 3448266 Zero_Sum
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All the online Physical sites are pulling the plug on their sales. Tried buying on two so far and been rejected by both.

Sun, 04/14/2013 - 22:28 | 3448282 palmereldritch
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Paper gold is tanking.  Physical has no market. Where to next?

Sun, 04/14/2013 - 22:37 | 3448337 Mr. Magoo
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Keep buying the paper (also known as the Papiermark in the Wiemar republic) so everyone everyone else can buy the physical at a lower price, the one holding all the paper loses that's how the game works eventually

Sun, 04/14/2013 - 22:44 | 3448353 Pinto Currency
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Reverse fractional reserve banking in action.

Brought to you by the same people who brought you Lehman Bros.

Hell, it's brought to you by the same people who brought you fractional reserve banking.

Sun, 04/14/2013 - 22:55 | 3448408 AllThatGlitters
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Ouch, look at gold and silver diving tonight!

Looks like they are now trying to bounce.

Live Gold:

Live Silver:

Sun, 04/14/2013 - 22:58 | 3448422 Pinto Currency
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The issue is not the price.

Investors and funds now suddenly realize they don't have possession.

Physical runs look to be on and paper market being smashed in order to provide time to acquire.

Sun, 04/14/2013 - 23:07 | 3448454 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

This is a deflationary collapse. No one give a shit about your damn pieces of metal. These traders don't want to have accidental steps from high office buildings or heavy shoes in the South China Sea. Implosion bitches!!

Sun, 04/14/2013 - 23:10 | 3448458 markmotive
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According to Marc Faber, gold could hit $1300.

Sun, 04/14/2013 - 23:10 | 3448469 Pinto Currency
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Vamp - Your $100 trillion bond market will surely deflate to near zilch. Launch for gold/silver and all strategically valuable assets.

Sun, 04/14/2013 - 23:13 | 3448473 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Pinto, yes the bond market will evaporate. Buy gold/silver after the current massacre is done. Until then, you are just going to get screwed as Bernanke has been putting to you over the last few years.

Sun, 04/14/2013 - 23:26 | 3448495 Pinto Currency
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Markets are realizing that the available gold and silver are much less than 1% of the bond market (ignoring derivatives, cash etc.) and that a good portion of their financial assets are going to be seized.

Now when they and other market participants try to get metal they find it has been been fractional reserve levered dozens of times.

The metal is not there now and it won't be there later.

Sun, 04/14/2013 - 23:37 | 3448537 Stuck on Zero
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It will be interesting to see the analysis of what is happening in several weeks time.  Somehow me thinks it will all lead back to JPM and the Squid.


Sun, 04/14/2013 - 23:39 | 3448544 Pinto Currency
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Just like Lehman.


Mon, 04/15/2013 - 00:33 | 3448666 Jack Napier
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No one knows the day and when markets will reach equilibrium, but once that occurs it will be too late to get a ticket on the cheap gold and silver train.

Mon, 04/15/2013 - 00:57 | 3448705 James_Cole
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No one knows the day and when markets will reach equilibrium, but once that occurs it will be too late to get a ticket on the cheap gold and silver train.

So just buy it all the way down right? People on here were saying $40 was cheap for silver, then $30, now $25? 

Mon, 04/15/2013 - 01:34 | 3448733 Pinto Currency
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The issue is not the price.

It is possession for the funds and investors who do not have it.

Mon, 04/15/2013 - 01:46 | 3448747 James_Cole
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The issue is not the price.

It is possession for the funds and investors who do not have it.

Right, well I'm sure there's a few bullion dealers out there very relieved to hear there's buyers out there willing to pick-up at any price. 15$ over spot? Stack em' up!

Mon, 04/15/2013 - 04:35 | 3448860 Gief Gold Plox
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Coin shops opened in EU about an hour ago and are now basically out of stock. 1kg bars were the first ones to go. The place I shop at is currently able to sell (with 3 - 7 days delivery time) only bars  at 1g, 5g, 10g, 1oz., 50g and 100g, 250g and 1000g bars. All gold coins and all other metals are "currently undeliverable"

I was only able to snatch one bar before everything was out of stock. My advice to you is get it while you can. All physical stock it appears will be gone in a few minutes.

Good luck.

Mon, 04/15/2013 - 05:47 | 3448898 Gief Gold Plox
Gief Gold Plox's picture

Just broke 1400$, 1070EUR / oz. But it doesn't matter much any more. Noone's delivering at that price.

Mon, 04/15/2013 - 06:41 | 3448989 Acet
Acet's picture

All I know is that I've checked some of my suppliers here in Europe and the price they're willing to pay for coins is actually higher that the paper-market value of the Gold in those coins (and this is for coins such as 2013 Britannias and Sovereigns)

Also, the lowest premium I've seen for buying gold coins is 5% and this is at the cheapest supplier I know who usually have a preminum of about 1%.

The premium at most suppliers is now 10%

Methinks that the physical market is decoupling from the paper one.


Mon, 04/15/2013 - 05:51 | 3448903 smlbizman
smlbizman's picture

i thought this help explain what is going on...

Mon, 04/15/2013 - 06:31 | 3448973 GetZeeGold
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Those who live by paper, will die by paper.


Mon, 04/15/2013 - 01:31 | 3448730 KickIce
KickIce's picture

No doubt the banks are behind it, historically, how often do you see gold prices drop during a banking crisis?  This is especially true for the Asian cultures that still value gold.  Like Tyler said, must be a whole of margin squeeze coming down the pike.

Then again, the faith of today's society in paper and 1s/0s truly bogles the mind.


Mon, 04/15/2013 - 00:47 | 3448688 hmmtellmemore
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Vamp, the voice of reason against brianwashed, paranoid stackers.  Can it be that printing money but giving it to the banks (who don't actually lend it out but use it to destroy their debt) causes deflation?  Yes.  

Will the price of precious metals rise in a year or two when it is public knowledge that it is a "terrible" investment?  Yes. 

Mon, 04/15/2013 - 06:34 | 3448979 GetZeeGold
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Come see when they steal your 401K.

Mon, 04/15/2013 - 06:50 | 3449014 draug
draug's picture

Or just realize that holding blocks of some random metal isn't going to "save" you from a deflationary spiral. In fact the idea is kinda silly when you think about it - you're holding on to gold just because you HOPE everybody else will value it to the moon. That's a speculative bubble per definition.

Mon, 04/15/2013 - 06:51 | 3449018 Kina
Kina's picture

That is exactly the same for any currency. But for money, supply is limited.

Sun, 04/14/2013 - 23:22 | 3448490 augustusgloop
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1350 is a 33%-38%  pull back (2002 low- 2011 high). 




Sun, 04/14/2013 - 23:11 | 3448464 Pinto Currency
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Mon, 04/15/2013 - 00:12 | 3448623 Mr. Magoo
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And so, It begins

Mon, 04/15/2013 - 02:19 | 3448777 AetosAeros
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Just read this article about the Fed being responsible for the crushing in Au and Ag. Because I don't have the formal knowledge of most of the ZH's who have a grasp on who's who, I can't validate the credentials of the news service (KWN) or the intervieweee (Dr. Craig Roberts), but just from my time here, and the well laid out plan he's presented, the article does have a damning ring of truth to what is happening, and why: crush gold/silver in order to show the dollar as the 'real' safe haven for investors due to market instability and the current global trends of other currencies to look to direct swap versus dollar conversion.

I await the fight club bloody nose should this be off track. BTW, I gladly take the Bitcoin blackeye that so many of you have served up daily, but I still keep my original position: Bitcoin is NOT money; it is an alternative currency in place of the current fiat currency that the FED is protecting at all costs; even to the detrimante of Au/Ag. My purpose with Bitcoin always was and always will be for the conversion to REAL money- Gold/Silver, and to that ends, much like the FRN was used previously and currently, I have put my currency into money and slept better at night. The costs? A computer running all day and night crunching hashes and collecting BTC, then selling when I felt the market was the most lucrative to do so; directly into Ag as I'm just a poor working serf with a leaky boat.

You don't have to like BTC, but if you're hoping the FRN's are enough to buy your gold and silver, you're sadly mistaken, and keeping FRN's, like BTC, longer than need be is at your own gut reaction, but don't knock the guy's like me who are taking the same heading as you, but on a differenet path.

Mon, 04/15/2013 - 06:53 | 3449026 draug
draug's picture

Just a question: How can bitcoin be a currency but not money? How do you define money?

Mon, 04/15/2013 - 10:30 | 3449907 AetosAeros
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For Me It's pretty clear cut:

Money: Recognized across borders as a non-perishable, rationale, easy to recognize and transfer in large or small quantities, medium of exchange that by it's 'intrinsic' value gains both value and store of value over time, and most importantly 'IS' value to both parties involved in it's use. 

Currency: Everything else that is traded in the stead of a store of value, or that which is accepted as a proxy to a store of value. Fiat is not money, it's a proxy, and a poor one at that. Much like getting Krugman as guest speaker for graduation when you were told it was gonna be George Carlin.

Bitcoin is and was offered as nothing more than a possible alternative to the current fiat currencies that abound around the world, and to help suck some of the power out of the FED in a way that standing on streets with signs and wearing stupid T-shirts bought with FRN's didn't. It was never meant to be a contender to Gold or Silver, it was meant to get people to see it had a value in removing the centralization and dependency that we all have come to know about banks and their ilk. If a non-centralized fiat currency like Bitcoin gained value, it was inherent as an aid in disconnecting the rigidity people feel about what is money and what is currency. If you could pay your rent, car payment, insurance, etc. with BTC, and this helped you price things in BTC, not dollars, over the time of it's use, then the dollar lost it's 'hold' on you (or rather the fixation that sheeple have for it), and then you truly let the Emporer know he has no clothes.

And Gold and Silver reclaim the historical cornerstone of what wealth, a store of value, and money truly is universal again.

BTC got taken down by someone who was threatened by it's existence, not because they were trying to capitalize on it. Broken Window fallacy is applied to understand why.

Gold/Silver have gone through this same attack, while a worthless paper is held up in their stead. But they will always survive. On a long enough time.....

Mon, 04/15/2013 - 02:32 | 3448786 Burt Gummer
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Just contacted my local coin shop dealer on his cell phone, said don't even bother coming in tomorrow they are completely sold out of both gold and silver now.

Mon, 04/15/2013 - 06:35 | 3448980 GetZeeGold
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.....and it's gone.

Sun, 04/14/2013 - 23:15 | 3448474 Lewshine
Lewshine's picture

Only thing that's gonna bounce is equities, AND bonds in both Amerika and Japan will find equilibrium by sunrise - As IS usual!

Mon, 04/15/2013 - 05:59 | 3448912 Go Tribe
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Why would equities bounce when the entire commodity complex is crushed? Soaring equities in the face of certain deflation? That's a nightmarish proposition.

Mon, 04/15/2013 - 06:37 | 3448985 GetZeeGold
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Worship the your own peril.

Mon, 04/15/2013 - 08:19 | 3449311 youngman
youngman's picture

Because the banks are "reporting" big earnings..."beating the street"....blah blah blah...and that is what TPTB want ..a higher stock market...

Sun, 04/14/2013 - 23:21 | 3448492 Pure Evil
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Excellent sites, thanks for the links.

Mon, 04/15/2013 - 04:18 | 3448847 TraderTimm
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Oh look, the Tyler(s) making a much-ado-about-nothing on a decline.

Gold will be doing fine on a daily basis, don't get sucked into the typical ZH "Oh shits we're down... oh wait, we're ramping up on < insert whatever >"

Fucking hell, seen it for nearly three years - what else is new.


Sun, 04/14/2013 - 23:57 | 3448592 CompassionateFascist
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"where to next"...lead.

Mon, 04/15/2013 - 06:40 | 3448990 GetZeeGold
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Full tilt global marxism.....they just needed the Iron Lady to die....and it's on like Donkey Kong.

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