All Abe-Inspired "Gold-In-JPY" Buyers Now Underwater

Tyler Durden's picture

Japan is opening ugly - the commodity rout continues with rubber, gold ($1325), and copper all down hard and stocks also being hit as liquidations continue. JGBs are modestly bid 1-2bps (though fading). JPY's bounce off the after-hours spike is fading...

JPY was its strongest at the start of October - and then the new Abenomics plan began. Very quickly the "long of gold in JPY terms" trade became extremely popular. After an impressive 16.4% rise into mid-February, gold-in-JPY corrected modestly; but the BoJ-inspired action smashed gold-in-JPY back up to its recent highs (helped by the seeming capitulation is JPY longs on the bigger-than-expected QQE). This appears to be the last straw on this trade. With JPY shorts so extremely positioned, the small rally on Thursday/Friday in JPY sent many scrambling to cover and, along with the need to unwind any and every asset to cover cash needs for JGB volatility, the avalanche began in gold-in-JPY. In 2 days, the entire Abe-inspired 'rally' in gold-in-JPY has been undone and all post-Abe buyers are now underwater. Whether this marks a short-term capitulation of these positions is unclear but CTFC CoT this week will be intriguing - and further JGB vol will not help. The rally in JPY of the last two days is the largest in 35 months - so someone clearly broke something...

Gold in JPY has retraced all its post-Abe gains...

It would appear that it is no longer moving from the lower left to the upper right...

and JPY is rallying faster than it has in 35 months...


and Gold is plunging on the Japanese open (as margin calls flush a few more out)...


Japanese interest rate volatility is surging higher and gold is being sold to match it still (as we discussed here)..


Something broke when the BoJ went full retard...


Charts: Bloomberg

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transaccountin's picture

magic /es up 10 off the lows. weeeee

markmotive's picture

Seems like Jim Grant still likes it. This could be the dip everyone's been waiting for.

Al Huxley's picture

This doesn't look like 'the dip everybody's waiting for'.  This looks more like the 'last, fuck what it looks like just close out the shorts and leave the specs holding the bag because we can't deliver and are going to default' move where everybody finds out that it's no longer possible to 'BTFD'.


There's NOTHING normal about this, and I agree with ebworthen - it's indicating something else is REALLY broken.

fonzannoon's picture

Looks like the miners went straight from unloved to completely fucked Al.

Al Huxley's picture

No kidding.  It's pretty hard to believe - did you see the volumes?  Who's left to sell?  I can't reconcile the shortages I'm running into when looking for physical metal with the collapsing price, which is why I'm 100% convinced this is an engineered, pre'default move by the bullion banks, but it seems like the miners might be collateral damage.  Still, at this rate, what do they have, maybe 5 days until 0?!

fonzannoon's picture

Al do you think these deals are wiped out or just sitting on stock that they refuse to sell at a loss? Is there a difference?

TheFourthStooge-ing's picture

I think it's reached the point where the best anyone can do is guess.

From TFA:

Something broke when the BoJ went full retard...

Something is broke and is getting broker quicker.

Funny how Abe has thrown everything into the fire in his efforts to devalue the JPY, yet now the opposite happens.

Also funny is how gold and silver, pretty much opposite of expectations, are taking such a massive hit at a time of substantial economic frailty and uncertainty.

This behavior might be expected, though, if the global economic system has reached a bifurcation point. A bifurcation occurs when a small smooth change made to the parameter values (the bifurcation parameters) of a system causes a sudden qualitative or topological change in its behavior.

If such a point has been reached, the current economic system will have moved beyond both predictability and control.

A graphical representation of the logistic map (an archetypal example of how complex, chaotic behavior can arise from very simple, non-linear dynamical equations) is a good way to illustrate this phenomenon.

Both the bifurcation diagram and the logistic map example below show how quickly, once a certain point is reached, a system which appears reasonably stable can be thrown into wild and bizarrely extreme perturbations by a very slight parameter change.

(The animated gif is also a decent way to visualize why weather forecast accuracy falls off so rapidly beyond three days in advance.)

Vlad Tepid's picture

The book Jurassic Park seems to be our best guide at this point...

draug's picture

+1 for mentioning some real math. This is what happens to stable systems when you remove too many of the legs beneath it. It may ironically balloon into a bigger version of itself due to over-reacting counter forces, before crashing chaotically. Similar to our sun becoming a red giant before collapsing.

Bifurcations can happen to many quasi-stable systems, I wish more people realized our biosphere/climate is one of them. (Oh no he said the 'c' word, he must be a libarul!)

Al Huxley's picture

I think that the selling's fund redemptions and real all-round panic in the sector that's making people lose sight of reality.  If there was some real indication that things had changed and the reasons for gold's price rise were no longer valid, if we'd had a real, retail public's all-in blow-off in gold and the stocks, followed by a crash, I could see it, and in that case being wiped out, or sitting around waiting for them to go to 0 would be the same thing.  But as gloomy as I am right now about the immediate turn, I still think that, barring some sort of (unlikely) global nationalization of miners, their day in the sun is still to come, and that anybody still around in the sector's thinking the same way and trying not to panic sell.

DoChenRollingBearing's picture

A really crappy day for America...  Three dead, gold & stocks lost a lot of people a lot of money.

"Monday Massacres"

draug's picture

Lots more than three die every day? These three just got more media attention.

Go Tribe's picture

You mean a real crappy day for the 99%. The money changers and their political servants did well today.

shuckster's picture

Shortages imply that demand exceeds supply - or, in a price fixing scenario, that prices are fixed too high and no one wants to fill that supply. I think its the ladder

Al Huxley's picture

Right, price is to high, so SUPPLY dries up.

shuckster's picture

No, supply dries up because demand dries up. Usually, in a non-price fixing scenario, demand falls and prices fall, but because of price fixing, prices aren't falling with demand

kito's picture

What shortages do you all speak of? I looked at several sites and all have gold and silver. The only real shortage I see is in ammo.....literally every site is sold out...

Al Huxley's picture

I don't buy physical metals over the internet, it's strictly cash and carry.  My local sources, which have historically been very well stocked, all the time, are both completely out of stock, and I was unable to call to find out if/when they will be getting more in, because the phone was busy all day.  Either they're no longer answering, or they're just dealing with a constant barrage of calls from buyers.  Either way, for me this is a shortage.  And I see the same reports from people all over the country. 

fonzannoon's picture

Kito there are a lot of sites claiming they are sold out. Take a look at apmex. Yes there is some stuff you can buy but much is out. For something being discarded globally that is pretty ironic. That being said I absolutely could have bought today and chose not to. They did have stuff where I go. That is the reason I did not buy. Which in retrspect, may have been pretty stupid of me.

It's all good though. Equity futures are up.

kito's picture

fonz apmex has 2013 gold and silver eagles available does gainesville....i call bullshit on actual shortage........look at that dow fly!!!! such a lovely shade of green....

fonzannoon's picture

fwiw I think all these places have stock. They are just underwater at these prices and won't sell. I also know from experience (some site called NY mint....pieces of shit) that I locked in to some amazing prices several years ago, and their site indicated they had them in stock...well they cancelled the order and pretty much told me tough shit.

Al Huxley's picture

I don't know about that.  I assume that the dealers fully hedge their buys at the time of purchase and as such don't really care about the price they sell at, they're just taking the spread.  In any case, I can only talk about the shop I deal with directly, and at the moment they're both out of stock and either extremely busy taking orders, or no longer willing to take orders.

fonzannoon's picture

You know more than I do, and I believe you regarding your dealer. That's all I need to know.

Alexandre Stavisky's picture

"If it weren't for the largesse of the taxpayer, we wouldn't be being told how detestable GOLD is at present."  In other words, without compelled subsidy by the taxpayer and strongarm dilution of their currency the banks wouldn't exist.  These same banks run a book which is diabolically opposed to precious metals.  If true market forces had taken their pound of flesh, there would not be the short sellers savaging precious metals.

Run for your life away from the house afire, the house (great shall be the fall thereof) which has embraced fraud and corruption and repudiated all disciplinary market forces.  Better to nurse a cockatrice within one's breast, better to sow a wind to reap the whirlwind.  Shun the global bankers.  Take all your labours (past, present, future) out of their arena of manipulation.  Repudiate the paper money.  Shun the financial instruments.  How long must you suffer the backbreaking enforced labours of morally bankrupt overmasters.  Demand your freedom.  Take possession of other storage vehicles of your soul's labour.  Let this people go.

scrappy's picture


You actually like this blatent manipulation of our economy and hence our livelyhoods?


fonzannoon's picture

scrappy you are incorrect there. Kito is on the same team. See below. Ekm is telling me cash under the mattress. W are all on the sam team, we just have different strategies.

kito's picture

Btw fonz, I hope you didn't bite on that short yen trade last looked so easy...I warned the contrarian..

kito's picture do you translate my thoughts on pm shortages to the ridiculous notion that I enjoy blatant manipulation of the economy...

DirkDiggler11's picture

I think you need to take another look Kito:

Gainesville Coins: over 16% premium on ASE's, they will not even ship until the end of April, they don't have any.

APMEX - explains why I hate the bastards, selling ASE'S at $29.70, fucking over 30% premium over spot.

Kitco- $27.42, 20% over spot, but they will only ship the fuckers to you if you live OUTSIDE of the US. Go Figure.

Provident - Completely sold out

Lear - Completely sold out

No supply issues here .... "Keep Moving, these are not the ASE's you were looking for"....

cynicalskeptic's picture

Heard a commentary on BBC today talking about how 'technological advances' have INCREASED supplies of things like gold and silver (and oil and NG) and that this is one of the reasons why prices are headed down.  I call BS.  You're mining lower and lower grades, with lower yields now - overall production globally has been declining.   You have some MAJOR issues at the moment with existing mines shutting down or losing prouiction.  The same commentator talked of demand DROPPING from China and Indoa..... c'mon - BOTH have been INCREASING imports - with Indian dealers buying the dips like mad.  Meanwhile China and other eastern central banks are in=creasing their purchases.  

I'm surprised and astounded personally at the volume and depth of this smashdown but it is clearly a manipulatged one.  Saw a JPM exec this week and asked about the dropping inventories in their vaults.  A cryptic comment about being able to buy cheaper in the future makes far more sense now.

I suspect the bullion banks are under immense pressure to deliver metal they don't have - there's a scramble to drop the price and hopefully force weak hands out of the market while picking up physical at far cheaper prices.  No real risk.  If they can't cover the massive naked shorts on the downside and they DO default, they pay in cash at a far lower price.   Not like the CFTC is going to do anythign about manipulation.  Reports of computer systems crashing in London on Friday - preventing BUY orders makes it clear this is a one way trip that's been carefully orchestrated.  

With Boston today it makes you wonder what else os going on and coming up. Such massive manipulation smacks of desperation - the question is "What else is about to hit the fan?' 

Pareto's picture

you might be able to buy singles kito.  but you're not, repeat NOT buying 10 or 20 lots OTC, I don't give a shit what you read or heard.  and the premiums have definitely increased.  And foot traffic, based on what I saw today was extraordinary.  call bullshit all you want, thems the facts.

CheapBastard's picture

"Sold out."


Yep. I looked ot buy a couple of presents for my dad at Apemx and they were sold out of those items they had quite a few of two weeks ago. There is no doubt lots of buyers are taking advantage of this dip. I'd love it if a whistleblower turned up exposing how much physical Goldman and some other investment companies were buying right now....that would be very interesting, indeed.

cynicalskeptic's picture

Whistleblowing gets you jail time or 'disappeared' these days.

shuckster's picture

No one delivers. Its a game, don't you get it? If you request delivery, you are NF. You're not a team player. And you'll get #Breitbarted/VinceFostered/MarkMadoff'd/JFK'd/RFK'd/Arkancided/AbeLincoln'd/JamesGarfield'd/PrincessDiane'd,..... am I missing any????  

Groundhog Day's picture

I guess Kyle Bass took one on the chin today in his 10 year sleep at night trade

Al Huxley's picture

If his time horizon's 10 years, I doubt he's worried.  Anyway I'm pretty sure those options he got for so cheap (the ones that are probably going to break his counterparty, though) are looking pretty good at the moment.  I wonder how he's planning on collecting, though, after the bank that sold them to him goes bust.

Pete15's picture

1. Santelli on gold sell off. Jesus everyone is acting like this very fast correction is the end of the world? What has gold never lost 30% and regained to new highs? Rogers still isnt thinking thats its over and he will be a buyer at 1200 and has been saying that for months. The technical picture looks awful but every fundamental is still there. Was anyone planning of selling this year?? Because when I bought I said in about 10 years I can use gold to get some very nice shit. Im sorry a lot of ppl think that the end is going to come every year but it ant. Gold has been up 12 years in a row!! Taking this break is a good thing long term. Deflation is powerful and you better believe the FED will increase its purchases, the economy is still tanking and we arnt seeing massive inflation. The Black Swan this year can easily be more printing it makes sense when you see the FED talking down their bond purchases and the low growth. If the dollar gets stronger it will add to the easy excuses the FED will make. This Gold sell-off is fantastic for a lot of people, take advantage. 

new game's picture

just snaking some shit out of the pipes...

MythicalFish's picture

Japan REITs still rather resilient, so don't think people are calling BOJ's bluff (yet).. more like flushing out the housewives

lolmao500's picture

Good thing the Yen is getting stronger... that means Abe will need even more printing!

BigJim's picture

And that can ONLY mean gold is going to $42 an ounce. See? The 'official' US price is right after all!

Big Slick's picture

David Stockman said "we're going back to the gold standard one way or another."

I didn't know he had 1970 prices in mind

Ray1968's picture

somebody got fucking rich today... and it wasn't me.

knukles's picture

Yeah, I feel like I was the one tongue punching the fart box


Big Slick's picture

Laugh of the day, knukles!!

Gonna use that one.

delivered's picture

Wasn't me either as I guess neither of us were on the early "leaked" (of course by mistake) reports list that seem to be delivered to all of the insiders on a daily, check that, hourly basis. But remember the saying in real estate, you don't make money when you sell real estate you make it when you buy it at the right price. So the key know is to attack the buy opportunity at the right price and then sit back, watch one hell of a show, and when all of the dust settles, realize that not being long in maybe the most crowded, manipulated trades ever will be a very good thing (i.e.. long UST and US equities).

Let's face it as the Fed's plan (fairly safe assumption that they and other CBs are behind this action) is not working as hoped as the violent moves in asset classes is creating uncertainty, confusion, and/or outright panic which is horrible for capital formation and deployment (which is needed by the economy to create jobs). Nobody knows were to park their money now as all trades are so violent and extreme that this type of excessive speculation and volitility is exactly the opposite of what is needed in the global economy now. The inmates are clearly running the show again just like in 2008 when all hell broke loose.

There's just no way this type of action is healthy for a global economy at a very delicate moment which could easily tip over into a route in just about every asset class out there. Just too much debt and leverage that has too get unwound too quickly. No safety nets left unless the CBs once again turn to the favorite play in the book and inject liquidity to help "manage" the panic.

What a fucking mess as I'm also taking it on the chin with these hits and relentless selling that really has no basis other than being based in a major shit storm forming behind the scenes.

css1971's picture

Well. We may find they're just holding bits of paper that say they're rich.