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Presenting Gold's 7-Sigma Move
While yesterday's cliff-dive in gold was impressive by any standards, the escalating drop over the past 5 days has been just as dramatic. Based on 20 years of rolling 5-day moves, the ~15% plunge is equivalent to around 7 standard deviations (in context Yao Ming is a mere 6 standard deviations taller than the average human making gold's move the equivalent of meeting a man taller than 7'7")
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Japan is doubling their money supply over the next two years, Bernank is monetizing the debt to the tune of 85 billion, and the EU has now set their sights on accounts over 100k.
Naturally, gold is selling off. Sarc snark and smirk off.
Over on Market watch, some knob named hulbert says gold's market value is 800 bucks. lol
Scare the sheep over to pasture 1. Buy bank stocks folks, bens got your back!
lol reality will have its day.
Lol, some douchebag on CNBS this morning was trying to blame the drop in PMs on the events in Boston yesterday.
So there was a smackdown in PMs to prevent a run on phys at the LBMA? Now as a result of this smackdown we now have record physical purchasing and shortages. This does not make logical sense. Please explain the purpose of the smackdown again? To stop a run on physical?
No. The run on physical is acceptable collateral damage. The metals were smashed so that JP Morgue and friends could dump their shorts onto the specs and go massively long. They made money on the way down and they will make money on the way up. They didn't go long gold to lose money. While it is good to see people buying physical, I believe that the fate of the physical bullion market is in the hands of the sovereigns, especially China, Russia and the middle eastern money centers.
So then please explain this statement:
"So Western governments had to do this because of an imminent run on the unallocated LBMA system. "
You'd have to ask McGuire exactly what he meant by this. I will speculate for what it is worth: Gold was going parabolic in Yen in the aftermath of Cypress and BOJ massive QE announcement. Gold was doing nothing in dollars, consolidating for 19 months and waiting for the trigger to push it out of the tight trading zone, one way or the other. Now imagine if the public learned of a gold delivery default by the LBMA. Without intervention by the central banks, the gold price would have exploded higher as the specs piled on. A dollar rally in gold would confirm the yen moves of late and totally undermine the dollar and interest rates. How long would bond holders settle for real negative yields while witnessing gold enter another explosive price rally?
It's as Continental said, the physical demand is unavoidable collateral damage. The Eastern CBs, the Middle East, even European (individuals) get the difference between paper gold and real gold. The run eventual depletion of the LBMA stocks is inevitable as long as the west pretends that gold's just a 'tradition' and a paper-tradeable commodity, so there's no avoiding that outcome.
But the banks own the system and have been playing it for all it's worth for a long time. Now they need to get out of their short commitments and offload them to bag-holding trend chasers who DON'T get the difference between paper and real metal (aided and abetted by the idiot MSM) so that when the LBMA default does happen it's the spec funds who have to deal with it and the bullion banks standing on the long side demanding delivery. And the other thing I expect is that, although the specs could never stand for delivery at the Comex without being settled in cash, once the game's done, the rule wll change and the banks WILL be able to force the funds to deliver, which will be a bitch, considering they're apparently short more than annual global production.
so is that good?
- stupid
Thanks for the explanation. That makes sense.
I will throw in my $0.02 and acknowledge the good work in the posts immediately precceding mine - albeit it more simple terms.
If a lot of the banks had shorted ........ say the July gold futures at $1600 .... and the LBMA had been the clearinghouse for those positions, then the LBMA would have been in deep doo-doo if the banks didn't produce the gold at $1,600 either because the gold wasn't available or the banks couldn't afford it at that price had it been available. Solution...start a downward panic in gold so that the shorting banks get to close the contract with no loss or a small gain. Icing on the cake is if dopey retail speculators hop in and either initiate new shorts (somewhere other than the LBMA) or buy the same shorts from the banks which the banks wanted to exit. That may still leave the LBMA with exposure, but they can margin call little small fry retailers much more readily thatn JPM.
Very important thoughts from Jim Sinclair. He suggests that: 1) the dollar is weak (duh), 2) the US can't afford to have the dollar weak/collapse/not reserve currency, 3) the dollar can't be made to be strong (at least through printing), and 4) the next best thing is to trash those things which make the dollar "appear" weak.
Will The Rest Of The World Support The US Dollar By Depressing Gold?
Posted April 15th, 2013
...................................
Will the rest of the world accommodate the effort to depress the gold price as a means of supporting the US dollar? That is the key question to which the answer will be shortly revealed. The gold market is a market of sovereigns now, and not a paper group of speculators and investors with differing interests.
The determinant of your question is expressed as is the USDX fundamentally strong? No, it is not because of the limited momentum of economic statistics representing that which is called the recovery. Can something as fundamentally and market weak as the dollar due to increase in supply and not demand be maintained in value by dimming the light of alternative venues? I very much doubt the longevity of that plan of hurting other to strengthen self.
http://www.jsmineset.com/2013/04/15/will-the-rest-of-the-world-support-t...
This is really a stretch, but you asked for the purpose. Here's my delerium-induced response.
China wants gold. China pulls Un's (NoKo leader) string. Obama's panties get bunched up. China says to Obama, we'll control Un if you just trash the POG. POG plunges.
Not that we'll ever know the truth, or even how much China is buying, until the end of the farce has arrived.
Another baseless conjecture: China started allowing, even encouraging its citizens to start accumulating gold at around $1000/oz, so it may be reluctant to allow the valuation (in Yuan, of course) to fall below that level. Too great a fall might lead to even more internal unrest, and China doesn't need that. Just a thought.
If we are ending the end of this decline with the GLD and SLV in tact and the bullion banks making out like champs that kind of sucks.
It would be really funny if JPM starts taking physical delivery to replenish their Chase Plaza ...
Surprise!!!!
Dr. Paul Craig Roberts raised an interesting point to consider (source:http://www.paulcraigroberts.org/2013/04/13/assault-on-gold-update-paul-c...):
Sometimes you just can't get There from Here...
Lies, damn lies, and statistics. Your argument is flawed. Do you honestly beleive gold price is normally distributed? From your comparision to human height distribution, I assume you do. wrong.
The post might instead be proof that it isn't normally distributed, because 7-sigma moves could not expected in this short of a time frame.
I think he was writing about changes in gold price, not gold price.
correct , you need to take daily changes for several years and add up how many days the change was within range ... [-N, 0); [0,N); [N, 2N); [2N, 3N) ...
then you plot the days numbers and you get more or less the standard distribution histogram presented in the article. There were very few days when gold dropped with N = $100 or more.
P.S. My understanding is that N taken was not an absolute value in dollars but rather percentage change (ratio (price change)/price)
I am certain that schwantz length will yield a much better correlation that human height. Undoubtedly, Washington has made an in depth study of such data and it is free of seasonal adjustments. If I'm not mistaken, I think it was Andrew Weiner who headed up the committee.
This is a RELATIONSHIP chart, it's based on PERCENTAGE change, not $$s (valuation) change.
I'm really only marginally educated yet I understand these things! Maybe I'm an Idiot Savant; or, maybe you are, only without the "Savant" part?
I think we have all seen enough of the forensics over the past several days to conclude that the U.S. gov't, through the CFTC, supports this fraud and price control. The insiders made billions and the little guy got sheared yet once again. I'm holding firm to my physical.
Which fund got Bear Stearn'ed yesterday?
That's the real question. And the answer to what happened the last few days. Margin clerks at work. Average small gold/silver buyers don't seem to realize most of this price movement is associated with highly leveraged players who are sometimes caught without enough equity and SOLD OUT of their positions. Mister market can give you a hell of an opportunity to buy physical gold/silver if you can find actual supplies.
Want a 8 sigma pop to make up for the 7 sigma drop. I loaded the truck yesterday.
looks to me like evey time theres some shit about to hit / hitting the fan the PMs get it in the neck. Im starting to wean myself off the idea that the banksters are in it for themsleves - seems to me more like its a holding game by CBs, not to let PMs breach any significant technical levels while theres bad stuff going down, as if it did i suspect the mother of all bull runs.
Well, paper (and electronic bits) are a lot easier to manage, to skim off of, in which case it should really be no surprise that they don't want anything encroaching on the turf that's messy to deal with (and likely reduces transaction volume*.
* Reality, of declining volumes, is here and will continue to cause them grief and allow PMs to be more competitive as currency (for everyday trade).
Welcome to the new normal, the equivalent of travelling the universe in a spaceship driven by an improbability engine. We've passed surreal and we're on our way to planet 7-Sigma.
So... The answer really is 42?
Yes, and bring your towel.
That's been well established. We are, however, still looking for the question...
The question is: can there be perpetual growth on a finite planet- apparently the answer is 42 x over (as long as we can travel to the end of the universe).
"It was a tough assignment!"
https://www.youtube.com/watch?v=x2rS-ha8DbE
No one can buy anything but worthless paper at these prices anyway so what's the use?
It saves you from having to go to the casino and waiting for the wheel to bring you home the riches.
If you can externalize your costs enough then all you need to do is crank up the volume. TPTB do it with volume.
Of course, there's the old joke:
"I'm losing money, but I hope to make it back up in volume."
If you're BIG enough you can subsidize away the losses, through either direct "funding" (financial scams or tax breaks) or by not having to account for physical/environmental damage.
Dealers are starting to hold inventories; look at what the major online dealers' buyback prices are, for the clue.
If ever btfd applied it was yesturday. It's over and gone now.. either get in here and now or be chasing it higher from here on. No flags no pendants no basing nothing just straight back up into the channel and maybe pause there a bit while equities take their turn at tanking.. or so I'm thinking.
I'm waiting for one more decline, if it's subdued and the low holds, I'm in.
touching $1400 an ounce now. What crash? Got fizz?
Hi I'm your friendly bankster from Goldman Squid/J.P Morgue
Is the cratering of the gold paper price concerning you? Can you not take any more of the violent down moves? Do you want out?
We'll take the phyzz off your hands if you must sell it!
TEXTBOOK BITCHEZ!!!
This must be the last shakedown, before gold rockets to the stratosphere...
Any thing can happen in a fully manipulated market. Investment is dead. Fed and goldman scare away last group of investors. Next they will feed off each other.
You took the words right out of my key board...
Gold is the anti-investment. You hold it till the end because shit is going to hit the fan and don't worry about the price.
I think that the feeding started with Lehman. As the field condenses, however, it'll be a LOT harder to hide the obvious turf battling (politicians won't any longer be able to be employed to distract us from what's going on).
All the $800 Gold Trolls are out in numbers. Surprised they are not yelling Silver to $4 soon. Either way, I'll sell everything I own to buy.
True! I bought small lot of ASEs at $6.95, and $6.25 for .999($5.25 spot then). I'd sell it all for a shot at that again.
THANKS TO THE CARTELS MANIPULATORS FOR THE FIRE SALE !!! HAVE ADDED AT 1370 AND WILL ADD MORE IN THE 1250/1200 AREA..
LOOKING FOR A BREAK OF 1800 LATER THIS YEAR. ON ANOTHER 7 SIGMA EVENT MAYBE, BUT IN THE OTHER DIRECTION... YES YES
I'd think that a 7 sigma UP would be the result of a collapsing USD.
The fate of today's gold/silver depends on how much paper gold/silver the Fed intends to dump...or if they have finished for the time being and handed it back to the usual corrupters.
Enough about this meaningless gold and silver. I want more news about bitcoin.
Maybe paper PM holders sold off to buy Bitcoins? (semi-joking- no idea what's been happening with the "safe" electronic bits lately)
Still standing back for the moment, I could see silver at $20. Although the spread for silver is insane...$7 over spot for maples.
Should be number of standard deviate Bernanks.
Then it would be only a 2 event?
The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.
The markets will fall only when the banksters have eliminated all the short positions and only they themselves have positioned themselves to profit when the market falls
OR
When an unexpected world event catches the banksters with their pants down and the softwares they use to rig the markets go berserk beyond their control.
http://www.marketoracle.co.uk/Article35345.html
Lets be honest, sings were out there at least for a week before the slump. Do the fundaments of the world economy tell you to buy gold? Yes, but should you? Fuck no. Not yet. At least I am honest when losing money on a bad bet and admit it, most people are living in some dreamland where they cant be wrong.
Only thing that have been good for gold was the Boston bombing.
Normally I'd be pissed off at the manipulating scumbags who engineered the crash, but fortunately I had some spare cash at hand so I find the whole episode rather entertaining.
I hope it crashes even more.
As I descended down the stairs,
I met a man who was not there.
He was not there again today.
I wish, I wish, he'd go away.
Still get a kick from the "Useless Barbarous Relic" crowd. Who would want to go see a James Bond movie titled "ETF Finger"
And then there's "Bitcoin Finger," where it's so secure that you cannot even see it!
Should have bought more at 9:00 p.m. last night, damnit.
Hum... Basing such a graph on "since 1993" kind of destroys the credibility a little bit...
Why? I would say a 20 year time period is sufficiently long to demonstrate this magnitude of movement (over 5 days) has not been "normal" for nearly a generation. Some of us haven't been in the market for 20 years you know. Not every historical perspective has to go back to the beginning of time to have merit.
Or are you mad at a tulip market analysis saying the tulip market is very stable because it only looks at the last 150 years, and not 400 years?
so South Korea started a QE yesterday too...more paper for a 7 sigma drop in value of real money....insane...gold goes down when all indications says it should be going up....????? I sit here totally confused
The sell off at 10am is still there....
Evidence of manipulation anyone?
Makes you forget all about that Bitcoin "correction", from $260 to $62 in a couple days. Now THAT's a bubble. All that pumping, have to say I expected it.
http://www.cbc.ca/doczone/episode/the-secret-world-of-gold.html
will the canadians have the balls to air this thursday? or will they knuckle under like the brits did?
Sounds like 9 PM ET will be excellent time to short GLD and/or COMEX Futures.
US GDP was $15 Trillion in 2012. The debt ceiling will have to be raised in mid-May (unless they vote to suspend it, again) to at least $18.5 Trillion to get through the mid-term elections. Debt to GDP will be 123% which is getting close to the PIIGS. Gold longs have been cleaned out to allow the crony-capitialist to establish positions.
In a normal distribution of trading days, a 7 sigma event occurs once in over 3 billion years. Why was the dataset limited to that since 1993 (~5,000 discrete 5-day trading periods ... 20 years x ~250 trading days a year)? If the data from 1979-1980 were included, I'll wager the last 5 trading days were much closer to normal ... maybe something one would expect every 3 million years, so nothing to worry about, move along.
Kurtosis, bitchez!
Oh look ...Govt shills in the MSM...gold true value might be only $800
So to fools who make those analysis...the extra trillions in USD created has no impact on the USD value of gold. So the extra trillion plus in USD created each year from now on...has no effect on the Gold price....LOL
Do these 'analysts' expect to be taken seriously....well no that isn't their purpose for writing such childish nonsense...
Of course it is all a psy op for the LBAM, Fed and TPTB.
The banksters own the MSM, Govt and Regulators.
Really goes without saying... BUT, sometimes one just has to say it lest all one can do is to think of "Sudden Debt's" avatar (my heads starts feeling like it should explode)!
Hey this looks like my johnson after double dose of viagra. Sure, I'll buy some gold.
Hey this looks like my johnson after double dose of viagra. Sure, I'll buy some gold.
The thing that must shit the LBMA, JPM, the Bernank etc is they have no control over Indian, Chinese, Asean, Russian etc...stacking of gold tonnage....and all those Asia billionaires out there probably doing the same and taking delivery.
Not like the good old days when the USA ruled the roost on these things. Now they can only play games to protect themselves from day to day....until they can't.
The MSM shilling business is simply to keep the US public out of PMs enmasse and to provide invented reasons for something that has or is about to go down, so the public can think cause-effect.
that's why the war is imminent
The warning shot was introduced in Boston the other day...
@ Kina:
Right you are...but think of how explosive the upside is going to be, when the propaganda no longer works on the US public, and they all want in.
Wealth transfer, bitchez!
This has a LIBOR aroma to it.....
This Ann Barnhardt's take on gold. Written last year apparently. She may have nailed it. We will see.
"When the arbitrageurs finally lose all confidence in the markets, the cash market will decouple from the futures because no one will be willing to take the risk of having their money, positions and/or physical metals stolen/confiscated... Watch for the gold and silver futures to sell off as people walk away from paper while the online cash dealers, seeing that market demand for their physical inventory is robust, begin to ignore the futures prices and hold their prices steady or even raise them."
I am a fan of Ann. Love it when she burned the Koran on YouTube. Love it that she wants Corzine in jail.
She is not incorrect in what you quoted. Several pundits (Weiner, Sinclair, Feteke...) say that the futures market will become a cash market. Stated differently, margin requirements will rise to 100%. In the constext of a failing futures market, they all seem to agree that the backwardation (positive cobasis) reflects a perception that a long gold futures contract will result in something other than physical delivery. IOW, I require a big risk premium if I sell my physical today thiunking I can exercise a futures contract a few months out and expect to get physical.
Another alternative is over-the-counter forwards contracts. Yet another - which I expect is getting very real - is the gold mines contracting directly (aka bilateral contract) with certain major consumers - e.g. central banks - or their agents.
HEY TYLER!
When does the BTC ETF come out? That's the Bitcoin ETF
OK 7 Sigma is either man made or paper Gold does not follow a Normal distribution.
Then the real question is why not a Normal distribution?
Because it is Asymmetrical and more is being lent out by Central Banksters on the way down than on the way up.
Fractional Gold Lending by Banksters
Normal distribution aka Gaussian is based on assumption of random walk behavior. It's tracing a binary tree with 50% branch ratios. Classic example is the odds of N coin tosses in a row being as likely as 2 ** (-N).
But each transaction is not INDEPENDENT of the transactions that preceded it. They're correlated. Price action is best predictor of subsequent price action as shown by Filimonov et al.:
http://www.imf.org/external/np/seminars/eng/2012/commodity/pdf/filimonov.pdf
Nassim Taleb et al. refer to it as the Fat Tail.
I'm not thinking that this is about symmetry, It's about probabilities based on historical data/moves. Granted, when we start to go totally unstable, THEN correlation to "historic" data is kind of meaningless (when you're up to shit to your eyeballs it no longer matters what the odds of encountering it are- you're THERE).
Further, any 7 sigma UP would tend to suggest that hyperinflation (and basic currency collapse) is in the works: a zero floor on one end, no such thing at the other (until total oblivion); I realize that gold "could" approach zero, but, again, in the current system it's unlikely and would tend to suggest the System has gone irrevocably unstable (it would be just a brief moment of encountering a near-zero point; it could go to permanent zero [glacial period sets in], or it could sky-rocket; both mean USD is D-E-A-D).
Told my wife at lunch today (Hong Kong Chinese) that TPTB trashed gold $200 to scare people out of it.... she shook her head and said that was crazy, the Chinese would just buy more.
lol
The scary part is that one can be sure that the US will leverage this and use it to demonize gold. Read the currents, they're all using this to tell us how "silly" gold is. And while your wife is 100% correct, this view/thinking adds fuel to the fire over US tensions with China (it's been a slow-brew for quite some time now)- China will be, after the West fritters away its gold, accused of hording.
It's all building up the story-line to support the up-coming war... (we'll NEVER look in the mirror and accept responsibility)
I don't imagine that the price drop in gold and silver is really going to stop everyone in the world from buying up the physical.If anything,the hard up nations that are running huge deficits will have their gold wealth purchased by small investors and other central banks.A simple transfer of "store of wealth".I look at any continual down move in both gold and silver as a buying opportunity for the long term.I know that I can't time bottoms very well so I'll buy a little at a time.Just like everyone in India,SouthEast Asia and the Middleast does all the time.It's a little habit that is good for you.North Americans and Europeans have finally woken up to their corrupt political-bankster crooks.Just look at how they're paid.Any further drop is a deal of a lifetime as the world's population will double again soon.It's demographics baby and hold long.Holding a store of wealth is not a get rich quick scheme.It's safety against the corrupt politicians and banksters.Simply look at gold as the standard.
"Holding a store of wealth is not a get rich quick scheme.It's safety against the corrupt politicians and banksters.Simply look at gold as the standard."
Sitting on ANYTHING is, well, SITTING... We don't survive by merely sitting (some living things do, but humans do not). For "wealth" to have any real meaning it needs to be applied.
The System has always been about encouraging trade transactions (whether one views the "good old days" as being the model or not, those days are really no different than today, it's just that today it's more complex owing to the scale of human population and scope of trade; NOTE: my point here is that the MODEL is the same, what's changed is the adherence to its fundamentals [paper-enabled leverage clearly abuses the model]).
In the future I wish for Food, Shelter and Water. I don't wish for "gold/PMs" or "wealth." PMs or "wealth" is meant to enable me to achieve access to Food, Shelter and Water.
"Simply look at gold as the standard." Yes, for trade...
man, this is not true. I just comeback from a retail house here in brussels
They have what you need. G4EX !
So there's only about 6 to 10 billion ounces of gold in the world. At $1500 per ounce that is equivalent to $9T to $15T of gold. Just why is the fed not capable of manipulating the gold market for years to come?
In my humble uniformed opinion (I am sure I am going to get smoked on this) there is no shortage. That is all BS.
If there was a shortage and we are running out of the metals why the fuck is the buy back price these dealers are giving between .99 and $2.00. They have a shit load of this stuff and they are sitting on it. If they didn't we would be getting a shitload more of a premium out of them. These fuckers are playing us.
Not saying that buying in is a horrible idea. Just saying keep your shit in check with this. I doubt we are "going to the fucking moon" anytime soon.
If no one is willing to sell at current price, there is a "shortage" at this price.
Ok?
APMEX is giving 1.75 over spot for Eagles.
That says a lot. I do not believe there are any major long term shortages or price explosions about to go down.
If APMEX was out of metal for any length of time I assume it would cripple their business. They would be paying much higher premiums and we would get one of those emails (like we got a year ago) giving us a high premium so they could turn around and sell it and stay in business. $1.75 looks to me like they are not anticipating any type of major disruption.
What if they figure the price is going to go DOWN more?
I don't know... the savvy seem to be able to make it work on the way up OR the way down...
The morons have given us the biggest discount on bullion - ever. Thank you morons and assholes! BUY GOLD NOW. ALL OF IT. NOW. N-O-W.
This one is only to close out any margin holders. "Gold will return to its rightful owners"
I'm scanning around for Indiana Jones...
from the math point of view, if you don't buy at 7.7 sigma, what sigma you would like to buy.