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Biggest Gold Drop Since December 2008 Sends Metal To... Week Ago Levels

Tyler Durden's picture


Gold this morning is plunging by the most since December 2008. For those seeking the reason for the sell off, it once again appears that the market is about 24 hours late in processing news that has been out for over a day. One of the main catalysts for today's gold price is the realization that the Shanghai Gold Exchange hiked gold margins by 26%. Of course that this happened not one but two days ago (as we reported) is irrelevant. There are other factors to be sure: on Tuesday holdings of the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell by nearly 25 tonnes, their biggest one-day outflow since Jan. 25. Furthermore, there is another rumor that hedge funds that have been crushed by the market volatility over the past month are shoring cash ahead of Jackson Hole by selling their winners. Either way, at last check gold was down to $1770. This is the price it was on August 16: about a week ago. As for where gold will go next: we suggest investors consider what the options for the world central banking cartel are, and how many of them do not include diluting paper. We are eager to hear the alternatives.


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Wed, 08/24/2011 - 10:34 | 1594968 TradingJoe
TradingJoe's picture

Gold is GOOD! Let the Noise be just that, NOISE!

Wed, 08/24/2011 - 10:43 | 1594995 Pladizow
Pladizow's picture

This was expected.

It is good, normal behaivior.

Expect alot more volatility as gold rockets upwards!

Olivia Newton John - Bitches!

Wed, 08/24/2011 - 10:57 | 1595111 foofoojin
foofoojin's picture

I was starting to fill crazy waiting for this correction. I was worried gold was in a bubble and this just proves that fundamentals still matter for hte material.  it was so high off it's 200d average.

Wed, 08/24/2011 - 12:58 | 1595651 Pegasus Muse
Pegasus Muse's picture

It's Option Expiration day for Gold and Silver on the COMEX tomorrow.  Check the volume of the selloff.  

Which market participants have pockets deep enough to cause that decline?  My vote goes to the Gangster Banksters (aka Bullion Banksters, aka Large Commercial Shorts).  JPMorgue and its crew market manipulators, that's who.   

Wed, 08/24/2011 - 11:04 | 1595129 dwdollar
dwdollar's picture

The outfit was 'finding' Hugo's gold which they supposedly had 'on deposit' for him.  Now that buying spree is over.

Wed, 08/24/2011 - 13:11 | 1595733 TruthInSunshine
TruthInSunshine's picture




I get my investment themes and paradigms from CNBC soundbits, interviews and anchor talk.



Wed, 08/24/2011 - 15:22 | 1596265 nuinut
nuinut's picture

It may be sarcasm for you, but the reality is that the majority really do inhabit that paradigm.

The Paradigm Shift is on, however.

Gold is the focal point of the shift, for good reason.

Thu, 08/25/2011 - 00:07 | 1598120 RockyRacoon
RockyRacoon's picture

THAT is great stuff!  Thanks for the link.

Wed, 08/24/2011 - 14:46 | 1596129 Bullionaire
Bullionaire's picture

We have a winner.


Wed, 08/24/2011 - 11:11 | 1595172 Whalley World
Whalley World's picture

With all that Libyan gold in the hands of the rebels (NATO) they will find it easier to pay off Hugo in the real thing.

Wed, 08/24/2011 - 11:45 | 1595312 trembo slice
trembo slice's picture


Wed, 08/24/2011 - 12:39 | 1595554 tunckar
tunckar's picture

No bubble in gold, buy gold whenever find it;    "The most important thing about money is to maintain its stability. . . .   You have to choose between trusting the natural stability of gold and   the honesty and intelligence of members of the government. With due   respect for these gentlemen, I advise you, as long as the capitalist   system lasts, to vote for gold."  


—George Bernard Shaw, 1928    


Wed, 08/24/2011 - 13:19 | 1595770 cynicalskeptic
cynicalskeptic's picture

Now, now, Libya's gold is being held for 'safekeeping' - and maybe some leverage to make sure the 'right' oil companies get long term contracts......

Has to be the first 'revolution' ever where the one of the first things the rebels did was set up a new central bank....... this from guys who wer scrambling to make whatever weapons they coudl find usable (see the video of the workshop where they wer modifying 20mm aircraft cannons to be used on the back of pick-ups?)

Wed, 08/24/2011 - 11:38 | 1595290 trav7777
trav7777's picture

wtf?!?! just yesterday you called me stupid for suggesting gold was overbought...put your tits away and STFU

Wed, 08/24/2011 - 11:39 | 1595292 Dangertime
Dangertime's picture

It is called "rationalization".


No matter what happens, it is good for gold.

Wed, 08/24/2011 - 11:47 | 1595322 fiddler_on_the_roof
fiddler_on_the_roof's picture

Can you confirm  you are short Gold now ? I will have a hook on you, when Gold turns higher. I just bought with some play money.

Wed, 08/24/2011 - 13:14 | 1595749 DosZap
DosZap's picture

Dudes, they MURDERED the Shorts,now they are taking down the LONGS........................

Same old story, same old song.


Wed, 08/24/2011 - 13:37 | 1595850 fiddler_on_the_roof
fiddler_on_the_roof's picture

we shall see who will be right.

Wed, 08/24/2011 - 11:49 | 1595331 Terminus C
Terminus C's picture

Why are you still here? Back in June you were calling for gold to go to $800 and silver to $15.

Changing your avatar doesn't mean you get any new credibility on PM's.

Wed, 08/24/2011 - 11:54 | 1595354 d00daa
d00daa's picture

and you have ZERO fucking credibility on anything PM related,  gtfo with your gravy-training bullshit.

Wed, 08/24/2011 - 12:01 | 1595393 Potemkin Nation
Potemkin Nation's picture

People have been calling it a bubble since it was $400.  There were people back then projecting $1650, and for the most part they were viewed as so loony it wasn't even worth the time to mock them.  Look at the long term chart.  If it was any other market, it would be touted nightly on CNBC.  You can call it rationalization, but the fact is, gold bulls have been on the right side of the trade for 10 years now.

Wed, 08/24/2011 - 11:54 | 1595345 Pladizow
Pladizow's picture

To: Trav777 and his butt buddy DangerTime.

Does my avatar upset you Travy?

And not only did I call you stupid but also full of shit!

Wed, 08/24/2011 - 11:55 | 1595358 trav7777
trav7777's picture

and yet here you are aping me...go figure

Wed, 08/24/2011 - 11:58 | 1595371 Pladizow
Pladizow's picture

You would think little Travvvvvvvvvvvv would be happier since his imaginary short should be paying off.

Man are you stupid and full of shit!

Wed, 08/24/2011 - 12:07 | 1595416 d00daa
d00daa's picture

any actual response to the fact that you made an unbelievably shitty call yesterday, and have thus far pretended you never did?

it's ok to be a bug, but don't embarass yourself if you don't actually know what the fuck you are talking about.

Wed, 08/24/2011 - 13:58 | 1595926 Pladizow
Pladizow's picture

How can someone who has bought gold for several years be embarassed by a ONE DAY correction?

Those that should be embarassed are those that have continued to be wrong for ELEVEN STRAIGHT YEARS!

So in closing STFU!


Wed, 08/24/2011 - 12:04 | 1595406 ZeroPower
ZeroPower's picture

Didnt we stop arguing with gold and silver bugs a while ago? I just agree and say 'all metals to a million obama dollaz'. Much simpler.

Wed, 08/24/2011 - 12:39 | 1595511 GoinFawr
GoinFawr's picture

Heh, I seem to recall you being short gold since it was around 1200 US bitz and bytes ZP; no wonder you 'stopped arguing with gold bugs a while ago'. Only 5 c-notes or so to go before you can turn up the knob on your shadenfreude, 'til then you've still got the 'suck' dial twisted right off past 'max'.

Wed, 08/24/2011 - 13:06 | 1595705 ZeroPower
ZeroPower's picture

Definitely not, but feel free to peruse my posts for such proof. Only time i mentioned being in anything at all was short silver from ~41s and 44s after it went to 50 and down.

The long-term thesis for gold bugs is correct, IMO, (for silver i am not convinced, but again, i wont go to an AA meeting explaining my love for Bombay & T now will i..) but i am basically astonished at how (some) rational minds here understanding bubbles cannot see a short term one when its evident in their face.

Wed, 08/24/2011 - 14:32 | 1595793 GoinFawr
GoinFawr's picture

Pardon me, not `short`,  I meant `bearish`. Otherwise my comment is spot on then?

Wed, 08/24/2011 - 12:34 | 1595512 GoinFawr
GoinFawr's picture


Wed, 08/24/2011 - 12:31 | 1595516 scratch_and_sniff
scratch_and_sniff's picture

Yeah, i mentioned a little "price" bubble the other day, and one guy, whom i wont name said "the gold markets laugh at my parabolas"... indeed, it laughed so hard that it fell over. Nothing new under the sun.

Wed, 08/24/2011 - 12:57 | 1595642 Gavrikon
Gavrikon's picture

Don't listen to him.

The tits STAY!

Wed, 08/24/2011 - 12:57 | 1595644 theotheri
theotheri's picture












Wed, 08/24/2011 - 13:27 | 1595801 fuu
fuu's picture

Only pussies whine for the moderators.

Thu, 08/25/2011 - 03:02 | 1596093 GoinFawr
GoinFawr's picture

`struth. Gotta take the good with the bad in a speakeasy.

Throwbacks are actually useful idiots anyway

Wed, 08/24/2011 - 15:21 | 1596262 JW n FL
JW n FL's picture

considering you call me racist and I am anything but??? I dont know, maybe it is not this other person or me?

maybe you are a zionist plant? trying to get the truth removed from the sight of everyone..

if I am a racist.. then are these other 300,000 - 400,000 people who HATE Israel's Government as well Racist? is it Jew on Jew hate? 

or it ok for them to hate the lobby whore Government there that controls our Government here?

The largest protest in Israel's history. Around 400.000 people took the streets all over the State of Israel - in Tel Aviv they were more than 300.000. The mass rally, organized on 6th August 2011, was to push the government to make reforms with a deep sense of social justice, stopping the rising prices and reducing the life cost in Israel.


Look at ALL of those Nazi Racists! me and my crew say fuck you!

Wed, 08/24/2011 - 15:30 | 1596288 fuu
fuu's picture

Personally I was wrong about you. I still think your copy/paste 3,000 word posts are annoying but I was wrong to assume instead of reading.

Wed, 08/24/2011 - 15:52 | 1596356 JW n FL
JW n FL's picture

Not! You Bro!!

You were just new.. You have figured out that I maybe an asshole.. but I am the asshole who is on yourside..

this idiot above you has NOOOOOO! CLUEEEEE!! he needs to read and open his mind or go back to finger painting with the kids at huffington post.

here we push the facts! ugly or not! and I am happy to be the bad guy! or a punching bag to help people see! whatever it takes to help!

much luv fuckers!!


Wed, 08/24/2011 - 20:55 | 1597613 StychoKiller
StychoKiller's picture

Define "Social Justice..."

Wed, 08/24/2011 - 19:56 | 1597387 russki standart
russki standart's picture

Ban yourself theotherri, you do not have to read his posts.  I may not agree with his views, but its called exercising your first amendment rights. 

Wed, 08/24/2011 - 23:11 | 1598025 MsCreant
MsCreant's picture

+++Damn straight.

Wed, 08/24/2011 - 11:38 | 1595291 MFL8240
MFL8240's picture

Yes, it was.  Did anyone expect this courrpt cartel to allow real money to rise like that without an assault?  Never, the confetti machine is where the fools trust their money, Ill stay in Gold.

Wed, 08/24/2011 - 11:07 | 1595152 The Wolf
The Wolf's picture

The point is, ladies and gentleman, that gold, for lack of a better word, is good. Gold is right, gold works. Gold clarifies, cuts through, and captures the essence of the evolutionary spirit. Gold, in all of its forms; gold for life, for money, for love, knowledge has marked the upward surge of mankind. And gold, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.

Wed, 08/24/2011 - 11:29 | 1595250 GFKjunior
GFKjunior's picture


Wed, 08/24/2011 - 12:14 | 1595444 mr_T
mr_T's picture

GreeOLD is not good fool. Glad I sold my calls @ 1860 days paid in full. Let's see what happens at Jackson's Ahole... BTW I love that movie.. the sequel sucked ass...

Wed, 08/24/2011 - 13:39 | 1595860 fiddler_on_the_roof
fiddler_on_the_roof's picture

I sold at $1890 and bought just now.

Wed, 08/24/2011 - 12:25 | 1595495 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Dudes, I just noticed something!

Jim Sinclairs 1764 has not been breached!

I think its the angels wings that are now pulling it and stopping it falling further!

Dips over folks, I'm loading me up some physical...

Wed, 08/24/2011 - 13:16 | 1595757 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Doh, well there it goes - I might wait for tomorrow. Should be a negative day as the rest of the weak hands get shaken out.

I'll make a prediction. Bullion stores are going to get cleaned out over the comming week.

Wed, 08/24/2011 - 13:25 | 1595796 cynicalskeptic
cynicalskeptic's picture

With the amount of paper shorts they can throw at the market (at least over the short run) they can paint the charts hpwever they want..... technical analysis over anything but the VERY long term in a manipulated market doesn't mean much.   You can bet this was a 'kitchen sink' effort to bring the price down as far as possible - yet its's still not even dow to what the price was two weeks ago.

I'll bet you're seeing some major buying - look at the drop in GLD stores.... I'll bet that was big boys exchanging for physical (only the select few participants have that right).   SO this smack down burns a bunch of longs, lets the big banks cove shorts and make a fortune onthe way down AND grab some more physical out of GLD at cheaper prices.   

Wed, 08/24/2011 - 17:42 | 1596835 DaBernank
DaBernank's picture

Paulson probably peeled off some of his GLD today.

Wed, 08/24/2011 - 14:03 | 1595953 Random_Robert
Random_Robert's picture

Ummm... yes it has.

Wed, 08/24/2011 - 12:34 | 1595523 William113
William113's picture

Oh look the Silver and Gold charts look the same again. I'm sure nobody is munipulating any part of the markets today.

Wed, 08/24/2011 - 13:01 | 1595673 IQ 145
IQ 145's picture  might be a useful list to print out. The idea is to sell the tops and buy the bottoms; Buying the tops and then whinning isn't nearly as effective.

Wed, 08/24/2011 - 10:34 | 1594971 the mad hatter
the mad hatter's picture

margin callapalooza

Wed, 08/24/2011 - 10:37 | 1594989 SheepDog-One
SheepDog-One's picture

Who the hell buys gold on margin at $1900? Nah I dont buy it...this is FED insider news leak about QE.

Wed, 08/24/2011 - 10:41 | 1595019 Johnny Lawrence
Johnny Lawrence's picture

As in no QE or yes QE?

Wed, 08/24/2011 - 10:44 | 1595045 I think I need ...
I think I need to buy a gun's picture

this whole gold thing is ending by labor revaluation by labor day

Wed, 08/24/2011 - 11:31 | 1595264 goldfreak
goldfreak's picture

Jonnybravo will be back too by Labor Day

Wed, 08/24/2011 - 15:56 | 1596372 JW n FL
JW n FL's picture

I hope gold goes to $5 bucks! the lower it goes! the more I get to buy!

Power to the Pirates!

Treasure for the WHOLE FIGHT CLUB FAMILY!!


***unless the sheep remain blind and you can do some really good profit taking to then be able to buy more for FREE!!

Wed, 08/24/2011 - 14:10 | 1595981 Dyler Turden II Esq
Dyler Turden II Esq's picture

Maybe he means "revaluation" as in FOFOAian revaluation -- to 50K.

Wed, 08/24/2011 - 10:44 | 1595047 SheepDog-One
SheepDog-One's picture

Like Ive been saying for weeks here, no QE3. At least not in the diamond encrusted many trillions that has already been baked into stocks since January and DOW 9,500.


Wed, 08/24/2011 - 10:57 | 1595105 malikai
malikai's picture

Heavy call there man. If you're right, we'll be testing 09 lows in a few weeks.

The meltup in the indices seems to disagree with you though. Maybe it's just sucker luring though. Can't say yet, but I can say if they say no to QE, say hello crushing collapse in all paper "assets".

Wed, 08/24/2011 - 11:27 | 1595241 gmrpeabody
gmrpeabody's picture

They (the Bernanke) will neither say yes or no. He will Greenspam it to the max, and leave everyone to come up with their own version of what he just said.

They will stand ready to respond should market conditions require it. Nothing more!

Wed, 08/24/2011 - 11:34 | 1595276 natty light
natty light's picture

Maybe Bernanke should just say "Splunge!"

Wed, 08/24/2011 - 21:01 | 1597631 StychoKiller
StychoKiller's picture

Or "persiflage!"

Wed, 08/24/2011 - 13:02 | 1595670 malek
malek's picture

Dream on!

Because your call is essentially implying the politicians/bankers will let the imbalances correct, house prices revert to their long term trendline, bad debts be written off, banks fail, the deflation run it's course, and limit overall government action to protecting the small savers and picking up the pieces. What a beautiful fantasy...

Wed, 08/24/2011 - 11:01 | 1595121 SMG
SMG's picture

The Oligarchy knows but not us.   My bet is big QE eventually, but not right now.  Maybe in a few weeks/months. Wish me luck.

Wed, 08/24/2011 - 10:44 | 1595038 Quintus
Quintus's picture

I suspect you're right.  The leak is clearly indicating that whatever happens on Friday will be positive for gold, so just as before QE1 and 2 were announced, a pre-emptive raid is launched so that gold spikes from a lower start point.

As I see it, if Ben announces more QE then gold will go up on the basis of accelerating currency dilution.  If Ben does not announce QE then gold goes up as money flees from the stock market amid renewed fears of a banking collapse due to the Fed life-support money pump not being turned back on.

Either way, the big shorts need to take gold down and get some shorts covered before Friday.

Wed, 08/24/2011 - 11:29 | 1595246 gmrpeabody
gmrpeabody's picture


Wed, 08/24/2011 - 11:49 | 1595334 Snidley Whipsnae
Snidley Whipsnae's picture

They need to take gold down and cover shorts before Thursday... That is expiry day for gold...

Strictly transitory...

We have all seen this before... By Sept 1 gold will be back pushing or above 1900...

Wed, 08/24/2011 - 12:14 | 1595441 fiddler_on_the_roof
fiddler_on_the_roof's picture


Wed, 08/24/2011 - 12:23 | 1595481 Joe Sixpack
Joe Sixpack's picture

+$200-$300 in short order!

Wed, 08/24/2011 - 13:08 | 1595712 IQ 145
IQ 145's picture

New York has been a source of short pressure and bear raids in silver and gold for thirty years; I used to call the New York floor traders, "The New York Whores"; like they were some kind of a ball team. There's a business holiday this Monday in England; watch out for Friday Lunch time, and maybe Monday, too. You might get a surprising opportunity. You're right about thrusday, but if the trade book looks doable to the New Yorkers, they'll just use Thursday as a warm up exercise; the top of the batting line will be up at lunch time on Friday. In other words, thursday, will be a good cover story, and it'll make Friday look "believable"---sort of. Cheers.

Wed, 08/24/2011 - 11:52 | 1595343 Ausperity
Ausperity's picture

any chance that this drubbing can continue for another day or two?  or are we sideways til Friday?

Wed, 08/24/2011 - 12:15 | 1595452 I Got Worms
I Got Worms's picture

I'm hoping it will malinger until my wednesday payday, so i can pick up a coin. Actually, who am I kidding, I buy gold/silver no matter the price. Can't exchange that toilet paper fast enough on payday.

Wed, 08/24/2011 - 13:09 | 1595720 IQ 145
IQ 145's picture

ninety percent chance there's more downside coming; hang in there.

Wed, 08/24/2011 - 15:56 | 1596376 malikai
malikai's picture

Fully agree. I'd say today was just the start really. I'm opening my wallet at $1600 gold/$36 silver.

Wed, 08/24/2011 - 11:52 | 1595344 Gandalf6900
Gandalf6900's picture


Wed, 08/24/2011 - 11:57 | 1595368 whaletail
whaletail's picture

Bingo. And if the hedgies know anything, then this story posted a few hours ago would indicate bets are being made on no QE3:

Wed, 08/24/2011 - 12:49 | 1595605 augmister
augmister's picture

Just as Ben and Turbo Timmay are out of bullets with no where to go but DOWN,  Gold will no doubt, continue to climb UP whether or not QE3 is kicked off....the economy is dead with or without the lifesupport.

This is now a sale on Gold.  Get it while it is still available at a coin store near you!

I bought gold last week at my local store.  Behind me were two women selling gold jewelry.   Joe and Mary Beercan average Americans, are still SELLING gold.   Stupid is as stupid does!

Thu, 08/25/2011 - 00:30 | 1598154 RockyRacoon
RockyRacoon's picture

Some people need the cash for living expenses.   They can't hold for all this to be over with.   That is the right and proper use of gold in its role as a store of wealth.   Think back on the selling of gold (paper) for meeting margin calls.   A properly prepared person does not sell his gold to buy food; he holds his wealth through the maelstrom and comes out sound on the other side. 

Wed, 08/24/2011 - 13:24 | 1595791 fockewulf190
fockewulf190's picture

If the Bernank pulls a QE3, Obama is a guarenteed one-termer.  If there is some kind of insider knowledge being passed around, you can bet your last silverless dollar that Axelrod is having a stroke.  There must be a titanic political melee going on right now within the administration.

Wed, 08/24/2011 - 13:53 | 1595911 Troublehoff
Troublehoff's picture

Get used to this kind of volatility.

The only way Gold is not going to the moon is if the dollar doesn't turn to shit.

The macro trend for the dollar is terrible - if the US Government, the banks, the coorporations and the people of the US are to remain solvent, the Bernank has to print. There is no growth, just unfunded liabilities and a boomer demographic timebomb..

Gold will be fine :)

Wed, 08/24/2011 - 11:41 | 1595300 MFL8240
MFL8240's picture

Its impossibe to tell who it is because this entire sytem is a con game.  Goverment are liars, Banks are liars, Federal Reserve and Treasury are liars so pick your posion.  Here is a fact, NOTHING THAT DROVE GOLD TO $1900 HAS CHANGED, THE GLOBAL ECONOMY IS CRUMBLING SO LET THESE BASTRDS PLAY THEIR GAMES.

Wed, 08/24/2011 - 11:59 | 1595380 Absinthe Minded
Absinthe Minded's picture

Easy, easy on the bastards that be, they're putting gold on sale just for you and me.

Wed, 08/24/2011 - 13:07 | 1595709 Herd Redirectio...
Herd Redirection Committee's picture

Long-dated call options for gold miners (even explorers) are also on sale!  I just couldn't resist!  I am pretty sure some f***ing algo traded with me, as my bid was hit at .84 with the last trade at .95 (but no other bids above .70, probably also algos)

I don't expect it to be without its bumps, but it should be a fun ride!

Wed, 08/24/2011 - 13:19 | 1595769 IQ 145
IQ 145's picture

Dude; It's called a market; markets go up and down. Every price chart has saw teeth. All of them. There are no exceptions. There's no explanation either; there never has been. The official explanation is the market was overbought; so it's correcting; don't get wound up about it; it's still a bull market.

Wed, 08/24/2011 - 21:58 | 1597829 StychoKiller
Wed, 08/24/2011 - 10:35 | 1594976 DormRoom
DormRoom's picture

SPY-GLD inverse correlation breaking down.  SPX going down && gold going down.  Not a good indicator for the overall markets.  Implies everyone getting out.

Wed, 08/24/2011 - 10:37 | 1594990 ZeroPower
ZeroPower's picture

Correlations hold until they don't. i.e. SPX OIL 2008, USD OIL 2008-09, SPX GOLD recently.

Wed, 08/24/2011 - 13:23 | 1595786 IQ 145
IQ 145's picture

I don't bother replying to the people with the correlation mantras, because it's clear they're not really traders; Of course you're right; the premise is absurd. I try to post things that would be useful to a rational trader; if there are any. Happy Canada Day !, (it'll be canada day, some day, might as well get that in now).

Wed, 08/24/2011 - 10:39 | 1594997 Johnny Lawrence
Johnny Lawrence's picture

I see what you're saying, but I think a one day sample size is not enough to make that call.  The correlation between SPX and Gold was spot on during QE2, and only recently did that become an inverse correlation.  My point is that it's too early to draw the conclusion, although 2008 (when gold dropped 20%) certainly speaks to your argument.

Wed, 08/24/2011 - 10:52 | 1595087 DormRoom
DormRoom's picture

yes, but hedge funds playing the SPY-GLD stat arbitrage will get crushed today, if the correlation breaks down.  So it becomes a self-fulfilling prophecy, if enough funds are involved, and are forced to further deleverage.

Wed, 08/24/2011 - 11:37 | 1595284 ZeroPower
ZeroPower's picture

Do you really think funds involved in stat arb follow a single policy blindly enough to be 'taken out' by a blip in the price of something which was bound to correct for a few months now?

I realize your 'iconic' handle of dormroom indicates you must be a 29yr old Quant with a phys PhD running a $10Bn book..but come on. My point is that the Spy-gold corr reversal of a mere few hours does not take a fund to the woodshed... just yet.

Wed, 08/24/2011 - 11:43 | 1595302 DormRoom
DormRoom's picture I'm a pimply 20 something student.  And yes, if the inverse correlation breaks down, funds will deleverage gold.  A 4% drop in price of gold in a day. What's the sigma for an event like that? It implies deleveraging.. And it may initate a deleveraging feed back loop.

Wed, 08/24/2011 - 11:53 | 1595347 Snidley Whipsnae
Snidley Whipsnae's picture

Blah, blah, blah, blee, blee, blee...

You sound like a guy running around with your fucking hair on fire...

The Dow has been having daily swings of 400-500 points and you are worried about a single day drop in gold? Get real...

Wed, 08/24/2011 - 12:02 | 1595395 Bolweevil
Bolweevil's picture

plug in the chart from silvers run up to $50, opex, jacksons hole, venezuela, too obvious. even dumb ass hedgies saw this one coming. and yes I top ticked it, again. bulls bears pigs and new category: me

Wed, 08/24/2011 - 13:28 | 1595806 IQ 145
IQ 145's picture

See my post above for a link to a full list of the top ten down days in Gold. The sigma is actually pretty low, it happens all the time. Unless you cherry pick your data, of course. Over ten years, it's common. Also, it means nothing.

Thu, 08/25/2011 - 00:35 | 1598163 RockyRacoon
RockyRacoon's picture

It doesn't mean exactly nothing.   The financial talking heads must have mentioned "gold!" every third word today.  That is different.   Bob Pissant on CNBS was bemoaning the "fact" that you can't buy anything with gold -- like a Big Mac.   The stupids are out in force, and not in favor of the gallant showing that gold is making.   Poor bastards.

Wed, 08/24/2011 - 13:25 | 1595795 IQ 145
IQ 145's picture

Could we talk about how many angels can dance on the head of pin, now ? I understand it correllates with global warming.

Wed, 08/24/2011 - 12:04 | 1595404 whaletail
whaletail's picture

True, but in 2008 governments didn't have the debt they have today. If markets tumble, currency really isn't the safe haven that it was in 2008.  So, I'm not sure people will flee into cash rather than reposition in gold or (inexplicably) UST's.

Wed, 08/24/2011 - 10:45 | 1595051 terrible
terrible's picture

“Ah, yes, divorce ... from the Latin word meaning to rip out a man's genitals through his wallet.”

Wed, 08/24/2011 - 11:30 | 1595255 gmrpeabody
gmrpeabody's picture

I see you've been there.

Wed, 08/24/2011 - 10:35 | 1594978 SheepDog-One
SheepDog-One's picture

Something WAY more behind this than 'stops were hit' this is QE news, I guarantee it.

Wed, 08/24/2011 - 10:40 | 1595012 Temporalist
Temporalist's picture

So you are implying no QE?  Which means the markets should be selling off too but they aren't.

Wed, 08/24/2011 - 10:42 | 1595030 SheepDog-One
SheepDog-One's picture

'Am I implying no QE'? No...Ive been yelling that in every post here for weeks!

Wed, 08/24/2011 - 10:51 | 1595077 Temporalist
Temporalist's picture

I can only reply to one post at a time...

There already is QE3; extending the ZIRP until 2013.


Wed, 08/24/2011 - 10:58 | 1595115 SheepDog-One
SheepDog-One's picture

So Temporalist are you trying to say all the expectations of a few trillion QE for equity party will now be replaced by 'ZIRP continuation for a while'?

May as well try passing off a used VW bug to the spoiled brat Super Sweet 16 girls birthday present when she was told shes getting a new Ferrari.

ZIRP is not $3 trillion QE3 party, which was expected.

Wed, 08/24/2011 - 11:03 | 1595138 Temporalist
Temporalist's picture

No I'm saying there already was QE3 and next will be QE4, then 5...etc.

Wed, 08/24/2011 - 11:27 | 1595242 Oh regional Indian
Oh regional Indian's picture

I agree Temporalist. They have no need to call money printing by any specific name.

Plus, the original QE had a panic reason for it' slaunch, secondary QE was because the fudged numbers and the inflated stox market and the low PM prices made it look like one more shot baby, one more shot and I'll be fine.

Now, a raison de etre is needed to launch a numbered QE, because all marco indicators show it failed. Else, they will just continue with back-room deals, black pools of liquidity, swaps..... so many ways, choices, choices....


Wed, 08/24/2011 - 11:59 | 1595381 trav7777
trav7777's picture

the real problem is this:  the Fed is willing to print but not in the quantities that the politicians seem to expect.

the bernank has REPEATEDLY called for some fiscal discipline on the Hill and they told him to go fuck himself.  Bernank deals with his banker peers across the world who are like wtf bitch you are killing our export sector, but the politicians deal with each other and constituent cronies who bribe them (sometimes these may be bankers).

The bernank has sovereigns to answer to, as opposed to just Wall St.  When the Congress went into the debt ceiling like they did, and emerged with NOT ONE DOLLAR worth of real cuts, and instead expecting (along with Bama), $2T deficits until the next admin, when they will likely go to 4, then 8, etc., the Bernank may be having to cut off the punchbowl a bit.

Wed, 08/24/2011 - 12:23 | 1595479 tahoebumsmith
tahoebumsmith's picture

I don't know Sheep but I got the feeling it's going to be a shock and awe announcement. The CRONIES have backed themselves into a corner and are all naked now. The failure of their keynesian plan will not go down without one last fight. There is too much at stake, an election, the dollar as the reserve currency, their casino's burning to the ground, or a National Bank holiday. The gamblers have all their chips on the table now and they are not going to call the hand. What I expect you will see is a QE Plan that will involve the ECB and the IMF all joining together to try and save the world from financial ruin. Like I said before, there is too much at stake, they won't go down without a fight, they will kick what ever is left of the can one more time and hope it buys them enough time to get Obama re-elected before the whole thing comes unraveled and comes crashing down. It also buys them enough time to get out and go into hiding. We both know it will cause further destruction however the time to take the pill isn't now. My guess is they will buy enough time to see a war break out against Iran and then the distraction will be created and the blame can be passed along. Nothing they have done has worked thus far, their incompetance has built a solid foundation for our demise however at this point they are not going to take the fall until they have a scapegoat in place to lay the blame on..

Wed, 08/24/2011 - 23:32 | 1598065 MsCreant
MsCreant's picture

How does all the hinting (from Fed members) that the Fed can't go around propping up markets fit into this story? We know there is dissension.

Wed, 08/24/2011 - 10:51 | 1595078 tarsubil
tarsubil's picture

What about 0% until 2013? What about the money already printed? I think the lowest current honest valuation of gold is about 2500. So with the new debt ceiling and 0%, gold would still seem a bargain below say 1600. *crossing fingers*

Wed, 08/24/2011 - 10:40 | 1595015 TradingJoe
TradingJoe's picture

yes it is QE "news", as in IT ISN"T COMING! Thys why Sheep I am long gold and short the rest :)))! Either way I WINNN!

Wed, 08/24/2011 - 10:43 | 1595032 SheepDog-One
SheepDog-One's picture

Thats right.

Wed, 08/24/2011 - 12:09 | 1595419 Strider52
Strider52's picture

Don't forget that gold & silver options expiry is tomorrow. That fact always sends gold & silver prices down. Plus, I think everyone agrees that a profit-taking correction was bound to happen in the paper market. I tend to think that holders of the physical precious did NOT sell much, if at all.

Wed, 08/24/2011 - 13:33 | 1595831 IQ 145
IQ 145's picture

How much do you guarantee it for? What are the conditions for you to pay off? Who's the counterparty? Where do I buy the contract, and what's the quote on it? The point? Guarantee is a word; it has a meaning. it is greatly abused. Also, you're wrong.

Wed, 08/24/2011 - 10:36 | 1594980 Azannoth
Azannoth's picture

Trick question time: after you sell all your winners what are you left with ? .........

Wed, 08/24/2011 - 11:37 | 1595288 Harlequin001
Harlequin001's picture


Wed, 08/24/2011 - 23:33 | 1598070 MsCreant
MsCreant's picture

Food is a winner, don't sell.

Wed, 08/24/2011 - 11:45 | 1595314 V in PA
V in PA's picture

The Full Faith and Credit of the US?

Wed, 08/24/2011 - 12:23 | 1595477 Hook Line and S...
Hook Line and Sphincter's picture


Wed, 08/24/2011 - 13:35 | 1595839 IQ 145
IQ 145's picture

No, actually I got the herpes from a girl named Joyce; but she was really cute.

Wed, 08/24/2011 - 23:38 | 1598073 MsCreant
MsCreant's picture

He said what is left after you sell your winners, not your wiener.

Wed, 08/24/2011 - 12:41 | 1595558 Rick64
Rick64's picture

Fiat that is continuously losing value.

Wed, 08/24/2011 - 13:17 | 1595762 ZeroHour
ZeroHour's picture

Farmland, lead, weapons, food and other essentials

Wed, 08/24/2011 - 23:36 | 1598077 MsCreant
MsCreant's picture

Again, these are all winners!

Wed, 08/24/2011 - 10:36 | 1594982 Madcow
Madcow's picture

Quick! - sell your nasty, dirty, stinky old gold - BEFORE the bubble collapses - HURRY DO NOT DELAY!!

Wed, 08/24/2011 - 10:44 | 1595042 Dane Bramage
Dane Bramage's picture

lol!  I saw a sign on a local pawn shop: "we buy broken gold!"   "Broken gold?!", I thought...  unless an atom fell off gold can never be "broken". 


This pull-back is a natural, temporary, consequential (margins hike, etc.,)) & probably good (for the long view) thing.  That said, I was getting used to the exponential (nominal) growth of my stash,  

Wed, 08/24/2011 - 11:02 | 1595131 malikai
malikai's picture

I've even seen a few of those here in London lately. Not the same company, but the same sort of shops. They're popping up like weeds around here. I hold to the idea that it's not a bubble until they change the signs to "Gold for Cash".

Wed, 08/24/2011 - 13:02 | 1595674 augmister
augmister's picture

Joe and Mary Beercan average American is SELLING gold for worthless fiat to pay bills.   Americans are SELLING gold, not buying.  No bubble.   You won't see the rush into buying gold bars or coins here.   The average American can't afford to plunk $1700+  to purchase and ounce.  Only the GIANTS, not the ANTS.   The ANTS will be playing the $40+ silver tables and that will be fun to watch!

Wed, 08/24/2011 - 12:30 | 1595501 Hook Line and S...
Hook Line and Sphincter's picture

The hilarious part of this is that most these buyers of gold (ie cash4gold) are converting to fiat and logging profit that will be devalued in a flash. When the curve steepens and time winks a joking smile while they sleep, all their profits will be rendered worthless. All their efforts in vain.

Wed, 08/24/2011 - 10:36 | 1594983 Madcow
Madcow's picture

Quick! - sell your nasty, dirty, stinky old gold - BEFORE the bubble collapses - HURRY DO NOT DELAY!!

Wed, 08/24/2011 - 10:36 | 1594984 LoneStarHog
LoneStarHog's picture

Funny how these CLOWNS never mention OPTIONS EXPIRY when they ALWAYS publish just before OPTIONS EXPIRY.

Wed, 08/24/2011 - 10:36 | 1594985 Loonie
Loonie's picture

QE news? Even Benny doesn't have a clue if he'll announce it or not..

Wed, 08/24/2011 - 10:38 | 1594999 buzzsaw99
buzzsaw99's picture

el wapo never lies. lulz

Wed, 08/24/2011 - 10:40 | 1595013 Loonie
Loonie's picture

but Benny does

Wed, 08/24/2011 - 10:40 | 1595017 slaughterer
slaughterer's picture

Big Ben has never missed a delivery yet. 

Wed, 08/24/2011 - 13:06 | 1595703 DosZap
DosZap's picture


No way Berrnake announce QE 3........................

The pubilc will go apeshite.

He has no justification to do it, matter of fact he has reasons NOT to do it.

IT DOESN'T HELP ANYONE except Wall Street.

Wed, 08/24/2011 - 10:37 | 1594986 tarsubil
tarsubil's picture

I guess their hands are tied. They have no other option but to raise margins with this type of volatility.

Wed, 08/24/2011 - 10:37 | 1594988 Bastiat
Bastiat's picture

Looks like the Sep 40 silver calls will expire worthless:  the invisible hand just loooooves JPM!


Wed, 08/24/2011 - 10:38 | 1595004 SheepDog-One
SheepDog-One's picture

But does it love no free QE trillions gifted to equities? No wait, its worse than that even, that QE3 has already been priced in a few times.

Wed, 08/24/2011 - 10:44 | 1595041 EscapeKey
EscapeKey's picture

QE3 has been priced in, unless QE3 is announced - then it's not priced in at all.

If QE3 however ISN'T announced, then it's not priced in either.

Everything is to the upside, even when horrible news are released. As Marketwatch said yesterday; "the news could have been worse".

Yep. The economy could have completely died. That's not a great reason for the market to rally 300 pts, however.

Manipulation. Lots of it.

Wed, 08/24/2011 - 10:46 | 1595055 SheepDog-One
SheepDog-One's picture

No, QE3 has been priced in ever since DOW sub 10,000 on every bit of bad news since January. 

Wed, 08/24/2011 - 10:48 | 1595065 EscapeKey
EscapeKey's picture

You're still living in the real world. Stop doing that.

I was speaking from the perspective of CNBC - when QE3 is announced, it suddenly isn't priced in already, and hence stocks explode.

Wed, 08/24/2011 - 11:06 | 1595148 malikai
malikai's picture

Remember the days long past back in November, when an alien invasion for the sole purpose of female reproductive enslavement would have meant DOW +300? Ah, the memories..

Wed, 08/24/2011 - 11:24 | 1595218 Spastica Rex
Spastica Rex's picture

How many times have you ever heard the term "overbought?"

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