Commodity Unwind Continues As Global Liquidity Scramble Accelerates

Tyler Durden's picture

As pointed out earlier, the short term USD-funding liquidity ruse instituted two weeks ago by the New York Fed has now all expired, which means global banks are progressively selling all residual winners left having dumping US safe haven securities (a big reason why the EUR has plunged is there is no more repatriation of USD-denominated assets by European, well, French banks). Enter the commodity space. As the following color-coded chart demonstrates, "stuff" is being offloaded by the boatload to procure cash in expectation of yet another day of "rip your face off" margin calls. Which naturally is to be expected - with collateral negligible, those who sell hard assets first sell best. Yet at the end of the day, all it does is provide an ever better entry point for those who have the means to institute hedges against the next step which will will occur shortly: yet another global liquidity tsunami courtesy of the central banks, because that is all they know and all they can.

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Sophist Economicus's picture

Gold, come to papa....

johngaltfla's picture

That's why I looked at the chats, saw a repeat of August 2008 and came to this conclusion:


The Coming Collapse might be your Final Chance to Legally Buy Physical Gold this Decade

DormRoom's picture

gold will do you no good during a collapse.  Talk to Venezeluans, or people who've gone through a civil war.  You need items you can barter.


canned goods.  gold means nothing to a mother with a starving child.  She will give herself to a gang for powdered milk.

kito's picture

cash will be king during a deflationary collapse. keep lots and lots on hand............

trav7777's picture

nah; they'll just print it like Japan has for 20 years

gmrpeabody's picture

I suppose that I'll just hold my nose... and BTFD!

Hugh_Jorgan's picture


The collapse of Venezuela in 2001 was localized to... well Venezuela. We are on the verge of a multi-detonation, global collapse of the entire western banking system along with all of it's sovereign governments. Even the holder of the world's reserve currency has ingested poison to the tune of 100% debt to GDP ratio and an economy that its present administration has managed to slow to a crawl.

Few analysts are now arguing that a worst case scenario is off the table, and I think most of them are wildly optimistic. This means the final "backstop" will be the US Federal Reserve burning up the printing presses to bail out the world (when the only tool you have is a hammer, everything has dents in it). This will obviously fail and massive printing will hyperinflate always does. Cash is trash and Gold is king during those times. Knowing this we have a chance to be ahead of the curve. Buy physical, firearms (with boucoup ammo), and food.

HoofHearted's picture

Huh, some of us play chess and think three steps ahead. Others like Dorm just happen to play tiddlywinks. We'll see how it plays out in the end.

Hard1's picture

Now, silver at -7.7% today confirms that silver is poor man's gold and holders will remain as such. BTW central banks are subsidizing your chance to buy gold on the cheap before they run out of options.

MissCellany's picture

Sure, they probably will. But they won't give it out to regular folks if they can possibly help it.

agent default's picture

They are printing, they are just not talking about it.  We are in the middle of this huge debt crisis, the US is running record deficits and debts, and the Bernank manages to keep interest rates at record low levels?  How does he do that?  It just shows how stupid the markets are actually.  Then they will wake up one day and say "Oh shit they have been printing all along" and everything will explode.  And if you are in cash you will be terribly damaged.

johngaltfla's picture

Do you honestly believe that the Fed will sit on its AZZ and do nothing with an election year coming up and riots in our streets?

Hell no.

Come the February-March 2012 time period, once Greece is out of the EU and Ireland is voting on it, the Fed will print like a mother.

And by print, I'm not talking QE 1 or QE 2; I'm talking a coordinated effort with the BOE, ECB, SNB, BoJ, and politicians in D.C. to re-liquify the system with north of $2 trillion.

Because the alternative is worse for the short term, they don't care about the long term.

DormRoom's picture

they are stuck between a rock & a hard place.


If they print, we'll get high-hyperinflation.  And it'll reck a number of economies, including many allies.


What will happen in America when there are 75M people on foodstamps?  There will be serious domestic political implications.  Every day there will be protests.


If they dont' print, we get another great recession.

johngaltfla's picture

It won't be a recession this time.

It will be the total deflationary destruction of our economic and political system resulting in something far worse than the political elites can tolerate.

Again, look at the calender:

The election is less than 12 months away.

That is all these idiots care about.

DormRoom's picture

high-hyper inflation will turn American into a police state.  Already they are militarizing police. Already the surveillance & detention apparatrus are setup: NDAA,  domestic drones, Carrier IQ monitoring cellphone data.


If America doesn't head into a great recession, it's headed towards a police state.  I'd rather live in a deflationary environment with liberty, than a police state.


Though, the police state may unfold in a great recession too.

GeneMarchbanks's picture

'high-hyper inflation will turn American into a police state.'

Firstly 'high-hyperinflation' is redundant. Second, hyperinflation is a political event not economic. See Hugh Hendry's excellent King World news interview from a couple years back or speak with people who lived through it like Yugoslavians. 

pods's picture

Headed towards a police state?

Head into a great recession?

You are living in the past.


EvryInternational's picture

Hiya pods.  Been a long time since da bear...

pods's picture

Yes it has.  Haven't been there in a long time!

Sorry to go, but it is what it is.


EvryInternational's picture

Hyperinflation will turn American into a police state.

So will massive, system-seizing deleveraging and financial market collapse if they don't.


This is the crux of the matter.  The outcome only changes depending on how much they print, but the final social effect differences are negligible.  Police state is here and ramping up.  Just imagine what it will be like with starving masses and a dead economy - something that happens no matter how much printing occurs.

Strut's picture

Sorry bud, but we're already there.

MachoMan's picture

You realize that there are land barons already in place...  you'd simply be trading drones for whips in a deflationary environment...  this is where the spoils of the wealth gap really get to be utilized (because the political structure has deflated as well and will be more local or very local with regional feudal lords).  If we're going to talk about extremes...

FEDbuster's picture

Let commodities fall a little, so when the next round of "printing" is announced the new highs won't come as fast.  Consolidation is good for long term bull markets.

China demand may fall a little as their real estate market implodes.

tocointhephrase's picture

I am trying to buy the dip, but my dealer aint selling!

I Got Worms's picture

I hear you - payday is tomorrow and wanted to buy my usual 5 oz of silver. But I already know the coin shop won't have a single dime in the joint tomorrow at these prices, and so not even worth the trip.

HoofHearted's picture

My sources are sure buying, but they are not selling. Think they know something?

I know stuff too....but I fear we may drop some more before I go all in.

dirtbagger's picture

Don't hold your breath - the Greek crises has been going on now for almost 2 years.  Waiting for the  "inevitable crash" is like watching paint dry.   It took Rome a couple of hundred years to finally implode and disintegrate.   There is a good chance that we may all be long dead before everything in the Western World falls apart.

Caviar Emptor's picture

Sorry, when they even announce the liquidity program, even before instituting it, raw material prices will surge. And another turn of the biflationary rack will further kill the buying power of the middle class. Because by now after 2.5 QEs and doing the Twist we have seen that net worth and incomes don't rise despite monetary expansion. Only the price of paper and paper-backed stuff. And that's the stuff of revolutions and geopolitical instability. So it's now down to the very short term

stocktivity's picture

Actually...Benny was appointed by a republican. I seriously doubt an election year makes a difference to him. He'll just keep printing no matter which party is in office. We may be on QE5 or 6 by election day.

Potemkin Village Idiot's picture

cash will be king during a deflationary collapse

Yeah... I'm guessing that when the price of real estate, farms, bread, crude oil, cattle, & metals all drop to ZERO during the deflationary collapse, I'll be sitting pretty with my $1 bill...

My Taint's picture

You can't help them. The meme of goldbug love is unstoppable.

trav7777's picture

you can barter yourself out of the country with gold

RSDallas's picture


I agree.  A lot of people have discounted what Pletcher has been preaching from the start of this and that is that there will not be any safe havens during the final unwind.

Falcon15's picture

Dorm, two words: wealth transition. Gold has no use in the throes of a massive collapse. I concur. However 6000 years of history show that gold and silver are stores of value. Smaller and more portable than a case of canned goods. Highly compact wealth that, when - and it would happen - a new system is put in place to replace the old. That new system may be well gold & silver money (not paper at all), it may be paper backed by gold and silver, but one will be instituted eventually. Based on historical precedent and plain, old fashioned common sense, having gold and silver in hand is a wealth preservation/transitional move.

If you make it through a collapse to the other side, you have a ready store of widely accepted and quickly converted or useable wealth now.

DormRoom's picture

I agree with everything you've written. karma +1

potatomafia's picture

Unless the mother HAS gold to use to buy food/necessities...

Oracle of Kypseli's picture


"canned goods.  gold means nothing to a mother with a starving child"

These items have expiration dates and slow you down when you want to be on the go. I was in Venezuela a few times and with a few gold coins you can buy the whole neighborhood. Those who produce these goods only want gold or silver.

pine_marten's picture

I agree with you Dorm.  If you have plenty of all practical supplies, gold may give you a nice store of wealth when the upheavel is over.  But you have to be able to defend it.  In the middle of complete anarchy, a hoard of gold would glow white hot, particularly if you had tried using it to aquire staples in your area.  You would be in more peril than some idiot who found a suitcase of smack and tried dealing it in the hood. 

trav7777's picture

your statements are totally wrong unless you live around people who are fucking thieves and robbers.

If you live in the HOOD, expect HOOD type outcomes.  If you live around the type of people who are typically in the HOOD, you will get HOOD behavior.  The reason the HOOD is like it is is because of the PEOPLE there.


pakled's picture

Desparate people do desparate things...

stuman's picture

I actually think there's quite a bit of validity to this comment...that said, I think it would be wise to have a bit of "both" gold/silver in small denominations & useful items to trade and barter with (ammo, canned food, TP, lighters, alcohol...)


trav7777's picture

silverbugz getting absolutely BLOWTORCHED

Falcon15's picture

Channeling Robotard. +1 for you.

GiantVampireSquid vs OWS UFC 2012's picture

silverbugz getting more fiat ready to swap for physical.  Fixed it.  If it hits $25 I'll gladly take out a loan to buy physical.

Martial's picture

And I hope it gets worse....ready to back my truck up. Bring it!

Tsunami Wave's picture

With a rising dollar, global selloff, traditional dip in all commodities (especially gold and silver) between January - April, 40,000+short order contracts still outstanding.... Nah that doesn't bother me.  I want to go even more in soon.

tmosley's picture

lol, like your gold is rising spectacularly.

Your doublethink on precious metals and "SHTF" is almost humorous to watch.

trav7777's picture

whether or not gold is going up has nothing to do with the fact that silverbugs like you are getting ABSOLUTELY MONKEYHAMMERED.

Anyway, I have a short gold position since a week ago anyway

SilverRhino's picture

Wow, that's fucking painful if I wanted to liquidate. 

Silver Bid: 28.89 Ask: 28.99 Change:  -2.28


If I want to buy, that's opportunity. :-)