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Commodity Unwind Continues As Global Liquidity Scramble Accelerates
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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Other than our regular monthly purchaces, we may want to wait until we see the whites of their eyes.
there is no helicopter.
asset prices will correct to pre-1980 levels. politically, no one cares about the losses of "rich people" (those with pensions, retirement funds, real estate ...). a global re-set of asset prices is the only way to choke off demand for oil, silver, and other commodities with falling (economic) supply. there will be "money-printing" - but only for governments. there is no mechanism for that money to make its way into the private economy. the money supply available to the private economy will continue to evaporate. EVERYTHING will continue to fall relative to the USD - for years if not decades.
Yup. THe last 3 years proved what you're saying. Plus it's supply-side philiosophy to keep money sequestered within the banking cartel, hoping it will "trickle" as a by product of their speculation. So i would add banks to your list
You are so right Madcow.
US wages are deflating which is why for Bernanke to really go the inflation/hyperinflation way litterally means he is paving the road for civil war.
Inflation also does not just squeeze the american people who already have little money, they squeeze margins of businesses operating in the country - when company margins get squeezed, they can increase sale prices, but I can quarantee you that they will not be actually hiring new people - this means unemployment will stay high, which is literally a large deflationary in or by itself.
Interest rates rising is inevitable when actual buyers disappear and this will filter into the economy destroying the rest of the debt ridden loans out there.
So forget about that helicopter and remember the following, Gold is a parking lot for money that has no where else to go, but economies can't run on Gold if everyone would rather have the gold (Bretton Woods II)
You're right, a helicopter could never lift this much cash.
http://www.shadowstats.com/alternate_data/money-supply-charts
M1 is CASH being dumped on the economy. It is growing 20% YoY.
lol, there's no way governments printing money can make it into the private economy, huh? What do you think governemnts do with that money? Launch it into space? No, they SPEND it. That means that money competes with private sector money for scarce goods. This path has been well trodden, and is lined with the corpses of empires. But let me guess, "this time will be different", right?
What losses? They get bailed out everytime they sneeze. Meanwhile, they are accumulating mass amounts of real wealth, namely real estate and gold, with 1s and 0s conjured out of thin air. At least at this point they are eating their own, and one of these days someone's going to get pissed enough to start a war. At some point they will collapse under their own weight, or as Daniel says, "broken without hand".
Now this market is getting exciting... GLD first time under the 200dma in THREE years this morning.
Dollar exploding the new short term highs - TLT (bonds) pushing highs. Euro new lows to 1.29.
And markets rolling under through the 50dma.
Could not be a better deflation setup....
Which is why it's soon going to be great time to buy. Governments won't wait for too long to begin the next round of easing.
I guesstimate this may be a good window of opportunity to load UN on phyzz but it won't last more than 4-5 weeks.
I am thinking about rounding up my Au and Ag holdings to the nearest (higher) number.
Any question as to why you never ever buy on Margin? I thought not.
Margin is a very handy tool to use when you actually suck badly at growing wealth but would still like to collect your 2 and 20 and weekend in the Hamptons.
Second Great Depression is here.
Yhis is just the Santa Claws rally as he claws the shit out of the market while tumbling down the chimney of depression. No worries
Nifty on TARGET for 4610 in 1-2 days time....::
http://markettechnicals-jonak.blogspot.com/2011/12/nifty-update.html
Like trying to surf by standing on a waterbed and having people push the sides of the mattress.
Christmas sale. Thanks. It's sad it's real money and not capital assets. But weak hands can dump it to real savers.
Interesting observation - but it looks to me like this market will fill the gap about 2% lower from here. At that point, bonds should be at resistance (historic low yields) and the dollar may be a bit overbought (RSI almost 70 this morning).
A small market bounce will begin to setup a flag from the Oct lows and Nov highs... Just something to watch setup - your guess is as good as mine which way it breaks... but it this flag sets up below the 50dma and 200dma, which is the way it looks... Seems like early 2012 isnt looking so good.
imho obviously... curious if some others see the same
War of nerves in Europe: Germany holds out on inflation to round up signatures committing to fiscal restraint.
Will ECB then print enough to buy EZ sovereign debt from banks, making the banks whole and leaving the ECB holding the bag?
Euro down; dollar up; gold down?
Then all eyes on USD.
Is any of this do-able, or is Kyle Bass right and the eurozone has gone past fail-safe?
Thumbs up if you're using this current nosedive in gold and silver to acquire more physical!!!
Confession time: Long-time equities/options trader but I haven't bought gold or silver yet as I just recently "woke up" and am researching and (obviously) waiting for the right entry point. Along the lines of margin calls, I understand those very well but it feels as though there could be a sustained period of margin calls with deteriorating global conditions/stronger dollar that will continue to drive down PM prices. Which suggests that I wait to buy - I'm thinking sub $1,500 gold/$26 silver. Where's the flaw in my logic? Thanks in advance for tolerance and thoughtful replies.
You may not be able to buy at lower prices, if there are shortages it's too late.
If you think you know when The Great Implosion™ will get here, by all means, wait. Au/Ag/Pt/Pd represent "wealth Insurance", not an investment.
Kyle Bass was just on CNBC...great interview...he nails it....
Did anyone there other than maybe Faber understand anything he said? I doubt it.
I saw it, I understood it. He should be in Bernanke's job.
Sorry for the confusion, I wasn't being critical of Mr. Bass, only the Kool-Aid brigade at CNBC. If you like I will second your motion that Kyle Bass become the next Chairman of the Fed.
Do you have a link?
This interview?
http://plus.cnbc.com/rssvideosearch/action/player/id/3000061932/code/cnb...
Looks, feels, tastes(?) like 2008. I sold my gold stocks in disgust today. I know very well when the carnage ended in 2008 for gold stock and we are not there yet (it was .09 on the xau/gold ratio intraday and we are at .113). I am not waiting to find out if we will tie 2008.
I imagine I am still up for the year having successfully traded out of silver during the run up. With that said, the beats are all I remember; the market wins are forgotten. Funny how that is.
Still holding all coins. Maybe a shotgun should be on my xmas list.
BTW, the dollar looks like it is breaking out on the uup chart. Makes me think we are at the beginning and not the end.
Did someone say a mother would give herself for powdered milk? I'm stocking up! LOL. Tasteless joke of the am. Think i've been watching too much Beavis and Butthead lately. Those two would do just well in a crash. Already undernourished and used to it, too stupid to know the difference. Now if tv got cut off they might have a problem. I will say that this massive economic recovery we're having is slowly turning my household into an episode of Squidbillies. If you haven't watched that I suggest you do asap. Make sure you're drinking though. That damn republican Dan Halen is pretty much the real deal.
Time to chug some "Glug!" :>D
Billions of ounces of silver selling today. If it continues for a few more hours, all those paper certificates might fill up a shoe box.
Yes I watch CEF a Canadian closed end gold and silver fund....it the the average daily volume in less than an hour...and whoever BATX is ..an exchange..they are the computer pushing it..they are on the top of the stack at all times with a 200 share order,,,,when volume is this big....its a raid or rigged market going on...something is up
ok Tyler NOW you can say gold and silver are plunging, unlike your earlier post this week.
This is the last wosh down for Gold and Silver. This should last till year end. Gold should bottom just below $ 1,500 and silver around $ 26.00. At that point it will be a great time to buy because more QE's are going to happen in 2012. I wouldn't be suprised if Eric Sprout dosen't bite on Silver in a few weeks.
Yeah, we haven't heard much about that follow on offering which would buy up 50 million ounces. About a month ago, the SEC were doing a review which would take 2 weeks?? I checked his website a few days ago, but there was no further information.
All of those margin increases were actually just to manipulate the gold and silver markets in the first place? Sure.
It could not have anything to do with the possible wide swings caused by the fluttering hearts of the Gold Bitchez, could it.
BUY. BUY. BUY.
Don't let the chance to grab the falling knife slip away.
qe^ in 5,4,3 .....
special announcement.
blood in the streets. stop.
need more money. stop.
start the print and give it to
the bankers. stop. everyone else,
you're on your own. good luck.
default triggers cds, the confusion would
be unbearable, would break the minds of all.
too liberating must be avoided, how? print,
they will print together and see what happens?
the crime is in the distribution.
Here is my House Oversight Committee testimony for tomorrow on the futility of trying to bail out the Eurozone Titanic. It's a solvency problem, not a liquidity problem.
My House Oversight Testimony on The Eurocrisis, The Fed And Implications for Taxpayershttp://confoundedinterest.wordpress.com
Will CB's make the same mistake over again and will this mean they are now certifiably insane?
great article and great comments. Seems what appear to opposite sides of the Gold Argument are actually on the same side just have a different timing outlook. People want food instead of gold during a massive jetwash down in the mkts, and others want gold. You need both, you can't stay in freefall forever, and eventually when they set up the Fiat game again, you will have some multiple of your old dollar balance. Keep thinking about the crisis, the crisis, the crisis......Oh my God this Crisis we're in! Corzine is a lying sack of shit, not complicated, no crisis here, just prosecute. Housing Crisis...Oh My God, banks are insolvent, then fucking fold up shop you pussys.....but no we have crisis instead. We've got a Prosecution Crisis, flat out. The way it touches everyone is that they are messing with the mkts, and the values of whatever we hold, houses, investments etc. Does anyone really think the world would have stopped if GM and the rest of the Auto boys were forced to have a yard sale?? Within a day, another group with cash would have vultured through everything and been up and running in no time----with a big fucking 'Who Wants to Work' sign out front, they'd be swamped. But sadly, we are forced to wallow in TPTB's weak-ass inability to prosecute.
SP500 daily chart resumes choppy downtrend. Opposite for USDX.
My long term indicators have continued to warn of USD strength and EURO weakness and these signals have increased since 2009. The overdue dollar rally should be substantial.
http://stockmarket618.wordpress.com
Copper at $3.27/lb...not deflation. Copper under $1.25/lb is deflation.
MY take (subject to change as I learn more):
1) gold (&silver) are stores of value. Always have been and always will be (until alchemy perfected).
2) gold (&silver) can be traded for goods/services, but [favorably] only under certain circumstances.
3) Therefore 50% of my emergency double secret dystopian crash bag of tricks is FOOD, and the means to cook it. (and supplies and medicine and seeds)
4) some of that 50& are redundant quantities to be offered for barter
5) must not forget dangers of relying on only gold (&silver). Possible scenario:
a) government makes gold (&silver) illegal to own. Perhaps confiscates for the patriotic purpose of backing a new currency
b) lest you try and barter with gold (&silver) on the grey/black market, government offers reward to your neighbor for turning in such a 'terrorist'. Reward is an offer the neighbor 'can't refuse', like increasing their food ration. How so? Monthly threshold on their safeway (albertson's, ralphs, costco, kroger, et al) will be bumped. How so? All food purchases, do to shortages, and to be 'fair', will require these cards. No hoarding! That is an act of terrorism and we have a place for such types.
6 No way around acredited grocery stores because all mom/pop farms will be illegal (we are actually just about there now on that one).
We must be thinking 3-dimensionally! TIMING IS EVERYTHING!