Deutsche Bank Charts a Danger Map For A Crisis Prone And Credit Troubled World

Tyler Durden's picture

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 09/25/2011 - 23:32 | 1709317 RobotTrader
RobotTrader's picture

Platinum getting totally destroyed.

The big story this week is probably going to be the further decimation of industrial metals prices.

Sun, 09/25/2011 - 23:47 | 1709341 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Robot, you are still alive. I guess throwing a few jabs at the PM worshipers after they talked all that trash about you.

Sun, 09/25/2011 - 23:57 | 1709385 Ahmeexnal
Ahmeexnal's picture

Rhodium seems to be immune to the meltdown.

Ag is falling to 28.  Hope it goes to 20 so I can load up with both hands.

Mon, 09/26/2011 - 00:15 | 1709420 Sudden Debt
Sudden Debt's picture

I just read a piece showing the probabilty of silver going down 50% and it made sense now banks and funds are selling the furniture.

At 20 euro per ounce, I'm buying at 15 euro per ounce I'm taking on a loan to buy more :)


Mon, 09/26/2011 - 00:20 | 1709433 Id fight Gandhi
Id fight Gandhi's picture

Silver moving multiple standard deviations over several trading sessions does mean down. Which is why you need to be hedged or short the markets if u want to pocket any profit. PMs will soar on money printing, but who knows when that will happen.

I'd be buying more eagles around 25-27 but already have more than enough silver much much lower.

Mon, 09/26/2011 - 00:30 | 1709455 Cliff Claven Cheers
Cliff Claven Cheers's picture

Can anyone explain why gold and silver have dropped so much?

Mon, 09/26/2011 - 01:11 | 1709507 Ahmeexnal
Ahmeexnal's picture

Someone leaked the margin hikes to be announced tomorrow.

Mon, 09/26/2011 - 01:13 | 1709509 Cliff Claven Cheers
Cliff Claven Cheers's picture

Thanks for the reply.


Real classy junking a question. I love these drive by junks who don't have anything to contribute.

Mon, 09/26/2011 - 02:02 | 1709602 Mauibrad
Mauibrad's picture

Neat Charts.

Mon, 09/26/2011 - 01:26 | 1709527 Western
Western's picture

This is a good place to start;

Put some effort into it next time.

Mon, 09/26/2011 - 01:29 | 1709537 MisterMousePotato
MisterMousePotato's picture

I think it's a combination of factors - a Perfect Storm kinda thing:

As the global financial crisis gathers momentum, why has gold dropped 15 percent since reaching a record $1,923.70 an ounce on September 6? Also, silver has plunged the most since October 1979. In two days, gold dropped 9.3 percent, the most since February 1983. The weekly decline of 9.6 percent was also the most in nearly three decades.

These are the possible fundamental causes for the accelerating decline in the price of gold:

1. Exchange Traded Funds (ETFs)

The UBS rogue trader, who caused the chief executive of UBS -- Oswald Gr?bel -- to lose his job over the $2bn black-hole, has accidentally highlighted the problem with ETFs. As the recent ATCA briefing, "Are The $1.4 Trillion ETFs The New WMDs? Anatomy Of The Highly Toxic UBS Scandal" points out:

"Think of all the gold ETFs and then ask yourself: How much physical gold actually underpins the gold ETFs? Answer: Not a lot! As much as half of the trades in gold are now driven by ETFs, while some blame them for speculatively driving up [commodity] prices."

Top gold sources say that some ETFs are involved in fractional selling in ratios of 1:100 and there is only 1 kilo of gold for every 100 kilos of gold-equivalent ETF units which are sold and re-sold. As queries for physical gold repatriation start, gold funds and myriad financial institutions and shadow banking vehicles -- such as prominent hedge funds -- may keel over?

Attention is just beginning to gather on the accounting principles of the popular but tainted gold and silver Exchange Traded Funds (ETFs). The gold inventory is under scrutiny for usage in COMEX -- Commodity Exchange -- deliveries, enabled by questionable shorts to the GLD and SLV shares by its own custodians. The Bar Lists are regularly seen as erroneous and suspicious.

The biggest gold and silver funds are now on the defensive, as they may soon face mass investor exits on the back of heavy discounts to the precious metal spot prices and doubts about the levels of physical gold they actually hold.

2. Paying for Losses and Booking Profits

There is clear evidence that investors are selling gold to pay for massive losses in other asset classes like equities and commodities. In parallel, many investors have made a solid profit in their gold-linked investments. As the markets crash and there is a need to find ready cash and report profits, it is easier to do so by selling their hitherto profitable gold positions.

3. Source of Liquidity and Margin Calls

Gold has become the source of liquidity for global margin calls. It is difficult to say at what level this liquidation will stop. COMEX -- Commodity Exchange -- is making it more expensive for speculators to trade. CME -- Chicago Mercantile Exchange -- Group has increased the margin requirements on gold and silver. The minimum cash deposit for gold futures will rise 21 per cent to $11,475 per 100-ounce contract in the speculative Tier 1 category at the close of trading on September 26, Chicago-based CME has said. For silver, the minimum cash deposit has been raised to $24,975 from $21,600.

4. Flight to Cash

We are seeing a flight from illiquidity to liquidity, ie, from all asset classes -- including precious metals -- to cash because 2008 is still very fresh in people?s minds. In October 2008, gold prices tumbled 18 percent as the most-severe slump since the Great Depression spurred losses in global equity and commodity markets. However, the yellow metal jumped 23 percent in the next two months.

5. Too Fast Too Soon

The summer run-up in the gold price was too far too fast and too soon as institutional speculators extended their long positions in paper derivative markets. All these tell-tale signatures suggested a big fall at some stage, which has now arrived. Rather than any dramatic reversal in world physical markets, it looks like gold's precipitous price decline in recent days and weeks can be attributed at some level to the same set of speculators -- including some prominent hedge funds and the trading desks of the big Wall Street, European and Asian banks -- reversing their positions or cashing out of gold altogether.

6. Deflation and Commodities

Slowing world growth has created pressure on gold and commodities from the deflation angle. The broad slide in commodity markets also helped drag gold lower, as declines in the commodity indices prompted managers to liquidate gold.


The fall in the price of gold at a time of increased global uncertainty can be counter-intuitive for some investors to understand. Of all the reasons cited for the accelerated decline in the price of gold, knowledgeable senior executives -- with board level responsibilities in gold mining and gold bullion trading -- suspect that worries about Exchange Traded Funds (ETFs) and investors pulling out of their leveraged gold positions are amongst the most likely suspects. The increased margin requirements may still be a minor contribution but would likely cause a further modest dampening of sentiment.

Is this a short-term or long-term correction? Could the correction in gold prices be short-term and similar to initial losses suffered in 2008 or is this a more long-term correction like the one in the early 1980s that lasted for more than two decades? The length of the fall in gold prices depends perhaps on how long will it take for the ETF situation to normalise!

Some senior executives from the gold industry feel that the long-term upward trend in the price of gold is likely to continue because physical supply from new production is very limited and the overhang from central banks pretty securely locked-in for the moment. This leaves open the question that how long will the transition period of falling gold prices be before the long-term trend resumes?

Having said (plagiarized) all that, it is my belief that most of the drop on Friday was the result of the in-the-club knowledge of margin hikes (why, oh why, will no one give me a badge and a gun?). None of this affects the long-term fundamentals, though, in any way that I can see (have to agree with that douche Deninger about this), and at some point in the future (a week? a month? a year?), those who didn't will be kicking themselves for not buying silver at $40. I, for one, will not ignore the opportunity hereby bestowed; viz., sale on silver, two for the price of one. Yay. Guess the Valiuminun scriptins are starting to wear off.

Mon, 09/26/2011 - 01:40 | 1709554 Cliff Claven Cheers
Cliff Claven Cheers's picture

Thank you Mister that was very informative.

Mon, 09/26/2011 - 00:06 | 1709400 I think I need ...
I think I need to buy a gun's picture

the fire has started paper and kindling have already started....all we are waiting on is the main logs very soon

Sun, 09/25/2011 - 23:51 | 1709347 Caviar Emptor
Caviar Emptor's picture

The big story this week is probably going to be the further decimation of industrial metals prices.

LOL. That ain't the only thing to be decimated. Keep your eyes wide open. 

Sun, 09/25/2011 - 23:55 | 1709366 bob_dabolina
bob_dabolina's picture

Silver -3% as well

Mon, 09/26/2011 - 00:13 | 1709414 DormRoom
DormRoom's picture

if you are in a leveraged gold or silver ETF, get the fuck out.  You can get wiped out, if you hold an ETF, when the underlying asset is falling sharply.  You get wiped out, but the ETF consolidates shares, so it can continue to fall.

Mon, 09/26/2011 - 01:00 | 1709492 scatterbrains
scatterbrains's picture

unless it's ZSL or DZZ for the time being anyway, but true.. I feel for anyone trapped in these 3x long funds praying for a bounce. Seriously it's getting ugly.

Mon, 09/26/2011 - 00:13 | 1709418 I think I need ...
I think I need to buy a gun's picture

yep we saw this movie before in 2008 when the slv dropped below 10 maybe 5...but could you get a coin for 5 dollars. Pretty soon your silver will be priced in gold terms along with oil.........the paper its the paper....everything paper is on fire

Mon, 09/26/2011 - 00:33 | 1709462 Cliff Claven Cheers
Cliff Claven Cheers's picture

BTW where is Mako, it only costs $5.00 to dig silver out of the ground.

Sun, 09/25/2011 - 23:57 | 1709386 jomama
jomama's picture

considering a 30%+ drop in the last 72 trading hours can't be a real move, how low can it go?

Mon, 09/26/2011 - 00:09 | 1709407 bob_dabolina
bob_dabolina's picture

It can be a real move and it is a real move. 

You can lead a horse to water... 

Mon, 09/26/2011 - 00:23 | 1709425 jomama
jomama's picture

i'm sure the price fluctuation is based on real supply and demand.

go be an asshole somewhere else.  i wasn't even fucking talking to you.  

oh, and uprating your own posts is pretty pathetic.

Mon, 09/26/2011 - 01:05 | 1709500 scatterbrains
scatterbrains's picture

This fluctuation is based on the hope now dashed that the Bernank would print along with twist. Now it's a game of chicken.. will he print ? How soon? He has to print! or does he ? meanwhile pm's are getting slaughtered... this is bad.


Mon, 09/26/2011 - 01:29 | 1709535 Western
Western's picture

JPM setting loose a couple of destructo-algorithms at midnight and CME raising margins in concert is considered a real move (in terms of Ag price)?


Mon, 09/26/2011 - 00:11 | 1709412 SGS
SGS's picture


Mon, 09/26/2011 - 00:10 | 1709409 DormRoom
DormRoom's picture

Bernanke was right.  The increase in commodity prices was transitory. lmao.

Mon, 09/26/2011 - 01:52 | 1709573 Hearst
Hearst's picture

President Lyndon Johnson on July 23, 1965

“Now, all of you know these changes are necessary for a very simple reason–silver is a scarce material. Our uses of silver are growing as our population and our economy grows. The hard fact is that silver consumption is now more than double new silver production each year. So, in the face of this worldwide shortage of silver, and our rapidly growing need for coins, the only really prudent course was to reduce our dependence upon silver for making our coins.

If we had not done so, we would have risked chronic coin shortages in the very near future.

Some have asked whether our silver coins will disappear. The answer is very definitely-no.

Our present silver coins won’t disappear and they won’t even become rarities. We estimate that there are now 12 billion–I repeat, more than 12 billion silver dimes and quarters and half dollars that are now outstanding. We will make another billion before we halt production. And they will be used side-by-side with our new coins.

Since the life of a silver coin is about 25 years, we expect our traditional silver coins to be with us in large numbers for a long, long time.

If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.”

Sun, 09/25/2011 - 23:35 | 1709322 spekulatn
spekulatn's picture

Outstanding post, Tyler.

Sun, 09/25/2011 - 23:38 | 1709325 Steroid
Steroid's picture

So many pages from a soon to be bailed out -again- bank.

The main question is credibility, DB's

Sun, 09/25/2011 - 23:38 | 1709328 Absalon
Absalon's picture

The report seems to leave out Canada even though its banking system is larger than that of some of the countries covered.

Sun, 09/25/2011 - 23:52 | 1709351 LeonardoFibonacci
LeonardoFibonacci's picture

For some reason the canadian banks seem to weasel their way out of world turmoil.  Can anyone please help me understand why canada always gets away with their banking system?

Mon, 09/26/2011 - 00:08 | 1709406 Let them eat iPads
Let them eat iPads's picture

Backstopped by taxpayers, particularly mortgages.

Mon, 09/26/2011 - 00:12 | 1709415 SGS
SGS's picture

We had banks fail in the ealry 90's.  Always...? always what? ONCE in 2008.  Fuck sake.

Mon, 09/26/2011 - 02:58 | 1709763 Dugald
Dugald's picture


Its a Snow Job?????

Sun, 09/25/2011 - 23:41 | 1709332 RobotTrader
RobotTrader's picture

New high for the move in the U.S. dollar, wow....

Sun, 09/25/2011 - 23:44 | 1709335 High Plains Drifter
High Plains Drifter's picture

do you find any of this kind of fishy considering the shape of the world financial system , there robo?   with these moves in the metals, i have to say something bad this way comes....

Mon, 09/26/2011 - 00:25 | 1709442 kito
kito's picture

Cant mess with robo, hes the master of pointing out the obvious. Just the other day he gloated that the sun rose. And when dusk came, he was quick to point that out as well. Hes a real sharp one....

Mon, 09/26/2011 - 01:22 | 1709522 Ahmeexnal
Ahmeexnal's picture

Kito, how is real estate in Salinas?  Can't figure out what Ecuador will do when the USD crashes. Aren't there any sucre backup plans?

Mon, 09/26/2011 - 00:26 | 1709444 Al Huxley
Al Huxley's picture

As you pointed out previously, what happens overnight is irrelevant. That's true for stock futures, metals prices and currencies. Whether people here like it or not, for now the sun still rises and sets on NY time.

Sun, 09/25/2011 - 23:44 | 1709337 Caviar Emptor
Caviar Emptor's picture

Asia stock markets gloomy tonight...again. 

Flash: Nikkei below tsunami lows


Sun, 09/25/2011 - 23:49 | 1709343 medicalstudent
medicalstudent's picture

silvers gonna humdrum down to 23 ish and mosey throughout the 20s-low30s for a couple months before skyrocketing in a flash of lightining to 100.



Sun, 09/25/2011 - 23:54 | 1709363 zorba THE GREEK
zorba THE GREEK's picture

I haven't used leverage in ten + years, but if silver goes down to anywhere

near $20, I am going in big on a levered silver trade. 

Mon, 09/26/2011 - 00:19 | 1709429 scatterbrains
scatterbrains's picture

The only thing is if the political winds change and the keynsians are thrown out on there ass's we could see $6 dollar silver or less come  the deflationary destruction it will bring.. just saying.  Anyone that buys silver believes in the Bernank.  I'm not so sure.

Mon, 09/26/2011 - 00:30 | 1709456 kito
kito's picture

Scatter--that change is already upon us. They cant even get funding for irene victims. No money to be spent in congress. Ben left the ship, and its mutiny on the deck. Keynesians are walking the plank. Pms, and everything except cash, are shark bait.

Mon, 09/26/2011 - 00:40 | 1709472 scatterbrains
scatterbrains's picture

They sure are culling the herd tonight though wow! Lots of peeps trapped looking for a bounce are going to get blown out it looks like.

Sun, 09/25/2011 - 23:59 | 1709388 X.inf.capt
X.inf.capt's picture

ill stop lurkin to comment on this one,

did you say $23 on silver....if you did, im having another garage sale next weekend like i did today, hell, my woman would sell her furiture at it to buy at $23.

how in the hell can they justify silver at anything lower than $50. anything lower than that is a fire sale.


Mon, 09/26/2011 - 00:27 | 1709445 Shirley Wilfahrt
Shirley Wilfahrt's picture

I was buying at $8....I was buying at $42.....I bought more at $30....




Mon, 09/26/2011 - 01:15 | 1709463 Cliff Claven Cheers
Cliff Claven Cheers's picture

Fart, nice to see you again. That pic cracks me up every time. Is that you or a friend of yours?

Mon, 09/26/2011 - 01:15 | 1709513 medicalstudent
medicalstudent's picture

agreed, as the white metal is invaluable.


the current prices will soon be seen as so unjustified that the end result will be most people will never hold a silver coin, as it will go untouchable and immeasurably valuable.


but for now, and for most of this year most likely, the silver window will remain open so long as post office trucks deliver the fucking mail.


after that, stock up on quinoa.


the apocalyptometer (the silver price) will have risen to painfully high levels.



Mon, 09/26/2011 - 03:01 | 1709774 Dugald
Dugald's picture

Sure hope to christ I neve need you for medical advise......

Do NOT follow this link or you will be banned from the site!