Did Schaeuble Break The Precious Metals And Force Everyone To Raise Cash?
We noted earlier that German finance minister Schaeuble said bank recaps were not the ECB's problem and the 2nd Greek bailout needed revisions - little did we know this would be the signal for investors to recognize that raising cash might be the safest thing to do. Since that statement TSYs and Gold/Silver flipped their recently well hedged relationship to one of total liquidation of both - correlation is not causation obviously but we though the timing was of note.
UPDATE: CME just announced that they are hiking Gol, Silver, and 30Y TSY margins! Seems if it wasn't Schaeuble then it was some leaky CME clerk.
Chart: Bloomberg
(7 votes)
»
- Login or register to post comments
- 19467 reads
- Printer-friendly version
- Send to friend
feels more like switch from reflation to deflation in peoples understanding than any one comment (or as you point out might be a cadaver in hedge fund land). 30 minutes from now margin clerks are in charge so we'll see.
if we go to serious deflation trade gold will catch bid - not sure about silver there tho - we are in uncharted waters..(in global macro picture)
Oh my God...
I can't handle all this "back to deflation" talk out there.
You really think Ben Bernanke (of all people) is going to take the podium and declare that his own 2002 thesis was erroneous?
"Sorry folks, Money and helicopters won't help... we're just going to deflate and that's that."
Will he seriously jeopardize his legacy as an Economist in order to legitimize his tenure as a Central Banker?
I think not.
Besides, consider the fact that all debts must be paid, and that right now the cumulative supply of all US dollars that exist is about 8 Trillion, yet this amount is leveraged to about 800 Trillion in debt (aka government unfunded liabilities and bank leveraged deriviatives.
That’s a 100:1 debt to POSSIBLE equity ratio- the real debt to equity ratio is worse, because approx 50% of the 8 Trillion in existent dollars is hoarded, or otherwise unaccounted for.
So, uhhhhhh…. how exactly does all that debt get paid, if it is denominated in a currency that does not exist in sufficient quantities to extinguish it?
Does this help you understand the TRUE nature of the game being played?
Economics will always yield to mass psychology.
your comments are random Robert. we've been in deflation trade all along, people THOUGHT that QE, etc was reflationary - there are far more claims on assets (money, bank accounts, retirement assets, debt, stocks) than there is productive capacity. There is no way that even governments can overcome that overhang -so assets will deflate - and hard - and prices will follow. Then there is no way out other than jubilee and new rules to haircut creditors. THEN and only then will they print.
Unfuckingbelievable. I leave for a couple of months and the collective IQ falls by half.
You would think that more than a couple of people would have a brain out here. What is selling off right now my fellow idiots is 99.9% paper. That's right... a falling cascade of paper!
Deflation my ass. Read and learn.
http://seekingalpha.com/article/295567-how-gold-performs-during-a-financial-crash
(H/T markmotive)
No competing safe havens are allowed. Note the SNB peg action, note the smash of PMs, note the compliance of the yen and Euro.
Why would any competing instrument to preserve purchasing power be targeted?
Because a great devaluation is planned. A comprehensive redistribution of wealth will come to pass.
It requires EVERYONE on the gameboard in play, so that all may bear the reduction to their stored goods and future expectations.
Fishermen with holes in their nets are ridiculed at the wharf.
Sewing tight the seine. Welding shut the bulkhead passages. Locking down steerage.
A system wide shanking and demoralizing of earth's population.
Yes you are right. This is one of the last attempts by the cartel to remind people that the dollar is king. Paper is moving.
The Fed has one bullet left after all the pain we are about to go through: dollar devaluation to reflate assets.
Mom, I've always wondered, how does the dollar devaluate when everyone else is devaluating (dollar still sucks less than the other children).
Is it devalued with respect to "real" "assets".
And, well, with the Fed boyz talking about "Bazookas", I'd doubt that there aren't a whole bunch of "throw-down" pieces hangin' around.
My bet, the Kabuki goes on for a while, decoupled from actuality and reality, but black and white paint will continue to be consumed.
- Ned
a) i didnt say I was bearish on gold, only that we are left with no other options than a reduction of claims - ie what people think they own on paper is largely going away - either via rule changes from govt or from market movements
b)the historical relationship between deflation and gold was ALWAYS during periods of an 'empty planet' where resources could still be accessed at lower prices in the future -the marginal price of energy is now (permanently) increasing. One reason why gold has always done well in deflation was that monetary authorities would come to the rescue and expand money supply. They can only do that now after things have deflated - ie a trillion here and there, despite being politically difficult doesnt help vis a vis the house of cards we are in. Ie we are in a no analog period where historical correlations may not be valid
c) you are wrong about the only thing selling off right now being 'paper'. Go try and sell your physical for real things: food, bullets, tractors, etc you will see that the price of food, bullets, tractors went way up in gold and silver terms these past few days. (tho i understood what you meant)
d)I think gold and silver will disappoint until the 11th hour when they go to the moon. Then there will be so few people that own then it will be difficult to spend.
e)self-deception is a key trait in our species. very adaptive to think ones IQ is higher than ones conspecifics, and ignoring evidence to the contrary helps one suppress cortisol (a stress hormone) and boosts helper T-cells (good for immune system, etc.)
As for b)... you are damn right that money supply will be expanded. The politcal masters of our now contracting consumer economies have no other viable choice... and it helps put a faster 'floor' in under most non-paper assets, devalues debt, increases tax revenues (inflated dollars), and gets banks back in the game of creating yet more debt. (You know... the 'engine' that has been driving our economy over the last thirty years!)
As for c)... I would have to be a great deal stupider than I appear to even contemplate it.
As for d)... Moon is correct. The bottom in gold/silver will occur before equities as those with better financial literacy finally get the picture as to what lies down the road. Most people cannot aford to purchase a sizable PM hedge... but those with wealth who can will and they will buy it all easily since annual production of silver is around 700,000,000 ounces, gold 70,000,000 and platinum and palladium 7,000,000.
Best buy is platinum at the bottom. Stratigic metal and 76% of global production is produced in South Africa where political risk is growing. "Kill the Boer" is considered to be an unofficial national anthem of sorts...
good luck trying to convince your neighbor that your bar is platinum not silver and thus worth 50X more...
Density of platinum is 21 grams/cc. Twice that of my silver and even heavier than gold (and tungsten :) And I will never sell my .9995's to my neighbour... much less show it! (He's a bit of a known klepto you know... a banker actually!)
You could sell him the lead. Or even just make him a present ...
Nate, you have a point forget what I just said
Ha! Falak my friend... how goes it? (Imitation is the sincerest form of flattery!)
(It's the ZerOhead guy with the "0" instead of the "O" for the uninitiated! Good luck with the book... :)
There's always inflation and deflation. Food clothing and shelter deflate against gold during a ponzi bust. They inflate against the paper. Someone either dumped gold and silver though I could see a silver dump but NOT a gold dump. Or pretended to do it.
The IPO market was huge in 2007 right before the pop and it got huge 4th quarter 2010. The corporate stocks are so watered down you'd have to drink 20 million shares just to get a buzz.
People think 1/4 percent interest is a gift to the banks it's nothing next to interest and cash accumulating ponzi ipo. Earnings suck. And the ponzi has too many outstanding shares.
This is a total freaking head fake. It's worse than an head fake they've tried to date and it's trying to say people are selling gold to make margin calls on the equity market. The problem is they are selling paper gold. Because I don't think france got the gaddafi gold. I think it's imploding. By the time smoke clears pm's will be rediculously priced.
People are not selling gold to raise cash. They are selling stocks. You have to sell the stock and go through the bankruptcy to get the money. But the problem is taxpayers and hedge funds and retirement funds own all the stocks. So if you think the 401k fucking in 2008 was bad just hang around. You're about to get reamed.
The flurry of CEO firings is just noise. The suckers and greater fools are broke. This one hurts the mega rich as thier 20 billion dollar company that can't earn a billion a year out in the free market implodes back down to 5 billion dollar companies. Buying back cheap stocks from now broke ass 401k bag holders can't take 5psi of air out of this 20 gigapounds per square inch bubble.
Headfake it is Hephy... and it's not the physical PM's that are being dumped... just levered "paper" falling under the pressure of a rising dollar causing knock-on effects in the 'fictional' PM's market.
A great (and possibly the last) buying opportunity in the making... the difference is that physical will be difficult to find when the dip recovers. As for paper PM's... good luck collecting on your bets when the time comes!
Nice to meet you Zerohead. This is going to be a great opportunity to buy physical. I have bought platinium. Any advantage to it? I have watched gold close on it and wondered why not buy some plat as plat may once again be alot higher then gold.
Any thoughts you would like to share?
Advantages to platinum? Christ... I nearly got a hernia picking up my last consignment of silver. It hasn't increased as much as silver and gold have over the last few years. It's used for catalytic converters, chemical processing of oil and fertilizers and of course for jet turbine blades. War or prosperity... all bases covered.
Plus there is no large inventory of it out ther like gold so is an unlikely candidate for expropriation by the Fed and it has the opportunity to double or triple overnight if civil unrest develops in South Africa like it did in Zimbabwe.
Other than that? Please buy right after I do. :)
One zero hedger did pretty good on platinum a few months back. And I personally freaked the hell out when gold got more expensive than platinum. I mean that was creepy.
'physical will be hard to find when the dip recovers'
I was thinking along similar lines. I was thinking if I was a manufacturer of PV panels (which need silver) and I wanted to buy a few tonnes of silver at knock down prices, what would be my chances of getting hold of the stuff, after the weekend, at anything close to $30?
Probably about the same as my chances of filling up with cheap gasoline because oil prices have tumbled...!
Yeah, I would think they would jump right on that with some futures contracts to lockin known cost of production for the next 3 to 6 months. Just like the airliners buying oil futures to hedge against price increases in Jet fuel. and to give stability to their expected cost structure.
Yes. The Alpha article is pretty good. At the end of the day, everyone must convert to fiat, THE convenient medium of exchange, so thay can conduct business. Sure, you can barter PM coins or ingots for a car or boat or whatever. But that's not how a government works. There is an apparent need for cash credits, whatever currency that is, so the very large holders of PM's need to liquidate. Example: one of the failing banks needs to sell off its PM's to raise Euros to stay afloat. Why is that surprising?
Perhaps the lesson we can learn form this is that the "crisis" is at or near an inflection point. That might mean some additional propaganda coming out to show that specific banks are not so bad off or that one of the PIIGS can pay its bills. Whatever it is, the PTB are desperate to kick the can. Just MHO. Please pass the popcorn.
All things are subject to interpretation whichever interpretation prevails at a given time is a function of power and not truth.
Friedrich Nietzsche
"there are far more claims on assets (money, bank accounts, retirement assets, debt, stocks) than there is productive capacity."
Ummm.... everything you define here as an "asset" maintains no fundamental value, except for (some) common stock.
consider that if I have 10k in a deposit account, the odds are slim that I would be able to find anyone willing to pay me 10,001 dollars for the balance in that account. Is this really represent deflation?
Ummm, No. It is more like common sense.
Now, if I have a well maintained, all original 66 Mustang (factory sticker price: $3800), and I ask $10,000 for it, I'd have a line of boomer dorks in hawaiian shirts fist-fighting each other trying to be first to stuff their 10 grand into my pocket.
Why?
Because they VALUE that Mustang more than they value 10,000 Bernanke-coupons.
Bring your argument back to me when that Mustang can be had for $3800, and maybe I'll pay more attention.
"...all debts must be paid..." Really? Including dishonest debt?
All debts don't have to be paid, in fact it's impossible for all debt to be paid. Countries & institutions need to default it's the only way to clear out the bad debt and start to have any sort of real recovery.
a default still clears debt... in such an example it is the creditor who pays.
It's not impossible- you are challenging the language, not the concept.
and when the debtor defaults, the creditor gets a nice whack with the ruler as a lesson. When the FED steps in and says , "hey, don't hit my kid with that ruler". then the kids get spoiled and don't take responsibility. Spare the rod, spoil the child and all that...
Random, get a clue. You always have inflation and deflation at the same time. For billionaires there is a inflation of incomes and rich guys toys. For the middle class there is the inflation of prices and deflation of earnings. Inflation or deflation, it all depends on where you sit.
You are confusing inflation and deflation (ambiguous terms) with price stickiness and stability
falling prices is not deflation, nor are rising prices inflation.
moving prices are simply that. they have nothing to do with "flations"
There are too many minute fractals that influence prices (sentiment and the personal value proposition being the most active)
in other words, trying to predict pricing trends based on global supplies of monetary aggregates is about as retarded as trying to predict the street address of the alien that abducted and sodomized you with a metal probe last night.
if we go to serious deflation trade gold will catch bid
Yes. This may be the final deflationary sag I've been expecting. It sure looks like it from here. Once people realize a few things, the flight to the dollar will stop.
Exactly right. The long term outlook even in a deflationary economy is debt default through currency devaluation.
What I see here are two competing forces. The first is the government's ability to wreck the economy which is deflationary. Part of this is also the slow ongoing deflation of the real estate bubble. The second factor is the currency devaluaton wars and the impending default of all Western nations through worthless currencies. This is inflationary.
Which one wins in the short run is up for grabs with deflation winning right now. But like SWRichmond above I believe the long play is inflation/worthless currencies. That is where metals come in.
I will be interested in the dynamics behind the metals moves today and who is selling...and why.
To me this smells like 2008. Back in those days, all the big players were looking for cash, talking heads called it a credit crunch. Semi-smarts might see that happening again, and are starting to turn all liabilities into cash. In 2008 Gold and Silver also took a nose dive, so I am not surprised this is happening now again.
Makes sense given that it PM have appreciated nicely and rapidly. It would be hard to liquidate other holdings, especially for banks.
8. Mass layoffs can be expected in 2011 when .gov promises to subsidize any new hiring in 2012.
Did you see the idiotic hiring subsidy in Dumbama's plan? Unemployed over 6 months gets the subsidy...not to mention government workers.
Gold won't catch bid. over one month ago I was telling everybody here that professionals where selling.
Even tho I got more negative votes than anybody I believe, it seems I was right.
So forget your gold. we havn't seen the lows yet. don't become one of the bag holders.
I sure hope you're not the worthless idiot troll you appear to be.
I'd love to get my hands on some low-price physical gold.
Me? Baby back ribs.
there is less than 1oz of Au above ground per person on the planet.
there is less than ½oz. of Ag above ground per person on the planet.
the median price of a home in the US is $250,000.00, or 151oz/Au or ~8200oz/Ag.
tell us again what value is and what the values of these metals are?!
if you could choose only one, would you rather have a paid for house to live in for 30-40 years, or 151oz/Au?
a 'paid for' house is never 'paid for'.
there are property taxes, utilities, upkeep, all of which go up in price every single year.
The 2010 US Census says US median home price is not now, nor has it ever been, a member of the $250K club!
Year Median Average
2010 $221,800 $272,900
from the URL:
http://docs.google.com/viewer?a=v&q=cache:KoRaB5Ntv00J:www.census.gov/co...
Hungarian boy... What "professionals" are you talking about...
Charlie Gasparino on FBN has recieved a death threat from MS. Said "ZEROHEDGE AN EXCELLENT FINANCIAL BLOG THAT MOVES MARKETS" did a story on it.
GOOD JOB TYLER.
The monsters of the market don't like commodities. They make money on them from casino take but really hate the value and confidence shift.
That's the number one problem with PM's is who has the power to control an arbitrary statement of value?
In my years of trading, I've never seen so much calculated bullshit.
Beware and be careful.
hey TD, you're only supposed to hit the save button once, and don't use the back button your browser :)
Monday is gonna be awesome, bitchez!
Buy the dip, folks.
golden opportunity...
DA DA! :))) No, really?!?!
Indeed, BTFGD, without cost averaging, life would be a whole-lotta hurt right now.
Did this guy just shout silver, while walking up the road, if he did he just got rammed. (but see what happens in the end)
http://www.youtube.com/watch?v=cud_k9f6tqk
Bank dump in desperation to stay capitalized...Joe snuffy killing off their money markets. The key will be timing the buy to just before everyone realizes the banks are screwed.
Yeah. But that also corresponds with my sister's birthday, so I'm not sure which one it is...
ya
they be whacking the walrus today...
who needs to raise capital and buy debt
DAX successfully re-tested lows this morning and bounced 4%. S&P futures re-tested 1102 and bounced. Copper is saying the downside is not complete in stocks though as it has bottomed first in recent downdrafts.
What is or isn't done Sunday night is what matters. The govts have conditioned markets to a point where no one wants to be short over the "intervention" weekend, thus causing a green close today, making politicians a little less antsy about doing something drastic.
Nothing on Sunday, ugly Monday.
Shouldn't Schaeuble's comments have been positve for the PM's?
No, the Euro-banks have to sell whatever they can to raise fiat cash - to "re-capitalize" themselves, and PM don't count. So, they sell their PMs in order to stay alive.
BTFD.
Now that makes sense.
Checked the safe, happy to see the precious is still there and just as shiny as ever. Maybe time to add some.
I agree, let the paper burn and the fuckers eat each other. The only way to not be robbed in a rigged game is simply not to play. There is always another market somewhere, at least in a normal (connected to reality) business cycle and the precious can always be turned into whatever the "fiat du jour" ends up being.
I remember reading on here well over a year ago that we would see daily moves/swings in the price of Gold in the $100/Oz range as the shit got close to the fan. Todays metal action confirms to me that things are much more precarious than the Daily action on the Stock indexes would indicate. The fact that phyaical PMs are unique due to their total lack of counterparty risk is the primary atraction for me. I am far more worried about weather my bank account deposits are about to go `pooof`
Scary day though, especialy silver, glad not to be trading it but still happy to own it.
Who the fuck knows. I heard going up that silver was giong to EXPLODE because of backwardation. Shit the Comex was going to default!
Now, someone is claiming that a rumor or a margin call causes it to crash 100 bucks in a day. Whatever!
I'm now sitting on my PM's out of a moral obligation to shun fiat currency. I can't be bothered trying to wonder why it goes up and down in regards to the paper currencies. They'll have to pry it out of my cold, dead hands!
Investment tip #1, never listen to cartoon bears.
You mean Timmay and Benocide are considered cartoon bears?
Hold her steady man, if the trend is a trend this shouldnt matter(heh)...but it should shake the bones of anyone to notice that this silver market is so speculative. Fucking safe haven? Jesus christ, 17%, that idea is done and dusted.
All your safe havens are belong to us
give Bunga cigar
-
Silver crashed $100 an ounce? That makes it -$60 per ounce.
What are you doing at your desk?
Please Sir, where may I buy a truckload at -$60/z? I'm there YESTERDAY!
I bought some already tomorrow!
Who is paying $60 to give away silver? I want in on that action.
But seriously, what are you bitching about? Gold and silver are still way up on the year, even the paper shit is still way up. Hell, silver and paper silver are still the best performing assets over hte last 12 months.
Also funny that you think that high prices would cause the COMEX to default, rather than the opposite. Here's a hint--if they don't have the silver, they have to buy it off the open market (or lease it from somewhere) to meet delivery requirements. High prices mean there is more floating around out there, so it is easy ot meet delivery. Low prices mean there is less or none. Where is the silver for the industrial users going to come from?
The idiots and trolls can see that this is the best possible outcome for holders of physical silver, as the coming default will catapult the price of physical to unheard of highs.
But hey, who cares about any of that? Sell your silver. It just makes more room at the top for the people who know what is going on.
I will help you out, you can get it for around half that here, all day long.
http://www.apmex.com/Category/2/Canadian_Silver_Maple_Leafs2011__Prior.aspx
....but there's no physical ANYWHERE
yeah yeah yeah, I hear this shit all the time. Hopefully the Comex will default and JP Morgan will go bankrupt. I'm not holding my breath.
When it comes down to it...you, me, and all the other analysts have no idea what will happen.
The only true reason for holding PM's is the moral component. It's the big middle finger to governments all over the world and the high cabal that prints money and steals the labor and assets of the masses.
A man that speaks the truth, no more and no less. It can take a long time to give governments the finger, but expecting the comex to default for a quick buck is effing madness, why would they default when they have carte blanche to raise margins when ever they feel like it? Never got my head around that one.
Why? PAGE. Those who want phyzz will ba able to stay away from the paper party games.
Daily Chinese 8AM fix coming. Based on composite price reports from in country banks.
http://goldsilverreview.blogspot.com/2011/09/page-pacific-asia-gold-exch...
<Thanks to above for the James Turk link>
The longer I hold my stack, the more I read opinion, the less I really know. All I can say is FUCK YOU FEDS I am not selling.
Moral reasons? FUUk that! I'm in to save my ass after the splat.
Yesterday the S&P dropped back to where it was last November. Gold dropped back to what it was two months ago. Which would you rather be holding?
Roy it is simple - there is so much debt in the world that Fed can play both ways (not only to print to inflate but also to print less and let the debts force deflation)
I couldn't agree more. But all this backwardation, margin call, lack on LBMA and Comex inventory, aluminum and tungsten laden PM's, etc. just makes my head spin.
K.I.S.S. Debt ain't going away. Default or Inflate...it's one or the other.
Roy, a greenie on ya.
Well, I'm thinking about that, in "Men in Black 1" -- "Your Proposal is Acceptable."
live to fight another day.
- Ned
Nice catch Tyler...
My take is it's part of the overall prep for QE3... the metals must be broken or the banks lose control when the easing is announced... after the Comex expiry next week.
'when the easing is announced'? what are you smoking dude? rates are already zero. nothing fed can do to help economy more than it has. next is trading restrictions/rule changes, etc.
unless you meant negative rates - fed will pay people to take new money. now that could work...(not)
Yeah, I agree. Pay me some paper to take paper so I can get physical. Winning!
That was QE Nate... adding a $T or two to the balance sheet... it's coming, or the markets are toast.
You forgot the other side of QE and that is the wholesale buying-monetization of all government paper. That's the danger past zero interest.
Nate you miss one thing - not all people are in debt. They can keep buying commodities. And those who are in debt will continue to default.
The green in that graphic matches my fucking face.