Gold And Silver Plunge As EUR Reaches 15 Month Lows

Tyler Durden's picture

It seems funds left redemptions until the last minute in the vain hope that everything will be fine in the European dis-Union as we see renewed selling pressure in EURUSD - taking out the January 2011 swing lows (as a mediocre Italian auction and failed Hungarian auction weigh heavily on the expectations for a 'solution' or firewall). Gold and Silver are also legging down hard (the latter now -9.5% from Christmas Eve) and the former loses $1550. Gold took out its September 2011 swing lows back to near six-month lows.

The USD is up around 1% since Christmas Eve's close with the EUR (and cable) underperforming and JPY outperforming (the only major cross that is stronger vs the USD). It also seems the AUD has a renewed corrrelation with the USD as we see Aussie bonds (the only 'safe' AAA govvie?) bid to record low yields.

Silver is the obvious (high beta) loser in this redemption/liquidation battle but Gold is 'decoupling' from copper here also. Interesting that Oil is stable just under $100 (and practically unch from Christmas Eve).

European sovereigns are all leaking wider with 10Y BTPs now almost 40bps wider than their tights yesterday, Portugal 10Y now 43bps wider than Christmas Eve's close and France 10Y also leaking badly (+15bps).

Elsewhere, ES is modestly higher from yesterday's day session close (as correlations with a weak Gold market are helping while every other risk asset driver is pointing negatively or flat). European corporate and financial credit spreads are notably wider (investment grade +7bps from yesterday's tights, Crossover +25bps, and senior financials +11bps) as European equities are now down nearly 1% from the Christmas Eve close.

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Azannoth's picture

Oh well, Tme to buy more Physical

Grand Vizier's picture

But gold is so pretty to look at, say it isn't so!!!

trav7777's picture

silverbugz losing even more of their life's savings after "generational buy with both fists" alerts issued by ZH pumper shills when the price was at 32

PsychicWebbah's picture

Not yet. GLD will bottom out at around 145-148. That is when you should buy buy buy gold (not GLD). I am just giving you the trigger level to buy as measured by GLD. I would never endorse an ETF.

mayhem_korner's picture



Why buy gold like a trade?  In the end, it will only matter how many oz you own.

PsychicWebbah's picture

Why pay $3.99/lb for chicken when next week it will be on sale for $2.00/lb? You get twice as much.

mayhem_korner's picture



And if it never gets to your "trigger price," then where are you?  And if you believe that buying at the "trigger price" is always the way to go, then you are constantly guessing where the bottom is.  And you will miss some of those - either buying at an "above-bottom trigger" or never getting there and buying higher - in the end wasting a lot of energy trying to time something where you are apt to have roughly the same result by just staying in a scheduled buying pattern.

My WAC of gold is $892, including a 5 oz purchase this summer at $1,811 (including premium).

If you believe you are a good guesser, knock yourself out.  But if you intend to hold the physical as an accumulation of real money/wealth store, and you're not planning to "trade" it back anytime soon, the difference you believe you can gain by timing won't matter much.

margaris's picture

exactly... Weighted Average Cost!

If you have a regular income its sooo easy.

Just take 10% of it (or more) and convert it immediately. Why wait? Waiting for what exactly?

Its even easier if you have been an unrestrained consumer bitch for years... and finally wake up!

You can still live out your desire to buy things... this time physical shiny metals!!!

Buy the real money with your fake money!

Such a fake paradox world we live in.... we have to BUY THE REAL MONEY.... lol!



FEDbuster's picture

I still think China has a large role in this slide.  Their housing bust is accelerating, and changes in their gold exchanges has made buying more difficult. 

Plus, we are seeing some year end selling, which is normal. 

The bet on the printers is still alive and well.  Deflation would take everything down stocks, gold, etc...  The bailouts will pump trillions into an already bloted system, which should be good for gold prices in every currency. 

DoChenRollingBearing's picture

+1 and + 1

mayhem and margaris have it exactly right, at least for small physical gold investors.  When I have money ($ fiats) come in, I take some of that and buy gold.  I have been doing just that for decades, it has worked out very well for me.  I have BTFD and BTFSpike.  But each Spike (until now...) has been very transitory.

I agree that waiting on a target price is really a game for TRADERS, not for long-term savers choosing to hold physical gold.

MassDecep's picture

At the very least, buy PM's monthly, or twice if you feel the urge.

DeadFred's picture

My eyeball chart reading puts the long term trend line support for silver at $22-23. The question is what is fueling the drop in the euro now, just the low volume giving someone the oppotunity? I'm not seeing enough news to be driving this.

fireeater294's picture

145 - 148 level? Is that the ETF price? If so i am watching it like a hawk! 

Clam McCain's picture

gold longs getting torched

mayhem_korner's picture

gold longs getting torched


Gold long traders getting torched.  Fixed it fer ya.

With gold up a measley 8% for the year at this smack-down level, and up double digits for each of the the past few years, only long traders are torched. 

Ratscam's picture

wait for tomorrow. TPTB want to see a very low single digit performance in gold for 2011. Possibly carrying this goal over into the first 2 months of 2012. This could be the last rainfall for a long time.

Al Huxley's picture

Paper longs, speculators holding leveraged bets on what the price of gold (as opposed to actually holding gold) are getting torched, and doing a favor for anybody who actually buys and takes delivery of the physical metal. You think that holders of physical are actually selling (other than the retail cash-for-gold market)? I doubt it.

Quinvarius's picture

It is funny to see these troll posts every time gold dips.  You really think a collapsing Euro and Pound are bad for gold or good for the dollar?  Nothing has changed.  Just buy the dips.  Things are only getting worse.

Hugh_Jorgan's picture

There are still a lot of people that look at gold like they do CSCO or AAPL. Most folks don't bother to try to understand economics, monetary policy, or for that matter investments outside of what they can do with their ETrade account.

pods's picture

If Etrade has an office in the City of London you will have to start putting quotes around "their" Etrade account.


MassDecep's picture

"gold longs getting torched"

I am long gold and silver. Not torched, bought at $850 and $9.00 !

Got a long way to go, to be torched

Hugh_Jorgan's picture

How about your physical will never be worth 0$?

NotApplicable's picture

Though it likely someday will near infinity when measured in dollars.

JoBob's picture

It ain't over 'til it's over!

machineh's picture

"Oh well, Time to buy more Physical."

Too bad "Nasdaq 5000" didn't come in a tangible version that you could take home in a box, eh?

Addicted to precious metal Hopium? ZSL can fix that fast!

Quinvarius's picture

ZSL is down from 1000.  LOL. 

You should buy puts on ZSL today.  I am.  That thing is mathematically designed to go down no matter what.  And no, I am not explaining it on the internet again.

Al Huxley's picture

All of those 'ultra' inverse funds are just carnival games to help separate retailers who think they've found a magical way to take a short position in the market without actually short-selling, but never bother to learn the math that drives the leveraged funds. Just look at the performance of any of them (even the unleveraged ones suck).

The casino is rigged, but many people refuse to believe it.

Pegasus Muse's picture

Jesse's latest.  Chart at bottom link.


 29 December 2011

The End of Year Precious Metal Bullion Bear Raid - Another Form of Window Dressing?                                     

Like many others who watch the markets I have wondered what might be prompting this obvious bear raid on the paper precious metals market over past four weeks.

It could be explained by any number of economic developments including the decline of the Euro, but that does not really explain the downward market action which has been sporadic and not associated with news, more so than fundamental.

One has to be a bit naive or disingenuous to ignore the blatant bombing of the market with large numbers of contracts for sale during thinly traded markets. This is the not the sort of trading that a profit seeking trader would do except under the duress of a margin call. Anyone who watches the tape, rather than waving their hands from the 50,000 feet level, can see it clearly.

From speaking with others, and based on my own thinking, I believe that what we are seeing is a type of end of year window dressing.

At the end of year an institution will mark positions to market. Granted, any number of institutions will have an off calendar fiscal year ending for example in October.

But many others observe the conventional calendar year ending in December as their fiscal year, among them JP Morgan and HSBC for example.

It is an obvious phenomenon that trading firms run up prices into key events to make their results look better if the market conditions permit it. And the trading desks run prices lower on some assets into key events such as option expirations.

But what about firms that have very large short positions including naked short positions with leverage? Would they have an incentive to push prices lower into key events of mark to market?

The answer is yes, particularly if markets are thin and sentiment has been battered by repeated bear raids and commentary from their friends in the financial press. They also often spread the word, one way or another, amongst big traders that tend to follow price momentum. And of course it does not hurt if a major source of bullish trading amongst small speculators has been taken down into bankruptcy [ed: former MF Global clients].

Is this why we are seeing this now? Few can know for sure, but if we see a sharp rally in January and resumption of the bull trend the answer is more probably 'yes.'

And if so, this is just another hidden price that is being paid by a nation that cannot bring itself to be free of a financial oligarchy and their corrupting influences. 

Posted by Jesse 

mayhem_korner's picture



Post-holiday PM sale!

RockyRacoon's picture

If the old lady can go out and get some bargains on post-Christmas sales of crap made in China, why am I not entitled to pick up some $900/ozt gold?   Come on!  Gimme my deserved sale prices.

NotApplicable's picture

My uneducated guess is that the Chinese set the floor at $1100 when they loaded up at that level previously. I can't imagine being able to source any physical at all if the paper price ever hits $900. I bet even Tulving would get cleaned out at that price point, especially given the counter-party risk disaster that is the Crimex.

RockyRacoon's picture

APMEX is blanketing my inbox with sale flyers.   Go figger.

eigenvalue's picture

Gold may reach sub $1200 and silver sub $15 in H1 2012.

DrStrangelove's picture

most newer producers would be assed out at $15/oz.... bye bye annual increase in supply


unless you mean DOW 8,000 silver $15, then yeah... possible

eigenvalue's picture

Short term price movements have little to do with fundos. The fundamentals of oil has been strong since 2001. However, oil still reached $40 in H1 2009.

passwordis's picture

 Fundamentals? They lie about peak oil. There is plenty of oil and countless new oil discoveries world wide. They probably lie about peak gold and silver as well.  There are probably secret mines, secret technology to unearth the metals and vast amounts of gold and silver reserves in secret underground storage facilities.

Fundamentals only apply if you can trust that they are accurate.  I'm a glutton for punishment and perhaps a little foolish so I'm trusting in the fundamentals of gold and silver but I'm also open to the possibility that I'm being played. ( think the De Beers diamond cartel)

I know one thing, I can't wait for this whole PM thing to runs it's course.  We may see a gold standard, which will push the price up so that all of the institutions and banks can sell their gold to the governments at $10,000  but the rest of us will probably be forced to sell (or hide) what we have to the local federal reserve at 1/10 that price.


 Yes, I'm feeling a bit pessimistic today.





Snidley Whipsnae's picture

"most newer producers would be assed out at $15/oz.... bye bye annual increase in supply"


But, but, Johnny Bravo said it cost only $5 oz to get it out of the ground...

Where are you Johnny? Still in your mom's basement?

EscapeKey's picture

Indeed, and the otherwise common company that a recession would be, will be solved through adjustments of CPI calculations, hence GDP deflators, and faster increasing GDP hedonics components.

mayhem_korner's picture



Are you wild-guessing, or do you have a rationale?  The one scenario that would support such prices is an all-out monkey-hammering by Ben et al to drive physical out of weak hands in a final 'confiscation' before a currency collapse. 

Apart from such a manipulation, the EUR/USD would have to reside in the stratosphere, which the FED can't tolerate in the ongoing currency war.

I just don't see it.  The tension between not wanting real money to take off too soon and needing to keep the USD debased will continue this see-saw until someone admits something is broken. 

eigenvalue's picture

I don't think the Fed wants to support EURUSD that much. The European debt crisis creates "safe haven" demand for US treasuries. Otherwise who is gonna finance the huge fiscal deficit of the US? 

mayhem_korner's picture



What level of the ponzi did you buy in at?

Do you think the USD "safe haven" status has any staying power?  Why do you think Timmay is building up frequent flyer miles to have crepes and schnitzel with Merkozy?

eigenvalue's picture

I first bought silver back in 2005. I added some in H1 2011 and it's already under water but I will not sell it. 

mayhem_korner's picture



Don't believe the hype of the 'market price.'  Your silver is not underwater.  Nothing the bad guys want more than for you to think that it is.  JPMorgan would love nothing more than for you and everyone else to believe Ag is a loser and cough it up to them. 

The real price of silver and gold are being masked, and the smart ones - you and the bad guys - know it.

Stax Edwards's picture

You are delusional.  You silver people are completely friggin delusional. There really is no other explanation for such a ridiculous attitude.  

Just snap the f out of it brother before you get yourself in too deep. Hearing you guys go on and on like price doesn't matter.  This is just a damn shame.

Max Fischer's picture



Absolutely agree.  It's really amazing.  

Max Fischer, Civis Mundi

James T. Kirk's picture

You are the delusional ones who believe the system is still honest. After MF Global, you should see this clearly. Instead, you stand in line to be slaughtered. Mass delusion indeed.

Stax Edwards's picture

Never have I claimed that 'the system is honest'.  I am claiming that hanging your wealth/retirement on the long term performance of silver alone is not a winning strategy.  

Not only that but I am beginning to get the impression some of you guys are morons.  No offense guys but come on.

SilverRhino's picture

Silver alone?   No, it's never a good idea to put your savings in one asset.   But the benefits of PM's as your retirement vehicle

  • ZERO counterparty risk / ZERO default possibility
  • Long term (10+ years) method of wealth retention  (seriously show me a better one)
  • Utimately fungible and marketable
  • Portable wealth
  • Can't be confiscated except through killing you.  

If you have a better idea / suggestion I'm sure we would be all ears.

chinaguy's picture

"Long term (10+ years) method of wealth retention"

- Amen & if this PM rally is over there will sure as fuck be another one w/ in the next 20 - 30 years...hows that 25% loss on the stock market (adjusted for inflation) over the past 10 years treating your retirement account?