Gold Celebrates Formal Greek CAC Activation With $40 Intraday Move Higher

Tyler Durden's picture

Minutes ago, the Greek cabinet formally announced that it has approved CAC use on Greek debt, which was the final milestone that ISDA was waiting for before making its determination. Most overjoyed by this appears to be gold, which has moved by nearly $40 from this morning's post-NFP (no "inflationary" QE3?) lows and was testing $1715 moments ago. Oh, and silver too. In other news, Zero Hedge is happy to sell CDS insurance on every bar of gold purchased by anyone, anywhere. Under UK, Greek or whatever alien law that will be needed in 2-3 years to bail out the world.

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akuacumen's picture

Very odd. Rally on stronger dollar on NFP and surely a delay in QE from the Fed (based on NFP)?

nope-1004's picture

Protection trade.  Only thing is you'll have to put up with COMEX lying and naked shorting, along with the 3am London price smashes.

My grand daughter grew out of her 3am feedings...... will the London banksters ever grow up?  Me thinks not.


Comay Mierda's picture

very simple

if credit event ---> then money printing/bailout

if no credit event ---> then bond rates skyrocket because cds now officially useless & fed/ecb print money to buy bonds and suppress the rates


CrashisOptimistic's picture

Gold is irrelevant and subject to the same rules everyone else is, namely that governments can do anything they want, including imposing some 60% tax on all gold transactions.  They don't because gold is irrelevant to society as a whole.  Never ever forget governments can do anything, including murder, if they rationalize that they must.

But far more important, let's look at what just happened.  Greece owed a huge amount of money.  They threatened creditors with a slash of principal to zero.  Then they created a package for creditors that would provide non zero return but far less than they owed.  Then the creditors chose the return that was largest, the package.  Greece then declared that this choice is a voluntary refinancing of the debt and therefore not a credit event.

EVERY COUNTRY CAN DO THIS.  THEY CAN ALL CREATE SUCH A PACKAGE, OFFER IT, and claim acceptance of it is a choice on the part of creditors to refinance the debt.

If this is ruled a non default, swaps will have no value on sovereigns.  If you can't hedge your bond position, then you must sell it.

If it is ruled a default, which I think it will be, then the months that have existed for the governments to kill whoever they had to in order to ensure no significant contagion will be tested.  To avoid massive selling of sovereign bonds, I would think gov'ts have instructed the ISDA to declare default.

Ghordius's picture

gold has been made irrelevant by law in the US between 1934 and 1974 and in the communist regimes until short ago, yes

but there is a lot of countries where you can truly forget it - it will continue to be the only sort of money people trust. count them up, you'll see they are a majority both in GDP and in headcount. sorry, your's is an American majority view, IMHO

HoofHearted's picture

I have noticed that marketwatch, for instance, is not allowing any comments today. People want to shout out that this is a default, get out of the euro or the dollar, but they cannot. It's only propaganda...all the time. Thank God for ZeroHedge. Now if the rest of the sheeple would just read the real information rather than the junk that the MSM print up.

zerozulu's picture

when SHTF and TPTB goes crazy, I see a lot of used cars changing owners with a golden hubcaps.

Floordawg's picture

Jeez, CiO... way to take a huge shit on our (PM holders) cupcake.


The worst part is, I can't help but agree with you.

Harlequin001's picture

The last bit is correct but the first bit is crud.

No society can function without a means to transact. To say that gold is irrelevant to a society indicates an ignorance and naivety that is truly staggering...

Floordawg's picture

Yeah, rules aren't changed on a daily basis with these matters. And try paying with an AGE at your local grocery store to buy your tub of butter and cucumber for your usual Friday night fun. So anyway, I was just trying to lighten things up a bit with a laugh, professor.

Careful with your tone, or people will think your a smug cunt.

Harlequin001's picture

Thanks for the advice, I'll bear that in mind.

Whilst I wouldn't want to comment on your Friday night activities, which certainly seem to be a rip roaring hoot, likewise you should be careful with your humour especially when you are agreeing with someone who is fundamentally wrong or the rest of the world might think you're a thick cunt.

Personally, I couldn't give a rip roaring shit what people think of my views, they are what they are, and I'm happy to debate them with anyone. Keep well.


Ghordius's picture

"gov'ts have instructed the ISDA to declare default" which gov'ts? the european (exclude the UK) would prefer to just forbid CDSs, regulate banks more, put up a Tobin Tax and so on. And the UK/US would prefer to deregulate further. I really don't see which "gov'ts".

Ghordius's picture

another gem: "If you can't hedge your bond position, then you must sell it." sure - public finance was invented the moment sovereign bonds CDSs were created, before there was nothing, nada.

CrashisOptimistic's picture

You missed the point.  

If you created your hedged position on the basis of the hedge existing, and then the hedge no longer exists, you have to close your position -- or rather, by the time you do it will have been repriced lower by others to closed faster than you could.

Sure, you can buy bonds unhedged.  Without the swap hedge, you better get paid more to do so -- and so rates must rise.

trav7777's picture

dude, nobody is buying soverein bonds except central banks.  WTF is there to hedge?

CrashisOptimistic's picture

There is that.  

LTRO was to fund banks to do it as the ECB proxies. and I remain astonished that Germany signed off on it -- though given that Merkel's alternative in Germany is more socialist than she, maybe she/her party had no choice if they wanted to stay in power.

The real issue is anyone can do this.  Any country can construct their little package of bond alternatives that is slightly greater than 0 return but far lower than promised return and offer it up to creditors.  The creditors will always take the non zero return and the countries can say See?  They agreed!

There is no end to this.  Which is I guess where you're going.  Buy no sovereigns, other than the safe haven US Treasuries for another year or so until the vigilantes arrive here.

Ghordius's picture

I did get your point - did not want to sound flippant - it just reminded me a young trader who brought it up in a very naive way. Germany signed it off because it increases the power of european governments on banks in the eurozone. It's a cultural/historic thing, Continental Governments tend to become authoritative on industries that might give political headaches.

Trav's statement is incomplete: sovereigns are now for CBs, banks stuffed with LTROs, pension funds and MegaBanks that packaged them in SPEs. It's accounting that makes a bank love CDSs - you can park stuff out of sight and out of risk management, with with the Basle accords means also capital, i.e. leverage potential.

The vigilantes? Should they not be already here? I'm starting to believe we'll see no vigilantes until the very end of the dollar...

crawldaddy's picture

I have to agree, If indeed the shit does hit the fan, and a Thunderdome sort of event happened, Governments will simply make owning gold illegal for its citizens. Illegal for personal use etc.  Basically   taken to the next level.  


Dont think it can happen, christ the government will break into your home, lock you up, take your shit if you smoke a plant they label as bad, you really think if they do this for a fucking common weed, they wont for gold?

trav7777's picture

weed seems to be proliferating.

Let's see...local police paid by weed tax, feds want to shut them down.

You're aware, aren't you that the reason for falloff in violence and shit in Peru and Colombia is because those gov'ts SURRENDERED in the drug war and have effectively decriminalized coca production?  This is because all politics is local.  There is NOTHING the national government can do when large swaths of places like California flip them the bird.  The local police in the coca producing areas of Peru are FUNDED by the coca.  They will not obey instructions from Lima to kill their economy.

This is why the fighting is no longer over production and has now gone to fighting over distribution.

States are already ignoring federal laws about guns and drugs.

crawldaddy's picture

You TOTALLY miss the entire piont.  The point is, if the government will do this for a weed, it can do it for other things.  We have the largest prsion population by far in the whole world. A great deal of it, non violent offenses.  Think about that.


FYI- states can chose to ignore any law they want, doesnt stop the fed from going in when it wants and enforcing federal laws

Gazooks's picture

you have heard of revolt

Temporalist's picture

That's the new car that Obama is selling right?

ViewfromUndertheBridge's picture

"governments can do anything they want"...and that is why everyone should own some gold.

mc_LDN's picture

You are correct my friend but in a global 24/7 world market my gold can be in many different places and all these governments aren't gonna tax. The US perhaps - Geneva, London and Beijing though? Bahahahahaha. Theres a reason why Geneva and London have been the home place of gold for this long. They're certainly not going to let the opp go missing while the US goes nuts trying to confiscate everything.

DoChenRollingBearing's picture

I had JUST finished writing up my new blog article on debt, gold's price spike and Molycorp.  I was wondering why the spike in gold.  So, after I finished the piece I came over here to see if there was any news why.

Zero Hedge is really fast in breaking news!

Congratulations, Tyler(s) and the whole Zero Hedge team!  Almost every day SOMETHING really impresses me about Zero Hedge...

IronShield's picture

Yeah, everything BUT the constant negative focus on the Euro.  That is a non-event and the real show starts soon, with the USD.  Look at the states and the ridiculous levels of debt.  Much pain to distribute in the US; coming soon.  PMs are a must have with gold at the top of the list.

StychoKiller's picture

Excerpted from:



Amazing what can be done when 22 million paper gold ounces is dropped on the market on a single day, the Leap Year Day of all days. Witness the leap downward in paper gold price and perceived market integrity. No need for an honest market. The CFTC remains asleep at the wheel, or with eyes firmly fixed on their master clubhouse on Wall Street, the chain tugged hard. The end result, as described by the notorious London Trader on King World News, is that a magnificent amount of physical gold is leaving the COMEX and LBMA. The United States remains transfixed on the paper gold price. The real action lies in the physical London gold market, where Asians are fast draining the London gold supply. Once again, a powerful dichotomy exists. The Boyz can control the paper gold price, but they are therefore gifting the Asian buyers with a hefty discount that results in truckloads of gold bullion rolling out the ramps in delivery. As desperation rises to ambush with naked gold sales devoid of metal, enabled by USGovt and UKGovt watchful eyes, the gold inventory is fast vanishing.


Harlequin001's picture

yeah but they managed to hammer it down by 30 bucks before hand though...

ViewfromUndertheBridge's picture

They hammered it into the London PM Fixing (GMT 1500) but then got pulled up short, the Fixing took quite a while and they had to pay (looked like physical buying in volume at their fake price)...then they had to cover. Fuck 'em.

Floordawg's picture

"Fuck 'em." EXACTLY. Dead square in the ass... but thanks for all the sales.

POpatriot's picture

SO I would assume CDS are triggered.  What happens to Europe's AIG equivalents...the two large insurance companies?  Is this not the bomb they were trying to avoid?  Any idea what the liability will be?  

akuacumen's picture

I placed a call to the bank when spot was trading about 1685 and they quoted me 53K/kg appx. 1650/oz ... well below spot. I'm finding this very strange.

Long-John-Silver's picture

Paper, Digital, 401-K in an allocated account, or Physical for delivery Gold? All have diverging values from the posted spot price.

akuacumen's picture

Physical gross (fees included) ... quite a divergence.

HoofHearted's picture

Uh, take it. And don't worry about the CDS that the Tylers are offering. (Sorry to ruin a moneymaker for ZH...)

IronShield's picture

Yeah?  What bank?  What form?  What refinery?  Assay cert?  I'll make that call to confirm.

IronShield's picture

No kidding.  Notice the crickets?

Reptil's picture

what are you waiting for? everyone makes mistakes, even banks.. ;-P

SheepDog-One's picture

All about trade-offs now....what do they want most? They tried another promise of fake 'QE sterile' to rescue equities, soon no one at all will believe that anymore damn talk about 'the boy who cried wolf' being worn out totaly.

What do they want, lower gas prices? Then they have to stiffle QE talk and raise up the dollar....however that will also lower equities too. 

Really Id hate to be in Bernank's shoes these days.

nope-1004's picture

He's losing credibility fast.  I, personally, always knew he was full of shit and a public liar.  But now more and more the people are seeing the facade.


mayhem_korner's picture

a public liar


I hear he's pretty good in private, too.

Quinvarius's picture

Everything the Fed and the Treasury have done has been a short term fix which has caused a larger long term problem.  The only way out is gold at much higher prices to balance out global debt.  That will be the very last thing that happens in this whole mess.

DoChenRollingBearing's picture

+ $55,000

I am looking for indicators.  I got an email from someone who said the thing to watch for might be BOTH the US$ and gold BOTH going up.  That would be the time to make your last purchases of physical gold before it's all gone.

BOTH gold and the US$ are up today...

FlyoverCountrySchmuck's picture

"Everything the Fed and the Treasury have done has been a short term fix"


Nothing matters but keeping perceptions inflated until the U.S. Election has passed, and Obama has been reelected, no matter how much it costs. NOTHING....


John Wilmot's picture

Obama is not that important. The same fuckers will be running the country regardless of who wins the election in November.

viahj's picture

higher priced in what?  at this rate all fiat will be dead at that point.  SDRs maybe with adding a commodity basket backed Yuan?

Quinvarius's picture

Dollar vs Euro tells you nothing about the real world.  It is impossible for people or algos who live within the system to protect themselves from a systemic collapse.  When they push paper gold down based on something the USD does, just take them up on their offer with physical every time.